28th Aug 2007 07:53
JSC Halyk Savings Bank Kazakhstan28 August 2007 28 August 2007 Press Release JSC Halyk Bank of Kazakhstan ("Halyk Bank" or "the Bank") Consolidated financial results for the first half of 2007 Almaty, Kazakhstan - Halyk Bank has today released its consolidated financial statements for the first half of 2007. The financial statements have been prepared in accordance with International Financial Reporting Standards. Financial Highlights • Net income increased by 110 percent from KZT 10,125 million in the first half of 2006 to KZT 21,263 million in the first half of 2007 • Income before income tax increase by 126 percent from KZT 12,944 million in the first half of 2006 to KZT 29,266 million in the first half 2007 • Operating income increased by 80 percent from KZT 24,945 million in the first half of 2006 to KZT 44,878 million in the first half of 2007 • Operating income before impairment charges increased by 60 percent from KZT 31,990 million in the first half of 2006 to KZT 51,047 million in the first half of 2007 • Net interest income increased by 76 percent from KZT 13,925 million in the first half of 2006 to KZT 24,494 million in the first half of 2007 • Net interest margin remained strong at 6.7 percent in the first half of 2007 • The ratio of operating expenses to operating income before impairment charges (cost-to-income ratio) improved from 37.5 percent in the first half of 2006 to 30.6 percent in the first half of 2007 • Net fee and commission income increased by 16 percent from KZT 9,866 million in the first half of 2006 to KZT 11,475 million in the first half of 2007 • Net loan portfolio increased by 31 percent from KZT 596,216 million as at 31 December 2006 to KZT 780,372 million as at 30 June 2007 • Total assets increased by 30 percent from KZT 991,359 million as at 31 December 2006 to KZT 1,286,951 million as at 30 June 2007 • Retail deposits increased by 22 percent from KZT 209,877 million as at 31 December 2006 to KZT 256,097 million as at 30 June 2007 • Total equity increased by 17 percent from KZT 120,627 million as at 31 December 2006 to KZT 141,157 million as at 30 June 2007 • Capital adequacy remained strong with Total capital adequacy ratio at 16 percent and Tier 1 ratio at 14 percent in accordance with Basel as at 30 June 2007 • Basic earnings per share increased from KZT 10.13 in the first half of 2006 to KZT 19.64 in the first half of 2007 Financial Overview Net Income The Bank's consolidated net income increased by 110 percent to KZT 21,263million in the first half of 2007 from KZT 10,125 million in the first half of2006. This increase was mainly attributable to an increase in net interestincome of 76 percent, an increase in net fee and commission income of 16percent, and a 672 percent increase in other non-interest income, which werepartially offset by increases in non-interest expense of 30 percent and incometax expense of 216 percent. Operating Income Operating income after impairment charges, consisting of net interest income,net fee and commission income and other non-interest income, increased by 80percent to KZT 44,878 million in the first half of 2007 from KZT 24,945 millionin the first half of 2006. Interest income Gross interest income increased by 54 percent from KZT 35,506 million in thefirst half of 2006 to KZT 54,850 million in the first half of 2007. Thisincrease was primarily due to a 52 percent growth of interest income from loansto customers from KZT 31,361 million in the first half of 2006 to KZT 47,735million in the first half of 2007 attributable to overall growth of the Bank'sloan portfolio and a 124 percent growth of interest income from debt securitiesfrom KZT 1,971 million in the first half of 2006 to KZT 4,418 million in thefirst half of 2007 attributable to growth of the Bank's securities portfolio. Interest expense increased by 66 percent from KZT 14,536 million in the firsthalf of 2006 to KZT 24,187 million in the first half of 2007. This increase wasprimarily due to a 75 percent growth of interest expense on customer depositsfrom KZT 7,730 million in the first half of 2006 to KZT 13,542 million in thefirst half of 2007 