3rd Jun 2008 08:12
3 June 2008
Joint Stock Company 'Halyk Savings Bank of Kazakhstan'
Interim consolidated financial results
for the three months ended 31 March 2008
Joint Stock Company 'Halyk Savings Bank of Kazakhstan' (Halyk Bank) (LSE: HSBK) (the Bank) releases its unaudited interim financial information for the three months ended 31 March 2008. The interim financial information has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting.
Total assets increased by 4% from KZT 1,595.1 billion as at YE2007 to KZT 1,666.4 billion
Total deposits increased by 9% from KZT 935.4 billion as at YE2007 to KZT 1,016.7 billion
Retail deposits increased by 7% from KZT 357.7 billion as at YE2007 to KZT 380.9 billion
Net loan portfolio increased by 6% from KZT 1,040.3 billion as at YE2007 to KZT 1,100.5 billion
Retail loans increased by 6% from KZT 322.3 billion as at YE2007 to KZT 342.5 billion
Halyk Bank's market shares as at 31 March 2008 increased in total assets to 13.8%, in total loans to 12.6%, in total deposits to 23.9%, in retail deposits to 24.5%, in net income to 25.5%
Net cash inflow from operating activities was KZT 33.9 billion in the first three months ended 31 March 2008 compared with a net outflow of KZT 78.0 billion in the first three months ended 31 March 2007 reflecting faster growth in customer deposits compared with loan portfolio in the first three months ended 31 March 2008
Net income for the first three months of 2008 was KZT 9.8 billion compared with KZT 10.8 billion for the first three months of 2007 and KZT 8.1 billion for the fourth quarter of 2007
Net fee and commission income increased by 13% from KZT 5.2 billion for the first three months of 2007 to KZT 5.8 billion
Total equity increased by 6% from KZT 161.0 billion as at YE2007 to KZT 170.4 billion
Capital adequacy remained strong with the total capital adequacy ratio at 13.0% and the Tier 1 ratio at 10.8% in accordance with the Basel Guidelines
Loans/Deposits ratio decreased from 1.11x as at YE2007 to 1.08x
Liquid assets/total assets was 30.2%
The ratio of operating expenses to operating income before impairment charge (cost-to-income ratio) was 40% for the first three months of 2008
The ratio of operating expenses to average assets (cost-to-assets ratio) decreased from 3.8% for the first three months of 2007 to 2.5%
Return on average common shareholders' equity and return on average assets were 27.7% and 2.4% respectively for the first three months of 2008
Financial Overview
Net Income
The Bank's consolidated net income was KZT 9,800 million for the first three months of 2008 compared with KZT 10,847 million for the first three months of 2007 and KZT 8,081 million for the fourth quarter of 2007. Net income was mainly affected by growing average rates on customer deposits, a higher impairment charge on the loan portfolio, and a net loss incurred on the financial assets partially offset by growth in interest income, income from subsidiaries and operating efficiency.
Interest income
Gross interest income increased by 70 percent from KZT 25,431 million for the first three months of 2007 to KZT 43,219 million for the first three months of 2008. This increase was primarily due to a 71 percent increase in average balances of interest-earning assets for the first three months of 2008 compared with the first three months of 2007.
Interest expense increased by 122 percent from KZT 10,869 million for the first three months of 2007 to KZT 24,115 million for the first three months of 2008. This increase was primarily due to a 76 percent increase in average balances of interest-bearing liabilities for the first three months of 2008 compared with the first three months of 2007 and also an increase in average rates on interest-earning liabilities from 5.5 percent to 6.9 percent.
Net interest income before impairment charges increased by 31 percent to KZT 19,104 million for the first three months of 2008 from KZT 14,562 million for the first three months of 2007. Interest expense grew at a faster rate than interest income resulting in net interest margin of 5.4 percent for the first three months of 2008.
Impairment charge
Impairment charge was KZT 1,401 million for the first three months of 2008 compared with KZT 6 million for the first three months of 2007. The effective provisioning rate on the customer loan portfolio was 5.0 percent as at 31 March 2008 compared with 5.2 percent as at 31 December 2007.
