TCS Group Holding PLC (TCS)
TCS Group Holding PLC reports record quarterly profit for the period (net profit) in 1Q'21
LIMASSOL, CYPRUS - 11 May 2021. 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 consolidated IFRS results for the three months ended 31 March 2021.
Oliver Hughes, CEO of Tinkoff Group, commented: "We continued to demonstrate profitable growth in the first quarter of 2021 with net profit reaching a new quarterly record of RUB 14.2 bn, as we charged full steam ahead, acquiring new customers and launching cool new features across our product lines.
We continue to strengthen Tinkoff Investments by diversifying our investment offering. I am pleased to welcome Anton Malkov on board as the new Head of the Capital Markets Transactions Management Team at Tinkoff Investments to lead our new DCM and ECM effort with a focus on new-economy companies.
In April we announced Tinkoff Group's acquisition of a majority stake in Beskontakt LLC, the developer of the Koshelek app. A digital wallet and Russia's only mobile app for aggregating bank cards, loyalty cards and coupons, the Koshelek app has a user base that exceeds 20 million and works with the country's largest retailers. This is a huge apportunity for Tinkoff as we step-up our presence in the loyalty space.
On the corporate governance front, we continue to make important improvements. I am pleased to have taken on the role of Executive Director of the newly expanded TCS Group Board of Directors to lead this work while continuing to oversee strategic initiatives. In addition, just a week ago we announced that we are signicantly expanding and strengthening the TCS Group Board with the appointments of Ashley Dunster, Masha Gordon, Margarita Hadjitofi, Nick Huber and Nitin Saigal as independent, non-executive Directors from today. In parallel with these appointments, the Company is launching two new committees, a Risk and Emerging Risk ('Sustainability') Committee and a Strategy Committee. With these and other initiatives, we are well on our way to achieving our goal of creating the most comprehensive, engaging and innovative financial and lifestyle ecosystem in the world."
Stanislav Bliznyuk, Chairman of the Tinkoff Bank Management Board, added: "I'm pleased to report the continuing robust performance of both our credit and non-credit business lines, with our non-credit business lines accounting for 43% of revenue in the first quarter. As digital adoption accelerates across industries, we are rolling out new products and services that best harness this trend. In April Tinkoff launched Russia's first digital BNPL (buy-now-pay-later) service for individuals called Dolyame.ru. It combines the advantages of online acquiring and instalment plans for customers making payments when shopping online. The Tinkoff Black business - our current account product and the backbone of the Tinkoff ecosystem, reached new heights with 8.9 mn total customers. Tinkoff Business continued to grow its customer base in Q1, as the increase in the number of mid-sized businesses gathered pace. Tinkoff Business also expanded customers' access to lending, while retaining its traditionally conservative approach to risk. We remain Russia's second-largest provider of online acquiring services and Tinkoff Acquiring continues to grow its revenues steadily. Tinkoff Checkout, which enables companies to take care of their online and offline payment needs in one place is just one of the new latest services addressed at our business customers Tinkoff Investments remained Russia's leading brokerage on Moscow Exchange with 1.8 mn customers and RUB 415 bn in assets under custody." FINANCIAL AND OPERATING REVIEW
In 1Q'21, the Group's total revenue grew by 21% year-on-year to RUB 56.8 bn (1Q'20: RUB 46.9 bn). Gross interest income increased by 11% year-on-year to RUB 35.3 bn (1Q'20: RUB 31.7 bn), driven primarily by loan portfolio growth.
Gross interest yield decreased to 25.6% in 1Q'21 (1Q'20: 29.8%), 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 5.1% (1Q'20: 6.0%), in connection with declining rouble interest rates.
In 1Q'21, despite the significant increase over the last 12 months in our customer base and account balances, interest expense decreased by 1.6% year-on-year to RUB 5.5 bn (1Q'20: RUB 5.6 bn). This was driven by a continued decline in our cost of borrowing from 4.8% in 1Q'20 to 3.2% in 1Q'21, due to a gradual decrease in deposit rates (consistent with market rate decreases) and a growing share of current accounts in the funding mix.
In 1Q'21 net margin grew by 14% year-on-year to a record RUB 29.2 bn (1Q'20: RUB 25.5 bn), primarily as a result of our growing loan portfolio.
Cost of risk fell to 4.5% in 1Q'21 from 15.9% in 1Q'20. Our risk-adjusted net interest margin rose from 7.9% in 1Q'20 to 13.3% in 1Q'21.
Our non-credit business lines continue to deliver an increasing share of our revenue thanks to growth of the customer base, our widened range of product offerings and continued monetisation efforts. In 1Q'21 non-credit revenue represented 43% of the Group's revenue and 24% of the Group's profit before tax.
