MOSCOW (Reuters) - Russian consumer lender TCS Group (TCSq.L) reported a 75-percent increase in net profit in the third quarter year-on-year on Monday and said its performance had allowed it to approve extra dividends.
TCS Group’s strong quarter stood out from Russia’s wider banking sector which has been shaken by the bailouts of two major lenders in the space of a month.
TCS said later on Monday its majority-owner, entrepreneur Oleg Tinkov, planned to sell a 6.6 percent stake in the group via an accelerated book build.
TCS Group will not receive any proceeds from the placement and Tinkov will retain an approximate 48 percent stake in the company, it said in a statement.
Tinkov said in a separate statement that he had supported the company during a “period of volatility” in recent years by buying back shares from investors wanting to sell.
“Now that the prices for our shares have recovered, the time has come to sell a part of the stake back to the market, which I hope will help further increase the liquidity of our receipts,” he said.
The group said net profit increased to 5.0 billion rubles (£63.5 million) in the third quarter, in line with a forecast of analysts polled by Reuters.
It said its main business, Tinkoff Bank, was the second-largest credit card player in Russia as of Oct. 1, with a market share of 11.6 percent.
Tinkoff CEO Oliver Hughes told a conference call that profit growth had been driven by an expanding loan portfolio and the development of businesses outside the core banking field.
The group said its board had approved a third interim gross dividend for 2017 of $0.22 per share or global depositary receipt. That takes the overall amount of dividend payment to $40.2 million (£30.3 million).
“In addition to this, and due to the stronger than expected bottom-line result, the Board of Directors approved a special interim dividend of $0.18 per share/GDR (with each GDR representing one share), with a total dividend payment of around $32.9 million,” TCS said in its earnings report.
The group’s net margin, which is the revenue after interest, taxes and operating expenses, rose 41 percent to 12.2 billion in the July-September period.
Return on equity ratio, an indicator of how much profit it made from shareholders’ investment, increased to 53.7 percent from 43.4 percent a year ago.
Hughes said the bank was sticking to its 2017 net profit guidance of 17 billion roubles and aimed to make at least 24 billion roubles in net profit next year.
Looking forward into 2018, the lender said it was expecting net loan growth of at least 25 percent, with the cost of risk rising to 7-8 percent from the current 6 percent.
“The cost of risks will increase slightly as we have attracted many clients this year,” Hughes said, adding that he was surprised by the low cost of risk level in 2017.
In the first nine months of this year, net loans and advances to customers rose 30 percent to 134.1 billion, TCS said.
Reporting by Andrey Ostroukh, Maria Kiselyova and Jack Stubbs; Editing by Jane Merriman