REG-TCS Group Holding PLC TCS Group Holding PLC reports strong performance in 3Q'20; announces 4th 2020 interim dividend and updated guidance
12/11/2020 07:00
============
TCS Group Holding PLC (TCS)
TCS Group Holding PLC reports strong performance in 3Q'20; announces 4th
2020 interim dividend and updated guidance
12-Nov-2020 / 10:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
══════════════════════════════════════════════════════════════════════════
TCS Group Holding PLC reports strong performance in 3Q'20; announces 4th
2020 interim dividend and updated guidance
• Net income rose by 30% year-on-year to RUB 12.6 bn in 3Q'20
• Exceeded 12 million customers and became Russia's third largest bank
by number of active customers
• Robust year-on-year growth in fee & commission income; non-credit
revenues reached a record 41% of total
• FY2020 guidance revised, with net income expected to be at least RUB
42 bn
LIMASSOL, CYPRUS - 12 November 2020. 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 interim condensed consolidated IFRS results
for the three months and nine months ended 30 September 2020.
Oliver Hughes, CEO of Tinkoff Group, commented:
"The third quarter of this year was a strong one for us, despite the
continuing uncertainty caused by the global COVID-19 pandemic. Net income
rose 30% year-on-year to RUB 12.6 billion in 3Q'20, underpinned by
unrelenting customer acquisition and particularly strong performance by
our fee businesses, which accounted for a record 41% of revenues.
"In the third quarter, our ROE increased versus the previous period and
stood at a robust 45.0%, as we retained our focus on profitability.
"Our resilient, highly scalable business model and adaptability to our
customers' changing needs meant that we continued expanding by leaps and
bounds. We reached an important milestone in the third quarter when we
welcomed our 12 millionth customer, keeping us on track to reach our goal
of 20 million customers by 2023. In addition, according to recent
1 research published by Deloitte, Tinkoff has become Russia's most
preferred non-state bank.
"As we unlock the benefits of our ecosystem strategy, our engagement with
each customer continues to grow. We are now in sight of reaching 1.4
products per customer from 1.3 at the beginning of the year, despite our
fast growth pace. More than 30% of our customers now have 2 or more
products with us, up from 24% in January. Each cohort of new customers
takes less and less time to use more of our products and services.
"Tinkoff Investments continues its impressive growth. Assets under custody
have grown sixfold year on year, as the platform's number of customer grew
to over 2.4 million, solidifying Tinkoff's status as the largest retail
brokerage on Moscow Exchange by number of active clients. Meanwhile,
Tinkoff Business is continuing to show robust growth, with SME client
current account balances up over 50% year on year.
"On the back of these solid results and in light of the optimism we have
for the fourth quarter, we are recommending a dividend of USD 0.25 per
GDR/share and we are upgrading our guidance for FY2020. We expect net
income to reach at least RUB 42 billion, which was the original target
provided at the start of the year, before the pandemic."
FINANCIAL AND OPERATING REVIEW
RUB bn 3Q'20 3Q'19 Change 9M'20 9M'19 Change
Credit accounts acquired (mn 1.2 1.0 +13.5% 2.8 3.2 -11.2%
pcs)
Net margin 24.4 23.4 +4.4% 76.2 63.9 +19.2%
Net margin after provisions 17.8 15.5 +14.2% 41.2 44.5 -7.4%
Profit before tax 15.9 12.5 +27.8% 40.7 32.2 +26.5%
Net income 12.6 9.7 +29.8% 31.9 25.1 +26.9%
Return on equity 45.0% 56.5% -11.5 p.p. 40.8% 59.0% -18.2 p.p.
Net interest margin 16.3% 22.5% -6.2 p.p. 18.3% 22.6% -4.3 p.p.
Cost of risk 6.5% 9.1% -2.6 p.p. 11.6% 8.6% +3.0 p.p.
RUB bn 30 Sept 2020 31 Dec 2019 Change
Total assets 725.6 579.5 +25.2%
Net loans and advances to customers 346.3 329.2 +5.2%
Share of NPLs 11.1% 9.1% +2.0 p.p.
