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

Analyzing the dynamics of changes in Return of Equity of JSC "Kazkommertsbank" we see a decrease in the rate of Return of Equity from 5.53% in 2011 to 5.18% in 2012 which means the decrease in efficiency in the use of equity. Return on equity decreases with the decrease in net profit.

Analyzing the results of the calculations of the Concentration ratio of equity, 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.

In calculating the capital adequacy ratio as at 31 December 2012, 2011 and 2010. The 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 2010. The Bank fully complied with all established requirements for the capital.

There is a tendency to the increase in the volume of deposits.

The share of retail deposits exceeds the share of deposits of legal entities in Kazkommertsbank, but the volume of retail deposits goes up rapidly. The volume of retail deposits starts to catch up with the volume of deposits of legal entities.

In comparison with other banks, the growth of retail deposits and deposits of legal entities is not high. This is explained by the fact that Kazkommertsbank reduced interest rates on its deposits.

The share of time deposits exceeds the share of demand deposits. There is a tendency to an increase in volume of time deposits and opposite tendency to decrease in volume of demand deposits.

Customers prefer to keep money in tenge.

Kazkommertsbank took out most of loans under repurchase agreements (65%).

In 2012 the volume of non-deposit resources was 109,974 mln, 2011 - 91,877 mln, 2010-147,138 mln. In comparison with 2011, we can see the tendency to the increase in volume of non-deposit resources, but we want to notice that the volume of non-deposit resources in 2010 was higher than in 2012.

As at 31 December 2012, included in loans and advances from banks and other financial institutions are loans under repurchase agreements of KZT 71,486 million (2011: KZT 27,937 million, 2010: KZT 26 million).

According to analysis in asset-liability management, we can see that over the last 3 years Bank's assets are reduced. In comparison with 2010, assets decreased by 243 billion tenge. Liabilities of the bank also declined. Decreases associated with the attempt to bring the reserves under IFRS in accordance with the requirements of regulatory standards. As a result, the rate of the allowance for losses on loans and total loans increased from 25.1 to 32.5 percent.

This increase in reserves should be treated as a single measure. It was created because of the high uncertainty that has arisen due to several factors, including the adoption of Basel III, the transition of regulatory requirements for provisions from regulatory to IFRS, and the introduction of dynamic provisioning.

In the sense of liquidity it almost meets standards in general. Bank liquidity is broken in the short-term period, it means Bank will not be able to cover its current liabilities unless the depositors would lose their confidence in the bank at one time.

It follows that there is liquidity risk, but not too obvious, such as it is part of the banking policy and management of the bank does not consider that all depositors want to withdraw their deposits at the same time. In general, the bank's liquidity is maintained relatively close to the standard values.

The implementation of Basel III has strengths and weaknesses. Advantage of Basel III is the creation of additional capital. Also Basel directed towards the reduction of operational risk and liquidity risk. Weaknesses are that the banks will have to not only reduce the current minimum lending period exceeding one year, but also encourage customers to repay previously issued the medium and long term loans for balancing their assets and liabilities as soon as possible. The second disadvantage is that it reduces competition and leads to the increase in number of the various micro-credit organizations.

The problem of lack of long-term funds by Kazakhstani banks can be solved by the fact that the American version of the certificate of deposit is issued for a longer period of time (usually 3 months to 5 years), while the secondary market of this tool really works. So, for early return on investment certificate holder can simply sell it instead of withdrawing money from the bank. This, in turn, is a solution to the problem of liquidity. Instead of mass panic withdrawals in volatile periods for the economy people can sell their certificates. The main thing is that the likelihood is high that before the repayment the money will remain in the bank, unless, of course, the possibility of an early withdrawal is not spelled out in the contract. In any case, the customer always has the right to choose, and still have the opportunity to return money quickly and relatively painless in terms of loss of a part of revenue. The presence of such a possibility could have a positive impact on the attitude of the banking system as a whole. An increase in supply of certificates of deposit in the secondary market, of course, will have its decreasing effect on the price, but it's still better than to solve the problem in the courts. However, the interest paid on certificates of deposit is higher than on conventional deposits. As a result, the both banks and depositors are happy.

As a result, banks receive long-term liabilities at a predetermined price, the population has income higher than for time deposits, return on investment and more money does not harm the banks and significantly less likely to lead to the settlement of the issue through the courts.

