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TCS Group Holding PLC
International Financial Reporting Standards
Consolidated Financial Statements and
Independent Auditor’s Report
31 December 2021
TCS Group Holding PLC
CONTENTS
Board of directors and other officers
Consolidated Management Report
Independent Auditor’s Report
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position............................................................................................ 1
Consolidated Statement of Profit or Loss and Other Comprehensive Income .......................................... 2
Consolidated Statement of Changes in Equity........................................................................................... 3
Consolidated Statement of Cash Flows ..................................................................................................... 4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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8
Introduction...................................................................................................................................................... 5
Operating Environment of the Group............................................................................................................... 8
Critical Accounting Estimates and Judgements in Applying Accounting Policies .................................................. 9
Segment Analysis.......................................................................................................................................... 12
Cash and Cash Equivalents .......................................................................................................................... 17
Due from Other Banks................................................................................................................................... 18
Investments in Securities and Repurchase Receivables ............................................................................... 19
Loans and Advances to Customers............................................................................................................... 27
Guarantee Deposits with Payment Systems.................................................................................................. 47
Brokerage Receivables and Brokerage Payables.......................................................................................... 48
Tangible Fixed Assets, Intangible Assets and Right-of-use Assets............................................................... 49
Other Financial and Non-financial Assets...................................................................................................... 50
Due to Banks................................................................................................................................................. 51
Customer Accounts ....................................................................................................................................... 52
Debt Securities in Issue................................................................................................................................. 52
Other Borrowed Funds .................................................................................................................................. 53
Subordinated Debt......................................................................................................................................... 53
Insurance Provisions ..................................................................................................................................... 54
Other Financial and Non-financial Liabilities.................................................................................................. 55
Share Capital, Share Premium and Treasury Shares.................................................................................... 57
Net Margin..................................................................................................................................................... 59
Fee and Commission Income and Expense .................................................................................................. 60
Customer Acquisition Expense...................................................................................................................... 61
Insurance Premiums Earned and Claims Incurred ........................................................................................ 62
Administrative and Other Operating Expenses.............................................................................................. 63
Other Operating Income ................................................................................................................................ 63
Income Taxes................................................................................................................................................ 64
Dividends....................................................................................................................................................... 67
Reconciliation of Liabilities Arising from Financing Activities ......................................................................... 68
Financial and Insurance Risk Management................................................................................................... 68
Management of Capital ................................................................................................................................... 85
Contingencies and Commitments .................................................................................................................... 87
Offsetting Financial Assets and Financial Liabilities ...................................................................................... 90
Transfers of Financial Assets ........................................................................................................................ 91
Non-Controlling Interest................................................................................................................................. 92
Financial Derivatives...................................................................................................................................... 93
Fair Value of Financial Instruments.................................................................................................................. 93
Presentation of Financial Instruments by Measurement Category ................................................................... 100
Related Party Transactions............................................................................................................................ 102
Events after the End of the Reporting Period.................................................................................................. 105
Significant Accounting Policies....................................................................................................................... 106
Adoption of New or Revised Standards and Interpretations ........................................................................ 123
New Accounting Pronouncements............................................................................................................... 123
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TCS Group Holding PLC
Board of directors and other officers
Board of directors
Except where stated all directors served throughout 2021 and through to the date of these consolidated
financial statements.
Director
Role
Retirement
Appointment
Martin Cocker
Ashley Dunster
Constantinos Economides
Pavel Fedorov
Maria Gordon
Margarita Hadjitofi
Nicholas Huber
Oliver Hughes
Alexios Ioannides
Jacques Der Megreditchian
Marilou Pavlou
Independent non-executive director
Independent non-executive director
Chairman of the Board, Executive director
Group Co-CEO, Executive director
Independent non-executive director
Independent non-executive director
Independent non-executive director
Group Co-CEO, Executive director
Executive director
Independent non-executive director
Executive director
Independent non-executive director
Executive director
-
-
1 March 2022
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-
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11 May 2021
28 May 2021
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11 May 2021
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10 September 2021
11 May 2021
11 May 2021
11 May 2021
25 March 2021
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10 September 2021
11 May 2021
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Nitin Saigal
Mary Trimithiotou
The Company’s Articles of Association include regulations for the retirement by rotation of Directors at each
annual general meeting. These regulations will operate in 2022 on the basis of the composition of the Board
at the relevant date.
Company Secretary
Caelion Secretarial Limited
25 Spyrou Araouzou
Berengaria 25, 5th floor,
3036, Limassol, Cyprus
Registered office
25 Spyrou Araouzou
Berengaria 25, 5th floor,
3036, Limassol, Cyprus
TCS Group Holding PLC
Consolidated Management Report
The Board of directors presents its report together with the audited consolidated financial statements of
TCS Group Holding PLC (the “Company”) and its subsidiaries (collectively the “Group”) for the year ended
31 December 2021.
Principal activities and nature of operations of the Group
1.
The Group’s principal activities are mainly undertaken within the Russian Federation and consist of
on-line retail banking operations, through its subsidiary JSC “Tinkoff Bank” (the “Bank”), and other
operations through its subsidiaries, such us insurance operations through JSC “Tinkoff Insurance”
(the “Insurance Company”), mobile services through LLC “Tinkoff Mobile” and asset management
through LLC “Tinkoff Capital” (Note 1).
2.
The Bank specialises in consumer finance, retail banking for individuals, individual entrepreneurs
(“IE”), small and medium enterprises (“SME”), acquiring and payments services and brokerage
services. The Bank which is fully licensed by the Central Bank of Russia, launched its operations in
the Summer of 2007 and is a member of the Russian Deposit Insurance System. The Insurance
Company specialises in providing non-life insurance coverage such as accident, property, travel,
credit protection and auto insurance. As at 31 December 2021 in accordance with IFRS 10 definition
of control the Group has no ultimate controlling party.
Changes in the Group’s structure
3.
In April 2021 the Group acquired a 77.4% shareholding in LLC “Beskontakt”. In July 2021 the Group
exercised a call option agreement with the founders and remaining stakeholders of LLC “Beskontakt”
and acquired an additional 8%. As a result, the Group’s shareholding increased to 85.4%.
LLC “Beskontakt” is a fintech company developing the “Koshelek” app, which is a digital wallet and
a mobile app aggregating bank and loyalty cards. The acquired entity will assist the expansion of the
Group’s customer base through the marketing and cross-selling of its products to the app’s users.
Refer to Note 41 for the details of this acquisition.
4.
In August 2021 Mortgage agent TB-1 was established as a special purpose entity which issued bonds
secured by portfolio of home equity loans (Note 16). The Group neither owns shares nor has voting
rights in 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 significant risks and rewards through the
retention of a junior tranche in the transaction.
5.
6.
In November 2021, the Group acquired a 51.0% stake in “Dzhast Luk” LLC – the company that
operates Jump.Finance, a fintech service that automates payments to individuals and the self-
employed (Note 1).
In late 2021, the Group acquired a 83.2% stake in Aximetria GmbH – a Swiss financial services
company providing cryptocurrency services (Note 1).
Review of developments, position and performance of the Group’s business
7.
The Group operates a flexible business model. Its virtual network enables it to quickly and easily
increase business or slow down customer acquisition depending upon the availability of funding and
market conditions. The Bank’s primary customer acquisition channels are Internet and Mobile, but it
also uses Direct Sales Agents and partnerships (co-brands) to acquire new customers. These
customer acquisition models, combined with the Bank’s virtual network, afford it a geographic reach
across all of Russia’s regions resulting in a highly diversified portfolio.
8.
In October 2021 the Bank has been added to the Bank of Russia’s list of 13 systemically important
banking institutions due to a recognition of the Bank’s growing presence in the financial market and
expanding customer base of its ecosystem. As a result, the Bank will be obliged to comply with the
additional capital adequacy buffers, as well as advanced risk management requirements. The Bank
is operating with ample liquidity and capital buffers above regulatory minimums and intends to
continue comfortably meeting all applicable requirements comfortably. Going forward management
of the Group expects that it will have positive effect on the cost of funding as well as positively affect
the Bank’s credit ratings.
TCS Group Holding PLC
Consolidated Management Report
9.
The key offerings of JSC “Tinkoff Insurance” are personal accident insurance, collective insurance
against accidents and illnesses, travel insurance, motor vehicle insurance and property insurance,
compulsory third party liability insurance (CTP) and voluntary third party liability insurance (VTP)
(Note 24). The Insurance Company focuses on online sales.
10. In terms of financial performance the profit of the Group for the year ended 31 December 2021 was
RR 63,368 million (2020: RR 44,213 million). This result is driven by two major continuing trends: the
ongoing growth of the Group’s consumer finance business and a growing contribution from the non-
credit fees-and-commission business lines. Net margin increased by 26.6% to RR 132,558 million
(2020: increased by 19.1% to RR 104,702 million) on the back of growth in the underlying
commission, credit and investment businesses. The growth of the credit portfolio was driven not only
by credit card loans but also by other types of loans, such as secured, cash and POS loans. The
Group aims to diversify its credit portfolio by the extension of collateralised credit products which
represents a business line with lower credit risks. The 90 days plus overdue loans ratio (“NPL”)
decreased to 8.6% as at 31 December 2021 (2020: 10.4%). The NPL coverage ratio reduced to
131.9% as at 31 December 2021 (2020: 153%). The Group’s Insurance business continues to
develop at a good pace. This year insurance premiums earned increased by 24.2% to RR 23,063
million (2020: increase by 31.6% to RR 18,567 million). The increase was as a result of the growth
in the sale of auto (including CTP and VTP) and travel insurance policies, especially to existing Group
customers, as well as the growth of personal accident insurance policies sold along with the credit
portfolio and providing a wider coverage of insured risks.
11. The value of the investment in securities portfolio decreased by 9.7% to RR 215,311 million as at
31 December 2021 (2020: increased by 76.4% to RR 238,454 ). As a result of attaining systemically
important status, management made a decision to create a portfolio of investments in debt securities
managed under a “hold to collect” business model. These securities will be accounted for amortised
cost, as opposed to fair value, will be held until full maturity and will not be susceptible to market
price fluctuations. Initially this portfolio will be created from the Bank’s existing portfolio of high-grade
bonds, consisting of Russian government bonds. The Group effectively managed this portfolio under
the “hold to collect” business model throughout 2021. The purpose of this decision is to create a
source of low-risk, long term interest income while minimizing pressure on the Bank’s regulatory
capital and capital adequacy position, as well as decreasing overall market risks of the Group.
12. In order to reflect appropriately the uncertainty associated with the COVID-19 pandemic, the Group
has made changes to its ECL model, which resulted in approximately RR 3.5 billion of additional
credit loss allowance as at 31 December 2021 (2020: RR 5.6 billion). Refer to Notes 2 and 3.
13. In September 2021 the Group issued perpetual subordinated loan participation notes in the amount
of USD 600 million (RR 43.5 billion). Refer to Note 17.
Environmental matters
14. As the Group is an online-only financial institution, the management of the Group believes that none
of the Group’s business relationships, products or services are likely to have any significant actual
or potential environmental impacts and do not believe its operations are exposed to any material
environmental risks. Management, in reaching this view, have taken into account the risk of adverse
impacts that may stem from the Company’s own activities as well as its business relationships
including its supply and subcontracting chains. The Group is continuously reviewing its processes to
identify opportunities to reduce their environmental impact adhering to best market practices. In 2021
the Group analysed and disclosed its greenhouse gas (GHG) inventory for all three scopes for the
entire value chain. Emissions of the seven GHGs listed in the Kyoto Protocol were assessed. The
analysis of the Company’s business processes shows that its operations result in CO₂, CH₄, N₂O
(Scopes 1, Scope 2 and Scope 3), and HFCs (hydrofluorocarbons) (Scope 1) emissions. Total
carbon footprint of the Group is significantly lower than traditional financial institutions and IT
companies generally show. In 2021 Tinkoff became the first Russian financial institution to join the
Science Based Targets initiative, a global body enabling businesses to set ambitious science based
emissions reduction targets in line with the latest climate science.
TCS Group Holding PLC
Consolidated Management Report
Human resources
15. Empowerment is an important ingredient in the success of our organization. To achieve this,
decision-making is delegated to levels deep below the management team, discussion, idea
generation and exchange and transparency are actively promoted and encouraged and an open
leadership style ensures that information can move freely. The Group utilizes all types of forums to
promote continual dialogue – such as email, online chat rooms, flash meetings, as well as formalized
meeting structures. The Group offers clear far-reaching career path for its employees, a unique work
environment and fair and transparent compensation.
16. Clear performance evaluation processes and fair compensation are essential. Compensation is a
combination of fixed rate salary and supplemental bonuses and is based on employee performance.
Employees are evaluated on a regular basis in order to monitor their achievement against their Key
Performance Indicators as well as to provide feedback which can be used for their career
development and to determine incentive compensation.
17. Prior to its IPO in 2013, the Group set up share-based management long term incentive plans as
retention and motivational tools for key and senior managers. In March 2016, the Group announced
a consolidated long-term management incentive and retention plan (MLTIP). Since then the Group
has announced the expansion of MLTIP over the next 5 years. Each grant before 2020 is divided
into 4 equal awards, and each award vests over 4 years in equal tranches. Each grant provided in
2020 and 2021 vests over 5 years.
18. In April 2020 the Group launched a key employees retention plan (KERP), which is a new long term
incentive program for senior and middle management level employees. The purpose of the program
is to retain and motivate key employees with high potential. In November 2021 the Group converted
existing cash-settled equity-based KERP into an expanded equity-settled program MLTIP, which
should put all the participants on the same footing. Additionally, Shareholders of the Company
approved at the AGM in November 2021 granting the authority to the Board of Directors to fund the
expanded MLTIP program via annual capital issuance of up to 1.5% (initially for a period of 5 years),
which makes funding the MLTIP more capital efficient.
19. In the fourth quarter of 2021 the Group issued a new instrument that represents a share-based
equity-settled compensation: 5-year warrants with an aggregate value equal to 1.2% of an increase
in the market capitalisation of the Company as at 1 January 2027 (calculated as the volume-weighted
average GDR price over the preceding six months, which amounted to 89.2 USD at the date of the
grant) over a GDR price of USD 92 (the "Warrants"). The Warrants vest on 1 January 2027 and are
exercisable at any time on or after that date. The Group has a unilateral right to terminate the
Warrants at a one month's notice. When the Warrants are exercised, the Group is required to deliver
the Ordinary Shares (GDRs) up to the value of the Warrants determined on 1 January 2027. The
weighted-average fair value of the Warrants at the grant date was RR 1.1 bln and it was measured
using the Black-Scholes model based on historical market quotes of GDRs. At the date of publication
of the Group’s annual results, the share price of the Company was significantly below the strike price
of the Warrants.
20. The total size of the unvested pool of the expanded MLTIP programs was 3.6% of the Group’s share
capital as at 31 December 2021 (2020: 3.7%). The program is designed to grow the Group's value
by aligning more closely managers’ interests with those of shareholders. The Group believes that
participation in its share capital is an effective motivation and retention tool. The program embraces
more managers, for two main reasons: firstly, internal promotions as some employees were
promoted to key managerial positions; and, secondly, as part of its expansion and transformation
into a financial marketplace, the Group has hired a significant number of new managers to develop
and manage new business lines and to strengthen internal controls, including cyber security.
TCS Group Holding PLC
Consolidated Management Report
Non-Financial Information and Diversity Statement
21. The Group’s policies and other information that provide an understanding of the development,
performance, position and impact of the Group’s activities in the areas of environmental, social and
employee matters, respect for human rights, anti-corruption and bribery matters can be found in the
Group’s most recently published Non-Financial Information and Diversity Statement (Sustainability
Report). The Group will publish its Sustainability Report for the year ended 2021, as a part of the
integrated annual report on the Company’s website, www.tcsgh.com.cy (and www.tinkoff.ru/eng) no
later than 29 April 2022.
Principal risks and uncertainties
22. The Group’s business and financial results are impacted by uncertainties and volatilities in the
Russian economic environment which can be impacted by global factors and/or by national factors.
23. The Group is subject to a number of principal risks which might adversely impact its performance.
The principal activities of the Group are banking and insurance operations and so it is within this area
that the principal risks occur. Management considers that those principal risks are financial risks,
operational risks and legal risks. Financial risk comprises market risks (including currency risk,
interest rate risk and other price risk), credit risk and liquidity risk.
24. The Board has put in place arrangements to identify, evaluate and manage the principal risks and
uncertainties faced by the Group. The Group has an established risk management program that
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects
on the Group's financial performance. This is overseen by a dedicated Risk Management function,
which works with senior management of the operating companies in Russia as well as the Board of
directors in this area. The primary objectives of the financial risk management function are to
establish acceptable risk limits, and then ensure that the exposures remain within these limits. The
operational and legal risk management functions are intended to ensure the proper functioning of
internal policies and procedures that minimize operational and legal risks. The risk management
strategy is established so as to identify, assess, monitor and manage the risks arising from Group's
activities. These risks as well as other risks and uncertainties, which affect the Group and how these
are managed, are presented in Notes 30 and 32 of the consolidated financial statements.
25. Analysis of impact of COVID-19 pandemic on the Group is disclosed in the Note 2 of the consolidated
financial statements.
Contingencies
26. The Group’s contingencies are disclosed in Note 32 to the consolidated financial statements.
Future developments
27. The Group's strategic objective is to grow its customer base profitably by building the most
comprehensive, engaging, innovative, and sustainable financial and lifestyle ecosystem in the world.
Results
28. The Group’s results for the year are set out on page 2 of the consolidated financial statements.
Information on distribution of profits is presented in Note 28.
Any important events for the Group that have occurred after the end of the financial year
29. In February 2022 economic situation in the Russian Federation was affected by escalated military
and political conflict and the associated international sanctions against a number of Russian
institutions, companies, banks and individuals. This requires the Group's business to adapt to the
changing operating environment. More details are presented in Note 40.
Share capital, redesignation and conversion of class B shares
30. In the beginning of 2021 the Group underwent a major restructuring of its shareholder structure. As
of 31 December 2020 the ultimate controlling party of the Company was Mr. Oleg Tinkov, who then
controlled approximately 84.38% of the aggregated voting rights attached to the class A and B
TCS Group Holding PLC
Consolidated Management Report
shares. However, on 7 January 2021 all issued 69,914,043 class B shares (35.08% of the total
number of issued shares) held by The Rigi Trust and The Bernina Trust were converted to class A
shares, and on the same date 100% of issued shares were reclassified and redesignated as ordinary
shares. Following the conversion, each share carries a single vote, and the total number of votes
capable of being exercised is equal to the total number of issued shares (currently 199,305,492
shares following the class B share conversion). The number of GDRs in issue was not affected by
the conversion. Then the shares held by the two trusts were transferred to The New Rigi Trust. After
the conversion the Trust’s voting rights dropped to 35.08%.
Treasury shares
31. At 31 December 2021 the Group held 1,237,583 (2020: 3,013,379 ) of its own GDRs, equivalent to
approximately RR 2,567 million (2020: RR 3,238 million) and which represent 0.6% (2020: 1.5%) of
the issued shares.
32. Treasury shares are GDRs of TCS Group Holding PLC include those that are held by a special
purpose trust which has been specifically created for the long-term incentive program for the MLTIP
(see Note 39 for further information).
33. During 2021 the Group repurchased 425,017 GDRs at market price for RR 1,877 million (2020:
650,000 GDRs at market price for RR 661 million).
34. During 2021 the Group transferred 2,200,813 GDRs (2020: 1,809,681 GDRs), representing 1.10%
(2020: 0.91%) of the issued shares, upon vesting under the MLTIP. This resulted in a transfer of
RR 2,548 million (2020: RR 587 million) out of treasury shares to retained earnings.
Research and development activities
35. During the years ended 31 December 2021 and 2020 the Group has undertaken research and
development activities related to software including greater use of biometrics, voice assistant, social
networking, machine learning and intelligence.
Board of directors
36. The members of the Board of directors as of 31 December 2021 and at the date of this report are
presented above. All served throughout the year ended 31 December 2021 and through to the date
of these consolidated financial statements, except where stated above.
37. There were significant changes in the structure and assignment of responsibilities of the Board of
directors. New list of the Board of directors is presented above.
Branches
38. The Group did not operate through any branches during the year.
Independent auditor
39. The Independent Auditor, PricewaterhouseCoopers Limited, has expressed its willingness to
continue in office. A resolution giving authority to the Board of directors to fix its remuneration will be
proposed at the Annual General Meeting (AGM).
Going concern
40. The Directors have access to all information necessary to exercise their duties. The Directors
continue to adopt the going concern basis in preparing the consolidated financial statements based
on the fact that, after making enquiries and following a review of the Group’s budget for 2022,
including cash flows and funding facilities, the Directors consider that the Group has adequate
resources to continue in operation for the foreseeable future. This assessment was made with the
available information to the Group as at the date of approving the financial statements.
TCS Group Holding PLC
Consolidated Management Report
Corporate Governance Statement
GDRs of TCS Group Holding PLC (a Cyprus incorporated company), with each GDR issued under a deposit
agreement dated on or about 24th October 2013 with JPMorgan Chase Bank N.A. as depositary
representing one ordinary (formerly class A) share, are listed on London Stock Exchange. The Company’s
GDRs are also listed on the Moscow Exchange. No shares of TCS Group Holding PLC are listed on any
exchange.
The Company is required to comply with the UK corporate governance regime to the extent it applies to
foreign issuers of GDRs listed on the London Stock Exchange. The Company has not adopted corporate
governance measures of the same standard in all respects as those adopted by UK incorporated
companies or companies with a premium listing on the London Stock Exchange.
As the shares themselves are not listed on the Cyprus Stock Exchange (or elsewhere), the Cypriot
corporate governance regime, which only relates to companies that are listed on the Cyprus Stock
Exchange, does not apply to the Company and accordingly the Company does not monitor its compliance
with that regime.
Until 7 January 2021, the Company maintained a capital structure with two classes of shares, class A and
class B. On 7 January 2021, all class B shares were converted to class A and simultaneously all shares
were reclassified and redesignated as ordinary shares, all ranking pari passu for all purposes and in all
respects with the other existing shares, with the provisions in the Articles of Association of the Company
relating to class B shares deemed deleted.
The Company’s Home State is Cyprus.
A description of the terms and conditions of the GDRs can be found at “Terms and Conditions of the Global
Depositary Receipts”, “Summary of the Provisions relating to the GDRs whilst still in Master Form” and
“Description of Arrangements to Safeguard the Rights of the Holders of the GDRs” in the Prospectus issued
by the Company dated 22 October 2013 and on the website at www.tinkoff.ru/eng.
Copies of the Articles of Association of the Company adopted on 19 November 2021, the terms of reference
of the Committees, and other corporate governance related as well as investor relations related materials
can also be found on the website www.tinkoff.ru/eng, at the Company’s main website www.tcsgh.com.cy,
on
the
Company’s
page
on
the
London
Stock
Exchange
website
(www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary) and at the official site of
the Department of Registrar of Companies, Cyprus (http://www.mcit.gov.cy).
The Board of directors
The role of the Board is to provide entrepreneurial leadership to the Group within a framework of prudent
and effective controls which enable risk to be assessed and managed. The Board sets the Group’s strategic
objectives, ensures that the necessary financial and human resources are in place for the Group to meet
its objectives and reviews management’s performance. The Board also sets the Group’s values and
standards and ensures that its obligations towards the shareholders and other stakeholders are understood
and met. The Board operates under a formal schedule of matters reserved to the Board for its decision,
approved by shareholders in 2013.
The authorities of the members of the Board are specified by the Articles of Association of the Company
and by law. The current ten strong Board of directors is comprised of five executive directors including the
chairman, and five independent non-executive directors. The changes in the composition of the Board
during the year are disclosed above.
The longest serving director Mr. Constantinos Economides took over the role of Chairman of the Board of
directors in June 2015. The names of the people who served on the Board during 2021 are listed at the
Board of directors and other officers.
The Group has established four Committees of the Board. Specific responsibilities have been delegated to
those committees as described below.
The Board is required to undertake a formal and rigorous review annually of its own performance, that of
its committees and of its individual directors. That review was recently carried out, in-house, in relation to
2021, looking at overall performance. All directors completed detailed questionnaires on the Board’s, the
TCS Group Holding PLC
Consolidated Management Report
committees’ and individual director’s performance. The role of appraising the Chairman of the Board for
2021 was performed by the Chairman of the Audit Committee. Analysis of the resultant feedback will be
discussed at a meeting of the Board of directors scheduled for 3 March 2022.
The Board has not appointed a senior independent director. As of the year ended 2021 there were six
independent directors, representing the majority of the Board, of whom at least one will retire each year.
Number of directors
Unless and until otherwise determined by the Company in general meeting, the number of directors shall
be no less than four, of whom two must be non-executive, and until 7 January 2021 was not permitted to
exceed seven, when class B shares were in issue. From 7 January 2021, there has been no maximum
number of directors.
The Articles of Association of the Company provide for the retirement by rotation of a number of directors
at each Annual General Meeting (AGM). At the AGM on 19 November 2021 one director Mr Martin Cocker
retired by rotation and he was duly re-elected to the Board. A number of other directors, whose initial
appointment was made by the Board, also retired then and were duly reelected to the Board: Mr. Ashley
Dunster (retired on 1 March 2022), Mr. Pavel Fedorov, Ms. Maria Gordon, Ms. Margarita Hadjitofi, Mr.
Nicholas Huber and Mr. Nitin Saigal.
Committees of the Board of directors
The Company has established four Committees of the Board of directors: the Audit Committee, the
Remuneration Committee, the Strategy Committee and the Risk and Emerging Risk (Sustainability)
Committee. Their terms of reference are summarized below. The Audit Committee and the Remuneration
Committees were formed in October 2013, whereas the other two were formed during 2021. The Board
reserves the right to amend their terms of reference and arranges a periodic review of each Committee’s
role and activities and considers the appropriateness of additional committees.
Committees-current composition
The Audit Committee comprises its chair Mr. Martin Cocker and three other independent non-executive
directors.
The Remuneration Committee following the resignation of its chair on 1 March 2022, temporarily comprises
one independent non-executive director.
The Risk and Emerging Risk (Sustainability) Committee comprises its chair Ms. Margarita Hadjitofi and two
other independent non-executive directors.
The Strategy Committee comprises its chair Mr. Nitin Saigal, two other independent non-executive directors
and two executive directors.
All the chairs are (or will be) independent. The current terms of reference of all Committees are available
to the public and can be found on the Group’s websites. A short summary of them is set out below.
Role of the Audit Committee
The Audit Committee’s primary purpose and responsibility is to assist the Board in its oversight
responsibilities. In executing this role the Audit Committee monitors the integrity of the financial statements
of the Group prepared under International Financial Reporting Standards (“IFRS”) as adopted by the
European Union (EU) and any formal announcements relating to the Group’s and the Company’s financial
performance, reviewing significant financial reporting judgments contained in them, oversees the financial
reporting controls and procedures implemented by the Group and monitors and assesses the effectiveness
of the Company’s internal financial controls, risk management systems, internal audit function, the
independence and qualifications of the independent auditor and the effectiveness of the external audit
process. The Audit Committee is required to meet at appropriate times in the reporting and audit cycle but
in practice meets more often as required.
Under its terms of reference, the Audit Committee is required, at least once each year, to review its own
performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and to
recommend any changes it considers necessary for Board approval. The Audit Committee met this
TCS Group Holding PLC
Consolidated Management Report
obligation through members participating in the main Board review described above. After consideration of
the review, no changes were proposed to the committee’s terms of reference. The Audit Committee
operates a structured framework around the extensive work it does on non-financial statements related
matters holding at least two additional meetings annually, which would typically be held at the Bank’s head
office in Moscow or via teleconference due to COVID-19 travel restrictions, to consider specific, non-
financial statements related areas within its terms of reference.
Role of the Remuneration Committee
The Remuneration Committee is responsible for determining and reviewing among other things the
framework of remuneration of the executive directors, senior management and its overall cost and the
Group’s remuneration policies. The objective is to ensure that the executive management of the Group are
provided with appropriate incentives to encourage enhanced performance and are in a fair and responsible
manner rewarded for their individual contributions to the success of the Group. The Remuneration
Committee’s terms of reference include reviewing the design and determining targets for any performance
related pay schemes and reviewing the design of all share incentive plans for approval by the Board. The
Remuneration Committee is required to meet at least twice a year but in practice meets far more often.
The Remuneration Committee continued with its work into 2021 on an ongoing review of the operation of
the Group’s MLTIP which launched in 2016 and in considering additional awards to existing and new
participants for this and subsequent years. It also with the assistance of external consultants carried out an
in-depth review of chief executive officer level compensation packages.
The Committee has also been working on plans for an incentive and compensation arrangement within
MLTIP for when, in the period 2022 to 2024, existing awards made to MLTIP joiners in 2016-2017 start to
go into run off. During 2020 and 2021 the Remuneration Committee recommended that the Board approve
new members of key management respectively be granted new awards under MLTIP.
In the end of Q2 2020 the Committee recommended that the Board approve the proposals of launching a
new incentive and retention plan for more than 250 senior and middle managers (KERP). In 2021 the
Committee considered an expansion of this program for over 400 senior and middle managers and that
existing cash-settled equity-based KERP be converted into expanded equity-settled program MLTIP and
recommended that the Board approve the expansion.
Refer to Note 39 for the details of MLTIP and KERP.
Under its terms of reference the Remuneration Committee is required at least once each year to review its
own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness
and to recommend any changes it considers necessary for Board approval. The Remuneration Committee
met this obligation through members participating in the main Board review (described above) under which
detailed questionnaires were completed by all directors assessing the operation of the Board and both
committees as well as individual directors. Although earlier reviews had resulted in certain minor changes
to the Remuneration Committee’s terms of reference, no further changes were felt required based on the
most recent review. The Committee continues to meet as required.
Role of the Risk and Emerging Risk (Sustainability) Committee
The primary purpose and responsibility of the Sustainability Committee is to oversee management and
advise the Board of the Company on matters required to enable the Group to (a) operate on a sustainable
basis for the benefit of current and future generations; (b) embed sustainable practices and adopt best
industry practices across the full range of the Group’s businesses; (c) to enhance the Company’s reputation
as a good corporate citizen; (d) drive sustainable growth by maintaining and enhancing the Group’s
economic, environmental, human, technological and social capital in the long term; and (e) the effective
management of the Group’s sustainability-related risks.
In this context Sustainable and Sustainability encompass the following elements (which are all of equal
importance): social, environmental and governance, including climate change; health and safety; security
and cybersecurity; diversity and inclusion; responsible lending and sustainable finance; relationships with
employees; relationships with communities and other stakeholders; and ethical, elements affecting, or
relevant to, the Group’s business or operations.
Under its terms of reference the Sustainability Committee is required at least once each year to review its
own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness
TCS Group Holding PLC
Consolidated Management Report
and to recommend any changes it considers necessary for Board approval. The Sustainability Committee
is relatively newly created and is considering how best to meet this obligation.
Role of the Strategy Committee
The primary purpose and responsibility of the Strategy Committee is (i) to assess the strategic development
plans, business plans, major financing and investment proposals and other material issues that affect the
development of the Group; (ii) define top-priority areas, strategic targets and major principles of strategic
development of the Group and its sustainable development; and (iii) to provide fresh perspectives on
strategy and economic trends, act as a sounding board for new ideas, to look at big picture, long range
trends, disruptive new technologies and their potential to be or become opportunities or threats to the
Group.
Under its terms of reference the Strategy Committee is required at least once each year to review its own
performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and to
recommend any changes it considers necessary for Board approval. The Strategy Committee is relatively
newly created and is considering how best to meet this obligation.
Appointment, retirement, rotation and removal of directors
The directors of the Company are appointed by the general meeting of shareholders with the sanction of
an ordinary resolution. Such an appointment may be made to fill a vacancy or as an additional director. But
no director may be appointed unless nominated by the Board of directors or a committee duly authorised
by the Board of directors or by a shareholder or shareholders together holding or representing shares which
in aggregate constitute or represent at least 5% in number of votes carried or conferred by the shares giving
a right to vote at a general meeting.
The Board of directors may at any time appoint any person to the office of director either to fill a vacancy
or as an additional director and every such director shall hold office only until the next following annual
general meeting and shall not be taken into account in determining the directors who are to retire by rotation.
One third of the directors (or if their number is not a multiple of three, the number nearest to three but not
exceeding one-third) shall retire by rotation at every annual general meeting. Directors holding an executive
office are excluded from retirement by rotation.
Directors may be removed from office by the shareholders at a general meeting with the sanction of an
ordinary resolution, subject to giving 28 days’ notice to that director in accordance with the Articles of
Association.
The office of director shall be vacated if the director:
•
•
becomes bankrupt or makes any arrangement or composition with his creditors generally; or
becomes prohibited from being a director by reason of any court order made under Section 180
(disqualification from holding the position of director on the basis of fraudulent or other conduct) of
the Cyprus Companies Law; or
•
•
•
becomes, or may be, of unsound mind; or
resigns his office by notice in writing to the Company left at the registered office; or
is absent from meetings of the board for six consecutive months without permission of the Board of
directors and his alternative director (if any) does not attend in his place and the Board of directors
resolves that his office be vacated.
Changes in the top management team
In light of the continued rapid growth of Group’s Russian business, the launch of multiple new business
lines and international expansion initiatives the Group announced the appointment of Oliver Hughes and
Pavel Fedorov as co-CEOs of the Group.
TCS Group Holding PLC
Consolidated Management Report
Significant direct/indirect holdings
For the significant direct and indirect shareholdings held in the share capital of the Company, please refer
to Note 1 of the consolidated financial statements.
Internal control and risk management systems in relation to the financial reporting process
Policies, procedures and controls exist around financial reporting. Management is responsible for executing
and assessing the effectiveness of these controls.
Financial reporting process
The Board of Directors is responsible for the preparation of the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union
(EU) and the requirements of the Cyprus Companies Law, Cap.113, and for such internal control as the
Board of directors determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the consolidated
financial statements, the Board of directors is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of directors either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
The Board has delegated to the Audit Committee the responsibility for reviewing the consolidated financial
statements to ensure that they are in compliance with the applicable framework and legislation and for
recommending these to the Board for approval. The Audit Committee is responsible for overseeing the
Group’s financial reporting process.
Internal Controls and Risk Management
Management is responsible for setting the principles in relation to risk management. The risk management
organization is divided between Policy Making Bodies and Policy Implementation Bodies. Policy Making
Bodies are responsible for establishing risk management policies and procedures, including the
establishment of limits. The main Policy Making Bodies are the Board of directors, the Management Board,
the Finance Committee, the Credit Committee and the Business Development Committee.
The policy implementation level of the Group’s risk management organization consists of the Finance
Department, the Risk Management Department, the Collections Department and the Internal Control
Service.
In addition the Group has implemented an online analytical processing management system based on a
common SAS data warehouse that is updated on a daily basis. The set of daily reports includes but is not
limited to sales reports, application processing reports, reports on the risk characteristics of the card
portfolios, vintage reports, transition matrix (roll rates) reports, reports on the pre-, early and late collections
activities, reports on compliance with CBR requirements, capital adequacy and liquidity reports, operational
liquidity forecast reports and information on intra-day cash flows.
TCS Group Holding PLC
Consolidated Management Report
Diversity policy
The Group is committed to offering equal opportunity to all current and prospective employees, such that
no applicant or employee is discriminated in favour of or against on the grounds of sex, racial or ethnic
origin, religion or belief, disability, age or sexual orientation in recruitment, training, promotion or any other
aspect of employment.
Recruitment, training and promotion are exclusively based on merit. All the Group employees involved in
the recruitment and management of staff are responsible for ensuring the policy is fairly applied within their
areas of responsibility. The Group applies this approach throughout, at all levels. This includes its
administrative, management and supervisory bodies, including the Board of directors of the Company.
The composition and diversity information of the Board of directors of the Group for the year ended and as
at 31 December 2021 is set out below:
Name
Age
Male/Female
Educational/professional background
Martin Cocker
ICAEW, BSc in Mathematics and Economics,
experience in ‘Big Four’ professional services firms
62
Male
Ashley Dunster (retired
on 1 March 2022)
Investment manager, Bachelor of Engineering Melbourne
University, Masters Mathematical Modelling & Numerical
Analysis, Oxford University
58
Male
Constantinos
Economides
ICAEW, MSc in Management Sciences, experience in ‘Big
Four’ professional services firms
46
47
47
Male
Banker, Diploma in Economics/Operations Research,
Novosibirsk State university, MBA in Finance, Edmund
Muskie Fellow, University of Washington
Investment manager, BA in Political Science University of
Wisconsin and MALD from the Fletcher School at Tufts
University
Pavel Fedorov
Maria Gordon
Male
Female
Lawyer, LLB (Law), Bachelor of Commerce (Business and
Finance) Western Sydney University, LLM (Law) University
of Sydney, Sustainability Leadership and Corporate
Responsibility at London Business School
Margarita Hadjitofi
41
Female
Nicholas Huber
Oliver Hughes
Investment manager, BSc in Finance Miami University
Farmer School of Business
Banker, BA Russian and French University of Sussex, MA
International Politics Leeds University, MSc Information
Management and Technology City University
32
51
Male
Male
Marilou Pavlou
Nitin Saigal
40
40
43
Female
Male
Lawyer, MA Modern History, Law at BPP Law School
Investment manager, BA Harvard College and MBA
Harvard Business School
Mary Trimithiotou
ICPAC, FCCA, Licensed insolvency practitioner,
experience in ‘Big Four’ professional services firms
Female
Further details of the corporate governance regime of the Company can be found on the website:
https://www.tinkoff.ru/eng/investor-relations/corporate-governance/.
By Order of the Board
____________________
Constantinos Economides
Chairman of the Board
Limassol
3 March 2022
Independent Auditor’s Report
To the Members of TCS Group Holding PLC
Report on the Audit of the Consolidated Financial Statements
Our opinion
In our opinion, the accompanying consolidated financial statements of TCS Group Holding PLC
(the “Company”) and its subsidiaries (together the “Group”) give a true and fair view of the
consolidated financial position of the Group as at 31 December 2021, and of its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union and the
requirements of the Cyprus Companies Law, Cap. 113.
What we have audited
We have audited the consolidated financial statements which are presented in pages 1 to 126 and
comprise:
•
•
the consolidated statement of financial position as at 31 December 2021;
the consolidated statement of profit or loss and other comprehensive income for the year then
ended;
•
•
•
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include a summary of significant
accounting policies.
The financial reporting framework that has been applied in the preparation of the consolidated
financial statements is International Financial Reporting Standards as adopted by the European
Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the International Ethics Standards Board
for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code) together with the ethical requirements that
are relevant to our audit of the consolidated financial statements in Cyprus and we have fulfilled
our other ethical responsibilities in accordance with these requirements and the IESBA Code.
2
Our audit approach
Overview
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where the
Board of Directors made subjective judgements; for example, in respect of significant accounting
estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits, we also addressed the risk of management override of internal
controls, including among other matters, consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
•
Overall group materiality: Russian Roubles (“RR”) 4 052
million, which represents approximately 5% of profit
before tax.
