OREANDA-NEWS. December 09, 2010. Home Credit & Finance Bank (“HCFB” or “the Bank”), rated Moody’s Ba3/NP/D-, S&P B+/B, and one of the largest Russian retail banks with leading positions in certain segments of the consumer lending market, announces its reviewed financial results for the nine month period ended 30 September 2010 in accordance with International Financial Reporting Standards (IFRS), reported the press-centre of HCFB.

The third quarter of 2010 was an outstanding for HCFB: this was the first quarter we demonstrated loan book growth after 6 quarters of portfolio decrease, with POS and cash loan portfolios showing over 30% growth. During the reporting period we executed aggressive marketing campaign which enabled us to increase our market share up to 29% and attract more than 200,000 new clients.

Now our client base comprised over 19 million customers and provides us with more opportunities for cross-sell. We also observe significant improvements in quality of our portfolio with NPLs below 8%, which is historical minimum for HCFB. We generated record profit of RUB 6.7 billion, and continue to succeed in retail banking. Strong capitalization with CAR at solid 36.2% supported by increasing interest earning assets, and good liquidity position provide us and shareholders with the optimistic outlook for the further portfolio and business growth.
Ivan Svitek, HCFB Chairman of the Management Board

Highlights
As of 30 September 2010 the net profit increased by 116% and reached RUB 6,702 million significantly exceeding the result from the corresponding period of last year (30 September 2009: net profit RUB 3,097 million)

The loan portfolio increased during the third quarter of 2010 and reached RUB 76,429 million as of 30 September 2010, an increase of almost 13% from the turn of the year (31 December 2009: gross loan portfolio RUB 67,802 million)

Operating income for the nine month period of 2010 reached RUB 17,325 million, which is almost similar to the results of the corresponding period of 2009 with the operating income of RUB 17,834 million)

HCFB maintains a well balanced and highly liquid position with cash and cash equivalents of RUB 6,431 million and a highly liquid AFS bond portfolio of RUB 7,013 million, which comprised 16% of total assets as of 9M2010. The cumulative net position for 12 months totalled RUB 29,097 million as of 30 September 2010

The share of retail deposits together with current accounts increased up to RUB 18,802 million and comprised over 30% of our funding base compared to 17% as of 31 December 2009

Shareholders' equity reached RUB 30,347 million, up by 13.1% as compared to RUB 26,832 million as of 31 December 2009. HCFB posted a risk-weighted capital adequacy ratio (CAR) of 36.2% as of 30 September 2010 (31 December 2009: CAR 36.4%) which is the highest reported in the banking system

Strong risk-management focus enabled to improve substantially the quality of the loan portfolio and resulted in a reduction in NPLs to a level of 7.8% of the loan book (12.9% as of 31 December 2009). Annualized risk-cost indicator as of 30 September 2010 was 4.4% (11.9% as of 31 December 2009)

One of the key competitive advantages for HCFB is its well developed network of 82 representative offices and 200 banking offices, and over 39,000 points-of-sale at retailers across 80 regions of Russia. The Bank also possesses a well developed ATM network, which consisted of 278 ATMs

HCFB maintains leading position in the Russian consumer lending being #1 market player with 29.1% of market share in the POS segment and a 6.2% market share in the credit cards segment

Business
During the nine month period of 2010 the Bank increased sales of POS-loans by 44% and cash loans by 93% respectively compared with the corresponding period of last year which enabled the Bank to increase total gross loan portfolio by 10% year-on-year basis to RUB 76,429 million. During the third quarter of 2010 competitive product offering enabled the Bank to awake POS-market and increase its market share up to 29.1%. Focus on POS and cash loans resulted into product portfolio breakdown: the share of POS-loans grew up to 48% of gross portfolio (RUB 36,756 million), cash loans increased up to over 19% (RUB 14,584 million), credit cards share decreased to almost 17% (RUB 12,754 million); mortgages, car loans and corporate comprised 9.5% (RUB 7,176 million), 2.0% (RUB 1,491 million) and 4.8% (RUB 3,668 million) respectively.

HCFB client base which is considered to be one of the largest in the Russian market increased to 19.3 million clients, 200,000 from which joined the Bank under promo marketing campaign. Increasing client base provides HCFB with great opportunities for cross-sell taking into consideration the extended range of financial products and services offered by HCFB.

Retail deposits with current accounts grew by almost 58% compared with YE2009 and amounted RUB 18,802 million at 30 September 2010 and comprised more than 30% of HCFB's funding base compared to 17.1% as of 31 December 2009.

HCFB's well developed banking infrastructure continued its development with increasing number of new banking offices, ATMs and retail partners. The Bank is currently represented in 80 Russian regions and 1200 cities with 200 banking offices, 82 representing offices, and more than 39,000 points-of-sale at retailers and 278 ATMs. In accordance with the Bank's strategy HCFB intends to continue banking network expansion in future, which will be supported by alternative sales channels development.

Results
In the third quarter of 2010 HCFB continued to demonstrate strong business and financial performance. Net profit for the nine month period ended 30 September 2010 increased up to RUB 6,702 million, as compared to RUB 3,097 million for the nine month period of 2009. This increase of 116% in net profit was a result of growing loan portfolio, and continuing focus on reduction of credit risk costs and cost of funding.

The operating income for the nine month period ended 30 September 2010 reached RUB 17,325 million which is almost equal to operating income for the corresponding period of 2009.

During the reporting period the Bank enabled to improve significantly its asset quality, with the level of NPLs (non-performing loans older 90 days as a percentage of gross loan book) down to 7.8% at 30 September 2010 (compared to 12.9% at 31 December 2009).

The Bank historically maintains a conservative approach towards provisions. The NPLs were sufficiently covered by provisions at a level of 99% as of the reporting date.

HCFB maintains well balanced liquidity position with Cash and Cash equivalents of RUB 6.4 billion and highly liquid bond portfolio of RUB 7.0 billion, and a cumulative net liquidity position of RUB 29.0 billion for 12 months.

The historically high capital position of the Bank, supported by its high profitability, resulted in a risk-weighted capital adequacy ratio and Tier I of 36.2% as at 30 September 2010, making HCFB the highest capitalized bank in Russia.