Baku, Azerbaijan, May 20
By Elena Kosolapova - Trend:
Kazakh banks saw a sharp 4-percent fall of retail lending and a 2-percent growth of corporate lending in 1Q16 in a difficult operating environment, says the report of the international ratings agency Fitch Ratings.
Emerging de-dollarization of deposits and a moderate oil prices recovery should help boost lending activities in the near future, says the report.
Non-performing loans edged up to 10.7 percent of gross loans at end of 1Q 2016, from 10.1 percent at the end of 4Q 2015, still only partially capturing the total problem exposures in the sector. Reserve coverage was at a moderate 9.6 percent of gross loans at the end of 1Q 2016.
The report also says that sector core tier I ratio increased 0.3 percentage point in 1Q 2016 to 12.4 percent due to limited loan growth, slight tenge appreciation and improved profit generation (15 percent return on average equity (ROAE); annualized), helped by low provisioning charges (2 percent of average loans; annualized).
Fitch also says that liquidity buffers remain high, also helped by fresh tenge inflows due to conversions of foreign-currency deposits and state funding injections into the system. Conversions into tenge have potentially helped to offset the impact of swap expirations in 1Q 2016.
Fitch expects the National Bank of Kazakhstan (NBK) to roll over swaps, if required, to allow banks to close open currency positions. However, continued de-dollarization could reduce rolled-over volumes.
The 1Q 2016 report covers 27 of Kazakhstan's 35 banks, comprising 99 percent of the system assets.
Edited by SI
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