 

LISTOFUSEDLITERATURE

[1] Полфреман Д., Форд Р. Основы банковского дела. - М., 1996 г;

[2] Банковский портфель - 1 (Книга банкира, Книга клиента, Книга инвестора) / Отв. Ред. Коробов Ю. И., Рубин Ю. Б. - М., «Сомнитек», 1994;

[3] Закон Республики Казахстан от 31 августа 1995 г. " О банках и банковской деятельности в Республике Казахстан";

[4] Батракова Л.Г. Экономический анализ деятельности коммерческого банка: Учебник для вузов. М.: Издательство Корпорация Логос, 2002 год. - 344с;

[5] Батракова Л.Г. Экономический анализ деятельности коммерческого банка: Учебник для вузов. М.: Издательство Корпорация Логос, 2002 год. - 362с;

[6] Сейткасимов Г.С. Деньги, кредит, банки: Учебник. - Алматы: экономика, 1999 год.-432с;

[7] Сейткасимов Г.С. Деньги, кредит, банки: Учебник. - Алматы: экономика, 1999 год.-441с;

[8] Regulation of the Republic of Kazakhstan on Regulation and Supervision of Financial Market and Financial Organizations on December 24, 2012 № 383

[ 9] ^”Isvestiya”, 08.12.95, “Diengy”, “Commersant-Daily”

[10]Pankratz, Alan, Forecasting with Dynamics Regression Models: Concepts and Cases, New York: John Willey & Sons, Inc., 1991.

[11] BertaevaK.Zh. Foreign exchange marketandforeign exchange transactions. Almaty, Economics, 2000, 18 p.

[12] Maidyrova D.N. Foreign exchange operations of bank..Almaty: ASU them. Abay, 2002, page 51.

[13] Rules of conductingexchange operationsin the Republic ofKazakhstan

[14] BertayevK.Zh. Foreign exchange marketandforeign exchange operations: the manual. - Almaty:Economics, 2011, page 62.

[15] Organizations.FinancialStructure:An Investigation of Sectoral Balance Sheets in the G-7(Social Studies) By: E. Philip Davis, Joseph P. Byrne, Joseph P., PH.D. Byrne

[16] The consolidated financialstatements ofJSC "Kazkommertsbank"for the years2011, 2012 and 2013.

[17] MishkinF.S. Theeconomicsofmoney, bankingandfinancialmarkets(p.201-213)
[18] Ларионова "Управлениеактивамиипассивамивкоммерческомбанке" (p.39-58, p199-214.)

[19] Lectures from the site http://gendocs.ru

[20] Белоглазова, Г. Н. Банковское дело: организация деятельности коммерческого банка, 2010. - (p. 116)

[21] www.kase.kz

[22] www.afn.kz

[23] www.kapital.kz;

[24] www.nationalbank.kz

[25] www.kazpravda.kz archive - 29.01.2012

[26] www.cesec.kz

[27] www.fingazeta.ru

[28] www.kkb.kz

 

Appendix 1

Consolidated statements of financial position as of December 31, 2012, 2011, 2010

	(mln. tenge)	(mln. tenge)	(mln. tenge)	(mln. tenge)
Assets
Money and accounts in national (central) banks	106,497	105,067	61.216	90,533
Precious metals	3,823	3,280	1,345	1,209
The financial assets estimated at fair value through profit or a loss	118,822	188,313	223,231	114,203
Loans and the means provided to banks and other financial institutions	146,703	53,968	146,331	148,375
The loans provided to clients	1,917,692	2,079,661	2,174,760	2,160,767
Investments available for sale	15,682	15,419	16,822	16,696
The investments withheld before repayment	6,937	4,026	1,996
Business reputation	2,405	2,405	2,405	2,405
Fixed assets and intangible assets	32,520	33,028	31,857	33,971
Other assets	89,511	80,522	28,145	18,771
Total assets	2,444,812	2,565,689	2,688,108	2,587,873
Liabilities
Loans and means to banks and other financial institutions	110,477	92,215	147,139	209,122
Means of clients	1,553,576	1,463,077	1,506,800	1,276,464
The financial liabilities estimated at fair value through profit or a loss	8,877	37,771	36,047	35,991
The issued debt securities	297,247	324,087	375,199	463,656
The other raised funds	18,631	26,359	23,943	31,172
Reserves	15,549	10,724	10,190	11,945
Liabilities for a deferred income tax	-	29,131	30,035	24,519
Dividends to payment
Other liabilities	10,296	7,647	7,868	8,990
The subordinated loan	122,150	138,040	137,137	136,411
Total liabilities	2,136,843	2,129,057	2,274,362	2,198,285
Capital
Equity attributable to equity holders of the parent:
authorized capital	9,008	9,023	9,031	9,031
share premium	194,721	194,924	195,024	195,006
Revaluation reserve	5,808	5,488	5,508	4,935
other provisions	97,117	226,085	203,109	180,839
Total equity attributable to shareholders of the Parent Bank	306,654	435,520	412,672	389,811
Non-controlling interests	1,315	1,112	1,074	-223
Total equity	307,969	436,632	413,746	389,588
Total liabilities and equity	2,444,812	2,565,689	2,688,108	2,587,873