•
We planned and conducted our audit to cover the two
largest business components of the Group, being Banking
and Insurance operations, for which we performed full
scope audits of each of their complete financial
information.
•
For the other components, we performed substantive
audit procedures where necessary.
We have identified the following key audit matter:
•
Credit loss allowance for loans and advances to
customers, using the expected credit loss model in line
with the requirements of IFRS
Instruments”.
9
“Financial
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to
obtain reasonable assurance whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall group materiality for the consolidated financial statements as a
whole as set out in the table below. These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of our audit procedures and to
evaluate the effect of misstatements, both individually and in aggregate on the consolidated
financial statements as a whole.
3
Overall group materiality
How we determined it
RR 4 052 million
Approximately 5% of profit before tax.
Rationale for the
materiality benchmark
applied
We chose profit before tax as the benchmark because, in our
view, it is the benchmark against which the performance of
the Group is most commonly measured by the users of the
consolidated financial statements, and it is a generally
accepted benchmark. We chose 5%, which in our experience is
an acceptable quantitative threshold for this materiality
benchmark.
We agreed with the Audit Committee that we would report to them misstatements identified during
our audit above RR 203 million as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
How we tailored our group audit scope
TCS Group Holding PLC is the parent of a group of companies. The financial information of this
Group is included in the consolidated financial statements of TCS Group Holding PLC.
Considering our ultimate responsibility for the opinion on the Group’s consolidated financial
statements we are responsible for the direction, supervision and performance of the group audit. In
this context, we tailored the scope of our audit and determined the nature and extent of the audit
procedures for the components of the Group to ensure that we perform sufficient work to enable us
to provide an opinion on the consolidated financial statements as a whole, taking into account the
structure of the Group, the significance and/or risk profile of the group entities or activities, the
accounting processes and controls, and the industry in which the Group operates.
The Group has two primary business components, being Banking (which includes retail business for
individuals and small and medium-sized entities business) and Insurance operations both of which
operate primarily in the Russian Federation. The Banking business comprises a number of reporting
units being JSC Tinkoff Bank, LLC Microfinance company Т-Finans, LLC Phoenix and LLC Tinkoff
Capital. The Insurance business comprises solely JSC Tinkoff Insurance. Full scope audit procedures
were performed in respect of the Banking and Insurance operations.
Other Group business reporting components are not considered to be primary business components
for audit purposes. Where necessary, additional substantive audit procedures were carried out across
these non-primary components at the financial statement item level in order to achieve the desired
level of audit evidence. The consolidated financial statements are a consolidation of all of the above
business reporting components.
We determined the level of involvement we needed to have in the audit work at the business
reporting components to be able to conclude whether sufficient appropriate audit evidence was
obtained as a basis for our opinion on the consolidated financial statements as a whole. We worked
with other PwC network firms in relation to the activities of the Group in the Russian Federation.
Overall, we have obtained sufficient and appropriate audit evidence regarding the consolidated
financial information of the Group as a whole to provide a basis for our audit opinion on the
consolidated financial statements.
4
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit
Matter
Credit loss allowance for loans and advances
to customers, using the expected credit loss
model in line with the requirements of IFRS 9
“Financial Instruments”
This is a complex accounting standard for
which models have been developed by the
Group as a basis to calculate expected credit
losses (“ECL”). These calculations involve the
application of significant management
judgement and estimates.
In relation to the ECL models for measuring
credit loss allowance we assessed the
appropriateness of the key assumptions used
in the methodologies and models of the Group
and their compliance with the requirements of
IFRS 9.
Therefore, we applied focus to the “expected
credit loss” models used by the Management
for the purpose of compliance with IFRS 9.
These models are described in more detail in
Note 41 “Significant Accounting Policies” and
Note 30 “Financial and Insurance Risk
Management” to the consolidated financial
statements.
We reviewed the Group’s back-testing of
probabilities of default estimated on the basis
of the models by comparing them to the actual
default rates evidenced in the loan portfolios.
In addition we performed our own back-testing
of default probabilities based on actual
movements into Stage 3 category of loans in
2021 to ensure the reasonableness of the
application of the policies and models used.
An assessment of the credit loss allowance for
loans and advances to customers is performed
on a portfolio basis, with the key assumptions
being the probability of an account falling into
arrears and subsequently defaulting (which is
impacted by the definitions of “significant
increase in credit risk” and “default”), the
estimated recoveries from defaulted loans and
the lifetime period for revolving credit
facilities. Statistical models are used for the
assessment of the probability of default,
recovery rate and the lifetime period for
revolving credit facilities. In addition,
For a sample of inputs into estimation of
recovery rate, we tested them for accuracy and
criteria for inclusion into the calculation.
With regard to the controls relating to the
credit loss allowance calculation process, we
assessed and tested on a sample basis the
design and operating effectiveness of the key
controls over credit loss data and calculations.
These key controls included those over
classification of certain loans by loan
portfolios, allocation of cash received from
customers to respective loans and advances to
customers, identification of the overdue loans
and the data transfer from source systems to
the credit loss allowance models.
calculation of the expected credit loss
allowance incorporates forward-looking
information, taking into consideration
different macro-economic scenarios and
adjusting the probability of default.
We assessed if and to what extent we could
place reliance upon these key controls for the
purposes of our audit.
In addition, we performed testing, on a sample
basis, of the accuracy of allocation of loans to
the different “stages” and the completeness of
restructured credit-impaired loans.
5
Key Audit Matter
How our audit addressed the Key Audit
Matter
We tested a sample of post model accounting
adjustments where applicable, including
considering the basis for the adjustment, the
logic applied, the source data used, the key
assumptions adopted and consistency with
prior periods. We verified management
assumptions in the context of the economic
environment that is affected by the COVID-19
pandemic.
We assessed if the disclosures made in the
consolidated financial statements comply with
the relevant accounting standards in terms of
completeness and accuracy.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises
the information included in the Consolidated Management Report including the Corporate
Governance Statement, which we obtained prior to the date of this auditor’s report, and the Group’s
complete Annual Report and Non-Financial Information and Diversity Statement, which is
expected to be made available to us after that date. Other information does not include the
consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we
do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information identified above and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
When we read the Group’s complete Annual Report and Non-Financial Information and Diversity
Statement, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance and if not corrected, we will bring the
matter to the attention of the members of the Company at the Company's Annual General Meeting
and we will take such other action as may be required.
Responsibilities of the Board of Directors and those charged with governance for
the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements
that give a true and fair view in accordance with International Financial Reporting Standards as
adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and
for such internal control as the Board of Directors determines is necessary to enable the
6
preparation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the Board of
Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors.
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves a true and fair view.
7
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
•
•
•
In our opinion, the consolidated management report has been prepared in accordance with
the requirements of the Cyprus Companies Law, Cap. 113, and the information given is
consistent with the consolidated financial statements.
In our opinion, and in the light of the knowledge and understanding of the Group and its
environment obtained in the course of the audit, we have not identified material
misstatements in the consolidated management report.
In our opinion, based on the work undertaken in the course of our audit, the information
included in the corporate governance statement in accordance with the requirements of
subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law,
Cap. 113, and which is included as a specific section of the consolidated management
report, have been prepared in accordance with the requirements of the Cyprus Companies
Law, Cap. 113, and is consistent with the consolidated financial statements.
•
•
In our opinion, based on the work undertaken in the course of our audit, the corporate
governance statement includes all information referred to in subparagraphs (i), (ii), (iii),
(vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.
In light of the knowledge and understanding of the Group and its environment obtained in
the course of the audit, we are required to report if we have identified material
misstatements in the corporate governance statement in relation to the information
disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies
Law, Cap. 113. We have nothing to report in this respect.
Other Matters
This report, including the opinion, has been prepared for and only for the Company’s members as a
body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do
not, in giving this opinion, accept or assume responsibility for any other purpose or to any other
person to whose knowledge this report may come to.
8
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule
4.1.14R, these consolidated financial statements form part of the European Single Electronic
Format (ESEF)-prepared annual financial report filed on the National Storage Mechanism of the
Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (ESEF
RTS). This independent auditor’s report provides no assurance over whether the annual financial
report has been prepared using the single electronic format specified in the ESEF RTS.
The engagement partner on the audit resulting in this independent auditor’s report is George C.
Kazamias.
George C. Kazamias
Certified Public Accountant and Registered Auditor
for and on behalf of
PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
PwC Central, 43 Demostheni Severi Avenue
CY-1080 Nicosia, Cyprus
3 March 2022
9
TCS Group Holding PLC
Consolidated Statement of Financial Position
31 December
2021
31 December
2020
In millions of RR
Note
ASSETS
Cash and cash equivalents
Mandatory cash balances with the CBRF
Due from other banks
5
316,476
8,589
542
136,351
5,379
1,887
238,454
29
376,521
5,035
15,475
24,064
3,133
947
6
Investments in securities
Repurchase receivables
Loans and advances to customers
Financial derivatives
Guarantee deposits with payment systems
Brokerage receivables
Current income tax assets
Deferred income tax assets
Tangible fixed assets and right-of-use assets
Intangible assets
Other financial assets
Other non-financial assets
7
215,311
5,826
606,308
5,963
15,171
49,138
3,524
-
13,964
15,069
52,969
8,895
7
8
36
9
10
27
27
11
11
12
12
10,481
7,082
31,070
3,386
TOTAL ASSETS
1,317,745
859,294
LIABILITIES
Due to banks
13
14
15
16
36
10
27
27
17
18
19
19
11,313
945,723
21,680
3,806
90
4,819
626,837
23,910
-
Customer accounts
Debt securities in issue
Other borrowed funds
Financial derivatives
Brokerage payables
Current income tax liabilities
Deferred income tax liabilities
Subordinated debt
109
9,634
125
9,206
-
333
20,755
6,067
34,337
5,905
1,860
59,657
10,365
69,302
8,099
Insurance provisions
Other financial liabilities
Other non-financial liabilities
TOTAL LIABILITIES
1,141,654
732,278
EQUITY
Share capital
20
20
20
39
230
26,998
(2,567)
4,745
159,491
(13,131)
230
26,998
(3,238)
1,548
99,540
1,849
Share premium
Treasury shares
Share-based payment reserve
Retained earnings
Revaluation reserve for investments in debt securities
Equity attributable to shareholders of the Company
Non-controlling interest
175,766
325
126,927
89
TOTAL EQUITY
176,091
127,016
859,294
TOTAL LIABILITIES AND EQUITY
1,317,745
Approved for issue and signed on behalf of the Board of directors on 3 March 2022.
_____________________
Constantinos Economides
Director
____________________
Mary Trimithiotou
Director
The notes № 1-43 are an integral part of these Consolidated Financial Statements.
1
TCS Group Holding PLC
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In millions of RR
Note
2021
2020
Interest income calculated using the effective interest rate method
Other similar income
Interest expense calculated using the effective interest rate method
Other similar expense
21
21
21
21
21
163,620
192
(28,430)
(80)
128,084
83
(21,581)
(139)
Expenses on deposit insurance programme
(2,744)
(1,745)
Net margin
21
132,558
104,702
Credit loss allowance for loans and advances to customers and credit
related commitments
Credit loss allowance for debt securities at FVOCI
8
8
(21,673)
(10)
(38,972)
(369)
Total credit loss allowance for debt financial instruments
(21,683)
110,875
(39,341)
65,361
Net margin after сredit loss allowance
Fee and commission income
Fee and commission expense
Customer acquisition expense
Net (losses)/gains from derivatives revaluation
Net losses from foreign exchange translation
Net (losses)/gains from operations with foreign currencies
Net gains from disposals of investments in securities
Net gains from financial assets at FVTPL
Insurance premiums earned
22
22
23
86,069
(38,779)
(43,442)
(100)
(866)
(730)
1,016
7,523
23,063
(4,964)
(59,449)
(101)
47,609
(22,215)
(22,588)
4,163
(6,850)
1,595
7,210
603
18,567
(3,814)
(35,005)
168
7,37
24
24
Insurance claims incurred
Administrative and other operating expenses
Net (losses)/gains from repurchase of subordinated debt
Other operating income
25
26
27
923
1,445
Profit before tax
Income tax expense
81,038
(17,670)
56,249
(12,036)
Profit for the year
63,368
44,213
Other comprehensive loss
Items that may be reclassified to profit or loss
Debt securities at FVOCI and Repurchase receivables:
- Net (losses)/gains arising during the year, net of tax
- Net gains reclassified to profit or loss upon disposal, net of tax
(14,367)
(613)
3,621
(5,768)
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year
(14,980)
48,388
(2,147)
42,066
Profit/(loss) is attributable to:
- Shareholders of the Company
- Non-controlling interest
63,471
(103)
44,209
4
Total comprehensive income/(loss) is attributable to:
- Shareholders of the Company
- Non-controlling interest
48,491
(103)
42,062
4
Earnings per share for profit attributable to the Shareholders of the
Company, basic (expressed in RR per share)
Earnings per share for profit attributable to the Shareholders of the
Company, diluted (expressed in RR per share)
20
20
321.80
314.88
225.60
223.73
The notes № 1-43 are an integral part of these Consolidated Financial Statements.
2
TCS Group Holding PLC
Consolidated Statement of Changes in Equity
Attributable to shareholders of the Company
Share
capital
Share
premium
Share-
based
Revaluation Treasury Retained
reserve for shares earnings
Total
Non-
control-
ling
Total
equity
payment investments in
reserve debt securities
In millions of RR
Note
Interest
Balance at 1 January 2020
230
26,998
1,039
3,996
-
(3,164)
66,880
95,979
44,209
(2,147)
42,062
103
96,082
44,213
(2,147)
42,066
Profit for the year
-
-
-
-
-
-
-
-
-
-
-
-
44,209
4
-
Other comprehensive loss:
Investments in debt securities at FVOCI and Repurchase receivables
(2,147)
(2,147)
-
44,209
-
Total comprehensive (loss)/income for the year
4
GDRs buy-back
Share-based payment reserve
Dividends declared
20
39
28
-
-
-
-
-
-
-
509
-
-
-
-
(661)
587
-
(661)
1,092
(11,545)
-
-
(661)
1,092
(11,563)
(4)
(11,545)
99,540
63,471
-
(18)
Balance at 31 December 2020
230
26,998
1,548
1,849
-
(3,238)
126,927
63,471
89
(103)
-
127,016
63,368
Profit/(loss) for the year
-
-
-
-
-
-
-
-
-
-
-
-
Other comprehensive loss:
Investments in debt securities at FVOCI and Repurchase receivables
(14,980)
(14,980)
(14,980)
48,491
(14,980)
48,388
Total comprehensive (loss)/income for the year
63,471
(103)
GDRs buy-back
Share-based payment reserve
Dividends declared
20
39
28
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,877)
12
20
(3,552)
-
(1,865)
5,765
(3,552)
-
-
-
(1,865)
5,765
(3,559)
346
3,197
2,548
-
-
-
-
(7)
346
Changes from business combinations and assets acquisitions
Balance at 31 December 2021
230
26,998
4,745
(13,131)
(2,567)
159,491
175,766
325
176,091
The notes № 1-43 are an integral part of these Consolidated Financial Statements.
3
TCS Group Holding PLC
Consolidated Statement of Cash Flows
In millions of RR
Note
2021
2020
Cash flows from/(used in) operating activities
Interest income received calculated using the effective interest rate method
Other similar income received
162,165
128
129,555
11
(28,315)
4,510
Interest expense paid calculated using the effective interest rate method
Recoveries from written-off loans
(22,280)
4,063
8
(2,369)
86,069
(43,554)
(44,213)
426
Expenses on deposits insurance paid
Fees and commissions received
Fees and commissions paid
(1,792)
47,613
(22,236)
(21,116)
831
Customer acquisition expense paid
Gains from operations with foreign currencies received
Losses from operations with derivatives paid
Insurance premiums received
Insurance claims paid
Recoveries from the purchased loans received
Other operating income received
(981)
(934)
25,379
(4,090)
3,991
18,193
(3,629)
1,750
8
1,093
1,053
Administrative and other operating expenses paid
Income tax paid
(47,462)
(11,705)
(30,456)
(12,930)
Cash flows from operating activities before changes in operating assets and
liabilities
101,072
87,696
Changes in operating assets and liabilities
Net increase in CBRF mandatory reserves
Net decrease in due from banks
(3,210)
1,345
(1,931)
197
Net increase in loans and advances to customers
Net increase in brokerage receivables
(255,612)
(25,074)
1,541
(728)
(18,916)
(436)
(81,724)
(21,265)
(3,788)
(4,325)
(9,708)
(1,038)
4,777
Net decrease/(increase) in debt securities measured at FVTPL
Net increase in guarantee deposits with payment systems
Net increase in other financial assets
Net increase in other non-financial assets
Net increase in due to banks
6,528
Net increase in customer accounts
Net increase in brokerage payables
320,992
428
201,922
7,999
Net increase in other financial liabilities
Net decrease in non-financial liabilities
30,851
(354)
16,512
(39)
Net cash from operating activities
158,427
195,285
Cash flows (used in)/from investing activities
Acquisition of tangible fixed assets
Acquisition of intangible assets
Acquisition of investments in securities, repurchase receivables and other investments
Proceeds from sale and redemption of investments in securities
(5,272)
(6,884)
(33,727)
34,507
(2,076)
(3,642)
(375,444)
282,288
Net cash used in investing activities
(11,376)
(98,874)
Cash flows from/(used in) financing activities
Proceeds from subordinated debt
Proceeds from securitisation
17,29
16
45,362
5,623
710
-
Repayment of subordinated debt
Dividends paid
Repayment of debt securities in issue
GDR’s buy-back
Repayment of securitisation
Repayment of principal of lease liabilities
Proceeds from debt securities in issue
17,29
28
15,29
20
(7,745)
(3,628)
(2,247)
(1,877)
(1,823)
(820)
(1,937)
(11,853)
(2,894)
(661)
-
(758)
331
11
15,29
-
Net cash from/(used in) financing activities
32,845
(17,062)
Effect of exchange rate changes on cash and cash equivalents
229
1,438
Net increase in cash and cash equivalents
180,125
136,351
316,476
80,787
55,564
Cash and cash equivalents at the beginning of the year
5
5
Cash and cash equivalents at the end of the year
136,351
The notes № 1-43 are an integral part of these Consolidated Financial Statements.
4
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
1
Introduction
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (“IFRS”) for the year ended 31 December 2021
for TCS Group Holding PLC (the “Company”) and its subsidiaries (together referred to as the “Group”), and
in accordance with the requirements of the Cyprus Companies Law, Cap.113.
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 these consolidated financial
statements consists of: Constantinos Economides, Margarita Hadjitofi, Martin Cocker, Mary Trimithiotou,
Maria Gordon, Marilou Pavlou, Nicholas Huber, Nitin Saigal, Oliver Hughes and Pavel Fedorov.
The Company Secretary is Caelion Secretarial Limited, 25 Spyrou Araouzou, 25 Berengaria, 5th floor,
Limassol 3036, Cyprus.
At 31 December 2021 the share capital of the Company is comprised of ordinary shares (2020: class A
shares and class B shares). Each ordinary share has a nominal value of USD 0.04 per share and carries
one vote. As at 31 December 2021 the number of issued ordinary shares is 199,305,492 (2020: the number
of issued class A shares is 129,391,449 and class B shares is 69,914,043). Refer to Note 20 for further
information on the share capital. 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. On 2 July 2019 the Group completed a secondary public offering (SPO) of its class A shares
in the form of GDRs. On 28 October 2019 the Group’s GDRs started trading also on the Moscow Exchange.
As at 31 December 2021 and 2020 the entities and the individuals holding Company’s shares were:
31 December 2020
31 December 2021
Class of
shares
Percentage
on total
issued
Class of Percentage
Country of
shares
on total Incorporation
issued
shares
shares
Guaranty Nominees Limited
(JPMorgan Chase Bank NA)
Virtue Trustees (Switzerland) AG as
Trustee of the New Rigi Trust
Ioanna Georgiou
Panagiota Charalambous
Maria Vyra
Chloi Panagiotou
United
64.92%
Ordinary
Ordinary
64.92%
35.08%
Class A
-
Kingdom
-
Switzerland
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Class A
Class A
Class A
Class A
Class A
Class A
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Leonora Chagianni
Antonis Strati
Virtue Trustees (Switzerland) AG as
Trustee of the Bernina Trust
Virtue Trustees (Switzerland) AG as
Trustee of the Rigi Trust
-
-
-
-
Class B
Class B
18.47%
16.61%
Switzerland
Switzerland
Total
100.00%
100.00%
Guaranty Nominees Limited is a company holding ordinary shares of the Company for which GDRs are
issued under a deposit agreement made between the Company and JPMorgan Chase Bank NA signed in
October 2013.
5
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
1
Introduction (Continued)
In the beginning of 2021 the Group underwent a major restructuring of its shareholder structure. While as
of 31 December 2020 the ultimate controlling party of the Company was Mr. Oleg Tinkov, who then
controlled approximately 84.38% of the aggregated voting rights attached to the class A and B shares, on
7 January 2021 all issued 69,914,043 class B shares (35.08% of the total number of issued shares) held
by The Rigi Trust and The Bernina Trust were converted to class A shares, and on the same date 100% of
issued shares were reclassified and redesignated as ordinary shares. Following the conversion, each share
carries a single vote, and the total number of votes capable of being exercised is equal to the total number
of issued shares (currently 199,305,492 shares following the class B share conversion). The number of
GDRs in issue was not affected by the conversion. Then the shares held by the two trusts were transferred
to The New Rigi Trust. After the conversion the Trust’s voting rights dropped to 35.08%.
As at 31 December 2021 in accordance with IFRS 10 definition of control the Group has no ultimate
controlling party.
As at 31 December 2021 and 2020 the six individuals listed in the table above each held one share. The
individuals hold them as nominees of Mr. Oleg Tinkov.
The material subsidiaries and associates of the Group are set out below. Except where stated the Group
owns 100% of shares and has 100% of voting rights of each of these subsidiaries as at 31 December 2021
and 2020.
Percentage of ownership
31 December
2021
31 December
2020
Name
Nature of business
Country of registration
JSC “Tinkoff Bank”
(the “Bank”)
JSC “Tinkoff Insurance”
(the “Insurance company”) operations
LLC TCS
LLC Microfinance
company "T-Finance"
LLC “Phoenix”
LLC “Tinkoff Software DC” Software
(Russia)
Banking operations
Insurance
100.00%
100.00%
Russia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Russia
Russia
Russia
Russia
Russia
Services
Micro-finance
services
Collection services
development service
LLC “Tinkoff Software DC” Software
100.00%
-
Belarus
(Belarus)
development service
LLC “Tinkoff Mobile”
ANO “Tinkoff Education”
Telecommunication
Education services
Asset management
company
Investment services
Online payment
services
Fintech
Cryptocurrency
services
100.00%
100.00%
100.00%
100.00%
Russia
Russia
LLC “Tinkoff Capital”
LLC “Tinkoff Invest Lab”
LLC “CloudPayments”
LLC “Beskontakt”
100.00%
100.00%
95.00%
85.40%
83.20%
100.00%
Russia
Russia
100.00%
95.00%
Russia
-
-
Russia
Aximetria GmbH
Switzerland
Online payment
services
Group of fintech
start-ups
LLC “Dzhast Luk”
51.00%
9.47%
-
Russia
Ireland
Vivid Money Holdco
Limited
16.32%
TCS Finance D.A.C.
Mortgage agent TB-1
Financing
Financing
-
-
-
-
Ireland
Russia
In the fourth quarter 2021 the Group acquired a 51.0% stake in LLC “Dzhast Luk” and a 83.2% stake in
Aximetria GmbH for a total amount of RR 0.8 billion. “Dzhast Luk” LLC is a company that operates
Jump.Finance, a fintech service that automates payments to individuals and self-employed persons.
Aximetria GmbH is a Swiss financial services company providing cryptocurrency services.
6
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
1
Introduction (Continued)
In April 2021 the Group acquired a 77.4% shareholding in LLC “Beskontakt”. In July 2021 the Group
exercised a call option agreement with the founders and remaining stakeholders of LLC “Beskontakt” and
acquired an additional 8%. As a result, the Group’s shareholding increased to 85.4%. LLC “Beskontakt” is
a fintech company developing the “Koshelek” app, which is a digital wallet and a mobile app aggregating
bank and loyalty cards. The acquired entity will assist the expansion of the Group’s customer base through
the marketing and cross-selling of its products to the app’s users. Refer to Note 41 for the details of this
acquisition.
In August 2020 the Group acquired a 22.15% shareholding in Incantus Holding Limited, which is a group
of fintech start-ups launched in 2020 to provide a range of services to retail customers in Europe (excluding
CIS) through the mobile banking platform Vivid Money. On 31 May 2021 Incantus was restructured into a
new holding, Vivid Money Holdco Limited. As a result of series of new shares issuances related to fresh
equity funding, the Company’s share in Vivid Money Holdco Limited has diluted to 9.47% as at
31 December 2021 (2020: 16.32%).
TCS Finance D.A.C. is a structured entity which issued debt securities including subordinated perpetual
bonds for the Group. The Group neither owns shares nor has voting rights in 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.
Mortgage agent TB-1 is a special purpose entity which issued bonds secured by a portfolio of home equity
loans (Note 16). The Group neither owns shares nor has voting rights in 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 significant risks and rewards through the retention of a junior tranche in the transaction.
EBT is a special purpose trust which has been specifically created for the long-term incentive program for
Management of the Group (MLTIP). The Group neither owns shares nor has voting rights in EBT.
Principal activity. The Group’s principal business activities are retail banking to private individuals,
individual entrepreneurs’ (“IE”) and small and medium enterprises’ (“SME”) accounts and banking services,
brokerage services and insurance operations within the Russian Federation through the Bank and the
Insurance Company. The Bank operates under general banking license No. 2673 issued by the Central
Bank of the Russian Federation (“CBRF”) on 8 December 2006. The Insurance Company operates under
an insurance license issued by the CBRF.
The Bank participates in the state deposit insurance scheme, which was introduced by Federal Law
No. 177-FZ “Deposits insurance in banks of the Russian Federation” dated 23 December 2003. The State
Deposit Insurance Agency guarantees repayment of up to RR 1.4 million per individual, individual
entrepreneur and small enterprise deposits 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 25 Spyrou Araouzou,
Berengaria 25, 5th floor, Limassol, Cyprus, and place of business is Office 403, Lophitis Business Centre I,
Corner of 28th October/Emiliou Chourmouziou Streets, Limassol 3035 Cyprus. The Bank’s and the
Insurance Company’s registered address is 2-nd Khutorskaya Street, 38A, building 26, 127287, Moscow,
Russian Federation.
Presentation currency. These consolidated financial statements are presented in millions of
Russian Rubles (RR).
7
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
2
Operating Environment of the Group
Russian Federation. The Group operates mainly within the Russian Federation. As a result of the
pandemic, 2020 has been a ground shaking year across the globe in many industries, but in the Russian
credit market the COVID-19 dislocations proved less impactful than during the previous crises of 2008-09
or 2013-2014, in part helped by government support and more disciplined lending practices of the biggest
banks. In 2020 the CBR relaxed risk weights for the first time in many years. This coupled with restructuring
programs launched by many banks helped the credit card market to still grow by 1.6% in 2020.
In 2021 the recovery in Russian economic activity is becoming more sustainable. However, the sharp
decline in economic activity caused by the coronavirus pandemic was accompanied by a rupture of
production and supply chains, the formation of a deep imbalance in supply and demand, and a softening
of financial conditions as part of anti-crisis government programs. This resulted in worldwide general rise
of inflation. By mid-2021, there was a trend towards accelerating consumer inflation. As a result, in
October 2021 the CBR decided to raise the key rate by 75 basis points to 7.50% per annum. The growth
of the key rate and raising yields of the Russian Federal bonds market led to substantial decline in bond
prices denominated in RR.
The CBR also continues to tighten regulatory requirements, in particular, establishing macroprudential limits
(quantitative restrictions on the issuance of unsecured loans) on consumer loans for banks and
microfinance organizations is being considered.
Some of numerous measures attempting to contain the spreading and impact of COVID-19, such as travel
bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, were
subsequently relaxed, however, as of 31 December 2021, the global infection levels remain high,
vaccination rate is low, and there is a risk that the Russian authorities may impose additional restrictions in
2022, including in response to new variants of the virus.
According to IFRS 9 “Financial Instruments”, the Group uses forecast information in the expected credit
loss models, including forecasts of macroeconomic indicators. For the purpose of calculating credit loss
allowances as at 31 December 2021, the Group took into account expectations regarding the following
macro-factors and allocated higher weight to the pessimistic macroeconomic scenario:
•
•
•
Russian stock market index MOEX;
Moscow Prime Offered Rate;
Debt load of Russian population based on statistics from bureaus of credit history.
In order to reflect appropriately the uncertainty associated with the COVID-19 pandemic the Group has
made the following changes to their ECL model:
•
•
•
the macro-adjustment calculation approach was refined to reflect the most recent impact of economic
developments;
an adjustment to the loss given default was made to address lower expected recoveries during the
upcoming quarters;
higher probabilities of default were applied to the loans which have been restructured.
More detailed information about the changes and their impact on the results of the Group’s operations for
the year ended 31 December 2021 is disclosed in Note 3.
8
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
2
Operating Environment of the Group (continued)
The management of the Group considers that the Group has demonstrated over the years and during the
current COVID-crisis its ability to withstand shocks and retains its positive long-term outlook in particular
due to the following advantages of the Group’s business model:
•
•
•
using flexible business structure, the Group swiftly shifted some of its resources from businesses
that were needed to run more conservatively to businesses with higher growth prospects;
the Group has a highly liquid, diversified, foreign exchange hedged, and well-capitalized consolidated
statement of financial position;
the Group’s digital model is exactly what is needed in the current environment and this can be seen
in the ongoing increased online payment volumes as well as increased take up of its mobile lifestyle
app, current accounts, and brokerage business.
The Group regularly stress tests its business to assess the sustainability of its liquidity and capital positions.
These tests demonstrate that Group’s current levels of capital and liquidity are more than sufficient to
absorb potential economic and operational impacts related to the new waves of the COVID-19 pandemic.
3
Critical Accounting Estimates and Judgements in Applying Accounting Policies
The Group makes estimates and assumptions that affect the amounts recognized in the consolidated
financial statements 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 recognized in the consolidated financial statements and estimates that can cause a significant
adjustment to the carrying amount of assets and liabilities within the next financial year include:
ECL measurement. Calculation and measurement of ECLs is an area of significant judgement and involves
methodology, models and data inputs. The following components of ECL calculation have a major impact
on credit loss allowance: probability of default (“PD”) (impacted by definition of default, SICR, forward-
looking scenarios and theirs weights) and loss given default (“LGD”). Refer to Note 30 for explanation of
terms. The Group makes estimates and judgments, which are constantly analysed based on statistical data,
actual and forecast information, as well as management experience, including expectations regarding
future events that are considered reasonable in the current circumstances. Refer to Note 30 for further
information on ECL measurement.
In order to address rising credit risks the Group adjusted the main approaches to assessing the level of
expected credit losses that have the most significant effect on the amounts recognised in the consolidated
financial statements:
•
the macroeconomic model has become more conservative, based on different scenarios: base,
optimistic and pessimistic, and higher weight is assigned to the pessimistic scenario (refer to Note
30 for details on distribution of scenarios and sensitivity analysis);
•
•
for loans in default the Group has applied increased coefficients of LGD;
the Group has estimated the volume of loans to individuals which were restructured despite no
evidence of any SICR, as of the reporting date and applied higher PDs to such loans for the purposes
of estimation of expected credit losses.
The impact of the changed macroeconomic conditions assessed using the approaches described above
was approximately RR 3.5 billion of additional credit loss allowance as at 31 December 2021 (2020:
RR 5.6 billion).
9
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
3
Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued)
In 2021, the Group implemented a new behavioural model for calculating probabilities of default for retail
annuity loans (cash loans, secured loans, POS loans and car loans). The management of the Group
believes that the new model results in a more refined assessment of expected credit losses. The impact of
this change was accounted for as a change in accounting estimate and was recognized by including in
profit or loss RR 78 million of additional credit loss allowance charge. Refer to Note 8 to see impact on each
class of loans separately.
An increase or decrease in PDs by 0.5% compared to PDs used in the ECL estimates calculated at
31 December 2021 would result in an increase or decrease in credit loss allowances of RR 2.3 billion (2020:
by 2% RR 5.2 billion).
An increase or decrease in LGDs by 1% compared to LGDs used in the ECL estimates calculated at
31 December 2021 would result in an increase or decrease in credit loss allowances of RR 0.8 billion (2020:
by 2% RR 1.5 billion).
Credit exposure on revolving credit facilities. For credit card loans, the Group's exposure to credit
losses extends beyond the maximum contractual period of the facility. For such facilities the Group
measures ECLs over the period that the Group is exposed to credit risk and ECLs are not mitigated by
credit risk management actions. Application of this approach requires judgement: determining a period for
measuring ECLs ‒ the Group considers historical information and experience about: (a) the length of time
for related defaults to occur on similar financial instruments following a SICR and (b) the credit risk
management actions that the Group expects to take once the credit risk has increased (e.g. the reduction
or removal of undrawn limits). For details of the period over which the Group is exposed to credit risk on
revolving facilities and which is used as an approximation of lifetime period for ECL calculation for stage 2
and stage 3 loans and advances to customers, refer to Note 30.
Perpetual subordinated debts. A perpetual subordinated bond issue in June 2017 was initially recognised
in the amount of USD 295.8 million (RR 16.9 billion). A perpetual subordinated loan participation notes
issue in September 2021 was initially recognised in the amount of USD 600 million (RR 43.5 billion). Both
issues represented by the funds received from investors less issuance costs. Subsequent measurement of
these instruments is consistent with the accounting policy for debt securities in issue. Interest expense on
these instruments is calculated using the effective interest rate method and recognised in profit or loss for
the year.
In the event the accrued interest is paid, the payment decreases the balance of the liability. A cancellation
of accrued interest for a given period results in its conversion, at the Group's option, into equity and
therefore the respective amount of the liability is reclassified to equity. Foreign exchange translation gains
and losses on the bond are recognised in profit or loss for the period. Application of this approach requires
judgement: the Group has taken into consideration that there are contingent settlement provisions that
could genuinely arise and as such has classified the perpetual subordinated debts instrument in its entirety
as a liability, rather than equity, on the basis of the terms of issue which stipulate the possible redemption
of the instrument in several cases other than liquidation of the issuer.
If the Group had recognized these instruments as equity, then interest expense would only have been
recognized when it was paid and treated as a distribution from equity rather than an expense in profit or
loss.
The Group also from time to time invests in perpetual subordinated debts issued by third parties. The Group
has taken into consideration that there are genuine contingent settlement provisions that could arise and
as such has classified the investments in perpetual subordinated debts as investments in debt securities
on the basis of terms of issue which stipulate the possible redemption of the instrument in several cases
other than liquidation of the issuer.
The investments in these instruments are classified as debt investment securities measured at FVTPL since
the analysis of the contractual cash flow characteristics resulted in acquired perpetual bonds not passing
SPPI test. If the Group had recognized this instrument as equity instrument, then it could have been
measured at FVTPL or FVOCI as the Group does not hold it for trading purposes.
10
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
3
Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued)
Interest income recognition. The effective interest method incorporates significant assumptions around
expected loan lives as well as judgements of type of fees and costs that are included in interest income.
Refer to Note 41.
Unbundling of loans and insurance products. Certain loans issued by the Group are forgivable upon
events such as the borrower's death, or the borrower becoming unemployed because the borrower had
opted to purchase the Insurance Company's products to cover repayments of the related loan products
issued by the Bank in such cases. The Group is able to measure the loans separately. Also the borrowers
are able to take a loan without insurance at the time of issuance with no different interest rate and the
borrowers can cancel the insurance products at any time, separately from the loan. Accordingly, the Group
unbundles the loans from the insurance arrangement.
The portion of the fee attributable to the insurance component (i.e. the amount paid to the Insurance
Company to cover the insured risk) is recognised within Insurance premiums earned line (refer to Note 24).
The remaining portion of the fee approximates a fee that the Bank would have earned on market terms for
selling third party insurance products and it is recognised as a fee for selling credit protection within Fee
and commission income line (refer to Note 22). The timing of recognition of the two income streams does
not materially vary as the insurance coverage is sold on a monthly basis.
Financial assets sales and securitisations. Group’s securitisation activities involve home equity loans
and are predominantly transacted using SPEs. In a typical securitisation, the SPE purchases assets
financed by proceeds received from the SPE’s issuance of debt certificates and other notes of
indebtedness. These assets and liabilities are recorded on the balance sheet of the SPE and consolidated
on the Group’s consolidated statement of financial position, unless the accounting requirements for sale
were met. At 31 December 2021 the Group has not made a securitisation transaction that resulted in
derecognition of transferred assets. The Group assessed that its secured loan portfolio meets the criteria
for held to collect business model and determined that the past securitisation transactions have not resulted
in derecognition of the assets and therefore are not inconsistent with the held to collect business model.
The Group may have intention to sell home equity loans under securitisation, in this case the derecognition
requirements should be applied. The derecognition test is performed in 2 steps:
1) Pass-through arrangement. All the following conditions have to be met to conclude that pass-through
arrangements meet the criteria:
•
An entity has no obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances by the entity to the eventual recipients with
the right of full recovery of the amount lent plus accrued interest from the amounts eventually payable
to the eventual recipients at market rates do not violate this condition.
•
•
An entity is prohibited by the transfer contract’s terms from selling or pledging the original asset other
than as security to the eventual recipients for the obligation to pay them cash flows.
An entity has an obligation to remit any cash flows that it collects on behalf of the eventual recipients
without material delay (up to 3 months).
2) Risk-reward assessment. If a transfer meets the pass-through requirements the transferor still needs to
assess whether it has transferred sufficient risks and rewards associated with the asset to achieve
derecognition. If, as the result of assessment, majority of risks and associated rewards are deemed to be
transferred, the asset is derecognized. Otherwise the sale is accounted for as a finance deal.
Investments in securities. As a result of attaining systemically important status, management made a
decision to create a portfolio of investments into debt securities managed under a “hold to collect” business
model. These securities will be accounted for amortised cost, as opposed to fair value, will be held until full
maturity and will not be susceptible to market price fluctuations. Initially this portfolio will be created from
the Bank’s existing portfolio of high-grade bonds, consisting of Russian government bonds. In 2021, the
Group has already managed designated bonds under the “hold to collect” model with no disposal made for
these securities. The purpose of this decision is to create a source of low-risk, long term interest income
while minimizing pressure on the Bank’s regulatory capital and capital adequacy position, as well as
decreasing overall market risks of the Group.
11
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
3
Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued)
The described change in accounting treatment of the securities managed under hold to collect model will
be effective starting from 1 January 2022.
Tax legislation. Russian and Cypriot tax, currency and customs legislation are subject to varying
interpretations. Refer to Note 32.
