JSC HALYK BANK

boliviahonorableManagement

Nov 18, 2013 (3 years and 8 months ago)

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JSC HALYK BANK


Condensed
Interim
Consolidated

Financial Information

(
u
naudited)

For the
nine

months e
nded
30 September
20
1
3





JSC

HALYK BANK



TABLE OF
CONTENTS



Page



STATEMENT OF MANAGEM
ENT’S RESPONSIBILIT
IES

FOR THE PREPARATION

AND APPROVAL OF THE
INTERIM
CONDENSED

CONSOLIDATED
FINANCIAL INFORMATIO
N


FOR
THE
NINE

MONTHS

ENDED
30 SEPTEMBER
20
13

(UNAUDITED)

1


REPORT

ON REVIEW OF

THE
INTERIM
CONDENSED
CONSOLIDATED

FINANCIAL INFORMATIO
N

2


INTERIM

CONDENSED

CONSOLIDATED

FINANCIAL INFORMATIO
N

FOR THE
NINE

MONTHS

ENDED
30 SEPTEMBER
20
1
3
:


I
nterim
consolidated

statement of financial position

(unaudited)

3


I
nterim c
onsolidated
statement
s

of profit or loss

(unaudited)

4


I
nterim consolidated statement
s

of
compre
hensive in
come

(unaudited)

5


I
nterim consolidated statement of changes in equity (unaudited)

6
-
7


I
nterim c
onsolidated statement of cash flows

(unaudited)

8
-
9


Selected

explanatory
n
otes to the
i
nterim
condensed

consolidated
f
inancial
i
nformation

(unaudi
ted)

1
0
-
5
2



JSC HALYK BANK


INTERIM
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


FOR
THE NINE MONTHS

END
ED
30 SEPTEMBER 201
3

(UNAUDITED)


(Millions

of
K
azakhstani
T
enge)



6



Share capital




Treasury shares
















Common

Share
s


Non
-
convertible

preferred

shares


Convertible

preferred

shares


Share

premium

reserve


C
ommon
shares


P
referred
shares


Cumulative
translation
reserve*


Revaluation

reserve of

available
-

for
-
sale

investment

securities*


Property
revaluation

reserve*


R
etained

earnings*


Total


Non
-
controlling

interest


Total

equity


31 December 201
2

83,571


46,891


13,233


1,496


(39,974)


(41,054)


1,122


8,926


14,754


249,033


337,998


1,641


339,639


Net income



















56,002


56,002


171


56,173

Other
comprehensive
(loss)/income

-


-


-


-


-


-


(264)


(7,142)


(53)


-


(7,459)


11


(7,448)


Total comprehensive

(loss)/income

-


-


-


-


-


-


(264)


(7,142)


(53)


56,002


48,543


182


48,725



























Treasury shares purchased


-


-


-


(23
9
)


(8)


-


-


-


-


-


(24
7
)


-


(24
7
)

Treasury shares sold **

-


3,436


58


137


5


-


-


-


-


-


3,636


-


3,636

Dividends paid


preferred shares

-


-


-


-


-


-


-


-


-


(
2,197)


(2,197)


-


(2,197)

Dividends paid



common shares

-


-


-


-


-


-


-


-


-


(12,215)


(12,215)


-


(12,215)

Release of property revaluation
reserve on depreciation and
disposal of previously revalued
assets


-


-


-


-


-


-


-


-


(307)


307


-


-


-


30 September

20
1
3
(unaudited)

83,571


50,327


13,291


1,3
94


(39,977)


(41,054)


858


1,784


14,394


290,930


375,518


1,823


377,341


* These amounts are included within Retained earnings and other reserves in the interim consolidated statement of financial p
osition.

** Sale of treasury shares is disclosed in
note
20


JSC

HALYK BANK


INTERIM
CONSOLIDATED STATEMENT OF CASH FLOWS

FOR
THE NINE MONTHS

ENDED
30 SEPTEMBER 2013

(UNAUDITED)

(Millions of Kazakhstani Tenge)




8


Notes

Nine months
ended

30 September
2013

(unaudited)


Nine
mont
hs
ended


30 September
2012

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:





Interest received from financial assets at fair val
ue through profit or loss


2
2


17

Interest received from cash equivalents and amounts due from credit
institutions


2,463


2,355

Interest received on available
-
for
-
sale investment securities


11,867


10,792

Interest received on investments held
-
to
-
matur
ity


1,539


1,079

Interest received from loans to customers


98,280


104,969

Interest paid on due to customers


(42,029)


(34,483)

Interest paid on due to credit institutions


(724)


(468)

Interest paid on debt securities issued


(14,573)


(15,583)

Fe
e and commission received


38,306


38,546

Fee and commission paid


(5,394)


(4,373)

Insurance underwriting income received


26,904


18,913

Ceded insurance share paid


(10,
470
)


(6,006)

Other income received


7,
849


9,388

Operating expenses paid


(33,
4
57
)


(28,094)

Insurance reimbursements paid


(
6,062
)


(7,617)

Reimbursements of losses due to reinsurance risks received


833


315


Cash flows from operating activities before changes in net operating
assets


75,354


89,750

Changes in operating ass
ets and liabilities:





(Increase)/decrease in operating assets:





Obligatory reserves


3,61
8


1,422

Financial assets at fair value through profit or loss


(1,245)


2,043

Amounts due from credit institutions


4,50
7


1,680

Precious metals


(1,938)


(593)

Loans to customers


(
10
4
,3
3
2)


34,017

Insurance assets


(
466
)


(1,525)

Other assets


2,
363


9,686

Increase/(decrease) in operating liabilities:





Financial liabilities at fair value through profit or loss


1,014


(1,992)

Amounts due to custom
ers


42,922


(36,191)

Amounts due to credit institutions


20,761


29,537

Insurance liabilities


(
704
)


1,164

Other liabilities


27
1


(10,675)


Net cash inflow from operating activities
before income tax


42,
125


118,323

Income tax paid


(11,
771
)


(4,5
12)


Net cash inflow from operating activities


30,
354


113,811


CASH FLOWS FROM INVESTING ACTIVITIES:





Purchase and prepayment for property and equipment and intangible
assets


(4,135)


(7,685)

Proceeds on sale of property and equipment


537


50

P
urchase of available
-
for
-
sale investment securities


(102,506)


(38,834)

Proceeds on sale of available
-
for
-
sale investment securities


87,471


48,627

Purchase of investments held to maturity


(1,572)


(59,698)

Proceeds from redemption of investments hel
d to maturity


3,267


76,996


Net cash
(
outflow)/
inflow from investing activities


(
16,938
)


19,456



JSC

HALYK BANK


SELECTED EXPLANATORY NOTES TO THE INTERIM CONDENSED

CONSOLIDATED FINANCIAL INFORMATION

FOR THE
NINE

MONTHS

ENDED
30 SEPTEMBER

20
13 (UNAUDITED)

(Millio
ns of Kazakhstani Tenge)



10




1.

