Kazakh Central Bank Says Lending Conditions to Ease This Quarter

May 11. Bloomberg

By Nariman Gizitdinov

Kazakh Central Bank Says Lending Conditions to Ease This QuarterKazakhstan’s central bank expects lending conditions to ease in the second quarter as competition for “quality borrowers” reduces the cost of money.

Seventy-one percent of banks will maintain current rates on standard loans to companies and 94 percent will do the same for riskier credits, the National Bank of Kazakhstan in Almaty said in a quarterly survey published on its website today. About a quarter of the respondents expect profit margins for standard loans to fall “insignificantly” this quarter.

“Growing competition for quality borrowers among banks in the second quarter of 2011 will force them to lower interest rates, improving the terms of lending,” the regulator said.

Kazakhstan’s 39 banks posted a combined loss of 364 million tenge ($2.5 million) in the first quarter, according to the central bank’s financial oversight committee. The government took control of three Kazakh lenders including BTA Bank, the nation’s largest bank at the time, in 2009 after credit markets froze and a property bubble burst.

Thirty-six of the nation’s banks responded to the survey, with 61 percent saying they expect the quality of their loan holdings to remain unchanged in the second quarter and 28 percent forecasting an insignificant improvement.

About 63 percent of respondents said the pace of corporate foreclosures will stay the same, while 31 percent expect an insignificant increase. Sixty percent of the banks said the pace of foreclosures on loans to individuals will stay the same, and 27 percent predict an insignificant increase.

The lenders surveyed by the central bank were asked to choose among five possible answers: significant increase, insignificant increase, no change, insignificant decrease and significant decrease.