attributable to overall growth of the Bank's deposit base anda 97 percent growth of interest expense on debt securities from KZT 3,614million in the first half of 2006 to KZT 7,106 million in the first half of 2007attributable to increase in debt securities issued by the Bank. Net interest income before impairment charges increased by 46 percent to KZT30,663 million in the first half of 2007 from KZT 20,970 million in the firsthalf of 2006. Interest expense grew at a faster rate than interest incomeresulting in net interest margin reducing to 6.7 percent in the first half of2007 from 6.8 percent in the first half of 2006. Provisions for impairment losses Provisions for impairment losses decreased by 12 percent to KZT 6,169 million inthe first half of 2007, compared with KZT 7,045 million for the first half of2006 due to general improvement in the overall quality of the loan portfolio andalso due to adoption of pooling method for portfolio provisioning policy inaccordance with IAS/IFRS. The effective provisioning rate on the customer loanportfolio was 4.9 percent as at 30 June 2007 compared to 5.3 percent as at 31December 2006. Fee and commission income Net fee and commission income increased by 16 percent to KZT 11,475 million inthe first half of 2007 from KZT 9,866 million in the first half of 2006,resulting primarily from growing volumes of the cash management, bank transfer,and pension fund and asset management services provided to the customers. Other non-interest income Other non-interest income increased by 672 percent to KZT 8,909 million in thefirst half of 2007 from KZT 1,154 million in the first half of 2006, primarilyas a result of net gains on foreign exchange operations and full consolidationof JSC Kazakhinstrakh. Gains on foreign exchange operations net of currency translation lossesincreased to KZT 4,778 million in the first half of 2007 from KZT 1,278 millionin the first half of 2006. This significant increase in gains on foreignexchange operations was due to increase of KZT 2,136 million in unrealized gains/ accrued income on foreign currency forward and swap operations included on thebalance sheet. These transactions were concluded with the aim of hedging foreignexchange risks. Excluding this effect, gains on foreign exchange operations net of currencytranslation gains increased to KZT 2,642 million in the first half of 2007 fromKZT 1,278 million in the first half of 2006 resulting from overall growth inforeign exchange operations of the Bank. In November 2006, the Bank acquired 57 percent stake in JSC Kazakhinstrakh andthus increased its holding in the company to 98 percent. Full consolidation ofJSC Kazakhinstrakh (non-life insurance subsidiary of the Bank) resulted ininclusion of KZT 2,499 million of insurance underwriting income into othernon-interest income. Operating expenses Operating expenses comprising non-interest expense increased by 30 percent toKZT 15,612 million in the first half of 2007 from KZT 12,001 million in thefirst half of 2006, primarily due to higher personnel expenses andadministrative and other operating expenses relating to maintenance of branchnetwork and expansion of the Bank's and its subsidiaries' operations. However,notwithstanding this growth in operating expenses, the ratio of the Bank'soperating expenses to operating income before provisions for impairment losses(cost-to-income ratio) decreased to 30.6 percent in the first half of 2007 from37.5 percent in the first half of 2006. Total assets The Bank's total assets increased by 30 percent to KZT 1,286,951 million as at30 June 2007 from KZT 991,359 million as at 31 December 2006 primarily due toincreases in the net loan portfolio, cash and cash equivalents, obligatoryreserves and other assets. Loan portfolio The net total loan portfolio increased by 31 percent to KZT 780,372 million or61 percent of the Bank's total assets as at 30 June 2007 from KZT 596,216million or 60 percent of the Bank's total assets at 31 December 2006 as a resultof an overall increase in the Bank's lending activity. Retail loans, including consumer and mortgage loans, increased by 18 percent toKZT 233,254 million as