PRINCI
PAL ACTIVITIES


JSC Halyk Bank (

the Bank”) and its subsidiaries

(collectively




the Group”) provide retail and
corporate banking services principally in Kazakhstan, Russia
,

Kyrgyzstan and Georgia,
as well as
pension
and other
asset management
,
insurance
,

leasing and brokerage

services in Kazakhstan. The
primary state registration of the Bank with the authorities of justice of Kazakhstan was made

on 20 January 1994.
The Bank operates under the license No. 10 for carrying out banking and other
operations a
nd activities on the securities market, renewed by the Committee for Control and
Supervision of Financial Market and Financial Organizations of the National Bank of the Republic of
Kazakhstan (“FMSC”


previously known as Agency for Regulation and Supervis
ion of Financial
Market and Financial Organizations of the Republic of Kazakhstan) on 6 August 2008. The Bank is a
member of the obligatory deposit insurance system pro
vided by JSC Kazakhstan Deposit

Insurance
Fund
.


The Bank’s primary business includes or
iginating loans and guarantees, attracting deposits, trading in
securities and foreign currencies, executing transfers, cash and payment card operations and rendering
other banking services to its customers. In addition, the Bank acts as the
agent of the G
overnment of
the Republic of Kazakhstan

in channelling various budgetary payments and pensions through its
nationwide
branch
network.


Trust activities


In the normal course of its business, the Group enters into agreements with
its customers

to manage
th
e
customers’

assets with limited decision making rights and in accordance with specific criteria
established by the
customers
. The Group may only be liable for losses or actions aimed at
appropriation of the
customers’

funds if such funds or securities are

not returned to the
customer
. The
maximum potential financial risk of the Group on any date is equal to the
volume of the customers’
funds, net of any unrealized income/loss on the customer’s position. The balance of the customers’
funds under the managem
ent of the Group, as at 30 September 201
3

is KZT
1,
181

billion

(31 December 201
2

-

KZT
1,060

billion).


Legal proceedings


From time to time and in the normal course of business, claims against the

Group are received from
customers and counterparties. Ma
nagement is of the opinion that no material unaccrued losses will be
incurred and accordingly no provision has been made in
this

condensed interim consolidated financial
information.


Operating environment


Emerging markets such as

the

Republic of Kazakhst
an are subject to different risks more
than
developed markets, including economic, political
,

social, legal and legislative risks. Laws and
regulations affecting businesses in
the R
epublic of Kazakhstan continue to change rapidly; tax and
regulatory framew
orks are subject to varying interpretations. The future economic direction of the
Republic of Kazakhstan is heavily influenced by the fiscal and monetary policies adopted by the
government, together with developments in the legal, regulatory, and political

environment.


Because the Republic

of Kazakhstan

produces and exports large volumes of oil and gas, its economy
is particularly sensitive to the price of o
il and gas on the world market.



11


The Bank has a primary listing with the Kazakhstan Stock Exchange
(“KASE”). In addition, the
Bank’s
Eurobonds
are primarily listed on the
London Stock Exchange
. The Bank has also
allocated

Global Depository Receipts (“GDRs”) on the London Stock Exchange.


In 2009, JSC “Sovereign Wealth Fund “Samruk
-
Kazyna” (“Samruk
-
Kazyn
a”), an entity controlled by
the
Government of the
Republic of Kazakhstan, acquired 259,064,909 common shares of the Bank for
KZT 26,951 million

and
196,232,499 non
-
convertible preferred shares of the Bank for

KZT 33,049 million.


In 2011, the Bank acqui
re
d

from JSC Almex Holding Group (hereafter


“the parent”) a call option
to
purchase 213,000,000 of the Bank’s common shares from Samruk
-
Kazyna at a fixed strike price of
KZT 126.8 per share

for KZT 12,867 million

and has
immediately exercised the option
and
repurchased 213,000,000 of its own common shares from Samruk
-
Kazyna
for
KZT 27,008 million.


In 2012, the Bank acquire
d

from the parent a call option

to purchase 196,232,499 of the Bank’s
preferred shares from Samruk
-
Kazyna at a fixed strike price of
KZT 179.94 per share

for

KZT 7,114 million
.

In June 2012 the Bank

partially exercised the option and repurchased

1
5
0,000,000 of its own preferred shares from Samruk
-
Kazyna

for KZT 26,991 million
.


On 5 July 2012, the Bank repurchased 40,000,000 of its o
wn preferred shares from Samruk
-
Kazyna at
a price of KZT 180.21 per share for KZT 7,208 million. As a result,
t
he Group has recorded

KZT
41
,
054

million as
the
cost of acquired treasury shares
. After the repurchase, Samruk
-
Kazyna
continues owning 6,232,499

preferred shares of the Bank.


The Group is ultimately controlled by Timur Kulibayev

and his wife Dinara Kulibayeva.




12

As at
30 September 2013 and 31 December 2012
, the Group was owned by the following shareholders, which own
individually

more than 5% of
the issued
shares of the Group:


30 September 2013

(unaudited)




Total shares


Stake in total shares

in circulation


Common

shares



Stake

in common shares

in circulation


Convertible and non
-
convertible preferred
shares


Stake in convertible and
non
-
convertible
preferred shares in
circulation

JSC

HG

Almex

8,024,149,068


72.3%


8,003,381,500


73.4
%


20,767,568


10.6
%

JSC Accumulat
ion

Pension Fund
of
Halyk Bank

of Kazakhstan

*

758,082,743


6.8%


661,367,710


6.1
%


96,715,033


49.3
%


GDR

2,074,
008,920


18.7%


2,074,008,920


19.0
%


-



-



Other

24
5
,
840,512



2.2%


167,213,264



1.5
%


78,627,248



40.1
%

Total shares
in circulation (on
consolidated basis
)

11,
102
,081,243


100%


10,905,971,394


100%


196,109,849


100%


31 December 2012




Tota
l shares


Stake in total shares

in circulation


Common

shares



Stake

in common shares

in circulation


Convertible and non
-
convertible preferred
shares


Stake in convertible and
non
-
convertible
preferred shares in
circulation

JSC

HG

Almex

7,559,973,820


68.2%


7,559,973,820


69.3%


-


-

JSC Accumulat
ion

Pension Fund
of
Halyk Bank

of Kazakhstan

*

758,082,743


6.8%


661,367,710


6.1%


96,715,033


55.1%


GDR

2,510,925,720


22.7%


2,510,925,720


23.0%


-


-


Other

254,416,525


2.3%


175,694,405


1.6%


78
,722,120


44.9%

Total shares
in circulation (on
consolidated basis
)

11,083,398,808


100
%


10,907,961,655


100
%


175,437,153


100
%


*
Common

and

preferred

shares

owned

by

JSC

Accumulation

Pension

Fund

of
Halyk

Bank

of Kazakhstan
are not eliminated as thos
e shares were purchased on clients’ funds
and are owned by the clients.


