AFS about conditions of financial market and financial organizations as of November 1, 2006

/IRBIS, Zaure Yessimova, December 4, 06/ - Agency of Republic of Kazakhstan for regulation and supervision of financial market and financial organizations (AFS) has spread the press-release about conditions of the financial market and financial organizations as of November 1, 2006, in which the following is said: Quotation start Banking sector As of November 1 of 2006 banking sector of the republic is represented by 34 second tier banks, 14 banks of which are with foreign funds (including 9 subsidiary banks - non-residents of Republic of Kazakhstan). As of November 1 of 2006 aggregate assets of banks made KZT6,917.1 bn., having increased since the beginning of the year by KZT2,402.0 bn. (53.2%), the augmentation made KZT339.0 m. per a month (by 5.2%). Aggregate settlement shareholders' equity of the banking sector have increased since the beginning of the year by KZT261.8 bn. (44.6%), at that within the month it decreased by KZT47.7 bn. or by 5.3%, to KZT849.0 bn. Indicators of the equity adequacy for the reporting date made k1 - 0.07; k2 - 0.13 (as of October 1, 2006: k1 - 0.09; k2 - 0.15). Decrease in the specified indicators occurred by the reason of changes of financial indicators of Valyut-Transit Bank JSC. Banks' loan holding (taking into account interbank loans) has increased since the beginning of the year by KZT1,928.4 bn. (63.0%); within the month it has increased by KZT360.6 bn. to KZT4,990.4 bn. In the structure of credit holding of banks as of November 1 of 2006 the stake of standard credits made 58.2%, doubtful - 38.9%, hopeless - 2.9%. At that, as of October 1, 2006, the stake of standards credits totaled 59.2%, doubtful - 38.7%, hopeless - 2.0%. Total sum of deposits, borrowed by banks from juridical and physical persons (excluding banks and international financial organizations) made KZT4,167.2 bn., having increased by 14.6% within the month. The sum of deposits of juridical persons made KZT3,287.7 bn., having increased by 11.1% within the month, and the sum of deposits of physical persons - KZT879.5 bn. with augmentation by 3.5% within the month. Deposits of the daughter organizations of the special importance made KZT1,368.3 bn., having increased for the month by 3.3%. Aggregate sum of revenue of the second tier banks as of November 1, 2006 made KZT695.1 bn., having increased by 77.5% in comparison with the similar period of last year, within a month the augmentation made 13.4 %. Aggregate sum of expenditures of the second tier banks within the specified period made KZT651.2 bn., having increased by 97.6% in comparison with analogical period of last year, augmentation within the month - by 24.1%. Unallocated net income (uncovered loss) of banks made KZT44.0 bn., and that was less than indicator for the analogical period of last year by 29.3%, within the month the decrease of this indicator made 50.1% as a result of unprofitable activity of Valyut-Transit Bank JSC. The amount of requirements to non-residents has increased since the beginning of the year by KZT236.6 bn. or by 19.8% to KZT1,431.2 bn. As of November 1, 2006 the amount of liabilities in front of non-residents in assets structure made KZT3,188.5 bn., and their stake of the total volume of the second tier banks' liabilities resulted in 50.3%. The banks have been pronounced 8 compulsory mandates for performance, and 7 sanctions have been applied in October 2006. As of November 1 of 2006 there are 12 banks in the process of compulsory liquidation by court decision. In October 2006 several resolutions were considered and adopted within the regular meeting of Board of Agency for the purpose of perfection subsequently of the regulatory and supervision functions over second tier banks' activities and also over work of banks' conglomerates, including: "About insertion of additions and changes into the resolution of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated June 25, 2005 # 224 "About confirmation of the report format about remainders on balance and non-balance accounts of the second tier banks", "About insertion of changes and additions into the resolution of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated September 30, 2005 #359 "About confirmation of the Instruction about requirements to attendance of risks managing systems and systems of internal control in the second tire banks", "About confirmation of the Instruction about the list, formats and terms of admission of the regulatory reports by the second tier banks of the Republic of Kazakhstan and about insertion of changes into the resolution of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated August 27, 2005 # 310 "About insertion of changes and additions in some normative legal statements of the Republic of Kazakhstan