Banking

Banking system includes:

Products /Services

Kyrgyz financial institutions launched a range of new products such as:

Foreign Investors

Kazakh banks are actively acquiring banks in the Kyrgyz Republic
In 2007 UniCredit Bank became the first Western European financial institution to operate in the country
Foreign investments are lowering the cost of capital

Retail Trends

Recent approval of draft law on deposit insurance protection by Parliament (Jan 2008)
Due to rapid growth of retail banking, the sector is witnessing a boom in lending portfolios
Retail consumers remain highly uneducated about the availability of modern banking products and services
Low penetration of banking services among population (concentration still dominantly in larger cities and amongst businesses)

Growth Trends

In 2007 Kyrgyz Banking sector took significant strides as evidenced by growths in the following:

Client Base Trends

Corporate clients:
Corporate clients account for over 70% of aggregate balances held at commercial banks

Retail clients:
- 233,000 personal accounts held by a population of 5.1 Million (July 2006)
- Market penetration of about 5%
- Banking assets to GDP ratio remains low compared to neighboring countries (27%)

Due to limited incomes of the country’s population, services such as private insurance, investment, and non-public pension funds remain underdeveloped for the foreseeable future

Banking Sector Characteristics

The Kyrgyz Republic lags behind its CIS peers in the ratio of its deposits to GDP, because of the mistrust of the banking sector by the general public

Lending slow to develop due to:
- Scarcity of capital within the banking system
- Unavailability of lending products

Relative geographic isolation of population and lack of developed market participants perpetuates this lag