Conference call to discuss Halyk Bank's the first half 2026 consolidated financial results. I'm Mira Seyanova, Head of IR, and joining on the call today are Ms.

Umut Shayakhmetova, Chief Executive Officer; Mr. Murat Koshenov, CFO, Deputy CEO Finance, Subsidiaries, Compliance and International Activities; Mr.

Dauren Sartayev, First Deputy CEO B2B Banking, Marketing, PR, and Acquiring, and Transactional Banking; Ms. Olga Vuruss, Deputy CEO Corporate Banking; Mr.

Nariman Mukushev, Deputy CEO GR, GovTech, and Ecosystem; Mr. Mikhail Khasen, Deputy CEO IT; Mr.

Kiril Bachvarov, Deputy CEO B2C Banking; Mr. Almas Makhanov, Financial Director; Mr.

Viktor Skryl, Strategy Director; and Mr. Rustam Telish from IR team.

The session will start with a presentation by our team and will be followed by Q&A. Please note that the call is being recorded.

Let me start with our B2C business update. The first half of 2026 continued to demonstrate strong engagement across the Halyk SuperApp ecosystem, with transaction activity growing at a healthy pace.

As of 1st of July, monthly active users reached 8.6 million, while daily active users stood at 2.8 million. Monthly transacting users reached 6.1 million, and our active client base stood at 11.5 million.

The scale of customer engagement is also reflected in transaction activity. During the first half of 2026, the number of payments and transfers increased by 8.1% year-on-year to 234.7 million, while transaction volumes grew by 14.1% to 10.5 trillion tenge.

We also maintained a strong position in our core customer segment, with active salary cards representing 39.3% of the country's employed population. Overall, the first half performance demonstrates the growing engagement of Halyk ecosystem and the scalability of our digital platform.

Turning to our retail lending business now. The retail gross loan book reached 4.8 trillion tenge as of 1st of July 2026, which is up 10.7% year-on-year.

From an asset quality perspective, the NPL 90 days plus ratio stood at 9.2%, with coverage at 81%. Loan issuance in the second quarter amounted to 730 billion tenge, up 16.8% year-on-year, demonstrating a recovery in origination activity following the regulatory tightening impact seen earlier in the year.

We continue to maintain a strong market position, with 17.8% market share, serving approximately 1.83 million borrowers. Digital channels remain a key part of our distribution model, with 88% of loans issued digitally by number.

Now turning to retail deposits. Our retail deposit portfolio reached 8.3 trillion tenge as of 1st of July, increasing by 10.5% year-on-year.

We maintained a strong market position with 26.9% market share, while tenge-denominated deposits accounted for 75% of the portfolio, supporting the stability of our funding base. Digital adoption remains strong, with 95% of new deposits opened digitally.

The combination of a large and growing deposit base, strong digital adoption, and a high share of local currency funding continues to support the resilience of our retail funding franchise. Now let me turn to our B2B ecosystem.

Onlinebank continues to scale rapidly, strengthening the connection between merchants, distributors, and Halyk's retail customer ecosystem. Quarterly GMV increased strongly, reaching 68.9 billion tenge in the second quarter, which is up 35.6% year-on-year.

The number of connected stores reached 18,800, representing approximately 2.8 times the level of the second quarter of 2025. This continued expansion strengthened the network effect between merchants, suppliers, and Halyk customers, and creates additional opportunities to increase the share of Halyk payments within the merchant ecosystem.

Onlinebank is therefore becoming an increasingly important component of our broader B2B and transactional banking proposition. Let me now turn to the performance of our Onlinebank platform.

We continue to maintain our leading position in B2B digital banking in Kazakhstan, and as of 1st of July, monthly active users reached approximately 317,000, while daily active users stood at 145,000. Monthly transacting users reached approximately 232,000.

The platform continued to demonstrate healthy growth in transactional activity. During the first half of the year, the number of KZ payments increased by 10% year-on-year to 29.4 million, while transaction volumes increased by 25% to 89.6 trillion tenge.

In the second quarter, payment volumes also remained strong, increasing by 23% year-on-year. Next slide, please.

Now turning to our corporate lending business. The gross corporate loan portfolio reached 6.8 trillion tenge as of 1st of July, increasing by 11.3% year-on-year.

