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S&P Global Ratings revises outlook on Halyk Bank, citing asset quality

S&P Global Ratings on July 8 revised the outlook onJSC Halyk Savings Bank ofKazakhstan to negative from stable and affirmed the bank's long-and short-term counterparty credit ratings at BB/B.

The agency also lowered the bank's Kazakhstan national scalerating to "kzA" from "kzA+", reflecting Halyk Bank'sinability to substantially clean up its legacy problem loan portfolio, whichwas generated before 2008. S&P Global Ratings previously expected the bankto achieve better results than the sector average in problem asset recovery.

Halyk Bank's nonperforming loan ratio was 11.7% undernational accounting standards as of June 1, compared to 9.2% as of 2015-end andagainst a system average of 8.2% as of June 1. The bank's NPL ratio under IFRSamounted to 12.9% as of March 31, up from 10.3% at the end of 2015.

S&P Global Ratings expects Halyk Bank's asset quality todeteriorate further over the next 12 to 18 months, in line with trends in theKazakh banking system, owing to sharply reduced economic growth prospects andthe substantial devaluation of the Kazakh tenge in 2015. The negative outlookon the lender indicates the possibility of a downgrade if pressure on its assetquality and profitability increases over the period.

S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.