Analysis of the credit system of the Republic of Kazakhstan

As at 1 October 2010 the Bank's total net corporate loan portfolio amounted to US$ 13,044 million with corporate deposits (excluding funds under government stabilization programs) to US$ 5,712 million.



2.2 Data analysis

This part is about the types of credit programs in BTA and KKB. There are credits for retails banking sector, for small and medium enterprises and for corporate banking sector.

At the end of this part you will see the SWOT analysis of these banks.

2.2.1 Bank TuranAlem

Banking sector is divided into three groups: retail banking sector, small and medium enterprises sector and corporate banking sector. First of all I will explain about credits which are oriented to the retail banking sector. These credits are for individuals who want to buy new cars, repair their houses, apartments or just make good celebrations of their birthday or marriage. Not everyone can do this for their own capital, so they have to take credits from banks.

2.2.1.1 Retail banking

Mortgage Retrieved on 29^th of March, 2015 from <http://bta.kz/ru/personal/credits/hypothec/>

Do you dream about your own home? Or, perhaps, planning to make capital repairs of your house, but do not know where to find the necessary funds? The solution is: BTA turns into reality your dreams and helps you realize your plans because of the unique program of mortgage lending for the purchase and renovation of housing with new and favorable conditions for you.

Table 1. Conditions of the loan “Home buyer's mortgage from Global Building Contract”

Loan program	To purchase accommodation
Initial installment	From 10%
Maximum loan term	up to 20 years
Repayment structure	Annuity or in equal share
Collateral	Global Building Contact apartments: “Kausar”, “Altyn Bulak”, “Zhagalau”, “AFD Plaza”, “Shahristan”
Borrower's confirmation of solvency	direct/indirect
For front and fees	From 0,5% of loan amount

“Universal Faculty” Program Retrieved on 31^st of March, 2015 from <http://bta.kz/ru/personal/credits/unfak/about/>

Credit conditions of the Program “Universal Faculty”

· The minimum term of credit line - not limited;

· The maximum term of credit line - 10 years;

· Early repayment of the loan - without penalties;

· Loan currency - KZT/U.S. dollar/Euro;

· Collateral for the loan - a warranty of JSC “Financial Center” Financial Center was established to make higher education accessible to every citizen of the Republic of Kazakhstan. The main function of the Financial Center is issuing guarantees on educational loans. System of guaranteeing education loans designed for those who are learning on paid departments. Loans are issued directly by second-level banks. Nowadays, the BTA Bank is one of the most active participants of the system, in addition to the National Bank of Kazakhstan and Alliance Bank.and/or immovable property (flat/house) and/or deposit in BTA;

· The maximum amount of tranche - depends on the solvency of the borrower/co-borrower and the collateral provided (apartment, dwelling house, a deposit),but not exceeding the amount of full tuition at an educational institution;

· Insurance - annual compulsory insurance of student life (insurance of the collateral in case of granting a mortgage).

Program can use

· Entrants aged from 16 to 40 years. If there are results of UNT Uniform national testing (UNT) - is the system of assessing applicants' knowledge. The results of the UNT are accepted by the organizations of secondary education as the results of the final state certification, and by colleges, high schools as the results of entrance examinations. From the number of points obtained by a student at UNT depends evaluation of the final school-leaving certificate, as well as the possibility of admission to universities in our country (a paid department or a grant). UNT scores are also important in awarding of the Presidential Scholarship “Bolashak”. or certificate of secondary school;

· Students aged from 16 to 40 years. If there are results of the last session (the transcript of last semester if he/she is studying in universities in foreign countries, or a certificate of GPA last semester at the time of treatment).

Express Loans Retrieved on 31^st of March, 2015 from <http://bta.kz/en/personal/credits/express/>

BTA Bank offers various programs of express credit that will help you to buy new furniture, appliances, to pay for a college education, to have a rest abroad or make a celebration and more. Select the program that suits you.

“Express salary”

This program is specifically designed for those who receive salaries by cards of BTA. Its main advantage is the favorable lending rates.

Table 2. Conditions of the loan “Express salary”

Loan currency	KZT
Loan term (months)	from 6 to 60
Loan amount	From 200 000 up to 3000 000 KZT
Nominal interest rate	from 16% per annum
Annual effective interest rate	from 21,77%
Commission for arranging the loan	2% of the loan amount (minimum 3500 KZT)
Commission for consideration of an application	for free

Express loan “Pensionniy”

This program is specifically designed for customers who receive pension benefits through the card “Kamkor”. Concessionary interest rate, low commissions and automatic loan repayment in the calculation of pensions to the card “Kamkor” make this program available even for those who like to save.

Table 3. Conditions of the loan “Pensionniy”

Loan currency	KZT
Loan term (months)	primary treatment	re-treatment
	6	24
Loan amount	from 50000 KZT to 500000 KZT
Nominal interest rate	from 22% per annum
Annual effective interest rate	from 20,85% p.a.
Commission for arranging the loan	for free
Commission for consideration of an application	3000 KZT
Main requirement	borrower must be a holder of the card/current account of “Kamkor” and get on it at least three pensions
Borrower's age	Since retirement till 68 as of the loan maturity

These types of credit programs which are oriented to retail banking sector are beneficial for customers, because:

· Low cost of financing. Using various schemes of complex lending, Bank assists to optimize interest costs of clients.

