Kazkommertsbank 3Q Net Profit -70% on Provisions
Kazkommertsbank, or KKB, Kazakhstan's largest bank by assets, said Monday its net profit dropped 70% to 4.74 billion tenge ($31.9 million) in the third quarter of this year, reflecting higher provisions and a decline in net interest income.
"The bank continues with its conservative policy of building sufficient provisions for expected credit losses," KKB said in a statement.
The bank's provisions for credit impairment losses increased to KZT 477.4 billion by the end of the third quarter, from KZT 289.3 billion at the end of 2008.
"As a result, the effective rate of provisioning amounted to 16.4% of gross loans at the end of the third quarter of 2009, compared with 11.9% at the end of 2008," KKB said.
Non-performing loans represented 20.6% of gross loans by the end of the third quarter of 2009, up from 8.1% at the end of 2008, the bank said.
"The negative development in KKB's performance was expected, including the expansion of NPLs," said VTB Capital in a note. "Nevertheless, the pace at which asset quality deteriorated puts the bank's operations in doubt for fourth quarter 2009. We believe that KKB will pass the trough soon."
The bank said its net interest income dropped to KZT 10.08 billion in the third quarter of this year from KZT 33.19 billion in the same period in 2008. Its third quarter operating profit dropped to KZT 17.19 billion from KZT 34.87 billion.
KKB's net non-interest income was KZT 45.2 billion in the first three quarters of this year, up from KZT 5.9 billion in the same period last year.
"This substantial improvement was primarily due to income resulting from the purchase of the bank's own debt securities of KZT 23 billion, and income from operations with financial assets of KZT 12.2 billion," KKB said, the Wall Street Journal reports (Dow Jones)