• Total customers reached 16.7m in 2Q’21 (2Q’20: 11.2m)
• Total revenues grew 37% to RUB 65.0 bn in 2Q’21 (2Q’20: RUB 47.4 bn)
• Non-credit business lines reached 44% of revenues
• Net profit rose 57% to RUB 16.1 bn in 2Q’21 (2Q’20: RUB 10.2 bn)
• ROE reached 46.1% in 2Q’21 (2Q’20: 40.0%)

TCS Group Holding PLC (LI: TCS, MOEX: TCSG) (“Tinkoff”, “We”, the "Group", the “Company”), a leading provider of online financial and lifestyle services via its Tinkoff ecosystem, today announces its consolidated IFRS results for the three months and six months ended 30 June 2021.

Oliver Hughes, CEO of Tinkoff Group, commented:

“We had another strong quarter and we are proud to report that Tinkoff is now serving more than 16.7 total customers and is continuing to grow rapidly. We showed excellent performance across just about all of our business-lines and cross-sell is clearly becoming a major driver of our business as we unlock the power of our ecosystem.

We continue delivering profitable growth with net profit rising 57% year-on-year to a new quarterly record of RUB 16.1 bn. ROE climbed to 46.1% in the period, underpinned by well-diversified revenue streams.

During 2Q we enhanced our partnership network by acquiring a 5% stake in SPB Exchange, an important partner for Tinkoff Investments. Also, we bought a controlling stake in the loyalty app Koshelek, which has substantial synergies with our core business and a market-leading position with 11 million monthly active users of the app.  We believe that there is significant scope for further partnerships and bolt-on acquisitions as we search for businesses that have strong fit with our ecosystem, in particular, in the areas of brokerage, payments and SME.   In line with this logic, we also launched a new Service Partner Program, aimed at seeking out top start-ups and technology projects. As part of this program, Tinkoff Group aims to become a strategic partner to companies that show stable growth and have the potential to be integrated into the business-lines of the Tinkoff ecosystem.

As previously communicated, the Company is currently engaging with regulators to explore licensing options and market entry strategies in a number of key markets in South and Southeast Asia. We plan to provide the market with an update on this important component of Company’s strategy in Q4 2021.

Finally, we plan to announce the second wave of TCSGH Board expansion in the coming weeks to further enhance our corporate governance.  Please look out for the announcement.”

Stanislav Bliznyuk, Chairman of the Tinkoff Bank Management Board, added:

“I’m pleased to highlight that our non-credit revenue continued rising steadily and accounted for 44% of total revenue in Q2 2021.

During the second quarter, we surpassed 100,000 daily deliveries of our Tinkoff Black products, the backbone of our ecosystem, setting a new daily record for us. Tinkoff Black now boasts 10.6 million total customers as of the end of June. At the same time, our Tinkoff Pro subscription service is taking off, with over 750k customer accounts activated only 8 months from its launch, which demonstrates a new level of engagement by our core client base.

In 2Q, we also launched our BNPL business – which is one of the more existing and faster-growing segments globally.  Our Dolyame offering became Russia’s first digital BNPL (buy-now-pay-later). 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. We believe this has tremendous market potential.

Tinkoff Investments, Russia’s leading brokerage by active customer base, expanded to serve 2.3 million total customers by the end of 1H 2021.  Most recently, Tinkoff Investments has appointed Ilya Oprenko as Head of Private Banking to lead this new offering at Tinkoff. He will focus on developing our advisory and lifestyle offerings, as well as Private Equity and alternative investments not previously available to Tinkoff Investments customers.

In July, we completed our debut securitisation transaction, which involved an offering of mortgage-backed securities. Going forward, securitisation will be an important mechanism at our disposal to balance capital requirements and manage liquidity.

Tinkoff Acquiring is capturing market share, reaching approximately 15% of Russian ecommerce acquiring in the first half of 2021 and securing our place as one of the top three Russian banks in this segment. We are confident that the rapid growth of Russian ecommerce will present us with many opportunities to further expand this business line.

Tinkoff Business continued growing its customer base, with particularly strong performance in the medium-sized business segment. The SME business line reached 547 thousand total customers at the end of the second quarter.

Our efforts have not gone unnoticed. Tinkoff has been named Central and Eastern Europe’s Best Digital Bank of 2021 by Euromoney’s Awards for Excellence, one of several important accolades we received this year.”

