Kazakh bank Halyk sees tough H2, better 2010

Sept 3. Reuters. ALMATY

By Masha Gordeyeva and Olga Orininskaya

* May recover some writedowns next year
* Sees positive signs in the Kazakh economy
* Says all banks hit by BTA trade finance row

Kazakh bank Halyk sees tough H2, better 2010Halyk bank, one of Kazakhstan’s largest banks, expects its financials to recover no earlier than next year despite some signs of improvement in the economy, Chief Executive Umut Shayakhmetova said on Thursday.

Crisis-hit Kazakh banks are dealing with mounting bad loans as Central Asia’s largest economy shrinks after a decade of oil-fuelled boom. Halyk said this week it would spend all income earned this year on loan loss provisions.

“We will probably recover some provisions (in the following years),” Shayakhmetova told Reuters in an interview. 

“I can say that repayments are starting again on some large bad loans. Some acquisitions are taking place.”

But the overall situation in the banking sector remains tense as two large banks, BTA BTAS.KZ and Alliance, are yet to complete large debt restructuring deals and some banks struggle for liquidity ahead of looming debt repayments.

“The situation will depend on how BTA’s and Alliance’s cases are resolved,” Shayakhmetova said.

Alliance has struck a preliminary deal with creditors that include a buyback option with a 77.5 percent discount. But BTA is still in talks and has warned that creditors’ losses may reach 97 percent.

Western banks have criticised BTA and the government, its main shareholder, for planning to restructure trade finance debts along with other liabilities. Shayakhmetova said the fallout had already affected all Kazakh banks.

“Of course this affects us and Kazakhstan in general very negatively because they all (Western banks) have closed trade finance credit lines for Kazakhstan,” she said.


Shayakhmetova also said plans by the country’s banking regulator to curb currency risks could slow down lending and economic recovery.

Following the devaluation of the local tenge currency by 18 percent in February, depositors prefer to keep money in dollars, which limits banks’ ability to extend tenge loans sought by most borrowers. 

However, Halyk, which was a relatively modest borrower on global markets at a time when other banks borrowed heavily, is now winning market share as its competitors’ resources are limited, Shayakhmetova said.

“We see opportunities for ourselves,” she said. “Overall, we assess our position positively.”

Shayakhmetova said it was too early to forecast 2010 financial results as Halyk was focusing on short-term issues.

“We are working on different scenarios, a pessimistic and a realistic one. We are no longer looking at the optimistic one.”