JSC Halyk Bank (HSBK)
JSC Halyk Bank - Consolidated financial results for the year
ended 31 December 2019
12-March-2020 / 13:11 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
12 March 2020
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the year ended 31 December 2019
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries
(together "the Bank") (LSE: HSBK) releases consolidated financial
information for the year ended 31 December 2019
Consolidated income statements
KZT mln
12M 12M Y-o-Y, % 4Q 4Q 2018 Y-o-Y,%
2019 2018 2019
Interest income 710,3 682,041 4.1% 178,91 179,435 (0.3%)
04 5
Interest expense (312, (333,77 (6.4%) (73,30 (80,398 (8.8%)
326) 2) 4) )
Net interest 397,9 348,269 14.3% 105,61 99,037 6.6%
income before 78 1
credit loss
expense
Fee and 123,2 113,241 8.8% 33,460 29,505 13.4%
commission income 56
Fee and (54,6 (39,006 40.1% (15,31 (10,834 41.3%
commission 46) ) 1) )
expense
Net fee and 68,61 74,235 (7.6%) 18,149 18,671 (2.8%)
commission income 0
Insurance 8,346 7,329 13.9% 4,576 4,342 5.4%
income(1)
FX operations(2) 45,37 (64,577 170.3% 14,976 (27,523 (154.4%)
9 ) )
(Loss)/gain from (10,5 116,586 (109.1%) (3,718 28,707 (113.0%)
derivative 96) )
operations and
securities (3)
Other income and 41,78 24,664 69.4% 15,441 (664) (24.3x)
share in profit 5
of associate
Credit loss (30,0 (31,995 (6.1%) (8,914 (853) (9.5x)
expense (4) 54) ) )
(Other credit (1,30 15,951 (108.2%) (621) 12,906 (104.8%)
loss 8)
expense)/recoveri
es of other
credit loss
expense
Operating (149, (164,53 (9.0%) (52,15 (30,016 73.8%
expenses 655)( 1)(6) 5) (5) ) (7)
5)
Income tax (35,9 (82,474 (56.4%) (10,22 (14,330 (28.7%)
expense 74) ) 2) )
Profit from - 9,974 - - - -
discontinued
operations
Non-controlling - (807) - - - -
interest in net
income
Net income 334,5 254,238 31.6% 83,123 90,277 (7.9%)
11
Net interest 5.3% 5.1% 5.4% 5.6%
margin, p.a.
Return on 28.8% 27.9% 26.3% 35.5%
average
equity, p.a.
Return on 3.7% 3.0% 3.6% 4.1%
average
assets, p.a.
Cost-to-income 26.0% 31.7% 33.5% 24.7%
ratio
Cost of risk 0.7% 0.5% 1.1% (0.6%)
on 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 foreign exchange gain/(loss);
3) Net (loss)/gain 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 (FVOCI);
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 7.4 bn.
6) including loss from impairment of non-financial assets of KZT 27.3 bn.
7) including loss from impairment of non-financial assets of KZT (4.2) bn.
Net income increased by 31.6% to KZT 334.5bn for 12M 2019 compared to KZT
254.2bn for 12M 2018 mainly due to net interest income growth in 12M 2019.
For 12M 2018 the Bank had higher loss from impairment of non-financial
assets of KZT 27.3 bn compared to 7.4bn for 12M 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 4.1% to KZT 710.3bn for 12M 2019 compared to
KZT 682.0bn for 12M 2018 mainly as a result of increase in average balances
of interest-earning assets by 9.8%. Interest expense for 12M 2019 decreased
by 6.4% compared to 12M 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 increase in net interest
income and due to increase in the share of placement of interest-bearing
liabilities into interest-earning assets, net interest margin increased to
5.3% p.a. for 12M 2019 compared to 5.1% p.a. in 12M 2018.
Cost of risk on loans to customers for 12M 2019 was at 0.7%, more normalized
level compared to 0.5% for 12M 2018 which was mainly due to repayment of a
large ticket impaired corporate loan and transfer of few problem corporate
loans to subsidiary SPVs in 4Q 2018.
Fee and commission income* for 12M 2019 increased by 8.8% p.a. vs. 12M 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 12M 2019 vs. 12M
2018. The decrease in fees derived from cash operations in 12M 2019 vs. 12M
2018 was mainly due to increased volumes of non-cash transactions.
Fee and commission expense increased by 40.1% compared to 12M 2018 mainly
due to increased number of transactions of other banks' cards in the
acquiring network of the Bank.
Operating income increased by 10.8% vs. 12M 2018 mainly due to increase in
net interest income.
On the back of lower operating expenses and higher operating income for 12M
2019 vs. 12M 2018, the Bank's cost-to-income ratio decreased to 26.0%
compared to 31.7% for 12M 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 4Q 2018 were recalculated accordingly.