at 30 June 2007 from KZT 197,181 million as at 31December 2006. Consumer loans, mostly backed by the salaries of the individualborrowers, increased by 18 percent to KZT 102,814 million as at 30 June 2007from KZT 86,907 million as at 31 December 2006. Mortgage loans increased by 18percent to KZT 130,440 million as at 30 June 2007 from KZT 110,274 million as at31 December 2006. Loans to corporate borrowers (including SME) increased by 36percent to KZT 587,531 million as at 30 June 2007 from KZT 432,689 million as at31 December 2006. As at 30 June 2007 the Bank's 20 largest borrowers accountedfor 24 percent of total gross loans to customers. As at 30 June 2007 thewholesale trade and construction sectors made up the largest shares of the loanportfolio with 17 percent and 13 percent of total gross loan portfolio,respectively. Funding and liabilities The Bank's total liabilities increased by 32 percent to KZT 1,145,794 million asat 30 June 2007 from KZT 870,732 million as at 31 December 2006 mainly due toincreases in customer accounts and deposits, debt securities issued and amountsdue to credit institutions. Debt securities issued The Bank's debt securities issued increased by 76 percent to KZT 236,826 millionor 21 percent of the Bank's total liabilities as at 30 June 2007 compared withKZT 134,413 million or 15 percent of the Bank's total liabilities as at 31December 2006. This increase includes USD 700 million Eurobond due in May 2017issued through HSBK (Europe) B.V. in May 2007 and two KZT-denominated domesticbonds for a total amount of KZT 25,000 million due in March and April 2009issued under the Bank's second bond issuance program in March and April 2007. Amounts due to credit institutions Loans and deposits due to credit institutions increased by 129 percent to KZT271,880 million or 24 percent of the Bank's liabilities as at 30 June 2007compared with KZT 118,719 million or 14 percent of the Bank's liabilities as at31 December 2006 mainly due to a 189 percent increase in loans and deposits fromOECD banks from KZT 73,126 million as at 31 December 2006 to KZT 211,625 millionas at 30 June 2007. This increase includes USD 400 million 3-year term loanfacility borrowed from a syndicate of international banks, an increase inobligations under bilateral loans and trade finance facilities and securitiesrepurchase agreements entered by the Bank with international financialinstitutions. Customer deposits Amounts due to customers increased to KZT 612,006 million or 53 percent of theBank's liabilities as at 30 June 2007 compared with KZT 597,935 million or 69percent of the Bank's liabilities as at 31 December 2006. Deposits and currentaccounts of individuals increased by 22 percent to KZT 256,097 million as at 30June 2007 from KZT 209,877 million as at 31 December 2006. Shareholders' Equity Total equity increased by 17 percent to KZT 141,157 million as at 30 June 2007from KZT 120,627 million as at 31 December 2006 primarily as a result ofcompletion of post-IPO offering of common shares for total amount of KZT 3,632million and retained earnings during the fist half of 2007. In May 2007, theBank effected the payment of dividends on preferred shares in amount of KZT1,578 million and dividends on common shares in amount of KZT 2,450 millionapproved by Annual General Shareholders Meeting for the year ended 31 December2006. About the Bank Halyk Bank is one of Kazakhstan's leading financial services groups and aleading retail bank with the largest customer base and distribution networkamong Kazakh banks. The Bank is developing as a universal financial groupoffering 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 internationaloperations and credit exposure to Russia, Georgia, Mongolia, Uzbekistan andKyrgyzstan. The Bank is rated by the three main rating agencies: Moody'sInvestor Service (Ba1/Stable/-), Fitch Ratings (BB+/Positive/B) and Standard&Poor's (BB+/Stable/B). As at 30 June 2007 total number of the Bank's outlets were 634, ATMs - 968, POSterminals - 3,141. Key events in the first half of 2007 • In March 2007 the Bank successfully completed a post-IPO issue of 9,432,877 common shares • On 18 April 