Home Credit B.V. IFRS consolidated results for the nine month period ended 30 September 2011: Continued strong performance with growth in cash loans and retail deposits while costs remain under control

Amsterdam, 1 December 2011

12/01/2011 - Home Credit B.V. ("HCBV"), the Netherlands-based holding company for Home Credit´s leading multi-channel consumer operations in Russia, the Czech Republic, Slovakia, Belarus and Kazakhstan, announces its consolidated non-audited financial results for the nine month period ended 30 September 2011 in accordance with International Financial Reporting Standards (IFRS).

“In a challenging economic environment we have built on our achievements in the first half of this year and have continued to deliver portfolio growth and realise our network expansion plans whilst managing our costs. Our retail deposit strategy continues to have positive results and our increasingly diversified funding base and strong liquidity position will enable us to continue to push the company forward and achieve its long term objectives for growth.”

Alexander Labak, HCBV Chief Executive Officer

Highlights

• Net profit amounted to EUR 195 million as of 30 September 2011 with an increase of 12% y-o-y (compared to 9M 2010: net profit EUR 174 million) despite the tough economic backdrop.
• Operating income for Q3 2011 increased by 24.0% to EUR 698 million in line with portfolio growth (compared to Q3 2010: EUR 563 million).  
• Net loan portfolio growth continued, up 16.0% to EUR 2,526 million as of 30 September 2011 from EUR 2,177 million as of 31 December 2010. Loan growth was driven by a continued increase in cash loans, which nearly doubled over the period and now comprise 39% of the net loan portfolio, mainly driven by the strategy to expand the distribution network in Russia.
• Retail deposits continued to rise with a 35.1% increase compared to the end of 2010 as we successfully attracted new customers. The share of customer current accounts and term deposits comprised 31.0% of the total liabilities (up compared to the position at 31 December 2010: 27.5%).
• Quality of HCBV loan portfolio in 9M 2011:NPLs comprised 9.4% of the gross loan book (compared to 10.1% as of 31 December 2010 and 12.1% as of 30 September 2010). At the same time the coverage ratio remains strong as NPLs were sufficiently covered by provisions at a slightly increased level of 108.2%.
• HCBV remains strongly capitalized with continued diversification of funding: total equity amounted to EUR 763 million as of 30 September 2011 as we continue to attract customer deposits, an increasingly important source of funding.
  • The consolidated ratio of total equity to total assets decreased to 22.9% as of 30 September 2011 (30.3% as of 31 December 2010) primarily due to the EUR 320 million dividend payout in H1 2011.

Results

In the first nine months of 2011 HCBV continued to demonstrate strong business and financial performance. Net profit for the nine monthperiod ended 30 September 2011 amounted to EUR 195 million, an increase of 12% compared to the same period in 2010.

Net interest income for the nine month period ended 30 September 2011 increased by EUR 80 million or 18.5% to EUR 513 million, compared to EUR 432 million for the prior year comparative period, in line with portfolio growth.

Net fee and commission income increased by 10.0% to EUR 139 for the first nine months of 2011 (from EUR 127 for 9M 2010).

General administrative and other operating expenses rose but remain very much under control at EUR 297 million (from EUR 249 million for 9M 2010) despite aggressive branch expansion in Russia. The cost to income ratio reflected this increase at 42.6% and was kept in check as a result of ongoing Group cost management initiatives.

The main growth driver of the balance sheet continues to be the increase in cash loans supported by our strategy to expand our distribution network in Russia, which so far this year has more than tripled the number of Home Credit branches to 822 branches by the end of September 2011 from 261 on 31 December 2010. We will continue to work on increasing our cash loan market share while maintaining our leadership position in POS loans.

HCBV’s net loan portfolio has grown by 16% to EUR 2,526 million since the end of 2010. The high quality of HCBV’s loan portfolio was maintained during the first nine months of 2011, with an NPL (non-performing loans older 90 days as a percentage of gross loan book) ratio of 9.4% as of 30 September 2011. NPLs were adequately covered by provisions at a level of 108.2%.

HCBV maintains a strong funding base and liquidity position and the company’s funding structure continues to diversify as Home Credit successfully attracted deposits from individual and corporate customers.

