Kazakh banks may have to write off 10 percent to 15 percent of loans after four of the former Soviet republic's lenders defaulted last year, Standard & Poor's said.
"We expect the loan portfolio to fall by about 10 percent in the next 12 months if banks proceed with adequate write- offs," Ekaterina Trofimova, a Paris-based S&P bank analyst, said in an interview in Almaty yesterday. "If write-offs are minimal, as in the last two years, then total gross loans could grow by about 10 percent in the next 12 months."
"Write-offs may be higher than 15 percent if the quality of potentially recoverable loans decreases," she said.
Kazakhstan's 38 banks reported that loans overdue by more than 90 days reached 2.34 trillion tenge ($15.9 billion) in the year through August, the Agency for Financial Supervision said on its website on Sept. 24, citing preliminary data. Total assets declined an annual 1.2 percent in the period to 11.97 trillion tenge, while total loans slumped 10.3 percent to 9.12 trillion tenge, the regulator said.
The share of "hopeless" loans on banks' books was 23.6 percent as of Sept. 1, the agency said, while "questionable" loans accounted for 50.7 percent of the total and "standard" loans for 25.7 percent. Excluding BTA Bank, Alliance Bank and Temirbank, which all defaulted last year, the share of bad loans was 10.3 percent, the agency said.
Samruk-Kazyna Control
The state-owned National Wellbeing Fund Samruk-Kazyna took control of BTA, the country's third-largest by assets, in February 2009 and the bank defaulted two months later after credit markets froze and Kazakhstan's property bubble burst. BTA, Alliance and Temirbank reached restructuring deals with creditors allowing them to write down debt of about $11 billion, according to a statement in April from Samruk-Kazyna, which now controls the three lenders.
"Faster cleaning of banks' portfolios would accelerate recovery and lending," Trofimova said.
"Problematic" loans account for 50 percent of total loans if the defaulted banks are included and 40 percent if they are excluded, she said.
Kazakh banks had 3.02 trillion tenge, or 33.2 percent of total loans, in reserve as of Sept. 1, according to the financial regulator.
High Liquidity
High bank liquidity will remain, though it will begin to dip as banks borrow less and expand lending, she said.
"We don't expect banks' liquidity to fall below $10 billion, which is a critical level of liquidity for the system to keep servicing its liabilities," Trofimova said. "State- controlled companies' deposits remain the important liquidity factor, but we expect the government to continue managing them carefully so as not to destabilize the banking sector."
Kazakhstan, which holds 3 percent of the world's oil reserves according to BP Plc, forecasts 5 percent economic growth this year compared with 1.2 percent in 2009. The economy grew 10 percent on average each year between 2000 and 2007 as energy and commodity prices rose.
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To contact the editor responsible for this story: Steve Voss at
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