4
Segment Analysis
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 Management of the Bank and the Management of the Insurance Company.
Description of products and services from which each reportable segment derives its revenue
Since the business of the Group is expanding certain operating segments became significant enough to be
considered as separate reportable segments. This triggered changes in the number and composition of
segments to be presented. The Group is organised on the basis of 8 main business segments:
Consumer finance – representing retail loans (credit cards, cash loans, consumer loans, car loans, secured
loans), deposits and savings, also lifestyles and travel services to individuals.
Retail debit cards - representing customer current accounts services to individuals with the loyalty
programs, co-branded offers, and also lifestyles and travel services to individuals. Assets of the segment
are represented by placements of the funds attracted in investments in securities, treasury transactions,
other financial and non-financial assets.
InsurTech – representing insurance services provided to individuals, such as personal accident insurance,
personal property insurance, travel insurance and vehicle insurance (Note 24).
SME services – representing customer current accounts, savings, deposits services and loans to individual
entrepreneurs and small to medium businesses. Assets of the segment are represented by placements of
the funds attracted into investments in securities, treasury transactions, other financial and non-financial
assets.
Acquiring and payments – providing merchants and businesses the ability to process payments online using
internet and offline acquiring services, through direct-to-merchant agreements, aggregators and the
Group's own aggregator CloudPayments.
InvestTech - representing online brokerage platform for investing in a range of securities including Russian
and international securities (ETFs, stocks, bonds, etc.).
Mobile virtual network operator (MVNO) services - providing full coverage across Russia and international
roaming, offering a number of value-added options such as virtual numbers, music and video streaming
services, etc.
Other investments represent investments in associated companies and equity instruments. The CODM
made a decision to allocate such investments into a separate business segment. Disclosures for
comparative periods were amended accordingly.
The Group’s principal activities are mainly undertaken within the Russian Federation. Given the retail nature
of business of the segments, the Group does not have any significant revenue stream from any single
customer.
12
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
4
Segment Analysis (Continued)
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. Their performance is analysed separately by the
CODM and 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 assets and liabilities, profit or loss
Segment reporting of the Group’s assets and liabilities as at 31 December 2021 is set out below:
Consu-
mer
Finance
Retail
Debit
Cards
Insur-
Tech
Invest-
Tech
Acquiring and
Payments
SME
Services
MVNO
services
Other
invest-
ments
Elimina-
tions
Total
In millions of RR
Reportable segment assets
Reportable segment liabilities
692,859
279,376
273,392
592,195
21,581
11,457
229,653
120,404
22,161
1,645
72,760
140,287
1,207
1,765
9,607
-
(5,475)
(5,475)
1,317,745
1,141,654
Segment reporting of the Group’s assets and liabilities as at 31 December 2020 is set out below:
Consu-
mer
Finance
Retail
Debit
Cards
Insur-
Tech
Invest-
Tech
Acquiring and
Payments
SME
Services
MVNO
services
Other
invest-
ments
Elimina-
tions
Total
In millions of RR
Reportable segment assets
Reportable segment liabilities
456,195
203,723
245,923
345,585
12,437
6,901
73,773
83,428
15,563
649
55,517
91,412
755
3,499
2,050
-
(2,919)
(2,919)
859,294
732,278
All jointly used assets, such as fixed assets, rights of use assets and intangible assets were allocated to the segments on the basis of detailed analysis of usage of
those assets by segments.
13
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
4
Segment Analysis (Continued)
Segment reporting of the Group’s capital expenditures for the year ended 31 December 2021 is set out below:
Consu-
mer
Finance
Retail
Debit
Cards
Insur-
Tech
Invest-
Tech
Acquiring and
Payments
SME
Services
MVNO
services
Total
In millions of RR
Intangible assets
Tangible fixed assets and right-of-use assets
3,263
4,166
5,364
1,342
1,116
323
440
116
97
195
988
272
434
54
11,702
6,468
Total capital expenditure
7,429
6,706
1,439
556
292
1,260
488
18,170
Segment reporting of the Group’s capital expenditures for the year ended 31 December 2020 is set out below:
Consu-
mer
Finance
Retail
Debit
Cards
Insur-
Tech
Invest-
Tech
Acquiring and
Payments
SME
Services
MVNO
services
Total
In millions of RR
Intangible assets
Tangible fixed assets and right-of-use assets
897
1,640
1,098
384
550
120
251
38
32
84
559
109
282
29
3,669
2,404
Total capital expenditure
2,537
1,482
670
289
116
668
311
6,073
14
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
4
Segment Analysis (Continued)
Segment reporting of the Group’s income and expenses for the year ended 31 December 2021 is set out below:
Consu-
mer
Finance
Retail
Debit
Cards
Insur-
Tech
Invest-
Tech
Acquiring
and
Payments
SME
Services
MVNO
services
Other Elimina-
invest-
ments
Total
tions
In millions of RR
External revenues
Interest income
139,123
10,834
511
8,152
-
5,156
13
23
-
163,812
Fee and commission income
- Fee and commission income on cards' and current accounts'
services
- Fee for selling credit protection
- Acquiring commission
- MVNO and investments services
- Other fees receivable
3,011
5,639
19,463
-
-
-
-
-
506
-
13,858
166
-
-
-
-
-
-
-
-
-
-
37,004
5,639
25,099
14,267
4,060
-
103
-
-
-
24,996
-
-
-
-
-
-
-
-
11,369
-
-
2,898
-
594
3,294
146
26
Timing of fee and commission income recognition:
- At point in time
- Over time
6,838
2,406
20,109
2,751
-
-
11,146
729
25,142
-
9,470
4,414
1,012
2,052
-
-
-
-
73,717
12,352
Total fee and commission income
9,244
22,860
-
11,875
25,142
13,884
3,064
-
-
86,069
Insurance premiums earned
Other operating income
-
-
11
23,063
327
-
-
-
28
-
-
-
-
-
-
-
-
23,063
923
557
Total external revenues
148,924
33,705
23,901
20,027
25,170
19,040
3,077
23
-
273,867
Revenues from other segments
Interest income
-
4,746
134
-
-
2,214
-
-
(7,094)
-
Fee and commission income
- Acquiring commission
- Other fees receivable
Insurance premiums earned
Other operating income
-
6
-
-
-
-
-
-
324
-
-
-
-
-
-
-
-
-
(324)
(1,004)
(209)
-
-
-
-
397
-
209
-
-
-
-
601
-
-
-
-
-
450
(450)
Total revenues from other segments
TOTAL REVENUES
456
5,143
343
-
324
2,214
601
-
(9,081)
(9,081)
-
149,380
38,848
24,244
20,027
25,494
21,254
3,678
23
273,867
Interest expense
(18,863)
(21,588)
(3,108)
-
(25,326)
(1,476)
(17,566)
(46)
(14,018)
-
(12,621)
519
-
(14)
(160)
(5,008)
(4,619)
1
(265)
-
(1,644)
(35)
(1,214)
-
(6,940)
252
(10)
-
-
-
7,094
-
339
44
115
-
(31,254)
(21,683)
(38,779)
(4,964)
(59,449)
6,742
Credit loss allowance charge
Fee and commission expense
Insurance claims incurred
Administrative and other operating expenses
Other (losses)/gains
-
(2,700)
-
-
-
(15,957)
(1,961)
-
(3,500)
-
-
(1,433)
-
-
(4,967)
3
(158)
7,443
Segment result before acquisition expenses
Customer acquisition expense
SEGMENT RESULT
79,019
(19,112)
59,907
(4,884)
(10,165)
(15,049)
14,444
(1,989)
12,455
12,098
(7,924)
4,174
6,037
(609)
5,428
11,673
(3,701)
7,972
274
(1,431)
(1,157)
7,308
-
(1,489)
1,489
-
124,480
(43,442)
81,038
7,308
15
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
4
Segment Analysis (Continued)
Segment reporting of the Group’s income and expenses for the year ended 31 December 2020 is set out below:
Consu-
mer
Finance
Retail
Debit
Cards
Insur-
Tech
Invest-
Tech
Acquiring
and
Payments
SME
Services
MVNO
services
Other Elimina-
Total
invest-
ments
tions
In millions of RR
External revenues
Interest income
113,486
9,092
409
2,804
-
2,358
10
8
-
128,167
Fee and commission income
- Fee and commission income on cards' and current accounts'
services
- Fee for selling credit protection
- Acquiring commission
2,715
4,657
11,981
-
-
-
-
-
261
-
9,147
15
-
-
1,815
-
-
-
-
-
-
-
-
-
-
-
24,119
4,657
11,049
6,813
971
-
-
-
-
-
11,049
-
-
-
-
-
-
-
-
4,998
-
- MVNO and investments services
- Other fees receivable
548
346
77
Timing of fee and commission income recognition:
- At point in time
- Over time
5,906
2,205
10,396
1,740
-
-
4,927
332
11,126
-
5,346
3,801
511
1,319
-
-
-
-
38,212
9,397
Total fee and commission income
7,920
12,327
-
5,259
11,126
9,147
1,830
-
-
47,609
Insurance premiums earned
Other operating income
-
-
-
18,567
250
-
-
-
26
-
-
-
-
-
-
-
-
18,567
1,445
1,169
Total external revenues
122,575
21,419
19,226
8,063
11,152
11,505
1,840
8
-
195,788
Revenues from other segments
Interest income
-
2,737
56
-
-
1,244
-
-
(4,037)
-
Fee and commission income
- Acquiring commission
- Other fees receivable
Insurance premiums earned
Other operating income
-
2
-
-
-
-
72
-
-
-
-
-
85
-
-
-
-
-
-
-
-
-
-
-
(85)
(632)
(72)
-
-
-
-
251
379
-
-
-
-
371
-
(371)
Total revenues from other segments
TOTAL REVENUES
373
2,988
128
-
85
1,244
379
-
(5,197)
(5,197)
-
122,948
24,407
19,354
8,063
11,237
12,749
2,219
8
195,788
Interest expense
(16,965)
(38,243)
(2,505)
-
(16,518)
(1,120)
(9,322)
(372)
(9,266)
-
(5,698)
5,935
-
-
-
-
-
-
(1,215)
(726)
(803)
-
(4,322)
1,345
-
-
-
-
-
4,037
-
128
28
106
-
(23,465)
(39,341)
(22,215)
(3,814)
(35,005)
6,889
Credit loss allowance charge
Fee and commission expense
Insurance claims incurred
Administrative and other operating expenses
Other (losses)/gains
(88)
(1,491)
(6,976)
(1,214)
(3,842)
(3,759)
219
-
(2,027)
-
-
(1,656)
-
-
(961)
-
-
(170)
510
Segment result before acquisition expenses
Customer acquisition expense
SEGMENT RESULT
47,597
(12,466)
35,131
5,684
(4,042)
1,642
11,884
(1,143)
10,741
4,545
(3,111)
1,434
2,605
(311)
2,294
7,028
(1,385)
5,643
44
(1,028)
(984)
348
-
(898)
898
-
78,837
(22,588)
56,249
348
16
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
4
Segment Analysis (Continued)
Fee and commission income on cards’ and current accounts' services include SME services commission,
SMS fee, interchange fee, foreign currency exchange transactions fee, fee for money transfers, cash
withdrawal fee and replenishment fee.
Interest income and interest expense from other segments amounted to RR 7,094 million for the year ended
31 December 2021 (2020: RR 4,037 million) are calculated using the funds transfer pricing curve.
5
Cash and Cash Equivalents
31 December 2021 31 December 2020
In millions of RR
Cash on hand
36,955
51,008
21,069
38,646
Cash balances with the CBRF (other than mandatory reserve
deposits)
Placements with other banks with original maturities of less than
three months:
- AA- to AA+ rated
- A- to A+ rated
- BBB- to BBB+ rated
- BB- to BB+ rated
19,602
696
13,223
45
6,404
1,328
1,276
646
- B- to B+ rated
142
499
- Unrated
601
-
Non-bank credit organizations:
- BBB- to BBB+ rated
- BB- to BB+ rated
185,370
7,640
775
53,764
11,265
190
- B- to B+ rated
- Unrated
419
1,264
Total Cash and Cash Equivalents
316,476
136,351
Cash on hand includes cash balances in ATMs and cash balances in transit. Placements with other banks
and organizations with original maturities of less than three months include placements under reverse sale
and repurchase agreements in the amount of RR 152,331 million as at 31 December 2021 (2020:
RR 33,210 million). The Group has a right to sell or repledge securities received under reverse sale and
repurchase agreements.
The table below discloses the credit quality of cash and cash equivalents balances based on credit risk
grades at 31 December 2021:
Cash balances
with the CBRF
Placements with
other banks and
non-bank credit
organizations
Total
In millions of RR
Excellent (AA- to AA+, A- to A+)
Good (BBB- to BBB+, BB+)
Monitor (BB, B- to B+, unrated)
51,008
20,298
198,638
9,577
71,306
198,638
9,577
-
-
Total cash and cash equivalents, excluding cash
on hand
51,008
228,513
279,521
17
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
5
Cash and Cash Equivalents (Continued)
The table below discloses the credit quality of cash and cash equivalents balances based on credit risk
grades at 31 December 2020:
Cash balances
with the CBRF
Placements with
other banks and
non-bank credit
organizations
Total
In millions of RR
Excellent (AA- to AA+, A- to A+)
Good (BBB- to BBB+, BB+)
Monitor (BB, B- to B+, unrated)
38,646
7,732
55,686
13,218
46,378
55,686
13,218
-
-
Total cash and cash equivalents, excluding cash
on hand
38,646
76,636
115,282
The carrying amount of cash and cash equivalents at 31 December 2021 and 2020 also represents the
Group's maximum exposure to credit risk on these assets. Refer to Note 30 for the description of the
Group’s credit risk grading system.
For the purpose of ECL measurement cash and cash equivalents balances are included in Stage 1. The
ECL for these balances represents an immaterial amount, therefore the Group did not recognise any credit
loss allowance for cash and cash equivalents. Except for reverse sale and repurchase agreements,
amounts of cash and cash equivalents are not collateralised. As at 31 December 2021 the fair value of
collateral under reverse sale and repurchase agreements was RR 154,255 million (2020:
RR 34,527 million). There is no material impact of collateral on credit loss allowance for cash and cash
equivalents.
Refer to Note 37 for the disclosure of the fair value of cash and cash equivalents. ECL measurement
approach, interest rate, maturity and geographical risk concentration analysis of cash and cash equivalents
are disclosed in Note 30.
6
Due from Other Banks
The table below discloses the credit quality of due from banks balances based on credit risk grades:
31 December 31 December
In millions of RR
2021
2020
Placements with other banks with original maturities of more than three months
Good
BB+ to BB- rated
BBB+ to BBB- rated
500
42
1,406
-
Monitor
B+ to B- rated
-
481
542
1,887
Total due from other banks
The carrying amount of due from other banks at 31 December 2021 and 2020 also represents the Group's
maximum exposure to credit risk on these assets. Refer to Note 30 for the description of credit risk grading
system used by the Group. For the purpose of ECL measurement due from other banks balances are
included in Stage 1. The ECL for these balances represents an immaterial amount, therefore the Group did
not create any credit loss allowance for due from other banks. Refer to Note 30 for the ECL measurement
approach. Refer to Note 37 for the disclosure of the fair value of due from other banks. Interest rate, maturity
and geographical risk concentration analysis are disclosed in Note 30.
18
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables
In millions of RR
31 December
2021
31 December
2020
Securities measured at fair value through other comprehensive income
Securities measured at fair value through profit or loss
207,175
8,136
234,189
4,265
Total investments in securities
215,311
5,826
238,454
29
Repurchase receivables
Total investments in securities and repurchase receivables
221,137
238,483
Repurchase receivables represent securities sold under sale and repurchase agreements which the
counterparty has the right, by contract or custom, to sell or repledge. As at 31 December 2021 the sale and
repurchase agreements are short-term and mature in January 2022.
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income
The table below discloses investments in debt securities and repurchase receivables measured at FVOCI
by classes:
In millions of RR
31 December
2021
31 December
2020
Investments in securities
Russian government bonds
Corporate bonds
120,155
76,285
8,367
123,916
96,200
9,474
Municipal bonds
Foreign government bonds
2,368
4,599
Repurchase receivables
Russian government bonds
Corporate bonds
5,752
74
-
29
Total investments in securities and repurchase receivables measured at
FVOCI
213,001
234,218
Including credit loss allowance
724
714
19
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income (Continued)
The table below contains an analysis of the credit risk exposure of investments in securities and repurchase
receivables measured at FVOCI at 31 December 2021, for which an ECL allowance is recognised, based
on credit risk grades:
Stage 1
Stage 2
Total
(12-months ECL) (lifetime ECL for
SICR)
In millions of RR
Russian government bonds
- Excellent
140,678
140,678
-
140,678
140,678
Total AC gross carrying amount
-
Credit loss allowance
Fair value adjustment from AC to FV
(291)
(14,480)
-
-
(291)
(14,480)
Carrying value
125,907
125,907
-
Corporate bonds
- Excellent
- Good
1,002
67,380
9,414
11
-
1,002
67,380
9,879
11
-
465
-
- Monitor
- Sub-standard
Total AC gross carrying amount
77,807
465
78,272
Credit loss allowance
Fair value adjustment from AC to FV
(333)
(1,580)
(15)
15
(348)
(1,565)
Carrying value
75,894
465
76,359
Municipal bonds
- Good
- Monitor
7,304
1,443
-
-
7,304
1,443
Total AC gross carrying amount
8,747
-
8,747
Credit loss allowance
Fair value adjustment from AC to FV
(46)
(334)
-
-
(46)
(334)
Carrying value
8,367
-
8,367
Foreign government bonds
- Good
652
1,419
337
-
-
-
652
1,419
337
- Monitor
- Sub-standard
Total AC gross carrying amount
2,408
-
2,408
Credit loss allowance
Fair value adjustment from AC to FV
(39)
(1)
-
-
(39)
(1)
Carrying value
2,368
-
2,368
20
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income (Continued)
The table below contains an analysis of the credit risk exposure of debt securities measured at FVOCI at
31 December 2020, for which an ECL allowance is recognised, based on credit risk grades:
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL for
SICR)
Total
In millions of RR
Russian government bonds
- Excellent
125,422
125,422
-
125,422
125,422
Total AC gross carrying amount
-
Credit loss allowance
Fair value adjustment from AC to FV
(255)
(1,251)
-
-
(255)
(1,251)
Carrying value
123,916
-
123,916
Corporate bonds
- Excellent
- Good
560
85,653
6,726
-
-
560
85,653
7,346
- Monitor
620
Total AC gross carrying amount
92,939
620
93,559
Credit loss allowance
Fair value adjustment from AC to FV
(334)
2,953
(14)
36
(348)
2,989
Carrying value
95,558
642
96,200
Municipal bonds
- Good
- Monitor
7,750
1,523
-
-
7,750
1,523
Total AC gross carrying amount
9,273
-
9,273
Credit loss allowance
Fair value adjustment from AC to FV
(45)
246
-
-
(45)
246
Carrying value
9,474
-
9,474
Foreign government bonds
- Good
- Monitor
908
3,119
494
-
-
-
908
3,119
494
- Sub-standard
Total AC gross carrying amount
4,521
-
4,521
Credit loss allowance
Fair value adjustment from AC to FV
(66)
144
-
-
(66)
144
Carrying value
4,599
-
4,599
There are no stage 3 investments in securities during the year and as at 31 December 2021 and 2020.
Refer to Note 30 for the description of credit risk grading system used by the Group and the approach to
ECL measurement, including the definition of default and SICR as applicable to investments in securities
and repurchase receivables at FVOCI. The investments at FVOCI are not collateralised. Refer to Note 37
for the disclosure of the fair value.
Securities at FVOCI reclassified to repurchase receivables continue to be carried at fair value in accordance
with accounting policies for these categories of assets. Refer to Note 13 for the related liabilities.
21
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income (Continued)
The following table explains the changes in the credit loss allowance (including those pledged under
repurchase agreements) and gross carrying amount for debt securities at FVOCI for the year ended
31 December 2021:
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2
(12- (lifetime
months ECL for
Total
Stage 1
(12-months
ECL)
Stage 2
(lifetime
ECL for
SICR)
Total
In millions of RR
ECL)
SICR)
Russian government bonds
At 31 December 2020
255
-
255
125,422
-
125,422
Movements with impact on credit
loss allowance charge:
New originated or purchased
30
-
-
30
-
17,992
-
17,992
Foreign exchange gains
Disposal during the year
Interest income accrued
Interest received
-
-
-
-
-
(124)
(2,001)
7,334
(7,945)
-
-
-
-
-
-
(124)
(2,001)
7,334
(7,945)
-
(3)
(3)
13
(14)
10
13
(14)
10
Other movements
Total movements with impact
on credit loss allowance
charge
36
-
-
36
15,256
-
-
15,256
At 31 December 2021
291
291
140,678
140,678
Corporate bonds
At 31 December 2020
334
14
348
92,939
620
93,559
Movements with impact on
credit loss allowance charge:
New originated or purchased
100
-
100
14,216
-
14,216
Foreign exchange gains
Redemption during the year
Disposal during the year
Interest income accrued
Interest received
-
(12)
(88)
15
(17)
1
-
(3)
-
1
(1)
4
-
(15)
(88)
16
(18)
5
(92)
(5,119)
(23,650)
4,665
(5,152)
-
-
(150)
-
40
(45)
-
(92)
(5,269)
(23,650)
4,705
(5,197)
-
Other movements
Total movements with impact
on credit loss allowance
charge
(1)
1
-
(15,132)
77,807
(155)
465
(15,287)
78,272
At 31 December 2021
333
15
348
22
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income (Continued)
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2
(12- (lifetime
months ECL for
Total
Stage 1
(12-months
ECL)
Stage 2
(lifetime
ECL for
SICR)
Total
In millions of RR
ECL)
SICR)
Municipal bonds
At 31 December 2020
45
-
45
9,273
-
9,273
Movements with impact on
credit loss allowance charge:
New originated or purchased
1
-
1
137
-
137
Redemption during the year
Disposal during the year
Interest income accrued
Interest received
(3)
3
2
(2)
-
-
-
-
-
-
(3)
3
2
(2)
-
(552)
(68)
590
(633)
-
-
-
-
-
-
(552)
(68)
590
(633)
-
Other movements
Total movements with impact
on credit loss allowance
charge
1
-
-
1
(526)
8,747
-
-
(526)
8,747
At 31 December 2021
46
46
Foreign government bonds
At 31 December 2020
66
-
66
4,521
-
4,521
Movements with impact on
credit loss allowance charge:
New originated or purchased
22
-
22
1,309
-
1,309
Foreign exchange gains
Redemption during the year
Disposal during the year
Interest income accrued
Interest received
1
(7)
(39)
1
(2)
(3)
-
-
-
-
-
-
1
(7)
(39)
1
(2)
(3)
44
(926)
(2,472)
95
(163)
-
-
-
-
-
-
-
44
(926)
(2,472)
95
(163)
-
Other movements
Total movements with impact
on credit loss allowance
charge
(27)
39
-
-
(27)
39
(2,113)
2,408
-
-
(2,113)
2,408
At 31 December 2021
23
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income (Continued)
The following table explains the changes in the credit loss allowance (including those pledged under
repurchase agreements) and gross carrying amount for debt securities at FVOCI for the year ended
31 December 2020:
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2
(12- (lifetime
months ECL for
Total
Stage 1
(12-months
ECL)
Stage 2
(lifetime
ECL for
SICR)
Total
In millions of RR
Russian government bonds
ECL)
SICR)
At 31 December 2019
99
-
99
54,471
-
54,471
Movements with impact on
credit loss allowance charge:
New originated or purchased
522
-
522
289,955
-
289,955
Foreign exchange gains
Redemption during the year
Disposal during the year
Interest income accrued
Interest received
1
(160)
(233)
8
(12)
30
-
-
-
-
-
-
1
(160)
(233)
8
(12)
30
767
(89,000)
(129,350)
5,318
(6,739)
-
-
-
-
-
-
767
(89,000)
(129,350)
5,318
(6,739)
-
Other movements
-
Total movements with impact
on credit loss allowance
charge
156
255
-
-
156
255
70,951
-
-
70,951
At 31 December 2020
125,422
125,422
Corporate bonds
At 31 December 2019
225
-
225
69,645
-
69,645
Movements with impact on
credit loss allowance charge:
New originated or purchased
198
(3)
-
198
-
70,438
(620)
-
70,438
-
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
3
620
Foreign exchange gains
Redemption during the year
Disposal during the year
Interest income accrued
Interest received
15
(13)
(117)
14
(16)
31
-
-
-
15
(13)
(117)
14
(17)
43
5,061
(4,171)
(46,924)
4,587
(5,077)
-
-
-
-
5,061
(4,171)
(46,924)
4,632
(5,122)
-
-
45
(45)
-
(1)
12
Other movements
Total movements with impact
on credit loss allowance
charge
109
334
14
14
123
348
23,294
92,939
620
620
23,914
93,559
At 31 December 2020
24
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities and repurchase receivables measured at fair value through other
comprehensive income (Continued)
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2
(12- (lifetime
months ECL for
Total
Stage 1
(12-months
ECL)
Stage 2
(lifetime
ECL for
SICR)
Total
In millions of RR
ECL)
SICR)
Municipal bonds
At 31 December 2019
21
-
21
6,085
-
6,085
Movements with impact on
credit loss allowance charge:
New originated or purchased
25
-
25
7,440
-
7,440
Redemption during the year
Disposal during the year
Interest income accrued
Interest received
-
(19)
3
(2)
17
-
-
-
-
-
-
(19)
3
(2)
17
(91)
(4,140)
474
(495)
-
-
-
-
-
-
(91)
(4,140)
474
(495)
-
Other movements
Total movements with impact
on credit loss allowance
charge
24
45
-
-
24
45
3,188
9,273
-
-
3,188
9,273
At 31 December 2020
Foreign government bonds
At 31 December 2019
-
-
-
-
-
-
Movements with impact on
credit loss allowance charge:
New originated or purchased
68
-
68
7,516
-
7,516
Foreign exchange gains
Disposal during the year
Interest income accrued
Interest received
1
(11)
1
(1)
8
-
-
-
-
-
1
(11)
1
(1)
8
246
(3,224)
61
-
-
-
-
-
246
(3,224)
61
(78)
-
(78)
-
Other movements
Total movements with impact
on credit loss allowance
charge
66
66
-
-
66
66
4,521
4,521
-
-
4,521
4,521
At 31 December 2020
25
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
7
Investments in Securities and Repurchase Receivables (Continued)
Securities measured at fair value through profit or loss
2)
The table below discloses investments in securities measured at FVTPL by classes:
31 December
31 December
2020
In millions of RR
2021
Investments in securities
Perpetual corporate bonds
Corporate shares
2,316
5,820
4,265
-
Total investments in securities and repurchase receivables
measured at FVTPL
8,136
4,265
The table below discloses the movements in securities at FVTPL for the year ended 31 December 2021
and 2020:
In millions of RR
2021
2020
Carrying amount at 1 January
Purchases
Disposal
Interest income accrued
Interest received
Foreign exchange (loss)/ gain
Revaluation through PL
4,265
562
(1,729)
169
(128)
(153)
5,150
413
4,125
(440)
75
(25)
8
109
Carrying amount at 31 December
8,136
4,265
Investments in securities measured at FVTPL are carried at fair value, which also reflects any credit risk
related write-downs and best represents Group’s maximum exposure to credit risk. The securities
measured at FVTPL are not collateralized. Interest rate, maturity and geographical risk concentration
analysis of investment in securities are disclosed in Note 30.
26
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers
31 December
2021
31 December
2020
In millions of RR
Gross carrying amount of loans and advances to customers at AC
Less credit loss allowance
680,152
(77,815)
445,529
(70,900)
Total carrying amount of loans and advances to customers at AC
Loans and advances to customers at FVTPL
602,337
3,971
374,629
1,892
Total loans and advances to customers
606,308
376,521
Loans and advances to customers at FVTPL represent a loan that does not meet SPPI requirement and
that was issued to related party (refer to Note 39).
Gross carrying amount and credit loss allowance amount for loans and advances to customers at AC by
classes at 31 December 2021 and 2020 are disclosed in the table below:
31 December 2021
Gross Credit Carrying
carrying
amount allowance
31 December 2020
Gross Credit Carrying
carrying
amount allowance
loss
amount
loss
amount
In millions of RR
Credit card loans
Cash loans
Secured loans
Car loans
POS loans
Loans to IE and SME
333,894
126,295
72,043
77,882
60,348
9,690
(52,987)
(14,121)
(1,986)
(5,342)
(2,605)
(774)
280,907
112,174
70,057
72,540
57,743
8,916
267,586
68,131
40,232
33,991
32,690
2,899
(54,242)
(11,055)
(1,099)
(2,144)
(1,611)
(749)
213,344
57,076
39,133
31,847
31,079
2,150
Total loans and advances to
customers at AC
680,152
(77,815)
602,337
445,529
(70,900)
374,629
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.
Cash loans represent a product for the borrowers who have a positive credit history and who do not have
overdue 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.
Secured loans represent loans secured with a real estate (home equity loans) or a car. As at
31 December 2021 home equity loans under securitisation amounted to RR 4,446 million (2020: RR nil).
Refer to Note 16 for details of the securitisation of home equity loans.
POS (“Point of sale”) loans represent loans to fund online and offline purchases through internet and offline
shops for individual borrowers.
Car loans represent loans for the purchase of a vehicle which is used as collateral under the loan.
Loans to IE and SME represent loans provided by the Bank to individual entrepreneurs and small and
medium businesses for the purpose of working capital management.
27
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
The credit loss allowance for loans and advances to customers recognised in the period is impacted by a
variety of factors. The main movements in the tables presented below are described as follows:
•
new originated or purchased category represents the gross carrying amounts and the related ECL
of purchased loans and loans issued during the reporting period (and withdrawals of limits of new
credit card borrowers) as at the end of the reporting period or as at the date of transfer of loan out of
stage 1 (whichever date is earlier);
•
transfers between Stage 1, 2 and 3 due to balances experiencing significant increases (or decreases)
of credit risk or becoming credit-impaired in the period, and the consequent "step up" (or “step down”)
between 12-month and lifetime ECL. Transfers present the amount of credit loss allowance charged
or recovered at the moment of transfer of a loan among the respective stages;
•
•
changes to ECL measurement model assumptions and estimates represent movements due to
application of a new behavioural model for calculating probabilities of default;
movements other than transfers and new originated or purchased loans category represent all other
movements of ECL in particular related to changes in gross carrying amounts (including drawdowns,
repayments, and accrued interest), as well as updates of inputs to ECL model in the period;
•
•
write-offs of allowances are related to assets that were written-off during the period;
unwinding of discount (for Stage 3) category represents adjustment to credit loss allowance and
gross carrying amount for Stage 3 loans to increase it to discounted amount of the expected cash
shortfalls to the reporting date using the effective interest rate;
•
Modification of original cash flows without derecognition represents adjustment to credit loss
allowance and gross carrying amount of Stage 3 loans caused by the modification of terms of those
loans which is not substantial.
28
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
The following tables disclose the changes in the credit loss allowance and gross carrying amount for loans
and advances to customers between the beginning and the end of the reporting and comparative periods:
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2 Stage 3 Purchased/
(12- (lifetime (lifetime originated
Stage 1 Stage 2
Stage 3
Total
Total
(12- (lifetime (lifetime
months ECL for
ECL for
credit
months ECL for
ECL) SICR)
ECL for
credit
credit
impaired
ECL)
SICR)
In millions of RR
impaired)
impaired)
Credit card loans
At 31 December 2020
16,441
7,560
30,241
54,242
210,074
11,758
45,573
181
267,586
Movements with impact
on credit loss allowance
charge for the year:
New originated or
purchased
5,889
-
-
5,889
82,751
-
-
229
82,980
Transfers:
- to lifetime (from Stage 1
to Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to
Stage 3)
- recovered (from Stage 3
to Stage 2 and from
Stage 2 to Stage 1)
(2,412)
6,542
-
24,875
(21)
4,130
13,948
(805)
(11,692) 11,692
-
31,383
(26)
-
-
-
-
-
-
(4,278) (6,649)
(22,163)
1,813
(9,220)
(1,787)
426
(1,210)
Movements other than
transfers and new
originated or purchased
loans
(1,038)
1,319
(5,707)
(5,426)
9,330
(457)
(6,313)
(11)
2,549
Total movements with
impact on credit loss
allowance charge for
the year
(1,413)
2
19,147
17,736
60,039
228
25,044
218
85,529
Movements without
impact on credit loss
allowance charge for the
year
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
-
-
4,920
(18,856) (18,856)
4,920
-
-
-
-
-
-
4,920
(18,856)
(2,559)
-
-
-
4,920
(18,856)
(2,559)
Sales
(2,329)
(2,726)
30,397
(2,329)
(2,726)
52,987
Modification of original
cash flows without
derecognition
-
-
-
-
(2,726)
-
(2,726)
At 31 December 2021
15,028
7,562
270,113
11,986
51,396
399
333,894
29
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 2 Stage 3Purchased/
(lifetime originated
ECL for credit
credit impaired
impaired)
Stage 1 Stage 2
Stage 3
Total
Stage 1
Total
(12- (lifetime (lifetime
months ECL for ECL for
12-months (lifetime
ECL) ECL for
SICR)
ECL)
SICR)
credit
In millions of RR
impaired)
Credit card loans
At 31 December 2019
11,704
6,853
25,572
44,129 197,796
11,432
35,373
336 244,937
Movements with impact
on credit loss allowance
charge for the year:
New originated or
purchased
4,037
-
-
4,037
49,264
-
-
130
49,394
Transfers:
- to lifetime (from Stage 1
to Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to
Stage 3)
- recovered (from Stage 3
to Stage 2 and from
Stage 2 to Stage 1)
(2,520) 6,396
(5,642) (6,697)
-
29,371
(23)
3,876
17,032
(479)
(11,557) 11,557
-
-
-
-
-
-
-
(27,133)
1,416
(9,677)
(1,388)
36,810
328
(784)
(28)
Changes to ECL
measurement model
assumptions and
estimates
Movements other than
transfers and new
originated or purchased
loans
2,960
5,574
633
1,936
5,529
2,426
-
-
-
-
-
1,159
(4,307)
288
(166)
(4,089)
(285) (4,252)
Total movements with
impact on credit loss
allowance charge for
the year
4,737
707
26,977
32,421
12,278
326
32,693
(155)
45,142
Movements without
impact on credit loss
allowance charge for the
year:
Unwinding of discount (for
Stage 3)
Write-offs
-
-
-
-
-
-
5,713
(14,071) (14,071)
(2,134) (2,134)
5,713
-
-
-
-
-
-
5,713
(14,071)
(2,319)
-
-
-
5,713
(14,071)
(2,319)
Sales
Modification of original
cash flows without
derecognition
-
-
(11,816) (11,816)
-
-
(11,816)
-
(11,816)
At 31 December 2020
16,441
7,560
30,241
54,242 210,074
11,758
45,573
181 267,586
30
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2
Stage 3
Total
Stage 1 Stage 2
Stage 3 Purchased/
Total
(12- (lifetime (lifetime
(12- (lifetime (lifetime originated
months ECL for
ECL for
credit
months ECL for
ECL for
credit
credit
impaired
ECL)
SICR)
ECL)
SICR)
In millions of RR
Cash loans
impaired)
impaired)
At 31 December 2020
4,120
2,041
4,894
11,055
56,186
4,767
6,748
430
68,131
Movements with impact on
credit loss allowance
charge for the year:
New originated or
purchased
4,998
-
-
4,998
100,712
(7,276)
-
-
464
101,176
Transfers:
- to lifetime (from Stage 1
to Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to
Stage 3)
- recovered (from Stage 3
to Stage 2 and from Stage
2 to Stage 1)
(1,018)
4,039
-
5,673
(4)
3,021
2,534
(226)
7,276
-
6,269
(4)
-
-
-
-
-
-
(1,562) (1,577)
(4,319) (1,950)
63
(285)
180
940
(936)
Changes to ECL
measurement model
assumptions and
estimates
(338)
-
(158)
-
-
-
-
-
Movements other than
transfers and new
originated or purchased
loans
(1,688) (1,408)
(800) (3,896)
(36,703) (2,765)
(309)
28
(39,749)
Total movements with
impact on credit loss
allowance charge for the
year
455
949
4,869
6,273
53,354
1,625
5,956
492
61,427
Movements without impact
on credit loss allowance
charge for the year
Unwinding of discount (for
Stage 3)
Write-offs
-
-
-
-
-
-
628
628
-
-
-
-
-
-
628
(3,149)
(660)
-
-
-
628
(3,149)
(660)
(3,149) (3,149)
(604)
Sales
(604)
Modification of original
cash flows without
derecognition
-
-
(82)
(82)
-
-
(82)
-
(82)
At 31 December 2021
4,575
2,990
6,556
14,121
109,540
6,392
9,441
922
126,295
31
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2
Stage 3
Total
Stage 1 Stage 2
Stage 3 Purchased/
Total
(12- (lifetime (lifetime
(12- (lifetime (lifetime originated
months ECL for
ECL for
credit
months ECL for
ECL for
credit
credit
impaired
ECL)
SICR)
ECL)
SICR)
In millions of RR
Cash loans
impaired)
impaired)
At 31 December 2019
2,358
1,882
3,789
8,029
51,925
5,034
4,670
636
62,265
Movements with impact on
credit loss allowance
charge for the year:
New originated or
purchased
2,532
(686)
-
-
2,532
40,074
(5,116)
-
-
259
40,333
Transfers:
- to lifetime (from Stage 1
to Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to
Stage 3)
- recovered (from Stage 3
to Stage 2 and from Stage
2 to Stage 1)
3,078
-
5,911
(2)
2,392
2,709
(200)
5,116
-
6,626
(3)
-
-
-
-
-
-
(1,393) (1,809)
(4,273) (2,353)
60
701
548
(258)
126
982
(979)
Changes to ECL
measurement model
assumptions and
estimates
291
1,118
-
-
-
-
-
Movements other than
transfers and new
originated or purchased
loans
(978)
(876) (1,306) (27,406) (2,051)
(297)
(465) (30,219)
Total movements with
impact on credit loss
allowance charge for the
year
1,762
159
5,324
7,245
4,261
(267)
6,326
(206)
10,114
Movements without impact
on credit loss allowance
charge for the year:
Unwinding of discount (for
Stage 3)
Write-offs
-
-
-
-
-
-
519
519
-
-
-
-
-
-
519
(2,363)
(426)
-
-
-
519
(2,363)
(426)
(2,363) (2,363)
(397) (397)
Sales
Modification of original
cash flows without
derecognition
-
-
(1,978) (1,978)
-
-
(1,978)
-
(1,978)
At 31 December 2020
4,120
2,041
4,894
11,055
56,186
4,767
6,748
430
68,131
32
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Total
Total
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
(12- (lifetime
(lifetime
ECL for
credit
(12- (lifetime
(lifetime
ECL for
credit
months
ECL for
SICR)
months
ECL for
SICR)
ECL)
ECL)
In millions of RR
impaired)
impaired)
Secured Loans
At 31 December 2020
256
482
361
1,099
35,243
4,115
874
40,232
Movements with impact on credit
loss allowance charge for the
year:
New originated or purchased
416
-
-
416
46,878
-
-
46,878
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
(90)
(45)
1,220
(217)
-
1,130
287
(4,569)
(677)
4,569
(597)
-
-
-
- to credit-impaired (from Stage 1
and Stage 2 to Stage 3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
549
1,274
14
(91)
(1)
(78)
41
1,300
-
(1,298)
(2)
-
-
Changes to ECL measurement
model assumptions and estimates
Movements other than transfers
and new originated or purchased
loans
(98)
85
130
9
-
-
(736)
(90)
(741) (12,697)
.
