TCS Group Holding PLC. International Financial Reporting Standards Consolidated Condensed Interim Financial Information (Unaudited) 30 September 2015

Transcription

1 International Financial Reporting Standards Consolidated Condensed Interim Financial Information (Unaudited) 30 September 2015

2 CONTENTS CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION Consolidated Condensed Interim Statement of Financial Position... 1 Consolidated Condensed Interim Statement of Profit or Loss and Other Comprehensive Income... 2 Consolidated Condensed Interim Statement of Changes in Equity... 3 Consolidated Condensed Interim Statement of Cash Flows... 4 NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL INFORMATION 1 Introduction Operating Environment of the Group Summary of Significant Accounting Policies Critical Accounting Estimates and Judgements in Applying Accounting Policies New Accounting Pronouncements Cash and Cash Equivalents Loans and Advances to Customers Investment Securities Available for Sale Repurchase Receivables Due to Banks Customer Accounts Debt Securities in Issue Subordinated Debt Share Capital Interest Income and Expense Customer Acquisition Expenses Net Income from Insurance Operations Fee and Commission Expense Administrative and Other Operating Expenses Income Taxes Segment Analysis Maturity Analysis Management of Capital Contingencies and Commitments Financial Derivatives Fair Value of Financial Instruments Related Party Transactions Events after the End of the Reporting Period... 34

3 pwc Report on review of Interim Financial Information To TCS Group Holding PLC Introduction We have reviewed the accompanying consolidated condensed interim statement of financial position of TCS Group Holding PLC and its subsidiaries (the 'Group') as of September 30, 2015 and the related consolidated condensed interim statements of profit or loss and other comprehensive income for the three-month and nine-month periods then ended, changes in equity and cash flows for the nine-month period then ended and other explanatory notes. Management is responsible for the preparation and fair presentation of this consolidated condensed interim financial information in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated condensed interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union. Lx Cal o-r-s PricewaterhouseCoopers Limited Chartered Accountants Limassol, November 30, 2015 PricewaterhouseCoopers Ltd, City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus P 0 Box 53034, CY-3300 Limassol, Cyprus T: , F: oot, PricewaterhouseCoopers Ltd is a member firm of PricewaterhouseCoopers International Ltd, each member firm of which is a separate legal entity. PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No ). A list of the company's directors including for individuals the present name and surname, as well as any previous names and for legal entities the corporate name, is kept by the Secretary of the company at its registered office at 3 Themistocles Dervis Street, 1066 Nicosia and appears on the company's web site. Offices in Nicosia, Limassol, Larnaca and Paphos.

4 Consolidated Condensed Interim Statement of Financial Position Ò±» øë² «¼»¼ íï Ü»½»³¾» ßÍÍÛÌÍ Cash and cash equivalents 6 4,686,490 10,699,577 Mandatory cash balances with the CBRF 668, ,510 Due from other banks 367,868 - Loans and advances to customers 7 78,224,767 74,579,998 Financial derivatives 25 9,411,216 8,879,972 Investment securities available for sale 8 13,106, ,535 Repurchase receivables 9 1,907,447 5,366,280 Current income tax assets 929,479 1,094,088 Guarantee deposits with payment systems 3,066,789 2,967,132 Tangible fixed assets 438, ,348 Intangible assets 1,312,607 1,125,307 Other financial assets 1,394,539 1,890,667 Other non-financial assets 484, ,860 ÌÑÌßÔ ßÍÍÛÌÍ ïïëôççéôêçé ïðèôèðêôîéì Ô ßÞ Ô Ì ÛÍ Due to banks 10 1,822,309 10,331,216 Customer accounts 11 74,681,785 43,366,434 Debt securities in issue 12 28,930 19,414,780 Current income tax liabilities - 12,593 Deferred income tax liabilities 1,454,495 1,039,795 Subordinated debt 13 13,724,979 11,250,686 Insurance provisions 460, ,409 Other financial liabilities 900,937 1,573,861 Other non-financial liabilities 1,061, ,432 ÌÑÌßÔ Ô ßÞ Ô Ì ÛÍ çìôïíìôèïë èéôèíéôîðê ÛÏË ÌÇ Share capital , ,112 Share premium 14 8,622,919 8,622,919 Treasury shares 14 (327,718) (4,474) Share-based payment reserve , ,200 Retained earnings 12,782,061 11,800,358 Revaluation reserve (1,627) (225,047) ÌÑÌßÔ ÛÏË ÌÇ îïôèêîôèèî îðôçêçôðêè ÌÑÌßÔ Ô ßÞ Ô Ì ÛÍ ßÒÜ ÛÏË ÌÇ ïïëôççéôêçé ïðèôèðêôîéì Approved for issue and signed on behalf of the Board of Directors on. The notes set out on pages 5 to 34 form an integral part of this Consolidated Condensed Interim Financial Information 1

5 Consolidated Condensed Interim Statement of Profit or Loss and Other Comprehensive Income Ò±» Ò ²» ³±²»²¼»¼ øë² «¼»¼ Ì»» ³±²»²¼»¼ øë² «¼»¼ Ò ²» ³±²»²¼»¼ øë² «¼»¼ Ì»» ³±²»²¼»¼ øë² «¼»¼ Interest income 15 29,523,909 10,414,148 29,448,279 9,908,716 Interest expense 15 (9,403,227) (3,210,043) (6,315,463) (1,970,885) Ò» ²»» ²½±³» îðôïîðôêèî éôîðìôïðë îíôïíîôèïê éôçíéôèíï Provision for loan impairment 7 (11,613,201) (3,614,165) (12,282,420) (3,739,373) Ò» ²»» ²½±³» º» ±ª ±² º± ± ² ³ ³»² èôëðéôìèï íôëèçôçìð ïðôèëðôíçê ìôïçèôìëè Customer acquisition expense 16 (2,350,626) (849,185) (2,340,201) (601,668) Net gains/(losses) from operations with foreign currencies 103,854 (8,525) (495,832) (641,762) Net income from insurance operations , , , ,431 Gain from sale of impaired loans 7 20,464 14,118 17,004 - Fee and commission income 695, , ,919 54,355 Fee and commission expense 18 (1,048,811) (420,113) (702,965) (243,748) Administrative and other operating expenses 19 (5,362,218) (1,931,321) (4,409,785) (1,477,947) Other operating income 127,404 92, ,259 28,792 Ð ±º ¾»º±» ïôíðëôëïí ïôðïëôîíì íôéêïôîêç ïôëîîôçïï Income tax expense 20 (389,438) (302,552) (965,429) (388,342) Ð ±º º±»» ±¼ çïêôðéë éïîôêèî îôéçëôèìð ïôïíìôëêç Other comprehensive income/(loss):»³ ³ ¾»»½ º»¼ ± ±º ± ± Investment securities available for sale and Repurchase receivables - Net gains /(losses) arising during the period, net of tax 241,652 37,059 (34,697) (53,094) - Net (gains)/losses reclassified to profit or loss upon disposal, net of tax (18,232) (26,841) (11,551) 14 Ñ» ½±³»»² ª» ²½±³»ñø ± º±»» ±¼ô ²» ±º îîíôìîð ïðôîïè øìêôîìè øëíôðèð ̱ ½±³»»² ª» ²½±³» º±»» ±¼ ïôïíçôìçë éîîôçðð îôéìçôëçî ïôðèïôìèç Û ² ²¹»» º± ±º ¾«¾» ±» ± ²» ±º» Ù ±«ô ¾ ½ ø»»»¼ ² Îλ» ëòïê ìòðî ïëòêî êòíì Û ² ²¹»» º± ±º ¾«¾» ±» ± ²» ±º» Ù ±«ô ¼ ¼ ø»»»¼ ² Îλ» ëòïë ìòðï ïëòìç êòîç The notes set out on pages 5 to 34 form an integral part of this Consolidated Condensed Interim Financial Information 2

