In Kazakhstan, the total loan portfolio of banks has been increasing for the second year. The high base rate has led to increased deposit rates, affecting funding costs. However, business is developing and needs borrowed funds. Under these conditions, Nurbank is expanding its loan portfolio by focusing on loans to entrepreneurs. State programs implemented by the Damu Fund provide support here. Thanks to interest rate subsidies, businesses receive loans at 7-8% (APR from 7.2%, from 8.2%) per annum. Gulnara Musataeva, Head of Nurbank, told DK about the bank's loan products for SMEs and new projects of the financial institution.
— Tell us about your loan portfolio in the SME sector.
— In 2022, the growth of the loan portfolio was 14%. The growth is due to attracting new large clients for financing, making changes to existing business processes that expanded the powers of branches and accelerated the consideration of loan applications.
To cite statistics, as of today, the SME share is 29% of the bank's total loan portfolio. In the period from January to March 2023, the SME block has 20,279 clients.
The main share of the SME loan portfolio consists of loans for investment purposes. The average loan amount for SMEs is 60 million tenge. However, our goal is to diversify the loan portfolio and increase the share of loans in the micro and small business segment up to 20 million tenge. For this reason, we plan to develop cooperation with the Damu Fund for portfolio subsidizing and guaranteeing loans, ensuring the acceptance of applications online.
— What SME loan programs does your bank offer?
— Our product line for SME clients currently fully meets market requirements. Nurbank offers a wide range of products with competitive rates and terms, where each client can choose conditions that best suit him and his business.
We would especially like to highlight the "Business Onay" loan product, which is of interest to micro and small businesses. The goal of lending is to replenish working capital, for investment purposes, and to refinance loans received from other second-tier banks. For example, for investment purposes, such a loan can be arranged for up to 60 months, and for working capital replenishment — up to 36 months. The "Business Onay" product has two directions — secured and unsecured. Secured — up to 20 million tenge with a guarantee from the Damu Fund, unsecured — up to 7 million tenge.
For individual entrepreneurs and farms with significant turnover, the universal product "SME Business" will be of interest. Such a loan can be obtained to replenish working capital, acquire and reconstruct fixed assets, and for investment purposes.
— We know that in the near future you plan to launch unsecured lending for SMEs. Tell us about this product and its advantages. Is it difficult to arrange such a loan?
— An unsecured loan under the "Business Onay" banking product can be taken out by sole proprietors to cover temporary cash gaps and replenish working capital for a short period. The main advantage is minimal requirements for the client, a simplified document package, and quick processing times.
The borrower's requirements for this product are as follows. For example, a positive credit history over the past three years, outstanding balance on unsecured loans should not exceed 7 million tenge, the borrower must have at least six months of experience in the main activity, and provide statements from current accounts and a personal guarantee of an individual/participant of an LLP. However, the bank may additionally request other documents.
— Does the new product (unsecured lending for SMEs) signify changes in your approach to SME lending?
— According to Nurbank's business development strategy, one of the key aspects is lending for SMEs, so taking into account market trends and client requests, we are ready to take on the risks associated with unsecured lending.
However, it cannot be said that we are significantly changing our approach to SME lending. We actively lend to SMEs within the framework of state programs to support domestic business, implemented by the Damu Fund. We are pleased to participate in this program, helping the state efficiently deliver credit resources to end recipients. Typically, through the Damu Fund, we subsidize the interest rate — our client reduces it to 7-8% (APR from 7.2%, from 8.2%) per annum. The Damu Fund also guarantees SME loans up to 85% of their amount. The volume of loan disbursements is growing annually: according to our statistics, every second project is financed within the framework of state programs through subsidization/guaranteeing or both instruments simultaneously.
We always strive to offer the client the most comfortable conditions for cooperation and jointly find the optimal ways to service the loan. The focus in SME lending is on building long-term relationships and business development for the client. Personal service and an individual approach are our credo at all stages of interaction with the client. Our priority tasks are to maintain a dialogue with the client, respond to their needs, and meet the demands of the time. We are focused on providing personalized flexible service for clients, offering competitive conditions in the banking services market.
— Which sectors does the bank most frequently lend to in the SME sector? Are you planning to expand your interests or shift them towards any new sectors?
— Our portfolio is diversified by industry. However, a large part of it is represented by loans to enterprises in the service sector, trade, agriculture, food production, and construction.
In the structure of the SME loan portfolio, the shares of loans are distributed as follows: the main sectors of economic activity in the SME segment are (by shares in the SME loan portfolio): services sector — 41.8%, industry — 19.1%, transport — 15%, trade — 11.7%, agriculture — 6.8%, construction — 5.2%, other industries — 1.3%.
— What are Nurbank's plans for SME lending this year?
— According to our plans, this year the growth of the SME loan portfolio will amount to 15%. Moreover, we intend to focus on the micro and small business segments. We plan to launch online lending in the mobile application.
In addition, we aim to develop the existing area — the issuance of bank guarantees, allowing clients to minimize risks when concluding large contracts or participating in tenders. Guarantees are necessary when concluding large contracts or working with a new partner, as well as with small suppliers, to ensure the return of money in unforeseen circumstances. Guarantees are also needed when deferring payments, making prepayments under contracts, or participating in a tender. I emphasize that the cost of such a service is cheaper than obtaining a loan. We have improved the terms of this banking product and hope that this will help attract new clients with high income for further servicing across the entire MSME product line.
Source: https://dknews.kz
