AMB CJSC (Kazakhstan): brief outline

/IRBIS, Aug. 27, 00/ - Below is the brief description of Almaty Merchant Bank closed joint-stock company (AMB CJSC). It compiled using reports of KASE Listing Commission. Description is published in connection with admission of the bank's bonds into official list of KASE securities, category "A". GENERAL INFORMATION Date of initial official registration - Nov 03, 1995. Date of latest official registration May 19, 2000. Juridical form - closed joint-stock company. Type of ownership - private. Legal and actual addresses of the office: 100, Furmanova St., 480091, Almaty, Kazakhstan. Type of activity - banking services. The bank has a membership in following institutions: KASE, Securities Depository CJSC, Union of legal persons of "Kazakhstan Financiers Association", Central Securities Depository of Kyrgyzstan CJSC, Union of Pension Reform Members, Kazakhstan Insurance Fund for Individual Deposits CJSC. AMB CJSC is a primary dealer of the Ministry of Finance and primary agent of the National bank of the Republic of Kazakhstan on the state securities market. The bank has 8 branch offices in Astana, Almaty, Atyrau, Karaganda, Kostanai, Pavlodar, Shymkent and Ust-Kamenogorsk. New office in Aktobe will be opened during this year. Number of employees as of Sep 01, 2000 - 560. LICENSES - NBK license on conduction of banking operation in tenge, forex, and other operations stipulated by banking legislation #239 dated Jan 10, 2000. - License of National Securities Commission (NSC) to conduct broker dealer activity on the securities market with the right to manage clients accounts as a nominal holder, #0401100219 dated Feb 15, 2000(first category license). - NSC license on conduction of custodian activity on the securities market, #0407100098 dated July 21, 2000. CAPITAL AND SHAREHOLDERS As of July 01, 2000 announced authorised capital of the bank totalled KZT1.211 bln. Issued authorised capital amounted KZT936.1 mln of which KZT856.35 were fully paid in. Total number of shares with KZT550,000.0 at face value are 1,702 (only ordinary shares). The shares were issued in documentary form. The registrar is maintained by the issuer itself. The decision of dividend payments for year results is approved by the general meeting of shareholders. The decision on amount, sources and order of dividend payments on the quarterly and semi-annual basis is approved by the Board of Directors of AMB CJSC. By the results of activity the bank repaid: KZT137,500 th in 1997, KZT236,500 th, 354,750 in 1999. As of Aug. 04, 2000 bank had 7 shareholders, non of whom was government representative. Following companies enjoy possession of 5% stake from authorised capital in the bank: Cormoto B.V. (Amsterdam, the Netherlands) - 25%, Fintrade OJSC (Almaty, Kazakhstan) - 24.2%, Reson Holding AG (Zug, Switzerland) - 20.5%, Glencore International AG (BAAR, Switzerland) - 15.2% Myrzakent OJSC (Almaty, Kazakhstan) - 7.6%, Kin Securities LLP (Almaty, Kazakhstan) - 5.1%. HISTORY AND BRIEF OUTLINE AMB CJSC is a private bank engaged in development of full-range banking services in Kazakhstan. It specialises in servicing of large corporate as well as medium and small-scale companies. The bank was founded in June 1995. In Nov 95 bank received the general license from the National bank of Kazakhstan (NBK) on operations in forex, in Oct 96 it joined SWIFT, in Nov it started servicing of Visa, EuroCard/MasterCard, Diners Club, JCB, American Express. In May 1997 AMB CJSC was included by NBK into the first group of banks to be transited to International Accounting Standards. In Nov 1998, it started commercial selling of gold bullion with own stamp and weight of 10and 20 grams. In Dec 1998, Inter government agreement between Deutsche Republic and Kazakhstan the bank was approved as a financial operator for German credit line (KFW). In March 1999, bank started issuing VISA-Classic, VISA- Gold and VISA Business with its own logotype. In Dec 1999, the list included Visa-Electron and domestic Altyn. Since Sep 1999 bank jointly with Western Union has implemented new services on money current transfers without opening of bank accounts. This service targeted individuals and covered 170 countries of the world. To conduct custodian services with international securities, AMB opened accounts in Deutsche Bank AG Frankfurt, Deutsche Bank AG London, Bank Societe Generale. Being the co-founder of Kyrgyz Securities Depository bank renders custodian services on securities market of this country. Bank has credit ratings from Thomson Bank Watch BREE: short-term - LC-2 (till may 2000 - LC-3) and long-term - "B". International payments are made using SWIFT Alliance Entry banking software. Presently bank cooperating with 160 banks of the world including: USA, Germany, Switzerland, the Netherlands, France, Great Britain, Danmark, Canada, Singapore, CIS countries and Baltic states. In turn about 80 banks of Russia, Kyrgyzstan, Latvia, Azerbaijan and Lithuania opened their correspondent accounts in AMB. The shareholders equity of the bank increased 4.3 times from 1997 to 1999 (KZT1.48 bln). For first six month of 2000 by 15.8% (or by KZT303.98 mln). Increase in shareholders equity by 2.3 times in 1998 was mainly caused by raise in authorised paid in capital (KZT581.35 mln). In 1999, (increase by 85.1%) and for the