Tinkoff Annual Report 2021

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FY2021 Annual Report · Tinkoff

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Annual Report 2021

TCS GROUP HOLDING PLC

CONTENTS

STRATEGIC REVIEW

FINANCIALS

Chairman’s Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Financial performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

2021 highlights for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-10

Business model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Notes to the consolidated Financial Statments . . . . . . . . . . . . F-14

Business description, position and strategy . . . . . . . . . . . . . . . . 16

Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Risk management and control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Responsible business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Tinkoff is an online ecosystem offering a full range of financial services for individuals and businesses . In 15 years of our history we have
secured our place among one of the world’s leading neobanks, with more than 20 million customers . Our unique values, entrepreneurial
spirit, the culture of innovation and teamwork are the key foundations of our success .

Our strategic objective is to grow our customer base profitably by building the most comprehensive, engaging, innovative, and sustainable
financial and lifestyle ecosystem in the world .

About this report

Summary of presentation of financial and other information: All financial information in this report is derived from the consolidated financial
statements of TCS Group Holding PLC and has been prepared in accordance with International Financial Reporting Standards as adopt-
ed by the European Union and the requirements of Cyprus Companies Law, Cap 113, which have been included in this report . A detailed
description of the presentation of financial and other information is set out from page F-1 of this report .

Data: Market data used in this report, including statistics in respect of market share, have been extracted from official and industry sources
TCS Group Holding PLC believes to be reliable and is sourced where it appears . Such information, data and statistics may be approxima-
tions or estimates . Some of the market data in this document has been derived from official data of Russian government agencies, including
the CBRF, Rosstat and the FSFM . Data published by Russian federal, regional and local governments are substantially less complete or
researched than those of Western countries .

STRATEGIC
REVIEW
Chairman’s Statement

Dear stakeholders,

Looking back now at FY 2021 as I must for the purposes of this annual
report, I feel we as a Board made our contribution, supporting as
before the Group’s traditional strengths-strong capital and liquidity
positions, innovative technologies, good control of risk, fast and
cool-headed reactions to change and the opportunities it creates .

I wrote last year that advancing technology allowed the Board to
carry forward its supervisory and oversight work despite the many
challenges thrown at us by the pandemic, and the same was true for
2021 . The continued rollout of our corporate governance enhancement
programme saw very significant changes . We increased in the strength
and depth of the Board while diversifying its composition . From the
onboarding of a number of new directors, many of them INEDs,
strengthening the executive management component on the Board to
setting up two new committees, the Strategy Committee and
Sustainability Committee, all clear pointers to greater transparency .

On the business frontline, corporate governance changes mirror the
Group's commitment to developing and promoting its outstanding
talent, deepening the management bench even as we maintain our
trajectory of fast and profitable growth .

As I have mentioned in the past, the outstanding financial performance
such as the Group delivered in FY2021 is the result of many contri-
butions, over many years, of informed, timely and astute decisions
taken, well targeted investments, allied to complete professionalism, a
focused and talented management team, passion for the Tinkoff brand
and devotion to serving our customers . And last but not least a dash of
true entrepreneurial instinct .

All of this put us in the strongest possible position for the unexpected,
coming into 2022 . Tinkoff in its 15 years of life has survived a number of
crises, with different causes and different impacts, testing the Tinkoff
business model . Everyone appreciates that the current operating
environment is markedly different to anything we have ever seen before .
Yet the business model has always been very flexible, highly resilient,
and skillfully led . The Group has been able to thrive whatever the
challenges, whatever the environment, and although the Board is
currently facing several setbacks, I believe we will outperform
expectations in 2022 .

Keep safe, keep optimistic in these difficult times .

Yours sincerely

Constantinos Economides
Chairman of the Board of Directors

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021HIGHLIGHTS
FOR THE YEAR

TCS GROUP IS AN INNOVATIVE PROVIDER OF DIGITAL FINANCIAL AND
LIFESTYLE SERVICES . BRANCHLESS SINCE ITS INCEPTION IN 2006, TCS
DEVELOPED A FULL RANGE OF IN-HOUSE PROPRIETARY TECHNOLOGY
SOLUTIONS AND SERVICES, INCLUDING DIGITAL BANKING, BROKERAGE,
ACQUIRING AND OTHER MERCHANT SOLUTIONS, INSURANCE, SME
BANKING AND MUCH MORE .

63.4₽ bn Net profit

46%

%
Group
revenue

274

₽ bn

54% credit revenue

Total
customers

20 .8 m

+7 .5m y-o-y

14.6 Debit cards
8.8 Credit products
3.0 Investments

2021

Customer accounts

0 .9

RUB tn

Total assets

1 .3

RUB tn

Net loans

+61%

to 31 .12 .2020

ROE

42 .5%

CoR

4 .5%

ROA

6 .2%

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 20212021

HIGHLIGHTS
FOR THE YEAR
Russia’s one of the largest banks of active retail customers

Total customers (m)

Active customers (m)

10.811.2

10.2

9.6

8.8

6.2 6.7 7.2 7.5 7.5

8.0

7.2

5.2 5.6

2.8 2.9 3.2 3.4 3.7 4.1 4.7 5.1 5.5 5.9 6.5
1.6 1.7 1.8 2.0 2.2 2.4 2.7 3.0

3.9 4.2 4.5

20.8

18.5

16.7

14.8

13.3

12.1

11.5

10.3

9.1

8.2

14.5

12.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2016

2017

2018

2019

2020

2021

Group MAU (m)

Group DAU (m)

15.4

13.7

12.5

10.7

9.3

8.0

5.8

6.0 6.7 7.0

0.9 1.0 1.3 1.6 1.9 2.1 2.4 2.7 2.9 3.0 3.4 4.0 4.5 4.8 5.2

0.7 0.8 0.9 1.1 1.3 1.4 1.6 1.9 2.0 2.2 2.6 3.2 3.6 4.2 4.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2016

2017

2018

2019

2020

2021

• Total customer: Customers with a utilized product that has not been closed

• Active customer: Customer who generated revenue in the last month

• Group MAU and DAU refers to unique monthly and daily active users of all Tinkoff platforms (incl . Tinkoff banking app, Tinkoff Invest-

ments, Tinkoff Internet Banking, SME, Tinkoff Junior and other smaller platforms)

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021HISTORY

HIGHLIGHTS OF TCS GROUP’S INNOVATIVE DEVELOPMENT

NET PROFIT (RUB BN)

2021

63 .4

• Tinkoff among world's Top 3 neo-banks according to WhiteSight
• Russia’s best-performing bank by The Banker
• Oleg voice assistant was integrated into Tinkoff phone call center
• Top 3 best employer in Russia according to Forbes
• Tinkoff Mobile launched an Ad Blocker for its customers
• Tinkoff launched Russia's first BNPL service

(buy-now-pay-later) - "Dolyami"

• Tinkoff Investments launched its ECM and DCM business line
• Tinkoff becomes a shareholder of Beskontakt LLC, the developer

of Koshelek

• Most Innovative Digital Bank in Central and Eastern Europe at 2021

Worlds Best Digital Bank Awards

• Tinkoff launched Tinkoff Private
• Tinkoff, together with CIAN, launched the first Russian service for

conducting remote electronic real estate deals
• Tinkoff Capital received asset management licence
• Tinkoff took the second place in the Forbes Woman 2021 rating
• TCS Group Holding Plc introduced Co-CEOs structure

• Tinkoff`s celebrated 15-year anniversary
• Tinkoff presented ETNA Russias first open-service tool for analys-

ing and forecasting business processes
• Tinkoff named Russia's Bank of the Year
• Tinkoff Group became a signatory to the Principles of Re-

sponsible Banking and joined the United Nations Environment
Programme Finance Initiative

• Tinkoff announced the launch of Oleg's free telephone secretary
• Tinkoff has acquired 5% of the St . Petersburg Exchange
• Tinkoff adopted Anodot’s Next-Level Technology to Revolution-
ize its Customer Experience, Payment, and Trading Monitoring

• Tinkoff completed its debut mortgage securitisation
• Tinkoff Named CEE’s Best Digital Bank at Euromoney’s Awards

for Excellence 2021

• Tinkoff launched 9 development hubs
• Tinkoff was recognized as Most Innovative Digital Bank

by Global Finance

2020

44 .2

• Tinkoff becomes the largest player in the CBR’s Faster

• Tinkoff non-credit product customers overtake the number of

Payments System

• Tinkoff GDRs included in the MSCI Russian Main Index
• Tinkoff included into Top 50 Most Valuable Russian Brands
• Tinkoff Capital launched Russia’s first ETF tracking
the Nasdaq (*) -100 Technology Sector Index (NDXT)

credit product customers for the first time

• Tinkoff deploys its cloud home call centre platform to assist the
Moscow City Government in fielding calls on pandemic-related
problems

2017–2019

• The Company’s GDRs are listed on MOEX
• Launch of the first "Super App" in Russia
•

Introduction of ‘Oleg’, the world's first voice assistant for finan-
cial and lifestyle tasks

2014–2016

• Full brokerage and depositary services license obtained
• Launch of Tinkoff Junior app, a service for children and teenagers

36 .1*

11 .0*

• Launched a network of software development hubs countrywide
•
• Launched a new management long term incentive plan

Introduced a face recognition system for scoring

• Became Russia’s second largest credit card provider
• Launched new business lines, transitioning to online financial

marketplace Tinkoff .ru

2010–2013

• TCS Group IPO on the London Stock Exchange Main Market
• Launch of Tinkoff Insurance

• Launch of online POS loan programme

2006–2009

• Tinkoff Credit Systems Bank was created by Oleg Tinkov
• First debit card issued

• First credit card issued

5 .8*

0 .6*

TINKOFF'S DNA

Regardless what happens around us, the Tinkoff spirit remains
that of a young, flexible, and innovative company . We are proud
of our culture and values, and it is important for us to work with
those who share them . The Tinkoff DNA is built around five
key values that were born from the everyday behaviour and
suggestions of our employees . They are not imposed artificially
on our workforce .

We are customer-centric

We succeed as a business only when our customers are satisfied .
We listen to our customers: what they need is what we need . We
aim to anticipate our customers’ needs and expectations, and as
pioneers since the very beginning we create products and services
our customers could not even have imagined .

We are one team

Our successes and failures are shared . We achieve success to-
gether and work to improve together as well . We are motivated by
the success of our colleagues, just as our success motivates them .
We debate, and while we may sometimes disagree we always
listen to each other . Together, we find the best possible solutions
for the success of our company .

We are trendsetters

We are not afraid of making mistakes – we learn from them . Every-
one is free to act as they see fit, and everyone can make mistakes .
We share ideas even if they do not seem promising at first and
test hypotheses quickly and make decisions based on considered
analysis .

We have an ownership mindset

We do not categorize what we do into primary and secondary re-
sponsibilities . If something can be improved, we will improve it . We
think about how our actions will affect the future – not as fortune
tellers but as visionaries . We make sure the company operates in a
sustainable fashion . Despite our successes, we are never satisfied
and we build on our success by nurturing and motivating our talent
and resources .

We love what we do

We do more than is expected of us, because we know that there are
no extraordinary results without extraordinary efforts . As we forge
ahead, we strive to inspire others by our example .

* For the last year of respective period

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
BUSINESS
MODEL

TINKOFF IS A FULLY DIGITAL ECOSYSTEM OFFERING CUSTOMERS A FULL RANGE OF FINANCIAL,
TRANSACTIONAL, AND LIFESTYLE SERVICES . THROUGH OUR MOBILE AND INTERNET PLATFORMS
WE OFFER TINKOFF-BRANDED PRODUCTS – CREDIT PRODUCTS, CURRENT ACCOUNTS,
DEPOSITS, SECURITIES DEALING, INSURANCE AND MOBILE SOLUTIONS, AS WELL
AS NON-TINKOFF PRODUCTS THROUGH OUR LIFESTYLE MARKETPLACE .
WE OFFER A DIVERSIFIED SET OF RETAIL AND SME PRODUCTS, THROUGH A BUSINESS MODEL
PREDICATED ON OPERATING FLEXIBILITY, ROBUST DATA AND RISK MANAGEMENT, HIGH QUALITY
FUNDING, POWERFUL DISTRIBUTION, PREMIUM LEVEL SERVICE, AND ASPIRATIONAL BRANDING .

WE RELY ON…

TO CREATE…

THAT ENABLES US TO…

A customer centric approach

A state-of-the-art technology stacks

Financial and lifestyle products

We are a tech company with a banking license –
we employ some of the finest tech talent to frequently
launch, update, and refine user-friendly and innovative
products, programs, and applications – at a fraction
of the cost of our competitors . Our capabilities include
some of the most advanced data protection
and cybersecurity technologies .

An entrepreneurial and innovative mindset

We are results-driven and run a very flat organization
where decision making is quick, collegial and often
delegated as close to the customer as possible . We test
our hypotheses and learn from them, making sure we
are always pushing the boundaries of innovation .

Best talents

We hire the brightest and most entrepreneurial
employees from top Russian schools and universities .
We wouldn’t be sustainable if we didn’t have the tech
talent to execute on our strategy .

We think about the customers’ needs, journey, and
experience .

A data-driven obsession

We create, collect, analyse, and use big data to inform
our decisions .

Deploying capital methodically

Where measurable, we deploy capital within an NPV
framework with 30% hurdle rate, constantly updating
and refining our models .

Our aspirational brand for all stakeholders

Over the years we have created a brand that’s
associated with innovation, agility, top-notch service,
reliability – being recognized as a company that it’s
good to be a customer of, that it’s great to work for, and
that it’s great to work with .

Strategic focus

We deploy time and resources in financial and lifestyle
activities where we think we have competitive
advantages . Strategy is what we don’t do as much
as it is what we do .

and services that serve to satisfy at least one of three
purposes:

•

acquire customers to grow our customer base;

engage with our customers in order to build loyalty
and long standing relationships;

monetize in order to generate satisfactory returns
for our shareholders .

Financial and lifestyle products

that delight our customers because of their quality,
their ease-of-use, their seamlessness, and the level of
service that comes with them

Financial content

that is educational, informative, useful, and helps to
grow the financial literacy and financial inclusion of
society as a whole .

Bring digital financial services to more
and more people

We aim to grow our customer base and to become the
primary banking relationship of our customers, there-
fore bringing best in class products and services to the
masses via our Super App .

Generate superior returns for shareholders

We aim to continue deploying capital to produce more
than satisfactory returns for our shareholders .

Lead by example to build sustainable
businesses

We aim to introduce products and practices that take
into consideration the long-term wellbeing and safety
of our people, our society, and our environment, always
upholding the highest standards of governance .

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
OUR STRATEGIC
DEVELOPMENT

The technology and experience acquired by Tinkoff in building its
high-tech online customer acquisition and service platform has
helped it to expand its transactional and payment products such as
current accounts, SME solutions, online acquiring, and mobile mo-
no-applications . We intend to support the growth of these products
that constitute an important channel for acquiring new customers
and for cross-selling other products . These transactional and
payment products are also being offered to existing customers of
Tinkoff, helping to boost retention rates .

Tinkoff Bank operates a low-cost, branchless model and seeks
to outsource wherever feasible while retaining core functions
in-house . This complementary outsourcing strategy allows us to
retain focus on and develop core competencies to economise on
capital expenditures, to manage workflow and to maintain a flexible
cost base with low fixed expenses .

As a data-driven organisation, the Group uses a wide range of
databases in its loan approval processes and portfolio manage-
ment and is constantly in search of new sources of relevant data .
We take loan approval decisions based on a range of available
information, including credit bureau data and scores, proprietary
scoring models, a proprietary application verification process and
sophisticated NPV models .

The Group will continue to develop credit risk management capabil-
ities and to use increasingly more sophisticated data analysis and
modelling to achieve this goal . Credit risk management remains
one of the core strengths of Tinkoff and will remain critical to sus-
taining its competitive advantage .

Our ecosystem will encourage customers to be more engaged
with Tinkoff, lowering CAC, improving retention and loyalty and
increasing LTV .

In 2021 Tinkoff became one of only 13 profitable digital banks
globally, and the only profitable one in Russia, according to Boston
Consulting Group (BCG) . In order to create and scale a digital bank
successfully in the long term, the research team suggests focusing
on the following three pillars of success: customer obsession,
scalable and flexible technology and agile organization and man-
agement .

A customer-centric approach

We wouldn’t be sustainable if we didn’t offer a superior customer
service experience . Our cloud-based servicing platform is
increasingly enhanced with AI capabilities, enabling us to
cost-efficiently service all our customers as if they were premium
customers .

2021 was a year of service for us . In order to maintain high level of
service for all our new and existing customers we have a variety of
formal and informal means of soliciting customer feedback includ-
ing through our call centres . This gives us feedback on a massive

scale about our products and services and about the Tinkoff Group
as a whole to which we respond with interest and enthusiasm, as
well as on the products and services of other financial services
providers in Russia .

Our Innovative mindset

Innovation is embedded in our corporate culture . We employ highly
scalable technological platforms, giving us fast time to market and
cost advantages . Our teams are always looking to innovate: inno-
vations save time, enhance the customer experience, and in most
cases reduce the environmental impact of the business .

We are aiming at supporting business expansion through advanced
IT systems and AI Banking as Tinkoff looks at business as a science .
In 2020, Tinkoff unveiled its AI Banking strategy that aims to trans-
form its customer offering through personalisation with the help
of artificial intelligence across all products and services . We have
the technological know-how to become the “AI Bank” - ecosystem
of the future, which helps customers become wealthier, helps
them reach their goals, gives them advice and recommendations,
automates their finances, beats their expectations and simplifies
their life . To that end, Tinkoff has expanded the use of AI across its
financial and lifestyle services to provide tailored advice, interface
personalisation, automation of repetitive financial tasks and inter-
active content that drives engagement and improves the customer
experience .

MOST INNOVATIVE DIGITAL
BANK IN CENTRAL AND EASTERN
EUROPE AT 2021 WORLD’S BEST
DIGITAL BANK AWARDS

In August 2021, Tinkoff was recognised for its innovative banking
solutions as the Most Innovative Digital Bank in Central and Eastern
Europe at Global Finance magazine’s 2021 World’s Best Digital
Banks awards .

In 2021, Tinkoff Bank continues to expand its technological ad-
vantages over traditional Russian banks . We encourage our young
employees to innovate and even make mistakes . To us, experi-
mentation and innovation are not merely buzzwords . Each team
member looks at problems from different angles and tests a range
of possible solutions to find the best way to address the challenges .
Following the launch of super-computer Kolmogorov to support
AI-based processes and expertise in 2020, in 2021 Tinkoff’s Centre
for AI technologies continue to introduce innovative technologies
to the market .

About ETNA

In 2021 Tinkoff’s Centre for AI technologies unveiled ETNA —
the first service on the Russian market that helps to analyse
and predict a wide range of data-driven processes, ranging
from precipitation levels to a company’s recruitment needs .
ETNA is an open-source tool that is currently available in the
programming language Python, but will in the future become
accessible to a wider audience of users .

It is an open-source tool that uses data uploaded by users
and gathered from public sources to conduct analyses, verify
hypotheses and generate forecasts . Among its capacities,
ETNA can be used to determine those factors that most affect
a company’s profit, forecast demand for specific products,
and calculate next year’s budget .

ETNA uses machine learning algorithms and neural networks,
while ensuring total data security by storing downloaded
information directly on the user’s computer and not sharing
it with third parties .

The Group’s in-house IT team develops a significant part of
the software used by Tinkoff, including software used in its
online customer acquisition and service platform . This ena-
bles Tinkoff to regularly and quickly roll-out new products and
services to customers or new versions with enhancements
and help to be flexible and sustainable at the same time .

Innovative solutions for cybersecurity
and data protection

Tinkoff firmly believes that technology can make its ecosys-
tem safer . Our goal is to maintain and enhance the protection
of customers data and resources and to monitor the security
threats . The work of the information security team permeates
every part of the Group’s business . Tinkoff pays great atten-
tion to the continuing development of a safety culture, and
works hard to boost its information security culture .

We follow the best international security standards as NIST
framework, COBIT for security risk management, CIS controls,
Software Assurance Maturity Model framework
for software security .

Our information security management system certified to

1 .

PCI Council standards (PCI DSS, PIN Security, 3DS
Assessment)

2 .

Central Bank security standards (382-P, 683-P, etc .)

3 .

SWIFT

4 .

Roskomnadzor personal data security standard

Tinkoff Bank successfully passed regular governance
compliance audits executed by

1 .

Central Bank

2 .

RosComNadzor (personal data)

3 .

Federal Security Service
of the Russian Federation (cryptography)

4 .

PCI DSS

We have also developed a comprehensive fraud monitoring
and protection system for our clients .

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

2021 HIGHLIGHTS FOR THE YEAR

BUSINESS DESCRIPTION,
POSITION AND STRATEGY

Originally the first purpose-built credit card focused lender in Rus-
sia, Tinkoff has evolved into a fully digital advanced online financial
and lifestyle ecosystem, providing a wide range of its own retail
financial services such as retail lending, transactional and savings
products, insurance, SME services, online merchant acquiring,
investment brokerage and mobile solutions as well as non-Tinkoff
products through its marketplace built-in the superapp . Tinkoff
continues to operate both in the mass market and mass affluent
segments by way of offering an ever-expanding range of financial
services and targeted lifestyle recommendations, advice and
entertainment features .

Since the business of the Group is expanding certain operating
segments became significant enough to be considered as separate
reportable segments . At the moment the Group is organised on the
basis of 8 main business segments .

Segment

Description

Customer experience

1. Consumer
finance

2. Retail debit

cards

InsurTech

4. SME services

5. Acquiring and
payments

InvestTech

representing retail loans (credit cards, cash
loans, consumer loans, car loans, secured
loans), deposits and savings, also lifestyles and
travel services to individuals

representing customer current accounts ser-
vices to individuals with the loyalty programs,
co-branded offers, and also lifestyles and trav-
el 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

Borrowing

Entertainment

• Cash loans
•
• Auto loans

Instalments

Daily banking
• Debit cards
• Credit products
• Utilities payments
• Deposits

• E-commerce
• Ticketing
• Restaurant reservations
• Stories
• Travel

Tinkoff Pro Subscription
• Higher deposit rates
• Special offers
• More cashback categories
• Free SMS notifications
• Higher P2P transfer limits

representing retail loans (credit cards, cash
loans, consumer loans, car loans, secured
loans), deposits and savings, also lifestyles and
travel services to individuals

Insurance
• Cars
• Travel
• Property
• Health & Life

representing customer current accounts, sav-
ings, deposits services and loans to individual
entrepreneurs and small to medium business-
es . Assets of the segment are represented by
placements of the funds attracted into invest-
ments in securities, treasury transactions, other
financial and non-financial assets

Small and medium business

• Business account
• Salary projects
• Overdraft
• Business loans
• Accounting

providing merchants and businesses the ability
to acquire and process payments online and of-
fline, through direct-to-merchant agreements,
aggregators and the Group's own payment
service provider Cloud

Acquiring and payments

• Payments
• P2P transfers
• SME banking services
• Safer deals

representing online brokerage platform for
investing in a range of securities including Rus-
sian and international securities (ETFs, stocks,
bonds, etc .)

Investments
• Securities
• Retail brokerage
•

Investment strategy

7. 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 .

Mobile

• Own number
• Own mobile network code
• Own SIM cards
• Anti-fraud features

8. Other

investments

represent investments in associated compa-
nies and equity instruments . The CODM made
a decision to allocate such investments into a
separate business segment . Disclosures for
comparative periods were amended
accordingly

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021CONTINUED

BUSINESS DESCRIPTION,
POSITION AND STRATEGY

Diversified revenue and profit sources ensure stability of the business and of our profitability . We see two main runways for our growth –
we can deepen markets where penetration is still low, and we can continue to gain market share across all the various markets in which we
already operate or planning to enter .

PLATINUM
CREDIT
CARDS

TINKOFF
ALLAIR-
LINES

HOME
EQUITY
LOANS

AUTO
LOANS

TINKOFF
BLACK

TINKOFF
INVEST-
MENTS

BLACK
EDITION
CUSTOMERS

DIVERSIFICATION (%)

Share of non-credit revenues

Share of secured lending in net loans

Share of credit cards in net loans

Share of customer accounts in liabilities

Current accounts in customer funding

Coverage of admin expenses by net F&C and insur-
ance income

CUSTOMER PROFILE

2014

2015

2020

2021

Gender (M/F)

51% / 49%

53% / 47%

72% / 28%

55% / 45%

61% / 39%

70% / 30%

120

111

Average age

Monthly income (₽k)

Moscow
and Moscow Region

Saint-Petersburg
and Leningradsky Region

108

105

17%

37%

19%

17%

11%

27%

10%

27%

10%

201

30%

Every other region

≤5%

≤3%

≤4%

≤6%

≤4%

≤13%

M F

Platinum
Flagship credit card

Tinkoff Black
Flagship debit card

Moscow & St . Petersburg: 24%
Max other region: 5%
Monthly income (₽k): 59
Age: 37

Moscow & St . Petersburg: 37%
Max other region: 4%
Monthly income (₽k): 75
Age: 33

Black Edition
Premium debit/credit cards

Moscow & St . Petersburg: 34%
Max other region: 13%
Monthly income (₽k): 201
Age: 37

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

TINKOFF
SUPER-APP

We offer a variety of online financial and
lifestyle services through our single super
app . The Tinkoff super app acts as an
entry point for customers to access all
of Tinkoff’s financial products as well as
a combination of proprietary and partner
lifestyle services . This is complemented
by interesting and educational content,
tailored and targeted offers, and is pro-
vided through an incredible UI . Tinkoff is
continuously improving its super app by
introducing new high-tech solutions for
various tasks .

