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    Home Credit B.V.: IFRS consolidated results for the three-month period ended 31 March 2016

    A third consecutive profitable quarter underscores Home Credit Group’s successful recalibration in Russia and continued growth in Asia

    Amsterdam, 30 May 2016: Home Credit B.V. (‘HCBV’ or ‘the Group’), the Netherlands-based holding company for Home Credit’s leading multi-channel consumer finance operations in CEE and Asia, announces its consolidated financial results for the three-month period ended 31 March 2016 in accordance with International Financial Reporting Standards (IFRS).

    “Our focus on geographical diversification into high-growth markets, combined with our adept and rapid response to changing macro-economic conditions, enabled us to deliver a profitable first quarter. With our Russian business stabilising, the promising growth of the Asian operations again shone through, with China and Vietnam leading the way.

    The backdrop in Russia remains challenging, but our operation there is adapting successfully. Measures to reduce both costs and risks continue to pay off and the business remains on the right trajectory, despite the normal seasonality present in Q1. We maintained our position as market leader in POS, and are confident that we are well positioned for the future.

    China remains a stellar performer in the portfolio with a three-fold increase in volumes. Vietnam also delivered a strong quarterly performance with increases in both volumes and profit during the period, while in India our focus remains on developing our network to secure market share so that we can fully tap the clear potential of this market as domestic demand drives higher. Our disciplined financial approach was nowhere more evident than in Kazakhstan where we remained profitable and further strengthened our liquidity position over the quarter, despite the currency turbulence the country has experienced recently. Importantly, we were able to maintain the profitability of the Asian operations while investing to support their growth, investing EUR 119 million during the quarter. Elsewhere, we are also delighted to be entering the next stage in our joint venture with Sprint in the US - on time and on budget.

    We have started 2016 on surer footing, having demonstrated over the past year our team’s unrivalled ability to maximise value across our portfolio, whether adapting to shifting macro-economic environments or capitalising on growth potential. We are well positioned in Asia where all our operations are either first or second in terms of market share in their respective countries. This year will bring further challenges, but also opportunities, and our focus remains on harnessing all of our operations to deliver long-term growth.”

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


    Home Credit’s geographical spread enabled the Group to build on the good performance in 2015 and deliver a net profit of EUR 14.6 million. New loans increased 88% compared to the first quarter last year, with Asia continuing to play a major role. New loan volumes rose three fold in China, which contributed more than half of the Group total, while they almost doubled in Vietnam. In the Philippines, Home Credit delivered a two-fold increase in number of customers to almost 200,000 in just six months, through a combination of expansion of the POS network and joint campaigns with retailers and electronics producers, a model that has also proven successful in China. In India, Home Credit continues its rollout and is now active in 40 of the largest cities, reaching some 120 million potential clients.
    In Russia, measures taken to recalibrate the business are delivering results with efficiency gains evident in Q1 not only compared to the year earlier quarter but also with respect to year-end 2015. Some measures, such as the reduction in the retail network to reflect the new macro environment, have enabled Home Credit to focus investment and management time on new areas, such as the further development of its online presence. This strong new channel – which is independently ranked third in terms of usability - is increasingly important given 27% of sector volumes today in Russia come from non-branch channels.


