Fitch: Asset quality in Kazakh banks down

Fitch Ratings said in a report that asset quality in the Kazakh banking system has deteriorated significantly since end-Q307, although sector-wide loan impairment is not yet at critical levels.

Reported loan impairment ratios have risen most markedly at Alliance Bank (BB-/negative outlook), followed by Bank Caspian (B+/stable outlook) and Kazkommertsbank (BB+/negative outlook), the agency said.

However, loss absorption capacity for the system as a whole and for these banks in particular, is also significant, reflective of sound profitability and capital ratios that are often well above minimum regulatory levels, Fitch said, adding that it views potential asset quality deterioration as the main near-term risk for Kazakh banks, driven by a gradual seasoning of loan portfolios, slower economic growth, tighter corporate liquidity, falling real estate prices and potential pressure on the Kazakh tenge.

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