The portfolio remains well diversified across industries, with no single sector representing a dominant concentration. This diversification continues to be an important strength of our corporate franchise and supports overall portfolio resilience and risk management.

Local currency loans represented 54.7% of the corporate portfolio. Next slide, please.

Turning to our corporate business performance now. We continue to maintain strong relationships with our corporate clients, serving approximately 3,000 active clients, and product penetration remains quite high, with an average of 4.5 products per client, while the total quarterly number of transactions reached approximately 3 million.

Our borrower base also demonstrates a high level of engagement, with an average of 5.9 products per borrower. We continue to maintain our leading position in corporate banking, with 86% penetration among Kazakhstan's largest taxpayers, a 47.6% share of loans to legal entities, and 31% share of deposits of legal entities.

Asset quality remains strong, with the NPL 90 day plus ratio at 2.6% and coverage at 122.6%. Now turning to our SME business.

The SME segment continued to be one of the key growth areas of the bank during the first half of 2026. The SME gross loan portfolio reached 2.4 trillion tenge as of 1st of July, increasing by 24.7% year-on-year.

Loan issuance also remained very strong, increasing by 23.7% year-on-year during the first half, while second quarter issuance grew by 19.8%. Digital lending continues to be an important growth driver here, and the digital loan portfolio for legal entities reached 413 billion tenge, representing an increase of almost 52% year-on-year and 20.4% growth compared with the beginning of the year.

Now turning to portfolio quality and client activity in the SME segment. Asset quality was strong, with the NPL 90 day plus ratio at 5% and coverage at 105.8%.

At the same time, client engagement remains high. Our SME customers use an average of 2.7 bank products per active client, while monthly transaction activity reached 5.2 million transactions, with a total monthly transaction volume of 16.3 trillion tenge.

Digitalization remains a key feature of our SME franchise, with 93% of loans issued digitally by count. Taken together, these segment dynamics demonstrate the continued strength of SME business and its role in the bank's broader digital ecosystem.

Now let me hand over the call to my colleague from IR team, Rustam Telish. Thank you.

Thank you, Mira, and good day, everyone. Now I will take you through the financial results for the first half and second quarter 2026.

Here you can see the decomposition of the net income in first half 2026 versus first half 2025. Net income for first half 2026 is down 15.3% year-on-year due to the impact of increased minimum reserve requirements, tighter regulations in retail lending, and increase in average interest rates on amounts due to customers amid flat average interest rate on loans.

At the same time, net interest income showed positive growth of 2.6% despite the pressure from minimum reserve requirements and tighter regulations in retail lending. Let me briefly highlight key balance sheet trends.

Total assets of the group increased by 5.4% year-to-date. Average total interest-earning assets in first half 2026 grew by 6.2%, while average total earning paying liabilities grew by 7.9%.

Total deposits to total liabilities ratio was at the level of 80.8%. As at the end of first half 2026, total equity of the bank increased by 4.1% compared to the year-end 2025 due to the net profit earned.

Loans to deposit ratio was at the level of 89.2%. Interest income for first half 2026 was up 12.2% versus first half 2025, mainly due to increase in of average balance loans to customers.

Interest expense for first half 2026 increased by 21.6% versus first half 2025, mainly as a result of the increase in average interest rate and balances of amounts due to customers, as well as the growth in the share of tenge amounts due to customers. Consequently, net interest income for first half 2026 grew by 2.6% versus first half 2025.

Net interest margin decreased to 6.8% for first half 2026 compared to 7.3% for first half 2025 due to the introduction of new minimum reserve requirements coefficients. NIM adjusted for the effect of tighter minimum reserve requirements would be 7.2%.

Net fee and commission income for first half 2026 decreased by 19.6% versus first half 2025, mainly due to negative dynamics of BNPL transactional income amid tighter underwriting resulting from regulatory changes, as well as the gradual pass-through of VAT on certain banking services to clients. At the same time, net fee and commission income for second quarter 2026 increased by 18.4% versus first quarter 2026.

Here is an overview of operating expenses, which increased by 5.5% versus first half 2025, mainly due to the indexation of salaries and other employee benefits, as well as IT development and related costs and increase in VAT. The cost-to-income ratio increased to 19.2% compared to 17.2% for first half 2025 amid lower operating income in first half 2026.

