Ratings of Halyk savings bank of Kazakhstan have been upgraded to "B+/B"; "Stable" forecast
15.08.03 00:00
/Standard & Poor's, Moscow, August 15, 03 / - Standard & Poor's Ratings
Services said today it raised its long- and short-term counterparty credit and
certificate of deposit ratings on Kazakhstan-based Halyk Savings Bank of
Kazakhstan (Halyk) to 'B+/B' from 'B/C'. The outlook is stable.
"The rating action reflects the improved, although still high risk, economic
environment in Kazakhstan, the bank's strengthened financial and business
profile following privatization, its dominant position in retail banking, ample
liquidity from customer deposits, and its systemic importance as the former
savings bank," said Standard & Poor's credit analyst Magar Kouyoumdjian.
Halyk is the third-largest bank in Kazakhstan with assets of Kazakhstan
tenge (KZT) 194.4 billion ($1.25 billion, at KZT155.05 to $1) at year-end
2002. The bank's asset quality has improved considerably following its
privatization, with the writing off of inherited problematic loans and the
granting of better quality new loans. The bank grew its loan portfolio more
than 58.2% during 2002, both through direct lending and programs targeted
at small and midsize enterprises (SMEs) from the European Bank for
Reconstruction & Development (EBRD; AAA/Stable/A-1+).
At year-end 2002, nonaccrual loans accounted for only 0.5% of gross loans.
Standard & Poor's remains cautious, however, about the sustainability of the
positive trend, due to the rather concentrated portfolio, risky economic
environment, and still-high proportion of U.S. dollar-denominated (or
indexed) loans in its loan portfolio. Despite evidence indicating that the
bank's situation is improving as the economic climate also improves,
provisions remain heavy to clean up problematic loans from the past.
Provisioning costs were inflated in 2002, however, due to the prudent
allocation of extraordinary revenues to provisions.
Following its privatization and the appointment of a new management team,
Halyk quickly began its transformation into a leaner, more competitive, and
profit-oriented organization. Halyk will retain its dominant position in the
retail market despite losing market share to competition and certain benefits
related to its former ties to the government.
"The potential for a higher credit rating depends on Halyk maintaining good
asset quality, further cost optimization, and developing profitable core
revenues," said Mr. Kouyoumdjian. "Higher ratings also hinge on stronger
capitalization and improvements in the still risky economic and financial
environment in Kazakhstan," he added.
For detailed information apply:
Magar Kouyoumdjian, London, 44 (207) 847-72-17
Denis Deripasko, London, 44 (207) 847-72-06
Analysts e-mail addresses:
magar_kouyoumdjian@standardandpoors.com
denis_deripasko@standardandpoors.com
FIG_Europe@standardandpoors.com
[2003-08-15]