At the end of 1Q'21, the Group had:
In 1Q'21, operating expenses increased 74% year-on-year to RUB 20.3 bn (1Q'20: RUB 11.6 bn) driven by resumed growth of our loan portfolio, and investments into our fast growing new business lines.
The Group reported robust quarterly net profit of RUB 14.2 bn in 1Q'21 (1Q'20: RUB 9.0 bn), supported by continued robust customer acquisition and monetisation. As a result, ROE for 1Q'21 stood at 43.7% (1Q'20: 37.5%).
In 1Q'21, the Group continued to maintain a healthy balance sheet, with total assets growing by 1.7% since the end of 2020 to RUB 873.5 bn (31 Dec'20: RUB 859.3 bn).
The Group's gross loan book grew by 12.4% since the end of 2020 to RUB 502.9 bn (31 Dec'20: RUB 447.4 bn), while the net loan book increased by 14.5% to RUB 431.0 bn (31 Dec'20: RUB 376.5 bn).
The Group's NPL ratio fell to 9.7% (31 Dec'20: 10.3%), while our credit loss allowance coverage stood at 1.47x non-performing loans.
The Group's customer accounts increased by 0.7% since the end of 2020 to RUB 631.3 bn (31 Dec'20: RUB 626.8 bn).
Tinkoff's total equity rose by 4.1% to RUB 132.3 bn at the end of 1Q'21 (31 Dec'20: RUB 127.0 bn). As of 1 April 2021 the Group's statutory N1.0 ratio stood at 12.6%, its N1.2 ratio stood at 12.1%, and the N1.1 ratio stood at 10.0%.
GUIDANCE FOR FY'21
The Group reiterates the following previously communicated guidance for full year 2021:
1Q'2021 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS
Customer base and engagement growth has led to increased market share
Superior and innovative product offering combined with targeted marketing activities secure Tinkoff's place as a leading fintech brand
Commitment to further improving our Investor Relations (IR) disclosure and ESG practices
Tinkoff has revamped its segmental financial reporting to provide further insight into its growth and profit drivers. Tinkoff now presents its P&L across 7 different segments: Consumer Finance, Retail Debit Cards (Tinkoff Black), SME Services (Tinkoff Business), InvestTech (Tinkoff Investments), Acquiring and Payments, InsurTech and MVNO Services. In April 2021 Tinkoff Group became a signatory to the Global Principles for Responsible Banking, as developed by the United Nations Environment Programme Finance Initiative, the largest UN partnership with the finance industry or the worldwide community of nearly 400 banks, insurers and investors
Corporate governance enhancements and new management appointments
In May Tinkoff announced that five new independent, non-executive directors (INEDs) would be joining the Tinkoff Group Board of Directors. Ashley Dunster, Masha Gordon, Margarita Hadjitofi, Nick Huber and Nitin Saigal have been appointed effective 11 May 2021. In addition, the Company will soon launc two new committees, a Risk and Emerging Risk ('Sustainability') Committee and a Strategy Committee. The Company envisages that the initial members of the Risk and Emerging Risk ('Sustainability') Committee will be Masha Gordon, Nick Huber and Margarita Hadjitofi (Chair), and of the Strategy Committee - Ashley Dunster, Masha Gordon, Oliver Hughes, Nick Huber, and chaired by Nitin Saigal. CONFERENCE CALL INFORMATION Tinkoff management team will host an investor and analyst conference call at 2:00 pm UK time (4:00 pm Moscow time, 09:00 am U.S. Eastern Daylight Time), on Tuesday, 11 May 2021. The press release, presentation and financial statements will be available on the Tinkoff website at https://tinkoffgroup.com/financials/quarterly-earnings/ To participate in the conference call, please use the following access details:
A live webcast of the presentation will be available at: https://www.webcast-eqs.com/tcsgroup20210511
Please register approximately 10 minutes prior to the start of the call.
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 13 mn customers and forms the core of the Tinkoff ecosystem. Tinkoff is the 3d largest retail bank in Russia in terms of active client-base.
Tinkoff Bank is the second largest player in the Russian credit card market, with a share of 14.3%. The 1Q'21 IFRS net profit of TCS Group Holding PLC amounted to RUB 14.2 bn. The ROE was 43.7%.
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.
Global Finance named Tinkoff Bank the world's Best Consumer Digital Bank in 2020 and 2018, and the Best Consumer Digital Bank in Russia in 2020, 2019, 2018, 2016 and 2015. Tinkoff was also named the Best European Retail Bank of the Year by Retail Banker International in 2020. In 2021, the Banker recognised Tinkoff Bank as Russia's Best-Performing Bank. 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: | QRF |
TIDM: | TCS |
LEI Code: | 549300XQRN9MR54V1W18 |
Sequence No.: | 104157 |
EQS News ID: | 1194880 |
End of Announcement | EQS News Service |