OREANDA-NEWS. April 15, 2011. Eurasian bank JSC has announced its operating results for 2010 according to the audited nonconsolidated financial statements under IFRS. In the challenging post-crisis economic environment the bank could achieve positive dynamics of its main financial indicators.

The bank’s assets grew by 11% in the reporting period reaching 355.5 billion tenge by the end of 2010. The bank’s total capital increased by 7% against 2009 to reach 25.9 billion tenge.

Asset growth was largely due to the increase in the loan portfolio that surged by 36% against last year amounting to 212.7 billion tenge. Generally, the total loan portfolio of Kazakhstani second tier banks decreased in 2010 by 5.9%.

Corporate sector financing increased by 68% and as of January 1, 2011 made up 59% of the total size of the loan portfolio. To compare, at the beginning of 2010 the corporate sector share in the total loan portfolio was 48%. The significant growth of corporate sector financing was the result of the bank’s shifting of its focus to major corporate clients with excellent credit histories. The measure was dictated by the need to minimize the risk of financing small and medium enterprises (SMEs, 11% of the total loan portfolio) and retail segment financing (30% of the total portfolio) in times of financial instability.

Thus, in absolute figures by the end of 2010 the corporate loan portfolio measured 129,0 billion tenge, the retail loan portfolio stood at 59,1 billion tenge and the SME loan portfolio at 24,6 billion tenge.

Another positive outcome of the bank’s operations in 2010 is the return to the profit zone after posting a loss in 2009. Net profit in 2010 amounted to 771.4 mln. tenge compared to a loss of 13,0 billion tenge in 2009. As it is known, the loss of 2009 was a consequence of the reassessment and restructuring of the loan portfolio by the new top management of the bank.

At the same time, net interest yield in 2010 surged by 38% to 5.8 billion tenge (4.2 billion in 2009) due to the rapid growth of prime lending last year.

One of the bank’s priorities in 2010 was a sizable improvement of its loan portfolio quality. To achieve this goal measures were taken to raise the efficiency of the risk management department.

In particular, a loan impairment early warning system and a common loan application processing centre were set up. As a result, the volume of non-performing loans with a 90 days or more delay in payment was reduced by 58% and as of January 1, 2011 made up 7% of the total loan portfolio (14,1 billion tenge).

Unsecured loans account for less than 1% of the total loan portfolio.

The share of restructured loans declined from almost 30% at January 1, 2010 to 14% at January 1, 2011.

Loan loss provisions made up 9,1% of the total loan portfolio exceeding the amount of frozen debt (7%) by 1.4 times.

Customer current accounts and deposits with Eurasian bank JSC amounting to 244.1 bln. tenge account for 74,1% of the total liabilities of the bank at the end of 2010.

It is important to note that serious structural change has occurred in the bank’s deposit portfolio that crept up 1,5% against 2009. The share of retail deposits in the overall volume decreased by 13,7%, while the amount of legal entity deposits grew by 12,3%.

The decrease in the retail deposit share was the result of a programme that started early in 2010 and aimed to reduce the cost of funding and ease down the pressure of excessive liquidity. As part of the programme, the interest rates on retail deposits were lowered considerably, which led to the decline of the latter. Meanwhile, the bank is actively working to increase the share of corporate client deposits, the interest rates on which are much lower.

Commenting on the bank’s performance in 2010, CEO Michael Eggleton noted: “In 2010 the bank was facing serious strategic challenges, such as improving asset quality, effective restructuring, bad debt recovery, increasing the loan portfolio based on quality borrowers, increasing profits by cutting spending. Today we are proud to say that all these goals have been achieved!”

Eurasian bank JSC maintains a sufficient amount of liquidity and has access to additional sources of financing from shareholders, public and quasi-public corporations.

As of January 1, 2011 the bank served 15,000 corporate and 237,400 retail clients.

The full audited nonconsolidated financial statements of Eurasian bank JSC under IFRS are available at the bank’s website www.eubank.kz