Investor Call Presentation 17 May 2011 Disclaimer WHILE JSC BTA - - PowerPoint PPT Presentation

Investor Call Presentation

17 May 2011

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

Disclaimer

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• I. Kazakhstan Economy Overview
• III. New BTA Bank

Table of Contents

a. Back to Growth

• b. Foreign Debt Structure

c. International Commodities Player

• d. On Path to Diversification

a. Introduction b. New Governance Structure c. Members of the Board of Directors d. Loan Portfolio Structure e. Funding f. New Debt Profile g. Financial Position h. Financial Performance i. IFRS vs. Regulatory Report j. Strategy Update

• II. Banking Sector Landscape

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• I. Kazakhstan Economy Overview

a. Back to Growth

• b. Foreign Debt Structure
• c. International Commodities Player
• d. On Path to Diversification

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2.5 3.1 5.0 9.3 7.1 19.1 17.6 19.9 23.1 28.3 35.2 1.2 1.9 3.7 5.1 8.1 14.1 21.0 27.5 24.4 30.6 33.8 10 20 30 40 50 60 70 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1Q2011 National Oil Fund Gold and currency reserves

Back to Growth

• The spike of a global financial crisis has passed, and today

Kazakhstan economy is on a stage of recovery with the GDP growth exceeding 7% in 2010

• Government of Kazakhstan reported GDP growth of 6.9% in

1Q’2011 and targets average 7% growth within next 5 years, GDP per capita growing from current US$9,000 to US$15,000 by 2016

• Relatively high commodity prices have allowed Kazakhstan to

accumulate significant reserves over the past few years – 45% growth since 2009

• Standing of Kazakhstan in Doing Business rating of the World

Bank increased from 80th in 2007 to 51st in 2011

• Newly created

Customs Union (with Russia and Belarus) expands market for Kazakhstani goods to 170 mln consumers

2006 2007 2008 2009 2010 Nominal GDP ($bln) 81.0 104.9 133.4 115.3 146.0 GDP per capita ($ths) 5.3 6.7 8.5 7.3 9.0 Real GDP Growth Rate (%) 10.7 8.9 3.3 1.2 7.0 Annual Inflation Rate (%) 8.6 10.8 17.1 7.3 7.1 Net FDI (% of GDP) 7.8 10.6 11.8 11.8 6.7 Unemployment Rate (%) 7.8 7.3 6.6 6.6 5.8 Population (mln)* 15.4 15.6 15.8 15.9 16.4

*Significant population growth in 2010 associated with the national census of 2009

Source: Kazakhstan Statistic Agency (SARK) and National Bank of Kazakhstan (NBK)

International Reserves ($bln) Key Economic Indicators Key Comments

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Foreign Debt Structure

30.1 39.2 15.3 7.7 3.5 1.4 45.9 33.0 20.0 3.2 4.3 5.9 7.3 12.6 19.3 41.2 29.7 26.9 4.8 3.2 1.7 1.6 2.6 1.6 3.1 2.5 10 20 30 40 50 2002 2003 2004 2005 2006 2007 2008 2009 2010 Banks Non-bank (excluding inter-corporate debt) Sovereign debt 23.1 28.3 163.5 146.0 115.3 36.5 24.4 30.1 20.0 30.6 19.4 79.9 94.4 99.4 37.3 20 40 60 80 100 120 140 160

2009 2010 2011F

■ Sovereign FD ■ Banking sector FD ■ Non-bank FD ■ GDP ■ National Oil Fund ■ Gold and currency reserves

Source: NBK

• Banking sector went through a large-scale deleveraging process with the net foreign debt of banks decreasing from US$46 bln in 2007 to US$20

bln in 2010

• The biggest impact comes from debt restructuring of 3 banks with the total haircut of US$15.6 bln (US$11.2 bln for BTA, US$3.6 bln for Alliance

and US$0.8 bln for Temirbank)

