DJ JSC Halyk Bank: Consolidated financial results for the nine months ended September 30, 2022
JSC Halyk Bank (HSBK) JSC Halyk Bank: Consolidated financial results for the nine months ended September 30, 2022 18-Nov-2022 / 05:10 GMT/BST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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November 18, 2022
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Consolidated financial results
for the nine months ended September 30, 2022
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries (together "the Bank") (LSE: HSBK) releases consolidated financial information for the nine months ended September 30, 2022.
Consolidated income statements
KZT mln
9M 2022 9M 2021 Y-o-Y,% 3Q 2022 3Q 2021 Y-o-Y,%
Interest income 887,454 637,375 39.2% 335,943 229,738 46.2%
Interest expense (406,242) (255,666) 58.9% (153,389) (90,946) 68.7%
Net interest income before credit loss expense 481,212 381,709 26.1% 182,554 138,792 31.5%
Fee and commission income 128,662 101,750 26.4% 49,362 34,838 41.7%
Fee and commission expense (70,965) (51,774) 37.1% (27,135) (18,468) 46.9%
Net fee and commission income 57,697 49,976 15.4% 22,227 16,370 35.8%
Net insurance income(1) 5,395 30,434 (82.3%) 2,060 12,457 (83.5%)
FX operations(2) 130,261 22,995 5.7x 20,860 6,882 3.0x
Net gain /(loss) from derivative operations and securities (3) 8,624 10,807 (20.2%) 10,013 1,788 5.6x
Other income/(expense), share in profit of associate and income 39,326 13,291 3.0x 11,199 71 157.7x
from non-banking activities
Credit loss expense (4) (94,709) (5,473) 17.3x (37,832) (8,727) 4.3x
Recovery of other credit loss expense/(other credit loss (450) (3,633) (87.6%) 452 745 (39.3%)
expense)
Operating expenses (146,150) (121,411) 20.4% (50,492) (43,821) 15.2%
(5) (6) (7) (8)
Income tax expense (64,110) (45,600) 40.6% (25,346) (16,900) 50.0%
Net profit 417,096 333,095 25.2% 135,695 107,657 26.0%
Non-controlling interest 1 - - 1 - -
Net profit attributable to common shareholders 417,095 333,095 25.2% 135,694 107,657 26.0%
Net interest margin, p.a. 5.4% 5.3% 5.8% 5.5%
Return on average equity, p.a. 32.6% 29.0% 29.5% 27.5%
Return on average assets, p.a. 4.2% 4.1% 3.9% 3.9%
Cost-to-income ratio 18.9% 22.6% 18.9% 23.5%
Cost of risk on loans to customers, p.a.
1.5% 0.2% 1.4% 0.9% 1. insurance underwriting income (gross insurance premiums written, net change in unearned insurancepremiums, 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 gain from financial assets and liabilities at fair value through profit or loss and net realised(loss)/gain from financial assets at fair value through other comprehensive income; 4. Total credit loss expense, including credit loss expense on loans to customers, amounts due from creditinstitutions, financial assets at FVTOCI, cash and cash equivalents and other assets. 5. Including loss from impairment of non-financial assets of KZT -0.1bn. 6. Including loss from impairment of non-financial assets of KZT -0.3 bn. 7. Including loss from impairment of non-financial assets of KZT -0.1 bn. 8. Including loss from impairment of non-financial assets of KZT 0.2 bn. The net profit attributable to common shareholders amounted to KZT 135.7bn in 3Q 2022, up 26.0% compared with KZT 107.7bn in 3Q 2021 mainly due to significant increase in lending business, including acquisition of Sber's loan portfolio, as well as increase in net gain on foreign exchange operations and net fee and commission income.
The interest income for 3Q 2022 increased by 46.2% vs. 3Q 2021 mainly due to increase in average rate and balances of loans to customers. The interest expense for 3Q 2022 increased by 68.7% vs. 3Q 2021, this stemmed mainly from to the increase in average rate and balances of amounts due to customers. The net interest margin increased to 5.8% p.a. for 3Q 2022 compared to 5.5% p.a. for 3Q 2021 mainly due to improved structure of placement of interest-bearing liabilities into interest-earning assets with increased share of high-yielding retail and SME loans and due to increase in the average rate and average balances of FX amounts due from credit institutions and FX interest-earning cash and cash equivalents following the global increase of USD interest rates.
