Lenders report losses due to stricter regulations in the microcredit market.

Astana. October 14. KAZAKHSTAN TODAY - Microfinance organizations in Kazakhstan are expressing concerns over low profitability amid increased government oversight, reports Ranking.kz .

Notably, 10 out of the 20 most profitable microfinance organizations (MFOs) focus on "payday loans."

As of the end of June this year, the total net profit of 221 microfinance organizations in Kazakhstan amounted to 48.6 billion tenge, which is 33.5% lower than the same period in 2023. For the entire previous year, the net profit of MFOs in Kazakhstan was 118.6 billion tenge. Out of the 221 MFOs, 156 reported net profits in the first half of this year, while 59 recorded losses," the agency writes.

The reason is the tightening of control over the microcrediting market. In October, the licenses of two MFOs were suspended, and one lost its license altogether.

MFOs that provide "payday loans" are complaining about excessive regulatory tightening. The maximum loan amount has been reduced from 50 to 45 MRP, the daily interest rate from 1% to 0.3%, and the maximum annual effective interest rate (AER) is now capped at 179%, whereas it could previously exceed 339%.

Companies that issue "payday loans" are expressing concern over declining profitability due to stricter requirements and policies aimed at reducing household debt. They attribute their high rates to significant credit risks, claiming that their profitability is at a minimal level - revenues barely cover expenses," the authors note.

However, despite claims of losses, in the first half of the year, half of the 20 MFOs with the highest net profit were those specializing in "payday loans."

The leader in net profit was the MFO "Robokesh.kz" (brand Zaimer) with 6 billion tenge. It is worth noting that this same company experienced a data leak affecting 2 million of its clients and also topped the list of the most profitable MFOs last year with a net profit of 15.9 billion tenge," the article specifies.

Other lenders reported profits ranging from 3.1 billion tenge to 1.7 billion.

Previously, the agency reported that Kazakhstan has been facing difficult times in terms of lending over the last two years. As of the end of eight months this year, the average interest rate on loans to individuals reached 20%. The share of loans with overdue payments in MFOs in Kazakhstan increased over the year from 10.2% to 15.4%.

Kazakhstani citizens owe 738 billion tenge in loans. Consumer loans totaled 18.7 trillion tenge, increasing by 2.2% in July 2024. In response, legislative restrictions on consumer loans and microcredits were introduced in Kazakhstan, aimed at limiting the issuance of unsecured consumer loans for large amounts. Deputies have demanded an investigation into banks that have issued loans through fraudulent means.