Kazakh bank lending unlikely to rise – regulator
* 2011 zero growth forecast echoes central bank view
* Banks should generate profit in 2011
* Says now is right time to write off bad assets
By Maria Gordeyeva
ALMATY, Feb 2 (Reuters) – Kazakhstan’s banks are unlikely to increase their total lending this year, the country’s financial regulator said on Wednesday, echoing the central bank’s forecast for a sector still emerging from the global financial crisis.
Improving profitability will be the first priority for banks in Central Asia’s largest economy this year, said Yelena Bakhmutova, head of Kazakhstan’s Financial Supervision Agency.
“We don’t expect a general growth of the loan portfolio,” Bakhmutova told reporters.
“With regard to profitability, the situation will be better than last year, given the absence of external shocks,” she said. “Banks will be able to generate profits.”
Kazakhstan was among the first and hardest hit by the global financial crisis. Some of its banks, including BTA BTAS.KZ and Alliance ASBN.KZ, emerged last year from billion-dollar debt restructuring programmes.
Last week the central bank forecast zero growth in Kazakh banks’ overall loan portfolio this year, saying that write-offs would offset new loans issued in 2011. [ID:nLDE70N05D] Kazakhstan’s banks’ total loan portfolio fell by 2 percent year-on-year in the first 11 months of 2010 to 7.5 trillion tenge ($51 billion), central bank data shows.
As major banks restructure their debt, the time is right to deal with bad assets by, for example, opening subsidiaries of local banks to manage such assets, Bakhmutova said.
“One year will be enough to assess whether they are able to resolve these problems. After that, some (problem) companies will run into bankruptcy, while others will be restructured.”
Bakhmutova said the government was ready to help local banks find buyers for their problem assets.
“If the (local stock) market starts working … it will be possible to issue asset-backed papers within a securitization programme,” she said.
As of Jan. 1, 2011, non-performing loans made up 20 percent of the total loans portfolio of Kazakhstan’s banking sector. Provisions on loans accounted for 30.9 percent of the loan portfolio.
(Reporting by Maria Gordeyeva; Writing by Robin Paxton and Dmitry Solovyov; Editing by Greg Mahlich and Erica Billingham)