ASTANA, Kazakhstan, August 16. Fitch Ratings has affirmed Otbasy Bank House Construction Savings Bank's (Otbasy) Long-Term Local-Currency Issuer Default Rating (IDR) at 'BBB' with a stable outlook, Trend reports.
Otbasy's Long-Term Local-Currency IDR and Government Support Rating (GSR) reflect Fitch's view of a high probability of support from the government of Kazakhstan.
"This captures Otbasy's policy role, strategic state ownership, and limited size relative to sovereign foreign-currency reserves, making the cost of potential support manageable," Fitch noted.
Fitch's assessment of the state's propensity to support the bank is underpinned by Otbasy's mandate to improve housing affordability in Kazakhstan through subsidized mortgage lending. Otbasy was the fourth-largest bank in Kazakhstan at end-2023, accounting for 54 percent of all outstanding mortgages, while its client base comprises over a quarter of Kazakhstan's economically active population. In Fitch's view, this would make the bank's policy role difficult to transfer to another entity.
At the same time, Otbasy does not expect any direct common equity contributions in the medium term. However, the bank has a long history of receiving long-term borrowings from state-related entities at nearly zero interest rates, resulting in fair-value gains and boosting the bank's capitalization. In this regard, Fitch views this as evidence of a strong record of government support.
In addition, Otbasy's National Long-Term Rating of 'AAA(kaz)' reflects Fitch's view that the bank ranks among the strongest credits in Kazakhstan.
Fitch has not assigned a Viability Rating (VR) to the bank, given its focus on policy operations. Fitch also does not assign it a Long-Term Foreign-Currency IDR, as foreign-currency transactions are immaterial for its business.