• Kazakhstani corporates and national companies attracted significant amounts of investments from debt capital markets in 2008-10, thus securing

cheap financing at a period of historically low interest rates

Foreign Debt Dynamics ($bln) Key Comments Net Foreign Debt, GDP and International Reserves ($bln)

Source: NBK

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International Commodities Player

2006 2007 2008 2009 2010 Oil 23.6 28.1 43.5 26.2 37.0 Copper 2.4 2.5 2.5 1.4 1.9 Ferrous Metals 0.9 1.4 3.0 1.2 1.8 Flat rolled iron 0.9 1.6 2.0 1.4 1.2 Zinc 0.8 1.0 0.6 0.4 0.6 Aluminium 0.02 0.02 0.3 0.2 0.4 Wheat 0.5 1.2 1.5 0.6 0.9

Reserves Global Position Crude oil (bln tons) 4.8 9 Copper (mln tons) 35.0 4 Zinc (mln tons) 30.0 4 Lead (mln tons) 5.0 4 Gold (tons) 1,700.0 7 Molybdenum (ths tons) 130.0 4 Uranium (% globally) 15.0 1 Territory (ths.sq.m) 2,724.9 9

* Kazakhstan is one of the largest uranium producers globally, №1 in 2010 with output

• f 17,803 tons

Source: World Nuclear Association, MINT (Committee of Geology & Resource Exploitation), US Geology Survey Source:SARK

• Kazakhstan is considered as one of the key suppliers of natural

resources globally, and benefits from both rising commodity prices and steadily increasing output

• Development of

new oil fields such as Kashagan will make Kazakhstan one of the world's top 10 oil producing nations

• The mining industry accounts for 30% of the GDP, about 90% of

all commodity products are exported to more than 30 countries

• Kazakhstan has 15% of the world's uranium resources, projecting

almost 18,000 tons of production in 2010, 25,000 tons in 2011, and 30,000 tons per year till 2018

• Kazakhstan will grow in importance as a major commodities supplier

to neighboring China supporting its large-scale modernization and urbanization efforts

Kazakhstan Commodity Rankings Key Comments Commodity Export Profile ($bln)

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17% 17% 13% 10% 7% 9% 26%

Metals & Mining Construction Chemical and Pharmaceuticals Energy Engineering Infrastructure Agriculture

On Path to Diversification

Note: as a percentage of total number of projects launched Source: Ministry of Industry and New Technologies (MINT)

• Kazakhstan has undertaken major plans to diversify its economy

from dependence on commodity prices and to achieve a sustainable and balanced growth of the economy based on competitive and dynamic industries

• Industrialization Program envisages development of new industries

and advancement of existing ones from extracting only to refining and reprocessing ones

• Total estimated budget of 294 investment projects included in the

Program comes at Total of US$55 bln

• 152 projects already launched in 2010, and the amount of utilized

investments reached US$5,5 bln, US$10,3 bln is planned to be directed to finance new projects in 2011

• Significant part of these investments will be channeled through commercial banks
• The implementation of such sizable investments should create a new cluster of customer base for banks – SMEs, Services, Non-commodity

manufacturing and Infrastructure

• Government’s increasing local content requirements should cherish new local businesses servicing large projects – Satellite Effect
• The Industrialization program creates significant export-import flows – base for growth in Trade finance revenues for commercial banks

State Industrialization Program 2010-2014 Key Comments Impact on banking sector

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• II. Banking Sector Landscape

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Banking Sector Landscape

20.2% 16.8% 16.6% 10.1% 8.2% 4.1% 25.9% 18.1% 13.5% 9.4% 7.9% 6.0% 21.1% 20.4% 11.5% 9.7% 7.0% 3.0%

Source: NBK, regulatory data, as at December 31, 2010

• Total banking sector assets as of 2010 amounted to US$81bln or 61.9% of GDP
• Despite severe financial crisis the list of TOP 6 largest banks out of 39 commercial banks did not change and account for 76% of the total

banking sector assets

• Loan portfolio of the banking sector makes 46.5% of GDP
• Total deposits of the banking sector amount to US$46 bln and make 35.2% of the GDP (corporate: 23.6%, retail: 11.6%)

