REG - JSC Halyk Bank JSC Halyk Bank-37QB - 1H & 2Q 2023 Financial Results
16/08/2023 08:00
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RNS Number : 4949J JSC Halyk Bank 16 August 2023
16 August 2023
Joint Stock Company 'Halyk Bank of Kazakhstan'
Consolidated financial results
the six month ended 30 June 2023
Joint Stock Company 'Halyk Bank of Kazakhstan' and its subsidiaries (together
"the Bank") (LSE: HSBK) releases consolidated financial information
for the six months ended 30 June 2023.
Consolidated income statements
KZT mln
1H 2023 1H 2022 Y-o-Y,% 2Q 2023 2Q 2022 Y-o-Y,%
Interest income 780,462 551,575 41.5% 400,193 297,735 34.4%
Interest expense (393,555) (253,073) 55.5% (205,378) (143,494) 43.1%
Net interest income before credit loss expense 386,907 298,502 29.6% 194,815 154,241 26.3%
Fee and commission income 98,689 79,300 24.5% 51,284 45,778 12.0%
Fee and commission expense (46,970) (43,818) 7.2% (24,484) (23,509) 4.1%
Net fee and commission income 51,719 35,482 45.8% 26,800 22,269 20.3%
Net insurance income((1)) 28,597 3,116 9.2x 9,249 4,663 2.0x
FX operations((2)) 31,410 109,401 (71.3%) 11,273 82,754 (86.4%)
Net gain/(loss) from derivative operations and securities ((3)) 21,174 (1,389) (15.2x) 17,701 (21,125) (183.8%)
Other income, share in profit of associate and income from non-banking 36,862 28,127 31.1% 15,668 14,572 7.5%
activities
Credit loss expense (32,659) (56,913) (42.6%) (17,840) (31,536) (43.4%)
Recovery of other credit loss expense/(other credit loss expense) 1,557 (902) (1.7x) 305 587 (48.0%)
Operating expenses (99,578) (()(4)()) (90,824) (()(5)()) 9.6% (53,092) (()(6)()) (47,462) 11.9%
Income tax expense (60,830) (38,764) 56.9% (27,921) (17,603) 58.6%
Net profit 365,159 285,836 27.8% 176,958 161,360 9.7%
Non-controlling interest 1 - - 1 - -
Net profit attributable to common shareholders 365,158 285,836 27.8% 176,957 161,360 9.7%
Net interest margin, p.a. 6.0% 5.2% 6.1% 5.2%
Return on average equity, p.a. 36.0% 34.8% 34.3% 38.5%
Return on average assets, p.a. 5.2% 4.5% 5.0% 4.9%
Cost-to-income ratio 17.9% 19.2% 19.3% 18.4%
Cost of risk on loans to customers, p.a. 0.9% 1.5% 1.0% 1.5%
(1) Insurance underwriting income less insurance claims incurred and
net expenses from reinsurance contracts held;
(2) Net gain/(loss) from financial assets and liabilities at fair
value through profit or loss and net realised loss from financial assets at
fair value through other comprehensive income;
(3) 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;
(4) Including recovery from impairment of non-financial assets of
KZT 0.01bn;
(5) Including loss from impairment of non-financial assets of KZT
-0.1bn;
(6) Including recovery from impairment of non-financial assets of
KZT 0.1bn;
Starting from 1 January 2023, Halyk Group's financial statements have been
transited to IFRS 17 "Insurance Contracts" from IFRS 4, which resulted in
recalculation of certain P&L items for 1H 2022 and 2Q 2022. All of the
ratios were also recalculated accordingly. For more detailed information
please refer to Halyk Group's financial statements for 2Q 2023, note #4.
Net profit attributable to common shareholders to KZT 177.0bn in 2Q 2023, up
9.7% compared with KZT 161.4bn in 2Q 2022 mainly due to significant increase
in lending and transactional businesses.
Interest income for 2Q 2023 increased by 34.4% vs. 2Q 2022 mainly due to
increase in average rate and balances of loans to customers. Interest expense
for 2Q 2023 increased by 43.1% vs. 2Q 2022 mainly as a result of the growth in
average rate and balances of amounts due to customers. Consequently, net
interest income for 2Q 2023 grew by 26.3% vs. 2Q 2022.
