June 23, 2017 / 11:00 AM / a month ago

Russian bank TCS has scope to increase lending after bond deal

Oliver Hughes, Chairman of the Management Board of Tinkoff Bank, poses during an interview with Reuters in Moscow, Russia, June 22, 2017.Sergei Karpukhin

MOSCOW (Reuters) - Russian online retail bank TCS Group has more scope to step up its lending after boosting capital via a $300 million (235.68 million pounds) bond deal earlier in June.

TCS, Russia's second-largest credit card issuer after top bank Sberbank, is sticking to its loan book growth guidance of at least 20 percent this year but could do more.

Oliver Hughes, chairman of the management board at TCS, said: "Thanks to the additional capital ... we have a buffer which would allow us to grow faster and longer if there is a source of quality growth."

London-listed TCS Group, or Tinkoff Credit Systems, is a pioneer in online banking in Russia. Majority-owned by entrepreneur Oleg Tinkov, who has a 53.5 percent stake, it has become one of the top 50 banks in the country along with heavyweights such as Sberbank and VTB since it was set up in 2006.

With no branches and, until recently no ATMs, TCS Group aims to expand in credit card loans and online banking services, among other financial services in the country.

Oliver Hughes, Chairman of the Management Board of Tinkoff Bank, and Sergey Pirogov, Vice President of Tinkoff Bank, pose during an interview with Reuters in Moscow, Russia, June 22, 2017.Sergei Karpukhin

"Now the capital is enough for a couple of years - depending on the pace of growth, until 2020," Hughes told Reuters in an interview. He said the bank did not have plans to issue new shares or to conduct a sale of existing shares, nor were there any plans to top up the bond deal.

"Banks are proposing options to us all the time and we look at all of them. But the most optimal from the capital point of view now is Tier 1 debt," Hughes said.

Sergey Pirogov, Vice President of Tinkoff Bank, poses during an interview with Reuters in Moscow, Russia, June 22, 2017.Sergei Karpukhin

After the Eurobond issue TCS's capital adequacy ratio, calculated under Russian central bank requirements, or N1, has increased by some 6 percentage points to around 16.2 percent, Sergey Pirogov, vice president with the bank, said.

"There are grounds to believe that there could be opportunities for faster growth," Pirogov said.

TCS's net loans rose by 8 percent in the first quarter of this year, with net profit up almost 80 percent to 3.4 billion roubles ($57 million), year-on-year, and strong return-on-equity of 43 percent.

TCS would be interested in buying into a loan portfolio following its purchase of a credit card loan book it bought from electronics retailer Svyaznoy for 6.4 billion roubles back in 2015, if such options came on the market, Hughes said. "But there are no such (now)," he said.

Editing by Jane Merriman

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