Aggregate equity capital of banks since the beginning of the year increased by 166.9 billion tenge (by 5.9%) to 3.0 trillion. tenge. Year on year growth of equity capital (from 01.11.2016 to 01.11.2017) was 194.0 billion tenge (6.9%). In July 2017 banks’ equity capital declined as a result of losses incurred. In October the banking sector managed to restore positive profit (10.5 billion tenge) after three consecutive months of negative profitability, which was mainly affected by losses of Kazkommertsbank JSC.
The diagram. Dynamics of financial indicators of second-tier banks
Source: National Bank of RK http://www.nationalbank.kz
Since the beginning of the year the following banks have demonstrated the greatest growth of their equity capital: Halyk Bank Kazakhstan JSC, Eurasian Bank JSC, Tsesnabank JSC, KASPIBANK JSC and Housing Construction Savings Bank of Kazakhstan JSC.
The increase in the equity capital of Halyk Bank Kazakhstan JSC from the beginning of the year is 136.3 billion tenge (22.1%), while the year on year increase is 158.7 billion tenge (26.7%). The bank is the leader in the market by the volume of its own assets. The share of Halyk Bank Kazakhstan JSC in aggregated equity capital of banking sector is 25%. The growth of the equity capital of Halyk Bank Kazakhstan JSC was due to the increase in undistributed net profit.
Equity capital of Eurasian Bank JSC increased by 70.1 billion tenge (by 74.4%) since January 1, 2017, and year on year growth was 75.6 billion tenge (by 85.4%). The share of Eurasian Bank JSC equals to 5.5% of the equity capital of second-tier banks in Kazakhstan. This growth was due to shareholders investment in the amount of 23.2 billion tenge within the framework of the Program for Enhancing the Financial Strength of the Banking Sector, as well as the bank’s profit for January-October 2017 of 64 billion tenge.
Tsesnabank’s equity capital also recorded an increase from the beginning of the year by 48.2 billion tenge or 29.3%, an increase from 01.11.2016 equaled 49.5 billion tenge (by 30.3%). The share of Tsesnabank JSC in aggregated equity capital of the banking sector is 7.1%. The profit of Tsesnabank and Eurasian Bank increased due to state support.
The ratio of equity to assets increased from 11.1% as of 01.11.2016 to 12.4% as of 01.11.2017. We expect further growth of the total equity capital of Kazakhstan banks as the requirements of the agreement between the National Bank of Kazakhstan and the banks that received financing within the framework of the STB recovery program are fulfilled.
Trends in the banking sector of Kazakhstan:
– The National Bank is carrying out a program to improve the financial stability of the banking sector, the first participants were 4 second-tier banks that submitted action plans to improve financial stability, improve asset quality and reduce the level of non-performing loans. The distribution of funds between banks is as follows: Tsesnabank JSC – KZT100 bln., Bank CenterCredit JSC – KZT 60 bln., ATF Bank JSC – KZT 100 bln. and Eurasian Bank JSC – KZT 150 bln.- Consolidation of the two largest banks takes place by joining Kazkommertsbank JSC to Halyk Bank Kazakhstan JSC;- Banks with lower assets positions are looking for ways to attract capital in international markets. For example, Bank of Astana JSC after an IPO on the Kazakhstan stock market in June 2017 held an SPO on the Moscow Stock Exchange, thereby well-established in the Russian market for the subsequent raising of financial assets by placing debt securities.
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