 

 

Appendix 2

 

Depository organizations deposits

 

	12.11	12.12	01.13	02.13
Deposits - total	8 386 537	8 994 465	9 073 532	9 126 719
ofwhich:
In KZT:	5 756 881	6 311 455	6 277 632	6 356 694
NonbankingLegalEntities	4 169 725	4 252 024	4 195 962	4 244 644
Individuals	1 587 156	2 059 431	2 081 670	2 112 050
In FC:	2 629 656	2 683 010	2 795 900	2 770 024
NonbankingLegalEntities	1 492 629	1 370 681	1 475 124	1 410 793
Individuals	1 137 028	1 312 329	1 320 776	1 359 231
From total sum of Deposits:
NonbankingLegalEntities	5 662 354	5 622 705	5 671 086	5 655 438
Individuals	2 724 184	3 371 760	3 402 446	3 471 281
TransferableDepositsin KZT:	2 479 298	2 352 376	2 297 249	2 349 890
NonbankingLegalEntities	2 182 491	1 981 399	1 973 569	2 014 145
Individuals	296 807	370 977	323 680	335 744
OtherDepositsin KZT:	3 277 583	3 959 079	3 980 383	4 006 805
NonbankingLegalEntities	1 987 234	2 270 625	2 222 392	2 230 499
Individuals	1 290 349	1 688 454	1 757 990	1 776 306
TransferableDepositsin FC:	844 923	707 174	865 117	858 756
NonbankingLegalEntities	803 069	668 148	822 979	817 713
Individuals	41 854	39 026	42 137	41 043
OtherDepositsin FC:	1 784 734	1 975 837	1 930 784	1 911 268
NonbankingLegalEntities	689 560	702 533	652 145	593 080
Individuals	1 095 174	1 273 303	1 278 639	1 318 188

Source www.nationalbank.kz

 

Appendix 3

 

Deposits of individuals in the banks of Kazakhstan

 

	Individuals Deposits, end of period, mln.KZT
	Demand deposits	Conditional deposits	Time deposits
	Total	natoionalcurrency	foreigncurrency	natoionalcurrency	foreigncurrency	natoionalcurrency	foreigncurrency
12.11	2 758 601	320 713	58 954	1 607		1 275 657	1 100 826
01.12	2 764 275	284 977	60 281	5 487	4 869	1 291 230	1 117 431
02.12	2 818 499	295 910	55 881	5 654	4 874	1 325 869	1 130 311
03.12	2 870 546	307 191	55 706	5 962	4 981	1 360 791	1 135 915
04.12	2 973 868	327 554	91 540	6 020	5 031	1 405 692	1 138 032
05.12	2 986 643	324 051	57 035	6 010	5 038	1 441 498	1 153 012
06.12	3 044 809	352 492	59 793	5 970	5 741	1 415 013	1 205 800
07.12	3 089 977	343 641	61 465	6 735	5 885	1 435 202	1 237 050
08.12	3 118 079	338 336	61 787	7 006	5 864	1 458 842	1 246 244
09.12	3 167 013	342 950	61 404	8 279	6 015	1 496 529	1 251 837
10.12	3 189 359	332 757	59 520	9 013	6 048	1 526 700	1 255 321
11.12	3 245 231	341 507	59 267	9 437	6 028	1 571 956	1 257 036
12.12	3 409 478	398 225	59 207	11 542	6 017	1 662 744	1 271 744
01.13	3 438 507	349 252	61 664	11 643	6 650	1 732 676	1 276 622
02.13	3 508 092	361 410	59 533	12 866	6 629	1 750 616	1 317 039

Source www.nationalbank.kz

 

Appendix 4

 

