Jsc Halyk Reg S Regulatory News (HSBK)

2 Apr 2007 09:58

JSC Halyk Savings Bank Kazakhstan02 April 2007 2 April 2007 Press Release JSC Halyk Bank of Kazakhstan ("Halyk Bank" or "the Bank") Results for the year ended 31 December 2006 72% RISE IN NET INCOME AFTER TAX WITH ROAE OF 41.8% "2006 marked another strong year of profitable growth for Halyk Bank, with ourmarket-leading position across a range of products driving our performance. Netincome and total assets both grew by more than 70 percent and we maintain astrong balance sheet with a total capital ratio of 17.1 percent. The Bank continued to maintain leading positions in the Kazakh retail marketwith a #1 ranking in mortgages, deposits, payroll and card products, pensionfund services, and its distribution platform, including the largest branch andATM networks. 2006 was also a year of landmark achievements for the Bank, in which wecompleted a successful IPO on the London Stock Exchange in a heavilyover-subscribed offer. Controlled and sustainable growth remains our top priority as we continue todevelop our client-focused offering in 2007. The year has started well and weare optimistic that we are well-placed to benefit from positive trends in theKazak banking sector." Grigoriy Marchenko, Chairman of the Management Board Financial Highlights - Net income after tax increased by 72% to KZT 27,159 million- Operating income increased by 66% to KZT 64,572 million- Net interest income increased by 98% to KZT 38,132 million- Net interest margin strong at 7.0%- Cost to income ratio strong at 36.8%- High fee and commission income at 33% of total operating income- ROAE increased by 4.6 percentage points to 41.8%- Total Assets increased by 77% to KZT 991,359 million- Capital adequacy strong at 17.1%* with Tier 1 at 14.0%* * In accordance with Basel 2006 Financial Overview Net Income The Bank's consolidated net income for 2006 increased by 72 percent to KZT27,159 million from KZT 15,828 million in 2005. This increase was mainlyattributable to an increase in net interest income of 98 percent and an increasein net fees and commission income of 39 percent, which were partially offset byincreases in non-interest expense of 48 percent and income tax expense of 139percent. Net income attributable to common shareholders (i.e. after dividends onpreferred shares and minority interest) amounted to KZT 25,080 million in 2006compared to KZT 14,200 million in 2005, showing a 77 percent increase. Operating Income Operating income, which includes net interest income, net fee and commissionincome and other non-interest income, increased by 66 percent to KZT 64,572million in 2006 from KZT 38,926 million in 2005. Net interest income, representing 59 percent of operating income, increased by98 percent to KZT 38,132 million in 2006 from KZT 19,259 million in 2005, mainlydue to increases in the average loan portfolio and share of retail loans whichtypically earn higher interest. In 2006 the Bank amended its loan provisioningpolicy in accordance with revised IAS 39 which resulted in a lower provisioningrate and a lower impairment charge in 2006, despite the growing loan portfolioand other assets. Net fee and commission income, representing 33 percent of operating income,increased by 39 percent to KZT 21,135 million in 2006, from KZT 15,248 millionin 2005, primarily as a result of increases in fee and commission incomegenerated from pension fund and asset management services and transactionalbanking services. Operating expenses increased by 48 percent in 2006 to KZT 28,971 million fromKZT 19,560 million in 2005 mainly due to increases in headcount and salaries andother employee benefits, and in administrative and operating expenses. Total Assets In 2006 the Bank's total assets increased by 77 percent to KZT 991,359 millionfrom KZT 559,665 million as at 31 December 2005. This increase was mainly drivenby increases in the loan portfolio and investment securities portfolio. The loan portfolio increased by 45 percent to KZT 596,216 million at the end of2006 from KZT 411,097 million at the end of 2005 as a result of an overallincrease in lending activity of the Bank, mainly lending to retail and SMEcustomers. The Bank also increased its investment securities portfolio to KZT 123,338million in 2006 from KZT 12,099 million in 2005 and cash and cash equivalents,including short-term T-bills, to KZT 127,799 million in 2006 from KZT 57,102million in 2005 as a result of excess liquidity experienced by the Bank duringthe year due to relatively high growth in the deposit base. Retail Banking The retail loan