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| Name | Symbol | Market | Type |
|---|---|---|---|
| Jsc Uzbek 5.75% | LSE:78JE | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
From Jun 2022 to Jun 2024
TIDM78JE
RNS Number : 8123C
Uzbek Ind & Construction Bank
13 October 2022
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/8123C_1-2022-10-13.pdf
Joint Stock Commercial Bank " UZBEK INDUSTRIAL AND CONSTRUCTION BANK " Condensed Consolidated Interim Financial Information prepared in accordance with IAS 34, Interim Financial Reporting 30 June 2022
JOINT STOCK COMMERCIAL BANK
"UZBEK INDUSTRIAL AND CONSTRUCTION BANK"
TABLE OF CONTENTS
CONTENTS
REVIEW REPORT
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
Condensed Consolidated Interim Statement of Financial Position 1
Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income
2
Condensed Consolidated Interim Statement of Changes in Equity 3
Condensed Consolidated Interim Statement of Cash Flows 4
Notes to the Condensed Consolidated Interim Financial Information
1. INTRODUCTION 2. OPERATING ENVIRONMENT OF THE GROUP 3. BASIS OF PRESENTATION 4. ADOPTION OF NEW AND REVISED STANDARDS 5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY 6. SEGMENT REPORTING 7. CASH AND CASH EQUIVALENTS 8. DUE FROM OTHER BANKS 9. LOANS AND ADVANCES TO CUSTOMERS 10. INVESTMENT SECURITIES MEASURED AT AMORTISED COST 11. PREMISES, EQUIPMENT AND INTANGIBLE ASSETS 12. DUE TO OTHER BANKS 13. CUSTOMER ACCOUNTS 14. OTHER BORROWED FUNDS 15. SUBORDINATED DEBT 16. INTEREST INCOME AND EXPENSE 17. ADMINISTRATIVE AND OTHER OPERATING EXPENSES 18. INCOME TAXES 19. EARNINGS PER SHARE 20. COMMITMENTS AND CONTINGENCIES 21. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES 22. FAIR VALUE 23. CAPITAL RISK MANAGEMENT 24. RISK MANAGEMENT POLICIES 25. RELATED PARTY TRANSACTIONS 26. EVENTS AFTER THE OF THE REPORTING PERIOD
JOINT STOCK COMMERCIAL BANK
"UZBEK INDUSTRIAL AND CONSTRUCTION BANK"
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(in millions of Uzbek Soums)
Hot Features
Premium
Notes 30 June 2022 31 December
(unaudited) 2021
------------------------------------- ------ ------------- ------------
ASSETS
Cash and cash equivalents 7 7,142,522 8,196,652
Due from other banks 8 2,790,842 1,956,303
Loans and advances to customers 9 42,645,889 42,537,051
Investment securities measured
at amortised cost 10 1,323,824 1,067,512
Financial assets at fair value
through other comprehensive income 40,755 48,136
Investment in associates 32,494 29,726
Premises, equipment and intangible
assets 11 1,582,575 1,276,363
Deferred tax asset 254,219 202,125
Insurance assets 16,990 12,964
Other assets 515,537 356,482
Non-current assets held for sale 46,324 48,602
TOTAL ASSETS 56,391,971 55,731,916
LIABILITIES
Due to other banks 12 3,539,170 1,392,977
Customer accounts 13 13,185,558 13,561,540
Debt securities in issue 3,317,253 3,317,817
Other borrowed funds 14 28,464,761 30,130,776
Insurance liabilities 100,887 84,813
Other liabilities 315,177 197,421
Subordinated debt 15 327,641 101,771
TOTAL LIABILITIES 49,250,447 48,787,115
EQUITY
Share capital 4,640,011 4,640,011
Retained earnings 2,480,967 2,284,458
Revaluation reserve of financial
assets at fair value through
other comprehensive income 14,346 14,132
Net assets attributable to the
Bank's owners 7,135,324 6,938,601
Non-controlling interest 6,200 6,200
TOTAL EQUITY 7,141,524 6,944,801
TOTAL LIABILITIES AND EQUITY 56,391,971 55,731,916
Approved for issue and signed on behalf of the Management Board on 10 October 2022.
Annaklichev Sakhi Vokhidov Oybek
Chairman of the Management Chief Accountant
Board
Notes Six months Six months
ended ended
30 June 2022 30 June 2021
(unaudited) (unaudited)
------------------------------------------ ------ -------------- --------------
Interest income calculated using
the effective interest method 16 2,311,709 1,927,987
Other similar income 16 16,657 17,323
Interest expense 16 (1,193,930) (983,027)
Net interest income before provision
on loans and advances to customers 1,134,436 962,283
(Provision) / recovery of credit
losses on loans and advances to
customers 9 (457,076) 314,451
Net interest income 677,360 1,276,734
Fee and commission income 191,316 194,399
Fee and commission expense (62,729) (44,552)
Gain / (loss) on initial recognition
on interest bearing assets (61,903) 3,159
Net gain / (loss) on foreign exchange
translation 46,788 (8,136)
Net gain from trading in foreign
currencies 136,570 74,248
Insurance operations income 41,666 40,654
Insurance operations expense (23,939) (16,598)
Change in insurance reserves, net (12,047) (20,263)
Dividend income 2,298 4,891
Other operating income 35,841 23,399
Provision for credit losses on
other assets and contingent liabilities (48,560) (52,077)
Impairment of assets held for sale (3,968) (3,974)
Administrative and other operating
expenses 17 (566,971) (452,216)
Share of result from associates (1,004) (595)
Profit before tax 350,718 1,019,073
Income tax expense 18 (154,210) (212,145)
PROFIT FOR THE PERIOD 196,508 806,928
Other comprehensive income:
Items that will not be subsequently
reclassified to profit or loss:
Fair value gain on equity securities at
fair value through other comprehensive
income 267 3,993
Tax effect (53) (799)
Other comprehensive income 214 3,194
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD 196,722 810,122
Attributable to:
- Owners of the Bank 196,508 806,928
- Non-controlling interest - -
PROFIT FOR THE PERIOD 196,508 806,928
Attributable to:
- Owners of the Bank 196,722 810,122
- Non-controlling interest - -
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD 196,722 810,122
Total basic and diluted EPS per
ordinary share (expressed in UZS
per share) 19 0.81 3.31
Share Revaluation reserve Retained earnings Non-controlling Total equity
capital of financial assets interest
at fair value through
other comprehensive
income
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
1 January 2021 4,640,011 13,384 1,427,469 - 6,080,864
, , , , ,
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
, , , , ,
Profit for the period - - 806,928 - 806,928
Other comprehensive income
for
the period - 3,194 - - 3,194
, , , , ,
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
, , , , ,
Total comprehensive income
for
the period - 3,194 806,928 - 810,122
, , , , ,
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
, , , , ,
Dividends declared - - (5,036) - (5,036)
30 June 2021 (unaudited) 4,640,011 16,578 2,229,361 - 6,885,950
, , , , ,
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
Share Revaluation reserve Retained earnings Non-controlling Total equity
capital of financial assets interest
at fair value through
other comprehensive
income
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
1 January 2022 4,640,011 14,132 2,284,459 6,200 6,944,802
Profit for the period - - 196,508 - 196,508
Other comprehensive income
for
the period - 214 - - 214
Total comprehensive income
for
the period - 214 196,508 - 196,722
30 June 2022 (unaudited) 4,640,011 14,346 2,480,967 6,200 7,141,524
, , , , ,
---------------------------- ---------- ----------------------- ------------------ ---------------- -------------
Six months Six months
ended ended
30 June 2022 30 June 2021
Notes (unaudited) (unaudited)
-------------------------------------------- ------ -------------------------- --------------
Cash flows from operating activities
Interest received 2,071,873 1,728,078
Interest paid (1,212,889) (940,764)
Fee and commission received 188,486 193,332
Fee and commission paid (62,729) (44,552)
Insurance operations income received 41,666 40,654
Insurance operations expense paid (23,939) (16,598)
Net gain from trading in foreign currencies 136,570 74,248
Other operating income received 35,301 23,399
Staff costs paid (245,534) (281,271)
Administrative and other operating expenses
paid (119,223) (107,171)
Income tax paid (181,007) (82,235)
#N/A
-------------------------------------------- ------ -------------------------- --------------
Cash flows from operating activities before
changes in operating assets and liabilities 628,575 587,120
Net (increase)/decrease in:
- due from other banks (832,347) (264,643)
- loans and advances to customers (865,306) (285,268)
- investment securities measured at amortised
cost (257,740) (703,350)
- other assets (191,326) (17,859)
Net increase/(decrease) in:
- due to other banks 111,412 (428,775)
- customer accounts (358,654) 610,410
- other liabilities (8,705) (4,735)
Net cash used in operating activities (1,774,091) (507,100)
Cash flows from investing activities
Acquisition of financial assets at fair
value through other comprehensive income - (33)
Proceeds from disposal of financial assets
at fair value through other comprehensive
income 5,111 341
Acquisition of premises equipment and intangible
assets (413,907) (287,558)
Proceeds from disposal of premises equipment
and intangible assets 4,784 762
Proceeds from disposal of repossessed assets 1,874 2,531
Acquisition of investment in associates (5,458) (11,681)
Dividend income received 2,298 4,891
Net cash used in investing activities (405,298) (290 747)
Cash flows from financing activities
Proceeds from borrowings due to other banks 2,447,336 13,950
Repayment of borrowings due to other banks (334,155) (142,951)
Proceeds from other borrowed funds 1,369,964 15,159,640
Repayment of other borrowed funds (2,915,691) (14,036,145)
Proceeds from debt securities in issue 28,000 15,200
Repayment of debt securities in issue (39,602) (65,510)
Proceeds from other subordinated debt 235,851 100,000
Dividends paid (1,726) (5,288)
Net cash from financing activities 789,977 1,038,896
Effect of exchange rate changes on
cash and cash equivalents 335,282 (57,727)
Net (decrease)/increase in cash
and cash equivalents (1,054,130) 183,322
Cash and cash equivalents at the
beginning of the period 7 8,196,652 5,601,186
Cash and cash equivalents at the
end of the period 7 7,142,522 5,784,508
1. INTRODUCTION
This condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" for the six months period ended 30 June 2022 for Joint Stock Commercial Bank "Uzbek Industrial and Construction Bank "(the "Bank") and its subsidiaries (together referred to as the "Group").
The Bank was incorporated in 1991 and is domiciled in the Republic of Uzbekistan. It is registered in Uzbekistan to carry out banking and foreign exchange activities and has operated under the banking license #17 issued by the Central Bank of Uzbekistan ("CBU") on 25 December 2021 (succeeded the licenses #17 issued on 25 January 2003 and #25 issued on 29 January 2005 by the CBU for banking operations and general license for foreign currency operations, respectively).
Principal activity . The Bank's principal activity is commercial banking, retail banking, operations with securities, foreign currencies and origination of loans and guarantees. The Bank accepts deposits from legal entities and individuals, extended loans, and transfer payments. The Bank conducts its banking operations from its head office in Tashkent and 44 branches within Uzbekistan as of 30 June 2022 (31 December 2021: 44 branches).
The Bank participates in the state deposit insurance scheme, which was introduced by the Uzbek Law #360-II "Insurance of Individual Bank Deposit" on 5 April 2002. On 28 November 2008, the President of Uzbekistan issued the Decree #PD-4057 stating that in case of the withdrawal of a license of a bank, the State Deposit Insurance Fund guarantees repayment of 100% of individual deposits regardless of the deposit amount.
As at 30 June 2022 (unaudited), the number of Bank's employees was 3,680 (31 December 2021: 3,841).
Registered address and place of business. 3, Shakhrisabz Street, Tashkent, 100000, Uzbekistan
At 30 June 2022 (unaudited) and 31 December 2021, the Group consolidated the following companies in these consolidated financial statements:
The Bank's ownership
Country 30 June 2022 31 December Type of
of (unaudited) 2021
Name incorporation % % operation
SQB Capital,
LLC Uzbekistan 100 100 Asset management
SQB Insurance,
LLC Uzbekistan 100 100 Insurance
SQB Securities,
LLC Uzbekistan 100 100 Asset management
SQB Construction,
LLC Uzbekistan 100 100 Construction
SQB Consulting,
LLC Uzbekistan 100 100 Consulting
In addition to the above consolidation disclosure table, in 2021, in accordance with Presidential decree-6244 "On additional measures to increase industrial power of the regions", seven companies were established with ownership structure of more than 50% held by the Group in each company. All these seven companies are also consolidated in the Group's financial statements. These companies will serve the purpose of regions industrial power improvement. During the first six months of 2022, the total additional capital investment in existing wholly owned subsidiaries amounted to 54 902 million UZS.
The table below represents the Group's investment in associates at 30 June 2022 (unaudited) and 31 December 2021.
Group's ownership
----------------------- ----------------------- ------------
Principal 30 June 31 December
Name activity Country 2022 (unaudited) 2021
----------------------- ----------------------- ------------ ------------------ ------------
"Kattaqurgon Business
Services" LLC Real state management Uzbekistan 33% 0%
LLC "Khorezm Invest
Project" Asset management Uzbekistan 34% 34%
During the first half of 2022 the Group invested to "Kattaqurgon Business Services" LLC in partnership with Asakabank and NBU for developing Business environment in Samarkand region in accordance with the government order.
