OREANDA-NEWS. September 01, 2011. Home Credit & Finance Bank ('HCFB' or 'the Bank'), the Russian operation of Home Credit B.V., announces its audited financial results for the six month period ended 30 June 2011 in accordance with International Financial Reporting Standards (IFRS). HCFB is rated Moody’s Ba3, Fitch BB-, reported the press-centre of HCFB.

“HCFB demonstrated very strong growth in net loans during the past year, almost tripling its cash loan portfolio. Underpinning this growth is our strategy to expand the distribution network in Russia, which grew substantially in the period, enabling us to succeed in increasing both lending activity and deposit taking. The Bank continues to deliver impressive key businessratios - ROAA of 10.9% and ROAE of 42.4% - which are far above market average. Given the current global market environment, we are closely monitoring developments but we remain confident in our ability to maintain a high level of efficiency within our business while delivering solid, profitable results.”

Ivan Svitek, HCFB Chairman of the Management Board
Highlights
Net profit increased 18.6% to RUB 5,773 million for the six month period ended 30 June 2011 compared to RUB 4,868 million in the corresponding period of 2010 due to the improving quality of the loan portfolio and overall portfolio growth

The net loanportfolio grew 42.0%year on year to RUB 82,855 million as at 30 June 2011, and increased 10.1% since the start of the year (31 December 2010: net loan portfolio RUB 75,275 million)

Operating income for the six month period ended 30 June 2011 was RUB 14,889 million, a 25.7% increase compared RUB 11,841 million in the corresponding period of 2010. As at 30 June 2011, the share of deposits together with current accounts increased to RUB 28,450 million and comprised 34% of total liabilities

HCFB maintains a well balanced and strong liquidity position with cash and cash equivalents of RUB 12,086 million and a highly liquid AFS (available for sale) bond portfolio of RUB 5,327 million, which comprised 15.8% of total assets as at 30 June 2011. The cumulative net liquidity position for the next 12 months is RUB 37.5 billion

In March 2011, HCFB successfully executed a Eurobond transaction for a total amount of USD 500 million

In April 2011, HCFB successfully placed two domestic bond issues with the aggregate amount of RUB 7 billion

In August 2011, HCFB closed another landmark transaction raising USD 200 million via a Syndicated Loan Facility

A strong risk management focus enabled HCFB to improve risks in 2010 and to continue to maintain the quality of the loan portfolio at a high level in 2011, with NPLs down to 6.6% of the loan book (6.9% as at 31 December 2010), and the cost of risk ratio at 6.7%as at 30 June 2011 (5.6% as at 31 December 2010)

HCFB continues to maintain a strong capital position with a Tier I capital adequacy ratio of 24.3% as of 30 June 2011 (33.5% as at 31 December 2010)

Robust loan growth supported by further network expansion. As of 30 June 2011 HCFB’s multi-channel distribution network consisted of 488 banking offices of different formats, 10 representative offices and over 51,000 point-of-sale facilities across 80 regions in Russia. HCFB also possesses a well developed ATM network which comprises 435 ATMs

On 26 May 2011, international rating agency Fitch assigned a BB- rating for HCFB  with a ‘Stable’ outlook

Business
HCFB experienced very strong growth in new lending with a 76.9% year-on-year increase. This translated into growth of net loans of 42.0%, with a loan portfolio of RUB 82,855 million as at 30 June 2011, a 10.1% increase since the end of 2010. With HCFB’s focus on further portfolio diversification, the Bank almost tripled its cash loan portfolio within one year resulting in the following portfolio breakdown as of 30 June 2011:

point-of-sale (POS) loans comprised 44.5% of the gross loan book (RUB 39,783 million),

the share of cash loans significantly increased to 34.8% (RUB 31,116 million),

the share of credit cards comprised 13.3% of the gross loan book (RUB 11,886 million),

mortgages, car loans and corporate loans comprised together 7.4% of the gross loan book (RUB 6,604 million).

HCFB’s deposit base together with current accounts grew by 63.0% compared to the corresponding period of last year, and by 19.6% compared to the end of 2010, and amounted to RUB 28,450 million at 30 June 2011 (31 December 2010: RUB 23,785 million), comprising 34% of HCFB’s total liabilities.

The HCFB client base increased to over 21 million clients as at 30 June 2011 with 3.5 million active customers, providing HCFB with in-depth market and client insight as well as significant cross-selling opportunities.

HCFB’s portfolio and deposit base growth was supported by further extending its distribution network across the entire country. HCFB’s well-developed banking infrastructure comprised 488 banking offices of different format (227 of which were opened in first half of 2011), over 51,000 points-of-sale, 435 ATMs as at 30 June 2011. In accordance with the Bank’s strategy, HCFB intends to continue expanding its banking network by growing the number of low cost offices and by the further development of the agents’ network.

To support HCFB’s further business growth, in March 2011 HCFB successfully executed a Eurobond transaction for a total amount of USD 500 million (due 2014) with a coupon of 7% p.a. In April 2011, HCFB placed two domestic bond issues totalling RUB 7 billion. In August HCFB made another landmark transaction raising USD 200 million via a Syndicated Loan Facility. The Bank will continue further diversification of its funding base, including by increasing the share of deposits.

Results
During the six month period of 2011, HCFB continued its strong performance with solid Return on Average Assets (ROAA) of 10.9%, and Return on Average Equity (ROAE) of 42.4% (30 June 2010; ROAA – 10.8%, ROAE – 34.4%). Net profit for the six month period ended 30 June 2011 increased to RUB 5,773 million, as compared to RUB 4,868 million for the corresponding period of 2010. This increase of 18.6% in net profit was due to the improving quality of the loan portfolio and overall portfolio growth.

The operating income for the six month period of 2011 reached RUB 14,889 million demonstrating a 25.7% increase over the corresponding period of 2010.

HCFB continues to manage its operating expenses effectively despite aggressive distribution channel expansion and very strong volume growth with a cost-to-income ratio of 33.1% as at 30 June 2011 compared to 36.1% for the corresponding period last year.

During the reporting period the Bank continued to maintain high asset quality, with the level of NPLs (non-performing loans older than 90 days as a percentage of gross loan book) at 6.6% at 30 June 2011 (compared to 6.9% as at 31 December 2010) and cost of risk ratio at 6.7%. HCFB historically maintains a conservative approach towards provisions and these NPLs were sufficiently covered by provisions at a level of 111.0% as of the reporting date.

HCFB maintains a well-balanced liquidity position with cash and cash equivalents of RUB 12,086 million and a highly liquid bond portfolio of RUB 5,327 million as at 30 June 2011, and holds a cumulative net liquidity position of RUB 37.5 billion for the next 12 months.

HCFB’s capital position, supported by its profitability, resulted in a risk-weighted Tier 1 capital adequacy ratio of 24.3% as at 30 June 2011, and HCFB intends to maintain its Tier 1 ratio at about 20 per cent as a long-term target.

HCFB’s strong financial and business performance has been recognized by international rating agency Fitch, which assigned HCFB a BB- long term rating with Stable outlook on 26 May 2011.