NUR-SULTAN

Banks in Kazakhstan increased net profit by 80.5 percent year-on-year to 812.2 billion tenge ($1.9 billion) in the first seven months of this year, backed by an improved economic environment in the Central Asian country.

The total assets of the banking sector rose by 0.1 percent in July to 34.8 trillion tenge mainly due to the growth of bank loans by 1.8 percent and deposits placed in other banks by 6.6 percent, the Agency for the financial markets’ regulation and development said in a report.

Second-tier banks have a significant stock of highly liquid assets, amounting to about 12.4 trillion tenge, or 35.8 percent of total assets. The liquidity reserve allows banks to service their liabilities in full.

The structure of the banking sector’s liabilities is mainly represented by the deposit portfolio, accounting for 80.2 percent of the total banking liabilities. The share of other liabilities, such as issued securities and loans received from other banks or banking organisations, amounted to 5.2 percent and 1.9 percent, respectively.

The return on bank assets (ROA) was down to 3.43 percent as of August 1, 2021, from 3.56 percent a year ago, while the return on equity (ROE) was up to 27.58 percent from 26.98 percent.

The total volume of lending by banks in the first seven months of this year increased in July by 1.9 percent and amounted to 16 trillion tenge.

The volume of loans to the economy in national currency increased by 2.3 percent in July to 14.1 trillion tenge.

The volume of residents’ deposits rose by 0.3 percent in July to 25.2 trillion tenge.

In April, Fitch Ratings revised Kazakhstan’s banking sector outlook to stable from negative and said that the resilience of the Kazakh banking sector to the challenges of a cyclical operating environment had improved.

The improvement stems from Kazakh banks’ strong pre-impairment profitability, robust asset structure, and large capital and liquidity buffers, the agency said.

Fitch added that it had expected a moderate increase in loan impairments in 2021, but sector pre-impairment profit should be sufficient to cover higher provisioning charges and allow most Kazakh banks to post solid bottom-line results, largely in line with pre-pandemic years.