For 6 months of 2018, the bank, as a result of the write-off of distressed assets, significantly improved the real state of the loan portfolio, as indicated by the presence of a share of uncollected interest income of 2.8% (16% at the beginning of the year). The improvement in the collection of interest income has had an impact on a significant increase (+105%) in real cash flows from operating activities before accounting for changes in assets and liabilities. At the same time, relative to other participants of the banking system, the profitability of the bank is low, which may be related to both the significant refinancing of previously issued loans and the bank's benchmark in the low-income segments of lending. For several years, the bank has maintained a stable sufficient supply of liquid assets (30%). The only drawback, which significantly limits the development of the bank, is the low capitalization of the bank as among the TOP-10 banks, and in general in the system. Taking into account the fairly good quality of the loan portfolio and the high level of liquid assets, the presence of low capitalization does not carry the risk of deteriorating financial stability, but rather restricts the bank in the pace of increasing its loan portfolio and interest income, prompting the bank to focus on quality growth. Perpetual dollar bonds of the bank continue to be one of the most profitable currency instruments on the Kazakhstani debt market. Given the good financial condition of the bank and the high yield of its debt instruments, we maintain our recommendation to Buy perpetual dollar subordinated bonds of the bank.

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