DJ TCS Group Holding PLC reports strong performance in 3Q'20; announces 4th 2020 interim dividend and updated guidance
TCS Group Holding PLC (TCS)
TCS Group Holding PLC reports strong performance in 3Q'20; announces 4th
2020 interim dividend and updated guidance
12-Nov-2020 / 10:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
TCS Group Holding PLC reports strong performance in 3Q'20; announces 4th
2020 interim dividend and updated guidance
- Net income rose by 30% year-on-year to RUB 12.6 bn in 3Q'20
- Exceeded 12 million customers and became Russia's third largest bank by
number of active customers
- Robust year-on-year growth in fee & commission income; non-credit
revenues reached a record 41% of total
- FY2020 guidance revised, with net income expected to be at least RUB 42
bn
LIMASSOL, CYPRUS - 12 November 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 interim condensed consolidated IFRS results
for the three months and nine months ended 30 September 2020.
Oliver Hughes, CEO of Tinkoff Group, commented:
"The third quarter of this year was a strong one for us, despite the
continuing uncertainty caused by the global COVID-19 pandemic. Net income
rose 30% year-on-year to RUB 12.6 billion in 3Q'20, underpinned by
unrelenting customer acquisition and particularly strong performance by our
fee businesses, which accounted for a record 41% of revenues.
"In the third quarter, our ROE increased versus the previous period and
stood at a robust 45.0%, as we retained our focus on profitability.
"Our resilient, highly scalable business model and adaptability to our
customers' changing needs meant that we continued expanding by leaps and
bounds. We reached an important milestone in the third quarter when we
welcomed our 12 millionth customer, keeping us on track to reach our goal of
20 million customers by 2023. In addition, according to recent research
published by Deloitte [1], Tinkoff has become Russia's most preferred
non-state bank.
"As we unlock the benefits of our ecosystem strategy, our engagement with
each customer continues to grow. We are now in sight of reaching 1.4
products per customer from 1.3 at the beginning of the year, despite our
fast growth pace. More than 30% of our customers now have 2 or more products
with us, up from 24% in January. Each cohort of new customers takes less and
less time to use more of our products and services.
"Tinkoff Investments continues its impressive growth. Assets under custody
have grown sixfold year on year, as the platform's number of customer grew
to over 2.4 million, solidifying Tinkoff's status as the largest retail
brokerage on Moscow Exchange by number of active clients. Meanwhile, Tinkoff
Business is continuing to show robust growth, with SME client current
account balances up over 50% year on year.
"On the back of these solid results and in light of the optimism we have for
the fourth quarter, we are recommending a dividend of USD 0.25 per GDR/share
and we are upgrading our guidance for FY2020. We expect net income to reach
at least RUB 42 billion, which was the original target provided at the start
of the year, before the pandemic."
FINANCIAL AND OPERATING REVIEW
RUB bn 3 Q'20 3Q'19 Change 9M'20 9M'19 Change
Credit accounts 1.2 1.0 +13.5% 2.8 3.2 -11.2%
acquired (mn pcs)
Net margin 24.4 23.4 +4.4% 76.2 63.9 +19.2%
Net margin after 17.8 15.5 +14.2% 41.2 44.5 -7.4%
provisions
Profit before tax 15.9 12.5 +27.8% 40.7 32.2 +26.5%
Net income 12.6 9.7 +29.8% 31.9 25.1 +26.9%
Return on equity 45.0% 56.5% -11.5 p.p. 40.8% 59.0% -18.2 p.p.
Net interest 16.3% 22.5% -6.2 p.p. 18.3% 22.6% -4.3 p.p.
margin
Cost of risk 6.5% 9.1% -2.6 p.p. 11.6% 8.6% +3.0 p.p.
RUB bn 30 Sept 2020 31 Dec 2019 Change
Total assets 725.6 579.5 +25.2%
Net loans and advances to 346.3 329.2 +5.2%
customers
Share of NPLs 11.1% 9.1% +2.0 p.p.
Cash and treasury portfolio 311.6 193.0 +61.5%
Total liabilities 609.1 483.4 +26.0%
Customer accounts 513.4 411.6 +24.7%
Total equity 116.5 96.1 +21.2%
Tier 1 capital ratio 19.9% 19.1% +0.8pp
Total capital ratio 19.9% 19.1% +0.8pp
CBR N1.0 (capital adequacy 13.9% 12.1% +1.8pp
ratio)
In 3Q'20, the Group's total revenue grew by 12% year-on-year to RUB 48.8 bn
(3Q'19: RUB 43.5 bn). Gross interest income increased by 3% year-on-year to
RUB 30.2 bn (3Q'19: RUB 29.5 bn), as our loan portfolio returned to growth
across the diversified product range. At the same time, interest income
declined compared to Q1 and Q2'20, mostly driven by our resumption in loan
growth in lower-yielding loan products, including car loans and home equity.
