Standard & Poor’s Ratings Services has revised its outlook on Kazakhstan-based Halyk Savings Bank of Kazakhstan to positive from stable and affirmed its ‘B+/B’ long and short-term counterparty credit and certificate of deposit ratings on the bank.
“The rating action reflects the bank’s consistent progress in strengthening its financial and business profile since its privatisation in 2002,” says Standard & Poor’s credit analyst Magar Kouyoumdjian. The bank has also improved its efficiency and core revenue generation, and has introduced customer segmentation.
The ratings reflect the still high risk economic environment in Kazakhstan, fast loan growth, and just-adequate capitalisation. The ratings are supported by the bank’s dominant position in retail banking, ample liquidity from customer deposits, and its systemic importance as the former state savings bank.
Halyk’s asset quality has improved considerably following its privatisation, with the writing off of inherited problematic loans and the granting of better quality new loans, which has also reduced loan concentrations.
Following its privatisation and the appointment of a new management team, Halyk is rapidly transforming into a leaner, more competitive, and profit-oriented organisation.
This is demonstrated by the strong financial results in 2003.
“Standard & Poor’s considers that Halyk will retain its dominant position in the retail market despite losing some market share to competition and certain benefits related to its former ties to the government,” says Kouyoumdjian. The potential for a higher credit rating depends on Halyk maintaining good asset quality, achieving further cost optimisation, and sustaining profitable core revenues. A ratings upgrade is also dependent on stronger capitalisation and improvements in the still-risky economic and financial environment in Kazakhstan.