Annual Report
2023
2023
TABLE OF CONTENTS
2 1. Glossary 3
2. At a Glance 5
3. Business Model 9
4. Chairman of the Board’s Statement 12
5. Chairperson of the Management Board’s Review 16
6. Board of Directors 20
7. Management Board 25
8. Key Events 31
9. Awards 36
10. Macroeconomic and Banking Review 39 11. Financial Review 44
12. Business Review 47
13. Risk Management 59
14. Corporate Governance 66
15. Social Report 85
16. Responsibility Statement 96
17. Outlook 98
18. Consolidated Financial Statements
and Independent Auditors’ Report
For the Year Ended 31 December 2023
101
19. Information for Shareholders 247
2 1. Glossary 3
2. At a Glance 5
3. Business Model 9
4. Chairman of the Board’s Statement 12
5. Chairperson of the Management Board’s Review 16
6. Board of Directors 20
7. Management Board 25
8. Key Events 31
9. Awards 36
10. Macroeconomic and Banking Review 39 11. Financial Review 44
12. Business Review 47
13. Risk Management 59
14. Corporate Governance 66
15. Social Report 85
16. Responsibility Statement 96
17. Outlook 98
18. Consolidated Financial Statements
and Independent Auditors’ Report
For the Year Ended 31 December 2023
101
19. Information for Shareholders 247
1
Glossary
Glossary
1
Glossary
GLOSSARY
4
AIX Astana International Exchange
Altyn Bank Altyn Bank (subsidiary of China CITIC Bank Corporation Limited)
AML/CFT Anti-Money Laundering and Countering Financing of Terrorism
ATM Automated teller machine (bank machine)
Business Roadmap – 2025 The “Road Map for Business 2025” Unified Programme for
Supporting Entrepreneurship and Business Development
CET Common equity tier
CIS Commonwealth of Independent States
CITIC Bank China CITIC Bank Corporation Limited
Damu Fund Damu Entrepreneurship Development Fund
DAU Daily active users
DLS Distance learning system
DMC Decision-Making Centre
ESG Environmental, social and governance
EU European Union
FATF Financial Action Task Force
GDP Gross domestic product
GDR Global depositary receipt
GMV Gross merchandise value
GovTech Government technology
GRI Global Reporting Initiative
Halyk Bank, the Bank Halyk Bank of Kazakhstan
Halyk Group, the Group Halyk Group of Companies
HR Human resources
IFRS International Financial Reporting Standards
IS Information security
IT Information technology
KASE Kazakhstan Stock Exchange
KPI Key performance indicator
KRI Key risk indicator
LSE London Stock Exchange
MAU Monthly active users
NSFR Net stable funding ratio
ORAP Organisation and Reinforcement of Preventive Action
POCI Purchased or originated credit-impaired
POS Point of sale
PR Public relations
RCC Retail Credit Committee of the Head Office
ROAA Return on average assets
ROAE Return on average equity
SKU Stock keeping unit
SME Small and medium-sized enterprise
UK United Kingdom
UN United Nations
US United States
Glossary
GLOSSARY
4
AIX Astana International Exchange
Altyn Bank Altyn Bank (subsidiary of China CITIC Bank Corporation Limited)
AML/CFT Anti-Money Laundering and Countering Financing of Terrorism
ATM Automated teller machine (bank machine)
Business Roadmap – 2025 The “Road Map for Business 2025” Unified Programme for
Supporting Entrepreneurship and Business Development
CET Common equity tier
CIS Commonwealth of Independent States
CITIC Bank China CITIC Bank Corporation Limited
Damu Fund Damu Entrepreneurship Development Fund
DAU Daily active users
DLS Distance learning system
DMC Decision-Making Centre
ESG Environmental, social and governance
EU European Union
FATF Financial Action Task Force
GDP Gross domestic product
GDR Global depositary receipt
GMV Gross merchandise value
GovTech Government technology
GRI Global Reporting Initiative
Halyk Bank, the Bank Halyk Bank of Kazakhstan
Halyk Group, the Group Halyk Group of Companies
HR Human resources
IFRS International Financial Reporting Standards
IS Information security
IT Information technology
KASE Kazakhstan Stock Exchange
KPI Key performance indicator
KRI Key risk indicator
LSE London Stock Exchange
MAU Monthly active users
NSFR Net stable funding ratio
ORAP Organisation and Reinforcement of Preventive Action
POCI Purchased or originated credit-impaired
POS Point of sale
PR Public relations
RCC Retail Credit Committee of the Head Office
ROAA Return on average assets
ROAE Return on average equity
SKU Stock keeping unit
SME Small and medium-sized enterprise
UK United Kingdom
UN United Nations
US United States
2
At a Glance
At a Glance
6
Key indicators
1 January 2024 1 January 2023
KZT million US$ million* KZT million US$ million*
Loans to customers 9,284,872 20,426.1 7,857,902 17,046.1
Total assets 15,494,368 34,086.5 14,395,102 31,227.2
Amounts due to customers 10,929,504 24,044.1 10,512,048 22,803.6
Debt securities issued 653,393 1,437.4 462,817 1,004.0
Amounts due to credit institutions 778,311 1,712.2 878,665 1,906.1
Total equity 2,476,954 5,449.1 2,012,242 4,365.1
Key indicators
2023 2022
KZT million US$ million** KZT million US$ million**
Net interest income 719,832 1,577.5 562,537 1,221.6
Fee and commission income 200,060 438.4 180,066 391.0
Operating expenses (including
impairment loss on non-financial
assets)
(216,405) (474.2) (188,959) (410.4)
Net income 693,436 1,519.7 553,752 1,202.6
Key indicators
2023 2022
KZT million US$ million** KZT million US$ million**
Net interest income 719,832 1,577.5 562,537 1,221.6
Fee and commission income 200,060 438.4 180,066 391.0
Operating expenses (including
impairment loss on non-financial
assets)
(216,405) (474.2) (188,959)*** (410.4)
Net income 693,436 1,519.7 569,478 1,293.9
Number of customers/accounts
Key indicators 2023 2022
Return on average equity (RoAE) 32.5% 32.4%
Return on average assets (RoAA) 4.8% 4.3%
Net interest margin 6.2% 5.6%
Cost-to-income 19.2% 19.0%
Operating expenses/average total assets 1.5% 1.4%
CET1 capital adequacy ratio (CET) 19.3% 19.2%
Tier 1 capital adequacy ratio 19.3% 19.2%
Total capital adequacy ratio 19.6% 19.5%
Key indicators 1 January 2024 1 January 2023
Retail clients (active), thousands 10,188 9,852
SME loan borrowers (active), thousands 369 310.7
Corporate clients (active), thousands 2.3 2.3
Payment cards, thousands 20,118 17,456
Retail loans, thousands 2,531 2,181
Mortgage loans, thousands 42 43
Other secured and unsecured customer loans,
thousands 2,489 2,138
Internet banking users, thousands
- Individuals 10,188 9,416
- Legal entities 514.7 418
2
At a Glance
FINANCIAL HIGHLIGHTS (CONSOLIDATED BASIS)
* Calculated using the official National Bank of Kazakhstan rate on the corresponding date.
** Calculated using the official National Bank of Kazakhstan average rate for the corresponding period.
*** Including reversal of/(loss from) impairment of non-financial assets and reversal of impairment loss of property, plant
and equipment
Key indicators
1 January 2024 1 January 2023
KZT million US$ million* KZT million US$ million*
Loans to customers 9,284,872 20,426.1 7,857,902 17,046.1
Total assets 15,494,368 34,086.5 14,395,102 31,227.2
Amounts due to customers 10,929,504 24,044.1 10,512,048 22,803.6
Debt securities issued 653,393 1,437.4 462,817 1,004.0
Amounts due to credit institutions 778,311 1,712.2 878,665 1,906.1
Total equity 2,476,954 5,449.1 2,012,242 4,365.1
Key indicators
2023 2022
KZT million US$ million** KZT million US$ million**
Net interest income 719,832 1,577.5 562,537 1,221.6
Fee and commission income 200,060 438.4 180,066 391.0
Operating expenses (including
impairment loss on non-financial
assets)
(216,405) (474.2) (188,959) (410.4)
Net income 693,436 1,519.7 553,752 1,202.6
Key indicators
2023 2022
KZT million US$ million** KZT million US$ million**
Net interest income 719,832 1,577.5 562,537 1,221.6
Fee and commission income 200,060 438.4 180,066 391.0
Operating expenses (including
impairment loss on non-financial
assets)
(216,405) (474.2) (188,959)*** (410.4)
Net income 693,436 1,519.7 569,478 1,293.9
Number of customers/accounts
Key indicators 2023 2022
Return on average equity (RoAE) 32.5% 32.4%
Return on average assets (RoAA) 4.8% 4.3%
Net interest margin 6.2% 5.6%
Cost-to-income 19.2% 19.0%
Operating expenses/average total assets 1.5% 1.4%
CET1 capital adequacy ratio (CET) 19.3% 19.2%
Tier 1 capital adequacy ratio 19.3% 19.2%
Total capital adequacy ratio 19.6% 19.5%
Key indicators 1 January 2024 1 January 2023
Retail clients (active), thousands 10,188 9,852
SME loan borrowers (active), thousands 369 310.7
Corporate clients (active), thousands 2.3 2.3
Payment cards, thousands 20,118 17,456
Retail loans, thousands 2,531 2,181
Mortgage loans, thousands 42 43
Other secured and unsecured customer loans,
thousands 2,489 2,138
Internet banking users, thousands
- Individuals 10,188 9,416
- Legal entities 514.7 418
2
At a Glance
FINANCIAL HIGHLIGHTS (CONSOLIDATED BASIS)
* Calculated using the official National Bank of Kazakhstan rate on the corresponding date.
** Calculated using the official National Bank of Kazakhstan average rate for the corresponding period.
*** Including reversal of/(loss from) impairment of non-financial assets and reversal of impairment loss of property, plant
and equipment
7
Halyk Bank 570 branches and outlets, including:
25 regional branches
119 sub-regional offices
329 personal service centres
3 VIP centres
48 banking service centres
13 cash settlement units
33 business centres (legal entities)
4,579 ATMS
330,847 POS terminals
941 payment terminals
As of 31 December 2023, Halyk Group had 16,833 full-time equivalent employees.
Halyk Insurance Company 18 branches and more than 40 points of sale
Halyk Life 20 branches and 7 representative offices
Halyk Finance 1 branch
Halyk Collection 20 branches and 34 offices
Halyk Bank Kyrgyzstan 10 branches, 8 cash settlement units and 6 mobile cash
settlement units
Halyk Bank Georgia 8 branches and 1 division
Tenge Bank 18 branches (6 banking service centres and 12 personal service
centres) and 46 universal cash settlement units
Kazteleport 1 branch and 1 subsidiary in Uzbekistan
Halyk Finservice 1 subsidiary in Uzbekistan
Halyk Aktiv 1 branch in Russia
KUSA Halyk 1 branch in Russia
2
At a Glance
DISTRIBUTION NETWORK
Halyk Bank 570 branches and outlets, including:
25 regional branches
119 sub-regional offices
329 personal service centres
3 VIP centres
48 banking service centres
13 cash settlement units
33 business centres (legal entities)
4,579 ATMS
330,847 POS terminals
941 payment terminals
As of 31 December 2023, Halyk Group had 16,833 full-time equivalent employees.
Halyk Insurance Company 18 branches and more than 40 points of sale
Halyk Life 20 branches and 7 representative offices
Halyk Finance 1 branch
Halyk Collection 20 branches and 34 offices
Halyk Bank Kyrgyzstan 10 branches, 8 cash settlement units and 6 mobile cash
settlement units
Halyk Bank Georgia 8 branches and 1 division
Tenge Bank 18 branches (6 banking service centres and 12 personal service
centres) and 46 universal cash settlement units
Kazteleport 1 branch and 1 subsidiary in Uzbekistan
Halyk Finservice 1 subsidiary in Uzbekistan
Halyk Aktiv 1 branch in Russia
KUSA Halyk 1 branch in Russia
2
At a Glance
DISTRIBUTION NETWORK
8
As of the date of publication of this annual report:
○ Halyk Bank’s stake in Altyn Bank (a subsidiary of China CITIC Bank Corporation Limited) is 40%
○ Halyk Bank’s stake in First Credit Bureau is 38.8%
○ Halyk Bank’s stake in Private Company Open Networks Ltd. is 50%
Holding Group ALMEX
Halyk Bank
Halyk Bank Kyrgyzstan* 100% Tenge Bank 100% Halyk Bank Georgia 100%
Halyk Finance
100%
Halyk Global Markets
100%
Halyk Insurance Company
99.99%
Halyk Life
100%
Kazteleport
100%
Halyk Finservice
100%
Halyk Aktiv
100%
Halyk Collection
100%
Halyk Leasing
100%
KUSA Halyk
100%
69.6%
Information about shareholders of Halyk Group with at least 5% of Halyk Bank’s common
shares issued as of 1 January 2024**:
Holding Group ALMEX is a holding company that has a controlling interest in Halyk Bank.
No. Name Common shares Proportion of total
shares in circulation
1 Total shares authorised 25,000,000,000 -
2 Holding Group ALMEX 7,583,538,228 69.6%
3 GDRs (ISIN: US46627J3023/US46627J2033) 3,109,586,880 28.5%
4 Other 209,046,483 1.9%
5 Total shares in circulation 10,902,171,591 100.0%
6 Shares bought back by the Bank (2,539,270,930) -
7 Shares retained by companies in the Group (6,102,261) -
8 Total shares issued 13,447,544,782 -
9 Total shares in circulation
(as per KASE listing rules) 3,324,735,624 -
10 Market price of local shares, KZT*** 160.5 -
11 Market price of GDRs, KZT / US$**** 15.16 -
2
At a Glance
HALYK GROUP STRUCTURE
** The Bank’s common shares have been listed on the Kazakhstan Stock Exchange (KASE) since 1998, its common
shares in the form of global depositary receipts have been listed on the London Stock Exchange (LSE) since 2006,
and its commons shares have been listed on the Astana International Exchange since 2019.
*** Market price of local shares as of 31 December 2023, determined and published by the Kazakhstan Stock
Exchange (KASE; www.kase.kz).
**** Market price of GDRs as of 31 December 2023, based on information from the London Stock Exchange (LSE).
* As of the date of publication of this report, the Bank has completed the sale of 100% of shares of Halyk Bank
Kyrgyzstan OJS
As of the date of publication of this annual report:
○ Halyk Bank’s stake in Altyn Bank (a subsidiary of China CITIC Bank Corporation Limited) is 40%
○ Halyk Bank’s stake in First Credit Bureau is 38.8%
○ Halyk Bank’s stake in Private Company Open Networks Ltd. is 50%
Holding Group ALMEX
Halyk Bank
Halyk Bank Kyrgyzstan* 100% Tenge Bank 100% Halyk Bank Georgia 100%
Halyk Finance
100%
Halyk Global Markets
100%
Halyk Insurance Company
99.99%
Halyk Life
100%
Kazteleport
100%
Halyk Finservice
100%
Halyk Aktiv
100%
Halyk Collection
100%
Halyk Leasing
100%
KUSA Halyk
100%
69.6%
Information about shareholders of Halyk Group with at least 5% of Halyk Bank’s common
shares issued as of 1 January 2024**:
Holding Group ALMEX is a holding company that has a controlling interest in Halyk Bank.
No. Name Common shares Proportion of total
shares in circulation
1 Total shares authorised 25,000,000,000 -
2 Holding Group ALMEX 7,583,538,228 69.6%
3 GDRs (ISIN: US46627J3023/US46627J2033) 3,109,586,880 28.5%
4 Other 209,046,483 1.9%
5 Total shares in circulation 10,902,171,591 100.0%
6 Shares bought back by the Bank (2,539,270,930) -
7 Shares retained by companies in the Group (6,102,261) -
8 Total shares issued 13,447,544,782 -
9 Total shares in circulation
(as per KASE listing rules) 3,324,735,624 -
10 Market price of local shares, KZT*** 160.5 -
11 Market price of GDRs, KZT / US$**** 15.16 -
2
At a Glance
HALYK GROUP STRUCTURE
** The Bank’s common shares have been listed on the Kazakhstan Stock Exchange (KASE) since 1998, its common
shares in the form of global depositary receipts have been listed on the London Stock Exchange (LSE) since 2006,
and its commons shares have been listed on the Astana International Exchange since 2019.
*** Market price of local shares as of 31 December 2023, determined and published by the Kazakhstan Stock
Exchange (KASE; www.kase.kz).
**** Market price of GDRs as of 31 December 2023, based on information from the London Stock Exchange (LSE).
* As of the date of publication of this report, the Bank has completed the sale of 100% of shares of Halyk Bank
Kyrgyzstan OJS
3
Business Model
Business Model
10
Solid financial position amid macroeconomic challenges
○ The Bank’s business model is resilient to macroeconomic risks: over 2014-23, the ROAE, cost-to-
income and Cost of risk ratios averaged 27.3%, 26.2% and 0.7%, respectively
○ High level of capitalisation: a common equity tier 1 (CET 1) capital adequacy ratio of 19.3%, tier 1
capital adequacy ratio of 19.3% and total capital adequacy ratio of 19.6%
○ Solid profitability is supporting shareholder returns: ROAE of 32.5% in 2023
○ Substantial level of liquidity: liquid assets to total assets ratio of 24.3% and net stable funding ratio
(NSFR) of 1.198
○ High-quality funding base: loans to deposits ratio of 85%
○ One of the lowest funding rates among second-tier banks
○ Deposits account for 84% of total liabilities, of which 25.5% are current accounts with zero or low
interest rates
○ Low leverage: debt securities account for just 5% of total liabilities (as of the end of 2023, the Bank’s
debt securities included only bonds issued on the local market)
○ Effective risk management and continuous work to improve asset quality: in 2023, the share of non-
performing loans (overdue by 90 days or more) grew slightly from 2.1% to 2.4%, the share of Stage
3* loans remained unchanged at 7.5%, the provision coverage ratio totalled 67.0% and the cost of
risk amounted to 1.0%, reflecting a more normalised level of credit loss expenses on loans
○ Balanced forex position: the share of foreign currency assets is 31.5% and the share of foreign
currency liabilities is 32.6%
○ Ongoing high operational efficiency is providing additional support for profitability: the cost-to-
income ratio was 19.2% in 2023
○ The Bank’s experienced management team has navigated through the turbulence of 2008-09,
2015-16, the pandemic and 2022-23, amid unprecedented domestic and regional macro shocks
and geopolitical tensions in the region
◦ Halyk Bank’s highest long-term credit ratings among second-tier Kazakh banks with no major
overseas shareholders have been confirmed by international ratings agencies, despite the
deterioration in the global operating environment. Moody’s Investor Services has affirmed the
Bank’s ratings at the sovereign level.
◦ Moody’s Investor Services – Baa2 (‘stable’, 1 November 2023)
◦ Standard&Poor’s – BB+ (‘positive’, 19 March 2024)
◦ Fitch Ratings – BBB- (‘stable’, 20 March 2024)
Regional financial group with a dominant market position and high level of systemic
importance
○ Kazakhstan’s leading universal financial group, with the largest client base and sales channel
network in the country: 10.2 million active retail customers and more than 371,000 active corporate
and SME customers; 10.2 million retail customers using the Halyk Super-App online banking system
and 514,700 corporate and SME customers using the Onlinebank portal; largest branch network
with 570 branches and outlets, 4,579 ATMs (market share of 36.0%) and 330,847 POS terminals
(market share of 32%)
○ Halyk Bank is the undisputed leader in Kazakhstan in terms of assets (total market share of 29%),
equity (34.9%), net income (28.4%), retail deposits (27.4%), corporate deposits (36.5%), gross
loans (32.0%) and net loans (32.8%)
○ Largest transaction bank in Kazakhstan: in 2023, the Bank's clients conducted transactions totalling
KZT121.2 trillion, of which retail customers accounted for KZT11.7 trillion, up 48% year-on-year, and
legal entities for KZT109.5 trillion, up 20% year-on-year
○ Largest payment agent for pensions and social payments: 2.5 million customers
○ Active participant in all government community and business support programmes
○ Since 2018, the Bank has been financing its own programme “Women in Business”, under which
almost 570 businesswomen have received preferential loans totalling around KZT5.6 billion with
interest rates of 5-7% annually.
3
Business Model
BUSINESS MODEL
* Including POCI.
Solid financial position amid macroeconomic challenges
○ The Bank’s business model is resilient to macroeconomic risks: over 2014-23, the ROAE, cost-to-
income and Cost of risk ratios averaged 27.3%, 26.2% and 0.7%, respectively
○ High level of capitalisation: a common equity tier 1 (CET 1) capital adequacy ratio of 19.3%, tier 1
capital adequacy ratio of 19.3% and total capital adequacy ratio of 19.6%
○ Solid profitability is supporting shareholder returns: ROAE of 32.5% in 2023
○ Substantial level of liquidity: liquid assets to total assets ratio of 24.3% and net stable funding ratio
(NSFR) of 1.198
○ High-quality funding base: loans to deposits ratio of 85%
○ One of the lowest funding rates among second-tier banks
○ Deposits account for 84% of total liabilities, of which 25.5% are current accounts with zero or low
interest rates
○ Low leverage: debt securities account for just 5% of total liabilities (as of the end of 2023, the Bank’s
debt securities included only bonds issued on the local market)
○ Effective risk management and continuous work to improve asset quality: in 2023, the share of non-
performing loans (overdue by 90 days or more) grew slightly from 2.1% to 2.4%, the share of Stage
3* loans remained unchanged at 7.5%, the provision coverage ratio totalled 67.0% and the cost of
risk amounted to 1.0%, reflecting a more normalised level of credit loss expenses on loans
○ Balanced forex position: the share of foreign currency assets is 31.5% and the share of foreign
currency liabilities is 32.6%
○ Ongoing high operational efficiency is providing additional support for profitability: the cost-to-
income ratio was 19.2% in 2023
○ The Bank’s experienced management team has navigated through the turbulence of 2008-09,
2015-16, the pandemic and 2022-23, amid unprecedented domestic and regional macro shocks
and geopolitical tensions in the region
◦ Halyk Bank’s highest long-term credit ratings among second-tier Kazakh banks with no major
overseas shareholders have been confirmed by international ratings agencies, despite the
deterioration in the global operating environment. Moody’s Investor Services has affirmed the
Bank’s ratings at the sovereign level.
◦ Moody’s Investor Services – Baa2 (‘stable’, 1 November 2023)
◦ Standard&Poor’s – BB+ (‘positive’, 19 March 2024)
◦ Fitch Ratings – BBB- (‘stable’, 20 March 2024)
Regional financial group with a dominant market position and high level of systemic
importance
○ Kazakhstan’s leading universal financial group, with the largest client base and sales channel
network in the country: 10.2 million active retail customers and more than 371,000 active corporate
and SME customers; 10.2 million retail customers using the Halyk Super-App online banking system
and 514,700 corporate and SME customers using the Onlinebank portal; largest branch network
with 570 branches and outlets, 4,579 ATMs (market share of 36.0%) and 330,847 POS terminals
(market share of 32%)
○ Halyk Bank is the undisputed leader in Kazakhstan in terms of assets (total market share of 29%),
equity (34.9%), net income (28.4%), retail deposits (27.4%), corporate deposits (36.5%), gross
loans (32.0%) and net loans (32.8%)
○ Largest transaction bank in Kazakhstan: in 2023, the Bank's clients conducted transactions totalling
KZT121.2 trillion, of which retail customers accounted for KZT11.7 trillion, up 48% year-on-year, and
legal entities for KZT109.5 trillion, up 20% year-on-year
○ Largest payment agent for pensions and social payments: 2.5 million customers
○ Active participant in all government community and business support programmes
○ Since 2018, the Bank has been financing its own programme “Women in Business”, under which
almost 570 businesswomen have received preferential loans totalling around KZT5.6 billion with
interest rates of 5-7% annually.
3
Business Model
BUSINESS MODEL
* Including POCI.
11
Continuous development of digital service channels
○ Halyk Super-App is one of the leading retail online banking platforms in Kazakhstan: 7.9 million
monthly active users (MAU) and 2.3 million daily active users (DAU), up a respective 46.2% and
34.9% year-on-year
○ Kundelik and Halyk Bank implemented a motivational programme for 5-11 grades students in
registered on the website kundelik.kz; for every 10 points, a student can receive 100 Halyk bonuses
on a Halyk Easy bank card
○ The synergy of the retail and corporate businesses led to a significant increase in digital car lending:
in 2023, the Bank issued 150% more car loans than in 2022 and had a 24.4% share of the car loan
market in December 2023
○ The Onlinebank platform for corporate and SME customers has 514,700 online banking users and
274,200 MAU for the WEB version and mobile app (up 8.1% year-on-year)
○ Digital bank tender guarantees increased significantly in 2023: the total volume of guarantees
issued grew by 360%, while the number of guarantees increased by 270%
The largest open ecosystem in the country
○ Halyk Market , a technological solution for online purchases, saw positive growth, with gross
merchandise value (GMV) of KZT63.9 billion (up 170% in 2023) and 4,557 partners (compared with
2,385 partners at the end of 2022). We are attracting more partners and improving the stock
keeping unit (SKU) base to ensure the best customer experience (874,300 SKUs, up from 495,800
at the end of 2022).
○ Halyk Travel , an app to search for, compare and purchase air, rail and intercity bus tickets online:
tickets were sold for KZT7.681 billion (up 20.4% year-on-year)
○ Kino.kz , a service to find and obtain tickets to various entertainment events: 2.8 million MAU (up
from 2.2 million MAU at the end of 2022) and the market share grew to 37.3% (up 9.3 percentage
points from the end of 2022)
○ The online auto insurance portal continues to grow steadily, as GMV increased to KZT4.0 billion
(up 80% year-on-year) and the number of policies rose by 60% to 346,900
○ Online government services : the Bank has the largest number of government online services
among second-tier banks: 52 government services for clients (35 for the nearest competitor) at the
end of 2023. In 2023, government services were used 13 million times.
○ Halyk Invest and Halyk Finance saw solid growth in their customer base (up 70% to 677,600
customers) and transactions using brokerage services , partly due to the coverage of the Bank’s
retail clients. In 2023, Halyk Finance entered the new pension asset management market and
already has a market share of 51%, while the total assets managed increased by 63% over the year.
Halyk Invest and Halyk Finance served as key brokerage platforms for SPO and IPO placements. In the
third quarter of 2023, during a SPO by KEGOC, the brokerage platforms of Halyk Group placed shares
worth KZT9.2 billion, or 40.8% of the total SPO volume. In February 2024, during an IPO by Air Astana,
Halyk Invest and Halyk Finance placed US$65 million, or 30.4% of the total local IPO volume.
Strategic focus on Uzbekistan as part of international expansion
○ Uzbekistan remains a key priority outside Kazakhstan.
○ The total loan exposure issued from the balance sheet of Halyk and Tenge Bank to Uzbekistan is
KZT477.1 billion.
○ The Group has developed its subsidiary Tenge Bank and taken a comprehensive approach to
support trade and the cross-border expansion of Kazakh business in Uzbekistan.
○ KZT92.5 billion – Halyk Group’s total interest and F&C from business in Uzbekistan for the period
2021-2023
○ Halyk Group is creating an important channel for payments between Kazakhstan and Uzbekistan. In
2023, volume of transfers between Kazakhstan and Uzbekistan through Halyk totalled more than
KZT1.1 trillion.
Compliance with ESG best practices
○ Since 2020, Halyk Bank has published an annual sustainability report in accordance with Global
Reporting Initiative (GRI) standards, which discloses the main aspects of the Bank’s ESG efforts
○ As part of the Group’s Strategy for 2022-24, it identified strategic sustainability priorities, selecting
11 of the 17 UN Sustainable Development Goals that are relevant to the Bank
○ To implement the agenda regarding its indirect impact, Halyk Bank:
◦ has integrated ESG into its risk management system
◦ continues to introduce responsible financing principles
○ Halyk Bank became the first bank in Kazakhstan to join the UN Global Compact
○ Halyk Bank published its ESG report for 2022 in accordance with the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD)
3
Business Model
Continuous development of digital service channels
○ Halyk Super-App is one of the leading retail online banking platforms in Kazakhstan: 7.9 million
monthly active users (MAU) and 2.3 million daily active users (DAU), up a respective 46.2% and
34.9% year-on-year
○ Kundelik and Halyk Bank implemented a motivational programme for 5-11 grades students in
registered on the website kundelik.kz; for every 10 points, a student can receive 100 Halyk bonuses
on a Halyk Easy bank card
○ The synergy of the retail and corporate businesses led to a significant increase in digital car lending:
in 2023, the Bank issued 150% more car loans than in 2022 and had a 24.4% share of the car loan
market in December 2023
○ The Onlinebank platform for corporate and SME customers has 514,700 online banking users and
274,200 MAU for the WEB version and mobile app (up 8.1% year-on-year)
○ Digital bank tender guarantees increased significantly in 2023: the total volume of guarantees
issued grew by 360%, while the number of guarantees increased by 270%
The largest open ecosystem in the country
○ Halyk Market , a technological solution for online purchases, saw positive growth, with gross
merchandise value (GMV) of KZT63.9 billion (up 170% in 2023) and 4,557 partners (compared with
2,385 partners at the end of 2022). We are attracting more partners and improving the stock
keeping unit (SKU) base to ensure the best customer experience (874,300 SKUs, up from 495,800
at the end of 2022).
○ Halyk Travel , an app to search for, compare and purchase air, rail and intercity bus tickets online:
tickets were sold for KZT7.681 billion (up 20.4% year-on-year)
○ Kino.kz , a service to find and obtain tickets to various entertainment events: 2.8 million MAU (up
from 2.2 million MAU at the end of 2022) and the market share grew to 37.3% (up 9.3 percentage
points from the end of 2022)
○ The online auto insurance portal continues to grow steadily, as GMV increased to KZT4.0 billion
(up 80% year-on-year) and the number of policies rose by 60% to 346,900
○ Online government services : the Bank has the largest number of government online services
among second-tier banks: 52 government services for clients (35 for the nearest competitor) at the
end of 2023. In 2023, government services were used 13 million times.
○ Halyk Invest and Halyk Finance saw solid growth in their customer base (up 70% to 677,600
customers) and transactions using brokerage services , partly due to the coverage of the Bank’s
retail clients. In 2023, Halyk Finance entered the new pension asset management market and
already has a market share of 51%, while the total assets managed increased by 63% over the year.
Halyk Invest and Halyk Finance served as key brokerage platforms for SPO and IPO placements. In the
third quarter of 2023, during a SPO by KEGOC, the brokerage platforms of Halyk Group placed shares
worth KZT9.2 billion, or 40.8% of the total SPO volume. In February 2024, during an IPO by Air Astana,
Halyk Invest and Halyk Finance placed US$65 million, or 30.4% of the total local IPO volume.
Strategic focus on Uzbekistan as part of international expansion
○ Uzbekistan remains a key priority outside Kazakhstan.
○ The total loan exposure issued from the balance sheet of Halyk and Tenge Bank to Uzbekistan is
KZT477.1 billion.
○ The Group has developed its subsidiary Tenge Bank and taken a comprehensive approach to
support trade and the cross-border expansion of Kazakh business in Uzbekistan.
○ KZT92.5 billion – Halyk Group’s total interest and F&C from business in Uzbekistan for the period
2021-2023
○ Halyk Group is creating an important channel for payments between Kazakhstan and Uzbekistan. In
2023, volume of transfers between Kazakhstan and Uzbekistan through Halyk totalled more than
KZT1.1 trillion.
Compliance with ESG best practices
○ Since 2020, Halyk Bank has published an annual sustainability report in accordance with Global
Reporting Initiative (GRI) standards, which discloses the main aspects of the Bank’s ESG efforts
○ As part of the Group’s Strategy for 2022-24, it identified strategic sustainability priorities, selecting
11 of the 17 UN Sustainable Development Goals that are relevant to the Bank
○ To implement the agenda regarding its indirect impact, Halyk Bank:
◦ has integrated ESG into its risk management system
◦ continues to introduce responsible financing principles
○ Halyk Bank became the first bank in Kazakhstan to join the UN Global Compact
○ Halyk Bank published its ESG report for 2022 in accordance with the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD)
3
Business Model
4
Chairman of the Board’s
Statement
Chairman of the Board’s
Statement
13
Dear shareholders, clients and partners,
The year 2023 will be remembered for increasing geopolitical tension between East and West,
slowing economic growth worldwide and disruptions in international logistics. Amid more muted
economic activity in the main hydrocarbon-consuming countries, oil prices slumped by 17% year-on-
year.
Despite the impact of external macroeconomic and energy-related factors, the military action in
Ukraine, disruptions in domestic oil production and a poor grain harvest, in 2023, Kazakhstan’s GDP
increased by 5.1% year-on-year. This was considerably higher than the forecasts for both the world
and the country by the World Bank and the International Monetary Fund. In addition, the trend was
positive in all key sectors, apart from agriculture: compared with 2022, construction expanded by
13.3%, trade by 11.3%, IT and communications by 7.1%, transport by 6.9% and industry by 4.3%. The
main drivers of this surge in activity were a recovery in domestic oil production in the fourth quarter,
an injection into the economy of an additional KZT1.3 trillion by the National Fund and greater trade.
Alongside this, by pursuing a tighter monetary policy, the National Bank of Kazakhstan succeeded in
reducing the rate of inflation to 9.8%. Meanwhile, by making injections from National Oil Fund, the
government managed to increase investment in fixed assets by 13.7% year-on-year to US$39.5
billion.
The development of Kazakhstan’s financial sector has slowed slightly and entered a more organic
phase. However, this has not prevented Halyk Group from achieving its strategic objectives,
progressing in developing its key business lines and expanding its presence in Kazakhstan,
Uzbekistan and Georgia. Notably, amid rising risks associated with greater international sanctions and
the threat that secondary sanctions could be imposed on Kazakh companies, the Bank made
appropriate changes to its internal procedures and business processes for controlling payments and
accounts of new clients, undertook a major restructuring of the entire compliance, and increased the
headcount of the compliance and currency control departments. We believe that this approach will
allow us to minimise the various threats to the Bank’s business and help to preserve its reputation in
the eyes of the international investment community, rating agencies and external auditors.
4
Chairman of the
Board’s Statement
CHAIRMAN OF THE BOARD’S STATEMENT
Dear shareholders, clients and partners,
The year 2023 will be remembered for increasing geopolitical tension between East and West,
slowing economic growth worldwide and disruptions in international logistics. Amid more muted
economic activity in the main hydrocarbon-consuming countries, oil prices slumped by 17% year-on-
year.
Despite the impact of external macroeconomic and energy-related factors, the military action in
Ukraine, disruptions in domestic oil production and a poor grain harvest, in 2023, Kazakhstan’s GDP
increased by 5.1% year-on-year. This was considerably higher than the forecasts for both the world
and the country by the World Bank and the International Monetary Fund. In addition, the trend was
positive in all key sectors, apart from agriculture: compared with 2022, construction expanded by
13.3%, trade by 11.3%, IT and communications by 7.1%, transport by 6.9% and industry by 4.3%. The
main drivers of this surge in activity were a recovery in domestic oil production in the fourth quarter,
an injection into the economy of an additional KZT1.3 trillion by the National Fund and greater trade.
Alongside this, by pursuing a tighter monetary policy, the National Bank of Kazakhstan succeeded in
reducing the rate of inflation to 9.8%. Meanwhile, by making injections from National Oil Fund, the
government managed to increase investment in fixed assets by 13.7% year-on-year to US$39.5
billion.
The development of Kazakhstan’s financial sector has slowed slightly and entered a more organic
phase. However, this has not prevented Halyk Group from achieving its strategic objectives,
progressing in developing its key business lines and expanding its presence in Kazakhstan,
Uzbekistan and Georgia. Notably, amid rising risks associated with greater international sanctions and
the threat that secondary sanctions could be imposed on Kazakh companies, the Bank made
appropriate changes to its internal procedures and business processes for controlling payments and
accounts of new clients, undertook a major restructuring of the entire compliance, and increased the
headcount of the compliance and currency control departments. We believe that this approach will
allow us to minimise the various threats to the Bank’s business and help to preserve its reputation in
the eyes of the international investment community, rating agencies and external auditors.
4
Chairman of the
Board’s Statement
CHAIRMAN OF THE BOARD’S STATEMENT
14
In 2023, Halyk Group’s net income climbed by 21.8% year-on-year to KZT693 billion, while its
consolidated assets increased by 7.6% year-on-year to KZT15.5 trillion, driven by a rise in client funds
and debt securities issued. Halyk Group continues to lead with a market share of 29% by assets,
placing it well ahead of its closest peers. The loan portfolio accounts for around 60% of its total assets,
standing at KZT9.3 trillion in 2023. In terms of loans to customers (on a net basis), the Group had a
market share of 32.8%, making it the largest commercial bank lender to the national economy.
SMEs accounted for the most growth in the Group’s loan portfolio, at 25.1% year-on-year. This was
due to our systematic work to implement Kazakh President Kassym-Jomart Tokayev’s call to expand
lending to the real sector as a key condition for accelerating economic growth in the country. The Bank
is actively involved in all government programmes to support domestic business.
Loans to the Bank’s corporate clients grew by 13.4% year-on-year in 2023, reflecting the expectations
of large businesses that slowing inflation and subsequent base rate cuts would reduce lending costs.
The retail segment of the loan portfolio rose by 22.7% year-on-year.
As the partner of choice in Kazakhstan for most businesses and practically the only bank providing a
full range of services, our focus is to maximise the digitalisation of banking services, improve the
customer experience and expand the functionality of Onlinebank, our mobile app for corporate
customers. Last year, we added new digital products and services to the range of services available
through the app. Halyk Bank’s digital unsecured bid bonds were particularly popular, their number
increasing by 3.7 times and their volume by 4.6 times in 2023. We also achieved impressive results in
our transaction banking business, where the volume of transactions by corporate clients climbed by
20% year-on-year to KZT109.5 trillion.
In 2024, the reputable information and analytical firm SME Banking Agency again rated the
Onlinebank app highly for its growing popularity, extensive functionality and strong security, as well as
the variety and accessibility of the services that it offers for entrepreneurs to manage their finances.
The Business Mobile Banking 2024 rankings, which evaluated more than 130 specialised mobile
apps, recognised Onlinebank as the leader among mobile banks for businesses in Kazakhstan.
Onlinebank was honoured with a similarly high assessment in May 2022.
In parallel with our work to improve services for entrepreneurs, we are actively investing to expand the
functionality of the Halyk Super-App for retail clients. Offering a wide range of financial and non-
financial services, it is one of the leading online banking platforms for retail customers in Kazakhstan.
In 2023 alone, the number of its monthly active users (MAU) reached 7.9 million, up 46.2% year-on-
year, while the number of daily active users (DAU) rose by 34.9%.
This rapid growth in the Halyk Super-App’s popularity among Kazakh customers can be explained by
our one-stop-shop approach to retail banking. We offer a full range of remote banking services within
an integrated financial ecosystem, complemented by online insurance, brokerage services, the most
popular government services and a variety of unique products designed for active lifestyle customers.
These include the Kino.kz service for entertainment tickets, which has a market share of 37%; and the
Halyk Travel service for air, rail and intercity bus tickets services, whose sales increased by 20% year-
on-year in 2023. In addition, on our Halyk Marketplaceplatform, the volume of purchases climbed by
2.7 times.
Another unique innovation that Halyk Bank implemented through the Halyk Super-App is the kundelik.
kz that student receives bonuses for excellent marks, participants: students of grades 5-11. For each
excellent mark, a student can receive 100 Halyk bonus points on a Halyk Easy bank card. In addition,
more than 50 different online government services are available to Kazakh customers through the
Halyk Super-App, more than any other commercial bank in the country. Overall, our clients have used
government services through the Halyk Super-App more than 13 million times.
Given the favourable prospects for greater cooperation and closer trade relations with Uzbekistan,
Halyk Group considers Kazakhstan’s neighbour a priority market in terms of its strategic development
plans. Since establishing Tenge Bank there in 2019, it has invested more than US$100 million in its
subsidiary’s charter capital. As of the end of 2023, the portfolio of loans provided from Halyk Bank’s
balance sheet for major projects in Uzbekistan amounted to around US$690 million. Over the Group’s
time in the market, Tenge Bank’s assets have increased to US$556 million. In 2023, assets rose by
US$161.3 million, of which loans accounted for 83.9%. Such impressive results are due to an effective
business model, which focuses on automating business processes, harnessing modern digital
solutions and developing online service channels, with an emphasis on mobile banking and a full-
cycle e-commerce platform, Tenge Market.
Another key country in terms of Halyk Group’s geographic expansion is Georgia, where the subsidiary
Halyk Bank Georgia has already been present for over 15 years. Given the rising trade volumes, active
expansion of transit corridors, construction of logistics hubs and growing tourism between
Kazakhstan and Georgia, the Group sees room to develop its business there further. In August 2023
alone, it invested US$11 million in Halyk Bank Georgia. Underpinned by the Group’s commitment to the
highest international standards, extensive experience, proven expertise and high ratings, this will help
to drive business, adopt cutting-edge IT solutions and meet the growing needs of customers in the
country’s highly competitive banking market. In 2023, Halyk Bank Georgia’s total assets increased to
over US$336 million, equity reached US$88 million and net income soared by 40% year-on-year.
4
Chairman of the
Board’s Statement
In 2023, Halyk Group’s net income climbed by 21.8% year-on-year to KZT693 billion, while its
consolidated assets increased by 7.6% year-on-year to KZT15.5 trillion, driven by a rise in client funds
and debt securities issued. Halyk Group continues to lead with a market share of 29% by assets,
placing it well ahead of its closest peers. The loan portfolio accounts for around 60% of its total assets,
standing at KZT9.3 trillion in 2023. In terms of loans to customers (on a net basis), the Group had a
market share of 32.8%, making it the largest commercial bank lender to the national economy.
SMEs accounted for the most growth in the Group’s loan portfolio, at 25.1% year-on-year. This was
due to our systematic work to implement Kazakh President Kassym-Jomart Tokayev’s call to expand
lending to the real sector as a key condition for accelerating economic growth in the country. The Bank
is actively involved in all government programmes to support domestic business.
Loans to the Bank’s corporate clients grew by 13.4% year-on-year in 2023, reflecting the expectations
of large businesses that slowing inflation and subsequent base rate cuts would reduce lending costs.
The retail segment of the loan portfolio rose by 22.7% year-on-year.
As the partner of choice in Kazakhstan for most businesses and practically the only bank providing a
full range of services, our focus is to maximise the digitalisation of banking services, improve the
customer experience and expand the functionality of Onlinebank, our mobile app for corporate
customers. Last year, we added new digital products and services to the range of services available
through the app. Halyk Bank’s digital unsecured bid bonds were particularly popular, their number
increasing by 3.7 times and their volume by 4.6 times in 2023. We also achieved impressive results in
our transaction banking business, where the volume of transactions by corporate clients climbed by
20% year-on-year to KZT109.5 trillion.
In 2024, the reputable information and analytical firm SME Banking Agency again rated the
Onlinebank app highly for its growing popularity, extensive functionality and strong security, as well as
the variety and accessibility of the services that it offers for entrepreneurs to manage their finances.
The Business Mobile Banking 2024 rankings, which evaluated more than 130 specialised mobile
apps, recognised Onlinebank as the leader among mobile banks for businesses in Kazakhstan.
Onlinebank was honoured with a similarly high assessment in May 2022.
In parallel with our work to improve services for entrepreneurs, we are actively investing to expand the
functionality of the Halyk Super-App for retail clients. Offering a wide range of financial and non-
financial services, it is one of the leading online banking platforms for retail customers in Kazakhstan.
In 2023 alone, the number of its monthly active users (MAU) reached 7.9 million, up 46.2% year-on-
year, while the number of daily active users (DAU) rose by 34.9%.
This rapid growth in the Halyk Super-App’s popularity among Kazakh customers can be explained by
our one-stop-shop approach to retail banking. We offer a full range of remote banking services within
an integrated financial ecosystem, complemented by online insurance, brokerage services, the most
popular government services and a variety of unique products designed for active lifestyle customers.
These include the Kino.kz service for entertainment tickets, which has a market share of 37%; and the
Halyk Travel service for air, rail and intercity bus tickets services, whose sales increased by 20% year-
on-year in 2023. In addition, on our Halyk Marketplaceplatform, the volume of purchases climbed by
2.7 times.
Another unique innovation that Halyk Bank implemented through the Halyk Super-App is the kundelik.
kz that student receives bonuses for excellent marks, participants: students of grades 5-11. For each
excellent mark, a student can receive 100 Halyk bonus points on a Halyk Easy bank card. In addition,
more than 50 different online government services are available to Kazakh customers through the
Halyk Super-App, more than any other commercial bank in the country. Overall, our clients have used
government services through the Halyk Super-App more than 13 million times.
Given the favourable prospects for greater cooperation and closer trade relations with Uzbekistan,
Halyk Group considers Kazakhstan’s neighbour a priority market in terms of its strategic development
plans. Since establishing Tenge Bank there in 2019, it has invested more than US$100 million in its
subsidiary’s charter capital. As of the end of 2023, the portfolio of loans provided from Halyk Bank’s
balance sheet for major projects in Uzbekistan amounted to around US$690 million. Over the Group’s
time in the market, Tenge Bank’s assets have increased to US$556 million. In 2023, assets rose by
US$161.3 million, of which loans accounted for 83.9%. Such impressive results are due to an effective
business model, which focuses on automating business processes, harnessing modern digital
solutions and developing online service channels, with an emphasis on mobile banking and a full-
cycle e-commerce platform, Tenge Market.
Another key country in terms of Halyk Group’s geographic expansion is Georgia, where the subsidiary
Halyk Bank Georgia has already been present for over 15 years. Given the rising trade volumes, active
expansion of transit corridors, construction of logistics hubs and growing tourism between
Kazakhstan and Georgia, the Group sees room to develop its business there further. In August 2023
alone, it invested US$11 million in Halyk Bank Georgia. Underpinned by the Group’s commitment to the
highest international standards, extensive experience, proven expertise and high ratings, this will help
to drive business, adopt cutting-edge IT solutions and meet the growing needs of customers in the
country’s highly competitive banking market. In 2023, Halyk Bank Georgia’s total assets increased to
over US$336 million, equity reached US$88 million and net income soared by 40% year-on-year.
4
Chairman of the
Board’s Statement
15
As part of the work to analyse the profitability of investments in neighbouring countries, following the
divestment of the subsidiaries in Russia and Tajikistan, in 2023, Halyk Group decided to sell 100% of
Halyk Bank Kyrgyzstan.
Halyk Group continues to play an active role in Kazakh society, helping the state and citizens to solve
everyday issues. For example, in 2023, to support families of employees of a forestry enterprise who
died while fighting a fire in the Abay region, we transferred KZT3 million to each and forgave any loans
with Halyk Bank. In addition, we were closely involved with the national project Karyzsyz Kogam (Debt
Free Society), which the Amanat political party proposed as a way of increasing financial literacy
among the population. As the leading provider of commercial loans in the national economy, Halyk
Bank sees a duty to create a rational consumer culture among local borrowers and encourage a
responsible approach to taking and repaying loans. As financial literacy is particularly low in rural
areas, Halyk Bank decided not only to sponsor this much-needed project, but also to send employees
to educate entrepreneurs and residents in remote areas about money matters. Individual participants
learned how to better manage their personal finances, optimise their income and expenses and
protect against fraudsters, while new entrepreneurs learned about how to devise a company budget,
prepare tax returns and harness the benefits of state subsidised lending programmes.
Other achievements by Halyk Group in 2023 include high recognition of Halyk Bank’s top
management from reputable international experts. Notably, Umut Shayakhmetova, Chairperson of the
Management Board, won awards from two independent organisations. International Banker, an
established industry publication, named her “Banking CEO of the Year in Eastern Europe in 2023”,
noting her contribution to developing the business in challenging macroeconomic conditions and
maintaining a balance among pursuing rapid growth, ensuring risk management and keeping the
quality of the loan portfolio high. In addition, the Yuksalish national movement and the Institute for
Social and Economic Initiatives in Uzbekistan named her as one of the top 40 women leaders in
Central Asia, highlighting her contributions to developing the region’s financial community, as well as
business, education, sport and society.
Despite the challenges of 2023, the Halyk Group has once again demonstrated that even in complex
economic and geopolitical conditions, a properly structured organisation with a well-established
corporate governance system and professional management can continue to deliver tangible results
through efficient teamwork. We are optimistic about the future and confident that the Halyk Group
team is capable of achieving the ambitious goals set out in our current strategy.
On behalf of the Board of Directors, I would like to express my gratitude and appreciation to Halyk
Group’s shareholders, customers, partners and all our colleagues for their productive collaboration,
understanding and support of our strategic vision.
Alexander Pavlov
Chairman of the Board of Directors
4
Chairman of the
Board’s Statement
As part of the work to analyse the profitability of investments in neighbouring countries, following the
divestment of the subsidiaries in Russia and Tajikistan, in 2023, Halyk Group decided to sell 100% of
Halyk Bank Kyrgyzstan.
Halyk Group continues to play an active role in Kazakh society, helping the state and citizens to solve
everyday issues. For example, in 2023, to support families of employees of a forestry enterprise who
died while fighting a fire in the Abay region, we transferred KZT3 million to each and forgave any loans
with Halyk Bank. In addition, we were closely involved with the national project Karyzsyz Kogam (Debt
Free Society), which the Amanat political party proposed as a way of increasing financial literacy
among the population. As the leading provider of commercial loans in the national economy, Halyk
Bank sees a duty to create a rational consumer culture among local borrowers and encourage a
responsible approach to taking and repaying loans. As financial literacy is particularly low in rural
areas, Halyk Bank decided not only to sponsor this much-needed project, but also to send employees
to educate entrepreneurs and residents in remote areas about money matters. Individual participants
learned how to better manage their personal finances, optimise their income and expenses and
protect against fraudsters, while new entrepreneurs learned about how to devise a company budget,
prepare tax returns and harness the benefits of state subsidised lending programmes.
Other achievements by Halyk Group in 2023 include high recognition of Halyk Bank’s top
management from reputable international experts. Notably, Umut Shayakhmetova, Chairperson of the
Management Board, won awards from two independent organisations. International Banker, an
established industry publication, named her “Banking CEO of the Year in Eastern Europe in 2023”,
noting her contribution to developing the business in challenging macroeconomic conditions and
maintaining a balance among pursuing rapid growth, ensuring risk management and keeping the
quality of the loan portfolio high. In addition, the Yuksalish national movement and the Institute for
Social and Economic Initiatives in Uzbekistan named her as one of the top 40 women leaders in
Central Asia, highlighting her contributions to developing the region’s financial community, as well as
business, education, sport and society.
Despite the challenges of 2023, the Halyk Group has once again demonstrated that even in complex
economic and geopolitical conditions, a properly structured organisation with a well-established
corporate governance system and professional management can continue to deliver tangible results
through efficient teamwork. We are optimistic about the future and confident that the Halyk Group
team is capable of achieving the ambitious goals set out in our current strategy.
On behalf of the Board of Directors, I would like to express my gratitude and appreciation to Halyk
Group’s shareholders, customers, partners and all our colleagues for their productive collaboration,
understanding and support of our strategic vision.
Alexander Pavlov
Chairman of the Board of Directors
4
Chairman of the
Board’s Statement
5
Chairperson of the
Management Board’s Review
Chairperson of the
Management Board’s Review
17
Dear clients, partners and shareholders,
The core focus of 2023 for most public institutions and private organisations in Kazakhstan was to
collectively overcome the challenges associated with rising global prices, the escalating military
conflict between Russia and Ukraine, tightening international sanctions, heightened geopolitical
tensions, global supply chain disruptions and a worldwide slowdown in economic growth.
In the year, the government and National Bank implemented numerous effective countermeasures
that helped to mitigate the negative impact of these unfavourable factors on Kazakhstan’s economy.
These included pursuing a tight monetary policy, boosting fixed capital investments to a record KZT18
trillion, increasing domestic production, providing affordable financing for manufacturing projects,
enacting anti-monopoly and foreign trade regulations, controlling pricing, and optimising logistics
and retail trade.
These comprehensive efforts helped to reduce annual inflation in Kazakhstan to 9.8% and expand
GDP by 5.1% in 2023. Amid the ongoing global economic slowdown, this encouraging outcome gives
cause for cautious optimism. This is based, in particular, on the gradual easing of monetary conditions,
reflecting the beginning of a slowdown in inflation, as well as a general increase in investment activity
in the economy, greater business activity in almost all sectors and an acceleration in business lending.
By the end of 2024, we expect inflation to be around 8.5%, the base rate to be reduced to 12% and
Kazakhstan’s GDP growth to be 4-5%, based on various estimates.
18
Chairperson of the
Management
Board’s Review
CHAIRPERSON OF THE MANAGEMENT BOARD’S REVIEW
Dear clients, partners and shareholders,
The core focus of 2023 for most public institutions and private organisations in Kazakhstan was to
collectively overcome the challenges associated with rising global prices, the escalating military
conflict between Russia and Ukraine, tightening international sanctions, heightened geopolitical
tensions, global supply chain disruptions and a worldwide slowdown in economic growth.
In the year, the government and National Bank implemented numerous effective countermeasures
that helped to mitigate the negative impact of these unfavourable factors on Kazakhstan’s economy.
These included pursuing a tight monetary policy, boosting fixed capital investments to a record KZT18
trillion, increasing domestic production, providing affordable financing for manufacturing projects,
enacting anti-monopoly and foreign trade regulations, controlling pricing, and optimising logistics
and retail trade.
These comprehensive efforts helped to reduce annual inflation in Kazakhstan to 9.8% and expand
GDP by 5.1% in 2023. Amid the ongoing global economic slowdown, this encouraging outcome gives
cause for cautious optimism. This is based, in particular, on the gradual easing of monetary conditions,
reflecting the beginning of a slowdown in inflation, as well as a general increase in investment activity
in the economy, greater business activity in almost all sectors and an acceleration in business lending.
By the end of 2024, we expect inflation to be around 8.5%, the base rate to be reduced to 12% and
Kazakhstan’s GDP growth to be 4-5%, based on various estimates.
18
Chairperson of the
Management
Board’s Review
CHAIRPERSON OF THE MANAGEMENT BOARD’S REVIEW
18
In 2023, Kazakhstan’s banking sector again demonstrated its resilience and ability to quickly adapt to
changes in the operating environment. These included strong inflationary pressures and a high cost
of liquidity, increased regulatory oversight, a greater tax burden and tougher lending requirements, a
significant escalation of geopolitical risks and multiple increase in compliance workload. At the year-
end, the banking sector’s aggregate net income was KZT2.2 trillion, up 50% compared with 2022.
The increase in banks’ income, coupled with a fivefold slowdown in the growth of loan portfolio
provisions, helped to increase the sector’s capitalisation by 31.3% to KZT6.9 trillion.
During the year, Halyk Bank reaffirmed its ability to achieve its goals in a rapidly changing
macroeconomic environment, respond to new and more complex challenges, effectively manage
risks and actively develop its business across all market segments. Thanks to the growth of customer
funds and debt securities issued, the Bank’s assets increased by 7.6% in 2023 to KZT15.5 trillion as of
1 January 2024. Around 63% of the bank’s assets are loans to customers, which rose by 18% (gross)
in the reporting period, driven by an increase of 13.4% in the corporate segment, 25.1% in the SME
portfolio and 22.7% in retail. Meanwhile, the amounts due to customers climbed by 4%. At the year-
end, the share of tenge-denominated corporate deposits was 72.9% (up 12.3 percentage points) and
the share of retail tenge deposits was 63.4% (up 10.8 percentage points).
Amid such strong growth in lending and transactional banking, the Bank delivered impressive financial
results, including net income of KZT693.4 billion, up 21.8% year-on-year. This increase, in turn, drove
the Bank’s equity capital up 23.1% to KZT2.477 trillion, enabling the Bank to absorb potential external
shocks and develop its business confidently in the current volatile environment.
In addition to objective financial metrics, Halyk Bank’s high stability and growth prospects are evident
in assessments from the international rating agencies Standard & Poor’s, Fitch Ratings and Moody’s
Investors Service. They affirmed the Bank’s ratings at their current high levels in 2023, noting among
the Bank’s strengths its sufficient headroom , strong customer base and dominant position in the
banking market, as well as its long history of profitability, solid capitalisation and ample liquidity buffer.
Moody’s changed Halyk Bank’s outlook from ‘stable’ to ‘positive’, reflecting expectations that the
improvement seen in the operating environment will allow the Bank to grow without taking increased
risks, reduce the volatility of its funding base and improve key credit metrics. In addition, in March
2024, after the reporting period, Standard & Poor’s revised its outlook on Halyk Bank from ‘stable’ to
‘positive’, affirmed the bank’s ‘BB+/B’ international scale ratings and improved its national scale
ratings from ‘kzAA’ to ‘kzAA+’.
Over the past few years, a core driver underpinning the success of Halyk Bank’s business has been its
holistic approach to customer service, as well as its transition from a traditional banking model to an
integrated ecosystem of fintech services. Seeking to integrate its extensive customer base of over 10
million retail clients into the digital ecosystem, the Bank is investing significant resources to develop
state-of-the-art software solutions and is constantly expanding the range of products, services and
facilities available through its mobile apps for retail and corporate customers.
By integrating the Bank’s IT systems with the databases of government bodies, Halyk’s mobile app
now serves as a one-stop shop. Customers can access more than 6,000 commission-free payments,
52 different government services and a wide range of online offerings, including lending, deposits,
money transfers, insurance, securities investments and instalment purchases.
Through its holistic service approach and access to government databases, the Bank can offer
customers personalised service packages linked to important life events, such as marriage and
childbirth, thereby increasing the engagement, satisfaction and loyalty of the customer base. This is
driving the popularity of the Halyk Super App. In 2023, the number of unique monthly users of the
service soared to 7.9 million, up 46.2% year-on-year, while the number of such daily users reached 2.3
million, up 34.9%.
The Bank’s emphasis on introducing modern digital technologies and offering products that
anticipate market needs is complemented by its traditional charitable activities well. During its 100th
year of operations, Halyk Bank organised its traditional 100 Good Deeds charity marathon. As part of
this initiative, it implemented major social projects in the fields of education, culture, healthcare and
environmental protection. Together with Halyk Fund, a subsidiary that focuses on charity, it allocated
KZT4.0 billion towards sponsorship and charitable assistance during 2023.
The Bank also supported mass sport activities, including its traditional free ice-skating events for all
comers in all regions of the country. As part of the People’s League social project, it financed training
sessions, the purchase of sportswear and sports equipment, and the organisation of the Cup of Hope
championship for children from orphanages and sponsored organisations. In addition, the Bank acted
as a general partner of the Astana Half Marathon 2023, a massive race in the capital. More than 2,000
people, including 100 employees, ran in the marathon.
18
Chairperson of the
Management
Board’s Review
In 2023, Kazakhstan’s banking sector again demonstrated its resilience and ability to quickly adapt to
changes in the operating environment. These included strong inflationary pressures and a high cost
of liquidity, increased regulatory oversight, a greater tax burden and tougher lending requirements, a
significant escalation of geopolitical risks and multiple increase in compliance workload. At the year-
end, the banking sector’s aggregate net income was KZT2.2 trillion, up 50% compared with 2022.
The increase in banks’ income, coupled with a fivefold slowdown in the growth of loan portfolio
provisions, helped to increase the sector’s capitalisation by 31.3% to KZT6.9 trillion.
During the year, Halyk Bank reaffirmed its ability to achieve its goals in a rapidly changing
macroeconomic environment, respond to new and more complex challenges, effectively manage
risks and actively develop its business across all market segments. Thanks to the growth of customer
funds and debt securities issued, the Bank’s assets increased by 7.6% in 2023 to KZT15.5 trillion as of
1 January 2024. Around 63% of the bank’s assets are loans to customers, which rose by 18% (gross)
in the reporting period, driven by an increase of 13.4% in the corporate segment, 25.1% in the SME
portfolio and 22.7% in retail. Meanwhile, the amounts due to customers climbed by 4%. At the year-
end, the share of tenge-denominated corporate deposits was 72.9% (up 12.3 percentage points) and
the share of retail tenge deposits was 63.4% (up 10.8 percentage points).
Amid such strong growth in lending and transactional banking, the Bank delivered impressive financial
results, including net income of KZT693.4 billion, up 21.8% year-on-year. This increase, in turn, drove
the Bank’s equity capital up 23.1% to KZT2.477 trillion, enabling the Bank to absorb potential external
shocks and develop its business confidently in the current volatile environment.
In addition to objective financial metrics, Halyk Bank’s high stability and growth prospects are evident
in assessments from the international rating agencies Standard & Poor’s, Fitch Ratings and Moody’s
Investors Service. They affirmed the Bank’s ratings at their current high levels in 2023, noting among
the Bank’s strengths its sufficient headroom , strong customer base and dominant position in the
banking market, as well as its long history of profitability, solid capitalisation and ample liquidity buffer.
Moody’s changed Halyk Bank’s outlook from ‘stable’ to ‘positive’, reflecting expectations that the
improvement seen in the operating environment will allow the Bank to grow without taking increased
risks, reduce the volatility of its funding base and improve key credit metrics. In addition, in March
2024, after the reporting period, Standard & Poor’s revised its outlook on Halyk Bank from ‘stable’ to
‘positive’, affirmed the bank’s ‘BB+/B’ international scale ratings and improved its national scale
ratings from ‘kzAA’ to ‘kzAA+’.
Over the past few years, a core driver underpinning the success of Halyk Bank’s business has been its
holistic approach to customer service, as well as its transition from a traditional banking model to an
integrated ecosystem of fintech services. Seeking to integrate its extensive customer base of over 10
million retail clients into the digital ecosystem, the Bank is investing significant resources to develop
state-of-the-art software solutions and is constantly expanding the range of products, services and
facilities available through its mobile apps for retail and corporate customers.
By integrating the Bank’s IT systems with the databases of government bodies, Halyk’s mobile app
now serves as a one-stop shop. Customers can access more than 6,000 commission-free payments,
52 different government services and a wide range of online offerings, including lending, deposits,
money transfers, insurance, securities investments and instalment purchases.
Through its holistic service approach and access to government databases, the Bank can offer
customers personalised service packages linked to important life events, such as marriage and
childbirth, thereby increasing the engagement, satisfaction and loyalty of the customer base. This is
driving the popularity of the Halyk Super App. In 2023, the number of unique monthly users of the
service soared to 7.9 million, up 46.2% year-on-year, while the number of such daily users reached 2.3
million, up 34.9%.
The Bank’s emphasis on introducing modern digital technologies and offering products that
anticipate market needs is complemented by its traditional charitable activities well. During its 100th
year of operations, Halyk Bank organised its traditional 100 Good Deeds charity marathon. As part of
this initiative, it implemented major social projects in the fields of education, culture, healthcare and
environmental protection. Together with Halyk Fund, a subsidiary that focuses on charity, it allocated
KZT4.0 billion towards sponsorship and charitable assistance during 2023.
The Bank also supported mass sport activities, including its traditional free ice-skating events for all
comers in all regions of the country. As part of the People’s League social project, it financed training
sessions, the purchase of sportswear and sports equipment, and the organisation of the Cup of Hope
championship for children from orphanages and sponsored organisations. In addition, the Bank acted
as a general partner of the Astana Half Marathon 2023, a massive race in the capital. More than 2,000
people, including 100 employees, ran in the marathon.
18
Chairperson of the
Management
Board’s Review
19
Halyk Bank also supported several cultural projects, including the celebration of Nauryz, by setting up
themed yurts in all regions of Kazakhstan. It also sponsored the revival of the iconic Asia Dauysy
(Voice of Asia) music festival, as well as the organisation of the open-air “Summer Music in Your
Favourite City” classical music festivals in Almaty, Aktau, Semey and Aktobe.
Among the important social initiatives implemented with the direct assistance of the Bank are the
unique Karyzsyz Kogam (Debt Free Society) project, implemented together with the Amanat party
with the aim of teaching financial literacy to 65,000 village residents; the connection to gas networks
of private homes of socially vulnerable residents in Almaty and Astana; a charity event for World War
II veterans; and the donation of vehicles adapted for people with special needs to regional societies
that support people with disabilities in 13 Kazakh cities. As part of its environmental protection efforts,
the Bank joined the UN in support of ecological projects by local artists and designers and helped to
organise the “Reduce, Reuse, Recycle” event, intended to raise awareness of environmental issues
among communities in Kazakhstan.
For the country’s youngest citizens, the Bank organised a children’s drawing competition to mark
Child Protection Day. It also provided assistance to first graders from low-income and large families as
part of the Road to School project and supported the construction of children’s sport and playgrounds
in seven regions of Kazakhstan.
For us, the Bank’s 100th anniversary is an occasion to look back at our achievements and review
important lessons learned. We look to the future with cautious optimism, making plans based on a
thorough analysis of the macroeconomic and geopolitical situation, considering all possible risks and
exploring the most likely scenarios. This approach has laid the foundation for the Bank’s new medium-
term strategy covering 2025-27. It is already clear that the Bank and Halyk Group will continue to
deepen its digitalisation and customer focus while introducing new products, not only in banking but
also in non-banking areas, to expand our multifunctional ecosystem. Our most important goal remains
unchanged: to maintain the financial stability, leading positions and strong performance of both the
Bank and Halyk Group as a whole.
Umut Shayakhmetova
Chairperson of the Management Board
18
Chairperson of the
Management
Board’s Review
Halyk Bank also supported several cultural projects, including the celebration of Nauryz, by setting up
themed yurts in all regions of Kazakhstan. It also sponsored the revival of the iconic Asia Dauysy
(Voice of Asia) music festival, as well as the organisation of the open-air “Summer Music in Your
Favourite City” classical music festivals in Almaty, Aktau, Semey and Aktobe.
Among the important social initiatives implemented with the direct assistance of the Bank are the
unique Karyzsyz Kogam (Debt Free Society) project, implemented together with the Amanat party
with the aim of teaching financial literacy to 65,000 village residents; the connection to gas networks
of private homes of socially vulnerable residents in Almaty and Astana; a charity event for World War
II veterans; and the donation of vehicles adapted for people with special needs to regional societies
that support people with disabilities in 13 Kazakh cities. As part of its environmental protection efforts,
the Bank joined the UN in support of ecological projects by local artists and designers and helped to
organise the “Reduce, Reuse, Recycle” event, intended to raise awareness of environmental issues
among communities in Kazakhstan.
For the country’s youngest citizens, the Bank organised a children’s drawing competition to mark
Child Protection Day. It also provided assistance to first graders from low-income and large families as
part of the Road to School project and supported the construction of children’s sport and playgrounds
in seven regions of Kazakhstan.
For us, the Bank’s 100th anniversary is an occasion to look back at our achievements and review
important lessons learned. We look to the future with cautious optimism, making plans based on a
thorough analysis of the macroeconomic and geopolitical situation, considering all possible risks and
exploring the most likely scenarios. This approach has laid the foundation for the Bank’s new medium-
term strategy covering 2025-27. It is already clear that the Bank and Halyk Group will continue to
deepen its digitalisation and customer focus while introducing new products, not only in banking but
also in non-banking areas, to expand our multifunctional ecosystem. Our most important goal remains
unchanged: to maintain the financial stability, leading positions and strong performance of both the
Bank and Halyk Group as a whole.
Umut Shayakhmetova
Chairperson of the Management Board
18
Chairperson of the
Management
Board’s Review
6
Board of Directors
Board of Directors
21
Mr Pavlov was elected Chairman of the Board of Halyk Bank in March 2004 and re-elected to the
same post in May 2023. Mr Pavlov has held numerous high-level posts in Kazakhstan’s government
over the years, including first deputy prime minister, deputy prime minister – minister of finance, and
head of the Main Tax Inspectorate – first deputy minister of finance. He has also worked in
managerial positions in large Kazakh machinery and natural resource companies and represented
Kazakhstan at numerous international financial organisations.
Mr Pavlov is a graduate of the Belarus State Institute of People’s Economy, where he specialised in
economics (1970-74), and of the Academy for Social Sciences of the Central Committee of the
Communist Party of the USSR, where he specialised in political science (1991).
Mr Dunaev was elected to the Board of Halyk Bank in September 2013 and re-elected to the same
post in May 2023.
Mr Dunaev’s experience in Kazakhstan’s government includes such posts as first deputy minister of
finance, minister of finance and chairman of the Agency for Regulation and Supervision of the
Financial Market and Financial Organisations. He has also held managerial positions in the quasi-
government sector. He is currently a member of the boards of directors of several Halyk Bank
subsidiaries.
Mr Dunaev is a graduate of Kazakh State University named after S. Kirov with a degree in political
economy and has a PhD from Moscow State University named after M. Lomonosov.
6
Board of Directors
Alexander Pavlov
(b. 1953)
Chairman, Independent Director
Arman Dunaev
(b. 1966)
Independent Director
Mr Pavlov was elected Chairman of the Board of Halyk Bank in March 2004 and re-elected to the
same post in May 2023. Mr Pavlov has held numerous high-level posts in Kazakhstan’s government
over the years, including first deputy prime minister, deputy prime minister – minister of finance, and
head of the Main Tax Inspectorate – first deputy minister of finance. He has also worked in
managerial positions in large Kazakh machinery and natural resource companies and represented
Kazakhstan at numerous international financial organisations.
Mr Pavlov is a graduate of the Belarus State Institute of People’s Economy, where he specialised in
economics (1970-74), and of the Academy for Social Sciences of the Central Committee of the
Communist Party of the USSR, where he specialised in political science (1991).
Mr Dunaev was elected to the Board of Halyk Bank in September 2013 and re-elected to the same
post in May 2023.
Mr Dunaev’s experience in Kazakhstan’s government includes such posts as first deputy minister of
finance, minister of finance and chairman of the Agency for Regulation and Supervision of the
Financial Market and Financial Organisations. He has also held managerial positions in the quasi-
government sector. He is currently a member of the boards of directors of several Halyk Bank
subsidiaries.
Mr Dunaev is a graduate of Kazakh State University named after S. Kirov with a degree in political
economy and has a PhD from Moscow State University named after M. Lomonosov.
6
Board of Directors
Alexander Pavlov
(b. 1953)
Chairman, Independent Director
Arman Dunaev
(b. 1966)
Independent Director
22
Mr Kuijlaars was elected to the Board of Halyk Bank in April 2009 and re-elected to the same post in
May 2023. From 1990 to 2007, Mr Kuijlaars served at ABN AMRO Bank and later at RBS as head of
corporate and investment banking in Belgium, regional manager in Brazil and country manager in
Russia and Argentina. He was a member of the supervisory board in Russia, Kazakhstan and
Uzbekistan. After his appointment as corporate executive vice president in 2001, in addition to
supervision of global energy issues, he was a member of the executive committees of EMEA
countries, as well as a member of the corporate and investment banking committee.
Mr Kuijlaars is an adviser to several international organisations and for a long time was a member of
the Foreign Investor Council of the President of the Republic of Kazakhstan. He was chairman of the
board of directors and an independent director of National Company KazMunayGas, as well as an
independent non-executive director and independent member of the supervisory board of
Amsterdam Trade Bank N.V.
He is the owner and managing director of Eureka (Energy) Ventures B.V. Mr Kuijlaars received a
master’s in law from Erasmus University (Netherlands). He studied at the Dutch Institute of Banks and
Insurance Companies and in a number of postgraduate programmes in such international institutions
as Fontainebleau (France), Cambridge (UK) and Harvard Business School (US).
Mr Nurabayev was elected to the Board of Halyk Bank in December 2023 as a representative of
Holding Group ALMEX. He has served on the board of directors of Halyk Global Markets since
September 2023.
At different stages of his career, Mr Nurabayev has held such key government positions as deputy
chairman of the Tax Committee for the Jetysu, Almaly and Medeu Districts of Almaty; head of the
Taxpayer Relations Department of the Tax Committee for Almaty; head of the Department for the
Taxation of Income of Legal Entities of the Tax Administration for Almaty; and tax inspector at the
Department of Inspection and Control for Compliance with Tax Legislation of the Main Tax
Inspectorate of the Ministry of Finance of Kazakhstan. He has also held senior positions at financial
and commercial organisations. From February 2014 to February 2024 – Deputy Chairman of the
Management Board of ALMEX Holding Group JSC.
From February 2024 to the present – Chairman of the Management Board of ALMEX Holding Group
JSC.
Mr Nurabayev graduated from Kazakh State Academy of Management with a degree in economics
and from Abai Kazakh National Pedagogical University with a degree in law.
6
Board of Directors
Franciscus Cornelis Wilhelmus
(Frank) Kuijlaars
(b. 1958)
Independent Director
Zhomart Nurabayev
(b. 1971)
Representative of Holding Group
ALMEX
Mr Kuijlaars was elected to the Board of Halyk Bank in April 2009 and re-elected to the same post in
May 2023. From 1990 to 2007, Mr Kuijlaars served at ABN AMRO Bank and later at RBS as head of
corporate and investment banking in Belgium, regional manager in Brazil and country manager in
Russia and Argentina. He was a member of the supervisory board in Russia, Kazakhstan and
Uzbekistan. After his appointment as corporate executive vice president in 2001, in addition to
supervision of global energy issues, he was a member of the executive committees of EMEA
countries, as well as a member of the corporate and investment banking committee.
Mr Kuijlaars is an adviser to several international organisations and for a long time was a member of
the Foreign Investor Council of the President of the Republic of Kazakhstan. He was chairman of the
board of directors and an independent director of National Company KazMunayGas, as well as an
independent non-executive director and independent member of the supervisory board of
Amsterdam Trade Bank N.V.
He is the owner and managing director of Eureka (Energy) Ventures B.V. Mr Kuijlaars received a
master’s in law from Erasmus University (Netherlands). He studied at the Dutch Institute of Banks and
Insurance Companies and in a number of postgraduate programmes in such international institutions
as Fontainebleau (France), Cambridge (UK) and Harvard Business School (US).
Mr Nurabayev was elected to the Board of Halyk Bank in December 2023 as a representative of
Holding Group ALMEX. He has served on the board of directors of Halyk Global Markets since
September 2023.
At different stages of his career, Mr Nurabayev has held such key government positions as deputy
chairman of the Tax Committee for the Jetysu, Almaly and Medeu Districts of Almaty; head of the
Taxpayer Relations Department of the Tax Committee for Almaty; head of the Department for the
Taxation of Income of Legal Entities of the Tax Administration for Almaty; and tax inspector at the
Department of Inspection and Control for Compliance with Tax Legislation of the Main Tax
Inspectorate of the Ministry of Finance of Kazakhstan. He has also held senior positions at financial
and commercial organisations. From February 2014 to February 2024 – Deputy Chairman of the
Management Board of ALMEX Holding Group JSC.
From February 2024 to the present – Chairman of the Management Board of ALMEX Holding Group
JSC.
Mr Nurabayev graduated from Kazakh State Academy of Management with a degree in economics
and from Abai Kazakh National Pedagogical University with a degree in law.
6
Board of Directors
Franciscus Cornelis Wilhelmus
(Frank) Kuijlaars
(b. 1958)
Independent Director
Zhomart Nurabayev
(b. 1971)
Representative of Holding Group
ALMEX
23
Mr Kulekeyev was elected to the Board of Halyk Bank in December 2023.
Mr Kulekeyev has held such key government positions as minister of education and science of
Kazakhstan, chairman of the Accounts Committee for Monitoring the Execution of the National
Budget of Kazakhstan, minister of economy and trade of Kazakhstan, minister of economy of
Kazakhstan and chairman of the Statistics Agency of Kazakhstan. He has worked in senior positions in
the quasi-public sector (National Company Kazakhstan Temir Zholy and National Company
KazMunayGas).
In addition, Mr Kulekeyev has served as a member of the board of directors and independent director
at KazAzot since June 2023; chairman of the board of directors of Gumilyov Eurasian National
University since October 2022; a member of the board of directors and independent director at the
Social Health Insurance Fund since January 2020; and scientific director at Applied Economics
Research Centre since October 2010.
Mr Kulekeyev worked at the Turar Ryskulov Kazakh Economic University (Almaty Institute of National
Economy) as a teacher, senior lecturer, associate professor and head of the Department of
Microeconomics. He also served as governor and deputy governor of the Asian Development Bank.
Mr Kulekeyev graduated from Kazakh State University named after S. Kirov with a degree in
mathematics, defended his dissertation at the Almaty Institute of National Economy and received a
PhD in economic sciences. He is an associate professor in applied mathematics from the USSR State
Committee for People’s Education. The Higher Attestation Committee of the Ministry of Education
and Science of Kazakhstan awarded Mr Kulekeyev the title of professor of economics.
Mr Tischendorf was elected to the Board of Halyk Bank in May 2023.
From May 2012 to October 2016, he served as chief information officer, managing director and a
member of the board at Eurasian Bank in Almaty. From October 2017 to August 2019, he was chief
technology officer and a member of the executive committee – technical director at SMARTNet LLC
(SmartPay) in Ho Chi Minh City (Vietnam). From October 2018 to August 2019, he worked as chief
information officer, head of the IT department and a member of the executive board (owner of
SMARTnet/SmartPay) at FEC VPBank Finance Company in Ho Chi Minh City (Vietnam). From
November 2019 to July 2021, he served as chief technology officer and a member of the executive
board at 4Finance Group in Riga (Latvia).
Since October 2016, Mr Tischendorf has been a senior partner and technical director (shareholder) at
MARFOR International Advisory in New York and Jacksonville (US). Since November 2019, he has
been the chief technology officer and a member of the executive board at MTN Group in
Johannesburg (South Africa).
Mr Tischendorf holds a master’s degree in economics with a specialisation in operations research and
information/data science from the University of Graz (1998). In 1997, he graduated from the John E.
Anderson Graduate School of Management at the University of California, Los Angeles, with a degree
in economics, international finance, money markets and macroeconomics. In 2021, he completed the
course “Fintech Revolution: Transformative Financial Services and Strategies” at the Wharton School
of the University of Pennsylvania.
6
Board of Directors
Zhaksybek Kulekeyev
(b. 1957)
Independent Director
Hermann Tischendorf
(b. 1971)
Independent Director
Mr Kulekeyev was elected to the Board of Halyk Bank in December 2023.
Mr Kulekeyev has held such key government positions as minister of education and science of
Kazakhstan, chairman of the Accounts Committee for Monitoring the Execution of the National
Budget of Kazakhstan, minister of economy and trade of Kazakhstan, minister of economy of
Kazakhstan and chairman of the Statistics Agency of Kazakhstan. He has worked in senior positions in
the quasi-public sector (National Company Kazakhstan Temir Zholy and National Company
KazMunayGas).
In addition, Mr Kulekeyev has served as a member of the board of directors and independent director
at KazAzot since June 2023; chairman of the board of directors of Gumilyov Eurasian National
University since October 2022; a member of the board of directors and independent director at the
Social Health Insurance Fund since January 2020; and scientific director at Applied Economics
Research Centre since October 2010.
Mr Kulekeyev worked at the Turar Ryskulov Kazakh Economic University (Almaty Institute of National
Economy) as a teacher, senior lecturer, associate professor and head of the Department of
Microeconomics. He also served as governor and deputy governor of the Asian Development Bank.
Mr Kulekeyev graduated from Kazakh State University named after S. Kirov with a degree in
mathematics, defended his dissertation at the Almaty Institute of National Economy and received a
PhD in economic sciences. He is an associate professor in applied mathematics from the USSR State
Committee for People’s Education. The Higher Attestation Committee of the Ministry of Education
and Science of Kazakhstan awarded Mr Kulekeyev the title of professor of economics.
Mr Tischendorf was elected to the Board of Halyk Bank in May 2023.
From May 2012 to October 2016, he served as chief information officer, managing director and a
member of the board at Eurasian Bank in Almaty. From October 2017 to August 2019, he was chief
technology officer and a member of the executive committee – technical director at SMARTNet LLC
(SmartPay) in Ho Chi Minh City (Vietnam). From October 2018 to August 2019, he worked as chief
information officer, head of the IT department and a member of the executive board (owner of
SMARTnet/SmartPay) at FEC VPBank Finance Company in Ho Chi Minh City (Vietnam). From
November 2019 to July 2021, he served as chief technology officer and a member of the executive
board at 4Finance Group in Riga (Latvia).
Since October 2016, Mr Tischendorf has been a senior partner and technical director (shareholder) at
MARFOR International Advisory in New York and Jacksonville (US). Since November 2019, he has
been the chief technology officer and a member of the executive board at MTN Group in
Johannesburg (South Africa).
Mr Tischendorf holds a master’s degree in economics with a specialisation in operations research and
information/data science from the University of Graz (1998). In 1997, he graduated from the John E.
Anderson Graduate School of Management at the University of California, Los Angeles, with a degree
in economics, international finance, money markets and macroeconomics. In 2021, he completed the
course “Fintech Revolution: Transformative Financial Services and Strategies” at the Wharton School
of the University of Pennsylvania.
6
Board of Directors
Zhaksybek Kulekeyev
(b. 1957)
Independent Director
Hermann Tischendorf
(b. 1971)
Independent Director
24
Mr Romanowski was elected to the Board of Halyk Bank in May 2020 and re-elected to the same post
in May 2023.
From 1998 to 2008, Mr Romanowski worked at the consulting company McKinsey & Company
(Poland), including as a manager / senior manager until 2004 and as a partner from 2005 to 2008.
From 2008 to 2009, he served as a member of the management board at Bank Millennium (Poland),
overseeing the corporate banking division. In 2009, he became the first external investor in Selvita
and Ryvu Therapeutics (Poland), where he has served as chairman of the supervisory board since
2011. From 2011 to 2014, Mr Romanowski was a partner and leader in financial services for Central
and Eastern Europe / CIS at PwC (Poland). From 2014 to 2018, he served as a member of the
management board of PwC Central and Eastern Europe / CIS in charge of advisory services; and from
2017 to 2018, he was also a leader in the market for clients from CIS countries. Since February 2021,
he has served as chairman of the board of directors of Kevin EU, UAB (Lithuania).
In 2017, Mr Romanowski graduated from the executive education programme in data analytics at
Harvard Business School (US). In 2016, he completed the executive education programme at
Singularity University (US). In 1995-97, he studied at Cambridge University (UK) and received a PhD
in molecular biology from the Wellcome / CRC Institute. In 1987-94, he studied at Gdansk Medical
Academy (Poland), where he received a PhD in cancer genetics in 1995.
Ms Shayakhmetova was appointed as Chairperson of the Management Board of Halyk Bank on
January 2009. She was elected as a member of the Board of Directors in April 2009 and re-elected to
the same post in May 2023.
Over the years, Ms Shayakhmetova served as chairperson of the management board of ABN AMRO
Asset Management and deputy chairperson of the management board of ABN AMRO Bank
Kazakhstan. She became deputy chairperson of the management board of Halyk Bank in November
2004. From May 2011 to February 2021, she was president of the Gymnastics Federation of
Kazakhstan. In June 2015, she was elected chairperson of the Regional Council of Businesswomen at
the Chamber of Entrepreneurs in Almaty. In June 2016, she was appointed as chairperson of the
Financial Sector Committee of the Presidium of the Atameken National Chamber of Entrepreneurs
and chairperson of the Regional Council Eastern Europe, Central Asia, Russia and Caucasus at
UnionPay International. Since June 2018, she has been a member of the board of directors and
representative of Halyk Bank at Altyn Bank.
Ms Shayakhmetova is an economics graduate of the People’s Friendship University named after P.
Lumumba (Russia) and holds an MBA from Rutgers University (US).
6
Board of Directors
Piotr Romanowski
(b. 1969)
Independent Director
Umut Shayakhmetova
(b. 1969)
Member of the Board of Directors,
Chairperson of the Management Board
Mr Romanowski was elected to the Board of Halyk Bank in May 2020 and re-elected to the same post
in May 2023.
From 1998 to 2008, Mr Romanowski worked at the consulting company McKinsey & Company
(Poland), including as a manager / senior manager until 2004 and as a partner from 2005 to 2008.
From 2008 to 2009, he served as a member of the management board at Bank Millennium (Poland),
overseeing the corporate banking division. In 2009, he became the first external investor in Selvita
and Ryvu Therapeutics (Poland), where he has served as chairman of the supervisory board since
2011. From 2011 to 2014, Mr Romanowski was a partner and leader in financial services for Central
and Eastern Europe / CIS at PwC (Poland). From 2014 to 2018, he served as a member of the
management board of PwC Central and Eastern Europe / CIS in charge of advisory services; and from
2017 to 2018, he was also a leader in the market for clients from CIS countries. Since February 2021,
he has served as chairman of the board of directors of Kevin EU, UAB (Lithuania).
In 2017, Mr Romanowski graduated from the executive education programme in data analytics at
Harvard Business School (US). In 2016, he completed the executive education programme at
Singularity University (US). In 1995-97, he studied at Cambridge University (UK) and received a PhD
in molecular biology from the Wellcome / CRC Institute. In 1987-94, he studied at Gdansk Medical
Academy (Poland), where he received a PhD in cancer genetics in 1995.
Ms Shayakhmetova was appointed as Chairperson of the Management Board of Halyk Bank on
January 2009. She was elected as a member of the Board of Directors in April 2009 and re-elected to
the same post in May 2023.
Over the years, Ms Shayakhmetova served as chairperson of the management board of ABN AMRO
Asset Management and deputy chairperson of the management board of ABN AMRO Bank
Kazakhstan. She became deputy chairperson of the management board of Halyk Bank in November
2004. From May 2011 to February 2021, she was president of the Gymnastics Federation of
Kazakhstan. In June 2015, she was elected chairperson of the Regional Council of Businesswomen at
the Chamber of Entrepreneurs in Almaty. In June 2016, she was appointed as chairperson of the
Financial Sector Committee of the Presidium of the Atameken National Chamber of Entrepreneurs
and chairperson of the Regional Council Eastern Europe, Central Asia, Russia and Caucasus at
UnionPay International. Since June 2018, she has been a member of the board of directors and
representative of Halyk Bank at Altyn Bank.
Ms Shayakhmetova is an economics graduate of the People’s Friendship University named after P.
Lumumba (Russia) and holds an MBA from Rutgers University (US).
6
Board of Directors
Piotr Romanowski
(b. 1969)
Independent Director
Umut Shayakhmetova
(b. 1969)
Member of the Board of Directors,
Chairperson of the Management Board
7
Management Board
Management Board
26
Please refer to the “Board of Directors” section. Mr Koshenov has been deputy Chairman of the Management Board of Halyk Bank since September
2014. He has also been chairman of the board of directors of Tenge Bank since September 2018. From
November 2014 to December 2022, he was chairman of the board of directors of Moskommertsbank.
Mr Koshenov has worked in finance and banking since 2000. From 2000 to 2010, he worked first as
head of broker-dealer operations at ABN AMRO Asset Management, and then as risk manager, head
of the risk management division and deputy chairman of the management board at SB ABN AMRO
Bank Kazakhstan (later SB RBS (Kazakhstan)). He joined Halyk Bank in January 2010 as chief risk
officer and then served as compliance controller.
Mr Koshenov has a degree in physics from Al-Farabi Kazakh National University and an MBA from the
Kazakhstan Institute of Economics, Management and Strategic Research.
7
Management Board
Umut Shayakhmetova
(b. 1969)
Chairperson of the Management Board
Murat Koshenov, CFA, FRM
(b. 1973)
Deputy Chairman: International
Activities, Finance and Accounting,
Subsidiaries and Compliance
Please refer to the “Board of Directors” section. Mr Koshenov has been deputy Chairman of the Management Board of Halyk Bank since September
2014. He has also been chairman of the board of directors of Tenge Bank since September 2018. From
November 2014 to December 2022, he was chairman of the board of directors of Moskommertsbank.
Mr Koshenov has worked in finance and banking since 2000. From 2000 to 2010, he worked first as
head of broker-dealer operations at ABN AMRO Asset Management, and then as risk manager, head
of the risk management division and deputy chairman of the management board at SB ABN AMRO
Bank Kazakhstan (later SB RBS (Kazakhstan)). He joined Halyk Bank in January 2010 as chief risk
officer and then served as compliance controller.
Mr Koshenov has a degree in physics from Al-Farabi Kazakh National University and an MBA from the
Kazakhstan Institute of Economics, Management and Strategic Research.
7
Management Board
Umut Shayakhmetova
(b. 1969)
Chairperson of the Management Board
Murat Koshenov, CFA, FRM
(b. 1973)
Deputy Chairman: International
Activities, Finance and Accounting,
Subsidiaries and Compliance
27
Ms Vuros has been deputy Chairperson and a member of the Management Board since April 2022.
At Halyk Bank, Ms Vuros has held the following positions: director of the Corporate Banking
Department, head of Division in the Corporate Banking Department, chief manager of Division No. 1 in
the Corporate Banking Department, and senior manager of Division No. 1 in the Corporate Banking
Department.
Ms Vuros graduated from Abai Kazakh National Pedagogical University with a degree in international
economics and holds an MBA specialising in management from the International Academy of
Business.
Mr Sartayev has been deputy Chairman of the Management Board of Halyk Bank since July 2018, as well
as a member of the supervisory board of Tenge Bank since March 2023.
Mr Sartayev began working in the banking industry in 2004 at Kazkommertsbank, where he held the
positions of manager, head of SME banking and head of small business banking. From 2010 to 2012, he
worked at Temirbank as head of credit risk, branch director and director of problem loans. He was
appointed as a member of the management board and managing director of Kazkommertsbank in June
2016, where he oversaw corporate lending, SME banking and the branch network. In July 2017, Mr
Sartayev became deputy chairman of the management board of Kazkommertsbank. He previously worked
at Kcell, where he headed the branch in the city of Shymkent and managed the offices in Almaty and
Almaty region. He also worked at the Kazakhstan representative office of the international auditing firm
Ernst and Young.
Mr Sartayev has a law degree from Kazakh Humanitarian and Law University in Almaty. He also holds an
MBA in strategic management and entrepreneurship from Moscow International Higher Business School
and an MBA in strategic management from Kazakh Economic University named after T. Ryskulov
7
Management Board
Olga Vuros
(b. 1983)
Deputy Chairperson: Corporate
Business
Dauren Sartayev
(b. 1982)
Deputy Chairman: SME Banking,
Marketing and PR, and Acquiring
Ms Vuros has been deputy Chairperson and a member of the Management Board since April 2022.
At Halyk Bank, Ms Vuros has held the following positions: director of the Corporate Banking
Department, head of Division in the Corporate Banking Department, chief manager of Division No. 1 in
the Corporate Banking Department, and senior manager of Division No. 1 in the Corporate Banking
Department.
Ms Vuros graduated from Abai Kazakh National Pedagogical University with a degree in international
economics and holds an MBA specialising in management from the International Academy of
Business.
Mr Sartayev has been deputy Chairman of the Management Board of Halyk Bank since July 2018, as well
as a member of the supervisory board of Tenge Bank since March 2023.
Mr Sartayev began working in the banking industry in 2004 at Kazkommertsbank, where he held the
positions of manager, head of SME banking and head of small business banking. From 2010 to 2012, he
worked at Temirbank as head of credit risk, branch director and director of problem loans. He was
appointed as a member of the management board and managing director of Kazkommertsbank in June
2016, where he oversaw corporate lending, SME banking and the branch network. In July 2017, Mr
Sartayev became deputy chairman of the management board of Kazkommertsbank. He previously worked
at Kcell, where he headed the branch in the city of Shymkent and managed the offices in Almaty and
Almaty region. He also worked at the Kazakhstan representative office of the international auditing firm
Ernst and Young.
Mr Sartayev has a law degree from Kazakh Humanitarian and Law University in Almaty. He also holds an
MBA in strategic management and entrepreneurship from Moscow International Higher Business School
and an MBA in strategic management from Kazakh Economic University named after T. Ryskulov
7
Management Board
Olga Vuros
(b. 1983)
Deputy Chairperson: Corporate
Business
Dauren Sartayev
(b. 1982)
Deputy Chairman: SME Banking,
Marketing and PR, and Acquiring
28
Mr Mamutov has been deputy Chairman of the Management Board of Halyk Bank since October 2019.
In November 2021, he was appointed as a member of the supervisory board at Halyk Finservice. In
January 2023, he was elected chairman of the board of directors of Halyk Life.
Mr Mamutov has worked in banking since 2004. From 2004 to 2008, he held the following positions:
director of the Zangar branch at SB ABN AMRO Bank Kazakhstan; head of the retail banking division
of the retail banking department, and then business development manager at SB ABN AMRO Bank
Kazakhstan; and branch affairs specialist of the marketing department of NPF ABN AMRO
KaspiyMunayGaz Kazakhstan. From 2008 to 2009, he was head of the regional and sales
administration of the HNWI department at Kazinvestbank. Mr Mamutov worked at Kazkommertsbank
from January 2010 to February 2014 and again from July 2015 to May 2017 in the following roles:
managing director, executive director of the office of the management board, executive director of the
card business development department, executive director of the banking card department, adviser
to the office of the chairman of the management board, adviser to the executive directorate of the
chairman of the management board, and director of the retail banking department. From February
2014 to July 2015, he was director of the department for planning and monitoring the implementation
of retail banking strategies at SB Sberbank. From May 2017 to February 2018, Mr Mamutov was
deputy chairman of the management board at Bank Kassa Nova, as well as member of the
management board and deputy chairman of the management board at Nova Leasing. From February
2018 to October 2019, he held the position of member of the management board and deputy
chairman of the management board at Forte Bank.
Mr Mamutov has a degree in statistics from Kazakh Economic University named after T. Ryskulov.
Mr Mukushev has been deputy Chairman and a member of the Management Board since April 2022.
Mr Mukushev has worked at Halyk Bank since May 2021 and previously held the position of managing
director. On 1 April 2022, he joined the Management Board. In April 2023, he was elected chairman of the
supervisory board of Halyk Finservice. In November 2023, he was elected as a member of the board of
directors of the joint company Private Company Open Networks Ltd.
Before joining Halyk Bank, he was deputy minister of labour and social protection of the population. Prior
to that, he worked at Kazpost, where he was managing director for business transformation and member
of the management board responsible for IT, managing director for innovation and member of the
management board responsible for IT, chief IT director, and managing director and director of the IT
Department. He also previously held positions ranging from specialist to director of the Innovative
Technology Department at Kazkommertsbank.
Mr Mukushev graduated from the Süleyman Demirel University with a degree in computer hardware,
software and networks, as well as the International Academy of Business with an MBA in management.
7
Management Board
Zhumabek Mamutov
(b. 1982)
Deputy Chairman: Retail Banking
Nariman Mukushev
(b. 1984)
Deputy Chairman: Digital Public
Services and Ecosystems
Mr Mamutov has been deputy Chairman of the Management Board of Halyk Bank since October 2019.
In November 2021, he was appointed as a member of the supervisory board at Halyk Finservice. In
January 2023, he was elected chairman of the board of directors of Halyk Life.
Mr Mamutov has worked in banking since 2004. From 2004 to 2008, he held the following positions:
director of the Zangar branch at SB ABN AMRO Bank Kazakhstan; head of the retail banking division
of the retail banking department, and then business development manager at SB ABN AMRO Bank
Kazakhstan; and branch affairs specialist of the marketing department of NPF ABN AMRO
KaspiyMunayGaz Kazakhstan. From 2008 to 2009, he was head of the regional and sales
administration of the HNWI department at Kazinvestbank. Mr Mamutov worked at Kazkommertsbank
from January 2010 to February 2014 and again from July 2015 to May 2017 in the following roles:
managing director, executive director of the office of the management board, executive director of the
card business development department, executive director of the banking card department, adviser
to the office of the chairman of the management board, adviser to the executive directorate of the
chairman of the management board, and director of the retail banking department. From February
2014 to July 2015, he was director of the department for planning and monitoring the implementation
of retail banking strategies at SB Sberbank. From May 2017 to February 2018, Mr Mamutov was
deputy chairman of the management board at Bank Kassa Nova, as well as member of the
management board and deputy chairman of the management board at Nova Leasing. From February
2018 to October 2019, he held the position of member of the management board and deputy
chairman of the management board at Forte Bank.
Mr Mamutov has a degree in statistics from Kazakh Economic University named after T. Ryskulov.
Mr Mukushev has been deputy Chairman and a member of the Management Board since April 2022.
Mr Mukushev has worked at Halyk Bank since May 2021 and previously held the position of managing
director. On 1 April 2022, he joined the Management Board. In April 2023, he was elected chairman of the
supervisory board of Halyk Finservice. In November 2023, he was elected as a member of the board of
directors of the joint company Private Company Open Networks Ltd.
Before joining Halyk Bank, he was deputy minister of labour and social protection of the population. Prior
to that, he worked at Kazpost, where he was managing director for business transformation and member
of the management board responsible for IT, managing director for innovation and member of the
management board responsible for IT, chief IT director, and managing director and director of the IT
Department. He also previously held positions ranging from specialist to director of the Innovative
Technology Department at Kazkommertsbank.
Mr Mukushev graduated from the Süleyman Demirel University with a degree in computer hardware,
software and networks, as well as the International Academy of Business with an MBA in management.
7
Management Board
Zhumabek Mamutov
(b. 1982)
Deputy Chairman: Retail Banking
Nariman Mukushev
(b. 1984)
Deputy Chairman: Digital Public
Services and Ecosystems
29
Mr Salimov has been deputy Chairman of the Management Board of Halyk Bank since September
2020 and held the same post from February 2015 to October 2019. In February 2019, he became a
member of the board of directors at Halyk Finance. From August 2018 to November 2022, he was a
member of the supervisory board of Halyk Bank Tajikistan. From October 2019 to August 2022, he
was director of the Astana region branch of Halyk Bank. From March 2021 to February 2022, he was
chairman of the supervisory board at Halyk Collection. On 27 November 2023, he was elected as a
member of the board of directors of Halyk Global Markets.
Mr Salimov joined Halyk Bank in August 1995 and has extensive experience of operations at the Bank.
He has worked as deputy head of the non-trading operations and precious metals desks in the foreign
exchange operations department; a leading banker on the precious metals handling and precious
metals desks in the international operations department; chief banker on the commodity desk in the
trade finance department; chief banker on the commodity desk in the commercial department; senior
dealer in the treasury; head of forex, money market operations and head of trading operations in the
treasury; deputy director and director in the treasury; head of the chief operations department; chief
operating officer; member of the board and independent director of the Kazakhstan Stock Exchange;
and chairman of the board of Halyk Finance.
Mr Salimov has a degree in finance and credit from the Kazakh State Academy of Management.
Mr Mashchyk has been deputy Chairman and a member of the Management Board and a chief
compliance controller since April 2022, and head of Risk Management since September 2023.
Mr Mashchyk has worked at Halyk Bank since October 2020 and was previously director and project
manager of the Digital Lending Risk Department and director of the Chief Data Scientist Office. In April
2022, he became deputy Chairman and a member of the Management Board, as well as chief
compliance controller. In September 2023, he also became head of Risk Management and covered all
of the roles. Since March 2024, he has been deputy Chairman of the Management Board and head of
Risk Management. Before that, he served in numerous positions. These include deputy chairman of
the management board and director of the Risk Department at BankCenterCredit; commercial
director of Asseco Kazakhstan; deputy chairman of the management board of CRO; adviser to the
chairman of the management board of Eurasian Bank; adviser to the chairman of the management
board of Bank Pocztowy; adviser to the chairman of the management board and managing director for
Risks and Risk Management at PKO BP SA Poland; deputy chairman of the management Board at CRO
Nadra Bank in Kyiv (Ukraine); chief risk adviser to the president and member of the executive
committee at CRO National Bank Trust in Moscow (Russia); managing director for Risks and Risk
Management at PKO BP SA Bank; member of the supervisory board at PKO BP SA Bank, PKO-
Inwestycje and Bankowy Fundusz Leasingowy in Warsaw (Poland); director of the Financial Risk
Department at PKO BP SA Bank; senior analyst for treasury bank transactions at Handlowy; chief
analyst for Asset and Liability Management at the Control and Financial Analysis Faculty of BISE S.A.
Bank; and professor in the Faculty of Physics at the University of Warsaw.
Mr Mashchyk holds a master’s and a PhD in theoretical physics from the University of Warsaw. He has
also completed postgraduate studies in mathematics at the University of Oxford and in banking at the
Warsaw School of Banking and Finance.
7
Management Board
Yertai Salimov
(b. 1974)
Deputy Chairman: Operations,
Chancellery, Resources, Contact
Centre and Treasury
Roman Maszczyk
(b. 1966)
Deputy Chairman, Head of Risk
Management: Risks and Data Science
Mr Salimov has been deputy Chairman of the Management Board of Halyk Bank since September
2020 and held the same post from February 2015 to October 2019. In February 2019, he became a
member of the board of directors at Halyk Finance. From August 2018 to November 2022, he was a
member of the supervisory board of Halyk Bank Tajikistan. From October 2019 to August 2022, he
was director of the Astana region branch of Halyk Bank. From March 2021 to February 2022, he was
chairman of the supervisory board at Halyk Collection. On 27 November 2023, he was elected as a
member of the board of directors of Halyk Global Markets.
Mr Salimov joined Halyk Bank in August 1995 and has extensive experience of operations at the Bank.
He has worked as deputy head of the non-trading operations and precious metals desks in the foreign
exchange operations department; a leading banker on the precious metals handling and precious
metals desks in the international operations department; chief banker on the commodity desk in the
trade finance department; chief banker on the commodity desk in the commercial department; senior
dealer in the treasury; head of forex, money market operations and head of trading operations in the
treasury; deputy director and director in the treasury; head of the chief operations department; chief
operating officer; member of the board and independent director of the Kazakhstan Stock Exchange;
and chairman of the board of Halyk Finance.
Mr Salimov has a degree in finance and credit from the Kazakh State Academy of Management.
Mr Mashchyk has been deputy Chairman and a member of the Management Board and a chief
compliance controller since April 2022, and head of Risk Management since September 2023.
Mr Mashchyk has worked at Halyk Bank since October 2020 and was previously director and project
manager of the Digital Lending Risk Department and director of the Chief Data Scientist Office. In April
2022, he became deputy Chairman and a member of the Management Board, as well as chief
compliance controller. In September 2023, he also became head of Risk Management and covered all
of the roles. Since March 2024, he has been deputy Chairman of the Management Board and head of
Risk Management. Before that, he served in numerous positions. These include deputy chairman of
the management board and director of the Risk Department at BankCenterCredit; commercial
director of Asseco Kazakhstan; deputy chairman of the management board of CRO; adviser to the
chairman of the management board of Eurasian Bank; adviser to the chairman of the management
board of Bank Pocztowy; adviser to the chairman of the management board and managing director for
Risks and Risk Management at PKO BP SA Poland; deputy chairman of the management Board at CRO
Nadra Bank in Kyiv (Ukraine); chief risk adviser to the president and member of the executive
committee at CRO National Bank Trust in Moscow (Russia); managing director for Risks and Risk
Management at PKO BP SA Bank; member of the supervisory board at PKO BP SA Bank, PKO-
Inwestycje and Bankowy Fundusz Leasingowy in Warsaw (Poland); director of the Financial Risk
Department at PKO BP SA Bank; senior analyst for treasury bank transactions at Handlowy; chief
analyst for Asset and Liability Management at the Control and Financial Analysis Faculty of BISE S.A.
