Development Strategy

Development Strategy of JSC "Development Bank of Kazakhstan" till 2020

Long-term Development Strategy for the Development Bank of Kazakhstan approved by the Board of Directors May 28, 2010 (Minutes № 113) and defines the strategic objectives and key areas of the Bank's development until 2020.

The purpose of the strategy - the transformation of the Bank into a modern and independent national institution for development, which plays a significant role in the creation of a competitive non-oil sector of Kazakhstan's economy, while being financially sustainable and dynamic banking organization.

The strategic objectives of the Bank for the period until 2020 are:

1. Provide at least 10% of investments in non-primary industries and infrastructure in Kazakhstan during the period of PFIIR 2010-2014. - Increase the size of the loan portfolio to $ 7 billion by the beginning of 2015 and to $ 10 billion by early 2020. 
2. Ensure that the rate of return on equity (ROE) of not less than 6% by 2015 and no less than 8% by 2020.
3.  By 2015, reach to the average cost of borrowings of the Bank (excluding the cost of sources) on the open market was at its lowest level among financial institutions in Kazakhstan. The Bank will seek to ensure that the cost of borrowing at the level of the Ministry of Finance.
4.  Provide high-quality portfolio of the Bank - to reduce the ratio of the volume of provisions to loan portfolio to less than 15% in 2015 and less than 10% in 2020.
5.  Get a corporate governance rating from Standard & Poor Standard & Poor's (or the method NWF "SK") at a level of GAMMA-6 (60%) by 2015 and below GAMMA-7 + (75:%) by 2020.

To control the results from operations, the loan portfolio of investment projects is divided into two groups - the development projects (large-scale investment projects of national importance, implemented by the Bank in accordance with the sectoral priorities of government programs in the field of industrial policy) and other commercial projects.
Given the characteristics of these two groups of projects (capital intensity, the timing of implementation, participation of the state, the average rate of return and other factors), and implementation of development projects will involve preferential budgetary sources to reduce the final crediting rate projects.

To maintain an optimal balance between the objectives of the Bank as a development institution and a financial institution, the Bank determines for itself the next target structure of loan portfolio in 2015: the share of development projects - not less than 60% share of commercial projects - not more than 40% of the Bank's loan portfolio .

When the long-term strategy, the Bank will be guided by two basic performance criteria for its activities:

1. launch competitive industries - annual growth rate of development (investment) by Bank projects and the number of industrial and infrastructure facilities, commissioned by Bank financing;
2. Ensure breakeven Bank - Out on a positive financial result for the year during the entire period of the strategy.

Using the entire list of available financial instruments, the Bank intends to focus its activities on developing three key areas:

1.  investment lending;
2.  trade finance;
3.  services of a financial agent.

At the 1-stage strategy for priority will be to provide loans of strategic investment projects implemented under PFIIR and development of trade finance. On 2-stage strategy of the Bank will focus on attracting private capital in non-project - organizing financing transactions and advising clients in entering the capital market, acting as fiscal agent to attract "cheap" loans for industrial projects of the Government and commercial banks.

Since 2013 the Bank intends to strengthen investment activity to finance overseas projects through project financing, technology-related non-extraction companies in Kazakhstan.

In the long run, the Bank sets the task to move away from state financial support (except for the replenishment of capital) and provide the base funding from commercial sources. In particular, the Bank will seek to ensure that the share of commercial sources in the base funding is not less than 85% by 2015 and 95% by 2020.

In the long run KDB is considering a partial privatization involving a strategic investor in the face of an authoritative international development institutions to increase transparency and market orientation of the Bank, to attract the best management practices and the introduction of advanced banking technologies and procedures.