DJ JSC Halyk Bank: Consolidated financial results for the year ended 31 December 2017
Dow Jones received a payment from EQS/DGAP to publish this press release.
JSC Halyk Bank (HSBK)
JSC Halyk Bank: Consolidated financial results for the year ended 31
December 2017
16-March-2018 / 12:48 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
16 March 2018
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the year ended 31 December 2017
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries
(together "the Bank") (LSE: HSBK) releases its consolidated financial
statements for the year ended 31 December 2017 prepared in accordance with
International Financial Reporting Standards, audited by Deloitte, LLP, and
subject to further approval by the Bank's Board of Directors and Annual
General Shareholders' Meeting.
Umut Shayakhmetova, the Bank's CEO commented:
"2017 had a particular historical significance for the further development
of Halyk Group. Having completed the major transaction on acquisition of
Kazkommertsbank, we have significantly strengthened our leading positions
and now have 34% market share. The main goal for this year is to
successfully complete all necessary procedures for the integration of
systemically important banks and insurance companies of the group. By
combining all the strengths, the most promising product and IT developments
and the largest infrastructures of our financial institutions - the Halyk
Group companies will be able to provide the best choice of products together
with excellent quality of service for our customers."
Consolidated income statements
12m 12m Change Y-o-Y 4Q 4Q Change Y-o-Y,
2017 2016 , abs , % 2017 2016 , abs %
Interest income 506,3 332,5 173,76 52.3% 167,2 88,51 78,759 89.0%
28 63 5 76 7
-257, -160, -97,25 60.6% -85,5 -41,7 -43,86 2.1x
805 549 6 69 05 4
Interest
expense
248,5 172,0 76,509 44.5% 81,70 46,81 34,895 74.5%
23 14 7 2
Net interest
income before
impairment
charge
87,64 57,69 29,943 51.9% 28,76 15,40 13,355 86.7%
0 7 0 5
Fee and
commission
income
-26,7 -11,2 -15,43 2.4x -10,7 -2,86 -7,835 3.7x
32 95 7 03 8
Fee and
commission
expense
60,90 46,40 14,506 31.3% 18,05 12,53 5,520 44.0%
8 2 7 7
Net fee and
commission
income
6,493 3,272 3,221 98.4% 2,933 1,373 1,560 2.1x
Insurance
income(1)
FX -4,94 18,50 -23,45 -4.7x 43,21 6,775 36,441 6.4x
operations(2) 9 6 5 6
Income/loss 32,48 -10,0 42,574 4.2x -27,8 -3,55 -24,32 7.8x
from derivative 7 87 77 4 3
operations and
securities (3)
Other 23,61 6,486 17,132 3.6x 14,17 2,518 11,661 5.6x
non-interest 8 9
income
Impairment -67,3 -25,3 -41,99 2.7x -43,1 -6,64 -36,50 6.5x
charge and 02 08 4 49 1 8
reserves (4)
1,737 -44 1781 40.5x 1,275 -66 1341 20.3x
Provisions
against letters
of credit and
guarantees
issued
-112, -68,5 -43,77 63.8% -46,2 -21,4 -24,72 2.2x
330 59 1 16 94 2
Operating
expenses(5)
-25,5 -22,1 -3,415 15.4% -8,16 -5,72 -2,441 42.6%
98 83 7 6
Income tax
expense
Profit from 9,876 10,91 -1,037 -9.5% 2,134 4,877 -2,743 -56.2%
discontinued 3
operations
-101 0 -101 100% -51 0 -51 100%
Non-controlling
Interest
173,3 131,4 41,950 31.9% 38,04 37,41 630 1.7%
62 12 1 1
Net income
Net interest 4.9% 5.5% 4.9% 5.3%
margin, p.a.
Return on 22.7% 22.3% 18.0% 23.1%
average equity,
p.a.
Return on 2.6% 2.8% 1.8% 3.0%
average assets,
p.a.
Cost-to-income 29.5% 28.1% 33.5% 31.3%
ratio
Cost of risk, 2.2% 1.0% 4.8% 1.1%
p.a.