(1,882)
(320) (14,899)
Total movements with impact
on credit loss allowance charge
for the year
282
306
467
1,055
30,235
792
952
31,979
Movements without impact on
credit loss allowance charge for
the year
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
-
-
105
(206)
(67)
105
(206)
(67)
-
-
-
-
-
-
105
(206)
(67)
105
(206)
(67)
Modification of original cash flows
At 31 December 2021
538
788
660
1,986
65,478
4,907
1,658
72,043
33
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1
(12- (lifetime
months
Stage 2
Stage 3
(lifetime
ECL for
credit
Total
Stage 1
(12- (lifetime
months
Stage 2
Stage 3
(lifetime
ECL for
credit
Total
ECL for
SICR)
ECL for
SICR)
ECL)
ECL)
In millions of RR
impaired)
impaired)
Secured Loans
At 31 December 2019
150
264
82
496
27,366
2,037
198
29,601
Movements with impact on
credit loss allowance charge
for the year:
New originated or purchased
141
-
-
141
21,517
-
-
21,517
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to
Stage 3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
(40)
954
(135)
(41)
-
914
221
(4,120)
(524)
516
4,120
(355)
(509)
-
-
-
-
(15)
3
371
879
(3)
(41)
(7)
Changes to ECL
measurement model
assumptions and estimates
Movements other than
transfers and new originated
or purchased loans
67
3
9
79
-
-
-
-
(50)
(563)
(21)
(634)
(9,512)
(1,178)
(119)
(10,809)
Total movements with
impact on credit loss
allowance charge for the
year
106
218
356
680
7,877
2,078
753
10,708
Movements without impact
on credit loss allowance
charge for the year:
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
46
(16)
46
(16)
-
-
-
-
46
(16)
46
(16)
Modification of original cash
flows
-
-
(107)
(107)
-
-
(107)
(107)
At 31 December 2020
256
482
361
1,099
35,243
4,115
874
40,232
34
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2 Stage 3 Purchased/
(12- (lifetime (lifetime originated
Stage 1 Stage 2
Stage 3
Total
Total
(12- (lifetime (lifetime
months ECL for ECL for
months ECL for ECL for
credit
ECL) SICR)
credit
ECL)
SICR)
credit
impaired
In millions of RR
POS loans
impaired)
impaired)
At 31 December 2020
527
227
857
1,611
30,278
1,080
1,045
287
32,690
Movements with impact on
credit loss allowance charge
for the year:
New originated or purchased
945
-
-
945
56,356
-
-
113
56,469
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to Stage
3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
(137)
(174)
4
922
(195)
(20)
-
1,175
-
785
806
(2,888) 2,888
-
1,336
-
-
-
-
-
-
-
(1,022)
194
(314)
(194)
(16)
Changes to ECL
measurement model
assumptions and estimates
Movements other than
transfers and new originated
or purchased loans
92
42
-
134
-
-
-
-
-
(406)
(439)
(149)
(994) (26,388) (1,569)
(116)
(11)
(28,084)
Total movements with
impact on credit loss
allowance charge for the
year
324
310
1,026
1,660
26,252
811
1,220
102
28,385
Movements without impact on
credit loss allowance charge
for the year
Unwinding of discount (for
Stage 3)
Write-offs
-
-
-
-
-
-
81
(522)
(216)
81
(522)
(216)
-
-
-
-
-
-
81
(522)
(277)
-
-
-
81
(522)
(277)
Sales
Modification of original cash
flows without derecognition
-
-
(9)
(9)
-
-
(9)
-
(9)
At 31 December 2021
851
537
1,217
2,605
56,530
1,891
1,538
389
60,348
35
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1 Stage 2 Stage 3 Purchased/
(12- (lifetime (lifetime originated
Stage 1 Stage 2
Stage 3
Total
Total
(12- (lifetime (lifetime
months ECL for ECL for
months ECL for ECL for
credit
ECL) SICR)
credit
ECL)
SICR)
credit
impaired
In millions of RR
POS loans
impaired)
impaired)
At 31 December 2019
298
190
569
1,057
24,031
1,053
658
198
25,940
Movements with impact on
credit loss allowance charge
for the year:
New originated or purchased
525
-
-
525
29,695
-
-
226
29,921
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to Stage
3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
(83)
(119)
3
642
(234)
(15)
-
1,023
-
559
670
(1,863) 1,863
-
1,105
-
-
-
-
-
-
-
(751)
206
(354)
(206)
(12)
Changes to ECL
measurement model
assumptions and estimates
Movements other than
transfers and new originated
or purchased loans
40
3
16
59
-
-
-
-
-
(137)
(359)
(209)
(705) (21,040) (1,276)
(173)
(137) (22,626)
Total movements with
impact on credit loss
allowance charge for the
year
229
37
830
1,096
6,247
27
932
89
7,295
Movements without impact on
credit loss allowance charge
for the year:
Unwinding of discount (for
Stage 3)
Write-offs
-
-
-
-
-
-
46
(360)
(50)
46
(360)
(50)
-
-
-
-
-
-
46
(360)
(53)
-
-
-
46
(360)
(53)
Sales
Modification of original cash
flows without derecognition
-
-
(178)
(178)
-
-
(178)
-
(178)
At 31 December 2020
527
227
857
1,611
30,278
1,080
1,045
287
32,690
36
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 2 Stage 3
(12- (lifetime (lifetime
Stage 1
Stage 2
Stage 3
Total
Stage 1
Total
(12- (lifetime (lifetime
months
ECL)
ECL for
SICR)
ECL for
credit
months
ECL)
ECL for
SICR)
ECL for
credit
In millions of RR
Car Loans
impaired)
impaired)
At 31 December 2020
664
558
922
2,144
30,716
2,012
1,263
33,991
Movements with impact on credit
loss allowance charge for the
year:
New originated or purchased
1,812
-
-
1,812
59,391
-
-
59,391
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
(385)
(382)
1,796
(375)
-
1,411
1,049
(3,703)
(1,740)
3,703
(578)
-
-
-
- to credit-impaired (from
Stage 1 and Stage 2 to Stage 3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
1,806
2,318
19
(103)
(3)
(87)
622
(617)
(5)
-
Changes to ECL measurement
model assumptions and
estimates
Movements other than transfers
and new originated or purchased
loans
(75)
59
136
-
61
-
-
-
-
(479)
(187)
(607)
(14,112)
(751)
(196)
(15,059)
Total movements with impact
on credit loss allowance
charge for the year
1,048
975
1,616
3,639
40,458
1,757
2,117
44,332
Movements without impact on
credit loss allowance charge for
the year
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
-
-
179
(354)
(1)
179
(354)
(1)
-
-
-
-
-
-
179
(354)
(1)
179
(354)
(1)
Sales
Modification of original cash
flows without derecognition
-
-
(265)
(265)
-
-
(265)
(265)
At 31 December 2021
1,712
1,533
2,097
5,342
71,174
3,769
2,939
77,882
37
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 2 Stage 3
(12- (lifetime (lifetime
Stage 1
Stage 2
Stage 3
Total
Stage 1
Total
(12- (lifetime (lifetime
months
ECL)
ECL for
SICR)
ECL for
credit
months
ECL)
ECL for
SICR)
ECL for
credit
In millions of RR
Car Loans
impaired)
impaired)
At 31 December 2019
368
285
260
913
18,725
1,060
371
20,156
Movements with impact on credit
loss allowance charge for the
year:
New originated or purchased
485
-
-
485
21,598
-
-
21,598
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
(141)
(184)
844
-
703
354
(1,926)
(739)
1,926
(352)
-
-
-
- to credit-impaired (from
Stage 1 and Stage 2 to Stage 3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
(232)
770
1,091
10
(50)
-
(40)
308
(307)
(1)
-
Changes to ECL measurement
model assumptions and
estimates
Movements other than transfers
and new originated or purchased
loans
105
21
13
32
38
150
-
-
-
-
(302)
(243)
(7,250)
(315)
(20)
(7,585)
Total movements with impact
on credit loss allowance
charge for the year
296
273
840
1,409
11,991
952
1,070
14,013
Movements without impact on
credit loss allowance charge for
the year:
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
81
(63)
81
(63)
-
-
-
-
81
(63)
81
(63)
Modification of original cash
flows
-
-
(196)
(196)
-
-
(196)
(196)
At 31 December 2020
664
558
922
2,144
30,716
2,012
1,263
33,991
38
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1
(12- (lifetime
months
Stage 2
Stage 3
(lifetime
ECL for
credit
Total
Stage 1
(12- (lifetime
months
Stage 2
Stage 3
(lifetime
ECL for
credit
Total
ECL for
SICR)
ECL for
SICR)
ECL)
ECL)
In millions of RR
impaired)
impaired)
Loans to IE and SME
At 31 December 2020
335
291
123
749
2,440
323
136
2,899
Movements with impact on
credit loss allowance charge for
the year:
New originated or purchased
158
-
-
158
4,863
-
-
4,863
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
(47)
(28)
318
(13)
-
271
170
(765)
(215)
765
(16)
-
-
-
- to credit-impaired (from
Stage 1 and Stage 2 to Stage 3)
- recovered (from Stage 3 to
Stage 2 and from Stage 2 to
Stage 1)
211
231
-
-
-
-
2
(2)
-
-
Movements other than transfers
and new originated or
purchased loans
(157)
(421)
(7)
(585)
2,484
(558)
(9)
1,917
Total movements with impact
on credit loss allowance
charge for the year
(74)
(116)
204
14
6,369
189
222
6,780
Movements without impact on
credit loss allowance charge for
the year
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
36
(25)
36
(25)
-
-
-
-
36
(25)
36
(25)
At 31 December 2021
261
175
338
774
8,809
512
369
9,690
39
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
Stage 1
Stage 2
Stage 3
(lifetime
ECL for
credit
Total
Stage 1
(12- (lifetime
months ECL for
Stage 2
Stage 3
(lifetime
ECL for
credit
Total
(12-months (lifetime
ECL) ECL for
SICR)
ECL)
SICR)
In millions of RR
impaired)
impaired)
Loans to IE and SME
At 31 December 2019
57
10
46
113
940
21
52
1,013
Movements with impact on
credit loss allowance charge for
the year:
New originated or purchased
28
-
-
28
676
-
-
676
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
- to credit-impaired (from
Stage 1 and Stage 2 to Stage 3)
(143)
(16)
314
(13)
-
171
48
(375)
(69)
375
(17)
-
-
-
77
86
Changes to ECL measurement
model assumptions and
estimates
Movements other than transfers
and new originated or
purchased loans
10
-
3
-
13
-
-
-
-
399
(20)
379
1,268
(56)
1
1,213
Total movements with impact
on credit loss allowance
charge for the year
278
281
80
639
1,500
302
87
1,889
Movements without impact on
credit loss allowance charge for
the year:
Unwinding of discount
(for Stage 3)
Write-offs
-
-
-
-
11
(14)
11
(14)
-
-
-
-
11
(14)
11
(14)
At 31 December 2020
335
291
123
749
2,440
323
136
2,899
In 2021 the Group implemented a new behavioural model for calculating probabilities of default for retail
annuity loans (cash loans, secured loans, POS loans and car loans). Refer to Note 3 for details.
In 2020 the Group implemented following changes to ECL measurement model assumptions:
•
•
Additional credit loss allowance charge due to the impact of the changed macroeconomic
conditions.
For the purposes of LGD estimation the Group has refined the approach to calculation of the rate
used for discounting expected cash flows from defaulted loans. The refined approach is that the
Group uses more disaggregated and specific discount rates for each credit product in the overall
loan portfolio of the Group rather than one generic rate, which makes the estimate more precise.
•
•
Having accumulated additional information the Group has refined its behavioural PD model used
for PD estimation for credit card loans. Also the Group has refined PD models for secured loans
and car loans using the most recent statistical data.
The Group has refined its approach to calculation of the impact of modification of original cash
flows without derecognition on stage 3 loans credit loss allowance and gross carrying amount.
40
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
The credit loss allowance charge during the year ended 31 December 2021 presented in the tables above
differs from the amount presented in the consolidated statement of profit or loss and other comprehensive
income for the year due to RR 4,510 million (2020: RR 4,063 million) recovery of amounts previously
written-off as uncollectible, due to RR 3,991 million (2020: RR 1,750 million) recovery from the purchased
loans in excess of their gross carrying amount, and due to RR 203 million recovery of ECL for credit related
commitments (2020: RR 1,295 million charge of ECL for credit related commitments, including RR 638
million of charge due to changes to ECL measurement model assumptions and estimates).
The amount of the recovery received from written-off loans and purchased loans during the year was
credited directly to the credit loss allowance line in the consolidated statement of profit or loss and other
comprehensive income.
The contractual amount outstanding of loans and advances to customers which were written off during the
reporting period ended 31 December 2021 and are still subject to enforcement activity is equal to
RR 16,519 million (2020: RR 13,966 million).
The amount of the ECL for credit related commitments is accounted separately from ECL for credit cards
loans and is included in other financial liabilities in the consolidated statement of financial position.
During the year ended 31 December 2021 the Group sold credit-impaired loans to third parties (external
debt collection agencies) by the means of transferring all subsequest risks and rewards without recource
to the buyer, which resulted into derecognition of gross amount of RR 3,497 million (2020: RR 2,798 million)
and credit loss allowance of RR 3,150 million (2020: RR 2,581 million). The difference between the carrying
amount of these loans and the consideration received was recognised as losses in the amount of RR 80
million within credit loss allowance for loans and advances to customers and credit related commitments
for the year ended 31 December 2021 (2020: losses in the amount of RR 186 million).
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:
31 December
2021
31 December
2020
In units
Credit card limits
Up to 20 RR thousand
20-40 RR thousand
40-60 RR thousand
60-80 RR thousand
80-100 RR thousand
100-120 RR thousand
120-140 RR thousand
140-200 RR thousand
More than 200 RR thousand
1,407,747
723,075
631,398
612,737
596,141
442,534
480,082
1,089,388
337,574
1,046,228
538,746
497,940
495,431
479,786
331,606
378,547
870,503
225,417
Total number of cards (in units)
6,320,676
4,864,204
Table above only includes credit cards less than 180 days overdue.
The following table contains an analysis of the credit risk exposure of loans and advances to customers
measured at AC and for which an ECL allowance is recognised. The carrying amount of loans and
advances to customers below also represents the Group's maximum exposure to credit risk on these loans.
41
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Loans and advances to customers at 31 December 2021 are disclosed as follows:
Stage 1
Stage 2
Stage 3
Purchased/
originated
credit
Total
(12-months (lifetime ECL (lifetime ECL
ECL)
for SICR)
for credit
impaired)
In millions of RR
Credit card loans
impaired
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
131,944
121,697
16,472
-
-
-
-
-
-
-
-
131,944
123,267
20,282
15,453
42,948
1,570
3,810
6,606
-
-
-
8,847
42,549
399
Gross carrying amount
270,113
(15,028)
255,085
11,986
(7,562)
4,424
51,396
(30,397)
20,999
399
-
333,894
(52,987)
280,907
Credit loss allowance
Carrying amount
399
Cash loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
74,885
34,094
-
3,512
1,134
1,746
-
-
-
-
-
-
-
-
74,885
37,606
1,695
2,913
9,196
561
-
-
1,167
8,274
922
Gross carrying amount
109,540
(4,575)
104,965
6,392
(2,990)
3,402
9,441
(6,556)
2,885
922
126,295
(14,121)
112,174
Credit loss allowance
-
Carrying amount
922
Secured Loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
53,540
11,355
-
3,685
668
554
-
-
-
-
-
-
-
-
-
-
53,540
15,040
1,251
554
583
-
-
1,658
1,658
Gross carrying amount
Credit loss allowance
Carrying amount
65,478
(538)
4,907
(788)
4,119
1,658
(660)
998
-
72,043
(1,986)
70,057
-
64,940
-
42
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
POS loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
44,024
12,223
-
1,105
310
476
-
-
-
-
-
-
-
-
44,024
13,328
593
504
1,899
283
-
-
28
1,510
389
Gross carrying amount
56,530
(851)
1,891
(537)
1,354
1,538
(1,217)
321
389
-
60,348
(2,605)
57,743
Credit loss allowance
Carrying amount
55,679
389
Car loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
53,275
17,290
-
2,115
703
951
-
-
-
-
-
-
-
-
-
-
53,275
19,405
1,312
951
609
-
-
2,939
2,939
Gross carrying amount
71,174
(1,712)
69,462
3,769
(1,533)
2,236
2,939
(2,097)
842
-
-
-
77,882
(5,342)
72,540
Credit loss allowance
Carrying amount
Loans to IE and SME
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
5,997
2,731
-
265
87
160
-
-
-
-
-
-
-
-
-
-
5,997
2,996
168
160
369
81
-
-
369
Gross carrying amount
Credit loss allowance
Carrying amount
8,809
(261)
8,548
512
(175)
337
369
(338)
31
-
-
-
9,690
(774)
8,916
43
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Loans and advances to customers at 31 December 2020 are disclosed as follows:
Stage 1
Stage 2
Stage 3
Purchased/
originated
credit
Total
(12-months (lifetime ECL (lifetime ECL
ECL)
for SICR)
for credit
impaired)
In millions of RR
impaired
Credit card loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
68,398
131,957
-
1,891
3,757
6,110
-
-
-
-
-
-
-
-
68,398
133,848
13,476
15,436
36,428
9,719
-
-
9,326
36,247
181
Gross carrying amount
Credit loss allowance
Carrying amount
210,074
(16,441)
193,633
11,758
(7,560)
4,198
45,573
(30,241)
15,332
181
181
267,586
(54,242)
213,344
-
Cash loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
33,877
22,053
-
3,189
546
1,032
-
-
-
-
-
-
-
-
33,877
25,242
802
2,021
6,189
256
-
-
989
5,759
430
Gross carrying amount
Credit loss allowance
Carrying amount
56,186
(4,120)
52,066
4,767
(2,041)
2,726
6,748
(4,894)
1,854
430
68,131
(11,055)
57,076
-
430
Secured Loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
21,201
13,937
-
3,307
442
366
-
-
-
-
-
-
-
-
-
-
21,201
17,244
547
105
-
-
366
874
874
Gross carrying amount
Credit loss allowance
Carrying amount
35,243
(256)
4,115
(482)
3,633
874
(361)
513
-
40,232
(1,099)
39,133
-
34,987
-
44
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Stage 1
Stage 2
Stage 3
Purchased/
originated
credit
Total
(12-months (lifetime ECL (lifetime ECL
ECL)
for SICR)
for credit
impaired)
In millions of RR
impaired
POS loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
25,159
4,998
-
793
121
166
-
-
-
-
-
-
-
-
25,159
5,791
242
194
1,304
121
-
-
28
1,017
287
Gross carrying amount
Credit loss allowance
Carrying amount
30,278
(527)
1,080
(227)
853
1,045
(857)
188
287
32,690
(1,611)
31,079
-
29,751
287
Car loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
21,444
9,136
-
1,427
263
322
-
-
-
-
-
-
-
-
-
-
21,444
10,563
399
322
1,263
136
-
-
1,263
Gross carrying amount
Credit loss allowance
Carrying amount
30,716
(664)
2,012
(558)
1,454
1,263
(922)
341
-
-
-
33,991
(2,144)
31,847
30,052
Loans to IE and SME
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
1,673
760
-
295
12
16
-
-
-
-
-
-
-
-
-
-
1,673
1,055
19
16
136
7
-
-
136
Gross carrying amount
Credit loss allowance
Carrying amount
2,440
(335)
2,105
323
(291)
32
136
(123)
13
-
-
-
2,899
(749)
2,150
45
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
Stage 3 includes restructured loans that are less than 90 days overdue which are not considered as NPL
according to the Group’s credit risk grading master scale. Refer to Note 30 for the description of credit risk
grading system used by the Group.
Loans in courts are included in Stage 3 and are loans to delinquent borrowers, against which the Group
has filed claims to courts in order to recover outstanding balances. As at 31 December 2021 the gross
carrying amount of the loans in courts was RR 39,066 million (2020: RR 31,082 million).
Description of collateral held for loans to individuals carried at amortised cost is as follows at 31 December
2021:
Secured loans
Car loans
Total
In millions of RR
Loans collateralised by:
- residential real estate
- cars
61,428
9,344
-
61,428
63,867
54,523
Total collateralised gross carrying amount
(representing exposure to credit risk for each class of
loans at AC)
70,772
54,523
125,295
Description of collateral held for loans to individuals carried at amortised cost is as follows at 31 December
2020:
In millions of RR
Secured loans
Car loans
Total
Loans collateralised by:
- residential real estate
- cars
37,896
2,101
-
37,896
28,616
26,515
Total collateralised gross carrying amount (representing
exposure to credit risk for each class of loans at AC)
39,997
26,515
66,512
In the disclosure above the difference between collateralised gross carrying amounts and total gross
carrying amount of the respective loans represents unsecured disclosures of RR 24,630 million (2020:
RR 7,711 million). Unsecured loans arise as the result of the fact that the borrowers have two months to
register their cars as collateral for car loans as well as the application of a conservative discount in
determining the carrying value of collateral for secured and car loans applied.
The extent to which collateral and other credit enhancements mitigate credit risk for financial assets carried
at amortised cost that are credit impaired, is presented by disclosing collateral values separately for (i) those
assets where collateral and other credit enhancements are equal to or exceed carrying value of the asset
(“over-collateralised assets”) and (ii) those assets where collateral and other credit enhancements are less
than the carrying value of the asset (“under-collateralised assets”).
The effect of collateral on credit impaired assets at 31 December 2021 is as follows.
Over-collateralised assets
Under-collateralised assets
Gross carrying
amount of the
assets
Value of
Gross carrying
amount of the
assets
Value of
collateral
collateral
In millions of RR
Credit impaired assets:
Secured loans
Car loans
1,625
843
4,381
1,355
33
2,096
11
929
46
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
8
Loans and Advances to Customers (Continued)
The effect of collateral on credit impaired assets at 31 December 2020 is as follows.
Over-collateralised assets Under-collateralised assets
Gross carrying
amount of the
assets
Value of
collateral
Gross carrying
amount of the
assets
Value of
collateral
In millions of RR
Credit impaired assets:
Secured loans
Car loans
855
200
2,136
296
19
1,063
10
715
The values of collateral considered in this disclosure are after a valuation haircut of 15% (2020: 15%) for
residential real estate and 20% (2020: 20%) for cars applied to consider liquidity and quality of the pledged
assets.
All contractual modifications of loans with the lifetime ECL that did not lead to derecognition did not have
gains less losses on modification recognised in profit or loss for the year ended 31 December 2021 (2020:
same).
Refer to Note 37 for the disclosure of the fair value of loans and advances to customers. Interest rate,
maturity and geographical risk concentration analysis are disclosed in Note 30. Information on related party
balances is disclosed in Note 39.
9
Guarantee Deposits with Payment Systems
As at 31 December 2021 and 2020 guarantee deposits were placed in favour of MasterCard with Barclays
Bank Plc London (A rated), in favour of Visa with United Overseas Bank Ltd Singapore (AA- rated), and in
favour of Russia payment card Mir with Russian National payment card system (NSPK).
As at 31 December 2021 the carrying value of guarantee deposits with payment systems was
RR 15,171 million (2020: RR 15,475 million).
The table below discloses the credit quality of guarantee deposits with payment systems balances based
on credit risk grades:
31 December
2021
31 December
2020
In millions of RR
- Excellent
- Good
13,772
1,399
14,803
672
Total guarantee deposits with payment systems
15,171
15,475
The carrying amount of guarantee deposits with payment systems at 31 December 2021 and 2020 also
represents the Group's maximum exposure to credit risk on these assets. Refer to Note 30 for the
description of credit risk grading system used by the Group. For the purpose of ECL measurement
guarantee deposits with payment systems balances are included in Stage 1. Guarantee deposits with
payment systems are unsecured financial assets.
The ECL for these balances represents an immaterial amount, therefore the Group did not create any credit
loss allowance for guarantee deposits with payment systems. Refer to Note 30 for the ECL measurement
approach. Interest rate, maturity and geographical risk concentration analysis are disclosed in Note 30.
47
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
10
Brokerage Receivables and Brokerage Payables
31 December
2021
31 December
2020
In millions of RR
Amounts receivable from brokers and clearing organizations
Total brokerage receivables
49,138
49,138
9,634
24,064
24,064
9,206
Amounts payable to brokers and clearing organizations
Total brokerage payables
9,634
9,206
Brokerage receivables represent placements under reverse sale and repurchase agreements made by the
Bank with central counterparty to provide customers of the Bank who have brokerage accounts with the
Bank with the possibility to acquire securities in case those customers have insufficient own funds to acquire
those securities. These balances are fully collateralized by highly liquid securities and have minimal credit
risk. As at 31 December 2021 the fair value of collateral of brokerage receivables was RR 46,721 million
(2020: RR 24,113 million). For the purpose of ECL measurement brokerage receivables are included in
Stage 1. The ECL for these balances represents an immaterial amount, therefore the Group did not
recognise any credit loss allowance for brokerage receivables.
Brokerage payables represent funds attracted under sale and repurchase agreements made by the Bank
with central counterparty to provide customers of the Bank who have brokerage accounts with the Bank
with the possibility to borrow securities and make a short sale.
As at 31 December 2021 the fair value of collateral of brokerage payables was RR 11,123 million (2020:
RR 9,696 million).
ECL measurement approach, interest rate, maturity and geographical risk concentration analysis are
disclosed in Note 30. Refer to Note 33 for the disclosure of the offsetting assets and liabilities. Refer to
Note 37 for the disclosure of the fair value of brokerage receivables and brokerage payables.
48
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
11
Tangible Fixed Assets, Intangible Assets and Right-of-use Assets
Tangible fixed assets
Intangible assets
Land
Buil- Equip-
Lease-
hold
improve-
ments
Vehic-
Total Capita- Acqui-
Total
red intangible
assets
ding
ment
les tangible
lised
fixed
assets
In millions of RR
Cost
31 December 2019
Additions
Disposals
396 4,219
6,070
2,168
(164)
1,620
2
(231)
88
-
-
12,393
2,170
(395)
1,944
1,854
-
7,173
1,815
(73)
9,117
3,669
(73)
-
-
-
-
31 December 2020
396 4,219
8,074
1,391
88
14,168
3,798
8,915
12,713
Additions
Disposals
-
-
-
-
5,783
(38)
187
(399)
1
(28)
5,971
(465)
4,311
-
7,391
(116)
11,702
(116)
31 December 2021
396 4,219 13,819
1,179
61
19,674
8,109 16,190
24,299
Depreciation and
amortisation
31 December 2019
Charge for the year
(Note 25)
-
(133)
(2,594)
(673)
(41)
(3,441)
(496)
(3,186)
(3,682)
-
-
(43)
-
(1,421)
103
(149)
128
(4)
-
(1,617)
231
(704)
-
(1,257)
12
(1,961)
12
Disposals
31 December 2020
-
(176)
(3,912)
(694)
(45)
(4,827)
(1,200)
(4,431)
(5,631)
Charge for the year
(Note 25)
Disposals
-
-
(42)
-
(2,083)
23
(47)
218
(8)
28
(2,180)
269
(1,699)
-
(1,902)
2
(3,601)
2
31 December 2021
-
(218)
(5,972)
(523)
(25)
(6,738)
(2,899)
(6,331)
(9,230)
Net book value
31 December 2020
396 4,043
396 4,001
4,162
7,847
697
656
43
36
9,341
2,598
5,210
4,484
9,859
7,082
31 December 2021
12,936
15,069
49
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
11
Tangible Fixed Assets, Intangible Assets and Right-of-use Assets (Continued)
Intangible assets additions in the amount of RR 4,311 million related to capitalised the software
developments by Tinkoff Software DC during the year ended 31 December 2021 (2020: RR 1,854 million).
Other intangible assets acquired during the year ended 31 December 2021 and 2020 mainly represent
accounting software, retail banking software, insurance software, licenses and development of software.
Right-of-use assets and lease liabilities. Right-of-use-assets relate to the office premises leased by the
Group. Rental contracts are typically for fixed periods from 1 to 5 years. The Group does not have extension
or termination options of its lease agreements other than lease agreements of low value items.
The right of use assets by class of underlying items is analysed as follows:
In millions of RR
Office premises
1,608
Carrying amount at 31 December 2019
Additions
234
Depreciation charge (Note 25)
(702)
Carrying amount at 31 December 2020
1,140
Additions
497
Depreciation charge (Note 25)
(609)
Carrying amount at 31 December 2021
1,028
Expenses relating to leases of low-value assets and short-term leases in the amount of RR 1,126 million
are included in administrative and other operating expenses (2020: RR 548 million). Refer to Note 25. Total
cash outflow for long-term rental contract leases during the year ended 31 December 2021 was RR 820
million (2020: RR 758 million).
12
Other Financial and Non-financial Assets
31 December
2021
31 December
2020
In millions of RR
Other Financial Assets
Settlement of operations with plastic cards
Insurance's financial assets
Other
42,995
965
9,009
23,882
542
6,646
Total Other Financial Assets
52,969
31,070
Other Non-Financial Assets
Prepaid expenses
Insurance's non-financial assets
Other
5,996
817
2,082
1,478
509
1,399
Total Other Non-Financial Assets
8,895
3,386
50
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
12
Other Financial and Non-financial Assets (Continued)
Settlement of operations with plastic cards represents settlements with payment systems and payment
channels on operations of the customers with banking cards due to be settled within 3 working days. This
amount also includes prepayment to the payment systems for operations during holiday period.
At 31 December 2021, included in other financial assets are receivables and investments in associates
(2020: same).
As at 31 December 2021 and 2020 prepaid expenses consist of prepayments for marketing, IT support,
security and ATM-service.
The table below discloses the credit quality of other financial assets based on credit risk grades:
31 December
2021
31 December
2020
In millions of RR
- Excellent
- Good
29,850
23,119
19,683
11,387
Total other financial assets
52,969
31,070
Refer to Note 30 for the description of the Group’s credit risk grading system.
For the purpose of ECL measurement settlement of operations with plastic cards balances and other
receivables are included in Stage 1. The ECL for these balances represents an immaterial amount,
therefore the Group did not recognise any credit loss allowance. Refer to Note 30 for the ECL measurement
approach. Refer to Note 37 for the disclosure of the fair value of other financial assets. The maturity and
geographical risk concentration analysis of amounts of other financial assets is disclosed in Note 30.
13
Due to Banks
31 December
2021
31 December
2020
In millions of RR
Correspondent accounts and overnight placements of other banks
Sale and repurchase agreements with other banks
5,829
5,484
4,795
24
Total due to banks
11,313
4,819
At 31 December 2021, included in the amounts due to other banks are collateral for swap contracts of
RR 5,829 million (2020: RR 4,789 million) and liabilities of RR 5,484 million (2020: RR 24 million) arising
from sale and repurchase agreements with debt securities at FVOCI (Note 7).
Refer to Note 37 for the disclosure of the fair value of amounts due to banks. Interest rate, maturity and
geographical risk concentration analysis of due to banks is disclosed in Note 30. Refer to Note 33 and 34
for information on the amounts included in due to banks received under sale and repurchase agreements
and fair value of securities pledged.
51
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
14
Customer Accounts
31 December
2021
31 December
2020
In millions of RR
Individuals
- Current/demand accounts
- Brokerage accounts
- Term deposits
544,561
110,277
146,548
323,145
73,970
135,995
IE and SME
- Current/demand accounts
- Term deposits
140,287
3,403
89,199
2,213
Other legal entities
- Current/demand accounts
- Term deposits
647
-
2,267
48
Total customer accounts
945,723
626,837
Refer to Note 37 for the disclosure of the fair value of customer accounts. Interest rate, maturity and
geographical risk concentration analysis of customer accounts amounts is disclosed in Note 30. Information
on related party balances is disclosed in Note 39.
15
Debt Securities in Issue
Date of maturity 31 December 31 December
In millions of RR
2021
2020
RR denominated bonds issued in September 2019
RR denominated bonds issued in April 2019
RR denominated bonds issued in April 2017
Structured debt notes issued in December 2020
Structured debt notes issued in October 2020
Structured debt notes issued in December 2020
RR denominated bonds issued in June 2016
12 September 2029
21 March 2029
22 April 2022
5 December 2023
5 October 2023
1 December 2023
24 June 2021
10,176
10,105
1,113
122
91
10,166
10,134
2,492
119
89
74
836
73
-
Total debt securities in issue
21,680
23,910
On 25 September 2019 the Bank issued RR denominated bonds with a nominal value of RR 10,000 million
at 8.25% coupon rate maturing on 12 September 2029.
On 3 April 2019 the Bank issued RR denominated bonds with a nominal value of RR 10,000 million at
9.25% coupon rate maturing on 21 March 2029.
On 28 April 2017 the Bank issued RR denominated bonds with a nominal value of RR 5,000 million at
9.65% coupon rate maturing on 22 April 2022.
During October and December 2020 the Bank issued structured debt notes with the total nominal value of
RR 282 million at 0.01% coupon rate maturing in October and December 2023. The structured debt notes
are linked to the performance of the underlying assets, such as the gold trust and equity indexes. The
derivative instruments embedded in the structured notes were separated and accounted within financial
derivatives line in the consolidated statement of financial position.
On 30 June 2016 the Group issued RR denominated bonds with a nominal value of RR 3,000 million at
11.7% coupon rate maturing on 24 June 2021. The Group redeemed all outstanding bonds of this issue at
maturity.
All RR denominated bonds and structured debt notes issued by the Bank are traded on the Moscow
Exchange. Refer to Note 37 for the disclosure of the fair value of debt securities in issue. Interest rate,
maturity and geographical risk concentration analysis of debt securities in issue are disclosed in Note 30.
52
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
16
Other Borrowed Funds
On 5-6 July 2021 the Group completed the securitisation of home equity loans placed by mortgage agent
TB- 1. The placement included Class A and B bonds secured by a portfolio of home equity loans. Class A
bonds are represented by senior tranche totaling RR 5,623 million and were placed with private and
institutional investors with a coupon of 7.9%. Class B bonds are represented by subordinated junior tranche
totaling RR 878 million that was retained by the Bank. This junior tranche absorbs substantially all amount
of credit risks related to the portfolio. As a result, the securitised home equity loans amounted to RR 5,638
million failed to meet derecognition criteria set out by IFRS 9 and hence continue to be recognised in the
Group’s consolidated financial statement.
As at 31 December 2021 the carrying value of borrowings through securitisation transaction amounted to
RR 3,806 million that are represented by Class A bonds. The carrying value of the securitised home equity
loans amounted to RR 4,446 million (Note 8). The fair value of the securitised home equity loans does not
differ materially from the carrying value as at 31 December 2021. Refer to Note 33 for the resulting net
position.
17
Subordinated Debt
31 December
2021
31 December
2020
In millions of RR
Perpetual subordinated loan notes issued in September 2021
Perpetual subordinated loan notes issued in June 2017
41,504
18,153
-
20,755
Total subordinated debt
59,657
20,755
On 20 September 2021 the Group issued perpetual subordinated loan participation notes with a nominal
value of USD 600 million (RR 43,536 million) with zero premium. The Group has a right to repay the notes
at its discretion starting from 20 December 2026 and they are repayable in case of certain events other
than liquidation. The notes bear a fixed interest rate of 6.00% p.a. payable quarterly starting from
20 December 2021.
On 15 June 2017 the Group issued perpetual subordinated loan participation notes with a nominal value of
USD 300 million (RR 17,109 million) with zero premium. The Group has a right to repay the notes at its
discretion starting from 15 September 2022 and they are repayable in case of certain events other than
liquidation. The notes bear a fixed interest rate of 9.25% p.a. payable quarterly starting from
15 September 2017.
All perpetual subordinated loan participation notes have no stated maturity, and interest payments may be
cancelled by the Group at any time.
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.
The perpetual subordinated loan participation notes are traded on the Global Exchange Market. Interest
rate, maturity and geographical risk concentration analysis of subordinated debt is disclosed in Note 30.
Refer to Note 37 for the disclosure of the fair value of financial instruments.
53
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
18
Insurance Provisions
31 December
2021
31 December
2020
In millions of RR
Insurance Provisions
Provision for unearned premiums
Loss provisions
7,281
3,084
3,907
2,160
Total Insurance Provisions
10,365
6,067
Movements in provision for unearned premiums for the year ended 31 December 2021 and 2020 are as
follows:
2021
2020
Gross Reinsurer’s
Provision
Gross Reinsurer’s
Provision
net of
provision
share of
net of provision
share of
In millions of RR
provision reinsurance
provision reinsurance
Provision for unearned
premiums as at 1 January
3,907
(11)
3,896
3,938
(11)
3,927
Change in provision, gross
3,374
-
3,374
(31)
-
(31)
Provision for unearned
premiums as at 31 December
7,281
(11)
7,270
3,907
(11)
3,896
Movements in loss provisions for the year ended 31 December 2021 and 31 December 2020 are as
follows:
OCP and
IBNR
URP
Provision
for claims
handling
expenses
Total loss
provisions
In millions of RR
Note
Loss provisions as at 31 December 2019
1,930
197
215
2,342
Losses incurred in the current reporting period
Changes in OCP, IBNR and claims handling
provisions related to prior periods
Insurance claims paid
Claims handling expenses accrued
Claims handling expenses paid
3,456
-
-
3,456
(119)
(3,500)
-
-
-
-
147
-
528
(497)
-
28
(3,500)
528
(497)
(197)
24
24
-
-
-
Unexpired risk provision reversal
(197)
Loss provisions as at 31 December 2020
1,767
-
393
2,160
Losses incurred in the current reporting period
Changes in OCP, IBNR and claims handling
provisions related to prior periods
Insurance claims paid
Claims handling expenses accrued
Claims handling expenses paid
4,475
-
-
4,475
(190)
(3,594)
-
-
-
-
(47)
-
728
(448)
(237)
(3,594)
728
24
24
-
-
(448)
Loss provisions as at 31 December 2021
2,458
-
626
3,084
54
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
19
Other Financial and Non-financial Liabilities
31 December
2021
31 December
2020
In millions of RR
Other financial liabilities
Settlement of operations with plastic cards
Trade payables
Credit related commitments (Note 32)
Loyalty programs
48,879
11,866
3,334
2,802
2,421
23,079
4,671
3,537
1,479
1,571
Other
Total other financial liabilities
69,302
34,337
Other non-financial liabilities
Accrued administrative expenses
Taxes payable other than income tax
Lease liabilities
3,573
3,167
1,052
307
2,171
1,731
1,340
663
Other
Total other non-financial liabilities
8,099
5,905
Settlements of operations with plastic cards include funds that were spent by customers of the Bank by
usage of plastic cards but have not yet been compensated to payment systems by the Bank. Accrued
administrative expenses are mainly represented by accrued staff costs.
