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

/Agency of the Republic of Kazakhstan for regulation and supervision of financial market and financial organizations, November 22, 05/ - Following is full volume press-release of FSA dedicated to the situation on Kazakhstan's financial market as of November 1, 2005 (note IRBIS). BANKING SECTOR As of November 1, 2005, 34 commercial banks functioned in Kazakhstan, 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. As of November 1, 2005 total settlement equity capital of the banking sector equaled to KZT486.3 bn., this is by KZT3.9 bn. or 0.8% more than index of last month. Banks' total assets grew within month by 4.4% to KZT3,871.2 bn. Capital adequacy indicators as of the reporting date were k1 - 0.081; k2 - 0.145 (as of October 1, 2005 k1 - 0.086, k2 - 0.150). Loan portfolio of banks (including interbank loans) as of November 1 was KZT2,629.3 bn. with growth with month by 4.6%. As of the reporting date, stake of standard credits in bank's loan portfolio structure as of November 1 was 58.6%, doubtful - 39.5%, bad - 1.9%. As of October 1, 2005 stake of standard credits was 59.1%, doubtful - 38.8%, bad - 2.1%. Total sum of deposits attracted by banks from individuals and legal entities (excluding banks and international financial organizations) was KZT2,300.5, with growth within passed month by 7.8%. Including deposits of legal entities increased by 9.4% and equaled to KZT1,754.2 bn., amount of individuals' deposits - by 2.8% or KZT546.3 bn. Total sum of commercial banks' revenues as of November 1, 2005 was KZT391.7 bn., having increased index of similar period of last year by 54.3%. Amount of expenses increased by 52.3% and equaled to KZT329.5 bn. Within considered month total size of undistributed net income of commercial banks equaled to KZT62.2 bn., this increases index of similar period of last year by 65.4%. For breaking the baking legislation in October 2005 the Agency gave 2 warnings to banks, demanded 2 letters - obligation and gave 3 prescriptions compulsory to fulfill. As of November 1, 2005, 12 banks in Kazakhstan were in forced liquidation process. In justice bodies in the reported period liquidation of AB Alisa and K CJSC was registered. In the next meeting of the Agency's Board decree #382 "About acknowledgement as invalid decree of the Board of the National Bank of the Republic of Kazakhstan dated April 16, 1999 #73 "About approval of list of independent auditing organizations"" was adopted. INSURANCE MARKET As of November 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 12 insurance brokers, 30 actuaries, 36 auditing organizations and 70 auditors, who had licenses for auditing insuring activity execute insurance activity in insurance market. Within 9 months of the current year total assets of insuring organizations grew by 43.3% and as of October 1 KZT63.2 bn. Total settlement equity capital reached KZT31.0 bn., this by 46.4% more the index of as of the beginning of the year. Insurance reserves totaled KZT30.9 bn. Volume of insurance premiums as of October 1, 2005 totaled KZT48.1 bn. and exceeded index of similar period of last year by KZT17.3 bn. or by 56.2%. Including volume of insurance premiums on compulsory insurance totaled KZT9.6 bn. (more by KZT6.3 bn. or 2.9 times), on voluntary property insurance - KZT5.9 bn. (more by KZT2.7 bn. or by 84.4%) and on voluntary property insurance - KZT32.5 bn. (more by KZT8.2 bn. or by 33.7%). Along with this, in comparison with similar index as of October 1, 2004 volume of insurance payments collected on "life insurance" branch grew 2.2 times or to KZT0.96 bn., stake of life insurance in total insurance premiums reached 2.0% against 1.4% as of October 1, 2004. As of as of October 1 amount of insurance premiums given for re-insurance totaled KZT17.1 bn., including 27.1% from total volume of insurance premiums were given to non-residents for re-insurance (as of as of October 1, 2004 stake of premiums given to non-residents for re-insurance was 44.1% or KZT13.6 bn). Volume of insurance payments within nine months of 2005 totaled KZT6.74 bn., this is higher than index of similar period of last year by KZT2.13 bn. (46.3%). Including volume of insurance payments on compulsory insurance totaled KZT2.31 bn. (more by KZT0.28 bn. (13.8%)), on voluntary personal insurance - KZT1.21 bn. (more by KZT0.31 bn. (34.4%)) and on voluntary property insurance - KZT3.23 bn. (more by KZT1.55 bn. (92.3%)). As of October 1 total of 2,121,756 insurance agreements were in effect, of them 58.8% were made on compulsory types of insurance. Total volume of obligations (insurance