OJSC Qishloq Qurilish Bankqishloqqurilishbank.uz/files/propsal_en.docx · Web viewAccording to the report, announced in October 2015, during the last three years of credit rating

ИНВЕСТИЦИОННОЕ ПРЕДЛОЖЕНИЕ АКБ «КИШЛОК КУРИЛИШ БАНК». ПРОЕКТ

No n - official translation

Draft

INVESTMENT PROPOSAL of JSCBB "Qishloq Qurilish Bank"

1. SUMMARY

1.1. General information about the bank

In order to improve the quality and appearance of the living conditions of the rural population in accordance with "The year of the Development and Improvement of rural areas" state program and the Resolution of the President of the Republic of Uzbekistan Joint Stock Commercial “Qishloq Qurilish Bank” was established by the Resolution of the President of the Republic of Uzbekistan RP № PR-1083 "On the establishment of the joint-stock commercial bank "Qishloq Qurilish bank"" dated 30 March 30, 2009 on the basis of existing joint-stock commercial bank "Galla- Bank", which was , functioning since 1994. , was established joint-stock commercial bank "Qishloq Qurilish Bank".

The main tasks of JSCB "Qishloq Qurilish Bank" are:lending and banking services to individuals and legal entities in fulfilling their

needs in the housing and communal, social, and equipping of rural settlements;lending and leasing services to specialized contractors engaged in the

construction and renovation of housing projects on the approved standard, industrial and social infrastructure in rural areas;

lending and the provision of full range of banking services to enterprises of all forms of ownership, producing new, modern building materials and construction, and introduce the industrial prefabricated building technologies in rural areas on the approved standard designs;

investment activities, including the housing finance, funding the works on modernization and further improvement of villages, the development and improvement of engineering and social infrastructure in rural areas, including the reconstruction of roads, power and water supply, rural medical centers, schools, children's sports facilities, provision of rural settlements transport communications, drinking water supply, service facilities and service of telecommunications networks.

provision in accordance with the legislation of other banking services to businesses and individuals as a universal commercial bank.

The main tasks of JSCB "Qishloq Qurilish Bank" are:lending and banking services to individuals and legal entities in fulfilling their

needs in the housing and communal, social, and equipping of rural settlements;lending and leasing services to specialized contractors engaged in the

construction and renovation of housing projects on the approved standard, industrial and social infrastructure in rural areas;

lending and the provision of full range of banking services to enterprises of all forms of ownership, producing new, modern building materials and construction, and

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introduce the industrial prefabricated building technologies in rural areas on the approved standard designs;

investment activities, including the financing of the development and implementation of projects aimed at improving the image quality of the village, the development and improvement of engineering and social infrastructure in rural areas, including the reconstruction of roads, power and water supply, rural medical centers, schools, children's sports facilities, provision of rural settlements transport communications, drinking water supply, service facilities and service of telecommunications networks;

QQB provides a full range of banking services in accordance with provision in accordance with the legislation of other integrated banking services to businesses and individuals as a universal commercial bank by:

- the license No. 77 dated issued on 4 August 20141 by the of the Central Bank of the Republic of Uzbekistan (CBU)for banking activities №77 dated August 4, 2014. (Substituted with the licenses № 48 dated 10.03.2012, dated 30.04.2009, dated 13.08.2004, dated 23.06.2001, dated 03.22.1995); and

- the general license No. 602 for the foreign currency transactions issued on 4 August 2014under of the Central Bank of the Republic of Uzbekistan № 60 dated August 4, 2014 (Substituted with the licenses №55 dated 10.03.2012, №42 dated 30.04.2009, №7 dated 29.01.2005, №54 dated 07.12.2001 and №38 dated 21.08.1996). QQB is also the main commercial bank which is implementing the government’s rural housing program by provision of mortgage loans to qualified borrowers (individuals) and supports rural housing construction industry.

JSCB "Qishloq Qurilish Bank" is a member of: Uzbekistan Banking Association of Banks of Uzbekistan; Foreign Currency Exchange of the Republic of Uzbekistan; Individuals Deposit Guarantee FundThe Fund of "Guaranteeing the deposits of

citizens in banks"; The Republican Stock Exchange "Tashkent"; National Countrywide payment system of Uzbekistan; SWIFT International payment system; VISA International payment system; Leasing Association of Uzbekistan.

The bank has a wide branch network in 14XX regional and 28 YY district centers of the republic,in the country which includes 42 branches, and 232 retail service offices 49 mini-banks, 41 savings offices, 36 special cash offices, 10 utilities, 29 outreach offices, 42 international money transfers, 10 conversionand 15 currency exchange offices and services more than 592,000 clients. The Bank has In total 2,835 staff work in QQBstaff.

The Bank is one of the most significant participants in the banking market of the Republic and is among the top five largest banks in terms of assets, the 3rd in terms of 1 License replaced previous banking licenses № 48 originally issued 22.03.1995 and extended 10.03.2012, 30.04.2009, 13.08.2004, and 23.06.2001;2 License replaced previous licenses №55 dated 10.03.2012, №42 dated 30.04.2009, №7 dated 29.01.2005, №54 dated 07.12.2001 and №38 dated 21.08.1996.

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loan portfolio. The share of the bank loans issued to individuals is 46.3% of total loans issued to individuals by the commercial banks of the Republic ("Akhbor rating" national rating company report review for the first 9 months of 2015).

As of 31 December 31, 2015 the nettotal assets of the bank were amounted toUZS 4, 241.4 billion UZS (equivalent to $1, 509.4 million USD),), the loan portfolio to UZS 3, 638.9 billion UZS ($1, 294.9 million USD) and total Equity shareholders’ capital to UZS 431.9 UZS ($153.7 million USD), Share capital to 356,0 UZS ($126,7 million). The authorized capital of the bank amounted to 356.0 billion UZS (126.7 million USD). The net profit of the Bankin 2015 was amounted toUZS 38.8 billion UZS (or $13.8 million USD). The return on assets (ROA) amounted to 0.92%.

The corporate governance system, functioning in the bank ensures transparency and adequacy in assessment of risks of the bank activities.

The Bank has acting Committees like Risk Management, Credit and investment, the Assets and liabilities management, Internal Audit and other Committees. The committees include the Council and the Board members, as well as heads of structural divisions of the bank, which ensure high quality and operational management of the Bank and the risk minimization.

QQB is an plays an important role in Uzbekistan’s banking sector - is the 54 largest bank if accounted by total banking assets (XX%), and the third largest by loan portfolio (XX% and amount). The share of the bank loans issued to individuals is 46.3% of total loans issued to individuals by the commercial banks of the Republic ("Akhbor rating" national rating company report review for the end first 9 months of 2015).

The annual audit of the financial activities of the bank has been performed by the leading international audit companies. During 2012-2015, the bank worked with the "Deloitte & Touch" audit company. Audit of the financial statements for 2015 is conducting by "PriceWaterhouseCoopers". The audit opinion on the results is reflected in the independent audit opinions and reports.

The Bank is actively cooperating with international financial institutions. With the participation of the International Development Association (IDA), the International Bank for Reconstruction and Development (IBRD), the International Fund for Agricultural Development (IFAD) have been implemented the investment projects to support small and private businesses.

Since 2012 the Asian Development Bank (ADB) was participating in the implementation of the housing on model projects in rural areas program. The Board of Directors of ADB approved the multi tranche financing under the "Housing for Integrated Rural Development" project in the amount of 500,0 million USD. Resources were allocated gradually during the 2012-2015.

