According to the National Bank, Kazakhstani banks earned $2.9 billion in net profit during the first seven months of 2024, marking a 12.3% increase over the previous year.
The banking sector’s profit grew by 20% compared to the results from January to June 2023. In July alone, banks earned $487 million, reflecting a 25% increase year-on-year and a 28% rise month-on-month.
The profit growth occurred amidst routine base rate reductions by the National Bank. In July 2023, the base rate had reached a record high of 16.75%. However, since then, the regulator has eased its monetary policy, bringing the rate down to 14.25% after several consecutive reductions.
Typically, high interest rates enhance banks’ profitability by allowing them to earn more via the bank multiplier, which involves the creation of additional money by credit institutions through the issuance of loans to multiple borrowers. The lent funds are deposited into the borrower’s account and then, through spending, transferred to the accounts of their counteragents and partners, who can later borrow again. The higher the rate, the greater the difference between the bank’s profit from business loans and its servicing costs.
However, the banking sector’s profit dropped by 17.5% to $72 billion year-on-year. In July, banks earned $15 billion compared to $10 billion in the same month the previous year. Expenses excluding income tax amounted to $69.6 billion, an 18.5% drop compared to the period from June to July 2023. In July, they reported $14.8 billion in profit compared to $9.8 billion last year.
At the end of July, Kazakhstani banks also managed to increase their assets by 22% year-on-year and by 2.6% month-on-month, reporting a total of $119 billion in assets. This indicates a 7.3% gain compared to the beginning of the year.
