Exhibit 99.02
 
 
 
“Bank Kassa Nova” JSC
(SB of “ForteBank” JSC)
 
Interim condensed consolidated financial statements
 
30 June 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 
  
CONTENTS
 
 
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Interim condensed consolidated statement of financial position
1
Interim condensed consolidated statement of comprehensive income
2-3
Interim condensed consolidated statement of changes in equity
4
Interim condensed consolidated statement of cash flows
5
 
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
2
Basis of preparation
6
3
Significant accounting judgments and estimates
8
4
Cash and cash equivalents
10
5
Amounts due from banks and other financial institutions
11
6
Loans to customers
11
7
Investment securities
32
8
Other assets
33
9
Taxation
34
10
Amounts due to banks and other financial institutions
34
11
Amounts due to customers
35
12
Subordinated debt
36
13
Other liabilities
36
14
Equity
36
15
Interest income and interest expense
37
16
Credit loss expense
38
17
Net fee and commission income
39
18
Personnel and administrative and other operating expenses
39
19
Earnings per share
40
20
Commitments and contingencies
40
21
Fair value measurement
41
22
Related party disclosures
45
23
Events after the end of the interim period
47
 
 
 
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
As at 30 June 2020
 
(in thousands of tenge)
 
 
 
 
Notes
 
 
30 June
2020
(unaudited)
 
 
31 December
2019
(unaudited)
 
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
  4 
  36,989,406 
  33,448,522 
Amounts due from banks and other financial institutions
  5 
  839,452 
  776,208 
Loans to customers
  6 
  62,506,360 
  68,124,327 
Investment securities
  7 
  5,627,863 
  3,785,045 
Property and equipment
    
  6,360,170 
  6,457,813 
Intangible assets
    
  1,188,279 
  1,156,968 
Other assets
  8 
  3,661,145 
  2,962,341 
Total assets
    
  117,172,675 
  116,711,224 
 
    
    
    
Liabilities
    
    
    
Financial instruments at fair value through profit or loss
    
  593 
  9,626 
Amounts due to banks and other financial institutions
  10 
  7,286,123 
  9,111,519 
Amounts due to customers
  11 
  87,367,206 
  85,802,298 
Current corporate income tax liabilities
  9 
  11,121 
  209,187 
Deferred corporate income tax liabilities
  9 
  1,361,420 
  1,277,045 
Lease liabilities
    
  173,014 
  226,456 
Subordinated debt
  12 
  3,348,142 
  3,303,255 
Other liabilities
  13 
  386,130 
  614,052 
Total liabilities
    
  99,933,749 
  100,553,438 
 
    
    
    
Equity
    
    
    
Share capital
  14 
  9,356,140 
  9,356,140 
Revaluation reserve for property and equipment
  14 
  755,767 
  761,249 
Fair value reserve
    
  (1,208)
   
Retained earnings
    
  7,128,227 
  6,040,397 
Total equity
    
  17,238,926 
  16,157,786 
Total equity and liabilities
    
  117,172,675 
  116,711,224 
                
The accompanying notes on pages 6 to 47 are an integral part of these interim condensed consolidated financial statements.
1
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 
For the six-month period ended 30 June 2020
 
(in thousands of tenge)
 
 
 
 
 
 
 
For the three-month period ended 30 June
 
 
For the six-month period ended 30 June
 
 
 
Notes
 
 
2020
(unaudited)
 
 
2019*
(unaudited)
 
 
2020
(unaudited)
 
 
2019*
(unaudited)
 
Interest income calculated using effective interest rate
  15 
  2,771,268 
  3,466,905 
  5,899,439 
  7,000,112 
Interest expense
  15 
  (1,338,525)
  (1,912,603)
  (2,900,765)
  (3,942,140)
Net interest income
    
  1,432,743 
  1,554,302 
  2,998,674 
  3,057,972 
 
    
    
    
    
    
Credit loss expense
  16 
  (449,624)
  (398,254)
  (541,096)
  (707,993)
Net interest income after credit loss expense
    
  983,119 
  1,156,048 
  2,457,578 
  2,349,979 
 
    
    
    
    
    
Net fee and commission income
  17 
  206,961 
  401,703 
  405,086 
  734,362 
Net gains from financial instruments at fair value through profit or loss
    
  (294,154)
  24,435 
  (48,881)
  31,784 
Net gains/(losses) from foreign currencies
    
    
    
    
    
- dealing
    
  294,241 
  241,784 
  592,338 
  408,309 
- translation differences
    
  145,647 
  (33,439)
  (87,793)
  (36,400)
Gain from government grant
    
   
  48,598 
   
  62,582 
Other income
    
  7,641 
  28,019 
  21,299 
  63,973 
Non-interest income
    
  360,336 
  711,100 
  882,049 
  1,264,610 
 
    
    