Bank; and professor in the Faculty of Physics at the University of Warsaw.
Mr Mashchyk holds a master’s and a PhD in theoretical physics from the University of Warsaw. He has
also completed postgraduate studies in mathematics at the University of Oxford and in banking at the
Warsaw School of Banking and Finance.
7
Management Board
Yertai Salimov
(b. 1974)
Deputy Chairman: Operations,
Chancellery, Resources, Contact
Centre and Treasury
Roman Maszczyk
(b. 1966)
Deputy Chairman, Head of Risk
Management: Risks and Data Science
30
Mr Bodanov was re-appointed as deputy Chairman of the Management Board of Halyk Bank in March
2018, having been director of the Security Department and Deputy Chairman of the Management Board
from September 2014 to May 2017. He has been chairman of the supervisory board at Halyk Collection
since February 2022, a member of the supervisory board at Halyk Collection since March 2021 and
chairman of the supervisory board at Halyk Aktiv and KUSA Halyk since August 2018.
Mr Bodanov started his career in 1984 as a high-voltage overhead specialist for Dzhambul Grid Operating
Company. He then worked as a specialist and senior producer at the Grazhdanstroy construction
enterprise, as well as a chief engineer at the Kultbytstroy construction enterprise. In 1988-89, he attended
the Sverdlovsk Higher Courses of the Ministry of Internal Affairs of the USSR. From 1990 to 2014, Mr
Bodanov held numerous posts in the Department of Internal Affairs, the State Investigative Committee and
the Tax and Financial Police. These included deputy head of the Agency of Kazakhstan for Combating
Economic Crimes and Corruption; head of the Department for Combating Economic Crimes and
Corruption in Almaty and West Kazakhstan regions; head of the Department for Investigating Economic
and Financial Crimes under the Agency of Kazakhstan for Combating Economic Crimes and Corruption;
deputy head of the Financial Police Department in Kyzylorda, South Kazakhstan and Atyrau regions; and
others.
From May to December 2017, Mr Bodanov served as head of the Internal Investigations Department and
head of the Third Service of the General Prosecutor’s Office of Kazakhstan. From February to March 2018,
he was head of the Department of Internal Security and Prevention of Corruption in the Courts of the
Department for the Support of the Courts of the Supreme Court of Kazakhstan.
Mr Bodanov holds the rank of Major General in the Financial Police. He is a graduate of the Dzhambul
Irrigation and Construction Institute, where he specialised in hydraulic engineering of river constructions
and hydroelectric power plants, and holds a law degree from the Karaganda Higher School under the
Ministry of Internal Affairs of Kazakhstan.
7
Management Board
Aivar Bodanov
(b. 1962)
Deputy Chairman: Security and
Problem Loans
Mr Bodanov was re-appointed as deputy Chairman of the Management Board of Halyk Bank in March
2018, having been director of the Security Department and Deputy Chairman of the Management Board
from September 2014 to May 2017. He has been chairman of the supervisory board at Halyk Collection
since February 2022, a member of the supervisory board at Halyk Collection since March 2021 and
chairman of the supervisory board at Halyk Aktiv and KUSA Halyk since August 2018.
Mr Bodanov started his career in 1984 as a high-voltage overhead specialist for Dzhambul Grid Operating
Company. He then worked as a specialist and senior producer at the Grazhdanstroy construction
enterprise, as well as a chief engineer at the Kultbytstroy construction enterprise. In 1988-89, he attended
the Sverdlovsk Higher Courses of the Ministry of Internal Affairs of the USSR. From 1990 to 2014, Mr
Bodanov held numerous posts in the Department of Internal Affairs, the State Investigative Committee and
the Tax and Financial Police. These included deputy head of the Agency of Kazakhstan for Combating
Economic Crimes and Corruption; head of the Department for Combating Economic Crimes and
Corruption in Almaty and West Kazakhstan regions; head of the Department for Investigating Economic
and Financial Crimes under the Agency of Kazakhstan for Combating Economic Crimes and Corruption;
deputy head of the Financial Police Department in Kyzylorda, South Kazakhstan and Atyrau regions; and
others.
From May to December 2017, Mr Bodanov served as head of the Internal Investigations Department and
head of the Third Service of the General Prosecutor’s Office of Kazakhstan. From February to March 2018,
he was head of the Department of Internal Security and Prevention of Corruption in the Courts of the
Department for the Support of the Courts of the Supreme Court of Kazakhstan.
Mr Bodanov holds the rank of Major General in the Financial Police. He is a graduate of the Dzhambul
Irrigation and Construction Institute, where he specialised in hydraulic engineering of river constructions
and hydroelectric power plants, and holds a law degree from the Karaganda Higher School under the
Ministry of Internal Affairs of Kazakhstan.
7
Management Board
Aivar Bodanov
(b. 1962)
Deputy Chairman: Security and
Problem Loans
8
Key Events
Key Events
32
January
○ Halyk Bank became the first bank in Kazakhstan to join the UN Global Compact.
○ The Bank offered free public ice skating throughout Kazakhstan as one of the major events to mark
its 100th anniversary.
○ Halyk Bank introduced the corporate open-source software-based ModelOps platform. The project
was devised by a team of experts from the international integration company Databorn. The
solution helped to at least halve the time-to-market of ML models.
○ With the support of the Kazakh Ministry of Justice, a new service was introduced in the Halyk Super-
App to let people check the name of a legal entity, the place and date of its state registration, the
details of its director and founder(s), its business profile, and information about its branches and
representative offices in the country. This information can be useful when looking for the right
business partner or employer.
○ Halyk Life organised “The Era of Change” forum in Almaty, which more than 100 of the leading
insurance agents from Kazakhstan’s regions attended.
○ Halyk Life launched a project with Halyk Bank to sell through the latter the Baiterek programme,
which focuses on providing customers with financial protection, long-term savings and additional
income.
○ At an Association of Financiers of Kazakhstan event, Halyk Life took part in several meetings to
showcase the online insurance process, and life insurance companies, the State Credit Bureau and
the Unified Accumulative Pension Fund agreed on a process for exchanging data when concluding
and terminating pension annuity agreements
○ Halyk Life launched the Gamisoft training platform for universal life insurance products.
February
○ The Halyk Super-App launched another service to make it easier for Kazakh residents to access
government services. Now both grooms and brides can apply to register their marriages through
the app.
○ Also in the Halyk Super-App, the Bank added a request to legalise a foreign car. To do this,
information about the previous owner and the car simply need to be entered in the app. Once
signed, the request is sent to the Ministry of Internal Affairs for preliminary verification, and the
result is sent to the applicant as a push notification.
○ The Bank increased the charter capital of Halyk Collection by KZT1.26 billion to KZT1.666 billion by
making an additional cash injection.
○ Halyk Life released a new universal life insurance product called Bilim-Life as part of the state
educational savings system.
○ Halyk Life launched a new product called GONS and a digital process for concluding an agreement
for the Bilim-Life product.
March
○ Halyk Finservice registered a subsidiary in Uzbekistan.
○ Halyk Bank Kyrgyzstan launched remote video-based identification in its mobile internet banking.
○ Kazteleport launched sales of cloud services in the Uzbek capital Tashkent.
○ Halyk Finance received the awards “Equity Market Leader” and “Equity Market Underwriter of the
Year” from the KASE exchange.
○ Halyk Finance received the AIX exchange award “Best Broker in the Debt Instruments Market”.
○ Halyk Finance was recognised as the best investment bank in Kazakhstan by the international
publication Global Finance.
○ S&P Global Ratings affirmed Halyk Life’s long-term financial strength rating of ‘BBB-’ (Country
Rating) and ‘kzAAA’ on the national scale and revised the outlook from ‘negative’ to ‘stable’. These
ratings correspond to the country level based on the S&P Global Ratings scale.
○ The AM Best rating agency upgraded its financial strength rating for Halyk Life from ‘B+’ to ‘B++’, as
well as its long-term credit rating from ‘bbb-’ to ‘bbb’, the outlook for both ‘stable’. The rating is the
highest among life insurance companies in Kazakhstan.
○ Tenge Bank received the “Best Technology Partner” award from Mastercard.
8
Key Events
KEY EVENTS
January
○ Halyk Bank became the first bank in Kazakhstan to join the UN Global Compact.
○ The Bank offered free public ice skating throughout Kazakhstan as one of the major events to mark
its 100th anniversary.
○ Halyk Bank introduced the corporate open-source software-based ModelOps platform. The project
was devised by a team of experts from the international integration company Databorn. The
solution helped to at least halve the time-to-market of ML models.
○ With the support of the Kazakh Ministry of Justice, a new service was introduced in the Halyk Super-
App to let people check the name of a legal entity, the place and date of its state registration, the
details of its director and founder(s), its business profile, and information about its branches and
representative offices in the country. This information can be useful when looking for the right
business partner or employer.
○ Halyk Life organised “The Era of Change” forum in Almaty, which more than 100 of the leading
insurance agents from Kazakhstan’s regions attended.
○ Halyk Life launched a project with Halyk Bank to sell through the latter the Baiterek programme,
which focuses on providing customers with financial protection, long-term savings and additional
income.
○ At an Association of Financiers of Kazakhstan event, Halyk Life took part in several meetings to
showcase the online insurance process, and life insurance companies, the State Credit Bureau and
the Unified Accumulative Pension Fund agreed on a process for exchanging data when concluding
and terminating pension annuity agreements
○ Halyk Life launched the Gamisoft training platform for universal life insurance products.
February
○ The Halyk Super-App launched another service to make it easier for Kazakh residents to access
government services. Now both grooms and brides can apply to register their marriages through
the app.
○ Also in the Halyk Super-App, the Bank added a request to legalise a foreign car. To do this,
information about the previous owner and the car simply need to be entered in the app. Once
signed, the request is sent to the Ministry of Internal Affairs for preliminary verification, and the
result is sent to the applicant as a push notification.
○ The Bank increased the charter capital of Halyk Collection by KZT1.26 billion to KZT1.666 billion by
making an additional cash injection.
○ Halyk Life released a new universal life insurance product called Bilim-Life as part of the state
educational savings system.
○ Halyk Life launched a new product called GONS and a digital process for concluding an agreement
for the Bilim-Life product.
March
○ Halyk Finservice registered a subsidiary in Uzbekistan.
○ Halyk Bank Kyrgyzstan launched remote video-based identification in its mobile internet banking.
○ Kazteleport launched sales of cloud services in the Uzbek capital Tashkent.
○ Halyk Finance received the awards “Equity Market Leader” and “Equity Market Underwriter of the
Year” from the KASE exchange.
○ Halyk Finance received the AIX exchange award “Best Broker in the Debt Instruments Market”.
○ Halyk Finance was recognised as the best investment bank in Kazakhstan by the international
publication Global Finance.
○ S&P Global Ratings affirmed Halyk Life’s long-term financial strength rating of ‘BBB-’ (Country
Rating) and ‘kzAAA’ on the national scale and revised the outlook from ‘negative’ to ‘stable’. These
ratings correspond to the country level based on the S&P Global Ratings scale.
○ The AM Best rating agency upgraded its financial strength rating for Halyk Life from ‘B+’ to ‘B++’, as
well as its long-term credit rating from ‘bbb-’ to ‘bbb’, the outlook for both ‘stable’. The rating is the
highest among life insurance companies in Kazakhstan.
○ Tenge Bank received the “Best Technology Partner” award from Mastercard.
8
Key Events
KEY EVENTS
33
April
○ Halyk received the “Best Employer of 2022” certificate and a Luca Awards (Luca Pacioli) statuette
from the Institute of Certified Financial Managers (ICFM), which noted that the Bank is a responsible
employer that supports the professional development and proficiency of its employees.
○ Fitch Ratings affirmed Halyk Finance’s long-term issuer default ratings in foreign and local
currencies at the investment level of ‘BBB-’ with a ‘stable’ outlook.
○ As part of the environmental campaign “One Hundred Shoots of a New Life”, employees from Halyk
Life planted 70 ash seedlings at the Atakent Children’s Culture Centre in Almaty. Staff from
branches in the cities of Karaganda, Zhezkazgan, Petropavlovsk, Kostanay, Semey, Ust-
Kamenogorsk and Uralsk took part in the campaign.
○ Halyk Insurance Company registered to become an official reinsurer in India (Cross-Border
Reinsurer), enabled it to increase its risk portfolio and premiums for incoming reinsurance from
India. As part of its first steps into this market, the company collected KZT251 million in reinsurance
premiums in 2023.
May
○ The annual General Shareholders Meeting approved payment of dividends on the Bank’s common
shares based on the results for 2022.
○ The Halyk digital ecosystem introduced a service for workers to receive social benefits if they lose
their jobs. The service was implemented jointly with the Ministry of Labour and Social Protection of
the Population, the Ministry of Digital Development, Innovations and Aerospace Industry, the Centre
for the Development of Labour Resources and National Information Technologies.
○ S&P Global Ratings affirmed the ratings of Halyk Bank at ‘ВB+/В’ and ‘kzAA’ with a ‘stable’ outlook.
○ Halyk Finservice launched a new project called Halyk Logistics to arrange a delivery service for
orders placed on the marketplace and establish an extensive network of parcel terminals and order
pick-up points.
○ Halyk Finance served as a financial consultant and underwriter for KMF Microfinance Organisation’s
placement of KZT10 billion in one-year bonds.
○ The corporate advertising newsletter Halyk-Life iNFO won a competition among corporate media in
the category “Best Corporate Magazine” at the 19th “Time of Changes and Challenges”
International PR Forum, held in Almaty.
○ Halyk Life became the first life insurance company in Kazakhstan to publish a sustainability report,
for 2022.
○ Tenge Bank opened a banking services centre in Andijan.
○ Tenge Bank received a principal’s licence in the Visa international payment system, making it
possible to transfer money from Uzbekistan to Kazakhstan in the bank’s mobile app.
June
○ Joint-Stock Company Halyk Savings Bank of Kazakhstan was re-registered as Joint-Stock
Company Halyk Bank of Kazakhstan following a change in the bank’s name.
○ Halyk announced the early partial return of KZT28.4 billion in state aid as part of the dividend
payment for 2022.
○ The families of people killed while putting out a fire in the Abay region received KZT3 million each
from Halyk, which also wrote off existing loans for the victims and their family members.
○ Halyk Bank received the “Best Green Investment Bank” award from the Green Finance Awards for
its commitment to environmental values and introduction of sustainable development principles.
○ The Halyk app introduced a service to re-issue driver’s licences in collaboration with the Kazakh
Ministry of Internal Affairs.
○ Based on the results of 2022, Halyk Life distributed KZT69.9 million in profit from investment
activities as insurance dividends among holders of 24,000 universal life insurance contracts.
July
○ Halyk Bank opened a branch in the Almaty region city of Konaev. It provides a full range of banking
services for individuals and legal entities, including a full line of credit and deposit products,
beneficial solutions for financing small and medium-sized businesses as part of government
programmes, operational and cash management services, and support for salary projects.
○ Euromoney recognized Halyk as the best bank in Kazakhstan.
○ Halyk Bank co-organised the legendary Asia Dauysy Festival, which returned to Almaty after 19
years.
○ Halyk Finance won three awards from Cbonds Awards in the categories “Best Investment Bank of
Kazakhstan”, “Best Management Company of Kazakhstan” and “Best Bond Market Analytics in
Kazakhstan”.
○ Halyk Finance won awards from the EMEA Finance international publication in the categories “Best
Investment Bank in Kazakhstan”, “Best Broker in Kazakhstan” and “Best Investment Bank in the
Equity Market in Central and Eastern Europe”.
○ Halyk Finance served as a joint underwriter for National Company Kazakhstan Temir Zholy’s
placement of KZT118.9 billion in two-year bonds.
○ The Astana Forum 2023 – which this time focused on “Expanding Business with Halyk Life” – was
held, and more than 300 insurance agents from Kazakh regions attended.
8
Key Events
April
○ Halyk received the “Best Employer of 2022” certificate and a Luca Awards (Luca Pacioli) statuette
from the Institute of Certified Financial Managers (ICFM), which noted that the Bank is a responsible
employer that supports the professional development and proficiency of its employees.
○ Fitch Ratings affirmed Halyk Finance’s long-term issuer default ratings in foreign and local
currencies at the investment level of ‘BBB-’ with a ‘stable’ outlook.
○ As part of the environmental campaign “One Hundred Shoots of a New Life”, employees from Halyk
Life planted 70 ash seedlings at the Atakent Children’s Culture Centre in Almaty. Staff from
branches in the cities of Karaganda, Zhezkazgan, Petropavlovsk, Kostanay, Semey, Ust-
Kamenogorsk and Uralsk took part in the campaign.
○ Halyk Insurance Company registered to become an official reinsurer in India (Cross-Border
Reinsurer), enabled it to increase its risk portfolio and premiums for incoming reinsurance from
India. As part of its first steps into this market, the company collected KZT251 million in reinsurance
premiums in 2023.
May
○ The annual General Shareholders Meeting approved payment of dividends on the Bank’s common
shares based on the results for 2022.
○ The Halyk digital ecosystem introduced a service for workers to receive social benefits if they lose
their jobs. The service was implemented jointly with the Ministry of Labour and Social Protection of
the Population, the Ministry of Digital Development, Innovations and Aerospace Industry, the Centre
for the Development of Labour Resources and National Information Technologies.
○ S&P Global Ratings affirmed the ratings of Halyk Bank at ‘ВB+/В’ and ‘kzAA’ with a ‘stable’ outlook.
○ Halyk Finservice launched a new project called Halyk Logistics to arrange a delivery service for
orders placed on the marketplace and establish an extensive network of parcel terminals and order
pick-up points.
○ Halyk Finance served as a financial consultant and underwriter for KMF Microfinance Organisation’s
placement of KZT10 billion in one-year bonds.
○ The corporate advertising newsletter Halyk-Life iNFO won a competition among corporate media in
the category “Best Corporate Magazine” at the 19th “Time of Changes and Challenges”
International PR Forum, held in Almaty.
○ Halyk Life became the first life insurance company in Kazakhstan to publish a sustainability report,
for 2022.
○ Tenge Bank opened a banking services centre in Andijan.
○ Tenge Bank received a principal’s licence in the Visa international payment system, making it
possible to transfer money from Uzbekistan to Kazakhstan in the bank’s mobile app.
June
○ Joint-Stock Company Halyk Savings Bank of Kazakhstan was re-registered as Joint-Stock
Company Halyk Bank of Kazakhstan following a change in the bank’s name.
○ Halyk announced the early partial return of KZT28.4 billion in state aid as part of the dividend
payment for 2022.
○ The families of people killed while putting out a fire in the Abay region received KZT3 million each
from Halyk, which also wrote off existing loans for the victims and their family members.
○ Halyk Bank received the “Best Green Investment Bank” award from the Green Finance Awards for
its commitment to environmental values and introduction of sustainable development principles.
○ The Halyk app introduced a service to re-issue driver’s licences in collaboration with the Kazakh
Ministry of Internal Affairs.
○ Based on the results of 2022, Halyk Life distributed KZT69.9 million in profit from investment
activities as insurance dividends among holders of 24,000 universal life insurance contracts.
July
○ Halyk Bank opened a branch in the Almaty region city of Konaev. It provides a full range of banking
services for individuals and legal entities, including a full line of credit and deposit products,
beneficial solutions for financing small and medium-sized businesses as part of government
programmes, operational and cash management services, and support for salary projects.
○ Euromoney recognized Halyk as the best bank in Kazakhstan.
○ Halyk Bank co-organised the legendary Asia Dauysy Festival, which returned to Almaty after 19
years.
○ Halyk Finance won three awards from Cbonds Awards in the categories “Best Investment Bank of
Kazakhstan”, “Best Management Company of Kazakhstan” and “Best Bond Market Analytics in
Kazakhstan”.
○ Halyk Finance won awards from the EMEA Finance international publication in the categories “Best
Investment Bank in Kazakhstan”, “Best Broker in Kazakhstan” and “Best Investment Bank in the
Equity Market in Central and Eastern Europe”.
○ Halyk Finance served as a joint underwriter for National Company Kazakhstan Temir Zholy’s
placement of KZT118.9 billion in two-year bonds.
○ The Astana Forum 2023 – which this time focused on “Expanding Business with Halyk Life” – was
held, and more than 300 insurance agents from Kazakh regions attended.
8
Key Events
34
August
○ The Halyk Onlinebank app launched a tax return filing service for form 250 on individual assets and
liabilities. The service was introduced in cooperation with the State Revenue Committee of the
Kazakh Ministry of Finance.
○ Halyk Bank Kyrgyzstan launched the Yourbi mobile internet banking service for individual
entrepreneurs and the automated Soft Collection service for retail business.
○ Forbes Kazakhstan named Halyk Life the best insurance company in 2022.
○ Halyk Life insured all participants of the “Tour of World Class Almaty 2023” cycling race against
accidents during the event.
○ Halyk Life organised the annual Donor Day charity event with the Almaty City Blood Centre for Halyk
Group companies, and 75 people attended.
○ S&P Global Ratings affirmed Halyk Life’s long-term financial strength rating of ‘BBB-’ (Country
Rating) and ‘kzAAA on the national scale with a ‘stable’ outlook.
○ Halyk Life introduced an online process for concluding Halyk Kazyna insurance contracts in the
Halyk Super-App.
September
○ Halyk Finance served as a joint bookrunner for Bi Development’s placement on the AIX of US$13.5
million in coupon bonds maturing in September 2024.
○ Halyk Life held a major clean-up to remove rubbish left by holidaymakers from nature spots near
Almaty in an effort to promote 'green’ behaviour among the public.
○ Halyk Insurance Company launched the online registration of the HALYK KASKO product (Standard
and VIP) through the online version of the website (https://797.polisonline.kz) via video call.
October
○ Halyk Life launched the Halyk Kazyna product in the mobile apps of Altyn Bank (Altyn-I) and Halyk
Bank, and also introduced a digital process to conclude insurance contracts on a voluntary deferred
annuity with participation in the profits of Life-Rent+ (with an electronic file).
○ Fitch Ratings affirmed the long-term rating of Halyk Bank Georgia at ‘BB+’ with a ‘stable’ outlook.
○ Halyk Bank acquired a 50% stake in the charter capital of Open Networks Ltd, a private company.
○ Tenge Bank and Bank of New York Mellon signed an agreement to open a correspondent account.
November
○ Umut Shayakhmetova was declared one of the Top 40 women leaders of Central Asia. The Yuksalish
national movement (Uzbekistan) and the Institute of Social and Economic Initiatives prepared the
Women Leaders of Central Asia rating with the support of experts.
○ Halyk Bank announced that it reached an agreement with a consortium of buyers that are part of the
investment group Visor International DMCC on the sale of 100% of Halyk Bank Kyrgyzstan.
○ Halyk Finance become the leader in terms of the volume and yield of pension assets under
management among private management companies.
○ Halyk Finance served as a joint coordinator and bookrunner for a share offering by Samruk-Kazyna
and KEGOC on the KASE and AIX. In addition, Halyk Group became the leader in terms of funds
attracted from retail investors.
○ Halyk Life introduced a digital process to conclude Life-Doroga voluntary life insurance contracts
(for people travelling abroad), and also introduced a digital process for policyholders to submit
notifications about insured events online using the Mandatory Accident Insurance product.
○ Halyk Insurance Company developed and introduced the new Travel product, which offers medical
insurance for tourists.
○ Halyk Insurance Company introduced an insurance pool through the sales channel of Toyota
Financial Services Kazakhstan with its partners Toyota Insurance Management (insurance brokers)
and Oil Insurance Company.
○ Halyk Insurance Company entered the Chinese market as a local partner/insurer with a view to
further reinsuring risks from Chinese reinsurers with a high financial strength rating (S&P rating no
lower than ‘A-’). The first transactions were concluded in December 2023.
8
Key Events
August
○ The Halyk Onlinebank app launched a tax return filing service for form 250 on individual assets and
liabilities. The service was introduced in cooperation with the State Revenue Committee of the
Kazakh Ministry of Finance.
○ Halyk Bank Kyrgyzstan launched the Yourbi mobile internet banking service for individual
entrepreneurs and the automated Soft Collection service for retail business.
○ Forbes Kazakhstan named Halyk Life the best insurance company in 2022.
○ Halyk Life insured all participants of the “Tour of World Class Almaty 2023” cycling race against
accidents during the event.
○ Halyk Life organised the annual Donor Day charity event with the Almaty City Blood Centre for Halyk
Group companies, and 75 people attended.
○ S&P Global Ratings affirmed Halyk Life’s long-term financial strength rating of ‘BBB-’ (Country
Rating) and ‘kzAAA on the national scale with a ‘stable’ outlook.
○ Halyk Life introduced an online process for concluding Halyk Kazyna insurance contracts in the
Halyk Super-App.
September
○ Halyk Finance served as a joint bookrunner for Bi Development’s placement on the AIX of US$13.5
million in coupon bonds maturing in September 2024.
○ Halyk Life held a major clean-up to remove rubbish left by holidaymakers from nature spots near
Almaty in an effort to promote 'green’ behaviour among the public.
○ Halyk Insurance Company launched the online registration of the HALYK KASKO product (Standard
and VIP) through the online version of the website (https://797.polisonline.kz) via video call.
October
○ Halyk Life launched the Halyk Kazyna product in the mobile apps of Altyn Bank (Altyn-I) and Halyk
Bank, and also introduced a digital process to conclude insurance contracts on a voluntary deferred
annuity with participation in the profits of Life-Rent+ (with an electronic file).
○ Fitch Ratings affirmed the long-term rating of Halyk Bank Georgia at ‘BB+’ with a ‘stable’ outlook.
○ Halyk Bank acquired a 50% stake in the charter capital of Open Networks Ltd, a private company.
○ Tenge Bank and Bank of New York Mellon signed an agreement to open a correspondent account.
November
○ Umut Shayakhmetova was declared one of the Top 40 women leaders of Central Asia. The Yuksalish
national movement (Uzbekistan) and the Institute of Social and Economic Initiatives prepared the
Women Leaders of Central Asia rating with the support of experts.
○ Halyk Bank announced that it reached an agreement with a consortium of buyers that are part of the
investment group Visor International DMCC on the sale of 100% of Halyk Bank Kyrgyzstan.
○ Halyk Finance become the leader in terms of the volume and yield of pension assets under
management among private management companies.
○ Halyk Finance served as a joint coordinator and bookrunner for a share offering by Samruk-Kazyna
and KEGOC on the KASE and AIX. In addition, Halyk Group became the leader in terms of funds
attracted from retail investors.
○ Halyk Life introduced a digital process to conclude Life-Doroga voluntary life insurance contracts
(for people travelling abroad), and also introduced a digital process for policyholders to submit
notifications about insured events online using the Mandatory Accident Insurance product.
○ Halyk Insurance Company developed and introduced the new Travel product, which offers medical
insurance for tourists.
○ Halyk Insurance Company introduced an insurance pool through the sales channel of Toyota
Financial Services Kazakhstan with its partners Toyota Insurance Management (insurance brokers)
and Oil Insurance Company.
○ Halyk Insurance Company entered the Chinese market as a local partner/insurer with a view to
further reinsuring risks from Chinese reinsurers with a high financial strength rating (S&P rating no
lower than ‘A-’). The first transactions were concluded in December 2023.
8
Key Events
35
December
○ Halyk Bank repaid ahead of schedule KZT40 billion worth of historical state aid received by
Kazkommertsbank in 2015.
○ The reputable international publication International Banker announced the results of the traditional
Best Banking Award 2023. Umut Shayakhmetova, Chairperson of the Management Board at Halyk
Bank, won the category “Best Banking CEO of the Year Eastern Europe 2023”.
○ Halyk Bank received an award from PwC for the best disclosure of ESG information in the financial
sector.
○ At an extraordinary General Shareholders Meeting, the powers of Mazhit Yessenbayev, a member of
Halyk Bank’s Board of Directors, were terminated early from 1 December 2023 at his request. The
size of the Board of Directors was increased from seven to eight members, Zhaksybek Kulekeyev
was elected as an additional independent director and Zhomart Nurabayev was elected as a
representative of Holding Group ALMEX.
○ Kazteleport commissioned the building of a new data centre in Astana, which has 100 racks and
meets the TIER III reliability level.
○ Halyk Finance retained its leading position in terms of pension assets under management among
private pension insurance companies and of return on pension assets under management among
all pension savings managers.
○ In 2023, Halyk Finance topped the Cbonds ranking of organisers of all bond issues in Kazakhstan,
with total placements of KZT657.7 billion and a market share of 38.9%, as well as market bond
issues in the country, with total placements of KZT394 billion and a market share of 44.4%.
○ In the web version of Onlinebank, Halyk Insurance Company launched an insurance section with two
products: compulsory civil liability insurance for vehicle owners and notaries.
○ Tenge Bank launched instant transfers to Halyk Bank cards.
Over 2023
○ As part of a programme to improve financial literacy, Halyk Life held a national competition among
journalists for the best reports on life insurance in Kazakhstan. The competition included an award
ceremony for 15 winners in categories among 51 reports on the insurance market.
○ Employees of Halyk Insurance Company organised and implemented seven ESG projects (clean-up
work, tree planting, the Teplo (“Warmth”) box for collecting items for charity, an eco-project for
children of employees, bird feeders, apple picking and T-shirts made from recycled materials for
employees).
○ Halyk Insurance Company signed a memorandum on the creation of the Turan international
reinsurance initiative. The goal is to bring participants together to create greater overall reinsurance
capacity and improve the quality of risk portfolios. Countries that signed the memorandum include
Azerbaijan, Georgia, Kazakhstan, and Uzbekistan. As a result, all Kazakh general insurance
companies will be able to enter the markets of these countries, and Halyk Insurance Company will
assume part of the risks associated with expansion. Other companies that signed the memorandum
include AzRe Reinsurance (Azerbaijan), Aldagi Insurance Company (Georgia) and Apex Insurance
(Uzbekistan). The insurance broker Marsh will administer the reinsurance pool.
○ The mandatory protection reserve for property risks, both risks and catastrophic events, was
doubled to KZT20 billion, which is the largest among Kazakh insurance companies. This increase
enables Halyk Insurance Company to retain a larger volume of risks and premiums and gives it a
competitive advantage over market peers.
8
Key Events
December
○ Halyk Bank repaid ahead of schedule KZT40 billion worth of historical state aid received by
Kazkommertsbank in 2015.
○ The reputable international publication International Banker announced the results of the traditional
Best Banking Award 2023. Umut Shayakhmetova, Chairperson of the Management Board at Halyk
Bank, won the category “Best Banking CEO of the Year Eastern Europe 2023”.
○ Halyk Bank received an award from PwC for the best disclosure of ESG information in the financial
sector.
○ At an extraordinary General Shareholders Meeting, the powers of Mazhit Yessenbayev, a member of
Halyk Bank’s Board of Directors, were terminated early from 1 December 2023 at his request. The
size of the Board of Directors was increased from seven to eight members, Zhaksybek Kulekeyev
was elected as an additional independent director and Zhomart Nurabayev was elected as a
representative of Holding Group ALMEX.
○ Kazteleport commissioned the building of a new data centre in Astana, which has 100 racks and
meets the TIER III reliability level.
○ Halyk Finance retained its leading position in terms of pension assets under management among
private pension insurance companies and of return on pension assets under management among
all pension savings managers.
○ In 2023, Halyk Finance topped the Cbonds ranking of organisers of all bond issues in Kazakhstan,
with total placements of KZT657.7 billion and a market share of 38.9%, as well as market bond
issues in the country, with total placements of KZT394 billion and a market share of 44.4%.
○ In the web version of Onlinebank, Halyk Insurance Company launched an insurance section with two
products: compulsory civil liability insurance for vehicle owners and notaries.
○ Tenge Bank launched instant transfers to Halyk Bank cards.
Over 2023
○ As part of a programme to improve financial literacy, Halyk Life held a national competition among
journalists for the best reports on life insurance in Kazakhstan. The competition included an award
ceremony for 15 winners in categories among 51 reports on the insurance market.
○ Employees of Halyk Insurance Company organised and implemented seven ESG projects (clean-up
work, tree planting, the Teplo (“Warmth”) box for collecting items for charity, an eco-project for
children of employees, bird feeders, apple picking and T-shirts made from recycled materials for
employees).
○ Halyk Insurance Company signed a memorandum on the creation of the Turan international
reinsurance initiative. The goal is to bring participants together to create greater overall reinsurance
capacity and improve the quality of risk portfolios. Countries that signed the memorandum include
Azerbaijan, Georgia, Kazakhstan, and Uzbekistan. As a result, all Kazakh general insurance
companies will be able to enter the markets of these countries, and Halyk Insurance Company will
assume part of the risks associated with expansion. Other companies that signed the memorandum
include AzRe Reinsurance (Azerbaijan), Aldagi Insurance Company (Georgia) and Apex Insurance
(Uzbekistan). The insurance broker Marsh will administer the reinsurance pool.
○ The mandatory protection reserve for property risks, both risks and catastrophic events, was
doubled to KZT20 billion, which is the largest among Kazakh insurance companies. This increase
enables Halyk Insurance Company to retain a larger volume of risks and premiums and gives it a
competitive advantage over market peers.
8
Key Events
9
Awards
Awards
9
Awards
AWARDS FOR 2023
37
HALYK BANK HALYK FINANCE
Euromoney
Best Bank in Kazakhstan
Cbonds
Best Bond Market Analytics in
Kazakhstan
Best Investment Bank in Kazakhstan
Best Management Company in
Kazakhstan
EMEA Finance
Best Broker in Kazakhstan
Best Investment Bank in Kazakhstan
Best Investment Bank in the Equity
Market in Central and Eastern Europe
Global Finance
Best Investment Bank in Kazakhstan
2023
AIX
Best Broker in the Debt Instruments
Market
KASE
Equity Market Leader
Equity Market Underwriter of the Year
PwC
Annual / ESG Report for 2022
Recognised as the Best Among
Financial Companies in Kazakhstan
Institute of Certified
Financial Managers (ICFM)
Best Employer (2022)
AIX
Best Employer (2022)
Global CIO
GovTech: Best IT Project
in E-Government
AIFC
Best Green Investment Bank
KASE
For Significant Contribution to
Attracting Investors (2023)
For Introducing ESG Standards
Market-Maker of the Year in the
Government Securities Market (2023)
For Contribution to the Development
of the Government Securities Market
(30th anniversary of KASE)
For Contribution to the Development
of the Foreign Exchange Market (30th
anniversary of KASE)
Equity Market Leader (2023)
For Development of the Retail Investors
Market (30th anniversary of KASE)
Awards
AWARDS FOR 2023
37
HALYK BANK HALYK FINANCE
Euromoney
Best Bank in Kazakhstan
Cbonds
Best Bond Market Analytics in
Kazakhstan
Best Investment Bank in Kazakhstan
Best Management Company in
Kazakhstan
EMEA Finance
Best Broker in Kazakhstan
Best Investment Bank in Kazakhstan
Best Investment Bank in the Equity
Market in Central and Eastern Europe
Global Finance
Best Investment Bank in Kazakhstan
2023
AIX
Best Broker in the Debt Instruments
Market
KASE
Equity Market Leader
Equity Market Underwriter of the Year
PwC
Annual / ESG Report for 2022
Recognised as the Best Among
Financial Companies in Kazakhstan
Institute of Certified
Financial Managers (ICFM)
Best Employer (2022)
AIX
Best Employer (2022)
Global CIO
GovTech: Best IT Project
in E-Government
AIFC
Best Green Investment Bank
KASE
For Significant Contribution to
Attracting Investors (2023)
For Introducing ESG Standards
Market-Maker of the Year in the
Government Securities Market (2023)
For Contribution to the Development
of the Government Securities Market
(30th anniversary of KASE)
For Contribution to the Development
of the Foreign Exchange Market (30th
anniversary of KASE)
Equity Market Leader (2023)
For Development of the Retail Investors
Market (30th anniversary of KASE)
9
Awards
AWARDS FOR 2023
38
HALYK LEASING HALYK BANK KYRGYZSTAN
National Analytical Center
“Star of the Industry 2022” award,
indicating a reliable and socially
significant enterprise in the country in
the financial leasing (except of medical
equipment and technology) industry
WasteNet.KG
Green Waste Leaders - 2023
SME Banking Agency
Recognised as one of the three best
online banks for business in Kyrgyzstan
USAID
For active cooperation and significant
contribution to the development of the
economy of the Kyrgyz Republic
VISA
Special Award – Strategic synergy for a
promising year ahead
TENGE BANK
Mastercard Awards
Best Technology Partner (2022)
Finance Derivative
Best International Bank
PLUS Awards
Accessibility of Banking Business for
the Best Technical Solution: Card
Machines (2023)
The Banker Awards
Bank of the Year in Uzbekistan (2023)
AsiaMoney Awards
Best International Bank (2023)
Visa Awards
Strategic Cooperation for a Promising
Year Ahead (2023)
Awards
AWARDS FOR 2023
38
HALYK LEASING HALYK BANK KYRGYZSTAN
National Analytical Center
“Star of the Industry 2022” award,
indicating a reliable and socially
significant enterprise in the country in
the financial leasing (except of medical
equipment and technology) industry
WasteNet.KG
Green Waste Leaders - 2023
SME Banking Agency
Recognised as one of the three best
online banks for business in Kyrgyzstan
USAID
For active cooperation and significant
contribution to the development of the
economy of the Kyrgyz Republic
VISA
Special Award – Strategic synergy for a
promising year ahead
TENGE BANK
Mastercard Awards
Best Technology Partner (2022)
Finance Derivative
Best International Bank
PLUS Awards
Accessibility of Banking Business for
the Best Technical Solution: Card
Machines (2023)
The Banker Awards
Bank of the Year in Uzbekistan (2023)
AsiaMoney Awards
Best International Bank (2023)
Visa Awards
Strategic Cooperation for a Promising
Year Ahead (2023)
10
Macroeconomic and Banking
Review
Macroeconomic and Banking
Review
40
Following moderate growth in 2022, the Kazakh economy picked up considerably in the last quarter
of 2023, and GDP growth for the year reached 5.1%. The increased business activity in 2023 was
driven by an unplanned injection by the National Fund of an additional KZT1.3 trillion in funds into the
economy, a recovery in oil production and a simultaneous rise in trade. In addition, the low base of the
previous year’s GDP growth, of just 3.2%, played a substantial role in the economy achieving record
growth since 2013.
The external economic conditions were exacerbated by geopolitical instability and high interest rates
of central banks in various key countries. The global economy slowed once again, which had a
noticeable impact on the hydrocarbon market, where oil prices dropped by 17% year-on-year in 2023.
As a result, trade conditions for Kazakhstan were significantly worse, which caused an export deficit.
The pace of the country’s accelerated economic growth was constrained somewhat by internal
problems with the economy, including an energy crisis (rising prices for fuel and lubricants and
disruptions in the country’s energy system) and a poor harvest.
In 2023, substantial transfers from the National Fund played a decisive role in boosting fixed
investment, which increased by 13.7% year-on-year overall. Economic growth was also driven by a
rise in fixed investment to US$39.5 billion in dollar terms, the second highest in the country’s history,
after the previous record of US$39.9 billion in 2013. Also noteworthy were the contributors to the
investment boom in Kazakhstan last year. Whereas in the past the oil sector largely dictated
investment activity, in 2023, investments in public utilities and transport infrastructure became the
main drivers, with budgetary allocations also playing a major role.
Economic growth in Kazakhstan and oil prices
Source: Bureau of National Statistics, Bloomberg
-3 30
-2 40
-1 50
0 60
1 70
2 80
3 90
4 100
5 110
6 120
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
6,0 4,2 4,2 4,1 4,5 4,3 2,2 5,1
-2,5
1,2 1,1
% year-on-year
GDP Brent crude price (right-hand-scale)
US$ per barrel
In 2023, foreign direct investment slumped, partly due to higher borrowing costs on capital markets.
Factoring in the amount of reinvested profit, Kazakhstan once again experienced a negative net
capital inflow, a trend seen consistently since 2018.
For several years, the state’s pricing policy has been based on keeping tariffs low, despite them not
covering the costs of state monopolies, which has led to a deterioration in infrastructure. As a result,
the state has had to quickly mobilise resources for major infrastructure modernisation. This, in turn,
will support related investments in the coming years while tariffs are raised to levels closer to actual
market ones. However, demand for bank loans remains insufficient. In 2023, the share of loans in
investments declined from 3.2% to 2.5%.
Despite collapsing in August, the tenge strengthened in 2023, for the first time since 2017, amid a
greater supply of currency from the National Fund. The national currency’s appreciation by the year-
end was also helped by the ruble strengthening against the US dollar. However, the exchange rates of
the US dollar against the ruble and tenge nevertheless moved in different proportions, which
bolstered the tenge’s position against the Russian currency. The tenge appreciation also had a
positive effect on inflation, which fell to single digits. Together, these factors, along with the budgetary
funds pumped into the economy, fuelled domestic demand and stimulated corporate investment and
household consumption.
While revenues from oil sales declined in 2023, the oil sector contributed substantially to
Kazakhstan’s overall economic growth amid an increase in hydrocarbon production. We estimate that
the oil sector’s contribution to GDP growth was around 0.5 percentage points. However, national oil
production has been steadily declining since 2019, which has noticeably reduced the total output. In
these conditions, the non-oil sectors have been saved by continuous injections from the National
Fund, which have averaged more than US$10 billion a year since 2020.
GDP by component
Source: Bureau of National Statistics
-5
-2
1
4
7
10
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
% year-on-year
GDP Non-oil Oil
10
Macroeconomic and
Banking Review
MACROECONOMIC AND BANKING REVIEW
Following moderate growth in 2022, the Kazakh economy picked up considerably in the last quarter
of 2023, and GDP growth for the year reached 5.1%. The increased business activity in 2023 was
driven by an unplanned injection by the National Fund of an additional KZT1.3 trillion in funds into the
economy, a recovery in oil production and a simultaneous rise in trade. In addition, the low base of the
previous year’s GDP growth, of just 3.2%, played a substantial role in the economy achieving record
growth since 2013.
The external economic conditions were exacerbated by geopolitical instability and high interest rates
of central banks in various key countries. The global economy slowed once again, which had a
noticeable impact on the hydrocarbon market, where oil prices dropped by 17% year-on-year in 2023.
As a result, trade conditions for Kazakhstan were significantly worse, which caused an export deficit.
The pace of the country’s accelerated economic growth was constrained somewhat by internal
problems with the economy, including an energy crisis (rising prices for fuel and lubricants and
disruptions in the country’s energy system) and a poor harvest.
In 2023, substantial transfers from the National Fund played a decisive role in boosting fixed
investment, which increased by 13.7% year-on-year overall. Economic growth was also driven by a
rise in fixed investment to US$39.5 billion in dollar terms, the second highest in the country’s history,
after the previous record of US$39.9 billion in 2013. Also noteworthy were the contributors to the
investment boom in Kazakhstan last year. Whereas in the past the oil sector largely dictated
investment activity, in 2023, investments in public utilities and transport infrastructure became the
main drivers, with budgetary allocations also playing a major role.
Economic growth in Kazakhstan and oil prices
Source: Bureau of National Statistics, Bloomberg
-3 30
-2 40
-1 50
0 60
1 70
2 80
3 90
4 100
5 110
6 120
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
6,0 4,2 4,2 4,1 4,5 4,3 2,2 5,1
-2,5
1,2 1,1
% year-on-year
GDP Brent crude price (right-hand-scale)
US$ per barrel
In 2023, foreign direct investment slumped, partly due to higher borrowing costs on capital markets.
Factoring in the amount of reinvested profit, Kazakhstan once again experienced a negative net
capital inflow, a trend seen consistently since 2018.
For several years, the state’s pricing policy has been based on keeping tariffs low, despite them not
covering the costs of state monopolies, which has led to a deterioration in infrastructure. As a result,
the state has had to quickly mobilise resources for major infrastructure modernisation. This, in turn,
will support related investments in the coming years while tariffs are raised to levels closer to actual
market ones. However, demand for bank loans remains insufficient. In 2023, the share of loans in
investments declined from 3.2% to 2.5%.
Despite collapsing in August, the tenge strengthened in 2023, for the first time since 2017, amid a
greater supply of currency from the National Fund. The national currency’s appreciation by the year-
end was also helped by the ruble strengthening against the US dollar. However, the exchange rates of
the US dollar against the ruble and tenge nevertheless moved in different proportions, which
bolstered the tenge’s position against the Russian currency. The tenge appreciation also had a
positive effect on inflation, which fell to single digits. Together, these factors, along with the budgetary
funds pumped into the economy, fuelled domestic demand and stimulated corporate investment and
household consumption.
While revenues from oil sales declined in 2023, the oil sector contributed substantially to
Kazakhstan’s overall economic growth amid an increase in hydrocarbon production. We estimate that
the oil sector’s contribution to GDP growth was around 0.5 percentage points. However, national oil
production has been steadily declining since 2019, which has noticeably reduced the total output. In
these conditions, the non-oil sectors have been saved by continuous injections from the National
Fund, which have averaged more than US$10 billion a year since 2020.
GDP by component
Source: Bureau of National Statistics
-5
-2
1
4
7
10
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
% year-on-year
GDP Non-oil Oil
10
Macroeconomic and
Banking Review
MACROECONOMIC AND BANKING REVIEW
41
Kazakhstan set a new demographic record in 2023, as its population passed the landmark of 20
million people at the year-end. On average, the figure is rising by one million each year. Population
growth naturally contributes to greater economic activity, as it increases the labour supply and
domestic demand. After declining in the 1990s, the country’s population stabilised only in the early
2000s, before gradually beginning to increase and reaching pre-crisis levels around 2010.
Amid stable external demand and the overall recovery of the Kazakh economy, industrial output
increased by 4.3% year-on-year in 2023, compared with 1.1% in 2022. The main drivers were the
mining sector (+4.6% year-on-year) and the manufacturing industry (+4.1%).
The National Bank of Kazakhstan reports that the current account balance had a deficit of US$8.7
billion in 2023, the highest since 2020. The main factor impacting the current account was a
significant increase in imports of goods and services, which have been rising for three years in a row.
Given the drop in oil prices of almost 20%, along with an increase in oil production of almost 7%,
exports declined by 3.6% year-on-year in 2023. As a result, the foreign trade surplus plummeted by
almost 50% to less than US$19 billion.
The negative current account balance is almost US$9 billion and amounts to -3.3% of GDP in relative
terms.
The rise in imports was driven by the unbridled increase in government spending, as well as the
strengthening tenge, which benefited from the flow of foreign currency from the National Fund.
Double-digit growth was also seen in consumer lending, which the population taps to compensate for
falling incomes amid high inflation and which also increases demand for imported products.
Current account surplus/deficit, US$ billion
Source: National Bank of Kazakhstan
-100 -12
-80 -10
-60 -8
-40 -6
-20 -4
0 -2
20 0
40 2
60 4
80
100
6
8
Imports Balance of incomes Exports Current account
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Consumption trends are largely moving with those of retail trade: retail sales amounted to KZT19.2
trillion in 2023, up 14% compared with 2022. In real terms, trade turnover rose by 7.7% year-on-year,
which significantly outpaced GDP growth for 2023. This was entirely due to greater turnover of non-
food products.
Retail trade
Source: Bureau of National Statistics
Despite dropping slightly in the year, tax revenues increased by 27% overall in 2023, which was lower
than the record in 2022, but significantly higher than in the previous five years. Compared with GDP,
tax revenues in real terms have also been notable for higher growth in the post-COVID period.
However, a disparity was seen last year, as GDP growth did not fully result in greater tax revenues,
although real growth remained at double-digit levels. Structurally, the non-oil sector accounted for the
bulk of GDP growth last year, while the oil sector suffered amid lower hydrocarbon prices, although
this was offset by tenge appreciation. Agricultural output also decreased because of poor harvests. As
such, the shortfall in taxes was due to the oil component.
0
3
6
9
15
12
18
21
2019 2020 2021 2022 2023
KZT trillion
Kazakhstan Almaty Astana
10
Macroeconomic and
Banking Review
Kazakhstan set a new demographic record in 2023, as its population passed the landmark of 20
million people at the year-end. On average, the figure is rising by one million each year. Population
growth naturally contributes to greater economic activity, as it increases the labour supply and
domestic demand. After declining in the 1990s, the country’s population stabilised only in the early
2000s, before gradually beginning to increase and reaching pre-crisis levels around 2010.
Amid stable external demand and the overall recovery of the Kazakh economy, industrial output
increased by 4.3% year-on-year in 2023, compared with 1.1% in 2022. The main drivers were the
mining sector (+4.6% year-on-year) and the manufacturing industry (+4.1%).
The National Bank of Kazakhstan reports that the current account balance had a deficit of US$8.7
billion in 2023, the highest since 2020. The main factor impacting the current account was a
significant increase in imports of goods and services, which have been rising for three years in a row.
Given the drop in oil prices of almost 20%, along with an increase in oil production of almost 7%,
exports declined by 3.6% year-on-year in 2023. As a result, the foreign trade surplus plummeted by
almost 50% to less than US$19 billion.
The negative current account balance is almost US$9 billion and amounts to -3.3% of GDP in relative
terms.
The rise in imports was driven by the unbridled increase in government spending, as well as the
strengthening tenge, which benefited from the flow of foreign currency from the National Fund.
Double-digit growth was also seen in consumer lending, which the population taps to compensate for
falling incomes amid high inflation and which also increases demand for imported products.
Current account surplus/deficit, US$ billion
Source: National Bank of Kazakhstan
-100 -12
-80 -10
-60 -8
-40 -6
-20 -4
0 -2
20 0
40 2
60 4
80
100
6
8
Imports Balance of incomes Exports Current account
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Consumption trends are largely moving with those of retail trade: retail sales amounted to KZT19.2
trillion in 2023, up 14% compared with 2022. In real terms, trade turnover rose by 7.7% year-on-year,
which significantly outpaced GDP growth for 2023. This was entirely due to greater turnover of non-
food products.
Retail trade
Source: Bureau of National Statistics
Despite dropping slightly in the year, tax revenues increased by 27% overall in 2023, which was lower
than the record in 2022, but significantly higher than in the previous five years. Compared with GDP,
tax revenues in real terms have also been notable for higher growth in the post-COVID period.
However, a disparity was seen last year, as GDP growth did not fully result in greater tax revenues,
although real growth remained at double-digit levels. Structurally, the non-oil sector accounted for the
bulk of GDP growth last year, while the oil sector suffered amid lower hydrocarbon prices, although
this was offset by tenge appreciation. Agricultural output also decreased because of poor harvests. As
such, the shortfall in taxes was due to the oil component.
0
3
6
9
15
12
18
21
2019 2020 2021 2022 2023
KZT trillion
Kazakhstan Almaty Astana
10
Macroeconomic and
Banking Review
The state budget deficit once again surged in 2023, rising by almost 30% to a three-year high of
KZT2.8 trillion. This stemmed partly from the rapid increase in expenditures, while revenues came
under pressure.
In 2023, inflation amounted to 9.8%, marking the first single-digit figure since February 2022.
Inflation continued to gradually stabilise in the year, due to both favourable external factors and
domestic state policy. First, the tenge appreciated several times in 2023 and amounted to KZT456.31/
US$1 by the year-end, which is even lower than the annual rate for 2022. Second, the monetary
regulator adhered to a very tight monetary policy throughout the year, starting an easing cycle only in
the second half and reducing the base interest rate very conservatively – by one percentage point by
the year-end. Third, as noted, inflationary pressure declined around the world, largely due to lower
energy and food prices and austere measures taken by central banks.
At the same time, inflation could have been even lower if not for the fiscal stimulus measures taken by
the government, which funded the country’s ever-growing expenses from the National Fund
throughout 2023.
Inflation and the base interest rate
Source: Bureau of National Statistics and National Bank of Kazakhstan
0
4
8
12
16
20
24
Dec 21
Mar 22
Jun 22
Sep 22
Jan 23
Feb 23
Mar 23
Apr 23
May 23
Jun 23
Jul 23
Aug 23
Sep 23
Oct 23
Nov 23
Dec 23
Dec 22
% year-on-year
CPI Base interest rate
42
Transfers from the National Fund to the state budget equalled KZT4 trillion, down KZT0.6 trillion
compared with 2022. However, additional withdrawals from the National Fund amounted to KZT1.3
trillion, which were essentially the same as transfers, meaning that total transfers amounted to KZT5.3
trillion.
The share of transfers in overall government revenues has been declining since 2020, reflecting the
significant growth in tax revenues. By the end of 2023, it had dropped to 16%, a new record low,
except for the very first year of transfers in 2007, when they amounted to just 9% of budget revenues.
In 2023, state budget expenditures increased to KZT26.8 trillion, up more than KZT5 trillion (+24.3%
year-on-year).
Despite the relatively modest growth in spending on education, healthcare and social security, the
social sector continued to account for more than half of all budget expenditures.
State budget indicators
Source: Ministry of Finance of Kazakhstan
0
3
6
9
15
24
12
21
18
27
2018 2019 2017 2020 2021 2022 2023
KZT trillion
Revenues Expenditures Deficit
11.6
12.5
10.8
11.3
12.8
13.5
14.5
16.7
15.8
18.0
20.2
21.5
24.9
26.8
1.5 0.8 1.3
2.8 2.5 2.2 2.8
10
Macroeconomic and
Banking Review
KZT2.8 trillion. This stemmed partly from the rapid increase in expenditures, while revenues came
under pressure.
In 2023, inflation amounted to 9.8%, marking the first single-digit figure since February 2022.
Inflation continued to gradually stabilise in the year, due to both favourable external factors and
domestic state policy. First, the tenge appreciated several times in 2023 and amounted to KZT456.31/
US$1 by the year-end, which is even lower than the annual rate for 2022. Second, the monetary
regulator adhered to a very tight monetary policy throughout the year, starting an easing cycle only in
the second half and reducing the base interest rate very conservatively – by one percentage point by
the year-end. Third, as noted, inflationary pressure declined around the world, largely due to lower
energy and food prices and austere measures taken by central banks.
At the same time, inflation could have been even lower if not for the fiscal stimulus measures taken by
the government, which funded the country’s ever-growing expenses from the National Fund
throughout 2023.
Inflation and the base interest rate
Source: Bureau of National Statistics and National Bank of Kazakhstan
0
4
8
12
16
20
24
Dec 21
Mar 22
Jun 22
Sep 22
Jan 23
Feb 23
Mar 23
Apr 23
May 23
Jun 23
Jul 23
Aug 23
Sep 23
Oct 23
Nov 23
Dec 23
Dec 22
% year-on-year
CPI Base interest rate
42
Transfers from the National Fund to the state budget equalled KZT4 trillion, down KZT0.6 trillion
compared with 2022. However, additional withdrawals from the National Fund amounted to KZT1.3
trillion, which were essentially the same as transfers, meaning that total transfers amounted to KZT5.3
trillion.
The share of transfers in overall government revenues has been declining since 2020, reflecting the
significant growth in tax revenues. By the end of 2023, it had dropped to 16%, a new record low,
except for the very first year of transfers in 2007, when they amounted to just 9% of budget revenues.
In 2023, state budget expenditures increased to KZT26.8 trillion, up more than KZT5 trillion (+24.3%
year-on-year).
Despite the relatively modest growth in spending on education, healthcare and social security, the
social sector continued to account for more than half of all budget expenditures.
State budget indicators
Source: Ministry of Finance of Kazakhstan
0
3
6
9
15
24
12
21
18
27
2018 2019 2017 2020 2021 2022 2023
KZT trillion
Revenues Expenditures Deficit
11.6
12.5
10.8
11.3
12.8
13.5
14.5
16.7
15.8
18.0
20.2
21.5
24.9
26.8
1.5 0.8 1.3
2.8 2.5 2.2 2.8
10
Macroeconomic and
Banking Review
43
National Bank monetary policy
In the second half of 2023, the National Bank of Kazakhstan began to gradually soften its monetary
policy, reducing the base interest rate from 16.75% to 15.75% by the year-end. At the same time,
consumer inflation slowed significantly, from 20.3% year-on-year in December 2022 to 9.8% in
December 2023.
All components of aggregate demand demonstrated double-digit growth rates, including retail trade,
loans for household consumer purposes, fixed investment and state budget expenditures, which
created upward inflationary pressure on the economy last year.
Overall, inflation in the country is gradually stabilising as the economy adapts to external shocks and
inflation normalises worldwide. The tenge appreciation also played an important role in this process,
as the exchange rate began to strengthen for the first time since 2017 and amounted to KZT456.31/
US$1 on average for the year (compared with KZT460.5 in 2022).
Banking sector of Kazakhstan
In 2023, the loan portfolio of second-tier banks increased to KZT27.9 trillion, up 22.4% year-on-year,
a growth rate slightly lower than in 2022 (+23.3% year-on-year). This was mainly due to expansion in
the retail loan portfolio, which increased by 28.9% year-on-year in 2023 (+31.8% in 2022) and
amounted to KZT18.2 trillion, almost twice that of the corporate loan portfolio (KZT9.7 trillion). The
corporate loan portfolio grew by 11.9% year-on-year in 2023 (+11.5% in 2022). The share of the
corporate portfolio in the overall loan portfolio of commercial banks decreased to 34.7% (37.9% in
2022). Growth in the loan portfolio was mainly due to a 23.0% year-on-year increase in loans
denominated in local currency (+26.4% in 2022), while lending in foreign currency rose by 16.3%
year-on-year (-3.1% in 2022). The share of loans denominated in local currency remains several times
higher than that of foreign currency: 92.3% and 7.7%, respectively (compared with 91.9% and 8.1% in
2022).
Consumer lending continues to dominate in the retail loan portfolio both in terms of growth rates and
volume: in 2023, the consumer loan portfolio grew by 34.1% year-on-year (+25.2% in 2022) and
amounted to KZT10.3 trillion (KZT7.7 trillion in 2022). The share of consumer loans in the overall loan
portfolio of second-tier banks increased over the year and amounted to 37.0% at the end of 2023
(33.7% in 2022). Lending for the construction and purchase of housing by the population increased
by 17.8% year-on-year in 2023 to KZT5.5 trillion (KZT4.7 trillion in 2022). As a result, over the year, the
share of such lending decreased slightly to 19.9%, from 20.6% in 2022.
The share of loans overdue for more than 90 days (NPL90+) declined from 3.4% in 2022 to 2.9% in
2023. In nominal terms, the NPL90+ figure was up 6% year-on-year, from KZT814.6 billion in 2022 to
KZT863.8 billion in 2023.
In 2023, the deposit portfolio of banks increased by 12.0% year-on-year (+14.2% in 2022) to KZT34.7
trillion (KZT30.9 trillion in 2022). The rise was mainly driven by a 20.4% increase in retail deposits
(+18.0% in 2022) to KZT18.8 trillion (KZT15.6 trillion in 2022), while corporate deposits grew by 3.5%
year-on-year KZT15.8 trillion (KZT15.3 trillion in 2022). Broken down by currency, tenge deposits
increased by 25.8% year-on-year to KZT21.2 trillion, while foreign currency deposits dropped by
17.7% year-on-year to KZT8.1 trillion (KZT9.8 trillion in 2022). In 2023, dollarisation in Kazakhstan
decreased to 23.2% (31.6% in 2022), its lowest since 1997.
As of the year-end, total liquidity withdrawn by the National Bank of Kazakhstan was up 18.3% year-
on-year at KZT4.4 trillion. The main instrument that it used to withdraw funds was the deposit auction,
at which total transactions increased by 157.2% year-on-year to KZT2.5 trillion. Withdrawals through
deposits grew by 17.1% year-on-year to KZT1.0 trillion, while withdrawals through short-term notes
dropped by 46.3% to KZT1.2 trillion . Overall, at the year-end, the volume of sterilised liquidity was
11.6% of the money supply (10.9% in 2022) and 14.9% of the gross loans (15.5% in 2022) of second-
tier banks.
In 2023, commercial banks generated total profits of KZT2.2 trillion, up 49.0% from 2022. Net
interest income in the banking sector grew by 31.2% year-on-year to KZT2.7 trillion, while net fee and
commission income amounted to KZT727 billion (+20.5%). Provision recovery income increased by
25.9% year-on-year to KZT1.6 trillion. The return on assets of banks rose from 3.6% in 2022 to 4.6%
in 2023, while the capital of second-tier banks increased by 31.3% year-on-year to KZT6.9 trillion
(+15.3% in 2022).
10
Macroeconomic and
Banking Review
National Bank monetary policy
In the second half of 2023, the National Bank of Kazakhstan began to gradually soften its monetary
policy, reducing the base interest rate from 16.75% to 15.75% by the year-end. At the same time,
consumer inflation slowed significantly, from 20.3% year-on-year in December 2022 to 9.8% in
December 2023.
All components of aggregate demand demonstrated double-digit growth rates, including retail trade,
loans for household consumer purposes, fixed investment and state budget expenditures, which
created upward inflationary pressure on the economy last year.
Overall, inflation in the country is gradually stabilising as the economy adapts to external shocks and
inflation normalises worldwide. The tenge appreciation also played an important role in this process,
as the exchange rate began to strengthen for the first time since 2017 and amounted to KZT456.31/
US$1 on average for the year (compared with KZT460.5 in 2022).
Banking sector of Kazakhstan
In 2023, the loan portfolio of second-tier banks increased to KZT27.9 trillion, up 22.4% year-on-year,
a growth rate slightly lower than in 2022 (+23.3% year-on-year). This was mainly due to expansion in
the retail loan portfolio, which increased by 28.9% year-on-year in 2023 (+31.8% in 2022) and
amounted to KZT18.2 trillion, almost twice that of the corporate loan portfolio (KZT9.7 trillion). The
corporate loan portfolio grew by 11.9% year-on-year in 2023 (+11.5% in 2022). The share of the
corporate portfolio in the overall loan portfolio of commercial banks decreased to 34.7% (37.9% in
2022). Growth in the loan portfolio was mainly due to a 23.0% year-on-year increase in loans
denominated in local currency (+26.4% in 2022), while lending in foreign currency rose by 16.3%
year-on-year (-3.1% in 2022). The share of loans denominated in local currency remains several times
higher than that of foreign currency: 92.3% and 7.7%, respectively (compared with 91.9% and 8.1% in
2022).
Consumer lending continues to dominate in the retail loan portfolio both in terms of growth rates and
volume: in 2023, the consumer loan portfolio grew by 34.1% year-on-year (+25.2% in 2022) and
amounted to KZT10.3 trillion (KZT7.7 trillion in 2022). The share of consumer loans in the overall loan
portfolio of second-tier banks increased over the year and amounted to 37.0% at the end of 2023
(33.7% in 2022). Lending for the construction and purchase of housing by the population increased
by 17.8% year-on-year in 2023 to KZT5.5 trillion (KZT4.7 trillion in 2022). As a result, over the year, the
share of such lending decreased slightly to 19.9%, from 20.6% in 2022.
The share of loans overdue for more than 90 days (NPL90+) declined from 3.4% in 2022 to 2.9% in
2023. In nominal terms, the NPL90+ figure was up 6% year-on-year, from KZT814.6 billion in 2022 to
KZT863.8 billion in 2023.
In 2023, the deposit portfolio of banks increased by 12.0% year-on-year (+14.2% in 2022) to KZT34.7
trillion (KZT30.9 trillion in 2022). The rise was mainly driven by a 20.4% increase in retail deposits
(+18.0% in 2022) to KZT18.8 trillion (KZT15.6 trillion in 2022), while corporate deposits grew by 3.5%
year-on-year KZT15.8 trillion (KZT15.3 trillion in 2022). Broken down by currency, tenge deposits
increased by 25.8% year-on-year to KZT21.2 trillion, while foreign currency deposits dropped by
17.7% year-on-year to KZT8.1 trillion (KZT9.8 trillion in 2022). In 2023, dollarisation in Kazakhstan
decreased to 23.2% (31.6% in 2022), its lowest since 1997.
As of the year-end, total liquidity withdrawn by the National Bank of Kazakhstan was up 18.3% year-
on-year at KZT4.4 trillion. The main instrument that it used to withdraw funds was the deposit auction,
at which total transactions increased by 157.2% year-on-year to KZT2.5 trillion. Withdrawals through
deposits grew by 17.1% year-on-year to KZT1.0 trillion, while withdrawals through short-term notes
dropped by 46.3% to KZT1.2 trillion . Overall, at the year-end, the volume of sterilised liquidity was
11.6% of the money supply (10.9% in 2022) and 14.9% of the gross loans (15.5% in 2022) of second-
tier banks.
In 2023, commercial banks generated total profits of KZT2.2 trillion, up 49.0% from 2022. Net
interest income in the banking sector grew by 31.2% year-on-year to KZT2.7 trillion, while net fee and
commission income amounted to KZT727 billion (+20.5%). Provision recovery income increased by
25.9% year-on-year to KZT1.6 trillion. The return on assets of banks rose from 3.6% in 2022 to 4.6%
in 2023, while the capital of second-tier banks increased by 31.3% year-on-year to KZT6.9 trillion
(+15.3% in 2022).
10
Macroeconomic and
Banking Review
11
Financial Review
Financial Review
45
Net profit attributable to common shareholders rose to KZT693.4 billion in 2023, up 21.8% compared
with KZT569.5 billion in 2022. This was due mainly to a significant increase in the lending and
transactional businesses, despite a one-off negative impact from the accelerated amortisation of a
discount (net of tax effect) in the amount) of KZT24.8 billion on a deposit of the Kazakhstan
Sustainability Fund (KSF), which the Bank partly prepaid in December 2023 (a partial prepayment of
state support received by Kazkommertsbank as a deposit from the KSF in 2015).
Interest income climbed by 33.8% year-on-year, due mainly to an increase in the average rate and
balances of loans to customers.
The interest expense rose by 48.6% compared with 2022. This was driven mainly by a higher average
rate on amounts due to customers and share of tenge amounts due to customers, as well as a one-off
negative impact from the abovementioned accelerated amortisation of a discount of KZT24.8 billion
on the KSF deposit. Consequently, net interest income climbed by 21.1% year-on-year.
In 2023, the net interest margin was affected by the increase in average rates on both loans to
customers and amounts due to customers following a rise in market interest rates. Furthermore, the
share of loans to customers in total interest-earning assets soared. Meanwhile, there was an increase
in the average rate of FX amounts due from credit institutions and FX interest-earning cash and cash
equivalents following a global rise in US dollar interest rates. As a result, the net interest margin
climbed to 6.2% in 2023, compared with 5.6% in 2022.
Moreover, the net interest margin in 2023 and the fourth quarter was negatively impacted by the
abovementioned accelerated amortisation of the discount of KZT24.8 billion on the KSF deposit.
Excluding this effect, the net interest margin would have amounted to 6.5% in 2023 and 7.0% for the
fourth quarter.
In 2023, the overall year-on-year dynamics of the fee and commission income and expense was
driven by growth in the number of clients and in clients’ transactional activity. Net fee and commission
income increased by 19.5% year-on-year, due to a rise in net transactional income of both legal
entities and individuals*, as well as in fees on letters of credit and guarantees issued.
Net fee and commission income for the fourth quarter decreased by 20.3% compared with the same
period of 2022. This was due to higher expenses on loyalty programme bonuses and deposit
insurance fees payable to the Kazakhstan Deposit Insurance Fund.
In 2023, other non-interest income (4) decreased by 17.3% year-on-year. This was due mainly to a
lower net foreign-exchange gain amid higher volatility of exchange rates and interest rates in 2022.
Net insurance income(5) surged by 89.2% compared with 2022, due to growth in the life and general
insurance business.
Operating expenses increased by 14.5% year-on-year. This was due mainly to the indexation of
salaries and other employee benefits from 1 March 2023, as well a rise in IT investments and expenses
for development of the card business. As part of operating expenses for 2023, the cost of audit
services amounted to KZT506.2 million (in 2022 – KZT467.5 million).
In 2023, the cost of risk on loans to customers remained at normalized level and within the scope of
our full-year guidance, at 1.0%.
The cost-to-income ratio equalled 19.2%, compared with 19.0% in 2022, the slight difference being
due to higher operating expenses.
As at the end of 2023, total assets were up 7.6% year-to-date, driven by an increase in amounts due
to customers and debt securities issued.
Compared with the end of 2022, loans to customers were up 18.0% on a gross and 18.2% on a net
basis. The growth in the gross loan portfolio was attributable to a rise of 13.4% in corporate, 25.1% in
SME and 22.7% in retail loans.
Despite some increase in absolute terms, Stage 3 loans had decreased to 7.5% by the year-end, due
to loan portfolio growth.
Compared with the end of the third quarter, deposits of legal entities and deposits of individuals were
up 11.2% and 9.3%, respectively, driven by client fund inflows.
As at the year-end, the share of tenge deposits in total corporate deposits was 72.9%, compared with
60.6% at the end of 2022, while the share in total retail deposits was 63.4%, compared with 52.6% a
year earlier.
11
Financial Review
FINANCIAL REVIEW
* Transactional income of individuals, less transactional expenses of individuals and loyalty programme bonuses
** Other non-interest income (net gain/(loss) on financial assets and liabilities at fair value through profit or loss, net
realised loss from financial assets at fair value through other comprehensive income, net foreign-exchange gain, share
in profit of associate, income on non-banking activities, other expenses, loss from impairment of assets held for sales,
loss on disposal of subsidiaries)
*** Insurance revenues less insurance service expenses and net reinsurance expenses
Net profit attributable to common shareholders rose to KZT693.4 billion in 2023, up 21.8% compared
with KZT569.5 billion in 2022. This was due mainly to a significant increase in the lending and
transactional businesses, despite a one-off negative impact from the accelerated amortisation of a
discount (net of tax effect) in the amount) of KZT24.8 billion on a deposit of the Kazakhstan
Sustainability Fund (KSF), which the Bank partly prepaid in December 2023 (a partial prepayment of
state support received by Kazkommertsbank as a deposit from the KSF in 2015).
Interest income climbed by 33.8% year-on-year, due mainly to an increase in the average rate and
balances of loans to customers.
The interest expense rose by 48.6% compared with 2022. This was driven mainly by a higher average
rate on amounts due to customers and share of tenge amounts due to customers, as well as a one-off
negative impact from the abovementioned accelerated amortisation of a discount of KZT24.8 billion
on the KSF deposit. Consequently, net interest income climbed by 21.1% year-on-year.
In 2023, the net interest margin was affected by the increase in average rates on both loans to
customers and amounts due to customers following a rise in market interest rates. Furthermore, the
share of loans to customers in total interest-earning assets soared. Meanwhile, there was an increase
in the average rate of FX amounts due from credit institutions and FX interest-earning cash and cash
equivalents following a global rise in US dollar interest rates. As a result, the net interest margin
climbed to 6.2% in 2023, compared with 5.6% in 2022.
Moreover, the net interest margin in 2023 and the fourth quarter was negatively impacted by the
abovementioned accelerated amortisation of the discount of KZT24.8 billion on the KSF deposit.
Excluding this effect, the net interest margin would have amounted to 6.5% in 2023 and 7.0% for the
fourth quarter.
In 2023, the overall year-on-year dynamics of the fee and commission income and expense was
driven by growth in the number of clients and in clients’ transactional activity. Net fee and commission
income increased by 19.5% year-on-year, due to a rise in net transactional income of both legal
entities and individuals*, as well as in fees on letters of credit and guarantees issued.
Net fee and commission income for the fourth quarter decreased by 20.3% compared with the same
period of 2022. This was due to higher expenses on loyalty programme bonuses and deposit
insurance fees payable to the Kazakhstan Deposit Insurance Fund.
In 2023, other non-interest income (4) decreased by 17.3% year-on-year. This was due mainly to a
lower net foreign-exchange gain amid higher volatility of exchange rates and interest rates in 2022.
Net insurance income(5) surged by 89.2% compared with 2022, due to growth in the life and general
insurance business.
Operating expenses increased by 14.5% year-on-year. This was due mainly to the indexation of
salaries and other employee benefits from 1 March 2023, as well a rise in IT investments and expenses
for development of the card business. As part of operating expenses for 2023, the cost of audit
services amounted to KZT506.2 million (in 2022 – KZT467.5 million).
In 2023, the cost of risk on loans to customers remained at normalized level and within the scope of
our full-year guidance, at 1.0%.
The cost-to-income ratio equalled 19.2%, compared with 19.0% in 2022, the slight difference being
due to higher operating expenses.
As at the end of 2023, total assets were up 7.6% year-to-date, driven by an increase in amounts due
to customers and debt securities issued.
Compared with the end of 2022, loans to customers were up 18.0% on a gross and 18.2% on a net
basis. The growth in the gross loan portfolio was attributable to a rise of 13.4% in corporate, 25.1% in
SME and 22.7% in retail loans.
Despite some increase in absolute terms, Stage 3 loans had decreased to 7.5% by the year-end, due
to loan portfolio growth.
Compared with the end of the third quarter, deposits of legal entities and deposits of individuals were
up 11.2% and 9.3%, respectively, driven by client fund inflows.
As at the year-end, the share of tenge deposits in total corporate deposits was 72.9%, compared with
60.6% at the end of 2022, while the share in total retail deposits was 63.4%, compared with 52.6% a
year earlier.
11
Financial Review
FINANCIAL REVIEW
* Transactional income of individuals, less transactional expenses of individuals and loyalty programme bonuses
** Other non-interest income (net gain/(loss) on financial assets and liabilities at fair value through profit or loss, net
realised loss from financial assets at fair value through other comprehensive income, net foreign-exchange gain, share
in profit of associate, income on non-banking activities, other expenses, loss from impairment of assets held for sales,
loss on disposal of subsidiaries)
*** Insurance revenues less insurance service expenses and net reinsurance expenses
46
As at the end of 2023, debt securities issued were up 41.2% year-to-date, due mainly to the issuance
of bonds on the Astana International Exchange (AIX) with a coupon rate of 3.5% in May and July 2023.
As at 15 March 2024, the Bank’s debt securities portfolio was as follows.
Description of security
Nominal amount
outstanding Interest rate Maturity date
Local bonds KZT100 billion 7.5% p.a. November 2024
Local bonds KZT131.7 billion 7.5% p.a. February 2025
Subordinated coupon bonds KZT101.1 billion 9.5% p.a. October 2025
Local bonds listed on AIX US$185.5 million 3.5% p.a. May 2025
Local bonds listed on AIX US$299.9 million 3.5% p.a. May 2025
Local bonds listed on AIX US$229.5 million 3.5% p.a. July 2025
In 2023, the Bank’s total equity increased by KZT464.7 billion, up 23.1% year-on-year, due mainly to
net profit generated in the reporting period.
The Bank’s capital adequacy ratios were as follows*.
31-Dec-23 30-Sep-23 30-Jun-23 31-Mar-23 31-Dec-22
Capital adequacy ratios, unconsolidated
Halyk Bank
k1-1 19.6% 18.6% 18.1% 20.2% 19.3%
k1-2 19.6% 18.6% 18.1% 20.2% 19.3%
k2 19.9% 19.0% 18.4% 20.6% 19.7%
Capital adequacy ratios, consolidated
CET 1 19.3% 18.2% 17.9% 20.2% 19.2%
Tier 1 capital 19.3% 18.2% 17.9% 20.2% 19.2%
Total capital 19.6% 18.5% 18.3% 20.5% 19.5%
11
Financial Review
* The minimum regulatory capital adequacy requirements are 9.5%, for k1, 10.5% for k1-2 and 12% for k2, including a
conservation buffer of 3% and systemic buffer of 1% for each.
As at the end of 2023, debt securities issued were up 41.2% year-to-date, due mainly to the issuance
of bonds on the Astana International Exchange (AIX) with a coupon rate of 3.5% in May and July 2023.
As at 15 March 2024, the Bank’s debt securities portfolio was as follows.
Description of security
Nominal amount
outstanding Interest rate Maturity date
Local bonds KZT100 billion 7.5% p.a. November 2024
Local bonds KZT131.7 billion 7.5% p.a. February 2025
Subordinated coupon bonds KZT101.1 billion 9.5% p.a. October 2025
Local bonds listed on AIX US$185.5 million 3.5% p.a. May 2025
Local bonds listed on AIX US$299.9 million 3.5% p.a. May 2025
Local bonds listed on AIX US$229.5 million 3.5% p.a. July 2025
In 2023, the Bank’s total equity increased by KZT464.7 billion, up 23.1% year-on-year, due mainly to
net profit generated in the reporting period.
The Bank’s capital adequacy ratios were as follows*.
31-Dec-23 30-Sep-23 30-Jun-23 31-Mar-23 31-Dec-22
Capital adequacy ratios, unconsolidated
Halyk Bank
k1-1 19.6% 18.6% 18.1% 20.2% 19.3%
k1-2 19.6% 18.6% 18.1% 20.2% 19.3%
k2 19.9% 19.0% 18.4% 20.6% 19.7%
Capital adequacy ratios, consolidated
CET 1 19.3% 18.2% 17.9% 20.2% 19.2%
Tier 1 capital 19.3% 18.2% 17.9% 20.2% 19.2%
Total capital 19.6% 18.5% 18.3% 20.5% 19.5%
11
Financial Review
* The minimum regulatory capital adequacy requirements are 9.5%, for k1, 10.5% for k1-2 and 12% for k2, including a
conservation buffer of 3% and systemic buffer of 1% for each.
12
Business Review
Business Review
48
Halyk Bank’s core business focuses on retail, corporate and SME banking. Through
subsidiaries, the Bank also provides insurance, cash collection, asset management, brokerage,
telecommunication and leasing services.
Retail banking
In 2023, the retail business once again delivered solid results. The retail team continued to actively
work on digitalisation, developing new products and building financial and consumer ecosystem
services. The Bank’s digital strategy has received positive feedback from the consumer market.
Despite intense competition from second-tier banks, there was strong demand throughout the year
for the Bank’s retail products. The Bank incorporated feedback from its customers, relentlessly
improving the quality of its services. The Bank’s ratings continue to improve and are still among the
best on the market. Customer trust has always been and remains one of the main criteria that the Bank
uses to measure its success. Halyk Group values this trust and makes every effort to not only maintain
it, but also enhance it. Another area of focus is on processes related to system security, an important
consideration in the current environment for customers choosing to begin or continue working with
the Bank.
Halyk Bank maintained its leading position in deposits, with a market share of 27.4%. At the year-end,
its deposit portfolio amounted to KZT5.8 trillion. Opening deposits online remains a popular service
among the Bank’s customers and accounted for 78% of new deposits in 2023.
In Halyk Bank’s card business, the positive trend continued. As of 1 January 2024, the Bank had 7
million active payment cards issued and remained a leader in this area, with a market share of 20%.
To expand the payment card service, the Bank continued to equip branches with self-embossers,
which allow customers to receive payment cards with the assistance of a manager. In 2023, 52
additional self-embossers were installed in the branch network. The Bank plans to deploy more of
them in 2024.
In November 2023, the Bank joined the National Payment Corporation of the National Bank of
Kazakhstan in the Digital Tenge pilot project, part of the Programme for the Development of the
National Payment System in Kazakhstan. During the pilot period, the Bank made such transactions
available as cash withdrawals from cashpoints, payments through the POS terminal of the Bank and
other second-tier banks, and online payments at retail and service outlets. The pilot project aims to
further develop and modernise the National Payment System, in which the Bank plans to continue
playing an active role.
The Bank has around 33,200 payroll card programmes, a key strategic service used to pay salaries on
its cards to 2.9 million people, or 42% of the country’s working population.
To foster and improve study skills, as well as offer social support for children of the Bank’s customers,
in September 2023, it launched a new service called Kundelik. This electronic diary for schoolchildren
in years 5-11 allows them to earn bonus points in the Halyk app for excellent marks (10 points is equal
to 100 bonus points). The bonus points are awarded in a journal at http://kundelik.kz/ on the
subsequent working day after a student receives an excellent mark. Since the start of the school year,
the project has opened more than 580,000 Halyk Easy cards, digital children’s cards issued through
the parent’s mobile app. At the year-end, the share of digital cards in the portfolio was 93%. This
project encompasses 5,650 schools, or 73% of the schools in the country.
For the convenience of customers, the Bank was first to market with its launch of Face Pay, an
innovative service that allows people to use their facial biometrics to pay for public transport such as
the underground. Face Pay is a convenient, safe and fast way to pay for travel, which does not require
a card or smartphone. Harnessing artificial intelligence, the payment process though Face Pay
terminals takes only a few seconds, which is crucial for customers taking the underground during rush
hour. In December, the Bank launched a pilot project for its customers at two underground stations in
Almaty: Abay and Bauyrjan Momyshuly.
As of the end of 2023, around 2.5 million pensioners and beneficiaries continued to trust the Bank and
use all its services.
Lending remains the most actively growing business and a driver for the retail unit. As of 1 January
2024, the Bank’s retail portfolio amounted to KZT3 trillion, representing a market share of 17.9%. In
2023, the portfolio expanded by 19%. Online loans accounted for 84% of those issued in the year.
A new project launched in September 2023 – digital car loans through partner dealerships – proved
to be the breakthrough of the year. The project was implemented in partnership with the country’s
leading car dealers, which are also corporate clients of the Bank. This initiative demonstrates the
strong synergy between the Bank’s retail and corporate businesses, driving a 150% year-on-year
increase in auto loans provided by the Bank. The process is simple: an application for a car loan is
submitted through a car dealership, the bank loan and collateral agreements are signed using a mobile
app, and the loan is issued online without needing to speak with a Bank manager or credit
administrator, which makes customers happy. In December, the Bank saw excellent results in terms of
the number of loans issued and had a 24.4% market share of overall car loans in Kazakhstan.
The Bank recently created an advanced analytics team to conduct in-depth data analysis, assess the
probability of events and possible risks, predict trends, plan appropriately and take informed
decisions. In solving advanced analytics problems, the Bank relies on the experience of a team of
business analysts and data scientists, employing the most appropriate analytical methods,
technologies and software for each task.
12
Business Review
BUSINESS REVIEW
Halyk Bank’s core business focuses on retail, corporate and SME banking. Through
subsidiaries, the Bank also provides insurance, cash collection, asset management, brokerage,
telecommunication and leasing services.
Retail banking
In 2023, the retail business once again delivered solid results. The retail team continued to actively
work on digitalisation, developing new products and building financial and consumer ecosystem
services. The Bank’s digital strategy has received positive feedback from the consumer market.
Despite intense competition from second-tier banks, there was strong demand throughout the year
for the Bank’s retail products. The Bank incorporated feedback from its customers, relentlessly
improving the quality of its services. The Bank’s ratings continue to improve and are still among the
best on the market. Customer trust has always been and remains one of the main criteria that the Bank
uses to measure its success. Halyk Group values this trust and makes every effort to not only maintain
it, but also enhance it. Another area of focus is on processes related to system security, an important
consideration in the current environment for customers choosing to begin or continue working with
the Bank.
Halyk Bank maintained its leading position in deposits, with a market share of 27.4%. At the year-end,
its deposit portfolio amounted to KZT5.8 trillion. Opening deposits online remains a popular service
among the Bank’s customers and accounted for 78% of new deposits in 2023.
In Halyk Bank’s card business, the positive trend continued. As of 1 January 2024, the Bank had 7
million active payment cards issued and remained a leader in this area, with a market share of 20%.
To expand the payment card service, the Bank continued to equip branches with self-embossers,
which allow customers to receive payment cards with the assistance of a manager. In 2023, 52
additional self-embossers were installed in the branch network. The Bank plans to deploy more of
them in 2024.
In November 2023, the Bank joined the National Payment Corporation of the National Bank of
Kazakhstan in the Digital Tenge pilot project, part of the Programme for the Development of the
National Payment System in Kazakhstan. During the pilot period, the Bank made such transactions
available as cash withdrawals from cashpoints, payments through the POS terminal of the Bank and
other second-tier banks, and online payments at retail and service outlets. The pilot project aims to
further develop and modernise the National Payment System, in which the Bank plans to continue
playing an active role.
The Bank has around 33,200 payroll card programmes, a key strategic service used to pay salaries on
its cards to 2.9 million people, or 42% of the country’s working population.
To foster and improve study skills, as well as offer social support for children of the Bank’s customers,
in September 2023, it launched a new service called Kundelik. This electronic diary for schoolchildren
in years 5-11 allows them to earn bonus points in the Halyk app for excellent marks (10 points is equal
to 100 bonus points). The bonus points are awarded in a journal at http://kundelik.kz/ on the
subsequent working day after a student receives an excellent mark. Since the start of the school year,
the project has opened more than 580,000 Halyk Easy cards, digital children’s cards issued through
the parent’s mobile app. At the year-end, the share of digital cards in the portfolio was 93%. This
project encompasses 5,650 schools, or 73% of the schools in the country.
For the convenience of customers, the Bank was first to market with its launch of Face Pay, an
innovative service that allows people to use their facial biometrics to pay for public transport such as
the underground. Face Pay is a convenient, safe and fast way to pay for travel, which does not require
a card or smartphone. Harnessing artificial intelligence, the payment process though Face Pay
terminals takes only a few seconds, which is crucial for customers taking the underground during rush
hour. In December, the Bank launched a pilot project for its customers at two underground stations in
Almaty: Abay and Bauyrjan Momyshuly.
As of the end of 2023, around 2.5 million pensioners and beneficiaries continued to trust the Bank and
use all its services.
Lending remains the most actively growing business and a driver for the retail unit. As of 1 January
2024, the Bank’s retail portfolio amounted to KZT3 trillion, representing a market share of 17.9%. In
2023, the portfolio expanded by 19%. Online loans accounted for 84% of those issued in the year.
A new project launched in September 2023 – digital car loans through partner dealerships – proved
to be the breakthrough of the year. The project was implemented in partnership with the country’s
leading car dealers, which are also corporate clients of the Bank. This initiative demonstrates the
strong synergy between the Bank’s retail and corporate businesses, driving a 150% year-on-year
increase in auto loans provided by the Bank. The process is simple: an application for a car loan is
submitted through a car dealership, the bank loan and collateral agreements are signed using a mobile
app, and the loan is issued online without needing to speak with a Bank manager or credit
administrator, which makes customers happy. In December, the Bank saw excellent results in terms of
the number of loans issued and had a 24.4% market share of overall car loans in Kazakhstan.
The Bank recently created an advanced analytics team to conduct in-depth data analysis, assess the
probability of events and possible risks, predict trends, plan appropriately and take informed
decisions. In solving advanced analytics problems, the Bank relies on the experience of a team of
business analysts and data scientists, employing the most appropriate analytical methods,
technologies and software for each task.
12
Business Review
BUSINESS REVIEW
49
The team specialises in collecting, processing and interpreting large amounts of data-driven insights
based on customers’ use of products and services. It applies this information to create machine
learning models and launch marketing campaigns, which ultimately helps to provide the best offers
and customer service. The models segment the customer base, which helps to better understand
their needs, behaviour and market, as well as optimise the pricing of products and services.
In advanced analytics, statistical methods and machine learning and artificial intelligence algorithms
are applied to identify patterns and trends in data. Data visualisation creates interactive dashboards
that help business units to better understand and use the findings.
GovTech: the digitalisation of public services
GovTech continues to be a strategic focus for the Bank. Its main objectives are to make public services
part of the Bank’s applications, integrate public services to automate the Bank’s internal business
processes and liaise with government agencies regarding digitalisation issues.
Since the creation of GovTech, the Bank has launched 52 public services. It continues to lead this
sector among second-tier banks that facilitate public services. The services are highly popular among
the Bank’s customers and had been used more than 13 million times as of the end of 2023. The most
popular ones are digital documents, vehicle certification, verification of health insurance status and
numerous types of enquiries/information. Some were presented at major IT forums, such as Digital
Bridge and Digital Almaty, and to senior government officials, including the Kazakh president. When
working with government agencies, the Bank has proven itself as a reliable, high-tech partner, and the
Bank’s representatives are the first ones people to turn to when planning new initiatives.
In 2024, the Bank plans to further develop this focus and launch services that are in high demand
among customers.
Marketplace
Over the past two years, Halyk has launched products and services across verticals of the ecosystem
that make life easier for and meet the needs of customers. The main focus remains on improving the
Halyk Super App, which is the backbone of its retail offering and of which Halyk Marketplace is part.
The Marketplace allows customers to buy goods from partners using Halyk Bank’s most
advantageous financial products. Considering the rapid pace of digitalisation, changes in consumer
behaviour and preferences, and the growing needs of customers, the Bank has combined these
processes to offer every customer convenience, speed, simplicity and security. Each solution
integrates big data analysis and aims to develop technological platforms.
The Bank’s customers actively use the Marketplace and pay for purchases from trading partners by
instalment or on credit, both through points of sale and online.
In 2023, the Bank achieved its goal of making it possible for people to order goods directly from China
and Turkey through cooperation with goods manufacturers in these countries. This is a unique
offering on the market and has had a beneficial effect on several key metrics.
Specifically, in 2023, Halyk Market’s GMV surged by 170% year-on-year. In the fourth quarter of 2023,
Halyk Market’s GMV jumped by a record KZT34.1 billion, an increase of 330% year-on-year. This
considerable growth made possible through active marketing, increasing the product base to more
than 874,000 SKUs, involving more major retailers and expanding the range of goods sold by existing
partners. New banking products were also launched, such as loans with individual interest rates,
which also made it possible to provide more competitive rates for Marketplace partners.
SME banking*
Halyk Bank has been and remains the leader in working with SMEs, in terms of both transactions and
lending. As of 1 January 2024, the Bank serviced around 270,200 active SME clients, including over
38,600 borrowers, who were provided with more than 75,100 loans in 2023. Deposits and balances
on the current accounts of SME customers increased by 19% year-on-year, which demonstrates the
high level of trust that customers have in Halyk Bank.
In 2023, the Bank expanded the list of services offered on the Onlinebank mobile app for legal entities,
which boosted the popularity of the app among entrepreneurs and led to an increase in the number of
MAUs. The Bank also worked actively to improve the system for working with Onlinebank legal entities
and modified the design of the mobile app for business customers, which resulted in a significant
increase in the DAU to MAU ratio from 27.0% to 30.9%.
Meanwhile, the development of a digital offering for legal entities helped to increase payments
through Onlinebank, which grew by 20.3% to KZT109.5 trillion in 2023. This figure has more than
doubled over the past two years.
In 2023, the SME digital team continued to actively increase lending to legal entities registered as
limited liability partnerships (LLPs). Whereas 608 LLPs were financed in 2022 following the launch of
the digital loan product from April 2022, the number of such companies increased to 2,315 in 2023,
bringing total lending to around KZT130 billion.
12
Business Review
* Unless otherwise indicated, data is presented for the Bank on an unconsolidated basis only.
The team specialises in collecting, processing and interpreting large amounts of data-driven insights
based on customers’ use of products and services. It applies this information to create machine
learning models and launch marketing campaigns, which ultimately helps to provide the best offers
and customer service. The models segment the customer base, which helps to better understand
their needs, behaviour and market, as well as optimise the pricing of products and services.
In advanced analytics, statistical methods and machine learning and artificial intelligence algorithms
are applied to identify patterns and trends in data. Data visualisation creates interactive dashboards
that help business units to better understand and use the findings.
GovTech: the digitalisation of public services
GovTech continues to be a strategic focus for the Bank. Its main objectives are to make public services
part of the Bank’s applications, integrate public services to automate the Bank’s internal business
processes and liaise with government agencies regarding digitalisation issues.
Since the creation of GovTech, the Bank has launched 52 public services. It continues to lead this
sector among second-tier banks that facilitate public services. The services are highly popular among
the Bank’s customers and had been used more than 13 million times as of the end of 2023. The most
popular ones are digital documents, vehicle certification, verification of health insurance status and
numerous types of enquiries/information. Some were presented at major IT forums, such as Digital
Bridge and Digital Almaty, and to senior government officials, including the Kazakh president. When
working with government agencies, the Bank has proven itself as a reliable, high-tech partner, and the
Bank’s representatives are the first ones people to turn to when planning new initiatives.
In 2024, the Bank plans to further develop this focus and launch services that are in high demand
among customers.
Marketplace
Over the past two years, Halyk has launched products and services across verticals of the ecosystem
that make life easier for and meet the needs of customers. The main focus remains on improving the
Halyk Super App, which is the backbone of its retail offering and of which Halyk Marketplace is part.
The Marketplace allows customers to buy goods from partners using Halyk Bank’s most
advantageous financial products. Considering the rapid pace of digitalisation, changes in consumer
behaviour and preferences, and the growing needs of customers, the Bank has combined these
processes to offer every customer convenience, speed, simplicity and security. Each solution
integrates big data analysis and aims to develop technological platforms.
The Bank’s customers actively use the Marketplace and pay for purchases from trading partners by
instalment or on credit, both through points of sale and online.
In 2023, the Bank achieved its goal of making it possible for people to order goods directly from China
and Turkey through cooperation with goods manufacturers in these countries. This is a unique
offering on the market and has had a beneficial effect on several key metrics.
Specifically, in 2023, Halyk Market’s GMV surged by 170% year-on-year. In the fourth quarter of 2023,
Halyk Market’s GMV jumped by a record KZT34.1 billion, an increase of 330% year-on-year. This
considerable growth made possible through active marketing, increasing the product base to more
than 874,000 SKUs, involving more major retailers and expanding the range of goods sold by existing
partners. New banking products were also launched, such as loans with individual interest rates,
which also made it possible to provide more competitive rates for Marketplace partners.
SME banking*
Halyk Bank has been and remains the leader in working with SMEs, in terms of both transactions and
lending. As of 1 January 2024, the Bank serviced around 270,200 active SME clients, including over
38,600 borrowers, who were provided with more than 75,100 loans in 2023. Deposits and balances
on the current accounts of SME customers increased by 19% year-on-year, which demonstrates the
high level of trust that customers have in Halyk Bank.
In 2023, the Bank expanded the list of services offered on the Onlinebank mobile app for legal entities,
which boosted the popularity of the app among entrepreneurs and led to an increase in the number of
MAUs. The Bank also worked actively to improve the system for working with Onlinebank legal entities
and modified the design of the mobile app for business customers, which resulted in a significant
increase in the DAU to MAU ratio from 27.0% to 30.9%.
Meanwhile, the development of a digital offering for legal entities helped to increase payments
through Onlinebank, which grew by 20.3% to KZT109.5 trillion in 2023. This figure has more than
doubled over the past two years.
In 2023, the SME digital team continued to actively increase lending to legal entities registered as
limited liability partnerships (LLPs). Whereas 608 LLPs were financed in 2022 following the launch of
the digital loan product from April 2022, the number of such companies increased to 2,315 in 2023,
bringing total lending to around KZT130 billion.
12
Business Review
* Unless otherwise indicated, data is presented for the Bank on an unconsolidated basis only.
50
This product increased the number of LLPs receiving lending by 53.4% year-on-year. In 2023, the
share of LLP borrowers that received a digital loan grew to more than 44% of the LLP borrowers in the
SME segment. These results were achieved in part by improving credit conditions for customers and
expanding the product range.
In terms of digital credit products for individual entrepreneurs, the Bank developed and launched a
product to finance supply chain customers. It now has new digital services that help to assess the
business and income of customers more accurately when making decisions on loan applications.
Convenient services have also been launched that enable clients to manage their loans online.
In 2023, the following trends were seen in SME lending:
○ The SME loan portfolio* grew by 25% to KZT1.6 trillion
○ The Bank’s SME lending rose steadily, with total loans issued to SME customers increasing by 42.1%
to KZT2.1 trillion, up from KZT1.5 trillion in 2022
○ Digital loans for LLPs demonstrated strong growth since their launch in April 2022: the loan
portfolio has expanded by six-fold since the start of the year
○ The portfolio of digital loans for individual entrepreneurs has increased by 14.4% since the
beginning of the year
The growth trends in the SME portfolio are presented below**:
2022
1,106
1,412
41 43
2023
SME standard loan portfolio
SME problem loan portfolio
KZT Billion
The structure of the SME lending portfolio is similar to that of the country’s economy with the
wholesale, retail and service sectors making up the main share.
Due to the creation of new regions in accordance with a decree issued by the Kazakh president on 3
May 2022, the Bank opened a new regional branch in Konaev in 2023, which currently provides a full
range of banking services for both SMEs and the population.
Services 27.3%
19.2%
13.3%
11.2%
6.9%
5.0%
4.4%
3.8%
3.3%
2.1%
2.0%
1.2%
0.3%
27.3%
19.3%
13.0%
10.2%
6.0%
4.4%
5.0%
4.0%
4.1%
2.7%
1.8%
1.4%
0.7%
Wholesale trade
Retail trade
Agriculture
Food production
Construction
Mining, chemical and
metals industries
Transport
Public authorities,
education and healthcare
Real estate
Hotel business
Light and manufacturing
industries
Oil and gas sector
2022
2023
12
Business Review
* Excluding problem loans.
** Data for the Bank on an unconsolidated basis only.
This product increased the number of LLPs receiving lending by 53.4% year-on-year. In 2023, the
share of LLP borrowers that received a digital loan grew to more than 44% of the LLP borrowers in the
SME segment. These results were achieved in part by improving credit conditions for customers and
expanding the product range.
In terms of digital credit products for individual entrepreneurs, the Bank developed and launched a
product to finance supply chain customers. It now has new digital services that help to assess the
business and income of customers more accurately when making decisions on loan applications.
Convenient services have also been launched that enable clients to manage their loans online.
In 2023, the following trends were seen in SME lending:
○ The SME loan portfolio* grew by 25% to KZT1.6 trillion
○ The Bank’s SME lending rose steadily, with total loans issued to SME customers increasing by 42.1%
to KZT2.1 trillion, up from KZT1.5 trillion in 2022
○ Digital loans for LLPs demonstrated strong growth since their launch in April 2022: the loan
portfolio has expanded by six-fold since the start of the year
○ The portfolio of digital loans for individual entrepreneurs has increased by 14.4% since the
beginning of the year
The growth trends in the SME portfolio are presented below**:
2022
1,106
1,412
41 43
2023
SME standard loan portfolio
SME problem loan portfolio
KZT Billion
The structure of the SME lending portfolio is similar to that of the country’s economy with the
wholesale, retail and service sectors making up the main share.
Due to the creation of new regions in accordance with a decree issued by the Kazakh president on 3
May 2022, the Bank opened a new regional branch in Konaev in 2023, which currently provides a full
range of banking services for both SMEs and the population.
Services 27.3%
19.2%
13.3%
11.2%
6.9%
5.0%
4.4%
3.8%
3.3%
2.1%
2.0%
1.2%
0.3%
27.3%
19.3%
13.0%
10.2%
6.0%
4.4%
5.0%
4.0%
4.1%
2.7%
1.8%
1.4%
0.7%
Wholesale trade
Retail trade
Agriculture
Food production
Construction
Mining, chemical and
metals industries
Transport
Public authorities,
education and healthcare
Real estate
Hotel business
Light and manufacturing
industries
Oil and gas sector
2022
2023
12
Business Review
* Excluding problem loans.
** Data for the Bank on an unconsolidated basis only.
51
Structure of the loan portfolio by region:
Support for SMEs and involvement in state programmes
The Bank also remained actively involved in state programmes to support businesses. This support
plays a crucial role in developing entrepreneurship in the country.
In 2023, the Bank was a leader in providing support to micro and small businesses, as well as
entrepreneurs/entities engaged in industrial and innovative activities as part of the National
Entrepreneurship Development Project for 2021-25. Based on data from the Damu Fund, during the
year, 538 projects received a total of KZT5.8 billion in subsidies and guarantees as part of the support
for micro and small businesses.
In terms of support for entrepreneurs/entities engaged in industrial and innovative activities as part of
the National Entrepreneurship Development Project for 2021-25, the Damu Fund reported that 1,697
projects received KZT219.9 billion in subsidies, while 1,238 projects received guarantees of
KZT74.98 billion.
Each year, the Bank participates in the Agrarian Credit Corporation’s Ken Dala state programme, which
supports the agricultural sector during the planting and harvesting seasons. Under it, in 2023, the
Bank provided KZT56 billion in financing for 159 projects.
In 2023, to support green finance principles and the initiative of a UN programme being implemented
in cooperation with the Damu Fund, the Bank expressed an interest in promoting projects in the
energy efficiency and renewable energy sectors. The Bank is providing financial support to subsidise
the principal amount, which entails repaying up to 40% of a loan after the launch and acceptance of a
project (technical verification).
Throughout 2023, the Bank continued to play an active role in other programmes with the Damu Fund
to support business in Kazakhstan. In particular, the Bank provides funding under the Regional SME
Financing Programme; the Programme for the Support of SMEs in the Manufacturing Sector; the
Nurly Zher State Programme for Housing Construction; and the ‘Economy of Simple Things’
Programme. In most of these, the Bank is a leader in terms of funds allocated, as well as the number
and volume of financing, subsidy and guarantee agreements.
12
Business Review
Almaty
Astana
Western Kazakhstan
KZT Billion
Shymkent
Aktobe
Karaganda
Kostanay
Akmola
Atyrau
Northern Kazakhstan
Zhambyl
Eastern Kazakhstan
Pavlodar
Abay
Mangistau
Kyzylorda
Almaty (Konaev)
Ekibastuz
Temirtau
Ulytau
Turkestan
Jetisu
Zhanaozen
Baikonyr Balkhash
187.8
116.9
115.7
107.6
101.1
88.4
80.6
77.1
75.3
62.2
59.3
55.7
50.5
49.0
42.9
39.8
30.7
21.8
20.1
19.8
18.9
8.9
7.8
5.5
5.1
200 15%
150
10%
100
50
0
5%
0%
SME loan portfolio Share of branches in SME portfolio
Structure of the loan portfolio by region:
Support for SMEs and involvement in state programmes
The Bank also remained actively involved in state programmes to support businesses. This support
plays a crucial role in developing entrepreneurship in the country.
In 2023, the Bank was a leader in providing support to micro and small businesses, as well as
entrepreneurs/entities engaged in industrial and innovative activities as part of the National
Entrepreneurship Development Project for 2021-25. Based on data from the Damu Fund, during the
year, 538 projects received a total of KZT5.8 billion in subsidies and guarantees as part of the support
for micro and small businesses.
In terms of support for entrepreneurs/entities engaged in industrial and innovative activities as part of
the National Entrepreneurship Development Project for 2021-25, the Damu Fund reported that 1,697
projects received KZT219.9 billion in subsidies, while 1,238 projects received guarantees of
KZT74.98 billion.
