S&P assigned Kaspi Bank (Kazakhstan) Ratings, Outlook - "Stable"

/Standard & Poor's, Frankfurt, December 5, 12, Standard & Poor's English translation, KASE headline / - Standard & Poor's Ratings Services said today that it had assigned its 'BB-' long-term and 'B' short-term counterparty credit ratings to Kazakhstan-based Kaspi Bank JSC. The outlook is stable. At the same time, we assigned a 'kzA-' Kazakhstan national scale rating to the bank. The ratings reflect the 'bb-' anchor for a bank operating primarily in Kazakhstan, as well as Kaspi Bank's "adequate" business position, "moderate" capital and earnings, "moderate" risk position, "average" funding, and "adequate" liquidity, as our criteria define these terms. The stand-alone credit profile (SACP) is 'b+'. The long-term counterparty credit rating (issuer credit rating; ICR) factors in one notch of uplift above the SACP to reflect the bank's "moderate" systemic importance in Kazakhstan, reflecting the large size of its retail operations. We assess Kazakhstan's government as "supportive" and we consider that there is a "moderate" likelihood that Kaspi Bank would receive extraordinary support from the government if needed. The stable outlook reflects Standard & Poor's view that Kaspi Bank will continue its focused growth without changing its risk appetite. We anticipate that the bank's capitalization and liquidity will stay at the current levels, profitability will further improve, and asset quality will deteriorate only modestly, while its loan portfolio grows over the next 12-24 months. We could lower the ratings if, contrary to our expectations, the bank's capitalization weakened, with our projected RAC ratio before adjustments for diversification falling to less than 5% because of higher-than-expected loan expansion or poor earnings generation capacity. We may also consider a negative rating action if the bank departs from its focused growth strategy, resulting in a material deterioration of asset quality or increasing loan concentrations. At this stage, we consider ratings upside to be limited. We would consider a positive rating action if we were to notice a significant strengthening of the bank's capitalization, mainly due to shareholder capital injections, resulting in a RAC ratio before adjustments of more than 10%, which is not our base-case scenario, though. Improvement of asset quality measures, notably capacity to stabilize growth in NPLs in absolute terms, would benefit the ratings, but we believe this is unlikely in the context of high loan growth and the given riskiness of consumer finance lending. Primary Credit Analyst: Annette Ess, Frankfurt, (49) 69-33-999-157; annette_ess@standardandpoors.com Secondary Contact: Maria Malyukova, Moscow, (7) 495-783-4135; maria_malyukova@standardandpoors.com [2012-12-05]