OREANDA-NEWS. December 07, 2009. Three quarters 2009 highlights:

Revenue of KZT 154.7 billion (USD 1,055 mn), up 2.5% from 3Q 2008

Net interest margin before provisions for impairment losses increased to 8.2% from 8.0% as of year-end 2008

Net profit of KZT 14.6 billion (USD 99.5 mn), down 70.7% from 3Q 2008

Total Bank assets increased 6.6% in KZT terms and decreased 14.7% in USD terms compared to year-end 2008

Deposits increased 19.7% in KZT terms and decreased 4.2% in USD terms compared to year-end 2008

Cost-to-income ratio of 11.3%

Core Tier 1 ratio of 13.7%

Total capital ratio increased to 18.0%

Loan-to-deposit ratio of 208%

Provisioning rate of 16.4% of gross loans

EPS decreased from KZT 71.36 to KZT 19.02

On 6 July KKB repaid in full Eurobond totalling JPY25 billion

On 3 November KKB repaid in full Eurobond totalling US500 million

Net interest income
Net interest income before provisions for impairment losses increased by 2.5% to KZT 154.7 billion for the period ended 30 September 2009, compared to KZT 151.0 billion for the period ended 30 September 2008.

The net interest margin before provisions for impairment losses as a percentage of average interest-earning assets was 8.2% for the period ended 30 September 2009, an improvement on the figure of 8.0% for full-year 2008. The increase resulted from the higher growth in the average yield on interest-earning assets from 15.2% in full-year 2008 to 15.4% in the third quarter of 2009, compared to flat average cost of interest-bearing liabilities at 7.2% in the third quarter of 2009.

Non-interest income
Net non-interest income amounted to KZT 45.2 billion the third quarter of 2009 compared to KZT 5.9 billion in the third quarter of 2008. This substantial improvement was primarily due to income resulting from the purchase of the bank’s own debt securities of KZT 23.0 billion, and income from operations with financial assets of KZT 12.2 billion.

Operating expenses
Operating expenses decreased by 14.1% to KZT 22.5 billion during the period ended 30 September 2009 compared to KZT 26.2 billion in the period ended 30 September 2008.

Within this total, Personnel expenses decreased by 18.4% to KZT 10.7 billion in the third quarter of 2009 from KZT 13.1 billion in the third quarter of 2008.   

As a result of our strategy of network optimisation, the number of branches decreased from 186 to 157 during the first nine months of 2009.

Provisions and NPLs
The Bank continues with its conservative policy of building sufficient provisions for expected credit losses. Provisions for credit impairment losses increased to KZT 477.4 billion as at 30 September 2009, compared with KZT 289.3 billion at the end of 2008. As a result, the effective rate of provisioning amounted to 16.4% of gross loans at the end of the third quarter of 2009 compared to 11.9% at the end of 2008.

Non-performing loans (NPLs) represented 20.6% of gross loans by the end of the third quarter of 2009, up from 8.1% at the end of 2008. KKB defines NPLs as total exposure to clients with overdue payments (30 days and more for corporates, 60 days and more for retail customers).
As of 30 September 2009, the provision-to-NPL ratio was 79.8%. Provision coverage of loans more than 90 days delinquent was 110.1%.

Profit
Net profit for the first nine months of 2009 amounted to KZT 14.6 billion compared to KZT 49.9 billion for the first nine months of 2008. This drop is a result of increase in provisioning expenses.

Capital ratios
Risk-weighted assets increased to KZT 2,748 billion at 30 September 2009, or by 12.4% compared to the situation at the end of 2008.

On a consolidated basis, the Bank’s Core Tier 1 ratio at 30 September 2009 was 13.7% compared with 13.5% at 31 December 2008, and the total capital ratio was 18.0% (17.7% at 31 December 2008).

Business line performance
Corporate and SME banking

The share of corporate loans in the Bank’s total net loan portfolio increased from 83.6% in 2008 to 87.4% in the third quarter of 2009.

As of 30 September 2009 corporate deposits (excluding deposits received under the Kazakh Government’s stabilisation programmes) had increased by 5.6%, to KZT 718.7 billion from KZT 680.6 billion as at 31 December 2008.

Retail banking
The share of retail loans within the total net loan portfolio was 12.6% in the third quarter of 2009, with mortgages constituting 66.3% of the retail loan portfolio.

As at 30 September 2008, the Bank had 157 branches in Kazakhstan. In addition, it has an extensive alternative distribution network consisting of 984 ATMs and more than 10,500 point-of-sale terminals and it offers customers internet banking and a call centre.

Retail deposits increased by 15.6%, from KZT 263.8 billion as at 31 December 2008 to KZT 304.8 billion as at 30 September 2009.