Last checked at 22 Aug 2014 08:13
JSC Halyk Bank / Half-yearly Results 22.08.2014 08:13 Dissemination of a Regulatory Announcement, transmitted byEquityStory.RS, LLC - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.--------------------------------------------------------------------------- 22 August 2014 Joint Stock Company 'Halyk Savings Bank of Kazakhstan' Consolidated financial resultsfor the six months ended 30 June 2014 Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries(together 'the Bank') (LSE: HSBK) releases its interim condensedconsolidated financial information for the 6 months ended 30 June 2014. 6 months 2014 financial highlights - Net income is up by 87.4% to KZT 64.0bn, YoY; - Net interest income before impairment charge is up by 32.0%; - Impairment charge is down by 79.2%; - Net interest income is up by 49.1%; - Fees and commissions from transactional banking are up by 12.7%; - RoAE is up to 32.1% p.a. (20.4% p.a. for 6m 2013); - RoAA is up to 4.7% p.a. (2.8% p.a. for 6m 2013); - Total assets are up by 12.1% YTD; - Net loans to customers are up by 2.9%; - Amounts due to customers are up by 15.5%; - Total equity is up by 11.6%; - NPLs 90-day+ ratio is down to 15.4% (18.0% as at 31 December 2013). Statement of profit or loss review Interest income increased by 18.5% for 1H 2014 vs. 1H 2013 mainly due toincrease in average balances of loans to customers by 14.2% and in averageinterest rate on loans to customers to 12.0% p.a. for 1H 2014 from 11.6%p.a. for 1H 2013. Interest expense increased by 1.2% for 1H 2014 vs. 1H2013 mainly due to increase in average balances of interest-bearing FX termdeposits of individuals and legal entities. The increase in interestexpense was partially offset by 27.3% decrease in average balances of debtsecurities issued and their average interest rates to 7.6% p.a. from 8.1%p.a. As a result, net interest income before impairment charge increased by32.0% to KZT 64.8bn for 1H 2014 vs. 1H 2013. Impairment charge decreased by 79.2% for 1H 2014 vs. 1H 2013, mainly due torepayments of overdue indebtedness of some corporate clients in 1Q 2014which led to release of provisions. During 2Q 2014 the Bank wrote-off fullyprovisioned non-performing loans for KZT 57.8bn without legally forgivingclaims on the borrowers. As a result allowances for loan impairmentdecreased by 8.9% vs. 31 December 2013, whereas provisioning leveldecreased to 16.2% as at 30 June 2014 vs. 17.9% as at 31 December 2013. TheBank will continue collection of these written-off loans in accordance withits regular procedures. Provisions against letters of credit and guarantees recovered by KZT 4.2bnas at 30 June 2014 mainly due to expiry of several large-ticket LCs andguarantees during 1Q 2014. Fee and commission income from transactional banking (i.e. excludingpension fund and asset management) increased by 12.7% for 1H 2014 vs. 1H2013 as a result of growing volumes of transactional banking business. Net pension fund and asset management fees increased 3.4-times for 1Q 2014vs. 1Q 2013 mainly due to revaluation gains on FX-denominated pensionassets as a result of one-off devaluation of KZT in February 2014. On 26 ofMarch 2014 JSC 'APF of Halyk Bank of Kazakhstan' completed transfer ofassets under management to the JSC 'Single Accumulative Pension Fund'.Starting from 26 March the Bank does not earn income from managing pensionassets. Other non-interest income (excluding insurance) increased by 73.7% for 1H2014 vs. 1H 2013 mainly due to increase in income from translationaldifferences to KZT 4.7bn for 1H 2014 vs. KZT 0.3bn for 1H 2013 thanks tothe Bank's net long FX position at the time of devaluation of KZT inFebruary 2014. The increase in other non-interest income was partiallyoffset by a decrease in net gain from financial assets and liabilitiesthrough profit or loss to negative KZT 66mln for 1H 2014 from KZT 1.1bn for1H 2013 due to lower volumes of FX forward and swap operations. Insurance underwriting income (net of reinsurance) decreased by 38.9% for1H 2014 vs. 1H 2013 due to lower volumes of pension annuities business andincrease in ceded reinsurance share of non-life insurance business during2Q 2014. Lower volumes of pension annuity business in 1H 2014 were due totemporary regulatory restrictions adopted in light of ongoing pensionreform from June 2013 to May 2014. Insurance expense (the sum of insurancepayments, insurance reserves and commissions to agents) decreased by 39.2%for 1H 2014 vs. 1H 2013 mainly as a result of 71.5% decrease in insurancereserves due to temporary regulatory restrictions imposed on pensionannuity business. As a result, insurance underwriting income, lessinsurance expense, decreased by 37.5% for 1H 2014 vs. 1H 2013. Insurance underwriting income (net of reinsurance) increased by 38.5% for2Q 2014 vs. 1Q 2014 as a result of increase in insurance underwritingincome in life insurance business due to lifting of earlier imposedrestrictions on underwriting of pension annuity contracts and due to launchof a new life insurance product in 2Q 2014. Insurance expense increased by29.3% for 2Q 2014 vs. 1Q 2014 mainly as a result of increase in insurancereserves for future pension annuity payments in life insurance business. Asa result, insurance underwriting income, less insurance expense, increasedby 79.0% for 2Q 2014 vs. 1Q 2014. Operating expenses increased by 