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For 2020:

The Bank provides a full range of financial services throughout the country. The next goal of the Bank is to maintain and strengthen the position of a modern, innovative and dynamically developing Bank of Uzbekistan

Aiming to achieve this goal, the Bank will increase focus on solving the following problems:

  • the introduction of modern banking technologies;
  • the increase of efficiency indicators due to optimization of business processes. The improvement of services quality and speed while, simultaneously, reducing production costs;
  • the customer base outreach, supported on the provision of a full range of services. The focusing on the individual characteristics of each client;
  • the providing of the risk management system improvement;
  • the development of professional potential of employees.

Forecasts of bank development

In the coming year the Bank prearranges to complete the work on introducing a new automated banking system and equipment for its functioning. This step will allow introducing of new interactive services that have no analogues in the Republic. This measure will provide quick and round-the-clock customer service. After the deployment of this program, most of the business processes will be automated. This program has also powerful tools for analytics and reporting, which will introduce new methods of integrated bank management. The common business productivity will be significantly improved through more efficient cost management, through the implementation of a functional-cost analysis model, and the effective distribution of regulatory capital among products and customers.

Having such kind of potential, we are planning to increase the total assets to 6.0 Trillion Sums, or to 9.2% by the end of 2020. Due to the need to strengthen capital adequacy and liquidity indicators, the Bank does not plan an aggressive growth in risky assets in 2020. Most of all active operations will be carried out as part of the repayment of existing assets with the redeployment of funds to more profitable products.

The Bank's gross income (net of income from inter-branch operations) is planned at the level of 868.0 Billion Sums in 2020. It is 6% higher than in 2019. The revenue growth will be achieved through the systematic development of all strategic areas of business: corporate, commercial and retail.

The corporate and commercial business

The Bank conditionally divides all Corporate Clients into 2 main segments: Large Business and Small Business.

Large Business Segment is represented by the most demanding customers who prefer to be served at several banks. They have large amounts of money and use a range of financial services. Such clients require prompt payment and lending, as well as complex banking products that include complex financial instruments. They prefer to work with highly qualified employees of the Bank who know the specifics of the industry in which the client works.

For this segment the Bank is planning to develop customer service through the offer of individual financial solutions. The Bank will expand its product range in the areas of short-term lending, trade finance, foreign exchange transactions and liquidity management products. It is important simultaneously to increase the speed of services, especially in terms of lending. The Bank will create different mechanisms for the operational interaction of client managers with client representatives.

Small Business Segment is also of significant interest to the Bank. Because it provides an acceptable level of profitability, while at the same time it also allows to effectively diversifying the client base. Due to economic reforms and active government support of small business activities, the number of potential customers of the Bank is growing rapidly. In 2020, the customer service policy for this segment will be aimed at transferring customers to service in remote and digital channels. They will be provided with a convenient solution for controlling and managing the finances of their business. The transfer to digital channels will offload our client managers and will open up opportunities, taking into account industry specifics, for the introduction of new packages of personalized services.

When creating a customer base, emphasis will be placed on customers with large balances and good “sedimentation”. This will increase the balances on accounts of legal entities to 2.4 Trillion Sums by the end of 2020 (including balances in foreign currency). It is 18.1% higher than the outcome of 2019.

The organized servicing of the corporate customer accounts in national currency is projected to bring a fee and commission income of at least 71.5 Billion Sums. The foreign currency accounts servicing and services providing for supporting foreign economic activity are projected to bring income in the amount of 132.8 Billion Sums.

In order to maintain the resource base stability, special attention will be paid to attracting term deposits of legal entities. By the end of 2020, it is planned to bring their balance to 276.1 Billion Sums (including accounts in foreign currency). The interest expenses will amount to 49.2 Billion Sums. And an average rate on newly opened deposits will reach 18-20%.

The attracted funds will be the main source of banking financing for active operations – namely for lending. It is planned to increase the loan portfolio by 30.4% in 2020 – up to 3.8 Trillion Sums. 1.79 Trillion Sums of these monetary resources will be accounted for loans in national currency and 2.03 Trillion Sums for loans in foreign currency in Sum equivalent.

