Presentation
Financial Performance Update
March 2010
Financial Performance Update
2009 Highlights
Assets increased by 30%. Loans to customers grew to USD 967 mln. Liquidity cushion is excessive comprising about 43% of total
assets.
Shareholder support by capital increase in total by USD 82 mln. No significant change in equity due to diminishing impact of
financial loss of USD 83 mln.
KAS net loss of USD 83 mln driven by planned provisioning increase by 371% (USD 123 mln) leading to comfortable 134%
coverage.
Liabilities increased by 34% to USD 2 bln. Deposit base grew by 76% to USD 1.6 bln.
Gradual changes in senior management. FMSA approved appointment of Mr. Michael Eggleton as a Chairman of the Board.
M&A - signed share purchase agreement of commercial Troika Dialog Bank (Russia) acquisition. Subject to regulatory approvals,
transaction is to be closed within Q1 2010.
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Financial Performance Update
Macroeconomic conditions
Foreign debt decreased from USD 46 bn to USD 28.4 bn mainly due to debt restructuring by defaulted Kazakh banks. As expected, around
USD 10 bn to be additionally written off after completion of whole restructuring process.
Alliance finalized restructuring process on March 30, 2010.
Astana-Finance signed initial MoU with creditors in Oct. 2009
BTA reached an outline agreement with creditors in Dec. 2009, but deadline is still postponed.
Temirbank creditors approve debt restructuring plan on March 31, 2010 .
Falling inflation and weak domestic demand resulted in 5-times cut of refinancing rate from 9.5% to 7% for the whole year.
In Feb 2009 NB RK devalued tenge by 24%. First official trade band kept by NB RK till Dec 2009 was +/- 3%. However NB RK plans trade band
to widen since Feb 2010 to +10/-15%
Forecast budget deficit to increase to 1.5-2% of GDP in 2010.
In 2009 inflation rate was 6.2%. As expected in 2010 it would be at 6-8%
Around USD 3.4 bn in loans ratified by major multinational organizations to finance infrastructure development works
Source: NB RK
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Financial Performance Update
Strategic initiatives and priorities…
…. as universal financial institution
…across business segments
Increasing share of trade finance facilities among
clients
6% market share in the medium term perspective
Further expansion within CIS region
Growth
Diversification of funding sources
Corporate
Window to cross-sell retail products
Current accounts and deposits support funding
profile
Growth opportunities given changes in strategies of
bigger banks
Opportune time for expanding market share
Enhancement of Risk Management System
Selective approach in SME market
Unified IT- system
Asset quality
High professional qualification and business culture
of the team
SME
Analyzing and building client base for future
expansion
Loan portfolio management in deteriorating
macroeconomic conditions
Universal
spectrum of
development
Expanding branch and ATMs networks,
alternative sales sources
Expansion of distribution network in Kazakhstan
Cross-sales among existing client base
Product innovations and high quality service
Focus on lower risk corporate business in current
market
Active participant of state support program jointly
with SamrukKazyna and DAMU Funds.
Retail
Cross-selling with employees of corporate clients
Focus on retail deposits, favorable period to
increase market share
Development of competitive sophisticated card
business
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Financial Performance Update
Asset structure
(USD mln)
Asset growth
Asset structure
•- loans to customers less provisions for impairment
Asset YoY growth of 30% mainly driven by increase of the Bank’s liquid assets, primarily cash and balances with NB RK by 41%. In addition loan portfolio and
securities grew by 20% and 76% respectively.
Share of government securities represents 84% of the securities portfolio Rest 16% are debt securities of primarily state-owned companies, i.e. Development
Bank of Kazakhstan, Kazakhstani Mortgage Company, KazAgroFinance.
High liquid assets represented by cash and balances with NB RK as well as high liquid securities amount to 44% of total asset portfolio. According to adopted
strategy to be on the safe side the Bank’s management took a decision to keep liquidity cushion more than required.
Source: based on 2007- 2008 unconsolidated audited IFRS financial statements
2009 unaudited KAS financial statements of the Bank.
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Financial Performance Update
Loan portfolio: strategic focus on corporate and selected SME and
retail segments
Average interest rates
Loan portfolio by business segments
(USD’mln)
%
2009
2008
2007
Corporate
15.47
14.23
13.57
SME
13.54
14.97
15.25
Retail
13.07
15.54
15.39
For 2009 loan portfolio increased by 20%.
Corporate loan portfolio continues growing as a consequence of lending policy of the Bank focusing on corporate business. Growth of interest rates on
corporate side shows adequate feedback of the bank on rising funding costs..
Meanwhile for 2009 SME loan portfolio increased by 140% mainly due to government support of SME business. Thus, through state support program the Bank
has used KZT 25 bn for SME financing. Stable decrease of effective interest rates on SME lending was primarily stipulated by the terms and conditions of
within state support program. Decrease of retail lending rates in 9 months was caused by state support of small entrepreneurs which were included into retail
business group.
