REG-TCS Group Holding PLC TCS Group Holding PLC reports record net profit in FY'20; announces dividend plans for FY'21 and guidance for FY'21
11/03/2021 07:05
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TCS Group Holding PLC (TCS)
TCS Group Holding PLC reports record net profit in FY'20; announces
dividend plans for FY'21 and guidance for FY'21
11-March-2021 / 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 reports record net profit in FY'20; announces
dividend plans for FY'21 and guidance for FY'21
• Total revenues grew 21% to RUB 195.8bn in FY'20 (FY'19: RUB 161.9bn)
• Net profit rose 22% to RUB 44.2bn in FY'20 (FY'19: RUB 36.1bn)
• Non-credit business lines amounted to a record 37% of revenues and 37%
of net profit
• Total customers reached 13.3mn in FY'20 (FY'19: 10.2mn)
LIMASSOL, CYPRUS - 11 March 2021. TCS Group Holding PLC (LI: TCS, MOEX:
TCSG) ("Tinkoff", "We", the "Group", the "Company"), Russia's leading
provider of online financial and lifestyle services via its Tinkoff
ecosystem, today announces its consolidated IFRS results for the three
months and twelve months ended 31 December 2020.
Oliver Hughes, CEO of Tinkoff Group, commented:
"Despite its challenges, 2020 proved to be yet another year of record
profit for us - we reported net profit of RUB 44.2 billion, beating our
full-year guidance. Tinkoff was quick to adjust to changing consumer
preferences, which helped both our credit and non-credit business lines go
from strength to strength.
We retained our strong growth momentum with the total number of customers
reaching 13.3 million, up from 10.2 million a year ago. This solidified
Tinkoff's position as Russia's third largest bank by the number of active
customers and its largest digital-only player in the financial sector.
This puts us firmly on track to expand our customer base to more than 20
million over the next three years. Our engagement with each customer
continues to deepen, with average products per customers growing from 1.3
at the end of 2019 to 1.4 at the end of 2020, despite strong growth of the
customer base.
Our non-credit businesses reached new heights, underpinned by the
popularity of our financial and lifestyle offering. These business lines,
which include our current account Tinkoff Black, Tinkoff Investments
brokerage platform, Tinkoff Business and Tinkoff Acquiring, generated RUB
73.0 billion of revenues (up 47% year-on-year and representing 37% of
total revenue) and RUB 20.6 billion of profit before tax (up 2.5x YoY and
representing 37% of total profit before tax). You can see this in much
more detail now thanks to our new financial segmental breakdown.
Tinkoff Black revenue grew by 41% year-on-year to RUB 21.2 billion. This
business has become by far our largest customer acquisition channel and
the locomotive of our growth. We increased the number of total Tinkoff
Black customers by 2.9 million in 2020 alone from 4.7 million to 7.5
million, and our growth is further accelerating. These customers are
highly digital, highly engaged, and we have confidence that they will be
using more and more of our ecosystem as time goes on.
Tinkoff Investments has blasted into outer space as the brokerage platform
reached another milestone of over 1.25 million total customers by the end
of 2020 and generated revenues amounting to RUB 8.1 billion, an over
eightfold increase. In December, Tinkoff Investment's active customer base
represented more than 60% of all active customers on the Moscow Exchange -
a remarkable result.
Tinkoff Business posted revenues and profit before tax of RUB 11.5 billion
and RUB 5.6 billion respectively in 2020, a 17% and 71% respective
increase from the previous year. We are visibly moving into the
medium-sized company segment through solutions such as accounting
software, tax reporting, website creators, CRM tools and much more.
Tinkoff Acquiring's revenues and profit before tax grew to RUB 11.2
billion and RUB 2.3 billion respectively in 2020, a 33% and 79% respective
increase from the previous year, as e-commerce adoption accelerated and
more and more businesses looked to Tinkoff for their customer service and
expertise in C2B payments.
We recently announced the launch of Tinkoff Checkout, a one-stop shop that
enables companies to take care of all of their online and offline payment
needs. It will combine existing Tinkoff payment technologies and new
solutions, including services provided by Tinkoff's CloudPayments.
Our credit business grew despite the challenging environment: we increased
the total number of customers with credit products to 6.9 million with net
loans rising 14%, even as we retained our conservative approach to
lending. Our share of Russia's short-term retail credit market increased
to 8.6% as of 1 January 2021, consolidating our position as the second
largest player in this segment.
Our ROE remained above 40% in 2020, as we continued to deliver profitable
growth.''
