Banking - The Times Of Central Asia

Viewing results 1 - 6 of 93

Over 90% of Economically Active Kazakhstanis Have Loans

Lyazzat Usenbekova, director of consumer protection at the Association of Financiers of Kazakhstan, conducted calculations to find out what percentage of Kazakh citizens have debt obligations, concluding that "more than 90% of those who actively participate in the economic life of the country bear the burden of credit obligations on their shoulders." Usenbekova specified that this percentage applies to those who are indebted to credit organizations. At the same time, the structure of loans reveals interesting details: according to her data, almost a third of citizens take out loans for relatively small amounts, meaning no more than 500,000 tenge ($1,115). However, they account for only 1.7% of the total loan portfolio of individuals. Meanwhile, 5% of Kazakhs have debts over 10 million tenge ($22,290), and their share in the total volume of loans accounts for 42.3%. "It may seem that loans for large sums are a cause for concern, but before issuing such loans, clients are carefully checked for their ability to pay, their debt load and other aspects," Usenbekova emphasized. Usenbekova also looked at the category of loans under 300,000 tenge, suggesting they are probably for consumer needs. "Such loans are often interest-free and, with proper borrower discipline, should not cause serious difficulties with repayment," she explained. But there is no perfect picture yet, Usenbekova stated, stressing the need to improve people's financial literacy and their responsibility to their debts. Majilis (lower chamber of parliament) representative, Tatyana Savelyeva assessed the prospects of enacting changes envisaged by the draft law on minimizing risks in lending and protecting borrowers' rights. "We are likely to see real results in a few years, when these innovations begin to operate. For example, in debt regulation. By then we will be able to objectively assess their effectiveness," Savelyeva opined. The proposed bill to protect the rights of borrowers provides for a ban on the transfer of debts to collection agencies within 24 months of the start of delinquency and for debt settlement procedures that exclude fines, penalties and commissions.

Economy Banking Kazakhstan Investments

Kazakhstan to Spend 500 Billion Tenge to Buy Domestic Bank Bonds

According to a document on asset management from the Unified National Pension Fund (EPPF), the Times of Central of Asia has learned that the National Bank of Kazakhstan is ready to invest 500 billion tenge ($1.1 billion) of pension funds in bonds issued by Kazakhstan's second-tier banks (BVU). According to the EPPF, this step is necessary to support entrepreneurship and give businesses the opportunity to obtain loans. However, as always, there are conditions. The funds will be directed to financial institutions that meet certain requirements. For example, the bank's credit rating should be no lower than "B," and its equity capital no less than 60 billion tenge ($134 million). Also, loans will not be issued to replenish working capital or refinance current loans. And that's not all; wholesale and retail trade, construction, real estate operations and even financial consultations are also not eligible for lending. And the National Bank is not going to stop there. In 2024, it will continue work on improving the management of pension assets. Last year, the same idea was raised by the head of the Association of Financiers of Kazakhstan, Elena Bakhmutova, who about the need to provide access to longer-term funding through BVU.

Uzbekistan Economy China Central Asia Banking Kazakhstan Tajikistan Turkmenistan Kyrgyzstan Finance

ADB Forecasts Faltering Economic Growth

The People's Republic of China (PRC) will remain the engine of growth for the world economy, even despite some slowdown. That forecast has been made by the Asian Development Bank (ADB) specialists in their report, Asian Development Outlook. Inflation is expected to decline in 2024 and 2025 after the increase in food prices in many countries over the past two years - and developing economies in the Asia-Pacific region will grow by an average of 4.9%, according to the ADB. Experts predict the highest economic growth for India: where the economy will grow by 7% this year and 7.2% next year. As for China, experts are more reserved in their forecasts: China's growth will slow to 4.8% this year and 4.5% next year. "Obviously, China will play an important role for some time to come. It still accounts for almost half of the GDP [gross domestic product] in the Asia-Pacific region," said ADB chief economist ,Albert Park. At the same time, economists also warned of possible risks: supply chain disruptions, uncertainty over U.S. monetary policy, the effects of extreme weather, and volatility in the PRC's real estate market. Inflation in developing Asia-Pacific economies is expected to fall to 3.2% this year and 3% next year as global price pressures ease and monetary policy remains tight in many countries. However, inflation in the region, with the exception of China, is still higher than before the COVID-19 pandemic. According to the bank's forecasts, economic growth in Uzbekistan will slow this year and grow slightly next year. This is because higher state-regulated prices will limit the growth of real household incomes, thus reducing demand. Economists expect a lower growth in services and agriculture. Lower remittances, fiscal space constraints, and lower global demand for Tajikistan's main exports will cause Tajikistan's economic growth to slow slightly in 2024 and 2025, the ADB said. "Tajikistan faces serious climate challenges and risks that could lead to irreversible economic, social, and environmental damage," said the ADB 's resident representative in Tajikistan, Shanny Campbell. The ADB says developing a green economy is key to the country's sustainable growth. As for its nearest neighbor, Kazakhstan, the ADB has lowered its GDP growth forecast for 2024 to 3.8%, down from 4.3% in the previous review. In 2025, the figure is expected to be 5.3%. Actual GDP growth at the end of 2023 was at 5.1%. "The growth rate of Kazakhstan's economy in 2024 will decrease against the background of slowdown in industrial growth due to stagnation in oil production and then recover in 2025 due to the growth of resource extraction at the Tengiz field and investments. Prospects for Kazakhstan's economic growth in the medium term look positive," ADB analysts said. As for developed economies globally, their growth will slow down this year: GDP growth in the U.S. will fall to 1.9% from last year's 2.5%, and in Japan, GDP will grow by 0.6% compared to 1.9% in 2023.

