S&P Upgrades Kazakhstan Banking Risk Assessment Amid Stronger Supervision
S&P Global Ratings has improved its assessment of Kazakhstan’s banking industry risk, citing stronger regulatory oversight, solid bank capital buffers and the country’s sovereign strength as credit growth and sector profitability moderated in the first seven months of 2026.
In its Sept. 4 assessment, the agency raised Kazakhstan’s Banking Industry Country Risk Assessment (BICRA) industry-risk score to 6 from 7, while leaving the economic-risk score at 7. The starting point used to rate Kazakh banks remained unchanged at BB. Under the BICRA framework, scores range from 1 to 10, with 1 representing the lowest level of risk.
S&P said the revision reflects a series of measures introduced by Kazakhstan’s financial regulator to strengthen supervision in recent years. These include regular systemwide asset-quality reviews, the implementation of the Supervisory Review and Evaluation Process (SREP), and measures aimed at limiting banks’ risk appetite, particularly in the rapidly expanding retail lending segment.
The agency also raised Bank CenterCredit’s long-term issuer credit rating to BB+ from BB. Positive outlooks were assigned to Halyk Bank, Nurbank, Freedom Holding Corp. and four of its core subsidiaries. S&P also raised national-scale ratings for Nurbank, Freedom Finance and Freedom Bank Kazakhstan.
According to S&P, stronger regulatory oversight and adequate capital buffers should help Kazakhstan’s banks withstand periods of heightened uncertainty, including risks related to geopolitical developments and their potential impact on commodity prices, supply chains, economic activity and credit conditions.
The agency revised the trend for Kazakhstan’s economic-risk assessment to positive while maintaining the score at 7. S&P said the assessment could improve if inflationary pressures ease and the quality of banks’ assets strengthens.
A further improvement would require evidence that economic imbalances, particularly elevated inflation, are placing less pressure on banks and nonbank financial institutions. Stronger asset-quality indicators would also be necessary, as S&P considers asset quality one of the key weaknesses of Kazakhstan’s banking sector.
The agency expects banks to benefit from continued disinflation and a gradual reduction in interest rates. Annual inflation fell from 10.2% in July to 9.8% in August, while the National Bank has reduced the base rate by a cumulative 1.25 percentage points since the beginning of 2026.
S&P forecasts inflation to decline to 7-9% in 2027 and 2028. Slower price growth could increase households’ disposable income and improve borrowers’ ability to service their loans, helping reduce credit risks for banks.
At the same time, S&P expects the tenge to weaken gradually during the second half of 2026, particularly if the National Bank continues to lower interest rates. The agency highlighted closer coordination between monetary, fiscal and macroprudential policies as an important factor supporting financial stability.
Photo credit: the Agency for Regulation and Development of the Financial Market.
