TCS Group Holding PLC (TCS)
TCS Group Holding PLC reports record net income in 4Q and FY
2019, announces 1st 2020 interim dividend
17-March-2020 / 15:51 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Correction
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 1.1 1.0 +10% 4.3 2.7 +59%
acquired (mn pcs)
Net margin 24.0 16.1 +49% 86.8 60.0 +45%
Net margin after 16.3 13.8 +18% 59.7 48.2 +24%
provisions
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 20.5% 21.9% -1.4 p.p. 21.6% 23.5% -1.9 p.p.
margin
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 Change
2018
Total Assets 579.5 375.5 +54%
Net loans and advances to 329.2 198.5 +66%
customers
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 12.1% 13.9% -1.8p.p.
ratio)
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 2020. 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
https://www.tinkoff.ru/eng/ir/financials/quarterly-earnings/ [1]
To participate in the conference call, please use the following access
details:
Conference ID 8962507
Russian Federation +7 499 609 1260
United Kingdom +44 330 027 1446
United States of America +1 334 777 6978
A live webcast of the presentation will be available at:
https://webcasts.eqs.com/tcsgroup20200311 [2]
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
pr@tinkoff.ru ir@tinkoff.ru [3]
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: ACS
TIDM: TCS
LEI Code: 549300XQRN9MR54V1W18
Sequence No.: 52816
EQS News ID: 999357
End of Announcement EQS News Service
1: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=7621881e2aa226803a4aac95ac2386f3&application_id=999357&site_id=vwd&application_name=news
2: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=8d8b962d0851ca9b02e17e90fb700b18&application_id=999357&site_id=vwd&application_name=news
3: mailto:ir@tcsbank.ru
(END) Dow Jones Newswires
March 17, 2020 08:51 ET (12:51 GMT)
