The banking sector of Kyrgyzstan is actively developing, introducing the latest technologies and maintaining sustainable growth every year. Myktybek Shokenov, member of the Board of Bank of Asia CJSC, shared his professional opinion on current trends in the banking industry. Myktybek Shokenov is a specialist in the field of economics and bank management for more than 20 years, currently holds the position of Member of the Board of Bank of Asia CJSC.

How would you characterize the banking sector of Kyrgyzstan? How developed is it?

In general, the banking sector of Kyrgyzstan is at the stage of active development, which is accompanied by a number of positive changes. On the one hand, competition is intensifying, which stimulates banks to improve the quality of service and introduce innovations. On the other hand, there is a growing share of state participation in the banking sector, which can also play an important role in stabilizing and supporting the financial system.

Attracting new investors is also an important trend. The sale of Keremet Bank to foreign investors, the transfer of Bai-Tushum Bank to local shareholders, and the merger of Halyk Bank with mobile operator O! demonstrate the attractiveness of the banking sector.

In recent years, there has been an active introduction of digital technologies into the banking sector. Banks are allocating significant funds for digital transformation, which contributes to the creation of new online products and services for customers. Robotization has already become a relevant part of daily banking processes.

What areas are not fully developed in Kyrgyzstan compared to CIS countries?

In Kyrgyzstan, banks’ services in trade finance are still underdeveloped compared to some CIS countries. At the same time, there is significant potential for growth in such areas as green finance and Islamic banking.

For example, custodial services (services provided by banks to hold securities or other financial assets of clients) are actively provided by banks of Kazakhstan, but have not found a significant place in Kyrgyzstan. This is largely due to the insufficient development of the stock market. However, the role of financial institutions in this process cannot be underestimated, and the Bank of Asia has been actively involved in the development of this area for many years.

In 2022, Bank of Asia was the first bank in Kyrgyzstan to issue sustainable bonds – gender bonds. This financial instrument was designed to support women’s entrepreneurship and became an important step in the development of the country’s stock market.

This year, together with the State Development Bank of the Kyrgyz Republic, we issued social bonds for 100 million KGS. This issue is aimed at supporting small and medium-sized businesses by providing loans at reduced rates. Special attention is paid to creating new jobs, increasing tax deductions, improving working conditions and protecting labor rights. Also, within the framework of financing, measures are being implemented to improve the quality and safety of labor, create modern working conditions and comply with sanitary and hygienic norms.

What banking products and services does the Bank of Asia provide? Which of them are the most demanded?

The banking sector of Kyrgyzstan covers most of the clients’ needs by offering cash and settlement services, lending, opening deposits, money transfers.

The Bank of Asia consistently holds high positions in the market, serving both individuals and legal entities. The Bank offers flexible conditions for consumer lending and financing of small medium-sized businesses. As previously mentioned, an important social segment for the bank is financing women entrepreneurs.

At the end of 2024, the bank published its first sustainability report, which reflects the bank’s key achievements in environmental, social and corporate responsibility (ESG). I believe that these initiatives not only develop the financial sector but also contribute to strengthening the country’s social infrastructure.

We offer a premium program from Visa for Visa Infinite holders: free access to the lounge area of international airports, travel insurance and many different card bonuses. In addition, Bank of Asia has opened “Privilege Club from Bank of Asia” for Visa Infinite from Bank of Asia cardholders.  In this club cardholders can get discount, bonuses from our partners such as World Class, UFC Gym Kyrgyzstan, Sea restaurant, Manifesto showroom, Paese Kyrgyzstan cosmetics store, etc.

The Bank strives to digitize its processes and offers its services through mobile application “Asia Online” and internet banking.  In the near future we expect to launch an updated version of the mobile application with expanded functionality and modern interface.

Is the growth of interest rates on deposits in Kyrgyzstan possible, as it is observed in the CIS?

The growth of interest rates on deposits in some CIS countries is largely due to the geopolitical situation, in particular between the Russian Federation and Ukraine, as well as instability in the Middle East. These factors have led to an increase in the cost of imported goods and services, as well as disruption of supply chains and logistics.

Kyrgyzstan, on the contrary, has a stable macroeconomic situation, which contributes to restraining the growth of interest rates on deposits. The decline in inflation to 5.2% (as of the end of November 2024) and the maintenance of the National Bank of the Kyrgyz Republic discount rate at 9.0% throughout the year reflect effective measures taken by the National Bank and the Government, which, in turn, contributes to reducing the cost of funds attracted by banks.

Additionally, I would like to note the following key factors that we observe:

– Deposit base growth. The deposit base has increased by almost a third since the beginning of the year. This indicates the confidence of households and businesses in banks, which reduces the need to raise rates to attract funds.

– Good liquidity. Today banks have enough funds, so we cannot expect strong competition for resources.

– Legislative changes. The planned tightening of the Law on Restriction of Usury Activities may lead to a decrease in profitability of some types of lending, which, in turn, will affect interest rates on deposits.

Thus, we do not expect any prerequisites for growth of deposit rates in the near term.

Is there a rating of banks in Kyrgyzstan? Who occupies the leading positions?

There are no local rating agencies in Kyrgyzstan that calculate bank ratings. The reliability of banks is assessed by external agencies. However, each bank independently analyzes the market and evaluates its competitors.

We use an internal ranking system based on financial statements at the end of each month. This ranking includes 11 absolute and relative indicators, each of which is assigned a certain weight and optimal value. The ranking is determined for each indicator and the bank’s overall rating is calculated.

Bank of Asia is stably in the top 10 banks in terms of overall rating, and in terms of a number of relative indicators it occupies positions in the top 3. According to the latter ranking, Aiyl Bank, MBank and Eldik Bank are the leaders.

How to assess the reliability of a bank? What should I pay attention to when choosing one?

The reliability of a bank is determined by its ability to fulfill its obligations to customers, employees, shareholders and the state on a particular date. When assessing reliability, the focus is on financial and regulatory indicators such as profitability, profitability, liquidity, capital adequacy ratios, return on assets, efficiency and others.

However, selecting a bank requires a comprehensive approach. In addition to analyzing financial ratios, it is important to consider the following aspects:

• Availability of license;
• Credit ratings;
• Age of the bank;
• Reputation;
• Current news;
• Range of services and tariffs;
• Convenience and availability of services;
• Use of innovations and technologies.

Such a comprehensive approach will help to make a more informed choice and minimize risks. When opening a deposit, of course, the key factor is often the deposit rate. However, it should be remembered that too high rates may indicate possible liquidity problems of the bank.