Ranking by Total Assets Ranking by Total Gross Loans Ranking by Total Deposits Key Comments

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33.0 45.9 39.2 30.1 20.0 6.9 9.3 13.9 6.4 37.0 32.3 38.0 40.5 46.3 10 20 30 40 50 60 70 80 90 2006 2007 2008 2009 2010 Foreign Debt ($bln) Other liabilities ($bln) Deposits ($bln)

Banking Sector Landscape (cont’d)

Source: NBK

81.6 84.8 47.2 73.7 76.5 65.3 61.5 62.6 77.8 98.5 69.9 97.1 31% 31% 8% 33% 33% 37% 6% 5% 11% 1% 5% 36% 10 20 30 40 50 60 70 80 90 100 2006 2007 2008 2009 2010 1Q2011 0% 5% 10% 15% 20% 25% 30% 35% 40% Assets ($bln) Loans($bln) Provisions (%) NPL (%)

• Loan portfolio of the banking sector declined by 6% during 2010 –

largely due to the decline of Corporate loans

• Total deposits of the banking sector grew 15% in 2010, Retail

deposit growth reached 17.5%

• Loans/Assets ratio declined from 84% in January 2010 to 75% in

January 2011 – sector accumulated excessive liquidity

• NPL ratio for the banking sector decreased from its peak in 2009

from 36% to 33% in 2010, and NPL ratio excluding BTA and Alliance stood at 23% at the end of 2010

• Provisioning levels of the banking sector have also declined from

37% to 31% in 2010, and excluding BTA and Alliance provisioning level stood at 24%

• Debt restructuring of BTA, Alliance and Temirbank has allowed to

reduce the banking sector foreign debt by 34% (from US$ 30.1 bln to US$20 bln YoY)

• Kazakhstani banking sector managed to refocus its funding base

from foreign debt to local deposits during 2009-10 as corporates shelved their investment plans

Balance sheet Banking Sector Loan Portfolio Quality Key Comments Liabilities Structure

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• Banks should focus on loan restructurings for distressed corporate borrowers

including discounts in order to stimulate the sustainable recovery of the corporate sector

• Expected changes in tax legislation should encourage write-offs and disposals
• f distressed assets – currently write-offs are taxed
• Asset disposal at fair value should also be encouraged as banks are not

interested in and do not possess resources to manage them appropriately, this will clean banks’ balance sheets significantly

• National Bank of Kazakhstan has initiated the establishment of Distressed

Asset Fund II in the total amount of US$1 bln that will purchase bad corporate loans from commercial banks

• Banks should be eligible to set up own SPVs to off-load bad loans at nominal

prices that will be regulated differently – this will help banks manage them more efficiently and dispose them within 3-5 years

• Proposed regulatory reforms will help banks conceptually differentiate Good

and Bad Banks, which in turn will allow to focus on different sets of strategies – aggressive growth for Good Banks, and efficient management and recovery of assets out of Bad bank

Banking Sector Landscape (cont’d)

Banking sector restructurings resulted in the loss of investor confidence and led to limited access to capital markets and high cost of funding for banks High level of NPLs still remains the key challenge for the banking sector as economic recovery has not been strong enough Banks are reluctant to extend new loans to corporate borrowers as most of them are distressed and cannot offer tangible collateral as asset prices has not recovered sufficiently Banks are hugely exposed to property markets where prices have fallen two-fold since its peak in 2007 and the recovery has been extremely slow so far

Addressing Outstanding Issues

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• III. New BTA Bank

a. Introduction b. New Governance Structure c. Members of the Board of Directors d. Loan Portfolio Structure e. Funding Structure f. New Debt Profile g. Financial Position h. Financial Performance i. IFRS vs. Regulatory report j. Strategy Update

