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Presentation November 2006

Presentation November 2006. Contents. Investment highlights. Business overview and financial highlights. Appendix – Macroeconomic overview of Kazakhstan . Strong growth propelled Alliance Bank into Kazakhstan’s top tier bank group. Total assets. Time deposits. Loan portfolio. USD mm.

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Presentation November 2006

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  1. Presentation November 2006

  2. Contents Investment highlights Business overview and financial highlights Appendix – Macroeconomic overview of Kazakhstan

  3. Strong growth propelled Alliance Bank into Kazakhstan’s top tier bank group Total assets Time deposits Loan portfolio USD mm Market share USD mm Market share USD mm Market share 21.9% 22.2% 25.0% 20.9% 17.1% 21.2% 12,1% 15.4% 11.7% ALB ALB ALB 10.2% 8.3% 11.0% 9.0% 8.2% 8.4% 7.8% 8.0% 7.7% Banking sector total: 13,030 Banking sector total: 35,328 Banking sector total: 51,706 Total capital Retail time deposits Retail loan portfolio USD mm Market share USD mm Market share USD mm Market share 19.2% 20.1% 20.7% ALB 17.4% 19.1% 16.4% 17.0% 13.5% 13.0% 12.4% 13.3% 8.0% ALB 9.8% 9.6% ALB 7.1% 5.8% 8.0% 5.6% Banking sector total: 4,914 Banking sector total: 5,585 Banking sector total: 9,802 Source: Published unauditedfinancial statements (in accordance with Kazakhstan Accounting Standards) as at 30 September 2006 1 USD = KZT 127.22, as at 30 September 2006 * Excluding Development Bank of Kazakhstan

  4. Contents Investment highlights Business overview and financial highlights Appendix – Macroeconomic overview of Kazakhstan

  5. The success is driven by a clearly defined strategy focusing on an innovative retail banking franchise • Widest distribution network, including channels developed through partnerships • Highest margin opportunities • Consumer finance is driver of retail growth • Focus on market share gains through innovation • Loan approval procedure based on an innovative scoring system Retail Banking • ALB’s historical niche/focus • Quantitative creditworthiness assessment methods based on scoring • Leveraging strong position in regions • Cooperation with EBRD SMEs Expansion of ALB’s client base ‘000 • Non-interest income generating business • Flexible pricing • Advanced financial products • Cross-selling of corporate finance services and products CorporateBanking Source: Alliance

  6. The strength of ALB’s business is underpinned by the continued expansion of the Bank’s own distribution network As of 30 September 2006, Alliance has 19 branches and 135 cash centres. Numbers of branches and cash centres Branches and cash centres of ALB Cash centres of ALB Planed branches of ALB

  7. The extensive branch network is complemented by a successful strategic partnership with Kazpost JSC Monthly lending volumes through Kazpost JSC • In 2004, ALB entered into a strategic alliance with Kazpost – national post monopoly • Kazpost’s 4,000 outlets provide the widest country coverage (compared to 600 outlets of the widest banking network) • To date, the Kazpost programme has generated approximately USD 292mm in loan and advances through more than 180,000 loans (incl. USD 234.9mm as of 30 September 2006) • Opportunity to offer products (deposit taking and lending services) in remote locations without costly overhead • Access to rural areas (i.e. more than 40% of the population) • Important first mover advantage due to considerable barriers to entry • Commission based cooperation Source: Alliance Kazpost’s share in ALB’s retail lending portfolio as at 30 September 2006 Source for both graphs: Alliance

  8. The partnership with distribution partners and an innovative product range further illustrate Alliance Bank’s leadership Composition of originators of express loans illustrates the importance of financial agents as of 30 September 2006 • Based on the positive experience with Kazporst, ALB started using similar arrangements with credit brokers for distribution of retail and SME loans Current cooperation with 15 credit brokers increases ALB’s distribution network by over 1,000 outlets, of which six are affiliated • Approximately 1,500 partnership arrangements with major retailers of furniture, household appliance, universal trade houses, mobile phones, consumer electronics and car dealers (trade partners) Total number of ALB’s trade outlets reached nearly 6,500 as of 30 Sept 2006 Source: Alliance • As of 30 September 2006, retail “Express” loans amounted to 63% of the retail loan portfolio • Volume of loans issued through credit brokers totalled USD 271mm • Clients pay a flat fee of 9.0% to the agents • The agents keep 2.5% – 3.0% Source: Alliance

