National Bank of Kazakhstan describes qualitative development options of credit market of the republic in initial 6 months of 2008

/IRBIS, August 11, 08/ - Press service of the National Bank of the Republic of Kazakhstan disseminated press release, dated August 8, 2008 of the following content: Quotation start July 2008 National Bank, with the purpose to monitor situation on credit market, conducted the regular research "Condition and forecast of credit market's options" in the form of personal interview with commercial banks` representatives. Situation on domestic credit market in initial 6 months of 2008 was characterized by sharp decreasing of demand on mortgage loan activity, growth of demand on credit resources on the side of nonfinancial organizations and further steps on banks` credit policy stiffening. From the number of interviewed banks 73 % noted stiffening crediting relative to nonfinancial organizations, 49 % to mortgage and 43 % to consumer crediting. The main factors affected the stiffening crediting were: - risk of changing value of mortgage security; - prospects of real estate market development; - batting average of loaners capacity to pay debt; - total economy expectations; - changing the stake of high-risk loans in loan portfolio. At the same time, factors of competitiveness, funding and capital resources accessibility made less influence during last analyzed period. Top 5 major banks made exception, for which accessibility and value of funding on domestic and foreign capital markets made prime meaning and influence stiffening crediting with above mentioned factors. Retail direction of banks activity is characterized by sharp decreasing of demand on mortgage loan activity all over the market (60 % respondents noted demand decreasing) and insignificant demand decreasing on consumer crediting (38 % responders noted). At that, its insignificant growth on consumer crediting on separate banks is observed. This growth is explained by retaining of the level of consumer expenditures on durable commodities and expenditures, not linked with real estate. Tendency of decreasing demand on mortgage is retaining because of uncertainties on real estate market and waiting position of banks` loaners (in the part of loan property realization). Experts` estimations agree on opinion that further insignificant decreasing of average price on real estate with reaching price bottom and its stabilization with possible growth prospect is expected in next quarter (77 % respondents noted further insignificant decreasing of average price). Credit market is functioning under conditions of prolonged liquidity crisis, which will gradually shift to acute sector of economy, underlining its system character. Correlation of markets and dependence of acute sector on financial one reflected on banks` activity. Problems in acute sector firstly affected problem credits growth. In particular, the growth of corporate business and physical entities expirations on granted loans. More than 1/3 banks note growth of operations on penalty of loan property and operations on restructuring debts of loaners. Growth of red burden and expenses on current loans servicing in consequence of stiffening crediting (loan requirements and margin on risk crediting have the biggest stiffening) affected the quality of banks` loan portfolio. According to experts, its insignificant worsening is observed. This aspect arouse highest interest of rating agencies, that's why banks while estimating risk projects changed the focus on mortgage security on monitoring of loaners` financial condition. At that, loan requirements stiffened more under the influence of constructing sector of economy and real estate market. By the results of interview, banks note that the level of problem assets is not on the critical but control level. Banks haven't use the total arsenal of current market instruments on overcoming problems. In particular, banks make deal with collector agencies, examine offers of foreign banks, in part of purchasing problem assets and using mechanism of securitization. Besides, the opportunity of creating special organization on clearing banks` financial statement from problem assets with government share can be examined by credit market's participants. Results of interview are published at National Bank of RK website, in the section "Financial stability". Quotation end [2008-08-11]