Kazakhstan Number of participant banks in mandatory collective insurance system for

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Kelly Merritt
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1 Current status of banking sector as of April 1, As of April 1, 2009, there are 37 tier two banks operational in Kazakhstan, of which number 35 banks, 34 branches and 376 cashier settlement desks are located in Almaty. Structure of the banking sector Number of tier two banks incl., : banks with 100% of authorized capital owned by the Government Number of tier two banks branches Number of tier two banks cashier settlement desks Number of tier two banks representative offices abroad Number of non-residents bank s representative offices in the Republic of Kazakhstan Number of participant banks in mandatory collective insurance system for individuals deposits Number of banks licensed to engage in custodian activity Capital. Year-to-date, total estimated equity3 of tier two banks has decreased by KZT35,4 bln. (1,82%) and constituted KZT1912,4 bln, as of 1 April Herewith, tier one capital has decreased by KZT 1497,3 bln (1,82%), while tier two banks capital decreased by KZT487,4 bln.(1,56%). Tier 1 capital Authorized capital Supplementary capital Tier 2 capital Subordinated debt Tier 3 capital Item increase, in % 1 525, ,3-1, , ,2 23,92 4,9 4,9 0,24 495,1 487,4-1,56 562,6 608,2 8,10 0,9 1,1 19,56 4 Инвестиции банков 73,3 73,3 0,03 Total estimated equity 1 947, ,4-1,82 As of 1 April 2009, capital adequacy indicators were as follows: k1 0,10, k2 0,13. Capital adequacy indicators Tier one capital to total assets (k1) 0,12 0,10 Total capital to total risk-weighted assets and contingent liabilities (k2) 0,15 0,13 Total capital to loan portfolio 0,21 0,19 Total capital to established provisions 1,90 1,23 Total capital to doubtful loans 0,40 0,32 Total capital to loss loans 4,84 2,80 Herewith, the tier two banks total capital, as seen from their balance sheets, has decreased since 1 January 2009 by KZT65,6bln. (4,5 %), and as of reporting date totaled KZT 1 387,0 bln.

2 2 Assets. During three months of 2009, the banks total assets increased by KZT2211,4 bln. (18,6%) and as of reporting date totaled KZT14100,9 bln. Such increase of assets was caused by devaluation of the tenge in February In case when tenge would not be devalued, the bank s total assets may decrease by 5,1% vs. the last period and constitute approximately KZT11280,7 bln. Change in and mix of total assets of banking sector % of total % of total increase (%) Cash, refined precious metals and correspondent accounts 820,2 6, ,2 7,8 34,4 Deposits in other banks 576,8 4,8 983,4 7,0 70,5 Securities 888,2 7,5 1670,7 11,8 88,1 Bank loans and reverse Repo 9 244,5 77, ,5 72,7 10,9 Capital investments 319,5 2,7 337,9 2,4 5,7 Reserves (provisions) ,9-8, ,0-11,1 51,9 Other assets 1 072,2 9, ,2 9,4 23,1 Total assets , , ,6 The banks asset mix shows the prevalence of loans to customers and reverse Repo (72,7%), followed by securities portfolio (11,8%), cash, refined precious metals and correspondent account balances (7,8%), deposits in other banks (7,0%). In Q1 2009, loans to customers and reverse Repo have increased by KZT1010,0 bln. (10,9%), securities increased by KZT782,4 bln. (88,1%), cash, refined precious metals and correspondent account balances have increased by KZT282,0 bln. or 34,4%, deposits in other banks have increased by KZT406,7 bln. or 70,5%, capital investments have increased by KZT18,3 bln. or 5,7%, reserves (provisions) have increased by KZT536,1 bln. or 51,9%. Year-to-date, the balance sheet debt 5 has increased from KZT256,6 bln. by KZT333,2 bln. (a 2,3 times increase) and as of reporting date, totaled KZT589,8 bln. Account balances reflecting the past due interest payments have increased by KZT69,1 bln. (a 2,4 times increase) and as of reporting date, totaled KZT118,2 bln.. Banking sector: Asset structure as of (%) Banking sector: Asset structure as of г. (%) 8,6 9,0 Bank loans and reverse Repo Deposits in other banks -11, ,7 6,9 7,5 4,9 77,8 Securities Cash, refined prec. metals, & corr. acc. Capital investments Provisions 2,4 7,8 11,8 7,0 72,7 Other

