TCS Group Holding PLC reports RUB 7.2 bn net income for 1Q19, announces 2nd Interim Dividend
Limassol, Cyprus - 14 May 2019. TCS Group Holding PLC (TCS LI) (the "Group"), Russia's leading provider of online financial and lifestyle services via its Tinkoff.ru ecosystem, today announces its interim condensed consolidated IFRS results for the first three months ended 31 March 2019.
KEY FINANCIAL HIGHLIGHTS
1Q'2019
- Net margin up 29% y-o-y to RUB 18.1 bn (1Q'18: RUB 14.0 bn)
- Profit before tax up 25% y-o-y to RUB 9.3 bn (1Q'18: RUB 7.4 bn)
- Net income up 25% y-o-y to RUB 7.2 bn (1Q'18: RUB 5.7 bn)
- ROE amounted to 64.4% (1Q'18: 68.5%)
- Net interest margin at 21.5% (1Q'18: 25.5%)
- Cost of risk at 7.5% (1Q'18: 7.5%)
- Total assets increased by 8.9% to RUB 408.9 bn (31 Dec'18: RUB 375.5 bn)
- Gross loans and advances to customers up 19.2% to RUB 279.7 bn (31 Dec'18: RUB 234.7 bn)
- Net loans and advances to customers up 21.5% to RUB 241.1 bn (31 Dec'18: RUB 198.5 bn)
- Share of non-performing loans (NPLs) decreased to 8.1% (31 Dec'18: 9.4%)
- Customer accounts increased by 0.2% to RUB 281.4 bn (31 Dec'18: RUB 280.9 bn)
- Total equity increased by 11.2% to RUB 46.9 bn (31 Dec'18: RUB 42.3 bn)
GUIDANCE FOR 2019
Following strong underlying growth year to date in 2019, the Group updates the net loan portfolio growth guidance and reaffirms its previously communicated guidance for the remaining metrics for the full year 2019.
- The Group expects net loan portfolio growth to be over 40%
- The Group expects net income of over RUB 35 bn
- The Group expects cost of risk to be around 6-7%
- The Group expects cost of borrowing to be within 6-7%
KEY HIGHLIGHTS FOR 1Q'2019
- In 1Q'19 over 1.1 mn new credit accounts were opened, underpinning net loan growth of 72.5% year-on-year
- As of 1Q'19, the Group has over 5.1 mn current accounts customers
- In February, Tinkoff Bank was in the first wave of Russian banks to launch the
Faster Payments System for its customers. The CBR introduced FSP to allow
nationwide instant P2P payments using mobile phone numbers
- In February, Tinkoff Bank won four accolades at the Bank of the Year
awards by Banki.ru, Russia's leading banking news portal. Tinkoff topped the
2018 list in the categories Investment Company of the Year, Online Mortgage
Application, The People's Ranking of banks and The People's Ranking for mobile
operators (Tinkoff Mobile)
- In February, Tinkoff Investments launched a web-based platform for securities trading. Following a pilot phase, the platform will be rolled out to a wider base of advanced investors among Tinkoff customers
- In February, Moody's upgraded Tinkoff Bank's rating to Ba3 with a stable outlook from B1. And in April, the Russian National Analytical Credit Rating Agency - ACRA - reaffirmed Tinkoff Bank's rating at A(RU) with a stable outlook
- The Group announced a further expansion and deepening of its long-term management incentive and retention plan (MLTIP), and added 10 new participants.
KEY HIGHLIGHTS POST 1Q'2019
- Tinkoff Bank's credit card market share increased to 12.4% as of 1 April 2019, further solidifying its position as Russia's second largest credit card issuer.
- Tinkoff Bank announced it would return as a general partner of the St. Petersburg International Economic Forum (SPIEF), to take place in St. Petersburg, Russia on 6-8 June, 2019
- In April, Tinkoff Group announced it had built the most powerful supercomputer, the Kolmogorov cluster, among financial institutions to develop a platform for machine learning and artificial intelligence for the Group
- In April, Tinkoff launched a co-branded card with Yandex, offering up to 10% of cashback for one of 15 services available through Yandex.Plus
- As of 1 May 2019, Tinkoff mobile banking app has over 13.3 mn installs, MAU stands at 4 mn, DAU stands at 1.2 mn
Second 2019 Interim Dividend Announcement
In line with the Group's new dividend policy, the Group's Board of Directors has
approved a second 2019 interim gross dividend of USD 0.17 per share/per GDR (with each GDR representing one class A share) with a total amount allocated for dividend payment for 1Q of around USD 31 mn.
Subject to London Stock Exchange regulations, indicatively the dividend will be payable on 28 May 2019 to those shareholders on the register as at the record date of 24 May 2019. The ex-dividend date will be 23 May 2019.
