Fitch Ratings has upgraded Altyn Bank (Subsidiary Bank of China CITIC Bank Corporation Limited)'s (Altyn) Long-Term Foreign-and Local-Currency Issuer Default Ratings (IDRs) to 'BBB' from 'BBB-'.

Fitch has also upgraded the bank's National Long-Term Rating to 'AAA(kaz)' from 'AA+(kaz)'. The Outlooks are Stable. A full list of rating actions is provided below.

The rating action follows the upgrade of parent China CITIC Bank Corporation Limited's (CNCB) Long-Term IDRs to 'BBB+' from 'BBB' (see Fitch Upgrades China CITIC Bank's Long-Term IDR to 'BBB+'; Outlook Stable on www.fitchratings.com). The bank's 'bb' Viability Rating has been unaffected by this rating action.

Key Rating Drivers

Altyn's IDRs and National Rating are driven by Fitch's assessment of a high probability of support from CNCB, as reflected by the bank's 'bbb' Shareholder Support Rating (SSR). This view reflects CNCB's majority ownership (50.1%), high reputational risks for CNCB in case of the subsidiary's default, and a low cost of potential support for the parent. At end-3Q23, Altyn's share in CNCB's total assets was a low 0.2%.

The one-notch difference between Altyn's and CNCB's Foreign-Currency IDRs captures the subsidiary's only moderate role in the group relative to other foreign subsidiaries, the presence of a large minority shareholder, JSC Halyk Bank (40%; BBB-/Stable) and considerable management independence from the parent. In our view, the bank will remain a strategically important subsidiary for CNCB in the medium-to-long term as the latter remains committed to developing a franchise in Kazakhstan.

Altyn's 'AAA(kaz)' National Rating captures its creditworthiness relative to domestic peers'.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of Altyn's IDRs and National Long-Term Rating would be triggered by: a downgrade of the parent's IDRs; a sale of CNCB's controlling stake to a lower-rated entity; or Fitch's view that CNCB's propensity to support the subsidiary has weakened.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Altyn's IDRs would be upgraded if CNCB's IDRs are upgraded. Fitch does not expect a narrowing of Altyn's notching with the parent's ratings in the medium term because of the presence of a large minority shareholder, JSC Halyk Bank, and limited integration with the parent.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

Altyn's Long-Term IDRs are driven by potential support from CNBC.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation of the materiality and relevance of ESG factors in a rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

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