(1) insurance underwriting income (gross insurance premiums written, net
change in unearned insurance premiums, ceded reinsurance share) less
insurance claims incurred, net of reinsurance (insurance payments, insurance
reserves expenses, commissions to agents);
(2) net gain on foreign exchange operations;
(3) net gain from financial assets and liabilities at fair value through
profit or loss and net realised gain/(loss) from available-for-sale
investment securities;
(4) total impairment charge, including impairment charge on loans to
customers, amounts due from credit institutions, available-for-sale
investment securities and other assets;
(5) Including impairment loss of assets held for sale
Compared with 12M 2016, interest income grew by 52.3% due to 51.1% increase
in average balances of interest-earning assets. The increase in average
balances of interest-earning assets was mainly on the back of consolidation
of Kazkommertsbank assets in 3Q 2017, as well as NBK Notes purchased by the
Bank starting from 2Q 2016. Interest expense grew by 60.6% compared with 12M
2016. This was mostly due to increase in average balances on interesting
bearing liabilities by 42.5%, as well as increase in average interest rates
on amounts to customers (to 4.1% p.a. from 3.7% p.a.) and debt securities
issued (to 8.5% p.a. from 7.7% p.a.) as a result of consolidation of
Kazkommertsbank assets in 3Q 2017. As a result, net interest income before
impairment charge increased by 44.5% to KZT 248.5bn compared to 12M 2016.
Compared with 3Q 2017, interest income grew by 8.4% due to 15.7% increase in
average balances of interest-earning assets. Interest expense decreased by
0.9% compared with 3Q 2017 due to decrease in average interest rates on
interest-bearing liabilities to 4.7%p.a. from 5.5%p.a. As a result, net
interest income before impairment charge increased by 20.1% to KZT 81.7bn
compared to 3Q 2017.
Net interest margin decreased to 4.9% p.a. for 12M 2017 compared to 5.5%
p.a. for 12M 2016, mainly on the back of lower net interest margin of
Kazkommertsbank and reclassification of Altyn Bank's interest earning-assets
into assets held for sale. Net interest margin remained almost flat at 4.9%
p.a. for 4Q 2017 compared to 4.8% p.a. for 3Q 2017 against the decreasing
interest rates on interest-bearing liabilities.
Impairment charge increased by 165.9% compared to 12M 2016 mainly due to
consolidation of Kazkommertsbank loan portfolio starting from 3Q 2017. The
cost of risk increased to 2.2% p.a. compared to 1.0% p.a. for 12m 2016 and
to 4.8% p.a. compared to 1.1% p.a. for 4Q 2016.
Fee and commission income rose by 51.9% compared to 12M 2016, mainly as a
result of consolidation of Kazkommertsbank, as well as, growing volumes of
transactional banking, mainly in payment card maintenance, cash operations
and bank transfers - settlements.
Other non-interest income increased to KZT 106.3bn for 12M 2017 vs. KZT
43.0bn for 12M 2016. This increase was largely attributable to consolidation
with insurance subsidiaries of Kazkommertsbank, as well as, growing volumes
of insurance business of the Bank. In addition, other non-interest income
grew due to net gain from financial assets and liabilities at fair value
through profit or loss mainly on the back of consolidation of
Kazkommertsbank.
Operating expenses grew by 63.8% compared to 12M 2016 mainly due to
consolidation of Kazkommertsbank, as well as increase in the Bank's expenses
on salaries and other employee benefits, professional services and taxes.
Salaries and other employee benefits increased on the back of higher bonus
reserves accrued in 12M 2017 compared to 12M 2016 and overall increase in
employee salaries from 1 June 2017; the increase was partially offset by the
reversal of bonus reserves in 3Q 2017 previously accrued by Kazkommertsbank.
The increase in professional services and taxes was due to expenses on
external consultants in connection with the purchase of Kazkommertsbank and
sale of 60% stake in Altyn Bank.
The Bank's cost-to-income ratio increased to 29.5% compared to 28.1% for 12M
2016 on the back of faster growth in operating expenses versus operating
income. Operating income increased by 56.1% on the back of higher interest
income, net fees and commissions, positive revaluation of derivative
instruments in 3Q 2017 and realised net gain on trading operations in 4Q
2017.
