Interview - Bank TuranAlem (Kazakhstan) hopes for income growth and new borrowings

/REUTERS, Almaty, Olzhas Auyezov, December 29, 03/ - Kazakhstan's second biggest bank TuranAlem plans to go on a borrowing spree over the next five years to boost lending and remain competitive in a fast-growing market, a top manager said. It plans to increase assets by $1 billion annually in that period to retain its sizeable market share as booming oil exports fuel economic growth. The bank's current assets of $2.5 billion make up nearly a quarter of the Central Asian state's total bank assets. Deputy Board Chairman Saduakas Mameshtegi told Reuters in an interview at the weekend that by 2007-08 assets of Kazakh banks would rise to 50 percent of gross domestic product (GDP) from the current 36 percent. This year's GDP is estimated at 4.37 trillion tenge, or some $30 billion at current exchange rates. "In 2003, loans to clients will top $1.6 billion, assets exceed $2.5 billion and own capital (calculated to international standards) will amount to $220 million," Mameshtegi said. He said this year's net profit would rise substantially from $31.5 million last year, but declined to give an exact figure. TuranAlem nearly doubled its assets annually over the last three years. Mameshtegi said he expected growth to slow down in the future but that the bank would issue eurobonds, local bonds and syndicated loans. BORROW TO GROW TuranAlem, headquartered in the financial capital Almaty, has said it plans to launch a eurobond worth $200-500 million in the first half of 2004. Mameshtegi said TuranAlem had already selected ABN AMRO Bank and J.P. Morgan to lead manage the eurobond issue. The bank will also issue local bonds worth $50 million. "If real (growth) indicators exceed our expectations, we will seek our shareholders' consent to boost the bank's capitalization through extra share issues," Mameshtegi said. Around 15-20 percent of TuranAlem shares were in circulation via ADRs and the remainder held by Kazakh investors. Mameshtegi predicted TuranAlem would remain a "universal" investor interested in serving a wide range of sectors. It aimed maintain a leading position on the domestic market, although large Kazakh firms may already borrow directly from Western banks and financial institutions at much lower rates. "All the same, we remain competitive," he said. "We must only adjust our strategy, but in general, we won't alter it." Consumer loans are another lucrative segment of banking business amid fast economic growth, Mameshtegi said. Expansion abroad is also high on the agenda, and TuranAlem has opened its office in Ukraine's capital Kiev and now plans to open one in China's financial hub Shanghai, Mameshtegi said. In northern neighbour Russia, TuraAlem is represented through its large minor stake in Moscow-based bank Slavinvest. As of September, TuranAlem management owned some 26 percent of the bank. The European Bank for Reconstruction and Development [EBRD.UL], the World Bank's IFC investment arm, Austria's Raiffeisen Zentralbank, German DEG and Dutch FMO held together 25 percent [2003-12-29]