However, Halyk Bank was, at least, able to draw on the expertise of its CEO, former central bank governor Grigoriy Marchenko, to steer it through the toughest of times. The bank accepted an equity injection from the Kazakh government in November 2008, but needed less than some of its peers, after consciously adopting a more conservative approach in 2007.
Halyk had also partially diversified exposure on its loan portfolio away from the troubled construction and real estate sectors, and tightened lending criteria so that all corporate borrowers must put up collateral. The risk management function now sits in all branches, in addition to head office. Its status as a comparatively safe institution allowed the bank to accumulate fresh deposits, keeping its loan-to-deposit ratio at 111% by end-2007.
As credit became scarce and many Kazakh bank ratings were downgraded, Halyk retained its BB+ rating from Standard & Poor’s. Crucially, it was also the only Kazakh bank to use the brief window in capital markets in April 2008 to launch a $500m Eurobond, in addition to attracting an oversubscribed syndicated loan for a further $200m four months later, hence reinforcing its liquidity more successfully than its peers.
Finally, fee and commission business contributed 27.5% of total operating profits in 2007, as the bank’s pension fund, asset management and insurance businesses grew strongly to act as a further insulator against the credit market downturn. The next few months will remain difficult for all Kazakh banks, but Halyk could be well positioned to win business from its competitors.
“After consolidating our domestic advantages, successfully expanding into neighbouring countries and preserving a solid capital position through careful and sustainable growth in our assets, we look forward to 2009 with some optimism,” says Mr Marchenko.
