OREANDA-NEWS. March 05, 2012. Home Credit B.V. (‘HCBV’), the Netherlands-based holding company for Home Credit in Europe, a leading multi-channel consumer finance provider predominantly in Russia as well as the Czech Republic, Slovakia, Belarus and Kazakhstan*, announces its consolidated financial results for the year ended 31 December 2011 in accordance with International Financial Reporting Standards (IFRS), reported the press-centre of HCBV.

"Our growth strategy of building our loan portfolio and expanding our branch network continues to deliver results due to our continued focus on cost productivity. We remain the undisputable leader in the Russian consumer finance market with high business efficiency. The Russian business remains a key growth driver and during 2011 we have also consolidated our market positions in the Czech Republic and Slovakia. In 2012 we will continue to diversify our consumer finance product offering and in those markets where we have a banking licence, we will pursue our stated strategy of growing deposit accounts to diversify our funding base and seek to offer innovative services to carry on attracting new customers."

Alexander Labak, HCBV Chief Executive Officer

HIGHLIGHTS
Net profit was stable at EUR 231.3 million as at 31 December 2011compared to 2010 net profit of EUR 234.2 million, with a solid 28.0% RoAE.

Operating income for 2011 increased by 21.4% to EUR 949.5 million (2010: EUR 782.3 million).

Net loan portfolio continued to grow strongly, up 38.1% to EUR 3,006.9 million as at 31 December 2011 (2010: EUR 2,176.9 million). Loan growth was boosted by cash loans, which more than doubled in the period.

HCBV’s strategy to increase retail deposits continued to be a success with a 187.7% increase y-o-y. Share of account balances and term deposits now comprise 49.2% of total liabilities (31 December 2010: 27.5%).

Quality of the HCBV loan portfolio stabilised in 2011 with the NPL share of the gross loan book reduced to 8.5% (10.1% as at 31 December 2010) while the NPL coverage ratio remains strong at over 111.4%.

HCBV remains strongly capitalised and continues to diversify its funding base: total equity amounted to EUR 831.3 million as at 31 December 2011 following the EUR 320.0 million dividend payout in 2011. The operations continued to attract customer deposits (up 187.7% to EUR 1,697.3 million compared to EUR 590.0 million as at 31 December 2010) and also successfully accessed the wholesale debt market through several landmark transactions.

Continuing loan and deposit portfolio growth was supported by further distribution network expansion (24.2% y-o-y), predominantly in Russia. As at 31 December 2011, HCBV’s multi-channel distribution network consisted of 1,300 branches of different formats, 68,368 points-of-sale, 2,697 post offices as well as a developed ATM network of 649 ATMs.

RESULTS
Net profit was stable at EUR 231.3 million as at 31 December 2011, with a solid 28.0% RoAE, compared to 2010 net profit of EUR 234.2 million. This strong result was achieved despite the negative impact of capital expenditure associated with the successful regional and branch network expansion in Russia, the significant EUR 16.5 million withholding tax charge on a dividend received by the Group from the Russian business, a higher level of loan loss provisions due to higher growth levels and an adjustment resulting from the implementation of hyperinflation accounting for the Belarus business, in line with IAS 29.

Net interest income for the year ended 31 December 2011 increased by EUR 106.8 million or 18.1% to EUR 696.9 million, compared to EUR 590.1 million for the prior year.

Net fee and commission income grew by 22.2% to EUR 210.2 over 2011 (2010: EUR 172.1 million) thanks to a well-established cross-selling strategy.

General administrative and other operating expenses rose by 26.1% to EUR 445.2 million from 353.1 due to the aggressive branch expansion in Russia. HCBV continues to implement cost management initiatives to reduce this impact; the cost-to-income ratio rose slightly to 46.9% over the year while the cost to average net loans ratio improved to 18.1% (2010: 19.1%).

HCBV’s loan portfolio grew by 38.1% to EUR 3,006.9 million as at 31 December 2011 (2010: EUR 2,176.9 million). Loan growth was boosted by an increase in cash loans, which more than doubled during the period. In terms of the loan portfolio composition, cash loans comprised 44.1% as at 31 December 2011, mainly driven by Russia and its regional and distribution network expansion.

The quality of HCBV’s loan portfolio stabilised during 2011, as the NPL (non-performing loans more than 90 days overdue as a percentage of gross loan book) ratio was reduced to 8.5% through HCBV’s prudent approach to risk management which comprised steps to enhance collection methods and optimise the underwriting process.

HCBV maintains a strong funding base and liquidity position and the Group’s funding structure continued to diversify as Home Credit successfully attracted deposits from individual and corporate customers. The increase in gathered deposits was bolstered by continued support from the wholesale markets through several international and domestic landmark transactions (e.g. USD 500 million Eurobond, RUB 7 billion stock exchanged bonds, USD 200 million Syndicated Loan Facility).

*Minority stake (9.99%) - JSC Home Credit Bank (Kazakhstan) is not consolidated to Home Credit B.V.