    
    
    
Loss on derecognition of financial assets measured at amortised cost
    
   
  (4,712)
   
  (26,714)
Personnel expenses
  18 
  (456,531)
  (603,798)
  (1,041,337)
  (1,205,580)
Administrative and other operating expenses
  18 
  (420,399)
  (450,801)
  (881,877)
  (912,592)
Other expense
    
  (30,256)
   
  (42,886)
  (60,535)
Non-interest expense
    
  (907,186)
  (1,059,311)
  (1,966,100)
  (2,205,421)
Profit before corporate income tax expense
    
  436,269 
  807,837 
  1,373,527 
  1,409,168 
 
    
    
    
    
    
Corporate income tax expense
  9 
  (107,228)
  (107,076)
  (291,179)
  (292,803)
Profit for the period
    
  329,041 
  700,761 
  1,082,348 
  1,116,365 
 
Certain amounts in these columns do not conform to the amounts in the interim condensed consolidated financial statements for the six-month period ended 30 June 2019, since they reflect performed reclassifications that are detailed in Note 2.
 
The accompanying notes on pages 6 to 47 are an integral part of these interim condensed consolidated financial statements.
2
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)
 
 
 
 
 
 
 
For the three-month period ended 30 June
 
 
For the six-month period ended 30 June
 
 
 
Notes
 
 
2020
(unaudited)
 
 
2019
(unaudited)
 
 
2020
(unaudited)
 
 
2019
(unaudited)
 
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive (loss)/income that may be reclassified to profit or loss in subsequent periods

 
 
 
 
 
 
 
 
 
 
 
 
Net change in fair value of debt instruments at fair value through other comprehensive income

  (587)
  543 
  (1,778)
  1,850 
Changes in allowance for expected credit losses of debt instruments at fair value through other comprehensive income

  (1,200)
   
  570 
  (179)
Other comprehensive (loss)/ income, net of corporate income tax
    
  (1,787)
  543 
  (1,208)
  1,671 
Total comprehensive income for the period
    
  327,254 
  701,304 
  1,081,140 
  1,118,036 
 
    
    
    
    
    
Basic and diluted earnings per share (in tenge)
  19 
  35.17 
  74.90 
  115.68 
  119.32 
 
 
The accompanying notes on pages 6 to 47 are an integral part of these interim condensed consolidated financial statements.
3
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 
For the six-month period ended 30 June 2020
 
(in thousands of tenge)
 
 
 
 
Notes
 
 
Share capital
 
 
Revaluation reserve for property and equipment
 
 
Fair value reserve
 
 
Retained earnings
 
 
Total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As at 31 December 2018
 
 
 
  9,356,140 
  772,815 
  (2,382)
  4,026,035 
  14,152,608 
 
 
 
    
    
    
    
    
Profit for the period (unaudited)
 
 
 
   
   
   
  1,116,365 
  1,116,365 
Other comprehensive income for the period (unaudited)

   
   
  1,671 
   
  1,671 
Total comprehensive income for the period (unaudited)

   
   
  1,671 
  1,116,365 
  1,118,036 
 

    
    
    
    
    
Amortisation of revaluation reserve for property and equipment (unaudited)

   
  (6,083)
   
  6,083 
   
At 30 June 2019 (unaudited)

  9,356,140 
  766,732 
  (711)
  5,148,483 
  15,270,644 
 
    
    
    
    
    
    
At 1 January 2019
    
  9,356,140 
  761,249 
   
  6,040,397 
  16,157,786 
 
    
    
    
    
    
    
Profit for the period (unaudited)
    
   
   
   
  1,082,348 
  1,082,348 
Other comprehensive loss for the period (unaudited)
    
   
   
  (1,208)
   
  (1,208)
Total comprehensive income for the period (unaudited)
    
   
   
  (1,208)
  1,082,348 
  1,081,140 
 
    
    
    
    
    
    
Amortisation of revaluation reserve for property and equipment (unaudited)
    
   
  (5,482)
   
  5,482 
   
At 30 June 2020 (unaudited)
    
  9,356,140 
  755,767 
  (1,208)
  7,128,227 
  17,238,926 
 
The accompanying notes on pages 6 to 47 are an integral part of these interim condensed consolidated financial statements.
4
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 
For the six-month period ended 30 June 2020
 
(in thousands of tenge)
 
 
 
 
 
 
 
For the six-month period ended 30 June
 
 
 
Notes
 
 
2020 (unaudited)
 
 
2019 (unaudited)
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
Interest received
 
 
 
  4,395,314 
  6,536,376 
Interest paid
 
 
 
  (2,905,335)
  (3,923,851)
Fees and commissions received
 
 
 