Statement of financial position review
KZT mln
31-Dec-19 30-Sep-19 Change 31-Dec-18 Change Change
Q-o-Q, , abs YTD, %
%
Total 9,234,758 8,992,491 2.7% 8,959,024 275,73 3.1%
assets 4
Cash and 1,805,343 1,869,364 (3.4%) 1,870,879 (65,53 (3.5%)
reserves 6)
Amounts 53,161 48,185 10.3% 55,035 (1,874 (3.4%)
due from )
credit
instituti
ons
T-bills & 1,954,066 1,964,806 (0.5%) 2,226,320 (272,2 (12.2%)
NBK notes 54)
Other 1,074,867 998,379 7.7% 782,356 292,51 37.4%
securitie 1
s &
derivativ
es
Gross 4,161,163 3,990,965 4.3% 3,890,872 270,29 6.9%
loan 1
portfolio
Stock of (408,718) (424,255) (3.7%) (409,793) 1,075 (0.3%)
provision
s
Net loan 3,752,445 3,566,710 5.2% 3,481,079 271,36 7.8%
portfolio 6
Assets 45,766 58,193 (21.4%) 56,129 (10,36 (18.5%)
held for 3)
sale
Other 549,110 486,854 12.8% 487,226 61,884 12.7%
assets
Total 7,927,535 7,765,703 2.1% 7,893,378 34,157 0.4%
liabiliti
es
Total 6,406,413 6,190,717 3.5% 6,526,930 (120,5 (1.8%)
deposits, 17)
including
:
retail 3,251,216 3,167,448 2.6% 3,395,590 (144,3 (4.3%)
deposits 74)
term 2,743,019 2,716,866 1.0% 2,918,070 (175,0 (6.0%)
deposits 51)
current 508,197 450,582 12.8% 477,520 30,677 6.4%
accounts
corporate 3,155,198 3,023,269 4.4% 3,131,340 23,858 0.8%
deposits
term 1,441,931 1,273,017 13.3% 1,374,592 67,339 4.9%
deposits
current 1,713,266 1,750,252 (2.1%) 1,756,748 (43,48 (2.5%)
accounts 2)
Debt 834,446 919,154 (9.2%) 900,791 (66,34 (7.4%)
securitie 5)
s
Amounts 305,965 337,211 (9.3%) 168,379 137,58 81.7%
due to 6
credit
instituti
ons
Other 380,711 318,621 19.5% 297,278 83,433 28.1%
liabilities
Equity 1,307,223 1,226,788 6.6% 1,065,646 241,57 22.7%
7
As at YE 2019 total assets increased by 3.1% vs. YE 2018, and their
structure was improved thanks to increased share of higher-yielding loans to
customers.
Compared with the YE 2018, loans to customers increased by 6.9% on a gross
basis and 7.8% on a net basis. Increase of gross loan portfolio in 2019 was
attributable to increase in corporate loans (5.9% on a gross basis),
increase in SME loans (9.4% on a gross basis), and increase in retail loans
(7.9% on a gross basis).
As at the end of 4Q 2019, Stage 3 ratio decreased to 16.0% from 17.9% as at
the end of 3Q 2019 mainly as a result of write-off and repayment of
previously impaired indebtedness of corporate and retail borrowers.
Deposits of legal entities increased by 0.8% and deposits of individuals
decreased by 4.3%, compared to YE 2018 mainly due to partial withdrawal of
funds by the Bank's customers to finance their ongoing needs and transfer of
a part of FX retail deposits into USD-denominated bonds placed at Astana
International Exchange. As at 31 December 2019, the share of corporate KZT
deposits in total corporate deposits was 49.4% compared to 49.6% as at 30
September 2019, whereas the share of retail KZT deposits in total retail
deposits was 43.7% compared to 42.2% as at the end of 3Q 2019.
Amounts due to credit institutions increased by 81.7% vs. YE 2018 mainly due
to increase in loans and deposits from Kazakhstan banks (including loans
under REPO agreements) attracted for placement at higher rates. As at 31
December 2019, 86.2% 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 programs supporting certain sectors of economy.
Debt securities issued decreased by 7.4% vs. YE 2018, mainly due to the
early partial prepayment of Bank's USD 750,000,000 Eurobond issue on 1 March
2019, redemption of Bank's KZT 3.5bn subordinated bonds on 26 April 2019 and
redemption of Bank's KZT 59.9bn coupon bonds on 14 November 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 172.5 mln 3.0% p.a. April 2022
at Astana
International
Exchange
Compared with the YE 2018 total equity increased by 22.7% as a result of net
profit earned by the Bank during 12M 2019.
The Bank's capital adequacy ratios were as follows*:
31-Dec-19 30-Sep-19 30-June-19 31-Mar-19 31-Dec-18
Capital adequacy ratios, unconsolidated:
Halyk Bank
k1-1 21.3% 21.4% 19.7% 20.4% 19.7%
k1-2 21.3% 21.4% 19.7% 20.4% 19.7%
k2 23.1% 23.4% 21.5% 22.3% 21.6%
Capital adequacy ratios, consolidated:
20.6% 20.0% 18.3% 19.5% 18.5%
CET 1
Tier 1 20.6% 20.0% 18.3% 19.5% 18.5%
capital
Total capital 21.9% 21.2% 19.6% 20.9% 19.9%
* minimum capital regulatory adequacy requirements: k1 - 9.72%, k1-2 -
10.72% and k2 - 12.22%, including conservation buffer of 3% and systemic
buffer of 1% for each of these ratios.
The consolidated financial information for year end 31 December 2019,
including the notes attached thereto, are available on Halyk Bank's website:
https://halykbank.kz/en/investors/ifrs-reports [1].
A 12M & 4Q 2019 results webcast will be hosted at 1:00 p.m. London time/9:00
a.m. EST on Friday, 13 March 2020:
https://webcasts.eqs.com/register/halykbank20200313 [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 9,234.8 billion as at 31 December 2019, Halyk Bank
is Kazakhstan's leading lender. The Bank has the largest customer base and
broadest branch network in Kazakhstan, with 626 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: MSCL
TIDM: HSBK
Sequence No.: 51983
EQS News ID: 995777
End of Announcement EQS News Service
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(END) Dow Jones Newswires
March 12, 2020 08:12 ET (12:12 GMT)
