Bank CentreCredit OJSC (Kazakhstan): brief description

/IRBIS, Dec.18, 00/ - Following is a brief description of Bank CentreCredit OJSC (Almaty), made on the basis of the conclusion of the Listing commission of the Kazakhstan Stock Exchange (KASE). The characteristics are published due to the admission of the bank's bonds into official list of the KASE securities under category "A". HISTORY The bank was founded on Sep 19, 1988 as Almaty Central Cooperative Bank under Cooperative Association of Almaty region Centre-Bank, which in 1991 was renamed as central joint-stock bank "CentreBank", and in 1996 in Bank CentreCredit OJSC. According to the government resolution #1713 dated Dec 08, 1997 Bank CentreCredit OJSC participated in tender over Zhylstroibank (English transcript: Housing Construction Bank) and eventually won it. As a result, Zhilstroibank merged with BankCentreCredit OJSC (date of government registration is June 30, 1998). GENERAL INFORMATION Date of initial government registration - June 30, 1998. Legal status - open joint stock company. Ownership - private. Legal and actual address of the head office - 100 Shevchenko street, Almaty 480072, Kazakhstan. Primary activity - banking services. Resolution of the National Bank of Kazakhstan #220 dated Oct 30, 1998 included the bank into first group of banks to be shifted to international standards. The bank holds stakes in following entities: - Kazakhstan Stock Exchange CJSC - 6.02% (share in the authorized capital) - Kazinterbank OJSC - 10.0% - Central Clearing Chamber - 6.25% - Tumar joint-stock insurance company - 6.85% - OAPF Korgau CJSC - 9.44% - OAPF Narodnii Pensionniy Fond - 9.0% - OUL Financiers Association of Kazakhstan - 16.6% - KIB ASSET MANAGEMENT Ltd - 60.0%. Bank is a member of OUL Financiers Association of Kazakhstan, Kazakhstan Stock Exchange CJSC, Central Clearing Chamber, Kazakhstan Deposit Insurance Fund CJSC. Bank is a primary dealer of the Finance Ministry of Kazakhstan (MOF) and primary agent of National Bank of Kazakhstan on the primary market of government bonds. The bank is also an financial agent of MOF on the market of national saving bonds (NSB). However, it has not participated on the two last auctions for NSB. Bank CentreCredit OJSC has 19 branches and 38 settlement offices in following cities: Astana, Almaty, Aksai, Aksukent, Aktau, Aktobe, Atyrau, Zhezkazgan, Zyryanovsk, Karaganda, Kostanai, Kokshetau, Kulsary, Kyzl- orda, Pavlodar, Petropavlovks, Rudnii, Satpayev, Semipalatinsk, Taldykorgan, Taraz, Temirtau, Tengiz, Uralsk, Shymkent, Ust-Kamenogorsk and Shuchinsk. International correspondent network of the bank consists of 15 banks located in USA, Germany, Japan, Switzerland and France. In 1996 bank jointly with Western Union (USA) started new operations with time money transfers that covered 180 countries of the world. In July 2000, bank implemented fast transfer system allowing money transfer in Kazakhstan during 10 minutes. In May 2000, bank was accepted into VISA International system as a Participant Member. Bank developed and approved design of cards. In 2001, bank will set 20 automatic teller machines (ATM). ATM will be set in the head office and all regional branches. At present, bank has following ratings of Thomson BankWatch: IC-D - debtor, LC-3 - short-term, B - principal debt. In year 2000, bank concluded contract with Standard & Poors. The number of employees as of Oct 01, 2000 equaled to 1,212. LICENSES - Of the National Bank of Kazakhstan to conduct banking and other operations in tenge and foreign currency, dated February 11, 2000 - Of the National Securities Commission of Kazakhstan to engage in brokerage and dealing activities with the government bonds (GB) and with the right to handle client accounts as a nominal holder, dated October 7, 1998, #040110045 (license of the first category) - Of the National Securities Commission of Kazakhstan to engage in custodian activities on the stock market, dated December 30, 1999, #0407100064. CAPITAL, SHARES AND SHAREHOLDERS As of October 1, 00 announced and issued authorized capital of Bank CentreCredit OJSC equaled KZT2,063,339.0 th, issued paid-up capital - KZT1,469,296.0 th. Total number of shares at KZT200.0 face value is 10,316,695. The shares have non-documentary form. Register is maintained by Centre DAR LLP (Almaty). According to the issue's prospects the size of dividends