Management Presentation September 2009

Transcription

1 Management Presentation September 2009

2 Disclaimer WHILE JSC BTA BANK ( BTA BANK OR THE BANK ) HAS TAKEN ALL REASONABLE MEASURES TO ENSURE THAT THE INFORMATION CONTAINED HEREIN IS CORRECT, ACCURATE AND COMPLETE AT THE DATE OF PUBLICATION, NO REPRESENTATION OR WARRANTY IS MADE (EXPRESS OR IMPLIED) AS TO THE RELIABILITY, ACCURACY OR COMPLETENESS OF SUCH INFORMATION AND NO RELIANCE SHOULD BE PLACED ON SUCH INFORMATION. THIS DOCUMENT DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL OR ISSUE, OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY SECURITIES OF THE BANK. THIS PRESENTATION INCLUDES FORWARD-LOOKING STATEMENTS. YOU ARE CAUTIONED NOT TO PLACE RELIANCE ON FORWARD-LOOKING STATEMENTS. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS PRESENTATION, INCLUDING, WITHOUT LIMITATION, THOSE REGARDING THE BANK S FINANCIAL POSITION, PROSPECTS, BUSINESS STRATEGY, MANAGEMENT PLANS AND OBJECTIVES FOR FUTURE OPERATIONS ARE FORWARD- LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS, WHICH MAY CAUSE THE BANK S ACTUAL RESULTS, PERFORMANCE, ACHIEVEMENTS OR INDUSTRY RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE BANK S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE BANK EXPECTS TO OPERATE IN THE FUTURE Page 2

3 Table of Contents Executive Summary I. Market Overview a. Kazakhstan Economy b. Key Banking Sector Trends c. Banking Sector Penetration Ratios d. Competitive Landscape II. Update On Recent Developments 2009 a. BTA Bank snapshot pre-restructuring b. Recent Developments c. Recent Financial Performance d. Current Portfolio Structure e. Overview of Asset Deterioration f. Corporate, SME & Retail Loans g. Investment in Affiliates & Key Subsidiaries h. Securities i. Funding and Deposit Outflow Page 3

4 Table of Contents (cont d) III. New BTA Strategy a. Strategy Overview b. Focus on Current Liquidity c. Branch Network & Subsidiaries d. Current Structure & Governance e. Specific Focus on Risk Management f. Treasury g. Human Resources & IT IV. Corporate Business Strategy a. Presentation of the Total Gross Loan Portfolio b. Focus on Corporate Clients c. Focus on the Troubled Assets Portfolio d. Restructuring and Recovery Strategy e. Focus on the Performing Loans Division f. Corporate Business Strengths & Development Strategy g. Specific Focus on the Trade Finance h. Deposits & Lending Dynamics Page 4

5 Table of Contents (cont d) V. SME Business Strategy a. Macroeconomic Considerations b. SME Business Overview c. Presentation of the Total Gross Loan Portfolio d. Impaired Assets Criteria e. Restructuring and Recovery Strategy f. SME Business Strengths & Development Strategy g. Lending Dynamics VI. Retail Business Strategy a. Macro-Economic Considerations b. Evolution of Retail Clients c. Presentation of the Total Gross Loan Portfolio d. Impaired Assets Portfolio e. Restructuring and Recovery Strategy f. Retail Business Strengths & Development Strategy g. Deposits & Lending Dynamics VII. Q&A Page 5

6 Executive Summary Page 6

7 Executive Summary Kazakhstan Economy Background on BTA Kazakhstan economy, which has been rapidly growing over the past decade, was heavily impacted by the global credit crunch and economic crisis, in particular the sharp decline in commodity prices The banking sector, which used to rely on access to cheap international funding, is currently facing major liquidity issues resulting from shortage of external funding combined with a dramatic decline in asset quality Recovery of the Kazakh banking system is largely dependent on macroeconomic prospects of Kazakhstan BTA has been Kazakhstan s leading bank with #1 or #2 position in major areas. The Bank focused in particular on Corporate Banking and Trade Finance Its financial position was heavily affected by its loan portfolio that included a large number of dubious loans to non-transparent companies outside of Kazakhstan (including borrowers incorporated in a number of off-shore jurisdictions such as Panama, Cayman Islands and British Virgin Islands). Continuous investigations into suspected corporate governance abuses as many loans appear to be linked to former management Almost the entire corporate loan portfolio of the Bank had to be fully provisioned. The Bank s trade finance portfolio is also largely composed of non-performing and dubious assets The impaired nature of BTA s loan portfolio was revealed in late 2008 through FMSA investigations, which had led to BTA being acquired by JSC SWF Samruk-Kazyna (Samruk-Kazyna) and the creation of additional provisions reducing BTA s net loans and impacting its capital structure Further to BTA s acquisition by Samruk-Kazyna and replacement of BTA s top management, further asset impairments were revealed at BTA, which had led to more provisions being created throughout 1H 2009 Since its acquisition of BTA, Samruk-Kazyna has invested c.us$7bn to support BTA s liquidity and does not intend to make any additional investments Page 7

