Provision of the financial stability of commercial banks in Kazakhstan

The dynamic development of the banking sector in the constantly changing economic environment brings new aspects and problems to the activities of commercial banks, the solution of which largely depends on the level of their financial stability. The strong financial position of the banking institution is not only the basis for the viability and the opportunity for further development in the banking services market, but also the creation of a conflict-free external and internal environment, the preservation and maintenance of the image, which is important in the current conditions for the development of a "civilized" banking business. At the same time, a commercial bank is a "social", "public" institution, in which the interests of various and numerous economic entities are combined, each of which assesses its activities through a spectrum of individual problems. Only a financially stable bank is able to fully meet the needs of all economic entities.

All the existing approaches to assessing the financial stability of a commercial bank can be divided into three main blocks [1]:

- basic approach of the National Bank;

- accounting approach;

- expert approach.

The approach of the National Bank is based on comparing the most important characteristics of the bank with the regulatory level; the assignment of a bank to a particular group is carried out mainly on an expert rating; a distinctive feature of the approach used when banks are divided into groups is the orientation toward the absence of negative signs.

The essence of the accounting approach to assessing the bank's financial stability is that the bank's quantitative indicators are analyzed on the basis of official reporting. According to the directions of analysis in this approach, there are the graphical method, the integral method, the coefficient method and the rating method.

The main difference between the expert approach and accounting approach is that not only quantitative but also qualitative information on the bank is analyzed. In this case, any available information is used [2].

According to the directions of analysis in this approach, as well as in accounting, it is possible to highlight the integral method, the coefficient method, the rating method and the expert method.

Having described the existing approaches to assessing the financial stability of commercial banks and considering the merits and demerits of methods for assessing financial sustainability, there is a conclusion that the most effective is the accounting approach based on the following methods: coefficient, rating and expert.

Proceeding from this, author's development of a methodical approach to the assessment of the financial stability of a commercial bank is proposed. The proposed methodical approach consists of 7 stages, which are characterized by the presence of direct and inverse connections. Transition to each subsequent stage is carried out only after the implementation of the previous stage. Reverse links provide the ability to return to previous stages in the case of obtaining results that do not meet certain requirements. A block diagram of the methodical approach is presented in the figure 1.

At the first stage, there is a detection of the principal features of a commercial bank as an object for assessing financial stability.

At the second stage, a system of financial sustainability criteria for a commercial bank is revealed.

The conducted researches have revealed and specified the following criteria of stable functioning of a commercial bank: the capital base of the bank, liquidity, profitability, quality of assets.

At the third stage, the methods necessary for assessing the financial stability of a commercial bank are detected.

At the fourth stage, the coefficients of financial stability of a commercial bank are determined in accordance with the valuation techniques used.

The development of the coefficients of financial stability of a commercial bank was based on the following principles of their selection:

- complexity, that is, obtaining an overall assessment of the financial stability of the bank, rather than individual areas of its activities, while not pursuing the goal of comparing the indicators of this bank with other;

- focus on the characteristics of financial stability by key criteria of the bank: profitability of operations, capital base, liquidity, asset quality;

- suitability for identifying the main trends in the bank's financial stability.

All the coefficients of the system are interrelated and the definition of the place of each is due to its significance in this aspect. A differentiated approach to the construction of the system made it possible to deepen the qualitative characteristics of banking activity, considered in the unity of the main grouping characteristics. The universality of the system lies in the fact that all its ratios can be directly or indirectly quantified [3].

In our opinion, the ratios determining the financial stability of a commercial bank can be grouped as follows:

- base capital ratios;

- liquidity ratios;

- profitability ratios;

- asset quality ratios.

Figure 1. Stages of the methodical approach to the assessment of the financial stability of a commercial bank

In practice, a sufficiently large number of coefficients is used to evaluate these criteria. The problem arises of choosing from the set of ratios only those that have the greatest impact on the bank's financial stability. The choice of ratios should be based not on subjective judgments of analysts, but on establishing a strict dependence on these coefficients of financial stability of banks (Table 1).

Table 1. Ratios used in the methodological approach

Conventions:

C - equity capital;

Awei - bank assets weighted by risk level;

A - total assets of the bank;

Arisk0 - bank assets with zero risk level;

Lah - highly liquid assets of the bank;

BF - borrowed funds;

Ld – liabilities on demand;

Lat - liquid assets of a bank;

Ldt - liabilities on demand and liabilities of the bank to creditors (investors) in the next 30 calendar days;

NP - bank net profit;

BL - bad loans;

LD - loans, loan and equivalent debt;

RPLLf - actually formed reserve for possible losses on loans;

Ainc - assets that generate income.

The coefficients presented in Table 1 are the most revealing and determine the capital base of the bank, its liquidity, profitability and quality of assets with maximum completeness and accuracy. Using the coefficient system proposed by our methodology will allow us to assess the financial stability of commercial banks quite professionally [4].

At the fifth stage, an algorithm is formed to identify typological groups of commercial banks that distinguish in their different levels of financial stability.

The essence of the stage is to determine the correspondence of the values of the coefficients selected at the previous stage to the particular state of financial stability of the commercial bank. As a result of the calculation of each coefficient, a sequence of actions is formed, the end result of which is the final assessment of the financial stability of a commercial bank and its attribution, based on this assessment, to one of five typological groups that differ in the level of financial stability.

Commercial banks will belong to one or another typological group based on the values of one or several coefficients. Also at this stage it is necessary to determine which approaches should be used to establish the values of the selected coefficients in order to fully assess the financial stability of the commercial banks under investigation.

The sixth stage is the formation and analysis of typological groups of commercial banks. Calculation of the coefficients determined at the previous stage of this methodical approach allows us to classify a commercial bank as one of five typological groups for financial sustainability: absolutely financially stable; financially sustainable; relatively financially sustainable; relatively financially unsustainable; financially unstable.

The algorithm for assessing the bank's financial stability includes the following sequence of procedures, depicted in the figure 2.

AFSCB - absolutely financially stable commercial banks; FSCB - financially stable commercial banks; RFSCB - relatively financially sustainable commercial banks; RFUCB - relatively financially unsustainable commercial banks; FUCB - financially unstable commercial banks

Figure 2 - Algorithm for assessing financial sustainability of a commercial bank

At the seventh stage, a system of measures and recommendations aimed at improving the financial stability of a commercial bank is proposed.

Summarizing all of the above, the financial stability is the most important characteristic of the financial and economic activity of any business entity in a market economy.

The financial stability of a commercial bank is a qualitative characteristic of its activities based on the ability to form and effectively use high-quality financial flows that cause the commercial bank to carry out socially significant functions, the formation of sufficient reserves to cover possible losses, and its further development in the banking services market. The financial stability of the bank is the ability to adapt to changes in the economic environment in a timely manner, this is the non-compliance with the risk of losses, this is the basis for a stable relationship with customers and counterparties [5].

REFERENCES

1. Kushlin V. Factors of the economic crisis and the basis for overcoming it // Economist. - 2009. - ¹ 3. - P. 3-11.

2. Strategic management in the bank. Textbook for high schools. - M.: Ltd «Market DS Corporation», 2005.

3. Larionova I.V. Risk management in a commercial bank. - M.: KnoRus, 2014.

4. Andryushin S.A. Banking Systems: Tutorial. - M.: Alpha M: INFRA-M, 2011.

5. Simontseva S.V. Formation of a financial policy of a commercial bank: the dissertation... the candidate of economic sciences: 08.00.10. - Ivanovo, 2012.