The development of the retail business, and retail lending in particular, is a priority area for the Bank due to the relatively high profitability and a significant degree of diversification of the loan portfolio. This indicator is planned to be increased from 27% to 36% in 2020 by increasing the retail loan portfolio by 70.7% - from 803 Billion Sums to 1.3 Trillion Sum

Taking into account the projected volume of issuance and interest rates, the bank intends to receive lending income in 2020 in the amount of 555.8 Billion Sums. It is 28% higher than the expected outcome of 2019.

Retail business

The access to services 24/7, a high speed of interaction with the Bank and an individual approach to banking services are becoming of critical importance for many retail customers. The population is becoming more financially literate, and prefers to use remote channels without direct contact with Bank employees.

Aiming the developing of retail business in 2020, the Bank will intend:

  • to make convenient, quick and profitable such simple operations as regular payments, transfer of funds, making payments for goods and services, saving of funds and microloans. In pursuing these aims, special attention will be paid to salary projects, transfers of funds between accounts of individuals, overdrafts and credit lines secured by financial assets. It is necessary to develop products for savings and popularize the use of plastic cards, introducing new methods of customer identification.
  • to establish long-term and close relationships with customers. In an effort to solve this problem, it is important to understand the needs of customers and find an individual approach to each client segment. The bank will develop product packages that are more attractive than stand-alone products. To compile such packages, the bank will expand its ability to collect, store and analyze customer information.

According to estimates the Bank will earn income from servicing individuals in the amount of 65.8 Billion Sums in 2020. At the same time, the income from services provided using plastic cards (card issuing, transaction processing, acquiring, and payment acceptance) will amount to 40 Billion Sums. And the income from services provided in retail business segment (money transfers, transfer of funds from accounts, cash withdrawals) is expected to reach 25.8 Billion Sums.

Furthermore, we regard the retail customers as strategic customers for the Bank – for their funds form 47% of the Bank’s resource base. It is planned to bring the balances on deposits of individuals to the level of 2.4 Trillion Sums in 2020. And time-deposits from these money means will amount to 1.9 Trillion Sums. Considering the current average rates on deposits – namely 4.5% on deposits in foreign currency and 18% on deposits in national currency – a gradual increase in balances in national currency is expected, and, on the other hand, a commensurate decrease in balances in foreign currency is expected too.

Bank expenses and financial results

The forecast of interest expenses for 2020 (excluding interest on inter-branch deposits) is in amount of 274.0 Billion Sums. It is 8% higher than the same indicator in 2019. The increase in interest expenses is associated with an increase in interest rates on financial resources in the market. It is a consequence of tightening the monetary policy of the Central Bank. In addition, the requirements of the Central Bank for a long-term resource base have increased. And for the implementation of these requirements the Bank will need additional attraction of fixed-term deposits for a period of more than a year. And fixed-term deposits are more expensive compared to “short” resources.

The interest-free expenses in 2020 are planned at the level of 68.4 Billion Sums. Due to an increase in commission income, as well as income in the form of exchange rate differences during spot and conversion operations, a significant growth is expected by 2020.

The forecast of operating expenses for 2020 is in amount of 263.1 Billion Sums. It is 16% higher than expected expenses for 2019. The main expenditure categories that will affect the growth of operating expenses are:

  • advertising and Marketing. The Bank launched a full-scale promotional campaign in 2019. In connection with the development of the retail business, this campaign will continue also in 2020.
  • the contributions to the Deposit Insurance Fund. In connection with the further attraction of household deposits, the Bank will increase contributions to the Deposit Insurance Fund in accordance with the requirements of the law.
  • the Depreciation of Fixed Assets and Depreciation of Intangible Assets. In 2020, the Bank plans to put into operation server equipments. It will increase the cost of depreciation and amortization.

In consideration of the above-described trends and forecasts, the Bank’s net profit for 2020 is forecasted to be at the level of not less than 130.5 Billion Sums. And the return on average assets, herewith, will be 2.2%. And the return on overall capital will be 18.7%.

For 2019:

The purpose of the bank is to retain and further strengthen the position of the modern, innovative and dynamically developing bank of Uzbekistan, which provides the entire range of financial services throughout the country.

To achieve this goal, the bank will focus on the following tasks:

  • introduction of modern banking technologies;
  • increase in efficiency indicators due to optimization of business processes, improvement of quality and speed of service, while reducing production costs;
  • expansion of the customer base, based on the provision of a full range of services, with a focus on the individual characteristics of each client;
  • improvement of risk management system;
  • development of professional potential of employees.

