KZT-denominated deposits at Kazakhstani banks currently offer interest rates of up to 18–19% per annum, while the yield on some bonds traded on KASE is 20% or higher. The difference in figures may be relatively small, but the mechanics of these instruments are fundamentally different. This determines what an investor can actually expect to receive: predictable income with deposit guarantee protection from the Kazakhstan Deposit Insurance Fund (KDIF) within the established limits, or a return that depends on the creditworthiness of a specific issuer. Let’s look at how a deposit differs from a bond and how to choose an instrument based on your investment objective.
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This material is for informational purposes only and does not constitute investment advice. Investing always involves the risk of losing capital.
Deposit rates, bond yields, deposit guarantee limits, and tax rules are stated as of September 2026 and may change. Please check the current terms with your bank or broker, or refer to primary sources such as kase.kz, kdif.kz, nationalbank.kz. |
The Key Difference Between the Two Instruments
A deposit means placing money with a bank on agreed terms: the deposit terms provide for the return of the principal and payment of interest; if the bank’s license is revoked, KDIF deposit guarantee protection applies within the established limits.
A bond is a debt security. By purchasing one, an investor effectively lends money to the issuer — a government, quasi-government company, or business — for a specified period at an agreed coupon rate. The income and repayment of the invested amount directly depend on whether the issuer is able to meet its obligations.
In practice, the difference looks like this: a 12-month tenge deposit currently offers an average market rate of around 14.5–15% per annum (with some banks offering up to 18.9% in effective annual interest), government securities (GS) on the secondary market trade at yields of 15.5–16.8%, while certain corporate bond issues offer yields ranging from 15.6% to 20% or higher, depending on the issuer’s creditworthiness. A higher bond yield almost always means higher risk — this principle also applies to the Kazakhstani market.
What Is a Bank Deposit?
A bank deposit is the placement of money with a bank on terms that provide for the return of the principal and payment of interest. The interest rate and payment terms are set out in the agreement before the deposit is opened.
Term and Conditions for Placing Funds
Banks offer tenge-denominated deposits with terms ranging from one month to several years. The interest rate depends on the term, amount, and whether additional funds can be added or money can be withdrawn. As of August–September 2026, following the National Bank’s reduction of the base rate to 16.25%, the upper end of the market looks as follows:
• Savings deposits with no withdrawal option — up to 18.5–18.9% annual effective rate of return, typically for terms of 3–6 months;
• Fixed-term deposits with the option to add funds — around 14.5–15% per annum on average across the market;
• Deposits in US dollars and euros — significantly lower, at approximately 1% per annum.
The base rate is the benchmark around which banks set the terms for deposits and loans. The Monetary Policy Committee reviews it several times a year, so rates on new deposits may differ from those indicated here. It is advisable to check banks’ current offers as of the date you open a deposit.
Early Withdrawal and Liquidity
For fixed-term deposits with no withdrawal option, early termination usually results in the interest being recalculated at the minimum applicable rate — effectively, the investor loses most of the accrued interest income. Deposits that allow partial withdrawals are more flexible, but they also offer a lower interest rate. An on-demand deposit is accessible at any time but generates minimal income.
Key Advantages and Limitations of Deposits
• KDIF guarantee. Up to KZT 20 million for KZT-denominated savings deposits, up to KZT 10 million for other KZT-denominated deposits, accounts, and cards, and up to KZT 5 million for foreign-currency deposits.
• Amounts exceeding the KDIF guarantee limit are not protected. It may make sense to spread a large deposit across several banks.
• Interest income is tax-exempt. Interest earned by individuals on deposits with banks in Kazakhstan is fully exempt from individual income tax.
• The interest rate is fixed for the entire term. This is an advantage if market rates decline and a disadvantage if they rise: you cannot move your money to a deposit offering a higher rate before the term ends without losing income.
What Is a Bond?
