Junior Research Fellow of the Eurasian Research Institute Daniyar Nurbayev gave a seminar on the topic of “Current Development in Kazakhstan’s Banking System”.

During the seminar on the topic of “Current Development in Kazakhstan’s Banking System” Daniyar Nurbayev touched upon the problems being faced by banks, the causes of the crisis in banking sector in 2008, and the current developments in the banking system. One of the most important issues that have been encountered by Kazakhstan banks is liquidity crisis and high rate of non-performing loans. Noting rapid development in the banking sector in the early 2000s, he stated that the banking system of Kazakhstan was the fastest developing system in Central Asia. He added that the banking system had developed very rapidly because of the rise of oil, metals and grain prices and distribution of the loans with low interest rates by the international organizations, but the banks’ too much loan distribution, global financial crisis and the fall in oil prices had interrupted the development.

As from today’s perspective, the bankruptcy of BTA bank, Temirbank and Alliance bank, which had been major participants in the development of the banking sector until 2008, significantly affected the decline of this rate. In 2009 the government intervened in the banking sector by purchasing these three banks, and these banks then were purchased by other banks also. He stated that in 2014 Kazkommertsbank had purchased BTA Bank, and in 2015 Forte Bank merged with Temirbank and Alliance Bank by purchasing them.

Later he stated that until 2007 in loan distribution the rates of tenge and foreign currencies were almost the same, and yet after 2007, there was a significant increase in rates of foreign currencies in loan distributions. The reason for this is that since banks took out loans from international organizations in dollars, in order not to be affected by possible devaluations they started to give out loans in dollars. However, he mentioned that the National Bank restricted giving out loan in dollars. He said that in non-performing loans it is approximately 5%-10% that of the world average, and while this rate in 2012 in Kazakhstan was 30%, in the middle of 2015, it fell to 10%. After the National Bank’s restriction for the rates of non-performing loans higher than 10% Kazkommertsbank cancelled non-performing loans close to 2 trillion tenge belonging to BTA bank and likewise Forte Bank had to cancel large parts of non-performing loans of Temirbank and Alliance Bank, and as a result such a decrease showed up.

He stated that in the last few years, in deposit accounts the transition from tenge to foreign currency had been taking place. He emphasized that the reason for this transition is that the National Bank had restricted other banks to lend at interest higher than 10%, and that the analyses for tenge’s devaluation of around 35% had been effective. With increasing the interest rate given for tenge up to 15% by the National Bank, since March of 2016, the rate of tenge in deposit accounts has started to increase again.

At the end of the seminar participants exchanged views on interest rates and banking system.