Transcript Front cover

June 2006
ATF Highlights
 ATF is the 4th largest bank in Kazakhstan by assets (assets reached USD
2.7bn in 2005)
 Network of over 60 full branches and other servicing outlets, covering
Kazakhstan, neighbouring Kyrgyzstan and the Omsk region of Russia
 Balanced business focus: Corporate, SMEs and Retail Banking
 High and stable profitability over the last 10 years
 Rating of Ba1/ stable by Moody’s, B+/ stable by S&P and BB-/stable by Fitch
 Top quality management team with proven track record and international
experience
 Strong gain in market share in 2003-2005 (reached 8% in 2005)
1
ATF Bank vs other Banks in Kazakhstan
Asset growth…
Growth %
31 Dec 2003
31 Dec 2004
31 Dec 2005
Kazakhstan banks
46%
60%
68%
Top 10
52%
64%
72%
ATFBank
64%
82%
106%
thousand KZT
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Kazakhst an banks
TOP 10
01/ 01/ 2005
ATFBank
01/ 01/ 2006
Source: FMSA
2
ATF Bank Among its Peers
Kazakh banks by assets, as of 1 Jan 2006 (thousand KZT)
Bank
VTB
2%
Eurasian
2%
Other
10%
KKB
25%
NURBank
3%
Caspian
3%
BCC
7%
Alliance
7%
ATF
8%
BTA
21%
Halyk
12%
1 Jan 2005
1 Jan 2006
Growth
Amount
%
1
KKB
656,381
1,131,763
475,382
72%
2
BTA
613,224
963,653
350,429
57%
3
Halyk Bank
398,186
558,455
160,269
40%
4
ATFBank
173,902
359,069
185,167
106%
5
Alliance Bank
120,299
336,956
216,657
180%
6
BCC
148,511
333,332
184,821
124%
7
Bank Caspian
80,032
150,157
70,125
88%
8
NURBank
89,644
121,813
32,169
36%
9
Eurasian Bank
78,068
105,163
27,095
35%
10
VTB
50,035
78,784
28,749
57%
281,482
460,627
179,145
64%
Other
Source: FMSA
3
ATF Branch Network
 Network of over 60 full branches and servicing outlets located throughout
Kazakhstan, Kyrgyzstan and Omsk region of Russia
 ATF will open over 30 new branches during 2006
KYRGYZSTAN
4
1. Operating Environment
5
Kazakhstan: Best Performing Economy in the CIS
Stable Environment
 Annual GDP growth from 2002-2005:
9.3%
Strong GDP Growth (%)
9,5 9,2 9,4 9,4
2002
2003
2004
2005
7,3 7,1
6,4
5,2
 Estimated GDP in 2005: USD 56.2bln
(9.4%)
4,3
4,1
3,7
4,3
4,7
3,0
1,3
0,7
 Inflation (CPI) decreased from 17.3%
in 1999 to 7.7% in 2005
 Gold and foreign currency reserves
(including National Oil Fund) reached
USD 15.3bn in 2005
Kazakhstan
(Baa3/BBB-)
Mexico (Baa1/BBB)
Croatia (Baa3/BBB)
Russia (Baa2/BBB)
Source: National Bank of Kazakhstan,Economist Intelligence Unit,
Mexican National Statistics Unit, Rosstat, Croatian CBS
Stabilizing Inflation
 Stable political environment
 Enormous base of natural resources
 1st sovereign investment grade rating
in the CIS
10,0
15,0
10,4
9,8
6,0
6,8
6,4
4,0
0,0
20,0
Inflation (CPI) (%) - RHS
17,3
8,0
2,0
Source: Statistics Agency of the Republic of Kazakhstan
Reserves (USD bn) - LHS
12,0
6,6
9,1
6.7
7,7
2,0
2,1
2,5
1999
2000
2001
3,1
5,0
2002
2003
10,0
5,0
0,0
2004
2005
Source: National Bank of Kazakhstan
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The Most Advanced Banking Sector in the CIS
Strong Sector Growth
Banking Assets as a % of GDP
No of Banks
80%
30
20%
0%
12%
15%
17%
31%
39%
48%
1999
2000
2001
2002
2003
2004
20
62%
10
0
2005
Source: National Bank of Kazakhstan
Banking Assets / GDP in 2005
105%
68%
67%
62%
45%
Russia
80%
Kazakhstan
 Rapidly developing insurance market
 Total premiums in 2005: USD 520mn (up
68% yoy)
40
40%
Brazil
Growing
Insurance
Market
50
35
44
Estonia
Developed
Pension
System
 Most successful pension reform in CIS
 14 pension funds with total assets of USD
5bn (around 9% of GDP)
 Most of the funds invested domestically
(T-bills, banks etc)
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Czech R.
