Отчет по практике в JSC “Home Credit Bank”

In the table 1 there is shown the structure of the Bank’s income, each statement shown as a percentage of total revenue for the period. Because of its activity the major part of income consists of interest income and fee and commissions income. Interest expenses consist from the expenses that Bank takes because paying percentage income on deposits from customers. Fee and commissions income include all gains that are received by Bank, such as for cash transactions, fees for tardy payments on credit, commissions for account maintenance, etc. Fee and commissions expense include all expenses that connected with payment of commissions and fees, such as commissions to partners, payments for account maintenance, cash transactions expenses, etc. Other part of income consists Net gain/(loss) on financial instruments at fair value through profit or loss, Net foreign exchange loss and other operating income.

Impairment losses are a statement that shows the amount of credits that were write-off, as uncollectable, because of delinquency. General administrative expenses are represented by all charges for non-banking activity, such as salary expenses, advertising and marketing, utilities, travel expenses, and depreciation and amortization expenses.

Profit before income tax complied approximately 50% of total revenue of the Bank for the past 3 years. Income tax expense was about 11% of total income in 2011 and 2012.

In 2012 profit and total comprehensive income for the period complied 36% of total revenue earned. This is quite good achievement, to save more than 1/3 of earned money. This amount goes to retained earnings and paying of dividends. So it can be concluded that Bank’s financial policy is done in its best way, because they can eliminate expenses and maximize profit.

Table 2

Dynamics of profit and loss of JSC “Home Credit Bank” for the period 2009 – 2012, KZT thous.

	2012	2011	2010	2009	2012/2011	2011/2010	2010/2009
Interest income	15 790 425	10 017 504	5 949 496	5 867 739	57,63%	68,38%	1,39%
Interest expense	-2 703 649	-869 418	-363 501	-889 715	210,97%	139,18%	-59,14%
Net interest income	13 086 776	9 148 086	5 585 995	4 978 024	43,05%	63,77%	12,21%
Fee and commission income	10 969 339	4 634 947	556 827	320 399	136,67%	732,39%	73,79%
Fee and commission expense	-77 288	-578 575	-170 997	-102 986	-86,64%	238,35%	66,04%
Net fee and commission income	10 196 459	4 056 372	385 830	217 413	151,37%	951,34%	77,46%
Net gain/(loss) on financial instruments at fair value through profit or loss	109 315	-12 126			1001,49%
Net foreign exchange loss	-220 609	-1 469	13 649	125 877	-14917,6%	-110,76%	-89,16%
Other operating income	5 078	8 476	19 039	52 315	-40,09%	-55,48%	-63,61%
Operating income	23 177 019	13 199 339	6 004 513	5 373 629	75,59%	119,82%	11,74%
Net impairment losses	-3 564 826	-529 306	121 381	-2 088 718	573,49%	-536,07%	-105,81%
General administrative expenses	-6 958 758	-4 916 621	-3 087 632	-2 708 150	41,54%	59,24%	14,01%
Profit before income tax	12 653 435	7 753 412	3 038 262	576 761	63,20%	155,19%	426,78%
Income tax expense	-2 985 102	-1 707 512	-658 369	-176 373	74,82%	159,35%	273,28%
Profit and total comprehensive income for the year	9 668 333	6 045 900	2 379 893	400 388	59,92%	154,04%	494,40%
Note – done by the author on the materials [3]

 

In table 2 there is shown the dynamics of gains and loss of the Bank for past 4 years. Interest income increased for a half each year starting from 2010. However interest expenses more than doubled in 2012 comparing with the previous period, so it can be concluded that Bank attracted more deposits, so it need to pay off interest to its consumers. Fee and commissions expenses on the contrary decreased in 2012, there is a suggestion that Bank was imposed with a fine, or had a significant amount of deals, so they need to pay out a lot of commissions. Fee and commissions income increased dramatically in 2012 because Bank granted loans to population, so each credit payment, imposed with commissions, brought additional income.

The reason for such growth of net impairment losses, also because Bank enlarged its customer database, so more people did not repay their credits, and Bank ought to write off great amounts.

General administrative expenses have a stable increase each year, so the growth caused with the constant expansion of the Bank. Every loss connected with the payment for utilities and rent, salaries and bonuses, travel, payment of all other taxes, except corporate income tax, are in this very statement. So the steady rise of general administrative expenses is the sign of growing and expanding Bank.

Last three years Bank significantly increased its profit after income tax, which is the achievement of Top Management and each department in the battle of minimizing costs and maximizing the profit.

 

Analysis of the assets of Bank. The property of JSC “Home Credit Bank” consists of Current Assets, Fixed Assets and Other Assets. This property belongs to the company on the right of a private property.

