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TCS Group Holding PLC (TCS)
TCS Group Holding PLC Announces 1Q 2018 IFRS Results and 2nd Interim
Dividend
30-May-2018 / 10:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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TCS Group Holding PLC Announces 1Q 2018 IFRS Results and 2nd Interim
Dividend
Moscow, Russia - 30 May 2018. TCS Group Holding PLC (TCS LI) (the
"Group"), Russia's leading provider of online retail financial services
via its Tinkoff.ru financial supermarket, today announces its interim
condensed consolidated IFRS results for the first three months ended 31
March 2018.
KEY FINANCIAL HIGHLIGHTS
1Q 2018
• Net margin up 44% y-o-y to RUB 14.0 bn (1Q17: RUB 9.8 bn)
• Profit before tax up 68% y-o-y to RUB 7.4 bn (1Q17: RUB 4.4 bn)
• Net income up 70% y-o-y to RUB 5.7 bn (1Q17: RUB 3.4 bn)
• ROE increased to 68.5% (1Q17: 42.8%)
• Net interest margin at 25.5% (1Q17: 26.2%)
• Cost of risk decreased to 7.5% (1Q17: 7.6%)
All balance sheet numbers and ratios as of 31 March 2018 below are
compared with corresponding numbers and ratios as of 1 January 2018 and
have been compiled in accordance with IFRS 9. All changes shown for
comparative numbers and ratios also reflect the transition to IFRS 9.
• Total assets increased by 2.5% to RUB 265.8 bn (1 Jan'18: RUB 259.3
bn)
• Gross loans and advances to customers up 5.9% to RUB 176.4 bn (1
Jan'18: RUB 166.7 bn)
• Net loans and advances to customers up 7.8% to RUB 139.8 bn (1 Jan'18:
RUB 129.7 bn)
• Share of non-performing loans (NPLs) at 12.6% (1 Jan'18: 13.4%)
• Customer accounts increased by 1.8% to RUB 182.3 bn (1 Jan'18: RUB
179.0 bn)
• Total equity increased by 8.3% to RUB 34.8 bn (1 Jan'18: RUB 32.1 bn)
KEY HIGHLIGHTS FOR 1Q 2018
• In 1Q18 over 370k new active credit card customers were acquired,
underpinning net loan growth of 7.8%
• In February 2018, Tinkoff Bank announced the opening of a development
hub at the Skolkovo innovation centre to focus on delivering new
business solutions based on blockchain, as well as voice and face
recognition technologies. The Group now has 9 development hubs across
Russia.
• Tinkoff Bank's website was named the best mobile website among Russian
banks, according to a review by Google and CXPartners
• In March 2018, Tinkoff Bank was issued a professional securities
market participant licence by the Bank of Russia to provide brokerage
and depositary services, thus allowing the Bank to further develop its
comprehensive investment platform and expand its range of investment
products
• The Bank was recognised as the leader among top 30 Russian banks by
the number of customer loyalty programmes based on the Bank Customer
Loyalty Programmes 2018 survey conducted by Markswebb
• Strong new business development for the reporting period included the
launch of multicurrency Tinkoff Black cards and premium Black Edition
programme
KEY HIGHLIGHTS POST 1Q 2018
• Tinkoff Bank's market share increased to 11.7% as of 1 May 2018,
further solidifying its position as Russia's second largest credit
card issuer.
• The Bank of Russia has recognised Tinkoff Bank as a significant credit
institution in the payment services market and added it to the
relevant register now numbering 36 financial institutions
• Following the issue of a professional securities market participant
licence, Tinkoff Bank re-launched its Tinkoff Investments brokerage
platform, offering customers a breadth of new capabilities to enable
faster and more technologically advanced securities trading
• Tinkoff Bank was a general partner of the St. Petersburg International
Economic Forum (SPIEF), which took place in St. Petersburg, Russia on
24-26 May
• Tinkoff Bank and the Talent and Success Foundation signed an agreement
to launch a development hub at Sirius educational center and to
cooperate in a number of areas, including joint R&D projects and
working towards a better regulatory framework to support innovation
• Tinkoff Bank and SME Bank signed a cooperation agreement for Tinkoff
Bank to become SME Bank's agent for transaction support services with
regard to the partner's SME lending programmes
Second 2018 Interim Dividend Announcement
In line with the Group's dividend policy, the Group's Board of Directors
yesterday
approved a second 2018 interim gross dividend of USD 0.24 per share/per
GDR (with each GDR representing one class A share) with a total amount
allocated for dividend payment for Q1 of around USD 43.8 mn.
