- The lease term is for the major part of the economic life of the asset even if title is not transferred;

- At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; and

- The leased assets are of a specialized nature such that only the lessee can use them without major modifications being made.

The Group as a lessor presents finance leases as loans and initially measures them at an amount equal to the net investment in the lease. Subsequently, the recognition of finance income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment in the finance lease.

Before commencement date property, plant and equipment purchased for future transfer to the financial lease is recognized in the consolidated financial statements as property and equipment purchased to transfer to finance lease at cost.

A non-current asset is classified as held for sale if it is highly probable that the asset's carrying amount will be recovered through a sale transaction rather than through continuing use and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification of an asset as held for sale.

Non-current assets held for sale are measured at the lower of its carrying amount and fair value less costs to sell. If the fair value less costs to sell of an asset held for sale is lower than its carrying amount, an impairment loss is recognized in the consolidated income statement as a loss from non-current assets held for sale. Any subsequent increase in an asset's fair value less costs to sell is recognized to the extent of the cumulative impairment loss that was previously recognized in relation to that specific asset.

Property, equipment and intangible assets are carried at historical cost less accumulated depreciation and any recognized impairment loss. Depreciation is charged on the carrying value of property and equipment and is designed to write off assets over their useful economic lives.

Table 2 - Depreciation is calculated on a straight line basis at the following annual prescribed rates

Buildings and other real estate	1-50%
Furniture and computer equipment	2-20%
Intangible assets	12-60%
Note: compiled by the author

Leasehold improvements are amortized over the shorter of the life of the related leased asset or the lease term. Expenses related to repairs and renewals are charged when incurred and included in operating expenses unless they qualify for capitalization.

The carrying amounts of property and equipment are reviewed at each reporting date to assess whether they are recorded in excess of their recoverable amounts. The recoverable amount is the higher of fair value less costs to sell and value in use. Where carrying values exceed the estimated recoverable amount, assets are written down to their recoverable amount, an impairment is recognized in the respective period and is included in operating expenses. After the recognition of an impairment loss the depreciation charge for property and equipment is adjusted in future periods to allocate the assets' revised carrying value, less its residual value (if any), on a systematic basis over its remaining useful life.The Group regularly reviews its loans and receivables to assess for impairment. The Group's loan impairment provisions are established to recognize incurred impairment losses in its portfolio of loans and receivables.

The Group considers accounting estimates related to the allowance for impairment of loans and receivables a key source of estimation uncertainty because (i) they are highly susceptible to change from period to period as the assumptions about future default rates and valuation of potential losses relating to impaired loans and receivables are based on recent performance experience, and (ii) any significant difference between the Group's estimated losses and actual losses would require the Group to record provisions which could have a material impact on its financial statements in future periods.

The Group uses management's judgment to estimate the amount of any impairment loss in cases where a borrower has financial difficulties and there are few available sources of historical data relating to similar borrowers. Similarly, the Group estimates changes in future cash flows based on past performance, past customer behavior, observable data indicating an adverse change in the payment status of borrowers in a group, and national or local economic conditions that correlate with defaults on assets in the group. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the group of loans. The Group uses management's judgment to adjust observable data for a group of loans to reflect current circumstances not reflected in historical data. The allowances for impairment of financial assets in the consolidated financial statements have been determined on the basis of existing economic and political conditions. The Group is not in a position to predict what changes in conditions will take place in countries in which it operates and what effect such changes might have on the adequacy of the allowances for impairment of financial assets in future periods.

Impairment of tangible assets At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.

An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Table 3 - The effect of the adjustments made to cash and cash equivalents as at 31 December 2015 is as follows

Consolidated statement of financial position	Amount	Statement of financial position line as per previous report	Statement of financial position line as per restated report
Reclassifying due from banks to cash and cash equivalents (maturity less than 3 months)		31 December 2015	31 December 2015
Cash and cash equivalents	98,922	24,361	123,283
Reclassifying due from banks to cash and cash equivalents (maturity less than 3 months)		31 December 2017	31 December 2017
Cash and cash equivalents	91,202	43,020	134,222
Note: compiled by the author

Certain reclassifications have been made in the consolidated financial statements as at 31 December 2013, 2014 and for the year then ended to conform to the presentation as at 31 December 209 and for the year then ended. Such 15reclassifications were made in order to conform to the presentation of the Group's largest shareholder and also Management of the Group considers the current year presentation provides a clearer view of the financial position of the Group. These reclassifications include: (a) reclassifying certain due from banks to loans to customers and banks, (b) reclassifying perpetual debt and subordinated loan to due to banks and financial institutions, and (c) reclassifying certain due to banks to customer and banks accounts.

Table 4 - These reclassifications have no impact on the consolidated financial results of the Group

	Amount	Statement of financial position line as per previous report	Statement of financial position line as reclassified
		31 December 20015	31 December 2015
Due from banks (*)	(145,929)	150,364	4,435
Loans to customers and banks	47,007	601,221	648,228
Due to banks and financial institutions	10,774	185,274	196,048
Customer and banks accounts	10,809	427,381	438,190
Subordinated bonds	(21,583)	57,173	35,590
		31 December 20014	31 December 20014
Due from banks (*)	(111,361)	119,245	7,884
Loans to customers and banks	20,159	625,655	645,814
Due to banks and financial institutions	(38,858)	258,208	219,350
Customer and banks accounts	54,855	313,444	368,299
Subordinated bonds	(15,997)	43,984	27,987
Note: compiled by the author

(*) The due from banks amounts reclassified also include the effects of the change in the accounting policy.

