TABLE OF CONTENTS
STRATEGIC REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FINANCIAL REPORT
MANAGEMENT REPORT
Address from the Chairman of the Board of Directors . . . . . . . . . 4
Address from the CEO/Chairman of the Management Board . . . . 4
Key Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Performance Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Consolidated Financial Statements in Accordance
with the International Financial Reporting Standards
and Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
1
TINKOFF —
A PIONEERING FINANCIAL
ECOSYSTEM
TINKOFF GROUP STANDS OUT AS AN INNOVATIVE PROVIDER
OF DIGITAL FINANCIAL AND LIFESTYLE SERVICES. ESTABLISHED
IN 2006, THE GROUP HAS DEVELOPED A COMPREHENSIVE ARRAY
OF TECHNOLOGICAL SOLUTIONS ENCOMPASSING INTERNET
BANKING, BROKERAGE SERVICES, TRADE ACQUIRING, AND OTHER
MERCHANT SERVICES, INSURANCE, SME BANKING AND OTHERS.
On 14 March 2024, the Group unveiled its 2023 IFRS Consolidated Financial Statements . The Management Board of the Group believes that
the information contained in the 2023 Financial Statements furnishes a relevant and holistic depiction of the Group's operations, business
structure and efficacy, critical risks, HR management approach, and describes the corporate governance specifics, and the responsibilities
of the Board of Directors and its committees .
All financial data presented in this report is derived from the Consolidated Financial Statements of TCS Group Holding PLC and adheres
to the International Financial Reporting Standards endorsed by the European Union, as well as the stipulations of the Cyprus Companies
Law, Chapter 113. The information relates to the year ending 31 December 2023 and is included in this report. For a detailed description
of the financial and ancillary data, please refer to page F-1 of this report.
2nd
Largest Bank in Russia
by Number of Active
Retail Customers
33,5%
Return
on Equity
(ROE)
Total customers
40M
32% YoY
Revenue (RUB bn)
Assets (RUB tn)
488
33% YoY
2,3
42% YoY
Active
customers
28M
30% YoY
Active SME
customers
0,7M
27% YoY
Net profit
(RUB bn)
80,9
4x YoY
Active products
per customer
1,8
20% YoY
Customer funds
(RUB tn)
1,7
44% YoY
Net loan portfolio
(RUB tn)
1,0
60% YoY
2
3
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Management
Report
Address from the Chairman of the Board of Directors
Dear Esteemed Shareholders,
We would like to emphasise the priorities of 2023 that will remain relevant in the years ahead .
This is my first time addressing you in my capacity as the Chairman of the Board of Directors, which saw significant transformations
in 2023 . Allow me to extend profound appreciation on behalf of the Board of Directors to all members of the Board whose dedication has
served as the cornerstone of our Group's achievements throughout the years .
The first and foremost is the relocation of the headquarters to the Russian jurisdiction . All preparatory measures were completed throughout
2023, and in early 2024, a new chapter began in Tinkoff's history as a public company . This decision will help strengthen corporate govern-
ance, expand opportunities for inorganic growth and distribution of profits among shareholders .
In 2023, our Board of Directors and management meticulously scrutinised the developmental trajectories of our Group . This thorough
assessment encompassed our past accomplishments and a contemplation of future avenues, taking into account the economic and ge-
opolitical landscapes . In early 2024, in alignment with your esteemed selves, we collectively decided to relocate the headquarters from
the Republic of Cyprus to the Russian Federation . The successful redomiciliation of our Group and the establishment of a full-fledged
corporate governance framework have empowered us to launch strategic initiatives aimed at outperforming business
expansion, including inorganic growth .
Despite the uncertainties of the external environment, 2023 proved the soundness of the strategic path charted in 2021 . Our unwavering
commitment to customer-centricity, technological innovation, and financial resilience continues to serve as the bedrock of our endeav-
ors . The Tinkoff Group has laid a sturdy groundwork for further solidification of its foothold in the Russian financial landscape and aims
to further increase its market share and return on equity .
Alexey Malinovskiy,
Chairman of the Board, TCS GROUP HOLDING PLC
Address from the CEO/Chairman of the Management Board
Dear Esteemed Shareholders, Partners, Customers, and Colleagues,
In April 2021, we laid out Tinkoff's strategic vision to 2023, with a commitment to doubling the size of the business . It is with great pride that
we report the accomplishment of this objective, surpassing even our most ambitious projections .
The Tinkoff customer base has now exceeded 40 million individuals, with 28 million active customers . This broad clientele has enabled us
to efficiently expand the cross-selling of products within our ecosystem . The average number of products per customer has risen from
1 .5 in 2022 to 1 .8 in 2023, including profitable loan products .
The Group's net profit nearly quadrupled YoY compared to 2022 and soared to nearly 81 billion rubles, marking a historic high for Tinkoff .
Despite challenging macroeconomic conditions and increased funding expenses, we delivered growth in return on equity and earned
a 33 .5% ROE, once again accentuating the resilience of our business model .
The loan portfolio surged by more than 1 .5 times YoY compared to 2022, surpassing the 1 trillion ruble milestone . By the end of 2023, we
ranked 4th in the country in terms of retail loan portfolio size . Tinkoff’s non-interest income exceeded 50% in 2023, underscoring our suc-
cessful revenue diversification efforts .
In 2023, capitalising on higher interest rates, we intensified our focus on deepening out penetration into our customers' “savings wallets” .
Tinkoff managed to increase the total customers’ funds in the bank to 1 .7 trillion rubles, and with the funds invested by customers in our
brokerage business, it reached 2 .5 trillion rubles .
Tinkoff also continued to expand its range of financial services for entrepreneurs, leading to a rise in Tinkoff Business's active base to 700
thousand customers . By the end of the year, the small and medium enterprise segment had brought together more than 1 .2 million clients
with a total cash balance of 268 billion rubles in their accounts . In late 2023, Tinkoff launched a merchant lending service on all major mar-
ketplaces, and the loan portfolio grew fourfold compared to 2022 .
The second priority is the implementation of machine learning and robotisation to enhance the customer experience and operational effi-
ciency of business . In 2023, we continued our work on specialised Large Language Models to widely integrate artificial intelligence into our
ecosystem products . Our aim is to develop specialised technologies to compete where it is truly necessary .
We take pride in leading in fraud protection technologies and enhancing the reliability of our ecosystem for customers . We launched
the market's first service to protect against phone scammers with refunds — "Protect or Refund ." The bank's and Tinkoff Mobile operator's
protective technologies allow us to detect fraud during phone conversations with over 99% probability . We are so confident in our product's
quality that we guarantee compensation for losses in the event that customers still become prey to fraudulent activities .
The third priority is the importance of talents, recruiting, and retaining the best specialists . In 2023, Tinkoff became a partner of the Central
University — the first private university in Russia based on the STEM (Science, Technology, Engineering, Mathematics) model . This com-
bines science, technology, engineering, and mathematics to create a holistic approach to education . The university will help train human
resources for the Russian IT sector, including Tinkoff .
We also continue to actively collaborate with leading universities, IT summer schools, and math competitions to attract highly qualified pro-
fessionals . To support our employees' growth, we offer extensive training and wellbeing support programmes, a flexible working environ-
ment, and cultivate a strong corporate culture at Tinkoff .
Once again, the achievements of 2023 were made possible by the teams that made the impact of sanctions imperceptible to customers and
developed innovative solutions for the market .
As a responsible corporate citizen, we strive to support vulnerable and socially disadvantaged segments of the population . In 2023, through
joint initiatives with charitable and educational organisations, the Group and its customers invested 3 .1 billion rubles in Russian non-profit
organisations . Our genuine interest in addressing current social issues combined with cutting-edge technologies enables us to fulfil our
mission and have a positive impact on society .
Given our exceptional performance in 2023, we expect to maintain our outperforming business growth rates, high return on equity and
maximise Tinkoff's shareholder value .
Stanislav Blizniuk,
CEO/Chairman of the Management Board, Tinkoff Bank JSC
4
5
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Key
Events
Innovative Products and Services
• The Tinkoff Pay service, which was launched back in 2021, became available for all Android-based smartphones in 2023 and emerged
as a reliable alternative to Google Pay, which ceased operations in Russia .
•
•
In order to broaden the range of payment options for customers, Tinkoff introduced transfers in Indian rupees, Thai baht, and Brazilian
reals, with expanded transfer opportunities in the currencies of Azerbaijan, Belarus, Kyrgyzstan, and Tajikistan .
In 2023, the Tinkoff ID secure online authorisation technology was integrated into third-party platforms, including the Avito classified
ads service, the Rustore app store, and the Moscow Exchange’s e-services . Building upon Tinkoff ID, the first unbranded banking
solution for phone number authentication was launched, with such online retailers as Technopark and Brandshop already adopting this
innovative feature .
• Tinkoff introduced the "Business Investments" service for companies to invest surplus funds in stocks and bonds, along with
the "Compass” free geoservice, aiding entrepreneurs in discovering optimal business locations through big data analysis .
Ecosystem Reliability and Security
• Tinkoff launched the industry's pioneering service to safeguard against phone scammers with refund capabilities . This service merges
the bank's security technologies with those of Tinkoff Mobile, identifying fraud during phone conversations with over 99% probability .
Should a customer fall prey to scammers and transfer funds to them, the bank will reimburse any losses incurred .
•
In 2023, the Humanoid Robot Factory was launched began operations, deploying a range of robot characters resembling real human
beings to engage scammers, prolonging interactions to avert potential fraud . Within only three months of its inception, these robots de-
tained almost 87,000 phone scammers, engaging in approximately 575,000 minutes of interaction . The average conversation duration
increased by 1 .5 times, nearly reaching 4 minutes .
• Tinkoff deployed special mobile teams comprising Tinkoff Security staff to dissuade victims from transferring money to scammers .
With the help of technology and staff, Tinkoff Security prevented the theft of over 21 billion rubles from customers who were targeted
by scammers .
• Tinkoff became the first bank to launch a public bug bounty program . Throughout 2023, the bank expanded the number of public plat-
forms for white hat hackers that feature the Tinkoff bug bounty program .
Artificial Intelligence
In 2023, scientists from the Tinkoff Research's Artificial Intelligence Research Lab made a series of scientific discoveries related to Reinforce-
ment Learning and recommender systems . The discoveries were recognised by the global scientific community and accepted to the world's
most prestigious AI conferences (NeurIPS, ICML, ACM RecSys) . These discoveries include:
•
the most efficient AI training and adapting algorithms compared to global analogues, and
• an algorithm for more accurate prediction of online consumer purchases considering the timing and periodicity of purchases .
• Tinkoff's Artificial Intelligence Technology Centre also announced the development of proprietary specialised Large Language Models
(LLMs) for widespread AI integration into ecosystem products, and throughout the year, helped launch numerous products based on other
AI technologies .
Attracting and retaining IT talents
•
In 2023, Tinkoff became a partner of the Central University — the first private university in Russia based on the STEM (Science, Technol-
ogy, Engineering, Mathematics) model . This combines science, technology, engineering, and mathematics to create a holistic approach
to education . The university will help train human resources for the Russian IT sector, including Tinkoff .
• Throughout the year, IT’s Tinkoff Solution Cup extensive competitions for experienced IT developers and analyst and IT’s Tinkoff Cap-
ture the Flag sports hacking competitions were held in Russia and Belarus .
•
In 2023, more than 13,000 students participated in the annual scholarship programme for talented students, with 200 winners
from 29 Russian universities receiving financial support from Tinkoff . This assistance enabled them to concentrate on their studies and
achieve exceptional academic results .
• The newly opened Tinkoff Space headquarters in 2023, located in the heart of Moscow, represents a new benchmark for integrating
work and daily life . Designed as "a city within a city," this space features cafes, restaurants, a medical clinic, fitness amenities, house-
hold services, and a panoramic terrace for work and relaxation .
Social Initiatives
•
In 2023, the Tinkoff ecosystem allowed charitable, educational and other non-profit organisations in Russia to receive RUB 3 .1 billion .
The number of customers actively involved in the Group's projects surpassed 3 million .
• Tinkoff continues to prioritise social investments directed at improving the quality of education and creating opportunities for talented
individuals in Russia . Participation in the establishment of the Central University and Tinkoff Education’s federal projects has benefitted
over 15,000 individuals nationwide .
• Under the Group's sponsorship, a comprehensive two-year online course called "Math Solves It" was launched for students in grades 4–6 .
Additionally, a grant competition named "Contribution to the Generation" was held for proficient mathematics and computer science teach-
ers, offering grants of up to 150,000 rubles .
Public Recognition
• Tinkoff was acknowledged as the most user-friendly online bank for daily operations, winning the Frank Debit Cards Award 2023 . It also
received recognition from the expert community for its premium customer services, securing the "High Loyalty of Premium Customers"
award as ranked at Frank Premium Banking 2023 .
• The Tinkoff mobile app was honored with the Best Mobile App Award at the Annual Banki .ru Awards, and the Tinkoff Pay payment sticker
emerged victorious in the "Project of the Year in the Banking Sector" category at the Compare Awards .
• Tinkoff was ranked by ECOVIS and Habr as the top fintech employer of 2023.
•
In the Forbes Employer Ranking, Tinkoff achieved a platinum — top — status, showing an improvement in its performance from the pre-
vious year by securing a platinum award in two of the three categories ("Employees and Society" and "Corporate Governance") at once .
Furthermore, Tinkoff earned a gold award in the "Environment" category .
• Tinkoff was placed in the first — top — group in the RBC Employer Ranking . The results were evaluated based on the following criteria:
"employees and working conditions", "business efficiency and innovative development", "social responsibility", "company's business
reputation", and "employee feedback" .
6
7
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Overview of Financial
and Operating Performance
In 2023, the Group witnessed a 33% YoY growth in total revenue, amounting to 487 .7 billion rubles (compared to 366 .0 billion rubles in 2022) .
The Group continued to diversify its revenue sources . Non-lending activities contributed to 52% of the revenue by the end of 2023 .
The total number of customers in 2023 saw a 32% increase, reaching 40 .4 million (compared to 30 .7 million in 2022) . The number of active
customers increased by 30% to around 28 million individuals .
Total customers (million)
Active customers (million)
DAU (million)
The Super App is the primary driver of user engagement and sales
8
9
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Overview of Financial and Operating
Performance (continued)
The broad customer base allowed us to effectively expand cross-selling of various products within the Tinkoff ecosystem. During the past
year, the Group managed to elevate the average number of products per customer from 1.5 to 1.8, with a strategic emphasis on profitable
loan products .
Revenue
As of the end of 2023, the Group's service coverage included:
• Current accounts of 33 .5 million+ customers with a cumulative balance of 1 .347 trillion rubles in current accounts and deposits;
• 1 .2 million+ customers in the Small and Medium Enterprise (SME) segment holding a total balance of 268 billion rubles in their accounts;
• 3.5 million+ users of Tinkoff Investments services.
The gross interest income surged by 46% YoY, totaling 300 .3 billion rubles, driven by a substantial growth in the customer base . Interest
expenses increased in 2023 by 12% YoY, amounting to 64 .4 billion rubles, due to growth in the customer base and an increase in interest
rates by the end of the year . The net interest income in 2023 experienced a notable upsurge of 60% YoY, reaching 230 .3 billion rubles .
The fee and commission income grew by 9% to 128 .1 billion rubles, driven by expansion of customer base and product portfolio . None-
theless, the net fee and commission income in 2023 witnessed a 5% decline to 73 .1 billion rubles primarily due to a high base in early
2022 .
With the stabilization of the macroeconomic environment, the cost of risk decreased to 6 .2% in 2023 (compared to 9 .9% in 2022) .
The Group's total operating expenses in 2023 escalated by 43% YoY, reaching 193 .3 billion rubles owing to customer base growth and
investments in IT infrastructure and human resources .
The net profit in 2023 increased by 3.9 times YoY to 80.9 billion rubles (compared to 20.8 billion rubles in 2022), marking a historic high
for the Group .
The return on equity in 2023 surged to 33 .5% (compared to 10 .9% in 2022), despite challenging macroeconomic conditions and in-
creased funding expenses .
The Group's total assets expanded by 42% YoY in 2023, reaching 2 .270 trillion rubles (compared to 1 .597 trillion rubles as
of 31 December 2022).