Interest rates of banks on attracted deposits (by maturity and types of currency) % for the month

 

	12.11	12.12	01.13	02.13
	KZT	СКВ	KZT	СКВ	KZT	СКВ	KZT	СКВ
Deposits of non-banking legal entities	2,6	1,4	3,5	1,9	3,0	2,4	2,4	1,9
including:
Demanddeposits	1,3	1,5	2,0	0,1	3,2	0,0	1,5	0,2
conditional	4,8	1,6	4,0	2,0	1,0	0,7	2,6	1,5
Timedeposits, total	2,7	1,4	3,6	1,9	3,0	2,4	2,5	1,9
ofwhichwithmaturity:
upto 1 month	1,7	0,3	2,6	0,6	1,5	2,1	1,1	3,5
from 1 to 3 month	1,7	0,9	3,1	2,0	2,4	3,5	2,3	0,9
from 3 monthto 1 year	2,5	2,6	3,9	2,7	3,8	1,6	3,8	0,6
from 1 to 3 years	-	-	-	-	-	-	-	-
from 1 to 5 years	5,3	3,3	6,1	1,4	5,6	3,6	5,6	4,3
over 3 years	-	-	-	-	-	-	-	-
over 5 years	10,0	5,7	7,0	2,9	10,3	2,8	6,4	1,0
Depositsofindividuals	6,4	6,1	6,7	4,7	6,7	5,1	6,4	5,2
including:
Demanddeposits	0,0	0,1	0,0	0,0	0,0	0,0	0,1	0,0
conditional	7,4	4,0	4,4	5,9	4,9	0,1	1,2	5,8
Timedeposits, total	8,4	6,4	8,3	5,1	7,9	5,5	7,9	5,4
Ofwhichwithmaturity:
Upto 1 month	1,0	0,5	5,7	1,3	0,2	1,1	1,2	1,6
from 1 to 3 month	6,5	1,7	6,5	3,0	4,3	2,6	4,4	2,5
from 3 monthto 1 year	8,4	4,9	8,0	4,5	8,0	5,3	8,1	4,3
from 1 to 3 years	-	-	-	-	-	-	-	-
from 1 to 5 years	9,3	7,3	8,8	6,1	8,8	6,0	8,7	6,8
over 3 years	-	-	-	-	-	-	-	-
over 5 years	3,5	7,8	5,4	6,4	3,4	4,6	3,7	5,8

Source www.nationalbank.kz

 

Appendix 5

 

Instruments of JSC Kazkommertsbank

 

Tradecode	НИН or ISIN	Sector	Category	bargaining	Index
KKGB	KZ1C00400016	stocks	First	28.10.1997	KASE
KZ000A0JC858
KKGBp	KZ1P00400112	stocks	First	08.01.2002	–
KZ0005416453
KKGBb4	KZ2CKY10B513	Debtsecurities	notrated	14.04.2005	KASE_B*
KZ2C00000750
KKGBb5	KZ2CKY10B695	Debtsecurities	notrated	20.10.2005	KASE_B*
KZ2C00000768
KKGBb6	KZP01Y10C727	Debtsecurities	notrated	24.12.2007	KASE_B*
KZ2C00000784
KKGBb7	KZP02Y10C725 KZ2C00000792	Debtsecurities	notrated	24.11.2008	KASE_B*
KKGBb8	KZP03Y10C723	Debtsecurities	notrated	28.10.2009	KASE_B*
KZ2C00000800
KKGBb9	KZP01Y06D707	Debtsecurities	rated	12.07.2010	–
KZ2C00000776
KKGBe5	XS0190240324	Debtsecurities	rated	14.04.2005	–
US48666FAD24
KKGBe8	XS0234488236	Debtsecurities	rated	25.05.2009	–
US48666QAA40
KKGBe15	XS0276707923	Debtsecurities	rated	25.11.2010	–
US48666FAF71
KKGBe17	XS0286431100	Debtsecurities	rated	25.11.2010	–
KKGBe21	XS0262468654	06.01.2011	–
KKGBe22	XS0305204595	Debtsecurities	rated	06.01.2011	–
KKGBe23	XS0625516157	Debtsecurities	rated	04.08.2011	–
US48668AAA79
KKGBe24	XS0234398245	Debtsecurities	rated	02.02.2012	–
1 Note – Types of instruments included into trade lists of JSC Kazkommertsbank 2 Note – source website www.kase.kz

 

 

Appendix 6

 