JSC "Bank CenterCredit" to achieve strategic goals of the country established by the Development Strategy of Kazakhstan 2020, the State Program of Accelerated Industrial-Innovative Development of Kazakhstan for 2010 -2014 (hereinafter - the SPAIID), development programs in rail industry, energy, oil and gas sector, etc. in compliance with the Law “On State Property” and the Decree of the President of Republic of Kazakhstan “On the System of State Planning in the Republic of Kazakhstan”.

Table 5 - Besides, the following macroeconomic indicators had an impact on activities of the Fund during 2015.

Description	2015 Actual	2014 Actual	Change, in %
Real GDP growth, in %	105,0	107,1	-2,1
Inflation at the end of period, %	6,8	5,1	1,7
Exchange rate of KZT to USD	149,1	145,8	3,3
World Brent oil price, USD/ barrel on average for the year for the reporting period	111,6	111,3	0,3
Note: compiled by the author

The interaction of the JSC "Bank CenterCredit" with the Government of the Republic of Kazakhstan is an integral part of the Fund's operations due to versatile nature of the functions of the Government of the Republic of Kazakhstan with respect to the Fund: the Shareholder, the tariff regulator, the government and industry programs coordinator.

In accordance with the consolidated financial statements of the Fund for year 2015 and IFRS, the total amount of dividends distributed by the Fund to the Shareholder in year 2015 is KZT 168,2 billion, in particular:

- The dividends of the Fund in the amount of KZT 9.1 billion for the period of 2010 that was calculated in accordance with the Decree of the Government of the Republic of Kazakhstan # 139 dated January 19, 2015, which was transferred to the state budget on December 13, 2014 under the decision of the Board of Directors # 67 dated July 20, 2014;

- The dividends of the Fund in the amount of KZT 159.1 billion for the period of 2014 paid according to the Decree of the Government of the Republic of Kazakhstan # 850 dated June 26, 2015, exceeding the planned estimate (KZT 9.1 billion). The increase was due to payment of an additional dividend of KZT 150.1 billion for acquisition of 100% share in “Company for Managing Shares in the Final Production Sharing Agreement” LLP according to the Decree of the Government of the Republic of Kazakhstan # 570 dated May 3, 2015;

Furthermore other distributions in favor to the Shareholder for year 2015 of the Fund's companies, which under the IFRS are recognized as dividends for a total amount of KZT 63.9 billion, in particular:

- Construction and transfer of facilities in the amount of KZT 49.5 billion: an obligation, under a Government degree, in relation to the construction of the following objects in Astana city: Kazakhstan History Museum, Building for a teleradio-complex, Ice Palace and reconstruction of the World Expo-Center (the Expo-Center”) in Moscow; obligations on the transfer of the North-Caspian ecological base for oil spill response to the Ministry of Emergency Situations of the Republic of Kazakhstan;

- Sponsorships under the Shareholder's request in the amount of KZT 14.4 billion, including of the Fund in the amount of KZT 9.1 billion by Decree of the Government of the Republic of Kazakhstan for financing the Fifth Astana Economic Forum, according to the Minutes of the meeting with the Prime Minister of the Republic of Kazakhstan/In overall the Group of Companies of the Fund in 2015 paid taxes and payments amounting to KZT 800 billion which was more by 8.3% and 32.3% compared to 2014 and 2010, accordingly. The bulk of taxes and fees were the charges on export tax (20%) and corporate income tax (19.7%). This type of taxes in 2015 compared to 2014 has increased by 7% and 25%, respectively due to rising world oil prices and increase of rent tax from 16% to 22%. The Group of the Fund is a driving force of investment activity in the country. The Fund raises own and borrowed funds, as well as direct foreign investments for implementation of projects by having strong positions in several key sectors. The Fund's investment program carried out through subsidiaries comprised of 100 major investment projects being implemented or in progress totaling to KZT 12.1 trillion.

Table 6 - The following is the segment structure for respective investment projects. Billion Tenge

Segment	Current investment portfolio	Perspective projects
	Total number of investment portfolio	Projects implemented in 2015	Projects in progress	Number	Amount
	Number	Amount	Number	Amount	Number	Amount
Oil and Gas	31	7 111	9	1 091	22	6 020	32	4 134
Chemistry	7	1 031	-	-	7	1 031	6	1 502
Transportation	22	2 311	13	353	9	1 958	6	116
Telecommunication	5	199	-	-	5	199	-	-
Energy	8	1 223	2	64	16	1 159	32	1 997
Mining and Industrial	8	192	-	-	8	192	-	-
Atomic	2	44	1	5	1	40	-	-
Mechanical engineering	7	29	2	10	5	19	3	3
Total	100	12 140	27	1 522	73	10 619	79	7 752
Note: compiled by the author

The Fund continues its participation in achieving objectives of diversification and modernization of national economy according to messages of the President of the Republic of Kazakhstan, the SPAIID, Strategic Development Plan of the Republic of Kazakhstan up to 2020 and other strategic and policy documents of the country.