On 14 December 2012
,

the Bank performed a share split of its common shares in proportion of one common share to ten common shares as described in

Note 2
0
.


As at 30 September

20
13,

the Bank operated through its head office in Almaty
and its 22 regional branches, 122 sub
-
regional offices and 40
5

cash settlement
units (as at 31 December 2012


22, 122, 410, respectively) located throughout Kazakhstan. The addres
s of the Bank’s register
ed office is:

109 V Abai Avenue, Almaty, 050008, Republic of Kazakhstan.


As at 30 September

2013, the number of the Group’s full
-
time
equivalent employees
was
11,
20
2

(31 December 2012


12,149).



The interim condensed consolidated financial information
of the Group for the
nine

months ended
30 September

2013

was authorized for issue by the
Management Board on
14

November

2013
.



13

2.

BASIS OF PRESENTATION


Accounting basis


The interim condensed consolidated financial information of the Group has been prepared

in
accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”

(“IAS 34”).


The interim condensed consolidated financial information is unaudited and does not include all the
information and disclosures required in the ann
ual financial statements. The Group omitted
disclosures which would substantially duplicate the information contained in its audited annual
consolidated financial statements for the year ended 31 December 2012 prepared in accordance with
International Fina
ncial Reporting Standards (“IFRS”), such as accounting policies and details of
accounts which have not changed significantly in amount or composition. Additionally, the Group has
provided disclosures where significant events have occurred subsequent to the

issuance of the
Group
’s annual consolidated financial statements for the year ended 31 December 2012 prepared in
accordance with IFRS. Management believes that the disclosures in this interim condensed
consolidated financial
information

are adequate to ma
ke the information presented not misleading if
this interim condensed consolidated financial
information is

read in conjunction with the Group’s
annual consolidated financial statements for
the year ended 31 December
2012 prepared in
accordance with IFRS.
In the opinion of management, this interim condensed consolidated financial
information reflects all adjustments necessary to present fairly the Group’s financial position, results
of operations, statements of changes in shareholders’ equity and cash flows

for the interim reporting
periods.


This interim condensed consolidated financial information is presented in millions of Kazakhstani
Tenge (“KZT” or “Tenge”), except for earnings per share amounts and unless otherwise indicated.


Consolidated subsidiari
es


This interim condensed consolidated financial information includes the following subsidiaries:


Subsidiary

Holding, %

Country

Industry


30
September


2013

(unaudited)

31 December

2012








JSC Halyk
-
Leasing

100

100

Kazakhstan

Leasing

JSC Kaztele
port

100

100

Kazakhstan

Telecommunications

HSBK (Europe) B.V.

100

100

Netherlands

Issue and placement of Eurobonds
,

attracting of syndicated loans

OJSC Halyk Bank
Kyrgyzstan

100

100

Kyrgyzstan

Banking

JSC Halyk Finance

100

100

Kazakhstan

Broker and deal
er

activities

LLC “Halyk Collection”

100

100

Kazakhstan

Cash collection

services

JSC Halyk
-
Life

100

100

Kazakhstan

Life insurance

LLP NBK
-
Finance

100

100

Russia

Broker and dealer

activities

JSC Kazakhinstrakh

100

100

Kazakhstan

Insurance

OJSC NBK
-
Bank

100

100

Russia

Banking

JSC Halyk Bank Georgia

100

100

Georgia

Banking

JSC Accumulated Pension
fund of Halyk Bank of
Kazakhstan

96

96

Kazakhstan

Pension assets

accumulation and

management

LLC Halyk Project

100

100

Kazakhstan

Management of doubtful

and
bad assets




14

Associates


JSC Processing Centre, the associate, provides data processing services in Kazakhstan.
It is classified
within other assets and accounted for under the equity method:


Holding, %

Share
of JSC
Halyk Bank in
n
et loss

Total

assets

To
tal

liabilities

Equity

Total


revenue

As at 30

September 2013

and for the
nine months

then ended

(unaudited)*

-

-

-

-

-

-

As at 31 December 2012 and for the year then ended

25.14

(1)

9

-

9

1


*In accor
dance with the Decision No.1
/2013

dated 9 July 20
13 of extraordinary General meeting of
shareholders of JSC Processing Center and and Certificate of FMSC NBK on annulment of share
issues
No. А4528
dated
13

September 2013 activity
of
JSC Processi
n
g Center is ceased

due to its
voluntary liquidation.




3.

SI
GNIFICANT ACCOUNTING POLICIES


The interim condensed consolidated financial information has been prepared on the accrual basis of
accounting under the historical cost convention, except for certain financial instruments that are
accounted for at fair value
,

insurance liabilities which are accounted for based on actuarial
calculations and certain property and equipment which are carried at revalued cost less depreciation.


In preparing this interim condensed consolidated financial information, the Group appl
ied the same
account
ing policies and methods of computation as those

applied in the consolidated financial
statements of the Group for the year ended 31 December 2012, except for the impact of the
new
Standards and Interpretations described below
.


New and

revised Standards on consolidation, joint arrangements, associates and disclosures


The Group has applied retrospectively a package of Standards on consolidation, joint arrangements,
associates and disclosures, including IFRS 10 Consolidated Financial Sta
tements, IFRS 11 Joint
Arrangements, IFRS 12 Disclosure of Interest in Other Entities, IAS 27 (as revised in 2011) Separate
Financial Statements and IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures.


Key requirements of these Standa
rds are described below.


IFRS 10 Consolidated Financial Statements replaced the parts of IAS 27 Consolidated and Separate
Financial Statements that deal with consolidated financial statements. SIC
-
12 Consolidation


Special
Purpose Entities is withdrawn.
Under IFRS 10 Consolidated Financial Statements, there is only one
basis for consolidation, that is, control. In addition, IFRS 10 Consolidated Financial Statements
includes a new definition of control that contains three elements: (a) power over an invest
ee,

(b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to
use its power over the investee to affect the amount of the investor’s return. Extensive guidance has
been added in IFRS 10 Consolidated Financ
ial Statements to deal with complex scenarios.


The Group assessed that adoption of IFRS 10 Consolidated Financial Statements did not result in any
change in the consolidation status of its subsidiaries.


IFRS 11 Joint Arrangements replaced IAS 31 Interest
s in Joint Ventures. IFRS 11 Joint Arrangements
deals with how a joint arrangement of which two or more parties have joint control should be classified.
SIC
-
13 Jointly Controlled Entities


Non
-
monetary Contributions by Venturers is withdrawn. Under
IFRS

1
1 Joint Arrangements, joint arrangements are classified as joint operations or joint ventures,
depending on the rights and obligations of the parties to the arrangements. In addition, joint ventures
under IFRS 11 Joint Arrangements are required to be acc
ou
nted for using the equity method of
accounting
.




