REG - JSC Halyk Bank JSC Halyk Bank-37QB - 1st Quarter Results

Halyk Bank AOAnnouncement

17/05/2024 10:00

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RNS Number : 9134O  JSC Halyk Bank  17 May 2024

17 May 2024

 

Joint Stock Company 'Halyk Bank of Kazakhstan'

Consolidated financial results

for the three months ended 31 March 2024

 

Joint Stock Company 'Halyk Bank of Kazakhstan' and its subsidiaries (together
"the Bank")     (LSE: HSBK) releases consolidated financial information
for the three months ended 31 March 2024.

 

Consolidated income statements

KZT mln

 

                                                                                 1Q 2024    1Q 2023    Change, abs  Y-o-Y,%
 Interest income                                                                 496,254    380,269    115,985      30.5%
 Interest expense                                                                (242,018)  (188,177)  (53,841)     28.6%
 Net interest income before  credit loss expense                                 254,236    192,092    62,144       32.4%
 Fee and commission income                                                       50,074     47,405     2,669        5.6%
 Fee and commission expense                                                      (24,582)   (22,486)   (2,096)      9.3%
 Net fee and commission income                                                   25,492     24,919     573          2.3%
 Net insurance income ((1))                                                      9,676      19,348     (9,672)      (50.0%)
 Net gain on foreign exchange operations, financial assets and liabilities((2))  45,689     28,926     16,763       58.0%
 Other expense/non-interest income ((3))                                         (50,865)   21,194     (72,059)     (x2.4)
 Expected credit loss expense and recovery of other credit loss expense          (18,994)   (13,567)   (5,427)      40.0%
 Operating expenses ((4))                                                        (56,641)   (46,486)   (10,155)     21.8%
 Income tax expense                                                              (30,629)   (33,972)   3,343        (9.8%)
 Net profit                                                                      177,964    192,454    (14,490)     (7.5%)
 Net profit attributable to common shareholders                                  177,964    192,454    (14,490)     (7.5%)

 Net interest margin, p.a.                                                       7.1%       6.0%
 Return on average equity, p.a.                                                  27.7%      37.3%
 Return on average assets, p.a.                                                  4.6%       5.4%
 Cost-to-income ratio                                                            19.9%      16.2%
 Cost of risk on loans to customers, p.a.                                        0.9%       0.8%

 

 

(1)      Insurance revenue less insurance service expense and net
reinsurance expense;

(2)      Net gain on financial assets and liabilities at fair value
through profit or loss, net realised gain/(loss) from financial assets at fair
value through other comprehensive income, net foreign exchange gain;

(3)      Share in profit of associate, income on non-banking activities,
other expense;

(4)      Including reversal of/(loss from) impairment of non-financial
assets;

 

 

In preparing the interim condensed consolidated financial information for the
three months ended 31 March 2024, the Group carried out an inventory of its
financial instruments. The inventory process identified financial instruments
measured at fair value through profit or loss that were previously restricted
in use and were incorrectly measured at cost. The Group revaluated these
financial instruments and recognized prior period adjustments.

The consolidated statement of profit or loss for the three months ended 31
March 2023 has been reclassified to conform to the presentation for the year
ended 31 December 2023 because the presentation of the current year report
provides a clearer picture of the Group's financial performance. All of the
ratios were also recalculated accordingly. For more detailed information
please refer to Halyk Group's financial statements for 1Q 2024, note #4b.

 

Net profit attributable to common shareholders decreased to KZT 178.0bn in 1Q
2024, down 7.5% compared with KZT 192.5bn in 1Q 2023, despite increase in
lending and transactional businesses, due to one off  recognized loss for KZT
66.1bn (pre-tax) in view of expected early repayment of the deposit of JSC
Kazakhstan Sustainability Fund (KSF) in accordance with the IFRS.

 

Interest income for 1Q 2024 increased by 30.5% vs. 1Q 2023 mainly due to
increase in average rate and balances of loans to customers.

