Отчет по практике в JSC “Home Credit Bank”

Contents

 

Introduction……………………………………………………………………….	3
Information about the Bank …………………………………………………….	4
History of the Bank………………………………………………………………	5
Issuer default rating by Fitch Ratings…………………………………………..	6
Internship at analyst team……………………………………………………….	8
Analysis of financial statements of the Bank……………………………………	10
Ratio analysis…………………………………………………………………….	17
Conclusion……………………………………………………………………….	23
References………………………………………………………………………..	24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Introduction

 

My internship for degree work was at JSC “Home Credit Bank”, as a financial analyst in analysis team. Analysis team is a part of Financial Management Unit, which is the part of the Finance Department. During the first week, my coach set me the tasks, which I should prepare for the period of internship. Work in analysis team helped me so much to get familiarized with the process of planning and budgeting, which is the subject of my degree work.

In the process of work I found out how to calculate different sales indices, prepare reports, answer for ad-hoc requests and etc. Also I studied how to predict some parameters on the basis of historical data.

In this report I described the history of the JSC “Home Credit Bank”, main information, such as mission and goals. Next I pointed the current achievements of JSC “Home Credit Bank” such as changing of ownership and rating by Fitch Ratings. In the second part of my report I write down about my internship, what task I did, and what issues were solved. In the third part I showed different calculations and analysis on financial data of the Bank. Next I analyzed the current data by calculating different financial ratios of the Bank.

For the three and half months of internship I used materials of the Bank, such as financial statements of past periods, internet site of the Bank, intranet, etc. Also I used materials from governmental internet sites, such as site of National Bank of the RK, Kazakhstan Stock Exchange and etc.

Each task and work gave me additional understanding of the working process in the Bank, and added practical knowledge to theoretical one.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information about the Bank

 

For the seven years of its existence Joint Stock Company "Home Credit Bank" has become one of the leading players in the consumer credit market in Kazakhstan. All shares (100%) owned by LLC "Home Credit and Finance Bank" (Russia).

JSC "Home Credit Bank" is one of the leading players in the consumer credit market in Kazakhstan. The bank offers loans to consumers in retail outlets partners, cash loans, and deposit products.

Its goals:

• We aim to become the market leader in consumer crediting in Kazakhstan.

• We want to establish, maintain and promote high standards in business relationships with customers, partners, employees, investors and other interested parties. This means to deal honestly and responsibly, respecting laws and meeting accepted international standards of responsible business, and to respect the traditions and culture of the countries and the people with whom we work.

Its values:

• We know the needs and values ​​of life of our clients, we know how they live. Convenience and simplicity of our loans and other services are based on this knowledge.

• We do our best to help our customers realize their dreams and make their lives better.

By the end of 2012 in the Home Credit Bank there was an increase of the credit portfolio, it more than doubled comparing to the same period last year.

Our partners are the national postal operator "Kazpost" and the largest retail network in the country such as “Technodom”, “Sulpak”, “LogyCom”, “Alser”, “Beliy Veter”, "Mechta", as well as regional retail chains and individual shops.

The priority of the Home Credit Bank is the consumer lending. Favorable loans in retail outlets partners are offered to potential clients in order to buy a wide range of products, starting from consumer electronics to furniture and building materials.

Another important area is non-purpose loans through branches of "Kazpost" own branches and through direct marketing. Distribution network covers the whole territory of the Republic of Kazakhstan.

In 2012, the bank has granted to the population loans for the total eighty-nine billion tenge. The client base includes more than two million Kazakhstan citizens.

Other services includes:

• deposit products;
• credit cards;
• safe operations;
• remittances of tenge in Kazakhstan and foreign currency around the world, transfers through the Western Union system;
• finance (for legal entities);
• provision for use of the electronic system "Client-Bank";
• settlement and cash services in tenge and foreign currency.

JSC "Home Credit Bank" is:

• The member of the Kazakhstan Deposit Insurance Fund;
• The member of the Association of Banks of the Republic of Kazakhstan;
• Associate member of the international payment system VISA International.

As of February 1, 2013 the bank has more than 3,047 points of sale in the channel POS, consultants in 213 offices of JSC "Kazpost", 33 banking offices and 30 micro-offices and 30 terminals to receive payments on loans. [1]

 

History of the bank

 

Private Bank FTD was established in 1993 and subsequently renamed Bank Alma-Ata in December 1994. In December 1995, the Bank was re-registered as Open Joint Stock Company International Bank Alma-Ata. Due to a change in legislation, the Bank was re-registered as a joint stock company in November 2004. On 4 November 2008, International Bank Alma-Ata JSC was renamed as Home Credit Bank JSC.

The principal activities of the Bank are retail lending, deposit taking and customer accounts maintenance, issuing guarantees, cash and settlement operations and foreign exchange. The activities of the Bank are regulated by the Committee for the Control and Supervision of the Financial Markets and Organisations of the National Bank of the Republic of Kazakhstan (“the Committee”). The Bank holds banking licence #1.1.188 received from the Committee on 28 November 2008.

