JSC Halyk Bank (HSBK)
CORRECTION: JSC Halyk Bank - Consolidated financial results for the nine
month ended 30 September 2019
15-Nov-2019 / 15:55 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
15 November 2019
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the nine month ended 30 September 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 nine months ended 30 September
2019.
Consolidated income statements
KZT mln
9M 2019 9M Y-o-Y, % 3Q 2019 3Q Y-o-Y,%
2018 2018
Interest income 531,389 502,60 5.7% 175,305 167,86 4.4%
6 7
Interest expense (239,022 (253,3 (5.7%) (73,198 (83,04 (11.9%)
) 74) ) 4)
Net interest 292,367 249,23 17.3% 102,107 84,823 20.4%
income before 2
credit loss
expense
Fee and 89,796 83,736 7.2% 32,112 29,350 9.4%
commission
income
Fee and (39,335) (28,17 39.6% (14,579 (10,19 42.9%
commission 2) ) 9)
expense
Net fee and 50,461 55,564 (9.2%) 17,533 19,151 (8.4%)
commission
income
Insurance 3,770 2,987 26.2% 628 1,199 (47.6%)
income(1)
FX operations(2) 30,403 (37,05 (182.1%) (2,076) (31,99 (93.5%)
4) 2)
(Loss)/gain from (6,878) 87,879 (107.8%) 13,212 56,156 (76,5%)
derivative
operations and
securities (3)
Other income and 26,344 25,328 4.0% 5,563 2,398 5,5x
share in profit
of associate
Credit loss (21,140) (31,14 (32.1%) (8,454) (8,266 2,3%
expense (4) 2) )
Recoveries of (687) 3,045 (122.6%) 1,394 698 99,7%
other credit
loss expense
Operating (97,500) (134,5 (27.5%) (34,235 (35,27 (2.9%)
expenses 15)(5) ) 1)(6)
Income tax (25,752) (68,14 (62.2%) (8,513) (10,94 (22.2%)
expense 4) 7)
Profit from - 9,974 - - - -
discontinued
operations
Non-controlling - (807) - - 162 -
interest in net
income
Net income 251,388 163,96 53.3% 87,159 77,787 12.0%
1
Net interest 5.2% 4.9% 5.4% 5.1%
margin, p.a.
Return on 29.7% 24.9% 29.6% 33.8%
average equity,
p.a.
Return on 3.8% 2.6% 3.9% 3.7%
average assets,
p.a.
Cost-to-income 23.2% 33.8% 23.3% 25.3%
ratio
Cost of risk on 0.6% 0.9% 0.8% 0.8%
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 (loss)/gain on foreign exchange operations;
3) net gain/(loss) from financial assets and liabilities at fair value
through profit or loss and net realised gain from 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, financial assets at
FVTOCI, cash and cash equivalents and other assets.
5) including loss from impairment of non-financial assets of KZT 31.5bn
6) including loss from impairment of non-financial assets of KZT 1.2bn
Net income increased by 53.3% to KZT 251.4bn for 9M 2019 compared to KZT
164.0bn for 9M 2018 mainly due to net interest income growth in 9M 2019. For
9M 2018 the Bank had higher loss from impairment of non-financial assets of
KZT 31.5 bn compared to nil for 9M 2019, and in 2Q 2018 there was a
de-recognition of tax loss carry forward of KZT 43.3bn by Kazkommertsbank's
(KKB) due to the merger into Halyk Bank.
Interest income increased by 5.7% to KZT 531.4bn for 9M 2019 compared to KZT
502.6bn for 9M 2018 mainly as a result of increase in average balances of
interest-earning assets by 10.3%. Interest expense for 9M 2019 decreased by
5.7% compared to 9M 2018 mainly 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 5.2% p.a. for 9M 2019 compared to 4.9% p.a. in
9M 2018, despite the negative effect from 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.
Cost of risk on loans to customers for 9M 2019 was at 0.6% due to one-off
repayments of large ticket problem loans in 2Q 2019, while cost of risk on
loans to customers for 3Q 2019 was at a more normalized level of 0.8%.