· Possibility of lowering interest rates. Interest rates on credit transactions are set and adjusted in accordance with market fluctuations and may decline with increasing level of collaboration between the bank and client.

· Possibility of increasing the loan term. Financing of projects underlines of credit can not only use low interest rates, but increase the term of loan from 3 to 5 years.

· Quick loan application processing. The Bank is constantly striving to improve the quality of service, resulting in a rapid examination of the project.

· Finance in the regions. You can use the services of the bank almost in all regional centers of the Republic. The Bank has an extensive network of regional branches and offices in Kazakhstan and a number of representative offices abroad.

2.2.1.2 Small and Medium Enterprises

SMEs are important to almost all economies in the world, but especially to those in developing countries and, within that broad category, especially to those with major employment and income distribution challenges. On what we may call the “static” front, SMEs contribute to output and to the creation of “decent” jobs The term “decent jobs” has been popularized recently, by the International Labor Office among others, and refers to jobs characterized by adequate wages, acceptable working conditions, and such other positive features as may be important to the employee. It has gained currency because of the importance of distinguishing between situations in which the same number of people are employed but the quality of those jobs differs markedly. In other words, number of jobs created is not a good indicator of a successful labor market outcome. Since many fewer jobs fail the “decency” test in industrial countries, the concept is much less important there.;

One of the high priority directions `BTA Bank' JSC's activity is corporate financing (crediting). The Bank realises: short-term crediting, mid-term and log-term financing from its own resources as well as with attraction of foreign credit lines.

It is common knowledge that timely financing can bring any project to life whereas any promising project will remain on paper from lack of means.

Standard financing of the subjects of SME Retrieved on 1^st of April, 2015 from <http://bta.kz/en/buss/credits/lending/self-finansing/aul/>

Standard financing of the subjects of SME is designed for legal entities and individual entrepreneurs, as well as for the borrowers having positive credit history. Financing is provided upon security of movable and/or immovable property, for investments purposes and replenishment of current assets.

Table 4. Conditions of the Standard financing of the subjects of SME

Loan currency	KZT/USD/EUR/RUR
Subject of pledge	Movable or immovable property
Maximum amount of the loan	25000000 USD or its equivalent in tenge (at the rate of NBRK as of the date of issue)
Purpose of lending	Commercial purposes
Loan term	36 month for replenishment of current assets 120 month for investment purposes

Micro and Malyi credit facilities Retrieved on 1^st of April, 2015 from < http://bta.kz/en/buss/credits/lending/self-finansing/micro/>

“Mikro” and “Malyi” credit facilities are elaborated for natural persons and legal entities carrying out business activity, subjects of SME, and for the borrowers having positive credit history. These credit facilities are provided for investment purposes and replenishment of turnover.



Table 5. Conditions of the Micro and Malyi credit facilities

	Micro	Malyi
Loan currency	KZT/USD (in case of currency earnings)
Status of borrower	subject of small business
Loan term	from 3 to 12 months for replenishment of current assets
	from 3 to 84 months - investment
Purpose of the loan	Purpose of lending	Commercial
Minimum loan amount	600 001 KZT/5001 USD	6 000 001 KZT/50 001 USD
Maximum loan amount	6 000 000 KZT/50 000 USD	60 000 000 KZT/50 000 USD
Collateral	- property (commercial, residential); land; goods in circulation; equipment; vehicles (including special); money placed in a savings account
Time for consideration	5-7 days	10-12 days

One of the main activities of BTA Bank is lending to small and medium-sized businesses. Providing a wide range of lending products, that met both short and long-term customer needs - a priority task of the bank's customer service.

BTA Bank provides its SME customers with lending products for investment purposes and financing of working capital funds that are linked to the bank's own funds and state funds.

2.2.2 Kazkommertsbank

Express loans Retrieved on 20^th of March, 2015 from <http://ru.kkb.kz/retail/page/CreditExpress>

Lending terms

· Amount of loan: from 100 000 to 3 million KZT;

· Currency: KZT;

· Term: up to 60 months;

· Guarantee: without collateral;

· Interest rate: 17% per annum;

· The amount of early repayment - no less than the sum of 3 monthly payments;

· No moratorium for early repayment.

· Annual effective interest rate of 37,65%

Commission for registration:

· The cashing of credit - 0 KZT.

· For the organization of credit: 5% (minimum of 5000 KZT);

· For maintaining the loan account: 0.5% of the original loan amount (monthly);

· Prepayment: 0 KZT;

2.2.2.1 Retail Banking

Mortgage Retrieved on 21^st of March, 2015 from < http://ru.kkb.kz/retail/page/CreditHouse>

Freedom of action, the life of its own rules - this is what we all want! Do what you want! And when you want! All this is possible when you own apartment! Your apartment, your life and your rules! KKB helps you to choose a mortgage that meets all your needs.

