DJ JSC Halyk Bank: Consolidated financial results for three months ended 31 March 2019
JSC Halyk Bank (HSBK)
JSC Halyk Bank: Consolidated financial results for three months ended 31
March 2019
14-May-2019 / 14:33 CET/CEST
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The issuer is solely responsible for the content of this announcement.
14 May 2019
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for three months ended 31 March 2019
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries
(together "the Bank") (LSE: HSBK) releases its condensed interim
consolidated financial information for the three months ended 31 March 2019.
Consolidated income statements
KZT mln
1Q 1Q Change Y-o-Y, %
2019 2018 , abs
Interest income 176,1 163,733 12,4 7.6%
83 50
Interest (83,5 (87,617) 4,04 (4.6%)
expense 74) 3
Net interest 92,60 76,116 16,4 21.7%
income before 9 93
credit loss
expense
Fee and 26,97 26,374 599 2.3%
commission 3
income
Fee and (11,5 (9,680) (1,8 19.0%
commission 20) 40)
expense
Net fee and 15,45 16,694 (1,2 (7.4%)
commission 3 41)
income
Insurance 843 292 551 2.9x
income(1)
FX 17,19 55,425 (38, (69.0%)
operations(2) 8 227)
Loss from (13,4 (42,546) 29,0 (68.3%)
derivative 95) 51
operations and
securities (3)
Other 9,227 7,313 1,91 26.2%
non-interest 4
income
Credit loss (9,07 1,139 (10, (8.0x)
expense (4) 1) 210)
Recoveries of (305) 1,355 (1,6 (0.2x)
other credit 60)
loss expense
Operating (30,1 (35,697) 5,56 (15.6%)
expenses 36) 1
Income tax (7,82 (10,159) 2,33 (23.0%)
expense 1) 8
Profit from - 2,585 - -
discontinued
operations
Non-controlling - (10,464) - -
interest in net
income
Net income 74,50 62,053 12,449 20.1%
2
Net interest 5.0% 4.4%
margin, p.a.
Return on 26.8% 29.2%
average equity,
p.a.
Return on 3.3% 2.9%
average assets,
p.a.
Cost-to-income 24.1% 30.7%
ratio
Cost of risk on 0.6% (0.5%)
loans to
customers, 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 loss from financial assets and liabilities at fair value through
profit or loss and net realised gain financial assets at fair value through
other comprehensive income (FVTOCI);
(4) total credit loss expense, including credit loss expense on loans to
customers, amounts due from credit institutions, debt securities at
amortized cost and at FVTOCI and other assets.
Net income increased to KZT 74.5bn for 1Q 2019 compared to KZT 62.1bn for 1Q
2018 mainly as a result of higher net interest income and lower operating
expenses in 1Q 2019.
Interest income increased to KZT 176.2bn for 1Q 2019 compared to KZT 163.7bn
for 1Q 2018 mainly as a result of increase in average balances of
interest-earning assets. Interest expense decreased by 4.6% compared to 1Q
2018. This was due to continuous repricing of retail term deposits following
the decrease of deposit interest rate cap by Kazakhstan Deposit Insurance
Fund. As a result of net interest income growth, net interest margin
increased to 5.0% p.a. for 1Q 2019 compared to 4.4% p.a. for 1Q 2018. Net
interest margin decreased to 5.0% p.a. for 1Q 2019 compared to 5.6% in 4Q
2018 mainly as a result of accelerated amortisation of discount on the
Bank's Eurobonds in the amount of KZT 7.4bn due to its early partial
prepayment on 1 March 2019 as well as decrease in average rates on loans to
customers.
Cost of risk on loans to customers for 1Q 2019 was at 0.6%.
Fee and commission income increased by 2.3% compared to 1Q 2018. Starting
from 1Q 2019 the portion of fees relating to payment card operations, which
was previously accounted within cash operations and bank transfers, will be
represented as fees derived from payment card operations. Figures for 1Q
2018 were recalculated accordingly.
Prior to the merger, transfers within legal entities current accounts in
Halyk and KKB were treated as external transfers and relevant fees were
applied. After the integration, transfers between those current accounts are
being treated as internal and therefore are free of charge. As a result,
fees derived from Bank transfers - settlements decreased to KZT 3.5bn
compared to KZT 4.1bn in 1Q 2018. Fee and commission income decreased by
8.6% compared to 4Q 2018 mainly on the back of seasonal effect.
Fee and commission expense increased by 19.0% compared to 1Q 2018 mainly due
to increased number of transactions of other banks' cards in the acquiring
network of the Bank.
Other non-interest income decreased by 18.2% to KZT 28.5bn for 1Q 2019 vs.
KZT 34.8bn for 1Q 2018 mainly due to lower gain from revaluation of swap
with NBK.
Operating expenses (including loss from impairment of non-financial assets)
decreased by 15.6% to KZT 30.1bn vs. KZT 35.7bn for 1Q 2018. This was mainly
a synergy effect on the back of cost optimisation following and during the
merger process of KKB into the Bank.
The Bank's cost-to-income ratio decreased to 24.1% compared to 30.7% for 1Q
2018 on the back of lower operating expenses and higher operating income in
1Q 2019 vs. 1Q 2018. Operating income increased by 7.5% mainly due to
increase in net interest income.