In 2015 under the "Construction of modern rural housing" project on the basis of Istisna’a agreement the Islamic Development Bank (IDB) financed the construction of 1 100 houses in the amount of 100,0 million USD.

In 2016 at the expense of the Saudi Fund for Development will be financed the construction of individual houses in the Khorezm region and the Republic of Karakalpakstan in the total amount of 60,0 million USD.

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In future, the bank activities will focus on expanding and improving the banking services, creating favorable conditions for client service, to provide comprehensive assistance to improve the of material welfare of the population. In accordance with the approved by the legislative acts of the Republic of Uzbekistan and the international standards particular attention will be paid to ensure financial stability and liquidity, strengthen the resource base, increasing the capitalization of the bank.

QQB is The high level of financial sustainability and solvent, which is cy of the bank is the confirmed by existence of the international and national rating agencys during the several years. Since 2008 the Bank has been cooperating with "Moody's Investors Service" with whome it cooperates since 2009.international rating agency, which periodically updates the assigned ratings, in accordance with the results of the bank analysis. In May 2015 the agencyitupdated confirmedthe rating of the bank. Thus, the rating of theQQB’s counterparty risk assessment assigned at "B1 / NP", the long-term rating forof the deposits in national currency assigned at “B2” and the financial strength rating (BCA) at “bB3”, with forecast for all ratings wasbeing "Stable".

At the same time, as well as many years, theQQB has also a national rating company "Axchbor rating" in September of 2015 awarded «uzA +» rating to the bank, which means a very high level of bank creditworthiness.

The corporate governance system, functioning in the bank ensures transparency and adequacy in assessment of risks of the bank activities and adequately assesses the risks.

The Bank has Risk Management, credit and investment, the management of assets and liabilities of the Bank, Internal Audit and other Committees. The committees include the Council and the Board members, as well as heads of structural divisions of the bank, which ensure high quality of WHAT ?and operational management of the Bank and the risk minimization.

The annual independent audit of the financial activities of the bank has been is performed by the leading international audit firmscompanies. In During 2012-2015, the bankQQB worked with the "Deloitte &Touche" audit companyfirm. In From 2016 an independent the audit of the bank is of the bank will be conducted by "PriceWaterhouseCoopersPWC". The audit opinion on the results is reflected in the independent audit opinions and reports.

The Bank is actively cooperating with international financial institutions. QQB With the participation of thecooperates with the World Bank (International Development Association (IDA), the International Bank for Reconstruction and Development (IBRD), the International Fund for Agricultural Development (IFAD))have beento implemented the investment projects to support small and private businesses.

Since 2012, QQB is cooperating withthe Asian Development Bank (ADB) was participating in the implementation of Housing for Integrated Rural Development Investment Programthe housing on model projects in rural areas program. The Board of Directors of ADB approved the multi tranche financing under the "Housing for Integrated Rural Development" project in the amount of 500,0 million USD. Resources were allocated

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This is wrong ? Check please provide it after discussion of shareholders. Council have committee but Management Board also has committees do not mix


gradually during the 2012-2015 QQB received 3 tranches of credit lines to finance housing construction loans for the total amount of $ 425,51XXXX million.

In 2015 under the "Construction of modern rural housing" project on the basis of Istisna’a agreement the it worked with Islamic Development Bank (IDB) to financed the construction of 1,100 houses and received funds in in the amount of $100.0 million USD.

In 2016 at the expense of the Saudi Fund for Development will be financed the construction of individual houses in the Khorezm region and the Republic of Karakalpakstan in the total amount of 60.0 million USD.

In future, the bank activities will focus on expanding and improving the banking services, creating favorable conditions for client service, to provide comprehensive assistance to improve the of material welfare of the population. In accordance with the approved by the legislative acts of the Republic of Uzbekistan and the international norms and standards particular attention will be paid to ensure financial stability and liquidity, strengthen the resource base, increasing the capitalization of the bank.

1.2. Assessment of expediency of the development of the enterpriseAbsent

1.23. Need of financing The need to attract additional financial resources is as follows:

-In accordance with the Resolution of the President of the Republic of Uzbekistan № RP-2344 "On measures to further improve the commercial banks and the development of their financial stability and resource base” dated May 5, 2015 the implementation of the "complex measures on further improving the financial stability and liquidity of commercial banks and the development of their resource base";

- implementation of the tasks set out in the Resolution of the President of the Republic of Uzbekistan № RP-1438 dated November 26, 2010 "On priority directions of reforming and increasing sustainability of financial-banking system of the republic in 2011-2015 and achieving high international rating indicators";

- an increase in lending for investment projects and improving access to finance for small businesses and private entrepreneurship;

- improving financial stability and liquidity of the bank, as well as compliance with the new requirements of the international standards set by the Basel Committee, due to the further capitalization of the bank;

- the expansion of the investment activities of the bank, including the modernization of the various sectors of the economy, further increasing the participation in the technical and technological equipment projects.

1.34. The share of the bank transmitted to the investors JSCB "Qishloq Qurilish Bank" was established as a joint stock company. As of

December 31, 2015 the authorized share capital is 356,0 billion 026 623 600,0UZS or the equivalent of 126115,7.8 million USDmillion Euro, at the exchange rate of the Central Bank of the Republic of Uzbekistan.

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The authorized fund is divided into 2 985 548 206 shares with a nominal value of 119.3 UZS each, including 9 000 000 privileged and 2 976 548 206 ordinary shares.

The state share as represented state bodies, state unitary enterprises and public institutions in the authorized capital of the "Qishloq Qurilish Bank" consists of 2 646 807 834 shares with a nominal value of 119.3 UZS each, with a total nominal value in the amount of 2 985 548 206 UZS (the list of shareholders is provided below).

The list of major shareholders - in the authorized capital of JSCB "of Qishloq Qurilish Bank"

№ The name of shareholderThe number

of shares (units)

The amount of shares

(in billion UZS)

Share in the authorized capital (%)

1 Ministry of Finance of the Republic of Uzbekistan

2 291 807 834 273,3273 298 084,2 76,876,76

2Fund for Reconstruction and Development of Uzbekistan

355 000 000 42,342 333 750,0 11,911,89

3 JSC "Uzdonmahsulot" 61 110 091 7,37 287 378,4 2,02,05

4 JSC "Uzbekistan TemirYollari"

60 000 000 7,27 155 000,0 2,02,01

5 EINIC "Uzbekinvest" 32 695 618 3,93 898 952,5 1,11,10

6Other 2432 shareholders legal entities (owning share of less than 1%)

174 083 647 20,720 759 475,0 5,85,84

7 Individuals (3781 shareholders)

10 851 014 1,31 293 983,5 0,40,35

TOTAL 2 985 548 206 356,0356 026 623,6 100,0%100,0%

In order to fulfill the requirements of the Resolution of the President of the Republic of Uzbekistan №RP-2454 dated December 21, 2015 "On additional measures to attract foreign investors to the joint-stock companies", the bank will sale not less than 15.0% of the state share of the authorized capital of Qishloq Qurilish Bank to the strategic foreign investor.

In accordance with the Resolution of the President of the Republic of Uzbekistan dated December 21, 2015 RP-2454 "On additional measures to attract foreign investors in joint-stock companies" is provided the sale of the state share in the amount of 23.4% to a strategic foreign investor (the size of the state share after the sale of bank shares amounting at 25.0 billion UZS).

The total volume of shares, subject sale of the state share to strategic foreign investor is at the nominal value of 69 801 751 703.9 UZS or 585 339 637 units of shares.

