The 10 years since Umut Shayakhmetova took over as chief executive of Halyk Bank have been turbulent ones for the Kazakh banking sector.
Two market leaders in succession – BTA Bank and Kazkommertsbank – have been brought down by legacy bad debts, while a clutch of smaller lenders has also failed or had to be bailed out following Kazakhstan’s currency devaluation in 2015.
Under Shayakhmetova’s leadership, however, Halyk has not only avoided the problems that have beset its local rivals but also emerged as one of the former Soviet Union’s largest and most profitable banks.
“We are in a unique situation,” says Shayakhmetova. “We have a competitive advantage even compared to the big Russian banks. We have the highest ratings in the region and we are not under sanctions, so we have access to international funding if we need it.”
In 2017, Halyk became the Kazakh market leader when it took over Kazkommertsbank following a state clean up of the latter’s balance sheet. Last year, the newly merged lenders posted a combined return on equity of 27.9%.
Shayakhmetova is now looking to build on Halyk’s local success and expand its regional presence. The bank already has operations in six countries in the Commonwealth of Independent States and was due to launch a green-field operation in Uzbekistan in April.
“We see integration growing among the former Soviet states,” she says. “Labour flows and investment are increasing, which presents opportunities in areas such as cross-border payments and trade finance, as well as local commercial banking.”
Meanwhile, Halyk is shaping up to fight off challenges to its domestic dominance by new players in the market.
“Several Chinese companies, including Alipay, have expressed an interest in operating in Kazakhstan, while locally we are seeing the emergence of new digital banks and payments companies, as well as the expansion of telecoms firms into financial services,” says Shayakhmetova.
As with most global bank chief executives, Shayakhmetova also lists compliance as a key challenge for the sector.
“It has become a big burden,” she says. “It is making banking a very capital-consuming and low-margin business, and at the same time quite high-risk. There is a trend towards over-regulation, and I think that needs to be addressed.”
She is supportive, however, of recent efforts by the Kazakh authorities to clean up the banking sector.
“I hope that will continue this year,” she says. “It will be good for the economy to have stronger banks.”