Each year, the Bank participates in the Agrarian Credit Corporation’s Ken Dala state programme, which
supports the agricultural sector during the planting and harvesting seasons. Under it, in 2023, the
Bank provided KZT56 billion in financing for 159 projects.
In 2023, to support green finance principles and the initiative of a UN programme being implemented
in cooperation with the Damu Fund, the Bank expressed an interest in promoting projects in the
energy efficiency and renewable energy sectors. The Bank is providing financial support to subsidise
the principal amount, which entails repaying up to 40% of a loan after the launch and acceptance of a
project (technical verification).
Throughout 2023, the Bank continued to play an active role in other programmes with the Damu Fund
to support business in Kazakhstan. In particular, the Bank provides funding under the Regional SME
Financing Programme; the Programme for the Support of SMEs in the Manufacturing Sector; the
Nurly Zher State Programme for Housing Construction; and the ‘Economy of Simple Things’
Programme. In most of these, the Bank is a leader in terms of funds allocated, as well as the number
and volume of financing, subsidy and guarantee agreements.
12
Business Review
Almaty
Astana
Western Kazakhstan
KZT Billion
Shymkent
Aktobe
Karaganda
Kostanay
Akmola
Atyrau
Northern Kazakhstan
Zhambyl
Eastern Kazakhstan
Pavlodar
Abay
Mangistau
Kyzylorda
Almaty (Konaev)
Ekibastuz
Temirtau
Ulytau
Turkestan
Jetisu
Zhanaozen
Baikonyr Balkhash
187.8
116.9
115.7
107.6
101.1
88.4
80.6
77.1
75.3
62.2
59.3
55.7
50.5
49.0
42.9
39.8
30.7
21.8
20.1
19.8
18.9
8.9
7.8
5.5
5.1
200 15%
150
10%
100
50
0
5%
0%
SME loan portfolio Share of branches in SME portfolio
52
Corporate banking*
Corporate banking remains a key focus of Halyk Bank’s business, as it promotes the growth and
development of the country’s largest companies.
The Bank is actively involved in financing various projects, including the development of social
infrastructure, as well as educational and renewable energy projects. The Bank’s customers are
among the country’s largest taxpayers and account for more than half of all budget revenues; 84% of
the country’s largest taxpayers are its customers.
Halyk Bank continues to offer significant advantages, such as high limits for a group of borrowers and
substantial liquidity in tenge and foreign currency, which enables the Bank to take part in financing
major projects, including infrastructure. It also supports the development of Kazakh companies in
international markets, including successful financing for joint projects in Uzbekistan.
In 2023, the corporate loan portfolio increased by KZT595 billion, or 13.4%. Through its relatively
conservative approach to risk assessment, the Bank also retains one of the most stable portfolios on
the market.
Halyk Bank offers high-quality customer service, as well as a wide range of products, services and
tools to meet customer needs. Despite the steady growth in the number of corporate customers
served, the average number of products that each transactional customer uses remains high, at 4.59,
and is even higher for corporate borrowers, at 5.89.
The main products provided to corporate customers include lending, trade finance and document
operations, corporate cash settlement services, payroll card programmes and merchant acquiring
solutions. The Bank also offers the full suite of Halyk Group services, including all types of insurance,
brokerage, cash collection and other solutions.
One of the key components of the Bank’s corporate business is the active introduction of information
technologies. Businesses strive to use modern data analytics and digital technologies to improve the
efficiency of their business processes. This not only reduces costs, but also improves service quality.
Transaction analysis, integration with government databases and client analytics helped to introduce
a digital process for setting unsecured credit limits of up to KZT1 billion and issuing bank guarantees
online, and also optimised the process of analysing large projects.
The Bank has introduced an online loan issuance process that allows the agreement to be signed
electronically, so paper documents are not needed. This has been well received by corporate
customers, who arranged more than 95% of loans online in 2023.
Corporate lending, which accounts for the majority of the Bank’s loan portfolio, continues to occupy a
leading position in the business. The Bank offers customers various types of corporate lending
products, including secured and unsecured loans, as well as loans to finance investments and
operations, factoring and other types of lending.
Factoring has become an essential digital product for the Bank, making it possible to quickly provide
financial support to corporate customers. During the reporting period, the Bank expanded its range of
factoring services, offering customers the opportunity to effectively manage their accounts
receivable. The product not only helps to increase customer liquidity, but also reduces risks
associated with the failure to pay bills.
Halyk Bank remains actively involved in a state programme to support large enterprises, which is
being implemented through the Development Bank of Kazakhstan. Overall, the Bank has allocated
KZT36.8 billion for this programme. In 2023, using resources provided by the National Fund, it
financed major manufacturers in the pharmaceutical, chemical, textile and food industries, as well as
producers of oil and gas equipment, construction materials, lubricants and cardboard.
For the corporate banking business, 2023 was a successful year. The Bank implemented several
major projects to finance such sectors of the economy as chemicals, energy, automotive, food
production and oil, among others, using its strong liquidity and capital reserves, as well as its ability to
offer customers a wide range of services through an extensive regional network. These results
reaffirm the sustainability of the Bank’s corporate lending approaches.
12
Business Review
* Unless otherwise indicated, data is presented for the Bank on an unconsolidated basis only.
Corporate banking*
Corporate banking remains a key focus of Halyk Bank’s business, as it promotes the growth and
development of the country’s largest companies.
The Bank is actively involved in financing various projects, including the development of social
infrastructure, as well as educational and renewable energy projects. The Bank’s customers are
among the country’s largest taxpayers and account for more than half of all budget revenues; 84% of
the country’s largest taxpayers are its customers.
Halyk Bank continues to offer significant advantages, such as high limits for a group of borrowers and
substantial liquidity in tenge and foreign currency, which enables the Bank to take part in financing
major projects, including infrastructure. It also supports the development of Kazakh companies in
international markets, including successful financing for joint projects in Uzbekistan.
In 2023, the corporate loan portfolio increased by KZT595 billion, or 13.4%. Through its relatively
conservative approach to risk assessment, the Bank also retains one of the most stable portfolios on
the market.
Halyk Bank offers high-quality customer service, as well as a wide range of products, services and
tools to meet customer needs. Despite the steady growth in the number of corporate customers
served, the average number of products that each transactional customer uses remains high, at 4.59,
and is even higher for corporate borrowers, at 5.89.
The main products provided to corporate customers include lending, trade finance and document
operations, corporate cash settlement services, payroll card programmes and merchant acquiring
solutions. The Bank also offers the full suite of Halyk Group services, including all types of insurance,
brokerage, cash collection and other solutions.
One of the key components of the Bank’s corporate business is the active introduction of information
technologies. Businesses strive to use modern data analytics and digital technologies to improve the
efficiency of their business processes. This not only reduces costs, but also improves service quality.
Transaction analysis, integration with government databases and client analytics helped to introduce
a digital process for setting unsecured credit limits of up to KZT1 billion and issuing bank guarantees
online, and also optimised the process of analysing large projects.
The Bank has introduced an online loan issuance process that allows the agreement to be signed
electronically, so paper documents are not needed. This has been well received by corporate
customers, who arranged more than 95% of loans online in 2023.
Corporate lending, which accounts for the majority of the Bank’s loan portfolio, continues to occupy a
leading position in the business. The Bank offers customers various types of corporate lending
products, including secured and unsecured loans, as well as loans to finance investments and
operations, factoring and other types of lending.
Factoring has become an essential digital product for the Bank, making it possible to quickly provide
financial support to corporate customers. During the reporting period, the Bank expanded its range of
factoring services, offering customers the opportunity to effectively manage their accounts
receivable. The product not only helps to increase customer liquidity, but also reduces risks
associated with the failure to pay bills.
Halyk Bank remains actively involved in a state programme to support large enterprises, which is
being implemented through the Development Bank of Kazakhstan. Overall, the Bank has allocated
KZT36.8 billion for this programme. In 2023, using resources provided by the National Fund, it
financed major manufacturers in the pharmaceutical, chemical, textile and food industries, as well as
producers of oil and gas equipment, construction materials, lubricants and cardboard.
For the corporate banking business, 2023 was a successful year. The Bank implemented several
major projects to finance such sectors of the economy as chemicals, energy, automotive, food
production and oil, among others, using its strong liquidity and capital reserves, as well as its ability to
offer customers a wide range of services through an extensive regional network. These results
reaffirm the sustainability of the Bank’s corporate lending approaches.
12
Business Review
* Unless otherwise indicated, data is presented for the Bank on an unconsolidated basis only.
53
Changes in Halyk Bank’s corporate portfolio (KZT billion)*
In 2023, the corporate loan portfolio expanded by 13.4%, interest income increased by 41.6%, partly
due to an increase in the interest rate, and non-interest income grew by 29.3%.
In 2024, the Bank plans to continue its policy of developing relationships with existing clients while
further expanding the customer base, as well as increasing their use of Halyk Group products and
services, offering a range of financial solutions and actively using the capabilities of Halyk Group. The
Bank will focus primarily on expanding the loan portfolio and transaction income.
4,492
470
5,098
669
01.01.2023 01.01.2024
Guarantees/letters of credit
Loans
Growth drivers of the loan portfolio include:
○ Greater demand for working capital financing
○ ESG investments
○ Digital lending
○ Financing projects jointly with subsidiary banks
○ Participation in syndicates
Growth drivers of non-interest income include:
○ Synergies among the Bank’s various customer segments
○ Expansion of services offered to customers
12
Business Review
* Data is presented for the Bank on an unconsolidated basis only.
Changes in Halyk Bank’s corporate portfolio (KZT billion)*
In 2023, the corporate loan portfolio expanded by 13.4%, interest income increased by 41.6%, partly
due to an increase in the interest rate, and non-interest income grew by 29.3%.
In 2024, the Bank plans to continue its policy of developing relationships with existing clients while
further expanding the customer base, as well as increasing their use of Halyk Group products and
services, offering a range of financial solutions and actively using the capabilities of Halyk Group. The
Bank will focus primarily on expanding the loan portfolio and transaction income.
4,492
470
5,098
669
01.01.2023 01.01.2024
Guarantees/letters of credit
Loans
Growth drivers of the loan portfolio include:
○ Greater demand for working capital financing
○ ESG investments
○ Digital lending
○ Financing projects jointly with subsidiary banks
○ Participation in syndicates
Growth drivers of non-interest income include:
○ Synergies among the Bank’s various customer segments
○ Expansion of services offered to customers
12
Business Review
* Data is presented for the Bank on an unconsolidated basis only.
54
Assets of subsidiaries as of 31 December 2023
Name Assets, KZT billion Market share by assets, %
Halyk Bank Georgia 154.2 1.1
Halyk Finance* 54.8 9.5
Halyk Global Markets* 17.4 3.0
Halyk Insurance Company** 180.0 13.1
Halyk Life*** 365.2 33
Halyk Bank Kyrgyzstan 92.1 3.0
Halyk Leasing 20.9 n/a
Halyk Collection 8.5 n/a
Kazteleport 11.1 n/a
Halyk Finservice 4.3 n/a
KUSA Halyk 82.0 n/a
Halyk Aktiv 99.5 n/a
Tenge Bank 253.3 1.0
Assets and equity of subsidiaries
Name
Assets, KZT billion
Equity,
KZT billion
2023 2022 Change, % 2023 2022 Change, %
Halyk Bank Georgia 154.2 170.5 -9.6% 40.3 27.0 33%
Halyk Finance 54.8 55.4 -1% 30.4 24.6 +24%
Halyk Global Markets 17.4 20.5 -15% 17.2 20.5 -16%
Halyk Insurance
Company* 180.0 158.4 13.6% 83.1 74.5 11.5%
Halyk Life* 365.2 282.7 29% 96.9 56.4 72%
Halyk Bank Kyrgyzstan 92.1 93.6 -1.3% 19.6 18.8 4.3%
Halyk Leasing 20.9 16.5 27.5% 8.5 7.9 7.1%
Halyk Collection 8.5 5.2 63.1% 7.3 3.8 93%
Kazteleport 11.1 8.1 37.89% 8.8 5.6 56.78%
Halyk Finservice 4.3 3.9 8.16% 2.6 3.1 -16.01%
KUSA Halyk 82.0 68.9 18.9% 31.7 29.8 6.5%
Halyk Aktiv 99.5 97.4 2.19% 48.8 46.5 -4.8%
Tenge Bank 253.3 182.6 38.7% 52.6 52.5 -0.2%
12
Business Review
SUBSIDIARIES
* Market share by assets is based on organisations that manage investment portfolios.
** Unaudited reporting data; market share by assets is based on general insurance companies.
*** Unaudited reporting data; market share by assets is based on life insurance companies.
* unaudited reporting data
Assets of subsidiaries as of 31 December 2023
Name Assets, KZT billion Market share by assets, %
Halyk Bank Georgia 154.2 1.1
Halyk Finance* 54.8 9.5
Halyk Global Markets* 17.4 3.0
Halyk Insurance Company** 180.0 13.1
Halyk Life*** 365.2 33
Halyk Bank Kyrgyzstan 92.1 3.0
Halyk Leasing 20.9 n/a
Halyk Collection 8.5 n/a
Kazteleport 11.1 n/a
Halyk Finservice 4.3 n/a
KUSA Halyk 82.0 n/a
Halyk Aktiv 99.5 n/a
Tenge Bank 253.3 1.0
Assets and equity of subsidiaries
Name
Assets, KZT billion
Equity,
KZT billion
2023 2022 Change, % 2023 2022 Change, %
Halyk Bank Georgia 154.2 170.5 -9.6% 40.3 27.0 33%
Halyk Finance 54.8 55.4 -1% 30.4 24.6 +24%
Halyk Global Markets 17.4 20.5 -15% 17.2 20.5 -16%
Halyk Insurance
Company* 180.0 158.4 13.6% 83.1 74.5 11.5%
Halyk Life* 365.2 282.7 29% 96.9 56.4 72%
Halyk Bank Kyrgyzstan 92.1 93.6 -1.3% 19.6 18.8 4.3%
Halyk Leasing 20.9 16.5 27.5% 8.5 7.9 7.1%
Halyk Collection 8.5 5.2 63.1% 7.3 3.8 93%
Kazteleport 11.1 8.1 37.89% 8.8 5.6 56.78%
Halyk Finservice 4.3 3.9 8.16% 2.6 3.1 -16.01%
KUSA Halyk 82.0 68.9 18.9% 31.7 29.8 6.5%
Halyk Aktiv 99.5 97.4 2.19% 48.8 46.5 -4.8%
Tenge Bank 253.3 182.6 38.7% 52.6 52.5 -0.2%
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Business Review
SUBSIDIARIES
* Market share by assets is based on organisations that manage investment portfolios.
** Unaudited reporting data; market share by assets is based on general insurance companies.
*** Unaudited reporting data; market share by assets is based on life insurance companies.
* unaudited reporting data
55
Subsidiary banks
Halyk Group provides banking services in Kyrgyzstan*, Georgia and Uzbekistan through subsidiaries
in those countries.
Halyk Bank Georgia
Halyk Bank Georgia is a commercial bank incorporated in Georgia that focuses on corporate, SME and
retail banking. As of 31 December 2023, it had total assets of GEL903.3 million (KZT154.2 billion),
down 8.2% from 2022. The gross loan portfolio stood at GEL723.8 million (KZT123.5 billion), up
9.6%. Total equity amounted to GEL235.8 million (KZT40.3 billion), up 51.6%. In 2023, it generated
net income of GEL20.2 million (KZT3.6 billion), up 40% compared with 2022.
Fitch Ratings affirmed Halyk Bank Georgia’s long-term credit rating of ‘BB+’ with a ‘stable’ outlook.
Halyk Bank Kyrgyzstan
Halyk Bank Kyrgyzstan is a commercial bank incorporated in Kyrgyzstan that offers universal banking
services. As of 31 December 2023, it had total assets of KGS18.1 billion (KZT92.1 billion), up 4.2%, or
KGS722 million (KZT3.7 billion), from a year earlier. Its gross loan portfolio was KGS9.7 billion
(KZT49.4 billion), down 8.5% year-on-year. Its total equity was KGS3.9 billion (KZT19.6 billion), up
KGS374 million. In 2023, it reported net income of KGS374 million (KZT1.9 billion).
Halyk Bank Kyrgyzstan has four branches in Bishkek and six in major regional centres.
Tenge Bank
Tenge Bank is a universal bank in Uzbekistan. As of 31 December 2023, it had assets of UZS6.9 trillion
(KZT253.3 billion), up 54.8% from 2022, and total equity of UZS1.4 trillion (KZT52.6 billion), up 11.9%.
Its gross loan portfolio stood at UZS4.4 trillion (KZT163.3 billion), up 76.7% from the end of 2022. In
2023, it reported net income of UZS146.5 billion (KZT5.7 billion), up 117.7% year-on-year. Tenge Bank
launched operations in July 2019.
Uzbekistan is one of Kazakhstan’s largest trade and economic partners and the fastest growing
economy in Central Asia.
Since 2019, trade turnover between the two countries has expanded from US$3.3 billion to US$4.6
billion through bilateral agreements. Today, Kazakhstan is one of Uzbekistan’s three largest trading
partners.
Businesses from Kazakhstan are actively investing in joint projects with their partners in Uzbekistan.
Between 2019 and 2023, the number of companies in Uzbekistan with shareholders from Kazakhstan
increased from 510 to around 1,064. Meanwhile, the number of companies in Kazakhstan with
shareholders from Uzbekistan increased from 1,800 to 3,300.
In recent years, significant progress has been made in developing digital technologies. Rapid growth
in internet and smartphone penetration, as well as non-cash payments, indicates increasing demand
for digital financial services.
Halyk established its subsidiary Tenge Bank in Uzbekistan in May 2019. At present, Tenge Bank works
in nine regions that account for over 80% of the population.
In addition, Tenge Bank has become one of the three largest auto lenders in Uzbekistan by introducing
an automated lending process and scoring system.
Continuous expansion on the Uzbek market is an integral part of Halyk Group’s overall development
strategy. To strengthen its position on the Uzbek market and further enhance cross-sale capabilities
across the board, the Group started providing non-banking products to customers in Uzbekistan in
2022. In the second quarter of 2022, its life and non-life insurance subsidiaries began providing
reinsurance services for Tenge Bank’s insurance partners. Halyk’s Kazteleport registered its
subsidiary in Tashkent in the fourth quarter of 2022. It later registered the Smart Cloud brand and
launched sales of cloud services in Uzbekistan. In March 2023, Halyk Finservice registered a
subsidiary in Tashkent based on which it deployed the Tenge Market trading platform together with
Tenge Bank.
Tenge Bank is the first financial institution with foreign capital to be established in Uzbekistan since
the country launched major reforms. It has a unique market position due to several competitive
advantages:
Since its inception, Tenge Bank has positioned itself as a part of a larger group that offers major
companies co-financing from Halyk Bank.
Tenge Bank provides corporate customers with a full range of lending and non-lending products,
including settlements between Uzbekistan and Kazakhstan in national currencies, direct purchases of
Kazakh tenge and minimal commissions for payments within Halyk Group.
Tenge Bank is continuously improving its digital offering for customers by developing remote
channels.
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Business Review
BANKING
* As of the date of publication of this report, the Bank has completed the sale of 100% of shares of Halyk Bank
Kyrgyzstan OJS
Subsidiary banks
Halyk Group provides banking services in Kyrgyzstan*, Georgia and Uzbekistan through subsidiaries
in those countries.
Halyk Bank Georgia
Halyk Bank Georgia is a commercial bank incorporated in Georgia that focuses on corporate, SME and
retail banking. As of 31 December 2023, it had total assets of GEL903.3 million (KZT154.2 billion),
down 8.2% from 2022. The gross loan portfolio stood at GEL723.8 million (KZT123.5 billion), up
9.6%. Total equity amounted to GEL235.8 million (KZT40.3 billion), up 51.6%. In 2023, it generated
net income of GEL20.2 million (KZT3.6 billion), up 40% compared with 2022.
Fitch Ratings affirmed Halyk Bank Georgia’s long-term credit rating of ‘BB+’ with a ‘stable’ outlook.
Halyk Bank Kyrgyzstan
Halyk Bank Kyrgyzstan is a commercial bank incorporated in Kyrgyzstan that offers universal banking
services. As of 31 December 2023, it had total assets of KGS18.1 billion (KZT92.1 billion), up 4.2%, or
KGS722 million (KZT3.7 billion), from a year earlier. Its gross loan portfolio was KGS9.7 billion
(KZT49.4 billion), down 8.5% year-on-year. Its total equity was KGS3.9 billion (KZT19.6 billion), up
KGS374 million. In 2023, it reported net income of KGS374 million (KZT1.9 billion).
Halyk Bank Kyrgyzstan has four branches in Bishkek and six in major regional centres.
Tenge Bank
Tenge Bank is a universal bank in Uzbekistan. As of 31 December 2023, it had assets of UZS6.9 trillion
(KZT253.3 billion), up 54.8% from 2022, and total equity of UZS1.4 trillion (KZT52.6 billion), up 11.9%.
Its gross loan portfolio stood at UZS4.4 trillion (KZT163.3 billion), up 76.7% from the end of 2022. In
2023, it reported net income of UZS146.5 billion (KZT5.7 billion), up 117.7% year-on-year. Tenge Bank
launched operations in July 2019.
Uzbekistan is one of Kazakhstan’s largest trade and economic partners and the fastest growing
economy in Central Asia.
Since 2019, trade turnover between the two countries has expanded from US$3.3 billion to US$4.6
billion through bilateral agreements. Today, Kazakhstan is one of Uzbekistan’s three largest trading
partners.
Businesses from Kazakhstan are actively investing in joint projects with their partners in Uzbekistan.
Between 2019 and 2023, the number of companies in Uzbekistan with shareholders from Kazakhstan
increased from 510 to around 1,064. Meanwhile, the number of companies in Kazakhstan with
shareholders from Uzbekistan increased from 1,800 to 3,300.
In recent years, significant progress has been made in developing digital technologies. Rapid growth
in internet and smartphone penetration, as well as non-cash payments, indicates increasing demand
for digital financial services.
Halyk established its subsidiary Tenge Bank in Uzbekistan in May 2019. At present, Tenge Bank works
in nine regions that account for over 80% of the population.
In addition, Tenge Bank has become one of the three largest auto lenders in Uzbekistan by introducing
an automated lending process and scoring system.
Continuous expansion on the Uzbek market is an integral part of Halyk Group’s overall development
strategy. To strengthen its position on the Uzbek market and further enhance cross-sale capabilities
across the board, the Group started providing non-banking products to customers in Uzbekistan in
2022. In the second quarter of 2022, its life and non-life insurance subsidiaries began providing
reinsurance services for Tenge Bank’s insurance partners. Halyk’s Kazteleport registered its
subsidiary in Tashkent in the fourth quarter of 2022. It later registered the Smart Cloud brand and
launched sales of cloud services in Uzbekistan. In March 2023, Halyk Finservice registered a
subsidiary in Tashkent based on which it deployed the Tenge Market trading platform together with
Tenge Bank.
Tenge Bank is the first financial institution with foreign capital to be established in Uzbekistan since
the country launched major reforms. It has a unique market position due to several competitive
advantages:
Since its inception, Tenge Bank has positioned itself as a part of a larger group that offers major
companies co-financing from Halyk Bank.
Tenge Bank provides corporate customers with a full range of lending and non-lending products,
including settlements between Uzbekistan and Kazakhstan in national currencies, direct purchases of
Kazakh tenge and minimal commissions for payments within Halyk Group.
Tenge Bank is continuously improving its digital offering for customers by developing remote
channels.
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Business Review
BANKING
* As of the date of publication of this report, the Bank has completed the sale of 100% of shares of Halyk Bank
Kyrgyzstan OJS
56
In 2023, Tenge Bank launched the Tenge Business mobile banking solution for legal entities. It offers
a wide range of services, including processing all types of payments, opening online deposits and
receiving loans within the approved limit through online applications.
Along with to its broad range of services, the Tenge 24 mobile app for individuals offers online lending
and convenient online deposits, as well as unique cross-border transfers to Halyk cards, using the
card number or phone number with the automatic conversion of soms into tenge. The mobile app also
provides access to the Tenge Marketplace, which was launched in the first half of 2023.
The Group is committed to expanding in Uzbekistan on all fronts. In addition to developing Tenge
Bank, it provides financing from Halyk Bank’s own balance sheet to support trade and cross-border
business expansion between the two countries.
By the end of 2023, the Group had achieved the following results in the Uzbek market:
○ Uzbekistan remains a key priority outside Kazakhstan.
○ The total loan exposure issued from the balance sheet of Halyk and Tenge Bank to Uzbekistan is
KZT477.1 billion.
○ The Group has developed its subsidiary Tenge Bank and taken a comprehensive approach to
support trade and the cross-border expansion of Kazakh business in Uzbekistan.
○ Over 2021-23, Halyk Group generated interest and fees and commission income from business in
Uzbekistan of KZT92.5 billion
○ Halyk Group is creating an important channel for payments between Kazakhstan and Uzbekistan. In
2023, transfers between Kazakhstan and Uzbekistan through it exceeded KZT1.1 trillion.
Insurance market
Halyk Insurance Company
Halyk Insurance Company is a general insurance company that provides a comprehensive range of
insurance services to all types of legal entities and individuals in numerous sectors.
As of 31 December 2023, Halyk Insurance Company was one of the largest general insurance
companies in Kazakhstan, ranking second in the country in terms of assets and third in terms of total
equity.
At the year-end, its assets totalled KZT180 billion, giving it a market share of 13.1%. Its net income for
the year was KZT14.3 billion and net premiums amounted to KZT137.4 billion, or 20.1% of the overall
insurance market (unaudited market data that excludes contracts terminated).
On 10 February 2024, AM Best affirmed Halyk Insurance Company’s financial strength rating of ‘B++’
(‘Good’) and long-term issuer credit rating of ‘bbb’. The outlook of these credit ratings is ‘stable’.
On 28 December 2022, the insurance portfolio for the compulsory accident insurance of employees
when performing their work (official) duties was transferred to Halyk Life.
Halyk Life
Halyk Life, the Bank’s life insurance company, offers various types of personal insurance products,
including annuity, accident and medical insurance. It also has a wide range of life insurance products.
At the end of 2023, Halyk Life was the leader among life insurance companies in terms of assets,
equity and insurance premiums, which respectively amounted to KZT365.2 billion (32% of total
market assets), KZT96.9 billion (39% of total equity among life insurance companies) and KZT170.4
billion (33% market share in terms of gross premiums). In 2023, the company generated net income
of KZT52.4 billion. In addition, Halyk Life continued actively working to improve the financial literacy
of the population by holding a national competition among regional journalists for the best coverage
of the life insurance market.
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Business Review
In 2023, Tenge Bank launched the Tenge Business mobile banking solution for legal entities. It offers
a wide range of services, including processing all types of payments, opening online deposits and
receiving loans within the approved limit through online applications.
Along with to its broad range of services, the Tenge 24 mobile app for individuals offers online lending
and convenient online deposits, as well as unique cross-border transfers to Halyk cards, using the
card number or phone number with the automatic conversion of soms into tenge. The mobile app also
provides access to the Tenge Marketplace, which was launched in the first half of 2023.
The Group is committed to expanding in Uzbekistan on all fronts. In addition to developing Tenge
Bank, it provides financing from Halyk Bank’s own balance sheet to support trade and cross-border
business expansion between the two countries.
By the end of 2023, the Group had achieved the following results in the Uzbek market:
○ Uzbekistan remains a key priority outside Kazakhstan.
○ The total loan exposure issued from the balance sheet of Halyk and Tenge Bank to Uzbekistan is
KZT477.1 billion.
○ The Group has developed its subsidiary Tenge Bank and taken a comprehensive approach to
support trade and the cross-border expansion of Kazakh business in Uzbekistan.
○ Over 2021-23, Halyk Group generated interest and fees and commission income from business in
Uzbekistan of KZT92.5 billion
○ Halyk Group is creating an important channel for payments between Kazakhstan and Uzbekistan. In
2023, transfers between Kazakhstan and Uzbekistan through it exceeded KZT1.1 trillion.
Insurance market
Halyk Insurance Company
Halyk Insurance Company is a general insurance company that provides a comprehensive range of
insurance services to all types of legal entities and individuals in numerous sectors.
As of 31 December 2023, Halyk Insurance Company was one of the largest general insurance
companies in Kazakhstan, ranking second in the country in terms of assets and third in terms of total
equity.
At the year-end, its assets totalled KZT180 billion, giving it a market share of 13.1%. Its net income for
the year was KZT14.3 billion and net premiums amounted to KZT137.4 billion, or 20.1% of the overall
insurance market (unaudited market data that excludes contracts terminated).
On 10 February 2024, AM Best affirmed Halyk Insurance Company’s financial strength rating of ‘B++’
(‘Good’) and long-term issuer credit rating of ‘bbb’. The outlook of these credit ratings is ‘stable’.
On 28 December 2022, the insurance portfolio for the compulsory accident insurance of employees
when performing their work (official) duties was transferred to Halyk Life.
Halyk Life
Halyk Life, the Bank’s life insurance company, offers various types of personal insurance products,
including annuity, accident and medical insurance. It also has a wide range of life insurance products.
At the end of 2023, Halyk Life was the leader among life insurance companies in terms of assets,
equity and insurance premiums, which respectively amounted to KZT365.2 billion (32% of total
market assets), KZT96.9 billion (39% of total equity among life insurance companies) and KZT170.4
billion (33% market share in terms of gross premiums). In 2023, the company generated net income
of KZT52.4 billion. In addition, Halyk Life continued actively working to improve the financial literacy
of the population by holding a national competition among regional journalists for the best coverage
of the life insurance market.
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Business Review
57
Brokerage and investment banking
Halyk Finance
Halyk Finance is one of Kazakhstan’s leading investment banks. It provides a full range of brokerage,
asset management, investment research, consulting, underwriting and pension asset management
services.
As of 31 December 2023, Halyk Finance had total assets of KZT54.8 billion and equity of KZT30.3
billion. In the year, net income amounted to KZT5.9 billion.
At the year-end, Halyk Finance’s gross proprietary investment portfolio was KZT52.2 billion, while its
portfolio of securities for brokerage services customers had a market value of KZT1.8 trillion. Assets
under management amounted to KZT640.9 billion.
In 2023, the company was once again recognised as the “Best Investment Bank in Kazakhstan” by
prominent information agencies and authoritative publications, including Global Finance, Cbonds and
EMEA Finance, as well as the KASE and AIX stock exchanges.
In April, Fitch Ratings affirmed Halyk Finance’s long-term issuer default ratings in foreign and national
currency at ‘BBB-’ with a ‘stable’ outlook.
Halyk Invest and Halyk Finance served as key brokerage platforms for SPOs and IPOs in 2023. In the
third quarter of the year, KEGOC held a SPO and placed KZT9.2 billion tenge, or 40.8%, of total SPOs,
using the brokerage platforms of Halyk Group. In February 2024, Air Astana held an IPO and placed
US$65 million, or 30.4% of the total, through Halyk Invest and Halyk Finance.
In 2023, Halyk Finance entered the new pension asset management market and has already gained a
market share of 51%, while its total assets under management increased by 63% over the year.
Halyk Global Markets
Halyk Global Markets operates based on a licence for broker and dealer activities and investment
portfolio management.
As of 31 December 2023, Halyk Global Markets had total assets of KZT17.4 billion and equity of
KZT17.2 billion. In the year, it generated net income of KZT2.6 billion.
At the year-end, its gross proprietary investment portfolio stood at KZT17.1 billion. Its total portfolio of
securities for brokerage services customers had a market value of KZT0.8 billion. Assets under
management amounted to KZT3.2 billion.
Infocommunications and internet acquiring
Kazteleport
Kazteleport is a major infocommunications and cloud services provider in Kazakhstan. It positions
itself as a provider of quality infocommunications services with a high level of security. It offers
comprehensive IT infrastructure solutions to medium-sized and large organisations, from renting
server racks and computing resources to protection against cyber-attacks.
As of 31 December 2023, Kazteleport’s assets were valued at KZT11.1 billion and its equity amounted
to KZT8.8 billion, while net income in the year was KZT181.5 million.
Halyk Finservice
Halyk Finservice provides technical processing support services for processing and storing data,
namely the collection, processing and storage of cardholder transactional data for the Bank and other
banks that act as card transaction agents.
In March 2023, Halyk Finservice registered a subsidiary in Uzbekistan. As of 31 December 2023,
Halyk Finservice had total assets of KZT4.3 billion and equity of KZT2.6 billion. In the year, Halyk
Finservice generated a net loss of KZT478.3 million, due to an increase in spending on the
development of Halyk Market and the launch of the new Halyk Logistics project.
Cash collection
Halyk Collection
Halyk Collection is the leader in the market of collection services for banknotes, coins and valuables.
The largest collection company in the country, it is positioned in Halyk Group as a subsidiary that
offers services independently while also providing cash to the Bank’s sales channels. In 2023, Halyk
Collection replaced 35 special vehicles as part of a plan for the phased replacement of its special
vehicles in 2023-27.
As of 31 December 2023, Halyk Collection had assets of KZT8.6 billion, equity of KZT7.3 billion and
charter capital of KZT1.7 billion. In the year, net income amounted to KZT2.3 billion.
Halyk Collection’s branch network includes 20 branches and 34 outlets that offer collection services
in regions, cities, towns and smaller settlements throughout Kazakhstan. The company uses
equipment that complies with modern requirements. All of its vehicles are fully armoured and their
movement is tracked via a GPS monitoring system. Halyk Collection’s operations are covered by risk
12
Business Review
Brokerage and investment banking
Halyk Finance
Halyk Finance is one of Kazakhstan’s leading investment banks. It provides a full range of brokerage,
asset management, investment research, consulting, underwriting and pension asset management
services.
As of 31 December 2023, Halyk Finance had total assets of KZT54.8 billion and equity of KZT30.3
billion. In the year, net income amounted to KZT5.9 billion.
At the year-end, Halyk Finance’s gross proprietary investment portfolio was KZT52.2 billion, while its
portfolio of securities for brokerage services customers had a market value of KZT1.8 trillion. Assets
under management amounted to KZT640.9 billion.
In 2023, the company was once again recognised as the “Best Investment Bank in Kazakhstan” by
prominent information agencies and authoritative publications, including Global Finance, Cbonds and
EMEA Finance, as well as the KASE and AIX stock exchanges.
In April, Fitch Ratings affirmed Halyk Finance’s long-term issuer default ratings in foreign and national
currency at ‘BBB-’ with a ‘stable’ outlook.
Halyk Invest and Halyk Finance served as key brokerage platforms for SPOs and IPOs in 2023. In the
third quarter of the year, KEGOC held a SPO and placed KZT9.2 billion tenge, or 40.8%, of total SPOs,
using the brokerage platforms of Halyk Group. In February 2024, Air Astana held an IPO and placed
US$65 million, or 30.4% of the total, through Halyk Invest and Halyk Finance.
In 2023, Halyk Finance entered the new pension asset management market and has already gained a
market share of 51%, while its total assets under management increased by 63% over the year.
Halyk Global Markets
Halyk Global Markets operates based on a licence for broker and dealer activities and investment
portfolio management.
As of 31 December 2023, Halyk Global Markets had total assets of KZT17.4 billion and equity of
KZT17.2 billion. In the year, it generated net income of KZT2.6 billion.
At the year-end, its gross proprietary investment portfolio stood at KZT17.1 billion. Its total portfolio of
securities for brokerage services customers had a market value of KZT0.8 billion. Assets under
management amounted to KZT3.2 billion.
Infocommunications and internet acquiring
Kazteleport
Kazteleport is a major infocommunications and cloud services provider in Kazakhstan. It positions
itself as a provider of quality infocommunications services with a high level of security. It offers
comprehensive IT infrastructure solutions to medium-sized and large organisations, from renting
server racks and computing resources to protection against cyber-attacks.
As of 31 December 2023, Kazteleport’s assets were valued at KZT11.1 billion and its equity amounted
to KZT8.8 billion, while net income in the year was KZT181.5 million.
Halyk Finservice
Halyk Finservice provides technical processing support services for processing and storing data,
namely the collection, processing and storage of cardholder transactional data for the Bank and other
banks that act as card transaction agents.
In March 2023, Halyk Finservice registered a subsidiary in Uzbekistan. As of 31 December 2023,
Halyk Finservice had total assets of KZT4.3 billion and equity of KZT2.6 billion. In the year, Halyk
Finservice generated a net loss of KZT478.3 million, due to an increase in spending on the
development of Halyk Market and the launch of the new Halyk Logistics project.
Cash collection
Halyk Collection
Halyk Collection is the leader in the market of collection services for banknotes, coins and valuables.
The largest collection company in the country, it is positioned in Halyk Group as a subsidiary that
offers services independently while also providing cash to the Bank’s sales channels. In 2023, Halyk
Collection replaced 35 special vehicles as part of a plan for the phased replacement of its special
vehicles in 2023-27.
As of 31 December 2023, Halyk Collection had assets of KZT8.6 billion, equity of KZT7.3 billion and
charter capital of KZT1.7 billion. In the year, net income amounted to KZT2.3 billion.
Halyk Collection’s branch network includes 20 branches and 34 outlets that offer collection services
in regions, cities, towns and smaller settlements throughout Kazakhstan. The company uses
equipment that complies with modern requirements. All of its vehicles are fully armoured and their
movement is tracked via a GPS monitoring system. Halyk Collection’s operations are covered by risk
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Business Review
58
reinsurance on the Lloyd’s insurance market with best-in-class insurance organisations that have
financial stability ratings of at least ‘AA-’. Halyk Collection ensures continuous operations and fully
executes all requests from the Bank and its customers.
Distressed asset management organisations and other companies
The main purpose of these companies is to improve the Bank’s loan portfolio by acquiring doubtful
and bad assets using borrowed funds, applying quality asset management principles to rehabilitate
them with minimal credit losses for Halyk Group, and then selling the assets to fully repay the
companies’ obligations to the Bank.
As of 31 December 2023, the total assets of Halyk Group’s distressed asset management
organisations amounted to KZT151.6 billion.
In 2023, KUSA Halyk sold assets valued at KZT22.8 billion and Halyk Aktiv at KZT50.2 billion.
KUSA Halyk
KUSA Halyk was created in 2013 as part of the Concept on Improving the Quality of Second-Tier Bank
Assets, which was approved by a resolution of Kazakhstan’s Council for Financial Stability and
Development of the Financial Market.
In 2023, the Bank transferred 13 assets worth KZT19.6 billion to KUSA Halyk. At the year-end, the
asset portfolio was valued at KZT61.7 billion.
In the year, income from the sale of assets and the provision of services amounted to KZT17.6 billion.
Operating income from the core business of KUSA Halyk totalled KZT6.4 billion.
Halyk Aktiv
Halyk Aktiv was created in 2013 as part of the Concept on Improving the Quality of Second-Tier Bank
Assets, which was approved by a resolution of Kazakhstan’s Council for Financial Stability and
Development of the Financial Market.
In 2023, the Bank transferred 11 assets valued at KZT20.8 billion to Halyk Aktiv. At the year-end, the
asset portfolio stood at KZT89.9 billion.
In the year, income from the sale of assets and the provision of services amounted to KZT11.3 billion.
Operating income from the company’s core business amounted to KZT4.3 billion.
Halyk Leasing
Halyk Leasing was one of the first leasing companies in Kazakhstan. Its primary focus is acquiring and
transferring special equipment under financial lease, including heavy, construction, roadmaking,
industrial, oilfield, mining, extracting and agricultural equipment, as well as commercial vehicles for
cargo and passenger transport and so on. The company resumed leasing operations in 2020 after
they had been suspended since 2014. As of 31 December 2023, it had total assets of KZT20.9 billion
and total equity of KZT8.5 billion. In the year, it reported net income of KZT565 million (including
income of KZT455 million from leasing operations).
In 2023, the actual volume of leasing agreements issued totalled KZT8.4 billion. At the year-end, the
gross loan portfolio totalled KZT13.4 billion (the net loan portfolio was KZT13.3 billion), while interest
income amounted to KZT2.3 billion. Halyk Leasing is funded by Halyk Bank, the Damu
Entrepreneurship Development Fund and the Agrarian Credit Corporation.
In 2023, Halyk Leasing received the “Star of the Industry 2022” award for its significant contribution
to the country’s economy, operational efficiency and strong business reputation. This underscores
that the company is a reliable and socially significant enterprise in Kazakhstan’s financial leasing
(except medical equipment and technology) industry.
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Business Review
reinsurance on the Lloyd’s insurance market with best-in-class insurance organisations that have
financial stability ratings of at least ‘AA-’. Halyk Collection ensures continuous operations and fully
executes all requests from the Bank and its customers.
Distressed asset management organisations and other companies
The main purpose of these companies is to improve the Bank’s loan portfolio by acquiring doubtful
and bad assets using borrowed funds, applying quality asset management principles to rehabilitate
them with minimal credit losses for Halyk Group, and then selling the assets to fully repay the
companies’ obligations to the Bank.
As of 31 December 2023, the total assets of Halyk Group’s distressed asset management
organisations amounted to KZT151.6 billion.
In 2023, KUSA Halyk sold assets valued at KZT22.8 billion and Halyk Aktiv at KZT50.2 billion.
KUSA Halyk
KUSA Halyk was created in 2013 as part of the Concept on Improving the Quality of Second-Tier Bank
Assets, which was approved by a resolution of Kazakhstan’s Council for Financial Stability and
Development of the Financial Market.
In 2023, the Bank transferred 13 assets worth KZT19.6 billion to KUSA Halyk. At the year-end, the
asset portfolio was valued at KZT61.7 billion.
In the year, income from the sale of assets and the provision of services amounted to KZT17.6 billion.
Operating income from the core business of KUSA Halyk totalled KZT6.4 billion.
Halyk Aktiv
Halyk Aktiv was created in 2013 as part of the Concept on Improving the Quality of Second-Tier Bank
Assets, which was approved by a resolution of Kazakhstan’s Council for Financial Stability and
Development of the Financial Market.
In 2023, the Bank transferred 11 assets valued at KZT20.8 billion to Halyk Aktiv. At the year-end, the
asset portfolio stood at KZT89.9 billion.
In the year, income from the sale of assets and the provision of services amounted to KZT11.3 billion.
Operating income from the company’s core business amounted to KZT4.3 billion.
Halyk Leasing
Halyk Leasing was one of the first leasing companies in Kazakhstan. Its primary focus is acquiring and
transferring special equipment under financial lease, including heavy, construction, roadmaking,
industrial, oilfield, mining, extracting and agricultural equipment, as well as commercial vehicles for
cargo and passenger transport and so on. The company resumed leasing operations in 2020 after
they had been suspended since 2014. As of 31 December 2023, it had total assets of KZT20.9 billion
and total equity of KZT8.5 billion. In the year, it reported net income of KZT565 million (including
income of KZT455 million from leasing operations).
In 2023, the actual volume of leasing agreements issued totalled KZT8.4 billion. At the year-end, the
gross loan portfolio totalled KZT13.4 billion (the net loan portfolio was KZT13.3 billion), while interest
income amounted to KZT2.3 billion. Halyk Leasing is funded by Halyk Bank, the Damu
Entrepreneurship Development Fund and the Agrarian Credit Corporation.
In 2023, Halyk Leasing received the “Star of the Industry 2022” award for its significant contribution
to the country’s economy, operational efficiency and strong business reputation. This underscores
that the company is a reliable and socially significant enterprise in Kazakhstan’s financial leasing
(except medical equipment and technology) industry.
12
Business Review
13
Risk Management
Risk Management
60
RISK MANAGEMENT
Halyk Group’s risk management policy focuses on creating an integrated risk management system in
line with the scope and scale of the Group’s activity and accepted risk profile, as well as supporting its
business development requirements. The Group seeks to continuously develop its risk management
system and improve the way in which it identifies, manages, assesses and controls risks.
1. RISK APPETITE MANAGEMENT
Halyk Bank’s risk appetite strategy defines clear boundaries for the acceptable volume of significant
risks associated with the activities that the Bank undertakes while implementing Halyk Group’s
Development Strategy. It also defines the risk profile of the Bank’s operations to prevent risks or
minimise their negative impact on the Bank’s financial position.
The approaches to risk appetite management are regulated by the risk appetite strategy, which has
been approved by the Board of Directors.
Risk appetite covers the aggregate level of material risks that the Bank is willing to accept or intends
to exclude when implementing its strategy.
The risk appetite strategy comprises general approaches to risk appetite management. This includes
the policies, processes, controls and systems through which risk appetite is defined, monitored and
distributed at all levels of the Bank’s organisational structure.
As part of the risk appetite strategy, the Board of Directors has approved a set of quantitative risk
appetite metrics for each significant risk level. These take into account the Bank’s established
business model, as well as the scale, types and complexity of its operations. Compliance with the risk
appetite levels is monitored periodically as part of management reporting on risks.
2. CREDIT RISK MANAGEMENT
To ensure effective credit risk management, the Bank has implemented a risk management system
and business processes to segregate the sales and risk management functions. It has also created an
organisational structure that facilitates credit risk management, including collegiate bodies and
subdivisions that take part in the credit risk assessment and management process.
The Bank manages credit risk by:
○ Adhering to the ‘three lines of defence’ principle: namely, initial analysis of credit risk by the initiating
subdivision, analysis by the risk management function, and control by the internal audit function
○ Setting counterparty limits depending on the type of (credit) transactions or products
○ Diversifying the loan portfolio to mitigate a concentration of risk related to any one borrower, sector
or geographical region
○ Monitoring the loan portfolio to identify any deterioration in quality at an early stage
○ Maintaining adequate provisioning to cover potential losses
Halyk Bank has developed and approved a Risk Appetite Strategy, which defines clear boundaries for
the scope of the material risks that it has accepted and with which the Bank operates as part of the
implementation of Halyk Group’s Development Strategy. The strategy also defines the risk profile of
the Bank’s operations in order to prevent risks or minimise their negative impact on its financial
position. When drafting and introducing the Risk Appetite Strategy for each significant level of risk, the
Board of Directors approved the levels of risk appetite (for credit risk, market risk, liquidity risk and
risk), taking into account the business model it has adopted, the scale of its operations, as well as the
types and complexity of its operations.
13
Risk Management
RISK MANAGEMENT
Halyk Group’s risk management policy focuses on creating an integrated risk management system in
line with the scope and scale of the Group’s activity and accepted risk profile, as well as supporting its
business development requirements. The Group seeks to continuously develop its risk management
system and improve the way in which it identifies, manages, assesses and controls risks.
1. RISK APPETITE MANAGEMENT
Halyk Bank’s risk appetite strategy defines clear boundaries for the acceptable volume of significant
risks associated with the activities that the Bank undertakes while implementing Halyk Group’s
Development Strategy. It also defines the risk profile of the Bank’s operations to prevent risks or
minimise their negative impact on the Bank’s financial position.
The approaches to risk appetite management are regulated by the risk appetite strategy, which has
been approved by the Board of Directors.
Risk appetite covers the aggregate level of material risks that the Bank is willing to accept or intends
to exclude when implementing its strategy.
The risk appetite strategy comprises general approaches to risk appetite management. This includes
the policies, processes, controls and systems through which risk appetite is defined, monitored and
distributed at all levels of the Bank’s organisational structure.
As part of the risk appetite strategy, the Board of Directors has approved a set of quantitative risk
appetite metrics for each significant risk level. These take into account the Bank’s established
business model, as well as the scale, types and complexity of its operations. Compliance with the risk
appetite levels is monitored periodically as part of management reporting on risks.
2. CREDIT RISK MANAGEMENT
To ensure effective credit risk management, the Bank has implemented a risk management system
and business processes to segregate the sales and risk management functions. It has also created an
organisational structure that facilitates credit risk management, including collegiate bodies and
subdivisions that take part in the credit risk assessment and management process.
The Bank manages credit risk by:
○ Adhering to the ‘three lines of defence’ principle: namely, initial analysis of credit risk by the initiating
subdivision, analysis by the risk management function, and control by the internal audit function
○ Setting counterparty limits depending on the type of (credit) transactions or products
○ Diversifying the loan portfolio to mitigate a concentration of risk related to any one borrower, sector
or geographical region
○ Monitoring the loan portfolio to identify any deterioration in quality at an early stage
○ Maintaining adequate provisioning to cover potential losses
Halyk Bank has developed and approved a Risk Appetite Strategy, which defines clear boundaries for
the scope of the material risks that it has accepted and with which the Bank operates as part of the
implementation of Halyk Group’s Development Strategy. The strategy also defines the risk profile of
the Bank’s operations in order to prevent risks or minimise their negative impact on its financial
position. When drafting and introducing the Risk Appetite Strategy for each significant level of risk, the
Board of Directors approved the levels of risk appetite (for credit risk, market risk, liquidity risk and
risk), taking into account the business model it has adopted, the scale of its operations, as well as the
types and complexity of its operations.
13
Risk Management
61
The Bank’s lending decision system is based on the delegation of certain powers by the Board of
Directors to appropriate collegiate bodies and the establishment of credit limits for each body. For
corporate borrowers, loan applications are reviewed by the Commercial Directorate. Loan
applications that exceed the limits set for the Commercial Directorate, as well as transactions with
related parties, require further approval by the Board of Directors. For SME borrowers, lending powers
are delegated to the SME Centre for Decision-Making and Credit Committee of the branch network.
Retail banking decisions are delegated to the Centre for Decision-Making and the Retail Credit
Committee (RCC) of the Head Office. Credit decisions on conventional unsecured retail applications
are taken using a specialised software module, which includes automated underwriting, the
verification of internal and external databases and the scoring of applicants, among other things.
Unconventional unsecured applications are subject to the credit approval procedure through the
Centre for Decision-Making/RCC. Decisions on conventional unsecured/secured loan applications
submitted by individual entrepreneurs and SME legal entities for the replenishment of their working
capital and business development are taken as part of the digital credit decision-making process
using risk models that assess the applicant’s creditworthiness and solvency, interest rate and lending
limit based on internal and external data. Digital credit products (DCP) are reviewed and issued online
for SME clients.
Credit committees of subsidiary banks are also authorised to take lending decisions within specific
limits. The Bank regularly monitors and, if necessary or if covenant thresholds are exceeded, revises
independent decision-making limits and the authority matrices of the credit committees at subsidiary
banks.
In addition to the Centre for Decision-Making and the RCC of the Head Office, an automated lending
decision approach is in place for retail borrowers. The automated decisions follow a risk-based
approach that includes risk-based pricing and the use of additional parameters when assessing the
solvency of customers. Following the application review, loan offers are formed according to the
requested terms, as well as by offering alternative solutions for all retail segments (including
customers who do and do not participate in salary projects, pensioners, etc.). This approach takes into
account the borrower’s risk profile and helps to minimise risks when taking decisions.
New SME business loan self-financing limits have been established for the SME Centre for Decision-
Making, Credit Committee of the branch network, digital credit products of corporate and SME
clients, as well as retail limits for the DMC and RCC of the Head Office. In addition, the SME and retail
lending processes have been optimised.
To assess the Bank’s exposure to the risk of negative macroeconomic changes on foreign and
domestic markets, as well as to determine the impact of the materialisation of stress scenarios
(provision levels, credit rating migration and the share of non-performing loans), the Bank periodically
conducts stress-testing of the loan portfolio. In 2023, the Bank conducted regular stress-testing
using relatively conservative forecasts amid threats of a decline in global economies, rising inflation,
lower oil prices and GDP levels, as well as geopolitical risks. The tests confirmed the resilience of the
Bank’s capital to a decrease in asset quality.
The existing Risk Rate rating model that the Bank uses to assess the likelihood of a default and the
associated rating on corporate and SME clients is widely used to determine loan collateral criteria, as
well as to conduct stress-testing on significant individual loans, and to optimise analysis and decision-
making for the Bank’s highly creditworthy clients. To keep the rating model up to date, as well as to
improve the performance of the Bank’s model, it is regularly validated. The model underwent
validation in 2023, and the outcome was successful.
Throughout 2023, work with problem loans continued, securing repayment through the sale of
collateral, claims and lawsuits, transferring assets to doubtful asset management organisations and
writing off bad debt. These measures have helped to reduce the share of overdue debt.
As of 31 December 2023, retail loans represented a significant share of Halyk Group’s loan portfolio
(31.8%); consumer and mortgage loans accounted for 27.8% and 4%, respectively. Broken down by
industry, the largest segments were services (9.6%), wholesale trade (8.5%), retail trade (6.5%),
energy (4.9%) and the financial sector (3.8%).
Breakdown of Halyk Group’s loan portfolio by sector, %
Retail loans
Wholesale trade
Oil and gas
Energy
Financial sector
Services
Retail trade
Real estate
Chemicals
Other sectors
Retail loans
Wholesale trade
Oil and gas
Energy
Financial sector
Services
Retail trade
Real estate
Chemicals
Other sectors
3
1
%
9
%
4
%
5
%
4
%
1
0
%
6
%
4 %
3
%
2
4
%
3
1
%
8
%
5
%
4
%
4
%
1
0
%
6
%
4
% 4
%
2
4
%
31 December 2023 31 December 2022
13
Risk Management
The Bank’s lending decision system is based on the delegation of certain powers by the Board of
Directors to appropriate collegiate bodies and the establishment of credit limits for each body. For
corporate borrowers, loan applications are reviewed by the Commercial Directorate. Loan
applications that exceed the limits set for the Commercial Directorate, as well as transactions with
related parties, require further approval by the Board of Directors. For SME borrowers, lending powers
are delegated to the SME Centre for Decision-Making and Credit Committee of the branch network.
Retail banking decisions are delegated to the Centre for Decision-Making and the Retail Credit
Committee (RCC) of the Head Office. Credit decisions on conventional unsecured retail applications
are taken using a specialised software module, which includes automated underwriting, the
verification of internal and external databases and the scoring of applicants, among other things.
Unconventional unsecured applications are subject to the credit approval procedure through the
Centre for Decision-Making/RCC. Decisions on conventional unsecured/secured loan applications
submitted by individual entrepreneurs and SME legal entities for the replenishment of their working
capital and business development are taken as part of the digital credit decision-making process
using risk models that assess the applicant’s creditworthiness and solvency, interest rate and lending
limit based on internal and external data. Digital credit products (DCP) are reviewed and issued online
for SME clients.
Credit committees of subsidiary banks are also authorised to take lending decisions within specific
limits. The Bank regularly monitors and, if necessary or if covenant thresholds are exceeded, revises
independent decision-making limits and the authority matrices of the credit committees at subsidiary
banks.
In addition to the Centre for Decision-Making and the RCC of the Head Office, an automated lending
decision approach is in place for retail borrowers. The automated decisions follow a risk-based
approach that includes risk-based pricing and the use of additional parameters when assessing the
solvency of customers. Following the application review, loan offers are formed according to the
requested terms, as well as by offering alternative solutions for all retail segments (including
customers who do and do not participate in salary projects, pensioners, etc.). This approach takes into
account the borrower’s risk profile and helps to minimise risks when taking decisions.
New SME business loan self-financing limits have been established for the SME Centre for Decision-
Making, Credit Committee of the branch network, digital credit products of corporate and SME
clients, as well as retail limits for the DMC and RCC of the Head Office. In addition, the SME and retail
lending processes have been optimised.
To assess the Bank’s exposure to the risk of negative macroeconomic changes on foreign and
domestic markets, as well as to determine the impact of the materialisation of stress scenarios
(provision levels, credit rating migration and the share of non-performing loans), the Bank periodically
conducts stress-testing of the loan portfolio. In 2023, the Bank conducted regular stress-testing
using relatively conservative forecasts amid threats of a decline in global economies, rising inflation,
lower oil prices and GDP levels, as well as geopolitical risks. The tests confirmed the resilience of the
Bank’s capital to a decrease in asset quality.
The existing Risk Rate rating model that the Bank uses to assess the likelihood of a default and the
associated rating on corporate and SME clients is widely used to determine loan collateral criteria, as
well as to conduct stress-testing on significant individual loans, and to optimise analysis and decision-
making for the Bank’s highly creditworthy clients. To keep the rating model up to date, as well as to
improve the performance of the Bank’s model, it is regularly validated. The model underwent
validation in 2023, and the outcome was successful.
Throughout 2023, work with problem loans continued, securing repayment through the sale of
collateral, claims and lawsuits, transferring assets to doubtful asset management organisations and
writing off bad debt. These measures have helped to reduce the share of overdue debt.
As of 31 December 2023, retail loans represented a significant share of Halyk Group’s loan portfolio
(31.8%); consumer and mortgage loans accounted for 27.8% and 4%, respectively. Broken down by
industry, the largest segments were services (9.6%), wholesale trade (8.5%), retail trade (6.5%),
energy (4.9%) and the financial sector (3.8%).
Breakdown of Halyk Group’s loan portfolio by sector, %
Retail loans
Wholesale trade
Oil and gas
Energy
Financial sector
Services
Retail trade
Real estate
Chemicals
Other sectors
Retail loans
Wholesale trade
Oil and gas
Energy
Financial sector
Services
Retail trade
Real estate
Chemicals
Other sectors
3
1
%
9
%
4
%
5
%
4
%
1
0
%
6
%
4 %
3
%
2
4
%
3
1
%
8
%
5
%
4
%
4
%
1
0
%
6
%
4
% 4
%
2
4
%
31 December 2023 31 December 2022
13
Risk Management
62
3. ASSET/LIABILITY MANAGEMENT
To create an optimal structure of assets that ensures a balanced approach to managing the risk-return
ratio, the Group invests in a spread of domestic and overseas assets, diversified in terms of banking
products, industry, currency and maturity.
The breakdown of the Group’s assets in 2023 was as follows:
Breakdown of Halyk Group’s assets, %*
5
4
.
9
%
2
5
.
0
%
1
4
.
2
%
1
.
7
%
1
.
8
%
1
.
5
%
0
.
9
%
5
9
.
9
%
2
4
.
1
%
8
.
9
%
2
.
9
%
1
.
6
%
1
.
5
%
1 . 1
%
Loans to customers
Securities portfolio
Cash and cash
equivalents
Other assets
Mandatory reserves
Property and
equipment and
intangible assets
Amounts due from
credit institutions
Loans to customers
Securities portfolio
Cash and cash
equivalents
Other assets
Mandatory reserves
Property and
equipment and
intangible assets
Amounts due from
credit institutions
31 December 2023 31 December 2022
In 2023, Halyk Group’s assets increased by 7.6% year-on-year. This was driven mainly by a rise in the
loan portfolio on a net basis by KZT1,427 billion (up 18.2% year-on-year) and in the securities portfolio
by KZT205.8 billion (up 10.7% year-on-year). The loan portfolio remains the largest item among Halyk
Group’s assets: as of 31 December 2023, it accounted for 59.9% of the total. Other key assets
included investments in securities (trading and investment portfolio; share of 13.7%), as well as cash
and cash equivalents (share of 10.5%).
The Group regularly checks the current positions of its existing limits for counterparty banks.
Whenever it identifies any negative factors affecting their operations and/or their countries of
operation, it makes immediate relevant adjustments to reduce the amount and term of such limits.
For liquidity management purposes, the Bank maintains a stable and diversified structure of liabilities,
which consists of borrowings and deposits with fixed maturities and liabilities payable on demand.
The breakdown of the Group’s liabilities in 2022 and 2023 was as follows:
Breakdown of the Group’s liabilities, %
8
4
%
6
%
5
%
5
%
8
5
%
7
%
4
%
4
%
Amounts due to
customers
Amounts due to
credit institutions
Debt securities
issued
Other liabilities
Amounts due to
customers
Amounts due to
credit institutions
Debt securities
issued
Other liabilities
31 December 2023 31 December 2022
The primary change in the liability structure in 2023 was in amounts due to customers. As of the year-
end, amounts due to customers rose by KZT417.5 billion (up 4.0%) in absolute terms. They continued
to account for the largest proportion of liabilities, at 70.4% in 2023, compared with 73% in 2022.
The proportions of term deposits and current accounts in amounts due to customers did not change
materially, at 74.5% and 25.5%, respectively, compared with 69.0% and 31.0% as of 1 January 2023.
In 2023, the amount of funds attracted from individuals increased by 11.2%, while that from legal
entities decreased by 3.2%. Corporate clients tended to place their spare funds in government
securities, as well as in foreign banks that have high rates on foreign currencies.
13
Risk Management
* Cash and cash equivalents include precious metals and other items. The securities portfolio includes financial assets
at fair value through profit or loss, financial assets at fair value through other comprehensive income, and debt
securities at amortised cost, net of allowance for expected credit losses, less derivative financial instruments.
Property, plant and equipment and intangible assets include, but are not limited to, goodwill, commercial and
investment properties.
3. ASSET/LIABILITY MANAGEMENT
To create an optimal structure of assets that ensures a balanced approach to managing the risk-return
ratio, the Group invests in a spread of domestic and overseas assets, diversified in terms of banking
products, industry, currency and maturity.
The breakdown of the Group’s assets in 2023 was as follows:
Breakdown of Halyk Group’s assets, %*
5
4
.
9
%
2
5
.
0
%
1
4
.
2
%
1
.
7
%
1
.
8
%
1
.
5
%
0
.
9
%
5
9
.
9
%
2
4
.
1
%
8
.
9
%
2
.
9
%
1
.
6
%
1
.
5
%
1 . 1
%
Loans to customers
Securities portfolio
Cash and cash
equivalents
Other assets
Mandatory reserves
Property and
equipment and
intangible assets
Amounts due from
credit institutions
Loans to customers
Securities portfolio
Cash and cash
equivalents
Other assets
Mandatory reserves
Property and
equipment and
intangible assets
Amounts due from
credit institutions
31 December 2023 31 December 2022
In 2023, Halyk Group’s assets increased by 7.6% year-on-year. This was driven mainly by a rise in the
loan portfolio on a net basis by KZT1,427 billion (up 18.2% year-on-year) and in the securities portfolio
by KZT205.8 billion (up 10.7% year-on-year). The loan portfolio remains the largest item among Halyk
Group’s assets: as of 31 December 2023, it accounted for 59.9% of the total. Other key assets
included investments in securities (trading and investment portfolio; share of 13.7%), as well as cash
and cash equivalents (share of 10.5%).
The Group regularly checks the current positions of its existing limits for counterparty banks.
Whenever it identifies any negative factors affecting their operations and/or their countries of
operation, it makes immediate relevant adjustments to reduce the amount and term of such limits.
For liquidity management purposes, the Bank maintains a stable and diversified structure of liabilities,
which consists of borrowings and deposits with fixed maturities and liabilities payable on demand.
The breakdown of the Group’s liabilities in 2022 and 2023 was as follows:
Breakdown of the Group’s liabilities, %
8
4
%
6
%
5
%
5
%
8
5
%
7
%
4
%
4
%
Amounts due to
customers
Amounts due to
credit institutions
Debt securities
issued
Other liabilities
Amounts due to
customers
Amounts due to
credit institutions
Debt securities
issued
Other liabilities
31 December 2023 31 December 2022
The primary change in the liability structure in 2023 was in amounts due to customers. As of the year-
end, amounts due to customers rose by KZT417.5 billion (up 4.0%) in absolute terms. They continued
to account for the largest proportion of liabilities, at 70.4% in 2023, compared with 73% in 2022.
The proportions of term deposits and current accounts in amounts due to customers did not change
materially, at 74.5% and 25.5%, respectively, compared with 69.0% and 31.0% as of 1 January 2023.
In 2023, the amount of funds attracted from individuals increased by 11.2%, while that from legal
entities decreased by 3.2%. Corporate clients tended to place their spare funds in government
securities, as well as in foreign banks that have high rates on foreign currencies.
13
Risk Management
* Cash and cash equivalents include precious metals and other items. The securities portfolio includes financial assets
at fair value through profit or loss, financial assets at fair value through other comprehensive income, and debt
securities at amortised cost, net of allowance for expected credit losses, less derivative financial instruments.
Property, plant and equipment and intangible assets include, but are not limited to, goodwill, commercial and
investment properties.
63
Amounts due to the Group’s customers, KZT billion
The Bank’s focus on raising funds in the domestic market helped to maintain leading positions in the
customer account market. As of 1 January 2024, despite a slight decrease in the share of funds raised
from customers, Halyk Bank was the market leader, with a share of retail deposits of 27.4% (compared
with 30.4% at the end of 2022) and of corporate deposits of 36.5% (compared with 35.5% at the end
of 2022).
4. MARKET RISK MANAGEMENT
In 2023, the Bank adhered to its conservative policy on currency position management, maintaining
neutral positions in all currencies.
The share of the Group’s assets in tenge increased from 64.3% in 2022 to 68.5% in 2023, while the
share of the loan portfolio in tenge decreased from 83.0% to 82.6%.
The share of deposits in tenge increased to 67.8%, compared with 56.6% in 2022.
The Group has identified the following sources of interest rate risk: on securities portfolios and
resulting from the mismatch of maturities (interest rate repricing) of assets and liabilities sensitive to
interest rate changes (risk of interest rate changes). The Group manages the risks of changes in
4,058
4,415
5,268
5,244
5,101
5,829
31 December
2021
31 December
2022
31 December
2023
9 000
12 000
6 000
3 000
0
Individuals
Legal entities
13
Risk Management
100%
75%
50%
25%
0
68.5%
31.5%
31
December
2023
64.3%
35.7%
31
December
2022
100%
75%
50%
25%
0
82.6%
17.4%
31
December
2023
83.0%
17.0%
31
December
2022
100%
75%
50%
25%
0
67.8%
32.2%
31
December
2023
56.6%
43.4%
31
December
2022
Foreign currencies Tenge
Breakdown of the Group’s
financial assets
by currency, %
Breakdown of the Group’s
net loans
by currency, %
Breakdown of amounts due
to the Group’s customers
by currency, %
interest rates and market risk by adjusting its interest rate position and maintaining a positive interest
margin.
Internal limits that restrict the level of market risk (currency, interest rate and price risks) are
established by the authorised bodies within the risk appetite and are monitored daily. The limits are
regularly reviewed for relevance and correlation with market conditions and the Bank’s risk appetite.
In 2023, the rapid decline in annual inflation created space for the National Bank of Kazakhstan to
reduce the base interest rate from 16.75% to 15.75%.
The Bank’s interest rate risk remained at an acceptable level within the established risk appetite limits.
Amounts due to the Group’s customers, KZT billion
The Bank’s focus on raising funds in the domestic market helped to maintain leading positions in the
customer account market. As of 1 January 2024, despite a slight decrease in the share of funds raised
from customers, Halyk Bank was the market leader, with a share of retail deposits of 27.4% (compared
with 30.4% at the end of 2022) and of corporate deposits of 36.5% (compared with 35.5% at the end
of 2022).
4. MARKET RISK MANAGEMENT
In 2023, the Bank adhered to its conservative policy on currency position management, maintaining
neutral positions in all currencies.
The share of the Group’s assets in tenge increased from 64.3% in 2022 to 68.5% in 2023, while the
share of the loan portfolio in tenge decreased from 83.0% to 82.6%.
The share of deposits in tenge increased to 67.8%, compared with 56.6% in 2022.
The Group has identified the following sources of interest rate risk: on securities portfolios and
resulting from the mismatch of maturities (interest rate repricing) of assets and liabilities sensitive to
interest rate changes (risk of interest rate changes). The Group manages the risks of changes in
4,058
4,415
5,268
5,244
5,101
5,829
31 December
2021
31 December
2022
31 December
2023
9 000
12 000
6 000
3 000
0
Individuals
Legal entities
13
Risk Management
100%
75%
50%
25%
0
68.5%
31.5%
31
December
2023
64.3%
35.7%
31
December
2022
100%
75%
50%
25%
0
82.6%
17.4%
31
December
2023
83.0%
17.0%
31
December
2022
100%
75%
50%
25%
0
67.8%
32.2%
31
December
2023
56.6%
43.4%
31
December
2022
Foreign currencies Tenge
Breakdown of the Group’s
financial assets
by currency, %
Breakdown of the Group’s
net loans
by currency, %
Breakdown of amounts due
to the Group’s customers
by currency, %
interest rates and market risk by adjusting its interest rate position and maintaining a positive interest
margin.
Internal limits that restrict the level of market risk (currency, interest rate and price risks) are
established by the authorised bodies within the risk appetite and are monitored daily. The limits are
regularly reviewed for relevance and correlation with market conditions and the Bank’s risk appetite.
In 2023, the rapid decline in annual inflation created space for the National Bank of Kazakhstan to
reduce the base interest rate from 16.75% to 15.75%.
The Bank’s interest rate risk remained at an acceptable level within the established risk appetite limits.
64
5. OPERATIONAL RISK MANAGEMENT
In the normal course of its business, the Bank is exposed to operational risk. This is defined as the risk
of losses resulting from inadequate and insufficient internal processes or systems, human factors or
the influence of external events, excluding strategic and reputational risk.
The operational risk management unit within the risk management function of the Bank has developed
and uses various operational risk management tools, such as:
○ The Bank performs operational risk assessments when launching new products/services, systems
and business processes (taking into account the processes used to control the testing and monitor
the functioning of the product/service), or implementing changes thereto. The Organisation and
Reinforcement of Preventive Action (ORAP) system is a fully functional and widely used tool. It has
covered the most significant areas of the Bank’s operations since 2010.
○ The Bank regularly collects and analyses information about operational risk events, which are
registered and classified (per Basel classification) as appropriate in a special database. The
information collected is used to generate regulatory and management reports on operational risks
to support decisions about corrective actions to minimise overall operating losses.
○ The Bank continues to develop an operational risk management tool, Key Risk Indicators (KRI). The
Bank currently uses the KRI system in various business lines, which helps to identify the most
significant risks to the Bank’s IT systems and critical business processes.
○ The Bank also continues to develop other operational risk management tools, such as scenario
analysis and risk self-assessments.
6. BUSINESS CONTINUITY MANAGEMENT
To ensure that it can respond to emergency situations rapidly and effectively, the Bank maintains
systems and resources to manage and support business continuity. These include legal documents,
infrastructure, competent employees and other items.
The Bank has introduced a new hybrid work arrangement under which key employees work remotely
on a rotational basis.
The Bank has approved a detailed notification system for members of the Operational Response
Headquarters, members of the Crisis Management Centre and the heads of departments of key
employees in the event of an incident in the process of business continuity.
In 2023, to increase the awareness, distance learning was arranged for employees of the Head Office
and regional branches, followed by testing on the business continuity management process at Halyk
Bank.
13
Risk Management
5. OPERATIONAL RISK MANAGEMENT
In the normal course of its business, the Bank is exposed to operational risk. This is defined as the risk
of losses resulting from inadequate and insufficient internal processes or systems, human factors or
the influence of external events, excluding strategic and reputational risk.
The operational risk management unit within the risk management function of the Bank has developed
and uses various operational risk management tools, such as:
○ The Bank performs operational risk assessments when launching new products/services, systems
and business processes (taking into account the processes used to control the testing and monitor
the functioning of the product/service), or implementing changes thereto. The Organisation and
Reinforcement of Preventive Action (ORAP) system is a fully functional and widely used tool. It has
covered the most significant areas of the Bank’s operations since 2010.
○ The Bank regularly collects and analyses information about operational risk events, which are
registered and classified (per Basel classification) as appropriate in a special database. The
information collected is used to generate regulatory and management reports on operational risks
to support decisions about corrective actions to minimise overall operating losses.
○ The Bank continues to develop an operational risk management tool, Key Risk Indicators (KRI). The
Bank currently uses the KRI system in various business lines, which helps to identify the most
significant risks to the Bank’s IT systems and critical business processes.
○ The Bank also continues to develop other operational risk management tools, such as scenario
analysis and risk self-assessments.
6. BUSINESS CONTINUITY MANAGEMENT
To ensure that it can respond to emergency situations rapidly and effectively, the Bank maintains
systems and resources to manage and support business continuity. These include legal documents,
infrastructure, competent employees and other items.
The Bank has introduced a new hybrid work arrangement under which key employees work remotely
on a rotational basis.
The Bank has approved a detailed notification system for members of the Operational Response
Headquarters, members of the Crisis Management Centre and the heads of departments of key
employees in the event of an incident in the process of business continuity.
In 2023, to increase the awareness, distance learning was arranged for employees of the Head Office
and regional branches, followed by testing on the business continuity management process at Halyk
Bank.
13
Risk Management
65
7. IT AND INFORMATION SECURITY RISK
MANAGEMENT
In 2023, the Bank continued its efforts to manage information technology (IT) and information
security (IS) risks and further developed its IT and IS risk management system. During the year, the
Bank conducted a cycle of IT and IS risk management activities. This included setting up a working
group to update critical information assets; assessing, processing and monitoring risks; and reviewing
the existing IT and IS risk management systems of the Bank’s subsidiaries. It then developed action
plans to minimise the IT and IS risks identified. In addition, together with the departments involved,
work is ongoing to analyse and minimise the risks of fraud incidents associated with IT and IS risks.
8. CAPITAL MANAGEMENT
In 2023, the Bank continued to manage its capital to ensure the business continuity of all Group
companies and optimise its debt-to-equity ratio. In the reporting period, the Bank ensured compliance
with the capital requirements set by regulatory standards and the Basel Accords.
Since 1 January 2016, the Group has calculated its capital adequacy ratios in accordance with the
prudential standards prescribed for banks by Kazakhstan’s regulatory authorities, in consideration of
the Basel Committee’s recommendations. In general, the National Bank of Kazakhstan’s methodology
for calculating regulatory capital levels and its components comply with the Basel III standards. At the
same time, the methodology applies separate regulatory adjustments that are not provided for by the
Basel III standards but are allowed under the Basel III recommendations concerning the application of
additional methodological amendments by local regulatory bodies.
As part of its capital adequacy risk management efforts, the Bank also has an internal process in place
for assessing capital adequacy. This approach to managing significant risks takes into account the
volume of assets, the nature and complexity of operations, and the organisational structure, strategic
plans, risk profile, regulatory and legal framework. Such risks are assessed and aggregated to
determine a target capital adequacy level for the Bank to maintain a stable financial position and
remain solvent.
In an effort to improve the risk management system, during the reporting year, the Bank developed
and introduced an internal methodology and calculation of internal (economic) capital for major types
of risks inherent in the Bank’s activities (credit, market and operational risks).
9. COMPLIANCE RISKS
For information about the system in place for monitoring the Bank’s compliance with international and
country-specific economic sanctions, see the Corporate Governance section.
13
Risk Management
7. IT AND INFORMATION SECURITY RISK
MANAGEMENT
In 2023, the Bank continued its efforts to manage information technology (IT) and information
security (IS) risks and further developed its IT and IS risk management system. During the year, the
Bank conducted a cycle of IT and IS risk management activities. This included setting up a working
group to update critical information assets; assessing, processing and monitoring risks; and reviewing
the existing IT and IS risk management systems of the Bank’s subsidiaries. It then developed action
plans to minimise the IT and IS risks identified. In addition, together with the departments involved,
work is ongoing to analyse and minimise the risks of fraud incidents associated with IT and IS risks.
8. CAPITAL MANAGEMENT
In 2023, the Bank continued to manage its capital to ensure the business continuity of all Group
companies and optimise its debt-to-equity ratio. In the reporting period, the Bank ensured compliance
with the capital requirements set by regulatory standards and the Basel Accords.
Since 1 January 2016, the Group has calculated its capital adequacy ratios in accordance with the
prudential standards prescribed for banks by Kazakhstan’s regulatory authorities, in consideration of
the Basel Committee’s recommendations. In general, the National Bank of Kazakhstan’s methodology
for calculating regulatory capital levels and its components comply with the Basel III standards. At the
same time, the methodology applies separate regulatory adjustments that are not provided for by the
Basel III standards but are allowed under the Basel III recommendations concerning the application of
additional methodological amendments by local regulatory bodies.
As part of its capital adequacy risk management efforts, the Bank also has an internal process in place
for assessing capital adequacy. This approach to managing significant risks takes into account the
volume of assets, the nature and complexity of operations, and the organisational structure, strategic
plans, risk profile, regulatory and legal framework. Such risks are assessed and aggregated to
determine a target capital adequacy level for the Bank to maintain a stable financial position and
remain solvent.
In an effort to improve the risk management system, during the reporting year, the Bank developed
and introduced an internal methodology and calculation of internal (economic) capital for major types
of risks inherent in the Bank’s activities (credit, market and operational risks).
9. COMPLIANCE RISKS
For information about the system in place for monitoring the Bank’s compliance with international and
country-specific economic sanctions, see the Corporate Governance section.
13
Risk Management
14
Corporate Governance
Corporate Governance
67
Halyk Bank’s corporate governance structure is based on respecting the rights and interests of all
stakeholders. This contributes to the Bank’s success by increasing its value, supporting its financial
stability and profitability, and reassuring investors and shareholders that their money is being used
efficiently.
The Bank’s current Corporate Governance Code defines the main standards and principles applied in
managing the Bank, including relations between the Board of Directors and Management Board, and
between shareholders and employees, as well as the functioning mechanisms and decision-making
procedures of the Bank’s internal bodies.
The Bank’s Corporate Governance Code enshrines the following principles:
○ Provide shareholders with a real opportunity to exercise their rights to take part in managing the
Bank
○ Provide shareholders with a real opportunity to take part in the distribution of the Bank’s net profit
(receive dividends)
○ Provide shareholders with accurate, timely and complete information regarding the Bank’s financial
position, economic indicators, results and management structures to ensure substantiated and
informed decisions by shareholders and investors
○ The Board of Directors is to conduct the strategic management of the Bank and effectively oversee
the executive body’s activities, and directors are to be accountable to the Bank’s shareholders
○ The Management Board is to be given the opportunity to manage the Bank effectively and in good
faith and to be accountable to the Board of Directors and shareholders
○ Define ethical standards for shareholders and the Bank’s officials, ensuring maximum operational
transparency
○ Create long-term economic value for all stakeholders
○ Respect human rights, inclusiveness, diversity and the fair and equal treatment of all
○ Respect the environment
○ Cultivate the practice of responsible financing and effective management of ESG risks
○ Observe all applicable laws and obligations
○ Adhere to ethical business approaches and introduce the best corporate governance practices
○ Enhance information disclosure and transparency
The Board of Directors and Management Board confirm that the Bank conducts its activities in
accordance with the principles, provisions and procedures set forth by the Corporate Governance
Code.
By accepting, streamlining and adhering strictly to the Corporate Governance Code, the Charter and
other internal regulations, the Bank confirms its intention to encourage the development and
improvement of the best corporate governance practices.
Compliance with the UK Corporate Governance Code*
This section has been prepared in accordance with section DTR 7.2. of the UK Financial Conduct
Authority’s Disclosure and Transparency Rules (corporate governance statements).
The Bank is not formally required to comply with the UK Corporate Governance Code published by the
Financial Reporting Council, the independent regulator of the United Kingdom. However, in
accordance with DTR 7.2, the Bank is obliged to disclose information about its compliance with both
the Kazakh Corporate Governance Code and the existing corporate governance principles to which it
adheres besides those stipulated in Kazakh legislation.
The Bank considers the UK Corporate Governance Code a guideline for the further development of
corporate governance.
The Bank’s Corporate Governance Code contains several differences from the UK Corporate
Governance Code. Below are the main ones.
UK Corporate Governance Code The Bank’s Corporate Governance Code
Stipulates a maximum three-year term for the
re-election of directors.
Does not require the regular re-election of the
Board. Instead, the scope of the General
Shareholder Meeting includes determining the
Board’s term of authority.
The General Shareholder Meeting of 25 May
2023 set a three-year term for the current
Board.
Provides for meetings of non-executive
directors at least annually, particularly to
appraise the chairman’s performance.
In 2023, non-executive directors held informal
meetings that were also attended by the
corporate secretary to discuss strategic issues,
ways to improve corporate governance
processes and the Board’s activities, and to
improve the work of the corporate secretary.
14
Corporate
Governance
CORPORATE GOVERNANCE
* UK Corporate Governance Code (2018)
Halyk Bank’s corporate governance structure is based on respecting the rights and interests of all
stakeholders. This contributes to the Bank’s success by increasing its value, supporting its financial
stability and profitability, and reassuring investors and shareholders that their money is being used
efficiently.
The Bank’s current Corporate Governance Code defines the main standards and principles applied in
managing the Bank, including relations between the Board of Directors and Management Board, and
between shareholders and employees, as well as the functioning mechanisms and decision-making
procedures of the Bank’s internal bodies.
The Bank’s Corporate Governance Code enshrines the following principles:
○ Provide shareholders with a real opportunity to exercise their rights to take part in managing the
Bank
○ Provide shareholders with a real opportunity to take part in the distribution of the Bank’s net profit
(receive dividends)
○ Provide shareholders with accurate, timely and complete information regarding the Bank’s financial
position, economic indicators, results and management structures to ensure substantiated and
informed decisions by shareholders and investors
○ The Board of Directors is to conduct the strategic management of the Bank and effectively oversee
the executive body’s activities, and directors are to be accountable to the Bank’s shareholders
○ The Management Board is to be given the opportunity to manage the Bank effectively and in good
faith and to be accountable to the Board of Directors and shareholders
○ Define ethical standards for shareholders and the Bank’s officials, ensuring maximum operational
transparency
○ Create long-term economic value for all stakeholders
○ Respect human rights, inclusiveness, diversity and the fair and equal treatment of all
○ Respect the environment
○ Cultivate the practice of responsible financing and effective management of ESG risks
○ Observe all applicable laws and obligations
○ Adhere to ethical business approaches and introduce the best corporate governance practices
○ Enhance information disclosure and transparency
The Board of Directors and Management Board confirm that the Bank conducts its activities in
accordance with the principles, provisions and procedures set forth by the Corporate Governance
Code.
By accepting, streamlining and adhering strictly to the Corporate Governance Code, the Charter and
other internal regulations, the Bank confirms its intention to encourage the development and
improvement of the best corporate governance practices.
Compliance with the UK Corporate Governance Code*
This section has been prepared in accordance with section DTR 7.2. of the UK Financial Conduct
Authority’s Disclosure and Transparency Rules (corporate governance statements).
The Bank is not formally required to comply with the UK Corporate Governance Code published by the
Financial Reporting Council, the independent regulator of the United Kingdom. However, in
accordance with DTR 7.2, the Bank is obliged to disclose information about its compliance with both
the Kazakh Corporate Governance Code and the existing corporate governance principles to which it
adheres besides those stipulated in Kazakh legislation.
The Bank considers the UK Corporate Governance Code a guideline for the further development of
corporate governance.
The Bank’s Corporate Governance Code contains several differences from the UK Corporate
Governance Code. Below are the main ones.
UK Corporate Governance Code The Bank’s Corporate Governance Code
Stipulates a maximum three-year term for the
re-election of directors.
Does not require the regular re-election of the
Board. Instead, the scope of the General
Shareholder Meeting includes determining the
Board’s term of authority.
The General Shareholder Meeting of 25 May
2023 set a three-year term for the current
Board.
Provides for meetings of non-executive
directors at least annually, particularly to
appraise the chairman’s performance.
In 2023, non-executive directors held informal
meetings that were also attended by the
corporate secretary to discuss strategic issues,
ways to improve corporate governance
processes and the Board’s activities, and to
improve the work of the corporate secretary.
14
Corporate
Governance
CORPORATE GOVERNANCE
* UK Corporate Governance Code (2018)
68
Halyk Bank’s Corporate Governance Code can be found on the corporate website: https://halykbank.
kz/en/about-bank/korporativnoe-upravlenie.
Compliance with the Corporate Governance Code of Kazakhstan
The Bank sent a letter to the Kazakhstan Stock Exchange (Ref. No. 11879 dated 23 June 2023)
confirming that it had assessed its compliance with and observes 92.1% of the overall principles of the
Model Code*. Compliance with the principles of the Model Code has risen since 2021, increasing from
85.5% to 92.1%.
UK Corporate Governance Code The Bank’s Corporate Governance Code
At least half of the Board, excluding the
chairman, should consist of independent non-
executive directors.
In accordance with Kazakh legal requirements, at
least one third of the Board’s members must be
independent directors. The composition of the
Board, as appointed by the General Shareholder
Meetings on 25 May and 1 December 2023,
includes six independent non-executive
directors out of eight.
Non-executive directors should carefully
analyse to what extent the Management
Board’s work fulfils the aims and objectives set,
monitor its activities, and ensure that financial
information is complete and that financial
controls and the risk management system are
effective and reliable.
In accordance with Kazakh legal requirements,
all members of the Board of Directors monitor
the activities of the Management Board.
The Board of Directors should ensure that an
appropriate succession plan is in place when
appointing members of the Board of Directors
and the senior management in order to create
an appropriate balance of skills and experience
in the company and the Board of Directors and
to continuously refresh the talent pool.
Stipulates the procedure for creating the Board
of Directors and requirements for its candidates,
the aim being to ensure an optimal balance of
experience and knowledge needed for the Board
of Directors to function effectively.
The Bank is working tirelessly to cultivate its corporate governance system, particularly by
incorporating the principles and policies of sustainability (ESG) into its corporate governance system,
transforming the committees of the Board of Directors, using an effective risk management and
internal control system, and regularly improving the professional skills of internal audit, risk
management and compliance employees, as well as the corporate secretary.
We firmly believe that achieving all of the key goals set in Halyk Group’s Development Strategy for
2022-24 and adhering to the key principles of corporate governance and sustainability enshrined in
the Corporate Governance Code will enable the Bank to achieve full compliance with the principles of
the Model Code.
Corporate governance events in 2023
○ On 25 May 2023, the Bank held its annual General Shareholder Meeting, at which 13 decisions were
taken regarding matters under consideration, including information about shareholders’ appeals
concerning the actions of the Bank and its officials.
○ A new version of the Bank’s Charter was approved at the annual General Shareholder Meeting, with
the removal of the word “savings” from the Bank’s full official name. The Bank was re-registered by
the government due to the change in its name, and now its full name is Joint-Stock Company Halyk
Bank of Kazakhstan. New versions of the Bank’s Corporate Governance Code and the Regulation on
the Board of Directors were approved at the annual General Shareholder Meeting.
○ At the annual General Shareholder Meeting, the decision was taken to pay dividends for 2022 of
KZT25.38 per common share, which represented 50% of the Bank’s total consolidated net income
for 2022. The Bank paid dividends of KZT276.852 billion on common shares to the current bank
accounts of the Bank’s shareholders on record with the Bank or listed in the system of the securities
holder registrar or the nominal holding accounting system. Total dividends paid to such
shareholders amounted to KZT276.138 billion from 6 June 2023 (the start date of dividend
payments) to 23 August 2023 inclusive, including KZT78.79 billion on GDRs, for which the Bank’s
common shares are the underlying asset. On 29 August 2023, the Bank transferred dividends of
KZT714 million that were accrued but not paid due to the lack of shareholders’ current bank details
to an account for unclaimed funds at the Central Securities Depository (hereinafter the Central
Depository) in accordance with the requirements of the Kazakh law on joint-stock companies.
○ At the annual General Shareholder Meeting, the following individuals were elected to the Bank’s
Board of Directors: Alexander Pavlov, Piotr Romanowski, Arman Dunayev, Hermann Tischendorf
and Frank Kuijlaars as independent non-executive directors, Mazhit Yessenbayev as a
representative of Holding Group ALMEX and Umut Shayakhmetova as chairperson of the board.
○ At the annual General Shareholder Meeting, changes were approved to the methodology for
14
Corporate
Governance
* The Model Code is the Corporate Governance Code of Kazakhstan (approved by Resolution No. 4 of the Presidium of
the Atameken National Chamber of Entrepreneurs of Kazakhstan dated 27 April 2021).
Halyk Bank’s Corporate Governance Code can be found on the corporate website: https://halykbank.
kz/en/about-bank/korporativnoe-upravlenie.
Compliance with the Corporate Governance Code of Kazakhstan
The Bank sent a letter to the Kazakhstan Stock Exchange (Ref. No. 11879 dated 23 June 2023)
confirming that it had assessed its compliance with and observes 92.1% of the overall principles of the
Model Code*. Compliance with the principles of the Model Code has risen since 2021, increasing from
85.5% to 92.1%.
UK Corporate Governance Code The Bank’s Corporate Governance Code
At least half of the Board, excluding the
chairman, should consist of independent non-
executive directors.
In accordance with Kazakh legal requirements, at
least one third of the Board’s members must be
independent directors. The composition of the
Board, as appointed by the General Shareholder
Meetings on 25 May and 1 December 2023,
includes six independent non-executive
directors out of eight.
Non-executive directors should carefully
analyse to what extent the Management
Board’s work fulfils the aims and objectives set,
monitor its activities, and ensure that financial
information is complete and that financial
controls and the risk management system are
effective and reliable.
In accordance with Kazakh legal requirements,
all members of the Board of Directors monitor
the activities of the Management Board.
The Board of Directors should ensure that an
appropriate succession plan is in place when
appointing members of the Board of Directors
and the senior management in order to create
an appropriate balance of skills and experience
in the company and the Board of Directors and
to continuously refresh the talent pool.
Stipulates the procedure for creating the Board
of Directors and requirements for its candidates,
the aim being to ensure an optimal balance of
experience and knowledge needed for the Board
of Directors to function effectively.
The Bank is working tirelessly to cultivate its corporate governance system, particularly by
incorporating the principles and policies of sustainability (ESG) into its corporate governance system,
transforming the committees of the Board of Directors, using an effective risk management and
internal control system, and regularly improving the professional skills of internal audit, risk
management and compliance employees, as well as the corporate secretary.
We firmly believe that achieving all of the key goals set in Halyk Group’s Development Strategy for
2022-24 and adhering to the key principles of corporate governance and sustainability enshrined in
the Corporate Governance Code will enable the Bank to achieve full compliance with the principles of
the Model Code.
Corporate governance events in 2023
○ On 25 May 2023, the Bank held its annual General Shareholder Meeting, at which 13 decisions were
taken regarding matters under consideration, including information about shareholders’ appeals
concerning the actions of the Bank and its officials.
○ A new version of the Bank’s Charter was approved at the annual General Shareholder Meeting, with
the removal of the word “savings” from the Bank’s full official name. The Bank was re-registered by
the government due to the change in its name, and now its full name is Joint-Stock Company Halyk
Bank of Kazakhstan. New versions of the Bank’s Corporate Governance Code and the Regulation on
the Board of Directors were approved at the annual General Shareholder Meeting.
○ At the annual General Shareholder Meeting, the decision was taken to pay dividends for 2022 of
KZT25.38 per common share, which represented 50% of the Bank’s total consolidated net income
for 2022. The Bank paid dividends of KZT276.852 billion on common shares to the current bank
accounts of the Bank’s shareholders on record with the Bank or listed in the system of the securities
holder registrar or the nominal holding accounting system. Total dividends paid to such
shareholders amounted to KZT276.138 billion from 6 June 2023 (the start date of dividend
payments) to 23 August 2023 inclusive, including KZT78.79 billion on GDRs, for which the Bank’s
common shares are the underlying asset. On 29 August 2023, the Bank transferred dividends of
KZT714 million that were accrued but not paid due to the lack of shareholders’ current bank details
to an account for unclaimed funds at the Central Securities Depository (hereinafter the Central
Depository) in accordance with the requirements of the Kazakh law on joint-stock companies.
○ At the annual General Shareholder Meeting, the following individuals were elected to the Bank’s
Board of Directors: Alexander Pavlov, Piotr Romanowski, Arman Dunayev, Hermann Tischendorf
and Frank Kuijlaars as independent non-executive directors, Mazhit Yessenbayev as a
representative of Holding Group ALMEX and Umut Shayakhmetova as chairperson of the board.
○ At the annual General Shareholder Meeting, changes were approved to the methodology for
14
Corporate
Governance
* The Model Code is the Corporate Governance Code of Kazakhstan (approved by Resolution No. 4 of the Presidium of
the Atameken National Chamber of Entrepreneurs of Kazakhstan dated 27 April 2021).
69
determining the value of shares repurchased by Halyk Bank on the OTC securities market. These
changes were required to bring the methodology into compliance with the requirements of the laws
of Kazakhstan introduced on 1 January 2023, and also to bring its provisions into line with current
practices and simplify corporate governance processes.
○ On 1 December 2023, the Bank held an extraordinary General Shareholder Meeting, at which the
following decisions were taken: 1) to terminate the powers of Mazhit Yessenbayev as a member of
the Board of Directors ahead of term based on his own initiative; 2) to expand the members of the
Board of Directors from seven to eight people; 3) to additionally elect Zhaksybek Kulekeyev to the
Board of Directors as an independent non-executive director and Zhomart Nurabayev as a
representative of Holding Group ALMEX .
○ In 2023, the members of the Bank’s Board of Directors conducted an assessment (self-assessment)
of their activities, consistent with best international practices. The results of the assessment (self-
assessment) were submitted for consideration to the Bank’s shareholders at the General
Shareholder Meeting.
○ In 2023, 10 official appeals by the Bank’s shareholders were considered regarding dividend
payments on the Bank’s shares, the provision of information about the presence/absence of
shareholders’ personal details in the Central Depository, details of the agenda for the General
Shareholder Meeting, the provision of information to a notary regarding any investigation into share
ownership and dividend payments, and other matters concerning the Bank’s activities and Kazakh
securities market legislation.
○ The Bank prepared and published its sustainability report for 2023 as part of its systematic
approach to sustainable development.
○ In 2023, in-person meetings of the Board of Directors considered reports on the implementation of
the Action Plan for the Introduction of Sustainable Development Principles and Goals for 2022-24.
○ An introductory course (Board Book) for new members of the Bank’s Board of Directors was
updated and a training course on corporate governance and sustainability (ESG) was prepared to
hold seminars for Halyk Group’s corporate secretaries and managers.
○ The corporate governance practices at the Bank’s Kazakh and foreign subsidiaries were reviewed
and a report was prepared with recommendations for improvement.
○ The corporate secretary conducted a two-day training course in Tashkent for Tenge Bank managers
on corporate governance and ESG issues.
○ In 2023, employees of the Bank and subsidiaries responsible for the functioning and development
of corporate governance underwent certification.
○ The results were reviewed of the Bank’s stress testing based on a general economic scenario for
2024 (using the scenario analysis).
Corporate governance structure
The Board of Directors has the following consultancy and advisory bodies: Strategic Planning
Committee, Audit Committee, Nomination and Remuneration Committee, Sustainable Development
Committee and Risk Committee. For more details of their work, please see the respective subsection
below.
The Management Board has created numerous working bodies, including directorates, committees
and working groups. This allows it to consider major issues concerning each separate segment in
detail. Where necessary and if required by law, decisions made by such working bodies are brought to
the Management Board or Board of Directors for approval.
To ensure best corporate governance practices, the Board of Directors is assisted by internal and
external auditors, as well as a chief compliance controller, head of internal audit, chief risk officer, chief
legal adviser, corporate secretary and others.
The Bank engages ‘Big Four’ professional services firms to audit the financial statements of Halyk
Group. In 2023, this was carried out by Deloitte LLP.
Functions are allocated between the Board of Directors and the Management Board in accordance
with Kazakh law.
General Shareholder Meeting
Board of Directors
Management Board
Corporate Secretary
Head of Risk Management
Risk Management Service
Head of Internal Audit
Chief Compliance Controller
Compliance Control Department
Internal Audit Service
Committees of the Board of Directors:
1. Strategic Planning Committee
2. Audit Committee
3. Risk Committee
4. Nomination and Remuneration Committee
5. Sustainable Development Committee
14
Corporate
Governance
determining the value of shares repurchased by Halyk Bank on the OTC securities market. These
changes were required to bring the methodology into compliance with the requirements of the laws
of Kazakhstan introduced on 1 January 2023, and also to bring its provisions into line with current
practices and simplify corporate governance processes.
○ On 1 December 2023, the Bank held an extraordinary General Shareholder Meeting, at which the
following decisions were taken: 1) to terminate the powers of Mazhit Yessenbayev as a member of
the Board of Directors ahead of term based on his own initiative; 2) to expand the members of the
Board of Directors from seven to eight people; 3) to additionally elect Zhaksybek Kulekeyev to the
Board of Directors as an independent non-executive director and Zhomart Nurabayev as a
representative of Holding Group ALMEX .
○ In 2023, the members of the Bank’s Board of Directors conducted an assessment (self-assessment)
of their activities, consistent with best international practices. The results of the assessment (self-
assessment) were submitted for consideration to the Bank’s shareholders at the General
Shareholder Meeting.
○ In 2023, 10 official appeals by the Bank’s shareholders were considered regarding dividend
payments on the Bank’s shares, the provision of information about the presence/absence of
shareholders’ personal details in the Central Depository, details of the agenda for the General
Shareholder Meeting, the provision of information to a notary regarding any investigation into share
ownership and dividend payments, and other matters concerning the Bank’s activities and Kazakh
securities market legislation.
○ The Bank prepared and published its sustainability report for 2023 as part of its systematic
approach to sustainable development.
○ In 2023, in-person meetings of the Board of Directors considered reports on the implementation of
the Action Plan for the Introduction of Sustainable Development Principles and Goals for 2022-24.
○ An introductory course (Board Book) for new members of the Bank’s Board of Directors was
updated and a training course on corporate governance and sustainability (ESG) was prepared to
hold seminars for Halyk Group’s corporate secretaries and managers.
○ The corporate governance practices at the Bank’s Kazakh and foreign subsidiaries were reviewed
and a report was prepared with recommendations for improvement.
○ The corporate secretary conducted a two-day training course in Tashkent for Tenge Bank managers
on corporate governance and ESG issues.
○ In 2023, employees of the Bank and subsidiaries responsible for the functioning and development
of corporate governance underwent certification.
○ The results were reviewed of the Bank’s stress testing based on a general economic scenario for
2024 (using the scenario analysis).
Corporate governance structure
The Board of Directors has the following consultancy and advisory bodies: Strategic Planning
Committee, Audit Committee, Nomination and Remuneration Committee, Sustainable Development
Committee and Risk Committee. For more details of their work, please see the respective subsection
below.
The Management Board has created numerous working bodies, including directorates, committees
and working groups. This allows it to consider major issues concerning each separate segment in
detail. Where necessary and if required by law, decisions made by such working bodies are brought to
the Management Board or Board of Directors for approval.
To ensure best corporate governance practices, the Board of Directors is assisted by internal and
external auditors, as well as a chief compliance controller, head of internal audit, chief risk officer, chief
legal adviser, corporate secretary and others.
The Bank engages ‘Big Four’ professional services firms to audit the financial statements of Halyk
Group. In 2023, this was carried out by Deloitte LLP.
Functions are allocated between the Board of Directors and the Management Board in accordance
with Kazakh law.
General Shareholder Meeting
Board of Directors
Management Board
Corporate Secretary
Head of Risk Management
Risk Management Service
Head of Internal Audit
Chief Compliance Controller
Compliance Control Department
Internal Audit Service
Committees of the Board of Directors:
1. Strategic Planning Committee
2. Audit Committee
3. Risk Committee
4. Nomination and Remuneration Committee
5. Sustainable Development Committee
14
Corporate
Governance
70
Board of Directors structure
As of 1 January 2024, the composition of the Board of Directors was as follows.
When determining the independence of the directors, the Board of Directors uses the criteria
stipulated by Kazakh law.
BOARD OF DIRECTORS
Alexander Pavlov Chairman of the Board of Directors, Risk Committee Chairman,
independent non-executive director
Arman Dunayev Audit Committee Chairman, member of the Board of Directors,
independent non-executive director
Frank Kuijlaars Nomination and Remuneration Committee Chairman, member of
the Board of Directors, independent non-executive director
Zhaksybek Kulekeyev Member of the Board of Directors, independent non-executive
director
Zhomart Nurabayev Member of the Board of Directors, representative of Holding Group
ALMEX
Hermann Tischendorf Chairman of the Sustainable Development Committee, member of
the Board of Directors, independent non-executive director
Piotr Romanowski Chairman of the Strategic Planning Committee, member of the
Board of Directors, independent non-executive director
Umut Shayakhmetova Member of the Board of Directors, Chairperson of the Management
Board
TOTAL 8 DIRECTORS
Directors’ skills and experience
The Bank seeks the best balance of experience, skills and vision in its directors. Having various views
when discussing issues allows the Board of Directors to exercise its duties and represent the
interests of shareholders most effectively.
Independent directors contribute international experience, strategic vision, insight into the largest
industries where the Bank operates, corporate governance and risk management.
At the same time, all directors have knowledge of banking activities, finance in general and human
resources management, including remuneration issues.
The skills and experience of the Board of Directors are summarised below.
DIRECTORS’ SKILLS AND EXPERIENCE
Banking 7 directors
Oil and gas and mining 4 directors
Other industries in the real economy 6 directors
Finance 8 directors
Leadership 8 directors
Risk management 4 directors
Medicine and biotechnology 1 director
International experience 5 directors
Strategic vision 8 directors
Corporate governance 8 directors
Human resource management 8 directors
Sustainable development 8 directors
IT and telecommunications 1 director
14
Corporate
Governance
Board of Directors structure
As of 1 January 2024, the composition of the Board of Directors was as follows.
When determining the independence of the directors, the Board of Directors uses the criteria
stipulated by Kazakh law.
BOARD OF DIRECTORS
Alexander Pavlov Chairman of the Board of Directors, Risk Committee Chairman,
independent non-executive director
Arman Dunayev Audit Committee Chairman, member of the Board of Directors,
independent non-executive director
Frank Kuijlaars Nomination and Remuneration Committee Chairman, member of
the Board of Directors, independent non-executive director
Zhaksybek Kulekeyev Member of the Board of Directors, independent non-executive
director
Zhomart Nurabayev Member of the Board of Directors, representative of Holding Group
ALMEX
Hermann Tischendorf Chairman of the Sustainable Development Committee, member of
the Board of Directors, independent non-executive director
Piotr Romanowski Chairman of the Strategic Planning Committee, member of the
Board of Directors, independent non-executive director
Umut Shayakhmetova Member of the Board of Directors, Chairperson of the Management
Board
TOTAL 8 DIRECTORS
Directors’ skills and experience
The Bank seeks the best balance of experience, skills and vision in its directors. Having various views
when discussing issues allows the Board of Directors to exercise its duties and represent the
interests of shareholders most effectively.
Independent directors contribute international experience, strategic vision, insight into the largest
industries where the Bank operates, corporate governance and risk management.
At the same time, all directors have knowledge of banking activities, finance in general and human
resources management, including remuneration issues.
The skills and experience of the Board of Directors are summarised below.
DIRECTORS’ SKILLS AND EXPERIENCE
Banking 7 directors
Oil and gas and mining 4 directors
Other industries in the real economy 6 directors
Finance 8 directors
Leadership 8 directors
Risk management 4 directors
Medicine and biotechnology 1 director
International experience 5 directors
Strategic vision 8 directors
Corporate governance 8 directors
Human resource management 8 directors
Sustainable development 8 directors
IT and telecommunications 1 director
14
Corporate
Governance
71
Management Board structure
In 2023, there were no changes to the members of the Management Board. As of 1 January 2024,
the composition of the Management Board was as follows.
