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    TCS   US87238U2033

TCS GROUP HOLDING PLC

(TCS)
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TCS Group Holding PLC reports record quarterly profit for the period (net profit) in 1Q'21

05/11/2021 | 03:01am EDT
TCS Group Holding PLC (TCS) 
TCS Group Holding PLC reports record quarterly profit for the period (net profit) in 1Q'21 
11-May-2021 / 10:00 MSK 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
=---------------------------------------------------------------------------------------------------------------------- 
 
TCS Group Holding PLC reports record quarterly profit for the period (net profit) in 1Q'21 
 
  ? Total revenues grew 21% to RUB 56.8 bn in 1Q'21 (1Q'20: RUB 46.9 bn) 
  ? Net profit rose 57% to RUB 14.2 bn in 1Q'21 (1Q'20: RUB 9.0 bn) 
  ? Tinkoff Investments assets under custody exceeded RUB 415 bn 
  ? Non-credit business lines accounted for 43% of revenues and 24% of net profit 
  ? Total customers reached 14.8 mn in 1Q'21 (1Q'20: 10.8 mn) 
 
LIMASSOL, CYPRUS - 11 May 2021. TCS Group Holding PLC (LI: TCS, MOEX: TCSG) ("Tinkoff", "We", the "Group", the 
"Company"), Russia's leading provider of online financial and lifestyle services via its Tinkoff ecosystem, today 
announces its consolidated IFRS results for the three months ended 31 March 2021. 
 
Oliver Hughes, CEO of Tinkoff Group, commented: 
"We continued to demonstrate profitable growth in the first quarter of 2021 with net profit reaching a new quarterly 
record of RUB 14.2 bn, as we charged full steam ahead, acquiring new customers and launching cool new features across 
our product lines. 
 
We continue to strengthen Tinkoff Investments by diversifying our investment offering. I am pleased to welcome Anton 
Malkov on board as the new Head of the Capital Markets Transactions Management Team at Tinkoff Investments to lead our 
new DCM and ECM effort with a focus on new-economy companies. 
 
In April we announced Tinkoff Group's acquisition of a majority stake in Beskontakt LLC, the developer of the Koshelek 
app. A digital wallet and Russia's only mobile app for aggregating bank cards, loyalty cards and coupons, the Koshelek 
app has a user base that exceeds 20 million and works with the country's largest retailers. This is a huge apportunity 
for Tinkoff as we step-up our presence in the loyalty space. 
 
On the corporate governance front, we continue to make important improvements. I am pleased to have taken on the role 
of Executive Director of the newly expanded TCS Group Board of Directors to lead this work while continuing to oversee 
strategic initiatives. In addition, just a week ago we announced that we are signicantly expanding and strengthening 
the TCS Group Board with the appointments of Ashley Dunster, Masha Gordon, Margarita Hadjitofi, Nick Huber and Nitin 
Saigal as independent, non-executive Directors from today. In parallel with these appointments, the Company is 
launching two new committees, a Risk and Emerging Risk ('Sustainability') Committee and a Strategy Committee. 
With these and other initiatives, we are well on our way to achieving our goal of creating the most comprehensive, 
engaging and innovative financial and lifestyle ecosystem in the world." 
 
 
 
Stanislav Bliznyuk, Chairman of the Tinkoff Bank Management Board, added: 
"I'm pleased to report the continuing robust performance of both our credit and non-credit business lines, with our 
non-credit business lines accounting for 43% of revenue in the first quarter. 
As digital adoption accelerates across industries, we are rolling out new products and services that best harness this 
trend. In April Tinkoff launched Russia's first digital BNPL (buy-now-pay-later) service for individuals called 
Dolyame.ru. It combines the advantages of online acquiring and instalment plans for customers making payments when 
shopping online. 
The Tinkoff Black business - our current account product and the backbone of the Tinkoff ecosystem, reached new heights 
with 8.9 mn total customers. 
Tinkoff Business continued to grow its customer base in Q1, as the increase in the number of mid-sized businesses 
gathered pace. Tinkoff Business also expanded customers' access to lending, while retaining its traditionally 
conservative approach to risk. 
We remain Russia's second-largest provider of online acquiring services and Tinkoff Acquiring continues to grow its 
revenues steadily. Tinkoff Checkout, which enables companies to take care of their online and offline payment needs in 
one place is just one of the new latest services addressed at our business customers 
Tinkoff Investments remained Russia's leading brokerage on Moscow Exchange with 1.8 mn customers and RUB 415 bn in 
assets under custody." 
 
