Отчет по практике в JSC “Home Credit Bank”

 

Second part of table 6 consists of owner’s equity. Share capital in absolute values was the same for 2009-2010, and increased for 198% in 2011 by the statement other capital contributions. With the enlargement of its activity Bank ought to raise statutory reserve funds, in 2012 the growth came to 464%. Retained earnings show the income of the Bank for the period, and starting from 2010 Bank has a positive with a tendency of growth statement.

Analysis of the loan portfolio. JSC “Home Credit Bank” gives loans only to individuals, and only consumer credits, which means, that it provides customers with cash loans and credits for purchasing some goods or services. In table 7 there is shown the structure of the given credits for past 3 years. In 2012 cash loans took the first place by the size of total loans. However in 2010 and 2011 consumer loans took most part of portfolio. In 2010 Bank granted mortgage loans, but later it stopped such kind of activity, because of narrow diversity of assets.

By the amount of total principal granted Bank ought to form impairment allowance, the amount that on the Bank’s suggestion will not be paid back by borrowers. It’s usually about 5%, but the percentage could change, because of risk adjustments.

Table 7

Loans granted to individuals, 2010 – 2012, KZT thous.

Loans to individuals	2012	2011	2010
Cash loans	38 776 612	15 383 795	6 527 322
Consumer loans	32 132 030	18 395 001	7 520 622
Credit cards	35 474	34 546	244 852
Mortgage loans			97 246
Total loans to individuals	70 946 128	33 815 353	14 392 052
Impairment allowances	-4 085 001	-1 268 964	-784 695
Net loans to individuals	66 861 127	32 546 389	13 607 357
Note – done by the author on the materials [3]

 

Figure 1. Loan portfolio of JSC "Home Credit Bank", 2008-2012, KZT thous.

 

On the figure 1 there is shown the growth of the loan portfolio since 2008 to 2012. First of all it is notable that for past 2 years loan portfolio increased for 2 times in a year. There are several main reasons for such rise. First and main, Bank enlarged its client database, so it suggests its services to the greater amount of population. Second reason is that Bank concluded partner agreements with more retail suppliers, so now possible clients may take goods or services in retail selling points, which are the partner of the bank. Third reason is the opening of own branch network through the whole territory of Republic of Kazakhstan. And since the end of 2011 Bank’s own branches started to open. And for the present moment there are more than 40 branches all over the country. [4]

 

Ratio analysis of JSC "Home Credit Bank"

 

The ratio analysis of JSC "Home Credit Bank" is aimed at providing an overall financial outlook on the Bank’s financial state, including the return on invested capital, financial stability, profitability, return on sales and other. Financial ratios have the power to prove a Bank’s financial state in short, and concise manner. The following analysis shall represent how JSC "Home Credit Bank" is dealing with its main financial indicators.

1. Share of owners’ equity in liabilities.

The ratio defines the level of financial stability of Bank. The higher the value of indicator is, the higher is the level of financial stability. For large commercial banks the bottom limit of optimum value can be less than 20%.

 

,                                 (4)

where - unfavorable (less than a typically normal indicator) [3]

Interpretation: The conclusion can be made that the Bank’s financial stability is in its highest representation and there is no need for corrections. The indicator shows that the major part of total capital and liabilities are represented by total liabilities, what is typical for second-tier banks. However Bank’s share of owner’s equity is much higher than in other commercial banks in the Republic.

2. Profit margin.

The indicator of profitability calculated as net income divided by all revenues, or net profits divided by total sales. It measures how much out of every tenge of sales Bank actually keeps in earnings. Net Profit ratio is used to measure the overall profitability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment.

 

     (5)

where optimal indicator

*Company’s income include:

2. Interest income
3. Fee and commission income
4. Other operating income 
5. Gain on financial instruments at fair value through profit/gain

Interpretation: a 36,27% profit margin means the company retains a net profit of KZT36,27 for every KZT100 of sales it earns.

 

3. Return on equity (ROE).

The indicator defines profitability of owners’  capital participating in the business.

 

 

            (6)

Interpretation: This means that JSC "Home Credit Bank" generated KZT 43,35 of profit for every KZT10000 of owners' equity last year, giving the stock a ROE of 43.35%.