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Introduction

New BTA post-restructuring

In Sep 2010 Bank successfully restructured US$16.7 bln debt which decreased to US$4.2 bln Bank was recapitalized by $11.2 bln and capital adequacy ratios are in compliance with local regulatory requirements Samruk-Kazyna became the main shareholder with 81.48%, the rest was distributed among creditors Significant changes in the corporate governance and the Board of Directors structure

Main Objectives

Proactive approach for CIS and Kazakhstan Corporate loan recovery and restructuring Restore market positions post-restructuring and return to profitability Local market orientation, special focus on SME and Retail Strengthen corporate governance and improved risk management Value maximization for shareholders and creditors

1 2 3 4 5

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CEO

• Audit committee
• Risk committee
• Compensation committee
• Recovery sub-committee

Board of Directors’ Committees

BUSINESS UNITS CORPORATE SERVICES

New Governance Structure

Retail Banking Finance and Risk Management Operations Corporate banking and Investment projects SME Banking Investment Activites

– Treasury – International

Problem Loans Legal and Compliance BOARD OF DIRECTORS Internal audit 4 SK nominees 2 Creditor Directors 3 Independent Directors

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Board of Directors

Arman Dunayev Chairman, Board of Directors Anvar Saidenov Member of the Board of Directors Yurki Talvite Member of the Board of Directors, Independent Director Aidan Karibzhanov Member of the Board of Directors Konstantin Korishchenko Independent Director, Member of the Board of Directors , Chairman of the Appointments and remunerations committee Bolat B. Babenov Member of the Board of Directors – Independent Director Christoph Schoefboeck Member of the Board of Directors – Creditor Director Chairman of the Audit Committee, Chairman of the Asset Recovery Committee Maarten Leo Pronk Member of the Board of Directors-Creditor Director Chairman of the Risk Committee Abay Iskandirov Member of the Board

• f Directors

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15,898 1,096 1,691 13,071 166 109 8,775 241 411

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Corporate SME Retail Gross loans Provision NPL

• Composition of Loan portfolio on a net basis is as follows:

Corporate – 52.9%; SME – 17.4%; Retail 29.6%

• Provisioning level by geography was as follows: Kazakhstan –

69%; non-Kazakhstan (mostly CIS) – 73%

• Historic Gross Loan book was a predominantly corporate one (85.1%),

with heavy exposure to real estate, construction and related industries

• Loan Loss provision amount decreased by 7.3% on YoY basis.

Provisioning ratio as of 31-Dec-2010 for each business segment was as follows: Corporate – 82.2% SME – 15.1% Retail – 6.4%

Oil & gas; 12.8% Real estate inv estments; 18.2% Other; 16.5% Agriculture; 6.0% Housing construction; 16.8% Wholesale trade; 12.1% Construction of roads and industrial buildings; 8.7% Retail customers; 9.1%

Corporate; 85.1% SME; 5.9% Retail; 9.1%

Loan Portfolio Structure

Source: BTA Bank Source: BTA Bank

($ mln)

Gross Loan Portfolio Breakdown – US$18.7 bln (2010) Industry Business Geographic segmentation Key Comments Provisions by Business

Non- Kazakhstan; 55.9% Kazakhstan; 44.1%

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8,774 9,911 6,054 7,290 2,731 6,696 2,000 4,000 6,000 8,000 10,000 12,000 Kazakhstan Non-Kazakhstan Gross Loans Provisions NPL

Wholesale trade 20% Oil & Gas 19% Real estate investments 14% Construction of roads and industrial buildings 11% Housing construction 10% Energy 5% Retail customers 4% Agriculture 4% Other 13%

Loan Portfolio Structure (cont’d)

Source: BTA Bank Source: BTA Bank Source: BTA Bank

($mln) ($mln)

