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Banks (Finance)

Moody's Affirms Eurasian Bank's Ratings Amid Asset Quality Concerns

Strategic Insights

— 1 min read

Moody's Investors Service has affirmed Eurasian Bank's long-term local and foreign currency bank deposit ratings at Ba2, reflecting the bank's strong capital and liquidity buffers, solid profitability, and low reliance on market funding. However, the rating outlook has been changed to negative from stable, driven by concerns over asset quality deterioration and uncertainty about the bank's evolving business model.

Key Takeaways:

  • Moody's has affirmed Eurasian Bank's long-term local and foreign currency bank deposit ratings at Ba2, with a negative outlook.
  • The bank's strong capital and liquidity buffers, solid profitability, and low reliance on market funding have been the primary drivers of the affirmation.
  • However, asset quality has deteriorated, with problem loans increasing to 15.1% as of 2024, and loan loss coverage by reserves declining to 77% from 109% over the same period.
  • The bank has slowed down gross lending growth to 2% for the first half of 2025 and started building reserves to address emerging asset pressures.
  • Eurasian Bank reported a 2.0% annualized return on assets under IFRS and a 20.2% regulatory tier-1 capital ratio, well above the regulatory minimum, in the first half of 2025.
  • The bank's deposits are exposed to currency risk, with 42% of deposits denominated in foreign currency as of 2024, but its funding profile is expected to remain stable over the next 12-18 months.
  • Moody's incorporates a one-notch rating uplift for a moderate probability of support from the Government of Kazakhstan.

Statistics:

  • Problem loans: 15.1% as of 2024 (up from 10.2% a year earlier).
  • Loan loss coverage by reserves: 77% as of 2024 (down from 109% in 2023).
  • Annualized return on assets: 2.0% under IFRS in the first half of 2025.
  • Regulatory tier-1 capital ratio: 20.2% in the first half of 2025 (well above the regulatory minimum).
  • Liquid assets: 46% of tangible assets as of mid-2025.
  • Market funds: 10% of tangible assets as of mid-2025.
  • Deposits denominated in foreign currency: 42% as of 2024.

Sources:

  • Moody's Ratings (Moody's) has today affirmed Eurasian Bank's long-term local and foreign currency bank deposit ratings at Ba2. The news release is available at the Moody's website.
  • [Source reference: Moody's Investors Service, dated no specific date]

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