Fee and commission income* for 9M 2019 increased by 7.2% p.a. vs. 9M 2018 as
a result of growing volumes of transactional banking, mainly in payment
cards operations, as well as letters of credit and guarantees issued.
Prior to the merger, the transfers within legal entities' current accounts
in Halyk and KKB were treated as external transfers and relevant fees were
applied. After the integration, the 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 in 9M 2019 vs. 9M
2018. The decrease in fees derived from cash operations in 9M 2019 vs. 9M
2018 was mainly due to increased volumes of non-cash transactions.
Fee and commission expense increased by 39.6% compared to 9M 2018 mainly due
to increased number of transactions of other banks' cards in the acquiring
network of the Bank.
Operating income increased by 5.5% vs. 9M 2018 mainly due to increase in net
interest income.
Operating expenses for 9M 2019 decreased by 27.5% vs. 9M 2018 mainly due to
loss from impairment of non-financial assets of KZT 28.5bn in 2Q 2018 and
cost optimisation on the back of synergy effect from merger of KKB into the
Bank.
On the back of lower operating expenses and higher operating income for 9M
2019 vs. 9M 2018, the Bank's cost-to-income ratio decreased to 23.2%
compared to 33.8% for 9M 2018.
* Starting from 1Q 2019 the portion of fees relating to payment card
operations, which was previously accounted within cash operations and bank
transfers, are represented as fees derived from payment card operations.
Figures for 3Q 2018 were recalculated accordingly.
Statement of financial position review
KZT mln
30-Sep-19 30-June-19 Change 31-Dec-18 Change Change
Q-o-Q, , abs YTD, %
%
Total 8,992,491 9,059,149 (0.7%) 8,959,024 33,467 0.4%
assets
Cash and 1,869,364 2,224,142 (16.0%) 1,870,879 (1,515 (0.1%)
reserves )
Amounts 48,185 51,357 (6.2%) 55,035 (6,850 (12.4%)
due from )
credit
instituti
ons
T-bills & 1,964,806 1,817,083 8.1% 2,226,320 (261,5 (11.7%)
NBK notes 14)
Other 998,379 900,282 10.9% 782,356 216,02 27.6%
securitie 3
s &
derivativ
es
Gross 3,990,965 3,909,256 2.1% 3,890,872 100,09 2.6%
loan 3
portfolio
Stock of (424,255) (416,681) 1.8% (409,793) (14,46 3.5%
provision 2)
s
Net loan 3,566,710 3,492,575 2.1% 3,481,079 85,631 2.5%
portfolio
Assets 58,193 55,990 3.9% 56,129 2,064 3.7%
held for
sale
Other 486,854 517,720 (6.0%) 487,226 (0,372 (0.1%)
assets )
Total 7,765,703 7,931,554 (2.1%) 7,893,378 (127,6 (1.6%)
liabiliti 75)
es
Total 6,190,717 6,220,463 (0.5%) 6,526,930 (336,2 (5.2%)
deposits, 13)
including
:
retail 3,167,448 3,241,081 (2.3%) 3,395,590 (228,1 (6.7%)
deposits 42)
term 2,716,866 2,770,374 (1.9%) 2,918,070 (201,2 (6.9%)
deposits 04)
current 450,582 470,707 (4.3%) 477,520 402,83 (5.6%)
accounts 0
corporate 3,023,269 2,979,382 1.5% 3,131,340 (108,0 (3.5%)
deposits 71)
term 1,273,017 1,455,387 (12.5%) 1,374,592 (101,5 (7.4%)
deposits 75)
current 1,750,252 1,523,995 14.8% 1,756,748 (6,496 (0.4%)
accounts )
Debt 919,154 903,536 1.7% 900,791 18,363 2.0%
securitie
s
Amounts 337,211 476,703 (29.3%) 168,379 168,83 100.3%
due to 2
credit
instituti
ons
Other 318,621 330,852 (3.7%) 297,278 21,343 7.2%
liabiliti
es
Equity 1,226,788 1,127,595 8.8% 1,065,646 61,142 15.1%
In 3Q 2019, *total assets* increased by 0.4% vs. YE 2018 mainly due to
increase in loans from Kazakhstan banks under REPO agreements and decreased
by 0.7% vs. 2Q 2019 mainly as a result of loans and deposits from Kazakhstan
banks (including loans under REPO agreements).