6 Consolidated Condensed Interim Statement of Changes in Equity Ò±» Í» ½ Í»»³ «³ Í»ó ¾»¼ ³»²»» ª» λª «ó ±² λ» ª» Ì» λ ²»¼» ² ²¹ Þ ²½» íï Ü»½»³¾» îðïí ïèêôïêî èôêîîôçïç ìééôéìð ó øîôëîì ïïôîêêôéïð îðôëëïôððé Profit for the ninemonths period ended 30 September 2014 (Unaudited) ,795,840 2,795,840 Other comprehensive loss: Revaluation of investment securities available for sale and transfers to profit or loss upon disposal or impairment (46,248) - - (46,248) ̱ ½±³»»² ª» ø ± ñ ²½±³» º±» ² ²»ó³±²» ±¼»²¼»¼ øë² «¼»¼ ó ó ó øìêôîìè ó îôéçëôèìð îôéìçôëçî Share issue 1, (1,950) - - Share-based payment reserve 19, , ,470 Þ ²½» øë² «¼»¼ ïèèôïïî èôêîîôçïç ëïçôîïð øìêôîìè øìôìéì ïìôðêîôëëð îíôíìîôðêç Þ ²½» ï Ö ²«ïèèôïïî èôêîîôçïç ëèéôîðð øîîëôðìé øìôìéì ïïôèððôíëè îðôçêçôðêè Profit for the ninemonths period ended 30 September 2015 (Unaudited) , ,075 Other comprehensive income: Revaluation of investment securities available for sale and Repurchase receivables , ,420 ̱ ½±³»»² ª» ²½±³» º±» ² ²»ó³±²» ±¼»²¼»¼ øë² «¼»¼ ó ó ó îîíôìîð ó çïêôðéë ïôïíçôìçë GDRs buy-back (323,808) - (323,808) Share-based payment reserve 19, , ,127 Shares sold under ESOP - - (66,192) ,628 - Þ ²½» øë² «¼»¼ ïèèôïïî èôêîîôçïç ëççôïíë øïôêîé øíîéôéïè ïîôéèîôðêï îïôèêîôèèî ̱ The notes set out on pages 5 to 34 form an integral part of this Consolidated Condensed Interim Financial Information 3

7 Consolidated Condensed Interim Statement of Cash Flows Ò±» Ò ²» ³±²»²¼»¼ øë² «¼»¼ Ò ²» ³±²»²¼»¼ øë² «¼»¼ Ý º ± º ±³ ±» ²¹ ½ ª» Interest received 26,965,275 27,037,671 Interest paid (9,503,972) (6,156,512) Customers acquisition expenses paid (1,468,160) (1,558,034) Cash received from trading in foreign currencies 3,243, ,654 Cash received from insurance operations 976, ,448 Cash received from sale of impaired loans 7 25,457 62,142 Fees and commissions paid (1,145,636) (712,585) Fees and commissions received 695, ,919 Other operating income received 155, ,820 Administrative and other operating expenses paid (2,456,100) (2,206,539) Income tax paid (31,246) (1,129,560) Ý º ± º ±³ ±» ²¹ ½ ª» ¾»º±» ½ ²¹» ² ±» ²¹» ²¼ ¾» ïéôìëéôííë ïêôêçîôìîì Ý ²¹» ² ±» ²¹» ²¼ ¾» Net decrease in CBRF mandatory reserves 17, ,768 Net increase in loans and advances to customers (13,279,489) (11,781,248) Net decrease/(increase) in guarantee deposits with payment systems 373,021 (418,779) Net increase in due from banks (350,000) - Net decrease/(increase) other financial assets 622,758 (372,340) Net increase in other non-financial assets - (16,031) Net (decrease)/increase in due to banks (8,821,089) 4,045,002 Net increase/(decrease) in customer accounts 27,084,341 (4,069,912) Net decrease in other financial liabilities (798,857) (120,674) Net increase in other non-financial liabilities - 3,740 Ò» ½ º ±³ ±» ²¹ ½ ª» îîôíðëôììè ìôîïïôçëð Ý º ± º ±³ ²ª» ²¹ ½ ª» Acquisition of tangible fixed assets (69,619) (88,555) Acquisition of intangible assets (232,756) (375,444) Acquisition of investments available for sale 8 (10,005,227) (6,793,757) Proceeds from sale of investments available for sale 8 1,825, ,463 Ò» ½ ¼ ² ²ª» ²¹ ½ ª» øèôìèïôçíî øêôîêíôîçí Ý º ± º ±³ º ² ²½ ²¹ ½ ª» Proceeds from debt securities in issue - 143,149 Repayment of debt securities in issue (19,976,903) (11,843,667) GDRs buy-back 14 (323,808) - Ò» ½ ¼ ² º ² ²½ ²¹ ½ ª» øîðôíððôéïï øïïôéððôëïè Effect of exchange rate changes on cash and cash equivalents 464,108 1,337,288 Ò» ¼»½»» ² ½ ²¼ ½» «ª»² øêôðïíôðèé øïîôìïìôëéí Ý ²¼ ½» «ª»²» ¾»¹ ²² ²¹ ±º»» ±¼ 6 ïðôêççôëéé ïèôèîëôçéð Ý ²¼ ½» «ª»²»»²¼ ±º»» ±¼ 6 ìôêèêôìçð êôìïïôíçé The notes set out on pages 5 to 34 form an integral part of this Consolidated Condensed Interim Financial Information 4

