Analytical accounts of the Depository Organizations
I. Methodological framework, concepts, definitions and classifications
The Monetary Survey is compiled monthly based on the balance sheet data of the National Bank, commercial banks (referred to as second tier banks under the laws of the Republic of Kazakhstan). For the period from December 2003 to December 2005, the Monetary Survey included accounts of credit unions in accordance with the analytical structure of the IMF Monetary and Financial Statistics Manual (MMFS). From January 2006 the accounts of credit partnerships are excluded from the monetary survey due to changes in the legislation of the Republic of Kazakhstan on licensing and consolidated supervision, as a result of which credit partnerships are not subject to the powers of the state body that regulates and supervises the financial market and financial organizations.
The following main aggregates are used:
- Monetary aggregates consisting of cash in circulation M0, narrow money supply M1, broad money supply M2, and money supply M3.
- Domestic credit, disaggregated by sector, i.e: net claims on the central Government, claims on local and regional governments (until December 2001, data on the general Government were reported), claims on non-banking financial institutions, claims on state and non-state non-financial institutions (until December 2001, data were provided for non-financial institutions as a whole), claims on nonprofit institutions serving households, claims on households. Net claims on the central government are shown on a gross basis, i.e. gross claims on the central government (broken down by instrument: loans, securities and other accounts receivable) and gross liabilities to the government (broken down by instrument: deposits, loans and other accounts payable). Claims on other sectors of the economy are also itemized by instrument.
- Net foreign assets of deposit-taking corporations are broken down by gross claims on non-residents in freely convertible currencies (itemized by instruments), gross liabilities to non-residents in freely convertible currencies (itemized by instruments), and other net foreign assets in non-convertible currencies (broken down by gross claims and liabilities).
- Other net domestic assets - broken down by other financial assets, non-financial assets, other liabilities and equity accounts.
In accordance with the requirements of the Monetary and Financial Statistics Manual (MFSM), monetary statistics in Kazakhstan distinguish between claims and liabilities of banks with regard to residents and non-residents. The definition of "resident-non-resident" in effect in Kazakhstan does not correspond to the definition published in the Balance of Payments Manual (5th edition 1993). The main difference concerns the center of economic interest. The Balance of Payments Manual considers that in most cases an institutional unit has a center of economic interest in a country if it already carries out or intends to carry out economic activities and economic transactions in that country on a large scale (individuals for at least one year).
According to the Law of RK of December 24, 1996 "On currency regulation" residents are individuals with a permanent residence in the Republic of Kazakhstan, including those temporarily located abroad or in the public service of the Republic of Kazakhstan abroad, as well as all legal entities established in accordance with the laws of the Republic of Kazakhstan, with a location in Kazakhstan, as well as their branches and representative offices located in Kazakhstan and abroad. In addition, residents are diplomatic, trade and other official representative offices of the Republic of Kazakhstan located outside the Republic of Kazakhstan.
Non-residents are all legal entities, their representative offices and branches, as well as individuals who are not specified in the concept of "residents".
Transactions with other sectors of the economy are grouped as claims and liabilities of commercial banks (second-tier banks) to residents (domestic economic entities) by mutually balancing sectors according to the RCFS: central (national) bank, non-bank financial institutions, state non-financial institutions, non-state non-financial institutions, central government, regional and local governments, non-profit institutions serving households, households. One minor exception is that the NB survey does not fully classify some claims by sector (in the Statistical Bulletin, these claims are reported under "claims on other sectors of the economy"). In addition, liabilities of the NFRC (National Fund of the Republic of Kazakhstan) are not classified by any sector of the economy.
Definition of Monetary Aggregates
M0 is defined as cash outside depository corporations (banknotes and coins in national currency in circulation minus cash held by the NB and banks); M1 is defined as M0 plus transferable deposits in national currency of non-bank legal persons and households; broad money M2 includes M1 plus other deposits in national currency and transferable deposits in foreign currency of non-bank legal persons and households. Money supply M3 includes M2 plus other foreign currency deposits of non-banking legal entities and households.
II. Data coverage
Monetary survey data is based on the balance sheets of the NB and commercial banks. The balance sheets of the NB and commercial banks include accounts of head offices and branches located in Kazakhstan. In addition, in accordance with the statutory definition of residency under the Law of the Republic of Kazakhstan "On Currency Regulation", accounts of branches located outside Kazakhstan are also included in the balance sheets of commercial banks. This inconsistency in reflecting the economic attribute of residency under the MFSM and the fifth edition of the Balance of Payments Manual (BPM5) currently results in transactions of a foreign branch of a commercial bank being erroneously included in monetary accounts. The central bank review covers the consolidated accounts of the NB's head office in Astana and its 17 branches; the remaining 11 subsidiaries are included in the NB's consolidated balance sheet.
