IG Group Holdings PLC

Earnings Release • Nov 22, 2023

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author: Tom Kiehn
date: 2023-11-20 11:45:00+00:00

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

TCS Group Holding PLC reports IFRS results for 3Q and nine months of 2023

LIMASSOL, CYPRUS — 22 November 2023. TCS Group Holding PLC (MOEX: TCSG) (“TCS”, “We”, the "Group", the “Company”), a leading provider of financial and lifestyle services via its digital ecosystem, today announces its interim condensed consolidated IFRS results for the three months and nine months ended 30 September 2023.

KEY PERFORMANCE METRICS

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 3Q’23, the Group’s total revenue grew by 46% year-on-year to RUB 128 bn (3Q’22: RUB 87.6 bn). Gross interest income increased by 54% year-on-year to RUB 78.4 bn (3Q’22: RUB 50.9 bn), driven by the growth of loan portfolio and expansion of our customer base.

Gross yield increased to 25.6% in 3Q’23 (3Q’22: 24.1%), mainly as a result of changes in the loan mix. The interest yield on the Group’s securities portfolio went up to 6.3% (3Q’22: 5.7%) following market rates.

In 3Q’23, interest expense grew by 15% year-on-year to RUB 15.2 bn (3Q’22: RUB 13.2 bn) as a result of the significant increase of our customer base and balances. The Group’s cost of borrowing decreased from 5.2% in 3Q’22 to 4.3% in 3Q’23, given the decline of average market rates relative to previous year.

In 3Q’23, net interest income grew by 68% year-on-year to RUB 61.8 bn (3Q’22: RUB 36.7 bn).

Fee and commission income increased by 32% to RUB 34.2 bn (3Q’22: RUB 26.0 bn), supported mainly by the continued growth of our retail and SME banking ecosystem. Net fee and commission income increased by 11% to RUB 18.8 bn (3Q’22: RUB 16.9 bn).

Cost of risk was 6.2% in 3Q’23, down from 11.3% in 3Q’22 and slightly increased from 5.7% in 2Q’23. Our risk-adjusted net interest margin increased to 12.3% both year-on-year (3Q’22: 6.4%) and quarter-on-quarter (2Q’23: 11.5%).

For 9M’23, non-credit revenue represented 52% of the Group’s revenue and 49% of the Group’s profit before tax.

At the end of 3Q’23. the Group had:

37.6 total customers

over 30.8 mn total current account customers with a total balance of RUB 1 106 bn across all accounts

over 1 mn total SME customers, with a total current account balance of RUB 275 bn

over 3.5 mn total Tinkoff Investments customers

In 3Q’23, total operating expenses increased by 53% year-on-year to RUB 50.4 bn (3Q’22: RUB 33.1 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 23.6 bn in 3Q’23, which was a 16% quarter-on-quarter increase and a 4-fold increase year-on-year. ROE for 3Q’23 was 37.8%, further improving from 35.5% in 2Q’23 (3Q’22: 12.5%).

In 3Q’23, the Group continued to maintain a healthy balance sheet, with total assets growing 46% year-on-year to RUB 1,917 bn (30 Sep’22: RUB 1,315 bn).

The Group’s net loan book increased by 52% year-on-year to RUB 888 bn (30 Sep’22: RUB 584 bn), while the gross loan book grew by 47% to RUB 1 031 bn (30 Sep’22: RUB 700 bn).

The Group’s NPL ratio fell to 9.7% (30 Sep’22: 11.9%), also improving quarter-on-quarter (30 Jun’22:10.3%). Credit loss allowance coverage was at 1.4x non-performing loans.

The Group’s customer accounts increased by 44% to RUB 1 381 bn (30 Sep’22: RUB 961 bn).

Total equity increased by 35% year-on-year to RUB 260 bn (30 Sep’22: RUB 194 bn) on the back of net profit capitalization.

Sanctions

On 25 February 2023, one of the Company’s subsidiaries, Tinkoff Bank became subject to 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»).

