Posted by: 2 june, 2022
INVESTOR INFORMATION Tashkent, 1 June 2022
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Our dynamic performance in 2021 gives us confidence that we are on track to achieve our strategic and financial objectives.
Financial data
Balance sheet IFRS data |
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In UZS billion |
2018 |
2019 |
2020 |
2021 |
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Cash and cash equivalents |
1 630.2 |
2 630.2 |
5 147.6 |
7 229.7 |
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Trading, financial assets |
162.6 |
139.7 |
802.1 |
1 095.1 |
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Due from banks |
508.2 |
845.0 |
1 810.5 |
2 031.5 |
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Loans and advances to customers |
17 866.9 |
19 839.7 |
24 345.2 |
29 263.2 |
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Other assets |
246.9 |
390.3 |
498.6 |
544.8 |
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Total assets |
19 831.3 |
23 844.9 |
32 604.1 |
40 164.3 |
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Customer accounts |
7 090.7 |
7 935.7 |
9 211,1 |
13 632,3 |
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Borrowings from the Government |
8 798,4 |
8 184,4 |
9 131,1 |
12 012,8 |
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Borrowings from fin. institutions |
2 268.9 |
3 345.9 |
5 986.3 |
5 360.2 |
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Due to other banks |
- |
284.5 |
520.1 |
- |
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Debt securities |
9.9 |
440.7 |
3 148.6 |
4 057.2 |
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Other liabilities |
61.2 |
105.5 |
140.6 |
174.9 |
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Total equity |
1 612.1 |
3 548.1 |
4 040.3 |
4 927.0 |
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Total liabilities and equity |
19 831.3 |
23 844.9 |
32 604.1 |
40 164.3 |
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Income statement |
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Net interest income |
647.0 |
1 035.2 |
1 410.1 |
2 121.7 |
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Net fee and commission income |
177.8 |
207.7 |
255.3 |
261.5 |
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Operating expenses |
503.6 |
619.4 |
665.2 |
894.1 |
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Operating income |
849.8 |
1 310.7 |
1 779.1 |
2 617.8 |
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Net profit |
177.7 |
339.0 |
405.2 |
886.8 |
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Key indicators |
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ROA |
1.1% |
1.6% |
1.4% |
2.4% |
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ROE |
11.9% |
13.1% |
10.7% |
19.8% |
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CIR |
59.3% |
47.3% |
37.4% |
34.2% |
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NIM |
4.5% |
5.2% |
5.8% |
7.0% |
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90+ dpd loans ratio |
0.8% |
1.9% |
2.5% |
4.4% |
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COR |
0,7% |
1,4% |
2,7% |
2,1% |
HIGHLIGHTS (IFRS data)
Balance sheet and P&L as of 31 December 2021 compared with 31 December 2020.
Performance highlights
Confidence in our overall asset quality, earning trajectory and cost optimization allowed the Bank gain remarkable profit. Net profit grew by 119% yoy to UZS 886.8 billion. The increase in net profit was driven by a growth of net interest income and fee and commission income.
Ipoteka-bank posted a 47.1% rise in its operating income to UZS 2 617.8 billion in the 2021 financial year. This strong operating performance reflected higher net interest income, solid loan volume growth and moderate rise in expenses. Cost to income ratio (CIR) improved to 34.2% due to traditionally stable operational efficiency.
Net interest income rose by 50.5% yoy to UZS 2 121.7 billion. The yoy increase in interest income by UZS 1 176.8 billion, or 46.8%, was primarily related to an increase in interest income from loans (+45.8%; UZS 1 065.0 billion), which was driven by an increase in the gross loan portfolio. Furthermore, the increase in interest income was positively affected by higher investments in government bonds and interbank placements.
Over the same period, interest expenses grew by 41.1% to UZS 1 600.7 billion, mainly driven by two factors: an increase in interest expenses of the borrowed funds from the Ministry of Finance (MOF) under the mortgage lending program and interest expenses of Eurobonds, issued in the end of 2020 and 2021.
Net interest margin widened to historical maximum (7.0%), mainly thanks to improved funding costs and effective fund management.
