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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 2021 to Jun 2024
TIDM78JE
RNS Number : 7053O
Uzbek Ind & Construction Bank
11 October 2021
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/7053O_1-2021-10-11.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 2021
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.................................................................................................................................................................. 5
2. OPERATING ENVIRONMENT OF THE GROUP............................................................................................................ 6 3. BASIS OF PRESENTATION.............................................................................................................................................. 6 4. ADOPTION OF NEW AND REVISED STANDARDS..................................................................................................... 7
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY.................. 7
6. SEGMENT REPORTING.................................................................................................................................................... 8 7. CASH AND CASH EQUIVALENTS............................................................................................................................... 10 8. DUE FROM OTHER BANKS........................................................................................................................................... 11 9. LOANS AND ADVANCES TO CUSTOMERS.............................................................................................................. 13 10. INVESTMENT SECURITIES MEASURED AT AMORTISED COST......................................................................... 21 11. PREMISES, EQUIPMENT AND INTANGIBLE ASSETS............................................................................................. 21 12. DUE TO OTHER BANKS................................................................................................................................................. 21 13. CUSTOMER ACCOUNTS............................................................................................................................................... 22 14. OTHER BORROWED FUNDS......................................................................................................................................... 23 15. SUBORDINATED DEBT................................................................................................................................................... 24 16. INTEREST INCOME AND EXPENSE............................................................................................................................ 25 17. ADMINISTRATIVE AND OTHER OPERATING EXPENSES...................................................................................... 25 18. INCOME TAXES................................................................................................................................................................ 26 19. EARNINGS PER SHARE................................................................................................................................................. 27 20. COMMITMENTS AND CONTINGENCIES.................................................................................................................... 27 21. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES.................................................................. 28 22. FAIR VALUE....................................................................................................................................................................... 28 23. CAPITAL RISK MANAGEMENT..................................................................................................................................... 31 24. RISK MANAGEMENT POLICIES.................................................................................................................................... 32 25. RELATED PARTY TRANSACTIONS.............................................................................................................................. 38 26. EVENTS AFTER THE OF THE REPORTING PERIOD...................................................................................... 40
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 2021 31 December
(unaudited) 2020
ASSETS
Cash and cash equivalents 7 5,784,508 5,601,186
Due from other banks 8 2,111,517 1,859,192
Loans and advances to customers 9 39,954,029 38,959,958
Investment securities measured at amortised
cost 10 1,236,614 540,222
Financial assets at fair value through
other comprehensive income 41,709 38,024
Investment in associates 12,026 993
Premises, equipment and intangible assets 11 1,015,789 747,232
Deferred tax asset 103,508 167,619
Insurance assets 10,847 5,544
Other assets 330,559 376,520
Non-current assets held for sale 20,936 27,355
TOTAL ASSETS 50,622,042 48,323,845
LIABILITIES
Due to other banks 12 942,515 1,496,004
Customer accounts 13 12,318,541 11,616,958
Debt securities in issue 3,264,282 3,273,048
Other borrowed funds 14 26,835,778 25,683,457
Insurance liabilities 70,725 44,887
Other liabilities 202,868 128,627
Subordinated debt 15 101,383 -
TOTAL LIABILITIES 43,736,092 42,242,981
EQUITY
Share capital 4,640,011 4,640,011
Retained earnings 2,229,361 1,427,469
Revaluation reserve of financial assets
at fair value through other comprehensive
income 16,578 13,384
Net assets attributable to the Bank's
owners 6,885,950 6,080,864
TOTAL EQUITY 6,885,950 6,080,864
TOTAL LIABILITIES AND EQUITY 50,622,042 48,323,845
Approved for issue and signed on behalf of the Management Board on 30 September 2021.
Annaklichev Sakhi Vokhidov Oybek Chairman of the Management Chief Accountant Board
The notes set out on pages 6 to 40 form an integral part of this condensed consolidated interim financial information 1
JOINT STOCK COMMERCIAL BANK
"UZBEK INDUSTRIAL AND CONSTRUCTION BANK"
CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
(in millions of Uzbek Soums, except for earnings per share which are in Soums)
Six months Six months
ended 30 ended
30
June 2021 June 2020
Notes (unaudited) (unaudited)
Continuing operations
Interest income calculated using effective
interest rate method 16 1,945,310 1,495,954
Interest expense 16 (983,027) (769,346)
Net interest income before provision on loans
and advances to customers 962,283 726,608
Recovery of / (provision) for credit losses
on loans and advances to customers 314,451 (434,197)
Net interest income 1,276,734 292,411
Fee and commission income 194,399 157,965
Fee and commission expense (44,552) (42,330)
Gain / (loss) on initial recognition on interest
bearing assets 3,159 (8,551)
Net gain on foreign exchange translation (8,136) 38,173
Net gain from trading in foreign currencies 74,248 26,774
Insurance operations income 40,654 15,970 Insurance operations expense (16,598) (16,604) Change in insurance reserves, net (20,263) - Dividend income 4,891 681 Other operating income 23,399 1,840 Provision for impairment of other assets (52,077) (11,212) Impairment of assets held for sale (3,974) (11,309) Administrative and other operating expenses 17 (452,216) (277,014) Share of result from associates (595) - Profit before tax 1,019,073 166,794 Income tax expense 18 (212,145) (31,904) PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 806,928 134,89 Discontinued operations Loss for the period from discontinued operations - (174) PROFIT FOR THE PERIOD 806,928 134,716 Attributable to: - Owners of the Bank 806,928 136,709 - Non-controlling interest - (1,993) PROFIT FOR THE PERIOD 806,928 134,716 Total basic and diluted EPS per ordinary share (expressed in UZS per share) 19 3,31 0.55 PROFIT FOR THE PERIOD 806,928 134,716 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 3,993 9,419 Tax effect (799) (1,884) Other comprehensive income 3,194 7,535 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 810,122 142,251 Attributable to: - Owners of the Bank 810,122 144,244 - Non-controlling interest - (1,993) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 810,122 142,251
The notes set out on pages 6 to 40 form an integral part of condensed consolidated interim financial information
2
JOINT STOCK COMMERCIAL BANK
"UZBEK INDUSTRIAL AND CONSTRUCTION BANK"
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(in millions of Uzbek Soums)
Share capital Revaluation reserve Retained Non-controlling Total equity
of financial assets earnings 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 paid - - (5,036) - (5,036)
30 June 2021 (unaudited) 4,640,011 16,578 2,229,361 - 6,885,950
Share Revaluation reserve Retained Non-controlling Total equity
of financial
capital assets at fair value earnings interest
through other
comprehensive income
1 January 2020 4,640,011 6,404 1,669,225 4,928 6,320,568
Profit for the period - - 136,709 (1,993) 134,716
Other comprehensive income for
the period - 7,535 - - 7,535
Total comprehensive income for
the period - 7,535 136,709 (1,993) 142,251
Dividends paid - - (13,500) - (13,500)
Non-controlling interest arising
on
acquisition of subsidiary - - - 32 32
30 June 2020 (unaudited) 4,640,011 13,939 1,792,434 2,967 6,449,351
The notes set out on pages 6 to 40 form an integral part of condensed consolidated interim financial information 3
Six months Six months
ended ended
30 June 2021 30 June 2020
Notes (unaudited) (unaudited)
Cash flows from operating activities
Interest received 1,728,078 1,040,584
Interest paid (940,764) (647,628)
Fee and commission received 193,332 149,435
Fee and commission paid (44,552) (42,330)
Insurance operations income received 40,654 15,970
Insurance operations expense paid (16,598) (8,349)
Net gain from trading in foreign currencies 74,248 26,774
Other operating income received 23,399 1,793
Staff costs paid (281,271) (173,280)
Administrative and other operating expenses
paid (107,171) (67,641)
Income tax paid (82,235) (130,689)
Cash flows from operating activities
before changes in operating 587,120 164,639
Net (increase)/decrease in:
Due from other banks (264,643) 139,414
Loans and advances to customers (285,268) (4,110,600)
Investments securities measured at amortised
costs (703,350) (985,777)
Other assets (17,860) (10,968)
Net increase/(decrease) in
Due to other banks (428,775) 1,274,388
Customer accounts 610,410 979,834
Other liabilities (4,735) (2,845)
Net cash used in operating activities (507,100) (2,551,915)
Cash flows from investing activities
Acquisition of financial assets at fair
value through other comprehensive income (33) (2,081)
Proceeds from disposal of financial assets
at fair value through other comprehensive 341 -
income
Acquisition of premises, equipment and
intangible assets Proceeds from disposal (287,558) (253,360)
of premises, equipment
and intangible assets 762 5,819
Proceeds from disposal of repossessed
assets 2,531 -
Acquisition of subsidiary, net of disposed
cash - (32,364)
Acquisition of investment in associates (11,681) -
Dividend income received 4,891 681
Net cash used in investing activities (290,747) (281,305)
Cash flows from financing activities
Proceeds from borrowings due to other
banks 13,950 -
Repayment of borrowings due to other
banks (142,951) (47,346)
Proceeds from other borrowed funds 15,159,640 7,121,033
Repayment of other borrowed funds (14,036,145) (2,121,843)
Proceeds from debt securities in issue 15,200 38,326
Repayment of debt securities in issue (65,510) (33,050)
Proceeds from other subordinated debt 100,000 -
Dividends paid (5,288) (13,583)
Net cash from financing activities 1,038,896 4,943,537
Effect of exchange rate changes on cash
and cash equivalents (57,727) 120,841
Net increase in cash and cash equivalents 183,322 2,231,158
Cash and cash equivalents at the beginning
of the period 7 5,601,186 2,862,574
Cash and cash equivalents at the end
of the period 7 5,784,508 5,093,732
The notes set out on pages 6 to 40 form an integral part of condensed consolidated interim financial information
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 2021 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 21 October 2017 (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 2021 (31 December 2020: 45 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 2021 (unaudited), the number of Bank's employees was 3,885 (31 December 2020: 4,052).
