Halyk Bank of Kazakhstan (HSBK) Q3 2024 earnings summary

Executive summary

• Net income for 9M 2024 rose 18.3% year-over-year to KZT 638.8bn, with Q3 net income up 53.7% year-on-year to KZT 169.0bn, driven by strong digital retail banking and lending growth.

• Total assets increased 13.9% year-to-date to KZT 17.65 trillion, maintaining the largest lender position in Kazakhstan.

• Gross loan portfolio grew 11.4% year-to-date, with retail loans up 25% and legal entities up 5%.

• Maintained leadership in net income, assets, loans, and deposits, with a 50% share of lending and 32% of corporate deposits.

• Digital penetration and active users rose significantly, with super app users up 11% monthly and 21% daily year-on-year.

Financial highlights

• Net interest income before credit loss expenses rose 38.7% year-on-year; net interest margin improved to 7.1% from 6.3%.

• Operating expenses increased 17.2% year-on-year, mainly due to salary indexation; cost-to-income ratio improved to 17.6%.

• Fee and commission income increased 2.0% year-on-year, but net fee and commission income declined 2.7% due to higher expenses.

• Retail deposits grew 12.3% year-to-date to KZT 6.54tn; market share at 28.6%.

• Stage 3 loans decreased to 6.9% from 7.5% year-to-date.

Outlook and guidance

• No revision to full-year guidance; Q3 and Q4 expected to be regular quarters without significant one-offs.

• Cost of risk for 9M 2024 at 1.3%, in line with full-year guidance.

• Dividend policy remains, with a proposed second payment of 15% of 2023 net income, in addition to 40% already paid.

• Management expects net interest margin to normalize over the next two to three quarters as rates decrease.

• Management expects continued growth in digital channels and ecosystem services.