8 Executive Summary (cont d) New Strategy The new strategy of BTA is focused on: - Recovery of troubled assets - Reliance on customer funds and State as key sources of funding - Refocusing of BTA s business strategy with higher emphasis on Kazakhstan customers, retail and SME Business - Scaling back on corporate and international business - Rigorous risk management, KYC and lending policies BTA s banking franchise (in particular, retail and SME) is fundamentally a healthy business that will perform efficiently now that the management and key shareholders of the Bank have changed and deficient legacy lending practices have been abandoned. Retail and SME blocs have retained the core infrastructure and personnel despite the recent financial turmoil A successful debt restructuring would boost the Bank s profile in Kazakhstan and provide BTA with a certain competitive advantage over its local peers as it would be one of the first Kazakhstan banks to re-emerge after the peak of the financial crisis. The completion of debt restructuring is expected to stop deposit outflows and trigger a significant increase of loan recoveries and expansion of retail and SME business due to improved customer confidence Further development of SME and Retail businesses will ensure strong synergies and cross-selling opportunities Close ties with its key shareholder, Samruk-Kazyna combined with BTA s strong infrastructure provide the Bank with a unique opportunity to benefit from servicing various state-sponsored programmes, as well as to act as the preferred bank for Samruk-Kazyna s group companies BTA s management and Samruk-Kazyna are fully committed to BTA s successful recovery and development going forward BTA would become an attractive partner for strategic investors post-restructuring Page 8

9 I Market Overview Page 9

10 I Market Overview a. Kazakhstan Economy b. Key Banking Sector Trends c. Banking Sector Penetration Ratios d. Competitive Landscape Page 10

11 Kazakhstan Economy Kazakhstan Economy is Largely Dependent on Natural Resources Oil & Gas: 16.0% of GDP Metals & Mining: 18.7% of GDP Agriculture: 5.3% of GDP Major international oil&gas player: 3% of total world oil reserves 1.7% of total world gas reserves Key national industry: c. 1/6 of GDP 59% of exports Improved production capacities with infrastructure investments Price drop over 50% since peak (oil) Kazakhstan is world s: # 2 in uranium reserves # 3 in zinc reserves # 11 in copper reserves Cost improvement Mostly privatized and owned by large local players or leading internationals Price drop since peak: Copper 30% Uranium 50% Zinc 40% 6 th largest exporter of grain globally Regulatory framework for grain production developed in cooperation with EBRD Favorable climate (similar to Canada) Proximity to largest consumers (Russia and CIS, Middle East) Price drop over 50% since peak The last year s sharp drop in commodities prices has negatively affected Kazakhstan growth projects since mid-2008 (e.g. exports in Q down by c.60% vs. Q or Q3 2008) Source: NBRK, SARK Page 11

12 Kazakhstan Economy (cont d) GDP Growth Rates Inflation Rates 17.0% 13.5% 9.8% 9.3% 9.6% 9.7% 10.7% 8.9% 6.0% 6.5% 8.0% 6.5% 8.4% 6.4% 8.6% 7.6% 6.9% 10.8% 9.5% 8.7% 6.0% 6.0% 6.0%6.0% 3.3% 1.5% 5.9% -2.0% Actual Forecast Actual Forecast Source: IMF as of 30/04/2009, SARK Source: IMF as of 30/04/2009, SARK Surging commodity prices combined with a credit boom supported a very strong economic performance in The international credit crunch and the global economic crisis have neutralized these two drivers leading to deceleration of growth in 2008 and expected drop in GDP in 2009 Page 12

