Grigoriy Marchenko: Kazakhstan gets serious on bad debt
The Kazakh banking sector is still burdened by a big non-performing-loan problem. Central bank governor Grigoriy Marchenko explains how the country is approaching the issue with more urgency and a more conservative approach to financial management.
Central Asia’s largest economy is tipped by its central bank, the National Bank of Kazakhstan (NBK), to grow by 6% in 2013. But it retains one glaring weakness: its banks.
BTA, still suing its former chairman for mass fraud, remains on life support following last year’s bailout, the second in two years. Another Kazakh bank, ATF Bank, looks set to lose its majority owner, UniCredit – assuming Italy’s largest lender can find a buyer.
Even worse lies beneath. Most lenders across the former Soviet Union have struggled to sell off or carve out a festering mass of bad loans disbursed pre-crisis, often to overleveraged borrowers.
Kazakhstan is no exception. In fact, the country’s vast stock of soured loans might make this one of the very few categories in which Kazakhstan can claim the unfortunate title of world-beater. Ninety-day non-performing loans stood just shy of 33% of the country’s cumulative loan portfolio of T11.2 billion ($73 million) by the end of 2012, according to central bank data.
Even Halyk Bank, often viewed as the country’s best-run lender and which controls two insurers as well as around 90% of the country’s payroll banking, is plagued by soured loans: 90-day NPLs rose from 16.3%