The Fund implemented 18 investment projects worth about KZT 4.2 trillion as part of SPAIID. The investment projects comprise of oil and gas, chemical, transportation, energy, mining and industrial segments. The implementation of certain projects would allow creating additional 38 thousand workplaces during construction and more than 16 thousand jobs during the activity operations.

Projects implemented as part of public, sector programs, as well as under the Government messages do not fulfill the minimum requirements of Companies of the Fund on capital return. Therefore, Companies, as a matter of fact, receive funding from the state budget and the National Fund of the Republic of Kazakhstan for implementation of social projects.

For purpose of minimizing foreign exchange risks Companies of the Fund carry out a part of borrowings from domestic capital market. An additional source of funding for capital expenditure will be resources received from the IPO. The intra-group financing in the Group of the Fund is applied as well.

Table 7 - Consolidated financial indicators

Description	Unit of measure	2015	2014	Change, (+/-)	Change, in %
Consolidated net profit	KZT billion	1 135.4	350.6	784.8	224
Consolidated net profit on the share of a shareholder of a parent Company	KZT billion	1 065.1	330.0	735.1	223
EBITDA margin	%	18.2	16.2	2.0
ROA	%	7.9	2.7	5.2
ROE	%	17.3	6.3	11.0

Table 8 - The main items of income statement

Description	2015	2015, KZT billion	2014	2014, KZT billion	Changes, in KZT billion	Changes, in %
	in % to revenue from sales	in % to operating expenses		in % to revenue from sales	in % to operating expenses
Revenue from sales and interest income	100	120	4 911.0	100	105	4 400.4	511	12
Operating expenses	83	100	4 097.7	95	100	4 198.0	-100	-2
Cost of sales and interest expenses	73	87	3 568.7	73	76	3 191.9	377	12
Gross profit (including governmental subsidies)	28	33	1 370.1	28	29	1 232.9	137	11
Administrative expenses	9	10	420.6	10	10	437.7	-17	-4
Sales and distribution expenses	8	9	377.2	8	9	367.2	10	3
Reversal of losses from impairment of assets	4	4	179.8	6	7	285.5	-106	-37
Losses from impairment of assets	8	10	416.5	12	12	517.6	-101	-20
Operating profit	17	21	841.2	5	5	226.7	615	271
Share in income of associates and joint ventures	11	13	538.8	14	15	611.2	-72	-12
Income tax expenses	5	6	250.7	8	9	367.2	-117	-32
Profit from discontinued operations	4	5	202.4	1	1	29.2	173	593
Net profit	23	28	1 135.4	8	8	350.6	785	224

The change in net profit in 2015 compared to the year 2014 amounted to KZT 784.8 billion which was mainly influenced by increase of cost of sales, as well as decrease in share in income of associates and joint ventures. Besides, the share of administrative expenses to revenue from sales in 2015 compared to 2014 decreased which resulted in rise of net profit. In addition, the influence of changes in sales and distribution expenses, as well as losses from impairment of assets was insignificant - the share of these expenses to operating expenses has decreased.

Table 9 - The following are key factors in net profit change in 2015 compared to the same period of 2014.

Factors	Changes in KZT billion
Net profit (KZT 1 135.4 billion for 2015; KZT 350.6 billion for 2014)	784.8
inclusive of:
other operating income from banking activities mainly due to gain from debt restructuring of JSC "Bank CenterCredit" financial liabilities	1 083.3
other operating income from banking activities mainly due to expenses on recognition of recovery obligations (bonds) at nominal amount per JSC "Bank CenterCredit"	-605.9
revenue increase by 510.7, mainly due to increase in sales volume of oil products (KZT 120 billion), crude oil (KZT 127 billion), medicines by “Samruk-Kazyna Pharmacy” JSC (KZT 24.8 billion), electricity (also including “East Kazakhstan Regional Energy Company” JSC into consolidation (KZT 22.2 billion), civilian products and dual-purpose products by “Kazakhstan Engineering” JSC (KZT 18.1 billion) as well as the services of freight and passenger rail transportation by “KTZh” JSC (KZT 95 billion) and air transportation by “Air Astana” JSC (KZT 17 billion)	57.7
increase operational efficiency without STB, mainly as a result of optimization of the GAE (mainly due to the increase of tariffs on traded services and works (over 60 billion), as well as reduce the sponsorship and charity (33.3 billion)	72.0
increase of losses from impairment of assets without STB, mainly due to impairment of fixed assets of KMG EP JSC (KZT 29.4 billion) due to decrease in crude oil production for the last 2 years; due to recognition of difference between book and fair value of equity securities of “Kazakhmys” PLC (KZT 86.1 billion), and the reversal of losses from impairment of DBK assets (KZT 27.6 billion)	-89.7
decrease in losses from impairment of assets mainly by BTA Bank JSC (KZT 157.3 billion) due to recognition of difference between book and fair value of equity securities of “Kazkommertsbank” JSC (KZT 60.7 billion)	85.0
increase in profit from discontinued operations, mainly as a result of the sale in 2015 of 49% share interest in “GSM Kazakhstan” LLP of “Kazakhtelecom” OJSC for KZT 200 billion, as well as share in income classified as discontinued operations for KZT 31.1 billion	169,9
increase of income tax expenses without STB due to revenue increase	-22.7
decrease in STB income tax expenses due to recovery of BTA Bank JSC's tax assets on transfer of losses that were recognized in 2014	139.2
decrease in share in income without STB mainly from the following associates and joint ventures: - “Tengizchevroil” LLP by 35.6 billion; - “Mangistau Investments B.V.” by KZT 16.2 billion; - “PetroKazahstanInc.” by KZT 14.0 billion; - “Katco” JV by KZT 10.4 billion	-70.2
decrease in finance income primarily due to lower interest rates on deposits placed in second-tier banks	-11.4
increase in finance costs mainly by KTZh as a result of increase in debt for Eurobonds and loans	-14.3
increase in foreign exchange losses	-15.5
other	7,4
Note: compiled by the author