  919,990 
  1,001,018 
Fees and commissions paid
 
 
 
  (482,409)
  (266,809)
Net realised (losses)/gains on transactions with financial instruments at fair value through profit or loss
 
 
 
  (57,914)
  31,784 
Net realised gains from dealing in foreign currencies
 
 
 
  592,338 
  408,309 
Other income received
 
 
 
  21,299 
  63,973 
Personnel expenses paid
 
 
 
  (1,393,710)
  (1,228,847)
Administrative and other operating expenses paid
 
 
 
  (606,832)
  (610,742)
Cash flows from operating activities before changes in operating assets and liabilities

  482,741 
  2,011,211 
 

    
    
Net changes in operating assets and liabilities

    
    
Amounts due from banks and other financial institutions

  (41,527)
  (200,389)
Loans to customers

  5,672,083 
  291,929 
Other assets

  151,548 
  91,308 
Amounts due to banks and other financial institutions

  (1,844,086)
  (692,426)
Amounts due to customers

  344,278 
  2,306,458 
Other liabilities
    
  (6,193)
  58,922 
Net cash from operating activities before corporate income tax
    
  4,758,844 
  3,867,013 
 
    
    
    
Corporate income tax paid
    
  (404,870)
   
Net cash flows from operating activities
    
  4,353,974 
  3,867,013 
 
    
    
    
Cash flows from investing activities
    
    
    
Purchase of property and equipment
    
  (52,577)
  (74,010)
Purchase of intangible assets
    
  (22,950)
  (54,630)
Purchase of investment securities at fair value through other comprehensive income
    
  (1,599,635)
  839,533 
Net cash flows (used in) / from investing activities
    
  (1,675,162)
  710,893 
 
    
    
    
Cash flows from financing activities
    
    
    
Lease payments
    
  (47,507)
  (42,238)
Net cash used in financing activities
    
  (47,507)
  (42,238)
 
    
    
    
Effect of exchange rate changes on cash and cash equivalents
    
  916,096 
  (492,662)
Effect of expected credit losses on cash and cash equivalents
    
  (6,517)
  3,702 
Net increase in cash and cash equivalents
    
  3,540,884 
  4,046,708 
 
    
    
    
Cash and cash equivalents at the beginning of the reporting period
    
  33,448,522 
  43,344,207 
Cash and cash equivalents at the end of the reporting period
    
  36,989,406 
  47,390,915 
 
    
    
    
Non-cash transactions
    
    
    
Repayment of loans to customers by repossession of collateral
  8 
  835,553 
  39,067 
 
The accompanying notes on pages 6 to 47 are an integral part of these interim condensed consolidated financial statements.
5
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
1. Principal activities
 
These interim condensed consolidated financial statements comprise the financial statements of “Bank Kassa Nova” JSC (SB “ForteBank” JSC) (the “Bank”) and OUSA Nova Limited Liability Partnership, a subsidiary of the Bank (jointly, the “Group”).
 
The Bank was registered on 31 July 2009 under the laws of the Republic of Kazakhstan. The Bank operates under a general banking license No. 1.1.260 issued by the Agency for Regulation and Supervision of Financial Markets and Financial Organisations of the Republic of Kazakhstan on 10 June 2011. The Bank’s activities are regulated by the National Bank of the Republic of Kazakhstan (“NBRK”).
 
The Bank accepts deposits from the public and extends credit, transfers payments in Kazakhstan and abroad, exchanges currencies and provides other banking services to its commercial and retail customers.
 
As at 30 June 2020 and 31 December 2019, the Bank’s branch network comprises 8 branches in the Republic of Kazakhstan.
 
Registered address of the Bank’s head office: 10 Kunayev Str., Nur-Sultan, Republic of Kazakhstan.
 
The Bank is a member of the Kazakhstan Deposit Insurance Fund (“KDIF”). The primary goal of the KDIF is to protect interests of depositors in the event of forcible liquidation of a member-bank. As at 30 June 2020 and 31 December 2019, depositors can receive limited insurance coverage for deposits up to a maximum of KZT 15 million per deposit, depending on the amount and currency of the deposit.
 
Starting from November 2015 the Bank is a member of Kazakhstan Stock Exchange foreign exchange market (“KASE”).
 
On 31 May 2018, the Bank established a subsidiary OUSA Nova Limited Liability Partnership (“OUSA Nova LLP”) in accordance with the NBRK permission to establish a subsidiary by the Bank No. 17 dated 2 May 2018. The principal activities of OUSA Nova LLP are the acquisition of doubtful and bad assets of the parent bank, sublease of real estate taken onto the books of the Bank.
 
As at 30 June 2020 and 31 December 2019, the sole shareholder of the Group, which owns 100% of outstanding shares is “ForteBank” JSC (the “Parent”).
 
