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REG-TCS Group Holding PLC TCS Group Holding PLC reports record net income in 4Q and FY 2019, announces 1st 2020 interim dividend

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   TCS Group Holding PLC (TCS)
   TCS Group Holding PLC reports record net income in 4Q and FY 2019,
   announces 1st 2020 interim dividend

   11-March-2020 / 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 income in 4Q and FY 2019,
   announces 1st 2020 interim dividend

    

     • Net margin up 43% year-on-year to RUB 86.8 bn in FY'19 (FY'18: RUB
       60.5 bn)
     • Net income of RUB 11.0 bn in 4Q'19 and RUB 36.1 bn in FY'19
     • Over 4.3 mn new credit accounts added in FY'19
     • Net loan portfolio growth of 66% in FY'19

    

   LIMASSOL, CYPRUS - 11 March 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 IFRS financial results fourth quarter and
   twelve months ended 31 December 2019.

    

   Oliver Hughes, CEO, commented:

    

   "I'm happy to report that 2019 was another year of record-high profit,
   underpinned by the strength of both our credit and non-credit business
   lines. We saw 4.3 million new credit accounts opened in 2019 with net
   loans rising 66%, even as we retained our conservative approach to
   lending. Current accounts grew by 57% to 7.1 million, underpinned by the
   popularity of our lifestyle and financial ecosystem.

    

   Tinkoff Investments made new strides, bringing more than 800 thousand new
   retail investors to Moscow Exchange in 2019, more than any other
   brokerage, as customers responded well to the straightforward, seamless
   approach to investing our tech solutions allow.

    

   As the popularity of our investment offering continued to grow, we added
   more options for traders to interact with one another within the app.
   We've also decided to launch Russia's first commission-free
   exchange-traded fund (ETF) through Tinkoff Capital, the management company
   within our ecosystem.

    

   We continued to innovate on the tech front, taking the next step in our
   ecosystem approach by launching Russia's first SuperApp. Now, customers
   can take care of nearly all of their lifestyle and financial needs,
   ranging from booking medical appointments to reserving restaurant tables
   and making bank transfers with just a few easy clicks without leaving the
   Tinkoff app.

    

   While continuing to innovate, we remain one of the most profitable banks
   in the world, with ROE at 55.9% for 2019 and continue to focus on our
   bottom line as we expand our lifestyle and financial offering.

    

   This year we're also undertaking one of our greatest marketing efforts,
   signing a title partnership agreement with the Russian Football Premier
   League. We hope this will help us further build customer loyalty, attract
   new customers and provide expanded possibilities for purchasing football
   tickets within the Tinkoff SuperApp."

    

    

    

    

    

   FINANCIAL AND OPERATING REVIEW

    

   RUB bn                      4Q'19 4Q'18 Change     FY'19 FY'18 Change
   Credit accounts acquired    1.1   1.0   +10%       4.3   2.7   +59%
   (mn pcs)
   Net margin                  24.0  16.1  +49%       86.8  60.0  +45%
                                     13.8
   Net margin after provisions 16.3        +18%       59.7  48.2  +24%
                                      
   Profit before tax           13.4  10.5  +28%       45.5  35.2  +29%
   Net income                  11.0  8.1   +36%       36.1  27.1  +33%
   Return on equity            49.0% 81.2% -32.2 p.p. 55.9% 74.7% -18.8 p.p.
   Net interest margin         20.5% 21.9% -1.4 p.p.  21.6% 23.5% -1.9 p.p.
   Cost of risk                8.1%  4.2%  +3.9 p.p.  8.5%  6.0%    +2.5 p.p.

    

   RUB bn                              31 Dec 2019 31 Dec 2018 Change
   Total Assets                        579.5       375.5       +54%
   Net loans and advances to customers 329.2       198.5       +66%
   Share of NPLs                       9.1%        9.4%        -0.3 p.p.
   Cash and treasury portfolio         193.0       135.1       +43%
   Total Liabilities                   483.4       333.2       +45%
   Customer accounts                   411.6       280.9       +47%
   Total Equity                        96.1        42.3        +127%
   Tier 1 capital ratio                19.4%       14.9%       +4.5p.p.
   Total capital ratio                 19.4%       14.9%       +4.5p.p.
   CBR N1.0 (capital adequacy ratio)   12.1%       13.9%       -1.8p.p.

    

    

   In 4Q'19, the Group's total revenue grew by 45% y-o-y to RUB 46.7 bn
   (4Q'18: RUB 32.3 bn). Gross interest income increased by 44% y-o-y to RUB
   30.2 bn (4Q'18: RUB 21.0 bn), thanks to the continued growth of our
   customer base and the expansion of our product range.
    

   Gross interest yield declined to 32.1% in FY'19 due to decrease in
   benchmark rates and regulatory caps. The interest yield on the Group's
   securities portfolio decreased to 6.4% (4Q'18: 7.4%).