You can receive a mortgage by choosing one of the following ways:

Lending terms

· Term: from 37 month to 20 years

· Initial installment: from 10% of acquired property

· Currency: USD

· Loan amount: from 5000 USD

· Collateral: Apartment

· Repayment of the loan: annuity, or in equal installments

· Commission for arranging the loan: for clients who receive the salary with KKB cards - 0 KZT, 1% of loan amount for other clients. 2% of loan amount for clients, getting a loan without financial analysis

· The commission for the account: 0.06% of loan amount (monthly).

Loans for emergency needs Retrieved on 21^st of March, 2015 from <http://ru.kkb.kz/retail/page/CreditNeotlojnye>

Want to make repairs in the apartment, to celebrate a wedding or to pay for the study, but not enough money? KKB can offer you a loan “on the urgent needs” up to 5 thousand USD.

Only now is a special offer! In action “It's time to make repairs?” and “For Two Hearts One Solution!”

By taking a loan from KKB, you will receive a discount up to 20% in a network of partner companies for the following services:

· Weddings, anniversaries and special occasions;

· Providing construction services and purchase of building materials.

Credit terms:

· Currency: KZT

· Interest rate: 16% per annum for clients who take salaries by cards and by 21% per annum for those who are engaged in business activities or can verify their income only partially

· Loan amount: from 300 000 to 12 m.

· Minimum Term: 6 months

· Maximum loan term: 5 years

· Collateral: Apartment

· Repayment of the loan: monthly annuity payments in equal installments

· Commission for arranging the loan: 1% of the loan amount, for clients who receive salaries by KKB cards - 0 KZT.

· The commission for the account: 0.06% of loan amount (monthly)

· Early repayment: the moratorium 6 months; after the expiration of the moratorium - without penalty

· Insurance Borrower: implemented by the bank

· Annual effective interest rate of 18,8% per annum

· Annual effective interest rate of 24,8% per annum

Credit limit Retrieved on 22^nd of March, 2015 from <http://ru.kkb.kz/cards/page/CardCreditLimit>

As you know, bank cards are divided into credit and debit. As its name says it allows you to withdraw from your account more money than it has at the moment. Accordingly, if you have only debit card, you are always limited by that amount that is in your card account.

However, the service “credit limit” allows to “borrow” money from the bank not only to individual owners of credit cards, but also the participants of “Salary Project” “Salary Project” is a convenient mechanism for calculation and payment of salary to employees: during the project, funds are transferred with single amount to the Bank, and Bank staff distribute them to the personal accounts of employees - with their debit card, employees to receive salary through account in KKB!

Credit limit on card accounts is available on a renewable (turret) basis. This means that when repaying your debt amount of the credit limit is automatically restored and once again becomes available to you during the subsequent use of the card.

Credit limit applies to all payment cards (basic and supplementary), issued by the relevant card account. The owner of the main card can set a limit of spending money on additional cards - within the credit limit set by the card account. This means that you can provide ongoing financial assistance to close relatives or children - users of additional cards, wherever they are.

Thus, without further recourse to the bank you can:

· reuse the credit resources of the bank card;

· use of borrowed funds, without specifying the intended use;

· automatically extend the validity of the established credit limit.

Terms of the credit limit

· Currency of credit limit: KZT or U.S. dollar.

· Validity of the credit limit: is the same as the card's validity, with the possibility of automatic renewal.

· Fee for credit limit: by the rate of the Bank of the actually used amount and loan term.

· Provision for credit limit: the “Salary Projects” - wages, coming to the card account in the future. For individual users - the deposit, the guarantee of a legal entity, provided by consumer lending program of KKB. In addition, for the owners of individual cards credit limit may be granted without collateral (blank credit).

· Maximum amount of credit limit: “Salary Projects” - up to 300% of average wages. For individual users - depending on the creditworthiness and solvency of the client, type and size of collateral. In the case of providing blank credit limit - no more than 50% of the average monthly turnover on the current and card accounts of client.

· Repayment: monthly, by any of these methods:

o in automatic mode - when you receipt wage to the card account;

o by filing the appropriate order (request) to the bank at the location of a bank account to transfer money to the repayment of the loan;

o by adding cash to the cashier of the bank.

Developing a program of consumer credit, KKB again and again improving the conditions on which it is possible in the shortest period of time to purchase your favorite real estate. KKB offers ample opportunity to acquire a credit to both new and used cars. Bank lending programs allow you to buy cars of various makes and models from the showroom or from a private seller.

2.2.2.2 Small and Medium Enterprises

Program of Fund “Damu” (2, 3, 4, 5, 6,7 tranches) Retrieved on 27^th of March, 2015 from <http://ru.kkb.kz/business/page/Credits_damu>

Program of Fund “Damu”“Entrepreneurship Development Fund “Damu” - State Fund whose main purpose- encouraging the formation and growth of small businesses, the more efficient use of state funds allocated to support small business. - is a program under which the financing of small and medium-sized enterprises put into effect in accordance with the legislation of Republic of Kazakhstan (“The Law on Private Entrepreneurship”), carrying on businesses in the area of ??trade, services, production, etc., except activities prohibited by the laws of Republic of Kazakhstan.

