Alliance Bank (Kazakhstan) comments on long-term rating downgrade by Fitch Ratings

May 28. KASE

Alliance Bank (Kazakhstan) comments on long-term rating downgrade by Fitch RatingsJSC “Alliance Bank” (Almaty), whose securities are officially listed on Kazakhstan Stock Exchange (KASE), has provided KASE with the following communiqu?:

Hereby Alliance Bank JSC (hereinafter – the Bank) would like to comment on the rating downgrade by Fitch Ratings Ltd. (hereinafter – Fitch) on 24 May 2013 as follows:

The Bank did not provide Fitch with any information on JSC NWF Samruk-Kazyna (hereinafter – SK) support plans. The Bank did not possess any information that SK is very unlikely to inject capital into Alliance prior to any sale  and a new debt restructuring being a real possibility, in view of SK support plans,  if SK has not made significant progress towards a sale by the end-2013 deadline.  The Bank possesses information only with regard to a possible sale of the Bank  by SK to a potential strategic investor and with regard to relevant exercises being  held by SK in this matter.

As of YE 2012 the Bank’s assets expanded by 11.3% to KZT 590 009 mln., net loan portfolio increased by 18.3% to KZT 388 930 mln., and deposits continued to show a steady growth of 14.6% to KZT 337 238 mln. The level of non-performing loans as a percentage of gross loan portfolio decreased from 55% to 49% at YE 2012 in comparison with YE 2011. In 2012 the Bank continued to increase its capital under IFRS, which amounted to KZT 11.1 bn. as of YE 2012. In 2012 and 1Q 2013 the Bank fully met its external liabilities having repaid USD  95.5 mln. under the Eurobonds and having paid USD 24.5 mln. under the Recovery Notes.

The Bank forecasts that its capital adequacy ratios will not be in compliance if new regulatory requirements from NBK come into force in 2013, which has been widely acknowledged since previous rating reviews.