OREANDA-NEWS. November 28, 2011. Home Credit & Finance Bank ('HCFB' or 'the Bank'), the Russian operation of Home Credit B.V., announces its unaudited financial results for the nine month period ended 30 September 2011 in accordance with International Financial Reporting Standards (IFRS). HCFB is rated Moody’s Ba3, Fitch BB-, reported the press-centre of HCFB.

“HCFB continued to deliver strong results with very high ROAA and ROAE of over 10% and 40%, respectively. We are successfully expanding our regional network with variable format offices which in return resulted in the significant growth of our cash loan and deposit portfolio. In terms of growth, HCFB outperformed the market while maintaining its risk profile and costs under control. Our strong liquidity and capital position enable us to support business growth and portfolio diversification during the peak Christmas season and into the future.”

Ivan Svitek,
HCFB Chairman of the Management Board

Highlights
Net profit increased 23.6% to RUB 8,284 million for the nine month period ended 30 September 2011 compared to RUB 6,701 million in the corresponding period of 2010 due to overall business growth

The net loan portfolio grew 37.1% year on year to RUB 96,755 million as at 30 September 2011, and increased 28.5% since the start of the year (31 December 2010: net loan portfolio RUB 75,275 million)

Operating income for the nine month period ended 30 September 2011 was RUB 22,882 million, a 32.1% increase compared RUB 17,325 million in the corresponding period of 2010

As at 30 September 2011, the share of deposits together with current accounts increased to RUB 34,154 million and comprised 37.5% of total liabilities

HCFB maintains a well balanced and strong liquidity position with cash and cash equivalents and a highly liquid AFS (available for sale) bond portfolio of RUB 10,660 million, which together comprised 8.9% of total assets as at 30 September 2011. The cumulative net liquidity position for the next 12 months was positive totalling RUB 43.8 billion

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

HCFB continues to maintain high quality of its loan portfolio with NPLs down to 6.2% of the loan book (6.9% as at 31 December 2010), and the cost of risk ratio at 6.9% as at 30 September 2011 (5.6% as at 31 December 2010)

HCFB’s capital position remained strong, with a Tier I capital adequacy ratio 22.9% as at 30 September 2011 (33.5% as at 31 December 2010)

Continuing loan and deposit portfolio growth was supported by further network expansion: as at 30 September 2011 HCFB’s multi-channel distribution network consisted of 822 banking offices of different formats, 10 representative offices and over 54,000 points-of-sale in 7 federal districts in Russia as well as a well developed ATM network of 549 ATMs

Business
HCFB continued its loan portfolio growth, resulting in a year on year increase of net loans of 37.1%, with a loan portfolio of RUB 96,755 million as at 30 September 2011, a 28.5% increase since the end of 2010.

Following HCFB’s focus on further diversifying its portfolio, the Bank significantly increased its cash loan portfolio resulting into the following portfolio breakdown as of 30 September 2011:

point-of-sale (POS) loans comprised 40.3% of the gross loan book (RUB 41,963 million)

share of cash loans significantly increased to 39.9% (RUB 41,577 million)

share of credit cards comprised 13.5% of the gross loan book (RUB 14,059 million)

mortgages, car loans and corporate loans comprised together 6.3% of the gross loan book (RUB 6,475 million).

The HCFB client base increased to 21.4 million clients as at 30 September 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 loan and deposit portfolio growth was supported by effective marketing campaigns and ongoing banking office network expansion. HCFB’s well-developed banking infrastructure comprised 822 banking offices formed of different formats: over 54,000 points-of-sale and 549 ATMs as at 30 September 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 August HCFB made a landmark transaction raising USD 200 million via a Syndicated Loan Facility (USD and RUB denominated tranches). The Bank will continue the further diversification of its funding base, including an increase in the share of deposits.

The deposit base together with current accounts grew by 63.0% compared to the corresponding period of last year, and by 43.6% compared to the end of 2010, and amounted to RUB 34,154 million at 30 September 2011 (31 December 2010: RUB 23,785 million), comprising 37.5% of HCFB’s total liabilities.

Results
During the nine month period of 2011, HCFB continued to deliver strong results with a solid Return on Average Assets (ROAA) of 10.1%, and a Return on Average Equity (ROAE) of 40.3% (30 September 2010; ROAA of 9.8%, ROAE of 31.0%). Net profit for the nine month period ended 30 September 2011 increased to RUB 8,284 million, compared to RUB 6,701 million for the corresponding period of 2010. This increase of 23.6% in net profit was due to the overall business growth.

Operating income for the nine month period of 2011 reached RUB 22,882 million demonstrating a 32.1% increase over the corresponding period of 2010.

HCFB continues to manage its cost base effectively despite an extensive banking office expansion programme and continuing strong portfolio growth with a cost-to-income ratio of 35.3% as at 30 September 2011 compared to 37.7% for the corresponding period last year.

During the reporting period the Bank continued to maintain a high asset quality, with the level of NPLs (non-performing loans older than 90 days as a percentage of gross loan book) at 6.2% at 30 September 2011 (compared to 6.9% as at 31 December 2010) and a cost of risk ratio at 6.9%. HCFB historically maintains a conservative approach towards provisions and these NPLs were sufficiently covered by provisions at a level of 114% as of the reporting date.

HCFB maintains a well-balanced liquidity position with cash and cash equivalents of RUB 4,248 million and a highly liquid bond portfolio of RUB 6,412 million as at 30 September 2011, and holds a cumulative net liquidity position of RUB 43.8 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 22.9% as at 30 September 2011.