Loans and advances from banks and other financial institutions

 

Recorded at amortized cost:	December 31, 2012 (mln. tenge)	December 31, 2011 (mln. tenge)	December 31, 2010 (mln. tenge)
Correspondent accounts of other banks	2,348	3,322	1,940
Correspondent accounts of organizations that serve certain types of banking operations
Loans from banks and other financial institutions, including:
Loan with maturity of June 2014	8,378	14,960	23,037
Loan with maturity of December 2013	3,302	-	-
Loan with maturity of December 2012	-	1,045	-
Loan with maturity of August 2011	-	-
Loans from other banks and financial institutions	24,289	44,433	121,760
Loans under repurchase agreements	71,486	27,937
In total	109,974	91,877	147,138
Note – source website www.kkb.kz

 

Appendix 7

Basel III overview table:

Capital	Liquidity
All Banks	Pillar 1	Pillar 2	Pillar 3
Capital	Risk coverage	Containing leverage	Risk management and supervision	Market discipline	Global liquidity standard and supervisory monitoring
Quality and level of capital. Greater focus on common equity. The minimum will be raised to 4.5% of riskweighted assets, after deductions.	Securitisations. Strengthens the capital treatment for certain complexsecuritisations. Requires banks to conduct more rigorous credit analyses of externally rated securitisation exposures.	Leverage ratio. A non-risk-based leverage ratio that includes off-balance sheet exposures will serve as a backstop to the risk-based capital requirement. Also helps contain system wide build up of leverage.	Supplemental Pillar 2 requirements. Address firm-wide governance and risk management; capturing the risk of off-balance sheet exposures and securitisation activities; managing risk concentrations; providing incentives for banks to better manage risk and returns over the long term; sound compensation practices; valuation practices; stress testing; accounting standards for financial instruments; corporate governance; and supervisory colleges.	Revised Pillar 3 disclosures requirements. The requirements introduced relate to securitisation exposures and sponsorship of off-balance sheet vehicles. Enhanced disclosures on the detail of the components of regulatory capital and their reconciliation to the reported accounts will be required, including a comprehensive explanation of how a bank calculates its regulatory capital ratios.	Liquidity coverage ratio. The liquidity coverage ratio (LCR) will require banks to have sufficient highquality liquid assets to withstand a 30-day stressed funding scenario that is specified by supervisors.
Capital loss absorption at the point of non-viability Contractual terms of capital instruments will include a clause that allows – at the discretion of the relevant authority – write-off or conversion to common shares if the bank is judged to be non-viable. This principle increases the contribution of the private sector to resolving future banking crises and thereby reduces moral hazard.	Trading book Significantly higher capital for trading and derivatives activities, as well as complex securitisations held in the trading book. Introduction of a stressed value-at-risk framework to help mitigate procyclicality. A capital charge for incremental risk that estimates the default and migration risks of unsecuritised credit products and takes liquidity into account.	Net stable funding ratio The net stable funding ratio (NSFR) is a longer-term structural ratio designed to address liquidity mismatches. It covers the entire balance sheet and provides incentives for banks to use stable sources of funding.
Capital conservation buffer Comprising common equity of 2.5% of risk-weighted assets, bringing the total common equity standard to 7%. Constraint on a bank’s discretionary distributions will be imposed when banks fall into the buffer range.	Counterparty credit risk Substantial strengthening of the counterparty credit risk framework. Includes: more stringent requirements for measuring exposure; capital incentives for banks to use central counterparties for derivatives; and higher capital for inter-financial sector exposures.	Principles for Sound Liquidity Risk Management and Supervision The Committee’s 2008 guidance Principles for Sound Liquidity Risk Management and Supervision takes account of lessons learned during the crisis and is based on a fundamental review of sound practices for managing liquidity risk in banking organizations.
Countercyclical buffer Imposed within a range of 0-2.5% comprising common equity, when authorities judge credit growth is resulting in an unacceptable build up of systematic risk.	Bank exposures to central counterparties (CCPs) The Committee has proposed that trade exposures to a qualifying CCP will receive a 2% risk weight and default fund exposures to a qualifying CCP will be capitalised according to a risk-based method that consistently and simply estimates risk arising from such default fund.	Supervisory monitoring The liquidity framework includes a common set of monitoring metrics to assist supervisors in identifying and analysingliquidity risk trends at both the bank and system-wide level.

(Data is taken from the site of Bank of International Settlements)