3 3 As of 1 April 2009, total assets and contingent liabilities subject to classification have increased by KZT2 747,7 bln. (20,0%) up to KZT16 459,2 bln. Such increase was, also, caused by devaluation of the tenge in February 2009, The proportion of standard assets and contingent liabilities totaled 58,0%, while doubtful assets increased from 36,6% to 37,6%, loss assets and contingent liabilities totaled 4,4% Change in assets quality and contingent liabilities Principal debt, bln. % of total Principal debt, bln. % of total Total assets and contingent liabilities , ,2 100 Standard 8 281,4 60, ,4 58,0 Doubtful 5 016,9 36, ,7 37,6 Doubtful in category 1 when paid in full and timely 2 347,1 17, ,2 17,4 Doubtful in category 2 when past due or paid partially 612,4 4,5 537,0 3,3 Doubtful in category 3 when paid in full and timely 1 588,8 11, ,1 8,3 Doubtful in category 4 when past due or paid partially 210,8 1,5 785,7 4,8 Doubtful in category 5 257,8 1,9 624,7 3,8 Loss 413,2 3,0 726,1 4,4 Over the analyzed period, the loan portfolio breakdown has shown the decrease in standard loans percentage from 43,0% to 35,5%, the percentage of doubtful loans has increased from 52,6% to 57,8%, while percentage of loss loans increased from 4,4% to 6,7%. Change in the quality of the loan portfolio principal debt, bln.tenge % of total principal debt, bln.tenge % of total Total loan portfolio 9 244, ,6 100 Standard 3 977,3 43, ,8 35,5 Doubtful 4 865,0 52, ,7 57,8 Doubtful in category 1 when paid in full and timely 2 232,6 24, ,0 27,0 Doubtful in category 2 when past due or paid partially 595,8 6,5 517,2 5,0 Doubtful in category 3 when paid in full and timely 1 577,4 17, ,4 12,8 Doubtful in category 4 when past due or paid partially 206,0 2,2 740,0 7,2

4 4 Doubtful in category 5 253,2 2,6 598,1 5,8 Loss 402,2 4,4 684,1 6,7 Loan portfolio mix, by quality as of (%) standard Loan portfolio mix, by quality as of (% ) 2,6 4,4 2,2 17,1 6,5 24,2 43 doubtful in category 1 doubtful in category 2 doubtful in category 3 doubtful in category 4 doubtful in category 5 loss 5,8 7,2 12,8 5,0 6,7 27,0 35,5 The amount of provisions established as of April 1, 2009 has constituted KZT1560,8 bln. or 15,2% of tier two banks loan portfolio. Year-to-date provisions have increased by KZT535,2 bln. or 52,2 %. As of 1 April 2009, total provisions constituted 0,02% of provisions established against loans or KZT0,3 bln. Special provisions totaled KZT1560,6 bln., having increased vs. the beginning of 2009 by 52,2%. Provisions established by tier two banks () 1,4 1,2 1 0,8 0,6 0,4 0, Total provisions (left scale) Special provisions (right scale) Liabilities. Year-to-date, total liabilities of tier two banks have increased by KZT2276,9 bln. (21,8%), and totaled KZT12713,9 bln. (that is by 21,8%), as of April 1, Such increase was caused by devaluation of the tenge in February In case when tenge would not be devalued, total liabilities of tier two banks may decrease by 2,5% and amount to approximately KZT10 171,1 bln. Foreign currency liabilities have constituted 61,0% of total liabilities of tier two banks. Of total liabilities of the banking sector, corporate deposits have increased by KZT690,0 bln., that is by 22,3%, special purpose deposits (SPV) have increased by KZT412,2 bln., that is by 18,0%, due to individuals have increased by KZT114,5 bln. that is by 7,6%; while loans from other banks and