8 ï ² ±¼«½ ±² This consolidated condensed interim financial information for the nine-months period ended 30 September 2015 for TCS Group Holding PLC (the Company ) and its subsidiaries (together referred to as the Group or TCS Group Holding PLC ) has been prepared in accordance with International Accounting Standard 34 (IAS 34) Interim Financial Reporting as adopted by the European Union. The Company was incorporated, and is domiciled, in Cyprus in accordance with the provisions of the Companies Law, Cap.113. The Board of Directors of the Company at the date of authorisation of this consolidated condensed interim financial information consists of Constantinos Economides, Alexios Ioannides, Mary Trimithiotou, Philippe Delpal, Jacques Der Megreditchian and Martin Cocker. The Company Secretary is Altruco Secretarial Limited, Kanika International Business Center, 6th floor, Profiti, Ilia No 4 Germasogeia, 4046 Limassol, Cyprus. Mail: P.O.Box 50734, 3609, Limassol, Cyprus. At 30 September 2015 and 31 December 2014 share capital of the Group is comprised of Class A shares and Class B shares. A Class A share is an ordinary share with a nominal value of USD 0.04 per share and carrying one vote. A Class B share is an ordinary share with a nominal value of USD 0.04 per share and carrying 10 votes. As at 30 September 2015 the number of Class A shares is 90,494,146 and Class B shares is 92,144,679. As at 31 December 2014 the number of Class A shares is 90,494,146 and Class B shares is 92,144,679. On 25 October 2013 the Group completed an initial public offering of its Class A ordinary shares in the form of global depository receipts (GDRs) listed on the London Stock Exchange plc. As at 30 September 2015 and 31 December 2014 the entities holding either Class A or Class B shares of the Company were: íï Ü»½»³¾» ݱ«² ±º ²½± ± ±² Tadek Holding & Finance S.A %* 50.45%* British Virgin Islands Guaranty Nominees Limited (JP Morgan Chase Bank NA) 42.52%** 43.91%** United Kingdom Rousse Nominees Limited 2.88% 2.88% Guernsey Vostok Emerging Finance Ltd 3.49% - Bermuda Altruco Trustees Limited 0.66%*** 1.32%*** Cyprus Tasos Invest & Finance Inc. 0.00%**** 0.00%**** British Virgin Islands Vizer Limited 0.00%***** 0.00%***** British Virgin Islands Maitland Commercial Inc. 0.00%***** 0.00%***** British Virgin Islands Norman Legal S.A. 0.00%***** 0.00%***** British Virgin Islands Lorimer Ventures Limited % Cyprus ̱ ïððòððû ïððòððû * The shareholding of Tadek Holding & Finance S.A. consists of Class B shares. ** Guaranty Nominees Limited is a company holding class A shares of the Company for which global depositary receipts were issued under a deposit agreement made between the Company and JP Morgan Chase Bank NA signed in October The percentage of class A shares held by Guaranty Nominees Limited in the total share capital of the Company is equal to 42.52% (31 December 2014: 43.91%). *** The shareholding of Altruco Trustees Limited represents Class A shares under the ESOP (Note 27) only. **** Tasos Invest & Finance Inc. owns 1 Class B share at 30 September 2015 and 31 December

9 ï ² ±¼«½ ±² øý±² ²¼ ***** Vizer Limited, Maitland Commercial Inc and Norman Legal S.A. each own 25 Class B shares of the Company at 30 September 2015 and 31 December As at 30 September 2015 and 31 December 2014 the ultimate controlling party of the Company is Mr. Oleg Tinkov. Mr. Oleg Tinkov controls 91.1% of the aggregated voting rights attaching to the Class A and B shares. As at 30 September 2015 and as at 31 December 2014 the beneficial owner of Tadek Holding & Finance S.A., Tasos Invest & Finance Inc., Vizer Limited, Maitland Commercial Inc and Norman Legal S.A. was Russian entrepreneur Mr. Oleg Tinkov, the beneficial owner of Rousse Nominees Limited was Baring Vostok Private Equity Fund IV, L.P. and the beneficial owner of Lorimer Ventures Limited was Horizon Capital Private Equity Fund. Subsidiaries and structured entity included in this consolidated condensed interim financial information are listed below: Ò ³» Ò ±º ¾«²» л ½»² ¹» ±º ± ²» л ½»² ¹» ±º ª± ²¹ ¹ íï Ü»½»³¾» л ½»² ¹» ±º ± ²» л ½»² ¹» ±º ª± ²¹ ¹ ݱ«² ±º»¹ ±² JSC Tinkoff Bank Banking operations 100% 100% 100% 100% Russia JSC Tinkoff Insurance Insurance operations 100% 100% 100% 100% Russia LLC TCS Services 100% 100% 100% 100% Russia LLC T-Finance Assets holding and microfinance services 100% 100% 100% 100% Russia TCS Finance Ltd Financing Ireland Goward Group Ltd Investment holding company 100% 100% 100% 100% British Virgin Islands LLC Feniks Collection services 100% 100% 100% 100% Russia JSC Tinkoff Bank (the Bank ) provides on-line retail banking services in Russia. The Bank specialises in issuing credit cards. On 2 April 2015 the Bank changed its corporate name from CJSC Tinkoff Credit Systems Bank. JSC Tinkoff Insurance (the Insurance Company ) provides insurance services mainly to clients of the Group. LLC T-Finance provides micro-finance services to clients of the Group. TCS Finance Ltd is a structured entity which issued debt securities for the Group. The Group neither has any shares nor has any voting rights of this company. However, this entity was consolidated as it was specifically set up for the purposes of the Group, and the Group has exposure to substantially all risks and rewards through outstanding guarantees of the entity s obligations. All obligations of this entity are fully repaid as of 30 September LLC Feniks is a debt collection agency. Principal activity. The Group s principal business activity is retail banking and insurance operations within the Russian Federation through the Bank and Insurance Company. The Bank has operated under general banking license No issued by the Central Bank of the Russian Federation ( CBRF ) since 8 December The Insurance Company operates under an insurance license issued by the Central Bank of the Russian Federation. 6

