Loans  

(First Quarter of 2007) 

Chart 1                                  Chart 2 

The growth trend in lending to the real sector of economy was maintained in the first quarter of 2007. Thus, the aggregate loan portfolio of operating commercial banks amounted to Som 15.7 billion at the end of March, having increased by 38.0 percent. The loan portfolio increased by 19.5 percent and totaled Som 13.6 billion excluding OJSC Aiyl Bank. 

Loan indebtedness of the banking system increased both because of loans in national currency by 80.6 percent (the increase was 20.1 percent excluding OJSC Aiyl Bank), and by 19.2 percent because of loans in foreign currency. As a result of outrunning growth, the share of loans in national currency increased by 9.4 percentage points up to 40.0 percent. At the same time, the loan portfolio growth was observed virtually in all operating commercial banks.  

The cost of loans comprising the portfolio of operating commercial banks reduced in the reporting period as follows: by 3.9 percentage points down to 20.5 percent in national currency (by 0.7 percentage points down to 23.7 percent excluding OJSC Aiyl Bank), and by 0.2 percentage points down to 17.8 percent in foreign currency (Table 1 and Chart 1).  

Table 1. Change of Loans in Operating Commercial Banks  

The increase of loans was noted in all branches of the real sector. At the same time, the share of loans to agriculture increased by 11.0 percentage points up to 14.3 percent in the sectoral structure of the loan portfolio, while the shares of remaining sectors reduced. However, loans to trade still constituted the main portion (36.8 percent). Then, there followed loans for mortgage (13.3 percent), to industry (8.9 percent), households (7.2 percent) and construction (5.5. percent). Loans to transportation, communication, social services, procurement and processing had a small share and accounted for 2.8 percent, and the share of other loans was 11.3 percent.  

In the reporting period, the share of long-term loans (over one year) increased by 8.5 percentage points than at the beginning of the year up to 61.1 percent, and duration of the loan portfolio increased by 1.7 percentage points up to 23.3 months at the end of March. Qualitative characteristics of loans also improved: the share of past due debt in the aggregate loan portfolio reduced from 2.9 percent to 2.1 percent at the end of the period, and the share of prolonged loans decreased from 5.8 percent to 4.5 percent.  

Table 2. Change in the Loan Portfolio of Commercial Banks for the First Quarter of 2007 by Term Categories 

The loan portfolio concentration index of commercial banks did not change for the first quarter of 2007 and remained at the level of 0.09, which was equivalent to the division of the credit market among 12 banks and indicated low concentration. Sectoral concentration of banks’ loan portfolios virtually did not change, and was 0.46 at the end of the period, which indicated that the loan indebtedness of most banks was distributed approximately between two sectors.  

Loan concentration in sectors also remained high: concentration index in 7 sectors out of 11 sectors was more than 0.18.  

Chart 3                                       Chart 4 

In the first quarter of 2007, the volume of newly disbursed loans notably increased by 78.4 percent than in the similar period of the last year and amounted to Som 6.0 billion (Table 1 and Chart 2). The flow of loans, excluding OJSC Aiyl Bank, totaled Som 5.6 billion, having increased by 68.8 percent. The volume of new loans in national currency amounted to Som 2.2 billion, having increased by 2.2 times, and the volume of loans in foreign currency increased by 61.0 percent up to Som 3.8 billion. At the same time, the ratio of new loans to GDP increased up to 28.2 percent, having increased by 10.5 percentage points than in the first quarter of 2006.  

In the reporting quarter, the increase in the flow of newly disbursed loans was noted in all sectors, other than loans for procurement and processing, construction and social services. The most marked increase in lending was noted in loans to agriculture (by 5.4 times) and for mortgage (by 4.2 times), which affected the increase in shares of these sectors up to 7.9 percent and 12.1 percent, correspondingly. Some increase in the share was also observed in newly disbursed loans to households (up to 10.5 percent), while the shares of remaining sectors decreased. At the same time, loans to the trade area (44.8 percent), as before, had the largest share in the general flow of loans.  

By terms, the flow of loans increased in all categories, other than loans for the term up to 1 month. The most marked increase was observed in loans for the term from one year up to three years (by 2.7 times) and over three years (by 5.9 times) (Table 3). As a result, duration of newly disbursed loans increased by 9.4 percentage points up to 23.6 months than in the similar period of the prior year.  

Table 3. Change in the Flow of Loans of Commercial Banks for the First Quarter of 2007 as Compared with the First Quarter of 2006 by Term Categories 

For the first quarter of 2007, the average interest rate of newly disbursed loans in national currency, on average, reduced by 4.1 percentage points than in the similar period of the prior year and accounted for 22.5 percent. Decrease in interest rates was virtually noted in all branches of the real sector. However, significant reduction in the cost of loans to agriculture because of cheaper loans of OJSC Aiyl Bank had the largest effect on the decrease in the cost of loans, and also the increase of their share in the general flow of loans. At the same time, loans in national currency were disbursed at the lowest interest rates to the communications sector (at 15.5 percent, on average, for the reporting period), and at the highest interest rates to the social services sector (29.7 percent). 

By terms, the decrease in average rates was virtually noted in all loans, other than in rates of loans from one to three months (Chart 5).  

Chart 5                                        Chart 6 

The real interest rate of loans in national currency was, on average, 17.0 percent for the reporting period, having reduced by 2.2 percentage points than in the prior year, which affected the reduction of the nominal rate. In the mean time, inflation growth rates (annualized) decreased in the reporting period and smoothed this effect.  

Average rate of loans in foreign currency increased by 2.1 percentage points and was 18.4 percent as compared with the similar indicator for the first quarter of 2006. The increase in the rate was, mainly, connected with the increase in the cost of loans to industry, construction and other loans, and also with structural changes in the flow of loans.  

Chart 7 

At the same time, loans in foreign currency were issued at the lowest interest rates for construction (on average, at 16.1 percent for the reporting period), and at the highest interest rates to households (22.2 percent). By terms, a significant increase was noted in average rates of loans up to 1 month, and changes in average rates were less significant in remaining term categories (Chart 7). Average interest rates of loans by banks reduced in 9 banks, increased in 8 banks and did not change in one bank.