Shareholders' equity decreased over the period from 413.746 to 353.466 million KZTthat is decreased for 60, 294 million KZT.

 

Note - Compiled by the author according to the data of website www.afn.kz

 

Figure 5.Changes in Total equity 2010-2012 (mln. KZT)

 

Return on equity

Shows the return on shareholders' investment, in terms of accounting profits.

The formula for calculating the return on equity:

ROE = Net Income / Equity, (4)

 

Table 2

Return on Equity

Net Income	20 789	23 520	20 992
Book value of equity	413 746	436 632	353 466
Continue Table 2
ROE, %	5,18%	5,53%	5,31%
Note - source website www.kase.kz

 

At calculation of ROE, we used data on net income and book value of equity excluding preferred shares.

In fact, the main indicator for strategic investors help determine the efficiency of capital invested by the owner of the enterprise. Return on equity shows how much currency net profits earned each unit invested owners of the company. Return on equity shows the amount of net profit that was generated net worth companies, characterizes the degree of attractiveness of the object for investment of the shareholders. The higher the coefficient of ROE, the higher the profit attributable to the share, and the larger the potential dividends.

 

Management of the Bank’s own Capital

In accordance with the established quantitative targets for capital adequacy The Bank is required to comply with the requirements to maintain minimum amounts and ratios of capital adequacy and Tier I capital to assets weighted by risk.

Capital adequacy requirements set by the FMSA and controlled using the principles, methods and factors identified by the Basel Committee on Banking Supervision.

 

Table 3

Execution of prudential and other standards of JSC Kazkommertsbank

 

Requirements of CFR NB RK andNB RK	Standardvalue	01.01.2012	01.01.2011	01.01.2010
Minimum size of authorized capital (1), billion KZT	5billionKZT (2)	204.1	204.1	204.1
K1-1 Tier 1 capital to total assets	Not less than 0.05 (until 01.07.09 - K1)	0.125	0.123	0.128
K1-2 tier I capital to assets and contingent and potential claims and liabilities, risk-weighted	Not less than 0.05 (introduced since 01.07.09)	0.121	0.111	0.110

 

 

The continuation of Table 3.

K2 equity-to-assets and contingent consideration and possible requirements andliabilities, risk-weighted	Notlessthan 0.10	0.160	0.150	0.149
K4 –currentratio	Notlessthan 0.3	0.770	0.675	0.588
K4-1 –quickratio (3)	Notlessthan 1	15.290	10.548	3.580
K4-2 –quickratio (4)	Notlessthan 0.9	4.470	4.145	1.172
K4-3 –quickratio (5)	Notlessthan 0.8	2.086	2.244	1.182
The quick currency liquidity ratio K4-4 (6)	Not less than 1	7.141	7.415	3.076
Coefficient of quick liquidity ratio K4-5 (7)	Not less than 0.9	2.737	2.980	1.120
Coefficient of quick currency liquidity ratio K4-6 (8)	Not less than 0.8	1.320	1.689	1.127
Note - source website www.kase.kz

 

(1) In accordance with the legislation in force contributions to the statutory fund may only be made in monetary form. Borrowed funds cannot be used as a down payment.

(2) For the newly created banks.

(3) Quick ratio K4-1 effective from 01.07.08 is calculated as the ratio of monthly average liquid assets of the average size of term liabilities with a remaining term to maturity of up to seven days or less.

(4) Quick ratio K4-2 effective from 01.07.08 is calculated as the ratio of monthly average liquid assets with maturity up to odnogo100 months, including highly liquid assets, the size of the monthly term obligations with a remaining maturity of up to one month, inclusive.

(5) The quick currency liquidity ratio K4-4 effective from 01.07.08 is calculated as the ratio of monthly average liquid assets in foreign currency to the average size of the fixed-term liabilities in the same foreign currency, with a remaining term to maturity of up to seven days or less.

(6) The quick currency liquidity ratio K4-5 effective from 01.07.08 is calculated as the ratio of monthly average liquid assets in foreign currency with a remaining term to maturity of up to one month, including highly liquid assets, the size of the monthly term liabilities in the same foreign currency with a remaining term to maturity of up to one month, inclusive.

(7) According to the definition of the FMSA, "equity" means the sum of Tier 1 and Tier 2 capital level (in an amount not exceeding the equity tier 1) capital and the third level (in an amount not to exceed 250 % of Tier I capital, intended to cover market risk) minus the bank's investments in equity of other companies. Tier 1 capital level - the amount of share capital plus share premium plus the reserves established at the expense of profits, plus perpetual financial instruments (at a rate not exceeding 15% of the equity tier 1) less intangible assets. Tier 2 capital - operating income plus revaluation of fixed assets and securities, plus general provisions (in an amount not to exceed 1.25% of balance sheet items, risk-weighted), plus subordinated debt (not more than 50% of Tier 1 capital) plus perpetual financial instruments (not included in Tier 1 capital).

 

Concentration ratio of equity

Concentration ratio shows the proportion of equity assets of the organization, which are covered by equity (provided their own sources of formation). The remaining share of the assets covered by borrowings.

Investors and banks issuing loans, pay attention to the importance of this factor. The higher the ratio, the more likely the organization can pay off the debts from its own funds. The higher the score, the more independent company.

Regulatory restrictions> 0.5.

The concentration factor on equity,%

The average annual equity / Total assets (1) /8/ Appendix 1

The general formula for calculating the coefficient of:

 

Concentration ratio of equity= Total equity/Total assets (2)

 

CRE2010=413 746/2 688 108=0,15(2)

CRE2011=436 632/2 565 689=0,17

CRE2012= 353 466/2 598 337 =0,14

 

were,

CRE- concentration ratio of equity

 

Analyzing the results of the calculations of this ratio, we can conclude that the assets are covered by their own sources of formation. In 2010, the figure was 0.15 depending, in 2011 - 0.17, in 2012 - 0.14, that is, above the regulatory limits, which indicates a good, independent financial condition of the bank.

 

Bank capital adequacy

The capital adequacy of commercial bank - the bank rate, expressed as the ratio of shareholders' equity to total volume of assets weighted for risk.

This ratio should not be less than 10%, follows from the calculations - the coefficient of compliance.

 

BCA= Total equity/Total assets * 100% (3)

 

BCA2010= 413 746/2 688 108*100=15% (3)

BCA2011=436 632/2 565 689*100=17%

BCA2012=353 466/2 598 337 *100=14%

 

where,

BCA- bank capital adequacy

Table 4

Capital adequacy

Capital adequacy
Equity/Total Assets	0,17	0,11	0,11
Liquidity
Current Ratio (k4)	0,64	0,68	0,59
Cash Ratio(k4-1)	8,32	10,54	3,58
Quick Ratio (k4-2)	2,892	4,15	1,17
Capital adequacy (k1-1)	0,13	0,12	0,13
Capital adequacy (k2)	0,16	0,15	0,15
Note - source websitewww.kase.kz

 

 

According to the FSA as at 01.07.2012. Bank with a margin carries out prudential standards on capital adequacy K1-1 and K2, as well as the current liquidity K4.

 

Note - Compiled by the author according to the website www.afn.kz

 

Figure6. Capital adequacy ratio (2010-2012)

 

In calculating the capital adequacy ratio as at 31 December 2012, 2011 and 2010the bank included in the calculation of capital obtained a subordinated loan in the amount not exceeding 50% of Tier I capital. In the event of bankruptcy or liquidation of the Bank, repayment of this debt is the Bank's liabilities to all other creditors. For the years ended December 31, 2012, 2011 and 2010the bank fully complied with all established requirements for the capital.