The Fund jointly with large companies have developed a medium-term Program on cost reduction within the Group of the Fund up to 2015, aimed at optimizing both cost and other expenses through diagnosis and analysis of business processes and others. The Fund plans to get the first results in H1, 2013. Moreover, in early 2015 at the initiative of the Fund, companies took measures to reduce administrative expenses of conporate centers of the Group of the Fund by 4.8 KZT billion, and the personnel number by 1.9 thousand people.

The Group of the Fund is working towards optimization of asset structure of its companies, including non-core assets. Currently, KMG, KAP, KTZh and Samruk-Energy has adopted the appropriate Action Plans which are under implementation process.

The increase in financial performance indicators (KPI) “EBITDA margin”, “ROA” and “ROE” in the reporting period compared to 2014 has been influenced by the factors of adjustment of the consolidated net profit, descibed above.

Table 10 - In compliance with the Law of the Republic of Kazakhstan “On Sovereign Wealth Fund” JSC "Bank CenterCredit" are not included into the Group of the Fund according to which the information on the consolidated financial results is given without the JSC "Bank CenterCredit".

Description	Unit of measure	2015	2014	Change, (+/-)	Change, in %
Consolidated net profit	KZT billion	791.4	718.4	73.0	10
Consolidated net profit on the share of a shareholder of a parent Company without the STB	KZT billion	628.4	630.0	-1.6	0
EBITDA margin	%	19.3	17.8	1.5
ROA	%	6.2	6.0	0.2
ROE	%	12.6	11.4	1.2
Note: compiled by the author

Table 11 - The following table provides information on major items of comprehensive income.

Description	2015	2015, KZT billion	2014	2014, KZT billion	Changes, in KZT billion	Changes, in %
	in % to revenue from sales	in % to operating expenses		in % to revenue from sales	in % to operating expenses
Revenue from sales and interest income	100	110	4 694.9	100	109	4 179.8	515.1	12
Operating expenses	92	100	4 306.0	92	100	3 828.1	478	12
Cost of sales and interest expenses	73	79	3 418.4	72	79	3 025.4	393	13
Gross profit	28	30	1 304.4	28	31	1 178.8	125.6	11
Administrative expenses	7	8	334.0	8	9	344.1	-10.1	-3
Sales and distribution expenses	8	9	377.2	9	10	367.2	10	3
Reversal of losses from impairment of assets	1	1	56.7	2	2	89.5	-32.8	-37
Losses from impairment of assets	5	6	238.8	4	5	181.9	56.9	31
Other operating profit, net	0	0	5.6	0	0	1	4.6	441
Operating profit	9	10	416.7	9	10	376.2	40.6	11
Share in income of associates and joint ventures	11	12	534.0	14	16	604.1	-70.2	-12
Income tax expenses	5	6	247.7	5	6	225.7	22	10
Profit from discontinued operations	4	5	202.4	1	1	32.5	169.9	523
Net profit without STB	17	18	791.4	17	19	718.4	73.0	10
Note: compiled by the author

The change in net profit in 2015 compared to the year 2014 amounted to KZT 73 billion which was mainly influenced by decrease of share of administrative expenses, sales and distribution expenses to revenue from sales and operating expenses; besides, there were negative effect on profit due to growth in losses from impairment of assets, income tax expenses, as well as decrease in reversal of losses from impairment of assets and share in income of associates and joint ventures.

Table 12 - The following table provides key factors of net profit changes without STB in 2015 compared to 2014.

Factors	Changes in KZT billion
Net profit without STB (KZT 791.4 billion in 2015; KZT 718.4 billion in 2014)	73.0
inclusive of:
Net profit including Banks (KZT 1 135.4 billion for 2015; KZT 350.6 billion for 2014)	784.8
other operating income from banking activities mainly due to gain from debt restructuring of JSC "Bank CenterCredit" financial liabilities	-1,083.3
other operating income from banking activities mainly due to expenses on recognition of recovery obligations (bonds) at nominal amount per BTA Bank JSC	605.9
decrease in impairment of assets, mainly BTA Bank (KZT 157.3 billion), in recognition of the difference between the original and the fair value of the equity securities of JSC "Bank CenterCredit" (KZT 60.7 billion)	-85.0
decrease in income tax expense due to the recovery of STB amount of tax assets of JSC "Bank CenterCredit" transfer of losses that were recognized in 2014	-139.2
other factors associated with STB	-10.2
Note: compiled by the author

In the long term, the Fund does not intend to hold share in JSC "Bank CenterCredit". The Fund will develop proposals for sale of its owned shares in second-tier banks, carry out search and negotiations with potential investors. Before the sale of shares of JSC "Bank CenterCredit", the Fund will continue to work actively to restore their financial position.