    

   In 4Q'19, interest expense grew by 32% y-o-y to RUB 5.9 bn (4Q'18: RUB 4.5
   bn), driven by significant growth of customer base and marketing campaign
   with higher cash-backs and interest rates. At the same time, our cost of
   borrowing decreased to 5.6% in 4Q'19 following a gradual decrease in
   deposit rates.

    

   In 4Q'19, net margin grew by 46% y-o-y to RUB 23.6 bn (4Q'18: RUB 16.1
   bn), primarily as a result of solid net loan growth.

    

   Cost of risk rose to 8.1% in 4Q'19 (4Q'18: 4.2%), reflecting high loan
   growth rates, front-loaded provisioning under IFRS9, and continued
   fine-tuning of our credit risk and approval models. Meanwhile, our
   risk-adjusted net interest margin decreased to 13.5% in 4Q'19 (4Q'18:
   18.7%) due to the continued product diversification of our loan portfolio.

    

   Our non-credit business lines continue to deliver robust performance
   thanks to customer base growth, and now represent over 36% of the Group's
   revenue. Fee and commission income rose by 37% y-o-y to RUB 10.0 bn in
   4Q'19 (4Q'18: RUB 7.3 bn), accounting for 21% of total revenue, while
   Tinkoff Insurance more than doubled its revenue y-o-y to RUB 4.6 bn
   (4Q'18: RUB 2.1 bn).

    

   As at the end of FY'19, the Group had:

     • over 7.1 mn current account customers with a total balance of RUB
       211.7 bn across all accounts
     • over 535k SME customers, with RUB 60.2 bn in total on their current
       accounts
     • 1,125k brokerage accounts opened at MOEX through Tinkoff Investments.

    

   In 4Q'19 operating expenses increased by 14% y-o-y to RUB 11.7 bn (4Q'18:
   RUB 10.2 bn) mainly due to accelerated growth of customer acquisition
   costs. The cost-to-income ratio decreased to 33.6% in 4Q'19 (4Q'18:
   43.0%).

    

   The Group reported record quarterly net income of RUB 11.0 bn in 4Q'19
   (4Q'18: RUB 8.1 bn). Net income for FY'19 amounted to RUB 36.1 bn (FY'18
   RUB 27.1 bn). As a result, ROE for FY'19 stood at 55.9% (FY'18: 74.7%).

    

   In FY'19, the Group continued to maintain a healthy balance sheet with
   total assets growing by 54% since the start of 2019 to RUB 579.5 bn (31
   Dec'18: RUB 375.5 bn).

    

   The Group's gross loan book grew by 63.6 % in 2019 to RUB 383.9 bn (31
   Dec'18: RUB 234.7 bn), while the net loan book grew by 66% to RUB 329 bn
   (31 Dec'18: RUB 198.5 bn).

    

   The Group's NPL ratio rose to 9.1%, primarily due to denominator effect as
   loan book growth slowed in 4Q19, while our loan loss provision coverage
   remained stable at 1.6x non-performing loans.

    

   The Group's customer accounts increased by 47% to RUB 412 bn (31 Dec'18:
   RUB 280.9 bn).

    

   Tinkoff's total equity increased by 127% in 2019 to RUB 96 bn (31 Dec'18:
   RUB 42.3 bn). As of 1 January 2020, the Group's statutory N1.0 ratio had
   decreased to 12.1%, and its N1.2 ratio had decreased to 11.7%. N1.1 stood
   at a comfortable 9.5%.
    

    

    

    

    

    

    

   GUIDANCE FOR 2020

    

   Following strong underlying growth in 2019, the Group is pleased to
   announce the following performance guidance for 2020:

    

     • We expect net loan growth of at least 20%
     • We expect cost of risk to be in the 9% area
     • We expect cost of borrowing to be in the 6% area
     • We expect net income of at least RUB 42 bn

    

   FIRST 2020 INTERIM DIVIDEND ANNOUNCEMENT

    

   The Board of Directors of TCS Group on 10 March 2020 decided to resume
   dividend payments and approved a first interim gross cash dividend for
   2020 of USD 0.21 per share/GDR (with each GDR representing one share),
   with a total dividend payment of around USD 42 mn. Subject to London Stock
   Exchange regulations, indicatively the dividends will be payable around 30
   March 2020, to those shareholders on the Group's register as at the record
   date of 27 March 2020.

    

   The ex-dividend date will be 26 March 2019. According to the terms of the
   GDR deposit agreement, holders of the Group's GDRs will receive their
   dividends within 5 business days of the payment date.

