S&P upgrades Kazakhstan banking sector risk assessment to Group 6

S&P raises Kazakhstan banking sector risk assessment to Group 6

S&P Global Ratings has lifted its view of Kazakhstan’s banking sector industry risk from Group 7 to Group 6 and changed the outlook on the country’s economic risk from stable to positive, Kazakhstan’s Agency for Regulation and Development of the Financial Market said.

The agency said S&P made the announcement on September 4 as part of its Banking Industry Country Risk Assessment (BICRA). The update comes after earlier improvements to Kazakhstan’s banking sector assessment in 2021, 2023 and 2024.

According to S&P, the higher industry risk assessment reflects steps taken to strengthen oversight of financial institutions. The agency said Kazakhstan’s supervisory framework has become more resilient and has helped maintain financial stability during periods of economic stress. S&P also judged banking regulation and supervision in Kazakhstan to be more effective than in several other countries in the region, including Uzbekistan, Kyrgyzstan, Armenia and Azerbaijan.

Among the measures cited by S&P are regular reviews of banks’ asset quality, the introduction of the Supervisory Review and Evaluation Process (SREP), and tighter limits on excessive risk-taking. The agency specifically highlighted supervision of the retail lending segment amid its rapid expansion. S&P also pointed to stronger ongoing supervision and monitoring, greater reporting transparency, stricter capital and liquidity requirements and regular stress testing. The supervisory framework also includes corporate governance and emerging risks, including cyber resilience and climate-related factors.

“In recent years, the banking sector has demonstrated relative resilience to geopolitical and macroeconomic risks in the region. Overall credit risk in the financial system remains under control,” S&P said.

The shift in the economic risk outlook from stable to positive reflects expectations that risks to Kazakhstan’s financial system will keep declining as macroeconomic conditions stabilize, inflation eases and asset quality indicators improve. The BICRA revision also affected the credit profiles of several financial institutions in Kazakhstan. S&P upgraded Bank CenterCredit’s long-term rating to “BB+” and raised the national-scale ratings of Freedom group subsidiaries to “kzA.”

The outlooks on the long-term ratings of Halyk Bank, currently rated “BBB-,” and Nurbank, rated “B,” were revised to positive. The outlook on Freedom Holding’s international ratings was also changed to positive.