The level of overdue agricultural loans is breaking records

Recently we wondered how responsibly farmers approach loan repayment. The first thing we did was to look into the situation in the Agrarian Credit Corporation. We found out that the percentage of overdue loans to individuals in ACC has increased from 12% to 17%. The percentage of delinquent loans of legal entities remains at 15%. Today we will look at similar information about Kazagrofinance loans, reports World of NAN.

We found that at the end of September 2022 the delinquency rate for KAF is about the same as for ACC - within 15% of the total loan portfolio. However, at the beginning of the year the delinquency rate was much higher at 21%.

It should be noted that KAF divides its portfolio into two parts: loans to clients and leasing of machinery. However, the level of delinquency was very high for issued loans. It was 62% and at the beginning of the year it was even 79%. And a little more than half of the loans are overdue for more than 1 year. 

But the situation on leasing is somewhat better. The delinquency rate there fell from 15% to 12% over 9 months of 2022. However, there is also a fairly high level of long-term delinquency.

Judging by the figures, farmers have more than a year overdue on leasing amounting to 27 billion tenge (share of 7%). It is important to note that the level of short-term delinquency is much higher at the end of the year than at the end of September. That is, there is probably a cash gap towards the end of the year and farmers have to postpone repayment of the lease or loan for a few days or weeks.

Also during the analytical work we found out that at the beginning of 2022 KAF had collateral in the form of vehicles worth 283 billion tenge on leasing. In 2021 the company seized leasing items to the amount of 1.3 bn tenge, and in 2020 already 2 bn tenge.

In the banking sector, one of the main indicators of the quality of the loan portfolio is the level of NPL+90 (the share of loans overdue for more than 90 days). KAF has this indicator is 12.3%, while ACC has 10.5%. That is, about every tenth loan issued in tenge is not repaid for at least 3 months. Meanwhile, the level of such bad loans in the banking sector is only 3.8%, far below the indicators of ACC and KAF. Thus, it becomes clear why lending to agriculture is not very attractive for banks.

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