first six month of 2000 main growth feel on capital of the second level. This was caused by receipt of subordinate debt (1999 - 483.29 and 2000 - 682.82 mln) and growth in undistributed income. AMB assets for the same period (1997-99) grew up by KZT7.27 bln or 2.6 times (1998 to the basis of 1997 - by 1.1%, 1999 to 1998 - by 154.5%) and by KZT4.40 bln or 37% for the first six months of 2000. The main source of growth for 1999-2000 fell on securities portfolio (18.75 of total assets in 1999 and 33.6% in 2000) and net volume of loan portfolio (39.4% of total assets in 1999 and 40.4% in 2000). Loan portfolio is formed by 100% from sustainable funds (own funds and long term deposits), which considerably decrease liquidity risks. Since its foundation, the bank has conducted conservative credit policy. The basis of bank's performance is crediting of export import operations. During 1999 and 2000 the bank has conducted policy of decreasing default risks on loans. The loan portfolio was steady growing due to increase in clients base and, as a result, growth in number of debtors. As of Jan 01, 2000 volume of loan portfolio totalled KZT4.8 bln and increased 3 times in compare to 1998. As of July 01, 2000 it grew up by KZT2.0 bln (to 1999) or 42.2% and amounted KZT6.8 bln. Data on quality of loan portfolio are presented in the table: -------------------------------------------------------------------------------- as of as of as of as of 01.01.98 01.01.99 01.01.00 01.07.00 --------------- --------------- --------------- --------------- Loans th tenge % th tenge % th tenge % th tenge % ---------------- --------- ----- --------- ----- --------- ----- --------- ----- Standard 1,501,534 87.5 1,021,452 63.3 3,237,137 67.5 5,935,396 86.9 Sub-standard 5,097 0.3 420,306 26.1 1,432,445 29.8 658 547 9.6 Non-satisfactory 15,110 0.9 57,702 3.6 115,550 2.4 29,286 0.4 Doubtful high risk 196,430 11.3 96,796 6.0 10,572 0.2 229 0 Bad debts - 0 17,067 1.0 3,486 0.1 203 084 3.0 ---------------- --------- ----- --------- ----- --------- ----- --------- ----- TOTAL 1,718,171 100.0 1,613,323 100.0 4,799,190 100.0 6,826,542 100.0 -------------------------------------------------------------------------------- Data on loan provision ------------------------------------------------------------------------------ as of as of as of as of 01.01.98 01.01.99 01.01.00 01.07.00 -------------- -------------- -------------- -------------- Loans th tenge % th tenge % th tenge % th tenge % ------------------ -------- ----- -------- ----- -------- ----- -------- ----- Standard 0 0 0 0 0 0 0 0 Sub-standard 255 0.2 23.478 22.9 73.342 69.0 35.420 14.4 Non-satisfactory 3.022 3.0 13.551 13.2 24.120 22.7 6.965 2.8 Doubtful high risk 98.215 96.8 48.398 47.2 5.286 5.0 115 0.0 Bad debts - 0 17.067 16.7 3.486 3.3 203.084 82.7 ------------------ -------- ----- -------- ----- -------- ----- -------- ----- TOTAL 101.492 100.0 102.494 100.0 106.234 100.0 245.584 100.0 ------------------------------------------------------------------------------ Deposit base formation during 1999 and 2000 has had following tendencies. New types of deposits were introduced during this time. Considerable efforts spent development of individual services. For year 1999 volume of attracted deposits increased 3 times and totalled KZT8.9 bln. For the first six month of year 2000 numbers equalled KZT11.7 bln and 31.8% correspondingly. As of July 01, 2000 share of individual deposits attracted by bank consisted of 19% (head office) and 2% (branch offices). The bank intends further strengthen deposit base of individuals. Structure of profitable assets ------------------------------------------------------------------------------ as of as of as of as of 01.01.98 01.01.99 01.01.00 01.07.00 ------------- ------------- ------------- -------------- Type of asset th tenge % th tenge % th tenge % th tenge % --------------------- --------- --- --------- --- --------- --- ---------- --- Commercial credits 1,616,661 52 1,509,284 68 4,675,506 64 6,053,163 49 Securities 1,319,849 42 714,669 32 2,222,457 30 5,580,177 45 Interbank credits and deposits 203,985 7 - 0 415,000 6 812,891 7 --------------------- --------- --- --------- --- --------- --- ---------- --- Total profit. assets 3,140,495 100 2,223,953 100 7,312,963 100 12,446,231 100 ------------------------------------------------------------------------------ AMB CJSC credit lines Bank is participant of small-scale business development program under the EBRD and Small Scale Business Development Fund (SSBDF). In the frame of this program $72.5 mln were granted at 9% interest rate for 10 years. This program also included two agreements between AMB and SSBDF on additional supplementary credit of $1.7 mln: - first receipt - $750 th, period - 3.5 years, interest rate 9.38% APR, maturity date - Oct 13, 2001; - second receipt - $950 th, period - 3.5 years, interest rate 8.63% APR, maturity date - Apr 29, 2002. The borrowers are mainly private entrepreneurs and small companies with 50% share of foreign capital. In the frame of Kreditanstalt Fuer Wiederaufbau (KFW) credit line based on two inter government agreements Bank received DM27.0 mln with maturity - 10 years, preference period - 3 years, and interest rate - 5%. The first receipt of DM2 mln was already utilised. They were directed to agricultural credit programs.