Registered address and place of business. 3, Shakhrisabz Street, Tashkent, 100000, Uzbekistan
At 30 June 2021 (unaudited) and 31 December 2020, the Group consolidated the following companies in these consolidated financial statements:
The Group's ownership
30 June 2021 31 December
Country of (unaudited) 2020 Type of
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
PSB Industrial Investments, Uzbekistan - 100 Asset management
LLC
During six months of 2021, the Group liquidated PSB Industrial Investments LLC. There was no impact on the Group's financial results in 2021 since PSB Industrial Investments LLC did not operate since second half of 2020 and there were no balances at the date of its liquidation.
The table below represents the Group's investment in associates at 30 June 2021 (unaudited) and 31 December 2020.
Group's ownership
30 June
2021 31 D ecember
Name Type of operation Country (unaudited) 2021
LLC "SQB Consult" Consulting Uzbekistan 40% 40%
LLC "Khorezm Invest Project" Asset management Uzbekistan 34% 34%
The table below represents the interest of the shareholders in the
Bank's share capital as at 30 June 2021(unaudited) and 31 December
2020:
30 June
2021 31 December
Shareholders (unaudited) 2020
The Fund of Reconstruction and Development of
the Republic of Uzbekistan 82.09% 82.09%
The Ministry of Finance of the Republic
of Uzbekistan 12.81% 12.77%
Other legal entities and individuals (individually
hold less than 5%) 5.10% 5.14%
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 2021:
-- Inflation: 11.1% (2020: 11.1%) -- GDP growth 4.8% (2020: 1.6%).
-- Official exchange rates: 30 June 2021: USD 1 = UZS 10,605.30 (31 December 2020: USD 1 = UZS 10,476.92).
-- Central Bank refinancing rate: 14% (2020: 14%).
In June 2021 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 updated to Stable. The agency forecasts Uzbekistan's economy to grow by 4.8% in 2021, with the service sector becoming the main driver of the growth.
On 12 March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to the pandemic, in 2020 (in 2021, some restrictions were held, where remained), the Uzbekistan authorities implemented numerous measures attempting to contain the spreading and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures. These measures have, among other things, severely restricted economic activity in Uzbekistan and have negatively impacted, and could continue to negatively impact businesses, market participants, clients of the Group, as well as the Uzbekistan and global economy for an unknown period of time. From the beginning of 2021 Uzbekistan actively supported health care systems related to vaccination and as a result at 20 September 2021 28% of the whole population got vaccinated.
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.
So far, the growth of loan portfolio stock was in line with the expectations of the Central Bank. Currently, it slowed to 8.5% from 15.8% in 2020 on a year-to-date basis. This is despite the fact that loans issued in the first half of this year grew 140% from the same period a year earlier, which is explained by the significantly elevated level of returning loans.
In the first half 2021 inflation rate declined year-on-year to 10.9% against 14.2% over the same period last year.
The rate of depreciation of national currency against US dollar also decreased from 7% to 1.2% in the first half of 2020 and 2021. This is coupled with de-dollarization policy of the government which aims to decrease the foreign currency part of the banks' loan portfolio below 50% by the end of the year.
In 2021 business environment has gradually recovering after pandemic crisis and began actively developing its activities as it was before pandemic.
The future effects of the current economic situation and the above measures are difficult to predict, and management's current expectations and estimates could differ from actual results.
Management is taking necessary measures to ensure sustainability of the Group's operations and support its employees.
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 2020, 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 2020.
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.
This condensed consolidated interim financial information is presented in millions of Uzbek Soums ("UZS"), except for earnings per share amounts and unless otherwise indicated.
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 2021 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 - Amendments to IAS 1 (issued on 23 January 2020 and effective for annual periods beginning on or after 1 January 2022).
-- 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).
-- Proceeds before intended use, Onerous contracts - cost of fulfilling a contract, Reference to the Conceptual Framework - narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018- 2020 - amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022).
-- Interest rate benchmark (IBOR) reform - phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (issued on 27 August 2020 and effective for annual periods beginning on or after 1 January 2021).
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 amendment 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 2020 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 2020, except for additional modification that the Group applied for measuring ECL as of 31 December 2020 in response to the COVID-19 pandemic:
-- During 2020 the Group offered forbearance solutions to customers in the form of reductions to contractual payments including freezes to interest payments for up to six months. The forbearance was provided to all customers notwithstanding their financial difficulties before the COVID-19 pandemic. These measures have not been treated as a trigger for credit impairment or SICR for the restructured loans that had no overdue prior and during the pandemic period and subsequently had no overdue in scheduled payments, since measures were based on legislative moratoria on loan repayments applied in light of the COVID-19 crisis.
-- During 2020 the Group has also adjusted the calculation of loss given default rates (LGD) by excluding the loan recovery results of the second and third quarters of 2020, assuming the recovery pattern during the lockdown period does not accurately reflect the financial performance of the borrowers. Cash flows and turnover of customer accounts observed during pre and post quarantine periods suggest that significant slow- down in the recovery of loans were mainly attributable to factors other than the financial standing of the borrowers. This adjustment to LGD has been applied across all portfolios of the Group.
Due to improvement of economic situation, absence of COVID-19 related moratoria on loan repayments in the first half of 2021 and observed curing of borrowers from COVID-19 pandemic the above adjustments and overlays to the risk parameters were not applied to the ECL as of 30 June 2021.
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 4% and amounted UZS 1,664,986 million as of 30 June 2021. If LGD increased by 10% for the whole loan portfolio then ECL would have increased by 7% and amounted UZS 1,719,132 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 2021 (unaudited) is set out below:
30 June 2021 (unaudited)
Corporate Individuals Total
Assets
Cash and cash equivalents 5,784,508 - 5,784,508
Loans and advances to customers 36,024,503 3,929,526 39,954,029
Due from other banks 2,111,517 - 2,111,517
Investment securities measured at
amortised cost 1,236,614 - 1,236,614
Total reportable segment assets 45,157,142 3,929,526 49,086,668
Liabilities
Due to other banks 942,515 - 942,515
Customer accounts 9,560,217 2,758,324 12,318,541
Other borrowed funds 26,825,591 10,187 26,835,778
Debt securities in issue 3,264,282 - 3,264,282
Total reportable segment liabilities 40,592,605 2,768,511 43,361,116
Capital expenditure - - 816,264
Segment information for the reportable segments for the year ended 31 December 2020 is set out below:
31 December 2020
Corporate Individuals Total
Assets
Cash and cash equivalents 5,601,186 - 5,601,186
Loans and advances to customers 34,821,532 4,138,426 38,959,958
Due from other banks 1,859,192 - 1,859,192
Investment securities measured at
amortised cost 540,222 - 540,222
Total reportable segment assets 42,822,132 4,138,426 46,960,558
Liabilities
Due to other banks 1,496,004 - 1,496,004
Customer accounts 9,475,904 2,141,054 11,616,958
Other borrowed funds 25,673,513 9,944 25,683,457
Debt securities in issue 3,273,048 - 3,273,048
Total reportable segment liabilities 39,918,469 2,150,998 42,069,467
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 2021 (unaudited)
Corporate Individuals Total
Interest on loans and advances to
customers 1,508,127 303,522 1,811,649
Interest on investment securities
measured at amortised cost 68,533 - 68,533
Interest on balances due from other
banks 65,128 - 65,128
Interest on other borrowed funds (607,659) - (607,659)
Interest on customer accounts (118,832) (113,017) (231,849)
Interest on debt securities in issue (104,164) - (104,164)
Interest on balances due to other
banks (36,706) - (36,706)
Interest on subordinated debt (2,649) - (2,649)
Segment results 771,778 190,505 962,283
Six months ended
30 June 2020 (unaudited)
Corporate Individuals Total
Interest on loans and advances to customers 1,132,429 286,973 1,419,402
Interest on balances due from other
banks 67,925 - 67,925
Interest on investment securities measured
at amortised cost 8,627 - 8,627
Interest on other borrowed funds (343,972) - (343,972)
Interest on customer accounts (142,831) (63,745) (206,576)
Interest on balances due to other banks (111,370) - (111,370)
Interest on debt securities in issue (100,094) - (100,094)
Interest on subordinated debt (7,334) - (7,334)
Segment results 503,380 223,228 726,608
(c) Reconciliation of income and expenses, assets, and liabilities
for reportable segments:
30 June 2021 31 December
(unaudited) 2020
Total reportable segment assets 49,086,668 46,960,558
Financial assets at fair value through
other comprehensive income 41,709 38,024
Investment in associates 12,026 993
Premises, equipment and intangible assets 1,015,789 747,232
Deferred tax asset 103,508 167,619
Insurance assets 10,847 5,544
Other assets 330,559 376,520
Non-current assets held for sale 20,936 27,355
Total assets 50,622,042 48,323,845
Total reportable segment liabilities 43,361,116 42,069,467
Insurance liabilities 70,725 44,887
Other liabilities 202,868 128,627
Subordinated debt 101,383 -
Total liabilities 43,736,092 42,242,981
Due to significant increase of retail transactions and business activities in comparison with the previous year, the management of the Group is currently in the process of development and enhancement of segmentation reporting.