• NPL – loan in which interest and/or principle payments are more than

90 days overdue

• NPLs have decreased by 32% YoY, due to decrease in Corporate

NPLs as a result of loan portfolio restructuring

• 71% of total NPLs relates to loans outside Kazakhstan for majority of

which legal and court proceedings are commenced

• Most of the NPLs are concentrated in Real estate, Construction and

Wholesale trade sectors

Breakdown of NPLs NPL Dynamics NPL by Industries Geographic segmentation Key Comments

Total: US$ 9,427mln

18,685 18,738 21,452 14,396 13,345 13,664 12,487 9,427 13,851

• 2,000

3,000 8,000 13,000 18,000 23,000 31-Dec-09 30-Jun-10 31-Dec-10 Gross loans Provision NPL 64.6% 66.6% 50.5% NPL ratio

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Amounts due to credit institutions ; 7.8% Amounts due to the Government and the NBK; 22.5% Amounts due to customers; 34.2% Debt securities issued; 33.6% Other liabilities; 1.9%

3,093 3,636 4,791 3,645 3,179 3,281 2,876 2,331 2,557 2,544 1,336 1,239 1,344 1,756 1,000 2,000 3,000 4,000 5,000 6,000 2H'07 1H'08 2H'08 1H'09 2H'09 1H'10 2H'10

Corporate Retail Non profit organizations; 1.40% Non-credit financial

• rganizations; 1.78%

Construction; 2.27% Individuals; 37.91% Wholesale trade; 2.44% Oil & Gas; 1.65% Other; 9.21% SK Group deposits; 43.34%

Funding Structure

Source: BTA Bank, audited consolidated financial statements

($ mln)

• Decrease of liabilities by 45% YoY and overall change in the funding structure relates to debt restructuring completed in September 2010, which

resulted in substantial deleveraging of the Bank

• As at 31- Dec - 2010 term deposits comprised US$3.7 bln - increase by 47.7% YoY
• Considerable retail deposit inflow contributed to the modest increase of the overall deposit base by 4.2% YoY (despite the deconsolidation of

Temirbank)

• Amounts due to the Government and NBK are mostly represented by 10 year REPO agreement with NBK on a monthly rolling basis, at NBK refinancing

rate (currently 7.5%). As at 11-May-2011 amount of funds utilized under REPO with NBK was US$2.47 bln or KZT 360.5 bln

• Total government related funding (including NBK and SK) comprised US$5.3 bln or 40% of Total Funding base

Key Comments Liabilities Structure Deposits Breakdown Deposit Dynamics

Total: US$13,561 mln Total: US$4,633 mln

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EUR, 412.25, 10% KZT, 479.82, 12% USD, 3,266.26, 78%

New Debt Profile

Source: BTA Bank Source: BTA Bank Source: BTA Bank

($ mln)

• On

01-Jan-2011 BTA made its first interest payment in the amount of US$165 mln under the new bonds issued as a result of restructuring

• On

31-Mar-2011 the Bank has repaid its first semi-annual installment of US$175 mln under the RCTFF Agreement

• BTA has grace period on principal repayments until 2015, except for

payments under RCTFF Agreement

• Average cost of new debt is 10.6%

Key Comments Debt Redemption Schedule Breakdown by Currency (US$ mln)

Security Description $ mln U.S.$ Senior Dollar Notes due 2018 2,208.36 KZT Senior Tenge Notes due 2018 275.02 U.S.$ Dollar Original Issue Discount Notes due 2021 204.62 EUR Euro Original Issue Discount Notes due 2021 376.95 U.S.$ 7.20 per cent. Dollar Subordinated Notes due 2025 382.65 EUR 6.75 per cent. Euro Subordinated Notes due 2025 35.3 KZT 11.2 per cent. Subordinated Tenge A Notes due 2025 52.79 KZT 8.0 per cent. Subordinated Tenge B Notes due 2030 152.01 RCTFF 470.63 TOTAL 4,158.33

Breakdown by Instruments

175 348 577 577 577 782 222 248 166 334 356 378 361 288 215 138 78 72

100 200 300 400 500 600 700 800 900 1,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Principal Interest