Statement of financial position review
KZT mln
31-Mar-19 31-Dec-18 Change Change YTD, %
, abs
Total 8,864,688 8,959,024 (94,33 (1.1%)
assets 6)
Cash and 1,603,235 1,870,879 (267,6 (14.3%)
reserves 44)
Amounts 49,585 55,035 (5,450 (9.9%)
due from )
credit
instituti
ons
T-bills & 2,388,241 2,226,320 161,92 7.3%
NBK notes 1
Other 842,741 782,356 60,385 7.7%
securitie
s &
derivativ
es
Gross 3,834,366 3,890,872 (56,50 (1.5%)
loan 6)
portfolio
*
Stock of (413,564) (409,793) 3,771 0.9%
provision
s**
Net loan 3,420,802 3,481,079 (60,27 (1.7%)
portfolio 7)
Assets 56,362 56,129 233 0.4%
held for
sale
Other 503,722 487,226 16,496 3.4%
assets
Total 7,714,905 7,893,378 178,47 (2.3%)
liabiliti 3
es
Total 6,385,098 6,526,930 (141,8 (2.2%)
deposits, 32)
including
:
retail 3,281,658 3,395,590 (113,9 (3.4%)
deposits 32)
term 2,843,352 2,918,070 (74,71 (2.6%)
deposits 8)
current 438,306 477,520 (39,21 (8.2%)
accounts 4)
corporate 3,103,440 3,131,340 (27,90 (0.9%)
deposits 0)
term 1,289,374 1,374,592 (85,21 (6.2%)
deposits 8)
current 1,814,066 1,756,748 (57,31 3.3%
accounts 8)
Debt 827,804 900,791 (72,98 (8.1%)
securitie 7)
s
Amounts 167,909 168,379 (470) (0.3%)
due to
credit
instituti
ons
Other 334,094 297,278 36,816 12.4%
liabiliti
es
Equity 1,149,783 1,065,646 84,137 7.9%
Total assets decreased by 1.1% vs. the end of YE 2018 mainly as a result of
partial withdrawal of funds by the Bank's customers in 1Q 2019.
Compared with the YE2018, loans to customers decreased by 1.5% on a gross
basis and 1.7% on a net basis. Decrease of gross loan portfolio in 1Q 2019
was attributable to decrease in corporate loans (- 0.2% on a gross basis),
SME loans (- 6.3% on a gross basis), mortgage loans (-1.5% on a gross basis)
and consumer loans (-1.3% on a gross basis).
Halyk Bank's 90-day NPL ratio increased to 9.1% from 8.2% as at the end of
2018. The increase was mainly as a result of some indebtedness of previously
impaired corporate borrowers became overdue.
Deposits of legal entities and individuals decreased by 0.9% and 3.4%,
respectively, compared to the YE 2018 mainly due to partial withdrawal of
funds by the Bank's customers to finance their ongoing needs. As at 31 March
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2019, the share of corporate KZT deposits in total corporate deposits was
50.3% compared to 48.3% as at 31 December 2018, whereas the share of retail
KZT deposits in total retail deposits was 42.6% compared to 41.0% as at YE
2018.
Amounts due to credit institutions decreased slightly by 0.3% vs. YE 2018.
As at 31 March 2018, 75.7% of the Bank's obligations to financial
institutions were 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 decreased by 8.1% compared to YE 2018, mainly due to
early partial prepayment on 1 March 2019 of Eurobond due in 2022 for the
amount of USD 200 mln. As at the date of this press-release, the Bank's debt
securities portfolio was as follows:
Description of the Nominal amount Interest rate Maturity Date
security outstanding
Eurobond USD 500 mln 7.25% p.a. January 2021
Eurobond USD 548 mln 5.5% p.a. December 2022
Local bonds placed KZT 100 bn 7.5% p.a. November 2024
with the Unified
Accumulative Pension
Fund
Local bonds placed KZT 131.7 bn 7.5% p.a. February 2025
with the Unified
Accumulative Pension
Fund
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
Local bonds listed USD 180.5 mln 3.0% p.a. April 2022
at Astana
International
Exchange
Compared with the YE 2018 total equity increased by 7.9% due to net profit
earned by the Bank during 1Q 2019.
The Bank's capital adequacy ratios were as follows*:
01.04.2019 01.01.2019 01.10.2018 01.07.2018 01.04.2018
Capital adequacy ratios, unconsolidated:
Halyk Bank
k1-1 20.4% 19.7% 19.4% 20.6% 21.7%
k1-2 20.4% 19.7% 19.4% 20.6% 21.7%
k2 22.3% 21.6% 21.6% 20.6% 21.6%
Capital adequacy ratios, consolidated:
CET 19.5% 18.5% 17.8% 17.2% 18.1%
Tier 1 19.5% 18.5% 17.8% 17.2% 18.1%
capital
Tier 2 20.9% 19.9% 19.9% 19.1% 20.0%
capital
* minimum capital adequacy requirements: 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 condensed interim consolidated financial information for the three
months ended 31 March
2019, including the notes attached thereto, are available on Halyk Bank's
website: https://halykbank.kz/investoram/ifrs_reports2 [1].
A 1Q 2019 results webcast will be hosted at 2:00 p.m. GMT/9:00 a.m. EST on
Friday, 15 May 2019:
https://webcasts.eqs.com/halyk20190515 [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 - and merged it fully in
July 2018.
With total assets of KZT 8,864.7 billion as at 31 March 2019, Halyk Bank is
Kazakhstan's leading lender. The Bank has the largest customer base and
broadest branch network in Kazakhstan, with 645 branches and outlets 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
Viktor Skryl +7 727 259 04 27
ViktorSk@halykbank.kz
Mira Kasenova +7 727 259 04 30
MiraK@halykbank.kz
Karashash Karymsakova +7 727 330 01 92
KarashashK@halykbank.kz
ISIN: US46627J3023
Category Code: MSCM
TIDM: HSBK
Sequence No.: 8619
EQS News ID: 811029
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