OREANDA-NEWS. September 06, 2010.
Net interest income
Net interest income before provisions for impairment losses decreased by 30.2% from KZT 106.2 billion in the 1st half 2009 to KZT 74.2 billion in the 1st half 2010. The accrued interest income on corporate customer loans, on which the Bank does not expect to receive accrued interest in full, increased during the six months ended 30 June 2010 by KZT 30.1 billion. This accrued interest has been fully provided for. For more details please refer to Note 5 of the financial statements for the six months ended 30 June 2010. Consequently the adjusted net interest income for the 1st half 2010, taking into account provisions on accrued interest income of KZT 30.1 billion, was KZT 44.0 billion. Adjusted Net Interest Margin for the six-month period ended 30 June 2010 was 4.0%, reported the press-centre National Bank of Kazkommertsbank.

Non-interest income
Net non-interest income decreased to KZT 282 million in the 1st half 2010, compared to KZT 38.0 billion in the 1st half 2009. The decrease was due to the “one-off” income received in the 2009, primarily from the purchase of the Bank’s own debt securities (KZT 22.6 billion) and also due to unrealised losses from cross-currency swaps revaluation.

Net fee and commission income decreased by 1.4% in the 1st half 2010 compared to the 1st half 2009 and amounted to KZT 8.3 billion.

Operating expenses
Operating expenses increased by 17.7% during the 1st half 2010 compared to the 1st half 2009 and amounted to KZT 16.8 billion. This was primarily due to an increase in payments to the Deposit Insurance Fund (by almost 2 times, or KZT 645 million), and an increase in personnel expenses (by 19.4% or KZT 1,370 million).

Impairment losses
The provisions for credit impairment losses represented 20.3% of gross loans and advances in the 1st half 2010 compared with 19.0% in 2009 and 19.8% in the 1st quarter 2010.
Non-performing loans (NPLs) reached 23.6% of the gross loans by the end of the 1st half 2010. By comparison, NPLs were 22.8% of the gross loans at the end of 2009 and 26.4% in the 1st quarter 2010. KKB defines NPLs as total exposure to clients with overdue payments: 30 days and more for corporate clients, and 60 days and more for retail customers.

Taxation
During the period ended 30 June 2010 the bank recorded a tax benefit of KZT 2,638 million. The main reason for this was an increase in losses from cross-currency and interest rate swaps revaluation which led to a decrease in corporate income tax expense. In the 1st half 2009 tax expense totalled KZT 3,533 million.

Profit
Profit before tax and minority interests for the six months ended 30 June 2010 decreased by 43.9% to KZT 7.5 billion compared to KZT 13.4 billion for the six months ended 30 June 2009.
Net profit after tax for the six months ended 30 June 2010 increased by 3.0% to KZT 10.2 billion compared to KZT 9.9 billion for the six months ended 30 June 2009.

Capital ratios
Risk-weighted assets decreased to KZT 2,453 billion at 30 June 2010, or by 1.2% compared to the end of 2009.

On a consolidated basis, the Bank’s Core Tier 1 ratio at 30 June 2010 was 16.1%, compared with 15.9% at 31 December 2009, and the total capital ratio was 20.6% (20.1% at 31 December 2009).

Business line performance
Corporate and SME banking
Corporate loans were KZT 1,922.9 billion as at 30 June 2010 compared to KZT 1,886.6 billion as at 31 December 2009. The share of corporate loans in the Bank’s total net portfolio increased from 87.3% as at the end of 2009 to 88.3% in 1H10.

As of 30 June 2010, corporate deposits (excluding deposits received under the Kazakh Government’s stabilisation programmes) had increased by 11.0% to KZT 858.4 billion from KZT 773.3 billion at 31 December 2009. The share of corporate deposits in the Bank’s total customer accounts increased from 60.6% as at the end of 2009 to 61.3% in 1H10.

Retail banking
As of 30 June 2010, the Bank had 23 branches and 135 outlets in Kazakhstan. In addition, it has an extensive alternative distribution network consisting of 1,114 ATMs, more than 11,000 point of sale terminals and offers customers internet and mobile banking services.
Retail loans were KZT 254.3 billion as at 30 June 2010 compared to KZT 274.1 billion as at 31 December 2009. The share of retail loans in the total net portfolio decreased from 12.7% in 2009 to 11.7% in 1H10, with mortgages constituting 65.8% of the retail loan portfolio.
Retail deposits increased by 13.8% to KZT 372.8 billion at 30 June 2010 from KZT 327.6 billion as at 31 December 2009. The share of retail deposits in the total customer accounts was 26.6% compared to 25.7% in 2009.