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Market Cap £3.92bn
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Position in Universe 180th / 1809

TCS Group Holding PLC TCS Group Holding PLC Announces 2Q and 1H 2017 IFRS Results and Second 2017 Interim Dividend

Tue 29th August, 2017 8:00am
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   TCS Group Holding PLC / Half-yearly Results
   TCS Group Holding PLC Announces 2Q and 1H 2017 IFRS Results and Second
   2017 Interim Dividend

   29-Aug-2017 / 09:00 CET/CEST
   Dissemination of a Regulatory Announcement, transmitted by EquityStory.RS,
   LLC - a company of EQS Group AG.
   The issuer is solely responsible for the content of this announcement.

   ══════════════════════════════════════════════════════════════════════════

   TCS Group Holding PLC Announces 2Q and 1H 2017 IFRS Results and Second
   2017 Interim Dividend

   Moscow, Russia - 29 August 2017. 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 second quarter and for the
   first six months ended 30 June 2017.

    

   KEY FINANCIAL HIGHLIGHTS

    

   2Q 2017

     • Net interest income up 37% y-o-y to RUB 11.2 bn (2Q16: RUB 8.2 bn)
     • Profit before tax up 68% y-o-y to RUB 5.5 bn (2Q16: RUB 3.3 bn)
     • Net income up 67% y-o-y to RUB 4.2 bn (2Q16: RUB 2.5 bn)
     • ROE increased to 48.6% (2Q16: 41.5%)
     • Net interest margin at 26.4% (2Q16: 25.9%)
     • Cost of risk decreased to 6.0% (2Q16: 7.7%)

   1H 2017

     • Net interest income grew by 36% y-o-y to RUB 21.1 bn (1H16: RUB 15.5
       bn)
     • Profit before tax up 72% y-o-y to RUB 9.9 bn (1H16: RUB 5.8 bn)
     • Net income up 72% y-o-y to RUB 7.6 bn (1H16: RUB 4.4 bn)
     • ROE grew to 46.1% (1H16: 36.9%)
     • Net interest margin at 26.1% (1H16: 25.7%)
     • Total assets increased by 23% to RUB 215.3 bn (YE16: RUB 175.4 bn)
     • Gross loans and advances to customers up 16% to RUB 139.5 bn (YE16:
       RUB 120.4 bn)
     • Net loans and advances to customers up 18% to RUB 121.2 bn (YE16: RUB
       102.9 bn)
     • Share of non-performing loans (NPLs) down to 9.4% (YE16: 10.2%)
     • Customer accounts increased by 13% to RUB 140.2 bn (YE16: RUB 124.6
       bn)
     • Total equity up by 22% to RUB 35.9 bn (YE16: RUB 29.5 bn)

   KEY HIGHLIGHTS FOR 1H 2017

     • In 1H17, over 770,000 new active credit card customers were acquired
     • In April 2017, Tinkoff Bank announced its plans to launch an MVNO,
       Tinkoff Mobile, and started pre-collecting applications for its
       SIM-cards
     • In April 2017, Tinkoff Bank successfully placed a 5-year RUB 5 bn bond
       with a 9.65% coupon
     • In April 2017, Tinkoff Bank joined Russia's FinTech Association
     • In May 2017, ACRA assigned Tinkoff Bank an A(RU) rating, outlook
       Stable
     • In May 2017, Tinkoff Bank introduced Android Pay for its customers
     • In June 2017, Tinkoff Bank signed a partnership agreement with the
       Skolkovo Foundation

     • In June 2017, Tinkoff Bank issued (through TCS Finance D.A.C., its
       Irish SPV) a USD 300m perpetual bond with a 9.25% coupon. This is a
       Basel III compliant instrument approved by the CBR for the inclusion
       into the N1.2 statutory CAR calculation.

