Moody's: Kazakhstan must do more to curb risky retail lending

Moody's: Kazakhstan must do more to curb risky retail lending

Kazakhstan’s authorities may need to take more measures to prevent a fresh asset quality crisis fuelled by risky retail lending, rating agency Moody’s said, warning that a spike in defaults was looming.

"Retail loans in Kazakhstan are growing rapidly again, raising the risk of a repeat of the asset quality crisis in 2014-15," Moody’s said in a report.

It was added that the ratio of total retail loans, excluding mortgages, to overall nominal household income will by mid-2020 exceed a pre-crisis high of 2.4 times reached in 2013, without regulatory measures to restrict loan growth.

Stable economic conditions in the former Soviet republic and steps such as writing down some of the existing debt and a "ban on lending to economically weak individuals" may extend the credit cycle, it said.

“However, such measures may prove inadequate as banks could find loopholes to circumvent them as they have in the past," Reuters cited Moody’s as saying.

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