NUR-SULTAN

S&P Global revised the outlook for Kazakhstan’s Kaspi Bank, a core component of Kaspi.kz’s Fintech Platform, to Positive, citing strong asset quality, solid operating performance and shift towards BNPL (Buy Now Pay Later system) and merchant financing.

The rating agency has reaffirmed its BB-/B rating and ‘kzA’ Kazakhstan national scale rating on Kaspi Bank.

S&P said that the bank’s operating performance remained strong in 2020 and in the first quarter of 2021.

“Return on average equity exceeded 70 percent over this period and we expect returns to stay at least at this level over the next two years,” S&P said in a statement.

Despite the COVID-19 pandemic, the group’s cost-of-risk reduced to a five-year low of 1.7 percent, and the bank demonstrated much lower credit losses compared with domestic peers as well as retail monoline banks in Russia.

“We think asset quality is likely to be supported by the bank’s ongoing shift towards BNPL loans and merchant financing,” the agency said.

It added that the ongoing changes in the lending mix go together with the improvement of underwriting and
collection processes, which might further support sustainably lower credit losses.

Kaspi.kz is the largest payments, marketplace and fintech ecosystem in Kazakhstan, with a leading market share in each of its key services and products. It has been listed on the London Stock Exchange since 2020.

In April, Fitch Ratings revised Kazakhstan’s banking sector outlook to stable from negative and said that the resilience of the Kazakh banking sector to the challenges of a cyclical operating environment had improved.

The improvement stems from Kazakh banks’ strong pre-impairment profitability, robust asset structure, and large capital and liquidity buffers, the agency said.

Fitch added that it had expected a moderate increase in loan impairments in 2021, but sector pre-impairment profit should be sufficient to cover higher provisioning charges and allow most Kazakh banks to post solid bottom-line results, largely in line with pre-pandemic years.