OREANDA-NEWS. March 25, 2008.  Alliance Bank, the leading retail bank in Kazakhstan, announced the results of its activities for 2007 according to IFRS audited consolidated statements. More than three times increase of the net profit to KZT42.683 million (USD348.3 million) compared to KZT14.010 million (USD111.1 million) for 2006 has become one of the major achievements of the Bank for the period.

Having commented the results of the Bank’s activities in 2007, The Chairman of the Board Erik Sultankulov said: “In 2007, Alliance Bank succeeded in resolving a comprehensive task to increase efficiency and profitability of operations while maintaining high business growth paces. This achievement was due to the commencement of optimization of the branch network and active investments in the promotion of business processes automation, extension of branch network to 24 and 199 mini-branches, ATM network up to 1243 units all over Kazakhstan and introduction of the automated loan analysis with the help of the world leading company, Experian Scorex. It is necessary to underline that during 2007 we have finalized the modernization of processing center, which allowed us to increase the product  line and improve the quality of payment cards and ATMs services. In addition, call-center functions were substantially widened and it currently has 240 employees.  The growth of retail share in the Bank’s loan portfolio and focus on the work with high margin products enabled significant increase of the Bank’s profitability and improvement of client service quality” – emphasized the Head of Alliance Bank.

The growth of the Bank’s resource base in 2007 caused by raising of funds in both domestic and foreign markets has enabled the Bank to increase the assets which from early 2007 grew by 26.1% and as of January 1, 208 totaled KZT1,160.9 billion (USD9,650.3 billion) in comparison with KZT920.8 billion (USD7,250.0 million) in the end of 2006.

The rise of the Bank’s assets was most of all caused by the increase of the Bank’s loan portfolio which rose by 32.2% in 2007 and as of January 1, 2008 totaled KZT819.2 billion (less reserves) (USD 6 809.6 million). Retail segment within the Bank’s loan portfolio extended by 50.4% against early 2007 and totaled KZT405.1 billion (USD 3,361 million) . Loan loss reserves (provisions) of the Bank were 5% of the loan portfolio exceeding the NPL arrears under the Bank’s loans in 1.3 times maintaining at comparably low level of 3.8%.

Accordingly to the growth of assets the Bank’s capitalization has also grown. From early 2007 the main indicator of the Bank’s financial soundness – its shareholders’ capital increased by 98.6% and totaled KZT159 billion (USD 1,321.5 million) /The increase of the Bank’s shareholders’ capital in 2007 was provided by the capital injections and profit capitalization showing aspiration of the Bank’s major shareholder – SAFC - to develop the Bank’s business.

Over the last years, Alliance Bank has actively developed its personal consumer lending featured by rapid turnover of loan portfolio as well as the Bank’s high margin in comparison with other types of retail business. Thanks to this, the Bank has in many ways avoided adverse effect of the current liquidity deficiency within the banking system of Kazakhstan. Together with big cushion of liquid assets it enabled the Bank not to resort to active foreign borrowings in the second half of 2007.

“In 2008, we adjusted our business model towards the increase of adaptation to streamlined production and innovativeness of the Bank’s operations meaning active use of card technologies in the work with retail customers,” – noted Erik Sultankulov, - “We believe that transition to revolving credit cards will ensure targeting of all indicators scheduled for 2008 both in terms of business volumes and profit even on the back of continuous adjustments in the world financial markets.”

As reported earlier, for the purpose of maintainance high liquidity, loan portfolio quality and profitability ratios at the previous high level, Alliance Bank has adjusted consumer lending model and from January 15, 2008, it proceeded to the new consumer lending program with the help of direct marketing and revolving credit cards. The Bank issues these cards for its customers with good credit stories who will be identified within the customer database accounting for more than 2 million borrowers.