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

TCS GROUP HOLDING PLC

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

Moscow, Russia - 17 June 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-May 2014.

Net income for the first five months increased by 11% y-o-y to RUB 2.2 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 89.0 bln representing an increase of 35% y-o-y and of 9% year-to-date. The net loan portfolio amounted to RUB 72.0 bln and increased by 23% y-o-y and by 2% year-to-date. The short-term slowdown in the growth of the gross loan portfolio in January-May 2014 was partly due to a much stricter underwriting policy. The net loan portfolio constitutes 73% of total assets (65% at 1 June 2013 and 67% at year-end 2013).

Retail customer accounts increased by 38% y-o-y and by 1% year-to-date to RUB 41.8 bln. TCS Bank continued to see a net deposit increase for January-May 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 84.4% (minimum: 15%), and the CBR N3 ratio is 67.8% (minimum: 50%). Retail customer accounts constitute 52% of total liabilities (38% at 1 June 2013 and 44% at year-end 2013).

Total assets increased by 14% y-o-y to RUB 99 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 6% 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 66% y-o-y and by 30% year-to-date to RUB 23.3 bln as of 1 June 2014. The CBR N1 capital adequacy ratio increased to 18.6%. Both Core Capital Adequacy Ratio (N1.1) and Main Capital Adequacy Ratio (N1.2) were 13.5%.

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 1 June 2014, the Group has issued over 4.3 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 March 2014, the Group's total assets amounted to RUB 101.2 bn, net loans and advances to customers stood at RUB 75 bn and customer accounts (deposits) amounted to RUB 43.1 bn. In Q1 2014, the Group generated a net profit of RUB 362.3 mln and net interest income of RUB 7.4 bn.

The Group is well capitalised with its total capital ratio and Tier 1 capital ratio of 22.3% and 17.3%, respectively, in accordance with Basel III methodology.