10 ï ² ±¼«½ ±² øý±² ²¼ The Bank participates in the state deposit insurance scheme, which was introduced by the Federal Law No. 177-FZ Deposits of individuals insurance in Russian Federation dated 23 December The State Deposit Insurance Agency guarantees repayment of 100% of individual deposits up to RR 1,400 thousand per individual in case of the withdrawal of a license of a bank or a CBRF-imposed moratorium on payments. Registered address and place of business. The Company s registered address is Kanika International Business Center, 6 th floor, Profiti Ilia 4 Germasogeia, Limassol 4046 Cyprus. The Bank s registered address is 1-st Volokolamsky proezd, 10, building 1, , Moscow, Russian Federation. The Group s principal place of business is the Russian Federation. Presentation currency. This consolidated condensed interim financial information is presented in thousands of Russian Rubles (RR). î Ñ» ²¹ Û²ª ±²³»² ±º» Ù ±«Russian Federation. The Russian Federation displays certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations (Note 24). During 2015, the Russian economy was negatively impacted by low oil prices, ongoing political tension in the region and continuing international sanctions against certain Russian companies and individuals, all of which contributed to the country s economic recession characterised by a decline in gross domestic product. The financial markets continue to be volatile and are characterised by frequent significant price movements and increased trading spreads. In January 2015 Russia's credit rating was downgraded to below investment grade. This operating environment has a significant impact on the Group s operations and financial position. Management is responding to the current operating and economic challenges to minimise the impact on the Group s operations. However, the future effects of the current economic situation are difficult to predict and management s current expectations and estimates could differ from actual results. Management determined loan impairment provisions using the incurred loss model required by the applicable accounting standards. These standards require recognition of impairment losses that arose from past events and prohibit recognition of impairment losses that could arise from future events, including future changes in the economic environment, no matter how likely those future events are. Thus final impairment losses from financial assets could differ significantly from the current level of provisions. Refer to Note 4. í Í«³³ ±º Í ¹² º ½ ² ß½½±«² ²¹ б ½» Basis of preparation. This consolidated condensed interim financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU) and should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2014 which have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the requirements of the Cyprus Companies Law, Cap Except as described below, the same accounting policies and methods of computation were followed in the preparation of this consolidated condensed interim financial information as compared with the annual consolidated financial statements for the year ended 31 December Interim period tax measurement. Interim period income tax expense is accrued using the effective tax rate that would be applicable to expected total annual earnings, that is, the estimated weighted average annual effective income tax rate applied to the pre-tax income of the interim period. Due from other banks. Amounts due from other banks are recorded when the Group advances money to counterparty banks with no intention of trading the resulting unquoted non-derivative receivable due on fixed or determinable dates. Amounts due from other banks are carried at amortised cost. 7

11 í Í«³³ ±º Í ¹² º ½ ² ß½½±«² ²¹ б ½» øý±² ²¼ Seasonality. The management do not consider that the Group s business exhibits material differences due to seasonality. Adoption of New or Revised Standards and Interpretations. Certain new standards, interpretations and amendments to the existing standards, as disclosed in the consolidated financial statements for the year ended 31 December 2014, became effective for the Group from 1 January These new or amended standards or interpretations did not have any material impact on this consolidated condensed interim financial information. At 30 September 2015 the principal rate of exchange used for translating foreign currency balances was USD 1 = RR (31 December 2014: USD 1 = RR ), the principal average rate of exchange was USD 1= RR for nine months period ended 30 September 2015, and the principal average rate of exchange was USD 1= RR for three months period ended 30 September 2015 (nine months period ended 30 September 2014: USD 1= RR , three months period ended 30 September 2014: USD 1= RR ). Changes in presentation. Where necessary, corresponding figures have been adjusted to conform to the presentation of the current year amounts. The effect of reclassifications for presentation purposes was as follows on amounts at 31 December 2014: ß ± ¹ ²»»²»¼ λ½ º ½ ±² ß»½ º»¼ íï Ü»½»³¾» Other financial liabilities 1,822,270 (248,409) 1,573,861 Insurance provisions - 248, ,409 The effect of reclassifications for presentation purposes was as follows on amounts in the consolidated condensed statement of cash flow for the 9 months period ended 30 September 2014: ß ± ¹ ²»»²»¼ λ½ º ½ ±² ß»½ º»¼ º±» ² ²» ³±²»²¼»¼ Net increase in loans and advances to customers (13,847,045) 2,065,797 (11,781,248) Net decrease in customer accounts (2,004,115) (2,065,797) (4,069,912) ì Ý ½ ß½½±«² ²¹ Û ³» ²¼ Ö«¼¹»³»² ² ß ²¹ ß½½±«² ²¹ б ½» The Group makes estimates and assumptions that affect the amounts recognised in the consolidated condensed interim financial information and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on management s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the consolidated condensed interim financial information and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include: 8

12 ì Ý ½ ß½½±«² ²¹ Û ³» ²¼ Ö«¼¹»³»² ² ß ²¹ ß½½±«² ²¹ б ½» øý±² ²¼ Impairment losses on loans and advances. The Group regularly reviews its loan portfolio to assess impairment. In determining whether an impairment loss should be recorded in profit or loss for the period, the Group makes judgments as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on assets in the group. The primary factor that the Group considers as objective evidence of impairment is the overdue status of the loan. In general, loans where there are no breaches in loan servicing are considered to be unimpaired. Given the nature of the borrowers and the loans it is the Group s view and experience that there is a very short time lag between a possible loss event that could lead to impairment and the non or under payment of a monthly instalment. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when estimating its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. In accordance with internal methodology for the provision estimation the Group uses its historical retail loan loss statistics for assessment of probabilities of default. The last twelve months of historical loss data give the most weighting in calculating the provision for impairment. This framework allows the Group to have better information to estimate losses on loans to individuals as all latest trends are taken into account, and to reduce the implied probabilities volatility. The loan loss provision includes adjustment on the future expected recovery of impaired loans based on conservative sampling of historical data. As at 30 September 2015 the positive effect of the above adjustment on provision for loan impairment is approximately RR 274,201 thousand (as at 31 December 2014: RR 282,559 thousand). To the extent that the incurred losses as at 30 September 2015 resulting from future cash flows vary by 0.5% (30 September 2014: 0.5%) from the calculated estimate, the result would be approximately RR 490,053 thousand (30 September 2014: RR 468,453 thousand) higher or lower. ë Ò» ß½½±«² ²¹ Ð ±²±«²½»³»² Since the Group published its last annual consolidated financial statements for the year ended 31 December 2014, no new accounting pronouncements have been issued. The Group has not early adopted any of the new standards and interpretations disclosed in the New Accounting Pronouncements note in its last annual consolidated financial statements and effective for its annual periods beginning on or after 1 January ê Ý ²¼ Ý Û «ª»² íï Ü»½»³¾» Cash on hand 35,017 25,571 Cash balances with the CBRF (other than mandatory reserve deposits) 3,358,275 2,295,541 Placements with other banks and organizations with original maturities of less than three months 1,293,198 8,378,465 ̱ Ý ²¼ Ý Û «ª»² ìôêèêôìçð ïðôêççôëéé Cash and cash equivalents are neither impaired nor past due. Refer to Note 26 for the disclosure of the fair value of cash and cash equivalents. 9

