DJ JSC Halyk Bank: Consolidated financial results for the nine month ended 30 September 2020
JSC Halyk Bank (HSBK)
JSC Halyk Bank: Consolidated financial results for the nine month ended 30
September 2020
16-Nov-2020 / 14:05 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
16 November 2020
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the nine month and third quarter ended 30 September 2020
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries
(together "the Bank") (LSE: HSBK) releases consolidated financial
information for the nine months and third quarter ended 30 September 2020.
Consolidated income statements
KZT mln
9M 9M 2019 Y-o-Y,% 3Q 3Q 2019 Y-o-Y,%
2020 2020
Interest income 540,38 531,389 1.7% 180,53 175,305 3.0%
7 9
Interest expense (239,3 (239,022 0.1% (87,94 (73,198) 20.1%
68) ) 3)
Net interest 301,01 292,367 3.0% 92,596 102,107 (9.3%)
income before 9
credit loss
expense
Fee and 94,579 89,796 5.3% 34,333 32,112 6.9%
commission
income
Fee and (48,23 (39,335) 22.6% (16,44 (14,579) 12.8%
commission 5) 5)
expense
Net fee and 46,344 50,461 (8.2%) 17,888 17,533 2.0%
commission
income
Net insurance 14,260 745 19.1x 6,761 (517) (13.1x)
income/(expense)
(1)
FX operations(2) 20,966 30,403 (31.0%) 9,804 (2,076) (4.7x)
Gain/(loss) from 8,199 (6,878) 1.2x 2,210 13,212 (83.3%)
derivative
operations and
securities (3)
Other income, 29,981 26,344 13.8% 8,963 5,563 61.1%
share in profit
of associate,
and income from
non-banking
activities
Credit loss (35,90 (21,140) 69.8% (1,996 (8,454) (76.4%)
expense (4) 2) )
Other credit (3,105 (687) 4.5x 11 1,394 (99.2%)
loss expense )
Operating (112,5 (94,475) 19.2% (37,95 (33,090) 14.7%
expenses 92) 5)(6)
(5)
Income tax (24,52 (25,752) (4.8%) (9,629 (8,513) 13.1%
expense 3) )
Non-controlling 1 - 100% 1 - 100%
interest
Net profit 244,64 251,388 (2.7%) 88,652 87,159 1.7%
attributable to 6
common
shareholders
Net interest 4.8% 5.2% 4.2% 5.4%
margin, p.a.
Return on 23.8% 29.7% 25.9% 29.6%
average equity,
p.a.
Return on 3.4% 3.8% 3.6% 3.9%
average assets,
p.a.
Cost-to-income 26% 22.6% 26.3% 22.7%
ratio
Cost of risk on
loans to
customers, p.a.
0.9% 0.6% 0.2% 0.8%
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/(loss) 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 (FVOCI);
4) Total credit loss expense, including credit loss expense on loans to
customers, amounts due from credit institutions, financial assets at
FVTOCI, debt securities at amortised cost, net of allowance, cash and cash
equivalents and other assets;
5) Including loss from impairment of non-financial assets of KZT 4.2 bn;
6) Including loss from impairment of non-financial assets of KZT 0.6 bn;
Net profit attributable to common shareholders increased by 1.7% to KZT
88.7bn for 3Q 2020 compared to KZT 87.2bn for 3Q 2019 mainly due to increase
in other non-interest income and decrease in credit loss expense.
Increase in interest income by 3.0% to KZT 180.5bn for 3Q 2020 compared to
KZT 175.3bn for 3Q 2019 was due to increase in interest income on loans to
customers by 12.7%, which was partially offset by the decrease in interest
income on securities due to transfers in placement from high-yielding NBRK
notes into low-yielding FX deposit with NBRK following the repayment of SWAP
agreement with NBRK for the amount of USD 912mln. Interest expense increased
by 20.1% vs. 3Q 2019 due to the increase of average balance and share of KZT
deposits in the amounts due to customers and due to recognition of discount
on receivables on sale of assets in installments. Net interest margin
decreased to 4.2% p.a. for 3Q 2020 compared to 5.4% p.a. in 3Q 2019 as a
result of transfers in placement from high-yielding NBRK notes into
low-yielding FX deposit with NBRK following the repayment of SWAP agreement
for the amount of USD 912mln. and due to one off negative effect from
recognition of discount on receivables on sale of assets in installments in
3Q 2020 vs. income from amortization of discount on receivables on sale of
assets in installments in 3Q 2019. NIM was also negatively affected by
decrease in the average effective interest rate on retail loans due to
increase in issued unsecured loans with a borrower's life insurance bundle,
income on which is reflected in insurance income, and increase in online
installment loans, which includes fees from merchants recognized in fee and
commission income.