u1087 in respect of questions about regulation and supervision of the financial market and financial organizations". Insurance market As of November 1 of 2006 39 insurance (reinsurance) organizations act in compliance with given licenses by Agency on financial market of the republic, under this, licenses on activity realization on insurance of life have 4 organizations, 29 organizations on compulsory insurance of Civil responsibility of owners of vehicles are represented. Also, 11 insurance brokers and 33 actuators perform their activity on the market of insurance services. Within ten months of the current year aggregate assets of insurance organizations made KZT119.3 bn., having increased by 62.8%, as of November 1. Aggregate shareholders' equity increased by 53.2% and made KZT69.4 bn. The sum of insurance reserves made KZT62.0 bn. The volume of insurance bonuses as of November 1 of 2006 made KZT93.8 bn., that is bigger by 69.6% than indicator for the analogical period of last year. Including, the volume of insurance bonuses on compulsory insurance increased by 29.5% and made KZT14.5 bn., on voluntary personal insurance - KZT9.7 bn. (increase by 49.2%) and on voluntary property insurance - KZT69.6 bn. (augmentation by 85.6%). In comparison with the analogical period of 2005, the volume of insurance bonuses, gathered for ten months of 2006 in the sector of лlife insurance increased 2.6 times or up to KZT2.9 bn., and the stake of life insurance in aggregate insurance bonuses reached 3.1% against 2.0% as of November 1 of 2005. The sum of insurance bonuses, passed for re-insurance, made KZT34.5 bn. or 36.8% out of the total volume of insurance bonuses, at that, non-residents have been passed 32.3% from the total volume of insurance bonuses for re- insurance (as of November 1 of 2005 the stake of insurance bonuses, passed for re-insurance to non-residents, made 31.9%). The volume of insurance payments, received for ten months of 2006, made KZT10.8 bn., which was bigger than indicator of past year by 18.7%. Including, the volume of insurance payments on compulsory insurance made KZT4.0 bn. (60.0%), on voluntary personal insurance - KZT1.5 bn. (augmentation by 7.1%) and on voluntary property insurance - KZT5.3 bn. (augmentation by 1.9%). At present, 31 insurance (re-insurance) organizations take part in the system of insurance payments securing. In October 2006 4 letter-directions were forwarded by the Agency to the address of insurance organizations in the aim of eliminating the infringements of legislation, regulating activity of insurance market. In October of year 2006 by the Board of the Agency for the purpose of perfection henceforward of the insurance legislation the following regulations have been passed: "About grant of the permission to assign the status of the big actor of the yet again being established Joint Stock Company Czechs Insurance Company of Kazakhstan - Life insurance, to the daughter company of Cheshska poishtovna JSC" PPF Group N.V., The Netherlands, Amsterdam", "About grant of the permission to assign the status of the big actor of the yet again being established Joint Stock company Czechs Insurance Company of Kazakhstan - Life insurance, to the daughter company of JSC Cheshska poishtovna to Peter Kellner", "About grant of the permission to assign the status of the big actor of the yet again being established Joint Stock company Czechs Insurance Company of Kazakhstan - Life insurance, to the daughter company of JSC Cheshska poishtovna to Cheshska poishtovna JSC". Accumulative pension system As of November 1 of 2006 there are 14 accumulative pension funds in the republic, which have 78 affiliates and 77 representation offices in the regions of the republic. 12 organizations fulfill Investment management of pension assets of accumulative pension funds, at that, 5 accumulative pension funds among them have license on pension assets self-management: Accumulative pension fund SAPF JSC, APF of Halyk Bank of Kazakhstan JSC, APF BTA Kazakhstan JSC, APF Capital JSC and APF Kazakhmys JSC. The quantity of personal pension accounts (hereinafter-the account) of depositors (recipients) on obligatory pension dues as of November 1 of 2006 made KZT8,401.370. Within October month of the current year the quantity of depositors' accounts (recipients), transferring the compulsory pension dues, has increased by 85,645 or by 1.03%. The quantity of depositors' accounts (recipients) on voluntary pension dues having increased within October of 2006 by 27 (0.08%) and made 33,003 as of November 1, 2006 with the total sum of pension accumulation at KZT580.5 m. The quantity of depositors' accounts on voluntary professional pension dues has grown within October by 23 (0.62%) and as of November 1, 2006 made 3,732 with the total sum of pension accumulation at KZT29.7 m. As of