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    Home Credit B.V.: IFRS consolidated results for the nine months period ended 30 September 2015

    Strong Asian growth with continued improvement in Russia 

    Amsterdam, 4 Dec 2015: Home Credit B.V. (‘HCBV’), the Netherlands-based holding company for Home Credit’s leading multi-channel consumer finance operations in CEE and Asia, announces its consolidated unaudited financial results for the nine months ended 30 September 2015, prepared in accordance with International Financial Reporting Standards (IFRS). 

    “We are pleased to report that we achieved a profit of EUR 30 million in the third quarter. This is a significant improvement on the earlier part of the year and more than double the same quarter a year ago.

    Our Asian businesses performed exceptionally strongly this quarter with our Chinese operation achieving its best month in our history in September. China outpaced Russia for the first time in terms of new loans volume, reflecting our long-term rebalancing. Looking at highlights elsewhere, our expansion in India continues; Home Credit is now present in 30 cities. We also continue to see good progress in our investment phase markets: in the Philippines, we reached our 100,000th customer and have financed 75,000 mobile phone purchases in the country after only two years of operation. 

    Despite challenging conditions in Russia our efforts to tighten lending criteria and implement a cost optimisation programme have delivered steady improvement over the period. We will continue to manage the business tightly and focus on achieving a return to profitability. 

    As we look towards the end of the year, across the Group we remain focused on delivering the best products to our customers supported by excellent customer service.”

    Jiri Smejc, Chairman of the Board of Directors 
    and Group Chief Executive Officer, Home Credit B.V.


    Home Credit’s focus remains on balancing the business geographically, with Asia playing an increasingly larger role. Loans granted for the nine-month period ending 30 September 2015 totaled EUR 4,333 million while the number of active clients reached 10.8 million, a record for the group so far. The Russian contribution to the Group’s newly underwritten loan portfolio continues to decrease substantially (currently 33% compared to 62% in the same period last year) and we will continue to focus on strengthening our presence across all our chosen markets to ensure the Group is in the best position to achieve further future growth.

    Our progress in Asia is supported by Home Credit’s financial literacy programme to educate and help current and future customers. In China, our efforts on financial inclusion and financial education were recognised by Tsinghua University, which released China’s first research report on best practices in China's consumer finance market. We are proud to say that Home Credit was ranked the leader in financial inclusion and came second in the overall ranking, which surveyed 114 consumer finance providers in China.



    • The Group posted a net loss of EUR 61 million in the first nine months of 2015 compared to a EUR 67 million loss for first three quarters of 2014. For the third quarter itself, the Group reported a net profit of EUR 30 million, a substantial improvement on the EUR 12 million in the same period last year.
    • Operating income was impacted by the more conservative approach to lending in Russia, falling by 20.0% to EUR 1,200 million (9M 2014: EUR 1,500 million) in line with a corresponding contraction of the net interest income that dropped 17.9% to EUR 879 million compared to EUR 1,071 million for the same period last year. This in turn put pressure on the net interest margin which was reduced to 15.7% (9M 2014: 17.8%).
    • However, the more positive effect of tightened lending criteria in Russia combined with a growth strategy in Asia can be seen in the increased quality of HCBV's loan portfolio: as at 30 September 2015, the NPL share (i.e. loans more than 90 days overdue) of the gross loan book was reduced to 12.6% (31 December 2014: 15.3%). Furthermore, the NPL coverage ratio increased to 108.4% (31 December 2014: 106.4%).
    • Impairment losses amounted to EUR 609 million for nine months in 2015 which represents 32.2% decrease compared to the same period of 2014 (9M 2014: EUR 898 million). 
    • The Group reduced general administrative and other operating expenses by 2.2% to EUR 632 million from EUR 647 million. However, the cost-to-income ratio increased to 52.7% from 43.1% in 9M 2014, largely as a result of the fall in income during the nine month period.
    • The Group focused on resizing its Russian distribution network while continuing to invest in further expansion in Asia and, as at 30 September 2015, HCBV’s multi-channel network consisted of 175,180 distribution points with 172,981 POS and loan offices, 439 bank branches and 1,760 post offices. 
    • The net loan portfolio rose overall to EUR 5,503 million (31 December 2014: EUR 5,060 million) largely because of strong growth across the Group’s Asian operations, particularly China, and the acquisition of Air Bank in June 2015.
    • New loan volumes during 9M 2015 reached EUR 4,333 million, down 16.3% from the previous year (9M 2014: EUR 5,179 million), impacted by the cautious steps taken in Russia. In contrast, the new volumes in China increased by more than 70% y-o-y, validating the strategic decision to expand into Asia’s high-growth markets.
    • HCBV’s customer deposits reached EUR 4,999 million as at 30 September 2015, which represents 73.0% increase compared to end of 2014 (31 December 2014: EUR 2,890 million), predominantly as a result of the Group’s acquisition of Air Bank in the Czech Republic. The share of current account balances and term deposits now comprises 62.7% of total liabilities (31 December 2014: 49.8%).
    • HCBV’s capitalization remained solid with total equity of EUR 1,218 million and an equity-to-assets ratio of 13.3% (31 December 2014: 17.6%).




