Kazakhstan Bank Lending Hits 31.9 Trillion Tenge as Business Borrowing Drives All Growth

Kazakhstan's Credit Boom Tilts Toward Business as Consumers Pull Back

Kazakhstan's banks issued 31.9 trillion tenge in new loans to the economy during the first nine months of 2026, a 7.1% increase — equivalent to 2.1 trillion tenge — over the same period in 2025, according to the Association of Financiers of Kazakhstan. But the headline number masks a sharp divergence: every tenge of that growth came from business lending, which jumped 18%, while loans to households actually shrank 4.3%.

The retail pullback was concentrated in consumer credit, which fell 6.7% as weaker household demand and regulatory restrictions on unsecured lending took effect. Mortgage lending was the exception, growing 9.6%. On the corporate side, mid-sized enterprises led with 37.8% growth, followed by small businesses at 21%. Three sectors — trade, industry and construction — generated 83% of all new business credit, with construction lending up 62.7%, industry up 20.4% and trade up 13.3%. These increases tracked real economic activity: construction output rose 11.5%, manufacturing 8.6% and trade 6.2% over the same nine months.

The shift changed the composition of Kazakhstan's credit market. Business now accounts for 56.2% of all new lending, up from 51% a year earlier. Long-term corporate loans grew faster (20.4%) than short-term ones (16.7%), suggesting businesses are financing investment rather than working capital. Yet total loan portfolios expanded more slowly than new issuance — corporate books grew 6.4% and retail books 7.6% since January — because large corporates repaid debt and some loans were reclassified. Large-business debt actually contracted 7.2%, while SME portfolios grew 16.2%.

The cost of this credit expansion is visible in bank profitability. Net profit for the sector fell 11.6% year-on-year to 1.8 trillion tenge, as net interest margin compressed 48 basis points to 6.30% and the interest spread narrowed 66 basis points to 3.96%. Non-performing loans overdue more than 90 days edged up to 3.9% from 3.6% at the start of the year, though the cost of credit risk remained 78 basis points below 2025 levels. Deposits continued to grow — retail up 8.6%, corporate up 5% — but the rising share of interest-bearing liabilities is keeping funding costs elevated, slowing the passthrough of lower market rates.

Why Kazakh Banks Are Lending More but Earning Less

Why Business Lending Is Carrying the Entire Market

The 18% surge in corporate credit is not uniform. Mid-sized enterprises (37.8% growth) and small businesses (21%) are borrowing aggressively, while large corporates are deleveraging — their outstanding debt fell 7.2%. This suggests the growth is coming from companies expanding into new capacity or market share, not from large incumbents refinancing. The concentration in construction (62.7% credit growth against 11.5% output growth) is particularly notable: credit is growing roughly five times faster than the sector's real activity, which could signal either a forward-looking investment cycle or speculative building. The AFK data does not distinguish between the two, and this warrants monitoring.

The Margin Squeeze Nobody Is Talking About

Kazakh banks are caught in a structural bind. Deposit rates for legal entities adjust quickly to base rate changes, but retail deposit rates fall more slowly. This asymmetry means that even as the National Bank lowers rates, banks cannot reprice their funding costs down at the same speed. The result: net interest margin fell from 6.78% to 6.30% and the spread from 4.62% to 3.96% since January. The AFK notes that asset yields and funding costs stabilized by the end of Q3 — but stabilization is not recovery. Until deposit repricing catches up, every new loan written at lower market rates further compresses margins.

What the S&P Upgrade Actually Signals

S&P Global Ratings improved Kazakhstan's banking sector industry risk score from 7 to 6 under its BICRA methodology, and seven Kazakh banks saw rating upgrades with five more improving their outlooks. This is meaningful: a BICRA score of 6 places the sector in a lower-risk category, which reduces the sovereign ceiling constraint on individual bank ratings. For context, this matters because it lowers the cost of wholesale funding for Kazakh banks in international markets — a partial offset to the domestic margin pressure. However, the NPL ratio ticking up from 3.6% to 3.9% shows that asset quality is not improving in tandem with the rating narrative.

Winners and Losers in This Credit Cycle

The clearest winners are SMEs in construction, trade and manufacturing, which are accessing credit at scale. Construction stands out: 62.7% credit growth alongside 11.5% output growth suggests the sector is in a genuine expansion phase, likely supported by state infrastructure programs. The losers are consumers — particularly those seeking unsecured credit, where lending fell 6.7% — and large corporates, whose debt shrank 7.2% as they repaid rather than borrowed. Among banks, those with heavier retail exposure face both volume decline and slower deposit repricing, while those with strong SME franchises are gaining share. The 11.6% profit decline suggests the sector as a whole is paying for the shift.

What Happens Next Depends on Funding Costs

The AFK is explicit: the speed at which funding becomes cheaper will determine whether banks can simultaneously restore margins and reduce lending rates. If the National Bank continues cutting its base rate and deposit costs follow, the margin pressure could ease in 2027 and new credit could become cheaper for both businesses and households. If deposit rates remain sticky — particularly retail deposits, which are growing at 8.6% — banks face a choice between protecting margins and growing volumes. The stabilization observed in Q3 suggests the worst of the compression may be over, but the 48-basis-point decline year-to-date is a significant hit to a sector earning 1.8 trillion tenge in nine months.

What Kazakhstan's Credit Shift Means for Banks, Businesses and Policymakers

Kazakhstan's banking sector is growing its loan book but shrinking its profit — the 11.6% earnings decline is the number that matters most.

For bank executives, the priority is managing the deposit-repricing lag. Retail deposits grew 8.6% and corporate deposits 5% since January, but the rising share of interest-bearing liabilities means funding costs are not falling as fast as market rates. Banks that can shift their deposit mix toward cheaper sources — or grow non-interest income — will protect margins better than those relying on volume alone.

• 0–6 months: Monitor whether the Q3 stabilization in asset yields and funding costs holds through Q4. If the National Bank cuts rates further, watch the spread between corporate and retail deposit repricing — this determines whether margin recovery begins in early 2027.
• 0–6 months: For SMEs in construction, trade and manufacturing, credit conditions remain favorable — business lending grew 18% and long-term loans (20.4% growth) outpaced short-term. Lock in fixed-rate long-term financing before any potential rate floor emerges.
• 6–24 months: Track the NPL 90+ ratio. It rose from 3.6% to 3.9% in nine months. If it crosses 4.5%, expect tighter underwriting standards, particularly in construction where credit growth (62.7%) far exceeds output growth (11.5%).
• 6–24 months: The S&P BICRA upgrade from 7 to 6 lowers the sovereign ceiling constraint on bank ratings. Banks with international funding needs should evaluate whether this improves their wholesale borrowing costs enough to offset domestic margin pressure.
• 2–5 years: The structural shift toward business lending — now 56.2% of new credit, up from 51% — signals a maturing credit market. Banks that build SME underwriting capabilities now will be positioned for a segment growing at 16.2% in portfolio terms.

Metrics to watch: National Bank base rate decisions and their passthrough to deposit rates; the NPL 90+ ratio (currently 3.9%); net interest margin (6.30%); construction sector credit-to-output ratio; S&P and other agency rating actions on individual Kazakh banks.