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Kazakhstan at times of market turmoil

Kazakhstan at times of market turmoil. Kazakhstan’s Banking market from the viewpoint of ATF Bank. Alexander Picker, Chief Executive Officer JSC “ATF Bank”. Almaty, September 2008. AGENDA. Macroeconomic analysis – yesterday’s drivers of growth are today’s problems

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Kazakhstan at times of market turmoil

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  1. Kazakhstan at times of market turmoil Kazakhstan’s Banking market from the viewpoint of ATF Bank Alexander Picker, Chief Executive Officer JSC “ATF Bank” Almaty, September 2008

  2. AGENDA • Macroeconomic analysis – yesterday’s drivers of growth are today’s problems • Competitive environment – a mature, if not saturated market • ATF Bank

  3. GDP has remained diversified • Largest sectors contributed to GDP growth • % of nominal GDP • % of growth contribution • Finance and real estate • Finance and real estate • Mineral resources • Manufacturing • Other manufacturing • Trade • Trade • Transport and comm 13 • Transport and comm. 12 12 12 11 • Construction 16 • Construction • 25 • 15 • 9 • Other • 22 • 21 • 18 • Other • 12 • 10 • 2004 • 2005 • 2006 • 2004 • 2005 • 2006 • Finance and manufacturing (including mineral resources) made major contribution to GDP growth • Largest sector of economy – finance and real estate – accounts 20% of GDP ECONOMIC GROWTH DRIVEN BY RESOURCES SECTOR, STRONG CONSTRUCTION AND FINANCIAL INDUSTRIES SO FAR – MOTORS FOR FUTURE GROWTH MOST LIKELY RESOURCES, INFRASTRUCTURAL PROJECTS, FOOD AND SOME TRADE • Loans, Investment and GDP by sectors • Kazakhstan % world mineral resources Source: Kazakhstan Agency on Statistics; Aton research report, EIU

  4. RAPID EXPANSION OF FINANCE AND CONSTRUCTION INDUSTRIES WAS FUELLED BY MASSIVE EXTERNAL BANK BORROWING As a result, both exploded in the last two years Kazakhstan banks borrowed massively from abroad ...to finance the construction industry Overheating • Loans to construction • industry of top 5 banks, $bln • External borrowing by banks, $bln • % real growth, y-o-y • +72% 19.5 10.3 12.2 7.5 6.1 3.5 • 2005 • 2006 • 2Q 2007 • 2005 • 2006 • 3Q 2007 • 1Q’06 • 2Q’06 • 3Q’06 • 4Q’06 • 1Q’07 • 2Q’07 • Construction • Financial services • GDP Source: Aton research report

  5. STRONG SLOWDOWN IN 2008 / RECOVERY IN 2009 ? • Macroeconomic scenario Source: National Bank of Kazakhstan, Statistical Agency, UniCredit New Europe Research Network

  6. AGENDA • Macroeconomic analysis – yesterday’s drivers of growth are today’s problems • Competitive environment – a mature, if not saturated market • ATF Bank

  7. BANKING SECTOR ANALYSIS - TOP-6 BANKS CONTROL 84% OF ASSETS KZT bn Assets Market share Growth BTA- Bank Turan Alem KKB – Kazkommerstbank ALB – Alliance Bank BCC – Bank Centr Credit BTA KKB Halyk ALB ATF BCC Loans Provisions Growth BTA KKB Halyk ALB ATF BCC Source: Banks financial statements (local standard)

  8. BANKING SECTOR ANALYSIS Assets Deposits Loans to customer, net Borrowings Source:FMSA (local standard)

  9. THE MAJOR PLAYERS 1. As of 31 March 2008 Source: USB, RenCap, Banks financial statements

  10. 0 25 50 75 100 THE POSITIONING OF THE MAJOR PLAYERS Market shares per volume in % Movement since EOY 2005 KKB Halyk 31,8% • Apart from Alliance all banks are heavily positioned in the Corporate Segment. • From 2005 to 2007 Alliance had a very aggressive growth in Assets and also increased its Retail portfolio. • ATF will increase its Retail Business, but without any substantial changes in the positioning ATF 2007 29,6% BTA 11,9 ATF 2010 10,2% % of Retail Loans 11,6% ALB % of Corporate Loans Loans / Deposits Data as of 3Q07 Source: Banks Financial Statements and ATF estimations * ATF data consider SME assets as part of Retail

  11. BANKING SECTOR - SUMMARY AND OUTLOOK SUMMARY: • Banking Sector seems to have successfully managed the liquidity Crisis • This has impacted the real sector and now returns as a Bad Loan Problem • NPL’s increased between 36%-106% ( average 86%) and LLP by 17- 83% ( average 36%) • Reported 6m Profits of Bank’s down between 30-50% OUTLOOK: • Repayments on international debt in 2009 estimated at USD 2bn • Bad Loan Problem is continuing • Major changes in ownership: foreign shareholders but also domestic oligarchs taking the chance • Slow growth of sector and significant redistribution of market shares

  12. AGENDA • Macroeconomic analysis – yesterday’s drivers of growth are today’s problems • Competitive environment – a mature, if not saturated market • ATF Bank – mixed but promising outlook

  13. -4 Petropavlovsk -2 -9 Kostanai -1 Kokshetau -2 -3 Pavlodar -4 -1 Schuchinsk -3 -0 Semei -5 -10 Uralsk Ust-Kamenogorsk -13 -2 Aksay -1 -13 -2 -2 Astana -0 -7 Aktobe -9 -3 -6 Karaganda -6 -0 -11 Atyrau Zhezkazgan -3 -1 -1 Taldykorgan -3 -3 -4 Kysylorda -2 Aktau -5 Kaskelen -3 -2 -25 Almaty -2 -14 Taraz -6 -14 Shymkent -3 Major oil fields Share of GDP Share of population ATF WILL INCREASE THE BRANCH NETWORK FROM CURRENTLY 140 TO 210 BY 2010, COVERING ALL THE MAIN AREAS IN KAZAKHSTAN 1.1 5.3 1.7 6.3 9.3 8.7 1.4 8.5 25.7 4.8 1.7 3.4 1.0 12.2 8.2 4.0 Existing ATF outlets XX Gross Regional product per capita ($K) new ATF outlets

  14. Breakdown of Loan Portfolio by sectors Breakdown of Loan Portfolio by sectors as at 31 December 2006 Breakdown of Loan Portfolio by sectors as at 31 December 2007

  15. ATF – MAIN SERVICES AND CONTACTS Multi Business Bank • Corporate banking • Loans in USD, KZT and EUR • Structured finance • Trade finance, Transactional banking • International desk • Retail & SME banking • Account Services • Cards • SME services • Private banking • Treasury Product range • Contact: • Alexander Picker, CEO, picker@atfbank.kz • Can Tekin Yildirimer, Head of International Desk dzhan-tekin@atfbank.kz

  16. Thank you for your attention Alexander Picker, Chief Executive Officer JSC “ATF Bank” Almaty, September 2008

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