amount) on acting insurance agreements is KZT11,941.1 bn. In October 2005 the Agency sent to insurance organizations 1 letter- prescription in order to remove violations of the legislation regulating insurance market. At present time 31 insurance (reinsurance) companies participated in the system of insurance payments guaranteeing. As of November 1, 2005 in process of liquidation are 8 insurance organizations. In October 2005 the Agency's Board considered and adopted the following decrees on matters of further improvement of insurance legislation "About approval of Recommendations on coefficients calculation methods, characterizing activity of insurance (reinsurance) organization by class (type) of insurance, or by all insurance portfolio in the whole, and determination of their admissible values" and "About terms to determine rating and minimum rating for reinsurance organizations-nonresidents of the Republic of Kazakhstan and approval of list of rating agencies". ACCUMULATIVE PENSION SYSTEM As of November 1, 2005 a total of 14 accumulative pension funds (APF) functioned in Kazakhstan, they had 76 branches and 75 representatives in the republic's regions. Investment management of pension assets of APF were carried out by 10 organizations, 3 of them - APF, which have licenses for independent management of own pension assets (APF 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 November 1, 2005 was 7,452,697. In October of the current year their number grew by 82,851 accounts or 1.12%. Number of accounts of depositors (recipients) on voluntary pension fees increased in a month by 233 and as of November 1, 2005 - 31,987 with total amount of pension accumulations KZT460.8 m. Number of accounts of depositors on voluntary professional pension fees, increased in October by 28, and as November 1, 2005 to 3,253 with total amount of pension accumulations KZT14.6 m. As of reporting date pension accumulations of depositors (recipients) was KZT610.3 bn., this is more by KZT13.8 bn. or 2.3% relative to index of October 1, 2005. At that, total inflow of pension fees grew in September by KZT12.1 bn. or by 2.6% to KZT483.5 bn. Amount of net investment income from pension assets investing (excluding commission interests), allocated to depositors' individual pension accounts, increased in October of the current year by KZT2.4 bn. (1.7%) and as of November 1, 2005 was KZT144.6 bn. Stake of net investment income in total amount of pension accumulations is 23.7%. Pension payments of accumulative pension funds as of November 1, 2005 were KZT34.2 bn., this is by 2.1% more than index of October 1 of the current year. Pension payments for October totaled KZT0.72 bn. Transfers of pension accumulations to insurance organizations in accordance with pension annuity agreement as of November 1, 2005 totaled KZT7.0 m. Weighted average coefficient of nominal income of accumulative pension funds for the period October 2002 till October 2005 totaled 20.23%, accumulated inflation rate for the period equaled to 23.76%. With a view to further improve normative legal base in October 2005 the Agency's Board adopted decrees #385 and #390 "About additions to decree of the Board of the National Bank of the Republic of Kazakhstan dated April 21, 2003 #127 "About approval of Rules about prudential normatives for accumulative pension funds"". SECURITIES MARKET As of November 1, 2005 there were registered 2,327 joint-stock companies with acting issues on corporate securities market, this is by 19 less in comparison with similar index of October 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 October 2005 there were registered 36 share issues (including those, in specifications of which changes were included and certificates about the state registration were changed), 2 bond issues, with total nominal value KZT3.0 bn., and also 2 issues with total of KZT5.7 bn. registered under bond programs. Also in September 34 share issues were annulled. As of November 1 total of 2,523 acting share issues and 147 existing corporate bond issues with total face value of KZT605.7 bn. were in circulation. In October 2005, 2 mutual funds were registered, in this connection number of mutual funds carrying investment management at securities market increased to 38 (29 - 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 November 1, 2005 176 corporate securities issues of Kazakhstan's issuers were included in KASE's official "A" listing category, 43 - in "B" category. In October 2005 on matters of professional participation in securities market the Agency's Board accepted the following normative legal acts: "About