MANAGEMENT BOARD
Umut Shayakhmetova Chairperson of the Management Board
HR, Legal, Customer Service Quality and Internal Security
Aivar Bodanov Deputy Chairman
Security and Problem Loans, CISO
Olga Vuros Deputy Chairperson
Corporate Banking
Murat Koshenov
Deputy Chairman
Financial Block, Financial Institutions and International Relations and
Subsidiaries
Zhumabek Mamutov Deputy Chairman
Retail Banking
Roman Mashchyk Deputy Chairman
Compliance, Risks and DS
Nariman Mukushev Deputy Chairman
Digital Public Services and Ecosystems
Yertai Salimov Deputy Chairman
Operations, Treasury, Resources, Chancellery and Contact Centre
Dauren Sartayev
Deputy Chairman
SME Banking, Transactional Banking, Service and Sales
Development, Marketing and PR
TOTAL 9 MEMBERS
Activities of the Board of Directors
In general, the Board of Directors and its committees work in accordance with the plans for
respective periods.
In 2023, Halyk Bank’s Board of Directors held seven meetings in person, at which 52 matters were
considered, as well as 61 in absentia, at which 558 matters were considered.
Attendance statistics for the meetings of the Board of Directors were as follows.
Member of the Board of
Directors
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Alexander Pavlov 6/51 38/373
Arman Dunayev 7/52 61/558
Mazhit Yessenbayev** 4/40 45/367
Frank Kuijlaars 7/52 59/549
Zhaksybek Kulekeyev**** 1/5 3/40
Zhomart Nurabayev**** 1/5 5/51
Christof Ruehl* 2/30 21/186
Piotr Romanowski 7/52 61/558
Hermann Tischendorf*** 5/22 39/367
Umut Shayakhmetova 7/52 50/489
TOTAL: 7/52 61/558
14
Corporate
Governance
* Christof Ruehl stepped down as a member of the Board of Directors as of 25 May 2023 (Resolution No. 48 of the
annual General Shareholder Meeting dated 25 May 2023)
** Mazhit Yessenbayev stepped down as a member of the Board of Directors as of 1 December 2023 (Resolution No. 49
of the extraordinary General Shareholder Meeting dated 1 December 2023)
*** Hermann Tischendorf was elected as a member of the Board of Directors as of 25 May 2023 (Resolution No. 49 of
the extraordinary General Shareholder Meeting dated 1 December 2023)
**** Zhaksybek Kulekeyev and Zhomart Nurabayev were elected as members of the Board of Directors as of 1 December
2023 (Resolution No. 49 of the extraordinary General Shareholder Meeting dated 1 December 2023)
Management Board structure
In 2023, there were no changes to the members of the Management Board. As of 1 January 2024,
the composition of the Management Board was as follows.
MANAGEMENT BOARD
Umut Shayakhmetova Chairperson of the Management Board
HR, Legal, Customer Service Quality and Internal Security
Aivar Bodanov Deputy Chairman
Security and Problem Loans, CISO
Olga Vuros Deputy Chairperson
Corporate Banking
Murat Koshenov
Deputy Chairman
Financial Block, Financial Institutions and International Relations and
Subsidiaries
Zhumabek Mamutov Deputy Chairman
Retail Banking
Roman Mashchyk Deputy Chairman
Compliance, Risks and DS
Nariman Mukushev Deputy Chairman
Digital Public Services and Ecosystems
Yertai Salimov Deputy Chairman
Operations, Treasury, Resources, Chancellery and Contact Centre
Dauren Sartayev
Deputy Chairman
SME Banking, Transactional Banking, Service and Sales
Development, Marketing and PR
TOTAL 9 MEMBERS
Activities of the Board of Directors
In general, the Board of Directors and its committees work in accordance with the plans for
respective periods.
In 2023, Halyk Bank’s Board of Directors held seven meetings in person, at which 52 matters were
considered, as well as 61 in absentia, at which 558 matters were considered.
Attendance statistics for the meetings of the Board of Directors were as follows.
Member of the Board of
Directors
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Alexander Pavlov 6/51 38/373
Arman Dunayev 7/52 61/558
Mazhit Yessenbayev** 4/40 45/367
Frank Kuijlaars 7/52 59/549
Zhaksybek Kulekeyev**** 1/5 3/40
Zhomart Nurabayev**** 1/5 5/51
Christof Ruehl* 2/30 21/186
Piotr Romanowski 7/52 61/558
Hermann Tischendorf*** 5/22 39/367
Umut Shayakhmetova 7/52 50/489
TOTAL: 7/52 61/558
14
Corporate
Governance
* Christof Ruehl stepped down as a member of the Board of Directors as of 25 May 2023 (Resolution No. 48 of the
annual General Shareholder Meeting dated 25 May 2023)
** Mazhit Yessenbayev stepped down as a member of the Board of Directors as of 1 December 2023 (Resolution No. 49
of the extraordinary General Shareholder Meeting dated 1 December 2023)
*** Hermann Tischendorf was elected as a member of the Board of Directors as of 25 May 2023 (Resolution No. 49 of
the extraordinary General Shareholder Meeting dated 1 December 2023)
**** Zhaksybek Kulekeyev and Zhomart Nurabayev were elected as members of the Board of Directors as of 1 December
2023 (Resolution No. 49 of the extraordinary General Shareholder Meeting dated 1 December 2023)
72
The most important matters that the Board of Directors considered in 2023 included the
following.
1. The Board of Directors considered the results of a scenario analysis on the impact of potential risks
on the Bank’s financial stability in 2024.
2. The Board of Directors considered proposals on the feasibility of adjusting Halyk Group’s
Development Strategy for 2024, after which it decided that it would be inappropriate to adjust the
current version of Halyk Group’s Development Strategy for 2022-24.
3. Based on the new versions of the Charter and the Corporate Governance Code approved at the
annual General Shareholder Meeting on 25 May 2023, the Bank undertook the voluntary
commitment to annually assess the compliance of its operations with the provisions of the Model
Code in accordance with the ‘comply or explain’ principle. To fulfil this commitment, the Bank sent
a letter to the Kazakhstan Stock Exchange (Ref. No. 11879 dated 23 June 2023) confirming that it
had assessed compliance with the principles of the Model Code.
4. The Bank prepared and published its sustainability report for 2022. This document detailed the
main aspects of the Bank’s ESG activities. The Bank made a voluntary commitment to provide
transparent disclosure of key information about its sustainability performance by publishing this
report.
5. The Board of Directors drafted and tentatively approved new versions of the Bank’s Charter,
Corporate Governance Code and Regulation on the Board of Directors, which were later approved
at the annual General Shareholder Meeting.
6. In accordance with the requirements of the Bank’s Corporate Governance Code, the members of
the Bank’s Board of Directors conducted an assessment (self-assessment) of their activities in
2022. The results were submitted for consideration to the Bank’s shareholders at the annual
General Shareholder Meeting.
7. As part of the preparation of materials for the annual General Shareholder Meeting, changes were
drafted and tentatively approved to the methodology for determining the value of shares
repurchased by Halyk Bank on the OTC securities market, which were later approved at the annual
General Shareholder Meeting.
8. The Board of Directors decided to sell 100% of Halyk Bank Kyrgyzstan.
Overall, the goals that the Board of Directors has set for Halyk Group were achieved, including
maintaining Halyk Bank’s position as the leading bank in Kazakhstan, improving customer service and
developing banking products.
At the meetings in person, the Board of Directors discussed key strategic issues, such as:
○ Reports from the Management Board of Halyk Bank and its subsidiaries about the implementation
of Halyk Group’s Development Strategy for 2022-24 (including the Bank’s technological
transformation, as well as the development of digital products and services)
○ The results of the operations and budget execution of the Bank and Halyk Group for 2022 and H1
2023
○ The approval of the consolidated budget of Halyk Group (IFRS) and Halyk Bank for 2024
○ A report on compliance with the internal capital adequacy assessment process and the internal
liquidity adequacy assessment process for 2022
○ Reports on the progress of the Action Plan for the Implementation of the Sustainable Development
Principles and Goals for 2022-24
○ Reports on the completion of work and current issues in the operations of Halyk Aktiv and KUSA
Halyk in 2022
○ The internal audit department’s working plan for 2024 and long-term working plan for 2025-27
○ Changes to the composition of several committees of the Board of Directors
○ The Bank’s major projects
○ Preliminary approval of the Bank’s 2022 financial statements and quarterly performance reports of
the Management Board
○ The reports of the chief compliance controller regarding the management and control of
compliance risks, as well as matters related to internal control at Halyk Bank
○ Analysis of the Bank’s loan portfolio quality
○ Analysis of the Bank’s related-party and other transactions
The Board of Directors also considered the results of stress tests on Halyk Bank’s loan portfolio based
on global economic development scenarios to determine the impact on the loan portfolio and
capitalisation of Halyk Bank.
The Board of Directors is confident that even under the worst-case scenario, the Bank’s positions will
remain sufficiently strong.
The Board also heard reports from the head of risk management and chief compliance controller
about the risk management and compliance processes in place at Halyk Bank and individual
subsidiaries, as well as about AML/CFT efforts.
14
Corporate
Governance
The most important matters that the Board of Directors considered in 2023 included the
following.
1. The Board of Directors considered the results of a scenario analysis on the impact of potential risks
on the Bank’s financial stability in 2024.
2. The Board of Directors considered proposals on the feasibility of adjusting Halyk Group’s
Development Strategy for 2024, after which it decided that it would be inappropriate to adjust the
current version of Halyk Group’s Development Strategy for 2022-24.
3. Based on the new versions of the Charter and the Corporate Governance Code approved at the
annual General Shareholder Meeting on 25 May 2023, the Bank undertook the voluntary
commitment to annually assess the compliance of its operations with the provisions of the Model
Code in accordance with the ‘comply or explain’ principle. To fulfil this commitment, the Bank sent
a letter to the Kazakhstan Stock Exchange (Ref. No. 11879 dated 23 June 2023) confirming that it
had assessed compliance with the principles of the Model Code.
4. The Bank prepared and published its sustainability report for 2022. This document detailed the
main aspects of the Bank’s ESG activities. The Bank made a voluntary commitment to provide
transparent disclosure of key information about its sustainability performance by publishing this
report.
5. The Board of Directors drafted and tentatively approved new versions of the Bank’s Charter,
Corporate Governance Code and Regulation on the Board of Directors, which were later approved
at the annual General Shareholder Meeting.
6. In accordance with the requirements of the Bank’s Corporate Governance Code, the members of
the Bank’s Board of Directors conducted an assessment (self-assessment) of their activities in
2022. The results were submitted for consideration to the Bank’s shareholders at the annual
General Shareholder Meeting.
7. As part of the preparation of materials for the annual General Shareholder Meeting, changes were
drafted and tentatively approved to the methodology for determining the value of shares
repurchased by Halyk Bank on the OTC securities market, which were later approved at the annual
General Shareholder Meeting.
8. The Board of Directors decided to sell 100% of Halyk Bank Kyrgyzstan.
Overall, the goals that the Board of Directors has set for Halyk Group were achieved, including
maintaining Halyk Bank’s position as the leading bank in Kazakhstan, improving customer service and
developing banking products.
At the meetings in person, the Board of Directors discussed key strategic issues, such as:
○ Reports from the Management Board of Halyk Bank and its subsidiaries about the implementation
of Halyk Group’s Development Strategy for 2022-24 (including the Bank’s technological
transformation, as well as the development of digital products and services)
○ The results of the operations and budget execution of the Bank and Halyk Group for 2022 and H1
2023
○ The approval of the consolidated budget of Halyk Group (IFRS) and Halyk Bank for 2024
○ A report on compliance with the internal capital adequacy assessment process and the internal
liquidity adequacy assessment process for 2022
○ Reports on the progress of the Action Plan for the Implementation of the Sustainable Development
Principles and Goals for 2022-24
○ Reports on the completion of work and current issues in the operations of Halyk Aktiv and KUSA
Halyk in 2022
○ The internal audit department’s working plan for 2024 and long-term working plan for 2025-27
○ Changes to the composition of several committees of the Board of Directors
○ The Bank’s major projects
○ Preliminary approval of the Bank’s 2022 financial statements and quarterly performance reports of
the Management Board
○ The reports of the chief compliance controller regarding the management and control of
compliance risks, as well as matters related to internal control at Halyk Bank
○ Analysis of the Bank’s loan portfolio quality
○ Analysis of the Bank’s related-party and other transactions
The Board of Directors also considered the results of stress tests on Halyk Bank’s loan portfolio based
on global economic development scenarios to determine the impact on the loan portfolio and
capitalisation of Halyk Bank.
The Board of Directors is confident that even under the worst-case scenario, the Bank’s positions will
remain sufficiently strong.
The Board also heard reports from the head of risk management and chief compliance controller
about the risk management and compliance processes in place at Halyk Bank and individual
subsidiaries, as well as about AML/CFT efforts.
14
Corporate
Governance
73
Absentee voting was conducted for routine issues that are included in the Board of Directors’ duties
by law or by the Bank’s internal documents, as well as urgent issues that could not wait until the next
ordinary meeting in person.
Detailed committee reports
General provisions
The Board committees are consulting and advisory bodies to the Board of Directors. All their
suggestions are recommendations for consideration by the Board of Directors.
Under Kazakh law, committee members are members of the Board of Directors and experts. More
detailed information on the composition of the committees is provided below in the subsections on
the activities of the respective committees.
Audit Committee
The Audit Committee was established in July 2005.
The committee consists of three members of the Board of Directors who are elected by a majority of
Board members. The committee is chaired by an independent non-executive director.
Its members are:
1. Arman Dunayev – chairman, independent non-executive director
2. Alexander Pavlov – member, independent non-executive director
3. Piotr Romanowski – member, independent non-executive director
All committee members are independent non-executive directors who are knowledgeable and
experienced in accounting and tax accounting, financial statements, internal and external auditing,
and risk management.
Committee functions
The committee assists the Board of Directors in matters concerning the completeness and
authenticity of financial and other reports, compliance of the Bank and its subsidiaries with legal
requirements and internal documents (compliance control), selection and independence of the
external auditor, adequacy and efficiency of internal control and risk management systems, and
coordination of external and internal audit activities.
Committee activity
In 2023, the committee held two meetings in person, at which it considered three matters, and 38
meetings in absentia, at which it considered 40 matters.
To ensure the completeness and reliability of the financial statements, the committee reviewed the
external auditor’s interim (quarterly) financial reports, as well as letters to the management of the
Bank and subsidiaries. It also approved the annual financial statements for 2022 and submitted them
to the Board of Directors for consideration. As part of this work, the committee discussed the
principles of the most important accounting judgments, policies and procedures, among other
matters, with the external auditor and the Bank’s finance department.
In 2023, the committee worked closely with the internal audit department and considered the
following matters: the internal audit budget and working plan; results of audits; management reports
on internal audit issues; internal audit department personnel matters; and draft internal regulatory
documents governing the internal audit department’s work.
In 2023, the committee also reviewed the quarterly analytical reports on the Bank’s portfolio quality
prepared by the risk management service.
Member of the Audit
Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Alexander Pavlov 1/2 23/27
Arman Dunayev 2/3 38/40
Christof Ruehl* 1/2 13/13
Piotr Romanowski** 1/1 25/27
TOTAL: 2/3 38/40
14
Corporate
Governance
* Christof Ruehl stepped down as a member of the Board of Directors as of 25 May 2023 (Resolution No. 48 of the
annual General Shareholder Meeting dated 25 May 2023)
** Piotr Romanowski was elected as a member of the Audit Committee on 25 May 2023 (Resolution No. 4, Item 2 of the
extraordinary meeting of the Board of Directors dated 25 May 2023)
Absentee voting was conducted for routine issues that are included in the Board of Directors’ duties
by law or by the Bank’s internal documents, as well as urgent issues that could not wait until the next
ordinary meeting in person.
Detailed committee reports
General provisions
The Board committees are consulting and advisory bodies to the Board of Directors. All their
suggestions are recommendations for consideration by the Board of Directors.
Under Kazakh law, committee members are members of the Board of Directors and experts. More
detailed information on the composition of the committees is provided below in the subsections on
the activities of the respective committees.
Audit Committee
The Audit Committee was established in July 2005.
The committee consists of three members of the Board of Directors who are elected by a majority of
Board members. The committee is chaired by an independent non-executive director.
Its members are:
1. Arman Dunayev – chairman, independent non-executive director
2. Alexander Pavlov – member, independent non-executive director
3. Piotr Romanowski – member, independent non-executive director
All committee members are independent non-executive directors who are knowledgeable and
experienced in accounting and tax accounting, financial statements, internal and external auditing,
and risk management.
Committee functions
The committee assists the Board of Directors in matters concerning the completeness and
authenticity of financial and other reports, compliance of the Bank and its subsidiaries with legal
requirements and internal documents (compliance control), selection and independence of the
external auditor, adequacy and efficiency of internal control and risk management systems, and
coordination of external and internal audit activities.
Committee activity
In 2023, the committee held two meetings in person, at which it considered three matters, and 38
meetings in absentia, at which it considered 40 matters.
To ensure the completeness and reliability of the financial statements, the committee reviewed the
external auditor’s interim (quarterly) financial reports, as well as letters to the management of the
Bank and subsidiaries. It also approved the annual financial statements for 2022 and submitted them
to the Board of Directors for consideration. As part of this work, the committee discussed the
principles of the most important accounting judgments, policies and procedures, among other
matters, with the external auditor and the Bank’s finance department.
In 2023, the committee worked closely with the internal audit department and considered the
following matters: the internal audit budget and working plan; results of audits; management reports
on internal audit issues; internal audit department personnel matters; and draft internal regulatory
documents governing the internal audit department’s work.
In 2023, the committee also reviewed the quarterly analytical reports on the Bank’s portfolio quality
prepared by the risk management service.
Member of the Audit
Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Alexander Pavlov 1/2 23/27
Arman Dunayev 2/3 38/40
Christof Ruehl* 1/2 13/13
Piotr Romanowski** 1/1 25/27
TOTAL: 2/3 38/40
14
Corporate
Governance
* Christof Ruehl stepped down as a member of the Board of Directors as of 25 May 2023 (Resolution No. 48 of the
annual General Shareholder Meeting dated 25 May 2023)
** Piotr Romanowski was elected as a member of the Audit Committee on 25 May 2023 (Resolution No. 4, Item 2 of the
extraordinary meeting of the Board of Directors dated 25 May 2023)
74
Nomination and Remuneration Committee
The Nomination and Remuneration Committee was established in September 2007.
The committee consists of three members of the Board of Directors who are elected by a majority of
Board members. At least two of the committee’s members must be independent non-executive
directors.
Its members are:
1. Frank Kuijlaars — chairman, independent non-executive director
2. Alexander Pavlov — member, independent non-executive director
3. Arman Dunayev — member, independent non-executive director
All members of the committee are independent non-executive directors and have extensive
experience in human resources management, including remuneration issues.
Committee functions
The committee makes recommendations to the Board of Directors regarding candidates for the Board
of Directors, Management Board and boards of directors of the Bank’s subsidiaries; the remuneration
system for members of the Board of Directors and Management Board; the salaries of the boards of
directors and executive bodies of subsidiaries; and ways to improve ethical standards to enhance the
corporate culture at the Bank.
Committee activity
In 2023, the committee held 12 meetings in absentia, at which it considered a total of 20 matters.
Member of the Nomination
and Remuneration
Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Frank Kuijlaars - 12/20
Alexander Pavlov - 12/20
Arman Dunayev - 12/20
TOTAL: - 12/20
The Nomination and Remuneration Committee reviewed: a report on the assessment (self-
assessment) of the activities of members of the Board of Directors; recommendations on candidates
for members of the Boards of Directors and the Bank’s subsidiaries; changes and additions to the
Bank’s organisational structure; and bonuses for members of the Board of Directors, employees of the
internal audit service and the corporate secretary.
Remuneration to the members of the Board of Directors and Management Board of Halyk
Bank for 2023 totalled:
In 2023, the following mandatory deductions were made from the above income of
members of the Board of Directors and Management Board of Halyk Bank:
Remuneration to members of the Management Board is based on the following three factors:
○ An assessment of the position that determines its significance (value) for the organisation, as well
as the degree of influence of the manager’s work on the Bank’s final results
○ Remuneration for comparable positions in the regional labour market
○ An assessment of the activities of the Bank’s managers, which is used to determine the annual
bonus
(KZT)
Members of the
Board of Directors
and Management
Board
Individual income
tax
Mandatory
pension
contributions
Compulsory
health
insurance
contributions
Total mandatory
deductions
417,116,131.74 32,200,000.00 1,526,000.00 450,842,131.74
(KZT)
Members of the Bank’s Board of Directors and
Management Board
Total income
4,201,900,567.03
14
Corporate
Governance
Nomination and Remuneration Committee
The Nomination and Remuneration Committee was established in September 2007.
The committee consists of three members of the Board of Directors who are elected by a majority of
Board members. At least two of the committee’s members must be independent non-executive
directors.
Its members are:
1. Frank Kuijlaars — chairman, independent non-executive director
2. Alexander Pavlov — member, independent non-executive director
3. Arman Dunayev — member, independent non-executive director
All members of the committee are independent non-executive directors and have extensive
experience in human resources management, including remuneration issues.
Committee functions
The committee makes recommendations to the Board of Directors regarding candidates for the Board
of Directors, Management Board and boards of directors of the Bank’s subsidiaries; the remuneration
system for members of the Board of Directors and Management Board; the salaries of the boards of
directors and executive bodies of subsidiaries; and ways to improve ethical standards to enhance the
corporate culture at the Bank.
Committee activity
In 2023, the committee held 12 meetings in absentia, at which it considered a total of 20 matters.
Member of the Nomination
and Remuneration
Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Frank Kuijlaars - 12/20
Alexander Pavlov - 12/20
Arman Dunayev - 12/20
TOTAL: - 12/20
The Nomination and Remuneration Committee reviewed: a report on the assessment (self-
assessment) of the activities of members of the Board of Directors; recommendations on candidates
for members of the Boards of Directors and the Bank’s subsidiaries; changes and additions to the
Bank’s organisational structure; and bonuses for members of the Board of Directors, employees of the
internal audit service and the corporate secretary.
Remuneration to the members of the Board of Directors and Management Board of Halyk
Bank for 2023 totalled:
In 2023, the following mandatory deductions were made from the above income of
members of the Board of Directors and Management Board of Halyk Bank:
Remuneration to members of the Management Board is based on the following three factors:
○ An assessment of the position that determines its significance (value) for the organisation, as well
as the degree of influence of the manager’s work on the Bank’s final results
○ Remuneration for comparable positions in the regional labour market
○ An assessment of the activities of the Bank’s managers, which is used to determine the annual
bonus
(KZT)
Members of the
Board of Directors
and Management
Board
Individual income
tax
Mandatory
pension
contributions
Compulsory
health
insurance
contributions
Total mandatory
deductions
417,116,131.74 32,200,000.00 1,526,000.00 450,842,131.74
(KZT)
Members of the Bank’s Board of Directors and
Management Board
Total income
4,201,900,567.03
14
Corporate
Governance
75
The fundamental principles of the remuneration system for members of the Board of Directors are the
relationship between Board members’ compensation and:
○ Their personal qualifications and contribution to the Bank’s performance
○ The execution of their duties and achievement of goals in the interests of the Bank and its
shareholders
Strategic Planning Committee
The Strategic Planning Committee was established in April 2012.
The committee consists of five members of the Board of Directors who are elected by a majority of
Board members, as well as four experts who are members of the Management Board overseeing the
Bank’s key strategic priorities.
The Strategic Planning Committee is chaired by an independent non-executive director. Its members
and experts have experience in the following areas: IT development; developing and providing
banking services; risk management and budget planning.
Its members are:
1. Piotr Romanowski — chairman, independent non-executive director
2. Zhomart Nurabayev — member, representative of the Bank’s largest shareholder Holding Group
ALMEX
3. Alexander Pavlov — member, independent non-executive director
4. Hermann Tischendorf — member, independent non-executive director
5. Umut Shayakhmetova — member, chairperson of the Management Board
6. Olga Vuros — expert (non-voting member)
7. Murat Koshenov — expert (non-voting member)
8. Zhumabek Mamutov — expert (non-voting member)
9. Dauren Sartayev — expert (non-voting member)
Committee functions
The committee assists the Board of Directors in matters regarding Halyk Group’s strategy; the Bank’s
sustainable development strategy and monitoring of its implementation; the determination of
medium- and long-term sustainable development goals and KPIs and monitoring of the
implementation of the action plan to achieve them; the analysis of reports on strategy implementation;
and monitoring of the external environment and its impact on the Group’s strategic plans. It conducts
a preliminary review of the Bank’s draft budget for the corresponding year, as well as its draft
profitability management policy, and monitors and controls compliance by the Bank and its employees
with this policy.
Committee activity
In 2023, the committee held three meetings in person, at which it considered eight matters, and two
in absentia, at which it considered two matters.
Member of the Strategic
Planning Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Arman Dunayev 3/8 2/2
Alexander Pavlov 3/8 2/2
Mazhit Yessenbayev** 3/8 2/2
Piotr Romanowski 3/8 2/2
Zhomart Nurabayev*** - -
Umut Shayakhmetova 3/8 2/2
Murat Koshenov* 3/8 2/2
Dauren Sartayev* 3/8 2/2
Olga Vuros* 3/8 2/2
Zhumabek Mamutov* 3/8 2/2
TOTAL: 3/8 2/2
14
Corporate
Governance
* expert (non-voting member)
** Mazhit Yessenbayev stepped down from the Committee on 26 December 2023 (Resolution No. 59 of the
extraordinary meeting of the Board of Directors dated 26 December 2023)
*** Zhomart Nurabayev joined the Committee on 26 December 2023 (Resolution No. 59 of the extraordinary meeting of
the Board of Directors dated 26 December 2023)
The fundamental principles of the remuneration system for members of the Board of Directors are the
relationship between Board members’ compensation and:
○ Their personal qualifications and contribution to the Bank’s performance
○ The execution of their duties and achievement of goals in the interests of the Bank and its
shareholders
Strategic Planning Committee
The Strategic Planning Committee was established in April 2012.
The committee consists of five members of the Board of Directors who are elected by a majority of
Board members, as well as four experts who are members of the Management Board overseeing the
Bank’s key strategic priorities.
The Strategic Planning Committee is chaired by an independent non-executive director. Its members
and experts have experience in the following areas: IT development; developing and providing
banking services; risk management and budget planning.
Its members are:
1. Piotr Romanowski — chairman, independent non-executive director
2. Zhomart Nurabayev — member, representative of the Bank’s largest shareholder Holding Group
ALMEX
3. Alexander Pavlov — member, independent non-executive director
4. Hermann Tischendorf — member, independent non-executive director
5. Umut Shayakhmetova — member, chairperson of the Management Board
6. Olga Vuros — expert (non-voting member)
7. Murat Koshenov — expert (non-voting member)
8. Zhumabek Mamutov — expert (non-voting member)
9. Dauren Sartayev — expert (non-voting member)
Committee functions
The committee assists the Board of Directors in matters regarding Halyk Group’s strategy; the Bank’s
sustainable development strategy and monitoring of its implementation; the determination of
medium- and long-term sustainable development goals and KPIs and monitoring of the
implementation of the action plan to achieve them; the analysis of reports on strategy implementation;
and monitoring of the external environment and its impact on the Group’s strategic plans. It conducts
a preliminary review of the Bank’s draft budget for the corresponding year, as well as its draft
profitability management policy, and monitors and controls compliance by the Bank and its employees
with this policy.
Committee activity
In 2023, the committee held three meetings in person, at which it considered eight matters, and two
in absentia, at which it considered two matters.
Member of the Strategic
Planning Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Arman Dunayev 3/8 2/2
Alexander Pavlov 3/8 2/2
Mazhit Yessenbayev** 3/8 2/2
Piotr Romanowski 3/8 2/2
Zhomart Nurabayev*** - -
Umut Shayakhmetova 3/8 2/2
Murat Koshenov* 3/8 2/2
Dauren Sartayev* 3/8 2/2
Olga Vuros* 3/8 2/2
Zhumabek Mamutov* 3/8 2/2
TOTAL: 3/8 2/2
14
Corporate
Governance
* expert (non-voting member)
** Mazhit Yessenbayev stepped down from the Committee on 26 December 2023 (Resolution No. 59 of the
extraordinary meeting of the Board of Directors dated 26 December 2023)
*** Zhomart Nurabayev joined the Committee on 26 December 2023 (Resolution No. 59 of the extraordinary meeting of
the Board of Directors dated 26 December 2023)
76
The committee reviewed the results of the implementation of Halyk Group’s Development Strategy for
2022-24 in 2022 and Halyk Group’s Development Strategy for 2022-24 in the first half of 2023. The
analysis showed satisfactory progress.
The committee also reviewed the Bank’s draft budget for 2024 and the execution of the Bank’s
budget for H1 2023.
In addition, the committee analysed changes in the external environment (regulatory, economic,
financial and so on) and assessed the impact of such changes on Halyk Group’s Development
Strategy for 2022-24.
Sustainable Development Committee
In April 2022, the Social Responsibilities Committee was transformed into the Sustainable
Development Committee.
The committee consists of four members of the Board of Directors, who were elected by a majority
vote of all members of the Board of Directors, and two experts, who are Board members in charge of
ESG, sponsorship and charity issues. A majority of the committee members are independent
directors.
Its members are:
1. Hermann Tischendorf – chairman, independent non-executive director
2. Arman Dunayev – member, independent non-executive director
3. Frank Kuijlaars – member, independent non-executive director
4. Zhaksybek Kulekeyev – member, independent non-executive director
5. Umut Shayakhmetova – member
6. Murat Koshenov – member, expert (non-voting member)
7. Dauren Sartayev – member, expert (non-voting member)
Committee functions
The main goals of the Sustainable Development Committee are to assist the Bank’s Board of Directors
in establishing a sustainable development system at the Bank, ensure its functioning and inform the
Board of Directors about measures taken to embed sustainable development and ESG principles in
the Bank’s activities.
Committee activity
In 2023, the committee held two meetings in person, at which it considered two matters, and two in
absentia, at which it considered three matters.
Member of the Sustainable
Development Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Hermann Tischendorf* 1/1 2/3
Frank Kuijlaars 2/2 2/3
Arman Dunayev 2/2 2/3
Zhaksybek Kulekeyev** - -
Christof Ruehl*** 1/1 -
Umut Shayakhmetova 2/2 2/3
Dauren Sartayev 2/2 2/3
Murat Koshenov 2/2 2/3
TOTAL: 2/2 2/3
14
Corporate
Governance
* Hermann Tischendorf assumed the duties of committee chairman on 25 May 2023 (Resolution No. 4, Item 5 of the
extraordinary meeting of the Board of Directors dated 25 May 2023)
** Zhaksybek Kulekeyev became a committee member on 26 December 2023 (Resolution No. 59 of the extraordinary
meeting of the Board of Directors dated 26 December 2023)
*** Christof Ruehl stepped down as a committee member on 25 May 2023 (Minutes No. 48 of the annual General
Shareholder Meeting dated 25 May 2023)
The committee reviewed the results of the implementation of Halyk Group’s Development Strategy for
2022-24 in 2022 and Halyk Group’s Development Strategy for 2022-24 in the first half of 2023. The
analysis showed satisfactory progress.
The committee also reviewed the Bank’s draft budget for 2024 and the execution of the Bank’s
budget for H1 2023.
In addition, the committee analysed changes in the external environment (regulatory, economic,
financial and so on) and assessed the impact of such changes on Halyk Group’s Development
Strategy for 2022-24.
Sustainable Development Committee
In April 2022, the Social Responsibilities Committee was transformed into the Sustainable
Development Committee.
The committee consists of four members of the Board of Directors, who were elected by a majority
vote of all members of the Board of Directors, and two experts, who are Board members in charge of
ESG, sponsorship and charity issues. A majority of the committee members are independent
directors.
Its members are:
1. Hermann Tischendorf – chairman, independent non-executive director
2. Arman Dunayev – member, independent non-executive director
3. Frank Kuijlaars – member, independent non-executive director
4. Zhaksybek Kulekeyev – member, independent non-executive director
5. Umut Shayakhmetova – member
6. Murat Koshenov – member, expert (non-voting member)
7. Dauren Sartayev – member, expert (non-voting member)
Committee functions
The main goals of the Sustainable Development Committee are to assist the Bank’s Board of Directors
in establishing a sustainable development system at the Bank, ensure its functioning and inform the
Board of Directors about measures taken to embed sustainable development and ESG principles in
the Bank’s activities.
Committee activity
In 2023, the committee held two meetings in person, at which it considered two matters, and two in
absentia, at which it considered three matters.
Member of the Sustainable
Development Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Hermann Tischendorf* 1/1 2/3
Frank Kuijlaars 2/2 2/3
Arman Dunayev 2/2 2/3
Zhaksybek Kulekeyev** - -
Christof Ruehl*** 1/1 -
Umut Shayakhmetova 2/2 2/3
Dauren Sartayev 2/2 2/3
Murat Koshenov 2/2 2/3
TOTAL: 2/2 2/3
14
Corporate
Governance
* Hermann Tischendorf assumed the duties of committee chairman on 25 May 2023 (Resolution No. 4, Item 5 of the
extraordinary meeting of the Board of Directors dated 25 May 2023)
** Zhaksybek Kulekeyev became a committee member on 26 December 2023 (Resolution No. 59 of the extraordinary
meeting of the Board of Directors dated 26 December 2023)
*** Christof Ruehl stepped down as a committee member on 25 May 2023 (Minutes No. 48 of the annual General
Shareholder Meeting dated 25 May 2023)
77
The Sustainable Development Committee reviewed the following matters:
○ Reports on the progress of the Action Plan for the Implementation of the Sustainable Development
Principles and Goals for 2022-24
○ A report on the sponsorship and charity activity of Halyk Bank and the Halyk Fund for 2023
○ The plan for the main sponsorship and charity events of Halyk Bank and the Halyk Fund for 2024
Risk Committee
The Risk Committee was established in May 2020.
Its members are:
1. Alexander Pavlov – chairman, independent non-executive director
2. Arman Dunayev – member, independent non-executive director
3. Piotr Romanowski – member, independent non-executive director
4. Umut Shayakhmetova – member, chairperson of the Management Board
5. Roman Mashchyk – expert (non-voting member)
Committee functions
The committee assists the Board of Directors in matters regarding establishing an effective risk
management and internal control system at the Bank, ensuring that it functions properly, and
informing the Board of the Bank’s acceptable risk levels. It is primarily tasked with:
1. Regularly assessing the risks inherent in the Bank’s activities, including when reviewing
management risk reports, as well as keeping the Bank’s risk profile up to date
2. Preparing recommendations for the Board of Directors as necessary on the following matters:
◦ Managing the primary types of risks inherent in the Bank’s activities (regarding credit, liquidity,
market, capital management, operational, business continuity management, information
technology, information security, strategy, reputation and ESG risks) to develop individual
strategic decisions regarding the Bank’s risk appetite strategy and risk profile
◦ Managing the Bank’s compliance risks
◦ Ensuring the adequacy and effectiveness of the Bank’s internal control system
◦ Addressing other matters that are under its remit based on applicable legislation and the Bank’s
internal regulations
3. Performing oversight of the Bank’s internal control system
4. Ensuring the introduction of procedures to identify, prioritise and manage the ESG risks of the
Bank’s borrowers
5. Ensuring compliance with responsible financing principles and the inclusion of ESG criteria in
decision-making processes on project financing by embedding them in the Bank’s Credit Policy
6. Ensuring the incorporation of ESG risk management processes in the Bank’s overall risk
management system to minimise the negative impact of lending and investment activities
7. Ensuring the introduction of procedures to assess the impact of climate risks on the business
model and strategic planning, as well as conducting scenario analysis and stress tests
Committee activity
In 2023, the committee held three meetings in person, at which it considered six matters, and 18 in
absentia, at which it considered 33 matters.
During the meetings held in person, the Risk Committee considered the following matters:
Member of the Risk
Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Alexander Pavlov 2/4 12/19
Arman Dunayev 3/6 18/33
Piotr Romanowski 3/6 18/33
Umut Shayakhmetova 3/6 16/28
Roman Mashchyk* 3/6 17/31
Almas Makhanov** 3/6 11/20
TOTAL: 3/6 18/33
14
Corporate
Governance
* Roman Mashchyk is a member of the Risk Committee of the Board of Directors (non-voting expert).
** Almas Makhanov was a member of the Risk Committee of the Board of Directors (non-voting expert) who stepped
down from the Risk Committee on 3 October 2023 due to the termination of his powers as head of risk management
at the Bank (Resolution No. 44 of the extraordinary meeting of the Board of Directors dated 3 October 2023).
The Sustainable Development Committee reviewed the following matters:
○ Reports on the progress of the Action Plan for the Implementation of the Sustainable Development
Principles and Goals for 2022-24
○ A report on the sponsorship and charity activity of Halyk Bank and the Halyk Fund for 2023
○ The plan for the main sponsorship and charity events of Halyk Bank and the Halyk Fund for 2024
Risk Committee
The Risk Committee was established in May 2020.
Its members are:
1. Alexander Pavlov – chairman, independent non-executive director
2. Arman Dunayev – member, independent non-executive director
3. Piotr Romanowski – member, independent non-executive director
4. Umut Shayakhmetova – member, chairperson of the Management Board
5. Roman Mashchyk – expert (non-voting member)
Committee functions
The committee assists the Board of Directors in matters regarding establishing an effective risk
management and internal control system at the Bank, ensuring that it functions properly, and
informing the Board of the Bank’s acceptable risk levels. It is primarily tasked with:
1. Regularly assessing the risks inherent in the Bank’s activities, including when reviewing
management risk reports, as well as keeping the Bank’s risk profile up to date
2. Preparing recommendations for the Board of Directors as necessary on the following matters:
◦ Managing the primary types of risks inherent in the Bank’s activities (regarding credit, liquidity,
market, capital management, operational, business continuity management, information
technology, information security, strategy, reputation and ESG risks) to develop individual
strategic decisions regarding the Bank’s risk appetite strategy and risk profile
◦ Managing the Bank’s compliance risks
◦ Ensuring the adequacy and effectiveness of the Bank’s internal control system
◦ Addressing other matters that are under its remit based on applicable legislation and the Bank’s
internal regulations
3. Performing oversight of the Bank’s internal control system
4. Ensuring the introduction of procedures to identify, prioritise and manage the ESG risks of the
Bank’s borrowers
5. Ensuring compliance with responsible financing principles and the inclusion of ESG criteria in
decision-making processes on project financing by embedding them in the Bank’s Credit Policy
6. Ensuring the incorporation of ESG risk management processes in the Bank’s overall risk
management system to minimise the negative impact of lending and investment activities
7. Ensuring the introduction of procedures to assess the impact of climate risks on the business
model and strategic planning, as well as conducting scenario analysis and stress tests
Committee activity
In 2023, the committee held three meetings in person, at which it considered six matters, and 18 in
absentia, at which it considered 33 matters.
During the meetings held in person, the Risk Committee considered the following matters:
Member of the Risk
Committee
Meetings in person (number of
meetings / number of matters
considered)
Meetings in absentia (number
of meetings / number of
matters considered)
Alexander Pavlov 2/4 12/19
Arman Dunayev 3/6 18/33
Piotr Romanowski 3/6 18/33
Umut Shayakhmetova 3/6 16/28
Roman Mashchyk* 3/6 17/31
Almas Makhanov** 3/6 11/20
TOTAL: 3/6 18/33
14
Corporate
Governance
* Roman Mashchyk is a member of the Risk Committee of the Board of Directors (non-voting expert).
** Almas Makhanov was a member of the Risk Committee of the Board of Directors (non-voting expert) who stepped
down from the Risk Committee on 3 October 2023 due to the termination of his powers as head of risk management
at the Bank (Resolution No. 44 of the extraordinary meeting of the Board of Directors dated 3 October 2023).
78
○ A report on the compliance (self-assessment) of internal processes for assessing capital adequacy
and liquidity adequacy for 2022
○ Presentations on the Bank’s portfolio quality for the reporting period
○ A report about the Bank’s 20 largest borrowers for the reporting period
Absentee voting was conducted for routine issues included in the committee’s duties by law or by the
Bank’s internal documents, including:
○ Management reporting about the Bank’s risks
○ Consideration and approval of the stress test results
○ Approval of changes to Halyk Group’s Development Strategy for 2022-24
○ Approval of the validation of the default probability model used to monitor Small Business clients as
part of the EWS
○ Approval of reports on the validation of the scoring model for the Unsecured Lending product and
the scoring model for the Commodity Lending product
○ Consideration of the monitoring and assessment of how effectively the Bank’s Management Board
implemented the compliance risk management policy and internal control policy, as well as
recommendations that aim to minimise compliance risks and improve components of the Bank’s
internal control system
○ Introduction of amendments and additions to the Bank’s internal regulations
Board assessment results for 2023
1. Board work style and culture
○ The Board follows a classic management model in its activities due to the need to comply with
applicable laws, risks and shareholder interests. The Board’s psychological atmosphere and work
style promote constructiveness and efficiency. The Board of Directors, Management Board and
other key employees of the Bank need to continue to have regular in-person meetings to exchange
information and develop new ideas for the Bank’s sustainable development and the creation of
Halyk Group’s Development Strategy for 2025-27.
○ The key motivating factors for Board members are: the scale of the Bank’s operations as the largest
financial institution in the country; the vibrant personalities of the Bank’s senior management; the
opportunity to share experience and knowledge with other Board members; the desire to achieve
self-fulfilment at the strategic level; and a high level of transparency and corporate governance.
○ The Board supports initiatives to develop corporate governance, ESG and the ecosystem, and to
introduce new tools that can improve its performance.
○ The Board possesses the necessary expertise in finance, financial reporting, internal control and
audit, banking, risk management, IT and corporate governance.
○ The most critical areas of the Board’s expertise are: digital transformation; innovation; risk
management; finance; internal control and audit; human resources and talent development;
strategic management; and sustainable development (ESG).
○ The key skills for the Board to function effectively are: the ability to make decisions under uncertain
conditions; constructive criticism and feedback; creative thinking and the search for ideas; and
international experience in business and IT.
○ There are no obvious or latent conflicts among the Board members that affect its efficiency, and all
Board members focus on working together efficiently as a collegial management body.
○ The relationship between the Board of Directors and Management Board contributes to the Bank’s
ability to operate in the interests of shareholders and other stakeholders (customers, employees
and so on).
2. Board composition and structure
○ The Board’s composition is optimal and balanced (in terms of members’ knowledge and
experience) to perform the functions assigned to it, including to oversee the implementation of the
Bank’s Development Strategy. The Board of Directors intends to enhance its expertise in
information technology, cybersecurity, artificial intelligence, audits, ESG, big data and innovation in
the banking business.
○ In 2023, significant changes were made to the Board’s composition (the number of Board members
was increased from seven to eight people) with the election of three new Board members
(Zhaksybek Kulekeyev, Zhomart Nurabayev and Hermann Tischendorf), who have extensive
experience and knowledge in such areas as IT, telecommunications, digital products, ecosystems,
finance, economics and management. One of the Board members advises the European Union on
sanctions compliance.
○ The Bank has an optimal system in place to improve Board members’ expertise and qualifications.
The Bank monitors technological advances and new approaches in banking, in both Kazakhstan and
other countries where it operates. Where necessary, additional training will be provided for Board
members. In 2023, information sessions (seminars and training) were held for the Board of
Directors and the Management Board in banking, finance, macroeconomics and strategic
management.
14
Corporate
Governance
○ A report on the compliance (self-assessment) of internal processes for assessing capital adequacy
and liquidity adequacy for 2022
○ Presentations on the Bank’s portfolio quality for the reporting period
○ A report about the Bank’s 20 largest borrowers for the reporting period
Absentee voting was conducted for routine issues included in the committee’s duties by law or by the
Bank’s internal documents, including:
○ Management reporting about the Bank’s risks
○ Consideration and approval of the stress test results
○ Approval of changes to Halyk Group’s Development Strategy for 2022-24
○ Approval of the validation of the default probability model used to monitor Small Business clients as
part of the EWS
○ Approval of reports on the validation of the scoring model for the Unsecured Lending product and
the scoring model for the Commodity Lending product
○ Consideration of the monitoring and assessment of how effectively the Bank’s Management Board
implemented the compliance risk management policy and internal control policy, as well as
recommendations that aim to minimise compliance risks and improve components of the Bank’s
internal control system
○ Introduction of amendments and additions to the Bank’s internal regulations
Board assessment results for 2023
1. Board work style and culture
○ The Board follows a classic management model in its activities due to the need to comply with
applicable laws, risks and shareholder interests. The Board’s psychological atmosphere and work
style promote constructiveness and efficiency. The Board of Directors, Management Board and
other key employees of the Bank need to continue to have regular in-person meetings to exchange
information and develop new ideas for the Bank’s sustainable development and the creation of
Halyk Group’s Development Strategy for 2025-27.
○ The key motivating factors for Board members are: the scale of the Bank’s operations as the largest
financial institution in the country; the vibrant personalities of the Bank’s senior management; the
opportunity to share experience and knowledge with other Board members; the desire to achieve
self-fulfilment at the strategic level; and a high level of transparency and corporate governance.
○ The Board supports initiatives to develop corporate governance, ESG and the ecosystem, and to
introduce new tools that can improve its performance.
○ The Board possesses the necessary expertise in finance, financial reporting, internal control and
audit, banking, risk management, IT and corporate governance.
○ The most critical areas of the Board’s expertise are: digital transformation; innovation; risk
management; finance; internal control and audit; human resources and talent development;
strategic management; and sustainable development (ESG).
○ The key skills for the Board to function effectively are: the ability to make decisions under uncertain
conditions; constructive criticism and feedback; creative thinking and the search for ideas; and
international experience in business and IT.
○ There are no obvious or latent conflicts among the Board members that affect its efficiency, and all
Board members focus on working together efficiently as a collegial management body.
○ The relationship between the Board of Directors and Management Board contributes to the Bank’s
ability to operate in the interests of shareholders and other stakeholders (customers, employees
and so on).
2. Board composition and structure
○ The Board’s composition is optimal and balanced (in terms of members’ knowledge and
experience) to perform the functions assigned to it, including to oversee the implementation of the
Bank’s Development Strategy. The Board of Directors intends to enhance its expertise in
information technology, cybersecurity, artificial intelligence, audits, ESG, big data and innovation in
the banking business.
○ In 2023, significant changes were made to the Board’s composition (the number of Board members
was increased from seven to eight people) with the election of three new Board members
(Zhaksybek Kulekeyev, Zhomart Nurabayev and Hermann Tischendorf), who have extensive
experience and knowledge in such areas as IT, telecommunications, digital products, ecosystems,
finance, economics and management. One of the Board members advises the European Union on
sanctions compliance.
○ The Bank has an optimal system in place to improve Board members’ expertise and qualifications.
The Bank monitors technological advances and new approaches in banking, in both Kazakhstan and
other countries where it operates. Where necessary, additional training will be provided for Board
members. In 2023, information sessions (seminars and training) were held for the Board of
Directors and the Management Board in banking, finance, macroeconomics and strategic
management.
14
Corporate
Governance
79
○ The Bank has an effective system for selecting Board members that helps it to attract true
professionals. It has formed a roster of candidates who have the right to apply to be independent
directors of the Bank and its subsidiaries. One potential source of information about candidates for
the Board of Directors may be details from the Bank’s minority shareholders (lists of potential Board
candidates that may be requested by the IR Service within a period sufficient to verify their
compliance with the requirements of Kazakh laws).
○ At present, the gender structure of the Board of Directors consists of 87% men and 13% women (the
slight change in the Board’s gender structure compared with 2022 is due to an increase in the total
number of Board members from seven to eight people). To comply with best international practices,
the assessment recommended considering the possibility of increasing the percentage of women
on the Board of Directors from 13% to 30% (for example, women account for 30% of management
bodies in the US and 39% in Europe).
○ The average age of members of the Board of Directors is 59 years (for comparison, the average age
of Board members in the 2022 report was 62 years). A review of corporate governance practices in
Kazakhstan prepared by the international consulting company Korn Ferry* shows that the average
age of a member of the Board of Directors in Kazakhstan is 53 years, while in Europe it is 60 years.
3. Board planning and operating procedures
○ All newly elected Board members receive a Board Book containing the information needed to
quickly familiarise themselves with the work of the Bank and Board of Directors. This includes key
milestones in the Bank’s history, Halyk Group’s Development Strategy, the Bank’s organisational
structure, the procedures of the Board of Directors and Management Board, and the duties of Board
members. All newly elected and current Board members also have access to training materials on
ESG topics.
○ The mandate of the Board of Directors is established in the new version of the Bank’s charter,
corresponds to its current strategic objectives and does not require any adjustments.
○ The quantity, frequency and duration of Board meetings, including the ratio of in-person and
absentee meetings, meets the Bank’s needs (the Board held seven in-person meetings and 61
absentee meetings in 2023). Board members intend to continue working in a hybrid format (two to
three in-person meetings and two to three absentee meetings held by videoconference).
○ In December 2023, a strategic session was organised and attended by all members of the Board of
Directors and the Management Board. The assessment recommended that the Board of Directors
and the Management Board increase the number of formal and informal working meetings (for
example, at meetings of the committees of the Board of Directors) to hold in-depth sessions on the
implementation of the Bank’s business objectives and strategy.
○ To comply with the best international corporate governance practices, the assessment
recommended analysing the G20/OECD Principles of Corporate Governance (as amended in
September 2023)** and the UK Corporate Governance Code*** (as amended in January 2024)
and, where necessary, incorporating their provisions into the Bank’s Corporate Governance Code.
4. Effectiveness of corporate procedures and workflow
○ The existing corporate procedures allow the Board of Directors to respond to external and internal
threats promptly (pandemic, terrorist attacks, military conflicts, sanctions and so on) and, if
necessary, take measures to ensure the continuity of the Bank’s operations.
○ The process of preparing for and holding Board meetings is detailed in the Bank’s internal
regulations, which describe the operating procedures and logistics under normal conditions
(without restrictions).
○ The new version of the Rules for Preparing Documents Related to Convening and Holding Meetings
of the Bank’s Board of Directors has helped to improve quality and reduce the amount of paper
materials for members of the Board of Directors (the volume of materials printed for the Board of
Directors decreased by 70% compared with 2020-21).
○ To incorporate the experience gained from working during the pandemic, corporate procedures
have been adapted to the conditions in which the Bank operates (remote work, use of software for
video meetings and workshops, restrictions on movement within cities and countries, lack of
opportunities to print and physically sign documents and so on).
○ In 2023, the Bank switched to a new electronic document management system (Thesis EDMS),
which helped to digitise numerous internal document approval procedures. A project was launched
in 2023 to develop and incorporate the Meetings module (Thesis EDMS) to prepare for and hold
meetings of collegial bodies (the Board of Directors, Management Board and their committees) in
digital format (this project is scheduled to be completed in 2024).
○ The Bank follows best practices and takes into account the specifics of its operations to determine
which internal documents and policies must be developed and/or approved by the Board of
Directors. The Board regularly analyses the Bank’s internal regulations that fall within its remit and
considers proposals of the Management Board to bring them into compliance with current Kazakh
law, reduce bureaucracy and simplify corporate governance processes.
14
Corporate
Governance
* https://forbes.kz/actual/stats/kak_vyiglyadyat_sovetyi_direktorov_kompaniy_v_kazahstane/
** https://www.oecd-ilibrary.org/governance/g20-oecd-principles-of-corporate-governance-2023_ed750b30-en
***https://www.frc.org.uk/library/standards-codes-policy/corporate-governance/uk-corporate-governance-code/
○ The Bank has an effective system for selecting Board members that helps it to attract true
professionals. It has formed a roster of candidates who have the right to apply to be independent
directors of the Bank and its subsidiaries. One potential source of information about candidates for
the Board of Directors may be details from the Bank’s minority shareholders (lists of potential Board
candidates that may be requested by the IR Service within a period sufficient to verify their
compliance with the requirements of Kazakh laws).
○ At present, the gender structure of the Board of Directors consists of 87% men and 13% women (the
slight change in the Board’s gender structure compared with 2022 is due to an increase in the total
number of Board members from seven to eight people). To comply with best international practices,
the assessment recommended considering the possibility of increasing the percentage of women
on the Board of Directors from 13% to 30% (for example, women account for 30% of management
bodies in the US and 39% in Europe).
○ The average age of members of the Board of Directors is 59 years (for comparison, the average age
of Board members in the 2022 report was 62 years). A review of corporate governance practices in
Kazakhstan prepared by the international consulting company Korn Ferry* shows that the average
age of a member of the Board of Directors in Kazakhstan is 53 years, while in Europe it is 60 years.
3. Board planning and operating procedures
○ All newly elected Board members receive a Board Book containing the information needed to
quickly familiarise themselves with the work of the Bank and Board of Directors. This includes key
milestones in the Bank’s history, Halyk Group’s Development Strategy, the Bank’s organisational
structure, the procedures of the Board of Directors and Management Board, and the duties of Board
members. All newly elected and current Board members also have access to training materials on
ESG topics.
○ The mandate of the Board of Directors is established in the new version of the Bank’s charter,
corresponds to its current strategic objectives and does not require any adjustments.
○ The quantity, frequency and duration of Board meetings, including the ratio of in-person and
absentee meetings, meets the Bank’s needs (the Board held seven in-person meetings and 61
absentee meetings in 2023). Board members intend to continue working in a hybrid format (two to
three in-person meetings and two to three absentee meetings held by videoconference).
○ In December 2023, a strategic session was organised and attended by all members of the Board of
Directors and the Management Board. The assessment recommended that the Board of Directors
and the Management Board increase the number of formal and informal working meetings (for
example, at meetings of the committees of the Board of Directors) to hold in-depth sessions on the
implementation of the Bank’s business objectives and strategy.
○ To comply with the best international corporate governance practices, the assessment
recommended analysing the G20/OECD Principles of Corporate Governance (as amended in
September 2023)** and the UK Corporate Governance Code*** (as amended in January 2024)
and, where necessary, incorporating their provisions into the Bank’s Corporate Governance Code.
4. Effectiveness of corporate procedures and workflow
○ The existing corporate procedures allow the Board of Directors to respond to external and internal
threats promptly (pandemic, terrorist attacks, military conflicts, sanctions and so on) and, if
necessary, take measures to ensure the continuity of the Bank’s operations.
○ The process of preparing for and holding Board meetings is detailed in the Bank’s internal
regulations, which describe the operating procedures and logistics under normal conditions
(without restrictions).
○ The new version of the Rules for Preparing Documents Related to Convening and Holding Meetings
of the Bank’s Board of Directors has helped to improve quality and reduce the amount of paper
materials for members of the Board of Directors (the volume of materials printed for the Board of
Directors decreased by 70% compared with 2020-21).
○ To incorporate the experience gained from working during the pandemic, corporate procedures
have been adapted to the conditions in which the Bank operates (remote work, use of software for
video meetings and workshops, restrictions on movement within cities and countries, lack of
opportunities to print and physically sign documents and so on).
○ In 2023, the Bank switched to a new electronic document management system (Thesis EDMS),
which helped to digitise numerous internal document approval procedures. A project was launched
in 2023 to develop and incorporate the Meetings module (Thesis EDMS) to prepare for and hold
meetings of collegial bodies (the Board of Directors, Management Board and their committees) in
digital format (this project is scheduled to be completed in 2024).
○ The Bank follows best practices and takes into account the specifics of its operations to determine
which internal documents and policies must be developed and/or approved by the Board of
Directors. The Board regularly analyses the Bank’s internal regulations that fall within its remit and
considers proposals of the Management Board to bring them into compliance with current Kazakh
law, reduce bureaucracy and simplify corporate governance processes.
14
Corporate
Governance
* https://forbes.kz/actual/stats/kak_vyiglyadyat_sovetyi_direktorov_kompaniy_v_kazahstane/
** https://www.oecd-ilibrary.org/governance/g20-oecd-principles-of-corporate-governance-2023_ed750b30-en
***https://www.frc.org.uk/library/standards-codes-policy/corporate-governance/uk-corporate-governance-code/
80
5. Functional areas of the Board’s work
○ In 2023, new versions of the Charter, Corporate Governance Code and the Regulation on the Board
of Directors were drafted and approved to incorporate sustainable development principles (ESG)
into the Bank’s corporate governance system, as well as to expand the powers and responsibilities
of the Board of Directors and the Management Board to incorporate such principles into the Bank’s
operations
○ Materials presented for meetings of the Board of Directors are complete, high-quality and contain
necessary and sufficient information on the agenda items for a member of the Board of Directors to
make an informed decision. The procedures for preparing materials for meetings of the Board of
Directors of the Bank are standardised and enshrined in the relevant IRR of the Bank, which is
reviewed on a regular basis and adapted to changes in the processes of preparing and holding
meetings of the Bank’s Board of Directors.
○ To strengthen control over the implementation of the Bank’s Development Strategy, plans and
programmes, the Board uses its Strategic Planning Committee, as well as informal meetings of
members of the Board of Directors and the Management Board, to discuss business, the Bank’s
Strategy, short- and long-term market trends, and competitor analysis in Kazakhstan and the
countries where Halyk Group operates.
○ The Board sets and approves KPIs for the Bank’s executives and regularly reviews the Management
Board’s performance regarding budget indicators and strategic objectives for the reporting period
at least once every six months.
Relations with minority shareholders
The Bank strives to continuously improve its system for working with minority shareholders, which
allows them to ask questions and receive the necessary information conveniently (in writing, by email
and/or by telephone).
Communications from minority shareholders and their wishes are analysed regularly. The Bank
informs shareholders of all substantial news, corporate events, changes to its activities that relate to
holders of its shares and bonds, and planned events via its online resource, the websites of stock
exchanges and financial reporting depositary websites.
Where necessary, employees of the Head Office provide consultations to branch employees
regarding shareholder relations, accrued dividends, changes in shareholders’ banking details, the
transfer of inheritance rights and other matters.
Dividend policy
Shareholders’ rights to dividends and the procedure for the payment thereof are stipulated by the
Bank’s Charter and Corporate Governance Code approved by General Shareholder Meetings.
The Board of Directors approved the Bank’s Dividend Policy in September 2012. Its main purpose is
to establish a clear and transparent decision-making mechanism regarding dividend payments,
including their size and the procedure and timelines for their payment.
Payment of dividends on common shares is subject to the Bank, registry system or the nominal
holding accounting system having the correct shareholder information no later than 90 calendar days
from the day after which the General Shareholder Meeting takes a decision regarding the payment of
a dividend on the Bank’s common shares.
If the Bank, registry system or the nominal holding accounting system do not have the shareholder’s
current information, dividends on the Bank’s common shares are paid to an account for unclaimed
funds opened in the Central Securities Depository accounting system within five business days after
the expiration of 90 calendar days from the day after which the General Shareholder Meeting takes a
decision regarding the payment of a dividend on the Bank’s common shares.
Total dividend payments for previous financial years are as follows*.
(KZT bln )
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Pre-
ferred
shares
None trading 0.338 2.61 1.8
Com-
mon
shares
276.85 138.64 211.57 200.76 126.71 69.38 - - 34.26 18.55
TOTAL 276.85 138.64 211.57 200.76 126.71 69.38 - 0.338 36.87 20.35
14
Corporate
Governance
* Information presented on an unconsolidated basis.
5. Functional areas of the Board’s work
○ In 2023, new versions of the Charter, Corporate Governance Code and the Regulation on the Board
of Directors were drafted and approved to incorporate sustainable development principles (ESG)
into the Bank’s corporate governance system, as well as to expand the powers and responsibilities
of the Board of Directors and the Management Board to incorporate such principles into the Bank’s
operations
○ Materials presented for meetings of the Board of Directors are complete, high-quality and contain
necessary and sufficient information on the agenda items for a member of the Board of Directors to
make an informed decision. The procedures for preparing materials for meetings of the Board of
Directors of the Bank are standardised and enshrined in the relevant IRR of the Bank, which is
reviewed on a regular basis and adapted to changes in the processes of preparing and holding
meetings of the Bank’s Board of Directors.
○ To strengthen control over the implementation of the Bank’s Development Strategy, plans and
programmes, the Board uses its Strategic Planning Committee, as well as informal meetings of
members of the Board of Directors and the Management Board, to discuss business, the Bank’s
Strategy, short- and long-term market trends, and competitor analysis in Kazakhstan and the
countries where Halyk Group operates.
○ The Board sets and approves KPIs for the Bank’s executives and regularly reviews the Management
Board’s performance regarding budget indicators and strategic objectives for the reporting period
at least once every six months.
Relations with minority shareholders
The Bank strives to continuously improve its system for working with minority shareholders, which
allows them to ask questions and receive the necessary information conveniently (in writing, by email
and/or by telephone).
Communications from minority shareholders and their wishes are analysed regularly. The Bank
informs shareholders of all substantial news, corporate events, changes to its activities that relate to
holders of its shares and bonds, and planned events via its online resource, the websites of stock
exchanges and financial reporting depositary websites.
Where necessary, employees of the Head Office provide consultations to branch employees
regarding shareholder relations, accrued dividends, changes in shareholders’ banking details, the
transfer of inheritance rights and other matters.
Dividend policy
Shareholders’ rights to dividends and the procedure for the payment thereof are stipulated by the
Bank’s Charter and Corporate Governance Code approved by General Shareholder Meetings.
The Board of Directors approved the Bank’s Dividend Policy in September 2012. Its main purpose is
to establish a clear and transparent decision-making mechanism regarding dividend payments,
including their size and the procedure and timelines for their payment.
Payment of dividends on common shares is subject to the Bank, registry system or the nominal
holding accounting system having the correct shareholder information no later than 90 calendar days
from the day after which the General Shareholder Meeting takes a decision regarding the payment of
a dividend on the Bank’s common shares.
If the Bank, registry system or the nominal holding accounting system do not have the shareholder’s
current information, dividends on the Bank’s common shares are paid to an account for unclaimed
funds opened in the Central Securities Depository accounting system within five business days after
the expiration of 90 calendar days from the day after which the General Shareholder Meeting takes a
decision regarding the payment of a dividend on the Bank’s common shares.
Total dividend payments for previous financial years are as follows*.
(KZT bln )
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Pre-
ferred
shares
None trading 0.338 2.61 1.8
Com-
mon
shares
276.85 138.64 211.57 200.76 126.71 69.38 - - 34.26 18.55
TOTAL 276.85 138.64 211.57 200.76 126.71 69.38 - 0.338 36.87 20.35
14
Corporate
Governance
* Information presented on an unconsolidated basis.
81
Awareness and training of members of the Board of Directors and Management Board
In 2023, the Board Book containing basic information about the history and current positions of the
Bank and Halyk Group, an organisational chart of the Bank and a director’s responsibilities was
updated for new members of the Board of Directors.
Members of the Board of Directors are also given information about the main changes in banking laws.
In 2023, seminars and training sessions were held for members of the Bank’s Board of Directors and
Management Board covering strategic development, change management and IT.
The Bank intends to further develop and improve the knowledge and qualifications of members of the
Board of Directors.
Risk management and internal control
Roles and responsibilities
Risk management and internal control functions are distributed within the Bank as follows.
○ The Board of Directors carries out strategic governance on internal control and risk management,
and approves and periodically revises its policies. The working body of the Board of Directors for
risk management and internal control is the Audit Committee.
○ The Board of Directors also considers major transactions of the Bank, transactions where the Bank
has an interest, and related-party transactions, including where there is an absence of preferential
conditions.
○ The Management Board is responsible for the implementation of risk management policies. The
Bank has the following key committees that carry out various risk management and control
functions: Credit Committee of the Head Office, Credit Committee of the Branch Network, Retail
Credit Committee, Bad Loans Committee, Committee for Managing Assets and Liabilities, and Risk
Committee.
○ The Bank’s structural units are directly responsible for identifying and assessing inherent risks, the
adequacy of controls and business continuity.
○ Independent risk management and compliance services are responsible for organising the risk
management system, which ensures the identification, assessment, control and monitoring of
credit, operational, market, compliance and liquidity risks. The risk management function is headed
by the chief risk officer and the compliance function is headed by the chief compliance controller.
○ The internal audit service performs independent and objective evaluations of the risk management,
internal control and corporate governance systems.
The Bank acknowledges that it is impossible to fully eliminate the risks inherent in its banking
activities. However, the Bank is confident that its risk management system is capable of significantly
minimising them.
Compliance risk management system
The Bank has developed an effective compliance risk management system, which ensures:
○ The effective functioning of the Bank and compliance of its activities with its strategy, risk profile
and risk appetite
○ The existence of a compliance risk management system that corresponds to the current market
situation, as well as the strategy, size and complexity of the Bank’s operations
○ Compliance of the activities of the Bank and each of its employees with Kazakh laws, including the
regulatory legal acts of an authorised body, internal documents regulating the procedure for the
provision of services, the applicable legislation of foreign states, as well as international standards
concerning compliance, including documents of the Basel Committee on banking supervision,
FATF and the Wolfsberg AML/CFT principles
○ A minimal risk of negative consequences associated with losses/damages due to a failure by the
Bank and its employees to comply with the requirements of Kazakh laws, including the regulatory
legal acts of an authorised body, the Bank’s internal documents regulating the procedure for the
provision of services by the Bank and operations on the financial market, as well as the legislation of
foreign countries that affect the Bank’s activities
○ A minimal risk of negative consequences associated with the imposition of sanctions against the
Bank by suspending or revoking its licence to conduct all or certain banking transactions, sanctions
in the form of the imposition or levying of a fine, or the imposition of limited enforcement measures
by an authorised body
○ The establishment of a unified compliance risk management system at the Bank
○ The conduct of business in compliance with Halyk Group’s business ethics and standards
‘Three lines of defence’ risk management system
Risk management at the Bank is based on the ‘three lines of defence’ system. This integrated
approach to building a compliance risk management system delineates roles and authority among
structural units to take measures aimed at minimising risks that are inherent in the Bank’s operations.
The first line of defence comprises the Bank’s employees, including subordinate functions; the second
line of defence is the Compliance Service; and the third line of defence is the internal audit function.
14
Corporate
Governance
Awareness and training of members of the Board of Directors and Management Board
In 2023, the Board Book containing basic information about the history and current positions of the
Bank and Halyk Group, an organisational chart of the Bank and a director’s responsibilities was
updated for new members of the Board of Directors.
Members of the Board of Directors are also given information about the main changes in banking laws.
In 2023, seminars and training sessions were held for members of the Bank’s Board of Directors and
Management Board covering strategic development, change management and IT.
The Bank intends to further develop and improve the knowledge and qualifications of members of the
Board of Directors.
Risk management and internal control
Roles and responsibilities
Risk management and internal control functions are distributed within the Bank as follows.
○ The Board of Directors carries out strategic governance on internal control and risk management,
and approves and periodically revises its policies. The working body of the Board of Directors for
risk management and internal control is the Audit Committee.
○ The Board of Directors also considers major transactions of the Bank, transactions where the Bank
has an interest, and related-party transactions, including where there is an absence of preferential
conditions.
○ The Management Board is responsible for the implementation of risk management policies. The
Bank has the following key committees that carry out various risk management and control
functions: Credit Committee of the Head Office, Credit Committee of the Branch Network, Retail
Credit Committee, Bad Loans Committee, Committee for Managing Assets and Liabilities, and Risk
Committee.
○ The Bank’s structural units are directly responsible for identifying and assessing inherent risks, the
adequacy of controls and business continuity.
○ Independent risk management and compliance services are responsible for organising the risk
management system, which ensures the identification, assessment, control and monitoring of
credit, operational, market, compliance and liquidity risks. The risk management function is headed
by the chief risk officer and the compliance function is headed by the chief compliance controller.
○ The internal audit service performs independent and objective evaluations of the risk management,
internal control and corporate governance systems.
The Bank acknowledges that it is impossible to fully eliminate the risks inherent in its banking
activities. However, the Bank is confident that its risk management system is capable of significantly
minimising them.
Compliance risk management system
The Bank has developed an effective compliance risk management system, which ensures:
○ The effective functioning of the Bank and compliance of its activities with its strategy, risk profile
and risk appetite
○ The existence of a compliance risk management system that corresponds to the current market
situation, as well as the strategy, size and complexity of the Bank’s operations
○ Compliance of the activities of the Bank and each of its employees with Kazakh laws, including the
regulatory legal acts of an authorised body, internal documents regulating the procedure for the
provision of services, the applicable legislation of foreign states, as well as international standards
concerning compliance, including documents of the Basel Committee on banking supervision,
FATF and the Wolfsberg AML/CFT principles
○ A minimal risk of negative consequences associated with losses/damages due to a failure by the
Bank and its employees to comply with the requirements of Kazakh laws, including the regulatory
legal acts of an authorised body, the Bank’s internal documents regulating the procedure for the
provision of services by the Bank and operations on the financial market, as well as the legislation of
foreign countries that affect the Bank’s activities
○ A minimal risk of negative consequences associated with the imposition of sanctions against the
Bank by suspending or revoking its licence to conduct all or certain banking transactions, sanctions
in the form of the imposition or levying of a fine, or the imposition of limited enforcement measures
by an authorised body
○ The establishment of a unified compliance risk management system at the Bank
○ The conduct of business in compliance with Halyk Group’s business ethics and standards
‘Three lines of defence’ risk management system
Risk management at the Bank is based on the ‘three lines of defence’ system. This integrated
approach to building a compliance risk management system delineates roles and authority among
structural units to take measures aimed at minimising risks that are inherent in the Bank’s operations.
The first line of defence comprises the Bank’s employees, including subordinate functions; the second
line of defence is the Compliance Service; and the third line of defence is the internal audit function.
14
Corporate
Governance
82
○ The first line of defence is the controls developed to ensure correct day-to-day operations by the
Bank’s various structural units. The controls are developed by the structural units and are an integral
part of business and other processes. Clearly delineated controls help to ensure sufficient risk
mitigation and compliance with the laws of Kazakhstan, internal regulations, internal documents, as
well as the laws of other countries that influence the Bank’s operations. The units themselves
manage and monitor the controls, enabling them to independently detect risks, weaknesses in
business processes and possible unforeseen events, and to take corrective action
○ The second line of defence is compliance control by the Compliance Service.
○ The Compliance Service arranges for procedures to comply with the requirements of the civil, tax
and banking laws of Kazakhstan; the laws of Kazakhstan on the state regulation, control and
supervision of the financial market and financial organisations; the laws of Kazakhstan governing
currency regulation, currency control, payments and payment systems, the provision of pensions,
the securities market, accounting and financial reporting, credit bureaus and the formation of credit
histories, collection activities, mandatory deposit guarantees, AML/CFT efforts and joint-stock
companies; the laws of foreign states that influence the Bank’s activities; as well as the Bank’s
internal documents regulating the procedure for the provision of services by the Bank and
transactions on the financial market. It provides comprehensive and reliable information to the
Board of Directors, Risk Committee of the Board of Directors and the Management Board about the
existence of a compliance risk.
The Bank’s internal documents delegate separate functions of compliance risk management, if
necessary, to the Bank’s other structural units, provided there is no conflict of interest.
○ The third line of defence consists of an independent assessment of the quality and effectiveness of
compliance risk management by the internal audit function (see the Internal Audit section).
While acknowledging that it is impossible to exclude risks inherent in banking operations
completely, the Bank is confident that its risk management system enables them to be minimised
significantly.
System for monitoring the Bank’s compliance with international and country-specific
economic sanctions
The Bank complies with international and national economic sanctions and adheres to the principles
of transparency, fairness and integration into the global community in its activities.
The Bank is required to comply with international and country-specific economic sanctions due to:
1. Kazakhstan’s membership in the United Nations, which obliges the Bank to comply with the
sanctions and embargoes established by the resolutions of the UN Security Council
2. The listing of the Bank’s securities on the London Stock Exchange
3. The existence of contractual relations with foreign counterparties, including nostro correspondent
relations with banks in the US, EU, UK and other countries
4. The extraterritorial nature of the imposition of international and country-specific economic
sanctions
To minimise possible compliance risks, the Compliance Service, along with other concerned units at
the Bank, analyses customers and their transactions for compliance with applicable sanctions
requirements. When analysing the transactions of the Bank’s clients and counterparties to determine
whether there is a sanctions element or a scheme for evading/circumventing international economic
sanctions, the Bank takes the following measures:
1. Checks all the parties to the transaction (beneficial owners, founders/shareholders and authorised
persons) based on the sanctions lists of applicable jurisdictions, including, but not limited to, the
US OFAC, EU, UK, UN, local lists and so on, if necessary
2. Verifies whether there is any negative information about all the parties to the transaction in reliable
information sources, including specialised databases used by the Bank (World-Check and others)
3. Checks the parties to the transaction for country-specific (geographical) risks
4. Conducts inspections of goods/services for compliance with applicable sanctions requirements,
including the manufacturers of goods, end users of the goods/services and other parties, if any.
To avoid the risk of the Bank failing to comply with international or country-specific economic
sanctions when serving clients, the Bank has the right to refuse or terminate a client’s transaction,
payment or transfer, including a bank that has a Loro correspondent account with the Bank, at any
stage and in any currency if such refusal or termination is due to:
1. The effect of international or country-specific economic sanctions
2. The effect of international and country-specific economic sanctions that restrict the export/import
of goods, technologies, equipment, natural resources or other items
3. Actions that aim to evade international economic sanctions
Considering the complex geopolitical situation around the world and the ever-changing sanctions
environment, the Bank regularly monitors information/announcements about international economic
sanctions using official public sources based on which (if necessary) it revises/updates its procedures
to minimise the risk of violating/bypassing sanctions.
14
Corporate
Governance
○ The first line of defence is the controls developed to ensure correct day-to-day operations by the
Bank’s various structural units. The controls are developed by the structural units and are an integral
part of business and other processes. Clearly delineated controls help to ensure sufficient risk
mitigation and compliance with the laws of Kazakhstan, internal regulations, internal documents, as
well as the laws of other countries that influence the Bank’s operations. The units themselves
manage and monitor the controls, enabling them to independently detect risks, weaknesses in
business processes and possible unforeseen events, and to take corrective action
○ The second line of defence is compliance control by the Compliance Service.
○ The Compliance Service arranges for procedures to comply with the requirements of the civil, tax
and banking laws of Kazakhstan; the laws of Kazakhstan on the state regulation, control and
supervision of the financial market and financial organisations; the laws of Kazakhstan governing
currency regulation, currency control, payments and payment systems, the provision of pensions,
the securities market, accounting and financial reporting, credit bureaus and the formation of credit
histories, collection activities, mandatory deposit guarantees, AML/CFT efforts and joint-stock
companies; the laws of foreign states that influence the Bank’s activities; as well as the Bank’s
internal documents regulating the procedure for the provision of services by the Bank and
transactions on the financial market. It provides comprehensive and reliable information to the
Board of Directors, Risk Committee of the Board of Directors and the Management Board about the
existence of a compliance risk.
The Bank’s internal documents delegate separate functions of compliance risk management, if
necessary, to the Bank’s other structural units, provided there is no conflict of interest.
○ The third line of defence consists of an independent assessment of the quality and effectiveness of
compliance risk management by the internal audit function (see the Internal Audit section).
While acknowledging that it is impossible to exclude risks inherent in banking operations
completely, the Bank is confident that its risk management system enables them to be minimised
significantly.
System for monitoring the Bank’s compliance with international and country-specific
economic sanctions
The Bank complies with international and national economic sanctions and adheres to the principles
of transparency, fairness and integration into the global community in its activities.
The Bank is required to comply with international and country-specific economic sanctions due to:
1. Kazakhstan’s membership in the United Nations, which obliges the Bank to comply with the
sanctions and embargoes established by the resolutions of the UN Security Council
2. The listing of the Bank’s securities on the London Stock Exchange
3. The existence of contractual relations with foreign counterparties, including nostro correspondent
relations with banks in the US, EU, UK and other countries
4. The extraterritorial nature of the imposition of international and country-specific economic
sanctions
To minimise possible compliance risks, the Compliance Service, along with other concerned units at
the Bank, analyses customers and their transactions for compliance with applicable sanctions
requirements. When analysing the transactions of the Bank’s clients and counterparties to determine
whether there is a sanctions element or a scheme for evading/circumventing international economic
sanctions, the Bank takes the following measures:
1. Checks all the parties to the transaction (beneficial owners, founders/shareholders and authorised
persons) based on the sanctions lists of applicable jurisdictions, including, but not limited to, the
US OFAC, EU, UK, UN, local lists and so on, if necessary
2. Verifies whether there is any negative information about all the parties to the transaction in reliable
information sources, including specialised databases used by the Bank (World-Check and others)
3. Checks the parties to the transaction for country-specific (geographical) risks
4. Conducts inspections of goods/services for compliance with applicable sanctions requirements,
including the manufacturers of goods, end users of the goods/services and other parties, if any.
To avoid the risk of the Bank failing to comply with international or country-specific economic
sanctions when serving clients, the Bank has the right to refuse or terminate a client’s transaction,
payment or transfer, including a bank that has a Loro correspondent account with the Bank, at any
stage and in any currency if such refusal or termination is due to:
1. The effect of international or country-specific economic sanctions
2. The effect of international and country-specific economic sanctions that restrict the export/import
of goods, technologies, equipment, natural resources or other items
3. Actions that aim to evade international economic sanctions
Considering the complex geopolitical situation around the world and the ever-changing sanctions
environment, the Bank regularly monitors information/announcements about international economic
sanctions using official public sources based on which (if necessary) it revises/updates its procedures
to minimise the risk of violating/bypassing sanctions.
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83
Internal audit
The Bank’s internal audit department acts as the third line of defence.
To ensure that the internal audit is independent and objective, the internal audit department is
functionally subordinate and accountable to the Bank’s Board of Directors. Working interaction with
members of the Board of Directors is carried out via the Audit Committee and directly. The head of
internal audit oversees the day-to-day operations of the internal audit department.
In accordance with the International Standards for the Professional Practice of Internal Auditing, the
internal audit function’s mission is to maintain and increase the value of Halyk Group through
independent audits and consultations using a risk-based approach and providing recommendations
to improve the Group’s operations.
The internal audit function is guided in its work by legislative norms, regulatory requirements, the
Standards and the Bank’s internal regulatory documents.
The Regulation on the Internal Audit Department, which was approved by the Board of Directors,
states that internal audit employees may conduct audits of any structural unit or subsidiary of the
Bank on a risk-oriented basis and have unlimited access to relevant documents, information, premises
and assets during the performance of such engagements.
The Board of Directors approves the annual work plan and budget of the internal audit department.
The internal audit department’s reports are provided to the boards of branches, the Management
Board, the Audit Committee and the Bank’s Board of Directors. Current issues related to the activities
of the internal audit department are promptly discussed with the chairperson of the Management
Board and the chairman of the Board of Directors. The internal audit department on a quarterly basis
provides the Board of Directors with a progress report on how the Bank’s structural units and
subsidiaries are implementing measures based on the results of the department’s audit
engagements.
By conducting audits and consultations, where applicable, the internal audit department reviews the
Bank’s compliance with ESG requirements and makes the appropriate recommendations for
improvement, if necessary. Internal audit employees undergo regular training on ESG and apply the
knowledge they gain when performing audit engagements.
The activities of the Bank’s internal audit department comply with the International Standards for the
Professional Practice of Internal Auditing and the Code of Ethics for Internal Auditors of the Institute
of Internal Auditors. An independent external auditor confirmed such compliance twice in 2017 and
2022. The internal audit department provides ongoing methodological assistance to bring the
internal audit services of the Bank’s subsidiaries into compliance with the abovementioned Standards
and Code of Ethics. Several internal audit employees have international professional certifications to
conduct internal, IT and information security audits.
Code of Ethics and Business Conduct
Compliance with the principles of business ethics and responsible behaviour are the key components
of corporate culture at any company. Each employee of the Bank takes decisions on a daily basis that
may have financial and reputational consequences for the Bank and could also affect people and
society.
As part of the short-term plan for the implementation of the sustainable development principles and
goals, the Bank drafted and approved the Code of Ethics and Business Conduct (the Code of Ethics),
which replaced the Bank’s previous Rules of Corporate Ethics. The Code of Ethics was drafted in
accordance with the generally recognised principles and norms of international law, the laws of
Kazakhstan, corporate governance standards, the Charter, the Corporate Governance Code and other
internal documents of the Bank, as well as best practices. The objectives of the Code of Ethics are:
1. Enshrine the mission, values, principles and standards of business ethics and behaviour that guide
the Bank’s officials and employees in their activities
2. Develop a uniform corporate culture based on high ethical standards, and support an atmosphere
of trust, mutual respect and decency
3. Increase and maintain trust in the Bank from shareholders, clients, business partners, the public
authorities, the public and other stakeholders, and strengthen its reputation as an open and honest
player on the financial market
4. Assist in interacting effectively with stakeholders
5. Prevent violations of the current laws of Kazakhstan by the Bank’s employees
The Code of Ethics provides an updated understanding of the Bank’s values and principles, as well as
general rules of ethics that everyone who represents the Bank must understand and follow. The Code
of Ethics contains mandatory standards of ethics and business conduct, and serves as a guide for
each official and employee to take the correct decision, regardless of position, whether working at the
Bank full-time or part-time, as well as for third parties hired for paid contractual services.
14
Corporate
Governance
Internal audit
The Bank’s internal audit department acts as the third line of defence.
To ensure that the internal audit is independent and objective, the internal audit department is
functionally subordinate and accountable to the Bank’s Board of Directors. Working interaction with
members of the Board of Directors is carried out via the Audit Committee and directly. The head of
internal audit oversees the day-to-day operations of the internal audit department.
In accordance with the International Standards for the Professional Practice of Internal Auditing, the
internal audit function’s mission is to maintain and increase the value of Halyk Group through
independent audits and consultations using a risk-based approach and providing recommendations
to improve the Group’s operations.
The internal audit function is guided in its work by legislative norms, regulatory requirements, the
Standards and the Bank’s internal regulatory documents.
The Regulation on the Internal Audit Department, which was approved by the Board of Directors,
states that internal audit employees may conduct audits of any structural unit or subsidiary of the
Bank on a risk-oriented basis and have unlimited access to relevant documents, information, premises
and assets during the performance of such engagements.
The Board of Directors approves the annual work plan and budget of the internal audit department.
The internal audit department’s reports are provided to the boards of branches, the Management
Board, the Audit Committee and the Bank’s Board of Directors. Current issues related to the activities
of the internal audit department are promptly discussed with the chairperson of the Management
Board and the chairman of the Board of Directors. The internal audit department on a quarterly basis
provides the Board of Directors with a progress report on how the Bank’s structural units and
subsidiaries are implementing measures based on the results of the department’s audit
engagements.
By conducting audits and consultations, where applicable, the internal audit department reviews the
Bank’s compliance with ESG requirements and makes the appropriate recommendations for
improvement, if necessary. Internal audit employees undergo regular training on ESG and apply the
knowledge they gain when performing audit engagements.
The activities of the Bank’s internal audit department comply with the International Standards for the
Professional Practice of Internal Auditing and the Code of Ethics for Internal Auditors of the Institute
of Internal Auditors. An independent external auditor confirmed such compliance twice in 2017 and
2022. The internal audit department provides ongoing methodological assistance to bring the
internal audit services of the Bank’s subsidiaries into compliance with the abovementioned Standards
and Code of Ethics. Several internal audit employees have international professional certifications to
conduct internal, IT and information security audits.
Code of Ethics and Business Conduct
Compliance with the principles of business ethics and responsible behaviour are the key components
of corporate culture at any company. Each employee of the Bank takes decisions on a daily basis that
may have financial and reputational consequences for the Bank and could also affect people and
society.
As part of the short-term plan for the implementation of the sustainable development principles and
goals, the Bank drafted and approved the Code of Ethics and Business Conduct (the Code of Ethics),
which replaced the Bank’s previous Rules of Corporate Ethics. The Code of Ethics was drafted in
accordance with the generally recognised principles and norms of international law, the laws of
Kazakhstan, corporate governance standards, the Charter, the Corporate Governance Code and other
internal documents of the Bank, as well as best practices. The objectives of the Code of Ethics are:
1. Enshrine the mission, values, principles and standards of business ethics and behaviour that guide
the Bank’s officials and employees in their activities
2. Develop a uniform corporate culture based on high ethical standards, and support an atmosphere
of trust, mutual respect and decency
3. Increase and maintain trust in the Bank from shareholders, clients, business partners, the public
authorities, the public and other stakeholders, and strengthen its reputation as an open and honest
player on the financial market
4. Assist in interacting effectively with stakeholders
5. Prevent violations of the current laws of Kazakhstan by the Bank’s employees
The Code of Ethics provides an updated understanding of the Bank’s values and principles, as well as
general rules of ethics that everyone who represents the Bank must understand and follow. The Code
of Ethics contains mandatory standards of ethics and business conduct, and serves as a guide for
each official and employee to take the correct decision, regardless of position, whether working at the
Bank full-time or part-time, as well as for third parties hired for paid contractual services.
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84
All the Bank’s documents, including those that formalise relations with clients, business partners,
government agencies, competitors and employees, are drafted and approved taking into account the
provisions of the Code of Ethics. Together, these documents provide a clearly articulated overall
framework for ensuring compliance with business ethics requirements and are essential components
of the Bank’s business ethics framework.
The Code of Ethics is a guide for taking the right decisions and a standard for conducting open and
honest business, as well as engaging in responsible, professional and ethical behaviour.
Bank executives seek to set a personal example of commitment to the Bank. They allocate time to
create a talent pool for the Bank, consult and coach, and bring employees together in a team united by
a common mission, values and principles.
Each employee is obliged to maintain the Bank’s image and business reputation at a high level.
In cases where the ethical standards stipulated by the Code of Ethics are higher than the standards
defined by business practice and applicable law, the Bank adheres to the standards of the Code of
Ethics.
Nomination and contracting of directors (general information on procedures)
When nominated, directors are subject to approval by the regulator in accordance with its rules
governing the issuance of consent to the appointment (election) of executives of financial
organisations, branches of non-resident banks in Kazakhstan, branches of non-resident insurance
(reinsurance) organisations in Kazakhstan, branches of non-resident insurance brokers in
Kazakhstan, banking and insurance holdings, and the Insurance Payment Guarantee Fund. These
include requirements for executives of branches of non-resident banks in Kazakhstan, branches of
non-resident insurance (reinsurance) organisations in Kazakhstan and branches of non-resident
insurance brokers in Kazakhstan, criteria concerning the lack of an impeccable business reputation,
and the list of documents required to receive approval.
Contracts are concluded with directors in accordance with the Bank’s Policy on Management
Personnel Remunerations and Reimbursements and Creating an Annual Performance Results Bonus
Awards Reserve.
The chairman of the Board of Directors takes decisions on payments and individual amounts of
directors’ remunerations (apart from the chairman of the Board of Directors and chairperson of the
Management Board) based on recommendations of the Nomination and Remuneration Committee.
On behalf of the Bank, the chairperson of the Management Board concludes contracts with directors
and sets the individual amounts, frequency and conditions for paying remuneration and withholding
respective taxes in accordance with Kazakh law (apart from that of the chairperson of the
Management Board).
Insurance of fiduciary liability
The Board of Directors and Management Board understand the risks arising from incorrect or
mistaken management decisions or actions.
To safeguard shareholders from potential damage from such events, the Bank insures the liability of
its directors and officers.
14
Corporate
Governance
All the Bank’s documents, including those that formalise relations with clients, business partners,
government agencies, competitors and employees, are drafted and approved taking into account the
provisions of the Code of Ethics. Together, these documents provide a clearly articulated overall
framework for ensuring compliance with business ethics requirements and are essential components
of the Bank’s business ethics framework.
The Code of Ethics is a guide for taking the right decisions and a standard for conducting open and
honest business, as well as engaging in responsible, professional and ethical behaviour.
Bank executives seek to set a personal example of commitment to the Bank. They allocate time to
create a talent pool for the Bank, consult and coach, and bring employees together in a team united by
a common mission, values and principles.
Each employee is obliged to maintain the Bank’s image and business reputation at a high level.
In cases where the ethical standards stipulated by the Code of Ethics are higher than the standards
defined by business practice and applicable law, the Bank adheres to the standards of the Code of
Ethics.
Nomination and contracting of directors (general information on procedures)
When nominated, directors are subject to approval by the regulator in accordance with its rules
governing the issuance of consent to the appointment (election) of executives of financial
organisations, branches of non-resident banks in Kazakhstan, branches of non-resident insurance
(reinsurance) organisations in Kazakhstan, branches of non-resident insurance brokers in
Kazakhstan, banking and insurance holdings, and the Insurance Payment Guarantee Fund. These
include requirements for executives of branches of non-resident banks in Kazakhstan, branches of
non-resident insurance (reinsurance) organisations in Kazakhstan and branches of non-resident
insurance brokers in Kazakhstan, criteria concerning the lack of an impeccable business reputation,
and the list of documents required to receive approval.
Contracts are concluded with directors in accordance with the Bank’s Policy on Management
Personnel Remunerations and Reimbursements and Creating an Annual Performance Results Bonus
Awards Reserve.
The chairman of the Board of Directors takes decisions on payments and individual amounts of
directors’ remunerations (apart from the chairman of the Board of Directors and chairperson of the
Management Board) based on recommendations of the Nomination and Remuneration Committee.
On behalf of the Bank, the chairperson of the Management Board concludes contracts with directors
and sets the individual amounts, frequency and conditions for paying remuneration and withholding
respective taxes in accordance with Kazakh law (apart from that of the chairperson of the
Management Board).
Insurance of fiduciary liability
The Board of Directors and Management Board understand the risks arising from incorrect or
mistaken management decisions or actions.
To safeguard shareholders from potential damage from such events, the Bank insures the liability of
its directors and officers.
14
Corporate
Governance
15
Social Report
Social Report
86
In 2023, the Bank provided over KZT4.5 billion in sponsorship and charitable assistance. Of this, KZT2
billion was allocated to the Halyk Charity Fund, more than KZT1.5 billion was spent on projects as part
of the 100 Good Deeds campaign and over KZT905 million was provided for other sponsorship and
charitable projects.
In addition, Halyk Bank allocated KZT385 million for sport in Kazakhstan and KZT431 million for
cultural projects. The Bank also actively supports the social sector, including in times of emergency.
Supporting sport in Kazakhstan
Free public ice skating
In January, Halyk Bank gave more than 53,000 residents and guests of Kazakhstan the opportunity to
go ice skating for free in 25 cities and regions of the country.
Astana Half Marathon
In 2023, Halyk Bank became the general sponsor of one of the country’s largest competitions: the
Astana Half Marathon. The event was organised by the “Courage To Be First” corporate foundation.
More than 6,000 sport and healthy lifestyle enthusiasts from several dozen countries took part in the
Astana Half Marathon 2023, where they ran races of 21.1 and 10 kilometres, as well as took part in a
10-kilometre Nordic walking race and a 21-kilometre Ekiden group relay race.
The event marked a memorable and successful step in the development of sports in Kazakhstan. In
keeping with tradition, around 100 Halyk employees from different cities and regions of the country
took part in the race through the capital.
Halyk Bank provided sponsorship of KZT30 million for the event.
People’s League
From 2005 to 2019, Halyk Bank and the National Basketball Federation of Kazakhstan had great
success in implementing the People’s League social project among foster children at orphanages and
boarding schools that the Bank sponsors throughout Kazakhstan.
Over the 14 years, Halyk Bank funded basketball lessons for children from orphanages and boarding
schools and provided them with the best regional coaches, training and kits, as well as sports
equipment as part of the People’s League project.
In 2020, the project had to be suspended temporarily because of the pandemic.
In 2023, Halyk Bank decided to resume the People’s League.
The project involved foster children from 16 orphanages in 16 regions of the country.
Since 2005, Halyk Bank has spent almost KZT500 million on the project, including KZT53 million in
2023. More than 3,000 children from orphanages and boarding schools have competed in the
People’s League.
Cup of Hope
Each year, the People’s League project culminates with the Cup of Hope championship. The league’s
teams competed at the final tournament in Almaty for the title of the best team in basketball. In 2023,
252 children from orphanages in 16 regions of the country took part in the Cup of Hope.
15
Social Report
SOCIAL REPORT
In 2023, the Bank provided over KZT4.5 billion in sponsorship and charitable assistance. Of this, KZT2
billion was allocated to the Halyk Charity Fund, more than KZT1.5 billion was spent on projects as part
of the 100 Good Deeds campaign and over KZT905 million was provided for other sponsorship and
charitable projects.
In addition, Halyk Bank allocated KZT385 million for sport in Kazakhstan and KZT431 million for
cultural projects. The Bank also actively supports the social sector, including in times of emergency.
Supporting sport in Kazakhstan
Free public ice skating
In January, Halyk Bank gave more than 53,000 residents and guests of Kazakhstan the opportunity to
go ice skating for free in 25 cities and regions of the country.
Astana Half Marathon
In 2023, Halyk Bank became the general sponsor of one of the country’s largest competitions: the
Astana Half Marathon. The event was organised by the “Courage To Be First” corporate foundation.
More than 6,000 sport and healthy lifestyle enthusiasts from several dozen countries took part in the
Astana Half Marathon 2023, where they ran races of 21.1 and 10 kilometres, as well as took part in a
10-kilometre Nordic walking race and a 21-kilometre Ekiden group relay race.
The event marked a memorable and successful step in the development of sports in Kazakhstan. In
keeping with tradition, around 100 Halyk employees from different cities and regions of the country
took part in the race through the capital.
Halyk Bank provided sponsorship of KZT30 million for the event.
People’s League
From 2005 to 2019, Halyk Bank and the National Basketball Federation of Kazakhstan had great
success in implementing the People’s League social project among foster children at orphanages and
boarding schools that the Bank sponsors throughout Kazakhstan.
Over the 14 years, Halyk Bank funded basketball lessons for children from orphanages and boarding
schools and provided them with the best regional coaches, training and kits, as well as sports
equipment as part of the People’s League project.
In 2020, the project had to be suspended temporarily because of the pandemic.
In 2023, Halyk Bank decided to resume the People’s League.
The project involved foster children from 16 orphanages in 16 regions of the country.
Since 2005, Halyk Bank has spent almost KZT500 million on the project, including KZT53 million in
2023. More than 3,000 children from orphanages and boarding schools have competed in the
People’s League.
Cup of Hope
Each year, the People’s League project culminates with the Cup of Hope championship. The league’s
teams competed at the final tournament in Almaty for the title of the best team in basketball. In 2023,
252 children from orphanages in 16 regions of the country took part in the Cup of Hope.
15
Social Report
SOCIAL REPORT
87
Table Tennis Federation
On 24 September 2023, the Halyk Bank Open table tennis tournament took place in Astana. More than
100 athletes took part in the tournament, including masters of sports, as well as winners and runners-
up from other tournaments. The Bank provided sponsorship of KZT20 million for the event.
Halyk Arena
In 2023, Halyk Bank and Halyk Arena continued to cooperate under a five-year naming rights
sponsorship contract. The Halyk Arena Race 2023, free public skating and other events were held
with the Bank’s sponsorship in 2023.
Kazakhstan Gymnastics Federation
The Bank allocated KZT100 million to support the Kazakhstan Gymnastics Federation in 2023. These
funds enabled athletes to participate in the World Artistic Gymnastics Championships (bronze
medal), Asian Games (three silver and three bronze) and Asian Championships (five bronze, five silver
and one gold).
Supporting culture and the arts
Abay State Academic Opera and Ballet Theatre
Halyk Bank continues to sponsor Kazakhstan’s Abay State Academic Opera and Ballet Theatre. The
total sponsorship amount was KZT50 million in 2023.
‘Summer Music in Your Favourite City’ Festival
As part of the 100 Good Deeds campaign, the two-day open-air festival “Summer Music in Your
Favourite City” was held in Aktobe, Semey, Almaty and Aktau in August and September 2023. The
event was sponsored by Halyk, which provided KZT131 million in support for the event.
Voice of Asia: Reviving a Legend
As part of its efforts to further develop culture, Halyk signed a one-off sponsorship agreement with
Tan Media Group to organise and hold the Voice of Asia (Asia Dauysy) international musical festival.
This collaboration enabled people to once again hear the Voice of Asia at the Medeu high-mountain
skating rink 19 years later.
15
Social Report
Table Tennis Federation
On 24 September 2023, the Halyk Bank Open table tennis tournament took place in Astana. More than
100 athletes took part in the tournament, including masters of sports, as well as winners and runners-
up from other tournaments. The Bank provided sponsorship of KZT20 million for the event.
Halyk Arena
In 2023, Halyk Bank and Halyk Arena continued to cooperate under a five-year naming rights
sponsorship contract. The Halyk Arena Race 2023, free public skating and other events were held
with the Bank’s sponsorship in 2023.
Kazakhstan Gymnastics Federation
The Bank allocated KZT100 million to support the Kazakhstan Gymnastics Federation in 2023. These
funds enabled athletes to participate in the World Artistic Gymnastics Championships (bronze
medal), Asian Games (three silver and three bronze) and Asian Championships (five bronze, five silver
and one gold).
Supporting culture and the arts
Abay State Academic Opera and Ballet Theatre
Halyk Bank continues to sponsor Kazakhstan’s Abay State Academic Opera and Ballet Theatre. The
total sponsorship amount was KZT50 million in 2023.
‘Summer Music in Your Favourite City’ Festival
As part of the 100 Good Deeds campaign, the two-day open-air festival “Summer Music in Your
Favourite City” was held in Aktobe, Semey, Almaty and Aktau in August and September 2023. The
event was sponsored by Halyk, which provided KZT131 million in support for the event.
Voice of Asia: Reviving a Legend
As part of its efforts to further develop culture, Halyk signed a one-off sponsorship agreement with
Tan Media Group to organise and hold the Voice of Asia (Asia Dauysy) international musical festival.
This collaboration enabled people to once again hear the Voice of Asia at the Medeu high-mountain
skating rink 19 years later.
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Social Report
88
On 28-30 July, such prominent performers as Bibigul Tulegenova, Roza Rymbaeva, Moldanazar,
V$XV PRiNCE and Miras Zhugunusov, the groups Irina Kairatovna and Black Eyed Peas, and many
others performed on stage.
The festival was attended by more than 9,000 people. The sponsorship budget was KZT300 million.
Social projects
Free gas connections in Almaty and Astana
As part of the 100 Good Deeds campaign dedicated to Halyk Bank’s 100th anniversary, the Bank used
its own funds to connect 200 homes in Almaty and Astana to the gas network. Gas was supplied to the
homes of socially vulnerable segments of the population based on lists provided by local
administrations.
This project was implemented throughout 2023. The total sponsorship amount was KZT200 million.
Karyzsyz Kogam
In April 2023, the Kazakh political party Amanat and Halyk Bank announced the launch of the Karyzsyz
Kogam project.
During the first stage, lessons on the basics of financial literacy were provided to residents from eight
regions of Kazakhstan: Aktobe, Almaty, Turkestan, North Kazakhstan, West Kazakhstan, Zhambyl,
Atyrau and Mangistau. Around 100 financial specialists taught people how to effectively manage their
finances, optimise their expenses and income, and protect themselves against fraudsters.
More than 60,000 residents of Kazakhstan attended the lessons. The total sponsorship amount was
KZT500 million.
Ayala Charity Fund
Halyk Bank has been supporting the Ayala Charity Fund since 2009. The fund works to help children
born with various health issues.
In 2023, the Bank provided support totalling KZT26 million to purchase medical equipment to
alleviate visual impairment in newborns with retinopathy, specifically the 3nethra neo retinal camera,
and to train ophthalmologists on how to work with this device.
Reuse. Recycle. Reduce
A presentation of the “Reuse. Recycle. Reduce” sustainable fashion and art campaign featuring
Kazakh artists and designers was held at Halyk Alañy (People’s Square) in the run-up to World
Environment Day (5 June). The aim of the event was to raise awareness about environmental issues
and support initiatives to protect it.
Incidentally, the People’s Square park, where the event was organised, was built by Halyk Bank. Halyk
employees are directly involved in looking after and monitoring the condition of the park. The Bank is
implementing similar projects in all countries where it operates: Kyrgyzstan, Uzbekistan and Georgia.
Victory Marathon
Each year, the Bank supports World War II veterans. In 2023, the Bank provided financial assistance
to 84 WWII veterans totalling KZT8.4 million, of which each veteran received KZT100,000.
15
Social Report
On 28-30 July, such prominent performers as Bibigul Tulegenova, Roza Rymbaeva, Moldanazar,
V$XV PRiNCE and Miras Zhugunusov, the groups Irina Kairatovna and Black Eyed Peas, and many
others performed on stage.
The festival was attended by more than 9,000 people. The sponsorship budget was KZT300 million.
Social projects
Free gas connections in Almaty and Astana
As part of the 100 Good Deeds campaign dedicated to Halyk Bank’s 100th anniversary, the Bank used
its own funds to connect 200 homes in Almaty and Astana to the gas network. Gas was supplied to the
homes of socially vulnerable segments of the population based on lists provided by local
administrations.
This project was implemented throughout 2023. The total sponsorship amount was KZT200 million.
Karyzsyz Kogam
In April 2023, the Kazakh political party Amanat and Halyk Bank announced the launch of the Karyzsyz
Kogam project.
During the first stage, lessons on the basics of financial literacy were provided to residents from eight
regions of Kazakhstan: Aktobe, Almaty, Turkestan, North Kazakhstan, West Kazakhstan, Zhambyl,
Atyrau and Mangistau. Around 100 financial specialists taught people how to effectively manage their
finances, optimise their expenses and income, and protect themselves against fraudsters.
More than 60,000 residents of Kazakhstan attended the lessons. The total sponsorship amount was
KZT500 million.
Ayala Charity Fund
Halyk Bank has been supporting the Ayala Charity Fund since 2009. The fund works to help children
born with various health issues.
In 2023, the Bank provided support totalling KZT26 million to purchase medical equipment to
alleviate visual impairment in newborns with retinopathy, specifically the 3nethra neo retinal camera,
and to train ophthalmologists on how to work with this device.
Reuse. Recycle. Reduce
A presentation of the “Reuse. Recycle. Reduce” sustainable fashion and art campaign featuring
Kazakh artists and designers was held at Halyk Alañy (People’s Square) in the run-up to World
Environment Day (5 June). The aim of the event was to raise awareness about environmental issues
and support initiatives to protect it.
Incidentally, the People’s Square park, where the event was organised, was built by Halyk Bank. Halyk
employees are directly involved in looking after and monitoring the condition of the park. The Bank is
implementing similar projects in all countries where it operates: Kyrgyzstan, Uzbekistan and Georgia.
Victory Marathon
Each year, the Bank supports World War II veterans. In 2023, the Bank provided financial assistance
to 84 WWII veterans totalling KZT8.4 million, of which each veteran received KZT100,000.
