Tag Archives: banking

Business comment: Halyk Bank & The Money Markets

SEPT. 18 2015 (The Conway Bulletin) — On Sept. 17, for the first time the Central Bank of Kazakhstan published data on the activities of Kazakh banks in the currency market. This decision greatly pleased liberal economists and advocates of transparency in Kazakhstan’s banking sector. But it didn’t please everybody. In one table, the Central Bank listed the amount of US dollars that banks

purchased and sold the day before. If a bank buys a large quantity of US dollars, it suggests that it may be engaging in speculation activities, or at least this is what the public could read into the data. By unveiling turnaround data only, the Central Bank irked Halyk Bank, who ranked first for volume traded.

The next day, in a rare complaint, Halyk Bank said the figures were “incomplete and misleading”.

Despite having traded $58m (around 12% of the whole banking sector), Halyk said it had been a net seller by $34m.

This is a much more patriotic figure.

And the bank, owned by powerful businessman Timur Kulibayev and his wife Dinara Nazarbayeva, now wants the Central Bank to publish the detailed numbers since Aug. 17, the day before the first adjustment to the tenge/dollar exchange rate, which led to the decision to let the tenge off its dollar peg, effectively spurring a new devaluation.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Moody downgrades Kazakh banks

SEPT. 7 2015 (The Conway Bulletin) — Moody’s ratings agency downgraded three Kazakh banks due to their deteriorating asset quality and their exposure to foreign currency lending. Kazkommertsbank’s baseline credit assessment (BCA) was rated caa2, ATF Bank fell to caa3, and Eurasian Bank was downgraded to caa1. Moody’s also changed the outlook of the three Kazakh lenders, together with Halyk Bank, to negative, highlighting the precarious state of Kazakhstan’s banking sector.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Georgian president signs banking law

SEPT. 10 2015 (The Conway Bulletin) – Georgian president Giorgi Margvelashvili signed into law a bill that switches supervision of commercial banks from the Central Bank to a state-linked body called the Financial Supervisory Body. Mr Margvelashvili tried to veto the switch but was blocked by parliament. Inter- governmental banks have criticised the switch and called it political.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Fitch warns Azerbaijani banks they are increasingly vulnerable

SEPT. 9 2015 (The Conway Bulletin) — The Fitch ratings agency warned investors of the precarious state of Azerbaijan’s banking sector.

Authorities in Azerbaijan have put a brave face on the country’s shaky economic conditions but the Fitch report cut through the bluster.

“We believe capital positions at some banks are likely to come under significant pressure over the medium term from increasing credit losses,” Fitch said. “Capital cushions are only moderate in most cases, and internal capital generation is limited.”

Azerbaijan depends on oil and gas for over 90% of its exports, meaning that it haPs been particularly exposed to the collapse in oil and gas prices. GDP growth is slated at the relatively low 1.5%.

In February, the Central Bank devalued the manat currency by a third denting its credibility. Despite the devaluation, fresh data has shown that the Central Bank has still spent billions defending its new value.

Non-performing loans are likely to grow from their current level of 10%, a consequence that Fitch sees inevitable, especially given the growing amount of loans and deposits denominated in foreign currency.

“We expect zero loan growth for the banking sector in 2015,” Fitch said. “Asset quality, already somewhat strained, with impaired loans averaging 10% at end-1H15 at Fitch-rated banks, is likely to deteriorate further.”

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Stock market: Tethys, Nostrum, KAZ Minerals, TBC Bank

SEPT. 3 2015 (The Conway Bulletin) – Shares in Toronto- and London listed Tethys Petroleum, whose focus is on oil and gas production and exploration in Central Asia, fell significantly after rival Nostrum on Aug. 28 cut a third off the value of an earlier buyout offer.

Tethys shares in Toronto fell by 20% and in London by 29.3%. Tethys responded by saying that it would honour the exclusivity agreement with Nostrum and then look to other companies for potential buyers.

Nostrum said that it had cut its offer after a new due diligence project showed that the original offer had overvalued the company.

In mining, shares in London-listed KAZ Minerals lost 14.2% of their value between Aug. 28 and Sept. 4, wiping gains from August’s devaluation.

KAZ Minerals used to be called Kazakhmys and is focused on copper production.

