OREANDA-NEWS. May 21, 2013.
Net interest income
Net interest income before provisions for impairment losses amounted to KZT30.4 billion for the 1st quarter 2013 compared to KZT30.5 billion for the 1st quarter 2012.

Non-interest income
Net non-interest income decreased to KZT7.5 billion in the 1st quarter 2013 compared to KZT11.5 billion in the 1st quarter 2012. The decrease in net non-interest income was mainly attributable to the unrealised loss on the derivative financial instruments.

Fee and commission income increased by 16.7% to KZT7.1 billion in the 1st quarter 2013 from KZT6.1 billion in the 1st quarter 2012. Increase in fee and commission income was mainly attributable to growth in commissions on banking cards operations by 20.8% and settlements by 10.0%.

Operating expenses
Operating expenses decreased by 6.8% to KZT7.8 billion in the 1st quarter 2013 compared to KZT8.3 billion in the 1st quarter 2012. This was mainly due to decrease in staff expenses by 11.8% or KZT568 million.

 Impairment losses
The provisions for credit impairment losses represented 32.9% of gross loans as at 31 March 2013 compared with 32.5% as at 31 December 2012. Provisioning charge amounted to KZT17.9 billion in the 1st quarter 2013 compared to KZT25.7 billion in the 1st quarter 2012.

Non-performing loans (NPLs) were 29.8% of gross loan book as at 31 March 2013. 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.

The accrued interest income on certain corporate customer loans where there are no expected cash flows to the Bank in the next few years amounted to KZT10.5 billion in the 1st quarter 2013, compared to KZT10.8 billion in the 1st quarter 2012. Management has established an allowance for loan losses against this interest. For more details please refer to the Note 6 of the financial statements.

Taxation
in the 1st quarter 2013 the Bank recorded a tax expense of KZT1.8 billion compared to KZT1.7 billion in the 1st quarter 2012. The effective tax rate was at 19.8%.

Capital ratios
On a consolidated basis, the Bank’s Core Tier 1 ratio was 13% and Total capital ratio was 16.3% at 31 March 2013.

Business line performance

Corporate and SME banking
Corporate loans were KZT 1,655 billion as at 31 March 2013 compared to KZT 1,704 billion as at 31 December 2012. The share of corporate loans in the Bank’s total net portfolio decreased from 88.9% at the end of 2012 to 88.1% as at 31 March 2013.

As of 31 March 2013, corporate deposits (excluding deposits under the Kazakh Government’s stabilisation programmes) were KZT938.2 billion compared to KZT789.2 billion at 31 December 2012. The share of corporate deposits in the Bank’s total customer accounts was 55.2% compared to 50.8% as at the end of 2012.

Retail banking
Retail deposits insignificantly decreased (by 0.2% or KZT1.4 billion) to KZT658 billion from KZT659.4 billion at 31 December 2012, mainly due to the decline in demand deposits. The term retail deposits increased by KZT 2.1 billion during the 1st quarter 2013. As of 31 March 2013, the Bank had 23 branches and 128 outlets in Kazakhstan. In addition, it has an extensive alternative distribution network. The number of ATMs and POS terminals was at 1,358 and 15,618, accordingly.

Retail loans (net) increased by 5.1% to KZT224.1 billion as at 31 March 2013 compared to KZT213.2 billion as at 31 December 2012 mainly due to increase in net consumer loans. The share of net retail loans in the total net loan portfolio was 11.9% as at the end of 1st quarter 2013 (11.1% at YE2012), with the share of mortgage loans decreased to 55.0% from 57.7% as at 31 December 2012.