OREANDA-NEWS. On November 20, 2008 Home Credit & Finance Bank ("HCFB" or "the Bank"), rated Moody's Ba3/NP/D-, S&P B+/B, and one of the leading banks specializing in consumer banking in Russia, announced its financial results for the nine month period ended 30th September 2008 in accordance with International Financial and Reporting Standards (IFRS), reported the press-centre of HCFB.

"We have been well placed to react proactively towards the changing market environment in recent months and to examine and adjust our short term objectives by optimizing our business process and sales strategy. We are now focused on our core business where HCFB established strong market position - short-term loans, such as POS loans, credit cards and cash loans. We also focus our efforts on enhancing our risk-management functions to be flexible in assessing risks and underwriting clients."

"The financial performance of HCFB has been continuously improving and our priority is to continue to deliver on our stated strategy - namely, evolving from a mono-line consumer finance bank into a universal retail bank and to refocus on liability structure."

"Under the current market conditions we will continue to be flexible in order to identify and implement the appropriate solutions to manage our business efficiently and effectively. We are confident that recent adjustments focusing on maximizing our efficiency will enable the Bank to maintain its stable position in terms of market position and business development through these challenging times."

Ivan Svitek, Chief Executive Officer

Highlights
Net profit for the period of RUR 2,344 million (9M 2007: RUR 915 million) - an increase of over 156%

Strong growth in net interest income to RUR 14,099 million (9M 2007: RUR 8,971 million) attributed to strong growth in the cash loan portfolio

The loan portfolio is well diversified - as of 30 September 2008, the POS loans share component of the total portfolio stood at approximately 40%, while credit cards was approximately 30% and cash loans increased to over 17%.

HCFB's position as one of the leaders of POS and credit card segments remains unchanged with 24% and about 11% of share of each segments.

The Bank's continuing focus on prudent risk management procedures resulted in a further downward trend in the level of non-performing loans (NPLs) to 9.2% of the gross loan book

HCFB's branch network covers 80 regions across the Russian Federation. As at 30 September 2008, HCFB had 93 representative offices (an increase of 13.4% from the same period of the last year); 147 loan offices (9M 2007: 59) and approximately 33,775 active point-of-sale outlets at retailers serving over 1,200 cities - (9M 2007: 25,287, representing an increase of 33.6%)

HCFB's customer base comprises more than 15 million customers across Russia providing significant cross selling opportunities across the product mix

HCFB accelerated its borrowing programme over the summer and since the start of 2008, has borrowed approximately USD 1.3 billion to support its activities

HCFB's cumulative net liquidity position within 12 months is positive - RUB 26.8 billion

HCFB maintains a strong capitalisation with risk weighted CAR of 18.9% assisted by the continuing support from its parent company - PPF Group.

BUSINESS
In the nine month period, the cumulative value of loans granted by the Bank rose to RUR 77.5 billion, which represents an increase of 33% when compared to the corresponding period for 2007.

The amount of credit card loans outstanding as at 30 September 2008 increased by 23% to RUR 23.9 billion. Credit card loans account for 29.3% of the gross loan book. HCFB's market share for credit card loans remains stable at a level of 10.5% reinforcing the Bank's position as the second largest provider of credit cards across Russia with nearly 9.5 million cards in issue.

The amount of point of sales (POS) loans outstanding as at 30 September 2008 increased by 26%. The POS loans portfolio now accounts for approximately 40% of the gross loan book. Management expect that the POS share, as a percentage of the gross loan book, will increase as a result of HCFB's decision in October to cease all further mortgage and car loans activities in favour of short-term and high-yield products such as POS loans, credit cards and cash loans.

Cash loan activities continued strongly in the period under review with loans outstanding as at 30 September 2008 increasing by over 130% up to RUB 14.5 billion. Cash loans now account for 17.7% of the gross loan book from the standing start in 2006 when the product was first piloted by the Bank. HCFB's share in the overall market for consumer cash loans in Russia stands at 0.80% as at 30th September, 2008.

In line with the Bank's stated strategy, HCFB is continuing to proactively develop its retail banking model by focussing on its liability structure. In December 2007, HCFB entered the retail deposit market by offering a new product via its own branch offices based in Moscow. As of today, HCFB's retail deposits products are available in more than 20 regions across the Russian Federation.

HCFB intends to further develop its retail deposit base via its own extended office network which now comprises 147 offices across the Russia. The results of the Bank's launch of a new retail deposit entitled  Good News  are quite positive, and demonstrate a relatively high demand from customers for this product.

RESULTS
HCFB reported a net profit of RUR 2,344 billion million for the nine month period ended 30 September 2008 compared to RUR 915 million for the prior year period, an increase of over 156%.

The key drivers of profitable growth in the first nine months of 2008 continue to emanate from the growth of the overall loan book; the focus on high yielding products and the continuing reduction in the level of NPLs. Net interest income in the period rose 57% to RUB 14,099 million (9M 2007: RUR 8,971 million) and the Bank's net interest margin is at a level of 26%.

The level of NPLs, as a percentage of the gross loan book, experienced a further decrease in the period to 9.2% (9M 2007: 13.5%) The continuing improvement in the level of NPLs and asset quality is testimony to the Bank's relentless pursuit in strengthening its risk-management procedures, collection processes and its focus on maintaining strict underwriting and fraud prevention measures.

The risk costs which are calculated as impairment losses to the gross loan book for the period stood at approximately 11.3%, reflecting the increase in business activity and improving risk management functions.

The capital position of the Bank remains strong as at 30 September 2008 with a risk-weighted capital adequacy ratio of 18.9%, in line with the Bank's target levels and a Tier 1 capital position of 18%. The liquidity position of the Bank is strong and the cumulative net liquidity position within 12 months is positive at RUB 26.8 billion.

In terms of funding, HCFB adjusted its pricing expectations to the appropriate market levels and accelerated its debt issuance programme over the summer period in order to achieve funding volume certainty in the turbulent credit markets. Over the summer HCFB carried out two of its largest Eurobonds placements for a total amount of USD 950 million and obtained a syndicated loan facility from a group of international relationship banks for a total amount of EUR 176.5 million.

HCFB fulfilled its debt service obligations for 2008 and is able to manage its redemption schedule for 2009 as a result of the prudent and dynamic management of assets and liabilities and the continuing support of the parent company - PPF Group and CBR support.