FINANCIAL AND OPERATING REVIEW 
RUB bn                             1Q'21 1Q'20 Change 
Credit accounts acquired (mn pcs)  1.5   1.0   +54% 
Net margin                         29.2  25.5  +14.4% 
Net margin after provisions        24.5  10.0  +144.0% 
Profit before tax                  18.0  11.6  +55.3% 
Net profit                         14.2  9.0   +57.0% 
Return on equity                   43.7% 37.5% +6.2 p.p. 
Net interest margin                15.8% 20.0% -4.2 p.p. 
Cost of risk                       4.5%  15.9% -11.4 p.p. 
RUB bn                               31 Mar 2021 31 Dec 2020 Change 
Total assets                         873.5       859.3       +1.7% 
Net loans and advances to customers  431.0       376.5       +14.5% 
Share of NPLs                        9.7%        10.3%       - 0.6 p.p. 
Cash and treasury portfolio          326.6       374.8       -12.9% 
Total liabilities                    741.3       732.3       1.2% 
Customer accounts                    631.3       626.8       +0.7% 
Total equity                         132.3       127.0       +4.1% 
Tier 1 capital ratio                 18.0%       17.9%       +0.1 p.p. 
Total capital ratio                  18.0%       17.9%       +0.1 p.p. 
CBR N1.0 (capital adequacy ratio)    12.6%       13.1%       -0.5 p.p. 

In 1Q'21, the Group's total revenue grew by 21% year-on-year to RUB 56.8 bn (1Q'20: RUB 46.9 bn). Gross interest income increased by 11% year-on-year to RUB 35.3 bn (1Q'20: RUB 31.7 bn), driven primarily by loan portfolio growth.

Gross interest yield decreased to 25.6% in 1Q'21 (1Q'20: 29.8%), mainly as a result of the declining interest rate environment and changes in the loan mix. The interest yield on the Group's securities portfolio decreased to 5.1% (1Q'20: 6.0%), in connection with declining rouble interest rates.

In 1Q'21, despite the significant increase over the last 12 months in our customer base and account balances, interest expense decreased by 1.6% year-on-year to RUB 5.5 bn (1Q'20: RUB 5.6 bn). This was driven by a continued decline in our cost of borrowing from 4.8% in 1Q'20 to 3.2% in 1Q'21, due to a gradual decrease in deposit rates (consistent with market rate decreases) and a growing share of current accounts in the funding mix.

In 1Q'21 net margin grew by 14% year-on-year to a record RUB 29.2 bn (1Q'20: RUB 25.5 bn), primarily as a result of our growing loan portfolio.

Cost of risk fell to 4.5% in 1Q'21 from 15.9% in 1Q'20. Our risk-adjusted net interest margin rose from 7.9% in 1 Q'20 to 13.3% in 1Q'21.

Our non-credit business lines continue to deliver an increasing share of our revenue thanks to growth of the customer base, our widened range of product offerings and continued monetisation efforts. In 1Q'21 non-credit revenue represented 43% of the Group's revenue and 24% of the Group's profit before tax.

At the end of 1Q'21, the Group had: ? over 8.9 mn total current account customers with a total balance of RUB 329.3 bn across all accounts ? over 500k total SME customers, with a total current account balance of RUB 83.1 bn ? over 1.8 mn total Tinkoff Investments customers and over RUB 415 bn in customer assets

In 1Q'21, operating expenses increased 74% year-on-year to RUB 20.3 bn (1Q'20: RUB 11.6 bn) driven by resumed growth of our loan portfolio, and investments into our fast growing new business lines.