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Financial Position

Source: BTA Bank, Extracted from audited Consolidated Financial Statements as of 31-Dec-2010 Exchange rate at the end of 2010 was KZT 147.5 = US$ 1

• Decrease in Loans to customers by 24% is mainly associated with

the deconsolidation of Temirbank and net write-off of loans in 2010

• At the end of 2010 Bank has recognized Deferred tax assets only for

KZT 159 bln (or 42%) out of available KZT 380 bln and KZT 220 bln

• f Deferred tax assets remained unrecognized
• Increase in deposit base at a lower pace of 4.2% YoY is associated

with deconsolidation of Temirbank, whereas deposit base of BTA (standalone) increased by 14.6%YoY. Weighted average cost of total deposit base in 2010 was 7.8%

• BTA has KZT 612 bln of available funds under REPO with NBK - as

at the end of 2010 KZT 449 bln were utilized and the remaining available amount under REPO was KZT 163 bln

• As a result of US$16.7 bln debt restructuring the amount of debt

decreased to US$4.2 bln with effective interest rate of 10.6%, tenors extended from 1-5yrs to 8-20yrs – this significantly deleveraged the Bank

• Recovery Units in the amount of KZT 119.7 bln were recognized

under IAS 39 requirements on the balance sheet based on the fair value of the future cash flows the Bank expects to receive on the underlying recovery assets. KZT 25 bln of expected tax asset recovery was included as part of the Recovery Units

• Equity deficit decreased 16-fold as a result of conversion of BTA

Bonds by SK in the amount of KZT 671 bln into equity, net restructuring income of KZT 854 bln, and current year P&L effect

Key Comments Consolidated IFRS Balance Sheet

in KZT (mln) 2010 2009 Cash and cash equivalents and obligatory reserves 100,830 78,360 % of Total Assets 5.3% 4.0% Trading securities 82,257 115,784 % of Total Assets 4.3% 5.9% SK Bonds 530,963 512,246 % of Total Assets 28.0% 26.0% Loans to customers, Gross 2,756,042 3,164,181 Impairment provisions (1,968,424) (2,123,408) Provisioning ratio 71.4% 67.1% Loans to customers, Net 787,618 1,040,773 % of Total Assets 41.5% 52.9% Deferred tax assets 159,735 5,267 % of Total Assets 8.4% 0.3% Other assets 234,307 216,229 TOTAL ASSETS 1,895,710 1,968,659 Customer deposits 683,301 655,963 % of Total liabilities and equity 36.0% 33.3% NBK Repo funding 448,875 404,938 % of Total liabilities and equity 23.7% 20.6% Debt securities issued including: 672,650 1,668,602 Senior Debt 515,252 1,513,151 Subordinated debt 115,742 180,602 Recovery units 119,787 Other (6,407) (3,266) Unamortized (discount)/ premium (71,724) (21,885) % of Total liabilities and equity 35.5% 84.8% Other liabilities 195,397 928,976 Equity (104,513) (1,689,820) TOTAL LIABILITIES AND EQUITY 1,895,710 1,968,659

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Financial Performance

• Interest income decreased by 17% YoY. The breakdown is as follows
• KZT 88 bln from Corporate, KZT 21 bln from SME, and KZT 38 bln

from Retail

• Decrease in interest expense by 19% YoY is associated with

substantial deleveraging

• Interest expense on debt securities in 2010 included accrued interest
• n old debts in 1H 2010
• Impairment charge breaks down into net impairment charge on Loan

portfolio of KZT 31 bln and on Amounts due from credit institutions of KZT 14 bln

• Increase in Net Trading Loss is associated with change in fair value
• f IR swaps (accelerated as a result of restructuring) and effect of

Alliance debt restructuring of KZT 7 bln

• Income on disposal of subsidiaries represents the deconsolidation

effect of Temirbank amounting to KZT 38 bln

• As a result of debt restructuring BTA booked KZT 854 bln income

(KZT 970 bln as a haircut less recognition of liability to Recovery Unit holders of KZT 116 bln)

• Bank recognized Deferred tax benefit in the amount of KZT 156 bln

based on the bank’s expectation of the future taxable income.