4.7% for 1H 2014 vs. 1H 2013 mainly due toexpenses related to project-specific professional services. The increase inoperating expenses was partially offset by 16.5% decrease in depreciationand amortisation expenses due to increase of amortisation period for someclasses of fixed assets. Operating expenses increased by 4.7% for 2Q 2014 vs. 2Q 2013 mainly due to4.8% increase in salaries and other employee benefits as a result ofincrease in bonuses accrued by some of the Bank's subsidiaries, as well as3.4-times increase in expenses related to sale of property and equipmentand intangible assets of the Bank's Pension Fund in connection with windingup of its business. The increase in operating expenses was partially offsetby 28.8% decrease in depreciation and amortisation expenses. The Bank's cost-to-income ratio decreased to 26.8% for 1H 2014 vs. 33.7%for 1H 2013 and to 29.9% for 2Q 2014 from 36.7% for 2Q 2013. Statement of financial position review Total assets increased by 12.1% vs. YE 2013 mainly in amounts due fromcredit institutions (75.0%), cash and cash equivalents (43.4%),available-for-sale investment securities (5.1%) and loans to customers(2.9%). Loans to customers grew by 0.8% on a gross basis and by 2.9% on a net basisvs. YE 2013. Gross loan portfolio growth was attributable to increase inretail loans by 5.8%. The increase in gross loans was partially off-set by0.3% decrease of corporate loans and 2.4% decrease of SME loans, primarilydue to write-offs of non-performing loans in these business sectors during2Q 2014 and, to a lesser extent, due to loan repayments exceeding new loanissues. Loans to customers decreased by 2.9% on a gross basis and remained flat ona net basis vs. 31 March 2014. The decrease of gross loan portfolio growthwas attributable to decrease in corporate loans and loans to SME by 5.7%and 1.1%, respectively, due to write-offs of non-performing loans,partially off-set by 4.4% increase in retail loans. 30-day and 90-day NPL ratios decreased to 16.4% and 15.4%, respectively, asat 30 June 2014 vs. 19.9% and 17.5%, respectively, as at 31 March 2014. Thedecrease in 30-day and 90-day NPL ratios was mainly due to write-offs ofnon-performing loans in corporate and SME sectors after changes to taxlegislation in April 2014, as well as repayment of some delinquencies inApril and May 2014. The Bank created IFRS provisions that covered 30-dayNPLs by 97.0% and 90-day NPLs by 103.3% as at 30 June 2014. Term deposits of legal entities decreased by 9.0% vs.YE 2013 mainly due topartial withdrawal of funds by some corporate clients in 1Q 2014 to financetheir on-going business needs, including tax payments to the state budgetin March 2014. Current accounts of legal entities increased by 45.4% vs. YE2013 as a result of flight to quality due to turbulence on financialmarkets. Term deposits and current accounts of individuals increased by 19.5% and10.0%, respectively, vs. YE 2013 due to growing volumes of retail bankingbusiness. Amounts due to credit institutions decreased by 57.2% mainly due to lowervolumes of REPO-transactions made through the Kazakhstan Stock Exchange,partially offset by KZT 20bn loan from JSC Entrepreneurship DevelopmentFund 'Damu' to support small and medium businesses operating in processingindustries. Debt securities issued increased by 16.8% vs. YE 2013 mainly due torecalculation of USD-denominated Eurobond issues at new KZT exchange rateafter KZT devaluation in February 2014. As of the date of thispress-release, the Bank's debt securities issued mainly consist of twooutstanding Eurobond issues for USD 700mln and USD 500mln with bulletmaturity in May 2017 and January 2021, respectively, each bearing a couponrate of 7.25%. Total equity increased by 11.6% vs. YE 2013 mainly on the back of netprofit earned during 1H 2014, partially offset by payment of dividends inamount of KZT 18,547mln to common shareholders (or KZT 1.70 per commonshare) and dividends in amount of KZT 1,757mln to preferred shareholders(or KZT 9.28 per preferred share). Regulatory Tier 1 capital adequacy ratios k1-1 and k1-2 and total capitaladequacy ratio k2 were at 12.0%, 14.9% and 18.9%, respectively, as at 30June 2014 vs.12.3%, 15.6% and 17.9%, respectively, as at 31 March 2014 and9.5%, 11.2% and 18.2%, respectively, as at 31 December 2013. Basel Tier 1capital adequacy ratio and total capital adequacy ratio were at 18.4% and19.8%, respectively, as at 30 June 2014 vs.18.0% and 19.2%, respectively,as at 31 March 2014 and vs. 17.2% and 18.5%, respectively, as at 31December 2013. The condensed interim consolidated financial information for the six monthsended 30 June 2014, including notes attached thereto, are available onHalyk Bank's website http://www.halykbank.kz/en/financial-reports andhttp://www.halykbank.kz/en/news ). For further information please contact: Halyk Bank Dauren Karabayev +7 727 259 68 10Viktor Skryl +7 727 259 04 27Mira Kasenova +7 727 259 0430 22.08.2014 The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: EnglishCompany: JSC Halyk Bank 109V, Abay ave 050008 Almaty KazakhstanPhone: +7 727 259 04 27Fax: +7 727 259 04 64E-mail: halykteam@halykbank.kzInternet: http://halykbank.kzISIN: US46627J3023Category Code: IRTIDM: Sequence Number: 2198Time of Receipt: Aug 22, 2014 08:12:55 End of Announcement EquityStory.RS, LLC News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.