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 lending and transactional business growth.

• Total assets increased 13.9% year-to-date to KZT 17.65tn as of September 30, 2024, maintaining the largest lender position in Kazakhstan.

• Retail client base grew 10% year-on-year, with digital penetration steady at 70% and super app MAU up 11.4%.

• Retail lending and deposits are increasingly digital, with 91% of loans and 92% of new deposits processed online in Q3.

• Halyk maintained #1 market position in net income, assets, loans, and deposits.

Financial highlights

• Net interest income before credit loss expenses grew 38.7% year-on-year for nine months, reaching KZT 803.5bn, with net interest margin at 7.1% for 9M 2024, up from 6.3%.

• Operating expenses rose 17.2% year-on-year, mainly due to salary indexation.

• Cost-to-income ratio improved to 17.6% from 17.9% year-on-year.

• Gross loan portfolio up 11.4% year-to-date to KZT 10.88tn; retail loans up 25% year-to-date.

• Retail deposits increased 12.3% year-to-date to KZT 6.54tn.

Outlook and guidance

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

• Dividend policy remains unchanged, 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, influenced by further potential rate cuts and asset mix.

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

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