The Group's net loan portfolio, excluding provisions, surged by 60% YoY to 972 billion rubles (compared to 606 trillion rubles as
of 31 December 2022). The Group's gross loan portfolio grew by 53% to 1.121 trillion rubles (compared to 732 billion rubles as
of 31 December 2022).
The proportion of non-performing loans in the Group's loan portfolio stood at 9 .5%, indicating a YoY improvement (compared to 12 .1%
as of 31 December 2022). The loan loss provisions to non-performing loans ratio was 140.2% as of 31 December 2023 (compared
to 141.5% as of 31 December 2022).
The funds in the Group's customer accounts surged by 44%, reaching 1.713 trillion rubles as of 31 December 2023 (compared
to 1.192 trillion rubles as of 31 December 2022). Considering customer funds invested in the brokerage business, the total volume
of customer funds under the Group's management reached 2 .5 trillion rubles .
The Group's equity surged by 38% to 284 billion rubles (compared to 206 billion rubles as of 31 December 2022) due to the capitalisation
of net profit.
10
11
All figures are in RUB billion, unless otherwise stated
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Overview of Financial and Operating
Performance (continued)
Retail Debit cards
Customers (millions)
Volume of purchases
with debit cards (RUB billion)
Credit business
Gross loans
Customer accounts (RUB billion)
Net loans breakdown
Net interest income
Net interest margin
All figures are in RUB billion, unless otherwise stated
All figures are in RUB billion, unless otherwise stated
12
13
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Overview of Financial and Operating
Performance (continued)
SME Services
Customers (thousands)
Loan portfolio (RUB billion)
InvestTech
Customers (millions)
Assets under custody
All figures are in RUB billion, unless otherwise stated
All figures are in RUB billion, unless otherwise stated
14
15
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT Performance
Overview (continued)
Net profit
Net profit
Return on assets
Return on equity
All figures are in RUB billion, unless otherwise stated
16
17
TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT 31 DECEMBER 2023
TCS Group Holding PLC
International Financial Reporting Standards Consolidated Financial
Statements and Independent Auditor’s Report
Board of directors
and other officers
Board of directors
CONTENTS
21 Customer Acquisition Expense . . . . . . . . . . . . . . . . . . . . . . . F-92
22 Insurance Revenue and Insurance Service Expense . . . . . F-93
Except where stated otherwise, all directors served throughout 2023 and through to the date of these consolidated financial statements.
23 Administrative and Other Operating Expenses . . . . . . . . . F-94
Director
Role
Retirement/
Resignation
Appointment
Board of directors and other officers . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Management Report . . . . . . . . . . . . . . . . . . . . . . . F-3
Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . F-12
CONSOLIDATED FINANCIAL STATEMENTS
24 Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-95
25 Reconciliation of Liabilities Arising from Financing
Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-99
26 Financial and Insurance Risk Management . . . . . . . . . . . . . F-99
27 Management of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-116
Consolidated Statement of Financial Position . . . . . . . . . . . . . F-19
28 Contingencies and Commitments . . . . . . . . . . . . . . . . . . . F-118
29 Offsetting Financial Assets and Financial Liabilities . . . . F-121
30 Transfers of Financial Assets . . . . . . . . . . . . . . . . . . . . . . . F-123
31 Financial Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-124
32 Fair Value of Financial Instruments . . . . . . . . . . . . . . . . . . F-125
33 Presentation of Financial Instruments by Measurement
Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-134
34 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . F-136
35 Material Accounting Policy Information . . . . . . . . . . . . . . .F-138
36 Adoption of New or Revised Standards
and Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-157
37 New Accounting Pronouncements . . . . . . . . . . . . . . . . . . . F-163
38 Events after the End of the Reporting Period . . . . . . . . . . F-163
Consolidated Statement of Profit or Loss and Other
Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21
Consolidated Statement of Changes in Equity . . . . . . . . . . . . . F-23
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . F-23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27
2 Operating Environment of the Group . . . . . . . . . . . . . . . . . . F-28
3
Critical Accounting Estimates and Judgements in Applying
Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
4 Segment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-33
5 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . F-37
6 Due from Other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-38
7
Investments in Securities and Repurchase Receivables . . F-39
8
Loans and Advances to Customers . . . . . . . . . . . . . . . . . . . F-49
9
Brokerage Receivables and Brokerage Payables . . . . . . . F-76
10 Tangible Fixed Assets, Intangible Assets and Right-of-use
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-77
11 Other Financial and Non-financial Assets . . . . . . . . . . . . . . F-78
12 Due to Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-79
13 Customer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-80
14 Other Borrowed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-80
15 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-81
16 Insurance Contract Assets and Liabilities . . . . . . . . . . . . . . F-82
17 Other Financial and Non-financial Liabilities . . . . . . . . . . . F-86
18 Share Capital, Share Premium and Treasury Shares . . . . . F-88
19 Net Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-89
20 Fee and Commission Income and Expense . . . . . . . . . . . . . F-91
Sergey Arsenyev
Independent Non-Executive Director
19 November 2023
Constantinos Economides
Chairman of the Board, Executive director
3 November 2023
Margarita Hadjitofi
Independent Non-Executive Director
16 February 2023
-
-
-
Alexander Isaev
Independent Non-Executive Director
Tatiana Kuznetsova
Independent Non-Executive Director
Chairman of the Board, Independent
Non-Executive Director
-
-
-
20 December 2023
22 September 2023
21 July 2023
Executive director
16 February 2023
-
Independent Non-Executive Director
29 September 2023
22 September 2023
Alexey Malinovskiy
Maria Pavlou
Vitaly Pyltsov
Dmitry Trembovolsky
Independent Non-Executive Director
19 November 2023
22 September 2023
Mary Trimithiotou
Executive director
13 December 2023
Daniel Wolfe
Independent Non-Executive Director
13 December 2023
-
-
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 2024 on the basis of the composition of the Board at the relevant date .
Registered office
25 Spyrou Araouzou
Berengaria 25, 5th floor,
3036, Limassol, Cyprus
Till 14 December 2023
Company Secretary
Caelion Secretarial Limited
Since 14 December 2023
Company Secretary
Paula Tanasie
25 Spyrou Araouzou
Berengaria 25, 5th floor,
3036, Limassol, Cyprus)
Ellanikou Street,
Myria Court, 102,
3071, Limassol, Cyprus
F-1
F-2
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 31 DECEMBER 2023
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 2023 .
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 financial servic-
es, through its subsidiaries JSC “Tinkoff Bank” (the “Bank”),
LLC Microfinance company "T-Finance", LLC “Phoenix” and
other operations through its subsidiaries, such as insurance
operations through JSC “Tinkoff Insurance” (the “Insurance
Company”) .
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 2023
in accordance with IFRS 10 definition of control the Group has
no ultimate controlling party (refer to Note 3) .
Changes in the Group’s structure
3 . On 15 January 2024, at an Extraordinary General Meeting, the
Company’s shareholders approved the deregistering of the
Company from the Register of the Registrar of Companies in
Cyprus and the registering of the Company as a continuing
company in the Russian Federation (redomiciliation) in the
form of international public joint-stock company without being
dissolved and without being re-incorporated . On the same
date, the shareholders also approved amendments to the Com-
pany’s Articles of Association that allow the parent structure
to continue operating in the jurisdiction other than Cyprus .
For further information about redomiciliation, please refer to
the section below “Any important events for the Group that
occurred after the end of the financial year" in the Consolidated
Management Report .
4 .
In November 2023 the Group established a new company, LLC
“Tinkoff Insurance Future”, which is part of an insurance group
with JSC “Tinkoff Insurance”.
Review of developments, position and
performance of the Group’s business
5 . The Group operates a flexible business model. Its virtual net-
work enables it to quickly and easily increase business or slow
down customer acquisition depending upon the availability of
funding and market conditions . The Bank’s primary customer
acquisition channels are Internet and Mobile, but it also uses
direct sales agents and partnerships (co-brands) to acquire
new customers . These customer acquisition models, com-
bined with the Bank’s virtual network, afford it a geographic
reach across Russia resulting in a highly diversified portfolio.
6 . The Bank is included to the Bank of Russia’s list of systemically
important banking institutions due to the Bank’s growing
presence in the financial market and expanding customer base
of its ecosystem . As a result, the Bank is obliged to comply with
the additional capital adequacy buffers, as well as advanced
risk management requirements . The Bank is operating with
ample liquidity and capital buffers above regulatory minimums
and intends to continue meeting all applicable requirements
comfortably .
7 . 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
22) . The Insurance Company focuses on online sales .
8 . Since February 2022 the economic situation in the Russian
Federation has been and is still affected by the escalated
military and political conflict and the associated international
sanctions against a number of Russian institutions, companies,
banks and individuals . In 2023, the following sanctions were
imposed on the Bank:
• On 25 February 2023, the Bank became subject to an asset
freeze in the EU under the Council Implementing Regulation
(EU) No 2023/429, implementing Council Regulation (EU) No
269/2014 (the "EC Regulation 269") .
• On 19 May 2023, the Bank became subject to an asset
freeze in the UK under the Russia (Sanctions) (EU Exit) Regu-
lations 2019 (S .I . 2019/855) .
• On 20 July 2023, the Bank became subject of the USA and
Canada updated sanctions list .
The Company and its controlled subsidiary undertakings (other
than the Bank and any controlled subsidiary undertakings of the
Bank) are not subject to an asset freeze pursuant to stated above
regulations . Taking into account the consequences of sanctions,
management of the Group continues the transformation of the busi-
ness and operating models to improve the efficiency of processes
and the profitability of products.
9 . As a result of the sanctions, the Bank’s ability to make interest
payments under its Eurobonds issued in 2017 and 2021
through the usual channels was undermined by the assets
freeze restrictions . In this regard, the Bank cancelled interest
payments for the two coupon periods (March and June 2023)
under its Eurobonds to avoid discrimination between bond-
holders and to focus on finding a practical and lawful solution
to remedy this situation by the time of the next scheduled
coupon payment . On 20 September and 20 December 2023 the
Group resumed payment of coupons for the 3rd and 4th quar-
ters in fulfilment of its obligations under a subordinated loan
notes to the holders whose rights are recorded in the Russian
depository infrastructure. The fulfilment of Eurobond coupon
payment obligations to holders whose rights are registered in
foreign depository infrastructure or foreign brokers remains
technically impossible due to imposed sanctions . The Group is
exploring all options available in the current circumstances for
making payments to all categories of investors .
On 27 November 2023 the Group replaced USD 146 .2 million
of Eurobonds issued in 2017 . The replacement share repre-
sents 48 .74% of the original volume with a nominal value of
USD 300 million, with coupon rate of 11 .99% and no stated
maturity .
On 30 November 2023 the Group replaced USD 288 .7 million
of Eurobonds issued in 2021 . The replacement share rep-
resents 48 .11% of the original volume with a nominal value
of USD 600 million, with coupon rate of 6 .0% and no stated
maturity .
Holders of Eurobonds whose rights are recorded in the
Russian depositories may participate in the replacement . The
nominal, coupon rate and maturity of the replacement bonds
remained the same . All coupon payments on replacement
bonds will be made in Russian rubles at the Central Bank
exchange rate on the payment date .
10 . In terms of financial performance the profit of the Group for the
year ended 31 December 2023 was RR 80,932 million (2022:
RR 20,760 million). Such a strong increase in profit by 290%,
on the one side, was driven by the growth of loan portfolio
and expansion of our customer base, on the other side, by the
recovery after a year of adaptation to sanctions and new oper-
ating environment caused by geopolitical tensions and macro-
economic uncertainty in 2022 . Net interest income increased
by 60% to RR 230,323 million (2022: 8 .66% to RR 143,897
million) . The Group’s net loan portfolio increased by 60%
year-on-year to RR 972,412 million (2022: RR 606,455 million),
while the gross loan portfolio grew by 53% to RR 1,121,435
million (2022: RR 732,185 million) . The 90 days plus overdue
loans ratio (“NPL”) decreased to 9 .5% as at 31 December 2023
(2022: 12 .1%) . Cost of risk was 6 .2% as at 31 December 2023,
down from 9 .9% in the end of 2022 .
Total operating expenses increased by 30% in 2023 (2022:
24%), driven by Group’s long-term strategy to expand customer
base and investments in IT platforms and personnel .
Environmental matters
11 . The Group, an online-only financial institution, prioritizes
addressing climate change and integrating sustainability into
our business practices . We also adhere to the precautionary
principle, taking proactive measures to minimize potential en-
vironmental impacts and ensuring responsible decision-mak-
ing in the face of uncertain or emerging risks .
12 . The Group aligns with global standards such as the United
Nations Environment Program Finance Initiative (UNEP FI) .
Our Sustainability Reports are prepared in line with leading
GRI and SASB standards, and we follow the Partnership for
Carbon Accounting Financials (PCAF) and the Task Force on
Climate-related Financial Disclosures (TCFD). We use the GHG
Protocol methodology to analyze emissions .
13 . The Group conducts assessments of both physical and tran-
sitional climate risks . This involves evaluating the likelihood
and impacts of climate-related risks within specific countries
and sectors . Our existing methodology for assessing climate
risks is constantly being revised and enhanced to align with a
more comprehensive understanding of the industry's factors
influencing climate risks and the associated consequences.
14 . As of December 31, 2023, we considered the RCP8 .5 IPCC AR5
scenario as the current and most likely scenario for mid-term
(until 2040) physical climate change .
15 . The Group is committed to environmental conservation and
climate action, actively contributing to sustainable business
practices and a healthier planet .
Human resources
16 . 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 pro-
moted and encouraged and an open leadership style ensures
that information can move freely . The Group applies all types of
forums to promote continual dialogue – such as email, online
chat rooms, flash meetings, as well as formalized meeting
structures. The Group offers clear far-reaching career path
for its employees, a unique work environment and fair and
transparent compensation .
17 . Clear performance evaluation processes and fair compensa-
tion 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 Perfor-
mance Indicators as well as to provide feedback which can be
used for their career development and to determine incentive
compensation .
18 . Prior to its IPO in 2013, the Group set up share-based man-
agement long term incentive plans as retention and motiva-
tional tools for key and senior managers . In March 2016, the
Group announced a consolidated management long-term
incentive and retention plan (MLTIP) . Since then the Group has
announced an expansion of MLTIP each year by adding new
participants to the program . The MLTIP programs are designed
to grow the Group's value by aligning more closely managers’
interests with those of shareholders . The Group believes that
participation in its share capital is an effective motivation
and retention tool . The MLTIP programs embrace a growing
number of managers, for two main reasons: firstly, internal pro-
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FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023
31 DECEMBER 2023
Consolidated
Management Report (Continued)
motions as some employees were promoted to key managerial
positions in line with the growth of the Group; and, secondly,
as part of its expansion and transformation into a financial
marketplace, the Group has hired a significant number of new
managers to develop and manage new business lines and to
strengthen internal controls, including cyber security . The total
size of the unvested pool of the expanded MLTIP programs
was 2 .7% of the Group’s share capital as at 31 December 2023
(2022: 3 .5%) .
These risks as well as other risks and uncertainties which affect
the Group and how these are managed, are presented in Notes
26 and 28 of the consolidated financial statements.
23 . Analysis of impact of the current geopolitical situation in the
region on the Group is disclosed in Note 2 to the consolidated
financial statements.
31 . On 31 January 2024 the Company cancelled the listing of its
41 . There were significant changes in the structure and assign-
GDRs on the Official List of the Financial Conduct Authority of
the United Kingdom and the GDRs’ admission to trading on the
LSE’s Main Market (delisting) .
ment of responsibilities of the Board of directors . The compo-
sition of directors was completely renewed during 2023 . The
new list of the Board of directors is presented above .
32 . On 1 March 2024, the Bank became subject of the Japan’s
updated sanctions list .
Branches
Contingencies
Share capital
Non-Financial Information and Diversity
Statement
24 . The Group’s contingencies are disclosed in Note 28 to the
consolidated financial statements.
19 . The Group’s policies and other information that provide an
understanding of the development, performance, position
and impact of the Group’s activities in the areas of environ-
mental, social and employee matters, respect for human
rights, anti-corruption and bribery matters can be found in the
Group’s most recently published Non-Financial Information
and Diversity Statement (Sustainability Report) . The Group will
publish its Sustainability Report for the year ended 2023, if it
forms part of an integrated annual report on the website (www .
tinkoff-group.com), no later than 30 June 2024.
