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

Halyk Bank AOAnnouncement

16/05/2023 09:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230516:nRSP5549Za&default-theme=true

RNS Number : 5630Z  JSC Halyk Bank  16 May 2023

May 16, 2023

 

Joint Stock Company 'Halyk Savings Bank of Kazakhstan'

Consolidated financial results

for the three months ended 31 March 2023

Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries
(together "the Bank") (LSE: HSBK) releases consolidated financial information
for the three months ended 31 March 2023.

 

Consolidated income statements

KZT mln

 

                                                                        1Q 2023         1Q 2022         Change, abs  Y-o-Y,%
 Interest income                                                        380,269         253,840         126,429      49.8%
 Interest expense                                                       (188,177)       (109,579)       (78,598)     71.7%
 Net interest income before  credit loss expense                        192,092         144,261         47,831       33.2%
 Fee and commission income                                              47,405          33,522          13,883       41.4%
 Fee and commission expense                                             (22,486)        (20,309)        (2,177)      10.7%
 Net fee and commission income                                          24,919          13,213          11,706       88.6%
 Net insurance income ((1))                                             19,348          (1,547)         20,895       (12.5x)
 Net foreign exchange gain                                              20,137          26,647          (6,510)      (24.4%)
 Net gain/(loss) from derivative operations and securities ((2))        3,473           19,736          (16,263)     (82.4%)
 Share in profit of associate, income on non-banking activities, other  21,194          13,555          7,639        56.4%
 (expense)/income
 (Credit loss expense)/recovery of credit loss expense ((3))            (14,819)        (25,377)        10,558       (41.6%)
 Recovery of other credit loss expense/(other credit loss expense)      1,252           (1,489)         2,741        (184.1%)
 Operating expenses ((4))                                               (46,486) ((5))  (43,362) ((6))  (3,124)      7.2%
 Income tax expense                                                     (32,909)        (21,161)        (11,748)     55.5%
 Net profit                                                             188,201         124,476         63,725       51.2%
 Net profit attributable to common shareholders                         188,201         124,476         63,725       51.2%

 Net interest margin, p.a.                                              6.0%            5.2%
 Return on average equity, p.a.                                         37.3%           31.2%
 Return on average assets, p.a.                                         5.3%            4.1%
 Cost-to-income ratio                                                   16.5%           20.1%
 Cost of risk on loans to customers, p.a.                               0.8%            1.5%

 

(1)      Insurance underwriting income less insurance claims incurred and
net expenses from reinsurance contracts held;

(2)      Net gain on 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 loss from impairment of non-financial assets:

(5)      KZT -0.1bn;

(6)      KZT -0.1bn;

 

 

Please note that 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 assets, labilities, equity and
P&L items for 2021-2022. All of the ratios were also recalculated
accordingly. For more detailed information please refer to Halyk Group's
financial statements for 1Q 2023, note #4.

 

 

 

The net profit attributable to common shareholders amounted to KZT 188.2bn in
1Q 2023, up 51.2% compared with KZT 124.5bn in 1Q 2022 mainly due to
significant increase in lending and transactional businesses.

 

The interest income for 1Q 2023 increased by 49.8% vs. 1Q 2022 mainly due to
increase in average rate and balances of loans to customers. The interest
expense for 1Q 2023 increased by 71.7% vs. 1Q 2022 mainly as a result of the
growth in average rate and balances of amounts due to customers. Consequently,
net interest income for 1Q 2023 grew by 33.2% vs. 1Q 2022.

 

In 1Q 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 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. As a result, net interest
margin increased to 6.0% p.a. for 1Q 2023 compared to 5.2% p.a. for 1Q 2022.

 

The cost of risk on loans to customers for 1Q 2023 was at normalized level
within the scope of our full year guidance of 1.2%

 

In 1Q 2023 compared to 1Q 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 1Q 2023 increased by 88.6% vs. 1Q 2022 due to
increase in net transactional income of legal entities and individuals ((7)).

 

Other non-interest income ((8)) decreased by 25.2% for 1Q 2023 vs. 1Q 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 1Q 2022.

 

The net insurance income ((9)) for 1Q 2023 increased by 12.5x year-on-year,
due to recognition of insurance reserve expenses on unsecured consumer loans
with a borrower's life insurance bundle in 1Q 2022.

 

The operating expenses for 1Q 2023 increased by 7.2% vs. 1Q 2022 mainly due to
the indexation of salaries and other employee benefits starting from March 1,
2023, which was partially offset by the higher charity expenses in 1Q 2022.

 

The cost-to-income ratio decreased to 16.5% compared to 20.1% for 1Q 2022 amid
higher operating income for 1Q 2023.

