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JSC Kazkommertsbank (JSCD)

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Monday 04 September, 2000

JSC Kazkommertsbank

Interim Report

JSC Kazkommertsbank
29 August 2000

                           FOR THE FIRST HALF 2000

The purpose of this press release is to discuss JSC Kazkommertsbank (the Bank)
performance for 6 months ended on 30 June 2000 in comparison to the respective
period in 1999.

Disclaimer: Results for the 6 months ended 30 June 2000 and 1999 are not quite
comparable due to sharp devaluation of local currency (Kazakh tenge or KZT) in
April 1999.  In 1H 1999 local currency devalued by 58%, while depreciation in
the 1H 2000 was minor 3%.  We would like the readers to consider this fact.

Financial Performance

We are please to announce that for the 6 months ended 30 June 2000 net income
increased by KZT526.3 million or 42.4% to KZT 1,766.9 million (KZT6.19 per
diluted share) compared to KZT1,240.6 million (KZT4.34 per diluted share) for
the same period in 1999.

The increase in net income is a direct result of the Bank's improved operating
income, which increased by KZT 1,075.6 million or 35.3% to KZT4,122.5 million
from KZT3,046.9 million in 1H 1999.  For the six months ended 30 June 2000 net
interest after provision for loan losses amounted to KZT 1,857.8 million
compared to a loss of KZT 378.7 million for the comparable period in 1999.

In the first half of 1999, due to a significant devaluation of the tenge and
concerns about the economy, the Bank created provisions for loan losses of 
KZT3,269.0 million and made write-offs of KZT 1,966.3 million.  For the six
months ended 30 June 2000, due to the improved economic environment in
Kazakhstan, a reversal of the provision on loan losses of KZT 431.3 million was
recorded, including recovery of previously written off loans of KZT 1,634.8
million.  As of 30 June 2000, the reserve for loan losses as a percent to total
loans was 10.9%.  At 30 June 1999, the reserve for possible loan losses
represented 10% of the total loan portfolio.

Net interest income before the loan loss provision decreased by KZT1,463.8
million or 50.6% to KZT 1,426.4 million in the first half of 2000 compared to
KZT 2,890.3 million in the first half of 1999 due to provisions on accrued
interest of KZT 1,186.9 million on a related party loan.  Interest income before
provisions on accrued interest increased by KZT 242.7 million to 
KZT 6,631.0 million from KZT 6,388.2 million, while interest expense were up
KZT 519.6 million to KZT 2,929.5 million from KZT 2,409.9 million.  This was a 
result of period average interest bearing assets and liabilities growth.

Non-interest income declined by KZT 1,160.9 million to KZT 2,264.8 million in 
2000 compared to KZT 3,425.7 million in 1999, which is attributable to negative
change in the Bank's net monetary position due to stabilisation of Tenge and a 
lower net foreign currency position in 2000 compared to 1999.  This resulted in
a loss of KZT 48.0 million in 2000 compared to a gain of KZT 2,284.4 million in
1999.  In the first half of 2000, a loss on foreign exchange operations was 
realized in the amount of KZT 23.1 million compared to a gain of KZT 268.4
million in 1999 due to a single hedging transaction with a non-related party's
tenge deposit which resulted in an accounting loss of KZT 234.2 million.

In the first six months of 2000, the Bank recorded an unrealized gain of 
KZT 964.0 million from its securities dealings operations.  There was no income
recognition in respective period 1999.  The securities dealings operations
relate to the Bank's Eurobonds that mature in May 2001.

Net fees and commission income was up by KZT 689.9 million to KZT 1,050.7
million for the first six months of 2000 compared to KZT 360.8 million in 1999
as a result of larger volumes and substantial reduction in the fees and
commissions paid on fund-raising programs.

Equity income from associated companies declined to KZT 232.1 million from
KZT 341.6 million primarily as a result of a revaluation of the Bank's interest
in ABN Amro Bank Kazakhstan under the equity method of accounting.

Operating expenses were up by KZT 603.7 million or 33.8% to KZT 2,392.0 million
from KZT 1,788.3 million, as a result of increase in salaries of staff, since
salaries are linked to US$ for the majority of employees.  Meanwhile, the Bank
managed to keep operating expenses relatively low at 58.0% of operating, income,
compared to 58.7% in 1999.