 

Interest expense for 1Q 2024 increased by 28.6% vs. 1Q 2023 mainly as a result
of the growth in average rate on amounts due to customers and increase in the
share of KZT amounts due to customer. Consequently, net interest income for 1Q
2024 grew by 32.4% vs. 1Q 2023.

 

In 1Q 2024, net interest margin was affected by the increase in average rates
on both loans to customers and amounts due to customers. Furthermore, the
share of loans to customers in total interest earning assets has increased.
Moreover, there was an increase in the average rate of FX amounts due from
credit institutions and FX interest-earning cash and cash equivalents
following the increase of USD interest rates, as well as increase in the share
of KZT interest-earning cash and cash equivalents. As a result, net interest
margin increased to 7.1% p.a. for 1Q 2024 compared to 6.0% p.a. for 1Q 2023.

 

In 1Q 2024 compared to 1Q 2023, the overall dynamics of fee and commission
income and expense was driven by the increased number of clients and the
growth of clients' transactional activity. Net fee and commission income for
1Q 2024 increased by 2.3% vs. 1Q 2023 due to increase in net transactional
income of individuals((5)()) as well as in fees on letters of credit and
guarantees issued.

 

Other expense/non-interest income ((6)) decreased by x2.4 for 1Q 2024 vs. 1Q
2023 mainly due to one off recognized loss for KZT 66.1bn (pre-tax) in view of
expected early repayment of the deposit of KSF in accordance with the IFRS.

 

Operating expenses for 1Q 2024 increased by 21.8% vs. 1Q 2023 mainly due to
the indexation of salaries and other employee benefits starting from 1 March
2023.

 

Cost of risk on loans to customers for 1Q 2024 was at normalized level within
the scope of our full year guidance and was at the level of 0.9%.

 

The cost-to-income ratio equalled 19.9% in 1Q 2024, compared with 16.2% in 1Q
2023 due to higher operating expenses for 1Q 2024.

 

(5)      Transactional income of individuals, less transactional expenses
of individuals and less loyalty program bonuses;

(6)      Share in profit of associate, income on non-banking activities,
other expense;

 

 

Statement of financial position review

KZT mln

                                       31-Mar-24       31-Dec-23       Change, abs      Change YTD, %
 Total assets                          15,910,944      15,494,368      416,576          2.7%
 Cash and reserves                     1,873,511       1,622,181       251,330           15.5%
 Amounts due from credit institutions  154,033         171,754         (17,721)         (10.3%)
 T-bills & NBK notes                   2,264,214       2,125,941        138,273          6.5%
 Other securities & derivatives        1,595,270       1,614,666        (19,396)        (1.2%)
 Gross loan portfolio                  9,811,644       9,774,798       36,846            0.4%
 Stock of provisions                   (512,352)       (489,926)       (22,426)          4.6%
 Net loan portfolio                    9,299,292       9,284,872       14,420            0.2%
 Assets held for sale                  125,807         111,542         14,265           12.8%
 Other assets                          598,817         563,412         35,405            6.3%
 Total liabilities                     13,246,474      13,017,414      229,060          1.8%
 Total deposits, including:            11,211,283      10,929,504      281,779           2.6%
 retail deposits                       5,850,404       5,828,645       21,759            0.4%
    term deposits                      4,962,819       4,808,592       154,227           3.2%
    current accounts                   887,585         1,020,053       (132,468)        (13.0%)
 corporate deposits                    5,360,879       5,100,859       260,020           5.1%
    term deposits                      3,809,577       3,338,099       471,478           14.1%
    current accounts                   1,551,302       1,762,760       (211,458)        (12.0%)
 Debt securities                       655,735         653,393         2,342             0.4%
 Amounts due to credit institutions    669,815         778,311         (108,496)        (13.9%)
 Other liabilities                     709,641         656,206         53,435            8.1%
 Equity                                2,664,470       2,476,954       187,516          7.6%

 

As at end of 1Q 2024, total assets were up 2.7% year-to-date due to increase
in amounts due to customers.

