Last checked at 17 May 2016 07:42
JSC Halyk Bank / Miscellaneous - High PriorityJSC Halyk Bank: Consolidated financial results for the three months ended 31March 2016 17-May-2016 / 08:41 CET/CESTDissemination of a Regulatory Announcement, transmitted by EquityStory.RS,LLC - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- 17 May 2016 Joint Stock Company 'Halyk Savings Bank of Kazakhstan' Consolidated financial resultsfor the three months ended 31 March 2016 Joint Stock Company 'Halyk Savings Bank of Kazakhstan' and its subsidiaries(together 'the Bank') (LSE: HSBK) releases its condensed interimconsolidated financial information for the three months ended 31 March2016. 1Q 2016 financial highlights - Net income is down by 32.2% YoY to KZT 18.3bn; - Net interest income before impairment charge is down by 14.7%; - Impairment charge is up to KZT 4.5bn compared with recoveries of KZT 1.7bn for 1Q 2015; - Net interest income is down by 30.1%; - Fees and commissions from transactional banking are up by 11.5%; - Net interest margin is down to 4.3% p.a. from 6.6% p.a. for 1Q 2015; - Cost-to-income ratio is up to 37.8% from 32.9% for 1Q 2015; - RoAE is down to 13.7% p.a. from 22.8% p.a. for 1Q 2015; - RoAA is down to 1.7% p.a. from 3.9% p.a. for 1Q 2015; - Total assets are down by 1.5%, YTD; - Net loans to customers are down by 2.7%; - Total equity is up by 2.3%; - NPLs 90-day+ ratio is up to 12.9% from 10.3% as at 31 December 2015; - Cost of risk is up to 0.7% p.a. from negative 0.3% p.a. for 1Q 2015; - Provisioning level is up to 12.7% from 12.3% as at 31 December 2015. Statement of profit or loss review Compared with 1Q 2015, interest income increased by 27.0%. This was mainlydue to an increase in average balances of interest-earning assets by 32.1%and a rise in average interest rates on the amounts due from creditinstitutions. In 1Q 2016, interest expense increased two-fold compared with1Q 2015. This was caused by an increase in average balances of interest-bearing liabilities and a rise in interest rates on KZT-denominated amountsdue to customers and amounts due to credit institutions because of limitedKZT funding on the market and higher interest rates. As a result, netinterest income before impairment charge decreased by 14.7% to KZT 31.3bncompared to 1Q 2015. In 1Q 2016, the Bank created provisions for KZT 4.5bn vs. recoveries of KZT1.7bn in 1Q 2015. Provision recoveries in 1Q 2015 were due to the transferof several problem loans to the SPV Halyk-Project LLP and the repayment ofone large-ticket impaired corporate loan. As a result, in 1Q 2016, cost ofrisk was back to more normalised level of 0.7% p.a. vs. negative 0.3% p.a.in 1Q 2015. Fee and commission income from transactional banking rose by 11.5% for1Q2016 vs. 1Q 2015, as a result of growing volumes of transactionalbanking, mainly in payment card maintenance, servicing customers' pensionpayments and letters of credit and guarantees issued, and, to a lesserextent, increase in certain tariffs. Fees from payment card maintenanceincreased by 17.3% to KZT 2.6bn for 1Q2016 vs. 1Q 2015 as a result ofgrowth in the number of active payment cards by 7.8%. Fees from servicingcustomers' pension payments rose by 18.1% to KZT 1.7bn for 1Q2016 vs. 1Q2015 due to increase in state pension payments by 9.0%. Increase in feesfrom letters of credit and guarantees issued by 31.8% to KZT 1.0bn for1Q2016 vs. 1Q 2015 was mostly attributable to the issuance of large-ticketletters of credits and guarantees and partially due to currencyrevaluation. Other non-interest income (excluding insurance) increased to KZT 3.7bn for1Q 2016 vs. KZT 0.6bn 1Q 2015 mainly due to 2.7 times rise in net gain onfinancial assets and liabilities at fair value through profit or loss. Thisgrowth was mostly attributable to KZT 2.7bn unrealised gain on derivativeoperations in one of the Bank's subsidiaries, and partially due to positiverevaluation gain of KZT 1.3bn on derivative and trading operations of theBank (USD/KZT swaps, off-balance sheet). Operating expenses grew by 9.7% compared to 1Q 2015 mainly due to increasein salaries of some categories of the Bank's employees and incentive bonusscheme introduced (but not yet paid out) starting from 1 January 2016instead of salary indexation. The growth rate of the Bank's operatingexpenses was lower than inflation rate, which reached 15.1% for the periodfrom 1 April 2015 to 1 April 2016. The Bank's cost-to-income ratio increased to 