Kazakh Banking Sector Expecting Super-Concentration

Kazakh Nat'l Bank plans to refinance mortgage loans given in dollars at rate of 188.35 tenge

Kazakhstan’s banking sector is waiting for a super-concentration. 6 out of 33 banks of the country have already announced possible merger, ranking.kz reports.

The process of concentration in the banking sector has been sharply boosted. At the end of 2016 – in early 2017, 6 out of 33 banks in the market announced possible merger. Two super-banks will likely control the market after completing all the merging processes with 51% of the total volume of the second-tier banks’ assets.

In early March 2017, Halyk Bank of Kazakhstan and Kazkommertsbank entered into a memorandum of merger which will result in establishment of a single financial institution where more than one third of all the banks’ assets will be concentrated.

On February 1, 2017, Tsesnabank and BankCenterCredit issued a joint press-release about possible merger. In early April, the National Bank of Kazakhstan allowed the Tsesnabank to buy into the BankCenterCredit which will enable TSB+BCC improve its condition as a unified Bank.

The next two banks that announced merger are Capital Bank and Tengri Bank. In the middle of March the banks signed a memorandum of intention on merger.

Kazkommertsbank and Halyk Bank are the largest banks of Kazakhstan ranking the 1stand the 2nd respectively. At the end of February, the asset portfolio of Kazkommertsbank made 4.7trln tenge, while Halyk Bank had 4.6trln tenge. After their possible merger, the total volume of the assets may comprise 9.3trln tenge which will make the bank almost unachievable for the rest of the banks. Its share against the country’s second-tier banks will comprise 37.4%. The share of loan portfolio can theoretically make 38.4% and the share of deposits may reach 35.7%.

Tsesnabank and BankCenterCredit enter the top 10 second-tier banks of the country. Tsesnabank ranks the third and the volume of its assets is 2.1trln tenge. BankCenterCredit stands the 6th with 1.3trln tenge of assets. After their merger, the total volume of assets may reach 3.4trln tenge which will enable the bank to rank the second after the Halyk+KKB, with 16.3% of loans and 15.1% deposits against other second-tier banks of the country.

The volume of loan portfolios of Capital Bank and Tengri Bank places them on the 24th and 26th lines of the ranking. Capital Bank’s portfolio at the end of February was estimated at 91.1bln tenge (0.4% of the share of second-tier banks) while Tengri Bank had 65.1bln tenge (0.3%). After the merger, Capital+Tengri will enter the country’s top 20 second-tier banks and its share in the market will make 0.6% and the total volume of assets will reach 156.3bln tenge. The share of its loan portfolio may increase to 0.8% and share of deposits will make 0.5%.