Financial summary

Income Statement (EUR millions)	9M period as at Sept 30, 2011	9M period as at Sept 30, 2010	Change,%
Net interest Income	513	432	18.5%
Operating Income	698	563	24.0%
Credit Risk Costs1	(116)	(73)	59.3%
Operating expenses2	(297)	(249)	19.5%
Profit Before Tax from Continuing Operations	284	242	17.5%
Net Profit from Continuing Operations	204	182	12.3%
Net Profit for the Period	195	174	12.1%

1) Credit risk costs comprise impairment losses and net expense related to credit risk insurance
2) Operating expenses comprise general administrative and other operating expenses

Balance Sheet (EUR millions)	As at Sept 30, 2011	As at Dec 31, 2010	Change,%
Total Assets	3,336	3,084	8.2%
Net Loan Portfolio	2,526	2,177	16.0%
Shareholder's Equity	763	936	(18.4%)
Wholesale Funding	1,658	1,362	21.8%
Customer's Deposits	797	590	35.1%

Source: Home Credit B.V., consolidated – excludes Kazakhstan.

Key ratios

Income Statement Ratios	9M period as at Sept 30, 2011	12M period as at Dec 31, 2010	9M period as at Sept 30, 2010
Net Interest Margin1	23.7%	24.2%	24.0%
Cost Income Ratio2	42.6%	45.1%	44.2%
Cost of Risk Ratio3	6.7%	5.9%	5.5%
Adj. ROAA4	8.3%	8.6%	8.6%
Adj. ROAE5	31.4%	26.5%	26.4%

Balance Sheet Ratios	As at Sept 30, 2011	As at Dec 31, 2010	As at Sept 30, 2010
Net Loans / Total Assets	75.7%	70.6%	67.7%
NPL Ratio6	9.4%	10.1%	12.1%
NPL Coverage Ratio7	108.2%	104.1%	95.0%
Deposits / Total Liabilities	31.0%	27.5%	29.5%
Equity / Assets	22.9%	30.3%	33.2%

Source: Home Credit B.V., consolidated – excludes Kazakhstan.

Notes:
1) Net interest margin is calculated as net interest income divided by average balance of net interest earning assets. The ratio is calculated not including discontinued operations in Ukraine.
2) Cost to income ratio is calculated as general administrative and other operating expenses divided by operating income. The ratio is calculated not including discontinued operations in Ukraine.
3) Cost of risk represents impairment losses and net income/ expense related to credit risk insurance divided by average balance of net loans to customers. The ratio is calculated not including discontinued operations in Ukraine
4) Adjusted RoAA is calculated as net profit for the year divided by the average balance of total assets. The ratio is calculated not including discontinued operations in Ukraine.
5) Adjusted RoAE is calculated as net profit attributable to equity holders divided by average balance of equity attributable to equity holders. The ratio is calculated not including discontinued operations in Ukraine.
6) NPL ratio is calculated as gross non-performing loans divided by total gross loans. HCBV defines non-performing loans as collectively impaired loans that are overdue by more than 90 days as well as loans considered individually impaired.
7) NPL coverage ratio is calculated as loan loss provisions divided by gross non-performing loans.

Contacts for investors

Jaroslav Gaisler

Group Head of Investor Relations and Financial Planning & Analysis
Home Credit International, a.s.
Tel.: +420 2241 74081
E-mail: Jaroslav.Gaisler@homecredit.eu

Contacts for journalists

Home Credit B.V.

David Sahula
Group Communications Manager
Home Credit International, a.s.
Tel.: +420 2241 74485
E-mail: david.sahula@homecredit.eu

PPF Group N.V.

Milan Tomanek
Group Head of Communications
PPF a.s.
Tel.: +420 2241 74066
E-mail: tomanek@ppf.cz

Notes to editors

Home Credit B.V. (“the Group”) is a leading multi-channel consumer finance provider, predominantly in Russia (since 2002) as well as the Czech Republic (since 1997), Slovakia (since 1999), Belarus (since 2007) and Kazakhstan (since 2005, minority stake). In selected countries, the Group has been successfully developing retail banking services. The Group’s database comprises 26 million clients (as of 30 June 2011, incl. Kazakhstan).

More information is available at www.homecredit.eu

Home Credit B.V. is wholly-owned by PPF Group N.V. (“PPF”), one of the largest investment and finance groups in Central and Eastern Europe. With approximately EUR 12.4 billion assets under management, PPF’s business investments range from banking and insurance to real estate to energy, metal mining and agriculture to retail. PPF's reach spans from Central and Eastern Europe to Russia and across Asia.

Following the success of the Home Credit business model in Europe, PPF provides consumer finance services in Asia, specifically in China (since 2007) and Vietnam (since 2009), and  explores opportunities to enter other emerging markets in this region.

More information is available at www.ppf.eu