Fortebank - Fixed Income Analysis

We recommend TO BUY Fortebank’s bonds since the bank has great capital adequacy ratio, which means it has considerable capacity for issuing new loans, positive dynamics of the profitability indicators, and sufficient liquidity on the balance sheet for a gradual redemption of the bonds.

Nevertheless, we indicate poor quality of bank’s assets, also, low coverage of impairment loss allowance on granted loans, which is probably going to trigger a removal of non-performing loans from the credit portfolio and an increase of expenses on creation of the impairment allowance, consequently, the pressure on the bank’s profit.

It is also important to note that the bank is moving towards an integration with other banks. This means there are high operating expenses and the risk of the unsuccessful merger.

As of May 2016, the United National Pension Fund held approximately 90% of Fortebank’s tenge bonds, which indicates low liquidity of the bank’s debt securities denominated in tenge.

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