MTI publishes first CIS study on Kazakhstan Banking

The Research and Intelligence Unit of MTI have released their first study carried out in the fast growing CIS market, with a study of the Banking and Financial Services Opportunity in Kazakhstan.

The banking sector experienced rapid expansion between 2004 and 2007 before a drastic fall with the banking industry assets growing by just about 4 percent in 2008.

Since the Kazakhstan government having introduced an US$19.4bn stimulus package, with a focus on the banking and construction sectors, the immediate outlook is challenging.

This research on the Kazakhstan Banking industry is backed by MTI’s Bangalore-based Research and Analytics Team who in addition serves the International Banking and Financial Services Sectors.

Banking Sector Overview

Kazakhstan’s banking sector posted staggering growth in recent years backed by its oil sector and booming real estate market. The size of Kazakhstan banking sector by assets is estimated to be about US$96bn as of 2007.

The growth of the balance sheet was driven by strong growth of corporate and retail lending which posted staggering growth of 65 percent and 117 percent CAGR respectively during the same period. As a result, penetration rates in Kazakhstan reached higher levels than in many other emerging countries.

However, the year 2008 saw the emergence of new issues which resulted in sharp decline in the rate of growth of the banking system, significant weakening of asset quality and lower profitability at Kazakh banks.

In 2009 the Kazakhstan government stimulus package may offer significant support for the economy but effective channeling of this money towards the real economy would be vital.