Kazakh Nurbank sees 2010 loss as provisions soar

Jan 12. Reuters. ALMATY

By Olga Orininskaya

* Provisions double to 40 pct of portfolio – CEO
* Bank expects return to profit in 2011

Kazakh Nurbank sees 2010 loss as provisions soarNurbank NRBN.KZ, Kazakhstan’s ninth-largest lender by assets, expects a net loss for 2010 after revealing provisions doubled last year to 40 percent of its total loan portfolio, its chief executive said on Wednesday.

Nurbank channelled most of the $650 million raised through an additional issue of ordinary shares at the end of 2010 into its provisions, CEO Marat Zairov said. He said he expected the bank to return to profit in 2011.

“After the provisions created in 2010, we expect that there will be losses,” Zairov told a news conference. “This year, of course, we do not require such provisions. We intend to complete 2011 with a profit.”

He declined to forecast the level of loss expected in 2010 or profit in 2011.

Kazakhstan’s banking sector was among the first and hardest hit by the global financial crisis. Several Kazakh banks last year managed to restructure billions of dollars in debt after defaulting.

Nurbank is majority owned by Sofia Sarsenova, who acquired a 56 percent stake in May 2010 from Dariga Nazarbayeva, the eldest daughter of Kazakh President Nursultan Nazarbayev, and her son.

As of Nov. 25, Sarsenova owned 70.5 percent of the bank’s shares and minority shareholders owned more than 33 percent. The bank has not disclosed its shareholder structure since the additional share issue in December.

The expected net loss in 2010 is in sharp contrast to the bank’s forecast in May, prior to its acquisition by Sarsenova, that it would double net profit from 762 million tenge ($5.2 million) earned in 2009.

Zairov said the bank would return to profit in 2011 due to the partial return of provisions and income from operations. He added that, based on the most optimistic scenario, the bank could this year return about 15 percent of total provisions.

Nurbank planned to increase lending in 2011 to 81 billion tenge from 35 billion in the previous year, Zairov said. He said the bank had enough resources to operate on the credit market without external borrowing.