REG - JSC Halyk Bank JSC Halyk Bank-37QB - Consolidated financial results for the FY 2023
15/03/2024 09:45
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RNS Number : 0535H JSC Halyk Bank 15 March 2024
15 March 2024
Joint Stock Company 'Halyk Bank of Kazakhstan'
Consolidated financial results
for the year ended 31 December 2023
Joint Stock Company 'Halyk Bank of Kazakhstan' and its subsidiaries (together
"the Bank") (LSE: HSBK) releases consolidated financial information
and independent auditors' report for the year ended 31 December 2023.
Consolidated income statements
KZT mln
12M 2023 12M 2022 Y-o-Y.% 4Q 2023 4Q 2022 Y-o-Y,%
Interest income 1,669,782 1,247,648 33.8% 463,498 360,129 28.7%
Interest expense (859,285) (578,182) 48.6% (258,335) (171,597) 50.5%
Net interest income before credit loss expense 810,497 669,466 21.1% 205,163 188,532 8.8%
Fee and commission income 200,060 180,066 11.1% 49,533 51,404 (3.6%)
Fee and commission expense (99,704) (96,099) 3.8% (28,617) (25,154) 13.8%
Net fee and commission income 100,356 83,967 19.5% 20,916 26,250 (20.3%)
Net insurance income((1)) 52,265 27,630 89.2% 25,918 35,620 (27.2%)
Net foreign exchange gain 90,114 177,893 (49.3%) 28,919 46,226 (37.4%)
Net gain/(loss) on financial assets and liabilities at fair value through 72,594 (525) (X138.3) 32,012 (10,264) (X3.1)
profit or loss
Net realised loss from financial assets at fair value through other (4,055) (1,275) (X3.2) (1,681) (160) X10.5
comprehensive income
Other income/expense, share in profit of associate and income from non-banking (1,490) 13,850 (110.8%) (47,127) (25,476) 85.0%
activities
Expected credit loss expense (90,665) (106,929) (15.2%) (18,267) (12,286) 48.7%
Recovery of other credit loss expense 1,563 78 X20.0 (42) 528 (108%)
Operating expenses(()(2)()) (216,405) (188,959) 14.5% (62,257) (48,735) 27.7%
Income tax expense (121,338) (105,718) 14.8% (27,411) (41,608) (34.1%)
Net profit 693,436 569,478 21.8% 156,143 158,627 (1.6%)
Non-controlling interest 1 1 0.0% - 1 100.0%
Net profit attributable to common shareholders 693,435 569,477 21.8% 156,143 158,626 (1.6%)
Net interest margin, p.a. 6.2% 5.6% 6.1% 5.9%
Return on average equity, p.a. 32.5% 32.4% 27.1% 33.4%
Return on average assets, p.a. 4.8% 4.3% 4.2% 4.5%
Cost-to-income ratio 19.2% 19.0% 23.2% 17.2%
Cost of risk on loans to customers, p.a. 1.0% 1.2% 0.7% 0.4%
(1) Insurance revenue less insurance service expense and net
reinsurance expense;
(2) Including reversal of/(loss from) impairment of non-financial
assets and reversal of impairment loss of property, plant and equipment
Starting from 1 January 2023, Halyk Group's financial statements have been
transited to IFRS 17 "Insurance Contracts" from IFRS 4.
Moreover, in preparing the consolidated financial statements for the year
ended 31 December 2023, 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, accordingly, were measured at historical cost. As a result, the Group
revalued these financial instruments and recognized prior period adjustments.
All above mentioned resulted in recalculation of certain balance sheet items
as at 31 December 2022 and 1 January 2022 and P&L items for 12M 2022 and
retained earnings of prior years. All of the ratios were also recalculated
accordingly.
For more detailed information please refer to Halyk Group's Consolidated
Financial Statements and Independent Auditors' Report for the Year Ended 31
December 2023, note #4b.