Advanced
Banking
System
 Most developed banking system in the CIS
with total assets of USD 35bn (up 68% in
2005)
 Market consolidation is progressing with 6
largest banks having around 80% of total
banking assets
 Deposit Insurance Fund since 1999 created
strong stimulus for deposits
35
38
60%
60
34
55
Poland
Strong and
Independent
Regulator
 Tight controls and regulations ensure only
strongest banks survive
 Consolidated supervision: FMSA
 Local regulations regime to be harmonized
with EU standards by 2007
Source: National Bank of Kazakhstan
7
2. Business Profile and Strategy
8
Business Overview
10 years of Confident Growth
 ATF was established in 1995 and developed into the
4th largest bank in Kazakhstan (8% of total banking
assets as of 31 Dec 2005)
 Core business: Corporate, SMEs and Retail
Banking
 Focus on top tier domestic corporates, SMEs,
middle class and higher net worth individuals
 Strong position in export oriented industries
 Engaged in lending, deposits, trade finance, cash
management, custodian services, commercial FX,
securities trading, insurance and leasing
31.12.2004 Highlights, USD
Total Assets:
1,338mn
Net Loans:
862mn
Deposits:
529mn
Equity:
140mn
Net Income:
17mn
Capital Adequacy: 11.10%
Tier 1:
9.6%
31.12.2005 Highlights, USD
Total Assets:
2,680mn
 Experienced management team with senior
managers formerly employed by international
banks
Net Loans:
1,828mn
 Strong focus on growth, including acquisitions,
both domestically and in CIS
Net Income:
Deposits:
871mn
Equity:
206mn
31mn
Capital Adequacy: 12.43%
Tier 1:
8.3%
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Current Ownership Structure
A supportive shareholder base
The Bank of New
York, ADRs
23,10%
Others (each less
than 5%)
34,72%
LLC Rink Invest
19,21%
JSC Pention Fund
"BTA KirmetKazakhstan"
5,02%
"KMC "AstanaMotors" LLP
JSC Olzha
5,0%
6,93%
 Historically, shareholders
always support the bank’s
development and growth
 No interference with
operational management
and lending
JSC Pension
Fund of Halyk
Bank Kazakhstan
4,8%
Represents common shares only
* Data is prepared as at 31 December 2005
10
Group Structure
Continuously Expanding: diversified business structure
ATF Bank
100.0%
ATF Policy
Insurance
Company
Assets: USD 41.4 mln
Capital: USD 8.6 mln
100.0%
SibirBank
Commercial Bank in the
Russian Federation
Assets: USD 2.1 mln
Capital: USD 0.5 mln
7.84% market share in
Kazakhstan (in terms of
premium)
73.9%
EnergoBank
Commercial Bank in
Kyrgyzstan
24.3%
9.0%
National Pension
Fund Otan
ATF Leasing
Pension Fund
Leasing
Assets: USD 24 mln
Capital: USD 5.4 mln
Pension Assets: USD
94.4 mln
Capital: USD 3.7 mln
Assets: USD 14.3 mln
Capital: USD 3.5 mln
6th largest bank in
Kyrgyzstan
1.95% share of the
pension market in
Kazakhstan
8% market share in
Kazakhstan
*All figures as at 31 December 2005
11
Business Strategy
Continuously strengthening its position in Kazakhstan…
ATF’s growing market share
Dec2002
Dec2003
Dec2004
9%
Dec2005
8,40%
8,00%
8%
6,90%
7%
6%
6,50%
5,70%
6,20%
6,90%
6,00%
5,70%
5,10%
5,70%
4,90%
5%
6,60%
5,70%
4,60%
4,10%
4%
3%
2%
1%
0%
Assets
Capital
Loans
Deposits
All figures as of 1 Jan of each year
12
Strategy Implementation
Expanding while maintaining quality and efficiency
Current Status
Future Strategy
Expand
banking and
other
financial
services
 Market share: reached 8% of total
banking sector assets
 Increased its stake to 73.9% in
Kyrgyz EnergoBank and fully
acquired SibirBank in the Russian
Federation
 Product mix targets corporates,
SMEs and high net worth
individuals
 Nation-wide brand recognition
(brand re-positioning in 2004-2005)
 Targeting 10-15% market share by 2008
(through both organic growth and
potential acquisition of a Top-10 bank)
 Further expansion in Kazakhstan and
building significant presence in Russia,
Kyrgyzstan and Ukraine
 Enhancing product range (incl. leases,
private banking, advisory and other
commission business, cross-selling)
 Higher exposure to growing sectors
(telecom, food/beverages, retail trade)
Diversifying
and
strengthening funding
base
 Able to tap syndicated lending and
Eurobond markets as well as the
local liquidity supply
 Continued support from
shareholders
 EBRD long-term funding or minority
stake transaction
 Reduce costs of funding
 Seeking liquidity in new markets (e.g.