TINKOFF SUPER APP
RECOGNIZED BY FRANK CARDS
& REWARD AWARD 2021 AS BEST
MOBILE DAILY BANKING APP

The share of mobile internet users in Russia is growing year-on-
year . Tinkoff being a leader in the mobile space from its very first
day continues to pay a close attention to not only interfaces and
seamlessness of processes in its mobile application but also
hugely invests into customer satisfaction and retention . Tinkoff Su-
per-App launched in 2019 continues to be a revolutionary product
with integrated Tinkoff platform which not only aggregates all of the
Tinkoff Group products under one umbrella, but seamlessly allows
customers to satisfy their daily banking, credit, transactional, and
lifestyle needs .

During the year, a wide range of new features and services were in-
troduced to help customers take care of their banking and everyday
needs in one place .

• Open a joint Tinkoff Black account or grant access to an individ-

ual account to other Tinkoff customers;

• Upload a QR code certifying vaccination or the presence of
antibodies to COVID-19, as well as schedule a PCR test for
travel purposes;

• Sign a credit card agreement directly in the app;

• Activate the Oleg voice assistant and access his services with a

quick voice greeting;

• Pull up the money transfer or request function with a shake of

the phone;

• Upload and store receipts, pay parking and toll fees, and much

more .

2021 Highlights:

86%

customers
use app
every month

38%

sticky factor
(DAU / MAU)

5 .8m

15 .4m

DAU

MAU

4 .5min

avg time spent per
day

130m

monthly in-app
payments

>450

App team
employees

Independent
teams

2 .3m

1release

every month

monthly
applications
via the App

Voice assistant OlegUnique Tinko IDWallet with ecosystem productsTinkoInvestmentsTinkoInsuranceTinkoMobileTinko BusinessTransfers, including by phone number and cardBanking for children from 7 years oldLimit management and spending controlAssignments for children for a feeChild geolocationStandalone Tinko Junior AppBaby Lifestyle ServicesBaby StoriesManagement of cashback, bonuses, points, milesCinema, Concerts, TheatersTravelsRestaurantsShoppingSport...Products and online retailHealth and beautyFood and Food DeliveryAuto, Breakfast, TaxiRecreation and entertainmentCulture and educationFitness and wellnessCleaningFlowers and animals...Life style cashbackSpecial oers with cashback up to 30%Installment planQuick payment systemGovernment servicesTraic police finesSubscriptions to accounts from governmentagenciesAll financial products of the bankDiscovery of new productsDetailing checks from storesCost structure with filtersOrdering documents24/7 live chat supportApple Pay, Samsung Pay, Google PayCrowdfunding...Tinko StoriesTinkoTargetIndividual oers with cashback up to 30%Big DataMachine LearningArticial intelligenceBiometricsTinkoEcosystemPayments and transfersTinko JuniorBonusesProprietary integrations:LifestyleOers from partners in dierentareas of a client’s life:Daily bankingMarketplacePayment for services in various fieldsPayment automationQR code operationsPayments and transfersExpensesinSeptemberTinkoff Black accountTinkoff Platinum credit accountBonuses upto 30%IvanSTRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
BUSINESS DESCRIPTION,
POSITION AND STRATEGY
Consumer finance

Retail lending remained Tinkoff’s core business in 2021

• Russian Credit card market - 14 .9% share of Tinkoff

• Steadily growth continued to accelerate, resulting in 8 .4% growth q-o-q and 52 .9% y-o-y

• More than half of our credit portfolio consists of non-credit card loans

• NPL coverage settled at 132% as NPL ration declined q-o-q . We retain high recovery expectations for NPL in courts

• Total LLP was down to 11 .4% of our total loan balance

GROSS LOANS (RUB bn)

+52.9%

+8.4%

580

507

631

556

684

606

447

377

503

431

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

Net loans

LLP

NET LOANS breakdown

9%
10%
8%

15%

57%

9%
10%
8%

17%

54%

10%

11%
8%

20%

50%

12%

19%

47%

12%

10%

19%

47%

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

SME loans

Car loans

Secured loans

POS loans

Cash loans

Credit cards

The Group rigorously applies a “low and grow” approach . This means applying a model according to which we assign the smallest possible
credit limit, which is then increased gradually over time for borrowers with good internal credit history – supported by estimates of credit
history bureaus – and who have shown their creditworthiness over time . This leads to average ticket sizes that are smaller than the market .
The Bank applies four main components to the underwriting process: initial selection; credit bureaus; verification; and limit management .
The approach provides a low level of first payment defaults and in general overdue debts .

Retail debit cards

Leadership in overall customer experience

Transparent cashback and interest

Access to best Super App in the market

Fastest mobile onboarding

Best customer service

Paramount attention to details

+100 more features that make us unique

Tinkoff Black customers are highly transactional, engaged and
more open to trying products and services in the Tinkoff suite .
The Group had over 14 .6 mn total Tinkoff Black customers
as of 1 January 2022 .

We pursposely tune this product line close to break-even in terms
of transactional economics as we see our current accounts busi-
ness as the cornerstone of our customer relationships .

TINKOFF BLACK IS AT THE CORE OF TINKOFF ECOSYSTEM

Investments

Savings

Business

Travel

Credit

Insurance

Mobile

Lifestyle

Bonuses

Payments

CUSTOMERS (m)

Total

Active

7.5

4.8

8.9

5.8

10.6

6.8

12.3

8.0

14.6

9.7

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

CURRENT ACCOUNTS BALANCES (RUB bn)

545

323

329

375

431

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
BUSINESS DESCRIPTION,
POSITION AND STRATEGY
Tinkoff Insurance

Doubled fees and growth rates for both complex
and obligatory auto insurance

Premium service via personal managers became
available for all clients

More than 13,000 people received support
by the ‘People in Yellow’ team on the roads in Moscow

Reduced settlement timing by 6 times for complex
insurance and by 2 times for obligatory auto insurance

Mortgage insurance launched

Insurance business follows the expansion of our credit and non-credit customer base . We are putting additional focus on the cross-sell of
our car insurance to growing transactional customer base, which starts to produce solid results

INSURANCE PREMIUMS EARNED (RUB bn)

Car

Other

4.6

3.3

1.3

4.8

3.6

1.3

5.3

3.9

1.4

4Q'20

1Q'21

2Q'21

6.1

4.5

1.6

3Q'21

6.9

4.9

2.0

4Q'21

Tinkoff Business

Tinkoff Business is a financial and technology services ecosys-
tem for SMEs and large enterprises, serving more than 500,000
companies and entrepreneurs across Russia . Tinkoff Business
provides core banking products, including payments, loans, pay-
roll, and international transactions support, as well as solutions for
optimizing business processes and increasing sales . These include
open APIs, call center, automated payments for the self-employed,
online accounting, and many other services . Each customer has a
personal manager, 24-hour support, and an ability to manage their
business via a mobile app .

Upgraded work with freelancers and self-employed

In 2021 Tinkoff acquired a controlling stake (51%) in Just Look, the
developer of Jump . Finance, a fintech service that automates inter-
actions with freelancers, including payments . Jump . Finance cus-
tomers will receive seamless access to business finance products
such as credit, identification, virtual card issuance and account
management . We remain open to integrating other solutions into
our ecosystem, where we can enable their significant growth by
providing access to Tinkoff’s financial technologies .

At the beginning of 2021 Tinkoff launched Tinkoff Checkout, a
payment service for businesses . Tinkoff Checkout is operating as
a one-stop shop, enabling companies to take care of all of their
online and offline financial needs in one place . The launch of Check-
out is a natural step for Tinkoff, given the growth of the e-commerce
market, which has accelerated during the pandemic . It provides a
full range of services for businesses, including cash management
services, merchant acquiring, in-house solutions for online cash
registers and it is compliant with Law No . 54-FZ .

Tinkoff Checkout will enable businesses to perform a wide range of
tasks such as the following via a single platform:

•

Accept payments in an online store

Introduce fiscal cash registers

Turn a phone into a payment terminal

Provide customers with a POS loan or an installment plan
online

Set up sales analytics

Get accounting workstreams organized

Tailor Internet acquiring to the company’s needs using open
APIs

Tinkoff Checkout is designed to address all business tasks simulta-
neously . Tinkoff Checkout covers all of those scenarios, both online
and offline .

E-commerce

In 2021 we launched Tinkoff E-commerce to better serve the needs
of online merchants and to create new synergies with Tinkoff
Business, taking our offering for businesses of all sizes to a new
level . It will combine non-financial and financial instruments for
entrepreneurs and companies that will help them succeed as they
go online and develop online sales through major marketplaces,
social networks, online stores, etc .

Our task is to create a fundamentally new dimension to e-com-
merce — to build an ecosystem where entrepreneurs would be
able to find any e-commerce solution, from a single gateway to all
Russian marketplaces to tools for growing their own sales in Russia
and globally .

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

BUSINESS DESCRIPTION,
POSITION AND STRATEGY
Acquiring and Payments

Stable acquiring commission with steady growth of TPV gives us
one of the most financially sustainable business lines

Online acquiring remains our main playing field, as we reman ion
track to become Russia’s second largest online acquirer . At the
same time the number of offline merchants kept growing through
our continued expansion in SME banking services

Our acquiring platform is developed in-house, making onboarding,
integration, and customer experience for our corporate customers
significantly better that anywhere else in the market

Segment result improved substantially y-o-y in spite of significant
step up in market in spend

TOTAL PAYMENT VOLUME (TPV)

Offline

Online

212

176
37
4Q'20

235

198

38
1Q'21

ACTIVE MERCHANTS (000’ EoP)

Offline

Online

2.5x

329

277

2Q'21

101

389

328

3Q'21

112

540

472

4Q'21

122

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

GROSS ACQUIRING COMMISSION

1.8%

1.7%

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

Tinkoff’s acquiring and payment services are currently used by more than 200,000 companies and individual entrepreneurs . Its partners
include major Russian and international companies, such as online and offline retailers, online marketplaces, brokers and management
companies, microfinance organizations, taxi firms, airlines, social media entrepreneurs and various other SMEs and large businesses .

International money transfers

In 2021 we launched a new service enabling clients of foreign banks to make transfers using their phone number . At the moment, Tinkoff
clients can make transfers to 4 countries via more than 30 banks . International transfers by phone number can be made through the Tinkoff
mobile app or within a customer’s personal account on the Tinkoff website .

InvestTech

Tinkoff Investments has become
synonymous to retail investment in Russia

Tinkoff is number 1 by number of active
customers on Moscow Exchange

Tinkoff investment is also the leading
broker by number of active customers
on the Saint Petersburg Exchange

In 2021 Tinkoff solidified its dominant position as it accounted for 68% of active accounts on Moscow Exchange, almost 5x ahead of the
second largest broker .

Tinkoff Investments is consistently one of the largest traders on the St . Petersburg Exchange, topping the ratings in trading volumes, the
number of registered and active customers, as well as customers’ assets . In 2021 Tinkoff signed a Cooperation Memorandum with the
Non-Profit Association for the Development of the RTS Financial Market (NP RTS Association), a primary shareholder of the St . Petersburg
Exchange . TCS ended up with 5% stake in the St . Petersburg Exchange from the NP RTS Association . The parties agreed to unite their
efforts to extend the list of financial instruments traded on the St . Petersburg Exchange . Tinkoff and the NP RTS Association intend to
boost the further development of the Russian securities market, both primary securities and derivatives, including options on international
securities .

Consistent growth of customers
of Tinkoff Investments

CUSTOMERS (m)

Total

Active

1.3

1.1

1.8

1.4

2.3

1.6

2.6

1.7

3.0

2.1

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

BUSINESS DESCRIPTION,
POSITION AND STRATEGY

TRANSACTION VOLUMES*

Deals volume

DARTs (000')

6,150

920

5,106

1 362

4,222

551

6,647

5,241

1 126

1 242

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

ASSETS UNDER CUSTODY (bn)

415

315

500

540

639

4Q'20

1Q'21

2Q'21

3Q'21

4Q'21

Risk management and protection of clients
The Company conducts a risk profiling procedure, analyses the risk appetite of its customers and compares this information with their
experience (which is also a legal requirement) . Tinkoff strives to develop robo-advising schemes which help to diversify customers’ assets .

Tinkoff thoroughly analyses various groups of customers (size and frequency of topping up of brokerage accounts, vintage of the account,
etc .), the level of diversification of their portfolios and any distortions . In the premium customer segment, there are business development
managers who provide advice on portfolio construction and diversification .

In 2021 Tinkoff developed its investment education guides and integrated them into the Tinkoff Investments app . There is also a special
educational app Tinkoff Investment Academy that accumulates information and materials for the retail investors . In addition, Tinkoff limits
the use of high-risk instruments (margin lending, financial derivatives) and does not advertise them .

We continue to strengthen Tinkoff Investments by diversifying our investment offering . In 2021 Tinkoff Capital Management Company was
licensed as a professional securities management operator . Leveraging the power of retail investors, we launched ECM and DCM advisory
services . In 2021 Tinkoff Investments launched its ECM and DCM business line with a focus on new-economy companies .

Private - our new
business line

• In September we unveiled Tinkoff Private to serve the needs
of the modern affluent consumer . It is our ‘Swiss banker in a
mobile app’ solution, available both via the Tinkoff super app
and Tinkoff Investments app .

• Tinkoff Private will focus on the digitization of traditional Private
Banking . We will provide our affluent customers with a full range
of Wealth Management services within the Tinkoff and Tinkoff
Investments applications . Tinkoff Private is currently being test-
ed, and I have several important tasks to undertake, including
organizing a large-scale service launch for all our customers in
the near future, and ensuring we assume leadership in Private
Banking in the medium term .

Tinkoff Investments became the first broker in Russia to offer
securities trading on weekends . Weekend trading is now available
to customers of any Tinkoff Investments plan between the hours
of 10:00 a .m . and 7:00 p .m . Moscow time .

Tinkoff Investments launched a social trading platform
Signal operating in synergy with the largest social network for
investors – Pulse, which allows investors to follow strategies
based on the investment ideas from the market professionals .

Today Tinkoff Investments continues to develop its informational
and educational services available both in the mobile app and on
the corporate website tinkoff .ru . Since the launch of its Investment
Guide, more than 4 .3 million users started exploring its tasks .
The Pulse social network maintained by Tinkoff Investments has
2 million registered users .

*w/o derivatives

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
BUSINESS DESCRIPTION,
POSITION AND STRATEGY

Mobile

Since launching our own mobile operator Tinkoff, we have focused on creating a unique and high-quality service offering, providing our
subscribers with access to new services that are not yet available on the market but that we see a strong demand for .

Tinkoff has launched a beta version of its free voice assistant Oleg . Tinkoff’s voice assistant will protect them from spammers and fraudsters .
Oleg is a smart personal assistant which is now available not only to customers of various services within the Tinkoff ecosystem but also
to subscribers of any Russian mobile operator which is what makes it unique globally .

This is Oleg

Today people in Russia have two big problems while making and
receiving calls on mobile phones: spammers who inundate them
with calls and fraudsters who try to deceive them . This is why
we decided to train Oleg to turn it into a “wall“ between mobile
subscribers and undesirable calls, and open it to subscribers of all
mobile operators .

Oleg is a product of artificial intelligence and machine learning .
It uses technologies from the Tinkoff VoiceKit, a market leader in
voice recognition and synthesis . It recognizes people’s speech,
can convert audio into text and activate different conversation
scripts for different categories of incoming calls if a subscriber
does not answer them .

We noticed that people have a real problem for which we have an
excellent fintech solution Oleg can answer, record and transcribe
calls, including calls from unknown numbers . Oleg can also con-
verse with callers and recognize their speech activating necessary
conversation scripts . Oleg is not just a personal assistant but also
a “defender" . This voice assistant has special functions aimed to
protect people from dangerous, undesirable or annoying calls from
spammers and fraudsters .

The voice assistant has scripts for “useful” calls, spammers, and
potential fraudsters . Currently, Oleg can respond to more than 100
different call scenarios . The voice assistant learns as conversation
scripts get regularly updated by a special team of people who
regularly perform in various stand-up comedy shows .

Oleg can also hold a conversation: it can tell jokes, if it is asked
to do so, or offer advice on how to get protected from fraudsters .

2021 HIGHLIGHTS FOR THE YEAR

CORPORATE
GOVERNANCE

Group structure

TCS Group Holding PLC (LI: TCS, MOEX: TCSG) is a leading provider of
online financial and lifestyle services in Russia via its Tinkoff ecosystem .
The Company’s Home State up to and including 2021 was Cyprus1 .

The Company's current Articles of Association were adopted on 19
November 2021 .

Articles of Association

TCS Group Holding PLC’s shares, in the form of Global Depositary Re-
ceipts (GDRs), have been trading on the London Stock Exchange under
the ticker TCS LI since October 2013; its GDRs are also listed on the Mos-
cow Exchange, and certain of its debt securities are admitted to trading
on the Global Exchange Market of the Irish Stock Exchange .

The Group is required to comply and does comply with the UK corporate
governance regime to the extent it applies to foreign issuers of GDRs
listed on the London Stock Exchange, and well as those relating to its
debt securities . No shares of the Group are listed . 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 .

TCS Group Holding PLC’s share capital consists of 199,305,492
ordinary shares . One GDR represents an interest in one ordinary share .
The number of GDRs in issue is 129, 391,443 . TCS Group Holding PLC’s
depositary bank is JPMorgan Chase Bank, N .A .

Following the conversion of Class B shares to Class A shares completed
in January 2021 Oleg Tinkov’s voting rights decrease from 84,38% to
35,1% .

Holders of GDRs are not direct shareholders in the Company but instead
derive their rights through holding a GDR . A description of the terms and
conditions of the GDRs can be found at on the website at https://tinkoff-
group .com/

Copies of the Articles of Association of the Company, 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 websites www .tinkoff .ru/eng and https://tinkoffgroup .
com/corporate-governance/governance-documents/ , at the
Company’s main website www .tcsgh .com .cy, on the Company’s
page on the London Stock Exchange website (www .londonstock-
exchange .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/) .

Corporate
governance structure

In 2021 TCS Group Holding plc announced new governance
enhancements and changes to the composition of its governing
bodies . The changes underscore the Group's commitment to
developing and promoting its outstanding talent, deepening the
management bench and continuing to strengthen the Group's
corporate governance, as it maintains its trajectory of fast and
profitable growth .

Key changes in the corporate
governance system in 2021

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 .

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 .

• The conversion of Class B
shares to Class A shares
completed

• Each shareholder of the

Company has equal rights
to any other holder of
shares of the Company (1
share – 1 vote)

• Oleg Tinkov’s voting rights
decrease from 84,38% to

35,1% via Tinkov family
trust

• The majority of directors

were independent as of 31
December 2021

• The Risk and Emerging Risk
('Sustainability') Committee
and the Strategy Commit-
tee launched

• New Co-CEO structure

¹In this section Cyprus Companies Law means the Companies Law, Cap . 113 of Cyprus and any successor statute or as the same may from time to
time be amended .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

CORPORATE
GOVERNANCE

Decision
making body

Relationship to other
key governing bodies

Key
powers

TCS Group
Holding PLC
(Cyprus) Board
of Directors

Operates under a formal schedule of matters
reserved to the Board for its decision, approved by
shareholders in 2013

•

Provides leadership and oversight to the Group within a
framework of prudent and effective controls which enable risk
to be assessed and managed;

Appoints members of the Tinkoff Bank Board of
Directors

• Sets the Group’s strategic objectives and ensures the neces-
sary financial and human resources are in place for the Group
to meet its objectives;

The Company is sole shareholder of Tinkoff Bank
and determines all the matters reserved to share-
holders and other stakeholders

• Appoints the Group’s external auditors;

• Sets the Group’s values and standards and ensures its obli-

gations to shareholders/investors and other stakeholders are
understood and met;

• Reviews management performance;

• Decides the Group’s remuneration policy;

• Approves the Group’s credit policies;

• Makes the Group’s dividend policy and decides the level of

dividends

• Covers sustainabilityrelated responsibilities and targets .

• Determines the strategic priorities of the Bank;

• Approves capital markets operations of the Bank, major and
related party transactions, risk and capital management
strategy, procedures for managing conflicts of interest, HR
policies, employee and management compensation and
bonus policies;

• Convenes annual and extraordinary meetings of shareholders,

decides on the agenda and the record date for meetings;

• Recommends dividends;

• Oversees esgrelated topics and activities .

•

Determines the Bank’s asset, liability and risk management
operations, policies and procedures;

• The Chairman appoints the members of the Finance, Credit,
Technology and Business Development Committees . The
decisions of these Committees frame most of the day to day
operations of Tinkoff Bank .

Tinkoff Bank
Board of Direc-
tors

The authorities of the members of the Board are
specified by the Articles of Association of the
Company and by law

Appoints and oversees the Tinkoff Bank Manage-
ment Board

Tinkoff Bank
Management
Board

Reports to the Tinkoff Bank Board of Directors

Responsible for the Bank’s asset, liability and risk
management operations, policies and procedures

Delegates and monitors decision making to the
fuctions within the Bank

Board of directors

The business of the Company is managed by the directors, who
are empowered to exercise all such powers of the Company as are
not, by the Cyprus Companies Law or by the Articles of Association,
required to be exercised by the shareholders in general meeting,
subject nevertheless to any provisions of the Articles of Associa-
tion, of the Cyprus Companies Law and of any directions given by
the general meeting by ordinary resolution; but no alteration of the
Articles of Association and no direction made by the Company in
general meeting shall invalidate any prior act of the directors which
would have been valid had that alteration or direction not been
made or given .

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 is no maximum number 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 authorized 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 considered 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 . Direc-
tors 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 hold-
ing 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 .

The Articles of Association of the Company provide for the retire-
ment by rotation of a number of directors at each Annual General
Meeting . At the AGM on 19 November 2021 one director 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 .

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 composi-
tion of the Board at the relevant date .

Composition of the Board of directors significantly changed during
2021 . Those changes were being made as part of the programme
of enhancements to TCS Group Holding plc corporate governance .
Please review the Board of directors and other officers Consolidat-
ed Management Report for further details .

Proceedings of the Board of Directors

The quorum necessary for the transaction of the business of the
directors shall be at least four directors .

Questions arising at any meeting of the Board of directors shall
be decided by a majority of votes . In the case of equality of votes,
the chairman shall have a second or casting vote . A director may,
and the secretary on the requisition of a director shall, at any time,
summon a meeting of the directors . A resolution in writing signed
or approved by letter, telex, facsimile or telegram by all directors
or in relation to a committee by all its directors, shall be as valid
and effectual as if it had been passed at a meeting of the Board of
directors or (as the case may be) at a committee meeting duly con-
vened and held . Any such resolution in writing signed may consist
of several documents each signed by one or more of the persons
described .

Any notice shall include an agenda identifying in reasonable detail
the matters to be discussed at the meeting together with copies of
any relevant documents .

The directors may delegate any of their powers to a committee or
committees consisting of one or more members of their body as
they think fit; any committee so formed shall, in the exercise of the
powers so delegated to it, comply with the rules which may have
been imposed on it by the directors, in respect of its powers, com-
position, proceedings, quorum or any other matter .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

CORPORATE
GOVERNANCE

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 . 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 . The current terms of reference of all
Committees can be found on the Group’s websites and in the
Consolidated Management Report .

Tinkoff Bank
Management Board

Tinkoff has survived a number of crises in its life . Even though
these crises have all been ‘different’, the Tinkoff business model
has always been and remains highly flexible, very resilient and
led by a skillful management team which has proved true this time
around too . We have been working in the decentralised, horizontal
organisational structure that empowers our employees and moves
quickly . Tinkoff Bank Management Board consists of people on the
following positions: Chairman of the Management Board, Group
Risk Director, Chief Financial Officer, Chief Accountant, Chief Legal
Counsel, Chief Operational Officer, Head of Payment Systems .

Shareholder information

The Company is required to hold an annual general meeting each
year on such date and at such place as the directors may determine
provided that not more than 15 months should elapse between
annual general meetings . The Board of directors or any director
may convene general meetings . The board of directors will also
convene extraordinary general meetings of the Company on the
requisition of a shareholder or shareholders together, holding or
representing in aggregate, shares which constitute or represent at
least five per cent . of the total number of votes carried or conferred
by the shares .

An annual general meeting and a meeting called at which a special
resolution will be proposed shall be called by at least twenty-one
days' prior written notice . All other general meetings may be con-
vened by the board by issuing at least 14 days’ prior written notice .
General meetings of the Company may be called by shorter notice
and shall be deemed to have been duly called if it is so agreed:

•

in the case of a meeting called as the annual general meeting,
by all the shareholders entitled to attend and vote; and

•

in the case of any other meeting, by a majority in number of the
shareholders having a right to attend and vote at the meeting,
being a majority together holding not less than 95 per cent . in
nominal value of the shares giving the right to attend and vote at
the meeting .

Shareholders’ rights at meetings

All shareholders are entitled to attend the general meeting or be
represented by a proxy authorised in writing . With effect from 7
January 2021 none of the shareholders of the Company has any
rights different from any other holder of shares of the Company .

The quorum for a general meeting will consist of such number of
shareholders holding in aggregate more than 50 percent of the
issued capital . If within half an hour from the time appointed for the
meeting a quorum is not present, the meeting shall stand adjourned
to the same day in the following week, at the same time and place or
to such other day and at such other time and place as the chairman
of the general meeting may determine, and if at the adjourned
meeting a quorum is not present within half an hour from the time
appointed for the meeting, the shareholders present shall be a
quorum .

A resolution in writing which has been signed by or on behalf of
shareholders conferring in aggregate at least 75 per cent of the
votes exercisable on such resolution at general meeting of the
Company is valid and effectual as if the resolution were sanctioned
by the general meeting, provided that a notice of the intention to
propose the resolution together with a copy of the resolution, are
given to all the shareholders conferring the right to vote on the
resolution, at least 30 days prior to the date of the resolution . Such
a resolution in writing may consist of several documents in the like
form each signed by, or on behalf of, one or more shareholders .

