S&P affirms Nurbank ratings; outlook Stable

/Standard & Poor's, Frankfurt, February 26, 15, heading by KASE/ – Standard & Poor's Ratings Services said today that it has affirmed its 'B/B' long- and short-term counterparty credit ratings on Kazakhstan-based Nurbank JSC. The outlook is stable. At the same time, we affirmed our 'kzBB+' Kazakhstan national scale rating on the bank. The affirmation reflects two opposite dynamics affecting Nurbank: - Capital ratios that are continuing to weaken from previously strong levels, as profitability is not robust enough to build up capital internally and to match dynamic asset growth. We expect capitalization to remain at adequate levels in 2015-2016 though; and; - The clean-up of sizable legacy problem assets and reduction of exposure to the risky real estate and construction sectors, which has improved the bank's risk profile. Nurbank is operating in the context of a deterioration of economic prospects in Kazakhstan and risks of further depreciation of the Kazakhstani tenge (KZT) in 2015, which could weaken Kazakh banks' asset quality and funding.Overall, in our view the combined capital and risk positions remain a negative rating factor for Nurbank. We have revised our capital and earnings assessment to "adequate" from "strong", and our assessment of risk position to "moderate" from "weak," as defined in our criteria. The stable outlook on Nurbank balances our expectation that the bank will continue its new business generation and gradual reduction of legacy problem assets while maintaining capitalization and liquidity at adequate levels. A negative rating action would follow if the positive trend in NPLs reverses, especially if we see above-peer growth in NPLs in the loan portfolio generated after 2011. We would also view negatively a further reduction of Nurbank's loss- absorption capacity, due, for instance, to aggressive balance sheet growth, igher provisioning expenses than we curre