5 5 institutions engaged in certain types of banking operations have increased by KZT198,2 bln. to reach KZT1648,4 bln. Change in and breakdown of total liabilities of banking sector % of total % of total increase in, % Interbank deposits 319,0 3,1 117,8 0,9-63,1 Loans from other banks and institutions engaged in certain types of banking operations 1 450,2 13, ,4 13,0 13,7 Loans from the Government of the Republic of Kazakhstan 32,0 0,3 48,6 0,4 51,7 Loans from international financial institutions 88,9 0,9 117,4 0,9 32,0 Corporate deposits 3 088,3 29, ,3 29,7 22,3 Retail deposits 1 500,3 14, ,8 12,7 7,6 Special-purpose deposits of subs 2 284,5 21, ,7 21,2 18,0 Outstanding securities 375,1 3, ,0 8,9 в 3 раза Repo securities transactions 269,1 2,6 353,3 2,8 31,3 Other liabilities 1 029,6 9, ,6 9,5 17,1 Total liabilities , , ,8 Banking sector liabilities mix as of (%) Banking sector liabilities mix as of (%) SPV 2,6 1,2 3,6 9,9 21,9 corporate deposits 2,8 1,3 8,9 9,5 21,2 3,1 retail deposits 0,9 13,9 14,4 29,6 loans from TTBs and instit's engaged in certain types of banking interbank deposits 13,0 12,7 29,7 As of 1 April 2009, corporate and retail deposits 6 have increased by KZT804,5 bln. or (17,5%) to reach KZT5 393,1 bln. In Q1 2009, retail deposits have increased by 7,6% (KZT114,5 bln.). Corporate

6 deposits have increased by 22,3% or KZT690,0 bln. 6 A considerable increase of corporate and retail deposits was caused by devaluation of the tenge in February In case when tenge would not be devalued, customer deposits may amount to approximately KZT4314,5 bln. Corporate deposits may decrease by 2,1% and amount to approximately KZT3022,6 bln., retail deposits may decrease by 13,9% и amount to approximately KZT1291,8 млрд.тенге. Customer deposits total increase in, % incl. those in FX total incl. those in FX total incl. those in FX Total deposits, incl.: 4 588, , , ,1 17,5 50,4 Corporate deposits, incl.: 3 088, , , ,7 22,3 46,6 Retail deposits 1 500,3 628, ,8 992,5 7,6 57,9 Due from non-residents of RoK. As of 1 April 2009, due from non-residents have increased by KZT690,8 bln. (23,7%) to reach KZT3 609,7 bln. by the reporting date. Due from non-residents accounts for 25,6% of tier two banks total assets. The largest proportion in due from non-residents falls on bank loans and reverse Repo transactions: 52,8%, that is KZT1906,5 bln., while deposits in other banks account for 20,2%, that is KZT728,7 bln. Change in and the breakdown of the banking sector s total due from nonresidents of the RoK % of total % of total Increase, in % Cash, refined precious metals and correspondent accounts 392,2 13,4 388,1 10,8-1,1 Deposits in other banks 453,0 15,5 728,7 20,2 60,9 Securities 290,7 10,0 382,7 10,6 31,6 Bank loans and reverse Repo transactions 1 537,2 52, ,5 52,8 24,0 Capital investments 124,4 4,3 143,4 4,0 15,2 Reserves (provisions) -147,1-5,0-334,2-9,3 2,3 Other assets 268,4 9,2 394,5 10,9 47,0 Total due to non-residents of the RoK 2 918, , ,7 Information on the breakdown of the tier two banks portfolio, including loans to non-residents of the RoK on April 1, 2009 is as follows:

7 7 Banks Loan Loans to non- Share of loans to non-residents in portfolio residents loan portfolio, % 1 BTA Bank, JSC 2 627, ,3 51,5 2 Kazkommertsbank, JSC 2 496,5 338,2 13,5 3 Halyk Bank of Kazakhstan, JSC 1 331,0 126,8 9,5 4 ATF Bank, JSC 911,9 10,1 1,1 5 Bank CenterCredit, JSC 718,4 25,7 3,6 6 Aliance Bank, JSC 700,6 26,1 3,7 7 BTA Bank Subsidiary Temirbank, JSC 285,2 3,1 1,1 8 Nurbank, JSC 251,7 5,9 2,3 9 Kaspi Bank, JSC 208,7 5,0 2,4 10 Eurasian Bank, JSC 143,6 10,3 7,2 11 Tsenbabank, JSC 99,5 0,3 0,3 12 Sberbank of Russia Subsidiary, JSC 80,7 0,0 0,0 13 HSBC Bank Subsidiary in Kazakhstan, JSC 64,7 0, 4 0, 6 1 azakhstan, JSC 64,4 4 RBS Subsidiary in K 0,2 0,4 15 Kazinvestbank, JSC 55,8 0,0 0,0 16 Zhilstroysberbank of Kazakhstan, JSC 41, Eximbank Kazakhstan, JSC 46,5 0,4 0,9 18 Citibank Kazakhstan, JS C 36,6 0,1 0,3 19 Alfa Bank subsidiary, JSC 17,8 0,0 0,0 20 Delta Bank, JSC 19, Home Credit Bank, JSC 11, Bank Positive Kazakhstan, JSC 6,7 0,1 2,1 23 Astana Finance Bank, 24 KZI bank subsidiary, JSC 4,4 0,1 3,3 25 METROCOMBANK, JSC - 26 LARIBA 27 Zaman Bank JSC 6, ,8 - BANK, JSC 3,1 - -, JSC 3, Senim Bank, JSC 2, TAIB Kazakh Bank, JSC 2,7 0,0 0,1 30 Dana Bank, JSC 2, Master Bank, JSC 1, Express Bank, JSC 1,7 - -