The table below represents the interest of the shareholders in the Bank's share capital as at 30 June 2022 (unaudited) and 31 December 2021:
30 June 31 December
Shareholders 2022 (unaudited) 2021
---------------------------------------------------- ------------------ ------------
The Fund of Reconstruction and Development
of the Republic of Uzbekistan 82,09% 82,09%
The Ministry of Finance of the Republic
of Uzbekistan 13,06% 13,06%
Other legal entities and individuals (individually
hold less than 5%) 4,85% 4,85%
Total 100% 100%
2. OPERATING ENVIRONMENT OF THE GROUP
Republic of Uzbekistan. The Uzbekistan economy displays characteristics of an emerging market, including but not limited to, a currency that is not freely convertible outside of the country and a low level of liquidity in debt and equity markets. Also, the banking sector in Uzbekistan is particularly impacted by local political, legislative, fiscal and regulatory developments. The largest Uzbek banks are state-controlled and act as an arm of the Government to develop the country's economy. The Government distributes funds from the country's budget, which flow through the banks to various government agencies, and other state and privately owned entities.
Uzbekistan experienced the following key economic indicators in 2022:
-- Inflation: 12.2% (2021: 10.7%) -- GDP growth 5.4% (2021: 7.4%).
-- Official exchange rates: 30 June 2022: USD 1 = UZS 10,860.25 (31 December 2021: USD 1 = UZS 10,837.66).
-- Central Bank refinancing rate: 14-16% (2021: 14%).
In June 2022 Standard & Poor's international rating agency affirmed the Republic of Uzbekistan's long-term foreign and short-term sovereign credit rating for foreign and local currency liabilities at the BB- level. The outlook was Stable. The agency expects that the sanctions imposed on Russia will put pressure on Uzbekistan's economic growth and slow down the pace of fiscal consolidation this year, as Russia is Uzbekistan's largest trading partner. The agency predicts that real GDP growth will average around 5% per year starting in 2023.
The regulator pursues the inflation targeting policy aimed to reaching 5% by the end of 2023 and averaging around that level for an extended period. This is achieved in large part by imposing tighter requirements on liquidity, which should narrow down monetary base and loan portfolios of banks.
In the first half 2022 inflation rate increased year-on-year to 12.2% against 10.9% over the same period last year.
Influence of geopolitical events in the world
In February 2022, due to the conflict between the Russian Federation and Ukraine, numerous sanctions were announced against the Russian Federation by many countries. These sanctions are intended to have a negative economic impact on the Russian Federation. Due to the growing geopolitical tensions, since February 2022, there has been a significant increase in volatility in the currency markets, as well as a volatility of UZS against the US dollar and euro.
On 18 March 2022, due to geopolitical events around Ukraine and Russia, the exchange rate of the US dollar against the UZS weakened to 11,571.99 or the exchange rate of the USD dollar against the UZS increased by 7% since 31 December 2021 (2021: 3.4% annual).
In order to reduce the impact of the external environment on the economy of the Republic of Uzbekistan, on March 17, 2022, the Board of the Central Bank of the Republic of Uzbekistan increased the CBU refinancing rate by 3% to 17%. In June 2022 and then in July 2022, after some decrease in the degree of influence of the external environment on the economy, the Board of the Central Bank of Uzbekistan decreased the CBU refinancing rate to 16% and 15% respectively.
For the purpose of managing the country risk, the Bank controls transactions with counterparties within the limits set by the Bank's collegial body, which are reviewed regularly. The Group continues to assess the effect of these events and changes in economic conditions on its operations, financial position and financial performance.
The future effects of the current economic situation taking into consideration the sanctions to the Russian government and the above measures are difficult to predict, and management's current expectations and estimates could differ from actual results.
3. BASIS OF PRESENTATION
The condensed consolidated interim financial information of the Group has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the annual financial statements of the Group for the year ended 31 December 2021, which have been prepared in accordance with International Financial Reporting Standards (IFRS).
Except as described below, the same accounting policies and methods of computation were followed in the preparation of this condensed consolidated interim financial information as compared with the annual consolidated financial statements of the Group for the year ended 31 December 2021.
Interim period tax measurement. Interim period income tax expense is accrued using the effective tax rate that would be applicable to expected total annual earnings, that is, the estimated weighted average annual effective income tax rate applied to the pre-tax income of the interim period. In addition, the Group's new accounting policy, implemented retrospectively as a result of amendments to IAS 12, Income Taxes, is to recognize tax benefits of distributions to owners in profit or loss when these tax benefits are linked more directly to past transactions or events that generated distributable profits than to the distributions to owners.
4. Adoption of New and Revised Standards
Certain new standards and interpretations have been issued that are mandatory for the annual periods beginning on or after 1 January 2023 or later, and which the Group has not early adopted.
-- IFRS 17 "Insurance Contracts" (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2023).
-- Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual periods beginning on or after 1 January 2023).
-- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28 (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined by the IASB).
-- Classification of liabilities as current or non-current, deferral of effective date - Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023). Classification of liabilities as current or non-current, deferral of effective date - Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023).
-- Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).
-- Deferred tax related to assets and liabilities arising from a single transaction - Amendments to IAS 12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023).
The requirements of the amended standards have not been taken into account in the preparation of this condensed consolidated interim financial information. The Group is currently assessing the effect of this amendments on its financial position and results of operations.
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In preparing this condensed consolidated interim financial information, the significant judgments made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent with those that applied to the Group's annual consolidated financial statements for the year ended 31 December 2021 prepared in accordance with IFRS. There have been no changes to the basis upon which the significant accounting estimates have been determined compared with 31 December 2021.
ECL measurement
Measurement of ECL is a significant estimate that involves determination of methodology, models and data inputs consistent with those at 31 December 2021. The following components have a major impact on credit loss allowance: definition of default, significant increase in credit risk ("SICR"), probability of default ("PD"), exposure at default ("EAD"), and loss given default ("LGD"), as well as models of macro-economic scenarios. The Group regularly reviews and validates the models and inputs to the models to reduce any differences between expected credit loss estimates and actual credit loss experience.
The Group incorporates forward-looking information into a measurement of ECL when there is a statistically proven correlation between the macro-economic variables and defaults. As at the reporting date the Group has obtained quarterly values for macroeconomic variables: export, import, GDP, CPI, current account balances, unemployment rates, aligned them with quarterly default rates across all loan portfolios and performed statistical tests for correlation considering different time lags. The Management analysed forward-looking information and assessed that effect of macro is not significant. The Management updates its statistical tests for correlation as at each reporting date.
If probability of default (PD) increased by 10% for the whole loan portfolio then ECL would have increased by 5% and amounted UZS 1,912,914 million as of 30 June 2022. If LGD increased by 10% for the whole loan portfolio then ECL would have increased by 4% and amounted UZS 1,815,321 million.
6. SEGMENT REPORTING
Operating segments are components of the Group that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision makers (CODM) and for which discrete financial information is available. The CODM of the group is the Management Board. The Management Board regularly uses financial information based on IFRS for operational decision-making and resource allocation.
(a) Description of products and services from which each reportable segment derives its revenue
The Group is organized on the basis of two main business segments - corporate banking which represents direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products and retail banking which represents private banking services, private customer current accounts, savings, deposits and debit cards, consumer loans.
(b) Information about reportable segment profit or loss, assets, and liabilities
Segment information for the reportable segments for the period ended 30 June 2022 (unaudited) is set out below:
30 June 2022 (Unaudited)
----------------------------------------
Corporate Individuals Total
--------------------------------- ----------- ------------ -------------
Assets
Cash and cash equivalents 7,099,144 43,378 7,142,522
Loans and advances to customers 38,257,017 4,388,872 42,645,889
Due from other banks 2,790,842 - 2,790,842
Investment securities measured
at amortised cost 1,323,824 - 1,323,824
Total reportable segment
assets 49,470,827 4,432,250 53,903,077
--------------------------------- ----------- ------------ -------------
Liabilities
Due to other banks 3,539,170 - 3,539,170
Customer accounts 11,169,180 2,016,378 13,185,558
Other borrowed funds 28,454,634 10,127 28,464,761
Debt securities in issue 3,317,253 - 3,317,253
Total reportable segment
liabilities 46,480,237 2,026,505 48,506,742
--------------------------------- ----------- ------------ -------------
Capital expenditure 889,099
--------------------------------- ----------- ------------ -------------
Segment information for the reportable segments for the year ended 31 December 2021 is set out below:
31 December 2021
--------------------------------------
Corporate Individuals Total
--------------------------------- ----------- ------------ -----------
Assets
Cash and cash equivalents 8,138,305 58,347 8,196,652
Loans and advances to customers 38,370,977 4,166,074 42,537,051
Due from other banks 1,956,303 - 1,956,303
Investment securities measured
at amortised cost 1,067,512 - 1,067,512
Total reportable segment
assets 49,533,097 4,224,421 53,757,518
--------------------------------- ----------- ------------ -----------
Liabilities
Due to other banks 1,392,977 - 1,392,977
Customer accounts 10,257,754 3,303,786 13,561,540
Other borrowed funds 30,120,024 10,752 30,130,776
Debt securities in issue 3,317,817 - 3,317,817
Total reportable segment
liabilities 45,088,572 3,314,538 48,403,110
--------------------------------- ----------- ------------ -----------
Capital expenditure 1,033,849
--------------------------------- ----------- ------------ -----------
The cash management is performed by Treasury Department to support liquidity of the Bank as a whole.
6. SEGMENT REPORTING (Continued)
Six months ended 30 June 2022 (unaudited)
----------------------------------------------
Corporate Individuals Total
----------------------------------- -------------- --------------- -------------
Interest income
Interest on Loans and advances
to customers 1,830,940 287,923 2,118,863
Interest on balances Due
from other banks 97,896 - 97,896
Interest on investment securities
measured at amortised cost 111,607 - 111,607
Interest expense
Interest on balances Due
to other banks (35,665) - (35,665)
Interest on Customer accounts (166,806) (192,005) (358,811)
Interest on Other borrowed
funds (682,141) - (682,141)
Interest on Debt securities
in issue (112,989) - (112,989)
Interest on subordinated
debt (4,324) - (4,324)
Segment results 1,038,518 95,918 1,134,436
----------------------------------- -------------- --------------- -------------
Six months ended 30 June 2021 (unaudited)
----------------------------------------------
Corporate Individuals Total
----------------------------------- -------------- --------------- -------------
Interest income
Interest on Loans and advances
to customers 1,508,127 303,522 1,811,649
Interest on balances Due
from other banks 65,128 - 65,128
Interest on investment securities
measured at amortised cost 68,533 - 68,533
Interest expense
Interest on balances Due
to other banks (36,706) - (36,706)
Interest on Customer accounts (118,832) (113,017) (231,849)
Interest on Other borrowed
funds (607,659) - (607,659)
Interest on Debt securities
in issue (104,164) - (104,164)
Interest on subordinated
debt (2,649) - (2,649)
Segment results 771,778 190,505 962,283
----------------------------------- -------------- --------------- -------------
(c) Reconciliation of income and expenses, assets, and liabilities for reportable segments:
30 June 2022
(Unaudited) 31 December 2021
-------------------------------------- ------------- -----------------
Total reportable segment assets 53,903,077 53,757,518
Financial assets at fair value
through other comprehensive income 40,755 48,136
Investment in associates 32,494 29,726
Premises, equipment and intangible
assets 1,582,575 1,276,363
Deferred tax asset 254,219 202,125
Insurance assets 16,990 12,964
Other assets 515,537 356,482
Non-current assets held for sale 46,324 48,602
Total assets 56,391,971 55,731,916
Total reportable segment liabilities 48,506,742 48,403,110
Insurance liabilities 100,887 84,813
Other liabilities 315,177 197,421
Subordinated debt 327,641 101,771
Total liabilities 49,250,447 48,787,115
6. SEGMENT REPORTING (Continued)
Six months Six months
ended 30 June ended 30 June
2022 (unaudited) 2021 (unaudited)
--------------------------------------------- ------------------ ------------------
Segment results 1,134,436 962,283
Recovery of / (provision) for credit
losses on loans and advances to customers (457,076) 314,451
(Loss) / gain on initial recognition
on interest bearing assets (61,903) 3,159
- -
Fee and commission income 191,316 194,399
Fee and commission expense (62,729) (44,552)
Net gain on foreign exchange translation 46,788 (8,136)
Net gain from trading in foreign currencies 136,570 74,248
Insurance operations income 41,666 40,654
Insurance operations expense (23,939) (16,598)
Change in insurance reserves, net (12,047) (20,263)
Dividend income 2,298 4,891
Other operating income 35,841 23,399
Provision for credit losses on other
assets (48,560) (52,077)
Impairment of assets held for sale (3,968) (3,974)
Administrative and other operating
expenses (566,971) (452,216)
Share of result from associates (1,004) (595)
Profit before tax 350,718 1,019,073
Income tax expense (154,210) (212,145)
,
PROFIT FOR THE PERIOD 196,508 806,928
7. CASH AND CASH EQUIVALENTS
30 June 2022 31 December
(unaudited) 2021
---------------------------------------- ------------- ------------
Correspondent accounts and placements
with other banks
with original maturities of less than
three months 3,480,006 5,154,254
Cash balances with the CBU (other than
mandatory reserve deposits) 2,890,594 2,181,792
Cash on hand 773,059 861,313
,
---------------------------------------- ------------- ------------
,
Less: Allowance for expected credit
losses (1,137) (707)
,
---------------------------------------- ------------- ------------
,
Total cash and cash equivalents 7,142,522 8,196,652
As at 30 June 2022 (unaudited) and 31 December 2021 for the purpose of ECL measurement cash and cash equivalents balances are included in Stage 1 except for balances with Russian banks. The balances with Russian banks are classified under the category Correspondent accounts and placements with other banks with original maturities of less than three months.
.
