Moody's: Risks for Kazakhstan banks

The outlook for Kazakhstan's rated banks is stable to negative, reflecting their increased refinancing risks and possible deterioration in asset quality, but also their improved profitability and reasonable capitalization to date, Moody's said.

Kazakhstan's banks have experienced very rapid asset growth over the past three years, supported by mounting wholesale international borrowings, which accounted for more than half of total funding at the end of the first half of 2007, the agency said.

This level of dependence on market funding poses a significant refinancing risk for both individual banks and the banking system as a whole, Moody's said. As proven by the current liquidity crunch, the Kazakh banks are highly vulnerable to a decline in international investor sentiment, the agency added.

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