In 2Q 2023, net interest margin was affected by the increase in average rates
on both loans to customers and amounts due to customers following the
significant increase in interest rates. Furthermore, the share of loans to
customers in total interest-earning assets increased substantially. 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
global increase of USD interest rates. As a result, net interest margin
increased to 6.1% p.a. for 2Q 2023 compared to 5.2% p.a. for 2Q 2022. Net
interest margin in 1H 2023 and 2Q 2023 was negatively affected by the
accelerated amortization of discount on the deposit of Kazakhstan
Sustainability Fund, which was partially prepaid by the Bank as a requirement
under new regulation, requiring banks with state support funds on their
balance sheet to make such prepayments in case of dividend payments. Excluding
these effects, net interest margin would have amounted to 6.3% p.a. for 1H
2023 and 6.5% p.a. for 2Q 2023.
The cost of risk on loans to customers for 2Q 2023 was at normalized level
within the scope of our full year guidance of 1.2%.
In 2Q 2023 compared to 2Q 2022, the overall dynamics of fee and commission
income and expense was driven by the increased transactional activity as a
result of the clients inflow due to changes in the operating landscape. Net
fee and commission income for 2Q 2023 increased by 20.3% vs. 2Q 2022 due to
increase in net transactional income of legal entities and individuals.
Other non-interest income ((7)) decreased by 41.4% for 2Q 2023 vs. 2Q 2022
mainly due to lower net gain from financial assets and liabilities at fair
value through profit or loss and net gain on foreign exchange operations as a
result of higher volatility of exchange rates and interest rates in 2Q 2022.
Net insurance income ((8)) for 2Q 2023 increased by 2x year-on-year, due to
overall business growth and as a result of recognition of insurance reserve
expenses on unsecured consumer loans with a borrower's life insurance bundle
in 2Q 2022.
Operating expenses for 2Q 2023 increased by 11.9% vs. 2Q 2022 mainly due to
the indexation of salaries and other employee benefits starting from March 1,
2023
The cost-to-income ratio equalled 19.3% in 2Q 2023, compared with 18.4% in 2Q
2022 due to higher operating expenses for 2Q 2023.
(7) Other non-interest income (net gain on foreign exchange
operations, net gain/(loss) from financial assets and liabilities at fair
value through profit or loss, net realised loss from financial assets at fair
value through other comprehensive income, share in profit of associate, income
on non-banking activities and other income);
(8) Insurance underwriting income less insurance claims incurred and
net expenses from reinsurance contracts held.
Statement of financial position review
KZT mln
30-Jun-23 31-Mar-23 Change Q-o-Q, % 31-Dec-22 Change, abs Change YTD, %
Total assets 14,241,463 14,142,764 0.7% 14,287,295 (45,832) (0.3%)
Cash and reserves 1,518,976 1,950,750 (22.1%) 2,288,375 (769,399) (33.6%)
Amounts due from credit institutions 116,666 133,401 (12.5%) 135,655 (18,989) (14.0%)
T-bills & NBRK notes 2,159,093 2,036,033 6.0% 1,920,189 238,904 12.4%
Other securities & derivatives 1,725,686 1,669,919 3.3% 1,550,337 175,349 11.3%
Gross loan portfolio 8,629,902 8,239,576 4.7% 8,280,290 349,612 4.2%
Stock of provisions (456,216) (438,588) 4.0% (422,388) (33,828) 8.0%
Net loan portfolio 8,173,686 7,800,988 4.8% 7,857,902 315,784 4.0%
Assets held for sale 38,610 27,890 38.4% 23,923 14,687 61.4%
Other assets 508,746 523,783 (2.9%) 510,914 (2,168) (0.4%)
Total liabilities 12,224,183 12,026,447 1.6% 12,365,149 (140,966) (1.1%)
Total deposits, including: 10,174,797 10,132,432 0.4% 10,512,048 (337,251) (3.2%)
retail deposits 5,302,501 5,046,300 5.1% 5,243,764 58,737 1.1%
term deposits 4,320,692 4,191,590 3.1% 4,351,846 (31,154) (0.7%)
current accounts 981,809 854,709 14.9% 891,918 89,891 10.1%
corporate deposits 4,872,296 5,086,132 (4.2%) 5,268,284 (395,988) (7.5%)
term deposits 2,936,368 2,994,176 (1.9%) 2,898,924 37,444 1.3%
current accounts 1,935,928 2,091,956 (7.5%) 2,369,360 (433,432) (18.3%)
Debt securities 561,214 419,638 33.7% 462,817 98,397 21.3%
Amounts due to credit institutions 958,413 935,593 2.4% 878,665 79,748 9.1%
Other liabilities 529,759 538,784 (1.7%) 511,619 18,140 3.5%
Equity 2,017,280 2,116,317 (4.7%) 1,922,146 95,134 4.9%
As at end of 2Q 2023, total assets were down 0.3% year-to-date due to decrease
in amounts due to customers.