According to the terms of the GDR deposit agreement, holders of the Group's GDRs should receive their dividends approximately 3-5 business days after the payment date.
Oliver Hughes, CEO of Tinkoff Bank, commented:
"I am pleased to report that we've had another excellent quarter, starting 2019 on a great footing. We reported a net profit of RUB 7.2 billion in the first quarter of the year.
These strong results were driven by both credit and fee and commission business lines, as we continued to expand our financial and lifestyle ecosystem.
Net loans grew and their structure became more diversified, as we developed new credit products, including secured, car and SME loans and further increased our credit card portfolio.
We saw robust growth of fee and commission income, driven by the development of non-credit business lines, such as SME services, retail investment products and debit cards. Transactional and servicing business-lines now account for 32% of the Group's total revenue.
Tinkoff Black, our main debit product, attracted customers with promo rates, adding 600,000 new customers in the first quarter. Strong inflows of customers are allowing us to keep funding costs at record lows.
Our award-winning mobile app is continuing to help attract and retain customers, who now have greater access to an increasing number of non-financial lifestyle services that feature restaurants, cinema tickets, concert tickets and other events. More and more people are starting to view Tinkoff as a guide and partner for their lifestyle needs, rather than just a banking app.
Tinkoff Investments continues to show rapid growth in transaction volumes and transaction fees. Almost half of new retail investment accounts at MOEX were opened through Tinkoff Investments in 1Q'19, which provides individuals an easy access to a wide spectrum of global securities. As we acquire more professional investors, who by nature generate high volumes of trades, our F&C revenue growth momentum will build up as well.
In line with our AI-first strategy, we have built our very own supercomputer to provide a better platform for machine learning and AI. This supercomputer, the so-called Kolmogorov cluster, significantly reduces time required for ML tasks and enables us to test hypotheses, improve services and bring new products to the market more quickly and efficiently.
AI puts the data we have accumulated since the company's inception 13 years ago to work quickly, creating targeted personalized content for customers and making our operational processes less costly and more efficient.''
FINANCIAL AND OPERATING REVIEW
|
RUB bn
|
1Q19
|
1Q18
|
Change
|
|
Credit cards issued ('000 pcs)
|
1,016
|
520
|
x2
|
|
Credit card
transactions
|
120.9
|
78.6
|
+54%
|
|
Net margin
|
18.1
|
14.0
|
+29%
|
|
Net margin after credit loss allowance
|
13.3
|
10.8
|
+23%
|
|
Profit before tax
|
9.3
|
7.4
|
+25%
|
|
Net income
|
7.2
|
5.7
|
+26%
|
|
RUB bn
|
31 March
2019
|
1 Jan 2019
|
Change
|
|
Total Assets
|
408.9
|
375.5
|
+8.9%
|
|
Net loans and advances to customers
|
241.1
|
198.5
|
+21.5%
|
|
Cash and treasury portfolio
|
126.4
|
135.1
|
-6.5%
|
|
Total Liabilities
|
361.7
|
333.2
|
+8.5%
|
|
Customer accounts
|
281.4
|
280.9
|
+0.2%
|
|
Total Equity
|
46.9
|
42.3
|
+11.2%
|
|
Tier 1 capital ratio
|
14.0%
|
14.9%
|
-0.9 p.p.
|
|
Total capital ratio
|
14.0%
|
14.9%
|
-0.9 p.p.
|
|
CBR N1.0 (capital adequacy ratio)
|
13.0%
|
13.9%
|
-0.9 p.p.
|
The Group delivered another strong set of results for 1Q'19 enabled by the unstoppable momentum of its core credit business and ever-increasing revenue contributions from non-credit business lines.
As a result, the Group reported a net income for 1Q'19 of RUB 7.2 bn, which translated into ROE of 64.4%.
In 1Q'19, the Group issued 1mn new credit cards. The total volume of credit card transactions in 1Q'19 increased by 54% y-o-y to RUB 120.9 bn (1Q'18: RUB 78.6 bn).
In 1Q'19, gross interest income grew by 29% y-o-y to RUB 22.8 bn (1Q'18: RUB 17.7 bn). This strong trend was underpinned by the growth of our customer base and the expansion of our product range, and despite a gradual decline in the loan book's gross yield interest yield, which slid to 32.6% in 1Q'19 due to increase of the non-credit card share of portfolio. Meanwhile, the interest yield on the Group's securities portfolio rose to 7.1% (1Q'18: 6.8%).
In 1Q'19, interest expense grew by 26% y-o-y to RUB 4.3 bn (1Q'18: RUB 3.4 bn). The Group's cost of borrowing fell to a record low of 5.3% in 1Q'19 as a result of a continued decrease in deposit rates and strong inflows of customer accounts.
