S&P revised Kazakh Bank RBK Outlook to Negative

Kazkommertsbank Says Standard & Poor's Placed Bank's Ratings on CreditWatch "Developing"

The International Rating Agency S&P Global Ratings revised its outlook on Kazakhstan-based Bank RBK JSC to negative from stable, the rating agency said in a message.

‘B-/C’ long- and short-term counterparty credit ratings on the bank were affirmed.
The rating agency also lowered its long-term Kazakhstan national scale rating on Bank RBK JSC to ‘kzB+’ from ‘kzBB-‘.

“The outlook revision and lowering of the national scale rating reflect our concerns that a material reduction in RBK’s liquid assets to the levels only slightly above the regulatory minimum as of Feb. 17 2017, exposes the bank to liquidity pressures or risk of breaching regulatory standards in a case of unplanned fund outflows,” S&P said.

According to the rating agency, the bank’s regulatory coefficient of current liquidity (a liquidity measure with a three-month horizon) was only 0.305x as of Feb. 17, 2017, versus the minimum of 0.300x. Similarly, its liquid assets (cash, cash equivalents, short-term interbank placements, and unledged securities) reduced to 7.7 percent of total assets as of Feb. 17, 2017, from 15 percent as of Dec. 31, 2016.

S&P believes that RBK’s current slim liquidity buffer, being subject to volatility, exposes the bank to risks associated with unplanned fund outflows, which cannot be excluded in Kazakhstan’s challenging operating environment.

The rating agency affirmed its global scale ratings based on its base-case assumption that RBK will continue to meet its moderate planned repayments over the next few months fully and on time. S&P bases this expectation on RBK’s planned attraction of new deposits and/or potential shareholder (the bank’s owner already injected Kazakhstani tenge 9.9 billion [about $31 million] into the bank’s capital in February 2017) or regulator support.

The negative outlook on RBK reflects the view of its weak capitalization and volatile liquidity buffer amid the challenging operating environment in Kazakhstan, which might impair the bank’s creditworthiness over the next 12 months.

S&P could lower the long-term global scale rating on the bank in the next 12 months if RBK is unable to restore and sustain the share of liquid assets above 10 percent of total assets by mid-2017. That might happen if the bank is not able to attract planned funding, fund outflows continue, or it does not receive liquidity support from the owners or the regulator. The rating agency could also lower the rating if the bank does not comply with regulatory liquidity ratios. Substantial deterioration of RBK’s loss absorption capacity, with the expected risk-adjusted capital (RAC) ratio falling below 3 percent, could also prompt a negative rating action.

S&P could revise the outlook to stable over the next 12 months if RBK’s liquidity cushion rebounds to levels comparable with that of peers and if the agency believes that those improvements are sustainable. An upgrade is also possible, if RBK restores and sustains its RAC ratio above 5 percent in the next 12 months, while its asset quality does not deteriorate beyond the system average levels.

JSC “Bank RBK” is a universal Kazakhstan’s banking institution, ranking among the top 10 largest banks in Kazakhstan.

RBK Bank JSC provides commercial and retail banking services in the Republic of Kazakhstan. It operates in three segments: Corporate Banking, Retail Banking, and Investment Activities.

Chief Executive Officer: Chairman of Management Board Marpu Zhakubaeva
Shareholder Common shares Preferred
shares
Total shares
number shareholding number shareholding
F. Lokhudzyaev 568,500 11.37 568,500 10.43
S.A.N-GROUP AGRO LLP 448,960 448,960 8.24
D.Idrisov 484,000 9.68 484,000 8.88
V.Kim 335,000 6.70 335,000 6.15
ASSET MANAGEMENT ADMINISTRATION “FOND-INVEST” LLP 936,000 18.72 936,000 17.17
U.Nurmukhamedov 434,000 8.68 434,000 7.96
B.Ablazimov 354,000 7.08 354,000 6.50
T.Jumaev 495,750 9.92 495,750 9.10
I.Mazhinov 330,000 6.60 330,000 6.06

Financial performance

Indicator As of 10/01/16 As of 07/01/16
Authorized capital 54,500,000.00 th. KZT 54,500,000.00 th. KZT
Equity capital 82,467,423.00 th. KZT 78,119,977.00 th. KZT
Total assets 1,020,897,255.00 th. KZT 920,966,823.00 th. KZT
Net income 3,928,397.00 th. KZT 1,693,756.00 th. KZT
Book value of common share 15,472.00 KZT 14,642.00 KZT
Book value of preferred share 10,000.00 KZT 10,000.00 KZT
ROA 0.38% 0.18%
ROE 4.76% 2.17%
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