Kazakh bank Halyk net income up 9pc as bad debts fall

ALMATY: Halyk Bank , Kazakhstan's second-largest lender by assets, said on Monday net income rose by 9.1 percent last year to 39.5 billion tenge ($267 million) partly due to a fall in bad debt charges of nearly a fifth.

But the bank, which is controlled by Timur Kulibayev, a son-in-law of President Nursultan Nazarbayev, and his wife Dinara, fell just short of its own forecast for net income in 2011 of 40-45 billion tenge.

Kazakhstan's banking sector was among the first and hardest hit by the global financial crisis. It is now recovering after some banks have completed billion-dollar debt restructurings. The Kazakh economy, Central Asia's largest, is also growing strongly, expanding by 7.5 percent last year.

The European Bank for Reconstruction and Development urged Kazakhstan last month to tackle its banks' high bad loan rates, which it said could hamper sustained growth if left unchecked.

Halyk Bank's bad debt charges fell last year by 19.1 percent. It said the share of non-performing loans (NPLs) with 30-day overdue payments decreased to 19.8 percent at the end of 2011 from 21.1 percent as of Sept. 30, 2011.

But the share of 90-day overdue payments rose to 18.7 percent from 17.8 percent over the same period, mainly because some of 30-day NPLs became overdue by 90 days, it said.

The bank's interest expenses fell by 8.7 percent and net fee and commission income went up by 17.6 percent.

Halyk said this was partly offset by a decrease in interest income of 6.9 percent, losses incurred from mismanagement of pension assets of 5.2 billion tenge ($35.2 million) and an increase in operating expenses by 2.4 percent.

The bank's net income had more than doubled to 36.2 billion tenge in 2010 compared to the previous year, driven by a revival in its loan portfolio.

The bank had said last year that it expected an increase of at least 10 percent in net income in 2011.

Kulibayev and his wife held a 44.51- percent stake in the bank and its subsidiaries at the end of 2011.

Kazakhstan's sovereign wealth fund Samruk-Kazyna held 11.55 percent, and individual shareholders the remaining 43.94 percent.