13 Kazakhstan Economy (cont d) Oil Prices (US$/bbl) Uranium Prices ($/lb) Actuals Forecasts Actuals Forecasts LT Source: brokers estimates, August 2009 Note: WTI prices Source: brokers estimates, August 2009, BTA Bank Oil prices are expected to recover in 2010, fuelled by the expected recovery of the global economy, which will drive demand Uranium demand is expected to grow by an average of 3.7% per year during the next 20 years whereas the prevailing uranium price is perceived as too low to stimulate sufficient supply to cover this future demand. Hence after the trough reached in 2009 (below $50/lb) the prices are expected to stabilize in the medium/long term Page 13

14 Key Banking Sector Trends Key Figures Net Profit Evolution ($m) 5.3% of total GDP 38 commercial banks , % of total economically active population Total assets / GDP: 76.4% Total loans / GDP: 64.3% Total deposits / GDP: 33.8% Corporate deposits / GDP: 23.5% Individual deposits / GDP: 10.3% Total Tier 1 capital / Total assets: (3.0)% 8.5% excluding BTA Bank and Alliance Bank Total reserves / Total loans: 30.6% Source: Analyst report, FMSA, July 2009 Funding Structure of Kazakh Banks (May 2009) Other sources 8% Local bonds 10% Retail deposits 13% Corporate deposits 31% (14,556) /06/09 3 largest banks account for 58.3% of the total banking system assets Liabilities to financial organizations 18% Eurobonds 20% Source: SARK and FMSA Source: FMSA Page 14

15 Key Banking Sector Trends (cont d) Evolution of Total Loans and Loss Provisions (LLP) Ratios at Major Kazakhstan Banks ($bn) % % 11.1% 5.6% 5.0% 31/12/ /12/ /12/07 31/12/08 30/06/09 Loans LLP/loans Source: Kazakhstan Financial review, June 2009 Evolution of Total Assets ($bn) 78 Source: Kazakhstan Financial Review, June 2009 Note: $1= KZT /12/07 31/12/08 30/06/09 81 Total loans in the Kazakhstan banking sector grew to $68bn in June 2009 (from $47bn in December 2006). This increase was driven mainly by very high GDP growth rates and easy access to foreign funding. The past 6 months, however, showed significant negative dynamics in total loans Although the total banking assets have remained stable in the first half of 2009, there was a sharp increase in the loan provisioning ratio at Kazakhstan banks, which resulted in a much weaker performance Page 15

16 Banking Sector Penetration Ratios Loan and Deposit Penetration (2008) Loans/GDP Deposits/GDP % % % % % % 30/06/09 64% 30/06/09 34% CEE Average Russia (1) 37% 41% Russia CEE Average (1) 26% 32% Czech Republic 42% Poland 38% Poland 48% Ukraine 38% Ukraine 76% Czech Republic 55% Euro Area 125% Euro Area 89% Source: EIU, Central Banks, FMSA (Kazakhstan Financial review, June 2009) Note: (1) CEE: Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia System suffers from structurally high loans/deposits ratio Page 16

17 Competitive Landscape Ranking by Total Assets Ranking by Total Gross Loans Ranking by Total Deposits BTA 21.1% BTA 25.6% Halyk 21.8% KKB 21.0% KKB 24.9% KKB 20.9% Halyk 16.3% Halyk 12.7% BTA 12.5% ATF 8.8% ATF 8.8% CenterCredit 8.9% CenterCredit 8.0% CenterCredit 6.8% ATF 7.2% Alliance 4.9% Alliance 6.7% Alliance 3.4% Total Banking Assets: KZT12,150bn ($81bn) Total Loans: KZT10,221bn ($68bn) Total Deposits: KZT5,370bn ($36bn) Source: FMSA - 30/06/2009 Note: $1= KZT150 Page 17

18 II Update On Recent Developments 2009 Page 18

19 II Update On Current Standings a. BTA Bank Snapshot Pre-restructuring b. Recent Developments c. Recent Financial Performance d. Current Portfolio Structure e. Overview of Asset Deterioration f. Corporate, SME & Retail Loans g. Investment in Affiliates & Key Subsidiaries h. Securities i. Funding and Deposit Outflow Page 19

