IG Group Holdings PLC

Earnings Release • May 24, 2023

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author: Tom Kiehn
date: 2023-05-24 15:24:00+00:00

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

TCS Group Holding PLC reports IFRS results for 1Q 2023

Total revenues grew 7% to RUB 99.9 bn in 1Q’23 compared to RUB 93.7 in 1Q’22

Non-credit business lines amounted to 51% of revenues

Net profit was RUB 16.2 bn in 1Q’23 with ROE of 30.5% (1 Q’22: RUB 1.4 bn)

LIMASSOL, CYPRUS — 24 May 2023. TCS Group Holding PLC (MOEX: TCSG) (“TCS”, 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 ended 31 March 2023.

FINANCIAL AND OPERATING REVIEW

*Revised 2022 figures due to adoption of IFRS 17 standard in relation to recognition of insurance assets and liabilities retrospectively from January 1, 2022.

In 1Q’23, the Group’s total revenue grew by 7% year-on-year to RUB 99.9 bn (1Q’22: RUB 93.7 bn). Gross interest income increased by 22% year-on-year to RUB 60.2 bn (1Q’22: RUB 49.5 bn).

Gross yield increased to 25.0% in 1Q’23 (1Q’22: 23.6%), mainly as a result of changes in the loan mix. The interest yield on the Group’s securities portfolio decreased to 5.6% (1Q’22: 6.2%), in connection with declining interest rates in the market.

In 1Q’23, interest expense grew by 3% year-on-year to RUB 12.1 bn (1Q’22: RUB 11.8 bn). The Group’s cost of borrowing decreased from 4.5% in 1Q’22 to 3.8% in 1Q’23, following the decline of market rates.

In 1Q’23, net interest income grew by 28% year-on-year to RUB 46.9 bn (1Q’22: RUB 36.7 bn).

Fee and commission income decreased by 23% to RUB 26.7 bn (1Q’22: RUB 34.5 bn). The decline is largely attributed to the high base effect of 1Q’22, when the Group registered elevated flows of FX transactions driven by volatile macro environment. Excluding the effect of FX transaction fee income, net fees and commission income generated growth of 36% year-on-year.

Cost of risk fell to 7.0% 1Q’23 from 11.7% in 1Q’22. Our risk-adjusted net interest margin increased to 10.2% (1Q’22: 5.6%).

In 1Q’23, non-credit revenue represented 51% of the Group’s revenue and 58% of the Group’s profit before tax.

In 1Q’23, total operating expenses increased by 35% year-on-year to RUB 40.5 bn (1Q’22: RUB 30.1 bn), driven by expansion of our customer base and our investments in our IT platforms and talent.

The Group reported quarterly net profit of RUB 16.2 bn in 1Q’23, which was a 58% quarter-on-quarter increase and a significant recovery year-on-year. ROE for 1Q’23 was 30.5%, further improving from 20.6% in 4Q’22 (1Q’22: 3.1%).

In 1Q’23, the Group continued to maintain a healthy balance sheet, with total assets growing 28% year-on-year to RUB 1,676 bn (31 Mar’22: RUB 1,307 bn).

The Group’s net loan book increased by 11% year-on-year to RUB 683 bn (31 Mar’22: RUB 616 bn), while the gross loan book grew by 15% to RUB 813 bn (31 Mar’22: RUB 710 bn).

The Group’s NPL ratio reached 11.4%, widening year-on-year (31 Mar’22: 9.1%) and improving quarter-on-quarter (31 Dec’22: 12.1%). Credit loss allowance coverage was at 1.4x non-performing loans.

Total equity increased by 19% to RUB 219 bn (31 Mar’22: RUB 185 bn) on the back of net profit capitalization.

Sanctions

On 19 May 2023, one of the Group’s subsidiaries, Tinkoff Bank, became subject to an asset freeze sanctions in the UK having been designated in the Consolidated List of Financial Sanctions Targets in the UK pursuant to the Sanctions and Anti-Money Laundering Act 2018.

On 25 February 2023, Tinkoff Bank became subject to an asset freeze sanctions in the EU under the Council Implementing Regulation (EU) No 2023/429, implementing Council Regulation (EU) No 269/2014 (the "EC Regulation 269").

The Company and its controlled subsidiary undertakings (other than the Bank and any controlled subsidiary undertakings of the Bank) are not subject to any sanctions in the UK or EU. The Management of the Group is continually updating the impact on the business.

The financial statements will be available on the TCS Group Holding Plc website at https://tcsgh.com.cy.

For enquiries:

IR@tcsgh.com.cy

About TCS Group

TCS Group is an innovative provider of digital financial and lifestyle services. Branchless since its inception in 2006, TCS developed a full range of in-house proprietary technology solutions and services, including digital banking, brokerage, acquiring and other merchant solutions, insurance, SME banking and much more.

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. 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 wish to caution you that these statements are only predictions and that actual events or results may differ materially. The Group 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, including, among others, general economic conditions, the competitive environment, risks associated with Russia, rapid technological and market change in the industries the Group operates in, as well as many other risks specifically related to the Group, respective operations.

RUB bn	1Q’23	1Q’22*	∆	4Q’22*	∆
Interest income	60.2	49.5	22%	53.2	13%
Interest expense	-12.1	-11.8	3%	-11.3	7%
Net interest income	46.9	36.7	28%	40.8	15%
Net interest income after provisions	34.6	15.8	х2.2	24.3	43%
Fee and commission income	26.7	34.5	-23%	27.0	-1%
Fee and commission expense	-10.3	-13.9	-26%	-9.2	11%
Net fee and commission Income	16.4	20.6	-20%	17.8	-8%
Total operating expenses	-40.5	-30.1	35%	-40.7	-0.3%
Profit before tax	20.9	2.0	х10.5	14.2	47%
Net profit	16.2	1.4	х11.5	10.3	58%

RATIOS	1Q’23	1Q’22	∆	4Q’22	∆
Return on equity	30.5%	3.1%	27.4 p.p.	20.6%	9 p.p.
Net interest margin	13.6%	13.0%	0.6 p.p.	13.4%	0.2 p.p.
Cost of risk	7.0%	11.7%	-4.7 p.p.	9.3%	-2.3 p.p.

RUB bn	31 Mar 2023	31 Mar 2022	∆
Total assets	1 676	1 307	+28%
Net loans and advances to customers	683	616	+11%
Cash and treasury portfolio	515	338	+52%
Total liabilities	1 456	1 122	+30%
Customer accounts	1 275	922	+38%
Total equity	219	184	+19%

RATIOS	31 Mar 2023	31 Mar 2022	∆
Share of NPLs	11.4%	9.1%	+2.3 p.p.
Tier 1 capital ratio	18.0%	21.9%	-3.9 p.p.
Total capital ratio	18.0%	21.9%	-3.9 p.p.