TBY talks to two top banking executives on their balance sheets, the investment climate, and prospects for e-banking.
How is Nurbank planning to achieve its goal of increasing the number of its SME and retail clients?
RAUAN DAUKENOV Our portfolio consists of 60% corporate and 40% SME and retail clients. Our main goal is to diversify our portfolio and increase our ratio of SME clients by 50%. It is a challenge, but one that we believe we can achieve. We are going to introduce new products such as trade and treasury financing. We are also going to pursue a strategy of increasing the number of our branches and outlets.
How has the non-performing loan (NPL) portfolio of banks improved in Kazakhstan?
YERZHAN SHAIKENOV In March, we had KZT177 billion worth of bad loans, whereas that is now down to KZT109 billion. We did some accounting triggers, writing some of the loans off the balance sheet, because that kind of cleaning is necessary, and you can’t just rely on restructuring. Some KZT15 billion was collected from bad loans during 2010. Kazakhstan is a huge country, more than five times the size of France, but with a small population, just one-fifth of Turkey’s. The same principals don’t work in this country. Our government understands the situation and seeks to help through infrastructure projects, like building new roads and railways. This has brought in foreign investment, especially Chinese. Companies from China are building oil refineries in western Kazakhstan, and these kinds of large-scale projects have also helped SMEs. Temirbank is a medium-sized bank and most of our customers are SMEs and retail customers; we don’t have big corporations on our accounts. Those kinds of large-scale investments into infrastructural projects help us a lot as a bank, because most of our customers are contractors or sub-contractors on these kinds of projects. Therefore, this has helped to reduce the number of NPLs we are seeing.
How do you see the investment climate in Kazakhstan over the medium term? Which sectors will be attracting investment?
RD I believe that the investment climate will be quite stable. The government is trying to do everything it can to try to bring new investors into the country. The government will continue to encourage the drive to diversify through innovation and new technology, and is supporting investors to further these aims. We expect an increasing number of new investors. It could be in industries from pharmaceuticals and chemicals to agriculture and beyond. Nurbank will embrace this change and move into 2011 offering new, innovative solutions to its customers.
What strategies are you employing to carry you forward into the next five years?
YS We will not drastically change our strategy and will remain a retail bank. We don’t want to rush ahead and compete with banks like Kazkommertsbank, BTA, Halyk, or the foreign banks. We want to stick to the market that we know. We have considerable experience and knowledge accumulation, and we have learned from our past mistakes. For example, we have already changed all our lending products and are marketing them now. We understand that foreign borrowing is not the solution to solving shortages in liquidity, and so we are now working on our deposit sites. We’ve improved a lot. Early in 2010 we had only KZT19 billion in retail deposits, and as of January 1, 2011 we have KZT32 billion. That’s 80% to 90% growth, which is the highest in the market. But it’s not enough. People should understand that our financial position is much stronger than those banks that didn’t do anything with their balance sheets.
What is your expectation for the development of e-banking in Kazakhstan?
RD Unfortunately, in Kazakhstan most people do not use the internet. We expect that the take up of internet usage will improve every year. We supply credit cards to all of our customers, and have a Visa financing program. We already cover Kazakhstan in terms of its regions, but one of our strategies now is to expand our coverage to smaller economic centers.
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