Fitch Affirms Khan Bank at 'B+'; Outlook Stable, Highlights Strong Franchise and Profitability
Fitch Ratings has affirmed Khan bank JSC’s Long-Term Issuer Default Ratings (IDRs) at 'B+' with a Stable Outlook, alongside its Viability Rating (VR) at 'b+' and Government Support Rating (GSR) at 'b+'.
The rating reflects Khan Bank’s strong domestic franchise, consistent risk management, robust profitability and stable capitalization, while its credit profile remains exposed to Mongolia’s operating environment and sovereign risks.
Key Highlights
Largest Domestic Banking Franchise
Khan Bank remains Mongolia’s largest bank, accounting for approximately 28% of system assets at end-2025. Fitch noted that its scale and competitive position support strong business volumes and more consistent performance compared with domestic peers.
Consistent Risk Management
Khan Bank’s risk profile is supported by consistent underwriting standards and risk-management practices. Its loan portfolio remains relatively well balanced, with controlled exposure to higher-risk borrowers and proactive loan classification and provisioning.
Impaired Loans Remain Manageable
The impaired-loan ratio increased to 5.3% at end-2025 from 4.7% a year earlier, mainly due to higher consumer non-performing loans. Fitch expects the ratio to remain broadly stable over the next two years.
Loan-loss allowance coverage stood at 110% of impaired loans, which Fitch expects to remain above 100% in the near term.
Strong Profitability Supports Capital
Khan Bank’s operating profit-to-risk-weighted assets ratio reached 5.7% in 2025, and Fitch expects it to remain above 5% in the near term.
Strong earnings are expected to support capital generation, balance-sheet expansion and dividend payments. The bank’s Tier 1 capital ratio stood at 17.5% at end-2025, broadly stable from 17.8% a year earlier.
Stable Funding and Liquidity
Khan Bank’s large domestic deposit franchise continues to underpin its funding profile, while access to international wholesale funding has also expanded.
Customer deposits accounted for 76% of total funding at end-2025, while bilateral funding from international financial institutions represented 16%, up from 12% a year earlier.
Outlook and Rating Sensitivities
A sovereign downgrade would likely put pressure on Khan Bank’s GSR, Long-Term IDR and VR given the bank’s exposure to Mongolia’s sovereign credit profile.
The VR could also face downward pressure if asset quality deteriorates materially, profitability weakens significantly, or capitalization declines without a credible recovery path.
Positive rating action could follow an upgrade of Mongolia’s sovereign rating, provided Khan Bank maintains its strong risk controls and financial performance.
CMM Perspective
Fitch’s latest assessment highlights Khan Bank’s scale, profitability and risk-management framework as key pillars of its credit profile.
With the bank holding the largest domestic banking franchise, maintaining asset quality and capital buffers while managing continued balance-sheet growth will remain important to sustaining its credit profile.
