Home Credit and Finance Bank - IFRS results for the twelve month period ended 31 December 2008: Increase in net profit of 85% reflects robustness of HCFB business model in a challenging economic environment

Home Credit & Finance Bank (“HCFB” or “the Bank”), rated Moody’s 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 twelve month period ended 31 December 2008 in accordance with International Financial and Reporting Standards (IFRS).

“During the final quarter of 2008, HCFB continued to maintain its position as a leading provider of consumer finance in Russia, producing a strong set of year-end results with record profitability. Current market conditions have created a challenging environment for business development. As a result, Home Credit has adapted its objectives to concentrate on optimising the business and product offering. Home Credit continues to be strongly supported by the parent company, PPF Group, which provides the business with a robust platform in order to help HCFB deliver its retail bank strategy.

Despite difficult market conditions, we have successfully entered the retail deposit market and have launched debit cards as well as expanding our ATM network in line with the Home Credit business model. We remain positive on the Group’s ability to successfully compete in the challenging economic conditions.”

Ivan Svitek, HCFB Chief Executive Officer


  • Net profit increased by 85.1% to RUB 3,659 million compared to RUB 1,977 million for the prior twelve month period ending 31 December 2007
  • The gross loan book increased by 15.9% from RUB 70,765 million for the year 2007 to RUB 82,014 million for 2008
  • Net interest income for the twelve months to 31 December 2008 of RUB 19.361 million resulted in a 48.8% increase, compared to the net interest income for the twelve month period to 31 December 2007 (RUB 13,013 million)
  • HCFB remains the dominant player in the POS market in Russia, with an increased share of 27%. HCFB also maintains a strong presence in the credit card market, with a market share of 10.5% and with over 9 million credit cards in issue
  • HCFB has established relationships with 15.8 million customers by the end of 2008 creating one of the largest customer databases in Russia
  • A key advantage for HCFB is its strong geographical presence with 93 representative offices and 190 branches across 80 regions of Russia
  • HCFB maintains a well balanced and highly liquid position to effectively manage its liabilities with a net liquidity position of over RUB 10 billion within 1 year
  • Ongoing improvements in risk management have continued to deliver positive results with a further decrease in the level of NPLs (calculated as a percentage of the gross loan book.) NPL level significantly fell from 12.1% in 2007 to 9.5% in 2008, with NPL coverage reached 111.6% against 105% in 2007, while the risk cost indicator declined from 14.8% down to 11% demonstrating the Bank’s ability to manage the asset quality effectively
  • The Bank maintains a healthy capitalisation position with a risk weighted CAR of 20.6%. It continues to enjoy the full support from its parent company, PPF Group, which provided capital injections of the total amount of RUB 2 billion in 2008 and RUB 1 billion in January 2009


Despite the challenging global market environment for consumer finance, HCFB reported a strong, profitable performance in the twelve month period and continues to make progress in consolidating its position as one of the leading providers of consumer finance in Russia.

In line with HCFB’s strategy of being a retail bank, the Bank successfully entered the market for retail deposits. Since launching this activity in Russia in October 2008, HCFB took over RUB 800 million in retail deposits over a three month period, reflecting the attractive parameters of the offer and high consumer demand. The Bank also extended its liability structured product offering with current accounts and debit cards on the new banking IT platform. HCFB also started the roll out of its own network of ATMs to strengthen the Bank’s platform for further developing its retail bank model.

The POS portfolio decreased by 7% compared with the corresponding period last year to RUB 33.2 billion as at the year end. The decrease in the POS portfolio demonstrates the continuing diversity of our loan portfolio and also reflects the increase of the Bank’s share of cash loans in the gross loan book. The credit card portfolio exceeded RUB 23.6 billion, representing an increase of approximately 10% increase from 2007, and the cash loan portfolio amounted to RUB 13.8 billion, showing almost a 60% increase in comparison to the 2007 year-end results. HCFB’s loan portfolio remains well diversified and comprises 40% in POS loans, 29% in credits cards, 17% in cash loans and 14% in mortgages and car loans as at the end of 2008.

The total number of cumulative loans granted in 2008 increased by 6.5% reflecting the tougher economic environment in Russia, the stringent underwriting and risk management procedures, and the business optimisation programme introduced by the Bank in 4Q 2008. The volume of POS loans granted increased by 6% compared with the previous year, the cumulative volume of card transactions decreased by 14.6% to RUB 18.8 billion compared to the prior year period, while the volume of cash loans granted increased by 41% to over RUB 14.8 billion. HCFB continues to be the dominant player in the POS market with a market share of over 27% and the second largest player in credit card market with the market share at 10.5%, according to HCFB estimates.

As part of the business optimisation programme, HCFB has stopped offering mortgages and car loans in response to unfavourable market conditions and is now focusing on short-term, high-yield products.