Cooperation of the Bank with the Fund of the Enterprise Development “Damu” and the National Welfare Fund “Samruk-Kazyna” provides further sustainable financing of projects of small and medium-sized businesses, and provides new opportunities for entrepreneurs to strengthen their market position and business expansion.

Loans to businesses in the stabilization program:

o Acquisition of new and modernization of fixed assets

o Financing of working capital,

o Refinancing of existing loans.

· Loan amount - 750 million KZT;

· Loan term - up to 84 months (7 years);

· Annual effective interest rate - 12,5% per annum;

· Grace period on principal repayment of loans provided:

o financing of working capital - up to 6 months;

o for other purposes - up to 12 months.

“Business turnover” Retrieved on 27^th of March, 2015 from <http://ru.kkb.kz/business/page/Credits_business_growth >

Loan Program for Entrepreneurs “Business turnover” under project “Energy of Business” is a source of finance on favorable terms.

Terms of lending program “Business Investment”:

· Purpose of loan: replenishment of working capital;

· Target group: JP, IE, IP Juridical Person, Individual Entrepreneur, Individual Person engaged in the area of trade, services, manufacturing;

· Loan currency: KZT/USD;

· Amount of loan: from U.S. $ 1000/150000 KZT up to U.S. $ 1000000/150000000 KZT;

· Term of loan: up to 36 months;

· Term of loan/tranche within credit line: up to 12 month

· Terms of principal repayment:

o monthly;

o flexible scheduling is possible;

o choice of method of repayment: annuity/equal shares, determined taking into account the solvency of the borrower;

· Period of availability: up to 12 months from the date of opening the credit line;

· Commission for arranging the loan/credit line: from 1% of the loan/credit line or increase of amount of limit (but not less than U.S. $ 100/15000 KZT);

· Collateral: movable and immovable property, according to the deposit policy of KKB;

· Mandatory conditions:

o insurance of collateral;

o transfer of turnover to the accounts of KKB;

Table 6. Interest rate (due to the Bank's equity) of “Business investment”

Term of loan/limit	Up to 12 month (inclusive)	Over 12 month (inclusive)
Interest rate (% PA) KZT/USD	from 17%	from 18%
Effective interest rate (% PA)	from 20,9%	from 20,7%

Note: Calculation of effective interest rate is made without taking into account the commissions arising from a change in credit conditions, and operating committees.



2.2.2.3 Corporate Banking

CreditingRetrieved on 28^th of March, 2015 from <http://ru.kkb.kz/corporates/page/Credits>

KKB provides loans to small and medium-sized businesses, and lending to private individuals secured by collaterals like inventory.

Loans are granted for the following purposes:

· To increase turnover;

· Replenishment of working capital for further growth;

· Expansion of production or volume of services provided;

· Purchase of machinery, equipment, raw materials, and improvement of production;

· Acquisition, construction and repair of real estate for business purposes;

· Other capital investments.

Program “Business Road Map 2020” Retrieved on 28^th of March, 2015 from <http://ru.kkb.kz/corporates/page/CreditsRoadCard>

This program allows you to significantly reduce interest costs on existing and new loans, if you decide to expand the existing production or open new.

The program is implemented in three ways:

· I direction - “Support of new business initiatives” - provides state support for projects in the primary sectors of the economy in line with the priorities of the State program for accelerated industrial-innovative development of the Republic of Kazakhstan For 2010-2014, approved by Decree of the President of the Republic of Kazakhstan dated 19 March 2010, ¹ 958.

State support in the first direction of the program is to:

1. Interest rate subsidies on bank loans for project implementation:

Subsidizing interest rates of the Bank implemented by new credits issued for realization of the new investment projects, and for projects aimed to modernize and expand the production. Credits that are used to refinance the loans, received not earlier than January 1, 2010, meeting the criteria of the first direction of the program are also subsidies.

2. Partial guarantee for loans aimed to realize the projects:

The warranty is valid only for loans issued for realization of new projects, and ongoing projects, aimed to modernize and expand the production.

· II direction - “Rehabilitation of the business sector.”

Under the rehabilitation can be the following support:

1. Subsidies to the debtor of the interest rate on existing loans of the bank (at the time of approval) and the new debt in a single line of credit, which occurs after the approval of the project.

Application for participation in a second direction of the program the debtor can apply only in 2011.

Subsidies of the interest rate spread on existing debt (at the time of approval) and the new debt in a single line of credit, which occurs after the approval of the project.

2. Providing the debtor delays on the payment of taxes and other obligatory payments to the budget (except for individual income tax) for up to 3 years without penalty fees.

The grace may be granted for debt which has emerged in the period from 01.01.2008 till the date of decision made by the Government of the Republic of Kazakhstan.

The grace period is up to 3 years without penalty fees.

3. Other activities to rehabilitate the enterprises under the plan of financial and economic recovery.

· III direction - “Reduction of currency risk of the entrepreneur.”

State support will be provided through interest rate subsidies on existing loans to banks.



