On August 21, 2019, Chairperson of the Management Board and CEO of the National Savings Bank of Kazakhstan (Halyk Bank) JSC Umut Shayakhmatova reported on the bank’s six-month progress and made negative comments on the National Bank’s initiatives in re regulating foreign-currency operations in the country. However, we believe the most important subject was omitted in her report.

We are talking about the fact that, according to the consolidated statements, as of June 30, 2019, Halyk Bank had 9095 bln tenge worth of assets while it only provided its clients with 3493 bln tenge worth of loans. With that, it kept:

• 2111 bln tenge in monetary resources and their equivalents,
• 113 bln in obligatory reserves,
• 192 bln in financial assets measured at fair value via profit or loss,
• 51 bln in lending agencies,
• 1436 bln in financial assets measured at fair value via other integrated profit,
• 1090 bln in debt securities measured at depreciate value minus the reserves for expected credit-linked losses.

As a result, as of June 30, 2019, only 38,6% of Halyk Bank’s total assets was accounted for by loans whereas 53,9% (4880 bln) was accounted for by the aforementioned financial assets minus obligatory reserves.

The information regarding the assets and the size of the bank’s loan portfolio presented on the National Bank’s website on the basis of the non-consolidated statements differs slightly from the above. As of July 1, 2019, they constituted 8730 and 3998 bln tenge respectively, in other words, 45,8% was accounted for by loans. And this is despite the fact that the last indicator constituted 53,8% among second-tier banks.

We believe these numbers show that it is Halyk Bank of Kazakhstan (owned by the relatives of the First President of the Republic of Kazakhstan and chaired by Alexander Pavlov who has recently become a member of the Nur Otan party’s Political Council Bureau) is the country’s main saboteur of Nursultan Nazarbayev’s economic policy.

The reasons why Halyk Bank, its top-management and majority shareholders are ignoring the policy of the Leader of the Nation, Akorda and the government by refusing to increase the provision of business-loans are clear:

• the country is experiencing a sharp deficit of high-quality borrowers,
• the country does not have enough business-projects that can make profit with relatively low risks,
• the bank has the opportunity to make good money (and without many problems at that) by simply investing available funds in the governmental and National Bank’s securities or putting them on NBK’s deposit accounts.

As a result, from the channel ensuring the movement of available funds from one economy’s field to another, the Kazakh banking sector has turned into a stopgap with Halyk Bank (due to the latter’s size and significance) as its base element. 

Note that, in order to kick start the economy, the President, Prime Minister and Chairman of the National Bank’s Management Board Erbolat Dosayev as well as Kazakhstan’s entire super-presential power vertical must, among other things, force (convince, persuade) second-tier banks to dramatically increase the provision of business-loans. But how will this be possible?

For, one way or another, they will meet with the justified resistance on the part of the top-management of the banks that do not want to take unnecessary risks. And Halyk Bank will be in the vanguard of this resistance especially considering that its majority shareholders and the Chairman of the Board of Directors have a direct access to the Leader of the Nation and thus can lobby for anything they want.

In our opinion, the result of this confrontation is quite predictable — Nursultan Nazarbayev will support his own (that is to say his relatives and allies).

In other words, Nazarbayev’s trumpet-tongued appeals to the citizens to stand united and build a happy future for all are worth nothing and will not be put into action. Because they are, first of all, being ignored by the people in possession of political power and gigantic fortunes and then by the rest of the ruling elite.

In these circumstances, it is not in the least surprising that the country literally has to «lure» foreign investors in. However, they only come when political interests are involved, or profits promise to be huge. 

As for the rest of the Kazakhs, in the course of the thirty years that have passed since the Leader of the Nation’s ascension, they seem to have learned to trust not in words but in actions. Therefore, they choose to turn a deaf ear to anything that does not concern them directly, cannot bring immediate dividends or somehow solve their personal everyday problems.

Consequently, if any patriotism has been left in the country at all, it only exists in the form of dissidence. Clearly, none of such patriots exists in Halyk Bank — the numbers attest to it.