Assessment of the development of the banking sector of the Republic of Kazakhstan in a competitive environment

Issue 56, 2024

Iuliia Trofimova, Aidar Mambetkaziyev, Ilona Bordiyanu, Marina Kozlova, Yevgeniy Varavin

Received 12.03.2024, Revised 17.06.2024, Accepted 03.07.2024

https://doi.org/10.54919/physics/56.2024.248lb4

Abstract

Relevance. This paper explores modern aspects of the Kazakh banking sector's development amidst a changing competitive environment, globalization, and evolving banking technologies. The Kazakh banking market is the second largest in the Eurasian Economic Union (EAEU) and the Commonwealth of Independent States (CIS) after Russia and is integrated into the global financial system with subsidiaries of large foreign banks. Despite various challenges, some Kazakh banks maintain high competitiveness and rapid development.

Purpose. The study aims to highlight the specific features of banking competition in the Republic of Kazakhstan's banking market.

Methodology. The study assessed external economic factors, compared them with other EAEU countries, analysed banking market size and dynamics, evaluated banking sector concentration, and rated banks based on assets, loan portfolios, equity, income, and return on assets.

Results. In the past five years, the banking sector's concentration level has increased, with a decrease in the number of banks and enlargement of some. The market includes many foreign bank subsidiaries. External factors like inflation, currency volatility, and the COVID-19 pandemic have negatively impacted the sector. Nevertheless, until 2020, Kazakhstan's economy grew faster than Russia and Belarus, and the banking sector's profitability was higher, attracting investors, including foreign banks.

Conclusions. The Kazakh banking sector faces challenges from environmental factors such as inflation, currency volatility, and the COVID-19 crisis. The market has become more concentrated, with significant improvements in the positions of Sberbank and Kaspi Bank due to their FinTech development. However, the overall number of banks has decreased, with some still experiencing financial issues. The sector's future development largely depends on the COVID-19 pandemic's impact on the economy in 2021.

Keywords: financial market; commerce; banking competitiveness; economics and finance

Suggested citation

Trofimova I, Mambetkaziyev A, Bordiyanu I, Kozlova M, Varavin Y. Assessment of the development of the banking sector of the Republic of Kazakhstan in a competitive environment. Sci Herald Uzhhorod Univ Ser Phys. 2024;(56):2484-2497. DOI: 10.54919/physics/56.2024.248lb4

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