15
Social Report
89
Education
Yerkin Soz Kazakh media competition
In 2023, Halyk Bank continued to support the Yerkin Soz Kazakh media competition, which aims to
improve the professional skills of financial journalists. The budget for 2023 amounted to KZT5 million.
Opening of the Halyk Academy laboratory and co-working area
In December 2023, the Halyk Academy multifunctional laboratory and co-working area, a joint project
of Halyk and the country’s leading IT universities, opened at Satbayev University. The new academy
will enable the university’s students to not only make use of the latest technologies and opportunities
to study IT, but to also attend lectures given by specialists from Halyk’s IT departments and have the
possibility of subsequent internship at the Bank.
Halyk previously donated such laboratories to Kazakh-British Technical University, International IT
University and SDU University.
Road to School
Each year, Halyk supports the national Road to School campaign, which it initiated with the support of
the Kazakh Ministry of Education and Science, education departments and local executive authorities.
In the run-up to the new school year in 2023, more than 2,500 schoolchildren from low-income and
large families across the country received school bags with school supplies as a gift from Halyk. The
total sponsorship amount was KZT57 million.
Image projects
Women in Business Forum
The Bank has been actively supporting entrepreneurial women for several years, which has led to its
sponsorship of the Women in Business forum, organised by the Atameken Council of Business
Women in Almaty. The total sponsorship amount was KZT6.5 million in 2023.
ULTTYQ ÓNIM 2022 Exhibition of Kazakh Manufacturers
As part of its cooperation with the Damu Fund, Halyk Bank sponsored the ULTTYQ ÓNIM 2022
exhibition of Kazakh manufacturers, which the fund organised. This gave the Bank’s management the
opportunity to hold its own session with entrepreneurs in Almaty. The total sponsorship amount was
KZT15 million.
Digital Bridge 2023 Forum
In October, the prominent Digital Bridge 2023 Forum was held, and the president, major companies
and international speakers took part. In an effort to develop the domestic IT industry and promote
digital transformation, the Bank provided KZT30 million in sponsorship for the forum.
Projects implemented through the Halyk Charity Fund
Since it was established in 2016, the Halyk Charity Fund has focused primarily on developing and
supporting social initiatives, encouraging projects in sport, education and culture, and providing
assistance to the public during emergencies.
The tragic events in Kazakhstan of January 2022 and the unstable geopolitical situation in
neighbouring states continued to place a tremendous burden on the country’s social protection
system.
In 2023, the fund continued to focus on providing social assistance to the country and the population
by supporting the proposals and initiatives of President Kassym-Jomart Tokayev.
In 2023, the Fund used more than KZT2 billion from the Bank to implement the following
projects:
1. Pledging KZT1.494 billion for financing the construction of social housing in Astana
2. Annual assistance of KZT124.2 million to the SOS Children’s Villages of Kazakhstan Fund, as well
as KZT22.6 million to support the Arystan lyceum
3. Since the beginning of 2023, the Halyk Foundation has distributed 3,000 food baskets totalling
KZT93.3 million to needy families in the city of Zhanaozen and the Almaty region
4. Installation of a low-power desalination plant in Zhanaozen at a cost of KZT23 million
5. Construction of a children’s recreation area in Zhanaozen for KZT402.9 million
15
Social Report
Education
Yerkin Soz Kazakh media competition
In 2023, Halyk Bank continued to support the Yerkin Soz Kazakh media competition, which aims to
improve the professional skills of financial journalists. The budget for 2023 amounted to KZT5 million.
Opening of the Halyk Academy laboratory and co-working area
In December 2023, the Halyk Academy multifunctional laboratory and co-working area, a joint project
of Halyk and the country’s leading IT universities, opened at Satbayev University. The new academy
will enable the university’s students to not only make use of the latest technologies and opportunities
to study IT, but to also attend lectures given by specialists from Halyk’s IT departments and have the
possibility of subsequent internship at the Bank.
Halyk previously donated such laboratories to Kazakh-British Technical University, International IT
University and SDU University.
Road to School
Each year, Halyk supports the national Road to School campaign, which it initiated with the support of
the Kazakh Ministry of Education and Science, education departments and local executive authorities.
In the run-up to the new school year in 2023, more than 2,500 schoolchildren from low-income and
large families across the country received school bags with school supplies as a gift from Halyk. The
total sponsorship amount was KZT57 million.
Image projects
Women in Business Forum
The Bank has been actively supporting entrepreneurial women for several years, which has led to its
sponsorship of the Women in Business forum, organised by the Atameken Council of Business
Women in Almaty. The total sponsorship amount was KZT6.5 million in 2023.
ULTTYQ ÓNIM 2022 Exhibition of Kazakh Manufacturers
As part of its cooperation with the Damu Fund, Halyk Bank sponsored the ULTTYQ ÓNIM 2022
exhibition of Kazakh manufacturers, which the fund organised. This gave the Bank’s management the
opportunity to hold its own session with entrepreneurs in Almaty. The total sponsorship amount was
KZT15 million.
Digital Bridge 2023 Forum
In October, the prominent Digital Bridge 2023 Forum was held, and the president, major companies
and international speakers took part. In an effort to develop the domestic IT industry and promote
digital transformation, the Bank provided KZT30 million in sponsorship for the forum.
Projects implemented through the Halyk Charity Fund
Since it was established in 2016, the Halyk Charity Fund has focused primarily on developing and
supporting social initiatives, encouraging projects in sport, education and culture, and providing
assistance to the public during emergencies.
The tragic events in Kazakhstan of January 2022 and the unstable geopolitical situation in
neighbouring states continued to place a tremendous burden on the country’s social protection
system.
In 2023, the fund continued to focus on providing social assistance to the country and the population
by supporting the proposals and initiatives of President Kassym-Jomart Tokayev.
In 2023, the Fund used more than KZT2 billion from the Bank to implement the following
projects:
1. Pledging KZT1.494 billion for financing the construction of social housing in Astana
2. Annual assistance of KZT124.2 million to the SOS Children’s Villages of Kazakhstan Fund, as well
as KZT22.6 million to support the Arystan lyceum
3. Since the beginning of 2023, the Halyk Foundation has distributed 3,000 food baskets totalling
KZT93.3 million to needy families in the city of Zhanaozen and the Almaty region
4. Installation of a low-power desalination plant in Zhanaozen at a cost of KZT23 million
5. Construction of a children’s recreation area in Zhanaozen for KZT402.9 million
15
Social Report
90
HALYK BANK’S HR SYSTEM
The Bank’s human resources (HR) system is governed by the Kazakh Labour Code, Tax Code, Law on
Banks and Banking Activities and other regulatory acts.
The main objectives of the Bank’s HR policy are to:
1. Observe the principles of legality, justice and equal opportunities in the Bank’s activities
2. Improve the organisational structure and HR planning
3. Adapt new employees and engage existing personnel
4. Train and develop employees and create a talent pool
5. Oversee productivity, employee incentivisation and salaries
6. Provide social support for employees
7. Foster a positive corporate culture
The Bank’s HR policy complies with Halyk Group’s Development Strategy, the organisational structure
and risk profile of the Bank, the results achieved and Kazakh legislation.
Halyk Bank’s Code of Ethics and Business Conduct (“the Code of Ethics”) regulates interpersonal
relations among employees and officials at the Bank, reflecting its values, mission and culture, but also
enshrines the Bank’s moral position in joint activities with all concerned parties, such as shareholders,
business partners, customers, government agencies, competitors and, ultimately, society as a whole
(https://halykbank.kz/en/about-bank/korporativnoe-upravlenie).
The Code of Ethics enshrines the following principles:
1. Honesty
2. Fairness
3. Openness
4. Protection
5. Preventing conflicts of interest
6. Responsibility
7. Combating fraud and the abuse of authority
8. Combating corruption
9. Exercising caution and accuracy in maintaining and storing documentation and reporting
The Bank’s headcount, 2022-23
Business area 2022 2023 Difference 2023/2022
Branches 9,544 9,525 -0.2% -20
Head office 3,330 3,557 6.8% 227
TOTAL 12,874 13,082 1.6% 208
15
Social Report
HALYK BANK’S HR SYSTEM
The Bank’s human resources (HR) system is governed by the Kazakh Labour Code, Tax Code, Law on
Banks and Banking Activities and other regulatory acts.
The main objectives of the Bank’s HR policy are to:
1. Observe the principles of legality, justice and equal opportunities in the Bank’s activities
2. Improve the organisational structure and HR planning
3. Adapt new employees and engage existing personnel
4. Train and develop employees and create a talent pool
5. Oversee productivity, employee incentivisation and salaries
6. Provide social support for employees
7. Foster a positive corporate culture
The Bank’s HR policy complies with Halyk Group’s Development Strategy, the organisational structure
and risk profile of the Bank, the results achieved and Kazakh legislation.
Halyk Bank’s Code of Ethics and Business Conduct (“the Code of Ethics”) regulates interpersonal
relations among employees and officials at the Bank, reflecting its values, mission and culture, but also
enshrines the Bank’s moral position in joint activities with all concerned parties, such as shareholders,
business partners, customers, government agencies, competitors and, ultimately, society as a whole
(https://halykbank.kz/en/about-bank/korporativnoe-upravlenie).
The Code of Ethics enshrines the following principles:
1. Honesty
2. Fairness
3. Openness
4. Protection
5. Preventing conflicts of interest
6. Responsibility
7. Combating fraud and the abuse of authority
8. Combating corruption
9. Exercising caution and accuracy in maintaining and storing documentation and reporting
The Bank’s headcount, 2022-23
Business area 2022 2023 Difference 2023/2022
Branches 9,544 9,525 -0.2% -20
Head office 3,330 3,557 6.8% 227
TOTAL 12,874 13,082 1.6% 208
15
Social Report
91
To successfully implement the Bank’s stated goals, the Bank’s structure and headcount are regularly
reviewed. In 2023, certain divisions were also optimised and new ones were created.
The Bank continues to expand the range of self-service processes available to staff in terms of
employment-related activities, as well as to increase the scope of management reporting regarding
personnel.
Candidate selection
Human capital is the primary competitive advantage for any financial organisation, so it is crucial for
us to maintain a high level of stability and staffing. The Bank uses different recruiting and selection
algorithms to attract talent based on the uniqueness and strategic value of its various positions.
However, regardless of the personnel group, the system used to recruit and select staff is based on an
objective assessment of their professional skills and expertise. In 2023, the Bank’s Head Office alone
processed more than 1,510 recruitment applications and hired 833 new employees.
Considering that the global increase in competition among employers for professionals who
specialise in high technologies is a major challenge, it is paramount for us to create a corporate culture
of innovation and look for ways to improve HR management processes. In 2023, we set and achieved
our goal of attracting no more than 40% of professionals (middle and senior positions) from the
market, and filling 60% of vacancies with internal resources using the internal talent pool and a
promising pool of students thanks to our HalykStart internship programme for IT specialties. We are
also increasing cooperation with leading universities to expand the recruitment funnel and immerse
potential young talent in the Halyk culture through the Halyk Academy. As of the start of 2023, the
Bank had laboratories at Kazakh-British Technical University, International IT University and SDU
University, and in the fourth quarter of 2023, it opened a laboratory at Satbayev University. In addition,
we regularly take part in job fairs, including Digital Bridge.
In an effort to cultivate leadership and position itself as an organisation that is ready for innovation, the
Bank held two successful Halyk OIY hackathons (internal and external), which encourage workers to
be proactive in developing new ideas and technologies.
To improve the efficiency of recruitment, we fully revised the entire hiring process – from searching for
candidates to their first working day – and introduced robotic process automation technologies. As a
result, we were able to post vacancies and search for CVs based on the criteria given by the
department in need on HH.kz without involving any recruiters, and have potential candidates consider
job offers on WhatsApp. Details of this project were shared at the Digital Almaty 2024 Forum.
We pay special attention to onboarding for new employees and supplemented the adaptation process
in 2023 with a motivational interview on a Telegram bot, which provides feedback in a short time.
Automating and optimising processes helps to free resources for other major projects. For example,
a team of recruiters held hackathons in 2023 and also launched a socially significant career guidance
project for children called Halyk Bolashagy. Children of Bank employees aged 10 to 16 years are the
target audience of the pilot project. Specialists from the Bank’s different businesses hold meetings
(once a month with two groups of 45 children) to talk about specific aspects of their professions. This
can help to choose a professional path and open a world of opportunities in the banking sector for
them.
Staff development
Halyk Bank considers it essential to ensure a continuous learning process so that employees maintain
their current knowledge. The main focuses of training are new products, updates to existing ones,
customer service standards taking into account some of the special aspects of the sales/service
channel and digital skills. The Bank also pays special attention to building standardised career paths
and training programmes for front-line units.
Third parties were also engaged to train front-office employees, as teachers from the branch network
continued to provide theoretical training at the following online schools:
○ Consultant training school
○ Professional cashier school
○ Manager school
Combined with on-the-job training in sales channels under the guidance of an experienced mentor,
this ensures a continuous inflow of candidates. More than 1,300 external individuals graduated from
these schools in 2023. Of these, 1,130 people (84%) were hired by the Bank.
15
Social Report
To successfully implement the Bank’s stated goals, the Bank’s structure and headcount are regularly
reviewed. In 2023, certain divisions were also optimised and new ones were created.
The Bank continues to expand the range of self-service processes available to staff in terms of
employment-related activities, as well as to increase the scope of management reporting regarding
personnel.
Candidate selection
Human capital is the primary competitive advantage for any financial organisation, so it is crucial for
us to maintain a high level of stability and staffing. The Bank uses different recruiting and selection
algorithms to attract talent based on the uniqueness and strategic value of its various positions.
However, regardless of the personnel group, the system used to recruit and select staff is based on an
objective assessment of their professional skills and expertise. In 2023, the Bank’s Head Office alone
processed more than 1,510 recruitment applications and hired 833 new employees.
Considering that the global increase in competition among employers for professionals who
specialise in high technologies is a major challenge, it is paramount for us to create a corporate culture
of innovation and look for ways to improve HR management processes. In 2023, we set and achieved
our goal of attracting no more than 40% of professionals (middle and senior positions) from the
market, and filling 60% of vacancies with internal resources using the internal talent pool and a
promising pool of students thanks to our HalykStart internship programme for IT specialties. We are
also increasing cooperation with leading universities to expand the recruitment funnel and immerse
potential young talent in the Halyk culture through the Halyk Academy. As of the start of 2023, the
Bank had laboratories at Kazakh-British Technical University, International IT University and SDU
University, and in the fourth quarter of 2023, it opened a laboratory at Satbayev University. In addition,
we regularly take part in job fairs, including Digital Bridge.
In an effort to cultivate leadership and position itself as an organisation that is ready for innovation, the
Bank held two successful Halyk OIY hackathons (internal and external), which encourage workers to
be proactive in developing new ideas and technologies.
To improve the efficiency of recruitment, we fully revised the entire hiring process – from searching for
candidates to their first working day – and introduced robotic process automation technologies. As a
result, we were able to post vacancies and search for CVs based on the criteria given by the
department in need on HH.kz without involving any recruiters, and have potential candidates consider
job offers on WhatsApp. Details of this project were shared at the Digital Almaty 2024 Forum.
We pay special attention to onboarding for new employees and supplemented the adaptation process
in 2023 with a motivational interview on a Telegram bot, which provides feedback in a short time.
Automating and optimising processes helps to free resources for other major projects. For example,
a team of recruiters held hackathons in 2023 and also launched a socially significant career guidance
project for children called Halyk Bolashagy. Children of Bank employees aged 10 to 16 years are the
target audience of the pilot project. Specialists from the Bank’s different businesses hold meetings
(once a month with two groups of 45 children) to talk about specific aspects of their professions. This
can help to choose a professional path and open a world of opportunities in the banking sector for
them.
Staff development
Halyk Bank considers it essential to ensure a continuous learning process so that employees maintain
their current knowledge. The main focuses of training are new products, updates to existing ones,
customer service standards taking into account some of the special aspects of the sales/service
channel and digital skills. The Bank also pays special attention to building standardised career paths
and training programmes for front-line units.
Third parties were also engaged to train front-office employees, as teachers from the branch network
continued to provide theoretical training at the following online schools:
○ Consultant training school
○ Professional cashier school
○ Manager school
Combined with on-the-job training in sales channels under the guidance of an experienced mentor,
this ensures a continuous inflow of candidates. More than 1,300 external individuals graduated from
these schools in 2023. Of these, 1,130 people (84%) were hired by the Bank.
15
Social Report
92
After being hired, new employees undergo training based on their development trajectories, which
include distance-learning offerings and webinar meetings:
○ For employees of the SME unit
○ For employees of the retail banking unit
○ For employees of the transactions department
Halyk Bank continued to use an adaptation programme for new staff members, which not only enables
new employees to quickly and effectively adapt to new work processes, but also helps them to
integrate into the corporate culture easily.
In 2023, corporate training for employees of the Head Office emphasised the introduction of flexible
project management methodology. Trainings sessions were conducted for product owners, Agile
coaches and Chapter leads based on the Agile and Scrum methodologies. More than 120 Bank
employees completed such training.
Customer service remains a priority area of development for front-office employees. Extensive
training on service and correcting common errors was conducted for around 1,800 cashiers. In
addition, cashiers underwent training on skills for managing difficult situations.
The theme of customer service encompassed all managers and key employees of the Bank’s sales
channels, with more than 750 people completing an in-person training course titled “DNA of Service.
Emotions in Customer Relations”.
The Bank developed and held a comprehensive training programme for employees of the SME unit of
the branch network. This included a mobile marathon that aimed to improve the performance results
of small business employees, and a face-to-face training session titled ‘Reboot. Emphasis on
Efficiency’, which over 350 employees of small and medium-sized businesses attended.
On two occasions, business coaches visited all 25 branches of the Bank to provide training. This not
only improved the skills and knowledge of the trainees, but also served as a useful motivational and
team-building tool for employees of the branch network.
Employee mental health has become one of the most important topics of discussion in all businesses,
including banking. To this end, we held mental health training and morning meditation sessions for
employees of the Head Office. More than 500 Bank employees completed mental health training.
Two training programmes were developed and conducted for employees of the contact centre
department, which aimed to improve the level of customer service and telephone sales skills. More
than 400 employees from the department completed this training.
Employees of subsidiaries also underwent corporate training. The Bank’s business coaches
conducted training for employees and managers of Halyk Bank Kyrgyzstan, Halyk Leasing and Halyk
Insurance Company.
Developing managers’ skills and tapping into their leadership potential remains a priority in the
current strategic period. Along with the Nazarbayev University Graduate School of Business, we
continued training managers as part of a programme that covered strategy and digital transformation,
digital marketing, FinTech and banking, change management, leadership competencies and
emotional intelligence.
In 2023, 44 managers of the Halyk Group underwent training as part of this programme, including 11
managers from subsidiaries, and another 45 managers began training, which will be completed in
2024.
The HR department and the retail business unit continued the Academy of Leaders project, whose
programme was thoroughly transformed and included two levels of training in 2023: basic and
advanced. The basic level of training contained modules on leadership, customer service, effective
communication, personal transformation and change management. The advanced level of the
programme included such topics as mindful leadership, meetings, emotional intelligence, combating
procrastination and mental health.
Around 200 people graduated from the Academy of Leaders and formed a talent pool for the retail
unit of the branch network. All the Academy of Leaders graduates received additional training from
external coach Andrey Burlutsky on how to remain resilient in turbulent times.
The Bank continues to develop the members of its talent pool. In 2023, the training programme for
members of the talent pool was held in a game-based format, as more than 100 succession
candidates completed the following two business games:
○ The Leader – a training aid to develop leadership skills
○ The Boss – a training aid to develop managerial skills
15
Social Report
After being hired, new employees undergo training based on their development trajectories, which
include distance-learning offerings and webinar meetings:
○ For employees of the SME unit
○ For employees of the retail banking unit
○ For employees of the transactions department
Halyk Bank continued to use an adaptation programme for new staff members, which not only enables
new employees to quickly and effectively adapt to new work processes, but also helps them to
integrate into the corporate culture easily.
In 2023, corporate training for employees of the Head Office emphasised the introduction of flexible
project management methodology. Trainings sessions were conducted for product owners, Agile
coaches and Chapter leads based on the Agile and Scrum methodologies. More than 120 Bank
employees completed such training.
Customer service remains a priority area of development for front-office employees. Extensive
training on service and correcting common errors was conducted for around 1,800 cashiers. In
addition, cashiers underwent training on skills for managing difficult situations.
The theme of customer service encompassed all managers and key employees of the Bank’s sales
channels, with more than 750 people completing an in-person training course titled “DNA of Service.
Emotions in Customer Relations”.
The Bank developed and held a comprehensive training programme for employees of the SME unit of
the branch network. This included a mobile marathon that aimed to improve the performance results
of small business employees, and a face-to-face training session titled ‘Reboot. Emphasis on
Efficiency’, which over 350 employees of small and medium-sized businesses attended.
On two occasions, business coaches visited all 25 branches of the Bank to provide training. This not
only improved the skills and knowledge of the trainees, but also served as a useful motivational and
team-building tool for employees of the branch network.
Employee mental health has become one of the most important topics of discussion in all businesses,
including banking. To this end, we held mental health training and morning meditation sessions for
employees of the Head Office. More than 500 Bank employees completed mental health training.
Two training programmes were developed and conducted for employees of the contact centre
department, which aimed to improve the level of customer service and telephone sales skills. More
than 400 employees from the department completed this training.
Employees of subsidiaries also underwent corporate training. The Bank’s business coaches
conducted training for employees and managers of Halyk Bank Kyrgyzstan, Halyk Leasing and Halyk
Insurance Company.
Developing managers’ skills and tapping into their leadership potential remains a priority in the
current strategic period. Along with the Nazarbayev University Graduate School of Business, we
continued training managers as part of a programme that covered strategy and digital transformation,
digital marketing, FinTech and banking, change management, leadership competencies and
emotional intelligence.
In 2023, 44 managers of the Halyk Group underwent training as part of this programme, including 11
managers from subsidiaries, and another 45 managers began training, which will be completed in
2024.
The HR department and the retail business unit continued the Academy of Leaders project, whose
programme was thoroughly transformed and included two levels of training in 2023: basic and
advanced. The basic level of training contained modules on leadership, customer service, effective
communication, personal transformation and change management. The advanced level of the
programme included such topics as mindful leadership, meetings, emotional intelligence, combating
procrastination and mental health.
Around 200 people graduated from the Academy of Leaders and formed a talent pool for the retail
unit of the branch network. All the Academy of Leaders graduates received additional training from
external coach Andrey Burlutsky on how to remain resilient in turbulent times.
The Bank continues to develop the members of its talent pool. In 2023, the training programme for
members of the talent pool was held in a game-based format, as more than 100 succession
candidates completed the following two business games:
○ The Leader – a training aid to develop leadership skills
○ The Boss – a training aid to develop managerial skills
15
Social Report
93
In 2023, external service providers were brought in to hold 20 training events in a corporate format
(in-person/webinar), which over 1,000 employees from the Head Office and branches attended.
Intensive ESG training was also conducted for employees of the Bank’s Head Office who are involved
in writing the sustainability report and for directors of the branch network.
Individual training was provided for 264 employees of the Bank, which devoted considerable attention
to developing specialists with digital skills who have been trained in DevOps, iOS development, SQL
and Software Architect. As in 2022, employees tended to prefer remote access to educational
technologies and resources on the platforms Coursera, Slurm, Skillbox, SkillFactory, Data Boom,
Datanomix.pro and Yandex Practicum.
The Bank provides opportunities to exchange knowledge and skills in professional communities
through conferences, reference visits and hackathons. In 2023, more than 40 people took part in
professional conferences and forums, while 17 executives paid reference visits to market leaders in
the UAE and Singapore.
Mandatory training (health and safety, industrial and electrical safety as well as Basics of Fire Safety)
was completed by 124 of the Bank’s employees. Employees of the compliance control department
took mandatory AML/CFT courses at a specialised training centre.
Two Annual meeting of branch directors were held in Uzbekistan and Georgia, similar events were
organised for the heads of the SME and RB units, and 10 business-specific seminars and meetings
were held for managers and employees of the branch network.
With co-financing provided by the Bank, 36 employees of the internal audit department and collateral
relations department received professional certifications and passed exams.
As part of a comprehensive development programme for branch directors, as well as to share
experience and study the work specifics of directors and business units from other regions, cluster
training was held for all directors of the branch network. A total of 31 branch employees completed
internal banking training.
Since 2022, we have been assessing the managerial skills of Halyk Group executives through the OPQ
questionnaire from SHL. All the Bank’s executives underwent an initial assessment, and in 2023, 42
executives from subsidiaries (chief executives and their deputies) completed the questionnaire. This
assessment gave executives the opportunity to demonstrate their strengths, which they can use to
achieve better business results, as well as their expertise on how to further develop the Bank’s
business.
We continue to increase the number of workers who undergo distance learning and testing. In 2023,
498,008 units were scheduled, up 54% from 2022.
We use the distance learning system (DLS) to conduct mass training that encompasses more than
10,000 people on such topics as the Code of Ethics and Business Conduct, Anti-Corruption Policy,
Personal Safety of Sales Channel Employees, Fundamentals of Information Security, Internal Control
and Combating Financial Fraud, Environmental Policy etc.
The number of people who use the DLS mobile application is increasing, which provides all the Bank’s
employees with the opportunity to take courses and read books on self-development, personal
effectiveness, psychology and business 24/7. The Bank’s electronic library has been replenished with
publications in the Kazakh language. As of the end of 2023, the mobile application had more than
4,000 active users.
Today, the DLS not only offers distance learning and testing for the Bank’s employees, but also for its
subsidiaries: Tenge Bank, Halyk-Leasing, Halyk Finance, Halyk Aktiv and KUSA Halyk.
The Bank implemented an employee self-development programme by announcing books from a list
recommended by the SKOLKOVO School of Management each month.
The Bank devotes considerable attention to supporting, developing and improving the status of the
Kazakh language in the business environment. In 2023, more than 30% of distance learning courses
were translated into Kazakh. All Bank employees were tested for their knowledge of the Kazakh
language, with more than 10,000 workers receiving a passing grade. Based on the testing results,
2,500 employees were offered language training at the Bank’s expense.
In an effort to further develop language practices, the Head Office runs a Kazakh language
conversation club, which has become not just a platform for communication, but a community of like-
minded people and ambassadors of the Kazakh language.
Staff motivation and loyalty
As a leading employer in the financial sector, Halyk continuously strives to incorporate global
practices and proven modern techniques into its business management and human resource
development. While focusing on coordinated teamwork, diligence and the efficiency of each
employee, the Bank organises a wide range of initiatives that aim to motivate staff and bolster their
commitment to corporate values. The Bank annually participates in studies on remuneration in the
banking market to monitor current trends and establish a competitive and fair remuneration system
that directly affects the recruitment, retention and productivity of employees. In 2023, the Bank
undertook significant financial measures to support employees, such as the regular indexation of
15
Social Report
In 2023, external service providers were brought in to hold 20 training events in a corporate format
(in-person/webinar), which over 1,000 employees from the Head Office and branches attended.
Intensive ESG training was also conducted for employees of the Bank’s Head Office who are involved
in writing the sustainability report and for directors of the branch network.
Individual training was provided for 264 employees of the Bank, which devoted considerable attention
to developing specialists with digital skills who have been trained in DevOps, iOS development, SQL
and Software Architect. As in 2022, employees tended to prefer remote access to educational
technologies and resources on the platforms Coursera, Slurm, Skillbox, SkillFactory, Data Boom,
Datanomix.pro and Yandex Practicum.
The Bank provides opportunities to exchange knowledge and skills in professional communities
through conferences, reference visits and hackathons. In 2023, more than 40 people took part in
professional conferences and forums, while 17 executives paid reference visits to market leaders in
the UAE and Singapore.
Mandatory training (health and safety, industrial and electrical safety as well as Basics of Fire Safety)
was completed by 124 of the Bank’s employees. Employees of the compliance control department
took mandatory AML/CFT courses at a specialised training centre.
Two Annual meeting of branch directors were held in Uzbekistan and Georgia, similar events were
organised for the heads of the SME and RB units, and 10 business-specific seminars and meetings
were held for managers and employees of the branch network.
With co-financing provided by the Bank, 36 employees of the internal audit department and collateral
relations department received professional certifications and passed exams.
As part of a comprehensive development programme for branch directors, as well as to share
experience and study the work specifics of directors and business units from other regions, cluster
training was held for all directors of the branch network. A total of 31 branch employees completed
internal banking training.
Since 2022, we have been assessing the managerial skills of Halyk Group executives through the OPQ
questionnaire from SHL. All the Bank’s executives underwent an initial assessment, and in 2023, 42
executives from subsidiaries (chief executives and their deputies) completed the questionnaire. This
assessment gave executives the opportunity to demonstrate their strengths, which they can use to
achieve better business results, as well as their expertise on how to further develop the Bank’s
business.
We continue to increase the number of workers who undergo distance learning and testing. In 2023,
498,008 units were scheduled, up 54% from 2022.
We use the distance learning system (DLS) to conduct mass training that encompasses more than
10,000 people on such topics as the Code of Ethics and Business Conduct, Anti-Corruption Policy,
Personal Safety of Sales Channel Employees, Fundamentals of Information Security, Internal Control
and Combating Financial Fraud, Environmental Policy etc.
The number of people who use the DLS mobile application is increasing, which provides all the Bank’s
employees with the opportunity to take courses and read books on self-development, personal
effectiveness, psychology and business 24/7. The Bank’s electronic library has been replenished with
publications in the Kazakh language. As of the end of 2023, the mobile application had more than
4,000 active users.
Today, the DLS not only offers distance learning and testing for the Bank’s employees, but also for its
subsidiaries: Tenge Bank, Halyk-Leasing, Halyk Finance, Halyk Aktiv and KUSA Halyk.
The Bank implemented an employee self-development programme by announcing books from a list
recommended by the SKOLKOVO School of Management each month.
The Bank devotes considerable attention to supporting, developing and improving the status of the
Kazakh language in the business environment. In 2023, more than 30% of distance learning courses
were translated into Kazakh. All Bank employees were tested for their knowledge of the Kazakh
language, with more than 10,000 workers receiving a passing grade. Based on the testing results,
2,500 employees were offered language training at the Bank’s expense.
In an effort to further develop language practices, the Head Office runs a Kazakh language
conversation club, which has become not just a platform for communication, but a community of like-
minded people and ambassadors of the Kazakh language.
Staff motivation and loyalty
As a leading employer in the financial sector, Halyk continuously strives to incorporate global
practices and proven modern techniques into its business management and human resource
development. While focusing on coordinated teamwork, diligence and the efficiency of each
employee, the Bank organises a wide range of initiatives that aim to motivate staff and bolster their
commitment to corporate values. The Bank annually participates in studies on remuneration in the
banking market to monitor current trends and establish a competitive and fair remuneration system
that directly affects the recruitment, retention and productivity of employees. In 2023, the Bank
undertook significant financial measures to support employees, such as the regular indexation of
15
Social Report
94
official salaries in March by an average of 12%, as well as the payment of an annual bonus and a bonus
to mark Independence Day in Kazakhstan. For the second year in a row, employees were paid
incentive-based bonuses from shareholder dividends on Halyk Bank common shares in two tranches
(July and September) to recognise their loyalty, productive work and dedication to the job. The bonus
for Bank specialists was two times higher than last year. The Bank continues to use a multifunctional
well-being programme, which in 2023 was supplemented by the official opening of a corporate co-
working area spanning 281 m2. Its main aim is to bring workers together for corporate meetings and
work presentations in a relaxed atmosphere in order to develop talent and generate new ideas.
The Bank has also created Tribes: cross-functional teams of employees from the Bank’s structural
units united by a single goal to develop, introduce and launch a product or service for the Bank’s
customers. To enhance the appeal of participating in Tribes and motivate employees to quickly
achieve results, principles have been developed to reward Tribe participants based on yearly results
or the completion of a project, taking into account both the team result and the personal contribution
of each employee.
As part of the well-being programme to strengthen loyalty, the Bank conducts an annual survey to
study the degree of employee engagement. The survey results for 2021 and 2022 demonstrated a
high level of involvement of the Bank’s employees, which exceeded the projected figures by several
percentage points. And 2023 was no exception: the survey results showed that we once again
demonstrated substantial growth and exceeded the Bank’s target by five percentage points.
In an effort to bolster the programme for recognising achievements and rewarding the best
employees, the following measures were taken in 2023:
○ The format for rewarding the best employees was revised, with the presentation of certificates,
steles and the payment of bonuses in three categories and a festive award ceremony
○ The results of the pilot project “Quarterly Recognition of the Bank’s Best Employees” were also
presented to increase the coverage of effective and key employees
The programme of achievements for Halyk Group managers was expanded. Awards were presented
in six categories for the best directors of branches by business, the best director of the Head Office
and the top two managers of subsidiaries.
The Bank’s employees also received state and public awards, including the Tengege 30 medal to mark
the 30-year anniversary of the Day of the Tenge National Currency, the medal “For Excellence at
Work”, the medal “Best Financier” and letters of gratitude from the National Bank of Kazakhstan and
the Agency for Regulation and Development of the Financial Market.
A key component of Halyk’s corporate culture is not only the professional development of its
employees, but also their physical health. Each year, we organise numerous sporting events. One of
their key goals is to promote the overall health and well-being of employees, as well as strengthen
corporate culture. The Bank also devotes significant attention to organising corporate holidays and
events. We realise that such events play an important role in strengthening cohesion and creating an
atmosphere of joy and unity. Each year, we arrange various forms of entertainment, hold competitions
and organise concerts, team building events and much more. We are committed to creating an
environment for our employees where everyone feels like a valuable and important member of the
team. These types of events are an essential tool for achieving this goal.
The Bank and its employees are actively involved in socially significant events and projects:
○ Letters of gratitude were prepared for holidays throughout the year
○ Charitable events were held throughout the year and assistance was provided to the Bank’s retirees
for the 9 May and 1 October holidays as well as anniversaries
○ The Bank’s employees visited orphanages (in January, June and September):
○ The Bank organised charity events for the New Year’s holidays, for which employees raised more
than KZT4 million and provided assistance to:
1. Ayala Social Services Centre – 110 children with cerebral palsy
2. Single pensioners (based on lists provided by the Almaty administration) – 50 pensioners
3. Low-income families (based on lists provided by the Almaty administration) – 50 children
4. Children from the Kovcheg Orphanage, Nur Charitable Family Orphanage and Barakat
Family-Type Orphanage
5. Children from the oncology department of the Paediatrics and Paediatric Surgery Scientific
Centre in Almaty
15
Social Report
official salaries in March by an average of 12%, as well as the payment of an annual bonus and a bonus
to mark Independence Day in Kazakhstan. For the second year in a row, employees were paid
incentive-based bonuses from shareholder dividends on Halyk Bank common shares in two tranches
(July and September) to recognise their loyalty, productive work and dedication to the job. The bonus
for Bank specialists was two times higher than last year. The Bank continues to use a multifunctional
well-being programme, which in 2023 was supplemented by the official opening of a corporate co-
working area spanning 281 m2. Its main aim is to bring workers together for corporate meetings and
work presentations in a relaxed atmosphere in order to develop talent and generate new ideas.
The Bank has also created Tribes: cross-functional teams of employees from the Bank’s structural
units united by a single goal to develop, introduce and launch a product or service for the Bank’s
customers. To enhance the appeal of participating in Tribes and motivate employees to quickly
achieve results, principles have been developed to reward Tribe participants based on yearly results
or the completion of a project, taking into account both the team result and the personal contribution
of each employee.
As part of the well-being programme to strengthen loyalty, the Bank conducts an annual survey to
study the degree of employee engagement. The survey results for 2021 and 2022 demonstrated a
high level of involvement of the Bank’s employees, which exceeded the projected figures by several
percentage points. And 2023 was no exception: the survey results showed that we once again
demonstrated substantial growth and exceeded the Bank’s target by five percentage points.
In an effort to bolster the programme for recognising achievements and rewarding the best
employees, the following measures were taken in 2023:
○ The format for rewarding the best employees was revised, with the presentation of certificates,
steles and the payment of bonuses in three categories and a festive award ceremony
○ The results of the pilot project “Quarterly Recognition of the Bank’s Best Employees” were also
presented to increase the coverage of effective and key employees
The programme of achievements for Halyk Group managers was expanded. Awards were presented
in six categories for the best directors of branches by business, the best director of the Head Office
and the top two managers of subsidiaries.
The Bank’s employees also received state and public awards, including the Tengege 30 medal to mark
the 30-year anniversary of the Day of the Tenge National Currency, the medal “For Excellence at
Work”, the medal “Best Financier” and letters of gratitude from the National Bank of Kazakhstan and
the Agency for Regulation and Development of the Financial Market.
A key component of Halyk’s corporate culture is not only the professional development of its
employees, but also their physical health. Each year, we organise numerous sporting events. One of
their key goals is to promote the overall health and well-being of employees, as well as strengthen
corporate culture. The Bank also devotes significant attention to organising corporate holidays and
events. We realise that such events play an important role in strengthening cohesion and creating an
atmosphere of joy and unity. Each year, we arrange various forms of entertainment, hold competitions
and organise concerts, team building events and much more. We are committed to creating an
environment for our employees where everyone feels like a valuable and important member of the
team. These types of events are an essential tool for achieving this goal.
The Bank and its employees are actively involved in socially significant events and projects:
○ Letters of gratitude were prepared for holidays throughout the year
○ Charitable events were held throughout the year and assistance was provided to the Bank’s retirees
for the 9 May and 1 October holidays as well as anniversaries
○ The Bank’s employees visited orphanages (in January, June and September):
○ The Bank organised charity events for the New Year’s holidays, for which employees raised more
than KZT4 million and provided assistance to:
1. Ayala Social Services Centre – 110 children with cerebral palsy
2. Single pensioners (based on lists provided by the Almaty administration) – 50 pensioners
3. Low-income families (based on lists provided by the Almaty administration) – 50 children
4. Children from the Kovcheg Orphanage, Nur Charitable Family Orphanage and Barakat
Family-Type Orphanage
5. Children from the oncology department of the Paediatrics and Paediatric Surgery Scientific
Centre in Almaty
15
Social Report
95
As part of the action plan for embedding sustainable development principles and goals in the
Bank’s work for 2022-24, the following work was performed by HR department:
○ A tree planting campaign, during which employees from branches and the Head Office planted 100
apple trees in the Park of the First President to symbolically mark the Bank’s 100th anniversary
○ The Bank’s offices were cleaned by employees in February and September to celebrate World
Cleanup Day
○ Cleanup days were also organised at the Bank’s branches and Head Office in September
○ Environmental awareness training sessions were held for the heads of independent units and
departments of the Head Office, and an online webinar was organised for regional employees
In addition, during the year of its centenary, the Bank focused on strengthening corporate values and
awareness of its history. It organised events, including seminars, training sessions and competitions,
to deeply immerse employees in the history of the Bank and its evolution. This approach not only
enhanced employees’ knowledge of the Bank, but also helped create a sense of pride and team unity,
and inspire new achievements.
15
Social Report
As part of the action plan for embedding sustainable development principles and goals in the
Bank’s work for 2022-24, the following work was performed by HR department:
○ A tree planting campaign, during which employees from branches and the Head Office planted 100
apple trees in the Park of the First President to symbolically mark the Bank’s 100th anniversary
○ The Bank’s offices were cleaned by employees in February and September to celebrate World
Cleanup Day
○ Cleanup days were also organised at the Bank’s branches and Head Office in September
○ Environmental awareness training sessions were held for the heads of independent units and
departments of the Head Office, and an online webinar was organised for regional employees
In addition, during the year of its centenary, the Bank focused on strengthening corporate values and
awareness of its history. It organised events, including seminars, training sessions and competitions,
to deeply immerse employees in the history of the Bank and its evolution. This approach not only
enhanced employees’ knowledge of the Bank, but also helped create a sense of pride and team unity,
and inspire new achievements.
15
Social Report
16
Responsibility Statement
Responsibility Statement
Sustainability Report for 2023 will be published by the end of July 2024.
Umut Shayakhmetova
Chairperson of the Management Board
97
We hereby confirm that, to the best of our
knowledge:
○ the consolidated financial statements in this
annual report are prepared in accordance with
International Financial Reporting Standards
and give a true and fair view of the financial
position, results, cash flow and changes in
equity of Halyk Bank and its subsidiaries; and
○ the annual report includes a fair review of the
development and performance, and of the
financial position, of Halyk Bank and its
subsidiaries included in the consolidated
financial statements and taken as a whole, as
well as the principal risks and uncertainties
that Halyk Bank faces.
16
Responsibility
Statement
RESPONSIBILITY STATEMENT
Umut Shayakhmetova
Chairperson of the Management Board
97
We hereby confirm that, to the best of our
knowledge:
○ the consolidated financial statements in this
annual report are prepared in accordance with
International Financial Reporting Standards
and give a true and fair view of the financial
position, results, cash flow and changes in
equity of Halyk Bank and its subsidiaries; and
○ the annual report includes a fair review of the
development and performance, and of the
financial position, of Halyk Bank and its
subsidiaries included in the consolidated
financial statements and taken as a whole, as
well as the principal risks and uncertainties
that Halyk Bank faces.
16
Responsibility
Statement
RESPONSIBILITY STATEMENT
17
Outlook
Outlook
99
For Kazakhstan, 2023 was the year of the ‘new normal’. The overall situation stabilised, inflation
declined to 9.8% and the economy grew. Banks adapted to life amid sanctions and certainly forewent
certain transactions due to sanctions restrictions. Nevertheless, Halyk, which celebrated its
centenary in 2023, once again demonstrated its stability, reliability and solidity and, earned greater
trust from its customers as a result. Last year, we came a long way in terms of further developing our
digital sales channels and ecosystem products. The year was also one of 100 good deeds, as Halyk
implemented major projects throughout the country in education, culture, healthcare, the
environment and social protection (providing gas to the homes of vulnerable social groups, building
mini-football fields, providing financial literacy training for the rural population and holding the Asia
Dauysy festival, among other initiatives). Our leadership remains solid: as of 1 January 2024, we had
a market share of 29% by assets, 32.8% by net loans to customers, 30.5% by liabilities to customers
and 30.0% by net income.
Last year also marked the midpoint of the new strategic development cycle for Halyk Group, covering
2022-24. While the Group approached the new strategy with different assumptions and market
expectations, we are staying the course and continuing to progress with our key priorities. Each year,
we reaffirm the mission we have chosen: “We create a territory of reliability, comfort and trust for our
customers and partners”. The Group’s reliability and resilience remain our key strengths and we
remain the first choice for our ever-growing customer base. In 2023, we had 10.2 million active retail
customers and over 370,000 active large business and SME customers.
During this strategic cycle, the Bank has achieved the following results for its main goals:
Customer focus
All the solutions, products and services being introduced aim to meet the needs of the Bank’s
customers and provide them with the best possible service. The Bank is focusing on providing
integrated services based on the ‘one-stop shop’ principle and increasing the loyalty and satisfaction
of its customers.
In 2023, we introduced new tools for receiving enquiries and assessing customer satisfaction with the
Bank’s services. Halyk conducted research into market loyalty and gave customers a greater voice in
determining priorities for the further development of our products and services. This had a positive
effect on our key quality indicators: the CSI satisfaction index increased from 89% in 2022 to 92% in
2023, while the average monthly complaint ratio per 10,000 active customers decreased from 6.9 to
5.5.
Constant growth of the client base, as well as of MAU and DAU
The Bank has prioritised the development of mobile applications, which are used to deliver services
better, more efficiently and faster. This should increase the number of both total customers and active
ones who use the applications daily. The Bank is also focusing on expanding non-cash payments.
Results for 2023:
○ Retail banking: We scaled up regular campaigns to retain and engage Halyk SuperApp clients. The
number of MAU clients increased to 7.9 million in the year (up 2 million), and the MAU share of the
Bank’s active clients was 77%.
○ Corporate banking: Steps were taken to increase customer activity on Onlinebank. The app
functionality was enhanced with new digital products and services, and the customer journey was
improved. MAU continued to grow: up 8% year-on-year (from 254,000 users to 274,000).
17
Outlook
OUTLOOK
For Kazakhstan, 2023 was the year of the ‘new normal’. The overall situation stabilised, inflation
declined to 9.8% and the economy grew. Banks adapted to life amid sanctions and certainly forewent
certain transactions due to sanctions restrictions. Nevertheless, Halyk, which celebrated its
centenary in 2023, once again demonstrated its stability, reliability and solidity and, earned greater
trust from its customers as a result. Last year, we came a long way in terms of further developing our
digital sales channels and ecosystem products. The year was also one of 100 good deeds, as Halyk
implemented major projects throughout the country in education, culture, healthcare, the
environment and social protection (providing gas to the homes of vulnerable social groups, building
mini-football fields, providing financial literacy training for the rural population and holding the Asia
Dauysy festival, among other initiatives). Our leadership remains solid: as of 1 January 2024, we had
a market share of 29% by assets, 32.8% by net loans to customers, 30.5% by liabilities to customers
and 30.0% by net income.
Last year also marked the midpoint of the new strategic development cycle for Halyk Group, covering
2022-24. While the Group approached the new strategy with different assumptions and market
expectations, we are staying the course and continuing to progress with our key priorities. Each year,
we reaffirm the mission we have chosen: “We create a territory of reliability, comfort and trust for our
customers and partners”. The Group’s reliability and resilience remain our key strengths and we
remain the first choice for our ever-growing customer base. In 2023, we had 10.2 million active retail
customers and over 370,000 active large business and SME customers.
During this strategic cycle, the Bank has achieved the following results for its main goals:
Customer focus
All the solutions, products and services being introduced aim to meet the needs of the Bank’s
customers and provide them with the best possible service. The Bank is focusing on providing
integrated services based on the ‘one-stop shop’ principle and increasing the loyalty and satisfaction
of its customers.
In 2023, we introduced new tools for receiving enquiries and assessing customer satisfaction with the
Bank’s services. Halyk conducted research into market loyalty and gave customers a greater voice in
determining priorities for the further development of our products and services. This had a positive
effect on our key quality indicators: the CSI satisfaction index increased from 89% in 2022 to 92% in
2023, while the average monthly complaint ratio per 10,000 active customers decreased from 6.9 to
5.5.
Constant growth of the client base, as well as of MAU and DAU
The Bank has prioritised the development of mobile applications, which are used to deliver services
better, more efficiently and faster. This should increase the number of both total customers and active
ones who use the applications daily. The Bank is also focusing on expanding non-cash payments.
Results for 2023:
○ Retail banking: We scaled up regular campaigns to retain and engage Halyk SuperApp clients. The
number of MAU clients increased to 7.9 million in the year (up 2 million), and the MAU share of the
Bank’s active clients was 77%.
○ Corporate banking: Steps were taken to increase customer activity on Onlinebank. The app
functionality was enhanced with new digital products and services, and the customer journey was
improved. MAU continued to grow: up 8% year-on-year (from 254,000 users to 274,000).
17
Outlook
OUTLOOK
100
Ability to scale business solutions
Given its substantial network of subsidiaries, the Bank plans to develop IT solutions that will allow
services at subsidiaries to be scaled quickly and with minimal reconfiguration.
In 2023, Tenge Business, an online business app, continued to develop in Uzbekistan, and had almost
1,500 active business users by the year-end. The Tenge 24 mobile app for retail customers was
supplemented with new services: instant transfers from Uzbekistan to Kazakhstan and online
currency conversion. Last year, the app’s MAU soared to 188,000 users, up 170%.
A flexible, adaptive and innovative approach
All of our solutions developed must be flexible, universal and modern. The Bank aims to select the best
IT and business solutions to provide the highest-quality service to its customers, including by
developing ecosystem services that consider their investment and entertainment interests.
In 2023, real-time campaigns were launched as part of Data Factory, focusing intensively on
developing IT solutions while enhancing system availability and service continuity.
In addition, Halyk implemented several major projects during the year:
○ The Bank initiated a strategic partnership with the leading educational platform Kundelik, as part of
which Halyk provides bonuses for good grades
○ It began providing digital car loans in partnership with the country’s seven largest car dealers in an
effort to synergise large and retail businesses
○ Halyk continues to develop ecosystem services: compared with 2022, the Kino.kz movie ticket
purchase service increased its market share to 37%, ticket purchases through the Halyk Travel
service rose by 20% and purchases on Halyk Marketplace grew by 170%
○ The Bank is a leader on the financial market in terms of the number of government services it
provides: in 2023, our customers used government services through the Halyk SuperApp more
than 13 million times
○ As part of its introduction of ESG principles, KPIs were identified in target areas (water consumption,
energy, CO2 emissions and more), the public event “Reuse.Recycle.Reduce” was organized jointly
with the UN, and ESG reporting formats were developed and introduced in accordance with the
recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
For 2024, the Bank has set the equally ambitious goals of digitising its banking business and further
promoting its ecosystem products:
○ Halyk Bank is major partner for most corporates and one of the only full-service banks in
Kazakhstan. To provide optimal service, the Bank continually enhances the customer experience
and adds new functionality to the Onlinebank mobile app for corporate customers.
○ The Halyk SuperApp digital private banking solution is also being continuously developed and
updated with new services.
○ Developing the acquiring business continues to be a key vector for the Bank.
○ Given the potential of the Uzbek market, the Bank is actively investing resources and developing in
this area.
○ The Bank will also continue to enhance and actively promote the lifestyle ecosystem products Kino.
kz (entertainment ticketing) and Halyk Travel (air, rail and bus ticketing).
○ Halyk Invest, designed for remote brokerage account opening and remote trading, is expanding its
functionality and improving the customer journey.
○ The Halyk Marketplace is working to constantly expand the range of products on offer to continue
meeting customer needs.
○ The Bank is also implementing several other equally important tasks to provide high-quality service
to customers and partners.
17
Outlook
Ability to scale business solutions
Given its substantial network of subsidiaries, the Bank plans to develop IT solutions that will allow
services at subsidiaries to be scaled quickly and with minimal reconfiguration.
In 2023, Tenge Business, an online business app, continued to develop in Uzbekistan, and had almost
1,500 active business users by the year-end. The Tenge 24 mobile app for retail customers was
supplemented with new services: instant transfers from Uzbekistan to Kazakhstan and online
currency conversion. Last year, the app’s MAU soared to 188,000 users, up 170%.
A flexible, adaptive and innovative approach
All of our solutions developed must be flexible, universal and modern. The Bank aims to select the best
IT and business solutions to provide the highest-quality service to its customers, including by
developing ecosystem services that consider their investment and entertainment interests.
In 2023, real-time campaigns were launched as part of Data Factory, focusing intensively on
developing IT solutions while enhancing system availability and service continuity.
In addition, Halyk implemented several major projects during the year:
○ The Bank initiated a strategic partnership with the leading educational platform Kundelik, as part of
which Halyk provides bonuses for good grades
○ It began providing digital car loans in partnership with the country’s seven largest car dealers in an
effort to synergise large and retail businesses
○ Halyk continues to develop ecosystem services: compared with 2022, the Kino.kz movie ticket
purchase service increased its market share to 37%, ticket purchases through the Halyk Travel
service rose by 20% and purchases on Halyk Marketplace grew by 170%
○ The Bank is a leader on the financial market in terms of the number of government services it
provides: in 2023, our customers used government services through the Halyk SuperApp more
than 13 million times
○ As part of its introduction of ESG principles, KPIs were identified in target areas (water consumption,
energy, CO2 emissions and more), the public event “Reuse.Recycle.Reduce” was organized jointly
with the UN, and ESG reporting formats were developed and introduced in accordance with the
recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
For 2024, the Bank has set the equally ambitious goals of digitising its banking business and further
promoting its ecosystem products:
○ Halyk Bank is major partner for most corporates and one of the only full-service banks in
Kazakhstan. To provide optimal service, the Bank continually enhances the customer experience
and adds new functionality to the Onlinebank mobile app for corporate customers.
○ The Halyk SuperApp digital private banking solution is also being continuously developed and
updated with new services.
○ Developing the acquiring business continues to be a key vector for the Bank.
○ Given the potential of the Uzbek market, the Bank is actively investing resources and developing in
this area.
○ The Bank will also continue to enhance and actively promote the lifestyle ecosystem products Kino.
kz (entertainment ticketing) and Halyk Travel (air, rail and bus ticketing).
○ Halyk Invest, designed for remote brokerage account opening and remote trading, is expanding its
functionality and improving the customer journey.
○ The Halyk Marketplace is working to constantly expand the range of products on offer to continue
meeting customer needs.
○ The Bank is also implementing several other equally important tasks to provide high-quality service
to customers and partners.
17
Outlook
18
Consolidated Financial
Statements and Independent
Auditors’ Report for the Year
Ended 31 December 2023
Consolidated Financial
Statements and Independent
Auditors’ Report for the Year
Ended 31 December 2023
102
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
TABLE OF CONTENTS
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES
FOR THE PREPARATION AND APPROVAL
OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023 103
INDEPENDENT AUDITORS’ REPORT 104-107
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023:
○ Consolidated statement of financial position 108-110
○ Consolidated statement of profit or loss 111-113
○ Consolidated statement of other comprehensive income 114-115
○ Consolidated statement of changes in equity 116-118
○ Consolidated statement of cash flows 119-122
○ Notes to the consolidated financial statements 123-246
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
TABLE OF CONTENTS
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES
FOR THE PREPARATION AND APPROVAL
OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023 103
INDEPENDENT AUDITORS’ REPORT 104-107
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023:
○ Consolidated statement of financial position 108-110
○ Consolidated statement of profit or loss 111-113
○ Consolidated statement of other comprehensive income 114-115
○ Consolidated statement of changes in equity 116-118
○ Consolidated statement of cash flows 119-122
○ Notes to the consolidated financial statements 123-246
103
Management of JSC Halyk Bank is responsible for the preparation of the consolidated financial
statements that present fairly the financial position of JSC Halyk Bank (the “Bank”) and its subsidiaries
(collectively – the “Group”) as at 31 December 2023, the related consolidated statement of profit or
loss, comprehensive income for the year then ended, changes in equity and cash flows for the year
then ended, and of material accounting policies and notes to the consolidated financial statements
(the “consolidated financial statements”) in compliance with International Financial Reporting
Standards (“IFRS”).
In preparing the consolidated financial statements, management is responsible for:
○ Properly selecting and applying accounting policies;
○ Presenting information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
○ Providing additional disclosures when compliance with the specific requirements in IFRS are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the Group's consolidated financial position and financial performance; and
○ Making an assessment of the Group's ability to continue as a going concern.
Management is also responsible for:
○ Designing, implementing and maintaining an effective and sound system of internal controls,
throughout the Group;
○ Maintaining adequate accounting records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the consolidated financial position
of the Group, and which enable them to ensure that the consolidated financial statements of the
Group comply with IFRS;
○ Maintaining statutory accounting records in compliance with legislation of the Republic of
Kazakhstan;
○ Taking such steps as are reasonably available to them to safeguard the assets of the Group; and
○ Preventing and detecting fraud and other irregularities.
The consolidated financial statements of the Group for the year ended 31 December 2023 were
approved by the Management Board on 13 March 2024.
On behalf of the Management Board:
Umut B. Shayakhmetova Pavel A. Cheussov
Chairperson of the Board Chief Accountant
13 March 2024 13 March 2024
Almaty, Kazakhstan Almaty, Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL
OF THE CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2023
Management of JSC Halyk Bank is responsible for the preparation of the consolidated financial
statements that present fairly the financial position of JSC Halyk Bank (the “Bank”) and its subsidiaries
(collectively – the “Group”) as at 31 December 2023, the related consolidated statement of profit or
loss, comprehensive income for the year then ended, changes in equity and cash flows for the year
then ended, and of material accounting policies and notes to the consolidated financial statements
(the “consolidated financial statements”) in compliance with International Financial Reporting
Standards (“IFRS”).
In preparing the consolidated financial statements, management is responsible for:
○ Properly selecting and applying accounting policies;
○ Presenting information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
○ Providing additional disclosures when compliance with the specific requirements in IFRS are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the Group's consolidated financial position and financial performance; and
○ Making an assessment of the Group's ability to continue as a going concern.
Management is also responsible for:
○ Designing, implementing and maintaining an effective and sound system of internal controls,
throughout the Group;
○ Maintaining adequate accounting records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the consolidated financial position
of the Group, and which enable them to ensure that the consolidated financial statements of the
Group comply with IFRS;
○ Maintaining statutory accounting records in compliance with legislation of the Republic of
Kazakhstan;
○ Taking such steps as are reasonably available to them to safeguard the assets of the Group; and
○ Preventing and detecting fraud and other irregularities.
The consolidated financial statements of the Group for the year ended 31 December 2023 were
approved by the Management Board on 13 March 2024.
On behalf of the Management Board:
Umut B. Shayakhmetova Pavel A. Cheussov
Chairperson of the Board Chief Accountant
13 March 2024 13 March 2024
Almaty, Kazakhstan Almaty, Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL
OF THE CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2023
To the Shareholders of JSC Halyk Bank
Opinion
We have audited the consolidated financial statements of JSC Halyk Bank and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at 31 December 2023,
and the consolidated statement of profit or loss, consolidated statement of other comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including material accounting
policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 December 2023, and its
consolidated financial performance and its consolidated cash flows for the year then ended in
accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards) (the
“IESBA Code”) together with the ethical requirements that are relevant to our audit of the consolidated
financial statements in the Republic of Kazakhstan, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 4b to the consolidated financial statements which describes
the restatement of corresponding figures for the year ended 31 December 2022 and 1 January 2022.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
INDEPENDENT AUDITORS’ REPORT
How the matter was addressed in the audit
We obtained an understanding of processes and
control procedures related to the loan
origination and ECL for collective assessment of
loans to customers.
We challenged the reasonableness of the
methodology on collective loan loss
provisioning and its compliance with IFRS 9
Financial Instruments requirements.
We checked that the data inputs and key
assumptions used in the models for assessing
PDs and LGDs reflect historical information
about incurred credit losses adjusted for
relevant forward-looking macroeconomic
factors.
With the involvement of our credit risk advisory
specialists, we tested the integrity and
mathematical accuracy of the ECL credit models
used by re-performing selective calculations on
relevant source data.
We evaluated the adequacy and completeness
of disclosures in the consolidated financial
statements relating to the loans to customers in
accordance with IFRS requirements.
Why the matter was determined to be a key
audit matter
Collective assessment of the expected credit
losses on loans to customers
As at 31 December 2023, the Group reported
total gross loans of KZT 9,774,798 million,
including KZT 3,824,856 million subject to
collective impairment assessment, which
comprise 39% of total gross loans. The
expected credit losses (“ECL”) resulting from
this assessment amounted to KZT 235,464
million.
Due to the significance and subjectivity of
judgements used by management of the Group
and the volume of loans assessed on a collective
basis, we identified the collective assessment of
expected credit losses as a key audit matter. In
particular, we focused on the principal
assumptions and significant inputs underlying
the estimation of ECL and the integrity of the
models used in calculations.
Refer to Notes 4, 11 and 32 to the consolidated
financial statements for the description of the
Group’s policy and disclosures of gross carrying
amounts and related allowances balances.
104
Opinion
We have audited the consolidated financial statements of JSC Halyk Bank and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at 31 December 2023,
and the consolidated statement of profit or loss, consolidated statement of other comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including material accounting
policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 December 2023, and its
consolidated financial performance and its consolidated cash flows for the year then ended in
accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards) (the
“IESBA Code”) together with the ethical requirements that are relevant to our audit of the consolidated
financial statements in the Republic of Kazakhstan, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 4b to the consolidated financial statements which describes
the restatement of corresponding figures for the year ended 31 December 2022 and 1 January 2022.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
INDEPENDENT AUDITORS’ REPORT
How the matter was addressed in the audit
We obtained an understanding of processes and
control procedures related to the loan
origination and ECL for collective assessment of
loans to customers.
We challenged the reasonableness of the
methodology on collective loan loss
provisioning and its compliance with IFRS 9
Financial Instruments requirements.
We checked that the data inputs and key
assumptions used in the models for assessing
PDs and LGDs reflect historical information
about incurred credit losses adjusted for
relevant forward-looking macroeconomic
factors.
With the involvement of our credit risk advisory
specialists, we tested the integrity and
mathematical accuracy of the ECL credit models
used by re-performing selective calculations on
relevant source data.
We evaluated the adequacy and completeness
of disclosures in the consolidated financial
statements relating to the loans to customers in
accordance with IFRS requirements.
Why the matter was determined to be a key
audit matter
Collective assessment of the expected credit
losses on loans to customers
As at 31 December 2023, the Group reported
total gross loans of KZT 9,774,798 million,
including KZT 3,824,856 million subject to
collective impairment assessment, which
comprise 39% of total gross loans. The
expected credit losses (“ECL”) resulting from
this assessment amounted to KZT 235,464
million.
Due to the significance and subjectivity of
judgements used by management of the Group
and the volume of loans assessed on a collective
basis, we identified the collective assessment of
expected credit losses as a key audit matter. In
particular, we focused on the principal
assumptions and significant inputs underlying
the estimation of ECL and the integrity of the
models used in calculations.
Refer to Notes 4, 11 and 32 to the consolidated
financial statements for the description of the
Group’s policy and disclosures of gross carrying
amounts and related allowances balances.
104
105
Other Information – Annual Report
Management is responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the consolidated financial statements
and our auditors’ report thereon. The Annual report is expected to be made available to us after the
date of this auditors’ report.
Our opinion on the consolidated financial statements does not cover the other information and we will
not express any form of an assurance conclusion thereon.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
We obtained an understanding of the loan
origination. We assessed the Group’s definitions
of significant increase in credit risk and credit-
impairment for assessment of individual loans’
ECL. We also evaluated the design and
implementation of controls related to individual
assessment of the ECL on loans to customers.
For a sample of loans identified as stage 1, we
performed a detailed credit review and
challenged the Group’s analysis of whether
there was a significant increase in credit risk
(stage 2) or default (stage 3). In order to evaluate
whether the loans have been appropriately
classified to the respective stage, we analysed
internal credit ratings (scoring), credit risk
factors and checked if relevant impairment
events, such as delinquency of interest or
principal, restructuring events, external
information and certain financial performance
indicators had been identified on a timely
manner.
On a sample basis, we re-performed
calculations of allowances for ECL for
individually significant loans in stage 2 and 3,
including reviewing the Group’s documented
credit assessment of the borrowers,
challenging assumptions underlying the ECL
calculation, such as estimated future cash
flows and the fair value of collateral.
We evaluated the adequacy and completeness
of disclosures in the consolidated financial
statements relating to the loans to customers in
accordance with IFRS requirements.
We obtained an understanding of the controls
over calculation of insurance contract liabilities
performed in accordance with IFRS 17
requirements and Group’s methodology.
We have involved our actuary specialists for
evaluation of methodology, models and
assumptions in relation to IFRS 17, considered
suitability of the transition approach applied and
tested on a sample basis the accuracy of the
underlying calculations.
We evaluated whether actuarial methodology,
models and assumptions used to calculate the
fulfillment cash flows, risk adjustment,
contractual service margin, and (if applicable)
loss component are functioning as intended,
in line with requirements of IFRS 17 and the
financial reporting framework as of transition
date.
Individual assessment of the expected credit
losses on loans to customers
As at 31 December 2023, the Group’s gross
loans assessed for impairment on an individual
basis amounted to KZT 5,949,942 million,
which accounts for 61% of total gross loans. The
related ECL comprised KZT 254,462 million.
The amount of allowances for the ECL on
individually significant loans is dependent on the
accuracy of allocation of loans to appropriate
stage of impairment in the provisioning system
of the Group.
The appropriate identification of significant
increase in credit risk or credit impairment event
require considerable judgment on the basis of
quantitative and qualitative information, which
results in focused audit procedures.
Additionally, the measurement of ECL on
individually significant credit-impaired loans is
based on the estimation of future cash flows
under different scenarios.
Due to the significance of the allowance for
expected credit losses on individually assessed
loans and the complexity and subjectivity of
management’s judgements, we identified the
individual assessment of ECL as a key audit
matter.
Refer to Notes 4, 11 and 32 to the consolidated
financial statements for the description of
impairment indicators on individually significant
loans and disclosure of gross carrying amounts
and related allowances for such loans.
Transition to IFRS 17
On 1 January 2023, the Group implemented
IFRS 17, Insurance Contracts. As part of IFRS 17
implementation, the Group developed and
implemented new complex methodologies,
models and assumptions required by new
standard and remeasured insurance contract
liabilities. As described in Note 3 and 4b, the
Group applied Modified Retrospective approach
and Fair Value approach for contracts issued
before 1 January 2022.
Due to complexity of methodology and models,
we identified transition to IFRS 17 as a key audit
matter.
Refer to Notes 3, 16 and 29 to the consolidated
financial statements for the description of the
Group’s accounting policy and disclosures of
insurance contract liabilities.
Other Information – Annual Report
Management is responsible for the other information. The other information comprises the
information included in the Annual report, but does not include the consolidated financial statements
and our auditors’ report thereon. The Annual report is expected to be made available to us after the
date of this auditors’ report.
Our opinion on the consolidated financial statements does not cover the other information and we will
not express any form of an assurance conclusion thereon.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
We obtained an understanding of the loan
origination. We assessed the Group’s definitions
of significant increase in credit risk and credit-
impairment for assessment of individual loans’
ECL. We also evaluated the design and
implementation of controls related to individual
assessment of the ECL on loans to customers.
For a sample of loans identified as stage 1, we
performed a detailed credit review and
challenged the Group’s analysis of whether
there was a significant increase in credit risk
(stage 2) or default (stage 3). In order to evaluate
whether the loans have been appropriately
classified to the respective stage, we analysed
internal credit ratings (scoring), credit risk
factors and checked if relevant impairment
events, such as delinquency of interest or
principal, restructuring events, external
information and certain financial performance
indicators had been identified on a timely
manner.
On a sample basis, we re-performed
calculations of allowances for ECL for
individually significant loans in stage 2 and 3,
including reviewing the Group’s documented
credit assessment of the borrowers,
challenging assumptions underlying the ECL
calculation, such as estimated future cash
flows and the fair value of collateral.
We evaluated the adequacy and completeness
of disclosures in the consolidated financial
statements relating to the loans to customers in
accordance with IFRS requirements.
We obtained an understanding of the controls
over calculation of insurance contract liabilities
performed in accordance with IFRS 17
requirements and Group’s methodology.
We have involved our actuary specialists for
evaluation of methodology, models and
assumptions in relation to IFRS 17, considered
suitability of the transition approach applied and
tested on a sample basis the accuracy of the
underlying calculations.
We evaluated whether actuarial methodology,
models and assumptions used to calculate the
fulfillment cash flows, risk adjustment,
contractual service margin, and (if applicable)
loss component are functioning as intended,
in line with requirements of IFRS 17 and the
financial reporting framework as of transition
date.
Individual assessment of the expected credit
losses on loans to customers
As at 31 December 2023, the Group’s gross
loans assessed for impairment on an individual
basis amounted to KZT 5,949,942 million,
which accounts for 61% of total gross loans. The
related ECL comprised KZT 254,462 million.
The amount of allowances for the ECL on
individually significant loans is dependent on the
accuracy of allocation of loans to appropriate
stage of impairment in the provisioning system
of the Group.
The appropriate identification of significant
increase in credit risk or credit impairment event
require considerable judgment on the basis of
quantitative and qualitative information, which
results in focused audit procedures.
Additionally, the measurement of ECL on
individually significant credit-impaired loans is
based on the estimation of future cash flows
under different scenarios.
Due to the significance of the allowance for
expected credit losses on individually assessed
loans and the complexity and subjectivity of
management’s judgements, we identified the
individual assessment of ECL as a key audit
matter.
Refer to Notes 4, 11 and 32 to the consolidated
financial statements for the description of
impairment indicators on individually significant
loans and disclosure of gross carrying amounts
and related allowances for such loans.
Transition to IFRS 17
On 1 January 2023, the Group implemented
IFRS 17, Insurance Contracts. As part of IFRS 17
implementation, the Group developed and
implemented new complex methodologies,
models and assumptions required by new
standard and remeasured insurance contract
liabilities. As described in Note 3 and 4b, the
Group applied Modified Retrospective approach
and Fair Value approach for contracts issued
before 1 January 2022.
Due to complexity of methodology and models,
we identified transition to IFRS 17 as a key audit
matter.
Refer to Notes 3, 16 and 29 to the consolidated
financial statements for the description of the
Group’s accounting policy and disclosures of
insurance contract liabilities.
106
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above when it becomes available and, in doing so, consider whether the
other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the Annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting Standards (“IFRSs”), and for such
internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
○ Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
○ Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
○ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
○ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
○ Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
○ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above when it becomes available and, in doing so, consider whether the
other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
When we read the Annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting Standards (“IFRSs”), and for such
internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
○ Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
○ Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
○ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
○ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
○ Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
○ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
107
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
13 March 2024
Almaty, Republic of Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Roman Sattarov
Engagement Partner
Qualified Auditor
Qualification certificate
# MF-0000149
dated 31 May 2013
Daulet Kuatbekov
Acting General Director
Deloitte LLP
State license on auditing in the
Republic of Kazakhstan
No. 0000015,
type MFU-2, issued by the, Ministry of Finance
of the Republic of Kazakhstan dated
13 September 2006
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
13 March 2024
Almaty, Republic of Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Roman Sattarov
Engagement Partner
Qualified Auditor
Qualification certificate
# MF-0000149
dated 31 May 2013
Daulet Kuatbekov
Acting General Director
Deloitte LLP
State license on auditing in the
Republic of Kazakhstan
No. 0000015,
type MFU-2, issued by the, Ministry of Finance
of the Republic of Kazakhstan dated
13 September 2006
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
108
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position as at 31 December 2023 and 2022
(millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
108
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
| Notes | 31 December2023 | 31 December 2022(restated)* | 1 January 2022(restated)* | |
| ASSETS | ||||
| Cash and cash equivalents | 5 |
|
|
|
| Obligatory reserves | 6 |
|
|
|
| Financial assets at fair value through profit or loss | 7 |
|
|
|
| Amounts due from credit institutions | 8 |
|
|
|
| Financial assets at fair value through other comprehensive income | 9 |
|
|
|
| Debt securities at amortised cost, net of allowance for expected credit losses | 10 |
|
|
|
| Loans to customers | 11, 37 |
|
|
|
| Investment property | 12 |
|
|
|
| Commercial property | 13 |
|
|
|
| Current income tax assets | 21 |
|
|
|
| Deferred tax assets | 21 |
|
|
|
| Property and equipment and intangible assets | 14 |
|
|
|
| Insurance contract assets | 16 |
|
|
|
| Reinsurance contract assets |
|
|
|
|
| Other assets | 17 |
|
|
|
| Total assets before assets classified as held for sale |
|
|
|
|
| Assets classified as held for sale | 15 |
|
|
|
| TOTAL ASSETS |
|
|
|
Consolidated Statement of Financial Position as at 31 December 2023 and 2022
(millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
109
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position as at 31 December 2023 and 2022
(millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
109
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position as at 31 December 2023 and 2022
(millions of Kazakhstani Tenge)
| Notes | 31 December2023 | 31 December 2022(restated)* | 1 January 2022(restated)* | |
| LIABILITIES AND EQUITY | ||||
| LIABILITIES | ||||
| Amounts due to customers | 18, 37 |
|
|
|
| Amounts due to credit institutions | 19 |
|
|
|
| Financial liabilities at fair value through profit or loss | 7 |
|
|
|
| Debt securities issued | 20, 37 |
|
|
|
| Current income tax liability | 21 |
|
|
|
| Deferred tax liability | 21 |
|
|
|
| Provisions | 24 |
|
|
|
| Insurance contract liabilities | 16 |
|
|
|
| Reinsurance contract liabilities |
|
|
|
|
| Other liabilities | 22 |
|
|
|
| Total liabilities before liabilities directly attributable to assets held for sale |
|
|
|
|
| Liabilities directly attributable to assets held for sale | 15 |
|
|
|
| TOTAL LIABILITIES |
|
|
|
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
110
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position as at 31 December 2023 and 2022
(millions of Kazakhstani Tenge)
209,027
209,027
209,027
8,667
7,966
9,067
(258,514 )
(260,535 )
(259,322 )
2,517,764
2,055,775
1,700,190
2,476,944
2,012,233
1,658,962
10
9
8
2,476,954
2,012,242
1,658,970
15,494,368
14,395,102
12,170,400
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
110
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position as at 31 December 2023 and 2022
(millions of Kazakhstani Tenge)
| Notes | ||||
| 31 December2023 | 31 December 2022(restated)* | 1 January 2022(restated)* | ||
| LIABILITIES AND EQUITY | ||||
| EQUITY | ||||
| Share capital | 23 | |||
| Share premium reserve | ||||
| Treasury shares | 23 | |||
| Retained earnings and other reserves | ||||
| Total equity attributable to owners of the Group | ||||
| Non-controlling interest TOTAL EQUITY | ||||
| TOTAL LIABILITIES AND EQUITY |
(
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
111
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss for the years ended 31 December 2023 and 2022
(millions of Kazakhstani Tenge, except for earnings per share which is in Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
111
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss for the years ended 31 December 2023 and 2022
(millions of Kazakhstani Tenge, except for earnings per share which is in Tenge)
| Notes | Year ended 31 December 2023 | Year ended 31 December 2022(restated)* | |
| Interest income calculated using the effective interest method | 25, 37 |
|
|
| Other interest income | 25 |
|
|
| Interest expense | 25, 37 |
( |
( |
| NET INTEREST INCOME BEFORE CREDIT LOSS EXPENSE | 25 |
|
|
| Expected credit loss expense | 5, 8, 10, 11 |
( |
( |
| NET INTEREST INCOME |
|
|
|
| Fee and commission income | 26 |
|
|
| Fee and commission expense | 26 |
( |
( |
| FEES AND COMMISSIONS, NET |
|
|
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
112
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss for the years ended 31 December 2023 and 2022
(millions of Kazakhstani Tenge, except for earnings per share which is in Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
112
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss for the years ended 31 December 2023 and 2022
(millions of Kazakhstani Tenge, except for earnings per share which is in Tenge)
| Year ended 31 December 2022 | |||
| Notes | Year ended 31 December 2023 | (restated)* | |
| Net gain/(loss) on financial assets and liabilities at fair value through profit or loss | 27 |
|
( |
| Net realised loss from financial assets at fair value through other comprehensive income |
( |
( |
|
| Net foreign exchange gain | 28 |
|
|
| Insurance revenue | 29 |
|
|
| Share in profit of associate | 37 |
|
|
| Income on non-banking activities | 31 |
|
|
| Other expense |
( |
( |
|
| OTHER NON-INTEREST INCOME |
|
|
|
| Operating expenses | 30 |
( |
( |
| Reversal of/(loss from) impairment of non-financial assets |
|
( |
|
| Reversal of impairment loss of property, plant and equipment | 24 |
|
|
| Recovery of other credit loss expense | 24 |
|
|
| Loss on disposal of subsidiaries | 2 |
|
( |
| Loss from impairment of assets held for sales | 15 |
( |
|
| Insurance service expense | 29 |
( |
( |
| Net reinsurance expense | 29 |
( |
( |
| NON-INTEREST EXPENSES |
( |
( |
|
| PROFIT FOR THE YEAR BEFORE TAX |
|
|
|
| INCOME TAX EXPENSE | 21 |
( |
( |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
113
* Comparative information has been restated in accordance with Note 4b.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss for the years ended 31 December 2023 and 2022
(millions of Kazakhstani Tenge, except for earnings per share which is in Tenge)
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
113
* Comparative information has been restated in accordance with Note 4b.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Profit or Loss for the years ended 31 December 2023 and 2022
(millions of Kazakhstani Tenge, except for earnings per share which is in Tenge)
| Year ended 31 December 2022 | |||
| Notes | Year ended 31 December 2023 | (restated)* | |
| NET INCOME |
|
|
|
| Attributable to: | |||
| Non-controlling interest |
|
|
|
| Common shareholders |
|
|
|
|
|
|
||
| EARNINGS PER SHARE | |||
| (in Kazakhstani Tenge) | |||
| Basic and diluted earnings per share | 32 |
|
|
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
114
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Other Comprehensive Income for the years ended 31 December
2023 and 2022 (Millions of Kazakhstani Tenge)
693,436
569,478
(13 )
17,693
(202 )
403
48,308
(104,028 )
4,055
1,274
1,189
(1,477 )
24
23
(8,283 )
13,136
-
(6,976 )
(8,283 )
6,160
Other comprehensive income/(loss) for the year45,078
(79,952 )
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
114
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Other Comprehensive Income for the years ended 31 December
2023 and 2022 (Millions of Kazakhstani Tenge)
| Year ended 31 December 2023 | ||
| Year ended 31 December 2022(restated)* | ||
| NET INCOME | ||
| Other comprehensive income:Items that will not be subsequently reclassified to profit or loss: | ||
| (Loss)/gain resulting on revaluation of property and equipment (2023 and 2022 – net of tax – KZT nullmillion and KZT 4,078 million, respectively) | ||
| (Loss)/gain on revaluation of equity financial assets at fair value through other comprehensive income | ||
| Items that may be subsequently reclassified to profit or loss: | ||
| Gain/(loss) on revaluation of debt financial assets at fair value through other comprehensive income,including impaired during the period (2023 and 2022 – net of tax – KZT nil) | ||
| Reclassification adjustment relating to financial assets at fair value through other comprehensiveincome disposed of in the period (2023 and 2022 - net of tax – KZT nil) | ||
| Share of other comprehensive income/(loss) of associate on revaluation of debt financial assets at fairvalue through other comprehensive income | ||
| Share of other comprehensive income of associate on revaluation of property and equipment | ||
| Foreign exchange differences on translation of foreign operation | ||
| Less: gain reclassified to profit or loss on disposal of foreign operation | ||
(
(
(
(
Other comprehensive income/(loss) for the year
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
115
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Other Comprehensive Income for the years ended 31 December
2023 and 2022 (Millions of Kazakhstani Tenge)
738,514
489,526
1
1
738,513
489,525
738,514
489,526
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
115
* Comparative information has been restated in accordance with Note 4b
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Other Comprehensive Income for the years ended 31 December
2023 and 2022 (Millions of Kazakhstani Tenge)
| Year ended 31 December 2023 | Year ended 31 December 2022 | (restated)* |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | ||
| Attributable to: | ||
| Non-controlling interest | ||
| Common shareholders |
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
116
* These amounts are included within Retained earnings and other reserves in the consolidated statement
of financial position.
** Comparative information has been restated in accordance with Note 4b
Consolidated Statement of Changes in Equity for the years ended 31 December 2023 and
2022 (Millions of Kazakhstani Tenge)
31 December 2022 (restated)**209,027
7,966
(260,535 )
11,742
Net income-
-
-
-
-
-
4,231
4,231
Dividends – common shares
(Note 23)-
-
-
-
-
-
(276,524 )
(276,524 )
-
(276,524 )
Release of property and
equipment revaluation reserve
on depreciation and disposal of
previously revalued assets
-
-
-
-
-
(2,195 )
2,195
-
-
-
31 December 2023209,027
8,667
(258,514 )
3,459
(25,299 )
41,125
2,498,479
2,476,944
10
2,476,954
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
116
* These amounts are included within Retained earnings and other reserves in the consolidated statement
of financial position.
** Comparative information has been restated in accordance with Note 4b
Consolidated Statement of Changes in Equity for the years ended 31 December 2023 and
2022 (Millions of Kazakhstani Tenge)
| Share capitalCommon shares | Share premiumreserve | Treasurycommon shares | Cumulativetranslationreserve* | Revaluationincome* | ||||||
| reserve of | ||||||||||
| financial assetsat fair valuethrough other | Property | |||||||||
| comprehensive | revaluationreserve* | Retainedearnings* | Totalequity | Non-controlling | interest | Total equity | ||||
|
( |
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||||
| Other comprehensive (loss)/income Total comprehensive (loss)/ |
|
|
( |
|
||||||
| income Treasury shares purchased(Note 23) Treasury shares sold (Note 23) |
|
|
( |
|
( |
|
||||
|
|
|
|
|
|
|
( |
31 December 2022 (restated)**
Net income
Dividends – common shares
(Note 23)
Release of property and
equipment revaluation reserve
on depreciation and disposal of
previously revalued assets
31 December 2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
117
* These amounts are included within Retained earnings and other reserves in the consolidated statement
of financial position.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity for the years ended 31 December 2023 and
2022 (Millions of Kazakhstani Tenge)
1 January 2022209,027
1,573,596
8
1,573,604
-
-
-
-
1,642
1,642
-
1,642
-
-
-
-
83,724
83,724
-
83,724
5,582
25,115
27,521
1,641,972
1,658,962
8
1,658,970
-
-
-
-
569,477
569,477
1
569,478
Other comprehensive income/
(loss)-
-
-
6,160
(103,828 )
17,716
-
(79,952 )
-
(79,952 )
Total comprehensive income/
(loss)-
-
-
6,160
(103,828 )
17,716
569,477
489,525
1
489,526
Treasury shares purchased
(Note 23)-
(1,101 )
(6,044 )
-
-
-
-
(7,145 )
-
(7,145 )
Treasury shares sold (Note 23)-
-
4,831
-
-
-
-
4,831
-
4,831
Disposal of subsidiaries
(Note 23)-
-
-
-
64
(272 )
4,609
4,401
-
4,401
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
117
* These amounts are included within Retained earnings and other reserves in the consolidated statement
of financial position.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity for the years ended 31 December 2023 and
2022 (Millions of Kazakhstani Tenge)
| Share capitalCommon shares | Share premium | reserve | common shares | |||||||
| Revaluationreserve of | ||||||||||
| Treasury | Cumulativetranslation | financial assetscomprehensive | at fair valuethrough other | Propertyrevaluation | ||||||
| Retained | Totalequity | Non-controlling | interest | Total equity | ||||||
|
|
reserve* |
|
income* |
|
reserve* |
|
earnings* |
|||
| Effect on transition to IFRS 17(Note 4b) |
|
|
||||||||
| Effect of revaluation of financialassets measured at fair value |
|
|
||||||||
| through profit or loss (Note 4b) | ||||||||||
| 1 January 2022 (as restated) Net income |
|
|
|
( |
||||||
1 January 2022
Other comprehensive income/
(loss)
Total comprehensive income/
(loss)
Treasury shares purchased
(Note 23)
Treasury shares sold (Note 23)
Disposal of subsidiaries
(Note 23)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
118
* These amounts are included within Retained earnings and other reserves in the consolidated statement
of financial position.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity for the years ended 31 December 2023 and
2022 (Millions of Kazakhstani Tenge)
Dividends – common shares
(Note 23)-
-
-
-
-
-
(138,341 )
(138,341 )
-
(138,341 )
Release of property and
equipment revaluation reserve
on depreciation and disposal of
previously revalued assets
-
-
-
-
-
(1,656 )
1,656
-
-
-
31 DECEMBER 2022209,027
7,966
(260,535 )
11,742
(78,649 )
43,309
2,079,373
2,012,233
9
2,012,242
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
118
* These amounts are included within Retained earnings and other reserves in the consolidated statement
of financial position.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity for the years ended 31 December 2023 and
2022 (Millions of Kazakhstani Tenge)
| Share capitalCommon shares | Share premium | reserve | common shares | |||||||
| Revaluation | ||||||||||
| Treasury | Cumulativetranslationreserve* | reserve offinancial assetsat fair valuethrough othercomprehensiveincome* | revaluationreserve* | Property | ||||||
| Retainedearnings* | Totalequity | Non-controlling | interest | Total equity |
Dividends – common shares
(Note 23)
Release of property and
equipment revaluation reserve
on depreciation and disposal of
previously revalued assets
31 DECEMBER 2022
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
119
Consolidated Statement of Cash Flows For the years ended 31 December 2023 and 2022
(Millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
119
Consolidated Statement of Cash Flows For the years ended 31 December 2023 and 2022
(Millions of Kazakhstani Tenge)
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Interest received from financial assets at fair value through profit or loss |
|
|
| Interest received from cash and cash equivalents and amounts due from credit institutions |
|
|
| Interest received on financial assets at fair value through other comprehensive income |
|
|
| Interest received on debt securities at amortised cost, net of allowance for expected credit losses |
|
|
| Interest received from loans to customers |
|
|
| Interest paid on amounts due to customers |
( |
( |
| Interest paid on amounts due to credit institutions |
( |
( |
| Interest paid on debt securities issued |
( |
( |
| Fee and commission received |
|
|
| Fee and commission paid |
( |
( |
| Insurance revenue |
|
|
| Ceded reinsurance share paid |
( |
( |
| Receipts from financial derivatives |
|
|
| (Other expense paid)/other income received |
( |
|
| Operating expenses paid |
( |
( |
| Insurance service expense |
( |
( |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
120
Consolidated Statement of Cash Flows (continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
120
Consolidated Statement of Cash Flows (continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| Cash flows from operating activities before changes in net operating assets |
|
|
| Changes in operating assets and liabilities: | ||
| Decrease/(increase) in operating assets: | ||
| Obligatory reserves |
|
( |
| Financial assets at fair value through profit or loss |
( |
( |
| Amounts due from credit institutions |
( |
|
| Loans to customers |
( |
( |
| Assets classified as held for sale |
|
|
| Insurance contract assets |
( |
( |
| Other assets |
|
|
| Increase/(decrease) in operating liabilities: | ||
| Amounts due to customers |
|
|
| Amounts due to credit institutions |
( |
( |
| Financial liabilities at fair value through profit or loss |
( |
|
| Insurance contract liabilities |
|
( |
| Other liabilities |
|
|
| NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES BEFORE INCOME TAX |
( |
|
| Income tax paid |
( |
( |
| NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES |
( |
|
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
121
Consolidated Statement of Cash Flows (continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
121
Consolidated Statement of Cash Flows (continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Notes | Year ended 31 December 2023 | Year ended 31 December 2022 | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||
| Disposal of subsidiaries | 2 |
|
( |
| Purchase and prepayments for property and equipment and intangible assets |
( |
( |
|
| Proceeds on sale of property and equipment and intangible assets |
|
|
|
| Proceeds on sale of investment property |
|
|
|
| Proceeds on sale of commercial property |
|
|
|
| Proceeds from sale of financial assets at fair value through other comprehensive income |
|
|
|
| Purchase of financial assets at fair value through other comprehensive income |
( |
( |
|
| Proceeds from sale of debt securities at amortised cost, net of allowance for expected credit losses |
|
|
|
| Purchase of debt securities at amortised cost, net of allowance for expected credit losses |
( |
( |
|
| Capital expenditures on commercial property |
( |
( |
|
| NET CASH OUTFLOW FROM INVESTING ACTIVITIES |
( |
( |
|
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||
| Proceeds on sale of treasury shares |
|
|
|
| Purchase of treasury shares |
( |
( |
|
| Dividends paid – common shares |
( |
( |
|
| Redemption and repayment of debt securities issued | 20 |
( |
( |
| Proceeds from issue of debt securities issued | 20 |
|
|
| Repayment of lease liabilities |
( |
( |
|
| NET CASH OUTFLOW FROM FINANCING ACTIVITIES |
( |
( |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
122
Consolidated Statement of Cash Flows (continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
During the years ended 31 December 2023 and 2022, there were non-cash
transfers, which were excluded from the consolidated statement of cash flows and
were disclosed in Notes 12, 13, 15 and 21.
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
122
Consolidated Statement of Cash Flows (continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Notes | Year ended 31 December 2023 | Year ended 31 December 2022 | |
| Effect of changes in foreign exchange rates on cash and cash equivalents |
( |
||
| Net change in cash and cash equivalents |
( |
|
|
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR | 5 |
|
|
| CASH AND CASH EQUIVALENTS, END OF THE YEAR | 5 |
|
|
During the years ended 31 December 2023 and 2022, there were non-cash
transfers, which were excluded from the consolidated statement of cash flows and
were disclosed in Notes 12, 13, 15 and 21.
On behalf of the Management Board:
Umut B. Shayakhmetova
Chairperson of the Board
13 March 2024
Almaty, Kazakhstan
Pavel A. Cheussov
Chief Accountant
13 March 2024
Almaty, Kazakhstan
123
1.
PRINCIPAL ACTIVITIES
J SC Halyk Bank (the “Bank”) and its subsidiaries (collectively, the “Group”) provide corporate and
retail banking services principally in Kazakhstan, Kyrgyzstan (classified as asset held for sale), Georgia
and Uzbekistan, leasing services in Kazakhstan, as well as asset management, insurance and
brokerage services in Kazakhstan. The primary state registration of the Bank with the authorities of
justice of Kazakhstan was made on 20 January 1994. The Bank operates under license No.
1.2.47/230/38/1 for carrying out banking and other operations and activities on the securities market,
renewed by the Agency of the Republic of Kazakhstan for Regulation and Development of the
Financial Market on 23 June 2023. The Bank is a member of the obligatory deposit insurance system
provided by the JSC Kazakhstan Deposit Insurance Fund.
The Bank’s primary business includes originating loans and guarantees, collecting deposits, trading
in securities and foreign currencies, executing transfers, cash and payment card operations, as well as
rendering other banking services to its customers. In addition, the Bank acts as a non-exclusive agent
of the Government of the Republic of Kazakhstan in channeling various budgetary payments and
pensions through its nationwide branch network.
The Bank has a primary listing with the Kazakhstan Stock Exchange ("KASE") and Astana International
Exchange. The Bank's Global Depository Receipts ("GDRs") are primary listed on the London Stock
Exchange, KASE and Astana International Exchange.
As at 31 December 2023 and 2022, the Group is ultimately controlled by Timur Kulibayev and his wife
Dinara Kulibayeva via JSC HG Almex.
As at 31 December 2023, the Bank operated through its head office in Almaty and its 25 regional
branches, 119 sub-regional offices and 426 cash settlement units (31 December 2022 – 24, 120 and
428, respectively) located throughout Kazakhstan. The address of the Bank’s registered office is:
40 Al-Farabi Avenue, Almaty, A26M3K5, Republic of Kazakhstan.
As at 31 December 2023, the number of the Group’s employees was 16,833 (31 December 2022 –
16,325).
The consolidated financial statements of the Group for the year ended 31 December 2023 were
authorised for issue by the Management Board on 13 March 2024.
Legal proceedings
From time to time and in the normal course of business, claims against the Group are received from
customers and counterparties. Management is of the opinion that no material unaccrued losses will
be incurred and accordingly, no provision has been made in these consolidated financial statements.
Operating environment
Emerging markets such as Kazakhstan are subject to different risks than more developed markets,
including economic, political and social, and legal and legislative risks. Laws and regulations affecting
businesses in Kazakhstan continue to change rapidly, tax and regulatory frameworks are subject to
varying interpretations. The future economic direction of Kazakhstan is heavily influenced by the fiscal
and monetary policies adopted by the government, together with developments in the legal,
regulatory, and political environment.
Because Kazakhstan produces and exports large volumes of oil and gas, its economy is particularly
sensitive to the price of oil and gas on the world market. Also, the government expenses on major
infrastructure projects and various socio-economic development programs have a significant impact
on the country’s economy.
The military and political conflict between Russian Federation and Ukraine escalated in early 2022. As
a result, several countries introduced economic sanctions against Russia and Belarus, including
measures to ban new investment and restrict interaction with major financial institutions and many
state enterprises.
In 2023, the average price for Brent crude oil was 83 USD per barrel (2022: 101 USD per barrel).
According
to
preliminary
estimates, the
Kazakhstan’s
gross
domestic
product
(“GDP”)
grew
by 4.9% per annum in 2023 (2022: 3.2%). Inflation in the country declined in 2023 to 9.8% per
annum (2022: inflation was 20.3% per annum).
In 2023, the National Bank of the Republic of Kazakhstan reduced the base rate from 16.75% to
15.75% per annum with a corridor of +/- 1.0 percentage points. In January 2024, the base rate further
decreased to 15.25% per annum with a corridor of +/- 1.0 percentage points, in February 2024, the
base rate decreased to 14.75% per annum with a corridor of +/- 1.0 percentage points. However, the
uncertainty still exists related to future development of the geopolitical risks and their impact on the
economy of Kazakhstan.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
124
The impact of anti-Russian sanctions has a limited impact on the Group's currency risk; risks related
to Russian securities and Russian banks are intangible in relation to the Group's assets. Claims to
Russian banks are represented by insignificant amounts of balances on nostro accounts. The gross
risk in relation to Russian securities and banks is KZT 45,827 million, the net risk is KZT 8,958 million.
Due to significant changes in the operating environment caused by realized geopolitical risks, an
extraordinary stress test of the Bank's financial stability was carried out. The stress testing results
show a slight decrease in certain financial indicators (growth in provisions for expected credit losses,
decrease in net profit and an outflow of customer funds). At the same time, given that the Group has
sufficient equity capital and liquid assets, a significant deterioration in the financial position of the
Group and violation of regulatory requirements and standards is not predicted.
As a result of significant changes in the operating environment, the financial condition of the Bank's
large borrowers is not expected to deteriorate significantly. The Bank’s clients to larger extend were
able to make necessary changes to their supply and logistics chains and continue the implementation
and completion of previously launched investment projects.
Management of the Group is monitoring developments in the economic, political, and geopolitical
situation and taking measures it considers necessary to support the sustainability and development
of the Group’s business for the foreseeable future. However, the consequences of these events and
related future changes may have a significant impact on the Group’s operations.
Ownership
As at 31 December 2023 and 2022, the Group was owned by the following shareholders, which own
individually more than 5% of the issued shares of the Group:
Stake in total shares
in circulation
69.7%
28.4%
1.9%
TOTAL SHARES IN CIRCULATION (ON
CONSOLIDATED BASIS)
10,883,868,379
100%
69.6%
28.5%
1.9%
100%
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | ||
| (Common shares) | ||
| Total sharesStake in total shares | in circulation | |
| JSC HG Almex | 7,583,538,228 | |
| GDR holders | 3,109,586,880 | |
| Other TOTAL SHARES IN CIRCULATION (ON CONSOLIDATED BASIS) | 209,046,483 10,902,171,591 | |
| 31 December 2022 | Total shares | |
| (Common shares) | ||
| JSC HG Almex | 7,583,538,228 | |
| GDR holders Other | 3,090,660,400 209,669,751 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
125
2.
BASIS OF PRESENTATION
Statement of compliance
These consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”).
These consolidated financial statements have been prepared assuming that the Group is a going
concern, as the Group have the resources to continue in operation for the foreseeable future. In
making this assessment, the management have considered a wide range of information in relation to
present and future economic conditions, including projections of cash flows, profit and capital
resources.
These consolidated financial statements are presented in millions of Kazakhstani Tenge
(“KZT” or “Tenge”), except for earnings per share amounts and unless otherwise indicated.
These consolidated financial statements have been prepared on the historical cost basis, except for
certain financial instruments that are accounted for at fair value and insurance contract liabilities
which are accounted at their fulfillment value in accordance with IFRS 17 for based on actuarial
calculations and certain property and equipment which are carried at revalued cost less depreciation
and impairment as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods
and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an
asset or a liability, the Group takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/or disclosure purposes in these consolidated
financial statements is determined on such a basis, except for share-based payment transactions that
are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and
measurements that have some similarities to fair value but are not fair value, such as net realisable
value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or
3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as follows:
○ Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
the Group can access at the measurement date;
○ Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
the asset or liability, either directly or indirectly; and
○ Level 3 inputs are unobservable inputs for the asset or liability.
The Group presents its consolidated statement of financial position broadly in order of liquidity. An
analysis regarding recovery or settlement within 12 months after the date of the consolidated
statement of financial position (current) and more than 12 months after the date of the consolidated
statement of financial position (non-current) is presented in Note 31.
Functional currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the “functional
currency”). The functional currency of the Bank is KZT. The presentation currency of the consolidated
financial statements is KZT.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
126
Consolidated subsidiaries
These consolidated financial statements include the following subsidiaries:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* On 24 October 2023, an agreement was signed on the sale of 100% of the shares of OJSC Halyk Bank Kyrgyzstan,
as disclosed in Note 15.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Subsidiaries | Holding % | Country | Industry | |
| 31 December 2023 | 31 December 2022 | |||
| JSC Halyk-Leasing | 100 | 100 | Kazakhstan | Leasing |
| JSC Kazteleport | 100 | 100 | Kazakhstan | Telecommunications |
| JSC Halyk Finance | 100 | 100 | Kazakhstan | Broker and dealer activities |
| LLC Halyk Collection | 100 | 100 | Kazakhstan | Cash collection services |
| JSC Halyk-Life | 100 | 100 | Kazakhstan | Life insurance |
| JSC Insurance Company Halyk | 99.99 | 99.99 | Kazakhstan | General insurance |
| JSC Halyk Bank Georgia | 100 | 100 | Georgia | Banking |
| OJSC Halyk Bank Kyrgyzstan* | 100 | 100 | Kyrgyzstan | Banking |
| JSC Halyk Global Markets | 100 | 100 | Kazakhstan | Broker and dealer activities |
| LLP KUSA Halyk | 100 | 100 | Kazakhstan | Management of doubtful and loss assets |
| LLP Halyk Activ | 100 | 100 | Kazakhstan | Management of doubtful and loss assets |
| LLP Halyk Finservice | 100 | 100 | Kazakhstan | Payment card processing and other related services |
| JSCB Tenge Bank | 100 | 100 | Uzbekistan | Banking |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
127
Disposal of subsidiaries
On 16 November 2022, the Bank signed an agreement with CJSC International Bank of Tajikistan on
the sale of 100% share capital of CJSC Halyk Bank Tajikistan (the “HBT”). On 1 December 2022, the
Bank completed the procedure for the sale of 100% shares of the HBT. The Group recognized a loss in
the amount of KZT 462 million as a result of disposal of subsidiary.
On 18 November 2022, in accordance with the terms of contract of sale, the Bank sold 100% share
capital of JSC CB Moskommertsbank (“MKB”) in the amount of 7,923,455 ordinary shares at par
value RUB 450 per share. On 20 December 2022, the Bank completed the sale of 100% shares of the
MKB. The Group recognized a loss in the amount of KZT 18,780 million as a result of disposal of
subsidiary.
Loss from disposal of subsidiaries for the year ended 31 December 2022 represents the difference
between the consideration received and the net assets value of subsidiaries in the consolidated
financial statements of the Group.
Net cash outflows from disposal of JSC CB Moskommertsbank and CJSC Halyk Bank Tajikistan were
as follows:
NET CASH OUTFLOW (50,691) (5,680) (56,371)
Loss from disposal of JSC CB Moskommertsbank and CJSC Halyk Bank Tajikistan were as follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Disposal of the MKB | Disposal of the HBT | Total | |
| The management of the Group believes that the disposal of these subsidiaries did not have a significant impact on the consolidated financial statements of the Group, and therefore does not disclose this information as discontinued operations in the consolidated financial statements for the year ended 31 December 2023. | |||
| Cash proceeds on sale of subsidiaries | 7,300 | 2,596 | 9,896 |
| Less: disposed cash and cash equivalents | (57,991) | (8,276) | (66,267) |
| Disposal of the MKB | Disposal of the HBT | Total | |
| Proceeds on sale of subsidiaries | 7,300 | 2,596 | 9,896 |
| Foreign exchange differences,reclassified to profit or loss on disposal of foreign subsidiaries | (5,400) | (1,576) | (6,976) |
| Less: carrying amount of disposed subsidiaries’ net assets | (20,080) | (1,482) | (22,192) |
| LOSS FROM DISPOSAL OF SUBSIDIARIES | (18,780) | (462) | (19,242) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
128
3.
MATERIAL ACCOUNTING POLICIES
Basis of consolidation
These consolidated financial statements incorporate the financial statements of the Bank and entities
(including structured entities) controlled by the Bank and its subsidiaries. Control is achieved when
the Bank:
○ has power over the investee;
○ is exposed, or has rights, to variable returns from its involvement with the investee; and
○ has the ability to use its power to affect its returns.
The Bank reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
When the Bank has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Bank considers all relevant facts and circumstances in
assessing whether or not the Bank's voting rights in an investee are sufficient to give it power,
including:
○ the size of the Bank's holding of voting rights relative to the size and dispersion of holdings of the
other vote holders;
○ potential voting rights held by the Bank, other vote holders or other parties;
○ rights arising from other contractual arrangements; and
○ any additional facts and circumstances that indicate that the Bank has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting
patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases
when the Bank loses control of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated statement of profit or loss and
other comprehensive income from the date the Bank gains control until the date when the Bank
ceases to control the subsidiary.
The profit or loss and each component of other comprehensive income are attributed to the owners
of the Bank and to any non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Bank and to any non-controlling interests even if this results in any non-
controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of the subsidiaries to bring their
accounting policies into line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full upon consolidation.
Changes in the Group's ownership interests in existing subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognised directly in
equity and attributed to owners of the Group. Transactions with non-controlling shareholders are
presented as financing activities in the consolidated statement of cash flows.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is
calculated as the difference between (i) the aggregate of the fair value of the consideration received
and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including
goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously
recognised in other comprehensive income in relation to that subsidiary are accounted for as if the
Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to
profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs).
The fair value of any investment retained in the former subsidiary at the date when control is lost is
regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when
applicable, the cost on initial recognition of an investment in an associate or a joint venture.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, unrestricted balances on correspondent
accounts and amounts due from credit institutions and reverse repo agreements with original
maturities within three months.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
129
Obligatory reserves
Obligatory reserves represent funds in correspondent accounts with the National Banks of
Kazakhstan, Georgia, Tajikistan, Uzbekistan and the Central Bank of the Russian Federation and cash
which are not available to finance the Group’s day to day operations and, hence, are not considered as
part of cash and cash equivalents for the purpose of the consolidated statement of cash flows.
Amounts due from credit institutions
In the normal course of business, the Group maintains current restricted accounts or deposits for
various periods of time with other banks. Amounts due from credit institutions with a fixed maturity
term are subsequently measured at amortised cost using the effective interest method. Those that do
not have fixed maturities are carried at cost. Amounts due from credit institutions are carried net of
any allowance for expected credit losses.
Recognition and measurement of financial instruments
The Group recognises financial assets and liabilities on its consolidated statement of financial position
when it becomes a party to the contractual obligations of the instrument. Regular way purchases and
sales of financial assets and liabilities are recognised using settlement date accounting. Where
regular way purchases of financial instruments will be subsequently measured at fair value, the Group
accounts for any change in the fair value of the asset between trade date and settlement date in the
same way it accounts for acquired instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in profit or loss. The accounting policies for
subsequent re-measurement of these items are disclosed in the respective accounting policies set
out below.
