Business Information Center Kapital
In 2013-2014, Nurbank significantly reduced the volume of non-performing loans, and it is expected that in 2015 the volume of the bank's problematic debts will still be less than 15%.
However, profitability indicators remain low and insufficient for capital generation from internal resources, leading to a gradual reduction in the bank's capital base.
Thus, Standard & Poor's agency confirmed Nurbank's credit ratings at 'B/B' and 'kzBB+'.
The confirmation of Nurbank's ratings reflects two opposing trends: the continued deterioration of the bank's previously 'strong' capitalization metrics, as the profitability level is insufficient to ensure the ability to generate capital from internal resources in line with the growth rate of assets, effective work with problem assets and reduced exposure to risks related to lending to the construction and real estate sectors, which has led to an improved risk profile.
Nurbank operates in an environment of deteriorating economic growth prospects in Kazakhstan and the risk of further tenge devaluation in 2015, which may reduce asset and funding quality for Kazakh banks.
Overall, capitalization indicators and risk position remain negative rating factors for Nurbank. The agency re-evaluated capitalization and profitability metrics from 'strong' to 'adequate' and the risk position rating from 'weak' to 'moderate' as per the criteria definitions.
The 'Stable' outlook reflects expectations that Nurbank will continue to increase its business volume and gradually reduce the volume of problematic loans while maintaining 'adequate' capitalization and 'adequate' liquidity indicators.
Negative rating action is possible if the positive trend in the volume of non-performing loans reverses, specifically if the proportion of problem assets in the loan portfolio formed after 2011 becomes more significant than those of comparable banks. The agency may take negative rating actions in the event of further weakening of Nurbank's ability to absorb losses due to aggressive balance sheet growth or reserve formation costs exceeding the forecast, as well as other one-off events leading to a reduction in the forecasted RAC ratio to below 7%.
Positive rating action within 12-18 months is unlikely, given the weakening economic growth prospects in 2015 and volatility of the national currency, which will not contribute to the financial performance improvement of Nurbank.