Almaty, 21 October. The combined net profit of Kazakh banks for January–September fell by 10% year on year, or 200 billion tenge, to 1.8 trillion tenge, according to a National Bank report; insurance companies' profit for eight months fell by 53.6%.
Bank profits have been falling since January, for the first time in five years, and by double digits every month. This followed the regulator's tightening of lending rules for individuals and prudential requirements as part of the fight against household over-indebtedness, as consumer lending cooled.
Insurers' revenues rose by 24.9% to 1.59 trillion tenge, but expenses rose by 39.3% to 1.49 trillion, so profit shrank to 88.5 billion tenge. Life insurance profit fell especially sharply, by 79.7% to 14.3 billion. The Agency for Regulation and Development of the Financial Market is now preparing a large-scale reform of the insurance market.
Prudential requirements are rules on how much capital and reserves banks must hold in case loans are not repaid: the stricter they are, the less a bank can earn from risky lending.
What it means: Restrictions on consumer loans, introduced so that people take on less debt, have hit bank profits; insurers' expenses are growing faster than their revenues.
Who benefits: The restrictions benefit borrowers, who are protected from excessive debt, and the stability of the financial system; the losers are banks and their shareholders, whose profits have been falling for nine months in a row.
Background: Bank profits have been falling since January, for the first time in five years.
List of sources used: National Bank, National Bank
Artificial intelligence was used in preparing this material.
