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

TCS GROUP HOLDING PLC

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

Moscow, Russia - 20 March 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 the first two months of 2014.

Net income for the first two months increased by 25% y-o-y to RUB 1.3 bln as of 1 March 2014. Higher revenue growth was partially offset by spending on a one-off winter 2014 TV advertising campaign and by a noticeable increase in 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 very low correlation between financial results under the two reporting standards as a result of significant accounting differences and therefore should not be used as the basis for conclusions on forthcoming IFRS results. 

The gross loan portfolio amounted to RUB 85 bln and increased by 48% y-o-y and by 4% year-to-date. The short-term slowdown in the growth of the gross loan portfolio in the first two months of 2014 was due in part to a much stricter underwriting policy of TCS Bank as credit risks relating to the over-extension of credit continued to increase and were further exacerbated by the slower growth of the Russian economy.

Customer accounts (retail deposits) increased by 49% y-o-y (by 1% year-to-date) and amounted to RUB 42 bln. TCS Bank continued to see a net deposit increase despite maintaining low deposit rates and not using advertising to attract new customer deposits. The reason for this policy is that TCS Bank is overliquid: CBR N2 ratio increasing y-o-y from 172.9% to 243.7% (minimum - 15%), and CBR N3 ratio rising y-o-y from 118.7% to 176.1% (minimum - 50%).

Total assets increased due to the portfolio growth and the creation of an additional cash cushion: cash balances increased by 60% y-o-y to RUB 17 bln. Total equity grew by 43% y-o-y reaching RUB 17 bln as of 1 March 2014. The N1 capital adequacy ratio (under RAS Basel approach) was maintained at 14.01% as of 1 March 2014. Both equity and N1 will increase significantly following the completion of the registration of the IPO proceeds with the CBR. 

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 7.5% based on non-delinquent receivables (according to the Central Bank of Russia (CBR) data, as of 1 January 2014). As of March 2014, the Group has issued 4.1 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, the Group's total assets amounted to USD 3 bn, net loans and advances to customers stood at USD 2.3 bn and customer accounts (deposits) amounted to USD 1.3 bn. 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.

The Group's class A shares, in the form of Global Depositary Receipts, have been trading on the London Stock Exchange since October 2013. TCS Group Holding PLC's share capital consists of 89,044,396 Class A shares and 92,144,679 Class B shares.