Page 10 - Kazakh Outlook 2024

5.2 Banks
In his State of the Nation Address delivered in September, Tokayev directed the government and parliament to explore the potential for a "fairer distribution of bank profits." According to Kazakh financial analyst Rasul Rysmambetov, this directive suggests a potential tax increase for financial institutions that have a history of offering limited lending support to the real economy.
Rysmambetov expressed his views to LSM news agency, stating: "The regulator aims to enhance banks' involvement in the real economy, but profit redistribution will occur in a non-coercive manner. Furthermore, this action aims to instill financial discipline within the Ministry of Finance, which has historically viewed banks primarily as purchasers of government securities. I believe the regulator aims to shift away from this trend and channel liquidity into the real sector of the economy."
Rysmambetov’s opinion aside, Tokayev specifically criticised the predominant focus of most banks on providing consumer loans. He remarked that "this situation compels the government to directly fund, guarantee and subsidise activities. Such practices are costly, ineffective and contradict the principles of a market-based economy. Moreover, as financing for the real economy sector declines, banks have increasingly directed their efforts toward offering consumer loans. This shift has raised risks for the financial system and resulted in excessive debt burdens for citizens."
The growing prevalence of consumer loans poses the risk of a financial bubble evolving, potentially leading to further challenges within the banking sector that might necessitate state support and intervention, a scenario Tokayev no doubt wishes to avoid.
Whether this scenario will reflect in government policy towards the banking sector in 2024 remains to be seen.
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