Published
01/04/2025, 09:48The National Bank of the Kyrgyz Republic tested how a deterioration in credit quality can affect non-bank financial and credit organisations (NBFIs).
For this purpose, they conducted stress tests, in which they modelled three scenarios of deterioration: from 50% to 100% of loans move to a more risky category, for example, from ‘standard’ to ‘doubtful’.
The results showed that in such a deterioration, the loss provision would almost double from 144% to 263%. This means that organisations would have to set aside more money to cover risks.
If these scenarios were to become reality, the sector's losses would range from KGS 1 billion to KGS 3.4 billion, depending on the extent of the deterioration. This would hit profits and capital, reducing the resilience of organisations.
Such testing helps to assess risks in advance and prepare for difficult situations. The National Bank continues to monitor the stability of the financial sector to minimise possible consequences.