7. CASH AND CASH EQUIVALENTS (Continued)
The credit quality of cash and cash equivalents at 30 June 2022 (unaudited) is as follows:
Cash balances Correspondent Total
with the CBU accounts and
(other than placements with
mandatory reserve other banks with
deposits) original maturities
of less than
three months
---------------------------------- ------------------- --------------------- ----------
- Central Bank of Uzbekistan 2,890,594 - 2,890,594
- Rated AA- to A+ - 2,962,579 2,962,579
- Rated Baa - 461,541 461,541
- Rated Ba - 40,214 40,214
- Unrated - 15,672 15,672
, , ,
---------------------------------- ------------------- --------------------- ----------
Less: Allowance for expected
credit losses (57) (1,080) (1,137)
, , ,
---------------------------------- ------------------- --------------------- ----------
Total cash and cash equivalents,
excluding cash on hand 2,890,537 3,478,926 6,369,463
Moody's credit rating for Uzbekistan was set at BB- as at 30 June 2022 and at 31 December 2021 which is used for assessment of cash balances with the CBU.
The credit quality of cash and cash equivalents at 31 December 2021 is as follows:
Cash balances Correspondent Total
with the CBU accounts and
(other than placements with
mandatory reserve other banks with
deposits) original maturities
of less than
three months
---------------------------------- ------------------- --------------------- ------------
- Central Bank of Uzbekistan 2,181,792 - 2,181,792
- Rated AA- to A+ - 4,022,030 4,022,030
- Rated Baa - 56,186 56,186
- Rated Ba - 1,076,038 1,076,038
Less: Allowance for expected
credit losses (50) (657) (707)
Total cash and cash equivalents,
excluding cash on hand 2,181,742 5,153,597 7,335,339
The credit rating is based on the rating agency Moody's (if available) or the rating agencies Standard & Poor's and Fitch, which are converted to the nearest equivalent value on the Moody's rating scale.
Information on related party balances is disclosed in Note 25. Information on fair value of cash and cash equivalents is disclosed in Note 22.
8. DUE FROM OTHER BANKS
30 June 2022 31 December
(unaudited) 2021
-------------------------------------------- -------------- -------------
Placements with other banks with original
maturities of
more than three months 2,494,832 1,688,653
Mandatory cash balances with CBU 203,853 184,209
Restricted cash 125,935 118,888
- -
-------------------------------------------- -------------- -------------
- -
Less: Allowance for expected credit losses (33,778) (35,447)
, ,
-------------------------------------------- -------------- -------------
, ,
Total due from other banks 2,790,842 1,956,303
Mandatory deposits with the CBU include non-interest-bearing reserves against client deposits. The Group does not have the right to use these deposits for the purposes of funding its own activities.
Restricted cash represents balances on correspondent accounts with foreign banks placed by the Group on behalf of its customers. The Group does not have the right to use these funds for the purpose of funding its own activities.
8. DUE FROM OTHER BANKS (Continued)
At 30 June 2022 (unaudited) the Group had balances with eleven counterparty banks (31 December 2021: ten counterparty banks) with aggregated amounts above UZS 20,000 million. The total aggregate amount of these deposits was UZS 2,379,230 million (2021: UZS 1,516,330 million) or 90% of the total amount due from other banks (31 December 2021: 83%).
As at 30 June 2022 (unaudited) and 31 December 2021 for the purpose of ECL measurement due from other bank balances are included in Stage 1 and Stage 3.
Analysis by credit quality of due from other banks outstanding at 30 June 2022 (unaudited) is as follows:
Mandatory cash Placements with Restricted Total
balances with other banks with cash
CBU original maturities
of more than three
months
---------------------- --------------- --------------------- ----------- ----------
- Central Bank
of Uzbekistan 203,853 - - 203,853
- Rated A+ - 233,353 - 233,353
- Rated A- - - 5,375 5,375
- Rated B - 260,199 - 260,199
- Rated B- - 520 - 520
- Rated B+ - 162,904 - 162,904
- Rated B1 - 1,182,539 - 1,182,539
- Rated B2 - 3,386 - 3,386
- Rated B3 - 1,500 - 1,500
- Rated BB- - 617,548 - 617,548
- Rated BBB+ - - 120,560 120,560
- Rated CCC+ - 32,581 - 32,581
- Unrated - 302 - 302
- , , ,
---------------------- --------------- --------------------- ----------- ----------
Less: Allowance
for expected credit
losses (123) (33,593) (62) (33,778)
, , , ,
---------------------- --------------- --------------------- ----------- ----------
Total due from
other banks 203,730 2,461,239 125,873 2,790,842
Per credit quality table above the Turkiston Bank was rated as CCC+ (Rated B- at 31 December 2021) and Hi-Tech Bank was classified as Unrated (Unrated at 31 December 2021) as at 30 June 2022 (unaudited). Both Turkiston and Hi-Tech Banks were classified under Stage 3 for purpose of ECL as at 30 June 2022 and as at 31 December 2021.
Analysis by credit quality of due from other banks outstanding at 31 December 2021 is as follows:
Mandatory Placements Restricted Total
cash balances with other banks cash
with CBU with original
maturities of
more than three
months
------------------------------ --------------- ------------------ ----------- ----------
- Central Bank of Uzbekistan 184,209 - - 184,209
- Rated A- to A+ - - - -
- Rated BBB+ - - 117,257 117,257
- Rated Ba2 - - - -
- Rated BB- - 1,119,053 - 1,119,053
- Rated B+ - - - -
- Rated B1 - 101,141 - 101,141
- Rated B2 - 2,641 - 2,641
- Rated B3 - 2,662 - 2,662
- Rated B - 418,386 - 418,386
- Rated B- - 36,419 - 36,419
- Rated C - 8,351 1,631 9,982
Less: Allowance for
expected credit losses - (35,406) (41) (35,447)
Total due from other
banks 184,209 1,653,247 118,847 1,956,303
The credit rating is based on the rating agency Moody's (if available) or the rating agencies Standard & Poor's and Fitch.
Information on related party balances is disclosed in Note 25. Information on fair value of due from other banks is disclosed in Note 22.
8. DUE FROM OTHER BANKS (Continued)
The following tables discloses the changes in the credit loss allowance and gross carrying amount for due from banks between the beginning and the end of the reporting periods:
EAD ECL
------------------------------------------------ ------------------------------------------
Stage Stage Stage Stage Stage Stage TOTAL
1 2 3 TOTAL 1 2 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL ECL ECL ECL
As at 1 January 2022 1,958,937 - 32,813 1,991,750 (14,779) - (20,668) (35,447)
Changes in the gross
carrying amount
- Transfer from stage
1 - - - - - - - -
- Transfer from stage - - - - - - - -
2
- Transfer from stage - - - - - - - -
3
- Changes due to
modifications that
did not result in
derecognition* - - - - 201 - 1,992 2,193
New assets issued or
acquired 2,408,845 - 2 2,408,847 (13,961) - (1) (13,962)
Matured or
derecognized assets
(except
for write off) (1,613,334) - - (1,613,334) 13,440 - - 13,440
Foreign exchange
differences 37,289 - 68 37,357 (2) - - (2)
, , , , , , , ,
, , , , , , , ,
Loss allowance for
ECL and Gross
Carrying as at 30
June 2022
(unaudited) 2,791,737 - 32,883 2,824,620 (15,101) - (18,677) (33,778)
EAD ECL
-------------------------------------------- ------------------------------------------
Stage Stage Stage Stage Stage Stage TOTAL
1 2 3 TOTAL 1 2 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL ECL ECL ECL
Loss allowance for ECL
as at 31 December 2020 1,877,621 - - 1,877,621 (18,429) - - (18,429)
Changes in the gross
carrying amount
- Transfer from stage 1 (31,731) - 31,731 - 4,149 - (4,149) -
- Transfer from stage 2 - - - - - - - -
- Transfer from stage 3 - - - - - - - -
- Changes due to
modifications that
did not result in
derecognition* - - - - 1,536 - (16,519) (14,983)
New assets issued or
acquired 1,023,303 - - 1,023,303 (7,935) - - (7,935)
Matured or derecognized
assets (except
for write off) (714,632) - - (714,632) 6,854 - - 6,854
Foreign exchange
differences (195,624) - 1,082 (194,542) (954) - - (954)
, , , , , , , ,
, , , , , , , ,
Loss allowance for ECL
as at 31 December 2021 1,958,937 - 32,813 1,991,750 (14,779) - (20,668) (35,447)
9. LOANS AND ADVANCES TO CUSTOMERS
The Bank uses the following classification of loans:
-- Loans to state and municipal organisations - loans issued to clients wholly owned by the Government of the Republic of Uzbekistan and budget organisations;
-- Corporate loans - loans issued to clients other than government entities and private entrepreneurs;
-- Loans to individuals - loans issued to individuals for consumption purposes, for the purchase of residential houses and flats and loans issued to private entrepreneurs without forming legal entity.
Loans and advances to customers comprise:
30 June 2022 31 December 2021
(unaudited)
----------------------------------- ------------- -----------------
Corporate loans 27,327,735 25,902,022
State and municipal organisations 13,210,498 14,278,451
Loans to individuals 4,469,618 4,349,321
Total loans and advances to
customers, gross 45,007,851 44,529,794
Less: Allowance for expected
credit losses (2,361,962) (1,992,743)
Total loans and advances to
customers 42,645,889 42,537,051
The table below represents loans and advances to customer's classification by stages:
30 June 2022 31 December 2021
(unaudited)
------------------------------- ------------- -----------------
Originated loans to customers 44,838,578 44,273,101
Overdrafts 169,273 256,693
Total loans and advances to
customers, gross 45,007,851 44,529,794
Stage 1 33,568,106 32,680,532
Stage 2 7,587,259 9,071,322
Stage 3 3,852,486 2,777,940
Total loans and advances to
customers, gross 45,007,851 44,529,794
Less: Allowance for expected
credit losses (2,361,962) (1,992,743)
Total loans and advances to
customers 42,645,889 42,537,051
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The following tables discloses the changes in the credit loss allowance and gross carrying amount for loans and advances to corporate customers between the beginning and the end of the reporting period:
Credit Loss Allowance Gross Carrying Amount
------------------------------------------ -------------------------------------------------
Stage Stage Stage TOTAL Stage Stage Stage TOTAL
1 2 3 1 2 3
State and municipal 12-month Lifetime Lifetime 12-month Lifetime Lifetime
organisations ECL ECL ECL ECL ECL ECL
As at 1 January 2022 111,428 - 5,037 116,465 14,246,280 - 32,171 14,278,451
Movements with
impact on credit
loss allowance
charge for the
period:
Changes in the gross
carrying
amount
- Transfer from
stage 1 (10,543) 10,543 - - (1,468,648) 1,468,648 - -
- Transfer from - - - - - - - -
stage 2
- Transfer from - - - - - - - -
stage 3
- Changes in EAD and
risk parameters
* (10,130) 190,612 9,389 189,871 (1,170,418) 44,325 1,277 (1,124,816)
New assets issued or
acquired 5,817 - - 5,817 1,076,587 1,076,587
Matured or
derecognized assets
(except for write
off) (10,489) - (1,592) (12,081) (1,012,024) - (11,847) (1,023,871)
Total movements with
impact on
credit loss
allowance charge
for
the period (25,345) 201,155 7,797 183,607 (2,574,503) 1,512,973 (10,570) (1,072,100)
Movements without impact on
credit loss
allowance charge for the
period:
Recovery of assets - - - -
previously
written off - - - -
Written off assets - - - - - - - -
Foreign exchange
differences 151 - - 151 3,016 783 348 4,147
Loss allowance for
ECL and Gross
Carrying
as at 30 June 2022
(unaudited) 86,234 201,155 12,834 300,223 11,674,793 1,513,756 21,949 13,210,498
--------------------- --------- --------- --------- --------- ------------ ---------- --------- ------------
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The following tables discloses the changes in the credit loss allowance and gross carrying amount for loans and advances to corporate customers between the beginning and the end of the reporting period:
Credit Loss Allowance Gross Carrying Amount
----------------------------------------------------- ------------------------------------------------------
Stage Stage Stage TOTAL Stage Stage Stage TOTAL
1 2 3 1 2 3
Corporate loans 12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL ECL ECL ECL
As at 1 January 2022 193,862 481,544 1,017,625 1,693,031 14,556,470 8,884,835 2,460,717 25,902,022
Movements with impact on credit
loss
allowance charge for the period:
Changes in the gross carrying
amount
- Transfer from stage 1 (31,253) 16,490 14,763 - (2,270,307) 1,175,250 1,095,057 -
- Transfer from stage 2 161,490 (261,811) 100,321 - 2,971,680 (4,376,668) 1,404,988 -
- Transfer from stage 3 143,431 151,984 (295,415) - 488,898 413,686 (902,584) -
- Changes in EAD and risk
parameters
* (320,802) (86,763) 806,315 398,750 (2,212,331) 507,673 (149,365) (1,854,023)
New assets issued or acquired 112,087 - - 112,087 6,218,088 - - 6,218,088
Matured or derecognized assets
(except
for write off) (28,457) (34,534) (100,256) (163,247) (2,249,670) (847,494) (187,526) (3,284,690)
Total movements with impact on
credit
loss allowance charge for the
period 36,496 (214,634) 525,728 347,590 2,946,358 (3,127,553) 1,260,570 1,079,375
Movements without impact on credit loss
allowance
charge for the period:
Recovery of assets previously - - - -
written
off - - - -
Written off assets - - (95,506) (95,506) - - (95,506) (95,506) Foreign exchange differences 4,091 10,162 21,625 35,878 321,385 83,409 37,050 441,844 Loss allowance for ECL and Gross Carrying as at 30 June 2022 (unaudited) 234,449 277,072 1,469,472 1,980,993 17,824,213 5,840,691 3,662,831 27,327,735 --------------------------------- ---------- --------------- ---------- ------------ ------------ ------------ ---------- -------------- 9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The following tables discloses the changes in the credit loss allowance and gross carrying amount for loans and advances to corporate customers between the beginning and the end of the reporting period:
Credit Loss Allowance Gross Carrying Amount
------------------------------------------------- ----------------------------------------------------
Stage Stage Stage TOTAL Stage Stage Stage TOTAL
1 2 3 1 2 3
Loans to individuals 12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL ECL ECL ECL
As at 1 January 2022 34,193 10,554 138,500 183,247 3,877,782 186,487 285,052 4,349,321
Movements with impact on credit loss
allowance charge for the period:
Changes in the gross carrying amount
- Transfer from stage 1 (1,604) 1,202 402 - (181,981) 136,337 45,644 -
- Transfer from stage 2 5,517 (7,259) 1,742 - 94,520 (125,777) 31,257 -
- Transfer from stage 3 20,442 26,643 (47,085) - 48,667 61,921 (110,588) -
- Changes in EAD and risk parameters
* (42,308) (23,658) 4,528 (61,438) (285,837) (11,909) (27,332) (325,078)
New assets issued or acquired 3,812 3,812 767,034 767,034
Matured or derecognized assets
(except
for write off) (2,214) (637) (13,644) (16,495) (251,085) (14,247) (27,947) (293,279)
Total movements with impact on credit
loss allowance charge for the period (16,355) (3,709) (54,057) (74,121) 191,318 46,325 (88,966) 148,677
Movements without impact on credit loss allowance
charge for the period:
Recovery of assets previously written - - - - - - - -
off
Written off assets - - (28,380) (28,380) - - (28,380) (28,380)
Foreign exchange differences - - - - - - - -
Loss allowance for ECL and Gross
Carrying
as at 30 June 2022 (unaudited) 17,838 6,845 56,063 80,746 4,069,100 232,812 167,706 4,469,618
-------------------------------------- ---------- --------- ----------- ------------- ---------- ---------- ---------- ----------
*The line "Changes in EAD and risk parameters" under columns related to Gross Carrying Amount represents changes in the gross carrying amount of loans issued in prior periods which have not been fully repaid during the reporting period and transfers of new issued loans between stages.
