Moody’s changed to stable from positive the outlook on the Ba1 foreign currency deposit ratings of four Kazakh banks: Kazkommertsbank, Bank TuranAlem, Halyk Bank and Bank CenterCredit. This follows an earlier action, which changed Kazakhstan’s FX bank deposit outlook to stable from positive. The agency has growing concerns over the very rapid credit expansion in recent years, which may have negative implications for the banks’ assets quality in the medium term. Moreover, the growth of money supply has been lagging behind loan growth, thus banks became increasingly reliant on foreign borrowing for funding. This assumes significant refinancing risks and increases the banks’ vulnerability to potential mood swings of international investors.

The agency also noted that systemic risk in the Kazakh banking sector has increased. Simultaneously, Moody’s placed under review for possible upgrade the Baa3 foreign currency issuer rating of Kazakh government-related issuer – Development Bank of Kazakhstan. This follows the earlier action of placing the sovereign Baa3 foreign currency bond rating under review for possible upgrade. This reflects solely the impact of the sovereign rating actions as the assessments of DBK’s credit risk; default dependence and government support remain unchanged.