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

/Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations, October 19, 05/ - Following is full volume press-release of FSA dedicated to the situation on Kazakhstan's financial market as of October 1, 2005 (note IRBIS). BANKING SECTOR As of October 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. As of the reporting date total settlement equity capital of the banking sector equaled to KZT482.4 bn. having grown during the month by KZT18.1 bn. or by 3.9%. Banks' total assets grew within month by KZT230.6 bn. (6.6%) to KZT3,709.7 bn. Adequacy indicators as of the reporting date were k1 - 0.086; k2 - 0.150 (as of September 1, 2005 k1 - 0.087, k2 - 0.150). Loan portfolio of banks (including interbank loans) rose in a month by KZT108.9 bn. (4.5%) to KZT2,514.0 bn. At that, stake of standard credits in bank's loan portfolio structure at the reporting date was 59.1%, doubtful - 38.8%, bad - 2.1%. As of September 1, 2005 stake of standard credits was 61.0%, doubtful - 36.9%, bad - 2.1%. Total sum of deposits attracted by banks from individuals and legal entities (excluding banks and International financial organizations) increased within passed month by 5.9% or to KZT2,134.9. Including deposits of legal entities - KZT1,603.6 bn. (growth by 7.54%), amount of individuals' deposits was KZT531.3 bn. (growth by 1.4%). Total sum of commercial banks' revenues as of October 1, 2005 increased in comparison with similar period of last year by 50.5% to KZT334.6 bn. Total expenses were KZT281.5 bn. having increased in comparison with similar period of last year by 50.2%. Undistributed net income (uncovered loss) of banks equaled to KZT53.1 bn., this is higher by 52.0% in comparison with similar period of last year. For breaking the baking legislation in September 2005 banks were given 8 warnings, demanded 7 letters - obligation, 1 prescription compulsory to fulfill, 1 written agreement was concluded, fines were imposed to 1 bank. As of October 1, 2005, 13 banks in Kazakhstan were in forced liquidation process. In September 2005 in order to improve the banking legislation the Agency's Board adopted a number of decrees, including "About changes to decree of the Board of the Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations dated March 26, 2005 #116 "About changes in some normative legal acts of the Republic of Kazakhstan on matters of regulation and supervision of financial market and financial organizations", in connection with adoption of Instruction about requirements to presence of risks management system and internal control in commercial banks, and also decree of the Agency's Board "About approval of the Instruction about normative indexes and methods for calculation of prudential normatives for commercial banks" changes and additions are introduced in instruction with a view to increase capitalization of commercial banks, adequate to market and operational risks. INSURANCE MARKET As of October 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. Also 10 insurance brokers, 28 actuaries, 36 auditing organizations and 70 auditors, who had licenses for auditing insuring activity execute insurance activity in insurance market. Within 8 months of the current year total assets of insuring organizations grew by 37% or to KZT60.4 bn. Total settlement equity capital reached KZT30.3 bn., this is higher the index of similar index of the beginning of the year by 25.7%. Insurance reserves totaled KZT29.7 bn. Volume of insurance premiums as of September 1, 2005 totaled KZT42.1 bn. and exceeded index of similar period of last year by KZT15.1 bn. or by 55.9%. Including volume of insurance premiums on compulsory insurance totaled KZT8.4 bn. (more by KZT5.5 bn. or 1.9 times), on voluntary property insurance - KZT5.2 bn. (more by KZT2.5 bn. or by 92.6%) and on voluntary property insurance - KZT28.5 bn. (more by KZT7.1 bn. or by 33.2%). Along with this, in comparison with similar index as of September 1, 2004 volume of insurance payments collected on "life insurance" branch grew 2 times or to KZT0.8 bn., stake of life insurance in total insurance premiums reached 2.0% against 1.3% correspondingly. As of September 1 amount of insurance premiums given for re-insurance totaled KZT14.6 bn. Including 27.8% from total volume of insurance premiums were given to non-residents for re-insurance (as of September 1, 2004 - 42.3%). Volume of insurance payments within eight months of 2005 totaled KZT5.92 bn., this is higher than index of similar period of last year by KZT1.79 bn. (43.3%). Including volume of insurance payments on compulsory insurance totaled KZT2.0 bn. (more by KZT0.24 bn. (13.6%)), on voluntary personal insurance - KZT0.99 bn. (more by KZT0.19 bn. (23.75%)) and on voluntary property insurance - KZT2.91 bn. (more by KZT1.34 bn. (85.3%)). As of September 1 