Fitch Affirms Kazakhstan’s Kazkommertsbank at 'BB+'; Positive Outlook
Fitch Ratings-London/Moscow-19 February 2007: Fitch Ratings has today affirmed Kazakhstan-based Kazkommertsbank’s ("KKB") ratings at foreign currency Issuer Default 'BB+', Short-term foreign currency 'B', local currency Issuer Default 'BBB-' (BBB minus), Short-term local currency 'F3', Individual 'C/D' and Support '3'. The Outlook on the foreign currency Issuer Default rating ("IDR") remains Positive and that on the local currency IDR Stable.
The Issuer Default, Short-term and Support ratings reflect the moderate probability of support being forthcoming, in case of need, from the Kazakhstani authorities. This is based on the bank’s substantial domestic franchise, and takes into account the authorities’ ability to provide support, as reflected in the sovereign IDRs of foreign currency ‘BBB’ and local currency ‘BBB+’. The Positive Outlook on KKB’s foreign currency IDR reflects that on the sovereign foreign currency IDR. The Stable Outlook on the local currency IDR reflects the fact that, given Fitch’s current view of the authorities’ propensity to support the country’s largest banks, the support floor for the bank’s IDRs is not expected to go higher than ‘BBB-’ (BBB minus), even should the sovereign be upgraded.
The Individual rating reflects the risks inherent in the bank’s rapid loan growth, which was particularly strong in Q406 following the receipt of new capital. It also reflects KKB’s high construction sector and individual borrower concentrations and potential structural risks stemming from the high reliance on external funding. However, the rating also considers KKB’s strong franchise, long track record of sound performance, reasonable asset quality to date and satisfactory liquidity and capitalisation.
A reduction in loan concentrations and a moderation of growth rates would be positive for KKB’s stand-alone credit strength, while higher loan impairment or further margin pressure would be negatives. That said, Fitch views any changes in the Individual rating as unlikely in the near term.
