National scale deposit ratings were upgraded
London, 05 November 2020 -- Moody's Investors Service ("Moody's") has today
affirmed Kaspi Bank JSC's (Kaspi Bank) global scale ratings and assessments:
long-term local and foreign currency deposit ratings of Ba2,
Baseline Credit Assessment (BCA) and Adjusted BCA of b1, long-term
local currency senior unsecured Medium Term Notes (MTN) program rating
of (P)B1, long-term local currency subordinate debt rating
of B2 and subordinate MTN program rating of (P)B2, long-term
Counterparty Risk (CR) Assessment of Ba2(cr) and long-term Counterparty
Risk Ratings (CRRs) of Ba2. Also affirmed were Kaspi Bank's short-term
deposit ratings and CRRs of Not Prime and its short-term CR Assessment
of Not Prime(cr). The outlook on the global scale long-term
deposit ratings and the overall issuer outlook were changed to positive
from stable.
In addition, Moody's Investors Service has upgraded Kaspi Bank's
national scale long-term deposit rating to A1.kz from A2.kz
and affirmed its national scale long-term CRR of A1.kz.
The positive outlook on Kaspi Bank's long-term global scale
deposit ratings reflects the bank's growing market share and importance
to Kazakhstan's financial system, its strong financial profile
and improving business diversification, all of these combined with
a positive outlook on the sovereign rating. The positive outlook
on the global scale long-term deposit ratings led Moody's
to map it to a higher national scale equivalent in the range, which
resulted in an upgrade of Kaspi Bank's national scale deposit rating.
Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL435505
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and identifies each affected issuer.
RATINGS RATIONALE
Moody's affirmation of Kaspi Bank's BCA and global scale deposit
ratings reflects the strength of the bank's financial profile,
despite the adverse operating environment in 2020, when Kazakhstan's
economy was hit by the coronavirus pandemic and the oil price plunge.
In the first six months of 2020, the bank's profitability
remained strong, its capital and liquidity buffers increased.
During the second quarter of 2020, approximately KZT610 billion
of loans, or 45% of gross loans, participated in Kaspi
Bank's three-months payment holidays program. Given
that 94% of borrowers, whose payments were deferred,
have resumed their monthly payments after the holidays [1] and that
loan book growth accelerated in the second half of 2020, Kaspi Bank's
management expects that in 2020 the bank's NPL ratio will not exceed
the level reported as of year-end 2019. Despite the remaining
downside risks to the bank's asset quality, given the ongoing
coronavirus pandemic and yet uncertain pace of economic recovery in Kazakhstan,
the rating agency estimates that the bank's pre-provision
income will be more than sufficient to absorb its credit losses in 2020
and 2021.
While maintaining solid financial fundamentals, Kaspi Bank continued
to grow its market share and to improve its business diversification.
Moody's estimates that the share of payment services in Kaspi Bank's
profits has recently exceeded 20%. These considerations
led Moody's to change Kaspi Bank's outlook to positive from
stable and to upgrade its national scale deposit rating.
HIGH GOVERNMENT SUPPORT
The bank's Ba2 deposit ratings are based on its BCA of b1 and a high probability
of support from the Government of Kazakhstan (Baa3 positive) for the bank's
deposit holders, which results in two notches of uplift from the
bank's BCA. As of 1 October 2020, Kaspi Bank's systemic importance
to Kazakhstan's banking system was supported by its 18.1%
market share in retail deposits and 8.5% in total banking
system assets [2]. Moreover, the share of Kaspi.kz
payments platform in total cashless and digital transactions in Kazakhstan
reached 65% in 2019, based on the National Bank of Kazakhstan's
data, which indicates its high importance to the broader financial
system [3].
POSITIVE OUTLOOK
The outlook on Kaspi Bank's long-term deposit ratings is
positive, which reflects a high likelihood of an upgrade of Kaspi
Bank's ratings in the next 12-18 months, given the
combination of a positive outlook on the sovereign rating, the bank's
strong financial profile, its improving business diversification
and growing market share.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Kaspi Bank's BCA could be upgraded, if in the next 12-18
months the bank sustains its high market share, strong profitability
and solid capital adequacy, while continuing to improve its business
diversification. A higher BCA could translate into an upgrade of
the bank's deposit ratings, if its market share increases
further, or if the sovereign debt rating is upgraded. A downgrade
of the ratings is unlikely in the next 12-18 months, given
the positive outlook. However, the outlook could be changed
to stable, if Kaspi Bank's asset quality, capitalization
and profitability deteriorate significantly beyond Moody's expectations,
or if the sovereign outlook is stabilized.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology
published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn"
country modifier signifying the relevant country, as in ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be inferred from
the GSR to which it maps back at that particular point in time.
For information on the historical default rates associated with different
global scale rating categories over different investment horizons,
please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1216309.
REGULATORY DISCLOSURES
The List of Affected Credit Ratings announced here are a mix of solicited
and unsolicited credit ratings. Additionally, the List of
Affected Credit Ratings includes additional disclosures that vary with
regard to some of the ratings. Please click on this link https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL435505
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
• Endorsement
• Rating Solicitation
• Issuer Participation
• Participation: Access to Management
• Participation: Access to Internal Documents
• Disclosure to Rated Entity
• Lead Analyst
• Releasing Office
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
REFERENCES/CITATIONS
[1] According to the unaudited IFRS report of Kaspi.kz,
the main shareholder of Kaspi Bank, for the six months ended 30
June 2020
[2] According to the monthly filings on the National Bank of Kazakhstan's
website
[3] According to the IPO prospectus of Kaspi.kz, the
main shareholder of Kaspi Bank
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Svetlana Pavlova, CFA
Asst Vice President - Analyst
Financial Institutions Group
Moody's Interfax Rating Agency
7th floor, Four Winds Plaza
21 1st Tverskaya-Yamskaya St.
Moscow 125047
Russia
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Nicholas Hill
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
