• Total revenues grew 21% to RUB 195.8bn in FY’20 (FY’19: RUB 161.9bn)
• Net profit rose 22% to RUB 44.2bn in FY’20 (FY’19: RUB 36.1bn)
• Non-credit business lines amounted to a record 37% of revenues and 37% of net profit
• Total customers reached 13.3mn in FY’20 (FY’19: 10.2mn)

LIMASSOL, CYPRUS — 11 March 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 and twelve months ended 31 December 2020.

Oliver Hughes, CEO of Tinkoff Group, commented:

“Despite its challenges, 2020 proved to be yet another year of record profit for us – we reported net profit of RUB 44.2 billion, beating our full-year guidance. Tinkoff was quick to adjust to changing consumer preferences, which helped both our credit and non-credit business lines go from strength to strength.

We retained our strong growth momentum with the total number of customers reaching 13.3 million, up from 10.2 million a year ago. This solidified Tinkoff’s position as Russia’s third largest bank by the number of active customers and its largest digital-only player in the financial sector. This puts us firmly on track to expand our customer base to more than 20 million over the next three years. Our engagement with each customer continues to deepen, with average products per customers growing from 1.3 at the end of 2019 to 1.4 at the end of 2020, despite strong growth of the customer base.

Our non-credit businesses reached new heights, underpinned by the popularity of our financial and lifestyle offering. These business lines, which include our current account Tinkoff Black, Tinkoff Investments brokerage platform, Tinkoff Business and Tinkoff Acquiring, generated RUB 73.0 billion of revenues (up 47% year-on-year and representing 37% of total revenue) and RUB 20.6 billion of profit before tax (up 2.5x YoY and representing 37% of total profit before tax). You can see this in much more detail now thanks to our new financial segmental breakdown. 

Tinkoff Black revenue grew by 41% year-on-year to RUB 21.2 billion. This business has become by far our largest customer acquisition channel and the locomotive of our growth.  We increased the number of total Tinkoff Black customers by 2.9 million in 2020 alone from 4.7 million to 7.5 million, and our growth is further accelerating. These customers are highly digital, highly engaged, and we have confidence that they will be using more and more of our ecosystem as time goes on.

Tinkoff Investments has blasted into outer space as the brokerage platform reached another milestone of over 1.25 million total customers by the end of 2020 and generated revenues amounting to RUB 8.1 billion, an over eightfold increase. In December, Tinkoff Investment’s active customer base represented more than 60% of all active customers on the Moscow Exchange – a remarkable result.

Tinkoff Business posted revenues and profit before tax of RUB 11.5 billion and RUB 5.6 billion respectively in 2020, a 17% and 71% respective increase from the previous year. We are visibly moving into the medium-sized company segment through solutions such as accounting software, tax reporting, website creators, CRM tools and much more.

Tinkoff Acquiring’s revenues and profit before tax grew to RUB 11.2 billion and RUB 2.3 billion respectively in 2020, a 33% and 79% respective increase from the previous year, as e-commerce adoption accelerated and more and more businesses looked to Tinkoff for their customer service and expertise in C2B payments.

We recently announced the launch of Tinkoff Checkout, a one-stop shop that enables companies to take care of all of their online and offline payment needs. It will combine existing Tinkoff payment technologies and new solutions, including services provided by Tinkoff’s CloudPayments.

Our credit business grew despite the challenging environment: we increased the total number of customers with credit products to 6.9 million with net loans rising 14%, even as we retained our conservative approach to lending. Our share of Russia’s short-term retail credit market increased to 8.6% as of 1 January 2021, consolidating our position as the second largest player in this segment.

Our ROE remained above 40% in 2020, as we continued to deliver profitable growth.’’ 

Stanislav Bliznyuk, SVP, Head of Business Development, added:

“Throughout 2020 we continued to innovate, launching new products and improving existing services. For the first time in our history, the number of non-credit product customers exceeded the number of credit product customers.

We launched Tinkoff Pro, a financial subscription that allows customers to use products and privileges of Tinkoff ecosystem and its partners on special terms. We have ambitious targets for this product to enhance retention and increase the LTV of our customers. As of the end of 2020, we already had over 150,000 Tinkoff Pro subscribers.

