TCS Group Holding PLC reports IFRS results for Q4 and FY 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

TCS Group Holding PLC reports IFRS results for Q4 and FY 2021

• Total revenues grew 40% to RUB 273.9bn in FY'21 (FY'20: RUB 195.8bn)
• Net profit rose 43% to record RUB 63.4bn in FY'21 (FY'20: RUB 44.2bn)
• Non-credit business lines amounted to 46% of revenues and 26% of profit before tax
• Total customers reached 20.8mn in FY'21 (FY'20: 13.3mn)
• ROE rose to 42.5% in FY'21 (FY'20: 40.6%)

LIMASSOL, CYPRUS - 4 March 2022. TCS Group Holding PLC (LI: TCS, MOEX: TCSG) ("TCS", "We", the "Group", the "Company"), a leading provider of financial and lifestyle services via its digital ecosystem, today announces its consolidated IFRS results for the three months and twelve months ended 31 December 2021.

Oliver Hughes and Pavel Fedorov, Co-CEOs of TCS Group, commented:

"While we are reporting strong results for 2021, our immediate focus now lies in making sure all our systems work as usual. We have all hands on deck and are responding accordingly. Tinkoff is a diversified and profitable business with a resilient and scalable business model. Our strong performance in 2021 will help us to navigate the year 2022, as we work hard to serve our customers, who have always been at the heart of what we do at Tinkoff.

We have ample ruble and FX liquidity and a solid capital position. We are monitoring the operational performance of our business on a minute-by-minute basis and have all key systems in place to ensure the security, protection, and flow of our customers' funds and assets."

FINANCIAL AND OPERATING REVIEW

In 4Q'21, the Group's total revenue grew by 51% year-on-year to RUB 80.4 bn (4Q'20: RUB 53.1 bn). Gross interest income increased by 40% year-on-year to RUB 45.8 bn (4Q'20: RUB 32.8 bn), driven primarily by loan portfolio growth.

Gross yield decreased to 27.8% in 4Q'21 (4Q'20: 30.4%), mainly as a result of changes in the loan mix. The interest yield on the Group's securities portfolio increased to 5.9% (4Q'20: 5.0%), in connection with rising rouble interest rates.

In 4Q'21, interest expense increased by 83% year-on-year to RUB 9.5 bn (4Q'20: RUB 5.2 bn) as a result of the significant expansion of our customer base. The Group's cost of borrowing increased from 3.3% in 4Q'20 to 4.0% in 4Q'21, following increase of market rates.

In 4Q'21 net margin grew by 31% year-on-year to RUB 35.4 bn (4Q'20: RUB 27.1 bn), primarily as a result of our growing loan portfolio.

Cost of risk fell to 4.9% 4Q'21 from 5.7% in 4Q'20. Our risk-adjusted net interest margin decreased from 13.1% in 3Q'21 to 11.0% on 4Q'21 (4Q'20: 12.9%).

Our non-credit business lines continue to deliver an increasing share of our revenue and bottom line thanks to growth of the customer base, our widened range of product offerings and continued monetisation efforts. In 4Q'21 non-credit revenue represented 46% of the Group's revenue and 26% of the Group's profit before tax. 

At the end of 4Q'21, the Group had:

• over 14.6 mn total current account customers with a total balance of RUB 545 bn across all accounts
• over 671k total SME customers, with a total current account balance of RUB 144 bn
• over 3.0 mn total Tinkoff Investments customers

In 4Q'21, operating expenses increased 72% year-on-year to RUB 33.0 bn (4Q'20: RUB 19.2 bn) driven by resumed growth of our loan portfolio, and investments into our growing new business lines.

The Group reported robust quarterly net profit of RUB 16.6 bn in 4Q'21 (4Q'20: RUB 12.3 bn), supported by continued customer acquisition and monetisation. As a result, ROE for 4Q'21 stood at 39.2% (4Q'20: 40.5%).

In 4Q'21, the Group continued to maintain a healthy balance sheet, with total assets growing by 53.3% since the end of 2020 to RUB 1,318 bn (31 Dec'20: RUB 859 bn).

The Group's gross loan book grew by 52.9% since the end of 2020 to RUB 684 bn (31 Dec'20: RUB 447 bn), while the net loan book increased by 61.0% to RUB 606 bn (31 Dec'20: RUB 377 bn).

The Group's NPL ratio fell to 8.6% (31 Dec'20: 10.3%), while our credit loss allowance coverage stood at 1.3x non-performing loans.

The Group's customer accounts increased by 50.9% since the end of 2020 to RUB 946 bn (31 Dec'20: RUB 627 bn).

The Group's total equity over 2021 rose by 38.6% to RUB 176 bn at the end of FY'21 (31 Dec'20: RUB 127 bn) on the back of solid net profit. As of 1 January 2022 the Group's statutory N1.0 ratio amounted to 15.3%, its N1.2 ratio stood at 14.0%, and the N1.1 ratio stood at 9.5%.

