OREANDA-NEWS. On August 06, 2008 JSC Kazkommertsbank announced its consolidated financial results reviewed by auditors for the period ended 31 March 2008, reported the press-centre of Kazkommertsbank.
 
Highlights:
Net profit increased by 32% from KZT 12.5 billion inthe first quarter 2007 to KZT 16.5 billion in the first quarter 2008

Net profit before income tax increased by 35.3% from KZT 17.4 billion to KZT 23.6 billion

Net interest income increased by 84.2% from KZT 17.7 billion to KZT 32.6 billion

Operating income increased by 15.6% from KZT 25.3 billion to KZT 29.3 billion

Earnings per share increased from KZT 17.37 to KZT 22.73
 
Total assets increased by 4.4% from KZT 2,997 billion as at 31 December 2007 to KZT 2,866 billion as at 31 March 2008

Total equity increased by 2.1% from KZT 319 billion to KZT 326 billion

Loans to customers less allowance for impairment losses decreased by 2% from KZT 2,366 billion to KZT 2,318 billion

Customer accounts decreased by 0.8% from KZT 895 billion to KZT 888 billion

Debt securities issued increased by 0.9% from KZT 740 billion to KZT 746 billion

Return on Equity amounted to 19.8%

Business Performance Overview
Income
Net interest income before provisions for impairment losses increased by 77.5% to KZT 47.8 billion in the period ended 31 March 2008 from KZT 26.9 billion in the same period of 2007, resulting primarily from the 22% growth in average interest-earning assets and an increase in Net Interest Margin from 5% in the first quarter of 2007 to 7.1% in the first quarter of 2008.

Net non-interest expense amounted KZT3.3 billion in the first quarter of 2008 compared to net non-interest income of KZT7.6 billion in the same period of last year. The unrealized losses from revaluation of derivatives and securities issued by large Kazakh companies in the portfolio of the Bank resulted from unfavourable conditions in the global financial markets.

Provisions for possible impairment losses on interest earning assets
Provisions for impairment losses increased by 64.7% making up KZT 15.2 billion for the period ended 31 March 2008 compared to KZT 9.2 billion in the first quarter of 2007. Reserves on customer loans represented the major part of the provisions. The effective provisioning rate on customer loans increased from 5.6% at the start of 2008 to 6.3% as at March 31, 2008. The Bank creates general provisions in line with the its conservative provisioning policy.

Operating expenses
Operating expenses increased by 37.7 per cent in the first quarter of 2008 to KZT 8.4 billion, from KZT 6.1 billion in the first quarter of 2007, as a result of increases in personnel expenses and branch network development expenses associated with implementation of the Bank’s retail strategy. The personnel expenses made up the largest share of operating expenses, constituting 51.3 per cent of operating expenses in the first quarter of 2008 (compared 53.9 per cent in the first quarter of 2007).

Loans to Customers
The Bank’s total gross loan portfolio reduced by 1.3 per cent to KZT 2,474 billion as at 31 March 2008 from KZT 2,507 billion as at 31 December 2007. Loans to individuals, including consumer and mortgage lending, made up 18.6 per cent as at 31 March 2008 or KZT 457 billion, compared to 19 per cent as at 31 December 2007.

Loans and advances to banks
Loans and advances to banks, less allowance for impairment losses, increased by 7 per cent to KZT 228 billion as at 31 March 2008, compared to KZT 213 billion as at 31 December 2007. At the same time, loans and advances to banks as a percentage of total assets increased to 7.9 per cent as at 31 March 2008 from 7.1 per cent as at 31 December 2007.

Cash and balances with National Bank
Cash and balances with the National Bank of Kazakhstan, the National Bank of Kyrgyz Republic and the Central Bank of Russia increased by 1.2 per cent to KZT 170 billion as at 31 March 2008, compared to KZT 168 billion as at 31 December 2007.

Securities portfolio
The size of the Bank’s securities portfolio decreased by 52.4 per cent to KZT 91.5 billion during the first quarter of 2008, from KZT 192.2 billion at the end of 2007. The decrease was mainly in the Bank’s trading portfolio, down 53.4 per cent or KZT 101 billion. This change was attributable to retirement of debt securities, termination of repurchase operations as well as sale of part of the trading portfolio.

Funding
On February 29, 2008, the Bank repaid USD 450 million of a syndicated loan signed in August 2006 for the amount of USD 850 million for 18 months. In August 2007 the Bank used its advanced repayment option to repay a USD 400 million portion of the syndicated loan. Lead arrangers of the deal were Citibank N.A., Deutsche Bank AG, ING Bank N. V. and Mizuho Corporate Bank. The purpose of the loan was funding of customer import-export contracts.

Book value of debt securities issued by the Bank increased to KZT 746 billion, representing 29.4 per cent of the Bank’s liabilities as at 31 March 2008, up from KZT 740 billion as at 31 December 2007. This increase was caused by changes in exchange rates.

Customer accounts slightly decreased by 0.8 per cent, from KZT 895 billion as at the end of 2007 to KZT 888 billion as at 31 March 2008 as a result of a decrease in term deposits. Term deposits amounted to KZT 709 billion as at 31 March 2008, compared to KZT 719 billion as at the end of 2007. However, the share of demand deposits increased to KZT 178 billion as at 31 March 2008, compared to KZT 176 billion as at 31 December 2007. The shares of the term deposits and demand deposits in the customer accounts as at 31 March 2008 comprised 79.9 and 20 per cent, respectively, compared to 80.3 and 19.7 per cent as at the year end 2007.

The customer accounts included repos in the amount of KZT 710 million as at 31 March 2008, compared to KZT 201 million as at 31 December 2007.