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Kazakhstani Banking Sector's Key Cumulative Results in Decline since the Start of the Year

These findings appear from banks records

Collage by Vadim Kvyatkovsky

Only seven bank loan portfolios have increased in January while total non-earning loans increased to 1.7%.


According to recent Kazakhstani National Bank data, cumulative assets of all regulated banks in Kazakhstan declined 1.1% after January, down to 26.53 trillion tenge (roughly $69.8 billion) compared to a 0.1% drop in January of last year. 

During this month, the hierarchy between the largest banks has changed.  Forte Bank dropped 299 billion tenge (about $787 million) and has lost its status as one of the three largest banks in Kazakhstan. It was replaced by Kaspi (–15 billion tenge or $39 million). Also, Jýsan Bank moved up two positions to reach the sixth rating (+62 billion tenge or $163 million) and pushed back two remaining banks: ATF (–36 billion tenge or $94 million) and Zhilstroysberbank (+9 billion tenge or $26 million). In the top twenty, Alfa Bank (+$94 million, #11) and Bank RBK (–$44 million, #12) swapped their positions.

In terms of money, Sberbank, Jýsan and Alfa made the highest earnings in the first month of 2020. Forte, Halyk, and ATFBank (see chart) lost the most. Also, Forte showed maximum decline per percentage (–13.6%), while VTB’s assets instead rose 7.5%. VTB’s change might be explained by its small size (known as a low base effect) as well as its dynamics. Last year VTB was second to only Zhilstroysberbank in terms of growth speed (+30,9%), so in this dynamic, someone might see a trend.


Cumulative loan portfolio (including interbank credits and reverse repo) for January declined 1.6%, down to 14.51 trillion tenge ($37 billion). Last year's decline from the same period was even bigger (–4.6%), but the general results from this year were positive (+7.1%).

This January only seven regulated banks (out of 27) operating on the local market increased their volume of loans. These seven are Eurasian Bank, RBK, Jýsan, Home Credit, Nurbank, VTB and Citibank, where Eurasian became an absolute leader. At the same time, the largest decrease in the volume of loans issued was recorded in Halyk, Forte, and Zilstroysberbank. 

The total volume of NPL 90+ (loans with late payments over 90 days) grew over the month by 1.7%, up to 1.22 trillion tenge ($2.6 million). The Eurasian Bank became the anti-leader in the growth of bad loans followed by Capital Bank and AsiaCredit Bank (both owned by entrepreneur Orifjan Shadiev) which also found themselves in trouble. Halyk and Jýsan both achieved the best results in removing toxic debts from their portfolios.

NPL 90+ in the total loan portfolio grew over the month from 8.13 to 8.42%. However, after summing up the AQR, this indicator may significantly change for the worse. The National Bank promised to announce the results of its audit on February 28. It is still difficult to predict how long it will take for banks to recognize bad loans and reflect them in the financial statements.

On February 21, Fitch Ratings confirmed the long-term credit rating of Kazakhstan at 'BBB' with a stable outlook. In an enclosed report, agency analysts admitted that efforts by the Government of Kazakhstan to strengthen the banking sector are quite effective. However, the system remains weak with non-earning loans (8.1% at the end of 2019), high dollarization of deposits (43%) and weakened financial intermediation, the report says.

Kazakhstani National Bank already published aggregated AQR results, which reveals a deficit of 450 billion tenge (0.6% of GDP). According to Fitch, “this deficit may be concentrated in several banks and then require further capital injections.” Even though President Tokayev has banned the use of the budget funds to support non-systemic banks, Fitch believes that governmental support can still be deployed through off-balance channels. 

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Client’s money 

The volume of individual deposits in January declined 1.1%, while those of legal entities increased by 0.5%. That month, all the largest banks faced an outflow of people’s money, most of all Halyk, Forte and Kaspi. Against this background, only one player succeeded. Jýsan increased its deposit base of individuals by 46 billion tenge ($121 million).