Principal risks and uncertainties
20 . The Group’s business and financial results are impacted
by uncertainties and volatilities in the Russian economic
environment which can be impacted by global factors and/or
by national factors as disclosed in Note 2 to the consolidated
financial statements.
21 . The Group is subject to a number of principal risks which might
adversely impact its performance . The principal activities of
the Group are banking and insurance operations and so it is
within this area that the principal risks occur . Management
considers that those principal risks are financial risks, oper-
ational risks and legal risks . Financial risk comprises market
risks (including currency risk, interest rate risk and other price
risk), credit risk and liquidity risk .
22 . The Board has put in place arrangements to identify, evaluate
and manage the principal risks and uncertainties faced by the
Group . The Group has an established risk management pro-
gram that focuses on the unpredictability of financial markets
and seeks to minimize potential adverse effects on the Group's
financial performance. This is overseen by a dedicated Risk
Management function, which works with senior management
of the operating companies in Russia as well as the Board of di-
rectors in this area. The primary objectives of the financial risk
management function are to establish acceptable risk limits,
and then ensure that the exposures remain within those limits .
The operational and legal risk management functions are in-
tended to ensure the proper functioning of internal policies and
procedures that minimize operational and legal risks . The risk
management strategy is established so as to identify, assess,
monitor and manage the risks arising from Group's activities .
Future developments
25 . The Group's strategic objective is to grow its customer base
profitably by building the most comprehensive, engaging,
innovative, and sustainable financial and lifestyle ecosystem
in the world .
Results
26 . The Group’s results for the year are set out on page 2 of the
consolidated financial statements.
27 . There were no dividends declared or paid by the Company
during the years ended 31 December 2023 and 2022 .
Any important events for the Group that occurred
after the end of the financial year
28 . On 15 January 2024, at an Extraordinary General Meeting, the
Company’s shareholders approved the deregistering of the
Company from the Register of the Registrar of Companies in
Cyprus and the registering of the Company as a continuing
company in the Russian Federation (redomiciliation) in the
form of international public joint-stock company without being
dissolved and without being re-incorporated . The vast majority
of the Company's assets are located and generate revenue
in Russia . Therefore, the reasons for redomiciling to Russia
include, among other things, maintaining the Company's stra-
tegic focus on the Russian market, preserving the equity value
for all shareholders, and ensuring execution of their rights .
29 . The full name of the Company will be “International Public
Joint-Stock Company TCS Holding” (IPJSC TCS Holding). The
place of residence of the Company shall be changed to: Russ-
kiy Island, Vladivostok Urban Okrug, Primorsky Krai, Russia .
30 . The par value of the Company’s shares in RR shall be equivalent
to the par value of the shares of the Company in U .S . dollar
(USD 0.04) at the official exchange rate set by the Bank of
Russia as of 12 December 2023 (1 USD = 90 .9846 RUB) . The
charter capital of the Company shall consist of 199,305,492
issued ordinary shares, and the amount the charter capital of
the Company shall be equal to RR 725 million .
33 . On 28 April 2022 The New Rigi Trust, a major shareholder of
the Company, disposed of its entire interest in the Company . IC
“Interros Capital”, a leading Russian investment group with a
diverse portfolio of assets including in banking, has acquired
an interest in the Group, and consequently now holds approxi-
mately 35 .08% of the outstanding shares in the Company . The
deal was approved by the Central Bank of the Russian Federa-
tion . As a result of the aforementioned deal Mr Vladimir Potanin,
ultimate beneficiary owner of IC “Interros Capital”, became a
minority shareholder with a total shareholding of 35 .08% .
34 . As at 31 December 2023 and 2022 in accordance with IFRS 10
definition of control the Group has no ultimate controlling party.
Refer to Note 3 for more information .
Treasury shares
35 . At 31 December 2023 the Group held 602,975 (2022:
602,975) of its own GDRs, equivalent to approximately RR
1,885 million (2022: RR 1,885 million) and which represent
0 .3% (2022: 0 .3%) of the issued shares .
36 . Treasury shares are GDRs of TCS Group Holding PLC and in-
clude those that are held by a special purpose trust which has
been specifically created for the long-term incentive program
for the MLTIP (see Note 34 for further information) .
37 . During 2023 no GDRs were repurchased by the Group (2022:
same) .
Research and development activities
38 . During the years ended 31 December 2023 and 2022 the
Group has undertaken research and development activities
related to software development including greater use of bi-
ometrics, voice assistant, social networking, machine learning
and intelligence .
39 . During the year ended 31 December 2023 the Group was
actively developing internal software to replace the providers
that have ceased operations in Russia .
Board of directors
40 . The members of the Board of directors as of 31 December
2023 and at the date of this report are presented above .
42 . The Group did not operate through any branches during the
year (2022: same) .
Independent auditor
43 . The Independent auditor, Kiteserve Limited, has expressed
its willingness to remain in office for the statutory audit of the
Company’s consolidated and separate financial statements for
the year ended 31 December 2023 and to not seek re-appoint-
ment as the Company’s statutory auditor . The shareholders
at the Annual General Meeting (AGM) authorized the Board of
directors to approve the remuneration in accordance with their
terms of engagement .
Going concern
44 . The Directors have access to all information necessary to
exercise their duties . The Directors continue to adopt the
going concern basis in preparing the consolidated financial
statements based on the fact that, after making enquiries and
following a review of the Group’s business plan and budget
for 2024-2025, including cash flows and funding facilities,
the Directors consider that the Group has adequate resourc-
es to continue in operation for the foreseeable future . This
assessment was made based on the information available to
the Group as at the date of approving the consolidated financial
statements . The Directors also considered the decision of the
Company’s shareholders on 15 January 2024, to deregister the
Company from the Register of the Registrar of Companies in
Cyprus and they ascertained that the Company is going to be
registered as a continuing company in the Russian Federation
(redomiciliation) in the form of international public joint-stock
company without being dissolved and without being re-incor-
porated .
Corporate Governance Statement
Global Depository Receipts (GDRs) of TCS Group Holding PLC (a
Cyprus incorporated company), with each GDR issued under a
deposit agreement dated on or about 24th October 2013 with JP-
Morgan Chase Bank N .A . as depositary representing one ordinary
share, during the year ended 31 December 2023 were listed on
London Stock Exchange . The Company’s GDRs are also listed on
the Moscow Exchange. No shares of TCS Group Holding PLC are
listed on any other exchange .
On 31 January 2024 the standard listing of the Group’s GDRs and
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FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 31 DECEMBER 2023
Consolidated
Management Report (Continued)
the admission of the GDRs to trading on the LSE’s main market for
listed securities have been canceled .
The Group has established four Committees of the Board. Specific
responsibilities have been delegated to those committees as
described below .
The Company was required until 31 January 2024 to comply with
the UK corporate governance regime to the extent it applies to
foreign issuers of GDRs listed on the London Stock Exchange . The
Company has not adopted corporate governance measures of the
same standard in all respects as those adopted by UK incorporated
companies or companies with a premium listing on the London
Stock Exchange .
As the shares themselves are not listed on the Cyprus Stock
Exchange, 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 .
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 initiated, in-house, in
relation to 2023, looking at overall performance . All directors were
invited to provide feedback on the Board’s, the committees’ and in-
dividual director’s performance . Analysis of the resultant feedback
will be discussed at a meeting of the Board of directors scheduled
for early 2024 .
The Board has not appointed a senior independent director . As of
the year ended 2023 there were three independent non-executive
directors, of whom at least one must retire each year .
All shares are ordinary shares, each ranking pari passu for all pur-
poses and in all respects with all other existing shares .
Number of directors
The Company’s Home State, for EU regulatory purposes, 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 .tcsgh .com .cy .
Unless and until otherwise determined by the Company in general
meeting, the number of directors shall be no less than two .
The Articles of Association of the Company provide for the retire-
ment by rotation of one-third (or if their number is not a multiple of
three, the number nearest to three but not exceeding one-third) of
directors at each AGM .
Copies of the Articles of Association of the Company adopted on
21 November 2023, 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 .tink-
off-group.com, at the Company’s main website www.tcsgh.com.cy
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 making process, adopted 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
Board of directors is comprised of three independent non-execu-
tive directors . The changes in the composition of the Board during
the year are disclosed above .
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 in 2021 . The
Board reserves the right to amend their terms of reference and
arranges a periodic review of each Committee’s role and activities
and considers the appropriateness of additional committees .
Committees-current composition
The Audit Committee comprises one independent non-executive
director . A chair is appointed on a meeting by meeting basis .
The Remuneration Committee comprises two independent non-ex-
ecutive directors, and is chaired by Mrs Tatiana Kuznetsova .
The Risk and Emerging Risk (Sustainability) Committee comprises
two independent non-executive directors . A chair is appointed on a
meeting by meeting basis .
The Strategy Committee comprises one independent non-executive
director, and is chaired by Mr Alexey Malinovskiy .
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 .
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 .
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 consolidated
financial statements of the Group prepared under International
Financial Reporting Standards (“IFRS”) as adopted by the European
Union (EU) and any formal announcements relating to the Group’s
and the Company’s financial performance, reviewing significant
financial reporting judgments contained in them, oversees the
financial reporting controls and procedures implemented by
the Group and monitors and assesses the effectiveness of the
Company’s internal financial controls, risk management systems,
internal audit function, the independence and qualifications of the
independent auditor and the effectiveness of the external audit
process . The Audit Committee is required to meet at appropriate
times in the reporting and audit cycle but in practice meets more
often as required .
Under its terms of reference, the Audit Committee is required, at
least once each year, to review its own performance, constitution
and terms of reference to ensure it is operating at maximum effec-
tiveness and to recommend any changes it considers necessary
for Board approval . The Audit Committee operates a structured
framework around the extensive work it carries out on specific,
non-financial statements related areas within its terms of reference.
Role of the Remuneration Committee
The Remuneration Committee is responsible for determining and
reviewing among other things the framework of remuneration of the
executive directors, senior management and its overall cost and the
Group’s remuneration policies . The objective is to ensure that the
executive management of the Group are provided with appropriate
incentives to encourage enhanced performance and are in a fair
and responsible manner rewarded for their individual contributions
to the success of the Group . The Remuneration Committee’s terms
of reference include reviewing the design and determining targets
for any performance related pay schemes and reviewing the design
of all share incentive plans for approval by the Board . The 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 2023
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. Under its
reference the Remuneration Committee is required at
terms of
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
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 op-
erating at maximum effectiveness and to recommend any changes
it considers necessary for Board approval .
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 effectiveness
and to recommend any changes it considers necessary for Board
approval .
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Consolidated
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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
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 .
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 re-
tire by rotation at every annual general meeting . Directors holding
an executive office are excluded from retirement by rotation.
Directors may be removed from office by the shareholders at a
general meeting with the sanction of an ordinary resolution, subject
to giving 28 days’ notice to that director in accordance with the
Articles of Association .
The office of director shall be vacated if the director:
• becomes bankrupt or makes any arrangement or composition
with his creditors generally; or
• becomes prohibited from being a director by reason of any
court order made under Section 180 (disqualification from 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.
Changes in the top management team
The were no changes in the top management team in 2023, except
for the changes in the Board of Directors that are presented above .
For the significant direct and indirect shareholdings held in the
share capital of the Company, please refer to Note 1 to 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.
Management is responsible for executing and assessing the effec-
tiveness of these controls .
Financial reporting process
The Board of Directors is responsible for the preparation of the
consolidated financial statements in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union (EU) and the requirements of the Cyprus Companies Law,
Cap .113, and for such internal control as the Board of directors
determines is necessary to enable the preparation of consolidat-
ed financial statements that are free from material misstatement,
whether due to fraud or error. In preparing the consolidated finan-
cial statements, the Board of directors is responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of directors either
intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so .
The Board has delegated to the Audit Committee the responsibility
for reviewing the consolidated financial statements to ensure that
they are in compliance with the applicable framework and legis-
lation 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 manage-
ment 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 Man-
agement Department, the Collections Department and the Internal
Control Service .
In addition the Group has implemented an online analytical
processing management system based on a common SAS data
warehouse that is updated on a daily basis . The set of daily reports
includes but is not limited to sales reports, application processing
reports, reports on the risk characteristics of the card portfolios,
vintage reports, transition matrix (roll rates) reports, reports on the
pre-, early and late collections activities, reports on compliance
with CBR requirements, capital adequacy and liquidity reports,
operational liquidity forecast reports and information on intra-day
cash flows.
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 employ-
ment .
Recruitment, training and promotion are exclusively based on merit .
All the Group employees involved in the recruitment and manage-
ment 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, manage-
ment and supervisory bodies, including the Board of directors of
the Company .
The composition and diversity information of the Board of directors
of the Group as at 31 December 2023 is set out below:
F-9
F-10
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 31 DECEMBER 2023
Consolidated
Management Report (Continued)
Name
Alexander Isaev
Tatiana Kuznetsova
Alexey Malinovskiy
Age
32
55
48
Male/Female
Educational/professional background
Male
Female
Male
Bayes Business School, MS in International Finance and Banking, Ple-
khanov Russian University of Economics, Bachelor in Accounting, Anal-
ysis and Audit, CFA, experienced in M&A and investments management
Moscow State University, Psychologist, experience in HR and organi-
zational development
Moscow Aviation Institute, MS in mathematics, Association of
chartered directors, Certified Independent Director, experienced in
payments and fintech
Further details of the corporate governance regime of the Company can be found on the website:
https://tinkoff-group.com/corporate-governance/.
By Order of the Board
Malinovskiy Alexey
Chairman of the Board
Limassol
13 March 2024
F-11
F-12
Kiteserve Limited, Correspondence Address: 6, Karaiskakis Street, City House, 3rd floor,CY-3032, Limassol, Cyprus
Kiteserve Limited is a private company registered in Cyprus (Reg . No . 435188) . A list of the company's directors including for individuals the present name and surname, as well
as any previous names and for legal entities the corporate name, is kept by the Secretary of the company at its registered office at 31 Gladstonos Street, CY-1095 Nicosia, and
appears on the company's web site .
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 Independent Auditor’s Report
To the Members of TCS Group Holding PLC
Report on the Audit of the Consolidated Financial Statements
Our Opinion
In our opinion, the accompanying consolidated financial statements of TCS Group Holding PLC (the “Company”) and its subsidiaries
(together the “Group”) give a true and fair view of the consolidated financial position of the Group as at 31 December 2023, and of its
consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap . 113 .
What we have audited
We have audited the consolidated financial statements which are presented in pages 1 to 133 and comprise:
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2023;
the consolidated statement of profit or loss and other comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include a summary of material accounting policy information.
The financial reporting framework that has been applied in the preparation of the consolidated financial statements is International
Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap . 113 .
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) . Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report .
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards)
(IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
Our audit approach
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial state-
ments. In particular, we considered where the Board of Directors made subjective judgements; for example, in respect of significant account-
ing estimates that involved making assumptions and considering future events that are inherently uncertain . As in all of our audits, we also
addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence
of bias that represented a risk of material misstatement due to fraud .
Materiality
Audit scope
• Overall group materiality: Russian Rubles (“RR”) 5 680 million, which repre-
sents approximately 2% of net assets .
• We planned and conducted our audit to cover the two largest business com-
ponents of the Group, being Banking and Insurance operations, for which we
performed full scope audits of each of their complete financial information.
• For the other components, we performed substantive audit procedures where
necessary
Key audit matters
We have identified the following key audit matter:
• Credit loss allowance for loans and advances to customers, using the expected
credit loss model in line with the requirements of IFRS 9 “Financial Instruments” .
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the
consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered
material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality
for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually and in aggregate on the consolidated financial statements as a whole.
Overall group materiality
RR 5 680 million
How we determined it
Approximately 2% of net assets .
Rationale for the materiality
benchmark applied
We chose net assets as the benchmark because, in our view, it is the benchmark
against which the net financial position of the Group is most commonly measured by the
users of the consolidated financial statements, and it is a generally accepted bench-
mark in particular during periods of volatility of earnings . We chose 2%, which in our
experience is an acceptable quantitative threshold for this materiality benchmark .
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above RR 284 million as well as
misstatements below that amount that, in our view, warranted reporting for qualitative reasons .
How we tailored our group audit scope
TCS Group Holding PLC is the parent of a group of companies. The financial information of this Group is included in the consolidated finan-
cial statements of TCS Group Holding PLC.
