APRIL 11 2014 (The Conway Bulletin) — Kazakh businesses and consumers need to learn to re-pay loans, Kazakhstan’s President Nursultan Nazarbayev said in a rare foray into personal finance. Mr Nazarbayev’s frustration is understandable. Kazakhstan has one of the highest proportions of bad loans in the world, hindering its economy.
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(News report from Issue No. 180, published on April 16 2014)
APRIL 9 2014 (The Conway Bulletin) — Georgia is considering launching a state-run development bank to support large-scale infrastructure projects, media reported. Former Georgian PM and head of the Georgian Dream coalition Bidzina Ivanishvili first voiced the idea of a Georgian Development Bank.
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(News report from Issue No. 180, published on April 16 2014)
APRIL 6 2014 (The Conway Bulletin) — Kazkommertsbank (KazKom), Kazakhstan’s biggest lender, said it made a profit of $288m last year, turning around a loss in 2012. KazKom’s ratio of non-performing loans, though, remained a stubbornly high 32.4%. Kazakhstan has made a priority of reducing its non-performing loans.
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(News report from Issue No. 179, published on April 9 2014)
MARCH 27 2014 (The Conway Bulletin) — Although electronic transactions are growing, Kazakhstan is still a predominantly cash-based society, analysis has shown.
Last year the number of credit and debit cards in circulation grew by 20% in Kazakhstan but the amount of electronic transactions by only 9%.
It feels as if consumers in Kazakhstan still have a mental aversion to using cashless payment models.
Payday for government workers in Kazakhstan is on the 10th day of each month. That’s when the tell-tale queues of people converting their electronic salaries into hard cash form outside branches of Halyk Bank.
It’s also a symbolic illustration of the problem that the Kazakh Central Bank needs to address.
Switching to a more cashless society is important as it is a mark of development. An increased number of electronic transactions in an economy also means that more taxes are paid and the financial system is, generally, more robust.
Alisher, a worker at Eurasia Bank in Almaty, puzzled over the problem.
“Our cards do not carry charges for electronic payments, yet customers refrain from using them,” he said. “Instead they pay withdrawal fees or simply forget that the piece of plastic they are carrying in their wallet is actually an instrument that could save them money and time.”
The problem, though, is not purely the mentality of the consumers. Many shops in Kazakhstan still do not have the right equipment. This is changing, though, and from July 1, new laws will mean that all shops will have to carry card reading machines.
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(News report from Issue No. 178, published on April 2 2014)
APRIL 1 2014 (The Conway Bulletin) — The 20% devaluation of the tenge earlier this year will trigger an increase in bad debt, Roman Kornev, director of financial institutions at Fitch Ratings said. The Kazakh government wants to reduce the amount of non-performing loans on banks’ portfolios.
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(News report from Issue No. 178, published on April 2 2014)
APRIL 1 2014 (The Conway Bulletin) — Uzbekistan’s Central Bank ordered commercial banks to stop taking wire transfers from Russia’s Zolotaya Korona, threatening the country’s remittances lifeline.
Remittances are crucial to Uzbekistan. According to the World Bank, remittances from Russia account for roughly 16% of Uzbekistan’s GDP.
This figure, although, large still underplays the importance of remittances to the Uzbek economy.
They are an essential lifeblood to the much of the population, feeding entire families and beating away poverty.
It makes the unexplained announcement by the Uzbek Central Bank all the more puzzling. Zolotaya Korona, which means Golden Crown, is the most popular system for Uzbeks working in Russia to wire cash home.
Forcing users onto another system, creates an additional barrier.
A couple of days after issuing the ban, the Uzbek Central Bank said it banned Zolotaya Korona because it thought that it was in poor financial health.
Officials at Zolotaya Korona, which is based in the Siberian city of Novosibirsk, have declined to comment on the Uzbek Central Bank’s decision.
In January, around a dozen Azerbaijani banks cut their links to Zolotaya Korona. They said that deals with the Russian company just weren’t profitable enough.
In 2012, Armenia’s Central Bank banned Zolotaya Korona from operating there because it was stopping some people using its services.
Whatever the reason for the Uzbek Central Bank’s sudden ban on Zolotaya Korona, the poor in Uzbekistan will suffer.
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(News report from Issue No. 178, published on April 2 2014)
MARCH 25 2014 (The Conway Bulletin) — Halyk Bank, Kazakhstan’s second largest lender, said net profit rose by 3.5% to $398m in 2013, good news for the Kazakh finance sector. Importantly, also, Halyk Bank said the ratio of so-called non-performing loans had reduced slightly.
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(News report from Issue No. 177, published on March 26 2014)
MARCH 24 2014 (The Conway Bulletin) — The Uzbek government aims to stop cash leaving the country by forcing local companies to get written permission from the Central Bank before opening foreign bank accounts, media reported. Foreign companies have long complained that repatriating profits is a major problem for businesses in Uzbekistan.
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(News report from Issue No. 177, published on March 26 2014)
MARCH 17 2014 (The Conway Bulletin) — The International Monetary Fund (IMF) has thrown its support behind the Azerbaijani government’s order to banks to stop lending so much cash to consumers.. At a press briefing the IMF head in Azerbaijan, Raja Almarzoqi, said: “A decrease in the share of consumer loans would be beneficial.”
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(News report from Issue No. 176, published on March 19 2014)
MARCH 6 2014 (The Conway Bulletin) — Looking to reduce bad loans, Kazakhstan’s Central Bank imposed tighter regulations on its banks’ lending. In a statement, the Central Bank said banks would be banned from lending to people whose repayments would equal half their monthly income. Nearly a third of all 90-day loans in Kazakhstan are overdue.
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(News report from Issue No. 175, published on March 12 2014)