REG-TCS Group Holding PLC TCS Group Holding PLC Announces 2Q and 1H 2018 IFRS Results and 3rd 2018 Interim Dividend
29/08/2018 08:00
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TCS Group Holding PLC (TCS)
TCS Group Holding PLC Announces 2Q and 1H 2018 IFRS Results and 3rd 2018
Interim Dividend
29-Aug-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 2Q and 1H 2018 IFRS Results and 3rd 2018
Interim Dividend
Limassol, Cyprus - 29 August 2018. TCS Group Holding PLC (TCS LI) (the
"Group"), Russia's leading provider of online retail financial and
lifestyle services via the Tinkoff.ru financial ecosystem, today announces
its interim condensed consolidated IFRS results for the six months ended
30 June 2018.
KEY FINANCIAL HIGHLIGHTS
2Q 2018
• Net margin up 28% y-o-y to RUB 14.2 bn (2Q17: RUB 11.1 bn)
• Profit before tax up 42% y-o-y to RUB 7.8 bn (2Q17: RUB 5.5 bn)
• Net income up 43% y-o-y to RUB 6.0 bn (2Q17: RUB 4.2 bn)
• ROE increased to 69.3% (2Q17: 48.6%)
• Net interest margin at 24.0% (2Q17: 26.0%)
• Cost of risk stood at 6.6% (2Q17: 6.0%)
1H 2018
• Net margin grew by 36% y-o-y to RUB 28.2 bn (1H17: RUB 20.8 bn)
• Profit before tax up 53% y-o-y to RUB 15.2 bn (1H17: RUB 9.9 bn)
• Net income up 55% y-o-y to RUB 11.7 bn (1H17: RUB 7.6 bn)
• ROE grew to 69.3% (1H17: 46.1%)
• Net interest margin at 24.7% (1H17: 25.7%)
All balance sheet numbers and ratios as of 30 June 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 11% to RUB 287.2 bn (1 Jan'18: RUB 259.3 bn)
• Gross loans and advances to customers up 14% to RUB 189.5 bn (1
Jan'18: RUB 166.7 bn)
• Net loans and advances to customers up 17.3% to RUB 152.2 bn (1
Jan'18: RUB 129.7 bn)
• Share of non-performing loans (NPLs) decreased to 12.1% (1 Jan'18:
13.4%)
• Customer accounts increased by 16% to RUB 207.7 bn (1 Jan'18: RUB
179.0 bn)
• Total equity increased by 8.1% to RUB 34.7 bn (1 Jan'18: RUB 32.1 bn)
KEY HIGHLIGHTS FOR 1H 2018
• In 1H18 over 735k new active credit card customers were acquired,
underpinning net loan growth of 17.3%
• In April, The Bank of Russia 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
• In April, Tinkoff Bank and NSPK (National Payment Card System)
launched a joint project that enables Tinkoff customers to view card
receipts details in their user accounts
• Following the issue of a professional securities market participant
licence, Tinkoff Bank re-launched its Tinkoff Investments brokerage
platform in May, 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
• In May, Tinkoff Bank and the Talent and Success Foundation signed an
agreement to launch a development hub at Sirius educational center in
Sochi and to cooperate in a number of areas, including joint R&D
projects and working towards a better regulatory framework to support
innovation
• In May, 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
• Tinkoff Bank uses robotic process automation for all customer
communication channels
KEY HIGHLIGHTS POST 1H 2018
• Tinkoff Bank's market share stood at 11.7% as of 1 August 2018,
solidifying its position as Russia's second largest credit card issuer
• In July, Tinkoff acquired a stake in Kassir.ru, Russia's top online
ticketing provider, in a move to further develop its ecosystem
to offer customers a greater choice of lifestyle and entertainment
services through the Tinkoff.ru platform
• In July, Tinkoff and Sberbank launched joint P2P money transfers using
just a mobile phone number
• In July, Tinkoff Bank replaced a vendor's voice-recognition system
with its proprietary solution, cutting average customer authentication
time by 50%
• In July, Tinkoff Investments launched a robo-advisor service for
investment portfolio management
• Tinkoff Mobile, the Group's MVNO, announced a major expansion drive
into Russia's regions with an aim to have operations in over 60
Russian regions by the end of 2018
• In August, Tinkoff Business launched its own small business lending
solution deploying its own balance sheet
• In August, Global Finance, the international banking and financial
magazine, recognized Tinkoff Bank as best consumer digital bank in
Russia. In addition, Tinkoff Bank won the following Central and
Eastern Europe nominations: Best Investment Service, Best Digital
Mortgage Service, Best Bill Payment & Presentment, Best Information
Security and Fraud Management, Best in Mobile Banking, and Best Mobile
Banking App.
THIRD 2018 INTERIM DIVIDEND ANNOUNCEMENT
In line with the Group's dividend policy, on 27 August the Group's Board
of Directors approved a third 2018 interim gross cash 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 Q2 of around USD
43,932,295.00.
