March 11, 2020 / 8:42 AM / 20 days ago

UPDATE 2-Russian bank TCS full-year profit up 33% as founder faces tax charges

* 2019 net profit up 33%

* Q4 profit up 36% y/y, net margin up 49%

* Aims for at least 42 bln roubles profit in 2020

* Approves first interim gross cash dividend of $0.21 (Adds TCS share price, details on dividends)

By Andrey Ostroukh

MOSCOW, March 11 (Reuters) - Russian consumer lender TCS Group Holding increased its net profit by a third to a record 36.1 billion roubles ($505.83 million) in 2019 and is aiming for a further increase to at least 42 billion roubles in 2020, the bank said on Wednesday.

TCS, the parent company of Tinkoff Bank, said the results were underpinned by a 66% rise in net loans as the number of new credit accounts reached 4.3 million.

TCS’s London-listed global depositary receipts were up 8% at $16.72 on Wednesday. They hit a 2020 low of $13.04 hit on Monday. They have lost around a quarter of their value since the U.S. Department of Justice charged TCS founder Oleg Tinkov last week with filing false tax returns.

Tinkov could face up to six years in prison if extradited to the United States, but TCS has said that the court hearings against its founder, who is battling acute leukaemia, would not affect the operations of its board of directors.

In the past few years, TCS Group’s strong results have stood out in Russia’s wider banking sector, which has been shaken by the withdrawal of dozens of banking licences and Western sanctions against some state-run lenders.

TCS has “excessive capital” and plans to pay $42 million in 2020 dividends, channelling around 30% of quarterly net profit into dividend payouts, Oliver Hughes, Chief Executive Officer and Chairman of the Management Board of Tinkoff Bank, said.

TCS approved a first interim gross cash dividend of $0.21 per share or GDR for 2020, the bank said in its earnings report.

TCS’s return on equity (ROE), an indicator of how much profit the company generated from money invested by its shareholders, was down to 55.9% in 2019 from 74.7% in 2018.

In the fourth quarter, the group’s net profit rose 36% year-on-year to 11 billion roubles as net margin jumped 49% to 24 billion roubles.

TCS’s net interest margin, which measures the difference between its interest income and interest paid, declined to 20.5% in the fourth quarter from 21.9% a year earlier.

TCS also said its cost of risk rose to 8.1% in the fourth quarter of 2019 from 4.2% a year earlier, “reflecting high loan growth rates, front-loaded provisioning... and continued fine-tuning of our credit risk and approval models.”

$1 = 71.3680 roubles Reporting by Gabrielle Tétrault-Farber, Tatiana Voronova; Writing by Andrey Ostroukh; Editing by Kirsten Donovan and Jane Merriman

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