Source: based on 2007- 2008 unconsolidated audited IFRS financial statements
*-2009 unaudited KAS financial statements of the Bank.
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Financial Performance Update
Loan portfolio breakdown
Jan 10
by currency
by industry
by maturity
Since September 1, 2009 second tier banks obliged to create 20% provisions on loans denominated in US dollars. USD denominated loans were considerably
decreased.
Loans to distressed industries like construction in total loan portfolio amounted to 11%. This is mainly road construction, infrastructure projects, electricity
network. Where residential real estate construction was 4% and commercial – 7%.
Mortgage loans amounted to 14% of total loan portfolio 10% of which issued to clients for purchase on secondary market and 4% on primary.
Source: 9M 2009 unaudited KAS financial statements of the Bank.
* - Individuals include entrepreneurs.
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Financial Performance Update
Loan portfolio quality: NPLs vs provisions
Oct 09
NPLs and provisions as a % of total loans
Loan portfolio by risks
Unsecured consumer loans comprise 1.2% of total loan portfolio.
10% of loan portfolio is guaranteed by deposits.
Related party loans account to 1.7% of loan portfolio.
LTV ratio on loan portfolio amounted to 42%. Revaluation of collateral is run each half year.
Source: 2009 unaudited KAS financial statements of the Bank.
* - NPLs = Bad debts + Doubtful 5 category + provisions on homogeneous loans
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Financial Performance Update
Liabilities: strong support and commitment from wealthy shareholders
Strong capital growth
Liabilities and Equity Structure
Jan 10
(USD mln)
Total liabilities: USD 2 023 mln
As planned second capital injection took place in December 2009 and amounted to KZT 9 bn. That was fully forwarded for creation provision according to
tightened requirement of regulator.
Capital adequacy ratio is substantially higher than Basel requirements (Tier I CAR at 11% and Total CAR at 16%)
CAR ratios under KAS prudentials: K1-1 – 7.8% (>5 – for banking holding); K1-2 – 11%; K2- 16 (>10 respectively)
Emphasizing on local deposits market as a main source in terms of funding the Bank gathered about USD 1.6 bn in customer accounts.
Source: based on 2007- 2008 unconsolidated audited IFRS financial statements
*-2009 unaudited KAS financial statements of the Bank.
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Financial Performance Update
Funding: soaring market share on local deposit market
Current accounts and term deposits
Term Deposits
by currency
by maturity
Biggest winner of retail deposits for 2009 by 210%. One of the healthiest loan/deposit ratios – 71%.
Term deposits comprise 83% of total deposit base. Deposits denominated in USD increased by around 49% however deposit portfolio retains well diversified.
Almost half of term deposits are short term indicating market trend of crisis of confidence to the whole banking system.
Since August 2009 the Bank decreased interest rates by around 2% to match lending rates under state support programs.
Source: based on 2007- 2008 unconsolidated audited IFRS financial statements
*-2009 unaudited KAS financial statements of the Bank.
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Financial Performance Update
Profit decrease as a result of provisioning enhancement
Net income vs provisions created against loan portfolio
Profitability ratios
(USD mln)
2009
2008
2007
ROAA (%)
-0.42
0.1
1.1
ROAE (%)
-45.3
0.6
9.4
Cost / Income (%)
41.9
66.2
55.8
Net interest margin (%)
2.69
3.9
5.1
Financial loss was caused by increase of charges on provisions on loan portfolio by 371% comparing with the same period last year as well as outrunning growth
of interest expenses of 54% than interest revenues of 31%
Fee and commission income rose due to increase of expenses on network development.
Cost to income ratio’s decrease reflects subsidiaries sale. This deal took place in first quarter however has affected annual financial results.
The Bank works on operating expenses optimization via reduction of advertisement and payroll costs etc.
Source: based on 2007- 2008 unconsolidated audited IFRS financial statements
*-9M 2009 unaudited KAS financial statements of the Bank.
