Tuesday, July 1, 2008

S&P: quality of assets determines ratings for Kazakh banks.

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S&P: quality of assets determines ratings for Kazakh banks. S&P considers that declining assets quality is a critical problem for the Kazakh banking sector. The agency said that “the true problem loans largely exceed reported nonperforming loans”. S&P estimates loans under stress at 15-20% for the sector which is 2-4% higher by far average NPL ratios reported by the banks. S&P also considers that the banks entered a new phase as the market turbulence lingers and the asset quality is becoming a determining factor for the banks ratings. The agency warns that if it sees “no sign of a recovery or at least stabilization in asset quality at banks, and of an improvement in their ability to absorb losses, recognize credit losses, and raise the capital they need, we could downgrade some of them in the coming couple of quarters”. Still, S&P believes that “the loss-absorption capacity and creditworthiness of most banks would benefit from higher provisions and increased capital”.

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S&P: quality of assets determines ratings for Kazakh banks.

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