6. SEGMENT REPORTING (Continued)
Six months ended Six months
ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
Segment results 962,283 726,608
Recovery of / (provision) for credit losses
on loans and advances to customers 314,451 (434,197)
Gain / (loss) on initial recognition on
interest bearing assets 3,159 (8,551)
Fee and commission income 194,399 157,965
Fee and commission expense (44,552) (42,330)
Net gain on foreign exchange translation (8,136) 38,173
Net gain from trading in foreign currencies 74,248 26,774
Insurance operations income 40,654 15,970
Insurance operations expense (16,598) (16,604)
Change in insurance reserves, net (20,263) -
Dividend income 4,891 681
Other operating income 23,399 1,840
Provision for impairment of other assets (52,077) (11,212)
Impairment of assets held for sale (3,974) (11,309)
Administrative and other operating expenses (452,216) (277,014)
Share of result from associates (595) -
Profit before tax 1,019,073 166,794
Income tax expense (212,145) (31,904)
PROFIT FOR THE PERIOD FROM CONTINUING
OPERATIONS 806,928 134,890
Discontinued operations
Loss for the period from discontinued
operations - (174)
PROFIT FOR THE PERIOD 806,928 134,716
7. CASH AND CASH EQUIVALENTS
30 June 2021 31 December
(unaudited) 2020
Cash on hand 872,820 1,022,474
Cash balances with the CBU (other than
mandatory reserve deposits) 219,743 2,624,648
Correspondent accounts and placements
with other banks with original maturities
of less than three months 4,692,284 1,954,225
Less: Allowance for expected credit losses (339) (161)
Total cash and cash equivalents 5,784,508 5,601,186
The increase in allowance for expected credit losses was triggered by the increase in correspondent accounts and placements with other banks.
As at 30 June 2021 (unaudited) and 31 December 2020 for the purpose of ECL measurement cash and cash equivalents balances are included in Stage 1.
7. CASH AND CASH EQUIVALENTS (Continued)
The credit quality of cash and cash equivalents at 30 June 2021 (unaudited) is as follows:
Cash balances Correspondent accounts Total
with the CBU and placements with
(other than other banks with original
mandatory reserve maturities of less
deposits) than three months
Neither past due nor impaired
- Central Bank of Uzbekistan 219,743 - 219,743
- Rated AA- to A+ - 1,321,985 1,321,985
- Rated Baa - 596,835 596,835
- Rated Ba - 2,673,464 2,673,464
- Rated B - 100,000 100,000
Less: Allowance for expected
credit losses (4) (335) (339)
Total cash and cash equivalents,
excluding cash on hand 219,739 4,691,949 4,911,688
The credit quality of cash and cash equivalents at 31 December
2020 is as follows:
Cash balances Correspondent accounts Total
with and
the CBU (other placements with other
than banks
mandatory reserve with original maturities
of less
deposits) than three months
Neither past due nor impaired
- Central bank of Uzbekistan 2,624,648 - 2,624,648
- Rated AA to A- - 1,666,788 1,666,788
- Rated Baa - 50,901 50,901
- Rated Ba - 228,007 228,007
- Rated B - 8,529 8,529
Less: Allowance for expected
credit losses (69) (92) (161)
Total cash and cash equivalents,
excluding cash on hand 2,624,579 1,954,133 4,578,712
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
2021 31 December
(unaudited) 2020
Madatory cash balances with
CBU 207,557 141,437
Placements with other banks with original
maturities of more than
three months 1,712,593 1,458,096
Restricted cash 225,658 278,088
Less: Allowance for expected
credit losses (34,291) (18,429)
Total due from other banks 2,111,517 1,859,192
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.
The increase in credit loss allowance was triggered by the increase in the Placements with other banks with original maturities of more than three months balances.
8. DUE FROM OTHER BANKS (Continued)
At 30 June 2021 (unaudited) the Group had balances with fourteen counterparty banks (31 December 2020: 6 counterparty banks) with aggregated amounts above UZS 10,000,000 thousand. The total aggregate amount of these deposits was UZS 1,961,543 million (2020: UZS 1,726,208 million) or 91% of the total amount due from other banks (31 December 2020: 91%).
As at 30 June 2021 (unaudited) and 31 December 2020 for the purpose of ECL measurement due from other bank balances are included in Stage 1.
Analysis by credit quality of due from other banks outstanding at 30 June 2021 (unaudited) is as follows:
Mandatory Placements with Restricted Total
cash balances other banks with cash
with CBU original maturities
of more than
three months
Neither past due nor impaired
- Central Bank of Uzbekistan 207,557 120,605 - 328,162
- Rated A- to A+ - - 98,501 98,501
- Rated Baa - 122,332 122,332
- Rated Ba2 - 3,386 - 3,386
- Rated BB- - 370,436 - 370,436
- Rated B+ - 159,080 - 159,080
- Rated B1 - 768,942 - 768,942
- Rated B2 - 6,801 - 6,801
- Rated B - 246,227 - 246,227
- Rated CCC+ - 31,816 - 31,816
- Unrated - 5,300 4,825 10,125
Less: Allowance for expected
credit losses - (33,648) (643) (34,291)
Total due from other banks 207,557 1,678,945 225,015 2,111,517
Analysis by credit quality of due from other banks outstanding at 31 December 2020 is as follows:
Mandatory Placements with Restricted Total
cash balances other banks with cash
with CBU original maturities
of more than
three months
Neither past due nor impaired
- Central bank of Uzbekistan 141,437 - - 141,437
- Rated AA to A- - - 5,268 5,268
- Rated Baa - 3,101 272,820 275,921
- Rated Ba2 - 339,281 - 339,281
- Rated BB- - 145,701 - 145,701
- Rated B+ - 704,271 - 704,271
- Rated B1 - 6,229 - 6,229
- Rated B2 - 225,518 - 225,518
- Rated B - 29,140 - 29,140
- Rated CCC+ - 4,854 - 4,854
Less: Allowance for expected
credit losses - (18,155) (274) (18,429)
Total due from other banks 141,437 1,439,941 277,814 1,859,192
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.
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 2021 31 December
(unaudited) 2020
Corporate loans 23,496,965 21,938,171
State and municipal organisations 13,873,581 14,562,532
Loans to individuals 4,184,377 4,361,970
Total loans and advances to customers,
gross 41,554,923 40,862,673
Less: Allowance for expected credit
losses (1,600,894) (1,902,715)
Total loans and advances to customers 39,954,029 38,959,958
The loan allowance reduction is explained by the improvement in the quality of the loan portfolio due to decreased COVID 19 effects on the Group borrowers. During 2020, the Group provided forbearances to customers via restructuring of interest payments by accruing of interest to the loan outstanding principal with final maturities predominantly extended by six months. Such restructuring increased the number of loans being classified in Stage 3 as a result significantly increasing the allowance for expected credit losses. During 2021 no additional major restructuring was made by the Group and prior year restructured amounts were mostly repaid influencing the loan and advances to customers balance staging.
The other major reason of allowance for expected credit losses reduction is improvement of individually significant loans performance on which the ECL is calculated on an individual basis and constituted in current year UZS 351,092 million and UZS 758,997 million as at 31 December 2020
The table below represents loans and advances to customer's classification by stages as at 30 June 2021 (unaudited) and 31 December 2020:
30 June 2021 31 December
(unaudited) 2020
Originated loans to customers 41,109,472 40,423,399
Overdrafts 445,451 439,274
Total loans and advances to customers,
gross 41,554,923 40,862,673
Stage 1 34,788,085 26,201,628
Stage 2 4,199,510 11,970,209
Stage 3 2,567,328 2,690,836
Total loans and advances to customers,
gross 41,554,923 40,862,673
Less: Allowance for expected credit
losses (1,600,894) (1,902,715)
Total loans and advances to customers 39,954,029 38,959,958
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 1 Stage Stage TOTAL Stage Stage Stage TOTAL
2 3 1 2 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
State and municipal ECL ECL ECL ECL ECL ECL
organisations
As at 1 January
2021 59,932 59,313 9,713 128,958 8,143,995 6,381,126 37,411 14,562,532
Changes in the
gross carrying
amount
- Transfer from
stage 1 (924) 920 4 - (139,137) 136,275 2,862 -
- Transfer from
stage 2 52,801 (52,801) - - 5,369,641 (5,369,641) - -
- Transfer from
stage 3 1,309 1,931 (3,240) - 1,674 3,745 (5,419) -
- Changes in EAD
and risk
parameters* (24,866) 2,193 (1,000) (23,673) (541,548) (3,408) (7,360) (552,316)
New assets issued
or acquired 3,904 - - 3,904 1,650,566 - - 1,650,566
Matured or
derecognized
assets
(except for write
off) (4,211) (5,728) (3,182) (13,121) (991,824) (887,386) (26,722) (1,905,932)
Foreign exchange
differences 572 547 - 1,119 101,672 11,883 5,176 118,731
Loss allowance for
ECL and Gross
Carrying as at
30 June 2021
(unaudited) 88,517 6,375 2,295 97,187 13,595,039 272,594 5,948 13,873,581
Credit Loss Allowance Gross Carrying Amount
Stage 1 Stage Stage TOTAL Stage Stage Stage TOTAL
2 3 1 2 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
Corporate loans ECL ECL ECL ECL ECL ECL
As at 1 January
2021 113,094 134,583 1,302,537 1,550,214 14,751,901 4,950,505 2,235,765 21,938,171
Changes in the
gross carrying
amount
- Transfer from
stage 1 (13,830) 7,783 6,047 - (1,925,569) 1,043,532 882,037 -
- Transfer from
stage 2 54,732 (75,307) 20,575 - 2,411,856 (3,218,276) 806,420 -
- Transfer from
stage 3 114,942 843,899 (958,841) - 258,352 1,274,670 (1,533,022) -
- Changes in EAD
and risk
parameters* (110,416) (579,382) 428,648 (261,150) (1,311,814) 118,594 31,100 (1,162,120)
New assets issued
or acquired 59,223 - - 59,223 4,390,162 - - 4,390,162
Matured or
derecognized
assets
(except for write
off) (6,821) (4,353) (78,200) (89,374) (1,066,456) (447,432) (190,755) (1,704,643)
Recovery of assets
previously
written off - - 11,656 11,656 - - 11,656 11,656
Written off assets - - (27,880) (27,880) - - (27,880) (27,880)
Foreign exchange
differences 465 4,085 1,616 6,166 44,203 5,166 2,250 51,619
Loss allowance for
ECL and Gross
Carrying as at
30 June 2021
(unaudited) 211,389 331,308 706,158 1,248,855 17,552,635 3,726,759 2,217,571 23,496,965
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 1 Stage Stage TOTAL Stage 1 Stage Stage TOTAL
2 3 2 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
Loans to individuals ECL ECL ECL ECL ECL ECL
As at 1 January 2021 21,253 19,047 183,244 223,544 3,582,749 361,561 417,660 4,361,970
Changes in the gross carrying
amount
- Transfer from stage 1 (1,263) 622 641 - (211,958) 104,430 107,528 -
- Transfer from stage 2 12,175 (16,070) 3,895 - 231,152 (299,749) 68,597 -
- Transfer from stage 3 56,606 19,966 (76,572) - 133,321 48,105 (181,426) -
- Changes in EAD and risk
parameters* (51,755) (1,091) 95,681 42,835 (426,196) 3,569 (16,273) (438,900)
New assets issued or acquired 13,692 - - 13,692 634,861 - - 634,861
Matured or derecognized
assets
(except for write off) (1,810) (623) (22,787) (25,220) (303,518) (17,760) (52,276) (373,554)
Loss allowance for ECL and
Gross
Carrying as at
30 June 2021 (unaudited) 48,898 21,851 184,102 254,851 3,640,411 200,156 343,810 4,184,377
*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.