Considering our ultimate responsibility for the opinion on the Group’s consolidated financial statements we are responsible for the direction,
supervision and performance of the group audit . In this context, we tailored the scope of our audit and determined the nature and extent of
the audit procedures for the components of the Group to ensure that we perform sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the significance and/or risk profile of the group
entities or activities, the accounting processes and controls, and the industry in which the Group operates .
The Group has two primary business components, being Banking (which includes retail business for individuals and small and medi-
um-sized entities business) and Insurance operations, both of which operate primarily in the Russian Federation . The Banking business
comprises a number of reporting units being primarily JSC Tinkoff Bank, LLC Microfinance company Т-Finans and LLC Phoenix.
F-13
F-14
TCS GROUP HOLDING PLCANNUAL REPORT 2023 The Insurance business comprises primarily JSC Tinkoff Insurance. Full scope audit procedures were performed in respect of the Banking
and Insurance operations .
Other Group business reporting components are not considered to be primary business components for audit purposes . Where necessary,
additional substantive audit procedures were carried out across these non-primary components at the financial statement item level in
order to achieve the desired level of audit evidence. The consolidated financial statements are a consolidation of all of the above business
reporting components .
We determined the level of involvement we needed to have in the audit work at the business reporting components to be able to conclude
whether sufficient appropriate audit evidence was obtained as a basis for our opinion on the consolidated financial statements as a whole.
We worked with other audit firms in relation to the activities of the Group in the Russian Federation. Overall, we have obtained sufficient and
appropriate audit evidence regarding the consolidated financial information of the Group as a whole to provide a basis for our audit opinion
on the consolidated financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters .
Key Audit Matter
How our audit addressed the Key Audit Matter
Credit loss allowance for loans and advances
to customers, using the expected credit loss
model in line with the requirements
of IFRS 9 “Financial Instruments”.
This is a complex accounting standard for which
models have been developed by the Group as a basis
to calculate expected credit losses (“ECL”) . These
calculations involve the application of significant
management judgement and estimates .
Therefore, we applied focus to the “expected credit
loss” models used by the Management for the purpose
of compliance with IFRS 9 . These models are de-
scribed in more detail in Note 35 “Material Accounting
Policy Information” and Note 26 “Financial and Insur-
ance Risk Management” to the consolidated financial
statements .
An assessment of the credit loss allowance for loans
and advances to customers is performed on a portfolio
basis, with the key assumptions being the probability
of an account falling into arrears and subsequently
defaulting (which is impacted by the definitions of
“significant increase in credit risk” and “default”), the
estimated recoveries from defaulted loans and the
lifetime period for revolving credit facilities . Statistical
models are used for the assessment of the probability
of default, recovery rate and the lifetime period for
revolving credit facilities . In addition, calculation
of the expected credit loss allowance incorporates
forward-looking information, taking into consideration
different macro-economic scenarios and adjusting the
probability of default .
In relation to the ECL models for measuring credit loss allowance we assessed the
appropriateness of the key assumptions used in the methodologies and models of
the Group and their compliance with the requirements of IFRS 9 .
We reviewed the Group’s back-testing of probabilities of default estimated on the
basis of the models by comparing them to the actual default rates evidenced in the
loan portfolios . In addition, we performed our own back-testing of default prob-
abilities based on actual movements into the Stage 3 category of loans in 2023 to
ensure the reasonableness of the application of the policies and models used .
For a sample of inputs into estimation of recovery rate, we tested them for accuracy
and criteria for inclusion into the calculation .
With regard to the controls relating to the credit loss allowance calculation process,
we assessed and tested on a sample basis the design and operating effective-
ness of the key controls over credit loss data and calculations . These key controls
included those over classification of certain loans by loan portfolios, allocation
of cash received from customers to respective loans and advances to customers,
identification of the overdue loans and the data transfer from source systems to the
credit loss allowance models .
We assessed if and to what extent we could place reliance upon these key controls
for the purposes of our audit .
In addition, we performed testing, on a sample basis, of the accuracy of allocation
of loans to the different “stages” and the completeness of restructured credit- im-
paired loans .
Key Audit Matter
How our audit addressed the Key Audit Matter
We assessed the appropriateness of the applied methodology for the post model
accounting adjustments and assessed the appropriateness and reasonableness
of the source data used, the key assumptions made and consistency with prior
periods in the context of the economic environment that is affected by the overall
geopolitical situation in the region .
We assessed if the disclosures made in the consolidated financial statements com-
ply with the relevant accounting standards in terms of completeness and accuracy .
The results of the above procedures were satisfactory for the purposes of our audit .
Reporting on Other Information
The Board of Directors is responsible for the other information . The other information comprises the information included in the Consolidat-
ed Management Report including the Corporate Governance Statement, which we obtained prior to the date of this auditor’s report, and the
Group’s complete Annual Report and Non-Financial Information and Diversity Statement, which is expected to be made available to us after
that date. Other information does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of
assurance conclusion thereon .
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated . If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact . We have nothing to report in this regard .
When we read the Group’s complete Annual Report and Non-Financial Information and Diversity Statement, if we conclude that there is
a material misstatement therein, we are required to communicate the matter to those charged with governance and if not corrected, we
will bring the matter to the attention of the members of the Company at the Company's Annual General Meeting and we will take such other
action as may be required .
Responsibilities of the Board of Directors and Those Charged with Governance for the Consolidated
Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance
with IFRSs as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap . 113, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error .
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so .
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion . Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
F-15
F-16
TCS GROUP HOLDING PLCANNUAL REPORT 2023 when it exists . Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit . We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion . The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control .
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the Board of Directors .
•
•
In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information
referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap . 113 .
In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to re-
port if we have identified material misstatements in the corporate governance statement in relation to the information disclosed for items
(iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap . 113 . We have nothing to report in this respect .
Other Matters
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 69 of
the Auditors Law of 2017 and for no other purpose . We do not, in giving this opinion, accept or assume responsibility for any other purpose
or to any other person to whose knowledge this report may come to .
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit
The engagement partner on the audit resulting in this independent auditor’s report is Olga Menelaou .
Olga Menelaou
Certified Public Accountant and Registered Auditor for and on behalf of
Kiteserve Limited
Certified Public Accountants and Registered Auditors
13 March 2024
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern . If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern .
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
the consolidated financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the
group audit . We remain solely responsible for our audit opinion .
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding inde-
pendence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards applied .
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we deter-
mine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
•
•
•
In our opinion, based on the work undertaken in the course of our audit, the Consolidated Management Report has been prepared in
accordance with the requirements of the Cyprus Companies Law, Cap . 113, and the information given is consistent with the consolidat-
ed financial statements.
In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to
report if we have identified material misstatements in the Consolidated Management Report. We have nothing to report in this respect.
In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate governance statement
in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap .
113, and which is included as a specific section of the Consolidated Management Report, have been prepared in accordance with the
requirements of the Cyprus Companies Law, Cap. 113, and is consistent with the consolidated financial statements.
F-17
F-18
TCS GROUP HOLDING PLCANNUAL REPORT 2023 31 DECEMBER 2023
Consolidated Statement
of Financial Position
In millions of RR
ASSETS
Cash and cash equivalents
Mandatory cash balances with the CBRF
Due from other banks
lnvestments in securities
Repurchase receivables
Precious metals
Loans and advances to customers
Financial derivatives
Brokerage receivaЫes
Guarantee deposits with payment systems
lnsurance contract assets
Current income tax assets
Deferred income tax assets
TangiЫe fixed assets and right-of-use assets
lntangiЫe assets
Other financial assets
Other non-financial assets
ТОТAL ASSETS
LIABILIТIES
Due to banks
Customer accounts
Deьt securities in issue
Other borrowed funds
Financial derivatives
Brokerage рауаblеs
Current income tax liabilities
Deferred income tax liabilities
Subordinated debt
lnsurance contract liabilities
Other financial liabilities
Other non-financial liabilities
TOTAL LIABILIТIES
Note
31 December
2023
31 December
2022*
1 January
2022*
5
6
7
7
8
31
9
16
24
24
10
10
11
11
12
13
14
31
9
24
24
15
16
17
17
724 154
511 561
316 476
3 189
5 312
1 690
450
8 589
542
332 923
325 802
215 311
845
12 015
-
9 982
5 826
-
972 412
606 455
606 308
2 983
42 345
-
1 463
2 336
212
43 823
36 391
52 557
36 839
1 020
26 747
6
693
109
1 946
34 890
24 097
37 219
14 208
5 963
49 138
15 171
14
3 524
-
13 964
15 069
52 744
8 078
2 269 799
1 596 875
1 316 717
6 843
2 060
11 313
1 713 272
1 191 986
945 723
-
1 061
9
9 416
1 337
2 396
58 538
21 860
129 620
41 532
301
2 199
217
8 258
2 437
7
45 913
15 223
89 873
32 488
21 680
3 806
90
9 634
125
1 860
59 657
9 785
68 946
7 817
1 985 884
1 390 962
1 140 436
In millions of RR
EQUITY
Share capital
Share premium
Treasury shares
Share-based payment reserve
Retained earnings
Revaluation reserve for investments in debt securities
Translation reserve
Other reserves
Note
31 December
2023
31 December
2022*
1 January
2022*
18
18
18
230
26 998
(1 885)
2 433
230
26 998
(1 885)
2 731
261 354
180 864
(5 434)
(3 214)
4
43
243
2
230
26 998
(2 567)
4 745
159 668
(13 131)
-
13
Equity attributaЬle to shareholders of the Company
283 743
205 969
175 956
Non-controlling interest
TOTAL EQUITY
172
(56)
325
283 915
205 913
176 281
TOTAL LIABILIТIES AND EQUITY
2 269 799
1 596 875
1 316 717
Approved for issue and signed on behalf of the Board of directors on 13 March 2024 .
Malinovskiy Alexey
Director
Tatiana Kuznetsova
Director
The notes № 1-38 are an integral part of these Consolidated Financial Statements.
The notes № 1-38 are an integral part of these Consolidated Financial Statements.
*See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
*See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
F-19
F-20
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023
31 DECEMBER 2023
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
In millions of RR
Note
2023
2022*
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 interest income
Credit loss allowance for loans and advances to customers and credit related commitments
Credit loss allowance reversal/(charge) for debt securities at FVOCI and AC
Total credit loss allowance for debt financial instruments
Net interest income after сredit loss allowance
Fee and commission income
Fee and commission expens
Customer acquisition expense
Net gains/(losses) from derivatives revaluation
Net gains from foreign exchange translation
Net gains/(losses) from operations with foreign currencies
Net gains/(losses) from precious metals revaluation
Net losses from disposals of investments in securities
Net gains/(losses) from financial assets at FVTPL
Insurance revenue
Insurance service expense
Administrative and other operating expenses
Other provisions charge and impairment loss
Net gains from repurchase of subordinated debt
Other operating income
Profit before tax
Income tax expense
Profit for the year
19
19
19
19
19
19
8
7
20
20
21
22
22
23
15
300 099
205 603
162
149
(62 175)
(56 772)
(2 265)
(5 498)
(1 007)
(4 076)
230 323
143 897
(51 777)
(65 431)
1 538
(2 071)
(50 239)
(67 502)
180 084
76 395
128 112
118 023
(55 047)
(40 973)
(70 445)
(41 712)
1 604
1 981
1 454
4 234
(120)
419
(8 156)
5 335
(380)
(3 785)
(130)
(7 185)
56 558
41 311
(17 997)
(14 147)
(122 854)
(93 717)
(7 641)
(6 608)
263
4 564
2 744
935
103 349
29 770
24
(22 417)
(9 010)
80 932
20 760
In millions of RR
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss
Debt securities at FVOCI and Repurchase receivables:
- Net losses arising during the year, net of tax
- Reversal of revaluation reserve, net of tax
- Net losses reclassified to profit or loss upon disposal, net of tax
Currency translation differences
Other reserves
Other comprehensive (loss)/income 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
- Shareholders of the Company
Note
2023
2022*
(2 316)
(2 081)
-
96
(239)
41
11 894
104
243
(11)
(2 418)
10 149
78 514
30 909
80 490
20 982
442
(222)
78 072
31 131
442
(222)
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)
18
18
405,08
105,59
395,24
102,35
The notes № 1-38 are an integral part of these Consolidated Financial Statements.
The notes № 1-38 are an integral part of these Consolidated Financial Statements.
*See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
*See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
F-21
F-22
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023
31 DECEMBER 2023
Consolidated Statement
of Changes in Equity
Attributable to shareholders of the Company
Attributable to shareholders of the Company
Profit/(loss) for the period*
-
-
-
-
-
20 982
230
26 998
4 745
(13 131)
(2 567)
159 668
13
175 956
325
176 281
-
20 982
(222)
20 760
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
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230
26 998
4 745
(13 131)
(2 567)
159 491
-
-
175 766
325
176 091
-
-
-
-
-
177
-
13
190
-
190
-
-
-
-
-
-
-
243
-
-
-
-
(1 977)
11 894
243
-
-
(11)
(11)
-
-
-
-
(1 977)
11 894
243
(11)
(1 977)
11 894
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9 917
-
20 982
243
(11)
31 131 (222)
30 909
-
(2 014)
-
682
214
-
-
(1 118)
-
(1 118)
-
-
-
-
-
-
-
-
(159)
(159)
230
26 998
2 731
(3 214)
(1 885)
180 864
243
2 205 969
(56)
205 913
In millions of RR
Balance
at 31 December 2021
Effect of initial application
of IFRS 17
Balance
at 1 January 2022*
Other comprehensive (loss)/
income:
Revaluation of investments in
debt securities at FVOCI and
Repurchase receivables
Reversal of revaluation reserve
Currency translation
differences
Reserve against changes
in discount rates
Total comprehensive
income/(loss) for the year
Share-based payment reserve
Changes from business
combinations and assets
acquisitions
Balance
at 31 December 2022
-
-
-
-
-
-
-
t
n
e
m
y
a
p
d
e
s
a
b
-
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T
230
26 998
2 731
(3 214)
(1 885)
180 864
243
2 205 969
(56)
205 913
In millions of RR
Balance
at 31 December 2022
Profit for the year
-
-
-
-
-
80 490
-
-
80 490
442
80 932
Other comprehensive (loss)/
income:
Revaluation of investments in
debt securities at FVOCI and
Repurchase receivables
Currency translation
differences
Reserve against changes
in discount rates
Total comprehensive
(loss)/income for the year
Share-based payment
reserve
Changes from business
combinations and assets
acquisitions
Balance
at 31 December 2023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(298)
-
-
(2 220)
-
-
-
-
-
-
-
-
(2 220)
-
(2 220)
-
(239)
-
(239)
-
-
41
41
-
-
(239)
41
(2 220)
-
80 490 (239)
41
78 072
442
78 514
-
-
-
-
-
-
-
(298)
-
(298)
-
-
-
-
(214)
(214)
230
26 998
2 433
(5 434)
(1 885)
261 354
4
43 283 743
172
283 915
The notes № 1-38 are an integral part of these Consolidated Financial Statements.
The notes № 1-38 are an integral part of these Consolidated Financial Statements.
*See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
*See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
F-23
F-24
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023
31 DECEMBER 2023
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/(losses) from operations with foreign currencies
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
Windfall tax paid
Note
2023
2022*
In millions of RR
Note
2023
2022*
8
8
298 190
205 096
151
136
(57 820)
(57 499)
6 651
(4 951)
5 660
(3 874)
127 825
120 629
(53 465)
(68 338)
1 733
(204)
61 564
(18 309)
4 971
1 327
(90 737)
(20 261)
(924)
(35 712)
(37 774)
(2 532)
(1 194)
44 134
(9 655)
3 902
1 403
(82 761)
(9 525)
-
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 used in financing activities
Repayment of debt securities in issue
Repayment of securitisation
Repayment of principal of lease liabilities
Repayment of subordinated debt
Net cash 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
(12 699)
(24 510)
(22 168)
(2 656)
(15 622)
(114 997)
26 187
15 686
(33 190)
(117 589)
(331)
(1 135)
(3 365)
(892)
(21 098)
(1 604)
(659)
(4 427)
(5 723)
(27 788)
22 028
(35 209)
212 593
195 085
511 561
316 476
724 154
511 561
25
25
10,25
25
5
5
Cash flows from operating activities before changes in operating assets
and liabilities
187 403
140 434
Changes in operating assets and liabilities
Net (increase)/decrease in CBRF mandatory reserves
Net (increase)/decrease in due from banks
Net increase in loans and advances to customers
Net (increase)/decrease in brokerage receivables
Net decrease in debt securities measured at FVTPL
Net decrease in guarantee deposits with payment systems
Net decrease/(increase) in precious metals
Net (increase)/decrease in other financial assets
Net increase in other non-financial assets
Net increase/(decrease) in due to banks
Net increase in customer accounts
Net increase/(decrease) in brokerage payables
Net increase in other financial liabilities
Net decrease in non-financial liabilities
Net cash from operating activities
(1 499)
(4 862)
6 899
92
(425 459)
(75 511)
(15 598)
617
8
22 391
3 509
17 568
2 201
(13 767)
(17 865)
(19 731)
4 587
3 844
(6 394)
(9 924)
484 105
269 993
1 158
34 436
(23)
(1 376)
18 098
(185)
229 478
375 671
The notes No 1-38 are an integral part of these Consolidated Financial Statements .