  9. The issuance of payment cards is another prospective trend of Alliance Bank’s retail business ALB payment card issuance since launch of the card project in March 2004 • ALB is the second bank in Kazakhstan to issue chip payment cards • Principle membership of MasterCard • ALB will focus on credit cards issued to customers who have successfully repaid cash loans • Upgraded from an Associated to a Principal VISA Member Payment cards development plan • Establishment of loan limits for salary projects • Access to card account by means of Internet and telephone communications • Establishment of a discount system, allowing cross-selling with retailers • Introduction of new card system Compass Plus • By the end of 2006, ALB plans to start distributing American Express Cards • Will address demands of Kazakhstan’s highest net worth individuals Source: Alliance ATM network strategy • ALB started establishing its own ATM network at the beginning of 2006 • ALB intends to increase the number of its own ATMs up to 800 by 2007

  10. Alliance Bank’s impressive overall growth is financed by a very supportive shareholder Shareholder structure as of 30 September 2006 (voting common shares) Shareholder support comes in form of strong capitalisation of the Bank USD mm Minority portfolio investors * Management SeimarAlliance Financial Corporation Free float – Central Depositaryof Securities * Note: According to BIS *Unaudited, according KAS Seimar Alliance Financial Corporation Related party lending is low * *Unaudited, according KAS

  11. Sources of funding are well balanced Concentration declines as number of deposits grows Growth of the deposit base by currency USD mm USD mm * * *Unaudited, according KAS *Unaudited, according KAS Note: (incl. demand deposits) Breakdown of international borrowing – 30September 2006 Funding mix 30 September 2006 *Unaudited, according KAS *Unaudited, according KAS

  12. Alliance Bank’s market share gains have been driven by growth in lending Growing exposure to retail borrowers leads to further diversification Strong loan portfolio and assets growth USD mm * * *Unaudited, according KAS *Unaudited, according KAS Loan portfolio concentration–Top 10 borrowers as % of the total loan portfolio Loan portfolio sectoral diversification * *Unaudited, according KAS *Unaudited, according KAS

  13. Momentum of Alliance Bank’s growth comes from the dynamic retail banking business Retail time deposits are also becoming significantly more important Rapidly growing loan portfolio USD mm USD mm * Dynamics of ALB’s market share gains in retail lending are unmatched by its competitors * * In accordance with KAS (unaudited)

  14. 2 Insurancecompany Bank 3 1 4 7 Client Collector bureau 6 5 Unique consumer finance model helps to manage quality and growth of the retail loan portfolio Consumer finance scoring model is, unlike in Russia, based on confirmed income (through State Pension Payments Center) Credit issue procedures through distribution channels • Most emphasis is placed on the criteria based on the data obtained from database of the SPPC: • Employment • Change of employer during last year • Frequency of pensioncontributionsand the following data is calculated: • Average monthly salary • Ratio of revenue (confirmed) to requested loan amount • Maximum allowable loan amount ALB Credit broker Opening of electronic application Application analysis on the basis of scoring Refusal Positive decision Automatic documents composition: Bank loan agreement, repayment schedule… Documents stamping, Client signing Approval of application Loan granting Transfer of client’s file Automatic cash transfer to client’s account In June 2006, ALB started to insure express loans using an innovative model • ALB grants loan to client • ALB simultaneously insures loans at insurance company with one-time commission of 5% • Insurance company, in case of overdue, pays client’s principal debt with accrued interest and accepts right to demand from client • Insurance company applies to an independent collector bureau to return uncollected debt

  15. The SME market is Alliance Bank’s historic niche ALB continues to command a leading position in SME financings • SMEs are benefiting from supportive macroeconomic environment and demand for services • There are approximately 460,000 registered SMEs • SMEs have been most active in wholesale and retail trade, services and agricultural sectors • As at 30 September, 2006,168,130 small legal entities were registered in Kazakhstan • Of which 48,739 were active, • Employed 551,982 people, and • Generated net revenues of $1.3billion in 2005 • At the end of September 30, 2006, SMEs accounted or 30% of ALB’s loan portfolio (20.7% market share) • Start-up/expansion financing to SMEs (generally from $50k up to $3mm) USD mm * In accordance with KAS (unaudited) Loans to SMEs in Kazakhstan ALB’s loans to SMEs by sector as at 30 September 2006 USD bn Source: National Bank of Kazakhstan

