Tinkoff Interim Report For the First Quarter 2009

Tinkoff Interim Report For the First Quarter 2009

Egidaco Investments PLC (“Tinkoff”), the parent company of ‘Tinkoff Credit
Systems' Bank (TCS Bank), announced the financial results of the first quarter
2009. 

The flexible and resilient Tinkoff business model, with very low fixed cost,
enabled it to respond quickly to changes in the economic environment and move
into ‘steady-state' in the Autumn of 2008.  This entails liquidity management,
close portfolio management, ongoing cost reduction and limited customer
acquisition.  While this approach has served Tinkoff well, two external,
crisis-related problems have negatively impacted Tinkoff financial performance:
FX as a result of RUB devaluation and deterioration in credit quality leading to
an increase in Loan Loss Provisions.  Despite this, Tinkoff remained profitable
in the first quarter of 2009, and as the situation eases going into the second
quarter, the outlook is set to improve further.

The RUB devaluation that started in November 08 continued into first quarter
2009.  FX losses were slightly lower than expected in 1Q09, and the RUB
subsequently strengthened as result of the Russian Central Bank's successful
defense of its target of 41 (55 USD:45 EUR) dual currency basket.  At the
operating level, the Company performed slightly above plan.  Operating Income
was higher than forecast due to increased yield, ongoing cost-reduction and bond
repurchases.  However, overall Q1 results were lower than plan primarily due to
a sharp increase in Loan Loss Provisions (LLP).  The increase in provisioning
was due to a market-wide deterioration in credit quality in Q1 (longstanding
good customers turned delinquent as a result of lay-offs and delays in wage
payments).  February to March took the brunt of the increase in delinquency,
with longstanding customers going delinquent and ‘roll-rates' (migration from
one delinquency cycle to another, the measure of ‘collectability')
deteriorating.  Delinquency and Collections performance have improved in 2Q as
the economic situation stabilises and companies that were previously withholding
salaries from their employees begin to pay.  

In Rouble terms, the portfolio grew from 4 483 to 5 230 million Roubles in last
six months.  As a result of Rouble devaluation, however, the portfolio decreased
in dollar terms in the fourth quarter 2008 from USD 163 million on 31 December
2008 to USD 154 million on 31 March 2009. Also as a result of Rouble
devaluation, interest income growth in US dollar terms has slowed. Total
interest income from credit cards reduced from USD 28.9 million in 4Q08 to USD
27.5 in 1Q09.  Although Tinkoff did not do any mailings (our primary customer
acquisition channel) as a result of the economic down-turn, there has been
limited card issuance.  This has come from the ‘pipeline' of applications that
have continued to come in as a result of mailings in 3Q 08.  Total credit card
issuance has therefore grown from 305 thousand pieces on 31 December 2008 to 341
thousand pieces on 31 March 2009.  Card activation and utilisation remained
strong, with total activated cards amounting to 272 thousand pieces on 31 March
09.

For additional information 

Oliver Hughes, President						
tel: +7 495 648 1000						
e-mail: o.hughes@tcsbank.ru 			

Ilya Pisemsky, CFO	
tel: +7 495 648-1000 
e-mail: i.pisemsky@tcsbank.ru

web: www.eginvestments.net/


Bank 'Tinkoff. Credit Systems' is Russia's first monoline bank, specialising
exclusively on the issuing and servicing of credit cards.  The bank was founded
by the famous Russian entrepreneur, Oleg Tinkov.  In October 2007, the
international investment bank Goldman Sachs became a shareholder. In September
2008, Vostok Nafta Investments Limited also became a shareholder.  

TCS Bank uses modern CRM and risk management systems.  The bank employs a remote
service model, providing virtual banking services of the highest quality to its
customers. Service is provided to customers through a sophisticated Call Centre,
Internet, SMS banking and by mail through the Russian Postal system.  The
combination of a narrow focus with a hi-tech approach gives the bank a distinct
competitive edge in the rapidly growing Russian credit card market.