Year-on-year, loans to customers increased by 13.2% on a gross basis and by 13% on net basis. Compared with the end of first quarter of 2026, loans to customers were up 4.1% on a gross basis and 4% on net basis.

The share of tenge loans to total net loans was at the level of 74.3%. Expected credit losses are in the line with our full-year cost of risk in first half 2026, was at the normalized level of 1.4%.

Stage 3 loans increased to 8.6% as at the end of first half 2026 as a result of continuing moratorium on the sale of retail loans to collector agencies, as well as slower retail loan portfolio growth. On a year-on-year basis, deposits of individuals increased by 10.5%, while deposits of legal entities increased by 5.4%.

Compared with the year-end 2025, deposits of individuals were up 3.8% and deposits of legal entities were up 3.6%, with total deposits up 3.7% year-to-date. As of the end of first half 2026, the share of total retail tenge deposits was 75%, while for legal entities, it was 67%.

Capital adequacy ratio of the bank decreased in second quarter 2026 due to the dividend payments. RWA increased by 3.2% year-to-date.

As at the end of first half 2026, RWA density stood at 89% compared to 87% as at the end of first quarter 2026. Based on our 6-month financial results, we have updated the outlook for the full year of 2026.

Retail net loan portfolio growth is expected to be in the area between 8% to 10%. Corporate and SME net loan portfolio growth is expected to be in the area between 10% to 13%.

Total net loan portfolio growth is expected to be in the area between 9% to 12%. Net fee and commission income is expected to decrease by 10%.

Cost of risk is projected to be in the area of 1.5%. Consolidated net income expected to be in the area of 1 trillion tenge.

Return on average equity is expected to be in the area of 29%. Net interest margin is estimated to be in the area of 6.8%, and cost-to-income ratio is projected to be in the range of 18% to 20%.

Dear ladies and gentlemen, that's a look through the financials. We will now open the floor for your questions.

Just a quick instruction: to state a question, you can raise your hand in Zoom, or if you joined via cell phone, please press *9 to raise your hand. You can also enter your question in the written form via chat.

While stating your question, please also mention your name and company. The next question comes from Jens.

Jens, please go ahead.

Hi, guys. Thanks, Mira, for the presentation.

It's Jens Eerma here from Cavendish. Two two questions from my side, if that's all right.

Firstly, just on the NIM and sort of the structural earnings power there. Appreciate we've seen an impact from the higher minimum reserve requirements of, I think it was 40-odd basis points or so.

Just looking beyond that mechanical effect, how should we think about the underlying margin given sort of what you see in terms of deposit repricing and the current competitive environment? Appreciate you've reiterated the guidance of in the area of 6.8%.

How should we think about that going forward? Is that 6.8% a level that you think is sustainable?

Then secondly, just on net fee and commission income. Appreciate sort of the year-to-date trend and some of the recovery in the second quarter.

If we separate the impact we've seen from the BNPL regulation and the VAT from the underlying trends, what do you see in terms of underlying transaction activity and customer monetization trends? Where do you think the run rate could go once we've really absorbed these regulatory changes?

Thank you.

Jens, thank you very much for your questions. Regarding the net interest margin, I would say there were two reasons which was driving NIM recently.

One is indeed the impact from higher minimum reserve requirements, and we actually provided how the net interest margin would look like in the absence of increase in minimum reserve requirements, which actually happened in two stages: one September last year, and the second one mid of April this year. Actually, in the absence of these increases, the net interest margin would be standing at 7.2%.

Another trend which was influencing the net interest margin was increase in deposit rates in tenge for retail clients. We saw that sector-wide during last year, especially in the second half of last year.

With stabilization of the rates and the cycle of base rate decreases which was started by the National Bank this year, we saw not only the stabilization, we see that some banks start gradually reducing the rates, including us among some few banks. It's not, let's say, the widespread reduction yet, but this is, I would say, the early signs that the rates on retail deposit might follow the world trend in rates reduction.

Regarding the net fees and commission, we were pointing during the Q1 couple of reasons which was influencing decrease in net fees and commission. One was introduction of VAT on some of the banking services, particular so-called documentary business, which would include guarantees and LCs which was issued, and for us it required, in some cases, renegotiation, in some cases, the incorporation of VAT with the new instruments which would be issued.

