OREANDA-NEWS. June 17, 2013. Home Credit & Finance Bank (“HCFB” or ‘the Bank”), announces the consolidated financial results of the Russian and Kazakhstan operations for the three month period ended 31 March 2013 in accordance with International Financial Reporting Standards (IFRS). HCFB is rated by Moody’s at Ba3, and by Fitch at BB. Bank Home Credit Kazakhstan, a 100% subsidiary of HCFB, is rated by Fitch at BB-.

“Our strategy of building a comprehensive distribution network, providing high quality customer service and products and emphasising risk management has proved to be the right one. As a result, we continue to see economies of scale that increase our operational efficiency. We have delivered portfolio growth of 6.5% with net profit of RUB 3.5 billion in the first quarter of 2013, up 45% on the same period last year. Our strong business franchise together with experienced management team gives us optimism for the future.”

Ivan Svitek, Chairman of the Management Board, HCFB

Highlights

Net profit for Q1 2013 was RUB 3.5 billion, a 45.2% increase on the same period last year. HCFB continued to maintain a stable net interest margin of 18.9% and produce a RoAA of 4.1% for the reporting period. Total assets reached RUB 343.7 billion.

Operating income for the reporting period reflected the growth across the business rising 99.6% to RUB 20.0 billion (1Q 2012: RUB 10.0 billion). The sharp increase in operating income is due to the strategy of investing in rapid branch expansion combined with rigorous cost management.

General administrative and other operating expenses rose 57.7% to RUB 6.1 billion, as the number of employees grew to more than 30,000, up 45.4% year on year, in line with the branch expansion programme.  Nevertheless, the Bank continued to manage its operating expenses carefully, with a best-in-class cost-to-income ratio of 30.3% and OPEX to Average Net Loans declining to 9.9%.

Net loans grew 6.5% to RUB 252.8 billion during the first quarter 2013 (YE 2012: RUB 237.3 billion), with RUB 76.3 billion new loans granted (1Q 2012: RUB 42.3 billion). Cash loans were the key driver of the overall loan portfolio growth. Volumes of new cash loans granted in Q1 2013 rose 93.2% on a year on year basis. This growth was fuelled by the regional expansion in Russia, as well as the development of distribution channels and remote banking services. To facilitate this growth, HCFB has continued adding distribution points across Russia and Kazakhstan and now serves over 4.7 million active customers through 960 bank branches, 6,920 loan offices, over 73,000 points of sale, and 1,276 ATMs. The Bank‘s client base comprised 27.1 million contacts as at 31 March 2013. 

Deposits and current accounts grew 18.1% from YE2012 to RUB 205.8 billion as at 31 March 2013, and comprised 70.2% of the Banks’s liabilities. As a result, the loan to deposit ratio decreased from 136.2% at the end of 2012 to 122.8% at the end of the first quarter 2013, confirming the diminishing reliance on wholesale funding.

Non-performing loans (NPL) grew to 7.7% of the total loans (YE2012: 6.2%). To support the sustainability of the fast-growing loan portfolio, HCFB applies a conservative provisioning policy with NPL provision coverage of 123.3%.

HCFB remains strongly capitalised with consolidated capital adequacy ratio (CAR) of 20.0% as at 31 March 2013 (YE2012: 21.4%). The slight decrease in the ratio reflects dividends of RUB 2.4 billion which the Bank paid in the first quarter.
 
In March 2013 the international rating agency Fitch upgraded Home Credit & Finance Bank’s long-term rating to “BB” with a Stable Outlook, this rating update is further evidence of the success of the Bank’s business model. Subsequently, in April 2013, Fitch assigned Bank Home Credit Kazakhstan a long-term rating of “BB-” with a Stable Outlook. This rating will enable the Kazakh-based unit to approach new sources of funding for its growing business.
 
For full details of HCFB’s 1Q 2013 financial results, please visit: http://www.homecredit.net/.