Page 104 - RusRPTJun21

the share of PBT down from 27% to 24%.
On the balance sheet, gross loans rose 12% in 1Q21, with cash loans surging 27% Q-o-Q, credit cards up 6% Q-o-Q, POS up 15%, car loans 24% and home equity 10%. Cost of risk was lower than expected at 4.5%, with Stage 3 loans down from 12.5% to 11.7% and 121% covered.
Opex growth remained high, as staff costs surged 33% Q-o-Q on new hires (1k IT staff added in 2020, 1.5k planned for this year), salary rises late last year and general wage inflation within the tech space.
Tinkoff Investments hosted a strategy session at the end of May, the first of a series of scheduled deep dives into the most interesting parts of TCS's digital ecosystem.
· Financial targets. The aim is for revenues of more than R40bn by 2023 (we model just over R38bn), with "stable to improving" profit margin (we think it should improve to about 30% on economies of scale). The segment targets 5mn active users (now 1.4mn, we model 4.9mn) out of a total active market of 15-20mn in 2023, so implying around 25-33% market share (it now has a more than 60% share of active customers).
· Customer segmentation. Customers are typically young (70% younger than 39), and segments include early-stage micro-investors through to mass, typically "buy-and hold" investors (87% of customers), along with higher-frequency traders and premium/private offerings. Around 6% of customers use margin trading. Some 47% come from existing Tinkoff clients.
· Features. The presentation included a demo of the wide range of features on the app, including Investment Box for early-stage micro-investors, the Pulse investment social network (more than 1mn users), Owl robo-advisory and a wide array of services for more advanced investors.
· Market growth. The company sees tremendous growth potential - retail investors hold around R6 trln in investment funds (around R1.8 trln in equities) compared to R34 trln in retail deposits. Tinkoff's AUC, at around R450bn, are just 1% of the deposit market and 7% of retail investment holdings.
· Monetization. Revenues (R8bn in 2020) are 65% fee income (mainly trading commissions, management fees, subscriptions, FX conversions) and 35% interest income earned on margin trading and investing client cash float in overnight funds (about 10% of the R450bn AUC). This revenue mix is expected to remain broadly stable.
How it fits into the ecosystem. Tinkoff Investments is clearly a key part of the plan to increase cross-sell in the ecosystem, with the need to also have a Tinkoff Black card and over 20% of T Black clients using Tinkoff Investments.
104 RUSSIA Country Report June 2021 www.intellinews.com