*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.
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 2020 and 30 June 2020:
Credit Loss Allowance Gross Carrying Amount
Stage 1 Stage Stage TOTAL Stage Stage 2 Stage TOTAL
2 3 1 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
State and municipal ECL ECL ECL ECL ECL ECL
organisations
As at 1 January 2020 50,850 90,841 7,568 149,259 7,316,072 5,499,817 57,264 12,873,153
Changes in the gross
carrying
amount
- Transfer from stage 1 (3,914) 3,914 - - (1,808,840) 1,808,840 - -
- Transfer from stage 2 52,929 (52,929) - - 2,603,994 (2,603,994) - -
- Transfer from stage 3 - 443 (443) - - 1,801 (1,801) -
- Changes in EAD and risk
parameters* (95,805) 30,736 14,300 (50,769) (235,089) 37,281 12,464 (108,055)
New assets issued or
acquired 17,330 - - 17,330 1,406,907 - - 1,406,907
Matured or derecognized
assets
(except for write off) (4,821) (1,305) (7,130) (13,256) (434,951) (43,777) (55,468) (534,196)
Foreign exchange
differences 2,526 5,624 - 8,150 505,559 159,213 33,809 621,292
Loss allowance for ECL
and Gross
Carrying as at
30 June 2020 (unaudited) 19,095 77,324 14,295 110,714 9,353,652 4,859,181 46,268 14,259,101
Credit Loss Allowance Gross Carrying Amount
Stage 1 Stage Stage TOTAL Stage Stage 2 Stage TOTAL
2 3 1 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
Corporate loans ECL ECL ECL ECL ECL ECL
As at 1 January 2020 83,109 85,813 297,872 466,794 11,182,892 2,740,116 765,282 14,688,290
Changes in the gross
carrying
amount
- Transfer from stage 1 (1,561) 842 719 - (231,377) 135,839 95,538 -
- Transfer from stage 2 31,010 (51,319) 20,309 - 780,471 (1,611,650) 831,179 -
- Transfer from stage 3 4,546 67,082 (71,628) - 37,648 98,162 (135,810) -
- Changes in EAD and risk
parameters* (643,886) (47,047) 740,583 49,650 (1,051,527) 118,148 925,851 (7,528)
New assets issued or
acquired 610,270 - - 610,270 5,181,786 - - 5,181,786
Matured or derecognized
assets
(except for write off) (9,302) (6,050) (173,712) (189,064) (1,496,139) (202,025) (433,868) (2,132,032)
Recovery of assets
previously
written off - - 35,109 35,109 - - 35,109 35,109
Foreign exchange
differences 4,885 4,366 4,955 14,206 662,332 208,585 44,294 915,211
Loss allowance for ECL
and Gross
Carrying as at
30 June 2020 (unaudited) 79,071 53,687 854,207 986,965 15,066,086 1,487,175 2,127,575 18,680,836
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 2020 and 30 June 2020:
Credit Loss Allowance Gross Carrying Amount
Stage 1 Stage Stage TOTAL Stage 1 Stage 2 Stage TOTAL
2 3 3
12-month Lifetime Lifetime 12-month Lifetime Lifetime
Loans to individuals ECL ECL ECL ECL ECL ECL
As at 1 January 2020 3,171 18,246 8,947 30,364 2,675,382 404,965 44,411 3,124,758
Changes in the gross carrying
amount
- Transfer from stage 1 (261) 251 10 - (199,411) 193,967 5,444 -
- Transfer from stage 2 8,298 (14,679) 6,381 - 177,375 (321,384) 144,009 -
- Transfer from stage 3 1,082 711 (1,793) - 5,500 3,564 (9,064) -
- Changes in EAD and risk
parameters* (19,488) 5,954 14,948 1,414 (469,585) 189,451 61,735 (218,399)
New assets issued or acquired 13,656 - - 13,656 1,916,637 - - 1,916,637
Matured or derecognized assets
(except for write off) (690) (1,134) (3,211) (5,035) (688,656) (26,911) (9,702) (725,269)
Loss allowance for ECL and
Gross
Carrying as at
30 June 2020 (unaudited) 5,768 9,349 25,282 40,399 3,417,242 443,652 236,833 4,097,727
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
Economic sector risk concentrations within the loans and advances to customer are as follows:
30 June 2021 31 December
(unaudited) 2020
Amount % Amount %
Manufacturing 12,776,443 31% 12,165,253 30%
Oil and gas & chemicals 10,711,913 26% 9,999,561 25%
Trade and Services 4,464,948 11% 4,338,733 11%
Individuals 4,184,377 10% 4,361,970 11%
Agriculture 3,780,218 9% 3,616,095 9%
Energy 2,631,063 6% 3,396,794 8%
Transport and communication 2,217,205 5% 2,198,157 5%
Construction 788,756 2% 786,11 2%
Total loans and advances to
customers, gross 41,554,923 100% 40,862,673 100%
Less: Allowance for expected
credit losses (1,600,894) (1,902,715)
Total loans and advances to
customers 39,954,029 38,959,958
As at 30 June 2021(unaudited), the Group granted loans to 13 (31 December 2020: 12) borrowers in the amount of UZS 14,759,440 million (31 December 2020: UZS 12,563,610 million), which individually exceeded 10% of the Group's equity.
