Shares of Halyk Bank Slide Down Shortly Before Dividend Payments

This is a common situation when book is closing, analytics says

Photo: Oleg Spivak

Common stocks and GDR of the Joint Stock Company Halyk Savings Bank of Kazakhstan (or Halyk Bank) have declined by 6-12%. According to Ms. Marzhan Melanich, head of the analytic department and a member of the board in Centras Securities, the situation is a result of the book closure date for shareholders.

The Global Depositary Receipts (GDR) of the Halyk Bank, which are traded on the LSE, fell 6.9% last week through July 23. At the opening trade session on Wednesday, these stocks declined from $12.10 to $10.60 and stopped at $11.40 mark by the end of the session. GDR traded on AIX fell 12% during the same period with $10.77 per share. Common stocks of Halyk Bank on KASE also declined by 5.7% to 115.62 tenge per share ($0.27). However, on Wednesday they bounded up to 117.17 tenge per share ($0.28).

The main topic in the agenda of an Extraordinary General Shareholders’ Meeting scheduled for today, July 23, is a payout on dividends in 17.08 tenge per share ($0,041). 

Earlier, on April 22 the board of directors had recommended avoiding payouts on common stocks due to the severe economic situation in the country. However, the board has changed its recommendation after the Kazakhstani economy became more stable and the bank showed good results in the first quarter. The board of directors of the Halyk Bank suggests making payouts on common stocks by using retained net income for previous years.

As Freedom Finance analytics noted, the book closure was scheduled for 12AM on July 23 or in other words before the decision. 

“Only KAZ Minerals PLC did that before,” analytics noted on Tuesday.  

According to Jýsan Invest money watchers, Halyk’s shares have sold with some “neglect” during the last few days because of their low market value. 

“Despite positive-going external and internal sentiments, the GDR of Halyk Bank are obviously traded on a lower level than the market on average. Moreover, shares of the Russian Sberbank and VTB  Bank, which both have fewer dividend returns and are more vulnerable for macroeconomic factors, surged by 3.4 and 6.2% respectively,” said experts in a written report published on July 22. 

“The decline of Halyk Bank shares on all trade platforms is probably a result of the book closure date for shareholders, who can receive dividend payouts,” Melanich told to kursiv.kz website.

As she noted, senior executives of the bank have decided to make payments in 17.08 tenge ($0,041) per common shares. The book closure date is today (12AM) and all payouts will be made starting from July 24. 

“This situation is very common for book closure periods. Usually, the share price might decline in this time by the size of a dividend itself. Concerning GDR, investors probably would have started to sell earlier given different trade regime (T+2),” the analytic said.

In general, Halyk Bank shows stable and good performance, and is a real leader in the Kazakhstani banking sector, Melanich noted.

“Even though we allow that the financial performance of the bank might worsen in the second half of the year due to the pandemic, we are still recommending ‘to buy’ as current financial indicators are stable,” head of the analytic department of Centras Securities said.

The Halyk Bank of Kazakhstan is a too-big-to-fail bank of the country. It holds the first place on net worth among all Kazakhstani banks. The net profit of the bank has increased by 8.8%, up to 81.1 billion tenge ($196,758,332) in the first quarter compared to 74.5 billion tenge ($182,929,448) in the same period of last year. In 2019 the financial return of the bank increased by 31.6% to 334.5 billion tenge ($811,537,140).

As of July 1, 2020, among the main shareholders of the bank are Almex (56.39%), The Bank of New York (22.71%) and the Unified Accumulative Pension Fund (5.34%).
 

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