Source: BTA Bank, Extracted from audited Consolidated Financial Statements as of 31-Dec-2010 Average exchange rate in 2010 was KZT 147.35 = US$ 1

Key Comments Consolidated IFRS Income Statement

in KZT (mln) 2010 2009 Interest income 196,867 237,725 Loans to customers 147,076 189,523 SK Bonds 34,774 28,551 Other 15,017 19,651 Interest expense (209,382) (257,663) NBK Repo Funding (28,831) (22,195) Customer deposits (43,794) (45,810) Debt securities issued (117,379) (141,611) Other (19,378) (48,047) Net interest expense before impairment (12,515) (19,938) Impairment charge (45,717) (754,254) Net interest expense (58,232) (774,192) Non interest income / (loss) 61,650 (302,666) Net trading loss (25,383) (2,965) Income / (loss) on disposal of subsidiaries 38,590 (3,075) Non interest expense (26,746) (37,050) Income from restructuring 853,914 Income / (loss) before income tax expense 830,586 (1,113,908) Income tax benefit / (expense) 155,679 (626) Net income / (loss) 986,265 (1,114,534)

23 Difference in Equity under IFRS and Standalone Regulatory report of KZT290 bln resulting from:

1 – difference is the level of impairment provisioning of KZT244 bln 2 – the recognition of liabilities to Recovery Unit holders of KZT119 bln 3 – the recognition of Deferred tax benefit of KZT156 bln 4 – Other insignificant differences, such as BTA treasury shares held by subsidiaries, revaluation of investments, etc.

• Regulatory Capital increase and compliance with all the regulatory adequacy

requirements were key objectives in implemented Restructuring model but not IFRS capital

• Financial Covenants included in the Trust Deed are based on Regulatory

Capital, and currently BTA Bank is not in breach of any Financial and Non- financial Covenants

• Currently BTA Bank complies with all Regulatory requirements as well

IFRS vs. Standalone Regulatory

Selected Financials: Standalone

(KZT bln)

IFRS Regulatory

Assets 1,896 1,994 Net Loans 788 964 Liabilities 2,000 1,813 Equity (105) 181

Key Comments Comparison

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• Maximizing return on loans: implementing phase 3 of loan restructuring program with more

aggressive approach to encourage loan repayment, focusing on CIS and property related portfolio

• Minimizing cost of funding: renegotiating NBK funding cost, and/or replacing with cheaper

sources in local market with excessive liquidity

• Rebalancing loan portfolio: shifting from distressed Corporate loans to higher yielding SME and

Retail business (target by 2015 – 60%, 20% and 20% respectively)

• Filed claims in London court against former shareholder in excess of US$4 bln
• Assets frozen and independent receiver appointed
• Political motivation claim rejected, court hearings scheduled in 2012
• Significant advancement on litigations in 2012-13 should give more visibility on asset recovery
• Negotiations with co-lenders in CIS are progressing, including the sale of BTA claims
• Cost cutting through optimization of organizational structure and staff count
• Optimizing rental expenses on head-office and branch network levels
• Managing other non-operating costs more efficiently through outsourcing support functions
• Revising motivation programs to improve employees performance
• Consolidated 3 insurance companies and 2 pension funds
• Focused on disposal overseas/domestic investments that should have substantial positive impact
• n capital, including non-core businesses (insurance, pension funds) and foreign banks

Strategy Update

Dealing with non-core assets and foreign investments Negative carry – effective yield on Assets is 5.5% whereas cost of Liabilities is 8.6% Asset Recovery - Litigations and Court proceedings against former shareholders Optimizing non-operating and administrative costs

Addressing Outstanding Issues