On 29 April 2019, Nova Leasing JSC and “ForteBank” JSC signed and registered with the authorised body an agreement for the purchase and sale of shares of “Bank Kassa Nova” JSC owned by Nova Leasing JSC in the amount of 100% of the issued share capital of “Bank Kassa Nova” JSC.
 
As at 30 June 2020 and 31 December 2019, the Group is under the practical control of Mr. B.Zh. Utemuratov, who is the ultimate controlling party and has the power to direct the Group activities at its sole discretion and on its own account.
 
2. Basis of preparation
 
General
 
The interim condensed consolidated financial statements for the six-month period ended 30 June 2020 have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
 
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 December 2019.
 
The interim condensed consolidated financial statements are presented in thousands of Kazakh tenge (“tenge” or “KZT”), unless otherwise is stated.
 
Effect of COVID-19 pandemic
 
Due to rapid spread of COVID-19 pandemic in the early of 2020 many governments, including the Republic of Kazakhstan, have introduced various measures to combat the outbreak, including travel restrictions, quarantines, closure of business and other venues and lockdown of certain area. These measures have affected the global supply chain, demand for goods and services, as well as scale of business activity. It is expected that pandemic itself as well as measures for its consequences’ minimization may influence the business of the entities in wide range of industries. Since March 2020 significant volatility in stock, currency and commodity markets exists, including decrease in crude prices and decrease in KZT to USD and EUR foreign exchange rates.
 
6
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
2.  Basis of preparation (continued)
 
Effect of COVID-19 pandemic (continued)
 
In 2020, support measures were introduced by the Government and the National Bank of the Republic of Kazakhstan (the “NBRK”) to counter the economic downturn caused by the COVID-19 pandemic. These measures include, among others, subsidized lending to affected industries and individuals, payment holidays and easing of certain regulatory restrictions to help the financial sector maintain its capabilities to provide resources and to help customers avoid liquidity shortages as a result of the COVID-19 containment measures.
 
The Group continues to assess pandemic effect and changing micro- and macroeconomic conditions on its activities, financial position and financial results.
 
Changes in accounting policies
 
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2019.
 
The Group has not adopted standards, interpretations or amendments thereto that have been early issued but are not yet effective.
 
Certain amendments that came into effect on 1 January 2020 have been applied, but they do not have any impact on the Group’s interim condensed consolidated financial statements.
 
Amendments to IFRS 3: Definition of a Business
 
The amendment to IFRS 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the interim condensed consolidated financial statements of the Group, but may impact future periods should the Group enter into any business combinations.
 
Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform
 
The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments had no impact on the interim condensed consolidated financial statements of the Group as it does not have any interest rate hedge relationships.
 
Amendments to IAS 1 and IAS 8: Definition of Material
 
The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”
 
The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the interim condensed consolidated financial statements of, nor is there expected to be any future impact to the Group.
 
Conceptual Framework for Financial Reporting issued on 29 March 2018
 
The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards.
 
The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the interim condensed consolidated financial statements of the Group.
 
 
7
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
2.  Basis of preparation (continued)
 
Reclassifications
 
The following reclassifications were made in the interim condensed consolidated statement of comprehensive income for the six-month and three-month periods ended 30 June 2019 for the purposes of the presentation for the six-month and three-month periods ended 30 June 2020:
 
Interim condensed statement of comprehensive income for the six-month period ended 30 June 2019
 
As previously reported
 
 
Reclassification
 
 
As adjusted
 
 
 
 
 
 
 
 
 
 
 
Interest income calculated using effective interest rate
  7,048,044 
  (47,932)
  7,000,112 
Net interest income
  3,105,904 
  (47,932)
  3,057,972 
Net interest income after credit loss expense
  2,397,911 
  (47,932)
  2,349,979 
 
    
    
    
Loss from modification of financial assets that does not result in derecognition
  (47,932)
  47,932 
   
Non-interest expense
  (2,253,353)
  47,932 
  (2,205,421)
 
Interim condensed statement of comprehensive income for the three-month period ended 30 June 2019
 
As previously reported
 
 
Reclassification
 
 
As adjusted
 
 
 
 
 
 
 
 
 
 
 
Interest income calculated using effective interest rate
  3,509,358 
  (42,453)
  3,466,905 
Net interest income
  1,596,755 
  (42,453)
  1,554,302 
Net interest income after credit loss expense
  1,198,501 
  (42,453)
  1,156,048 
 
    
    
    
Loss from modification of financial assets that does not result in derecognition
  (42,453)
  42,453 
   
Non-interest expense
  (1,101,764)
  42,453 
  (1,059,311)
 
3. Significant accounting judgments and estimates
 
Estimation uncertainty
 
The preparation of interim condensed consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual outcomes can differ from these estimates.
 