Microcredit Retrieved on 29^th of March, 2015 from <http://ru.kkb.kz/corporates/page/Credits_micro>

This is the most profitable form of lending, as low interest rates from 16% to 27% per annum, loan terms up to 18 months, an individual approach to each client, confidentiality of projects and other financial information is guaranteed, there is no need to provide a business plan, the procedure term is not more than 14 days, flexible approaches to collateral.

Terms of microcredit:

· Amount: from $ 500 up to $ 30000.

· Term: up to 12 months.

· Interest rate: in currency 2-2,6% per month.

· Financed areas: trade, services, manufacturing.

Loans for real estate for business Retrieved on 29^th of March, 2015 from <http://ru.kkb.kz/corporates/page/Office_credits>

What are the advantages of crediting in KKB?

· First, you will immediately become the owner of acquired on credit property, but pay for it during the loan period.

· Secondly, as collateral serves acquired commercial property (shop, café, hairdresser, laundry, dry cleaning).

· Third, working capital can be used for business development (no need to pay the rent).

Credit conditions of commercial real estate in KKB:

· Term: up to 5 years (the EBRD European Bank for Reconstruction and Development - The EBRD is an international financial institution that supports projects from central Europe to central Asia. Investing primarily in private sector clients whose needs cannot be fully met by the market, the Bank fosters transition towards open and democratic market economies. In all operations the EBRD follow the highest standards of corporate governance and sustainable development. - 4 years)

· Interest rate: from 1.3% per month in the interval. currency, 1,6% per month in KZT

· Prepayment: from 15% of the value of the acquired commercial real estate.

· Collateral: acquired real estate. Other types of collaterals.

· Special advantages: financing of starting business. Individual loan repayment schedule (the presence of the grace period for principal repayment).

· Additional benefits: possibility of taking a credit in the amount of 100%, provided that putting the additional security. You can get a loan a lump sum method or in installments (if the financing of the project involves the gradual development of resources).

Crediting of investment projects and the current starting business Retrieved on 17^th of May, 2015 from < http://ru.kkb.kz/corporates/page/Investprojet_credit>

Lending terms

Funded by:

* acquisition, construction and renovation of real estate for business purposes;

* purchase of machinery and equipment;

* modernization and upgrading of production;

* other capital investments.

The amount, terms, interest rate, repayment schedule: set individually for each project.

The forms of lending:

* loans;

* Credit line (renewable or non-renewable);

* a letter of credit.

Loan currency:

* KZT;

* USD;

* the import of equipment - any other currency.

Security:

* available property: real estate, vehicles, equipment, deposits, goods in turnover, securities, third party guarantees

* property purchased at the expense of credit funds.

Required documents:

* financial statements for the last three years;

* constituent documents (if you do not have a current account with the Bank);

* Documents on the project and on the collateral.

Advantages of crediting in Kazkommertsbank:

* reasonable interest rates;

* credit terms are sufficient for recoupment;

* the possibility of obtaining the grace period in the repayment of principal;

* minimum time of processing the loan;

* the possibility of obtaining a loan secured by the purchased property.

The Bank's services include:

* advice on the preparation of feasibility studies and business plans for the project;

* a full examination of the investment project on the basis of documents provided;

* advisory services on financial planning, effective recruitment and placement of funds.

Services are provided on a fee basis.

Loans for real estate for business Retrieved on 29^th of March, 2015 from <http://ru.kkb.kz/corporates/page/Office_credits>

What are the advantages of crediting in KKB?

· First, you will immediately become the owner of acquired on credit property, but pay for it during the loan period.

· Secondly, as collateral serves acquired commercial property (shop, café, hairdresser, laundry, dry cleaning).

· Third, working capital can be used for business development (no need to pay the rent).

Credit conditions of commercial real estate in KKB:

· Term: up to 5 years (the EBRD European Bank for Reconstruction and Development - The EBRD is an international financial institution that supports projects from central Europe to central Asia. Investing primarily in private sector clients whose needs cannot be fully met by the market, the Bank fosters transition towards open and democratic market economies. In all operations the EBRD follow the highest standards of corporate governance and sustainable development. - 4 years)

· Interest rate:from1.3%per month in the interval. currency, 1,6% per month in KZT

· Prepayment: from 15% of the value of the acquired commercial real estate.

· Collateral: acquired real estate. Other types of collaterals.

· Special advantages: financing of starting business. Individual loan repayment schedule (the presence of the grace period for principal repayment).

· Additional benefits: possibility of taking a credit in the amount of 100%, provided that putting the additional security. You can get a loan a lump sum method or in installments (if the financing of the project involves the gradual development of resources).

2.3 SWOT analysis

Table 7. SWOT analysis of BTA and KKB

Strengths	Weaknesses
- BTA and KKB have a widespread presence in our country, allowing them to spread risk and enjoy economies of scale. - Their brands are well-established historically and continually promoted, for example through sponsorship of charity concerts, establishment of some books, etc. - The interest rates are lower than in other secondary banks.	- Not in every affiliate there is a good quality of customer service. - In some branches there is not enough cash register office, so clients have to wait in queue for a long time.
Opportunities	Threats
- Good financial position of them is creating a good reputation for future bank loans and borrowings. - Skilled workforce means that they can be moved and trained into other areas of the business. - The banks' strategy is to offer a full portfolio of services countrywide, providing a wide range of cross-selling opportunities. - Both of them are continuously opening new affiliates among the country, trying to expand their positions.	- Large and increasing competition. - While offering a wide range of services provides opportunities, there is also the threat that customers may prefer to go to suppliers who present a more specialized approach.