November 1, 2006 the sum of pension accumulation of depositors (recipients) made KZT844.1 bn., or with augmentation by 30.1% in comparison with January 1, 2006. Within October of year 2006 the growth of pension accumulation of depositors (recipients) made KZT13.6 bn. At that, the total receipt of pension dues, having increased within October by KZT15.8 bn. or by 2.50% made KZT648.9 bn. as of November 1, 2006. The sum of net investment income from pension assets investing (minus commission remuneration), allocated on individual pension accounts of depositors (recipients), having decreased within October of 2006 by KZT1.3 bn. (0.58%), and as of November 1, 2006 made KZT223.4 bn. In total sum of pension accumulation of depositors (recipients) the stake of net investment income makes 26.47% or decreased by 0.59 percent points compared to the previous reporting month. Pension payments and transfers into insurance organizations out of accumulative pension funds as of November 1, 2006 made KZT46.0 bn. or within October month of the current year increased by KZT0.94 bn. (2.07%). The transfers of pension accumulation into insurance organizations pursuant to u1089 contract of pension annuity for January-October of the current year made KZT73.5 m., including within October month - KZT7.4 m. The transfers of pension accumulation of depositors (recipients) from one fund into another one, having increased within October by KZT4.0 bn. (3.27%), as of November 1 of 2006 made KZT126.1 bn. As of November 1, 2006 the weighted average coefficient of the nominal income of pension assets of accumulative pension funds made 24.33% within the period since October 2003 to October 2006, the accumulated inflation rate for the specified period made 25.50%. On the subject of regulation of the accumulative pension system's operation and also the functioning of organizations, carrying out investment management over pension assets, in October of year 2006 by the Board of the Agency there were passed resolutions as follows: - "About confirmation of Rules of execution of activity on investment management over pension assets" dated October 27, 2006 #225; - "About confirmation of the Instruction about normative values of prudential standards, methodology of their calculation for organizations, carrying out investment management over pension assets" dated October 27, 2006 #223; - "About confirmation of the Instruction about normative values of prudential standards, methodology of their calculation for accumulative pension funds and about insertion of changes into the resolution of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of the financial and financial organizations dated August 27, 2005 # 310 "About insertion of changes and additions into some normative legal statements of the Republic of Kazakhstan in respect of questions about regulation and supervision of the financial market and financial organizations" dated October 27, 2006 #222; - "About insertion of additions and changes into the resolution of the Board of the agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated June 17, 2006 # 132 "About confirmation of Rules of calculation of prudential standards for organizations, combining jobs on the securities market and insertion of the change into the resolution of the Board of the agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated August 27, 2005 #310 "About insertion changes and additions into some normative legal statements of the Republic of Kazakhstan in respect of questions of regulation and supervision of the financial market and financial organizations" dated October 27, 2006 #226. Adoption of the mentioned resolutions was purposed for increasing the efficiency of management over pension assets and responsibility of participants of the pension market. Thus, it is provided by the rules of execution of activity on investment management over pension assets the necessity of attendance of the corresponding rating mark at the financial instrument, which is the investment object, including in respect of corporate securities of the organizations of the Republic of Kazakhstan. The possibility to use the hedgiest instruments, the base asset of which is the foreign currency and settlement indicators (indexes) was set up, and also it is possible to conclude swap, option and forward deals on non-organized market at the attendance of the corresponding rating of the contra-agent. The new concept of prudential regulation provides the calculation of prudential standards reasoning from the credit and market risk. Including, all financial documents of the investment portfolio of accumulative pension funds are calculated according to credit and market risk, at that the market risk is the sum of the percent risk, as well as, currency and stock. In addition, the possibility to share the responsibility