Table 13 - Financial indicators for 2015 by the segments and capital expenditure KZT billion

Description	Oil & Gas	Mining and Industrial	Transportation	Telecommunications	Energy	Financial and Development Institutes	Corporate Centre and Projects
Revenue from sales and interest income	2 960.4	374.3	932.2	200.4	183.7	349.3	469.3
Cost of sales and interest expenses	2 090.8	287.4	661.8	144.1	146.1	282.3	159.0
Gross profit	869.6	86.9	270.4	56.3	37.7	67.0	310.3
Administrative expenses	156.1	30.7	84.0	24.4	14.1	99.2	20.2
Sales and distribution expenses	360.7	4.4	6.2	5.4	0.6	0.0	1.9
Reversal of losses from impairment of assets	1.9	0.4	1.3	0.6	0.9	174.9	282.1
Losses from impairment of assets	96.7	3.8	2.1	-5.2	0.6	172.0	302.1
Other operating income from banking activities	0.0	0.0	0.0	0.0	0.0	1 148.5	16.2
Other operating costs from banking activities	0.0	0.0	0.0	0.0	0.0	694.7	0.0
Operating profit	257.9	48.4	179.4	32.3	23.2	424.5	284.4
Note: compiled by the author

The following charts present the indicators of affiliates considering consolidation adjustments at the level of the Fund.

Figure 2 - Consolidated Net Profit for year 2015 by companies, in KZT billion Note: compiled by the author



Figure 3 - Consolidated Net Profit for year 2014 by companies, in KZT billion Note: compiled by the author

Figure 4 - EBITDA for year 2015 by companies, in KZT billion

Note: compiled by the author

Figure 5 - EBITDA for year 2014 by companies, in KZT billion

Note: compiled by the author

Then, the presented segment analysis is based on production figures from the reports on implementation of development plans of the subsidiaries and data of the audited financial statements of subsidiaries for 2014-2015.

As of 01.01.2014, the number of borrowers from the total number of legal entities in Serviced Bank CenterCredit is 17323 or 2.96%, this rate reached the level of 3.18% in the last year (18,567).

Figure 6 - Percentage of borrowers of the total number of legal entities.

Note compiled by the author

Table 14 - The share of borrowers of the total number of legal entities

	01.01.2013	01.01.2014	01.01.2015	01.10.2015
Entities	15497	17323	18657	19539
Borrowers	414	513	594	598
* Note - compiled by the author based on the source [6]

Number of legal as well as the number of borrowers is increasing every year. Thus, in comparison with the beginning of the year the number of legal entities increased from 18657 to 19539, of which the share of borrowers in the same period amounted to 594, 598, respectively.

Figure 7 - loans to individuals Market in Almaty, including BCC branch in tenge.

Note compiled by the author based on the source [1].

The total amount including individuals' loans are serviced in the BCC in 2013 amounted 1122142mln. tenge, the index increases over time. Market individuals loans branch at the end of the year -. 120.641 billion tenge, which is 5% above the amount obtained in 2014 (114.824 billion tenge.).

Figure 8 - Market share of BCC, on 10/01/2015, the

Note - drawn up on the basis of the source [7].

Loans to individuals in the context of Kazakhstan's leading banks. The market share of Bank CenterCredit was 8.24% (5th place). The largest share went to Eurasian Bank (18.9%), second place went to Kazkommertsbank (11.9%), the People's Bank (8.7%) and 0.02% higher than the nearby Caspian Sea.

Figure 9 - Percentage of total number of borrowers from the FL and FE, in%.

Note - drawn up on the basis of the source [7].

Since the beginning of this year the total number of borrowers has changed and amounted to 209257 against 224492. Of these individuals account for only 5.22% - 10930 and individual entrepreneurs 0.32% - 669.

Table 15 - The number of borrowers of the total number FL and FE

	01.01.2013	01.01.2014	01.01.2015	01.10.2015
Total	211218	220357	224492	209257
Individuals	13776	14744	13112	10920
Individual entrepreneurs	661	656	617	669
* Note - compiled by the author based on the source [6]

Considering the loan portfolio of the Bank Group as of 01.01.2015 totaled 972 billion tenge. Compared to the beginning of the year these loan portfolio decreased by 0.1% or 935 million. Tenge, which was due to the Bank's activities carried out to reduce the level of non-performing loans (NPL). On 01.01.2015, compared to 01.01.2014, the NPL rate declined by 38.1 billion tenge and amounted to 150.5 billion tenge (15.5%). The level of provisions BCC on 01.01.2015 totaled 150.0 billion tenge or 15.3%.