    

    

   4Q'2019 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS

    

   Customer base and engagement growth has led to increased market share

     • The Group had over 7.1 mn current accounts customers as at the
       beginning of 2020
     • As of 1 March 2020, Tinkoff app had over 20 mn installs, MAU stood at
       5.3 mn, DAU stood at 1.9 mn
     • Tinkoff Bank's credit card market share increased to 13.4% as of 1
       February 2020, further solidifying its position as Russia's second
       largest credit card issuer
     • In February, Tinkoff announced plans to invest in a new venture
       project to set up a fintech company providing a range of services to
       retail customers in Europe (excluding CIS). The startup will offer
       non-credit financial products. The project is due to launch in 2020,
       with Tinkoff as its key seed investor. Tinkoff will have a controlling
       interest in the new venture. Tinkoff's initial commitment is up to
       Euro 25 million and will be contributed in tranches as the venture
       develops

    

   Superior and innovative offering combined with targeted marketing
   activities secure Tinkoff's place as a leading fintech brand

     • In February, Tinkoff signed a title partnership agreement with the
       Russian Football Premier League (RFPL) covering the 2019/2020, 2020/21
       and 2021/22 football seasons. 
     • In February, Tinkoff announced plans to invest in a new venture
       project to set up a fintech company providing non-credit financial
       products to retail customers in Europe (excluding CIS)
     • In December, Tinkoff launched boosted its digital leadership in the
       European fintech space by being the first European financial services
       company to launch a super app, a versatile application designed to
       meet almost any financial, leisure or lifestyle need its users may
       have
     • In December, Tinkoff rolled out Russia's first fully digital ATM.
       The brand-new model, dubbed «Kesha», features a 32-inch screen and
       does away with a physical keyboard and receipt printing. 
     • In December, we launched Russia's first commission-free
       exchange-traded fund (ETF) through Tinkoff Capital, the management
       company within our ecosystem.
     • In November, Tinkoff launched a payments app for car refueling at BP
       stations in Russia
     • In November, Tinkoff launched a series of debit cards featuring
       characters from the popular television show 'Rick and Morty'
     • Tinkoff continued its educational outreach to retail investors: In
       November, Tinkoff Journal launched a free course for beginner
       investors. Earlier in October, Tinkoff launched a YouTube show for
       investors called 'Money Doesn't Sleep'
     • In October, Tinkoff held a hackathon in partnership with McKinsey with
       a prize pool of RUB 1 mn
     • In October, Tinkoff launched CloudTips, an app for paying tips
     • In October, Tinkoff and Kassir signed an agreement with Crocus Group,
       one of the leading entertainment players in Russia, for Kassir to
       become the exclusive seller of tickets to events held at Crocus venues

    

   Tinkoff's award-winning investor relations team steps up outreach with the
   investment community

     • In February 2020, Tinkoff announced plans to hold Strategy day events
       in London, New York and San Francisco in April 2020
     • In November, Institutional Investor and Moscow Exchange recognized
       Tinkoff as the Best IR Team among Russian mid-cap companies based on
       the results of the annual global Extel survey of portfolio managers
       and sell-side research analysts
     • In October, Fitch upgraded Tinkoff Bank's credit rating to BB with a
       Stable Outlook. Earlier in the year, Moody's upgraded Tinkoff Bank's
       rating to Ba3 with a Stable Outlook while the Russian National
       Analytical Credit Rating Agency (ACRA) reaffirmed Tinkoff Bank's
       rating at A(RU) with a stable outlook
     • In October, Tinkoff GDRs were admitted to trading on the Moscow
       Exchange, making the shares more accessible to Russian investors and
       supporting liquidity and market capitalization growth
     • In October, Global Finance named Tinkoff the World's Best Corporate
       Digital Bank in Information Security, as well as the Best Consumer
       Digital Bank in Central and Eastern Europe

    

   Focus on acquiring best talent to strengthen the Group

     • In February 2020, Stanislav Bliznyuk (formerly COO) was promoted to
       SVP, Head of Business Development
     • In January 2020, Pavel Khristolyubov joined Tinkoff Group as the
       company's new COO
     • On 1 November, Dmitry Panchenko was appointed to lead the Tinkoff's
       retail investment business
     • On 6 November, Neri Tollardo joined Tinkoff IR team to focus on
       international IR and partnership projects

    

   CONFERENCE CALL INFORMATION

   The Tinkoff management team will host an investor and analyst conference
   call at 14:00 UK time (17:00 Moscow time, 10:00 U.S. Eastern Standard
   Time), on Wednesday, 11 March 2020.

   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:

                            8962507
   Conference ID
                             
    
                             
                            +7 499 609 1260
   Russian Federation
                             
                            +44 330 027 1446
   United Kingdom
                             
                            +1 334 777 6978
   United States of America
                             

   A live webcast of the presentation will be available at:
    2 https://webcasts.eqs.com/tcsgroup20200311

    

    

   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 financial
   services. It includes Tinkoff Bank, mobile virtual network operator
   Tinkoff Mobile, Tinkoff Insurance, 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
   around 10 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 13.4%. The FY 2019 IFRS net income of TCS Group
   Holding PLC amounted to RUB 36.1 bn. The ROE was 55.9%.

    

   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 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: FR
   TIDM:          TCS
   LEI Code:      549300XQRN9MR54V1W18
   Sequence No.:  51672
   EQS News ID:   994343


    
   End of Announcement EQS News Service

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    5 fncls.ssp?fn=show_t_gif&application_id=994343&application_name=news&site_id=refinitiv2

References

   Visible links
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   3. mailto:pr@tinkoff.ru
   4. mailto:ir@tcsbank.ru


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