8 8 33 Bank of China in K 34 Kazakhstan Innovational Commercial Bank, JSC 35 National Bank of Pakistan, Kazakhstan subsidiary JSC 36 Industrial and Commercial Bank of China in Almaty JSC 37 Shinkhan azakhstan, JSC 1,2 - - Bank Kazakhstan, JSC - - 0, ,3 0,0 11,8 - - Total , ,5 18,6 Due to non-residents of the RoK. Over the 1 quarter of 2009, tier two banks total due to nonresidents have increased by KZT549,6 bln. (by 11,7%) and totaled, as of the end of the reporting period, KZT5 239,1 bln.. Such increase was caused by devaluation of the tenge in February In case when tenge would not be devalued, tier two banks total due to non-residents may decrease by 10,6% and amount to approximately KZT4191,3 bln. Of total liabilities of tier two banks, the due to non-residents, as of 1 April 2009, accounted for 41,2,0%. Change in and the breakdown of banking sector s total due to non-residents of the RoK % of total increase, % Interbank deposits 199,2 4,2 30,7 0,6-84,6 Loans from other b anks and institutions engaged in certain types of banking operations 1 332,70 28, ,1 27,0 6,3 Loans from international financial institutions 88,9 1,9 117,4 2,2 32,0 Corporate deposits 111,4 2,4 140,6 2,7 26,2 Retail deposits 36,8 0,8 37,2 0,7 1,2 Special-purpose deposits of subs 2 284,50 48, ,7 51,5 18,0 Outstanding securities 229,2 4,9 259,2 5,0 13,1 Repo securities transactions 8,2 0, Other liabilities 398,7 8,5 540,2 10,3 35,5 Total due to non-residents 4 689, , ,7 Tier two banks liabilities to non-residents of the RoK per date of maturity. period of payment amount on demand 67,4

9 9 up to 1 month 194,9 from 1 to 3 months 250,1 from 3 to 6 months from 6 months to 1 year from 1 to 2 years from 2 to 3 337,1 505,0 731, 4 824,5 from 3 to 5 years 787,7 from 5 years and more 1 476,6 non-financial liabilities 64,4 Liabilities to non-residents of the RoK 5 239,1 Liquidity. In order to regulate banks liquidity, it was entered alterations to the quick and currency liquidity ratio, which are valid from 1 July As of 1 April 2009, the bank system liquidity ratio was as follows: quick liquidity ratio up to 7 days (k4-1) is 5,0 (minimum not less than 1), quick liquidity rati o up to 30 days (k4-2) is 2,8 (minimum not less than 0,9), quick liquidity ratio up to 90 day s (k4-3) is 2,2 (minimum not less than 0,8) Quick liquidity k4-1 (minimum not less than 1) Quick liquidity k4-2 (minimum not less than 0,9) Quick liquidity k4-3 (minimum not less than 0,8) 4,4 4,5 4,7 4,9 4,2 3,1 3,1 2, 9 4,2 5,0 3,1 2,7 3,6 3,2 2 1,8 1,8 2,2 3,1 2, ,1 1,6 1,5 1,6 1,6 1,6 1,9 2, 2 Earnings. As of 1 April 2009, the tier two banks aggregate losses have constituted KZT296,6 bln. (vs. KZT27,6 bln. as of April 1, 2008). Bankin g sector earnings Ch ange (+;- ), % Interest income 348,7 401,2 15,1 Interest expense 188,5 209,8 11,3 Net interest income 160,1 191,4 19,5