In 2020, Tinkoff became the largest player in the Central Bank’s Faster Payments System thanks to our continued efforts to build out support and integration in the Tinkoff ecosystem.

Tinkoff Mobile unveiled a new version 2.0 of our trailblazing voice assistant Oleg, which enables customers to create their own mobile concierge with customizable features, including the assistant’s voice and name.

Altogether these and many more innovations enabled us to increase the number of monthly active users (MAU) across our main interfaces from 6.0 mn to 9.3 mn.

I am pleased to note that our efforts were recognised by the international community. Tinkoff was named the world’s Best Consumer Digital Bank and honoured with multiple other category wins at Global Finance’s Digital Bank Awards 2020.Tinkoff was also recognised as Russia’s Best-Performing Bank Overall by The Banker magazine, which scored Tinkoff’s 2020 performance in the areas of growth, profitability, operational efficiency, asset quality, return on risk, liquidity, soundness and leverage.

Our robust performance is made possible by our deep bench of first-rate talent, attracted to Tinkoff’s unique corporate culture and its ability to foster innovation, while driving solid results. Tinkoff was recognised among Russia’s Top 3 Employers for 2020, according to Forbes.’’

FINANCIAL AND OPERATING REVIEW

In 4Q’20, the Group’s total revenue grew by 17% year-on-year to RUB 53.1 bn (4Q’19: RUB 45.6 bn). Gross interest income increased by 7% year-on-year to RUB 32.6 bn (4Q’19: RUB 30.4 bn), driven primarily by loan portfolio growth.

Gross yield decreased to 30.3% in 4Q’20 (4Q’19: 32.3%), 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 5.0% (4Q’19: 6.4%), in connection with declining rouble interest rates.

In 4Q’20, despite the significant increase over the last 12 months in our customer base and account balances, interest expense decreased by 12.8% year-on-year to RUB 5.2 bn (4Q’19: RUB 5.9 bn). This was driven by a continued decline in our cost of borrowing from 5.6% in 4Q’19 to 3.3% in 4Q’20, 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 4Q’20 net margin grew by 12.5% year-on-year to RUB 26.9 bn (4Q’19: RUB 24.0 bn), primarily as a result of our growing loan portfolio.

Cost of risk fell to 5.7% 4Q’20 from 8.1% in 4Q’19. Our risk-adjusted net interest margin rose from 13.1% in 3Q’20 to 13.2% on 4Q’20 (4Q’19: 14.1%).

Our non-credit business lines continue to deliver an increasing share of our revenue and bottom line thanks to growth of the customer base, our widened range of product offerings and continued monetisation efforts. In 4Q’20 non-credit revenue represented 43% of the Group’s revenue and 27% of the Group’s profit before tax.  

At the end of 4Q’20, the Group had:

• over 7.5 mn total current account customers with a total balance of RUB 323.1 bn across all accounts
• over 385k total SME customers, with a total current account balance of RUB 89.1 bn
• over 1.25 mn total Tinkoff Investments customers

In 4Q’20, operating expenses increased 65.9% year-on-year to RUB 19.4 bn (4Q’19: RUB 11.7 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 12.3 bn in 4Q’20 (4Q’19: RUB 11.0 bn), supported by continued customer acquisition and monetisation. As a result, ROE for 4Q’20 stood at 40.5% (4Q’19: 49.0%).

In 4Q’20, the Group continued to maintain a healthy balance sheet, with total assets growing by 48.1% since the end of 2019 to RUB 859.3 bn (31 Dec’19: RUB 580.0 bn).

The Group’s gross loan book grew by 16.0% since the end of 2019 to RUB 445.5 bn (31 Dec’19: RUB 383.9 bn), while the net loan book increased by 14.4% to RUB 376.5 bn (31 Dec’19: RUB 329.2 bn).

The Group’s NPL ratio rose to 10.4% (31 Dec’19: 9.1%), while our credit loss allowance coverage stood at 1.5x non-performing loans.

The Group’s customer accounts increased by 52.3% since the end of 2019 to RUB 626.8 bn (31 Dec’19: RUB 411.6 bn).

