The total amount of deposits in Kazakhstan in 2022 approached 30 trillion tenge. Household deposits account for 49%, the remainder are company deposits. In the first quarter of 2022, according to Kazakhstan Deposit Insurance Fund, there was a reduction in individual deposits. This is explained by the January events and the impact of sanctions affecting Russian subsidiary banks. Gradually, the situation stabilized—in early November 2022, Kazakhstanis had 14.6 trillion tenge in deposits, and corporate deposits accounted for almost 15 trillion tenge.
To prevent depositors from leaving banks and to avoid an increase in deposit dollarization, KDIF raised the recommended rates several times, and market participants followed by increasing deposit rates. What else happened in the deposit market under economic turbulence conditions is discussed in an exclusive interview with the Chairman of the Board of JSC Nurbank Gulnara Musataeva.
Recently, the head of the National Bank, Galymzhan Pirmatov, reported to the President that the growth of deposits in tenge reached a historic maximum. During the pandemic, the population actively accumulated savings due to closed borders, concerns about lockdowns, and job cuts. What influenced the market this year?
2022 can be called the year of transformation of the global economy, related to policy changes. This trend could not bypass Kazakhstan: many business representatives are reassessing development plans, looking for new directions and niches, creating temporarily free funds, which are quite profitable to place in a bank deposit even for a short term due to high rates. Essentially, for legal entities, placing money in bank deposits serves as a sort of inflation protection.
Individuals use savings accounts to accumulate and grow savings.
Can we say that the increase in the number of depositors is related to digitalization, which is actively developing in the banking sector?
To a large extent, the rise in the number of depositors is related to the increased accessibility of banking services, including through modern technologies. The statistics of the National Bank of Kazakhstan show a decrease in cash circulation and an increase in cashless transactions in the daily life of the population, with the payment market of the country continuing to develop actively. More and more people switch to online payments and use banking apps, which leads to an increase in the balances of current accounts and deposits for individuals.
For example, individuals can easily open a savings deposit in the Nur24.kz mobile application, where services are also available for withdrawing necessary amounts, transferring to a card, or replenishing the deposit at any convenient time.
What other trends have been observed this year in the deposit market?
First of all, it should be noted the repeated increase in the base rate by the National Bank. On December 5, the rate was raised again to 16.75% per annum, so deposit rates rose this year and continue to grow.
At the beginning of this year, the Government of Kazakhstan and the National Bank announced the launch of the tenge deposit protection program, providing for compensation payments of 10% on individual deposits from budget funds. Compensation is paid on deposits placed before February 23, 2022, within the limits of 20 million tenge. The mandatory condition for accruing compensation is the retention of the deposit in the bank until the end of its term, but not less than 12 months from the introduction of the mechanism, i.e., until February 24, 2023.
How have these trends affected your bank, and has the deposit portfolio changed this year?
As of November 1, Nurbank's corporate deposit portfolio amounted to 203.4 billion tenge, increasing by almost 6 billion tenge since the beginning of the year. Individual deposits account for 39.7%, or 134 billion tenge, and the remainder, 60.3%, are corporate deposits. We strive for the diversification of the resource base and its balance with the credit portfolio.
Did the bank increase deposit rates for individuals and legal entities?
Nurbank promptly responded to the recommendations of the Kazakhstan Deposit Insurance Fund (KDIF), thus the rates on individual deposits increased from 13.7% (EIR) to 17.5% (EIR). Today, the bank offers rather high rates on savings deposits
for individuals.
Regarding legal entities, Nurbank also revised remuneration rates on new deposits upwards. Depending on the terms and the product of placement, standard remuneration rates have been increased by a range from 0.5 to 3% in tenge.
In your opinion, why do individuals and legal entities choose Nurbank for their savings?
When choosing a bank to place savings deposits, the client evaluates several important factors: primarily, a reliable bank is chosen. Nurbank has been operating in the market for over 30 years, with the bank's policy throughout this time aimed at ensuring stability and sustainability. The bank's strategy is focused on maintaining asset quality, taking a balanced approach to risk assessment, and ensuring a sufficient liquidity level. The reliability of the financial institution is confirmed by ratings from international agencies at the “B-/B” level with a stable outlook and a solid business reputation. Besides, comfort and convenience are important for clients: Nurbank has an extensive branch network across Kazakhstan, with 17 branches and 98 offices.
Corporate clients choose the bank for several reasons: favorable deposit conditions, personalized service. The client’s interests are our top priority. Today, we are ready to offer the optimal balance of deposit term and remuneration rate.
Do you think the deposit growth trend will continue in 2023?
I believe that if the current state of the global economy and political situation is maintained, the trend of placing temporarily free funds in bank deposits will continue in 2023. We believe the slowdown in inflation is possible only in the second half of next year, and consequently, there will be a decrease in the cost of funding. Now is a very good time to open a deposit at a high rate for the long term, as such high rates might not be available in the near future.
Source: kz.kursiv.media