Pre-emption rights

Under the Cyprus Companies Law, each existing shareholder has
a right of pre-emption to subscribe for any new shares to be issued
by the Company in cash, in proportion to the aggregate number of
such shares of the shareholder . There are no pre-emption rights
with respect to shares issued for non-cash consideration .

Specifically, all new shares and/or other securities giving rights
to purchase shares in the Company, or which are convertible
into shares in the Company that are to be issued for cash, shall
be offered to the existing shareholders on a pro-rata basis to the
participation of each shareholder in the capital of the Company, on
a specific date fixed by the directors .

Any such offer shall be made upon written notice to all the share-
holders specifying the number of the shares and or other securities
giving rights to purchase shares in the Company, or which are
convertible into shares in the Company, which the shareholder is

entitled to acquire and the time periods (which shall not be less than
14 days from the date of notification of the offer (or)/from the date
of the dispatch of the written notice), within which the offer, if not
accepted, shaII be deemed to have been rejected . If, until the expiry
of the said time period, no notification is received from the person
to whom the offer is addressed or to whom the rights have been
assigned that such person accepts all or part of the offered shares
or other securities giving rights to purchase shares in the Company,
or which are convenable into shares of the Company, the directors
may dispose of them in any manner that they deem fit .

These pre-emption rights may be disapplied by a resolution of the
general meeting which is passed by a specified majority, being a
majority in favour of over one half of all the votes cast if the attend-
ance represents not less than half the issued share capital and a
majority in favour of not less than two-thirds of the votes cast in all
other cases ("Special Majority Resolution") . In connection with such
a waiver, the directors have an obligation to present to the relevant
general meeting a written report which explains the reasons for
the proposed disapplication of pre-emption rights and justifies the
proposed issue price of the shares .

Voting rights at general meetings

All shareholders are entitled to attend the general meeting or be
represented by a proxy authorised in writing

• on a Hands Vote, to one vote per shareholder;

•

on a Poll Vote, to one vote per share held by each shareholder .

Dividend and distribution rights

The Ordinary shares have the right to an equal share in any dividend
or other distribution paid by the Company, and any dividend or other
distribution may only be declared and paid by the Company to the
holders of all shares together .

AGM results in 2021

Copies of the resolutions passed at the AGM (other than resolutions
concerning ordinary business) have been submitted to the UK
Listing Authority, and were available for inspection at the UK Listing
Authority's National Storage Mechanism which is located
at https://data .fca .org .uk/#/nsm/nationalstoragemechanism .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

RISK MANAGEMENT
AND CONTROL

Robust data and risk management

TCS Group employs a highly scientific, data-driven and conservative risk management approach, which underpins the success of the
business model . All aspects of the client life cycle – from acquisition to services and collections – are carefully monitored and evaluated . We
make loan approval decisions based on a range of available information, including credit bureau data, a rigorous application verification
process and proprietary scoring models .

The goal of the Group’s risk management function is to identify potential problems before they materialize and have a plan for addressing
them if and when, and in the form, they do . Covering both internal and external risks which might have an adverse impact on the group, the
group’s approach can be stripped down to four essentials: defining a risk management strategy, identifying and analyzing and re-analyzing
risks, pro-actively managing risks through implementing that strategy and drawing up a contingency plan and/or preventative measures .

The purpose of the Group’s asset, liability and risk management (“risk management”) strategy is to evaluate, monitor and manage the
risks arising from the Group’s activities . The main types of risk inherent in the Group’s business are credit risk, market risk, which includes
foreign currency exchange risk, interest rate risk and liquidity risk . The Group designs its risk management policy to manage these risks by
establishing procedures and setting limits that are monitored by the relevant departments .

Tinkoff has established a robust liquidity risk management framework that ensures it maintains sufficient liquidity, including a significant
cushion of liquid assets . TCS Group’s funding strategy provides effective diversification in the sources and tenor of funding . The Group
maintains strong relationships with market participants to promote effective diversification of funding sources .

2014

2015

2016

2021

Diversification

Share of non-credit revenues

Share of secured lending in net loans

Share of credit cards in net loans

Share of customer accounts in liabilities

Current accounts in customer funding

Coverage of admin expenses by net F&C and insurance income

Asset quality

LLPs as % of gross total loans

NPL as % of gross loans

Liquidity

Share of cash & investments as % of total assets

Cash & Investments to customer accounts

Net loan-to-deposit ratio

Capital

N1 .0 ratio

N1 .1 ratio

N1 .2 ratio

Leverage (x)

Customer loyalty

Total customers (m)

MAU (m)

DAU (m)

93%

49%

30%

21%

14%

16%

39%

172%

13%

92%

77%

29%

49%

19%

12%

23%

37%

92%

15 .5%

15 .2%

9 .4%

5 .2

2 .7

0 .2

9 .4%

6 .1

2 .9

0 .6

37%

19%

57%

86%

78%

46%

24%

46%

83%

84%

115%

110%

16%

10%

44%

61%

60%

13 .1%

10 .2%

12 .4%

6 .8

13 .3

9 .3

3 .2

11%

41%

57%

64%

15 .3%

9 .5%

14 .0%

7 .5

20 .8

15 .4

5 .8

The Group also calculates the debt burden per borrower (PTI),
according to the rules established by the Central Bank of Russia .
The PTI for a loan provided to a customer is calculated as the ratio
of the average monthly payments for all loans and borrowings of the
specific customer relative to his or her average monthly income . PTI
is calculated to complement the decision of issuance of a new loan
or for a credit limit increase . It also helps to ensure customers are
not overwhelmed with a debt burden .

In 2021 Tinkoff adopted cutting-edge approach to credit-scoring
based on securely-merged data on oneFactor platform . The plaform
covers AI-powered predictive analytics tools, based on combined
data from multiple sources, including telecom operators, Russia’s
largest credit bureau and Tinkoff itself .

In addition to providing greater security, the technological solution
embedded in the oneFactor platform ensures that the quality of the
combined data is 20–40% higher, compared with using separate
data sets . Using this platform for credit-scoring helps to reduce the
level of non-performing loans (NPLs), potentially allowing banks to
unlock additional profit .

The ML platform allows to confidentially combine and process data
from multiple data owners and launch AI services based on this
combined data . It trains and utilizes ML algorithms by relying only
on encrypted data . Therefore, the platform allows to securely and
confidentially combine data sourced across different industries and
use it in AI predictive analytics services .

This is made possible by the oneFactor platform, which uses a
Hardware Security Module (HSM) solution in conjunction with
Machine Learning (ML) algorithms and processes encrypted infor-
mation in the perimeter of the data owner, ensuring the safety and
confidentiality of client data . Such software architecture and the
way it employs big data analytics is unique, making this application
the first of its kind in Russia and worldwide .

The Group will continue to develop credit risk management capabil-
ities and to use increasingly more sophisticated data analysis and
modelling to achieve this goal . Credit risk management remains one
of the core strengths of Tinkoff and will remain critical to sustaining
its competitive advantage .

Risk Management Organisational
Structure

The Group’s risk management organisation is divided between
policy making bodies that are responsible for establishing risk
management policies and procedures (including the establishment
of limits) and policy implementation bodies whose function is to
implement those policies and procedures, including monitoring and
controlling risks and limits .

Policy Making Bodies

The policy making level of the Group’s risk management organisa-
tion consists of the Board of Directors, and at the Tinkoff Bank level
its Board of Directors and the Management Board, the Finance
Committee, the Credit Committee and the Business Development
Committee .

These bodies perform the following functions:

Tinkoff Bank Board of Directors

The Board of Directors is responsible for the creation and su-
pervision of the operations of the internal control system of the
Group and approves the Group’s credit policy (“Credit Policy”) and
approves certain decisions that fall outside the scope of the Credit
Committee’s authority .

Tinkoff Bank Management Board

The Bank’s Management Board, which, in addition to its Chairman,
also includes the Group’s Risk Director, Chief Financial Officer,
Chief Accountant, Chief Legal Counsel, Chief Operational Officer
and Head of Payment Systems, has overall responsibility for the
Bank’s asset, liability and risk management operations, policies
and procedures . The Management Board delegates individual risk
management functions to each of the various decision making and
execution bodies within the Group’s risk management structure

Finance Committee

The purpose of the Finance Committee is to ensure the long-term
economic effectiveness and stability of the Group’s operations . The
Finance Committee establishes the Group’s policy with respect
to capital adequacy and market risks, including market limits,
manages the Group’s assets and liabilities, establishes the Group’s
medium term and long term liquidity risk management policy and
sets interest rate policy and charges with respect to individual loan
products . The Finance Committee meets on a weekly basis .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

RISK MANAGEMENT
AND CONTROL

Credit Committee

Collections Department

The Credit Committee supervises and manages the Group’s credit
risks . With respect to credit cards, the Credit Committee approves
the consumer lending policy, the underwriting methodologies
and the scoring models used for assessment of the probability of
default, the initial credit limit assignment and subsequent account
management strategies, provisioning rates and decisions to write
off non-performing loans .

Business Development Committee

The Business Development Committee is responsible for the de-
velopment, design and marketing of the Group’s financial products
and provides recommendations to the Group’s risk management
bodies with respect to changes to the Group’s lending policies and
procedures and the pricing of the Group’s loan products .

Policy Implementation Bodies

The Collections Department is responsible for collection of amounts
due but unpaid by delinquent Group customers . The Management
Board approves the Group’s collections policy, which is then imple-
mented by the Collections Department .

Internal Control Service

The Internal Control Service assesses the adequacy of internal
procedures and professional standards, as well as their compliance
with CBR regulations . The Internal Control Service is controlled by,
and reports to, the Bank’s Board of Directors .

Compliance department

The centralised Compliance Department was formed out in March
2021 . It consolidated previously created functions in different busi-
ness units of the Group’s and connected the following competences
into one broader function:

The policy implementation level of the Group’s risk management
organisation consists of the Finance Department, the Risk Man-
agement Department, the Collections Department and the Internal
Control Service .

1 .

Finance Department

Financial Monitoring Service: compliance with anti-money
laundering legislation, development and implementation of
control methodology, identification of public Russian and
foreign officials, reporting to Russian regulators, detection
of illegal drug trafficking, illegal transactions in casinos,
cryptocurrencies .

The Finance Department is responsible for managing correspond-
ent accounts, daily currency liquidity, money transfer control and
daily money transfer modelling to support the required currency
liquidity level for correspondent accounts and compliance with the
CBR’s liquidity ratios .

The Finance Department is also responsible for closing interna-
tional and local transactions in accordance with the Group’s limits
as approved by the Finance Committee and in compliance with the
CBR’s regulations, as well as for short term placements, currency
hedging and interest rate hedging .

2 . Operational compliance: online financial monitoring for com-

pliance against anti-money laundering legislation

3 .

Sanction and counter-sanction control, FATCA, CRS

4 . Methodology: development and updating of internal regulato-

ry documents and regulations

5 . Monitoring of regulatory risk and corporate givernance

policies

Risk Management Department

The Risk Management Department is responsible for the develop-
ment and implementation of the Group’s consumer lending policy
after the final approval of such policy by the Credit Committee . The
Risk Management Department is also responsible for credit risk
assessment of all proposed new products and related marketing
communications, for approval of credit card applications and other
loan products applications and for subsequent account manage-
ment programmes .

Management Reporting Systems

The Group has implemented an online analytical processing
management reporting system based on a common SAS data
warehouse; it is updated on a daily basis . The set of daily reports
includes sales reports, application processing reports, reports on
the risk characteristics of the credit card portfolio, vintage reports,
transition matrix (roll rates) reports, reports on pre, early and
late collections activities, reports on compliance with the CBR’s
requirements, capital adequacy and liquidity reports, operational
liquidity forecast reports and information on intraday cash flows .

Some reports are submitted for the review of the Tinkoff Bank Board
of Directors on a monthly basis . These include selected financial

information based on IFRS and adjusted to meet the requirements
of internal reporting, analytical reports on credit risk and lending,
reports on the status of the Group’s credit card business accompa-
nied by management commentary and analysis and reports on the
Group’s performance versus budget and operational risk reports .

Overview of principal risks

The Group is subject to a number of principal risks which might
adversely impact its performance .

Substantially all of the Group’s assets and customers were located
in or had businesses related to Russia in 2021 . Consequently, the
Group is affected by the state of the Russian economy which is itself
to a significant degree dependent on exports of key commodities
such as oil, gas, iron ore and other raw materials, on imports of
material amounts of consumer and other goods and on access to
international sources of financing . During recent years the Russian
economy has been significantly and negatively impacted by a
combination of macroeconomic and geopolitical factors such as a
significant decline in the price of oil, ongoing political tension in the
region, economic sanctions imposed against Russian individuals
and companies, economic restrictions imposed by Russia on other
countries, capital outflows as well as depreciation of the Rouble
and a decrease in Russia’s international reserves . In addition,
emerging markets such as Russia are subject to greater risks than
more mature markets, including significant political, economic and
legal risks . This overarching risk environment could impact one or
more of the principal risks .

The principal activity of the Group is banking operations and so it is
within this area that the Principal Risks occur . Management consid-
ers that those principal risks, are:

• Credit risk

• Market risk

• Foreign currency
exchange risk

•

Interest rate risk

• Liquidity risk

• Operational risk

• Business (global and

country) risks

The Group has sophisticated business continuity plans and
a recovery plan in accordance with the requirements
of the Central Bank of the Russian Federation .

Credit risks

The Group is exposed to credit risk, which is the risk thaе a custom-
er will be unable to pay amounts in full when due . Credit risk arises
mainly in the context of the Group’s consumer lending activities .

The general principles of the Group’s credit policy are outlined in the
Credit Policy approved by the Board of Directors . This document
also outlines credit risk controls and monitoring procedures and the
Group’s credit risk management systems . Credit limits with respect
to credit card applications are established by the Credit Committee
and by officers of the Risk Management Department .

The Group structures the levels of its credit risk exposure by placing
limits on the amount of risk accepted in relation to different online
(Internet, mobile and telesales) and offline (sales through retailers)
customer acquisition channels and sub-channels . Such risks are
monitored on an ongoing basis and are subject to frequent review
with the approval of the Management Board .

The Group uses automated systems to evaluate an applicant’s
creditworthiness (“scoring”) . The system is regularly modified to
incorporate past experience and new data acquired on an iterative
basis . The Group performs close credit risk monitoring throughout
the life of a loan .

1 . Loan Approval Criteria and Procedures

In almost all cases, the decision to issue a credit card or other loan
product to a potential customer is made automatically, based on the
credit bureaus information, verification of the customer’s identity
and credit score of the applicant calculated using one of the acqui-
sition channel-specific scoring models .

Tinkoff’s lending approach is centred around ensuring a
long-standing mutually beneficial relationship with its customers .
Tinkoff rigorously applies a “low and grow” approach, offering the
smallest possible credit limits and increasing them gradually only to
borrowers with positive credit history . Debt-restructuring programs
are implemented to retain bona fide customers . Margin lending in
securities dealing is only offered to qualified investors and turned
off by default .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

RISK MANAGEMENT
AND CONTROL

Loan Collection

The Group employs a multi stage collection process that seeks to
achieve greater efficiency in the recovery of overdue credit card
loans . Collections on loans that are overdue by 0 to 90 days are
performed by the Group’s internal Collections Department . After 90
days of delinquency, when it is clear that the early collection efforts
are unlikely to be effective, a customer’s debt may be restructured
into instalment loans (which is the option preferred by the Group),
transferred to collections through courts or sold to the Group’s its
internal collection agency or external collection agencies .

The Group’s collections methodology is based on customer behav-
iour and corresponding collection scores . Under this approach, at
initial stage of collections (precollections and early collections),
delinquent customers are allocated to one of three groups depend-
ing on their risk profile (high risk of default, medium risk of default
and low risk of default) . This enables the Group to apply a variety of
collec tions tools and collections treatments to different groups of
delinquent customers .

All of the stages described may be accelerated in cases where the
Group has grounds to believe that the delinquent customer will not
repay the debt voluntarily or that fraud has taken place . In such
circumstances, the time periods between each collections stage
are shortened or omitted (the respective loans are accelerated into
collections used for non-performing loans) to increase the chances
of recovery .

The Group’s management uses monthly second payment default
rate (percentage of accounts on which payment has not been re-
ceived within 30 days of the first due date) as an important measure
of asset quality that provides early indication of how non-perform-
ing loans levels and provisions might change in the future .

Non-Performing Loans Management

When loans are overdue by more than 90 days, the Group collection
efforts consists of (i) the restructuring of credit card debt to per-
sonal instalment loans, which is the preferred option of the Group
to handle such delinquency, or, if customers do not agree to such
restructuring, then either

(ii) collections through courts with the enforcement of judgments
with the help of the Federal Service of Court Bailiffs of the Russian
Federation or (iii) sales of non-performing loans to its internal col-
lection agency (Feniks) or external collection agencies .

Fraud Prevention

The Group maintains a fraud prevention strategy which is based on
identification and fraud monitoring .

Access to customers’ accounts is secured via smart identification
system, which takes into account various customer profile param-
eters and sets an identification level . Depending on such identifi-
cation level, the customer needs to acknowledge the entry into the
account by way of a login and password, four-digit access code,
fingerprint, security question or a password sent to the customer’s
contact number . In securing access to customers’ accounts a
two-factor identification is used .

Customer support centres use a unified identification
manager, which allows to request a customer’s identification
data and passwords without providing access to such data to the
customer support service . In addition, a real-time voice authenti-
cation system is used to verify the identity of a caller . The system
is based on the NICE Real-Time Voice Authentication System . The
system is synchronised with the universal authentication manager
processing customer calls to the centre . This technology enables
customer voice identification during a regular phone call, reducing
verification times . This dramatically improved customer experience
by saving customer time and helped to reduce traffic costs and
enhance security, given the prevalent risk of personal data in the
age of social engineering .

Payment operations are generally secured via one-time SMS codes .
Any operations with cash and movements on customer accounts are
only carried out upon confirmation using a code sent via SMS and
push notifications . IMSI system is used to check to authenticate a
sim card .

Unauthorised operations are prevented by our fraud monitoring
system, which is based on the IBM Safer Payments solution . The
system allows us to effectively prevent fraud at various stages of a
payment process using a cross-channel monitoring .

The monitoring system may, inter alia, automatically reject or
suspend a payment, block an account or send an alert report of a
suspicious operation .

Provisioning Policy

Provisioning policy falls under the responsibility of Tinkoff Bank’s
Management Board that approves internal documents regulating
the determination of delinquency groups and creation of allowances
for potential losses in connection with the Group’s loan portfolio .

Write Off Policy

The Management Board makes decisions on loans to be written off
based on information provided by the Risk Management Depart-
ment . Generally, loans recommended to be written off are those in
respect of which further steps to enforce collection are regarded as
not economically viable . Loans sold to external collection agencies
are also written off from the Group’s balance sheet .

2 . Market risk

The Group’s exposure to market risk arises from open interest rate
and foreign currency positions, which are exposed to general and
specific market movements .

The Group is generally not engaged in trading operations . It has
mismatches in its foreign currency positions that arise generally
due to relatively short term lending in Roubles and relatively long
term borrowings in U .S . dollars . The Group manages the positions
through hedging, matching or controlled mismatching .

The CBR sets limits on the open currency position that may be
accepted by the Group on a stand-alone level, which is monitored
on a daily basis . These limits prevent the Group from having an open
currency position in any currency exceeding five per cent . of the
Group’s equity .

3 . Foreign Currency Exchange Risk

The Group suffered from the Rouble devaluation in November
2008 to February 2009 and has since implemented a “low foreign
exchange risk tolerance” policy aiming to minimise exposure to
foreign currency exchange risks . The policy imposes neutral
hedging that matches assets and liabilities by currency, foreign
exchange hedging of funding received in foreign currency and
prohibits foreign exchange trading for speculative purposes .
Non-monetary assets are not considered to give rise to any material
currency risk .

4 . Interest Rate Risk

The Group’s exposure to interest rate risks arises due to the impact
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 also decrease or create losses
in the event that unexpect- ed movements arise . The Group’s
management monitors on a daily basis and sets limits on the level of
mismatch of interest rate repricing that may be undertaken .

The Group has no significant risk associated with variable interest
rates on loans and advances provided to custom- ers or loans
received .

The Group monitors interest rates for its financial instruments .

5 . 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, cur-
rent 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 Finance
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 the CBR and overnight placements in
high rated commercial banks, in order to be able to respond quickly
and smoothly to unforeseen liquidity requirements . The Group
believes that the available cash at all times is sufficient to cover (i)
debt repayments due within a month and accrued interest for one
month ahead and (ii) a deposit liquidity cushion . The Group believes
that it has a proven ability to control loan portfolio cash flows to
maintain levels of liquidity reflecting changing market realities . The
Group also believes that its loan portfolio is responsive to change
in inputs (such as stopping the issuance of any new credit cards
or other loans and any increases in credit card limits) and that the
Group can go from being cash-negative to being cash positive in a
short period of time .

All daily reports also include week-to-day and month-to-day com-
parisons .

On the basis of all these reports, the CFO then ensures the availabil-
ity of an adequate portfolio of short term liquid assets, made up of
an amount in the correspondent account with the CBR 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 .

All the investment securities available for sale are classified within
demand and less than one month as they are easy repoable in the
CBR or on the open market securities and can provide immediate
liquidity to the Group . All current accounts of individuals are
classified within demand and less than one month .

The matching and/or controlled mismatching of the maturities and
interest rates of assets and liabilities is fundamental to the man-
agement 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 . 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 .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

CONTINUED

RISK MANAGEMENT
AND CONTROL

in incident log . In order to minimise operational risk, the Group
strives to regularly improve its business processes and its organi-
sational structure as well as incentivise its staff .

The Group insures against operational risks through several
insurance policies that cover, among other things, property risks
in respect of the Group’s offices, IT infrastructure and certain
third-party liabilities .

The Group has not experienced any material operational failures in
recent years . In order to minimise potential losses from such fail-
ures, ensure business continuity in case of disruption to IT systems
and provide reliable and continuous access to business data and
services, the Group’s IT systems are located in two dedicated data
centres each connected to separate and independent power supply
sources .

Both data centres provide 24 hours a day, seven day a week, year
round power, cooling, connectivity and security capabilities to pro-
tect mission-critical operations and preserve business continuity
for IT systems . Moreover, the Group keeps additional hardware on
its premises for back-up purposes and has stand-by servers for
each key system, including active standby for critical systems such
as processing and transaction authorisation . Data connections to
the data centres are 100 per cent . reserved via separate physical
lines

6 . Operational Risk

The Group is exposed to operational risk which is the risk of losses
resulting from inadequate management and control procedures,
fraud, poor business decisions, system errors relating to employee
mistakes and abuse by employees of their positions, technical
failures, settlement errors, natural disasters and misuse of the
Group’s property .

The Group has established internal control systems intended to
comply with Basel guidelines and the CBR’s requirements regard-
ing operational risk . The Board of Directors adopts general risk
management policy, assesses the efficiency of risk management,
approves the Group’s management structure, adopts measures
designed to ensure continuous business activities of the Group
including measures designed for extraordinary and emergency
situations and supervises other executive bodies in respect of
operational risk management . The Management Board generally
oversees the
implementation of risk management processes at the Group
including relevant internal policies, adopts internal regulations
on the Group’s risk management, determines limits for
monitoring operational risks and allocates duties among various
bodies responsible for operational risk management .

Regular monitoring of activities is intended to detect in a timely
manner and correct deficiencies in policies and procedures de-
signed to manage operational risk, which can reduce the potential
frequency and/or severity of a loss event . Dedicated personnel
track all problems the Group encounters in its operations and re-
cord all operation errors/issues and remedial measures taken on a
special helpdesk system . Reports on such errors or issues are sent
to key managers and all such errors are issues are recorded

RESPONSIBLE
BUSINESS

When executing sustainability-related projects, we want to make sure that all our stakeholders understand how Tinkoff DNA is inextricably
linked to sustainability . We believe that we have what it takes to be an example in Russia and beyond of how to build a business that is inno-
vative, responsible, customer-centric, investor-friendly, with loyal and motivated employees .

We are contributing to the UN Sustainable Development Goals and broader global sustainable development agenda . We want to tackle
shared global environmental and social challenges by focusing on the six areas where we can deliver the most value for our stakeholders .

Throughout 2021 we set the base for significant corporate governance improvements . In 2021 our double share class was collapsed, we
launched new segmental reporting to better reflect the evolution of the Tinkoff business model, and we added new independent non-exec-
utive directors, launched two new committees: Risk and Emerging Risk (Sustainability) and Strategy, introduced and updated new policies .
In 2021 we also became signatories to the UNEP Finance Initiative Principles for Responsible Banking . We are aiming to stay a responsible
corporate citizen and drive our ESG agenda .

Driving financial culture and literacy

In addition to the customer protection we go further, trying to protect our customers from harm . This includes borrower education and
promoting financial literacy through our ‘Tinkoff Journal’, and the excellent support available through our highly trained call centre staff .

Tinkoff Journal is our media platform for providing our customers and broader community with knowledge about various aspects of their
lives, including health, work, security, personal finance, doing business, education, leisure activities, raising children, government services,
legal practices, and many others .

From its launch, ‘Tinkoff Journal’ has been focusing on personal finance management, investments, interaction with banks and other con-
sumer issues (such as loans, saving, markets, luxury purchases, taxes, careers, retirement small business finance and real estate) .

