Page 13 - Kazakh Outlook 2022

4.2 Banks

Kazakh President Kassym-Jomart Tokayev said during a government
briefing in November that Kazakhstan's financial sector has been
stabilised and cleared of insolvent banks thanks to the state writing off
KZT6.6tn ($15.2bn) worth of bad loans within the framework of the
banking sector rehabilitation programme in the past several years.
Kazakhstan formed a “bad loan bank” to buy out underperforming loans
from banks in order to write off the bad loans.

The level of loans overdue in the banking sector for over 90 days
currently stands at 4.3% of the banks' loan portfolio - the lowest value
seen in the past 13 years.

The major highlight for the local banking sector this year came in April,
when Fitch Ratings upgraded the long-term issuer default ratings
(IDRs) of Kazakhstan's Halyk Bank to 'BBB-' from 'BB+' with a stable
outlook.

The rating brought an upgrade to an investment grade rating from a
speculative grading. It also marked the first time a private Kazakh
commercial bank had received an investment grade rating from Fitch -
only quasi-sovereign banks or banks with foreign participation have
previously received such a rating. The upgrade reflected Halyk's robust
bottom line results in 2020 along with its further progress in recovering
its legacy problem assets amid continuous pressure on the operating
environment from the COVID-19 pandemic.

Fitch said later in the year that it expected sector performance to
moderate in the second half of 2021, but continue to be robust “in the
near term”, as banks’ focus on higher-yielding and granular retail
lending is set to support net interest margins and boost transactional
incomes.

13 Kazakhstan Outlook 2022 www.intellinews.com