Cash and treasury portfolio 311.6 193.0 +61.5%
Total liabilities 609.1 483.4 +26.0%
Customer accounts 513.4 411.6 +24.7%
Total equity 116.5 96.1 +21.2%
Tier 1 capital ratio 19.9% 19.1% +0.8pp
Total capital ratio 19.9% 19.1% +0.8pp
CBR N1.0 (capital adequacy ratio) 13.9% 12.1% +1.8pp
In 3Q'20, the Group's total revenue grew by 12% year-on-year to RUB 48.8
bn (3Q'19: RUB 43.5 bn). Gross interest income increased by 3%
year-on-year to RUB 30.2 bn (3Q'19: RUB 29.5 bn), as our loan portfolio
returned to growth across the diversified product range. At the same time,
interest income declined compared to Q1 and Q2'20, mostly driven by our
resumption in loan growth in lower-yielding loan products, including car
loans and home equity.
Gross interest yield decreased to 29.8% in 3Q'20 (3Q'19: 33.6%), 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 5.3% (3Q'19: 6.5%), primarily due to declining rouble interest rates.
In 3Q'20, despite the significant increase in our funding base
year-on-year as we continued to grow our customer base and account
balances, interest expense decreased by 5% year-on-year to RUB 5.3 bn
(3Q'19: RUB 5.6 bn). This was driven by a continued decline in our cost of
borrowing from 5.8% in 3Q'19 to 3.9% in 3Q'20, following a gradual
decrease in deposit rates and a growing share of current accounts in the
funding mix.
In 3Q'20, net margin grew by 4% year-on-year to RUB 24.4 bn (3Q'19: RUB
23.4 bn), primarily as a result of our growing loan portfolio and
declining funding costs.
Cost of risk fell to 6.5% 3Q'20, a material decline from 9.1% in 3Q'19 and
12.5% in 2Q'20. This was driven by the front-loading of loan provisions in
the first and second quarters of 2020 in accordance with IFRS9, a swift
normalisation in the economic environment in 3Q'20, and a significant
reduction in the number of loans subject to agreed restrucuring in
response to the pandemic. Our risk-adjusted net interest margin rose
compared to 2Q'20, remaining at a comfortable level of 11.8% in 3Q'20
(3Q'19: 14.9%).
Our non-credit business lines continue to deliver robust performance
thanks to growth of the customer base and continued monetisation efforts,
and now represents 41% of the Group's revenue. In 3Q'20, fee and
commission revenue rose by 39% year-on-year to RUB 13.0 bn (3Q'19: RUB 9.4
bn) and grew q-o-q as well, as consumer transaction activity improved in
the post-lockdown period. Tinkoff Investments once again performed
exceptionally well, with record inflows, record transaction volumes and
record fee and commission income. Tinkoff Investments' revenue grew 8x
year-on-year to RUB 2.2 bn (3Q'19: RUB 0.3 bn), and now accounts for 16%
of total fee and commission revenue. As economic activity normalised in
3Q'20, so did Tinkoff Black and Tinkoff Business transaction volumes,
leading to solid sequential improvement in their revenues.
At the end of 3Q'20, the Group had:
• over 10.7 mn current account customers with a total balance of RUB
302.2 bn across all accounts
• over 595k SME customers, with a total current account balance of RUB
69.9 bn
• Over 2.4 mn customers with Tinkoff Investments brokerage accounts
In 3Q'20, operating expenses increased 25% year-on-year to RUB 14.3 bn
(3Q'19: RUB 11.4 bn) driven by the resumed growth of our loan portfolio,
and continued investing in new growing business lines.
The Group reported robust quarterly net income of RUB 12.6 bn in 3Q'20
(3Q'19: RUB 9.7 bn), supported by continued customer acquisition and
monetisation. As a result, ROE for 3Q'20 stood at 45.0% (3Q'19: 56.5%).
In 3Q'20, the Group continued to maintain a healthy balance sheet, with
total assets growing by 25% since the end of 2019 to RUB 725.6 bn (31
Dec'19: RUB 579.5 bn).