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1.45. Summary of a marketing planIn conditions of strengthening competition, maintaining the strong position of

OJSCB "Qishloq Qurilish Bank" in the market, as well as the development of new segments require an active marketing strategy. The marketing strategy of the bank is developed taking into account the expected changes in the banking market and is focused on strengthening the bank position in the market, increasing competitiveness, expanding the agency network and improving the quality of service, replenishment of staff professionals and young specialists.

The main objectives of the bank marketing strategy focused on providing cost-effective work in a constantly changing environment, the competitiveness of the bank in order to meet Customer customer interests and maintain the public image, to maximize customer satisfaction in terms of volume, structure and quality of service, which creates conditions for the stability of the business relationship.

The bank has set a task to increase competitiveness, which involves the creation of additional units in the operational customer service, the organization of an effective monitoring system, the introduction of new information technologies.

The implementation of the tasks assessed quite realistic, given enough support from shareholders and relatively high profitability of the bank.

1.5. 1.6. Forecast of key financial indicators in 2016-2020.

Strategic targets of the Bank for the period 20156-2020*.(At the end of the year, billion UZS)

№ Indicator 2016 2017 2018 2019 2020 The ratio of 2020 to 2016

1 Assets 6 061,6 7 826,1 9 768,8 12 085,3 14 642,9 2,4

including

1.1. Credit Loanportfolio 5

530,2 7 169,4 8 995,9 11 212,7 13 630,4 2,5

2 obligations 5 401,8 6 998,8 8 759,7 10 873,5 13 202,7 2,4

including2.1. deposits 1

625,4 2 150,0 2 690,8 3 375,8 4 202 ,2 2,6

3Own Shareholders’capital

659,8 827,3 1 009,1 1 211,8 1 440,2 2,2

including3.1. Authorized capital 573,8 719,7 879,9 1 053,8 1 246,0 2,2

4 Income 693,8 916,3 1 181,4 1 519,6 1 944,1 2,8

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5 Expenses 646,5 852,1 1 102,2 1 419,5 1 817,8 2,8

6 Net income 47,2 64,1 79,2 100,1 126,3 2,7

7Return on assets(ROA)

0,8% 0,8% 0,8% 0,8% 0,9% 1,1

8 Capital adequacy 16,6% 15,7% 15,6% 15,3% 15,1% 0,9

№ Indicator 2015 2016 2017 2018 2019 2020The ratio of 2020 to 2015

1 Assets 4 240,3 6 061,6 7 826,1 9 768,8 12 085,3 14 642,9 3,51.1. Loan portfolio 3 623,1 5 530,2 7 169,4 8 995,9 11 212,7 13 630,4 3,8

2 Liabilities 3 603,6 5 328,2 6 910,5 8 650,3 10 754,4 13 072,4 3,6

2.1. Due to Clients 726,7 1 448,4 1 953,0 2 463,8 3 118,8 3 892,2 5,4

2.2. Due to Banks 175,4 225,0 265,0 285,0 320,0 380,0 2,2

3 Total Equity 431,9 659,8 827,3 1 009,1 1 211,8 1 440,2 3,33.1.

Authorized capital

356,1 573,8 719,7 879,9 1 053,8 1 246,0 3,5

4 Net Profit 38,8 47,2 64,1 79,2 100,1 126,3 3,3*Prepared according to the national accounting standards.

1.657. The main advantages and risks of the projectinvestmentTaking into account the positive development prospects of tThe bank main

advantages for strategic investors of thein QQB bank are: -Availability of the corporate governance system, which allows to ensures the

greatest transparency of activities of the bank and to adequately assess the risks;-The Bank has an extensive regional network, through which the Bank is

represented in almost all regions of the republic;-The historical client base of the bank;-Sufficiently high capitalization compared with banks in developed countries of the

world, allowing the investor by investing relatively minor resources to enter the banking market of Uzbekistan to yield a significant market share;

-Financial stability and solvency of the bank, confirmed the presence of high ranking and being in the official stock exchange listing in the highest category of issuers;

-High liquidity of the stock, creating the opportunity for shareholders to dispose of them freely and leave the company as they wish;

-Honored reputation and generated image among customers for 21 years of the activity of the bank.

The major risk factors for the project, according to the bank, are as follows:8

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Corporate risks; Risks of termination of the license; Risks due to inflation and devaluation; Social risks; Foreign currency risk; Liquidity risks.

In order to minimize and reduce consequences of the above risks the Bank is developing the strategic and tactical decisions which exclude the occurrence of risk situations. In addition, the bank operates an independent Department of management of bank risks, which allows identifying and minimizing the risks.

1.768. Key indicators of investment attractiveness of the projectThe main indicators describing the investment attractiveness of the participation of

potential investors in the capital of the "Qishloq Qurilish Bank" may include:- one of the leading banks in the country offering its clients innovative solutions and a

full range of banking services accepted in international banking practice, in national and foreign currency;

- long-term sustainable growth of the key financial indicators of the bank;- the presence of the reputation of a stable and reliable partner for the majority of

large corporate and individual clients;- organizational and legal form of the bank that provides the greatest openness and

transparency for investors and shareholders;- stable business relationships and service experience with corporate and individual

clientscompanies of the telecommunication sector; - a good level of capitalization and a strong financial potential shareholders are ready

to continue to raise the level of the bank capitalization;- the bank is in the list of listed companies of the Republican Stock Exchange

"Tashkent" in the highest "A" category;- the presence of the formed authorized capital of JSCB "Qishloq Qurilish Bank" in

the equivalent 115.8 million. Euro, as well as a high level of capital adequacy, which is 2 times higher than the requirements set by the Basel Committee, which enables the bank to further expand credit activity and to receive higher profits;

- the extensive network of branches and mini-banks in regional and district centers of the republic;

- a high level of financial stability and solvency of the bank, confirmed by international ("of Moody's Investors Service") and national ("Ahbor-rating") rating agencies for many years;

- diversified loan portfolio and the stable growth of its profitability;- availability of highly qualified and young staff.

It should be noted that according to the current legislation the following privileges and preferences are provided to foreign investors and foreign employees of joint-stock companies:

the income of foreign investors in the form of the dividends on stocks belonging to them in joint-stock companies is exempted from the taxation for up to January 1, 2020;

to joint-stock companies in which the share of the foreign investor makes from 15 to 33 percent from authorized capital, privileges on income taxes of legal entities, on

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property, on improvement and development of social infrastructure, uniform tax payment are provided, and also obligatory contributions to Republican road fund is differentiated, depending on the volume of the investments brought by the foreign investor (according to the Decree of the President of the Republic of Uzbekistan "About additional measures for stimulation of attraction of direct private foreign investments" DP-3594 of April 1, 2005);

joint-stock companies don't charge uniform social payment and insurance premiums for the income in a type of compensation of foreign employees of the joint-stock companies attracted as the administrative personnel (according to the Tax Code of the Republic of Uzbekistan);

income of foreign employees of joint-stock companies gained from their activity as the administrative personnel isn't subject to the taxation (according to the Tax Code of the Republic of Uzbekistan).

2. DESCRIPTION OF THE BANK2.1. History of the bank

In order to improve the quality appearance of the village and the living conditions of the rural population, the accelerated development of industrial and social infrastructure in rural areas, wide implementation of the system of long-term of preferential lending of housing and, in accordance with the approved State program "Year of Rural Development and Improvement" based on the Resolution of the President of the Republic of Uzbekistan №1083 dated March 30, 2009 "On the establishment of joint-stock commercial bank" QishloqQurilish Bank", on the basis of Joint stock commercial Bank "Galla Bank" was established joint-stock commercial bank "QishloqQurilish Bank".