This is the accounting rate of return on stockholder’s equity since the ratio shows the rate of return the company is earning on its capital and surplus committed to conducting its banking activity and investments made. The greater this ratio, the greater the use the bank is making of the funds invested in it by its stockholders.

4. Current ratio.

This is a liquidity ratio that measures a company's ability to pay short-term obligations. The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables).

     

                       (10)

*Current assets includes:

• Cash and cash equivalents;
• Placements with banks and other financial institutions.

Interpretation: a 30,12% means that Bank is able to cover approximately one third of its current liabilities with its current assets.

5. Cash ratio.

The ratio of a bank's total cash and cash equivalents to its current liabilities. The cash ratio is most commonly used as a measure of company liquidity. It can therefore determine if, and how quickly, the company can repay its short-term debt.

        

                       (11)

Interpretation: Bank is able to cover 24,30% of its current liabilities with cash, which is quite good for commercial bank. Liquidity is sufficient, and not too high, so it could be said that Bank allocates its resources in a proper way.

6. Return on Investment.

The ratio represents the money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment.

 

              

                          (12)

Interpretation: a 56,74% Return on Investment ratio indicates that JSC "Home Credit Bank" is earning a 56,47% profit on its invested capital.

7. Return on assets.

The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue. This number represents the earnings the company can do with what it has, i.e. how many tenge of earnings it derives from each tenge of assets it controls.

 

  

         (13)

Interpretation: JSC "Home Credit Bank" derives an earning of KZT 12,23 of a KZT 10000 worth of assets. 

The conclusion can be drawn that according to the ratio analysis, JSC "Home Credit Bank" is in good financial health. It has the highest performance on Return on Assets and Return on Equity among all second-tier banks in the Republic of Kazakhstan. Bank also has the quite sound liquidity, and profitability. So it could be concluded that financing process is working in best way. Taking into account the specificity of the Bank that it works mostly on the retail market, this reflects in good points of Bank’s financial representation.

Return on Assets of Commercial Banks of the RK.

In the table 8 below there is shown the Return on Assets for the 2012 for the Second-tier banks of the RK. JSC “Home Credit Bank” takes the first place. Its ROA surpasses the following more than twice. This ratio shows how effectively company allocates its net income to the amount of its assets. ROA sometimes also called as ROI – Return on investments, because it shows what earnings were generated from invested means. ROA is a better tool of comparison between commercial banks, because it shows of not absolute amounts, but percentages. JSC “Home Credit Bank” takes deals mainly with retail consumer crediting, so the average financial amount of its loans is much less than, for example, amount of corporate loans, or even mortgages for population. However it is clearly seen that JSC “Home Credit Bank” allocates its resources in more proper way than its competitors. Only first three banks have its ROA greater than 3%, so it can be concluded that second level banks in RK earn much less net income to the amount of their total assets. Another conclusion can be made: commercial banks advisedly exaggerate their assets by amount of long-term credits. However, in JSC “Home Credit Bank” major part of loans is short-term, one year or less, because for consumer loans there is no any necessity to take not big amount for a long period of time.

 

Table 8

Return on Assets of commercial banks of the RK, 2012, KZT thous.