Financial assets
All financial assets are recognized and derecognized on a trade date where the purchase or sale of
a financial asset is under a contract whose terms require delivery of the financial asset within the
timeframe established by the market concerned, and are initially measured at fair value, plus
transaction costs, except for those financial assets classified as at fair value through profit or loss
(“FVTPL”). Transaction costs directly attributable to the acquisition of financial assets classified as at
FVTPL are recognized immediately in profit or loss.
All recognized financial assets that are within the scope of IFRS 9 “Financial Instruments” (“IFRS 9”)
are required to be subsequently measured at amortised cost or fair value on the basis of the entity’s
business model for managing the financial assets and the contractual cash flow characteristics of the
financial assets.
Specifically:
○ Retention of an asset to obtain the cash flows stipulated by the contract. This business model
suggests financial asset management aims to realize cash flows by receiving principal and interest
payments over the life of the financial instrument. Within the framework of this business model,
holding a financial asset to maturity is a priority, but early disposal is not prohibited.
○ Retention of an asset with a view for obtaining contractual cash flows and sale of financial assets.
This business model assumes that the management of financial assets is aimed at both obtaining
contractual cash flows and sale of financial assets. Within the framework of this business model, the
receipt of cash from the sale of a financial asset is a priority, which is characterized by a greater
frequency and volume of sales compared to "retention of an asset to obtain the cash flows
stipulated by the contract" business model.
○ Retention of an asset for other purposes. Within the framework of this business model, financial
assets can be managed with the following purposes:
◦ management with a view to selling cash flows through the sale of financial assets;
◦ iquidity management to meet daily funding needs;
◦ a portfolio, which management and performance is measured on a fair value basis;
◦ a portfolio, which matches the definition of held for trading. Financial assets are deemed to be
held for trading if they were acquired mainly with a view to subsequent disposal in the near future
(up to 180 days), gaining short-term profit, or represent derivative financial instruments (except
for a financial guarantee or derivative financial instrument that was designated as a hedging
instrument).
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
130
In accordance with IFRS 9, financial assets are classified as follows:
○ bank loans classified as assets at amortised cost are contained within the framework of a business
model which aims to receive cash flows exclusively for repayment of unpaid interest and principal
stipulated by loan agreement and that have contractual cash flows that are solely payments of
principal and interest (“SPPI”) on the principal amount outstanding;
○ balances on correspondent accounts, interbank loans/deposits, repo transactions are classified, as
a rule, as assets, estimated at amortised cost, since they are managed within the framework of a
business model, which aims to receive cash flows stipulated by the contract, and that have
contractual cash flows that are SPPI;
○ debt securities may be classified into any of the three classification categories, taking into account
the selected business model and compliance with the SPPI criterion;
○ equity securities are generally classified as instruments at fair value through profit or loss;
○ trading securities and derivatives are classified as financial assets at fair value through profit or loss.
Financial assets or financial liabilities at fair value through profit or loss
Financial assets at FVTPL are:
○ Assets with contractual cash flows that are not SPPI; or/and
○ Assets that are held in a business model other than held to collect contractual cash flows or held to
collect and sell; or
○ Assets designated at FVTPL using the fair value option
○ Financial liabilities are classified as at fair value through profit or loss where the financial liability is
either held for trading or it is designated as at fair value through profit or loss.
A financial liability is classified as held for trading if:
○ it has been acquired principally for the purpose of selling in the near term; or
○ it is a part of an identified portfolio of financial instruments that the Group manages together and
has a recent actual pattern of short-term profit-taking; or
○ it is a derivative that is not designated and effective as a hedging instrument.
Financial assets and financial liabilities at fair value through profit or loss are recorded in the
consolidated statement of financial position at fair value. Changes in fair value are recorded in net
(loss)/gain on financial assets and liabilities at fair value through profit or loss. Interest earned or
incurred is accrued in interest income or expense, respectively, according to the terms of the contract,
while dividend income is recorded in “Other income” when the right to receive the payment has been
established.
Debt instruments at amortised cost or at fair value through other comprehensive income
(“FVTOCI”)
The Group assesses the classification and measurement of a financial asset based on the contractual
cash flow characteristics of the asset and the Group’s business model for managing the asset.
For an asset to be classified and measured at amortised cost or at FVTOCI, its contractual terms
should give rise to cash flows that are solely payments of principal and interest on the principal
outstanding.
For the purpose of SPPI test, principal is the fair value of the financial asset at initial recognition.
That principal amount may change over the life of the financial asset (e.g. if there are repayments of
principal). Interest consists of consideration for the time value of money, for the credit risk associated
with the principal amount outstanding during a particular period of time and for other basic lending
risks and costs, as well as a profit margin. The SPPI assessment is made in the currency in which the
financial asset is denominated.
Contractual cash flows that are SPPI are consistent with a basic lending arrangement. Contractual
terms that introduce exposure to risks or volatility in the contractual cash flows that are unrelated to
a basic lending arrangement, such as exposure to changes in equity prices or commodity prices, do
not give rise to contractual cash flows that are SPPI. An originated or an acquired financial asset can
be a basic lending arrangement irrespective of whether it is a loan in its legal form.
An assessment of business models for managing financial assets is performed at the date of initial
application of IFRS 9 to determine the classification of a financial asset. The business model is applied
retrospectively to all financial assets existing at the date of initial application of IFRS 9. The Group
determines the business models at a level that reflects how groups of financial assets are managed
together to achieve a particular business objective. The Group’s business model does not depend on
management’s intentions for an individual instrument; therefore, the business model assessment is
performed at a higher level of aggregation rather than on an instrument-by-instrument basis.
The Group has more than one business model for managing its financial instruments that reflect how
the Group manages its financial assets in order to generate cash flows. The Group’s business models
determine whether cash flows will result from collecting contractual cash flows, selling financial
assets or both.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
131
The Group considers all relevant information available when making the business model assessment.
However, this assessment is not performed based on scenarios that the Group does not reasonably
expect to occur, such as so-called ‘worst case’ or ‘stress case’ scenarios. The Group takes into
account all relevant evidence available such as:
○ How the performance of the business model and the financial assets held within that business
model are evaluated and reported to the entity’s key management personnel;
○ The risks that affect the performance of the business model (and the financial assets held within
that business model) and, in particular, the way in which those risks are managed; and
○ How managers of the business are compensated (e.g. whether the compensation is based on
the fair value of the assets managed or on the contractual cash flows collected).
At initial recognition of a financial asset, the Group determines whether newly recognized financial
assets are part of an existing business model or whether they reflect the commencement of a new
business model. The Group reassess its business models each reporting period to determine whether
the business models have changed since the preceding period. For the current reporting period, the
Group has not identified a change in its business models.
When a debt instrument measured at FVTOCI is derecognized, the cumulative gain/loss previously
recognized in OCI is reclassified from equity to profit or loss. In contrast, for an equity investment
designated as measured at FVTOCI, the cumulative gain/loss previously recognized in OCI is not
subsequently reclassified to profit or loss but transferred within equity. Debt instruments that are
subsequently measured at amortised cost or at FVTOCI are subject to impairment.
Reclassification of financial assets
If the business model under which the Group holds financial assets changes, the financial assets
affected are reclassified. The classification and measurement requirements related to the new
category apply prospectively from the first day of the first reporting period following the change in
business model that result in reclassifying the Group’s financial assets. Changes in contractual cash
flows are considered under the accounting policy on Modification and derecognition of financial
assets described below.
Modification and derecognition of financial assets
A modification of a financial asset occurs when the contractual terms governing the cash flows of
a financial asset are renegotiated or otherwise modified between initial recognition and maturity of the
financial asset. A modification affects the amount and/or timing of the contractual cash flows either
immediately or at a future date. In addition, the introduction or adjustment of existing covenants of an
existing loan would constitute a modification even if these new or adjusted covenants do not yet affect
the cash flows immediately but may affect the cash flows depending on whether the covenant is or is
not met (e.g. a change to the increase in the interest rate that arises when covenants are breached).
Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This
may involve extending the payment arrangements and the agreement of new loan conditions. Once
the terms have been renegotiated, the loan is no longer considered past due. Management
continuously monitors renegotiated loans to ensure that they are performing and that future
payments are likely to occur. The loans continue to be subject to an individual or collective impairment
assessment, calculated using the loan’s original EIR. Renegotiated terms are evidence of impairment
for loans assessed for impairment on an individual basis, for which deterioration of the financial
position is observed.
The Group renegotiates loans to customers in financial difficulty to maximize collection and minimize
the risk of default. A loan forbearance is granted in cases where although the borrower made all
reasonable efforts to pay under the original contractual terms, there is a high risk of default or default
has already happened and the borrower is expected to be able to meet the revised terms. The revised
terms in most of the cases include an extension of the maturity of the loan, changes to the timing of
the cash flows of the loan (principal and interest repayment), reduction in the amount of cash flows
due (principal and interest forgiveness) and amendments to covenants. The Group has an established
forbearance policy, which applies for corporate and retail lending.
When a financial asset is modified the Group assesses whether this modification results
in derecognition. In accordance with the Group’s policy a modification results in derecognition when
it gives rise to substantially different terms. To determine if the modified terms are substantially
different from the original contractual terms the Group considers qualitative factors, such as
contractual cash flows after modification are no longer SPPI, change in currency or change of
counterparty, the extent of change in interest rates, maturity, covenants.
When a financial asset is modified due to commercial reasons, the Group considers various qualitative
factors (change in currency, interest rate, maturity) and on that basis concludes whether old loan
should be derecognised and new loan should be recognised at fair value.
In the case where the financial asset is derecognized the loss allowance for ECL is remeasured at the
date of derecognition to determine the net carrying amount of the asset at that date. The difference
between this revised carrying amount and the fair value of the new financial asset with the new terms
will lead to a gain or loss on derecognition. The new financial asset will have a loss allowance
measured based on 12-month ECL except in the rare occasions where the new loan is considered to
be originated credit-impaired asset. This applies only in the case where the fair value of the new loan
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
132
is recognized at a significant discount to its revised par amount because there remains a high risk of
default, which has not been reduced by the modification. Please also refer to Note 11 for more details.
Impairment
Calculation of financial assets impairment is carried out taking into account the following factors:
○ In order to calculate the ECL, the Bank performs a loan assessment on an individual basis and on a
group basis depending on general credit risk features.
○ ECLs are a probability-weighted estimate of the present value of credit losses. These are measured
as the present value of the difference between the cash flows due to the Group under the contract
and the cash flows that the Group expects to receive arising from the weighting of multiple future
economic scenarios, discounted at the asset’s EIR.
○ Calculations are based on justified and verified information, which may be received without any
significant costs or efforts. Calculation of the present value of the expected future cash flows of the
secured financial asset reflects the cash flow that may result from foreclosure, less the cost of
obtaining and selling collateral, regardless of whether the recovery is probable or not. The
allowance is based on the Group's own experience in assessing losses and management
assumptions about the level of losses likely to be recognised on assets in each category of a credit
risk, based on debt servicing capabilities and borrower's credit track record.
○ Impairment for treasury operations (investments in debt securities, reverse repurchase
transactions, interbank loans and deposits, correspondent account transactions, accounts
receivable under treasury transactions) is calculated taking into account the counterparty's rating,
probability of default, duration of a transaction and the extent of loss in case of a default.
○ The estimated credit losses for treasury operations are estimated on an individual basis (except for
individual claims in the form of receivables).
Financial assets are segmented by stages in accordance with the following approach:
○ Stage 1: There is no significant increase in credit risk since recognition of an asset, impairment is
recognised as expected losses over the next 12 months;
○ Stage 2: Significant increase in credit risk since recognition of an asset, impairment is recognised as
expected losses over the life of a financial asset;
○ Stage 3: Financial asset is in default or has signs of impairment.
Allowances for expected credit losses
ECLs are required to be measured through a loss allowance at an amount equal to:
○ 12-month ECL, i.e. lifetime ECL that result from those default events on the financial instrument that
are possible within 12 months after the reporting date, (referred to as Stage 1); or
○ Full lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of the
financial instrument, (referred to as Stage 2 and Stage 3).
For more details about staging refer to Notes 5, 8, 9, 10 and 11.
A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that
financial instrument has increased significantly since initial recognition. For all other financial
instruments, ECLs are measured at an amount equal to the 12-month ECL.
○ For undrawn loan commitments, the ECL is the difference between the present value of the
difference between the contractual cash flows that are due to the Group if the holder of the
commitment draws down the loan and the cash flows that the Group expects to receive if the loan
is drawn down; and
○ For financial guarantee contracts, the ECL is the difference between the expected payments to
reimburse the holder of the guaranteed debt instrument less any amounts that the Group expects
to receive from the holder, the debtor or any other party.
The Group measures ECL on an individual basis, or on a collective basis for portfolios of loans that
share similar risk characteristics. The measurement of the loss allowance is based on the present
value of the asset’s expected cash flows using the asset’s original effective interest rate (“EIR”),
regardless of whether it is measured on an individual basis or a collective basis.
Critical to the determination of ECL is the definition of default. The definition of default is used in
measuring the amount of ECL and in the determination of whether the loss allowance is based
on 12-month or lifetime ECL, as default is a component of the probability of default, which affects both
the measurement of ECLs and the identification of a significant increase in credit risk. Please also refer
to Note 4 for more details.
For the details of supportable forward-looking information, please refer to Note 31 for more details.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
133
Offsetting
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement
of financial position when there is a legally enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis, or to realise the asset and settle the liability
simultaneously. In accounting for a transfer of a financial asset that does not qualify for derecognition,
the Group does not offset the transferred asset and the associated liability. Income and expense is not
offset in the consolidated statement of profit or loss unless required or permitted by any accounting
standard or interpretation, and as specifically disclosed in the accounting policies of the Group.
Credit-impaired financial assets
A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are
referred to as Stage 3 assets. Evidence of credit-impairment includes observable data about the
following events:
○ significant financial difficulty of the borrower or issuer;
○ a breach of contract such as a default or past due event;
○ the lender of the borrower, for economic or contractual reasons relating to the borrower’s financial
difficulty, having granted to the borrower a concession that the lender would not otherwise
consider;
○ the disappearance of an active market for a security because of financial difficulties; or
○ the purchase of a financial asset at a deep discount that reflects the incurred credit losses.
It may not be possible to identify a single discrete event instead; the combined effect of several events
may have caused financial assets to become credit-impaired. The Group assesses whether debt
instruments that are financial assets measured at amortised cost or FVTOCI are credit-impaired at
each reporting date. To assess if sovereign and corporate debt instruments are credit impaired, the
Group considers factors such as bond yields, credit ratings and the ability of the borrower to raise
funding.
A loan is considered credit-impaired when a concession is granted to the borrower due to
a deterioration in the borrower’s financial condition, unless there is evidence that as a result of
granting the concession the risk of not receiving the contractual cash flows has reduced significantly
and there are no other indicators of impairment. For financial assets where concessions are
contemplated but not granted, the asset is deemed credit impaired when there is observable evidence
of credit-impairment including meeting the definition of default. The definition of default includes
unlikeliness to pay indicators and a backstop if amounts are overdue for 90 days or more. The decision
to use cross-default is based on case-by-case assessment of client’s facility conditions such as
collateral and materiality of exposure.
Purchased or originated credit-impaired (“POCI”) financial assets
POCI financial assets are treated differently because the asset is credit-impaired at initial recognition.
For these assets, the Group recognizes all changes in lifetime ECL since initial recognition as a loss
allowance with any changes recognized in profit or loss. A favorable change for such assets creates
an impairment gain (recovery of credit loss expense).
Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or a part of a group of similar financial
assets) is derecognised where:
○ the rights to receive cash flows from the asset have expired;
○ the Group has transferred its rights to receive cash flows from the asset, or retained the right to
receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party under a ‘pass-through’ arrangement; and
○ the Group either (a) has transferred substantially all the risks and rewards of the asset, or (b) has
neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
A financial asset is derecognised when it has been transferred and the transfer qualifies for
derecognition. A transfer requires that the Group either: (a) transfers the contractual rights to receive
the asset’s cash flows; or (b) retains the right to the asset’s cash flows but assumes a contractual
obligation to pay those cash flows to a third party. After a transfer, the Group reassesses the extent to
which it has retained the risks and rewards of ownership of the transferred asset. If substantially all the
risks and rewards have been retained, the asset remains on the consolidated statement of financial
position. If substantially all of the risks and rewards have been transferred, the asset is derecognised.
If substantially all the risks and rewards have been neither retained nor transferred, the Group
assesses whether or not it has retained control of the asset. If it has not retained control, the asset is
derecognised. Where the Group has retained control of the asset, it continues to recognise the asset
to the extent of its continuing involvement.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
134
Modification and derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial
liability derecognized and the consideration paid and payable is recognized in profit or loss.
When the Group exchanges with the existing lender one debt instrument into another one with
substantially different terms, such exchange is accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. Similarly, the Group accounts for
substantial modification of terms of an existing liability or part of it as an extinguishment of the original
financial liability and the recognition of a new liability. It is assumed that the terms are substantially
different if the discounted present value of the cash flows under the new terms, including any fees
paid net of any fees received and discounted using the original effective rate is at least 10 per cent
different from the discounted present value of the remaining cash flows of the original financial
liability. If the modification is not substantial, the difference between: (1) the carrying amount of the
liability before the modification; and (2) the present value of the cash flows after modification should
be recognised in profit or loss as the modification gain or loss within other gains and losses.
Taxation
The current income tax expense is calculated in accordance with the regulations of Kazakhstan and
other countries where the Group operates.
Deferred tax assets and liabilities are calculated in respect of temporary differences using the balance
sheet liability method. Deferred income taxes are provided for all temporary differences arising
between the tax bases of assets and liabilities and their carrying values for financial reporting
purposes, except where the deferred income tax arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss.
A deferred tax asset is recorded only to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences can be utilised. The carrying amount of deferred
tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax assets and liabilities are measured at tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates that have been enacted or substantively
enacted at the reporting date. Deferred tax is charged or credited to profit or loss, except when it
relates to items charged or credited directly to other comprehensive income or equity, in which case
the deferred tax is also charged or credited directly to other comprehensive income or equity.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments
in subsidiaries and associates, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries,
associates and joint ventures, except where the timing of the reversal of the temporary difference can
be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset and reported net in the consolidated
statement of financial position if:
○ The Group has a legally enforceable right to offset current income tax assets against current income
tax liabilities; and
○ Deferred income tax assets and deferred income tax liabilities relate to income taxes levied by the
same taxation authority on the same taxable entity.
Kazakhstan and other countries where the Group operates also have various operating taxes that are
assessed on the Group’s activities. These taxes are recorded as taxes other than income tax.
The Group records a provision for uncertain tax positions if it is probable that the Group will have to
make a payment to tax authorities upon their examination of a tax position. This provision is measured
at the Group's best estimate of the amount expected to be paid. Provisions are reversed to income in
provision for (recovery of) income taxes in the period in which management determines they are no
longer required or as determined by statute.
Property and equipment
Property and equipment are carried at cost less accumulated depreciation and any accumulated
impairment, except for any buildings and construction which are carried at revalued amount, being
the fair value at the date of the revaluation, less any subsequent accumulated depreciation and
subsequent accumulated impairment losses.
The carrying amounts of property and equipment are reviewed at each reporting date.
Buildings and construction held for use in supply of services, or for administrative purposes, are
stated in the consolidated statement of financial position at their revalued amounts, being the fair
value at the date of revaluation, determined from market-based evidence by appraisal undertaken by
professional independent appraisers, less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity
such that the carrying amount does not differ materially from that which would be determined using
fair values at the reporting date.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
135
Any revaluation increase arising on the revaluation of such buildings and construction is credited to
the property revaluation reserve, except to the extent that it reverses a revaluation decrease for the
same asset previously recognised as an expense, in which case the increase is credited to the
consolidated statement of profit or loss to the extent of the decrease previously charged. A decrease
in the carrying amount arising on the revaluation of such buildings and construction is charged as an
expense to the extent that it exceeds the balance, if any, held in the property revaluation reserve
relating to a previous revaluation of that asset.
Depreciation on revalued buildings and construction is charged to the consolidated statement of
profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation
surplus remaining in the property revaluation reserve is transferred directly to retained earnings.
Construction in progress is carried at cost, less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the
Group’s accounting policy. Such construction in progress is classified to the appropriate categories of
property and equipment when completed and ready for intended use. Depreciation of these assets,
on the same basis as other property assets, commences when the assets are ready for their
intended use.
An item of property and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Assets held for sale
Non-current assets and the liabilities directly associated with non-current assets are classified as held
for sale (“disposal group”) if it is highly probable that the net asset’s carrying amount will be recovered
through a sale transaction rather than through continuing use and the asset (or disposal group) is
available for immediate sale in its present condition. Management must be committed to the sale,
which should be expected to qualify for recognition as a completed sale within one year from the date
of classification of an asset as held for sale.
Assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
If the fair value less costs to sell of an asset held for sale is lower than its carrying amount, an
impairment loss is recognised in profit or loss. Any subsequent increase in an asset’s fair value less
costs to sell is recognised to the extent of the cumulative impairment loss that was previously
recognised in profit or loss in relation to that specific asset.
Investment property
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment
properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are measured at fair value. Gains and losses arising from changes in the fair
value of investment properties are included in profit or loss in the year in which they arise.
An investment property is derecognised upon disposal or when the investment property is
permanently withdrawn from use and no future economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the property (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year in
which the property is derecognised.
Commercial property
In certain circumstances, the Group may foreclose commercial properties as part of the settlement of
loan agreements with customers. The Group intends to sell these properties in the normal course of
business and therefore these are initially measured at fair value including transaction costs and
subsequently measured at the lower of cost or net realisable value. Estimates of net realisable value
are based on the most reliable evidence available at the time the estimates are made, of the amount
the commercial property is expected to be realised for. These estimates take into consideration
fluctuations of price or cost directly relating to events occurring after the end of the year to the extent
that such events confirm conditions existing at the end of the year.
Amounts due to customers and credit institutions
Amounts due to customers and credit institutions are initially recognised at the fair value of the
consideration received, less directly attributable transaction costs. Subsequently, amounts due are
stated at amortised cost and any difference between net proceeds and the redemption value is
recognised in the consolidated statement of profit or loss over the period of the borrowings using the
effective interest method. If the Group purchases its own debt, it is removed from the consolidated
statement of financial position and the difference between the carrying amount of the liability and the
consideration paid is recognised in the consolidated statement of profit or loss.
Debt securities issued
Debt securities issued represent bonds issued by the Group, which are accounted for according to the
same principles used for amounts due to customers and credit institutions. Any difference between
proceeds received, net of debt issuance costs, and the redemption value is recognised in the
consolidated statement of profit or loss over the period of the borrowings using the effective interest
method.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
136
Equity
The Group classifies a financial instrument that it issues as a financial asset, financial liability or an
equity instrument in accordance with the substance of the contractual arrangement. An instrument is
classified as a liability if it is a contractual obligation to deliver cash or another financial asset, or to
exchange financial assets or financial liabilities on potentially unfavourable terms. An instrument is
classified as equity if it evidences a residual interest in the assets of the Group, after the deduction of
liabilities.
The components of a compound financial instrument issued by the Group are classified and
accounted for separately as financial assets, financial liabilities or equity instruments as appropriate.
Share capital
External costs directly attributable to the issue of new shares, other than in a business combination,
are shown as a deduction from the proceeds in equity. Prior to 13 May 2003, any excess of the fair
value of consideration received over the nominal value of shares issued was recognised as share
premium reserve. Effective 13 May 2003, upon a change in the law concerning “Joint Stock
Companies”, the nominal amount concept was restricted to placement of shares only between the
founders of an entity. For all other investors, share capital is recorded at placement value being the
consideration received by an entity for its shares.
Treasury shares
When the Group acquires its own share capital, the amount of the consideration paid, including
directly attributable costs, net of any related tax benefit, is recognised as a change in equity.
Repurchased shares are classified as treasury shares and are held at cost. These shares are treated as
a deduction from the issued and weighted average number of shares, and the cost price of the shares
is presented as a deduction from total equity. Dividends on shares purchased by the Group’s
subsidiaries are eliminated upon consolidation.
Dividends
Dividends are recognised as a liability and deducted from equity on the date they are declared.
Dividends are disclosed when they are proposed before the reporting date or proposed or declared
after the reporting date but before the consolidated financial statements are authorised for issue.
Equity reserves
The reserves recorded in equity (other comprehensive income) on the Group’s consolidated
statement of financial position include:
○ Revaluation reserve of financial assets at fair value through other comprehensive income which
comprises changes in fair value of financial assets at fair value through other comprehensive
income and allowances for expected credit losses on debt financial assets at fair value through
other comprehensive income;
○ Cumulative translation reserve which is used to record foreign exchange differences arising from
the translation of the net investment in foreign operations;
○ Property revaluation reserve, which comprises revaluation reserve of land and buildings.
Contingencies
Contingent liabilities are not recognised in the consolidated statement of financial position but are
disclosed unless the possibility of any outflow in settlement is remote. A contingent asset is not
recognised in the consolidated statement of financial position but disclosed when an inflow of
economic benefits is probable.
Recognition of income and expense
Interest income and expense for all financial instruments, except for financial assets measured or
designated at fair value through profit or loss are recognized in ‘Net interest income’ as ‘Interest
income calculated using the effective interest method’ and ‘Interest expense’ in the profit or loss
account using the effective interest method.
Interest income on financial instruments measured at fair value through profit or loss is included in
‘Other interest income’ in the consolidated statement of profit or loss.
The EIR is the rate that exactly discounts estimated future cash flows of the financial instrument
through the expected life of the financial instrument or, where appropriate, a shorter period, to the net
carrying amount of the financial asset or financial liability. The future cash flows are estimated taking
into account all the contractual terms of the instrument.
The calculation of the EIR includes all fees and points paid or received between parties to the contract
that are incremental and directly attributable to the specific lending arrangement, transaction costs,
and all other premiums or discounts. For financial assets at FVTPL transaction costs are recognized
in profit or loss at initial recognition.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
137
The interest income/interest expense is calculated by applying the EIR to the gross carrying amount
of non-credit impaired financial assets (i.e. at the amortised cost of the financial asset before adjusting
for any expected credit loss allowance), or to the amortised cost of financial liabilities. For credit-
impaired financial assets, the interest income is calculated by applying the EIR to the amortised cost
of the credit-impaired financial assets (i.e. the gross carrying amount less the allowance for expected
credit losses). For financial assets POCI the EIR reflects the expected credit losses in determining the
future cash flows expected to be received from the financial asset.
Loan origination fees for loans issued to customers are (together with related direct costs) recognised
as an adjustment to the effective yield of the loans. Where it is probable that a loan commitment will
lead to a specific lending arrangement, the loan commitment fees are deferred, together with the
related direct costs, and recognised as an adjustment to the effective interest rate of the resulting
loan. Where it is unlikely that a loan commitment will lead to a specific lending arrangement, the loan
commitment fees are recognised in profit or loss over the remaining period of the loan commitment.
Where a loan commitment expires without resulting in a loan, the loan commitment fee is recognised
in profit or loss on expiry.
Fee and commission income
Fee and commission income is recognised to reflect the transfer of services to customers at an
amount that reflects the consideration that is expected to be received in exchange for such services.
The Group identifies the performance obligation, i.e. the services agreed with the customer, and the
consideration, and recognises income in line with the transfer of services, the performance obligation,
agreed with the customer.
For each performance obligation identified, the Group determines at contract inception whether it
satisfies the performance obligation over time or at a point in time, and whether the consideration is
fixed or variable, including whether consideration is constrained by, for instance, external factors
outside the Group’s influence. The consideration is subsequently allocated to the identified
performance obligation.
Fee and commission income from maintenance of customer accounts and cash operations include
fees earned from deposit products in lieu of compensating balances, service charges for transactions
performed upon depositors’ request, as well as fees earned from performing cash management
activities. Service charges on deposit products are recognized over the period in which the related
service is provided, typically monthly. Service fees are recognized at a point in time upon completion
of the requested service transaction. Fees on cash management products are recognized over time as
services are provided.
Plastic cards operations fee and commission income include interchange income from credit and
debit card transactions and are recognized at a point in time upon settlement by the associated
network. Interchange rates are generally set by the associated network based on purchase volume
and other factors. Other card-related fees are recognized at a point in time upon completion of the
transaction.
Other banking fees include fees for various transactional banking activities such as bank transfers,
letters of credit fees and other transactional services. These fees are recognized in a manner that
reflects the timing of when transactions occur and as services are provided. Letter of credit fees
primarily includes fees received related to letter of credit agreements and are generally recognized
upon execution of the contract.
The adoption of IFRS 15 has not had any material impact on the disclosures or on the amounts
reported in the consolidated financial statements.
Foreign currency translation
The consolidated financial statements are presented in KZT, which is the functional currency of the
Bank and each of its subsidiaries, except for foreign subsidiaries. Transactions in foreign currencies
are initially recorded in the functional currency, converted at the rate of exchange ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at
the currency rate of exchange as quoted by KASE as at the reporting date. Gains and losses resulting
from the translation of foreign currency transactions into functional currency are recognised in the
consolidated statement of profit or loss as net foreign exchange gain or loss. Non-monetary items that
are measured in terms of historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into the
Group’s presentation currency at the exchange rates as at the consolidated statement of financial
position date, and their statements of profit or loss are translated at the average exchange rates for the
year. Exchange differences arising on translation are taken directly to a separate component of equity.
On disposal of a foreign subsidiary, the deferred cumulative amount recognised in equity relating to
that particular foreign operation is recognised in the consolidated statement of profit or loss.
Differences between the contractual exchange rate of a transaction in a foreign currency and the
market exchange rate on the date of the transaction are included in net foreign exchange gain or loss.
The market exchange rate at 31 December 2023 was – KZT 454.56 to USD, KZT 5.06 to RUB, KZT
502.24 to EUR (at 31 December 2022 was – KZT 462.65 to USD, KZT 6.43 to RUB, KZT 492.86 to EUR).
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Notes to the Consolidated Financial Statements (Continued)
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Insurance contracts
On 1 January 2023, the Group implemented IFRS 17, Insurance Contracts.
A. Key types of insurance contracts issued and reinsurance contracts held
The Group issues the following types of contracts that are accounted for in accordance with IFRS 17
Insurance Contracts.
Life business – non-participating contracts including:
○ Term life insurance contracts providing level or decreasing sum assured coverage for a limited
period of time in exchange for non-renewable fixed premiums.
This group of contracts include the following material products of the Group – voluntary
accumulative life insurance Kazyna, voluntary accumulative life insurance Baiterek, voluntary
accumulative life insurance Bolashak Life, and others.
○ Fixed annuity contracts providing the annuitant with a guaranteed income payout for life.
This group of contracts include the following material products of the Group – pension annuity and
annuities under employer liability. The Group accounts for these policies applying the General
Model.
Motor and property insurance policies:
These comprise comprehensive and third-party liability car insurance policies as well as property
insurance policies for contents and buildings and other properties with coverage of one year or more.
This group of contracts include the following material products of the Group – voluntary life insurance
Halyk Retail, voluntary life insurance Halyk Small Business, and obligatory insurance of an employee
against accidents during the performance of his work duties, voluntary life insurance Halyk Eurasia,
health insurance, and obligatory liability insurance for vehicle owners, property insurance, motor
transport and liability insurance.
The Group accounts for these contracts applying the Premium Allocation Approach (PAA).
B. Definitions and classifications
Products sold by the Group are classified as insurance contracts when the Group accepts significant
insurance risk from a policyholder by agreeing to compensate the policyholder if a specified uncertain
future event adversely affects the policyholder.
This assessment is made on a contract-by-contract basis at the contract issue date. In making this
assessment, the Group considers all its substantive rights and obligations, whether they arise from
contract, law or regulation. The Group determines whether a contract contains significant insurance
risk by assessing if an insured event could cause the Group to pay to the policyholder additional
amounts that are significant in any single scenario with commercial substance even if the insured
event is extremely unlikely or the expected present value of the contingent cash flows is a small
proportion of the expected present value of the remaining cash flows from the insurance contract.
C. Combining a set or series of contracts
Sometimes, the Group enters into two or more contracts at the same time with the same or related
counterparties to achieve an overall commercial effect. The Group accounts for such a set of
contracts as a single insurance contract when this reflects the substance of the contracts. When
making this assessment, the Group considers whether:
○ The rights and obligations are different when looked at together compared to when looked at
individually
○ The Group is unable to measure one contract without considering the other
D. Separating components from insurance and reinsurance contracts
In addition to the provision of the insurance coverage service, some insurance contracts issued by the
Group have other components such as an investment component.
The Group assesses its products to determine whether some of these components are distinct and
need to be separated and accounted for applying other IFRS Accounting Standards. When these non-
insurance components are non-distinct, they are accounted for together with the insurance
component applying IFRS 17.
Separating investment components
The Group issues certain life insurance policies. These include an investment component under which
the Group is required to repay to a policyholder in all circumstances, regardless of an insured event
occurring. In assessing whether an investment component is distinct and therefore required to be
accounted for separately applying IFRS 9, the Group considers if the investment and insurance
components are highly interrelated or not. A contract with equivalent terms to the investment
component is sold (or could be sold) separately in the same market or in the same jurisdiction by other
entities, including those issuing insurance contracts.
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Notes to the Consolidated Financial Statements (Continued)
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When the investment component meets the definition of an investment contract with discretionary
participation features, it is then accounted for applying IFRS 17. In determining whether investment
and insurance components are highly interrelated the Group assesses whether the Group is unable to
measure one component without considering the other and whether the policyholder is unable to
benefit from one component unless the other component is present, i.e. whether cancelling one
component also terminates the other. The Group has not identified any distinct investment
components. The Group applies IFRS 17 to account for non-distinct investment components as part
of its insurance contracts.
Separating insurance components of a single insurance contract
Once investment components are separated, the Group assesses whether the contract should be
separated into several insurance components that, in substance, should be treated as separate
contracts to reflect the substance of the transaction. To determine whether insurance components
should be recognised and measured separately, the Group considers whether there is an
interdependency between the different risks covered, whether components can lapse independently
of each other and whether the components can be priced and sold separately. When the Group enters
into one legal contract with different insurance components operating independently of each other,
insurance components are recognised and measured separately applying IFRS 17.
E. Level of aggregation
The Group identifies portfolios by aggregating insurance contracts that are subject to similar risks and
managed together. In grouping insurance contracts into portfolios, the Group considers the similarity
of risks rather than the specific labelling of product lines. The Group has determined that all contracts
within each product line, as defined for management purposes, have similar risks. Therefore, when
contracts are managed together, they represent a portfolio of contracts. Some products issued by
different entities within the Group are considered as being managed at the issuing entity level. This is
because the management of the solvency capital management, which supports the issuance of these
contracts, is ring-fenced within these entities.
Each portfolio is subdivided into groups of contracts to which the recognition and measurement
requirements of IFRS 17 are applied. At initial recognition, the Group segregates contracts based on
when they were issued. A cohort contains all contracts that were issued within a 12-month period.
Each cohort is then further disaggregated into two groups of contracts:
○ Contracts that are onerous on initial recognition
○ Contracts that, on initial recognition, have no significant possibility of becoming onerous
subsequently
The determination of whether a contract or a group of contracts is onerous is based on the
expectations as at the date of initial recognition, with fulfilment cash flow expectations determined on
a probability-weighted basis. The Group determines the appropriate level at which reasonable and
supportable information is available to assess whether the contracts are onerous at initial recognition
and whether the contracts not onerous at initial recognition have a significant possibility of becoming
onerous subsequently. The Group applies significant judgement in determining at what level of
granularity the Group has sufficient information to conclude that all contracts within a set will be in the
same group. In the absence of such information, the Group assesses each contract individually.
The composition of groups established at initial recognition is not subsequently reassessed. See Note
1.M below for the accounting policy on levels of aggregation for contracts that existed as at the
transition date to IFRS 17.
For motor and property insurance contracts accounted for applying the PAA, the Group determines
that contracts are not onerous on initial recognition, unless there are facts and circumstances
indicating otherwise. The Group assesses the likelihood of changes in applicable facts and
circumstances to determine whether contracts not onerous on initial recognition belong to a group
with no significant possibility of becoming onerous in the future. If facts and circumstances indicate
that some contracts may be onerous at initial recognition or the group of contracts has become
onerous, the Group performs a quantitative assessment to assess whether the carrying amount of the
liability for remaining coverage determined applying the PAA is less than the fulfilment cash flows
related to remaining coverage determined applying the General Model. If the fulfilment cash flows
related to remaining coverage determined applying the General Model exceed the PAA carrying
amount of the liability for remaining coverage, the difference is recognised in profit or loss and the
liability for remaining coverage is increased by the same amount.
When motor insurance contracts within a portfolio would only fall into different groups due to specific
constraints imposed by law or regulation on the Group’s practical ability to set a different price or level
of benefits for male and female policyholders, the Group nevertheless includes those contracts in the
same group.
F. Recognition
The Group recognises groups of insurance contracts issued from the earliest of the following dates:
○ The beginning of the coverage period of the group of contracts
○ The date when the first payment from a policyholder in the group becomes due (in the absence of a
contractual due date, this is deemed to be when the first payment is received)
○ The date when a group of contracts becomes onerous
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Notes to the Consolidated Financial Statements (Continued)
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The Group recognises only contracts issued within a one-year period meeting the recognition criteria
by the reporting date. Subject to this limit, a group of insurance contracts can remain open after the
end of the current reporting period. New contracts are included in the group when they meet the
recognition criteria in subsequent reporting periods until such time that all contracts expected to be
included within the group have been recognised. Investment contracts with discretionary
participation features are initially recognised at the date the Group becomes a party to the contract.
G. Contract boundaries
The measurement of a group of insurance contracts includes all future cash flows expected to arise
within the boundary of each contract in the group. In determining which cash flows fall within a
contract boundary, the Group considers its substantive rights and obligations arising from the terms
of the contract, and from applicable laws, regulations and customary business practices. The Group
determines that cash flows are within the boundary of a contract if they arise from substantive rights
and obligations that exist during the reporting period in which the Group can compel the policyholder
to pay the premiums or the Group has a substantive obligation to provide the policyholder with
insurance contract services. A substantive obligation to provide insurance contract services ends
when the Group has the practical ability to reassess the risks of a particular policyholder and, as a
result, to change the price charged or the level of benefits provided for the price to fully reflect the new
level of risk. If the boundary assessment is performed at a portfolio rather than individual contract
level, the Group must have the practical ability to reprice the portfolio to fully reflect risk from all
policyholders. The Group’s pricing must not take into account any risks beyond the next reassessment
date.
In determining whether all risks have been reflected either in the premium or in the level of benefits,
the Group considers all risks that policyholders would transfer had the Group issued the contracts (or
portfolio of contracts) at the reassessment date. Similarly, the Group concludes on its practical ability
to set a price that fully reflects the risks in the contract or portfolio at a renewal date by considering all
the risks it would assess when underwriting equivalent contracts on the renewal date for the
remaining service. The assessment on the Group’s practical ability to reprice existing contracts takes
into account all contractual, legal and regulatory restrictions. In doing so, the Group disregards
restrictions that have no commercial substance. The Group also considers the impact of market
competitiveness and commercial considerations on its practical ability to price new contracts and
repricing existing contracts. The Group exercises judgement in deciding whether such commercial
considerations are relevant in concluding as to whether the practical ability exists at the
reporting date.
In estimating expected future cash flows of a group of contracts, the Group applies judgement in
assessing future policyholder behaviour surrounding the exercise of options available to them. These
include surrender options, and other options falling within the contract boundary.
Cash flows are within the boundaries of investment contracts with discretionary participation features
if they result from a substantive obligation of the Group to deliver cash at a present or future date.
The Group assesses the contract boundary at initial recognition and at each subsequent reporting
date to include the effect of changes in circumstances on the Group’s substantive rights and
obligations.
H. Measurement of insurance contracts issued
H1. Measurement on initial recognition for contracts other than PAA
The Group measures a group of contracts on initial recognition as the sum of the expected fulfilment
cash flows within the contract boundary and the contractual service margin representing the
unearned profit in the contracts relating to services that will be provided under the contracts.
Fulfilment cash flows within contract boundary
The fulfilment cash flows are the best estimates of the present value of the future cash flows, including
a risk adjustment for non-financial risk. The estimates of future cash flows reflect conditions existing
at the measurement date including assumptions at that date about the future.
The Group estimates expected future cash flows for a group of contracts at a portfolio level and
allocates them to the groups in that portfolio in a systematic and rational way. When estimating future
cash flows, the Group includes all cash flows within the contract boundary including:
○ Premiums and any additional cash flows resulting from those premiums;
○ Reported claims that have not yet been paid, claims incurred but not yet reported, future claims
expected to arise from the policy and potential cash inflows from recoveries on future claims
covered by existing insurance contracts;
○ An allocation of insurance acquisition cash flows attributable to the portfolio to which the issued
contract belongs;
○ Claim handling costs;
○ Policy administration and maintenance costs including recurring commissions expected to be paid
to intermediaries for policy administration services only (recurring commissions that are insurance
acquisition cash flows are treated as such in the estimate of future cash flows)
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Notes to the Consolidated Financial Statements (Continued)
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○ An allocation of fixed and variable overheads directly attributable to the fulfilment of insurance
contracts including overhead costs such as accounting, human resources, information technology
and support, building depreciation, rent, and maintenance and utilities
○ Other costs specifically chargeable to the policyholder under the terms of the contract
See Note 16 for fulfilment cash flows of reinsurance contracts held.
Discount rates
The time value of money and financial risk is measured separately from expected future cash flows
with changes in financial risks recognised in profit or loss at the end of each reporting period unless
the Group has elected the accounting policy to present the time value of money separately in profit or
loss. The Group measures the time value of money using discount rates that reflect the liquidity
characteristics of the insurance contracts and the characteristics of the cash flows, consistent with
observable current market prices. They exclude the effect of factors that influence such observable
market prices but do not affect the future cash flows of the insurance contracts (e.g. credit risk).
Expected future cash flows that vary based on the returns on any financial underlying items are
discounted at rates that reflect this variability.
A mix of the bottom-up and top-down approaches was applied in the determination of the discount
rates for different products. Bottom-up approach is used for cash flows denominated in foreign
currencies. Top-down approach is used for cash flows denominated in KZT. Discount rates
determined at the reporting date are disclosed in Note 16.
Risk adjustment for non-financial risk
The Group measures the compensation it would require for bearing the uncertainty about the amount
and timing of cash flows arising from insurance contracts, other than financial risk, separately as an
adjustment for non-financial risk. In calculating the risk adjustment coefficient, the impact of the
following actuarial assumptions on the level of insurance risk is taken into account:
○ Probability of death by sex and age;
○ Amount of administrative expenses;
○ Probability of termination (if any);
○ Probability of prolongation.
The calculation is made using the Value at Risk (VaR) method. Under this approach, the Group
calculates the present value of future cash flows under a number of different scenarios (each scenario
representing uncertainty resulting from non-financial risks) in order to reproduce the distribution of
risks. The risk adjustment for non-financial risk is taken to be equal to the difference between the cost
measure of risk at a given level of confidence and the average value - its best estimate. The reliability
equal to 75% are accepted.
Contractual service margin (CSM)
The CSM is a component of the overall carrying amount of a group of insurance contracts
representing unearned profit that the Group will recognise as it provides insurance contract services
over the coverage period.
At initial recognition, the Group measures the CSM at an amount that, unless a group of insurance
contracts is onerous, results in no gains recognised in profit or loss arising from:
○ The expected fulfilment cash flows of the group
○ The amount of any derecognised asset for insurance acquisition cash flows allocated to the group
○ Any other asset or liability previously recognised for cash flows related to the group
○ Any cash flows that have already arisen on the contracts as of that date
If a group of contracts is onerous, the Group recognises a loss on initial recognition. This results in the
carrying amount of the liability for the group being equal to the fulfilment cash flows, and the CSM of
the group being nil. A loss component is recognised for any loss on initial recognition of the group of
insurance contracts. See Note 16.
The Group determines at initial recognition the group’s coverage units. The Group then allocates the
group’s CSM based on the coverage units provided in the period.
Insurance acquisition cash flows
The Group includes insurance acquisition cash flows in the measurement of a group of insurance
contracts if they are directly attributable to either the individual contracts in a group, the group itself
or the portfolio of insurance contracts to which the group belongs.
The Group estimates, at a portfolio level, insurance acquisition cash flows not directly attributable to
the group but directly attributable to the portfolio. The Group then allocates them to the group of
newly written and renewed contracts on a systematic and rational basis.
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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The Group recognises an asset in respect of costs to secure a portfolio or group of insurance
contracts, such as costs of selling and underwriting, when these costs are incurred before the
recognition of the group of insurance contracts to which these costs relate. The Group recognises
such an asset for each existing or future group of insurance contracts to which insurance acquisition
cash flows are allocated. The related portion of the asset for insurance acquisition cash flows is
derecognised and included in the measurement of the fulfilment cash flows of the associated group
of contracts when the group is initially recognised. When only some of the insurance contracts
expected to be included within the group are recognised as at the end of the reporting period, the
Group determines the related portion of the asset that is derecognised and included in the group’s
fulfilment cash flows. The related portion is determined on a systematic and rational allocation
method that considers the timing of recognition of the contracts in the group.
At each reporting date, the Group reviews the carrying amounts of the asset for insurance acquisition
cash flows to determine whether there is an indication that the asset has suffered an impairment. If
any such indication exists, the Group adjusts the carrying amount of the asset so that the carrying
amount of the asset does not exceed the expected net cash inflow for the associated future groups of
contracts. An impairment loss is recognised in profit or loss for the difference. Where an impairment
loss subsequently reverses, the carrying amount of the asset is increased to the extent the impairment
conditions no longer exist or have improved and the cumulative amount of impairment loss reversal
does not exceed the impairment loss recognised for the asset in prior years.
H.2 Subsequent measurement under the General Model
In estimating the total future fulfilment cash flows, the Group distinguishes between those relating to
already incurred claims and those relating to future service. At the end of each reporting period, the
carrying amount of the group of insurance contracts will reflect a current estimate of the liability for
remaining coverage (LRC) as at that date and a current estimate of the liability for incurred claims
(LIC). The LRC represents the Group’s obligation to investigate and pay valid claims under existing
contracts for insured events that have not yet occurred, amounts that relate to other insurance
contract services not yet provided (i.e. provision of investment-return and investment-related
services) and investment components and other amounts not related to insurance contract services
that have not yet been transferred to the LIC. The LRC is comprised of (a) the fulfilment cash flows
relating to future service, (b) the CSM yet to be earned and (c) any outstanding premiums for
insurance contract services already provided.
The LIC includes the Group’s liability to pay valid claims for insured events that have already incurred,
other incurred insurance expenses arising from past coverage service and the liability for claims
incurred but not yet reported. It also includes the Group’s liability to pay amounts the Group is obliged
to pay the policyholder under the contract. This includes repayment of investment components, when
a contract is derecognised. The current estimate of LIC comprises the fulfilment cash flows related to
current and past service allocated to the group at the reporting date.
Changes in fulfilment cash flows
At the end of each reporting period, the Group updates the fulfilment cash flows for both LIC and LRC
to reflect the current estimates of the amounts, timing and uncertainty of future cash flows, as well as
discount rates and other financial variables.
The Group has an accounting policy choice which calculates changes in fulfilment cash flows at the
end of a reporting period for changes in non-financial assumptions, changes in discount rates and
financial assumptions. The Group first calculates the changes in discount rates and financial
assumptions on the fulfilment cash flows (as expected at the beginning of the period) and then
calculate changes on those cash flows from the change in non-financial assumptions.
Experience adjustments are the difference between:
○ The expected cash flow estimate at the beginning of the period and the actual cash flows for
premiums received in
○ the period (and any related cash flows paid such as insurance acquisition cash flows)
○ The expected cash flow estimate at the beginning of the period and the actual incurred amounts of
insurance service expenses in the period (excluding insurance acquisition expenses)
Experience adjustments relating to current or past service are recognised in profit or loss. For
incurred claims (including incurred but not reported) and other incurred insurance service expenses,
experience adjustments always relate to current or past service. They are included in profit or loss as
part of insurance service expenses.
Experience adjustments relating to future service are included in the LRC by adjusting the CSM. The
release of the CSM depends on whether the contract does not participate, participates indirectly, or
directly participates in the performance of the specified underlying items. At the end of each reporting
period, the Group re-estimates the LRC fulfilment cash flows, updating for changes in assumptions
relating to financial and non-financial risks.
Adjustments to the CSM
For insurance contracts without direct participating features, the following changes in fulfilment cash
flows are considered to be related to future service and adjust (or ‘unlock’) the CSM of the group of
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Notes to the Consolidated Financial Statements (Continued)
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insurance contracts:
○ Experience adjustments relating to the premiums received in the period that relate to future service,
and any related cash flows such as insurance acquisition cash flows and premium-based taxes
measured at the ‘locked in’ discount rates applicable when the contracts in the group were initially
recognized;
○ The change in the estimate of the present value of expected future cash flows in the liability for
remaining coverage, related to non-financial variables, measured at the ‘locked in’ discount rates
applicable when the contracts in the group were initially recognised. All financial variables are
locked in at initial recognition;
○ Changes in the risk adjustment for non-financial risk relating to future service. The Group has
elected not to disaggregate the change in the risk adjustment for non-financial risk between
(i) a change related to non-financial risk and (ii) the effect of the time value of money and changes
in the time value of money;
○ Differences between the amount of investment components that were expected to be payable in the
period and the amount of investment components that actually became payable. The amount of
investment components expected to be payable in the period is measured at the discount rates
applicable before it became payable.
The following adjustments do not relate to future service and thus do not adjust the CSM:
○ Changes in fulfilment cash flows for the effect of the time value of money and the effect of financial
risk and changes thereof;
○ Changes in the fulfilment cash flows relating to the LIC;
○ Experience adjustments relating to insurance service expenses (excluding insurance acquisition
cash flows).
Any further increases in fulfilment cash flows relating to future coverage are recognised in profit or
loss as they occur, increasing the loss component of the group of insurance contracts. Any
subsequent decreases in fulfilment cash flows related to future coverage do not adjust the CSM until
the loss component of the group is fully reversed through profit or loss.
At the end of the reporting period, the carrying amount of the CSM for a group of insurance contracts
without direct participating features is the carrying amount at the beginning of the period adjusted for:
○ The effect of any new contracts added to the group;
○ Interest accreted on the carrying amount of the CSM measured at the discount rates determined at
initial recognition;
○ The changes in fulfilment cash flows related to future service, except:
◦ Increases in fulfilment cash flows that exceed the carrying amount of the CSM, giving rise to a
loss that results in the group of contracts becoming onerous or more onerous
◦ Decreases in fulfilment cash flows that reverse a previously recognised loss on a group of
onerous contracts
○ The effect of any currency exchange differences on the CSM;
○ The amount recognised as insurance revenue because of the transfer of insurance contract
services in the period, determined by the allocation of the CSM remaining at the end of the reporting
period over the current and remaining coverage period.
Recognition of the CSM in profit or loss
An amount of the CSM is released to profit or loss in each period during which the insurance contract
services are provided.
In determining the amount of the CSM to be released in each period, the Group follows three steps:
○ Determine the total number of coverage units in the group. The amount of coverage units in the
group is determined by considering the quantity of benefits provided under the contract and the
expected coverage period for each contract;
○ Allocate the CSM at the end of the period (before any of it is released to profit or loss to reflect the
insurance contract services provided in the period) equally to each of the coverage units provided
in the current period and expected to be provided in the future;
○ Recognise in profit or loss the amount of CSM allocated to the coverage units provided during the
period.
The number of coverage units change as insurance contract services are provided, contracts expire,
lapse or surrender and new contracts are added to the group. The total number of coverage units
depends on the expected duration of the obligations that the Group has from its contracts. These can
differ from the legal contract maturity because of the impact of policyholder behaviour and the
uncertainty surrounding future insured events. By determining a number of coverage units, the Group
exercises judgement in estimating the likelihood of insured events occurring and policyholder
behaviour to the extent that they affect expected period of coverage in the group, the different levels
of service offered across periods (e.g. policyholder exercising an option and adding an additional
coverage for a previously guaranteed price) and the ‘quantity of benefits’ provided under a contract.
18
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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Contracts with cash flows not dependent on underlying items
In determining the number of coverage units, the Group applies the following methods:
For term life (with level or decreasing sum assured) and fixed annuity policies, a method based on the
expected coverage period and maximum contractual cover in each period is applied. This method is
appropriate as there is variability in the contractual cover in each period and, therefore, variability in
the amount of the service provided in each period.
The amount of CSM allocated to each coverage unit changes over time, as the amount of CSM
changes. The allocation of the CSM to coverage units is done at the end of the period, after reflecting
all other CSM adjustments (the accretion of interest and the effect of change in assumptions relating
to future coverage), but before any of it is released to profit or loss. The amount of CSM remaining at
the end of the reporting period is allocated equally to the coverage units provided in the period and
the remaining coverage units relating to future periods.
H.3 Insurance contracts measured under the premium allocation approach
The Group applies the PAA to the measurement of motor and property insurance contracts with a
coverage period of each contract in the group of one year or less. The Group applies the PAA to the
measurement of motor and property insurance contracts with a coverage period of each contract in
the group of more than one year if PAA model is applied.
On initial recognition, the Group measures the LRC at the amount of premiums received in cash. As all
issued insurance contracts to which the PAA is applied have coverage of a year or less, the Group
applies a policy of amortising all insurance acquisition cash flows over the contract’s coverage period.
Premiums due to the Group for insurance contract services already provided in the period but not yet
received at the end of the reporting period are included in the LRC. The carrying amount of the LRC at
the end of each subsequent reporting period represents the carrying amount at the start of the
reporting period adjusted for the premiums received in the period and the amount recognised as
insurance revenue for insurance contract services provided in that period.
The Group has determined that there is no significant financing component in motor and property
insurance contracts with a coverage period of one year or less. The Group does not discount the
liability for remaining coverage to reflect the time value of money and financial risk for such insurance
contracts.
The Group also applies the PAA to the all-quota share property and motor reinsurance contracts held.
The coverage period of such reinsurance contracts held is 15 months or less. As the coverage period
exceeds one year, the Group at initial recognition assesses whether the PAA is a reasonable
approximation of the General Model.
For motor and property reinsurance contracts held with a coverage period longer than one year, the
Group exercises judgement to determine whether a significant financing component exists. For
groups of reinsurance contracts held with a significant financing component, the Group adjusts the
LRC for the time value of money using discount rates determined at initial recognition.
For both motor and property insurance contracts issued and reinsurance contracts held, the carrying
amount of the LIC is measured applying the General Model, except that:
○ For claims that the Group expects to be paid within one year or less from the date of incurrence, the
Group does not adjust future cash flows for the time value of money and the effects of financial risks;
○ For claims expected to take more than one year to settle are discounted applying the discount rate
at the time the incurred claim is initially recognized.
Applying the PAA, the insurance revenue is measured at the amount allocated from the expected
premium receipts excluding any investment component. The allocation is done on the basis of the
passage of time. The Group applies judgement in determining the basis of allocation. When facts and
circumstances indicate that a group of contracts has become onerous, the Group performs a test for
onerousness. If the amount of the fulfilment cash flows exceeds the carrying amount of the LRC, the
Group recognises the amount of the difference as a loss in profit or loss and increases the LRC for the
corresponding amount.
H.4 Onerous contracts
The Group considers an insurance contract to be onerous if the expected fulfilment cash flows
allocated to the contract, any previously recognised acquisition cash flows and any cash flows arising
from the contract at the date of initial recognition in total result in a net cash outflow.
On initial recognition, the onerous assessment is done on an individual contract level assessing on a
best estimate of future expected cashflows including a risk adjustment for non-financial risk.
Contracts expected on initial recognition to be loss-making are grouped together and such groups are
measured and presented separately. Once contracts are allocated to a group, they are not re-
allocated to another group, unless they are substantively modified.
On initial recognition, the CSM of the group of onerous contracts is nil and the group’s measurement
consists entirely of fulfilment cash flows. A net outflow expected from a group of contracts
determined to be onerous is considered to be the group’s ‘loss component’. It is initially calculated
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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when the group is first considered to be onerous and is recognised at that date in profit or loss. The
amount of the group’s loss component is tracked for the purposes of presentation and subsequent
measurement.
After the loss component is recognised, the Group allocates any subsequent changes in fulfilment
cash flows of the LRC on a systematic basis between the loss component and the LRC excluding the
loss component.
For groups of onerous contracts, without direct participating features, the Group uses locked-in
discount rates. They are determined at initial recognition to calculate the changes in the estimate of
future cash flows relating to future service (both changes in a loss component and reversals of a loss
component).
For all issued contracts, other than those accounted for applying the PAA, the subsequent changes in
the fulfilment cash flows of the LRC to be allocated are:
○ Insurance finance income or expense;
○ Changes in risk adjustment for non-financial risk recognised in profit or loss representing release
from risk in the period;
○ Estimates of the present value of future cash flows for claims and expenses released from the LRC
because of incurred insurance service expenses in the period.
The Group determines the systematic allocation of insurance service expenses incurred based on the
percentage of loss component to the total fulfilment cash outflows included in the LRC.
Any subsequent decreases in fulfilment cash flows relating to future service allocated to the group
(arising from changes in estimates of future cash flows and the risk adjustments for non-financial risk)
are allocated first to the loss component only. Once it is exhausted, any further decreases in fulfilment
cash flows relating to future service results in the establishment of the group’s CSM.
For onerous groups of contracts, revenue is calculated as the amount of insurance service expenses
expected at the beginning of the period that form part of revenue and reflects only:
○ The change in the risk adjustment for non-financial risk due to expected release from risk in the
period (excluding the amount systematically allocated to the loss component);
○ The estimates of the present value of future cash flows related to claims expected to incur in the
period (excluding the systematic allocation to the loss component);
○ The allocation, based on the coverage units, of the portion of premiums that relates to the recovery
of the insurance acquisition cash flows.
All these amounts are accounted for as a reduction of the LRC excluding the loss component.
The Group recognises amounts in insurance service expenses related to the loss component arising
from:
○ Changes in fulfilment cash flows arising from changes in estimates related to future service that
establish or further increase the loss component;
○ Subsequent decreases in fulfilment cash flows that relate to future service and reduce the loss
component until it is exhausted;
○ Systematic allocation to the loss component arising both from changes in the risk adjustment for
non-financial risk and from incurred insurance services expenses.
I. Modification and derecognition
The Group derecognises the original contract and recognises the modified contract as a new
contract, if the terms of insurance contracts are modified and the following conditions are met:
○ If the modified terms were included at contract inception and the Group would have concluded that
the modified contract:
◦ Is outside of the scope of IFRS 17;
◦ Results in a different insurance contract due to separating components from the host contract;
◦ Results in a substantially different contract boundary;
◦ Would be included in a different group of contracts.
○ The original contract was accounted for applying the PAA, but the modified contract no longer
meets the PAA eligibility criteria for that approach.
If the contract modification meets any of the conditions, the Group performs all assessments
applicable at initial recognition, derecognises the original contract and recognises the new modified
contract as if it was entered for the first time.
If the contract modification does not meet any of the conditions, the Group treats the effect of the
modification as changes in the estimates of fulfilment cash flows.
For insurance contracts accounted for applying the General Model, a change in the estimates of
fulfilment cash flows results in a revised end of period CSM (before the current period allocation). A
portion of the revised end of period CSM is allocated to the current period, as is the revised CSM
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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amount applied from the beginning of the period but reflecting the change in the coverage units due
to the modification during the period. This portion is calculated using updated coverage unit amounts
determined at the end of the period and weighted to reflect the fact that the revised coverage existed
for only part of the current period.
For insurance contracts accounted for applying the PAA, the Group adjusts insurance revenue
prospectively from the time of the contract modification.
The Group derecognises an insurance contract when, and only when the contract is:
○ Extinguished (when the obligation specified in the insurance contract expires or is discharged or
cancelled);
○ Modified and the derecognition criteria are met.
When the Group derecognises an insurance contract from within a group of contracts, it:
○ Adjusts the fulfilment cash flows allocated to the group to eliminate the present value of the future
cash flows and risk adjustment for non-financial risk relating to the rights and obligations that have
been derecognised from the group;
○ Adjusts the CSM of the group for the change in the fulfilment cash flows (unless it relates to the
increase or reversal of the loss component);
○ Adjusts the number of coverage units for expected remaining insurance contract services to reflect
the coverage units derecognised from the group, and recognises in profit or loss in the period the
amount of CSM based on that adjusted number.
When the Group transfers an insurance contract to a third party and that results in derecognition, the
Group adjusts the CSM of the group from which the contract has been derecognised for the difference
between the change in the carrying amount of the group caused by the derecognised fulfilment cash
flows and the premium charged by the third party for the transfer.
When the Group derecognises an insurance contract due to modification, it derecognises the original
insurance contract and recognises a new one. The Group adjusts the CSM of the group from which the
modified contract has been derecognised for the difference between the change in the carrying
amount of the group as a result of adjustment to fulfilment cash flows due to derecognition and the
premium the Group would have charged had it entered into a contract with equivalent terms as the
new contract at the date of the contract modification, less any additional premium actually charged
for the modification.
J. Presentation
The Group has presented separately in the consolidated statement of financial position the carrying
amount of portfolios of insurance contracts that are assets and those that are liabilities, and the
portfolios of reinsurance contracts held that are assets and those that are liabilities.
The Group disaggregates the amounts recognised in the consolidated statement of profit or loss into
insurance revenue and insurance service expenses. The Group has voluntarily included the net
insurance finance income or expenses line in insurance revenue
The Group does not disaggregate the change in risk adjustment for non-financial risk between a
financial and nonfinancial portion. It includes the entire change as part of the insurance service result.
J.1 Insurance revenue
As the Group provides insurance services under a group of insurance contracts issued, it reduces its
LRC and recognises insurance revenue, which is measured at the amount of consideration the Group
expects to be entitled to in exchange for those services.
For groups of insurance contracts measured under the General Model, insurance revenue consists of
the sum of the changes in the LRC due to:
○ The insurance service expenses incurred in the period measured at the amounts expected at the
beginning of the period, excluding:
◦ Amounts allocated to the loss component
◦ Repayments of investment components
◦ Insurance acquisition expenses
◦ Amounts relating to risk adjustment for non-financial risk
○ The change in the risk adjustment for non-financial risk, excluding:
◦ Changes that relate to future service that adjust the CSM
◦ Amounts allocated to the loss component
○ The amount of CSM for the services provided in the period.
Insurance revenue also includes the portion of premiums that relate to recovering those insurance
acquisition cash flows included in the insurance service expenses in each period. Both amounts are
measured in a systematic way on the basis of the passage of time.
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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When applying the PAA, the Group recognises insurance revenue for the period based on the passage
of time by allocating expected premium receipts including premium experience adjustments to each
period of service.
J.2 Insurance service expenses
Insurance service expenses arising from a group of insurance contracts issued comprises:
○ Changes in the LIC related to claims and expenses incurred in the period excluding repayment of
investment components;
○ Changes in the LIC related to claims and expenses incurred in prior periods (related to past service);
○ Other directly attributable insurance service expenses incurred in the period;
○ Amortisation of insurance acquisition cash flows, which is recognised at the same amount in both
insurance service expenses and insurance contract revenue;
○ Loss component of onerous groups of contracts initially recognised in the period;
○ Changes in the LRC related to future service that do not adjust the CSM, because they are changes
in the loss components of onerous groups of contracts.
J.3 Income or expenses from reinsurance contracts held
The Group presents income or expenses from a group of reinsurance contracts held and reinsurance
finance income or expenses in profit or loss for the period separately. Income or expenses from
reinsurance contracts held are split into the following two amounts:
○ Amount recovered from reinsurers
○ An allocation of the premiums paid
Ceding commissions that are not contingent on claims of the underlying contracts are presented as a
deduction in the premiums to be paid to the reinsurer which is then allocated to profit or loss.
For PAA contracts
When applying the PAA, the Group does not discount the liability for remaining coverage to reflect the
time value of money and financial risk for motor and property insurance policies with a coverage
period of one year or less. For those claims that the Group expects to be paid within one year or less
from the date of incurrence, the Group does not adjust future cash flows for the time value of money
and the effects of financial risks. However, claims expected to take more than one year to settle are
discounted applying the discount rate at the time the incurred claim is initially recognised.
For non-participating contracts
For non-participating contracts whose cash flows are not affected by underlying items, the Group has
elected to present all insurance finance income or expenses in profit or loss.
Exchange differences
Exchange differences arising from changes in the carrying amount of groups of insurance contracts
issued and reinsurance contracts held are recognised in profit or loss in the period in which they arise.
The group of insurance contracts with cash flows in different foreign currencies is assessed to be
denominated in a single currency. Accordingly, the risk adjustment for non-financial risks and the CSM
of the group of insurance contracts are determined in the currency of the group of contracts.
At the end of each reporting period, the carrying amount of the group of insurance contracts
denominated in a foreign currency is translated into the functional currency.
The amounts arising from changes in exchange rates between the currency of the group of contracts
and the functional currency are considered as exchange differences and are recognised in profit or
loss in the period in which they arise.
K. Contracts existing at transition date
K.1 Contracts measured under the modified retrospective approach
For all life business the Group assessed historical information available and determined that all
reasonable and supportable information necessary for applying the full retrospective approach was
not available for groups of insurance contracts issued between 2019 to 2021 years prior to the
transition date. For all non-life business the Group assessed historical information available and
determined that all reasonable and supportable information necessary for applying the full
retrospective approach was not available for groups of insurance contracts issued before 2021 year.
The Group elected to apply the modified retrospective approach, which was intended to achieve the
closest possible outcome to the full retrospective application maximising the use of available
information.
The Group applied modifications in the following areas:
○ Assessments of insurance contracts or groups of insurance contracts that would have been are
required to be made at inception or initial recognition, such as assessments of insurance contracts
profitability and identification of discretionary cash flows for indirect participating contracts
○ Estimation of expected future cash flows, discount rates and risk adjustment for non-financial risk
as at the date of initial recognition
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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○ Determination of the CSM
○ Determination of insurance finance income or expenses
Level of aggregation
To the extent that reasonable and supportable information was not available at the date of initial
recognition, the Group applied simplification in assumptions development taking into account
available and supportable information as at transition date. The Group assessed the CSM on the date
of initial recognition to determine whether contracts belong to one of three profitability groups:
groups of onerous contracts, groups of contracts that have no significant possibility of becoming
onerous subsequently, and groups that are neither onerous nor have no significant possibility of
becoming onerous subsequently.
Assessments at inception or initial recognition
The Group assessed that it did not have reasonable and supportable information to perform the
following assessments as at the date of inception or initial recognition and accordingly performed the
assessments using the following information available at the transition date:
Expected cash flows
The Group estimated the cash flows at the date of initial recognition by estimating these cash flows at
the date of transition, or if known at an earlier date than the transition date, adjusted by actual cash
flows that were known to have occurred between then and the date of initial recognition. These
include cash flows from contracts that have ceased to exist by the date of transition.
The Group applied the simplified assumption that the expectations as at the date of transition were
also valid at the date of initial recognition, so that only the known cash flows that have occurred since
initial recognition are adjusted for.
Discount rates
To the extent that the Group did not have reasonable and supportable information to determine
discount rates applicable on the date of initial recognition of the group of contracts, the Group
estimated the discount rates using an observable yield curve that for at least three years prior to the
transition (i.e. 2019-2021) approximated the current yield curve used for subsequent measurement
applying IFRS 17. Since observable yield curve did not exist till 2019, the Group applied the discount
rates as at 31 December 2019 for the valuation dates until 31 December 2019.
K.2 Contracts measured applying the fair value approach
The Group concluded that reasonable and supportable information for application of the modified
retrospective approach was not available for Pension annuity and Obligatory Employer’s Liability Lob
issued before 2019 and therefore applied the fair value approach for those contracts.
The Group uses reasonable and supportable information available at the transition date to:
○ Identify groups of insurance contracts
○ Determine whether an insurance contract meets the definition of an insurance contract with direct
participation features
○ Identify discretionary cash flows for insurance contracts without direct participation features
○ Determine whether an investment contract meets the definition of an investment contract with
discretionary participation features within the scope of IFRS 17
Level of aggregation
The Group included contracts into one group of contracts as there was no reasonable and
supportable information available to make the division.
Measurement at the transition date
In applying the fair value approach at the transition date, the CSM or loss component of the LRC was
estimated as the difference between the fair value and the fulfilment cash flows of the group of
contracts as of that date. In determining fair value, the Group followed the requirements of IFRS 13 Fair
Value Measurement, except for that standard’s requirement in relation to demand features (that fair
value cannot be less than the amount repayable on demand), This is because it would contradict the
IFRS 17 requirement to incorporate cash flows on a probability-weighted basis.
Discount rates
The Group used discount rates as at the date of initial recognition.
Insurance acquisition cash flows
The Group did not include an amount for insurance acquisition cash flows in the measurement of the
groups of insurance contracts recognised at the transition date.
18
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
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Notes to the Consolidated Financial Statements (Continued)
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149
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products
or services (business segment), or in providing products or services within a particular economic
environment (geographical segment), which is subject to risks and rewards that are different from
those of other segments.
Financial guarantee contracts and letters of credit issued
Financial guarantee contracts and letters of credit issued by the Group are credit insurance that
provides for specified payments to be made to reimburse the holder for a loss it incurs because a
specified debtor fails to make a payment when due under the original or modified terms of a debt
instrument. Such financial guarantee contracts and letters of credit issued are initially recognised at
fair value. Subsequently, they are measured at the higher of (a) the amount recognised as a provision
and (b) the amount initially recognised less, where appropriate, cumulative amortisation of initial
premium revenue received over the financial guarantee contracts or letters of credit issued.
New and amended IFRS Standards that are effective for the current year.
The following amendments and interpretations are effective for the Group effective 1 January 2023:
○ IFRS 17 ( including the June 2020 and December 2021 Amendments to IFRS 17 "Insurance
contracts”)
○ Amendments to IAS 1- Classification of liabilities as current or non-current
○ Amendments to IAS 1 and IFRS Practice Statement 2 – "Disclosure of Accounting Policies”
○ Amendments to IAS 12 Deferred Tax Relating to Assets and Liabilities Arising from a Single
Transaction
○ Amendments to IAS 8 – "Definition of Accounting Estimates”
The above standards and interpretations were reviewed by the Group’s management, but did not have
a significant effect on the consolidated financial statements of the Group except for IFRS 17 Insurance
Contracts.
New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new
and revised IFRS Standards that have been issued but are not yet effective:
The Group does not expect that the adoption of the Standards listed above will have a material impact
on the financial statements of the Group in future periods.
4.
4a. SIGNIFICANT ACCOUNTING ESTIMATES
The preparation of the Group’s consolidated financial statements requires management to make
estimates and judgments that affect the reported amount of assets and liabilities at the date of the
financial statements and the reported amount of income and expenses during the reporting year.
Management evaluates its estimates and judgements on an ongoing basis. Management bases its
estimates and judgments on historical experience and on various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates under different
assumptions or conditions. The following estimates and judgments are considered important to the
portrayal of the Group’s financial condition.
Significant increase of credit risk
As explained in Note 3, ECL are measured as an allowance equal to 12-month ECL for Stage 1 assets,
or lifetime ECL assets for Stage 2 or Stage 3 assets. An asset moves to Stage 2 when its credit risk has
increased significantly since initial recognition. In assessing whether the credit risk of an asset has
significantly increased, the Group takes into account qualitative and quantitative reasonable and
supportable forward-looking information (refer to Note 31 for more details).
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| New or revised standard or interpretation | Applicable to annual reporting periods beginning on or after |
| Amendment to IFRS 16- Lease Liability in a Sale and Leaseback | 1 January 2024 |
| Amendments to IAS 1- Non-current Liabilities with Covenants | 1 January 2024 |
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Establishing the number and relative weightings of forward-looking scenarios for each type
of product/market and determining the forward-looking information relevant to each
scenario
For treasury operations, the Bank calculates ECL on a financial asset based not only on the current
estimates of the credit quality of the counterparty/issuer at the reporting date, but also taking into
account possible deterioration of the financial condition due to the adverse macroeconomic factors of
the counterparty’s/issuer’s environment in the future. In particular, the level of ECL for treasury
operations is affected by the rating outlook (positive, stable, negative) assigned by international rating
agencies, which affects the probability of default.
For bank loans, the calculation of ECL takes into account the possible estimated effects of changes in
macroeconomic parameters on forecasted cash flows, migration of collective loans and collateral
coverage.
When measuring ECL the Group uses reasonable and supportable forward-looking information,
which is based on assumptions for the future movement of different economic drivers and how these
drivers will affect each other. Refer to Note 31 for more details.
The key inputs used for measuring ECL are:
○ Probability of default (“PD”);
○ Loss given default (“LGD”); and
○ Exposure at default (“EAD”).
Probability of default
PD constitutes a key input in measuring ECL. PD is an estimate of the likelihood of default over a given
time horizon, the calculation of which includes historical data, assumptions and expectations of future
conditions.
PD for treasury operations is determined according to the Default Study from international rating
agencies (S&P, Fitch, Moody's), which publish tabular data with the values of the probabilitie s of
default. The probabilities of default are maintained up to date and are updated on a periodic basis as
the default statistics are updated.
PD for individually assessed loans of corporate, small and medium businesses is estimated using an
internal rating model based on the quantitative and qualitative characteristics of the borrower. The
calculation of PD on loans assessed on a collective basis is carried out on the basis of historical data
using the migration matrices and roll-rates.
Loss Given Default
LGD is an estimate of the loss arising on default. It is based on the difference between the contractual
cash flows due and those that the lender would expect to receive, taking into account cash flows from
collateral and integral credit enhancements.
LGD for treasury operations is determined according to the Default Study data from international
rating agencies (S&P, Fitch and Moody’s) and depends on the type of debt on the financia
senior secured/unsecured, subordinated and sovereign. In addition, LGD may be adjusted if collateral
is provided for the asset, as well as if there are indications of impairment for the financial asset (Stage
2 or Stage 3).
LGD for collectively assessed loans is calculated based on an estimate of the recoverability of debt in
case of the pledged collateral sale with a discount period that corresponds to the pledged collateral
implementation terms.
Exposure at Default
EAD is an estimate of the exposure at a future default date, taking into account expected changes in
the exposure after the reporting date, including repayments of principal and interest, and expected
drawdowns on committed facilities. The Group’s modelling approach for EAD reflects expected
changes in the balance outstanding over the lifetime of the loan exposure that are permitted by the
current contractual terms, such as amortization profiles, early repayment or overpayment, changes in
utilization of undrawn commitments and credit mitigation actions taken before default. The Group
uses EAD models that reflect the characteristics of the portfolios.
Models and assumptions used
The Group uses various models and assumptions in measuring fair value of financial assets as well as
in estimating ECL. Judgement is applied in identifying the most appropriate model for each type of
asset, as well as for determining the assumptions used in these models, including assumptions that
relate to key drivers of credit risk. See Notes 5, 8, 9, 10, 11 and 31 for more details on allowances for
ECL and Note 34 for more details on fair value measurement.
The Group makes estimates and judgments, which are constantly analyzed based on statistical data,
actual and forecast information, as well as management experience, including expectations regarding
future events that are reasonable in current circumstances.
In order to reflect objectively the impact of the prevailing macroeconomic conditions and in
accordance with the recommendations of the International Accounting Standards Board, the Group
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December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
151
adjusted the main approaches to assessing the level of expected credit losses that have the most
significant effect on the amounts recorded in the consolidated financial statements for the year ended
31 December 2022:
○ The Group refined the approach of calculating macroeconomic parameters in the probability of
default rates of borrowers, as disclosed in Note 31. The impact of macroeconomic indicators is
assessed, which more accurately reflects the changing economic conditions and an updated
forecast of macroeconomic indicators is used based on the most relevant information.
In 2023, the allowances for ECL of financial assets in the consolidated financial statements have been
determined on the basis of existing economic and political conditions and available forward-looking
information.
The carrying amount of the allowance for ECL of loans to customers as at 31 December 2023 is
KZT 489,926 million (31 December 2022: KZT 422,388million).
Fair value measurement and valuation process
In estimating the fair value of a financial asset or a liability, the Group uses market-observable data to
the extent it is available. Where such Level 1 inputs are not available, the Group uses valuation models
to determine the fair value of its financial instruments. Refer to Note 34 for more details on fair value
measurement.
Taxation
Kazakhstan tax, currency and customs legislations are subject to varying interpretations and changes,
which can occur frequently. Management's interpretation of such legislation as applied to the
transactions and activity of the Group may be challenged by the relevant regional and state
authorities. Fiscal periods remain open to review by the authorities in respect of taxes for five calendar
years preceding the year of review.
As at 31 December 2023, management believes that its interpretation of the relevant legislation is
appropriate and that the Group's tax, currency and customs positions will be sustained. Significant
additional actual taxes, penalties and interest may be assessed following any challenges by the
relevant authorities, which could have a material impact on the Group’s reported net income.
4b.RESTATEMENTS
The consolidated statement of financial position as at 31 December 2022 and 1 January 2022 and the
corresponding consolidated statement of profit or loss for the year ended 31 December 2022 have
been amended due to the application of IFRS 17.
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* Retained earnings and other reserves as at 31 December 2022 amounted to KZT 2,055,775 million, taking into account
restatements due to the adoption of IFRS 17 and adjustments related to financial instruments measured at fair value
through profit or loss recorded below.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Balance under IFRS 4 | Recalculation | Balance under IFRS 17 | |
| Consolidated statement of financial position | 31 December 2022 | 31 December 2022 31 December 2022 | |
| Insurance contract assets | 53,233 | (49,139) | 4,094 |
| Reinsurance contract assets | - | 22,809 | 22,809 |
| Insurance contract liabilities | 292,344 | (69,036) | 223,308 |
| Reinsurance contract liabilities | - | 1,711 | 1,711 |
| Other assets | 160,097 | 2,297 | 162,394 |
| Other liabilities | 189,343 | 4,062 | 193,405 |
| Amounts due to customers | 10,487,615 | 24,433 | 10,512,048 |
| Retained earnings and other reserves | 1,954,767 | 14,797 | 1,969,564 |
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
152
In preparing the consolidated financial statements for the year ended 31 December 2023, the Group
carried out an inventory of its financial instruments. The inventory process identified financial
instruments measured at fair value through profit or loss that were previously restricted in use and
were incorrectly measured at cost. The Group revaluated these financial instruments and recognized
prior period adjustments. These financial assets measured at fair value through profit or loss are
classified as Level 2.
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Balance | Balance | ||
| under IFRS 4 | Recalculation | under IFRS 17 | |
| Consolidated statement of financial position | 1 January 2022 | 1 January 2022 | 1 January 2022 |
| Insurance contract assets | 54,111 | (50,794) | 3,317 |
| Reinsurance contract assets | - | 25,423 | 25,423 |
| Loans to customers | 5,872,228 | (402) | 5,871,826 |
| Insurance contract liabilities | 240,281 | (46,085) | 194,195 |
| Reinsurance contract liabilities - | 3,535 | 3,535 | |
| Other assets | 134,394 | 148 | 134,542 |
| Other liabilities | 155,147 | 15,283 | 170,430 |
| Retained earnings and other reserves | 1,614,824 | 1,642 | 1,616,466 |
| Balance under IFRS 4 | Recalculation | Balance under IFRS 17 | |
| Consolidated statement of profit and loss | Year ended 31 December 2022 | Year ended 31 December 2022 | Year ended 31 December 2022 |
| Interest income calculated using effective interest method | 1,220,639 | 4 | 1,220,643 |
| Interest expense | (577,445) | (737) | (578,182) |
| Expected credit loss expense | (106,778) | (151) | (106,929) |
| Fee and commission expense | (96,274) | 175 | (96,099) |
| Net gain on foreign exchange operations | 178,900 | (1,007) | 177,893 |
| Insurance underwriting income | 155,760 | 39,116 | 194,876 |
| Insurance claims incurred | (133,948) | 17,981 | (115,967) |
| Net reinsurance result | - | (51,278) | (51,278) |
| Operating expenses | (202,159) | 9,141 | (193,018) |
| Other expense | (2,166) | (4) | (2,170) |
| NET PROFIT | 553,752 | 13,240 | 566,992 |
18
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
153
Retained earnings and other
reserves64 1,616,466 83,724 1,700,190
The consolidated statement of profit or loss for the year ended 31 December 2021 has been
reclassified to conform to the presentation for the year ended 31 December 2022 because the
presentation of the current year report provides a clearer picture of the Group's financial
performance.
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| As previously reported | Adjustment | As restated | |
| As previously reported | Adjustment | As restated | |
| Consolidated statement of financial position | 31 December 2022 | 31 December 2022 31 December 2022 | |
| Financial assets at fair value | 342,168 | 107,763 | 449,931 |
| through profit or loss Deferred tax liability | 52,595 | 21,552 | 74,147 |
| Retained earnings and other reserves | 1,969,564 | 86,211 | 2,055,775 |
| As previously reported | Adjustment | As restated | |
| Consolidated statement of financial position | 1 January 2022 | 1 January 2022 | 1 January 2022 |
| Financial assets at fair value | 283,333 | 104,655 | 387,988 |
| through profit or loss Deferred tax liability | 50,469 | 20,931 | 71,400 |
| Consolidated statement of profit and loss | Year ended 31 December 2022 | Year ended 31 December 2022 | Year ended 31 December 2022 |
| Net gain/(loss) on financial assets and liabilities at fair value through profit or loss | (3,633) | 3,108 | (525) |
| Income tax expense | (105,097) | (621) | (105,718) |
| As previously reported | Adjustment | As restated | |
| Consolidated statement of profit and loss | Year ended 1 January 2022 | Year ended 1 January 2022 | Year ended 1 January 2022 |
| Net gain/(loss) on financial assets and liabilities at fair value through profit or loss | 13,035 | 1,687 | 14,722 |
| Income tax expense | (59,980) | (422) | (60,402) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
154
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise:
As at 31 December 2023 and 2022, cash and cash equivalents allowance for expected credit losses
comprised KZT 36 million and KZT 21 million, respectively.
TOTAL CASH AND CASH EQUIVALENTS 1,377,315 2,028,831
The movements in accumulated allowances for expected credit losses of cash and cash equivalents
were as follows:
Interest rates and currencies in which interest earning cash and cash equivalents are denominated are
as follows:
(42)
(28) 202
13 (181)
AT THE END OF THE YEAR (36) (21)
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December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| At the beginning of the year | Stage 1 | Stage 1 (21) |
| Correspondent accounts with Organization for Economic Co-operation and Development countries (the “OECD”) | 360,599 | 493,639 |
| based banks | ||
| Short-term deposits with NBRK | 350,310 | 769,907 |
| Cash on hand Correspondent accounts with NBRK | 314,055 176,766 | 274,961 236,507 |
| Short-term deposits with non-OECD based banks | 57,349 | 6,652 |
| Correspondent accounts with non-OECD based banks | 40,418 | 40,199 |
| Short-term deposits with Kazakhstan banks | ||
| (incl. loans under reverse repurchase agreements) | 39,052 | 17,152 |
| Correspondent accounts with Kazakhstan banks | 33,595 | 30,874 |
| Overnight deposits with non-OECD based banks | 5,171 | 20,138 |
| Short-term deposits with OECD based banks Overnight deposits with OECD based banks | - - | 46,266 92,536 |
| 31 December 2023 | 31 December 2022 | |||
| KZT | Foreign currencies | KZT | Foreign currencies | |
| Short-term deposits with NBRK | 14.8%-15.8% | - | 15.8% | 4.0%-4.5% |
| Short-term deposits with non-OECD based banks | - | 5.7%-12.0% | - | 11%-15.0% |
| Short-term deposits with Kazakhstan banks (incl. loans under reverse repurchase agreements) | 14.8%-17.8% | 3.6%-7.1% 14.8%-22.0% | - | |
| Overnight deposits with non-OECD based banks | - | 12.0% | - | 3.0%-13.0% |
| Short-term deposits with OECD based banks | - | - | - | 0.7% |
| Overnight deposits with OECD based banks | - | - | - | 2.5% |
| 31 December 2023 31 December 2023 | ||
| Changes in risk parameters | ||
| Foreign exchange differences and other movements |
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
155
Fair value of assets pledged and carrying amounts of loans under reverse repurchase agreements
included into short-term deposits with Kazakhstan banks as at 31 December 2023 and 2022 are as
follows:
As at 31 December 2023 and 2022, maturities of loans under reverse repurchase agreements are less
than one month.
39,052 38,951 17,152 16,708
6. OBLIGATORY RESERVES
Obligatory reserves comprise:
The obligatory reserves represent the minimum reserve deposits and cash on hand balances required
by the National Banks of the Republic of Kazakhstan, Kyrgyzstan Georgia, and Uzbekistan and used for
calculation of the minimum reserve requirements. As at 31 December 2023, obligatory reserves of the
Bank’s subsidiaries JSC Halyk Bank Georgia and JSCB Tenge Bank comprised KZT 10,811 million
(31 December 2022 – obligatory reserves of the Bank’s subsidiaries OJSC Halyk Bank Kyrgyzstan,
JSC Halyk Bank Georgia and JSCB Tenge Bank comprised KZT 24,991million).
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Cash and due from banks allocated to obligatory reserves | 2023 244,866 | 259,544 | ||
| Carrying amount | Fair value of | Carrying amount | Fair value of | |
| of loans | collateral | of loans | collateral | |
| Treasury bills of the Ministry of Finance of Kazakhstan | 17,585 | 17,583 | 1,711 | 1,623 |
| Corporate bonds | 10,766 | 10,788 | 7,815 | 7,331 |
| Treasury bills of the Ministry of Finance of Uzbekistan | 6,094 | 6,096 | - | - |
| Eurobonds of the foreign countries Bonds of Kazakhstan banks | 2,113 1,457 | 2,092 1,371 | - - | - - |
| Bonds of JSC Development Bank of | 669 | 657 | 1,317 | 1,294 |
| Kazakhstan Bonds of foreign financial | ||||
| organizations | 356 | 352 | - | - |
| Notes of NBRK Equity securities of Kazakhstan corporations | 12 - | 12 - | 6,216 93 | 6,367 93 |
| 31 December | 31 December 2023 | |
| TOTAL OBLIGATORY RESERVES | 244,866 | 259,544 |
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
156
7.FINANCIAL ASSETS AND LIABILITIES AT
FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value through profit or loss comprise:
Financial liabilities at fair value through profit or loss comprise:
Interest rates on financial assets at fair value through profit or loss are presented in the table below.
Interest rates in the table below are calculated as weighted average of the effective interest rates for
the respective financial assets:
As at 31 December 2023 and 2022, financial assets at fair value through profit or loss included
Treasury bills of the Ministry of Finance of Kazakhstan at fair value of KZT 12,210 million and
KZT 18,943 million, respectively, pledged under repurchase agreements with the other banks
(see Note 19). All repurchase agreements as at 31 December 2023 and 2022 matured before
18 January 2024 and 25 January 2023, respectively.
Derivative financial instruments 4,202 10,628
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| Financial assets held for trading: | ||
| Corporate bonds | 186,343 | 171,078 |
| Equity securities of foreign organizations | 149,224 | 115,571 |
| Treasury bills of the Ministry of Finance of Kazakhstan | 51,137 | 11,529 |
| Bonds of JSC Development Bank of Kazakhstan | 35,546 | 37,871 |
| Bonds of foreign organizations | 34,668 | 2,460 |
| Bonds of Kazakhstan banks | 33,676 | 9,250 |
| Eurobonds of foreign states | 32,650 | 27,743 |
| Derivative financial instruments | 23,836 | 11,736 |
| Bonds of foreign financial organizations | 23,716 | 18,590 |
| Equity securities of Kazakhstan corporations | 12,723 | 44,103 |
| NBRK notes | 5,843 | - |
| TOTAL FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS | 589,362 | 449,931 |
| 31 December 2023 | 31 December 2022 | |
| Corporate bonds | 12.7% | 11.4% |
| Treasury bills of the Ministry of Finance of Kazakhstan | 12.8% | 7.6% |
| Bonds of JSC Development Bank of Kazakhstan | 14.7% | 12.8% |
| Bonds of foreign organizations | 6.2% | 7.1% |
| Bonds of Kazakhstan banks | 13.6% | 12.2% |
| Eurobonds of foreign states | 4.8% | 4.7% |
| Bonds of foreign financial organizations | 12.0% | 10.7% |
| NBRK notes | 15.4% | - |
| 31 December 2023 31 December | 2022 | |
| Financial liabilities held for trading: |
18
Consolidated
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December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
157
As at 31 December 2023 and 2022, financial assets assessed at fair value through profit or loss
included Treasury bills of the Ministry of Finance of the Republic of Kazakhstan, JSC Development
Bank of Kazakhstan, JSC Industrial Development Fund and JSC Kazakhstan Sustainability Fund, JP
Morgan Securities PLC, CITIGROUP GLOBAL MARKETS LTD at fair value of KZT 188,100 million and
KZT 6,609 million, respectively, pledged as collateral under repurchase agreements with other banks
(see Note 19). All repurchase agreements as at 31 December 2023 and 2022 will mature before
17 November 2025 and 25 January 2023, respectively.
Derivative financial instruments comprise:
As at 31 December 2023 and 2022, the Group used quoted market prices from independent
information sources for all of its financial assets at fair value through profit or loss, except for
derivative financial instruments, which are valued using valuation models based on observable market
data.
31 December
2023
31 December
2022
Fair value Fair value
8. AMOUNTS DUE FROM CREDIT
INSTITUTIONS
Amounts due from credit institutions comprise:
Interest rates and maturities of amounts due from credit institutions are as follows:
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Notional amount | Asset | Liability | Notional amount | Asset | Liability | |
| Foreign currency contracts | ||||||
| Swaps | 789,753 | 23,487 | 4,029 | 473,979 | 10,455 | 9,288 |
| Spots | 78,676 | 326 | 173 | 34,212 | 1,281 | 1,244 |
| Forwards | 4,736 | 23 | - | 4,627 | - | 96 |
| 23,836 | 4,202 | 11,736 | 10,628 |
| 31 December 2023 | 31 December 2022 | |||
| Interest rate,% | Maturity,year | Interest rate,% | Maturity,year | |
| Deposit pledged as collateral | 1.8%-5.4% | 2024-2046 | 0.1%-2.5% | 2046 |
| Term deposits and restricted accounts | 1.0%-14.3% | 2024 | 0.3%-18.0% | 2022-2023 |
| Loans to credit institutions | 3.0%-9.1% | 2024-2027 | 2.0%-13.0% | 2022 |
| 31 December 2023 | 31 December 2022 | |
| Deposit pledged as collateral | 78,774 | 53,720 |
| Term deposits and restricted accounts | 51,367 | 35,121 |
| Loans to credit institutions | 42,013 | 47,159 |
| 172,154 | 136,000 | |
| Less - Allowance for expected credit losses | (400) | (345) |
| TOTAL AMOUNTS DUE FROM CREDIT INSTITUTIONS | 171,754 | 135,655 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
158
The movements in accumulated allowances for expected credit losses of amounts due from credit
institutions were as follows:
9. FINANCIAL ASSETS AT FAIR VALUE
THROUGH OTHER COMPREHENSIVE INCOME
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Stage 1 | Stage 2 | 31 December 2022 Total | |
| At the beginning of the year | (198) | - | (198) |
| Changes in risk parameters | 6 | (144) | (138) |
| Foreign exchange differences and other movements | (9) | - | (9) |
| At the end of the year | (201) (144) | (345) |
| 31 December 2023 | |||
| Stage 1 | Stage 2 | Total | |
| At the beginning of the year | (201) | (144) | (345) |
| Changes in risk parameters | (65) | 71 | 6 |
| Foreign exchange differences and other movements | (64) | 3 | (61) |
| AT THE END OF THE YEAR | (330) | (70) | (400) |
| Debt securities comprise: | ||
| 31 December 2023 | 31 December 2022 | |
| Treasury bills of the Ministry of Finance of Kazakhstan | 1,547,296 | 1,125,065 |
| Corporate bonds | 211,958 | 236,879 |
| Eurobonds of foreign states | 206,347 | 404,556 |
| Bonds of foreign organisations | 188,038 | 106,449 |
| Bonds of JSC Development Bank of Kazakhstan | 147,645 | 133,508 |
| Bonds of foreign financial organizations | 89,887 | 69,659 |
| Local municipal bonds | 10,756 | 10,578 |
| Bonds of Kazakhstan banks | 10,465 | 13,621 |
| Treasury bills of the Ministry of Finance of Uzbekistan | 3,880 | - |
| 2,416,272 | 2,100,315 | |
| Equity securities comprise: | ||
| 31 December 2023 | 31 December 2022 | |
| Equity securities of Kazakhstan corporations | 9,630 | 8,954 |
| 9,630 | 8,954 | |
| TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME | 2,425,902 | 2,109,269 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
159
As at 31 December 2023 and 2022, financial assets at fair value through other comprehensive income
included Treasury bills of the Ministry of Finance of Kazakhstan, JSC Development Bank of
Kazakhstan, JSC Industrial Development Fund, and JSC Kazakhstan Sustainability Fund at fair value
of KZT 188,100 million and KZT 6,609 million, respectively, pledged under repurchase agreements
with the other banks (see Note 19). All repurchase agreements as at 31 December 2023 and 2022 will
be matured before 17 November 2025 and 25 January 2023, respectively.
As at 31 December 2023 and 2022, the allowance for expected credit losses on financial assets at fair
value through other comprehensive income comprised KZT 2,206 million and KZT 1,218 million,
respectively (Note 10).
Interest rates and maturities of financial assets at fair value through other comprehensive income are
presented in the table below. Interest rates in the table below are calculated as weighted average of
the effective interest rates for the respective securities.
Treasury bills of the Ministry of
Finance of Uzbekistan 7.9% 2028-2029 - -
10. DEBT SECURITIES AT AMORTISED COST,
NET OF ALLOWANCE FOR EXPECTED CREDIT
LOSSES
Debt securities at amortised cost, net of allowances for expected credit losses comprise:
On 3 July 2023, the debt securities at amortized cost, net of allowances for expected credit losses of
the Ministry of Finance of the Republic of Kazakhstan with a coupon rate of 9.5% and a maturity of 5
years in the amount of KZT 250 billion were fully redeemed.
As at 31 December 2023 and 2022, the allowance for expected credit losses on debt securities at
amortised cost comprised KZT 656 million and KZT 350 million, respectively.
As at 31 December 2023 and 2022, debt securities at amortised cost, net of allowances for expected
credit losses included Treasury bills of the Ministry of Finance of Kazakhstan at fair value of
KZT 269,231 million and KZT 505,588 million, respectively, pledged under repurchase agreements
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Treasury bills of Uzbekistan Bonds of foreign organizations | 7,421 5,332 | 25,234 8,221 | ||
| Interest rate,% | Maturity,year | Interest rate,% | Maturity,year | |
| Treasury bills of the Ministry of | 5.7% | 2024-2045 | 4.8% 2023-2045 | |
| Finance of Kazakhstan | ||||
| Corporate bonds | 10.2% | 2024-2047 | 10.3% | 2023-2047 |
| Eurobonds of foreign states Bonds of foreign organisations | 3.8% 3.8% | 2024-2025 2024-2027 | 1.6% 2023-2025 2.2% 2023-2025 | |
| Bonds of JSC Development Bank of Kazakhstan | 6.3% | 2024-2032 | 4.9% 2024-2032 | |
| Bonds of foreign financial | 9.0% | 2024-2030 | 7.6% 2023-2026 | |
| organisations | ||||
| Local municipal bonds Bonds of Kazakhstan banks | 10.8% 11.9% | 2026 2024-2026 | 10.8% | 2026 11.7% 2023-2026 |
| 31 December 2023 | 31 December 2022 | |
| Treasury bills of the Ministry of Finance of Kazakhstan | 521,665 | 783,595 |
| Corporate bonds | 187,966 | 191,141 |
| Notes of National Bank of Georgia | 2,959 | 3,002 |
| Treasury bills of the Kyrgyz Republic | - | 3,494 |
| Notes of National Bank of the Kyrgyz Republic | - | 2,689 |
| Bonds of Kazakhstan banks | - | 1,713 |
| TOTAL DEBT SECURITIES AT AMORTISED COST, NET OF ALLOWANCE FOR EXPECTED CREDIT LOSSES | 725,343 | 1,019,089 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
160
with the other banks (see Note 19). All repurchase agreements as at 31 December 2023 and 2022
mature before 3 January 2024 and 25 January 2023, respectively.
Interest rates and maturities of debt securities at amortised cost, net of allowance for expected credit
losses are presented in the table below. Interest rates in the table below are calculated as weighted
average of the effective interest rates for the respective securities.
The movements in accumulated allowances for expected credit losses of debt securities at amortised
cost, net of allowances for expected credit losses and financial assets at fair value through other
comprehensive income were as follows:
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
* FS line “(Credit loss expense)/ Recovery of credit loss expense” in the consolidated statement of profit or loss is
comprised from “Changes in risk parameters”, “New originations or purchases of financial assets” and “Derecognition
of financial assets”.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Interest rate,% | Maturity,year | Interest rate,% | Maturity,year | |
| Treasury bills of the Ministry of Finance of Kazakhstan | 9.1% | 2026-2027 | 9.2% | 2023-2027 |
| Corporate bonds | 3.3% | 2024 | 3.3% | 2024 |
| Treasury bills of Uzbekistan | 16.4% | 2024 | 16.7% | 2023 |
| Bonds of foreign organizations | 3.4% | 2025 | 2.5% | 2025 |
| Notes of National Bank of Georgia | 9.9% | 2024-2028 | 9.6% | 2024-2028 |
| Treasury bills of the Kyrgyz Republic | - | - | 10.0% | 2023-2024 |
| Notes of National Bank of Kyrgyz Republic | - | - | 12.8% | 2023 |
| Bonds of Kazakhstan banks | - | - | 4.1% | 2023 |
| 31 December 2023 | 31 December 2022 | ||||||
| Stage 1 | Stage 3 | Total | Stage 1 Stage 2 | Stage 3 | Total | ||
| At the beginning of the year | (1,398) | (170) | (1,568) | (1,628) | - | (1,594) | (3,222) |
| Transfer to Stage 1 | - | - | - | (437) | 437 | - | - |
| Transfer to Stage 2 | - | - | - | 440 | (440) | - | - |
| Changes in risk parameters* | (1,212) | - | (1,212) | 207 | (134) | 177 | 250 |
| New originations or purchases of financial assets* | (465) | - | (465) | (208) | - | - | (208) |
| Derecognition of financial assets* | 108 | - | 108 | 205 | - | - | 205 |
| Disposal of subsidiaries | 20 | - | 20 | 1 | 137 | - | 138 |
| Write-offs | - | 170 | 170 | 23 | - | 1,246 | 1,269 |
| Foreign exchange differences and other movements | 85 | - | 85 | (1) | - | 1 | - |
| AT THE END OF THE YEAR | (2,862) | - | (2,862) | (1,398) | - | (170) | (1,568) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
161
11. LOANS TO CUSTOMERS
Loans to customers comprise:
The weighted average interest rate on loans to customers is calculated as interest income on loans to
customers divided by monthly average balances of loans to customers. For the year ended
31 December 2023, average interest rate on loans was 16.3% (for the year ended 31 December
2022 –14.2%).
As at 31 December 2023, the Group’s loan concentration to the ten largest borrowers was KZT
1,745,993 million, which comprised 18% of the Group’s total gross loan portfolio (as at 31 December
2022 – KZT 1,549,351 million, 19%) and 73% of the Group’s total equity (as at 31 December 2022 –
81%). As at 31 December 2023, the allowance for expected credit losses created against these loans
was KZT 17,489 million (as at 31 December 2022 – KZT 23,725 million).
The amount and type of collateral required depends on an assessment of the credit risk of the
counterparty. Guidelines are implemented regarding the acceptability of types of collateral and
valuation parameters.
The main types of collateral obtained are as follows:
○ For securities lending and reverse repurchase transactions, cash or securities;
○ For commercial lending, charges over real estate properties, equipment, guarantees of legal entities
with external rating not lower than ‘B’;
○ For retail lending, mortgages over residential properties, motor vehicles.
The Group obtained the following financial and non-financial assets during the year by taking
possession of collateral held as security against loans and advances and held at the year end. The
Group’s policy is to realise collateral on a timely basis. The primary purpose of collateral is to reduce
the potential credit loss in case of default. Management monitors the market value of collateral
obtained during its review of the adequacy of the allowance for expected credit losses.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| Purchased and originated loans to customers | 9,752,598 | 8,259,709 |
| Overdrafts | 22,200 | 20,581 |
| 9,774,798 | 8,280,290 | |
| Stage 1 | 8,992,052 | 7,549,514 |
| Stage 2 | 51,860 | 106,694 |
| Stage 3 | 700,518 | 586,787 |
| Purchased or originated credit-impaired assets (“POCI”) | 30,368 | 37,295 |
| TOTAL | 9,774,798 | 8,280,290 |
| Less – Allowance for expected credit losses | (489,926) | (422,388) |
| LOANS TO CUSTOMERS | 9,284,872 | 7,857,902 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
162
The table below summarizes the amount of loans secured by type of collateral, rather than the fair
value of the collateral itself:
Loans are granted to the following sectors:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
*These loans are collateralised by cash to be received in the future from the employees of companies within the
framework of salary projects.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| Loans collateralised by pledge of real estate or rights thereon | 2,392,964 | 2,085,862 |
| Consumer loans issued within the framework of payroll projects* | 1,802,732 | 1,456,127 |
| Loans collateralised by mixed types of collateral | 1,164,050 | 1,128,130 |
| Loans collateralised by guarantees | 1,093,407 | 894,676 |
| Loans collateralised by cash | 485,530 | 406,136 |
| Loans collateralised by pledge of corporate shares | 408,871 | 344,630 |
| Loans collateralised by pledge of equipment | 402,584 | 357,587 |
| Loans collateralised by pledge of vehicles | 356,266 | 337,480 |
| Loans collateralised by pledge of inventories | 232,602 | 218,538 |
| Loans collateralised by pledge of agricultural products | - | 183 |
| Unsecured loans | 1,435,792 | 1,050,941 |
| 9,774,798 | 8,280,290 | |
| Less – Allowance for expected credit losses | (489,926) | (422,388) |
| LOANS TO CUSTOMERS | 9,284,872 | 7,857,902 |
| 31 December 2023 | % | 31 December 2022 | % | |
| Retail loans: - consumer loans | 2,720,125 | 28% | 2,148,440 | 26% |
| - mortgage loans | 392,280 | 4% | 388,416 | 5% |
| 3,112,405 | 2,536,856 | |||
| Services | 940,224 | 10% | 796,329 | 10% |
| Wholesale trade | 828,977 | 8% | 649,849 | 8% |
| Retail trade | 635,295 | 6% | 528,459 | 6% |
| Energy | 509,210 | 5% | 320,085 | 4% |
| Financial services | 367,719 | 4% | 356,178 | 4% |
| Oil and gas | 360,489 | 4% | 401,939 | 5% |
| Metallurgy | 356,780 | 4% | 184,312 | 2% |
| Real estate | 333,018 | 3% | 337,180 | 4% |
| Transportation | 330,840 | 3% | 330,642 | 4% |
| Chemical industry | 326,310 | 3% | 327,215 | 4% |
| Food industry | 302,575 | 3% | 304,746 | 4% |
| Agriculture | 298,939 | 3% | 268,233 | 3% |
| Construction | 274,556 | 3% | 287,046 | 3% |
| Machinery | 271,588 | 3% | 221,028 | 3% |
| Communication | 155,574 | 2% | 92,976 | 1% |
| Mining | 125,184 | 1% | 145,260 | 2% |
| Hotel industry | 72,136 | 1% | 51,216 | 0% |
| Light industry | 64,007 | 1% | 53,278 | 1% |
| Other | 108,972 | 1% | 87,463 | 1% |
| 9,774,798 | 100% | 8,280,290 | 100% |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
163
Restructured and modified loans to customers
The Bank derecognises a financial asset, such as a loan to a customer, if the terms of the contract are
renegotiated in such a way that it effectively becomes a new loan, and the difference is recognized as
a gain or loss on derecognition before an impairment loss is recognized. On initial recognition, loans
to customers are classified in Stage 1 for the purpose of estimating expected credit losses, unless the
loan originated is considered POCI. If the modification does not result in a significant change in cash
flows, then derecognition does not occur. No material modification gain/(loss) of loans to customers
was recognized in 2023 and 2022.