total of 1,940.3 th. insurance agreements were in effect, of them 58% were made on compulsory types of insurance. Total volume of obligations (insurance amount) on acting insurance agreements is KZT8,888.6 bn. In September 2005 the Agency sent to insurance organizations 2 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. As of October 1, 2005 in process of liquidation are 8 insurance organizations. At that, in September in justice bodies of South-Kazakhstan oblast documents about liquidation of IC Saktan LLP are registered. In September 2005 the Agency's Board considered and adopted the following decrees on matters of further improvement of insurance legislation "About changes and additions to decree of the Board of the National Bank of the Republic of Kazakhstan dated June 14, 2001 #224 "About approval of Instruction for documentation, documentation recording and documents keeping in insurance (reinsurance) organizations"" and "About changes and additions in decree of the Board of the National Bank of the Republic of Kazakhstan dated February 15, 2001 #33 "About approval of Instruction to form insurance policy"". ACCUMULATIVE PENSION SYSTEM As of October 1, 2005 a total of 14 accumulative pension funds functioned in Kazakhstan, they had 76 branches and 75 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: 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 of October 1, 2005 was 7,369,846. In September of the current year number of depositors paying compulsory pension fees grew by 70,453 (0.97%). Number of accounts of depositors (recipients) on voluntary pension fees increased in September of the current year by 174 and as of October 1, 2005 was 31,754 with total amount of pension accumulations amounting to KZT456.2 m. Number of accounts of depositors on voluntary professional pension fees, having increased in September by 23, equaled by October 1, 2005 to 3,225 with total amount of pension accumulations amounting to KZT13.6 m. As of reporting date pension accumulations of depositors (recipients) was KZT596.5 bn., this is more by KZT12.7 bn. or 2.2% relative to index of September 1, 2005. At that, total inflow of pension fees grew in September by KZT11.6 bn. or by 2.5% to KZT471.4 bn. Amount of net investment income from pension assets investing (excluding commission interests), allocated to depositors' individual pension accounts, increased in September of the current year by KZT1.6 bn. (1.1%) and as of October 1, 2005 were KZT142.2 bn. Stake of net investment income in total amount of pension accumulations is 23.84%. Pension payments of accumulative pension funds as of October 1, 2005 were KZT33.5 bn., this is by 2.4% more than index of September 1 of the current year. Pension payments for September of the current year totaled KZT0.75 bn. Transfers of pension accumulations to insurance organizations in accordance with pension annuity agreement as of October 1, 2005 totaled KZT5.3 m., also in September of this year KZT1.9 m. were transferred to insurance organizations. As of October 1, 2005 weighted average coefficient of nominal income of accumulative pension funds for the period September 2002 till September 2005 totaled 20.73%, accumulated inflation rate for the period equaled to 23.06%. SECURITIES MARKET As of October 1, 2005 there were registered 2,346 joint-stock companies with acting issues on corporate securities market, this is by 26 less in comparison with similar index of September 1, 2005. Also 62 broker-dealers, 18 registrars, 11 banks-custodians, 10 pension assets investment management organizations (PAIMO) and 25 organizations controlling securities portfolios acted on securities market. In September 2005 there were registered 42 share issues (including those, in specifications of which changes were included and certificates about the state registration were changed), 4 bond issues, with total nominal value KZT28.25 bn., 1 bond program and 2 bond issues with total volume of KZT8 bn. registered under bond programs. Also in September 48 share issues were annulled. As of October 1 total of 2,552 acting share issues and 146 existing corporate bond issues with total face value of KZT597 bn. were in circulation. In September 2005 seven mutual funds were registered, in this connection as of October 1 number of mutual funds carrying investment management at securities market increased to 36 (27 - closed, 5 - open and 4 interval). Also 3 of joint stock investment funds were functioning in the market. Volume of assets of mutual funds increased by KZT605.8 m. within 2 quarters and as of October 1, 2005 was KZT11,202.4 m., assets of joint stock investment funds as on reporting date increased by KZT885.4 m. to KZT15,576.8 m. As on October 1, 2005 170 corporate securities issues of Kazakhstan's issuers were included in KASE's official "A" listing category, 44 - in "B" category. In