TINKOFF JOURNAL

Number of unique users

Number of registered users

Number of students on the online platform

Number of authors/contributors

Number of new textbooks

% Growth in the number of released materials

2018

2019

2020

2021

23,500,000

45,500,000

80,000,000

136,000,000

12,000

50+

213

80,000

30,000

600

930,000

500,000

1,950,000

1,100,000

850

1000

100

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
Launch of a new management long-term incentive program (MLTIP)
and a Key-Employee Retention Programme (KERP)

The Group's original MLTIP launched in 2016 proved very suc-
cessful in motivating and retaining key staff . It will soon come to an
end . After consulting with stakeholders the Group has therefore
decided to scale the MLTIP (equity-based) and create a new KERP
(cash-based, equity-linked) which will initially cover around 300
beneficiaries . These are top- and mid-level managers representing
all operational divisions of the Group . We expect that the KERP will
be significantly expanded later this year .

IT talent is a scarce and extremely valuable resource . Being an ap-
pealing employer for these talent pools is of paramount importance
to the long-term success and sustainability of our business . To
acquire talent, we continue to invest heavily in partnerships with
leading Russian universities, summer IT schools, mathematics
competitions, and more . Just a few days ago, we launched Tinkoff
Stewardship to support talents in the Russian universities .

The equity-based MLTIP includes awards currently totaling 5 .35m
GDRs and vests over 5 years, starting from August 2021 .The MLTIP
contains a standard deferral clause in case of underperformance by
the management team . The Group plans to fund the MLTIP through
a combination of opportunistic buy-backs and new share issuance .

To retain talent, we continue to provide extensive
training programs, flexible work environments, ensure a decentral-
ised and horizontal organisational structure, jealously cultivating
our Tinkoff DNA .

RESPONSIBLE
BUSINESS

In 2021, more than 136 million users visited the Tinkoff Journal
website compared to 80 million in 2020 . Its average daily audience
is 750k users . Almost 1 .5k new materials are published monthly .
70% of these materials are created by the community of readers un-
der the supervision of editors and moderators, 30% - by authors and
experts of Tinkoff Journal . More than 1,000 authors and experts
are creating materials for the Journal . Tinkoff Journal has built an
active community of readers comprised of nearly 2 million people
who regularly leave thousands of comments and make hundreds of
thousands of social actions every month .

We deliberately do not try monetise this platform through promotion
of our own services and products on Tinkoff Journal as we aim to
keep it objective and trustworthy for the Russian population . The
Journal’s content is deeply embedded in our mobile banking app
and increasingly tailored to individual customers’ needs and
circumstances .

Environmental strategy

In November, Tinkoff became the first Russian financial institution
to join the Science Based Targets initiative (SBTi), a global body
enabling businesses to set ambitious science-based emissions
reduction targets in line with the latest climate science . It is focused
on accelerating companies and financial institutions across the
world to halve emissions before 2030 and achieve net-zero emis-
sions before 2050 . By joining the SBTi, Tinkoff has committed to
set science-based emissions reduction targets — across the entire
value chain — that are consistent with keeping global warming to
1 .5°C above pre-industrial levels . Tinkoff has also committed to a
long-term target to reach net-zero emissions by no later than 2050 .

In November, Tinkoff analysed and published its greenhouse
emissions gas inventory on the website for the entire value chain for
2019 and 2020 baseline years, making us, to our knowledge, one
of the first fintechs in the world to do so . Total carbon footprint of
the Group is significantly lower than traditional financial institutions
and IT companies generally show . The detailed description of the
methodology and its results could be found on the website https://
tinkoffgroup .com/corporate-governance/esg/

Tinkoff has ambitious plans to raise awareness of environmental is-
sues within the organisation, but also to the broader community . In
May 2021 we launched a campaign “Goodbye plastic bags – ecoch-
allenge”, where Tinkoff rewarded customers that did not buy plastic
bags for 30 days with 5% cashback for purchases in supermarkets .
The campaign was complemented by several educational resources
on how to be more environmentally conscious, including resources
offered through Tinkoff Journal . More than 224,000 customers
participated in the campaign, the total outreach was around 120m .
What’s more important 89% of participants ended the challenge,
and the number of bought plastics bags were decreased by 40%
compared to previous months .

HR practices

Tinkoff is committed to offering equal opportunity and equal
treatment 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 based exclusively on merit, with all Tinkoff employees involved
in the recruitment and management of staff responsible for ensur-
ing the policy is fairly applied within their areas of responsibility .

The Group applies this approach throughout, at all levels . All these
norms are explicitly stated in the Corporate Code of Conduct and
employment contracts .

Tinkoff significantly enhanced its HR team and practices due to
significant headcount growth which was in direct correlation the
growth of the customer base . In 2021 we started to see the HR
practices from the business product point of view . This objective re-
flects the importance of providing our people with an engaging and
seamless platform to grow, built on a foundation of fair remunera-
tion and equal opportunities for all, attractive working conditions
that protect fundamental rights, and special measures to support
the diversity of our workforce .

Total headcount, including part-time workers and contractors in
2019-2021

Head Office

Operations

22,042

45,048

28,614

3,927

5,304

8,355

31.12.2019

31.12.2020

31.12.2021

Tinkoff was ranked 5th in HeadHunter’s annual rating of the best
employers in Russia in 2021 . Tinkoff competed in the tier of the larg-
est companies — those with more than 5,000 employees . Based
on its performance in 2021, Forbes granted Tinkoff platinum status
in its annual ranking of the best employers in Russia . It also rated
Tinkoff second in its ranking of female-friendly companies .

Tinkoff implements three types of compensation for its employees:
salary, cash bonus, and long-term incentives . No external
consultants are involved in the setting of remuneration . Cash
bonuses are paid in accordance to the achievement of pre-set KPIs .

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

RESPONSIBLE
BUSINESS

Community investments

As part of our sustainability strategy, the Group is committed to use next generation financial technologies for building a safe, low-carbon
future that puts people first and is based on impeccable and equitable governance . We want to imporove quality of people's life and overall
well-being by using cutting-edge technologies, offering simple, comprehensible solutions, providing access to trusted, secure information,
and bringing those who care together for better results .

Our priorities

Target audiences

Themes

Improving life quality through
the development of financial
wellbeing and ensuring
availability of products and
solutions

children, teenagers, adults, in-
cluding seniors and people with
disabilities

Knowledge and protection:
we want our customers and
other stakeholders to make
informed, thoughtful financial
decisions so they can look to the
future with confidence . Investing
in better financial literacy and
developing the financial culture
of our customers, their families,
and the society as a whole is our
top priority as an ecosystem in
all countries where we operate .

Accessibility: we consistently
invest in increasing physical and
digital accessibility of products
and services and empower
vulnerable populations
financially .

Financial technology for the
benefit of the nonprofit sector

Oncohematology

not-for-profit organisations and
their beneficiaries, employees of
foundations and the Group, the
society as a whole

not-for-profit organisations
helping people with blood
cancers or those suffering the
consequences of such illnesses

Financial products and
services: we develop complex
hi-end financial products to
upgrade fundraising processes
in favour of proven reliable
charitable foundations and
not-for-profit organisations in
the form of cashback, transfers,
acquiring, and other formats of
support .

We want to help adults cope
with any oncohematolog-
ical disease (blood cancer)
or its consequences through
the widest range of partner-
ships with reliable foundations,
fundraisings in their favour,
partnership initiatives and am-
bassadorship of care for adult
patients in general .

Cause-related marketing
and advertising:
we use modern, hi-tech and
non-standard approaches to the
responsible promotion of the
philanthropic culture through the
channels, formats and platforms
available to us .

Intellectual volunteering: we
support our employees in all as-
pects of intellectual assistance
and professional advice for non-
for-profit organisations .

Giving back to our communities for us is a duty as a responsible corporate citizen . Our efforts to support vulnerable and less fortunate
groups continue, through both corporate and employee-driven programs . In 2021 we achieved great results and engaged the record
number of customers and employees in our cause-related marketing campaigns and charity activations .

Key achievements

• Total employee donations via Super App
increased by 18 times to 34 .3m in 2021

• Total customers donations reached

• Customers engagement into charity

nearly 344m

and cause-related marketing activities

²At least one transaction to a non-for-profit organization during the reporting period

FINANCIAL
PERFORMANCE

CFO's Financial Review

Dear Investors

When looking at our 2021 results, I should say it was a second year
of COVID environment when the Group demonstrated its promiment
ability to develop exceptional products, to grow its business, to
reach strong financial results and to effectively manage its risks
even in a highly volatile circumstances .

Our original plan for this annual report was to present great results
that Tinkoff had in 2021 . We generated RUB 63 .4 billion of net
income, and 42 .5% return on equity . We grew our customer base by
57% to over 20 million total customers, and we solidified our posi-
tion as one of the world's leading fintechs . But obviously, a lot has
changed since the end of last year . We, at Tinkoff, were extremely
saddened by the recent turn of events, and we all very much hope
the situation gets resolved quickly and that peace will be restored
as soon as possible .

Since the very beginning of our journey, we are remaining profitable .
We went through the 2008-2009 global financial crisis, the 2014-
2015 crisis after the first wave of sanctions, when we went through
the first credit cycle in Russia's history, the devaluation of the ruble,
oil shock, banking sector crisis, liquidity crisis . And we stayed
profitable . We then had the COVID stress test back in 2020 . And we
stayed profitable and actually grew significantly all the way through
2020 and 2021 .

This is a very different crisis, and this is completely unchartered ter-
ritory . But as you know, our business model is very flexible, and we
can withstand severe shocks . We have ample ruble and FX liquidity
and a solid capital position . We are monitoring the operational
performance of our business on a minute-by-minute basis and have
all key systems in place to ensure the security, protection, and flow
of our customers' funds and assets .

We have abundant liquidity in both rubles and foreign currency .
We have very strong capital buffers, which have actually just been
beefed up further by the Central Bank sector support measures . We
have a very high margin business, with a very high variable cost
base, which can be adjusted very quickly, and a team of 40,000+
Tinkoff employees and experienced managers working around the
clock to make sure that our operations remain uninterrupted and
that all of our customers, 20 million of them, continue to access, use
and transfer their funds . By now we have much more experience to
deal with such crisis situations, while using these changing market
conditions to our advantage, improving our efficiency, growing our
customer base and business volumes and contributing value to all
stakeholders of the Group .

Ilya Pisemsky
Chief Financial Officer

Among the main highlights of the 2021, I would name the following
events and developments:

•

In April 2021 the Group acquired a 77 .4% shareholding in LLC
“Beskontakt” and later in July 2021 the Group exercised a call
option agreement with the founders and remaining stakehold-
ers of LLC “Beskontakt” and acquired an additional 8% . 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 expan-
sion of the Group’s customer base through the marketing and
cross-selling of its products to the app’s users .

In August 2021 Mortgage agent TB-1 was established as a
special purpose entity which issued bonds secured by portfolio
of home equity loans .

In forth quater 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 .

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

Tinkoff Tops The Bankers
Best-Performing Russian
Banks List

Tinkoff Bank was named Russia’s best-per-
forming bank by The Banker, a leading inter-
national financial publication which is part
of the Financial Times Group .

Tinkoff topped Russia’s Best-Performing
Banks Overall ranking, which uses 17 ratios
to score such performance categories
as growth, profitability, operational
efficiency, asset quality, return on risk,
liquidity, soundness and leverage .
Each performance category receives
equal weighting, according
to the methodology .

CONTINUED

FINANCIAL
PERFORMANCE

The Group’s Balance Sheet

Starting with the composition of the Balance Sheet I will emphasize the following: Total As-
sets of the Group continued to grow further and reached RR 1 .3 trln by the year end, demon-
strating the growth of 53% year by year . Mostly the growth is provided by the increase in
loan portfolio and cash balances .

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 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 .

The investment in securities portfolio decreased by 9 .7% to RR 215,311 million as at 31
December 2021 . 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 pres-
sure on the Bank’s regulatory capital and capital adequacy position, as well as decreasing
overall market risks of the Group .

Group performance

The Tinkoff ecosystem comprises some of the most technologically advanced fintech solu-
tions in the world, in the field of digital banking, retail brokerage, SME banking, payments,
credit underwriting, big data, artificial intelligence, and much more .

Every one of our employees is empowered to be an innovator . Through our test and learn
approach, we encourage our employees to try out new ideas, take measured risks, make
mistakes . This incredibly entrepreneurial atmosphere rewards everyone of our employees
and ultimately Tinkoff as a whole, giving us the ability to continue to innovate, respond
to our customer’s needs, and maintain our leadership over the competition .

FINANCIAL AND OPERATING REVIEW

RUB bn

4Q’21

4Q’20

Change

FY’21

FY’20

Change

Credit accounts
acquired (mn pcs)

Net margin

Net margin after
provisions

Profit before tax

Net profit

1 .9

35 .4

28 .5

21 .9

16 .6

Return on equity

39 .2%

Net interest margin

13 .7%

Cost of risk

4 .9%

1 .5

27 .1

21 .7

15 .6

12 .3

40 .5%

16 .1%

5 .7%

31%

+30 .5%

+31 .3%

+40 .5%

+34 .6%

-1 .3 p .p .

-2 .4 p .p .

-0 .8 p .p .

7 .0

132 .6

110 .9

81 .0

63 .4

42 .5%

15 .1%

4 .5%

4 .3

104 .7

65 .4

56 .2

44 .2

40 .6%

17 .8%

10 .0%

62%

+26 .6%

+69 .6%

+44 .1%

+43 .3%

+1 .9 p .p .

-2 .7 p .p .

-5 .5 p .p .

RUB bn

Total assets

Net loans and advances to customers

Share of NPLs

Cash and treasury portfolio

Total liabilities

Customer accounts

Total equity

Tier 1 capital ratio

Total capital ratio

CBR N1.0 (capital adequacy ratio)

31 Dec 2021

31 Dec 2020

Change

1,318

606

8 .6%

538

1,142

946

176

20 .2%

15 .3%

859

376

10 .4%

375

732

627

127

17 .9%

13 .1%

+53 .4%

+61 .0%

-1 .8 p .p

+43 .4%

+55 .9%

+50 .9%

+38 .6%

+2 .3 p .p .

+2 .2 p .p .

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

CONTINUED

FINANCIAL
PERFORMANCE

In 4Q'21, the Group's total revenue grew by 51% year-on-year to
RUB 80 .4 bn (4Q'20: RUB 53 .1 bn) . Gross interest income increased
by 40% year-on-year to RUB 45 .8 bn (4Q'20: RUB 32 .8 bn), driven
primarily by loan portfolio growth .

In 4Q'21, operating expenses increased 72% year-on-year to RUB
33 .0 bn (4Q'20: RUB 19 .2 bn) driven by resumed growth of our loan
portfolio, and investments into our growing new business lines .

Gross yield decreased to 27 .8% in 4Q'21 (4Q'20: 30 .4%), mainly as
a result of changes in the loan mix . The interest yield on the Group's
securities portfolio increased to 5 .9% (4Q'20: 5 .0%), in connection
with rising rouble interest rates .

In 4Q'21, interest expense increased by 83% year-on-year to RUB
9 .5 bn (4Q'20: RUB 5 .2 bn) as a result of the significant expansion of
our customer base . The Group's cost of borrowing increased from
3 .3% in 4Q'20 to 4 .0% in 4Q'21, following increase of market rates .

In 4Q'21 net margin grew by 31% year-on-year to RUB 35 .4 bn
(4Q'20: RUB 27 .1 bn), primarily as a result of our growing loan
portfolio .

The Group reported robust quarterly net profit of RUB 16 .6 bn in
4Q'21 (4Q'20: RUB 12 .3 bn), supported by continued customer
acquisition and monetisation . As a result, ROE for 4Q'21 stood at
39 .2% (4Q'20: 40 .5%) .

In 4Q'21, the Group continued to maintain a healthy balance sheet,
with total assets growing by 53 .3% since the end of 2020 to RUB
1,318 bn (31 Dec'20: RUB 859 bn) .

The Group's gross loan book grew by 52 .9% since the end of 2020
to RUB 684 bn (31 Dec'20: RUB 447 bn), while the net loan book
increased by 61 .0% to RUB 606 bn (31 Dec'20: RUB 377 bn) .

The Group's NPL ratio fell to 8 .6% (31 Dec'20: 10 .3%), while our
credit loss allowance coverage stood at 1 .3x non-performing loans .

Cost of risk fell to 4 .9% 4Q'21 from 5 .7% in 4Q'20 . Our risk-adjusted
net interest margin decreased from 13 .1% in 3Q'21 to 11 .0% on
4Q'21 (4Q'20: 12 .9%) .

The Group's customer accounts increased by 50 .9% since the end
of 2020 to RUB 946 bn (31 Dec'20: RUB 627 bn) .

Our non-credit business lines continue to deliver an increasing
share of our revenue and bottom line thanks to growth of the cus-
tomer base, our widened range of product offerings and continued
monetisation efforts . In 4Q'21 non-credit revenue represented 46%
of the Group's revenue and 26% of the Group's profit before tax .

The Group's total equity over 2021 rose by 38 .6% to RUB 176 bn
at the end of FY'21 (31 Dec'20: RUB 127 bn) on the back of solid
net profit . As of 1 January 2022, the Bank's statutory N1 .0 ratio
amounted to 15 .3%, its N1 .2 ratio stood at 14 .0%, and the N1 .1 ratio
stood at 9 .5% .

At the end of 4Q'21, the Group had: over 14 .6 mn total current
account customers with a total balance of RUB 545 bn across all
accounts; over 671k total SME customers, with a total current ac-
count balance of RUB 144 bn; over 3 .0 mn total Tinkoff Investments
customers

FINANCIAL
STATEMENTS

Forward looking statements

Certain statements and/or other information included in this document may not be historical facts and may constitute “forward looking
statements” . The words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan”, “forecast”, “target”, “project”, “will”, “may”, “should”
and similar expressions may identify forward looking statements

but are not the exclusive means of identifying such statements . Forward looking statements include statements concerning our plans,
expectations, projections, objectives, targets,

goals, strategies, future events, future revenues, operations or performance, capital expenditures, financing needs, our plans or intentions
relating to the expansion or contraction of our business as well as specific acquisitions and dispositions, our competitive strengths and
weaknesses, our plans or goals relating to forecasted operations, reserves, financial position

and future operations and development, our business strategy and the trends we anticipate in the industry and the political, economic,
social and legal environment in which we operate, together with the assumptions underlying these forward looking statements . We do not
make any representation, warranty or prediction that the results anticipated by such forward looking statements will be achieved .

Nothing in this document constitutes an invitation to invest in securities of TCS Group .

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
31 DECEMBER 2021

TCS Group Holding PLC

International Financial Reporting Standards
Consolidated Financial Statements and
Independent Auditor’s Report

Contents

Board of Directors and other officers . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated Management Report . . . . . . . . . . . . . . . . . . . . . . . F-3

16 Other Borrowed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-57

17 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-58

18 Insurance Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-58

19 Other Financial and Non-financial Liabilities . . . . . . . . . . . F-60

20 Share Capital, Share Premium and Treasury Shares . . . . . F-62

CONSOLIDATED FINANCIAL STATEMENTS

21 Net Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-64

Consolidated Statement of Financial Position . . . . . . . . . . . . . F-10

Consolidated Statement of Profit or Loss and Other
Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11

22 Fee and Commission Income and Expense . . . . . . . . . . . . . F-65

23 Customer Acquisition Expense . . . . . . . . . . . . . . . . . . . . . . . F-66

24 Insurance Premiums Earned and Claims Incurred . . . . . . . F-67

Consolidated Statement of Changes in Equity . . . . . . . . . . . . . F-12

25 Administrative and Other Operating Expenses . . . . . . . . . F-67

Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . F-13

26 Other Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-68

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14

2 Operating Environment of the Group . . . . . . . . . . . . . . . . . . F-16

Critical Accounting Estimates and Judgements in Applying
Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19

4 Segment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20

5 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . F-24

6 Due from Other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-25

Investments in Securities and Repurchase Receivables . . F-26

Loans and Advances to Customers . . . . . . . . . . . . . . . . . . . F-33

9 Guarantee Deposits with Payment Systems . . . . . . . . . . . . F-53

27 Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-68

28 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-71

29 Reconciliation of Liabilities Arising from

Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-72

30 Financial and Insurance Risk Management . . . . . . . . . . . . F-73

31 Management of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-91

32 Contingencies and Commitments . . . . . . . . . . . . . . . . . . . . F-92

33 Offsetting Financial Assets
and Financial Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-95

34 Transfers of Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . F-96

35 Non-Controlling Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-97

36 Financial Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-98

37 Fair Value of Financial Instruments . . . . . . . . . . . . . . . . . . . F-99

38 Presentation of Financial Instruments by Measurement

10 Brokerage Receivables and Brokerage Payables . . . . . . . F-53

Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105

11 Tangible Fixed Assets, Intangible Assets

39 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . F-107

and Right-of-use Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-54

12 Other Financial and Non-financial Assets . . . . . . . . . . . . . . F-55

13 Due to Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-56

40 Events after the End of the Reporting Period . . . . . . . . . . F-110

41 Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . F-111

42 Adoption of New or Revised Standards

14 Customer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-56

and Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-126

15 Debt Securities in Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-57

43 New Accounting Pronouncements . . . . . . . . . . . . . . . . . . . F-126

Board of Directors

Except where stated all directors served throughout 2021 and through to the date of these consolidated financial statements .

Director

Martin Cocker

Ashley Dunster

Role

Retirement

Appointment

Independent non-executive director

1 March 2022

11 May 2021

Constantinos Economides

Chairman of the Board, Executive director

Pavel Fedorov

Maria Gordon

Group Co-CEO, Executive director

Independent non-executive director

Margarita Hadjitofi

Independent non-executive director

Nicholas Huber

Oliver Hughes

Independent non-executive director

Group Co-CEO, Executive director

Alexios Ioannides

Executive director

Jacques Der Megreditchian

Independent non-executive director

Marilou Pavlou

Executive director

Nitin Saigal

Independent non-executive director

Mary Trimithiotou

Executive director

10 September 2021

11 May 2021

25 March 2021

11 May 2021

28 May 2021

10 September 2021

11 May 2021

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

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F-2

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
31 DECEMBER 2021

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 .

6 .

In late 2021, the Group acquired a 83 .2% stake in Aximetria
GmbH – a Swiss financial services company providing crypto-
currency services (Note 1) .

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 group structure

3 .

4 .

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 “Beskon-
takt” 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 expan-
sion 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 2021 Mortgage agent TB-1 was established as a
special purpose entity which issued bonds secured by port-
folio 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 pur-
poses of the Group, and the Group has exposure to significant
risks and rewards through the retention of a junior tranche in
the transaction .

5 .

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) .

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 avail-
ability 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 geograph-
ic 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 Rus-
sia’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 manage-
ment 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 .

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 com-
mission, 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 pre-
miums 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 manage-

ment 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 environ-
mental 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 opportu-
nities 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 (hydro-
fluorocarbons) (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 .

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-reach-
ing 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 ML-
TIP 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 .

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 War-
rants are exercised, the Group is required to deliver the Ordinary Shares
(GDRs) up to the value of

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STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

31 DECEMBER 2021

Consolidated
Management Report (Continued)

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 objec-
tives 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 direc-
tors . 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 .

completed detailed questionnaires on the Board’s, the 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, repre-
senting 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 retire-
ment 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 .

The Group has established four Committees of the Board . Specific
responsibilities have been delegated to those committees as
described below .

The Audit Committee comprises its chair Mr . Martin Cocker and
three other independent non-executive directors .

Committees-current composition

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

The Remuneration Committee following the resignation of its chair
on 1 March 2022, temporarily comprises one independent non-ex-
ecutive director .

The Risk and Emerging Risk (Sustainability) Committee comprises
its chair Ms . Margarita Hadjitofi and two other independent non-ex-
ecutive 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 func-
tion, the independence and qualifications of the independent au-
ditor 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 effec-
tiveness and to recommend any changes it considers necessary for
Board approval . The Audit Committee met this 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-fi-
nancial 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 .

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 Remu-
neration 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 max-
imum 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 re-
view (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 re-
quired based on the most recent review . The Committee continues
to meet as required .

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

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 genera-
tions; (b) embed sustainable practices and adopt best industry

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STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
31 DECEMBER 2021

Consolidated
Management Report (Continued)

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 max-
imum effectiveness 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-pri-
ority 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 effec-
tiveness 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 .

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 deter-
mining the directors who are to retire by rotation .

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 hold-
ing 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

•

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 expan-
sion initiatives the Group announced the appointment of Oliver
Hughes and Pavel Fedorov as co-CEOs of the Group .

Appointment, retirement, rotation and removal of
directors

Significant direct/indirect holdings

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

For the significant direct and indirect shareholdings held in the
share capital of the Company, please refer to Note 1 of the consoli-
dated financial statements .

Internal control and risk management systems in relation to the financial reporting process

Policies, procedures and controls exist around financial reporting .

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 respon-
sible 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 De-
partment, 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 .