Also, in financial information for the nine months ended 30 September 2020,
the note "20. Net interest income" now includes detailed disclosure of
interest income on loans to customers and interest expense from customers
accounts. The Note discloses detailed breakdown of interest income on loans
to customers by business segments - corporate, SME and retail and interest
expense from customers accounts by types of customers - individuals and
legal entities.
Cost of risk decreased to 0.2% compared to 0.8% in 3Q 2019 due to repayments
of large ticket problem loans of corporate borrowers and due to recovery of
retail loans. The decrease of cost of risk was also affected by changes in
macroeconomic assumptions when calculating provisioning rates for collective
loans in accordance with IFRS 9.
Fee and commission income increased by 6.9% in comparison to 3Q 2019 mainly
due to launch of online instalment loans, which are issued through ecosystem
partners - the largest appliances retailers in the country and as a result
of growing volumes of transactional banking, mainly in payment cards
operations.
Fee and commission expense increased by 12.8% compared to 3Q 2019 due to
increased number of transactions of other banks' cards in the acquiring
network of the Bank and growth of service fees payable to the international
payment systems as a result of increase of non-cash transactions.
Other non-interest income (7) increased by 25.6% to KZT 21.0bn for 3Q 2020
vs. KZT 16.7bn for 3Q 2019 mainly as a result of higher income from the sale
of property by subsidiary SPVs.
The new Note "26. Income on non-banking activities" was added to the
financial information for the nine months ended 30 September 2020. This note
discloses information about gain/ loss from the sale of commercial property,
assets held for sale and investment property.
Net insurance income/ (expense)(8) for 3Q 2020 significantly increased vs.
3Q 2019 as a result of new unsecured lending program with a borrower's life
insurance bundle.
Operating expenses (including loss from impairment of non-financial assets)
for 3Q 2020 increased by 14.7% vs. 3Q 2019 due to the increase in salaries &
other employee benefits, and loyalty program bonuses payable to the
customers, which are included in operating expenses related to the
advertisement and loyalty program expense starting from 4Q 2019.
The Bank's cost-to-income ratio increased to 26.3% compared to 22.7% for 3Q
2019 on the back of higher operating expense in 3Q 2020 vs. 3Q 2019.
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 income on non -
banking activities 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-Sep-20 30-Jun-20 Change 31-Dec-19 Change Change
Q-o-Q, , abs YTD, %
%
Total 9,999,141 9,731,200 2.8% 9,234,758 764,38 8.3%
assets 3
Cash and 2,372,908 2,304,306 3.0% 1,805,343 567,56 31.4%
reserves 5
Amounts 211,883 101,351 109.1% 53,161 158,72 4.0x
due from 2
credit
instituti
ons
T-bills & 1,815,799 2,075,528 (12.5%) 1,954,066 (138,2 (7.1%)
NBRK 67)
notes
Other 814,472 721,004 13.0% 1,074,867 (260,3 (24.2%)
securitie 95)
s &
derivativ
es
Gross 4,656,733 4,389,064 6.1% 4,161,153 495,58 11.9%
loan 0
portfolio
Stock of (450,712) (444,585) 1.4% (408,718) (41,99 10.3%
provision 4)
s
(MORE TO FOLLOW) Dow Jones Newswires
November 16, 2020 08:05 ET (13:05 GMT)
DJ JSC Halyk Bank: Consolidated financial results -2-
Net loan 4,206,021 3,944,479 6.6% 3,752,445 453,57 12.1%
portfolio 6
Assets 44,102 44,539 (1.0%) 45,766 (1,664 (3.6%)
held for )
sale
Other 533,956 539,993 (1.1%) 549,110 (15,15 (2.8%)
assets 4)
Total 8,631,327 8,262,263 4.5% 7,927,535 703,79 8.9%
liabiliti 2
es
Total 7,094,061 6,756,011 5.0% 6,406,413 687,64 10.7%
deposits, 8
including
:
retail 3,549,742 3,470,200 2.3% 3,251,216 298,52 9.2%
deposits 6
term 2,973,310 2,865,134 3.8% 2,743,019 230,29 8.4%
deposits 1
current 576,432 605,066 (4.7%) 508,197 68,235 13.4%
accounts
corporate 3,544,319 3,285,811 7.9% 3,155,197 389,12 12.3%
deposits 2
term 1,728,607 1,588,246 8.8% 1,441,930 286,67 19.9%
deposits 7
current 1,815,712 1,697,565 7.0% 1,713,267 102,44 6.0%
accounts 5
Debt 904,229 864,453 4.6% 834,446 69,783 8.4%
securitie
s
Amounts 266,993 270,393 (1.3%) 305,965 (38,97 (12.7%)
due to 2)
credit
instituti
ons
Other 366,044 371,406 (1.4%) 380,711 (14,66 (3.9%)
liabiliti 7)
es
Equity 1,367,814 1,468,937 (6.9%) 1,307,223 60,591 4.6%
As at the end of 3Q 2020, total assets increased by 8.3% vs. YE 2019 due to
growth in deposits and total equity. Whereas, the increase by 2.8% vs. the
end of the 2Q 2020 was caused by revaluation of FX balance sheet positions
due to KZT depreciation versus US dollar during 3Q 2020.