Consolidated statement of financial position
31-Dec-17 30-Sep-17 31-Dec-16 Change Change Change Change
, abs YTD, % , abs
Q-o-Q,
%
Total 8,857,781 8,674,584 5,348,483 3,509, 65.6% 183,19 2.1%
assets 298 7
Cash and 1,891,587 1,726,932 1,850,641 40,946 2.2% 164,65 9.5%
reserves 5
Amounts due 87,736 77,056 35,542 52,194 2.5x 10,680 13.9%
from credit
institution
s
T-bills & 1,878,870 1,974,180 586,982 1,291, 3.2x -95,31 -4.8%
(MORE TO FOLLOW) Dow Jones Newswires
March 16, 2018 07:48 ET (11:48 GMT)
NBK notes 888 0
Other 831,531 799,117 341,379 490,15 2.4x 32,414 4.1%
securities 2
&
derivatives
Gross loan 3,568,263 3,413,180 2,604,335 963,92 37.0% 155,08 4.5%
portfolio* 8 3
Stock of -317,161 -290,110 -284,752 -32,40 11.4% -27,05 9.3%
provisions 9 1
Net loan 3,251,102 3,123,070 2,319,583 931,51 40.2% 128,03 4.1%
portfolio 9 2
Assets held 552,405 581,208 10,297 542,10 53.6x -28,80 -5.0%
for sale 8 3
Other 364,550 393,021 204,059 160,49 78.6% -28,47 -7.2%
assets 1 1
Total 7,923,324 7,847,901 4,682,890 3,240, 69.2% 75,423 1.0%
liabilities 434
Total 6,131,750 6,076,281 3,820,662 2,311, 60.5% 55,469 0.9%
deposits, 088
including:
retail 3,104,249 3,159,493 1,715,448 1,388, 81.0% -55,24 -1.7%
deposits 801 4
term 2,691,886 2,772,441 1,470,536 1,221, 83.1% -80,55 -2.9%
deposits 350 5
current 412,363 387,052 244,912 167,45 68.4% 25,311 6.5%
accounts 1
corporate 3,027,501 2,916,788 2,105,214 922,28 43.8% 110,71 3.8%
deposits 7 3
term 1,705,971 1,578,268 1,267,589 438,38 34.6% 127,70 8.1%
deposits 2 3
current 1,321,530 1,338,520 837,625 483,90 57.8% -16,99 -1.3%
accounts 5 0
Debt 962,396 988,774 584,933 377,46 64.5% -26,37 -2.7%
securities 3 8
Amounts due 255,151 154,892 162,134 93,017 57.4% 100,25 64.7%
to credit 9
institution
s
Liabilities 334,627 372,899 0 334,62 100% -38,27 -10.3%
directly 7 2
associated
with assets
classified
as held for
sale
Other 239,400 255,055 115,161 124,23 2.1x -15,65 -6.1%
liabilities 9 5
Equity 934,457 826,683 665,593 268,86 40.4% 107,77 13.0%
4 4
*Including KKB net loans of KZT 780,866 million recognised by the Bank at
fair value + changes in KKB gross loan portfolio from acquisition date to 31
December 2017.
**Including changes in provisions created on KKB loan portfolio from
acquisition date to 31 December 2017.
In FY 2017, total assets increased by 65.6% vs. YE 2016, mainly due to
consolidation of KKB. Compared to YE 2016, the Bank's assets, excluding
those of KKB, increased by 3.1% mainly on the back of loan and securities
portfolio growth.
Compared with YE 2016, loans to customers increased by 37.0% on a gross
basis and 40.2% on a net basis, as a result of consolidation of
Kazkommertsbank loan portfolio.
The aggregate Halyk Bank and KKB's 90-day NPL ratio was 12.1% compared to
13.4% as at 30 September 2017. The decrease compared to 3Q 2017 was mainly
due to write-off and repayment of problem indebtedness in loan portfolios of
the Bank and Kazkommertsbank.
Allowances for loan impairment increased by 11.4% compared to YE 2016,
mainly as a result of additional provisions created against impaired loans
in the Bank's and Kazkommertsbank's portfolio.
Deposits of legal entities and individuals increased by 43.8% and 81.0%,
respectively, compared to YE 2016, mainly due to consolidation of
Kazkommertsbank assets and liabilities. As at 31 December 2017, the share of
corporate KZT deposits in total corporate deposits was 48.3% compared to
52.1% as at 30 September 2017 and 36.8% as at YE 2016, whereas the share of
retail KZT deposits in total retail deposits was 40.7% compared to 37.7% as
at 30 September 2017 and 32.1% as at YE 2016.
Amounts due to credit institutions increased by 57.4% vs. YE 2016 mainly due
to the Bank's REPO transactions with the Kazakhstan Stock Exchange in 4Q
2017 and consolidation of Kazkommertsbank in 3Q 2017. As at YE 2017, 47.5%
of the Bank's obligations to financial institutions was represented by loans
from KazAgro national management holding, DAMU development fund, Development
Bank of Kazakhstan drawn in 2014-2017 within the framework of government
programmes supporting certain sectors of economy.