     • In June 2017, Tinkoff Bank launched the Tinkoff Property service for
       searching and buying properties on the primary market as part of its
       Tinkoff.ru financial supermarket

   KEY HIGHLIGHTS POST 1H 2017

     • As of 1 August 2017, Tinkoff Bank's credit card market share grew to
       11.5%, further solidifying its position as the second largest credit
       card issuer in Russia
     • In July 2017, Tinkoff Bank was named the most profitable bank in
       Central and Eastern Europe by The Banker magazine
     • In July 2017, Tinkoff Bank won awards in two categories in Global
       Finance's 2017 World's Best Consumer Digital Banks awards in Central
       and Eastern Europe  (Best Online Deposit, Credit and Investment
       Product Offerings Award and Best in Social Media Award)
     • In August 2017, Tinkoff Bank started the gradual deployment of its own
       ATM network

   Second Interim Dividend Announcement

    

   In line with the Group's dividend policy, the Board of Directors on 28
   August approved the 2017 a second interim gross dividend for 2017 of USD
   0.20 per share/per GDR (with each GDR representing one share), with a
   total dividend payment of USD 36.5 mn (RUB 2.1 bn).

   Subject to the London Stock Exchange regulations, indicatively the
   dividend will be payable on Monday, 11 September 2017, to those
   shareholders on the Group's register as at the record date of Friday, 8
   September 2017. The ex-dividend date will be 7 September 2017.

   According to the terms of the GDR deposit agreement, holders of the
   Group's GDRs will receive their dividends approximately 5 business days
   after the payment date.

   UPDATED GUIDANCE FOR 2017

    

   Following its strong underlying growth, the Group has revised its FY17 net
   income guidance from at least RUB 14 bn to at least RUB 17 bn.

    

   The Group has also updated its guidance for:

     • cost of risk to be around 7-8% (previously, in the range of 9-10%),
     • net portfolio growth to be around 35% (previously, of at least 20%),
     • cost of funds to be below 8% (previously, around 9%).

    

   Oliver Hughes, CEO of Tinkoff Bank, commented:

    

   'In 1H 2017, the Group delivered a strong set of results underpinned by
   two key drivers - the continued accelerated growth of our core credit card
   business and the sound performance of our new business lines which have
   been launched over the past few years as part of the Tinkoff.ru financial
   supermarket.

    

   This year, the diversification of our business has become visible not just
   in the top-line but in the bottom-line result as well. Some non-credit
   products have already broken even, and the rest are expected to do so in
   2H17. The new business lines started primarily as cross-sell to our
   existing customer base, but now they are being sold mainly to the open
   market, as we attract new customers to our growing eco-system. In 2Q17,
   non-credit card products made up RUB 3.3 bn of total income, and by
   year-end we expect their share to grow to around 20%.

    

   While the new non-credit business lines are producing promising results,
   we continue to grow our credit business. The economics of our credit
   portfolio are improving as credit quality remains solid and the
   cost-of-funds reduces.

    

   We generated a record net income of RUB 4.2 bn in 2Q17 and RUB 7.6 bn in
   1H17. Thanks to this quarter's robust performance, we are revising our
   2017 guidance upwards, and we are now expecting to deliver a net profit of
   over RUB 17 bn for the full year. We are also delighted to announce that,
   in line with the Group's dividend policy, the Board of Directors has
   approved the payment of RUB 2.1 bn in dividends.'

    

    

   FINANCIAL AND OPERATING REVIEW

   RUB bn                                  2Q17 2Q16 Change  1H17 1H16 Change
   Credit cards issued ('000 pcs)           570  330   +73% 1,020  620   +65%
   Credit card                             64.9 42.5   +53% 119.4 78.0   +53%
   transactions
   Net interest income                     11.2  8.2   +37%  21.1 15.5   +36%
   Net interest income after loan           9.2  6.1   +51%  16.7 11.0   +53%
   impairment
   Profit before tax                        5.5  3.3   +68%   9.9  5.8   +72%
   Net income                               4.2  2.5   +67%   7.6  4.4   +72%

    

   RUB bn                              30 June 31 December  Change
                                          2017        2016
   Total Assets                          215.3       175.4    +23%
   Net loans and advances to customers   121.2       102.9    +18%
   Cash and treasury portfolio            73.0        49.5    +47%
   Total Liabilities                     179.4       145.9    +23%
   Customer accounts                     140.2       124.6    +13%
   Total Equity                           35.9        29.5    +22%
   Tier 1 capital ratio                  24.7%       14.8%  +9.9pp
   Total capital ratio                   25.1%       16.3%  +8.8pp
   CBR N1 (capital adequacy ratio)      11.96%      11.13% +0.83pp

    

    

   The Group delivered another strong set of results for 2Q and 1H17
   following accelerated growth of its core credit card business and
   excellent performance of its new business lines.