Movements in the credit loss allowance for credit related commitments were as follows for the year ended
31 December 2021:
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL for
SICR)
Gross committed
amount
In millions of RR
At 31 December 2020
3,513
24
3,537
Movements with impact on provision
for credit related commitments charge
for the year:
New originated or purchased
1,331
-
1,331
Transfers:
- to lifetime (from Stage 1 to Stage 2)
- to 12-months ECL (from Stage 2 to
Stage 1)
(96)
12
(5)
(101)
(16)
(28)
25
Movements other than transfers and
new originated or purchased loans
(1,442)
(1,417)
Total recovery to profit or loss for
the year
(195)
3,318
(8)
16
(203)
3,334
At 31 December 2021
55
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
19
Other Financial and Non-financial Liabilities (Continued)
Movements in the credit loss allowance for credit related commitments were as follows for the year ended
31 December 2020:
Stage 1
(12-months
ECL)
Stage 2
(lifetime ECL
for SICR)
Gross
committed
amount
In millions of RR
At 31 December 2019
2,228
14
2,242
Movements with impact on provision for credit related
commitments charge for the year:
New originated or purchased
920
-
920
Transfers:
- to lifetime (from Stage 1 to Stage 2)
- to 12-months ECL (from Stage 2 to Stage 1)
(95)
7
9
(15)
(86)
(8)
Changes to ECL measurement model assumptions and
estimates
Movements other than transfers and new originated or
purchased loans
(637)
1,090
(1)
17
(638)
1,107
Total charge to profit or loss for the year
At 31 December 2020
1,285
3,513
10
24
1,295
3,537
The main movements in the table presented above are described as follows:
•
new originated or purchased category represents the day one 12-month ECL for the undrawn part of
the purchased loans and loans to new borrowers (for this particular product) before the first payment
became due;
•
transfers between Stage 1 and Stage 2 due to undrawn limits experiencing significant increases (or
decreases) of credit risk and the consequent “step up” (or “step down”) between 12-month and
Lifetime ECL. Transfers present the amount of credit loss allowance for loan commitments charged
or recovered at the moment of transfer of a loan commitment among the respective stages;
•
movements other than transfers and new originated or purchased loans category represents all other
movements of ECL for loan commitments in particular related to changes in gross carrying amounts
of associated loans, ECL model assumptions and other.
There are no movements in Stage 3, as in case of becoming credit-impaired, undrawn limits will be blocked.
Interest rate, maturity and geographical risk concentration analysis of other financial liabilities is disclosed
in Note 30. Refer to Note 37 for disclosure of fair value of other financial liabilities. Refer to Note 32 for
analysis of loan commitments by credit risk grades.
56
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
20
Share Capital, Share Premium and Treasury Shares
In millions of RR except
for the number of
shares
Number of
authorised
shares
Number of
outstanding
shares
Ordinary
shares premium
Share Treasury
shares
Total
At 1 January 2020
210,034,648
199,305,492
230
26,998
(3,164) 24,064
GDRs buy-back
GDRs and shares
transferred under
MLTIP
-
-
-
-
-
-
-
(661)
587
(661)
587
-
At 31 December 2020
210,034,648
199,305,492
230
26,998
(3,238) 23,990
Increase of number of
authorised shares
GDRs buy-back
GDRs and shares
transferred under
MLTIP
14,184,030
-
-
-
-
-
-
-
(1,877) (1,877)
-
2,548
2,548
At 31 December 2021
224,218,678
199,305,492
230
26,998
(2,567) 24,661
In November 2021 the Company’s shareholders approved a resolution to increase authorised share capital
to USD 8,968,747.12 by the creation of 14,184,030 new shares of nominal value USD 0.04 each. As at
31 December 2021 the total number of authorised shares is 224,218,678 shares (31 December 2020:
210,034,648 shares) with a par value of USD 0.04 per share.
At 31 December 2021 the total number of outstanding shares is 199,305,492 shares (2020: 199,305,492
shares) with a par value of USD 0.04 per share (2020: USD 0.04 per share).
At 31 December 2021 and 31 December 2020 treasury shares represent GDRs of the Group repurchased
from the market for the purposes permitted by Cyprus law including contribution to MLTIP. Refer to Note 39.
At 31 December 2021 the total number of treasury shares is 1,237,583 (2020: 3,013,379).
During the year ended 31 December 2021 the Group repurchased 425,017 GDRs at market price for
RR 1,877 million (2020: 650,000 GDRs at market price for RR 661 million).
During the year ended 31 December 2021 the Group transferred 2,200,813 GDRs (2020: 1,809,681 GDRs),
representing 1.10% (2020: 0.91%) of the issued shares, upon vesting under the MLTIP. This resulted in a
transfer of RR 2,548 million (2020: RR 587 million) out of treasury shares to retained earnings.
Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the Company
by the weighted average number of ordinary shares in issue during the year, excluding treasury shares.
For the purpose of calculating diluted earnings per share the Group considered the dilutive effect of share
options granted under MLTIP.
57
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
20
Share Capital, Share Premium and Treasury Shares (Continued)
Earnings per share are calculated as follows:
In millions of RR except for the number of shares
2021
2020
Profit for the year attributable to ordinary shareholders of the Company
63,471
44,209
Weighted average number of ordinary shares in issue used for basic earnings
per ordinary share calculation (thousands)
Weighted average number of ordinary shares in issue used for diluted earnings
per ordinary share calculation (thousands)
197,239
201,569
195,962
197,604
Basic earnings per ordinary share (expressed in RR per share)
Diluted earnings per ordinary share (expressed in RR per share)
321.80
314.88
225.60
223.73
Information on dividends is disclosed in Note 28.
Reconciliation of the number of shares used for basic and diluted EPS:
In thousands
Note
2021
2020
Weighted average number of ordinary shares in issue used for basic
earnings per ordinary share calculation
197,239
195,962
Number of shares attributable for MLTIP
39
7,019
7,276
Number of shares that would have been issued at fair value
(2,689)
(5,634)
Weighted average number of ordinary shares in issue used for
diluted earnings per ordinary share calculation
201,569
197,604
58
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
21
Net Margin
In millions of RR
2021
2020
Interest income calculated using the effective interest rate method
Loans and advances to customers, including:
Credit card loans
Cash loans
Car loans
Secured loans
POS loans
Loans to IE and SME
Debt securities and repurchase receivables at FVOCI
Brokerage operations
98,585
17,550
7,987
7,737
7,666
2,631
12,710
8,059
89,253
11,439
3,342
4,950
4,806
529
10,510
2,629
Placements with other banks and non-bank credit organizations with original
maturities of less than three months
695
626
Total interest income calculated using the effective interest rate method
163,620
128,084
Other similar income
Financial assets at FVTPL
192
83
Total interest income
163,812
128,167
Interest expense calculated using the effective interest rate method
Customer accounts, including:
Individuals
- Current/demand accounts
- Term deposits
IE and SME
Other legal entities
Subordinated debt
RR denominated bonds
Due to banks
16,392
5,217
1,317
51
2,692
1,879
671
9,590
6,499
1,022
24
1,948
2,027
439
Other borrowed funds
Euro-Commercial Paper
211
-
32
-
Total interest expense calculated using the effective interest rate method
28,430
21,581
Other similar expense
Lease liabilities
80
28,510
2,744
139
21,720
1,745
Total interest expense
Expenses on deposit insurance programme
Net margin
132,558
104,702
59
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
22
Fee and Commission Income and Expense
2021
2020
In millions of RR
Fee and commission income
Acquiring commission
Brokerage fee
SME services commission
Fee for money transfers
Foreign currency exchange transactions fee
Interchange fee
Fee for selling credit protection
SMS fee
Income from MVNO services
Subscription fee
25,099
11,369
10,546
7,123
6,717
6,052
5,639
5,157
2,898
1,982
1,155
604
11,049
4,998
7,437
3,944
3,943
3,963
4,657
3,945
1,815
-
Cash withdrawal fee
Marketing services fee
Replenishment fee
746
394
141
254
Other fees receivable
1,474
577
Total fee and commission income
86,069
47,609
Acquiring commission represents commission for processing card payments from online and offline points
of sale. Brokerage fee includes trading fee and brokerage account service fee. SME services commission
represents commission for services to individual entrepreneurs and small to medium businesses. Fee for
selling credit protection represents fee which the Bank receives for selling voluntary credit insurance to
borrowers of the Group. Income from MVNO services represents income from providing mobile services
such as full coverage across Russia and international roaming, offering a number of value-added options
such as virtual numbers, music and video streaming services, etc. Subscription fee is a payment from a
client who has subscribed to receive a discount on card service, more cashback, more income from
savings and account balance, special loyalty programs from partners.
The Group has refined the presentation of the Group's revenue structure by reclassifying the sum of
provider’s fee from other fees receivable to fee for money transfers. The comparative information was
amended accordingly:
As originally Reclassification
presented
As reclassified
In millions of RR
Fee for money transfers
Other fees receivable
3,117
1,404
827
(827)
3,944
577
60
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
22
Fee and Commission Income and Expense (Continued)
2021
2020
In millions of RR
Fee and commission expense
Payment systems
Banking and other fees
Service fees
Costs of MVNO services
Payment channels
28,028
3,863
3,437
1,922
1,529
14,684
2,361
2,654
1,225
1,291
Total fee and commission expense
38,779
22,215
Payment systems fees represent fees for MasterCard, Visa and other payment systems’ services. Service
fees represent fees for statement printing, mailing service, SMS services and others. Payment channels
represent fees paid to third parties through whom borrowers make loan repayments. Costs of MVNO
services represent expenses for the traffic, telecommunications service and roaming.
Refer to Note 41 that describes the types of revenues recognized on a point in time basis and on the over
time basis.
23
Customer Acquisition Expense
In millions of RR
2021
2020
Marketing and advertising
Staff costs
Cards issuing expenses
Partnership expenses
Credit bureaux
26,286
10,695
2,140
1,818
1,641
478
12,091
6,689
1,064
1,145
1,038
284
Telecommunication expenses
Other acquisition
384
277
Total customer acquisition expenses
43,442
22,588
Customer acquisition expenses represent expenses paid by the Group on services related to origination of
customers which are not directly attributable to the recognised assets and are not incremental. The Group
uses a variety of different channels for the acquisition of new customers.
Staff costs represent salary expenses and related costs of employees directly involved in customer
acquisition. Included in staff costs are statutory social contributions to the state non-budgetary funds in the
amount of RR 2,124 million for the year ended 31 December 2021 (2020: RR 1,265 million).
61
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
24
Insurance Premiums Earned and Claims Incurred
In millions of RR
2021
2020
Insurance premiums earned
Insurance premiums on insurance, co-insurance and reinsurance operations
Change in provision for unearned premiums
26,437
(3,374)
18,536
31
Total Insurance premiums earned
23,063
18,567
Insurance claims incurred
Insurance claims on insurance, co-insurance and reinsurance operations
Changes in loss provisions
Claims handling expenses
(3,594)
(924)
(448)
2
(3,500)
182
(497)
1
Reinsurers' share
Total Insurance claims incurred
(4,964)
(3,814)
The Insurance company provides the following types of insurance:
Personal accident insurance and collective insurance against accidents, illnesses or loss of work provides
compensation and financial protection in the event of injuries, disability, death or loss of loss of work of the
borrower. It is different from life insurance and medical and health insurance. In accordance with the terms
of individual insurance contracts, the policyholder and beneficiary is an individual who has entered into an
insurance contract. In accordance with the terms of the collective insurance contract, the insurer is the Bank
that has concluded the collective insurance contract with the Insurance Company, the beneficiary is the
insured individual.
Motor vehicle insurance and property insurance provides compensation for damage to a client’s vehicle or
other property.
Compulsory third party liability insurance (CTP) contracts provide the insured with financial protection from
the risk of civil liability of vehicle owners, which may occur as a result of harm to life, health or property of
others when using vehicles.
Voluntary third party (VTP) risk insurance contracts provide the insured with financial protection in case of
insufficiency of insurance payment for compulsory third party liability insurance of motor vehicle owners
(CTP) to compensate for harm caused to life, health and / or property.
Travel insurance provides compensation in case of medical or other unforeseen expenses of the client
while being away from their place of permanent residence.
Staff and administrative expenses for insurance operations are included in Note 25.
62
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
25
Administrative and Other Operating Expenses
In millions of RR
Note
2021
2020
Staff costs
Amortization of intangible assets
IT and software support
Depreciation of fixed assets
Professional services
Short-term and low-value lease
Office maintenance and office supplies
Depreciation of right-of-use assets
Communication services
45,304
3,601
2,319
2,180
1,524
1,126
610
24,365
1,961
1,449
1,617
643
11
11
788
454
702
505
11
609
471
Collection expenses
454
303
Security expenses
224
198
Other administrative expenses
Other provisions (recovery)/ charge and impairment (reversal)/ loss
1,038
(11)
814
1,206
Total administrative and other operating expenses
59,449
35,005
The total fees charged by the Company's statutory auditor for the statutory audit of the annual consolidated
and separate financial statements of the Company for the year ended 31 December 2021 amounted to
RR 7.5 million (2020: RR 6.9 mln). The total fees charged by the Company's statutory auditor for the year
ended 31 December 2020 for other assurance services amounted to RR 3.4 million (2020: RR 0.8 million),
for tax advisory services amounted to RR 1.5 million (2020: RR 3.4 million) and for other non-assurance
services amounted to RR 0.1 million (2020: RR 0.1 million).
Included in staff costs are statutory social contributions to the non-budget funds and share-based
remuneration:
In millions of RR
2021
2020
Statutory social contribution to the non-budget funds
7,505
4,223
Total
7,505
4,223
Share-based remuneration
- Management long-term incentive program
- Key employees retention plan
- Warrant compensation
5,740
248
25
1,092
372
-
Total
6,013
1,464
The average number of employees employed by the Group during the reporting year, including those who
are working under civil contracts, was 43,787 (2020: 25,970).
26
Other Operating Income
In millions of RR
2021
2020
Subrogation fee
Reimbursement fee
Other
318
49
556
250
190
1,005
Total other operating income
923
1,445
63
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
27
Income Taxes
Income tax expense comprises the following:
In millions of RR
2021
2020
Current tax
Deferred tax
11,437
6,233
10,612
1,424
Total income tax expense
17,670
12,036
The income tax rate applicable to the majority of the Group’s income is 20% (2020: 20%). The operations
of the Group are subject to multiple tax jurisdictions. The income tax rate applicable to the Russian
subsidiaries of the Company is 20%. The income tax rate applicable to the Company registered in Cyprus
is 12.5% (2020: 12.5%).
A reconciliation between the expected and the actual taxation charge is provided below.
In millions of RR
2021
2020
Profit before tax
81,038
56,249
Theoretical tax expense at statutory rate of 20% (2020: 20%)
16,208
11,250
Tax effect of items, which are not deductible or assessable for taxation
purposes:
- Non-deductible expenses
- Other expenses including dividend tax
- Unrecognised tax losses
2,481
(11)
62
418
709
109
-
- Non-taxable income
(461)
Effects of different tax rates:
- Income on government and corporate securities taxed at different rates
- Results of companies of the Group taxed at different statutory rates
(606)
(3)
(448)
(2)
Income tax expenses for the year
17,670
12,036
Differences between IFRS and taxation regulations in Russia and other countries give rise to temporary
differences between the carrying amount of assets and liabilities for financial reporting purposes and their
tax bases. As all of the Group’s temporary differences arise in Russia, the tax effect of the movements in
these temporary differences is detailed below and is recorded at the rate of 20% (2020: 20%).
In the context of the Group’s current structure and Russian tax legislation, tax losses and current tax assets
of different group companies may not be offset against current tax liabilities and taxable profits of other
group companies and, accordingly, taxes may accrue even where there is a consolidated tax loss.
64
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
27
Income Taxes (Continued)
Therefore, deferred tax assets and liabilities are offset only when they relate to the same taxable entity and
the same taxation authority.
The deferred tax assets effect of the movements in temporary differences for the year ended 31 December 2021
is detailed below:
31 December
2020
(Charged)/
credited to
31 December
2021
In millions of RR
profit or loss
Tax effect of deductible and taxable temporary
differences
Loans and advances to customers
Tangible fixed assets
Right-of-use assets
3,673
(506)
(186)
(200)
(1,450)
(34)
(3,673)
506
-
-
-
-
-
-
-
-
-
-
-
186
200
Intangible assets
Revaluation of debt investments at FVOCI
Revaluation of debt investments at FVTPL
Accrued expenses and other temporary differences
Lease liabilities
Customer accounts
Debt securities in issue
1,450
34
(521)
(231)
53
521
231
(53)
(58)
58
991
Financial derivatives
(991)
Deferred tax assets
947
(947)
-
The deferred tax liabilities effect of the movements in temporary differences for the year ended 31 December
2021 is detailed below:
31
(Charged)/
credited to
Credited
to OCI
31
December
2021
December
In millions of RR
2020 profit or loss
Tax effect of deductible and taxable temporary
differences
Loans and advances to customers
Tangible fixed assets
Right-of-use assets
Intangible assets
Revaluation of debt investments at FVOCI
Revaluation of debt investments at FVTPL
Accrued expenses and other temporary differences
Lease liabilities
Customer accounts
Debt securities in issue
(123)
(62)
(764)
(153)
(344)
(1,878)
(1,093)
106
-
-
-
-
(185)
(764)
(153)
(389)
1,858
(1,093)
(38)
-
-
(45)
(23)
3,759
-
-
-
-
-
-
-
-
(144)
-
-
-
-
2
206
(73)
206
(73)
3
3
Financial derivatives
Insurance provisions
(1,183)
(51)
(1,183)
(49)
Deferred tax liabilities
(333)
(5,286)
3,759
(1,860)
65
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
27
Income Taxes (Continued)
The deferred tax assets effect of the movements in temporary differences for the year ended 31 December
2020 is detailed below:
31
(Charged)/
credited to
Credited
to OCI
31 December
2020
December
In millions of RR
2019 profit or loss
Tax effect of deductible and taxable temporary
differences
Loans and advances to customers
Tangible fixed assets
Right-of-use assets
3,576
(588)
(322)
(195)
(1,019)
-
(208)
339
(44)
97
82
136
-
-
-
-
3,673
(506)
(186)
(200)
(1,450)
(34)
Intangible assets
(5)
(1,094)
(34)
729
(108)
(9)
Revaluation of debt investments at FVOCI
Revaluation of debt investments at FVTPL
Accrued expenses and other temporary differences
Lease liabilities
Customer accounts
Debt securities in issue
663
-
-
-
-
-
-
521
231
(53)
(58)
(62)
40
4
Financial derivatives
(1,031)
(991)
Deferred tax assets
1,517
(1,233)
663
947
The deferred tax liabilities effect of the movements in temporary differences for the year ended
31 December 2020 is detailed below:
31 December
2019
(Charged)/
credited to
31 December
2020
In millions of RR
profit or loss
Tax effect of deductible and taxable temporary
differences
Loans and advances to customers
Tangible fixed assets
Intangible assets
Revaluation of debt investments at FVOCI
Accrued expenses and other temporary differences
Insurance provisions
(61)
(16)
(76)
-
21
(10)
(62)
16
31
(23)
(165)
12
(123)
-
(45)
(23)
(144)
2
Deferred tax liabilities
(142)
(191)
(333)
66
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
28
Dividends
The movements in dividends during the year ended 31 December 2021 and 2020 are as follows:
In millions of RR
2021
2020
Dividends payable at 1 January
Dividends declared
Dividends paid
656
3,559
(3,628)
(283)
582
11,563
(11,853)
364
Foreign exchange differences and other movements
Dividends payable at 31 December
304
656
Dividends per share declared (in USD)
0.24
0.80
On 11 March 2021 the Group announced suspension of dividend payments for the remainder of 2021 to
keep the funds inside the Group to provide for organic and/or inorganic growth opportunities.
Dividends declared in the tables above represent dividends declared by the Board of directors are reduced
by RR 74 million for the year ended 31 December 2020 due to dividends on GDRs acquired by the Company
from the market not for the immediate purposes of the existing MLTIP.
On 10 March 2021 the Board of directors declared an interim dividend of USD 0.24 (RR 17.82) per
share/per GDR with a total amount allocated for dividend payment of around USD 47.8 million
(RR 3,552 million).
On 11 November 2020 the Board of directors declared an interim dividend in line with the current dividend
policy of USD 0.25 (RR 19.10) per share/per GDR with a total amount allocated for dividend payment of
around USD 49.8 million (RR 3,807 million). Declared dividends were paid in USD on 30 November 2020.
On 5 August 2020 the Board of directors declared an interim dividend in line with the current dividend policy
of USD 0.20 (RR 14.68) per share/per GDR with a total amount allocated for dividend payment of around
USD 39.9 million (RR 2,925 million). Declared dividends were paid in USD on 24 August 2020.
On 11 May 2020 the Board of directors declared an interim dividend in line with the current dividend policy
of USD 0.14 (RR 10.34) per share/per GDR with a total amount allocated for dividend payment of around
USD 28 million (RR 2,061 million). Declared dividends were paid in USD on 1 and 2 June 2020.
On 10 March 2020 the Board of directors declared an interim dividend of USD 0.21 (RR 14.18) per
share/per GDR with a total amount allocated for dividend payment of around USD 41.9 million
(RR 2,826 million). Declared dividends were paid in USD on 30 March and 1 April 2020.
Dividends were declared and paid in USD throughout the years ended 31 December 2021 and 2020.
Dividends payable at 31 December 2021 related to treasury shares acquired under MLTIP amounting to
RR 304 million are included in other non-financial liabilities (2020: RR 656 million).
67
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
29
Reconciliation of Liabilities Arising from Financing Activities
The table below sets out an analysis of the Group’s debt and the movements in the Group’s debt for each
of the periods presented. The debt items are those that are reported as financing in the consolidated
statement of cash flows.
Debt
Perpetual
Lease
Total
securities in subordinated
liabilities
In millions of RR
issue
debts
At 31 December 2019
26,078
18,487
1,694
46,259
Cash flows from repayments
Cash flows from proceeds
Foreign exchange adjustments
Other non-cash movements
(2,894)
331
(1,937)
710
3,609
(114)
(758)
(5,589)
1,041
4,068
226
-
-
459
(64)
404
At 31 December 2020
23,910
20,755
1,340
46,005
Cash flows from repayments
Cash flows from proceeds
Foreign exchange adjustments
Other non-cash movements
(2,247)
(7,745)
45,362
999
(820)
(10,812)
45,362
999
-
-
17
-
-
286
532
835
At 31 December 2021
21,680
59,657
1,052
82,389
30
Financial and Insurance Risk Management
The risk management function within the Group is carried out with respect to financial risks, operational
risks and legal risks by the management of the Bank and Insurance Company. Financial risk comprises
market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The
primary function of financial risk management is to establish risk limits and to ensure that any exposure to
risk stays within these limits. The operational and legal risk management functions are intended to ensure
the proper functioning of internal policies and procedures in order to minimize operational and legal risks.
Credit risk. The Group exposes itself to credit risk, which is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to meet an obligation. Exposure to credit risk arises
as a result of the Group’s lending and other transactions with counterparties giving rise to financial assets.
The Group grants retail loans and SME loans to customers across all regions of Russia, therefore its credit
risk is broadly diversified.
The management of the Group takes special measures to mitigate growing credit risk such as decreasing
of credit limits for unreliable clients, diversifying of modes of work with overdue borrowers, toughening of
scoring for the new borrowers etc., giving rise to financial assets and off-balance sheet credit-related
commitments.
The Group’s maximum exposure to credit risk is reflected in the carrying amounts of financial assets in the
consolidated statement of financial position. For financial guarantees issued, commitments to extend credit,
undrawn credit lines, the maximum exposure to credit risk is the amount of the commitment (Note 32).
The Bank created a credit committee, which establishes general principles for lending to individual
borrowers. According to these principles, the minimum requirements for potential customers are listed
below:
•
•
•
Citizenship of the Russian Federation;
Age from 18 to 70 y.o., but not older than 70 y.o. at the time of loan repayment;
Availability of a cell-phone;
68
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
•
•
Permanent employment;
Permanent income.
Сredit cards are issued with a limit of up to RR 700 thousand, with monthly debt repayment.
For cash loans, minimum requirements are listed below:
•
•
The requested loan term is from 3 to 36 months;
Cash loan volumes range between RR 50 thousand and RR 2,000 thousand.
For POS loans minimum requirements are listed below:
•
•
•
The requested loan amount should exceed RR 3 thousand;
The requested loan term is from 3 to 36 months;
The amount of one POS loan does not exceed RR 500 thousand.
For secured loans minimum requirements are listed below:
•
•
The requested loan secured with a car amount should be between RR 100 thousand and
RR 3,000 thousand, loan term is from 3 months to 5 years. The requirement for the car is in good
condition of driving with an age not more than 15 years, availability of a vehicle registration certificate
and vehicle passport;
The requested loan secured with a real estate amount should be between RR 200 thousand and
RR 15,000 thousand, loan term is from 3 months to 15 years. The requirement for the real estate is
an apartment in the apartment building within the Russian Federation, which is free from any
encumbrances.
For car loans minimum requirements are listed below:
•
•
•
The requested loan term is from 1 to 5 years;
Car loan volumes up to RR 3,000 thousand;
The requirement for the car is with an age not more than 18 years and availability of vehicle passport.
For loans to SME minimum requirements are listed below:
•
•
Working capital loan: loan volumes up to RR 10,000 thousand and loan term to 6 months;
Credit for individual entrepreneurs for any purpose: loan volumes up to RR 2,000 thousand and loan
term to 36 months;
•
•
Investment credit line secured by real estate: loan volumes up to RR 15 million and loan term to 5
years. The requirement for the real estate is an apartment in the apartment building within the
Russian Federation, which is free from any encumbrances;
For SME with a turnover from RR 120 million per year: loan volumes up to RR 60 million and loan
term to 5 years.
A credit decision process includes:
•
•
•
•
Validation of the application data. The system checks the validity of the data provided (addresses,
telephone numbers, age, if the applicant already uses any other products of the Bank);
Phone verification of the application information about the potential customer, his/her employment,
social and property status, etc. This step may be omitted for POS loans;
Requesting of the previous credit history of the applicant from the three largest credit bureaus in
Russia – Equifax, UCB (United Credit Bureau) and NBCH (National Bureau of Credit Histories);
Based on all available information, the credit score of the applicant is calculated and a final decision
is made about the approval of the credit product;
69
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
•
The approved loan amount, loan term and tariff plan are calculated depending on the score and
declared income.
Management of the Group manages the credit risk on unused limits on credit cards in the following way:
a)
b)
if the credit card loan is overdue for more than 7 days, its account will be blocked till repayment;
if the borrower had lost his/her source of income, then borrower account might be blocked till
verification of his/her new employment;
c)
if borrower’s loan debt burden in other banks is substantially bigger than at the time of loan origination
or the credit quality of the borrower decreases significantly then the borrower’s limit for credit might
be reduced accordingly.
When a customer experiences serious difficulties with his/her current debt servicing, he/she may be offered
loan restructuring. In this case the Bank stops accrual of interest, commissions and fines and the debt
amount is restructured according to a fixed instalment payment plan with not more than 36 equal monthly
payments. Another way of working with overdue loans is initiation of the state court process. This collection
option statistically gives greater recovery than the sale of credit-impaired loans. Defaulted clients that could
be subject to the court process are chosen by the Bank’s Collection Department considering the following
criteria:
a)
b)
c)
d)
e)
the client’s account balance was fixed, accrual of interest stopped;
information about the client is considered to be up to date;
the client denied restructuring program;
term of limitation of court actions has not expired;
court process is economically justified.
When loans become unrecoverable or not economically viable to pursue further collection efforts, the
Collection Department may decide to sell these loans to a debt collection agency. The Collection
Department considers the following criteria for credit-impaired loans qualifying for sale to external debt
collection agencies:
a)
loans remain unpaid after all collection procedures were performed (no payment during last 4-6
months);
b)
c)
d)
e)
the debtor cannot be either reached or found for the previous 4 months;
the debtor has no assets and there is no expectation he/she will have any in the future;
the debtor has died and there is no known estate or guarantor;
it is determined that it is not cost effective to continue collection efforts.
70
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
Credit risk grading system. For measuring credit risk and grading financial instruments except for loans
and advances to customers by the level of credit risk, the Group applies risk grades estimated by external
international rating agencies in case these financial instruments have risk grades estimated by external
international rating agencies (using Fitch ratings and in case of their absence - Moody’s or Standard &
Poor’s ratings adjusting them to Fitch’s categories using a reconciliation table):
Corresponding ratings of external international rating
Master scale credit risk grade
agency (Fitch)
Excellent
Good
Monitor
AAA, AA+ to AA-, A+ to A-
BBB+ to BBB-, BB+
BB to B+
Sub-standard
Doubtful
Default
B, B-
CCC+ to CC-
C, D
Each master scale credit risk grade is assigned a specific degree of creditworthiness:
•
•
•
•
•
•
Excellent – high credit quality with lowest or very low expected credit risk;
Good - good credit quality with currently low expected credit risk;
Monitor – adequate credit quality with a moderate credit risk;
Sub-standard – moderate credit quality with a satisfactory credit risk;
Doubtful – facilities that require closer monitoring and remedial management; and
Default – facilities in which a default has occurred.
For measuring credit risk and grading loans and advances to customers, credit related commitments and
those financial instruments which do not have risk grades estimated by external international rating
agencies, the Group applies risk grades and the corresponding range of probabilities of default (PD):
Master scale credit risk grade
Corresponding interval
Excellent
For credit cards: non-overdue with PD < 5%;
for other types of loans: non-overdue for the last 12 months with PD < 5% or with
early repayments
all other non-overdue loans
Good
Monitor
1-30 days overdue for all types of loans or without first due date for credit card
loans
Sub-standard
NPL
31-90 days overdue or restructured loans 0-90 days overdue
90+ days overdue
The condition of early repayments is satisfied, as described in the table above, if cumulative amount of
early repayments exceed 5% of the gross carrying amount at the date of recognition of the loan
Each master scale credit risk grade is assigned a specific degree of creditworthiness:
•
•
•
Excellent – strong credit quality with minimum expected credit risk;
Good – adequate credit quality with low expected credit risk;
Monitor – adequate credit quality with a moderate credit risk and credit cards loans before the first
due date;
•
•
Sub-standard – low credit quality with a substantial credit risk, includes restructured loans that are
less than 90 days overdue;
NPL – non-performing loans, credit-impaired loans more than 90 days overdue.
71
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The rating models are regularly reviewed by the Credit Risk Department, backtested on actual default data
and updated if necessary. Despite the method used, the Group regularly validates the accuracy of ratings
estimates and appraises the predictive power of the models.
Expected credit loss (ECL) measurement – definitions and description of estimation techniques.
ECL is a probability-weighted estimate of the present value of future cash shortfalls (i.e., the weighted
average of credit losses, with the respective risks of default occurring in a given time period used as
weights). ECL measurement is based on the following components used by the Group:
Default occurs when a financial asset is 90 days past due or less than 90 days overdue but with the final
statement issued, i.e. the limit is closed, the balance is fixed, interest and commissions are no longer
accrued.
Probability of Default (PD) – an estimate of the likelihood of default to occur over a given time period.
Exposure at Default (EAD) – an estimate of exposure at a future default date, taking into account expected
changes in exposure after the reporting date, including repayments of principal and interest, and expected
drawdowns on committed facilities.
Loss Given Default (LGD) – an estimate of the loss arising on default as a percentage of the EAD. It is
based on the difference between the contractual cash flows due and those that the Group would expect to
receive.
Discount Rate – a rate to discount an expected loss to its present value at the reporting date. The discount
rate represents the effective interest rate (EIR) for the financial instrument or an approximation thereof.
Lifetime period – the maximum period over which ECL should be measured. For POS loans lifetime period
is equal to 24 months, cash loans to 36 months, secured loans to 72 months, car loans to 48 months. For
revolving facilities, it is based on statistics of the average period between the moment of the loan falling
into the Stage 2 until the write-off or attrition. Currently the Group estimates that this period equals to 4
years, though it is subject to periodical reassessment.
Lifetime ECL – losses that result from all possible default events over the remaining lifetime period of the
financial instrument.
12-month ECL – the portion of lifetime ECLs that represent the ECLs resulting from default events on a
financial instrument that are possible within 12 months after the reporting date that are limited by the
remaining contractual life of the financial instrument.
Forward looking information – the information that includes the key macroeconomic variables impacting
credit risk and expected credit losses for each portfolio segment. A pervasive concept in measuring ECL in
accordance with IFRS 9 is that it should consider forward-looking information.
Credit Conversion Factor (CCF) – a coefficient that shows that the probability of conversion of an off-
balance sheet amount to exposure on the consolidated statement of financial position within a defined
period. It can be calculated for a 12-month or lifetime period. Based on the analysis performed, the Group
considers that 12-month and lifetime CCFs are the same.
Purchased or originated credit-impaired (POCI) financial assets - financial assets that are credit-impaired
upon initial recognition.
Default and credit-impaired assets – assets for which a default event has occurred.
The default definition stated above should be applied to all types of financial assets of the Group.
An instrument is considered to no longer be in default (i.e. to have “cured”) when it no longer meets any of
the default criteria.
Significant increase in credit risk (SICR) - the SICR assessment is performed on an individual basis for all
financial assets by monitoring the triggers stated below. The criteria used to identify SICR are monitored
and reviewed periodically for appropriateness by the Group’s Risk Management Department.
72
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The Group considers a financial instrument to have experienced a SICR when one or more of the following
quantitative, qualitative or backstop criteria have been met.
For interbank operations, bonds issued by banks and bonds issued by corporates and sovereigns:
•
•
•
30 days past due;
award of risk grade “Doubtful”;
decrease of assigned external rating by 2 notches, which corresponds to an approximate increase
of PD by 2.5 times.
For credit card loans:
•
•
30 days past due; or
threshold defined on an individual basis using existing scoring models: increase of the 12-month PD
compared to 12-month PD estimated 18 months ago or as of the date of initial recognition (if it
occurred less than 18 months ago) by 3 times and PD reaching 50% and above. 18-month period
was determined as the weighted average period of the most recent date where the credit limit was
revised by at least 25%, which is considered to be a substantial revision.
For all other loans:
•
•
30 days past due; or
if number of overdue payments for the last 6 due dates exceeds 2, or if PD exceeds 50%.
If the SICR criteria are no longer met, the instrument will be transferred back to Stage 1.
General principle of techniques applied
For non-POCI financial assets, ECLs are generally measured based on the risk of default over one of two
different time periods, depending on whether or not the credit risk of the borrower has increased significantly
since initial recognition.
This approach can be summarized in a three-stage model for ECL measurement:
•
•
Stage 1 – a financial instrument that is not credit-impaired on initial recognition and its credit risk has
not increased significantly since initial recognition, the loss allowance is based on 12-month ECLs;
Stage 2 – if since the date, which was assumed to be the date of initial recognition is identified a
SICR, the financial instrument is moved to Stage 2 but is not yet deemed to be credit-impaired, the
loss allowance is based on lifetime ECLs;
•
Stage 3 – if the financial instrument is credit-impaired or restructured, the financial instrument is then
moved to Stage 3 and the loss allowance is based on lifetime ECLs.
ECL for POCI financial assets is always measured on a lifetime basis (Stage 3), so at the reporting date,
the Group only recognises the cumulative changes in lifetime expected credit losses.
The Group carries out two separate approaches for ECL measurement:
•
for loans and advances to customers: assessment on a portfolio basis: internal ratings are estimated
on an individual basis but the same credit risk parameters (e.g. PD, LGD) are applied during the
process of ECL calculations for the same credit risk ratings and homogeneous segments of the loan
portfolio;
•
for all other financial assets except FVTPL: assessment based on external ratings.
The Group performs an assessment on a portfolio basis for the retail loans. This approach incorporates
aggregating the portfolio into homogeneous segments based on borrower-specific information, such as
delinquency, the historical data on losses and other.
73
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
Principles of assessment on portfolio basis – to assess the staging of exposure and to measure a loss
allowance on a collective basis, the Group combines its exposures into segments on the basis of shared
credit risk characteristics, such as that exposures to risk within a group are homogeneous.
Examples of shared characteristics include type of customer, product type, credit risk rating, date of initial
recognition, overdue level and repayment statistics.
The different segments reflect differences in PD. The appropriateness of groupings is monitored and
reviewed on a periodic basis by the Risk Management Department.
In general, ECL is the multiplication of the following credit risk parameters: EAD, PD and LGD (definitions
of the parameters are provided above). The general approach used for ECL calculation is stated below.
where:
푃퐷푡 – probability of default in moment ꢀꢁ (can’t be higher than 100%);
푖
퐸퐴퐷푡 - exposure at default in moment ꢀꢁ;
푖
퐿퐺퐷푡 - loss given default in moment ꢀꢁ;
푖
ꢀꢁ – number of months in the loan’s lifetime;
퐸퐼푅 – effective interest rate;
푁 – remaining amount of payments.
The ECL is determined by predicting credit risk parameters (EAD, PD and LGD) for each future month
during the lifetime period for each exposure or segment. These three components are multiplied together.
This effectively calculates an ECL for each future month, which is then discounted back to the reporting
date and summed up. The discount rate used in the ECL calculation is the effective interest rate or an
approximation thereof.
The EADs are determined based on the expected payment profile, on an individual basis. For revolving
products, the EAD is predicted by taking the current withdrawn balance and adding a “credit conversion
factor” that accounts for the expected drawdown of the remaining limit of utilised loans by the time of default.
These assumptions vary by product type, current limit utilisation and other borrower-specific behavioural
characteristics. For other products EAD is equal to current exposure as there is no credit limit to utilize.
Two types of PDs are used for calculating ECLs: 12-month and lifetime PD:
•
12-month PDs – the estimated probability of a default occurring within the next 12 months. This
parameter is used to calculate 12-month ECLs. An assessment of a 12-month PD is based on the
latest available historic default data using borrower-specific behavioural characteristics and adjusted
for forward-looking information when appropriate. Based on borrower-specific PDs the exposures
are allocated to segments to which average PD for the segment is applied.
•
Lifetime PDs – the estimated probability of a default occurring over the remaining life of the financial
instrument. This parameter is used to calculate lifetime ECLs for Stage 2 and Stage 3 exposures. An
assessment of a lifetime PD is based on the latest available historic default data using product
specific lifetime periods defined above. To calculate Lifetime PD, the Group developed lifetime PD
curves based on the 12-month PD data.