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

Martin Cocker

Ashley Dunster (retired on 1
March 2022)

Age

Male/Female

Educational/professional background

Male

ICAEW, BSc in Mathematics and Economics,

Investment manager, Bachelor of Engineering Melbourne Universi-
ty, Masters Mathematical Modelling & Numerical Analysis, Oxford
University

F-7

F-8

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

31 DECEMBER 2021

Consolidated
Management Report (Continued)

Name

Constantinos Economides

Age

Male/Female

Educational/professional background

Male

ICAEW, MSc in Management Sciences, experience in ‘Big Four’ profes-
sional services firms

Pavel Fedorov

Male

Female

Male

Maria Gordon

Margarita Hadjitofi

Responsibility at London Busi-
ness School

Nicholas Huber

Oliver Hughes

Marilou Pavlou

Mary Trimithiotou

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

Lawyer, LLB (Law), Bachelor of Commerce (Business and Finance)
Western Sydney University, LLM (Law) University of Sydney, Sustaina-
bility Leadership and Corporate

Investment manager, BA in Political Science University of Wisconsin
and MALD from the Fletcher School at Tufts University

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 Technolo-
gy City University

Female

Lawyer, MA Modern History, Law at BPP Law School

Female

ICPAC, FCCA, Licensed insolvency practitioner, experience in ‘Big Four’
professional services firms

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

Consolidated Statement
of Financial Position

In millions of RR
ASSETS
Cash and cash equivalents
Mandatory cash balances with the CBRF
Due from other banks
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

TOTAL ASSETS

LIABILITIES
Due to banks
Customer accounts
Debt securities in issue

Other borrowed funds
Financial derivatives
Brokerage payables
Current income tax liabilities
Deferred income tax liabilities

Subordinated debt
Insurance provisions
Other financial liabilities
Other non-financial liabilities
TOTAL LIABILITIES
EQUITY
Share capital
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

TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY

Note

31 December 2020

31 December 2019

6
7
7
8
36
9
10
27
27
11
11
12

13
14
15

16
36
10
27
27

17
18
19
19

20
20
20
39

316,476
8,589
542
215,311
5,826
606,308
5,963
15,171
49,138
3,524
-
13,964
15,069
52,969

8,895

1,317,745

11,313
945,723
21,680

3,806
90
9,634
125
1,860

59,657
10,365
69,302
8,099
1,141,654

230
26,998
(2,567)
4,745
159,491
(13,131)
175,766
325

176,091
1,317,745

136,351
5,379
1,887
238,454
29
376,521
5,035
15,475
24,064
3,133
947
10,481
7,082
31,070

3,386

859,294

4,819
626,837
23,910

-
109
9,206
-
333

20,755
6,067
34,337
5,905
732,278

230
26,998
(3,238)
1,548
99,540
1,849
126,927
89

127,016
859,294

Approved for issue and signed on behalf of the Board of directors on 10 March 2021 .

Constantinos Economides
Director
The notes № 1-43 are an integral part of these Consolidated Financial Statements .

Mary Trimithiotou
Director

F-9

F-10

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

31 DECEMBER 2021

Consolidated Statement of Profit or Loss and
Other Comprehensive Income

Consolidated Statement
of Changes in Equity

Note

2020

2019

7,37

In millions of RR

Interest income calculated using the effective interest rate method

Other similar income

Interest expense calculated using the effective interest rate method

Other similar expense

Expenses on deposit insurance programme

Net margin

Credit loss allowance for loans and advances to customers and credit related commitments

Credit loss allowance for debt securities at FVOCI

Total credit loss allowance for debt financial instruments

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

Insurance claims incurred

Administrative and other operating expenses

Net (losses)/gains from repurchase of subordinated debt

Other operating income

Profit before tax

Income tax expense

Profit for the year

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

Other comprehensive loss for the year, net of tax

Total comprehensive income for the year

Profit/(loss) is attributable to:

- Shareholders of the Company

- Non-controlling interest

Total comprehensive income/(loss) is attributable to:

- Shareholders of the Company

- Non-controlling interest

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)

163,620

128,084

192

(28,430)

(21,581)

(80)

(2,744)

(139)

(1,745)

132,558

104,702

(21,673)

(38,972)

(10)

(21,683)

110,875

86,069

(38,779)

(43,442)

(100)

(866)

(730)

1,016

7,523

(369)

(39,341)

65,361

47,609

(22,215)

(22,588)

4,163

(6,850)

1,595

7,210

603

23,063

18,567

(4,964)

(59,449)

(101)

923

81,038

(17,670)

63,368

(3,814)

(35,005)

168

1,445

56,249

(12,036)

44,213

(14,367)

(613)

(14,980)

3,621

(5,768)

(2,147)

48,388

42,066

63,471

44,209

(103)

48,491

42,062

(103)

321.80

225.60

314.88

223.73

Attributable to shareholders of the Company

-
y
a
p
d
e
s
a
b
-
e
r
a
h
S

e
v
r
e
s
e
r
t
n
e
m

m
u
m
e
r
p
e
r
a
h
S

e
v
r
e
s
e
r
n
o

i
t
a
u

a
v
e
R

i
s
t
n
e
m
t
s
e
v
n

i
r
o
f

s
e

i
t
i
r
u
c
e
s
t
b
e
d

a
t
i

p
a
c
e
r
a
h
S

e
t
o
N

s
e
r
a
h
s
y
r
u
s
a
e
r
T

s
g
n

n
r
a
e
d
e
n

a
t
e
R

g
n

i
l
-
l

o
r
t
n
o
c
-
n
o
N

t
s
e
r
e
t
n
I

a
t
o
T

y
t
i

u
q
e

a
t
o
T

230

26,998

1,039

3,996

(3,164)

66,880

95,979

103

96,082

In millions of RR

Balance at 31 Decem-
ber 2018

Profit for the year

44,209

44,213

Other comprehensive
income:

Investments in debt
securities at FVOCI and
Repurchase receivables

Total comprehensive
(loss)/income for the
year

GDRs buy-back

Share-based payment
reserve

Dividends declared

Balance at 31 Decem-
ber 2020

(2,147)

44,209

42,062

42,066

509

(661)

587

(4)

1,092

(661)

1,092

(11,545)

(18)

(11,563)

230

26,998

1,548

1,849

(3,238)

99,540

126,927

127,016

Profit/(loss) for the year

63,471

(103)

63,368

Other comprehensive
loss:

Investments in debt
securities at FVOCI and
Repurchase receivables

Total comprehensive
(loss)/income for the
year

GDRs buy-back

Share-based payment
reserve

Dividends declared

Changes from business
combinations and assets
acquisitions

Balance at 31 Decem-
ber 2020

(14,980)

63,471

48,491

(103)

48,388

3,197

(1,877)

(1,865)

2,548

5,765

(3,552)

(7)

(3,559)

346

230

26,998

4,745

(13,131)

(2,567)

159,491

175,766

325

176,091

F-11

F-12

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

31 DECEMBER 2021

Consolidated Statement
of Cash Flows

In millions of RR
Cash flows from/(used in) operating activities
Interest income received calculated using the effective interest rate method
Other similar income received
Interest expense paid calculated using the effective interest rate method
Recoveries from written-off loans
Expenses on deposits insurance paid
Fees and commissions received
Fees and commissions paid
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
Administrative and other operating expenses paid
Income tax paid
Cash flows from operating activities before changes in operating assets and
liabilities
Changes in operating assets and liabilities
Net increase in CBRF mandatory reserves
Net decrease in due from banks
Net increase in loans and advances to customers
Net increase in brokerage receivables
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
Net increase in customer accounts
Net increase in brokerage payables
Net increase in other financial liabilities
Net decrease in non-financial liabilities
Net cash from operating activities
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
Net cash used in investing activities
Cash flows from/(used in) financing activities
Proceeds from subordinated debt
Proceeds from securitisation
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
Other financing activities cash flows
Net cash from/(used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

Notes to the Consolidated Financial
Statements

Note

2021

2020

Introduction

162,165
128
(28,315)
4,510
(2,369)
86,069
(43,554)
(44,213)
426
(981)
25,379
(4,090)
3,991
1,093
(47,462)
(11,705)

129,555
11
(22,280)
4,063
(1,792)
47,613
(22,236)
(21,116)
831
(934)
18,193
(3,629)
1,750
1,053
(30,456)
(12,930)

101,072

87,696

(3,210)
1,345
(255,612)
(25,074)
1,541
(728)
(18,916)
(436)
6,528
320,992
428
30,851
(354)
158,427

(5,272)
(6,884)
(33,727)
34,507
(11,376)

45,362
5,623
(7,745)
(3,628)
(2,247)
(1,877)
(1,823)
(820)
-
-
32,845
229
180,125
136,351
316,476

(1,931)
197
(81,724)
(21,265)
(3,788)
(4,325)
(9,708)
(1,038)
4,777
201,922
7,999
16,512
(39)
195,285

(2,076)
(3,642)
(375,444)
282,288
(98,874)

710
-
(1,937)
(11,853)
(2,894)
(661)
-
(758)
331
(461)
(17,062)
1,438
80,787
55,564
136,351

17,29
16
17,29
28
15,29
20

11
15,29

5
5

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 or-
dinary 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 of-
fering (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 2021

31 December 2020

Class of
shares

Percentage
on total issued
shares

Class of
shares

Percentage
on total is-
sued shares

Country of
Incorporation

Ordinary

64 .92%

Class A

64 .92%

United Kingdom

Ordinary

35 .08%

Switzerland

0 .00%

Class A

0 .00%

Cyprus

Class B

18 .47%

Switzerland

Class B

16 .61%

Switzerland

Guaranty Nominees Limited (JPMor-
gan Chase Bank NA)

Virtue Trustees (Switzerland) AG as
Trustee of the New Rigi Trust

Ioanna Georgiou

Panagiota Charalambous

Maria Vyra

Chloi Panagiotou

Leonora Chagianni

Antonis Strati

Virtue Trustees (Switzerland) AG as
Trustee of the Bernina Trust

Virtue Trustees (Switzerland) AG as
Trustee of the Rigi Trust

Total

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 .

The notes № 1-43 are an integral part of these Consolidated Financial Statements .

F-13

F-14

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021

31 DECEMBER 2021

Notes to the Consolidated Financial
Statements (Сontinued)

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 .

Name

Nature of business

Percentage of ownership

31 December
2021

31 December
2020

Country
of registration

JSC “Tinkoff Bank” (the “Bank”)

Banking operations

100 .00%

JSC “Tinkoff Insurance” (the “Insur-
ance company”)

Insurance operations

LLC TCS

Services

LLC Microfinance company
“T-Finance”

Micro-finance services

LLC “Phoenix”

Collection services

LLC “Tinkoff Software DC” (Russia)

Software development service

LLC “Tinkoff Software DC” (Belarus)

Software development service

LLC “Tinkoff Mobile”

Telecommunication

ANO “Tinkoff Education”

Education services

LLC “Tinkoff Capital”

Asset management company

LLC “Tinkoff Invest Lab”

Investment services

LLC “CloudPayments”

Online payment services

LLC “Beskontakt”

Aximetria GmbH

LLC “Dzhast Luk”

Fintech

Cryptocurrency services

Online payment services

Vivid Money Holdco Limited

Group of fintech start-ups

TCS Finance D .A .C .

Mortgage agent TB-1

Financing

100 .00%

95 .00%

85 .40%

83 .20%

51 .00%

9 .47%

100 .00%

95 .00%

16 .32%

Russia

Belarus

Russia

Switzerland

Russia

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 .

Notes to the Consolidated Financial
Statements

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 nei-
ther 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 nei-
ther 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 (ML-
TIP) . 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 mil-
lion 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) .

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

F-15

F-16

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
31 DECEMBER 2021

Notes to the Consolidated Financial
Statements (Сontinued)

2 Operating Environment of the Group (Continued)

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, quaran-
tines, 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 .

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 con-

servatively 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 .

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 man-
agement’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) .

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 in-
crease 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 per-
petual 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 . 3

Critical Accounting Estimates and

F-17

F-18

STRATEGIC REVIEWFINANCIALSTCS GROUP HOLDING PLCANNUAL REPORT 2021
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

Critical Accounting Estimates and Judgements in Applying Accounting
Policies (Сontinued)

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 rec-
ognised 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 commis-
sion 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 consolidat-
ed statement of financial position, unless the accounting requirements for sale were met . At 31 December 2021 the Group has not made a securiti-
sation 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 .
Thederecognition 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 trans-

ferred 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 posi-
tion, as well as decreasing overall market risks of the Group .

The described change in accounting treatment of the securities managed under hold to collect model will be effective starting from 1 Janu-
ary 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 per-
formed 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 reporta-
ble 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 .

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 .

F-19

F-20

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

4 Segment Analysis (Continued)

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:

In millions of RR
Reportable segment
assets

Reportable segment
liabilities

Con-
sumer
Finance

Retail
Debit
Cards

Insur-
Tech

Invest-
Tech

Acquiring
and Pay-
ments

SME
servic-
es

MVNO
ser-
vices

Other
invest-
ments

Elimina-
tions

Total

692,859

273,392

21,581

229,653

22,161

72,760

1,207

9,607

(5,475) 1,317,745

279,376

592,195

11,457 120,404

1,645

140,287

1,765

(5,475) 1,141,654

Segment reporting of the Group’s assets and liabilities as at 31 December 2020 is set out below:

In millions of RR
Reportable segment
assets

Reportable segment
liabilities

Con-
sumer
Finance

Retail
Debit
Cards

Insur-
Tech

Invest-
Tech

Acquiring
and Pay-
ments

SME
servic-
es

MVNO
ser-
vices

Other
invest-
ments

Elimina-
tions

Total

456,195

245,923

12,437

73,773

15,563

55,517

755

2,050

(2,919)

859,294

203,723

345,585

6,901

83,428

649

91,412

3,499

(2,919)

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 de-
tailed analysis of usage of those assets by segments .

Segment reporting of the Group’s capital expenditures for the year ended 31 December 2021 is set out below:

In millions of RR
Intangible assets

Tangible fixed assets
and right-of-use
assets

Total capital
expenditure

Consumer
Finance

Retail Debit
Cards

3,263

5,364

Insur-
Tech

1,116

4,166

1,342

323

Invest-
Tech

Acquiring
and Pay-
ments

440

116

195

SME
services

MVNO ser-
vices

Total

988

272

434

11,702

6,468

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:

In millions of RR
Intangible assets

Tangible fixed assets
and right-of-use
assets

Total capital
expenditure

Consumer
Finance

Retail Debit
Cards

897

1,098

Insur-
Tech

550

1,640

384

120

Invest-
Tech

Acquiring
and Pay-
ments

SME
services

MVNO ser-
vices

251

559

109

Total

3,669

282

2,404

2,537

1,482

670

289

116

668

311

6,073

Segment reporting of the Group’s income and expenses for the year ended 31 December 2021 is set out below:

In millions of RR

External revenues
- Fee and commission
income on cards' and
current accounts'
services
- Fee for selling credit
protection

- Acquiring commission
- MVNO and invest-
ments services
- Other fees receivable
Timing of fee and commis-
sion income
recognition:
- At point in time
- Over time

Total fee and commission
income
Insurance premiums earned
Other operating income
Total external revenues
Revenues from other
segments
Interest income
Fee and commission income
- Acquiring commission
- Other fees receivable
Insurance premiums earned
Other operating income
Total revenues from
other segments
TOTAL REVENUES
Interest expense
Credit loss allowance
charge
Fee and commission
expense
Insurance claims incurred
Administrative and other
operating expenses
Other (losses)/ gains
Segment result before
acquisition expenses
Customer acquisition
expense
SEGMENT RESULT

Con-
sumer
Finance

Retail
Debit
Cards

Insur-
Tech

Invest-
Tech

Acquiring
and Pay-
ments

SME
Ser-
vices

MVNO
ser-
vices

Other
invest-
ments

Elimina-
tions

Total

3,011

19,463

5,639

103

506

- 13,858

166

24,996

- 11,369

- 2,898

594

3,294

146

6,838
2,406

20,109
2,751

- 11,146
729
-

25,142
-

9,470
4,414

1,012
2,052

9,244

22,860

- 11,875

25,142 13,884

3,064

-
-

37,004

5,639

25,099

14,267

4,060

73,717
12,352

86,069

-
557
148,924

- 23,063
327

-
-
33,705 23,901 20,027

-
28

-
-
25,170 19,040

-
-
3,077

-
-
23

23,063
-
-
923
- 273,867

4,746

134

-
6
-
450

-
397
-
-

-
-
209
-

456

5,143

343

-
-
-
-

2,214

324
-
-
-

-
-
-
-

-
601
-
-

324

2,214

601

-
-
-
-

(7,094)

(324)
(1,004)
(209)
(450)

(9,081)

-
-
-
-

149,380
(18,863)

38,848 24,244 20,027
(265)
(17,566)

25,494 21,254 3,678
(10)
- (1,644)

23
-

(9,081)
7,094

273,867
(31,254)

(21,588)

(46)

(14)

(35)

(3,108)

(14,018)

(160)

(2,700)

(15,957)

(1,214)

(1,961)

(5,008)

(21,683)

339

(38,779)

(4,964)

(25,326)

(12,621)

(4,619)

(4,967)

(3,500)

(6,940)

(1,433)

(158)

115

(59,449)

(1,476)

519

252

7,443

6,742

79,019

(4,884) 14,444 12,098

6,037 11,673

274

7,308

(1,489) 124,480

(19,112)

(10,165)

(1,989)

(7,924)

(609)

(3,701)

(1,431)

1,489

(43,442)

59,907

(15,049) 12,455

4,174

5,428

7,972 (1,157)

7,308

81,038

F-21

F-22

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 Pay-
ments

SME
Ser-
vices

MVNO
servic-
es

Other
invest-
ments

Elimina-
tions

Total

External revenues

Interest income

113,486

9,092

409

2,804

2,358

128,167

Fee and commission income
- Fee and commission
income on cards' and
current accounts'
services
- Fee for selling credit
protection
- Acquiring commis-
sion
- MVNO and invest-
ments services
- Other fees receivable
Timing of fee and commis-
sion income
recognition:
- At point in time
- Over time
Total fee and commission
income
Insurance premiums earned
Other operating income
Total external revenues
Revenues from other
segments
Interest income
Fee and commission income
- Acquiring commis-
sion
- Other fees receivable
Insurance premiums earned
Other operating income
Total revenues from
other segments
TOTAL REVENUES
Interest expense
Credit loss allowance
charge
Fee and commission
expense
Insurance claims incurred
Administrative and other
operating expenses
Other (losses)/ gains
Segment result before
acquisition expenses
Customer acquisition
expense

2,715

11,981

4,657

-
548

-
346

5,906
2,205

10,396
1,740

7,920

12,327

-
-

261

4,998
-

11,049

-
77

9,147

-
-

1,815
-

4,927
332

11,126
-

5,346
3,801

511
1,319

5,259

11,126

9,147

1,830

-
1,169
122,575

-
-

18,567
250
21,419 19,226

-
-
8,063

-
26

-
-
11,152 11,505

-
-
1,840

2,737

-
2
-
371

373

-
251
-
-

-
-
72
-

2,988

128

-
-
-
-

1,244

85
-
-
-

-
-
-
-

1,244

-
379
-
-

379

122,948
(16,965)

24,407 19,354
-
(9,322)

8,063
-

11,237 12,749
(1,215)

2,219
-

(38,243)

(372)

(726)

(2,505)
-

(9,266)
-

(88)
(3,842)

(1,491)
-

(6,976)
-

(803)
-

(1,214)
-

-
-

-
-
8

-
-
-
-

8
-

-
-

(16,518)
(1,120)

(5,698)
5,935

(3,759)
219

(2,027)
-

(1,656)
-

(4,322)
1,345

(961)
-

(170)
510

-
-

-
-
-

24,119

4,657

11,049

6,813
971

38,212
9,397

47,609

18,567
1,445
195,788

(4,037)

(85)
(632)
(72)
(371)

(5,197)

-
-
-
-

(5,197)
4,037

195,788
(23,465)

(39,341)

128
28

106
-

(22,215)
(3,814)

(35,005)
6,889

47,597

5,684 11,884

4,545

2,605

7,028

348

(898)

78,837

(12,466)

(4,042)

(1,143)

(3,111)

(311)

(1,385)

(1,028)

898

(22,588)

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 4,037 million for the year ended 31 December 2020 (2019: RR

5,150 million) are calculated using the funds transfer pricing curve .

5 Cash and Cash Equivalents

In millions of RR

Cash on hand

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

- B- to B+ rated

- Unrated

Non-bank credit organizations:

- BBB- to BBB+ rated

- BB- to BB+ rated

- B- to B+ rated

- Unrated

31 December
2020

31 December
2019

36,955

51,008

19,602

696

13,223

142

601

185,370

7,640

775

419

21,069

38,646

6,404

1,328

1,276

646

499

53,764

11,265

190

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:

In millions of RR

Excellent (AA- to AA+, A- to A+)

Good (BBB- to BBB+, BB+)

Monitor (BB, B- to B+, unrated)

Cash balances with
the CBRF

Placements with other
banks and non-bank credit
organizations

51,008

20,298

198,638

9,577

Total

71,306

198,638

9,577

Total cash and cash equivalents, excluding
cash on hand

51,008

228,513

279,521

F-23

F-24

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

The table below discloses the credit quality of cash and cash equivalents balances based on credit risk grades at 31 December 2020:

Investments in Securities and Repurchase Receivables

In millions of RR

Excellent (AA- to AA+, A- to A+)

Good (BBB- to BBB+, BB+)

Monitor (BB, B- to B+, unrated)

Cash balances with
the CBRF

Placements with other
banks and non-bank credit
organizations

38,646

7,732

55,686

13,218

Total

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:

In millions of RR

31 December 2020

31 December 2019

Placements with other banks with original maturities of more than three months

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

Total investments in securities

Repurchase receivables

Total investments in securities and repurchase receivables

207,175

8,136

215,311

5,826

221,137

234,189

4,265

238,454

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 .

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

Investments in securities

Russian government bonds

Corporate bonds

Municipal bonds

Foreign government bonds

Repurchase receivables

Russian government bonds

Corporate bonds

31 December 2021

31 December 2020

120,155

76,285

8,367

2,368

5,752

123,916

96,200

9,474

4,599

Good

BB+ to BB- rated

BBB+ to BBB- rated

Monitor

B+ to B- rated

Total due from other banks

500

542

1,406

481

1,887

Total investments in securities and repurchase receivables measured at
FVOCI

Including credit loss allowance

213,001

234,218

724

714

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:

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 .

In millions of RR

Russian government bonds

- Excellent

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Corporate bonds

- Monitor

- Sub-standard

Stage 1
(12-months ECL)

Stage 2
(lifetime ECL for SICR)

140,678

(291)

(14,480)

125,907

9,414

465

Total

140,678

(291)

(14,480)

125,907

9,879

F-25

F-26

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

Investments in Securities and Repurchase Receivables (Continued)

In millions of RR

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Municipal bonds

- Good

- Monitor

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Foreign government bonds

- Good

- Monitor

- Sub-standard

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Stage 1
(12-months ECL)

Stage 2
(lifetime ECL for SICR)

77,807

(333)

(1,580)

75,894

7,304

1,443

8,747

(46)

(334)

8,367

652

1,419

337

2,408

(39)

(1)

2,368

465

(15)

465

Total

78,272

(348)

(1,565)

76,359

7,304

1,443

8,747

(46)

(334)

8,367

652

1,419

337

2,408

(39)

(1)

2,368

1) Investments in securities and repurchase receivables measured at fair value through other comprehensive income

(continued)

In millions of RR

Russian government bonds

- Excellent

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Stage 1
(12-months ECL)

Stage 2
(lifetime ECL for SICR)

125,422

(255)

(1,251)

123,916

Total

125,422

(255)

(1,251)

123,916

In millions of RR

Corporate bonds

- Excellent

- Good

- Monitor

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Municipal bonds

- Good

- Monitor

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Foreign government bonds

- Good

- Monitor

- Sub-standard

Total AC gross carrying amount

Credit loss allowance

Fair value adjustment from AC to FV

Carrying value

Stage 1
(12-months ECL)

Stage 2
(lifetime ECL for SICR)

560

85,653

6,726

92,939

(334)

2,953

95,558

7,750

1,523

9,273

(45)

246

9,474

908

3,119

494

4,521

(66)

144

4,599

620

(14)

642

Total

560

85,653

7,346

93,559

(348)

2,989

96,200

7,750

1,523

9,273

(45)

246

9,474

908

3,119

494

4,521

(66)

144

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 .

