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D ] D N K V W D Q  _% D Q N L Q J  6 H F W R U   &21680(53527(&7,21,17+(%$1.,1*6(&725  29(59,(:  .D]DNKVWDQLVVWLOOLQWKHHDUO\VWDJHRIILQDQFLDOPDUNHWGHYHORSPHQWRFFXS\LQJWKHORZHQGRI ILQDQFLDOVHFWRUSHQHWUDWLRQPLGZD\EHWZHHQ8NUDLQHDQG5XVVLD%DQNLQJSHQHWUDWLRQLQ.D]DNKVWDQ LVLQOLQHZLWK&HQWUDODQG(DVWHUQ (XURSHEXWVLJQLILFDQWO\EHORZ:HVWHUQ(XURSH.D]DNKVWDQ¶VQRQ SHUIRUPLQJORDQVFXUUHQWO\PDWFKWKRVHRIWKHFRXQWULHVZLWKWKHKLJKHVWUDWLRVLQWKHILQDQFLDO FULVLV$GLVWLQFWFKDUDFWHULVWLFRIWKHEDQNLQJPDUNHWLVWKDWWKHUHWDLOGHSRVLWLVZHDN±DWRI*'3 FRPSDUHGWRLQ5XVVLDLQ8NUDLQHLQ7XUNH\DQGRYHULQ&]HFK5HSXEOLF±  'XULQJPLG.D]DNKVWDQH[SHULHQFHGKLJKFUHGLWJURZWKDQGFUHGLWWRWKHSULYDWH VHFWRULQFUHDVHGIURPSHUFHQWLQWRSHUFHQWLQ$QQXDOGRPHVWLFFUHGLWJURZWKUDWHV DYHUDJHG  SHUFHQW EHWZHHQ  DQG -XO\  IXHOOHG E\ IRUHLJQ FDSLWDO LQIORZV LQWR WKH ILQDQFLDO VHFWRU'XULQJWKHQRPLQDOYDOXHRIFUHGLWWRWKHHFRQRP\DOPRVWGRXEOHGRQDQDQQXDOEDVLV 7KH LQIORZV ZHUH PRWLYDWHG SDUWO\ E\ WKH SOHQWLIXO JOREDO OLTXLGLW\ SDUWO\ E\ WKH FRXQWU\¶V UHVRXUFH ULFKQHVVDQGWKXVH[SHFWHGDELOLW\WRJHQHUDWHIRUHLJQLQFRPH$VDVKDUHRI*'3FUHGLWWRWKHSULYDWH VHFWRU LQFUHDVHG IURP  SHUFHQW LQ  WR  SHUFHQW LQ  DQG VWRRG DW DERXW  SHUFHQW DW HQG 7KHJURZWKLQFUHGLWRXWSDFHGWKHJURZWKLQGHSRVLWVZKLFKLQFUHDVHGIURPSHUFHQWLQWR SHUFHQWLQDQGVWRRGDWSHUFHQWDWHQG  Figure 1. Credit to Private Sector and Deposits/GDP (Dec 2008) 120 60 Credit to private sector/GDP Deposits/GDP 100 50 80 40 60 30 20 40 10 20 0 0  6RXUFH:RUOG%DQN  0XFKRIEDQNV¶OHQGLQJZDVGLUHFWHGWR KRXVHKROGVZKLFKUHJLVWHUHGWKHKLJKHVWJURZWKUDWH )URPUHWDLOOHQGLQJLQFUHDVHGE\SHUFHQWZKLOHFRUSRUDWHOHQGLQJLQFUHDVHG RQDYHUDJH E\SHUFHQW$VDUHVXOWKRXVHKROGLQGHEWHGQHVVVWRRGDWSHUFHQWRI*'3LQ,QDGGLWLRQORDQV WRFRQVWUXFWLRQDQGUHDOHVWDWHVHFWRUVJUHZVLJQLILFDQWO\7KHVKDUHRIUHDOHVWDWHOHQGLQJGRXEOHGEHWZHHQ DQGDPRXQWLQJWRSHUFHQWRI*'3DWHQG/RDQVWRWKHFRQVWUXFWLRQVHFWRULQFUHDVHG UDSLGO\E\RYHUSHUFHQWIURPWRDQGFRPSULVHGRQDYHUDJHSHUFHQWRIWRWDOORDQVLQ    AFN Annual Report and Investor’s Voice by American Chamber of Commerce Kazakhstan, July 2010-Pg 40.   . D ] D N K V W D Q  _% D Q N L Q J  6 H F W R U  Figure 2. Credit Growth Rates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able 1: Structure of the Kazakh Financial System KZT bln. % of Total Financial Sector 2008 2009 2010 2008 2009 2010 Banking 11,890 11,555 12,134 83.79 83.07 81.26 Pensions 1,378 1,825 2,170 9.71 13.12 14.53 Insurance 269 298 340 1.90 2.14 2.28 Securities 441 151 166 3.11 1.08 1.11 NBFI 213 80 122 1.50 0.58 0.81 Total 14,190 13,909 14,931 100 100 100 Source: AFN   7KHILQDQFLDOV\VWHPLVVWLOOUHHOLQJIURPWKHJOREDOILQDQFLDOFULVLV 7KH*RYHUQPHQWWKH1DWLRQDO %DQN 1%. 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³2QDPHQGPHQWVWRVRPHOHJLVODWLYHDFWVRQPDWWHUVRIWKH HQKDQFHPHQW RI OHJLVODWLRQ  RQ SD\PHQWV DQG PRQH\ WUDQVIHUV DFFRXQWLQJ DQG ILQDQFLDO UHSRUWLQJ RI ILQDQFLDORUJDQL]DWLRQVEDQNLQJDFWLYLW\DQGDFWLYLW\RIWKH1DWLRQDO%DQN´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¶VDVVHWV7KHWRSVL[EDQNVFRQWURORI DVVHWVDQGWKHWRSWKUHHEDQNVRZQPDUNHWVKDUHLQWKHPDMRULW\RISURGXFWV Table 2: Concentration of Bank Lending * Item Dec-2007 Dec-2008 Oct-2009 Lending to legal entities 86.66 84.4 84.54 construction 87.31 87.85 87.92 trade 84.47 79.18 80.49 Lending to individuals 67.97 66.46 61.37 consumer loans to individuals 73.77 73.05 56.29 for construction and purchase of housing by individuals 64.32 63.14 62.3 mortgage residential loans of individuals 75.18 63.96 62.72 * share of top 5 financial organizations Source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nnual Report 2009; AFN.    . 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