Umut Shayakhmetova: devaluation will create difficulties for the banks, but not as global as in 2009

Almaty. September 29. KazTAG - Sergei Zelepukhin. Experts differently reacted to another landslide devaluation of the tenge. Some called it the right step, the others - expressed regret that the monetary authorities have gone the same way again conducting sharp weakening of the national currency again, increasing the risk of the banking system of Kazakhstan.  Umut Shayakhmetova, chairfigure of Halyk Bank of Kazakhstan, commented on the situation.

- Umut Bolathanovna, the National Bank has devaluated the national currency. In fact, it happened  a year after a trend of falling oil prices arose as well as  sharp weakening of the ruble. How do you assess this step of the monetary authorities?

- The devaluation was the right step. First of all, it has helped the real sector. We have seen that, for example, the company "ArcelorMittal Temirtau" made the staff redundant before the devaluation. After this, the condition of the company is expected to improve, and it will employ the laid off workers again.
Similar situation will be observed in the national companies. Therefore, in terms of maintaining economic growth devaluation was painful but necessary measure. In 3-4 months - we will see the positive effects of the devaluation for the economy.

- Don't you think that the devaluation was too belated step?


- I will not talk about the timeliness, but the fact that it has happened - that's good. It was essential for the manufacturing sector.

- You mean, it's better late than never?

- Of course. Now we need a clear and understandable policy of the regulator. Everyone realized that the devaluation will happen sooner or later. Therefore, in my opinion, we all had to have the B plan , which suggested some measures undertaken after the devaluation. The National Bank started doing something only half a month after the devaluation (the decision of the regulator on September 2 to fix the base rate 12%-KazTAG).
I still hope that the plan "B" has been developed. But if we now start to compress the budget, it will make negative effect. Therefore it is better to save targeted programs and more efficient use of the state funds for them. Clearly, this is a difficult task, but don’t we aspire  to get out from the crisis stronger? So now the most important thing - is not to lose control over the situation.

- You have just mentioned the decision of the National Bank on the base rate. It is clear that this step was passed as part of the declared policy of inflation targeting. Is there any change of effective performance of this policy in Kazakhstan?

- We have not seen all the details of inflation targeting. The theory - it is one thing, but in practice - it is quite different. So you need to see the whole range of measures to be taken by the regulator to give a clear comment. But I would like to note the positive moment. The National Bank conducts contact meetings and discussions. And I think that some consensus will be generated.
In my opinion, we need more liberalization. This includes withdrawal of the state from those sectors and activities where there is a market (single registrar of securities, one credit bureau, a single NPF -  
KazTAG). This should be done today. Only then  there will be competition and development.


- You say that the regulator regularly holds discussions with the banks on various issues. And did you discuss the question of the basic rate, its parameters and level?

- No. But in general, we expected the rate decision.

- Do you think that it is justified if the National Bank establishes 10% difference between the provision of unlimited liquidity at a rate of 12% ± 5%, and remove it at the rate of 12% to 5%?

-We are given a very wide range. It will be narrowed. I think, the National Bank is just trying to find an optimum level.

- How much does the basic rate of 12% reflects the realities of Kazakhstan, for example, the ceiling level to attract tenge deposits of banks at the level of 10.5%?

- The fact of its introduction itself- is a positive factor. How is it fixed? Maybe the National Bank was guided by Russia (now there's a base rate of 11% - KazTAG). Maybe the fact that the rate of recruitment and placement in our market stayed at 14%. Therefore, 12%  is better than 14%. If only there was no 17%.


- Based on the current market trends, which forecast can you make in terms of growth in lending and asset growth of the banking sector before the end of this year?

- There will be growth as long as tenge liquidity is provided.  If it is limited, fearing the pressure on the exchange rate, there will be no growth.


- The international rating agencies are concerned that the devaluation will worsen the assets of the banking sector. How strong can  this deterioration turn to be? Isn't a new tenge decline coming contrary to the requirement of the National Bank to lower the idle credit in the second tier banks to 10% by January 1 2016?

- I think there will be a problem with performance of the early response measures of the National Bank to reduce non-performing loans to 10%. But it will be individual for each bank.
Of course, the devaluation will affect the quality of bank assets. This applies to consumer loans. Now we see what impact the weakening of tenge will have on the corporate loans, as we see that the sales of the companies are declining due to the drop of demand.
But we do not expect such  strong deterioration in asset quality, like in 2009, because the share of foreign currency loans is very low now. And they were given exclusively for export earnings.
As for the consumer loans, the people who took them in tenge have benefited. Therefore, we will see reduction of assets quality, but it will not be critical.

-Won't there  be any difficulties for some banks to meet the requirements of the National Bank for the level of bad loans  not higher than 10%, and in terms of the capital?



- Of course, there are banks, which before the devaluation had problems  in respect of the quality of assets and the capital. And if they face further deterioration in the loan portfolio, their capital will continue to decline.
Halyk Bank is in different situation. Our capitalization stands at 19%. Therefore, we feel comfortable. But in general, the banking system will face difficulties, but , not as  global as in 2009.

- Thanks for the interview!