portfolio, representing 31 percent of the total loan portfolio,increased by 51 percent to KZT 197,181 million in 2006 from KZT 130,602 millionin 2005. Mortgage loans, representing 56 percent of total retail loans,increased by 40 percent in 2006, while the consumer loan portfolio increased by67 percent. Retail banking contributed 41 percent of total interest income in 2006 ascompared to 36 percent in 2005. Shareholders' Equity At the end of 2006, shareholders' equity amounted to KZT 120,628 million,reflecting an increase of 87 percent over the 2005 year-end figure. The increaseresulted from new share capital injections and increases in retained earningsand other reserves. The Bank's share capital increased by 109 percent to KZT 60,684 million in 2006from KZT 29,016 million as at year end 2005 following placement of convertiblepreferred shares early in the year, the issue of 30 million common shares inSeptember 2006 as approved by the General Shareholders Meeting in April 2006 andof 55 million common shares following the London IPO in December 2006. Operating Overview Halyk Bank is one of Kazakhstan's leading financial services groups, with thelargest customer base and distribution network of any bank in Kazakhstan. TheBank is developing as a universal financial group offering a broad range ofservices (banking, pensions, insurance, leasing, brokerage and asset management)to its retail, small and medium enterprise ("SME") and corporate customers. Halyk Bank maintains the largest retail deposit base in Kazakhstan as well asthe largest portfolio in the fast growing mortgage loan market (approximately 20percent market share for both) and has the highest number of payment cards inissue (more than 50 percent market share). The bank serves approximately 6million customers from its unrivalled network of branches and ATMs, as well asthrough rapidly growing internet and mobile banking channels. Customers benefitfrom a wide range of retail banking products and services, including currentaccounts, term deposits, consumer loans, mortgages, credit and debit cards,traveller's cheques and currency exchange, with several new card productssuccessfully introduced during 2006. The Bank's corporate banking businessprovides a range of wholesale banking products and services (including loans,payroll services and cash management) to corporate and SME business customers,financial institutions and Government entities. The full consolidated financial statements, including the notes attachedthereto, are available on Halyk Bank's website (http://eng.halykbank.kz/financials/reports and http://eng.halykbank.kz/info/news). Contact details: Dauren Karabayev, Deputy Chairman (daurenk@halykbank.kz) 007 327 259 88 66 Ainur Ilyassova, Head of FI (ainuri@halykbank.kz) 007 327 259 04 27 APPENDIX SUMMARY CONSOLIDATED BALANCE SHEET KZT millions As at December 31, 2006 2005Customer loans, net 596,216 411,097Total assets 991,359 559,665Customer deposits 597,935 323,515Total liabilities 870,732 495,221Total equity 120,628 64,444Total equity and liabilities 991,359 559,665 SUMMARY CONSOLIDATED STATEMENTS OF INCOME KZT millions For the years ended December 31, 2006 2005Net interest income 38,132 19,259Fees and commissions, net 21,135 15,248Non-interest income 5,305 4,419Non-interest expense (28,971) (19,560)Income before income tax expense 35,601 19,366Income tax expense (8,442) (3,539)Net income 27,159 15,828 KEY FINANCIAL AND OPERATING FIGURES 2006 2005Customer deposits / total liabilities 68.7% 65.3%Loans / deposits 99.7% 127.1%Cost-to-income 36.8% 35.0%Provisions / gross loans 5.3% 5.9%Provisions / NPLs(1) 467.8% 420.6%NPLs / gross loans 1.1% 1.4%Return on average common shareholders' equity (ROAE) 41.8% 37.2%Return on average assets (ROAA) 3.5% 3.0%Net interest margin 7.0% 6.9%Net interest spread 6.8% 6.7%Tier 1 capital adequacy ratio (in accordance with FMSA(2)) 9.5% 8.5%Total capital adequacy ratio (in accordance with FMSA) 16.6% 15.7%Tier 1 capital adequacy ratio (in accordance with Basel) 14.0% 12.8%Total capital adequacy ratio (in accordance with Basel) 17.1% 17.1%Share of collateralized loans in total loan portfolio 99.8% 99.3%Basic earnings per common share, KZT 26.8 28.8 Number of branches 617 576Number of ATMs 697 585Number of POS-terminals 2,851 1,976 (1) Non-performing loans comprise the portion of principal or interest which is past due for more than 30 days. (2) Agency of Kazakhstan on Regulation and Supervision of Financial Markets and Financial Organisations. This information is provided by RNS The company news service from the London Stock Exchange