The Group's gross loan book grew by 9% since the end of 2019 to RUB 416.7
bn (31 Dec'19: RUB 383.9 bn), while the net loan book increased by 5% to
RUB 346.3 bn (31 Dec'19: RUB 329.2 bn).
The Group's NPL ratio rose to 11.1% (31 Dec'19: 9.1%), while our loan loss
provision coverage stood at 1.5x non-performing loans.
The Group's customer accounts increased by 25% since the end of 2019 to
RUB 513.4 bn (31 Dec'19: RUB 411.6 bn).
Tinkoff's total equity rose 21% as at the end of 9M'20 to RUB 116.5 bn (31
Dec'19: RUB 96.1 bn) despite the payment of three 2020 interim dividends
(total of $0.55/GDR), on the back of solid net income. As of 1 October
2020, the Group's statutory N1.0 ratio amounted to 13.9%, its N1.2 ratio
stood at 13.4%, and the N1.1 ratio stood at 10.8% - a meaningful
improvfement relative to 2Q'20 due to the Central Bank of Russia's changes
to the risk weights assigned to certain unsecured loans.
UPDATED GUIDANCE FOR FY2020
With the gradual recovery in economic activity supporting strong
performance during the reporting period and into the fourth quarter,
Tinkoff is updating its FY2020 guidance:
• We expect our net loan portfolio growth to be in the 10% area
• We expect cost of risk to be 10-11% (previously in the 12% area)
• We expect cost of borrowing to be in the 4% area (previously in the 5%
area)
• We expect net income to be at least RUB 42 bn (previously RUB 30-35bn)
Fourth 2020 Interim Dividend Announcement
In line with the Group's dividend policy, the Group's Board of Directors
has approved a fourth 2020 interim gross cash dividend of USD 0.25 per
share/per GDR (with each GDR representing one class A share) with a total
amount allocated for dividend payment in relation to 3Q of around USD 49.8
mn. Subject to London Stock Exchange regulations, indicatively the
dividend will be payable on 30 November 2020 to those shareholders on the
register as at the record date of 27 November 2020. The ex-dividend date
will be 25 November 2020. 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.
3Q'2020 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS
Customer base and engagement growth has led to increased market share
• The Group had over 10.7 mn current accounts customers as at 1 October
2020
• As of 1 October 2020, the Tinkoff app had over 25 mn installs, MAU
stood at 7.6 mn, DAU stood at 2.4 mn
• Tinkoff Bank's credit card market share increased to 13.5% as of 1
October 2020, further solidifying its position as Russia's second
largest credit card issuer
• In October, Tinkoff became the leader among Russian banks in terms of
the number of merchants connected to the Faster Payments System. Every
second merchants with access to the upgraded QR code payment feature
under the Faster Payments System are customers of the Tinkoff Payment
internet acquiring service, for a total of 27,000 businesses
• Tinkoff rose to become Russia's third largest bank and leading private
bank by the number of active retail customers according to three
surveys conducted by Deloitte, Frost & Sullivan / NEO Centre, and
Ipsos
Superior and innovative product offering combined with targeted marketing
activities secure Tinkoff's place as a leading fintech brand
• Tinkoff Business started opening accounts for foreign companies
operating in Russia and businesses launching branches abroad
• Oleg, the world's first voice assistant for financial and lifestyle
services, added new skills, helping customers to set their spending
limits, make recurring payments on time and pay their credit card
bills
• Tinkoff Capital launched Russia's first exchange-traded fund (ETF)
tracking the Nasdaq(R)-100 Technology Sector Index (NDXT)
• In October, Tinkoff launched a financial messenger built into its
super app for users to chat while making financial transactions
• In November, Tinkoff launched Tinkoff Pro - a subscription offering
that gives Tinkoff customers a number of benefits within the Tinkoff
ecosystems, including higher interest rates on deposits, discounts on
Tinkoff ecosystem and partner products, higher and more tailored
cashback offers, and much more
The market and industry associations recognised Tinkoff's strong
performance
• Tinkoff has been recognised for its consumer banking, online treasury
services and open banking APIs, leading in five categories at the 2020
World's Best Digital Banks awards by Global Finance magazine
• Tinkoff has become the leader among Russian banks in terms of customer
loyalty with an NPS of 26% and the share of loyal customers reaching
50%, according to a banking market survey conducted by Romir
• Tinkoff Investments won first place in the Retail Brokerage Company
category of the Stock Market Elite 2019 contest held by the National
Association of Stock Market Participants (NAUFOR)
• Tinkoff Business took silver in Europe's SME Bank of the Year category
at the Global SME Finance Awards 2020, in recognition of its
outstanding products and services to small and medium enterprise (SME)
clients.
