Fitch: Kazakhstan banks risk rising

Fitch Ratings said the very aggressive growth strategies of Kazakhstani banks are giving rise to heightened credit and structural risks. In a newly published report, Fitch said the expansion seems likely to remain rapid, at least in the short-term, based on revised forecasts collected from rated banks. Such growth presents an important test of the banks' credit risk management capabilities and any significant deterioration of asset quality could result in negative actions on banks' individual ratings.

The long-term foreign-currency issuer default ratings of the six largest banks remain underpinned by the potential for sovereign support.

Two of the country's largest banks, Kazkommerts and Halyk (both have long-term foreign-currency issuer default ratings of BB+ with positive outlooks), have made public share offerings to support ongoing growth. Alliance Bank (rated long-term foreign-currency issuer default BB- with stable outlook) plans to make an offering of existing shares. The tapping of public equity markets represents a further source of capital flexibility for Kazakhstani banks and is a credit positive, Fitch said.

ATF Bank (rated long-term foreign-currency issuer default BB-/Rating Watch positive) is set to become the first major bank to be acquired by a foreign buyer, following the recent agreement with Italy's Unicredito (rated A+ with positive outlook), and this may serve as a catalyst for other banks to be sold, the agency said.

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