per share is set by Board of the bank and approved on general meeting of shareholders. The decision of annual general meeting held on Apr 02, 1999 distributed KZT71 mln. (or 45.5% of net income for year 1998) on re-formation of announced authorized capital. Dividends are accrued for amount of KZT11.96 per share. Dividend payments were made in the form of the bank's securities. At the general shareholders meeting held by the results of 1999 the dividend was set at KZT20 per share (dividend fund was approved at KZT108.1 mln, or 56% of net income). Ordinary registered shares of CentreCredit Bank were traded on the non- listing floor of KASE during June 28 and August 13, 1998. On August 13, 1998 shares were admitted into category "A" of the official list. Since that, there were 21 deals concluded using 864,778 shares for a total of $1,230.2 th. Weighted average price of shares for the first and second trading days grew from $1.13 up to $1.5282. As of Oct 01, 2000 bank had 786 shareholders. Following entities have stakes exceeding 5% level of the authorized capital: State Property and Privatization Department of the Ministry of Finance - 16.54%, OAPF Senim CJSC (Almaty, Kazakhstan) - 10.20%, Utta LLP (Almaty, Kazakhstan) - 9.52%, Altyn Tan LLP (Almaty, Kazakhstan) - 8.80%, Delta Trade LLP (Almaty, Kazakhstan) - 8.70%, Atameken financial-industrial group (Almaty, Kazakhstan) - 8.20%. BRIEF DESCRIPTION OF THE ACTIVITIES The bank's shareholders equity grew by KZT192.1 mln or 15.7% from 1998 to 1999, and in 9 months of 2000 - by 19.0% (by KZT269.7 mln). In 1999 increase in shareholders' equity was conditioned by increase in second level capital by KZT219.4 mln for an account of net income. Despite, increase of the authorized paid-up capital, first level capital decreased due to decline in accumulations of funds, reserves and undistributed profit of previous years. Growth of shareholder's equity for 9 months 2000 was caused by increase of authorized paid-up capital on KZT406.8 mln (first level capital). The assets of Bank CentreCredit OJSC grew by KZT9.6 bln, or 3.2 times for the same period (1999 to 1999 - 1.3 times, 1998 to 1997 - 2.4 times), in 9 months of 2000 by KZT3.2 bln, or 23.1%. The major growth that took place in 1999 (KZT2.2 bln) and in the first half of 2000 (KZT2.8 bln) was due to a increase of loan portfolio (1999 - 60.2% of the assets, in 2000 - 65.6%). The structure of profitable assets of Bank CentreCredit OJSC --------------------------------------------------------------------- As of Jan.1.99 As of Jan.1.00 As of Oct.1.00 --------------------------------------------------- Th. Th. Th. Assets KZT % KZT % KZT % --------------------------------------------------------------------- Securities 787,076 10.8 2,045,343 17.5 2,208,249 15.3 Bank deposits 363,631 5.0 1,275,847 11.0 1,108,014 7.6 Clients' credits 6,157,797 84.2 8,326,133 71.5 11,167,989 77.1 --------------------------------------------------------------------- Total 7,308,504 100 11,647,323 100 14,484,252 100 --------------------------------------------------------------------- The proportion of profitable assets within total assets of the bank equaled 71% in late 1998, and 84% in late 1999 and 85% as of October 1, 2000. In 1999, profitable assets of the bank increased by KZT4.3 bln, or 59.4% against 1998, in 9 months of current year - by KZT2.8 bln, or 24.4%. Bank's management intends to maintain profitable assets on the current level. It will change its structure increasing securities holdings and lowering loan portfolio. The sectoral division of the loan portfolio is following: trade - 34.1%, industry - 16.4%, mortgage lending - 12.6%, food industry - 8.0%, leasing - 6.2%, agriculture - 3.2%, construction - 3.1%, other businesses - 16.5%. The major share of total income are profits from loan interests and cash- settlement operations. Loan income increased 1.5 times (from KZT811.2 mln in late 1998 to KZT1,207.3 mln in October 2000), income from cash- settlement operations grew up 1.8 times (from KZT367.9 mln to KZT645.3 mln) mainly due to opening of new accounts. In late 1998, bank serviced 52 thousands clients, as of Oct 01, 2000 - 59 thousands, of which 21 thousands are legal entities. The sum of total expenses for 1999 increased by 80.8%, for 9 months by 3.1%. Such significant increase was explained by information technologies modernization, aggressive