Kazakhstan: Problem loans subside but growth still subdued
Loan write-off legislation delayed; Banks “too cautious”, analysts allege
Bad debt levels finally look to have stabilized in Kazakhstan but analysts are still predicting a lean year ahead for the country’s banks as new lending remains subdued.
Non-performing loans for the sector (excluding restructured banks BTA and Alliance) declined to 23.6% of the total outstanding at the end of June from 25.8% in March, according to central bank statistics, while the ratio of debts more than 90 days in arrears fell 30 basis points to 18.6% and coverage remained high at 99.9%.
Lending growth, however, remained sluggish at 3.2% in the first half and is expected to come in at just 5% to 7% for the full year – well below both the double-digit levels targeted by many banks in January and current estimates of up to 15% nominal growth in the wider economy.
Part of the problem, say analysts, lies with the government’s failure to push through reforms to the tax legislation to make loan write-offs less painful for lenders. At present, writing down bad debts incurs tax liabilities on any provisions made against them – with the result, says Ainur Medeubayeva, equities analyst at Troika Dialog in Almaty, that banks are still extending "hopeless" loans from long before the financial crisis.