• Tinkoff has joined the Top 50 most valuable Russian brands as ranked
by Brand Finance, an independent UK-based consultancy, achieving
above-average scores in customer familiarity, as well as performing
strongly in innovation and quality of services
• Tinkoff led in both Daily Banking and Digital Office categories of the
Internet Banking Rank 2020 rankings compiled by the analytical agency
Markswebb
• In October, Tinkoff's super app won at the global Digital
Communication Awards (DCA) 2020 for Disruptive Communications
• In October, Tinkoff won top spot in the Daily Banking category and
took the second position in the Best Premium Service Programme
category at the Frank Premium Banking Award 2020 rankings
CONFERENCE CALL INFORMATION
The Tinkoff management team will host an investor and analyst conference
call at 1:00 pm UK time (4:00 pm Moscow time, 08:00 am U.S. Eastern
Standard Time), on Thursday, 12 November 2020.
The press release, presentation and financial statements will be available
on the Tinkoff website at
2 https://www.tinkoffgroup.com/financials/quarterly-earnings/
To participate in the conference call, please use the following access
details:
2202491
Conference ID
Russian Federation +7 495 213 1767
Toll-free 8 800 500 9283
United Kingdom +44 (0) 330 336 9125
Toll-free 0800 358 6377
+1 929-477-0324
United States of America
888-479-1004
Toll-free
A live webcast of the presentation will be available at:
3 https://www.webcast-eqs.com/tcsgroup20201112
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
4 pr@tinkoff.ru 5 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 12 mn customers and forms the core of the Tinkoff ecosystem.
Tinkoff Bank is the second largest player in the Russian credit card
market, with a share of 13.5%. The 3Q 2020 IFRS net income of TCS Group
Holding PLC amounted to RUB 12.6 bn. The ROE was 45%.
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.
In 2018, Global Finance named Tinkoff Bank the world's Best Consumer
Digital Bank, and in 2020, 2019, 2018, 2016 and 2015, the Best Consumer
Digital Bank in Russia. In 2017 and 2013, the Banker recognised Tinkoff
Bank as the Bank of the Year in Russia. 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).
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: QRT
TIDM: TCS
LEI Code: 549300XQRN9MR54V1W18
Sequence No.: 87703
EQS News ID: 1147548
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
6 fncls.ssp?fn=show_t_gif&application_id=1147548&application_name=news&site_id=reuters8
References
Visible links
1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=956458ada97b9b0b3fdfb788272dfc31&application_id=1147548&site_id=reuters8&application_name=news
2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=b6680d290db49b1f5026cd907131312c&application_id=1147548&site_id=reuters8&application_name=news
3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=759f9c9be19849130559a07bd9e1382d&application_id=1147548&site_id=reuters8&application_name=news
4. mailto:pr@tinkoff.ru
5. mailto:ir@tcsbank.ru
============Recent news on TCS Holding
See all newsREG - Official List TCS Grp Hldg PLC - Removal - TCS Group Holding PLC
AnnouncementREG - Stock Exch Notice TCS Grp Hldg PLC - Cancellation - TCS GROUP HOLDING PLC
AnnouncementREG-TCS Group Holding PLC TCS Group Holding PLC reports IFRS results for 4Q and FY 2022
AnnouncementREG-TCS Group Holding PLC TCS Group Holding PLC: notification of Board changes under LR9.6
AnnouncementREG-TCS Group Holding PLC Correction: TCS Group Holding PLC: Headhunter Group plc Appoints Mr Sergey Arsenyev as Non-Executive Director
Announcement