2.4 Summary

In this chapter I wrote little about backgrounds of observed companies: BTA and KKB, from formation of them till now, their functions, etc.

Topic of my work is credit policy of these banks, so mainly I wrote about types of credit programs in each bank. Both of BTA and KKB offer to their customers several types of credits, separately for retail customers, for small and medium enterprises and for corporate clients.

First of all I wrote about types of credit programs of BTA bank. If you want to buy your own house or make full repair of your accommodation you can use “Mortgage” programs that offers suitable conditions to you. Or if you want to buy new furniture, to pay for college, to have a rest abroad or just want to make celebrate your birthday or marriage you can use “Express loans” program which allows you to do your best. All of these credit programs are for retail customers.

One of the main activities of BTA Bank is lending to small and medium-sized businesses. Providing a wide range of lending products, that met both short and long-term customer needs - a priority task of the bank's customer service.

BTA Bank provides its SME customers with lending products for investment purposes and financing of working capital funds that are linked to the bank's own funds and state funds.

Secondly, I wrote about credit programs of KKB. There are also several types of loan programs for retail customers, for SME and for corporate clients.

Developing a program of consumer credit, KKB again and again improving the conditions on which it is possible in the shortest period of time to purchase your favorite real estate.

New loan programs from KKB are developed for specific business objectives: investments, working capital, acquisition of finished commercial real estate, refinancing of debt in other banks.



Chapter 3. Findings and recommendations

3.1 Introduction

This chapter will include detailed interpretation of findings from research that was provided in chapter two. The case consists of two parts, first is findings and second is recommendations. In findings paragraph I will try to cover all information of this research in short form. It is like picture of this work in which you see this research clearly. You can understand which credit programs the banks use for retail banking sector, for SMEs and for corporate banking sector as well. The second paragraph is recommendations, which consists of possible advices, hints that can improve the service and raise the reputation of the banks. Recommendations will be based on needs that companies suffer from.

3.2 Findings

At the beginning of this work I mentioned about objectives of my thesis, so I think I have covered all topics about the credit and credit programs of observed companies. Almost all information was taken from secondary data: mostly from internet and less from books.

In this paragraph involve the reasons of gained results from observation and in next paragraph present certain recommendations that can be applied.

All results from findings would be answered base on objectives and those results are:

1) First objective was to understand the meaning of the term credit. This objective was understood base on theoretical knowledge of the subject. Credit is the provision of money or goods on credit, usually with interest payments; valuation of economic category, an essential element of commodity-money relations. The emergence of credit is directly connected with the sphere of exchange, where the owners of the goods against each other as owners are willing to enter into economic relations.

2) Next objective was to understand the advantages and disadvantages of the credit. This objective was understood base on secondary data too.

Advantages of the loan are: 1) Interest rates: Banks that offer loans do so at competitive rates of interest and on mutually understood and accepted repayment terms, as compared to unconventional lenders; 2) Easy availability: Considering that lending institutions like banks must always keep their depositors' money working for them and earning more money and interest than it pays out to depositors, bank loans should, in theory, always be available to anyone seeking one; 3) Good lending terms and relations with the bank: If a borrower meets the bank's lending criteria to the letter, he could benefit with a lower rate of interest and relaxed and easy repayment terms. Add to this the bonus of having a good working relationship with the bank; 4) Speed: If the borrower has all the appropriate documentation, any bank can process his application within an hour; 5) Uses: A borrower can use a bank loan for a number of reasons--either for setting up a business, or to buy home improvement goods or to go on a holiday. In fact, a bank loan is a financial package which helps you tide over a difficult time or set up business or invest in stocks. Considering it is a loan, it means that eventually you will have to pay the bank back within a stipulated time at a predetermined rate of interest; 6) No need for collateral: For a personal loan, a borrower needn't produce any security or collateral. Besides, even the documentation is very little, as compared to other kinds of loans, thereby expediting the processing time; 7) No need to specify use of the money: In case of a personal loan, one need not spell out what the money is going towards. All a borrower should do is to repay the money in equated monthly installments on or before the stipulated date.

Disadvantages of the loan are: 1) Borrowers over-borrow: People sometimes over borrow money and get caught in their own debt. Often, this can lead to a shortfall in cash flow and payments can take precedence over income. To prevent this, loan repayments are restricted to a set percentage of a borrower's income; 2) Prepayment penalty: Often, loans come with a prepayment penalty which prevents the borrower from paying the loan earlier than the stipulated date without incurring any extra costs; 3) Restrictions: Banks levy a number of restrictions on the transaction. This includes having a good credit history before applying for a loan, and there are often restrictions about how the money should be used.

