FSA about condition of the financial market and financial organizations as of September 1, 2005 (preliminary data)

/Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations, September 15, 05/ - Following is the press-release of FSA dedicated to the situation on Kazakhstan's financial market as of September 1, 2005 (note IRBIS). BANKING SECTOR As of September 1, 2005, 34 commercial banks functioned in Kazakhstan. By the mentioned date 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 commercial bank, were acting. 25 commercial banks have branch networks, total number of banks' branches is 384, including branches of Halyk savings bank of Kazakhstan JSC - 147, BANK CASPIAN JSC - 40, Kazkommertsbank JSC - 23. 23 banks have cash-settlement offices (CSO) out of their locations. Total number of CSO is 1,213 (in the reporting month permissions for opening 19 CSO were given), including CSO of Halyk savings bank of Kazakhstan JSC - 395, Bank TuranAlem JSC - 199, VALUT-TRANZIT-BANK JSC - 169. 17 representatives of banks non-residents are functioning in the republic. By the reporting date 28 auditing organizations and 56 auditors had licenses for auditing banks. As of September 1, 2005 total equity capital of the banking sector equaled to KZT464.1 bn. having grown during the month by KZT19.3 bn. or by 4.3%. Banks' total assets grew by KZT58.8 bn. (1.7%) to KZT3,479.1 bn. Adequacy indicators were k1 - 0.087; k2 - 0.153 (as of August 1, 2005 k1 - 0.086, k2 - 0.145). Loan portfolio of banks including interbank loans rose by KZT68.3 bn. (2.9%) within the month to KZT2,405.2 bn. Stake of standard credits in bank's loan portfolio structure at the reporting date was 61.0%, doubtful - 36.9%, bad - 2.1%. As of August 1, 2005 stake of standard credits was estimated by FSA at 61.2%, doubtful - 36.8%, bad - 2.0%. Total sum of deposits attracted by banks from individuals and legal entities (excluding banks and International financial organizations) was KZT2,015.3 having increased within passed month by 1.9%. Including deposits of legal entities - KZT1,491.4 bn., grew by 2.4%; total deposits of individuals - KZT523.9 bn., grew by 0.7%). Total sum of commercial banks' revenues as of September 1, 2005 was KZT293.4 bn. having increased in comparison with similar period of last year by 49.0%. Total expenses were KZT244.1 bn. having increased in comparison with similar period of last year by 47.6%. Undistributed net income (uncovered loss) of banks equaled to KZT49.3 bn., this is higher by 56.5% in comparison with similar period of last year. For breaking the baking legislation in August 2005 banks were given 1 prescription compulsory to fulfill, 2 warnings, demanded 1 letter - obligation, fines were imposed to 1 bank. As of reporting date, 13 banks in Kazakhstan were in forced liquidation process. In August 2005 in order to improve the banking legislation The Agency's Board made the resolution "About approval of the Instruction about measures on supporting equity capital sufficiency coefficients of the bank group by the bank holding". INSURANCE MARKET As of September 1, 2005, 37 insurance (reinsurance) organizations had licenses for dealing with insuring activity, including 3 organizations with licenses for life insurance, 29 - licenses on compulsory insurance of transport owners' civil responsibilities, and also 10 insurance brokers, 28 actuaries, 36 auditing organizations and 70 auditors, who had licenses for auditing insuring activity. Within 7 months of 2005 total assets of insuring organizations grew by 31.3% to KZT57.9 bn. Total equity capital grew by 22.0% to KZT29.4 bn. Insurance reserves totaled KZT29.1 bn. Volume of insurance premiums as of August 1, 2005 totaled KZT36.6 bn. this is higher than index of similar period of last year by KZT14.2 bn. (63.4%). Including volume of insurance premiums on compulsory insurance totaled KZT6.0 bn. (more by KZT3.5 bn. (140.0%)), voluntary personal insurance - KZT4.4 bn. (more by KZT2.1 bn. (91.3%)) and on voluntary property insurance - KZT26.2 bn. (more by KZT8.7 bn. (49.7%)). Along with this, volume of insurance payments collected on "life insurance" branch totaled KZT0.7 bn., this is higher than index of similar period of last year by KZT0.4 bn. (133.3%). Stake of life insurance in total insurance premiums totaled 1.9% against 1.4% as of August 1, 2004. As of August 1 amount of insurance premiums given for re-insurance totaled KZT13.9 bn. Including 32.2% from total volume of insurance premiums were given to non-residents for re-insurance (as of August 1, 2004 - 42.2%). Volume of insurance payments within seven months of 2005 totaled KZT5.29 bn., this is higher than index of similar period of last year by KZT1.69 bn. (46.9%). Including volume of insurance payments on compulsory insurance totaled KZT1.76 bn. (more by KZT0.23 bn. (15.0%)), on voluntary personal insurance - KZT0.88 bn. (more by KZT0.21 bn. (31.3%)) and on voluntary property insurance - KZT2.66 bn. (more by KZT1.26 bn. (90.0%)). As of August 1 total of 1,863.9 th. insurance agreements were in effect, of them 1,029.5 th. were made on compulsory types of insurance. Total volume of obligations (insurance amount) on acting