November 2020
INVESTOR PRESENTATION
0
Disclaimer
Certain statements and/or other information included in this document may not be historical facts and may constitute "forward looking statements" within the meaning of Section 27A of the U.S. Securities Act and
Section 2(1)(e) of the U.S. Securities Exchange Act of 1934, as amended. The words "believe", "expect", "anticipate", "intend", "estimate", "plans", "forecast", "project", "will", "may", "should" and similar expressions
may identify forward looking statements but are not the exclusive means of identifying such statements.
Forward looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues, operations or performance, capital expenditures, financing needs, our plans or intentions relating to the expansion or contraction of our business as well as specific acquisitions and dispositions, our competitive strengths and weaknesses, our plans or goals relating to forecasted production, reserves, financial position and future operations and development, our business strategy and the trends we anticipate in the industry and the political, economic, social and legal environment in which we operate, and other information that is not historical information, together with the assumptions
underlying these forward looking statements. By their very nature, forward looking statements involve inherent risks, uncertainties and other important factors that could cause our actual results, performance or achievements to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the political, economic, social and legal environment in which we will operate in the future. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements
represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. We expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect actual results, changes in assumptions or in any other factors affecting such statements.
1
A digital financial & lifestyle ecosystem built around customer needs
3
5
How Tinkoff Black drives cross-sell
TINKOFF BLACK IS A MAJOR SALE CHANNEL FOR OTHER PRODUCTS
80% 32% 32% 31% 30% 8% 9%
Investments All Airlines Cash loans Insurance SME Co-brands Platinum
TINKOFF BLACK IS USED BY OUR CREDIT CUSTOMERS
96% Cash loans
47% All Airlines
38% Insurance
9%Platinum
8%Co-brands
We also see positive cross-sell dynamics among other products
6
Lifestyle journey in your banking app
Superb UX
Restaurants 25%
Tinkoff Junior
Stories
Drives customers'
loyalty and stickiness
20.6 installs
2.4m DAU
7.6m MAU
150m sessions per month
1.5min session length
7
8
9
All currency data are in RUB bn unless otherwise stated
SHAREHOLDER STRUCTURE
Management
Tinkov Family TrustFree float
Awards
Best Digital Bank
in Central and Eastern Europe, 2016
GROUP'S KEY FINANCIALS (IFRS)
Income statement
Interest income
Net margin
Provision charge for loan impairment
Customer acquisition expense
Administrative and other operating expenses
Profit before tax
Profit for the period
Balance Sheet
Cash and treasury portfolio
Loans and advances to customers
3Q'20
2Q'20
Change
9M'20
9M'19
Change
30.2
32.3
-6%
94.0
24.4
80.8 16%
26.4
-8%
76.2
6.6
63.9 19%
12.4
-47%
34.6
5.5
19.6 77%
4.1
33%
13.6
8.9
13.9 -2%
8.8
1%
25.2
15.9
20.5 23%
13.1
21%
40.7
12.6
32.2 27%
10.2
23%
31.9
25.1 27%
30-Sep-20
30-Jun-20
Change
30-Sep-19
Change
311.6
288.5
8.0%
139.4 124%
346.3
324.2
6.8%
319.9 8%
Total assets
725.6
669.2
8%
507.6 43%
Customer accounts
513.4
473.9
8%
346.7 48%
Total liabilities
609.1
561.2
9%
424.2 44%
Total equity
116.5
108.1
8%
83.4 40%
Ratios | 3Q'20 2Q'20 Change 9M'20 9M'19 Change |
-11.5 p.p.
ROAE
ROAA
Net interest margin
Cost/Income (incl. acquisition expenses)
Cost of risk
Most profitable bank
in Central and Eastern Europe, 2017
45.0%
7.2%
16.2%
38.2%
6.5%
Best Internet Bank In Russia, 2018
56.5%
40.8%
59.0%
8.1%
-0.9 p.p.
6.6%
7.7%
22.5%
-6.2 p.p.
18.3%
22.6%
34.1%
4 p.p.
34.3%
38.4%
9.1%
-2.6 p.p.
11.6%
8.6%
Best Consumer Digital Bank in Russia, 2018
-18.2 p.p.
-1.1 p.p.
-4.3 p.p.
-4.1 p.p.
3 p.p.
Best Digital Consumer Bank
In the World, 2020
RUBbn
400
350 300 250 200 150 100 50 0
* Market estimated as non-overdue portfolio from RAS reporting 101 form 455% and 457% accounts, including only loans with term up to 3 years
150%
120%
90%
60%
30%
0%
-30%
RUBbn
14,0
• Russian consumer finance crisis
12,0
• Macro weakness
• Low oil prices
• Geopolitics
10,0
140%
120%
8,0
100%
6,0
4,0
2,0
0,0
Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 | Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 |
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
80% 60% 40% 20% 0%
Profit (quarterly)ROE, rs
• Russian consumer finance crisis
• Macro weakness
• Low oil prices
• Geopolitics
Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 | Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 Q4 | Q1 Q2 Q3 |
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
30%
25%
20%
15%
10%
5%
0%Cost of risk (wo macro)Cost of riskAverage through the cycle
Premium debit/credit cards
Moscow & St. Petersburg: 51%
Black Edition
Max other region: 7%
Monthly income (₽k): 197
Age: 36
Saint-Petersburg and Leningradskaya oblast'
Gender (M/F)
Average age
Monthly income (₽k)
Moscow and Moscow Region
Every other region
Data shows weekly volumes as a % of the volumes during the first week of February (=100%)
Card Total Payment Volume (TPV)
SME clients' turnover
OfflineOnline
200% 175% 150% 125% 100% 75% 50%
150%
125%
100%
75%
50%
Online Acquiring Total Payment Volume (TPV)
Retail brokerage transaction volumes
200%
175%
150% 125% 100% 75% 50%
350% 300% 250% 200% 150% 100% 50% 0%
Protecting health and safety of our employees, maintaining motivation, while ensuring business continuity
Supporting our communitiesIncrease in restructuring /payment holiday requests from customers
Moving all non-critical and business essential functions to the cloud, equipping smart couriers with PPE. >95% of HQ employees are working from home. Offering more generous compensation packages for our smart couriers and employees still coming to the office (+15-20%). Increasing the number of employees included in the Long-Term Incentive Program.