advertisement policy and opening of 12 new cash-settlement desks. The loan portfolio. The basis of bank's assets is made up of credits. The quality of loan portfolio was positively affected by crediting limits set on branch and clients of the bank. As of Oct 01, 2000, 93.9% of the total loan portfolio were standard and sub-standard credits, 3.4% - unsatisfactory and doubtful loans, and 2.7% bad loans. As of late 1999, net volume of loan portfolio totaled KZT8.3 bln and increased by 35.2% for the year. During 9 months of 2000, the loan portfolio increased by KZT2.8 bln or 34.1% and amounted KZT11.2 bln. The time structure of the portfolio shifted to more mid to long-term financing. As of Oct 01, 2000 the share of credits upwards 1 year to maturity equaled 78.9%. The main portion of long term credits (13.9%) consisted of mortgage credits (12.6%) that had been accepted with Zhylstroibank assets. The source of credits is shareholder's equity. The mid-term credits (65.1%) and rest part of long-term credits are financed for an account of demand deposits. Data on the quality of the loan portfolio of Bank CentreCredit OJSC ------------------------------------------------------------------------------ As of Jan.1.99 As of Jan.1.00 As of Oct.1.00 ------------------------------------------------------------------------------ Th. Th. Th. Type of the loan KZT % KZT % KZT % ------------------------------------------------------------------------------ Standard 5,495,014 85.0 7,411,161 84.4 9,921,276 85.0 Substandard 573,277 8.9 717,208 8.2 1,032,974 8.9 Unsatisfactory 117,238 1.8 125,845, 1.4 231,033 1.9 Doubtful with high risk 66,894 1.0 273,715 3.1 175,210 1.5 Bad 210,484 3.3 254,495 2.9 310,936 2.7 ------------------------------------------------------------------------------ Total 6,462,907 100.0 8,782,424 100.0 11,671,429 100.0 ------------------------------------------------------------------------------ Data on the provisions create by the loans of Bank CentreCredit OJSC ----------------------------------------------------------------------- As of Jan.1.99 As of Jan.1.00 As of Oct.1.00 ----------------------------------------------------------------------- Th. Th. Th. Type of the loan KZT % KZT % KZT % ----------------------------------------------------------------------- Standard - - - - - - Substandard 34,927 11.4 36,542 8.0 55,762 11.1 Unsatisfactory 26,248 8.6 28,395 6.2 48,285 9.6 Doubtful with high risk 33,450 11.0 136,859 30.0 87,606 17.4 Bad 210,485 69.0 254,495 55.8 311,787 61.9 ----------------------------------------------------------------------- Total 305,110 100.0 456,291 100.0 503,440 100.0 ----------------------------------------------------------------------- Deposit base. As of Oct 01, 2000 the liabilities' structure of Bank CentreCredit OJSC consisted of 87.4% of deposits (KZT13.4 bln). Of this number, KZT6.4 bln or 47.6% are time deposits (44.7% - late 1999, 36.2% late 1998), and demand and saving deposits - 52.4% (55.3% - 1999, 63.8% - 1998). For 1999 the volume of attracted deposits grew by 43.9% and totaled KZT10.4 bln, for 9 months, deposits increased by KZT3.0 bln or 28.7% and amounted KZT13.4 bln, of which KZT3.8 bln or 28% are deposits of individuals. CREDIT LINES OF THE BANK European bank for Reconstruction and Development (EBRD). In the framework of small and medium scale business development program of EBRD, Bank CentreCredit financed more than 500 projects for a total of $2.5 mln. Asian Development Bank (ADB). In the framework of ADB credit line for agriculture sector, bank financed 5 projects (since 1999). The projects related to purchases of processing and production equipment for agriculture for a total of $3.1 mln. American Fund for Entrepreneurship Support in Central Asia. In the framework, of small and medium scale business financed by CrossRoads the bank financed 7 projects (since 1998) for a total of $1.7 mln. Sectors engaged: polygraphy, food and light industry. Government support program for domestic producers. In the framework of this program, the bank finances projects that would supply domestic market with consumer goods and would produce export oriented goods. Three projects for a total of $3.2 mln were financed in 2000. Gold mining industry development program. In the framework of this program financed by the National Bank of Kazakhstan, bank financed one project for a total of $1.5 mln.