20 BTA Bank Snapshot Pre-Restructuring Overview Key Financials (KZTbn) 2006 to % market share in loans and 12.5% in deposits as of 30/06/2009 More than 1.3 million retail and 150,000 corporate clients Nationwide branch network including 22 branches and 269 cash settlement centers in Kazakhstan Extensive presence in the CIS Strategic partnership with Samruk-Kazyna and a leading role in servicing government-sponsored financing programmes CAGR Balance sheet Gross loans 1,240 2,197 2, % Provisions on loans (65) (111) (214) 81.4 % Net loans 1,173 2,086 2, % Total assets 1,825 2,649 2, % Client deposits % Total equity % Gross Loan Portfolio (31/12/2008) SME 9.2% Retail 9.9% Income statement Net interest income % Operating income % Provisions (39) (45) (108) 66.4 % Net income (21.6)% Corporate 80.9% Key ratios Cost/income ratio RoAE Tier 1 ratio Tier 2 ratio Source: Company information Page 20

21 Recent Financial Performance Key Comments Loan provisions have grown 10 times by June 2009 y-o-y. A sharp decrease in net loans resulted from additional provisions combined with a decrease in gross loans Substantial client deposit outflows in 1H 2009 resulted in sharp deterioration in BTA s cash position Historical Balance Sheet Assets (KZT bn) 31/12/ /03/ /06/2009 Cash and obligatory reserves Trading securities Loans and deposits to other banks Gross loans to customers 2,504 2,883 2,897 Provisions (214) (491) (1,602) Net loans to customers 2,289 2,392 1,295 Investments Fixed and intangible assets Other assets Total 2,915 3,797 2,566 Liabilities / Equity (KZT bn) 31/12/ /03/ /06/2009 Securities sold by REPO Bank accounts and client deposits Debt securities issued (1) Bonds to S-K Debt due to banks Subordinated debt Other liabilities Total liabilities 2,498 3,430 3,456 Equity (890) Total 2,915 3,797 2,566 Source: Company information, unconsolidated financials based on local GAAP Note: (1) Includes Principal Amount + Accrued Interests Page 21

22 Recent Financial Performance (cont d) Historical P&L Key Comments (KZT bn) FY 2008 Q Q Net interest income Net fee and commission income Other non-interest (loss) / income (9) 1 (28) Operating income (1) Operating expenses (47) (9) (18) Provisions for loan impairment (108) (246) (1,358) Other provisions 3 (47) (141) Profit before tax 16 (262) (1,518) Income tax (expense) / benefit Net (loss) / income 13 (262) (1,518) Weak net interest income in 1H 2009 due to a rapid increase in non-performing loans Other non-interest losses in 1H 2009 are largely attributed to losses from operations with foreign currencies as well as dealing transactions c. $9bn of new provisions created due to further internal investigations with respect to loan quality Source: Company information, unconsolidated financials based on local GAAP Page 22

23 Current Portfolio Structure Key Comments Total gross off-balance sheet exposure was equal to c.30% of total gross exposure as of 30/06/2009 Trade finance operations, represented by L/Cs and guarantees issued for clients, amounted to c.$1.8bn as of 30/06/2009 Loans and Off-Balance Sheet Exposure (KZTbn) 31/12/ /03/ /06/2009 Loans to legal entities 2,076 2,353 2,379 Loans to individuals Total gross balance sheet exposure 2,304 2,602 2,615 Guarantees ,006 o/w for clients o/w Eurobonds Letters of credit Total gross off-balance sheet exposure 1,035 1,118 1,099 Total gross exposure 3,339 3,720 3,714 % of loans granted to related parties Source: Company information, unconsolidated financials based on local GAAP Page 23

24 Current Portfolio Structure (cont d) Loan Portfolio Breakdown (30/06/2009) Industry Clients Geographical Concentration Other 19.9% Real estate 16.2% SME 7.7% Retail 9.0% Other 20.8% Agriculture 5.6% Individuals 9.0% Wholesale trade 11.0% Oil and gas 13.3% Housing construction 16.1% Infrastructure construction 8.9% Corporate 83.3% Other CIS 0.6% Kazakhstan 47.6% Off-shore 20.5% Russia 10.4% Currency Collateral Concentration of Borrowers* EUR 5.8% Other 2.0% KZT 33.9% Blank 17.6% Real estate 25.7% Тор % USD 58.2% Other 26.5% Insurance policy 4.7% Goods in future 6.5% Guarantees 7.3% Pawned (securities, shares and others) 11.6% Other loans 51.1% Note: * only Corporate and SME Тор % Тор % Source: Company information Page 24

