Kazakhstan Provides Economy with More Than $500 Million in Loans

Long-term loans dominate, short-term loans shrink

Photo: Askar Akhmetullin

From the beginning of this year, the number of business loans in Kazakhstan has risen 1.4% or $424.4 million up to $35 billion in total. This data was revealed by Erbolat Dosaev, head of the National Bank of Kazakhstan at a government meeting.

According to Dosaev, the number of long-term loans has risen 1.8% or $544.9 million up to $30 billion. Short-term loans instead are down 1.4% or $72.4 million to $5 billion. 

The rate for loans for companies in tenge has decreased from 12.5% in March 2020 to 12.1% in April; on short-term loans to 12% (12.4%) and for long-term loans, the rate instead has risen 13.3% (13.1%).

As of June 4, 2020, Kazakhstani small and mid-sized businesses that suffered from the state of emergency which was declared in Kazakhstan due to Covid-19, applied for $1.2 billion in soft loans. Some of these loans were approved for $497.3 in total, Dosaev said. 
    
In addition, under the "Economy of Simple Things" program, Kazakhstani banks approved $755 million in loans, and $529.5 in loans were already issued. Another state program “7-20-25” (aimed to provide people with affordable housing) approved $544.9 million in loans with $462.8 million already issued. Within the "Baspana Hit" mortgage program, $615 million in loans were approved with $498.3 million in loans issued.

According to Dosaev, gold and currency reserves of the National Bank have risen 3.1% or $950 million in May up to $31.5 billion thanks to an increase in currency reserves by gains in National Bank currency accounts in commercial banks up to $600 million. Gold portfolio slightly decreased, losing $137 million because of gold sales for $250 million to National Fund and a minor surge in gold prices from $1717 to $1726 per ounce. 
 
Total assets of the National Fund in May didn't change significantly compared to the prior month and reached $58.5 billion. Last month the government made a transfer of $1.6 billion from the National Fund to the state budget.

To implement this step, the National Fund sold currency for about $1.1 billion. Later, foreign currency revenue in $384 million, as well as investment income in $670 million during the stock market’s partial recovery in May, reimbursed those sales. Gross international reserves increased that month by 1% up to $90 billion.

According to preliminary estimates, the current account of the balance of payments for the first quarter was with a surplus of $1.2 billion. The surplus of trade balance rose to $6.9 billion. Export of goods increased up to $581 million due to oil and gas condensate exports increasing by 18.5% - mostly as a result of a surge in supply (to 13.8%) beyond numbers figured at contracts. The import of goods instead is down $148 million because of limitations in cross border trade and the ban for traveling abroad.

As some media outlets reported, Kazakhstan plans to decrease microloan rates for companies to 6%. Loans up to $12,500 will be provided for working capital financing purposes and up to $50,000 for production needs.
 

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Uzbekistani Bank Has Placed Eurobonds On LSE for the First Time

Demand for the bank’s securities turned out to be high

Фото: Shutterstock.com

Uzbekistani joint-stock commercial bank Uzpromstroybank placed international bonds on the London Stock Exchange (LSE) for the first time on November 25, the bank’s press office says.

“JSCB Uzpromstroybank issued international bonds on the London Stock Exchange, thus becoming a participant of the international capital market. Eurobonds worth $300 million were highly regarded by the investors,” the bank’s press release says.

Demand for the bank’s securities turned out to be high. The initial interest rate for the five-year international bonds was set at 6.5%, and within one and a half hours, order volume reached $300 million, equaling the entire issue volume. By 1:05 p.m., order volume reached $1.2 billion, translating to an oversubscription by four times. At the same time, the interest rate of the bonds was lowered by 0.125% to 6.375%.

“Thanks to such high demand, the deal was sufficiently profitable and was closed at 5:00 p.m. London time with a coupon rate of 5.75%,” Uzpromstroybank’s press release noted.

International investment banks such as JP Morgan, Citigroup, Commerzbank, and Raiffeisen Bank served as financial consultants of the deal on the issue of corporate Eurobonds.

JSCB Uzpromstroybank is one of the oldest financial institutions in Uzbekistan. The bank was founded in Tashkent in 1922 as the Central Asian office of Promyshlennyi Bank. Presently the bank lends to large investment projects, basic sectors of the economy, and small and private businesses. Major shareholders of the bank are the Finance Ministry of Uzbekistan and the Fund of Reconstruction and Development of Uzbekistan (together they own 82.18% of the shares), as well as a partially government-owned company group (national holding company Uzbekneftegaz, JSC Uzbekenergo, JSC Uzkimyosanoat, and JSC Uzbekiston Temir Yullari). An unknown foreign investor owns 0.48% of the bank’s shares. Another 3.98% are owned by other entities and individuals.

In August 2018, the bank served 960,500 clients. According to the results of the third quarter of 2019, the bank’s net profit was more than 327 billion Uzbekistani som ($34.4 million). Uzpromstroybank has a credit rating of ‘BB-’ and the outlook is stable, according to the international rating agency Fitch Ratings.

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