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Financial Performance Update
Contact information
Ainagul Iskakova
Head, Debt Capital Markets
Tel.: +7 727 250 87 10
E-mail: Aynagul.Iskakova@eubank.kz
Irina Aristova
Head, Financial Institutions
Zareena Taimagambetova
Executive Director
Tel.: +7 727 244 39 15
E-mail: Zareena@eubank.kz
Tel.: +7 727 244 53 93
E-mail: Irina.Aristova@eubank.kz
Zhanna Nurambekova
Head, Financial Institutions, CIS & Baltics
Tel.: +7 727 244 53 79
E-mail: Zhanna.Nurambekova@eubank.kz
Eurasian Bank
56 Kunayev Street, 050002, Almaty, Kazakhstan
Tel.: +7 727 250 86 66, Fax: +7 727 250 86 97
E-mail: FI@eubank.kz
Visit us at www.eubank.kz
Appendix
Financial Performance Update
Key Performance Indicators
Balance Sheet (USD’000)
2009
9M 2009
H1 2009
Q1 2009
2008
2007
2006
161 834
183 366
188 962
184 515
202 139
168 679
149 059
Liabilities
2 022 714
2 053 571
2 156 361
1 789 798
1 859 311
1 347 463
1 050 318
Total Assets
2 184 548
2 236 936
2 345 323
1 974 313
2 061450
1 521 814
1 199 377
Interest Income
171 273
122 224
78 462
39 871
160 260
149 806
82 017
Interest Expense
132 281
93 992
59 355
29 892
105 593
88 484
37 453
Net Interest Income
38 991
28 232
19 108
9 979
54 668
61 322
44 564
Net Income
-83 290
- 5 305
1 081
410
1 026
15 341
30 064
ROAA (%)
-0.4
-0.4
0.12
0.09
0.1
1.10
2.96
ROAE (%)
-45.3
-3.9
1.18
0.84
0.6
9.39
23.93
Equity / Assets (%)
7.41
8.20
8.06
9.35
9.81
11.13
12.43
Cost / Income (%)
41.90
47.64
42.06
34.59
66.2
55.81
58.88
Operation revenues / Assets (%)
3.14
2.29
2.22
1.85
1.18
6.34
6.83
Net Interest Margin (%)
2.69
2.78
3.0
2.97
3.9
5.06
5.85
Term Retail Deposits / Term Deposits (%)
47.4
51.53
55.48
45.45
29.68
21.99
14.48
Fixed Assets / Assets (%)
3.92
3.72
3.33
3.77
3.97
5.50
1.49
Capital Adequacy K1-1 (>= 0.05)*
7.8
8.8
0.12
0.10
0.10
0.10
0.09
Capital Adequacy K2 (>= 0.10)*
16.0
18.8
0.17
0.18
0.17
0.16
0.20
20.804
11.526
9.65
11.66
6.44
1.29
1.07
0.71
0.79
0.79
0.85
0,88
1.26
1.15
Total Equity
Income Statement (USD’000)
Key Ratios
Current liquidity ratio K4-1 (>=1)*
Loans / Deposits
*Based on KAS figures
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Financial Performance Update
Main assets of beneficial shareholders
Alijan Ibragimov
(33.33%)
Alexander Machkevich
(33.33%)
Eurasian Financial Company
(100%)
(91%)
(9%)
Eurasian Bank
Eurasian Accumulative
Pension Fund
Eurasian Capital
(Brokerage Company)
Eurasian Insurance Company
Eurasian Industrial Company
(100%)
Eurasian Aluminium Company (100%)
EuroCenterAstana (100%)
Shubarkol’ Komir (91%)
Impala Intercom (15%)
Altyn-Tay (100%)
BN-Invest-Komir (100%)
Giproshakht (100%)
Granitek (100%)
Eurasia Development (100%)
Eurasia Finance Group (100%)
Eurasiaenergoprom (82%)
EPEK-Trade House (100%)
Information Agency “Inter Asia” (10%)
Express-K newspaper office (17%)
Rudnensky vodokanal (100%)
Sary-Arka spetskoks (100%)
Folias (100%)
Energosystema (100%)
Yuzhugol’invest (100%)
Yuzhenergoprom (85%)
Eurasian Construction (5%)
Eurasiaenergoprom (100%)
Other companies (less than 5% share)
Patokh Chodiev
(33.33%)
Eurasian Natural Resources Company
(43.77%)
Ferroalloys:
Kazchrome
Zairem GOK
Serov (Russia)
Tuoli (China)
Iron Ore:
SSGPO
BML (Brazil)
Alumina & Aluminium:
Aluminium of Kazakhstan
Kazakhstan Aluminium Smelter
Energy:
Eurasian Energy Corporation
Logistics:
ENRC Logistics
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Financial Performance Update
Macroeconomic indicators
H1 2009
Q1 2009
2008
2007
2006
GDP (nominal, USD mn)
42 759
120 343*
131 691
105 180
81 002
Direct Investments (USD mn)
2 070
2 097
10 732
12 592
10 911
Gross FX reserves (USD mn)
19 975
18 891
19 872
17 3629
19 127
Gross Foreign Debt (USD mn)
106 673
105 101
107 813
96 914
74 014
-1
….
-2.1
-1.7
0.6
Trade Balance (USD mn)
2 077
2 015
33 519
15 091
14 642
Export (USD mn)
9 361
8 154
76 354
51 901
41 570
Import (USD mn)
7 284
6 140
49 451
44 887
32 880
Unemployment (%)
6.6
6.9
6.6
7.3
7.8
Inflation (%)
8.5
8.9
9.5
18.8
8.4
150.43
151.40
120.79
121.7
126.1
Budget deficit/surplus (% to GDP)
Exchange rate (USD 1 = KZT)
Source: NB RK, Statistical Agency of RK, FSA
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