The registered address of the Bank’s head office is 248, Furmanov Street, Almaty, Republic of Kazakhstan, 050059. The Bank has a branch in Astana.

As at 31 December 2012 and 2011 the Bank was owned by Richard Benysek (90.01%) and Home Credit B.V. (9.99%).

“Home Credit and Finance Bank LLC” (HCFB), a bank incorporated in Russia, today announces that it has acquired a 100% stake in “Home Credit Bank JSC”, a bank incorporated in the Republic of Kazakhstan, from its current shareholders. The transaction has been approved by respective regulators.

“The deal is part of the strategic plan of Home Credit Group in the CIS region. The consolidation of Russian and Kazakh assets will leverage business synergies, facilitate the transfer of expertise and finally it will further increase business efficiency in both countries. Home Credit Bank Kazakhstan will be supported both by HCFB and Home Credit Group (Home Credit B.V.),” said Ivan Svitek, Chairman of the Management Board of HCFB, who has recently taken responsibility for business development of Home Credit operations in the CIS region.

Home Credit Bank JSC is one of the key players on consumer finance market in Kazakhstan boasting a market share close to 30%. The bank offers POS loans at partner shops, cash loans as well as deposit products.

Home Credit Bank takes the leading position in the retail financial market of Kazakhstan and is in the top 10 by volume of consumer loans.

In this section, I present the basic facts of the seven-year history of successful development of the bank in Kazakhstan.

 

2005: Microcredit company "Home Credit Kazakhstan" was based.

2006: The program of money lending via national communication provider "Kazpost" was launched.

An agency agreement with the "Kazpost" for providing consumer loans was signed.

2008: Dutch company Home Credit BV acquired a minority stake in a small Kazakh bank "International Bank of Alma-Ata" (IBA).

The name was changed to JSC "Home Credit Bank".

The new strategy was adopted, and the Home Credit Group’s business model was implemented to the processes of the Bank.

2009: First profit was earned.

2010: Profitability increased 5 times.

2011: Net interest income for the first half of 2011 increased by 73% comparing the same period of previous year.

The two new offices in Almaty in the shopping center "Merey" and Ainabulak neighborhood were opened.

The credit portfolio increased to 139.2%.

2012: The first co-branding project "Tehnodengi" for financing purchases on credit in Kazakhstan was launched.

Loan program "Cash loan for all" was started.

The system of payment through payment terminals Home Credit Bank started to work.

Issuance of credit cards for loyal customers "Home Card".

Innovation system for work with loyal customers DSA was introduced.

30 branches of the Bank were opened in Kazakhstan.

30 micro-offices in different regions of the country started to work. [1]

 

Issuer default rating by Fitch Ratings

 

International rating agency Fitch Ratings has assigned a Subsidiary Bank "Home Credit Bank" long-term issuer default rating (IDR) "BB-" from "stable" outlook, according to Novosti-Kazakhstan.

According to the report, the long-term IDR, National and Support ratings reflect the moderate probability of support for the bank in case of need from its parent company - Russian Home Credit and Finance Bank (HCF Bank, "BB" / forecast "Stable" / "BB").

Fitch's view of the likelihood of support reflects a 100-percent ownership stake in the Kazakh HCF Bank subsidiary structure, its small size relative to the parent (in SB Home Credit Bank accounts for 5% of the assets HCF Bank, which limits the potential cost of support) and reputational risk to the HCF Bank in case of default of the Kazakh subsidiary.

The difference in level between the ratings of one of the two banks take into account that the parent and subsidiary structures are in different countries, limited operating history to date SB JSC Home Credit Bank, and some uncertainty about the readiness of HCF Bank to support its subsidiary in Kazakhstan for the long term in the event of a prolonged deterioration operating environment in the country.

SB JSC Home Credit Bank is 100-percent subsidiary of HCF Bank, which in turn is a member of Home Credit Group, which leads activities in Central and Eastern Europe, CIS and Asia. Majority-owned by a group PPF Group N.V., a diversified industrial holding company controlled by Czech businessman Peter Kellner.

SB JSC Home Credit Bank is a small, but fast-growing retail bank (in 2012 the growth of the loan portfolio was 110%), which focuses on lending to retail outlets and retail loans in the lower echelons of the mass market. Like other banks, lending to retail customers in the mass market, the bank is sensitive to fundamental macroeconomic factors because of the relatively low level of financial flexibility of its borrowers.

Asset quality of SB Home Loan Bank, according to Fitch, is currently adequate. Problem loans (overdue by 90 days) increased to a moderate 5% at end-2012, compared with 2.8% at the end of 2011, and the generation of bad loans reached 7.7% of the average performing loans in 2012 against the background of the bank with more high-risk customers.