Deploying Tinkoff cloud-based home call center (HCC) to assist the Moscow City Government and the People's Social Front (a consumer protection organization) with fielding calls from people beset by COVID-19 and related problems. Committing RUB 1bn to social initiatives, including support for hospitals.
Engaging with customers to find the optimal restructuring solution, including proprietary and government-sponsored payment holidays.
No loss in productivity and employee engagementMeaningful support for communities affected by COVID-19
Managed and controlled increase in restructured exposures, with limited impact on liquidity
Supporting SMEs given difficult revenue generating environment
Lowering acquiring and account fees, offering payment holidays on our small test loan portfolio, helping SMEs move online, launching 0% loans to pay salaries in partnership with the Russian Bank for SME support
Increasing loyalty of the customer base, minimizing negative impact on risk costs from the small test portfolio
Negative macro impact from COVID-19 related lockdowns and lower oil prices
Responding to significant increase in demand for Tinkoff Investments
Strengthening engagement with customers despite social distancing measures
Tightening origination standards (e.g. more manual verification, no issuance of second loans to existing customers), more proactive portfolio and credit limit management, shifting of resources from customer acquisition towards cloud-based pre-collection and collection activities. Gradual increase in approval rates following stabilization and improvement of high frequency internal asset quality metrics.
Investing in technology and system capability to deal with high volumes. Continuing the launch of new product features: a new process to onboard customers without the need for a physical meeting with our smart-couriers; a redesigned and enhanced web terminal; six new currencies that can traded at the interbank rate; online events, webinars, and shows for our customers.
Tinkoff introduced a cash-back offer called "Surviving quarantine" which allows customers to benefit from up to 75% discounts on online services, products, and subscriptions that are particularly in demand during isolation (online cinema, home fitness, books, language courses, etc.). Tinkoff Mobile implemented functions allowing customers to open accounts using virtual sim cards, to delay payment of mobile services by up to 2 weeks without charge, to waive certain roaming fees for customers not able to return to Russia, to record and store voice calls, and to use unlimited data for remote working apps like Zoom, Skype, Slack, etc. Introduced a new communication channel with Tinkoff support for Apple users through iMessage. Introduced 50% cashback on baby food expenditures for parents.
Temporary pause in loan growth in 2Q. Containing risk costs. Higher cash flow generation. Cost structure optimization.
#1 retail brokerage on MOEX by number of active customers for seven consecutive months with 2.4m customers
Continued growth in MAU (now 7.6m) and DAU (now 2.4m), continued growth in Tinkoff Black accounts
Experienced team and continued governance improvements
■ All members of the management board were present in 08-09 and 14-15 crises
■ Tinkoff Bank Board of Directors changes signal commitment to further corporate governance roadmap
Loyal, engaged customer base ■ 2.4m DAU, 7.6m MAU ■ 4.8 App rating on Apple Store and Google Play ■ Tinkoff Investments temporarily overtook the number of downloads of our main mobile banking app
Trust in the bank grew 2.4 times over 5 years (according to BrandZ poll)
Digital and flexible operating model
Conservative underwriting standards
■ High share of variable costs: Over 1/3 of total costs are customer acquisition costs
■ 30% hurdle rate ensures large buffer for eventual deteriorations
■ Lean organizational structure, with delegated decision making allowing each business to take swift decisions to relevant challenges
■ Low approval rates, gradually tightening underwriting standards since early 2019
■ Ability to shift resources (including HR) across different functions
■ Smaller than average loan tickets (Average credit card balance is 65k RUB, cash loan 260k RUB, POS loan 27k RUB, home equity 1050k RUB, car loan 550k RUB)
Diversified revenue structure
■ 41% of revenues from non-credit businesses (3Q20)
■ Net fee, commission, and insurance income covers 125% of administrative expenses and 77% of total expenses (3Q20)
■ Non-credit businesses are scaling up and driving customer growth
Abundant liquidity
■ Liquid balance sheet (cash, cash equivalents, and investments amounting to RUB 312bn, or 61% of customer accounts)
■ Short-term balance sheet (83% of financial assets expected to mature within 12 months)
■ Asset-liability matching (Current accounts fund cash, treasury, and very ST lending; deposits fund unsecured consumer lending; wholesale funding funds secured lending)