The cost of risk on loans to customers for 9M 2022 and 3Q 2022 was at normalized level within the scope of our full year guidance of 1.5%.
In 9M 2022, the overall dynamics of the fee and commission income and expense was affected by the increased transactional activity as a result of the clients inflow due to changes in the operating landscape. Consequently, the net fee and commission income increased by 35.8% in 3Q 2022 vs. 3Q 2021. Fee and commission income for 3Q 2022 increased by 41.7% vs. 3Q 2021 as a result of growing volumes of transactional banking, mainly in plastic card operations, bank transfers - settlements and cash operations.
Other non-interest income (9) increased by 4.8x for 3Q 2022 vs. 3Q 2021 mainly due to the volatility of exchange rates and interest rates, which resulted in significant growth of net gain from financial assets and liabilities at fair value through profit or loss and of net gain on foreign exchange operations.
The net insurance income (10) for 3Q 2022 decreased by 83.5% year-on-year, due to increase in insurance reserve expenses on unsecured consumer loans with a borrower's life insurance bundle.
The operating expenses rose by 15.2% year-on year in 3Q 2022, mainly due to the indexation of salaries and other employee benefits starting from March 1, 2022, increase in charity expenses and IT investments.
The cost-to-income ratio equalled 18.9% in 3Q 2022, compared with 23.5% in 3Q 2021, as operating income increased in the reporting period. 9. Other non-interest income (net gain on foreign exchange operations, net gain from financial assets andliabilities at fair value through profit or loss, net realised (loss)/gain from financial assets at fair valuethrough other comprehensive income, share in profit of associate, income on non-banking activities and other income/(expense)); 10. Insurance underwriting income (gross insurance premiums written, net change in unearned insurancepremiums, 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-22 30-Jun-22 Change Q-o-Q, 31-Dec-21 Change, Change YTD,
% abs %
Total assets 14,207,912 13,735,579 3.4% 12,091,370 2,116,542 17.5%
Cash and reserves 2,884,594 2,345,504 23.0% 1,633,452 1,251,142 76.6%
Amounts due from credit 115,151 199,278 (42.2%) 602,125 (486,974) (80.9%)
institutions
T-bills & NBRK notes 1,922,323 2,174,956 (11.6%) 2,195,931 (273,608) (12.5%)
Other securities & derivatives 1,201,019 1,177,310 2.0% 1,247,257 (46,238) (3.7%)
Gross loan portfolio 7,945,531 7,694,465 3.3% 6,250,260 1,695,271 27.1%
Stock of provisions (446,372) (436,027) 2.4% (378,032) (68,340) 18.1%
Net loan portfolio 7,499,159 7,258,438 3.3% 5,872,228 1,626,931 27.7%
Assets held for sale 540,169 547,763 (1.4%) 494,965 45,204 9.1%
Other assets 45,497 32,330 40.7% 45,412 85 0.2%
Total liabilities 12,309,651 11,970,901 2.8% 10,517,766 1,791,885 17.0%
Total deposits, including: 10,386,965 9,985,097 4.0% 8,473,407 1,913,558 22.6%
retail deposits 4,889,910 4,778,143 2.3% 4,415,103 474,807 10.8%
term deposits 4,075,160 3,895,488 4.6% 3,674,572 400,589 10.9%
current accounts 814,750 882,655 (7.7%) 740,531 74,219 10.0%
corporate deposits 5,497,055 5,206,955 5.6% 4,058,304 1,438,751 35.5%
term deposits 3,036,054 2,849,777 6.5% 2,046,999 989,054 48.3%
current accounts 2,461,001 2,357,178 4.4% 2,011,305 449,696 22.4%
Debt securities 474,322 468,861 1.2% 499,812 (25,490) (5.1%)
Amounts due to credit institutions 801,201 943,699 (15.1%) 1,071,642 (270,441) (25.2%)
Other liabilities 647,163 573,244 12.9% 472,905 174,258 36.8%
Equity 1,898,261 1,764,678 7.6% 1,573,604 324,657 20.6%
As at the end of 3Q 2022, total assets were up 17.5% year-to-date. This was due to the growth in amounts due to customers to support the expansion of lending business.