upon formation of the corresponding level of the equity capital between accumulative pension funs and the organization, carrying out the investment management over pension assets were set up on the basis of nego terms within the frameworks of the summary coefficient of the equity capital sufficiency of APF and PAIMO. Besides, the profitability of pension assets in compliance with the new rules will be calculated twelve, thirteen and sixty calendar days beforehand. Moreover, in respect of u1076 questions of regulation of activity of the accumulative pension system in October 2006 by the Board of the Agency there were passed resolutions as follows: "About insertion of changes and additions into the resolution of the Agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated March 26, 2005 # 109 "About confirmation of the Rules of evaluation of the financial instruments of investments portfolios of the accumulative pension funds", "About insertion of changes and additions into the resolution of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of the financial market and financial organizations dated November 26, 2005 # 410 "About confirmation of the Rules of licensing on activity of on borrowing the pension dues and execution of the pension payment". Securities market The number of JSCs with actual issues as of November 1, 2006 in the market of corporate securities made 2,162 companies, and that is by 2 more in comparison with analogical indicator as of October 1, 2006. Also, there are 65 brokers-dealers, 16 registrars, 10 banks-custodians, 12 organizations fulfilling investment management by pension assets (OOIUPA) and 35 managers of investments holdings and 2 transfer agents. For October of 2006 35 shares issues were registered (taking into account shares issues in the specifications of which changes have been made and substitution of certificate of state registration has been made), 12 shares issues were annulled. As of November 1, 2006 2,305 acting shares issues were in circulation. Also in October, 2006 5 bonds issues were registered for the total face value at KZT43.5 bn., 2 bonds program, and also 4 bonds issues for the sum of KZT12.5 bn., having been registered within the frameworks of bonds programs. As of November 1, 2006 223 actual corporate bonds issues were in circulation, total face value of which made KZT1,079.5 bn. In October, 2006 2 investment shareholders funds have been registered, seeing that, as of November 1, 2006 the amount of investment shareholders funds functioning on the market of securities had increased to 78 (61 closed, 9 - opened, 8 - interval). Also in October 2006 was registered 1 joint-stock investment fund, thus on the market as of November 1 are functioning 12 joint-stock investment funds. As of November 1 of 2006 the quantity of CS issues of issuers of Republic of Kazakhstan, included in KASE's official "А" listing category made 217 issues and in "В" category - 63 issues. In October 2006 for violation of legislation of the Republic of Kazakhstan on securities market by Agency 2 letters-directions were forwarded to the address of professional participants of securities market. By resolution of Board of Agency of Republic of Kazakhstan of regulation and supervision over financial market and organizations dated October 27, 2006 #224 were included changes to the resolution of Board of Agency of Republic of Kazakhstan of regulating and supervision over financial market and organizations dated March 15, 2004 #63 (About requirements to issuers and their securities, admitting (admitted) to circulation on stock exchange, and also to separate categories of the list of exchange" in the part of liberalization of requirements, giving to the auditing organizations, which are conducting the audit of issuers' activities, securities of which are liable to inclusion into official list of stock exchange under the highest category of listing or are in it. According to the wording acting earlier the audit of annual financial report of issuer must be made by one of auditing organizations, corresponding to criteria of the World Bank, which are set by it for auditing organizations with the objectives of audit of the projects, realizing in Kazakhstan for the account of credits or grants of World Bank, which had significantly embarrassed the exit of companies to the stock exchange, because this list was limited by international audit companies. Also in October, 2006 on the questions of regulating the activities of professional participants of securities' market by the Board of Agency was accepted the resolution "About introducing changes to regulation of Board of agency of Republic of Kazakhstan of regulating and supervision over financial market and organizations dated April 19, 205 #132" About confirmation of Instruction o requirements to program-technical