March 6, 2020 / 9:19 AM / a month ago

Halyk Bank targets SMEs in resource-rich Uzbekistan to grow market share

ALMATY, March 6 (Reuters) - Kazakhstan’s Halyk Bank , the first private foreign lender to enter Uzbekistan after recent reforms, plans to grow its market share by targeting small and medium businesses, the chief executive of Halyk’s Uzbek unit told Reuters.

Tenge Bank also plans to roll out retail operations and believes the Uzbek banking sector could benefit from a capital amnesty, chief executive Aslan Talpakov said in a telephone interview from Tashkent.

Halyk Bank set up its Tenge unit after Uzbekistan relaxed regulatory requirements for Kazakh banks in 2018, part of the resource-rich Central Asian nation’s campaign to attract foreign investment and reform the economy.

Tenge was launched in the middle of last year with 118 billion sums ($13 million) in capital, the minimum required by regulations. At the end of 2019, it ranked No.25 out of 30 by assets with a market share of 0.13%.

“By the end of this year we plan to rise to No.19 by assets... with a share of 0.6%,” Talpakov said.

Tenge started out by lending to small and medium-sized enterprises, he said, and plans to grow by adding more corporate customers while also developing the retail portfolio.

“The risks we see are inflation which remains high and pressure on the local currency,” he said, adding that Uzbek authorities were working on those issues.

The Uzbek sum lost 12.3% of its value against the dollar last year while inflation was running at 15.2%. Lending rates fluctuate between 24-28% as a result, Talpakov said.

The relatively high proportion of cash transactions which bypass the banking system was another issue, he said. That could be partly addressed by an amnesty similar to those carried out in other ex-Soviet nations where citizens were given a pass on tax avoidance in exchange for depositing money in banks, he added.

“I think such an exercise could be topical in the local economy,” Talpakov said. “The question is, how to organise and execute it... Perhaps it will require more than one iteration, maybe two.” (Writing by Olzhas Auyezov; Editing by Emelia Sithole-Matarise)

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