A bond is a debt security through which an investor provides funds to an issuer on specified terms. The face value of each bond, its maturity, and the amount of regular payments are determined in advance. Bonds are traded on exchanges—in Kazakhstan, primarily the Kazakhstan Stock Exchange (KASE) and Astana International Exchange (AIX)—and are divided into three groups:
• Government bonds (MEOKAM, MEUKAM, MEIKAM issued by the Ministry of Finance of the Republic of Kazakhstan);
• Quasi-government bonds (for example, bonds issued by KazMunayGas, Kazatomprom, and the Kazakhstan Sustainability Fund);
• Corporate bonds — bonds issued by banks, microfinance organizations, and other companies.
Coupon Payments and Maturity
A coupon is a periodic interest payment made to the holder of a bond. It may be paid monthly, quarterly, or semi-annually, depending on the terms of the issue. For example, for a bond with a face value of KZT 1,000 and a coupon rate of 16% per annum, an investor receives KZT 160 per year — approximately KZT 40 every three months if payments are made quarterly. On the maturity date, the issuer is required to repay the bond’s face value, provided that it remains solvent. In other words, the investor receives the principal amount originally invested back.
Market Price of a Bond
Unlike a deposit, where the principal amount does not change, the market price of a bond may deviate from its face value. If market interest rates rise, the price of previously issued bonds with lower coupon rates declines so that their yield to maturity becomes comparable with current market conditions. Conversely, when interest rates decline, the price of fixed-rate bonds generally rises. This means that an investor who sells a bond before maturity may receive more or less than the amount originally invested. If the bond is held until maturity, however, it is redeemed at its face value.
Key Risks for Bondholders
• Issuer risk. Bonds are not covered by the KDIF guarantee. Therefore, before purchasing a bond, investors also need to assess the issuer’s credit quality, rather than focusing solely on the stated yield.
• Interest rate (price) risk. Rising market interest rates reduce the market price of previously issued fixed-rate bonds.
• Liquidity risk. For some issues, particularly those of smaller companies and microfinance organizations, daily trading volumes on KASE are minimal. As a result, it may be difficult to sell a large position quickly without accepting a lower price.
Important: A bond is not an instrument with a guaranteed return of capital. Coupon payments and principal repayment depend on the financial condition of the specific issuer, rather than the government (except in the case of government securities (GS)).
The tax treatment of coupon income depends on the type of security, the trading venue, and the status of the issue. Before comparing net returns, it is important to check the current tax treatment applicable to the specific issue.
Understanding the current bond issues and the level of risk associated with each one is easier with a ready-made selection — for example, the bond ideas compiled by Freedom Broker analysts, where securities are grouped by risk level and yield.
Deposits vs. Bonds: Comparison by Key Parameters
| Parameter | Deposit | Bond |
| How It Works | Placing money with a bank at a fixed interest rate | An investor lends money to an issuer in exchange for coupon payments and repayment of the face value |
| Liquidity | Limited by the deposit terms; early withdrawal reduces the income earned | Can be sold on the exchange on any trading day at the prevailing market price |
| Term | From 1 month to several years; fixed term | From several months to 10+ years; can be exited earlier by selling the bond |
| Currency | KZT, USD, EUR | KZT, USD (including USD-denominated bonds issued by Freedom Holding Corp.), EUR, CNY, etc. |
| Risk | Bank risk is not critical within the KDIF guarantee limit | Risk of the specific issuer; not covered by deposit insurance |
| Predictability of Payments | High: the interest rate is fixed for the entire term | High for coupon payments, but the price may differ from face value if sold before maturity |
| Change in Investment Value | The principal amount does not change | The market price of the bond fluctuates with interest rates |
| Income Tax (Individual Income Tax) | Tax-exempt | Depends on the type of security, trading venue, and applicable tax regime |
| Typical Investor Objective | Preserve capital and earn predictable income | Earn a potentially higher return while accepting market risk |
| Selection Complexity | Low: it is sufficient to compare banks’ terms, the deposit term, and interest rate | Higher: yield, maturity, issuer credit quality, liquidity, and market price all need to be considered |
What to Choose in Different Situations
There is no universal answer such as “choose X” — the choice depends on the investment horizon, objective, and risk tolerance. Here are the key factors to consider.
Emergency Fund for Unexpected Expenses
For an emergency fund, quick access to money without losses is more important than the potential return. In this case, a deposit with partial withdrawal or an on-demand deposit may be more suitable than a bond — even a liquid bond may sometimes have to be sold at a price below its purchase price.
