FSA about condition of the financial market and financial organizations as on August1, 2005 (preliminary data)

/Agency of the Republic of Kazakhstan for financial market and financial organizations regulation and supervision, August 12, 05/ - Below full press- release of AFS, dedicated to preliminary data about the situation on Kazakhstan's financial market in August 1, 2005 is given (note IRBIS). BANKING SECTOR As on August 1, 2005, 34 second tier banks functions in Kazakhstan. As on August 1, 2005, 14 banks with foreign participation (including 9 subsidiary banks of banks-non-residents of the Republic of Kazakhstan) and Development Bank of Kazakhstan JSC, which is not a second tier bank, are acting. 25 second tier banks have branch networks, total number of banks' branches is 380, including branches of Halyk savings bank of Kazakhstan JSC - 147, BANK CASPIAN JSC - 39, Kazkommertsbank JSC - 23. 23 banks have cash-settlement offices (CSO) out of their locations. Total number of CSO is 1,174 (in the reporting month permissions for opening 24 CSO were given), including CSO of Halyk savings bank of Kazakhstan JSC - 391, Bank TuranAlem JSC - 194, VALUT-TRANZIT-BANK JSC - 161. 17 representatives of banks non-residents are functioning in the republic. By the reporting date 27 auditing organizations and 56 auditors have licenses for auditing banks. As on August 1, 2005 total equity capital of the banking sector equaled to KZT441.4 bn. having grown during the month by KZT11.5 bn. or by 2.7%. Banks' total assets grew by KZT43.1 bn. (1.3%) to KZT3,420.3 bn. Capital adequacy indicators by the reporting date were k1 - 0.086; k2 - 0.146 (as on July 1, 2005 k1 - 0.087; k2 - 0.156). In structure of banks' loan portfolio as on August 1, 2005 standard credits stake equaled to 61.1%, doubtful - 36.8%, bad - 2.0%. As on July 1, 2005 stake of standard credits was 61.1%, doubtful - 36.4%, bad - 2.5%. Total sum of deposits attracted by banks from legal entities and individuals (excluding banks and International financial organizations) was KZT1,957.4 bn. having increased within past month by 0.5%. Including sum of deposits of legal entities was KZT1,455.2 bn., having increased by 0.1%; total deposits of individuals was KZT502.2 bn., having increased by 1.9%). Total sum of second tier banks' revenues as on August 1, 2005 was KZT253.1 bn. having increased in comparison with similar period of last year by 49.3%. Total expenses were KZT208.9 bn. having increased in comparison with similar period of last year by 48.1%. Undistributed net income (uncovered loss) of banks was KZT44.2 bn., this is higher by 54.8% in comparison with similar period of last year. For breaking the baking legislation in July 2005 banks were given 2 orders compulsory for execution, 3 warnings, demanded 2 letters - obligations, fines were imposed to 1 bank. As on reporting date 13 banks are in forced liquidation process. INSURANCE MARKET As on August 1, 2005, 37 insurance (reinsurance) organizations have licenses for dealing with insuring activity, including 3 for life insurance, 29 have licenses on compulsory insurance of transport owners' civil responsibilities, and also 10 insurance brokers, 28 actuaries, 35 auditing organizations and 70 auditors, who have licenses for auditing insuring activity. In July of the current year Agency issued licenses for dealing with insuring activity in life insurance field to again created insurance organization Company on life insurance State annuity company JSC. Besides, in July licenses for executing activity of insurance broker were issued to Industrial insurance broker IIB LLP and Insurance Broker Company BRAND SECURITIES LLP. In 6 months of the current year total assets of insuring organizations grew by 23.8% to KZT54.6 bn. Total equity capital grew by 15.8% to KZT27.9 bn. Insurance reserves totaled KZT27.5 bn. Volume of insurance premiums as on July 1, 2005 totaled KZT31.2 bn., this is higher then index of similar period of last year by KZT12.4 bn. (66.0%). Including volume of insurance premiums on compulsory insurance totaled KZT3.7 bn. (more by KZT1.4 bn. (60.9%)), voluntary personal insurance - KZT3.8 bn. (more by KZT1.8 bn. (90.0%)) and on voluntary property insurance - KZT23.7 bn. (more by KZT9.1 bn. (62.3%)). Volume of insurance payments within six months of 2005 totaled KZT4.67 bn. this is higher than index of similar period of last year by KZT1.67 bn. (55.7%). Including on compulsory insurance volume of insurance payments totaled KZT1.54 bn. (more by KZT0.23 bn. (17.6%)), on voluntary personal insurance - KZT0.73 bn. (more by KZT0.17 bn. (30.4%)) and on voluntary property insurance - KZT2.40 bn. (more by KZT1.27 bn. (112.4%)). In July 2005 in order to eliminate legislation violation, Agency, which regulates activity of insurance market, sent 1 letter-order to insurance organizations. By the current date 31 insurance (reinsurance) organizations participate in the system of insurance