On 19 May 2023, Tinkoff Bank, became subject to 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 20 July 2023, Tinkoff Bank, was included into the Specially Designated Nationals and Blocked Persons List, or the SDN List, in the U.S., and was also sanctioned by Canada.

The Company and its subsidiaries (other than the Bank and any Group subsidiary that may be controlled by the Bank) are not subject to any sanctions in the UK, EU, U.S. or Canada. The Management of the Group are continually monitoring 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

Important Legal Information

The information and statements contained or referred to in this announcement do not constitute or form part of, and should not be construed as, any public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. The distribution of this document in certain jurisdictions may be restricted by law. Recipients are required by the Group to inform themselves about and to observe any such restrictions. No liability to any person is accepted in relation to the distribution or possession of this document in any jurisdiction.

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.

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.

Key metrics, mn	3Q’23	3Q’22	2Q’23	Y-o-Y Change, %	Q-o-Q Change, %
Total customers, mn	37.6	27.9	35.3	35%	7%
Active customers, mn	26.0	19.4	24.5	34%	6%
Monthly active users (MAU)	26.4	20.6	25.2	28%	5%
Daily active users (DAU)	11.6	8.7	10.7	33%	8%

RUB bn	3Q’23	3Q’22	∆	2Q’23	∆	9M’23	9M’22	∆
Interest income	78.4	50.9	54%	67.9	15%	206.5	152.6	35%
Interest expense	-15.2	-13.2	15%	-13.1	16%	-40.4	-46.5	-13%
Net interest income	61.8	36.7	68%	53.5	16%	162.2	103.1	57%
Net interest income after provisions	48.1	18.4	x2.6	42.4	13%	125.2	52.1	x2.4
Fee and commission income	34.2	26.0	32%	30.2	13%	91.2	91.0	0%
Fee and commission expense	-15.4	-9.1	69%	-13.6	13%	-39.3	-31.7	24%
Net fee and commission income	18.8	16.9	11%	16.6	13%	51.9	59.3	-13%
Total operating expenses	-50.4	-33.1	52%	-45.2	12%	-136.1	-94.2	44%
Profit before tax	29.9	9.3	x3.2	25.2	19%	76.0	15.5	x4.9
Net profit	23.6	6.0	x3.9	20.4	16%	60.2	10.5	x5.8

Ratios	3Q’23	3Q’22	∆	2Q’23	∆	9M’23	9M’22	∆
Return on equity	37.8%	12.5%	25.3 p.p.	35.5%	2.3 p.p.	34.7%	7.5%	27.2 p.p.
Net interest margin	15.9%	12.7%	3.1 p.p.	14.5%	1.4 p.p.	14.7%	12.0%	2.7 p.p.
Cost of risk	6.2%	11.3%	-5.1 p.p.	5.7%	0.5 p.p.	6.2%	10.2%	-3.9 p.p.

RUB bn	30 Sep 2023	30 Jun 2023	∆	31 Dec 2022	∆	30 Sep 2022	∆
Total assets	1 917	1 753	9%	1 596	20%	1 315	46%
Net loans and advances to customers	888	784	13%	606	46%	584	52%
Cash and treasury portfolio	465	446	4%	512	-9%	348	33%
Total liabilities	1 657	1 514	9%	1 390	19%	1 122	48%
Customer accounts	1 381	1 313	5%	1 192	16%	961	44%
Total equity	260	239	9%	206	27%	194	35%

Ratios	30 Sep 2023	30 Jun 2023	∆	31 Dec 2022	∆	30 Sep 2022	∆
Share of NPLs	9.7%	10.3%	-0.6 p.p.	12.1%	-2.4 p.p.	11.9%	-2.2 p.p.
Tier I capital ratio	18.0%	18.4%	-0.4 p.p.	16.9%	1.1 p.p.	18.2%	-0.2 p.p.
Total capital ratio	18.0%	18.4%	-0.4 p.p.	16.9%	1.1 p.p.	18.2%	-0.2 p.p.