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JSC Halyk Bank / Miscellaneous - Medium PriorityJSC Halyk Bank: Consolidated financial results for the nine months ended 30September 2016 18-Nov-2016 / 08:08 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. --------------------------------------------------------------------------- 18 November 2016 Joint Stock Company 'Halyk Savings Bank of Kazakhstan' Consolidated financial resultsfor the nine months ended 30 September 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 nine months ended 30 September2016. 9m 2016 financial highlights 3Q 2016 financial highlightsNet income is up by 2.2% YoY to KZT Net income is up by 0.5% YoY to KZT94.0bn; 36.9bn;Net interest income before Net interest income beforeimpairment charge is up by 17.0%; impairment charge is up by 28.6%;Impairment charge is up by 2.2 Impairment charge is up by 20.2%;times; Net interest income is up by 30.4%;Net interest income is up by 8.5%; Fees and commission income is up byFees and commission income is up by 13.3%;11.8%; Net interest margin is down to 5.6%Net interest margin is down to 5.6% p.a. vs. 6.3% p.a. for 3Q 2015;p.a. vs. 6.5% p.a. for 9M 2015; Cost-to-income ratio is up to 25.3%Cost-to-income ratio is flat 27.7% vs. 23.8% for 3Q 2015;vs. 27.7% for 9M 2015; RoAE is down to 24.1% p.a. vs. 29.8%RoAE is down to 22.0% p.a. vs. 25.5% p.a. for 3Q 2015;p.a. for 9M 2015; RoAA is down to 3.1% p.a. vs. 4.5%RoAA is down to 2.8% p.a. vs. 4.1% p.a. for 3Q 2015;p.a. for 9M 2015; Total assets are down by 3.9%, q-o-Total assets are up by 5.6%, YTD; q;Net loans to customers are up by Net loans to customers are up by1.3%; 2.0%;Total equity is up by 19.3%; Total equity is up by 7.6%;NPLs 90-day+ ratio is up to 11.5% NPLs 90-day+ ratio is down to 11.5%vs. 10.3% as at 31 December 2015; vs. 12.0% as at 30 June 2016;Cost of risk[1] is up to 1.0% p.a. Cost of risk1 is up to 1.4% p.a. vs.vs. 0.4% p.a. for 9M 2015; 1.2% p.a. for 3Q 2015;Provisioning level is down to 12.1% Provisioning level is almost flat atvs. 12.3% as at 31 December 2015. 12.1% vs. 12.2% as at 30 June 2016. Statement of profit or loss review Compared with 9m 2015, interest income grew by 43.4%. This was due to 37.8%increase in average balances of interest-earning assets and a rise ofaverage interest rates on those to 10.8% p.a. from 10.4% p.a., mainly onthe back of NBK Notes purchased to the Bank's portfolio during 2Q and 3Q2016. Interest expense grew by 88.4% compared with 9m 2015. This was due toincrease in average balances of interest-bearing liabilities and a rise ininterest rates on KZT-denominated amounts due to customers and amounts dueto credit institutions. The increase in average balances of interest-bearing liabilities was a result of KZT depreciation in autumn 2015 (afterfree-float KZT exchange rate policy adopted by the NBK in August 2015); therise in interest rates was a result of limited KZT funding on the marketand, consequently, higher interest rates offered to the Bank's clients in1Q 2016. As a result, net interest income before impairment chargeincreased by 17.0% to KZT 133.8bn compared to 9m 2015. Impairment charge increased to KZT 19.0bn for 9M 2016 vs. KZT 8.5bn for 9М2015. Lower impairment charges in 9M 2015 were due to the transfer ofseveral problem loans to the Bank's SPV Halyk-Project LLP and repayment ofa large-ticket impaired corporate loan, which resulted in provisionrecoveries. In 9M 2016, the cost of risk was back to a more normalisedlevel of 1.0% p.a. vs. 0.4% p.a. in 9M 2015. Fee and commission income rose by 11.8% for 9m 2016 vs. 9m 2015, as aresult of growing volumes of transactional banking, mainly in payment cardmaintenance, bank transfers - settlements and cash operations. Other non-interest income (excluding insurance) decreased to KZT 12.0bn for9m 2016 vs. KZT 24.7bn 9m 2015. This decline was mainly attributable to KZT10.0bn net loss from financial assets and liabilities at fair value throughprofit or loss mainly as a result of loss on derivative operations of oneof the Bank's subsidiaries and, to a lesser extent, due to revaluation losson trading and derivative operations (USD/KZT swaps, off-balance sheet) onthe back of KZT appreciation. The decrease was partially offset by netforeign exchange gain, mainly as a result of positive revaluation of shortUSD position on balance sheet due to KZT appreciation in 3Q 2016. Operating expenses grew by 6.4% compared to 9M 2015 mainly due to increasein salaries of some categories of the Bank's employees and incentive bonusscheme introduced starting from 1 January 2016 instead of salaryindexation. The Bank's cost-to-income ratio remained flat at 27.7% compared to 9M 2015.At the same time the Bank's operating income increased by 6.2% for 9M 16vs. 9M 15 on the back of higher interest income and fee and commissionincome. The Bank's cost-to-income ratio increased to 25.3% for 3Q 2016compared with 23.8% for 3Q 2015, as a result of higher operating income in3Q 2015 due to one-off unrealised gain on derivative operations. Statement of financial position review In 9M 2016, total assets grew by 5.6% vs. YE 2015, as a result of increasein the Bank's client deposit base. Compared with YE 2015, loans to customers increased by 1.0% on a grossbasis and 1.3% on a net basis, mainly on the back of consumer loans (+ 7.2%on a gross basis). Compared with 30 June 2016, loans to customers increasedby 1.8% on a gross basis and 2.0% on a net basis, on the back of corporateloans (+2.2% on a gross basis) and consumer loans (+4.7% on a gross basis). 