30 November 2009
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Interim consolidated financial results
for the nine months ended 30 September 2009
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries ("the Bank") (LSE: HSBK) releases its unaudited interim financial information for the nine months ended 30 September 2009 prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and reviewed by Deloitte LLP, Kazakhstan.
Total assets increased by 29.3 percent during the nine months ended 30 September 2009
Amounts due to customers increased by 53.6 percent during the nine months ended 30 September 2009
Loans to customers decreased by 3.1 percent to KZT 1,151.8 billion from KZT 1,188.3 billion as at YE2008
Retail loans decreased by 9.0 percent to KZT 315.3 billion from KZT 346.6 billion as at YE2008
Total equity increased by 44.6 percent to KZT 276.2 billion from KZT 191.1 billion as at YE2008
Net interest income before impairment charge increased by 5.3 percent to KZT 70,446 million from KZT 66,924 million for the nine months ended 30 September 2008
Net fee and commission income increased by 47.9 percent to KZT 28.5 billion from KZT 19.3 billion for the nine months ended 30 September 2008
Operating expenses decreased by 8.6 percent to KZT 28.4 billion from KZT 31.1 billion for the nine months ended 30 September 2008
Net income for the nine months ended 30 September 2009 was KZT 9.3 billion
Net interest margin decreased to 5.5 percent from 5.9 percent for the nine months ended 30 September 2008
The ratio of provisions to gross loans (provisioning rate) increased to 14.8 percent from 8.8 percent as at YE2008
The ratio of operating expenses to operating income before impairment charge (cost-to-income ratio) decreased to 25.2 percent from 34.1 percent for the nine months ended 30 September 2008
The ratio of operating expenses to average assets (cost-to-assets ratio) decreased to 1.9 percent from 2.4 percent for the nine months ended 30 September 2008
The ratio of loans to customers1 to amounts due to customers (loan-to-deposit ratio) decreased to 0.86x from 1.37x as at YE2008
1 Loans to customers net of allowance for loan impairment
Financial Overview
Interest income
Interest income increased by 4.8 percent to KZT 149,221 million from KZT 142,399 million for the nine months ended 30 September 2008. This increase was primarily due to a 12.3 percent increase in average balances of interest-earning assets partially offset by the decline in average rates on interest-earning assets to 11.8 percent p.a. from 12.7 percent p.a. for the nine months ended 30 September 2008. This decrease in average rates on interest-earning assets was primarily due to the decline in average rates on amounts due from credit institutions (including cash and cash equivalents) to 1.2 percent p.a. from 3.4 percent p.a. for the nine months ended 30 September 2008 and average rates on loans to customers to 15.5 percent p.a. from 15.6 percent p.a. for the nine months ended 30 September 2008 partially offset by the increase in average rates on the securities portfolio to 9.1 percent p.a. from 8.2 percent p.a. for the nine months ended 30 September 2008.
Interest expenses increased by 4.4 percent to KZT 78,775 million from KZT 75,475 million for the nine months ended 30 September 2008. This increase was primarily due to a 13.2 percent increase in average balances of interest-bearing liabilities partially offset by decrease in average rates on interest-bearing liabilities to 6.3 percent p.a. from 6.8 percent p.a. for the nine months ended 30 September 2008. Average rates on debt securities issued increased to 9.6 percent p.a. from 8.1 percent p.a. for the nine months ended 30 September 2008. Average rates on amounts due to customers fell to 5.8 percent p.a. from 6.8 percent p.a. for the nine months ended 30 September 2008 and average rates on amounts due to credit institutions fell to 4.2 percent p.a. from 5.2 percent p.a. for the nine months ended 30 September 2008.
Net interest income before impairment charge increased by 5.3 percent to KZT 70,446 million from KZT 66,924 million for the nine months ended 30 September 2008.
Impairment charge
Impairment charge increased by 143.3 percent to KZT 73,408 million from KZT 30,168 million for the nine months ended 30 September 2008. The effective provisioning rate on loans to customers increased to 14.8 percent from 8.8 percent as at YE2008. The effective provisioning rate under Kazakhstan regulatory standards increased to 18.8 percent from 10.9 percent as at YE2008.