Fee and commission income
Net fee and commission income increased by 13 percent to KZT 5,845 million for the first three months of 2008 from KZT 5,159 million for the first three months of 2007, resulting primarily from growing volumes of the pension fund and asset management services, bank transfers, customer accounts and plastic cards.
Other non-interest income
Other non-interest income decreased by 60 percent to KZT 1,378 million for the first three months of 2008 from KZT 3,458 million for the first three months of 2007, primarily as a result of net losses from financial assets at fair value through profit or loss partially offset by an increase in net gains on foreign exchange operations and increase in insurance underwriting income.
Net loss from financial assets at fair value through profit or loss was KZT 2,573 million for the first three months of 2008 compared with a net loss of KZT 97 million for the first three months of 2007, mainly due to one-off losses on foreign exchange options position and losses on the securities portfolio as a result of an upward shift in the KZT yield curve.
Gains on foreign exchange operations net of currency translation differences increased to KZT 1,499 million for the first three months of 2008 from KZT 1,239 million for the first three months of 2007. This increase in gains on foreign exchange operations net of currency translation differences was due to an increase by KZT 1,174 million in net gains from translation of foreign currencies to a net gain of KZT 125 million from a net loss of KZT 1,049 million mainly as a result of an increase in realized and unrealized gains from revaluation of foreign currency-denominated balance sheet items.
Insurance underwriting income increased to KZT 2,019 million for the first three months of 2008 from KZT 1,156 million for the first three months of 2007 mainly as a result of the overall increase in insurance activity of JSC Kazakhinstrakh (non-life insurance subsidiary of the Bank).
Non-interest expenses
Non-interest expenses increased by 44 percent to KZT 12,312 million for the first three months of 2008 from KZT 8,551 million for the first three months of 2007, primarily due to increased provisions for off-balance sheet liabilities (letters of credit and guarantees) and higher operating expenses mainly attributable to inflation, increased personnel expenses, and depreciation and amortization expenses relating to maintenance of the branch network and expansion of the Bank's and its subsidiaries' operations. The ratio of the Bank's operating expenses to operating income before provisions for impairment losses (cost-to-income ratio) was 40.1 percent for the first three months of 2008 compared with 39.3 percent for the first three months of 2007.
Total assets
The Bank's total assets increased by 4 percent to KZT 1,666,385 million as at 31 March 2008 from KZT 1,595,075 million as at 31 December 2007 primarily due to increases in the net loan portfolio, investment securities portfolio and cash and cash equivalents.
Loan portfolio
The total net loan portfolio increased by 6 percent to KZT 1,100,462 million or 66 percent of the Bank's total assets as at 31 March 2008 from KZT 1,040,273 million or 65 percent of the Bank's total assets at 31 December 2007 as a result of an overall increase in the Bank's lending activity.
Retail loans, including consumer and mortgage loans, increased by 6 percent to KZT 342,493 million as at 31 March 2008 from KZT 322,274 million as at 31 December 2007. Consumer loans, mostly backed by the salaries of the individual borrowers, increased by 12 percent to KZT 181,326 million as at 31 March 2008 from KZT 161,611 million as at 31 December 2007. Mortgage loans increased by 0.3 percent to KZT 161,167 million as at 31 March 2008 from KZT 160,663 million as at 31 December 2007. Loans to corporate borrowers (including SMEs) increased by 5 percent to KZT 816,253 million as at 31 March 2008 from KZT 774,696 million as at 31 December 2007. As at 31 March 2008 the Bank's 10 largest borrowers accounted for 13 percent of total gross loans to customers compared with 15 percent as at 31 December 2007. As at 31 March 2008 wholesale trade and consumer loans made up the largest shares of the loan portfolio with 20 percent and 16 percent of the total gross loan portfolio, respectively. Mortgages, construction and retail trade sectors accounted for 14 percent, 13 percent and 8 percent of the Bank's total gross loans respectively.
Funding and liabilities
The Bank's total liabilities increased by 4 percent to KZT 1,495,971 million as at 31 March 2008 from KZT 1,434,050 million as at 31 December 2007 mainly due to increases in customer accounts and deposits and amounts due to credit institutions.