25 Key Comments The $9bn increase in provisions recorded in 1H 2009 after audit work results were subsequently applied to the local GAP provision figures Loan portfolio parameters were also affected by the Tenge devaluation and reclassification of certain asset types based on FMSA rules Loan Portfolio Performance in 1H 2009 (KZTbn) Overview of Asset Deterioration Gross Loans and Provisions by Business (KZT bn) Gross loans 31/12/ /06/2009 Accrued interest Provisions (%) Gross loans Accrued interest Provisions (%) Corporate Commercial loans Corporate Investment loans Corporate CIS excl. Kazakhstan Corporate 1, , , SME Retail Total gross loans 2, , , Off-balance sheet exposure 1, , Total gross exposure 3, ,714 1, Source:Company information; the 30/06/2009 numbers represent BTA s management s view only and have not been independently verified Page 25

26 Overview of Asset Deterioration (cont d) Key Comments In 1H 2009 non-performing loans increased from 4.2% to 56.0% of gross loans, while standard loans fell to 25.7% of gross loans (in accordance with local methodology of creating provisions) Provision Statistics Based on Local Methodology 31/12/ /06/ /06/2009 (KZT bn) Gross loans Provisions (%) Gross loans Provisions (%) Standard loans 1, Doubtful loans 1, category (5% provisioning) category (10% provisioning) category (20% provisioning) category (25% provisioning) category (50% provisioning) Non-performing loans (100%) ,465 1, Total on-balance sheet exposure 2, ,615 1,611 1, Source: Company information, unconsolidated financials based on local GAAP Page 26

27 Commercial: 26% KZT2,178bn 572 Che micals Te xtile 2.8% 4.3% Fina ncial Services 4.3% Trans po rt 5.9% Tra de 7.9% Corporate Loans Loan Portfolio Breakdown By Industry By Currency By Maturity Other 12.5% Energy a nd Oil & Gas 12.1% Real Es ta te inves tments 6.8% Ho us ing co ns truc tio n 20.3% Ro ads & Indus trial Agriculture 16.6% buildings 6.5% USD 30.5% JPY EUR 4.1% 7.8 % KZT 57.6 % Overdue 16.0 % > 3 years % < 1 month 5.8 % 1-6 months 14.0 % 6m-1 year 4.4% 1-3 years 23.4% Investment Loans: 32% 687 Che mic a ls Ot he r 2.4% 1.8% Tra de 28.2% Roa ds & Indust ria l buildings 2.4% Housing construction 13.7% Oil & Ga s 34.2% Re a l Est a t e inve st me nt s 17.3% USD % RUR 1.3 % EUR 0.1% KZT % Overdue 9.2% > 3 years 54.1% < 1 month 0.2 % 1-6 months 3.4% 6m-1 year 5.2% 1-3 years 2 7.9% CIS: 42% 919 Chemicals 3.1% Agriculture 4.4% Financial Services 4.4% Energ y and Oil & Gas 11.8% Ro ads & industrial buildings 16.6% Teleco ms 2.7% Other 6.1% Real Estate investments 28.6% Housing construction 22.3% RUR EUR 2.2% 11.5% USD 86.3% < 1 month 0.0% Overdue 11.0% > 3 years 46.4% 1-6 months 4.6 % 6 m-1 year 1.6% 1-3 years 36.4% 30/06/2009 Page 27

28 SME Loans Key Highlights Diversified loan portfolio Provisions increased from 10.5% to 24.2% of gross loans in 1H 2009 Loans overdue 30 days amount to 21% of SME portfolio and are fully covered by accumulated loan loss provisions 31/12/2008 (KZT bn) Gross Loans Provisions (%) SME Loans Own Agriculture 6.1% Real Estate Investments 1.5% Housing Construction 2.0% Roads & Industrial Buildings 13.3 % USD 10.5% By Industry Transport 4.5% Food 4.6% Manufacturing 2.6% By Currency Other 1.1% Energy 1.9% Hospitality 1.6% Other 15.6 % Trading Companies % Government Accrued interest 2 KZT 88.4% 30/06/2009 (KZT bn) Gross Loans Provisions (%) SME Loans Own Government Accrued interest 2 < 1 month 1.9% 1 6 months 21.3% 6m 1 year 14.5% By Maturity Overdue 2.7% > 3 years 36.6% Source: Company information, unconsolidated financials based on local GAAP 1 3 years 22.9% Page 28