2007 the Bank raised a syndicated loan facility for principal amount of USD 400 million with a 3-year tenor from a syndicate of international banks. The benchmark loan bears a margin of 30 bps over LIBOR for the first two years with a step-up to 70 bps for the third year • On 23 April 2007 the Annual General Shareholders Meeting of the Bank resolved to increase the number of members of the Board of Directors and to elect Mr. Christof Ruehl and Sir. Gavyn Arthur as new independent non-executive directors. • On 3 May 2007 the Bank's special purpose vehicle subsidiary, HSBK (Europe) B.V., successfully placed 10-year Eurobonds for the principal amount of USD 700 million fully guaranteed by the Bank priced at 220 bps over mid-swaps. • On 4 May 2007 Moody's confirmed the BFSR (Bank Financial Strength Rating) for the Bank at D corresponding to a Baseline Risk Assessment of Ba2. • On 9 June 2007 the Bank was nominated the Best Retail Bank in Central Asia by Asian Banker. Contact details: Dauren Karabayev [email protected] +7 327 259 88 66 Assel Atinova [email protected] +7 327 259 04 30 Financial Dynamics London: Paul Marriott +44 (0)20 7269 7252 David Cranmer +44 (0)20 7269 7217 Moscow: Leonid Solovyev +7 495 795 06 23 APPENDIX CONSOLIDATED SUMMARY BALANCE SHEET KZT millions As at June 30, 2007 December 31, 2006 Assets Cash and cash equivalents 190,167 127,799 Obligatory reserves 74,423 55,106 Financial assets at fair value through profit or loss 51,995 53,016 Amounts due from credit institutions 6,207 2,049 Available-for-sale investment securities 139,837 123,339 Loans to customers, net 780,372 596,216 Property and equipment 23,370 21,215 Insurance assets 4,983 5,626 Other assets 15,597 6,993Total assets 1,286,951 991,359 Liabilities Amounts due to credit institutions 271,880 118,719 Amounts due to customers: 612,006 597,935- Retail 256,097 209,877- Corporate 355,909 388,058 Debt securities issued 236,826 134,413 Provisions 1,911 3,021 Deferred tax liability 3,376 2,530 Insurance liabilities 7,651 7,535 Other liabilities 12,144 6,579Total liabilities 1,145,794 870,732 Shareholders' equity: Share capital 64,316 60,684 Share premium reserve 2,183 2,183 Treasury shares (234) (38) Retained earnings and other reserves 73,862 56,736 140,127 119,565 Minority interest 1,030 1,062Total shareholders' equity 141,157 120,627 Total liabilities and shareholders' equity 1,286,951 991,359 CONSOLIDATED SUMMARY STATEMENT OF INCOME KZT millions For the six-month period ended June 30, 2007 June 30, 2006 Interest income 54,850 35,506Interest expense (24,187) (14,536)Net interest income before impairment 30,663 20,970Impairment charge (6,169) (7,045)Net interest income 24,494 13,925Fees and commissions, net 11,475 9,866Non interest income 8,909 1,154Non interest expense (15,612) (12,001)Income before income tax expense 29,266 12,944Income tax expense (7,721) (2,446)Net income after income tax expense 21,545 10,498Minority interest in net income 282 373Net income after minority interest 21,263 10,125 KEY FINANCIAL AND OPERATING FIGURES As at June 30, 2007 December 31, 2006Customer deposits / total liabilities 53.4% 68.7%Loans / deposits 127.5% 99.7%Provisions / gross loans 4.9% 5.3%Provisions / NPLs(1) 517.9% 467.8%NPLs / gross loans 1.0% 1.1%Tier 1 capital adequacy ratio (in accordance with FMSA(2)) 8.7% 9.5%Total capital adequacy ratio (in accordance with FMSA) 14.8% 16.6%Tier 1 capital adequacy ratio (in accordance with Basel) 13.5% 14.0%Total capital adequacy ratio (in accordance with Basel) 15.9% 17.1%Share of collateralized loans in total loan portfolio 99.4% 99.8% Number of branches 634 617Number of ATMs 968 697Number of POS-terminals 3,141 2,851 For the six-month period ended June 30, 2007 June 30, 2006 Cost-to-income 30.6% 37.5%Return on average common shareholders' equity (ROAE) 42.0% 38.6%Return on average assets (ROAA) 4.2% 3.0%Net interest margin 6.7% 6.8%Net interest spread 6.4% 6.3%Basic earnings per share, KZT 19.64 10.13 (1) Non-performing loans comprise the portion of principal or interest which is overdue by 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 ExchangeRelated Shares:
Jsc Halyk Reg S