The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan has completed its latest cycle of risk-based supervision of the banking sector, combining a comprehensive Supervisory Review and Evaluation Process (SREP), ongoing asset quality review (AQR) and supervisory stress testing. The cycle resulted in the first-time application of bank-specific supervisory capital add-ons and stress-test buffers, and the publication of the Agency’s first report summarising the SREP assessment and methodology. The 2024 SREP was conducted under an updated methodology intended to provide deeper and more comprehensive analysis of banks’ risk identification, assessment and control. The AQR reviewed banks’ loan portfolios and provisioning adequacy, while stress testing assessed resilience to economic and financial crisis scenarios; 11 banks covering 85% of sector assets were included in the AQR and stress testing. The Agency reported a core capital adequacy ratio (k1) of 15.0% versus a 5.5% minimum standard, and stated that all banks remained compliant with minimum requirements after applying the supervisory add-ons. For banks subject to ongoing AQR, add-ons range from 0% to 6% based on SREP and AQR outcomes; for banks not in the AQR, add-ons range from 0% to 3% based on SREP only. Stress-test buffers range from 0% to 3% based on vulnerability under stress and are applied through restrictions on dividend distributions from net profit. Banks are expected to reflect the add-ons and buffers in strategic and budget planning and in defining risk appetite, and the Agency has sent requirements and recommendations to address deficiencies identified in the cycle. Annual reports on the AQR and supervisory stress testing have also been made available on the Agency’s website.

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