OREANDA-NEWS. April 16, 2015. Fitch Ratings has affirmed the Long-term Issuer Default Ratings (IDRs) of JSC SB Alfa Bank Kazakhstan (ABK) at 'B+' and AsiaCredit Bank JSC (ACB) at 'B'. The Outlooks are Stable.

A full list of rating actions is available at the end of this commentary. KEY RATING DRIVERS - IDRs, VRs, NATIONAL AND DEBT RATINGS The banks' IDRs and National Ratings are based on the banks' individual strength, which in turn is reflected in their Viability Ratings (VRs). The VRs reflect the banks' small, albeit growing, franchises, relatively moderate loss absorption capacity (tighter at ACB) in light of fast recent growth and seasoning loan book, and high concentrations on both sides of the balance sheet.

The VRs also take into account the banks' reasonable liquidity positions, strong profitability (ABK), and track record of equity injections provided by the shareholder and the agency's expectation that these will continue (ACB). Seasoning of the loan book has resulted in an increase in non-performing loans (NPLs, 90 days overdue) at ABK to 5.2% at end-9M14 (1.2% at end-2013) and at ACB to 9.7% at end-2014 (2013: 4.1%). ABK also had about 6% of restructured loans compared with only 0.6% at ACB. However, ACB has weaker coverage, with unreserved NPLs amounting to 39% of its Fitch core capital (FCC) at end-2014, while ABK's NPLs were 1.2x covered by reserves. The increase in ACB's NPLs was mainly driven by two large defaults (together KZT5bn or 5% of gross end-2014 loans). In Fitch's view, both exposures may require additional provisioning given the low current level of reserves of 3% and 18%, respectively, at end-2014.