Operating expenses rose moderately to UZS 894.1 billion (+34.4%; UZS 229.0 billion). The increase was mainly driven by an increase in staff costs, software maintenance and depreciation expenses, as the Bank continued investment in the transformation of digital and personnel capabilities through cost efficiency measures.
Charges for credit losses on loans in 2021 amounted to UZS 591.3 billion (decreased by 3.0%; or UZS 18.4 billion), which translated into a 2.1% Cost of risk down by 0.6 pp yoy.
Moreover, at the end of 2021, the quality indicators that reflect the profitability and efficiency of the bank's activities remained at a high level. In particular, during the reporting period, the Bank's Return on assets (ROA) amounted to 2.4% and the Return on capital (ROE) to 19.8%.
Balance sheet remains strong, liquid and well diversified
Total assets increased to UZS 40 164.3 billion (+23%; UZS 7 560.2 billion) in 2021.
Since the Bank’s assets are equally funded by long-term borrowing from the government and IFIs, this lead to diversify the assets and to gain strong position in the local deposit and debt market.
Placements with banks increased to UZS 2 031.5 billion (+12.2%; UZS 221.0 billion) and the security portfolio was up sharply by 41.0 % to UZS 1 095.1 billion in 2021, due to acquirement of the Government bonds.
Our loan book increased by 20.2% year-on-year in constant currency terms rose to UZS 29 263.2 billion. The portfolio is well-diversified and had a 35.8% share of mortgage loans, 28.5% share of small business loans, 25.9% share of corporate loans and 9.8% share of consumer loans.
The corporate loan portfolio (including SME loans) expanded by 10.8% to UZS 16 866.2 billion on the back of the increased demand from high-quality corporate borrowers and revaluation of FX loans. The retail loan portfolio had a bigger effect to the gross loan portfolio, increasing by 36.8% to UZS 14 124.5 billion mainly driven by mortgage lending which increased by 29.2% to UZS 11 101.0 billion as mortgage loans became more affordable with reliable interest-rates and the governmental loan programs.
The share of 90 day past due loans in the loan portfolio increased to 4.4% and could be associated with the continued effect of the anti-covid measures and circumstances. However, the Bank has maintained
stage 3 loans under control and owns fully collateralized portfolio.
On the liability side, the Bank’s funding strategy is to continue developing a diversified funding base in order to achieve an optimum balance between its own capital, domestic and international borrowings to cover the growing needs of the Bank’s business, while gradually reducing its need for state funding as part of its ongoing privatization strategy.
Funding base relies mainly on Customer deposits with 38.7% share of liabilities, borrowings from the Government (MOF and UFRD) with 34.1% share, and borrowings from the local and international financial institutions with 26.7% share of liabilities, respectively.
Borrowings from the state and Debt securities increased by 25.7% and 28.9%, respectively, since the bank had access long-term funding from the state to support lending to the domestic mortgage market and issuing local currency corporate Eurobonds UZS 785 billion to the global capital market in 2021.
The bank’s total capital increased by 21.9% to UZS 4 927.0 billion from the beginning of 2021 mainly owing to the profit generation. Tier 1 capital ratio, calculated in accordance with the CBU measures, amounted to 11.1%, total capital adequacy ratio to 14.4%.
OUTLOOK
Ipoteka-bank, being one of the largest banks in Uzbekistan, has a significant role in the banking sector and constantly holds a strong market position with 8.4% market share. Moreover, the bank is the largest mortgage lender in Uzbekistan with approximately 1/3rd market share.
Our credit ratings today are at the sovereign level with recently revised outlooks from S&P Global (from Negative to Stable) rated at ‘BB-’ and Moody’s (from Stable to Positive) rated at ‘B1’.
Although, Ipoteka-bank is state owned, it is mainly commercialized, meaning that almost all products provided on commercial base. Prudential lending policy and wide range of products, operations and structural optimization, lending on commercial base, all these factors together allowed the bank to improve the efficiency resulting in profitability above the sector.
It can be said without any doubt that 2021 was the second stage of the transformation of Ipoteka-bank in cooperation with International Finance Corporation - the year of implementation of initiatives.
In addition, the evolving geopolitical situation has moderately low direct and indirect impact to Ipoteka-bank; exposures are negligible.
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