№	Name of two tier bank	Assets	Net Income	ROA
1	JSC "Home Credit Bank"	80 000 030	9 693 031	12,12%
2	"Temirbank", JSC	290 712 124	14 645 920	5,04%
3	JSC "KASPI BANK"	588 420 560	18 770 373	3,19%
4	SJSB "KZI Bank"	22 419 716	646 005	2,88%
5	SJSB "HSBC Bank Kazakhstan"	175 145 988	4 535 732	2,59%
6	SJSB "Bank of China in Kazakhstan"	65 612 927	1 679 559	2,56%
7	"Al-Hilal Islamic Bank" JSC	12 021 721	303 566	2,53%
8	JSC "Halyk Bank Kazakhstan"	2 339 459 872	58 116 808	2,48%
9	JSC "National Bank of Pakistan in Kazakhstan"	5 396 775	126 652	2,35%
10	JSC "Shinhan Bank Kazakhstan"	16 367 821	370 610	2,26%
11	"Astana-Finance" Bank", JSC	53 760 919	1 212 149	2,25%
12	SJSB  Citibank Kazakhstan JSC	313 244 330	6 936 960	2,21%
13	JSC "Eurasian Bank"	465 938 011	9 912 953	2,13%
14	АО "ForteBank"	47 236 908	890 174	1,88%
15	SJSB "Savings bank of Russian Federation"	732 388 396	13 529 824	1,85%
16	JSC "Tsesnabank"	618 415 009	10 785 462	1,74%
17	SJSB "Alfa-bank"	135 658 632	2 344 820	1,73%
18	Subsidiary Bank RBS (Kazakhstan)", JSC	80 450 554	1 275 552	1,59%
19	JSC "Alliance Bank"	598 510 733	7 646 996	1,28%
20	JSC "Commercial and Industrial Bank of China in Almaty"	33 922 448	402 975	1,19%
21	JSC "Delta Bank"	140 890 822	1 579 315	1,12%
22	JSC "Zaman-Bank"	19 631 010	183 073	0,93%
23	JSC "Housing Construction Savings Bank of Kazakhstan"	284 320 419	2 297 235	0,81%
24	JSC "Eximbank Kazakhstan"	77 081 170	563 856	0,73%
25	JSC "Bank Pozitif"	16 657 115	120 810	0,73%
26	JSC "Senim Bank"	13 258 981	57 640	0,43%
27	JSC "RBK Bank"	88 786 760	275 445	0,31%
28	JSC "Kazkommertsbank"	2 555 009 356	1 184 231	0,05%
29	JSC "Bank CenterCredit"	1 062 810 704	412 888	0,04%
30	JSC  "AsiaCreditBank"	54 866 078	13 390	0,02%
31	JSC "Bank Kassa Nova"	31 126 872	-21 986	-0,07%
32	Subsidiary JSC Bank VTB (Kazakhstan)	96 756 492	-1 052 986	-1,09%
33	JSC "ATFBank"	851 635 594	-10 993 851	-1,29%
34	JSC "KazInvestBank"	114 195 843	-1 599 520	-1,40%
35	JSC "Nurbank"	260 173 339	-5 527 839	-2,12%
36	SJSB "Taib Kazakh Bank"	5 575 050	-208 420	-3,74%
37	SJSB"PNB"-Kazakhstan"	13 641 625	-1 096 031	-8,03%
38	JSC"BTA Bank"	1 518 475 075	-349 280 082	-23,00%
	Total	13 879 975 779	-199 266 711
Note – done by the author on the materials [4]

Return on Equity of Commercial Banks of the RK.

The amount of net income returned as a percentage of shareholders equity is showed by ROE. Return on equity measures a bank's profitability by revealing how much profit a bank generates with the money shareholders have invested. Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholder's equity does not include preferred shares.

Table 9

Return on Equity of commercial banks of the RK, 2012, KZT thous.