    Business Results

    As at Sep 30, 2015

    As at Sep 30, 2014

    YO-Y Change,%

    Loans granted YTD  (EUR millions) 4,333 5,179 (16.3%)
    Number of active clients (millions) 10.8 9.0 18.9%
    Number of distribution points 175,180 162,066 8.1%
    Number of employees (thousands) 68.3 59.1 15.6%



    Income Statement (EUR millions)

    9M period ended
    Sep 30, 2015

    9M period ended
    Sep 30, 2014


    Net interest income 879 1,071 (17.9%)
    Operating income 1,200 1,500 (20.0%)
    Impairment losses on financial assets (609) (898) (32.2%)
    Operating expenses1 (632) (647) (2.2%)
    Net profit after tax (61) (67) (9.3%)

    Financial Position (EUR millions)

    As at Sep 30, 2015

    As at Dec 31, 2014


    Total assets 9,187 7,037 30.5
    Net loan portfolio 5,503 5,060 8.8
    Shareholders' equity 1,218 1,239 (1.7)
    Wholesale funding 2,582 2,552 1.2
    Customer deposits 4,999 2,890 73.0
    1) Operating expenses comprise general administrative and other operating expenses




    Income Statement Ratios

    As at
    Sep 30, 2015

    As at
    Dec 31, 2014

    As at
    Sep 30, 2014

    Net interest margin1 15.7% 18.0% 17.8%
    Net interest income to operating income 73.3% 70.9% 71.4%
    Cost to average net loans2 15.6% 13.8% 13.1%
    Cost to income3 52.7% 44.6% 43.1%
    Cost of risk ratio4 15.0% 17.8% 18.2%
    RoAA (1.0%) (0.7%) (1.0%)
    RoAE (6.3%) (4.3%) (6.2%)



    Financial Position Ratios

    As at Sep 30, 2015

    As at Dec 31, 2014

    As at
    Sep 30, 2014

    Net loans to total assets 59.9% 71.9% 69.1%
    NPL ratio5 12.6% 15.3% 16.4%
    NPL coverage ratio6 108.4% 106.4% 104.1%
    Deposits to total liabilities 62.7% 49.8% 58.9%
    Equity to assets 13.3% 17.6% 15.9%
    Equity and deposits to net loans ratio 113.0% 81.6% 94.7%

    1) Net interest margin is calculated as net interest income divided by average balance of net interest earning assets.
    2) Cost to average net loans is calculated as general administrative and other operating expenses divided by average net loans.
    3) Cost to income ratio is calculated as general administrative and other operating expenses divided by operating income.
    4) Cost of risk represents impairment losses divided by average balance of net loans to customers.
    5) NPL ratio is calculated as gross non-performing loans divided by total gross loans. The Group defines non-performing loans as collectively impaired loans that are overdue by more than 90 days as well as loans considered individually impaired.
    6) NPL coverage ratio is calculated as loan loss provisions divided by gross non-performing loans.

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