October 28, 2019 / 3:00 PM / 22 days ago

UPDATE 1-Russian lender TCS to resume dividend payments - CFO

(Repeats to additional subscribers)

By Alexander Marrow

MOSCOW, Oct 28 (Reuters) - Russian lender TCS Group Holding will resume dividend payments following this year’s fourth-quarter results, the company’s chief financial officer said on Monday.

At an event marking the start of trading of the group’s global depositary receipts on the Moscow Exchange, CFO Ilya Pisemsky said dividend payments, which were suspended in June for the remainder of 2019, would be paid in March or April 2020.

TCS, the parent company of Tinkoff Bank, a pioneer of online banking technology and Russia’s second-largest credit card issuer after the market leader Sberbank, has had strong growth this year and expects to make a minimum year-end profit of 35 billion roubles ($550 million).

The company’s dividend policy, in which TCS pays up to 30% of net profit under International Financial Reporting Standards (IFRS) in the form of dividends, was suspended for two quarters over the summer due to changes in capital allocation, Pisemsky said.

CEO Oliver Hughes said the company already has a rough idea of what its loan portfolio will look like next year, taking into account risk weights, business development and portfolio growth.

“We understand how much capital we need to adhere to the specific level of the central bank’s capital adequacy ratio and other indicators, so we know that we can comfortably pay up to 30% of the audited profit of the previous quarter,” Hughes told reporters.

“From the beginning of next year we will resume dividend payments.” In London, TCS stock was up 3.7% in early trade, its highest since Aug. 22.

In Moscow, Tinkoff’s GDRs started trading at 1,186 roubles and were up nearly 2% on the day at 1,209 roubles at 1123 GMT.

LONG-TERM STRATEGY

Hughes said he expected secured lending to be one of the biggest drivers of balance sheet growth over the next three years, but said expanding Tinkoff’s customer base was the company’s most important target.

“We don’t like giving large loans to an individual customer so we grow by the number of customers in our customer base, not by the balance of each customer in terms of borrowing,” he said.

“We are opening around 400,000 new accounts per month. If we assume that everything stays constant in the economy, no external shocks, then we should have 20 million customers in the next three years or so.”

Now with two listings, in London and Moscow, Hughes said investors could easily buy TCS stock, but did not rule out a third. “Do we need a third listing?” Hughes said. “This is a big question, but we’ll never say never.”

Further company coverage: ($1 = 63.6100 roubles) (Reporting by Alexander Marrow Editing by Katya Golubkova and David Evans)

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