№	Name of two tier bank	Capital	Net income (loss)	ROE
1	JSC "Home Credit Bank"	22 325 875	9 693 031	43,42%
2	JSC "KASPI BANK"	66 296 395	18 770 373	28,31%
3	JSC "Tsesnabank"	50 735 963	10 785 462	21,26%
4	JSC "Alliance Bank"	36 350 860	7 646 996	21,04%
5	JSC "Eurasian Bank"	47 787 295	9 912 953	20,74%
6	"Temirbank", JSC	71 623 522	14 645 920	20,45%
7	SJSB "HSBC Bank Kazakhstan"	22 632 965	4 535 732	20,04%
8	JSC "Halyk Bank Kazakhstan"	302 824 826	58 116 808	19,19%
9	"Astana-Finance" Bank", JSC	6 537 539	1 212 149	18,54%
10	SJSB  Citibank Kazakhstan JSC	42 066 136	6 936 960	16,49%
11	SJSB "Savings bank of Russian Federation"	88 246 249	13 529 824	15,33%
12	SJSB "Alfa-bank"	20 011 541	2 344 820	11,72%
13	SJSB "Bank of China in Kazakhstan"	14 802 450	1 679 559	11,35%
14	АО "ForteBank"	9 081 676	890 174	9,80%
15	JSC "Delta Bank"	18 689 069	1 579 315	8,45%
16	Subsidiary Bank RBS (Kazakhstan)", JSC	15 692 814	1 275 552	8,13%
17	JSC "Eximbank Kazakhstan"	14 196 070	563 856	3,97%
18	SJSB "KZI Bank"	16 823 055	646 005	3,84%
19	JSC "Commercial and Industrial Bank of China in Almaty"	11 357 009	402 975	3,55%
20	JSC "Shinhan Bank Kazakhstan"	10 611 578	370 610	3,49%
21	JSC "National Bank of Pakistan in Kazakhstan"	4 365 492	126 652	2,90%
22	"Al-Hilal Islamic Bank" JSC	10 509 603	303 566	2,89%
23	JSC "Housing Construction Savings Bank of Kazakhstan"	92 586 639	2 297 235	2,48%
24	JSC "RBK Bank"	15 387 940	275 445	1,79%
25	JSC "Zaman-Bank"	10 730 822	183 073	1,71%
26	JSC "Bank Pozitif"	11 249 008	120 810	1,07%
27	JSC "Senim Bank"	6 311 739	57 640	0,91%
28	JSC "Bank CenterCredit"	83 358 573	412 888	0,50%
29	JSC "Kazkommertsbank"	461 745 419	1 184 231	0,26%
30	JSC  "AsiaCreditBank"	12 370 157	13 390	0,11%
31	JSC "Bank Kassa Nova"	7 709 269	-21 986	-0,29%
32	SJSB "Taib Kazakh Bank"	3 489 092	-208 420	-5,97%
33	Subsidiary JSC Bank VTB (Kazakhstan)	17 278 696	-1 052 986	-6,09%
34	JSC "Nurbank"	75 693 301	-5 527 839	-7,30%
Continuation of the Table 9
35	SJSB"PNB"-Kazakhstan"	12 357 065	-1 096 031	-8,87%
36	JSC "KazInvestBank"	10 369 989	-1 599 520	-15,42%
37	JSC "ATFBank"	71 244 373	-10 993 851	-15,43%
38	JSC"BTA Bank"	209 886 898	-349 280 082	-166,41%
	Total	2 005 336 962	-199 266 711
Note – done by the author on the materials [4]

 

In conclusion of Ratio Analysis it could be said that financial position of the JSC “Home Credit Bank” is quite stable. It’s ROA and ROE is better than any other’s commercial bank in the RK. It’s debt to equity ratio is unlike to most commercial banks, because about 30% of funding are done by the means of parental company.

However, the main conclusion is that Bank is the stable, growing and reliable commercial bank, which is confirmed not only by its customer’s but also by Fitch Ratings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conclusion

 

Making the conclusion of my internship I want to stress all things that I studied during this period. First of all I got an experience how to work in team, meet the deadlines and keep calm in very stressful situations. The work in bank requires good financial skills, logical thinking and be a good team-player.

JSC “Home Credit Bank” is a growing, bank, which takes a special niche on the market of the commercial banks of the RK. It is a bank with a 100% of ownership by Russian bank “Home Credit and Finance Bank”.

Analyzing the financial data, I made a conclusion that Bank has positive tendency of growth. Its financial ratios are in adequate limits. The debt to equity relationship is even higher than generally accepted by commercial banks in the Republic of Kazakhstan.

Bank received “BB-” rating by International rating agency Fitch, with a conclusion that it is stable. So it is a good rating for a second-tier bank in the RK, some of our major banks has lower rating.

During the period of internship I studied a lot of things, which is connected with banking and finance as a whole. Also I improved my computer skills, especially knowledge of MS Excel, because most of calculations are done in this program.

Bank also plans to differentiate its services provided. In March it started the pilot deposit project, which now bears its fruits.

I can conclude that Bank is the stable, growing and reliable commercial bank, which is confirmed not only by its customer’s but also by Fitch Ratings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

1. www.homecredit.kz
2. www.newskaz.ru
3. Financial statements of the JSC “Home Credit Bank” for the years 2009-2012
4. www.afn.kz
5. www.wikipedia.org