Credits serve as an important financial instrument, empowering both individuals and businesses to secure the necessary funds for meeting their immediate needs or investment projects.
Likewise in other countries in Kazakhstan lending contributes to economic growth by providing access to financing crucial for business development, home purchases, education, and other consumer needs. An efficiently functioning credit system stands as a key component for economic stability and prosperity.
According to data from the National Bank of the Republic of Kazakhstan (hereinafter - NB), the banking system on average expands its credit portfolio by 1.7% monthly. As of November 2023, the credit portfolio of the banking system reached 26.9 trillion tenge, marking a 2.2% increase compared to October 2023. In annual terms, the credit portfolio grew by 21% by the end of November 2023 compared to November 2022.
The primary consumers of credit products in 2023 are individuals with their share averaging 59.3 percentage points throughout the year. Notably, the majority of loans issued to individuals are for consumer needs, constituting an average share of 59.4 percentage points from January to November. Such a dynamic may pose a sharply negative impact on the country in the long term, as it raises the risk of a debt bubble in the economy, potentially leading to a crisis or recession. Consequently, individuals may face difficulties in repaying loans, resulting in bankruptcy and other adverse consequences.
From a macroeconomic perspective, the growth of the credit portfolio also represents positive aspects:
- Firstly, this trend provides opportunities for further economic development in Kazakhstan, enabling the expansion and modernization of production capacities, fostering employment growth, and improving the quality of life for the population.
- Secondly, it enhances Kazakhstan's credit rating internationally making the country more appealing to foreign investors.
- Thirdly, the growth of the credit portfolio allows the banking system to innovate in providing diverse credit products, data analytics, and elevates the country's visibility on the global stage.