The total assets of the Bank increased by KZT 19,768.6 million or 29.2% to 
KZT 87,467.4 million from KZT 67,698.9 million at 30 June 1999 while total
liabilities increased by KZT 16,337.9 million or 29.1%.

During the first half of 2000 due to the improved liquidity on the market in
Kazakhstan and the growth of the Bank's clientele, the Bank increased its
customer deposit base by 147% to KZT 33,488.3 million from KZT 13,546.2 million.
As a result the share of customer accounts of total liabilities grew
to 46.2% from 24.2%.  The increase enabled the Bank to reduce higher cost debt
and as a result, loans and advances from banks decreased at 30 June 2000 by
KZT 6,440.2 million to KZT 15,619.6 million compared to KZT 22,059.8 million at
30 June 1999.  In the first half 2000, the Bank attracted a US$20 million 
syndicated loan and borrowed US$10 million under a credit line from German
banks.  Management believes that strong franchise of the Bank and its aggressive
marketing programs enable it to increase local funding and to attract funds at
affordable rates.

The ability of the Bank to attract funds also enabled it to increase its dealing
securities position by KZT 15,705.7 million to KZT 16,838.5 million at
30 June 2000 from KZT 1,132.8 million at 30 June 1999.  Due to increased short-
term liabilities and cash management requirements, the Bank increased its loans
and advances to banks by KZT 7,510.3 million during the first six months of 

Net loans to customers decreased by KZT 2,452.0 million to KZT 47,731.9 million
from KZT 50,183.9 million, which the Bank sees as a prudent move in
re-allocating its resources.  The decrease is attributed to partial repayment of
the related party loan.

At 30 June 2000 compared to 30 June 1999, the Bank's position in investments
decreased by KZT 2,700.2 million or 52.2% to KZT 2,476.7 million from 
KZT 5,176.8 million largely as a result of the sales of its investments in the
Shymkent Oil Refinery and KatelCo which occurred in late 1999.

Equity capital reached its highest level ever to KZT 15,053.8 million (or
17.2% of assets) from KZT 11,623.1 million (or 17.1% of assets).  Return on
average equity improved to 25.2% from 24.3%.  Tier-1 and total capital adequacy
ratios stayed at 16.7% and 20.3%, respectively.  Book value of an ordinary
voting share reached KZT 52.75, which translates into book value of ADR/GDR of
KTZ 1,582.5 OR US$11.0.

The Board of Directors of the Bank believes that at current prices the Bank's
GDRs on international markets are undervalued.  At a shareholders' meeting 
scheduled for 11 September 2000, the Board of Directors will discuss this issue
as well as considering measures to improve the stock performance.  Mr. Nurzhan
Subkhanberdin, the Chairman of the Board, stated that 'Maximising of the 
shareholder's value is the top priority for the Board.  We may consider
corporate actions, including stock buy-back program to improve current


Kazkommertsbank is a private bank, which ranks the first in Kazakhstan by
equity, assets and loan portfolio.  GDRs are listed on the London Stock
Exchange, the Istanbul Stock Exchange and are traded on the OTC market in
Frankfurt and Berlin Stock Exchanges.  The free float is over 32% of total
issued capital.


Certain statements in this report are 'forward looking statements' within the 
meaning of the Private Securities Litigation Reform Act of 1995.  All forward
looking statements involve risks and uncertainties.  In particular, any 
statement contained herein, in press releases, written statements or in the
Bank's communications and discussions with investors and analysts in the normal
course of business through meetings, phone calls and conference calls, regarding
the consummation and benefits of future prospects, as well as 
expectations with respect to future earnings, cash flows, operating
efficiencies, product expansion, financings and share repurchases, are subject
to known and unknown risks, uncertainties and contingencies, many of which are
beyond the control of the Bank, which may cause actual results, performance or
achievements to differ materially from anticipated results, performances or 
achievements.  Factors that might affect such forward looking statements
include, among other things, overall economic and business conditions; the
demand for the Bank's services; competitive factors in the industries in which
the Bank competes; changes in government regulation; changes in tax requirements
(including tax rate changes, new tax laws and revised tax law
interpretations); results of litigation; interest rate fluctuations and other
capital market conditions, including foreign currency rate fluctuations;
economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital across
borders and the timing, impact and other uncertainties of future actions.

For further information, please contact

Mr Eldar S. Abdrazakov, Director, Investment banking    007 3272 585 110
Mr Andrey Tolochenko, Capital Markets                   007 3272 585 116


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