The bank's interest income increased by 18.6 billion tenge
Current indicators of JSC "Nurbank" (4Q17):
Assets: 356.4 billion tenge (-25.0 billion tenge; -6.6%)
Liabilities: 303.85 billion tenge (-36.62 billion tenge; -10.8%)
Capital: 52.56 billion tenge (+11.61 billion tenge; +28.4%)
Profit: 10.9 billion tenge (+10.52 billion tenge; 29.1x)
The bank's net profit significantly increased to 10.9 billion tenge in 2017 (374.5 million tenge in 2016) mainly due to a rise in interest income (+66.2% or by 18.58 billion tenge to 46.63 billion tenge). Interest expenses decreased by 3%, amounting to 21.02 billion tenge. Operating income increased from 15.37 billion tenge to 31.81 billion tenge. In addition, the bank recorded 3.78 billion tenge in collected insurance premiums (+2.1%). The bank's personnel expenses increased by 1.12 billion to 6.08 billion tenge, while other general administrative expenses decreased by 1.14 billion to 5.12 billion tenge.
Notably, the bank's loan portfolio slightly increased, reaching 223.34 billion tenge (+3.63 billion tenge). The bank's assets decreased by 25.0 billion tenge, or 6.6%, to 356.4 billion tenge during the reporting period. Specifically, the bank's cash decreased from 64.14 billion tenge to 35.02 billion tenge, and financial assets available for sale decreased by 11.0 billion tenge to 41.05 billion tenge. The bank primarily lends to large enterprises, with 136.32 billion tenge of the loan portfolio allocated to these companies.
The cash flow statement indicates that actual interest income in the reporting period was 28.78 billion tenge. The explanatory notes to the report indicate that other assets increased by 17.62 billion tenge, including due to the sale of loans to collection companies for 9.99 billion tenge (increasing accounts receivable under this item from 9.7 billion tenge to 19.69 billion tenge). The income increase could also be related to the transfer of assets to the subsidiary LLP "OUSA "NB".
The bank's deposit portfolio decreased by 59.42 billion tenge, or 22.1%, and amounted to 209.0 billion tenge by the end of the reporting period. While the funds of retail clients increased by 27.0 billion tenge, current accounts, and deposits of corporate clients decreased by 86.42 billion tenge. Funds from other financial institutions decreased by 7.69 billion to 15.85 billion tenge. The outflow of client funds was partially offset by "repo" transactions amounting to 25.86 billion tenge and the issuance of debt securities for 4.59 billion tenge (increasing to 18.56 billion tenge). Government of the RK funds amounting to 25.92 billion tenge are also included in liabilities.
Thanks to recorded profits, the bank's accumulated losses decreased to 81.8 billion tenge. Considering the equity capital of 127.61 billion tenge and other reserves of 6.75 billion tenge, the bank's equity increased to 52.56 billion tenge (+28.4%). As of early 2018, the sole major shareholder of JSC "Nurbank" is LLP "JP FINANCE GROUP" (82.81% of shares).
According to NBK data, as of the end of 2017, 12.3% of all bank loans are overdue, amounting to 26.39 billion tenge, while 6.83% of the loan portfolio or loans amounting to 14.67 billion tenge are more than 90 days overdue (NPL). Provisions formed for the loan portfolio constitute 25.17 billion tenge. At the beginning of the reporting period, the amount of loans with overdue payments was 25.79 billion tenge (11.55%), while NPL amounted to 15.51 billion tenge (6.94%). It is worth noting that during the reporting period, the bank recorded 9.67 billion tenge in impairment and reserve expenses, compared to 4.53 billion tenge a year earlier.
As of early 2018, Nurbank complies with all prudential regulations set by the regulator:
There are no current rating actions for Nurbank. More than half a year ago, S&P Global Ratings downgraded Nurbank's long-term counterparty credit rating from "B" to "B-" (08.06.2017) with a "negative" outlook. The bank's short-term rating was also affirmed at "B". Additionally, the bank's rating on the national scale was downgraded from "kzBB" to "kzB+". "The rating action reflects persistent weak profitability indicators at Nurbank, which pressure its capital reserves, leading to no positive dynamics in market share over the past five years. Therefore, our assessment of the bank's market position has been revised from "moderate" to "weak". We do not expect the bank’s profitability indicators to improve to a level comparable to peer Kazakhstani banks, nor do we anticipate improvements in Nurbank's market share over the next two years, considering continued consolidation and increased competition in the Kazakhstani banking sector," stated the rating agency's press release.