As at 31 December 2023, accrued interest on loans comprised KZT 213,240 million (31 December
2022 – KZT 178,222 million).
During the years ended 31 December 2023 and 2022, the Group received financial and non-financial
assets by taking possession of collateral it held as security. As at 31 December 2023 and 2022, such
assets of KZT 22,910 million and KZT 4,032 million, respectively, are included in assets classified as
held for sale.
As at 31 December 2023 and 2022, loans to customers included loans of KZT 328,102 million and
KZT 273,204 million, respectively, which terms were renegotiated. Otherwise, these loans would be
past due.
The following is a reconciliation of the gross carrying amounts at the beginning and end of year: 31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| AT THE BEGINNING OF THE YEAR | 7,549,514 | 106,694 | 586,787 | 37,295 | 8,280,290 |
| Transfer to Stage 1 | 69,859 | (32,039) | (37,820) | - | - |
| Transfer to Stage 2 | (105,912) | 112,093 | (6,181) | - | - |
| Transfer to Stage 3 | (342,347) | (108,555) | 450,902 | - | - |
| New originations or purchases of financial assets | 8,151,453 | - | - | - | 8,151,453 |
| Assets derecognised or repaid | (3,922,697) | (11,348) | (150,225) | (1,599) (4,085,869) | |
| Write-offs | - | - | (42,970) | (204) | (43,174) |
| Changes in the gross value of financial assets* | (2,363,817) | (14,714) | (87,169) | (5,124) (2,470,824) | |
| Disposal of subsidiaries | (44,001) | (271) | (12,806) | - | (57,078) |
| AT THE END OF THE YEAR | 8,992,052 | 51,860 | 700,518 | 30,368 | 9,774,798 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
164
31 December
2023
31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Corporate Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Retail Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| AT THE BEGINNING OF THE YEAR | 4,046,565 | 72,288 | 302,658 | 27,969 4,449,480 | AT THE BEGINNING OF THE YEAR | 2,354,692 | 15,253 | 163,659 | 3,252 | 2,536,856 | ||
| Transfer to Stage 1 | 12,137 | (1,006) | (11,131) | - | - | Transfer to Stage 1 | 37,109 | (19,105) | (18,004) | - | - | |
| Transfer to Stage 2 | (12,552) | 12,552 | - | - | - | Transfer to Stage 2 | (52,774) | 57,496 | (4,722) | - | - | |
| Transfer to Stage 3 | (208,546) | (58,791) | 267,337 | - | - | Transfer to Stage 3 | (86,330) | (33,972) | 120,302 | - | - | |
| New originations or purchases of financial assets | 4,462,136 | - | - | - | 4,462,136 | New originations or purchases of financial assets | 1,979,276 | - | - | - | 1,979,276 | |
| Assets derecognised or repaid | (2,530,102) | (3,826) | (59,213) | (1,113) (2,594,254) | Assets derecognised or repaid | (662,894) | (1,495) | (51,285) | (81) | (715,755) | ||
| Write-offs | - | - | (419) | (204) | (623) | Write-offs | - | - | (33,001) | - | (33,001) | |
| Changes in the gross value of financial assets* | (1,140,687) | (7,910) | (109,042) | (2,284) | (1,259,923) | Changes in the gross value of financial assets* | (665,135) | 2,849 | 22,334 | (1,025) | (640,977) | |
| Disposal of subsidiaries | (8,078) | - | (5,164) | (13,242) | Disposal of subsidiaries | (12,985) | (60) | (949) | - | (13,994) | ||
| AT THE END OF THE YEAR | 4,620,873 | 13,307 | 385,026 | 24,368 | 5,043,574 | AT THE END OF THE YEAR | 2,890,959 | 20,966 | 198,334 | 2,146 | 3,112,405 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
165
31 December
2023
31 December
2022
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| SME Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||
| AT THE BEGINNING OF THE YEAR | 1,148,257 | 19,153 | 120,470 | 6,074 | 1,293,954 | AT THE BEGINNING OF THE YEAR | 5,469,752 | 245,157 | 502,058 | 33,293 | 6,250,260 | |
| Transfer to Stage 1 | 20,613 | (11,928) | (8,685) | - | - | Transfer to Stage 1 | 119,859 | (79,334) | (40,525) | - | - | |
| Transfer to Stage 2 | (40,586) | 42,045 | (1,459) | - | - | Transfer to Stage 2 | (168,158) | 178,398 | (10,240) | - | - | |
| Transfer to Stage 3 | (47,471) | (15,792) | 63,263 | - | - | Transfer to Stage 3 | (280,560) | (127,720) | 408,280 | - | - | |
| New originations or purchases of financial assets | 1,710,041 | - | - | - | 1,710,041 | New originations or purchases of financial assets | 6,473,557 | - | - | 14,180 | 6,487,737 | |
| Assets derecognised or repaid | (729,701) | (6,027) | (39,727) | (405) | (775,860) | Assets derecognised or repaid | (2,712,559) | (65,294) | (152,482) | (1,963) (2,932,298) | ||
| Write-offs | - | - | (9,550) | - | (9,550) | Write-offs | - | - | (42,021) | (725) | (42,746) | |
| Changes in the gross value of financial assets* | (557,995) | (9,653) | (461) | (1,815) | (569,924) | Changes in the gross value of financial assets* | (1,300,954) | (29,038) | (53,669) | (7,490) | (1,391,151) | |
| Disposal of subsidiaries | (22,938) | (211) | (6,693) | - | (29,842) | Disposal of subsidiaries | (51,423) | (15,475) | (24,614) | - | (91,512) | |
| AT THE END OF THE YEAR | 1,480,220 | 17,587 | 117,158 | 3,854 | 1,618,819 | AT THE END OF THE YEAR | 7,549,514 | 106,694 | 586,787 | 37,295 | 8,280,290 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
166
31 December
2022
31 December
2022
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Corporate Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Retail Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| AT THE BEGINNING OF THE YEAR | 2,834,605 | 197,214 | 234,273 | 26,974 | 3,293,066 | AT THE BEGINNING OF THE YEAR | 1,758,678 | 11,633 | 141,870 | - | 1,912,181 | |
| Transfer to Stage 1 | 75,274 | (55,939) | (19,335) | - | - | Transfer to Stage 1 | 26,033 | (14,718) | (11,315) | - | - | |
| Transfer to Stage 2 | (82,793) | 84,594 | (1,801) | - | - | Transfer to Stage 2 | (43,093) | 46,965 | (3,872) | - | - | |
| Transfer to Stage 3 | (152,224) | (75,562) | 227,786 | - | - | Transfer to Stage 3 | (77,583) | (25,457) | 103,040 | - | - | |
| New originations or purchases of financial assets | 3,433,144 | - | - | 4,079 | 3,437,223 | New originations or purchases of financial assets | 1,700,680 | - | - | 5,450 | 1,706,130 | |
| Assets derecognised or repaid | (1,742,842) | (45,998) | (70,675) | (606) | (1,860,121) | Assets derecognised or repaid | (447,297) | (2,221) | (48,284) | - | (497,802) | |
| Write-offs | - | - | (777) | - | (777) | Write-offs | - | - | (25,065) | - | (25,065) | |
| Changes in the gross value of financial assets* | (317,595) | (25,470) | (64,055) | (2,478) | (409,598) | Changes in the gross value of financial assets* | (532,855) | 2,805 | 17,998 | (2,198) | (514,250) | |
| Disposal of subsidiaries | (1,004) | (6,551) | (2,758) | - | (10,313) | Disposal of subsidiaries | (29,871) | (3,754) | (10,713) | - | (44,338) | |
| AT THE END OF THE YEAR | 4,046,565 | 72,288 | 302,658 | 27,969 4,449,480 | AT THE END OF THE YEAR | 2,354,692 | 15,253 | 163,659 | 3,252 | 2,536,856 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
167
31 December
2022
The movements in accumulated allowances for expected credit losses of loans to customers were as
follows: 31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* Changes in the gross value of financial assets includes changes in gross carrying amount associated
with partial repayment of debt, accrual of interest income and foreign exchange differences
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| SME Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| AT THE BEGINNING OF THE YEAR | 876,469 | 36,310 | 125,915 | 6,319 | 1,045,013 |
| Transfer to Stage 1 | 18,552 | (8,677) | (9,875) | - | - |
| Transfer to Stage 2 | (42,272) | 46,839 | (4,567) | - | - |
| Transfer to Stage 3 | (50,753) | (26,701) | 77,454 | - | - |
| New originations or purchases of financial assets | 1,339,733 | - | 4,651 | 1,344,384 | |
| Assets derecognised or repaid | (522,420) | (17,075) | (33,523) | (1,357) | (574,375) |
| Write-offs | - | - | (16,179) | (725) | (16,904) |
| Changes in the gross value of financial assets* | (450,504) | (6,373) | (7,612) | (2,814) | (467,303) |
| Disposal of subsidiaries | (20,548) | (5,170) | (11,143) | - | (36,861) |
| AT THE END OF THE YEAR | 1,148,257 | 19,153 | 120,470 | 6,074 | 1,293,954 |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| AT THE BEGINNING OF THE YEAR | (113,665) | (17,767) | (269,840) | (21,116) | (422,388) |
| Transfer to Stage 1 | (22,216) | 5,356 | 16,860 | - | - |
| Transfer to Stage 2 | 4,729 | (7,053) | 2,324 | - | - |
| Transfer to Stage 3 | 15,074 | 20,332 | (35,406) | - | - |
| Changes in risk parameters* | 44,670 | (9,234) | (176,425) | 16,887 | (124,102) |
| New originations or purchases of financial assets* | (99,959) | - | - | - | (99,959) |
| Derecognition of financial assets*/** | 47,400 | 881 | 83,904 | 2,982 | 135,167 |
| Recoveries of allowances on previously written-off assets | (420) | - | (17,215) | (12,231) | (29,866) |
| Write-offs | - | - | 42,970 | 204 | 43,174 |
| Disposal of subsidiaries | 1,836 | 89 | 2,226 | - | 4,151 |
| Foreign exchange differences and other movements | 402 | 34 | 2,947 | 514 | 3,897 |
| AT THE END OF THE YEAR | (122,149) | (7,362) | (347,655) | (12,760) | (489,926) |
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* Changes in the gross value of financial assets includes changes in gross carrying amount associated
with partial repayment of debt, accrual of interest income and foreign exchange differences
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
168
31 December
2023
31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Corporate Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| AT THE BEGINNING OF THE YEAR | (26,828) | (13,277) | (138,666) | (19,280) | (198,051) |
| Transfer to Stage 1 | (5,842) | 32 | 5,810 | - | - |
| Transfer to Stage 2 | 17 | (17) | - | - | - |
| Transfer to Stage 3 | 5,277 | 10,482 | (15,759) | - | - |
| Changes in risk parameters* | 7,328 | (530) | (70,460) | 15,961 | (47,701) |
| New originations or purchases of financial assets* | (21,614) | - | - | - | (21,614) |
| Derecognition of financial assets*/** | 19,454 | 297 | 28,834 | 2,708 | 51,293 |
| Recoveries of allowances on previously written-off assets | (243) | - | (9,140) | (11,878) | (21,261) |
| Write-offs | - | - | 419 | 204 | 623 |
| Disposal of subsidiaries | 745 | - | 747 | - | 1,492 |
| Foreign exchange differences and other movements | 145 | 3 | 3,405 | 515 | 4,068 |
| AT THE END OF THE YEAR | (21,561) | (3,010) | (194,810) | (11,770) | (231,151) |
| Retail Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| AT THE BEGINNING OF THE YEAR | (74,364) | (3,108) | (93,919) | (125) | (171,516) |
| Transfer to Stage 1 | (13,179) | 3,815 | 9,364 | - | - |
| Transfer to Stage 2 | 3,536 | (5,667) | 2,131 | - | - |
| Transfer to Stage 3 | 8,361 | 7,604 | (15,965) | - | - |
| Changes in risk parameters* | 32,887 | (6,270) | (83,659) | 128 | (56,914) |
| New originations or purchases of financial assets* | (60,306) | - | - | - | (60,306) |
| Derecognition of financial assets*/** | 21,472 | 227 | 38,342 | 1 | 60,042 |
| Recoveries of allowances on previously written-off assets | - | - | (5,719) | (173) | (5,892) |
| Write-offs | - | - | 33,001 | - | 33,001 |
| Disposal of subsidiaries | 390 | 70 | 266 | - | 726 |
| Foreign exchange differences and other movements | (26) | 3 | (174) | - | (197) |
| AT THE END OF THE YEAR | (81,229) | (3,326) | (116,332) | (169) | (201,056) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
169
31 December
2023
31 December
2022
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| SME Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||
| AT THE BEGINNING OF THE YEAR | (12,473) | (1,382) | (37,255) | (1,711) | (52,821) | AT THE BEGINNING OF THE YEAR | (69,846) | (48,369) | (240,242) | (19,575) | (378,032) | |
| Transfer to Stage 1 | (3,195) | 1,509 | 1,686 | - | - | Transfer to Stage 1 | (12,769) | 4,042 | 8,727 | - | - | |
| Transfer to Stage 2 | 1,176 | (1,369) | 193 | - | - | Transfer to Stage 2 | 3,522 | (5,226) | 1,704 | - | - | |
| Transfer to Stage 3 | 1,436 | 2,246 | (3,682) | - | - | Transfer to Stage 3 | 4,657 | 33,185 | (37,842) | - | - | |
| Changes in risk parameters* | 4,455 | (2,434) | (22,306) | 798 | (19,487) | Changes in risk parameters* | 13,156 | (19,588) | (87,678) | 275 | (93,835) | |
| New originations or purchases of financial assets* | (18,039) | - | - | - | (18,039) | New originations or purchases of financial assets* | (79,156) | - | - | - | (79,156) | |
| Derecognition of financial assets*/** | 6,474 | 357 | 16,728 | 273 | 23,832 | Derecognition of financial assets*/** | 26,340 | 16,001 | 39,426 | 2,327 | 84,094 | |
| Recoveries of allowances on previously written-off assets | (177) | - | (2,356) | (180) | (2,713) | Recoveries of allowances on previously written-off assets | - | - | (12,006) | (3,109) | (15,115) | |
| Write-offs | - | - | 9,550 | - | 9,550 | Write-offs | - | - | 42,021 | 725 | 42,746 | |
| Disposal of subsidiaries | 701 | 19 | 1,213 | - | 1,933 | Disposal of subsidiaries | 3,037 | 2,584 | 18,264 | - | 23,885 | |
| Foreign exchange differences and other movements | 283 | 28 | (284) | (1) | 26 | Foreign exchange differences and other movements | (2,606) | (396) | (2,214) | (1,759) | (6,975) | |
| AT THE END OF THE YEAR | (19,359) | (1,026) | (36,513) | (821) | (57,719) | AT THE END OF THE YEAR | (113,665) | (17,767) | (269,840) | (21,116) | (422,388) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
170
31 December
2022
31 December
2022
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Corporate Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | Retail Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |
| AT THE BEGINNING OF THE YEAR | (5,786) | (42,199) | (127,195) | (16,698) | (191,878) | AT THE BEGINNING OF THE YEAR | (54,991) | (4,332) | (61,020) | - | (120,343) | |
| Transfer to Stage 1 | (2,512) | 569 | 1,943 | - | - | Transfer to Stage 1 | (8,807) | 2,715 | 6,092 | - | - | |
| Transfer to Stage 2 | 407 | (424) | 17 | - | - | Transfer to Stage 2 | 2,836 | (4,320) | 1,484 | - | - | |
| Transfer to Stage 3 | 614 | 24,925 | (25,539) | - | - | Transfer to Stage 3 | 6,510 | 5,664 | (12,174) | - | - | |
| Changes in risk parameters* | (8,519) | (10,144) | (12,374) | 540 | (30,497) | Changes in risk parameters* | 15,736 | (3,846) | (59,047) | (125) | (47,282) | |
| New originations or purchases of financial assets* | (16,079) | - | - | - | (16,079) | New originations or purchases of financial assets* | (50,125) | - | - | - | (50,125) | |
| Derecognition of financial assets*/** | 6,904 | 13,889 | 27,954 | 1,064 | 49,811 | Derecognition of financial assets*/** | 14,323 | 322 | 7,029 | - | 21,674 | |
| Recoveries of allowances on previously written-off assets | - | - | (5,896) | (2,507) | (8,403) | Recoveries of allowances on previously written-off assets | - | - | (5,002) | - | (5,002) | |
| Write-offs | - | - | 777 | - | 777 | Write-offs | - | - | 25,065 | - | 25,065 | |
| Disposal of subsidiaries | 111 | 554 | 3,101 | - | 3,766 | Disposal of subsidiaries | 380 | 707 | 4,069 | - | 5,156 | |
| Foreign exchange differences and other movements | (1,968) | (447) | (1,454) | (1,679) | (5,548) | Foreign exchange differences and other movements | (226) | (18) | (415) | - | (659) | |
| AT THE END OF THE YEAR | (26,828) | (13,277) | (138,666) | (19,280) | (198,051) | AT THE END OF THE YEAR | (74,364) | (3,108) | (93,919) | (125) | (171,516) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
171
31 December
2022
During the years ended 31 December 2023 and 2022, the Group has written off loans of
KZT 43,174 million and KZT 42,746 million, respectively, which allow the writing off loans without
being considered forgiveness of the loan for tax purpose and are therefore not subject to corporate
income tax.
Allowance for expected credit losses and provisions
For the year ended 31 December 2023, credit loss expense on loans to customers comprised
KZT 88,894 million (2022 year: credit loss expense on loans to customers comprised KZT 88,897
million).
Internal rating model for loans to customers
Loans to customers are classified based on internal assessments and other analytical procedures.
The respective business units classify loans according to their risk and the exposure that they
potentially present to the Group, and this classification is verified by the risk management function.
The Bank and its subsidiaries are using an internal rating model to classify loans in different risk
categories. The model assists to assess the risk category based on a borrowers’ financial
performance, credit history, quality of accounts receivable, liquidity of the borrower, market risks
relating to the borrower, industry of the borrower and other factors. At the same time, the rating is an
auxiliary criterion in assessing the level of increase in credit risk and staging. In addition to the rating,
the bank takes into account such factors borrowers’ credit history and financial performance,
changes in the value of collateral and the quality of financial guarantees. Periodically, the required
information is inputted into the model by credit analysts. Information input into the system and the
estimate of the allowance for loan loss is verified by the risk management department.
The following classifications are used by the rating model:
○ Rating score 1 - superior loan rating, minimal credit risk;
○ Rating score 2 - very high quality of loan, very low credit risk;
○ Rating score 3 - high quality of loan, low credit risk;
○ Rating score 4 - satisfactory quality of loan, insignificant risk;
○ Rating score 5 - credit risk can increase at economic variation;
○ Rating score 6 - high risk at economic variation;
○ Rating score 7 - high risk of default, in the absence of other factors mentioned above, paying
capacity of the borrower depends on favorable economic circumstances;
○ Rating score 8 - 10 - very high risk of default/default.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* FS line “(Credit loss expense)/ Recovery of credit loss expense” in the consolidated statement of profit or loss is
comprised from “Changes in risk parameters”, “New originations or purchases of financial assets” and “Derecognition
of financial assets”.
*/** Derecognition of financial assets includes changes in the amount of allowances for expected credit losses on fully
repaid loans to customers.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| SME Business | Stage 1 | Stage 2 | Stage 3 | POCI | Total |
| AT THE BEGINNING OF THE YEAR | (9,069) | (1,838) | (52,027) | (2,877) | (65,811) |
| Transfer to Stage 1 | (1,450) | 758 | 692 | - | - |
| Transfer to Stage 2 | 279 | (482) | 203 | - | - |
| Transfer to Stage 3 | (2,467) | 2,596 | (129) | - | - |
| Changes in risk parameters* | 5,939 | (5,598) | (16,257) | (140) | (16,056) |
| New originations or purchases of financial assets* | (12,952) | - | - | - | (12,952) |
| Derecognition of financial assets*/** | 5,113 | 1,790 | 4,443 | 1,263 | 12,609 |
| Recoveries of allowances on previously written-off assets | - | - | (1,108) | (602) | (1,710) |
| Write-offs | - | - | 16,179 | 725 | 16,904 |
| Disposal of subsidiaries | 2,546 | 1,323 | 11,094 | - | 14,963 |
| Foreign exchange differences and other movements | (412) | 69 | (345) | (80) | (768) |
| AT THE END OF THE YEAR | (12,473) | (1,382) | (37,255) | (1,711) | (52,821) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
172
Pools of homogeneous loans – loans to customers are included in groups of loans with similar credit
risk characteristics (i.e. the characteristics include sector of the economy, borrower activities, type of
loan program, level of defaults, internal ratings and other factors). Pools of homogeneous loans
include assets that have been assessed collectively.
An analysis of the Group’s credit risk exposure per class of financial asset, internal rating and “stage”
without taking into account the effects of any collateral or other credit enhancements is provided in
the following table. Unless specifically indicated, for financial assets, the amounts in the table
represent gross carrying amounts.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Stage 1 | Stage 2 | Stage 3 | |||
| Rating score | 12-month ECL | Lifetime ECL | Lifetime ECL | POCI | Total |
| 1-3 | - | - | - | - | - |
| 4 | 1,749,142 | - | - | - | 1,749,142 |
| 5 | 2,623,093 | 1,866 | 5,848 | 10,516 | 2,641,323 |
| 6 | 214,067 | 11,283 | 232,656 | 4,834 | 462,840 |
| 7 | - | - | 54,889 | 610 | 55,499 |
| 8-10 | - | - | 91,632 | 8,408 | 100,040 |
| Loans to corporate customers that are individually assessed for impairment | 4,586,302 | 13,149 | 385,025 | 24,368 | 5,008,844 |
| Loans to SME customers and retail business that are individually assessed for impairment | 852,628 | 12,226 | 71,803 | 4,441 | 941,098 |
| Loans to customers that are collectively assessed for impairment | 3,553,122 | 26,485 | 243,690 | 1,559 | 3,824,856 |
| 8,992,052 | 51,860 | 700,518 | 30,368 | 9,774,798 | |
| Less – Allowance for expected credit losses | (122,149) | (7,362) | (347,655) | (12,760) | (489,926) |
| LOANS TO CUSTOMERS | 8,869,903 | 44,498 | 352,863 | 17,608 | 9,284,872 |
173
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)31 December
2022
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Stage 1 | Stage 2 | Stage 3 | |||
| Rating score | 12-month ECL | Lifetime ECL | Lifetime ECL | POCI | Total |
| 1-3 | - | - | - | - | - |
| 4 | 1,779,631 | - | - | - | 1,779,631 |
| 5 | 1,914,670 | 28,800 | 28,756 | 9,787 | 1,982,013 |
| 6 | 323,860 | 43,457 | 128,925 | 6,769 | 503,011 |
| 7 | - | 2,622 | 52,432 | 334 | 55,388 |
| 8-10 | - | - | 101,516 | 11,079 | 112,595 |
| Loans to corporate customers that are individually assessed for impairment | 4,018,161 | 74,879 | 311,629 | 27,969 | 4,432,638 |
| Loans to SME customers and retail business that are individually assessed for impairment | 640,447 | 12,185 | 65,361 | 7,267 | 725,260 |
| Loans to customers that are collectively assessed for impairment | 2,890,906 | 19,630 | 209,797 | 2,059 | 3,122,392 |
| 7,549,514 | 106,694 | 586,787 | 37,295 | 8,280,290 | |
| Less – Allowance for expected credit losses | (113,665) | (17,767) | (269,840) | (21,116) | (422,388) |
| LOANS TO CUSTOMERS | 7,435,849 | 88,927 | 316,947 | 16,179 | 7,857,902 |
174
Analysis by credit quality of loans to retail business and SME customers that are collectively and
individually assessed for impairment as at 31 December 2023 and 2022 is as follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| As at 31 December 2023 | Gross loans | Allowances for expected credit losses | Net loans |
| Loans to retail business | |||
| Not past due | 2,862,892 | (88,290) | 2,774,602 |
| Overdue: | |||
| up to 30 days | 64,459 | (9,445) | 55,014 |
| 31 to 60 days | 18,532 | (3,744) | 14,788 |
| 61 to 90 days | 12,976 | (3,090) | 9,886 |
| 91 to 180 days | 26,141 | (21,803) | 4,338 |
| over 180 days | 101,337 | (70,547) | 30,790 |
| Loans to retail business that are collectively and individually assessed for impairment | 3,086,337 | (196,919) | 2,889,418 |
| Loans to SME customers | |||
| Not past due | 1,526,304 | (26,208) | 1,500,096 |
| Overdue: up to 30 days | 20,800 | (1,413) | 19,387 |
| 31 to 60 days | 10,022 | (1,599) | 8,423 |
| 61 to 90 days | 3,530 | (1,429) | 2,101 |
| 91 to 180 days | 11,011 | (7,095) | 3,916 |
| over 180 days | 47,152 | (19,975) | 27,177 |
| Loans to SME customers that are collectively and individually assessed for impairment | 1,618,819 | (57,719) | 1,561,100 |
| Loans to SME customers and retail business that are collectively and individually assessed for impairment | 4,705,156 | (254,638) | 4,450,518 |
| Loans to corporate customers that are collectively and individually assessed for impairment | 5,043,574 | (231,151) | 4,812,423 |
| Loans related to card transactions | 26,068 | (4,137) | 21,931 |
| Loans to customers | 9,774,798 | (489,926) | 9,284,872 |
| As at 31 December 2022 | Gross loans | Allowances for expected credit losses | Net loans |
| Loans to retail business Not past due | 2,332,737 | (81,822) | 2,250,915 |
| Overdue: up to 30 days | 59,894 | (9,656) | 50,238 |
| 31 to 60 days | 15,049 | (3,700) | 11,349 |
| 61 to 90 days | 10,599 | (3,094) | 7,505 |
| 91 to 180 days | 21,264 | (15,956) | 5,308 |
| over 180 days | 73,880 | (53,657) | 20,223 |
| Loans to retail business that are collectively and individually assessed for impairment | 2,513,423 | (167,885) | 2,345,538 |
| Loans to SME customers Not past due | 1,198,007 | (22,547) | 1,175,460 |
| Overdue: up to 30 days | 21,747 | (1,248) | 20,499 |
| 31 to 60 days | 13,202 | (3,682) | 9,520 |
| 61 to 90 days | 9,603 | (4,078) | 5,525 |
| 91 to 180 days | 5,661 | (2,535) | 3,126 |
| over 180 days | 45,734 | (18,731) | 27,003 |
| Loans to SME customers that are collectively and individually assessed for impairment | 1,293,954 | (52,821) | 1,241,133 |
| Loans to SME customers and retail business that are collectively and individually assessed for impairment | 3,807,377 | (220,706) | 3,586,671 |
| Loans to corporate customers that are collectively and individually assessed for impairment | 4,449,480 | (198,051) | 4,251,429 |
| Loans related to card transactions | 23,433 | (3,631) | 19,802 |
| Loans to customers | 8,280,290 | (422,388) | 7,857,902 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
175
12. INVESTMENT PROPERTY
During the years ended 31 December 2023 and 2022, the Group foreclosed collateral it held as a
security for loans to customers. As a result, the Group received investment property of KZT 16,449
million and KZT 3,792 million, respectively.
As at 31 December 2023 and 2022, there was no investment property that was pledged as collateral
for liabilities.
As at 31 December 2023 and 2022, other income includes income in the amount of KZT 2,534 million
and KZT 2,107 million, respectively, from the rental of investment real estate.
Operating expenses arising from the investment property that generated rental income during the
years ended 31 December 2023 and 2022 were KZT 1,280 million and KZT 2,107 million, respectively.
Investment property owned by the Group was revalued by independent appraisers as at 31 December
2023 and 2022. The fair value of the investment property was estimated based on the income
approach and the comparative approach. When estimating the fair value of the properties, their
current use is considered the best use and the most effective. There has been no change to the
valuation technique during the year. This revaluation resulted in recognition of a revaluation gain in the
consolidated
statement
of
profit
or
loss
for
the
years
ended
31
December
2023
and
31 December 2022 – KZT 58 million and KZT 5,410 million, respectively.
As at 31 December 2023 and 2022, the fair value measurements of the Group’s investment property
of KZT 47,326 million and KZT 35,541 million, respectively, are categorised into Level 3 (description
of measurement hierarchy is disclosed in Note 36).
13. COMMERCIAL PROPERTY
During the years ended 31 December 2023 and 2022, the Group foreclosed collateral it held as a
security for loans to customers. As a result, the Group received commercial property of KZT 19,122
million and KZT 22,631 million, respectively.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 2023 | 2022 | |
| As at 1 January | 35,541 | 28,007 |
| Additions | 16,449 | 3,792 |
| Disposals | (5,393) | (8,565) |
| Transferred to/from commercial property | 657 | 3,998 |
| Transferred from property and equipment | 37 | 2,766 |
| Gain on revaluation of investment property | 58 | 5,410 |
| Translation differences | (23) | 133 |
| As at 31 December | 47,326 | 35,541 |
| 2023 | 2022 | |
| As at 1 January | 76,538 | 92,412 |
| Additions | 19,122 | 22,631 |
| Sale of property | (23,160) | (39,296) |
| Capitalised expenses | 3,039 | 4,789 |
| Transfer/reclassification to investment property | (657) | (3,998) |
| As at 31 December | 74,882 | 76,538 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
176
14. PROPERTY AND EQUIPMENT AND
INTANGIBLE ASSETS
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| The movements in property and equipment are as follows: | Buildings and construction | Vehicles | Computers and banking equipment | Construction in progress | Other | Right-of-use assets | Intangible assets | Total |
| REVALUED/INITIAL COST: | ||||||||
| 31 DECEMBER 2022 | 136,378 | 5,042 | 55,292 | 4,136 | 29,794 | 9,158 | 32,030 | 271,830 |
| Additions | 363 | 1,707 | 9,677 | 22,759 | 4,410 | 2,509 | 4,071 | 45,496 |
| Disposals | (601) | (114) | (2,297) | (6) | (854) | (2,580) | (316) | (6,768) |
| Revaluation | 12 | - | - | - | - | - | - | 12 |
| Reclassification to assets classified as held for sale | (3,138) | (31) | (862) | - | (1,665) | (92) | (3,079) | (8,867) |
| Transferred to investment property | (37) | - | - | - | - | - | - | (37) |
| Transfers | 4,815 | - | (87) | (4,820) | 92 | - | - | - |
| Translation differences | (155) | (30) | (138) | (337) | (461) | (261) | (572) | (1,954) |
| 31 DECEMBER 2023 | 137,637 | 6,574 | 61,585 | 21,732 | 31,316 | 8,734 | 32,134 | 299,712 |
| ACCUMULATED DEPRECIATION: | ||||||||
| 31 DECEMBER 2022 | 957 | 2,774 | 24,879 | - | 13,390 | 4,327 | 17,715 | 64,042 |
| Charge | 3,079 | 642 | 7,103 | - | 3,093 | 2,296 | 2,635 | 18,848 |
| Disposals | (601) | (110) | (2,255) | - | (829) | (1,943) | (312) | (6,050) |
| Reclassification to assets held for sale | (68) | (31) | (663) | - | (703) | (38) | (1,139) | (2,642) |
| Transfers | - | - | 24 | - | (24) | - | - | - |
| Translation differences | 10 | (13) | (90) | - | (88) | (363) | (112) | (656) |
| 31 DECEMBER 2023 | 3,377 | 3,262 | 28,998 | - | 14,839 | 4,279 | 18,787 | 73,542 |
| NET BOOK VALUE: | ||||||||
| 31 DECEMBER 2023 | 134,260 | 3,312 | 32,587 | 21,732 | 16,477 | 4,455 | 13,347 | 226,170 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
177
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Buildings and construction | Vehicles | Computers and banking equipment | Construction in progress | Other | Right-of-use assets | Intangible assets | Total | |
| REVALUED/INITIAL COST: | ||||||||
| 31 DECEMBER 2021 | 120,179 | 5,022 | 46,633 | 5,656 | 25,390 | 10,147 | 30,508 | 243,535 |
| Additions | 462 | 298 | 9,823 | 4,166 | 6,409 | 3,098 | 4,759 | 29,015 |
| Disposals | (5,704) | (339) | (4,431) | (11) | (2,682) | (4,320) | (4,226) | (21,713) |
| Revaluation | 20,455 | - | - | 304 | - | - | - | 20,759 |
| Reclassification to assets classified as held for sale | (41) | - | (39) | (657) | (98) | - | - | (835) |
| Transferred to investment property | (2,766) | - | - | - | - | - | - | (2,766) |
| Transfers | 2,445 | - | 2,739 | (5,447) | 265 | - | (2) | - |
| Translation differences | 1,348 | 61 | 567 | 125 | 510 | 233 | 991 | 3,835 |
| 31 DECEMBER 2022 | 136,378 | 5,042 | 55,292 | 4,136 | 29,794 | 9,158 | 32,030 | 271,830 |
| ACCUMULATED DEPRECIATION: | ||||||||
| 31 DECEMBER 2021 | 3,255 | 2,363 | 21,608 | - | 11,805 | 3,694 | 16,961 | 59,686 |
| Charge | 1,938 | 609 | 6,705 | - | 2,747 | 2,472 | 2,803 | 17,274 |
| Disposals | (539) | (223) | (3,641) | - | (1,495) | (2,080) | (2,456) | (10,434) |
| Write-off at revaluation | (3,764) | - | - | - | - | - | - | (3,764) |
| Transfers | (31) | - | (70) | - | 101 | - | - | - |
| Translation differences | 98 | 25 | 277 | - | 232 | 241 | 407 | 1,280 |
| 31 DECEMBER 2022 | 957 | 2,774 | 24,879 | - | 13,390 | 4,327 | 17,715 | 64,042 |
| NET BOOK VALUE: | ||||||||
| 31 DECEMBER 2022 | 135,421 | 2,268 | 30,413 | 4,136 | 16,404 | 4,831 | 14,315 | 207,788 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
178
As at 31 December 2023, the increase in construction in progress in amount of KZT 22,759 million is
associated with the construction of the Bank’s administrative buildings in Astana and Tashkent, as well
as the construction of a Data Processing Center in Astana.
The Group’s revaluation policy requires the entire asset class of buildings and construction to be
revalued every three years. In the event of significant changes in specific market or property
indicators, the Group may opt to perform revaluations more regularly. In 2023, the management of the
Group has not identified such significant changes in the commercial property market for similar
buildings that Group owns and no revaluation has been performed accordingly.
The Group had its buildings and properties revalued during 2022 by independent appraisers. The
independent appraisers used three approaches to identify the fair value of the property and
equipment - the income approach with the income capitalisation method, the comparative approach,
using market information to identify the fair value of buildings and structures under active market
conditions, and the cost approach when no active market existed for items subject to revaluation.
As at 31 December 2023, the fair value measurements of the Group’s buildings and construction, are
categorised into Level 2 in the amount of KZT 134,260 million, respectively (31 December 2022 KZT
135,421 million). A description of the measurement hierarchy is disclosed in Note 36.
As at 31 December 2023, the carrying amount of property and equipment that would have been
recognised had the assets been carried under the cost model is KZT 107,033 million
(31 December 2021: KZT 107,045 million).
15. ASSETS CLASSIFIED AS HELD FOR SALE
AND LIABILITIES DIRECTLY ATTRIBUTABLE
TO ASSETS HELD FOR SALE
After the default of some counterparties on loans to customers, the Group recognised the property
pledged as collateral for those loans as assets held for sale at fair value. The assets have been
subsequently measured at the lower of fair value less disposal costs or the carrying value, as the
Group’s management of the appropriate level committed to a plan to sell the assets and an active
programme to locate a buyer and complete the plan was initiated.
Assets held for sale comprised the following:
OJSC Halyk Bank Kyrgyzstan is a commercial bank registered in Kyrgyzstan, which by type of activity
is a universal bank. Created on 12 April 1999, in 2004 was acquired by JSC Halyk Bank of Kazakhstan.
OJSC Halyk Bank Kyrgyzstan has 10 branches and provides a wide range of banking services. The
share of participation of JSC Halyk Bank of Kazakhstan in the capital is 100%.
On 24 October 2023, an agreement was signed on the sale of 100% of the shares of OJSC Halyk Bank
Kyrgyzstan. The completion of the transaction is planned after receiving the consent of the National
Bank of the Kyrgyz Republic from the Buyer. The expected completion date for the sale of JSC Halyk
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| Assets held for sale related to OJSC Halyk Bank Kyrgyzstan | 90,242 | - |
| Land plots | 12,578 | 11,257 |
| Real estate | 8,671 | 12,619 |
| Movable property | 51 | 47 |
| TOTAL ASSETS CLASSIFIED AS HELD FOR SALE | 111,542 | 23,923 |
| Liabilities directly attributable to assets held for sale | 58,422 | - |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
179
Bank Kyrgyzstan is the 1st quarter of 2024, as such assets and liabilities of OJSC Halyk Bank
Kyrgyzstan were classified as held for sale.
The major classes of assets, net of impairment, and liabilities of OJSC Halyk Bank Kyrgyzstan as at
As a result of the reclassification of OJSC Halyk Bank Kyrgyzstan, the Group recognized an
impairment loss in the amount of KZT 3,781 million for the year ended 31 December 2023 in the
consolidated statement of profit or loss.
In November 2022, the Group performed an independent valuation of its assets held for sale and
based on the results recognised an impairment loss of KZT 1,044 million, included to the “Loss from
impairment of assets held for sale” in the consolidated statement of profit or loss.
Despite the Group actively marketing these assets for sale, the majority have not been sold within a
short timeframe. However, the management remains committed to the sale of these assets. As the
assets are carried at a price not exceeding the current fair value less costs to sell, they continued to be
classified as held for sale at the end of 2023 and 2022.
The fair value of the Group's non-current assets held for sale was determined by independent
appraisers. Income approach, comparative approach and cost-based approach were used to
estimate the fair value of those non-current assets. To estimate the fair value of the properties, the
highest and best use of the properties is their current use. There has been no change to the valuation
technique during the year.
Details of the Group's assets held for sale and information about the fair value hierarchy as at 31
December 2023 and 2022 are as follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 are as follows: | 31 December 2023 |
| Cash and cash equivalents | 27,446 |
| Obligatory reserves | 2,897 |
| Amounts due from credit institutions | 71 |
| Debt securities at amortized cost, net of allowance for expected credit losses | 5,756 |
| Loans to customers | 41,585 |
| Property and equipment and intangible assets | 5,263 |
| Long term assets classified as held for sale | 418 |
| Other assets | 3,055 |
| Assets of OJSC Halyk Bank Kyrgyzstan held for sale | 86,491 |
| Amounts due to customers | 52,866 |
| Amounts due to credit institutions | 3,086 |
| Provisions | 136 |
| Deferred tax liability | 447 |
| Other liabilities | 1,887 |
| Liabilities of OJSC Halyk Bank Kyrgyzstan directly related to assets held for sale | 58,422 |
| NET ASSETS OF OJSC HALYK BANK KYRGYZSTAN HELD FOR SALE | 28,096 |
| Level 2 | Level 3 | Total | |
| 31 DECEMBER 2023 | |||
| Real estate | 2,703 | 5,968 | 8,671 |
| Land plots | - | 12,578 | 12,578 |
| Movable property | - | 51 | 51 |
| Net assets of OJSC Halyk Bank Kyrgyzstan held for sale | - | 28,096 | 28,096 |
| 31 DECEMBER 2022 | |||
| Real estate | 5,548 | 7,071 | 12,619 |
| Land plots | - | 11,257 | 11,257 |
| Movable property | - | 47 | 47 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
180
16. INSURANCE CONTRACT ASSETS AND
LIABILITIES
Insurance contract assets and liabilities comprised the following:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Liabilities for the remaining portion of coverage | Liabilities for incurred claims using the premium allocation method | ||||
| Excluding loss component | Loss Component | Present value of future cash flows | Risk adjustment for non-financial risk | Total | |
| Liabilities under insurance contracts at the beginning | 175,050 | 6,878 | 35,690 | 5,690 | 223,308 |
| Assets under insurance contracts at the beginning | 4,094 | - | - | - | 4,094 |
| TOTAL AS AT 31 DECEMBER 2023 | 170,956 | 6,878 | 35,690 | 5,690 | 219,214 |
| INSURANCE REVENUE | (239,189) | - | - | - | (239,189) |
| INSURANCE EXPENSE: | |||||
| Incurred insurance losses and other incurred costs for insurance services | - | (1,963) | 63,214 | 17,791 | 79,042 |
| Amortization of acquisition cash flows | 35,802 | - | - | - | 35,802 |
| Changes attributed to past periods | - | - | 12,624 | 3,002 | 15,626 |
| Losses under groups of onerous contracts and restoration of such losses | - | 1,377 | - | - | 1,377 |
| TOTAL EXPENSES FOR INSURANCE SERVICES TAKEN INTO ACCOUNT IN THE ASSESSMENT OF LIABILITIES | 35,802 | (586) | 75,838 | 20,793 | 131,847 |
| Result of insurance activities | (203,387) | (586) | 75,838 | 20,793 | (107,342) |
| Financial expenses or income from insurance contracts issued | 3,465 | 1,159 | 376 | 36 | 5,036 |
| Expenses from the revaluation of foreign currency | (1,407) | - | - | - | (1,407) |
| TOTAL AMOUNTS RECOGNIZED IN PROFIT OR LOSS | (201,329) | 573 | 76,214 | 20,829 | (103,713) |
181
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
31 December
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Liabilities for the remaining portion of coverage | Liabilities for incurred claims using the premium allocation method | 2023 | |||
| Excluding loss component | Loss Component | Present value of future cash flows | Risk adjustment for non-financial risk | Total | |
| Other changes | 644 | - | - | - | 644 |
| CASH FLOWS FOR THE PERIOD: | |||||
| Premiums received under insurance contracts issued | 260,959 | - | - | - | 260,959 |
| Payments for incurred insurance losses and other expenses for insurance services paid under issued insurance contracts, with the exception of acquisition cash flows | - | - | (62,055) | (10,155) | (72,210) |
| Acquisition cash flows | (42,118) | - | - | - | (42,118) |
| TOTAL CASH FLOWS | 219,485 | - | (62,055) | (10,155) | 147,275 |
| CHANGE IN RESERVES FOR THE YEAR | (18,156) | 573 | 14,159 | 10,674 | 43,562 |
| Liabilities under insurance contracts at the end of the period | 199,401 | 7,451 | 49,849 | 16,364 | 273,065 |
| Assets under insurance contracts at the end of the period | 10,289 | - | - | - | 10,289 |
| Total as at 31 December 2023 | 189,112 | 7,451 | 49,849 | 16,364 | 262,776 |
182
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
31 December
2022
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Liabilities for the remaining portion of coverage | Liabilities for incurred claims using the premium allocation method | ||||
| Excluding loss component | Loss Component | Present value of future cash flows | Risk adjustment for non-financial risk | Total | |
| Liabilities under insurance contracts at the beginning | 144,513 | 7,658 | 35,675 | 6,349 | 194,195 |
| Assets under insurance contracts at the beginning | 3,317 | - | - | - | 3,317 |
| TOTAL AS AT 31 DECEMBER 2022 | 141,196 | 7,658 | 35,675 | 6,349 | 190,878 |
| INSURANCE REVENUE | (194,876) | - | - | - | (194,876) |
| INSURANCE EXPENSE: | |||||
| Incurred insurance losses and other incurred costs for insurance services | - | (2,470) | 46,576 | 5,925 | 50,031 |
| Amortization of acquisition cash flows | 71,124 | - | - | - | 71,124 |
| Changes attributed to past periods | - | - | (4,305) | (1,467) | (5,772) |
| Losses under groups of onerous contracts and restoration of such losses | - | 585 | - | - | 585 |
| TOTAL EXPENSES FOR INSURANCE SERVICES TAKEN INTO ACCOUNT IN THE ASSESSMENT OF LIABILITIES | 71,124 | (1,885) | 42,271 | 4,458 | 115,968 |
| Result of insurance activities | (123,752) | (1,885) | 42,271 | 4,458 | (78,908) |
| Financial expenses or income from insurance contracts issued | 7,199 | 1,105 | 145 | 12 | 8,461 |
| Expenses from the revaluation of foreign currency | 1,578 | - | - | - | 1,578 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
183
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
31 December
2022
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Liabilities for the remaining portion of coverage | Liabilities for incurred claims using the premium allocation method | ||||
| Excluding loss component | Loss Component | Present value of future cash flows | Risk adjustment for non-financial risk | Total | |
| TOTAL AMOUNTS RECOGNIZED IN PROFIT OR LOSS | (114,975) | (780) | 42,416 | 4,470 | (68,869) |
| Other changes | (2,712) | - | - | - | (2,712) |
| CASH FLOWS FOR THE PERIOD: | |||||
| Premiums received under insurance contracts issued | 179,930 | - | - | - | 179,930 |
| Payments for incurred insurance losses and other expenses for insurance services paid under issued insurance contracts, with the exception of acquisition cash flows | - | - | (42,400) | (5,129) | (47,529) |
| Acquisition cash flows | (32,484) | - | - | - | (32,484) |
| TOTAL CASH FLOWS | 144,734 | - | (42,400) | (5,129) | 97,205 |
| CHANGE IN RESERVES FOR THE YEAR | 29,759 | (780) | 16 | (659) | 28,336 |
| Liabilities under insurance contracts at the end of the period | 175,049 | 6,878 | 35,691 | 5,690 | 223,308 |
| Assets under insurance contracts at the end of the period | 4,094 | - | - | - | 4,094 |
| TOTAL AS AT 31 DECEMBER 2022 | 170,955 | 6,878 | 35,691 | 5,690 | 219,214 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
184
The table below shows the carrying amounts of portfolio assets and liabilities under insurance and
reinsurance contracts as of the end of the reporting period for each class of activity:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
31 December
31 December
2022
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| LRC+LRCre | Employer lability Annuities | Pension annuities | Endowment insurance | Term life insurance | Short-term agreements | Health insurance | Mandatory liability insurance for vehicle owners | Property insurance | Motor transport and liability insurance | Other | 2023 Total |
| Assets under issued insurance contracts | - | - | - | - | (78) | (24) | - | (9,335) | (89) | (763) | (10,289) |
| Liabilities under issued insurance contracts | 14,055 | 116,973 | 70,593 | 3,319 | 37,242 | 1,860 | 4,239 | 10,654 | 9,532 | 4,598 | 273,065 |
| NET AMOUNT | 14,055 | 116,973 | 70,593 | 3,319 | 37,164 | 1,836 | 4,239 | 1,319 | 9,443 | 3,835 | 262,776 |
| LRC+LRCre | Employer lability Annuities | Pension annuities | Endowment insurance | Term life insurance | Short-term agreements | Health insurance | Mandatory liability insurance for vehicle owners | Property insurance | Motor transport and liability insurance | Other | Total | |
| Assets under issued insurance contracts | - | - | - | - | (81) | - | - | (3,359) | (19) | (635) | (4,094) | |
| Liabilities under issued insurance contracts | 13,650 | 100,342 | 52,986 | 3,452 | 25,594 | 1,628 | 3,143 | 10,616 | 7,825 | 4,072 | 223,308 | |
| NET AMOUNT | 13,650 | 100,342 | 52,986 | 3,452 | 25,513 | 1,628 | 3,143 | 7,257 | 7,806 | 3,437 | 219,214 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
185
The Group used the following yield curves to discount cash flows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Life insurance | General insurance | ||||||||||
| 31 DECEMBER 2023 Insurance contract | CURRENCY | 1 YEAR | 5 YEARS | 10 YEARS | 20 YEARS | 30 YEARS | 1 YEAR | 5 YEARS | 10 YEARS | 20 YEARS | 30 YEARS |
| KZT | 15.7% | 12.6% | 11.3% | 10.9% | 10.8% | 16.4% | 10.2% | 10.2% | - | - | |
| USD | 4.8% | 3.5% | 3.4% | 3.5% | 3.2% | 5.6% | 4.5% | 4.5% | - | - | |
| EUR | - | - | - | - | - | 4.0% | 3.0% | 3.1% | - | - | |
| 31 DECEMBER 2022 Insurance contract | CURRENCY | 1 YEAR | 5 YEARS | 10 YEARS | 20 YEARS | 30 YEARS | 1 YEAR | 5 YEARS | 10 YEARS | 20 YEARS | 30 YEARS |
| KZT | 15.4% | 12.7% | 10.9% | 10.03% | 9.87% | 9.6% | 10.0% | 9.6% | - | - | |
| USD | 5.6% | 4.5% | 4.3% | 4.1% | 3.8% | 5.6% | 4.5% | 4.3% | - | - | |
| EUR | - | - | - | - | - | 3.4% | 3.3% | 3.3% | - | - | |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
186
An analysis of the concentration of the Group's insurance risks (both before and after reinsurance) by
business class and by region is given in the following tables:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
31 December 2022
Net amount
Net amount
14,055 13,650 - 13,650
116,973 100,342 - 100,342
70,594 52,986 (2) 52,984
(1,297) 3,452 (6,025) (2,573)
30,664 25,513 (2,455) 23,058
1,800 1,628 (10) 1,618
4,239 3,143 - 3,143
(2,750) 7,257 (10,158) (2,901)
9,335 7,806 (146) 7,660
1,709 3,437 (2,302) 1,135
TOTAL 262,776 (17,455) 245,321 219,214 (21,098) 198,116
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| 31 December 2023 | ||||||
| Net assets and liabilities under insurance contracts issued | Net assets and liabilities under reinsurance contracts held | |||||
| Net assets and liabilities under insurance contracts issued | Net assets and liabilities under reinsurance contracts held | |||||
| Employer Liability Annuities | 14,055 | - | ||||
| Pension annuities | 116,973 | - | ||||
| Endowment insurance | 70,594 | - | ||||
| Term life insurance | 3,319 | (4,616) | ||||
| Short-term contracts | 37,164 | (6,500) | ||||
| Health insurance | 1,836 | (36) | ||||
| Mandatory liability insurance for vehicle owners | 4,239 | - | ||||
| Property insurance | 1,319 | (4,069) | ||||
| Motor transport and liability insurance Other | 9,443 3,835 | (108) (2,126) | ||||
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
187
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| 31 December 2023 | 31 December 2022 | |||||
| Net assets and liabilities under insurance contracts issued | Net assets and liabilities under reinsurance contracts held | Net amount | Net assets and liabilities under insurance contracts issued | Net assets and liabilities under reinsurance contracts held | Net amount | |
| Concentration by region | ||||||
| LRC | ||||||
| Kazakhstan | 205,910 | 5,562 | 200,348 | 180,802 | 6,286 | 174,516 |
| OECD | (3,581) | (2,006) | (1,575) | (4,085) | 5,229 | (9,314) |
| Non-OECD | (5,772) | 1,818 | (7,590) | 1,117 | 2,140 | (1,023) |
| 196,557 | 5,374 | 191,183 | 177,834 | 13,655 | 164,179 | |
| 31 December 2023 | 31 December 2022 | |||||
| Net assets and liabilities under insurance contracts issued | Net assets and liabilities under reinsurance contracts held | Net amount | Net assets and liabilities under insurance contracts issued | Net assets and liabilities under reinsurance contracts held | Net amount | |
| Concentration by region | ||||||
| LIC | ||||||
| Kazakhstan | 65,279 | 12,063 | 53,216 | 40,159 | 7,199 | 32,960 |
| OECD | 394 | 10 | 384 | 736 | 131 | 605 |
| Non-OECD | 546 | 8 | 538 | 485 | 113 | 372 |
| 66,219 | 12,081 | 54,138 | 41,380 | 7,443 | 33,937 | |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
188
The table below summarizes actual claims compared to historical estimates of undiscounted claims.
The Group discloses the gross and net amounts of claims arising during the 10 years prior to the
reporting period. The Group reconciles the liabilities for incurred claims presented in the table with the
aggregate carrying value of groups of insurance contracts.
Life insurance
The dynamics of the development of losses for the reserve of occurred but not reported losses and
the reserve of declared but not settled losses is presented as follows:
Gross loss reserve at the end of the year for insured events that occurred in the corresponding year:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Gross liability for unpaid claims and claim expenses | 10,352 | 12,679 | 15,411 | 19,963 | 22,803 | 26,176 | 28,909 | 43,019 |
| Reinsurance amount to be reimbursed | (6,163) | (6,712) | (7,445) | (8,532) | (8,947) | (8,412) | (3,052) | (4,285) |
| Net liability for unpaid claims and claim expenses | 4,189 | 5,967 | 7,966 | 11,431 | 13,856 | 17,764 | 25,857 | 38,734 |
| Loss reserve as of: | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
| 2,729 | 5,081 | 2,786 | 2,589 | 3,097 | 3,969 | 6,811 | 17,024 |
| Year of incident | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
| after one year | 2,729 | 5,081 | 2,786 | 2,589 | 3,097 | 3,969 | 6,811 | 17,024 |
| after two years | 1,316 | 2,562 | 3,942 | 3,157 | 3,039 | 4,777 | 8,106 | - |
| after three years | 1,982 | 2,844 | 3,682 | 3,097 | 3,125 | 5,316 | - | - |
| after four years | 2,204 | 2,629 | 3,330 | 2,853 | 1,722 | - | - | - |
| after five years | 1,887 | 2,456 | 2,812 | 1,647 | - | - | - | - |
| after six years | 1,859 | 1,980 | 1,712 | - | - | - | - | - |
| after seven years | 1,385 | 1,209 | - | - | - | - | - | - |
| after eight years | 810 | - | - | - | - | - | - | - |
| Current assessment of losses incurred on an accrual basis | 1,859 | 2,456 | 3,330 | 3,097 | 3,039 | 3,969 | 6,811 | 17,024 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
189
Insurance payments (with cumulative total) for:
The net amount of the reserve for outstanding losses under insurance contracts for 2020 is presented
as follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| after one year | 439 | 622 | 342 | 551 | 535 | 846 | 2,348 | 1,556 |
| after two years | 1,193 | 1,175 | 1,144 | 1,174 | 1,224 | 2,614 | 3,181 | - |
| after three years | 1,354 | 1,390 | 1,405 | 1,499 | 1,358 | 2,807 | - | - |
| after four years | 1,498 | 1,533 | 1,678 | 1,723 | 1,523 | - | - | - |
| after five years | 1,672 | 1,731 | 1,872 | 1,884 | - | - | - | - |
| after six years | 1,795 | 1,915 | 2,070 | - | - | - | - | - |
| after seven years | 2,088 | 2,161 | - | - | - | - | - | - |
| after eight years | 2,270 | - | - | - | - | - | - | - |
| Cumulative payments to date | 2,270 | 2,161 | 2,070 | 1,884 | 1,523 | 2,807 | 3,181 | 1,556 |
| Excess/deficit of loss reserve (accumulated): | (1,400) | 464 | (2,614) | (2,393) | (1,464) | (2,807) | (3,181) | (1,556) |
| % of excess/deficit from the initial gross loss reserve | (51.32%) | 9.14% (93.85%) (92.42%) (47.28%) (70.73%) (46.70%) | (9.14%) |
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| after one year | 1,408 | 2,241 | 2,175 | 2,238 | 2,990 | 3,842 | 7,070 | 14,205 |
| after two years | 1,319 | 1,709 | 2,879 | 2,766 | 3,029 | 4,661 | 8,387 | - |
| after three years | 1,418 | 1,917 | 2,589 | 2,812 | 3,183 | 4,828 | - | - |
| after four years | 1,631 | 1,736 | 2,400 | 2,715 | 1,715 | - | - | - |
| after five years | 1,351 | 1,664 | 2,348 | 1,548 | - | - | - | - |
| after six years | 1,325 | 1,644 | 1,375 | - | - | - | - | - |
| after seven years | 1,167 | 993 | - | - | - | - | - | - |
| after eight years | 641 | - | - | - | - | - | - | - |
| Current assessment of losses incurred on an accrual basis | 1,325 | 1,664 | 2,400 | 2,812 | 3,029 | 3,842 | 7,070 | 14,205 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
190
loss reserve
The table below summarizes actual claims compared to historical estimates of undiscounted claims.
The Group discloses the gross and net amounts of claims arising during the 10 years prior to the
reporting period. The Group reconciles the liabilities for incurred claims presented in the table with the
aggregate carrying value of groups of insurance contracts.
Gross amount
of claims
Gross liability
for the period
of the insured
event from
2014 to 2023.
- - - - - - - 18,991
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| after one year | 313 | 402 | 231 | 480 | 532 | 828 | 2,326 | 1,555 |
| after two years | 872 | 793 | 877 | 1,045 | 1,168 | 2,579 | 3,155 | - |
| after three years | 994 | 954 | 1,068 | 1,358 | 1,301 | 2,765 | - | - |
| after four years | 1,103 | 1,035 | 1,279 | 1,560 | 1,462 | - | - | - |
| after five years | 1,245 | 1,152 | 1,417 | 1,705 | - | - | - | - |
| after six years | 1,340 | 1,295 | 1,600 | - | - | - | - | - |
| after seven years | 1,609 | 1,497 | - | - | - | - | - | - |
| after eight years | 1,779 | - | - | - | - | - | - | - |
| Cumulative payments to date | 1,779 | 1,497 | 1,600 | 1,705 | 1,462 | 2,765 | 3,155 | 1,555 |
| Excess/deficit of loss reserve (accumulated): | (1,696) | (921) | (1,825) | (2,279) | (1,502) | (2,765) | (3,155) | (1,555) |
| % of excess/ deficit from the initial gross | (120.45%) | (41.12%) (83.90%)(101.84%) (50.22%) (71.99%) (44.62%)(10.95%) |
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total | |
| Estimates of undiscounted gross claims | ||||||||
| End of the year of the insured event | 3,485 | 27,536 | 4,214 | 7,390 | 13,138 | 8,797 | 12,763 | - |
| after one year | 1,289 | 1,908 | 1,202 | 2,297 | 2,948 | 3,291 | - | - |
| after two years | 1,909 | 1,156 | 723 | 1,042 | 2,137 | - | - | - |
| after three years | 2,376 | 288 | 171 | 285 | - | - | - | - |
| after four years | 239 | 306 | 48 | - | - | - | - | - |
| after five years | 262 | 239 | - | - | - | - | - | - |
| 1,541 | 91,785 | 5,278 | 3,765 | 10,445 | 9,484 | - 122,297 | ||
| Cumulative gross amount of claims paid | 1,803 | 92,023 | 5,326 | 4,050 | 12,582 | 12,775 | 12,763 141,322 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
191
Gross amount
of claims
Gross amount
of claims
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total | |
| Gross amount of liabilities for the years preceding the insured event | - | - | - | - | - | - | - | 1,556 |
| Discounting effect | - | - | - | - | - | - | - | 17,435 |
| Gross liability for claims incurred | ||||||||
| Estimates of undiscounted gross claims | 2016 | |||||||
| End of the year of the insured event | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total |
| after one year | ||||||||
| after two years | 2,029 | 2,591 | 2,972 | 3,534 | 5,302 | 6,431 | 9,637 | - |
| after three years | 819 | 683 | 29 | 807 | 1,271 | 2,743 | - | - |
| after four years | 839 | 571 | 637 | 681 | 973 | - | - | - |
| after five years | 138 | 260 | 142 | 130 | - | - | - | - |
| 239 | 306 | 48 | - | - | - | - | - | |
| Cumulative gross amount of claims paid | 262 | 239 | - | - | - | - | - | - |
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total | |
| Gross liability for the period of the insured event from 2014 to 2023. | 1,146 | 2,167 | 2,148 | 2,992 | 5,306 | 6,906 | - | 20,665 |
| Gross amount of liabilities for the years preceding the insured event | 1,408 | 2,406 | 2,196 | 3,122 | 6,279 | 9,649 | 9,637 | 34,697 |
| Discounting effect | - | - | - | - | - | - | - | 12,997 |
| Gross liability for claims incurred | - | - | - | - | - | - | - | 1,556 |
| Estimates of undiscounted gross claims | - | - | - | - | - | - | - | 11,440 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
192
Maturity analysis for portfolios of insurance contracts issued and reinsurance contracts
held that represent liabilities
The following disclosure notes do not include all of the information required by IFRS 7. To better
understand the specific disclosures required by IFRS 17, some of the disclosures required by IFRS 7
regarding financial issues. tools. IFRS 17:132(b) provides entities with a choice of how to provide a
timing analysis of a) the estimated timing of the remaining undiscounted net contractual cash flows;
or b) by the estimated timing of the estimates, taking into account the value of future reimbursement
flows.
The following table discloses information only in relation to insurance products, which have material
long-term component.
17. OTHER ASSETS
Other assets include:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | Book value | Less than a year | 1-5 years | 5-10 years 10-20 years | More than 20 years | |
| Pension annuities | 51,310 | 30,949 | 9,645 | 5,257 | 3,836 | 1,624 |
| Halyk Kazyna | 15,112 | 3,712 | 9,859 | 662 | 880 | - |
| TOTAL | 66,422 | 34,661 | 19,504 | 5,919 | 4,716 | 1,624 |
| 31 December 2022 | Book value | Less than a year | 1-5 years | 5-10 years 10-20 years | More than 20 years | |
| Pension annuities | 58,923 | 35,364 | 11,550 | 6,301 | 3,419 | 2,289 |
| Halyk Kazyna | 11,271 | 2,722 | 7,685 | 443 | 421 | - |
| TOTAL | 70,194 | 38,086 | 19,235 | 6,744 | 3,840 | 2,289 |
17. OTHER ASSETS
Other assets include:
| 31 December2023 | 31 December2022 | |
| Other financial assets: | ||
| Banking debtors | 75,693 | 72,982 |
| Finance lease receivables | 17,273 | 16,435 |
| Debtors for non-banking activities | 13,115 | 16,456 |
| Accrued commission income | 7,207 | 5,700 |
| Other | 134 | 55 |
| 113,422 | 111,628 | |
| Less – Allowance for expected credit losses | (31,656) | (33,442) |
| TOTAL FINANCIAL ASSETS | 81,766 | 78,186 |
| Other non-financial assets: | ||
| Investments in associated organizations | 51,464 | 42,005 |
| Prepaid taxes, excluding income tax | 9,204 | 7,425 |
| Prepayment for property, plant and equipment | 8,042 | 5,811 |
| Inventory | 7,725 | 5,066 |
| Other investments | 3,874 | 1,287 |
| Goodwill | 3,055 | 3,085 |
| Precious metals | 2,253 | 2,046 |
| Prepayment for investment property | 2,737 | 15,347 |
| Other | 3,542 | 2,136 |
| TOTAL NON-FINANCIAL ASSETS | 91,896 | 84,208 |
| TOTAL OTHER ASSETS | 173,662 | 162,394 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
193
As at 31 December 2023, investments in associated organizations include investments in JSC Altyn
Bank (SB of China CITIC Bank Corporation Ltd.) in the amount of KZT 51,195 million and Open Travel
Networks Ltd in the amount of KZT 269 million (31 December 2022 – KZT 42,005 million and nil,
respectively).
Finance lease receivables include:
Movements in accumulated provisions for expected credit losses on other assets are as follows:
31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
As at 31 December 2023, investments in associated organizations include investments in JSC Altyn
Bank (SB of China CITIC Bank Corporation Ltd.) in the amount of KZT 51,195 million and Open Travel
Networks Ltd in the amount of KZT 269 million (31 December 2022 – KZT 42,005 million and nil,
respectively).
Finance lease receivables include:
| 31 December2023 | 31 December2022 | |
| Amounts receivable under finance leases: | ||
| Year 1 | 6,063 | 5,656 |
| Year 2 | 4,967 | 4,762 |
| Year 3 | 4,212 | 3,655 |
| Year 4 | 3,395 | 2,868 |
| Year 5 | 2,527 | 2,129 |
| Onwards | 6,542 | 4,827 |
| Undiscounted lease payments | 27,706 | 23,897 |
| Less: unearned financial income | (10,433) | (7,461) |
| PRESENT VALUE OF LEASE PAYMENTSRECEIVABLE | 17,273 | 16,435 |
| Impairment loss allowance | (1,024) | (1,644) |
| NET INVESTMENT IN LEASE | 16,250 | 14,792 |
| NET INVESTMENT IN THE LEASE ANALYSED AS: | ||
| Recoverable after 12 months | 4,029 | 3,869 |
| Recoverable within 12 months | 12,220 | 10,923 |
| NET INVESTMENT IN LEASE | 16,250 | 14,792 |
Movements in accumulated provisions for expected credit losses on other assets are as follows:
31 December
2023
| Stage 1 | Stage 2 | Stage 3 | Total | |
| AT THE BEGINNINGOF THE PERIOD | (1,043) | (580) | (31,819) | (33,442) |
| Transfer to Stage 1 | (8) | - | 8 | - |
| Transfer to Stage 2 | - | (560) | 560 | - |
| Transfer to Stage 3 | 36 | 20 | (56) | - |
| Changes in risk parameters* | 394 | 1,114 | (1,688) | (180) |
| Recoveries of allowances onpreviously written-offassets | - | - | (160) | (160) |
| Write-offs | - | - | 547 | 547 |
| Foreign exchange differencesand other movements | 37 | - | 1,542 | 1,579 |
| AT THE END OF THE PERIOD | (584) | (6) | (31,066) | (31,656) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
194
31 December
2022
Below is a reconciliation of gross book value at the beginning and end of the year:
31 December
2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* The item “Expected credit loss expense” in the consolidated income statement consists of the following items:
“Changes in risk parameters”, “New issues or acquisitions of financial assets” and “Derecognition of financial assets”.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
31 December
2022
| Stage 1 | Stage 2 | Stage 3 | Total | |
| AT THE BEGINNINGOF THE PERIOD | (2,969) | - | (16,627) | (19,596) |
| Transfer to Stage 2 | 12 | (243) | 231 | - |
| Transfer to Stage 3 | 641 | - | (641) | - |
| Changes in risk parameters* | 1,258 | (337) | (19,264) | (18,343) |
| Recoveries of allowances onpreviously written-off assets | - | - | (167) | (167) |
| Write-offs | - | - | 2,269 | 2,269 |
| Disposals of subsidiaries | 8 | - | 1,742 | 1,750 |
| Foreign exchange differencesand other movements | 7 | - | 638 | 645 |
| AT THE END OF THE PERIOD | (1,043) | (580) | (31,819) | (33,442) |
Below is a reconciliation of gross book value at the beginning and end of the year:
31 December
2023
| Stage 1 | Stage 2 | Stage 3 | Total | |
| AT THE BEGINNING OF THEPERIOD | 44,761 | 572 | 66,295 | 111,628 |
| Transfer to Stage 1 | 2,194 | 561 | (2,755) | - |
| Transfer to Stage 2 | - | - | - | - |
| Transfer to Stage 3 | (3,222) | (7) | 3,229 | - |
| Changes in risk parameters* | (19,736) | (1,092) | 26,874 | 6,046 |
| Write-offs | - | - | (3,662) | (3,662) |
| Foreign exchange differencesand other movements | (552) | - | (38) | (590) |
| AT THE END OF THE PERIOD | 23,445 | 34 | 89,943 | 113,422 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* The item “Expected credit loss expense” in the consolidated income statement consists of the following items:
“Changes in risk parameters”, “New issues or acquisitions of financial assets” and “Derecognition of financial assets”.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
195
31 December
2022
18. AMOUNTS DUE TO CUSTOMERS
Amounts due to customers include the following:
As at 31 December 2023, the Group’s ten largest groups of related customers accounted for
approximately 11% of the total amounts due to customers (31 December 2022 – 17%), where each
group of related customers represents customers related to each other within that group.
As at 31 December 2023, amounts due to customers included amounts held as collateral of
KZT 171,838 million (31 December 2022 – KZT 177,501 million) .
Management believes that in the event of withdrawal of funds, the Group would be given sufficient
notice so as to realise its liquid assets to enable repayment .
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
31 December
2022
| Stage 1 | Stage 2 | Stage 3 | Total | |
| AT THE BEGINNINGOF THE PERIOD | 51,230 | 263 | 39,336 | 90,829 |
| Transfer to Stage 1 | - | - | - | - |
| Transfer to Stage 2 | (455) | 686 | (231) | - |
| Transfer to Stage 3 | (21,702) | - | 21,702 | - |
| Changes in risk parameters* | 15,722 | (377) | 8,467 | 23,812 |
| Write-offs | - | - | (2,272) | (2,272) |
| Foreign exchange differencesand other movements | (34) | - | (707) | (741) |
| AT THE END OF THE PERIOD | 44,761 | 572 | 66,295 | 111,628 |
| 31 December 2023 | 31 December 2022 | |
| RECORDED AT AMORTISED COST: | ||
| Term deposits: | ||
| Individuals | 4,808,592 | 4,351,846 |
| Legal entities | 3,338,099 | 2,898,924 |
| 8,146,691 | 7,250,770 | |
| Current accounts: | ||
| Legal entities | 1,762,760 | 2,369,360 |
| Individuals | 1,020,053 | 891,918 |
| 2,782,813 | 3,261,278 | |
| TOTAL AMOUNT DUE TO CUSTOMERS | 10,929,504 | 10,512,048 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
196
An analysis of customer accounts by sector is as follows:
19. AMOUNTS DUE TO CREDIT
INSTITUTIONS
Amounts due to credit institutions comprise:
As at 31 December 2023, loans from JSC Entrepreneurship Development Fund DAMU (“DAMU”)
included long-term loans of KZT 82,904 million at a 1.0% - 4.5% interest rate maturing in 2022 –
2035 with an early recall option (31 December 2022 – KZT 80,686 million). These loans were
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | % | 31 December 2023 | % | |
| Individuals and entrepreneurs | 5,828,645 | 54% | 5,243,764 | 50% |
| Wholesale trade | 842,830 | 8% | 679,740 | 6% |
| Other consumer services | 679,724 | 6% | 777,500 | 7% |
| Construction | 557,885 | 5% | 299,500 | 3% |
| Oil and gas | 454,390 | 4% | 808,762 | 8% |
| Transportation | 404,404 | 4% | 417,556 | 4% |
| Financial sector | 457,576 | 4% | 658,374 | 6% |
| Metallurgy | 357,750 | 3% | 210,530 | 2% |
| Healthcare and social services | 262,791 | 2% | 235,717 | 2% |
| Education | 161,137 | 1% | 111,330 | 1% |
| Communication | 131,413 | 1% | 262,722 | 3% |
| Government and state-controlled companies | 103,978 | 1% | 191,126 | 2% |
| Energy | 106,071 | 1% | 73,334 | 1% |
| Insurance and pension funds activity | 97,300 | 1% | 106,773 | 1% |
| Other | 483,610 | 4% | 435,360 | 4% |
| 10,929,504 | 100% | 10,512,048 | 100% |
| 31 December 2023 | 31 December 2022 | |
| RECORDED AT AMORTISED COST: | ||
| Loans and deposits from Kazakhstan banks (incl. loans under repurchase agreements) | 285,349 | 529,743 |
| Loans and deposits from OECD based banks | 143,511 | 14,006 |
| Loans from JSC Entrepreneurship Development Fund DAMU | 84,991 | 83,356 |
| Loans from JSC Development Bank of Kazakhstan | 80,873 | 80,071 |
| Loans and deposits from non-OECD based banks | 64,404 | 64,631 |
| Correspondent accounts | 60,205 | 74,496 |
| Loans from JSC Agrarian Credit Corporation | 27,923 | 9,730 |
| Loans from JSC Industrial Development Fund | 22,637 | 22,632 |
| Loans from JSC “National Managing Holding “KazAgro” | 6,890 | - |
| Loans from other financial institutions | 1,528 | - |
| 778,311 | 878,665 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
197
received in accordance with the Government program (“the Program”) to finance small and medium
enterprises (“SME”) operating in certain industries. According to the loan agreements between
DAMU and the Group, the Group is responsible to extend loans to SME borrowers, eligible to
participate in the Program, up to 10 years at a 5.0% interest rate.
As at 31 December 2023, the Group entered into an agreement with DAMU to provide a credit line for
financing leasing transactions of small and medium-sized businesses in the amount of KZT 1,665
million with maturity until 2028. Under the terms of the loan agreement, loans are issued at a rate of
13%, provided that the Group obtains sufficient collateral.
As at 31 December 2023, loans from JSC Development Bank of Kazakhstan (“DBK”) included long-
term loans of KZT 36,844 million (31 December 2022 – KZT 36,045 million) at a 2.0% interest rate
maturing in 2029 – 2037, to finance corporate enterprises operating in manufacturing industries, as
well as a long-term loan of KZT 43,796 million (31 December 2022 – KZT 43,796 million) at a 1.0%
interest rate maturing in 2035, to finance the purchase of cars by the Group’s retail customers.
According to the loan agreement between DBK and the Group, the Group is responsible to extend
loans to corporate borrowers, eligible to participate in the Program, up to 10 years at a 6.0% interest
rate, and to retail borrowers – up to 5 years at a 4.0% interest rate.
As at 31 December 2023, loans from JSC Industrial Development Fund (“IDF”) included long-term
loans of of KZT 22,500 million at 1.0% interest rate maturing in 2052 to finance the purchase of
domestically produced vehicles by the Group’s retail customers. According to the loan agreement
between the IDF and the Group, the Group is responsible for providing loans to retail business
borrowers at a rate of 4.0% with a maturity of no more than 7 years.
As at 31 December 2023, loans from JSC Agrarian Credit Corporation under the “Ken-Dala” program
included long-term loans in the amount of KZT 2,777 million (31 December 2022 – KZT 9,668 million)
at 1.5%-5% interest rate with a repayment period until 18 November 2025. Loans must be used for
subsequent lending to subjects of the agro-industrial complex at 4%-5% interest rate for the final
borrower, with a loan period until 1 November 2025. According to the loan agreements between JSC
Agrarian Credit Corporation and the Group, loans are provided to replenish working capital for spring
field and harvesting work.
The management of the Group believes that there are no other similar financial instruments and, due
to their special nature, these loans from DAMU, DBK, JSC Agrarian Credit Corporation and IDF
represent separate segments in the lending market for agricultural entities, SME and retail lending. As
a result, the loans from DAMU, DBK, JSC Agrarian Credit Corporation and IDF were received as part of
an orderly transaction and, as such, were recorded at fair value at the date of recognition, which was
determined to be the cash consideration transferred to the customers.
Interest rates and maturities of amounts due to credit institutions are as follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
I
| 31 December 2023 | 31 December 2022 | |||
| Interest rate,% | Maturity,year | Interest rate,% | Maturity,year | |
| Loans and deposits from Kazakhstan banks (incl. loans under repurchase agreements) | 4.0%-17.0% | 2024-2026 | 11.5%-17.8% | 2023-2026 |
| Loans and deposits from OECD based banks | 6.0%-6.8% | 2024-2025 | 14.5% | 2023 |
| Loans from JSC Entrepreneurship Development Fund DAMU | 1.0%-13.0% | 2024-2035 | 1.0%-10.0% | 2023-2035 |
| Loans from JSC Development Bank of Kazakhstan | 1.0%-2.0% | 2029-2037 | 1.0%-2.0% | 2029-2037 |
| Loans and deposits from non-OECD based banks | 3.0%-25.0% | 2024-2027 | 1.0%-14.5% | 2023-2027 |
| Loans from JSC Industrial Development Fund | 1.0% | 2052 | 1.0% | 2052 |
| Loans from JSC Agrarian Credit Corporation | 1.5%-5.0% | 2024-2025 | 1.5% | 2024 |
| Loans from JSC “National Managing Holding “KazAgro” | 14.8% | 2024 | - | - |
| Loans from other financial institutions | 15.0% | 2024 | - | - |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
198
The fair value of assets pledged (Note 7, 9 and 10) and the carrying value of loans included in loans and
deposits from Kazakhstan banks under repurchase agreements as at 31 December 2023 and 2022,
are as follows:
Details of transferred financial assets that are not derecognised in their entirety as at 31 December
2023 and 2022 are disclosed below.
Loans under repurchase agreements are used by the Group to provide current cash flows in KZT
within the Group’s operating activities. The Group regularly uses this type of instrument to attract
short-term liquidity and plans to continue raising funds through loans under repurchase agreements
when necessary
The Group has determined that it retains substantially all the risks and rewards of these securities,
which include credit risk and market risk, and therefore it has not amortized them. In addition, it
amortizes a financial liability for cash received as collateral
Certain of the Group’s outstanding financing agreements include covenants restricting the Group’s
ability to create security interests over its assets. Should the Group default under these covenants,
this could result in cross-accelerations and cross-defaults under the terms of the Group’s other
financing arrangements.
The Group’s management believes that as at 31 December 2023 and 2022, the Group was in
compliance with the covenants.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Fair value of collateral | Carrying amount of loans | Fair value of collateral | Carrying amount of loans | |
| Debt securities at amortised cost,net of allowance for expected credit losses | 269,231 | 268,663 | 505,588 | 502,620 |
| Financial assets at fair value through profit or loss | 12,110 | 12,098 | 18,943 | 19,129 |
| Financial assets at fair value through other comprehensive income | 188,100 | 147,042 | 6,609 | 6,668 |
| 469,442 | 427,803 | 531,140 | 528,417 |
| Debt securities at amortised cost,net of allowances for expected credit loss (Note 10) | Financial assets at fair value at value through profit or loss (Note 7) | Financial assets at fair value through other comprehensive income (Note 9) | |
| AS AT 31 DECEMBER 2023: | |||
| Carrying amount of transferred assets | 269,231 | 12,110 | 188,100 |
| Carrying amount of associated liabilities | 268,663 | 12,098 | 147,042 |
| AS AT 31 DECEMBER 2022: | |||
| Carrying amount of transferred assets | 505,588 | 18,943 | 6,609 |
| Carrying amount of associated liabilities | 502,620 | 19,129 | 6,668 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
199
20.DEBT SECURITIES ISSUED
Debt securities issued comprise:
On 6 February 2023 the Group repurchased bonds listed on AIX in the amount of USD 100 million with
a coupon rate of 2.5%, issued on 1 June 2022.
On 17 May 2023 the Group issued bonds listed on AIX in the total amount of USD 200 million with a
coupon rate of 3.5%, of which as of 31 December 2023 USD 185.5 million were placed.
On 29 May 2023 the Group issued bonds listed on AIX in the total amount of USD 300 million with a
coupon rate of 3.5%, of which as of 31 December 2023 USD 300 million were placed.
On 3 July 2023 the Group issued bonds listed on AIX in the total amount of USD 500 million with a
coupon rate of 3.5%, of which as of 31 December 2023 USD 221.7 million were placed.
The coupon rates and maturities of these debt securities issued are as follows:
As at 31 December 2023, accrued interest on debt securities issued was KZT 9,003 million
(as at 31 December 2022 – KZT 6,994 million).
Subordinated securities are unsecured obligations of the Group and are subordinated in right of
payments to all present and future senior indebtedness and certain other obligations of the Group.
Coupon payments on debt securities issued are payable on a semi-annual and an annual basis.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| RECORDED AT AMORTISED COST: | ||
| SUBORDINATED DEBT SECURITIES ISSUED: | ||
| KZT denominated bonds, fixed rate | 94,246 | 90,341 |
| Total subordinated debt securities outstanding | 94,246 | 90,341 |
| UNSUBORDINATED DEBT SECURITIES ISSUED: | ||
| KZT denominated bonds | 234,344 | 232,597 |
| USD denominated bonds | 324,803 | 139,879 |
| TOTAL UNSUBORDINATED DEBT SECURITIES OUTSTANDING | 559,147 | 372,476 |
| TOTAL DEBT SECURITIES OUTSTANDING | 653,393 | 462,817 |
| 31 December 2023 | 31 December 2022 | |||
| Coupon rate,% | Maturity,year | Coupon rate,% | Maturity,year | |
| SUBORDINATED DEBT SECURITIES ISSUED: | ||||
| KZT denominated bonds, fixed rate | 9.5% | 2025 | 9.5% | 2025 |
| UNSUBORDINATED DEBT SECURITIES ISSUED: | ||||
| KZT denominated bonds | 7.5% | 2024-2025 | 7.5% | 2024-2025 |
| USD denominated bonds | 3.5%-4.0% | 2025 | 2.5%-4.0% | 2025 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
200
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including
both cash and non-cash changes. Liabilities arising from financing activities are those for which cash
flows were, or future cash flows will be, classified in the Group’s consolidated statement of cash flows
as cash flows from financing activities.
21. TAXATION
The Bank and its subsidiaries are subject to taxation in accordance with the tax law of the country
where the Group operates.
The income tax expense comprises:
Deferred income tax expense/(benefit) relating to temporary differences is as follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Cash changes | Non-cash changes | |||||
| 1 January 2022 | Issuance of the debt securities | Redemption and repayment of debt securities | Foreign exchange movement | Changes in amortised cost | 31 December 2022 | |
| Debt securities issued | 499,812 | 127,886 | (177,600) | 15,649 | (2,930) | 462,817 |
| Cash changes | Non-cash changes | |||||
| 1 January 2023 | Issuance of the debt securities | Redemption and repayment of debt securities | Foreign exchange movement | Changes in amortised cost | 31 December 2023 | |
| Debt securities issued | 462,817 | 325,696 | (140,705) | (2,157) | 7,742 | 653,393 |
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| Fair value of derivatives and financial assets at fair value through other comprehensive income | 2,871 | (555) |
| Property and equipment, accrued depreciation | 687 | 675 |
| Loans to customers, allowance for expected credit losses | 157 | 1,109 |
| Deferred tax liability on financial instruments | 4,982 | 622 |
| Deferred tax liability on deposits held at JSC "Fund of Problem Loans" | (22,299) | (1,676) |
| Other | (1,637) | (291) |
| DEFERRED INCOME TAX BENEFIT RECOGNIZED IN PROFIT OR LOSS | (15,239) | (116) |
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| Current income tax expense | 136,577 | 105,834 |
| Deferred income tax benefit | (15,239) | (116) |
| TOTAL INCOME TAX EXPENSE | 121,338 | 105,718 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
201
The tax rate for Kazakhstan companies was 20% during the years ended 31 December 2023 and
2022. Income on state and other qualifying securities is tax exempt.
During the year ended 31 December 2023 the tax rates in Georgia and the Republic of Uzbekistan are
15% and 20%, respectively (31 December 2022 – in the Republic of Kyrgyzstan, Georgia and
the Republic of Uzbekistan were 10%, 15% and 20%, respectively).
The effective income tax rate differs from the statutory income tax rates. A reconciliation of the
income tax expense based on the Kazakhstan statutory rate of 20% with the reported income tax
expense is as follows:
Deferred tax assets and liabilities comprise:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| Income before income tax expense | 814,774 | 675,197 |
| Statutory tax rate | 20% | 20% |
| Income tax expense at the statutory rate | 162,955 | 135,039 |
| Tax-exempt interest income and other related income on state and other qualifying securities and derivatives | (42,221) | (39,673) |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | (322) | (588) |
| Non-deductible expenditures: - other provisions | 1,732 | 7,280 |
| - loss from disposal of subsidiary | - | 3,848 |
| - general and administrative expenses | 449 | 759 |
| Other | (1,255) | (947) |
| INCOME TAX EXPENSE | 121,338 | 105,718 |
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| TAX EFFECT OF DEDUCTIBLE TEMPORARY DIFFERENCES: | ||
| Bonuses accrued | 6,387 | 4,853 |
| Fair value of derivatives | 871 | 1,650 |
| Vacation pay accrual | 860 | 688 |
| Other | 32 | 142 |
| DEFERRED TAX ASSET | 8,150 | 7,333 |
| TAX EFFECT OF TAXABLE TEMPORARY DIFFERENCES: | ||
| Fair value adjustment on customer accounts | (16,421) | (38,721) |
| Property and equipment, accrued depreciation | (19,719) | (19,284) |
| Allowance for loans to customers | (1,314) | (1,406) |
| Fair value of derivatives, financial assets at fair value through other comprehensive income, and financial assets at fair value through profit or loss | (30,608) | (21,803) |
| Disposal of subsidiaries | 447 | - |
| Other | 17 | 7 |
| DEFERRED TAX LIABILITY | (67,598) | (81,207) |
| NET DEFERRED TAX LIABILITY | (59,448) | (73,874) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
202
Current income tax assets and liabilities comprise:
The Group has offset deferred tax assets and liabilities on the consolidated statement of financial
position where a right of offset existed. The amounts presented after offset comprise:
Kazakhstan and other countries where the Group operates currently have a number of laws related to
various taxes imposed by both state and regional government authorities. Applicable taxes include
value added tax, income tax, social taxes, and others. Implemented regulations are often unclear or
nonexistent and few precedents have been established. Often, differing opinions regarding legal
interpretation exist both among and within government ministries and organisations; thus, creating
uncertainties and areas of conflict. Tax declarations, together with other legal compliance areas
(for example, customs and currency control matters) are subject to review and investigation by a
number of authorities, which are enabled by law to impose severe fines, penalties and interest
charges. These facts create substantially more significant tax risks in Kazakhstan than typically found
in countries with more developed tax systems.
Commercial legislation of the countries where the Group operates, including tax legislation, may allow
more than one interpretation. In addition, there is a risk of tax authorities making arbitrary judgments
of business activities. If a particular treatment, based on management’s judgment of the Group’s
business activities, was to be challenged by the tax authorities, the Group may be assessed additional
taxes, penalties and interest.
Such uncertainty may relate to the valuation of financial instruments and the market pricing of deals.
Additionally, such uncertainty may relate to the valuation of temporary differences on the provision
and recovery of the provision for impairment losses on loans to customers and receivables, as an
underestimation of the taxable profit .
In Kazakhstan, tax years remain open for review by the tax authorities for five years. However, tax
authorities may perform additional reviews, if considered necessary. In accordance with judicial
rulings, the period of review can be altered, if the court acknowledges the fact of interdiction to
conducting the tax review by the tax authorities.
Management believes that the Group is in compliance with the tax laws affecting its operations;
however, the risk that relevant authorities could take differing positions with regard to interpretive
issues remains.
Movements in net deferred tax liability:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| Deferred tax asset | 351 | 273 |
| Deferred tax liability | (59,799) | (74,147) |
| NET DEFERRED TAX LIABILITY | (59,448) | (73,874) |
| 31 December 2023 | 31 December 2022 | |
| Current income tax refund receivable | 7,956 | 1,521 |
| Current income tax payable | (946) | (12,358) |
| CURRENT INCOME TAX ASSET/(LIABILITY) | 7,010 | (10,837) |
| 31 December 2023 | 31 December 2022 | |
| Net deferred tax liability at the beginning of the year | 73,874 | 71,150 |
| Deferred tax benefit recognized in profit or loss | (15,239) | (116) |
| Deferred tax expense recognized in other comprehensive income | 813 | 2,840 |
| NET DEFERRED TAX LIABILITY AT THE END OF THE YEAR | 59,448 | 73,874 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
203
22.OTHER LIABILITIES
Other liabilities include:
The liability from continuing involvement represents obligations towards JSC Kazakhstan
Sustainability Fund (hereinafter referred to as the “Operator”) associated with the state mortgage
program “7-20-25” and other programs. In accordance with the terms of this program, the Bank
provides mortgage loans to borrowers and transfers the rights of claim on the loans to the Program
Operator. In accordance with the program and the trust management agreement, the Bank carries out
trust management of the transferred mortgage loans. At the same time, the Bank is obliged to redeem
the rights of claim on the transferred mortgage loans if there is a delay in the principal debt and
interest on loans for more than 90 calendar days. The repurchase is carried out at the nominal value
of the loan on the date of purchase.
The Bank has determined that It has no transferred or retained all the risks and rewards of ownership
of these assets, in particular credit risk, but has retained control of the transferred assets and
continues to recognize loans to the extent of its continuing involvement in them. The extent of the
continuing involvement is limited to the maximum amount of consideration received that the Bank
may be required to repay because the Banks continuing involvement takes the form of a guarantee
over the transferred asset. Because the Bank continues to recognize an asset to the extent of its
continuing involvement in loans to customers, the Bank also recognizes an associated liability.
23. EQUITY
The number of shares authorized, issued and fully paid as at 31 December 2023 and 2022, were as
follows:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
22.OTHER LIABILITIES
Other liabilities include:
The liability from continuing involvement represents obligations towards JSC Kazakhstan
Sustainability Fund (hereinafter referred to as the “Operator”) associated with the state mortgage
program “7-20-25” and other programs. In accordance with the terms of this program, the Bank
provides mortgage loans to borrowers and transfers the rights of claim on the loans to the Program
Operator. In accordance with the program and the trust management agreement, the Bank carries out
trust management of the transferred mortgage loans. At the same time, the Bank is obliged to redeem
the rights of claim on the transferred mortgage loans if there is a delay in the principal debt and
interest on loans for more than 90 calendar days. The repurchase is carried out at the nominal value
of the loan on the date of purchase.
| 31 December2023 | 31 December2022 | |
| Liabilities from continuing involvement | 104,921 | 95,346 |
| Banking creditors | 52,130 | 28,521 |
| Accrual for settlements with employees, bonuses andvacations | 35,110 | 27,380 |
| Lenders for non-banking activities | 16,332 | 7,648 |
| Other advances received | 13,597 | 11,409 |
| Tax debts other than income tax | 8,416 | 12,021 |
| Lease liabilities | 4,965 | 5,205 |
| Commercial Real Estate Lenders | 3,838 | 2,092 |
| General and administrative expenses payable | 2,641 | 2,695 |
| Other | 806 | 1,088 |
| TOTAL OTHER LIABILITIES | 242,756 | 193,405 |
The Bank has determined that It has no transferred or retained all the risks and rewards of ownership
of these assets, in particular credit risk, but has retained control of the transferred assets and
continues to recognize loans to the extent of its continuing involvement in them. The extent of the
continuing involvement is limited to the maximum amount of consideration received that the Bank
may be required to repay because the Banks continuing involvement takes the form of a guarantee
over the transferred asset. Because the Bank continues to recognize an asset to the extent of its
continuing involvement in loans to customers, the Bank also recognizes an associated liability.
| Share capital authorised | Share authorized and not issued | Fully paid and issued share capital | Share capital repurchased | Outstanding shares | |
| 31 December 2023: Common | 25,000,000,000 | (11,552,455,218) | 13,447,544,782 | (2,545,373,191) | 10,902,171,591 |
| 31 December 2022: Common | 25,000,000,000 | (11,552,455,218) | 13,447,544,782 | (2,563,676,403) | 10,883,868,379 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
204
All shares are KZT denominated. Movements of shares outstanding are as follows:
Common shares
As at 31 December 2023 and 2022, share capital comprised KZT 209,027 million.
As at 31 December 2023, the Group held 2,545,373,191 shares of the Group’s common shares as
treasury shares for KZT 258,514 million (31 December 2022 – 2,563,676,403 for KZT 260,535
million).
Each common share outstanding is entitled to one vote and dividends. Treasury shares are not entitled
to any vote or dividends.
Dividends paid for the previous financial years were as follows:
Share premium reserve
Share premium reserve represents an excess of contributions received over the nominal value of
shares issued.
24.FINANCIAL COMMITMENTS AND
CONTINGENCIES
The Group’s financial commitments and contingencies comprise the following:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Number of shares Common | Nominal (placement) amount (millions of KZT) Common | |
| 31 DECEMBER 2021 | 10,896,004,850 | (50,295) |
| Purchases common shares | ||
| Purchase of treasury shares | (52,653,439) | (6,044) |
| Sale of treasury shares | 40,516,968 | 4,831 |
| 31 DECEMBER 2022 | 10,883,868,379 | (51,508) |
| Purchases of treasury shares | (10,653,349) | (1,509) |
| Sale of treasury shares | 28,956,561 | 3,530 |
| 31 DECEMBER 2023 | 10,902,171,591 | (49,487) |
| 31 December 2023 | 31 December 2022 | |
| Guarantees issued | 820,260 | 603,028 |
| Commercial letters of credit | 120,497 | 94,192 |
| Commitments to extend credit | 65,207 | 69,122 |
| Financial commitments and contingencies | 1,005,964 | 766,342 |
| Less: cash collateral against letters of credit | (45,279) | (63,730) |
| Less: provisions | (11,695) | (13,773) |
| FINANCIAL COMMITMENTS AND CONTINGENCIES,NET | 948,990 | 688,839 |
| Paid in 2023 for the year ended 31 December 2022 | Paid in 2022 for the year ended 31 December 2021 | |
| Dividends declared during the period | 276,524 | 138,341 |
| Dividend paid per one common share | 25.38 | 12.71 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
205
Guarantees issued represent bank guarantees issued by the Group by order of its clients, and which
are in effect as at the reporting date. As at 31 December 2023, uncovered guarantees issued for the
ten largest groups of customers/groups of customers accounted for 46% of the Group’s total
financial guarantees (31 December 2022 – 45%) and represented 16% of the Group’s total equity
(31 December 2022 – 14%).
Commercial letters of credit represent letters of credit issued by the Group by order of its clients,
and under which, as at the reporting date, the payment has not yet been made. As at 31 December
2023, the ten largest unsecured letters of credit accounted for 57% of the Group’s total commercial
letters of credit (31 December 2022 – 31%) and represented 3% of the Group’s total equity (31
December 2022 – 1%).
The Group requires collateral to support credit-related financial instruments, when it is deemed
necessary. The Group typically requires collateral support unless it is determined to be not
necessary through a review of the credit risk of the borrower or an analysis of other deposit accounts
held by the Group. Collateral held varies, but may include deposits held with banks, government
securities and other assets.
Provision represents other credit loss expenses against letters of credit and guarantees issued .
The movements in provisions were as follows:
31 December 2022
31 December 2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Stage 1 | Stage 2 | Stage 3 | Total | |
| At the beginning of the year | (306) | (6,433) | (6,454) | (13,193) |
| Transfer to Stage 2 | 3 | (7) | 4 | - |
| Transfer to Stage 3 | 3,156 | 25 | (3,181) | - |
| (Additional provisions recognized)/recoveries | (3,346) | 446 | 2,978 | 78 |
| Disposal of subsidiaries | 176 | - | 403 | 579 |
| Foreign exchange differences | 308 | (745) | (800) | (1,237) |
| AT THE END OF THE YEAR | (9) | (6,714) | (7,050) | (13,773) |
| Stage 1 | Stage 2 | Stage 3 | Total | |
| At the beginning of the year | (9) | (6,714) | (7,050) | (13,773) |
| Transfer to Stage 1 | (5,208) | (3) | 5,211 | - |
| Transfer to Stage 2 | 1 | (1) | - | - |
| Transfer to Stage 3 | 2,439 | - | (2,439) | - |
| (Additional provisions recognized)/recoveries | 931 | 3,287 | (2,588) | 1,630 |
| Disposal of subsidiaries | 69 | - | - | 69 |
| Foreign exchange differences | 1 | 213 | 165 | 379 |
| AT THE END OF THE YEAR | (1,776) | (3,218) | (6,701) | (11,695) |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
206
Capital commitments
As at 31 December 2023, the Group had capital expenditures commitments in respect of
construction in progress for KZT 35,790 million, of which the amount of KZT 33,871 million refers to
the construction of the Bank’s administrative building in Astana (31 December 2022 – KZT 1,595
million).
Operating lease commitments
There were no material operating lease commitments under irrevocable operating leases
outstanding as at 31 December 2023 and 2022 .
25. NET INTEREST INCOME
31 December
2023
31 December
2022
INTEREST INCOME:
Loans to customers 1,349,836 983,419
- Corporate business 599,633 435,286
- Retail business 527,606 402,568
- SME business 222,597 145,565
Financial assets at fair value through other comprehensive
income 155,145 97,309
Debt securities at amortised cost, net of allowance for
expected credit losses 66,175 91,388
Amounts due from credit institutions and cash and cash
equivalents 49,319 41,026
Other financial assets 6,543 7,501
INTEREST INCOME CALCULATED USING EFFECTIVE
INTEREST METHOD 1,627,018 1,220,643
Financial assets at fair value through profit or loss 42,764 27,005
OTHER INTEREST INCOME 42,764 27,005
TOTAL INTEREST INCOME 1,669,782 1,247,648
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
207
Other interest and similar expense include loss on initial recognition of long-term financial accounts
receivable.
The total interest income calculated using the EIR method for financial assets measured at amortised
cost is KZT 1,471,873 million for the year ended 31 December 2023
(31 December 2022: KZT 1,123,334 million).
26.FEES AND COMMISSIONS
Fee and commission income is derived from the following sources:
Fee and commission expense is derived from the following sources:
Transactional income of individuals and legal entities includes fee and commission income derived
from bank transfers on settlements and salary projects, maintenance of customer accounts and
plastic card operations, cash operations and servicing customers’ pension payments.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| INTEREST EXPENSE: | ||
| Amounts due to customers | (771,460) | (477,839) |
| - Individuals | (361,449) | (227,747) |
| - Legal entities | (410,011) | (250,092) |
| Amounts due to credit institutions | (46,723) | (63,982) |
| Debt securities issued | (40,284) | (35,317) |
| Other financial liabilities | (708) | (827) |
| Other interest and similar expense | (110) | (217) |
| Total interest expense | (859,285) | (578,182) |
| NET INTEREST INCOME BEFORE CREDIT LOSS EXPENSE | 810,497 | 669,466 |
| 31 December 2023 | 31 December 2022 | |
| Transactional expense of individuals | (76,518) | (78,983) |
| Transactional expense of legal entities | (5,304) | (7,420) |
| Deposit insurance | (13,357) | (6,265) |
| Other | (4,525) | (3,431) |
| TOTAL FEE AND COMMISSION EXPENSE | (99,704) | (96,099) |
| 31 December 2023 | 31 December 2022 | |
| Transactional income of individuals | 139,948 | 129,232 |
| Transactional income of legal entities | 44,403 | 38,343 |
| Letters of credit and guarantees issued | 20,036 | 13,863 |
| Other | 9,016 | 10,849 |
| Loyalty program | (13,343) | (12,221) |
| TOTAL FEE AND COMMISSION INCOME | 200,060 | 180,066 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
208
Transactional expense of individuals and legal entities includes fee and commission expense derived
from payment cards, bank transfers and cash operations.