Net profit attributable to common shareholders increased to KZT 693.4bn in 12M
2023, up 21.8% compared with KZT 569.5bn in 12M 2022 mainly due to significant
increase in lending and transactional businesses despite one-off negative
effect from the accelerated amortization of discount (net of tax effect) in
the amount of KZT 24.8bn on the deposit of Kazakhstan Sustainability Fund
(KSF), which was partially prepaid by the Bank in December 2023 (partial
prepayment of state support funds received by KKB in the form of a deposit
from KSF in 2015).
Interest income for 12M 2023 increased by 33.8% vs. 12M 2022 mainly due to
increase in average rate and balances of loans to customers.
Interest expense for 12M 2023 increased by 48.6% vs. 12M 2022 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, as well as one-off negative
effect from above mentioned accelerated amortization of discount in the amount
of KZT 24.8 bn on the deposit of KSF. Consequently, net interest income for
12M 2023 grew by 21.1% vs. 12M 2022.
In 12M 2023, net interest margin was affected by the increase in average rates
on both loans to customers and amounts due to customers following increase in
the market 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 6.2% p.a.
for 12M 2023 compared to 5.6% p.a. for 12M 2022.
Moreover, net interest margin in 12M 2023 and 4Q 2023 was negatively affected
by the above mentioned accelerated amortization of discount in the amount of
KZT 24.8bn on the deposit of KSF. Excluding this effect, net interest margin
would have amounted to 6.5% p.a. for 12M 2023 and 7.0% p.a. for 4Q 2023.
In 12M 2023 compared to 12M 2022, 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
12M 2023 increased by 19.5% vs. 12M 2022 due to increase in net transactional
income of both legal entities and individuals((3)) as well as in fees on
letters of credit and guarantees issued.
Net fee and commission income for 4Q 2023 decreased by 20.3% vs. 4Q 2022 due
to increased expenses on loyalty program bonuses and deposit insurance fees
payable to the Kazakhstan Deposit Insurance Fund.
Other non-interest income ((4)) decreased by 17.3% for 12M 2023 vs. 12M 2022
mainly due to lower net foreign exchange gain amid higher volatility of
exchange rates and interest rates in 12M 2022.
Net insurance income ((5)) for 12M 2023 improved by 89.2% vs. 12M 2022, due to
overall life and general insurance business growth.
Operating expenses for 12M 2023 increased by 14.5% vs. 12M 2022 mainly due to
the indexation of salaries and other employee benefits starting from 1 March
2023, as well as increase in IT investments and expenses for card business
development.
Cost of risk on loans to customers for 12M 2023 was at normalized level within
the scope of our full year guidance and was at the level of 1.0%.
The cost-to-income ratio equalled 19.2% in 12M 2023, compared with 19% in 12M
2022 due to higher operating expenses for 12M 2023.
(3) Transactional income of individuals, less transactional expenses
of individuals and less loyalty program bonuses;
(4) Other non-interest income (net gain/(loss) 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, net foreign
exchange gain, share in profit of associate, income on non-banking activities,
other expense, loss from impairment of assets held for sales, loss on disposal
of subsidiaries)
(5) Insurance revenue less insurance service expense and net
reinsurance expense;
Statement of financial position review
KZT mln
31-Dec-23 30-Sep-23 Change Q-o-Q, % 31-Dec-22 Change, abs Change YTD, %
Total assets 15,494,368 14,249,649 8.7% 14,395,102 1,099,266 7.6%
Cash and reserves 1,622,181 1,010,078 60.6% 2,288,375 (666,194) (29.1%)
Amounts due from credit institutions 171,754 146,010 17.6% 135,655 36,099 26.6%
T-bills & NBRK notes 2,125,941 2,216,148 (4.1%) 1,920,189 205,752 10.7%