    

   As a result, the Group reported a net income for both 2Q17 and 1H17 of RUB
   4.2 bn and RUB 7.6 bn respectively. This translated into ROE of 48.6% for
   2Q17 and 46.1% for 1H17.

    

   In 1H17, the Group issued 1 mn credit cards, including 570,000 in 2Q17.
   The total volume of credit card transactions in 1H17 grew 53% y-o-y to RUB
   119.4 bn (1H16: RUB 78.0 bn).

    

   In 1H17, gross interest income grew by 21% y-o-y to RUB 27.3 bn (1H16: RUB
   22.6 bn), while in 2Q17 it was up 23% y-o-y to RUB 14.3 bn (2Q16: RUB 11.6
   bn), driven by the growth in both the loan book and securities portfolio.
   Gross interest yield stayed at 40.1% in 2Q17, while the interest yield on
   the Group's securities portfolio decreased to 7.3%. Gross yield for 1H17
   amounted to 39.6% (1H16: 40.0%).

    

   Interest expense stayed flat at RUB 2.9 bn in 2Q17, further reducing the
   cost of borrowing to 7.6%.

    

   In 2Q17, net interest income grew by 37% y-o-y to RUB 11.2 bn (2Q16: RUB
   8.2 bn), while in 1H17 it increased by 36% y-o-y to RUB 21.1 bn (1H16: RUB
   15.5 bn). The net interest margin (NIM) stood at 26.4% in 2Q17 (2Q16:
   25.9%) and at 26.1% in 1H17 (25.7% in 1H16). Due to lower cost of risk,
   the risk-adjusted net interest margin increased to 21.7% in 2Q17 (2Q16:
   19.3%) and to 20.6% in 1H17 (1H16: 18.2%).

    

   The Group continues to focus on controlling its cost of risk and
   efficiently managing the quality of its portfolio. In 2Q17, the cost of
   risk went down to 6.0% after a seasonal spike of 7.6% in 1Q17 (2Q16:
   7.7%), with the 1H17 cost of risk decreasing to 6.8% from 8.6% in 1H16.

    

   The Group continues to further develop its new business lines, all of
   which are demonstrating robust growth, with the SME business delivering
   the best performance. In 1H17, the Group's fee and commission income
   increased by 61% y-o-y to RUB 6.1 bn (1H16: RUB 3.8 bn).

    

   At the end of 1H17, the Group had over 2.1 mn current accounts customers
   with a total balance of over RUB 55 bn across all their accounts. The
   Group's SME business had over 140,000 SME customers with over RUB 11.8 bn
   on their current accounts. This business line broke even in June 2017,
   with its fee and commission income amounting to RUB 0.8 bn in 1H17. The
   Group continues to develop its mortgage platform in partnership with seven
   banks, through which it has originated over RUB 1.5 bn of mortgage loans
   in 2Q17. The Group expects the mortgage platform to break-even in 2H17.
   Tinkoff Investments continues to demonstrate robust growth. With every
   fourth brokerage account currently opened via this service, the Group
   expects it to break even in 2H17.

    

   In 2Q17, operating expenses increased by 14% q-o-q due to continued growth
   of acquisition expenses. The cost-to-income ratio decreased to 42.3% in
   2Q17 following solid growth of interest income and fee and commission
   income.

    

   In 2Q17, the Group reported a net income of RUB 4.2 bn (2Q16: RUB 2.5 bn).
   Net income for 1H17 amounted to RUB 7.6 bn (1H16: RUB 4.4 bn). As a
   result, ROE for 2Q17 reached 48.6%.

    

   In 1H17, the Group continued to maintain a healthy balance sheet with
   total assets having increased by 23% to RUB 215.3 bn due to strong credit
   portfolio growth and proceeds from the Perpetual Subordinated Eurobond
   (YE16: RUB 175.4 bn).