Figure 10 - Dynamics of the loan portfolio for 2011-2015, mln...

Note - drawn up on the basis of the source [7].

For 2012 the loan portfolio of "Bank CenterCredit" increased by 4.6% or 41 bln., And at the end of the year amounted to 921 billion. Tenge. The structure of the portfolio has not changed significantly. The level of reserves of "Bank CenterCredit" at 01.01.2013 year amounted to 137.4 billion tenge, or 14,9%, NPL Level -. 89 billion tenge or 9.8%.. When lending to various sectors of the economy of JSC "Bank CenterCredit" adhered to the policy of diversification, the main purpose of which is to limit the negative impact of industry risks on the bank's activities.

Loan portfolio equaled 971 billion. Tenge as of January 1, 2015.



Figure 11 - The structure of the loan portfolio of BCC.

Note - drawn up on the basis of the source [7].

The lending sectors of the economy, the largest share in the loan portfolio of BCC occupy physical persons - 38%, about 17% to trade and then the rest of the industry.

Since 2011, lending to individuals is carried out in two directions: retail credit products; credit products for individual entrepreneurship.

Figure 12 - Dynamics of the loan portfolio for 2011-2015, mln...

Note - drawn up on the basis of the source [7].

Loan portfolio by lending to individuals on 1 January 2015 in the number amounted to 86 078 credits on the sum - 346 208 million tenge. In comparison with the previous year 2013 the portfolio increased by 5.5%.

For 2014 it was granted 21,214 loans for a total amount of 126,129 million tenge, of them.:

- Mortgage loans granted 4,859 loans for a total of 36 181 million tenge.

- On consumer loans granted 10,457 loans for a total of 52 481 million tenge.

- On unsecured loans granted 1,923 loans worth 747 million tenge.

. - 2851 loan of $ 32 974 million tenge loans issued by private business;

- Lending for the purchase of a vehicle issued 1,124 loans for a total of 3 741 million tenge..

Figure 13 - Issuance of loans to legal entities, broken down, in%.

Note - drawn up on the basis of the source [7].

For 2014 it was granted 10,902 loans totaling 446,696 million tenge, of them.:

- By big business 3704 issued a loan in the amount of 318,616 million tenge.

- Business for Middle issued 3136 loans in the amount of 78,887 million tenge.

- On Small (micro) business issued 4062 loans in the amount of 49 193 m..

3. PROBLEM OF FINANCING OF LARGE BUSINESS IN KAZAKHSTAN

3.1 The risks and rewards of multiple lender financings: loan participations and syndicated loans

In a loan participation, the originating lender transfers all or part of its interest in a loan to a participant pursuant to a participation agreement. The participation agreement defines the rights and obligations between the participant and the originating lender, including the participant's rights, if any, to direct the originating lender's actions and decisions regarding material aspects of the loan. The participant purchases an economic interest in the financing arrangements and is typically entitled to share in the economic benefit thereof, i.e., the right to receive principal and interest payments, and collect certain loan fees, while undertaking the obligation to fund any additional loans on behalf of the originating lender as required by the underlying credit agreement between the originating lender and the borrower.

In most participation agreements, the originating lender's interest in the loan is sold outright to the participant, and the originating lender does not become an agent, trustee, or fiduciary of the participant. To ensure such a relationship is not impliedly created, the participant agreement should expressly provide that the relationship between the lender and the participant is that of a buyer and a seller, and the intention of the participation is to transfer full economic rights from the lender to the participant without the creation of a fiduciary or agent relationship.

Importantly, the borrower remains directly obligated to the originating lender under the credit agreement between the originating lender and the borrower, notwithstanding the loan participation. The participant does not become a party to the credit agreement and does not have any direct contractual relationship with the borrower. As a result, the participant does not maintain any direct claims against the borrower or any collateral securing the loan.

In syndicated lending, the borrower enters into a single credit agreement with a group of lenders covering all of the loan facilities provided to the borrower by the lenders. A syndicated credit agreement might take the place of multiple bilateral credit agreements between the borrower and each lender or be used in lieu of a participation because all of the lenders are in privity with the borrower. Unlike a participation, each of the lenders in a syndication has a direct contractual relationship with the borrower. Despite the fact that all of the lenders are in privity of contract with the borrower, generally one of the lenders is designated as the agent to act on behalf of the lender group. In a syndication, there can be several different agents, with each serving a distinct role in the credit facility (e.g., administrative agent, collateral agent, etc.). The rights and obligations of the borrower, the agents and the lenders are all governed by the syndicated credit agreement.

The administrative agent administers the loan facility on behalf of the lender group. Generally, the agent is responsible for all formal communications between the lenders and the borrower, and the disbursement of the loan proceeds. Any collateral securing the loan facility is generally secured by the granting of a security interest by the borrower in favor of the administrative agent (or another lender designated as collateral agent) for the benefit of the lenders.

In a participation, the participant has no direct rights against the borrower, but does not have any direct obligations under the loan agreement (e.g., commitment to lend).

Participations may create value for the lender, especially in a distressed situation, by creating a market for the beneficial interest, while allowing the lender to remain the record owner of the loan for purposes of maintaining its relationship with its client.

