The Kyrgyz banking sector continues to grow steadily. As of 31 August, 21 commercial banks and 305 branches operate in the country. Bank assets have increased, and there is also an increase in lending, with dollarisation declining. Financing under Islamic principles is also demonstrating positive dynamics.

ASSETS AND PROFIT GROWTH

Since the beginning of 2024, banks' assets have increased by 20.1% to reach 737.7 billion KGS. This is 123.4 billion more than at the end of 2023. Net profit of banks totalled 21.3 billion KGS.

The banking sector capital has grown by 14% since the beginning of the year, up to 121.1 billion KGS. Foreign participation in the capital totalled 21.3%, or KGS 16.2 billion, which is also higher than at the end of 2023, when the share was 20.3% (KGS 12.2 billion).

The capital adequacy ratio of the banking system totalled 23.9%, which is well above the regulatory level of 12%, but slightly below the level of the end of last year (24.8%).

However, the leverage ratio (debt ratio - the ratio of the company's assets secured by borrowed funds) increased to 12.6%, while the norm is 6%.

At the same time, the banking system's liquidity remains at a high level - 78.3%, which exceeds the norm of 45%. The banking sector's profitability indicators are also improving. Return on assets (ROA - the ratio of business profits to the value of its assets) was 4.7%, up from 4.4% at end-2023. Return on equity (ROE- return on equity) also rose, to 33.4%, up from 32.4% last year.

Incidentally, the share of assets to GDP reached 55.8%. This is up from the end of 2023 when the ratio was 50%.

LOANS AND DEPOSITS

The total deposit base of banking sector customers at the end of August 2024 totalled KGS 528.6 billion, up significantly from KGS 431.3 billion at the end of 2023. Since the beginning of this year, deposits have grown by 22.5%.

The loan portfolio of Kyrgyz banks at the end of August 2024 also demonstrated growth. It reached 295 billion KGS, increasing by 14.4% compared to the end of last year (257.8 billion KGS). At the same time, the volume of loans issued totalled 22.3% of GDP, up from 21% at the end of last year.

Of these, loans to industry decreased by 4.7% to 12.8bn KGS, while agriculture loans increased by 11.5% to 47bn KGS. The trade sector received 77.6 billion KGS in loans, 4.8% more than before.

Construction showed significant growth, with loans increasing by 13.2% to 13.4bn KGS. Mortgage loans also grew by 14.5%, to 34.4 billion KGS, while consumer loans showed the largest growth, up 38.3%, to 77.2 billion KGS.

Other types of loans also grew by 6.8% to 32.5 billion KGS.
Overdue loans increased by 11.7% (7.2 billion KGS), 2.4% of the total loan portfolio. Overall, the share of problem loans was 12.1%, or 35.6 billion KGS. This is higher than earlier - 9.2% (23.8 billion KGS) at the end of 2023.

The level of dollarisation in the banking sector continues to decline. The share of loans issued in foreign currency was 20.4%, 1.6 percentage points lower than at the beginning of 2024. The deposit base also shows a decrease in dollarisation, falling to 42.4%, down by 3.2 percentage points compared to the beginning of the year.

ISLAMIC FINANCING DEVELOPMENT

Since the beginning of 2024, the financing volume under Islamic principles in Kyrgyzstan has increased by 11.2% to 6.7 billion KGS. 

This growth has manifested itself differently in different sectors. In industry, financing increased by 100% to KGS 300 million, and in agriculture by 61.5% to KGS 1 billion.

In trade, financing increased by 12.4% to 800 million KGS, and in construction by 8.8% to 500 million KGS. Mortgage financing showed a significant increase of 83% to KGS 1.9 billion, while consumer financing decreased by 47.8% to KGS 1.3 billion.

For ‘other purposes’ KGS 800 million was received, 77.5% more than last year.

Overdue Islamic financing also increased - by 63.6% to KGS 400 million, 1.7% of total Islamic financing volume.