S&P downgrades Halyk Savings

Standard & Poor’s said it lowered the long-term counterparty credit rating on Halyk Savings Bank of Kazakhstan to BB from BB+ and affirmed its short-term counterparty credit rating at B.

The agency also said it also lowered the Kazakhstan national scale rating on Halyk Bank to kzA+ from kzAA-.

The outlook is stable.

The Kazakhstan government’s ability to provide extraordinary support to systemically important private sector banks has gradually weakened over the past 18 months, S&P said.

This limits assumed support of the bank in times of need, the agency said.

S&P also said it expects GDP growth in Kazakhstan to stagnate or to contract modestly in 2016 due to the economy’s high dependence on the oil sector.

Weaker exports, flat oil production, de-valuation of the Kazakhstani tenge, high inflation and weak consumer lending have negatively impacted the country’s economy, the agency said.

Halyk Bank is considered to be of high systemic importance in Kazakhstan as the second-largest bank by assets and corporate deposits with a market share of more than 20% in retail deposits, S&P said.

This means that a failure of Halyk Bank would likely have a highly adverse impact on Kazakhstan’s financial system and the real economy, the agency added.

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