Tinkoff’s total equity over 2020 rose by 32.2% to RUB 127.0 bn at the end of FY’20 (31 Dec’19: RUB 96.1 bn) even after the payment in 2020 of four interim dividends (total of $0.80/GDR), on the back of solid net profit. As of 1 January 2021 the Group’s statutory N1.0 ratio amounted to 13.1%, its N1.2 ratio stood at 12.4%, and the N1.1 ratio stood at 10.2%.

2021 Interim Dividend Announcement

In line with the Group’s dividend policy, the Group’s Board of Directors has approved a first 2021 interim gross cash dividend of USD 0.24 per share/per GDR (with each GDR representing one Ordinary share) with a total amount allocated for dividend payment in relation to 4Q of around USD 48 mn. Subject to London Stock Exchange regulations, indicatively the dividend will be payable on 29 March 2021 to those shareholders on the register as at the record date of 26 March 2021. The ex-dividend date will be 25 March 2021. According to the terms of the GDR deposit agreement, holders of the Group’s GDRs should receive their dividends approximately 5 business days after the payment date.

GUIDANCE FOR 2021

With the gradual recovery in economic activity on top of strong performance in 2020, the Group is pleased to announce the following performance guidance for 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

The Group also plans to temporarily suspend dividends for the remainder of 2021 as it further assesses both organic and inorganic growth opportunities. It is management’s belief that allocating capital to additional growth now is the best way of guaranteeing a sustainable and profitable business into the future. Growth opportunities will be discussed in more detail at the Strategy Day to be held on April 7 2021.

Some of the accumulated capital might also be used to buy back up to 1 mn GDRs to fund commitments to MLTIP, as previously communicated to the market.

4Q’2020 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS

Customer base and engagement growth has led to increased market share

• The Group had over 7.5 mn total Tinkoff Black customers as of 1 January 2021.
• As of 1 January 2021, the Tinkoff app had over 30.05 mn installs, and Group MAU stood at 9.3 mn, Group DAU stood at 3.2 mn.
• Tinkoff Bank’s credit card market share increased to 14.0% as of 1 January 2021, further solidifying its position as Russia’s second largest credit card issuer.
• Tinkoff moved up 44 positions to 91^st 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.

Superior and innovative product offering combined with targeted marketing activities secure Tinkoff’s place as a leading fintech brand

• In December Tinkoff Mobile launched a new 2.0 version of its voice assistant Oleg, which enables customers to create their own mobile concierge with custom features.
• Tinkoff launched Tinkoff Call Defender, a platform designed to prevent fraud and social engineering in the telecom sector developed as part of the comprehensive Tinkoff Security system to protect the ecosystem customers. It was developed in partnership with major Russian mobile operators, including Megafon, MTS, Tele2 and Tinkoff Mobile.
• Tinkoff launched a free service called “Who is Calling?”, which identifies incoming caller IDs and helps to protect against scammers and spam calls.
• Tinkoff adopted a cutting-edge approach to credit-scoring based on securely-merged data on oneFactor platform. It includes AI-powered predictive analytics tools, based on combined data from multiple sources, including telecom operators, Russia’s largest credit bureau and Tinkoff itself.
• In January, Tinkoff Insurance became a partner of Sber's insurance marketplace. Now customers on the Sber marketplace can purchase both voluntary KASKO and mandatory OSAGO car insurance policies.
• In January Tinkoff integrated its Oleg voice assistant into its own phone call center, aiding customer service representatives in dealing with customer queries.
• In February Tinkoff launched Tinkoff Checkout, an online and offline payment service for legal entities which operates as a one-stop shop, enabling companies to take care of all of their online and offline financial needs in one place.
• In February Tinkoff Business launched “Business Saving Box” – a service that allows our SME customers to automatically save and allocate their income for various purposes such as taxes, rent, salaries, etc.

