Kazakhstan’s banks expand individual lending amid decreasing rates

As overall lending is growing, the rates are falling / Photo: Shutterstock, photo editor: Denis Andreev

According to Kazakhstan’s National Bank statistics, the banks kept on expanding their loan portfolios for both households and businesses in August, while the average market rates continued to decline after July’s base rate reduction.

The cumulative loan portfolio for all categories reached roughly $65 billion by the end of August, a 2% increase ($1.3 billion) compared to July. This includes around $59.3 billion in loans issued in the national currency and around $5.6 billion in foreign currencies. The vast majority of the portfolio (85.5%) are long-term borrowings.

Loans issued to private entities, individual entrepreneurs included, accounted for 68% ($44.2 billion) of the portfolio, whereas the share of personal loans not meant for business purposes reached 61.5%, or $40 billion.

An upward trend, as seen in previous months, was observed in August for all loan types. Individuals (individual entrepreneurs included) reported the biggest volume of loans at $995 million (+23%).

Growth can also be noticed in the cumulative portfolio of loans issued by commercial banks and the Development Bank of Kazakhstan. At the end of August, the portfolio stood at $68.6 billion, compared to $67.4 billion in the previous month. Under this methodology, the ratio between loans to retail and corporate borrowers is different: 41.8% of loans for the population and 58.2% for businesses.

At the same time, the trend for the rate decrease has recently been dominating the market. The average business loan price in August was 17.6%, compared to 17.7% in July and 18% in June. The most expensive are loans issued for a period from one to five years (20.5%), while the cheapest were loans from three months to a year (17.3%).

The average rate for individual loans was 20.2% in August, compared to 20.3% in July. Although June demonstrated a lower rate (18.6%), it was more of an exception in overall dynamics for a gradual decrease. In terms of periods, the rates ranged from 19.4% (a loan for over five years) to 36.9% (a loan for less than a month).

The National Bank’s base rate has been the same since August — 14.25% per annum. In July, the regulator’s profile committee cut the base rate by 25 percentage points.