Adequate capital buffers
■ Current N1.1 buffer over minimum requirement equates to 126% of 2019 bank level profit
■ Highly capital generative business model, thanks to 30% internal hurdle rate
■ Profitable through the cycle, can easily and quickly slow down RWA growth
■ Flexible dividend policy (up to 30% of quarterly net income)
Total customers (m)Mobile App MAU (m)Mobile App DAU (m)
12,1
Several levers to defend returns: high margin credit business, growing non-credit businesses, high share of variable costs
ROA DRIVERS (as % of average assets)
35% 25%
15%
5%
-5%
-15% -25%
1Q 2Q 3Q
2014
Net interest income
4Q
1Q 2Q 3Q
2015
F&C, Insurance income
4Q
1Q 2Q 3Q
2016
Trading income, other
4Q
1Q
2Q 3Q | 2Q 3Q | 2Q 3Q | 2Q |
2017 | 2018 | 2019 | 2020 |
4Q
Provisions
1QAdministrative Expenses
4Q
1QCustomer Acquisition Expenses
-35%
4Q
1Q
3QTaxesROA
Returning to growth
Credit business: Temporary pause in growth trajectoryTransactional & Servicing business lines: reducing P&L volatility
+1.2mn new credit accounts acquired
+8.2% YTD gross loan growth
Diversified product and customer mix
Non-credit card products accounted for 40% of the loan book and secured loans grew to 18% of total portfolio
Conservative front loading of provisions
CoR at 6.5% in 3Q'20 and 11.6% in 9M'20 reflecting our conservative approach to risk assessment
NPLs (90d+) at 11.1% with coverage at 153%, gross loan coverage at 16.9%
Customer growth remains in focus
Current Accounts customers up to 10.7mn (+16% q-o-q and 70% y-o-y)
Investments customers grew to 2.4mn, providing us with record-high impact in fee and commission income
Important and less cyclical revenue and growth driver
41% of revenues coming from non-credit lines in 3Q'20
Tinkoff investments generated ₽2.1bn of fee income in 3Q'20 to become the second source of F&C income after Tinkoff Business (₽3.1bn)
Strong contributor to customer growth, leveraging on digital distribution channels
Superior profitability & capital positionStrong business development effort
Net profit of ₽12.6bn in 3Q'20, up 29.8% y-o-y
ROE grew to 45.0% (ROA of 7.2%) in 3Q'20 returning to our longer-term levels
High statutory and Basel capital ratios throughout the crisis due to high profitability and declining risk weighted asset density on certain unsecured consumer loans
Tinkoff Business started opening accounts for foreign companies
Voice assistant Oleg added new skills, helping customers to set their spending limits, make recurring payments on time and pay their credit card billsTinkoff Capital launched Russia's first exchange-traded fund (ETF) tracking the
Nasdaq®-100 Technology Sector Index (NDXT)
In October, Tinkoff launched a financial messenger built into its super app for users to chat while making financial transactions
Launch of Tinkoff Pro - subscription offering that gives our customers all sorts of benefits within the Tinkoff ecosystems
ASSETS
ASSETS STRUCTURE
3Q'19
4Q'19
Cash and cash equivalents
1Q'20
2Q'20
Investments in debt securities
3Q'20
3Q'19
4Q'19
Net loans
Other
Cash and cash equivalents
1Q'20
2Q'20
Investments in debt securities
3Q'20
Net loans
Other
Total assets grew 8.4% q-o-q in 3Q'20 and 42.9% y-o-y
Our assets structure remains well balanced between loans and highly liquid investments and cash
Our large liquidity cushion enables to capture future growth opportunities
GROSS LOANS
NET LOANS BREAKDOWN
4Q'19
NPLs
3Q'19Net loansLLP
1Q'20
2Q'20
3Q'20
Gross loans grew 5.5% q-o-q, resuming the growth of the portfolio
The share of non-credit card loans grew slightly q-o-q to 40% as of 30-Sep-20
NPL coverage remained comfortable at 153% despite the expected uptick in total NPLs driven by the COVID-19 pandemic. We retain high recovery expectations for NPLs in courts.
The share of collateralized loans grew q-o-q to 18% as of 30-Sep-20
Total LLPs account for a conservative and comfortable 17% of our total gross loan balance
Provisioning rate Stage
ExcellentGood
Monitor Sub standardNPL
Rose to (6.2%) due to macro factor adjustment
(47%)
41.1%
2.0%
2.3% | 1.8% |
(72%)
2.4% 2.1%
31-Mar-20
Does not include purchased originated credit impaired loans
(6.3%)
(46%) (71%)
40.9%
1.3%
4.1%
1.7%
3.0% 2.1% 1.9% 2.2%
10.5% 10.9%
30-Jun-20
Does not include purchased originated credit impaired loans
(6.3%) (44%) (69%)
41.0% 3.1%
2.3% 1.6%
30-Sep-20
Does not include purchased originated credit impaired loans
Excellent: non-overdue credit cards with PD < 5% or other non-overdue loans with early repayments
Sub-standard: 31-90 days overdue
NPL: 90+ days overdue
Good: other non-overdue loans
Current: non-overdue portfolio with low expected credit risk
Monitor: 1-30 days overdue or without first due date