The purposeful work was conducted during the last 21 years as part of the reform and modernization of the bank, which is characterized by the following basic steps:

Firstly, were developedthe new methodological framework basis, the new regulations governing labor relations, aimed at improving personal responsibility of employees and strengthening of the economic discipline.

Secondly, have been carried out the a retraining program has been carried out, starting with senior managers and ending at the level of experts for their mastery of modern approaches of banking, market mechanisms to customer satisfaction.

Thirdly, there has been gradual reform of the structure of the loan portfolio, focusing on maximum diversification of portfolio.

Fourth, on a fundamentally new level was organized the investment work aimed at the efficient use of available resources with a view to ensuring principles of repayment, diversification and liquidity was organized on a fundamentally new level.

In addition, measures have been taken to improve the quality of banking services have been taken measures for the development, introduction and widespread use of modern information technologies, in particular was implemented the integrated automated banking system.

As part of the above tasks the have been taken following measures by the bank: - the development of new banking products and services; - implementation of measures to increase the bank resource base at the expense of free money resources of the population and economic entities; - strengthening the financial stability by increasing of equity capital;

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-the expansion of credit and investment; - strengthening of the internal control and risk management activities; - development of information technologies and the achievement of new stages of automation Quality; - the expansion of foreign economic activities of the bank and cooperation with financially stable and reputable foreign banks.

The implementation of these measures has led to the growth of all key financial indicators, strengthening the staff and strengthening the material-technical base.

Especially it should be noted that during this period the bank management was able to form a team of specialists. HR policy focused on strengthening the professional core of specialists, creation of conditions for study and adapts quickly coming to inflow of staff provided new forces to the bank.Reasonable, rational combination of huge practical and methodological baggage of experienced specialists and fresh ideas of new young employees led to a team that is able to solve tasks effectively in a competitive environment.

2.2. Information about the owners (shareholders) of the bankInformation on shareholders of JSCB "QishloqQurilish Bank" as of

01.01.2016

№ The name of shareholderThe share of the shareholder

(thousand UZS) ( %)

1 Ministry of Finance of the Republic of Uzbekistan

273 298 084,2 76,76

2 Fund for Reconstruction and Development of Uzbekistan

42 333 750,0 11,89

3 JSC "Uzdonmahsulot" 7 287 378,4 2,05

4 JSC "Uzbekistan TemirYollari" 7 155 000,0 2,01

5 EINIC "Uzbekinvest" 3 898 952,5 1,10

6 Other 2432 shareholders (owning share of less than 1%)

20 759 475,0 5,84

7 Individuals (3781 shareholders) 1 293 983,5 0,35

TOTAL 356 026 623,6 100,0%

2.1. История создания банкаBased on the Resolution of Cabinet Ministers of the Republic of Uzbekistan on June

20th 1994 №311 the Republican specialized joint-stock commercial bank “Galla-bank” was established. On August 2, 1994 the license No. 45 for banking activities issued by the Central Bank of the Republic of Uzbekistan.

According to the Resolution of the President of the Republic of Uzbekistan № PR-1083 dated 30 March, 2009 the Joint Stock Commercial “Qishloq Qurilish Bank” was established on the basis of existing joint-stock commercial bank "Galla-bank".

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Povtorenie


The purposeful work was conducted during the last 21 years as part of the reform and modernization of the bank, which is characterized by the following basic steps:

Firstly, were developed the new methodological framework basis, the new regulations governing labor relations, aimed at improving personal responsibility of employees and strengthening of the economic discipline.

Secondly, a retraining program has been carried out, starting with senior managers and ending at the level of experts for their mastery of modern approaches of banking, market mechanisms to customer satisfaction.

Thirdly, the investment work aimed at the efficient use of available resources with a view to ensuring principles of repayment, diversification and liquidity was organized on a fundamentally new level.

In addition, measures have been taken to improve the quality of banking services for the development, introduction and widespread use of modern information technologies, in particular was implemented the integrated automated banking system.

As part of the above tasks the have been taken following measures by the bank:- the development of new banking products and services;- implementation of measures to increase the bank resource base at the expense of

free money resources of the population and economic entities; - strengthening the financial stability by increasing of equity capital;- the expansion of credit and investment;- strengthening of the internal control and risk management activities;- development of information technologies and the achievement of new stages of

automation Quality;- the expansion of foreign economic activities of the bank and cooperation with

financially stable and reputable foreign banks.The implementation of these measures has led to the growth of all key financial

indicators, strengthening the staff and strengthening the material-technical base.Especially it should be noted that during this period the bank management was able

to form a team of specialists. HR policy focused on strengthening the professional core of specialists, creation of conditions for study and adapts quickly coming to inflow of staff provided new forces to the bank. Reasonable, rational combination of huge practical and methodological baggage of experienced specialists and fresh ideas of new young employees led to a team that is able to solve tasks effectively in a competitive environment.

2.2. Information about the owners (shareholders) of the bank. The list of major shareholders of JSCB Qishloq Qurilish Bank is given in 1.3 of this Investment Proposal.

2.313. Legal structure- Organizational chart ofOF JSCB "Qishloq Qurilish Bank" is given in Annex.

2.4. Governance structure: - Governance structure of JSCB "Qishloq Qurilish Bank" is given in Annex.

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2.4. Manual: - Governance structure OF JSCB "QishloqQurilish Bank" is given in Annex. - Summary of key managers OF JSCB "QishloqQurilish Bank" listed in the Annex.2.525. Staff

- Number of employees by category is given in Annex;- Salary levels by category is given in Annex.

2.6. Financial Indicators according to IFRS for the past 5 years* (in billion UZS)

Name of Indicator 2010 2011 2012 2013 2014

The ratio

of 2014

to 2010

Total Equity 172,1 193,5 208,3 296,9 338,0 2,0

Authorized capital 155,6 176,7 186,8 283,7 317,0 2,0

Assets 1 026,8 1 701,5 2 596,2 2 423,3 3 402,2 3,3Loan portfolio 474,0 869,8 1 313,8 2 109,4 2 968,0 6,3

Liabilities 624,3 1 127,8 1 755,3 2 120,2 3 057,0 4,9

Due to Clients 426,3 565,2 737,8 525,9 665,2 1,6

Income 230,3 437,7 493,0 196,5 281,4 1,2

Net Profit 5,0 4,3 6,1 18,0 21,4 4,2

Number of Clients (in thousands) 316,1 335,2 395,8 473,5 483,7 1,5

Number of staff 2 018 2 351 2 479 2 521 2 698 1,3*indicators for 2010-2012 include the consolidation of financial statements of subsidiary companies of the bank «Qishloq qurilish invest» and «Qishloq qurilish service».

2.6. Financial Indicators according to IFRS for the past 5 years(million UZS)

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Name of Indicator 2010 2011 2012 2013 2014 2015 *

Aggregate capital 172 092,8 193 493,8 208 288,8 296 937,4 338 049,7 431 859,4

Authorized capital 155 648,6 176 746,0 186 761,5 283 684,1 317 047,8 356 026,6

Assets 1 026 837,9 1 701 478,7 2 596 193,6 2 423 256,

7 3 402 186,5 4 240 308,5

Credit investments 474 038,7 869 838,8 1 313 849,9 2 109 435,0 2 968 010,5 3 623 080,

0The volume of

attracted Ddeposits 807 186,9 1 410 845,8 1 453 242,6 2 120 175,6 3 057 024,4 879 228,3

Population funds 182 898,8 331 329,1 548 191,5 - - 490 952,6

Income 6 927,1 7 643,1 8 426,8 11 704,5 25 348,7 504 390,9

Net income 5 014,1 4 278,6 6 102,9 7 922,2 21 430,5 38 846,1*for 2015 - Unaudited, prepared in accordance with national accounting standards (NAS).