Compared with the end of 2022, loans to customers were up 4.2% on a gross and
4.0% on a net basis. The increase in the gross loan portfolio was attributable
to a rise of 2.4% in corporate, 3.3% in SME and 7.9% in retail loans.
Stage 3 loans slightly increased to 8.1% as at the end of 2Q 2023 mainly due
to increase in non-performing retail loans.
Compared with the end of 2022, the deposits of legal entities were down 7.5%
mainly due to overall transfers of funds across the banking sector into
higher-yielding securities market in light of elevated interest rates.
Compared with the end of 2022, the deposits of individuals were up 1.1% due to
fund inflow from the Bank's clients.
As at the-end of 2Q 2023, the share of KZT deposits in total corporate
deposits was 63.7% compared to
60.6% as at the YE 2022, while the share in total retail deposits was 58.2%
vs. 52.6% as at YE 2022.
As at the end of 2Q 2023, debt securities issued were up 21.3% year-to-date,
mainly due to the issuance of bonds listed on AIX in the amount USD 500
million with a coupon rate of 3.5%. 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 USD 187.5 mln 3.5% p.a. May 2025
International Exchange
Local bonds listed at Astana USD 299.5 mln 3.5% p.a. May 2025
International Exchange
Local bonds listed at Astana USD 220.8 mln 3.5% p.a. July 2025
International Exchange
In 1H 2023, total equity of the Bank increased by KZT 95.1bn or by 4.9%
compared to the YE 2022, mainly due to net profit earned by the Bank during 1H
2023, which was partially offset by the payment of dividends.
The Bank's capital adequacy ratios were as follows*:
30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22
Capital adequacy ratios, unconsolidated:
Halyk Bank
k1-1 18.1% 20.2% 18.5% 18.5% 18.1%
k1-2 18.1% 20.2% 18.5% 18.5% 18.1%
k2 18.4% 20.6% 18.9% 19.1% 18.8%
Capital adequacy ratios, consolidated:
CET 1 17.9% 20.2% 18.3% 17.8% 17.5%
Tier 1 capital 17.9% 20.2% 18.3% 17.8% 17.5%
Total capital 18.3% 20.5% 18.7% 18.3% 18.1%
* 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 30 June
2023, including the notes attached thereto, are available on Halyk Bank's
website: http://halykbank.com/financial-results
(http://halykbank.com/financial-results) .
A 1H & 2Q 2023 results webcast will be hosted at 2:00 p.m. London
time/9:00 a.m. EST on Thursday, 17 August 2023. A live webcast of the
presentation can be accessed via Zoom link after the registration. The
registration is open until 17 August, 2023 (including), for the registration
please click here.
(https://halykbank-kz.zoom.us/webinar/register/WN_d6-BkLaDTD-Cl6exVeYbzQ#/)
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 14,241.5bn as at June 30, 2023, Halyk Bank is
Kazakhstan's leading lender.
The Bank has the largest customer base and broadest branch network in
Kazakhstan, with 570 branches and outlets across the country. The Bank also
operates in Georgia, Kyrgyzstan 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
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