Restructured loans fall into either Stage 1 or 2 depending on days overdue, on the probability of default level and deterioration, and on number of missed payments. Restructured loans in Stage 1 have higher provision coverage than current loans in Stage 1
"Credit holidays" government program
(Federal Law 106)
No payment over a 6 month period for customers with >30% decline in income
Interest accrues at rate of 2/3 of average market rate
Strict eligibility criteria and requires extensivedocumentation within 90 days of request
Tinkoff restructuring (>1 month)
Temporary relief (<1 month)
Less stringent eligibility criteria
Less stringent eligibility criteria
Flexible solutions with options to maintain a minimum monthly payment to encourage borrower discipline, positively impacting repayment rate and reducing probability of default
Customer allowed to decrease upcoming payment
Contractual interest rate unchanged
Contractual interest rate unchanged
# of loans restructured during 20/03 - 31/10: 3,892 # of restructured loans outstanding as of 31/10: 1,795Size of restructured loan portfolio as of 31/10:
RUB 0.2bn
As of 31-Oct-20, total outstanding restructured loans of RUB 4.6bn amounted to 1.1% of the gross loan portfolio, down from 4.5% as of 31-Jul-20
# of loans restructured during 20/03 - 31/10 139,431
# of restructured loans outstanding as of 31/10:
15,923
Size of restructured loan portfolio as of 31/10:
RUB 4.2bn
Data from management accounts
# of loans restructured during 20/03 - 31/10: 128,088 # of restructured loans outstanding as of 31/10: 1,608Size of restructured loan portfolio as of 31/10:
RUB 0.2bn
FUNDING
575,3
3Q'19
Retail DepositsLegal entities
4Q'19
Debt securities in issue
1Q'20
2Q'20 3Q'20Retail Cur.Acct. & Brokerage fundsSubordinated debt
Due to banks (inc. Repo)
CUSTOMER ACCOUNTS
86% 98,0
All currency data are in ₽ bn unless otherwise stated
87%
87% 86%
87%
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
WHOLESALE DEBT MATURITY PROFILE
FX
RUB
% of retail accounts covered by DIA
Put optionPut optionCall option 33,9
4Q'20
Tier 1 PerpetualECP
Local bonds
…
2Q'21
…
1Q'22
2Q'22
3Q'22
Customer funds' growth accelerated in 3Q, supported by the increasing popularity of our current account product. Our retail current account balances rose by 32bn in one quarter to 302bn, or a record 53% of total funding
FX position hedged on a long-term basis through a combination of natural hedge and long-dated currency swaps
We continue to deploy our retail current accounts in highly liquid securities and short duration loans
The share of RUB customer accounts has grown q-o-q
Data from management accounts
EXPECTED MATURITY OF FINANCIAL ASSETS (as of 31-Dec-19)
>5 years
1-5 years
6-12 month
3-6 month
1-3 monthDemand and <1 month
NET CASH FLOW PRODUCED BY CREDIT CARDS
15 000
12 000
CASH FLOW MANAGEMENT INSTRUMENTS
15 000
-10 000
-15 000
10 000
-5 000
5 000
-
Thousands
New utilized cards (RHS)
Monthly limit increase/decrease for utilized cards (LHS)
Tinkoff
SHAREHOLDERS' EQUITY
OF THE GROUP
RWA*
+39.7%
+7.8%
+38.8%
+6.8%
116,5
3Q'19
4Q'19
1Q'20
EquityBasel III Tier 1 / Total CAR
2Q'20
Basel III CET1 ratio
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
RWA
Density**
Shareholders' equity rose 7.8% q-o-q given solid profit generation
Risk weighted assets rose 6.8% q-o-q
The negligible size of our FX-denominated assets and our USD-denominated AT1 perpetual bond ensure a small impact on our capital ratios from changes in the RUB/USD exchange rate
*According to Basel regulations **RWA/Total assets
DENSITY
RISK WEIGHTED ASSETS OF THE BANK
Retail loans
Credit + Market risk / Total assets
3Q'19
4Q'19Credit risk
1Q'20Market risk
2Q'20Operational risk
163%
168% 171%
172%
103%
3Q'19
4Q'19
STATUTORY RATIOS
1Q'20
2Q'20
3Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Our statutory risk weighted assets declined 7.9% q-o-q due to the implementation of lower risk weights on certain unsecured consumer loans
Consequently, our risk weighted asset density declined q-o-q
Our statutory capital ratios remain well above the minimum requirements (currently 10.5%/8.5%/7.0% for N1.0/N1.2/N1.1)
Density calculated as risk-weighted retail portfolio divided by RAS retail loan book
REVENUE
3Q'19
9M'19
9M'20
Credit
F&C business
3Q'19
REVENUE STRUCTURE
4Q'19
Treasury
1Q'20
2Q'20
Insurance premiums
3Q'20
9M'19
9M'20Credit
F&C business
4Q'19Treasury
1Q'20 2Q'20Insurance premiums
3Q'20
NET F&C INCOME / OPEX
Net F&C and insurance income / Admin expensesNet F&C and insurance income / Total expenses
112%
120%
72%
76%
117%
111%
73%
125%
79%
77%
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Total revenues grew 12% y-o-y in 3Q'20, driven by non-credit business lines
The share of non-credit revenues grew y-o-y from 32% to 41% - a record high
Our diversified revenue structure reduces the volatility of our P&L
Our non-credit revenue covers more than 100% of our admin expenses and almost 80% of our total expenses
STRUCTURE OF OPERATING EXPENSES
