Fitch affirms ratings of Subsidiary Organization JSC VTB Bank (Kazakhstan); outlook Stable
05.09.11 14:44
/Fitch Ratings, London-Moscow, September 2, 11, heading by KASE/ - Fitch Ratings
has affirmed Kazakhstan-based Subsidiary JSC VTB Bank's (VTBK) Long-term
foreign-currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook. A
full list of rating actions is at the end of this commentary.
VTBK's ratings are driven by potential support from its sole shareholder,
Russian state-owned bank VTB ('BBB'/'bb'). The one-notch difference between the
Long-term IDRs of VTBK and VTB reflects the cross-border nature of the parent-
subsidiary relationship. In Fitch's view, VTB would have a strong propensity to
support VTBK given its ownership, the strategic importance of the Kazakh market
for its regional development, VTBK's very small relative size and VTB's strong
track record of supporting its subsidiaries, including VTBK.
VTBK effectively began operating in Q210, and the scope of its operations is
still limited (loan book of USD0.1bn at end-H111). Underwriting standards have
been reasonable to date, however, Fitch cannot rule out the possibility of them
being loosened in the future given VTBK's ambitious expansion plans (almost 10x
loan book increase to end-2012). Unlike some of VTB's other subsidiaries, VTBK
has so far funded its lending operations in the local market, including through
placements from local pension funds and insurance companies. However, parent
funding may become more significant as VTBK expands.
VTBK has been loss making to date, and management only expects the bank to
become profitable in 2013. Capital ratios are currently high (88% total capital
ratio at end-H111), but likely to reduce to much lower levels as the loan book
grows.
VTBK is a small bank focused on providing traditional commercial banking
services to corporates, at the same time targeting mass-affluent customers on
the retail side. In light of VTBK's short track record and unseasoned business
model, Fitch has not assigned it a Viability Rating.
The rating actions are as follows:
Long-term foreign currency IDR: affirmed at 'BBB-'; Stable Outlook
Long-term local currency IDR: affirmed at 'BBB-'; Stable Outlook
Short-term IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
National Rating: affirmed at 'AA(kaz)'; Stable Outlook.
Contacts:
Primary Analyst Aslan Tavitov, Associate Director+7 495 956 99 01
Secondary Analyst Anton Naberoukhin, Analyst+7 495 956 99 01
Committee Chairperson James Watson, Managing Director+7 495 956 66 57
Media Relations:
Anna Bykova, Moscow, tel.:+ 7 495 956 9903/9901,
anna.bykova@fitchratings.com
[2011-09-05]