Secondly, the regulatory tightening, as well as our more cautious approach for some e-commerce related financings, specifically BNPL. You'll see in this presentation as well as the presentation of the first quarter where we was showing that share of BNPL was decreasing as a part of our retail portfolio.

Apart from that, as you'll see from the presentation, we see strong underlying business. The number of transaction and volume of transaction continue to increase both on retail as well as on B2B segments.

For us, it means that the client activity remains robust. Once the impact of the mentioned items would start fading out, I think we might come to level of increase in fees and commission which we saw in periods before we saw this disruption.

Saying that, we see quite tight competition on the transactional banking, specifically on retail part, but that part of the business and respect of that, I think we should be able to come to the positive result on the fees and commission starting from the next year.

That's very clear. Thank you, Murat.

Probably I'll add, you rightly pointed that in the second quarter, we already see turnaround. Why we're still showing the negative guidance for the full year, because the result of the first quarter was strongly negative, and we think that while we'll be able to start reversing that, as it was witnessed in the second quarter, that will not be enough in order to compensate the impact of the Q1.

Super. Thank you.

The next question comes from Bernhard Bernhard Kohler. Bernhard, please go ahead.

Hello? Bernhard, do you hear?

The next question comes from Milos Papst. Milos, please go ahead.

Yes, hi. Thank you for the presentation, taking my questions.

I have three, if I may. Firstly, can we maybe talk us through the reasons for the somewhat weaker net insurance income in the second quarter, in particular the spike in the net finance insurance expense?

Then secondly, maybe you can also give us some background to the strong sequential growth in deposits in Q2? Then finally, in terms of your guidance for retail loan growth, it implies a pickup in the second half of the year.

Is it because you see an improving credit quality across the retail market, maybe partly driven by reduction in interest rates or are there any other factors? That will be helpful.

Thank you.

Milos, thank you for your question. We were mentioning during the first quarter call that on insurance income, there are few items which was impacting.

One specifically was higher loss ratio on one of the products related it's mandatory, we cannot not to accept that, related to auto loans. Couple of items which was influencing that results, one thing is inflation, actually cost of covering cases when there was insurance case is triggered became higher, but tariffs revision is lagging.

We hope that in the second half of this year, the tariffs would be revised, and the profitability start improving on that products. Secondly, on other line on insurance expenses, that is partially related to increase in certain premium on certain product last year, which was translated in some higher payments on the claims.

Third one related to net finance insurance expenses, one thing related to some revision of insurance liability assessment, we think that is having mostly one-off effect. Secondly, it's related to increase in certain annuity-related products where the accrual on the liability is accounted in the insurance expenses portion, but the profitability side is actually sitting in the interest income side.

It not visible in, let's say, the particular insurance lines, but it's visible in the interest income side. I hope that that probably explains the dynamics on insurance side.

Your second question, if you would repeat that?

Yes, sure. Of course.

I was wondering if you could give us some background for the quite strong sequential growth in deposits in the second quarter specifically compared to Q1.

I think we saw increase both in the corporate in retail portion. I think it's broad-based.

It's probably difficult to point out any specific one particular specific reason in why it's related. Probably we might see some slowdown in growth in the second half, but indeed, it's a sector-wide.

It's not specifically related to Halyk. We saw similar increase sector-wide.

Regarding retail loan increase, I think there are couple of reasons for that. During a number of previous quarters, we saw slowdown in retail loan growth.

That means that we now seeing some stabilization in the base, and when we see that, it became a bit easier to start growing back. Because during the previous quarters, we saw that the market share of Halyk in retail lending was decreasing, I think we just start gradually going back to the market share which we had 12 to 24 months ago.

This is reason number one. Secondly, if you see, we start increasing more secured portfolios, specifically auto loans.

That was the second reason.

Excellent. Thank you.

The next question comes from Will Kelly. Will, please go ahead.

Hi. This is Will Kelly from Torq Capital.

Thanks for the call. We tracked the monthly figures that were reported to the NBK, and I know these are bank-only figures, but there was a pretty significant divergence between these numbers and what you reported this quarter that I haven't really seen before.