additions to decree of the Board of AFS dated September 25, 2004 #264 "About determination of prudential normative for organizations, fulfilling broker-dealer activity in securities market, approval of Rules to calculate prudential normative for organizations, fulfilling broker-dealer activity in securities market"", "About additions in decree of the Board of AFS dated January 29, 2005 #17 "About determination of prudential normative for organizations, combining types of professional activity in securities market, approval of Rules to calculate prudential normative for organizations, combining types of professional activity in securities market", "About additions in decree of the Board of AFS dated September 25, 2004 #266 "About determination of prudential normative for organizations, fulfilling investment portfolio management, approval of Rules to calculate prudential normative for organizations, fulfilling investment portfolio management"" and "About additions in decree of the Board of AFS dated September 25, 2004 #265 "About determination of prudential normative for organizations, fulfilling activity on securities holders register system, approval of Rules to calculate prudential normative for organizations, fulfilling activity on securities holders register system"". ORGANIZATIONS CONDUCTING SEPARATE TYPES OF BANKING OPERATIONS As of November 1, 2005 a total of 81 pawn-shops, 135 credit institutions and 53 organizations (including 6 mortgage companies), executing separate types of banking services on the basis of acting licenses. As of October 1, 2005 total of aggregate assets of credit institutions was KZT29.6 bn. , this is by 15.9% more than index of September 1 of the current year, volume of total liabilities was KZT13.7 bn. (up by 22.4%), total shareholders equity - KZT15.9 bn. (up by 10.8%), correspondingly. Credit portfolio of credit institutions as of October 1, 2005 was KZT25.4 bn., this is by 14.7% exceeds index of lat month. Stake of standard credits in the structure of credit portfolio of credit institutions was 87.2% from total volume of credits, doubtful - 12.7%, bad - 0.1%. At that, improvement of credit portfolio quality is observed in comparison with corresponding data as of September 1, 2005. Within the reporting month there was increase of main indexes, characterizing activity of mortgage companies. So, within September total assets increased by 3.8% to KZT65.1 bn., total liabilities reached KZT52.6 bn. (grew by 4.3%), shareholders equity increased by 1.7% or to KZT12.7 bn. Credit portfolio of mortgage companies as on reporting date was KZT59.7 bn., this is by KZT2.6 bn. (4.5%) more than index of last month. Stake of standard credits reached 99.04%, at that doubtful credits were 0.89%, and bad - 0.07%. As of September 1, 2005 stake of standard credits was 98.81%, doubtful - 1.15%, bad - 0.04%. In October 2005 for non-execution of norms of acting legislation in address of organizations, fulfilling separate types of banking operations 1 letter- prescription was sent, and also 1 letter-obligation was demanded. PROTECTION OF INTERESTS OF FINANCIAL SERVICES CONSUMERS In October 2005 the Agency received 60 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 34 - are being examined. From total number of appeals 45% of letters were concerning activity of commercial banks, 32% - on matters of activity of insurance organizations, 13% - accumulative pension funds, 10% - activity of securities market's subjects. In number of considered appeals there were also 11 letters of Ministries and departments, 3 - of the National Bank of RK and 2 appeals of the republic's citizens, received from party Asar. Also in passed month on 19 appeals received earlier were explained and regulated. On the basis of considered appeals of citizens in October the Agency prepared documents for attraction of 1 joint stock company to administrative responsibility on the basis of Code of RK about administrative infringements (article 194), and also matters on existing payments to 4 insurers were regulated, in connection with insurance case, total amount of payments on which equaled to KZT809.5 th. Within conducted informational-explanatory activity in periodical editions "Financial vestnik" (#9) and "Insurance Market" (#9) the Agency published 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 International conference "Corporate management and investment climate in Kazakhstan" was held with participation of representatives of the Agency, Economy and budget planning ministry of RK, AFK, Program "Efficient management" of US trade ministry and a number of other organizations. [2005-11-22]