Middle East markets)
 Full utilization of pension fund limits
13
Strategy Implementation (cont’d)
Expanding while maintaining quality and efficiency
Current Status
Future Strategy
Strengthening risk
management
 Risk management capabilities
demonstrated by rapid growth with
no material increase in NPLs
 Experienced credit risk managers
who directly report to the Head
Office, are stationed at each branch
and have veto power
 Ability to manage risks associated
with acquisitions
 Industry exposures and positions
limits monitored daily
 Institution-wide new banking software
project in 2005-07 (budget: USD 15 mn)
 Improved reporting and control system
to reduce operational risks
 Move to internal rating system in credit
analysis, in line with Basle II
 Developing group-wide corporate
governance and RM procedures
 Considering “RM Twinning” project with
western financial institution
Enhancing
operating
efficiency
 Implementing a matrix business
and reporting structure
 Multi-level credit risk authorization
 Performance-based incentive
schemes for commercial staff
 Investment in human resources
 Moving to RAROC benchmarking by
business area
 Further standardization of operations
throughout the bank network
 Centralized data processing to focus
branches on product sales (IT project)
14
3. Lending and Asset Quality
15
Strong Growth Driven by Core Business
...reflects a successful implementation of strategy
Total Asset Growth Dynamics
3500
Cash & Equivalents
Loans
Securities
Other
USD million
3000
2,680
2500
2000
1,338
1500
1000
500
662
374
0
2002
2003
2004
2005
Growth:
2002
2003
2004
2005
Loans
40%
88%
106%
112%
Securities
91%
69%
64%
63%
Total Assets
44%
77%
102%
100%
16
Well Diversified Loan Portfolio
In 2005 ATF’s loan portfolio grew by 112 %
Customer Loans by Type of
Borrower
Customer Loans by Sector
Wholesale
trading
18.3%
Other
35.4%
2004
Corporates
92%
89%
Individuals
14.5%
Oil & Gas
2,7%
Construction
9.0%
Transport
3,3%
Services
4,0%
Retail trading
5,3%
Wholesale
trading
18.6%
Other
17.7%
Hospitality
3.0%
2002
74%
70
Individuals
16.7%
2003
2004
Food
industry
10.2%
2005
60
54
%
50
37
40
32
29
30
Agriculture
5.4%
14% 12%
9% 11%
Share of Top 10 Borrowers
2005
60
Retail trading
4.1%
Retail
80%
5% 6%
3% 5%
Agriculture
7,5%
SME
20
20
2003
2004
25
20
Services
12.7%
Construction
11.6%
10
0
1998
1999
2000
2001
2002
2005
17
High Quality Loan Book Prudently Provisioned
Ratios
Allowance / Gross Loans
% of Gross Loans
6%
5%
NPL / Gross Loans
5,3%
4,7%
4,4%
4%
3,0%
3%
2,4%
2%
1%
Net Write Offs
2,0%
2,5%
1,6%
1,1%
0,2%
0,6%
0,4%
0%
2002
2003
2004
2005
 98.9% of loans are collateralised by cash, real estate, equipment, commercial
goods, inventories, cash receivables and etc.
