DJ JSC Halyk Bank: Consolidated financial results for the year ended 31 December 2020
JSC Halyk Bank (HSBK)
JSC Halyk Bank: Consolidated financial results for the year ended 31 December 2020
12-March-2021 / 12:03 CET/CEST
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12 March 2021
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the year ended 31 December 2020
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries (together "the Bank") (LSE: HSBK)
releases consolidated financial statements and independent auditors' report for the year ended 31 December 2020.
Consolidated income statements
KZT mln
12M 2020 12M 2019 Y-o-Y,% 4Q 2020 4Q 2019 Y-o-Y,%
Interest income 733,234 710,304 3.2% 192,847 178,915 7.8%
Interest expense (333,741) (312,326) 6.9% (94,373) (73,304) 28.7%
Net interest income before credit loss expense 399,493 397,978 0.4% 98,474 105,611 (6.8%)
Fee and commission income 131,399 123,256 6.6% 36,820 33,460 10.0%
Fee and commission expense (63,184) (54,646) 15.6% (14,949) (15,311) (2.4%)
Net fee and commission income 68,215 68,610 (0.6%) 21,871 18,149 20.5%
Net insurance income(1) 22,482 4,058 5.5x 8,222 3,313 148.2%
FX operations(2) 40,940 45,379 (9.8%) 19,974 14,976 33.4%
Gain/(loss) from derivative operations and securities (3) 6,625 (10,596) (162.5%) (1,574) (3,718) (57.7%)
Other income, share in profit of associate, and income from 41,957 41,785 0.4% 11,976 15,441 (22.4%)
non-banking activities
Credit loss expense (4) (26,918) (30,054) (10.4%) 8,984 (8,914) (1.0x)
Other credit loss expense (5,025) (1,308) 3.8x (1,920) (621) 3.1x
Operating expenses (158,237) (145,367) 8.9% (45,645) (50,892) (10.3%)
(5) (6) (7) (6)
Income tax expense (36,878) (35,974) 2.5% (12,355) (10,222) 20.9%
Non-controlling interest 1 - - - - -
Net profit attributable to common shareholders 352,653 334,511 5.4% 108,007 83,123 29.9%
Net interest margin, p.a. 4.7% 5.3% 4.4% 5.4%
Return on average equity, p.a. 25.5% 28.8% 30.4% 26.3%
Return on average assets, p.a. 3.6% 3.7% 4.3% 3.6%
Cost-to-income ratio 26.8% 25.4% 28.9% 33.0%
Cost of risk on loans to customers, p.a. 0.4% 0.7% (1.0%) 1.1% 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 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 5.1 bn; 6. Including loss from impairment of non-financial assets of KZT 7.4 bn; 7. Including loss from impairment of non-financial assets of KZT 0.9 bn;
Net profit attributable to common shareholders increased by 5.4% to KZT 352.7bn for 12M 2020 compared to KZT 334.5n for 12M 2019 mainly due to increase in net insurance income and gain from derivative operations and securities.
Increase in interest income on loans to customers 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 912 mln. As a result, interest income increased by 3.2% to KZT 733.2bn for 12M 2020 compared to KZT 710.3bn for 12M 2019. Interest expense for 12M 2020 increased by 6.9% to KZT 333.7bn vs. KZT 312.3bn for 12M 2019 mainly due to the increase of average balance and share of KZT deposits in the amounts due to customers. Net interest margin decreased to 4.7% p.a. for 12M 2020 compared to 5.3% p.a. for 12M 2019 mainly due to transfers in placement from high-yielding NBRK notes into low-yielding FX deposit with NBRK following the repayment of SWAP agreement.
Cost of risk for 12M 2020 decreased to 0.4% compared to 0.7% for 12M 2019 and decreased to (1.0%) in 4Q 2020 compared to 0.2% in 3Q 2020 mainly due to repayments of large ticket corporate loans.
Fee and commission income for 12M 2020 increased by 6.6% vs. 12M 2019 as a result of growing volumes of transactional banking, mainly in plastic card operations, as well as bank transfers - settlements.
The increase in fee and commission expense by 15.6% Y-o-Y was mainly due to increased number of transactions of other banks' cards in the acquiring network of the Bank, partially offset by the decrease in deposit insurance fees payable to the Kazakhstan Deposit Insurance Fund due to lower rates for the Bank on the back of increase of capital adequacy ratios.
Other non-interest income (8) increased by 16.9% to KZT 89.5bn for 12M 2020 vs. KZT 76.6bn for
12M 2019 mainly due to net gain from derivative operations and securities following the repayment of SWAP agreement with NBRK for the amount of USD 912.
Net insurance income (9) for 12M 2020 significantly increased vs. 12M 2019 as a result of new unsecured lending program with a borrower's life insurance bundle.
Operating expenses for 12M 2020 increased by 8.9% vs. 12M 2019 mainly due to the increase in salaries and other employee benefits as a result of the increase in sales based payments in retail business in 2020 and due to the loyalty program bonuses payable to the customers, which are included in operating expenses related to the advertisement and loyalty program starting from 4Q 2019.
The Bank's cost-to-income ratio increased to 26.8% compared to 25.4% for 12M 2019 due to higher operating expenses for 12M 2020. 8. Other non-interest income (net foreign exchange gain/(loss) , net gain/(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, income on non-banking activities and other income); 9. 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
31-Dec-20 30-Sep-20 Change Q-o-Q, % 31-Dec-19 Change, abs Change YTD,
%
Total assets 10,387,832 9,999,141 3.9% 9,234,758 1,153,074 12.5%
Cash and reserves 1,927,605 2,372,908 (18.8%) 1,805,343 122,262 6.8%
Amounts due from credit 709,310 211,883 3.3x 53,161 656,149 13.3x
institutions
T-bills & NBRK notes 1,865,684 1,815,799 2.7% 1,954,066 (88,382) (4.5%)
Other securities & derivatives 862,339 814,472 5.9% 1,074,867 (212,528) (19.8%)
Gross loan portfolio 4,824,316 4,656,733 3.6% 4,161,163 663,153 15.9%
Stock of provisions (378,041) (450,712) (16.1%) (408,718) 30,677 (7.5%)
Net loan portfolio 4,446,275 4,206,021 5.7% 3,752,445 693,830 18.5%
Assets held for sale 42,244 44,102 (4.2%) 45,766 (3,522) (7.7%)
Other assets 534,375 533,956 0.1% 549,110 (14,735) (2.7%)
Total liabilities 8,894,564 8,631,327 3.0% 7,927,535 967,029 12.2%
Total deposits, including: 7,455,977 7,094,061 5.1% 6,406,413 1,049,564 16.4%
retail deposits 3,698,368 3,549,742 4.2% 3,251,216 447,152 13.8%
term deposits 3,073,187 2,973,310 3.4% 2,743,019 330,168 12.0%
current accounts 625,181 576,432 8.5% 508,197 116,984 23.0%
corporate deposits 3,757,609 3,544,319 6.0% 3,155,197 602,412 19.1%
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