JSC Halyk Bank (HSBK)
JSC Halyk Bank: Consolidated financial results for the six month ended 30
June 2020
17-Aug-2020 / 06:39 CET/CEST
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The issuer is solely responsible for the content of this announcement.
17 August 2020
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the six month ended 30 June 2020
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries
(together "the Bank") (LSE: HSBK) releases consolidated financial
information for the six months ended 30 June 2020.
Consolidated income statements
KZT mln
1H 1H 2019 Y-o-Y,% 2Q 2Q 2019 Y-o-Y,%
2020 2020
Interest income 359,84 356,084 1.1% 180,50 179,901 0.3%
8 0
Interest (151,4 (165,824 (8.7%) (76,15 (82,250) (7.4%)
expense 25) ) 1)
Net interest 208,42 190,260 9.5% 104,34 97,651 6.9%
income before 3 9
credit loss
expense
Fee and 60,246 57,684 4.4% 29,435 30,711 (4.2%)
commission
income
Fee and (31,79 (24,756) 28.4% (14,85 (13,236) 12.2%
commission 0) 5)
expense
Net fee and 28,456 32,928 (13.6%) 14,580 17,475 (16.6%)
commission
income
Insurance 7,499 1,262 5.9x 5,758 1,330 4.3x
income(1)
FX 11,162 32,479 (65.6%) 52,259 15,281 3.4x
operations(2)
(Loss)/gain 5,989 (20,090) (129.8%) (55,15 (6,595) 8.3x
from derivative 6)
operations and
securities (3)
Other income 21,018 20,781 1.1% 5,908 11,554 (48.9%)
and share in
profit of
associate
Credit loss (33,90 (12,686) 167.3% (13,81 (3,615) 3.8x
expense (4) 6) 6)
Other credit (3,116 (2,081) 49.7% (1,205 (1,776) (32.2%)
loss expense ) )
Operating (74,63 (61,385) 21.6% (37,14 (32,160) 15.5%
expenses 7)(5) 7)(6)
Income tax (14,89 (17,239) (13.6%) (605) (9,418) (93.6%)
expense 4)
- - - - - -
- - - - - -
Net income 155,99 164,229 (5.0%) 74,925 89,727 (16.5%)
4
Net interest 5.2% 5.1% 5.0% 5.1%
margin, p.a.
Return on 22.6% 29.8% 21.2% 32.5%
average equity,
p.a.
Return on 3.3% 3.7% 3.1% 4.0%
average assets,
p.a.
Cost-to-income 25.8% 22.6% 28.2% 21.8%
ratio
Cost of risk on
loans to
customers, p.a.
1.3% 0.5% 1.0% 0.3%
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)/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 3.6 bn;
6) Including loss from impairment of non-financial assets of KZT 1.7 bn;
Net income decreased by 16.5% to KZT 74.9bn for 2Q 2020 compared to KZT
89.7bn for 2Q 2019 mainly as a result of increase in credit loss expenses.
Interest income slightly increased by 0.3% to KZT 180.5bn for 2Q 2020
compared to KZT 179.9bn for 2Q 2019 mainly as a result of increase in
average balances of interest-earning assets. Interest expense decreased by
7.4% compared to 2Q 2019. In comparison with 2Q 2019, net interest margin
decreased by 0.1% as a result of decline in interest rates on FX interbank
deposits and increase in share of placement in lower yielding FX
instruments.
Cost of risk increased to 1.0% compared to 0.3% in 2Q 2019 due to the
additional allowances for expected credit losses reflecting the increased
risk and uncertainty from COVID-19 outbreak and lockdown restrictions.
Fee and commission income reduction by 4.2% in comparison to 2Q 2019 was
caused by decrease in fees derived from cash operations in 2Q 2020 due to
the effect of COVID-19 lockdown, and as a result of some fees on payment
card operations became free of charge.
Fee and commission expense increased by 12.2% compared to 2Q 2019 due to
growth of service fees payable to the international payment systems as a
result of increase of non-cash transactions.
Other non-interest income(7) decreased by 85.1% to KZT 3.0bn for 2Q 2020 vs.