The notes No 1-38 are an integral part of these Consolidated Financial Statements .
F-25
F-26
FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023
1
Introduction
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union (“IFRS”) for the year ended 31 December 2023 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 .
On 15 January 2024 at an Extraordinary General Meeting, the Company’s shareholders approved the deregistering of the Company from
the Register of the Registrar of Companies in Cyprus and the registering of the Company as a continuing company in the Russian Feder-
ation (redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incorporated .
On the same date, the shareholders also approved amendments to the Company’s Articles of Association that allow the parent structure
to continue operating in the jurisdiction other than Cyprus .
Till 14 December 2023 the Company Secretary was Caelion Secretarial Limited, 25 Spyrou Araouzou, 25 Berengaria, 5th floor, Limassol
3036, Cyprus . Since 14 December 2023 the Company Secretary is Paula Tanasie, Ellanikou Street, Myria Court, 102, 3071, Limassol,
Cyprus .
At 31 December 2023 the share capital of the Company is comprised of ordinary shares (31 December 2022: same) . Each ordinary
share has a nominal value of USD 0 .04 per share and carries one vote . As at 31 December 2023 the number of issued ordinary shares is
199,305,492 (31 December 2022: same) . Refer to Note 18 for further information on the share capital . On 25 October 2013 the Group
completed an initial public offering of its ordinary shares in the form of global depository receipts (GDRs) listed on the London Stock
Exchange plc. On 2 July 2019 the Group completed a secondary public offering (SPO) of its 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 2023 in accordance with IFRS 10 definition of
control the Group has no ultimate controlling party (31 December 2022: same) . Refer to Note 3 for further information .
On 28 April 2022 The New Rigi Trust, a major shareholder of the Company, disposed of its entire interest in the Company . IC “Interros
Capital”, a leading Russian investment group with a diverse portfolio of assets including in banking, has acquired an interest in the
Group, and consequently now holds approximately 35 .08% of the outstanding shares in the Company . The deal was approved by the
Central Bank of the Russian Federation. As a result of the aforementioned deal Mr Vladimir Potanin, ultimate beneficiary owner of IC
“Interros Capital”, became a minority shareholder with a total shareholding of 35.08%. The free float of the Company amounts to approx-
imately 64 .92% of the Company’s issued share capital and Guaranty Nominees Limited is the company that holds the ordinary shares of
the Company for which GDRs were issued up until 31 January 2024 under a deposit agreement made between the Company and JPMor-
gan Chase Bank, N .A . (JPM) signed in October 2013 .
The Company has notified JPM, the depositary bank for the GDRs, of its intention to change the depositary bank. RCS Issuer Services
S .AR .L . ("RCS") has been selected as the new depositary bank .
Following the delisting of the Company’s GDRs from the LSE and until the termination of the GDR program, these securities outside
Russia will only be available for over-the-counter (OTC) transactions . In fact, this situation existed since 03 March 2022, when the LSE
suspended trading of the Company's GDRs . At the same time, the Company is taking measures to ensure that the GDRs continue to be
traded on the Moscow Exchange .
Following the Company's registration as International Public Joint-Stock Company TCS Holding in Russian Federation the Company will
be required to take steps to discontinue its GDR program. TCS Holding shares will be listed on the Moscow Exchange.
GDRs accountable for within Russian depositories will be automatically converted into TCS Holding shares in accordance with the pro-
cedure and terms approved by the Board of Directors of the Central Bank of the Russian Federation .
GDRs accountable for within foreign depositories are not subject to the procedure of automatic conversion of GDRs into TCS Holding
shares. Voluntary conversion must be carried out with the assistance of investors’ brokerage firm and/or depositary bank. A GDR holder
whose rights are accountable for by a foreign depositary may have to apply for a forced conversion of the GDRs . GDR holders may claim
compensation if GDRs are not converted .
The material subsidiaries of the Group are set out below . The Group owns 100% of shares and has 100% of voting rights of each of these
subsidiaries as at 31 December 2023 and 2022 .
JSC “Tinkoff Bank” (the “Bank”) provides on-line retail financial services in Russia, such as retail loans (credit cards, cash loans,
consumer loans, car loans, secured loans), deposits and savings, retail debit cards, investment services, SME services, acquiring and
payments, other lifestyles and travel services to individuals .
JSC “Tinkoff Insurance” (the “Insurance Company”) provides insurance services such as accident, property, travellers', financial risks
and auto insurance .
LLC "Microfinance company “Т-Finans” provides micro-finance services.
LLC “Phoenix” is a debt collection agency .
Principal activity. The Group’s principal business activities are retail banking to private individuals, individual entrepreneurs’ and small
and medium enterprises’ (“SME”) accounts and banking services, brokerage services, insurance operations, acquiring and payments’ ser-
vices mainly 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 . This license was re-issued on 11 April 2022
due to changes in requirements related to certain banking operations . The Insurance Company operates under an insurance license No .
0191 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. Registered address and place of business . The Company’s registered address is 25
Spyrou Araouzou, Berengaria 25, 5th floor, Limassol, 3036, Cyprus. The Bank’s and the Insurance Company’s registered address is
2-nd Khutorskaya Street, 38A, building 26, 127287, Moscow, Russian Federation . The Group’s principal activities are undertaken mainly
within the 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 Russian Federation displays certain characteristics of an emerging market . Its economy is particularly sensi-
tive to oil and gas prices . The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying
interpretations .
In 2023, a significant geopolitical tension persisted. Some countries introduced and continue introducing significant sanctions against
Russian individuals and legal entities, including major Russian companies and entire industries, which resulted in disruptions in the
global financial markets. Moreover, a number of multinational groups suspended or terminated their business activity in the Russian
Federation. Despite the trade volume recovery, the financial and commodity markets continue to demonstrate instability.
In 2023, the Russian economy demonstrated a recovery, with a growth of GDP by 5.1%. To limit inflation risks (up to 7.4% in the end of
2023) in the context of gradual recovery of economic activity, the Central Bank of Russian Federation more than once increased the
key rate: on 24 July 2023 – from 7,5% to 8,5%, on 15 August 2023 – from 8,5% to 12%, on 18 September 2023 – from 12% to 13%, on
27 October 2023 – from 13% to 15%, on 18 December 2023 – from 15% to 16% . In 2023, the exchange rates to Russian ruble increased
significantly compared to the exchange rates valid at 31 December 2022.
On 3 June 2022, the European Union imposed sanctions against the National Settlement Depository (NSD) as the largest securities
depository in Russia . As a result, the Bank's funds in euros were blocked on the correspondent account in NSD, and all payments on
matured coupons and bonds were frozen. The management of the Group made a decision to reclassify these amounts to other financial
assets and to create a provision for impairment for these blocked amounts . Refer to Note 11 .
On 2 November 2023, the US Treasury imposed sanctions against the St . Petersburg Exchange and added it to the SDN list . As a result,
the Group transferred blocked funds in central counterparty St. Petersburg clearing to other financial assets and created a provision for
impairment for these blocked amounts . Refer to Note 11 .
F-27
F-28
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
2 Operating Environment of the Group (Continued)
Statements” definition of control the Group has no ultimate controlling party.
On 25 February 2023, the international sanctions list was expanded, with the Bank becoming subject to an asset freeze in the EU under
the Council Implementing Regulation (EU) No 2023/429, implementing Council Regulation (EU) No 269/2014 (the "EC Regulation 269") .
The Company and its controlled subsidiary undertakings (other than the Bank and any controlled subsidiary undertakings of the Bank)
are not subject to an asset freeze pursuant to EC Regulation 269 or to other EU sanctions .
On 19 May 2023, the Bank became subject to an asset freeze in the UK under the Russia (Sanctions) (EU Exit) Regulations 2019 (S .I .
2019/855) . The Company and its controlled subsidiary undertakings (other than the Bank and any controlled subsidiary undertakings of
the Bank) are not subject to an asset freeze pursuant to stated above Regulations S .I . 2019/855 .
On 20 July 2023, the Bank became subject of the USA and Canada updated sanctions list .
Taking into account the consequences of sanctions and risks, the transformation of business and operating models continues to improve
the efficiency of processes and the profitability of products.
As of 31 December 2023 the Group complied with all the required ratios including capital adequacy and liquidity ratios . The Group has
formed a liquidity reserve in advance, including cash balances in Russian rubles and foreign currencies, which will ensure the stability
of the customer service and 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 ATMs with cash banknotes .
Depending on the stress scenario, the Group provides for liquidity recovery plan that includes a wide range of measures aimed at pro-
tecting funds, assets and interests of the customers, as well as ensuring the regular operation of all functions .
The Group maintains adequate capital and liquidity levels and closely monitors its foreign exchange position and cash flows, also it has
all the necessary technological capabilities for maintaining of its operations without interruptions .
The Group regularly performs stress testing of its business to assess the sustainability of its liquidity and capital positions . These tests
demonstrate that the Group’s current levels of capital and liquidity are more than sufficient to absorb operational impacts from potential
economic shocks and market volatility .
3 Critical Accounting Estimates and Judgements in Applying Accounting
Policies
The Group makes estimates and assumptions that affect the amounts recognized in the consolidated financial statements and the car-
rying amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based
on the management’s experience and other factors, including expectations of future events that are believed to be reasonable under the
existing 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 state-
ments and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year
include:
Ultimate controlling party. As per IFRS 10 “Consolidated Financial Statements”, an investor controls an investee when it is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over
the investee . Control is presumed to exist when an investor holds, directly or indirectly through subsidiaries, 50% or more of the voting
power of the investee . In cases where the investor’s shareholding is less than 50%, judgement is required in determining whether the
investor exercises control on the investee . In performing this assessment, the Management considers the investor’s representation in
the board of directors or other governing body of the Group which could impact the investor’s voting rights, the investor’s participation
in policy-making processes and exercise of the voting rights at the Group’s general meetings of shareholders, including participation in
decisions about dividends and other distributions as well as any material transactions .
In making this judgment, Management considered that the Group’s directors have sole responsibility for decisions over the Group’s
relevant activities and dividend distributions and are independent of the shareholders, among whom none is the owner of preference
shares, providing any special rights to its’ holders. Hence as of 31 December 2023 in accordance with IFRS 10 “Consolidated Financial
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 their weights) and loss given default (“LGD”). The Group makes
estimates and judgments, which are constantly analysed based on statistical data, actual and forecast information, as well as manage-
ment experience, including expectations regarding future events that are considered reasonable in the current circumstances .
An increase or decrease in PDs by 0 .5% compared to PDs used in the ECL estimates calculated at 31 December 2023 would result in an
increase or decrease in credit loss allowances of RR 5 .1 billion (31 December 2022: by 0 .5% RR 3 .4 billion) .
An increase or decrease in LGDs by 1% compared to LGDs used in the ECL estimates calculated at 31 December 2023 would result in an
increase or decrease in credit loss allowances of RR 1 .5 billion (31 December 2022: by 1% RR 1 .3 billion) .
In 2022, given the high degree of uncertainty associated with the current geopolitical situation, the Group has assessed the impact of the
economic environment on the applicable estimates used in calculating ECLs . In determining the amount of impairment, the Group uses
forward looking information based on forecasts and data received in the previous economic crisis, which results in a direct adjustment
to the probability of default . As with any forecast, however, the projections and likelihoods of their occurrence are subject to a high
degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected. The effect of the
revision of forecast data led to an increase in the amount of the credit loss allowance by RR 15 .1 billion of additional credit loss allow-
ance as at 31 December 2022 .
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 26 .
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 . Subse-
quent 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 ap-
proach requires judgement: the Group has taken into consideration that there are contingent settlement provisions that could genuinely
arise and as such has classified the perpetual subordinated debts instrument in its entirety as a liability, rather than equity, on the basis
of the terms of issue which stipulate the possible redemption of the instrument in several cases other than liquidation of the issuer .
If the Group had recognized these instruments as equity, then interest expense would only have been recognized when it was paid and
treated as a distribution from equity rather than an expense in profit or loss.
The Group also from time to time invests in perpetual subordinated debts issued by third parties . The Group has taken into consideration
that there are genuine contingent settlement provisions that could arise and as such has classified the investments in perpetual subordi-
nated 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 contrac-
tual 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 .
F-29
F-30
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 3 Critical Accounting Estimates and Judgements in Applying Accounting
Policies (Continued)
The provision from restricted assets was estimated by weighting the estimates of expected credit losses for different possible outcomes
against probabilities of each outcome. The Group defined at least two possible scenarios for each separate deal, one of which leads to a
loss. Individual assessment is mainly based on the expert opinion of the Group’s management, including official projections.
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 35 .
Unbundling of loans 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 .
Financial assets sales and securitisations. Group’s securitisation activities involve home equity loans and are predominantly
transacted using SPEs. In a typical securitisation, the SPE purchases assets financed by proceeds received from the SPE’s issuance
of debt certificates and other notes of indebtedness. These assets and liabilities are recorded on the balance sheet of the SPE and
consolidated on the Group’s consolidated statement of financial position, unless the accounting requirements for sale were met. At 31
December 2023 the Group has not made a securitisation transaction that resulted in derecognition of transferred assets . The Group
assessed that its secured loan portfolio meets the criteria for held to collect business model and determined that the past securitisation
transactions have not resulted in derecognition of the assets and therefore are not inconsistent with the held to collect business model .
The Group may have intention to sell home equity loans under securitisation, in this case the derecognition requirements should be
applied . The derecognition test is performed in 2 steps:
1) Pass-through arrangement . All the following conditions have to be met to conclude that pass-through arrangements meet the criteria:
• An entity has no obligation to pay amounts to the eventual recipients, unless it collects equivalent amounts from the original asset . Short-
term advances by the entity to the eventual recipients with the right of full recovery of the amount lent plus accrued interest from the
amounts eventually payable to the eventual recipients at market rates do not violate this condition .
• An entity is prohibited by the transfer contract’s terms from selling or pledging the original asset other than as security to the eventual
recipients for the obligation to pay them cash flows .
• An entity has an obligation to remit any cash flows that it collects on behalf of the eventual recipients without material delay (up to 3
months) .
2) Risk-reward assessment . If a transfer meets the pass-through requirements the transferor still needs to assess whether it has trans-
ferred sufficient risks and rewards associated with the asset to achieve derecognition. If, as a result of the 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 and repurchase receivables classification. 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 were accounted for at amortised cost, as opposed to fair value, as they will be held until full maturity and will
not be susceptible to market price fluctuations. Initially this portfolio was created from the Bank’s existing portfolio of high-grade bonds,
consisting of Russian government bonds . The described change in accounting treatment of the securities managed under hold to collect
model is effective starting from 1 January 2022. Refer to Note 7.
Investments in securities and repurchase receivables FV measurement. During the year ended 31 December 2023 revalu-
ation of investments in securities has been calculated according to the accounting policy of the Group due to the market recovery . In
March 2022 due to the absence of an active market of foreign currency OFZs and сorporate eurobonds, the fair value of these securities
measured at FVOCI and FVTPL, for which market quotes were unavailable, was calculated by discounting cash flows, taking into account
the transfer of expected coupons to receive in the flow. Refer to Note 32.