3) Next objective was to analyze company's credit program for Retail Banking sector of Kazakhstan of BTA and KKB.

In BTA there are three types of credit program for retail banking sector: 1) Loan “Home buyer mortgage from Global Building”; 2) Universal faculty; 3) Express Loans.

And in KKB there are 4 types of credit programs for retail banking sector: 1) Express loans; 2) Mortgage; 3) Loans for emergency needs; 4) Credit limit.

These types of credit programs which are oriented to retail banking sector are beneficial for customers, because: a) Low cost of financing. Using various schemes of complex lending, Bank assists to optimize interest costs of clients; b) Possibility of lowering interest rates. Interest rates on credit transactions are set and adjusted in accordance with market fluctuations and may decline with increasing level of collaboration between the bank and client; c) Possibility of increasing the loan term. Financing of projects underlines of credit can not only use low interest rates, but increase the term of loan from 3 to 5 years; d) Quick loan application processing. The Bank is constantly striving to improve the quality of service, resulting in a rapid examination of the project; e) Finance in the regions. You can use the services of the bank almost in all regional centers of the Republic. The Bank has an extensive network of regional branches and offices in Kazakhstan and a number of representative offices abroad.

4) SMEs are important to almost all economies in the world, but especially to those in developing countries and, within that broad category, especially to those with major employment and income distribution challenges. On what we may call the “static” front, SMEs contribute to output and to the creation of “decent” jobs; on the dynamic front they are a nursery for the larger firms of the future, are the next (and important) step up for expanding micro enterprises, they contribute directly and often significantly to aggregate savings and investment, and they are involved in the development of appropriate technology.

So the next objective was to analyze company's credit program for Small and Medium Enterprises Banking sector of Kazakhstan of BTA and KKB.

BTA has two types of credit programs for SMEs: 1) Standart financing of the subjects of SME; 2) Micro and Malyi credit facilities.

KKB has also two types of credit programs for SMEs: 1) Program of Fund “Damu”; 2) “Business turnover”.

5) Next objective was to analyze company's credit program for Corporate Banking sector of Kazakhstan of BTA and KKB.

KKB has two types of credit programs for corporate banking sector: 1) Program “Business Road Map 2020”; 2) Microcredit.

As every sector of business corporate banking sector needs financing too. Some corporations have to take loans from banks in order to make some investments or in order to expand their business, so BTA and KKB offer to that corporations several types of credit programs with suitable conditions.

6) And the last objective of this work was to make SWOT analysis of BTA and KKB. As I mentioned above there are strengths, weaknesses, opportunities and threats of these banks.

Strengths are: a) BTA and KKB have a widespread presence in our country, allowing them to spread risk and enjoy economies of scale; b) Their brands are well-established historically and continually promoted, for example through sponsorship of charity concerts, establishment of some books, etc; c) The interest rates are lower than in other secondary banks.

Weaknesses are: a) Not in every affiliate there is a good quality of customer service; b) In some branches there is not enough cash register office, so clients have to wait in queue for a long time.

Opportunities are: a) Good financial position of them is creating a good reputation for future bank loans and borrowings; b) Skilled workforce means that they can be moved and trained into other areas of the business; c) The banks' strategy is to offer a full portfolio of services countrywide, providing a wide range of cross-selling opportunities; d) Both of them are continuously opening new affiliates among the country, trying to expand their positions.

Threats are: a) Large and increasing competition; b) While offering a wide range of services provides opportunities, there is also the threat that customers may prefer to go to suppliers who present a more specialized approach.

Both BTA and KKB are the main secondary banks of Kazakhstan. So there are few differences between them. And from this work we can understand this. Interest rates, lending terms, size of collaterals, etc. are almost the same.

According to research the difference is only in financing of corporate banking sector. BTA bank has few (almost doesn't have) credit programs for corporations, but KKB makes this type of financing much successfully. It has four types of programs for corporations.

3.3 Recommendations

credit system kazakhstan

This paragraph includes recommendations that can be offered to companies in order to improve the quality of crediting of clients.

Base on this work I recommend next items that by my opinion and theoretical background material will lead to high performances:

1) First thing that I can recommend is about interest rates. Not everyone can allow themselves to buy luxury things, apartments, etc. So they have to take loans from banks, but if banks have high interest rates on loans taken it is hard to repay it.

2) Secondly, I recommend improving the quality of service in all branches of BTA and KKB. Some workers of the bank handle with their clients rudely, for example, with elder people or with students. I think everyone deserve the good relationship.

3) Third recommendation is about queuing problem in some affiliates of these banks. There are few number of cash register offices in some branches of BTA and KKB, so everyone have to wait for a long time in order to make some money transactions or repay their debts.

3.4 Summary of the study

This section will give an overview of the entire study. It will begin with a review of the problem and the type of information collected.

The study begins from whole observation of the thesis. It takes start from ancient description of credit. The meaning which this subject takes in society from past centuries till present and what values it will occupy in the future.