74
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
LGD represents the Group's expectation of the extent of loss on a defaulted exposure. For credit card loans,
cash loans and POS loans LGDs are calculated on portfolio basis based on recovery statistics of defaulted
loans over the period of 24 or 36 months. For secured loans, car loans and loans to SME LGDs are
calculated using current market data in relation to the expected recoveries.
ECL measurement for loan commitments. The ECL measurement for these instruments includes the same
steps as described above for on-balance sheet exposures and differs with respect to EAD calculation. The
EAD is a product of credit conversion factor (“CCF”) and amount of the commitment. CCF for undrawn
credit limits of credit cards and overdrafts is defined based on statistical analysis of exposures at default.
Principles of assessment based on external ratings – the principles of ECL calculations based on external
ratings are the same as for their assessment on a portfolio basis. Credit risk parameters (PD and LGD) are
taken from the default and recovery statistics published by international rating agencies (Fitch and in case
of their absence - Moody’s or Standard & Poor’s).
Forward-looking information incorporated in the ECL models. The calculation of ECLs incorporates forward-
looking information. The Group has performed historical analysis and identified the key economic variables
impacting credit risk and ECLs for each portfolio. The list of variables:
•
•
•
Russian stock market index MOEX;
Moscow Prime Offered Rate;
Debt load of Russian population based on statistics from bureaus of credit history.
The impact of these economic variables on the ECL has been determined by performing statistical
regression analysis in order to understand the way how changes in these variables historically impacted
default rates. Three different scenarios are used: base, optimistic and pessimistic. The scenarios are
weighted accordingly with base scenario having the 92.7% (2020: 71.1%) weight, optimistic scenario having
the 0.1% (2020: 0.1%) weight and pessimistic scenario having the 7.2% (2020: 28.8%) weight. Scenarios
are reviewed monthly.
An increase in pessimistic scenario by 10% to the detriment of the base one would result in increase in
credit loss allowances of RR 338 million. An increase in optimistic scenario by 10% to the detriment of the
base one would result in decrease in credit loss allowances of RR 57 million.
Backtesting – the Group regularly reviews its methodology and assumptions to reduce any difference
between the estimates and the actual loss of credit. Such backtesting is performed on a quarterly basis.
The results of backtesting the ECL measurement methodology are communicated to Group Management
and further steps for refining models and assumptions are defined after discussions between authorised
persons.
Market risk. The Group takes on exposure to market risks. Market risks of the Group arise from open
positions in (a) currency and (b) interest rate, both of which are exposed to general and specific market
movements. The priority goal of market risk management is to maintain the risks assumed by the Group at
a level determined by the Group in accordance with its own strategic objectives. Management sets limits
on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this
approach does not prevent losses outside of these limits in the event of more significant market movements.
Currency risk. In respect of currency risk, the management sets limits on the level of exposure by currency
and in total for both overnight and intra-day positions, which are monitored daily.
75
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The table below summarizes the Group’s exposure to foreign currency exchange rate risk at the end of the
year:
At 31 December 2021
Non- Derivatives
derivative
monetary
financial
At 31 December 2020
Non- Derivatives
position derivative derivative
monetary monetary
Non-
derivative
monetary
financial
assets
Net
Non-
Net
position
In
millions
of RR
financial
assets
financial
liabilities
liabilities
RR
1,002,784
206,008
55,093
2,368
(835,131)
(228,623)
(53,866)
(2,360)
(23,351) 144,302
674,171
116,693
35,019
1,405
(545,395)
(140,851)
(31,909)
(1,414)
(24,276) 104,500
USD
Euro
GBP
Others
29,227
(3)
6,612
1,224
8
29,207
(5)
5,049
3,105
-
-
-
-
(9)
(513)
4,077
(4,219)
(142)
1,942
(2,455)
Total
1,270,330
(1,124,199)
5,873 152,004
829,230
(722,024)
4,926
112,132
Derivatives presented above are monetary financial assets or monetary financial liabilities but are
presented separately in order to show the Group’s gross exposure. Amounts disclosed in respect of
derivatives represent the fair value, at the end of the reporting period, of the respective currency that the
Group agreed to buy (positive amount) or sell (negative amount) before netting of positions and payments
with the counterparty. The amounts by currency are presented gross as stated in Note 36.
The net total represents the fair value of the currency derivatives. The above analysis includes only
monetary assets and liabilities.
The following table presents sensitivities of profit or loss and equity to reasonably possible changes in
exchange rates applied at the end of the reporting period, with all other variables held constant:
At 31 December 2021
At 31 December 2020
Impact on Impact on
Impact on
profit for the
year
Impact on
total profit for the
equity
total
In millions of RR
year
equity
USD strengthening by 20% (2020: by 20%)
USD weakening by 20% (2020: by 20%)
Euro strengthening by 20% (2020: by 20%)
Euro weakening by 20% (2020: by 20%)
GBP strengthening by 20% (2020: by 20%)
GBP weakening by 20% (2020: by 20%)
1,322
(1,322)
245
(245)
2
1,322
(1,322)
245
(245)
2
794
(794)
488
(488)
1
794
(794)
488
(488)
1
(2)
(2)
(1)
(1)
The exposure was calculated only for monetary balances denominated in currencies other than the
functional currency of the respective entity of the Group.
Interest rate risk. The Group takes on exposure to the effects of fluctuations in the prevailing levels of
market interest rates on its financial position and cash flows. Interest margins may increase as a result of
such changes but may reduce or create losses in the event that unexpected movements arise. Management
monitors on a daily basis and sets limits on the level of mismatch of interest rate repricing that may be
undertaken.
The Group is exposed to prepayment risk through providing fixed rate loans, which give the borrower the
right to repay the loans early. The Group’s current year profit and equity at the end of the current reporting
period would not have been significantly impacted by changes in prepayment rates because such loans
are carried at amortised cost and the prepayment right is at or close to the amortised cost of the loans and
advances to customers (2020: no material impact).
76
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The table below summarizes the Group’s exposure to interest rate risks. The table presents the aggregated
amounts of the Group’s financial assets and liabilities at carrying amounts, categorized by the earlier of
contractual interest repricing or maturity dates:
Demand and From 1 to
From 6 to
From 1 to More than
Total
less than
1 month
6 months 12 months
3 years
3 years
In millions of RR
31 December 2021
Total financial assets
Total financial liabilities
504,182
(610,067)
215,387
(238,762)
128,403
(119,402)
245,696
(102,641)
182,625
(53,417) (1,124,289)
1,276,293
Net interest sensitivity
gap at 31 December 2021
(105,885)
(23,375)
9,001
143,055
129,208
152,004
31 December 2020
Total financial assets
Total financial liabilities
249,316
(379,481)
149,031
(165,961)
77,988
(75,564)
138,248
(90,975)
219,682
(10,152)
834,265
(722,133)
Net interest sensitivity
gap at 31 December 2020
(130,165)
(16,930)
2,424
47,273
209,530
112,132
The Group has no significant risk associated with variable interest rates on loans and advances provided
to customers or loans received.
The aim of interest rate risk management is to maintain the risks assumed by the Group within the limits
determined by the Group in accordance with its own strategic objectives. The interest rate risk is managed
by setting caps and floors in relation to interest rates on financial assets and liabilities depending on their
types and maturities and balancing the assets and liabilities which are sensitive to changes in interest rates.
The assessment of the magnitude of interest rate risk is carried out by performing a sensitivity analysis
which imply assessment of impact on net interest income of a shift in interest rates by 200 basis points. At
31 December 2021, if interest rates at that date had been 200 basis points lower/higher (2020: 200 basis
points), with all other variables held constant, profit for the year would have been RR 3,040 million (2020:
RR 2,243 million) lower/higher, equity would have been RR 3,040 million (2020: RR 2,243 million)
lower/higher.
The Group monitors interest rates for its financial instruments. The table below summarizes interest rates
for the years 2021 and 2020 based on reports reviewed by key management personnel.For securities, the
interest rates represent yields to maturity based on market quotations at the reporting date:
77
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
At 31 December 2021
At 31 December 2020
In % p.a.
Assets
RR USD EURO GPB Other
RR USD EURO GPB
Other
Cash and cash equivalents
Loans and advances to
customers
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
28.9
0.0
6.9
5.9
15.2 15.0
-
-
1.7
-
1.3
0.0
15.2
-
-
-
-
-
-
-
-
33.5
3.2
6.9
6.9
15.5 15.4
-
-
1.7
-
1.3
-
-
-
-
-
-
-
-
-
-
-
Due from banks
Investments in securities
Repurchase receivables
Brokerage receivables
2.3
0.0
2.6
3.3
0.0
-
13.5
Liabilities
Due to banks
4.8
2.7
8.6
4.9
0.0
0.3
-
-
-
-
4.4
3.3
-
0.0
0.5
-
-
-
-
Customer accounts
Other borrowed funds
Debt securities in issue
Brokerage payables
Subordinated debt
0.1
0.0
0.0
0.1
0.1
0.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.6
-
15.2 15.4
8.2
15.6 15.6
10.0
-
-
The sign “-” in the table above means that the Group does not have the respective assets or liabilities in
the corresponding currency
Geographical risk concentrations. The geographical concentration of the Group’s financial assets and
liabilities at 31 December 2021 is set out below:
Russia
OECD
Other
Listed
Total
In millions of RR
Non-OECD
Financial assets
Cash and cash equivalents
Mandatory cash balances with the CBRF
Due from other banks
Loans and advances to customers
Financial derivatives
Investments in securities
Repurchase receivables
Brokerage receivables
295,864
8,589
542
602,337
5,963
209,477
5,826
49,138
1,399
20,612
-
-
-
-
-
-
-
-
-
-
-
-
-
316,476
8,589
542
606,308
5,963
215,311
5,826
49,138
15,171
52,969
-
-
-
-
-
-
3,971
-
5,834
-
-
-
-
13,772
-
Guarantee deposits with payment systems
Other financial assets
52,944
25
Total financial assets
1,232,079
34,384
9,830
-
1,276,293
Financial liabilities
Due to banks
11,313
945,723
-
3,806
90
9,634
-
3,084
69,170
-
-
-
-
-
-
-
-
67
-
-
-
-
-
-
-
-
65
-
-
11,313
945,723
21,680
3,806
90
9,634
59,657
3,084
69,302
Customer accounts
Debt securities in issue
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance provisions
Other financial liabilities
21,680
-
-
-
59,657
-
-
Total financial liabilities
1,042,820
307,806
67
-
65
-
81,337
1,124,289
307,806
Credit related commitments (Note 32)
78
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The geographical concentration of the Group’s financial assets and liabilities at 31 December 2020 is set
out below:
Russia
OECD
Other
Non-OECD
Listed
Total
In millions of RR
Financial assets
Cash and cash equivalents
Mandatory cash balances with the CBRF
Due from other banks
Loans and advances to customers
Financial derivatives
Investments in securities
Repurchase receivables
Brokerage receivables
128,536
5,379
1,887
374,629
5,035
231,872
29
24,064
672
30,912
7,815
-
-
-
-
-
-
-
-
-
-
-
-
-
136,351
5,379
1,887
376,521
5,035
238,454
29
24,064
15,475
31,070
-
-
-
1,892
-
-
-
6,582
-
-
-
-
14,803
-
Guarantee deposits with payment systems
Other financial assets
158
Total financial assets
803,015
22,618
8,632
-
834,265
Financial liabilities
Due to banks
4,819
626,837
-
109
9,206
-
2,160
34,291
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46
-
-
4,819
626,837
23,910
109
9,206
20,755
2,160
Customer accounts
Debt securities in issue
Financial derivatives
Brokerage payables
Subordinated debt
Insurance provisions
Other financial liabilities
23,910
-
-
20,755
-
-
34,337
Total financial liabilities
677,422
204,868
-
-
46
-
44,665
722,133
204,868
Credit related commitments (Note )
Assets, liabilities and credit related commitments have been based on the country in which the counterparty
is located. Cash on hand has been allocated based on the country in which they are physically held.
Balances with Russian counterparties actually outstanding to/from offshore companies of these Russian
counterparties, are allocated to the caption “Russia”.
Other risk concentrations. Management monitors and discloses concentrations of credit risk by obtaining
reports listing exposures to borrowers with aggregated loan balances in excess of 10% of net assets. The
Group did not have any such significant risk concentrations at 31 December 2021 and 2020.
Liquidity risk. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities. The Group is exposed to daily calls on its available cash resources from
unused limits on issued credit cards, retail deposits from customers, current accounts and due to banks.
The Group does not maintain cash resources to meet all of these needs as experience shows that only a
certain level of calls will take place and it can be predicted with a high level of certainty. Liquidity risk is
managed by the Financial Committee of the Bank. The Group seeks to maintain a stable funding base
primarily consisting of amounts due to institutional investors, corporate and retail customer deposits and
debt securities. The Group keeps all available cash in diversified portfolios of liquid instruments such as a
correspondent account with CBRF and overnight placements in high-rated commercial banks, in order to
be able to respond quickly and smoothly to unforeseen liquidity requirements. The available cash at all
times exceeds all accrued financing costs falling due within half a year plus two months of regular operating
costs.
79
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The liquidity management of the Group requires consideration of the level of liquid assets necessary to
settle obligations as they fall due; maintaining access to a range of funding sources; maintaining funding
contingency plans; and monitoring balance sheet liquidity ratios against regulatory requirements.
The liquidity analysis takes into account the covenant requirements and ability of the Group to waive any
potential breaches within the grace period. The Bank calculates liquidity ratios on a daily basis in
accordance with the requirements of the CBRF. The Bank has complied with these ratios throughout 2021
and 2020. The CFO receives information about the liquidity profile of the financial assets and liabilities. This
includes daily, weekly, monthly and quarterly updates on the level of credit card transactions and
repayments, statistics on credit card issuance and credit card limit utilisation, inflow and outflow of retail
deposits, changes in the investment securities portfolio, level of expected outflows such as operating costs
and financing activities. The CFO then ensures the availability of an adequate portfolio of short-term liquid
assets, made up of an amount on the correspondent account with the CBRF and overnight deposits with
banks, to ensure that sufficient liquidity is maintained within the Group as a whole. Regular liquidity stress
testing under a variety of scenarios covering both normal and more severe market conditions and credit
card portfolio behaviour is reviewed by the CFO.
The table below shows liabilities at 31 December 2021 by their remaining contractual maturity. The amounts
of liabilities disclosed in the maturity table are the contractual undiscounted cash flows and gross loan
commitments. Such undiscounted cash flows differ from the amount included in the consolidated statement
of financial position because the consolidated statement of financial position amount is based on discounted
cash flows. When the amount payable is not fixed, the amount disclosed is determined by reference to the
conditions existing at the reporting date. Foreign currency payments are translated using the spot exchange
rate at the end of the reporting period.
The maturity analysis of financial liabilities at 31 December 2021 is as follows:
Demand From 1 to From 3 to
From 6 to More than
Total
and less 3 months
than
6 months 12 months 1 year
In millions of RR
1 month
Liabilities
Due to banks
5,600
545,363
153
-
-
3,993
114,368
1,720
73,213
31,608
3,806
6,602
-
11,313
950,822
34,488
3,806
7,434
9,634
60,753
3,084
66,683
686
Customer accounts
Debt securities in issue
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance provisions
Other financial liabilities
Lease liabilities
117,367
100,511
292
-
198
-
698
724
-
1,495
-
249
-
1,075
724
-
940
-
51
9,634
365
350
-
334
-
18,908
587
-
39,707
699
66,683
64
-
92
146
275
109
Credit related commitments
(Note 32)
307,806
-
-
-
-
307,806
Total potential future
payments for financial
obligations
936,069
119,371
104,200
139,405
157,464
1,456,509
80
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The maturity analysis of financial liabilities at 31 December 2020 is as follows:
Demand
and less
than
From 1 to
3 months
From 3 to
6 months 12 months
From 6 to More than
Total
1 year
In millions of RR
1 month
Liabilities
Due to banks
-
335,710
173
51
9,206
168
345
34,337
64
-
84,412
316
198
-
-
80,149
515
251
-
-
80,306
1,930
501
-
4,819
49,184
23,245
25,842
-
4,819
629,761
26,179
26,843
9,206
24,110
2,160
34,337
1,348
Customer accounts
Debt securities in issue
Financial derivatives
Brokerage payables
Subordinated debt
Insurance provisions
Other financial liabilities
Lease liabilities
322
207
-
496
953
-
998
358
-
22,126
297
-
102
166
330
686
Credit related commitments
(Note 32)
204,868
-
-
-
-
204,868
Total potential future
payments for financial
obligations
584,922
85,557
82,530
84,423
126,199
963,631
Financial derivatives receivable and payable are disclosed in the Note 36. The tables above present only
the gross payables.
Insurance provisions are disclosed in the table above based on their expected maturities.
Customer accounts are classified in the above analysis based on contractual maturities. However, in
accordance with the Russian Civil Code, individuals have a right to withdraw their deposits prior to maturity
if they forfeit their right to accrued interest.
The Group takes on exposure to liquidity risk, which is the risk of cash surplus in case of assets-liabilities
cash-flow profile mismatch. Exposure to liquidity risk arises as a result of the Group’s borrowing and
operational activities that assume cash payment obligations. The Group uses daily, short-term and long-
term reporting, stress-testing and forecasting practices to monitor and prevent potential liquidity problems.
The Group is actively increasing the number of counterparties for interbank lending, looks for new wholesale
markets, improves and creates additional debit and credit products to have more instruments over cash-
flow management. The recent economic situation has resulted in increased liquidity risk.
In response the management of the Group preserves cash safety cushions for possible cash outflows and
has planned Group’s liquidity position for the next year to ensure it can cover all upcoming payment
obligations.
81
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The expected maturity analysis of financial instruments at carrying amounts as monitored by management
at 31 December 2021 is presented in the table below.
Demand From 1 to From 3 to From 6 to From 1 to More than 5
Total
and less 3 months 6 months 12 months
5 years
years
than
In millions of RR
1 month
Assets
Cash and cash equivalents
Mandatory cash balances
with the CBRF
Due from other banks
Loans and advances to
customers
Financial derivatives
Investments in securities
Repurchase receivables
Brokerage receivables
Guarantee deposits with
payment systems
309,364
7,112
-
-
-
-
316,476
4,794
-
901
-
673
-
780
-
1,441
542
-
-
8,589
542
79,485
111
209,491
5,826
95,910 100,446
109,658
190,672
1,800
30,137
606,308
5,963
215,311
5,826
-
-
-
-
-
-
4,052
-
5,820
-
-
-
-
-
49,138
49,138
1,989
51,883
2,400
53
2,513
31
2,744
37
4,771
965
754
-
15,171
52,969
Other financial assets
Total financial assets
712,081 106,376 103,663
117,271
200,191
36,711 1,276,293
Liabilities
Due to banks
5,600
527,741
-
99,159
872
-
-
74,102
1,113
-
3,993
85,933 158,788
1,720
-
-
11,313
945,723
21,680
3,806
90
9,634
59,657
3,084
69,302
Customer accounts
Debt securities in issue
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance provisions
Other financial liabilities
-
-
59
873
7,263
11,559
3,806
-
-
-
-
31
-
-
-
-
-
-
-
-
-
-
9,634
-
350
66,683
1,046
724
825
1,046
724
787
19,798
587
37,767
699
309
698
Total financial liabilities
610,067 102,626
77,772
25,891
111,882
5,389
206,577
(6,386)
130,658
15,365 1,124,289
Net liquidity gap at
31 December 2021
102,014
3,750
21,346
152,004
Cumulative liquidity gap at
31 December 2021
102,014 105,764 131,655
137,044
152,004
-
Provision for unearned premiums in the amount of RR 7,281 million is not included in the insurance
provisions stated above. Refer to Note 18.
82
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
The expected maturity analysis of financial instruments at carrying amounts as monitored by management
at 31 December 2020 is presented in the table below.
Demand From 1 to From 3 to From 6 to From 1 to More than 5
Total
and less 3 months 6 months 12 months
5 years
years
than
In millions of RR
1 month
Assets
Cash and cash equivalents
Mandatory cash balances
with the CBRF
Due from other banks
Loans and advances to
customers
Financial derivatives
Investments in securities
Repurchase receivables
Brokerage receivables
Guarantee deposits with
payment systems
136,351
-
-
-
-
-
136,351
2,756
-
546
-
454
-
531
-
1,092
1,887
-
-
5,379
1,887
52,623
82
238,454
29
67,843
69,011
72,407
98,002
4,953
16,635
376,521
5,035
238,454
29
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,064
24,064
2,163
30,820
2,788
44
2,836
21
2,976
12
4,028
173
684
-
15,475
31,070
Other financial assets
Total financial assets
487,342
71,221
72,322
75,926 110,135
17,319
834,265
Liabilities
Due to banks
-
321,104
-
76
9,206
-
-
-
-
4,819
-
-
4,819
626,837
23,910
109
9,206
20,755
2,160
Customer accounts
Debt securities in issue
Financial derivatives
Brokerage payables
Subordinated debt
Insurance provisions
Other financial liabilities
63,601
52,958
61,899 127,275
870
944
981
11,281
9,834
-
-
-
-
-
-
33
-
-
-
-
-
-
18,832
297
481
207
-
481
953
-
961
358
-
345
34,337
-
34,337
Total financial liabilities
365,068
122,274
65,159
6,062
55,336
16,986
64,199 162,537
9,834
7,485
722,133
112,132
-
Net liquidity gap at
31 December 2020
11,727
(52,402)
Cumulative liquidity gap at
31 December 2020
122,274 128,336 145,322
157,049 104,647
112,132
Provision for unearned premiums in the amount of RR 3,907 million is not included in the insurance
provisions stated above. Refer to Note 18.
As at the 31 December 2021 all the investment in debt securities are classified within demand and less
than one month as they are easy repoable in CBR or on the open market securities and can provide
immediate liquidity to the Group. All current accounts of individuals are classified using outflow curve (2020:
the same).
The allocation of deposits of individuals considers the statistics of autoprolongations and top-ups of longer
deposits with the funds from shorter deposits after their expiration in case when the customers have more than
one active deposit. The matching and/or controlled mismatching of the maturities and interest rates of assets
and liabilities is fundamental to the management of the Group. It is unusual for banks ever to be completely
matched since business transacted is often of an uncertain term and of different types.
83
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
An unmatched position potentially enhances profitability but can also increase the risk of losses. The maturities
of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature,
are important factors in assessing the liquidity of the Group and its exposure to changes in interest and exchange
rates.
Management believes that in spite of a substantial portion of customer accounts being on demand,
diversification of these deposits by number and type of depositors, and the past experience of the Group
would indicate that these customer accounts provide a long-term and stable source of funding for the Group.
Insurance risk. Insurance risk is the risk associated with insurance contracts, consisting in the possibility
of the occurrence of an insurance event and the uncertainty of the amount and time of occurrence of the
loss associated with it.
The insurance risk management process covers all stages, from the stage of development of insurance
rates to the settlement of losses.
The main steps in the insurance risk management process include:
•
•
•
Underwriting and regulation of tariff policy;
Efficiency of the loss settlement process;
Diversification of the insurance portfolio.
Tariff policy. The process of underwriting and regulation of the tariff policy includes the formation of tariffs
for certain areas of activity based on the analysis of results for previous periods, existing market conditions
and the Insurance Company's strategy.
The insurance tariff is set on the basis of the analysis of the expected loss ratio based on Group’s insurance
portfolio and similar products on the market, the commission ratio based on the analysis of product
profitability and commission rates for similar products on the market, and the analysis of the average market
rate. When developing tariffs, factors such as expected inflation and changes in the legislation of the
Russian Federation are also taken into account.
The Insurance Company monitors the correctness of the calculation of the insurance premium under the
insurance contract by analysing, on a regular basis, the deviations of the actual received premiums from
the estimated premiums.
Loss settlement process. In accordance with the insurance contract, the policyholder is obliged to notify the
insurance company of a loss within a certain period of time. Losses are settled by specialized units, other
than selling business units. The insurance claims will be paid only after receiving all the necessary
documents confirming the fact of the insured event. Also, if necessary, economic security department and
legal department are involved in checking documents for settlement of losses. If at the time of payment of
the insurance claims the policyholder had outstanding debt of the insurance premium, the unpaid part is
deducted from the amount of compensation.
If there is a third party that caused an insurance loss to the insured client, the Group has a right to pursue
third parties responsible for loss for payment of some or all costs related to the claims settlement process
of the Group.
Diversification of the insurance portfolio. To reduce insurance risk, the Group also uses the diversification
of its insurance portfolio - it insures a large number of small risks, which, in particular, is achieved through
the remote provision of insurance services almost throughout the Russian Federation. The company does
not operate outside the Russian Federation and is exposed to risks associated with the geographical
features of the regions of the Russian Federation.
84
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
30
Financial and Insurance Risk Management (Continued)
Sensitivity analysis. The following analyses the possible changes in the key assumptions used in the
calculation of insurance liabilities under contracts other than life insurance, provided that the other
assumptions are constant. This analysis reflects the impact on gross and net liabilities, profit before tax and
equity of the Group.
Effect of changes in the key assumptions as at 31 December 2021:
In millions of RR except for the number
of claims
Change in
assumptions
Effect on
insurance
obligations
other than
life
Effect on the Effect on Effect on
reinsurers'
profit
equity
share in before tax
insurance
obligations
insurance other than life
insurance
The average cost of insurance claims
The average number of claims
– 10%
+ 10%
(256)
256
1
(1)
255
(255)
204
(204)
– 10%
+ 10%
(256)
256
1
(1)
255
(255)
204
(204)
Effect of changes in the key assumptions as at 31 December 2020:
Change in
assumptions
Effect on Effect on the
Effect on
profit
Effect on
equity
insurance
obligations
other than
life
reinsurers'
share in before tax
insurance
obligations
In millions of RR except for the number
of claims
insurance other than life
insurance
The average cost of insurance claims
– 10%
+ 10%
(180)
180
1
(1)
179
(179)
143
(143)
The average number of claims
– 10%
+ 10%
(180)
180
1
(1)
179
(179)
143
(143)
31
Management of Capital
The Group’s objectives when managing capital are (i) for the Bank to comply with the capital requirements
set by the Central Bank of Russian Federation (CBRF), (ii) for the Insurance Company to comply with the
capital requirements set by the legislation of the Russian Federation, (iii) for the Group to comply with the
financial covenants set by the terms of securities issued; (iv) to safeguard the Group’s ability to continue
as a going concern.
The Group considers total capital under management to be equity attributable to shareholders of the
Company as shown in the consolidated statement of financial position. The amount of capital that the Group
managed as of 31 December 2021 was RR 176,091 million (2020: RR 127,016 million).
Compliance with capital adequacy ratios set by the CBRF is monitored daily and submitted to the CBRF
monthly with reports outlining their calculation reviewed and signed by the Bank’s Chief Executive Officer
and Chief Accountant. Other objectives of capital management are evaluated annually. In accordance with
information provided internally to key management personnel, the amount of regulatory capital of the Bank
calculated in accordance with the methodology set by CBRF as at 31 December 2021 was
RR 206,955 million, and the equity capital adequacy ratio (N1.0) was 15.27% (2020: RR 121,350 million
and 13.07%). Minimum required statutory equity capital adequacy ratio (N1.0) was 8% as at 31 December
2021 (2020: 8%).
85
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
31
Management of Capital (Continued)
In October 2021 the Bank has been added to the Bank of Russia’s list of 13 systemically important banking
institutions due to a recognition of the Bank’s growing presence in the financial market and expanding
customer base of its ecosystem. As a result, from 1 January 2022 the Bank will be obliged to comply with the
additional capital adequacy buffers +1% to the minimum required statutory equity capital adequacy ratio
(N1.0).
The Group also monitors capital requirements including capital adequacy ratio under the Basel III
methodology of the Basel Committee on Banking Supervision: global regulatory framework for more
resilient banks and banking systems (hereinafter “Basel III”). The composition of the Group’s capital
calculated in accordance with the methodology set by Basel Committee with capital adjustments as set out
in Basel III is as follows:
31 December
2021
31 December
2020
In millions of RR
Share capital
Share premium
Treasury shares
Share-based payment reserve
Retained earnings
Revaluation reserve for investments in debt securities
Less intangible assets
Non-controlling interest
230
26,998
(2,567)
4,745
159,491
(13,131)
(15,069)
325
230
26,998
(3,238)
1,548
99,540
1,849
(7,082)
89
Common Equity Tier 1 (CET1)
Additional Tier 1
161,022
59,657
119,934
20,755
Tier 1 capital
220,679
220,679
140,689
140,689
Total capital
Risk weighted assets (RWA)
Credit risk
Operational risk
Market risk
794,241
261,813
32,484
562,918
199,184
24,707
Total risk weighted assets (RWA)
1,088,538
786,809
Common equity Tier 1 capital adequacy ratio (CET1 /Total RWA), %
Tier 1 capital adequacy ratio (Tier 1 capital /Total RWA), %
Total capital adequacy ratio (Total capital /Total RWA), %
14.79%
20.27%
20.27%
15.24%
17.88%
17.88%
The Group and the Bank have complied with all externally imposed capital requirements throughout the
years ended 31 December 2021 and 2020.
The Insurance Company has complied with all capital requirements set by the legislation of the Russian
Federation throughout the years ended 31 December 2021 and 2020.
86
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
32
Contingencies and Commitments
Legal proceedings. From time to time and in the normal course of business, claims against the Group
may be received. On the basis of its own estimates and internal professional advice, management is of the
opinion that no material unprovided losses will be incurred in respect of claims.
Tax contingencies. Russian tax legislation which was enacted or substantively enacted at the end of the
reporting period, is subject to varying interpretations when being applied to the transactions and activities
of the Group. Consequently, tax positions taken by management and the formal documentation supporting
the tax positions may be challenged tax authorities. Russian tax administration is gradually strengthening,
including the fact that there is a higher risk of review of tax transactions without a clear business purpose
or with tax incompliant counterparties. Fiscal periods remain open to review by the authorities in respect of
taxes for three calendar years preceding the year when decision about review was made. Under certain
circumstances reviews may cover longer periods. The Russian transfer pricing legislation is generally
aligned with the international transfer pricing principles developed by the Organization for Economic
Cooperation and Development (OECD), although it has specific features. This legislation provides for the
possibility of additional tax assessment for controlled transactions (transactions between related parties
and certain transactions between unrelated parties), if such transactions are not on an arm's length.
Tax liabilities arising from controlled transactions are determined based on their actual transaction prices.
It is possible, with the evolution of the interpretation of transfer pricing rules, that such transfer prices could
be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be
significant to the financial position and/or the overall operations of the Group.
The Group includes companies incorporated outside of Russia. The tax liabilities of the Group are
determined on the assumption that these companies are not subject to Russian profits tax, because they
do not have a permanent establishment in Russia. The Company is a tax resident of Cyprus only and full
beneficial owner of the Bank and Insurance Company. This interpretation of relevant legislation may be
challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be
significant to the financial position and/or the overall operations of the Group.
The Controlled Foreign Company (CFC) legislation introduced Russian taxation of profits of foreign
companies and non-corporate structures (including trusts) controlled by Russian tax residents (controlling
parties). The CFC income is subject to a 20% tax rate if the CFC is controlled by a legal entity and a rate
of 13% if it is controlled by an individual. As a result, management reassessed the Group’s tax positions
and recognised current tax expense as well as deferred taxes that arose from the expected taxable manner
of recovery of the relevant Group’s operations to which the CFC legislation applies to and to the extent that
the Group (rather than its owners) is obliged to settle such taxes.
As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from
time to time, interpretations of such uncertain areas that reduce the overall tax rate of the Group. While
management currently estimates that the tax positions and interpretations that it has taken can probably be
sustained, there is a possible risk that outflow of resources will be required should such tax positions and
interpretations be challenged by the tax authorities. The impact of any such challenge cannot be reliably
estimated; however, it may be significant to the financial position and/or the overall operations of the Group.
As at 31 December 2021 and 2020 no material tax risks were identified.
Future lease payments related to leases where leased asset is of low value The future cash outflows
to which the Group is exposed and which are not reflected in the lease liabilities amounted to RR 298 million
at 31 December 2021 and relate primarily to leases of assets which are of low value (2020: RR 233 million).
Compliance with covenants. The Group is subject to certain covenants related primarily to its
subordinated perpetual debt. Non-compliance with such covenants may result in negative consequences
for the Group. Management believes that the Group was in compliance with all such covenants as at
31 December 2021 and 2020.
87
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
32
Contingencies and Commitments (Continued)
Credit related commitments and performance guarantees issued. The primary purpose of these
instruments is to ensure that funds are available to a customer as required. Commitments to extend credit
represent unused portions of authorisations to extend credit in the form of credit card loans, guarantees.
With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an
amount equal to the total unused commitments, if the unused amounts were to be drawn down. Most
commitments to extend credit are contingent upon customers maintaining specific credit standards. The
Group monitors the term to maturity of credit related commitments because longer-term commitments
generally have a greater degree of credit risk than shorter-term commitments.
Performance guarantees are contracts that provide compensation if another party fails to perform a
contractual obligation. Such contracts do not transfer credit risk. The risk under performance guarantee
contracts is the possibility that the insured event (i.e. the failure to perform the contractual obligation by
another party) occurs. The key risks the Group faces are significant fluctuations in the frequency and
severity of payments incurred on such contracts relative to expectations. The Group uses a scoring model
to predict levels of such payments. Claims must be made before the contract matures and most claims are
settled within short term. This allows the Group to achieve a high degree of certainty about the estimated
payments and therefore future cash flows.
Outstanding credit related commitments and performance guarantees are as follows:
31 December
2021
31 December
2020
In millions of RR
Unused limits on credit card loans
Unused limits on SME loans
Credit loss allowance
295,233
15,907
(3,334)
208,405
7,291
(3,537)
Total credit related commitments, net of сredit loss allowance
307,806
212,159
Performance guarantees issued
Provisions
137
(1)
498
(4)
Total performance guarantees issued, net of provisions
136
494
The total outstanding contractual amount of unused limits on contingencies and commitments liability does
not necessarily represent future cash requirements, as these financial instruments may expire or terminate
without being funded. In accordance with credit card service conditions the Group has a right to refuse the
issuance, activation, reissuing or unblocking of a credit card, and is providing a credit card limit at its own
discretion and without explaining its reasons.
88
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
32
Contingencies and Commitments (Continued)
The following table contains an analysis of credit related commitments by credit quality at
31 December 2021 based on credit risk grades.
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL for
SICR)
Stage 3
(lifetime ECL
for credit
Total
In millions of RR
impaired)
Credit related commitments
- Excellent
- Good
- Monitor
270,344
13,179
27,242
-
91
284
-
-
-
270,344
13,270
27,526
Unrecognised gross amount
Credit loss allowance
310,765
(3,318)
307,447
375
(16)
359
-
-
-
311,140
(3,334)
307,806
Unrecognised net amount
The following table contains an analysis of credit related commitments by credit quality at
31 December 2020 based on credit risk grades.
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL for
SICR)
Stage 3
(lifetime ECL
for credit
Total
In millions of RR
impaired)
Credit related commitments
- Excellent
- Good
- Monitor
180,619
14,905
12,546
-
84
251
-
-
-
180,619
14,989
12,797
Unrecognised gross amount
Credit loss allowance
208,070
(3,513)
204,557
335
(24)
311
-
-
-
208,405
(3,537)
204,868
Unrecognised net amount
Also, the Group may decide to increase or decrease a credit card limit using a scoring model, which is
based on the client's behaviour model. Therefore, the fair value of the contractual amount of revocable
unused limits on contingencies and commitments is close to zero. Credit related commitments are
denominated in RR.
89
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
32
Contingencies and Commitments (Continued)
The following table contains an analysis of performance guarantees issued by credit quality based on credit
risk grades.
31 December
2021
31 December
2020
Stage 1
Stage 1
In millions of RR
(12-months ECL)
(12-months ECL)
Performance guarantees issued
- Excellent
- Good
80
57
310
188
Unrecognised gross amount
Provisions
137
498
(1)
(4)
Unrecognised net amount
136
494
Mandatory cash balances with the CBRF of RR 8,589 million as at 31 December 2021 (2020: RR 5,379
million) represent mandatory reserve deposits which are not available to finance the Bank's day to day
operations.
33
Offsetting Financial Assets and Financial Liabilities
Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as
follows at 31 December 2021:
Gross
Gross Net amount after
Amounts subject to
master netting and
similar arrangements
not set off in the
Net
amount
of expo-
sure
amounts amounts set offsetting in the
before
offsetting consolidated
statement of
financial
off in the
consolidated
statement of
financial consolidated statement
position
of financial position
position
Financial
Cash
In millions of RR
instruments collateral
ASSETS
Reverse repurchase agreements
Brokerage receivables
Financial derivatives
152,331
49,138
5,820
-
-
-
152,331
49,138
5,820
154,255
46,721
-
-
-
-
2,417
-
5,829
Total assets subject to offsetting,
master netting and similar
arrangement
207,289
-
207,289
200,976
5,829
2,417
LIABILITIES
Correspondent accounts and overnight
placements of other banks
Sale and repurchase agreements with
other banks
Brokerage payables
Other borrowed funds
5,829
-
5,829
5,820
-
9
5,484
9,634
3,806
-
-
-
5,484
9,634
3,806
5,826
11,123
4,446
-
-
-
-
-
-
Total liabilities subject to offsetting,
master netting and similar
arrangement
24,753
-
24,753
27,215
-
9
90
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
33
Offsetting Financial Assets and Financial Liabilities (Continued)
Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as
follows at 31 December 2020:
Gross
amounts
before
Gross
amounts set
off in the
Net amount
after
offsetting in
the
Amounts subject to master
netting and similar amount
arrangements not set off in
the consolidated statement
of financial position
Net
of
expo-
sure
offsetting consolidated
statement of consolidated
financial
position
statement of
financial
position
Financial
Cash
In millions of RR
instruments
collateral
ASSETS
Reverse repurchase agreements
Brokerage receivables
Financial derivatives
33,210
24,064
4,920
-
-
-
33,210
24,064
4,920
34,527
24,113
-
-
-
-
-
4,795
125
Total assets subject to offsetting,
master netting and similar
arrangement
62,194
-
62,194
58,640
4,795
125
LIABILITIES
Due to banks
Brokerage payables
4,819
9,206
-
-
4,819
9,206
4,949
9,696
-
-
-
-
Total liabilities subject to
offsetting, master netting and
similar arrangement
14,025
-
14,025
14,645
-
-
As at 31 December 2021 the Group has master netting arrangements with counterparty banks, which are
enforceable in case of default. The Group also made margin deposits with clearing house counterparty as
collateral for its outstanding derivative positions. The counterparty may set off the Group’s liabilities with
the margin deposit in case of default (2020: same). The disclosure does not apply to loans and advances
to customers and related customer deposits.
34
Transfers of Financial Assets
The Group transferred financial assets in transactions that did not qualify for derecognition in the current
periods.