F-27

F-28

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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

)
L
C
E
s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

255

(3)

(14)

291

r
o
f
L
C
E
e
m

i
t
e
f
i
l
(

2
e
g
a
t
S

)
R
C

I
S

)
L
C
E
s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

r
o
f
L
C
E
e
m

i
t
e
f
i
l
(

2
e
g
a
t
S

)
R
C

I
S

a
t
o
T

255

125,422

(3)

(14)

17,992

(124)

(2,001)

7,334

(7,945)

15,256

291

140,678

a
t
o
T

125,422

17,992

(124)

(2,001)

7,334

(7,945)

15,256

140,678

334

348

92,939

620

93,559

100

(12)

(88)

(17)

(1)

(3)

(1)

100

(15)

(88)

(18)

14,216

(92)

(5,119)

(23,650)

4,665

(5,152)

(150)

(45)

14,216

(92)

(5,269)

(23,650)

4,705

(5,197)

(15,132)

(155)

(15,287)

In millions of RR

Russian government bonds

At 31 December 2020

Movements with impact
on credit loss allowance

New originated or purchased

Foreign exchange gains

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2021

Corporate bonds

At 31 December 2020

Movements with impact
on credit loss allowance

New originated or purchased

Foreign exchange gains

Redemption during the year

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2021

333

348

77,807

465

78,272

Credit loss allowance

Gross carrying amount

)
L
C
E
s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

r
o
f
L
C
E
e
m

i
t
e
f
i
l
(

2
e
g
a
t
S

)
R
C

I
S

)
L
C
E
s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

r
o
f
L
C
E
e
m

i
t
e
f
i
l
(

2
e
g
a
t
S

)
R
C

I
S

a
t
o
T

(3)

(2)

(7)

(39)

(2)

(3)

(27)

9,273

(3)

(2)

(7)

(39)

(2)

(3)

137

(552)

(68)

590

(633)

(526)

8,747

4,521

1,309

(926)

(2,472)

(163)

(27)

(2,113)

2,408

a
t
o
T

9,273

137

(552)

(68)

590

(633)

(526)

8,747

4,521

1,309

(926)

(2,472)

(163)

(2,113)

2,408

In millions of RR

Municipal bonds

At 31 December 2020

Movements with impact
on credit loss allowance

New originated or purchased

Redemption during the year

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2021

Foreign government bonds

At 31 December 2020

Movements with impact
on credit loss allowance

New originated or purchased

Foreign exchange gains

Redemption during the year

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2021

F-29

F-30

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

Investments in Securities and Repurchase Receivables (Continued)

1) Investments in securities and repurchase receivables measured at fair value through other comprehensive income

(continued)

1) Investments in securities and repurchase receivables measured at fair value through other comprehensive income

(continued)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

a
t
o
T

In millions of RR

Russian government bonds

At 31 December 2019

Movements with impact
on credit loss allowance

New originated or purchased

Foreign exchange gains

Redemption during the year

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2020

Corporate bonds

At 31 December 2019

Movements with impact
on credit loss allowance

522

(160)

(233)

(12)

156

255

225

New originated or purchased

198

Transfers:
- to lifetime
(from Stage 1 to Stage 2)

Foreign exchange gains

Redemption during the year

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2020

(3)

(13)

(117)

(16)

109

334

54,471

522

(160)

(233)

(12)

289,955

767

(89,000)

(129,350)

5,318

(6,739)

156

70,951

255

125,422

225

69,645

198

70,438

(13)

(117)

(17)

(620)

5,061

(4,171)

(46,924)

4,587

(5,077)

620

(45)

a
t
o
T

54,471

289,955

767

(89,000)

(129,350)

5,318

(6,739)

70,951

125,422

69,645

70,438

5,061

(4,171)

(46,924)

4,632

(5,122)

123

23,294

620

23,914

348

92,939

620

93,559

(1)

Credit loss allowance

Gross carrying amount

)
L
C
E
s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

r
o
f
L
C
E
e
m

i
t
e
f
i
l
(

2
e
g
a
t
S

)
R
C

I
S

(19)

(2)

(11)

(1)

)
L
C
E
s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

r
o
f
L
C
E
e
m

i
t
e
f
i
l
(

2
e
g
a
t
S

)
R
C

I
S

6,085

7,440

(91)

(4,140)

474

(495)

3,188

9,273

7,516

246

(3,224)

(78)

4,521

a
t
o
T

6,085

7,440

(91)

(4,140)

474

(495)

3,188

9,273

7,516

246

(3,224)

(78)

4,521

a
t
o
T

(19)

(2)

(11)

(1)

In millions of RR

Municipal bonds

At 31 December 2019

Movements with impact
on credit loss allowance

New originated or purchased

Redemption during the year

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2020

Foreign government bonds

At 31 December 2019

Movements with impact
on credit loss allowance

New originated or purchased

Foreign exchange gains

Disposal during the year

Interest income accrued

Interest received

Other movements

Total movements with impact
on credit loss allowance
charge

At 31 December 2020

F-31

F-32

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

Investments in Securities and Repurchase Receivables (Continued)

2) Securities measured at fair value through profit or loss

In millions of RR

31 December 2021

31 December 2020

Gross
carrying
amount

Credit loss
allowance

Carrying
amount

Gross
carrying
amount

Credit loss
allowance

Carrying
amount

The table below discloses investments in securities measured at FVTPL by classes:

In millions of RR

31 December 2021

31 December 2020

Investments in securities
Perpetual corporate bonds
Corporate shares
Total investments in securities and repurchase receivables measured at
FVTPL

The table below discloses investments in securities measured at FVTPL by classes:

In millions of RR

Carrying amount at 1 January

Purchases

Disposal

Interest income accrued

Interest received

Foreign exchange (loss)/ gain

Revaluation through PL

Carrying amount at 31 December

2,316
5,820

8,136

2021

4,265

562

(1,729)

169

(128)

(153)

5,150

8,136

4,265
-

4,265

2020

413

4,125

(440)

(25)

109

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 .

8 Loans and Advances to Customers

Credit card loans

333,894

(52,987)

280,907

267,586

(54,242)

213,344

Cash loans
Secured loans
Car loans
POS loans
Loans to IE and SME
Total loans and advances to cus-
tomers at AC

126,295
72,043
77,882
60,348
9,690

(14,121)
(1,986)
(5,342)
(2,605)
(774)

112,174
70,057
72,540
57,743
8,916

68,131
40,232
33,991
32,690
2,899

(11,055)
(1,099)
(2,144)
(1,611)
(749)

57,076
39,133
31,847
31,079
2,150

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 collateral-
ized .

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 .

The credit loss allowance for loans and advances to customers recognised in the period is impacted by a variety of factors . The main move-
ments 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);

In millions of RR

31 December 2021

31 December 2020

• transfers between Stage 1, 2 and 3 due to balances experiencing significant increases (or decreases) of credit risk or becoming

Gross carrying amount of loans and advances to customers at AC

Less credit loss allowance

Total carrying amount of loans and advances to customers at AC

Loans and advances to customers at FVTPL

Total loans and advances to customers

680,152

(77,815)

602,337

3,971

606,308

445,529

(70,900)

374,629

1,892

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:

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 .

F-33

F-34

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

/
d
e
s
a
h
c
r
u
P

d
e
t
a
n

g
i
r
o

i
t
i

d
e
r
c

d
e
r
i

a
p

a
t
o
T

In millions of RR

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 pur-
chased

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)

Total movements with
impact on credit loss
allowance charge for
the year

Movements without
impact on credit loss
allowance charge for
the year:

Unwinding of discount
(for Stage 3)

Write-offs

Sales

Modification of original
cash flows without
derecognition

5,889

82,751

(2,412)

6,542

4,130

(11,692)

11,692

(4,278)

(6,649)

24,875

13,948

(22,163)

(9,220)

31,383

426

(1,210)

(21)

(805)

1,813

(1,787)

(26)

229

82,980

(1,413)

19,147

17,736

60,039

228

25,044

218

85,529

4,920

(18,856)

(2,329)

(2,726)

4,920

(18,856)

(2,559)

4,920

(18,856)

(2,559)

(2,726)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

/
d
e
s
a
h
c
r
u
P

d
e
t
a
n

g
i
r
o

i
t
i

d
e
r
c

d
e
r
i

a
p

a
t
o
T

In millions of RR

Credit card loans

At 31 December 2019

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 pur-
chased

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)

Changes to ECL measure-
ment model assumptions
and estimates

Movements other than
transfers and new origi-
nated or purchased loans

Total movements with
impact on credit loss
allowance charge for
the year

Movements without
impact on credit loss
allowance charge for
the year:

Unwinding of discount
(for Stage 3)

Write-offs

Sales

Modification of original
cash flows without
derecognition

4,037

49,264

(2,520)

6,396

3,876

(11,557)

11,557

(5,642)

(6,697)

29,371

17,032

(27,133)

(9,677)

36,810

328

(784)

(23)

(479)

1,416

(1,388)

(28)

130

49,394

2,960

633

1,936

5,529

5,574

1,159

(4,307)

2,426

288

(166)

(4,089)

(285)

(4,252)

4,737

707

26,977

32,421

12,278

326

32,693

(155)

45,142

5,713

(14,071)

(2,134)

(11,816)

5,713

(14,071)

(2,319)

5,713

(14,071)

(2,319)

(11,816)

At 31 December 2020

16,441

7,560

30,241

54,242

210,074

11,758

45,573

181

267,586

F-35

F-36

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

/
d
e
s
a
h
c
r
u
P

d
e
t
a
n

g
i
r
o

i
t
i

d
e
r
c

d
e
r
i

a
p

a
t
o
T

In millions of RR

Credit card loans

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

In millions of RR

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 pur-
chased

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)

Changes to ECL measure-
ment model assumptions
and estimates

Movements other than
transfers and new origi-
nated or purchased loans

Total movements with
impact on credit loss
allowance charge for
the year

Movements without
impact on credit loss
allowance charge for
the year:

Unwinding of discount
(for Stage 3)

Write-offs

Sales

Modification of original
cash flows without
derecognition

4,998

100,712

(1,018)

4,039

3,021

(7,276)

7,276

(1,562)

(1,577)

5,673

2,534

(4,319)

(1,950)

6,269

(285)

(4)

(226)

940

(936)

(4)

(338)

180

(158)

464

101,176

(1,688)

(1,408)

(800)

(3,896)

(36,703)

(2,765)

(309)

(39,749)

455

949

4,869

6,273

53,354

1,625

5,956

492

61,427

628

(3,149)

(604)

(82)

628

(3,149)

(660)

(82)

628

(3,149)

(660)

(82)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

/
d
e
s
a
h
c
r
u
P

d
e
t
a
n

g
i
r
o

i
t
i

d
e
r
c

d
e
r
i

a
p

a
t
o
T

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 pur-
chased

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)

Changes to ECL measure-
ment model assumptions
and estimates

Movements other than
transfers and new origi-
nated or purchased loans

Total movements with
impact on credit loss
allowance charge for
the year

Movements without
impact on credit loss
allowance charge for
the year:

Unwinding of discount
(for Stage 3)

Write-offs

Sales

Modification of original
cash flows without
derecognition

2,532

40,074

(686)

3,078

2,392

(5,116)

5,116

(1,393)

(1,809)

5,911

2,709

(4,273)

(2,353)

6,626

(258)

(2)

(200)

982

(979)

(3)

701

126

291

1,118

259

40,333

548

(978)

(876)

(1,306)

(27,406)

(2,051)

(297)

(465)

(30,219)

1,762

159

5,324

7,245

4,261

(267)

6,326

(206)

10,114

519

(2,363)

(397)

(1,978)

519

(2,363)

(426)

519

(2,363)

(426)

(1,978)

At 31 December 2020

4,120

2,041

4,894

11,055

56,186

4,767

6,748

430

68,131

At 31 December 2021

4,575

2,990

6,556

14,121

109,540

6,392

9,441

922

126,295

F-37

F-38

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

a
t
o
T

In millions of RR

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

46,878

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)

Changes to ECL measure-
ment model assumptions and
estimates

Movements other than transfers
and new originated or pur-
chased loans

Total movements with
impact on credit loss allow-
ance charge for the year

Movements with impact
on credit loss allowance
charge for the year:

Unwinding of discount (for
Stage 3)

Write-offs

Modification of original cash
flows

(90)

1,220

1,130

(4,569)

4,569

(45)

(217)

549

287

(677)

(597)

1,274

(91)

(1)

(78)

1,300

(1,298)

(2)

(98)

130

(736)

(90)

(741)

(12,697)

(1,882)

(320)

(14,899)

282

306

467

1,055

30,235

792

952

31,979

105

(206)

105

(206)

(67)

105

(206)

105

(206)

(67)

At 31 December 2021

538

788

660

1,986

65,478

4,907

1,658

72,043

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

a
t
o
T

In millions of RR

Secured Loans

At 31 December 2019

150

264

496

27,366

2,037

198

29,601

Movements with impact
on credit loss allowance
charge for the year:

New originated or purchased

141

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)

Changes to ECL measure-
ment model assumptions and
estimates

Movements other than transfers
and new originated or pur-
chased loans

Total movements with
impact on credit loss allow-
ance charge for the year

Movements with impact
on credit loss allowance
charge for the year:

Unwinding of discount (for
Stage 3)

Write-offs

Modification of original cash
flows

(40)

954

914

(4,120)

4,120

(15)

(135)

371

221

(524)

(355)

879

(41)

(3)

(41)

516

(509)

(7)

(50)

(563)

(21)

(634)

(9,512)

(1,178)

(119)

(10,809)

106

218

356

680

7,877

2,078

753

10,708

(16)

(107)

(16)

(107)

At 31 December 2020

256

482

361

1,099

35,243

4,115

874

40,232

F-39

F-40

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

/
d
e
s
a
h
c
r
u
P

d
e
t
a
n

g
i
r
o

i
t
i

d
e
r
c

d
e
r
i

a
p

a
t
o
T

In millions of RR

POS loans

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 pur-
chased

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)

Changes to ECL measure-
ment model assumptions
and estimates

Movements other than
transfers and new origi-
nated or purchased loans

Total movements with
impact on credit loss
allowance charge for
the year

Movements without
impact on credit loss
allowance charge for
the year

Unwinding of discount
(for Stage 3)

Write-offs

Sales

Modification of original
cash flows without
derecognition

945

56,356

(137)

922

785

(2,888)

2,888

(174)

(195)

1,175

806

(1,022)

(314)

1,336

(20)

(16)

194

(194)

134

113

56,469

(406)

(439)

(149)

(994)

(26,388)

(1,569)

(116)

(11)

(28,084)

324

310

1,026

1,660

26,252

811

1,220

102

28,385

(522)

(216)

(522)

(216)

(9)

(522)

(277)

(9)

(522)

(277)

(9)

At 31 December 2021

851

537

1,217

2,605

56,530

1,891

1,538

389

60,348

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

/
d
e
s
a
h
c
r
u
P

d
e
t
a
n

g
i
r
o

i
t
i

d
e
r
c

d
e
r
i

a
p

a
t
o
T

In millions of RR

POS loans

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 pur-
chased

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)

Changes to ECL measure-
ment model assumptions
and estimates

Movements other than
transfers and new origi-
nated or purchased loans

Total movements with
impact on credit loss
allowance charge for
the year

Movements without
impact on credit loss
allowance charge for
the year

Unwinding of discount
(for Stage 3)

Write-offs

Sales

Modification of original
cash flows without
derecognition

525

29,695

(83)

642

559

(1,863)

1,863

(119)

(234)

1,023

670

(751)

(354)

1,105

(15)

(12)

206

(206)

226

29,921

(137)

(359)

(209)

(705)

(21,040)

(1,276)

(173)

(137)

(22,626)

229

830

1,096

6,247

932

7,295

(360)

(50)

(178)

(360)

(53)

(360)

(53)

(178)

At 31 December 2020

527

227

857

1,611

30,278

1,080

1,045

287

32,690

F-41

F-42

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

a
t
o
T

In millions of RR

Car Loans

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

59,391

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)

Changes to ECL measure-
ment model assumptions and
estimates

Movements other than transfers
and new originated or pur-
chased loans

Total movements with
impact on credit loss allow-
ance charge for the year

Movements without im-
pact on credit loss allow-
ance charge for the year

Unwinding of discount (for
Stage 3)

Write-offs

Sales

Modification of original cash
flows without derecognition

(385)

1,796

1,411

(3,703)

3,703

(382)

(375)

1,806

1,049

(1,740)

(578)

2,318

(103)

(3)

(87)

622

(617)

(5)

(75)

136

(479)

(187)

(607)

(14,112)

(751)

(196)

(15,059)

1,048

975

1,616

3,639

40,458

1,757

2,117

44,332

105

(354)

(1)

(265)

105

(354)

(1)

105

(354)

(1)

(265)

At 31 December 2021

1,712

1,533

2,097

5,342

71,174

3,769

2,939

77,882

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

a
t
o
T

In millions of RR

Car Loans

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

21,598

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)

Changes to ECL measure-
ment model assumptions and
estimates

Movements other than transfers
and new originated or pur-
chased loans

Total movements with
impact on credit loss allow-
ance charge for the year

Movements without im-
pact on credit loss allow-
ance charge for the year

Unwinding of discount (for
Stage 3)

Write-offs

Modification of original cash
flows

(141)

844

703

(1,926)

1,926

(184)

(232)

770

354

(739)

(352)

1,091

(50)

(40)

308

(307)

(1)

105

150

(302)

(243)

(7,250)

(315)

(20)

(7,585)

296

273

840

1,409

11,991

952

1,070

14,013

(63)

(196)

(63)

(196)

At 31 December 2020

664

558

922

2,144

30,716

2,012

1,263

33,991

F-43

F-44

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

a
t
o
T

In millions of RR

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

4,863

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)

Movements other than transfers
and new originated or pur-
chased loans

Total movements with
impact on credit loss allow-
ance charge for the year

Movements without im-
pact on credit loss allow-
ance charge for the year

Unwinding of discount (for
Stage 3)

Write-offs

(47)

318

271

(765)

765

(28)

(13)

211

170

(215)

(16)

231

(2)

(157)

(421)

(7)

(585)

2,484

(558)

(9)

1,917

(74)

(116)

204

6,369

189

222

6,780

(25)

At 31 December 2021

261

175

338

774

8,809

512

369

9,690

Credit loss allowance

Gross carrying amount

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

s
h
t
n
o
m
-
2
1
(

1
e
g
a
t
S

)
L
C
E

a
t
o
T

L
C
E
e
m

i
t
e
f
i
l
(

)
R
C

I
S
r
o
f

2
e
g
a
t
S

L
C
E
e
m

i
t
e
f
i
l
(

i
t
i

d
e
r
c
r
o
f

3
e
g
a
t
S

)
d
e
r
i

a
p

a
t
o
T

In millions of RR

Loans to IE and SME

At 31 December 2019

113

940

1,013

Movements with impact
on credit loss allowance
charge for the year:

New originated or purchased

676

(143)

314

171

(375)

375

(16)

(13)

(69)

(17)

(157)

(421)

(7)

(585)

2,484

(558)

(9)

1,917

278

281

639

1,500

302

1,889

Transfers:

- to lifetime (from Stage 1
to Stage 2)

- to credit-impaired (from
Stage 1 and Stage 2 to
Stage 3)

Changes to ECL measure-
ment model assumptions and
estimates

Movements other than transfers
and new originated or pur-
chased loans

Total movements with
impact on credit loss allow-
ance charge for the year

Movements without
impact on credit loss
allowance charge for the
year:

Unwinding of discount (for
Stage 3)

Write-offs

At 31 December 2020

335

291

(14)

123

(14)

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

F-45

F-46

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 as-
sumptions 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 De-
cember 2021 and are still subject to enforcement activity is equal to RR 16,519 million (2020: RR 13,966 million) .

Loans and advances to customers at 31 December 2021 are disclosed as follows:

Stage 1
(12-months
ECL)

Stage 2
(lifetime ECL
for SICR)

Stage 3
(lifetime ECL for
credit im-paired)

Purchased/
originated credit
impaired

Total

In millions of RR

Credit card loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

131,944

121,697

16,472

1,570

3,810

6,606

The amount of the ECL for credit related commitments is accounted separately from ECL for credit cards loans and is included in other finan-
cial liabilities in the consolidated statement of financial position .

Gross carrying amount

270,113

11,986

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:

In millions of RR

Total guarantee deposits with payment systems

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

Total number of cards (in units)

31 December
2021

31 December
2020

1,407,747

1,046,228

723,075

631,398

612,737

596,141

442,534

480,082

1,089,388

337,574

6,320,676

538,746

497,940

495,431

479,786

331,606

378,547

870,503

225,417

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 expo-
sure to credit risk on these loans .

Credit loss allowance

Carrying amount

Cash loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

Secured Loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

(15,028)

255,085

74,885

34,094

561

109,540

(4,575)

104,965

53,540

11,355

583

65,478

(538)

64,940

(7,562)

4,424

3,512

1,134

1,746

6,392

(2,990)

3,402

3,685

668

554

4,907

(788)

4,119

8,847

42,549

51,396

(30,397)

20,999

1,167

8,274

9,441

(6,556)

2,885

1,658

(660)

998

399

922

131,944

123,267

20,282

15,453

42,948

333,894

(52,987)

280,907

74,885

37,606

1,695

2,913

9,196

126,295

(14,121)

112,174

53,540

15,040

1,251

554

1,658

72,043

(1,986)

70,057

F-47

F-48

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

In millions of RR

POS loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

Car loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

Loans to IE and SME

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

Stage 1
(12-months
ECL)

Stage 2
(lifetime ECL
for SICR)

Stage 3
(lifetime ECL for
credit im-paired)

Purchased/
originated credit
impaired

Total

44,024

12,223

283

56,530

(851)

55,679

53,275

17,290

609

71,174

(1,712)

69,462

5,997

2,731

8,809

(261)

8,548

1,105

310

476

1,891

(537)

1,354

2,115

703

951

3,769

(1,533)

2,236

265

160

512

(175)

337

1,510

1,538

(1,217)

321

2,939

(2,097)

842

369

(338)

389

44,024

13,328

593

504

1,899

60,348

(2,605)

57,743

53,275

19,405

1,312

951

2,939

77,882

(5,342)

72,540

5,997

2,996

168

160

369

9,690

(774)

8,916

Loans and advances to customers at 31 December 2020 are disclosed as follows:

Stage 1
(12-months
ECL)

Stage 2
(lifetime ECL
for SICR)

Stage 3
(lifetime ECL for
credit im-paired)

Purchased/
originated credit
impaired

Total

In millions of RR

Credit card loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

68,398

131,957

9,719

1,891

3,757

6,110

Gross carrying amount

210,074

11,758

Credit loss allowance

Carrying amount

(16,441)

193,633

Cash loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

Secured Loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

33,877

22,053

256

56,186

(4,120)

52,066

21,201

13,937

105

35,243

(256)

34,987

(7,560)

4,198

3,189

546

1,032

4,767

(2,041)

2,726

3,307

442

366

4,115

(482)

3,633

9,326

36,247

45,573

(30,241)

15,332

989

5,759

6,748

(4,894)

1,854

874

(361)

513

181

430

68,398

133,848

13,476

15,436

36,428

267,586

(54,242)

213,344

33,877

25,242

802

2,021

6,189

68,131

(11,055)

57,076

21,201

17,244

547

366

874

40,232

(1,099)

39,133

F-49

F-50

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

Stage 1
(12-months
ECL)

Stage 2
(lifetime ECL
for SICR)

Stage 3
(lifetime ECL for
credit im-paired)

Purchased/
originated credit
impaired

Total

In millions of RR

POS loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

25,159

4,998

121

793

121

166

Gross carrying amount

30,278

1,080

Credit loss allowance

Carrying amount

Car loans

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

Loans to IE and SME

- Excellent

- Good

- Monitor

- Sub-standard

- NPL

Gross carrying amount

Credit loss allowance

Carrying amount

(527)

29,751

21,444

9,136

136

30,716

(664)

30,052

1,673

760

2,440

(335)

2,105

(227)

853

1,427

263

322

2,012

(558)

1,454

295

323

(291)

1,017

1,045

(857)

188

1,263

(922)

341

136

(123)

287

25,159

5,791

242

194

1,304

32,690

(1,611)

31,079

21,444

10,563

399

322

1,263

33,991

(2,144)

31,847

1,673

1,055

136

2,899

(749)

2,150

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:

In millions of RR

Secured loans

Car loans

Total

Loans collateralised by:
- residential real estate
- cars
Total collateralised gross carrying amount (rep-
resenting exposure to credit risk for each class of
loans at AC)

61,428
9,344

70,772

-
54,523

54,523

61,428
63,867

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
Total collateralised gross carrying amount (rep-
resenting exposure to credit risk for each class of
loans at AC)

37,896
2,101

39,997

-
26,515

26,515

37,896
28,616

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 determin-
ing 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 enhance-
ments 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 .

In millions of RR

Credit impaired assets:
Secured loans
Car loans

Over-collateralised assets

Under-collateralised assets

Gross carrying
amount of the
assets

Value
of collateral

Gross carrying
amount of the
assets

Value
of collateral

1,625
843

4,381
1,355

33
2,096

11
929

The effect of collateral on credit impaired assets at 31 December 2020 is as follows .

In millions of RR

Credit impaired assets:
Secured loans
Car loans

Over-collateralised assets

Under-collateralised assets

Gross carrying
amount of the
assets

Value
of collateral

Gross carrying
amount of the
assets

Value
of collateral

855
200

2,136
296

19
1,063

10
715

F-51

F-52

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

8 Loans and Advances to Customers (Continued)

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 con-
centration 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 fa-
vour 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:

In millions of RR
- Excellent
- Good
Total guarantee deposits with payment systems

31 December
2021
13,772
1,399
15,171

31 December
2020
14,803
672
15,475

The carrying amount of guarantee deposits with payment systems at 31 December 2021 and 2020 also represents the Group's maximum ex-
posure 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 concen-
tration analysis are disclosed in Note 30 .

10 Brokerage Receivables and Brokerage Payables

In millions of RR
Amounts receivable from brokers and clearing organizations
Total brokerage receivables
Amounts payable to brokers and clearing organizations
Total brokerage payables

31 December
2021
49,138
49,138
9,634
9,634

31 December
2020
24,064
24,064
9,206
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 cus-
tomers 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 pro-
vide 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 .

11 Tangible Fixed Assets, Intangible Assets and Right-of-use Assets

Tangible fixed assets

Intangible assets

In millions of RR

Land

Build-
ing

Equip-
ment

Lease-
hold
improve-

ments Vehicles

Total
tangible
fixed
assets

Capital
ised

Acquired

Total intangi-
ble assets

Cost
31 December 2019

Additions
Disposals

396

4,219

6,070

1,620

12,393

1,944

7,173

31 December 2020
Additions

396
-

4,219
-

-
-

2,168
(164)

8,074
5,783

Disposals
31 December 2021

-
396

-
4,219

(38)
13,819

2
(231)

1,391
187

(399)
1,179

-
-

2,170
(395)

88
1

(28)
61

14,168
5,971

(465)
19,674

1,854
-

3,798
4,311

-
8,109

1,815
(73)

8,915
7,391

(116)
16,190

9,117

3,669
(73)

12,713
11,702

(116)
24,299

Depreciation and
amortisation
31 December 2019

Charge for the year
(Note 25)
Disposals

31 December 2020
Charge for the year
(Note 25)
Disposals

31 December 2021
Net book value

(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

(176)

(3,912)

(694)

(45)

(4,827)

(1,200)

(4,431)

(42)
-

(2,083)
23

(47)
218

(8)
28

(2,180)
269

(1,699)
-

(1,902)
2

(1,961)
12

(5,631)

(3,601)
2

(218)

(5,972)

(523)

(25)

(6,738)

(2,899)

(6,331)

(9,230)

31 December 2020
31 December 2021

396 4,043
4,001
396

4,162
7,847

697
656

43
36

9,341
12,936

2,598
5,210

4,484
9,859

7,082
15,069

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 .