In 1Q'19, net margin grew by 29% y-o-y to RUB 18.1 bn (1Q'18: RUB 14.0 bn). The net interest margin (NIM) stood at 21.5% in 1Q'19 (1Q'18: 25.5%).
The Group continues to focus on controlling its cost of risk and efficiently managing the quality of its portfolio. Cost of risk stood at 7.5% (1Q'18: 7.5%), while the risk-adjusted net interest margin decreased to 15.8% in 1Q'19 (1Q'18: 19.6%).
The Group continues to develop and expand its new non-credit business lines, all of which are delivering exceptional performance. Tinkoff's transactional and servicing business lines are together becoming an important revenue driver, already contributing 32% of total revenue. In 1Q'19, the Group's fee and commission income increased by 34% y-o-y to RUB 7.8 bn (1Q'18: RUB 5.8 bn) during the reporting period.
At the end of 1Q'19, the Group had nearly 5.1 mn current account customers with a total balance of over RUB 134 bn across all their accounts. The Group's SME business has grown its customer base to over 454k SME customers in 1Q'19, with RUB 37.6 bn in total on their current accounts.
The Group continues to develop its mortgage platform in partnership with 11 banks, through which it originated over RUB 4 bn of mortgage loans in 1Q'19.
Tinkoff Investments continues to demonstrate robust growth and surpassed 450k brokerage accounts in 1Q'19.
In 1Q'19 operating expenses increased by 33% year-on-year to RUB 11.1 bn (1Q'18: RUB 8.3 bn) due to annual salary indexation in 4Q'18. The cost-to-income ratio was stable at 42.8% in 1Q'19 (1Q'18: 42.6%).
The Group reported net income of RUB 7.2 bn (1Q'18: RUB 5.7 bn). As a result, ROE for the reporting period reached 64.4% (1Q'18: 68.5%).
In 1Q'19, the Group continued to maintain a healthy balance sheet with total assets remaining firm at RUB 408.9 bn (1 Jan'19: RUB 375.5 bn).
In 1Q'19, the Group's gross loan book grew by 19.2% to RUB 279.7 bn (1 Jan'19: RUB 234.7 bn), while the net loan book grew by 21.5% to RUB 241.1 bn (1 Jan'19: RUB 198.5 bn).
In 1Q'19, the Group's NPL ratio came to 8.1%, as a result of adoption of IFRS 9 methodology. The Group's loan loss provision coverage stood at 1.7x non-performing loans.
The Group's customer accounts increased by 0.3% YTD to RUB 281.8 bn (1 Jan'19: RUB 280.9 bn).
In 1Q'19, the Group's total equity increased by 11.2% to RUB 46.9 bn (1 Jan'19: RUB 42.3 bn). As of 1 April 2019, the Group's statutory N1.0 ratio was up at 13.0% and its N1.2 ratio had decreased to 12.7%. N1.1 stood at a comfortable 9.5 %.
***
The Tinkoff management team will host an investor and analyst conference call at 12:00 UK time (14:00 Moscow time, 7:00 U.S. Eastern Standard Time), on Tuesday, 14 May 2019.
The press release, presentation and financial statements will be available on the Tinkoff website at https://www.tinkoff.ru/eng/investor-relations/results-and-reports/
To participate in the conference call, please use the following access details:
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Conference ID
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6062151
|
|
Russian Federation
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+7 495 646 9190
|
|
United Kingdom
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+44 (0)330 336 9411
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United States of America
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+1 646-828-8193
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A live webcast of the presentation will be available at: https://webcasts.eqs.com/tcsgroup20190514
Please register approximately 10 minutes prior to the start of the call.
|
For enquiries:
|
|
Tinkoff Bank
Darya Ermolina
Head of PR
+ 7 495 648-10-00 (ext. 2009)
d.ermolina@tinkoff.ru
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Tinkoff Bank
Larisa Chernysheva
IR Department
+ 7 495 648-10-00 (ext. 2312)
ir@tinkoff.ru
|
About the 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, and Tinkoff Software DC, a network of development hubs in major Russian cities. The Group also has Tinkoff.ru, an evolving ecosystem that 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, the country's first and only direct bank and the core of the Tinkoff.ru ecosystem.
Tinkoff Bank is the second largest player in the Russian credit card market, with a share of 12.4% as of 1 April 2019. The 1Q'19 IFRS net income of TCS Group Holding PLC amounted to RUB 7.2 bn, ROE stood at 64.4%.
With no branches, the Group serves all its customers remotely via online channels and a cloud-based call centre staffed by over 10,000 employees, which makes 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, in 2018, 2016 and 2015, the Best Consumer Digital Bank in Russia, and in 2017 and 2013 The Banker recognised it 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.
