(The following statement was released by the rating agency)
Oct 22 -
Summary analysis -- Temirbank JSC --------------------------------- 22-Oct-2012
CREDIT RATING: B/Stable/B Country: Kazakhstan
Primary SIC: Commercial banks,
Mult. CUSIP6: 87971S
Credit Rating History:
Local currency Foreign currency
04-Oct-2010 B/B B/B
24-Nov-2009 D/D D/D
31-Mar-2009 CC/C CC/C
26-Mar-2009 C/C C/C
20-Mar-2009 CCC+/C CCC+/C
16-Feb-2009 B/B B/B
Ratings Score Snapshot
Issuer Credit Rating B/Stable/B
Business Position Moderate (-1)
Capital and Earnings Adequate (0)
Risk Position Weak (-2)
Funding and Liquidity Average
and Adequate (0)
GRE Support +1
Group Support 0
Sovereign Support 0
Additional Factors 0
Major Rating Factors
-- A government-related entity that we consider has a "moderate" likelihood of receiving extraordinary government support.
-- Limited single-name lending concentrations due to focus on retail business.
-- Adequate capitalization compared with peers'.
-- Uncertainties regarding further development.
-- Still very high stock of nonperforming loans.
-- Moderate earnings quality, notably due to the difference between interest paid and interest accrued.
Standard & Poor's Ratings Services' stable outlook on Kazakhstan-based Temirbank JSC reflects its view that Kazakhstan's government will continue to provide support to the bank as it cleans its loan book and diversifies its funding base. Given the amount of problem loans the bank has, we expect nonperforming loans to decline only gradually over the next 12 months.
If we perceived that the government's stance toward the bank were no longer consistent with a "moderately" likelihood of support, we would remove the one notch of uplift that we currently factor into the ratings. We could also consider lowering the ratings if we observed further deterioration in asset quality over the next 12 months. This could happen if the quality of newly originated loans were weak, reflecting relaxed underwriting practices. At the same time, a potential merger with weaker Alliance Bank JSC (B-/Stable/C; Kazakhstan national scale 'kzBB-') could worsen the risk profile of the newly formed entity. However, we see this merger as a long-term process and don't currently factor its impact into our ratings and outlook on Temirbank.
We could raise the ratings if Temirbank demonstrated a significant and sustainable improvement in asset quality, with a material reduction in problematic assets in absolute terms, which would improve its risk position. An improvement in capitalization, with the risk-adjusted capital ratio rising higher than 10% could also be positive for the ratings.
Related Criteria And Research
All articles listed below are available on RatingsDirect on the Global Credit Portal, unless otherwise stated.
-- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
-- Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011
-- Bank Capital Methodology And Assumptions, Dec. 6, 2010
-- "here 6348503&rev_id=4&sid=920988&sind=A&", Dec. 9, 2010
-- Banking Industry Country Risk Assessment: Kazakhstan, May 15, 2012