3. ORGANIZATION OF PRODUCTION

3.1. TechnologiesAbsent3.2. Production assets, power, infrastructureAbsent

3.3. Necessity of new / additional production equipmentAbsent

3.4. Source of raw materialsAbsent

3.5. The impact of the enterprise on the environmentAbsent

34. DESCRIPTION OF SERVICES / GOODS4.1. Name of productBank offers the following services to its clients:

Opening and maintaining current accounts of individuals and legal entities, including correspondent banks to make payments on the current account.

Attracting deposits. Provision of loans from its own and borrowed funds on terms of repayment,

payment and maturity. Cash management based on contract with the owner and manager of funds. Collection of funds, payment and settlement documents.

14

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Loans ?


Obtaining the right to demand fulfillment of the obligations on behalf of third parties. Obtaining the right to claim from a third party the performance of obligations. Issue, purchase, sale, registration and storage of securities, securities management

on the basis of the contract with the client, other operations with securities. Provision of banking business advisory and information services. Letting of natural and legal persons of special premises or fireproof boxes for

storage of documents and other valuables. Financial leasing. Issuance of guarantees, implying the implementation obligations of third parties.

4.2. Purpose and scopeAbsent.

4.3. Main characteristicsDue to the nature of banking activities, the basic feature of banking is the most

responsible financial needs of clients in the terms of repayment, payment and maturity.Based on research of financial indicators JSCB "QishloqQurilish Bank" for the 3 previous years, national rating agency "Axkhbor-rating" is assigned a national scale rating of reliability on the level of «UzA +», described asing the "very high financial reliability".(Copy of the rating certificate for 2015 is attached)

34.14. Bank services and operations Bank offers the following services to its clients:

Opening and maintaining current accounts of individuals and legal entities, including correspondent banks to make payments on the current account.

Attracting deposits. Provision of loans from its own and borrowed funds on terms of repayment,

payment and maturity. Cash management based on contract with the owner and manager of funds. Collection of funds, payment and settlement documents. Obtaining the right to demand fulfillment of the obligations on behalf of third parties. Obtaining the right to claim from a third party the performance of obligations. Issue, purchase, sale, registration and storage of securities, securities management

on the basis of the contract with the client, other operations with securities. Provision of banking business advisory and information services. Letting of natural and legal persons of special premises or fireproof boxes for

storage of documents and other valuables. Financial leasing. Issuance of guarantees, implying the implementation obligations of third parties.

3.2. Main characteristicsDue to the nature of banking activities, the basic feature of banking is the most

responsible financial needs of clients in the terms of repayment, payment and maturity.

15

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Based on research of financial indicators JSCB "Qishloq Qurilish Bank" for the 3 previous years, national rating agency "Axbor-rating" is assigned a national scale rating of reliability on the level of «UzA +», described as "very high financial reliability".

3.3. The features, benefits / clients benefitsThe main features of the quality of services provided by the JSCB "Qishloq Qurilish Bank" includes:

- relatively easy availability of acquisition of financial services due to the presence of a widely ramified network of the bank;

- efficiency of processing the loan documents by the widespread use of modern information and communications technology and simplifying the loan application process;

- efficiency of reviewing of applications for issuing plastic cards;- high professional level of the bank key specialists, both in terms of design and

contracting, as well as in the settlement of claims;- the presence of the Call-center to get the full information about the types of

services and to obtain advice in the event customers need to meet your future needs;- relative affordability of credit resources of the bank, at the expense of an

established mechanism to attract borrowed funds.

3.4. The presence or the need for licensingBanking in the Republic of Uzbekistan is subject to licensing in accordance with the

Law of the Republic of Uzbekistan № 216-I dated 25.04.1996 "On banks and banking activity", according to which "the Bank, including foreign, has been operating in the Republic of Uzbekistan on the basis of a license issued by the Central Bank of the Republic of Uzbekistan".

JSCB "Qishloq Qurilish Bank" is the holder of the license №77 dated August 4, 2014 to conduct banking activities and the main license №60 dated August 4, 2014 to carry out activities in foreign currency issued by the Central Bank of the Republic of Uzbekistan.

3.5. Readiness to release and sale of productsJSCB "Qishloq Qurilish Bank" is a fully operating bank, with the presence of all the

legal, human, material and technical, technological and methodological components for the full implementation of the banking operations.

Today the bank has a high potential in the field of information technology. The latest telecommunication equipment allows the bank to have distributed and secure local area network that provides communication between affiliates and other divisions of the bank. It should be noted that the server equipment is represented by world leaders such as IBM, HP and DELL. Structure of the organization of information telecommunication system of JSCB "Qishloq Qurilish Bank" complies with international standards in this field.

3.6. Necessity of certification, certificationsThe legislation of the Republic of Uzbekistan does not provide the need for passage of procedure of certification of banking services or receiving any certificate for the providing services.

3.7. The necessity and possibility of service modernization16


JSCB "Qishloq Qurilish Bank" has all possibilities of modernization of banking services and regularly measure the technological modernization of its products on the basis of best international practices and information technologies.

The features, benefits / clients benefitsThe main features of the quality of services provided by the JSCB "QishloqQurilish Bank" may include: - relatively easy availability of acquisition of financial services due to the presence of a widely ramified network of the bank; - efficiency of processing the loan documents by the widespread use of modern information and communications technology and simplifying the loan application process; - efficiency of reviewing of applications for plastic cards; - high professional level of the bank key specialists, both in terms of design and contracting, as well as in the settlement of claims; - the presence of the Call-center to get the full information about the types of services and to obtain advice in the event customers need to meet your future needs; - relative affordability of credit resources of the bank, at the expense of an established mechanism to attract borrowed funds.

4.5. The presence or the need for licensingBanking in the Republic of Uzbekistan is subject to licensing in accordance with the

Law of the Republic of Uzbekistan № 216-I dated 25.04.1996 "On banks and banking activity", according to which "the Bank, including foreign, has been operating in the Republic of Uzbekistan on the basis of a license issued by the Central Bank of the Republic of Uzbekistan".

JSCB "QishloqQurilish Bank" is the holder of the license №77 dated August 4, 2014 to conduct banking activities and the main license №60 dated August 4, 2014 to carry out activities in foreign currency issued by the Central Bank of the Republic of Uzbekistan.( Copy of the license attached)

4.6. The degree of readiness to release and sale of productsJSCB "QishloqQurilish Bank" is a fully operating bank, with the presence of all the

legal, human, material and technical, technological and methodological components for the full implementation of the banking operations.

Today the bank has a high potential in the field of information technology. The latest telecommunication equipment allows the bank to have distributed and secure local area network that provides communication between affiliates and other divisions of the bank. Itshould be noted that the server equipment is represented by world leaders such as IBM, HP, and DELL. Structure of the organization of information telecommunication system of JSCB "QishloqQurilish Bank" complies with international standards in this field.

4.7. Necessity of certification, certificationsThe legislation of the Republic of Uzbekistan does not provide the need for passage

of procedure of certification of banking services or receiving any certificate for the providing services.