KZT 20.2bn for 2Q 2019 due to net loss from derivative operations and
securities mainly related to loss from revaluation of swap with NBRK and as
a result of lower income from the sale of property by subsidiary SPVs.
Insurance income(8) for 2Q 2020 increased by 4.3 times vs. 2Q 2019 due to
the growth of insurance premium on life insurance of the borrower under the
Bank's new unsecured lending program.
Operating expenses (including loss from impairment of non-financial assets)
for 2Q 2020 increased by 15.5% vs. 2Q 2019 mainly due to loss from
impairment of non-financial assets of KZT 1.7bn in 2Q 2020 and loyalty
program bonuses payable to the customers, which are included in operating
expenses related to the advertisement starting from 4Q 2019.
The Bank's cost-to-income ratio increased to 28.2% compared to 21.8% for 2Q
2019 due to lower operating income in 2Q 2020.
7) Other non-interest income (net gain on foreign exchange operations, net
loss from financial assets and liabilities at fair value through profit or
loss, net realised gain from financial assets at fair value through other
comprehensive income, share in profit of associate and other income);
8) 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).
Statement of financial position review
KZT mln
30-Jun-20 31-Mar-20 Change 31-Dec-19 Change Change
Q-o-Q, , abs YTD, %
%
Total 9,731,200 10,034,32 (3.0%) 9,234,758 496,44 5.4%
assets 3 2
Cash and 2,304,306 2,237,523 3.0% 1,805,343 498,96 27.6%
reserves 3
Amounts 101,351 72,161 40.5% 53,161 48,190 90.6%
due from
credit
instituti
ons
T-bills & 2,075,528 2,049,302 1.3% 1,954,066 121,46 6.2%
NBRK 2
notes
Other 721,004 1,094,266 (34.1%) 1,074,867 (353,8 (32.9%)
securitie 63)
s &
derivativ
es
Gross 4,389,064 4,427,427 (0.9%) 4,161,163 227,90 5.5%
loan 1
portfolio
Stock of (444,585) (454,166) (2.1%) (408,718) (35,86 8.8%
provision 7)
s
Net loan 3,944,479 3,973,261 (0.7%) 3,752,445 192,03 5.1%
portfolio 4
Assets 44,539 62,455 (28.7%) 45,766 (1,227 (2.7%)
held for )
sale
Other 539,993 545,355 (1.0%) 549,110 (9,117 (1.7%)
assets )
Total 8,262,263 8,674,629 (4.8%) 7,927,535 334,72 4.2%
liabiliti 8
es
Total 6,756,011 6,935,284 (2.6%) 6,406,413 349,59 5.5%
deposits, 8
including
:
retail 3,470,200 3,581,446 (3.1%) 3,251,216 218,98 6.7%
deposits 4
term 2,865,134 3,081,899 (7.0%) 2,743,019 122,11 4.5%
deposits 5
current 605,066 499,547 21.1% 508,197 96,869 19.1%
accounts
corporate 3,285,811 3,353,838 (2.0%) 3,155,197 130,61 4.1%
deposits 4
term 1,588,246 1,364,196 16.4% 1,441,930 146,31 10.1%
deposits 6
current 1,697,565 1,989,642 (14.7%) 1,713,267 (15,70 (0.9%)
accounts 2)
Debt 864,453 917,361 (5.8%) 834,446 30,007 3.6%
securitie
s
Amounts 270,393 418,047 (35.3%) 305,965 (35,57 (11.6%)
due to 2)
credit
instituti
ons
Other 371,406 403,937 (8.1%) 380,711 (9,305 (2.4%)
liabiliti )
es
Equity 1,468,937 1,359,694 8.0% 1,307,223 161,71 12.4%
4
As at the end of 2Q 2020, total assets increased by 5.4% vs. YE 2019 due to
growth in deposits and total equity. Whereas, the decrease by 3.0% vs. the
end of the 1Q 2020 was caused by revaluation of FX balance sheet positions
due to KZT appreciation versus US dollar during 2Q 2020 and decrease in the
volume of funds raised under REPO transactions.
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