Subject to London Stock Exchange regulations, indicatively the dividend
will be payable on 24 September 2018 to those shareholders on the register
as at the record date of 14 September 2018. The ex-dividend date will be
13 September 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.
GUIDANCE FOR 2018 REAFFIRMED
Following strong underlying growth year to date in 2018, the Group is
pleased to reaffirm its FY18 performance guidance:
• net income to be at least RUB 24 bn;
• net loan growth to be at least 25%;
• cost of risk around 7% on IFRS 9 basis;
• cost of borrowing to be around 6-7%
Oliver Hughes, CEO of Tinkoff Bank, commented:
"The Group delivered good results in the first half of 2018, with RUB 11.7
billion in net income underpinned by three major elements of our business
model: consumer lending, fee and commissions income and lifestyle
services. Our ROE grew to 69.3% during the period, reaffirming our
position as one of the most profitable banks globally.
"Our core credit card business has continued to demonstrate robust growth,
delivering 38% growth in transaction volumes in 1H 2018 and attracting
735,000 new customers. At the same time, we have been successful in
delivering our diversification strategy, with non-credit businesses now
accounting for 30% of our top line results.
"Tinkoff SME has reached new heights in 2018 with over 340,000 accounts
opened by the end of 1H18. In August we scaled up this business and
launched our own lending solution. Tinkoff Mortgage remains Russia's only
fully online mortgage marketplace and continues to thrive as declining
mortgage rates have driven market growth via our 11 partner banks, for
whom we are originating over RUB 2bn mortgages per month. After receiving
a professional securities market participant license from the CBR in
March, we re-launched our ground-breaking Tinkoff Investments platform.
Our new independent brokerage platform has captured a 25% market share of
new accounts.
"In July, we made an important acquisition by purchasing a stake in
Kassir.ru, Russia's leading and a fast-growing online ticket seller. By
integrating Kassir.ru into our Tinkoff ecosystem, we are able to provide
our customers with a range of services beyond financial and insurance
products, and attract new users to our ecosystem. This, together with our
integrations with Booking.com and Afisha Restaurants, will form a key part
of our lifestyle banking value proposition.
In line with our dividend policy, the Board approved a third 2018 interim
dividend of USD 0.24 per share."
FINANCIAL AND OPERATING REVIEW
RUB bn 2Q18 2Q17 Change 1H18 1H17 Change
Credit cards issued ('000 pcs) 500 570 (12%) 1,020 1,020 -
Credit card 86.7 64.9 34% 165.3 119.4 38%
transactions
Net margin 14.2 11.1 28% 28.2 20.8 36%
9.0
Net margin after credit loss allowance 11.1 23% 21.9 16.4 33%
Profit before tax 7.8 5.5 42% 15.2 9.9 53%
Net income 6.0 4.2 43% 11.7 7.6 55%
RUB bn 30 June 1 Jan 2018 Change
2018
Total Assets 287.2 259.3 10.8%
Net loans and advances to customers 152.2 129.7 17.3%
Cash and treasury portfolio 104.9 96.3 8.8%
Total Liabilities 252.4 227.1 11.1%
Customer accounts 207.7 179.0 16%
Total Equity 34.7 32.1 8.1%
Tier 1 capital ratio 16.5% 17.7% (1.2pp)
Total capital ratio 16.5% 17.8% (1.3pp)
CBR N1.0 (capital adequacy ratio) 16.4% 16.3% 0.1pp
The Group delivered another strong set of results for 1H18 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 in 2Q18 and 1H18 of RUB 6.0
bn
and RUB 11.7 bn, respectively. This translated into ROE of 69.3% both for
2Q18 and for 1H18.
In 1H18, the Group issued 1,020k credit cards, including 500k in 2Q18. The
total
volume of credit card transactions in 1H18 grew 38% y-o-y to RUB 165.3 bn
(1H17:
RUB 119.4 bn).
In 1H18, gross interest income grew by 32% y-o-y to RUB 35.7 bn (1H17: RUB
27.1
bn), while in 2Q18 it was up 27% y-o-y to RUB 18.0 bn (2Q17: RUB 14.2 bn),
driven by
the growth in both the loan book and securities portfolio. Gross interest
yield decreased to 36.1% in 2Q18, while the interest yield on the Group's
securities portfolio dropped to 6.8%. Gross interest yield for 1H18
amounted to 36.9% (1H17: 39.3%).
In 2Q18, interest expense grew by 19% y-o-y to RUB 3.6 bn (2Q17: RUB 3.0
bn), while the aggregate cost of borrowing dropped to 6.3% as a result of
declining retail deposit rates and gradual growth of the weight of the
individual and SME current accounts in the liabilities structure.
In 2Q18, net margin grew by 28% y-o-y to RUB 14.2 bn (2Q17: RUB 11.1 bn).
Net interest margin (NIM) stood at 24.0% in 2Q18 (2Q17: 26.0%).