    • The Group posted a net profit of EUR 14.6 million overall in the first quarter compared with a loss in the same period a year earlier, as the contribution of Asia to the Group business continued to grow, particularly in China and Vietnam. Although macroeconomic pressures remain in Russia the rebalancing of the business means that lending criteria have been adapted allowing the Group to secure healthy new loans and increase its market share specifically in the important POS segment.
    • Operating income in Q1 2016 was up 13.9% year on year to EUR 419 million (Q1 2014: EUR 368 million). The number of active clients reached 14 million up from 12.5 million at the year-end 2015.
    • HCBV’s multi-channel network consisted of 195,379 distribution points, up 26.8% from Q1 2015, with 193,041 POS and loan offices, 373 bank branches and 1,965 post offices. The Group expanded the network predominantly in countries where its franchise is still in the investment stage.
    • New loan volume was EUR 2,109 million, up 88% year on year (Q1 2015: EUR 1,122 million). In China, new loan volumes made a strong start to the year rising to EUR 1.17 billion (Q1 2015: EUR 367 million) while in Vietnam they rose to EUR 163 million from EUR 82 million in Q1 2015, in line with the growth plan in the region. In Russia, measures taken enabled the Group to increase new loan volumes, after years of major decreases in the overall loan book, with POS lending up 28% year on year.
    • General and Administrative and other operating expenses increased in the period in line with the overall expansion of Home Credit’s networks, principally focused on the development of business in Asia, while G&A expenses in Russia were cut by 25% as that operation was resized. 
    • The net loan portfolio increased to EUR 6,229 million (YE 2015: EUR 5,835 million) demonstrating our continued growth mainly in Asia.
    • The quality of HCBV’s loan portfolio increased slightly in Q1 2016 with the NPL (i.e. loans more than 90 days overdue) share of the gross loan book down to 9.0% (10.0% as at 31 December 2015 and 16.1% at 31 March 2015). The Russian subsidiary reported a drop in NPLs to 11.5% (down from 13.3% at the 2015 year-end) reflecting an increased focus on loan quality and collections.
    • The NPL coverage ratio rose to 119.6% (31 December 2015: 115.7%).
    • HCBV’s customer deposits declined 6.1% to EUR 4,607 million (31 December 2015: EUR 4,909 million) in line with funding requirements.
    • Impairment losses were EUR 145.0 million in the period, down substantially from EUR 238.2 million the same period a year earlier.
    • HCBV remains strongly capitalised with total equity of EUR 1,185 million and a solid equity to asset ratio of 12%.


    Business Results 1Q 2016 YE 2014 1Q 2015
    Loans granted YTD (EUR million) 2,109 6,558 1,122
    Number of active clients (million) 14.0 12.5 9.1
    Number of distribution points  195,379 185,893 154,056
    - Number of POSs and loan offices  193,041  183,488 151,455
    - Number of bank branches 373 439 629
    - Number of post offices 1,965 1,966 1,972
    Number of employees (thousand) 77.4     72.9 55.5
    Profit and Loss (EUR million) 1Q 2016 2015 1Q 2015
    Net interest income 332 1,193 269
    Operating income 419 1,619 368
    Credit risk costs¹ (145) (725) (238)
    Operating expenses² (247) (887) (196)
    Net result for the period (15) (42) (57)

    ¹Credit risk costs represent impairment losses on the loan portfolio
    ²Operating expenses comprise general administrative and other operating expenses

    Financial Position (EUR million) 1Q 2016 YE 2015
    Total assets 9,897 9,656
    Net loan portfolio 6,228 5,835
    Equity 1,185 1,196
    Wholesale funding 3,627 3,131
    Customer deposits and current accounts 4,607 4,909

    Source: Home Credit B.V., consolidated.



    Profit and Loss Ratios 1Q 2016 2015 1Q 2015
    Net interest margin¹ 14.5% 15.4% 17.0%
    Net interest income to operating income 79.2% 73.7% 73.3%
    Cost to average net loans² 16.4% 16.1% 15.2%
    Cost to income ratio³ 58.9% 54.8% 53.2%
    Cost of risk ratio4 9.6% 13.2% 18.6%
    ROAA5 0.6% (0.5%) (3.2%)
    Financial Position Ratios 1Q 2016 YE 2015 1Q 2015
    Net loans to total assets 62.9% 60.4% 69.5%
    NPL ratio6 9.0% 10.0% 16.1%
    NPL coverage ratio7 119.6% 115.7% 102.7%
    Deposits to total liabilities 52.9% 58.0% 55.6%
    Equity to assets 12.0% 12.4% 17.6%
    Equity and deposits to net loans ratio 93.0% 104.6% 91.3%

    Source: Home Credit B.V., consolidated.


    ¹Net interest margin is calculated as net interest income divided by the average balance of net interest earning assets.

    ²Cost to average net loans is calculated as general administrative and other operating expenses divided by average net loans.

    ³Cost to income ratio is calculated as general administrative and other operating expenses divided by operating income.

    4Cost of risk represents impairment losses on the loan portfolio divided by average balance of net loans to customers.

    5RoAA is calculated as net profit divided by average balance of total assets.

    6NPL 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.

    7NPL coverage ratio is calculated as loan loss provisions divided by gross non-performing loan.

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