Net profit for the twelve month period ended 31 December 2008 amounted to RUB 3,659 million compared to RUB 1,977 million for same period in 2007; an increase of 85.1%. The key drivers of profitable growth for 2008 were: the Bank’s ability to react proactively to the market situation with prudent steps to optimise the business; the significant improvement in asset quality driven by on-going risk-management enhancement and the continued growth of loan portfolio over the year.

Net interest income for the twelve month period ended 31 December 2008 was RUB 19,361 million, compared to RUB 13,013 million for the twelve month period ended 31 December 2007, an increase of 48.8%. Net interest margin remains stable at over 26%.

Throughout the period HCFB has focused on the continued efficiency of its risk management and collection procedures. This has resulted in the level of NPLs, as a percentage of the gross loan book, significantly decreasing to 9.5% as at 31 December 2008 from 12.1% as at 31 December 2007, while NPL provisioning coverage stood at 111.6% (2007: 105.5%). The risk cost indicator declining to 11% demonstrates the Bank’s ability to effectively manage the quality of its portfolio by executing effective risk-management measures which are constantly adjusted according to market conditions.

During 2008, the Bank demonstrated its ability to effectively manage its assets and liabilities by obtaining sufficient funding to support further business development. This funding included two large Eurobond transactions, a syndicated loan facility from the group of international relationship banks and the domestic bonds placement. The funds, which totalled USD 1.3 billion, allowed the Bank to maintain its leading position in the consumer finance market and to deliver the strategy of being a retail bank through introducing new liability-structured products: retails deposits, current accounts with debit cards, as well as developing its own ATM network.

HCFB maintains a well balanced and highly liquid position with positive cumulative resources for the next twelve months of over RUB 10 billion to effectively manage its refinancing schedule. Furthermore, the Bank repaid its debt obligations for 2008 and has developed a manageable refinancing agenda for 2009 supported by strong liquidity from the bank’s parent company.

The capital position of the Bank, with the support of its parent PPF Group, resulted in HCFB posting a risk-weighted capital adequacy ratio at 31 December 2008 of 20.6%, in line with management target levels and a Tier 1 capital position of 19.6%.

In June 2008, HCFB announced that it had been provided with a liquidity facility from its parent company totalling EUR 900 million which has, to date, not been utilised providing HCFB with a solid liquidity cushion. PPF Group N.V. has repeatedly confirmed that HCFB remains a strategic line of business for the Group and that Russia is a strategically important country for its business interests. As a result, PPF Group has also provided HCFB with additional rouble equity injections of RUB 2 billion (made in December 2008), and RUB 1 billion in January 2009.


(‘000 000 RUB) Y2007 Y2008 Y-o-Y change
Total Assets 81,393 113,449 39.4%
Operating Income 17,707 25,920 46.4%
Gross Loan Book 70,765 82,014 16%
Net Profit 1,977 3,659 85%
Total Equity 14,940 20,598 38%


For further enquiries, please contact:

Alena Zheltova
Corporate Finance and Investor Relations, HCFB
Tel: (+7) 495 514 1017 (4431)


Milan Tománek
Head of PPF Group Communications
Tel: +420 224 559 573


Home Credit & Finance Bank (Moody’s Ba3/NP/D-, S&P B+/ /B) is one of the leading banks specializing in consumer banking in Russia with a 27% market share in the point-of-sale market and almost an 11% market share of the credit card market as at 31 December 2008.

HCFB offers its clients a wide range of credit products with variable credit terms. HCFB’s products are distributed through about 30,000 POS outlets across over 1,200 cities throughout Russia. The Bank’s regional network comprises 93 representative offices, 190 cash offices and 5 branches across the Russian Federation as at 31 December 2008.

Companies of the Home Credit Group operate in the Central and Eastern European, Central Asian and the Far East consumer finance markets and as at year-end 2007, had granted loans in the combined principal of EUR 3.3 billion. Home Credit Group maintains leading positions in the consumer finance markets of the Czech Republic (Home Credit, since 1997), the Slovak Republic (Home Credit Slovakia, since 1999), the Russian Federation (Home Credit & Finance Bank, since 2002) and the Republic of Kazakhstan (Home Credit Kazakhstan, since December 2005). Home Credit Group also entered the Ukrainian and Belarusian markets in 2006 (CJSC Home Credit Bank, Home Credit Finance and OAO Home Credit Bank respectively) and China (Home Credit Asia, December 2007).

The Home Credit Group is part of the PPF Group, which is a leading international financial group. Established in 1991, PPF Group now operates in consumer finance and retail banking. Through its stake in Generali PPF Holding the Group participates in the insurance market and asset management services. PPF Group also actively seeks investment opportunities and undertakes strategic investments in developing markets of the CEE and CIS. During its 18 years in business, PPF Group has become an important international financial investor, managing assets of EUR 8.8 billion as of 30 July 2008.