Information about loans and advances to individuals as at 30 June 2021 (unaudited) and 31 December 2020 are as follows:
30 June 2021 31 December
(unaudited) 2020
Mortgage 3,037,262 2,867,127
Microloan 528,643 628,107
Car Loan 394,952 536,708
Consumer Loans 167,580 256,592
Other 55,940 73,436
Total loans and advances to individuals,
gross 4,184,377 4,361,970
Less: Allowance for expected
credit losses (254,851) (223,544)
Total loans and advances to individuals 3,929,526 4,138,426
Information about collateral and other credit enhancement as at
30 June 2021 (unaudited) are as follows:
State and Corporate Loans to 30 June
2021
municipal loans individuals (unaudited)
organisations
Loans collateralised by: Letter
of surety 2,386,592 7,547,780 566,830 10,501,202
Real estate 118,553 7,425,505 2,720,418 10,264,476
State guarantee 7,503,654 259,348 - 7,763,002
Equipment 646,971 4,528,726 - 5,175,697
Insurance policy 11,489 2,482,773 691,823 3,186,085
Inventory and receivables 1,868,972 839,810 1,145 2,709,927
Cash deposits 1,084,973 23,163 3,246 1,111,382
Vehicles 91,727 387,307 178,440 657,474
Equity securities 156,939 - - 156,939
Not collateralised 3,711 2,553 22,475 28,739
Total loans and advances to customers,
gross 13,873,581 23,496,965 4,184,377 41,554,923
Less: Allowance for expected
credit losses (97,187) (1,248,856) (254,851) (1,600,894)
Total loans and advances to customers 13,776,394 22,248,109 3,929,526 39,954,029
9. LOANS AND ADVANCES TO CUSTOMERS (Continued)
Information about collateral and other credit enhancement as at 31 December 2020 are as follows:
State and Corporate Loans to 31 December
municipal organisations loans individuals 2020
Loans collateralised by: Letter
of surety 2,230,264 7,748,268 804,776 10,783,308
Real estate 137,576 6,980,088 2,544,451 9,662,115
State guarantee 7,871,577 2,179 - 7,873,756
Equipment 957,259 4,231,746 - 5,189,005
Inventory and receivables 2,055,641 717,007 1,151 2,773,799
Insurance policy 15,016 1,912,279 348,154 2,275,449
Cash deposits 1,054,919 52,955 4,623 1,112,497
Vehicles 73,101 290,185 236,322 599,608
Equity securities 164,181 - - 164,181
Not collateralised 2,998 3,464 422,493 428,955
Total loans and advances to customers,
gross 14,562,532 21,938,171 4,361,970 40,862,673
Less: Allowance for expected
credit losses (128,957) (1,550,214) (223,544) (1,902,715)
Total loans and advances to customers 14,433,575 20,387,957 4,138,426 38,959,958
Analysis by credit quality of loans and advances to customers that are collectively and individually assessed for impairment as at 30 June 2021 (unaudited) is as follows:
Loans
State and Corporate to Total
municipal loans individuals
organisations
Not past due loans 13,862,472 20,097,491 3,317,338 37,277,301
Past due loans
- less than 30 days overdue 5,160 1,172,749 385,262 1,563,171
- 31 to 90 days overdue 655 638,357 168,381 807,393
- 91 to 180 days overdue 5,294 611,860 188,799 805,953
- 181 to 360 days overdue - 181,800 111,884 293,684
- over 360 days overdue - 28,801 12,713 41,514
Total loans assessed for
impairment on a collective basis,
gross 13,873,581 22,731,058 4,184,377 40,789,016
Loans individually determined to
be impaired (gross):
Restructured loans - 765,907 - 765,907
Not past due loans - 356,435 - 356,435
Past due loans - - -
1-30 days - 30,700 - 30,700
31-90 days - 27,992 - 27,992
91-180 days - 257,953 - 257,953
- 181 to 360 days overdue - 92,827 - 92,827
Total loans individually
determined to be impaired, gross - 765,907 - 765,907
- Impairment provisions for
individually impaired loans - (212,818) - (212,818)
- Impairment provisions
assessed on a collective basis (97,187) (1,036,038) (254,851) (1,388,076)
Less: Allowance for expected credit
losses (97,187) (1,248,856) (254,851) (1,600,894)
Total loans and advances to customers 13,776,394 22,248,109 3,929,526 39,954,029
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 2020 is as follows:
Loans
State and Corporate to Total
municipal loans individuals
organisations
Loans assessed for impairment on a collective
basis (gross)
Not past due loans 14,228,723 17,897,823 3,826,146 35,952,692
Past due loans
less than 30 days overdue - 593,668 279,244 872,912
31 to 90 days overdue 59,829 1,927,487 193,959 2,181,275
91 to 180 days overdue - 81,407 33,325 114,732
181 to 360 days overdue - 93,052 27,906 120,958
over 360 days overdue - 31,439 1,39 32,829
Total loans assessed for
impairment on a collective basis,
gross 14,288,552 20,624,876 4,361,970 39,275,398
Loans individually determined
to be impaired (gross):
Restructured loans 273,980 1,313,295 - 1,587,275
Not past due loans 273,980 1,230,685 - 1,504,665
Past due loans
31-90 days - 82,610 - 82,610
Total loans individually
determined to be impaired, gross 273,980 1,313,295 - 1,587,275
- Impairment provisions for
individually impaired loans - (758,997) - (758,997)
Impairment provisions
assessed on a collective basis (128,957) (791,217) (223,544) (1,143,718)
Less: Allowance for expected credit
losses (128,957) (1,550,214) (223,544) (1,902,715)
Total loans and advances to customers 14,433,575 20,387,957 4,138,426 38,959,958
10. INVESTMENT SECURITIES MEASURED AT AMORTISED COST
Currency Annual coupon/ EIR Maturity date 30 June 31 December
% 2021
interest month/year (unaudited) 2020
rate %
13 - July 21 -
CBU Bonds UZS 13 - 14 14 Dec 21 955,352 174,089
13 - Oct 21 - Mar
Government Bonds UZS 13 - 16 16 24 282,229 365,319
Corporate bonds UZS 18 18 29-Jul-26 2,609 2,503
Less: Allowance for expected credit
losses (3,576) (1,689)
Total investment securities measured
at amortised cost 1,236,614 540,222
Analysis by credit quality of investment securities measured at
amortised costs at 30 June 2021 (unaudited) is as follows:
CBU Government Corporate Total
Bonds Bonds Bonds
Neither past due nor impaired
- Rated BB- 955,352 282,229 - 1,237,581
- Rated B2 - - 2,609 2,609
Less: Allowance for expected credit
losses (2,755) (814) (8) (3,576)
Total investment securities measured
at amortised cost 952,597 281,415 2,601 1,236,614
Analysis by credit quality of investment securities measured at amortised costs at and 30 December 2020 is as follows:
CBU Government Corporate Total
Bonds Bonds Bonds
Neither past due nor impaired
- Rated BB- 174,089 365,319 - 539,408
- Rated B2 - - 2,503 2,503
Less: Allowance for expected credit
losses (543) (1,139) (8) (1,689)
Total investment securities measured
at amortised cost 173,546 364,180 2,495 540,222
During 6 months of 2021, the Group invested UZS 868,166 million into CBU bonds. Overall increase was offset by maturity of previously purchased CBU bonds.
During 6 months of 2021, the Group invested UZS 238,670 million into new bonds of the Ministry of Finance. Overall increase was offset be maturity previously purchased bonds of the Ministry of Finance.
Refer to Note 22 for the disclosure of the fair value of investment securities measured at amortised cost. Information on related party balances is disclosed in Note 25.
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 2021 (unaudited), in accordance with the contract, the Group invested USD 54.048 million (equivalent to UZS 589 387 million) of which UZS 458,302 million was recorded in CIP.
As at 30 June 2021 (unaudited) and 31 December 2020, premises and equipment of the Group were not pledged.
12. DUE TO OTHER BANKS
30 June 2021 31 December
(unaudited) 2020
Long term placements of other banks 455,783 584,783
Short term placements of other banks 281,113 279,438
Correspondent accounts and overnight placements
of other banks 205,619 372,618
Payable to the CBU under repo agreement - 259,165
Total due to other banks 942,515 1,496,004
12. DUE TO OTHER BANKS (Continued)
Significant change in long term placements of other banks is due to the repayments made by the Group during 6 months of 2021.
Significant change in payable to the CBU under repo agreement is associated with the maturity of a three-month repo agreement with CBU.
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 2021 31 December
(unaudited) 2020
State and public organisations
- Term deposits 2,758,020 2,705,206
- Current/settlement accounts 2,586,605 3,171,211
5,344,625 5,876,417
Other legal entities
- Current/settlement accounts 3,144,545 3,360,112
- Term deposits 1,071,047 239,375
4,215,592 3,599,487
Individuals
- Term deposits 2,054,982 1,215,455
- Current/demand accounts 703,342 925,599
2,758,324 2,141,054
Total customer accounts 12,318,541 11,616,958
Economic sector concentrations within customer accounts are as follows:
30 June 2021 (unaudited) 31 December 2020
Amount % Amount %
Public administration 2,879,206 23% 2,744,161 24%
Individuals 2,758,324 22% 2,141,054 18%
Oil and gas 1,701,104 14% 2,348,720 20%
Manufacturing 1,575,441 13% 1,363,581 12%
Energy 1,412,594 11% 1,324,434 11%
Finance 473,060 4% 181,740 2%
Communication 420,577 3% 260,275 2%
Services 311,498 3% 347,780 3%
Trade 294,539 2% 318,599 3%
Construction 217,913 2% 246,051 2%
Engineering 124,347 2% 155,739 2%
Mining 41,629 1% 17,414 0%
Agriculture 39,158 0% 57,036 0%
Transportation 38,185 0% 87,060 1%
Medicine 24,510 0% 16,015 0%
Other 6,456 0% 7,299 0%
Total customer accounts 12,318,541 100% 11,616,958 100%
As at 30 June 2021 (unaudited), the Group had three (31 December 2010: two) customers with a total balance UZS 4,568,145 million (31 December 2020: UZS 4,291,575 million), which individually exceeded 10% of the Group's equity.
Significant change in 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.
Significant change in balances of Individuals is associated with implementation of new mobile application "Joyida", which allows the Group's clients to place or withdraw their funds online. Such mobile application is getting popular and the Group's number of clients is significantly increasing.
