OREANDA-NEWS. June 25, 2008. Alliance Bank (LSE: ALLB) disclosed its 1Q2008 performance highlights based on IFRS audited consolidated financials. One of the main achievements of the Bank for the reported period was growth of its net interest income before reserves by 22% against same period of 2007. As of 1Q2008 it amounted to KZT 20 579 million (USD 170,9 million).

Strategy of the Bank targeted at business efficiency increase, allowed to see increase of interest as well as commission income. As of 1Q2008 net commission income of the Bank totaled KZT 176 million against losses of KZT 154 million for the same period of 2007. Main portion of commission income of the Bank are income cash settlement operations, which grew 2,5 times and comprised KZT 2 205 million (USD 18,3 million) as well as documentary operations income, increased 2,5 times and totaling KZT 793 million (USD 6,6 million) against same period of 2007.

Maintaining high profitability of operational activity, the Bank pays close attention to adequate liquidity levels, retaining liquid assets at the level of 20-23% of total assets. Within 1Q2008 level of liquid assets increased by 4% as opposed to the indicator of 2007 and totaled KZT 251 million (USD 2,1 million). At the same time the Bank’s liquidity ratio since beginning of 2008 grew by 1.3% reaching 22.1%.

Liquidity k4 and k5 ratios under prudential norms of NBK comprised 443,7% and 181,6% accordingly while minimum requirements are 30% and 50% respectively.

“In the first quarter of 2008, we primarily focused on maintenance of the Bank’s adequate liquidity level and scheduled repayment of our liabilities to foreign investors. The Bank’s foreign indebtedness in 2008 is USD 1 billion 22 million, while 70% of this amount falls due and will be repaid before July 1, 2008. In the current environment of insufficient liquidity, the Bank has the PIL scheduled repayments as the main source of funding. As of April 1 the assets with less than one year maturity made up KZT 531 billion, which significantly exceeds liabilities with less than one year maturity totaling KZT 375 billion. As a result, we are successfully managing all our short-term liabilities repayment, despite challenges connected with fundraising from international markets,” said Erik Sultankulov, CEO of Alliance Bank.

As was previously announced, as a result of environment change in international capital markets in 2007, the Bank has corrected it’s development strategy in order to settle new objectives. The Bank's new strategic targets encompass maintenance of stable growth and strengthening its position in the market as well as improvement of the service quality and operational efficiency. Maximum use of the stored knowledge, know how and technologies are aimed to attract more customers to the Bank. Alliance Bank will continue to be the leader and an innovator in retail banking. Customer service efficiency coupled with increased service quality are among the Bank’s main priorities.

Alliance Bank’s key financial performance highlights in 1Q2008:
Assets comprised KZT 1 137 billion (USD 9,4 billion) against KZT1 161 billion (USD9,6 billion) as of YE 2007. At the same time liquid assets increased by 4% against end of 2007 and comprised KZT251 billion (USD2 083 million). The Bank Liquidity ratio from beginning of 2008 grew by 1.3% to 22.1%. Liquidity k4 and k5 ratios under prudential norms of NBK comprised 443,7% and 181,6% accordingly while requirements are 30% and 50% respectively.
Loan portfolio was contracted by 6% to KZT 770 billion (USD 6 383 million), including retail loans reducing by 9.7% to KZT 367,1 billion (USD 3 042 million).
To cover possible loan losses from NPLs, the bank has generated loan loss reserves in amount of KZT 48 685 million (USD 403.4 million). In addition, equity of the Bank includes additional reserve capital for possible losses for the amount of KZT 10 billion, thus, total reserves stand at 7.2% of loan book and fully cover non-performing loan level.
In 1Q2008 the Bank has repaid a part of its indebtedness to the foreign investors for a total amount of USD 171 million. The Bank is repaying another USD 510 million of foreign liabilities, thus meeting it’s obligations by approximately 70% of its total debt for the whole year of 2008. The remaining portion of its foreign liabilities due until end of 2008 makes up USD 342 million.
The Bank’s shareholders’ equity increased by 2.6% to KZT 163 billion (USD 1 352 million) against KZT 159 billion (USD 1 321 million) in 2007.
Total capital and T1 capital adequacy ratios under Basel methodology stood at 19.4% and 17.7% accordingly, while minimum requirements are 6% and 12% respectively.
K1 and K2 general capital adequacy ratios under prudential standards of NBK totalled 14.9% and 16.2% while required levels are 5 % and 10% accordingly
The Bank’s net profit totaled KZT 4 220 million (USD 35.0 million) in comparison with KZT 8 307 million (USD 66.5 million) in 1Q2007. On a contrary, the Bank’s net interest income grew by 22% against same period last year and comprised KZT 20 579 million (USD 170, 9 million).
Net commission income made up KZT 176 million (USD 1, 5 million) compared to losses of KZT 154 million for the same period of 2007. The main portion of the income came from cash settlement operations, which increased 2.5 times and amounted to KZT 793 million (USD 6,6 million) against 1Q 2007.
Cost to Income ratio stood at 29.3% as of April 1, 2008.