Could you describe what might have contributed to that? It seems like it might have been a weaker insurance and non-interest income result, things that are outside of the bank-only numbers.

Is that correct?

Will, thanks for question. I can probably repeat what I told as response to one of the previous questions, that we saw some weaker results in the insurance income.

This is because of the higher loss ratio on one of the product related to auto insurance. Second is related to some I would call it model revision in terms of the assessment of insurance liabilities.

That is probably couple of reasons which might explain the difference between consolidated and solo results.

Understood. Thank you.

The next question comes from Simon Kitchen. Simon, please go ahead.

Thank you. This is Simon from Emerging Frontier Capital.

There was something where the National Bank, Central Bank, has been talking in recent comments about the difficulty for them of predicting an inflation path because of fiscal and quasi-fiscal stimulus. In the last comment they put out, they said that there'd been an agreement between the National Bank and the government and Baiterek Holdings on the scope of this quasi-fiscal stimulus.

I've got a question in two parts. One is how, if at all, has that quasi-fiscal stimulus you've seen, how has that affected Halyk in the past 6 months?

The second question is how will this agreement between these various authorities, how will that affect this quasi-fiscal stimulus in future, and what does that mean for loan growth, for fee and commission income in future?

Simon, thank you for question. I will probably start answering that question probably by providing comments what was the reason for inflation decrease.

Partially it's was also reflected by the National Bank, but also it's to certain extent is shared by our economist. Basically, the continuation of relatively tight monetary condition is one of the reason.

Secondly, the strengthening of tenge, because part of inflation in previous periods was considered as imported because of some tenge weakening. The third reason which the National Bank is highlighting is actually stabilization of consumer demand.

In previous periods, also Central Bank was pointing to high increase in consumer loans as the one of the reason why consumer inflation was stayed high. Because of the recent cooling on the consumer lending, they also pointing that now becoming one of the factor of inflation deceleration.

The fourth element is moratorium which was agreed last year between National Bank and the government, the moratorium on tariffs increase and regulated prices increase. Basically, it's related to utilities prices as well as the prices on petrol.

Despite the fact that indeed the Central Bank made decrease in base rate already during two meetings, they pointing that in the second half, they potentially might see certain vulnerabilities. Indeed, they are pointing that it's a bit unclear in terms of what the government would be doing in terms of previously imposed moratorium on the regulated tariffs.

This is reason number one. Secondly, indeed we also saw this comments from the National Bank which says that they came to certain agreement with the government, particularly with Baiterek in terms of how the previous plans of Baiterek might be revised in order not to put additional pressure on the inflation side, one thing.

Secondly, without unnecessarily stepping into sphere of the commercial banks. What we understand is that, first of all, they say that they will not be touching loans which is mostly considered medium-sized loans, like below 15 billion tenge.

Secondly, trying to limit financing from Baiterek, which would also include the Development Bank of Kazakhstan, to larger projects, infrastructure-related ones. We actually see that the plans of Baiterek is not too much affecting us.

We see quite strong pipeline on our large corporate space. We also saw quite strong dynamics of our SME business in the second quarter.

We think that that is enough in order to reconfirm our guidance for the full year in terms of the loan portfolio growth.

Thank you.

The next questions come from Dan Mikhaylov. Dan, please go ahead.

Hello, this is Dan from Vergent. Congratulations on the results.

Just one quick question from me. Given that this year obviously contains a few one-offs that are distorting the underlying performance of the bank, the minimum reserve requirements as well as macroprudential measures on the consumer side, how should we think about the dividend for 2026?

Should we think of it as being usual sort of 60% dividend payout ratio, or would you consider having a higher dividend payout ratio to reflect the underlying profitability as opposed to the 1 trillion tenge that we'll see on the headline basis?

Dan, thank you for question. Indeed, we see that specifically to certain extent, the third quarter as well as second quarter had some one-offs which probably do not fully correlate with underlying business and client activity which we see.

We already saw actually a larger loan portfolio growth in the second quarter. I think we remain optimistic regarding the second half results, we think that capital would be needed to support our growth going forward.

Saying that, we also probably as a matter of showing our, I would say, confidence in the banking results, probably decided to bring the second dividend payment slightly up front, because last year we did that a bit late into the year, this time we are making that in the third quarter. Of course, subject to shareholders' decision.