sources, needed for conduction of activities on the market of securities". Sector of organizations that fulfills separate bank's operations As of November 1, 2006 there are 8 mortgage organizations, 12 companies, which implement separate types of bank operations on the basis of actual licenses, in the financial market of the republic. For the reported month had taken place the increase of main indicators, characterizing the activities of mortgage companies. As of November 1 of 2006 the total of aggregate assets made KZT117.3 bn., having increased by 1.8% for the month, aggregate liabilities reached KZT91.6 bn. increase by 1.0%, the size of shareholders' equity makes KZT25.7 bn., having increased for the month by 4.9%.. The size of credit holding of mortgage companies as of November 1 of 2006 totaled KZT95.1 bn., which is bigger by KZT2.4 bn. or by 2.6%, compared to the indicator fixed as of October 1, 2006. In the structure of aggregate credit holding of mortgage companies as of November 1, 2006 the stake of standard credits made 95.1%, doubtful - 4.7%, and stake of hopeless - 0.2%. The credit portfolio of mortgage companies looks as follows: standard - 95.5%, doubtless - 4.3%, hopeless - 0.2%. In October 2006 by the Board of Agency with the objective of further improvement of regulatory and supervision functions over the activities of non banking organizations was accepted the resolution "About inclusion of additions and changes to resolution of Board of Agency of Republic of Kazakhstan of regulating and supervision over financial market and organizations dated February 25, 2006 #43 "About confirmation of Rules of providing the reports by mortgage organizations". Protection of consumers' interests of financial services In September of 2006 102 addresses (complaints) of physical and juridical persons, including addresses (complaints) of other state bodies, came to Agency. Corresponding explanations up to 29 have been presented, and 74 are under consideration. Out of the total number of addresses 65% of letters concerned matters of activity of second tier banks, 6% of letters are on matters of activity of accumulative pension funds, 13% - of activity of insurance organizations, 12% - of activity of the subjects of securities market and 4% of letter have the explanation character. Down there are given data about addressing in the aspect second tier banks, insurance organizations, accumulative pension funds and organizations, conducting the activities on the market of securities, and their weight in the total volume of addresses: ----------------------------------------------------------------------- Weight in # corresponding in Name of financial Amount of sector of order organization addresses financial market ----- ----------------------------------- --------- ------------------- Banking activities ----------------------------------------------------------------------- 1 Valut-Transit-Bank JSC 24 36 ----- ----------------------------------- --------- ------------------- 2 Halyk Bank of Kazakhstan JSC 6 9 ----- ----------------------------------- --------- ------------------- 3 Alliance Bank JSC 5 8 ----- ----------------------------------- --------- ------------------- 4 Bank Caspian JSC 3 4 ----- ----------------------------------- --------- ------------------- 5 Nauryz Bank JSC 3 4 ----- ----------------------------------- --------- ------------------- 6 Tsesna bank JSC 2 3 ----- ----------------------------------- --------- ------------------- 7 Nurbank JSC 2 3 ----- ----------------------------------- --------- ------------------- 8 Temirbank JSC 2 3 ----- ----------------------------------- --------- ------------------- 9 Others 20 30 ----- ----------------------------------- --------- ------------------- TOTAL 67 65* ----- ----------------------------------- --------- ------------------- Insurance activities ----------------------------------------------------------------------- 1 Altyn Polis JSC 2 14.3 ----- ----------------------------------- --------- ------------------- 2 Atlanta Polis JSC 2 14.3 ----- ----------------------------------- --------- ------------------- 3 Others 10 71.4 ----- ----------------------------------- --------- ------------------- TOTAL 14 13* ----- ----------------------------------- --------- ------------------- Accumulative pension system ----------------------------------------------------------------------- 1 APF Atameken JSC 1 16.7 ----- ----------------------------------- --------- ------------------- 2 APF of Halyk Bank of Kazakhstan JSC 1 16.7 ----- ----------------------------------- --------- ------------------- 3 APF BTA Kazakhstan JSC 1 16.7 ----- ----------------------------------- --------- ------------------- 4 Others 3 50 ----- ----------------------------------- --------- ------------------- TOTAL 6 