15

Application of the Amendments to IFRS 11 Joint Arrangements did not result in changes to the Group’s
interim condensed consolidated financial
information
.


IFRS 12 Disclosure of Interests in Other Entities i
s a disclosure standard and is applicable to entities that
have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities.


Application of IFRS 12 Disclosure of Interests in Other Entities did not result in signif
icant changes to
the Group’s interim condensed consolidated financial
information
.


IFRS 13 Fair Value Measurement


IFRS 13 Fair Value Measurement establishes a single source of guidance for fair value measurements
and disclosures about fair value measurem
ents. The Standard defines fair value, establishes

a framework for measuring fair value, and requires disclosures about fair value measurements.

The scope of IFRS 13 Fair Value Measurement is broad; it applies to both financial instrument items
and non
-
f
inancial instrument items for which other IFRSs require or permit fair value measurements and
disclosures amount fair value measurements, except in specified circumstances. Application of IFRS 13
Fair Value Measurement resulted in more extensive disclosure
s in the interim condensed consolidated
financial
information

(see Note 30)
.


Amendments to IAS 1 Presentation of Financial Statements “Presentation of Items of Other
Comprehensive Income”


The Group has applied the amendments to IAS 1 Presentation of Fina
ncial Statements “Presentation of
Items of Other Comprehensive Income”. The amendments require items of other comprehensive income
to be grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss
and (b) items that
may be reclassified subsequently to profit or loss when specific conditions are met.
Income tax on items of other comprehensive income is required to be allocated on the same basis. The
amendments have been applied retrospectively, and hence the presentati
on of items of other
comprehensive income has been modified to reflect the changes.


Several other amendments including amended IFRS 7 Financial Instruments: Disclosures “Disclosures


Offsetting Financial Assets and Financial Liabilities” and amendments
resulting from “Annual
Improvements to IFRSs” (2009
-
2011 cycle) were applied for the first time in these interim condensed
consolidated financial statements. Application of these amendments did not result in significant changes
to the Group’s financial pos
ition or results of operations.



4.

SIGNIFICANT ACCOUNTING ESTIMATES


In preparing th
is

interim condensed consolidated financial
information
, the significant judgments
made by
M
anagement in applying the Group’s accounting policies and the key sources of esti
mation
uncertainty were consistent with those that applied to the Group’s annual consolidated financial
statements for
the year ended 31 December
2012 prepared in accordance with IFRS.





16

5.

CASH AND CASH EQUIVALENTS


Cash and cash equivalents comprise:



30
September
2013


(unaudited)


31 December

201
2





Cash on hand

103,785


64,256

Recorded as loans and receivables in accordance with IAS 39:




Short
-
term deposits with Organization for Economic Co
-
operation and
Development countries (the “OECD”) based

banks

207,658


257,783

Overnight deposits with OECD based banks

92,996


-

Correspondent accounts with National Bank of Kazakhstan (“NBK”)

48,936


114,175

Correspondent accounts with OECD based banks


38,288


70,088

Short
-
term deposits with Kazakhstan

banks

6,159


3,510

Correspondent accounts with non
-
OECD based banks

2,008


5,194

Short
-
term deposits with non
-
OECD based banks

1,780


3,437

Overnight deposits with Kazakhstan banks

1,000


-

Short
-
term deposits with
NBK

-


15,001

Overnight deposits wi
th non
-
OECD based banks

-


55



502,610


533
,
499


Interest

rates and currencies in which
interest earning cash and cash equivalents

are denominated
are

presented as
follow
s
:



30 September 201
3

(unaudited)

31 December 201
2


KZT

Foreign
currencies

KZT

Fo
reign
currencies

Short
-
term deposits with OECD
based banks

-

0.1%
-
0.2%

-

0.1%
-
1
.
0
%

Overnight deposits with OECD
based banks

-

0.01%
-
6
.
3
%

-

-

Short
-
term deposits with non
-
OECD based banks

-

1.0%
-
4.5%

-

4
.0%
-
6.0
%

Overnight deposits with
Kazakhstan banks

2.0%

-

-

-

Short
-
term deposits with NBK

-

-

0.5%
-
1.0%

-

Overnight deposits with non
-
OECD based banks

-

-

-

0.1
%


Fair value of assets pledged and carrying amounts of loans

under reverse repurchase agreements
within short
-
term deposits with Kazakhstan ba
nks as at 30

September

20
13 and 31 December
2012

are
presented as follows:



30 September
20
1
3


(unaudited)


31 December 20
1
2


Carrying value
of
deposits


Fair value

of collateral


Carrying value
of
deposits


Fair value

of collateral

Treasury bills of th
e Ministry
of Finance of Kazakhstan

5,655


6,136


3,459


3,721

Equity securities of
Kazakhstan banks

504


500


51


51



6
,159


6,636


3,510


3,772










As at 30 September 2013 and 31 December 2012, maturities of loans under reverse repurchase
agree
ments are less than 1 month.




17

6.

OBLIGATORY
RESERVES


Obligatory reserves comprise:



30 September
20
1
3

(unaudited)


31 December
20
1
2

Recorded as loans and receivables

in accordance with IAS 39
:




Due from
Banks

allocated to obligatory reserves

45,419


49,037



45,419


49,037


The obligatory reserves represent the minimum reserve deposits and cash on hand balances required
by N
ational Banks of Kazakhstan, Kyrgyzstan and Georgia and

Central Bank of Russia

and used for
calculation of the
minimum reserve

requirement.

As at 30 September 2013 obligatory reserves of
OJSC Halyk Bank Kyrgyzstan, OJSC NBK Bank and JSC Halyk Bank Georgia comprised

KZT
51
5

million

(31
December 2012


KZT 570 million
)
.



7.

FINANCIAL ASSETS
AND LIABILITIES
AT FAIR VALUE THROUGH PROF
IT OR LOSS


Financial assets at fair value through profit or loss
comprise:



30 September
20
1
3


(unaudited)


31 December

20
1
2

Financial assets
held for trading
:




Derivative financial instruments

578


733

Corporate bonds

369


277

Securities of forei
gn organizations

184


144

Bonds of JSC Development Bank of Kazakhstan

149


32

Bonds o
f

Kazakhstan banks

75


-

Equity securities of Kazakhstan banks

67


-

Equity securities of Kazakhstan
corporations

17


85






1,439


1,271


Financial liabilities at

fai
r value through profit or loss comprise:



30 September
20
1
3

(unaudited)


31 December
20
1
2

Financial liabilities

at fair value through profit or loss
:




Derivative financial instruments

1,457


439


I
nterest rates

of
financial assets at fair value t
hrough profit or loss

are presented as
follow
s
:



30 September
20
1
3


(unaudited)


31 December

201
2



Interest rate,

%



Interest rate,

%


Corporate bonds

5.2
%


7
.
6%

Securities of foreign organizations

10.9
%


13
.
8%

Bonds of JSC Development Bank of Kaza
khstan

5.4
%


5.5%

Bonds of Kazakhstan banks

3.1
%


-





18

Derivative financial instruments comprise:



30 September
20
1
3


(unaudited)


31 December 20
1
2


Nominal


Net fair value


Nominal


Net fair value


a
mount


Asset


Liability


a
mount


Asset


Liability

Fore
ign currency
contracts
:












Swaps

74,597


242


1,252


40,321


395


388

Forwards

30,551


87


205


32,159


83


51

Options

5,035


249


-


7,231


255

-

-
















578


1,457




733


439


As at
30 September 2013

and
31 December 2012
, the
Group used quoted market prices from
independent information sources for all of its financial assets recorded at fair value through profit or
loss,
except for

derivative financial instruments, which are valued using valuation models based on
observable
mar
ket data.