Restricted assets. Restricted assets are receivables from settlements with banks and other financial institutions which are currently
subject to restrictions, and securities blocked in foreign depositories due to imposed sanctions and therefore unavailable to the Group .
The Group performed transactions with these counterparties either directly or as an agent. The Group makes all possible efforts to
obtain access to those assets and reinstate their payment schedules . Refer to Note 11 .
Tax legislation. Russian and Cypriot tax, currency and customs legislation are subject to varying interpretations . Refer to Note 28 .
Insurance contracts. The following estimates and assumptions are used for accounting of insurance contracts .
Unit of account . For collective personal accident and property insurance contracts of individuals, where the insurance contract is legally
concluded with the Bank, the analysis of the scope of the contracts is based on the terms of the individual policies of the insured, and not
on the terms of the contract with the Bank, i .e . the accounting unit for such contracts is the combination of policies of insured individuals
with the same start and end term dates of the contract within the framework of one monthly register of concluded insurance contracts .
Aggregation of insurance contracts . For obligatory motor third party liability insurance of motor vehicle owners (hereinafter – “OMTPL”)
the Group applies the right to include onerous contracts in one group with profitable contracts, contracts that at initial recognition have no
significant possibility of becoming onerous subsequently, because due to regulatory restrictions on OMTPL tariff corridors, the Group has
no practical opportunity to set different tariffs or the level of benefits for policyholders with different characteristics.
Measurement model . For contracts measured under the premium allocation approach (PAA) with a coverage period of more than one year
the Group verified that contracts meet the PAA eligibility criteria and established that such a simplification would produce a measurement
of the liability for remaining coverage (LRC) that would not differ materially from the one that would be produced by applying the general
measurement model (GMM) .
Estimates of future cash flows to fulfil insurance contracts. The estimates of future cash flows are based on probability weighted expected
future cash flows. The Group estimates which cash flows are expected and the probability that they will occur as at the measurement date.
In making these expectations, the Group uses information about past events, current conditions and forecasts of future conditions .
The forecast of the future cash flow is calculated using mathematical modeling methods as a weighted average of the probability of realiza-
tion of the size of individual cash flows.
Where estimates of expenses related cash flows are determined at the portfolio level or higher, corresponding to allocation drivers: the
amount of the premium, the amount of claims costs, number of claims, labor hours by type of activity and similar indicators . The Group has
determined that this method results in a systematic and rational allocation . Similar methods are consistently applied to allocate expenses of
a similar nature .
Acquisition cash flows are typically allocated to groups of contracts based on gross premiums written. The Group allocates acquisition cash
flows to both existing and future groups of insurance contracts.
Claims settlement-related expenses are allocated to groups of insurance contracts using actuarial methods or based on the average claim
costs .
The Group forecasts of an estimate of future expenses related to insurance contracts are based on the current level of expenses . Expenses
include expenses that are directly attributable to groups of contracts, including allocation of fixed and variable expenses of the Group.
Directly attributable expenses of an administrative policy maintenance nature are allocated by a relevant driver, while not directly attributa-
ble expenses are allocated to groups of contracts based on insurance revenue within the certain group .
Uncertainty in the estimation of future claims and benefit payments and premium receipts arises primarily from the unpredictability of
claims amount and future inflation rates that lead to expenses growth.
In determining the assumptions for estimation of future cash flows, the Group used reasonable consistent approaches. Assumptions used to
develop estimates about future cash flows are reassessed at each reporting date and adjusted where required.
Estimates of liability for incurred claims . The Group estimates insurance liabilities in relation to claims incurred on accident period basis
as ultimate cost of outstanding claims . Judgement is involved in assessing the most appropriate technique to estimate insurance liabilities
for the claims incurred . The most common methods used to estimate property damage claims incurred are the chain-ladder, the Bornhuet-
ter-Ferguson and Expected loss ratio methods .
F-31
F-32
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 3 Critical Accounting Estimates and Judgements in Applying Accounting
Policies (Continued)
The chain-ladder technique is the most appropriate for those accident periods and classes of business that have reached a relatively stable
development pattern . The chain-ladder technique is less suitable in cases in which the Group does not have a developed claims history for a
particular type of claim . Also, the chain-ladder technique is best suited for estimation of more matured accident periods .
The Bornhuetter-Ferguson method uses a combination of a benchmark or market-based estimate and an estimate based on claims experi-
ence . The former is based on a measure of exposure, such as gross premiums; the latter is based on the paid or incurred claims to date . The
two estimates are combined, using a formula that gives more weight to the experience-based estimate as time passes . This technique is
best suited for estimation of more recent accident periods .
The Expected loss ratio method assumes the estimation of ultimate level of losses in relation to gross earned premiums . This technique can
be used in situations in which claims experience is not available for the projection.In certain instances, different techniques or a combina-
tion of techniques have been selected for individual accident periods within the same type of contract .
The Group estimates future claim handling costs on incurred claims separately . Under motor own damage insurance (“CASCO”) insurance
contracts the Group has the right to pursue third parties for payment of some or all costs . Estimates of subrogation reimbursements are
based on historical data of corresponding income .
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
As a result of a rapid change in macroeconomic environment, the management of the Group adopted new eco-system review approach of
its business. Thus the management highlights 4 segments: consumer financial services, retail daily and lifestyle transaction services, SME
financial services and other investments. Each segment comprises certain services and business lines, thanks to the interaction of which
synergy is achieved and the efficiency of the Group's business as a whole is ensured. This impacted overall composition of the comparative
information .
Description of 4 main business segments:
Consumer financial services - representing risk-taking services provided to individuals, including retail loans such as credit cards, cash
loans, consumer loans, car loans, secured loans, as well as other associated insurance services .
Retail daily and lifestyle transaction services - representing transactional financial and daily lifestyle services provided to retail customers,
including mobile app experience, current accounts, debit cards, savings and investments services, loyalty programs, co-branded offers,
telecommunications and also daily lifestyle and travel services to individuals . Assets of the segment are represented by placements of the
funds attracted in customer funds and investments in securities, treasury transactions, other financial and non-financial assets.
SME financial services - representing financial services provided to SME customers and merchants. It includes customer current accounts,
deposits, transactional and software services and loans to individual entrepreneurs and small to medium businesses . It also includes
providing merchants and businesses the ability to process and acquire payments using online and offline channels. Assets of the segment
are represented by placements of the funds attracted from customers into investments in securities, treasury transactions, other financial
and non-financial assets.
Other investments - representing investments in companies and equity instruments that fall outside of the scope of the other segments . The
CODM made a decision to allocate such investments into a separate business segment .
F-33
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.
Information about reportable segment assets and liabilities, profit or loss
Segment reporting of the Group’s assets and liabilities as at 31 December 2023 is set out below:
In millions of RR
Consumer
financial
services
Retail daily
and lifestyle
transaction services
SME
financial
services
Other
invest-
ments
Elimina-
tions
Total
Reportable segment assets
Reportable segment liabilities
1 352 080
780 679
716 124
189 945
16 381
(4 731)
2 269 799
930 095
279 841
-
(4 731)
1 985 884
Segment reporting of the Group’s assets and liabilities as at 31 December 2022* is set out below:
In millions of RR
Reportable segment assets
Reportable segment liabilities
Consumer
financial
services
857 710
346 742
Retail daily
and lifestyle
transaction ser-
vices
SME
financial
services
611 019
131 040
Other
invest-
ments
12 092
Elimina-
tions
Total
(14 986)
1 596 875
844 319
214 887
-
(14 986)
1 390 962
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 .
All jointly used assets, such as fixed assets, rights of use assets and intangible assets were allocated to the segments on the basis of
detailed analysis of usage of those assets by segments .
Segment reporting of the Group’s capital expenditures for the year ended 31 December 2023 is set out below:
In millions of RR
Intangible assets
Tangible fixed assets
and right-of-use assets
Total capital expenditure
Consumer
financial services
Retail daily and lifestyle
transaction services
SME financial
services
13 495
9 828
23 323
8 824
4 290
13 114
3 634
800
Total
25 953
14 918
4 434
40 871
Segment reporting of the Group’s capital expenditures for the year ended 31 December 2022 is set out below:
Consumer
financial services
Retail daily and lifestyle
transaction services
SME financial
services
In millions of RR
Intangible assets
Tangible fixed assets
and right-of-use assets
Total capital expenditure
8 608
19 388
27 996
5 615
6 532
12 147
2 426
2 018
Total
16 649
27 938
4 444
44 587
F-34
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 4 Segment Analysis (Continued)
Segment reporting of the Group’s income and expenses for the year ended 31 December 2023 is set out below:
In millions of RR
External revenues
Interest income
Fee and commission income
- Fee and commission income on cards'
and current accounts' services
- Acquiring commission
- MVNO and investments services
- Other fees receivable
Timing of fee and commission income
recognition:
- At point in time
- Over time
Total fee and commission income
Insurance revenue
Other operating income
Total external revenues
Revenues from other segments
Interest income
Total revenues from other
segments
TOTAL REVENUES
Interest expense
Credit loss allowance charge
Fee and commission expense
Insurance service expense
Administrative and other operating
expenses
Other gains/(losses)
Segment result before
acquisition expenses
Customer acquisition expense
Consumer
financial
services
Retail daily
and lifestyle
transaction
services
SME
financial
services
Other
invest-
ments
Elimina-
tions
Total
228 904
49 909
21 389
59
-
300 261
4 208
-
-
3 310
2 470
5 048
7 518
56 558
2 197
295 177
-
-
295 177
(76 852)
(45 910)
(4 220)
(17 997)
(39 139)
4 124
115 183
(25 727)
19 480
840
25 496
11 065
39 829
17 052
56 881
-
420
26 148
36 611
-
954
53 807
9 906
63 713
-
127
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49 836
37 451
25 496
15 329
96 106
32 006
128 112
56 558
2 744
107 210
85 229
59
-
487 675
35 955
9 401
-
(45 356)
35 955
9 401
-
(45 356)
-
-
143 165
(30 702)
(1 495)
(31 183)
-
94 630
(7 740)
(2 445)
(19 644)
-
59
-
(389)
-
-
(45 356)
45 356
-
-
-
487 675
(69 938)
(50 239)
(55 047)
(17 997)
(54 997)
(5 552)
(28 718)
(1 342)
-
4 964
- (122 854)
2 194
-
19 236
34 741
4 634
(35 417)
(9 301)
-
-
-
173 794
(70 445)
SEGMENT RESULT
89 456
(16 181)
25 440
4 634
-
103 349
Segment reporting of the Group’s income and expenses for the year ended 31 December 2022* is set out below:
Consumer
financial
services
Retail daily
and lifestyle
transaction
services
SME
financial
services
Other
invest-
ments
Elimina-
tions
Total
164 765
30 109
10 867
11
-
205 752
In millions of RR
External revenues
Interest income
Fee and commission income
- Fee and commission income on cards'
and current accounts' services
- Acquiring commission
- MVNO and investments services
- Other fees receivable
Timing of fee and commission income
recognition:
- At point in time
- Over time
Total fee and commission income
Insurance revenue
3 939
-
-
876
2 367
2 448
4 815
41 311
32 532
283
24 792
30 787
17 469
6 788
48 580
8 492
57 072
-
557
51 686
4 450
56 136
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61 263
31 070
17 469
8 221
102 633
15 390
118 023
41 311
935
Other operating income
690
84
161
Total external revenues
211 581
87 265
67 164
11
-
366 021
Revenues from other segments
Interest income
Total revenues from other
segments
218
218
19 854
6 131
-
(26 203)
19 854
6 131
-
(26 203)
-
-
TOTAL REVENUES
211 799
107 119
73 295
11
(26 203)
366 021
Interest expense
Credit loss allowance charge
Fee and commission expense
Insurance service expense
Administrative and other operating
expenses
Other losses
Segment result before
acquisition expenses
Customer acquisition expense
SEGMENT RESULT
(56 173)
(63 842)
(2 689)
(14 147)
(30 641)
(4 493)
39 814
(11 364)
28 450
(28 351)
(2 002)
(21 136)
-
(3 534)
(1 658)
(17 148)
-
-
-
-
-
26 203
-
-
-
(61 855)
(67 502)
(40 973)
(14 147)
(39 437)
(4 054)
(23 639)
(1 456)
-
(6 342)
-
-
(93 717)
(16 345)
12 139
25 860
(6 331)
(22 816)
(7 532)
-
-
-
71 482
(41 712)
(10 677)
18 328
(6 331)
-
29 770
* Подробная информация о пересмотре учетной политики в связи с применением МСФО 17 с 1 января 2023 года раскрыта в Примечании 36.
F-35
F-36
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
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 2023 the fair value of collat-
eral under reverse sale and repurchase agreements was RR 493,162 million (31 December 2022: RR 254,683 million) . There is no material
impact of collateral on credit loss allowance for cash and cash equivalents .
Refer to Note 32 for the disclosure of the fair value of cash and cash equivalents . Interest rate, maturity and geographical risk concentration
analysis are disclosed in Note 26 .
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
Placements with other banks with original maturities of more than three months
Good
Monitor
Total due from other banks
31 December
2023
31 December
2022
5 312
2 112
3 200
5 312
450
100
350
450
The carrying amount of due from other banks at 31 December 2023 and 2022 also represents the Group's maximum exposure to credit risk
on these assets . Refer to Note 26 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 32 for the disclosure of the fair value of due from other banks . Interest rate, maturity and geographical risk concentration
analysis are disclosed in Note 26 .
4 Segment Analysis (Continued)
Fee and commission income on cards’ and current accounts' services include SME services commission, SMS fee, interchange fee, foreign
currency exchange transactions fee, fee for money transfers, cash withdrawal fee and replenishment fee .
Interest income and interest expense from other segments for the year ended 31 December 2023 amounted to RR 45,356 million (2022: RR
26,203 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 and non-bank credit organizations with original maturities
of less than three months
Total cash and cash equivalents
31 December
2023
31 December
2022
78 905
71 283
56 895
106 693
573 966
347 973
724 154
511 561
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 476,063 million
as at 31 December 2023 (31 December 2022: RR 252,399 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 2023:
In millions of RR
Excellent
Good
Monitor
Cash
balances
with the CBRF
Placements with other banks
and non-bank credit
organizations
71 283
-
-
4 168
565 023
4 775
Total
75 451
565 023
4 775
Total cash and cash equivalents, excluding
cash on hand
71 283
573 966
645 249
The table below discloses the credit quality of cash and cash equivalents balances based on credit risk grades at 31 December 2022:
In millions of RR
Excellent
Good
Monitor
Cash
balances
with the CBRF
Placements with other
banks and non-bank credit
organizations
106 693
-
-
3 385
326 901
17 687
Total cash and cash equivalents, excluding
cash on hand
106 693
347 973
Total
110 078
326 901
17 687
454 666
The carrying amount of cash and cash equivalents at 31 December 2023 and 2022 also represents the Group's maximum exposure to credit
risk on these assets . Refer to Note 26 for the description of the risk grades .
F-37
F-38
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
7
Investments in Securities and Repurchase Receivables
The table below contains an analysis of the credit risk exposure of investments in securities measured at FVOCI at 31 December 2023, for
which an ECL allowance is recognised, based on credit risk grades:
In millions of RR
31 December 2023
31 December 2022
Securities measured at fair value through other comprehensive income
Securities measured at amortised cost
Securities measured at fair value through profit or loss
Total investments in securities
Repurchase receivables at amortised cost
Total investments in securities and repurchase receivables
206 376
120 136
6 411
332 923
845
333 768
199 892
121 283
4 627
325 802
-
325 802
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 2023 repurchase receivables were RR 845 million, short-term and matured in January
2024 (31 December 2022: nil) .
Refer to Note 12 for the related liabilities . Refer to Note 32 for the disclosure of the fair value of repurchase receivables . Securities reclassi-
fied to repurchase receivables continue to be carried at value in accordance with accounting policies for these categories of assets.
As a result of the imposed sanctions against Russian financial system, receivable cash on redeemed bonds and related coupon payments
have been postponed, thus the Group reclassified all these receivables to Other financial assets. Refer to Note 11 for more information.
1)
Investments in securities measured at fair value through other comprehensive income
The table below discloses investments in debt securities measured at FVOCI by classes:
In millions of RR
Investments in securities
Russian government bonds
Corporate bonds
Municipal bonds
Foreign government bonds
Total investments in securities measured at FVOCI
Including credit loss allowance
31 December 2023
31 December 2022
113 124
86 758
5 656
838
206 376
(1 130)
106 918
80 559
7 811
4 604
199 892
(2 132)
The corporate bonds portfolio mainly includes securities from the following sectors: financial, energy, basic materials and industrial.
