KAZAKHSTAN - Economy
CEO, Development Bank of Kazakhstan
Bolat Zhamishev was born in 1957 and graduated from the Kazakh Agricultural Institute. Over the years he has held executive positions in the Congress of Entrepreneurs of Kazakhstan, National Bank of the Republic of Kazakhstan, National Pension Agency of the Ministry of Labour and Social Protection of Population of the Republic of Kazakhstan, Ministry of Labor and Social Protection of Population of the Republic of Kazakhstan, Ministry of Finance of the Republic of Kazakhstan, Ministry of Internal Affairs of the Republic of Kazakhstan, and the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Institutions. In 2007 he was appointed Minister of Finance and in 2014 he became head of the Development Bank of Kazakhstan.
We are a government-owned development institution and the acquisition of high yields is not our major goal. As a development bank, our major role is to promote the diversification of the economy in Kazakhstan and implement a new economy industrialization program of the government. On this basis, the indicator that would characterize the contribution of the DBK in this direction is an increase in our loan portfolio through an increase in the financing of sectors other than raw material-based ones, such as processing sectors primarily, which provides for the diversification of the economy. Our consolidated credit portfolio as of August 1, 2016 was KZT1.394 trillion versus KZT843 billion last August. The visible increase is about 65%; however, if you exclude the devaluation effect, the gross increase will be about 20%. For us it is important to finance efficient projects, which is why the second important indicator of the efficiency of our work is the quality of our loan portfolio. As for net profit, it should be noted that steps taken by DBK affected this indicator in some way. This spring we conducted stress testing on all our projects and assessed the volume of credit portfolio is more sensitive to foreign exchange risks. About 15% of our projects seemed to be exposed to this risk and we thus decided to restructure these loan. As a result, we have diverted the financing from foreign exchange to tenge. These measures resulted in good quality of credit portfolio as of current date, excluded formation of any additional provisions and, certainly, had effect on net profit. This is true and valid for the period from August 1, 2015 through to August 1 this year, as the bank has previous history that cannot be described only by these comments.
There was a standard that the loan amount should be not less than USD20 million, which was then raised to USD30 million, to match the size of Kazakhstan. For the processing sectors of our country such projects are considered large. At present we have 36 investment projects in our portfolio and 11 export loans. This year we took the decision to invest in poultry farm construction in the Akmola region with a capacity of 60,000 tons per year; the construction of a transport logistics center in south Kazakhstan; the construction of the Turgussun hydro power station in east Kazakhstan; the expansion and modernization of a nitrogenous fertilizer plant in west Kazakhstan; and the construction of a sodium cyanide plant in south Kazakhstan. The Development Bank of Kazakhstan (DBK) also invested in a project on the complete production cycle for railway wheels in the Pavlodar region. Also, we continue to finance the modernization of the Atyrau and Pavlodar refineries, and have invested in such greenfield projects as the construction of rail and structural steel plants in the Aktobe region. In whole, 83 new plants have been put into operation using the funds of the DBK.
In my opinion agribusiness is a sector that is gaining significant impetus and is a promising sector. Our government is actively negotiating with China to export agriculture products to the market there. The middle class is growing in China and it is keen to have environmentally friendly products. Kazakh products are synonymous with being environmentally safe and ecological. At present the Chinese are ready to import products such as grain, meat, and vegetable oils from Kazakhstan. China is a new market for our agricultural products. But if we speak about traditional markets, then the creation of the Eurasian Union with the markets of Russia and Belarus, and Kyrgyzstan and Armenia, which recently joined, provides us with a wide market for the supply of our agriculture products. DBK is also interested in green energy, such as wind and solar energy projects. However, according to the estimates of the relevant ministry the overall relative weight of green energy in the power industry shall be limited for sustainable power supply and consumption. Traditional sources of energy will prevail. That is why there are opportunities for investment in green energy, but such opportunities will be afforded to enterprises that propose the best conditions and more effective projects, as limits on the production of non-conventional energy will be determined on a competitive basis. The most efficient projects for investment are those based on the further stages of processing of Kazakhstani products and raw materials. The possibilities for transit potential in Kazakhstan are also worth mentioning. The projects that could use this transit potential are quite interesting for investments.
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