Stanislav Bliznyuk, SVP, Head of Business Development, added:
"Throughout 2020 we continued to innovate, launching new products and
improving existing services. For the first time in our history, the number
of non-credit product customers exceeded the number of credit product
customers.
We launched Tinkoff Pro, a financial subscription that allows customers
to use products and privileges of Tinkoff ecosystem and its partners
on special terms. We have ambitious targets for this product to enhance
retention and increase the LTV of our customers. As of the end of 2020, we
already had over 150,000 Tinkoff Pro subscribers.
In 2020, Tinkoff became the largest player in the Central Bank's Faster
Payments System thanks to our continued efforts to build out support and
integration in the Tinkoff ecosystem.
Tinkoff Mobile unveiled a new version 2.0 of our trailblazing voice
assistant Oleg, which enables customers to create their own mobile
concierge with customizable features, including the assistant's voice and
name.
Altogether these and many more innovations enabled us to increase the
number of monthly active users (MAU) across our main interfaces from 6.0
mn to 9.3 mn.
I am pleased to note that our efforts were recognised by the international
community. Tinkoff was named the world's Best Consumer Digital Bank and
honoured with multiple other category wins at Global Finance's Digital
Bank Awards 2020.Tinkoff was also recognised as Russia's Best-Performing
Bank Overall by The Banker magazine, which scored Tinkoff's 2020
performance in the areas of growth, profitability, operational efficiency,
asset quality, return on risk, liquidity, soundness and leverage.
Our robust performance is made possible by our deep bench of first-rate
talent, attracted to Tinkoff's unique corporate culture and its ability to
foster innovation, while driving solid results. Tinkoff was recognised
among Russia's Top 3 Employers for 2020, according to Forbes.''
FINANCIAL AND OPERATING REVIEW
RUB bn 4Q'20 4Q'19 Change FY'20 FY'19 Change
Credit accounts acquired (mn 1.5 1.1 33% 4.3 4.3 0.3%
pcs)
Net margin 26.9 24.0 +12.5% 104.7 87.9 +19.1%
Net margin after provisions 21.5 16.5 +30.7% 65.4 61.5 +6.3%
Profit before tax 15.6 13.4 +16.3% 56.2 45.5 +23.5%
Net profit 12.3 11.0 +12.0% 44.2 36.1 +22.4%
Return on equity 40.5% 49.0% -8.6 p.p. 40.6% 55.9% -15.3 p.p.
Net interest margin 16.45% 20.5% -4.0 p.p. 18.2% 22.0% -3.8 p.p.
Cost of risk 5.7% 8.1% -2.5 p.p. 10.0% 8.5% +1.5 p.p.
RUB bn 31 Dec 2020 31 Dec 2019 Change
Total assets 859.3 580.0 +48.1%
Net loans and advances to customers 376.5 329.2 +14.4%
Share of NPLs 10.4% 9.1% +1.3 p.p.
Cash and treasury portfolio 374.8 190.7 +96.5%
Total liabilities 732.3 483.9 +51.3%
Customer accounts 626.8 411.6 +52.3%
Total equity 127.0 96.1 +32.2%
Tier 1 capital ratio 17.8% 19.1% -1.3 p.p.
Total capital ratio 17.8% 19.1% -1.3 p.p.
CBR N1.0 (capital adequacy ratio) 13.1% 12.1% +1.0 p.p.
In 4Q'20, the Group's total revenue grew by 17% year-on-year to RUB 53.1
bn (4Q'19: RUB 45.6 bn). Gross interest income increased by 7%
year-on-year to RUB 32.6 bn (4Q'19: RUB 30.4 bn), driven primarily by loan
portfolio growth.
Gross yield decreased to 30.3% in 4Q'20 (4Q'19: 32.3%), mainly as a result
of the declining interest rate environment and changes in the loan mix.
The interest yield on the Group's securities portfolio decreased to 5.0%
(4Q'19: 6.4%), in connection with declining rouble interest rates.
In 4Q'20, despite the significant increase over the last 12 months in our
customer base and account balances, interest expense decreased by 12.8%
year-on-year to RUB 5.2 bn (4Q'19: RUB 5.9 bn). This was driven by a
continued decline in our cost of borrowing from 5.6% in 4Q'19 to 3.3% in
4Q'20, due to a gradual decrease in deposit rates (consistent with market
rate decreases) and a growing share of current accounts in the funding
mix.
In 4Q'20 net margin grew by 12.5% year-on-year to RUB 26.9 bn (4Q'19: RUB
24.0 bn), primarily as a result of our growing loan portfolio.
Cost of risk fell to 5.7% 4Q'20 from 8.1% in 4Q'19. Our risk-adjusted net
interest margin rose from 13.1% in 3Q'20 to 13.2% on 4Q'20 (4Q'19: 14.1%).