OPERATING EFFICIENCY
+13%
38,8
9M'19
9M'20Administrative staff
+25%
14,3
3Q'19
4Q'19
1Q'20
Other administrative
2Q'20Acquisition
3Q'20
9M'19
9M'20 3Q'19C/I (incl. acquisition)
4Q'19
1Q'20 2Q'20C/I (excl. acquisition)
3Q'20
Operating expenses rose 25% y-o-y, driven by acquisition costs as we returned to growth across all businesses
C/I returned to 2019 levels as we push on with our growth and customer acquisition plans
Rapid acquisition cost growth in 3Q20 compensated a temporary decrease in
2Q'20 caused by COVID
INTEREST INCOME
9M'19
9M'20
INTEREST EXPENSE
3Q'19Credit portfolio
4Q'19Treasury
1Q'20 2Q'20
YIELD
33,1%
28,7%
6,8%
5,5%
3Q'20
Credit portfolioInvestment portfolio
31,6%
30,0%
29,7% 29,8%
26,8%
6,5%
6,4%
6,0% 5,4%
5,3%
9M'19
9M'20
COST OF BORROWING
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
15,5
16,5
2,9 | 3,4 |
12,6 | 13,1 |
9M'19
9M'20
2Q'20
Customer accounts
3Q'19
4Q'19 1Q'20Wholesale / interbank
5,8% 5,5%
4,3% 3,7%Customer accounts
Blended
3Q'20
9M'19
9M'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Growth in interest income continues to outpace growth in interest expense in 2020
Credit portfolio yield declined in 3Q'20 as we returned to growth, especially in lower yielding categories
Interest expense declined 5% y-o-y despite a 45.7% y-o-y increase in the total funding base
Cost of borrowing reached a record low of 3.9%, continuing its decline driven by easing monetary policy, brand recognition, and customer loyalty
NET INTEREST INCOME
76,2
1Q'20 15,9% 9,9% 5,9 9,7
9M'19
9M'20 3Q'19
COST OF RISK
9M'19
9M'20
Provision for loan impairmentReported Cost of risk
4Q'19
2Q'20
3Q'20
NET INTEREST MARGIN
Net interest margin (NIM)
22,6%
18,3% 11,0% 9,9%
Risk-adjusted NIM 22,5%
7,6%
9M'19
9M'20
3Q'19 4Q'19
WRITE-OFFS / SALE OF BAD DEBTS
Write-offs
Sale of bad debtsRisk-adjusted NIM wo macro
1Q'20
2Q'20
3Q'20
% of gross loans (annualized)
3Q'19
4Q'19 1Q'20 2Q'20 3Q'20Macro factor effect
Underlying CoR (w/o macro factor effect)
4,4%
4,5% 13,5
3,2% 3,0%
4,1%
4,7% 4,8%
2Q'20
9M'19
9M'20
3Q'19
4Q'19
1Q'20
3Q'20
Reported cost of risk (incl. macro factor adjustments) declined q-o-q from 12.5% to 6.5%. As the economic situation turned out to be better than we had originally forecasted in 1Q'20, we reversed in 2Q and 3Q RUB 1.4bn out of the RUB 5.9bn macro factor adjustment made in 1Q'20.
Underlying cost of risk (excl. macro factor adjustments) significantly decreased q-o-q from 13.5% to 6.8%, driven by better performance of borrowers, including those who came out of restructuring programs
Risk adjusted NIM improved sequentially in 3Q'20 despite the q-o-q
NIM decline
NET UNSECURED LOANS
GROSS INTEREST YIELD
277
280
282
281
3Q'20
3Q'19
4Q'19
NPL (% OF GROSS LOANS)
33,8%
32,3%
32,2%
32,4%
29,2%
1Q'20
2Q'20
3Q'19 4Q'19 1Q'20
COST OF RISK (UNSECURED LOANS)
2Q'20
3Q'20
12,4%
17,5%
11,9%
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Our unsecured loan portfolio returned to growth after a temporary slowdown in 2Q'20
Reported cost of risk declined q-o-q from 13.8% to 7.3%
Underlying cost of risk declined q-o-q from 14.9% to 7.7%.
Interest yields resumed their downward decline after temporary resilience in
4Q'19 - 2Q'20
NET COLLATERALIZED LOANS
Car loansSecured loans
62,6
GROSS INTEREST YIELD
TotalCar loansSecured loans
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
15% 14% 13% 12% 11%
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
NPL (% OF GROSS LOANS)
Car loansSecured loans
3,5%
3,5%
COST OF RISK (COLLATERALIZED LOANS)
TotalCar loansSecured loans
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
In 3Q'20, car loans drove total collateralized loans portfolio growth
Underlying/Reported cost of risk changed in the following way in 3Q:
We remain optimistic about the prospects of this high margin, lower cost of risk portfolio
Secured loans: from 2.6%/2.1% to 1.0%/0.9%
Car loans: from 6.7%/5.4% to 4.6%/4.4%
Asset quality metrics continue to develop as the portfolio matures
Total collateralized portfolio: from 4.0%/3.2% to 2.4%/2.2%
12%
10%
8%
6%
4%
2%
0%
FEE AND COMMISSION INCOME
INSURANCE PREMIUMS EARNED
9M'19
+39%
13,0
9M'19Credit-related
9M'20
SME
3Q'19Debit cards
4Q'19
1Q'20
Merchant acquiring
2Q'20Brokerage operations
3Q'20
Other
9M'20
3Q'19
Auto
4Q'19Accident, other
1Q'20
2Q'20
3Q'20
Record-high quarterly revenue from SME, Investments and debit cards business lines lead to an impressive 39% y-o-y F&C income growth
More selective underwriting of insurance customers led to a temporary slowdown in insurance premiums growth
CUSTOMERS (m)
10,7
3Q'19
4Q'19
1Q'20
2Q'20
DEBIT CARDS TOTAL PAYMENT VOLUME (TPV)
3Q'20
640
504
504
446
449
BALANCES
302,2
3Q'19
4Q'19
1Q'20
FEE AND COMMISSION INCOME
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
Interchange
1Q'20
FX
Cash withdrawal
2Q'20
SMS
3Q'20Other