13 é Ô± ² ²¼ ß¼ª ²½» ± Ý«±³» íï Ü»½»³¾» Ô± ² ± ²¼ ª ¼«æ Credit card loans 87,502,994 85,064,092 Instalment loans 8,298,656 6,534,975 Cash loans 1,520,085 1,564,940 POS loans 688, ,319 ̱ ± ² ²¼ ¼ª ²½» ± ½«±³» ¾»º±» ³ ³»² çèôðïðôëéç çíôçðéôíîê Less: Provision for loan impairment (19,785,812) (19,327,328) ̱ ± ² ²¼ ¼ª ²½» ± ½«±³» éèôîîìôéêé éìôëéçôççè Credit cards are issued to customers for cash withdrawals or payment for goods or services, within the range of limits established by the Bank. These limits may be increased or decreased from time-to-time based on management decision. Credit card loans are not collateralized. During June and July 2015 the Group acquired a portion of JSC Svyaznoy Bank s credit card portfolio of RR 3,170 mln. The acquired portfolio consisted of neither past due, nor impaired credit card loans at the date of acquisition. The Bank has a restructuring programme for delinquent borrowers who demonstrate a willingness to settle their debt by switching to fixed monthly repayments of outstanding amounts ( instalment loans ). POS ( Point of sale ) loans represent POS lending through the Bank s programme POS loans (KupiVKredit). This programme funds online purchases through internet shops for individual borrowers. Cash loans represent a product for existing borrowers of the Bank who have positive credit history and who do not have loans in other banks. Cash loans are loans provided to customers via the Bank s debit cards. These loans are available for withdrawal without commission. Presented below is an analysis of issued, activated and utilised cards based on their credit card limits as at the end of the reporting period: ² «² íð Í»»³¾» íï Ü»½»³¾» Ý»¼ ½ ¼ ³ Up to 10 RR thousand 435, , RR thousand 268, , RR thousand 209, , RR thousand 179, , RR thousand 150, , RR thousand 124, , RR thousand 234, , RR thousand 186, ,724 More than 100 RR thousand 446, ,673 ̱ ½ ¼ îôîíëôïêð îôìçìôééî 10

14 é Ô± ² ²¼ ß¼ª ²½» ± Ý«±³» øý±² ²¼ Movements in the provision for loan impairment for the 9 months period ended 30 September 2015 are as follows: ß íï Ü»½»³¾» Í» ±º ³»¼ ± ² ß³±«²»²ó±ºº ¼«²¹»» ±¼ Ð ±ª ±² º± ³ ³»² ¼«²¹»» ±¼ ß Ô± ² ± ²¼ ª ¼«æ Credit card loans 15,609,454 (217,696) (9,028,659) 8,764,300 15,127,399 Instalment loans 3,133,634 (11,109) (1,478,527) 2,500,122 4,144,120 Cash loans 457,893 - (324,518) 203, ,071 POS loans 126,347 - (94,208) 145, ,222 ̱ ±ª ±² º± ± ² ³ ³»² ïçôíîéôíîè øîîèôèðë øïðôçîëôçïî ïïôêïíôîðï ïçôéèëôèïî Movements in the provision for loan impairment for the 3 months period ended 30 September 2015 are as follows: ß íð Ö«²» Í» ±º ³»¼ ± ² ß³±«²»²ó±ºº ¼«²¹»» ±¼ Ð ±ª ±² º± ³ ³»² ¼«²¹»» ±¼ ß Ô± ² ± ²¼ ª ¼«æ Credit card loans 15,056,114 (179,742) (2,565,440) 2,816,467 15,127,399 Instalment loans 3,874,077 (6,551) (465,142) 741,736 4,144,120 Cash loans 402,901 - (103,818) 37, ,071 POS loans 179,661 - (20,413) 17, ,222 ̱ ±ª ±² º± ± ² ³ ³»² ïçôëïîôéëí øïèêôîçí øíôïëìôèïí íôêïìôïêë ïçôéèëôèïî Movements in the provision for loan impairment for the 9 months period ended 30 September 2014 are as follows: ß íï Ü»½»³¾» îðïí Í» ±º ³»¼ ± ² ß³±«²»²ó±ºº ¼«²¹»» ±¼ Ð ±ª ±² º± ³ ³»² ¼«²¹»» ±¼ ß Ô± ² ± ²¼ ª ¼«æ Credit card loans 8,372,032 (1,005,116) (1,343,724) 9,998,087 16,021,279 Instalment loans 884,867 (285,079) (8,950) 1,848,641 2,439,479 POS loans 116,680 - (94,718) 94, ,799 Cash loans 31, , ,602 ̱ ±ª ±² º± ± ² ³ ³»² çôìðëôíîê øïôîçðôïçë øïôììéôíçî ïîôîèîôìîð ïèôçëðôïëç 11