Fee and commission income
Net fee and commission income increased by 47.9 percent to KZT 28,522 million from KZT 19,288 million for the nine months ended 30 September 2008. This increase was primarily due to a 226.0 percent increase in pension fund and asset management fees to KZT 12,981 million from KZT 3,982 million for the nine months ended 30 September 2008, an increase in plastic card maintenance fees by 18.4 percent to KZT 1,944 million from KZT 1,642 million for the nine months of 2008, as well as an increase in volume of maintenance fees on customer accounts by 44.5 percent to KZT 2,630 million from KZT 1,820 million for the nine months ended 30 September 2008.
Other non-interest income
Other non-interest income increased by 72.7 percent to KZT 16,520 million from KZT 9,566 million for the nine months ended 30 September 2008, primarily as a result of net gain from financial assets and liabilities at fair value through profit or loss account of KZT 991 million compared with the loss of KZT 6,819 million for the nine months ended 30 September 2008, net gain on foreign exchange operations, and net gain from repurchase of debt securities issued of KZT 439 million for the nine months ended 30 September 2009, partially offset by losses from available-for-sale investment securities and decrease in insurance underwriting income.
Gains on foreign exchange operations net of currency translation differences increased by 10.2 percent to KZT 8,573 million from KZT 7,778 million for the nine months ended 30 September 2008, primarily as a result of increased margins and volumes of customer operations with foreign currency.
Insurance underwriting income decreased by 11.4 percent to KZT 5,954 million from KZT 6,718 million for the nine months ended 30 September 2008, primarily as a result of decrease in overall insurance premiums collected by JSC Kazakhinstrakh.
Insurance underwriting income less insurance claims incurred, net of reinsurance, increased by 36.6 percent to KZT 3,148 million from KZT 2,304 million for the nine months ended 30 September 2008, mainly as a result of decrease in JSC Kazakhinstrakh`s expenses on insurance claim payments and insurance reserves.
Operating expenses
Operating expenses decreased by 8.6 percent to KZT 28,433 million from KZT 31,112 million for the nine months ended 30 September 2008, mainly due to a 16.1 percent decrease in expenses on salaries and other employee benefits.
Total assets
The Bank's total assets increased by 29.3 percent to KZT 2,135,811 million from KZT 1,651,349 million as at YE2008 primarily due to increases in cash and cash equivalents and investments held to maturity partially offset by decrease in available-for-sale investment securities, loans to customers and financial assets at fair value through profit or loss.
Liquid assets(2)
The Bank's ratio of liquid assets to total assets increased to 39.6 percent from 17.0 percent as at YE2008 mainly as a result of a 338.9 percent increase in cash and cash equivalents and a 171.7 percent increase in investments held to maturity. Increase in liquid assets was mainly funded by a 53.6 percent increase in amounts due to customers and a 18.3 percent increase in debt securities. The increase in debt securities resulted from two domestic bond issues in the first quarter of 2009. The Bank keeps its liquid assets primarily in short-term deposits with international banks and the National Bank of Kazakhstan.
Loans to customers
Total loans to customers decreased by 3.1 percent to KZT 1,151,772 million from KZT 1,188,280 million as at YE2008. Retail loans, including consumer and mortgage loans, decreased by 9.0 percent to KZT 315,256 million from KZT 346,620 million as at YE2008. Loans to corporate borrowers (including SMEs) increased by 8.4 percent to KZT 1,036,731 million from KZT 956,712 million as at YE2008 primarily as a result of foreign exchange differences on loans denominated in foreign currencies.
Liabilities
The Bank's total liabilities increased by 27.3 percent to KZT 1,859,594 million from KZT 1,460,294 million as at YE2008 mainly due to increases in amounts due to customers, insurance liabilities, issuance of two domestic bonds in the first quarter of 2009, and foreign exchange differences on liabilities denominated in foreign currencies.
