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TCS - TCS Holding News Story

$26.35 -0.1  -0.6%

Last Trade - 18/09/20

Large Cap
Market Cap £4.00bn
Enterprise Value £4.08bn
Revenue £1.62bn
Position in Universe 182nd / 1807

UPDATE 2-Russian banking group TCS warns full-year profit to fall despite solid second quarter

Thu 6th August, 2020 11:36am
* TCS says Q2 profit up 24.7% y/y, above forecast
    * New 2020 profit guidance below pre-coronavirus outlook
    * Says scrapping tax deal with Cyprus may increase tax

 (Adds TCS' position on tax agreement with Cyprus, paragraphs
    By Andrey Ostroukh
    MOSCOW, Aug 6 (Reuters) - Russian bank TCS Group Holding
 TCSq.L   TCSGDR.MM  reported on Thursday a 25% rise in
second-quarter net profit, but said it expects full-year
earnings to fall as it reintroduced guidance after scrapping it
last quarter due to the COVID-19 pandemic. 
    The Russian banking sector has taken a hit from the
coronavirus and related lockdowns, which are expected to have
pushed the economy into recession and pressured prices for oil,
its key export, while weakening the rouble.
    TCS, the parent company of online bank Tinkoff, withdrew
full-year guidance last quarter amid uncertainty related to the
    Reintroducing its targets on Thursday, it said it now
expects net profit to come in at 30 billion-35 billion roubles
($410 million-$478 million). 
    Previously it had expected profit to increase to 42 billion
roubles, another record, from 36.1 billion in 2019.
    Looking further ahead, TCS warned it may see a higher tax
burden in 2021 if Russia and Cyprus terminate an agreement aimed
at avoiding double taxation after Moscow said talks to modify
the deal failed.*:nL8N2F52OW
    TCS Group, set up in 2006, is incorporated and domiciled in
Cyprus although its core activities are all undertaken in Russia
where Tinkoff has over 10 million customers, making it one of
the world's biggest online banks.
     "While management currently estimates that the tax
positions and interpretations that it has taken can probably be
sustained, there is a possible risk that outflow of resources
will be required should such tax positions and interpretations
be challenged by the tax authorities."    
    TCS said its second-quarter net profit rose by 24.7% to 10.2
billion roubles, beating the market consensus reported by
Interfax news agency of 8.2 billion roubles.
    Return on equity (ROE), an indicator of how much profit the
company generated from money invested by its shareholders, fell
to 40% from 64.7% a year earlier.
    The group's non-performing loans' ratio also rose to 10.8%,
from 9.1% as of the end of 2019 "due to the consequences of the
COVID-19 outbreak and the denominator effect as loan book growth
slowed in the second quarter," TCS said.
    Its loan loss provision coverage was 1.7 times higher than
its non-performing loans.
    TCS said it expected its net loan portfolio to return to
steady growth in the second half of the year.
    "We see 2020 guidance a bit conservative on net income," BCS
brokerage said. TCS's global depository receipts on the Moscow
Exchange were up 0.2% on the day.
    The bank said its board had approved a third interim gross
dividend payment of $0.20 per share, allocating $39.9 million to
second-quarter dividends.

($1 = 73.2300 roubles)

 (Reporting by Andrey Ostroukh; Additional reporting by Maria
Kiselyova and Tatiana Voronova; Editing by Jason Neely/Jan
Harvey/Susan Fenton)
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