Compared with the end of 2021, loans to customers were up 27.1% on a gross and 27.7% on a net basis. The increase in the gross loan portfolio was attributable to a rise of 25.4% in corporate, 19.4% in SME and 34.2% in retail loans.
Stage 3 ratio increased to 8.0% as at the end of 3Q 2022 mainly due to migration of individual corporate loans and retail loans from Stage 1 and 2 to Stage 3.
Compared with the end of 2021, the deposits of legal entities and individuals were up 35.5% and 10.8%, respectively, as a result of the clients inflow due to changes in the operating landscape. As at the-end of 3Q 2022, the share of KZT deposits in total corporate deposits was 53.6% compared to 52.9% as at the YE 2021, while the share in total retail deposits was almost flat vs. the YE 2021 and stayed at 50.5%.
As at the end of 3Q 2022, the debt securities issued were down 5.1% year-to-date, following the redemption of the local unsubordinated bonds denominated in KZT with a coupon rate of 8.75% in amount of KZT 93,632 million on 19 January 2022. As at the date of this press-release, the Bank's debt securities portfolio was as follows:
Description of the security Nominal amount outstanding Interest rate Maturity Date Local bonds KZT 100 bn 7.5% p.a. November 2024 Local bonds KZT 131.7 bn 7.5% p.a. February 2025 Subordinated coupon bonds KZT 101.1 bn 9.5% p.a. October 2025 Local bonds listed at Astana International Exchange USD 195 mln 2.5% p.a. April 2025 Local bonds listed at Astana International Exchange USD 100 mln 2.5% p.a. June 2025
In 9M 2022 the total equity of the Bank increased by KZT 324.7bn or by 20.6% compared to the YE 2021 whereas the net income for 9M 2022 amounted to KZT 417.1bn. This was due to the loss on revaluation of debt financial assets at fair value through other comprehensive income, which totaled for KZT 111.8bn in 9M 2022. The loss mainly relates to the treasury bills of the Ministry of Finance of Kazakhstan, which have decreased in price due to the base rate hike from 10.25% to 14.5% in the nine months of this year.
The Bank's capital adequacy ratios were as follows*:
30-Sep-22 30-Jun-22 31-Mar-22 31-Dec-21 30-Sep-21 Capital adequacy ratios, unconsolidated: Halyk Bank k1-1 18.5% 18.1% 19.0% 19.6% 20.6% k1-2 18.5% 18.1% 19.0% 19.6% 20.6% k2 19.1% 18.8% 19.8% 20.4% 21.8% Capital adequacy ratios, consolidated: CET 1 17.8% 17.5% 18.7% 19.3% 21.5% Tier 1 capital 17.8% 17.5% 18.7% 19.3% 21.5% Total capital 18.3% 18.1% 19.4% 19.9% 22.5%
* The minimum regulatory capital adequacy requirements are 9.5%, for k1, 10.5% for k1-2 and 12% for k2, including a conservation buffer of 3% and systemic buffer of 1% for each.
The consolidated financial information for nine months ended September 30, 2022, including the notes attached thereto, are available on Halyk Bank's website: http://halykbank.com/financial-results.
The 9M & 3Q 2022 results webcast will be hosted at 1:00 p.m. London time/8:00 a.m. EST on Monday, November 21, 2022. A live webcast of the presentation can be accessed via Zoom link after the registration. The registration is open until November 21, 2022 (including), for the registration please click here.
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 14,207.9bn as at September 30, 2022, Halyk Bank is Kazakhstan's leading lender.
The Bank has the largest customer base and broadest branch network in Kazakhstan, with 575 branches and outlets across the country. The Bank operates in Georgia, Kyrgyzstan, Russia, Uzbekistan and Tajikistan.
For more information on Halyk Bank, please visit https://www.halykbank.com
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For further information, please contact:
Halyk Bank
+7 727 259 04 30
Mira Kassenova
MiraK@halykbank.kz
+7 727 259 04 53
Margulan Tanirtayev
Margulant@halykbank.kz
+7 727 330 16 77
Nurgul Mukhadi
NyrgylMy@halykbank.kz
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ISIN: US46627J3023 Category Code: MSCL TIDM: HSBK Sequence No.: 201702 EQS News ID: 1490963 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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November 18, 2022 00:11 ET (05:11 GMT)