insurance agreements is KZT7,850.3 bn. In August 2005 FSA sent to insurance organizations 3 letters-prescriptions in order to remove violations of the legislation regulating insurance market. By the current date 31 insurance (reinsurance) companies participated in the system of insurance payments guaranteeing. By the reporting date 9 insuring companies were in the process of forced liquidation. ACCUMULATIVE PENSION SYSTEM As of September 1, 2005 a total of 14 accumulative pension funds functioned in Kazakhstan, they had 75 branches and 77 representatives in the republic's regions. Investment management of pension assets of accumulative pension funds were carried out by 10 organizations, 3 of them were accumulative pension funds, which had licenses for independent management of pension assets: 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 of September 1, 2005 was 7,299,393. In August number of depositors paying compulsory pension fees grew by 59,575 (0.8%). Number of accounts of depositors (recipients) on voluntary pension fees increased in August 2005 by 223 and as of September 1, 2005 was 31,580 with total amount of pension accumulations amounting to KZT442.1 m. Number of accounts of depositors on voluntary professional pension fees, having increased in August by 17, equaled by September 1, 2005 to 3,202 with total amount of pension accumulations amounting to KZT12.5 m. Pension accumulations of depositors (recipients), having grown in August by KZT14.8 bn. (2.6%), as of September 1, 2005 were KZT583.8 bn. Total inflow of pension fees, having grown in August by KZT10.9 bn., as of reporting date were KZT459.8 bn. or with growth by 2.4%. Amount of net investment income from pension assets investing (excluding commission interests), allocated to depositors' individual pension accounts, having increased in August by KZT4.6 bn. (3.4%), as of September 1, 2005 were KZT140.6 bn. Stake of net investment income in total amount of pension accumulations is 24.08%. Pension payments of accumulative pension funds as of September 1, 2005 were KZT32.7 bn. (grew within the month by 2.4%). Pension payments for August 2005 totaled KZT0.77 bn. Transfers of pension accumulations to insurance organizations in accordance with pension annuity agreement as of September 1, 2005 totaled KZT3.3 m., in August of this year KZT1.6 m. were transferred to insurance organizations. As of September 1, 2005 weighted average coefficient of nominal income of accumulative pension funds for the period August 2002 till August 2005 totaled 21.51%, accumulated inflation rate for the period equaled to 22.26%. SECURITIES MARKET As of September 1, 2005 there were registered 2,372 joint-stock companies with acting issues on corporate securities market (grew by 17). 62 broker- dealers, 18 registrars, 11 banks-custodians, 10 pension assets investment management organizations (PAIMO) and 23 organizations controlling securities portfolios acted on securities market. In August 2005 there were registered 27 share issues (including those, in specifications of which changes were included and certificates about the state registration were changed), 1 bond program with total nominal value KZT5.5 bn., 1 bond issues with total volume of KZT1 bn. registered under bond programs, 30 share issues were annulled. As of September 1 total of 2,598 acting share issues and 140 existing corporate bond issues with total face value of KZT561.4 bn. were in circulation. In August 2005 six mutual funds were registered, as of September 1 twenty nine mutual funds were carrying investment management at securities market (21 closed funds, 5 open and 3 interval funds). Volume of assets of mutual funds with growth in 15.2 times in a quarter as on July 1, 2005 was KZT10,596.6 m., assets of joint stock investment funds as on reporting date were KZT14,691.4 m. (growth in 26.5 times). As on September 1, 2005 170 corporate securities issues of Kazakhstan's issuers were included in KASE's official "A" listing category, 44 - in "B" category. In August 2005 the Agency's Board accepted the following normative legal acts on questions of professional securities market participants: - About cancellation of decree of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations dated June 25, 2005 #222 "About approval of Rules to fulfill broker-dealer activity in securities market of the Republic of Kazakhstan"; - "About approval of Rules to fulfill broker-dealer activity in securities market of the Republic of Kazakhstan and introduction of changes in decree of the National committee of the Republic of Kazakhstan on securities dated April 20, 1999 #30 "About changes in some normative legal acts of the National committee of the Republic of Kazakhstan on securities on questions of admission of individuals to operate in securities market"; - with a view to bring normative legal base of authorized body in compliance with Law of RK "About securities market" (in connection with changes of the Law dated July 8, 2005): - "About changes and additions in decree of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations dated March 15, 2004 #62 "About approval of Rules to register by securities market