Clear. For next year, would you say we can fairly comfortably assume that the payout ratio is from the previous years would continue given the strong capital generation, anywhere between 50% to 60% dividend payout ratio?

Of course, I cannot say with certainty whether it will be, let's say, 50%, 55%, or 60%,

or some other figure, because

it's subject to recommendation from Board of Directors and then subject to decision on the General Shareholders Meeting. We as the management, looking still at strong profitability of the bank, we see the strong capital position of the bank, and even with continuation of growth which we at least see until this year-end and hopefully would continue to see into the next year, still gives us, I think, belief that we would be striving to stick to the dividend policy, which actually says the dividend payout 50% plus.

Thank you so much.

The next question comes from Simon Nellis. Simon, please go ahead.

Oh hi, thanks for the opportunity. My question would be just on fees.

You're guiding for 10% down now, but that would still mean that you're looking for around 30% growth in the second half versus the first half. I'd be interested in knowing where you're so optimistic about a recovery in fees.

Where is it coming from? Then I guess a related question is, you changed your fee guidance quite substantially.

It's a 25, I think, billion tenge drag, but you're reiterating your trillion earnings guidance. Where do you expect to make up the difference?

Thank you.

Thank you for question, Simon. We already saw increase in the second quarter compared to the first quarter, and if you would look for last few years, actually you would not see a big difference between second and third quarter.

That is probably one of the reason why we think that the second half should be stronger, because the second quarter already providing us some comfort. In terms of where we are looking that revival and what would be the reason, one is gradual revision with new instruments to be issued which would already incorporate VAT, so that was one of the reason of the second quarter, and that would continue to influence into the second half.

We see increasing client activity as the base, and we tactically revised fees on certain products.

How large were those increases and what percentage of your product suite did you increase pricing, if I may ask?

We did some tactical for SME and for retail. It's a number of product.

It's not probably high from the client perspective, because that probably affecting some, I would say, mass products, but in terms of the volumes, it's adding some positive delta to fees and commission. Then

maybe just one last one on fees. Once these kind of one-offs are clear, where do you think your fee growth returns to on a normalized state?

Of course, it's subject to competition, because competition might also drive the tariffs up or down. If we assume that that would not be the factor which would be influencing fees and commission, we think that we can come to around 10% growth, might be higher.

Again, it's not the official guidance. I think it's better to wait until we'll be providing, let's say, more specific guidance.

It's just estimation based on fees and commission attraction which we saw before 2026.

Understood. Thank you very much.

That's all for me.

The next question comes from Roman Rozaylov. Roman, please go ahead.

Hello? Hi, guys, can you hear me?

Yes, Roman.

Great. Thank you for the presentation and for taking my questions.

I just wanted to follow up on Simon's question. I didn't understand clearly from your response about where the offsetting income would be coming from so offset the reduction in expected fees and commissions for the year.

I'm a little surprised because it seems like if you're expecting 29% ROE for the full year and the first half realized outcome was around 25, it would suggest that the second half would be 30% plus. Is that right?

I'm surprised that I guess the business performance would improve so dramatically half-on-half. I understand that there's some seasonality to that, but I would have thought that I guess the headwinds that you've absorbed both on net interest income and on fees in the first half to some extent would still continue to affect second half if we look at it year-over-year.

This looks like it would be quite a strong outcome for the second half based on what you're suggesting for the updated guidance. Maybe if you could just talk about that in a little more detail, thank you.

Roman, are you talking about the guidance for net income?

That's correct.

We already see increase in loan portfolio. Particularly, we see quite good dynamic in retail and SME portfolio, which already happened in the second quarter.

It's already good starting point in terms of start increasing our interest income. Secondly, as I mentioned before today, we start seeing some early signs not only on stabilization of retail deposit, but some tactical decrease on some retail deposits.

Further adding to net interest income dynamics in the second half. The third reason is the cycle of interest rate decreases which is started by the National Bank.

We saw also that the rates for some medium-term and longer instruments, specifically the government securities, also start decreasing, and that should lead to some mark-to-market changes which also would be adding to net interest income. The third thing is net fees and commissions.

