OREANDA-NEWS. December 06, 2012. Home Credit & Finance Bank ('HCFB' or 'the Bank'), the Russian operations of Home Credit B.V., announces its financial results for the nine month period ended 30 September 2012 in accordance with International Financial Reporting Standards (IFRS). HCFB is rated by Moody’s at Ba3, and by Fitch at BB-, reported the press-centre of HCFB.

HCFB continued the build-up of its retail banking operations,expanding its presence andgainingmarket share. Successfully offering fully-fledged services at 6,000 banking offices in various formats, HCFB increased its loan and deposit portfolios while maintaining strong efficiency, resulting in outstanding profit growth.

“Our performance is impressive, particularly in Q3. Our retail business is experiencing continual growth as a result of our diverse product offering, and deep knowledge of our customers’ needs and the market. We have confirmed our position as the #1 private bank in unsecured lending in Russia, demonstrating robust loan and deposit portfolio growth whilst keeping strong operational efficiency.

Our growth is healthy as we heavily invest in our success, continuously developing our infrastructure, technologies and distribution and maintaining our client focus.”

Ivan Svitek,
Chairman of the Management Board of HCFB

Highlights
Net profit for the nine month period of 2012 grew 46.2% to RUB 12.1 billion compared to the corresponding period of 2011, driven by overall business growth.

Net interest margin, cost-to-income ratio and ROAA for the nine month period ended 30 September 2012 remained strong at 20.4%, 31.3% and 8.4% respectively (9 months of 2011: 23.3%, 35.3%. and 10.1%) despite the extensive loan portfolio development and heavy investment in the distribution network.

Loans granted in the nine months of 2012 reached RUB 185.9 billion, twice the number for the previous year.

Net loans grew 59.1% during the first nine months of 2012 from RUB 112.8 billion to RUB 179.5 billion.

Non-performing loans (NPL) remained low with a 6.3% share of the total loan portfolio (YE2011: 5.8%).

HCFB’s capital adequacy level remained solid. Tier 1 CAR was 16.8% as at 30 September 2012 (YE2011: 20.5%). In October 2012 HCFB issued a subordinated Eurobond of USD 500 million, matured in 7.5 years and with a call option in 5.5 years.

HCFB confirmed its leading position amongst Russian private banks in unsecured lending (#4 amongst all Russian banks): with market share of 25.1% in POS loans (#1), 3.4% in cash loans (#4) and 3.0% in credit cards (#9). (Based on HCFB’s analysis.)

 Deposits and current accounts grew 90.9% compared to YE2011 to RUB 134.2 billion as at the end of September 2012, and comprised 67.4% of the Bank’s liabilities.

HCFB’s well-developed distribution infrastructure encompassing 874 bank branches (reported to the Central Bank of Russia / the CBR as bank offices), 5,089 loan offices, over64.5 thousand points of sale and 1,081 ATMs and terminals was the key driver of the growth in loans and deposits.

HCFB’s client base comprised 24.3 million contacts on 30 September 2012, with 3.7 million active clients.

Operating results
HCFB increased by twofold the volumes of loans granted during the first nine months of 2012 compared to the same period of 2011: RUB 185.9 billion in 9 months of 2012 compared to RUB 91.2 in corresponding period of 2011. As a result, the net loan portfolio grew 59.1% to RUB 179.5 billion as of 30 September 2012 compared to RUB 112.8 billion at the YE2011.

Cash loans were the key driver of overall loan portfolio growth. Volumes of new cash loans granted in 2012 grew threefold on a year on year basis. As a result net cash loans increased  112.5% in the nine months of 2012 to RUB 110.3 billion (YE2011: RUB 51.9 billion). Well-balanced products, an extensive distribution network and a successful marketing policy allowed HCFB to reach the #1 position for incremental growth in cash loans in 2012 and the #4 position in the overall cash loan market with a 3.4% market share.