Debt securities issued increased by 64.5% vs. YE 2016, mainly due to
consolidation of Kazkommertsbank's securities portfolio in 3Q 2017. On 9
February 2018, Kazkommertsbank redeemed in full its USD 100 million
perpetual subordinated international bond bearing a coupon rate of USD Libor
+ 6.1905% out of its own funds. As at the date of this press-release, the
Bank's debt securities portfolio was as follows:
Description of the Nominal Interest rate Maturity
security amount Date
outstanding
Issued by Halyk
Bank
Eurobond USD 500 mln 7.25% p.a. January 2021
Local bonds placed KZT 100 bn 7.5% p.a. November
with the Unified 2024
Accumulative
Pension Fund
Local bonds placed KZT 131.7 bn 7.5% p.a. February
with the Unified 2025
Accumulative
Pension Fund
Issued by
Kazkommertsbank*
Eurobond USD 300 mln 8.5% p.a. May 2018
Eurobond USD 750 mln 5.5% p.a. December
2022
Local bonds KZT 94.2 bn 8.75% p.a. January 2022
Local bonds KZT 59.9 bn 8.4% p.a. November
2019
Subordinated coupon KZT 101.1 bn 9.5% p.a. October 2025
bonds
Subordinated coupon KZT 3.5 bn Inflation April 2019
bonds indexed
(currently 8.9%
p.a.)
Subordinated coupon KZT 10 bn Inflation November
bonds indexed 2018
(currently 8.0
%p.a.)
*Excluding debt securities of Kazkommertsbank's Russian subsidiary for RUB
121.2million.
Compared with YE 2016 total equity increased by 40.4% mainly due to net
profit earned by the Bank during FY 2017, as well as consolidation of
Kazkommertsbank in 3Q 2017 and additional capital injection of KZT 65.2 bn
into it by the Bank's major shareholder Holding Group Almex on 15 November
2017.
The Bank's capital adequacy ratios were as follows:
01.01.2018 01.10.2017* 01.07.2017* 01.04.2017* 01.01.2017
Capital adequacy ratios, unconsolidated:
Halyk Bank
K1-1 21.5% 20.2% 22.1% 21.3% 19.2%
K1-2 21.5% 20.2% 22.1% 21.3% 19.2%
K2 21.4% 20.1% 22.1% 21.3% 19.2%
Kazkommertsbank
K1-1 18.0% 13.1%
K1-2 19.9% 15.0%
K2 26.9% 10.3%
Capital adequacy ratios, consolidated:
CET 16.9% 15.4% 21.6% 21.5% 19.4%
Tier 1 16.9% 15.8% 21.6% 21.5% 19.4%
capita
l
Tier 2 18.9% 17.8% 21.6% 21.5% 19.4%
capita
l
* The regulator increased minimum capital adequacy requirements starting
from 1 January 2017: k1 - 9.5%, k1-2 - 10.5% and k2 - 12.0%, including
conservation buffer of 3% and systemic buffer of 1% for each of these
ratios.
The consolidated financial information for the year ended 31 December 2017,
including the notes
attached thereto, are available on Halyk Bank's website:
https://halykbank.kz/investoram/ifrs_reports2 [1].
A 12M 2017 results webcast will be hosted at 11:00 a.m. GMT/7:00 a.m. EST on
Monday, 19 March 2018:
http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5435 [2]
About Halyk Bank
Halyk Bank is Kazakhstan's leading financial services group, operating
across a variety of segments, including retail, SME & corporate banking,
insurance, leasing, brokerage and asset management. Halyk Bank has been
listed on the Kazakhstan Stock Exchange since 1998 and on the London Stock
Exchange since 2006.
In July 2017, the Bank purchased majority stake in Kazkommertsbank JSC - the
second largest Bank in Kazakhstan by total assets.
With total assets of KZT 8,857.8 billion as at 31 December 2017, Halyk Bank
is Kazakhstan's leading lender. The Bank has the largest customer base and
broadest branch network in Kazakhstan, with 699 branches and outlets
(including 210 branches and outlets of Kazkommertsbank) across the country.
The Bank also operates in Georgia, Kyrgyzstan, Russia and Tajikistan.
For more information on Halyk Bank, please visit https://www.halykbank.kz
[3]
- ENDS-
For further information, please contact:
Halyk Bank
Murat Koshenov +7 727 259 07 95
Mira Kasenova +7 727 259 04 30
Karashash Karymsakova +7 727 330 01 92
ISIN: US46627J3023
Category Code: MSCM
TIDM: HSBK
Sequence No.: 5310
End of Announcement EQS News Service
665003 16-March-2018
(MORE TO FOLLOW) Dow Jones Newswires
March 16, 2018 07:48 ET (11:48 GMT)