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised in the period in which the estimates are revised and in any future periods affected.
 
Fair value of financial instruments
 
Where the fair values of financial assets and financial liabilities recorded in the interim condensed consolidated statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.
 
Assessment of collateral
 
The Group management performs monitoring of collateral on a regular basis. The management of the Group uses experienced judgements or an independent assessment in order to adjust the cost of collateral considering the current market conditions.
 
 
8
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
3.  Significant accounting judgments and estimates (continued)
 
Expected credit losses on financial assets
 
At the end of the first and beginning of the second quarter of 2020, there were significant changes in the economic environment:
 
Reduced industrial production and activities in many sectors of the economy as a result of government restrictions related to the outbreak of the COVID-19 pandemic;
 
Implementation of measures of state support to the population and business related to the outbreak of the COVID-19 pandemic;
 
Significant depreciation of the tenge exchange rate against major foreign currencies, high volatility in the foreign exchange market.
 
The above-mentioned changes in the economic environment have impact on the Group’s activities.
 
To help the Group’s clients, the following main activities are being implemented:
 
Offering changes to certain loan terms, including government support programs;
 
Expansion of the product offerings to clients via remote service channels.
 
Due to the high level of uncertainty, as well as limited up-to-date and consistent information about the actual financial position of the Bank’s counterparties and borrowers, it is not possible to present a comprehensive quantitative assessment of the impact of changes in the economic environment on the Bank’s 2020 financial performance in these interim condensed consolidated financial statements. In accordance with IFRS 9 Financial Instruments, the Group uses forward-looking information, including forecasts of macroeconomic indicators, in its models for assessment of allowance for expected credit losses. To assess the impact of above-mentioned changes in the economic environment on the Group’s operations, the following activities were carried out:
 
Increase in the probability of default based on the updated forecast for macroeconomic indicators;
 
Increase in the probability of default for Credit cards agreements at Stage 1.
 
Forward-looking information
 
The key forward-looking indicators used in assessing the allowance for expected credit losses on loan portfolio as at 30 June 2020 are as follows:
 
Key factors
 
2020
 
 
 
 
 
Price of Brent crude oil (Brent ICE), USD
  20.00 
GDP index, % to the previous year
  99.4 
Volume of production of oil and gas condensate, million tons
  90.00 
Inflation rate, %
  10.40 
USD/KZT exchange rate
  509.0 
 
As a result of the above changes for the six-month period ended 30 June 2020, credit loss expenses increased by KZT 102,374 thousand.
 
Taxation
 
The Republic of Kazakhstan currently has a single Tax Code that regulates main taxation matters. The existing taxes include value added tax, corporate income tax, social and other taxes. Implementing regulations are often unclear or nonexistent and insignificant amount of precedents has been established. Often, differing opinions regarding legal interpretation exist both among and within government ministries and organisations; thus creating uncertainties and areas of conflict. Tax declarations, together with other legal compliance areas (as examples, customs and currency control matters) are subject to review and investigation by a number of authorities, which are enabled by law to impose severe fines, penalties and interest charges. These facts create tax risks in the Republic of Kazakhstan substantially more significant than typically found in countries with more developed tax systems.
 
The management believes that the Group’s tax position as at 30 June 2020 and 31 December 2019 was in compliance with tax laws of the Republic of Kazakhstan regulating its activities. However, the risk remains that relevant authorities could take differing positions with regard to interpretive tax issues. Assessment of recoverability of deferred income tax assets requires to use subjective judgements by the Group’s management around the likely timing and the level of future taxable profit together with the tax planning strategy.
 
 
9
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
3.  Significant accounting judgments and estimates (continued)
 
Taxation (continued)
 
The management believes that deferred income tax assets as at 30 June 2020 are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences, unused tax losses and credits can be utilised, and deferred income tax assets are reduced to the extent that taxable profit will be available against which the deductible temporary differences can be utilised.
 
4.  Cash and cash equivalents
 
Cash and cash equivalents comprised the following:
 
 
 
30 June
2020
(unaudited)
 
 
31 December
2019
(unaudited)
 
 
 
 
 
 
 
 
Cash on hand
  3,458,854 
  4,198,884 
Cash on current accounts with the NBRK rated at BBB-
  29,921,405 
  17,477,932 
 
    
    
Cash on current bank accounts, other banks:
    
    
- Rated from A- to A+
  156,735 
  88,619 
- Rated from BBB- to BBB+
  92,223 
  6 
- Rated from ВВ- to ВВ+
  318,114 
  362,898 
- Rated below B+
  869,611 
  912,521 
- Not rated
  180,337 
  404,086 
Accounts receivable under reverse repurchase agreements with contractual maturity of 90 days or less
   
  7,501,994 
Time deposits with the NBRK rated at BBB- with contractual maturity of 90 days or less
  2,000,417 
  2,500,573 
Time deposits with other banks rated from BBB- to BBB+ with contractual maturity of 90 days or less
  5,572 
  8,274 
Cash and cash equivalents before ECL allowance
  37,003,268 
  33,455,787 
 
    
    
ECL allowance
  (13,862)
  (7,265)
Cash and cash equivalents
  36,989,406 
  33,448,522 
 
The credit ratings are presented by reference to the credit ratings of Standard & Poor’s credit rating agency or analogues of similar international agencies.
 
