OREANDA-NEWS. May 19, 2014. JSC Kazkommertsbank (“KKB” or the “Bank”) (LSE: KKB; KASE: KKGB), one of the largest banks in Kazakhstan and Central Asia, today announces its audited consolidated IFRS financial results for the period ended 31 March 2014.

Highlights of the 1Q 2014 results:

Total assets increased by 7.4% to KZT 2,779 billion from KZT 2,586 billion as at year end 2013

Total deposits increased by 6.8% to KZT 1,796 billion

Tier 1 Capital Adequacy ratio at 14.6%

Total Capital Adequacy ratio at 16.9%

Adjusted Net Interest Margin at 3.6%

Net transactional fees and commissions income increased by 17.0% compared to 1Q 2013

Operating expenses increased by 4.9% compared to 1Q 2013

Net income amounted to KZT 4.0 billion in 1Q 2014 compared to KZT 7.0 billion in 1Q 2013

Provisioning rate on loan portfolio at 34.7%

Net interest income

Net interest income before provisions for impairment losses increased 9.3% to KZT 27.3 billion in 1Q 2014 compared to KZT 30.1 billion in 1Q 2013.

Non-interest income

Net non-interest income decreased to KZT 5.6 billion in 1Q 2014 compared to KZT 7.5 billion in 1Q 2013, due to a negative translation differences as a consequence of Tenge devaluation.
Fee and commission income stayed flat at KZT 7.1 billion in 1Q 2014, while net transactional fees and commissions income increased by 17.0% compared to 1Q 2013.

Operating expenses

Operating expenses increased by 4.9% to KZT 8.2 billion in 1Q 2014 compared to KZT 7.8 billion in 1Q 2013.

Impairment losses

The provisions for credit impairment losses represented 34.7% of gross loans as at 31 March 2014 compared with 34.0% as at 31 December 2013. The provisioning charge amounted to KZT 9.8 billion in the 1Q 2014 compared to KZT 17.7 billion in 1Q 2013.

Non-performing loans (NPLs) were 36.1% of the gross loan book as at 31 March 2014. KKB defines NPLs as total exposure to clients with overdue payments of 30 days and more for corporate clients, and 60 days and more for retail customers.

Taxation
In the 1Q 2014 the Bank recorded a tax expense of KZT1.2 billion compared to KZT 1.8 billion in 1Q 2013. The effective tax rate was 22.7%.

Capital ratios

On a consolidated basis, the Bank’s Core Tier 1 ratio was 14.6% and the Total capital ratio was 16.9% at 31 March 2014.

Business line performance

Corporate and SME banking

Corporate loans were KZT 1,794 billion as at 31 March 2014 compared to KZT 1,630 billion as at 31 December 2013. The share of corporate loans in the Bank’s total net portfolio increased to 86.7% as at 31 March 2014 from 85.8% at the end of 2013.

As of 31 March 2014, corporate deposits (excluding deposits under the Kazakh Government’s stabilisation programmes) were KZT 990 billion compared to KZT 925 billion at 31 December 2013. The share of corporate deposits in the Bank’s total customer accounts was 55.1% compared to 55.0% as at the end of 2013.

Retail banking

Retail deposits increased by 7.3% to KZT 733.7 billion from KZT 683.7 billion at 31 December 2013.

As of 31 March 2014, 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 1,360 and 17,666, accordingly.

Retail loans (net) increased by 1.6% to KZT 274.8 billion, as at 31 March 2014, compared to KZT 270.6 billion, as at 31 December 2013. The share of net retail loans in the total net loan portfolio was 13.3% as at the end of 1Q 2014 (14.2% at YE2013).