We purposely run this product line close to break-even as we see our current accounts business as the cornerstone of our customer relationship. Tinkoff Black customers are highly transactional, highly engaged, and more open to trying products and services in the Tinkoff suite
10,7m current accounts opened is cast-iron proof of our exceptional UX design, attractive tariffs and superb customer service
Customer base growth and ease of restrictive anti-pandemic measures led to the growth of interchange fees and as a result 16% y-o-y growth of fee and commission income
CUSTOMERS ('000)
BALANCES
565
595
514
535
545
3Q'19
69,9
4Q'19
1Q'20
2Q'20
3Q'20
FEE AND COMMISSION INCOME
3Q'19
4Q'19
+26%
3Q'19
1Q'20
2Q'20
3Q'20
4Q'19Transaction
1Q'20
2Q'20Service
3Q'20
Despite lockdown measures, our SME business showed continued growth in customer number and fee and commission income y-o-y
We continue offering attractive terms and expanding the range of services for
SME customers to support the customer base growthDuring lockdown, Tinkoff SME clients benefitted from our ability to help them migrate to online payments, to do their accounting and tax reporting fully online through our cloud software, to build websites, to set up electronic documentation processes, to set up delivery services with partners, and to provide partner-financed credit lines to help companies through the crisis
CUSTOMERS ('000)
2 387
ASSETS UNDER CUSTODY
221,3
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
TRANSACTION VOLUMES
2 927
REVENUE*
2,2
3Q'19
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
4Q'19
1Q'20
2Q'20
3Q'20
In 2020, Tinkoff Investments sharply grew its customer base, its transaction volumes, and its revenue
Tinkoff Investments was named the winner in the Retail Brokerage
Company category of the Stock Market Elite 2019
#1 retail broker by the number of active users on MOEX throughout 2020, starting Dec 19
Product improvement continues: our asset manager Tinkoff Capital launched Russia's first ETF that tracks the Nasdaq 100 Technology
*Includes all revenues including fee and commissions, FX revenues, and interest on cash balances
Sector Index
TOTAL PAYMENT VOLUME (TPV)
+30%
1Q'20
3Q'19
4Q'19
2Q'20
MERCHANT ACQUIRING COMMISSION
3Q'20
+30%
2,0
2,0
1Q'20
GROSS ACQUIRING COMMISSION*
1,6%
1,7%
1,7%
1,6%
1,6%
3Q'19
4Q'19
1Q'20
SHARE OF DIRECT-TO-MERCHANT
2Q'20
3Q'20
59%
58%
51%
51%
51%
3Q'19
4Q'19
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Steady business growth: turnover up 30% y-o-y along with revenue
Important source of revenue: in 3Q'20 internet acquiring brought ₽ 2.0bn of fee income
Direct share shows % of turnover generated by Tinkoff merchants without aggregators
On track to become Russia's second largest online acquirer
*Gross acquiring commission is total fee and commission income divided by turnover
RETURN ON ASSETS
7,7%
NET INCOME
+27%
+30%
1Q'20
9M'19
9M'20
RETURN ON EQUITY
8,1%
8,1%
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
9M'19
9M'20
3Q'19
4Q'19
2Q'20
3Q'20
59,0%
56,5%
49,0%
45,0%
40,8%
37,5%
40,0%
9M'19
9M'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Industry leading ROA of 7.2% and ROE of 45%
Net income of RUB 12.6bn rose 30% y-o-y, supported by continued customer acquisition and monetization
FY2020 guidanceNet loan portfolio growth
Cost of Risk
Net profit
10% area 10-11% 4% area
Time frameImplemented by Tinkoff
Customer support measures
Higher unemployment benefits and social security payments
Government retail borrower payment holiday scheme (see slide 11)
Reduction in interchange and merchant acquiring fees for certain online categories
Tax and debt holidays for SMEs
0% loans to SMEs to continue paying salaries
Bank support measures
Forbearance on revaluation of securities for capital calculation
Forbearance on use of FX rates for capital calculation
Forbearance on provisioning for restructured exposures and payment holidays
Lower deposit insurance charges from 0.15% to 0.10%
Reduced cost for existing CBR irrevocable credit lines
Other
Interest on retail deposits and bond holdings above RUB 1 mn subject to 13% tax
Dividend withholding tax to offshore companies to increase to 15%
Issue in lombard
Issue not in lombard
Financial
Energy
Basic Materials
Consumer, Non-cyclical
Government
Industrial
Utilities
Communications
Consumer, Cyclical
Income statement
Interest income
Net margin
Provision charge for loan impairment Customer acquisition expense Administrative and other operating expenses Profit before tax
Profit for the period
Balance Sheet
Cash and treasury portfolio Loans and advances to customers Total assets
Customer accounts Total liabilities Total equity
Ratios
ROAE ROAA
Net interest margin
Cost/Income (incl. acquisition expenses) Cost of risk
45.0%
56.5%
-11.5 p.p.
40.8%
59.0%
-18.2 p.p.
7.2%
8.1%
-0.9 p.p.
6.6%
7.7%
-1.1 p.p.
16.2%
22.5%
-6.2 p.p.
18.3%
22.6%
-4.3 p.p.
38.2%
34.1%
4 p.p.
34.3%
38.4%
-4.1 p.p.
6.5%
9.1%
-2.6 p.p.
11.6%
8.6%
3 p.p.