The Group reported robust quarterly net profit of RUB 14.2 bn in 1Q'21 (1Q'20: RUB 9.0 bn), supported by continued robust customer acquisition and monetisation. As a result, ROE for 1Q'21 stood at 43.7% (1Q'20: 37.5%).

In 1Q'21, the Group continued to maintain a healthy balance sheet, with total assets growing by 1.7% since the end of 2020 to RUB 873.5 bn (31 Dec'20: RUB 859.3 bn).

The Group's gross loan book grew by 12.4% since the end of 2020 to RUB 502.9 bn (31 Dec'20: RUB 447.4 bn), while the net loan book increased by 14.5% to RUB 431.0 bn (31 Dec'20: RUB 376.5 bn).

The Group's NPL ratio fell to 9.7% (31 Dec'20: 10.3%), while our credit loss allowance coverage stood at 1.47x non-performing loans.

The Group's customer accounts increased by 0.7% since the end of 2020 to RUB 631.3 bn (31 Dec'20: RUB 626.8 bn).

Tinkoff's total equity rose by 4.1% to RUB 132.3 bn at the end of 1Q'21 (31 Dec'20: RUB 127.0 bn). As of 1 April 2021 the Group's statutory N1.0 ratio stood at 12.6%, its N1.2 ratio stood at 12.1%, and the N1.1 ratio stood at 10.0%.

GUIDANCE FOR FY'21

The Group reiterates the following previously communicated guidance for full year 2021: ? We expect our net loan portfolio growth to be more than 30% ? We expect cost of risk to be 7-8% ? We expect cost of borrowing to be in the 3-4% range ? We expect the share of non-credit revenues to be more than 40% of total revenues ? We expect net profit to be at least RUB 55 bn

1Q'2021 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS

Customer base and engagement growth has led to increased market share ? The Group had over 8.9 mn total Tinkoff Black customers as of 1 April 2021. ? As of 31 March 2021, the Tinkoff app had over 30 mn installs, and Group MAU stood at 10.7 mn, Group DAU stood at

3.6 mn. ? Tinkoff Bank's credit card market share increased to 14.3% as of 1 April 2021, further solidifying its position as

Russia's second largest credit card issuer. ? Tinkoff moved up 44 positions to 91st place in the ranking of the top banks in the world by debit card turnover

thanks to the growth in Tinkoff Black, according to the Nilson Report.

(MORE TO FOLLOW) Dow Jones Newswires

May 11, 2021 03:00 ET (07:00 GMT)

Stocks mentioned in the article
ChangeLast1st jan.
DCM HOLDINGS CO., LTD. 0.19% 1052 End-of-day quote.-10.77%
DJ INDUSTRIAL -0.77% 34033.67 Delayed Quote.12.37%
RTS INDEX 0.48% 1678 Real-time Quote.20.97%
TCS GROUP HOLDING PLC 0.29% 76.38 Delayed Quote.132.16%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 0.03% 72.483 Delayed Quote.-2.46%
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Financials (USD)
Sales 2021 1 752 M - -
Net income 2021 784 M - -
Net Debt 2021 - - -
P/E ratio 2021 19,3x
Yield 2021 0,08%
Capitalization 15 086 M 15 086 M -
Capi. / Sales 2021 8,61x
Capi. / Sales 2022 7,60x
Nbr of Employees 25 970
Free-Float 78,5%
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Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 64,12 $
Last Close Price 76,38 $
Spread / Highest target 30,9%
Spread / Average Target -16,0%
Spread / Lowest Target -60,7%
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Managers and Directors
NameTitle
Oliver Charles Hughes Group Chief Executive Officer & Executive Director
Constantinos Economides Chairman
Martin Robert Cocker Independent Non-Executive Director
Ashley Dunster Independent Non-Executive Director
Masha Gordon Independent Non-Executive Director
Sector and Competitors