payments guaranteeing. By the reporting date 9 insuring organizations are in the process of forced liquidation. ACCUMULATIVE PENSION SYSTEM As on August 1, 2005 a total of 14 accumulative pension funds function in the republic, they have 75 branches and 75 representatives in the republic's regions. Investment management of pension assets of accumulative pension funds are executed by 10 organizations, 3 of them were accumulative pension funds, which have licenses for independent management of pension assets: Accumulative pension fund SAPF JSC, APF of Halyk Bank of Kazakhstan JSC and APF BTA Kurmet-Kazakhstan JSC. Number of individual pension accounts (hereinafter - account) of depositors (recipients) on compulsory pension fees as on August 1, 2005 was 7,239,818. In July of the current year number of accounts of depositors (recipients), who transferred compulsory pension fees grew by 69,320 (1.0%). Number of accounts of depositors (recipients) on voluntary pension fees increased in July of the current year by 124 and as on August 1, 2005 was 31,357 with total amount of pension accumulations amounting to KZT433.5 m. Number of accounts of depositors on voluntary professional pension fees, having increased in July by 36, equaled by August 1, 2005 to 3,185 with total amount of pension accumulations amounting to KZT11.5 m. Pension accumulations of depositors (recipients), having grown in July by KZT12.5 bn. (2.2%), as on August 1, 2005 were KZT568.98 bn. Total inflow of pension fees, having grown in July by KZT10.8 bn., as on reporting date were KZT448.9 bn. or with growth by 2.5%. Amount of net investment income, having increased in July of the current year by KZT2.4 bn. (1.8%), as on August 1, 2005 were KZT135.9 bn. Stake of net investment income in total amount of pension accumulations is 23.9%. Pension payments of accumulative pension funds as on August 1, 2005 were KZT31.96 bn. or with growth in comparison with July 1 of the current year by 2.5%). Pension payments for July current year totaled KZT0.8 bn. No transfers of pension accumulations to insurance organizations in accordance with pension annuity agreement were made in July of the current year. As on August 1, 2005 weighted average coefficient of nominal income of accumulative pension funds for the period July 2002 till July 2005 totaled 22.26%, accumulated inflation rate for the period equaled to 21.79%. SECURITIES MARKET On corporate securities market number of joint-stock companies with acting share issues as on August 1, 2005 equaled to 2,389, having decreased in comparison with similar index on July 1, 2005 - by 25. 62 broker-dealers, 18 registrars, 11 banks-custodians, 10 pension assets investment management organizations (PAIMO) and 21 organizations controlling securities portfolios act at securities market. In the past month there were registered 47 share issues (including those, in specifications of which changes were included and certificates about the state registration were changed), 2 bond programs, 2 bond issues with nominal value KZT3.4 bn., 5 bond issues with total volume in KZT17 bn. are registered under bond programs, 38 share issues were annulled. As on August 1 2,619 acting share issues and 138 existing corporate bond issues with total face value of KZT554.9 bn. were in circulation. In July, 2005 2 mutual investment funds were registered, so on reporting date 23 mutual investment funds fulfilled activity at securities market (16 closed funds, 4 open and 3 interval funds) and 3 joint stock investment funds. As on August 1, 2005 KASE's official "A" listing category included (here and further in paragraph - IRBIS data) 118 corporate bond issues and 48 share issues, "B" category - 6 corporate bond issues and 39 share issues, sector Non-listing securities - 4 share issues. In July 2005, in order to remove violations of the legislation regulating activity on the securities market, the Agency sent to securities market's professional participants 2 letters-prescriptions. In July 2005 on matters of securities market's professional participants the Agency's Board accepted following normative legal acts: - "About inclusion of changes in decree of the Board of National Bank of the Republic of Kazakhstan dated July 4, 2005 #217 "About approval of Rules of state registration of announced share issue, statements of report about results of shares floatation and share issue cancellation""; - "About inclusion of changes in decree of the Board of National Bank of the Republic of Kazakhstan dated October 27, 2003 #385 "About approval of Rules of state registration of corporate bond issue and consideration of reports about results of bonds floatation and redemption"; - "About approval of Rules for issuance of permissions for issue or floatation of emission securities of organization-resident of the Republic of Kazakhstan on the territory of foreign state"; - "About approval of Rules for notification about depositary receipts