 

 

 

 

 

 

 

 

 

 

 

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

(8)      Other non-interest income (Net gain on 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;

(9)      Insurance underwriting income less insurance claims incurred and
net expenses from reinsurance contracts held;

 

 

Statement of financial position review

KZT mln

 

                                       31-Mar-23       31-Dec-22       Change, abs      Change YTD, %
 Total assets                          14,142,764      14,287,295      (144,531)        (1.0%)
 Cash and reserves                     1,950,750       2,288,375       (337,625)        (14.8%)
 Amounts due from credit institutions  133,401         135,655         (2,254)          (1.7%)
 T-bills & NBK notes                   2,036,033       1,920,189       115,844          6.0%
 Other securities & derivatives        1,669,919       1,550,337       119,582          7.7%
 Gross loan portfolio                  8,239,576       8,280,290       (40,714)         (0.5%)
 Stock of provisions                   (438,588)       (422,388)       (16,200)         3.8%
 Net loan portfolio                    7,800,988       7,857,902       (56,914)         (0.7%)
 Assets held for sale                  27,890          23,923          3,967            16.6%
 Other assets                          523,783         510,914         12,869           2.5%
 Total liabilities                     12,026,447      12,365,149      (338,702)        (2.7%)
 Total deposits, including:            10,132,432      10,512,048      (379,616)        (3.6%)
 retail deposits                       5,046,300       5,243,764       (197,464)        (3.8%)
    term deposits                      4,191,590       4,351,846       (160,256)        (3.7%)
    current accounts                   854,709         891,918         (37,209)         (4.2%)
 corporate deposits                    5,086,132       5,268,284       (182,152)        (3.5%)
    term deposits                      2,994,176       2,898,924       95,252           3.3%
    current accounts                   2,091,956       2,369,360       (277,404)        (11.7%)
 Debt securities                       419,638         462,817         (43,179)         (9.3%)
 Amounts due to credit institutions    935,593         878,665         56,928           6.5%
 Other liabilities                     538,784         511,619         27,165           5.3%
 Equity                                2,116,317       1,922,146       194,171          10.1%

 

As at end of 1Q 2023, total assets were down 1.0% year-to-date due to decrease
in amounts due to customers.

 

Compared with the end of 2022, loans to customers were down 0.5% on a gross
and 0.7% on a net basis. The decrease in the gross loan portfolio was
attributable to a decline of 0.9% in corporate, 1.2% in SME and growth of 0.6%
in retail loans.

 

Stage 3 ratio increased to 8.0% as at the end of 1Q 2023 mainly due to
increase in non-performing small business and retail loans.

 

Compared with the end of 2022, the deposits of legal entities were down 3.5%
mainly due to partial withdrawal of funds by the Bank's customers to finance
their ongoing needs (including tax payments) and strengthening of USD/KZT
exchange rate.

 

Compared with the end of 2022, the deposits of individuals were down 3.8% as a
result of transfer of a certain FX deposits into higher-yielding securities
market through our brokerage and asset management arm Halyk-Finance and
strengthening of USD/KZT exchange rate.

 

As at the-end of 1Q 2023, the share of KZT deposits in total corporate
deposits was 61.9% compared to 60.6% as at the YE 2022, while the share in
total retail deposits was 55.6% vs. 52.6% as at YE 2022.

 

 

As at 1Q 2023, the debt securities issued were down 9.3% year-to-date. 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

 

 

In 1Q 2023 the total equity of the Bank increased by KZT 194.2bn or by 10.1%
compared to the YE 2022, as a result of net profit earned by the Bank during
1Q 2023.

 

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

 

                 31-Mar-23  31-Dec-22  30-Sep-22  30-Jun-22  31-Mar-22
 Capital adequacy ratios, unconsolidated:
 Halyk Bank
 k1-1            20.2%      18.5%      18.5%      18.1%      19.0%
 k1-2            20.2%      18.5%      18.5%      18.1%      19.0%
 k2              20.6%      18.9%      19.1%      18.8%      19.8%
 Capital adequacy ratios, consolidated:
 CET 1           20.2%      18.3%      17.8%      17.5%      18.7%
 Tier 1 capital  20.2%      18.3%      17.8%      17.5%      18.7%
 Total capital   20.5%      18.7%      18.3%      18.1%      19.4%

 

* 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
2023, including the notes attached thereto, are available on Halyk Bank's
website: http://halykbank.com/financial-results
(http://halykbank.com/financial-results) .

 

A 1Q 2023 results webcast will be hosted at 2:00 p.m. London time/9:00 a.m.
EST on Wednesday, 17 May 2023. A live webcast of the presentation can be
accessed via Zoom link after the registration. The registration is open until
17 May, 2023 (including), for the registration please click here.
(https://halykbank-kz.zoom.us/webinar/register/WN_W_zus1FgQMmnadOq6h-tDg#/registration)

 

 

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 14,142.8bn as at March 31, 2023, Halyk Bank is
Kazakhstan's leading lender.

The Bank has the largest customer base and broadest branch network in
Kazakhstan, with 572 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

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  QRFSFSSWMEDSELI