FINANCIAL AND OPERATING REVIEW

In 2Q’21, the Group’s total revenue grew by 37% y-o-y to RUB 65.0 bn (2Q’20: RUB 47.4 bn). Gross interest income increased by 22% y-o-y to RUB 39.9 bn (2Q’20: RUB 32.7 bn), driven by the continued growth of our loan portfolio, customer base, and credit product range.
Gross interest yield decreased y-o-y to 25.6% in 2Q’21 (2Q’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 increased slightly to 5.5% (2Q’20: 5.4%).

In 2Q’21, in connection with the increase in our funding base as we continued to grow our customer base and account balances, interest expense rose only by 11% y-o-y to RUB 6.2 bn (2Q’20: RUB 5.6 bn). This was driven by a continued decline in our cost of borrowing from 4.5% in 2Q’20 to 3.4% in 2Q’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 2Q’21, net margin grew by 23% y-o-y to RUB 33.1 bn (2Q’20: RUB 26.8 bn), primarily as a result of solid y-o-y net loan portfolio growth.

Cost of risk fell to 4.5% in 2Q’21 from 12.5% in 2Q’20. Our risk-adjusted net interest margin rose from 13.3% in 1Q’21 to 14.2% in 2Q’21 (2Q’20: 10.6%).

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 2Q’21 non-credit revenue represented 44% of the Group’s revenue and 18% of the Group’s profit before tax.

At the end of 2Q’21, the Group had:

• 10.6 mn total retail current account customers with a total balance of RUB 375 bn
• over 547k total SME customers, with a total balance of RUB 93 bn
• over 2.3 mn total Tinkoff Investments customers and over RUB 500 bn in customer assets under custody

In 2Q’21, operating expenses increased 90% y-o-y to RUB 24.1 bn (2Q’20: RUB 12.7 bn) driven by continued investment in marketing and advertising for our new, growing business lines.

The Group reported robust quarterly net profit of RUB 16.1 bn in 2Q’21 (2Q’20: RUB 10.2 bn), supported by new customer acquisition and monetisation. As a result, ROE for 2Q’21 stood at 46.1% (2Q’20: 40.0%).

In 2Q’21, the Group continued to maintain a healthy balance sheet with total assets growing by 12% since the end of 2020 to RUB 966 bn (31 Dec’20: RUB 859 bn).

The Group’s gross loan book grew by 30% since the end of 2020 to RUB 580 bn (31 Dec’20: RUB 447 bn), while the net loan book increased by 35% to RUB 507 bn (31 Dec’20: RUB 377 bn).

The Group’s NPL ratio decreased to 8.7% (31 Dec’20: 10.3%), while our loan loss provision coverage stood at 1.44x non-performing loans.

The Group’s customer accounts increased by 13% since the end of 2020 to RUB 707 bn (31 Dec’20: RUB 627 bn).

Tinkoff’s total equity rose by 16% to RUB 147 bn at the end of 2Q’21 (31 Dec’20: RUB 127 bn). As of 1 July 2021, the Group’s statutory N1.0 ratio stood at 12.2%, its N1.2 ratio stood at 11.9%, and the N1.1 ratio stood at 10.0%.

upgraded GUIDANCE FOR FY’21

While some uncertainty remains, we believe we have enough visibility to upgrade our guidance for the financial year of 2021 under the assumption of a gradual recovery in economic activity:

• We now expect our net loan portfolio growth to be 50+% (was previously more than 30%)
• We expect cost of risk to be in the 5% area (was previously 7-8%)
• We expect cost of borrowing to be 3-4% (unchanged)
• We expect the share of non-credit revenues to be more than 40% (unchanged)
• We expect net profit to be at least RUB 60 bn (was previously RUB 55 bn)

EXTENSION OF THE BUYBACK PROGRAMME TO 2022

The Board approved an extension to the current GDRs buyback programme launched April 2021 expiring 31 August 2021 of up to an additional 1.05M GDRs (programme aggregate 1.5M, of which approximately 450K have been purchased) in the period to 30 June 2022, up to a maximum programme expenditure of USD125M (conditional upon the approval of the shareholders for the period after the 2021 AGM).  The purpose of the Programme remains to fund the Company's long-term management incentive plan MLTIP, as notified in earlier disclosures in April 2021. The GDRs repurchased by the Company will be held in treasury pending cancellation or other permitted use.

The Programme will be conducted consistent with the general authority to repurchase shares/GDRs granted by the Company's shareholders at the 2020 annual general meeting, and otherwise in accordance with applicable laws and regulations. Details of any purchases made under the Programme will be provided via RNS announcements and published on the Company's website.