F-53

F-54

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

11 Tangible Fixed Assets, Intangible Assets and Right-of-use Assets
(Continued)

The right of use assets by class of underlying items is analysed as follows:

In millions of RR

Carrying amount at 31 December 2019

Additions

Depreciation charge (Note 25)

Carrying amount at 31 December 2020

Additions

Depreciation charge (Note 25)

Carrying amount at 31 December 2021

Office premises

1,608

234

(702)

1,140

497

(609)

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

In millions of RR

Other Financial Assets

Settlement of operations with plastic cards

Insurance's financial assets

Other

Total Other Financial Assets

Other Non-Financial Assets

Prepaid expenses

Insurance's non-financial assets

Other

Total Other Non-Financial Assets

31 December
2021

31 December
2020

42,995

965

9,009

52,969

5,996

817

2,082

8,895

23,882

542

6,646

31,070

1,478

509

1,399

3,386

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:

In millions of RR

- Excellent

- Good

Total other financial assets

31 December
2021

31 December
2020

29,850

23,119

52,969

19,683

11,387

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

In millions of RR

Correspondent accounts and overnight placements of other banks

Sale and repurchase agreements with other banks

Total due to banks

31 December 2021

31 December 2020

5,829

5,484

11,313

4,795

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 .

14 Customer Accounts

In millions of RR

Individuals
- Current/demand accounts
- Brokerage accounts
- Term deposits

IE and SME
- Current/demand accounts
- Term deposits

Other legal entities
- Current/demand accounts
- Term deposits

Total customer accounts

31 December
2021

31 December
2020

2021
544,561
110,277
146,548

140,287
3,403

647
-

945,723

31 December 2020
323,145
73,970
135,995

89,199
2,213

2,267
48

626,837

Refer to Note 37 for the disclosure of the fair value of customer accounts . Interest rate, maturity and geographical risk concentration analy-
sis of customer accounts amounts is disclosed in Note 30 . Information on related party balances is disclosed in Note 39 .

F-55

F-56

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

15 Debt Securities in Issue

In millions of RR

Date of maturity

31 December
2021

31 December
2020

RR denominated bonds issued in September 2019

12 September 2029

RR denominated bonds issued in April 2019

RR denominated bonds issued in April 2017

21 March 2029

22 April 2022

Structured debt notes issued in December 2020

5 December 2023

Structured debt notes issued in October 2020

5 October 2023

Structured debt notes issued in December 2020

1 December 2023

RR denominated bonds issued in June 2016

24 June 2021

10,176

10,105

1,113

122

10,166

10,134

2,492

119

836

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 .

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 repre-
sented 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

In millions of RR

Perpetual subordinated loan notes issued in September 2021

Perpetual subordinated loan notes issued in June 2017

Total subordinated debt

31 December
2021

31 December
2020

41,504

18,153

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 .

18 Insurance Provisions

In millions of RR

Insurance Provisions

Provision for unearned premiums

Loss provisions

Total Insurance Provisions

31 December
2021

31 December
2020

7,281

3,084

10,365

3,907

2,160

6,067

F-57

F-58

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

18 Insurance Provisions (Continued)

19 Other Financial and Non-financial Liabilities

Movements in provision for unearned premiums for the year ended 31 December 2021 and 2020 are as follows:

2021

2020

Gross provi-
sion

Reinsurer’s
share of pro-
vision

Provision net
of reinsur-
ance

Gross provi-
sion

Reinsurer’s
share of pro-
vision

Provision net
of reinsur-
ance

3,907

3,374

7,281

(11)

3,896

3,374

3,938

(31)

7,270

3,907

(11)

3,927

(31)

3,896

In millions of RR

Provision for unearned pre-
miums as at 1 January

Change in provision, gross

Provision for unearned pre-
miums as at 31 December

Movements in loss provisions for the year ended 31 December 2021 and 31 December 2020 are as follows:

In millions of RR

Note OCP and IBNR

Loss provisions as at 31 December 2019

Losses incurred in the current reporting period

Changes in OCP, IBNR and claims handling provi-
sions related to prior periods

Insurance claims paid

Claims handling expenses accrued

Claims handling expenses paid

Unexpired risk provision reversal

Loss provisions as at 31 December 2020

Losses incurred in the current reporting period

Changes in OCP, IBNR and claims handling provi-
sions related to prior periods

Insurance claims paid

Claims handling expenses accrued

Claims handling expenses paid

1,930

3,456

(119)

(3,500)

1,767

4,475

(190)

(3,594)

Loss provisions as at 31 December 2021

2,458

URP

197

(197)

Provision for claims
handling expenses

Total loss
provisions

215

147

528

(497)

393

(47)

728

(448)

626

2,342

3,456

(3,500)

528

(497)

(197)

2,160

4,475

(237)

(3,594)

728

(448)

3,084

In millions of RR

Other financial liabilities

Settlement of operations with plastic cards

Trade payables

Credit related commitments (Note 32)

Loyalty programs

Other

Total other financial liabilities

Other non-financial liabilities

Accrued administrative expenses

Taxes payable other than income tax

Lease liabilities

Other

Total other non-financial liabilities

31 December
2021

31 December
2020

48,879

11,866

3,334

2,802

2,421

69,302

3,573

3,167

1,052

307

8,099

23,079

4,671

3,537

1,479

1,571

34,337

2,171

1,731

1,340

663

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:

In millions of RR

At 31 December 2020

Movements with impact on provi-
sion for credit related commitments
charge for the year:

New originated or purchased

Transfers:

- to lifetime (from Stage 1 to Stage 2)

- to 12-months ECL (from Stage 2 to Stage 1)

Movements other than transfers and new
originated or purchased loans

Total recovery to profit or loss for the
year

At 31 December 2021

Stage 1
(12-months ECL)

Stage 2
(lifetime ECL for SICR)

Gross
committed amount

3,513

3,537

1,331

(96)

(1,442)

(195)

3,318

(5)

(28)

(8)

1,331

(101)

(16)

(1,417)

(203)

3,334

F-59

F-60

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

19 Other Financial and Non-financial Liabilities (Continued)

20 Share Capital, Share Premium and Treasury Shares

Movements in the credit loss allowance for credit related commitments were as follows for the year ended 31 December 2020:

In millions of RR

At 31 December 2019

Movements with impact on provision
for credit related commitments charge
for the year:

New originated or purchased

Transfers:

- to lifetime (from Stage 1 to Stage 2)

- to 12-months ECL (from Stage 2 to Stage 1)

Changes to ECL measurement model assump-
tions and estimates

Movements other than transfers and new origi-
nated or purchased loans

Total charge to profit or loss for the year

At 31 December 2020

Stage 1
(12-months ECL)

Stage 2
(lifetime ECL for SICR)

Gross committed
amount

2,228

2,242

920

(95)

(637)

1,090

1,285

3,513

(15)

(1)

920

(86)

(8)

(638)

1,107

1,295

3,537

TThe main movements in the table presented above are described as follows:

In millions of RR except
for the number of
shares

Number of
authorised
shares

Number of
outstanding
shares

Ordinary
shares

Share pre-
mium

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

At 31 December 2020

210,034,648

199,305,492

230

26,998

(3,238)

23,990

Increase of number of au-
thorised shares

GDRs buy-back

GDRs and shares transferred
under MLTIP

14,184,030

(1,877)

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) .

• 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;

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 .

• 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 com-

mitments 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 .

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 treas-
ury 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 .

F-61

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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

Profit for the year attributable to ordinary shareholders of the Company

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)

Basic earnings per ordinary share (expressed in RR per share)

Diluted earnings per ordinary share (expressed in RR per share)

Information on dividends is disclosed in Note 28 .

Reconciliation of the number of shares used for basic and diluted EPS:

2021

63,471

2020

44,209

197,239

195,962

201,569

321.80

314.88

197,604

225.60

223.73

In thousands

Note

2021

2020

Weighted average number of ordinary shares in issue used for basic
earnings per ordinary share calculation

Number of shares attributable for MLTIP

Number of shares that would have been issued at fair value

Weighted average number of ordinary shares in issue used for diluted
earnings per ordinary share calculation

21 Net Margin

In millions of RR

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

2021

2020

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

197,239

195,962

7,019

(2,689)

7,276

(5,634)

Other similar income

Financial assets at FVTPL

Total interest income

201,569

197,604

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

Other borrowed funds

Euro-Commercial Paper

192

163,812

128,167

16,392

5,217

1,317

2,692

1,879

671

211

9,590

6,499

1,022

1,948

2,027

439

Total interest expense calculated using the effective interest rate method

28,430

21,581

Other similar expense

Lease liabilities

Total interest expense

Expenses on deposit insurance programme

Net margin

28,510

2,744

139

21,720

1,745

132,558

104,702

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

22 Fee and Commission Income and Expense

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

Cash withdrawal fee

Marketing services fee

Replenishment fee

Other fees receivable

2021

2020

25,099

11,369

10,546

7,123

6,717

6,052

5,639

5,157

2,898

1,982

1,155

604

254

1,474

11,049

4,998

7,437

3,944

3,943

3,963

4,657

3,945

1,815

746

394

141

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 entrepre-
neurs 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 receiva-
ble to fee for money transfers . The comparative information was amended accordingly:

In millions of RR

Fee for money transfers

Other fees receivable

In millions of RR

Fee and commission expense

Payment systems

Banking and other fees

Service fees

Costs of MVNO services

Payment channels

As originally presented

Reclassification As reclassified

3,117

1,404

827

(827)

3,944

577

2021

2020

28,028

14,684

3,863

3,437

1,922

1,529

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

Marketing and advertising

Staff costs

Cards issuing expenses

Partnership expenses

Credit bureaux

Telecommunication expenses

Other acquisition

2021

26,286

10,695

2,140

1,818

1,641

478

384

2020

12,091

6,689

1,064

1,145

1,038

284

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) .

24 Insurance Premiums Earned and Claims Incurred

In millions of RR

Insurance premiums earned

Insurance premiums on insurance, co-insurance and reinsurance operations

Change in provision for unearned premiums

Total Insurance premiums earned

Insurance claims incurred

2021

2020

26,437

18,536

(3,374)

23,063

18,567

Insurance claims on insurance, co-insurance and reinsurance operations

(3,594)

(3,500)

Changes in loss provisions

Claims handling expenses

Reinsurers' share

Total Insurance claims incurred

(924)

(448)

182

(497)

(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 med-
ical 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 .

F-65

F-66

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

24 Insurance Premiums Earned and Claims Incurred (Continued)

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 .

25 Administrative and Other Operating Expenses

In millions of RR

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

Collection expenses

Security expenses

Other administrative expenses

Other provisions (recovery)/ charge and impairment (reversal)/ loss

Note

2021

2020

45,304

24,365

3,601

2,319

2,180

1,524

1,126

610

609

471

454

224

1,038

(11)

1,961

1,449

1,617

643

788

454

702

505

303

198

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 state-
ments 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

Statutory social contribution to the non-budget funds

Total

Share-based remuneration

- Management long-term incentive program

- Key employees retention plan

- Warrant compensation

Total

2021

7,505

2020

4,223

5,740

1,092

248

372

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

Subrogation fee

Reimbursement fee

Other

Total other operating income

27 Income Taxes

Income tax expense comprises the following:

In millions of RR

Current tax

Deferred tax

Total income tax expense

2021

318

556

923

2020

250

190

1,005

1,445

2021

11,437

6,233

2020

10,612

1,424

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%) .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

27 Income Taxes (Continued)

A reconciliation between the expected and the actual taxation charge is provided below .

In millions of RR

Profit before tax

Theoretical tax expense at statutory rate of 20% (2020: 20%)

Tax effect of items, which are not deductible or assessable for taxation purposes:

- Non-deductible expenses

- Other expenses including dividend tax

- Unrecognised tax losses

- Non-taxable income

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

2021

81,038

16,208

2020

56,249

11,250

2,481

(11)

(461)

(606)

(3)

418

709

109

(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 .

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:

In millions of RR

Tax effect of deductible and taxable temporary differenc-
es

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

Financial derivatives

Deferred tax assets

31 December 2020

(Charged)/credited to
profit or loss

31 December
2021

3,673

(506)

(186)

(200)

(1,450)

(34)

521

231

(53)

(58)

(991)

947

(3,673)

506

186

200

1,450

(521)

(231)

991

(947)

The deferred tax liabilities effect of the movements in temporary differences for the year ended 31 December 2021 is detailed below:

In millions of RR

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

Financial derivatives

Insurance provisions

Deferred tax liabilities

31 December
2020

(Charged)/
credited to

profit or loss Credited to OCI

31 December
2021

(123)

(45)

(23)

(144)

(333)

(62)

(764)

(153)

(344)

(1,878)

(1,093)

106

206

(73)

(1,183)

(51)

(5,286)

3,759

(185)

(764)

(153)

(389)

1,858

(1,093)

(38)

206

(73)

(1,183)

(49)

(1,860)

The deferred tax assets effect of the movements in temporary differences for the year ended 31 December 2020 is detailed below:

In millions of RR

Tax effect of deductible and taxable temporary
differences

Loans and advances to customers

Tangible fixed assets

Right-of-use assets

Intangible assets

31 December
2019

(Charged)/
credited to

profit or loss Credited to OCI

31 December
2020

3,576

(588)

(322)

(195)

136

(5)

3,673

(506)

(186)

(200)

Revaluation of debt investments at FVOCI

(1,019)

(1,094)

663

(1,450)

Revaluation of debt investments at FVTPL

Accrued expenses and other temporary differences

Lease liabilities

Customer accounts

Debt securities in issue

Financial derivatives

Deferred tax assets

(208)

339

(44)

(62)

1,517

(34)

729

(108)

(9)

(1,031)

(1,233)

663

(34)

521

231

(53)

(58)

(991)

947

F-69

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

27 Income Taxes (Continued)

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)/credit-
ed to profit or loss

31 December 2020

In millions of RR

Tax effect of deductible and taxable temporary differ-
ences

Loans and advances to customers

Tangible fixed assets

Intangible assets

Revaluation of debt investments at FVOCI

Accrued expenses and other temporary differences

Insurance provisions

Deferred tax liabilities

28 Dividends

(61)

(16)

(76)

(10)

(142)

(62)

(23)

(165)

(191)

The movements in dividends during the year ended 31 December 2021 and 2020 are as follows:

In millions of RR

Dividends payable at 1 January

Dividends declared

Dividends paid

Foreign exchange differences and other movements

Dividends payable at 31 December

Dividends per share declared (in USD)

2021

656

3,559

(3,628)

(283)

304

0.24

(123)

(45)

(23)

(144)

(333)

2020

582

11,563

(11,853)

364

656

0.80

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 allocat-
ed 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) .

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 .

In millions of RR

At 31 December 2019

Cash flows from repayments

Cash flows from proceeds

Foreign exchange adjustments

Other non-cash movements

At 31 December 2020

Cash flows from repayments

Cash flows from proceeds

Foreign exchange adjustments

Other non-cash movements

At 31 December 2021

Debt securities in
issue

Perpetual subor-
dinated debts

Lease liabilities

26,078

(2,894)

331

459

(64)

23,910

(2,247)

18,487

(1,937)

710

3,609

(114)

20,755

(7,745)

45,362

999

286

21,680

59,657

1,694

(758)

404

1,340

(820)

532

1,052

Total

46,259

(5,589)

1,041

4,068

226

46,005

(10,812)

45,362

999

835

82,389

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 end-
ed 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 allocat-
ed 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 .

F-71

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 manage-
ment 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 expo-
sure 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, there-
fore 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 cli-
ents, 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 finan-
cial 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) .

• 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;

• 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:

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;

• Credit for individual entrepreneurs secured by real estate: loan volumes up to RR 15 million and loan term 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;

• 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 appli-

cant 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;

• 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:

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;

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 bor-

c)
rower 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 col-
lection 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:

• 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 regis-
tration 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 .

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 .

F-73

F-74

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

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:

loans remain unpaid after all collection procedures were performed (no payment during last 4-6 months);

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 .

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 instru-
ments 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):

Master scale credit risk grade

Corresponding ratings of external international rating agency (Fitch)

Excellent

Good

Monitor

Sub-standard

Doubtful

Default

AAA, AA+ to AA-, A+ to A-

BBB+ to BBB-, BB+

BB to B+

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

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

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 .

The rating models are regularly reviewed by the Credit Risk Department, backtested on actual default data and updated if necessary . De-
spite 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 proba-
bility-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 possi-
ble 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-look-
ing 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 .

Excellent

Good

Monitor

Sub-standard

NPL

1-30 days overdue for all types of loans or without first due date for credit card loans

31-90 days overdue or restructured loans 0-90 days overdue

The default definition stated above should be applied to all types of financial assets of the Group .

all other non-overdue loans

Default and credit-impaired assets – assets for which a default event has occurred .

90+ days overdue

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 .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

Significant increase in credit risk (SICR) - the SICR assessment is performed on an individual basis for all financial assets by monitor-
ing the triggers stated below . The criteria used to identify SICR are monitored and reviewed periodically for appropriateness by the Group’s
Risk Management Department .

The Group considers a financial instrument to have experienced a SICR when one or more of the following quantitative, qualitative or back-
stop 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

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 .

• threshold defined on an individual basis using existing scoring models: increase of the 12-month PD compared to 12-month PD esti-

mated 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 .

where:

– probability of default in moment

(can’t be higher than 100%);

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 cumu-
lative 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 homogene-
ous 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 homo-
geneous segments based on borrower-specific information, such as delinquency, the historical data on losses and other .

– exposure at default in moment

;

– loss given default in moment

;

– number of months in the loan’s lifetime;

– effective interest rate;

– 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 behav-
ioural characteristics and adjusted for forward-looking information when appropriate . Based on borrower-specific PDs the exposures

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

•

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 .

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 cal-
culated 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) in-
terest 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 .

The table below summarizes the Group’s exposure to foreign currency exchange rate risk at the end of the year:

At 31 December 2021

At 31 December 2020

Non-de-
rivative
monetary
financial
assets

Non-de-
rivative
monetary
financial
liabilities Derivatives

Net posi-
tion

Non-de-
rivative
monetary
financial
assets

Non-de-
rivative
monetary
financial
liabilities

Deriva-
tives

Net posi-
tion

1,002,784

(835,131)

(23,351)

144,302

674,171

(545,395)

(24,276)

104,500

206,008

(228,623)

29,227

55,093

(53,866)

2,368

4,077

(2,360)

(4,219)

(3)

6,612

1,224

(142)

116,693

(140,851)

29,207

35,019

(31,909)

1,405

1,942

(1,414)

(2,455)

(5)

5,049

3,105

(9)

(513)

1,270,330

(1,124,199)

5,873

152,004

829,230

(722,024)

4,926

112,132

In millions
of RR

USD

Euro

GBP

Others

Total

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:

In millions of RR

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%)

At 31 December 2021

At 31 December 2020

Impact on profit
for the year

Impact on total
equity

Impact on profit
for the year

Impact on total
equity

1,322

(1,322)

245

(245)

(2)

1,322

(1,322)

245

(245)

(2)

794

(794)

488

(488)

(1)

794

(794)

488

(488)

(1)

The exposure was calculated only for monetary balances denominated in currencies other than the functional currency of the respective
entity of the Group .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

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) .

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
less than
1 month

From 1 to
6 months

From 6 to
12 months

From 1 to
3 years

More than 3
years

Total

In millions of RR

31 December 2021

Total financial assets

504,182

215,387

128,403

245,696

182,625

1,276,293

Total financial liabilities

(610,067)

(238,762)

(119,402)

(102,641)

(53,417)

(1,124,289)

Net interest sensitivity gap
at 31 December 2021

31 December 2020

(105,885)

(23,375)

9,001

143,055

129,208

152,004

Total financial assets

249,316

149,031

77,988

138,248

219,682

834,265

Total financial liabilities

(379,481)

(165,961)

(75,564)

(90,975)

(10,152)

(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 accord-
ance 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:

In % p.a.

Assets

At 31 December 2021

At 31 December 2020

USD

EURO

GPB Other

USD

EURO

GPB

Other

Cash and cash equivalents

Loans and advances to customers

Due from banks

Investments in securities

Repurchase receivables

0 .0

28 .9

0 .0

6 .9

5 .9

0 .0

2 .3

0 .0

1 .7

1 .3

0 .0

Brokerage receivables

15 .2

15 .0

15 .2

Liabilities

Due to banks

Customer accounts

Other borrowed funds

Debt securities in issue

Brokerage payables

Subordinated debt

4 .8

2 .7

8 .6

4 .9

0 .0

0 .3

15 .2

15 .4

8 .2

0 .1

0 .0

33 .5

3 .2

6 .9

0 .0

2 .6

3 .3

0 .0

1 .7

1 .3

15 .5

15 .4

13 .5

4 .4

3 .3

8 .6

0 .0

0 .5

15 .6

10 .0

0 .1

0 .0

0 .1

0 .0

The sign “-” in the table above means that the Group does not have the respective assets or liabilities in the corresponding currency

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F-82

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

Geographical risk concentrations. The geographical concentration of the Group’s financial assets and liabilities at 31 December
2021 is set out below:

In millions of RR

Financial assets

Russia

OECD

Other
Non-OECD

Cash and cash equivalents

295,864

20,612

Mandatory cash balances with the CBRF

Due from other banks

Loans and advances to customers

Financial derivatives

Investments in securities

Repurchase receivables

Brokerage receivables

8,589

542

602,337

5,963

209,477

5,826

49,138

Guarantee deposits with payment systems

1,399

13,772

3,971

5,834

Other financial assets

Total financial assets

Financial liabilities

Due to banks

Customer accounts

Debt securities in issue

Other borrowed funds

Financial derivatives

Brokerage payables

Subordinated debt

Insurance provisions

Other financial liabilities

52,944

1,232,079

34,384

9,830

11,313

945,723

3,806

9,634

3,084

69,170

Total financial liabilities

1,042,820

Credit related commitments (Note 32)

307,806

21,680

59,657

316,476

8,589

542

606,308

5,963

215,311

5,826

49,138

15,171

52,969

1,276,293

11,313

945,723

21,680

3,806

9,634

59,657

3,084

69,302

81,337

1,124,289

307,806

Listed

Total

Cash and cash equivalents

128,536

7,815

The geographical concentration of the Group’s financial assets and liabilities at 31 December 2020 is set out below:

In millions of RR

Financial assets

Russia

OECD

Other
Non-OECD

Listed

Total

Mandatory cash balances with the CBRF

Due from other banks

Loans and advances to customers

Financial derivatives

Investments in securities

Repurchase receivables

Brokerage receivables

5,379

1,887

374,629

5,035

231,872

24,064

Guarantee deposits with payment systems

672

14,803

1,892

6,582

30,912

803,015

22,618

158

8,632

136,351

5,379

1,887

376,521

5,035

238,454

24,064

15,475

31,070

834,265

4,819

Other financial assets

Total financial assets

Financial liabilities

Due to banks

Customer accounts

Debt securities in issue

Financial derivatives

Brokerage payables

Subordinated debt

Insurance provisions

Other financial liabilities

Total financial liabilities

Credit related commitments (Note )

4,819

626,837

109

9,206

2,160

34,291

677,422

204,868

626,837

23,910

20,755

109

9,206

20,755

2,160

34,337

44,665

722,133

204,868

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 custom-
ers, 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 .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

The maturity analysis of financial liabilities at 31 December 2020 is as follows:

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 issu-
ance 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:

In millions of RR

Liabilities

Due to banks

Customer accounts

Debt securities in issue

Other borrowed funds

Financial derivatives

Brokerage payables

Subordinated debt

Insurance provisions

Other financial liabilities

Lease liabilities

Demand
and less
than
1 month

From 1 to
3 months

From 3 to
6 months

From 6 to
12 months

More than
1 year

Total

5,600

3,993

1,720

11,313

545,363

117,367

100,511

114,368

73,213

950,822

153

9,634

365

350

66,683

292

198

698

724

1,495

940

31,608

34,488

249

334

3,806

6,602

3,806

7,434

9,634

1,075

18,908

39,707

60,753

724

146

587

275

699

3,084

66,683

109

686

307,806

In millions of RR

Liabilities

Due to banks

Customer accounts

Debt securities in issue

Financial derivatives

Brokerage payables

Subordinated debt

Insurance provisions

Other financial liabilities

Lease liabilities

Demand
and less
than
1 month

From 1 to
3 months

From 3 to
6 months

From 6 to
12 months

More than
1 year

335,710

84,412

80,149

80,306

173

9,206

168

345

34,337

316

198

322

207

102

515

251

496

953

166

1,930

501

998

358

330

Total

4,819

629,761

26,179

26,843

9,206

24,110

2,160

34,337

1,348

4,819

49,184

23,245

25,842

22,126

297

686

Credit related commitments (Note 32)

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 . Expo-
sure 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 .

Credit related commitments (Note 32)

307,806

Total potential future payments for
financial obligations

936,069

119,371

104,200

139,405

157,464

1,456,509

F-85

F-86

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 present-
ed in the table below .

Demand
and less
than
1 month

In millions of RR

Assets

From 1 to
3 months

From 3 to
6 months

From 6 to
12 months

From 1 to
5 years

More than
5 years

Total

Cash and cash equivalents

309,364

7,112

4,794

901

673

780

1,441

542

316,476

8,589

542

Mandatory cash balances with
the CBRF

Due from other banks

Loans and advances to cus-
tomers

79,485

95,910

100,446

109,658

190,672

30,137

606,308

Financial derivatives

111

Investments in securities

209,491

Repurchase receivables

Brokerage receivables

5,826

49,138

4,052

1,800

5,963

5,820

215,311

5,826

49,138

Guarantee deposits with pay-
ment systems

1,989

2,400

2,513

2,744

4,771

754

15,171

Other financial assets

51,883

965

52,969

Total financial assets

712,081

106,376

103,663

117,271

200,191

36,711

1,276,293

Liabilities

Due to banks

5,600

3,993

1,720

Customer accounts

527,741

99,159

74,102

85,933

158,788

11,313

945,723

Debt securities in issue

Other borrowed funds

Financial derivatives

Brokerage payables

Subordinated debt

Insurance provisions

9,634

350

Other financial liabilities

66,683

872

1,113

873

7,263

11,559

21,680

1,046

19,798

37,767

724

825

724

787

587

698

699

309

3,806

9,634

59,657

3,084

69,302

Total financial liabilities

610,067

102,626

77,772

111,882

206,577

15,365

1,124,289

Net liquidity gap at
31 December 2021

Cumulative liquidity gap at
31 December 2021

102,014

3,750

25,891

5,389

(6,386)

21,346

152,004

102,014

105,764

131,655

137,044

130,658

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 .