Table 3.

Structure of assets of “JSC “Home Credit Bank”, 2009-2012, %

	2012	2011	2010	2009
ASSETS	100%	100%	100%	100%
Cash and cash equivalents	8,78%	10,19%	16,54%	28,37%
Placements with banks and other financial institutions	2,10%	1,98%	0,67%	0,86%
Loans to customers	84,56%	82,62%	75,92%	59,80%
Financial assets at fair value through profit or loss	0,22%	-	-	-
Intangible assets	0,47%	0,65%	1,19%	0,99%
Property and equipment	0,86%	1,25%	1,55%	2,43%
Current tax receivable	-	0,35%	1,13%	4,33%
Deferred tax asset	-	-	-	0,58%
Other assets	3,00%	2,95%	2,98%	2,64%
Note – done by the author on the materials [3]

 

According to the results of analysis of assets structure, shown in the Table 3, it is seen that loans to customers are the most weighted assets during all 4 years. It is clearly that the main activity of the bank – credits to clients – is the largest statement in the Bank’s balance sheet. In 2012 8,78% of Bank’s total assets were taken by cash and cash equivalents. It is notable that this amount slightly decreased since 2009, and placements with banks and other financial institutions on the contrary starting from 2010 rise for a little. The figure of intangible assets does not change sharply for the whole period of consideration, it is about 1%. The article other assets also is stable, and its amount fluctuates near 3%. Share of property and equipment decreased, however the absolute amount increased, so it can be concluded that fixed assets do not play a significant role in Bank’s balance, what is obviously good. All other assets do not excel 1%, so there is no need to examine them.

 

As seen in the table 4, in 2012 Bank more than doubled its assets, the same was seen in the previous year. Cash and cash equivalents increased proportionally to the size of assets, it can be explained by keeping the asset liquidity level. Bank more than doubled the amount of placements with banks and other financial institutions, which could be either short-term placements, or long-term investments. In 2011 this statement increased sharply, so it can be concluded that Bank has free means that could be put in other banks for earning interest income. This statement includes Mandatory reserve with the National Bank of the Republic of Kazakhstan, so it has the direct connection with the next statement – Loans to customers. If Bank guaratees more loans, it ought to create more provisions.

The main article in Banks assets, it is loans to customers. It has a positive tendency to increase, especially in 2012. There are several reasons for it:

1. Bank enlarged its customers base;
2. Opened 30 branches and 30 micro-branches all over the country, what brought additional customers.
3. Concluded agreements with new retail outlet partners.
4. Bank became strong player on the retail consumer credits.
5. Other reasons, such as increase of purchase power of clients, etc.

Intangible assets include depreciation and amortization of assets, so this statement increases from year to year. Property and equipment also increase from year to year, but the reason for it the enlargement of Bank network. In 2012 new article appeared - Financial assets at fair value through profit or loss. It shows the contractual amounts of outstanding swap contracts with details of the contractual exchange rates and remaining periods to maturity. Foreign currency amounts presented below are translated at rates ruling at the reporting date.

 

Table 4

Dynamics of assets of JSC “Home Credit Bank”, 2009-2012, KZT thous.

	2012	2011	2010	2009	2012/2011	2011/2010	2010/2009
ASSETS	79 064 461	39 391 236	17 919 924	12 749 921	100,72%	119,82%	40,55%
Cash and cash equivalents	6 940 542	4 015 404	2 964 724	3 616 920	72,85%	35,44%	-18,03%
Placements with banks and other financial institutions	1 660 413	779 786	120 766	110 249	112,93%	545,70%	9,54%
Loans to customers	66 859 261	32 544 453	13 605 457	7 623 920	105,44%	139,20%	78,46%
Financial assets at fair value through profit or loss	177 450	-	-	-	-	-	-
Intangible assets	375 107	257 785	213 176	125 775	45,51%	20,93%	69,49%
Property and equipment	677 715	493 511	277 927	309 676	37,33%	77,57%	-10,25%
Current tax receivable	-	137 873	203 008	552 148	-100,00%	-32,08%	-63,23%
Deferred tax asset	-	-	-	74 260	0,00%	-	-100,00%
Other assets	2 373 973	1 162 424	534 866	336 973	104,23%	117,33%	58,73%
Note – done by the author on the materials [3]

 

Analysis of liabilities and equity of Bank. Receipt, acquisition and creation of assets are carried out at the expense of own and debt funds which are characterized by a sustainable growth over the four-year period in the overall financial position of the company.

