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Kazakhstan: Banking fails to keep pace with economic growth

Lending still shrinking as NPLs weigh on sentiment; Regulatory changes may help ease the burden

Although the debt restructurings at three of the leading Kazakh banks have now been completed, there are few signs of a meaningful revival in risk appetite among many of the country’s lenders.

According to the latest statistics, although net lending rose by 0.3% in August, it has shrunk by 5.4% over the year, despite the fact that the Kazakh economy expanded by 7.9% over the same period and the full-year forecast is for GDP growth of at least 5%.

Although there are signs that asset quality is stabilizing, with provisions for non-performing loans falling to 33.2%, overall NPLs remain a drag on lending sentiment in the sector.

Milena Ivanova-Venturini, banking analyst at Renaissance Capital in Almaty

"We believe that the recently completed BTA debt restructuring and state support programmes will support loan portfolio expansion in the autumn"

Milena Ivanova-Venturini, Renaissance Capital

Commenting on the latest statistics, Milena Ivanova-Venturini, banking analyst at Renaissance Capital in Almaty, says: "The results are disappointing as we still cannot see any strong signs of recovery in lending in Kazakhstan.

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