By Rustam Botashev, Equity Analyst at UniCredit Securities
Kazakhstan’s Financial Supervisory Agency (FSA) published preliminary banking statistics for 2009.
Our view: The banking sector’s losses for the year totalled KZT 2,837bn ($19.1bn), or KZT 127bn ($0.9bn) excluding the two defaulted banks (BTA Bank and Alliance Bank).
Retail loans declined by 4.8% yoy and corporate loans rose by 7.3% yoy, resulting in total loan growth of 4.3% yoy. Total deposits rose by 13.5% yoy (but declined by 9.4% when taking into account the 23% tenge devaluation) and shrank in December by 1.1% mom. As a result, the system’s loan-to-deposit ratio decreased from 1.35X as of end-2008 to 1.24X as of end 2009
Aggregate NPLs reached 36.5% (or 17.9% excluding the defaulted banks) compared to 8.1% as of end-2008. The volume of non-performing loans in absolute terms continued to decline for a second month in a row (down 1.1% mom), far from the skyrocketing growth of 93% mom in May 2009. However, given the smaller loan portfolio, the NPL to total loans ratio grew by 0.3pp mom to 36.5%. Bad loan reserves went up by 254.5% yoy and still fully cover NPLs (coverage of 103.3%).
FSA data also showed that Halyk Bank’s 2009 net income exceeded KZT 2,591m ($17.5m) under local accounting standards. Halyk is now Kazakhstan’s market leader in terms of earnings, and second in terms of assets.
The Kazakhstani banking sector was hit hard in 2009 by a sharp devaluation of the tenge and an economic slowdown that resulted in the default of BTA Bank and Alliance Bank, and asset quality deterioration across the whole sector.
Nevertheless at the end of 2009, Kazakhstan’s banking system started showing the first signs of recovery, such as declining NPL growth. We believe that the worst is over for the industry and rate both Kazakhstani banks, Halyk Bank and Kazkommertsbank, Buy.
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