S&P affirms ratings of leading banks in Kazakhstan

S&P has affirmed ratings of six Kazakhstani banks / Shutterstock

Standard & Poor’s has confirmed credit ratings for Halyk Bank, Kaspi Bank, Bank CenterCredit, ForteBank, Nurbank and Freedom Bank with a stable outlook, according to the Agency on Regulation and Development of the Financial Market in Kazakhstan (ARDFM).

The credit rating agency also affirmed the rating of OnlineKazFinance, a micro financial organization.

«According to S&P data, in 2022, the country’s banking system was stable and demonstrated a professional approach to the management of assets’ quality during economic cycles,» the regulator said.

The agency noted that currently, Kazakhstani banks spend less money on reserves for possible losses than they had in 2015-2020. S&P said it is unlikely that the banks’ assets will deteriorate in quality soon, although the country’s banking sector is still in the process of recovering from a long period of correction.

«The sector is quickly rebounding thanks to high commodity prices that stimulate demand for loans and significantly improve the quality of assets. High margins and the ability to generate profit have also helped banks to improve their position. It protects them from risks even amidst volatile and uncertain external environment,» the ARDFM said in a statement.

In 2022, the country’s banks increased their revenues by 14% to $3.2 billion compared to 2021. In 2023, it is expected that the revenue of all Kazakhstani banks combined will stay at the 2022 level while the net percentage margin will increase by 5%, the financial control agency reported.

Kazakhstan’s banking system includes 21 commercial banks and the National Bank. As of February 1, 2023, Halyk Bank was ranked first in terms of assets, followed by Kaspi (2nd position), CenterCredit (3rd), ForteBank (5th), Freedom Bank (11th) and Nurbank (15th).

On March 7, S&P affirmed the short-term rating of Freedom Bank at «B» with a stable outlook. At the same time, the long-term credit rating of the bank has been raised from «B-» to «B.» In the next 18 months, Freedom will continue to generate revenue with a reasonable capitalization rate for asset purchasing, the agency noted.

S&P has also improved its credit rating outlook on Kazakhstan from negative to stable. If the country succeeds in improving its budget policy and reducing the debt burden and costs associated with public debt serving, the agency may improve the sovereign rating of Kazakhstan further.