Compared with YE 2019, loans to customers increased by 11.9% on a gross
basis and 12.1% on a net basis. Increase of gross loan portfolio was
attributable to increase in corporate loans (7.7% on a gross basis),
increase in SME and retail loans by 15% and 19.9% on a gross basis,
respectively.
As at the end of 3Q 2020, Stage 3 ratio decreased to 14.8% from 15.7% as at
the end of 2Q 2020 mainly as a result of repayments of large ticket problem
loans of corporate borrowers and due to recovery and write-off of retail
loans.
Deposits of legal entities and individuals increased by 12.3% and 9.2%,
respectively, compared to YE 2019 mainly due to fund inflow from the Bank's
clients, and positive revaluation of FX-denominated deposits due to KZT
depreciation in 9M 2020. As at the end of 3Q 2020, the share of corporate
KZT deposits in total corporate deposits was 55.5% compared to 56.6% as at
the end of 2Q 2020, whereas the share of retail KZT deposits in total retail
deposits was 43.5% compared to 43.6% as at the end of 2Q 2020.
Amounts due to credit institutions decreased by 12.7% vs. the end of YE 2019
mainly due to decrease in loans under REPO agreements. As at 30 September
2020, 67.5% 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 increased by 4.6% compared to the end of 2Q 2020 as a
result of revaluation of FX denominated debt securities due to KZT
depreciation versus US dollar during 3Q 2020.
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 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 182 mln 3.0% p.a. April 2022
at Astana
International
Exchange
As at the end of 3Q 2020, total equity decreased by 6.9% compared with the
end of 2Q 2020 due to payout of dividends to shareholders in 3Q 2020.
The Bank's capital adequacy ratios were as follows*:
30-Sep-20 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19
Capital adequacy ratios, unconsolidated:
Halyk Bank
k1-1 22.4% 25.9% 22.5% 21.3% 21.4%
k1-2 22.4% 25.9% 22.5% 21.3% 21.4%
k2 24.4% 27.9% 24.4% 23.1% 23.4%
Capital adequacy ratios, consolidated:
CET 1 22.8% 25.2% 20.6% 20.6% 20.0%
Tier 1 capital 22.8% 25.2% 20.6% 20.6% 20.0%
Total capital 24.3% 26.7% 21.9% 21.9% 21.2%
* minimum capital regulatory adequacy requirements: k1 - 8.59%, k1-2 -
9.59% and k2 - 11.09%, including conservation buffer of 2% and systemic
buffer of 1% for each of these ratios.
The consolidated financial information for nine months ended 30 September
2020, including the notes attached thereto, are available on Halyk Bank's
website: http://halykbank.com/financial-results [1]
A 3Q 2020 results webcast will be hosted at 1:00 p.m. London time/8:00 a.m.
EST on Tuesday, 17 November 2020:
https://www.webcast-eqs.com/halykbank20201117 [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.
With total assets of KZT 9,999.1bn as at 30 September 2020, Halyk Bank is
Kazakhstan's leading lender. The Bank has the largest customer base and
broadest branch network in Kazakhstan, with 613 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.com
- ENDS-
For further information, please contact:
Halyk Bank
Mira Kassenova +7 727 259 04 30
MiraK@halykbank.kz
Margulan Tanirtayev +7 727 259 04 53
Margulant@halykbank.kz
Nurgul Mukhadi +7 727 330 16 77
NyrgylMy@halykbank.kz
ISIN: US46627J3023
Category Code: MSCL
TIDM: HSBK
Sequence No.: 87963
EQS News ID: 1148448
End of Announcement EQS News Service
1: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=c29947585f46ab75e6585b0a642fcb96&application_id=1148448&site_id=vwd&application_name=news
2: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=c45f4bc2a5137f5b4b55d9ca845c5767&application_id=1148448&site_id=vwd&application_name=news
(END) Dow Jones Newswires
November 16, 2020 08:05 ET (13:05 GMT)
© 2020 Dow Jones News