8.

AMOUNTS DUE FROM CREDIT INSTITUTIONS


Amounts due from credit institutions
comprise:



30 September
20
1
3

(unaudited)


31 December
20
1
2

Recorded as loans and receivables

in accordance with IAS 39
:




Loans to Kazakhstan credit institutions

14,
313


15,931

Term deposits

11,305


15,765

Deposit pledged as collateral for derivative financial instruments

2,857


1,105



28,475


32,801

Less
-

Allowance for loan impairment (Note 1
7
)

(3)


(2)



28,472


32,799


Interest rates and maturity of
amounts

due from credit institutions

are presented as
follow
s
:



30 September
20
1
3

(unaudited)

31 December 20
1
2


Interest rate,

%

Maturity
,
year

Interest rate,

%

Maturity
,
year






Loans to Kazakhstan credit institutions

8.2%
-
17.0%

2017

8.2%
-
17.0%

2017

Term
deposits

0
.
5
%
-
9.0%

2013
-
201
5

0.5%
-
9.0%

2013
-
201
5

Deposit pledged as collateral for derivative
financial instruments


0.2%
-
1.8%

2014

0.2%
-
1.8%

2013





19

9.

AVAILABLE
-
FOR
-
SALE INVESTMENT SECURITIES


Available
-
for
-
sale investment securities
comprise:



30 Septem
ber
20
13

(unaudited)



31 December
20
1
2

Treasury bills of the Ministry
of Finance of Kazakhstan

109,383


110,878

Corporate bonds

85,529


8
8
,
657

Securities of foreign organizations

79,516


8
4
,
719

Treasury bills
of the Ministry of Finance
of the

Russian
Federation

28,170


11,254

Bonds of
JSC
Development Bank of Kazakhstan

19,667


20,839

Bonds of Kazakhstan banks

10,483


8,349

NBK notes

4,484


889

Local municipal bonds

3,980


3,997

Equity securities of Kazakhstan corporations

2,904


2,
529

Equity secu
rities of foreign corporations

1,659


136

Mutual investment funds shares

106


1,927

Equity securities of Kazakhstan banks

48


188



345,929


334,362





Subject to repurchase agreements




NBK notes

and Treasury bills of the Ministry of Finance of K
azakhstan

4,693


3,369


I
nterest rates and maturities of available
-
for
-
sale

investment securities are presented
in the table
below. Interest rates in the table below are calculated as weighted average of the effective interest
rates for the respective sec
urities.



30 September
20
1
3

(unaudited)

31 December 20
1
2


Interest rate,

%

Maturity
,
year

Interest rate,

%

Maturity
,
year

Treasury bills of the Ministry of Finance of
Kazakhstan

4.9
%


2013
-
2027

4.5%

2013
-
2027

Corporate bonds

6.8
%

2013
-
2021

7.2%

2013
-
20
21

Securities of foreign organizations

3.8
%

2013
-
2020

3.8%

2013
-
2020

Treasury bills of the Russian Federation

2.7
%

2015
-
2018

3.4%

2015
-
2021

Bonds of JSC Development Bank of
Kazakhstan

4.9
%


2015
-
2026

5.6%

2015
-
2026

Bonds of Kazakhstan banks

9.0
%

2013
-
2
030

8.3%

2013
-
2022

NBK notes

1.0%

2013

1.0%

2013

Local municipal bonds

4.9%

2015

4.9%

2015


As at
30 September 2013

and
31 December 2012
, the Group used quoted market prices from
independent information sources to determine the fair value for all of its

available
-
for
-
sale investment
securities.




20


10.

INVESTMENTS HELD TO MATURITY


Investments held to maturity comprise
:



30 September
20
1
3

(unaudited)


31 December
20
1
2

Treasury bills of the Ministry of Finance of Kazakhstan


10,462


12,437

Corporate bonds

8
,868


8,237

Bonds of Kazakhstan banks

3,168


3,065

Securities of foreign organizations

1,065


996

Notes of National Bank of Georgia

578


579

Treasury bills of Kyrgyz Republic

335


225

Notes of National Bank of Kyrgyz Republic

-


222

NBK notes

-


5






24,476


25,766


I
nterest rates and maturities of investments held to maturity are presented
in the
table below. Interest
rates in the table below are calculated as

the

weighted average of the effective interest rates

for the
respective securities
.



30 September
20
1
3

(unaudited)

31 December
20
1
2


Interest rate,

%

Maturity
,
year

Interest rate,

%

Maturity
,
year

Treasury bills of the Ministry of
Finance of Kazakhstan

1.5%

2015
-
2030

5.1%

2013
-
2030

Corporate bonds

12.2%

2015
-
2020

14.6%

2014
-
2016

Bonds
of Kazakhstan banks

9.6%

2013
-
2016

12.6%

2015
-
2020

Securities of foreign organizations

14.6%

2014
-
2016

9.7%

2013
-
2016

Notes of National Bank of Georgia

12.5%

2016
-
2017

13.2%

2016
-
2017

Treasury bills of Kyrgyz Republic

8.8%

2013
-
2014

14.1%

2013

Notes of

National Bank of Kyrgyz
Republic

-

-

2.3%

2013

NBK notes

-

-

1.5%

2013



11.

LOANS TO CUSTOMERS


Loans to customers
comprise:



30 September
20
1
3


(unaudited)


31 December


20
1
2

Recorded as loans and receivables

in accordance with IAS 39
:




Originated lo
ans to customers

1,756,570


1,619,850

Overdrafts

430


2,284



1,757,000


1,622,134

Less


Allowance for loan impairment (Note 1
7
)

(314,680)


(302,926)



1,442,320


1,319,208


Average interest rate on loans
to customers
is calculated as interest income

divided by average
balances of loans

to customers
.