*The line "Changes in EAD and risk parameters" under columns related to Credit Loss Allowance represents changes in risk parameters (PD, LGD), changes in EAD and adjustment of ECL due to transfer to new stages, as well as transfers of ECL on new loans originated during the reporting period from Stage 1 to other stages. The information on transfers above reflects the migration of loans from their initial stage (or the stage as at the beginning of the reporting date) to the stage they were in as at the reporting date. This information does not reflect the intermediate stage that the loans could be assigned to throughout the reporting period. *The line "Changes in EAD and risk parameters" under columns related to Gross Carrying Amount represents changes in the gross carrying amount of loans issued in prior periods which have not been fully repaid during 2021 and transfers of new issued loans between stages.
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The following table discloses the changes in the credit loss allowance and gross carrying amount for loans and advances to corporate customers between the 1 January 2021 and 31 December 2021:
Credit Loss Allowance Gross Carrying Amount
------------------------------------------------ -----------------------------------------------------
Stage 1 Stage Stage TOTAL Stage Stage Stage TOTAL
2 3 1 2 3
State and 12-month Lifetime Lifetime 12-month Lifetime Lifetime
municipal ECL ECL ECL ECL ECL ECL
organisations
As at 1 January
2021 57,409 61,835 9,713 128,957 7,866,977 6,658,143 37,412 14,562,532
Movements with
impact on credit
loss allowance
charge for the
period:
Changes in the
gross carrying
amount
- Transfer from
stage 1 (19) - 19 - (25,941) - 25,941 -
- Transfer from
stage 2 51,435 (51,435) - - 5,327,666 (5,327,666) - -
- Transfer from
stage 3 1,309 - (1,309) - 1,674 - (1,674) -
- Change in EAD
and risk
parameters* (22,458) (1,260) 4,413 (19,305) (1,104,933) (73,172) (14,545) (1,192,650)
New assets issued
or acquired 27,164 - - 27,164 3,258,046 - - 3,258,046
Matured or
derecognized
assets
(except for write
off) (4,990) (10,400) (7,799) (23,189) (1,307,340) (1,330,477) (34,563) (2,672,380)
Total movements
with impact on
credit loss
allowance charge
for
the period 52,441 (63,095) (4,676) (15,330) 6,149,172 (6,731,315) (24,841) (606,984)
Movements without impact on
credit loss allowance
charge for the period:
Recovery of assets - - - -
previously written
off - - - -
Written off assets - - - - - - - -
Foreign exchange
differences 1,578 1,260 - 2,838 230,131 73,172 19,600 322,903
Loss allowance for
ECL and Gross
Carrying
as at 31 December
2021 111,428 - 5,037 116,465 14,246,280 - 32,171 14,278,451
------------------- ---------- ----------- ---------- ----------- ------------- ------------ --------- -------------
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The following table discloses the changes in the credit loss allowance and gross carrying amount for loans and advances to corporate customers between the 1 January 2021 and 31 December 2021:
Credit Loss Allowance Gross Carrying Amount
-------------------------------------------------- ------------------------------------------------------
Stage Stage Stage TOTAL Stage Stage Stage TOTAL
1 2 3 1 2 3
Corporate loans 12-month Lifetime Lifetime 12-month Lifetime Lifetime
ECL ECL ECL ECL ECL ECL
As at 1 January
2021 113,170 134,583 1,302,461 1,550,214 14,751,901 4,950,505 2,235,765 21,938,171
Movements with
impact on credit
loss allowance
charge for the
period:
Changes in the
gross carrying
amount
- Transfer from
stage 1 (29,292) 20,152 9,140 - (3,863,755) 2,686,846 1,176,909 -
- Transfer from
stage 2 31,101 (59,515) 28,414 - 934,919 (1,699,391) 764,472 -
- Transfer from
stage 3 75,976 761,008 (836,984) - 112,400 1,230,420 (1,342,820) -
- Change in EAD
and risk
parameters* (252,694) (377,789) 1,082,857 452,374 (4,168,431) 2,608,458 538,287 (1,021,686) New assets issued or acquired 273,146 - - 273,146 9,933,457 - - 9,933,457 Matured or derecognized assets (except for write off) (21,367) (11,064) (263,708) (296,139) (3,218,934) (915,822) (577,873) (4,712,629) Total movements with impact on credit loss allowance charge for the period 76,870 332,792 19,719 429,381 (270,344) 3,910,511 558,975 4,199,142 Movements without impact on credit loss allowance charge for the period: Recovery of assets previously written off - - 5,707 5,707 - - 5,707 5,707 Written off assets - - (346,110) (346,110) - - (346,110) (346,110) Foreign exchange differences 3,822 14,169 35,848 53,839 74,913 23,819 6,380 105,112 Loss allowance for ECL and Gross Carrying as at 31 December 2021 193,862 481,544 1,017,625 1,693,031 14,556,470 8,884,835 2,460,717 25,902,022 ------------------- ---------- ---------- ------------ ------------ ------------ ------------ ------------ ------------ 9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The following table discloses the changes in the credit loss allowance and gross carrying amount for loans and advances to corporate customers between the 1 January 2021 and 31 December 2021:
Credit Loss Allowance Gross Carrying Amount
--------------------------------------------- -----------------------------------------------------
Stage Stage Stage TOTAL Stage Stage Stage TOTAL
1 2 3 1 2 3
Loans to 12-month Lifetime Lifetime 12-month Lifetime Lifetime
individuals ECL ECL ECL ECL ECL ECL
As at 1
January 2021 21,179 19,047 183,318 223,544 3,582,749 361,561 417,660 4,361,970
Movements
with impact
on credit
loss
allowance
charge for
the period:
Changes in
the gross
carrying
amount
- Transfer
from stage 1 (1,278) 616 662 - (215,002) 103,543 111,459 -
- Transfer
from stage 2 11,377 (15,290) 3,913 - 217,446 (285,998) 68,552 -
- Transfer
from stage 3 53,719 19,413 (73,132) - 124,708 45,260 (169,968) -
- Changes in
EAD and risk
parameters
* (70,210) (12,026) 138,413 56,177 (374,211) (8,641) 58,303 (324,549)
New assets
issued or
acquired 23,930 - - 23,930 1,303,052 - - 1,303,052
Matured or
derecognized
assets
(except
for write
off) (4,524) (1,206) (67,491) (73,221) (760,960) (29,238) (153,771) (943,969)
Total
movements
with impact
on credit
loss
allowance
charge for
the period 13,014 (8,493) 2,365 6,886 295,033 (175,074) (85,425) 34,534
Movements without impact
on credit loss allowance
charge for the period:
Recovery of
assets
previously
written
off - - 1,270 1,270 - - 1,270 1,270
Written off
assets - - (48,453) (48,453) - - (48,453) (48,453)
Foreign - - - - - - - -
exchange
differences
Loss
allowance
for ECL and
Gross
Carrying
as at 31
December
2021 34,193 10,554 138,500 183,247 3,877,782 186,487 285,052 4,349,321
-------------- --------- ---------- ---------- ---------- ------------ ------------ ----------- ------------
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
Economic sector risk concentrations within the loans and advances to customer are as follows:
30 June 2022 31 December
(unaudited) 2021
------------- ----- -------------- -------
Amount % Amount %
----------------------------- ------------- ----- -------------- -------
Manufacturing 16,521,074 37% 15,849,755 36%
Oil and gas & chemicals 10,163,500 23% 10,704,331 24%
Trade and Services 4,876,794 11% 4,441,329 10%
Individuals 4,469,618 10% 4,349,321 10%
Agriculture 3,635,655 8% 3,745,481 8%
Energy 1,480,486 3% 2,176,801 5%
Transport and communication 2,595,461 6% 2,367,542 5%
Construction 1,265,263 3% 895,234 2%
Total loans and advances
to customers, gross 45,007,851 100% 44,529,794 100%
Less: Allowance for
expected credit losses (2,361,962) (1,992,743)
Total loans and advances
to customers 42,645,889 42,537,051
----------------------------- ------------- ----- -------------- -------
As at 30 June 2022 (unaudited), the Group granted loans to 12 (31 December 2021: 13) borrowers in the amount of UZS 14,666,464 million (31 December 2021: UZS 15,396,167 million), which individually exceeded 10% of the Group's equity.