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 2021 31 December
(unaudited) 2020
International financial institutions
China EXIMBANK 5,100,090 5,167,808
CREDIT Suisse 2,114,039 2,122,431
Commerzbank AG 1,525,238 1,632,046
International Bank of Reconstruction
and Development 1,345,008 1,298,161
Russia EXIMBANK 995,699 995,354
Daryo Finance B.V. 973,906 770,900
ICBC (London) plc 937,924 671,172
Landesbank Baden -- Wuerttemberg 879,409 967,246
European Bank for Reconstruction and
Development 868,272 517,297
China Development Bank 804,831 886,739
VTB BANK EUROPE 698,280 436,654
Raiffeisen Bank International AG 616,150 819,035
International Development Association
of World Bank 597,577 602,590
Asian Development Bank 577,306 584,938
Gazprombank 565,870 789,796
Credit Bank of Moscow 457,377 263,233
Citibank N.A. ADGM 425,530 -
Japan International Cooperation Agency
(JICA) 327,813 323,180
Turk EXIMBANK 236,775 216,946
AKA Ausfuhrkredit-Gesellschaft mbH 201,516 13,811 OJSB Transcapitalbank 188,228 187,908 UniCredit 186,531 - OPEC Fund for International Development 170,631 208,719 Halyk Savings Bank of Kazakhstan JSC 158,770 179,788 Promsvyazbank PJSC 125,533 540,737 Korea EXIMBANK 121,068 141,464 Baobab Securities Limited 107,333 162,180 KfW IPEX-Bank 51,630 57,417 Others 209,089 358,902 Total international financial institutions 21,567,423 20,916,452 Financial institutions of Uzbekistan Long term borrowings from Ministry of Finance 3,213,735 3,233,042 Fund for Reconstruction and Development of Uzbekistan 1,579,880 1,384,626 Export Promotion Agency under MIFT 265,575 - Uzbekistan Mortgage Refinancing Company (UzMRC) 98,592 61,213 Long term borrowings from CBU 64,560 68,358 KDB Bank Uzbekistan 24,463 - Preference Shares 10,187 9,944 Khokimiyat of Tashkent Region 6,060 5,927 Other 5,303 3,895 Total financial institutions of Uzbekistan 5,268,355 4,767,005 Total other borrowed funds 26,835,778 25,683,457
On 17 March 2021 the Group and the European Bank for Reconstruction and Development signed an Agreement on attracting a synthetic credit line in the amount of USD 25 million. These loan funds are denominated in the national currency equivalent and are aimed at financing projects and supporting business initiatives implemented by small and medium-sized businesses (SMEs) of the country, thereby providing access to financing and stimulating sustainable growth in the development of the SME segment, in particular, modernizing the business infrastructure, especially during a pandemic caused by the spread of coronavirus infection.
14. OTHER BORROWED FUNDS (Continued)
On 19 March 2021 the Group and JSC "KDB Bank Uzbekistan" signed a General Agreement for provision of long-term credit lines to the Group" for the subsequent financing of projects of small and medium-sized businesses in Uzbekistan.
On 24 March 2021 the Group and AKA Ausfuhrkredit-Gesellschaft mbH signed an Agreement in the amount of EUR 15 million to finance investment projects of small and medium-sized businesses (SME) of Uzbekistan.
On 19 March 2021 the Group and Citibank N.A. ADGM signed an Agreement in the amount of USD 40 million to finance purchase of busses from China, equipment for textile manufacturing.
On 18 May 2021 the Group and UniCredit signed an Agreement in the amount of EUR 14 million to finance purchase of equipment from Italy for package manufacturing.
On 3 December 2020 the Group and Export Promotion Agency under MIFT signed an Agreement in the amount of USD 25 million to support export-oriented entities in Uzbekistan.
The Group has to comply with specific financial and non-financial covenants on obtained funds. As of 31 December 2020, the Group was not in compliance with the following covenants:
- In 2017 and 2018, the ADB advanced two loans to the Republic of Uzbekistan (the "Republic") in connection with the financing of horticulture projects in Uzbekistan (the "Project"). The Republic on-lent a portion of these loans to the Bank under tripartite subsidiary loan agreements No. 3471-UZB dated April 2017 and No. 3673- UZB dated November 2018 between the Republic, the Rural Restructuring Agency and the Bank (the "Subsidiary Loan Agreements"). In November 2019, the ADB advanced another Subsidiary Loan Agreement to the Republic of Uzbekistan in connection with the financing of livestock value chain development projects in Uzbekistan (the "Project"). The Republic on-lent a portion of this loan to the Bank under subsidiary loan agreements No. L3823 (COL)-UZB dated 10 February 2020 between the Republic, the Agro Industries and Food Security Agency and the Bank. As at 31 December 2020, the Bank was not in compliance with return on average assets ratio stipulated in the Subsidiary Loan Agreements. The Management has received a letter from the Ministry of Finance dated 31 December 2020 confirming that this breach of the covenant is not considered to be an event of default.
- As at 31 December 2020, the Bank was not in compliance with following covenants stipulated in Master Trade Finance Loan Agreement (the 'Master Agreement') dated 15 October 2019 between the Bank and VTB Bank Europe: the percentage of problem loans (Stage 3 loans) in relation to loans and advances to customers (gross), loan loss reserves to problem loans (Stage 3 loans). On 24 March 2021, the Bank received a letter form VTB Bank Europe giving their consent to waive above mentioned financial covenant as of the end of the financial year 2020 with the decision to grant the waiver reached during December 2020. Hence, liquidity has not been adjusted.
As of 30 June 2021 (unaudited) the Group was in compliance with all covenants.
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
Subordinated debt issued by Fund for Reconstruction and Development of Uzbekistan of UZS 100,000 million on 9 April 2021 carries a fixed interest rate of 9.22 % and matures on 15 April 2041. The debt ranks after all other creditors' claims are fully settled in the case of liquidation.
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 2021 30 June 2020
(unaudited) (unaudited)
Interest income calculated using the effective
interest method
Interest on loans and advances to customers 1,811,649 1,419,402
Interest on investment securities measured
at amortised cost 68,533 8,627
Interest on balances due from other banks 65,128 67,925
Total Interest income calculated using
the effective interest method 1,945,310 1,495,954
Interest expense
Interest on other borrowed funds (607,659) (343,972)
Interest on customer accounts (231,849) (206,576)
Interest on debt securities in issue (104,164) (100,094)
Interest on balances due to other banks (36,706) (111,370)
Interest on subordinated debt (2,649) (7,334)
Total interest expense (983,027) (769,346)
Net interest income before provision on
loans and advances
to customers 962,283 726,608
Significant change in interest income on loan and advances to customers is associated with the increase in the Group's loan portfolio during 6 months of 2021, which in its turn is associated with the gradual improvements of the economic situation and business activity in Uzbekistan caused by COVID-19.
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 6 months of 2021.
Significant change in interest income on other borrowed funds is associated with the attraction of additional funds from local and international financial institutions.
Significant change in interest income on balances due to other banks is associated with repayments made by the Group to local banks towards borrowings received.
17. ADMINISTRATIVE AND OTHER OPERATING EXPENSES
Six months ended Six months
ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
Staff costs 282,526 171,296
Depreciation and amortisation 34,012 25,500
Charity expenses 27,150 2,783
Taxes other than income tax 18,698 10,737
Security services 17,593 14,368
Stationery and other low value items 11,585 7,569
Membership fees 8,542 10,463
Communication expenses 5,410 2,870
Rent expenses 5,195 1,733
Repair and maintenance of buildings 3,986 2,847
Legal and audit fees 3,854 1,972
Consultancy fee 3,202 6,942
Travel expenses 3,012 1,416
Utilities expenses 3,000 2,519
Advertising expenses 2,992 2,641
Fuel 968 804
Representation and entertainment 558 910
Medical, Dental and Hospitalization 230 -
Other operating expenses 19,703 9,644
Total administrative and other operating
expenses 452,216 277,014
Significant change in staff costs is associated with the overall increase of salary rates as well as due to increase in bonuses and other stimulation payments.
18. INCOME TAXES
Six months ended Six months ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
Current income tax expense 148,834 98,993
Deferred tax (benefit)/expense:
- Deferred tax (benefit)/expense 63,311 (67,089)
- Deferred tax expense relating to
the components of
other comprehensive income 799 1,884
- Deferred tax benefit relating to
discontinued operation - (165)
Total income tax expense through profit
or loss and
other comprehensive income 212,944 33,623
Interim period income tax expense is recognised 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 2021(unaudited) is 20.0 % (the estimated tax rate for the six months ended 30 June 2021 (unaudited) was 20%)).