As
at
30 September 2013
,
average interest rate on loans
was 11.
9%

(as at 31 December 2012


12.1%)




21

As
at
30

September

201
3
, the
Group’s loan concentration to the ten largest borrowers

was

KZT
365
,
384

million, which comprised 2
1
% of the Group’s total gross loan portfolio

(as at 31 December 2012


KZT 331,012 million; 20%) and
97
%

of t
he Group’s total
equity

(
as at 31 December 201
2



97
%
)
.


As at
30 September 2013,

an a
llowance

for
loan impairment

amoun
ting to
KZT
47,292

million

was
made against these loans (
as at
31 December 2012



KZT
45,948

million
).


Loans are made to the following sectors:



30 September
2013

(unaudited)


%


31 December
2012


%

Retail loans:








-

consumer loans

288,317


16%


2
19,809


14%

-

mortgage loans

105,069


6%


110,141


7%



393,386




329,950



Wholesale trade

304,233


17%


287,126


18%

Services

238,983


14%


157,560


9%

Construction

159,706


9%


168,244


10%

Real estate

133,005


8%


120,038


7%

Retail trade

110,
172


6%


104,408


6%

Financial activity

100,222


6%


66,250


4%

Agriculture

83,722


5%


116,467


7%

Transportation

39,440


2%


39,885


3%

Metallurgy

37,799


2%


36,851


2%

Mining

37,284


2%


36,143


2%

Hotel industry

32,243


2%


32,668


2%

Food ind
ustry

31,390


2%


37,414


2%

Communication

10,341


1%


1,642


0%

Chemical industry

9,620


1%


41,127


3%

Machinery

6,075


0%


9,416


1%

Oil and gas

5,123


0%


10,836


1%

Light industry

4,135


0%


4,553


0%

Energy

2,655


0%


7,906


1%

Other

17,466


1%


13,650


1%



1,757,000


100%


1,622,134


100%


As at 30 September 201
3
, the amount of accrued interest on loans comprised KZT
115
,
839

million


(as at 31 December 20
1
2



KZT
103,278

million).



12.

INSURANCE ASSETS AND LIABILITIES


Insurance assets compri
sed the following:



30 September
201
3

(unaudited)


31 December

20
12





Reinsurance premium unearned

8,974


7,065

Reinsurance amounts recoverable

4,513


5,003



13,487


12,068

Premiums receivable

5,386


2,855


Insurance assets

18,873


14,923




22

I
ns
urance liabilities comprised the following:



30 September
2013


(unaudited)


31 December

20
12





Reserves for insurance claims

17,625


13,108

Gross unearned insurance premium reserve

13,386


9,908



31,011


23,016





Payables to reinsurers and ag
ents

4,340


2,185





Insurance liabilities

35,351


25,201



13.

OT
HER ASSETS


Other assets
comprise:



30 September
20
1
3

(unaudited)


31 December
20
1
2

Other financial assets

recorded as loans and receivables

in
accordance with IAS 39
:




Debtors on banki
ng activities

7,
337


5,429

Debtors on non


banking activity

954


1,076

Accrued other commission income

943


647

Accrued
commission for managing pension assets

584


2,239

Other

23


3



9,8
41


9,394

Less


Allowance for impairment (Note 1
7
)

(3,118)


(
1,576)



6,7
23


7,818





Other non financial assets:




Corporate income tax prepaid

3,290


1,835

Prepayments for property and equipment

1,607


1,153

Inventory

1,321


1,442

Advances for taxes other than income tax


948


1,222

Deferred tax asset
(Note 18)

457


1,091

Investments in associates

24


53

Other

606


568



8,253


7,364

Less


Allowance for impairment (Note 17)

(727)


(813)



7,526


6,551






14,249


14,369




23


14.

AMOUNTS DUE TO CUSTOMERS


Amounts due to customers
include the followin
g
:



30 September
20
1
3


(unaudited)


31 December
20
1
2

Recorded at amortized cost:




Term deposits:




Individuals

640,451


543,59
1

Legal entities

461,661


401,70
5



1,102,112


945,296

Current accounts:




Legal entities

494,459


603,249

Individual
s

156,337


150,637



650,796


753,886



1,752,908


1,699,182


As at
30
September

2013, the Group’s ten largest groups of related customers accounted for
approximately
33
% of the total amounts due to customers (31 December 2012


42%), where each
group o
f related customers

represents customers related to each other within that group.


Management believes that in the event of withdrawal of funds, the Group would be given sufficient
notice so as to
realiz
e its liquid assets to enable repayment.


An analysis

of customer accounts by sector follows:



30 September
20
1
3

(unaudited)


%


31 December
20
1
2


%









Individuals and entrepreneurs

796,788


45%


694,228


41%

Oil and gas

369,473


21%


312,023


18%

Other consumer services

82,940


5%


77,579


5%

Tra
nsportation

69,051


4%


58,308


3%

Wholesale trade

64,737


4%


107,014


6%

Government

64,062


4%


78,316


5%

Construction

60,639


3%


68,627


4%

Financial sector

60,090


3%


123,951


7%

Insurance and pension funds
activity

43,655


2%


11,187


1%

Edu
cation

22,044


1%


13,862


1%

Metallurgy

17,157


1%


29,862


2%

Healthcare and social services

14,331


1%


8,858


0
%

Energy

10,556


1%


12,577


1%

Communication

8,804


1%


28,675


2%

Other

68,581


4%


74,115


4%


1,752,908


100%


1,699,182


100%







24


15.

AMOUNTS DUE TO CREDIT INSTITUTIONS


Amounts due to credit institutions
comprise:



30 September
20
1
3


(unaudited)


31 December
20
1
2

Recorded at amortized cost:




Correspondent accounts

14,258


2,529

Loans and deposits from Kazakhstan banks

12,
264


4,784

Loans and deposits from OECD based banks

4,518


5,403

Loans from other financial institutions

3,353


1,542

Loans and deposits from non


OECD banks

1,923


944



36,316


15,202


Interest rates and maturit
ies

of amounts due to
credit

institu
tions
are presented as
follow
s
:



30 September
20
13

(unaudited)

31 December 20
1
2


Interest rate,

%

Maturity
,


year

Interest rate,

%

Maturity
,

year

Loans and deposits from Kazakhstan banks

0.1%
-
5
.0
%

2013
-
2014

3
.0
%

2013

Loans and deposits from OECD based

banks

0.9
%
-
6.5%

2013
-
2023

0.8%
-
6.5%

2013
-
2023

Loans from other financial institutions

2.7%
-
5.9%

2014
-
2018

2.8%
-
5.2%

2014
-
2016

Loans and deposits from non
-
OECD based
banks

0.5%
-
3.5%

2013

5.5%

2013


Fair value of assets pledged and carrying value of loan
s

included in loans and deposits from
Kazakhstan banks
under repurchase agreements
as at 3
0 September 2013

and
31 December 2012

are
presented as follows:



30 September
20
1
3

(unaudited)


31 December 20
1
2


Fair value of
collateral



Carrying
amount

of loan
s



Fair value of
collateral



Carrying
amount
of loans


Treasury bills of the Ministry of
Finance of Kazakhstan


4,951


4,693


2,943


2,791

Equity securities of Kazakhstan
banks

-


-


426


300










4,951


4,693


3,369


3,091


As at
30 September 2
013 and
31 December 20
12
,

the maturities of loans and deposits under
repurchase agreements are

less than 1 month.


