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China is no threat to Kazakhstan's banking

15 may 2013, 17:16
0

The Bank of China tapping into the Kazakh market doesn’t bode ill for the banking sector of Kazakhstan, Russia’s Finam [investment holding company] analyst Anton Soroko said in an interview for Tengrinews.kz.

According to Ranking.kz, in March 2013 alone the Bank of China [its Kazakhstan-based subsidiary] boosted its deposits 4.7 times. Within March the Bank moved from the 25th position up to the 12th position among Kazakhstan-based banks in terms of deposits. The overall deposits figure grew from 34.9 billion tenge to 166 billion tenge.

According to Mr. Soroko, in March almost all Kazakhstan-based banks boosted their deposits nearly twofold. “The growth of deposits kept with the Bank of China 4.7 times is not that impressive against the backdrop of overall growth across banks. It’s no wonder Chinese companies are developing fast. They need to expand into foreign markets to maintain their own growth rates. Kazakhstan as an emerging market looks promising”, the analyst believes.

Anton Soroko. Photo courtesy of urbc.ru

Anton Soroko. Photo courtesy of urbc.ru

However, expansion of the Bank of China may make the competition stiffer in the market. “However, given the currently insignificant share of the market held by the Bank, changes in the competition won’t be tangible. The aggregate demand for banking services on the part of population is sufficient for many banks to develop”, he elaborated.

Igor Arnautov, an analyst with Russia’s independent Investcafe, believes the Bank of China expanding into Kazakhstan will bring forth no negative consequences for the country’s banking sector. According to him, the Bank mostly relies on lending to individuals. “Chinese banks will be exerting influence on the top 20 lenders in Kazakhstan … besides, Chinese banks should be interested in lending to Kazakhstan-based companies”, he believes.

According to him, one may assert that Chinese banks have actually entered the Kazakh market only after at least two of them join the top 20 lenders of Kazakhstan in terms of deposits.

Igor Arnautov. Photo courtesy of tagtown.ru

Igor Arnautov. Photo courtesy of tagtown.ru

Olzhas Khudaibergenov, Director of the Center for Macroeconomic Research, believes the mentioned growth of assets is not enough to say the Bank of China has any significant influence on the country’s banking sector and the overall economy.

“Should we have a closer look at the Bank’s balance sheet, the growth of assets from $0.3 billion to $1.2 billion is assigned to growing liabilities … most likely to the parent bank. In terms of assets the Bank has jumped up from the 25th to the 12th position. The loan portfolio only stands at $0.1 billion. Most likely, the Bank serves Chinese companies operating in Kazakhstan”, he said.

According to Khudaibergenov, the policy Chinese banks are pursuing in Kazakhstan should be visible within 5-6 months’ time. This time will be sufficient to see if they cater to Chinese companies only or if they are actually expanding. “This policy will define possible growth of the loan portfolio and adjacent “threats””.

Olzhas Khudaibergenov. Photo courtesy of kapital.kz

Olzhas Khudaibergenov. Photo courtesy of kapital.kz

Yerlan Khassenbekov, Director of the Agency for Return on Investments, believes the data cited in the Ranking.kz research are different from the quarterly data published by the Bank of China. According to the Bank’s data, deposits as of the end of 2012 stood at 47.8 billion tenge, with the figure growing to 167.3 billion tenge as of the end of the Q1 2013.

According to Khassenbekov, the keen interest of the country’s media to the Bank of China is mostly driven by the overall alleged “Chinese expansion”. However, at the moment the Bank of China is only responsible for 1.78% of all the deposits kept with Kazakhstan-based banks”, the expert elaborated.


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