The Global Depositary Receipts (GDRs) of TBC Bank, which are traded in London, fell by around 8% over the week to $9.12, the lowest price to date for the bank.

TBC, which is the largest retail bank in Georgia and counts PM Irakli Garibashvili as a director, has been trading its GDRs in London since 2014.

The Georgian economy, like the rest of the region, has been dealing with the fallout from the slowdown in Russia’s economy. Georgia is also vulnerable to Greece, its second largest source of remittances. There was no particular news from TBC that would have pressures its GDRs.

ENDS

(News report from Issue No. 280, published on May 13 2016)

Georgian MPs vote against veto

SEPT. 3 2015 (The Conway Bulletin) – Georgia’s parliament voted to overrule a veto by President Giorgi Margvelashvili that would have blocked the adoption of a controversial bill that stripped the Central Bank of its supervisory powers over the commercial banking sector. International organisations have criticised the bill as politically-motivated. The Central Bank has argued with the government over economic policy.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Kazakhstan’s Kazkom posts $231m loss

AUG. 28 2015 (The Conway Bulletin) – Kazkommertsbank, one of the largest banks in Kazakhstan, posted a net loss of almost 55b tenge ($231m) in the first half of 2015, due to costs associated with bad loans inherited from the takeover of troubled BTA bank.

Kazkommertsbank had to sell assets to guarantee provisions for its non-performing loans (NPL) portfolio, which increased after the takeover of BTA earlier this year. Analysts said at the time of the merger that political, rather than business, reasons had driven the Kazkommertsbank’s takeover of BTA Bank.

The latest earnings results follow a 55% fall in net profit in 2014, a drop also associated with the takeover of BTA Bank. Sabina Amangeldi, senior analyst at Halyk Finance, said that the high non-performing loan (NPL) ratio in Kazkommertsbank’s portfolio would continue to weigh on its earnings potential.

“NPL share and cost of risk, remain high and earnings quality is still low,” she wrote in a note.

NPLs now account for 14.5% of Kazkommertsbank’s loan portfolio.

Ms Amangeldi also highlighted the weak tenge as a potential problem for Kazkommertsbank, an issue that the bank also pointed out.

Kazkommertsbank said the impact of the Central Bank’s decision at the end of last month to remove the tenge from its US dollar peg was still unclear.

“At the present time it is impossible to determine the impact of [the new monetary policy] on the Kazakhstan economy and the banking system,” it said.

The value of the tenge collapsed by 23% after the dollar peg was withdrawn in August, the second major devaluation in the value of the Kazakh currency since Feb. 2014.

ENDS

(News report from Issue No. 246, published on Sept. 4 2015)

Georgian parliament passes banking law

JULY 17 2015 (The Conway Bulletin) – Georgia’s parliament passed a final reading of a bill that strips supervision of the country’s commercial banking sector from the Central Bank. The World Bank had urged the government to drop the bill. President Giorgi Margvelashvili now has to sign the bill into law although he has said he may veto it.

ENDS

(News report from Issue No. 241, published on July 23 2015)

Kazakhs issue sovereign debt

JULY 14 2015 (The Conway Bulletin) – In a move designed to plug a gap in it finances, Kazakhstan issued a $4b bond in two tranches.

These 10 and 30 year eurobonds with an initial yield of 3% and 3.5% over their US Treasuries equivalents were the second debt issued by Kazakhstan since October 2014, highlighting just how heavily a drop in oil prices had hit its budget.

And bond traders said that the yield, a measure of the risk factor attached to taking on the debt, had been relatively high.

“Remarkably, the placement yields are even higher than Russian sovereign bond yields,” Reuters quoted Alexey Bulgakov, a senior credit analyst at Sberbank, as saying.

Kazakhstan had not been active in the sovereign debt market since 2000, so two issues in the past nine months show how badly Kazakhstan needs the cash.

ENDS

(News report from Issue No. 240, published on July 16 2015)

Kazakh Central Bank spends reserves

JULY 8 2015 (The Conway Bulletin) – Kazakhstan’s foreign currency reserves declined by 4.4% in the first half of 2015, data from the Central Bank showed. Kazakhstan, like other countries across the region, has been defending the value of its currency by spending its reserves.

ENDS

(News report from Issue No. 239, published on July 9 2015)