Gulnara Musataeva, head of Nurbank, explained why the bank lends to corporate clients and SMEs, as well as its intention to engage in syndicated lending.
— Ms. Abaevna, how has the credit appetite of clients in Kazakhstan changed after rounds of base rate cuts?
— The base rate reduction in 2023 cannot be considered significant, as funding remains quite expensive for banks. As a result, the average weighted loan rates remain high. At the same time, we see a stable demand for loans from our corporate clients and SME representatives. State support programs, such as subsidies through the "Damu" fund, where the final rate for the borrower is within 7–8% (APR from 7.2%, from 8.2%) per annum, greatly help in mitigating still high lending rates for SMEs.
We believe that if the current state of the world economy and the political situation are maintained, the tendency to reduce the base rate for 2024 will continue, making lending products more accessible for businesses.
— However, high rates do not prevent active lending to the population. Why is that?
— We believe that more dynamic expansion of personal lending is due to the fact that retail lending is traditionally more profitable for commercial banks due to higher rates. Meanwhile, corporate sector clients require long-term and inexpensive funding. As a rule, investment projects need long-term loans, up to 10 years, with loan sizes reaching several billion tenge.
The current subsidy programs of the "Damu" fund are limited to 3 billion tenge per borrower, with the average loan amount to a corporate client being 5–6 billion tenge, so the "Damu" subsidy programs do not fully cover the need for large funding. For the bank, the process of lending to corporate sector clients remains quite complex as it requires a thorough examination of the project, financial analysis, risk assessment, and sometimes the involvement of external experts.
As of early December 2023, Nurbank's corporate loan portfolio stands at 164 billion tenge, or 56% of the total loan portfolio. As can be seen, we specialize in financing large projects and therefore know and understand the needs of our clients.
— What projects are currently in Nurbank's loan portfolio?
— We strive to diversify the loan portfolio by industries and client segments. In the structure of the corporate loan portfolio, we have projects in the food industry, automotive transport, and construction. Traditionally, Nurbank pays great attention to SME lending. As of early December this year, the SME loan portfolio was valued at 87.1 billion tenge, with an 8% increase since the beginning of the year. The SME segment accounts for 30% of the bank's total loan portfolio, primarily represented by loans to enterprises in the service, trade, agriculture, food production, and construction sectors.
The range of work in the SME block is extremely wide; we lend to completely different business projects: from small coffee shops to production workshops. The loan amounts range from 2–3 million to 3 billion tenge. As noted earlier, Nurbank has been a constant partner of the "Damu" fund and has been comprehensively supporting the development of SMEs within government programs for over 15 years.
— Which areas of entrepreneurial activity does the bank see as the most interesting for itself?
— We highlight lending to women's entrepreneurship, startups, and projects in the green economy. Responsible and financially disciplined women are becoming a growth point for stable and reliable SMEs. Currently, out of 13,357 individual entrepreneurs served by the bank, 5,483 are women. In the SME loan portfolio, loans to women entrepreneurs account for 11.8%, with over 65.6% of such clients.
As for green technologies, we help entrepreneurs develop green economy projects aimed at improving the efficiency of existing natural resources, reducing the negative environmental impact, enhancing energy efficiency, saving energy, and mitigating climate change consequences. The bank's credit support assisted the implementation of projects in electricity supply, gas supply, steam and air conditioning, non-hazardous waste treatment, etc.
Nurbank also focuses on financing socially significant projects such as healthcare and educational institutions. For example, in 2023, we financed the construction and equipment of a new building for the multipurpose medical center "Keruen-Medicus," the opening of which was attended by the President of Kazakhstan. The project's implementation allowed for expanded capabilities of the medical institution in areas such as surgery, neurosurgery, orthopedics, traumatology, and pediatric surgery.
— Can you highlight the most significant projects in the use of renewable energy sources (RES) where the role of Nurbank as a socially responsible financial institution is noticeable?
— According to the task set by President Tokayev, Kazakhstan should achieve carbon neutrality by 2060. More immediate goals include reducing or fully neutralizing the energy deficit in certain regions of Kazakhstan. Currently, a landmark project is being implemented in the Zhetysu region, in which Nurbank participates as a financial operator in collaboration with LLP "Bekzat," — the construction of the Upper-Talap hydroelectric power station on the Koksu River with a prospective capacity of about 12.8 MW. The launch of this hydroelectric station will have a positive impact on the energy security and ecology of the entire region. The planned commissioning date is August 2024. The construction of the hydroelectric station is carried out with direct financial support from the Baiterek Venture Fund.
— The National Bank plans to stimulate syndicated lending. How do you see the involvement of bank resources in syndicated lending?
— Syndicated loans are attractive because two or more commercial banks, the Development Bank of Kazakhstan, as well as international financial institutions, can unite to finance a single borrower. Syndicates are effective through their cooperation; one bank is not always willing to allocate a large sum for financing a large-scale project. Several banks can share the risks and, accordingly, the funding volumes for the project.
The mechanism of syndicated lending can provide the real sector with access to "long" money. A legislative amendments block has already been submitted to parliament for consideration, regulatory incentives for the financial sector have been developed, and a project office for implementing a pool of selected investment projects is operating continuously. Additionally, conditions for the participation of banks and development institutes in syndicated lending will be refined to maximize the involvement of second-tier bank resources in syndicated lending. Since May 2023, we have been actively gaining expertise in syndicated lending and will be one of the main creditors under this program.
Source: https://forbes.kz/economy/finance/nurbank_aktsent_na_kreditovanie_realnogo_sektora_ekonomiki/