Amounts due to credit institutions
Amounts due to credit institutions decreased by 38.3 percent to KZT 178,822 million from KZT 289,608 million as at YE2008. This decrease was mainly due to a 72.6 percent decrease in loans and deposits from Kazakhstan banks to KZT 26,436 million from KZT 96,391 million as at YE2008 and a 27.4 percent decrease in loans and deposits from OECD-based banks to KZT 138,944 million from KZT 191,337 million as at YE2008. The decrease in loans and deposits from OECD-based banks was mainly attributable to repayment of a syndicated loan for USD 300 million on 2 September 2009.
The decrease in loans and deposits from Kazakhstan banks and OECD-based banks was partially offset by a long-term facility for KZT 11.7 billion provided by the Fund for Entrepreneurship Development "DAMU" in February 2009.
Amounts due to customers
Amounts due to customers increased by 53.6 percent to KZT 1,332,727 million from KZT 867,392 million as at YE2008. This growth was attributable to a 77.3 percent increase in term deposits and current accounts of legal entities to KZT 951,529 million from KZT 536,545 million as at YE2008 as well as a 15.2 percent increase in term deposits and current accounts of individuals to KZT 381,198 million from KZT 330,847 million as at YE2008. KZT 415.0 billion increase in amounts due to legal entities includes KZT 80.7 billion attributable to deposits from Joint Stock Company "Sovereign Wealth Fund "Samruk-Kazyna" under specialized refinancing programs for the real sector of the economy and mortgages.
Large ticket foreign borrowings
On 2 September 2009, the Bank repaid its USD 300 million international syndicated loan. On 7 October 2009, the Bank repaid USD 200 million Eurobond. In October 2009, the Bank prepaid two syndicated loans for the amount of USD 400 million with original maturity in April 2010 and USD 300 million with original maturity in September 2010. As a result, the Bank's large ticket foreign debt decreased to USD 1.5 billion as at 1 November 2009 from USD 2.7 billion as at YE2008.
Equity
Total equity increased by 44.6 percent to KZT 276,217 million from KZT 191,055 million as at YE2008 primarily as a result of capital injection from Joint Stock Company "Sovereign Wealth Fund "Samruk-Kazyna" ("SWF S-K") for KZT 26,951 million from the sale of the Bank's common shares in March 2009 and for KZT 33,049 million from the sale of the Bank's preferred shares in May 2009.
About the Bank
Halyk Bank is one of Kazakhstan's leading financial services groups and a leading retail bank with the largest customer base and distribution network among Kazakh banks. The Bank is developing as a universal financial group offering a broad range of services (banking, pensions, insurance, leasing, brokerage and asset management) to its retail, small and medium enterprise and corporate customers. The Bank is also present through its wholly-owned subsidiaries in Russia, Georgia and Kyrgyzstan. The Bank is rated by the three main rating agencies: Moody's Investor Service (Ba2), Fitch Ratings (B+) and Standard&Poor's (B+).
Halyk Bank's market share as at 30 September 2009 was 16.8 percent in total assets, 12.3 percent in total loans, 21.7 percent in total deposits, 20.2 percent in retail deposits and 22.4 percent in corporate deposits, 21.4 percent in fee and commission income.
Recent events
In June 2009, the Bank was recognised as the "Best Local Bank in Kazakhstan" by Emeafinance.
In July 2009, the Bank was named as the "Best Bank in Kazakhstan" in the Awards for Excellence 2009 by Euromoney.
On 2 September 2009, the Bank repaid its USD 300 million international syndicated loan.
On 30 September 2009, OJSC "Halyk Bank Kyrgyzstan", the Bank's subsidiary in Kyrgyzstan, repaid successfully its USD 12 million loan received from Raiffeisen Zentralbank Österreich AG (Austria) having performed in full its external obligations.
On 1 October 2009, the Bank prepaid its USD 300 million international syndicated loan.
On 7 October 2009, the Bank repaid USD 200 million Eurobond.
On 9 October 2009, the Bank announced placement of 67,533,545 authorized but unplaced common shares at a price of KZT 104.03 per share. By the date of this press release, the Bank has issued and received payment for 65,259,845 common shares for the total amount of KZT 6,789 million.