Compared with the 2Q 2019, *loans to customers* increased by 2.1% on a gross
basis and 2.1% on a net basis. Increase of gross loan portfolio in 3Q 2019
was attributable to increase in corporate loans (0.8% on a gross basis),
increase in SME loans (4.3% on a gross basis), and increase in retail loans
(3.9% on a gross basis).
As at the end of 3Q 2019, *Stage 3 ratio *decreased to 17.9% from 18.6% as
at the end of 2Q 2019 mainly as a result of repayments of previously
impaired indebtedness of corporate and retail borrowers.
Deposits of legal entities and individuals decreased by 3.5% and 6.7%,
respectively, compared to YE 2018 mainly due to partial withdrawal of funds
by the Bank's customers to finance their ongoing needs, including the
repayment of external debt obligations of national companies, and transfer
of a part of FX retail deposits into USD-denominated bonds placed at Astana
International Exchange. As at 30 September 2019, the share of corporate KZT
deposits in total corporate deposits was 49.6% compared to 55.8% as at 30
June 2019, whereas the share of retail KZT deposits in total retail deposits
was 42.2% compared to 41.8% as at the end of 2Q 2019.
Amounts due to credit institutions decreased by 29.3% vs. 2Q 2019 mainly due
to decrease in loans and deposits from Kazakhstan banks (including loans
under REPO agreements) attracted for placement at higher rates. As at 30
September 2019, 90.0% of the Bank's obligations to financial institutions
were represented by loans from Kazakhstan banks (incl. loans under REPO
agreements), KazAgro national managing 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 1.7% compared to 2Q 2019. 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 KZT 100.0 bn 7.5% p.a. November 2024
Local bonds KZT 131.7 bn 7.5% p.a. February 2025
Local bonds KZT 93.6 bn 8.75% p.a. January 2022
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 2Q 2019 total equity increased by 8.8% as a result of net
profit earned by the Bank during 3Q 2019.
The Bank's capital adequacy ratios were as follows*:
30-Sep-19 30-June-19 31-Mar-19 31-Dec-19 30-Sep-18
Capital adequacy ratios, unconsolidated:
Halyk Bank
k1-1 21.4% 19.7% 20.4% 19.7% 19.4%
k1-2 21.4% 19.7% 20.4% 19.7% 19.4%
k2 23.4% 21.5% 22.3% 21.6% 21.6%
Capital adequacy ratios, consolidated:
20.0% 18.3% 19.5% 18.5%
CET 1 17.8%
Tier 1 20.0% 18.3% 19.5% 18.5% 17.8%
capital
Total capital 23.4% 19.6% 20.9% 19.9% 19.9%
* minimum capital regulatory 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 nine months
ended 30 September 2019, including the notes attached thereto, are available
on Halyk Bank's website: https://halykbank.kz/en/investors/ifrs-reports [1].
A 9M & 3Q 2019 results webcast will be hosted at 1:00 p.m. London time/8:00
a.m. EST on Monday, 18 November 2019:
https://webcasts.eqs.com/halykbank20191118 [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, on the London Stock
Exchange since 2006 and Astana International Exchange since October 2019.
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 8,992.4 billion as at 30 September 2019, Halyk Bank
is Kazakhstan's leading lender. The Bank has the largest customer base and
broadest branch network in Kazakhstan, with 631 branches and outlets across
the country. The Bank operates in Georgia, Kyrgyzstan, Russia, Tajikistan
and Uzbekistan.
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 Kassenova +7 727 259 04 30
MiraK@halykbank.kz
Margulan Tanirtayev +7 727 259 04 53
Margulant@halykbank.kz
ISIN: US46627J3023
Category Code: MSCM
TIDM: HSBK
Sequence No.: 29652
EQS News ID: 914545
End of Announcement EQS News Service
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November 15, 2019 09:55 ET (14:55 GMT)
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