2Q’2021 AND POST-REPORTING PERIOD OPERATING HIGHLIGHTS

Customer base and engagement growth has led to increased market share

• The Group had over 10.6 mn total Tinkoff Black customers as of 1 July 2021.
• As of 1 July 2021, Group MAU stood at 12.5 mn, Group DAU stood at 4.2 mn.
• Tinkoff Bank’s credit card market share increased to 14,6% as of 1 July 2021, further solidifying its position as Russia’s second largest credit card issuer.

The market and industry associations recognised Tinkoff’s strong performance

• In May, Tinkoff Mobile was named Russia's most innovative mobile operator in a survey conducted by TelecomDaily – a leading Russian media covering telecom market.
• In July, Voice assistant Oleg won in two categories in Chatbot Rank 2021 ranking organised by Markswebb, scoring the first place both in the Best Customer Experience in Chats ranking out of all digital companies and in the Quality of Customer Experience in Chats ranking among Russia’s top 15 banks.
• In July, Tinkoff was named Central and Eastern Europe’s Best Digital Bank at Euromoney’s Awards for Excellence 2021. In this category, Euromoney looked for true leadership in a bank’s digital offering as well as evidence that the company’s technology benefits not only the efficiency of the institution, but also customers themselves.
• In July, Tinkoff received Quality Recognition Awards by J.P. Morgan in three categories, in recognition of its operational excellence in processing customer payments in foreign currencies in 2020.
• In July, Tinkoff won four out of seven CEMEA categories in the 2020 Visa Global Service Quality Awards – an annual client performance program honoring the world’s highest-performing acquirers, issuers, and issuer processors.
• In July, Frank Cards & Reward named Tinkoff’s Superapp the best daily mobile banking app among its 2021 awards recipients.
• In August, Brand Finance Magazine announced its 2021 Brand Finance Russia 50 rating, in which Tinkoff rose by 7 spots to 32^nd place, in addition to being included in the top 5 most valuable banks in Russia.

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

• 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
• In June, Tinkoff launched a beta version of its free voice assistant Oleg which became available to subscribers of all Russian mobile operators. Oleg is not just a personal assistant but also a “defender" protecting customers from spammers and fraudsters.
• In June, Tinkoff launched a new program to assist startups and technology projects, as part of which it will become a strategic investor or partner to companies that show stable growth and have the potential to be integrated into Tinkoff’s services, product lines or its wider ecosystem.
• In June, Tinkoff adopted AI technology developed by Anodot – the autonomous business monitoring company – to help safe-proof the way customers experience payments and trading on the Tinkoff platform.
• In July, Tinkoff’s voice assistant Oleg was a winner in the Increase in Productivity category and a finalist in the Cost Reduction category of the first national award AI Russia Awards’21 – the first national award in the field of effective use of artificial intelligence for business.
• In August, Tinkoff and Yandex announced a partnership through which Tinkoff will offer online loans of up to RUB 200k to customers on the Yandex.Market ecommerce platform.

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

• Tinkoff’s senior management will continue its series of virtual Strategy Days for analysts and investors throughout the second half of the year, where they will present detailed information on Tinkoff’s business lines and exciting new strategic initiatives.

Corporate governance enhancements and new management appointments

• In July, Ilya Oprenko was appointed Head of Private Banking where he will oversee the launch of Tinkoff Private and be responsible for growing the segment’s assets and managing private banking teams. He will focus on developing our advisory and lifestyle offerings, as well as Private Equity and alternative investments not previously available to Tinkoff Investments customers.
• In July, Ivan Zimin was appointed Vice President for Integration of Government Technologies and Services, in order to develop Tinkoff’s presences and partnerships with the Russian Government’s fintech and digital services.

Other corporate developments

• In June, Tinkoff acquired 5% in the St. Petersburg Exchange – a major platform for trading international securities in Russia.
• In July, Tinkoff completed its debut mortgage securitisation, placed by mortgage agent TB 1. The placement included class A and class B bonds secured by a mortgage loan portfolio. The order book was 1.5x oversubscribed.
• In July, Tinkoff announced it would open 9 new development hubs across Russia and Belarus. The company intends to hire 800 employees to staff the development hubs by the end of the year.

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"), and is disclosed in accordance with the Company's obligations under Article 17 of UK MAR.

CONFERENCE CALL INFORMATION

The Tinkoff management team will host an investor and analyst conference call at 14:00 UK time (16:00 Moscow time, 09:00 US Eastern Daylight Time), on Thursday, 26 August 2021.

The press release, presentation and financial statements will be available on the Tinkoff website at https://www.tinkoff.ru/eng/ir/financials/quarterly-earnings/

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