Amounts due to credit institutions
Loans and deposits from credit institutions decreased by 12 percent to KZT 218,367 million or 15 percent of the Bank's liabilities as at 31 March 2008 compared with KZT 247,452 million or 17 percent of the Bank's liabilities as at 31 December 2007 mainly due to a 42 percent decrease in loans and deposits from Kazakhstan banks from KZT 66,889 million as at 31 December 2007 to KZT 38,819 million as at 31 March 2008.
Customer deposits
Amounts due to customers increased to KZT 1,016,687 million or 68 percent of the Bank's total liabilities as at 31 March 2008 compared with KZT 935,429 million or 65 percent of the Bank's total liabilities as at 31 December 2007. This growth was primarily attributable to a 10 percent increase in the corporate deposits to KZT 635,760 million as at 31 March 2008 from KZT 577,757 million as at 31 December 2007, and a 7 percent increase in the retail deposits to KZT 380,927 million as at 31 March 2008 from KZT 357,672 million as at 31 December 2007.
Shareholders' Equity
Total equity increased by 6 percent to KZT 170,414 million as at 31 March 2008 from KZT 161,025 million as at 31 December 2007 primarily as a result of an increase in retained earnings during the first three months of 2008.
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 ("SME") and corporate customers, seeking further expansion of its international operations and credit exposure to Russia, Georgia, Mongolia and Kyrgyzstan. The Bank is rated by the three main rating agencies: Moody's Investor Service (Ba1), Fitch Ratings (BB+) and Standard&Poor's (BB+).
As at 31 March 2008, the total number of the Bank's outlets was 707, with 1,556 ATMs and,3,755 POS terminals.
Recent key events
In January 2008 the Bank was recognised as "A Leading Bank in Corporate Governance in Emerging Europe" in a corporate governance survey conducted by Euromoney of 146 companies.
On 29 January 2008 JSC "Halyk Bank Georgia", the Bank's subsidiary bank in Georgia, received a license to carry out banking operations in the territory of Georgia.
On 28 February 2008 'Halyk Astana Dornod LLP', the Bank's non-banking subsidiary in Mongolia, received a certificate from the Financial Regulatory Commission of Mongolia authorising 'Halyk Astana Dornod LLP' to carry out non-banking financial operations in the territory of Mongolia for three years.
On 16 April the Bank's special purpose vehicle subsidiary, HSBK (Europe) B.V., successfully placed 5.5-year Eurobonds for the principal amount of USD 500 million fully guaranteed by the Bank and bearing a coupon of 9.25%.
In May 2008 - the Bank won two awards at The Seventh Asian Banker Excellence in Retail Financial Services Award: Best Retail Bank in Kazakhstan 2007 and Best Retail Bank in Central Asia 2007.
CONSOLIDATED SUMMARY BALANCE SHEET
|
As at |
Variations |
||
|
31-Mar-08 (unaudited) |
31-Dec-07 (audited) |
1Q08/YE07 |
|
|
(KZT millions) |
(%) |
||
|
Assets |
|||
|
Cash and cash equivalents |
267,112 |
255,245 |
5 |
|
Obligatory reserves |
90,510 |
87,268 |
4 |
|
Financial assets at fair value through profit or loss |
16,365 |
48,073 |
(66) |
|
Amounts due from credit institutions |
5,178 |
3,398 |
52 |
|
Available-for-sale investment securities |
124,476 |
107,839 |
15 |
|
Loans to customers, net |
1,100,462 |
1,040,273 |
6 |
|
Property and equipment |
25,637 |
22,766 |
13 |
|
Goodwill |
3,265 |
3,265 |
0 |
|