Subject to London Stock Exchange regulations, indicatively the dividend
will be payable on 21 June 2018 to those shareholders on the register as
at the record date of 15 June 2018. The ex-dividend date will be 14 June
2018.
According to the terms of the GDR deposit agreement, holders of the
Group's GDRs should receive their dividends approximately 5 business days
after the payment date.
Oliver Hughes, CEO of Tinkoff Bank, commented:
"In the first quarter we delivered strong net income of RUB 5.7 billion
underpinned by 44% year-on-year growth in net interest income. We also
showed a solid 113% year-on-year increase in total fee and commission
income reflecting successful expansion of new business-lines such as
Tinkoff SME and Tinkoff Mortgage. With ROE at 68.5% for 1Q 2018, we remain
one of the most profitable banks globally.
"We continue to actively expand our non-credit business-lines. We have
deepened integration of partner products and services such as Booking.com
and Afisha restaurants through our award-winning mobile app and
Tinkoff.ru platform, as we build out our ecosystem
for lifestyle-related spending. We are also developing our investment
platform and widening the range of investment products, after receiving a
professional securities market participant license from the CBR in March.
"Continued robust growth of our core lending business, combined with our
goal to remain at the forefront of fintech services globally, requires
top-flight human resources. To achieve this, we continue to attract local
programming expertise through regional development hubs including
Skolkovo, Russian institutions of higher education and other organisations
supporting local IT talent and education. Our most recent partnership is
with the Talent and Success Foundation, which will partner with us
in applied research to harness the power of artificial intelligence and
machine learning.
"Five months into 2018, I am happy to confirm that the Group is well on
track to deliver the full-year targets that were previously communicated
to the market. In line with our dividend policy, the Board approved a 1Q
2018 interim dividend of USD 43.8 bn."
FINANCIAL AND OPERATING REVIEW
RUB bn 1Q18 1Q17 Change
Credit cards issued ('000 pcs) 520 450 +16%
Credit card 78.6 54.5 +44%
transactions
Net margin 14.0 9.8 +44%
Net margin after credit loss allowance 10.8 7.4 +46%
Profit before tax 7.4 4.4 +68%
Net income 5.7 3.4 +70%
RUB bn 31 March 1 Jan 2018 Change
2018
Total Assets 265.8 259.3 +2.5%
Net loans and advances to customers 139.8 129.7 +7.8%
Cash and treasury portfolio 96.0 96.3 -0.3%
Total Liabilities 231.0 227.1 +1.7%
Customer accounts 182.3 179.0 +1.8%
Total Equity 34.8 32.1 +8.3%
Tier 1 capital ratio 17.0% 17.7% -0.7pp
Total capital ratio 17.0% 17.8% -0.8pp
CBR N1.0 (capital adequacy ratio) 16.7% 16.3% +0.4pp
The Group delivered another strong set of results for 1Q18 following
accelerating growth of its core credit card business and the excellent
performance of its new business lines.
As a result, the Group reported a net income for 1Q18 of RUB 5.7 bn, which
translated into ROE of 68.5%.
In 1Q18, the Group issued 520k new credit cards. The total volume of
credit card transactions in 1Q18 increased by 44% y-o-y to RUB 78.6 bn
(1Q17: RUB 54.5 bn).
In 1Q18, gross interest income grew by 37% y-o-y to RUB 17.7 bn (1Q17: RUB
12.9 bn), driven by growth in both the loan book and securities portfolio.
Gross interest yield decreased slightly to 38.0% in 1Q18, while the
interest yield on the Group's securities portfolio came in at 6.8%.
