Moody’s downgrades Kaspi Bank

Moody’s Investors Service said it downgraded Kaspi Bank’s senior unsecured local- and foreign-currency debt ratings to B2 from B1 and downgraded the bank’s baseline credit assessment to B2 from B1.

Moody also downgraded the bank’s subordinated local-currency debt rating to B3 from B2 and the national scale rating to Ba3.kz from Ba2.kz.

The outlook on the bank’s long-term global scale senior unsecured ratings remains negative, while the outlook on the long-term global scale deposit ratings was changed to negative from stable.

The downgrade reflects the bank’s weakening asset quality, substantial decline in loan loss reserve coverage and the deteriorating operating environment in Kazakhstan, where 100% of the bank’s operations are concentrated, Moody’s said.

Although Kaspi Bank’s capital adequacy and profitability remained healthy in recent years, the coverage of overdue loans by loan loss reserves declined significantly in 2012 to 2014, the agency said.

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