These shares were offered to existing shareholders, including holders of global depository receipts representing the Bank's common shares, for purchase on a pre-emptive basis from 20 February to 24 March 2009 at a price of KZT 102.02 per share (equivalent to USD 2.75 per GDR at the then current exchange rate) as part of the global offering of 326,673,000 common shares aimed to be placed with Samruk-Kazyna.
The full consolidated financial statements, including the notes attached thereto, are available on Halyk Bank's website (http://eng.halykbank.kz/financials/reports and http://eng.halykbank.kz/info/news).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
| As at | Variations | |
|
| 30-Sep-09 | 31-Dec-08 | 9M09/YE08 |
| (unaudited) | (audited) | ||
|
| (KZT millions) | ( percent) | |
| Assets |
|
|
|
| Cash and cash equivalents | 707,092 | 161,088 | 338.9 |
| Obligatory reserves | 29,669 | 30,825 | (3.8) |
| Financial assets at fair value through profit or loss | 8,695 | 14,987 | (42.0) |
| Amounts due from credit institutions | 12,536 | 10,357 | 21.0 |
| Available-for-sale investment securities | 87,950 | 135,801 | (35.2) |
| Investments held to maturity | 23,605 | 8,689 | 171.7 |
| Loans to customers | 1,151,772 | 1,188,280 | (3.1) |
| Property and equipment | 59,461 | 58,023 | 2.5 |
| Goodwill | 3,190 | 3,190 | - |
| Intangible assets | 7,804 | 6,436 | 21.3 |
| Insurance assets | 7,536 | 4,417 | 70.6 |
| Other assets | 36,501 | 29,256 | 24.8 |
| Total assets | 2,135,811 | 1,651,349 | 29.3 |
|
|
|
|
|
| Liabilities |
|
|
|
| Amounts due to customers | 1332,727 | 867,392 | 53.6 |
| Amounts due to credit institutions | 178,822 | 289,608 | (38.3) |
| Financial liabilities at fair value through profit or loss | 5,225 | 6,048 | (13.6) |
| Debt securities issued | 310,992 | 262,991 | 18.3 |
| Provisions | 4,016 | 2,889 | 39.0 |
| Deferred tax liability | 8,787 | 8,854 | (0.8) |
| Insurance liabilities | 12,361 | 8,618 | 43.4 |
| Other liabilities | 6,664 | 13,894 | (52.0) |
| Total liabilities | 1,859,594 | 1,460,294 | 27.3 |
|
|
|
|
|
| Equity: |
|
|
|
| Share capital | 140,509 | 65,531 | 114.4 |
| Share premium reserve | 1,639 | 1,908 | (14.1) |
| Treasury shares | (101) | (69) | 46.4 |
| Retained earnings and other reserves | 133,832 | 123,428 | 8.4 |
|
| 275,879 | 190,798 | 44.6 |
| | | | |
| Minority interest | 338 | 257 | 31.5 |
|
|
|
|
|
| Total equity | 276,217 | 191,055 | 44.6 |
|
|
|
|
|
| Total liabilities and equity | 2,135,811 | 1,651,349 | 29.3 |
CONSOLIDATED SUMMARY INCOME STATEMENT
| | For the nine-month period ended | |
| | 30-Sep-09 (unaudited) | 30-Sep-08 (unaudited) |
| | (KZT millions) | |
| Interest income | 149,221 | 142,399 |
| Interest expense | (78,775) | (75,475) |
| Net interest income before impairment charge | 70,446 |
66,924 |
| Impairment charge | (73,408) | (30,168) |
| Net interest income | (2,962) | 36,756 |
|
|
| |
| Fees and commissions, net | 28,522 | 19,288 |
| Other non-interest income | 16,520 | 9,566 |
| Non-interest expenses | (32,000) | (41,598) |
|
|
| |
| Income before income tax expense | 10,080 | 24,012 |
| Income tax expense | (806) | (6,272) |
| Net income | 9,274 | 17,740 |
| Minority interest in net income | 171 | (357) |