29 Retail Loans Key Highlights Real estate related retail products account for c. 77% of total portfolio Up to KZT38bn increase in provisions in 1H 2009 resulted from a mandatory change of provisioning methodology (individual assessment of each loan instead of pooling). Once BTA s capital position improved, BTA may return to pooling retail loans for provisioning purposes and, therefore, may potentially release all or a part of, these additional provisions 31/12/2008 (KZT bn) Gross loans Provisions (%) Consumer loans secured by real estate Car loans Unsecured loans Mortgage loans Other loans Retail total Accrued interest 4 30/06/2009 (KZT bn) Gross loans Provisions (%) Consumer loans secured by real estate Car loans Unsecured loans Mortgage loans Other loans Retail total Accrued interest 4 USD 50.6% <1 month Overdue 0.1% 0.5% >3 years 80.4% By Currency Other 0.1% By Maturity KZT 49.3% 1 6 month 6m 1 year 1.1% 3.8% 1 3 years 14.1% Source: Company information, unconsolidated financials based on local GAAP Page 29

30 Investments in Affiliates Subsidiary Banks Other Financial Institutions BTA Bank Kyrgyzstan BTA Bank Georgia BTA Bank Armenia BTA Bank Kazan London Almaty Insurance Co BTA Insurance Oranta Insurance (Ukraine) BTA Life BTA Zabota 71.00% 49.00% 48.93% 47.32% 99.39% 100% 14.01% 100% 98.17% 55.34% 99.29% 49.99% 22.26% 100% 86% 100% 26.75% 45.00% Temirbank 1 BTA Bank Belarus BTA Bank Ukraine BTA Bank Russia BTA Securities BTA Kazakhstan Pension Fund BTA Ipoteka Temir Leasing BTA Orix Leasing Temir Leasing 18.88% 33.98% Sekerbank A.S. (Turkey) 100% 86.11% 100% 100% 18.40% SPV TuranAlem Finance B.V. (Netherlands) BTA Finance Luxembourg SA TuranAlem Finance (Russia) Temir Capital B.V. (Netherlands) First Credit Bureau Non-commercial entities Source: Company information Note: 1 Voting shares stake amounts to 69.85% Page 30

31 Key Subsidiaries Key Highlights BTA's share of total net assets in several subsidiaries is significantly below the carrying value of those subsidiaries on BTA's balance sheet, thus creating risk of additional write-downs on these assets BTA lost control in some of its subsidiaries (most notably BTA Russia) due to fraudulent actions of previous management Subsidiary Temirbank Description Leading retail banking franchise in Kazakhstan BTA stake (%) Total assets (KZTbn) Net assets (KZTbn) Carrying value (KZTbn) BTA exposure (KZTbn) BTA Securities Investment banking arm of BTA Sekerbank Turkish bank, owned by BTA Securities BTA Russia Russian subsidiary of BTA BTA Ukraine Ukrainian subsidiary of BTA <1 Oranta Insurance BTA Ipoteka Leading insurance company in Ukraine Specialised mortgaged lender in Kazakhstan BTA Belarus Belarussian subsidiary of BTA BTA Kazan Russian subsidiary of BTA BTA Armenia Armenian subsidiary of BTA BTA Georgia Georgian subsidiary of BTA Notes: 1 1 March April Funding provided by BTA Bank to its subsidiary Source: Company information Page 31

32 Securities portfolio Portfolio Structure as of 01/07/2009 BTA marks to market its securities portfolio on a monthly basis - therefore the current numbers reflect fair value of portfolio as of 01/07/2009 Alliance and Astana-Finance bonds are impaired assets due to financial problems of the respective issuers KZTbn KZT bn Credit Organisations Securities State Securities Nominal Nominal Carrying Value Alliance-Bank Astana-Finance BTA Ipoteka BTA Bank Kazkommertsbank Bank Halyk 2 2 ATF Bank 4 3 Bank CentreCredit 7 6 Kazakhstan Development Bank 4 3 Total Carrying Value Samruk-Kazyna Fund KZT bn Corporate Securities International Securities Carrying Value Supranational Provisions Nominal Carrying Value Kazakhmys 2 1 Prodcorporation 5 4 Kazakhtelecom Kazmunaygaz Total KZT bn Nominal Carrying Value German Government Asian Development Bank American Development Bank International Bank of Reconstruction and Development Total Supranational, KZTbn KZT 46 bn Ministry of Finance 8 9 Total Source: Company information TOTAL NOMINAL VALUE TOTAL CARRYING VALUE KZT826bn KZT769bn Page 32