6* ----- ----------------------------------- --------- ------------------- Market of securities ----------------------------------------------------------------------- Joint stock companies, including 1 8.3 ----- ----------------------------------- --------- ------------------- 1 Second tier banks 11 91.7 ----- ----------------------------------- --------- ------------------- 2 Others 12 12* ----- ----------------------------------- --------- ------------------- TOTAL 4 4* ----- ----------------------------------- --------- ------------------- Explanations 4 4* ----- ----------------------------------- --------- ------------------- Total 103 ----------------------------------------------------------------------- * weight of the sector on financial market Examination works on 65 earlier submitted addresses were finished in October month. By the results of consideration of addresses in respect of 1 insurance company there was applied the sanction of limited influence as the letter- notification concerning the execution of requirements of the letter-order and making the insurance payment to the declarant. According to the results of consideration of complaints regarding the head of one second tier bank arrangement of official reprimand was applied in the form of amercement by the article 168-2 parts 1 and 5 in the amount of 30 and 40 MCI. At the same time in October the Agency conducted planned and initiated extraordinary checks of 3 second tier banks, 2 organizations, which execute broker and dealer activity at the securities market with the right to maintain accounts of clients as the nominal holder and the 1st investment portfolio manager. By results of checks earlier conducted by the Agency with respect to 2 accumulative pension funds and one organization, which execute investment management of pension assets, actions of restricted influence were applied in the form of pronouncement of written instructions. Within the frameworks of carrying out of public awareness efforts, the following articles were prepared and published: "Transfer order of investors' (recipient) pension accruals" (newspaper The Panorama), "Order of making of pension contracts about pension provision with investors (recipients)" (newspaper The Kursiv), "Obligatory insurance of civil responsibility of owners of transport means (newspaper The Kursiv), "How to determine real rates on loans and deposits" (newspaper The Kazakhstanskaya pravda). Besides, with a view of perfection of work on informing consumers of financial services and increasing fundamentals of their economic literacy the Agency prepared brochures "Protection of rights of consumers of financial services" and brief memos concerning all sectors of the financial market according to the following issues: - Memorial for consumers of financial services at making of loan contracts. - Memorial for consumers of financial services at making of banking deposit contract. - Memorial for owners of transport means and participants of MVA. - Memorial to a consumer of insurance services on issues of compulsory insurance of carriers' civil responsibility to passengers. - Memorial of insurance services consumers' necessity to know about compulsory insurance of employer's civil responsibility for causing harm to life and health of an employee at execution of working (official) duties. - Memorial for producers of agricultural output at compulsory insurance in plant cultivation. - Memorial for consumers of financial services at making of contracts of voluntary insurance. - Memorial for consumers of financial services on issue of shareholders' rights. - Memorial about duties of joint-stock companies and other people on informing their shareholders. - Memorial for shareholders of joint-stock companies on matter of distribution and payment of dividends on shares. - Memorial for consumers of financial services about exclusive competence of the general meeting of shareholders. - Memorial for consumers of financial services about the order of calling of the general meeting of shareholders by a joint-stock company. - Memorial for consumers of financial services about the order of holding of the general meeting of shareholders. - Memorial for consumers of financial services about the issue of shareholders' rights at reorganization of JSC into LLP. - Memorial for consumers of financial services on the issue of privatization coupons, invested in investment privatization funds by the population of RK. - General memorial for a consumer of pension services - depositor of pension fees. - Memorial for investors of APF at transfer of pension accumulation from one APF to another. - Memorial for investors of APF at transfer of pension accumulation from one APF to an insurance organization. Given memorials are available on the website of the Agency - www.afn.kz. Quotation end [2006-12-04]