Information about loans and advances to individuals as at 30 June 2022 (unaudited) and 31 December 2021 are as follows:
30 June 2022 31 December 2021
(unaudited)
------------------------------ ------------- -----------------
Mortgage 3,304,332 3,314,059
Microloan 591,818 464,727
Car Loan 532,404 448,949
Consumer Loans 23,232 110,161
Other 17,832 11,425
Total loans and advances to
individuals, gross 4,469,618 4,349,321
Less: Allowance for expected
credit losses (80,746) (183,247)
Total loans and advances to
individuals 4,388,872 4,166,074
Information about collateral and other credit enhancement as at 30 June 2022 (unaudited) are as follows:
State and Corporate Loans to
municipal loans individuals
organisations
------------------------------ --------------- ------------ ------------- ------------
Loans guaranteed by letters
of surety 2,451,066 9,858,739 914,531 13,224,336
Loans guaranteed by state
guarantees 7,141,695 - - 7,141,695
Not collateralised 206,778 - 167,117 373,895
Loans collateralised
by:
Real estate 146,184 6,835,834 2,747,480 9,729,498
Equipment 519,442 4,436,811 - 4,956,253
Inventory and receivables 1,492,202 2,560,891 39,502 4,092,595
Insurance policy 13,057 3,237,369 453,712 3,704,138
Cash deposits 1,025,796 20,436 2,991 1,049,223
Vehicles 72,472 377,655 144,285 594,412
Equity securities 141,806 - - 141,806
Total loans and advances
to customers, gross 13,210,498 27,327,735 4,469,618 45,007,851
Less: Allowance for expected
credit losses (300,223) (1,980,993) (80,746) (2,361,962)
Total loans and advances
to customers 12,910,275 25,346,742 4,388,872 42,645,889
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
Information about collateral and other credit enhancement as at 31 December 2021 are as follows:
State and Corporate Loans to
municipal loans individuals
organisations
------------------------------ --------------- ----------------- ------------- --------------
Loans guaranteed by letters
of surety 2,504,049 8,983,059 599,579 12,086,687
Loans guaranteed by state
guarantees 7,314,269 - - 7,314,269
Not collateralised 185,749 - 320,336 506,085
Loans collateralised
by:
Real estate 136,130 7,334,729 2,844,909 10,315,768
Equipment 679,990 4,459,284 - 5,139,274
Inventory and receivables 2,213,930 1,657,871 181,650 4,053,451
Insurance policy 11,817 3,040,375 263,634 3,315,826
Cash deposits 993,410 22,440 3,246 1,019,096
Vehicles 88,134 404,264 135,967 628,365
Equity securities 150,973 - - 150,973
Total loans and advances
to customers, gross 14,278,451 25,902,022 4,349,321 44,529,794
Less: Allowance for expected
credit losses (116,465) (1,693,031) (183,247) (1,992,743)
Total loans and advances
to customers 14,161,986 24,208,991 4,166,074 42,537,051
Analysis by credit quality of loans and advances to customers that are collectively and individually assessed for impairment as at 30 June 2022 (unaudited) is as follows :
State and Corporate Loans Total
municipal loans to individuals
organisations
-------------------------------- --------------- ------------ ---------------- ------------
Loans assessed for impairment
on a collective basis (gross)
Not past due loans 11,674,792 22,786,040 3,824,547 38,285,379
Past due loans - - -
- less than 30 days overdue 37,879 1,564,554 490,161 2,092,594
- 31 to 90 days overdue 18,269 885,403 115,360 1,019,032
- 91 to 180 days overdue 1,479,558 442,604 23,896 1,946,058
- 181 to 360 days overdue - 191,877 10,095 201,972
- over 360 days overdue - 11,187 5,559 16,746
Total loans assessed for
impairment on a collective
basis, gross 13,210,498 25,881,665 4,469,618 43,561,781
Loans individually determined
to be impaired (gross):
Restructured loans - 1,446,070 - 1,446,070
Not past due loans - 1,029,986 - 1,029,986
Past due loans - 122,431 - 122,431
1-30 days - 293,653 - 293,653
Total loans individually
determined to be impaired,
gross - 1,446,070 - 1,446,070
- Impairment provisions for
individually impaired loans - (367,647) - (367,647)
- Impairment provisions
assessed on a collective
basis (300,223) (1,613,346) (80,746) (1,994,315)
Less: Allowance for expected
credit losses (300,223) (1,980,993) (80,746) (2,361,962)
Total loans and advances
to customers 12,910,275 25,346,742 4,388,872 42,645,889
-------------------------------- --------------- ------------ ---------------- ------------
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
Analysis by credit quality of loans and advances to customers that are collectively and individually assessed for impairment as at 31 December 2021 is as follows :
31 December 2021 State and Corporate Loans Total
municipal loans to individuals
organisations
--------------------------------- ---------------- ------------ ---------------- -------------
Loans assessed for impairment
on a collective basis (gross)
Not past due loans 14,246,999 23,156,242 3,840,673 41,243,914
Past due loans - - - -
- less than 30 days overdue 27,616 949,697 185,401 1,162,714
- 31 to 90 days overdue 2,471 539,388 87,801 629,660
- 91 to 180 days overdue - 271,438 72,755 344,193
- 181 to 360 days overdue 1,365 376,143 128,524 506,032
- over 360 days overdue - 40,486 34,167 74,653
Total loans assessed for
impairment on a collective
basis, gross 14,278,451 25,333,394 4,349,321 43,961,166
Loans individually determined
to be impaired (gross):
Restructured loans - 568,628 - 568,628
Not past due loans - 422,936 - 422,936
Past due loans - - - -
1-30 days - - - -
31-90 days - 72,759 - 72,759
91-180 days - 72,933 - 72,933
181-360 days - - - -
Total loans individually
determined to be impaired,
gross - 568,628 - 568,628
- Impairment provisions for
individually impaired loans - (182,745) - (182,745)
- Impairment provisions
assessed on a collective basis (116,465) (1,510,286) (183,247) (1,809,998)
Less: Allowance for expected
credit losses (116,465) (1,693,031) (183,247) (1,992,743)
Total loans and advances to
customers 14,161,986 24,208,991 4,166,074 42,537,051
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The credit quality of loans to customers carried at amortised cost is as follows at 30 June 2022:
Stage 1 Stage Stage 3 Total
2
------------
(12-months (lifetime (lifetime
ECL) ECL for ECL for
30 June 2022 (unaudited) SICR) credit im-paired)
----------------------------------- ----------- ---------- ------------------- ------------
Corporate loans
Standard 17,631,738 3,748,209 19,594 21,399,541
Substandard 167,373 2,089,472 2,039,064 4,295,909
Unsatisfactory 25,104 2,283 1,317,159 1,344,546
Doubtful - 725 283,788 284,513
Loss - - 3,226 3,226
Gross carrying amount 17,824,215 5,840,689 3,662,831 27,327,735
Credit loss allowance (234,448) (277,072) (1,469,473) (1,980,993)
Carrying amount 17,589,767 5,563,617 2,193,358 25,346,742
State and municipal organisations
Standard 11,674,791 - - 11,674,791
Substandard - 1,513,757 - 1,513,757
Unsatisfactory - - 21,950 21,950
Doubtful - - - -
Loss - - - -
Gross carrying amount 11,674,791 1,513,757 21,950 13,210,498
Credit loss allowance (86,234) (201,155) (12,834) (300,223)
Carrying amount 11,588,557 1,312,602 9,116 12,910,275
Loans to individuals
Standard 3,814,388 220,700 159,162 4,194,250
Substandard 145,731 7,883 5,770 159,384
Unsatisfactory 50,655 1,593 1,428 53,676 Doubtful 34,676 1,065 648 36,389 Loss 23,650 1,572 697 25,919 Gross carrying amount 4,069,100 232,813 167,705 4,469,618 Credit loss allowance (17,835) (6,847) (56,064) (80,746) Carrying amount 4,051,265 225,966 111,641 4,388,872 ----------------------------------- ----------- ---------- ------------------- ------------ 9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The credit quality of loans to customers carried at amortised cost is as follows at 31 December 2021:
Stage 1 Stage Stage Total
2 3
------------
(12-months (lifetime (lifetime
ECL) ECL for ECL for
SICR) credit
31 December 2021 im-paired)
------------------------------------ ----------- ---------- ------------ ------------
Corporate loans , , , ,
Standard 14,556,470 6,984,900 138,149 21,679,519
Substandard - 1,899,935 741,772 2,641,707
Unsatisfactory - - 890,792 890,792
Doubtful - - 187,119 187,119
Loss - - 502,885 502,885
, , , ,
, , , ,
Gross carrying amount 14,556,470 8,884,835 2,460,717 25,902,022
Credit loss allowance (193,862) (481,544) (1,017,625) (1,693,031)
, , , ,
, , , ,
Carrying amount 14,362,608 8,403,291 1,443,092 24,208,991
, , , ,
------------------------------------ ----------- ---------- ------------ ------------
State and municipal organisations , , , ,
Standard 14,246,280 - 4,414 14,250,694
Substandard - - - -
Unsatisfactory - - 22,256 22,256
Doubtful - - 4,136 4,136
Loss - - 1,365 1,365
, , , ,
, , , ,
Gross carrying amount 14,246,280 - 32,171 14,278,451
Credit loss allowance (111,428) - (5,037) (116,465)
, , , ,
, , , ,
Carrying amount 14,134,852 - 27,134 14,161,986
, , , ,
------------------------------------ ----------- ---------- ------------ ------------
Loans to individuals , , , ,
Standard 3,877,782 106,616 49,809 4,034,207
Substandard - 79,871 55,966 135,837
Unsatisfactory - - 40,105 40,105
Doubtful - - 34,015 34,015
Loss - - 105,157 105,157
, , , ,
, , , ,
Gross carrying amount 3,877,782 186,487 285,052 4,349,321
Credit loss allowance (34,193) (10,554) (138,500) (183,247)
, , , ,
, , , ,
------------------------------------ ----------- ---------- ------------ ------------
Carrying amount 3,843,589 175,933 146,552 4,166,074
------------------------------------ ----------- ---------- ------------ ------------
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
The extent to which collateral and other credit enhancements mitigate credit risk for financial assets carried at amortised cost that are credit impaired, is presented by disclosing collateral values separately for (i) those assets where collateral and other credit enhancements are equal to or exceed carrying value of the asset ("over-collateralised assets") and (ii) those assets where collateral and other credit enhancements are less than the carrying value of the asset ("under-collateralised assets"). The effect of collateral on credit impaired assets at 30 June 2022 and 31 December 2021 are as follows.
30 June 2022 (unaudited)
Over-collateralised Under-collateralised
---------------------------- -----------------------------
Carrying Value of Carrying Value Value of
Value of Collateral of the Assets Collateral
the Assets
------------- ------------- --------------- ------------
Credit Impared Assets
------------- ------------- --------------- ------------
Loans to Corporate
and State Companies
carried at AC
------------- ------------- --------------- ------------
Manufacturing - - 1 571 958 940 655
------------- ------------- --------------- ------------
Oil and gas & Chemicals - - 1 076 410 453 514
------------- ------------- --------------- ------------
Agriculture - - 465 964 210 820
------------- ------------- --------------- ------------
Trade and services - - 365 151 175 239
------------- ------------- --------------- ------------
Construction - - 141 426 61 099
------------- ------------- --------------- ------------
Transport and communication - - 63 871 32 906
------------- ------------- --------------- ------------
Loans to Individuals
carried at AC
------------- ------------- --------------- ------------
Mortgage - - 128 803 99 578
------------- ------------- --------------- ------------
Microloan - - 18 447 5 445
------------- ------------- --------------- ------------
Car Loan - - 8 823 4 834
------------- ------------- --------------- ------------
Consumer Loans - - 8 199 4 207
------------- ------------- --------------- ------------
Other - - 2 335 -
------------- ------------- --------------- ------------
Student Loan - - 1 098 799
------------- ------------- --------------- ------------
31 December 2021
Over-collateralised Under-collateralised
------------------------------- -----------------------------
Carrying Value Value of Carrying Value Value of
of the Assets Collateral of the Assets Collateral
---------------- ------------- --------------- ------------
Credit Impared Assets
---------------- ------------- --------------- ------------
Loans to Corporate and
State Companies carried
at AC
---------------- ------------- --------------- ------------
Manufacturing - - 1,180,611 625,964
---------------- ------------- --------------- ------------
Agriculture - - 472,300 210,571
---------------- ------------- --------------- ------------
Trade - - 278,063 187,710
---------------- ------------- --------------- ------------
Services - - 229,670 81,102
---------------- ------------- --------------- ------------
Oil and gas & Chemicals - - 142,065 120,948
---------------- ------------- --------------- ------------
Construction - - 129,769 68,944
---------------- ------------- --------------- ------------
Transport and communication - - 60,411 44,826
---------------- ------------- --------------- ------------
Loans to Individuals
carried at AC
---------------- ------------- --------------- ------------
Mortgage - - 212,408 165,451
---------------- ------------- --------------- ------------
Microloan - - 28,729 2
---------------- ------------- --------------- ------------
Consumer Loans - - 26,616 2,917
---------------- ------------- --------------- ------------
Car Loan - - 16,346 6,768
---------------- ------------- --------------- ------------
Other - - 953 348
---------------- ------------- --------------- ------------
10. INVESTMENT SECURITIES MEASURED AT AMORTISED COST
Currency Annual EIR Maturity 30 June 31 December
coupon/ % date month/year 2022 (unaudited) 2021
interest
rate
%
---------------------- ---------- ---------- ----- -------------------- ------------------ ------------
19 - 19 - July 2022-September
CBU Bonds UZS 22 22 2022 934,559 771,384
14 - 14 - August 2022-March
Government Bonds UZS 14 15 2024 383,231 289,361
18 - 18 - June 2023-
Corporate bonds UZS 22 22 July 2026 8,409 8,400
Less: Allowance
for expected credit
losses (2,375) (1,633)
Total investment
securities measured
at amortised cost 1,323,824 1,067,512
Analysis by credit quality of investment securities measured at amortised costs at 30 June 2022 (unaudited) is as follows:
CBU Government Corporate Total
Bonds Bonds Bonds
------------------------------- -------- ----------- ---------- ----------
Neither past due nor impaired
- Rated BB- 934,559 383,231 - 1,317,790
- Rated B2 - - 2,621 2,621
- Unrated - - 5,788 5,788
Less: Allowance for expected
credit losses (513) (1,757) (105) (2,375)
Total investment securities
measured at amortised cost 934,046 381,474 8,304 1,323,824
Analysis by credit quality of investment securities measured at amortised costs at and 31 December 2021 is as follows:
31 December 2021 CBU Government Corporate Total
Bonds Bonds Bonds
------------------------------ -------- ----------- ---------- ----------
- Rated BB- 289,361 771,384 5,789 1,066,534
- Rated B2 - - 2,611 2,611
Less: Allowance for expected
credit losses (1,071) (453) (109) (1,633)
Total investment securities
measured at amortised cost 288,290 770,931 8,291 1,067,512
At 30 June 2022 (unaudited), the Group holds government bonds of the Ministry of Finance of the Republic of Uzbekistan in the quantity of 338,321 (31 December 2021: 288,970) with nominal value of UZS 1,000,000 and coupon
rate of 14-19% p.a. (31 December 2021: 14-16% p.a.).
At 30 June 2022, the Group holds bonds of the CBU in the amount of UZS 934,559 million at 19% p.a. coupon rate.
At 30 June 2022, the Group holds 1 156 bonds of Uzmetkombinat with nominal value of UZS 5,000,000.
At 30 June 2022, the subsidiary PSB Insurance LLC holds corporate bonds of JSCB "Asia Alliance Bank" in quantity 2,500 with nominal value of UZS 1,000,000 and coupon rate of CBU refinancing rate (14%) + 4% p.a.
11. PREMISES, EQUIPMENT AND INTANGIBLE ASSETS
In 2019, the Group has arranged a contract with construction company Shanghai Construction Group Co. Ltd on design and construction of the Headquarters for Group in the amount of USD 136.5 million. As at 30 June 2022 (unaudited), in accordance with the contract, the Group invested USD 83.613 million (equivalent to UZS 894 781 million) of which UZS 889,099 million was recorded in CIP.
11. PREMISES, EQUIPMENT AND INTANGIBLE ASSETS (Continued)
As at 30 June 2022 (unaudited) and 31 December 2021, premises and equipment of the Group were not pledged.
12. DUE TO OTHER BANKS
30 June 2022 31 December
(unaudited) 2021
-------------------------------------- ------------- ------------
Short term placements of other banks 2,489,972 613,405
Long term placements of other banks 499,267 492,583
Correspondent accounts and overnight
placements of other banks 549,931 286,989
Total due to other banks 3,539,170 1,392,977
Short term placements of other banks increased due to attracting 200 mln USD (2,172,050 millon equivalent UZS) deposit from Gazprombank Russia.
Refer to Note 22 for the disclosure of the fair value of due to other banks. Information on related party balances is disclosed in Note 25.