As we discussed, we continue to expect strong results on our FX and dealing business. Thirdly, some negatives which we saw on the insurance, we also expect it will start reversing in the second half.

Insurance portfolio, if we talk about the asset side, specifically their investment portfolios, also should start generating some positive result because of the interest rate dynamic which I mentioned. Partially, their portfolios was also affected by stronger tenge, because some portion of investment portfolio of insurance companies, they are linked to US dollar.

Stabilization and potentially some reversal of tenge depreciation might also add to positive interest rate return of our investments portfolio.

Okay. Maybe just to come back to the previous question about the difference in bank-only results reported by NBK and the IFRS consolidated figures you just reported.

Can you just maybe quantify what the impact was from the insurance side, and were there any other factors aside from the insurance result that contributed to the difference between those two sets of numbers in this quarter?

Roman, I think that is probably the biggest, I would say, impact. During consolidation, there are some actually netting, but I don't think that they played a bigger role.

The biggest, I would say, it's results of insurance subsidiaries.

Okay. Thank you, guys.

The next question comes from Alex Vasyuk. Alex, please go ahead.

Yes, hello. Can you hear me?

Please go ahead.

Hello? Yeah.

Thank you, guys. Alex Vasyuk from Prosperity.

Just a quick follow-up on asset repricing and your net interest margin. If we exclude the impact of the minimum reserve requirements, look at the underlying rates, I'm just trying to figure out the asset liability repricing and how you are positioned in this cycle, because average loan yields have been remarkably stable.

You show around 17.2% to 17.4% relatively stable rates over the last year against the deposit and overall funding costs moving higher. My question is what is really preventing the asset side from repricing more meaningfully over the last 12 months when the tenge interest rates were increasing, in fact?

Hello?

Alex, thank you for your question. I think my microphone was muted.

The main reason probably was slightly increase in dollar portion of the loan portfolio. Despite of strengthening of tenge vis-a-vis US dollars, the portion of foreign currency loans actually increased.

That's why the average rate on loans actually didn't change that much year-over-year basis. On deposits portion, as I mentioned, there was some increase in retail deposits, particularly during 2025.

There was no change actually on the base rate during this period. The changes in the base rate is only happened during last couple of months, and we expect that start translating in some changes in the rates dynamic in the second half of this year.

Probably less to the third quarter, but more pronounced in the fourth quarter.

In terms of the outlook for over the next 12 months or so, let's say, your commentary suggests that you should be positively exposed to interest rate declines. Is that correct interpretation?

We were constantly saying that the bank has longer assets, longer tenor on the asset side compared to liability side, and the reduction rates typically showing to quicker repricing of liabilities compared to the asset side.

Okay. Thank you very much.

The next question comes from Bernhard Kohler. Bernhard, please go ahead.

Hello, can you hear me?

Yes.

There seems to be a problem because I have not any question or raised my hand. Maybe some technical problem.

Oh okay. No problem.

Thank you. Good quarter.

Thank you. The next question comes from Simon Nellis.

Simon, please go ahead.

Hi. Just a quick follow-up on the asset-liability gap.

What's the tenor? How long does it take before the lower rates actually start to negatively impact the margin?

Because I guess initially you see liabilities reprice faster, but then that will stop, and then the assets will reprice, and I guess the margin settles at a lower level. Just wondering how fast that process takes and yeah, what's your base case in terms of where you think you bottom in this cycle and where your margin bottoms?

Thank you.

It's typically I would say lagging, probably by around two quarters, sometimes three quarters, depending on how the yield curve is reacting. It's not like always the same reaction, but on average, it's probably two to three quarters.

Where do you expect rates to bottom in the cycle, or is that too difficult to call at this point?

If I read I would say the monetary documents of the National Bank, they saying that their ultimate target on the inflation is 5%, I think by 2028. In some other policy documents, they were saying that they want to have the real rate between 2% and 4%.

If that goes well through, at some point of time, we might see the base rate might go down as low as 9%, but it's probably the best case. Still, even if we say that realistically the base rate might go down at least to 12%, it's already providing substantial route downwards which we have ahead of us hopefully we'll have in front of us for the next two or three years.

Again, subject to that there is no, let's say, external factors which is affecting,

and

the anti-inflationary measure which is conducted by the National Bank with some coordination from the government would achieve its purpose.