The expected maturity analysis of financial instruments at carrying amounts as monitored by management at 31 December 2020 is present-
ed in the table below .

Demand
and less
than
1 month

From
1 to 3
months

From
3 to 6
months

From
6 to 12
months

In millions of RR

Assets

Cash and cash equivalents

136,351

Mandatory cash balances with the
CBRF

Due from other banks

2,756

546

454

531

From
1 to 5
years

1,092

1,887

More than
5 years

Total

136,351

5,379

1,887

Loans and advances to customers

52,623

67,843

69,011

72,407

98,002

16,635

376,521

Financial derivatives

Investments in securities

Repurchase receivables

Brokerage receivables

Guarantee deposits with payment
systems

Other financial assets

238,454

24,064

2,163

30,820

4,953

5,035

238,454

24,064

2,788

2,836

2,976

4,028

173

684

15,475

31,070

Total financial assets

487,342

71,221

72,322

75,926

110,135

17,319

834,265

Liabilities

Due to banks

4,819

Customer accounts

321,104

63,601

52,958

61,899

127,275

4,819

626,837

Debt securities in issue

Financial derivatives

Brokerage payables

Subordinated debt

Insurance provisions

Other financial liabilities

9,206

345

34,337

870

944

981

11,281

9,834

23,910

481

207

481

953

961

358

18,832

297

109

9,206

20,755

2,160

34,337

Total financial liabilities

365,068

65,159

55,336

64,199

162,537

9,834

722,133

Net liquidity gap at
31 December 2020

Cumulative liquidity gap at
31 December 2020

122,274

6,062

16,986

11,727

(52,402)

7,485

112,132

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 mis-
matching 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 .

F-87

F-88

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

30 Financial and Insurance Risk Management (Continued)

Effect of changes in the key assumptions as at 31 December 2021:

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 insur-
ance event and the uncertainty of the amount and time of occurrence of the loss associated with it .

In millions of RR except for the
number of claims

The average cost of insurance claims

The average number of claims

Effect on
insurance
obligations
other than life
insurance

Change
in assump-
tions

Effect on the reinsur-
ers' share in insurance
obligations other than
life insurance

Effect on
profit be-
fore tax

Effect on
equity

– 10%

+ 10%

– 10%

+ 10%

(256)

256

(256)

256

(1)

255

(255)

255

(255)

204

(204)

204

(204)

The insurance risk management process covers all stages, from the stage of development of insurance rates to the settlement of losses .

Effect of changes in the key assumptions as at 31 December 2020:

In millions of RR except for the
number of claims

Change in
assumptions

The average cost of insurance claims

The average number of claims

– 10%

+ 10%

– 10%

+ 10%

Effect on
insurance
obligations
other than life
insurance

(180)

180

(180)

180

Effect on the reinsur-
ers' share in insurance
obligations other than
life insurance

Effect on
profit be-
fore tax

Effect on
equity

(1)

179

(179)

179

(179)

143

(143)

143

(143)

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 depart-
ment 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 geo-
graphical features of the regions of the Russian Federation .

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 .

F-89

F-90

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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%) .

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:

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

Common Equity Tier 1 (CET1)

Additional Tier 1

Tier 1 capital

Total capital

Risk weighted assets (RWA)

Credit risk

Operational risk

Market risk

Total risk weighted assets (RWA)

Common equity Tier 1 capital adequacy ratio (CET1 /Total RWA), %

31 December 2021

31 December 2020

230

26,998

(2,567)

4,745

159,491

(13,131)

(15,069)

325

161,022

59,657

220,679

794,241

261,813

32,484

1,088,538

14.79%

230

26,998

(3,238)

1,548

99,540

1,849

(7,082)

119,934

20,755

140,689

562,918

199,184

24,707

786,809

15.24%

In millions of RR

31 December 2021

31 December 2020

Tier 1 capital adequacy ratio (Tier 1 capital /Total RWA), %

Total capital adequacy ratio (Total capital /Total RWA), %

20.27%

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 .

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 manage-
ment 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 incom-
pliant 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 chal-
lenged 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 con-
trolled 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 interpreta-
tions 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 .

F-91

F-92

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

32 Contingencies and Commitments (Continued)

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-com-
pliance 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 .

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 com-
mitments 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:

In millions of RR

Unused limits on credit card loans

Unused limits on SME loans

Credit loss allowance

Total credit related commitments, net
of сredit loss allowance

Performance guarantees issued

Provisions

Total performance guarantees issued,
net of provisions

31 December 2021

31 December 2020

295,233

15,907

(3,334)

307,806

137

(1)

136

208,405

7,291

(3,537)

212,159

498

(4)

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 .

F-93

The following table contains an analysis of credit related commitments by credit quality at 31 December 2021 based on credit risk grades .

In millions of RR

Credit related commitments

- Excellent

- Good

- Monitor

Unrecognised gross amount

Credit loss allowance

Unrecognised net amount

Stage 1
(12-months
ECL)

Stage 2
(lifetime ECL
for SICR)

Stage 3
(lifetime ECL for
credit impaired)

270,344

13,179

27,242

310,765

(3,318)

307,447

284

375

(16)

359

Total

270,344

13,270

27,526

311,140

(3,334)

307,806

The following table contains an analysis of credit related commitments by credit quality at 31 December 2020 based on credit risk grades .

In millions of RR

Credit related commitments

- Excellent

- Good

- Monitor

Unrecognised gross amount

Credit loss allowance

Unrecognised net amount

Stage 1
(12-months
ECL)

Stage 2
(lifetime ECL
for SICR)

Stage 3
(lifetime ECL for
credit impaired)

180,619

14,905

12,546

208,070

(3,513)

204,557

251

335

(24)

311

Total

180,619

14,989

12,797

208,405

(3,537)

204,868

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 .

F-94

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

32 Contingencies and Commitments (Continued)

The following table contains an analysis of performance guarantees issued by credit quality based on credit risk grades .

In millions of RR

Performance guarantees issued

- Excellent

- Good

Unrecognised gross amount

Provisions

Unrecognised net amount

31 December 2021

31 December 2020

Stage 1
(12-months ECL)

137

(1)

136

310

188

498

(4)

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:

Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at 31 December 2020:

Gross
amounts set
off in the
consolidated
statement
of financial
position

Net amount
after offset-
ting in the
consolidated
statement
of financial
position

Gross
amounts
before
offsetting

Amounts subject to master
netting and similar arrange-
ments not set off in the
consolidated statement of
financial position

Net
amount
of expo-
sure

Financial
instruments

Cash collat-
eral

In millions of RR

ASSETS

Reverse repurchase agreements

Brokerage receivables

Financial derivatives

Total assets subject to offset-
ting, master netting and similar
arrangement

LIABILITIES

Due to banks

Brokerage payables

Total liabilities subject to offset-
ting, master netting and similar
arrangement

33,210

24,064

4,920

62,194

4,819

9,206

14,025

33,210

24,064

4,920

34,527

24,113

4,795

125

62,194

58,640

4,795

125

4,819

9,206

4,949

9,696

14,025

14,645

Gross
amounts
set off in the
consolidated
statement
of financial
position

Net amount
after offset-
ting in the
consolidated
statement
of financial
position

Gross
amounts
before
offsetting

Amounts subject to master
netting and similar arrange-
ments not set off in the
consolidated statement of
financial position

Net
amount
of expo-
sure

Financial
instruments

Cash collat-
eral

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 advanc-
es 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 .

2,417

The table below shows the amount of operations under sale and repurchase agreements which the Group enters into in the normal course of
business:

In millions of RR

ASSETS

Reverse repurchase agreements

Brokerage receivables

Total assets subject to offset-
ting, master netting and similar
arrangement

LIABILITIES

Correspondent accounts and overnight
placements of other banks

Sale and repurchase agreements with
other banks

Brokerage payables

Other borrowed funds

Total liabilities subject to offset-
ting, master netting and similar
arrangement

152,331

49,138

5,820

207,289

5,829

5,484

9,634

3,806

14,025

F-95

152,331

154,255

46,721

49,138

5,820

5,829

207,289

200,976

5,829

2,417

5,829

5,820

5,484

9,634

3,806

5,826

11,123

4,446

14,025

14,645

(620)

In millions of RR

Debt securities at FVOCI pledged under repurchase
agreements

Notes

Total

31 December 2021

31 December 2020

Carrying
amount of
the assets

Carrying
amount of
the associat-
ed liabilities

Carrying
amount of
the assets

Carrying
amount of
the associat-
ed liabilities

5,826

5,484

F-96

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

34 Transfers of Financial Assets (Continued)

36 Financial Derivatives

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:

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 pay-
ments) and covers the contracts with settlement dates after the end of the respective reporting period .

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 (-)

- EUR receivable on settlement (+)

- EUR payable on settlement (-)

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

29,288

(23,341)

(42)

(31)

(10)

(7)

29,311

(24,351)

(104)

(5)

Fair value of foreign exchange forwards
and swaps

5,963

(90)

5,035

(109)

In millions of RR

Cash and cash equivalents

Brokerage receivables

Total

31 December 2021

31 December 2020

Amounts
granted
under
repo agree-
ments

Fair value of
securities
received as
collateral

Amounts
granted
under
repo agree-
ments

Fair value of
securities
received as
collateral

152,331

154,255

49,138

46,721

33,210

24,064

34,527

24,113

201,469

200,976

57,274

58,640

Notes

35 Non-Controlling Interest

The following table provides information about each subsidiary that has non-controlling interest:

Place of
business
(and coun-
try of incor-
po-ration if
different)

Propor-
tion of
non-con-
trolling
interest

Proportion
of non-con-
trolling inter-
est’s voting
rights held

Profit or loss
attribu-table
to non-con-
trolling
interest

Accumu-lat-
ed non-con-
trolling in-
terest in the
subsidiary

Dividends
paid to
non-con-
trolling in-
terest during
the year

In millions of RR

Year ended 31 December 2021

LLC “Cloudpayments”

LLC “Beskontakt”

Russia

5 .00%

Russia

14 .60%

5 .00%

14 .60%

(144)

130

202

Year ended 31 December 2020

LLC “Cloudpayments”

Russia

5 .00%

The summarised financial information of these subsidiaries was as follows:

Current
assets

Non-cur-
rent
assets

Current
liabilities

Non-cur-
rent
liabilities

Revenue

Profit

Total com-
pre-hensive
income

Cash
flows

1,182

284

337

238

258

1,952

1,895

389

898

(734)

898

119

(734)

In millions of RR

Year ended 31 Decem-
ber 2021

LLC “Cloudpayments”

LLC “Beskontakt”

Year ended 31 Decem-
ber 2020

LLC “Cloudpayments”

389

277

105

1,226

606

(13)

F-97

F-98

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 measure-
ments 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:

In millions of RR

ASSETS AT FAIR VALUE

31 December 2021

31 December 2010

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Investments in securities

211,375

3,936

215,311

232,198

6,256

Repurchase receivables

5,826

Loans and advances to customers

Financial derivatives

5,826

3,971

238,454

1,892

5,963

5,035

Total assets recurring fair value
measurements

LIABILITIES AT FAIR VALUE

Financial derivatives

Total liabilities recurring fair
value measurements

217,201

9,899

3,971

231,071

232,227

11,291

1,892

245,410

109

Investments in securities categorised in level 2 are represented by liquid debt securities classified in “Good” credit risk grade .

The description of valuation techniques and the description of the inputs used in the fair value measurement for level 2 and level 3 measure-
ments at 31 December 2021 are as follows:

In millions of RR

Fair value Valuation technique

Inputs used

Assets AT FAIR VALUE

Investments in securities

3,936

Observable quotes for comparable securities
adjusted by multiplicator depending on the
degree of the market activity

Quotes from the automated fair value
system for financial instruments of NSD
Price Center*

Foreign exchange swaps and
forwards

5,963

Discounted cash flows adjusted for counter-
party credit risk

Russian rouble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
CDS quotes assessment of counterparty
credit risk or reference entities .

Total recurring fair value
measurements at level 2

9,899

Loans and advances to
customers

Total recurring fair value
measurements at level 3

Liabilities AT FAIR VALUE

3,971

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 Limited
(Note 39)

Share price as per the most recent sale
purchase transaction

Foreign exchange swaps and
forwards

Total recurring fair value
measurements at level 2

Discounted cash flows adjusted for counter-
party credit risk

Russian rouble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
CDS quotes assessment of counterparty
credit risk or reference entities .

F-99

F-100

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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

Investments in securities

6,256

Observable quotes for comparable securities
adjusted by multiplicator depending on the
degree of the market activity

Quotes from the automated fair value
system for financial instruments of NSD
Price Center*

Foreign exchange swaps and
forwards

5,035

Discounted cash flows adjusted for counter-
party credit risk

Total recurring fair value
measurements at level 2

11,291

Russian rouble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
CDS quotes assessment of counterparty
credit risk or reference entities .

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 Limited
(Note 38)

Share price as per the most recent sale
purchase transaction

Loans and advances to
customers

Total recurring fair value
measurements at level 3

Liabilities AT FAIR VALUE

1,892

Foreign exchange swaps and
forwards

Total recurring fair value
measurements at level 2

109

Discounted cash flows adjusted for counter-
party credit risk

Russian rouble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
CDS quotes assessment of counterparty
credit risk or reference entities .

* 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 insignifi-
cant for level 2 derivatives .

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

Other interest income

Net gains from foreign exchange translation

Net gains from revaluation of convertible loan

Fair value as at 31 December 2021 - Level 3

Loans and advances to customers

(317)

2,373

3,971

Changes of the fair value measurements at Level 3 for the year ended 31 December 2021 and 2020 are as follows (Continued):

In millions of RR

Other interest income

Net gains from foreign exchange translation

Net gains from revaluation of convertible loan

Fair value as at 31 December 2021 - Level 3

Loans and advances to customers

(317)

2,373

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) .

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

In millions of RR

Level 1

Level 2

Level 3

FINANCIAL ASSETS CARRIED AT AMORTISED COST

Carrying
value

Level 1

Level 2

Level 3

Carrying
value

Cash and cash equivalents

- Cash on hand

36,955

21,069

- Cash balances with the CBRF
(other than mandatory reserve
deposits)

- Placements with other banks
and non-bank credit organiza-
tions with original maturities of
less than three months

Mandatory cash balances
with the CBRF

Due from other banks

Loans and advances to
customers

Guarantee deposits with
payment systems

Brokerage receivables

Other financial assets

Settlement of operations with
plastic cards receivable

Insurance's financial assets

Other receivables

Total financial assets car-
ried at amortised cost

51,008

228,513

8,589

542

602,864

602,337

15,171

49,138

42,995

965

9,009

51,008

228,513

8,589

542

49,138

42,995

965

9,009

21,069

38,646

76,636

5,379

1,887

374,996

374,629

15,475

24,064

23,882

542

6,646

38,646

76,636

5,379

1,887

24,064

23,882

542

6,646

36,955

390,759

618,035 1,045,222

21,069

177,682

390,471

588,855

F-101

F-102

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 1

Level 2

Level 3

In millions of RR

Level 1

Level 2

Level 3

FINANCIAL LIABILITIES CARRIED AT AMORTISED COST

Due to banks

Brokerage payables

Customer accounts

Individuals

-Current/demand accounts

- Brokerage accounts

-Term deposits

SME

-Current/demand accounts

-Term deposits

Other legal entities

-Current/demand accounts

-Term deposits

Debt securities in issue

RR Bonds issued on domestic
market

21,794

Other borrowed funds

Borrowings through securitisa-
tion transaction

3,723

Subordinated debt

Perpetual subordinated debts

59,365

11,313

9,634

544,561

110,277

149,813

140,287

3,434

647

Other financial liabilities

Settlement of operations with
plastic cards

Trade payables

Credit related commitments

Loyalty programs

Other financial liabilities

Total financial liabilities
carried at amortised cost

48,879

11,866

2,802

2,421

84,882 1,035,934

Carrying
value

11,313

9,634

544,561

110,277

146,548

140,287

3,403

647

4,819

9,206

323,145

73,970

138,971

89,199

1,915

2,267

21,680

24,824

3,806

59,657

22,174

48,879

11,866

3,334

2,802

2,421

23,079

4,671

1,479

1,571

1,121,115

46,998

674,340

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 ex-
pected 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 .

Weighted average discount rates used in determining fair value as of 31 December 2021 and 2020 are disclosed below:

In % p.a.

Assets

Cash and cash equivalents

Due from other banks

Investments in securities

Repurchase receivables

Loans and advances to customers

Brokerage receivables

Liabilities

Due to banks

Customer accounts

Debt securities in issue

Other borrowed funds

Brokerage payables

Subordinated debt

31 December
2021

31 December
2020

0 .0

2 .4

5 .6

4 .3

28 .9

15 .1

4 .8

2 .7

9 .1

8 .6

15 .4

5 .9

0 .0

3 .2

5 .4

5 .1

33 .5

15 .4

4 .4

2 .2

6 .1

15 .6

5 .3

Carrying
value

4,819

9,206

323,145

73,970

135,995

89,199

2,213

2,267

23,910

20,755

23,079

4,671

3,537

1,479

1,571

719,864

F-103

F-104

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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

Cash and cash equivalents

- Cash on hand

- Cash balances with the CBRF (other than mandatory reserve depos-
its)

- 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

Loans and advances to customers

Financial derivatives

Guarantee deposits with payment systems

Investments in securities

Repurchase receivables

Brokerage receivables

Other financial assets

- Settlement of operations with plastic cards receivable

- Insurance's financial assets

- Other receivables

TOTAL FINANCIAL ASSETS

FVTPL

FVOCI

Total

36,955

51,008

228,513

8,589

542

602,337

15,171

49,138

42,995

965

9,009

3,971

5,963

36,955

51,008

228,513

8,589

542

606,308

5,963

15,171

5,826

49,138

42,995

965

9,009

1,045,222

18,070

213,001

1,276,293

The following table provides a reconciliation of classes of financial assets with these measurement categories as of 31 December 2020:

In millions of RR

Cash and cash equivalents

- Cash on hand

- Cash balances with the CBRF (other than mandatory reserve depos-
its)

- 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

Loans and advances to customers

Financial derivatives

Guarantee deposits with payment systems

Investments in securities

Repurchase receivables

Brokerage receivables

Other financial assets

- Insurance's financial assets

- Other receivables

TOTAL FINANCIAL ASSETS

FVTPL

FVOCI

Total

21,069

38,646

76,636

5,379

1,887

374,629

15,475

24,064

23,882

542

6,646

1,892

5,035

21,069

38,646

76,636

5,379

1,887

376,521

5,035

15,475

4,265

234,189

238,454

24,064

23,882

542

6,646

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 .

8,136

207,175

215,311

- Settlement of operations with plastic cards receivable

F-105

F-106

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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:

The income and expense items with related parties were as follows:

31 December 2021

31 December 2020

In millions of RR

2021

2020

Associ-
ates, joint
ventures and
other related
parties

Key manage-
ment
personnel

Associ-
ates, joint
ventures and
other related
parties

Key manage-
ment
personnel

In millions of RR

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

Other financial assets

TOTAL ASSETS

LIABILITIES

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

TOTAL LIABILITIES

EQUITY

Share-based payment reserve

- Management long-term incentive program

TOTAL EQUITY

Key
management
personnel

Associates, joint
ventures and
other related
parties

Key
management
personnel

Associates, joint
ventures and
other related
parties

380

413

(33)

380

7,716

1,741

9,457

4,225

3,971

166

570

607

(37)

570

6,246

584

6,830

1,378

1,855

1,892

(37)

158

2,013

2,086

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 .

Interest income calculated using the effective interest rate method

Other similar income

Interest expense calculated using effective interest rate method

(103)

Net gains/(losses) from foreign exchange translation

Net gains from financial assets at FVTPL

Administrative and other operating expenses

Other operating income

(7,337)

186

229

2,373

(158)

(42)

(2,895)

(33)

(40)

494

(248)

447

Key management compensation is presented below:

In millions of RR

Short-term benefits:

- Salaries

- Short-term bonuses

Long-term benefits:

- Management long-term incentive programme

- Key employees retention plan

- Warrant compensation

Total

2021

2020

1,356

1,408

4,520

1,086

921

862

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 Jan-
uary 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 re-
quired 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 sen-
ior 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 con-
version the program has been combined with Management long-term incentive program (MLTIP) due to application of similar approach to
the grants . 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 .

F-107

F-108

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS

31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

39 Related Party Transactions (Continued)

40 Events after the End of the Reporting Period

Management long-term incentive program. On 31 March 2016 the Group introduced a MLTIP as both a long-term incentive and a re-
tention 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 . Weight-
ed-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 partic-
ipants 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 .

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 ex-
panded 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 .

The following table discloses the changes in the numbers of GDRs attributable to the MLTIP:

Because of the increased volatility in the financial sector, the CBR introduced a number of support measures, being:

In thousands

At 31 December 2019

Granted

Vested

Forfeited

At 31 December 2020

Granted

Vested

Forfeited

At 31 December 2021

Number of GDRs attributable
to the MLTIP

3,782

5,350

(1,810)

(46)

7,276

1,950

(2,201)

(6)

7,019

• 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 . Effec-

tive 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 provi-

sioning 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 unse-
cured 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 .

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 .

F-109

F-110

TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

40 Events after the End of the Reporting Period (Continued)

The Group has formed in advance a liquidity reserve, including cash in rubles and foreign currency, to provide stability to the customer ser-
vice 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 consequenc-
es 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 meas-
ures 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 (“FVT-
PL”) 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 be-
cause 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 .

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 propor-
tionate 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 ac-
companying 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 com-
prehensive 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 .

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 previous-
ly 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 partici-
pants 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

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Notes to the Consolidated
Financial Statements (Continued)

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 finan-
cial data of the investees, are used to measure fair value of certain financial instruments for which external market pricing information is not
available .

Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (un-
adjusted) 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 meas-
urements 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 meas-
ured 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 (“regu-
lar way” purchases and sales) are recorded at trade date, which is the date on which the Group commits to deliver a financial asset .

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 transac-
tion 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 de-
termining 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 compensat-
ed .

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, man-
datory 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 con-
tractual 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 .

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Notes to the Consolidated
Financial Statements (Continued)

41 Significant Accounting Policies (Continued)

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 – modifi-
cation” .

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) the time value of money; and

3) 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 recogni-
tion:

1) 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”) .

2) 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 .

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 writ-
ten-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 as-
sets . 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 exten-
sion 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 origi-
nal 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 sub-
stantially 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 allow-
ance . 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) .

3) 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 .

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) .

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 compo-
nent, 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 .

An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial mod-
ifications 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% differ-
ent from the discounted present value of the remaining cash flows of the original financial liability .

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31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

41 Significant Accounting Policies (Continued)

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 meth-
od, 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 place-
ments 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 desig-
nated 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 repur-
chase 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 paya-
bles 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 . 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 rec-
ognised 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 cal-
culated 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 des-
ignate 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 follow-
ing measurement categories:

1) 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;

2) 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 informa-
tion 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 recog-
nised 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 . 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 com-
pensation 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 receiv-
ables . 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 consol-
idated 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 .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

41 Significant Accounting Policies (Continued)

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) .

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:

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 recog-
nised 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 commence-

ment 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 .

The lease term includes any non-cancellable and optional extension periods which have been assessed as reasonably certain to be exer-
cised . The lease payments are discounted using the interest rate implicit in the lease . If that rate cannot be determined, the lessee’s incre-
mental 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 .

Useful lives in years

Right-of-use assets are measured at cost comprising the following:

Building

Equipment

Vehicles

3 to 10

5 to 7

Leasehold improvements

Shorter of their useful economic life and the term of the underlying lease

Others (safes, fireproof cabinets)

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 insur-
ance 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 .

• 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 .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

41 Significant Accounting Policies (Continued)

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 cur-
rent 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 .

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 transac-
tion 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 pe-
riod 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 subsidi-
aries, 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 . Lia-
bilities 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 external costs, 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 con-
sideration 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 report-
ing 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 distribu-
tion .

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:

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 .

* NSD Valuation Center is a fair value measurement service for bonds and other financial instruments, accredited by the CBRF .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

41 Significant Accounting Policies (Continued)

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 .

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 execu-
tion 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 as-
sessed 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 reim-
bursement 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 consist-

ently 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 . Reinsur-
ance 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 .

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 individ-
uals 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 recog-
nised 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 up-
dated . 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 histor-
ical 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 .

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TCS GROUP HOLDING PLCANNUAL REPORT 2021STRATEGIC REVIEWFINANCIALS
31 DECEMBER 2021

Notes to the Consolidated
Financial Statements (Continued)

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 real-
ise 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 dilut-
ed 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 .

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 “Busi-
ness 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:

In millions of RR

Fee and commission expense

Administrative and other operating expenses

As originally pre-
sented

(21,599)

(35,621)

Reclassification

As reclassified

(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 determin-
ing 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 .

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 .

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Notes to the Consolidated
Financial Statements (Continued)

43 Significant Accounting Pronouncements (Continued)

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 Ac-
counting 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 Ac-
counting 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 effec-

tive 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) .

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