37.8% for 1Q 2016 from 32.9%for 1Q 2015 as a result of lower operating income in 1Q 2016, mainly drivenby interest expense growth and increase in operating expenses. Statement of financial position review In 1Q 2016, total assets decreased by 1.5% vs. YE 2015 mainly driven bycash and cash equivalents (down by 1.4%) and loans to customers (down by2.7%). Compared with YE 2015, loans to customers decreased by 2.2% on a gross and2.7% on a net basis. Gross loan portfolio decline was attributable tolimited KZT funding on the market, higher interest rates in 1Q 2016 andtighter loan underwriting policies of the Bank. 90-day NPL ratio increased to 12.9% as at 31 March 2016 compared with 10.3%as at 31 December 2015 due to recognition of impairment in the financialcondition of several corporate borrowers operating in the agriculturalsector during January and February 2016, as well as overall loan portfoliodecrease. As at 31 March 2016, provisioning level increased to 12.7% compared with12.3% as at 31 December 2015. Deposits of legal entities decreased by 7.8% compared to YE 2015 mainly dueto lower rates offered by the Bank in light of improving KZT liquiditysituation. At the same time, the share of corporate KZT deposits in totalcorporate deposits increased to 43.3% as at 31 March 2016 compared to 23.7%as at YE 2015. Deposits of individuals increased by 3.4% vs. YE 2015 as a result of inflowof new deposits with the Bank during 1Q 2016. At the same time, the shareof retail KZT deposits in total retail deposits increased to 23.3% as at 31March 2016 compared to 22.4% as at YE 2015. Amounts due to credit institutions as at 31 March 2016 decreased by 13.9%vs. YE 2015 mainly due to decrease in borrowings in the money market (T-bills REPOs) via Kazakhstan Stock Exchange. As of 31 March 2016, the Bank'sobligations to financial institutions consisted mainly of loans drawn bythe Bank in FY2014 and FY2015 from KazAgro national management holding,DAMU development fund and Development Bank of Kazakhstan under stateprogrammes supporting certain sectors of economy. Debt securities issued remained almost flat vs. YE 2015. As of 31 March2016, the Bank's debt securities consisted of: - two outstanding Eurobond issues for USD 638mln and USD 500mln, maturing in May 2017 and January 2021, respectively, bearing a coupon rate of 7.25%; - local bonds of KZT 131.7bn placed with the Single Accumulated Pension Fund in 2015 at a coupon rate of 7.5% and maturing in February 2025; - local bonds of KZT 100bn placed with the Single Accumulated Pension Fund in 2014 at a coupon rate of 7.5% and maturing in November 2024; - local subordinated bonds of KZT 5bn at a coupon rate of 13% maturing in November 2018; - local subordinated bonds of KZT 4bn at coupon rate of 15% minus inflation, which the Bank repaid on 25 April 2016 according to the schedule. Compared with YE 2015 total equity increased by 2.3% due to net profitearned during 1Q 2016. The Bank's regulatory capital adequacy ratios were at k1 - 18.5%, k1-2-18.5% and k2 - 18.5% as at 31 March 2016 vs. k1 - 17.3%, k1-2 -17.3% andk2 - 17.5% as at 31 December 2015, whereas Basel CET, Tier 1 and Tier 2capital adequacy ratios were at 18.5%, 18.5% and 18.6% as at 31 March 2016vs. 17.3%, 17.3% and 17.5%, respectively, as at 31 December 2015. Theincrease in capital adequacy ratios was mainly due to decrease in risk-weighted assets (as a result of changes to NBK methodology) and net profitearned by the Bank in 1Q 2016. The condensed interim consolidated financial information for the threemonths ended 31 March 2016, including notes attached thereto, are availableon Halyk Bank's websitehttp://www.halykbank.kz/en/financial-reports and http://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 04 30 --------------------------------------------------------------------------- 17-May-2016 The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Media archive at www.dgap.de/ukreg --------------------------------------------------------------------------- Language: English Company: JSC Halyk Bank 109V, Abay ave 050008 Almaty Kazakhstan Phone: +7 727 259 04 27 Fax: +7 727 259 04 64 E-mail: halykteam@halykbank.kz Internet: http://halykbank.kz ISIN: US46627J3023 WKN: A0LF36 Category Code: MSCH TIDM: HSBK Sequence Number: 3163 Time of Receipt: 17-May-2016 / 08:41 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------------- 464019 17-May-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.