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
Excellent
Good
Monitor
Doubtful
Total AC gross carrying amount
Credit loss allowance
Fair value adjustment from AC to FV
Carrying value
Municipal bonds
Excellent
Good
Monitor
Total AC gross carrying amount
Credit loss allowance
Fair value adjustment from AC to FV
Carrying value
Foreign government bonds
Doubtful
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)
Total
115 010
115 010
(120)
(1 766)
113 124
69 949
19 501
402
-
89 852
(232)
(4 878)
84 742
2 028
3 317
779
6 124
(38)
(430)
5 656
-
-
-
-
-
-
-
-
-
-
-
-
-
115 010
115 010
(120)
(1 766)
113 124
69 949
19 501
402
2 257
2 257
2 257
92 109
(528)
(760)
287
(4 591)
2 016
86 758
-
-
-
-
-
-
-
886
886
(212)
164
838
2 028
3 317
779
6 124
(38)
(430)
5 656
886
886
(212)
164
838
F-39
F-40
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
In millions of RR
Foreign government bonds
Excellent
Sub-standard
Doubtful
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)
Total
2 214
1 917
-
4 131
(93)
(46)
3 992
-
-
709
2 214
1 917
709
709
4 840
(205)
108
612
(298)
62
4 604
There are no stage 3 investments in securities during the year and as at 31 December 2023 and 2022 .
7
Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities measured at fair value through other comprehensive income (Continued)
The table below contains an analysis of the credit risk exposure of investments in securities measured at FVOCI at 31 December 2022, for
which an ECL allowance is recognised, based on credit risk grades:
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
Excellent
Good
Monitor
Sub-standard
Doubtful
Total AC gross carrying amount
Credit loss allowance
Fair value adjustment from AC to FV
Carrying value
Municipal bonds
Excellent
Good
Monitor
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)
Total
109 575
109 575
(628)
(2 029)
106 918
56 565
18 248
8 427
687
-
83 927
(997)
(3 161)
79 769
2 694
3 461
1 886
8 041
(90)
(140)
7 811
-
-
-
-
-
109 575
109 575
(628)
(2 029)
106 918
-
56 565
155
18 403
11
-
211
8 438
687
211
377
84 304
(119)
(1 116)
532
(2 629)
790
80 559
-
-
-
-
-
-
-
2 694
3 461
1 886
8 041
(90)
(140)
7 811
F-41
F-42
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
7 Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities measured at fair value through other comprehensive income (Continued)
Refer to Note 26 for the description of credit risk grading system used by the Group and the approach to ECL measurement, including the defi-
nition of default and SICR as applicable to investments in securities at FVOCI . The investments at FVOCI are not collateralised . Refer to Note 32
for the disclosure of the fair value .
The following table explains the changes in the credit loss allowance and gross carrying amount for debt securities at FVOCI for the year ended
31 December 2023:
Credit loss allowance
Gross carrying amount
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
In millions of RR
Russian government bonds
At 31 December 2022
628
-
628
109 575
-
109 575
Movements with impact on credit loss
allowance charge:
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 2023
Corporate bonds
At 31 December 2022
Movements with impact on credit loss
allowance charge:
New originated or purchased
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 2023
5
8
(88)
(1)
7
(9)
(430)
(508)
120
-
-
-
-
-
-
-
-
-
5
8
6 971
12 236
(88)
(12 210)
(1)
7
(9)
(430)
(378)
8 014
(9 198)
-
(508)
5 435
-
-
-
-
-
-
-
-
6 971
12 236
(12 210)
(378)
8 014
(9 198)
-
5 435
120
115 010
-
115 010
997
119
1 116
83 927
377
84 304
51
(42)
18
(50)
(90)
10
(11)
(651)
(765)
232
-
42
51
-
24 344
(1 576)
100
118
8 866
(3)
-
14
-
(53)
(90)
24
(11)
256
(395)
(8 603)
(16 761)
4 921
(5 060)
(206)
-
24 344
1 576
-
491
9 357
(150)
(8 753)
-
(16 761)
69
(6)
4 990
(5 066)
(100)
(306)
409
(356)
5 925
1 880
7 805
528
760
89 852
2 257
92 109
Credit loss allowance
Gross carrying amount
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
90
-
90
8 041
-
8 041
(7)
2
(2)
(45)
(52)
38
-
-
-
-
-
-
(7)
2
(2)
(45)
(1 749)
500
(668)
-
(52)
(1 917)
38
6 124
-
-
-
-
-
-
(1 749)
500
(668)
-
(1 917)
6 124
In millions of RR
Municipal bonds
At 31 December 2022
Movements with impact on credit loss
allowance charge:
Redemption during the year
Interest income accrued
Interest received
Other movements
Total movements with impact on
credit loss allowance charge
At 31 December 2023
Foreign government bonds
At 31 December 2022
93
205
298
4 131
709
4 840
Movements with impact on credit loss
allowance charge:
New originated or purchased
Transfers:
- to lifetime (from Stage 1 to Stage 2)
Foreign exchange gains
Redemption during the year
Disposal during the year
Interest income accrued
Other movements
Total movements with impact on
credit loss allowance charge
At 31 December 2023
-
(92)
-
-
-
-
(1)
(93)
-
-
92
39
-
-
8
-
-
39
-
-
8
(132)
(133)
69
(1 917)
143
(69)
(2 372)
15
-
-
1 917
716
-
-
69
-
859
(69)
(2 372)
91
106
(2 547)
(2 547)
7
(86)
(4 131)
177
(3 954)
212
212
-
886
886
Other movements of the сredit loss allowance in the tables above are represented mainly by the reversal of ECL for debt securities due to the
application the new ECL approach according to the ACRA rating system .
F-43
F-44
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
7 Investments in Securities and Repurchase Receivables (Continued)
1)
Investments in securities measured at fair value through other comprehensive income (Continued)
The following table explains the changes in the credit loss allowance and gross carrying amount for debt securities at FVOCI for the year ended
31 December 2022:
Credit loss allowance
Gross carrying amount
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
In millions of RR
Russian government bonds
At 31 December 2021
79
-
79
17 873
-
17 873
Movements with impact on credit loss
allowance charge:
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 2022
Corporate bonds
At 31 December 2021
Movements with impact on credit loss
allowance charge:
New originated or purchased
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 2022
425
30
-
(1)
11
(12)
96
549
628
333
205
(6)
-
(17)
(46)
37
(39)
530
664
997
-
-
-
-
-
-
-
-
-
425
30
-
(1)
11
(12)
96
86 847
5 680
(12)
(566)
2 312
(2 559)
-
-
-
-
-
-
-
-
86 847
5 680
(12)
(566)
2 312
(2 559)
-
549
91 702
-
91 702
628
109 575
-
109 575
15
348
77 807
465
78 272
-
6
(2)
(6)
-
4
(3)
105
205
25 541
-
25 541
-
(233)
233
-
(2)
(23)
(46)
41
(42)
635
1 231
(7 136)
(9 487)
4 187
(4 062)
(3 921)
(12)
1 219
(300)
(7 436)
-
(9 487)
29
4 216
(29)
(9)
(4 091)
(3 930)
104
768
6 120
(88)
6 032
119
1 116
83 927
377
84 304
In millions of RR
Municipal bonds
At 31 December 2021
Movements with impact on credit loss
allowance charge:
New originated or purchased
Redemption during the year
Interest income accrued
Interest received
Other movements
Total movements with impact on
credit loss allowance charge
At 31 December 2022
Foreign government bonds
At 31 December 2021
Movements with impact on credit loss
allowance charge:
New originated or purchased
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 2022
Credit loss allowance
Gross carrying amount
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
46
3
(6)
6
(6)
47
44
90
39
2
(22)
(4)
(1)
(1)
2
-
78
54
93
-
46
8,747
-
8,747
-
-
-
-
-
-
-
-
-
22
(9)
-
-
8
-
3
(6)
6
(6)
47
476
(1,167)
584
(599)
-
44
(706)
90
8,041
-
-
-
-
-
-
-
476
(1,167)
584
(599)
-
(706)
8,041
39
2,408
-
2,408
2
-
4,913
(762)
-
4,913
762
-
(13)
227
(37)
190
(1)
(1)
10
-
(2,044)
(1,024)
60
(32)
385
-
-
(2,044)
(1,024)
30
(12)
(34)
90
(44)
351
184
262
205
259
1,723
709
2,432
205
298
4,131
709
4,840
F-45
F-46
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
7 Investments in Securities and Repurchase Receivables (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 AC for the year ended 31 December 2022:
2)
Investments in securities and repurchase receivables measured at amortised cost
In millions of RR
Russian government bonds
Gross carrying amount
Сredit loss allowance
Total investments in securities measured at AC
Repurchase receivables
Gross carrying amount
Сredit loss allowance
Total repurchase receivables measured at AC
31 December 2023
31 December 2022
120 262
(126)
120 136
846
(1)
845
121 946
(663)
121 283
-
-
-
Total investments in securities and repurchase receivables
measured at AC
120 981
121 283
For the purpose of the credit risk analysis investments in securities and repurchase receivables measured at AC are included in Excellent
level .
For the purpose of ECL measurement investments in securities and repurchase receivables measured at AC are included in Stage 1 .
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 AC for the year ended 31 December 2023:
Credit loss allowance
Gross carrying amount
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR))
In millions of RR
Russian government bonds
At 31 December 2022
663
-
663
121 946
-
121 946
Movements with impact on credit loss
allowance charge:
Interest income accrued
Interest received
Other movements
Total movements with impact on
credit loss allowance charge
At 31 December 2023
6
(7)
(535)
(536)
127
-
-
-
-
-
6
(7)
(535)
6 631
(7 469)
-
(536)
(838)
-
-
-
-
6 631
(7 469)
-
(838)
127
121,108
-
121,108
Credit loss allowance
Gross carrying amount
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
Stage 1
(12-
months
ECL)
Total
Stage 2
(lifetime
ECL for SICR)
In millions of RR
Russian government bonds
At 1 January 2022
Movements with impact on credit loss
allowance charge:
Interest income accrued
Interest received
Other movements
Total movements with impact on
credit loss allowance charge
At 31 December 2022
212
31
(35)
455
451
663
-
212
122 805
-
122 805
-
-
-
-
-
31
(35)
455
6 629
(7 488)
-
451
(859)
-
-
-
-
6 629
(7 488)
-
(859)
663
121 946
-
121 946
3) Securities measured at fair value through profit or loss
The table below discloses investments in securities measured at FVTPL by classes:
In millions of RR
Investments in securities
Corporate shares
Corporate bonds
Russian government bonds
Total investments in securities measured at FVTPL
31 December 2023
31 December 2022
4 151
2 057
203
6 411
2 278
2 349
-
4 627
Corporate shares are measured at FVTPL mandatorily, corporate bonds and russian government bonds are measured at FVTPL designated .
The table below discloses the movements in securities at FVTPL for the year ended 31 December 2023 and 2022:
In millions of RR
Carrying amount at 1 January
Purchases
Disposals
Interest income accrued
Interest received
Foreign exchange gain/(loss)
Revaluation gain/(loss) through profit or loss
Carrying amount at 31 December
2023
4 627
3 469
(3 094)
138
(157)
398
1 030
6 411
2022
8 136
2 116
(1 158)
129
(136)
(80)
(4 380)
4 627
F-47
F-48
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
POS (“Point of sale”) loans represent loans to fund online and offline purchases through internet and offline shops for individual borrowers,
including Buy-Now-Pay-Later (BNPL) loans .
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
movements in the tables presented below are described as follows:
• new originated or purchased category represents the gross carrying amounts and the related ECL of purchased loans and loans issued
during the reporting period (and withdrawals of limits of new credit card borrowers) as at the end of the reporting period or as at the date
of transfer of loan out of Stage 1 (whichever date is earlier);
• transfers between Stage 1, 2 and 3 due to balances experiencing significant increases (or decreases) of credit risk or becoming
credit-impaired in the period, and the consequent "step up" (or “step down”) between 12-month and lifetime ECL . Transfers present the
amount of credit loss allowance charged or recovered at the moment of transfer of a loan among the respective stages;
• 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;
Changes to ECL measurement model assumptions and estimates for three months ended 31 March 2023 represent a refined approach to
calculation of the car loan recovery rate, as well as impact of the economic environment. The refined approach is that the Group has applied
its own car loan portfolio statistics accumulated in sufficient volume, which makes the assessment more precise. Except stated above there
were no changes in ECL measurement . Refer to Notes 2 and 3 for more information .
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 26 .
8 Loans and Advances to Customers
In millions of RR
31 December 2023
31 December 2022
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
1 121 138
(149 023)
972 115
297
972 412
731 602
(125 730)
605 872
583
606 455
Loans and advances to customers at FVTPL represent a loan that does not meet SPPI requirement .
Gross carrying amount and credit loss allowance amount for loans and advances to customers at AC by classes at 31 December 2023 and
2022 are disclosed in the table below:
31 December 2023
31 December 2022
Gross
carrying
amount
Credit loss
allowance
Carrying
amount
Gross
carrying
amount
Credit loss
allowance
Carrying
amount
548 062
(90 996)
457 066
399 196
(81 394)
317 802
216 849
(29 436)
187 413
121 267
(22 898)
98 369
356 227
(28 591)
327 636
211 139
(21 438)
189 701
147 205
(15 473)
131 732
114 620
60 217
34 185
(3 800)
(4 663)
(4 655)
110 820
55 554
29 530
79 177
75 607
47 893
8 462
(11 141)
(3 597)
(4 913)
(1 787)
68 036
72 010
42 980
6 675
1 121 138
(149 023)
972 115
731 602
(125 730)
605 872
In millions of RR
Credit card loans
Cash loans
Other loans
Car loans
Secured loans
POS loans
Loans to IE and SME
Total loans and advances to
customers at AC
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 .
Car loans represent loans for the purchase of a vehicle which is used as collateral under the loan .
Secured loans represent loans secured with a real estate (home equity loans) or a car . As at 31 December 2023 home equity loans under
securitisation amounted to RR 1,857 million (31 December 2022: RR 2,958 million) . Refer to Note 14 for details of the securitisation of home
equity loans .