September 2005 on matters of professional participation in securities market the Agency's Board accepted the following normative legal acts: "About changes and additions to 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 #63 "About requirements to issuers and their securities, being admitted (admitted) in circulation in stock exchange, and also to separate categories of stock exchange's list"" and "About requirements to foreign legal entities for membership in stock exchange". ORGANIZATIONS CONDUCTING SEPARATE TYPES OF BANKING OPERATIONS As of October 1, 2005 a total of 78 pawn-shops, 133 credit institutions and 51 organizations (including 4 mortgage companies), executing separate types of banking services on the basis of acting licenses. As of September 1, 2005 total of aggregate assets of credit institutions was KZT25.6 bn. , this is by 10.3% more than index of August 1 of the current year, volume of total liabilities was KZT11.2 bn. (up by 7.4%), total shareholders equity - KZT14.4 bn. (up by 12.7%), correspondingly. Credit portfolio of credit institutions as on September 1, 2005 increased by 21.1% to KZT22.2 bn. Stake of standard credits in the structure of credit portfolio of credit institutions was 86.5%, doubtful - 13.4%, bad - 0.1%. At that, improvement of credit portfolio quality is observed in comparison with corresponding data as of August 1, 2005. Within the reporting month there was increase of main indexes, characterizing activity of mortgage companies. So, within August total assets increased by 3.9% to KZT62.9 bn., total liabilities reached KZT50.4 bn. (grew by 4.6%), shareholders equity increased by 1.3% or to KZT12.5 bn. Credit portfolio of mortgage companies as on reporting date was KZT57.0 bn., this is more than index of last month by KZT2.7 bn. (5.0%). There was improvement of credit portfolio quality of mortgage companies. Stake of standard credits reached 98.81%, at that doubtful credits were 1.15%, and bad - 0.04%. As of August 1, 2005 stake of standard credits was 98.65%, doubtful - 1.31%, bad - 0.04%. In September 2005 the Agency's Board adopted decree "About changes in decree of the Board of the National Bank of the Republic of Kazakhstan dated December 6, 2003 #445 "About approval of Rules for creation, licensing, regulation, stoppage of organizations' activity, fulfilling separate types of banking operations"" PROTECTION OF INVESTORS CONSUMERS OF FINANCIAL SERVICES In September 2005 the Agency received 44 complaints from individuals and legal entities concerning activity of different financial organizations and subjects of securities market, on 26 of them corresponding explanations are given, and 18 - are being examined. From total number of appeals 39% of letters were concerning activity of insurance organizations, 32% - accumulative pension funds, 25% - commercial banks, 4% - activity of securities market's subjects. In number of considered appeals there were also 3 letters of Ministries and departments and 2 appeals of the National Bank of RK. Also in passed month explanations on 28 appeals received earlier were given and regulated, including 3 letters of the National Bank of RK and appeal of deputy of Majilis of Parliament of RK. On the basis of considered appeals of citizens in September the Agency sent one letter-warning to commercial bank, 1 insurance company was called to administrative responsibility on the basis of Code of RK about administrative infringements (article 174, part 2), in connection with violation of liabilities on compulsory civil responsibility agreement, and also matters on existing payments to 11 insurers were regulated, in connection with insurance case, total amount of payments on which equaled to KZT2.8 m. Within conducted informational-explanatory activity the Agency prepared and sent for publication in republican printing editions article "About compulsory insurance in plant growing". Along with this, the Agency continues work on coordination of bill "About compulsory guaranteeing of deposits in commercial banks of the Republic of Kazakhstan" (hereinafter - bill) with interested ministries and departments. At present time the bill is considered in the Government of RK, and its version is available for wide circle of users at the Agency's site www.afn.kz With a view to protect interests of depositors of accumulative pension funds changes and additions to decree of the Board of the Agency of RK for regulation and supervision of financial market and financial organizations dated May 24, 04 #146 "About approval of rules to transfer pension accumulations from accumulative pension funds" are elaborated, and question to create net of transfer-agents in pension market on the base of RSKE State center on pension payments and Kazpost JSC is considered, in that connection corresponding letter was sent to the Government of RK. [2005-10-19]