13. CUSTOMER ACCOUNTS
30 June 2022 (unaudited) 31 December 2021
-------------------------------- ------------------------- -----------------
State and public organisations
- Current/settlement accounts 3,131,866 4,148,013
- Term deposits 4,343,403 3,019,115
,
Other legal entities
- Current/settlement accounts 3,193,578 2,378,852
- Term deposits 500,333 711,774
,
Individuals
- Current/demand accounts 277,518 949,191
- Term deposits 1,738,860 2,354,595
Total customer accounts 13,185,558 13,561,540
Economic sector concentrations within customer accounts are as follows:
30 June 2022 (unaudited) 31 December 2021
--------------------------- -------------------
Amount % Amount %
------------------------- ------------------ ------- ------------ -----
Public administration 4,158,143 32% 3,120,451 23%
Oil and gas 2,135,559 16% 2,615,793 19%
Manufacturing 2,107,181 16% 1,592,246 12%
Individuals 2,016,378 15% 3,303,786 24%
Energy 896,382 7% 768,794 6%
Trade 642,718 5% 291,532 2%
Finance 587,299 4% 631,942 5%
Services 202,063 2% 336,840 2%
Construction 141,673 2% 299,667 2%
Engineering 127,103 1% 135,083 1%
Agriculture 60,969 0% 79,929 1%
Transportation 51,654 0% 52,233 1%
Medicine 33,200 0% 17,679 0%
Communication 16,298 0% 261,931 2% Mining 6,867 0% 48,056 0% Other 2,071 0% 5,578 0% Total customer accounts 13,185,558 100% 13,561,540 100%
As at 30 June 2022 (unaudited), the Group had two (31 December 2021: two) customers with a total balance UZS 4,593,303 million (31 December 2021: UZS 4,208,043 million), which individually exceeded 10% of the Group's equity.
13. CUSTOMER ACCOUNTS (Continued)
Significant change in current account balances of State and public organizations is associated with payments made by two large state owned enterprises operating in Oil and gas sector to their counterparties.
Significant change in Other legal entities is associated with increase in balances of the Group's clients operating in Oil an gas sector within their normal course of the business activities.
Refer to Note 22 for the disclosure of the fair value of customer accounts. Information on related party balances is disclosed in Note 25.
14. OTHER BORROWED FUNDS
30 June 2022 31 December 2021
(unaudited)
----------------------------------------- ------------- -----------------
International financial institutions
China EXIMBANK 4,968,867 5,102,508
CREDIT Suisse 3,084,652 2,912,645
International Bank of Reconstruction
and Development 1,434,506 1,430,444
Commerzbank AG 1,424,113 1,480,096
Landesbank Baden-Wuerttemberg 1,224,446 833,390
ICBC (London) plc 1,210,859 1,482,801
Daryo Finance B.V. 960,342 965,082
European Bank for Reconstruction
and Development 915,022 1,112,670
Russia EXIMBANK 883,663 986,473
Asian Development Bank 789,633 631,199
China Development Bank 615,870 715,507
Promsvyazbank PJSC 608,094 1,122,664
International Development Association
of World Bank 578,980 592,900
Raiffeisen Bank International AG 503,979 495,013
Citibank Europe PLC 487,200 -
UniCredit 408,309 216,711
Japan International Cooperation
Agency (JICA) 337,706 347,869
VTB BANK EUROPE 312,664 990,079
AK Bars Bank 231,884 291,701
Turk EXIMBANK 177,058 218,224
Gazprombank 173,126 255,774
Credit Bank of Moscow 119,227 472,254
Baobab Securities Limited 117,141 166,135
Halyk Savings Bank of Kazakhstan
JSC 118,788 74,637
OJSB Transcapitalbank 110,029 108,402
OPEC Fund for International Development 87,732 131,115
Korea EXIMBANK 77,094 94,936
JPMorgan Chase 60,783 67,802
Bereke Bank Kazakhstan 60,012 7,183
PJSC "Sovcombank" 55,562 44,692
AKA Ausfuhrkredit-Gesellschaft
mbH 41,233 195,044
KfW IPEX-Bank 40,270 48,516
ODDO BHF 34,412 28,247
The Export-Import Bank of the Republic
of China 31,999 35,699
BANCA POPOLARE DI SONDRIO 28,434 -
John Deere 21,824 29,389
International Finance Corporation 7,944 1,603
International Fund for Agricultural
Development 2,022 2,138
Citibank N.A. ADGM - 442,321
Sberbank Europe AG - 108,598
European Merchant Bank UAB - 25,066
Financial institutions of Uzbekistan
Long term borrowings from Ministry
of Finance 3,918,824 3,498,702
Fund for Reconstruction and Development
of Uzbekistan 1,486,981 1,778,851
Uzbekistan Mortgage Refinancing
Company (UzMRC) 343,229 225,058
Export Promotion Agency under MIFT 218,632 174,623
KDB Bank Uzbekistan 108,764 93,197
Young Entrepreneurs Support Fund
under MIFT 12,156 7,538
Long term borrowings from CBU 10,864 63,314
Preference Shares 10,127 10,752
Khokimiyat of Tashkent Region 4,252 5,793
Other 5,453 5,421
Total other borrowed funds 28,464,761 30,130,776
14. OTHER BORROWED FUNDS (Continued)
On 8 June 2022 the Group and Mashreqbank PSC has signed an Agreement on attracting the Credit line facility in the amount of USD 15 million. The facility is to be used to finance the purchase of oil and gas products and spare parts for engine production. The maturity period of the loan is 12 months.
Further on 14 June 2022 the Group and Landesbank Hessen-Thüringen (Helaba) has signed an Agreement on attracting the Credit line facility to be utilized to purchase capital goods from European Union countries. The loan maturity period is defined as 10 years.
On 6 June 2022 the Group has received the Trade finance from Banca Popolare Di Sondrio in the amount of USD 2.7 million with the purpose of the Group client's working capital replenishment.
On 11 May 2022 the Group and Citibank Europe PLC has signed Continuing Agreement for reimbursement of Trade advances. In year 2022 the amount of USD 42,6 million were called by the Group.
As of 30 June 2022 (unaudited) the Group was in compliance with all covenants including the covenants related to issued Eurobonds.
The maturity analysis is disclosed in Note 24. Refer to Note 22 for disclosure of the fair value of other borrowed funds and Note 25 for information on related party balances.
15. Subordinated debt
Currency Maturity Nominal Effective 30 June 31 December
date interest interest 2022 (unaudited) 2021
rate rate %
%
-------------------------- ---------- ----------- ---------- ---------- ------------------ ------------
Subordinated debt
of
Fund for Reconstruction
and Development
of Uzbekistan USD-UZS 2028-2041 5%-9% 5%-9,21% 327,641 101,771
Total subordinated
debt 327,641 101,771
Refer to Note 22 for the disclosure of the fair value of subordinated debt and Note 25 for information on related party balances.
16. INTEREST INCOME AND EXPENSE
Six months Six months
ended ended
30 June 2022 30 June 2021
(unaudited) (unaudited)
------------------------------------------------ -------------- --------------
Interest income calculated using the
effective interest method
Interest income on assets recorded at
amortised cost comprises:
Interest on loans and advances to customers 2,102,206 1,794,326
Interest on investment securities measured
at amortised cost 111,607 68,533
Interest on balances due from other
banks 97,896 65,128
,
------------------------------------------------ -------------- --------------
,
Total interest income calculated using
the effective interest method 2,311,709 1,927,987
,
------------------------------------------------ -------------- --------------
,
Other similar income ,
Finance lease receivables 16,657 17,323
Total other similar income 16,657 17,323
------------------------------------------------ -------------- --------------
, ,
Interest expense
Interest expense on liabilities recorded
at amortised cost comprises:
Interest on other borrowed funds (682,142) (607,659)
Interest on customer accounts (358,810) (231,849)
Interest on debt securities in issue (112,989) (104,164)
Interest on balances due to other banks (35,665) (36,706)
Interest on subordinated debt (4,324) (2,649)
Total interest expense (1,193,930) (983,027)
Net interest income before provision
on loans and advances to customers 1,117,779 944,960
, ,
------------------------------------------------ -------------- --------------
Significant change in interest income on loan and advances to customers is associated with the increase in the Group's loan portfolio during six months of 2022, which in its turn is associated with the gradual improvements of the economic situation and business activity in Uzbekistan caused by post COVID-19 restrictions release.
16. INTEREST INCOME AND EXPENSE (Continued)
Significant change in interest income on investment securities measured at amortised cost is associated with the significant investments made by the Group in bonds of CBU and Ministry of Finance during six months of 2022.
Significant change in interest income on other borrowed funds is driven by the attraction of additional funds from local and international financial institutions.
17. ADMINISTRATIVE AND OTHER OPERATING EXPENSES
Six months ended Six months ended
30 June 2022 30 June 2021
(unaudited) (unaudited)
------------------------------------- ------------------ ------------------
Staff costs 284,119 253,842
Social security costs 32,433 28,684
Total staff costs 316,552 282,526
Loss on Sale or Disposal of 49,490 -
Fixed assets
Depreciation and amortisation 43,350 34,012
Charity expenses 25,203 27,150
Security services 24,571 17,593
Taxes other than income tax 27,164 18,698
Membership fees 17,650 8,542
Stationery and other low value
items 15,120 11,585
Communication expenses 3,922 5,410
Repair and maintenance of buildings 7,423 3,986
Rent expenses 5,823 5,195
Advertising expenses 3,290 2,992
Legal and audit fees 2,328 3,854
Consultancy fee 4,784 3,202
Travel expenses 4,177 3,012
Utilities expenses 2,707 3,000
Representation and entertainment 1,544 558
Fuel 1,550 968
Medical, Dental and Hospitalization 190 230
------------------------------------- ------------------ ------------------
Other operating expenses 10,133 19,703
------------------------------------- ------------------ ------------------
Total administrative and other
operating expenses 566,971 452,216
The increase in Loss on Sale or Disposal of Fixed assets is due to the charge made in April 2022, for the amount mln 48 457 UZS. This was the result of the recognized loss on fixed assets given free of charge to "State asset management agency" according to resolution of the Cabinet of Ministers No. 75 of February 17, 2022 and Central Bank No. 296 of April 4, 2022. These properties consisted of non-residential buildings, a park in the Jizzakh region and poultry farms that were repossessed from borrowers due to non-payment of loans.
18. INCOME TAXES
Six months Six months
ended ended 30 June
30 June 2022 2021 (unaudited)
(unaudited)
----------------------------------------- -------------- ------------------
Current income tax expense 206,357 148,834
Deferred tax (benefit)/expense: (52,147) 63,311
- Deferred tax (benefit)/expense 53 799
Total income tax expense through profit
or loss and other comprehensive income 154,263 212,944
The increase in non-deductible tax expense component let to significant tax charge increase, hence the estimate annual tax rate of 20.0 % is not sustained.
Interim period income tax expense is recognized based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate applied for the six months ended 30 June 2022 (unaudited) is 20.0 % (the estimated tax rate for the six months ended 30 June 2021 (unaudited) was 20%)).
19. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit attributable to ordinary shares by the weighted average number of ordinary shares.
The Group has no dilutive potential ordinary shares; therefore, the diluted earnings per share equal basic earnings per share.
According to the charter of the Group, dividend payments per ordinary share cannot exceed the dividends per share on preferred shares for the same period and the minimum dividends payable to the owners of preference shares comprise not less than 20%. Therefore, net profit for the period is allocated to the ordinary shares and the preferred shares in accordance with their legal and contractual dividend rights to participate in undistributed earnings.
Six months Six months
ended ended
30 June 2022 30 June 2021
(unaudited) (unaudited)
------------------------------------------------ --------------- ---------------
Profit for the year attributable to ordinary
shareholders 196,508 806,928
------------------------------------------------ --------------- ---------------
Weighted average number of ordinary shares
for the purpose of basic and diluted earnings
per share (millions) 243,922 243,922
Total basic and diluted earnings per
ordinary share (expressed in UZS per share) 0.81 3.31
20. COMMITMENTS AND CONTINGENCIES
Operating lease commitments. As at 30 June 2022 (unaudited) and 31 December 2021, the Group had no material operating lease commitments outstanding.
Legal proceedings . From time to time and in the normal course of business, claims against the Group are received. On the basis of its own estimates and both internal and external professional advice the Management is of the opinion that no material losses will be incurred in respect of claims and accordingly no provision has been made in these consolidated financial statements.
Tax legislation . Uzbek tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. The Management's interpretation of such legislation as applied to the transactions and activity of the Group may be challenged by the relevant regional and state authorities. Recent events within Uzbekistan suggest that the tax authorities may be taking a more assertive position in their interpretation of the legislation and assessments, and it is possible that transactions and activities that have not been challenged in the past, may be challenged. As a result, significant additional taxes, penalties and interest may be assessed. Fiscal periods remain open to review by the authorities in respect of taxes for five calendar years preceding the year of review. Under certain circumstances reviews may cover longer periods.
The Management believes that its interpretation of the relevant legislation is appropriate and the Bank's tax, currency legislation and customs positions will be sustained. Accordingly, as at 30 June 2022 (unaudited), no provision for potential tax liabilities had been recorded (2021: Nil). The Group estimates that it has no potential obligations from exposure to other than remote tax risks.
Capital expenditure commitments. As at 30 June 2022 (unaudited) and 31 December 2021, the Group had contractual capital expenditure commitments for the total amount of UZS 889,099 million and UZS 1,033,849 million in respect of premises and equipment, respectively.
Credit related commitments . The primary purpose of these instruments is to ensure that funds are available to a customer as required. Guarantees and standby letters of credit, which represent irrevocable assurances that the Group will make payments in the event that a customer cannot meet its obligations to third parties, carry the same credit risk as loans. Documentary and commercial letters of credit, which are written undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions, are collateralised by the underlying shipments of goods to which they relate or cash deposits and therefore carry less risk than a direct borrowing. Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments. However, the likely amount of loss is less than the total unused commitments since most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to maturity of credit related commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.
