The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan published its report on the 2024 regular Asset Quality Review (AQR) of the banking sector, covering 11 major banks that accounted for 85% of system assets as at 1 January 2024. The results indicated system-wide resilience, with capital adequacy across the 11 banks at 16.3%, above the 5.5% regulatory minimum. The AQR assessed KZT 27.4 trillion of exposures, up 31.3% from the prior year, with the largest concentrations in unsecured consumer lending (KZT 9.0 trillion), large business (KZT 4.4 trillion), small business (KZT 3.4 trillion) and investment projects (KZT 3.1 trillion). It included individual reviews of 1,583 large borrowers plus 856 related borrowers and guarantors (KZT 9.6 trillion of debt) and collective analysis of 29.9 million loans totalling KZT 17.8 trillion. The difference between banks’ and the AQR’s provisioning estimates was KZT 415.1 billion, with Stage 2 exposures rising by KZT 492.7 billion to 3.3% from 1.5% and Stage 3 exposures rising by KZT 327.8 billion to 9.8% from 8.6%; compared with the 2023 regular AQR, reserve adjustments were KZT 36.1 billion lower and the Stage 2 and Stage 3 shares were down 0.5 percentage points and 3.7 percentage points. The regular AQR forms part of the supervisory cycle alongside the Supervisory Review and Evaluation Process (SREP) and supervisory stress testing, and its results are used to adjust banks’ reserves and capital and to set the baseline for the annual supervisory stress test.

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