Our non-credit business lines continue to deliver an increasing share of
our revenue and bottom line thanks to growth of the customer base, our
widened range of product offerings and continued monetisation efforts. In
4Q'20 non-credit revenue represented 43% of the Group's revenue and 27% of
the Group's profit before tax.
At the end of 4Q'20, the Group had:
• over 7.5 mn total current account customers with a total balance of
RUB 323.1 bn across all accounts
• over 385k total SME customers, with a total current account balance of
RUB 89.1 bn
• over 1.25 mn total Tinkoff Investments customers
In 4Q'20, operating expenses increased 65.9% year-on-year to RUB 19.4 bn
(4Q'19: RUB 11.7 bn) driven by resumed growth of our loan portfolio, and
investments into our fast growing new business lines.
The Group reported robust quarterly net profit of RUB 12.3 bn in 4Q'20
(4Q'19: RUB 11.0 bn), supported by continued customer acquisition and
monetisation. As a result, ROE for 4Q'20 stood at 40.5% (4Q'19: 49.0%).
In 4Q'20, the Group continued to maintain a healthy balance sheet, with
total assets growing by 48.1% since the end of 2019 to RUB 859.3 bn (31
Dec'19: RUB 580.0 bn).
The Group's gross loan book grew by 16.0% since the end of 2019 to RUB
445.5 bn (31 Dec'19: RUB 383.9 bn), while the net loan book increased by
14.4% to RUB 376.5 bn (31 Dec'19: RUB 329.2 bn).
The Group's NPL ratio rose to 10.4% (31 Dec'19: 9.1%), while our credit
loss allowance coverage stood at 1.5x non-performing loans.
The Group's customer accounts increased by 52.3% since the end of 2019 to
RUB 626.8 bn (31 Dec'19: RUB 411.6 bn).
Tinkoff's total equity over 2020 rose by 32.2% to RUB 127.0 bn at the end
of FY'20 (31 Dec'19: RUB 96.1 bn) even after the payment in 2020 of four
interim dividends (total of $0.80/GDR), on the back of solid net profit.
As of 1 January 2021 the Group's statutory N1.0 ratio amounted to 13.1%,
its N1.2 ratio stood at 12.4%, and the N1.1 ratio stood at 10.2%.
2021 Interim Dividend Announcement
In line with the Group's dividend policy, the Group's Board of Directors
has approved a first 2021 interim gross cash dividend of USD 0.24 per
share/per GDR (with each GDR representing one Ordinary share) with a total
amount allocated for dividend payment in relation to 4Q of around USD 48
mn. Subject to London Stock Exchange regulations, indicatively the
dividend will be payable on 29 March 2021 to those shareholders on the
register as at the record date of 26 March 2021. The ex-dividend date will
be 25 March 2021. 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.
GUIDANCE FOR 2021
With the gradual recovery in economic activity on top of strong
performance in 2020, the Group is pleased to announce the following
performance guidance for 2021:
• We expect our net loan portfolio growth to be more than 30%
• We expect cost of risk to be 7-8%
• We expect cost of borrowing to be in the 3-4% range
• We expect the share of non-credit revenues to be more than 40% of
total revenues
• We expect net profit to be at least RUB 55 bn
The Group also plans to temporarily suspend dividends for the remainder of
2021 as it further assesses both organic and inorganic growth
opportunities. It is management's belief that allocating capital to
additional growth now is the best way of guaranteeing a sustainable and
profitable business into the future. Growth opportunities will be
discussed in more detail at the Strategy Day to be held on April 7 2021.
Some of the accumulated capital might also be used to buy back up to 1 mn
GDRs to fund commitments to MLTIP, as previously communicated to the
market.
4Q'2020 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS
Customer base and engagement growth has led to increased market share
• The Group had over 7.5 mn total Tinkoff Black customers as of 1
January 2021.
• As of 1 January 2021, the Tinkoff app had over 30.05 mn installs, and
Group MAU stood at 9.3 mn, Group DAU stood at 3.2 mn.
• Tinkoff Bank's credit card market share increased to 14.0% as of 1
January 2021, further solidifying its position as Russia's second
largest credit card issuer.
• Tinkoff moved up 44 positions to 91st place in the ranking of the top
banks in the world by debit card turnover thanks to the growth in
Tinkoff Black, according to the Nilson Report.
Superior and innovative product offering combined with targeted marketing
activities secure Tinkoff's place as a leading fintech brand
• In December Tinkoff Mobile launched a new 2.0 version of its voice
assistant Oleg, which enables customers to create their own mobile
concierge with custom features.