The accounts of banks in the process of liquidation are not included in the analytical accounts of depository institutions.
III. Accounting principles
At the National Bank, financial assets are measured at fair value, i.e. at actual cost. Securities are recorded at fair value and revalued at least once a month on the date of sale/maturity. The securities are revalued according to the quotations (prices) established at the time of closing of trading on the financial market, on the penultimate working day of the calendar month and/or the day preceding the day of sale of the securities. From the moment the securities accounting is automated, revaluation of the securities is made on a daily basis. From the moment the Kazakhstan Stock Exchange establishes official quotations (prices) for the securities in national currency issued for circulation in Kazakhstan, revaluation of these securities is carried out at the quotations (prices) established at the moment of closing of trading at the domestic stock exchange on the last business day of the calendar month or the last day of trading these securities and the day of sale of these securities.
Securities acquired for the purpose of making capital investments shall be accounted for at their purchase price. Throughout the holding period, the value of this category of securities shall not be revalued, except for the organizations having negative equity capital.
With regard to the formation and use of special and general provisions (provisions). At the end of a financial year or in the period of final turnovers special provisions (provisions) are formed at the expense of the National Bank on the basis of the decision of the standing inventory commission of the National Bank on the results of the annual inventory of banking and non-banking assets against doubtful banking and non-banking assets and possible losses of the National Bank, and general provisions (provisions) are formed at the expense of the National Bank at the expense of retained net income of the National Bank for the reporting period.
Securities in commercial banks and credit partnerships are accounted for in three categories:
- securities held for trading;
- available-for-sale securities;
- held-to-maturity securities.
The first two categories of securities are recorded at fair value. These securities in national and foreign currency shall be accounted at fair (market) value by means of their reassessment according to the quotations (prices) established at the external or internal financial market depending on the accounting policy of the bank (daily, weekly, monthly and/or at the moment of sale/maturity).
The third category of securities both in national and foreign currency shall be accounted at depreciated costs, using the effective interest rate. There is no revaluation of these securities.
Investments in the capital of associated companies shall be accounted depending on the method of accounting of investments chosen by the bank:
- Equity accounting, under which investments are initially recognized at cost and then adjusted for post-acquisition changes in the investor's share of net assets of an investee;
- cost accounting, under which investments are initially recognized at cost. Income from investments is recognized in the income statement only to the extent that the investor receives dividends from accumulated net income of the investee arising after the acquisition date.
Investments in the capital of subsidiaries are also accounted for depending on the method chosen by the bank:
- at actual cost;
- according to the participation method;
- or as financial assets available for sale as it has been described above.
The items expressed in foreign currency shall be converted into the national currency using the market exchange rate of tenge.
IV. Main sources of information
Data sources for the central bank and Data sources for other depository institutions.
The basis for the NB's and second-tier banks' (STB) monetary review is their monthly balance sheets. Commercial banks submit monthly balance sheets and statistical reporting forms to the NB. The balance sheet accounts of the NB and STBs are grouped on the basis of residence into external and internal assets/liabilities. Domestic assets/liabilities are grouped by sector of the economy.
Securities owned by the NFRK are not included in the balance sheet of the NB, but to ensure transparency of the balance sheet in the NB review are included as a separate line in the net foreign asset with a balancing entry in the liabilities in the net domestic asset item.
V. Practical features of data development
Banks submit their itemized balance sheet reports electronically, which are then entered into the NB Automated Information System "Statistics" (AIS "Statistics").
The data of the detailed balance sheet reports submitted by banks are subject to automated cross-checking with additional information on loans and deposits. The "Statistics" system automatically outputs the report on error with indication of any discrepancies between the data submitted by banks.
The detailed balance sheet data are subject to reconciliation with the second-tier banks' balance sheet data. The National Bank receives data on itemized balance sheets and groups accounts to compile a monetary survey of depository institutions and calculate monetary aggregates.
Year-end data are reported twice. Final year-end data for December (including final turnovers) are compiled later due to established rules for auditing year-end data. Preliminary end-of-December data are used to compile an overview of depository institutions until final end-of-December data are available. The basis for compiling the monetary survey of the NB and the STBs is their monthly itemized balance sheets.