Fitch Ratings has assigned Bank of Astana (BoA) long-term issuer default ratings of 'B' with a stable outlook. This rating reflects BoA's standalone credit profile as indicated by its 'b' viability rating, which is constrained by its small franchise size, high concentration levels, and short track record since 2013. While current asset quality is better than sector averages, the loan book's rapid growth leaves it highly unseasoned. Capitalization is adequate but additional loss absorption capacity is modest. Profitability is reasonable but weakened as funding costs increased. Changes to support ratings are unlikely, but ratings could be upgraded if BoA is acquired by a stronger institution.

1. Fitch Rates Bank of Astana at 'B'; Stable Outlook
Fitch Ratings-Moscow/London-28 October 2015: Fitch Ratings has assigned Bank of Astana JSC
(BoA) Long-term Issuer Default Ratings (IDRs) of 'B' with a Stable Outlook. A full list of rating
actions is at the end of this rating action commentary.
KEY RATING DRIVERS - IDRS, VIABILITY RATING (VR), NATIONAL LONG-TERM
RATING
BoA's Long-term IDRs of 'B' are driven by its standalone credit profile, as reflected in its 'b' VR.
The latter is currently constrained by the bank's small, albeit growing, franchise (below 1% of
sector assets and loans), high concentrations on both sides of the balance sheet, and a short track
record (since 2013) of operations under new shareholders and with the revised SME/retail-focused
strategy.
BoA's current asset quality metrics are somewhat better than sector averages, but its loan book is
highly unseasoned following the recent rapid growth (63% CAGR for 2012-2014). At end-1H15,
NPLs (loans more than 90 days overdue) stood at around 7.3% of gross loans and were 84%
covered by reserves. However, restructured loans (mostly in the agriculture and services sectors)
amounted to a further 7% at the same date.
The corporate loan book is highly concentrated, with the 25 largest exposures comprising around
66% of gross corporate loans (2.3x FCC) at end-4M15. Loans to construction companies accounted
for at least 21% of the gross corporate book, or 0.7x FCC. Fitch considers these to be relatively
risky due to high non-completion risks and, in some instances, rather weak collateral.
Foreign currency loans amounted to 32% of gross loans at end-8M15 and may be subject to
deterioration as a result of recent tenge devaluation, as most borrowers do not have foreign currency
revenues.
BoA's capitalisation is adequate, with a total regulatory capital adequacy ratio of 11.7% at end-
8M15 (capital is almost entirely composed of Tier 1). These figures already take into account the
devaluation-driven boost of risk-weighted assets.
Fitch estimates that at end-8M15 BoA's additional loss absorption capacity was modest at around
5% of gross loans. However, given BoA's moderate growth plans for 2016 and the planned
KZT4.5bn equity injection in December 2015 (around 24% of end-8M15 equity), its capital should
be preserved, at least in the near term.
BoA's profitability is reasonable, with 1.8% ROAA and 12% ROAE in 1H15 (annualised), but
weakened somewhat, as the cost of funding increased (to 5.2% in 1H15 from 2.5% in 2013). BoA's
pre-impairment profit provides solid loss-absorption capacity (around 3% of average gross loans in
1H15, annualised). The bank made a moderate gain on devaluation due to a small long foreign
currency position.
BoA's funding profile is undermined by very high concentrations and low diversification. At end-
4M15, the bank's 20 largest customers provided around 94% of total customer funding or 72% of
liabilities. State companies accounted for at least 58% of the total customer funding or 45% of total
liabilities at that date. At end-8M15, BoA's total available liquidity covered around one-third of its
customer accounts. At the same time, Fitch views the bank's liquidity as only moderate due to high
concentrations in its deposit base.

2. KEY RATING DRIVERS - SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF)
BoA's SRF of 'No Floor' and '5' Support Rating reflect its limited scale of operations and market
share. Thus any extraordinary direct capital support from the Kazakhstani authorities cannot be
relied upon, in Fitch's view. Support from the bank's private shareholders also cannot be relied
upon, in the agency's view.
RATING SENSITIVITIES
IDRS, VR, NATIONAL LONG-TERM RATING
An extended track record of sound performance under new shareholders and successful
implementation of the new strategy would be credit positive. A strengthening of BoA's franchise
while maintaining reasonable asset quality and margin of safety would also be positive for the
bank's ratings. A downgrade could result from a notable deterioration of asset quality, capital
depletion, and/or liquidity squeeze.
SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF)
Changes to the bank's SRF and SR are unlikely in the foreseeable future, although the SR could be
upgraded in case of the acquisition of BoA by a stronger financial institution (not Fitch's base case
expectation at the moment).
The rating actions are as follows:
Long-term foreign and local currency IDRs: assigned at 'B', Outlook Stable
Short-term foreign and local currency IDRs: assigned at 'B'
National Long Term Rating: assigned at 'BB(kaz)', Outlook Stable
Viability Rating: assigned at 'b'
Support Rating: assigned at '5'
Support Rating Floor: assigned at 'No Floor'
Contact:
Primary Analyst
Roman Kornev
Director
+7 495 956 7016
Fitch Ratings CIS Limited
26 Valovaya Street
Moscow 115054
Secondary Analyst
Maria Kuraeva
Analyst
+7 495 956 5575
Committee Chairperson
Olga Ignatieva
Senior Director
+7 495 956 6906

3. Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email:
julia.belskayavontell@fitchratings.com
Additional information is available on www.fitchratings.com
Applicable Criteria
Global Bank Rating Criteria (pub. 20 Mar 2015)
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
Endorsement Policy
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