Kazakhstan’s banking sector sees strong loan expansion amid retail lending surge in 2025

Kazakhstan’s banking sector is experiencing robust growth in 2025, led by a surge in retail and consumer lending, with total loans rising sharply despite high interest rates and macroeconomic uncertainties.

As of May 1, 2025, the country’s total banking loan portfolio reached 37.4 trillion tenge (approximately $74.8 billion), up 4.1% year-to-date, according to sector data. When including loans issued by microfinance institutions and public sector lenders, the figure climbs to 42.8 trillion tenge, reflecting a 20.4% year-on-year increase as of April.

Key Drivers of Growth

• Consumer lending accounted for 77% of the sector's credit growth, with retail loans making up 60% of total lending by the end of 2024.
• Business loans, including those to non-financial entities and entrepreneurs, made up 45.6% of the total, with a modest 6% increase in real terms.
• Medium and large enterprises led the corporate lending growth, while small business loans declined, indicating a possible gap in credit access for SMEs.
   

Despite a policy interest rate of 16.5% (as of March 2025), the banking sector has remained profitable, supported by a net interest margin of 6.4% in 2024 and a record 37.0% return on equity in 2023.

Sector Resilience and Risks

Kazakhstan’s banks benefit from strong capital buffers and liquidity, positioning them well against external shocks. However, the rapid pace of unsecured retail loan issuance has raised concerns over rising household debt and potential credit quality deterioration if economic conditions weaken.

The government’s concessional lending programs have played a crucial role in supporting corporate credit, particularly amid tighter monetary conditions and persistent inflationary pressure.

External Pressures and Regulatory Oversight

The sector’s growth occurs in a complex environment marked by:

• High inflation and elevated policy rates
• Dependence on the oil sector, exposing banks to commodity volatility
• Geopolitical tensions, particularly the ongoing Russia–Ukraine conflict
   

Regulatory authorities have increased scrutiny on lending practices, but observers warn that strong housing market dynamics and fast credit expansion could create financial imbalances if not closely managed.

Outlook

Kazakhstan’s banking sector is projected to sustain healthy but moderating growth through 2025. Retail lending will likely remain the core engine, while business lending—especially to large firms—continues to rebound with government support. The sector’s fundamentals are strong, yet vigilance is required to address potential risks from consumer debt levels and external economic shocks.

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