• 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

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 1Q’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 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 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 contactcenter, 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.
• In April Tinkoff launched Russia’s first digital BNPL (buy-now-pay-later) service Dolyame.ru. The new platform facilitates combines the advantages of online acquiring and installment plans. Buyers can pay for goods in installments without incurring interest, and sellers can immediately receive the full purchase price in their account without delays.
• In April Tinkoff acquired a majority stake in Beskontakt LLC, the developer of Koshelek digital wallet, an aggregator of banking cards and retail loyalty programs. The Koshelek app is a leader in its field, reporting the highest number of users of any app in Russia and the CIS

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

• Tinkoff’s senior management held a virtual Strategy Day for analysts and investors on 7 April 2021, where they presented the Group’s growth opportunities and medium term targets. The presentation and full replay of the event are accessible on the Tinkoff IR website.
• 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 expansion of 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 currently covers around 400 beneficiaries. With a view to financing this initiative, the Group has announced a GDR buyback programme to repurchase up to 700,000 GDRs, with an aggregate purchase price not exceeding $45 mn.
• 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.

In April 2021 Tinkoff Group became a signatory to the Global Principles for Responsible Banking, as developed by the United Nations Environment Programme Finance Initiative, the largest UN partnership with the finance industry or the worldwide community of nearly 400 banks, insurers and investors

• Tinkoff is progressing its latest Sustainability Report which it expects to publish in June 2021.

Corporate governance enhancements and new management appointments

• In March with the aim of developing and promoting its outstanding talent, deepening the management bench and continuing to strengthen the Group’s corporate governance, Tinkoff announced that Oliver Hughes was appointed Executive Director of the TCS Group Board of Directors as part of its expansion. At the same time, Stanislav Bliznyuk was appointed Chairman of Tinkoff Bank Mangement Board and George Chesakov was appointed as Chairman of Tinkoff Bank Board of Directors.
• In April Neri Tollardo was promoted to Vice President, Director of Strategy from his previous role of Head of International Investor Relations and Partnership Projects. At the same time, Andrey Pavlov-Rusinov joined the company as the new Head of International Investor Relations and Partnership Projects. Andrey was previously the lead equity analyst for Russia & CIS Financials at Goldman Sachs Russia.
• In April Anton Malkov joined Tinkoff as Head of Capital Markets Transactions Management to develop the ECM and DCM businesses with a focus on new-economy companies. Previously, Anton served as the Managing Director of Sberbank CIB’s Global Markets Department, where he was engaged in ECM development and supervised DCM and M&A from 2015–2018
• In May Tinkoff announced that five new independent, non-executive directors (INEDs) would be joining the Tinkoff Group Board of Directors. Ashley Dunster, Masha Gordon, Margarita Hadjitofi, Nick Huber and Nitin Saigal have been appointed effective 11 May 2021. In addition, the Company will soon launc two new committees, a Risk and Emerging Risk (‘Sustainability’) Committee and a Strategy Committee. The Company envisages that the initial members of the Risk and Emerging Risk (‘Sustainability’) Committee will be Masha Gordon, Nick Huber and Margarita Hadjitofi (Chair), and of the Strategy Committee — Ashley Dunster, Masha Gordon, Oliver Hughes, Nick Huber, and chaired by Nitin Saigal.

CONFERENCE CALL INFORMATION

Tinkoff management team will host an investor and analyst conference call at 2:00 pm UK time (4:00 pm Moscow time, 09:00 am U.S. Eastern Daylight Time), on Tuesday, 11 May 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/tcsgroup20210511

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

Forward-looking statements