In accordance with the contractual terms of the loans from certain OECD based banks, the Group is
required to maintain certain financial rat
ios, particularly with regard to capital adequacy.
Some

of the
Group’s outstanding financing agreements include covenants restricting the Group’s ability to create
security interests over its assets. Should the Group default under these covenants, this cou
ld result in
cross
-
accelerations and cross
-
defaults under the terms of the Group’s other financing arrangements.


The Group’s management believes that a
s at
30 September 2013

and
31 December 2012
, the Group
was in compliance with the covenants
of the agree
ments the Group has with
other banks and credit
institutions
.




25


16.

DEBT SECURITIES ISSUED


Debt securities issued comprise:



30 September
201
3

(unaudited)


31 December
201
2

Recorded at amortized cost:




Subordinated debt securities issued:




Fixed rate

KZT denominated bonds

11,928


11,725

Reverse inflation indexed KZT denominated bonds

8,647


8,455

Inflation indexed KZT denominated bonds

3,984


3,926


Total subordinated debt securities outstanding

24,559


24,106

Unsubordinated debt securities issued
:




USD denominated bonds

243,902


277,813


Total unsubordinated debt securities outstanding

243,902


277,813


Total debt securities outstanding

268,461


301,919


The coupon rates and maturities of these debt securities issued follow:



30 September
2
01
3

(unaudited)

31 December 201
2


Coupon

rate,

%

Maturity,
year

Coupon
rate,

%

Maturity,
year

Subordinated debt securities issued:





Fixed rate KZT denominated bonds

7.5%
-
13.0%

2014
-
2018

7.5%
-
13.0%

2014
-
2018

Reverse inflation indexed KZT denominated

bonds

15% less
inflation rate

2015
-
2016

15% less
inflation rate

2015
-
2016

Inflation indexed KZT denominated bonds

inflation rate
plus 1%

2015

inflation rate
plus 1%

2015

Unsubordinated debt securities issued:





USD denominated bonds

7.3%
-
9.3%

2013
-
20
21

7.3%
-
9.3%

2013
-
2021


Subordinated securities are unsecured obligations of the Group and are subordinated in right
of
payments to all present and future senior indebtedness and certain other obligations of the Group.

Interest on debt securities issued i
s payable on a semi
-
annual basis
.


In accordance with the terms of the USD denominated bonds, the Group is required to maintain
certain financial covenants particularly with regard to its capital adequacy, limitations on transactions
at less than fair mark
et value and payment of dividends. Furthermore, the terms of the USD
denominated bonds include covenants restricting the Group’s ability to create security interests over
its assets. Should the Group default under these covenants, this could result in cros
s
-
accelerations and
cross
-
defaults under the terms of the Group’s other financing arrangements. The Group’s
management

believes that as
at

30 September 2013

and
31 December 2012

the Group was in
compliance with the covenants of the agreements the Group has

with the notes’ trustee
s

and holders.




26

17.

ALLOWANCES FOR IMPAIRMENT LOSSES AND PROVISIONS


The movements in accumulated impairment of available
-
for
-
sale

invest
ment securities, the
allowances for impairment of interest earning and other assets were as follow
s
:



Loans

to customers


Amounts due
from credit
institutions


Available
-
for
-
sale
investment
securities


Other

a
ssets


Total


30 June 201
3

(unaudited)

(307,093)



(3)



(999)



(3,300)



(311,395)

Additional provisions
recognized

(6,063)


(1)


-


(574)


(6,638)

Write
-
offs

160


-


-


-


160

Foreign exchange
differences

(1,684)


1


-


29


(1,654)


30 September 2013
(unaudited)

(314,680)


(3)


(999)


(3,845)


(319,527)











30 June 201
2

(unaudited)

(295,007)


(1)


(1,050)


(2,089)


(298,147)

(Addi
tional provisions
recognized)/recovery

of provision

(1,591)


(1)


24


(336)


(1,904)

Write
-
offs

510


-


-


-


510

Foreign exchange
differences


(1,029)


-


-


(2)


(1,031)


30 September 2012
(unaudited)

(297,117)


(2)


(1,026)


(2,427)


(300,572)












31 December 20
1
2

(302,926)


(2)


(999)


(2,389)


(306,316)

Additional provisions
recognized

(11,610)


(2)


-


(1,563)


(13,175)

Write
-

offs

2,108


-


-


83


2,191

Foreign exchange
differences

(2,252)


1


-


24


(2,227)

30 September 2013
(un
audited)

(314,680)


(3)


(999)


(3,845)


(319,527)











31 December 201
1

(291,303)


(2)


(1,098)


(2,225)


(294,628)

(Additional provisions
recognized)/recovery
of provision

(9,816)


-


72


(400)


(10,144)

Write
-
offs

5,935


-


-


200


6,135

F
oreign exchange
differences


(1,933)


-


-


(2)


(1,935)


30 September 2012

(unaudited)

(297,117)


(2)


(1,026)


(2,427)


(300,572)




27

Provisions

represent provisions against letters of credit and guarantees issued.

The movements in
provisions were as fol
lows:



Three months
ended

30 September
2013

(unaudited)


Three months
ended

30 September
2012

(unaudited)


Nine

months
ended

30 September
2013

(unaudited)


Nine

months
ended

30 September
201
2

(unaudited)









At the beginning of the period

(4,539)


(
4,854)


(4,385)


(3,388)

Additional provisions recognized

(648)


(1,552)


(4,427)


(6,186)

Recovery of provisions

1,246


3,168


4,840


6,351

Foreign exchange differences

(17)


(26)


14


(41)


At the end of the period

(3,958)


(3,264)


(3,958)


(3,264)



18.

TAXATION


The Bank and its subsidiaries, other than HSBK (Europe) B.V., OJSC NBK Bank, OJSC Halyk Bank
Kyrgyzstan, LLP NBK
-
Finance and JSC Halyk Bank Georgia are subject to taxation in Kazakhstan.
HSBK (Europe) B.V. is subject to income tax in the Nethe
rlands. OJSC NBK Bank and LLP NBK
-
Finance are subject to income tax in the Russian Federation. OJSC Halyk Bank Kyrgyzstan is subject
to income tax in the Republic of Kyrgyzstan. JSC Halyk Bank Georgia is subject to income tax in
Georgia.