10 10 Non-interest income 308, ,4 4,7 times Non-interest expense 429, ,8 4,5 times Net non-interest profit/loss -43,1-486,4 11,3 times Extraordinary items Net income before tax 38,5-295,0 - Income tax costs 10,9 1,6-84, 9 Net income after tax 27,6-296,6 - In interest income, the largest proportion falls on interest income on loans to customers (82,0% i.e. KZT328,9 bln.), while in interest expense prevailing are interest payments on due to customers. (66,1% i.e. KZT138,7 bln.). Net income before tax to total assets ratio (ROA) totaled 2,36% (vs. 2,21% as of April 1, 2008), net income before tax to equity ratio was (ROE) -21,51% (vs.19,60% as of as of April 1, 2008). Summary performance indicators reflecting the earnings of the banking sector Net income before tax to total assets (ROA) 2,21-2,36 Net income before tax to equity (ROE) 19,60-21,51 Interest income to total assets 12,55 11,67 Interest income on loans to total loan portfolio 16,06 14,19 Net income on dealing operations to net income before tax 46,81-21,23 Interest expense to total liabilities 7, 43 7,03 Provisioning expenses to total assets 4,13 19,81 Concentration of the banking sector. As of 1 April 2009, the three top banks proportion in total assets of the banking sector have constituted 60,3%. The three top banks proportion in total liabilities of the banking sector have constituted 60,9%. The loans issued by the three top banks account for 63,0% of total loan portfolio of the banking sector. As of 1 April 2009, the three top banks accounted for 54,0% of total retail deposits in tier two banks. Percentage of banking sector total Assets of top three banks 57,8 60,3 Liabilities of top three banks 58,3 60,9 Equity of top three banks 54,0 54,0 Loan portfolio of top three banks 61,8 63,0 Customer deposits 8 in top three banks, incl.: 56,6 58,4

11 11 - corporate 56,0 60,3 - retail 58,0 54, % Assets of top three banks Equity of top three banks Liabilities of top three banks Loan portfolio of top three banks Customer deposits8 in top three banks, incl.: Role played by banking sector in economy Change in relative indicators characterizing the role played by banking sectors in economy of Kazakhstan GDP, , , , ,1 Assets to GDP ratio, % 74,6 71,3 80,0 84,3 Loan book to GDP, % 58,0 54,5 61,3 61,3 Total capital to GDP, % 12,2 11,6 11,6 11,4 Customer deposits 10 to GDP, % 43,1 41,1 32,4 32,2 1 information as of is provided here exclusive of data for Development Bank of Kazakhstan, JSC; 2 Housing Construction Savings Bank of Kazakhstan, JSC; 3 pursuant to Instruction on normative values and methodology for calculation of prudential normative requirements for tier two banks approved by the authorized body;

12 12 4 banks investments ( investments of a bank in shares (share in an authorized capital) of a legal entity, as well as a subordinated debt of a legal entity, the aggregated amount of which exceeds ten percent of the amount of tier one capital and tier two capital of a bank), withdrawn from calculation of own capital; 5 past due debt on the balance sheet includes the customers debt on loans, factoring, forfeiting, financial lease (account 1306, 1309, 1327, 1328, 1409, 1421, 1423,1424); past due interest payments on loans is reflected in balance sheet accounts 1741, 1731, 1734; 6 exclusive of acc.2222 Special-Purpose Deposits of Subsidiaries; 7 - the calculation of average indicator was changed; 8 - information on customer deposits is provided inclusive of customers current accounts; 9 in accordance with forecast data of the Ministry of Economy and Budget Planning of RoK: in KZT12849,8 bln.; in 2008 KZT15936,5 bln.; in ,1 bln.; 10 inclusive special purpose deposits of subsidiaries

7 April. International reserves of Kazakhstan increased by 1.7% to US$99.3 bln. in March National Bank

7 April. International reserves of Kazakhstan increased by 1.7% to US$99.3 bln. in March National Bank Official exchange KZT/ rate on 1 March 2014 184.08 Summary Economy Banking sector International reserves of Kazakhstan increased by 1.7 to $99.3 bln. in March KKB reported 52.53 bln. Tenge net profit in