| Net income attributable to equity holders of the parent | 9,103 | 18,097 |
KEY FINANCIAL RATIOS
|
| 30-Sep09 (unaudited) | 30-Jun-09 (unaudited) | 31-Mar-09 (unaudited) | 31-Dec-08 (unaudited) |
| Amounts due to customers/ total liabilities | 71.7% | 67.3% | 65.3% | 59.4% |
| Loans / deposits ratio | 0.86x | 1.02x | 1.10x | 1.37x |
| Liquid assets (less securities subject to repurchase agreements) / total assets(1) | 39.6% | 34.3% | 29.8% | 17.0% |
| NPLs / gross loans(2) | 19.7% | 17.9% | 14.6% | 10.1% |
| Allowance for loan impairment / gross loans to customers | 14.8% | 12.9% | 10.9% | 8.8% |
| Regulatory provisioning rate | 18.8% | 16.5% | 14.4% | 10.9% |
| Tier 1 capital adequacy ratio(3) | 15.1% | 14.8% | 10.5% | 9.9% |
| Total capital adequacy ratio(3) | 18.9% | 18.5% | 13.8% | 13.4% |
| Tier 1 capital adequacy ratio (k1-1) (4) | 9.9% | 10.1% | 7.9% | 8.0% |
| Tier 1 capital adequacy ratio (k1-2) (4) | 13.0% | - | - | - |
| Tier 2 capital adequacy ratio (k2) (4) | 16.9% | 15.7% | 11.3% | 13.0% |
| | | | | |
| Number of branches and outlets | 625 | 623 | 629 | 682 |
| Number of ATMs | 1,689 | 1,704 | 1,631 | 1,648 |
| Number of POS-terminals | 3,467 | 3,654 | 3,732 | 3,711 |
| Information and transaction terminals (multiservice kiosks) | 572 | 569 | 562 | 563 |
(1) On consolidated IFRS basis, unaudited, liquid assets consist of "Cash and cash equivalents", "Obligatory reserves", "Financial assets at fair value through profit or loss", "Amounts due from credit institutions", "Available-for-sale investment securities", "Investments held to maturity" less securities pledged under REPO transactions.
(2) Total NPLs (total principle amount of loans with principle and/or interest overdue by more than 30 days) / gross loan portfolio, unconsolidated.
(3) As per Guidelines adopted by the Basel Committee on Banking Regulations and Supervision Practices of the Bank for International Settlements.
(4) As per the FMSA Guidelines. As per the FMSA Resolution dd 27 February 2009, starting from 1 July 2009 capital adequacy shall be determined by three ratios: k1-1, k1-2, k2.
|
| For the nine-month period ended | For the year ended | |
|
| 30-Sep-09 (unaudited) | 30-Sep-08 (unaudited) | 31-Dec-08 (unaudited) |
| | | | |
| Cost-to-income(5) | 25.2% | 34.1% | 34.4% |
| Return on average common shareholders' equity (ROAE) | 5.2%(6) | 4.2%(6) | 8.3% |
| Return on average assets (ROAA) | 0.6%(6) | 1.4%(6) | 0.8% |
| Net interest margin(7) | 5.5%(6) | 5.9%(6) | 6.0% |
| Operating expense/average total assets | 1.9%(6) | 2.4%(6) | 2.6% |
(5) Cost-to-income is calculated as operating expenses divided by net interest income before impairment charge, plus fees and commissions, net, and other non-interest income, less insurance claims incurred, net of reinsurance.
(6) Annualised.
(7) Net interest margin is calculated as net interest income before impairment charge, divided by average interest-earning assets.
- END-
For further information please contact:
Zhanara Aikimbayeva JanarA@halykbank.kz +7 727 259 07 96
Assel Atinova AselA@halykbank.kz +7 727 259 04 30
Oleg Khvan OlegH@halykbank.kz +7 727 259 04 65
Viktor Skryl ViktorSk@halykbank.kz +7 727 259 04 64
Yelena Perekhoda ElenaPer@halykbank.kz +7 727 330 17 19
