TCS Bank's RAS Financial Highlights - Jan-Apr 2014

TCS GROUP HOLDING PLC

Statement on TCS Bank's RAS Financial Highlights for January-April 2014

Moscow, Russia - 16 May 2014. TCS Group Holding PLC (TCS LI) (the "Group"), including Tinkoff Credit Systems Bank ("TCS Bank"), Russia's leading provider of online retail financial services, today announces TCS Bank's unaudited RAS financial highlights for January-April 2014.

Net income for the first four months increased by 13% y-o-y to RUB 2 bln. Higher growth in revenue and net interest income was partially offset by increased loan provisioning (partly due to new regulatory requirements and partly due to increasing risk).

It should be noted that the RAS net income figure is not a reliable indicator of IFRS net income for the same period. There is a very low correlation between financial results under the two reporting standards as a result of significant accounting differences and therefore RAS figures should not be used as the basis for conclusions on forthcoming IFRS results. 

The gross loan portfolio amounted to RUB 87.5 bln representing an increase of 40% y-o-y and of 7% year-to-date. The net loan portfolio amounted to RUB 72.1 bln and increased by 30% y-o-y and by 2% year-to-date. The short-term slowdown in the growth of the gross loan portfolio in January-April 2014 was partly due to a much stricter underwriting policy. The net loan portfolio constitutes 73% of total assets (64% at 1 May 2013 and 67% at year-end 2013).

Retail deposits increased by 40% y-o-y and by 2% year-to-date to RUB 42.5 bln. TCS Bank continued to see a net deposit increase for January-April despite maintaining low deposit rates and not soliciting new customer deposits through advertising. The reason for this policy is that TCS Bank is over-liquid: The CBR N2 ratio stands at 78.7% (minimum: 15%), and the CBR N3 ratio is 78.7% (minimum: 50%). Retail deposits constitute 54% of total liabilities (39% at 1 May 2013 and 45% at year-end 2013).

Total assets increased by 14% y-o-y to RUB 98.2 bln. Most of this increase was due to the growth of the loan portfolio. Compared to the beginning of the year total assets decreased by 7% primarily due to the redemption of Eurobond (USD 175 mln) and two Euro-Commercial Papers (USD 75 and 50 mln).

As of 26 March 2014, TCS Bank increased its share capital by RUB 5.3 bln after the completion of the registration of IPO proceeds with the CBR. Together with retained profits, these proceeds increased total capital (based on Form 123) by 75% y-o-y and by 28% year-to-date to almost RUB 23 bln as of 1 May 2014. The CBR N1 capital adequacy ratio increased to almost 18.4%. Both Core Capital Adequacy Ratio (N1.1) and Main Capital Adequacy Ratio (N1.2) were 13.3%.

Note on RAS results

Please note that the numbers in this press release are calculated in accordance with TCS Bank's internal methodology which is available at: http://static.tcsbank.ru/documents/eng/investor-relations/ras-methodology.pdf

RAS results are not a reliable indicator of IFRS results due to significant accounting differences that make a direct read-across from RAS to IFRS results impossible. The main differences between RAS and IFRS are:

• Consolidated results under IFRS include a number of additional items and results of its subsidiaries

• Accrual of expenses under IFRS

• Timing differences in accounting for restructured loans ('instalments') and loans going through courts

• The effect from the revaluation of currency derivative instruments

• The effect of deferred income tax.

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About the Group

TCS Group Holding PLC is an innovative provider of online retail financial services operating in Russia through a high-tech branchless platform. In order to support its branchless platform, the Group has also developed a "smart courier" network covering almost 600 cities and towns in Russia which allows next day delivery to many customers.

Since its launch in 2007 by Mr. Oleg Tinkov, one of the best known Russian entrepreneurs with a long track record of creating successful businesses, the Group has grown into a leader in the Russian credit card market, with the third largest credit card loan portfolio and a market share of 7.3% based on non-delinquent receivables (according to the Central Bank of Russia (CBR) data, as of 1 April 2014). As of May 2014, the Group has issued more than 4.2 mln credit cards.

In addition to a market-leading credit card offering, the Group has developed a successful online retail deposits programme. The Group's other innovative lines of business include Tinkoff Online Insurance, which enables the Group to underwrite and sell its own innovative online insurance products, and Tinkoff Mobile Wallet, mobile payment solutions and financial services for Russian consumers.

As of 31 December 2013, under IFRS results the Group's total assets amounted to USD 3 bln, net loans and advances to customers stood at USD 2.3 bln and customer accounts (deposits) amounted to USD 1.3 bln. In 2013, the Group generated a net profit of USD 181 mln and net interest income of USD 843 mln. The Group is well capitalised with its total capital ratio and Tier 1 capital ratio of 25.03% and 19.85%, respectively, in accordance with Basel III methodology.