The Analytical Centre of the Association of Financiers of Kazakhstan (AFK) has published an overview of the banking sector of Kazakhstan for the first half of 2022.
Despite the general increase in interest rates in the system and the curtailment of a number of state programs, this year there is a positive trend both in the issuance of new loans and in the growth of loan portfolios.
In the first half of the year, new loans were issued in the country in the amount of 10.8 trillion tenge, of which 51% are corporate sector loans. Compared to the same period last year, the indicator increased by 1.5 trillion tenge, or 16%.
However, the retail portfolio (+11.5%) continued to grow faster than the corporate portfolio (+4.5%) due to the structure of loans: in the retail portfolio, 80% of loans are long-term loans (>1 year), in the corporate portfolio many times less at 15%.
Long-term business lending is limited by structural problems on the demand side (low base of quality borrowers) and supply side (lack of long-term funding, difficulty in converting term deposits into long-term loans).
At the same time, long lending to the population is due to the growth of mortgage loans (+17%; Otbasy Bank's portfolio grew by 19%) and consumer loans (+7.7%; including car loans and instalments).
Meanwhile, in the issuance of new mortgage loans, the share of Otbasy Bank rose to 73% from 66% a year earlier. Excluding Otbasy Bank, the issuance of mortgage loans decreased by 7%.
The quality of the loan portfolio remains high: the NPL indicator for the first half of the year amounted to 3.6% (3.3% at the beginning of the year).
Meanwhile, the landscape of the sector has undergone some changes due to the introduction of Western sanctions against subsidiaries of Russian banks. It should be noted that due to a significant decrease in the balance sheet currency, their share of the sector's assets fell from 15% to 5.6% over the first half of the year.
Against this background, the concentration among the top 5 STBs in terms of assets increased to 67% from 66% at the beginning of the year.
The equity capital of the sector showed near-zero dynamics, mainly due to a decrease in the capital of Russian subsidiary banks. Excluding them, the capital of the sector grew by 423 billion tenge (+11%) against the backdrop of capitalisation of profits and a revision of the dividend policy.
Compared to the first half of last year, the sector's profit decreased by 305 billion tenge, mainly due to losses on the side of Russian subsidiary banks. Without taking them into account, the sector's profit increased by 210 billion tenge, or 37%.
“A significant increase in demand for borrowed resources is largely due to the acceleration of GDP dynamics (up to 3.4% in the first half of the year compared to 2.2% in the same period last year), stimulating fiscal policy (consolidated budget expenditures increased to 9.6 trillion tenge compared to 8.1 in the same period last year), the widespread digitalisation of banking services, which makes it possible to more quickly obtain the necessary financial resources,” analysts say.
Lending in the country is supported, among other things, through existing state financing programs, where programs to support the real sector of the economy prevail SMEs, manufacturing, regional development, as well as socially vulnerable and certain categories of citizens (social mortgage 7-20-25). The dynamics of a number of indicators of the sector's activity (volume of equity capital, net profit) was affected by certain events of the first half of the year, including the fall of subsidiary banks under Western sanctions.
Against this background, there were significant changes in the dynamics of loan portfolios and deposits in the context of second-tier banks, which led to some increase in concentration among the top 5 in terms of assets of second-tier banks. The total volumes of the loan portfolio and the deposit base did not noticeably change (+5.5% and 1.6%, respectively).
“In the second half of the year, high inflationary processes (goods and services become less affordable), changes in price conditions due to a serious increase in the base rate and significant changes in the cost of funding may have a certain impact on the dynamics of demand for borrowed resources,” experts say.
Reported by Kapital (Kazakhstan).