As for the dynamics of business deposits, Jýsan took the third position after Sberbank and Alpha. The fourth is VTB (+17 billion tenge). These figures show that in January, business customers trusted the Russian bank subsidiaries most of all. The largest outflow of legal entities was observed in Citibank, ATF, and Altyn Bank.


A significant deterioration in January was demonstrated by an indicator of the cumulative profitability of banks. In that period, earnings for regulated banks were 32% less ($87 million) than a year ago. However, there is no drama if these results are considered case-by-case, not as a whole.

At the beginning of 2019, official statistics included Tsesnabank and its profit in January, with reported earnings of 50.5 billion tenge ($133 million). However, a month later (on March 1, 2019), this profit turned into a loss of 216 billion tenge ($568 million). In other words, if Tsesna is excluded from these aggregate statistics, the total profit of banks in January 2019 might be 54.2 billion tenge ($142.7 million). Compared to this result, banks earned 32% more in January 2020.

Last year, the three most profitable banks were Halyk, Kaspi, and Sberbank. They completed the first month of the new year in the same order. Kaspi increased its profit by 8.5 billion tenge ($22.3 million) (January to January), Halyk by 7.4 billion ($19.4 million), and Sberbank by 1.8 billion ($4.7 million). Two banks turned out to be unprofitable in January: Tengri (–581 million tenge or $1.5 million) and AsiaCredit (-154 million tenge or $405,529). Their merger partner Capital Bank (not for Tengri any more) showed in its report a symbolic profit of 10.5 million tenge ($27,649).


The above three banks have become the main newsmaker of the financial sector this year, while significant market players went through the second stage of AQR; Tengri, AsiaCredit, and Capital faced hurdles in their proposed merger, which they announced in the middle of last year. At the same time, banks owned by Shadiev continued to receive penalties from the regulator for violating prudential standards and making late payments.

The key move was made by Punjab National Bank, the Indian shareholder of Tengri Bank (the second-largest state-owned bank in India, which owns 41.64% of Tengri shares).

On February 20, press service of the Tengri Bank announced that the Indian shareholder had "withdrawn consent" to the deal. “Without the consent of the largest shareholder, completion of the merger process is impossible,” Tengri Bank noted. 

According to information that Kursiv was able to obtain, the merger deal was supported by Kazakhstani shareholders of Tengri. (Residents of Kazakhstan own 43.34% of the bank’s shares.) Perhaps the lack of mutual understanding between local and foreign owners led to corporate litigation and rearrangements of the board and directors. The position of Indians was determined by their unwillingness to make an additional capitalization of the combined bank, a source familiar with the situation said. According to him, the injection of additional capital into the Kazakhstani subsidiary is not a strategic priority for Punjab National Bank.

In turn, the banks of Shadiev said they would merge without the participation of Tengri. A press release issued on February 28 states that the reorganization process would begin on March 2. “All efforts needed would be made and by the end of this year, the new financial institution will comply with all prudential standards of the regulator as well as requirements of customers,” the sole shareholder said in a statement. The press release states that the reorganization program “received approval” from the regulator represented by the Agency for Regulation and Development of the Financial Market.

As of February 1 of the current year, the shares of NPL 90+ in Capital and AsiaCredit banks amounted to 72.21 and 35.19%, respectively. In October last year, AsiaCredit Bank imposed restrictions on the issuance of cash and non-cash transactions. The regulator (first the National Bank, then the Financial Agency) punished these banks multiple times with no official statements.

According to the Fitch report of February 21, the agency does not believe that the exclusion of the financial regulatory body from the National Bank will lead to a significant improvement in its independence and quality of regulation. As Fitch noted, the key decisions governing the behavior of financial agents may be subject to intervention, as they are likely to be coordinated at the level of the Financial Stability Board, which is represented, inter alia, by the National Bank and the president.


Please note that this material was prepared by Kursiv Research for informational purposes only and does not constitute an offer or recommendation to make any transactions with securities and other assets of these organizations.

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