Bad loans remain the main systemic risk for Kazakh banks as liquidity and currency risks gradually decline, Kazakhstan's central bank said Monday, citing its survey of the country's commercial banks.

"A big share of bad loans remains the main systemic risk of banks, though their (bad loans) quantity has stabilized, according to banks' estimates," the central bank said in a summary of its survey.

Liquidity and currency risks for banks are gradually declining, the central bank said its survey showed. Of the survey's participants, 17% said liquidity risk was rising, down from 20% in the third quarter last year, while "only 8%" said currency risk was increasing, down from 17%, the bank said.

Banks say a pickup in lending will depend on Kazakhstan's macroeconomic situation, loan portfolio quality and action by financial regulators.

"The toughening of regulatory norms may contribute to the containment of credits to the economy," the central bank said.

Kazakhstan's banking sector was hit hard by the global economic crisis. Two major Kazakh banks defaulted on their foreign obligations last year after they had been taken over by the state in an effort to stabilize the country's wobbling banking sector.

Central bank Web site: www.nationalbank.kz

-By Kadyr Toktogulov, Dow Jones Newswires; +7 701 726 4327, kadyr.toktogulov@dowjones.com