/KASE, July 28, 00/ - Halyk Bank of Kazakhstan OJSC (Almaty, official list of securities, category "A") in accordance with the listing requirements provided KASE with auditing report made by Arthur Andersen (Almaty, Kazakhstan) on the issuer's 1999 financial statements.

Based on the data of an independent auditor, following were the results of the company as of December 31, 1998 and 1999 (in th. KZT):

Indicator 1998 1999

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Authorized capital (paid)                  3,011,900   3,615,067
Weighted average number of issued shares  24,107,000  31,124,278
Shareholders' equity                       4,297,204   5,260,338
Total assets                              38,929,375  55,946,565
Total liquid assets                       12,400,383  20,296,887
Liabilities of credit institutions         1,935,687   4,298,118
Liabilities to credit institutions         2,203,512   2,396,079
Loans and advances to clients             16,914,603  20,159,709
Liabilities to the clients                32,029,477  47,173,977
Operating income                           8,700,097  12,465,857
Total expenses                             8,234,709  11,993,034
Net income                                   465,388     472,823
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Calculated based on the data of the auditor:            
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Return on equity (ROE), %                      10.83        8.99
Return on assets (ROA), %                       1.20        0.85
Earnings per share (EPS), KZT                  16.70       15.19
Price earnings ratio (P/E)                      7.91       17.75
Book value of a share, KZT                    154.23      169.01
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The auditing was conducted by Arthur Andersen in accordance with International accounting standards. Since Halyk Bank of Kazakhstan OJSC keeps its records and makes financial statements based on the Kazakhstani accounting standards, as well as banking legislature, instructions and regulations of the National Bank of Kazakhstan, the auditor had to make some adjustments and regroupings of the balance sheet articles to make them in conformity with the requirements of the International committee on accounting standards. As a result, there are some discrepancies in the ratios calculated by the bank and those of independent auditor. Some information regarding previous years was reclassified to make it in line with 1999 financial statements.

Financial statements were prepared taking into account initial values, re- evaluation of fixed assets. Capital investments were calculated using the cost basis. Interest income and expenses were reflected on accrual basis. Deferred taxes created due to timing are reflected on the liabilities basis. Valuation methods of current value of financial instruments (cash, investment securities, loans to the banks, to the clients, funds of the clients, liabilities, interest to be received) are considered by the auditor reasonable, though some remarks that the use of different market allowances and/or different valuation methods can have a significant impact on their current values: the amounts based on initial calculations may differ from those that can be received from the sales on the market.

Based on the auditor: - as of December 31, 1999, 1998 and 1997, capital sufficiency ratios, calculated based on the requirements of the National Bank were exceeding the minimum level by at least 10% of total assets weighted at their levels of risks;
- capital sufficiency ratios, calculated based on international standards, equaled: 15% as of December 31, 1998 and 1999, and 12% as of December 31, 1997, while the minimum was at 8%;
- loans of the bank equaled 5% of total assets in 1998, 7% in 1999; to clients 43% and 36%, respectively;
- loans granted to the clients in 1999 were distributed among the sectors of the economy as follows (in parentheses are data for 1998): wholesale trade - 42% (22%), oil and gas - 10% (6%), metallurgy - 8% (7%), agriculture and product processing - 3% (0.5%), chemical industry - 3% (3%), food industry and energy - 3% (1.4%), construction - 3% (6%), light industry - 2% (2.5%), retail trade - 1.7% (6%), transportation - 1% (10%), hotel business - 1% (0.6%), communication - 0% (1%), others - 18% (23%); financing of private companies equaled 86% (89%), that of state enterprises - 11% (6%);
- total amount of loans granted to the clients in 1999 grew 21.2% to 1998, whereas reserves for contingencies were increased by 44.6%.

Regarding the deals made with related parties, the auditor notes that they were made on commercial terms identical to the terms used for related parties.

In the opinion of the auditor, financial statements of Halyk Bank of Kazakhstan OJSC and its subsidiaries give a reliable and objective picture of the company's financial situation as of December 31, 1999, 1998, as well as the results and cash flows as of indicated dates in accordance with International accounting standards.