Other securities & derivatives 1,614,666 1,678,962 (3.8%) 1,658,100 (43,434) (2.6%)
Gross loan portfolio 9,774,798 9,062,263 7.9% 8,280,290 1,494,508 18.0%
Stock of provisions (489,926) (471,389) 3.9% (422,388) (67,538) 16.0%
Net loan portfolio 9,284,872 8,590,874 8.1% 7,857,902 1,426,970 18.2%
Other assets 563,412 575,246 (2.1%) 510,958 52,454 10.3%
Assets held for sale 111,542 32,331 X3.5 23,923 87,619 X4.7
Total liabilities 13,017,414 12,068,377 7.9% 12,382,860 634,554 5.1%
Total deposits, including: 10,929,504 9,915,794 10.2% 10,512,048 417,456 4.0%
retail deposits 5,828,645 5,330,410 9.3% 5,243,764 584,881 11.2%
term deposits 4,808,592 4,421,606 8.8% 4,351,846 456,746 10.5%
current accounts 1,020,053 908,804 12.2% 891,918 128,135 14.4%
corporate deposits 5,100,859 4,585,384 11.2% 5,268,284 (167,425) (3.2%)
term deposits 3,338,099 2,968,099 12.5% 2,898,924 439,175 15.1%
current accounts 1,762,760 1,617,285 9.0% 2,369,360 (606,600) (25.6%)
Debt securities issued 653,393 677,452 (3.6%) 462,817 190,576 41.2%
Amounts due to credit institutions 778,311 885,797 (12.1%) 878,665 (100,354) (11.4%)
Other liabilities 656,206 589,334 11.3% 529,330 126,876 24.0%
Equity 2,476,954 2,181,272 13.6% 2,012,242 464,712 23.1%
As at YE 2023, total assets were up 7.6% year-to-date due to increase in
amounts due to customers and debt securities issued.
Compared with the end of 2022, loans to customers were up 18% on a gross and
18.2% on a net basis. The increase in the gross loan portfolio was
attributable to a rise of 13.4% in corporate, 25.1% in SME and 22.7% in retail
loans.
Despite some increase in absolute terms, Stage 3 loans decreased to 7.5% as at
the end of 4Q 2023 due to loan portfolio growth.
Compared with the end of 3Q 2023, the deposits of legal entities and the
deposits of individuals were up 11.2% and 9.3%, respectively, due to fund
inflow from the Bank's clients.
As at the-end of 12M 2023, the share of KZT deposits in total corporate
deposits was 72.9% compared to 60.6% as at the YE 2022, while the share in
total retail deposits was 63.4% vs. 52.6% as at YE 2022.
As at the end of 12M 2023, debt securities issued were up 41.2% year-to-date,
mainly due to the issuance of bonds listed on AIX with a coupon rate of 3.5%
in May and July 2023. 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 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 229.5mln 3.5% p.a. July 2025
International Exchange
In 12M 2023, total equity of the Bank increased by KZT 464.7bn or by 23.1%
compared to the YE 2022, mainly due to net profit earned by the Bank during
12M 2023.
The Bank's capital adequacy ratios were as follows*:
31-Dec-23 30-Sep-23 30-Jun-23 31-Mar-23 31-Dec-22
Capital adequacy ratios, unconsolidated:
Halyk Bank
k1-1 19.6% 18.6% 18.1% 20.2% 19.3%
k1-2 19.6% 18.6% 18.1% 20.2% 19.3%
k2 19.9% 19.0% 18.4% 20.6% 19.7%
Capital adequacy ratios, consolidated:
CET 1 19.3% 18.2% 17.9% 20.2% 19.2%
Tier 1 capital 19.3% 18.2% 17.9% 20.2% 19.2%
Total capital 19.6% 18.5% 18.3% 20.5% 19.5%
* 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 the nine months ended 31 December
2023, including the notes attached thereto, are available on Halyk Bank's
website: http://halykbank.com/financial-results
(http://halykbank.com/financial-results) .
A 12M & 4Q 2023 results webcast will be hosted at 2:30pm London
time/7:30pm Almaty time (UTC +05:00) on Monday, 18 March 2024. A live webcast
of the presentation can be accessed via Zoom link after the registration. The
registration is open until 18 March 2024 (including), for the registration
please click here.
(https://halykbank-kz.zoom.us/webinar/register/WN_yD5jgkfFRk6dVurWOAONHw)
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 15,494.4bn as at 31 December, 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 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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