 Improved credit controls have reduced actual loan losses to a fraction of
provision levels
 Regulations limit the bank’s “single borrower” risk exposure to:
- 10% of equity for related parties
- 25% of equity for other borrowers
18
Strong Deposit Base
Growing in line with assets
Deposits by Sector
Deposit Growth Dynamics
Corporates
900
871
77%
78%
76%
800
Retail
79%
78%
700
24%
23%
22%
22%
21%
600
529
2001
2002
2003
2004
2005
Top 10 Customer Deposits
400
311
80
300
71
70
55
60
203
200
43
50
134
%
USD million
500
100
47
48
39
43
35
40
30
20
0
10
2001
2002
2003
2004
2005
0
1998
1999
2000
2001
2002
2003
2004
2005
19
Balanced Maturity Profile
Liquidity position further enhanced following the Eurobond offering
Asset and Liability Breakdown by Maturity for 2005
1 000
Assets
Liabilities
882
900
800
USD million
700
708
702
695
591
600
500
420
400
350
334
300
261
200
88
100
61
68
0
On demand
< 1 month
1 - 3 month
3 - 12 month
1 - 5 years
> 5 years
20
Adequate Capitalisation
Capital Base
Total Capital
350
16,9%
Capital Adequacy Ratio
18%
15,6%
300
12,4%
13,6%
USD million
250
14%
11,1%
12%
200
309
10%
8%
150
6%
100
146
50
34
44
4%
70
2%
0
Capital Adequacy (BIS)
16%
0%
2001
2002
2003
2004
2005
2001
2002
2003
2004
Tier 1 Capital (USD mn)
26
30
45
125
206
Total Capital (USD mn)
34
44
70
146
309
197
281
516
1,306
2,484
Tier 1 Capital Adequacy (%)
13.0
10.7
8.7
9.6
8.3
Total Capital Adequacy (%)
16.9
15.6
13.6
11.1
12.4
Total Risk Weighted Assets (USD mn)
2005
21
Funding
Current capital transactions are laying basis for further asset growth
Recent Developments
Future plans
 USD 35mn Lower Tier 2 capital placed on the
local market in January 2005
 USD Tier 1 Eurobonds issue under RegS rule
in June 2006
 USD 200 mn Eurobonds issue under 144
A/Reg S rule in April 2005
 Shareholders have agreed to increase Tier 1
capital by USD 150-200 mn in Q2 2006
 USD 40mn Common and Preferred Shares
fully subscribed among the existing
shareholders in July 2005
 USD 250mn Syndicated Loan in H2 2006
 USD 100mn Subordinated Bonds placed in
August 2005 (primarily for local pension
funds)
 Negotiations to bring EBRD to minority
stakeholder or Tier 2 capital are in progress
 USD 100-150mn Subordinated Debt to be
placed in local market in H2 2006
 USD 200 mn Eurobonds issue under Reg S
rule placed in October 2005
 USD 50mn of newly issued shares were
placed and fully paid by existing shareholders
in March 2006
 USD 100 mn DPR Securitization program in
April 2006
 USD 350 mn Eurobonds issue under 144
A/Reg S rule in May 2006
22
4. Financial Performance
23
High Quality and Sustainable Earnings Momentum
Net Bank Income Breakdown (Before Impairment)
100,0
21,7
90,0
Other Non Interest Income
80,0
Net Commision Income
Net Interest Income
USD million
70,0
12,6
60,0
20,5
14,4
50,0
7,9
40,0
9,5
30,0
20,0
7,8
62,3
4,5
7,1
50,2
31,1
5,5
10,0
12,3
19,3
0,0
2001
ROAA
ROAE
2002
2003
2004
2005
2002
2003
2004
2005
2.1%
21.4%
1.9%
22.0%
1.8%
17.5%
1.6%
17.5%
24
Strong Focus on Operating Efficiency
Net Interest Margin
Cost / Income Ratio*
In percent
In percent
80,0
12,0
72,8
9,8
10,0
70,0
7,2
8,0
7,1
6,7
60,0
5,7
54,1
51,1
6,0
3,4
4,0
50,0
48,2
49,2
2004
2005
43,5
40,0
2,0
30,0
0,0
2000
2001
2002
2003
2004
2005
2000
2001
2002
2003
* Definition: Non-interest Expense / (Net Interest Income before
Provisioning + Non-Interest Income)
25
ATF Highlights
 ATF is the 4th largest bank in Kazakhstan by assets (assets reached USD
2.7bn in 2005)
 Network of over 60 full branches and other servicing outlets, covering
Kazakhstan, neighbouring Kyrgyzstan and Omsk region of Russia
 Balanced business focus: Corporate, SMEs and Retail Banking
 High and stable profitability over the last 10 years
 Rating of Ba1/ stable by Moody’s, B+/ stable by S&P and BB-/stable by Fitch
 Top quality management team with proven track record and international
experience
 Strong gain in market share in 2003-2005 (reached 8% in 2005)
26