OREANDA-NEWS. On September 10, 2008 Home Credit & Finance Bank (“HCFB” or “the Bank”), rated Moody’s Ba3/NP/D-, S&P B+/Stable/B, and one of the leading banks specializing in consumer banking in Russia, announced its financial results for the six month period ended 30th June 2008 in accordance with International Financial and Reporting Standards (IFRS), reported the press-centre of HCFB.

"Home Credit & Finance Bank is delighted to build on its success with a further strong set of results. As well as delivering on loan book diversification and profitable growth, we are focussed on innovative new products to assist in a maturing and increasingly competitive marketplace. Despite tougher global conditions, the Russian consumer finance market is growing and thanks to our investors' support and successful Eurobond placements we are in a good position to continue delivering on our strategy. The ongoing support of our parent, PPF Group, also enables us to capitalise on our success and to consolidate our position in the market."
Jiri Smejc, Chairman of the Board of Directors

HIGHLIGHTS
Net profit for the period of RUB 1,294 million (H1 2007: RUB 456 million) - an increase of 184% Y-o-Y.

Continuing improvement in net interest income to RUB 9.2 billion (H1 2007: RUB 5.7 billion) attributed to diverse product growth.

Operating income increased 73.5% in the period to RUB 12.1 billion (H1 2007: RUB 7 billion).

74.4% Y-o-Y increase in the gross loan portfolio from RUB 43.7 billion at H1 2007 to RUB 76.2 billion at H1 2008.

The volume of loans granted has increased by 47.6% from RUB 33.6 billion at H1 2007 to RUB 49.7 billion at H1 2008.

HCFB has continued to diversify its product portfolio, in line with the group strategy, with cash loans now comprising 16% of HCFB's gross loan book andcredit cards accounting for 30%.

The HCFB branch network is growing in line with the Bank's strategic objectives, with 115 offices now open compared to 59 offices opened as of H1 2007.

At H1 2008 HCFB had relationships with 14.4 million customers, compared to 10.6 million at H1 2007.

HCFB's market position in the POS and Credit Card segments remained stable as at H1 2008, HCFB was the second largest player in these segments in terms of its loan portfolio.

Maintenance of strong capitalization with risk weighted CAR of 19.5%.

HCFB's cumulative net liquidity position within 12 months is strong - RUB 28.7 billion.

The funding position of the Bank is strong due to the RUB 4 billion domestic bond issue earlier this year; the June Eurobond issue for USD500 million and a EUR900 million commitment from PPF Group. The Bank's refinancing needs are covered for the foreseeable future and further business growth is supported.

The focus on risk management has produced further positive results with another decrease in NPLs calculated as a percentage of the gross loan book.NPLs fell from 13.5% at H1 2007 to 9.3% at H1 2008. NPL provision coverage reached 112.9% at H1 2008 compared to 97.8% at H1 2007.

In April 2008, the international rating agency Standard & Poor's affirmed HCFB rating at B+/Stable/B level, Moody's issued updated Credit Opinion on HCFBcurrent ratings. Outlook for both ratings - stable.

BUSINESS
During the first half of 2008 the consumer banking market in Russia grew by 21% from RUB 2.97 trillion at 31 December 2007 to RUB 3.6 trillion as measured by loans outstanding. The growth reduced slightly as the market matured compared to the same period for the previous year when the growth rate was 28%.

HCFB's strategy is progressing well as the Bank continues to diversify from a monoline product provider to a retail bank with a lending focus and diversified product offering. The Bank continues to focus on the growth of its cash loan and credit card businesses and will continue to introduce new competitive products, which reflect market demand. In accordance with HCFB's strategy, the Bank is continuing to optimise its product range with non-commission products based on consumer risk/reward profiles in order to continue sustainable and profitable growth.

The outstanding cash loans portfolio increased by 157% to RUB 12.3 billion at H1 2008 compared with RUB 4.8 billion a year earlier, and cash loans granted increased from 4.1 billion at H1 2007 to over 8 billion RUB at H1 2008.

Similarly, the credit card portfolio grew by 29% from 17.8 billion at H1 2007 to RUB 22.9 billion at H1 2008. Despite the competitive environment HCFB's position in the credit card segment remains stable with approximately 11% market share as at H1 2008. As of H1 2008, HCFB had issued over 8.6 million credit cards.

The Bank continues to grow its mortgage loan book at a prudent rate relative to the rest of the gross loan book and now has proven experience and a firm foothold in this market. As at H1 2008, the mortgage portfolio had grown to RUB 7.5 billion (from RUB 1.2 billion at H1 2007) comprising approximately 9.8% of HCFB gross loan book.

The POS loan book continues to represent the largest part of the business with RUB 31.8 billion outstanding, and has grown by over 60% compared to the same period in 2007. POS loans granted have increased by 58% from H1 2007. Market share has also increased from 21% to 24% from H1 2007 to H1 2008 thus maintaining HCFB's position as the second largest player in the segment. This is in-line with the Bank's expectations and the annual cycle.

The Bank has selectively increased its distribution capabilities. The network of active POS outlets has grown to over 32,000 as at H1 2008, an increase of 29% year on year. The number of representative offices at H1 2008 was 92, while the branch network grew to 115 offices from 59 at H1 2007, reflecting the Bank's strategy to become a retail bank with a lending focus. The Bank is consequently now present in 1,200 cities over 80 regions.

RESULTS
HCFB reported a record net profit of RUB 1,3 million for H1 2008, an increase of 184% on H1 2007 (RUB 456 million). This excellent growth was obtained due to several factors:

Net interest income increased to RUB 9.2 billion from RUB 5.7 billion due to the continued growth and diversification of the loan portfolio.

As the Bank improves its controls and risk procedures, the level of NPLs calculated as a percentage of the gross loan book has significantly decreased from 13.5% at H1 2007 to 9.3% at H1 2008 also reflecting the change made in June 2008 in the Bank's write-off policy. Provision for loan coverage has been increased from 105.5% at 31 December 2007 to 112.9% at H1 2008.

HCFB continues to enjoy a diversified funding base and a strong capital position due to the RUB 4 billion domestic bond issue earlier this year, the June Eurobond issue for USD 500 million and a EUR900m funding commitment from its parent, PPF Group. This commitment breaks down as EUR500m over the next year and EUR400m for the next 6.5 years.

In addition HCFB successfully placed its fifth Eurobond of USD 450 million in August. Under the transaction structure USD 149.1 million of USD 200 million of existing notes due in 2010 have already been exchanged. HCFB has also obtained a EUR176.5m syndicated loan.

The successful implementation of HCFB's funding strategy under current global market conditions has allowed HCFB to fulfil its funding target in the Eurobond market until mid 2009.

PPF Group continues to further support HCFB's business growth and the deposit of USD 328 million has been rolled over for the period of one year to September 2009.

The Bank maintains a risk-weighted capital adequacy ratio of 19.5%. In August 2008, the international rating agency Standard & Poor's affirmed HCFB rating at B+/Stable/B level, Moody's issued updated Credit Opinion on HCFB current ratings. Outlook for both ratings - stable.