The POS loans portfolio increased 11.1% in nine months of 2012 to RUB 45.8 billion compared to the end of 2011, due to promotional actions taken and the widened POS network. HCFB maintained its leading position1 in the POS loan market with a 25.1% market share. The Bank has historically been strong in electronics and has now expanded its portfolio to include furniture, DIY, clothing and medical and other services.

Credit card transaction volumes doubled on a year on year basis, and net card loans grew  32.3% to RUB 19.2 billion compared to YE2011. HCFB is one of the leaders in the credit card market, where it ranks 9th, with a 3.0% market share1. This segment promises to grow going forward.

On 30 September 2012 the Bank’s net loan portfolio had the following structure:
-    Cash loan share: 61.4% (RUB 110.3 billion);
-    POS-loan share: 25.5% (RUB 45.8 billion);
-    Credit card share: 10.7% (RUB 19.2 billion);
-    Mortgage loans, car loans and corporate loans: 2.4% (RUB 4.2 billion).

In 2011 deposits became the key funding source for HCFB’s activities, and in 2012 deposits and current accounts grew 90.9% to RUB 134.2 billion compared to YE2011 and comprised 67.4% of the Bank’s liabilities. As a result loan to deposit ratio decreased from 160.5% at the end of 2011 to 133.7% at the end of September 2012.

In 2012 HCFB has been promoting the rapid development of its distribution channels and remote banking services. As at 30 September, 2012 the Bank’s distribution network reached 874 bank branches (reported to CBR as bank offices), 5,089 loan offices, over 64.5 thousand points of sale and 1,081 ATMs and terminals. Home Credit Bank has continued to focus on customer satisfaction and the constant improvement of its services by heavily investing in IT systems and high-tech services such as Internet, mobile and telephone banking.

Successful implementation ofthestrategy and the popularity of our innovative products has resulted in constantly increasing client base. At the end of September 2012the client base comprised 24.3 million people. This growth of the client base gives the Bank a profound understanding of the consumer banking market and brings multiple cross-selling opportunities.

Financial Results
Notwithstanding the heavy investment in its distribution network and customer service operations, the Bank preserved its operating efficiency over the period.

Our operating income for the 9 months of 2012 grew by 80.0% to RUB 41.2 billion (compared to the corresponding period a year earlier), reflecting the outstanding business growth and solid margins.

Rigorous risk management remained among key priorities for the Bank. To support the sustainability of our fast-growing loan portfolio, we are applying a conservative provisioning policy with NPL provision coverage of 133.3% (which we believe is one of the highest in the industry). As a result of our conservative approach towards provisioning and the substantial growth and changes in the structure of our loan portfolio, risk costs in the nine month period of 2012 grew to 12.4% compared to 6.9%a year earlier. Nevertheless, the level of NPLs remained stable at a moderate 6.3% (at YE2011: 5.8%).

Our investment programme resulted in a 59.9% increase of the cost side on a year on year basis,as the distribution network expanded substantially (see above) and the number of employees grew 47.7% year on year.  Nevertheless, the Bank continued to manage its operating expenses carefully, with a stable and comfortable cost-to-income ratio of 31.3% and OPEX to Average Net Loans declining to 12.4%.  Strict cost-discipline has always been among our key priorities and we will continue to manage our expenses in a prudent manner in the future.

Our net profit grew by 46.2% to RUB 12.1 billion with substantial part created in Q3 of 2012, partly due to a one-off gain from a sale of a part of our loan portfolio.  We continued to maintain a strong and stable net interest margin of 20.4% and produced a strong RoAA of 8.4% for the reporting period.  All these achievements make us one of the best run banks in the industry.

The Bank’s capital adequacy level remained solid. On 30 September 2012, our capital adequacy ratio was 16.8% (20.5% at the end of 2011). The decrease in the ratio reflects mainly the growth of our loan portfolio. In October we issued a new Eurobond in the amount of USD 500 million, and registered this issue with the CBR as a subordinated debt in November 2012. This will help us further strengthen our capital adequacy and support our business growth.

For full details on the Bank’s 9M 2012 financial results, please visit: http://www.homecredit.eu/.