20-01-09
Kazakhstan Banking System. The impact of the global financial crisis in Kazakhstan: A look at the top ten banks

In 2008 several new issues emerged in the Kazakh banking sector, which together have become the dominant factor shaping the financial system as a whole. Among the most significant current trends are:

• a sharp decline in the rate of growth of the banking system;
• a significant weakening of asset quality; and
• a decline in profitability at Kazakh banks.

In order to provide a clearer illustration of these trends, this article examines figures for Kazakhstan’s top ten banks (which together account for 92.4% of the banking systems assets) rather than just looking at the banking system as a whole (see Table 1).

Table 1. Assets at Kazakh banks

Growth at Kazakh banks is not what it was. Following a period of rapid expansion – driven mainly by international borrowing – the rate of growth for the banking system as a whole fell from 31.6% in 2007 to 2.3% in the 11 months of 2008. Moreover, by early December of 2008 total assets declined by 1.8% compared to the first half of the year.

The global liquidity crisis has plainly cut Kazakh banks off from further access to relatively low-cost international funding.

Up until now the country’s top five banks (with the possible exception of Halyk Bank) have drawn on quite substantial sums. Some analysts suspect that a number of banks may have difficulty meeting their obligations to foreign creditors.

It should be noted that unstable world market conditions have not prevented Kazakhstan’s largest banks from refinancing their debt. Banks have reported successful paying off of liabilities due in 2008 and liquidity has not fallen to critical levels.

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