Growth in demand for business loans, according to the latest National Bank survey

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NUR-SULTAN – The demand for corporate loans is growing significantly, despite the continued growth in the cost of credit resources and some tightening of lending conditions, according to the results of the survey conducted by the National Bank of Kazakhstan for the second quarter of 2022, reports the bank’s press service.

Building of the National Bank of Kazakhstan. Photo credit: kapital.kz

Twenty second-tier banks participated in the survey conducted by the National Bank on a quarterly basis to assess the development of demand and supply of credit resources. The increase in credit demand was observed in half of the banks.

The total number of loan applications received in the second quarter increased 19% quarter-on-quarter to 310,000, while average loan volume decreased 8% to 23.3 million ($48,848).

“The growth in the number of applications was largely driven by the active development of online credit scoring products [that enable financial institutions to evaluate the creditworthiness of an individual or a business] for small businesses by large banks, as well as the launch of these products by individual banks. The resumption of lending under government programs had a positive impact on demand in the quarter under review,” said Acting Director of the Financial Stability and Research Department at the National Bank of Kazakhstan, Yerulan Mustafin. .

The demand for loans from medium-sized businesses has also increased. The number of loan applications received nearly quadrupled to 3,900 and the average loan size nearly halved to 265 million tenge (US$555,565).

Large enterprises, however, showed the least demand for loans with just 203 applications and the average loan volume size at 7.6 billion tenge ($15.9 million).

Mustafin said banks were generally more reluctant to lend to small businesses. The approval rate for small business loan applications decreased by 29%, compared to 57% and 55% for medium and large business loan applications, respectively.

“In the next quarter, some banks expect a slight increase in demand for loans from large enterprises, the demand index for small and medium enterprises will remain on average at the level of the first quarter. Most banks do not expect corporate loan interest rates to rise in the next quarter,” Mustafin said.

At the same time, consumer loans increased due to “growing consumer appetite”, according to the National Bank. People were also more likely to borrow after some banks eased their loan terms in terms of collateral requirements for secured consumer loans and increased the limit and repayment period for unsecured loans.

“Along with this, the exodus of customers from Russian banks has also affected demand growth. The number of applications received for consumer loans during the quarter under review increased by 27.8% and 4.3% for secured and unsecured loans, respectively,” Mustafin said.

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