As at 30 June 2020 and 31 December 2019, all balances of cash and cash equivalents are allocated to Stage 1 for ECL measurement purposes.
 
Minimum reserve requirements
 
In accordance with regulations issued by the NBRK, minimum reserve requirements are calculated as a percent of specified banks liabilities. Banks are required to comply with these requirements by maintaining average reserve assets (national currency cash and amounts on current accounts with NBRK) equal or in excess of the average minimum requirements. As at 30 June 2020, minimum reserve requirements of the Bank amount to KZT 1,345,216 thousand (31 December 2019: KZT 970,663 thousand).
 
Concentration of cash and cash equivalents
 
As at 30 June 2020 and 31 December 2019, the Group has accounts with one bank which balances exceeded 10% of total cash and cash equivalents. The total balance on the accounts with the above counteragent as at 30 June 2020 and 31 December 2019 amounts to KZT 31,921,822 thousand and KZT 19,978,505 thousand, respectively.
 
 
10
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
5. Amounts due from banks and other financial institutions
 
Amounts due from banks and other financial institutions comprise:
 
 
 
30 June
2020
(unaudited)
 
 
31 December
2019
(unaudited)
 
Funds provided as collateral
 
 
 
 
 
 
- Rated from AA- to AA+
  139,250 
  131,430 
- Rated from A- to A+
  286,461 
  270,849 
- Not rated
  415,000 
  375,000 
Amounts due from banks and other financial institutions before ECL allowance
  840,711 
  777,279 
 
    
    
ECL allowance
  (1,259)
  (1,071)
Amounts due from banks and other financial institutions
  839,452 
  776,208 
 
The credit ratings are presented by reference to the credit ratings of Standard & Poor’s credit rating agency or analogues of similar international agencies.
 
As at 30 June 2020, funds provided as collateral included a security deposit of a participant of MasterCard system in the amount of KZT 286,461 thousand (31 December 2018: KZT 270,849 thousand) and a security deposit of a participant of Visa International system in the amount of KZT 139,250 thousand (31 December 2019: KZT 131,430 thousand) and deposit placed as collateral of the Bank’s liabilities to the KASE in the amount of KZT 415,000 thousand (as at 31 December 2019: KZT 375,000 thousand).
 
As at 30 June 2020 and 31 December 2019, all balances of amounts due from banks and other financial institutions are allocated to Stage 1 for ECL measurement purposes.
 
Concentration of amounts due from banks and other financial institutions
 
As at 30 June 2020, the Group has amounts due from three financial institutions (31 December 2019: three) which balances individually exceed 10% of total due from financial institutions. The aggregate balances of amounts due from these counterparties as at 30 June 2020 were KZT 839,452 thousand (31 December 2019: KZT 776,208 thousand).
 
6. Loans to customers
 
As at 30 June 2020 loans to customers comprise:
 
 
 
30 June 2020
(unaudited)
 
 
 
Stage 1
 
 
Stage 2
 
 
Stage 3
 
 
POCI
 
 
Total
 
Individually significant loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans issued to small and medium-sized businesses
  10,831,344 
  1,661,430 
  4,389,963 
  18,322 
  16,901,059 
Mortgages
   
   
  54,032 
   
  54,032 
Consumer loans
   
   
  66,823 
   
  66,823 
Other loans secured by collateral
  813,606 
  238,337 
  1,437,699 
  80,718 
  2,570,360 
Total individually significant loans
  11,644,950 
  1,899,767 
  5,948,517 
  99,040 
  19,592,274 
 
    
    
    
    
    
Individually insignificant loans
    
    
    
    
    
Loans issued to small and medium-sized businesses
  8,430,949 
  615,852 
  1,526,762 
   
  10,573,563 
Mortgages
  1,139,476 
  99,203 
  233,330 
  683,214 
  2,155,223 
Consumer loans
  1,309,875 
  101,271 
  279,881 
   