issue or other securities, basic asset of which are emission securities of issuers-residents of the Republic of Kazakhstan, submission of report about results of their floatation, and also issuance of permission to issue or float derived securities on the territory of foreign state"; - "About submission of information about affiliated persons of joint stock companies"; - "About inclusion of additions and changes in decree of the Board of Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations dated December 27, 2004 #373 "About approval of Rules for licensing of activity at securities market""; - "About approval of Rules for execution of activity on investment management of pension assets". ORGANIZATIONS CONDUCTING SEPARATE TYPES OF BANKING OPERATIONS As on August 1, 2005 a total of 76 pawn-shops, 121 credit institutions and 49 other organizations rendering separate types of banking services (including 4 mortgage companies) have licenses for conducting of banking and other operations. As on August 1, 2005 total of aggregate assets of credit institutions was KZT22.3 bn. (up by 5.7% within the month), liabilities - KZT9.9 m. (up by 8.8%), shareholders equity - KZT12.4 bn. (up by 3.3%). Stake of standard credits in the structure of credit portfolio of credit institutions as on August 1, 2005 was 85.9%, doubtful - 14.0%, bad - 0.1%. As on June 1, 2005 stake of standard credits was 84.0%, doubtful - 15.9%, bad - 0.1%. Total assets of mortgage companies as on July 1, 2005 was KZT56.7 bn. (up by 6.4% within the month), liabilities - KZT44.8 bn. (grew by 8.7%), shareholders equity - KZT11.9 bn. (decrease within the month by 1.7%). Stake of standard credits in the structure of credit portfolio of mortgage companies was 98.7%, doubtful - 1.33%, bad - 0.04%. As on June 1, 2005 stake of standard credits was 98.91%, doubtful - 1.03%, bad - 0.06%. In July 2005 for non-fulfillment of norms of the acting legislation organizations conducting separate types of banking operations were sent 1 letter - prescriptions. As on August 1, 2005 three credit institutions were in the process of voluntary liquidation, 1 - in forced liquidation. PROTECTION OF INVESTORS CONSUMERS OF FINANCIAL SERVICES In July 2005 the Agency received 73 complaints from individuals and legal entities concerning activity of second tier banks, insurance organizations, accumulative pension funds, securities market's subjects, among which: - 18 appeals were concerned with activity of second tier banks (25% from total number), explanations on 11 of them were given, 7 are being examined; - 17 appeals were concerned with activity of insurance organizations (23%), explanations on 5 of them were given, 12 are being examined; - 33 appeals were concerned with activity of accumulative pension funds (45%), explanations on 32 of them were given, 1 is being examined; - 5 appeals were concerned with activity of securities market's subjects (7%), which are being examined. Further examination of 56 appeals given before has been completed (3 - concerned with activity of second tier banks, 13 - activity of insurance organizations, 40 - activity of accumulative pension funds), on which corresponding explanations have been given. At that after interference of the Agency shareholders of Aviaremontnyi plant JSC #406 were paid dividends for the period from 1994 to 2005. On 2 appeals questions were regulated as insurance payments to insurers (victims) in the amount - KZT600,609. For untimely insurance one insurance organization was attracted to administrative responsibility on art.174 p.2 of Codex of the Republic of Kazakhstan about administrative violations of the law (in the amount - KZT19, 420). In the whole number of appeals 4 (5%) are orders of Chancellery of Prime Minister of the Republic of Kazakhstan (1), deputy Majilis of Parliament of the Republic of Kazakhstan (1) and 2 from Office of Public Prosecutor. On 3 of them explanations are given, 1 appeal is being examined. Also 4 demands of financial market's subject (on question of transfer of pension accumulations and compulsory insurance of civil responsibility of car owners) were considered on which also corresponding explanations were given. On the meeting of Round table, organized by Association of financiers of Kazakhstan jointly with Agency and with participation of commercial banks questions of project of law of the Republic of Kazakhstan About compulsory guaranteeing of deposits in commercial banks and changes and additions in prudential normative for commercial banks were considered. Work with national Bank of RK on execution of order of deputy Prime Minister of RK regarding measures, for meetings with commercial banks to elaborate coordinated offers for creation of favorable conditions for consumers, elimination of obstacles for general introduction and application of payment cards is continues. At present NB RK conducts a number of preparatory measures for meeting. [2005-08-12]