OREANDA-NEWS. On April 25, 2008 Alliance Bank JSC (Almaty), securities of which are traded in the Kazakhstan Stock Exchange (KASE) category "A" official list, provided to KASE the press release on the following, reported the press-centre of KASE:

Alliance Bank evaluates conclusions, made in the international rating agency Fitch Ratings report "Quality of Kazakhstan banks assets: negative trends and low transparency", published on April 21, 2008, in whole as unbiased.

International rating agencies Standard&Poor's, Moody's Investors Service and Fitch Ratings, when evaluating the impact of the world financial markets turbulence on the Kazakhstan banking system, several times forecasted that the most probable and inevitable consequence under the existing liquidity deficiency and the decrease of loans volumes will result in degradation of the Kazakhstan banking system assets quality.
 
At the same time, Alliance Bank considers necessary to explain the reasons of the loans indicators devaluation growth and evaluate the situation.

The loans indicators devaluation growth is based on three factors:

- As it was mentioned above, under the adjustment on the world financial markets, Alliance Bank, as well as many other banks of Kazakhstan, has to decrease the loan portfolio size, which, in its turn, leads to the increase of overdue loans percentage in the loan portfolio.

- Upon completion of the average life of credits, the so called phase of the portfolio "maturity" becomes due. The average personal consumer loan life makes up 2.5-3 years. Considering, that Alliance Bank started active consumer lending in 2006, given this the maximum sales were reported in spring of 2007, the Alliance Bank portfolio active "maturity" phase occurred in  2008, at this the percentage of overdue debt in the Bank's portfolio does not exceed the forecasted values.

- Certain growth of the percentage of classified by the Kazakhstan legislation loans in the Bank's loan portfolio was caused by toughening of the Bank's internal policy on the existing borrowers classification. In particular, from the end of 2007 the Bank started making strict demands to borrowers' financial statements norms, and re-evaluated the existing collateral security, and implemented the business borrowers' detailed analysis.

Concerning the Fitch Ratings statement on insufficient level of formed by the Banks rations, the following should be noted. From the very beginning of the active consumer lending development, Alliance Bank deliberately accepted the conservative enough method of rations charging on the homogeneous loans portfolio. The additional argument in favor of the Alliance Bank loan portfolio quality is the unique business model, based on the re-tail lending and using of nonstandard instruments of minimizing bank's credit risks, in particular the re0tail loan portfolio insurance. Thus, at calculation of overdue loans coverage it is necessary to consider loans volume, bearing additional insurance coverage.

Also, as emphasize in their report Fitch Ratings analysts, these risks of Alliance Bank loan portfolio is partly reimbursed by the short-term nature of consumer loans, and as the consequence, the rapid turnover of the Bank's loan portfolio. Given this the level of Alliance Bank blocked loans can be stabilized quicker, than loan portfolios of other banks, having the longer turnover period, believes Fitch Ratings.

Another strength of Alliance Bank, from the Fitch Ratings standpoint, is the practice of personal consumer insurance in Insurance Company Alliance Police JSC, till November of 2007. The Fitch Ratings analysts believe that it will help Alliance Bank to prevent losses on previously issued personal consumer loans.

And, at last, emphasized Fitch Ratings, the level of Alliance Bank yield and capitalization (which have the highest indicators across the Kazakhstan banking sector) allow the Bank better absorption of possible losses, connected with the existing loan portfolio quality, than any other bank in Kazakhstan.

Summarizing the above said, on the Alliance Bank opinion, the Kazakhstan banks assets and corresponding risks evaluation requires consideration of differences between Kazakhstan banks business models. The Alliance Bank business model is based on the re-tail crediting and therefore can not be directly compared with banks, whose business focus on crediting of corporate clients and small and medium size subjects.

Alliance Bank thoroughly tracks the loan portfolio quality and observes all established by the regulating body norms on forming of the sufficient reservation level.