You Will Need the Money in a Few Months
A short-term deposit for 3–6 months may be suitable, as may a bond with a maturity date that matches the investor’s investment horizon. In the latter case, the investor can avoid having to worry about fluctuations in the market price and simply wait for the face value to be repaid, provided that the issuer meets its obligations.
The Funds Can Be Invested for a Longer Term
Over a longer investment horizon, the difference in returns between deposits and bonds becomes more noticeable. Government bonds offer yields comparable to or slightly higher than those of deposits and generally carry lower credit risk than corporate issues in the same market and currency. At the same time, part of the portfolio can be allocated to corporate bonds offering higher coupon rates in exchange for taking on additional issuer risk.
The Investor Is Willing to Accept Market Risk
In this case, the focus may be on higher-yielding corporate bonds, diversification across issuers, and currency instruments. For example, USD-denominated bonds issued by Freedom Holding Corp. are traded on AIX with yields of up to 9.5% per annum in USD, with a minimum investment of one bond with a face value of USD 100. This type of instrument provides both currency diversification and a potentially higher return than a USD-denominated bank deposit.
Key Risks to Compare
Liquidity Risk
For a deposit, this means the risk of losing interest income if the deposit is terminated early. For a bond, it means the risk of being unable to find a buyer at an acceptable price for an illiquid issue, particularly when dealing with smaller issuers.
Issuer Risk
For a bank deposit within the KDIF guarantee limit, this risk is effectively assumed by the deposit guarantee system. For a bond, the investor bears the issuer risk directly and must assess it independently based on the issuer’s credit rating, financial statements, and payment history.
Changes in Interest Rates and Bond Prices
A deposit is protected from this risk—the principal amount does not change. When market interest rates rise, the price of a fixed-rate bond generally declines; when rates fall, its price generally increases. The longer the time to maturity, the more sensitive the bond’s price is to changes in interest rates.
Currency Risk
KZT-denominated instruments offer higher nominal returns but are exposed to fluctuations in the tenge exchange rate. Foreign-currency deposits and USD-denominated bonds offer lower interest rates but may reduce the portfolio’s exposure to a weakening tenge. Many individual investors in Kazakhstan hold both types of instruments for this reason.
Can You Combine Deposits and Bonds?
Deposits and bonds serve different purposes and do not necessarily exclude each other. A common approach is to keep part of the capital in a deposit or short-term government securities (GS) as an emergency reserve with predictable income, part in longer-term government and quasi-government bonds for baseline income, and a smaller portion in corporate or foreign-currency bonds to increase the portfolio’s potential return. Such a combination reduces the dependence of the entire portfolio on a single instrument, bank, or issuer
For more information on how to allocate money among different instruments depending on your objective, see the article “Where to Invest Money in Kazakhstan: An Overview of Investment Instruments for Different Goals.”
Frequently Asked Questions
Which Is More Liquid: a Deposit or Bonds?
If there is sufficient market demand for a particular bond issue, it can be sold before maturity at the prevailing market price. A deposit does not have formal exchange-traded liquidity: early withdrawal may be possible, but it usually results in the loss of some or all accrued interest.
Can You Sell a Bond Before Maturity?
Yes, if the bond is traded on an exchange. The sale price may be above or below the face value, depending on the current level of market interest rates and demand for the specific issue.
Which Is Riskier: a Deposit or a Bond?
Within the KDIF guarantee limit, a deposit is generally considered a more protected instrument. A bond is not covered by deposit insurance and carries the risk of the specific issuer, while its market price may fluctuate. At the same time, it is this additional risk that often allows bonds to offer higher yields.
Can You Use Deposits and Bonds at the Same Time?
Yes. Many investors combine both instruments: a deposit for an emergency reserve and predictable income, and bonds to increase the portfolio’s potential return over a longer investment horizon.
Would you like to assess which bonds are currently available in the Kazakhstani and international markets and which may suit your investment objective? Explore the selection of bond ideas from Freedom Broker analysts.
Sources and Useful Links
• Kazakhstan Deposit Insurance Fund — Deposit Guarantee