Moody's changed the outlook on Kazakhstan's banking system to negative from positive, pointing to pressure on profitability and growing asset quality risks in the sector.

Tighter monetary conditions and slower economic growth caused by the coronavirus outbreak and the recent oil price drop will reduce loan demand and weaken borrowers' ability to service debt, with problem loan ratios to grow across the sector, the rating agency said April 8.

Profitability in the Kazakh banking system is expected to weaken due to higher credit costs, pressure on net interest margins and losses on fixed income securities, while liquidity will continue to be strong.

Moody's also noted that depositors at the largest Kazakh banks will continue to benefit from government support, taking into account the system's small size and the government's ample fiscal capacity.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.