According to the four-month results of 2019, Kaspi Bank has become Kazakhstan’s second largest bank in terms of the size of assets (1 867.3 bln tenge). The other top five include Halyk Bank (8 471.2 bln tenge), SB of Sberbank (1 865.5 bln tenge), ForteBank (1.768.7 bln tenge) and Bank CenterCredit (1 479.9 bln tenge). These banks account for 62.9% of all the assets in the banking system.
In our opinion, this is a big success for Kaspi Bank JSC.
This success is particularly noteworthy because it has been achieved amid the obvious stagnation in the sector (despite the growth of business loans provided by the “survived” banks) and the serious problems that one of the bank’s end shareholders had in Russia. We are talking about Baring Vostok Group (through Kaspi Group JSC, Kazpi.kz (KSPI) and Asia Partners Limited).
This is what it looks like in real-time mode. As of January 1, 2018, Kaspi Bank JSC occupied 8th place among second-tier banks in terms of the size of assets. In terms of loan portfolio, it came fifths, in terms of physical bodies’ deposits – third, in terms of legal bodies’ deposits – 15th. As of May 1, 2019, it held the 2dn, 3rd, 2nd and 16th places, correspondingly.
So, one must give proper respect to the business-intuition and high professionalism of Kaspi Bank’s top-management and its majority shareholders for, amid the stagnation of the non-resource economy, they put emphasis on increasing the physical bodies’ loan portfolio which worked to their benefit.
The problem, however, is that the risks, both market-related and the non-market ones, have grown as well.
Out of the market-related risks, the most significant one is the degeneration of the loan quality caused by, among other things, the decreasing level of life and the tenge devaluation (as of May 1, 2019, the share of non-performing loans constituted 14.16% in the bank’s loan portfolio including the over 90 days late payments (8.38%) which is lower than the country’s average).
The second group of risks include the negative development of Calvey’s case in Russia and the serious problems of Kayrat Satybaldy and Samat Abish, Nursultan Nazarbayev’s nephews.
The thing is that the market does not believe that entrepreneur Kayrat Satybaldy had suddenly decided to leave such a successful and profitable business as Kaspi Bank JSC for no reason.
Neither do we (see our publication of February 15, 2019 On Satybaldy and His Exit from Kaspi Bank.
According to our insiders, Kayrat Satybaldy and his younger brother Samat Abish (currently serving as the First Deputy Chair of the National Security Committee in the rank of lieutenant general) have close relationships. Moreover, Kayrat Satybaldy, allegedly, is acting as his younger brother’s advisor in all matters and the latter does not make a move without consulting the former first. Together, they constitute a separate elite group within the ruling clan of the Nazarbayev family headed by the Leader of the Nation.
Presently, Kayrat Satybaldy and Samat Abish are trying to remain in the shadows. Even though Samat Abish is suspected of being chosen by Nazarbayev as his real successor on the top of the Kazakh authoritarian political system and the super-presidential vertical (see our 2017 publication The Abish Plan Guaranteed by Four).
In the meantime, current President of the Republic of Kazakhstan Kasym-Zhomart Tokayev will be left with the role of a buffoon.
However, since Nursultan Nazarbayev’s eldest daughter and the Speaker of the Kazakh Senate Dariga Nazarbayeva is also coveting the presidential post (already in quite an open fashion), one must not underestimate the risk of her ascending to power.
We believe, however, that, at this moment, Kaspi Bank JSC is not facing big market-related and non-market risks. Therefore, one may forecast that, as long as the First President of the Republic of Kazakhstan is alive and relatively well while the general constitution of the ruling elite does not change too rapidly, Kaspi Bank JSC will remain profitable. Of course, it is not to outshine Halyk Bank of Kazakhstan but can solidify its hold on the second place among Kazakhstan’s second-tier banks.