RW for unsecured loans since 1-Sep-20
0-10%
100%
100%
100%
110%
130%
150% 180%
10-15%
100%
100%
100%
120%
140%
160% 190%
15-20%
120%
120%
120%
160%
190%
200% 230%
20-25%
150%
150%
150%
200%
230%
240% 270%
25-30%
190%
190%
190%
240%
260%
280% 300%
30-35%
300%
300%
300%
310%
320%
330% 350%
35%+
500%
500%
500%
500%
500%
500% 500%
* SIFI means Systemically Important Financial Institution
LTM GROSS WRITTEN PREMIUMS
18,3
18,5
18,5
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
CAPITAL ADEQUACY*
*Actual capital / Regulatory capital
205%
196%
3Q'19
Ample capital buffers for our insurance business growth plans
4Q'19
1Q'20
2Q'20
3Q'20
TINKOFF BLACK DEBIT CARD
Everyday purchases
3.5% interest on balance1% cashback on all purchases>5% cashback on special categories
Up to 30% cashback on selected merchants
Loyalty programmes and co-brands
Free cash withdrawal in any ATM worldwide
Payments
Convenient interface in the internet and mobile banks
Automatic and regular payments
Support of CB fast payments by phone number (NEW)
Payments to/from Sberbank by phone number (NEW)
Free ingoing and outgoing C2C transfers
Source: management accounts
Multicurrency support
Narrow FX spread (0,5%) and online exchange rate
Money transfers
Multicurrency cards (NEW) and deposits
Accounts in 30 currencies
(NEW)
Lifestyle banking
RETAIL TERM DEPOSITS
Opened and serviced online and via Tinkoff's smart couriers
Free withdrawals and top-ups via ATMs, terminals or bank transfers
Competitive interest rates and features, multiple currencies
Cashbacks for entertainment (NEW)
Restaurants
Cinema
Theaters
Concerts
Tinkoff Travel Cashback
Stories
Tinkoff Junior (NEW)
Premium and Metal cards (NEW)
SAVINGS ACCOUNTS
3% interest
You can open a savings account and save for your personal goals
US$, € 11%
CUSTOMERS (m)
BALANCES
10,7
302,2
270,1
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
DEBIT CARDS TRANSACTIONS VOLUME
640
FEE AND COMMISSION INCOME
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
Interchange
FX
Cash withdrawal
2Q'20
3Q'20
SMS
Other
We purposely run this product line close to break-even as we see our current accounts business as the cornerstone of our customer relationship. Tinkoff Black customers are highly transactional, highly engaged, and more open to trying products and services in the Tinkoff suite
10.7m million current accounts opened is cast-iron proof of our exceptional UX design, attractive tariffs and superb customer service
Fee & commission income rose y-o-y in spite of the impact of lockdown measures on transaction volumes
NEW CUSTOMERS ('000)
CAC (₽'000)
1 200 2,0
1 100
1 000
500
400
300 0,5
200
100
0 0,0
UNIT ECONOMICS
Revenue per customer ₽'000
OPEX per customer ₽'000
BUSINESS LINE P&L
3
2
1
0
Fee and commission income ₽mInterest expense ₽mAcquisition costs ₽m
Interest income ₽m
8 000
6 000
4 000
2 000
0
-2 000
-4 000
-6 000
-8 000
-10 000
Transaction and service costs ₽mOperating income ₽m
HOME EQUITY LOANS
CREDIT CARDS
Flagship credit card product with premium features for mass and affluent customers
Co-brands and loyalty programmes55-day grace period
Free repayments
Free 24/7 call centre coverage
International acceptance anywhere on the Mastercard or VISA networks
Regular limits reviews
Partner-based installment loans - 0% interest rate for up to 12 months. c.100 partner offers for all credit card customers
CASH LOANS
Just with one documents - a state registered ID
Cash-in on a debit card
Over 50% of issuance - to Tinkoff customer base
Cash loans secured by an apartment or a car
Programme loan size is up to RUB10mn, and tenor of 10 years max
Collateral - apartments in apartment blocks, housing property, car
Just one document - a state registered ID, partial loan amount directly debited on Tinkoff Black current account upon credit decision; following registration of collateral in RosReestr (Real Estate Register) the full amount of loan becomes available for a customer
Tinkoff fully conducts the origination process, including valuation, verification and registration of collateral. The involvement of customer in this process is nil
This is still a tiny segment of our overall credit business, we continue to test distribution, gather data and build our models
POS LOANS
Point-of-sale unsecured lending for customers to pay for their purchases at online and offline retailers
Offered to both existing and new customers of Tinkoff
Up to RUB500k for non-Tinkoff customers and up to RUB2mn for
Tinkoff current account customers with positive track-record and risk profile
Low acquisition cost due to organic and cross-sell nature of growth
No cannibalization of credit cards traffic
Low loan size and short loan duration
CAR LOANS
P&L neutral product - the main goal of the product is a cross-sell to credit cards
c.20% of POS monthly issuance converted to credit cards
Two sales channels: dealers (launched 1H2018) and direct (launched in 2H2018)
Focus on second-hand car market with higher interest rates and lower competition vs new cars market
Loans through dealerships:
Our own exclusive and best in class IT solution of loan issuance through dealerships
Swift online verification
Synergy with Tinkoff Insurance
Direct car loans:
