BAKU, Azerbaijan, March 2. Increased trade between Kyrgyzstan and Russia helped Kyrgyz banks in 2022, Trend reports citing Moody’s.
“The increase in international trade, including with Russia, benefited local banks in the form of higher liquidity, a larger client base and increase cashflows, which boosted profits,” the service said.
Moody’s added that Kyrgyzstan’s banks also benefited from remittances coming out of Russia.
However, the services noted that while some CIS (the Commonwealth of Independent States) banks profited last year, longer term impact of the Russian-Ukraine conflict is likely to have negative effect on the banking system of these countries.
For instance, expected deterioration of Russian economy by 3 percent in 2023 will result in reduced remittance flows and weaker trade flows to Kyrgyzstan's banks.
According to the Moody’s forecast, the further weakening of Russian economy will also eventually affect the sectors where migrants from Kyrgyzstan work.
However, Moody’s noted that support from sovereigns can help shield some banks from the abovementioned risks.
Moody’s Investment Service provides data, analytical solutions, and insights into decisions in financial markets. Moody’s operates in more than 40 countries.