professional participants, rendering services of nominal holding, deals with securities, registration and issue extract from personal account of securities holders and opening information by nominal holderl"; - "About changes and additions in decree of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations dated February 16, 2004 #32 "About approval of Rules to maintain securities holders register system". ORGANIZATIONS CONDUCTING SEPARATE TYPES OF BANKING OPERATIONS As of September 1, 2005 a total of 77 pawn-shops, 130 credit institutions and 49 other organizations rendering separate types of banking services (including 4 mortgage companies) had licenses for conducting of banking and other operations. As of August 1, 2005 total of aggregate assets of credit institutions was KZT23.2 bn. (up by 3.7% within the month), liabilities - KZT10.4 bn. (up by 4.6%), shareholders equity - KZT12.8 bn. (up by 3.0%). Credit portfolio of credit institutions as on August 1, 2005 was KZR18.4 bn., having increased in a month by KZT1.7 bn. (10.3%). Stake of standard credits in the structure of credit portfolio of credit institutions was 86.3%, doubtful - 13.6%, bad - 0.1%. As of July1, 2005 stake of standard credits was 85.9%, doubtful - 14.0%, bad - 0.1%. Total assets of mortgage companies as of August 1, 2005 was KZT60.5 bn. (up by 6.7% within the month), liabilities - KZT48.2 bn. (grew by 7.7%), shareholders equity - KZT12.3 bn. (grew by 3.1%). Credit portfolio of mortgage companies as on reporting date was KZR54.4 bn., having increased in a month by KZT4.5 bn. (9.0%). Stake of standard credits in the structure of credit portfolio of mortgage companies was 98.65%, doubtful - 1.31%, bad - 0.04%. As of July 1, 2005 stake of standard credits was 98.64%, doubtful - 1.32%, bad - 0.04%. In August 2005 for non-fulfillment of norms of the acting legislation credit institutions were sent 15 letters - prescriptions. PROTECTION OF INVESTORS CONSUMERS OF FINANCIAL SERVICES In August 2005 the Agency received 86 complaints from individuals and legal entities concerning activity of commercial banks, insurance organizations, accumulative pension funds, securities market's subjects, among which: - 26 appeals were concerned with activity of commercial banks (30% from total number), explanations on 13 of them were given, 13 are being examined; - 17 appeals were concerned with activity of insurance organizations (20%), explanations on 7 of them were given, 10 are being examined; - 39 appeals were concerned with activity of accumulative pension funds (45%), explanations on 35 of them were given, 4 are being examined; - 4 appeals were concerned with activity of securities market's subjects (5%), explanations on 2 of them were given, 2 are being examined. Further examination of 25 appeals given before has been completed (7 - concerned with activity of commercial banks, 12 - activity of insurance organizations, 1 - activity of accumulative pension funds, 5 - activity of securities market's subjects), on which corresponding explanations have been given. 7 appeals have been regulated by means of making insurance payments by insurers to victims in the amount - KZT1,644,454. Documents to bring to administrative account one of insurance companies as per articled 463 part 1-1 of Code of the Republic of Kazakhstan about administrative infringements for untimely payment of insurance are prepared. From total number of received appeals 9 (10%) are orders of Administration of President of the Republic of Kazakhstan (2), Chancellery of Prime Minister of the Republic of Kazakhstan (1), deputy of Majilis of the Parliament of the Republic of Kazakhstan (1), ministries and departments (1), National Bank (4), explanations on 4 of them were given, 5 are being examined. Also 3 inquiries of finical market's subjects regarding norms of Rules to transfer pension accumulations dated May 24, 04 #146 were executed. Along with this representatives of the Agency participated in the meeting, organized by the National Bank of RK with commercial banks, to elaborate coordinated offers to create favorable conditions for consumers, to eliminate obstacles for general introduction and application of payment cards. Letters to CNS RK and department for struggle with economic and corruption criminality concerning illegal activity on the territory of the Republic of Kazakhstan were sent by insurance company Med life. Agency, as elaborator of project of the Law "About compulsory guaranteeing of deposits in commercial banks of the Republic of Kazakhstan" (hereinafter - bill), after its discussion at the round table, organized by Association of financiers of Kazakhstan with commercial banks, submitted this bill for coordination with interested ministries. The purpose of the project is legal securing of rights of most vulnerable investors of financial market - investors - individuals to get guaranteed compensation in case of forced liquidation of the bank - participant of deposits guaranteeing system, this is directly connected with realization of their property rights and its protection. All interested persons may see bill, which is published at the Agency's site www.afn.kz [2005-09-15]