Partnerships with main classified sites - auto.ru, drom.ru and others
Own internet acquisition channels, including cross-sell to existing customer base
This is still a tiny segment of our overall credit business, we continue to test distribution, gather data and build our models
Tinkoff Business ecosystem
Cash Management & Payments | Accounting and State Authorities | Lending | Sales Generator |
• Internet and POS acquiring | • Self-service accounting | • Overdrafts and bank | • Cloud CRM |
• Payroll programmes | • Cloud accounting | guarantees for select clients | • B2B trading |
• Tax and Currency Control | • Management accounting | • Call-center services | |
• Customs and Logistics | • Qualified e-signature | • Targeting | |
• ATMs | • Legal and tax consulting | • POS lending | |
• API | |||
• Cash-in and cash collection |
• SME-loan brokerage
• Loans for select clients
Start-up your business with Tinkoff
• Registration of new entities
• Start-up incubator (franchises)
• University of an entrepreneur
• HR agency
TINKOFF BUSINESS GROWTH DYNAMICS (# of accounts)**
Thousands
700 600 500 400 300 200
100
0
TINKOFF MICRO SME'S IS A TOP-5 PLAYER
80 70
₽ Bn
60
50 40 30 20 10 0
Small SME'sMicro SME'sBalance (RHS)
* Small SME (legal entities up to 20 employees), micro SME (individual entrepreneurs) ** Management accounts
Source: Bank's analytics based on CBR 101 form
#
Bank
1 Sberbank
2 VTB Bank
3 Alfa-Bank
4 Rosselkhozbank
5 Tinkoff Bank
6 FC Otkritie
14.4 12.7
1-Oct-20 ₽ bn
344
99
98
55
51
42.9
Share
36.8%
10.6%
10.5%
5.9%
5.4%
4.6%
2019 ₽ bn
2018 ₽ bn
274 213
77 64
85 59
42 38
39 25
37.9 23.3
21.2 15.7
CUSTOMERS ('000)
BALANCES
69,3
545
514
535
565
595
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
FEE AND COMMISSION INCOME
+26%
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
Transaction
Service
Despite lockdown measures, our SME business showed continued growth in customer number and fee and commission income y-o-y
We continue offering attractive terms and expanding the range of services for SME customers to support the customer base growth
During lockdown, Tinkoff SME clients benefitted from our ability to help them migrate to online payments, to do their accounting and tax reporting fully online through our cloud software, to build websites, to set up electronic documentation processes, to set up delivery services with partners, and to provide partner-financed credit lines to help companies through the crisis
NEW CUSTOMERS ('000)
CAC (₽'000)
20
0 0
UNIT ECONOMICS
Revenue per customer ₽'000
OPEX per customer ₽'000
BUSINESS LINE P&L
20
10
0
Fee and commission income ₽mInterest expense ₽mAcquisition costs ₽m
Interest income ₽m
Transaction and service costs ₽mOperating income ₽m
5 000
4 000
3 000
2 000
1 000
0
-1 000
-2 000
-3 000
For different type of investors:
Various investment instruments:
• Individual Investment Accounts
• Retail Brokerage Accounts
Investor - for passive investors
Trader - for active traders
Premium - for affluent customers
CUSTOMER ACCOUNTS ('000)
• Shares
• ETFs
• Currency exchange
• Bonds
• Investment life insurance
2 387
Tools:
• Roboadvisor
• Analytics
• Personal manager
• Direct debit/credit from/to current account
• T+0
BALANCES
2019 snapshot
• #1 by number of newly opened accounts on MOEX (c.200k acc/mos)
• Average balance RUB285k
• DAU 400k
• MAU 1100k
All currency data are in ₽ bn unless otherwise stated
221,3
3Q'19
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
4Q'19
1Q'20
2Q'20
3Q'20
TRANSACTION VOLUMES
2 926,8
1Q'20
3Q'19
* Management accounts
FEE AND COMMISSION INCOME
2,2
4Q'19
2Q'20
3Q'20
3Q'19
4Q'19
1Q'20
Avg. transaction fee rate
2Q'20
3Q'20
NEW CUSTOMERS ('000)
CAC (₽'000)
250 200 150 100 50 0
3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20
300
3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20
8
7
6
5
4
3
2
1
0
UNIT ECONOMICS
BUSINESS LINE P&L
0,9
3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20
Revenue per customer ₽'000
OPEX per customer ₽'000
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0,0
3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20
Revenue ₽mAcquisition ₽mService ₽mOperating income ₽m
2 000
1 500
1 000
500 0 -500 -1 000
• Car insurance: OSAGO/KASKO
• Travel insurance
• Property insurance
Gross written premiums*
• Life insurance
1Q'17
2Q'17
3Q'17
4Q'17
1Q'18
2Q'18
3Q'18
4Q'18
1Q'19
AutoOther
Segment result
2Q'19
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
1Q'20
6,0 5,0 4,0
RUBbn
3,0
2,0 1,0 0,0
4,0
3,5
RUBbn
3,0
2,5
2,0
1,5
1,0
0,5
0,0
1Q'16
2Q'16
3Q'16
4Q'16
1Q'17
2Q'17
3Q'17
4Q'17
1Q'18
2Q'18
3Q'18
4Q'18
1Q'19
2Q'19
3Q'19
4Q'19
2Q'20
3Q'20
Total turnover and breakdown*
RUBbn
2Q'17
1Q'16
2Q'16
3Q'16
4Q'16
1Q'17
3Q'17
4Q'17
1Q'18
Turnover
2Q'18
3Q'18
Direct share, rs
Fee and commission income
4Q'18
1Q'19
2Q'19
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
1Q'16
2,0
1,8
1,6
RUBbn
1,4
1,2
1,0
0,8
0,6
0,4
0,2
0,0
2Q'16
3Q'16
4Q'16
1Q'17
2Q'17
3Q'17
4Q'17
1Q'18
2Q'18
3Q'18
4Q'18
1Q'19
2Q'19
3Q'19
4Q'19
1Q'20
2Q'20
3Q'20
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TCS Group Holding plc published this content on 02 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 December 2020 13:08:05 UTC