The table below shows the amount of operations under sale and repurchase agreements which the Group
enters into in the normal course of business:
31 December 2021
31 December 2020
Carrying
amount of
the assets
Carrying
amount of
the
Carrying
amount of
the assets
Carrying
amount of
the
associated
liabilities
associated
liabilities
In millions of RR
Notes
Debt securities at FVOCI pledged under
repurchase agreements
13
5,826
5,484
29
24
Total
5,826
5,484
29
24
91
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
34
Transfers of Financial Assets (Continued)
In the normal course of business, the Group makes borrowings on interbank market using different financial
instruments as collateral to support its everyday operations in terms of liquidity.
The Group also enters into reverse sale and repurchase agreements. The summary of such operations is
provided in the table below:
31 December 2021
31 December 2020
Amounts Fair value of
Amounts Fair value of
granted
under
securities
received as
collateral
granted
under
securities
received as
collateral
repo
repo
In millions of RR
Notes agreements
agreements
Cash and cash equivalents
Brokerage receivables
5
10
152,331
49,138
154,255
46,721
33,210
24,064
34,527
24,113
Total
201,469
200,976
57,274
58,640
35
Non-Controlling Interest
The following table provides information about each subsidiary that has non-controlling interest:
Place of Proportion Proportion
business of non- of non-
(and controlling controlling
Profit or
loss
attribu- controlling
Accumu-
lated non-
Dividends
paid to
non-
country of
incorpo-
ration if
interest
interest’s
table to
non-
interest in controlling
voting
the
interest
during the
year
rights held controlling subsidiary
interest
In millions of RR
different)
Year ended
31 December 2021
LLC “Cloudpayments”
LLC “Beskontakt”
Russia
Russia
5.00%
14.60%
5.00%
14.60%
41
(144)
130
202
7
-
Year ended
31 December 2020
LLC “Cloudpayments”
Russia
5.00%
5.00%
4
89
18
The summarized financial information of these subsidiaries was as follows:
Current
assets current liabilities
assets
Non-
Current
Non- Revenue
current
liabilities
Profit/
Total Cash
(loss) compre- flows
hensive
In millions of RR
income
Year ended
31 December 2021
LLC “Cloudpayments”
LLC “Beskontakt”
1,182
284
284
337
238
258
-
1,952
389
898
(734)
898
(734)
119
32
1,895
Year ended
31 December 2020
LLC “Cloudpayments”
389
277
105
-
1,226
606
606
(13)
92
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
36
Financial Derivatives
The table below sets out fair values, at the end of the reporting period, of currencies receivable or payable
under foreign exchange forwards and swap contracts entered into by the Group. The table reflects gross
positions before the netting of any counterparty positions (and payments) and covers the contracts with
settlement dates after the end of the respective reporting period.
31 December 2021
31 December 2020
Contracts
with positive
fair value
Contracts
with negative
fair value
Contracts
with positive
fair value
Contracts with
negative fair
value
In millions of RR
Foreign exchange forwards and
swaps: discounted notional amounts,
at the end of the reporting period, of
- USD receivable on settlement (+)
- USD payable on settlement (-)
- RR receivable on settlement (+)
- RR payable on settlement (-)
29,288
(42)
(31)
-
(10)
(7)
-
29,311
-
12
-
(23,341)
-
75
(24,351)
(104)
-
-
-
- EUR receivable on settlement (+)
- EUR payable on settlement (-)
-
4
-
-
(5)
Fair value of foreign exchange
forwards and swaps
5,963
(90)
5,035
(109)
37
Fair Value of Financial Instruments
Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are
measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two
measurements are valuation techniques with all material inputs observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are
valuations not based on observable market data (that is, unobservable inputs).
(a)
Recurring fair value measurements
Recurring fair value measurements are those that the accounting standards require or permit in the
consolidated statement of financial position at the end of each reporting period. The levels in the fair value
hierarchy into which the recurring fair value measurements are categorised are as follows:
93
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
31 December 2021
31 December 2020
In millions of RR
Level 1
Level 2 Level 3
Total
Level 1 Level 2 Level 3
Total
ASSETS AT FAIR
VALUE
Investments in securities
Repurchase receivables
Loans and advances to
customers
211,375
5,826
3,936
-
-
-
215,311 232,198
6,256
-
-
-
238,454
29
5,826
29
-
-
-
3,971
-
3,971
5,963
-
-
-
1,892
-
1,892
5,035
Financial derivatives
5,963
5,035
Total assets recurring
fair value
measurements
217,201
9,899
3,971
231,071 232,227
11,291
1,892 245,410
LIABILITIES AT FAIR
VALUE
Financial derivatives
-
90
-
90
-
109
-
109
Total liabilities
recurring fair value
measurements
-
90
-
90
-
109
-
109
Investments in securities categorised in level 2 are represented by liquid debt securities classified in “Good”
credit risk grade.
94
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
The description of valuation techniques and the description of the inputs used in the fair value measurement
for level 2 and level 3 measurements at 31 December 2021 are as follows:
In millions of RR
Fair value Valuation technique
Inputs used
ASSETS AT FAIR VALUE
Observable quotes for comparable
securities adjusted by multiplicator
depending on the degree of the
Quotes from the automated fair
value system for financial
instruments of NSD Price
Center*
Investments in securities
3,936 market activity
Russian rouble curve.
USD Dollar Swaps Curve.
EUR Swaps Curve.
CDS quotes assessment of
counterparty credit risk or
reference entities.
Foreign exchange swaps and
forwards
Discounted cash flows adjusted for
5,963 counterparty credit risk
Total recurring fair value
measurements at level 2
9,899
Revaluation of the convertible loan
based on the Vivid Money Holdco
Limited share price as per the most
recent sale purchase transactions
with shares of Vivid Money Holdco
Share price as per the most
recent sale purchase
transaction
Loans and advances to
customers
3,971 Limited (Note 39)
Total recurring fair value
measurements at level 3
3,971
LIABILITIES AT FAIR VALUE
Russian rouble curve.
USD Dollar Swaps Curve.
EUR Swaps Curve.
CDS quotes assessment of
counterparty credit risk or
reference entities.
Foreign exchange swaps and
forwards
Discounted cash flows adjusted for
90 counterparty credit risk
Total recurring fair value
measurements at level 2
90
95
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
The description of valuation techniques and the description of the inputs used in the fair value measurement
for level 2 measurements at 31 December 2020 are as follows:
In millions of RR
Fair value Valuation technique
Inputs used
ASSETS AT FAIR VALUE
Observable quotes for comparable
securities adjusted by multiplicator
depending on the degree of the
Quotes from the automated fair
value system for financial
instruments of NSD Price
Center*
Investments in securities
6,256 market activity
Russian rouble curve.
USD Dollar Swaps Curve.
EUR Swaps Curve.
CDS quotes assessment of
counterparty credit risk or
reference entities.
Foreign exchange swaps and
forwards
Discounted cash flows adjusted for
5,035 counterparty credit risk
Total recurring fair value
measurements at level 2
11,291
Revaluation of the convertible loan
based on the Vivid Money Holdco
Limited share price as per its most
recent sale purchase transactions
with shares of Vivid Money Holdco
Share price as per the most
recent sale purchase
transaction
Loans and advances to
customers
1,892 Limited (Note 38)
Total recurring fair value
measurements at level 3
1,892
LIABILITIES AT FAIR VALUE
Russian rouble curve.
USD Dollar Swaps Curve.
EUR Swaps Curve.
CDS quotes assessment of
counterparty credit risk or
reference entities.
Foreign exchange swaps and
forwards
Discounted cash flows adjusted for
109 counterparty credit risk
Total recurring fair value
measurements at level 2
109
* NSD Valuation Center is a fair value measurement service for bonds and other financial instruments,
accredited by the CBRF.
There were no changes in the valuation techniques for level 2 recurring fair value measurements during
the year ended 31 December 2021 and 2020. Level 2 derivatives comprise foreign exchange forwards and
swaps.
The foreign exchange forwards have been fair valued using forward exchange rates that are quoted in an
active market. Foreign exchange swaps are fair valued using forward interest rates extracted from
observable yield curves. The effects of discounting are generally insignificant for level 2 derivatives.
96
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
Changes of the fair value measurements at Level 3 for the year ended 31 December 2021 and 2020 are
as follows:
In millions of RR
Loans and advances to customers
Fair value at the date of recognition
Other interest income
1,374
8
Net gains from foreign exchange translation
Net gains from revaluation of convertible loan
16
494
Fair value as at 31 December 2020 - Level 3
1,892
Other interest income
Net losses from foreign exchange translation
Net gains from revaluation of convertible loan
23
(317)
2,373
Fair value as at 31 December 2021 - Level 3
3,971
As at 31 December 2021, if the share price had been 10% lower/higher, fair value of loans and advances
to customers carried at fair value would have been RR 293 million lower/higher (2020: 64 million).
97
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
(b)
Assets and liabilities not measured at fair value but for which fair value is disclosed
Fair values analysed by level in the fair value hierarchy and carrying value of assets not measured at fair
value are as follows:
31 December 2021
31 December 2020
Level 1 Level 2 Level 3 Carrying Level 1 Level 2 Level 3 Carrying
In millions of RR
value
value
FINANCIAL ASSETS CARRIED AT
AMORTISED COST
Cash and cash
equivalents
- Cash on hand
36,955
-
-
-
-
36,955
51,008
21,069
-
-
-
-
21,069
38,646
- Cash balances with the
CBRF (other than
mandatory reserve
deposits)
51,008
38,646
- Placements with other
banks and non-bank
credit organizations with
original maturities of less
than three months
Mandatory cash
-
228,513
-
228,513
-
76,636
-
76,636
balances with the CBRF
Due from other banks
Loans and advances to
customers
-
-
8,589
542
-
-
8,589
542
-
-
5,379
1,887
-
-
5,379
1,887
-
-
602,864
602,337
-
-
374,996
374,629
Guarantee deposits
with payment systems
Brokerage receivables
Other financial assets
Settlement of operations
with plastic cards
-
-
-
15,171
-
15,171
49,138
-
-
-
15,475
-
15,475
24,064
49,138
24,064
receivable
-
42,995
-
42,995
-
23,882
-
23,882
Insurance's financial
assets
Other receivables
-
-
965
9,009
-
-
965
9,009
-
-
542
6,646
-
-
542
6,646
Total financial assets
carried at amortised
cost
36,955 390,759 618,035 1,045,222
21,069 177,682 390,471
588,855
98
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
Fair values analysed by level in the fair value hierarchy and carrying value of liabilities not measured at fair
value are as follows:
31 December 2021
31 December 2020
Level 2 Level 3 Carrying
value
Level 1
Level 2
Level 3 Carrying Level 1
In millions of RR
value
FINANCIAL LIABILITIES CARRIED AT
AMORTISED COST
Due to banks
Brokerage payables
Customer accounts
Individuals
-
-
11,313
9,634
-
-
11,313
9,634
-
-
4,819
9,206
-
-
4,819
9,206
-Current/demand
accounts
- Brokerage accounts
-Term deposits
SME
-
-
-
544,561
110,277
149,813
-
-
-
544,561
110,277
146,548
-
-
-
323,145
73,970
138,971
-
-
-
323,145
73,970
135,995
-Current/demand
accounts
-Term deposits
Other legal entities
-Current/demand
accounts
-
-
140,287
3,434
-
-
140,287
3,403
-
-
89,199
1,915
-
-
89,199
2,213
-
-
647
-
-
-
647
-
-
-
2,267
48
-
-
2,267
48
-Term deposits
Debt securities in issue
RR Bonds issued on
domestic market
Other borrowed funds
Borrowings through
securitisation transaction
Subordinated debt
Perpetual subordinated
debts
21,794
3,723
-
-
-
-
-
-
21,680 24,824
-
-
-
-
-
-
23,910
-
3,806
-
59,365
59,657 22,174
20,755
Other financial
liabilities
Settlement of operations
with plastic cards
Trade payables
-
-
48,879
11,866
-
-
48,879
11,866
-
-
23,079
4,671
-
-
23,079
4,671
Credit related
commitments
Loyalty programs
Other financial liabilities
-
-
-
-
2,802
2,421
-
-
-
3,334
2,802
2,421
-
-
-
-
1,479
1,571
-
-
-
3,537
1,479
1,571
Total financial liabilities
carried at amortised
cost
84,882 1,035,934
- 1,121,115 46,998
674,340
-
719,864
Fair value is the amount at which a financial instrument could be exchanged in a current transaction
between willing parties, other than in a forced sale or liquidation, and is best evidenced by an active quoted
market price. Where quoted market prices are not available, the Group used valuation techniques. The fair
value of floating rate instruments that are not quoted in an active market was estimated to be equal to their
carrying amount. The fair value of unquoted fixed interest rate instruments was estimated based on
estimated future cash flows expected to be received discounted at current interest rates for new instruments
with similar credit risk and remaining maturity.
As at 31 December 2021 and 2020 the fair value of the debt securities in issue and subordinated debt has
been calculated based on quoted prices from the Moscow Exchange MICEX-RTS, St. Petersburg
Exchange and Global Exchange Market, where the Group’s debt securities are listed and traded.
99
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
37
Fair Value of Financial Instruments (Continued)
Weighted average discount rates used in determining fair value as of 31 December 2021 and 2020 are
disclosed below:
31 December
2021
31 December
2020
In % p.a.
Assets
Cash and cash equivalents
Due from other banks
Investments in securities
Repurchase receivables
Loans and advances to customers
Brokerage receivables
0.0
2.4
5.6
4.3
28.9
15.1
0.0
3.2
5.4
5.1
33.5
15.4
Liabilities
Due to banks
4.8
2.7
9.1
8.6
15.4
5.9
4.4
2.2
6.1
-
15.6
5.3
Customer accounts
Debt securities in issue
Other borrowed funds
Brokerage payables
Subordinated debt
38
Presentation of Financial Instruments by Measurement Category
For the purposes of measurement, IFRS 9 “Financial Instruments” classifies financial assets into the
following categories: (a) financial assets at FVTPL; (b) financial assets at FVOCI and (c) financial assets at
AC. Financial assets at FVTPL have two sub-categories: (i) assets measured at FVTPL mandatorily, and
(ii) assets designated as such upon initial recognition.
The following table provides a reconciliation of classes of financial assets with these measurement
categories as of 31 December 2021:
In millions of RR
AC
FVTPL
FVOCI
Total
Cash and cash equivalents
- Cash on hand
- Cash balances with the CBRF (other than mandatory
reserve deposits)
36,955
51,008
-
-
-
-
36,955
51,008
- Placements with other banks and non-bank credit
organizations with original maturities of less than three
months
Mandatory cash balances with the CBRF
Due from other banks
228,513
-
-
-
-
228,513
8,589
8,589
542
542
Loans and advances to customers
Financial derivatives
602,337
3,971
5,963
-
-
606,308
5,963
-
Guarantee deposits with payment systems
Investments in securities
Repurchase receivables
15,171
-
-
207,175
5,826
-
15,171
215,311
5,826
-
-
8,136
-
-
Brokerage receivables
49,138
49,138
Other financial assets
- Settlement of operations with plastic cards receivable
- Insurance's financial assets
- Other receivables
42,995
965
9,009
-
-
-
-
-
-
42,995
965
9,009
TOTAL FINANCIAL ASSETS
1,045,222
18,070
213,001
1,276,293
100
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
38
Presentation of Financial Instruments by Measurement Category (Continued)
The following table provides a reconciliation of classes of financial assets with these measurement
categories as of 31 December 2020:
In millions of RR
AC
FVTPL
FVOCI
Total
Cash and cash equivalents
- Cash on hand
- Cash balances with the CBRF (other than mandatory
reserve deposits)
21,069
38,646
-
-
-
-
21,069
38,646
- Placements with other banks and non-bank credit
organizations with original maturities of less than three
months
Mandatory cash balances with the CBRF
Due from other banks
76,636
5,379
1,887
374,629
-
-
-
-
-
76,636
5,379
1,887
376,521
5,035
Loans and advances to customers
Financial derivatives
1,892
5,035
-
-
Guarantee deposits with payment systems
Investments in securities
Repurchase receivables
15,475
-
-
-
15,475
238,454
29
4,265
234,189
-
-
-
29
-
Brokerage receivables
24,064
24,064
Other financial assets
- Settlement of operations with plastic cards receivable
- Insurance's financial assets
- Other receivables
23,882
542
6,646
-
-
-
-
-
-
23,882
542
6,646
TOTAL FINANCIAL ASSETS
588,855
11,192
234,218
834,265
As of 31 December 2021 and 2020 all of the Group’s financial liabilities except derivatives were carried at
amortised cost.
101
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
39
Related Party Transactions
Parties are generally considered to be related if the parties are under common control or one party has the
ability to control the other party or can exercise significant influence over the other party in making financial
or operational decisions. In considering each possible related party relationship, attention is directed to the
substance of the relationship, not merely the legal form. The outstanding balances with related parties were
as follows:
31 December 2021
31 December 2020
Key
management
personnel
Associates
and other management
Key
Associates
and other
related
related
parties
personnel
In millions of RR
parties
ASSETS
Loans and advances to customers (average
interest rate: 1.7-11.9% p.a. (31 December
2020: 1.7-13.7% p.a.)):
- Gross carrying amount
- Credit loss allowance
380
413
(33)
-
3,971
3,971
570
607
(37)
-
1,855
1,892
(37)
-
-
Other financial assets
158
TOTAL ASSETS
380
3,971
570
2,013
Customer accounts, including brokerage
accounts (average interest rate: 1.8-11% p.a.
(31 December 2020: 0.8-3.7% p.a.))
Other non-financial liabilities
7,716
1,741
166
-
6,246
584
2,086
-
TOTAL LIABILITIES
9,457
166
6,830
2,086
EQUITY
Share-based payment reserve
- Management long-term incentive program
4,225
-
1,378
-
TOTAL EQUITY
4,225
-
1,378
-
On 31 August 2020 the Group acquired shareholding in Vivid Money Holdco Limited (Note 1), which is a
group of fintech start-ups launched in 2020 to provide a range of services to retail customers in Europe
(excluding CIS). The investment in Vivid Money Holdco Limited was classified as an investment in associate
and accounted for using the equity method. Also in 2020 the Group issued convertible loan to Vivid Money
Holdco Limited (Note 8), which is carried at FV.
102
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
39
Related Party Transactions (Continued)
The income and expense items with related parties were as follows:
2021
2020
Key Associates
Key Associates
management
personnel
and other management
and other
related
related
parties
personnel
In millions of RR
parties
Interest income calculated using the effective interest
rate method
Other similar income
37
-
186
23
26
-
32
8
Interest expense calculated using effective interest
rate method
Net gains/(losses) from foreign exchange translation
Net gains from financial assets at FVTPL
Administrative and other operating expenses
Other operating income
(103)
-
229
2,373
(158)
-
(42)
(33)
(40)
494
(248)
447
-
-
-
(7,337)
-
-
(2,895)
-
Key management compensation is presented below:
In millions of RR
2021
2020
Short-term benefits:
- Salaries
- Short-term bonuses
1,356
1,408
1,086
921
Long-term benefits:
- Management long-term incentive programme
- Key employees retention plan
- Warrant compensation
4,520
28
862
26
-
25
Total
7,337
2,895
Warrant compensation. In the fourth quarter of 2021 the Group issued a new instrument that represents
a share-based equity-settled compensation: 5-year warrants with an aggregate value equal to 1.2% of an
increase in the market capitalisation of the Company as at 1 January 2027 (calculated as the volume-
weighted average GDR price over the preceding six months, which amounted to 89.2 USD at the date of
the grant) over a GDR price of USD 92 (the "Warrants"). The Warrants vest on 1 January 2027 and are
exercisable at any time on or after that date. The Group has a unilateral right to terminate the Warrants at
a one month's notice. When the Warrants are exercised, the Group is required to deliver the Ordinary
Shares (GDRs) up to the value of the Warrants determined on 1 January 2027. The weighted-average fair
value of the Warrants at the grant date was RR 1.1 bln and it was measured using the Black-Scholes model
based on historical market quotes of GDRs. At the date of publication of the Group’s annual results, the
share price of the Company was significantly below the strike price of the Warrants.
Key employees retention plan (KERP). On 14 April 2020 the Group launched a new long term incentive
program for more than 250 senior and middle management level employees. The purpose of the program
is to retain and motivate key employees with high potential. This was a performance-based cash-settled
program linked to the market price of GDRs. A new grant has been provided to the current and new
participants in April 2021. In 2021 number of employees joined the program increased to more than 400
participants. Later in November 2021 the program has been converted into equity-settled instrument to
increase its efficiency for the Group and participants. After the conversion the program has been combined
with Management long-term incentive program (MLTIP) due to application of similar approach to the grants.
103
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
39
Related Party Transactions (Continued)
Participants of the program receive the vested parts of their grants provided that they remain employed by
the Group throughout the vesting period. Participants are entitled to the dividends, if any.
Participants who leave the Group lose their right for the unvested parts of the grants. The program provides
3 equal annual vestings after grant date. The expenses related to those participants who are considered to
be key management personnel are disclosed in the table above.
Management long-term incentive program. On 31 March 2016 the Group introduced a MLTIP as both a
long-term incentive and a retention tool for the management of the Group. Total number of GDRs
attributable to the management is 17,241 thousand as at 31 December 2021 (2020: 15,290 thousand).
Participants of the program receive the vested parts of their grants provided that they remain employed by
the Group throughout the vesting period. Participants are entitled to the dividends, if any. Participants who
leave the Group lose their right for the unvested parts of the grants.
The fair value of the awards as at grant dates (31 March 2016, 8 February 2017, 22 February 2018,
15 January 2019, 5 June 2020, 11 December 2020, 9 February 2021 and 23 November 2021) is determined
on the basis of market quotes of GDRs as at those dates. Weighted-average fair value of the awards in
2021 was USD 87 per 1 GDR (2020: USD 24.7 per 1 GDR).
Each grant before 2020 is divided into 4 equal awards. Each award vests over 4 years in equal tranches.
The delivery dates as of which the GDRs are allowed to be sold by the participants correspond to the
vesting dates 31 March, as well as each subsequent 31 March (with the exception of 2019 when the vesting
date for all participants was 31 January 2019) until 2022 for participants joining in 2016, until 2023 for
participants joining in 2017, until 2024 for participants joining in 2018, until 2025 for participants joining in
2019.
Each grant provided in 2020 and 2021 is vested over 5 years. The delivery dates as of which the GDRs are
allowed to be sold by the participants correspond to the vesting dates 31 August, as well as each
subsequent 31 August until 2025 for 2020 grant and until 2026 for 2021 grant.
The following table discloses the changes in the numbers of GDRs attributable to the MLTIP:
Number of GDRs
In thousands
attributable to the MLTIP
At 31 December 2019
3,782
Granted
Vested
Forfeited
5,350
(1,810)
(46)
At 31 December 2020
7,276
Granted
Vested
Forfeited
1,950
(2,201)
(6)
At 31 December 2021
7,019
104
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
40
Events after the End of the Reporting Period
On 1 January 2022 the Group reclassified RR 122,805 million of government bonds, previously accounted
under “Hold to collect and sell” business model into “‘Hold to collect” accounted for amortised cost, with
subsequent reversal of RR 14,867 million of negative revaluation reserve recognised through other
comprehensive income. The Group managed the reclassified assets under “Hold to collect” business model
and made no sale of these government bonds throughout 2021.
In February 2022, the economic situation in Russia was negatively affected by the military-political conflict
in the region, as well as expanded international sanctions against certain Russian companies, citizens and
institutions. These factors led to a significant increase in volatility in the financial markets, frequent and
significant price changes, and an increase in trading spreads.
During the period from 18 February to 3 March 2022:
•
the exchange rate of the Central Bank of the Russian Federation (the CBR) fluctuated in the range
from 75.57 to 103.25 rubles per USD and from 86.13 rubles to 114.55 rubles per Euro;
•
•
RTS stock index fluctuated in the range from 616.7 to 1391.3 points;
the international sanctions list was expanded, which meant that the access for some companies to
international financial markets in order to raise funds was limited;
•
the cost of a barrel of oil on international markets is in the range from $92.73 to $113 USD per 1
barrel.
Because of the increased volatility in the financial sector, the CBR introduced a number of support
measures, being:
•
The ability to report shares and bonds acquired before 18 February 2022 at market value as of
18 February 2022, and acquired from 18 February to 31 December 2022 - at fair value as of the
acquisition date. Applicable for the purposes of regulatory reporting. Effective until 31 December
2022.
•
•
•
•
The ability to use the values of foreign exchange rates as of 18 February 2022. Applicable for the
purposes of regulatory reporting. Effective until 31 December 2022.
Relaxation of short-term liquidity ratios for systemically important banks and brokers. Effective until
31 December 2022.
Providing additional liquidity for up to RR 3 trillion to systemically important banks through the
mechanism of REPO transactions.
To improve the ability of banks to manage liquidity, the CBR intends to reduce to zero the additional
and increased additional rates of insurance premiums for banks participating in the deposit insurance
system for deposits in rubles and foreign currency attracted in the first and second quarters.
•
•
•
The ability not to decrease the estimates of borrowers’ financial standing and debt service quality for
loan loss provisioning purposes if borrowers’ financial standing deteriorated after 18 February 2022
as a result of the sanctions. Applicable for the purposes of regulatory reporting. Effective until 31
December 2022.
The ability to use the assessments made as of 18 February 2022 for the assets recorded on banks’
balance sheets for loan loss provisioning on loans where security assets are classified under quality
category I and II. Applicable for the purposes of regulatory reporting. Effective until 31 December
2022.
The implementation of the countercyclical macroprudential policy (release of the accumulated
macroprudential capital buffer for unsecured consumer loans and mortgage loans in rubles and
foreign currency), starting from 28 February 2022. This measure has no time limit. The value of add-
ons to risk weights for new claims issued after 1 March 2022 are released or decreased.
The CBR’s Board of Directors decided to increase the key rate to 20% per annum from 28 February 2022
to support financial and price stability and protect the savings of citizens from depreciation.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
40
Events After the End of the Reporting Period (Continued)
After the official publication of the regulation and until 30 June 2022, the restriction on the effective interest
rate of consumer loans for banks will be temporarily suspended. At the same time, the current
macroprudential add-on matrix for newly provided unsecured consumer loans remains unchanged (higher
add-ons for high EIRs) and will encourage banks to raise interest rates on loans to individuals in a limited
manner.
As at 3 March 2022 the Group complied with all the required ratios including capital adequacy and liquidity
ratios.
The Group has formed in advance a liquidity reserve, including cash in rubles and foreign currency, to
provide stability to the customer service and the stability of the Group. All necessary measures have been
taken to ensure uninterrupted non-cash payments and meet the needs of the Group's customers, backing
cash desks and ATMs with cash banknotes. Under the different stress scenarios the Group has in place
different plans and options all of which are at present available to the management to meet the range of
reasonable possible challenges. The plans include a wide range of measures aimed at protecting the funds,
assets and interests of customers, as well as ensuring the regular operation of all functions.
The Group maintains adequate capital and liquidity and closely monitors its foreign exchange position and
cash flow.
The Group has all the necessary technological capabilities for maintaining its operations without
interruptions.
As of 3 March 2022, the Group is not subject to any sanctions. However, further expansion of the sanctions
list, the shutdown of the SWIFT system for some Russian banks, the possible introduction of restrictions
on the CBR and a number of companies, including customers and counterparties of the Group, may have
a significant impact on the activities and financial position of the Group in the future, the consequences of
which are difficult to predict. The future economic and regulatory environment and its impact on the Group's
operations may differ from management's current expectations.
The Management of the Group is currently assessing the possible impact of the events mentioned above
and taking all the necessary measures to ensure the sustainability of the Group's operations.
41
Significant Accounting Policies
Basis of preparation. These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the European Union (EU) and the
requirements of the Cyprus Companies Law Cap.113.
The consolidated financial statements have been prepared under the historical cost convention, as modified
by the initial recognition of financial instruments based on fair value, and by revaluation of financial
instruments categorised at fair value through profit or loss (“FVTPL”) and at fair value through other
comprehensive income (“FVOCI”). The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been consistently applied to all
the periods presented, unless otherwise stated. Refer to Note 42. Management prepared these
consolidated financial statements on a going concern basis.
Consolidated financial statements. Subsidiaries are those investees, including structured entities, that
the Group controls because the Group (i) has power to direct relevant activities of the investees that
significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the
investees, and (iii) has the ability to use its power over the investees to affect the amount of investor’s
returns. The existence and effect of substantive rights, including substantive potential voting rights, are
considered when assessing whether the Group has power over another entity. For a right to be substantive,
the holder must have practical ability to exercise that right when decisions about the direction of the relevant
activities of the investee need to be made. The Group may have power over an investee even when it holds
less than majority of voting power in an investee.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings
of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other
investors, such as those that relate to fundamental changes of investee’s activities or apply only in
exceptional circumstances, do not prevent the Group from controlling an investee.
Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date)
and are deconsolidated from the date on which control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries other than those
acquired from parties under common control. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest.
The Group measures non-controlling interest that represents present ownership interest and entitles the
holder to a proportionate share of net assets in the event of liquidation on a transaction by transaction basis,
either at: (a) fair value, or (b) the non-controlling interest's proportionate share of net assets of the acquiree.
Non-controlling interests that are not present ownership interests are measured at fair value.
Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration
transferred for the acquiree, the amount of non-controlling interest in the acquiree and fair value of an
interest in the acquiree held immediately before the acquisition date. Any negative amount (“negative
goodwill”) is recognised in profit or loss, after management reassesses whether it identified all the assets
acquired and all liabilities and contingent liabilities assumed, and reviews appropriateness of their
measurement.
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from
contingent consideration arrangements, but excludes acquisition related costs such as advisory, legal,
valuation and similar professional services. Transaction costs incurred for issuing equity instruments are
deducted from equity; transaction costs incurred for issuing debt are deducted from its carrying amount and
all other transaction costs associated with the acquisition are expensed.
Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. The Company and
all of its subsidiaries use uniform accounting policies consistent with the Group’s policies.
Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests
which are not owned, directly or indirectly, by the Group. Non-controlling interest forms a separate
component of the Group’s equity. When the Group acquires a dormant company with no business
operations holding an asset and this asset is the main reason of acquisition of the company such transaction
is treated as an asset acquisition. No goodwill is recognized as a result of such acquisition.
Purchases and sales of non-controlling interests. The Group applies the economic entity model to
account for transactions with owners of non-controlling interest. Any difference between the purchase
consideration and the carrying amount of non-controlling interest acquired is recorded as a capital
transaction directly in equity. The Group recognises the difference between sales consideration and
carrying amount of non-controlling interest sold as a capital transaction in the consolidated statement of
changes in equity.
Associates. Associates are entities over which the Group has significant influence (directly or indirectly),
but not control, generally accompanying a shareholding of between 20 and 50 percent of the voting rights.
Investments in associates are accounted for using the equity method of accounting and are initially
recognised at cost. The carrying amount of associates includes goodwill identified on acquisition less
accumulated credit losses, if any. Dividends received from associates reduce the carrying value of the
investment in associates. Other post-acquisition changes in Group’s share of net assets of an associate
are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the
consolidated profit or loss for the year as share of result of associates, (ii) the Group’s share of other
comprehensive income is recognised in other comprehensive income and presented separately, (iii); all
other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit
or loss within the share of result of associates.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate. Otherwise the Group continue to
recognise further losses if it has commitments to fund the associate’s operations.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the
Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
The Group applies the impairment requirements in IFRS 9 to long-term loans and similar long-term interest
that in substance form part of the investment in associate before reducing the carrying value of the
investment by a share of a loss of the investee that exceeds the amount of the Group’s interest in the
ordinary shares.
Disposals of subsidiaries, associates or joint ventures. When the Group ceases to have control or
significant influence, any retained interest in the entity is remeasured to its fair value, with the change in
carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial asset. In
addition, any amounts previously recognised in other comprehensive income in respect of that entity, are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that
amounts previously recognised in other comprehensive income are recycled to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate
share of the amounts previously recognised in other comprehensive income are reclassified to profit or
loss, where appropriate.
Financial instruments – key measurement terms. Depending on their classification financial instruments
are carried at fair value or amortised cost as described below.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The best evidence of fair value is price
in an active market. An active market is one in which transactions for the asset or liability take place with
sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of financial
instruments traded in an active market is measured as the product of the quoted price for the individual
asset or liability and the quantity held by the entity. This is the case even if a market’s normal daily trading
volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single
transaction might affect the quoted price.
The price within the bid-ask spread which management considers to be the most representative of fair value
for quoted financial assets and liabilities is the last bid price of the business day. A portfolio of financial
derivatives or other financial assets and liabilities that are not traded in an active market is measured at the
fair value of a group of financial assets and financial liabilities on the basis of the price that would be
received to sell a net long position (an asset) for a particular risk exposure or paid to transfer a net short
position (a liability) for a particular risk exposure in an orderly transaction between market participants at
the measurement date.
This is applicable for assets carried at fair value on a recurring basis if the Group: (a) manages the group
of financial assets and financial liabilities on the basis of the entity’s net exposure to a particular market risk
(or risks) or to the credit risk of a particular counterparty in accordance with the entity’s documented risk
management or investment strategy; (b) it provides information on that basis about the group of assets and
liabilities to the entity’s key management personnel; and (c) the market risks, including duration of the
entity’s exposure to a particular market risk (or risks) arising from the financial assets and financial liabilities
is substantially the same.
Valuation techniques such as discounted cash flow models or models based on recent arm’s length
transactions or consideration of financial data of the investees, are used to measure fair value of certain
financial instruments for which external market pricing information is not available.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are
measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two
measurements are valuations techniques with all material inputs observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are
valuations not based on solely observable market data (that is, the measurement requires significant
unobservable inputs). Transfers between levels of the fair value hierarchy are deemed to have occurred at
the end of the reporting period. Refer to Note 37.
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of
a financial instrument. An incremental cost is one that would not have been incurred if the transaction had
not taken place. Transaction costs include fees and commissions paid to agents (including employees
acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities
exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts,
financing costs or internal administrative or holding costs.
Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition
less any principal repayments, plus accrued interest, and for financial assets less any allowance for
expected credit losses. Accrued interest includes amortisation of transaction costs deferred at initial
recognition and of any premium or discount to maturity amount using the effective interest method. Accrued
interest income and accrued interest expense, including both accrued coupon and amortised discount or
premium (including fees deferred at origination, if any), are not presented separately and are included in
the carrying values of related items in the consolidated statement of financial position.
The effective interest method is a method of allocating interest income or interest expense over the relevant
period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount.
The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
(excluding future credit losses) through the expected life of the financial instrument or a shorter period, if
appropriate, to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
The calculation does not consider expected credit losses and includes transaction costs, premiums or
discounts and fees and points paid or secured that are integral to the effective interest rate such as
origination fees.
The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing
date, except for the premium or discount, which reflects the credit spread over the floating rate specified in
the instrument, or other variables that are not reset to market rates. Such premiums or discounts are
amortised over the whole expected life of the instrument. The present value calculation includes all fees
paid or received between parties to the contract that are an integral part of the effective interest rate.
For assets that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective
interest rate is adjusted for credit risk, i.e. it is calculated based on the expected cash flows on initial
recognition instead of contractual payments.
Financial instruments – initial recognition. Financial instruments at FVTPL are initially recorded at fair
value. All other financial instruments are initially recorded at fair value adjusted for transaction costs that
are incremental and directly attributable to the acquisition or the issue of the financial asset or financial
liability. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial
recognition is only recorded if there is a difference between fair value and transaction price which can be
evidenced by other observable current market transactions in the same instrument or by a valuation
technique whose inputs include only data from observable markets.
After the initial recognition, an ECL allowance is recognised for financial assets measured at AC and
investments in debt instruments measured at FVOCI, resulting in an immediate accounting loss.
All purchases and sales of financial assets that require delivery within the time frame established by
regulation or market convention (“regular way” purchases and sales) are recorded at trade date, which is
the date on which the Group commits to deliver a financial asset.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
The Group uses discounted cash flow valuation techniques to determine the fair value of currency swaps,
foreign exchange forwards that are not traded in an active market. Differences may arise between the fair
value at initial recognition, which is considered to be the transaction price, and the amount determined at
initial recognition using a valuation technique. The differences are immediately recognised in profit or loss
if the valuation uses only level 1 or level 2 inputs.
Financial assets – classification and subsequent measurement – measurement categories. The
Group classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The
classification and subsequent measurement of debt financial assets depends on:
•
•
the Group’s business model for managing the related assets portfolio and
the cash flow characteristics of the asset.
Financial assets – classification and subsequent measurement – business model. The business
model reflects how the Group manages the assets in order to generate cash flows – whether the Group’s
objective is:
•
•
•
solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”);
or
to collect both the contractual cash flows and the cash flows arising from the sale of assets (“hold to
collect contractual cash flows and sell”);
if neither of i) and ii) is applicable, the financial assets are classified as part of “other” business model
and measured at FVTPL.
Business model is determined for a group of assets (on a portfolio level) based on all relevant evidence
about the activities that the Group undertakes to achieve the objective set out for the portfolio available at
the date of the assessment. Factors considered by the Group in determining the business model include
the purpose and composition of a portfolio, past experience on how the cash flows for the respective assets
were collected, how risks are assessed and managed, how the assets’ performance is assessed and how
managers are compensated.
Based on the analysis performed the Group included the following financial instruments in the business
model “hold to collect contractual cash flows” since the Group manages these financial instruments solely
to collect contractual cash flows: cash and cash equivalents, mandatory cash balances with the CBRF, due
from other banks, loans and advances to customers, guarantee deposits with payment systems, brokerage
receivables and other financial assets. The Group included debt securities at FVOCI in the business model
“hold to collect contractual cash flows and sell” since the Group manages these financial instruments to
collect both the contractual cash flows and the cash flows arising from the sale of assets. The Group
included debt securities measured at FVTPL and financial derivatives in the business model “other”.
Financial assets – classification and subsequent measurement – cash flow characteristics. Where
the business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and
sell, the Group assesses whether the cash flows represent solely payments of principal and interest (the
SPPI test). Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are consistent with the SPPI feature.
In making this assessment, the Group considers whether the contractual cash flows are consistent with a
basic lending arrangement, i.e. interest includes only consideration for credit risk, time value of money,
other basic lending risks and profit margin.
Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending
arrangement, the financial asset is classified and measured at FVTPL. The SPPI assessment is performed
on initial recognition of an asset and it is not subsequently reassessed. However, if the contractual terms
of the asset are modified, the Group considers if the contractual cash flows continue to be consistent with
a basic lending arrangement in assessing whether the modification is substantial. See below for “Financial
assets – modification”.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Financial assets – reclassification. Financial instruments are reclassified only when the business model
for managing the portfolio as a whole changes. The reclassification has a prospective effect and takes place
from the beginning of the first reporting period that follows after the change in the business model. The
Group did not change its business model during the current and comparative period and did not make any
reclassifications.
Financial assets – impairment – credit loss allowance for ECL. The Group assesses on a forward-
looking basis the ECL for debt instruments (including loans) measured at AC and FVOCI and for the
exposure arising from loan commitments and financial guarantee contracts. The Group measures ECL and
recognises credit loss allowance at each reporting date.