 

Compared with the end of 2023, loans to customers were up 0.4% on a gross and
0.2% on a net basis. The increase in the gross loan portfolio was attributable
to a rise of 7.9% in retail loans, while corporate loan portfolio and SME loan
portfolio were down by 2.6% and 4.7%, respectively, due to seasonal effect.

 

As at the end of 1Q 2024, Stage 3 loans remain at the level of 7.5% despite
some increase in absolute terms.

 

Compared with the end of 4Q 2023, the deposits of legal entities and the
deposits of individuals were up 5.1% and 0.4%, respectively, due to fund
inflow from the Bank's clients.

 

As at the end of 1Q 2024, the share of KZT deposits in total corporate
deposits was 69.9% compared to 72.9% as at the YE 2023, while the share in
total retail deposits was 65.2% vs. 63.4% as at YE 2023.

 

As at the end of 1Q 2024, debt securities issued were slightly up by 0.4%
year-to-date. As at the end of 1Q 2024, the Bank's debt securities portfolio
was as follows:

 

 Description of the security   Nominal amount outstanding  Interest rate  Maturity Date

 Local bonds                   KZT 100bn                   7.5% p.a.      November 2024
 Local bonds                   KZT 131.7bn                 7.5% p.a.      February 2025
 Subordinated coupon bonds     KZT 101.1bn                 9.5% p.a.      October 2025
 Local bonds listed at Astana  USD  185.5mln               3.5% p.a.      May 2025

 International Exchange
 Local bonds listed at Astana  USD  299.9mln               3.5% p.a.      May 2025

 International Exchange
 Local bonds listed at Astana  USD  229.8mln               3.5% p.a.      July 2025

 International Exchange

 

In 1Q 2024, total equity of the Bank increased by 7.6% compared to the YE
2023, mainly due to net profit earned by the Bank during 1Q 2024.

 

The Bank's capital adequacy ratios were as follows*:

 

                 31-Mar-24  31-Dec-23  30-Sep-23  30-Jun-23  31-Mar-23
 Capital adequacy ratios, unconsolidated:
 Halyk Bank
 k1-1            19.0%      19.6%      18.6%      18.1%      20.2%
 k1-2            19.0%      19.6%      18.6%      18.1%      20.2%
 k2              19.2%      19.9%      19.0%      18.4%      20.6%
 Capital adequacy ratios, consolidated:
 CET 1           19.5%      19.3%      18.2%      17.9%      19.3%
 Tier 1 capital  19.5%      19.3%      18.2%      17.9%      19.3%
 Total capital   19.7%      19.6%      18.5%      18.3%      19.6%

 

* 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 the three months ended 31 March
2024, including the notes attached thereto, are available on Halyk Bank's
website: http://halykbank.com/financial-results
(http://halykbank.com/financial-results) .

 

A 1Q 2024 results webcast will be hosted at 3:00pm London time/7:00pm Almaty
time (UTC +05:00) on Monday, 20 May 2024. A live webcast of the presentation
can be accessed via Zoom link after the registration. The registration is open
until 20 May 2024 (including), for the registration please click here.
(https://halykbank-kz.zoom.us/webinar/register/WN_voQ7t3bQQ1C4V-c5nun1jg)

 

 

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 15,910.9bn as at 31 March, 2024, Halyk Bank is
Kazakhstan's leading lender. The Bank has the largest customer base and
broadest branch network in Kazakhstan, with 571 branches and outlets across
the country. The Bank also operates in Georgia and Uzbekistan.

 

For more information on Halyk Bank, please visit https://www.halykbank.com

- ENDS-

 

For further information, please contact:

 Halyk Bank

 Mira Tiyanak     +7 727 259 04 30

                  MiraK@halykbank.kz

 Rustam Telish    +7 727 330 15 66 RustamT3@halykbank.kz

 Nurgul Mukhadi   +7 727 330 16 77

                  NyrgylMy@halykbank.kz

 

 

 

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