Home Credit & Finance Bank H1 2007 IFRS results: HCFB reports net profit increase of 300% to RUR 456 million

Moscow, 08/28/2007

Home Credit & Finance Bank ("HCFB"), rated Moody' Ba3/NP/D-, S&P B+/B, and one of the leading banks specializing in consumer banking in Russia, announces its financial results for the six months ended 30th June 2007 in accordance with International Financial and Reporting Standards (IFRS).

'The first half of 2007 has seen the Bank demonstrate a strong performance and deliver upon our strategy. Business volumes and profits have grown steadily, whilst the Bank has successfully continued to diversify the product offering and broaden geographical presence. Positive trends in HCFB's development have been seen in every area of our activity - business operations, risk-management, product performance.'
Paul Batchelor, Chief Executive Officer

Highlights

Net profit for the period of RUR 456 million (H1 2006: RUR 111 million) – an increase of over 300%
Strong growth in net interest income to RUR 5,703 million (H1 2006: RUR 3,717 million) attributed to continued growth in the credit card and cash loan portfolios
Mortgage loan portfolio grew to RUR 1,185 million in line with the Bank's strategy for product diversification
Increase in the Bank's revolving credit card activities with a 144% uplift in the value of credit loans granted, compared to H1 2006, maintaining HCFB's position as the second largest provider of credit cards in Russia with market share increasing to 12%
Continued diversification of the loan portfolio with revolving credit cards and cash loans accounting for over 50% of the Bank's gross as at 30 June, 2007
HCFB's branch network covers 80 regions across the Russian Federation serviced from 81 representative offices and 58 loan offices of which 40 new loan offices were opened in the first half of 2007
HCFB's client base comprises approximately 13 million customers with 50% active clients
The distribution network comprises over 25,000 points-of-sale partners
Maintenance of strong capitalisation with risk weighted CAR of 20.7% (YE 2006: 23.7%)
On 20th August, 2007 HCFB announced that it had successfully raised EUR 265 million via a syndicated loan facility, providing further diversification of the Bank's funding sources

In the first six months of the year, HCFB's net profit increased by over 300%, compared to the prior year period, up from RUR 111 million to RUR 456 million and was in line with management expectations.

The increase in net profitability was driven by a 53% uplift in the Bank's net interest income from RUR 3,717 million to RUR 5,703 million. The increase in net interest income is once again attributable to the sustained growth in the volume of credit card loans where the cumulative value of loans granted in the period totalled RUR 11.3 billion, a rise of over 140% from the previous year. The Bank has maintained its position as the second largest provider of credit cards by market share which stands at 12% with almost 6 million cards issued.

The cumulative value of cash loans granted in the first six months increased significantly from RUR 170 million in the prior year period to RUR 4 billion, whilst the cumulative value of POS loans granted decreased by 6% from the prior period. The decrease reflects HCFB's continued focus on the diversification of the Bank's loan portfolio and the growth in the credit card and cash loan portfolios.

HCFB's gross loan book grew steadily with an increase of 20% from the year end 2006, and 50% from the corresponding period for the last year, to RUR 43.7 billion and was in line with expectations. For the first time, POS loans amounted to less than 50% of the portfolio due primarily to the strong growth of the Bank's credit card and cash loan portfolios. Credit cards accounted for 40% of the gross loan book, up from 32% at year end and cash loans accounted for over 10% of the book, up from 5% at year end.

Product diversification has remained a key priority for HCFB in the half-year period. HCFB's mortgage book, which is centred on the prime mortgage market in Russia, increased to RUR 1,185 million with no borrower defaults experienced. The Bank's mortgage book represents approximately 3% of the gross loan book, compared to a negligible amount at the year end. The residential mortgage market continues to be an attractive growth area for the Bank which currently operates mortgage centres across 7 regions in Russia. Motor vehicle loans are still being piloted by the Bank in several regions although the number of car loans granted to date is insignificant.

The level of NPLs, as a percentage of our gross loan book, fell to 13.7% in the first half and reflects the concerted efforts of the Bank's management team to strengthen the risk management procedures and collection processes. HCFB will continue to focus on its risk management systems and processes as these are central to the continued, steady growth of the Bank.

HCFB's capital position remains strong as at the half-year end with a risk-weighted capital adequacy ratio of 20.7%, in line with the Bank's target levels and a Tier 1 capital position of 19.1%. To finance HCFB‘s operations in the Russian retail banking market, HCFB successfully raised EUR 265 million in August 2007 via a syndicated loan facility, providing further diversification of the Bank's funding sources. The transaction oversubscription and costs demonstrated keen interest and strong support from the banks.

Financial Summary

	30th June 2007 RUR million	30th June 2006 RUR million	y-o-y change
Gross Loans Granted	43,677	28,765	51.8%
Operating Income	6,693	3,892	71.9%
Net Profit	456	111	311.1%
Total Assets	51,156	36,502	40.1%
Total Equity	10,431	9,306	12.1%

Notes to Editors:

Home Credit & Finance Bank

HCFB offers its clients a wide range of credit products with variable credit terms. HCFB's products are distributed through more than 25,000 POS outlets across over 1,100 cities throughout Russia. The bank's regional network comprises 139 offices across the Russian Federation as of 30 June 2007.

Home Credit & Finance Bank is a member of the Home Credit Group. The companies of the Home Credit Group have been operating in the Central and Eastern European consumer loan markets since 1997. The Home Credit Group belongs to the PPF international group of companies which has interests in insurance and consumer finance, and provides complex asset management services. During its 16 years in business, PPF has become a leading international financial investor, managing assets of approximately USD 10.8 billion as at the end of 2006.

For further enquiries, please contact:

Natalya Dokuchaeva
Head of Strategic
Communications, HCFB
Tel: (+7) 495 514 1019 (4930)
E-mail: press@homecredit.ru

Alena Zheltova
Deputy Head of Corporate
Finance, HCFB
Tel: (+7) 495 514 1017 (4431)
E-mail: alena.zheltova@homecredit.ru

Tomas Cerny
Head of Capital Markets
Home Credit Group
Tel: +420 224 559 174
E-mail: tomas.cerny@homecredit.eu

08/28/2007

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