  16. Although the principal focus of corporate banking is on the SME sector, Alliance Bank has a number of important corporate clients • Client base primarily includes companies, “upgraded” from SMEs • Major source for non-interest income and deposit taking synergies • Large national companies (”blue chips”) among clients • Minimal dependence on oil-related industries • ALB’s growing balance sheet increases its capability to fund larger corporate projects • Full range of products (“One-package credit solutions”): • Leasing • Receivables financing • Commercial paper (primary and secondary discounting) • Sophisticated investment projects (structuring and financing) • Structured finance (including pre-export and post-financing with international counterparts) and acquisition finance Loans to corporates USD mm Non-interest income from corporate clients USD mm * *Annualized

  17. Despite high growth, the quality of the loan portfolio continues to improve Loan portfolio classification Retail and SME’s loans provide strong profitability with low overdue amounts as at 30 September 2006 • Increasing ratio of standard loans has resulted from increasing insurance of express loans • Overdue loan amount is calculated on the outstanding dues on loans (starting from the 1st day of delinquency) • Classified loans differ from overdue by its approach/method of calculation

  18. Improving loan quality allows for lower provisioning • Sharp decline in NPLs from 4% to 2.4% and write-offs from 0.9% to 0.1% between 2003 and June 30, 2006 was a result of the new, risk oriented policies of ALB • Provisions /NPLs comprises 176% • According to Kazakhstan Accounting Standards, NPLs are calculated on non-accrual loans (“blocked loans”) starting from 30th day of delinquency

  19. Focus on retail and SME businesses ensures high margins ... Interest rates in retail Banking sector average lending margins Note: “SecA” stands for Kazakhstan’s banking sector average Source: National Bank of Kazakhstan for SecA, Alliance for ALB Source: Alliance Net interest margin Interest rates in corporate and SME * * * Annualized Source: Alliance

  20. ... and improved profitability, particularly this year Non-interest income grew steadily Net income USD mm USD mm 49,3* * Annualized ALB’s profitability continues to grow Cost / income ratio * Annualized Period of high expansionary investments is almost over, which should further enhance profitability

  21. Contents Investment highlights Business overview and financial highlights Appendix – Macroeconomic overview of Kazakhstan

  22. Kazakhstan’s macroeconomic indicators compare favorably with similarly rated peers Real GDP growth is well above the median level of BBB peers A surplus of 5% of GDP is expected in 2006, while the median surplus of peers is 0.2% % % Low levels of general government debt A compelling growth story % of GDP • The economic growth of Kazakhstan is significantly more robust than most similarly rated economies with strong growth forecasts to augment them • Kazakhstan’s low general external debt and its net public sector external position compare favorably with its BBB peers • The political liberalization process is also now in place making the situation more comparable with its peers and allowing for greater expectations of political stability Source: Standard and Poor’s research dated July 11, 2006 “F” refers to S&P forecasts

  23. Economic indicators point towards strong future performance Inflation remains stable despite increasing investments and growing savings Macroeconomic forecasts Inflation Demand (% of GDP) Source: S&P and Asian Development Bank Outlook 2006 • Exports are expected to expand through the diversification of the pipeline network through the Baku-Tbilisi-Ceyhan oil pipeline • Non-oil private sector could get a boost through the removal of trade impediments and accession to the WTO • Despite rising inflation pressures, the government expects inflation to be below 8.5% in 2006 30-Jun-06 * Values indexed to the 2003 level * Values indexed to the 2003 level Performance of Kazakhstan Mortgage Company’s KTZ 9.29% bond due 2009 Indicative KZT-swap curve (as of Sep 5, 2006) 5.80% 5.70% 5.50% 5.40% 5.25% 5.00% 4.75%

  24. Rising exports, growing reserves and an appreciating currency, together signal growth Soaring exports and reserves provide stability • Draft budget of 2007, envisages a reduction of budgetary spending • The draft budget also expects a KZT/USD rate of 117 for 2007 • Recent KZT depreciation was driven by the National Bank’s conversion of KZT tax receipts • Kazyna Sustainable Development Fund will seek to develop non-commodity sectors by allocating approximately USD 3.5bn to support sectors like IT, bio-energy, petrochemicals and hydroelectricity over the next 3-years • National Fund FX reserves can be turned into KZT USD mm The Kazakh Tenge has seen a steady appreciation against the USD since 2003 * Values indexed to the 2001 level KTZ/USD Source: Bloomberg

  25. Contact Information Ms. Almira Akhmetkarimova Managing Director, International Relations Tel.:+ 7 (3272) 584 040 (ext. 1033) Direct: +7 (3272) 448 411 Fax: + 7 (3272) 596 787 E-mail: AAhmetkarimova@alb.kz InvestorRelations@alb.kz + 7 (3272) 448 410 www.alb.kz

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