15 é Ô± ² ²¼ ß¼ª ²½» ± Ý«±³» øý±² ²¼ Movements in the provision for loan impairment for the 3 months period ended 30 September 2014 are as follows: ß íð Ö«²» Í» ±º ³»¼ ± ² ß³±«²»²ó±ºº ¼«²¹»» ±¼ Ð ±ª ±² º± ³ ³»² ¼«²¹»» ±¼ ß Ô± ² ± ²¼ ª ¼«æ Credit card loans 14,463,308 - (1,343,724) 2,901,695 16,021,279 Instalment loans 1,742,721 - (8,950) 705,708 2,439,479 POS loans 191,849 - (94,718) 19, ,799 Cash loans 260, , ,602 ̱ ±ª ±² º± ± ² ³ ³»² ïêôêëèôïéè ó øïôììéôíçî íôéíçôíéí ïèôçëðôïëç During nine months period ended 30 September 2015 the Group sold impaired loans to third parties (external debt collection agencies) with a gross amount of RR 233,798 thousand (nine months period ended 30 September 2014: RR 1,335,333 thousand), and provision for impairment of RR 228,805 thousand (30 September 2014: RR 1,290,195 thousand). The difference between the carrying amount of these loans and the consideration received was recognised in profit or loss as gain from the sale of impaired loans in the amount of RR 20,464 thousand (nine months period ended 30 September 2014: RR 17,004 thousand). During three months period ended 30 September 2015 the Group sold impaired loans to third parties (external debt collection agencies) with a gross amount of RR 189,823 thousand and provision for impairment of RR 186,293 thousand (three months period ended 30 September 2014: none). The difference between the carrying amount of these loans and the consideration received was recognised in profit or loss as gain from the sale of impaired loans in the amount of RR 14,118 thousand for the three months period ended 30 September Analysis of loans to individuals by credit quality is as follows: Ý»¼ ½ ¼ ± ² ² ó Ý ³»² ± ² ± ² ÐÑÍ ± ² Ý»¼ ½ ¼ ± ² íï Ü»½»³¾» ² ó Ý ³»² ± ² ± ² ÐÑÍ ± ² Neither past due nor impaired: - new 1,473, , , , ,659 Loans collectively assessed for impairment (gross): - non-overdue 68,791,800 5,340, , ,562 66,142,385 4,083,880 1,080, ,023 - less than 30 days overdue 2,983, ,520 51,973 21,040 3,230, ,447 68,554 27, to 90 days overdue 2,815, ,432 46,295 22,841 3,015, ,151 79,082 19, to 180 days overdue 3,128, ,911 73,753 47,739 3,126, , ,693 22, to 360 days overdue 4,083,323 1,054, ,720 97,492 4,625, , ,957 77,221 - loans in courts 4,226, ,958, Less: Provision for loan impairment (15,127,399) (4,144,120) (337,071) (177,222) (15,609,454) (3,133,634) (457,893) (126,347) ̱ ± ² ± ²¼ ª ¼«éîôíéëôëçë ìôïëìôëíê ïôïèíôðïì ëïïôêîî êçôìëìôêíè íôìðïôíìï ïôïðéôðìé êïêôçéî 12

16 é Ô± ² ²¼ ß¼ª ²½» ± Ý«±³» øý±² ²¼ Loans in category new represent loans provided to new borrowers or purchased loans for which the date of the first payment did not occur before the reporting date. Loans in courts are loans to delinquent borrowers, against which the Group has filed claims to courts in order to recover outstanding balances. The Group assesses non-overdue loans for impairment collectively as a homogeneous population with similar credit quality as disclosed above. The Group considers overdue loans as impaired. Refer to Note 26 for the estimated fair value of loans and advances to customers. Information on related party balances is disclosed in Note 27. è ²ª» ³»² Í»½ ߪ ¾» º± Í» íï Ü»½»³¾» Corporate bonds 12,804, ,535 Russian government bonds 301,826 - ̱ ²ª» ³»²»½ ª ¾» º±» ïíôïðêôððì îïêôëíë The movements in investment securities available for sale during nine months ended 30 September 2015 are as follows: Carrying amount at 1 January 216,535 Purchases 10,005,227 Redemption of investment securities available for sale (1,275,037) Disposal of investment securities available for sale (550,633) Interest income accrued on investment securities available for sale 692,841 Interest received (563,731) Receipt under Sale and Repurchase agreements 5,420,662 Pledged under Sale and Repurchase agreements (1,629,907) Foreign exchange gain on investment securities available for sale in currency 492,715 Revaluation through other comprehensive income 297,332 Ý ²¹ ³±«² ïíôïðêôððì The movements in investment securities available for sale for three months ended 30 September 2015 are as follows: Carrying amount at 30 June 11,844,984 Purchases 1,479,987 Redemption of investment securities available for sale (356,234) Disposal of investment securities available for sale (550,633) Interest income accrued on investment securities available for sale 314,639 Interest received (240,851) Receipt under sale and repurchase agreements 53,734 Foreign exchange gain on investment securities available for sale in currency 529,549 Revaluation through other comprehensive income 30,829 Ý ²¹ ³±«² ïíôïðêôððì 13

17 è ²ª» ³»² Í»½ ߪ ¾» º± Í» øý±² ²¼ The movements in investment securities available for sale during nine months ended 30 September 2014 are as follows: Carrying amount at 1 January - Purchases 6,793,757 Disposals of investment securities available for sale (502,241) Redemption of investment securities available for sale (492,222) Interest income accrued on investment securities available for sale 188,042 Interest received (161,014) Revaluation through other comprehensive income (43,371) Ý ²¹ ³±«² ëôéèîôçëï The movements in investment securities available for sale for three months ended 30 September 2014 are as follows: Carrying amount at 30 June 2,608,019 Purchases 2,395,835 Disposals of investment securities available for sale (100,106) Redemption of investment securities available for sale (292,222) Interest income accrued on Investment securities available for sale 117,898 Interest received (114,799) Receipt under sale and repurchase agreements 1,234,692 Revaluation through other comprehensive income (66,366) Ý ²¹ ³±«² ëôéèîôçëï ç λ «½» λ½» ª ¾» Repurchase receivables represent securities sold under sale and repurchase agreements through which the counterparty has the right, by contract or custom, to sell or repledge the securities. The repurchase agreements mature by 20 April 2016 (31 December 2014: matured on 14 January 2015). íï Ü»½»³¾» ߪ ¾»óº± ó»»½ ± ¼ «²¼»» ²¼» «½» ¹»»³»² Corporate bonds 1,907,447 5,098,868 Russian government bonds - 267,412 ̱» «½»»½» ª ¾» ïôçðéôììé ëôíêêôîèð 14

