OREANDA-NEWS. October 07, 2010. Standard & Poor's Ratings Services said today that it has raised its long-term counterparty credit ratings on Kazakhstan-based Temirbank JSC to 'B' from 'D' and its short-term counterparty credit ratings to 'B' from 'D'. The outlook is stable. At the same time, we raised the Kazakhstan national scale rating to 'kzBB' from 'kzD', reported the press-centre of KASE.

"The upgrade factors in one notch of uplift above the bank's stand-alone credit profile due to, our opinion of, the moderate probability of potential government extraordinary support if required," said Standard & Poor's credit analyst Ekaterina Trofimova.

It also reflects the improvement of the bank's stand-alone credit profile resulting from the restructuring of its wholesale debt and the recent capital injection. Weak asset quality and poor earnings remain the key weaknesses for the ratings.

Temir is the 13th-largest Kazakh bank, with total assets of USD1.57 billion on June 30, 2010, a market share of 3.4% in loans and 1% in deposits.

"The stable outlook reflects our expectation that the Kazakh government will continue to provide ongoing liquidity support as the bank cleans it loan book and diversify its funding base. Our baseline scenario is that bad loans peaked in the second quarter of 2010, with some potential for recoveries," said Ms. Trofimova.

We may lower the ratings if we perceive that the Kazakh government's stance toward the bank is no longer consistent with a "moderate" likelihood of support, or if Temir's weak earnings and poor asset quality start to weaken the currently adequate levels of capital. We would also consider a downgrade if the bank increases or changes its debt profile and refinancing risks increase again.

Although unlikely in the near term, we may raise the ratings if the bank's asset quality and earnings recover to levels more comparable with peers with higher ratings and the bank maintains its current liquidity profile, or if our expectation of the government support increases.