OREANDA-NEWS. On September 24, 2008 JSC Kazkommertsbank announced its consolidated financial results reviewed by auditors for the period ended 30 June 2008, reported the press-centre of Kazkommertsbank.

Highlights:
Net profit increased by 26.8% from KZT 26.9 billion in the first half 2007 to KZT 34.1 billion in the first half 2008.

Net profit before income tax increased by 43.2% from KZT 34.6 billion to KZT 49.5 billion.

Net interest income increased twice from KZT 31.4 billion to KZT 63.6 billion.

Operating income increased by 34% from KZT 48.8 billion to KZT 65.3 billion.

Earnings per share increased from KZT 36.38 to KZT 47.90.

Total assets decreased by 3.8% from KZT 2,997 billion as at 31 December 2007 to KZT 2,884 billion as at 30 June 2008.

Total equity increased by 6.4% from KZT 319 billion to KZT 340 billion.

Loans to customers less allowance for impairment losses decreased by 2.6% from KZT 2,366 billion to KZT 2,304 billion.

Customer accounts increased by 9.3% from KZT 895 billion to KZT 978 billion. 

Debt securities issued increased by 0.5% from KZT 740 billion to KZT 736 billion.

Return on Equity increased from 19.5% in2007 to 20.5% inthe first half 2008

Business Performance Overview

Income
Net interest income before provisions for impairment losses increased by 67.1% to KZT 101.5 billion in the period ended 30 June 2008 from KZT 60.7 billion in the same period of 2007, resulting primarily from the 14.2% growth in average interest-earning assets and an increase in Net Interest Margin from 5.5% in the first half of 2007 to 7.8% in the first half of 2008.

Net non-interest income amounted KZT1.7 billion in the first half of 2008 compared to KZT17.3 billion in the same period of last year. The decrease was caused by 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 29.3% making up KZT 37.9 billion for the period ended 30 June 2008 compared to KZT 29.3 billion in the first half 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 7.2% as at June 30, 2008. The Bank creates general provisions in line with the its conservative provisioning policy.

Operating expenses
Operating expenses increased by 33.9 per cent in the first half of 2008 to KZT 17.4 billion, from KZT 13 billion in the first half 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 half of 2008 (compared 53.4 per cent in the first half of 2007).

Loans to Customers
The Bank’s total gross loan portfolio reduced by 1 per cent to KZT 2,482 billion as at 30 June 2008 from KZT 2,507 billion as at 31 December 2007. Loans to individuals, including consumer and mortgage lending, made up 18 per cent as at 30 June 2008 or KZT 416 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, decreased by 14.6 per cent to KZT 182 billion as at 30 June 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 decreased to 6.3 per cent as at 30 June 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 39.3 per cent to KZT 234 billion as at 30 June 2008, compared to KZT 168 billion as at 31 December 2007.

Securities portfolio
The size of the Bank’s securities portfolio decreased by 45.1 per cent to KZT 105.5 billion during the first half of 2008, from KZT 192.2 billion at the end of 2007. The decrease was mainly in the Bank’s trading portfolio, down 46 per cent or KZT 87 billion. This change was primarily attributable to the retirement of debt securities of international financial institutions.

Funding
On May 16, 2008, the Bank repaid USD 250 million Eurobonds with zero coupon signed in May 2007 within mid-term notes issuance programme (MTN). Lead arranger of the deal was UBS; the funds were used for general corporate activities of the Bank.

Book value of debt securities issued by the Bank decreased to KZT 736 billion, representing 28.9 per cent of the Bank’s liabilities as at 30 June 2008, from KZT 740 billion as at 31 December 2007.

Customer accounts increased by 9.3 per cent, from KZT 895 billion as at the end of 2007 to KZT 978 billion as at 30 June 2008 as a result of increase in term deposits by 7.4 per cent. Term deposits amounted to KZT 772 billion as at 30 June 2008, compared to KZT 719 billion as at the end of 2007.

The demand deposits increased to KZT 205 billion as at 30 June 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 30 June 2008 comprised 78.9 and 21 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 511 million as at 30 June 2008, compared to KZT 201 million as at 31 December 2007.