Significant change in the balance of deferred tax asset is associated with the recovery of credit losses on loans and advances to customers
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 ended Six months
ended
30 June 2021 30 June 2020
(unaudited (unaudited)
Profit for the year attributable to ordinary
shareholders 806,928 134,716
Weighted average number of ordinary shares
for the purpose of basic and diluted earnings
per share (in million of shares) 243,922 243,922
Total basic and diluted earnings per ordinary
share (expressed in UZS per share) 3.31 0.55
20. COMMITMENTS AND CONTINGENCIES
Operating lease commitments. As at 30 June 2021 (unaudited) and 31 December 2020, 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 2021 (unaudited), no provision for potential tax liabilities had been recorded (2020: 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 2021 (unaudited) and 31 December 2020, the Group had contractual capital expenditure commitments for the total amount of UZS 816,264 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
2021 31 December
(unaudited) 2020
Guarantees
issued 2,430,619 2,424,042
Letters of credits, post-financing with commencement
after reporting period end 852,329 457,743
Letters of credit, non post-financing 518,015 336,446
Undrawn credit
lines 461,177 518,506
Total gross credit related
commitments 4,262,140 3,736,737
Less - Cash held as security against
letters of credit and guarantees (224,444) (155,267)
Less - Provision for expected
credit losses (59,630) (22,845)
Total credit related commitments 3,978,066 3,558,625
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
Other borrowed Debt securities Subordinated
funds in issue debt Total
Net debt at 1 January 2020 16,803,214 2,920,894 83,332 19,807,440
Proceeds from the issue 13,094,718 168,310 - 13,263,028
Redemtion (6,488,852) (94,400) (80,000) (6,663,252)
Foreign currency translation 2,199,354 278,819 - 2,478,173
Other non-cash movements 75,023 (575) (3,332) 71,116
Net debt at 31 December
2020 25,683,457 3,273,048 - 28,956,505
Proceeds from the issue 15,159,640 15,200 100,000 15,274,840
Redemtion (14,036,145) (65,510) - (14,101,655)
Foreign currency translation 21,752 41,556 - 63,308
Other non-cash movements 7,074 (12) 1,383 8,445
Net debt at 30 June 2021
(unaudited) 26,835,778 3,264,282 101,383 30,201,443
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 categorising 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 recognising 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
Financial 30 June Valuation model(s) Relatioship
assets 2021 31 December Fair value and key input(s) Significant of
(unaudited) 2020 hierarchy unobservable unobservable
inputs to fair
input(s) value
Equity
securities
at
FVTOCI
Quoted bid prices
- Visa Level in an active
Inc. 14,454 13,203 1 market N/A N/A
Discounted cash The greater
flows. Discount discount-the
Level rate estimated Discount smaller fair
- Other 27,255 24,821 3 based on WACC. 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 2021 (unaudited) 31 December 2021
Carrying Carrying
value Fair value value Fair value
Loans and advances to customers 39,954,029 39,773,366 38,959,958 34,401,244
Due from other banks 2,111,517 2,085,983 1,859,192 1,739,931
Due securities in
issue
Eurobonds 3,160,498 3,367,713 3,118,189 3,312,173
Other borrowed funds 26,835,778 31,751,605 25,683,457 26,703,457
30 June 2021 (unaudited)
Level 1 Level 2 Level 3 Total
Loans and advances to customers - 39,773,366 - 39,773,366
Due from other banks - 1,014,023 1,071,960 2,085,983
Due securities in
issue
Eurobonds 3,367,713 - - 3,367,713
Other borrowed funds - - 31,751,605 31,751,605
31 June 2020
Level 1 Level 2 Level 3 Total
Loans and advances to customers - 34,401,244 - 34,401,244
Due from other banks - - 1,739,931 1,739,931
Due securities in
issue
Eurobonds 3,312,173 - - 3,312,173
Other borrowed funds - - 26,703,457 26,703,457
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 2020: 13%). Actual ratio as at 30 June 2021: 17% (31 December 2020: 17%);
-- Ratio of Group's tier 1 capital to risk weighted assets ("Capital adequacy ratio") above a prescribed minimum level of 10% (31 December 2020: 10%). Actual ratio as at 30 June 2021: 13.8% (31 December 2020: 13%); and
-- Ratio of Group's tier 1 capital to total assets less intangibles ("Leverage ratio") above a prescribed minimum level of 6% (31 December 2020: 6%). Actual ratio as at 30 June 2021: 11.4% (31 December 2020: 10.3%).
Total capital is based on the Group's reports prepared under Uzbekistan Accounting Legislation and related instructions and comprises:
31 December
30 June 2021 2020
(unaudited) (unaudited)
Tier 1 capital 6,342,662 5,543,925
Less: Deduction from
capital (74,725) (46,485)
Tier 1 capital adjusted 6,267,937 5,497,440
Tier 2 capital 1,470,733 1,619,786
Total Regulatory Capital 7,738,670 7,117,226
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 2020.
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 Council 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:
USD EUR Other UZS Total
30 June 2021 (unaudited) currencies
Cash and cash equivalents 3,284,659 372,535 146,889 1,980,425 5,784,508
Due from other banks 960,681 7,217 78,113 1,065,506 2,111,517
Loans and advances to
customers 21,055,134 6,206,371 - 12,692,524 39,954,029
Investment securities
measured at amortised
cost - - - 1,236,614 1,236,614
Other financial assets 16,076 4,575 146 6,306 27,103
Total monetary assets 25,316,550 6,590,698 225,148 16,981,375 49,113,771
Due to other banks 601,256 38,177 - 303,082 942,515
Customer accounts 6,152,564 610,708 133,480 5,421,789 12,318,541
Debt securities in issue 3,160,498 - - 103,784 3,264,282
Other borrowed funds 15,095,163 6,029,972 3,294 5,707,349 26,835,778
Other financial liabilities 47,390 28 75,225 122,643
Subordinated debt - - - 101,383 101,383
Total monetary liabilities 25,056,871 6,678,857 136,802 11,712,612 43,585,142
Net Balance sheet position 259,679 (88,159) 88,346 5,268,763 5,528,629
USD EUR Other UZS Total
31 December 2020 currencies
Cash and cash equivalents 3,768,254 138,176 138,499 1,556,257 5,601,186
Due from other banks 944,034 61,634 149,885 703,639 1,859,192
Loans and advances to
customers 20,391,586 6,290,620 - 12,277,752 38,959,958
Investment securities
measured at amortised
cost - - - 540,222 540,222
Other financial assets 646 5,058 10,504 16,208
Total monetary assets 25,104,520 6,495,488 288,384 15,088,374 46,976,766
Due to other banks 857,428 180 - 638,396 1,496,004
Customer accounts 6,991,777 237,180 198,854 4,189,147 11,616,958
Debt securities in issue 3,118,189 - - 154,859 3,273,048
Other borrowed funds 14,643,855 6,147,006 - 4,892,596 25,683,457
Other financial liabilities 21,430 - 29 39,527 60,986
Total monetary liabilities 25,632,679 6,384,366 198,883 9,914,525 42,130,453
Net Balance sheet position (528,159) 111,122 89,501 5,173,849 4,846,313
JOINT STOCK COMMERCIAL BANK
"UZBEK INDUSTRIAL AND CONSTRUCTION BANK" AND ITS SUBSIDIARIES
SELECTED EXPLANATORY NOTES TO THE I CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHSED 30 JUNE 2021 (UNAUDITED)
(In millions of Uzbek Soums, unless otherwise indicated)
24. RISK MANAGEMENT POLICIES (Continued)
Geographical risk concentration . The geographical concentration of the Group's financial assets and liabilities at
30 June 2021 (unaudited) is set
out below:
Uzbekistan OECD Non-OECD Total
Assets
Cash and cash equivalents 3,116,114 2,630,993 37,401 5,784,508
Due from other banks 1,890,585 220,764 168 2,111,517
Loans and advances to customers 39,954,029 - - 39,954,029
Investment securities measured at
amortised cost 1,236,614 - - 1,236,614
Financial assets at fair value through
other comprehensive
income 27,255 14,454 - 41,709
Other financial assets 12,437 14,666 - 27,103
Total financial assets 46,237,034 2,880,877 37,569 49,155,480
Liabilities
Due to other banks 628,239 265,809 48,467 942,515
Customer accounts 12,318,541 - 12,318,541
Debt securities in issue 103,784 3,160,498 - 3,264,282
Other borrowed funds 5,268,356 12,110,053 9,457,369 26,835,778
Other financial liabilities 75,253 - 47,390 122,643
Subordinated debt 101,383 - - 101,383
Total financial liabilities 18,495,556 15,536,360 9,553,226 43,585,142
Net balance sheet position 27,741,478 (12,655,483) (9,515,657) 5,570,338
Credit related commitments 3,978,066 - - 3,978,066
The geographical concentration of the Group's financial assets and
liabilities at 31 December 2020 is set out below:
Uzbekistan OECD Non-OECD Total
Assets
Cash and cash equivalents 3,658,933 1,875,324 66,929 5,601,186
Due from other banks 1,581,319 272,594 5,279 1,859,192
Loans and advances to customers 38,959,958 - - 38,959,958
Investment securities measured at
amortised cost 540,222 - - 540,222
Financial assets at fair value through
other comprehensive income 24,821 13,203 - 38,024
Other financial assets 16,130 - 78 16,208
Total financial assets 44,781,383 2,161,121 72,286 47,014,790
Liabilities
Due to other banks 1,221,829 262,437 11,738 1,496,004
Customer accounts 11,616,958 - - 11,616,958
Debt securities in issue 154,859 3,118,189 - 3,273,048
Other borrowed funds 4,767,006 11,146,580 9,769,871 25,683,457
Other financial liabilities 39,556 - 21,430 60,986
Total financial liabilities 17,800,208 14,527,206 9,803,039 42,130,453
Net balance sheet position 26,981,175 (12,366,085) (9,730,753) 4,884,337
Credit related commitments 3,558,625 - - 3,558,625
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 2021 (unaudited) is as follows:
Demand From 1 From 6 From 1 From 3 Over 5 Total
and to to to 3 to 5 years
less than 6 months 12 months years years
1 month
Liabilities
Due to other
banks 226,945 289,776 31,057 140,546 432,324 25,807 1,146,455
Customer accounts 6,732,128 821,210 2,186,417 1,477,059 1,375,370 920,404 13,512,588
Debt securities
in
issue 24,839 124,778 109,938 463,409 3,225,340 - 3,948,304
Other borrowed
funds 220,346 3,510,292 5,275,421 12,780,947 3,742,323 7,435,148 32,964,477
Other financial
liabilities 122,643 - - - - - 122,643
Subordinated
debt - - - 18,025 21,472 164,089 203,586
Undrawn credit
lines 103 20,025 35,867 271,072 91,444 42,667 461,177
Guarantees
issued 32,884 666,517 92,640 106,000 46,140 1,299,189 2,243,370
Letters of
credit 70,105 534,154 669,260 - - - 1,273,519
Total potential
future payments
for financial
obligations 7,429,993 5,966,753 8,400,600 15,257,057 8,934,413 9,887,303 55,876,119
JOINT STOCK COMMERCIAL BANK
"UZBEK INDUSTRIAL AND CONSTRUCTION BANK" AND ITS SUBSIDIARIES
SELECTED EXPLANATORY NOTES TO THE I CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHSED 30 JUNE 2021 (UNAUDITED)
(In millions of Uzbek Soums, unless otherwise indicated)
24. RISK MANAGEMENT POLICIES (Continued)
The undiscounted maturity analysis of financial instruments at 31 December 2020 is as follows:
Demand From From 6 From 1 From 3 Over 5 Total
and 1 to to to 3 to 5 years
less than 6 months 12 months years years
1 month
Liabilities
Due to other
banks 653,958 397,187 27,093 124,181 524,047 10,924 1,737,390
Customer
accounts 5,925,986 689,463 418,200 2,727,185 1,933,544 819,946 12,514,324
Debt securities
in
issue 48,120 149,083 116,301 463,862 3,272,377 - 4,049,743
Other borrowed
funds 1,153,167 4,202,521 4,788,640 10,750,559 2,490,447 5,607,441 28,992,775
Other financial
liabilities 60,986 - - - - - 60,986
Undrawn credit
lines 48,534 108,872 51,981 164,553 136,384 8,182 518,506
Guarantees
issued 48,230 729,985 55,229 - 246,24 1,319,511 2,399,195
Letters of
credit 9,946 619,743 11,235 - - - 640,924
Total potential
future payments
for financial
obligations 7,948,927 6,896,854 5,468,679 14,230,340 8,603,039 7,766,004 50,913,843
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 2021 (unaudited) is set out below.