17


4.8. The necessity and possibility of production modernizationJSCB "QishloqQurilish Bank" has all possibilities of modernization of banking

services and regularly measure the technological modernization of its products on the basis of best international practices and information technologies.

4.9. Terms of delivery and packagingAbsent.

4.10. Warranty and serviceAbsent.

45. MARKET REVIEW45.1. Overall analysis of the banking market of Uzbekistan

Basic indicators of the banking system, namely the "adequacy of the total capital of the banks", "liquidity of commercial banks", "Dynamics of deposits", "change in the volume of credit investments," according to the results of 2015 complies with high-level assessment.

Basic indicators of the banking system, namely the "adequacy of the total capital of the banks", "liquidity of commercial banks", "Dynamics of deposits", "change in the volume of credit investments," according to the results of 2015 comply with high-level assessment.

Today, the capital adequacy ratio of the banking system is 23.3%, which is 3 times higher than the requirements set by the Basel Committee on Banking Supervision (8%). This indicatorTotal capital of the banks is as of 1 January 1, 2016 has reached more than 7. 800 btrillion UZS (at the end of 2014 more than 6. 900 billioln. UZS).

The current level of liquidity of the domestic banking system is stable and shows a high level over the last few years more than 64,5%, which is 2 times higher than the minimum level set by international standards.

Assets of the banks increased by 25.1% compared to last year and amounted to 65. 200 btrillion UZS (at the end of the 2014: 56. 200 btrillion UZS).

In particular, during the reporting period the total amount of credits directed to the real sector of the economy increased by 27.3% compared to the year 2014 and the beginning of 2016 more than 42. 700 btrillion UZS (as of 2016 it has reached a value of more than 42. 700 btrillion UZS). In addition, the volume of loans for investment purposes, compared with 2014 increased by more than 1.2 times and as of January 1, 2016 was 10 . 200 btrillion UZS.

The volume of loans granted to small businesses compared to 2014 increased by 1.3 times and as of January 1 of this year amounted to more than 12. 100 btrillion UZS, including microloans amounted to more than 2. 500 btrillion UZS, which is 1.3 times more than in 2014.

A stable state national banks, increasing confidence in them, as well as the growth of real incomes become a solid basis for the attraction of free funds of population and economic entities to deposits. In the reporting period, total deposits compared to 2014 increased by 28% and at the beginning of this year is 35. 600 btrillion UZS.

18


Free funds? 1chi martdanzagruzkaqilinmaganpulgayam 9% to’liydi bank, tekinmas. Vkladlaniyamfoizlarijudayuqori


1.3 times digandanko’ra, by 30% disayaxshiroqmasmi?


Tushunarsiz.


Рекомендация: вездеиспользоватьloans.

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It should be noted that sSpecial attention is paid to the further development of cashless payments, which demonstrates the intense increase in the number of plastic cards issued into circulation. At the end of 2015, the country put into circulation in excess of 16.3 million plastic cards, and the number of terminals installed at trade and service facilities reached 183.1 thousand units.

In 2015, the share of banking services in the structure of financial services amounted to 88% and grew to more than 1.3 times as compared to 2014. This is the result of targeted measures to increase the volume and improve the quality of banking services to the population and business entities.

It Iis appropriate to note that progress on the reform and liberalization of the domestic banking system have found its reflection in the annual evaluation of the World of the bank review and the International Finance Corporation under the terms of doing business «Doing Busineess-2016".

According to the report, announced in October 2015, during the last three years of credit rating conditions Uzbekistan immediately moved up immediately to step 113 steps, that is, from 154 to 42.

54.2. Market segmentation, capacity analysis, saturation, and dynamics of market segments.

As of January 1, 2016, the number of commercial banks registered by the Central Bank of the Republic of Uzbekistan is , was 26, including 3 state-commercial banks, 141 joint-stock commercial banks, 87 private banks and 45 banks with foreign capital participation.

According to the analysis conducted by the International Monetary Fund, the indicators services for the population by banks in Uzbekistan, including the availability of banking services is about 47.7 units per 100 thousand of the adult population, and for every 1,000 people is open 1 028 bank accounts is opened, which is the best result among CIS countries.

As a result of RA «Akhhxbor-reyting» analysis, it was determined that at the end of the 3rd quarter of 2015, the concentration of the banking sector assets continues its gradual growth. In particular, at the end of in the first 9 months of 2015, the concentration of assets in the top five largest national banks in the republic is 6149.43% of total banking sector assets.

45.3. Analysis of the competitive environmentAccording to the results of 9 months of 2015 Qishloq qurilish bankthe bank ranks 5th

in terms of assets, 3rd on the loan portfolio and the 6th place on the equity in the banking market. Key indicators of the bank maintain dynamic growth.

(Information on the market position of JSC "Qishloq Qurilish Bank" for the end first 9 months of 2015 is attached)

45.4. Marketing strategy and marketing of banking services

19


Eskiinformatsiya, hozirsaytida 87chi o’rin.


30%


Yana primoytarjima, POS terminal bo’sakerakyaxshiroq variant.


Faqato’zbekistonda u plastikkartadiyiladi, boshqaso’zishlatila.


The main channel for spreading banking services is traditionally a branch network. Customer service is made through the branch network of 42 branches and 232 retail service offices, 49 mini-banks, 41 savings, 36 special, 10 utilities, 29-site offices, 42 international money transfer points and 15 currency exchange points.

In conditions of competition strengthening, maintaining the strong position of JSCB "Qishloq Qurilish Bank" in the market, as well as the development of new segments require an active marketing strategy. The marketing strategy of the bank is developed considering the expected changes in the banking market and is focused on strengthening of the bank position in the market, to improve the competitiveness on tariffs, the expansion of the branch network and improving the quality of service, replenishment of the bank staff professionals and young specialists.

The main objectives of of the bank marketing strategy focused on providing cost-effective work in a constantly changing environment, the competitiveness of the bank in order to meet clients’ interests and maintain the public image, to maximize customer satisfaction in terms of volume, structure and quality of service, which creates conditions for the stability of the business relationship.

The bank has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional operational units to customer service, the organization of an effective system of control, the introduction of new information technologies.

5.5. SWOT - Marketing analysis of the strengths and weaknesses of the Bank

SWOT-analysis of JSCB "QishloqQurilish Bank»

Competitive advantages Competitive disadvantages

The presence of a large regional network of branches and mini banks

Sufficiently not high capitalization compared with banks in developed countries The presence of already

4 banks with foreign capital

Availability of qualified staff in key positions in the central and regional

offices

The presence of already 4 banks with foreign capital A small

share in the domestic banking system

It has developed internal rules and formed methodological base

Weak position of the operational implementation of new innovative

services

21 years of experience in banking operations

The weak position of the operational implementation of new innovative

services

A solid customer base

Brand awareness, public awareness of activities of the bank

Composition of shareholders of the bank and 20


their support

Long-term tax benefits

The competitiveness of the bank, enough experience in the sphere of financing the

construction of housing on the model projects

Brand awareness, public awareness of the bank activities

Availability of long-term tax benefits

Structure of shareholders and their support

Branches are provided with the innovative technology needed to maintain competition in

the banking sector

Presence of groups of customers with long term partnership wish the bank

Providing services as a universal bank

Having own training center for the organization of courses and seminars for staff

development

Branches of the bank are sufficiently provided with progressive and innovative technologies

necessary to maintain competition in the provision of services

High capital base, financial stability and reliability

Universality (no branch of the bank supplies)

The presence of groups of clients in long-term partnership with the bank

Widespread introduction of modern ICT in bank activity

Having own training center for the organization of courses and seminars for staff

development

Opportunities ThreatsState support of the banking system (tax

relief, etc.)Loss of customers due to the unfair

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The favorable economic environment for the development of the banking business

Strict requirements for capital adequacy and liquidity

Tax privileges and preferences to foreign investors Strict competition in the financial sector

Trust and good attitude of clientsPossible change of the demographic

situation Strict competition in the financial sector

Improving the quality and expand the range of banking services

Possible change of the demographic situation

Increasing of the population and enterprises income

The increasing demand for bank services

Increasing of population and enterprises income

56. FINANCIAL PLAN56.1. Assumptions used in the construction of the financial models

In constructing financial model used by a number of indicators and the factors that influence the final result, based on market conditions, expected demand, the expected selling prices, reached agreements with key customers, the planned marketing activities, etc.

