PRESS RELEASE
On November 12, 2020 online round table “Results of the development of the financial sector of Kazakhstan during the coronavirus pandemic" was held" with the participation of the leadership of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, the National Bank of the Republic of Kazakhstan, the first heads of second-tier banks, insurance companies, professional participants in the securities market, as well as representatives of international organizations. More than 100 representatives of the financial sector and the media watched the roundtable online.
In her speech, the Agency's Chairperson Madina Abylkassymova summed up the development of the financial sector of the Republic of Kazakhstan during the pandemic. It was noted that despite the crisis in the economy, the main indicators of the financial sector are currently showing positive dynamics.
As of October 1st of this year, the equity capital of second-tier banks amounted to 4.5 trillion tenge, an increase of 1.0% since the beginning of the year. The equity capital adequacy ratio was 25.3% with a minimum value of 8%. Second-tier banks ' assets increased by 11.6% to 29.9 trillion tenge since the beginning of the year.
Since the beginning of the year, the assets of the insurance sector have grown by 20% and amounted to 1.4 trillion tenge. The equity of insurance companies increased by 18% and amounted to 653 billion tenge. It is noted that the insurance market is characterized by a fairly high level of stability and solvency. The adequacy of the solvency margin for the market was 2.14, with minimum requirements of at least 1.
Equity market capitalization since the beginning of the year has increased by 2.6% and amounted to 26% of GDP. The volume of corporate debt in circulation since the beginning of the year increased by 18.3% and amounted to 21% of GDP.
The anti-crisis measures of the Agency, the National Bank, and the Government were highlighted in detail, aimed at ensuring financial stability, minimizing the impact of difficult economic conditions and the pandemic on the banking sector, providing financial support to citizens in isolation, as well as allowing SMEs to maintain their business and prevent growth of the debt load and return to the repayment of loans after the resumption of activities.
It was noted that state support measures prevented a decline in the rate of lending to the economy, which has grown by 3.5% since the beginning of this year, including SME loans increased by 5.9% since the beginning of 2020, compared with a decrease of 9.5% over the same period of the previous year.
The Chairperson of the Agency also presented 7 main priorities as a strategy of the country's financial system development, which is laid down in the draft of the Concept for the Development of the Financial Sector of the Republic of Kazakhstan till 2030, developed by the regulator jointly with the National Bank, the financial sector representatives, and international experts. These include ensuring financial stability, increasing the competitiveness of financial organizations, restoring the role of the banking sector in financing the economy, improving the quality of corporate governance, increasing transparency and diversifying the ownership structure of financial organizations, increasing financial inclusion, and financial literacy, and introducing new technologies and innovations.
Deputy Chairman of the National Bank Akylzhan Baimagambetov in his speech highlighted the features of monetary policy during the coronavirus pandemic. The adoption of operational measures by the National Bank allowed to stabilize the foreign exchange market and reduce the risks of a potential surge in inflation. Currently, monetary policy is a stimulating nature, which allows maintaining economic activity in the country, including within the framework of ongoing lending programs. Further work of the National Bank will be aimed at improving the effectiveness of monetary policy in cooperation with the Agency and the Government within the framework of the Monetary Policy Strategy being developed until 2030.
In turn, the head of the Association of Financiers of Kazakhstan Elena Bakhmutova, noted the need to move away from the classical banking model through digital transformation and the transition to universal financial services with the maximum use of artificial intelligence, as well as to offer complex financial products in the most convenient form and as soon as possible with taking into account the increased requirements of customers. To ensure the competitiveness of the financial sector in the context of globalization, the main priority in the regulation of the financial sector is the need to create a comfortable environment for the introduction of innovations, as well as equal conditions for similar financial product regulation.
As an example of the effective use of modern technologies, the experience of Kaspi.kz JSC was presented, which carried out a successful IPO on the London Stock Exchange, becoming the largest company in Kazakhstan in terms of capitalization.
The head of the Centras Group companies, Eldar Abdrazakov also indicated the need for digitalization in the insurance sector, which accelerated significantly during the pandemic. According to him, the insurance organizations' business models should be focused on relationships with partners and customers, the quality and level of services provided. At the same time, the main strategic challenges are the development of new products, the creation of new ecosystems, the formation of new market practices.
Agris Preimanis, Director of the European Bank for Reconstruction and Development in Kazakhstan, shared the EBRD's experience in implementing projects that contribute to solving environmental problems, noting the importance of active use of Green Finance. To accelerate the implementation of innovative projects, he noted the importance of the widespread use of venture financing. Among other things, he said, the financial sector should play a key role in increasing inclusiveness, improving the opportunities of women, youth, and the population in the regions, which is the basis for ensuring social stability.
Ernst & Young's partner Luca Martini presented the main trends in the global financial services market after the COVID-19 pandemic, which confirmed the earlier theses about the need for active digitalization of customer interaction procedures, in-depth study of their needs, as well as the revision of traditional business models. As the main directions for improving the efficiency of financial organizations, measures were proposed to introduce an individual approach to the client, reduce transaction costs in the provision of services through simplification and investment in technology.
During the round table, Alina Aldambergen, the Chairperson of the Board of the Kazakhstan Stock Exchange (KASE), outlined measures that will further expand the role of the securities market in the economy. The key of which is the further transition to a new trading and clearing system, as well as the introduction of Central counterparty services. The drivers of the stock market development are the ongoing work to improve the status of the domestic securities market in the FTSE/MSCI indices, the Agency's legislative initiatives, market-making programs, and increasing market liquidity, granting banks the right to provide a full range of brokerage services, further digitalization of financial services, the introduction of new investment tools, and transfer of pension assets to trust management.
Timur Abilkassymov, the partner of the consulting company Radius Advisory Lab, proposed to consider issues related to the development of human capital, stimulating bank lending, increasing institutional demand, as well as depth and liquidity in the stock market, approaches to developing risk-focused supervision, improving the quality of audits of financial statements and improving corporate governance.
Galim Khusainov, Chairman of the Board of Bank CenterCredit JSC, in his speech told about additional proposals for further increasing bank lending to SMEs by building high-quality scoring models, expanding access of second-tier banks to various databases, simplifying loan issuance procedures, developing a market for unsecured loans and digitalization of procedures for the formation of credit dossiers. Improvement of collection procedures and replacement of expensive foreign funding in the subsoil user market is indicated as an additional driver of lending.
In general, the participants of the round table noted the high level of organization of the event, as well as the relevance of the issues considered.
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