Kazkommertsbank earnings fall 70% in 1Q2009
June 26, 2009
While the news is positive for the Bank because the quarterly net profit of KZT5.0bn (US$36m) is significantly better than the previously-reported virtually no profits based on regulatory data, we do not expect any significant bond or share price impact because the Bank reported a net interest loss.
According to unaudited, consolidated 1Q2009 financial statements of Kazkommertsbank (KKGB KZ)(KKGBp KZ)(KKGB LI), net income declined by 70% YoY to KZT4.1bn (US$29m). The Bank reported a net interest loss of KZT7.5bn (US$54m) after increasing its provisions expense by 288% to KZT58.9bn (US$425m).
On a positive note, the Bank’s net non-interest income increased to KZT22.8bn (US$165m) compared to a small net non-interest loss in 1Q2008. The increase in net non-interest income was due primarily to increases in income from trading operations and other income, which included KZT14.4bn (US$104m) income from repurchase of the Bank’s debt securities. Continued cost-cutting contributed to a 16% reduction in staff expenses, and a 15% decrease in total operating expenses to KZT7.1bn (US$51m). As a result, the cost-to-income ratio dropped to 10%, from an already-low 19% in 1Q2008.
On the balance sheet, assets increased by 16% (down 8% in US$ terms) during the quarter to KZT3.0tr (US$20.0bn), while loans increased by 14% (down 9% in US$ terms) to KZT2.4tr (US$16.1bn). Deposits increased by 33% (up 6% in US$ terms) to KZT1.3tr (US$8.6bn). The gross LTD ratio decreased to 217% from 249% as at YE2008. While the news is positive for the Bank because the quarterly net profit of KZT5.0bn (US$36m) is considerably better than the previously-reported profit of less than US$1k based on regulatory data, we do not expect any significant bond or share price impact because the Bank showed a net interest loss.