90-day NPL ratio decreased to 11.5% as at 30 September 2016 compared to12.0% as at 30 June 2016, mainly due to write-off of fully provisioned non-performing loans for KZT 5.7bn, as well as restructuring and repayment ofnon-performing indebtedness by the Bank's corporate clients and overallloan portfolio increase. Allowances for loan impairment decreased by 0.9% vs. YE 2015, mainly as aresult of loan write-off and repayments of impaired indebtedness by theBank's borrowers. Allowances for loan impairment increased by 0.6% vs. 30June 2016 as a result of additional provisions on impaired loans recognisedduring 3Q 2016. Provisioning level was at 12.1% compared with 12.2% as at30 June 2016 and 12.3% as at 31 December 2015. Deposits of legal entities and individuals increased by 3.3% and 5.2%,respectively, compared to YE 2015 as a result of new KZT and FX depositsplaced with the Bank by its corporate clients and retail customers during9M 2016. As at 30 September 2016, the share of corporate KZT deposits intotal corporate deposits was 37.6% compared to 37.9% as at 30 June 2016 and24.2% as at YE 2015, whereas the share of retail KZT deposits in totalretail deposits was 28.1% compared to 29.0% as at 30 June 2016 and 23.3% asat YE 2015. Amounts due to credit institutions increased by 6.3% vs. YE 2015 mainly dueto increase in balances on correspondent accounts as at the reporting date.As of 30 September 2016, over one half of the Bank's obligations tofinancial institutions was represented by loans from KazAgro nationalmanagement holding, DAMU development fund and Development Bank ofKazakhstan drawn in FY2014 and FY2015 within the framework of governmentprogrammes supporting certain sectors of economy. Debt securities issued decreased by 1.1% vs. YE 2015 mainly due toscheduled repayment of 10-year KZT 4bn local subordinated bond on 25 April2016, bearing a coupon rate of 15% minus inflation. On 9 November 2016, theBank made another voluntary prepayment of KZT 5bn subordinated bondsbearing a coupon rate of 13% p.a. with original maturity in November 2018.Therefore, as at the date of this press-release, the Bank's debt securitiesconsisted of: - two outstanding Eurobond issues for USD 638mln and USD 500mln, maturing in May 2017 and January 2021, respectively, each bearing a coupon rate of 7.25% p.a.; - local bonds of KZT 131.7bn placed with the Single Accumulated Pension Fund in 2015 at a coupon rate of 7.5% p.a. 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% p.a. and maturing in November 2024. Compared with YE 2015 total equity increased by 19.3% due to net profitearned during 9M 2016. The Bank's capital adequacy ratios were as follows: 01.10.2016 01.07.2016 01.04.2016 01.01.2016 Capital adequacy ratios, unconsolidated:K1-1 19.0% 19.9% 18.5% 17.3%K1-2 19.0% 19.9% 18.5% 17.3%K2 19.0% 19.9% 18.5% 17.5%Capital adequacy ratios, consolidated:CET 19.1% 19.7% 18.8% 17.3%Tier 1 capital 19.1% 19.7% 18.8% 17.3%Tier 2 capital 19.2% 19.8% 18.9% 17.5% The increase in capital adequacy ratios compared to YE 2015 was mainly dueto net profit earned by the Bank during 9m 2016. The decrease in capitaladequacy ratios compared to 2Q 2016 was mainly due to increase in risk-weighted assets during 3Q 2016 on the back of increase in interbankdeposits and consumer loans. The condensed interim consolidated financial information for the ninemonths ended 30 September 2016, including notes attached thereto, areavailable on Halyk Bank's websitehttp://www.halykbank.kz/en/financial-reports and http://www.halykbank.kz/en/news. Nine-month results webcast at 1:00 p.m. GMT/8:00 a.m. EST on Monday, 21November 2016. For further information please contact: Halyk Bank Murat Koshenov +7 727 259 07 95Mira Kasenova +7 727 259 04 30Yelena Perekhoda +7 727 330 17 19 [1] impairment charge on loans to customers as a percentage of monthlyaverage balances of gross loans to customers, annualised. --------------------------------------------------------------------------- The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.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: MSCM TIDM: HSBK Sequence Number: 3614 Time of Receipt: 18-Nov-2016 / 08:08 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------------- 522345 18-Nov-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.