With this potential, by the end of 2019 it is planned to increase total assets to 5.7 trillion UZS, or 19%. At the same time, the growth of the bank’s liabilities for 2019 is planned at the level of 19% and total capital of 17%.

Gross income of the bank (minus income from operations between branches) in 2019 is planned at the level of 792.6 billion UZS, which is 30% higher than in 2018. Revenue growth will be achieved through the systematic development of the main strategic business areas: corporate and retail.

The bank conditionally divides corporate clients into 2 main segments: large business and small business.

The bank plans to develop customer service in the large business segment through the offer of individual financial solutions. The bank will expand its product range in the areas of short-term lending, trade finance, foreign exchange operations and liquidity management products. At the same time, it is important to increase the speed of providing services, especially in terms of lending. The bank will create mechanisms for operational interaction between client managers and client representatives.

The small business segment is of significant interest to the Bank, as it provides an acceptable level of profitability, at the same time allows diversifying the customer base effectively. Due to economic reforms and active state support of small businesses, the number of potential customers of the bank is growing rapidly. The customer service policy of this segment in 2019 will be aimed at transferring customers to service in remote and digital channels, where they will be provided with a convenient solution for controlling and managing the finances of their business. Transfer to digital channels will relieve client managers, and open up opportunities for the introduction of new packages of personalized services, taking into account industry specifics.

For the development of retail business in 2019, the bank should:

  • make such simple operations as regular payments, transfer of funds, payment for goods and services, saving funds and microloans convenient, fast and profitable. For this purpose, special attention will be paid to salary projects, transfers of funds between accounts of individuals, overdrafts and credit lines secured by financial assets. It is necessary to develop products for savings and promote the use of plastic cards, introducing new methods of customer identification.
  • build long-term and close relationships with customers. To solve this problem, it is important to understand the needs of customers and find an individual approach to each customer segment. The bank will develop product packages that are more attractive than independent products. To compile such packages, the bank will expand its capabilities in collecting, storing and analyzing customer information.

Taking into account the above trends and forecasts, the bank’s net profit for 2019 is projected at the level of at least 83 billion UZS. At the same time, return on assets will be 1.6% and return on total capital will be 16%.

For 2018:

The Business Plan defines the major directions for “Kapitalbank” JSCB development for 2018, ensures the objective setting, unity of purpose and coordination of efforts of all units in order to improve the performance of the bank.

The Business Plan serves as a base for further management control over the financial activity of the bank, contributes to the quickest adjustment under the conditions of possible changes in financial environment.

All operational plans of bank’s units for 2018 shall be developed according to principles of and in full compliance with the business plan of the bank.

Goal of the bank is to hold and further consolidate the position of modern, innovative and dynamically developing bank of Uzbekistan, rendering the full range of financial services across the country. To achieve this goal, the bank will focus on solving the following issues:

  • introduction of the latest banking technologies;
  • improvement of performance indicators due to business processes optimization, improvement of quality and speed of service, while reducing production costs;
  • expansion of the client base, based on the provision of a full range of services, with a focus on the individual characteristics of each client;
  • risk management system improvement;
  • employees professional capacity building.

In the coming year, the bank plans to complete works on the introduction of a new automated banking system and equipment for its operation. This step will allow introducing new interactive services that are unique in the country and ensure quick and round-the-clock client service. After the program is deployed, most of the business processes will be automated. Moreover, this program contains powerful tools for analytics and reporting that will allow introducing new methods of integrated bank management. Business efficiency will be significantly enhanced by more efficient cost management, implementation of cost-effectiveness analysis model as well as efficient allocation of economic and regulatory capital among products and clients.





2018


in thousand UZS

Plan

Fact

Percentage of completion

Assets

3 991 127 443

4 817 131 061

121%

Liabilities

3 527 142 862

4 328 429 230

123%

Capital

463 984 581

488 701 831

105%

Gross income

664 442 554

608 904 330

92%

Net income

55 306 911

93 995 346

170%





2019


in thousand UZS

Plan

Fact

Percentage of completion

Assets

5 722 942 456

5 482 808 304

96%

Liabilities

5 150 920 070

4 829 907 672

94%

Capital

572 022 386

652 900 631

114%

Gross income

932 458 755

1 050 626 905

113%

Net income

83 320 555

113 487 052

136%

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