Deputy Chairman of the Management Board of JSC Nurbank, Rauan Daukenov, discussed the consumer market and SMEs in an exclusive interview for nevopros.kz.
1. What is the current state of the consumer market?
The consumer lending market in Kazakhstan is experiencing dynamic conditions today. Consumer loans are once again in high demand by clients as banks have somewhat eased the conditions for consumer lending—requirements, terms, interest rates.
2. How is Nurbank performing in the consumer market?
Many banks today offer unsecured loans for individuals in the consumer market. The choice is vast, so selecting something cost-effective, prompt, and under the best conditions is not easy. In turn, Nurbank offers customers the best conditions for unsecured consumer loans, with a maximum loan amount of 5 million KZT, one of the largest offered by Kazakh banks for unsecured loans, as well as favorable interest rates—from 16% per annum (APR—from 20.62%).
3. What distinguishes secured consumer loans from unsecured ones?
The main difference lies in the presence/absence of collateral, the time required to process documents for disbursement, the maximum loan amount, and the interest rate on the loan. Unsecured loans for small amounts issued to individuals for consumer needs are characterized by simplicity in documentation processing, short decision-making times for loan approval/rejection. Usually, interest rates on unsecured loans are higher than on secured ones since banks take on significant risks when lending without collateral.
Besides unsecured loans, Nurbank also grants loans for consumer purposes secured by real estate, with loan amounts up to 30 million KZT (with partial income confirmation—up to 10 million KZT). Individuals, as well as individual entrepreneurs, can obtain this loan for renovations, celebrations, travel, car purchase, household appliances, and other consumer purposes under favorable conditions. Target confirmation is not required; partial income confirmation is possible.
4. Who might Nurbank deny a consumer loan, and which client?
Quite often, the bank is forced to refuse a client if the information they provide about themselves, including income and credit history, does not match reality.
Mismatches with the bank's requirements concerning age and experience can also be reasons for loan denial. Specifically, Nurbank grants consumer loans to individuals no younger than 23 years old and no older than 58 for women and 63 for men at the time the loan is repaid, with total work experience of at least 6 months.
One common reason for loan denial is the absence of officially confirmed income. In our bank, a consumer loan secured by real estate can be obtained with partial income confirmation.
5. What is the current situation in the SME segment? Do you notice any fundamental changes in the SME lending market?
Providing financial support to SMEs is an attractive and viable opportunity for banks. The interest of lenders in providing loans in this direction has grown markedly during the stabilization of the economic market in the post-crisis period. The revival of the SME lending market is due to the recovery of the economy, and with it, increased competition, especially between commercial and state credit financial institutions. As banks show greater interest in offering credit products to entrepreneurs, certain changes have emerged in the loan conditions. First, this has resulted in some easing of bank requirements for borrowers and lower interest rates on loans issued to SMEs. New lending programs tailored specifically to meet the needs of the SME segment have emerged in the market, and banks have begun expanding additional service options for SME clients.
6. Do you feel there is government interest in SME lending development?
There is a significant impact on the SME lending market from state financial organizations that have readily proposed reducing rates and revitalizing existing businesses through various credit programs for the SME segment. The trend of state support for lowering lending rates as part of anti-crisis measures for SME programs has been evident since 2008. Currently, numerous state levers and mechanisms for supporting SME lending are actively functioning and developing in the bank, such as the "Business Roadmap 2020," a subsidy program implemented by the Ministry of Agriculture, and preferential lending programs for the SME segment.
7. What are your bank's competitive advantages in the SME lending market?
The bank actively pursues a policy of lending to the SME segment. To this end, we have made several adjustments to financing conditions to align them with those offered by competing banks. As a result, the SME lending programs offered by the bank have competitive and attractive terms in the financial services market. Additionally, credit activity stimulation for borrowers is achieved through participation in government preferential programs supporting SMEs, enabling our clients to lengthen financing terms and reduce interest rates. Alongside this, the bank actively conducts various promotions for SME clients. We have a highly flexible approach to SME clients.
8. Does your bank work with startups? Do you think banks should finance emerging entrepreneurs?
Before the crisis, a fairly popular credit product was the loan for small and medium-sized businesses from scratch. Funding programs offering loans for small and medium-sized businesses from scratch are currently available from a limited number of banks. It is worth noting that there is a massive number of small and medium-sized businesses in our country, and many of them have a real need for funds. This, seemingly, could open up a wide field for creditor banks, but in practice, the high risks associated with entrepreneurship compel creditors to be very selective in granting loans for small and medium-sized businesses from scratch.
For a bank, the risks of lending to small businesses from scratch cannot be offset merely by providing a potential borrower with a business plan, even one professionally prepared, outlining all activities' nuances and prospects. The domestic market's instability confirms that even quite promising ideas can result in no profit from the implemented project. However, the current year's start-up project lending program within the "Business Roadmap 2020," implemented jointly by the state and second-tier banks, has facilitated funding availability in this market segment. Consequently, the bank is now conducting activities to review applications from new entrepreneurs.
Considering the market's need for banks to fund emerging entrepreneurs, banks undoubtedly should finance this market segment, but to cover existing risks, such funding should continue with state participation—through programs of partial/full loan guarantees via the formation of guarantee funds and other support mechanisms for new entrepreneurs.
Link to the material: http://nevopros.kz/ru/news/371-kto_blagosklonen_k_msb/