  1,691,027 
Car loans
  46,090 
   
  1,712 
   
  47,802 
Credit cards
  274,360 
  6,996 
  48,193 
   
  329,549 
Other loans secured by collateral
  24,215,326 
  1,970,292 
  5,097,911 
  654,415 
  31,937,944 
Total individually insignificant loans
  35,416,076 
  2,793,614 
  7,187,789 
  1,337,629 
  46,735,108 
Loans to customers before ECL allowance
  47,061,026 
  4,693,381 
  13,136,306 
  1,436,669 
  66,327,382 
 
    
    
    
    
    
ECL allowance
  (249,113)
  (71,891)
  (3,497,220)
  (2,798)
  (3,821,022)
Loans to customers
  46,811,913 
  4,621,490 
  9,639,086 
  1,433,871 
  62,506,360 
 
 
11
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
6.  Loans to customers (continued)
 
As at 31 December 2019 loans to customers comprise:
 
 
 
31 December 2019
(unaudited)
 
 
 
Stage 1
 
 
Stage 2
 
 
Stage 3
 
 
POCI
 
 
Total
 
Individually significant loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans issued to small and medium-sized businesses
  12,551,517 
  1,589,738 
  3,650,370 
   
  17,791,625 
Mortgages
   
   
  51,304 
   
  51,304 
Consumer loans
   
   
  59,041 
   
  59,041 
Other loans secured by collateral
  1,274,987 
  50,291 
  921,772 
  86,493 
  2,333,543 
Total individually significant loans
  13,826,504 
  1,640,029 
  4,682,487 
  86,493 
  20,235,513 
 
    
    
    
    
    
Individually insignificant loans
    
    
    
    
    
Loans issued to small and medium-sized businesses
  8,735,885 
  482,813 
  1,400,305 
   
  10,619,003 
Mortgages
  1,420,772 
  166,814 
  197,539 
  766,002 
  2,551,127 
Consumer loans
  1,968,343 
  80,727 
  648,223 
   
  2,697,293 
Car loans
  65,209 
  1,840 
   
   
  67,049 
Credit cards
  387,010 
  4,422 
  85,703 
   
  477,135 
Other loans secured by collateral
  29,375,420 
  963,113 
  4,058,274 
  804,756 
  35,201,563 
Total individually insignificant loans
  41,952,639 
  1,699,729 
  6,390,044 
  1,570,758 
  51,613,170 
Loans to customers before ECL allowance
  55,779,143 
  3,339,758 
  11,072,531 
  1,657,251 
  71,848,683 
 
    
    
    
    
    
ECL allowance
  (246,263)
  (50,365)
  (3,427,474)
  (254)
  (3,724,356)
Loans to customers
  55,532,880 
  3,289,393 
  7,645,057 
  1,656,997 
  68,124,327 
 
Quality of individually significant loans
 
Information on the quality of individually significant loans at 30 June 2020 is presented in the table below:
 
 
 
30 June 2020
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loans less ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant loans issued to small and medium-sized businesses
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
  8,661,028 
  (2,027)
  8,659,001 
  0.0%
- Overdue for less than 30 days
  2,170,316 
   
  2,170,316 
  0.0%
Stage 1 loans
  10,831,344 
  (2,027)
  10,829,317 
  0.0%
 
    
    
    
    
Stage 2 and Stage 3 loans
    
    
    
    
- Not overdue
  2,128,170 
  (92,948)
  2,035,222 
  4.4%
- Overdue for less than 30 days
  1,267,429 
   
  1,267,429 
  0.0%
- Overdue for 30 days to 90 days
  272,805 
  (104,217)
  168,588 
  38.2%
- Overdue for 90 days to 180 days
   
   
   
  0.0%
- Overdue for 180 days to 360 days
  171,138 
  (9,426)
  161,712 
  5.5%
- Overdue for more than 360 days
  2,211,851 
  (1,835,451)
  376,400 
  83.0%
Stage 2 and Stage 3 loans
  6,051,393 
  (2,042,042)
  4,009,351 
  33.7%
 
    
    
    
    
POCI
  18,322 
   
  18,322 
  0.0%
Total individually significant loans issued to small and medium-sized businesses
  16,901,059 
  (2,044,069)
  14,856,990 
  12.1%
 
 
12
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
6.  Loans to customers (continued)
 
Quality of individually significant loans (continued)
 
 
 
30 June 2020
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loans less ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant mortgage loans
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
Stage 1 loans
   
   
   
   
 
    
    
    
    
Stage 2 and Stage 3 loans
    
    
    
    
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
- Overdue for 30 days to 90 days
   
   
   
   
- Overdue for 90 days to 180 days
   
   
   
   
- Overdue for 180 days to 360 days
   
   
   
