Standard & Poor’s presented its report on the Kazakh banking system this week, revealing its concerns over very fast growth of Kazakh banks’ lending, up 70% year-over-year in 2005 compared to 50% y/y in 2004. The indicator is expected to remain at the same level in 2006 to 2007. S&P pointed out that the banking sector creditworthiness is constrained by non-transparent ownership, which is typically a barrier for banks’ rating upgrades.

High loan concentrations in one industry, a large number of individual borrowers and a large share of international loans also worry the S&P. However, the agency noted some progress in development of a regulatory and legal framework, and the gradual business diversification of the banks. The system needs a fresh momentum, which can be achieved by further regulatory enhancements.