By selling the participation, the lender is able to reduce its credit risk in the loan while adding another source of financing for the borrower in the event that the terms of the credit agreement require additional funding. Simultaneously, the sale of its beneficial interest allows the lender to realize capital while permitting the lender to use the proceeds of the sale to take advantage of new lending opportunities.

However, the participation can prove to be quite burdensome on the lender. Understandably, given the rights at stake, participation agreements can be quite complex and require substantial negotiation.

Further, servicing the participation can prove a challenge for the lender. Since the lender is the intermediary between the borrower and the participant, the lender may spend much time and effort transferring funds received by the borrower or advanced by the participant, or, to the extent required by the participation agreement, providing current information about the loan and the borrower to the participant.

Moreover, the participant may have the right to prevent material economic changes to the credit agreement. If the lender provides the participant with such veto rights, the participant, regardless of the size of its interest in the loan, may be able to block an entire restructuring of the facility. As the participation agreement must comply with the terms of the credit agreement, it is prudent for the lender to carefully analyze the terms and conditions of the credit agreement to ensure there are no inconsistent provisions.

From the perspective of the participant, because the participation agreement is solely between the lender and the participant, in most cases, the participant enjoys the benefit of purchasing a beneficial interest in the loan while keeping its anonymity. This allows the participant to shelter the existence of the participation relationship from the borrower, other lenders, and the global loan market. However, it is possible for the credit agreement to contain certain conditions upon the transfer of the lender's beneficial interest in the loan, such as (i) requiring the borrower's consent; (ii) requiring notice to the borrower; (iii) restricting the amount that can be transferred; and (iv) requiring that the participant be an eligible assignee.

While the participant may not have direct rights against the borrower, the participant can preserve its rights under the credit facility within the participation agreement. Significantly, participant agreements might allow the participant to prevent material amendments to the credit agreement and any material waivers of rights by the lender. It is also not uncommon for the credit agreement to provide the participant with third party beneficiary rights when participation is contemplated at the time the initial credit is extended by the lender.

As a legal matter, the participant is not in privity with the borrower and does not maintain any direct causes of action or rights of set-off against the borrower. Rather, the participant must generally rely on the lender to protect its rights. If the participation agreement does not provide the participant with the ability to force the lender to enforce remedies against the borrower, the participant could be left in a relatively weaker position.

The participant should negotiate for entitlement to certain information about the borrower. If the participant does not have a great deal of knowledge about the borrower and its business operations, evaluating the likelihood of the borrower's default or the prospects of the borrower becoming insolvent becomes a challenging endeavor.

The syndicated loan is a helpful tool for administrative agents and non-agent lenders. The syndicated loan allows the administrative agent (which typically arranges the syndicated credit facility) or a group of lenders to provide borrowers with access to larger credit facilities which might otherwise exceed the agent's or any single lender's internal and external credit exposure limits. By allocating the credit facility among a group of lenders rather than committing to fund the entire credit facility itself, the agent lender is able to maintain its relationship with its borrower and provide a large amount of funding, while, at the same time, remaining within its credit exposure limits and sharing risk among the lender group. In addition, the agent lender benefits from collecting additional fees (e.g., arrangement fees, administrative fees and fronting fees) in its capacity as administrative agent.

Likewise, a syndicated loan allows a non-agent lender to take part in a large or complex credit facility which the non-agent lender may not have the expertise or administrative capacity to handle independently. A non-agent lender also benefits from collecting a portion of lender fees (e.g., commitment fees) in accordance with its share of the loan. In addition, as a practical matter, a syndicated loan facility is less expensive and more efficient to administer than several bilateral loan facilities between the borrower and the lenders.

From the perspective of the non-agent lender, a syndicated loan generally provides for more rights for the members than a typical participation. First, each lender is a party to the credit agreement and has a direct contractual relationship with the borrower. To the extent expressly permitted by the credit agreement, each lender may maintain direct causes of action against the borrower for breach of the credit agreement and may also exercise any set-off rights against the borrower. Second, as a party to the credit agreement at origination, each lender is involved (at times, through the administrative agent) in negotiating the respective terms or covenants contained in the credit agreement, including the rights of the lenders under the credit agreement.

Also, the lenders themselves may determine the percentage of lender approval required in order to direct the administrative agent to take action or modify the terms of the agreement. For example, some minor amendments to the credit agreement may require the approval of only a simple majority of lenders, while material amendments, such as changing the interest rate or maturity date, may require the approval of two-thirds of the lenders.

There is also an informational benefit to being a lender in a syndicated loan, as opposed to a participant. Unlike a participation, each lender separately underwrites its portion of the loan and, therefore, is entitled to receive, prior to origination, all information regarding the borrower's finances and business operations which helps the lender ascertain if the borrower is an acceptable risk based on the lender's own criteria. Also, the non-agent lenders may require the credit agreement to provide that any material disclosures made by the borrower to the administrative agent under the credit agreement be provided to all members of the lending group, either directly by the borrower or through the administrative agent.