In 1Q18, interest expense grew by 16% y-o-y to RUB 3.4 bn (1Q17: RUB 3.0
bn). The cost of borrowing fell to 6.4% in 1Q18 as a result of continued
decrease in the deposit rates and growth of individual and SME current
accounts share in the funding structure.
In 1Q18, net margin grew by 44% y-o-y to RUB 14.0 bn (1Q17: RUB 9.8 bn).
The net interest margin (NIM) stood at 25.5% in 1Q18 (1Q17: 26.2%).
The Group continues to focus on controlling its cost of risk and
efficiently managing the quality of its portfolio. Cost of risk was almost
flat at 7.5% (1Q17: 7.6%), while the risk-adjusted net interest margin
slightly decreased to 19.6% in 1Q18 (1Q18: 19.9%), both post-IFRS 9.
The Group continues to develop its new business lines, all of which are
demonstrating robust growth, with the SME business performing
exceptionally well and contributing to the bottom line. In 1Q18, the
Group's fee and commission income increased by a remarkable 113% y-o-y to
RUB 5.8 bn (1Q17: RUB 2.7 bn).
At the end of 1Q18, the Group had nearly 3.1 mn current account customers
with a total balance of over RUB 78 bn across all their accounts. The
Group's SME business has grown its customer base to over 292k SME
customers in 1Q18, with RUB 23.9 bn in total on their current accounts.
The Group continues to develop its mortgage platform in partnership with
11 banks, through which it originated over RUB 4.6 bn of mortgage loans in
1Q18. The mortgage business has seen its market share steadily increase
quarter-on-quarter.
Tinkoff Investments continues to demonstrate robust growth and hit 100K
brokerage accounts on 14 May 2018. Following the launch of the Tinkoff
Investment's own brokerage platform in 2018, the Group expects the
business line to break even in late 2018.
In 1Q18 operating expenses increased by 61% year-on-year due to continued
growth of acquisition expenses. The cost-to-income ratio was stable at
42.6% in 1Q18 (1Q17: 42.7%).
The Group reported net income of RUB 5.7 bn (1Q17: RUB 3.4 bn). As a
result, ROE for the reporting period reached 68.5%.
In 1Q18 the Group continued to maintain a healthy balance sheet with total
assets remaining firm at RUB 265.8 bn (1 Jan 18: RUB 259.3 bn).
In 1Q18 the Group's gross loan book grew by 5.9% to RUB 176.4 bn (1 Jan
18: RUB 166.7 bn), while the net loan book grew by 7.8% to RUB 139.8 bn (1
Jan 18: RUB 129.7 bn).
In 1Q18, the Group's NPL ratio came to 12.6%, as a result of adoption of
IFRS 9 methodology. The Group's loan loss provision coverage stood at 1.6x
non-performing loans.
The Group's customer accounts increased by 1.8% YTD to RUB 182.3 bn (1 Jan
18: RUB 179.0 bn).
In 1Q18, the Group's total equity increased by 8.3% to RUB 34.8 bn (1 Jan
18: RUB 32.1 bn). As of 1 April 2018, the Group's statutory N1.0 ratio was
up at 16.7% and its N1.2 ratio had increased to 14.8%. N1.1 stood at a
comfortable 10.4%.
LAUNCH OF TENDER FOR EXTERNAL AUDITOR OF THE GROUP
The Group announced in Q4 2017 it intended to conduct an audit tender
during 2018, in the context of the EU Regulation on audit reform of public
interest entities.
A competitive tender process, open on equal terms to registered audit
companies that have the required industry expertise and resources in
addition to meeting the statutory requirements and the professional
standards, including the current external auditors, PwC, overseen by the
Audit Committee of the Company, will be launched in the coming days with a
view to identifying and appointing external auditors of the Group for
accounting periods commencing on 1 January 2019 and thereafter.
***
The management team will host an investor and analyst conference call at
15:00 UK time (17:00 Moscow time, 10:00 U.S. Eastern Standard Time), on
Wednesday, 30 May 2018.