20. COMMITMENTS AND CONTINGENCIES (Continued)
The credit related commitments are comprised of the following:
30 June 2022 31 December
(unaudited) 2021
---------------------------------------- ------------- ------------
Guarantees issued 1,992,862 1,834,214
Letters of credit, non post-financing 622,626 398,886
Letters of credits, post-financing
with commencement after reporting
period end 1,247,498 1,508,819
Undrawn credit lines 437,958 831,415
,
---------------------------------------- ------------- ------------
,
Total gross credit related commitments 4,300,944 4,573,334
,
---------------------------------------- ------------- ------------
,
Less - Cash held as security against
letters of credit and guarantees (470,952) (275,863)
,
---------------------------------------- ------------- ------------
,
Less - Provision for expected credit
losses (40,190) (43,203)
,
---------------------------------------- ------------- ------------
,
Total credit related commitments 3,789,802 4,254,268
The total outstanding contractual amount of letters of credit, guarantees issued and undrawn credit lines does not necessarily represent future cash requirements as these financial instruments may expire or terminate without being funded.
21. Changes in Liabilities Arising from Financing Activities
The table below sets out movement in the Group's liabilities from financing activities for each of periods presented. The items of these liabilities are those that are reported as financing activities in the condensed consolidated interim statement of cash flows.
Liabilities from financing activities Total
---------------------------------------------------------
Other Due to
borrowed Debt securities other Subordinated
In million funds issue banks debt
Uzbekistan Soums
-------------------------- ------------ ---------------- ---------- ------------- ------------
Net debt at
1 January 2021 25,683,457 3,273,048 1,496,004 - 30,452,509
Proceeds from the
issue 11,826,214 10,000 411,116 100,000 12,347,330
Redemption (8,391,815) (81,310) (381,937) - (8,855,062)
Foreign currency
translation 992,957 126,637 22,932 - 1,142,526
Other non-cash movements 19,963 (10,558) (155,138) 1,771 (143,962)
Net debt at
31 December 2021 30,130,776 3,317,817 1,392,977 101,771 34,943,341
Proceeds from the
issue 1,369,964 28,000 2,447,336 235,851 4,081,151
Redemption (2,915,691) (39,602) (334,155) - (3,289,448)
Foreign currency
translation (97,134) (3,214) (79,056) (14,131) (193,535)
Other non-cash movements (23,154) 14,252 112,068 4,150 107,316
Net debt at 31
December 2022 28,464,761 3,317,253 3,539,170 327,641 35,648,825
22. FAIR VALUE
IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a measurement date. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs).
The Management applies judgement in categorizing financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety.
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting year. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used). Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Management's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.
22. FAIR VALUE (Continued)
The Group considers that the accounting estimate related to the valuation of financial instruments where quoted markets prices are not available is a key source of estimation uncertainty because: (i) it is highly susceptible to changes from year to year, as it requires the Management to make assumptions about interest rates, volatility, exchange rates, the credit rating of the counterparty, valuation adjustments and specific features of transactions and (ii) the impact that recognizing a change in the valuations would have on the assets reported on the consolidated statement of financial position, as well as, the related profit or loss reported on the consolidated statement of profit or loss, could be material.
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting year. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).
Fair value as
at
-------------- ------------
30 June 2022 31 December Fair value Valuation Significant Relationship of
Financial (unaudited) 2021 hierarchy model(s) unobservable unobservable
assets/ and key input(s) input(s) inputs
financial to fair value
liablities
------------------- -------------- ------------ ----------- ------------------ -------------- ------------------
Equity securities
at
FVTOCI
Quoted bid prices
in an active
- Visa Inc. 12,208 13,613 Level 1 market. N/A N/A
Discounted cash The greater
flows. Discount discount-
rate estimated the smaller fair
- Other 28,547 34,523 Level 3 based on WACC Discount rate value
The fair value of the equity instruments at fair value through other comprehensive income were determined as the present value of future dividends by assuming dividend growth rate of zero per annum. The Management built its expectation based on previous experience of dividends received on financial assets at fair value through other comprehensive income over multiple years, and accordingly calculated the value of using the average rate of return on investments. A significant unobservable input used in determining the fair value of equity securities at FVTOCI is the Group's WACC. The higher the WACC the lower the fair value of the equity securities at FVTOCI. The Management believes that this approach accurately reflects the fair value of these securities, given they are not traded. Such financial instruments were categorised as Level 3.
Investments to which the dividends valuation approach is not applicable, i.e. dividends were not paid during the period, Management may use the Assets based valuation approach focused on the investment company's net assets value (NAV), or fair market value of its total assets minus its total liabilities, to determine what would cost to recreate the business. The Management believes that such approach accurately reflects the fair value of these securities.
22. FAIR VALUE (Continued)
Below is presented the fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required). Except as detailed in the following table, the Management considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values.
30 June 2022 (unaudited) 31 December 2021
Carrying Fair value Carrying Fair value
value value
Loans and advances to customers 42,645,889 40,024,782 42,537,051 39,773,366
Due from other banks 2,790,842 2,756,385 1,956,303 1,726,508
Debt securities in issue
- Eurobonds 3,246,183 2,862,593 3,235,127 3,280,385
Other borrowed funds 28,464,761 29,508,572 30,130,776 31,751,605
Subordinated debt 327,641 324,552 101,771 97,338
30 June 2022 (unaudited)
Level 1 Level Level 3 Total
2
Loans and advances
to customers - 40,024,782 - 40,024,782
Due from other banks - 2,756,385 - 2,756,385
Debt securities in
issue
- Eurobonds 2,862,593 - - 2,862,593
Other borrowed funds - - 29,508,572 29,508,572
Subordinated debt - 324,552 - 324,552
31 December 2021
Level 1 Level Level 3 Total
2
Loans and advances
to customers - 39,773,366 - 39,773,366
Due from other banks - 1,726,508 - 1,726,508
Debt securities in
issue
- Eurobonds 3,280,385 - - 3,280,385
Other borrowed funds - - 31,751,605 31,751,605
Subordinated debt - - 97,338 97,338
23. Capital risk management
The Group manages regulatory capital as Group's capital. The Group's objectives when managing capital are to comply with the capital requirements set by the CBU, and to safeguard the Group's ability to continue as a going concern. Compliance with capital adequacy ratios set by the CBU is monitored monthly with reports outlining their calculation reviewed and signed by the Chairman and Chief Accountant.
Under the current capital requirements set by the CBU, banks have to maintain ratios of (actual ratios given below are unaudited):
-- Ratio of regulatory capital to risk weighted assets ("Regulatory capital ratio") above a prescribed minimum level of 13% (31 December 2021: 13%). Actual ratio as at 30 June 2022: 15.5% (31 December 2021: 15.8%);
-- Ratio of Group's tier 1 capital to risk weighted assets ("Capital adequacy ratio") above a prescribed minimum level of 10% (31 December 2021: 10%). Actual ratio as at 30 June 2022: 12.5% (31 December 2021: 11.9%); and
-- Ratio of Group's tier 1 capital to total assets less intangibles ("Leverage ratio") above a prescribed minimum level of 6% (31 December 2021: 6%). Actual ratio as at 30 June 2022: 10% (31 December 2021: 10%).
The Group and the Bank have complied with all externally imposed capital requirements throughout the reporting period and 2021.
Total capital is based on the Group's reports prepared under CBU Instructions and related instructions and comprises:
30 June 2022 (unaudited) 31 December 2021 (unaudited)
Tier 1 capital 7,217,218 6,223,703
Less: Deductions from capital (203,708) (149,023)
Tier 1 capital adjusted 7,013,510 6,074,680
Tier 2 capital 1,664,212 2,024,893
,
Total regulatory Capital 8,677,722 8,099,573
Regulatory capital consists of Tier 1 capital, which comprises share capital, share premium, preference shares, retained earnings excluding current year profit and less intangible assets. The other component of regulatory capital is Tier 2 capital, which includes current year profit.
24. RISK MANAGEMENT POLICIES
The Group manages the following risk: credit risk, off-balance sheet risk, market risk, currency risk, interest rate risk, liquidity risk, operational risk, compliance risk and other type of risks.
Risk management system is the part of the overall management system of the Group which aims to provide sustainable development of the Bank and the Group members in line with the approved Development Strategy.
The Group's risk management policies and procedures are consistent with those disclosed in the annual consolidate financial statements of the Group for the year ended 31 December 2021.
Currency risk . The Group takes on exposure to the effect of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. In respect of currency risk, the Management Board sets limits on the level of exposure by currency and in total for both overnight and intra-day positions, which are monitored daily. The Group's Treasury Department measures its currency risk by matching financial assets and liabilities denominated in same currency and analyses effect of actual annual appreciation/depreciation of that currency against Uzbekistan Soum to the profit and loss of the Group. The table below summarises the Group's exposure to foreign currency exchange rate risk at the end of reporting period:
30 June 2022 (unaudited) USD EUR Other UZS Total
currencies
Cash and cash equivalents 4,920,340 333,421 137,967 1,750,794 7,142,522
Due from other banks 1,369,086 40,517 311,921 1,069,318 2,790,842
Loans and advances to customers 20,048,087 6,989,964 - 15,607,838 42,645,889
Investment securities measured
at amortised cost - - - 1,323,824 1,323,824
Other financial assets 43,769 5,622 125,841 - 175,232
Total monetary assets 26,381,282 7,369,524 575,729 19,751,774 54,078,309
Due to other banks 3,094,375 101,176 - 343,619 3,539,170
Customer accounts 5,943,549 651,675 153,441 6,436,893 13,185,558
Debt securities in issue 3,246,183 - - 71,070 3,317,253
Other borrowed funds 14,241,488 6,835,567 237,038 7,150,668 28,464,761
Other financial liabilities 41,629 29,364 5,656 155,110 231,759
Subordinated debt - - - 327,641 327,641
Total monetary liabilities 26,567,224 7,617,782 396,135 14,485,001 49,066,142
Net Balance sheet position (185,942) (248,258) 179,594 5,266,773 5,012,167
31 December 2021 USD EUR Other UZS Total
currencies
Cash and cash equivalents 5,058,478 480,056 130,815 2,527,303 8,196,652
Due from other banks 843,913 43,387 65,131 1,003,872 1,956,303
Loans and advances to customers 20,739,057 6,883,573 3,305 14,911,116 42,537,051
Investment securities measured
at amortised cost - - - 1,067,512 1,067,512
Other financial assets 10,766 6,175 3,308 - 20,249
Total monetary assets 26,652,214 7,413,191 202,559 19,509,803 53,777,767
Due to other banks 1,012,647 44,171 - 336,159 1,392,977
Customer accounts 6,411,546 424,540 114,676 6,610,778 13,561,540
Debt securities in issue 3,235,127 - - 82,690 3,317,817
Other borrowed funds 16,014,520 7,179,169 3,443 6,933,644 30,130,776 Other financial liabilities 101,305 399 4 54,047 155,755 Subordinated debt - - - 101,771 101,771 Total monetary liabilities 26,775,145 7,648,279 118,123 14,119,089 48,660,636 Net Balance sheet position (122,931) (235,088) 84,436 5,390,714 5,117,131 24. RISK MANAGEMENT POLICIES (Continued)
Geographical risk concentration . The geographical concentration of the Group's financial assets and liabilities at 30 June 2022 (unaudited) is set out below:
30 June 2022 (unaudited) Uzbekistan OECD Non-OECD Russia Total Assets Cash and cash equivalents 3,703,787 3,423,758 267 14,710 7,142,522 Due from other banks 2,431,707 359,135 - - 2,790,842 Loans and advances to customers 42,645,889 - - - 42,645,889 Investment securities measured at amortised cost 1,323,824 - - - 1,323,824 Financial assets at fair value through other comprehensive income 28,545 12,210 - - 40,755 Other financial assets 133,045 42,187 - - 175,232 Total financial assets 50,266,797 3,837,290 267 14,710 54,119,064 Liabilities Due to other banks 972,720 246,626 147,774 2,172,050 3,539,170 Customer accounts 12,797,614 - 387,944 - 13,185,558 Debt securities in issue 71,070 3,246,183 - - 3,317,253 Other borrowed funds 6,119,259 13,578,726 6,585,199 2,181,577 28,464,761 Other financial liabilities 231,736 - 23 - 231,759 Subordinated debt 327,641 - - - 327,641 Total financial liabilities 20,520,040 17,071,535 7,120,940 4,353,627 49,066,142 Net balance sheet position 29,746,757 (13,234,245) (7,120,673) (4,338,917 5,052,922 Credit related commitments (Note 20) 3,789,802 - - - 3,789,802
The geographical concentration of the Group's financial assets and liabilities at 31 December 2021 is set out below:
31 December 2021 Uzbekistan OECD Non-OECD Russia Total
-------------
Assets
Cash and cash equivalents 4,007,434 4,124,590 - 64,628 8,196,652
Due from other banks 1,837,456 117,215 1,632 - 1,956,303
Loans and advances to
customers 42,537,051 - - - 42,537,051
Investment securities
measured at amortised
cost 1,067,512 - - - 1,067,512
Financial assets at fair
value through other comprehensive
income 34,523 13,613 - - 48,136
Other financial assets 10,270 9,979 - - 20,249
Total financial assets 49,494,246 4,265,397 1,632 64,628 53,825,903
Liabilities
Due to other banks 1,050,532 271,622 70,410 413 1,392,977
Customer accounts 13,171,330 - 390,210 - 13,561,540
Debt securities in issue 82,690 3,235,127 - - 3,317,817
Other borrowed funds 5,863,247 13,976,515 7,009,055 3,281,959 30,130,776
Other financial liabilities 54,452 - 101,303 - 155,755
Subordinated debt 101,771 - - - 101,771
Total financial liabilities 20,324,022 17,483,264 7,570,978 3,282,372 48,660,636
Net balance sheet position 29,170,224 (13,217,867) (7,569,346) (3,217,744) 5,165,267
Credit related commitments
(Note 20) 4,254,268 - - - 4,254,268
24. RISK MANAGEMENT POLICIES (Continued)
Liquidity risk . Liquidity risk is defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan draw downs, guarantees and from margin and other calls on cash settled derivative instruments. The Group does not maintain cash resources to meet all of these needs as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. Liquidity risk is managed by the Resources Management Committee of the Group.