The Group continues to focus on controlling its cost of risk and
efficiently managing the quality of its portfolio. Cost of risk was at
6.6% (2Q17: 6.0%), while the risk-adjusted net interest margin decreased
to 18.8% in 2Q18 (2Q17: 21.3%) both post-IFRS9.
The Group continues to develop its new business lines, all of which are
demonstrating robust growth, with the SME business performing
exceptionally well and starting to contribute to the bottom line.
In 1H18, the Group's fee and commission income increased by an impressive
99% y-o-y to RUB 12.1 bn (1H17: RUB 6.1 bn).
At the end of 1H18, the Group had nearly 3.5 mn current account customers
with a total balance of over RUB 92 bn across all their accounts. The
Group's SME business has grown its customer base to over 340k SME
customers in 1H18, with RUB 28.8 bn in total on their current accounts.
The newly relaunched Tinkoff Investments continues to demonstrate robust
growth and hit 100K brokerage accounts on 14 May 2018. Following the
launch of Tinkoff Investment's own brokerage platform in 2018, the Group
expects the business line to break even in late 2018.
The Group continues to develop its mortgage platform in partnership with
11 banks, through which it originated over RUB 10.5 bn of mortgage loans
in 1H18. The mortgage business has seen its market share steadily increase
quarter-on-quarter.
In 2Q18, operating expenses increased by 46% year-on-year due to continued
growth of acquisition expenses. The cost-to-income ratio was up slightly
at 42.8% in 2Q18 (2Q17: 41.9%).
In 2Q18, the Group reported a net income of RUB 6.0 bn (2Q17: RUB 4.2 bn).
Net income for 1H18 amounted to RUB 11.7 bn (1H17: RUB 7.6 bn). As a
result, ROE for 1H18 reached 69.3%.
In 1H18 the Group continued to maintain a healthy balance sheet with total
assets growing by 10.8% to RUB 287.2 bn (1 Jan 18: RUB 259.3 bn).
In 1H18 the Group's gross loan book grew by 13.7% to RUB 189.5 bn (1 Jan
18: RUB 166.7 bn), while the net loan book grew by 17.3% to RUB 152.2 bn
(1 Jan 18: RUB 129.7 bn).
In 1H18, the Group's NPL ratio came to 12.1%, 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 16% YTD to RUB 207.7 bn (1 Jan
18: RUB 179.0 bn).
In 1H18, the Group's total equity increased by 8.1% to RUB 34.7 bn (1 Jan
18: RUB 32.1 bn). As of 1 July 2018, the Group's statutory N1.0 ratio
stood up at 16.4% and its N1.2 ratio had increased to 16.0%. N1.1 stood at
a comfortable 11.4%.
***
The Tinkoff management team will host an investor and analyst conference
call at 13:00 UK time (15:00 Moscow time, 08:00 U.S. Eastern Daylight
Time), on Wednesday, 29 August 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
8957798
Russian Federation +7 495 646 9190
+44 (0)330 336 9411
United Kingdom
+1 646-828-8143
United States of America
A live webcast of the presentation will be available
at 2 https://webcasts.eqs.com/tcsgroup20180829
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, MyPocket, Card 2 Card instant money transfers).
As at 1 August 2018, the bank was the second largest player in the Russian
credit card market, with a market share of 11.7%. The 1H18 IFRS net income
of TCS Group Holding PLC amounted to RUB 11.7 bn, ROE grew to 69.3%.
Tinkoff Bank regularly wins the Best Digital Bank Award by the Global
Finance magazine. In 2015-2016 and in 2018, Tinkoff Bank was named the
Best Consumer Digital Bank in Russia. In 2018, Global Finance also
recognised Tinkoff Bank in additional nominations: Best Bill Payment &
Presentment, Best Information Security and Fraud Management, Best in
Mobile Banking, and Best Mobile Banking App.
In 2017, The Banker magazine named Tinkoff the Bank of the Year in Russia.
In 2016, Tinkoff Bank was named CEE's Best Digital Bank by Euromoney. In
2016, Tinkoff Bank was the largest independent global direct bank by
customer base, according to Frost & Sullivan. Banki.ru, Russia's largest
financial news portal, named Tinkoff the Bank of the Year 2016.
In 2014-2016, Markswebb Rank & Report ranked Tinkoff Bank's mobile app the
best in Russia. In June 2018, Tinkoff Bank topped Markswebb's Internet
Banking Rank 2018. Tinkoff Bank's mobile banking app was recognised as the
best in Russia 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.
══════════════════════════════════════════════════════════════════════════
ISIN: US87238U2033
Category Code: IR
TIDM: TCS
LEI Code: 549300XQRN9MR54V1W18
Sequence No.: 5932
EQS News ID: 718437
End of Announcement EQS News Service
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3. mailto:d.ermolina@tinkoff.ru
4. mailto:ir@tcsbank.ru
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