18 ïð Ü ± Þ ²µ íï Ü»½»³¾» Sale and repurchase agreements with CBRF 1,737,412 5,002,399 Due to other banks 84, ,208 Loan from OJSC Sberbank of Russia - 2,994,061 Short-term loan from CBRF - 2,005,548 ̱ ¼ ± ¾ ²µ ïôèîîôíðç ïðôííïôîïê As at 30 September 2015, in amounts due to banks are included liabilities of RR 1,737,412 thousand from sale and repurchase agreements with CBRF (31 December 2014: RR 5,002,399 thousand). On 10 December 2014 the Bank raised a loan from CBRF in the amount of RR 1,000 mln with a contractual interest rate of 11.25%. The loan was fully redeemed on 10 March On 18 November 2014 the Bank raised a loan from CBRF in the amount of RR 1,000 mln with a contractual interest rate of 11.25%. The loan was fully redeemed on 16 February On 14 March 2014 the Bank raised a loan from OJSC Sberbank of Russia in the amount of RR 3,000 mln with a contractual interest rate of 11.2%. The loan was fully redeemed on 13 September Refer to Note 26 for the estimated fair value of due to banks. ïï Ý«±³» ß½½±«² íï Ü»½»³¾» Ô»¹»²» - Current/settlement accounts of corporate entities 313, ,242 - Term deposits of corporate entities 1,090,336 1,878,589 ²¼ ª ¼«- Current/settlement accounts of individuals 16,179,384 11,056,383 - Term deposits of individuals 57,098,264 30,235,220 ̱ Ý«±³» ß½½±«² éìôêèïôéèë ìíôíêêôìíì Refer to Note 26 for the estimated fair value of customer accounts. Information on related party balances is disclosed in Note 27. ïî Ü»¾ Í»½ ² Ó «¼» íï Ü»½»³¾» RR denominated bonds issued in May ,930 1,131,498 USD denominated bonds issued in September ,426,424 RR denominated bonds issued in July ,094,954 RR denominated bonds issued in April ,538,870 Euro-Commercial Paper issued in February ,034 ̱ Ü»¾ Í»½ ² îèôçíð ïçôìïìôéèð 15

19 ïî Ü»¾ Í»½ ² øý±² ²¼ On 28 May 2013 the Group issued RR denominated bonds with a nominal value of RR 3,000 mln at 10.25% coupon rate maturing on 24 May As a result of an offer event as at 25 November 2014 securities with nominal value of RR 1,880 mln were repurchased by the Group. In November 2014 the Group has set the coupon rate of RR denominated bonds at 14.00% till the next offer event. On 29 May 2015 as a result of an offer event securities with nominal value of RR 1,092 mln were repurchased by the Group. In May 2015 the Group has set the coupon rate of RR denominated bonds at 12.50% till maturity. On 18 September 2012 the Group issued USD denominated bonds with a nominal value of USD 250 mln at 10.75% coupon rate maturing on 18 September On 18 September 2015 the Group redeemed the outstanding balance of the USD denominated bonds at maturity, when listing and trading was cancelled. On 16 July 2012 the Group issued RR denominated bonds with a nominal value of RR 2,000 mln at 13.9% coupon rate maturing on 14 July On 14 July 2015 the Group redeemed all outstanding bonds of this issue at maturity. On 19 April 2012 the Group issued RR denominated bonds with a nominal value of RR 1,500 mln at 13.25% coupon rate maturing on 16 April On 16 April 2015 the Group redeemed all outstanding bonds of this issue at maturity. On 27 February 2014 the Group issued USD denominated Euro-Commercial Paper (ECP) with a nominal value of USD 4 mln with a discount of 5.5% maturing on 26 February On 26 February 2015 the ECP was fully redeemed. All the debt securities issued by the Group are traded on stock exchanges. Refer to Note 26 for the disclosure of the fair value of debt securities in issue. ïí Í«¾± ¼ ²»¼ Ü»¾ As at 30 September 2015 the carrying value of the subordinated debt was RR 13,724,979 thousand (31 December 2014: RR 11,250,686 thousand). On 6 December 2012 and 18 February 2013 the Group issued USD denominated subordinated bonds with a nominal value of USD 125 mln with zero premium and USD 75 mln at a premium of 7.0% respectively, at 14.0% coupon rate (applicable to both tranches) maturing on 6 June The claims of lenders against the Group in respect of the principal and interest on these bonds are subordinated to the claims of other creditors in accordance with the legislation of the Russian Federation. Refer to Note 26 for the disclosure of the fair value of financial instruments. ïì Í» Ý» ½» º± ²«³¾» ±º» Ò«³¾» ±º «±»¼» Ò«³¾» ±º ±«²¼ ²¹» Ñ ¼ ²» Í»»³ «³ Ì» ̱ ß íï Ü»½»³¾» îðïí ïçðôìéçôëðð ïèïôïèçôðéë ïèêôïêî èôêîîôçïç øîôëîì èôèðêôëëé ß íï Ü»½»³¾» ïçðôìéçôëðð ïèîôêíèôèîë ïèèôïïî èôêîîôçïç øìôìéì èôèðêôëëé GDRs buy-back (323,808) (323,808) Shares sold under ESOP ß ïçðôìéçôëðð ïèîôêíèôèîë ïèèôïïî èôêîîôçïç øíîéôéïè èôìèíôíïí During the three months ended 30 June 2015 the Group repurchased 1,843,682 GDRs at market prices for RR 323,808 thousand. 16

20 ïì Í» Ý øý±² ²¼ Treasury shares represent Class A shares of the Group under the ESOP and Equity LTIP and all held by a trustee and GDRs repurchased from the market during the period from April to June Refer to Note 27. In June 2014 the Group issued 1,449,750 ordinary Class A shares with a par value of USD 0.04 per share, fully paid, to Altruco Trustees Limited under the ESOP. Refer to Note 27. ïë ²»» ²½±³» ²¼ Û»²» Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² ²»» ²½±³» Loans and advances to customers, including: Credit card loans 27,330,987 9,562,908 28,164,365 9,382,557 Instalment loans 672, , , ,307 Cash loans 466, , , ,452 POS loans 278,849 85, ,731 56,331 Investment securities available for sale and Repurchase receivables 723, , , ,898 Placements with other banks 41,237 24,529 11, Reverse Repurchase agreements 10,426 3, Other interest income - - 5,563 5,563 ̱ ²»» ²½±³» îçôëîíôçðç ïðôìïìôïìè îçôììèôîéç çôçðèôéïê ²»»»»²» Customer accounts 6,533,901 2,479,757 3,706,478 1,150,619 Subordinated debt 1,266, , , ,179 Eurobonds 1,020, , , ,081 Due to banks 353,139 64, , ,682 RR denominated bonds 226,837 9, , ,706 Euro-Commercial Paper 2,305-53,425 2,618 ̱ ²»» Û»²» çôìðíôîîé íôîïðôðìí êôíïëôìêí ïôçéðôèèë Ò» ²»» ²½±³» îðôïîðôêèî éôîðìôïðë îíôïíîôèïê éôçíéôèíï ïê Ý«±³» ß½ «±² Û»²» Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² Marketing and advertising 1,142, ,038 1,165, ,879 Staff costs 1,031, , , ,758 Credit bureaux 125,713 47, ,124 42,472 Telecommunication expenses 43,569 16,507 54,268 10,816 Personalisation, printing and distribution 6,707-19,446 5,743 Acquisition and partnerships ̱ ½«±³» ½ «±²»»²» îôíëðôêîê èìçôïèë îôíìðôîðï êðïôêêè 17