Migration Economy Central Asia Banking Russia Kyrgyzstan

Kyrgyz Still Suffering From Ban on Russian Bank Cards

The head of Kyrgyzstan's cabinet of ministers, Akylbek Zhaparov, has told media that it wasn't his decision to terminate the interbank agreement with Russia's MIR payment system. According to him, the Interbank Processing Center (IPC) that services the Kyrgyz payment system Elkart -- which previously had a contract with the Russian MIR system -- does not belong to the government, but rather is run by commercial banks. He added that Kyrgyz authorities learned of the system's disconnection only after it occurred. Zhaparov commented: "Even the National Bank does not have control over the MPC, which is more than 54 percent owned by commercial banks. I assume that these commercial banks may have feared sanctions... It would be good if the MPC coordinated this issue with the cabinet, because there are more than a million of our citizens in Russia. All of them used the MIR card." Zhaparov emphasized that while Kyrgyz citizens benefited from MIR's presence in Kyrgyzstan, the closure of the system will have almost no effect on Russians. He said that work is already underway to find alternatives. On April 5 the IPC informed the Kyrgyz public about the shutdown of MIR "in order to minimize [the risk of] secondary sanctions" by the United States. Many travel companies in Kyrgyzstan have sounded the alarm -- about 90% of all tourists coming to Kyrgyzstan are from Russia.

Turkmenistan Banking Central Asia

People in Turkmenistan Losing Money Due to Bank Glitches

According to news portal Turkmen.news, clients of a number of banks in Turkmenistan are inexplicably losing money from their accounts due to technical problems. On April 8-9, Dayhanbank customers discovered deficits of several hundred manat in their accounts. The amounts ranged from about 150 ($88.24) to 800 manat ($470.59). and in some cases their accounts were left in the red. When customers complained to the bank, they said it was a technical glitch and everything would be back to normal by the evening. In most cases, the amounts withdrawn was refunded to the customer’s account later that same day. According to the report, only by obtaining a bank statement and carefully checking all expenses would one be able to identify the discrepancy.

Banking

Five Kazakhstani Banks Improve Their Positions in S&P Rating

S&P Global Ratings, one of the "big three" global ratings agencies, has revised its outlook and upgraded the ratings for five banks in Kazakhstan -- Halyk Bank, Kaspi Bank, Bank CenterCredit, ForteBank and Nurbank. S&P experts pointed out that in recent years Kazakhstan's banking sector has demonstrated increased resilience to macroeconomic risks, especially against the backdrop of increasing geopolitical instability in the region. Asset quality and the financial performance of banks have significantly exceeded analysts' expectations. As a result, S&P improved its economic risk assessment and revised the industry risk trend to "Positive." For example, as of the beginning of 2024, the share of overdue loans (more than 90 days overdue) was only 3% of the total portfolio -- significantly lower than in previous years. Comparing the banking sector with the segment of microfinance institutions (MFIs), it is clear that MFIs are in a more attractive shape. The share of delinquencies in MFIs is growing, which indicates an inherently higher risk profile in their loan portfolios. It's possible that the adoption by Kazakh parliament of a law on risk minimization in lending -- and protecting borrowers' rights -- could remedy the situation. According to the National Bank of Kazakhstan, the level of loan application approvals remains moderate, indicating a careful approach to issuing loans and control over their repayment by banking structures. Also complicating the retail and corporate lending landscape is the high key rate in Kazakhstan, which was cut to 14.75% in February from 15.25%.