The income tax ex
pense comprises:



Three months
ended

30 September
2013


(unaudited)


Three months
ended

30 September
2012


(unaudited)


Nine

months
ended

30 September
2013

(unaudited)


Nine

months
ended

30 September
2012

(unaudited)









Current tax charge

3,9
2
0


5,
588


10,187


13,090

Deferred
tax
expense
/
(benefit)

724


(774)


1,6
71


(1,468)


Income tax expense

4
,
644


4,814


11,858


11,622


The tax rate for
Kazakhstan
companies was
20%
during
nine months
ended
30 September
201
3


and 201
2
.

Income on state and other

qualifying securities is tax exempt.


The tax rates in the Netherlands, the Russian Federation, the Republic of Kyrgyzstan and Georgia

are

20%, 20%, 10% and 15%, respectively.




28

Deferred tax assets and liabilities comprise:



30 September
2013

(unaudite
d)


31 December

201
2

Tax effect of deductible temporary differences:




Insurance premium reserves

238


917

Bonuses accrued

1,06
6


1,069

Vacation pay accrual

20
2


151

Fair value of derivatives

281


51

Other

10
7


557


Deferred tax asset

1,
8
94


2,
745





Tax effect of taxable temporary differences:




Loans to customers, allowance for impairment losses

(5,
518
)


(5,05
6
)

Property and equipment, accrued depreciation

(4,
7
66
)


(4,4
00
)

Fair value of derivatives

(
97
)


(105)


Deferred tax liability

(10
,
374
)


(9,561)


Net deferred tax liability

(8,
487
)


(6,816)


The Group has offset deferred tax assets and liabilities on the consolidated statement of financial
position where a right of offset existed. The amounts presented after offset comprise:



30 S
eptember

201
3

(unaudited)


31 December

201
2


Deferred tax asset (Note 1
3
)

4
5
7


1,091

Deferred tax liability

(8,
944
)


(7,907)





Net deferred tax liability

(8,
487
)


(6,816)


Kazakhstan and other countries where the Group operates currently have a numb
er of laws related to
various taxes imposed by both state and regional governmental authorities. Applicable taxes include
value added tax, income tax, social taxes, and other

taxe
s. Implementing regulations are often unclear
or nonexistent and few preceden
ts have been established. Often, differ
ent

opinions regarding legal
interpretation exist both among and within government ministries and organizations; thus creating
uncertainties and areas of conflict. Tax declarations, together with other legal complianc
e areas

(as examples, customs and currency control matters) are subject to review and investigation by a
number of authorities, which are enabled by law to impose severe fines, penalties and interest charges.
These facts create tax risks in Kazakhstan sub
stantially more significant than typically found in
countries with more developed tax systems.


Management believes that the Group is in compliance with the tax laws affecting its operations;
however, the risk remains that relevant authorities could take d
iffer
ent

positions with regard to
interpretive issues.


Commercial legislation of the countries where the Group operates, including tax legislation, may
allow more than one interpretation. In addition, there is a risk of tax authorities making arbitrary
ju
dgments of business activities. If a particular treatment, based on Management’s judgment of the
Group’s business activities, was to be challenged by the tax authorities, the Group may be assessed
additional taxes, penalties and interest.




29

Such uncertain
ty may relate to the valuation of financial instruments and the market pricing of deals.
Additionally such uncertainty may relate to the valuation of temporary differences on the provision
and recovery of the provision for impairment losses on loans to cus
tomers and receivables, as an
underestimation of the taxable profit. The management of the Group believes that it has accrued all
tax amounts due and therefore no allowance has been made in the condensed interim consolidated
financial information.


In Kaz
akhstan
t
ax years remain open to review by the tax authorities
within the

subsequent
five years.
However,
the
tax authorities may perform additional reviews, if considered necessary. In accordance
with judicial rulings, the period of review can be altered,

if the court acknowledges
that there was
prevention to conducting of the tax reviews by the tax authorities
.



19.

OTHER LIABILITIES


Other liabilities
comprise:



30 September
201
3


(unaudited)


31 December


201
2

Other financial liabilities:




Creditors o
n bank activities

2,135


1,720

Payable for general and administrative expenses

1,671


243

Creditors on
non
-

banking activities

680


644

Other

50


44



4,536


2,651

Other non financial liabilities:




Salary payable

6,452


6,033

Current income tax p
ayable

3,202


3,329

Taxes payable other than income tax

1,928


1,351

Other prepayments received

457


760



12,039



11,473


16,575



14,124



20.

EQUITY


A
uthorized, issued and fully paid number of shares as at
30 September
201
3

and 201
2

were as
follows:


30 September 201
3
(unaudited)







Share

capital
authorized

Share capital
authorized and
not issued

Fully paid and
issued share
capital

Share capital
repurchased

Outstanding
shares


Common shares

24
,
000
,
000
,0
00

12,871,481,549

11,128,518,451

(222,547,05
7)

10,905,971,394

Non
-
convertible preferred
shares

600,000,000

(290,140,570)

309,859,430

(193,746,831)

116,112,599

Convertible preferred shares

80,225,222

-

80,225,222

(227,972)

79,997,250


30 September 201
2

(unaudited)







Share capital

authorized

S
hare capital
authorized

and not issued

Fully paid and

issued

share capital

Share capital
repurchased

Outstanding
shares


Common shares

2,400,000,000

(1,091,584,040)

1,308,415,960

(218,204,421)

1,090,211,539

Non
-
convertible preferred
shares

600,000,000

(2
90,140,570)

309,859,430

(214,085,931)

95,773,499

Convertible preferred shares

80,225,222

-

80,225,222

(482,898)

79,742,324



30

All shares are KZT denominated. Movements of shares outstanding are as follows:



Number of shares

Nominal (placement) amount


Co
mmon


Non
-
convertible
preferred


Convertible
preferred


Common


Non
-
convertible
preferred


Convertible
preferred













31 December 20
1
2

10,907,961,655


95,712,499


79,724,654


43,597


5,837


13,233

P
urchases of treasury
shares

(6,829,353)


-


(101
,167)


(8)


-


-

Sale of treasury shares

4,839,092


20,400,100


373,763


5


3,436


58


30 September 2013

(unaudited)

10,905,971,394


116,112,599


79,997,250


43,594


9,273


13,291













31 December 2011

1,089,338,798


285,803,817


79,846,624


43,611


46,891


13,233

Purchase of treasury
shares from Samruk
-
Kazyna (including
the cost of the call
option


see Note 1)

-


(190,000,000)


-



-


(41,054)


-

Other purchases of
treasury shares

(902,296)


(1,349,054)


(129,300)


(9)


-


-

Sale of tr
easury shares

1,775,037


1,318,73
6


25,000



18


-


-


30 Sep
tember 2012

(unaudited)

1,090,211,539


95,773,499


79,742,324


43,620


5,837


13,233


Common shares


In accordance with the Decision made on extraordinary shareholders meeting held

on

6 December 2012, the Bank increased

the

total amount of shares by performing a split of the
common shares in proportion of one common share to

ten common shares