The measurement of ECL reflects:
1)
an unbiased and probability weighted amount that is determined by evaluating a range of possible
outcomes;
2)
3)
the time value of money; and
all reasonable and supportable information that is available without undue cost and effort at the end
of each reporting period about past events, current conditions and forecasts of future conditions.
Debt instruments measured at AC are presented in the consolidated statement of financial position net of
the allowance for ECL.
For loan commitments (where those components can be separated from the loan) and financial guarantees,
a separate provision for ECL is recognised as a financial liability in the consolidated statement of financial
position. For debt instruments at FVOCI, changes in amortised cost, net of allowance for ECL, are
recognised in profit or loss and other changes in carrying value are recognised in OCI as gains less losses
on debt instruments at FVOCI.
The Group applies a “three stage” model for impairment in accordance with IFRS 9, based on changes in
credit quality since initial recognition:
1)
2)
3)
A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial
assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that
results from default events possible within the next 12 months or until contractual maturity, if shorter
(“12 months ECL”).
If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset
is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until
contractual maturity but considering expected prepayments, if any (“lifetime ECL”). Refer to Note 30
for a description of how the Group determines when a SICR has occurred.
If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3
and its ECL is measured as a lifetime ECL. Refer to Note 30 for a description of how the Group
defines credit-impaired assets and default.
For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always
measured at a lifetime ECL. Note 30 provides information about inputs, assumptions and estimation
techniques used in measuring ECL, including an explanation of how the Group incorporates forward-looking
information in the ECL models.
As an exception, for certain financial instruments, such as credit cards, that may include both a loan and
an undrawn commitment component, the Group measures expected credit losses over the period that the
Group is exposed to credit risk, that is, until the expected credit losses would be mitigated by credit risk
management actions, even if that period extends beyond the maximum contractual period. This is because
contractual ability to demand repayment and cancel the undrawn commitment does not limit the exposure
to credit losses to such contractual notice period. Refer to Note 3 for critical judgements applied by the
Group in determining the period for measuring ECL.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Financial assets – write-off. Uncollectible assets are partly written-off against the related сredit loss
allowance usually after one year since they become overdue. The amount of uncollectible part of loan is
estimated on a loan portfolio basis taking into account defaulted loans recovery statistics. The Group writes-
off financial assets that are mostly still subject to enforcement activity, however, there is no reasonable
expectation of recovery. If credit-impaired loans are sold to third parties, the Group remeasures the amount
of ECL prior to sale taking into consideration the expected sales proceeds so that there are no gains or
losses on derecognition upon sale.
Repayments of written-off loans. Recovery of amounts previously written-off as uncollectible is credited
directly to the credit loss allowance line in the consolidated statement of profit or loss and other
comprehensive income. Cash flows related to repayments of written-off loans are separately presented
within recoveries from written-off loan in the consolidated statement of cash flows.
Financial assets – derecognition. The Group derecognises financial assets when (a) the assets are
redeemed or the rights to cash flows from the assets otherwise expired or (b) the Group has transferred
the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement
while (i) also transferring substantially all risks and rewards of ownership of the assets or (ii) neither
transferring nor retaining substantially all risks and rewards of ownership, but not retaining control. Control
is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated
third party without needing to impose restrictions on the sale.
Financial assets – modification. The Group sometimes renegotiates or otherwise modifies the contractual
terms of the financial assets. The Group assesses whether the modification of contractual cash flows is
substantial considering, among other, the following factors: any new contractual terms that substantially
affect the risk profile of the asset, significant change in interest rate, change in the currency denomination,
new collateral or credit enhancement that significantly affects the credit risk associated with the asset, or a
significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and
the Group derecognises the original financial asset and recognises a new asset at its fair value. The date
of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation
purposes, including determining whether a SICR has occurred.
The Group also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference
between the carrying amount of the original asset derecognised and fair value of the new substantially
modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital
transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to
make the originally agreed payments, the Group compares the original and revised expected cash flows to
assets whether the risks and rewards of the asset are substantially different as a result of the contractual
modification. If the risks and rewards do not change, the modified asset is not substantially different from
the original asset and the modification does not result in derecognition.
The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by
the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets) and
recognises a modification gain or loss through a credit loss allowance. Usually modifications of stage 3
loans do not result in derecognition since they do not change the expected cash flows substantially and
represent the way of collection of past due balances.
Financial liabilities – measurement categories. Financial liabilities are classified as subsequently
measured at AC, except for financial liabilities at FVTPL: this classification is applied to derivatives, financial
liabilities held for trading (e.g. short positions in securities).
Financial liabilities – derecognition. Financial liabilities are derecognised when they are extinguished
(i.e. when the obligation specified in the contract is discharged, cancelled or expires).
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
An exchange between the Group and its original lenders of debt instruments with substantially different
terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are
accounted for as an extinguishment of the original financial liability and the recognition of a new financial
liability. The terms are substantially different if the discounted present value of the cash flows under the
new terms, including any fees paid net of any fees received and discounted using the original effective
interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the
original financial liability.
In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes
in the type of interest rate, new conversion features attached to the instrument and change in loan
covenants are also considered. If an exchange of debt instruments or modification of terms is accounted
for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the
extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or
fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the
modified liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate
using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic
substance of the difference in carrying values is attributed to a capital transaction with owners.
Cash and cash equivalents. Cash and cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value. Cash and cash equivalents include all interbank placements and reverse sale and repurchase
agreements with other banks with original maturities of less than three months. Funds restricted for a period
of more than three months on origination are excluded from cash and cash equivalents. Cash and cash
equivalents are carried at amortised cost as: (i) they are held for collection of contractual cash flows and
those cash flows represent SPPI, and (ii) they are not designated at FVTPL.
The payments or receipts presented in the consolidated statement of cash flows represent transfers of cash
and cash equivalents by the Group, including amounts charged or credited to current accounts of the
Group’s counterparties held with the Group, such as loan interest income or principal collected by charging
the customer’s current account or interest payments or disbursement of loans credited to the customer’s
current account, which represents cash or cash equivalent from the customer’s perspective.
Brokerage receivables and brokerage payables. Brokerage receivables represent placements under
reverse sale and repurchase agreements made by the Bank with central counterparty to provide customers
of the Bank who have brokerage accounts with the Bank with possibility to acquire securities in case those
customers have insufficient own funds to acquire those securities. Brokerage payables represent funds
attracted under sale and repurchase agreements made by the Bank with central counterparty to provide
customers of the Bank who have brokerage accounts with the Bank with the possibility to borrow securities
and make a short sale. Brokerage receivables and payables are short-term and accounted at amortised
cost.
Mandatory cash balances with the CBRF. Mandatory cash balances with the CBRF are carried at
amortised cost and represent non-interest bearing mandatory reserve deposits which are not available to
finance the Group’s day to day operations and hence are not considered as part of cash and cash
equivalents for the purposes of the consolidated statement of cash flows.
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 as: (i) they are
held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not
designated at FVTPL.
Certain bank deposits are subject to the “bail-in” legislation that permits or requires a national resolving
authority to impose losses on holders in particular circumstances. Where the bail-in clauses are included
in the contractual terms of the instrument and would apply even if legislation subsequently changes, the
SPPI test is not met and such instruments are mandatorily measured at FVTPL. The Group did not identify
such balances due from other banks.
113
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Where such clauses in the contract merely acknowledge the existence of the legislation and do not create
any additional rights or obligation for the Group, the SPPI criterion is met and the respective instruments
are carried at AC.
Investments in debt securities. Based on the business model and the contractual cash flow
characteristics, the Group classifies investments in debt securities as carried at AC, FVOCI or FVTPL.
Debt securities are carried at AC if they are held for collection of contractual cash flows and where those
cash flows represent SPPI, and if they are not voluntarily designated at FVTPL in order to significantly
reduce an accounting mismatch.
Debt securities are carried at FVOCI if they are held for collection of contractual cash flows and for selling,
where those cash flows represent SPPI, and if they are not designated at FVTPL. Interest income from
these assets is calculated using the effective interest method and recognised in profit or loss. An impairment
allowance estimated using the expected credit loss model is recognised in profit or loss for the year. All
other changes in the carrying value are recognised in OCI except for foreign exchange translation
gains/(losses) and interest income calculated using the effective interest rate method. When the debt
security is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from OCI
to profit or loss.
Investments in debt securities are carried at FVTPL if they do not meet the criteria for AC or FVOCI. The
Group may also irrevocably designate investments in debt securities at FVTPL on initial recognition if
applying this option significantly reduces an accounting mismatch between financial assets and liabilities
being recognised or measured on different accounting bases.
Loans and advances to customers. Loans and advances to customers are recorded when the Group
advances money to purchase or originate a loan due from a customer.
Based on the business model and the cash flow characteristics, the Group classifies loans and advances
to customers into one of the following measurement categories:
1)
2)
AC: loans that are held for collection of contractual cash flows and those cash flows represent SPPI
and loans that are not voluntarily designated at FVTPL;
FVTPL: loans that do not meet the criteria for AC or FVOCI are measured at FVTPL (mandatory
FVTPL).
Impairment allowances of the loans measured at AC are determined based on the forward-looking ECL
model. Note 30 provides information about inputs, assumptions and estimation techniques used in
measuring ECL, including an explanation of how the Group incorporates forward-looking information in the
ECL models.
Credit related commitments. The Group issues commitments to provide loans. Commitments to provide
loans are initially recognised at their fair value, which is normally evidenced by the amount of fees received.
Such loan commitment fees are deferred and included in the carrying value of the loan on initial recognition.
At the end of each reporting period, the commitments are measured at the amount of the loss allowance
determined based on the expected credit loss model. For loan commitments (where those components can
be separated from the loan), a separate provision for ECL is recognised as a liability in the consolidated
statement of financial position.
Performance guarantees. Performance guarantees are contracts that provide compensation if another
party fails to perform a contractual obligation. Such contracts transfer non-financial performance risk in
addition to credit risk. Performance guarantees are initially recognised at their fair value, which is normally
evidenced by the amount of fees received. This amount is amortised on a straight line basis over the life of
the contract. At the end of each reporting period, the performance guarantee contracts are measured at
the higher of (i) the unamortised balance of the amount at initial recognition and (ii) the best estimate of
expenditure required to settle the contract at the end of each reporting period, discounted to present value.
114
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Where the Group has the contractual right to revert to its customer for recovering amounts paid to settle
the performance guarantee contracts, such amounts will be recognised as an asset upon transfer of the
loss compensation to the guarantee’s beneficiary. These fees are recognised within fee and commission
income in profit or loss.
Sale and repurchase agreements and lending of securities. Sale and repurchase agreements (“repo
agreements”), which effectively provide a lender’s return to the counterparty, are treated as secured
financing transactions. Securities sold under such sale and repurchase agreements are not derecognised.
The securities are not reclassified in the consolidated statement of financial position unless the transferee
has the right by contract or custom to sell or repledge the securities, in which case they are reclassified as
repurchase receivables. The corresponding liability is presented within amounts due to other banks or other
borrowed funds.
Securities purchased under agreements to resell (“reverse repo agreements”), which effectively provide a
lender’s return to the Group, are recorded as due from other banks or loans and advances to customers,
as appropriate. The difference between the sale and repurchase price, adjusted by interest and dividend
income collected by the counterparty, is treated as interest income and accrued over the life of reverse
repo agreements using the effective interest method.
Securities lent to counterparties for a fixed fee are retained in the consolidated financial statements in their
original category in the consolidated statement of financial position unless the counterparty has the right by
contract or custom to sell or repledge the securities, in which case they are reclassified and presented
separately.
Securities borrowed for a fixed fee are not recorded in the consolidated financial statements, unless these
are sold to third parties, in which case the purchase and sale are recorded in profit or loss for the year within
gains less losses arising from trading securities. The obligation to return the securities is recorded at fair
value in other borrowed funds.
Based on classification of securities sold under the sale and repurchase agreements, the Group classifies
repurchase receivables into one of the following measurement categories: AC, FVOCI, FVTPL.
Guarantee deposits with payment systems. Amounts of guarantee deposits with payment systems are
recorded when the Group advances money to payment systems with no intention of trading the resulting
unquoted non-derivative receivable. Amounts of guarantee deposits with payment systems are carried at
amortised cost.
Tangible fixed assets. Tangible fixed assets are stated at cost less accumulated depreciation and
provision for impairment, where required.
Costs of minor repairs and day-to-day maintenance are expensed when incurred. Costs of replacing major
parts or components of premises and equipment items are capitalised, and the replaced part is retired.
At the end of each reporting period management assesses whether there is any indication of impairment
of tangible fixed assets. If any such indication exists, management estimates the recoverable amount,
which is determined as the higher of an asset’s fair value less costs to sell and its value in use. The carrying
amount is reduced to the recoverable amount and the impairment loss is recognised in profit or loss for the
year. An impairment loss recognised for an asset in prior years is reversed if there has been a change in
the estimates used to determine the asset’s value in use or fair value less costs to sell.
Gains and losses on disposals determined by comparing proceeds with carrying amount are recognised in
profit or loss for the year (within other operating income or expenses).
115
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Depreciation. Depreciation of each item of tangible fixed assets is calculated using the straight-line method
to allocate its cost to its residual value over its estimated useful life as follows:
Useful lives in years
Building
99
Equipment
3 to 10
Vehicles
5 to 7
Leasehold improvements
Others (safes, fireproof cabinets)
Shorter of their useful economic life and the term of the underlying lease
20
The residual value of an asset is an estimated amount that the Group would currently obtain from disposal
of the asset less the estimated costs of disposal, if the asset was already of the age and in the condition
expected at the end of its useful life. The assets’ residual values and useful lives are reviewed, and adjusted
if appropriate, at the end of each reporting period.
Intangible assets. Intangible assets are stated at cost less accumulated amortization. The Group’s
intangible assets other than insurance license have definite useful life and include capitalised acquired
computer software and internally developed software. Development costs that are directly associated with
identifiable and unique software controlled by the Group are recorded as intangible assets if the inflow of
incremental economic benefits exceeding costs is probable. Capitalised costs include staff costs of the
software development team and an appropriate portion of relevant overheads.
Computer software licenses acquired are capitalised on the basis of the costs incurred to acquire and bring
to use the specific software. All other costs associated with computer software, e.g. its maintenance, are
expensed when incurred. Capitalised computer software is amortised on a straight line basis over expected
useful lives of 1 to 10 years.
At each reporting date management assesses whether there is any indication of impairment of intangible
assets with an indefinite useful life. If any such indication exists, management estimates the recoverable
amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use.
The carrying amount is reduced to the recoverable amount and the impairment loss is recognised in profit
or loss. An impairment loss recognised for an asset in prior years is reversed if there has been a change in
the estimates used to determine the asset’s value in use or fair value less costs to sell. Intangible assets
including goodwill with indefinite useful life are tested annually for impairment.
Accounting for leases by the Group as a lessee. Leases, where the Group is the lessee, are recognised
as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for
use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of
the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable under
cancellable and non-cancellable operating leases;
variable lease payments that are based on an index or a rate and that are initially measured using
the index or rate as at the commencement date;
•
•
•
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that
option.
116
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
The lease term includes any non-cancellable and optional extension periods which have been assessed
as reasonably certain to be exercised. The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the
rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs, and
dismantling and restoration costs.
As an exception to the above, the Group accounts for short-term leases and leases of low value assets by
recognising the lease payments as an operating expense on a straight line basis. Short-term leases are
leases with a lease term of 12 months or less, and the lease does not provide for the possibility of
repurchase of the asset at the end of the contract. Low value assets are assets with a value of RR 300,000
or less at the date of conclusion of the contract.
Right-of-use assets are included in tangible fixed assets, lease liabilities are included in other non-financial
liabilities in the consolidated statement of financial position. Depreciation of right-of-use assets are
recognised in administrative and other operating expenses in the consolidated statement of profit or loss
and other comprehensive income. Finance cost is recognised within other similar expense line of the
consolidated statement of profit or loss and other comprehensive income. Repayment of principal of lease
liabilities is disclosed within cash flows from financing activities of the consolidated statement of cash flows.
Due to other banks. Amounts due to banks are recorded when money or other assets are advanced to
the Group by counterparty banks. Non-derivative liability is carried at amortised cost.
Customer accounts. Customer accounts are non-derivative liabilities to corporate entities and individuals
and are carried at amortised cost.
Debt securities in issue. Debt securities are stated at amortised cost. If the Group purchases its own debt
securities in issue, they are removed from the consolidated statement of financial position and the difference
between the carrying amount of the liability and the consideration paid is included in a separate line of
consolidated statement of profit or loss and other comprehensive income as gains/losses from repurchase
of debt securities in issue.
Subordinated debt. Subordinated debt can only be paid in the event of a liquidation after the claims of
other higher priority creditors have been met. Subordinated debt is carried at AC.
Financial derivatives. Financial derivatives represented by forwards and foreign currency swaps are
carried at their fair value. Derivatives are carried as assets when fair value is positive and as liabilities when
fair value is negative. Changes in the fair value of financial derivatives are recorded in profit or loss within
Net (losses)/gains from derivatives revaluation. The Group does not apply hedge accounting.
Income taxes. Income taxes have been provided for in the consolidated financial statements in accordance
with Russian legislation and Cyprus legislation enacted or substantively enacted by the end of the reporting
period. The income tax charge comprises current tax and deferred tax and is recognised in profit or loss for
the year except if it is recognised in other comprehensive income or directly in equity because it relates to
transactions that are also recognised, in the same or a different period, in other comprehensive income or
directly in equity.
Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of
taxable profits or losses for the current and prior periods. Taxable profits or losses are based on estimates
if the consolidated financial statements are authorised prior to filing relevant tax returns. Taxes other than
on income are recorded within administrative and other operating expenses.
117
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and
temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not
recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than
a business combination if the transaction, when initially recorded, affects neither accounting nor taxable
profit. Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of
reporting period which are expected to apply to the period when the temporary differences will reverse or
the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the
individual companies of the Group. Deferred tax assets for deductible temporary differences and tax loss
carry forwards are recorded only to the extent that it is probable that future taxable profit will be available
against which the deductions can be utilised.
Deferred income tax is not recognised on post-acquisition retained earnings and other post acquisition
movements in reserves of subsidiaries, where the Group controls the subsidiary’s dividend policy and it is
probable that the difference will not reverse through dividends or otherwise in the foreseeable future.
Uncertain tax positions. The Group's uncertain tax positions are assessed by management at the end of
each reporting period. Liabilities are recorded for income tax positions that are determined by management
as more likely than not to result in additional taxes being levied if the positions were to be challenged by
the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or
substantively enacted at the end of reporting period and any known court or other rulings on such issues.
Liabilities for penalties, interest and taxes other than on income are recognised based on management’s
best estimate of the expenditure required to settle the obligations at the end of the reporting period.
Provisions for liabilities and charges. Provisions for liabilities and charges are non-financial liabilities of
uncertain timing or amount. They are accrued when the Group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
Levies and charges, such as taxes other than income tax or regulatory fees based on information related
to a period before the obligation to pay arises, are recognised as liabilities when the obligating event that
gives rise to pay a levy occurs, as identified by the legislation that triggers the obligation to pay the levy. If
a levy is paid before the obligating event, it is recognised as a prepayment.
Other liabilities. Other liabilities are accrued when the counterparty has performed its obligations under
the contract and are carried at amortised cost.
Share capital. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of new shares are shown in equity as a deduction, net of tax, from the proceeds and debited against share
premium.
Share premium. Share premium is the difference between the fair value of the consideration receivable
for the issue of shares and the nominal value of the shares. The share premium account can only be
resorted to for limited purposes, which do not include the distribution of dividends, and is otherwise subject
to the provisions of the Cyprus Companies Law on reduction of share capital.
Treasury shares. Where the Company or its subsidiaries purchase the Company’s equity instruments, the
consideration paid, including any directly attributable incremental externalcosts, net of income taxes, is deducted
from equity attributable to the owners of the Company until the equity instruments are reissued, disposed of or
cancelled. Where such shares are subsequently disposed of or reissued, any consideration received is included
in equity. The value of GDRs transferred out of treasury shares for the purposes of the long-term incentive
program for management of the Group are determined based on the weighted average cost.
Dividends. Dividends are recorded in equity in the period in which they are declared. Any dividends
declared after the end of the reporting period and before the consolidated financial statements are
authorised for issue, are disclosed in the Note 40. The accounting reports of the Group entities are the
basis for profit distribution and other appropriations. The separate financial statements of the Company
prepared in accordance with IFRS as adopted by the EU and in accordance with Cyprus Companies Law
is the basis of available reserves for distribution.
118
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Dividend distribution to the Company's shareholders is recognised as a liability in the Company's
consolidated financial statements in the year in which the dividends are appropriately authorised and are
no longer at the discretion of the Company. More specifically, interim dividends are recognised as a liability
in the period in which these are authorised by the Board of directors and in the case of final dividends,
these are recognised in the period in which these are approved by the Company's shareholders.
Interest income and expense recognition. Interest income and expense calculated using effective
interest method are recorded for all debt instruments, other than those at FVTPL, on an accrual basis using
the effective interest method. This method defers, as part of interest income or expense, all fees paid or
received between the parties to the contract that are an integral part of the effective interest rate, transaction
costs and all other premiums or discounts.
Fees integral to the effective interest rate include origination fees (e.g. interchange fee on credit card loans)
received or paid by the entity relating to the creation or acquisition of a financial asset or issuance of a
financial liability.
Commitment fees (e.g. annual fee on credit card loans) received by the Group to originate loans at market
interest rates are integral to the effective interest rate if it is probable that the Group will enter into a specific
lending arrangement and does not expect to sell the resulting loan shortly after origination. The Group does
not designate loan commitments as financial liabilities at FVTPL.
For financial assets that are originated or purchased credit-impaired, the effective interest rate is the rate
that discounts the expected cash flows (including the initial expected credit losses) to the fair value on initial
recognition (normally represented by the purchase price). As a result, the effective interest is credit-
adjusted.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial
assets, except for:
i) financial assets that have become credit-impaired (Stage 3), for which interest revenue is calculated by
applying the effective interest rate to their AC (net of the ECL provision); and
ii) financial assets that are purchased or originated credit-impaired, for which the original credit-adjusted
effective interest rate is applied to the AC.
Customer acquisition expense recognition. Customer acquisition expenses are represented by the
costs incurred by the Group on services related to attraction of the client, mailing of advertising materials,
processing of responses etc. Those costs, which can be directly attributed to the acquisition of a particular
client, are included in the effective interest rate of the originated financial instruments; the remaining costs
are expensed on the basis of the actual services provided.
Other income and expense recognition. All other income is generally recorded on an accrual basis by
reference to completion of the specific performance obligation assessed on the basis of measurement of
the Group’s progress towards complete satisfaction of that performance obligation.
All other expenses are generally recorded on an accrual basis by reference to completion of the specific
transaction assessed on the basis of the actual service provided as a proportion of the total services to be
provided.
Other similar income. Other similar income represents interest income recorded for debt instruments
measured at fair value through profit or loss (“FVTPL”) and is recognised on an accrual basis using nominal
interest rate.
Other similar expense. Other similar expense represents finance cost related to the discounted lease
payments using the incremental borrowing rate.
Fee and commission income and expense. Fee and commission income is recognised over time as the
services are rendered, when the customer simultaneously receives and consumes the benefits provided
by the Group’s performance. Such income includes SMS fee, part of SME services commission, part of
brokerage fee and income from MVNO services which represents fixed monthly payments.
119
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Variable fees are recognised only to the extent that management determines that it is highly probable that
a significant reversal will not occur.
Other fee and commission income is recognised at a point in time when the Group satisfies its performance
obligation, usually upon execution of the underlying transaction. The amount of fee or commission received
or receivable represents the transaction price for the services identified as distinct performance obligations.
Such income includes acquiring commission, part of SME services commission, brokerage fee and income
from MVNO services, which represents payments for each transaction, fee for selling credit protection,
interchange fee, cash withdrawal fee, foreign currency exchange transactions fee, fee for money transfers
and other.
All fee and commission expenses are generally recorded on an accrual basis by reference to completion
of the specific transaction assessed on the basis of the actual service provided as a proportion of the total
services to be provided.
Customer loyalty program. The group operates loyalty programs where retail clients accumulate points,
which entitle them to reimbursement of purchases made with credit and debit cards. A financial liability is
recognised for the amount of fair value of points expected to be redeemed until they are actually redeemed
or expire with the corresponding entries to interest income calculated using the effective interest rate
method or commission expenses depending on whether the points were accumulated by credit card clients
or debit card clients respectively.
Insurance contracts. Insurance contracts are those contracts that transfer significant insurance risk.
Insurance risk exists when the Group has uncertainty in respect of at least one of the following matters at
inception of the contract: occurrence of insurance event, date of occurrence of the insurance event, and
the claim value in respect of the occurred insurance event. Such contracts may also transfer financial risk.
Non-life insurance (short-term insurance). The below items from the consolidated statement of financial
position of the Group are accounted within Other financial assets and Other financial liabilities lines, the
below items from the consolidated statement of profit or loss and other comprehensive income of these
consolidated financial statements are accounted within Income from insurance operations and Insurance
claims incurred lines.
•
Premiums written. Premiums (hereafter – “premiums” or “insurance premiums”) under insurance
contracts are recorded as written upon inception of a contract and are earned on a pro-rata basis
over the term of the related contract coverage. Reduction of premium written in subsequent periods
(under amendments to the signed original contacts, for example) is accounted by debiting of
premiums written in current period.
•
•
Claims. Claims are charged to the consolidated statement of profit or loss and other comprehensive
income as compensation is paid to policyholders (beneficiaries) or third parties.
Claims handling expenses. Claims handling expenses are recognised in profit or loss for the period
as incurred and include direct expenses related to negotiations and subsequent claims handling, as
well as indirect expenses, including expenses of claims handling department and administrative
expenses directly related to activities of this department.
•
Reinsurance. The Group assumes and cedes reinsurance in the normal course of business. Ceded
reinsurance contracts do not relieve the Group from its obligations to the policyholders under
insurance contract. Amounts due from reinsurers are measured consistently with the amounts
associated with the direct insurance contracts and in accordance with the terms of each reinsurance
contract. Reinsurance assets arising from outward reinsurance contracts include reinsurers share in
paid claims, including claims handling expenses. Liabilities under outward reinsurance operations
are obligations of the Group for payment of premiums to reinsurers. Reinsurance assets include
premiums ceded to the Group under inward reinsurance contracts. The Group's liabilities under
inward reinsurance contracts are obligations to compensate the Group's share in paid claims,
including claims handling expenses to reinsurers. The Group assesses its reinsurance assets for
impairment on a regular basis. If there is objective evidence that the reinsurance asset is impaired,
the Group reduces the carrying amount of the reinsurance asset to its recoverable amount and
recognises that impairment loss in the consolidated statement of profit or loss and other
comprehensive income.
120
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
The Group gathers the evidence that a reinsurance asset is impaired using the same process
adopted for financial assets carried at amortised cost. The impairment loss is also calculated
following the same method used for the financial assets carried at amortised cost.
•
Subrogation income. The Group has a right to pursue third parties responsible for loss for payment
of some or all costs related to the claims settlement process of the Group (subrogation).
Reimbursements are recognised as income only if the Group is confident in receipt of these amounts
from these third parties. Under inward reinsurance contracts, amounts of reimbursement due to the
Group as a result of settlement of reinsurer's subrogation claims are treated as the Group's income
as at the date of acceptance of the invoice received from the reinsurer and including calculation of
the Group's share in the subrogation claim.
•
Deferred acquisition costs. Deferred acquisition costs (“DAC”) are calculated (for non-life
insurance contracts) separately for each insurance product. Acquisition costs include remuneration
to agents for concluding agreements with corporate clients and individuals and brokerage fees for
underwriting of assumed reinsurance agreements. They vary with and fully depend on the premium
earned under acquired or renewed insurance policies. These acquisition costs are deferred and
amortised over the period in which the related written premiums are earned. They are reviewed by
line of business at the time of the policy issue and at the end of each accounting period to ensure
they are recoverable based on future estimates. For the insurance contracts with duration of less
than one month and with automatic prolongation condition amortisation of one-off acquisition costs
occurs over the period determined based on statistical assessment of duration of the insurance
contract taking into account all of the expected future prolongations.
Insurance provisions
•
Provision for unearned premiums. Provision for unearned premiums (“UEPR”) represents the
proportion of premiums written that relate to the unexpired term of policies in force as at the reporting
date, calculated on a time apportionment basis. UEPR is recognised within liabilities on a gross basis.
•
Loss provisions. Loss provisions represent the accumulation of estimates for ultimate losses and
include outstanding claims provision (“OCP”) and provision for losses incurred but not yet reported
(“IBNR”). Loss provisions are recognised within liabilities on a gross basis. Estimates of claims
handling expenses are included in both OCP and IBNR. OCP is provided in respect of claims
reported, but not settled as at the reporting date. The estimation is made on the basis of information
received by the Group during settlement of the insured event, including information received after
the reporting date. IBNR is determined by the Group by line of business using actuarial methods,
and includes assumptions based on prior years’ claims and claims handling experience. IBNR is
calculated for each occurrence period as the difference between the projected maximum amount of
future payments resulting from the events that occurred during the period and the amount of future
payments resulting from the event already reported but not settled at the reporting date within the
same period. The methods of determining such estimates and establishing the resulting provisions
are continually reviewed and updated. Resulting adjustments are reflected in the consolidated
statement of profit or loss and other comprehensive income as they arise. Loss provisions are
estimated on an undiscounted basis due to relatively quick pattern of claims notification and payment.
•
•
Unexpired risk provision. Unexpired risk provision (“URP”) is recorded when unearned premiums
are insufficient to meet claims and expenses, which may be incurred after the end of the financial
year. To estimate the unexpired risk provision the Group uses historical experience and forward
looking assumptions of ultimate loss ratios (including claims handling expenses) and the level of in-
force portfolio maintenance expenses. The expected claims are calculated having regard to events
that have occurred prior to the reporting date. For the purposes of final presentation of consolidated
financial statements unexpired risk provision is written off against deferred acquisition costs.
Liability adequacy testing. As at each reporting date the adequacy of the insurance reserves is
tested. Testing of insurance reserves for non-life insurance is performed to ensure adequacy of
contract liabilities. In performing these tests, current estimates of future contractual cash flows,
claims handling and administration expenses are used. As a result of liability adequacy testing for
non-life insurance, the Group sets up its URP.
121
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Foreign currency translation and operations. The functional currency of the Company and each of the
Group’s consolidated entities is the Russian Rouble (“RR”), which is the currency of the primary economic
environment in which each entity operates. Monetary assets and liabilities are translated into each entity’s
functional currency at the official exchange rate of the CBRF at the end of the respective reporting period.
Foreign exchange gains and losses resulting from the translation of monetary assets and liabilities into
each entity’s functional currency at year-end official exchange rates of the CBRF are recognised in profit
or loss for the year as Net (losses)/gains from foreign exchange translation.
Foreign exchange gains and losses resulting from the settlement of transactions with foreign currencies
are recognised in profit or loss for the year as net (losses)/gains from operations with foreign currencies
(except for clients’ foreign currency exchange transactions fee, which is recognised in profit or loss as fee
and commission income).
Translation at year-end rates does not apply to non-monetary items that are measured at historical cost.
At 31 December 2021 the rate of exchange used for translating foreign currency balances was USD 1 =
RR 74.2926 (2020: USD 1 = RR 73.8757), and the average rate of exchange was USD 1 = RR 73.6541
(2020: USD 1 = RR 72.1464).
Offsetting. Financial assets and liabilities are offset and the net amount reported in the consolidated
statement of financial position only when there is a legally enforceable right to offset the recognised
amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability
simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must be legally
enforceable in all of the following circumstances: (i) in the normal course of business, (ii) the event of default
and (iii) the event of insolvency or bankruptcy.
Earnings per share. Earnings per share are determined by dividing the profit or loss attributable to owners
of the Company by the weighted average number of participating shares outstanding during the reporting
year, excluding treasury shares. For the purpose of diluted earnings per share calculation the Group
considers dilutive effects of shares granted under employee share option plans.
Staff costs and related contributions. Wages, salaries, contributions to the Russian Federation state
pension and social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits
are accrued in the year in which the associated services are rendered by the employees of the Group. The
Group has no legal or constructive obligation to make pension or similar benefit payments beyond the
payments to the statutory defined contribution scheme.
Segment reporting. Segments are reported in a manner consistent with the internal reporting provided to
the Group’s chief operating decision maker. Segments whose revenue, result or assets are ten percent or
more of all the segments are reported separately.
Equity-settled share-based payment. The expense is recognized over the vesting period and is
measured at the fair value of the award determined at the grant date, which is amortized over the service
(vesting) period. The fair value of the equity award is estimated only once at the grant date and is trued up
to the estimated number of instruments that are expected to vest. Dividends declared during the vesting
period accrue and are paid to the employee together with the sale proceeds of the vested shares upon a
liquidity event. Expected dividends (including those expected during the vesting period) are therefore
included in the determination of fair value of the share-based payment.
Cash-settled share-based program. The expense is recognized gradually over the vesting period and is
measured at the fair value of the liability at each end of the reporting period. The fair value of the liability
reflects all vesting conditions, except for the requirement of the employee to stay in service which is
reflected through the amortization schedule. The liability is measured, initially and at the end of each
reporting period until settled, at fair value, taking into account the terms and conditions on which the
instruments were granted and the extent to which the employees have rendered service to date.
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TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
41
Significant Accounting Policies (Continued)
Beskontakt acquisition. On 29 April 2021 the Group obtained control of LLC “Beskontakt” through
acquisition of its 77,4% net assets (refer to Note 1). To account for this acquisition, the Group decided to
apply an optional concentration test as allowed under IFRS 3 “Business combination”. The concentration
test has demonstrated that approximately 95% of the fair value of gross assets acquired would be
concentrated in intangible asset that is represented by the “Koshelek” application and customer database.
Therefore, the Group concluded that the acquired set of assets and activities is not a business. For the
acquisition of an asset or a group of assets that does not constitute a business, such a transaction or event
does not give rise to goodwill.
Amendments of the consolidated financial statements after issue. The Board of directors of the
Company has the power to amend the consolidated financial statements after issue.
Changes in presentation. In March 2021 the Group refined its presentation of non-recoverable VAT
expenses by including them into the expense items which triggered such VAT expenses. The management
considers that such refined presentation results in more relevant presentation of substance of those non-
recoverable VAT expenses. As a result, the comparative information was amended accordingly in the notes
to the following financial statements line items: Fee and commission expense, Customer acquisition
expense and Administrative and other operating expenses (refer to Notes 22, 23 and 25).
The effect of changes described above on the consolidated statement of profit or loss and other
comprehensive income for the year ended 31 December 2020 is as follows:
As originally Reclassification
presented
As reclassified
In millions of RR
Fee and commission expense
Administrative and other operating expenses
(21,599)
(35,621)
(616)
616
(22,215)
(35,005)
42
Adoption of New or Revised Standards and Interpretations
The following amended standard became effective from 1 January 2021, but did not have any material
impact on the Group:
Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16 (issued on 27 August 2020 and effective for annual periods beginning on or after 1 January 2021).
Under these amendments, changes to the basis for determining the contractual cash flows are reflected by
adjusting the effective interest rate. No immediate gain or loss is recognised. Reform and replacement of
various inter-bank offered rates (‘IBORs’) has become a priority for regulators. Most IBOR rates would stop
being published by 31 December 2021, while certain USD LIBOR rates would stop being published by 30
June 2023. During the reporting year and as at 31 December 2021, the Group does not have any
transactions and balances based on IBOR or LIBOR rates.
Covid-19-Related Rent Concessions – Amendments to IFRS 16 (issued on 28 May 2020 and effective
for annual periods beginning on or after 1 June 2020).
43
New Accounting Pronouncements
Certain new amendments have been issued that are mandatory for the annual periods beginning on or
after 1 January 2022, which the Group has not early adopted:
IFRS 17 "Insurance Contracts"(issued on 18 May 2017 and effective for annual periods beginning
on or after 1 January 2023). IFRS 17 replaces IFRS 4, which has given companies dispensation to carry
on accounting for insurance contracts using existing practices. As a consequence, it was difficult for
investors to compare and contrast the financial performance of otherwise similar insurance companies.
IFRS 17 is a single principle-based standard to account for all types of insurance contracts, including
reinsurance contracts that an insurer holds.
123
TCS Group Holding PLC
Notes to the Consolidated Financial Statements – 31 December 2021
43
New Accounting Pronouncements (Continued)
The standard requires recognition and measurement of groups of insurance contracts at: (i) a risk-adjusted
present value of the future cash flows (the fulfilment cash flows) that incorporates all of the available
information about the fulfilment cash flows in a way that is consistent with observable market information;
plus (if this value is a liability) or minus (if this value is an asset) (ii) an amount representing the unearned
profit in the group of contracts (the contractual service margin). Insurers will be recognising the profit from
a group of insurance contracts over the period they provide insurance coverage, and as they are released
from risk. If a group of contracts is or becomes loss-making, an entity will be recognising the loss
immediately. The Group is currently assessing the impact of IFRS 17 on the insurance contracts issued by
the Insurance Company as well as the impact for credit cards and similar loan products which may include
insurance component.
Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for
annual periods beginning on or after 1 January 2023). The amendments include a number of
clarifications intended to ease implementation of IFRS 17, simplify some requirements of the standard and
transition. The amendments relate to eight areas of IFRS 17, and they are not intended to change the
fundamental principles of the standard.
Amendment to IFRS 4 – deferral of IFRS 9 (issued on 25 June 2020 and effective for annual periods
beginning on or after 1 January 2023). The amendments to IFRS 4 addressed the temporary accounting
consequences of the different effective dates of IFRS 9 and the forthcoming IFRS 17. The amendments to
IFRS 4 extended the expiry date of the temporary exemption from applying IFRS 9 until 2023 in order to
align the effective date of IFRS 9 with the new IFRS 17. The fixed expiry date of the temporary exemption
from applying IFRS 9 in IFRS 4 has been deferred to annual reporting periods beginning on or after 1
January 2023.
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition
of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or
after 1 January 2023)*.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods
beginning on or after 1 January 2023)*.
Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS
12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023)*.
The amendments to IAS 12 specify how to account for deferred tax on transactions such as leases and
decommissioning obligations.
The following other new pronouncements are not expected to have any material impact on the Group when
adopted:
•
•
•
IFRS 14, Regulatory Deferral Accounts (issued on 30 January 2014 and effective for annual periods
beginning on or after 1 January 2016)*.
Classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January
2020 and effective for annual periods beginning on or after 1 January 2022)*.
Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the
Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual
Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued
on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022)*.
•
•
Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS
1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023)*.
Covid-19-Related Rent Concessions – Amendments to IFRS 16 (issued on 31 March 2021 and
effective for annual periods beginning on or after 1 April 2021).
* Denotes standards, interpretations and amendments which have not yet been endorsed by the European
Union.
124