Moody's Investors Service assigns to Alliance Bank OJSC (Kazakhstan) credit ratings E+/Ba3/NP, "stable" outlook

29.09.03, 00:00
/IRBIS, September 29, 03/ - Moody's Investors Service informed on September 29 of 2003 about assigning of the first credit ratings to Alliance Bank OJSC (Almaty). The bank has been assigned long-term "Ba3" on senior unsecured debt in foreign currency with stable outlook and financial strength rating (FSR) "E+". The bank's ability to suit short-term bank deposits in foreign currency has been estimated by the agency on the level of NP (Not Prime). Following is the original message of Moody's Investors Service. MOODY'S ASSIGNS TO ALLIANCE BANK (KAZAKHSTAN) E+/Ba3/NP FIRST- TIME RATINGS Limassol, September 29, 2003 - Moody's Investors Service has assigned to Alliance Bank (Alliance), Kazakhstan, an E+ Financial Strength Rating (FSR), and ratings of Ba3/Not Prime for long- and short-term foreign currency deposits. All ratings carry stable outlooks. According to Moody's, the Ba3/NP foreign currency deposit ratings incorporate potential support from the Kazakhstani authorities, should the need arise, reflecting Alliance's growing importance to Kazakhstan's banking system. As at June 2003, Alliance was the country's tenth-largest bank by assets, the seventh- largest by customer loans, and the tenth-largest in terms of customer deposits. However, Moody's cautions that any outside support from the authorities in case of distress may be of a limited nature, and its volume and timeliness rather uncertain. This prevents the rating agency from placing the long-term foreign currency deposit rating at the Ba1 country ceiling for such deposits. Alliance's E+ FSR incorporates the bank's aggressive development strategy with a clear customer orientation; however, as a relative newcomer to the market Alliance faces strong competition in all business segments. In addition, the expansion strategy results in rising operating costs, which pressured profitability in 2002. However, interim 2003 results indicate that the bank's earnings generating capacity has been gradually improving. The bank's liquidity remains ample although it has been gradually declining, notes Moody's. The FSR is supported by reducing customer concentrations on both sides of the balance sheet, adequate -- although gradually weakening -- capitalisation and provision coverage, as well as prevailing high asset quality despite rapid growth in lending in the recent past. Moody's welcomes Alliance's initiatives to expand its retail banking; the rating agency believes that retail banking in Kazakhstan remains underdeveloped, offers interesting business opportunities and may contribute to a further diversification of the bank's credit portfolio while strengthening the bank's franchise, if successfully implemented. Moody's is concerned that dynamic growth in lending activities represents a challenge for credit-risk management and requires regular monitoring of the exposures. Despite this the bank has managed to defend a relatively high asset quality. Alliance Bank is headquartered in Almaty, Kazakhstan and reported total IAS assets of KZT33.7 billion (US$227.6 million) as of 30 June 2003. Limassol Jiri Kasek Analyst Financial Institutions Group Moody's Interbank Credit Service Ltd. 357-25-586586 Limassol Elisabeth Jackson-Moore Managing Director Financial Institutions Group Moody's Interbank Credit Service Ltd. 357-25-586586 [2003-09-29]