The press release, presentation and financial statements will be available
on the Tinkoff website
at 1 https://www.tinkoff.ru/eng/investor-relations/results-and-reports/
To participate in the conference call, please use the following access
details:
Conference ID
7987458
Russian Federation - Local +7 495 646 9190
8 10 8002 8675011
Russian Federation - Toll Free
+44 (0)330 336 9411
United Kingdom - Local
0800 279 7204
United Kingdom - Toll Free
+1 323-794-2423
United States of America - Local
800-289-0438
United States of America - Toll Free
A live webcast of the presentation will be available
at 2 http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5579
Please register approximately 10 minutes prior to the start of the call.
For enquiries:
Tinkoff Bank
Tinkoff Bank
Larisa Chernysheva
Darya Ermolina IR Department
Head of PR
+ 7 495 648-10-00 (ext. 2312)
+ 7 495 648-10-00 (ext. 2009)
4 ir@tinkoff.ru
3 d.ermolina@tinkoff.ru
About the Group
TCS Group Holding PLC is an innovative provider of online retail financial
services operating in Russia through a high-tech branchless platform. TCS
Group includes Tinkoff Bank, mobile virtual operator network Tinkoff
Mobile, Tinkoff Insurance, and Tinkoff Software DC, a network of
development hubs across Russia.
The Group was founded in 2006 by the Russian entrepreneur Oleg Tinkov and
has been listed on the London Stock Exchange since October 2013.
With no retail branches, the Group serves its customers remotely via
online channels and its call centre and operates a network of over 2,500
representatives to ensure smooth delivery of its products. The network
covers all of Russia and allows next day delivery to most customers.
The Group's key business is Tinkoff Bank, Russia's first and only direct
bank offering both own brand and partner retail financial services via its
Tinkoff.ru platform. The product range includes daily banking (credit and
debit cards, payments, money transfers), savings, investments, loyalty
programmes, travel services, SME services, mortgage platform, and
insurance. With its special focus on mobile business, the bank offers
mobile applications both for its customer base (Mobile Bank) and beyond it
(Traffic Fines, MoneyTalk, Card 2 Card instant money transfers).
As at 1 May 2018, the bank was the second largest player in the Russian
credit card market, with a market share of 11.7%. The 1Q18 IFRS net income
of TCS Group Holding PLC amounted to RUB 5.7 bn, ROE grew to 68.5%.
Banki.ru, Russia's largest financial news portal, named Tinkoff Bank the
Bank of the Year 2016. In October 2016 Tinkoff Bank was named the largest
independent global direct bank by Frost & Sullivan. In 2015 and 2016, the
Global Finance magazine named Tinkoff Bank as the Best Consumer Digital
Bank in Russia. In 2016, the bank also won Global Finance's Best
Integrated Consumer Bank Site award and was named the Best Digital Bank in
the CEE by Euromoney. The bank's mobile application was recognised as the
best in Russia by Markswebb Rank & Report for three consecutive years in
2014, 2015 and 2016, and by Deloitte for four consecutive years from 2013
to 2016.
Forward-looking statements
Some of the information in this announcement may contain projections or
other forward-looking statements regarding future events or the future
financial performance of the Group and Tinkoff Bank. You can identify
forward looking statements by terms such as "expect", "believe",
"anticipate", "estimate", "intend", "will", "could," "may" or "might", the
negative of such terms or other similar expressions. The Group and Tinkoff
Bank wish to caution you that these statements are only predictions and
that actual events or results may differ materially. The Group and Tinkoff
Bank do not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the occurrence
of unanticipated events. Many factors could cause the actual results to
differ materially from those contained in projections or forward-looking
statements of the Group and Tinkoff Bank, including, among others, general
economic conditions, the competitive environment, risks associated with
operating in Russia, rapid technological and market change in the
industries the Group operates in, as well as many other risks specifically
related to the Group, Tinkoff Bank and their respective operations.
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ISIN: US87238U2033
Category Code: QRF
TIDM: TCS
LEI Code: 549300XQRN9MR54V1W18
Sequence No.: 5595
EQS News ID: 690731
End of Announcement EQS News Service
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References
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3. mailto:d.ermolina@tinkoff.ru
4. mailto:ir@tcsbank.ru
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