    

   In 1H17, the Group's gross loan book grew by 16% to RUB 139.5 bn (YE16:
   RUB 120.4 bn) due to the increased number of new customers with over
   430,000 new active credit card customers in 2Q17 and over 770,000 in 1H17.

    

   The Group's net loan book grew 18% to RUB 121.2 bn (YE16: RUB 102.9 bn)
    As a result, Tinkoff Bank's market share increased to 11.5% as of 1
   August 2017, further solidifying its position as Russia's second largest
   credit card issuer.

    

   The Group's portfolio quality continued to improve on a q-o-q basis with
   the NPL ratio dropping further to 9.4% in 2Q17 from 9.6% in 1Q17. The
   Group's loan loss provision coverage remained stable at 1.4x
   non-performing loans.

    

   The Group's customer accounts increased by 13% over the period to RUB
   140.2 bn (1Q17: RUB 123.3 bn; YE16: RUB 124.6 bn). In April 2017, Tinkoff
   Bank issued a 5-year RUB 5 bn bond with a put option in April 2019. In
   June 2017, Tinkoff Bank issued (through TCS Finance D.A.C., its Irish SPV)
   a USD 300m perpetual bond with a 9.25% coupon and with a call option in
   September 2022. Simultaneously, the Group bought back a substantial amount
   of its Tier 2 subordinated debt.

    

   In 2Q17, the Group's total equity increased by 22% to RUB 35.9 bn (YE16:
   RUB 29.5 bn).  The Group's Basel ratios went up following the inclusion of
   perpetual debt in additional Tier 1 capital. As of 1 August 2017, the
   Group's statutory N1.0 ratio went up to 16.6% and its N1.2 ratio increased
   to 14.3%. N1.1 stood at a comfortable 9.0%, and the Group expects it to go
   up after the inclusion of its audited 2Q17 net income in Tier 1 capital.

    

   ***

   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 Daylight Time), on
   Tuesday, 29 August 2017.

   The press release, presentation and financial statements will be available
   on the Tinkoff Bank 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
                                        5383943
    
   Russian Federation - Local           +7 495 213 1767
   Russian Federation - Toll Free       8 800 500 9283
   United Kingdom - Local               +44 (0)330 336 9105
   United Kingdom - Toll Free           0800 358 6377
   United States of America - Local     +1 719-325-2213
   United States of America - Toll Free 888-349-9618

   A live webcast of the presentation will be available
   at  2 http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4865

   Please register approximately 10 minutes prior to the start of the call.

    

    

   For enquiries:
   Tinkoff Bank                  Tinkoff Bank

   Darya Ermolina                Larisa Chernysheva
   Head of PR                    IR Department

   + 7 495 648-10-00 (ext. 2009) + 7 495 648-10-00 (ext. 2312)

   d.ermolina 3 @tinkoff.ru       4 ir@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, a 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 1,800
   representatives to ensure the smooth delivery of its products. The network
   covers all of Russia and allows next day delivery to most of its
   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 August 2017, the bank was the second largest player in the Russian
   credit card market, with a market share of 11.5%. The 1H 2017 IFRS net
   income of TCS Group Holding PLC amounted to RUB 7.6 bn, ROE stood at 46%.

   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.

    

    

   ══════════════════════════════════════════════════════════════════════════

   The EquityStory.RS, LLC Distribution Services include Regulatory
   Announcements, Financial/Corporate News and Press Releases.
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   ══════════════════════════════════════════════════════════════════════════

   Language:      English
   Company:       TCS Group Holding PLC
                  2nd Floor, Sotiri Tofini 4, Agios Athanasios
                  4102 Limassol
                  Cyprus
   Phone:         +7 495 648-10-00
   Fax:           +7 495 645-59-09
   E-mail:        media@tinkoff.ru
   Internet:      https://www.tinkoff.ru
   ISIN:          US87238U2033
   Listed:        Foreign Exchange(s) London, Moscow
   Category Code: IR
   TIDM:          TCS
   LEI Code:      549300XQRN9MR54V1W18
   Sequence No.:  4567


    
   End of Announcement EquityStory.RS, LLC News Service

   ══════════════════════════════════════════════════════════════════════════

   604795  29-Aug-2017 

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References

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   4. mailto:ir@tcsbank.ru


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