Gross interest yield decreased to 29.8% in 3Q'20 (3Q'19: 33.6%), mainly as a
result of the declining interest rate environment and changes in the loan
mix. The interest yield on the Group's securities portfolio decreased to
5.3% (3Q'19: 6.5%), primarily due to declining rouble interest rates.
In 3Q'20, despite the significant increase in our funding base year-on-year
as we continued to grow our customer base and account balances, interest
expense decreased by 5% year-on-year to RUB 5.3 bn (3Q'19: RUB 5.6 bn). This
was driven by a continued decline in our cost of borrowing from 5.8% in
3Q'19 to 3.9% in 3Q'20, following a gradual decrease in deposit rates and a
growing share of current accounts in the funding mix.
In 3Q'20, net margin grew by 4% year-on-year to RUB 24.4 bn (3Q'19: RUB 23.4
bn), primarily as a result of our growing loan portfolio and declining
funding costs.
Cost of risk fell to 6.5% 3Q'20, a material decline from 9.1% in 3Q'19 and
12.5% in 2Q'20. This was driven by the front-loading of loan provisions in
the first and second quarters of 2020 in accordance with IFRS9, a swift
normalisation in the economic environment in 3Q'20, and a significant
reduction in the number of loans subject to agreed restrucuring in response
to the pandemic. Our risk-adjusted net interest margin rose compared to
2Q'20, remaining at a comfortable level of 11.8% in 3Q'20 (3Q'19: 14.9%).
Our non-credit business lines continue to deliver robust performance thanks
to growth of the customer base and continued monetisation efforts, and now
represents 41% of the Group's revenue. In 3Q'20, fee and commission revenue
rose by 39% year-on-year to RUB 13.0 bn (3Q'19: RUB 9.4 bn) and grew q-o-q
as well, as consumer transaction activity improved in the post-lockdown
period. Tinkoff Investments once again performed exceptionally well, with
record inflows, record transaction volumes and record fee and commission
income. Tinkoff Investments' revenue grew 8x year-on-year to RUB 2.2 bn
(3Q'19: RUB 0.3 bn), and now accounts for 16% of total fee and commission
revenue. As economic activity normalised in 3Q'20, so did Tinkoff Black and
Tinkoff Business transaction volumes, leading to solid sequential
improvement in their revenues.
At the end of 3Q'20, the Group had:
? over 10.7 mn current account customers with a total balance of RUB 302.2
bn across all accounts
? over 595k SME customers, with a total current account balance of RUB
69.9 bn
? Over 2.4 mn customers with Tinkoff Investments brokerage accounts
In 3Q'20, operating expenses increased 25% year-on-year to RUB 14.3 bn
(3Q'19: RUB 11.4 bn) driven by the resumed growth of our loan portfolio, and
continued investing in new growing business lines.
The Group reported robust quarterly net income of RUB 12.6 bn in 3Q'20
(3Q'19: RUB 9.7 bn), supported by continued customer acquisition and
monetisation. As a result, ROE for 3Q'20 stood at 45.0% (3Q'19: 56.5%).
In 3Q'20, the Group continued to maintain a healthy balance sheet, with
total assets growing by 25% since the end of 2019 to RUB 725.6 bn (31
Dec'19: RUB 579.5 bn).
The Group's gross loan book grew by 9% since the end of 2019 to RUB 416.7 bn
(31 Dec'19: RUB 383.9 bn), while the net loan book increased by 5% to RUB
346.3 bn (31 Dec'19: RUB 329.2 bn).
The Group's NPL ratio rose to 11.1% (31 Dec'19: 9.1%), while our loan loss
provision coverage stood at 1.5x non-performing loans.
The Group's customer accounts increased by 25% since the end of 2019 to RUB
513.4 bn (31 Dec'19: RUB 411.6 bn).
Tinkoff's total equity rose 21% as at the end of 9M'20 to RUB 116.5 bn (31
Dec'19: RUB 96.1 bn) despite the payment of three 2020 interim dividends
(total of $0.55/GDR), on the back of solid net income. As of 1 October 2020,
the Group's statutory N1.0 ratio amounted to 13.9%, its N1.2 ratio stood at
13.4%, and the N1.1 ratio stood at 10.8% - a meaningful improvfement
relative to 2Q'20 due to the Central Bank of Russia's changes to the risk
weights assigned to certain unsecured loans.
UPDATED GUIDANCE FOR FY2020
With the gradual recovery in economic activity supporting strong performance
during the reporting period and into the fourth quarter, Tinkoff is updating
its FY2020 guidance:
? We expect our net loan portfolio growth to be in the 10% area
? We expect cost of risk to be 10-11% (previously in the 12% area)
? We expect cost of borrowing to be in the 4% area (previously in the 5%
area)
? We expect net income to be at least RUB 42 bn (previously RUB 30-35bn)
Fourth 2020 Interim Dividend Announcement
In line with the Group's dividend policy, the Group's Board of Directors has
approved a fourth 2020 interim gross cash dividend of USD 0.25 per share/per
GDR (with each GDR representing one class A share) with a total amount
allocated for dividend payment in relation to 3Q of around USD 49.8 mn.