• Tinkoff launched Tinkoff Call Defender, a platform designed to prevent
fraud and social engineering in the telecom sector developed as part
of the comprehensive Tinkoff Security system to protect the ecosystem
customers. It was developed in partnership with major Russian mobile
operators, including Megafon, MTS, Tele2 and Tinkoff Mobile.
• Tinkoff launched a free service called "Who is Calling?", which
identifies incoming caller IDs and helps to protect against scammers
and spam calls.
• Tinkoff adopted a cutting-edge approach to credit-scoring based on
securely-merged data on oneFactor platform. It includes AI-powered
predictive analytics tools, based on combined data from multiple
sources, including telecom operators, Russia's largest credit bureau
and Tinkoff itself.
• In January, Tinkoff Insurance became a partner of Sber's insurance
marketplace. Now customers on the Sber marketplace can purchase both
voluntary KASKO and mandatory OSAGO car insurance policies.
• In January Tinkoff integrated its Oleg voice assistant into its own
phone call center, aiding customer service representatives in dealing
with customer queries.
• In February Tinkoff launched Tinkoff Checkout, an online and offline
payment service for legal entities which operates as a one-stop shop,
enabling companies to take care of all of their online and offline
financial needs in one place.
• In February Tinkoff Business launched "Business Saving Box" - a
service that allows our SME customers to automatically save and
allocate their income for various purposes such as taxes, rent,
salaries, etc.
Commitment to further improving our Investor Relations (IR) disclosure and
ESG practices
• Tinkoff's senior management team will hold a virtual Strategy Day for
analysts and investors on 7 April 2021 to present its growth
opportunities and medium term targets.
• Tinkoff is progressing its latest Sustainability report which it
expects to publish by June 2021.
• In January all outstanding 69,914,043 Class B shares in the Group,
held by trusts connected with Oleg Tinkov, were converted to and
reclassified as Ordinary shares (after 10,100,181 Class B Shares were
converted to GDRs in December 2020). Following this latest conversion
and reclassification, Oleg Tinkov's voting rights in the Group
decreased to around 35% from 84% aligning all shareholders' interests
ever more closely.
• In February 2021 Tinkoff's GDRs were added to the MSCI Russia Standard
Index with a pro-forma weight of 4.69%.
• In February 2021 the Group announced the launch of an updated version
of its management long-term incentive program (MLTIP) and its
Key-Employee Retention Programme (KERP). The updated equity-based
MLTIP includes awards currently totalling 5.35 mn GDRs and vests over
5 years starting from August 2021, while the cash-based equity-linked
KERP initially covers around 300 beneficiaries.
• Tinkoff is now presenting two new customer metrics: "Total customers",
which represent customers that have utilised a Tinkoff product and
have not closed it. "Active customers", which represent customers that
have generated revenue for Tinkoff over the previous month.
• Tinkoff has revamped its segmental financial reporting to provide
further insight into its growth and profit drivers. Tinkoff now
presents its P&L across 7 different segments: Consumer Finance, Retail
Debit Cards (Tinkoff Black), SME Services (Tinkoff Business),
InvestTech (Tinkoff Investments), Acquiring and Payments, InsurTech
and MVNO Services.
The market and industry associations recognised Tinkoff's strong
performance
• Tinkoff was ranked among the top 100 Emerging Market Technology
Companies and become one of six Russian companies on the list compiled
by Boston Consulting Group (BCG). Companies from 14 countries were
included in the list and judged by six criteria to verify their
promising business models, proven market traction and market-leading
position.
• Tinkoff was named the world's Best Consumer Digital Bank at Digital
Bank Awards 2020 organised by Global Finance magazine. It was also
named the Best Consumer Digital Bank in CEE and won top recognition in
the Best Mobile Banking App and the Best Web Site Design
subcategories.
• Tinkoff was named among world's top 3 neo-banks according to
WhiteSight Moscow and was the only profitable bank on the list. The
ranking takes into account such metrics as capitalisation and market
valuation and compares digital banks across various parameters such as
user base, funding, investors and more.
• Tinkoff's super app was named the Best Mobile Banking App at the Core
of a Financial Ecosystem and the Best Mobile Banking for Daily
Operations (for the second year in a row) for iOS and Android,
according to Markswebb's Mobile Banking Rank 2020 rankings.
• Tinkoff won first place in the Employee Development and Training
nomination for its Tinkoff Life well-being programme, which
successfully helps to retain employees and attract new talents from
the IT sphere, at the IT HR Awards 2020. Tinkoff was also ranked 3rd
in Forbes' rating of Best Russian Employers.
