The past year was quite challenging and unpredictable for entrepreneurs.
Disruptions in logistics, an increase in the base rate, currency fluctuations — all these factors affected business efficiency. To support entrepreneurs in 2022, Nurbank expanded the powers of its branches and was able to significantly speed up the process of reviewing loan applications. In an interview with a correspondent from the business information center Kapital.kz, the bank's Chairman of the Board, Gulnara Musataeva, spoke about the financial institution's products and how it helps businesses and retail borrowers reduce their credit burden.
— Last year cannot be described as easy for Kazakhstani businesses. Looking at your MSME borrowers, which sectors faced the most difficulties?
— Events that happened in 2022 affected almost all business sectors. For instance, entrepreneurs in Almaty and Shymkent suffered more during the January events; this primarily affected the restaurant and retail sectors. Some entrepreneurs faced disruptions in logistics chains, and in March-April 2022, they complained about the volatility of the dollar and Russian ruble rates. Nurbank historically adheres to a policy of loyalty towards existing clients. Therefore, we use both government support programs and our own loan restructuring programs. Overall, our MSME credit portfolio for the 12 months of 2022 amounted to 80.7 billion tenge.
— Can you always say you reach out to businesses and are ready to ease loan conditions for MSMEs?
— In 2022, we expanded the powers of our branches and were able to significantly speed up the review process of loan applications. In 2023, we plan to simplify the lending process for micro and small business entities. Also, it's worth mentioning that government support programs play a significant role in mitigating the effects of inflation growth and lending rates for MSMEs — subsidies through the "Damu" fund, where the final rate for the borrower does not exceed 6% per annum.
— Last year, credit resources became less accessible for businesses overall. Throughout 2022, the base rate increased from 10.25% to 16.75%. How did the bank react to the base rate increase?
— Of course, changes in funding costs affected the operations of all banks, and we are no exception. Nurbank maintains a balance of interests between borrowers by offering market-average loan rates and depositors. The bank always focuses on market rates.
— What are the average loan rates for MSMEs in the country?
— Today, the average rates for MSME segment loans range from 19 to 25%. Since the beginning of the year, such rates have increased by an average of 5%. This is due to the increase in the National Bank's base rate. At Nurbank, MSME loan rates range from 21 to 23%.
— Let's move on to Nurbank's products. What programs can MSMEs currently use at your bank?
— The bank has a wide range of products. We would like to highlight the "Business Onay" credit product, which will be of interest to MSMEs. The purpose of the loan is to replenish working capital, investment goals, and refinancing loans obtained in other second-tier banks. For example, such a loan for investment purposes can be taken for up to 84 months, and for working capital replenishment — up to 36 months.
For individual entrepreneurs and farms with significant turnover, the universal product "MSME Business" will be interesting. Such a loan can be taken for replenishing working capital, acquiring and reconstructing fixed assets, and investment goals. — Let's talk about the retail segment.
— How much lower are the rates for secured loans compared to unsecured ones in your bank?
— The main advantage of secured lending is lower rates since the borrower's property serves as a guarantee of fund return. For example, in our bank, the rate on a secured loan is 5% lower than on an unsecured loan. An additional advantage is loan terms up to 120 months.
The monthly payment on a secured loan is traditionally lower due to the term and rate.
Of course, it is much easier and faster to obtain an unsecured credit. The client always has the right to choose: to take a loan secured by real estate at a low rate or quickly get an unsecured loan, but at a higher rate. Moreover, the reward rate for unsecured loans depends on the analysis of the client's solvency and creditworthiness. We recommend not being afraid to provide collateral. After all, in some banks, the APR on unsecured loans can reach 56%. The borrower should always realistically assess their financial capabilities and weigh the risks.
If a borrower wants to reduce their credit burden, it is better to refinance their loan. Debt refinancing allows obtaining a new loan on more favorable terms. If there are several loans, they can be consolidated — combined into one with a lower interest rate. Thus, the financial burden difference in refinancing can be reduced by twice.
— Many are afraid to take mortgages because if the borrower cannot meet their obligations, the bank has the right to seize the property. How willing is your bank to communicate with borrowers?
— The main advantage of Nurbank is an individual approach. For us, these are not empty words; we always try to find optimal solutions when individuals encounter difficulties in repaying loans. If a borrower defaults, we investigate why it happened and offer various options to reduce the debt load: deferring the principal debt, accrued interest, or extending the loan term. These measures are designed so the borrower can subsequently follow the schedule and meet their loan obligations. This applies to both retail and the MSME sector. The bank is not in a hurry to realize collateral property and tries to help borrowers through various mechanisms. We understand that the more stable and resilient our borrowers are, the stronger the country's economy.
Source: https://kapital.kz
