Business Portal Kursiv.kz
Construction and housing acquisition became the most popular lending objects for banks by the end of March 2017, analysts note. Meanwhile, collateralized loans remain a priority, and small and medium-sized businesses - trade and services - lead in lending.
According to information published by the analytical agency ranking.kz, the loan portfolio of banks in Kazakhstan remained practically unchanged by the end of March 2017, with loans growing by 0.2% to 12.5 trillion tenge. The most notable annual growth in lending objects was in loans for construction and housing acquisition by citizens, which grew by 7.4% to 1.1 trillion tenge. This was followed by consumer loans, which increased by 1.6% to 2.5 trillion tenge, with the share rising from 19.9% to 20.2%.
The Safest Loans
The head of risk management at VTB Group's subsidiary banks, Alexander Lvov, stated that the most secure lending objects are collateralized ones, specifically completed objects that have been put into operation, as their collateral risks are minimal.
The same situation is noted at JSC Nurbank. "Undoubtedly, cash is a highly liquid form of collateral. If we speak of solid collateral, the safest type is real estate. Based on existing practices, the most liquid real estate is urban apartments in multi-apartment residential buildings located in cities of national or regional significance. This is the market segment in highest demand," the bank's press service shared.
In Nurbank, it was detailed that the offered collateral property must meet several requirements. For example, the property should offer liquidity ensured by stable prices and a consistent market situation for similar properties used as collateral. It is also divided into segments: residential, commercial, industrial, warehousing, and others.
"The pricing of each segment depends on the impact of any future events on value, influenced by economic conditions, demographic situations, population solvency, and other regional factors affecting the demand and supply balance in the current market," the bank explained.
For legal entities, the safest lending objects are retail-entertainment complexes, food production, extraction (production) and export of oil, and non-ferrous metals.
Significant growth at VTB Bank is seen in wholesale and retail trade and services sectors. "In 2017, we observed a significant reduction in lending volumes to production sector enterprises," Mr. Lvov noted.
The greatest increase in lending at Nurbank in 2017 was noted in food production. Growth in Nurbank's most popular lending sectors, specifically construction, reached 19.3% since the beginning of the year, with wholesale trade increasing by 10.3%.
The top-5 sectors for legal entities included entertainment complex construction, food production, road construction, wholesale-retail trade of consumer goods, and oil and non-ferrous metals extraction (production) and export.
At VTB Bank, leaders include trade and services, construction, with transport services (freight or passenger) in fourth place, and agriculture and crop production in fifth.
Earlier, Halyk Bank's Chairperson Yumut Shayakhmetova pointed out a decline in growth for product output in sectoral directions.
Primarily, this affects agriculture, which faces a heavy debt burden. According to her, banks today do not lend to agricultural companies. The construction sector also poses certain risks due to falling demand and prices for real estate. Sales decline is also noted in the automobile market and in sales of durable goods. Only retail trade remains stable, with indicators maintaining previous levels without significant growth. Comparatively good lending levels are also maintained in small and medium-sized businesses.
Who Gets Rejected More Often
The largest number of rejections for legal entities at Nurbank are given to loan applications for housing construction and agriculture.
Regarding individuals, such data is not available, as loans for consumer purposes have been in demand in the personal lending market over recent years, and specific purposes primarily are not tracked by the bank. According to regulatory requirements, purposes must be confirmed if the loan amount exceeds 0.02% of own capital.
At VTB Bank, legal entity loan applications, particularly for investment purposes, are most frequently rejected. "This is due to the use of more stringent approaches to assessing payment ability," Mr. Lvov explained.
In personal lending, unsecured consumer loans are most often rejected. This relates to low client solvency, overindebtedness, and negative credit history.
However, Nurbank's underwriting model for assessing borrower solvency does not change. Mr. Lvov noted that VTB uses advanced methods for this purpose, allowing the bank to constantly adapt to new industry requirements and enhance its risk profile.
12.06.2017