Considered the following groups of indicators:- staff (the need for personnel, expenses for payment, operating mode);- financial (need for financing sources and sourcing conditions);- tax (tax rates and fees to be paid to the budgets of all levels);- marketing (cost of funds and the forecast price changes);- investment(purchased equipment, capital expenditures for construction of

buildings and structures) and others.The operating expenses associated with business activities of the bank are

taken into account, including depreciation costs and taxes. Operating expenses include:

- variables (external services);- overhead (salaries, expenses for service of the means of transport and

buildings and others constant expenses);- business associated with the implementation and promotion of banking

services;- administrative.

The sources of attracted funds, amounts and periods of attracting and repayment are taken into account.

22


Carried out the calculation of the profit before tax, income tax and net profit. Analyzed the information about the bank in the appropriate period in the context of the profitability and efficiency of operations, and financial condition of the bank property.

56.2. The structure of the bank financing The availability of financial resources in the required amounts, as well as their

effective use determines the financial health of the bank, financial stability, solvency and liquidity.

The main source of financing is own and borrowed funds. Own funds of the bank formed by the internal (income of the bank) and external sources (this means additional contributions to the authorized capital, additional issuance and sale of shares, other external sources of formation of own financial resources).

Attracted funds are formed at the expense of the public, businesses and financial institutions.

Income - is the main source of funds of the dynamically developing bank. The amount of profit depends on many factors, main of which is the ratio of income and expenses.

Profit (net Income) - is the main source for the formation of reserve capital (fund), which is intended to compensate unexpected losses and potential losses of banking activities. The procedure for the formation of the reserve capital is fixed in the regulations that govern the activities of the bank as well as its charter documents.

5.3. The results of the project financial model. Business plan of the main indicators of the Bank for 2016* (in billion UZS)

(million UZS)

№ Indicators Factfor 2013

Factfor 2014

Factfor 2015

Planfor 2016

The expected growth in

comparison with 2015

(%)

1 Bank assets2 473 23

3,93 465 76

5,14 240 308,

55 395 010,5 27,2

including:

Credit and leasing operations

2 133 450,0

2 996 098,0

3 623 080,0

4 837 806,2 33,5

Investments 40 395,1 45 457,4 9 879,8 10 593,2 0,7

2 Obligations2 146 03

1,33 093 85

2,63 808 449,0

4 896 297,4 28,6

including:

Deposits518 111,

0639 660,

2 879 228,3 889 609,8 1,2

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Repeating


Deposit certificates

49 000,0

Issued bonds

3 Capital327 202,

6371 912,

5 431 859,4 498 713,1 15,5

including:

Authorized capital

278 035,4

311 399,1 356 026,6 412 981,5 15,9

4 Income282 516,

9407 141,

8 504 390,9 616 982,6 22,3

5 Expenses260 646,

0378

262,7 465 544,8 572 400,3 22,9

6 Net income( loss )

21 870,9 28 879,1 38 846,1 44582,4 16,3

№ Indicators Factfor 2015

Planfor 2016

The expected growth in

comparison with 2015 (%)

1 Bank assets 4 240,3 5 395,0 27,2including:Credit and leasing operations 3 638,9 4 837,8 33,5

2 Liabilities 3 808,5 4 896,3 28,6Including:Due to clients 862,1 889,6 1,01

3 Total Equity 431,9 498,7 15,5including:

Authorized capital 356,0 412,9 15,9

4 Income 504,4 616,9 22,3

5 Expenses 465,5 572,4 22,9

6 Net Profit ( loss ) 38,9 44,6 16,3

*Prepared according to the national accounting standards.The main source of financing is own and borrowed funds. Own funds of the bank formed by the internal (income of the bank) and external sources (this means additional contributions to the authorized capital, additional issuance and sale of shares, other external sources of formation of own financial resources).

Attracted funds are formed at the expense of the public, businesses and financial institutions.

24


Income - is the main source of funds of the dynamically developing bank. The amount of profit depends on many factors, main of which is the ratio of income and expenses.

Income - is the main source for the formation of reserve capital (fund), which is intended to compensate unexpected losses and potential losses of banking activities. The procedure for the formation of the reserve capital is fixed in the regulations that govern the activities of the bank as well as its charter documents.

56.3. The results of the project financial model

Business plan of the main indicators of the Bank for 2016 (million UZS)

56.4. Analysis of project investment attractivenessThe banking market of the Republic of Uzbekistan has a stable growth trend of both

quantitative and qualitative indicators.Banking activity regulatory policy carried out by the Government of the country

creates the necessary conditions for dynamic development of the market. These measures are key factors in the formation of modern, high-grade and competitive banking market. Carrying out a complex work to improve banking legislation, to improve the quality of banking services, ensuring a high degree of financial stability of banks, as well as the introduction of international standards and regulatory principles and supervision of banking activities.

As a result of the above factors, in recent times Bank, acting as a trusted partner, has become widely encompassing and well-formed financial institution for its clients. JSCB "Qishloq Qurilish Bank", originally for the purpose of improvement of the appearance of rural areas and the living conditions of the rural population, the accelerated development of industrial and social infrastructure in rural areas, the widespread introduction of the system of long-term preferential lending of housing and with the organized financial support, modernization and development, today as a universal bank providing a wide range of clients in all kinds of banking services, based on international practice, in national and foreign currency.

Analysis of the final results of the 20-year activity of the bank showed that as a result of thecarried consecutive reforms the net assets amounteding to 7.4 billion UZS for 1995 reached 4.2 trillion UZS, credit portfolio $ 0.1 billion UZS reached 3.6 trillion UZS, own capital of 0.02 billion UZS reached 431.9 billion UZS and charter capital of 0.01 billion UZS reached 356.0 billion UZS.

According to the financial results of 2015 bank assets increased by 1.2 times, equity - by 1.2 times, the volume of deposits of the population and legal entities - by 1.2 times, and net profit obtained for the financial year, increased by 1.3 times compared with the previous year.

As a result of the taken measures for the formation of the loan portfolio, as well as the increasing the bank investment activity during 2015, the loan portfolio increased by 1.2 times and especially worth noting that 79.0% of the portfolio amounted to long-term loans.

As a result of extensive work carried out under the financial support of small business and private entrepreneurship, which is one of the most important activities of the

25


3dan keyin 3 times, 4 times disabo’ladi, 1.2 1.3laga foizqo’yganma’qulroq.


Investor sifatidao’qiganodam, INFLATION ADJUSTED informationgako’proqqiziqqanbo’lardimanimcha.


Boshqanarsaqo’yishkerak.


bank, the amount of loans allocated in 2015 for these purposes in comparison with 2014 increased by 1.4 times.

Positive results and pace of strong growth achieved by the bank, valued and recognized highly by national and international rating agencies.