The annual plan for a business is not to be confused with something very different, the business plan. A business plan is a document that includes everything from a Bank’s mission statement, to the plan for how and what the business will be doing. This is a document that is generally not completed yearly, and in fact may only be done once. A business will plan for several reasons; most notably the plan helps the business to create cash and capital budgets. A business will also require an annual plan in order to have a base to judge performance by.

The debt-to-equity ratio showed that the company is able to meet its short-term obligations on accounts payable and the financing of borrowed means in the form of long-term credit.

The assessment of dynamics of structure and structure of sources, own and debt funds is carried out and is presented in Table 6, which shows the data in 4 years’ time so the tendency can be traced.

Table 5

Structure of liabilities and equity of “JSC “Home Credit Bank”, 2009-2012, %

	2012	2011	2010	2009
LIABILITIES AND EQUITY	100%	100%	100%	100%
TOTAL LIABILITIES	71,79%	67,93%	63,24%	67,00%
Current accounts and deposits from customers	36,12%	36,14%	28,84%	26,70%
Due to banks and other financial institutions	31,38%	25,92%	26,38%	28,77%
Financial liabilities at fair value through profit or loss	0,06%	0,01%	0,00%	0,00%
Current tax payable	0,03%	0,00%	0,00%	0,00%
Deferred tax liability	0,10%	0,13%	0,29%	0,00%
Other liabilities	4,10%	5,72%	7,73%	11,53%
EQUITY	28,21%	32,07%	36,76%	33,00%
Share capital	6,58%	13,20%	9,73%	13,68%
Other capital contributions	0,00%	0,00%	19,28%	27,10%
Statutory reserve fund	9,29%	3,31%	0,42%	0,39%
Retained earnings/ Accumulated losses	12,34%	15,57%	7,32%	-8,17%
Note – done by the author on the materials [3]

 

In table 5 it is shown structure of liabilities and equity for the last 4 years. It is notable that debt to equity ratio is approximately 30%. Starting from 2011 Bank significantly increased the share of retained earnings; this is expected by the fact of growth of net income. Unlike other second level banks in the RK HCB has the great share of owner’s equity. It is better for bank, because it would be easier to cover liabilities. However the major part of funding is done by current accounts and deposits from customers. Second place is taken by deposits from other banks and financial institutions. So it can be concluded that the major part of funding is done by liabilities to clients. Insignificant part of liabilities are taken by Current tax payable, Deferred tax liability and other liabilities, not more than 5% in 2012.

In table 6 there is shown dynamics of liabilities and owner’s equity for the past 4 years. In 2011 and 2012 the amount of current account and deposits from customers increased for 176% and 101% correspondently. Another significant growth was in liabilities due to banks and other financial institutions, this statement increased because Bank had a need for additional funding to cover its loan activity. In 2012 bank started to participate on the security market, it is seen from the statement financial liabilities at fair value through profit or loss, it increased for 1817% comparing with the previous period of consideration. Other liabilities include such statements as for example settlements with suppliers, accrued salary expenses and others.

Table 6

Dynamics of liabilities and equity of JSC “Home Credit Bank”, 2009-2012, KZT thous.

	2012	2011	2010	2009	2012/2011	2011/2010	2010/2009
LIABILITIES AND EQUITY	79 064 461	39 391 236	17 919 924	12 749 921	100,72%	119,82%	40,55%
TOTAL LIABILITIES	56 763 291	26 758 399	11 332 986	8 542 876	112,13%	136,11%	32,66%
Current accounts and deposits from customers	28 557 550	14 237 933	5 167 452	3 404 141	100,57%	175,53%	51,80%
Due to banks and other financial institutions	24 813 057	10 212 154	4 727 561	3 668 494	142,98%	116,01%	28,87%
Financial liabilities at fair value through profit or loss	44 860	2 340	-	-	1817,09%	-	-
Current tax payable	20 690	-	-	-	-	-	-
Deferred tax liability	82 978	52 851	51 962	-	57,00%	1,71%	-
Other liabilities	3 244 156	2 253 121	1 386 011	1 470 241	43,98%	62,56%	-5,73%
EQUITY	22 301 170	12 632 837	6 586 938	4 207 045	76,53%	91,79%	56,57%
Share capital	5 199 503	5 199 503	1 744 500	1 744 500	-	198,05%	-
Other capital contributions	-	-	3 455 003	3 455 003	-	-100,00%	-
Statutory reserve fund	7 347 876	1 301 976	75 750	49 598	464,36%	1618,78%	52,73%
Retained earnings/ Accumulated losses	9 753 791	6 131 358	1 311 685	-1 042 056	59,08%	367,44%	-225,87%
Note – done by the author on the materials [3]