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    Home Credit Bank’s IFRS results for the first nine months of 2013: high efficiency and strong revenues combat changing market conditions

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     Moscow, 27 November 2013: Home Credit and Finance Bank (hereinafter also referred to as “HCFB”, “Home Credit Bank” or the “Bank”) reports consolidated results of the banks in Russia and Kazakhstan for the first nine months of 2013 under the International Financial Reporting Standards (IFRS). HCFB’s credit ratings are Ba3 by Moody’s and BB by Fitch, and its wholly-owned subsidiary Home Credit Bank (Kazakhstan) has been rated BB- by Fitch.

    “Despite the difficult market situation, our Bank retains high efficiency and good income ratios. Net profit for the first nine months was RUB 9.4 billion and return on capital was 23.8%.
    Retail banking in Russia is maturing. The tightening of requirements for borrowers is leading to escalating competition for good quality clients. The ability to adapt quickly is one of our Bank’s main competitive advantages. We have adjusted our business model, emphasising the quality of service and credit portfolio. We have stepped up our efforts to increase our share of the credit card market. This is a more sophisticated product, offering great opportunities in terms of client segmentation and catering for our clients’ needs. These changes will improve our Bank’s competitiveness as it faces these new market conditions.”

    Ivan Svítek,
    Chairman of the Board of Directors, HCFB


    • The Bank’s net profit for the first nine months of 2013 was 9.4 billion roubles, down 23% on the same period last year, which is attributable primarily to the general market trend of deteriorating quality of assets. This result is in line with the expectations announced by HCFB earlier this year. The Bank earned RUB 1.8 billion in the third quarter of 2013. The Bank posts good results in terms of the net percentage margin (19.6%) and return on average equity (ROAE), which was 23.8%. The Bank’s assets amounted to RUB 375.8 billion.
    • Operating income for the period under review reflected the increase in the Bank’s business activity and has risen 63.9% to RUB 67.5 billion compared with the same period of the preceding year (RUB 41.2 billion for the first three quarters of 2012).
    • Total administrative and other costs increased 54.8% to RUB 20 billion in connection with the development of the regional network and a 34% increase in the number of employees to more than 33,000. Even so, the Bank managed its costs effectively, achieving a cost-to-income ratio of 29.6% (Q3 2012: 32%), one of the most efficient results on the market, and a cost-to-average-net-loans ratio of 10% (Q3 2012: 12.6%).
    • The net loan portfolio grew 22.2% to RUB 290 billion (Q3 2012: RUB 237.3 billion) for the first nine months of 2013. Credit provided amounted to RUB 262.1 billion (Q3 2012: RUB 185.9 billion). Cash loans were the principal driver behind the growth of the credit portfolio, increasing 24.6% compared with the same period last year. Despite this, the rate of growth in credit provided decreased in the second half of the year as a result of tighter requirements for underwriting and the introduction of new regulatory measures. Home Credit Bank currently provides services to almost 5 million active clients in Russia and Kazakhstan through 1,172 branches, 8,051 micro-branches and more than 88,000 points of sale and 1,323 ATMs. At 30 September 2013, the Bank’s client base comprised 28.5 million customers.

    Note: HCFB acquired 100% of the shares of Home Credit Bank (Kazakhstan) on 31 December 2012. Therefore the latter company’s results were not included in the Q3 2012 results, but were consolidated in the results at the end of Q3 2013.
    Financial statements reporting the results for the third quarter of 2013 are available at

    Balance Sheet (RUB millions)* Q3 2013 2012 Change, %
    Assets 375,806 337,816 11.2
    Net loan portfolio 289,992 237,316 22.2
    Shareholders’ equity 53,348 51,334 3.9
    Income statement, RUB billions* Q3 2013 2012 Change, %
    Operating income 67,493 41,185 63.9
    Profit before tax 12,219 15,280 (20)
    Net profit 9,382 12,113 (22.5)
      Q3 2013 2012 Change, %
    Return on average assets (ROAA)1 3.4 8.6 8.4
    Return on average equity (ROAE)2 23.8 52.5 48
    Cost to income3 29,6 32 31.3
    Capital adequacy in % 21 21,4 16.8
    NPL ratio in %4 9.9 6,5 6.3
    Cost of risk ratio5 17.7 11.4 12.4

    1) RoAA as an annual percentage is calculated as net profit divided by average balance of total assets for the same period. The assets of the Kazakh bank were excluded from the calculation of the ratio for 2012 because it was acquired on 31 December 2012, as a result of which the bank did not contribute to 2012 revenues.
    2) RoAE is calculated as net profit divided by average balance of equity. The assets of the Kazakh bank were excluded from the calculation of the ratio for 2012 because it was acquired on 31 December 2012, as a result of which the bank did not contribute to 2012 revenues.
    3) The cost-to-income ratio is calculated as general administrative expenses divided by operating income.
    4) The NPL ratio is calculated as gross loans overdue by more than 90 days divided by total gross loans.
    5) The cost-of-risk ratio is calculated as impairment losses divided by average balance of net loans to customers in an annual representation. The loan portfolio of the Kazakh bank was excluded from the calculation of the ratio for 2012 because it was acquired on 31 December 2012, as a result of which the Bank had no influence on impairment losses for 2012.

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