QQB is financial sustainability and solvent, which is confirmed by international rating agency "Moody's Investors Service" with whome it cooperates since 2008. In 2015 it confirmed QQB’s counterparty risk assessment "B1 / NP", long-term rating for deposits in national currency at “B2” and the financial strength rating (BCA) at “B3”, with forecast for all ratings being "Stable".

QQB has also a national rating company "Axbor rating" awarded in September 2015 «uzA+» rating to the bank, which means a very high level of bank creditworthiness.

For example, for seven consecutive years, the bank awarded "stable" rating according to International rating agency «Moody's Investors Service» and these indicators are confirmed again in 2015.

A further increase in capitalization of the bank, improvement of quality, volume and profitability of assets, ensuring stable growth of all indicators relating to the bank activities through raising partnerships with clients and financial institutions to a new level, and most importantly, the further strengthening of customer confidence in the bank were identified priority objectives of the Bank in near future.

Implementation of these objectives will serve to improve the living standards and welfare of the population, as well as economic, industrial and export capacity of the country, along with the full financial support of businesses.

56.5. The sensitivity analysis and scenario analysisThe sensitivity analysis carried out during the business planning, i.e., is estimated

the effect of changing of initial parameters on its outcome. Sensitivity analysis technique is to change the selected parameters within certain limits, provided that the other parameters are without any changes. Sensitivity analysis allows evaluating how changes resulting indicators at different values given variables required for calculation. This type of analysis allows identifying the most critical variables, which best can affect the feasibility and effectiveness of the business plan.Accepted as a variable:

- interest income from lending and investment activities;- interest expenses on borrowed funds;- operating expenses and their components;- inflation, etc..

As a resulting indicators:1. Performance Indicators

- profitability index- return on equity-return on assets

2. Annual indicators- net income- net profitAbsolute sensitivity analysis allows determining numerical deviation of the resulting

indicators when changing the values of the original variables. 26


Project Development Scenario analysis allows estimating the impact on the business plan for the possible simultaneous change of several variables of the probability of each scenario.

67. ANALYSIS OF THE MAIN RISKS67.1. Characteristics of the main risks

Corporate risksThis category of risk associated with the probability of deterioration of the financial

condition of the bank as a result of negative changes that may occur as a result of its activities, as well as its affiliated structures.Thestructures. The bank has every opportunity directly affect the probability of occurrence of these negative changes, as well as possible to reduce the possible negative impact on its financial condition as a result of these changes.

Termination of licenses Risks Today the bank has a license to carry out its activities. Licenses are general, open-

ended. The bank activities are in accordance with the obtained license, without violating licensing rules and regulations, the timely submission of reports to the relevant authorities allow the bank to minimize these risks.

Risks associated with changes in the value and the cost of servicesThis risk is generated by the results of operations of the bank stipulating the

reduction of the level and the amount of its profits. The causes of such risk can perform: decline in yields and credit investment portfolio, the fall in demand for banking services, reducing income of the Bank in terms of increasing competition and a number of other similar factors. As a result of lower bank profits and the associated deterioration of its financial condition could be a threat to reduce dividend payments on shares.

Inflation and devaluation risksThe bank is exposed to inflation risk because the bank provides loans from the client

funds. In case of this factor, there is outflow of population and economic entities. Social Risks

Social risks for the bank conditionally divided into two groups:First group - the risks associated with the bank staff. Social and personnel policy of

the bank is aimed at attracting highly skilled professionals and staff to ensure maximum social benefits. The lack of the necessary skill level of workers is achieved by training in relevant schools, including teaching in their own training center.

The second group of social risks associated with the macroeconomic situation in the country - dependent on income levels. Economic and social development of Uzbekistan has a positive effect on the welfare of the population. Economic reforms and programs of measures adopted by the Government of the Republic reduce to moderate level this type of risk.

Currency riskThis risk arises as a result of currency rate fluctuations, which are nominated the

assets and liabilities and cash flows of the bank. Given the small volume of loans and investments in foreign currency assessed as insignificant risks by the bank.

Liquidity Risks27


Mismatches of assets and liabilities by maturity, can lead to a temporary failure of the bank to fulfill its obligations. The bank assesses these risks as moderate due to the presence of a significant proportion of highly liquid assets.

67.2. Analysis of the degree of risk impact on the cost-effectiveness of various project participants and options to minimize these risks

In order to minimize and reduce the consequences of the above risks the bank is developing strategic and tactical decisions which exclude the occurrence of risk situations. The decision to refuse the specific risks can be taken, both at the stage of preparation of the solution, and by refraining from activities, in which the bank already participates, if the actual risk is higher than expected. Also, is focusing on the following methods to minimize the risks:

1. Adoption of risk - management decision to take some (existing or planned) level of risk not taking measures for its reduction, usually for technical or cost reasons. In case of acceptance of risk must take into account the possible losses:

- loss of a permanent nature, which can easily be anticipated; - losses caused by single, static risk. Typically, these risks are associated with substantial losses. The peculiarity of the fact

that they do not amenable to statistical evaluation.2. Reduction of possible losses which is achieved on the one hand, by the loss of

accuracy of a prediction, on the other hand, using more complete use of the available knowledge in the field.

3. Insurance (hedging) of risk - this is the most convenient and the most common way to react to the marketing risk. Risk insurance is a protection against incorrect decisions and effective way to increase the responsibility of those involved. Strictly speaking, the insurance can be attributed to risk reduction methods, and risk transfer techniques.

67.3. Conclusions and recommendations Taking into account the positive development prospects of the bank main advantages

for strategic investors are: - The presence of corporate management system, which allows to ensure the

greatest transparency of the bank activities and to adequately assess the risks;- The bank has an extensive regional network, through which the bank is

represented in almost all regions of the republic;- The historical client base of the bank;- Long-term sustainable growth of the key financial indicators of the bank;- Sufficiently not high capitalization compared with banks in developed countries of

the world, allowing the investor by investing relatively modest resources to enter the banking market of Uzbekistan to yield a significant market;

- Financial stability and solvency of the bank, confirmed the presence of high ranking and being in the official stock exchange listing in the highest category of issuers;

- The high liquidity of the shares, which creates an opportunity for shareholders manage them freely and leave the company as they wish;

- Honored reputation and generated image among clients for 210 years of the bank activities.

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8. ANNEXContact Information:Legal address: st.A.Navoi Str., 18A, Tashkent, 100011, The Republic of Uzbekistan.Tel.: (+998 71) 150-76-58, 150-76-59, 150-77-28. Fax: (+998 71) 150-39-93(+998 71) 150-93-39Fax: (+998 71) 150-39-93Web site: www.qqb.uze-mail: [email protected] SWIFT: GJSOUZ22

Additional materials: - The organizational structure of the bank;- The structure of bank management;- Summary oList of keyf the main managers of the bank;- Number of employees by category;- The level of wages by category;- IFRS Reporting;- Copy of the certificate confirming the assignment of the rating;- Copy of the license;- The market position of the bank;- Additional data (Resolution of the President of the Republic of Uzbekistan №RP-

1083, Resolution of Cabinet Ministers of the Republic of Uzbekistan dated 20 june, 1994, copy of the bank charter and founding agreement).

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bg1, 03/11/16,

Do not provide this unless asked – even asked why would you do that.

http://www.qqb.uz/

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OJSC Qishloq Qurilish Bankqishloqqurilishbank.uz/files/propsal_en.docx · Web viewAccording to the report, announced in October 2015, during the last three years of credit rating