SB Home Credit Bank currently relies on funding provided by the Group (37% of total liabilities at the end of 2012), and non-core corporate deposits (35% of total liabilities at the end of 2012). The latter are highly concentrated: the five largest accounted for 28%, and the largest 14% of total liabilities at the end of 2012. [2]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internship at Analysts Team

 

Finance department consists of Accounting Unit, Purchase Unit Business Information Unit, and Finance Management Unit, which composed of Financial reporting and planning team, Cost control team, and Analysts team, where I practiced during my internship.

The main purpose of the Analyst Department is to prepare analytical information in order to take managerial decisions, financial analysis of Bank; make financial analysis of activity, and defining ways for effectiveness increase.  The main tasks of Analyst team are to control and evaluate work effectiveness of Bank’s departments on the base of difference between actual performances with the budgeted one. Also analyst team participates in the process of composing informational and analytical system of the Bank.

One of the latest achievements of the team was the introduction of the procedure of conducting marketing actions with the partners. Also was compiled weekly report that allows analyzing and controlling actions, what significantly increased effectiveness of the expenses control system and plan fulfillment on action.

Analyst team consists of the leader of analyst team, leading specialist and specialist. I was appointed to the place of specialist.

At first week my chief defined what main tasks I should do during my internship:

 

Reports

 

Name of the report	Periodicity	Recipients
Daily Sales	Daily	Top Management; all interested employees
Sales Report	Monthly	HQ; Top Management; Finance Management Unit
Sales Report (DS)	Monthly	HQ; Top Management; Finance Management Unit
POS opening report	Weekly	Top Management; all interested employees
Technodom shares	Weekly	Techno Manager
Action Evaluation Report	2 times a week	Top Management; all interested employees
Slides for LTP	Monthly	Finance Management Unit

 

Besides listed responsibilities I participated in confirmation of marketing actions with our partners (retail outlets and KazPost), done ad-hoc requests for our department, and for other departments as well, participated in the testing of new tool for Action Evaluation Report, which enabled to spend much less time for calculation, and consequently freed time for analyzing and solving occurred discrepancies.

Each report and task helped me to understand how the process of planning and budgeting proceeds, and what team or department is responsible for achievement of common goal.

At the two latest week of the internship our department started to prepare the Forecast for the rest of the year. In this process participated not only the Finance Department, but also Consumer loans and Cash loans departments, in cooperation with Marketing Department.

 What is the Forecast? A financial forecast is an estimate of future financial outcomes for a company or country (for futures and currency markets). Using historical internal accounting and sales data, in addition to external market and economic indicators, a financial forecast is an economist's best guess of what will happen to a company in financial terms over a given time period—which is usually one year. Arguably, the most difficult aspect of preparing a financial forecast is predicting revenue. Future costs can be estimated by using historical accounting data; variable costs are also a function of sales. Unlike a financial plan or a budget a financial forecast doesn't have to be used as a planning document. Outside analysts can use a financial forecast to estimate a company's success in the coming year. [5]

Sales Departments provide all input data, such as volume of sales, average maturity of loans, interest rates and etc. Forecast is based on the results of first 3 months of 2013, so after first quarter there could be made conclusion on the effectiveness of the approved budget. Forecast gives an opportunity to change planning cash inflows and outflows with the respect to the current market situation.

Participation in forecast process allowed me to understand the process of budget and planning, get familiarized with the special features of the methodology. I studied a lot of things that facilitated my work, and writing of my degree work.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analysis of financial statements of JSC “Home Credit Bank”

 

Analysis of the statement of comprehensive income. The statement of comprehensive income shows the cash inflows and outflows of the Bank for period of consideration.

Table 1

Structure of statement of comprehensive income of the JSC “Home Credit Bank”, 2009 – 2012, %

	2012	2011	2010	2009
Interest income	59,24%	68,39%	90,98%	92,17%
Interest expense	-10,14%	-5,94%	-5,56%	-13,98%
Net interest income	49,10%	62,46%	85,43%	78,19%
Fee and commission income	41,16%	31,64%	8,52%	5,03%
Fee and commission expense	-0,29%	-3,95%	-2,62%	-1,62%
Net fee and commission income	38,26%	27,69%	5,90%	3,42%
Net gain/(loss) on financial instruments at fair value through profit or loss	0,41%	-0,08%	0,00%	0,00%
Net foreign exchange loss	-0,83%	-0,01%	0,21%	1,98%
Other operating income	0,02%	0,06%	0,29%	0,82%
Operating income	86,96%	90,11%	91,83%	84,41%
Net impairment losses	-13,37%	-3,61%	1,86%	-32,81%
General administrative expenses	-26,11%	-33,57%	-47,22%	-42,54%
Profit before income tax	47,47%	52,93%	46,46%	9,06%
Income tax expense	-11,20%	-11,66%	-10,07%	-2,77%
Profit and total comprehensive income for the year	36,27%	41,28%	36,40%	6,29%
Note – done by the author on the materials [3]