In addition, Moody's also affirmed Not Prime short-term issuer ratings in national and foreign currencies.
The issuer's outlook was changed from stable to positive.
Moody's decision to affirm the IDF's long-term rating at 'Ba2' and change the issuer's outlook from stable to positive reflects an increase in its self-assessment at 'b2' driven by improved capital and asset quality, as well as a stable funding and liquidity position. information.
It is noted that the ratings include a three-notch upgrade due to Moody's assumptions of a very high degree of support from its immediate parent company, the Development Bank of Kazakhstan (DBK, "Baa2", "stable").
Moody's clarifies that the upward pressure on the FER's standalone 'b2' valuation reflects current capital and financial support already received and expected from its parent company DBK.
"The PDF's core capital has almost doubled since the end of 2020, and new capital of 100 billion tenge is expected in 2023, which will increase the PDF's core capital by 48%. In addition, the PDF has benefited from a significant increase in parental and other government funding, which accounts for the overwhelming part of the IDF funding base - more than 90% at the end of the 3rd quarter of 2022," the agency explains.
According to Moody's, these capital injections and new government funding demonstrate the increased importance of the IDF in meeting the strategic objectives of DBK and the government of Kazakhstan.
"The FER's large capital base and government funding will allow for a better diversification of the company's franchise, as well as leasing it to larger and more creditworthy corporations. Cheap medium-term and long-term government funding supports profitability and liquidity," the agency said.
In addition, Moody's notes that a larger capital base significantly improved the IDF's ability to absorb losses: NPLs against tangible common shares and provisions for possible losses on loans decreased to 10% at the end of Q3 2022 from more than 14% at the end of 2021 and 21% three years earlier. According to the agency, the situation will improve further after the expected increase in capital.
The ratings could be upgraded if the sole shareholder's capital injection continues, which would significantly improve the company's ability to absorb losses and also signal that asset quality is stabilizing at its current lower level.
A negative rating action could occur in the event of unanticipated losses on the leasing portfolio, which could significantly reduce its capitalization, or in the event of a material weakening of the parent company's ability or willingness to provide support.
Industrial Development Fund JSC is a subsidiary of the Development Bank of Kazakhstan JSC and is part of the Baiterek National Managing Holding JSC.
The Fund is engaged in financing import substitution projects and export-oriented industries in the manufacturing industry and infrastructure, in order to increase competitiveness and develop the industrial potential of the national economy.
Recall that earlier the IDF reported that the hype around preferential car loans is created by journalists, not people.