Demand From 1 From 6 From 1 From 3 Over 5 Total
and less to to to to years
than 6 months 12 months 3 years 5 years
1 month
Assets
Cash and cash equivalents 5,784,508 - - - - - 5,784,508
Due from other banks 520,434 449,434 39,281 720,648 283,383 98,337 2,111,517
Loans and advances
to customers 2,142,692 6,611,672 4,968,169 10,998,235 7,460,234 7,773,027 39,954,029
Investment securities
measured at
amortised cost 172,761 801,157 139,095 121,163 - 2,438 1,236,614
Financial assets at
fair value through
other comprehensive
income - - - 41,709 - - 41,709
Other financial assets 27,103 - - - - - 27,103
Total financial assets 8,647,498 7,862,263 5,146,545 11,881,755 7,743,617 7,873,802 49,155,480
Liabilities
Due to other banks 221,629 265,133 5,964 44,714 381,591 23,484 942,515
Customer accounts 6,682,774 602,559 1,965,473 1,194,038 1,227,538 646,159 12,318,541
Debt securities in
issue 7,052 39,460 5,600 70,000 3,142,170 - 3,264,282
Other borrowed funds 112,044 2,969,121 4,720,768 10,527,037 2,893,915 5,612,893 26,835,778
Other financial liabilities 122,643 - - - - - 122,643
Subordinated debt - 1,383 - - 3,226 96,774 101,383
Undrawn credit lines 103 20,025 35,867 271,072 91,444 42,667 461,178
Guarantees issued 32,884 666,517 92,640 106,000 46,140 1,299,189 2,243,370
Letters of credit 70,105 534,154 669,260 - - - 1,273,519
Total financial liabilities 7,249,234 5,098,352 7,495,572 12,212,861 7,786,024 7,721,166 47,563,209
Net liquidity gap 1,398,264 2,763,911 (2,349,027) (331,106) (42,407) 152,636 1,592,271
Cumulative liquidity
gap 1,398,264 4,162,175 1,813,148 1,482,042 1,439,635 1,592,271
24. RISK MANAGEMENT POLICIES (Continued)
The analysis of liquidity of the Group's assets and liabilities as at 31 December 2020 is set out below.
Demand From 1 From 6 From 1 From 3 Over 5 Total
and less to to to to years
than 6 months 12 months 3 years 5 years
1 month
Assets
Cash and cash equivalents 5,601,186 - - - - - 5,601,186
Due from other banks 148,127 324,311 372,726 621,215 - 392,813 1,859,192
Loans and advances
to customers 2,147,523 6,647,182 4,350,766 9,953,937 7,766,068 8,094,482 38,959,958
Investment securities
measured at
amortised cost 14,897 405,524 69,561 47,800 - 2,440 540,222
Financial assets at
fair value through
other comprehensive
income - - - 38,024 - - 38,024
Other financial assets 16,208 - - - - - 16,208
Total financial assets 7,927,941 7,377,017 4,793,053 10,660,976 7,766,068 8,489,735 47,014,790
Liabilities
Due to other banks 646,684 370,728 14 19,898 449,146 9,534 1,496,004
Customer accounts 5,900,846 585,060 299,983 2,443,524 1,787,025 600,520 11,616,958
Debt securities in
issue 30,095 63,471 13,500 70,600 3,095,382 - 3,273,048
Other borrowed funds 1,066,290 3,798,602 4,386,007 9,392,454 2,164,228 4,875,876 25,683,457
Other financial liabilities 60,986 - - - - - 60,986
Undrawn credit lines 48,534 108,872 51,981 164,553 136,384 8,182 518,506
Guarantees issued 48,230 754,832 55,229 - 246,240 1,319,511 2,424,042
Letters of credit 9,946 594,896 11,235 - - - 616,077
Total financial liabilities 7,811,611 6,276,461 4,817,949 12,091,029 7,878,405 6,813,623 45,689,078
Net liquidity gap 116,330 1,100,556 (24,896) (1,430,053) (112,337) 1,676,112 1,325,712
Cumulative liquidity
gap 116,330 1,216,886 1,191,990 (238,063) (350,400) 1,325,712
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 2021 (unaudited) 31 December 2020
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 1,477,030 26% 2,636,460 47%
Due from other banks
- entities under common
control 1,316,921 62% 1,327,746 71%
Loans and advances to
customers
- key management personnel 115 0% 269 0%
- significant shareholders 4,991,019 12% 6,011,991 15%
- entities under common
control 4,798,381 12% 8,550,541 22%
Investment securities
measured at amortised
cost
- significant shareholders 280,590 23% 364,378 67%
- entities under common
control - 0% 173,401 32%
Financial assets at fair
value through other comprehensive
income
- entities under common
control - 0.00% 10,788 28%
Other Assets
- significant shareholders 13,347 4% 9,814 3%
Due to other banks
- entities under common
control 549,974 58% 1,194,253 80%
Customer accounts
- key management personnel 372 0% 1,204 0%
- significant shareholders 4,308,779 35% 4,698,047 40%
- entities under common
control 746,014 6% 1,178,370 10%
Debt securities in issue
- entities under common
control 12,588 0% 21,180 1%
- significant shareholders - 0% - 0%
Other borrowed funds
- significant shareholders 4,793,615 18% 4,617,668 18%
- entities under common
control 6,060 0% 145,443 1%
Other liabilities
- significant shareholders 163 0% 71 0%
- entities under common
control - 0% 22,128 17%
Subordinated debt
- entities under common
control 101,383 100% - 0%
25. RELATED PARTY TRANSACTIONS (Continued)
30 June 2021 (unaudited) 31 December
2020
Related Total category Related Total category
party as per party as per
balances financial statements balances financial statements
caption caption
Interest income
- key management personnel 26 0% 9 0%
- significant shareholders 156,882 8% 125,212 8%
- entities under common control 73,991 4% 208,791 14%
Interest expense
- key management personnel (10) 0% (24) 0%
- significant shareholders (178,251) 18% (128,251) 17%
- entities under common control
Provision for/(recovery of)
credit losses on loans and
advances to customers (113) 0% (135,667) 18%
- significant shareholders (37,486) -12% (14,116) 3%
Fee and commission income
- significant shareholders 4,343 2% 17,083 11%
- entities under common control
Net gain from trading in foreign
currencies 3% 24,430 15%
- significant shareholders - 0% 17 0%
- entities under common control 0% 2,035 8%
Other operating income
- significant shareholders 202 1% - 0%
- entities under common control 36 0% 75 4%
Administrative and other operating
expenses
- key management personnel (2,603) 1% (1,540) 1%
- entities under common control (30,240) 7% (38,142) 14%
Key management compensation is presented
below: Six months ended Six months
ended
30 June 2021 30 June 2020
(unaudited) (unaudited)
Salaries and other benefits 1,706 1,222
Social security contributions 534 317
Bonuses 362 -
Total 2,603 1,539
26. EVENTS AFTER THE OF THE REPORTING PERIOD
In accordance with the Decree of the President of 2 August 2018 No. PP-3895 "On measures to create modern business centers" Business city "in the territories of the republic", the head office of Uzpromstroybank is being built on the territory of the Tashkent City International Business Center. To finance this project, in June 2021, Group signed a loan agreement with a consortium of foreign banks including Credit Suisse, Citibank, Eximbank of China and Raiffeisenbank for a total amount of 122.3 million US dollars. The deal was facilitated by Credit Suisse, which acted as a structuring bank, arranger and agent, Citibank, China Eximbank and Raiffeisenbank were involved as arrangers, and an insurance guarantee was provided by China Export Credit Insurance Corporation Sinosure.
On 14 September of this year, the signing ceremony of the Agreement on the allocation of a loan to Group in the amount of 75 million US dollars by the International Finance Corporation (IFC) took place. An IFC loan aimed at climate finance and increased lending to small and medium-sized enterprises (SMEs) in Uzbekistan
will support the bank's further privatization process. IFC financing, denominated in Uzbek soums, will provide the bank with access to long-term financing in local currency, limited in the market due to the COVID-19 pandemic, and will help transform the bank with the possibility of further converting the IFC loan into bank shares.
On September 14 this year, an additional agreement was signed with the investment company "Frontera Capital" (Great Britain) to raise funds in national currency to finance projects of small and medium-sized businesses in the amount of equivalent to USD 10 million.
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END
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October 11, 2021 13:25 ET (17:25 GMT)
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