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Financials

Kazakh bank CenterCredit sees bad loans rising after devaluation

ALMATY, Oct 8 (Reuters) - Kazakh lender Bank CenterCredit expects its bad loans, previously on the decline, to rise again after a sharp devaluation of the tenge, Chief Executive Vladislav Lee told Reuters on Thursday.

The tenge has lost more than 31 percent of its value against the dollar since Kazakhstan’s central bank abandoned its dollar peg in August, due to pressure from low oil prices and the cheaper Russian rouble.

The devaluation is likely to put pressure on companies and individuals who had borrowed in foreign currencies, seeking lower interest rates.

“Our non-performing loans rose from 11.3 percent to 12.5 percent within one month (after the devaluation),” Lee said in an interview.

Lee said the ratio could worsen to between 13.0 and 13.5 percent by the end of this year, although that would still be an improvement from 14.5 percent at the end of 2014 at Kazakhstan’s No.5 lender by assets.

“The worsening of the overall economic situation will affect the loan book quality,” Lee said. “Dollar-denominated loans make up almost 20 percent of our loan book, (although) most of them had already been bad loans.”

In the Kazakh banking system as a whole, dollar loans account for 35 percent of outstanding credit, he added.

Kookmin Bank, South Korea’s top mortgage lender, has a 41.93 percent stake in CenterCredit. (Writing by Olzhas Auyezov; Editing by David Holmes)

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