At the beginning I state the objectives which were achieved through all thesis work. In order to achieve those objectives was constructed methodology. By this methodology objectives were achieved. In this paragraph was mentioned about the methods of making this work. I collected almost all information from internet, web sites, books, because my work is dependent from secondary data. I mentioned about theoretical background of the credit, principles and forms of credit, types of bank loans, etc.

Second chapter was about companies observed: BTA and KKB. First I wrote little about their history, what types of services they provide, etc. Then I mentioned about credit programs of these banks for individual clients, after that for SMEs, and then for corporations.

And the last chapter consists from explanation of those results. I shortly explained the research which I made in second chapter. I made some recommendations in order to improve the quality of the service, to make available the credits for everyone, etc.



Conclusion

Conclusion based on the objectives of this research. The objectives of this work were as follows:

1) First objective was to understand the meaning of the term credit. This objective was understood base on theoretical knowledge of the subject. Credit is the provision of money or goods on credit, usually with interest payments; valuation of economic category, an essential element of commodity-money relations. The emergence of credit is directly connected with the sphere of exchange, where the owners of the goods against each other as owners are willing to enter into economic relations.

2) Next objective was to understand the advantages and disadvantages of the credit. This objective was understood base on secondary data too.

Advantages of the loan are: 1) Interest rates: Banks that offer loans do so at competitive rates of interest and on mutually understood and accepted repayment terms, as compared to unconventional lenders; 2) Easy availability: Considering that lending institutions like banks must always keep their depositors' money working for them and earning more money and interest than it pays out to depositors, bank loans should, in theory, always be available to anyone seeking one; 3) Good lending terms and relations with the bank: If a borrower meets the bank's lending criteria to the letter, he could benefit with a lower rate of interest and relaxed and easy repayment terms. Add to this the bonus of having a good working relationship with the bank; 4) Speed: If the borrower has all the appropriate documentation, any bank can process his application within an hour; 5) Uses: A borrower can use a bank loan for a number of reasons--either for setting up a business, or to buy home improvement goods or to go on a holiday. In fact, a bank loan is a financial package which helps you tide over a difficult time or set up business or invest in stocks. Considering it is a loan, it means that eventually you will have to pay the bank back within a stipulated time at a predetermined rate of interest; 6) No need for collateral: For a personal loan, a borrower needn't produce any security or collateral. Besides, even the documentation is very little, as compared to other kinds of loans, thereby expediting the processing time; 7) No need to specify use of the money: In case of a personal loan, one need not spell out what the money is going towards. All a borrower should do is to repay the money in equated monthly installments on or before the stipulated date.

Disadvantages of the loan are: 1) Borrowers over-borrow: People sometimes over borrow money and get caught in their own debt. Often, this can lead to a shortfall in cash flow and payments can take precedence over income. To prevent this, loan repayments are restricted to a set percentage of a borrower's income; 2) Prepayment penalty: Often, loans come with a prepayment penalty which prevents the borrower from paying the loan earlier than the stipulated date without incurring any extra costs; 3) Restrictions: Banks levy a number of restrictions on the transaction. This includes having a good credit history before applying for a loan, and there are often restrictions about how the money should be used.

3) Next objective was to analyze company's credit program for Retail Banking sector of Kazakhstan of BTA and KKB.

In BTA there are three types of credit program for retail banking sector: 1) Loan “Home buyer mortgage from Global Building”; 2) Universal faculty; 3) Express Loans.

And in KKB there are 4 types of credit programs for retail banking sector: 1) Express loans; 2) Mortgage; 3) Loans for emergency needs; 4) Credit limit.

These types of credit programs which are oriented to retail banking sector are beneficial for customers, because: a) Low cost of financing. Using various schemes of complex lending, Bank assists to optimize interest costs of clients; b) Possibility of lowering interest rates. Interest rates on credit transactions are set and adjusted in accordance with market fluctuations and may decline with increasing level of collaboration between the bank and client; c) Possibility of increasing the loan term. Financing of projects underlines of credit can not only use low interest rates, but increase the term of loan from 3 to 5 years; d) Quick loan application processing. The Bank is constantly striving to improve the quality of service, resulting in a rapid examination of the project; e) Finance in the regions. You can use the services of the bank almost in all regional centers of the Republic. The Bank has an extensive network of regional branches and offices in Kazakhstan and a number of representative offices abroad.

4) SMEs are important to almost all economies in the world, but especially to those in developing countries and, within that broad category, especially to those with major employment and income distribution challenges. On what we may call the “static” front, SMEs contribute to output and to the creation of “decent” jobs; on the dynamic front they are a nursery for the larger firms of the future, are the next (and important) step up for expanding micro enterprises, they contribute directly and often significantly to aggregate savings and investment, and they are involved in the development of appropriate technology.

So the next objective was to analyze company's credit program for Small and Medium Enterprises Banking sector of Kazakhstan of BTA and KKB.

BTA has two types of credit programs for SMEs: 1) Standart financing of the subjects of SME; 2) Micro and Malyi credit facilities.

KKB has also two types of credit programs for SMEs: 1) Program of Fund “Damu”; 2) “Business turnover”.

5) Next objective was to analyze company's credit program for Corporate Banking sector of Kazakhstan of BTA and KKB.

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