We reiterate our Hold recommendations on the Halyk Bank (HSBKKZ) 2021 and 2022 bonds. Q2 19 net income of just under KZT90bn was up from KZT74bn in the previous quarter, reflecting strong revenues and a significant decline in provisions. The annualised ROE was over 30%. Net income was up significantly from KZT24bn in Q2 18, when derecognition of tax losses carried forward and one-off impairments on non-financial assets impacted the bottom line result.
Following this strong performance, Halyk now expects consolidated net income of KZT300bn this year, up from KZT270bn previously, and the ROE is now seen exceeding 26%. Further, the issuer expects loan growth of 7%, a net interest margin of 5%, cost/income ratio of less than 27% and a cost of risk of 0.7%.