Possible bond buybacks

The Group may, at any time and from time to time, purchase its outstanding debt in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

4Q'2021 OPERATING HIGHLIGHTS

Customer base and engagement

• The Group had over 14.6 mntotal Tinkoff Black customers asof1 January 2022. 
• Asof1 January 2022, Group MAU stood at15.4 mn, Group DAU stood at5.8 mn. 
• Tinkoff super app was named the fastest growing financial app in Russia by the analytics platform App Annie in 2021. The researchers estimated that the number of downloads of the Tinkoff mobile app in Russia across iOS and Google Play grew by 41% in total in 2021. 

Superior and innovative product offering

• In November, Tinkoff acquired a controlling stake (51%) in Just Look, the developer of Jump. Finance, a fintech service that automates interactions with freelancers, including payments. It adds value to Tinkoff Business' set of industry solutions for businesses and entrepreneurs.  
• In November, Tinkoff Capital Management Company launched Tinkoff Eurobonds EUR, a new exchange-traded mutual fund investing in sovereign and corporate Eurobonds denominated in euros, as well as new exchange-traded funds (ETFs) for investments in artificial intelligence, fintech and Asian markets. 
• In December, Tinkoff carried out a major upgrade of its mobile super app, adding account sharing options, innovative tech features and COVID-19 related services. 
• In December, Tinkoff launched Investment Academy, a country-wide educational initiative aimed at strengthening financial literacy among the population.  
• In December, Tinkoff Investments became the first broker in Russia to offer securities trading on weekends.  
• Tinkoff Cashier launched a new solution allowing customers to quickly get an installment plan in just a few clicks while shopping at online stores. This was made possible thanks to Tinkoff Cashier's integration of Tinkoff Credit Broker installment service into the payment form.

Market and industry associations recognised Tinkoff'sstrong performance 

• In November, Tinkoff Business took home awards in two categories - Best Digital Bank for Small Business Lending and Best Customer Journey in Small Business Lending - at the Frank Small Business Loans Award 2021 organized by Frank RG.  
• In December, Tinkoff was named Bank of the Year in Russia at the Bank of the Year Awards 2021, organized by The Banker, a leading international finance publication which is part of the Financial Times Group. The Banker recognised Tinkoff for its strong financial performance in 2020. 

 ESG developments 

• In November, Tinkoff became the first Russian financial institution to join the Science Based Targets initiative (SBTi), a global body enabling businesses to set ambitious science-based emissions reduction targets in line with the latest climate science. It is focused on accelerating companies and financial institutions across the world to halve emissions before 2030 and achieve net-zero emissions before 2050. 
• In November, Tinkoff analysed and published its greenhouse emissions gas inventory on the website for the entire value chain for 2019 and 2020 baseline years, making us, to our knowledge, one of the first fintechs in the world to do so. Total carbon footprint of the Group is significantly lower than traditional financial institutions and IT companies generally show.

LSE Russia related update; Rule 1510

On 3 March 2022, the London Stock Exchange suspended the admission to trading of a number of instruments, including TCSGH GDRs, in accordance with Rule 1510 of the Rules of the London Stock Exchange, with immediate effect, to maintain orderly markets. The Exchange will continue to keep this situation under review.

CONFERENCE CALL INFORMATION

TCS management team will host an investor and analyst conference call at 2:00 pm UK time (5:00 pm Moscow time, 09:00 am U.S. Eastern Standard Time), on Friday, 4 March 2022.

The press release, presentation and financial statements will be available on the Tinkoff website at https://www.tinkoff.ru/eng/ir/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/tcsgroup20220310

Please register approximately 10 minutes prior to the start of the call.

About TCS Group

TCS Group is an innovative provider of digital financial and lifestyle services to more than 20 million customers via its award-winning apps and web interface. Branchless since its inception in 2006, the Tinkoff ecosystem currently offers a full range of services, including digital banking, brokerage, acquiring and other merchant solutions, insurance, corporate banking for businesses of all sizes and much more. 

Tinkoff Bank, 100% owned by TCS Group, one of the most profitable digital banks globally, is a central part of this ecosystem and the first financial institution in Europe to launch its own super app. Aided by artificial intelligence (AI) and machine learning, it enables customers to assess and plan personal spending, invest savings, earn loyalty program bonuses, book trips, buy movie tickets, make restaurant reservations, and perform other tasks all in one place. 

Global Finance named Tinkoff Bank the world's Best Consumer Digital Bank in 2020 and 2018. It was also named the Best European Retail Bank of the Year by Retail Banker International in 2020. 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). 

UK MAR

This announcement is released by TCS Group Holding plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal Act) 2018 ("UK MAR"),  and is disclosed in accordance with the Company's obligations under Article 17 of UK MAR.

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.