Halyk Bank of Kazakhstan (HSBK) Q2 2024 earnings summary

Executive summary

• Net income attributable to common shareholders rose 2.2% year-over-year to KZT 379.1bn for 1H 2024, despite one-off negative effects and higher credit loss expense.

• Total assets increased 8.1% year-to-date to KZT 16,749.9bn as of June 30, 2024, driven by growth in customer deposits and loans.

• The bank maintained its #1 market position in net income, assets, loans, and deposits in Kazakhstan, with strong digital and retail banking growth.

Financial highlights

• Net interest income for 1H 2024 rose 32.1% year-over-year to KZT 511.3bn, driven by higher loan rates and balances.

• Net interest margin improved to 7.0% from 6.0% year-over-year.

• Fee and commission income rose 1.1%, but net fee and commission income decreased by 0.5% due to higher loyalty program expenses and tariff changes.

• Operating expenses increased by 16.3% year-over-year, mainly from salary indexation and bonus payments, with a cost-to-income ratio of 18.5%.

• Net gain on FX operations and financial assets increased 51.0% year-over-year to KZT 90.0bn.

Outlook and guidance

• Retail net loan portfolio growth expected at 20%-25%; corporate and SME net loan growth at 10%-15%.

• Consolidated net income guidance fine-tuned to around KZT 800 billion for 2024, with ROAE expected above 30%.

• Net interest margin guidance at 7%; cost-to-income ratio projected at 20%.

• Management continues to focus on asset quality and cost control.