Credits 

(2007) 

A growth trend generally remained for credits payable in the banking system in 2007. Some reduction in foreign currency credit balances was registered in October, which was related to the policy implemented by commercial banks in the context of uncertain impact of the liquidity crisis in Kazakhstan on the situation in our domestic market, and also to the accelerating inflation rate and the growth of rates in the financial market. Over the 2007, the combined credit portfolio of operating commercial banks increased by 83.7% and amounted to 20.9 billion soms as of the end of the period. Without regard of OJSC Ayil Bank, the credit portfolio amounted to 18.6 billion soms, having increased by 64.3%. 

The growth in crediting volumes was due to an increase in credits both in national currency (2.3 times) and foreign currency (by 65.0 per cent). Without regard of OJSC Ayil Bank the growth amounted to 62.7% and 65.0% correspondingly. As the result of an advanced growth, the share of credits in national currency grew by 7.1 pp, up to 37.6% in the structure of credit portfolio. The growth of credit base was observed in all commercial banks over the reporting year. 

The weighted average interest rate for credits in national currency in the portfolio of operating commercial banks decreased by 3.1 pp, down to 21.3%, and the rate for credits in foreign currency went up by 0.1 pp and amounted to 18.1% (Table 1 and Diagram 1). 

A growth was observed in crediting issued in almost all industries of the real sector except communications. The industry structure of the credit portfolio saw an increase in the share of agricultural credits (from 3.3% to 12.2%), in mortgage credits (from 14.3% to 15.8%), and in credits to construction (from 5.8% to 6.8%). However, the share of credits to retail and commercial operations constituted the major share of the credit portfolio of operating commercial banks, even though this share somewhat declined in comparison with the early 2007 (from 40.9% to 37.9%). A decrease was also observed for the credits to industrial production (from 11% to 6.8%), credits to households (from 8.1% to 6.6%), and other credits (from 13.2% to 11.9%). Credits to transportation, communications, social services, procurement, and processing accounted for a small share and amounted to 2.0% altogether. 

The reporting year witnessed a growth trend in the share of long-term crediting (credits for over 1 year) in the time structure of the credit portfolio, which increased by 14.8 pp and amounted to 67.4%. As a result, the maturity of the credit portfolio increased from 21.6 to 25.2 months. The quality of credits also improved: the share of overdue credits in the combined credit portfolio went down by 1.5 pp to 1.4%, and the share of deferred credits decreased by 3.6 pp down to 2.2% as of the end of December of the reporting year. 

The concentration index of the credit portfolio in commercial banks did not change over the reporting period, and amounted to 0.09 as of the end of December, which indicated low concentration and equaled to the market presence of 11 banks. The industry concentration of the credit portfolio of separate banks also remained unchanged and amounted to 0.45 as of the end of December. This figure indicates the distribution of credits payable roughly between two industries. The concentration of credits within industries also remained high: the concentration index in 8 industries of 11 was over 0.18. 

The volume of new credits in 2007 increased by 51.1% compared to the previous year and amounted to 24.5 billion soms (Table 1, Diagram 2); without regard of OJSC Ayil Bank the volume amounted to 23.3 billion soms which was a 43.4% increase. The growth in the volume of credits was registered in the first half-year; then the commercial banks reduced the volume of credits to economy, and the most significant reduction was registered in September and October. However, the volume of credits went back up in November and December. 

The volume of new credits in national currency amounted to 8.4 billion soms in 2007, having increased by 79.1% compared to 2006 (without regard of OJSC Ayil Bank, the increase was 52.2%, and the amount was 7.1 billion soms), and the volume of credits in foreign currency increased by 39.8% up to 16.1 billion soms. The index of financial intermediation (the ratio of new credits to GDP) increased by 17.5%, having increased by 3.3 pp compared to 2006. 

The growth in the flow of new credits was registered in all industries except communications, procurement, and processing. The most significant growth was registered for the credits to agriculture (4.2 times) and for mortgage credits (by 77.5%). As a result, the shares of these industries increased up to 7.7% and 12.0% correspondingly against 2006. In addition, the reporting year saw a growth in the flow of credits to retail (by 56.7%) resulting in the rise of their share up to 45.4%. 

In terms of maturity, the flow of credits increased across all maturities except for credits with the term under three months. The most significant growth was observed for credits with the term from one to three years (Table 3). The term for new credits increased up to 23.7 months in 2007 compared to 18.8% in 2006. 

On average for the reporting period, the rate for credits issued in soms amounted to 23.2%, having increased by 2.4 pp compared to 2006. A reduction of interest rates was registered in almost all real sector industries. Nevertheless, a decrease in the rate of credits to the agriculture, retail and commercial bargains had a greatest impact on the reduction of the interest rate of credits. The decrease of the average interest rates was also due to the increase in the share of credits to the agriculture with relatively low rates, and also to the reduction in the share of credits to retail and commercial bargains, which have higher rates. 

The lowest interest rates were registered for the credits to communications (14.8% on average over the reporting period), and the highest rates were noted for the credits to households (27.1%). The average rates in the banks went down by 1.5 pp compared to 2006 and amounted to 23.6% over the year. 

In terms of maturity, the average rates went down for almost all terms of credits except those for 3 to 6 months (Diagram 5). 

The weighted average rate of credits in foreign currency increased by 1.2 pp on average over the reporting period compared to the previous year and amounted to 18.5%. The higher rate was mostly due to the increase in the share of credits to retail and commercial services, which have relatively high rates, the growth of the ‘other’ credit rates, credits to industrial production and to construction. The lowest rates for credits issued in foreign currency were registered for the construction (16.2% on average over the reporting period), and the highest rates were noted for social services (27.3%). In terms of maturity, the average rate of credits went up for credits with the term under 6 months, while the rates for credits over 6 months came dawn. (Diagram 7). The average credit rates in the banks did not change and amounted to 20.7%.