Subject to London Stock Exchange regulations, indicatively the dividend will
be payable on 30 November 2020 to those shareholders on the register as at
the record date of 27 November 2020. The ex-dividend date will be 25
November 2020. 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.
3Q'2020 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS
Customer base and engagement growth has led to increased market share
? The Group had over 10.7 mn current accounts customers as at 1 October
2020
? As of 1 October 2020, the Tinkoff app had over 25 mn installs, MAU stood
at 7.6 mn, DAU stood at 2.4 mn
? Tinkoff Bank's credit card market share increased to 13.5% as of 1
October 2020, further solidifying its position as Russia's second largest
credit card issuer
? In October, Tinkoff became the leader among Russian banks in terms of
the number of merchants connected to the Faster Payments System. Every
second merchants with access to the upgraded QR code payment feature under
the Faster Payments System are customers of the Tinkoff Payment internet
acquiring service, for a total of 27,000 businesses
? Tinkoff rose to become Russia's third largest bank and leading private
bank by the number of active retail customers according to three surveys
conducted by Deloitte, Frost & Sullivan / NEO Centre, and Ipsos
Superior and innovative product offering combined with targeted marketing
activities secure Tinkoff's place as a leading fintech brand
? Tinkoff Business started opening accounts for foreign companies
operating in Russia and businesses launching branches abroad
? Oleg, the world's first voice assistant for financial and lifestyle
services, added new skills, helping customers to set their spending
limits, make recurring payments on time and pay their credit card bills
? Tinkoff Capital launched Russia's first exchange-traded fund (ETF)
tracking the Nasdaq(R)-100 Technology Sector Index (NDXT)
? In October, Tinkoff launched a financial messenger built into its super
app for users to chat while making financial transactions
? In November, Tinkoff launched Tinkoff Pro - a subscription offering that
gives Tinkoff customers a number of benefits within the Tinkoff
ecosystems, including higher interest rates on deposits, discounts on
Tinkoff ecosystem and partner products, higher and more tailored cashback
offers, and much more
The market and industry associations recognised Tinkoff's strong performance
? Tinkoff has been recognised for its consumer banking, online treasury
services and open banking APIs, leading in five categories at the 2020
World's Best Digital Banks awards by Global Finance magazine
? Tinkoff has become the leader among Russian banks in terms of customer
loyalty with an NPS of 26% and the share of loyal customers reaching 50%,
according to a banking market survey conducted by Romir
? Tinkoff Investments won first place in the Retail Brokerage Company
category of the Stock Market Elite 2019 contest held by the National
Association of Stock Market Participants (NAUFOR)
? Tinkoff Business took silver in Europe's SME Bank of the Year category
at the Global SME Finance Awards 2020, in recognition of its outstanding
products and services to small and medium enterprise (SME) clients.
? Tinkoff has joined the Top 50 most valuable Russian brands as ranked by
Brand Finance, an independent UK-based consultancy, achieving
above-average scores in customer familiarity, as well as performing
strongly in innovation and quality of services
? Tinkoff led in both Daily Banking and Digital Office categories of the
Internet Banking Rank 2020 rankings compiled by the analytical agency
Markswebb
? In October, Tinkoff's super app won at the global Digital Communication
Awards (DCA) 2020 for Disruptive Communications
? In October, Tinkoff won top spot in the Daily Banking category and took
the second position in the Best Premium Service Programme category at the
Frank Premium Banking Award 2020 rankings
CONFERENCE CALL INFORMATION
The Tinkoff management team will host an investor and analyst conference
call at 1:00 pm UK time (4:00 pm Moscow time, 08:00 am U.S. Eastern Standard
Time), on Thursday, 12 November 2020.
The press release, presentation and financial statements will be available
on the Tinkoff website at
https://www.tinkoffgroup.com/financials/quarterly-earnings/ [2]
To participate in the conference call, please use the following access
details:
Conference ID 2202491
Russian Federation +7 495 213 1767
Toll-free 8 800 500 9283
United Kingdom +44 (0) 330 336 9125
Toll-free 0800 358 6377
United States of America +1 929-477-0324
Toll-free 888-479-1004
A live webcast of the presentation will be available at:
https://www.webcast-eqs.com/tcsgroup20201112 [3]
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 [4]
About Tinkoff Group
TCS Group Holding PLC is an innovative provider of online retail and SME
financial services. It includes Tinkoff Bank, its mobile virtual network
operator Tinkoff Mobile, Tinkoff Insurance, its asset 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
over 12 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 13.5%. The 3Q 2020 IFRS net income of TCS Group Holding PLC
amounted to RUB 12.6 bn. The ROE was 45%.
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 2020, 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: QRT
TIDM: TCS
LEI Code: 549300XQRN9MR54V1W18
Sequence No.: 87703
EQS News ID: 1147548
End of Announcement EQS News Service
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4: mailto:ir@tcsbank.ru
(END) Dow Jones Newswires
November 12, 2020 02:00 ET (07:00 GMT)