27. NET GAIN/(LOSS) ON FINANCIAL ASSETS
AND LIABILITIES AT FAIR VALUE THROUGH
PROFIT OR LOSS
Net gain/(loss) on financial assets and liabilities at fair value through profit or loss comprises:
28.NET FOREIGN EXCHANGE GAIN
Net foreign exchange gain comprises:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| NET GAIN/(LOSS) ON OPERATIONS WITH FINANCIAL ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR TRADING: | ||
| Realized net gain on derivative operations | 28,831 | 12,798 |
| Net gain/(loss) on trading operations | 34,255 | (10,262) |
| Unrealized net gain/(loss) on derivative operations | 9,508 | (3,061) |
| TOTAL NET GAIN/(LOSS) ON OPERATIONS WITH FINANCIAL ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR TRADING | 72,594 | (525) |
| 31 December | 31 December | |
| 2023 | 2022 | |
| Dealing, net | 107,271 | 172,982 |
| Translation differences, net | (17,157) | 4,911 |
| TOTAL NET FOREIGN EXCHANGE GAIN | 90,114 | 177,893 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
209
29. INSURANCE REVENUE/(INSURANCE
SERVICE EXPENSE)
The following tables illustrate an analysis of insurance revenue recognized during this period:
18
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Auditors’ Report for
the Year Ended 31
December 2023
Y ear ended 31 December 2023
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Employer Liability Annuities | Pension annuities | Endowment insurance | Term life insurance | Short-term contracts | Health insurance | Mandatory liability insurance for vehicle owners | Property insurance | Motor transport and liability insurance | Other | Total | |
| Insurance revenue | 2,441 | 645 | 256 | 1,507 | 84,165 | 10,535 | 11,420 | 62,711 | 12,348 | 26,454 | 212,482 |
| Release of risk adjustment | 69 | 537 | 2,732 | 201 | - | - | - | - | - | - | 3,539 |
| Margin amortization | 565 | 5,652 | 2,807 | 129 | - | - | - | - | - | - | 9,153 |
| Depreciation of acquisition costs | 10 | 734 | 1,188 | 12,083 | - | - | - | - | - | - | 14,015 |
| TOTAL INSURANCE REVENUE | 3,085 | 7,568 | 6,983 | 13,920 | 84,165 | 10,535 | 11,420 | 62,711 | 12,348 | 26,454 | 239,189 |
| Employer Liability Annuities | Pension annuities | Endowment insurance | Term life insurance | Short-term contracts | Health insurance | Mandatory liability insurance for vehicle owners | Property insurance | Motor transport and liability insurance | Other | Total | |
| Insurance revenue | 1,946 | 752 | 1,736 | 1,420 | 63,244 | 6,207 | 16,506 | 46,463 | 8,363 | 20,784 | 167,421 |
| Release of risk adjustment | 83 | 750 | 2,799 | 218 | - | - | - | - | - | - | 3,850 |
| Margin amortization | 479 | 5,158 | 1,166 | 99 | - | - | - | - | - | - | 6,902 |
| Depreciation of acquisition costs | 9 | 366 | 829 | 15,499 | - | - | - | - | - | - | 16,703 |
| TOTAL INSURANCE REVENUE | 2,517 | 7,026 | 6,530 | 17,236 | 63,244 | 6,207 | 16,506 | 46,463 | 8,363 | 20,784 | 194,876 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
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210
Year ended 31 December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
210
| Employer Liability Annuities | Pension annuities | Endowment insurance | Term life insurance | Short-term contracts | Health insurance | Mandatory liability insurance for vehicle owners | Property insurance | Motor transport and liability insurance | Other | Total | |
| COSTS FOR INSURANCE SERVICES: | |||||||||||
| incurred insurance losses and other incurred costs for insurance services | (7,923) | (5,250) | 886 | (3,020) | (4,654) | (10,901) | (7,335) | (5,647) | (8,251) | (3,994) | (56,089) |
| amortization of acquisition cash flows | (9) | (366) | (829) | (15,485) | (27,719) | (646) | (4,395) | (1,656) | (3,755) | (3,355) | (58,215) |
| changes that are attributed to past periods | - | - | - | - | (1,746) | (142) | 600 | (10,245) | (474) | (370) | (12,377) |
| Losses under groups of onerous contracts and restoration of such losses | (2) | - | (881) | (494) | - | - | 159 | - | (585) | - | (1,803) |
| TOTAL EXPENSES FOR INSURANCE SERVICES TAKEN INTO ACCOUNT IN THE ASSESSMENT OF LIABILITIES | (7,934) | (5,616) | (824) | (18,999) | (34,119) | (11,689) | (10,971) | (17,548) | (13,065) | (7,719) | (128,484) |
| Net expenses/(income) under recourse claim | (29) | ||||||||||
| Income received under recourse claim | 729 | ||||||||||
| Acquisition expenses | (6,524) | ||||||||||
| Expenses for settlement of insurance losses | 99 | ||||||||||
| Expenses associated with insurance (reinsurance) activities | 2,362 | ||||||||||
| TOTAL EXPENSES FOR INSURANCE SERVICES | (131,847) |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
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211
Year ended 31 December 2022
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
211
| Employer Liability Annuities | Pension annuities | Endowment insurance | Term life insurance | Short-term contracts | Health insurance | Mandatory liability insurance for vehicle owners | Property insurance | Motor transport and liability insurance | Other | Total | |
| COSTS FOR INSURANCE SERVICES: | |||||||||||
| incurred insurance losses and other incurred costs for insurance services | (3,537) | (3,457) | (5,415) | (4,847) | (24,816) | (8,189) | (10,288) | (2,076) | (6,393) | (2,940) | (71,958) |
| amortization of acquisition cash flows | (10) | (734) | (1,188) | (12,083) | (11,329) | (468) | (8,497) | (929) | (2,131) | (3,902) | (41,271) |
| changes that are attributed to past periods | - | - | (907) | (669) | (3,421) | (412) | (699) | (2,888) | (279) | 11,797 | 2,522 |
| Losses under groups of onerous contracts and restoration of such losses | (2) | - | (144) | (805) | - | - | 1,646 | - | (854) | - | (159) |
| TOTAL EXPENSES FOR INSURANCE SERVICES TAKEN INTO ACCOUNT IN THE ASSESSMENT OF LIABILITIES | (3,549) | (4,191) | (7,654) | (18,404) | (39,566) | (9,069) | (17,838) | (5,893) | (9,657) | 4,955 | (110,866) |
| Net expenses/(income) under recourse claim | 81 | ||||||||||
| Income received under recourse claim | 366 | ||||||||||
| Acquisition expenses | (3,272) | ||||||||||
| Expenses for settlement of insurance losses | (1,256) | ||||||||||
| Expenses associated with insurance (reinsurance) activities | (1,019) | ||||||||||
| TOTAL EXPENSES FOR INSURANCE SERVICES | (115,966) |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
212
30.OPERATING EXPENSES
Operating expenses comprises:
31. INCOME ON NON-BANKING ACTIVITIES
32.EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing the net income for the year attributable
to equity holders of the parent by the weighted average number of participating shares outstanding
during the year.
According to Kazakhstan legislation on Joint Stock Companies, dividend payments on common
shares may not exceed dividend payments on preferred shares for the same year. Therefore, net profit
for the year is allocated to the ordinary shares and the preferred shares in accordance with their legal
and contractual dividend rights to participate in undistributed earnings.
18
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Auditors’ Report for
the Year Ended 31
December 2023
* In response to the economic implications of January 2022 events, the Government has prepared initiatives designed
to address the current crisis. A special charitable fund “For the People of Kazakhstan”, which is funded from private
and public sources, is established to support citizens of Kazakhstan in the field of healthcare, education and provide
other social support. During the year ended 31 December 2023 the Group has contributed KZT 2 billion
(31 December 2022 – KZT 3 billion) to the fund, which are part of charity expenses .
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| Salaries and other employee benefits | 126,929 | 108,461 |
| Depreciation and amortization expenses | 18,534 | 17,011 |
| Taxes other than income tax | 9,772 | 11,335 |
| Information services | 7,905 | 6,856 |
| Communication | 6,419 | 6,621 |
| Advertisement | 5,504 | 4,226 |
| Repair and maintenance | 5,297 | 3,895 |
| Security | 5,438 | 6,174 |
| Utilities expenses | 4,721 | 4,625 |
| Charity* | 4,547 | 6,542 |
| Rent | 3,151 | 2,903 |
| Stationery and office supplies | 3,066 | 2,566 |
| Professional services | 1,663 | 1,717 |
| Other | 13,942 | 10,086 |
| TOTAL OPERATING EXPENSES | 216,888 | 193,018 |
| 31 December 2023 | 31 December 2022 | |
| Net gain on sale of commercial property | 17,864 | 19,659 |
| Net gain on sale of investment property | 166 | 235 |
| Net gain on sale of assets classified as held for sale | 1,283 | 1,304 |
| Other income on non-banking activities | 4,269 | 4,356 |
| INCOME ON NON-BANKING ACTIVITIES | 23,582 | 25,554 |
18
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
213
The following table presents basic and diluted earnings per share:
As required by KASE rules for listed companies, the book value of one common share as at 31
December 2023 and 2022 is disclosed as follows:
31 December 2023
31 December 2022
Equity attributable to common shares is calculated as the difference between the total equity and total
net book value of intangible assets.
The management of the Group believes that it fully complies with the requirement of KASE as at the
reporting dates.
33.FINANCIAL RISK MANAGEMENT
Risk management is fundamental to the Group’s banking business and is an essential element of the
Group’s operations. The main risks inherent to the Group’s operations are those related to:
○ Credit risk;
○
Liquidity risk; and
○
Market risk.
The Group recognises that it is essential to have efficient and effective risk management processes in
place. To enable this, the Group has established a risk management framework, whose main purpose
is to protect the Group from risk and allow it to achieve its performance objectives. Through the risk
management framework, the Group manages the following risks.
Risk appetite management
Risk appetite is the aggregate level and types of risks that the Bank is ready to accept when achieving
strategic objectives and business plan.
In order to build an effective system for managing the Bank's risk appetite, the risk appetite strategy
of JSC Halyk Bank was developed and approved.
The risk appetite strategy defines clear boundaries of the volume of accepted significant risks in
which the Bank operates as part of the implementation of the overall development strategy of Halyk
Group, and
also
determines
the
risk
profile
of
the
Bank's
activities
in
order
to
prevent
the
implementation of risks or minimize their negative impact on the financial position of the Bank.
As part of the development and implementation of the risk appetite strategy for each significant level
of risk, the Board of Directors approved the levels of risk appetite (for credit risk, market risk, liquidity
risk, operational risk), taking into account the adopted business model, scale of activities, types and
complexity of the Bank's operations.
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Year ended 31 December 2023 | Year ended 31 December 2022 | |
| BASIC AND DILUTED EARNINGS PER SHARE | ||
| Net profit for the year attributable to equity holders of the parent | 693,435 | 569,477 |
| Earnings attributable to common shareholders | 693,435 | 569,477 |
| Weighted average number of common shares for the purposes of basic earnings per share | 10,894,712,258 | 10,891,001,418 |
| BASIC EARNINGS PER SHARE (IN TENGE) | 63.65 | 52.29 |
| Class of shares | Outstanding shares | Equity (as calculated per KASE rules) | Book value of one share, in KZT |
| Common | 10,902,171,591 | 2,463,607 | 225.97 |
| 2,463,607 |
| Class of shares | Outstanding shares | Equity (as calculated per KASE rules) | Book value of one share, in KZT |
| Common | 10,883,868,379 | 1,997,927 | 183.57 |
| 1,997,927 |
18
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the Year Ended 31
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Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
214
Internal process for assessing capital adequacy
In accordance with the requirements of the rules for the formation of a risk management and internal
control system for second-tier banks, the Group developed and implemented an internal process for
assessing capital adequacy, which was approved by the Board of Directors. The internal capital
adequacy assessment process (the “ICAAP”) is a set of processes for managing significant risks,
taking into account the volume of assets, the nature and level of complexity of the activity, the
organizational
structure,
strategic
plans,
risk
profile,
regulatory
framework,
assessment
and
aggregation of such risks in order to determine target level of the Group's capital adequacy to
maintain a stable financial position and solvency.
The purpose of the ICAAP development is to identify, assess, aggregate and control significant types
of risks inherent in the Group's activities in order to determine the required level of capital sufficient to
cover them, including: credit risk, market risk, liquidity risk and operational risk. The Group assesses
the adequacy of its equity capital, taking into account the current level of risk appetite and
development strategy, based on the approved budget. Equity capital adequacy is assessed taking into
account the results of stress testing of the Group's risks. The internal process for assessing capital
adequacy is subject to continuous review of both quantitative and qualitative indicators, including the
application of its results, approaches to stress testing, risk identification and information collection
process, validation of risk assessment models.
Credit risk
Credit risk is the risk of loss arising for the Group when a borrower/counterparty is unable to meet its
contractual obligations on time or in full.
The risk management department plays an important role in managing and controlling the credit risk.
This division is responsible for credit risk identification, evaluation and implementation of control and
monitoring measures. As part of the credit risk management system, the Group maintains a sufficient
level of allowances for expected credit losses, controls the credit risk assessment process, takes the
necessary measures to ensure the completeness and reliability of information in order to make
decisions, adhere to internal policies and procedures, and maintain a credit assessment procedures
independent of the business units risks.
The risk management department directly participates in credit decision - making processes and the
development process of internal rules, regulations and loan programs. In addition, the department
provides independent recommendations concerning credit exposure limitation measures, controls
limits and monitors credit risks, the level of risk appetite for credit risk, provides relevant reporting to
management and ensures compliance of the credit process with external laws/regulations as well as
internal requirements and procedures.
The Group structures the level of credit risk it undertakes by placing limits on the amount of risk
accepted in relation to one borrower/counterparty, or groups of borrowers, and to industry (and
geographical) segments. Limits on the level of credit risk concentration by industry sector are
approved and controlled by the Assets and Liabilities Management Committee (the “ALMC”). The
Group sets the levels of risk appetite for the concentration of the loan portfolio by types of lending:
corporate business, small and medium business, retail business to the Bank's loan portfolio, portfolio
concentration by 10 large borrowers of the Bank, the concentration of the portfolio on foreign
currency loans, the concentration of the loan portfolio by the acceptable rating level, PD level and NPL
level in small and retail business in the loan portfolio by lending segment. Limits on credit risk
exposure with respect to credit programs (SME and retail) are approved by the Management Board.
The exposure to any one borrower, including banks and brokers, covers on and off-balance sheet
exposures, which are reviewed by the Credit Committees and the ALMC. Actual exposures against
limits are monitored daily.
The risk that the counterparty will not meet its obligations is restricted by the limits covering on and
off-balance sheet exposure.
Commitments to extend credit represent unused portions of credit in the form of loans, guarantees or
letters of credit. The credit risk for off-balance sheet financial instruments is defined as a probability
of losses due to the inability of a counterparty to comply with the contractual terms and conditions.
With respect to credit risk on commitments to extend credit, the Group is potentially exposed to a loss
in an amount equal to the total unused commitments. However, the likely amount of the loss is less
than the total unused commitments since most commitments to extend credit are contingent upon
counterparties maintaining specific credit standards. The Group applies the same credit policy to the
contingent liabilities as it does to the financial instruments recorded in the consolidated statement of
financial position (i.e. the policy based on the procedures for approving the grant of loans, using limits
to mitigate the risk, and current monitoring). The Group monitors the term to maturity of off-balance
sheet contingencies, as longer term commitments generally have a greater degree of credit risk than
shorter term commitments.
Structure and authorities of credit committees
Credit committees, the ALMC, the Management Board, Risk Committee and the Board of Directors are
credit authorities responsible for the implementation of the Bank’s Credit Policy and credit decision
making process.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
215
Head Office Credit Committee (“СС”)
The primary goal of the CC is the implementation of the Bank’s Credit Policy in terms of credit
operations and credit applications from corporate customers.
Branch Credit Committee and Branch Network Credit Committee (“BCC”, “BNCC”)
The primary goal of the BCC and the BNCC is the implementation of the Bank’s Credit Policy in terms
of granting financial instruments via branches to SME customers.
Delegated credit authority limits for the BCC and the BNCC are established by the Management
Board. The BCC makes credit decisions within its limits. If the loan application exceeds the relevant
credit limit or the authorities of the BCC, the final decision has to be taken by the BNCC. The procedure
of the decision-making by the BNCC involves consideration of a package of documents, including
complex analysis and assessments of the potential borrowers conducted by the Bank’s experts.
Retail Branch Credit Committee of the Head Office (“RCCHO”) and Decision Making Center
(“DMC”)
The primary goal of the RCCHO and the DMC, which are credit authorities, is the implementation of
the Bank’s Credit Policy in terms of granting retail financial instruments via branches.
The DMC is comprised of credit underwriters with delegated credit authorities based on a four eyes
principle. The DMC makes credit decisions within their authorities and limits established by the
Management Board and the RCCHO. The RCCHO is authorised to consider loan applications that
exceed relevant credit limits or the authorities of the DMC, as well as other matters within the
authorities established by the Management Board.
Along with the functioning of the DMC and RCCHO, there is an automated approach for making
decisions when lending to individuals. Automation of decision making is based on a risk-based
approach, including Risk Based Pricing and the use of additional parameters when assessing
customer solvency. Based on the results of consideration of applications, loan proposals are formed
both according to the requested conditions and by offering alternative solutions for all segments of
applicants for individuals (participants / non-participants of the salary project, pensioners, etc.). This
approach takes into account the risk profile of the potential borrower and allows minimising the credit
risk exposure in the decision making process.
Decision Making Center for Small Business (“DMC for SB”)
The main task of DMC is to consider loan applications in the small business sector in an amount not
exceeding KZT 400 million.
The DMC for SB consists of credit underwriters with delegated decision-making powers based on the
four-eye principle. The Decision Making Center takes decisions within the framework of the authority
approved by the Board of the Bank and the limits approved by the BNCC.
Problem loans committee of the Head Office, branches
The primary goal of the problem loans committee of the Head Office, branches is the implementation
of the Bank’s Credit Policy in terms of management, servicing and maintaining the repayment of the
problem loans.
Authorised credit authorities of the Bank’s subsidiaries
Consideration and approval of the loan applications in the subsidiaries are performed by the
authorised credit authorities in accordance with the internal rules and regulations of the subsidiary.
Loan applications exceeding the established limits and authorities have to be approved by the Board
of Directors of the subsidiaries with the preliminary consideration by the relevant credit committee,
according to the Bank’s internal rules and regulations.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
216
ALMC
The primary goal of the ALMC is profit maximisation and to limit the risks of banking activities related
to raising and allocating funds and the establishment of a medium-term policy for the management of
assets and liabilities. The main tasks of the ALMC are: liquidity management, market risk
management, ensuring effective control over the activities of the Bank's executive bodies on financial
risk management and determining priority areas for minimizing the Bank's risks
The ALMC is also responsible for establishing country and counterparty-bank limits. The ALMC
reports to the Board of Directors.
The Management Board
For loan applications exceeding the authorities of the Head Office Credit Committee, the BNCC and
the RCCHO, or exceeding the relevant limits of the BNCC and the RCCHO, have to be considered by
the Management Board.
Risk Committee
The Committee is a collegial body under the Board of Directors and assists in the implementation of
functions related to the formation of an effective risk management and internal control system in the
Bank, ensuring its functioning and informing the Board of Directors about the level of risks assumed
by the Bank.
The Board of Directors
If the loan application exceeds 5% of the Bank’s equity capital or the potential borrower is a related
party, such applications have to be considered by the Board of Directors.
Maximum Exposure
The Group’s maximum exposure to credit risk varies significantly and is dependent on both individual
risks and general market risks.
The following table presents the maximum exposure to credit risk of financial assets and contingent
liabilities. For financial assets, the maximum exposure equals the carrying value of those assets prior
to any offset or collateral. For financial guarantees and other contingent liabilities, the maximum
exposure to credit risk is the maximum amount the Group would have to pay if the guarantee was
called on, or in the case of commitments, if the loan amount was called on (Note 22). The collateral
pledged is represented by the carrying amount of a financial instrument for which the collateral was
received as security.
31 December 2023
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* Amount represents the short-term loans and deposits with original maturities of not more than 90 days,
which are included within cash and cash equivalents in the statement of financial position.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Maximum exposure and net exposure after offset | Collateral pledged | |
| Cash equivalents* | 1,063,260 | 39,052 |
| Obligatory reserves | 244,866 | |
| Financial assets at fair value through profit or loss (less equity securities) | 427,415 | |
| Amounts due from credit institutions | 171,754 | |
| Financial assets at fair value through other comprehensive income | 2,416,272 | |
| Debt securities at amortised cost, net of allowance for expected credit losses | 725,343 | |
| Loans to customers | 9,284,872 | 7,849,080 |
| Other financial assets | 81,766 | |
| Commitments and contingencies (less provisions) | 994,269 | 45,279 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* Amount represents the short-term loans and deposits with original maturities of not more than 90 days,
which are included within cash and cash equivalents in the statement of financial position.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
217
As at 31 December 2023 and 2022, there is no any difference between maximum exposure and net
exposure after offset.
Significant increase in credit risk
As explained in Note 4, the Group monitors all financial assets that are subject to impairment
requirements to assess whether there has been a significant increase in credit risk since initial
recognition. If there has been a significant increase in credit risk, the Group will measure the loss
allowance based on lifetime rather than 12-month ECL.
The Group uses credit risk grades as a primary input into the determination of the term structure of the
PD for exposures. The Group collects performance and default information about its credit risk
exposures analyzed by jurisdiction or region and by type of product and borrower as well as by credit
risk grading. The information used is both internal and external depending on the portfolio assessed.
31 December 2022
The Group uses different criteria to determine whether credit risk has increased significantly per
portfolio of assets. The criteria used are both quantitative changes in PDs as well as qualitative.
For treasury operations (interbank transactions, securities, reverse repurchase agreements), a
significant increase in credit risk is determined individually for each financial asset on the basis of
quantitative indicators (rating downgrades by 3 or more steps since initial recognition, overdue by 1
day or more since initial recognition) and qualitative indicators (negative information relating to the
issuer/counterparty, including deterioration of financial condition, change of shareholders, the
realization of the risk of loss of reputation, the systematic violation of prudential standards) since initial
recognition.
For bank loans assessed on a collective basis, a significant increase in credit risk is determined on the
basis of increase in lifetime probability of default since initial recognition over defined thresholds for
segmented homogeneous portfolios and for loans with an overdue more than 30 days since initial
recognition, for loans assessed on an individual basis - additionally in case of the decrease of internal
credit rating and increase in lifetime PD on 10 percentage points in accordance with the internal rating
model (the presence of restructuring during deterioration of the financial position for classification to
Stage 3), expert opinions of the Bank’s specialists based on the changes in the qualitative and
quantitative indicators of the borrower, a significant deterioration of collateral and other objective
evidence of significant financial difficulties since initial recognition.
Stage 3 is determined for loans that are assessed on a collective basis with an overdue of over
60 - 90 days, for loans assessed on an individual basis - over 60 days past due, restructuring related
to the deterioration of financial condition, deterioration of the internal credit rating and expert opinion
of the Bank’s specialists.
The Group considers that certain financial instruments with low credit risk at the reporting date have
not experienced a significant increase in credit risk. The Group applies this policy to financial
instruments issued to sovereign and financial institutions only. The Group considers a financial
instrument to have low credit risk when their external credit risk rating is equivalent to definition of
'investment grade' by international rating agencies.
The Group has monitoring procedures in place to make sure that the criteria used to identify
significant increases in credit are effective, meaning that significant increase in credit risk is identified
before the exposure is defaulted or when the asset becomes 30 days past due.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* Amount represents the short-term loans and deposits with original maturities of not more than 90 days,
which are included within cash and cash equivalents in the statement of financial position.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Maximum exposure and net exposure after offset | Collateral pledged | |
| Cash equivalents* | 1,753,870 | 17,152 |
| Obligatory reserves | 259,544 | - |
| Financial assets at fair value through profit or loss (less equity securities) | 290,257 | - |
| Amounts due from credit institutions | 135,655 | - |
| Financial assets at fair value through other comprehensive income | 2,100,315 | - |
| Debt securities at amortised cost, net of allowance for expected credit losses | 1,019,089 | - |
| Loans to customers | 7,857,902 | 6,806,961 |
| Other financial assets | 78,186 | - |
| Commitments and contingencies (less provisions) | 752,569 | 63,730 |
18
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December 2023
* Amount represents the short-term loans and deposits with original maturities of not more than 90 days,
which are included within cash and cash equivalents in the statement of financial position.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
218
Incorporation of forward-looking information
The Group uses forward-looking information that is available without undue cost or effort in its
assessment of significant increase of credit risk as well as in its measurement of ECL.
The incorporation of forward-looking elements reflects the expectations of the Group and involves the
creation of two scenarios (“base case” and “downside” scenarios), including an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non-linear
impact of assumptions about macroeconomic factors on the expected credit losses. The “base case”
scenario enters with a probability of 75% and the “downside” scenario with a probability of 25%.
Development of forecasting was carried out by JSC Halyk Finance using internal and external
information for creating “base case” and “downside” scenarios of future forecasting of relevant
economic variables along with a representative range of other possible forecast scenarios. The
external information used includes economic data and forecasts published by governmental bodies
and monetary authorities.
The Group applies probabilities to the forecast scenarios identified. The base case scenario is the
single most-likely outcome and consists of information used by the Group for strategic planning and
budgeting. The Group has identified and documented key drivers of credit risk and credit losses for
each portfolio of financial instruments and, using a statistical analysis of historical data, has estimated
relationships between macro-economic variables and credit risk and credit losses.
When applying these stress factors, the results of stress testing performed at the end of 2023 show a
slight decrease in certain financial indicators of the Group (growth in provisions for expected credit
losses, decrease in net profit and outflow of customer accounts).
At the same time, given that, the Group has a sufficient amount of equity and liquid assets, significant
deterioration in the financial position of the Group and violation of regulatory requirements and norms
are not predicted.
In general, a worsening of forecasted macroeconomic variables for each scenario or an increase in the
probability of the “downside” scenario occurring will both increase the number of loans migrating
from Stage 1 to Stage 2 and increase the estimated allowances for expected credit losses. In contrast,
an improvement in the outlook on forecasted macroeconomic variables or an increase in the
probability of the “base case” scenario occurring will have a positive impact. It is not possible to
meaningfully isolate the impact of changes in the various macroeconomic variables for a particular
scenario due to the interrelationship between the variables as well as the interrelationship between
the level of pessimism inherent in a particular scenario and its probability of occurring.
The table below summarizes the forecasts for the following year for the principal macroeconomic
indicators included in economic scenarios as at 31 December 2023 and 2022 for Kazakhstan, which
is the country where the Group operates and therefore is the country that has a material impact in
ECLs.
Financial assets are graded according to the current credit rating they have been issued by an
international rating agency or in accordance with the Group’s internal rating system. The highest
possible rating is AAA. Investment grade financial assets have ratings from AAA to BBB. Financial
assets which have ratings lower than BBB are classified as speculative grade.
18
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Statements and
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Auditors’ Report for
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December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2023 | |||
| List of macro variables used | Definition | Range | Definition | Range |
| Real GDP growth | % change | Between 2.8% and 4.5% | % change | Between 1.6% and 3.2% |
| Inflation | Inflation % | Between 10.3% and 12.5% | Inflation % | Between 14.3% and 16.0% |
| Oil price (USD/bbl) | Price per barrel | Between USD 60 and USD 80 | Price per barrel | Between USD 60 and USD 80 |
18
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Statements and
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Auditors’ Report for
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December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
219
The following table details the credit ratings of financial assets held by the Group (except for loans to
customers, which are disclosed in details below), before any allowances for expected credit losses:
18
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Auditors’ Report for
the Year Ended 31
December 2023
* Amount represents the short-term loans and deposits with original maturities of not more than 90 days,
which are included within cash and cash equivalents in the statement of financial position.
585,630 54,055 15,331 1,063,296
- 234,054 10,812 - 244,866
263,602 107,364 15,436 589,362
37,701 33,403 16,143 172,154
1,962,799 68,567 397 2,425,902
- 710,267 15,732 - 725,999
Other financial assets - - - - - 113,422 113,422
Commitments and contingencies - - - - - 1,005,964 1,005,964
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
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December 2023
| AA | AA- | ||||||
| 31 December | 2023 | ||||||
| A BBB | <BBB | Not Rated | Total | ||||
| Cash equivalents* | 236,673 | 102,015 | 69,592 | ||||
| Obligatory reserves | - | - | |||||
| Financial assets at fair value through profit or loss Amounts due from credit institutions | 42,588 5,666 | 102,429 26,343 | 57,943 52,898 | ||||
| Financial assets at fair value through other | |||||||
| comprehensive income | 203,639 | 79,983 | 110,517 | ||||
| Debt securities at amortised cost | - | - |
| 31 December 2022 Total | |||||||
| AA | AA- | A | BBB | <BBB | Not Rated | ||
| Cash equivalents* | 338,678 | 111,290 | 181,764 | 1,049,429 | 57,175 | 15,555 | 1,753,891 |
| Obligatory reserves | - | - | - | 234,552 | 24,992 | - | 259,544 |
| Financial assets at fair value through profit or loss 29,028 | 79,714 | 39,346 | 247,191 | 40,838 | 13,814 | 449,931 | |
| Amounts due from credit institutions | 8,624 | 25,466 | 37,215 | 7,369 | 36,486 | 20,840 | 136,000 |
| Financial assets at fair value through other comprehensive income | 312,265 | 66,907 | 92,863 | 1,568,149 | 60,087 | 8,998 | 2,109,269 |
| Debt securities at amortised cost | - | - | - | 975,153 | 42,570 | 1,716 | 1,019,439 |
| Other financial assets | - | - | - | - | - | 111,628 | 111,628 |
| Commitments and contingencies | - | - | - | - | - | 766,342 | 766,342 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
220
The banking industry is generally exposed to credit risk through its financial assets and contingent
liabilities. Credit risk exposure of the Group is concentrated within the Republic of Kazakhstan. The
exposure is monitored on a regular basis to ensure that the credit limits and credit worthiness
guidelines established by the Group’s risk management policy are not breached.
The following table details the carrying value of assets that are impaired and for those that are past
due but not impaired:
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Auditors’ Report for
the Year Ended 31
December 2023
As at 31 December 2023, the carrying amount of unimpaired overdue loans was KZT 62,832 million
(31 December 2022 – 67,128 million). Maturities of these overdue loans are not greater than 90 days.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
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Auditors’ Report for
the Year Ended 31
December 2023
| Financial assets that have been individually assessed for impairment | Financial assets that have been collectively assessed for impairment | ||||||
| Unimpaired financial assets | Impaired financial assets | ||||||
| Gross carrying amount of assets | Amount of allowance for expected credit losses | Gross carrying amount of assets | Amount of allowance for expected credit losses | Gross carrying amount of assets | Amount of allowance for expected credit losses | 31 December 2023 Total | |
| Amounts due from credit institutions | 169,622 | (395) | - | - | 2,532 | (5) | 171,754 |
| Financial assets at fair value through other comprehensive income | 2,428,108 | (2,206) | - | - | - | - | 2,425,902 |
| Debt securities at amortised cost | 723,037 | (653) | - | - | 2,962 | (3) | 725,343 |
| Loans to customers | 5,452,369 | (30,037) | 497,573 | (224,425) | 3,824,856 | (235,464) | 9,284,872 |
| Other financial assets | - | - | 55,559 | (31,066) | 57,863 | (590) | 81,766 |
| Financial assets that have been individually assessed for impairment | Financial assets that have been collectively assessed for impairment | ||||||
| Unimpaired financial assets | Impaired financial assets | ||||||
| Gross carrying amount of assets | Amount of allowance for expected credit losses | Gross carrying amount of assets | Amount of allowance for expected credit losses | Gross carrying amount of assets | Amount of allowance for expected credit losses | 31 December 2023 Total | |
| Amounts due from credit institutions | 135,807 | (345) | - | - | 193 | - | 135,655 |
| Financial assets at fair value through other comprehensive income | 2,110,487 | (1,218) | - | - | - | - | 2,109,269 |
| Debt securities at amortised cost | 1,016,434 | (347) | - | - | 3,005 | (3) | 1,019,089 |
| Loans to customers | 4,740,903 | (42,143) | 416,995 | (186,551) | 3,122,392 | (193,694) | 7,857,902 |
| Other financial assets | - | - | 68,239 | (31,819) | 43,389 | (1,623) | 78,186 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
221
Liquidity risk
Liquidity risk is the risk resulting from the inability of the Group to provide funds for repayment of its
obligations in due time. The Group’s liquidity risk arises when terms of assets on active operations and
maturity dates of obligations do not match.
In accordance with the requirements of the Rules for the formation of a risk management and internal
control system for second-tier banks, the Group has developed and implemented an internal process
for assessing liquidity adequacy (“IPALA”), which was approved by the Board of Directors. IPALA is a
set of liquidity risk management processes in order to maintain an adequate level of liquidity and
implement an appropriate liquidity risk management system at different time intervals depending on
the type of activity, currency. IPALA was developed in accordance with the risk appetite strategy,
taking into account the current market and economic situation, the risk profile and the requirements
of the legislation of the Republic of Kazakhstan in terms of the formation of a risk management and
internal control system for second-tier banks, as well as the internal needs of the Bank in determining
the main approaches and principles of the process assessing the adequacy of liquidity. In order to
determine the risk appetite, the Board of Directors approves the levels of risk appetite for liquidity risk,
and also uses a quantitative internal indicator of liquidity adequacy within the IPALA, which limits the
risks of current, short-term, medium-term and long-term liquidity. In order to identify weaknesses, the
IPALA is subject to continuous review at least once a year, which is submitted for approval by the
Board of Directors.
As part of the risk management system, liquidity risk is measured and controlled through the following
tools:
○ monitoring compliance with regulatory (prudential) liquidity ratios;
○ setting and regular monitoring of internal limits and triggers for liquidity risk: risk appetite level,
IPALA ratio, limit on GAP gaps, liability concentration limits, early warning indicators of liquidity risk;
○ analysis of contractual maturities (GAP-analysis) and cash flow forecasting, including: planned
transactions, projected rollover of attracted customer funds (taking into account the calculation of
the stable part of funding);
○ analysis of the concentration of funding sources (by largest depositors, by currency, by funding
maturity, by funding source;
○ indicators of early warning about liquidity risk, allowing to monitor and control liquidity risk;
○ analysis of the volume of assets that can be used as collateral to raise liquidity;
○ development and regular testing of a contingency financing plan with a description of the process
of eliminating liquidity shortage in emergency situations;
○ stress testing of the impact of changes in various macroeconomic and other factors and parameters
on liquidity.
Short-term liquidity needs are managed by the Group’s treasury function collecting daily cash inflow/
outflow forecasts. Long-term liquidity management is performed by the ALMC by analysing longer
term liquidity positions and making decisions on managing significant gaps through various available
means.
18
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December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
222
In order to manage liquidity risk, the Group analyses and evaluates cash inflows and outflows to
determine the potential shortage of liquid assets in the future. The Group measures and forecasts
estimated cash flows for assets and liabilities, including off-balance sheet claims and liabilities, which
analyzes the structure of gaps between cash flows for financial assets and financial liabilities (GAP
analysis). In a GAP analysis, cash flows are grouped into time buckets based on the following
principles:
○ assets and liabilities are broken down into economically homogeneous and significant items;
○ securities at fair value through profit or loss are classified in the column “Less than 1 month”
because they are available to meet the Group's short-term liquidity needs;
○ part of long-term loans provided to customers are classified in the column “From 3 months to
1 year”, because for them, the Group has the right to unilaterally withdraw within ten months after
due notice issued by the Group;
○ loans to customers, amounts due from credit institutions, financial assets at fair value through other
comprehensive income, debt securities at amortized cost, other financial assets, customer
accounts, amounts due to credit institutions, debt securities issued, other financial liabilities
included analysis of the liquidity position based on expected contractual maturities;
○ Assets and liabilities other than those listed above are generally classified according to the payment
schedule and the remaining period from the reporting date to the earliest contractual payment date
or available maturity date.
For the purposes of effective control, the Group divides liquidity management into:
○ management of current (intraday)/short-term liquidity – management of assets and liabilities with a
maturity of less than 3 months;
○ management of mid-term/long-term liquidity – management of assets and liabilities with maturity
from 3 months to 1 year and more than 1 year.
Liquidity risk management is generally carried out by ALMC, whose main tasks are to control the
implementation of the asset and liability management policy and the liquidity management policy, and
to determine the need for liquid funds. The treasury department directly manages the Bank's cash
flows and short-term liquidity within the established level of risk appetite for liquidity risk and the limits
established by ALMC. The treasury department develops and implements measures for operational
liquidity management. The risk management division is responsible for the implementation of the
liquidity risk management process, for identifying, measuring, monitoring, controlling and analyzing
liquidity risk as part of periodic management reporting on the current state of liquidity risk with related
analysis, and, if necessary, provides its recommendations for minimizing risks. The risk management
division also conducts stress testing of the impact of changes in various macroeconomic and other
factors and parameters on liquidity, including taking into account the scenario of the outflow of
customer funds.
Liquidity risk management (identification, measurement, monitoring, control and analysis of liquidity
risk) is carried out in accordance with the IPALA and the liquidity risk management policy, as well as
regulatory requirements.
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
223
The following tables provide an analysis of financial assets and liabilities grouped based on the above
principles.
18
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Auditors’ Report for
the Year Ended 31
December 2023
* Loans to customers in the column “3 months to 1 year” include loans with non-standard repayment schedule .
31 December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
| Less than 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | Total | |
| FINANCIAL ASSETS: | ||||||
| Cash and cash equivalents | 1,377,315 | - | - | - | - | 1,377,315 |
| Obligatory reserves | 122,468 | 23,652 | 64,201 | 24,272 | 10,273 | 244,866 |
| Financial assets at fair value through profit or loss | 569,008 | 337 | 2,029 | 17,988 | - | 589,362 |
| Amounts due from credit institutions | 99,434 | 2,669 | 53,199 | 16,171 | 281 | 171,754 |
| Financial assets at fair value through other comprehensive income | 98,807 | 109,353 | 505,451 | 1,169,237 | 543,054 | 2,425,902 |
| Debt securities at amortised cost, net of allowance for expected credit losses | 42 | 9,960 | 208,067 | 507,274 | 725,343 | |
| Loans to customers* | 318,822 | 731,541 | 4,812,666 | 2,976,729 | 445,114 | 9,284,872 |
| Other financial assets | 50,216 | 2,096 | 11,305 | 14,026 | 4,123 | 81,766 |
| 2,636,112 | 879,608 | 5,656,918 | 4,725,697 | 1,002,845 | 14,901,180 | |
| FINANCIAL LIABILITIES: | ||||||
| Amounts due to customers | 5,472,599 | 1,182,508 | 3,267,492 | 618,404 | 388,501 | 10,929,504 |
| Amounts due to credit institutions | 429,220 | 50,924 | 19,798 | 106,426 | 171,943 | 778,311 |
| Financial liabilities at fair value through profit or loss | 3,672 | - | - | 530 | - | 4,202 |
| Debt securities issued | 1,734 | 3,785 | 103,604 | 544,270 | 653,393 | |
| Other financial liabilities | 170,969 | 1,463 | 8,274 | 642 | 446 | 181,794 |
| 6,078,194 | 1,238,680 | 3,399,168 | 1,270,272 | 560,890 | 12,547,204 | |
| Net position | (3,442,082) | (359,072) | 2,257,750 | 3,455,425 | 441,955 | 2,353,976 |
| ACCUMULATED GAP | (3,442,082) | (3,801,154) | (1,543,404) | 1,912,021 | 2,353,976 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
224
18
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Auditors’ Report for
the Year Ended 31
December 2023
* Loans to customers in the column “3 months to 1 year” include loans with non-standard repayment schedule .
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
| Less than 1 month | 1 to 3 months | 3 months to 1 year | 1 to 5 years | Over 5 years | 31 December 2022 Total | |
| FINANCIAL ASSETS: | ||||||
| Cash and cash equivalents | 2,028,820 | 11 | - | - | - | 2,028,831 |
| Obligatory reserves | 144,759 | 14,670 | 71,901 | 16,814 | 11,400 | 259,544 |
| Financial assets at fair value through profit or loss | 439,499 | - | - | 10,432 | - | 449,931 |
| Amounts due from credit institutions | 79,867 | 6,894 | 20,744 | 28,028 | 122 | 135,655 |
| Financial assets at fair value through other comprehensive income | 57,289 | 150,169 | 395,275 | 1,278,991 | 227,545 | 2,109,269 |
| Debt securities at amortised cost, net of allowance for expected credit losses | 14,113 | 17,305 | 283,541 | 703,146 | 984 | 1,019,089 |
| Loans to customers* | 325,594 | 671,791 | 4,472,139 | 2,286,554 | 101,824 | 7,857,902 |
| Other financial assets | 31,494 | 2,258 | 23,650 | 14,754 | 6,030 | 78,186 |
| 3,121,435 | 863,098 | 5,267,250 | 4,338,719 | 347,905 | 13,938,407 | |
| FINANCIAL LIABILITIES: | ||||||
| Amounts due to customers | 5,365,384 | 722,973 | 3,612,836 | 411,430 | 399,425 | 10,512,048 |
| Amounts due to credit institutions | 679,972 | 9,577 | 3,174 | 19,112 | 166,830 | 878,665 |
| Financial liabilities at fair value through profit or loss | 9,955 | - | - | 673 | - | 10,628 |
| Debt securities issued | - | 3,785 | 3,209 | 455,823 | - | 462,817 |
| Other financial liabilities | 136,610 | 1,273 | 1,569 | 547 | 503 | 140,502 |
| 6,191,921 | 737,608 | 3,620,788 | 887,585 | 566,758 | 12,004,660 | |
| Net position | (3,070,486) | 125,490 | 1,646,462 | 3,451,134 | (218,853) | 1,933,747 |
| ACCUMULATED GAP | (3,070,486) | (2,944,996) | (1,298,534) | 2,152,600 | 1,933,747 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
225
The change in liquidity gaps during the reporting period is associated with a change in the volume
and/or structure of liquid assets, a change in the maturity structure of the Group's assets and
liabilities, including due to a change in the maturity of assets (reduction/increase in the maturity of the
portfolio of securities, loans to customers) and liabilities (reduction/increase in funds of amounts due
to customers, amounts due to credit institutions, for debt securities issued).
As at 31 December 2023 and 2022 the Group complies with main liquidity ratios and regulatory
liquidity requirements.
The analysis of liabilities by maturity does not reflect the historical stability of customer current
account balances, which have traditionally been repaid over a longer period than indicated in the
tables above. In this regard, Management believes that although a substantial portion of current
accounts and customer deposits are on demand and mature in less than one month, diversification of
these deposits by number and type of depositors, and the past experience of the Group, indicate that
these deposits provide a long-term and stable source of funding for the Group. Therefore, an essential
part of the Group’s current accounts is considered to be stable resources for the purposes of liquidity
analysis and management. Additionally, the accumulated gap can be sufficiently covered by
refinancing with the repurchase agreements and sale of liquid government and other high-quality
rated securities or attracting long-term debt funding on capital markets when necessary.
A further analysis of the liquidity risk is presented in the following tables in accordance with IFRS 7.
The amounts disclosed in these tables do not correspond to the amounts recorded on the
consolidated statement of financial position, as the presentation below includes a maturity analysis
for financial liabilities and contingent liabilities based on the remaining contractual payments
(including interest payments).
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| FINANCIAL AND CONTINGENT LIABILITIES | Up to 1 month | 1 month to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | 31 December 2023 Total |
| Amounts due to customers | 5,539,223 | 1,201,861 | 3,389,901 | 650,178 | 464,185 | 11,245,348 |
| Amounts due to credit institutions | 435,062 | 53,409 | 54,744 | 346,535 | 190,807 | 1,080,557 |
| Debt securities issued | 1,734 | 4,937 | 132,792 | 564,207 | 703,670 | |
| Other financial liabilities | 170,968 | 1,463 | 8,274 | 642 | 447 | 181,794 |
| Guarantees issued | 820,260 | - | - | - | - | 820,260 |
| Commercial letters of credit | 120,497 | - | - | - | - | 120,497 |
| Commitments to extend credit | 65,207 | - | - | - | - | 65,207 |
| 7,094,644 | 1,261,670 | 3,585,711 | 1,561,562 | 655,439 | 14,159,026 | |
| Derivative financial assets | 762,961 | 23,731 | 30,522 | 51,694 | - | 868,908 |
| Derivative financial liabilities | 765,828 | 22,773 | 25,168 | 44,046 | - | 857,815 |
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
226
Transactions with government agencies and government-controlled companies
In the course of its operations, the Group enters into transactions with the National Bank of the
Republic of Kazakhstan, the Government of the Republic of Kazakhstan represented by the Ministry of
Finance of the Republic of Kazakhstan and government agencies, as well as with state-controlled
companies (with an equity stake of 50% or more). The Group provides these customers with banking
services, including, but not limited to: placing deposits, providing loans, transactions for the sale and
purchase of securities, accepting funds for deposits, etc.
The balances of transactions with government institutions and state-controlled companies that were
significant in terms of their carrying value (TOP 10) as at 31 December 2023 and 31 December 2022
are as follows:
31 DECEMBER 2023
18
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| FINANCIAL AND CONTINGENT LIABILITIES | Up to 1 month | 1 month to 3 months | 3 months to 1 year | 1 year to 5 years | Over 5 years | 31 December 2022 Total |
| Amounts due to customers | 5,386,395 | 729,470 | 3,733,613 | 418,929 | 459,846 | 10,728,253 |
| Amounts due to credit institutions | 686,364 | 28,473 | 106,197 | 131,590 | 207,326 | 1,159,950 |
| Debt securities issued | - | 7,626 | 25,523 | 518,249 | - | 551,398 |
| Other financial liabilities | 136,610 | 1,273 | 1,569 | 547 | 503 | 140,502 |
| Guarantees issued | 603,701 | - | - | - | - | 603,701 |
| Commercial letters of credit | 94,192 | - | - | - | - | 94,192 |
| Commitments to extend credit | 69,122 | - | - | - | - | 69,122 |
| 6,976,384 | 766,842 | 3,866,902 | 1,069,315 | 667,675 | 13,347,118 | |
| Derivative financial assets | 358,493 | 102,895 | - | 52,614 | - | 514,002 |
| Derivative financial liabilities | 375,114 | 103,250 | - | 55,971 | - | 534,335 |
| Counterparty/Issuer | Cash and cash equivalents | Loans to customers | Investments in securities | Amounts due to customers/ due to credit institutions | Total |
| NBRK | 786,104 | - | 5,843 | 152 | 792,099 |
| Government of the Republic of Kazakhstan | 12,559 | - | 2,129,527 | 34,392 | 2,176,478 |
| Other government agencies and state- controlled companies | 11,285 | 499,061 | 678,336 | 952,439 | 2,141,121 |
| Including: | |||||
| funds of state programs | - | - | - | 186,812 | 186,812 |
| conditional deposits | - | - | - | 74,184 | 74,184 |
| 809,948 | 499,061 | 2,813,706 | 1,247,979 | 5,370,694 |
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
227
Cash and cash equivalents include balances on nostro accounts and term deposits with the NBRK in
national and foreign currencies.
Loans
to
customers
represent
transactions
for
the
financing
of
state-controlled
companies,
concluded on the terms of payment, urgency, repayment.
Securities are represented by debt and equity financial instruments denominated in national and
foreign currencies, evaluated at fair value or amortized cost, depending on the purpose of acquisition.
Amounts due to credit institutions / due to customers represent liabilities to state-controlled
companies in the form of current account balances, term deposits, funds placed under government
financing programs small and medium-sized businesses, as well as conditional deposits placed by
quasi-state companies as part of subsoil use operations.
31 DECEMBER 2022
In order to manage liquidity risk, including monitoring the concentration of assets and liabilities, the
Group sets concentration limits for certain groups of customers, both in terms of claims to customers
and liabilities to them (by the largest depositors / borrowers, by currency baskets, by source of
funding ); on a regular basis monitors the fulfillment of the specified limits, analyzes the dynamics of
changes in indicators, and, if necessary, develops action plans to reduce the risk of concentration.
Additionally, on a regular basis, the Group conducts stress testing on the impact of potential changes
in various macroeconomic and other indicators on the financial stability of the Group. One of the
scenarios that must be considered and analyzed is a stressful outflow of customer funds (withdrawals
from current accounts, early termination of term deposits), as well as the conversion of customer
funds into foreign currency (from tenge to foreign currency), based on the results of a stress test, if
necessary preventive measures are being developed to prevent a negative impact on the Group's
operations.
The results of monitoring limits on the concentration of assets and liabilities and the results of stress
testing are mandatory submitted for consideration by the authorized collegial bodies to get
acquainted with the current level of the main types of risk inherent in the Group's activities and take
corrective measures to minimize the risk, if necessary.
Market risk
Market risk is the risk that the Group’s earnings or equity or its ability to meet business objectives will
be adversely affected by changes in market variables, such as interest rates, foreign exchange rates,
securities prices and other basic variables.
The Group is exposed to market risks, which include the following components:
○ Risk of changes in interest rates (interest rate risk);
○ Risk of changes in foreign exchange rates (currency risk);
○ Risk of changes in securities prices (price risk).
The objective of market risk management is to optimise risk/return, minimise losses in case of adverse
events and decrease deviation of factual financial results from expected financial results.
Market risk management includes security portfolio management and control of open positions on
currencies, interest rates and derivatives. For these purposes, the ALMC fixes limits on security
portfolios, open positions, stop-loss limits and other limitations. Market risk limits are subject to
review on at least an annual basis and should be monitored continuously.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Counterparty/Issuer | Cash and cash equivalents | Loans to customers | Investments in securities | Amounts due to customers/ due to credit institutions | Total |
| NBRK | 1,259,773 | - | - | 341 | 1,260,114 |
| Government of the Republic of Kazakhstan | 218 | 2,780 | 1,929,425 | 40,137 | 1,972,560 |
| Other government agencies and state- controlled companies | 1,742 | 441,768 | 682,583 | 1,691,460 | 2,817,553 |
| Including: | |||||
| funds of state programs | 135 | - | 67 | 105,709 | 105,911 |
| conditional deposits | - | - | - | 82,712 | 82,712 |
| 1,262,699 | 444,548 | 2,612,008 | 1,731,939 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
228
Interest rate risk
The Group is exposed to interest rate risk. Interest rate risk is defined as the risk of interest income
decreases, interest expense increases or a negative impact on equity resulting from adverse changes
in market interest rates.
The Group determines two types of interest rate risk:
○ Interest rate risk related to changes in fair values of securities portfolios, which are reflected through
other comprehensive income;
○ Interest rate risk resulting from assets and liabilities maturity dates (dates of interest rate repricing)
mismatch that are sensitive to interest rate changes (risk of interest rate changes).
The ALMC manages interest rate risks and market risks through the management of the Group’s
position on interest rates to reach positive interest margins.
The Group manages interest rates by determining the Group’s exposure to the interest rate risk using
the approach described by the Basel Committee on the principles for the management and
supervision of interest rate risk. This approach identifies the Group’s exposure to interest rate risk by
testing the impact of a parallel movement in interest rates on assets and liabilities.
Sensitivity analysis of interest rate risk
The following table presents a sensitivity analysis of interest rate risk, which has been determined
based on “reasonably possible changes in the risk variable”. The Group assesses the reasonably
possible changes in interest rates in tenge and foreign currencies separately, in which financial assets
and liabilities are denominated due to the different volatility of interest rates. Particularly, a scenario of
interest rate changes in tenge takes into account the dynamics of market interest rates (loans/
deposits, NBRK base rate etc.)
The impact on profit before tax is the effect of the assumed changes in interest rates on the net
interest income for one year, based on the floating rate financial assets and liabilities held
as at 31 December 2023 and 2022 and the effect of revaluing instruments with fixed rates accounted
for at fair value. The management of the Group believes income tax not to have a substantial effect for
the purpose of interest rate risk management.
The impact on income before tax based on asset values as at 31 December 2023 and 2022 is as
follows:
The impact on equity is the effect of the assumed changes in interest rates due to changes in retained
earnings and the effect of revaluation of financial assets at fair value through other comprehensive
income with fixed rates.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Interest rate KZT +3.75% CCY +2% | Interest rate KZT -3.75% CCY -2% | Interest rate KZT +3.75% CCY +2% | Interest rate KZT -3.75% CCY -2% | |
| FINANCIAL ASSETS: | ||||
| Financial assets at fair value through profit or loss | (9,099) | 8,963 | (24,595) | 24,332 |
| KZT | (9,368) | 9,368 | (24,924) | 24,924 |
| CCY | 268 | (405) | 329 | (592) |
| Amounts due from credit institutions | 1,223 | (1,223) | 1,135 | (1,135) |
| CCY | 1,223 | (1,223) | 1,135 | (1,135) |
| Financial assets at fair value through other comprehensive income | 766 | (766) | 611 | (611) |
| KZT | 766 | (766) | 611 | (611) |
| Loans to customers | 4,682 | (4,682) | 2,590 | (2,590) |
| CCY | 4,682 | (4,682) | 2,590 | (2,590) |
| NET IMPACT ON INCOME BEFORE TAX | (2,428) | 2,291 | (20,257) | 19,994 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
229
The impact on equity based on asset values as at 31 December 2023 and 2022 is as follows:
Currency Risk
The Group is exposed to currency risk. Currency risk arises from open positions in foreign currencies
and adverse movements of market exchange rates that may have a negative impact on the financial
performance of the Group.
The ALMC controls currency risk by management of the open currency position based on the
estimations of KZT devaluation and other macroeconomic indicators, which gives the Group an
opportunity to minimise losses from significant currency rate fluctuations of national and foreign
currencies.
The treasury department performs daily monitoring of the Group’s open currency positions, with the
aim to comply with the requirements of the regulatory authority.
The Group is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates
(primarily USD) on its financial positions, results of operations and cash flows, which are monitored
daily. The ALMC sets limits on the level of exposure by currencies within the authority approved by the
Board of Directors. These limits also comply with the minimum requirements of the regulator
authority.
The Group’s principal cash flows are generated in KZT and USD. As a result, potential movements in
the exchange rate between KZT and USD will affect the carrying value of the Group’s USD
denominated monetary assets and liabilities. Currency risk is assessed in relation to the consolidated
statement of financial position and off-balance sheet positions. Currently, the Group's sensitivity to
fluctuations in exchange rates is acceptable, due to the fact that the off- balance sheet items
significantly neutralise the consolidated statement of financial position.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Interest rate KZT +3.75% CCY +2% | Interest rate KZT -3.75% CCY -2% | Interest rate KZT +2% CCY +2% | Interest rate KZT -2% CCY -2% | |
| FINANCIAL ASSETS: | ||||
| Financial assets at fair value through profit or loss | (9,099) | 8,963 | (24,595) | 24,332 |
| KZT | (9,368) | 9,368 | (24,924) | 24,924 |
| CCY | 268 | (405) | 329 | (592) |
| Amounts due from credit institutions | - | - | 1,135 | (1,135) |
| CCY | - | - | 1,135 | (1,135) |
| Financial assets at fair value through other comprehensive income | (172,588) | 172,588 | (108,970) | 108,970 |
| KZT | (65,965) | 65,965 | (55,330) | 55,330 |
| CCY | (106,623) | 106,623 | (53,640) | 53,640 |
| Loans to customers | 4,682 | (4,682) | 2,590 | (2,590) |
| CCY | 4,682 | (4,682) | 2,590 | (2,590) |
| NET IMPACT ON EQUITY | (175,782) | 175,646 | (129,839) | 129,577 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
230
The Group’s exposure to foreign currency exchange rate risk is as follows :
1
8
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
31 December 2023
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| FINANCIAL ASSETS: | USD | EURO | RUR | Other | Total foreign currencies | KZT | Total |
| Cash and cash equivalents | 561,336 | 61,510 | 22,111 | 138,220 | 783,177 | 594,138 | 1,377,315 |
| Obligatory reserves | 8,906 | 6,150 | 105,596 | 120,652 | 124,214 | 244,866 | |
| Financial assets at fair value through profit or loss | 246,103 | 3,370 | 20 | 613 | 250,106 | 339,256 | 589,362 |
| Amounts due from credit institutions | 101,126 | 4,109 | 16,073 | 13,119 | 134,427 | 37,327 | 171,754 |
| Financial assets at fair value through other comprehensive income | 1,418,689 | 133,479 | 8,255 | 1,560,423 | 865,479 | 2,425,902 | |
| Debt securities at amortised cost, net of allowance for expected credit losses | 193,298 | 10,380 | 203,678 | 521,665 | 725,343 | ||
| Loans to customers | 1,365,955 | 122,814 | 13,637 | 109,008 | 1,611,414 | 7,673,458 | 9,284,872 |
| Other financial assets | 21,196 | 740 | 1,976 | 265 | 24,177 | 57,589 | 81,766 |
| 3,916,609 | 332,172 | 62,072 | 377,201 | 4,688,054 | 10,213,126 | 14,901,180 | |
| FINANCIAL LIABILITIES | |||||||
| Amounts due to customers | 3,138,884 | 210,030 | 37,853 | 127,231 | 3,513,998 | 7,415,506 | 10,929,504 |
| Amounts due to credit institutions | 193,078 | 8,646 | 39,207 | 4,143 | 245,074 | 533,237 | 778,311 |
| Financial liabilities at fair value through profit or loss | - | 530 | - | 530 | 3,672 | 4,202 | |
| Debt securities issued | 324,803 | - | - | - | 324,803 | 328,590 | 653,393 |
| Other financial liabilities | 4,594 | 1,454 | 91 | 2,517 | 8,656 | 173,138 | 181,794 |
| 3,661,359 | 220,130 | 77,681 | 133,891 | 4,093,061 | 8,454,143 | 12,547,204 | |
| NET POSITION – ON-BALANCE | 255,250 | 112,042 | (15,609) | 243,310 | 594,993 | 1,758,983 | 2,353,976 |
| NET POSITION – OFF-BALANCE | 29,460 | (109,932) | 21,147 | (183,970) | (243,295) | 256,524 | |
| NET POSITION | 284,710 | 2,110 | 5,538 | 59,340 | 351,698 | 2,015,507 |
231
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
31 December 2022
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| FINANCIAL ASSETS: | USD | EURO | RUR | Other | Total foreign currencies | KZT | Total |
| Cash and cash equivalents | 1,212,787 | 44,706 | 25,727 | 243,665 | 1,526,885 | 501,946 | 2,028,831 |
| Obligatory reserves | 19,865 | 10,333 | - | 154,546 | 184,744 | 74,800 | 259,544 |
| Financial assets at fair value through profit or loss | 176,977 | - | 71 | 902 | 177,950 | 271,981 | 449,931 |
| Amounts due from credit institutions | 76,533 | 8,896 | 20,666 | 22,789 | 128,884 | 6,771 | 135,655 |
| Financial assets at fair value through other comprehensive income | 1,294,923 | 135,359 | 10,742 | - | 1,441,024 | 668,245 | 2,109,269 |
| Debt securities at amortised cost, net of allowance for expected credit losses | 201,171 | - | - | 34,419 | 235,590 | 783,499 | 1,019,089 |
| Loans to customers | 1,091,803 | 83,335 | 50,354 | 113,423 | 1,338,915 | 6,518,987 | 7,857,902 |
| Other financial assets | 3,291 | 322 | 6,414 | 2,334 | 12,361 | 65,825 | 78,186 |
| 4,077,350 | 282,951 | 113,974 | 572,078 | 5,046,353 | 8,892,054 | 13,938,407 | |
| FINANCIAL LIABILITIES | |||||||
| Amounts due to customers | 4,078,425 | 264,226 | 43,983 | 166,189 | 4,552,823 | 5,959,225 | 10,512,048 |
| Amounts due to credit institutions | 49,176 | 16,425 | 52,718 | 2,139 | 120,458 | 758,207 | 878,665 |
| Financial liabilities at fair value through profit or loss | - | 240 | 673 | 983 | 1,896 | 8,732 | 10,628 |
| Debt securities issued | 139,879 | - | - | - | 139,879 | 322,938 | 462,817 |
| Other financial liabilities | 2,306 | 779 | 93 | 2,914 | 6,092 | 134,410 | 140,502 |
| 4,269,786 | 281,670 | 97,465 | 172,225 | 4,821,148 | 7,183,512 | 12,004,660 | |
| NET POSITION – ON-BALANCE | (192,436) | 1,281 | 16,507 | 399,853 | 225,205 | 1,708,542 | 1,933,747 |
| NET POSITION – OFF-BALANCE | 368,850 | (2,181) | (19,378) | (315,886) | 31,405 | (41,816) | |
| NET POSITION | 176,414 | (900) | (2,871) | 83,967 | 256,610 | 1,666,726 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
232
Sensitivity analysis of currency risk
The table below indicates the currencies in which the Group had significant exposure at
31 December 2023 and 2022 and its forecasted cash flows. The analysis calculates the effect of a
reasonable possible movement of the currency rate, with all other variables held constant on the
consolidated statement of profit or loss. A negative amount in the table reflects a potential net
reduction in the consolidated statement of profit or loss, while a positive amount reflects a net
potential increase. Sensitivity of currency risk is assessed based on balance sheet and off-balance
sheet open currency positions. The management of the Group believes income tax not to have a
substantial effect for the purpose of currency risk management.
The impact on income before tax and equity, based on asset values as at 31 December 2023 and 2022
was calculated using the annual analysis of the exchange rate volatility based on historical data of the
exchange rate dynamics over the last two years; see the details in the following table:
Limitations of sensitivity analysis
The above tables demonstrate the effect of a change in a key assumption, while other assumptions
remain unchanged. In reality, there is a correlation between the assumptions and other factors. It
should also be noted that these sensitivities are non-linear, and larger or smaller impacts should not
be interpolated or extrapolated from these results.
The sensitivity analyses do not take into consideration that the Group’s assets and liabilities are
actively managed. Additionally, the financial position of the Group may vary at the time that any actual
market movement occurs. For example, the Group’s financial risk management strategy aims to
manage the exposure to market fluctuations. As investment markets move past various trigger levels,
management actions could include selling investments, changing investment portfolio allocations
and taking other protective actions. Consequently, the actual impact of a change in the assumptions
may not have any impact on the liabilities, whereas assets are held at market value on the consolidated
statement of financial position. In these circumstances, the different measurement bases for liabilities
and assets may lead to volatility in equity.
Other limitations in the above sensitivity analyses include the use of hypothetical market movements
to demonstrate potential risk that only represent the Group’s view of possible near-term market
changes that cannot be predicted with any certainty.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| +30% | -30% | +30% | -30% | |
| KZT/USD | KZT/USD | KZT/USD | KZT/USD | |
| Impact on financial result/equity | 85,413 | (85,413) | 20,575 | (20,575) |
| 31 December 2023 | 31 December 2022 | |||
| +30% | -30% | +30% | -30% | |
| KZT/EURO | KZT/EURO | KZT/EURO | KZT/EURO | |
| Impact on financial result/equity | 633 | (633) | (270) | 270 |
| 31 December 2023 | 31 December 2022 | |||
| +30% | -30% | +30% | -30% | |
| KZT/RUR | KZT/RUR | KZT/RUR | KZT/RUR | |
| Impact on financial result/equity | 1,661 | (1,661) | (866) | 866 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
233
Price risk
Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in
market prices, where those changes are caused by factors specific to the individual security, its issuer,
or factors affecting all securities traded in the market. The Group is exposed to price risks of its
products, which are subject to general and specific market fluctuations.
To limit price risk, the Group determines limits for maximum losses (stop-loss) on securities from the
trade portfolio to minimise potential losses of the trade portfolio.
Price risk assessment is also performed on the basis of the Value At Risk (“VaR”) method, through the
establishment of Expected Shortfall (“ES”) limits on the level of expected losses, which the Bank is
able to undertake within one day in a situation when factual losses may exceed the level of VaR.
Calculation of VaR is based on the following parameters:
○ Reporting period – 252 working days;
○ Confidence interval – 99%;
○ The method of measurement – historical and parametric simulation.
The Group estimates the price risk at 31 December 2023 and 2022 to be not material and therefore
quantitative information is not disclosed.
34.CAPITAL RISK MANAGEMENT
The Group’s capital management objectives, which are a broader concept than the “equity” on the
face of the consolidated statement of financial position, are as follows:
○ To comply with the capital requirements set by NBRK;
○
To safeguard the Group’s ability to continue as a going concern so that it can continue to provide
returns for shareholders and benefits for other stakeholders; and
○ To maintain a strong capital base to support the development of its business.
The required level of capital is determined during the annual budgeting process, taking into account
the above objectives, and is approved by the Management Board and the Board of Directors. As of the
current date the capital adequacy of the Group is calculated according to prudential norms set for
banks by the Kazakhstan regulatory authority, applying Basel Committee principles and methods.
Currently, regulatory capital is represented by:
○ Tier 1 capital, which is required to maintain the normal operating activity of the Group and absorb
losses as they arise. It consists of Common Equity Tier 1 capital (“CET 1 capital”) and Additional Tier
1 capital, which includes common shares issued by the Group, share premium, retained earnings,
other
accrued
comprehensive
income
and
disclosed
reserves
and
regulatory
adjustments
(deductions);
○ Tier 2 capital, which is required to absorb losses in case of the Group’s liquidation. This part of
capital consists of instruments issued by the Group and deductions.
Risk-weighted assets are split into five different groups, based on the risk level of the investment and
its possible impairment, and weighted according to the nature of and reflecting an estimate of credit,
market and other risks associated with each asset and counterparty, taking into account any eligible
collateral or guarantees. A similar treatment is adopted for off-balance sheet exposure, with some
adjustments made to reflect the more contingent nature of the potential losses.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
234
The below table summarises the regulatory capital composition and capital adequacy ratios of the
Group for the years ended 31 December 2023 and 2022. During these two years, individual entities
within the Group and the Group complied with all of the externally imposed capital requirements to
which they are subject.
35.SEGMENT ANALYSIS
The Group is managed and reported on the basis of four main operating segments – corporate
banking, SME banking, retail banking and investment banking. These segments are strategic business
units that offer different products and services and are managed separately.
Retail banking represents private banking services to individuals, including private customer current
accounts, deposits, investment savings products, custody, credit and debit cards, consumer loans
and mortgages, cash and foreign currency related services to individuals.
Corporate banking represents banking services to corporate clients and financial organisations
including current accounts and correspondent accounts, deposits, custody, overdrafts, loans and
other credit facilities, documentary operations, including guarantees and letters of credit, trade
finance products, interbank operations, as well as cash services and foreign exchange transactions.
SME banking represents banking services to SME clients and individual entrepreneurs, including
current accounts, deposits, overdrafts, loans and other credit facilities, documentary operations and
guarantees, foreign exchange transactions and trade finance products.
Investment banking represents services on sale and purchase of securities on the market.
Unallocated amounts are account balances and classes of transactions which are not allocated to a
particular segment, not initiated by any business function and relate to the current activity of the
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* As at 31 December 2023, accumulated disclosed reserves comprised from KZT 54,102 million capital reserve
(31 December 2022: 54,157 million capital reserve).
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |
| COMPOSITION OF REGULATORY CAPITAL | ||
| CET 1 | ||
| Common shares, net of treasury shares | (49,487) | (51,508) |
| Share premium | 8,667 | 7,966 |
| Retained earnings of prior years | 1,750,723 | 1,455,739 |
| Net income for the current year | 693,436 | 569,478 |
| Accumulated disclosed reserves* | 54,320 | 54,157 |
| Non-controlling interest | 10 | 9 |
| Property and financial assets at fair value through other comprehensive income revaluation reserves | 13,620 | (36,729) |
| Less: goodwill and intangible assets | (16,401) | (17,398) |
| Less: cumulative translation reserve | (3,459) | (11,742) |
| COMMON EQUITY TIER 1 (CET 1) CAPITAL | 2,451,429 | 1,969,972 |
| ADDITIONAL TIER 1 | ||
| TIER 2 | ||
| Subordinated debt | 37,698 | 36,136 |
| TOTAL QUALIFYING FOR TIER 2 CAPITAL | 37,698 | 36,136 |
| TOTAL REGULATORY CAPITAL | 2,489,127 | 2,006,108 |
| 31 December 2023 | 31 December 2022 | |
| Risk weighted assets | 12,676,762 | 10,273,792 |
| CET 1 CAPITAL ADEQUACY RATIO | 19.34% | 19.17% |
| TIER 1 CAPITAL ADEQUACY RATIO | 19.34% | 19.17% |
| TOTAL CAPITAL ADEQUACY RATIO | 19.64% | 19.53% |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
235
Group. Unallocated assets include fixed assets, intangible assets, non-current assets held for sale,
cash on hand and other unallocated assets. Unallocated liabilities include deferred tax liabilities and
other unallocated liabilities. Unallocated income includes other income from main and nonoperating
activities and insurance income. Unallocated expenses include the allowances for expected credit
losses on accounts receivable, operating overhead expenses, insurance expenses and income tax.
The segment information below is based on financial information used for performance evaluation by
the Bank’s Chairperson of the Management Board, the Group’s chief operating decision maker, in
accordance with IFRS 8. The Group’s management reviews discrete financial information for each
segment, including the evaluation of operating segment results, assets and liabilities. Segment result
is the measure reported to the Group’s chief operating decision maker for the purpose of resource
allocation and assessment of segment performance.
Segment information for the main reportable business segments of the Group as at 31 December
2023 and 2022 and for the years then ended, is set out below:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Retail banking | Corporate banking | SME banking | Investment banking | Unallocated | Total | |
| AS AT 31 DECEMBER 2023 AND FOR THE YEAR THEN ENDED | ||||||
| External revenues | 669,139 | 710,701 | 295,973 | 295,440 | 302,777 | 2,274,030 |
| TOTAL REVENUES | 669,139 | 710,701 | 295,973 | 295,440 | 302,777 | 2,274,030 |
| TOTAL REVENUES COMPRISE: - Interest income | 523,475 | 653,442 | 225,778 | 264,083 | 3,004 | 1,669,782 |
| - Fee and commission income, including: | 127,771 | 32,769 | 36,011 | - | 3,509 | 200,060 |
| Transactional income of individuals | 139,948 | - | - | - | - | 139,948 |
| Transactional income of legal entities | - | 13,146 | 31,254 | - | 2 | 44,402 |
| Letters of credit and guarantees issued | - | 15,415 | 4,621 | - | - | 20,036 |
| Other | 865 | 4,508 | 136 | - | 3,507 | 9,016 |
| LOYALTY PROGRAM | (13,043) | (300) | - | - | - | (13,343) |
| - Net (loss)/gain on financial assets at fair value through profit or loss | - | 40,939 | - | 31,346 | 309 | 72,594 |
| - Net foreign exchange gain | 17,893 | 48,085 | 34,184 | 11 | (10,059) | 90,114 |
| - Share in profit of associate | - | - | - | - | 13,593 | 13,593 |
| - Insurance underwriting income, income on non-banking activities and other (expense)/income | - | (64,534) | - | - | 292,421 | 227,887 |
| TOTAL REVENUES | 669,139 | 710,701 | 295,973 | 295,440 | 302,777 | 2,274,030 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
236
18
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Retail banking | Corporate banking | SME banking | Investment banking | Unallocated | Total | |
| - Interest expense | (360,442) | (317,131) | (140,123) | (40,043) | (1,546) | (859,285) |
| - Expected credit loss expense | (61,410) | (15,215) | (14,639) | (3,384) | 3,982 | (90,666) |
| - Fee and commission expense | (91,693) | (5,229) | (1,825) | (954) | (3) | (99,704) |
| - Net realised loss from financial assets at fair value through other comprehensive income | - | - | - | (4,055) | - | (4,055) |
| - Operating expenses | (118,483) | (15,906) | (24,149) | (1,616) | (56,733) | (216,887) |
| - Recovery of other credit loss expense/(other credit loss expense) | - | 1,923 | (293) | (68) | 1,562 | |
| - Gain from recovery of a previously recognized loss from impairment of property, plant and equipment and loss from impairment of non-financial assets | - | - | - | - | (3,298) | (3,298) |
| - Insurance claims incurred, net of reinsurance | - | - | - | - | (131,848) | (131,848) |
| - Reinsurance agreements | (55,075) | (55,075) | ||||
| TOTAL EXPENSES | (632,028) | (351,558) | (181,029) | (50,052) | (244,589) | (1,459,256) |
| SEGMENT RESULT | 37,111 | 359,143 | 114,944 | 245,388 | 58,188 | 814,774 |
| Income before income tax expense | 37,111 | 359,143 | 114,944 | 245,388 | 58,188 | 814,774 |
| Income tax expense | - | - | - | - | (121,338) | (121,338) |
| NET INCOME | 37,111 | 359,143 | 114,944 | 245,388 | (63,150) | 693,436 |
| Total segment assets | 2,917,442 | 6,339,309 | 1,536,837 | 3,722,275 | 978,505 | 15,494,368 |
| Total segment liabilities | 5,690,720 | 3,755,107 | 2,425,130 | 683,243 | 463,214 | 13,017,414 |
| OTHER SEGMENT ITEMS: | ||||||
| Capital expenditures | (45,845) | (45,845) | ||||
| Depreciation and amortisation | (18,534) | (18,534) | ||||
| Investment in associate | 51,464 | 51,464 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
237
18
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December 2023
612,744
225,238
215,820
233,089
1,833,575
612,744
225,238
215,820
233,089
1,833,575
476,317
153,066
215,386
316
1,247,648
23,331
33,161
4
3,572
180,066
-
-
4
39
129,232
-
9,946
28,034
-
363
38,343
44
10,159
3,611
-
49
13,863
3,293
1,516
-
3,121
10,849
(67)
-
-
-
(12,221)
118,843
38,166
-
94
177,893
- Share in profit of associate
-
-
-
-
9,708
9,708
- Insurance underwriting income, income on non-banking activities and other (expene)/income
3,333
(5,747)
845
430
219,399
218,260
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
| Retail banking Corporate banking SME banking | Investment banking | Unallocated | Total | |||
| AS AT 31 DECEMBER 2022 AND FOR THE YEAR THEN ENDED | ||||||
| External revenues | 546,684 | |||||
| TOTAL REVENUES | 546,684 | |||||
| TOTAL REVENUES COMPRISE: | ||||||
| - Interest income | 402,563 | |||||
| - Fee and commission income, including: | 119,998 | |||||
| Transactional income of individuals | 129,189 | |||||
| Transactional income of legal entities | ||||||
| Letters of credit and guarantees issued | ||||||
| Other | 2,919 | |||||
| LOYALTY PROGRAM | (12,154) | |||||
| - Net foreign exchange gain | 20,790 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
238
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the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Corporate | Investment | |||||
| Retail banking | banking | SME banking | banking | Unallocated | Total | |
| TOTAL REVENUES | 546,684 | 612,744 | 225,238 | 215,820 | 233,089 | 1,833,575 |
| - Interest expense | (227,009) | (245,311) | (69,537) | (35,268) | (1,057) | (578,182) |
| - Credit loss expense | (71,009) | (22,793) | (3,413) | (954) | (8,760) | (106,929) |
| - Fee and commission expense | (86,152) | (7,300) | (1,298) | (763) | (586) | (96,099) |
| - Net (loss)/gain on financial assets and liabilities at fair value through profit or loss | - | 5,667 | - | (3,608) | (3,859) | (1,800) |
| - Operating expenses | (103,627) | (14,063) | (20,772) | (1,199) | (53,357) | (193,018) |
| - Recovery of other credit loss expense/(other credit loss expense) | 332 | (266) | (82) | - | 94 | 78 |
| - Gain from recovery of a previously recognized loss from impairment of property, plant and equipment and Loss from impairment of non-financial assets | - | 21 | - | - | 4,038 | 4,059 |
| - Loss on disposal of subsidiaries | - | (19,242) | (19,242) | |||
| - Insurance claims incurred, net of reinsurance | - | - | - | - | (167,246) | (167,246) |
| TOTAL EXPENSES | (487,465) | (303,287) | (95,102) | (41,792) | (230,733) | (1,158,379) |
| SEGMENT RESULT | 59,219 | 309,457 | 130,136 | 174,028 | 2,356 | 675,196 |
| Income before income tax expense | 59,219 | 309,457 | 130,136 | 174,028 | 2,356 | 675,196 |
| Income tax expense | (105,718) | (105,718) | ||||
| NET INCOME | 59,219 | 309,457 | 130,136 | 174,028 | (103,362) | 569,478 |
| Total segment assets | 2,398,307 | 6,435,420 | 1,257,508 | 3,403,441 | 900,426 | 14,395,102 |
| Total segment liabilities | 5,206,935 | 4,238,654 | 2,124,081 | 468,571 | 344,619 | 12,382,860 |
| OTHER SEGMENT ITEMS: | ||||||
| Capital expenditures | (30,547) | (30,547) | ||||
| Depreciation and amortisation | (16,002) | (16,002) | ||||
| Investment in associate | 42,005 | 42,005 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
239
Income before income tax expense by segments were as follows:
For the period ended 31 December
2022
For the period ended 31 December
2023
2,356
Unallocated
Investment
banking
SME
banking
Corporate
banking
Retail
banking
58,188
174,028
245,388
130,136
114,944
309,457
359,143
59,219
37,111
100000
200000
300000
400000
Share of segment assets and liabilities as at 31 December 2023 and 2022 presented as follows:
18
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Statements and
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December 2023
Retail banking
Corporate banking
SME banking
Investment banking
Unallocated
Retail banking
Corporate banking
SME banking
Investment banking
Unallocated
Total segment assets
31 December 2023
Total segment liabilities
31 December 2023
7
%
1
9
%
4
1
%
1
0
%
2
3
%
4
%
4
4
%
2
8
%
1
9
%
5
%
Retail banking
Corporate banking
SME banking
Investment banking
Unallocated
Retail banking
Corporate banking
SME banking
Investment banking
Unallocated
Total segment assets
31 December 2022
Total segment liabilities
31 December 2022
5
%
1
7
%
4
5
%
9
%
2
4
%
3
%
4
2
%
3
4
%
1
7
%
4
%
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Total segment assets
31 December 2022
Total segment liabilities
31 December 2022
5
%
1
7
%
4
5
%
9
%
2
4
%
3
%
4
2
%
3
4
%
1
7
%
4
%
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
240
Geographical information
Information for the main geographical areas of the Group is set out below as at 31 December 2023 and
2022 and for the years then ended.
External revenues, assets and credit related commitments have generally been allocated based on the
domicile of the counterparty. Cash on hand, property and equipment and capital expenditure have
been allocated based on the country in which they are physically held.
36.FAIR VALUES OF FINANCIAL
INSTRUMENTS
IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at a measurement date.
The fair values of the Group's financial assets and financial liabilities are measured at fair value on a
recurring basis.
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of
each reporting year. The following table gives information about how the fair values of these financial
assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs
used).
The following table provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value
is observable.
Financial assets and financial liabilities are classified in their entirety based on the lowest level of input
that is significant to the fair value measurements. Management’s assessment of the significance of a
particular input to the fair value measurement requires judgment and may affect the valuation of the
assets and liabilities being measured and their placement within the fair value hierarchy.
The Group considers that the accounting estimate related to the valuation of financial instruments
where quoted markets prices are not available is a key source of estimation uncertainty because: (i) it
is highly susceptible to changes from year to year, as it requires management to make assumptions
about interest rates, volatility, exchange rates, the credit rating of the counterparty, valuation
adjustments and specific features of transactions and (ii) the impact that recognising a change in the
valuations would have on the assets reported on the consolidated statement of financial position, as
well as, the related profit or loss reported on the consolidated statement of profit or loss, could be
material .
18
Consolidated
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Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Kazakhstan | OECD | Non-OECD | Total | |
| 2023 | ||||
| Total assets | 13,495,756 | 1,393,663 | 604,949 | 15,494,368 |
| External revenues | 2,106,406 | 103,318 | 64,306 | 2,274,030 |
| Capital expenditure | (44,845) | - | - | (44,845) |
| 2022 | ||||
| Total assets | 12,488,832 | 1,295,413 | 610,857 | 14,395,102 |
| External revenues | 1,719,033 | 37,511 | 77,031 | 1,833,575 |
| Capital expenditure | (30,547) | - | - | (30,547) |
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
241
During the year ended 31 December 2023, the Group changed the definition of an active market in its
accounting policies. In accordance with the changes in policy, the Group has revised the classification
of securities for previous periods.
The impact of restatements is as follows:
The adjustments of these misclassifications did not result in any changes to the Group’s consolidated
financial statements or basic and diluted earnings per share.
The table below summarises the Group’s financial assets and liabilities held at fair value by valuation
methodology as at 31 December 2023 and 2022, before any allowances for expected credit losses.
18
Consolidated
Financial
Statements and
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Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Financial assets and liabilities | Fair value hierarchy | (as previously reported) | Adjustment | (restated) |
| Non-derivative financial assets at fair value through profit or loss (Note 7) | Level 1 | 160,373 | (82,442) | 77,931 |
| Derivative financial assets at fair value through profit or loss,excluding options (Note 7) | Level 2 | 170,049 | 82,442 | 252,491 |
| Derivative financial assets at fair value through profit or loss,excluding options (Note 7) | Level 3 | 10 | 107,763 | 107,773 |
| Non-derivative financial assets at fair value through other comprehensive income (Note 9) | Level 1 | 1,735,734 | (1,349,006) | 386,728 |
| Non-derivative financial assets at fair value through other comprehensive income in bonds of foreign organisations (Note 9) | Level 2 | 373,482 | 1,349,006 | 1,722,488 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
242
18
Consolidated
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Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| Fair value | ||||||
| Financial Assets/Liabilities | 31 December 2023 | 31 December 2022 | Fair value hierarchy | Valuation technique(s) and key input(s) | Significant unobservable input(s) | Relationship of unobservable inputs to fair value |
| Non-derivative financial assets at fair value through profit or loss (Note 7) | 95,431 | 77,931 | Level 1 | Quoted prices in an active market. | Not applicable | Not applicable |
| Derivative financial assets at fair value through profit or loss, excluding options (Note 7) | 337,413 | 252,491 | Level 2 | Quoted prices in a market that is not sufficiently active. | Not applicable | Not applicable |
| Derivative financial assets at fair value through profit or loss, excluding options (Note 7) | 132,682 | 107,773 | Level 3 | Valuation model based on internal rating model. Percentage discount | The greater discount - the smaller fair value | |
| Derivative financial assets at fair value through profit or loss, excluding options (Note 7) | 23,836 | 11,736 | Level 2 | Discounted cash flows. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period). | Not applicable | Not applicable |
| TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS | 589,362 | 449,931 | ||||
| Derivative financial liabilities at fair value through profit or loss, excluding options (Note 7) | 4,202 | 10,628 | Level 2 | Discounted cash flows. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting year). | Not applicable | Not applicable |
| TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS | 4,202 | 10,628 | ||||
| Non-derivative financial assets at fair value through other comprehensive income (Note 9) | 428,476 | 386,728 | Level 1 | Quoted prices in an active market. | Not applicable | Not applicable |
| Non-derivative financial assets at fair value through other comprehensive income in bonds of foreign organisations (Note 9) | 1,997,373 | 1,722,488 | Level 2 | Quoted prices in a market that is not active. | Not applicable | Not applicable |
| Non-derivative financial assets at fair value through other comprehensive income – unquoted equity securities (Note 9) | 53 | 53 | Level 3 | Unquoted equity securities Percentage discount | The greater discount - the smaller fair value | |
| FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME | 2,425,902 | 2,109,269 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
243
There were no transfers between Levels 1 and 2, nor between Levels 2 and 3, during the years ended
31 December 2023 and 2022.
Fair value of financial assets and financial liabilities that are not measured at fair value on a
recurring basis (but fair value disclosures are required)
The following methods and assumptions are used by the Group to estimate the fair value of financial
instruments not carried at fair value.
Amounts due to and from credit institutions
For assets and liabilities maturing within one month, the carrying amount approximates fair value due
to the relatively short-term maturity of these financial instruments. For the assets and liabilities
maturing in over one month, the fair value was estimated as the present value of the estimated future
cash flows, discounted at the appropriate year-end market rates.
Loans to customers
The estimate was made by discounting the scheduled future cash flows of the individual loans
through the estimated maturity using prevailing market rates as at the respective year-end.
Amounts due to customers
Interest rates charged to customers closely approximate market interest rates and accordingly, the
carrying amounts approximate fair values.
Debt securities issued
Market values have been used to determine the fair value of debt securities traded on an active
market. For other debt securities, the fair value was estimated as the present value of estimated future
cash flows, discounted at the year-end market rates.
The following table sets out the carrying amount and fair values of financial assets and liabilities not
carried at their fair values:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
* As at 31 December 2023 and 2022, the settlements include written-off bonds of Kazakhstani corporations.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| Non-derivative financial assets at fair value through other comprehensive income – unquoted equity securities (Level 3) | Non-derivative financial assets at fair value through profit or loss (Level 3) | |
| 31 December 2021 | 750 | 10 |
| Settlements* | (697) | 107,763 |
| 31 December 2022 | 53 | 107,773 |
| Settlements* | - | 24,909 |
| 31 December 2023 | 53 | 132,682 |
| 31 December 2023 | 31 December 2022 | |||
| FINANCIAL ASSETS | Carrying amount | Fair value | Carrying amount | Fair value |
| Amounts due from credit institutions | 171,754 | 177,504 | 135,655 | 145,621 |
| Loans to customers | 9,284,872 | 9,360,564 | 7,857,902 | 7,410,430 |
| Debt securities at amortised cost, net of allowance for expected credit losses | 725,343 | 665,491 | 1,019,089 | 945,828 |
| FINANCIAL LIABILITIES | ||||
| Amounts due to customers | 10,929,504 | 10,885,820 | 10,487,615 10,500,612 | |
| Amounts due to credit institutions | 778,311 | 816,092 | 878,665 | 881,765 |
| Debt securities issued | 653,393 | 642,695 | 462,817 | 436,540 |
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
244
The carrying amounts of cash and cash equivalents, obligatory reserves, other financial assets and
other financial liabilities approximates fair value due to the short-term nature of such financial
instruments.
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
37. RELATED PARTY TRANSACTIONS
Related parties or transactions with related parties are assessed in accordance with IAS 24 “Related
Party Disclosures”. Related parties may enter into transactions which unrelated parties might not.
Terms, conditions and amounts of related party transactions are usually same as those between
unrelated parties. Transactions with related parties are settled on an arm’s-length basis and
recognised in the financial statements according to the same accounting policy as for similar
transactions with unrelated parties.
During 2023 and 2022, the Group entered into arm-length transactions with entities where the
Group’s shareholders were one of the participants. Management believes that any control of these
entities is with unrelated parties as per IFRS through the level of holding control or trust management
arrangements, which are in compliance with Kazakhstan legislation. As such, these transactions are
not disclosed as being with related parties.
Considering each possible related party not only their legal status is taken into account but also the
substance of the relationship between these parties. The Group had the following balances
outstanding as at 31 December 2023 and 2022 with related parties:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| 31 December 2023 | |||
| Level 2 | Level 3 | Total | |
| FINANCIAL ASSETS | |||
| Amounts due from credit institutions | 177,504 | - | 177,504 |
| Loans to customers | - | 9,360,564 | 9,360,564 |
| Debt securities at amortised cost, net of allowance for expected credit losses | 472,070 | 193,421 | 665,491 |
| FINANCIAL LIABILITIES | |||
| Amounts due to customers | 10,885,820 | - | 10,885,820 |
| Amounts due to credit institutions | 816,092 | - | 816,092 |
| Debt securities issued | 642,695 | - | 642,695 |
| 31 December 2022 | |||
| Level 2 | Level 3 | Total | |
| FINANCIAL ASSETS | |||
| Amounts due from credit institutions | 145,621 | - | 145,621 |
| Loans to customers | - | 7,410,430 | 7,410,430 |
| Debt securities at amortised cost, net of allowance for expected credit losses | 746,236 | 199,592 | 945,828 |
| FINANCIAL LIABILITIES | |||
| Amounts due to customers | 10,500,612 | - | 10,512,612 |
| Amounts due to credit institutions | 881,765 | - | 881,765 |
| Debt securities issued | 436,540 | - | 436,540 |
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Related party balances | Total category as per financial statements caption | Related party balances | Total category as per financial statements caption | |
| Loans to customers before allowance for expected credit losses | 12,025 | 9,774,798 | 42,676 | 8,280,290 |
| - entities with joint control or significant influence over the entity | 11,706 | 42,284 | ||
| - key management personnel of the entity or its parent | 311 | 392 | ||
| - other related parties | 8 | - | ||
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
245
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
Included in the consolidated statement of profit or loss for the years ended 31 December 2023 and
2022, are the following amounts which arose due to transactions with related parties:
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
| 31 December 2023 | 31 December 2022 | |||
| Related party balances | Total category as per financial statements caption | Related party balances | Total category as per financial statements caption | |
| Allowance for expected credit losses | (48) | (489,926) | (182) | (422,388) |
| - entities with joint control or significant influence over the entity | (44) | (177) | ||
| - key management personnel of the entity and its parent | (3) | (5) | ||
| - other related parties | (1) | |||
| Other assets | 51,464 | 173,662 | 42,005 | 159,982 |
| - Investments in associates | 51,464 | 42,005 | ||
| Amounts due to customers | 178,669 | 10,929,504 | 516,223 | 10,512,048 |
| - the parent | 110,838 | 434,987 | ||
| - entities with joint control or significant influence over the entity | 46,305 | 60,332 | ||
| - key management personnel of the entity or its parent | 11,397 | 10,243 | ||
| - other related parties | 10,129 | 10,662 | ||
| Debt securities issued | 227,351 | 653,393 | - | 462,817 |
| - entities with joint control or significant influence over the entity | 223,473 | - | ||
| - key management personnel of the entity or its parent | 3,878 | - | ||
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
| 31 December 2023 | 31 December 2022 | |||
| Related party balances | Total category as per financial statements caption | Related party balances | Total category as per financial statements caption | |
| Interest income calculated using effective interest method | 2,392 | 1,627,018 | 2,583 | 1,220,643 |
| - entities with joint control or significant influence over the entity | 2,362 | 2,561 | ||
| - key management personnel of the entity or its parent | 30 | 22 | ||
| Interest expense | (10,781) | (859,285) | (7,813) | (578,182) |
| - the parent | (6,336) | (3,924) | ||
| - entities with joint control or significant influence over the entity | (3,455) | (3,563) | ||
| - key management personnel of the entity or its parent | (364) | (140) | ||
| - other related parties | (626) | (186) | ||
| Share in profit of associate | 13,593 | 13,593 | 9,708 | 9,708 |
| Operating expenses | (2,000) | (216,888) | (2,500) | (193,018) |
| - entities with joint control or significant influence over the entity | (2,000) | (2,500) | ||
| Key management personnel compensation: | 3,715 | 126,929 | 3,816 | 108,461 |
| - Salaries and other employee benefits | 3,715 | 3,816 | ||
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
246
38. SUBSEQUENT EVENTS
Management has not identified events occurred after 31 December 2023, requiring recognition or
disclosure.
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
18
Consolidated
Financial
Statements and
Independent
Auditors’ Report for
the Year Ended 31
December 2023
Notes to the Consolidated Financial Statements (Continued)
For the years ended 31 December 2023 and 2022 (Millions of Kazakhstani Tenge)
19
Information for Shareholders
Information for Shareholders
248
JOINT STOCK COMPANY HALYK BANK OF
KAZAKHSTAN
Registered address
40, Al-Farabi Avenue, Almaty A26M3K5, Kazakhstan
Telephone
+7 727 259 0777
Fax
+7 727 259 0271
Website
www.halykbank.kz
https://halykbank.com
https://halykbank.kz/en/about/shareholders_investors/akcioneram
Registered with
The Ministry of Justice of the Republic of Kazakhstan
Registration number
3898-1900-АО
Date of re-registration
5 June 2023
Representative offices
Representative office in Beijing, People’s Republic of China
No. 41 East Fourth Ring Road, Chaoyang District, Beijing Room 2006, A TOWER,
Jia Tai International Mansion
Post code: 100026
Tel: +86 10 65047265
Representative office in London, United Kingdom
6 London Street, New London House, London EC3R 7LP
Tel: +44 (0)203 741 9500
19
Information for
Shareholders
INFORMATION FOR SHAREHOLDERS
Contact information
Investor Relations
JSC Halyk Bank of Kazakhstan
Holders of GDRs:
Tel: +7 (727) 259 04 30
Holders of common shares:
Tel: +7 (727) 259 05 99
Tel: +7 (727) 259 07 77
Securities holder registrar
JSC Central Securities Depositary
Kazakhstan
050040/A15P5B5,
Almaty, st. Satpaeva, 30/8,
non-residential premises 163
Tel: +7 (727) 262 08 46, 355 47 60
010000,
Astana, district "Almaty", st. Amangeldy Imanov,
13, BC "Nur-Saulet 2", office No. 101
Tel: +7 (717) 247 67 50
Auditors
Deloitte LLP
36, Al-Farabi Avenue, Almaty 050059,
Kazakhstan
Tel: +7 (727) 258 1340
Depositary
The Bank of New York Mellon
New York 10286
US
Tel: +1 212 815 4158
SWIFT: IRVTUS3N
JOINT STOCK COMPANY HALYK BANK OF
KAZAKHSTAN
Registered address
40, Al-Farabi Avenue, Almaty A26M3K5, Kazakhstan
Telephone
+7 727 259 0777
Fax
+7 727 259 0271
Website
www.halykbank.kz
https://halykbank.com
https://halykbank.kz/en/about/shareholders_investors/akcioneram
Registered with
The Ministry of Justice of the Republic of Kazakhstan
Registration number
3898-1900-АО
Date of re-registration
5 June 2023
Representative offices
Representative office in Beijing, People’s Republic of China
No. 41 East Fourth Ring Road, Chaoyang District, Beijing Room 2006, A TOWER,
Jia Tai International Mansion
Post code: 100026
Tel: +86 10 65047265
Representative office in London, United Kingdom
6 London Street, New London House, London EC3R 7LP
Tel: +44 (0)203 741 9500
19
Information for
Shareholders
INFORMATION FOR SHAREHOLDERS
Contact information
Investor Relations
JSC Halyk Bank of Kazakhstan
Holders of GDRs:
Tel: +7 (727) 259 04 30
Holders of common shares:
Tel: +7 (727) 259 05 99
Tel: +7 (727) 259 07 77
Securities holder registrar
JSC Central Securities Depositary
Kazakhstan
050040/A15P5B5,
Almaty, st. Satpaeva, 30/8,
non-residential premises 163
Tel: +7 (727) 262 08 46, 355 47 60
010000,
Astana, district "Almaty", st. Amangeldy Imanov,
13, BC "Nur-Saulet 2", office No. 101
Tel: +7 (717) 247 67 50
Auditors
Deloitte LLP
36, Al-Farabi Avenue, Almaty 050059,
Kazakhstan
Tel: +7 (727) 258 1340
Depositary
The Bank of New York Mellon
New York 10286
US
Tel: +1 212 815 4158
SWIFT: IRVTUS3N
249
REGIONAL BRANCHES
Astana Regional Branch
17, Kabanbay Batyr Street, non-residential
premises 17, Nura district, Astana 010000
Tel: +7 717 259 1144
Aktobe Regional Branch
16/B, Microdistrict 12, Aktobe 030020
Tel: +7 713 294 2403
Almaty Regional Branch
135/8, Gagarin Avenue, Bostandyksky district,
Almaty A15E4E2
Tel: +7 727 259 7271
Atyrau Regional Branch
23, Baktygerey Kulmanov Street, Atyrau 060011
Tel: +7 712 258 6470
Eastern Kazakhstan Regional Branch
57A, Gorky Street, Ust-Kamenogorsk 070004
Tel: +7 723 259 3462
Zhambyl Regional Branch
145, Zhambyl Avenue, Taraz 080000
Tel: +7 726 259 5984
Ulytau Regional Branch
20, German Titov Street, Zheskazgan 100600
Tel: +7 710 277 8484
Western Kazakhstan Regional Branch
194/1, Nursultan Nazarbayev Avenue, Uralsk
090000
Tel: +7 711 259 3920
Karaganda Regional Branch
56, Tishbek Akhanov Street, Kazybek Bi district,
Karaganda 100008
Tel: +7 721 258 9218
Kostanay Regional Branch
146, Tauelsizdik Street, Kostanay 110000
Tel: +7 714 259 3359
Kyzylorda Regional Branch
91a, Kulyash Baiseitova Street, Kyzylorda 20001
Tel: +7 724 255 0001
Mangistau Regional Branch
74, Microdistrict 14, Aktau 130000
Tel: +7 729 270 0101
Pavlodar Regional Branch
1/1, Lermontov Street, Pavlodar 140008
Tel: +7 718 270 0149
Northern Kazakhstan Regional Branch
36, Konstitutsiya Street, Petropavlovsk 150008
Tel: +7 715 259 5739
Abay Regional Branch
109, Abaya Kunanbayeva Street, Semey
071400
Tel: +7 722 255 8805
Shymkent Regional Branch
3/10, Al-Farabi Square, Al-Farabi district,
Shymkent 160012
Tel: +7 725 258 9784
Jetisu Regional Branch
22/1, Karatal microdistrict, Taldykorgan
040000
Tel: +7 728 255 5000
Akmola Regional Branch
33, Nursultan Nazarbayev Avenue, Kokshetau
020000
Tel: +7 716 259 5472
Baikonyr Regional Branch
16, Gorky Street, Baikonyr 468320
Tel: +7 336 227 6172
Zhanaozen Regional Branch
15, Zhalyn Microdistrict, Zhanaozen 359900
Tel: +7 729 342 8504
Ekibastuz Regional Branch
49A, Baurzhan Momyshuly Street, Ekibastuz
141200
Tel: +7 718 734 8980
Temirtau Regional Branch
26A, Respublika Avenue, Temirtau 101403
Tel: +7 721 393 3130
Balkhash Regional Branch
15a, Sashubaya Koshkarbayeva microdistrict,
Balkhash
Tel: +7 710 367 9822
Turkestan Regional Branch
5, Street 28, Zhana Kala microdistrict,
Turkestan
Tel: +7 253 358 055
Almaty Regional Branch
3, Dostyk Street, Konayev
Tel: +7 277 279 900
19
Information for
Shareholders
REGIONAL BRANCHES
Astana Regional Branch
17, Kabanbay Batyr Street, non-residential
premises 17, Nura district, Astana 010000
Tel: +7 717 259 1144
Aktobe Regional Branch
16/B, Microdistrict 12, Aktobe 030020
Tel: +7 713 294 2403
Almaty Regional Branch
135/8, Gagarin Avenue, Bostandyksky district,
Almaty A15E4E2
Tel: +7 727 259 7271
Atyrau Regional Branch
23, Baktygerey Kulmanov Street, Atyrau 060011
Tel: +7 712 258 6470
Eastern Kazakhstan Regional Branch
57A, Gorky Street, Ust-Kamenogorsk 070004
Tel: +7 723 259 3462
Zhambyl Regional Branch
145, Zhambyl Avenue, Taraz 080000
Tel: +7 726 259 5984
Ulytau Regional Branch
20, German Titov Street, Zheskazgan 100600
Tel: +7 710 277 8484
Western Kazakhstan Regional Branch
194/1, Nursultan Nazarbayev Avenue, Uralsk
090000
Tel: +7 711 259 3920
Karaganda Regional Branch
56, Tishbek Akhanov Street, Kazybek Bi district,
Karaganda 100008
Tel: +7 721 258 9218
Kostanay Regional Branch
146, Tauelsizdik Street, Kostanay 110000
Tel: +7 714 259 3359
Kyzylorda Regional Branch
91a, Kulyash Baiseitova Street, Kyzylorda 20001
Tel: +7 724 255 0001
Mangistau Regional Branch
74, Microdistrict 14, Aktau 130000
Tel: +7 729 270 0101
Pavlodar Regional Branch
1/1, Lermontov Street, Pavlodar 140008
Tel: +7 718 270 0149
Northern Kazakhstan Regional Branch
36, Konstitutsiya Street, Petropavlovsk 150008
Tel: +7 715 259 5739
Abay Regional Branch
109, Abaya Kunanbayeva Street, Semey
071400
Tel: +7 722 255 8805
Shymkent Regional Branch
3/10, Al-Farabi Square, Al-Farabi district,
Shymkent 160012
Tel: +7 725 258 9784
Jetisu Regional Branch
22/1, Karatal microdistrict, Taldykorgan
040000
Tel: +7 728 255 5000
Akmola Regional Branch
33, Nursultan Nazarbayev Avenue, Kokshetau
020000
Tel: +7 716 259 5472
Baikonyr Regional Branch
16, Gorky Street, Baikonyr 468320
Tel: +7 336 227 6172
Zhanaozen Regional Branch
15, Zhalyn Microdistrict, Zhanaozen 359900
Tel: +7 729 342 8504
Ekibastuz Regional Branch
49A, Baurzhan Momyshuly Street, Ekibastuz
141200
Tel: +7 718 734 8980
Temirtau Regional Branch
26A, Respublika Avenue, Temirtau 101403
Tel: +7 721 393 3130
Balkhash Regional Branch
15a, Sashubaya Koshkarbayeva microdistrict,
Balkhash
Tel: +7 710 367 9822
Turkestan Regional Branch
5, Street 28, Zhana Kala microdistrict,
Turkestan
Tel: +7 253 358 055
Almaty Regional Branch
3, Dostyk Street, Konayev
Tel: +7 277 279 900
19
Information for
Shareholders
250
SUBSIDIARIES
Kazakhstan
Halyk Collection
109 “B”, Abay Avenue, Almaty
Tel: +7 727 357 2927
Halyk Leasing
26, Masanchi Street, Almaty
Tel: +7 727 239 8798
Halyk Finance
Floor 5, 109 “B”, Abay Avenue, Almaty
Tel: +7 727 339 4377
Halyk Global Markets
Floor 4, 109 “B”, Abay Avenue, Almaty
Tel: +7 727 339 7271
Kazteleport
109 “B”, Abay Avenue, Almaty
Tel: +7 727 364 5151
Halyk Finservice
133/7, Gagarin Avenue, non-residential
premises 1, Almaty
Halyk Life
109 “B”, Abay Avenue, Almaty
Tel: +7 727 244 6222
Halyk Insurance Company
109 “B”, Abay Avenue,
non-residential premises 9A, Almaty
Tel: +7 727 250 2222
Tel: +7 727 295 2233 (call centre)
Tel: 797 (free from mobile)
KUSA Halyk
99, Zhamakayev Street, Almaty
Tel: +7 727 232 1450
Halyk Aktiv
77/3, Al-Farabi Avenue, Bostandyksy district,
non-residential premises 293, Almaty
Tel: +7 727 311 5166
Georgia
Halyk Bank Georgia
74, Kostava Street, Tbilisi 0171
Tel: +995 32 224 07 07
Kyrgyzstan
Halyk Bank Kyrgyzstan
390, Frunze Street, Bishkek 720033,
Kyrgyzstan
Tel: +996 312 614 128
Uzbekistan
Tenge Bank
66, Parkentskaya Street, Tashkent 100007
Tel: +998 71 203 8899
Useful links:
National Bank of the Republic of Kazakhstan
www.nationalbank.kz
The Agency for Financial Market Regulation
and Development
www.finreg.kz
Kazakhstan Stock Exchange (KASE)
www.kase.kz
Astana International Exchange
www.aix.kz
London Stock Exchange (LSE)
www.londonstockexchange.com
Financial Conduct Authority (FCA)
www.fca.org.uk
Prudential Regulation Authority (PRA)
http://www.bankofengland.co.uk/pra
19
Information for
Shareholders
SUBSIDIARIES
Kazakhstan
Halyk Collection
109 “B”, Abay Avenue, Almaty
Tel: +7 727 357 2927
Halyk Leasing
26, Masanchi Street, Almaty
Tel: +7 727 239 8798
Halyk Finance
Floor 5, 109 “B”, Abay Avenue, Almaty
Tel: +7 727 339 4377
Halyk Global Markets
Floor 4, 109 “B”, Abay Avenue, Almaty
Tel: +7 727 339 7271
Kazteleport
109 “B”, Abay Avenue, Almaty
Tel: +7 727 364 5151
Halyk Finservice
133/7, Gagarin Avenue, non-residential
premises 1, Almaty
Halyk Life
109 “B”, Abay Avenue, Almaty
Tel: +7 727 244 6222
Halyk Insurance Company
109 “B”, Abay Avenue,
non-residential premises 9A, Almaty
Tel: +7 727 250 2222
Tel: +7 727 295 2233 (call centre)
Tel: 797 (free from mobile)
KUSA Halyk
99, Zhamakayev Street, Almaty
Tel: +7 727 232 1450
Halyk Aktiv
77/3, Al-Farabi Avenue, Bostandyksy district,
non-residential premises 293, Almaty
Tel: +7 727 311 5166
Georgia
Halyk Bank Georgia
74, Kostava Street, Tbilisi 0171
Tel: +995 32 224 07 07
Kyrgyzstan
Halyk Bank Kyrgyzstan
390, Frunze Street, Bishkek 720033,
Kyrgyzstan
Tel: +996 312 614 128
Uzbekistan
Tenge Bank
66, Parkentskaya Street, Tashkent 100007
Tel: +998 71 203 8899
Useful links:
National Bank of the Republic of Kazakhstan
www.nationalbank.kz
The Agency for Financial Market Regulation
and Development
www.finreg.kz
Kazakhstan Stock Exchange (KASE)
www.kase.kz
Astana International Exchange
www.aix.kz
London Stock Exchange (LSE)
www.londonstockexchange.com
Financial Conduct Authority (FCA)
www.fca.org.uk
Prudential Regulation Authority (PRA)
http://www.bankofengland.co.uk/pra
19
Information for
Shareholders