The Group seeks to maintain a stable funding base comprising primarily amounts due to other banks, corporate and retail customer deposits and invest the funds in inter-bank placements of liquid assets, in order to be able to respond quickly and smoothly to unforeseen liquidity requirements.
The liquidity management of the Group requires considering the level of liquid assets necessary to settle obligations as they fall due; maintaining access to a range of funding sources; maintaining funding contingency plans and monitoring balance sheet liquidity ratios against regulatory requirements. The Group calculates liquidity ratios on a monthly basis in accordance with the requirement of the Central Bank of Uzbekistan. These ratios are calculated using figures based on National Accounting Standards.
The Treasury Department receives information about the liquidity profile of the financial assets and liabilities. The Treasury Department then provides for an adequate portfolio of short-term liquid assets, largely made up of short-term liquid trading securities, deposits with banks and other inter-bank facilities, to ensure that sufficient liquidity is maintained within the Group as a whole.
The daily liquidity position is monitored and regular liquidity stress testing under a variety of scenarios covering both normal and more severe market conditions is performed by the Treasury Department.
When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the reporting date. Foreign currency payments are translated using the spot exchange rate at the statement of financial position date.
The undiscounted maturity analysis of financial instruments at 30 June 2022 (unaudited) is as follows:
30 June 2022 Demand From From From From Over Total
(unaudited) and less 1 to 6 to 12 1 to 3 3 to 5 years
than 1 6 months months years 5 years
month
Liabilities
Due to other
banks 1,695,440 1,169,035 247,422 173,755 404,888 22,756 3,713,296
ustomer accounts 7,082,044 1,826,603 1,536,803 2,298,340 581,001 1,485,056 14,809,847
Debt securities
in
issue 16,881 163,260 93,657 3,496,285 - - 3,770,083
Other borrowed
funds 224,931 1,525,401 4,031,676 17,790,504 3,489,339 6,625,469 33,687,320
Other financial
liabilities 231,759 - - - - - 231,759
Subordinated
debt - - - 18,025 27,248 370,626 415,899
Undrawn credit
lines 831,415 - - - - - 831,415
Guarantees
issued 1,788,686 - - - - - 1,788,686
Letters of
credit 83,485 182,609 1,296,813 - - - 1,562,907
Total potential
future payments
for financial
obligations 11,954,641 4,866,908 7,206,371 23,776,909 4,502,476 8,503,907 60,811,212
24. RISK MANAGEMENT POLICIES (Continued)
The undiscounted maturity analysis of financial instruments at 31 December 2021 is as follows:
31 December Demand From From From From Over Total
2021 and less 1 to 6 to 12 1 to 3 3 to 5 years
than 1 6 months months years 5 years
month
Liabilities
Due to other
banks 473,736 460,908 28,335 142,257 437,562 48,173 1,590,971
ustomer accounts 7,628,416 1,989,658 2,312,751 917,524 219,074 721,434 13,788,857
Debt securities
in
issue 20,964 120,246 174,614 3,593,482 - - 3,909,306
Other borrowed
funds 664,752 4,185,661 5,449,195 13,934,192 3,305,437 6,493,697 34,032,934
Other financial
liabilities 155,755 - - - - - 155,755
Subordinated
debt - - - 18,025 21,472 164,089 203,586
Undrawn credit
lines 831,415 - - - - - 831,415
Guarantees
issued 1,676,260 - - - - - 1,676,260
Letters of
credit 35,013 1,622,819 48,777 60,264 - - 1,766,873 Total potential future payments for financial obligations 11,486,311 8,379,292 8,013,672 18,665,744 3,983,545 7,427,393 57,955,957
Liquidity requirements to support calls under guarantees and standby letters of credit are considerably less than the amount of the commitment disclosed in the above maturity analysis, because the Group does not generally expect the third party to draw funds under the agreement.
The total outstanding contractual amount of commitments to extend credit as included in the above maturity table does not necessarily represent future cash requirements, since many of these commitments will expire or terminate without being funded.
The table below shows the maturity analysis of non-derivative financial assets at their carrying amounts and based on their contractual maturities, except for assets that are readily saleable if it should be necessary to meet cash outflows on financial liabilities. Such financial assets are included in the maturity analysis based on their expected date of disposal. Impaired loans are included at their carrying amounts net of impairment provisions, and based on the expected timing of cash inflows.
24. RISK MANAGEMENT POLICIES (Continued)
The Group does not use the above undiscounted maturity analysis to manage liquidity. Instead, the Group monitors expected maturities which may be summarised as follows at 30 June 2022 (unaudited) is set out below.
30 June 2022 Demand From From From From Over Total
(unaudited) and less 1 to 6 to 12 1 to 3 3 to 5 years
than 1 6 months months years 5 years
month
Assets
Cash and cash
equivalents 7,142,522 - - - - - 7,142,522
Due from other
banks 477,615 602,319 245,831 206,960 915,919 342,198 2,790,842
Loans and
advances to
customers 2,138,486 7,498,350 5,237,132 11,728,345 6,906,542 9,137,034 42,645,889
Investment
securities
measured at
amortised
cost 401,343 636,688 253,410 29,948 2,435 - 1,323,824
Financial
assets at
fair value
through other
comprehensive
income - - - 40,755 - - 40,755
Other financial
assets 175,232 - - - - - 175,232
Total financial
assets 10,335,198 8,737,357 5,736,373 12,006,008 7,824,896 9,479,232 54,119,064
Liabilities
Due to other
banks 1,690,103 1,144,066 217,205 77,619 389,422 20,755 3,539,170
Customer accounts 7,030,598 1,649,441 1,295,585 1,999,868 319,912 890,154 13,185,558
Debt securities
in issue - 86,161 - 3,231,092 - - 3,317,253
Other borrowed
funds 106,153 958,934 3,422,996 15,640,672 2,828,994 5,507,012 28,464,761
Other financial
liabilities 231,759 - - - - - 231,759
Subordinated
debt - 6,296 - - 3,226 318,119 327,641
Total financial
liabilities 9,058,613 3,844,898 4,935,786 20,949,251 3,541,554 6,736,040 49,066,142
Net liquidity
gap 1,276,585 4,892,459 800,587 (8,943,243) 4,283,342 2,743,192 5,052,922
Cumulative
liquidity
gap 1,276,585 6,169,044 6,969,631 (1,973,612) 2,309,730 5,052,922
24. RISK MANAGEMENT POLICIES (Continued)
The analysis of liquidity of the Group's assets and liabilities as at 31 December 2021 is set out below.
31 December Demand From From From From Over Total
2021 and less 1 to 6 to 12 1 to 3 3 to 5 years
than 1 6 months months years 5 years
month
Assets
Cash and cash
equivalents 8,196,652 - - - - - 8,196,652
Due from other
banks 208,322 24,092 877,224 208,950 257,745 379,970 1,956,303
Loans and advances
to customers 2,303,397 7,692,692 5,415,340 11,550,168 7,910,452 7,665,002 42,537,051
Investment
securities
measured at
amortised cost 446,005 493,401 - 125,664 2,442 - 1,067,512
Financial assets
at fair value
through other
comprehensive
income - - - 48,136 - - 48,136
Other financial
assets 20,249 - - - - - 20,249
Total financial
assets 11,174,625 8,210,185 6,292,564 11,932,918 8,170,639 8,044,972 53,825,903
Liabilities
Due to other
banks 467,396 435,292 2,469 42,430 401,151 44,239 1,392,977
Customer accounts 7,588,430 1,897,559 2,264,066 877,011 216,880 717,594 13,561,540
Debt securities
in issue 3,002 33,801 70,000 3,211,014 - - 3,317,817
Other borrowed
funds 560,328 3,670,762 4,931,885 12,437,283 2,875,810 5,654,708 30,130,776
Other financial
liabilities 155,755 - - - - - 155,755
Subordinated
debt - 1,771 - - 3,226 96,774 101,771
Total financial
liabilities 8,774,911 6,039,185 7,268,420 16,567,738 3,497,067 6,513,315 48,660,636
Net liquidity
gap 2,399,714 2,171,000 (975,856) (4,634,820) 4,673,572 1,531,657 5,165,267
Cumulative
liquidity gap 2,399,714 4,570,714 3,594,858 (1,039,962) 3,633,610 5,165,267
The above analysis is based on remaining contractual maturities.
Although the Group does not have the right to use the mandatory deposits held in Central bank of Uzbekistan for the purposes of funding its operating activities, the Management classifies them as demand deposits in the liquidity gap analysis on the basis that their nature is inherently to fund sudden withdrawal of customer accounts.
The matching and/or controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the Management of the Group. It is unusual for banks ever to be completely matched since business transacted is often of an uncertain term and of different types. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest and exchange rates.
The Management believes that in spite of a substantial portion of customer accounts being on demand, the fact that significant portion of these customer accounts are of large state-controlled entities which are either the Group's shareholders or its entities under common control and the past experience of the Group, indicate that these customer accounts provide a long-term and stable source of funding for the Group.
25. RELATED PARTY TRANSACTIONS
Parties are generally considered to be related if the parties are under common control or one party has the ability to control the other party or can exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. The Group applies a disclosure exemption regarding Government-related entities, where the same Government has control or joint control of, or significant influence over, both the Group and the other entities, disclosed as "entities under common control".
-- "Significant shareholders" -legal entities-shareholders which have a significant influence to the Group through Government;
-- "Key management personnel" - members of the Management Board and the Council of the Bank;
-- "Entities under common control" - entities that are controlled, jointly controlled or significantly influenced by the Government.
Details of transactions between the Group and related parties are disclosed below:
30 June 2022 (unaudited) 31 December 2021
Related Total category Related Total category
party as per financial party as per financial
balances statements balances statements
caption caption
Cash and cash equivalents
- entities under common
control 1,593,008 22% 1,746,320 21%
Due from other banks
- entities under common
control 2,062,056 79% 1,483,268 76%
Loans and advances to customers
- key management personnel 1,774 0% 1,176 0%
- significant shareholders 2,180,609 5% 3,678,666 9%
- entities under common
control 6,331,696 14% 8,157,239 19%
Investment securities measured
at
amortised cost
- significant shareholders 381,474 14% 288,290 27%
- entities under common
control 934,046 71% 770,932 72%
Financial assets at fair
value
through other comprehensive
income
- entities under common
control 18,136 45% 19,952 42%
Other Assets
- significant shareholders 10,754 3% 13,270 4%
Due to other banks
- entities under common
control 704,312 20% 963,175 69%
Customer accounts
- key management personnel 13 0% 63 0%
- significant shareholders 3,746,758 28% 4,258,100 31%
- entities under common
control 3,728,511 28% 2,891,164 21%
Debt securities in issue
- entities under common
control 12,315 0% 12,604 0%
- significant shareholders - 0% - 0%
Other borrowed funds
- significant shareholders 5,405,805 14% 5,277,553 18%
- entities under common
control 687 2% 476 0%
Other liabilities
- significant shareholders 30 0% 163 0%
- entities under common
control 33,529 13% 26,774 14%
Subordinated debt
- entities under common
control 327,641 100% 101,771 100%
25. RELATED PARTY TRANSACTIONS (Continued)
Six months ended Six months ended
30 June 2022 (unaudited) 30 June 2021 (unaudited)
Related Total Related Total category
party category party as per financial
balances as per balances statements
financial caption
statements
caption
Interest income
- key management personnel 18 0% 26 0%
- significant shareholders 153,695 6% 156,882 9%
- entities under common control 107,751 5% 73,991 14%
Interest expense
- key management personnel (1) 0% (10) 0%
- significant shareholders (2,631) 16% (178,251) 31%
- entities under common control (583) 3% (113) 0%
Provision for/(recovery of)
credit losses on loans and
advances to customers
- significant shareholders (20,042) 2% (37,486) 12%
Fee and commission income
- significant shareholders 12,139 6% 4,383 2%
- entities under common control 15,786 8% 5,375 3%
Other operating income
- significant shareholders 60 0% 202 1%
- entities under common control - 0% 36 0%
Administrative and other
operating expenses
- key management personnel (5,825) 12% (2,603) 1%
- entities under common control (79,266) 15% (30,240) 7%
Key management compensation is presented below:
Six months Six months
ended 30 June ended 30 June
2022 (unaudited) 2021 (unaudited)
Salaries and other benefits 4,371 1,706
Bonuses 269 534
State pension and social security costs 1,185 362
Total 5,825 2,602
26. EVENTS AFTER THE END OF THE REPORTING PERIOD
On 25 July 2022 the Group has signed EUR 100 million Trade related loan agreement with Cargill Financial Services International Inc. The Group hereby represents and warrants that the Loan will be solely allocated to finance the exportation and/or importation of various commodities and goods, from/to the Republic of Uzbekistan to/from various countries by the Groups's clients. The maturity of Loan agreement is 5 years.
On 27 July 2022 the Group has signed USD 50 million convertible loan facility with European Bank for Reconstruction and Development (EBRD). The attraction of this loan facility creates additional opportunities to realize the goals set by the Groups's Strategy for the years 2021-2023. The strategy is to strengthen the Groups's position in the market by developing the small and medium business segments, and to further increase its profitability and attractiveness for the Group investors.
On 22 August 2022, IFC has disbursed USD 75 million under the convertible loan agreement, signed on 20 September 2021. Loan has maturity of 5 years with bullet repayment of principal and semi-annual interest repayments.
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END
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October 13, 2022 06:00 ET (10:00 GMT)
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