If rates do go to 12% and then stay there for some time, what do you think is your natural margin? I know again, it's difficult given it depends on mix and other factors, but...

It's a very difficult question because it's indeed depend on the mix of the portfolio.

Okay. Thank you.

The next question comes from Anna Harie. Anna, please go ahead.

Hello, Anna? We not hear you.

Sorry about that. Thank you.

Can you hear me now?

Yes.

Perfect. Can you give us more details on the dynamics of BNPL activity, like what were the reasons of the decline and how are you seeing the dynamics moving forward?

Thank you.

Anna, thank you for question. I'll hand floor to Kiril Bachvarov, who actually joined us earlier this year as a Head of Retail, and Kiril previously was CEO of Home Credit Bank in Kazakhstan, very successful retail bank.

Kiril, this is your first words.

Thank you for the question, Anna. BNPL is my bread and butter, and I can assure you that the decision to downscale in the BNPL segment is by no means strategic exit from the segment.

It just reflects the risk-adjusted return currently. We looked at the risk, we priced it, and we decided not to take it, because in our opinion, this type product is writing relatively thinner margin into the households' debt both macro and the regulator has been pointing at in terms of, I would say, decreasing solvency.

This is why we strategically took the decision to scale collateralized loans, car loans, and mortgages, and we're ready to re-enter or I would say reactivate the BNPL market as soon as we see the intrinsic profitability return.

All right. Thank you so much.

Next questions come from the chat. Next two questions comes from Patrick Postroling.

"Hello. Thank you for your presentation.

I have two questions. There has been a significant reduction in the short-term deposit with National Bank of Kazakhstan in tenge, which has been mostly replaced with deposit with OECD-based banks, denominated in foreign currency.

Can you explain why you made this change? The second question.

After the increase in NPLs over the past year, provisions have remained almost flat, and NPL coverage ratio has declined to historical lows, particularly in the retail portfolio. Could you explain why you remain confident in the current level of provisions, and why do you think that increasing the provision level is not necessary?"

Patrick, thank you for your question. The short-term deposits with National Bank of Kazakhstan was actually substituted with short-term NBK notes when the period of decreasing base rates started.

Increase of deposits with OECD banks, actually international banks, was due to inflow of USD liquidity from our corporate clients. Regarding your second question, in terms of NPLs, also Kiril would answer this question.

I would say the short answer that forward-looking, this is the mix. The mix is moving toward the better quality collateralized loans.

Basically, what you see the accumulation of NPL due to the fact that we're not able to sell the portfolios right now, but this is not reflecting the current reality of the loans that we take on book. We see the new vintages being of much better quality, and we are sure that once the ban on selling loans has lifted, we will be able to very quickly normalize.

The intrinsic quality of the loans that we book right now, as well as, let's say, the shift towards higher collateral requires structurally less coverage. We believe we're adequately provisioned that reflects the current composition of the book and trend.

Next question are already answered, we go to the question from Brad Pribilski. "In terms of credit quality, do you think that your NPL ratio has peaked in second quarter, or do you think it will continue to rise?

What do you think is normalized NPL ratio in your B2C lending book B2C lending book absent recent regulation changes?"

Brad, yeah, thank you for question. I think Kiril provided the reason, and I think in our materials also provide the reason why NPLs continue to climb.

Just to reiterate, because we saw lower retail growth in previous quarters, the portfolio became more mature, and continuation of moratorium of sale of retail loans to the collectors. Saying that, we also track the quality of retail portfolio through so-called cost of risk, actually when the loss provision runs through our P&L.

For unsecured retail portfolio, that ratio actually remained fairly stable during last few quarters at around 3%. We don't expect that that ratio would going up.

In a better credit cycle, we might see even some reduction of cost of risk on unsecured consumer lending.

Next question comes from James O'Leary. "If timing on dividend payments will be moved up, what is the outlook for timing on that?"

The voting count is expected to be done this week. In case of approval, the dividend payment would start, as far as I remember, the 7th of September.

It will depend on how, let's say, the process will work including the brokers on the shareholder side.

Seems that there are no questions left. Ladies and gentlemen, it seems this completes our presentation.

Thank you very much for your participation.