   
- Overdue for more than 360 days
  54,032 
   
  54,032 
  0.0%
Stage 2 and Stage 3 loans
  54,032 
   
  54,032 
  0.0%
Total individually significant mortgage loans
  54,032 
   
  54,032 
  0.0%
 
 
 
30 June 2020
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loansless ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
Stage 1 loans
   
   
   
   
 
    
    
    
    
Stage 2 and Stage 3 loans
    
    
    
    
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
- Overdue for 30 days to 90 days
   
   
   
   
- Overdue for 90 days to 180 days
   
   
   
   
- Overdue for 180 days to 360 days
   
   
   
   
- Overdue for more than 360 days
  66,823 
  (66,823)
   
  100.0%
Stage 2 and Stage 3 loans
  66,823 
  (66,823)
   
  100.0%
Total individually significant consumer loans
  66,823 
  (66,823)
   
  100.0%
 
 
13
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
6.  Loans to customers (continued)
 
Quality of individually significant loans (continued)
 
 
 
30 June 2020
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loansless ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant other loans secured by collateral
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
  618,016 
   
  618,016 
  0.0%
- Overdue for less than 30 days
  195,590 
   
  195,590 
  0.0%
Stage 1 loans
  813,606 
   
  813,606 
  0.0%
 
    
    
    
    
Stage 2 and Stage 3 loans
    
    
    
    
- Not overdue
  404,466 
  (147)
  404,319 
  0.0%
- Overdue for less than 30 days
  639,658 
   
  639,658 
  0.0%
- Overdue for 30 days to 90 days
   
   
   
  0.0%
- Overdue for 90 days to 180 days
   
   
   
  0.0%
- Overdue for 180 days to 360 days
  116,093 
  (16,055)
  100,038 
  13.8%
- Overdue for more than 360 days
  515,819 
  (122,147)
  393,672 
  23.7%
Stage 2 and Stage 3 loans
  1,676,036 
  (138,349)
  1,537,687 
  8.3%
 
    
    
    
    
POCI
  80,718 
  (267)
  80,451 
  0.3%
Total individually significant other loans secured by collateral
  2,570,360 
  (138,616)
  2,431,744 
  5.4%
 
Information on the quality of individually significant loans at 31 December 2019 is presented in the table below:
 
 
 
31 December 2019
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loans less ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant loans issued to small and medium-sized businesses
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
  12,257,867 
  (2,137)
  12,255,730 
  0.0%
- Overdue for less than 30 days
  293,650 
   
  293,650 
  0.0%
Stage 1 loans
  12,551,517 
  (2,137)
  12,549,380 
  0.0%
 
    
    
    
    
Stage 2 and Stage 3 loans
    
    
    
    
- Not overdue
  1,683,901 
  (201,140)
  1,482,761 
  11.9%
- Overdue for less than 30 days
  509,267 
   
  509,267 
  0.0%
- Overdue for 30 days to 90 days
  822,305 
   
  822,305 
  0.0%
- Overdue for 90 days to 180 days
  55,621 
   
  55,621 
  0.0%
- Overdue for 180 days to 360 days
  51,284 
  (51,284)
   
  100.0%
- Overdue for more than 360 days
  2,117,730 
  (1,583,917)
  533,813 
  74.8%
Stage 2 and Stage 3 loans
  5,240,108 
  (1,836,341)
  3,403,767 
  35.0%
Total individually significant loans issued to small and medium-sized businesses
  17,791,625 
  (1,838,478)
  15,953,147 
  10.3%
 
 
14
“Bank Kassa Nova” JSC
Interim condensed consolidated
(SB of “ForteBank” JSC)
financial statements
 
 (in thousands of tenge)
 
 
6.  Loans to customers (continued)
 
Quality of individually significant loans (continued)
 
 
 
31 December 2019
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loans less ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant mortgage loans
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
Stage 1 loans
   
   
   
   
 
    
    
    
    
Stage 2 and Stage 3 loans
    
    
    
    
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
- Overdue for 30 days to 90 days
   
   
   
   
- Overdue for 90 days to 180 days
   
   
   
   
- Overdue for 180 days to 360 days
  51,304 
   
  51,304 
  0.0%
- Overdue for more than 360 days
   
   
   
   
Stage 2 and Stage 3 loans
  51,304 
   
  51,304 
  0.0%
Total individually significant mortgage loans
  51,304 
   
  51,304 
  0.0%
 
 
 
 
31 December 2019
(unaudited)
 
 
 
Loans before ECL allowance
 
 
ECL allowance
 
 
Loansless ECL allowance
 
 
ECL allowance to gross loans before ECL allowance, (%)
 
Individually significant consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
- Not overdue
   
   
   
   
- Overdue for less than 30 days
   
   
   
   
Stage 1 loans
   
   
   
   
 
    
    
    
    
Stage 2 and Stage 3 loans