33 Funding Funding Structure Development in 1H 2009 State Funding has been Critical in Ensuring Bank s Operations in 1H 2009 As of 30/06/2009 state funding in the form of bonds to S-K, REPO facilities and state deposits amounted to 41.4% of total liabilities The bank has experienced significant deposit outflows from both corporate and retail clients 31/12/ /06/2009 Subordinated debt 6.3% Other liabilities 2.2% Securities sold by REPO agreements 2.1% Other liabilities 4.5% Subordinated debt 4.2% Securities sold by REPO agreements 10.5% Debt due to banks 24.9% Bank accounts and client deposits 33.2% Debt due to banks 15.9% Bonds to S-K 19.2% Debt securities issued incl. Eurobonds 31.3% Debt securities issued incl. Eurobonds 26.0% Bank accounts and client deposits 19.7% Total: US$20,818m Total: US$23,042m Source: Company information Page 33

34 The State and Samruk-Kazyna have invested c. $7bn in supporting BTA through various forms of funding Samruk-Kazyna stated that no further support will be provided to BTA Bank before restructuring process is completed Funding (cont d) Extensive State Support Samruk-Kazyna Bonds Description Senior unsecured bonds issued by S-K Interest rate of 9%, repayment within Amount KZT645bn State Programmes Other Liquidity Support Long-term funding support for SME Long-term funding support for agricultural sector Long-term funding support for construction Long-term funding support for mortgage market Long-term loans Deposits on demand Term deposits KZT37bn KZT8bn KZT20bn KZT40bn KZT3bn KZT257bn KZT41bn Source: Company information Page 34

35 Customers Deposits Key Highlights BTA experienced significant net deposit outflows in 1H 2009, particularly in term deposits (c.62% decrease) Considerable inflow of deposits from state companies (including S-K) to corporate current accounts has partially mitigated negative impact of deposit run. Deposit levels stabilized in 2Q 2009 Customer Accounts Dynamics in 2009 (KZTbn) Terms Deposits Dynamics in 2009 (KZTbn) Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Source: Company information Retail SMEs Corporate Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Retail SMEs Corporate Page 35

36 III New BTA Strategy Page 36

37 III New BTA Strategy a. Strategy Overview b. Focus on Current Liquidity c. Branch Network & Subsidiaries d. Current Structure & Governance e. Specific Focus on Risk Management f. Treasury g. Human Resources & IT Page 37

38 Strategy Overview Following detailed examination of the financial and commercial situation of BTA, and in particular the loan portfolio, BTA's new management has identified the following key strategic priorities: Funding Strategy (General) Competitive Strenghts Due to the deteriorated conditions in capital markets and scarcity of funding sources, BTA is now largely dependent on (i) Samruk-Kazyna funds and other state support; and (ii) customer funds, (e.g. deposits) A strong emphasis will also be made on maximising cash-in from existing assets. This includes recovery of non-performing assets. All of these assets have been identified and a dedicated senior recovery team has been assigned to lead the recovery process Limited funding opportunities and higher cost of funding would require BTA to scale back its growth prospects as a universal bank and also focus on domestic market. Growth perspectives are expected to become more dependent on Kazakhstan s macroeconomic outlook SME and Retail will have to become the key business segments areas for BTA, while the corporate loan book will need to be rebuilt entirely Lending procedures are being reviewed and improved with a focus on managing credit risk more efficiently A successful debt restructuring would provide BTA with an advantage over other Kazakhstan banks as BTA would be one of the first Kazakhstan financial institutions to have overcome the financial crisis as opposed to a generally distressed banking sector with generally limited funding sources A successful restructuring would also boost client confidence (as opposed to expectations of similar issues in other banks in the future), which would give BTA an opportunity both to increase collections on existing assets, as well as to attract new clients, including depositors After restructuring, BTA will carry on with capitalising on its historical strengths (network, customer base, experience in servicing state-sponsored programmes) Page 38