One potential risk to a non-agent lender in a syndicated loan is the limitation on the lender's ability to control the administrative agent's exercise of remedies after an event of default. The agent generally exercises remedies after an event of default subject only to the direction of the lenders holding a certain percentage of the commitments (e.g., 51 percent of the commitments). As a result, a non-agent lender--particularly a lender holding a smaller percentage of the commitments--may be constrained by the course of action selected by the agent and other lenders after a default. For instance, the agent and the required majority of the lenders may wish to tolerate a continuing default under the credit agreement in order to preserve the credit facility and their relationship with the borrower, while a smaller lender instead may wish to direct the agent to proceed against the collateral securing the loan and exit the credit facility.

A problem in syndicated loans that generally does not arise in the context of a participation is where a member of the lending group runs into financial distress or is unable to satisfy its obligations under the credit agreement. A default by one of the lenders does not eliminate the obligations of the remaining lenders to make advances as requested by the borrower in accordance with the credit agreement. To address this situation, the syndicated credit agreement will generally permit the borrower to force the defaulting lender to terminate its commitment in the loan or to assign its commitment to the other lenders or a third party. If the defaulting lender is in bankruptcy, however, the forced assignment would be subject to bankruptcy court approval. In the case of a defaulting lender, the agent's risk is limited because the credit agreement typically provides that the borrower is required to immediately repay any advance made by the agent on behalf of the defaulting lender.

Syndicated credit agreements do not always address a situation where the agent is the defaulting lender. In the case of a bankruptcy or an insolvency proceeding involving the agent, any loan payments from the borrower to be distributed to the lenders that is held by the agent at the time that the proceeding is commenced could, but likely would not, constitute property of the agent's estate, except to the extent of the agent's pro rata interest in the loan payments in its capacity as a lender. The lenders likely would, however, need to seek court approval prior to realizing payments under the loan.

Further, the existence of a bankruptcy may constrain the agent from performing its other administrative functions under the credit agreement to the extent that the agent is not removed from its position as administrative agent. The agent's exercise of certain of its powers and obligations (such as approving amendments to the credit agreement, actions with respect to the loan collateral, or consenting to a lender assignment of its rights under the loan) would likely require court approval.

When organizing a particular credit deal, lenders should assess the various loan structures and the associated benefits and risks. Multiple lender financing provides lenders with the ability to share credit risk with other lenders and diversify their credit portfolios by seizing other lending opportunities. Loan participations allow a lender to take part in a credit agreement without abdicating much control over the credit and announcing its presence to the borrower and the global loan market. Syndicated loans provide the other lenders with direct rights against the borrower and are structured to create ease in the administration and servicing of large or complex loans. To ensure that a lender can structure a credit facility to accommodate its needs and adequately protect its rights, a lender's awareness of the key differences between loan participations and loan syndications, especially when the underlying credit becomes distressed, is paramount.

3.2 Challenges and development prospects of large business in the Republic of Kazakhstan

Foreign experience of economic and social development confirms that large business can become a real factor of, not only stability but also growth of many countries economies. Large business contributes to maintenance of competition at the proper level, flexible restructuring of production, acceleration of innovation processes, formation of market economy social dimension and employment growth. In this regard, scientific analysis of large business problems in Kazakhstan is of particular importance in conditions of economy reforming characterized primarily by economy restructuring, the need to stabilize the reproduction processes and provide a perspective of sustainable economic development.

To date, problems of public and private influence optimizing on the large business sector, the lack of an integrated business management system in the level of State, region, and a particular company acquire a special urgency. The state is in need of studies on both a theoretical aspects of business, and definition of large and medium-sized businesses, as well as the study of the practical issues of creation and effective functioning of large firms.

There is an increase in absolute performance of large and medium-sized businesses in general as shown by official statistics: the share of large and medium-sized businesses in Kazakhstan amounted to 32% of GDP, employment rate - 29% (in 2009).

One of the most difficult problems hindering the development of large and medium-sized business is the absence of sufficient financial resources for investment and working capital needs. Particularly acute shortage of credit resources is felt in the real sector of the economy.

The global financial crisis reduced the liquidity of banks in Kazakhstan and aggravated the problem of credit resources deficit in the economy as a whole, and in the large sector. In addition, the crisis had a negative impact on microfinance institutions sources of funding that were contributed to the micro-enterprises development. The question about a financial instruments development that are specific for large businesses arises in the view of too many existing businesses lending, and lack of credit history, non-coverage of loans, informative financial statements of starting companies.

To date, there are different kinds of financial support instruments for business: loans, microloans, loan guarantees, subsidized interest rates, leasing, and investments.

According to statistics of the National Bank of Kazakhstan the volume of loans granted by banks to large and medium-sized businesses in the October 1, 2010 is 1,746,479 million tenge.

Regionally the largest sums were granted to Almaty and Astana cities, the largeest amount of the issue is observed in Zhambyl region. The greatest number of loans granted for projects in trade (38,6%), and the least - in the sphere of communication (0,9%).

The Government of Kazakhstan has provided additional funding totaling 1 087.5 billion dollars, of which 120 billion tenge were directed to support of large and medium-sized business in order to stabilize the economy and financial system of the republic in the period of 2009 - 2010. As a result, 117 billion tenge were placed in 12 banks of second level, however the share of public financing of large and medium-sized business in the loan portfolio of second level banks within the stabilization program was 23%.