Fitch affirms ratings of ATFBank, Development Bank of Kazakhstan and KazAgroFinance, ATFBank ratings outlook revised from “Stable” to “Positive”

December 22. KASE

Fitch affirms ratings of ATFBank, Development Bank of Kazakhstan and KazAgroFinance, ATFBank ratings outlook revised from "Stable" to "Positive"Fitch Ratings has revised ATF Bank’s Outlook to Positive from Stable and affirmed its ratings. The agency has also affirmed the ratings of two other Kazakh banks, Development Bank of Kazakhstan (DBK) and KazAgroFinance (KAF). The rating actions follow Fitch’s recent revision of the Outlooks on Kazakhstan’s ratings to Positive from Stable (see ‘Fitch Revises Kazakhstan’s Outlook to Positive; Affirms ‘BBB-‘, dated 20 December 2010 and available at www.fitchratings.com. A summary of rating actions is presented at the end of this commentary.

ATF Bank’s IDRs and Support Rating are driven by potential support from its parent UniCredito Italiano (UCI, rated ‘A’/Negative/’F1’). Given UCI’s ability and propensity to provide support, Fitch believes there is a high probability that support would be forthcoming, if required. However, the Country Ceiling of Kazakhstan, which reflects transfer and convertibility risks, constrains the bank’s Long-term foreign currency IDR as it limits the extent to which support from the foreign shareholder can be factored into the ratings. ATF Bank’s ‘BBB’ Long-term local currency IDRs also take into account Kazakhstan’s country risks. Hence, an upgrade of the sovereign IDR and, consequently the Country Ceiling, could result in ATF Bank’s IDRs being upgraded. ATF Bank was the fifth-largest bank in Kazakhstan as at end-Q310. It is primarily a corporate bank but has developed a reasonable network and retail deposits franchise.

The ratings of DBK were affirmed at their current level, reflecting Fitch’s expectation that the bank’s ratings will likely not change if Kazakhstan’s Long- term IDRs are upgraded to ‘BBB’. This in turn mirrors the agency’s usual practice of notching the ratings of state-owned banks down from their respective sovereigns, particularly at the higher rating levels.

DBK’s ratings continue to be underpinned by Fitch’s view on the probability that it will be supported by the state due its exceptional mandate as a development institution, still relatively moderate size and 100% state control via the Sovereign Wealth Fund Samruk-Kazyna.

KAF’s ratings consider its less prominent policy role and lesser importance for the country’s economy relative to DBK. They also take into account the legacy of defaults of other Kazakh financial companies during 2009. At the same time, the company’s ratings continue to factor in a moderate probability of government support in light of state ownership of KAF, the company’s small size (and hence cost of support) and the government financial assistance which has been made available to date.

DBK was founded to foster the growth of non-extracting industries in Kazakhstan. Its owner, Sovereign Wealth Fund Samruk-Kazyna, is wholly owned by the state. KAF is a non-banking financial institution providing predominantly finance leases to domestic agricultural industry. KAF is a subsidiary company of the state-owned JSC National Holding Kazagro.

The rating actions are as follows:

Development Bank of Kazakhstan

Long-term foreign currency IDR affirmed at ‘BBB-‘, Outlook Stable

Short-term foreign currency IDR affirmed at ‘F3’

Long-term local currency IDR affirmed at ‘BBB’, Outlook Stable

Short-term local currency IDR affirmed at ‘F3’

Support Rating affirmed at ‘2’

Support Rating Floor affirmed at ‘BBB-‘

Senior unsecured debt rating affirmed at ‘BBB-‘

KazAgroFinance

Long-term foreign currency IDR affirmed at ‘BB’, Outlook Stable

Short-term foreign currency IDR affirmed at ‘B’

Long-term local currency IDR affirmed at ‘BB’, Outlook Stable

National Long-term rating affirmed at ‘A(kaz)’

Support Rating affirmed at ‘3’

Support Rating Floor affirmed at ‘BB’

Senior unsecured debt rating affirmed at ‘BB’

ATF Bank

Long-term foreign currency IDR affirmed at ‘BBB’; Outlook revised to Positive

from Stable

Short-term foreign currency IDR affirmed at ‘F3’

Long-term local currency IDR affirmed at ‘BBB’; Outlook revised to Positive from

Stable

Senior unsecured debt affirmed at ‘BBB’

Subordinated debt affirmed at ‘BBB-‘

Support Rating affirmed at ‘2’

Individual Rating ‘D/E’ unaffected by the current review

National Long-term rating affirmed at ‘AAA(kaz)’; Outlook Stable

National senior unsecured debt rating affirmed at ‘AAA(kaz)’

National subordinated debt affirmed at ‘AA+(kaz)’

http://www.kase.kz/en

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