Commitment to further improving our Investor Relations (IR) disclosure and ESG practices

• Tinkoff’s senior management team will hold a virtual Strategy Day for analysts and investors on 7 April 2021 to present its growth opportunities and medium term targets.
• Tinkoff is progressing its latest Sustainability report which it expects to publish by June 2021.
• In January all outstanding 69,914,043 Class B shares in the Group, held by trusts connected with Oleg Tinkov, were converted to and reclassified as Ordinary shares (after 10,100,181 Class B Shares were converted to GDRs in December 2020). Following this latest conversion and reclassification, Oleg Tinkov's voting rights in the Group decreased to around 35% from 84% aligning all shareholders' interests ever more closely.
• In February 2021 Tinkoff’s GDRs were added to the MSCI Russia Standard Index with a pro-forma weight of 4.69%.
• In February 2021 the Group announced the launch of an updated version of its management long-term incentive program (MLTIP) and its Key-Employee Retention Programme (KERP). The updated equity-based MLTIP includes awards currently totalling 5.35 mn GDRs and vests over 5 years starting from August 2021, while the cash-based equity-linked KERP initially covers around 300 beneficiaries.
• Tinkoff is now presenting two new customer metrics: “Total customers”, which represent customers that have utilised a Tinkoff product and have not closed it. “Active customers”, which represent customers that have generated revenue for Tinkoff over the previous month.
• Tinkoff has revamped its segmental financial reporting to provide further insight into its growth and profit drivers. Tinkoff now presents its P&L across 7 different segments: Consumer Finance, Retail Debit Cards (Tinkoff Black), SME Services (Tinkoff Business), InvestTech (Tinkoff Investments), Acquiring and Payments, InsurTech and MVNO Services.

The market and industry associations recognised Tinkoff’s strong performance

• Tinkoff was ranked among the top 100 Emerging Market Technology Companies and become one of six Russian companies on the list compiled by Boston Consulting Group (BCG). Companies from 14 countries were included in the list and judged by six criteria to verify their promising business models, proven market traction and market-leading position.
• Tinkoff was named the world’s Best Consumer Digital Bank at Digital Bank Awards 2020 organised by Global Finance magazine. It was also named the Best Consumer Digital Bank in CEE and won top recognition in the Best Mobile Banking App and the Best Web Site Design subcategories.
• Tinkoff was named among world's top 3 neo-banks according to WhiteSight Moscow and was the only profitable bank on the list. The ranking takes into account such metrics as capitalisation and market valuation and compares digital banks across various parameters such as user base, funding, investors and more.
• Tinkoff’s super app was named the Best Mobile Banking App at the Core of a Financial Ecosystem and the Best Mobile Banking for Daily Operations (for the second year in a row) for iOS and Android, according to Markswebb’s Mobile Banking Rank 2020 rankings.
• Tinkoff won first place in the Employee Development and Training nomination for its Tinkoff Life well-being programme, which successfully helps to retain employees and attract new talents from the IT sphere, at the IT HR Awards 2020. Tinkoff was also ranked 3rd in Forbes’ rating of Best Russian Employers.
• In February Tinkoff strengthened its standing in the Brand Finance Banking 500’s ranking in 2021, moving up 28 spots to 298th position.
• In February, Tinkoff was ranked 4th in the Rating of Best Employers in Russia 2020 published by HeadHunter. It was also ranked 5th in HeadHunter’s subrating Most Popular among Jobseekers based on the company’s visibility and attractiveness for external audience.
• In February Tinkoff Bank was named Russia’s Best-Performing Bank, based on 17 metrics including growth, profitability, operational efficiency, asset quality, return on risk, liquidity, soundness and leverage, according to The Banker, a leading international financial publication which is part of the Financial Times Group.

CONFERENCE CALL INFORMATION

Tinkoff management team will host an investor and analyst conference call at 2:00 pm UK time (5:00 pm Moscow time, 09:00 am U.S. Eastern Standard Time), on Thursday, 11 March 2021.

The press release, presentation and financial statements will be available on the Tinkoff website at https://tinkoffgroup.com/financials/quarterly-earnings/

To participate in the conference call, please use the following access details:

A live webcast of the presentation will be available at:
https://www.webcast-eqs.com/tcsgroup20210311

Please register approximately 10 minutes prior to the start of the call.

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»), encompassing certain information relating to the suspension of dividends and is disclosed in accordance with the Company’s obligations under Article 17 of UK MAR.

Forward-looking statements