21 ïê Ý«±³» ß½ «±² Û»²» øý±² ²¼ Customer acquisition expenses represent expenses paid by the Group on services related to acquisition of credit card customers (mailing of advertising materials, processing of responses, marketing and advertising etc). The Group uses a variety of different channels for the acquisition of new customers. Staff costs represent salary expenses and related costs of employees involved in customer acquisition. Included in staff costs are statutory social contributions to the pension fund for the nine-months period ended 30 September 2015 in the amount of RR 213,764 thousand (nine-months period ended 30 September 2014:_RR_163,057 thousand). Included in staff costs are statutory social contributions to the state pension fund for the three-months period ended 30 September 2015 in the amount of RR 76,248 thousand (three-months period ended 30 September 2014:_RR_50,670 thousand). ïé Ò» ²½±³» º ±³ ² «²½» Ñ» ±² Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² Insurance premiums earned 867, , , ,341 Insurance agency fees 5,659 1,849 43,827 3,608 Insurance claims incurred (260,736) (121,201) (117,304) (47,518) ̱ ²» ²½±³» º ±³ ² «²½» ±» ±² êïîôëïð ïèéôéðî ëèîôìéì îðêôìíï Staff and administrative expense for insurance operations are included in Note 19. ïè Ú»» ²¼ ݱ³³ ±² Û»²» Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² Payment systems 695, , , ,040 Service fees 312, , , ,164 Banking and other fees 40,196 13,307 12,644 5,544 ̱ º»» ²¼ ½±³³ ±²»»²» ïôðìèôèïï ìîðôïïí éðîôçêë îìíôéìè Service fees represent fees for statement printing, mailing services and sms services. Payment systems fees represent fees for MasterCard and Visa services. 18

22 ïç ß¼³ ² ª» ²¼ Ñ» Ñ» ²¹ Û»²» Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² Staff costs 3,212,950 1,179,387 2,570, ,586 Taxes other than income tax 656, , , ,824 Rental expenses 343, , ,211 92,173 Depreciation of tangible fixed assets 181,475 54, ,037 66,818 Expenses on deposit insurance 180,325 72, ,298 43,082 Information services 177,030 73,381 69,516 18,174 Communication services 176,732 63, ,451 61,686 Amortization of intangible assets 133,612 45,720 85,249 35,060 Professional services 84,422 24,926 71,727 11,432 Stationary and office expenses 48,182 18,865 39,881 13,482 Transportation 8,098 1,379 10,803 4,041 Other administrative expenses 159,736 54, ,289 50,589 ̱ ¼³ ² ª» ²¼ ±» ±» ²¹»»²» ëôíêîôîïè ïôçíïôíîï ìôìðçôéèë ïôìééôçìé Included in staff costs are statutory social contributions to the pension fund and share-based remuneration: Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² Statutory social contribution to the pension fund 555, , ,440 85,052 Share-based remuneration 78,127 15,731 41,470 18,043 îð ²½±³» Ì» Income tax expense comprises the following: Ò ²»óÓ±² Ì»»óÓ±² Ò ²»óÓ±² Ì»»óÓ±² Current tax (33,262) (15,411) (634,122) 91,927 Deferred tax (356,176) (287,141) (331,307) (480,269) ²½±³»»»²» º±»» ±¼ øíèçôìíè øíðîôëëî øçêëôìîç øíèèôíìî îï Í»¹³»² ß² Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (CODM) and for which discrete financial information is available. The CODM is the person or group of persons who allocates resources and assesses the performance for the Group. The functions of CODM are performed by the Board of Directors of the Group. 19

23 îï Í»¹³»² ß² øý±² ²¼ Description of products and services from which each reportable segment derives its revenue The Group is organised on the basis of 2 main business segments: Retail banking representing private banking services, private customer current accounts, savings, deposits, investment savings products, custody, credit and debit cards, consumer loans and mortgages; Insurance operations representing insurance services provided to individuals. Factors that management used to identify the reportable segments The Group s segments are strategic business units that focus on different services to the customers of the Group. They are managed separately because each business unit requires different marketing strategies and represents different types of businesses. Measurement of operating segment profit or loss, assets and liabilities The CODM reviews financial information prepared based on International financial reporting standards adjusted to meet the requirements of internal reporting. The CODM evaluates performance of each segment based on profit before tax.information about reportable segment profit or loss, assets and liabilities Segment information for the reportable segments as at 30 September 2015 is set out below: λ ¾ ²µ ²¹ ² «²½» ±» ±² Û ³ ² ±² ̱ Cash and cash equivalents 4,504, ,412 (584,404) 4,686,490 Mandatory cash balances with the CBRF 668, ,082 Due from other banks - 367, ,868 Loans and advances to customers 78,224, ,224,767 Financial derivatives 9,411, ,411,216 Investment securities available for sale 13,106, ,106,004 Repurchase receivables 1,907, ,907,447 Current income tax assets 929, ,479 Guarantee deposits with payment systems 3,066, ,066,789 Tangible fixed assets 437,053 1, ,210 Intangible assets 1,026, ,078-1,312,607 Other financial assets 1,394,539 24,710 (24,710) 1,394,539 Other non-financial assets 335, , ,199 ̱» ± ¾»»¹³»²» ïïëôðïîôðêë ïôëçìôéìê øêðçôïïì ïïëôççéôêçé Due to banks 1,822, ,822,309 Customer accounts 75,266,189 - (584,404) 74,681,785 Debt securities in issue 28, ,930 Deferred income tax liabilities 1,425,570 28,925-1,454,495 Subordinated debt 13,724, ,724,979 Insurance provisions - 460, ,081 Other financial liabilities 853,291 72,356 (24,710) 900,937 Other non-financial liabilities 1,053,847 7,452-1,061,299 ̱» ± ¾»»¹³»² ¾» çìôïéëôïïë ëêèôèïì øêðçôïïì çìôïíìôèïë 20