Intangible assets |
4,553 |
3,841 |
19 |
|
Insurance assets |
7,885 |
3,886 |
103 |
|
Other assets |
20,942 |
19,221 |
9 |
|
Total assets |
1,666,385 |
1,595,075 |
4 |
|
|
|||
|
Liabilities |
|||
|
Amounts due to customers |
1,016,687 |
935,429 |
9 |
|
Amounts due to credit institutions |
218,367 |
247,452 |
(12) |
|
Financial liabilities at fair value through profit or loss |
4,800 |
2,851 |
68 |
|
Debt securities issued |
226,130 |
224,886 |
1 |
|
Provisions |
3,067 |
1,885 |
63 |
|
Deferred tax liability |
3,614 |
3,897 |
(7) |
|
Insurance liabilities |
11,895 |
7,389 |
61 |
|
Other liabilities |
11,411 |
10,261 |
11 |
|
Total liabilities |
1,495,971 |
1,434,050 |
4 |
|
Equity: |
|||
|
Share capital |
65,546 |
65,531 |
- |
|
Share premium reserve |
1,950 |
1,952 |
- |
|
Treasury shares |
(66) |
(66) |
- |
|
Retained earnings and other reserves |
101,318 |
92,253 |
10 |
|
Minority interest |
1,666 |
1,355 |
23 |
|
Total equity |
170,414 |
161,025 |
6 |
|
|
|||
|
Total liabilities and equity |
1,666,385 |
1,595,075 |
4 |
CONSOLIDATED SUMMARY INCOME STATEMENT
|
For the period ended |
||
|
31-Mar-08 (unaudited) |
31-Mar-07 (unaudited) |
|
|
(KZT millions) |
||
|
Interest income |
43,219 |
25,431 |
|
Interest expense |
(24,115) |
(10,869) |
|
Net interest income before impairment charge |
19,104 |
14,562, |
|
Impairment charge |
(1,401) |
(6) |
|
Net interest income |
17,703 |
14,556 |
|
|
||
|
Fees and commissions, net |
5,845 |
5,159, |
|
Non interest income |
1,378 |
3,458 |
|
Non interest expense |
(12,312) |
(8,551) |
|
|
||
|
Income before income tax expense |
12,614 |
14,622 |
|
Income tax expense |
(2,814) |
(3,775) |
|
Net income after income tax expense |
9,800 |
10,847 |
|
Minority interest in net income |
98 |
30 |
|
Net income attributable to equity holders of the parent |
9,702 |
10,817 |
KEY FINANCIAL RATIOS
|
|
As at |
|
|
|
31-Mar-08 |
31-Dec-07 |
|
Customer deposits / total liabilities |
68.0% |
65.2% |
|
Loans / deposits ratio |
1.08x |
1.11x |
|
Liquid assets / total assets |
30.2% |
31.5% |
|
NPLs(1) / gross loans |
1.4% |
0.9% |
|
Provisions / gross loans |
5.0% |
5.2% |
|
Tier 1 capital adequacy ratio(2) |
10.8% |
10.6% |
|
Total capital adequacy ratio(2) |
13.0% |
12.9% |
|
|
|
|
|
Number of branches and outlets |
707 |
670 |
|
Number of ATMs |
1,556 |
1,166 |
|
Number of POS-terminals |
3,755 |
3,375 |
|
|
For the period ended |
|
|
|
31-Mar-08 |
31-Dec-07 |
|
Cost-to-income |
40.1% |
34.3% |
|
Return on average common shareholders' equity (ROAE) |
27.7%(3) |
31.0% |
|
Return on average assets (ROAA) |
2.4%(3) |
3.4% |
|
Net interest margin |
5.4%(3) |
6.7% |
|
Operating expense/average total assets |
2.5%(3) |
3.2% |
(1) Non-performing loans comprise those portions of the principal or interest which are past due by more than 30 days.
(2) As per Guidelines adopted by the Basel Committee on Banking Regulations and Supervision Practices of the Bank for International Settlements.
(3) Annualised.
- END-
For further information please contact:
Zhanara Aikimbayeva [email protected] +7 727 259 07 96
Assel Atinova [email protected] +7 727 259 04 30
Farkhad Okhonov [email protected] +7 727 259 04 27
Financial Dynamics
London:
Paul Marriott [email protected] +44 (0)20 7269 7252
David Cranmer [email protected] +44 (0)20 7269 7217
Moscow:
Leonid Solovyev [email protected] +7 495 795 06 23
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