Home Credit B.V. announces IFRS consolidated results for the six month period ended 30 June 2010
Home Credit B.V. (‘HCBV’), the Netherlands-based holding company for retail banking & consumer finance entities operating under the Home Credit brand in CEE and CIS countries, announces its consolidated financial results for the six month period ended 30 June 2010 in accordance with International Financial Reporting Standards (IFRS).
“We are pleased to announce yet another record result for the first half of 2010 with a six fold increase in net profit from the same period last year. Thanks to timely actions taken during the financial crisis to reduce costs and mitigate risk, HCBV is in a strong position to benefit from recovery in our chosen markets. Following a decline in 2009, our loan portfolio has grown in 2010 while our risk costs have decreased dramatically. The transformation of Home Credit into a retail bank from a consumer lending business continues apace in those markets where we are pursuing this strategy, with retail deposits now comprising over a quarter of total liabilities. Russia, which is starting to show tentative signs of recovery, is spearheading this drive and has yet again contributed strongly to the Group’s overall result.”
Alexander Labak, HCBV Chief Executive Officer
- Net profit amounted to EUR 126 million as of 30 June 2010 which represented the increase of 530% y-o-y (compared to 6M2009: net profit EUR 20 million)
- Operating income for 6M2010 increased by 2.4% to EUR 392 million (compared to 6M2009: EUR 383 million).
- Continued credit risk mitigation measures in response to economic downturn and still faint but noticeable recovery in Russia were reflected by significant decrease in risk-costs: 74.4% y-o-y (from EUR 190 million for 6M2009 to EUR 49 million for 6M2010). This resulted in a higher-than-expected profit.
- Stabilization of operating income was supported by the increase in net loan portfolio by 9.3%, to EUR 1,839 million as of 30 June 2010 (from EUR 1,682 million for YE2009).
- Inflow of retail deposits successfully continued: The share of account balances and term deposits comprised 27.4% of the total liabilities (compared to 19.3% as of 31 December 2009)
- The quality of the HCBV loan portfolio improved in the course of 6M2010 due to timely credit risk mitigation measures and resulted in drop of NPLs to 9.1% of the gross loan book (13.2% as of 31 December 2009). At the same time the NPLs were sufficiently covered by provisions at a level of 104.4%.
- HCBV remains strongly capitalized (total equity amounted to EUR 1,000 as of 30 June 2010) and continues to maintain a strong funding base and liquidity position thanks to the commitment from its parent PPF Group as part of its on-going support of HCBV.
– The consolidated ratio of total equity to total assets grew up to 33.6% as of 30 June 2010 (28.6% as of 31 December 2009).
– The consolidated ratio of liquid assets to total assets increased to 17.6% as of 30 June 2010 compared to 15.0% as of 31 December 2009.
ResultsIn the first six months of 2010 HCBV continued to demonstrate strong business and financial performance. Net profit for the six month period ended 30 June 2010 amounted to EUR 126 million, six times the result from the year earlier period of EUR 20 million.
Net interest income for the six month period ended 30 June 2010 decreased by EUR 42 million to EUR 279 million, compared to EUR 321 million for the prior year comparative period. The decline in HCBV revenues was partly compensated by lower interest expenses, caused by positive development of interest rates in the financial markets and lower outstanding balance of wholesale funding. Net gain/(loss) on financial operations was influenced by favourable development of foreign exchange rates as HCBV posted net gain on financial operations of EUR 5.8 million for 6M2010 compared to net loss on financial operations of EUR 35.7 million in the prior year comparative period.
After continuous decrease in the course of 2009 the loan portfolio started to grow again and amounted to EUR 1,839 million as of 30 June 2010, a 9.3% increase from YE2009. As a result of credit risk mitigation measures in response to the economic downturn, the risk-costs significantly decreased from EUR 190 million for 6M2009 to EUR 49 million for 6M2010. The higher quality of HCBV’s loan portfolio was supported by descending level of NPL (non-performing loans older than 90 days and younger than 360 days as a percentage of the gross loan book); from 14.5% as of 30 June 2009 over 13.2% as of 31 December 2009 to 9.1% as of 30 June 2010. At the same time the NPLs were sufficiently covered by provisions at a level of 104.4%.
The structure of HCBV funding sources improved as Home Credit companies with a banking license successfully continued in gathering deposits from individual and corporate customers; current accounts and term deposits grew by 43.4% up to EUR 541 million as of 30 June 2010. The increase in gathered deposits enabled the Group to reduce funding from banks and HCBV was able to keep and extend funding from the financial markets.
Favourable development of related foreign exchange rates and record net profit contributed to a substantial increase of HCBV’s equity by EUR 217 million up to EUR 1,000 million as of 30 June 2010.
Active presence of Home Credit companies in the CEE/CIS markets was enabled by continued strong support from its parent company, PPF Group, which was prepared to provide necessary funding liquidity as an alternative to unavailable market resources.
|(EUR millions)||6M2010||6M2009||Y-o-Y change|
|Net Loan Book||1,839||1,922||(4.3%)|