OREANDA-NEWS. October 10, 2013. Home Credit & Finance Bank (“HCFB” or ‘the Bank”), announces the consolidated financial results of the Russian and Kazakhstan operations for the six month period ended 30 June 2013 in accordance with International Financial Reporting Standards (IFRS). HCFB is rated by Moody’s at Ba3, and by Fitch at BB. SB JSC Bank Home Credit, a 100% subsidiary of HCFB, is rated by Fitch at BB-.

“Our business model has continued to prove its effectiveness and has ensured the sustainability of our operations. We have demonstrated once again that we are able to outperform the consumer finance market in terms of both asset quality and profitability. As a responsible lender we saw very quickly that the current situation in the retail lending market had caused a decline in asset quality, indeed we spotted the signs at the end of last year. Since then we have been proactively taking measures to improve the risk profile of our clients resulting in an intentional slowdown in the pace of growth. We believe that our strong expertise in risk management and our past performance during the financial crisis of 2008-2009 allow us to expect some stabilisation and further improvement in 2014.

First half net profit increased 18.8% compared to the same period last year reaching RUB 7.5 billion, and return on average assets was 4.2%. We are confident that our strong franchise in retail finance and our highly-effective business model will lead to our successful development in the retail market in the future.”

Ivan Svitek,
Chairman of the Management Board, HCFB

HIGHLIGHTS
Net profit for the six months of 2013 was RUB 7.5 billion, an 18.8% increase on the same period last year mainly thanks to the inclusion of the Kazakhstan operations. HCFB’s net interest margin was 19.0% and it produced a RoAA of 4.2% for the reporting period. Total assets reached RUB 394.2 billion.

Operating income for the reporting period reflected the growth across the business rising 88.4% to RUB 44.7 billion (1H 2012: RUB 23.7 billion).

General administrative and other operating expenses rose 59.6% to RUB 13.0 billion, as the number of employees grew to more than 32,000, up 47.9% year on year, in line with the widening of the branch network. Nevertheless, the Bank continued to manage its operating expenses carefully, with a best-in-class cost-to-income ratio of 29.1% and cost- to-average-net-loans ratio reaching 10.1%.  

Net loans grew 20.4% to RUB 285.7 billion during the first six months of 2013 (YE 2012: RUB 237.3 billion), with RUB 182.4 billion new loans granted (1H 2012: RUB 106.3 billion). Cash loans were the key driver of the overall loan portfolio growth. Volumes of new cash loans granted in 1H 2013 rose 68.1% on a year on year basis. Nevertheless the growth rates of cash loans volumes noticeably declined in the second half of 2013 as a result of a tightening in underwriting standards. HCFB now serves over 4.8 million active customers through 1,068 bank branches, 7,617 loan offices, over 81,000 points of sale, and 1,318 ATMs across Russia and Kazakhstan. The Bank‘s client base comprised 27.8 million customers as at 30 June 2013.

Deposits and current accounts grew 36.0% from YE2012 to RUB 237.0 billion as at 30 June 2013, and comprised 70.0% of the Bank’s liabilities. As a result, the loan to deposit ratio decreased from 136.2% at the end of 2012 to 120.5% at the end of 1H 2013, confirming the diminishing reliance on wholesale funding.

Non-performing loans (NPL) grew to 8.5% of the total loans (YE2012: 6.5%). To support the sustainability of the fast-growing loan portfolio, HCFB applied a conservative provisioning policy with NPL provision coverage of 125.6%. HCFB observed a decline in asset quality inthe overall retail market starting in Q4 of 2012, which accelerated in the beginning of 2013. To combat this, HCFB immediately started to implement corrective actions aimed at improving of customer risk profile.

HCFB remains strongly capitalised with a consolidated capital adequacy ratio (CAR) of 20.0% as at 30 June 2013 (YE2012: 21.4%). The decrease in the ratio reflected dividends of RUB 2.4 billion which the Bank paid in the first quarter.

Note: HCFB acquired a 100% stake in SB JSC “Bank Home Credit” (Kazakhstan) in January 2013, thus this company was not consolidated into H1 2012 results of HCFB but has been included in H1 2013 numbers.

For full details of HCFB’s 1H 2013 financial results, please visit: http://www.homecredit.net/.