Halyk Bank reported 2Q17 IFRS results and followed up with a conference
callto provide updated guidance for full year 2017 and KKB
(Kazkommertsbank)integration. This is the last time we are seeing
Halyk’s standalone results, asfrom 3Q17 onwards, the bank will be
reporting on a consolidated basisincluding KKB accounts. Overall, the
results look good, both on a QoQ and YoYbasis. Except for QoQ Balance
Sheet contraction, the results demonstratedimproving trends on the B/S,
P&L, asset quality and capitalization front. Totalassets grew 13.4% YoY
(-1.3% QoQ) to USD16bn, driven by a 37.4% YoYincrease in the Securities
portfolio. Gross loan book expanded modestly by5.5% YoY, although was
down 3.6% QoQ, breaking the sequence of fourconsecutive quarterly
increases. The quarterly decline in loan book was mainlyon account of
loan repayments exceeding new loan issuances. On theliabilities side,
Customer deposits declined 6.3% QoQ, partly due to a lowerbalance of FX
deposits on account of the KZT appreciation and partly due tocorporate
withdrawals. However, these were still up 6.6% YoY and 2.2% YTD.

    The P&L performance was even more impressive registering healthy
growthboth on a QoQ and YoY basis driven by higher interest earning
assets,repayment of a high coupon bearing Eurobond in May 2017 and
higher incomefrom securities portfolio. Net interest income (NII) grew
27% YoY (+6.5% QoQ)driving Pre-provision income up 18.3% YoY (+3.4%
QoQ). Adjusted NIM, asper our calculation, grew by a healthy 140bps YoY
and 50bps QoQ to 5.9%.