Financial results of JSC Eurasian Bank for the first six months of 2011

Almaty, July 13, 2011 – JSC Eurasian Bank has today announced the financial results for the first half of 2011.

According to the unconsolidated financial statements as at July 2011, the Bank continues improving its key financial indicators.

Main indicators from Profit and Loss Statement for January-June of 2011 compared with the same period of 2010:

• Net interest income increased by 177%;
• Operating income before provisions grew by 83.4%;
• Cost Income Ratio decreased by 22.2%;
• Net interest margin (NIM) widened by 176.5%;
• Net income (profit) amounted to 2.270 billion tenge compared with a loss of 1.266 billion tenge in the first six months of 2010;
• Total production of ProstoCredit for 1H11 surpassed the full year 2010 production;
• Total unique clients have increased 96.8% YtD; and
• The YtD Interest Income received in cash as a percentage of Total Interest Income was 95.4%.

The above information highlights that the Bank’s operating income continues growing.

Net interest income before loan loss provisions increased by 177% compared with July 1, 2010 to amount to 7.4 billion tenge. The rise was due to the expansion of loans to both legal entities and physical persons.

Net interest margin (YtD), which is one of the main indicators of the Bank’s performance, stood at 4.7%, or nearly a 176.5% rise compared with the same period last year.

Net operating income before provisions grew 83.4% to 11.1 billion tenge compared with January-June of 2010. The increase in net operating income was due to a rise in net interest and fee income as well as higher profit from exchange operations combined with a reduction in interest costs.

Cost Income Ratio decreased by 22.2% YoY to 63.5%.  Operating Expenses rose by 43% in the reporting period to stand at 5.8 billion tenge as at July 1, 2011, reflecting increased business and the expenses of ProstoCredit.

Net profit was at 2.27 billion tenge as at July 1, 2011.

In the first half of 2011 the Bank’s assets shrank 4.9% compared with the beginning of the year for the following reasons:

• a decrease in the value of the stock portfolio by 26.5 billion tenge, or 35.9% (including the securities that were available for trading but retained until repayment);
• a decline in the level of deposits placed with RoK National Bank by 16.8 billion tenge, or  94.3%.

It is worth noting that a decrease was the result of the Bank’s policy for optimization of the asset structure and minimization of excess liquidity pressure on the Bank’s profit. At the same time, the Bank continues to reduce its low-profit monetary assets, while maintaining the acceptable level of liquid assets.

Loan portfolio (including accrued interests) reached 255.7 billion tenge in value over the first six months of 2011, or up 28.6% YoY, and 8.7% for the year to date.

Corporate loan portfolio expanded 7.7% to 145.5 billion tenge in the first six months of 2011.

Small and medium-sized enterprises loan portfolio grew 6.6% in the first six months of 2011 to reach 47.7 billion tenge.

In line with its strategy for business balance, the Bank was actively developing its retail lending sector. Thus, the value of the retail loan portfolio came to 53.5 billion tenge, accounting for 22% of the total loan portfolio and a growth rate of 12.3% for the first six months of 2011

The provisions for loan losses accounted for 9.6% of the total loan portfolio, or 10% higher than the value of non-performing loans.

Equity capital, which is the main indicator of the Bank’s financial stability, rose 9.1% over the six months of the current year to reach 28.2 billion tenge as at July 1, 2011. The growth of the capital was due to profit capitalization, which proves that the main shareholders are determined to develop the Bank into a leading financial institution of the republic.

When commenting on the half-year financial results, Board Chairman Michael Eggleton said, “In the reporting period the financial indicators of the Bank demonstrated a sustainable improvement. We can assert that Eurasian Bank has entered the stage of steady post-crisis development.”

JSC Eurasian Bank maintains the required level of liquid funds, has access to additional sources of financing that are offered by its shareholders and state and quasi-state organizations.

As at July 1, 2011 as many as 11,900 legal entities and 347,000 physical persons were the clients of the Bank.  
 
The unconsolidated financial statements of JSC Eurasian Bank can be found on the Bank’s website at www.eubank.kz