• In February Tinkoff strengthened its standing in the Brand Finance
Banking 500's ranking in 2021, moving up 28 spots to 298th position.
• In February, Tinkoff was ranked 4th in the Rating of Best Employers in
Russia 2020 published by HeadHunter. It was also ranked 5th in
HeadHunter's subrating Most Popular among Jobseekers based on the
company's visibility and attractiveness for external audience.
• In February Tinkoff Bank was named Russia's Best-Performing Bank,
based on 17 metrics including growth, profitability, operational
efficiency, asset quality, return on risk, liquidity, soundness and
leverage, according to The Banker, a leading international financial
publication which is part of the Financial Times Group.
CONFERENCE CALL INFORMATION
Tinkoff management team will host an investor and analyst conference call
at 2:00 pm UK time (5:00 pm Moscow time, 09:00 am U.S. Eastern Standard
Time), on Thursday, 11 March 2021.
The press release, presentation and financial statements will be available
on the Tinkoff website at
1 https://www.tinkoff.ru/eng/ir/financials/quarterly-earnings/
To participate in the conference call, please use the following access
details:
9555581
Conference ID
+7 495 646 9190
Russian Federation
8 10 8002 8675011
Toll-free
United Kingdom +44 (0)330 336 9411
Toll-free 0800 279 7204
United States of America +1 929-477-0402
Toll-free 888-254-3590
A live webcast of the presentation will be available at:
2 https://www.webcast-eqs.com/tcsgroup20210311
Please register approximately 10 minutes prior to the start of the call.
For enquiries:
Tinkoff Tinkoff
Artem Lebedev Larisa Chernysheva
PR Department IR Department
+ 7 495 648-10-00 (ext. 2202) + 7 495 648-10-00 (ext. 2312)
Alexandr Leonov Neri Tollardo
+ 7 495 648-10-00 (ext. 35738) +44 7741 078383
3 pr@tinkoff.ru 4 ir@tinkoff.ru
About Tinkoff Group
TCS Group Holding PLC is an innovative provider of online retail and SME
financial services. It includes Tinkoff Bank, its mobile virtual network
operator Tinkoff Mobile, Tinkoff Insurance, its asset management company
Tinkoff Capital, Tinkoff Software DC, a network of development hubs in
major Russian cities, and Tinkoff Education. The Group is currently
developing Tinkoff ecosystem, which offers financial and lifestyle
services.
The Group was founded in 2006 by Russian entrepreneur Oleg Tinkov and has
been listed on the London Stock Exchange since October 2013.
The Group's key business is Tinkoff Bank, a fully online bank that serves
over 13 mn customers and forms the core of the Tinkoff ecosystem. Tinkoff
is the 3d largest retail bank in Russia in terms of active client-base.
Tinkoff Bank is the second largest player in the Russian credit card
market, with a share of 14.0%. The 4Q'20 IFRS net profit of TCS Group
Holding PLC amounted to RUB 12.3 bn. The ROE was 40.5%.
With no branches, the Group serves all its customers remotely via online
channels and a cloud-based call centre. The centre is staffed by over
10,000 employees, making it one of the largest in Europe. To ensure smooth
delivery of the Group's products, the Group has a nationwide network of
over 2,500 representatives.
Global Finance named Tinkoff Bank the world's Best Consumer Digital Bank
in 2020 and 2018, and the Best Consumer Digital Bank in Russia in 2020,
2019, 2018, 2016 and 2015. Tinkoff was also named the Best European Retail
Bank of the Year by Retail Banker International in 2020. In 2021, the
Banker recognised Tinkoff Bank as Russia's Best-Performing Bank. The
bank's mobile app has been consistently praised by local and global
independent experts as the best of its kind (in 2013, 2014, 2015, 2016 by
Deloitte and in 2018 by Global Finance).
UK MAR
This announcement is released by TCS Group Holding plc and contains inside
information for the purposes of Article 7 of the Market Abuse Regulation
(EU) 596/2014 as it forms part of domestic law by virtue of the European
Union (Withdrawal Act) 2018 ("UK MAR"), encompassing certain information
relating to the suspension of dividends and is disclosed in accordance
with the Company's obligations under Article 17 of UK MAR.
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.
══════════════════════════════════════════════════════════════════════════
ISIN: US87238U2033
Category Code: ACS
TIDM: TCS
LEI Code: 549300XQRN9MR54V1W18
Sequence No.: 95262
EQS News ID: 1174756
End of Announcement EQS News Service
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References
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3. mailto:pr@tinkoff.ru
4. mailto:ir@tcsbank.ru
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