Baku, Fineko/abc.az. Fitch Ratings has published a new special report in which the turnaround in Kazakh banks’ performance and credit profiles is proving challenging, although some limited signs of recovery in the sector are now evident.

The Agency informs that the rating Outlook for most banks in the country is currently Stable, reflecting Fitch’s expectation that any further improvement, or deterioration, in credit profiles is likely to materialise only gradually.

Kazakh banks continue to be negatively affected by persistently high levels of problem loans, driven mainly by a still illiquid real estate market and banks’ only limited steps so far to clean up balance sheets. Uncertainty as to the size of ultimate credit losses and the adequacy of impairment reserves means that some banks’ capital positions may still require further support.

In Fitch’s view, the benign macroeconomic environment and increasing government support for troubled industries could somewhat ease asset quality problems in the banking sector. The creation of a problem assets fund and regulatory changes allowing banks to transfer exposures to subsidiary companies for more active management should also help to facilitate loan work outs. However, progress is likely to be slow in light of the deep-seated nature of asset quality problems and banks’ still predominantly ’wait and see’ approach in respect to most impaired exposures.

Kazakh Banks’ liquidity cushions are generally comfortable, supported by inflows of retail deposits and still high levels of funding from state-owned companies and government agencies. Refinancing risk is moderate as banks have reduced their stock of external debt and do not face significant repayment spikes.

Profitability remains constrained due to competitive pressure on interest margins, the large burden of non-cash generative assets and limited loan growth. However, the quality of revenues has been improving as a result of some banks discontinuing interest accruals on potentially problematic loans, and more active balance sheet management has resulted in banks reporting positive pre-impairment profit on a cash basis.

29.05.2012 09:38