F-49
F-50
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 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
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
e
g
a
t
S
t
i
d
e
r
c
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
)
d
e
r
i
a
p
m
i
3
e
g
a
t
S
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
e
g
a
t
S
t
i
d
e
r
c
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
)
d
e
r
i
a
p
m
i
3
e
g
a
t
S
d
e
t
-
a
n
i
g
i
r
O
/
d
e
s
-
a
h
c
r
u
P
d
e
r
i
a
p
m
i
t
i
d
e
r
c
l
a
t
o
T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
In millions of RR
Credit card loans
At 31 December 2022
25 461
9 480
46 453
81 394
314 534
14 539
69 657
466 399 196
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
e
g
a
t
S
t
i
d
e
r
c
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
)
d
e
r
i
a
p
m
i
3
e
g
a
t
S
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
e
g
a
t
S
t
i
d
e
r
c
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
)
d
e
r
i
a
p
m
i
3
e
g
a
t
S
d
e
t
-
a
n
i
g
i
r
O
/
d
e
s
-
a
h
c
r
u
P
d
e
r
i
a
p
m
i
t
i
d
e
r
c
l
a
t
o
T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
-
-
-
7 347
7 347
(29 872)
(29 872)
(2 263)
(2 263)
-
(1 202)
(1 202)
-
-
-
-
-
-
-
7 347
(29 872)
(2 637)
-
-
-
7 347
(29 872)
(2 637)
-
(1 202)
-
(1 202)
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
-
-
-
-
In millions of RR
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
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
13 005
-
-
13 005
156 318
-
(4 921)
9 957
-
5 036
(16 669)
16 669
-
-
(7 908)
(7 488)
33 483
18 087
(30 561)
(10 223)
40 784
732
(1 648)
(42)
(958)
2 475
(2 422)
(53)
(242)
(528)
(162)
(932)
-
-
-
-
156 318
At 31 December 2023
26 622
10 654
53 720
90 996
450 588
17 182
80 044
248 548 062
-
-
-
-
-
-
-
-
495
881
(22)
1 354
24 491
(1 381)
(3 980)
(218)
18 912
1 161
1 174
33 257
35 592
136 054
2 643
36 751
(218)
175 230
F-51
F-52
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
e
g
a
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r
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L
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f
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(
)
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g
a
t
S
)
R
C
I
S
r
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f
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m
i
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(
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d
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r
c
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L
C
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m
i
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f
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(
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g
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d
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t
-
a
n
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d
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r
c
l
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T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
-
-
-
6 659
6 659
(19 630)
(19 630)
(1 317)
(1 317)
-
(3 873)
(3 873)
-
-
-
-
-
-
-
6 659
(19 630)
(1 384)
-
-
-
6 659
(19 630)
(1 384)
-
(3 873)
-
(3 873)
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
-
-
-
-
In millions of RR
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
At 31 December 2022
25 461
9 480
46 453
81 394
314 534
14 539
69 657
466
399 196
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
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g
a
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S
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i
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c
r
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f
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(
)
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a
p
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3
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g
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S
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L
C
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h
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m
-
2
1
(
1
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g
a
t
S
)
R
C
I
S
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o
f
L
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E
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m
i
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f
i
l
(
2
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g
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i
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r
c
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f
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(
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d
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3
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a
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l
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T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
In millions of RR
Credit card loans
At 31 December 2021
15 028
7 562
30 397
52 987
270 113
11 986
51 396
399
333 894
Movements with
impact on credit loss
allowance charge for
the year:
New originated
or purchased
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
4 891
-
-
4 891
75 273
-
-
138
75 411
(3,742)
8 574
-
4 832
(14 680)
14 680
-
(7,259)
(6 251)
32 931
19 421
(32 709)
(8 828)
41 537
422
(1 115)
(29)
(722)
1 661
(1 622)
(39)
4 623
18
2 298
6 939
-
-
-
-
-
-
-
-
-
-
-
11 498
692
(983)
11 207
14 876
(1 677)
(5 009)
(71)
8 119
10 433
1 918
34 217
46 568
44 421
2 553
36 489
67
83 530
F-53
F-54
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
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g
a
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S
t
i
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c
r
o
f
L
C
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f
i
l
(
)
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a
p
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3
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g
a
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S
)
R
C
I
S
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f
L
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m
i
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f
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l
(
2
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g
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L
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m
i
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f
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(
)
d
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L
C
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s
h
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n
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m
-
2
1
(
1
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g
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T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
-
-
-
-
In millions of RR
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
-
-
-
-
1 004
1 004
(6 861)
(6 861)
(688)
(688)
(136)
(136)
(361)
-
-
-
-
-
-
-
-
1 004
(6 861)
(812)
(136)
(351)
-
-
-
-
-
1 004
(6 861)
(812)
(136)
(2 061)
Other
(451)
(143)
(955)
(1 564)
(146)
At 31 December 2023
10 084
5 606
13 746
29 436
189 829
8 374
17 787
859 216 849
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
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g
a
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(
)
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p
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L
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h
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2
1
(
1
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g
a
t
S
)
R
C
I
S
r
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f
L
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E
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m
i
t
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f
i
l
(
2
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f
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(
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d
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-
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m
i
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r
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l
a
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T
)
L
C
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s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
In millions of RR
Cash loans
At 31 December 2022
7 125
4 206
11 567
22 898
98 620
6 707
14 930
1 010
121 267
Movements with
impact on credit loss
allowance charge for
the year
New originated
or purchased
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
11 262
-
-
11 262
160 734
-
-
216
160 950
(3 138)
9 006
-
5 868
(9 673)
9 673
-
(2 534)
(2 733)
9 267
4 000
(6 823)
(3 203)
10 026
173
(515)
(9)
(351)
1 282
(1 271)
(11)
102
264
1
367
-
-
-
-
-
-
-
-
-
-
-
(2 455)
(4 479)
(38)
(6 972)
(52 747)
(3 386)
(2)
(367)
(56 502)
3 410
1 543
9 221
14 174
92 773
1 813
10 013
(151) 104 448
F-55
F-56
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
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g
a
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S
t
i
d
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r
c
r
o
f
L
C
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m
i
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f
i
l
(
)
d
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a
p
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3
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g
a
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S
)
L
C
E
s
h
t
n
o
m
-
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1
(
1
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g
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S
)
R
C
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S
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f
L
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m
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f
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(
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f
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m
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f
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(
)
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i
d
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r
c
l
a
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T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
-
-
-
-
-
-
987
987
(4 000)
(4 000)
(564)
(564)
-
-
-
-
-
-
987
(4 000)
(590)
-
-
-
987
(4 000)
(590)
-
7 125
-
4 206
(818)
11 567
(818)
22 898
-
98 620
-
6 707
(818)
14 930
-
1 010
(818)
121 267
In millions of RR
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
At 31 December 2022
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
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g
a
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S
t
i
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r
c
r
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f
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m
i
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f
i
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(
)
d
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a
p
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3
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g
a
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S
)
L
C
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s
h
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n
o
m
-
2
1
(
1
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g
a
t
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)
R
C
I
S
r
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f
L
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m
i
t
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f
i
l
(
2
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g
a
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f
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m
i
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f
i
l
(
)
d
e
r
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a
p
m
i
3
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g
a
t
S
d
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t
-
a
n
i
g
i
r
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/
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s
-
a
h
c
r
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P
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r
i
a
p
m
i
t
i
d
e
r
c
l
a
t
o
T
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
In millions of RR
Cash loans
At 31 December 2021
4 575
2 990
6 556
14 121
109 540
6 392
9 441
922
126 295
Movements with
impact on credit loss
allowance charge for
the year:
New originated
or purchased
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
2 917
-
-
2 917
60 803
-
-
365
61 168
(1,498)
4 653
-
3 155
(7 788)
7 788
-
(1,616)
(2 548)
9 271
5 107
(6 979)
(3 107)
10 086
77
(234)
(5)
(162)
872
(867)
(5)
2 261
959
425
3 645
-
-
-
-
-
-
-
-
-
-
-
409
(1 614)
(285)
(1 490)
(57 828)
(3 499)
(171)
(277)
(61 775)
2 550
1 216
9 406
13 172
(10 920)
315
9 910
88
(607)
F-57
F-58
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
)
L
C
E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
-
-
-
In millions of RR
Movements without impact on
credit loss allowance charge
for the year
Unwinding of discount (for Stage 3)
Write-offs
Modification of original cash flows
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
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E
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m
i
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f
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(
2
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R
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(
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c
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m
i
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f
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(
)
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S
l
a
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)
L
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E
s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
-
-
-
205
(701)
205
(701)
8
8
-
-
-
-
-
-
205
205
(701)
(701)
8
8
At 31 December 2023
905
1 346
1 549
3 800
103 203
7 951
3 466
114 620
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
e
m
i
t
e
f
i
l
(
2
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g
a
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(
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)
L
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s
h
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2
1
(
1
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)
R
C
I
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f
L
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m
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f
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(
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f
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(
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a
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)
L
C
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s
h
t
n
o
m
-
2
1
(
1
e
g
a
t
S
l
a
t
o
T
In millions of RR
Secured Loans
At 31 December 2022
769
1 584
1 244
3 597
65 037
7 810
2 760
75 607
Movements with impact on
credit loss allowance charge
for the year
New originated or purchased
751
-
-
751
66 555
-
-
66 555
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 measurement model
assumptions and estimates
Movements other than transfers and
new originated or purchased loans
Total movements with impact
on credit loss allowance charge
for the year
(271)
2 184
-
1 913
(6 599)
6 599
-
(84)
(446)
1 113
583
(935)
(1 055)
1 990
56
(248)
(9)
(201)
2 637
(2 619)
(18)
-
12
-
12
-
-
-
-
-
-
-
(316)
(1 740)
(311)
(2 367)
(23 492)
(2 784)
(778)
(27 054)
136
(238)
793
691
38 166
141
1 194
39 501
F-59
F-60
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
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In millions of RR
Secured Loans
At 31 December 2021
538
788
660
1 986
65 478
4 907
1 658
72 043
Movements with impact on
credit loss allowance charge
for the year:
New originated or purchased
253
-
-
253
26 679
-
-
26 679
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 measurement model
assumptions and estimates
Movements other than transfers and
new originated 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
Modification of original cash flows
(216)
2 247
-
2 031
(7 239)
7 239
-
(57)
(302)
938
579
(1 023)
(756)
1 779
25
(124)
(10)
(109)
1 234
(1 211)
(23)
276
471
62
809
-
-
-
-
-
-
-
(50)
(1 496)
(262)
(1 808)
(20 092)
(2 369)
(510)
(22 971)
231
796
728
1 755
(441)
2 903
1 246
3 708
-
-
-
-
-
-
175
(403)
84
175
(403)
84
-
-
-
-
-
-
175
175
(403)
(403)
84
84
Credit loss allowance
Credit loss allowance
)
R
C
I
S
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T
In millions of RR
POS loans
At 31 December 2022
1 343
744
2 826
4 913
42 490
1 667
3 329
407
47 893
Movements with
impact on credit loss
allowance charge for
the year
New originated
or purchased
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 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
1 573
-
-
1 573
54 154
-
(327)
1 829
-
1 502
(2 745)
2 745
-
-
(359)
(442)
1 832
1 031
(1 555)
(621)
2 176
1
54 155
-
-
-
-
16
(53)
(4)
(41)
215
(211)
(4)
-
-
(978)
(1 456)
(433)
(2 867)
(37 680)
(1 922)
(545)
(223)
(40 370)
(75)
(122)
1 395
1 198
12 389
(9)
1 627
(222)
13 785
-
-
-
-
-
-
-
-
140
140
(1 424)
(1 424)
(70)
(70)
(94)
(94)
-
-
-
-
-
-
-
-
140
(1 424)
(83)
-
-
-
140
(1 424)
(83)
(94)
-
(94)
At 31 December 2022
769
1 584
1 244
3 597
65 037
7 810
2 760
75 607
At 31 December 2023
1 268
622
2 773
4 663
54 879
1 658
3 495
185
60 217
F-61
F-62
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
Credit loss allowance
Gross carrying amount
)
R
C
I
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-
-
-
-
-
-
159
159
(789)
(39)
(789)
(39)
-
-
-
-
-
-
159
(789)
(41)
-
-
-
159
(789)
(41)
-
1 343
-
744
(88)
2 826
(88)
4 913
-
42 490
-
1 667
(88)
3 329
-
407
(88)
47 893
In millions of RR
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
At 31 December 2022
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
I
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l
a
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T
In millions of RR
POS loans
At 31 December 2021
851
537
1 217
2 605
56 530
1 891
1 538
389
60 348
Movements with
impact on credit loss
allowance charge for
the year:
New originated
or purchased
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
582
-
-
582
37 955
-
-
150
38 105
(211)
1 080
-
869
(2 838)
2 838
-
(262)
(529)
2 454
1 663
(2 065)
(783)
2 848
10
(35)
(1)
(26)
219
(219)
667
258
36
961
-
-
-
-
-
-
-
-
-
-
-
-
(294)
(567)
(123)
(984)
(47 311)
(2 060)
(298)
(132)
(49 801)
492
207
2 366
3 065
(14 040)
(224)
2 550
18
(11 696)
F-63
F-64
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
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m
-
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(
1
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g
a
t
S
l
a
t
o
T
In millions of RR
Car Loans
At 31 December 2022
2 637
2 830
5 674
11 141
66 293
5 786
7 098
79 177
Movements with impact on
credit loss allowance charge
for the year
New originated or purchased
4 138
-
-
4 138
101 205
-
-
101 205
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 measurement model
assumptions and estimates
Movements other than transfers and
new originated 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
At 31 December 2023
(1 165)
4 161
-
2 996
(5 886)
5 886
-
(1 277)
(1 333)
5 151
2 541
(4 025)
(1 786)
5 811
129
(404)
(15)
(290)
1 555
(1 536)
(19)
-
(24)
-
(24)
-
-
-
-
-
-
-
(469)
(2 172)
(307)
(2 948)
(28 529)
(1 898)
(669)
(31 096)
1 356
228
4 829
6 413
64 320
666
5 123
70 109
-
-
-
-
-
-
488
488
(2 099)
(2 099)
(11)
(11)
-
-
-
-
-
-
488
488
(2 099)
(2 099)
(11)
(11)
-
3 993
-
3 058
(459)
8 422
(459)
15 473
-
130 613
-
6 452
(459)
10 140
(459)
147 205
Credit loss allowance
Gross carrying amount
)
R
C
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(
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g
a
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S
l
a
t
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T
In millions of RR
Car Loans
At 31 December 2021
1 712
1 533
2 097
5 342
71 174
3 769
2 939
77 882
Movements with impact on
credit loss allowance charge
for the year
New originated or purchased
1 011
-
-
1 011
30 102
-
-
30 102
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 measurement model
assumptions and estimates
Movements other than transfers and
new originated 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
(736)
3 035
-
2 299
(5 714)
5 714
-
(690)
(1 153)
4 104
2 261
(3 452)
(1 541)
4 993
52
(163)
(8)
(119)
722
(712)
(10)
798
700
114
1 612
-
-
-
-
-
-
-
490
(1 122)
(161)
(793)
(26 539)
(1 444)
(352)
(28 335)
925
1 297
4 049
6 271
(4 881)
2 017
4 631
1 767
-
-
-
-
-
-
-
358
(643)
(5)
358
(643)
(5)
-
(182)
(182)
-
-
-
-
-
-
-
358
358
(643)
(643)
(5)
(5)
-
(182)
(182)
At 31 December 2022
2 637
2 830
5 674
11 141
66 293
5 786
7 098
79 177
F-65
F-66
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
8 Loans and Advances to Customers (Continued)
Credit loss allowance
Gross carrying amount
)
R
C
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In millions of RR
Loans to IE and SME
At 31 December 2022
400
246
1 141
1 787
6 418
777
1 267
8 462
Movements with impact on
credit loss allowance charge
for the year
New originated or purchased
796
-
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 measurement model
assumptions and estimates
Movements other than transfers and
new originated 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
Other
796
17 745
-
-
17 745
-
-
(194)
1 146
952
(3 920)
3 920
-
(146)
(181)
976
649
(835)
(244)
1 079
7
(51)
(2)
(46)
219
(217)
(2)
(173)
(7)
-
(180)
-
-
-
-
-
-
-
461
949
(448)
962
7 192
1 217
(183)
8 226
751
1 856
526
3 133
20 401
4 676
894
25 971
-
-
-
-
-
-
169
(434)
-
169
(434)
-
-
-
-
-
-
17
169
169
(434)
(434)
-
17
Credit loss allowance
Gross carrying amount
)
R
C
I
S
r
o
f
L
C
E
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m
i
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e
f
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(
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(
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g
a
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L
C
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s
h
t
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(
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g
a
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S
)
R
C
I
S
r
o
f
L
C
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e
m
i
t
e
f
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l
(
2
e
g
a
t
S
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r
c
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f
L
C
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m
i
t
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f
i
l
(
)
d
e
r
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a
p
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g
a
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l
a
t
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L
C
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s
h
t
n
o
m
-
2
1
(
1
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g
a
t
S
l
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t
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T
In millions of RR
Loans to IE and SME
At 31 December 2021
261
175
338
774
8 809
512
369
9 690
Movements with impact on
credit loss allowance charge
for the year:
New originated or purchased
85
-
Transfers:
- to lifetime (from Stage 1 to
Stage 2)
(94)
556
-
-
85
2 769
-
-
2 769
462
(1 570)
1 570
-
- 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 measurement model
assumptions and estimates
Movements other than transfers and
new originated 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
(89)
(149)
801
563
(647)
(202)
849
3
(10)
(2)
(9)
90
(88)
(2)
166
33
7
206
-
-
-
68
(359)
(50)
(341)
(3 033)
(1 015)
4
(4 044)
139
71
756
966
(2 391)
265
851
(1 275)
-
-
-
-
193
(146)
193
(146)
-
-
-
-
193
193
(146)
(146)
At 31 December 2022
400
246
1 141
1 787
6 418
777
1 267
8 462
-
-
-
-
At 31 December 2023
1 151
2 102
1 402
4 655
26 819
5 470
1 896
34 185
F-67
F-68
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
8 Loans and Advances to Customers (Continued)
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 represents the Group's maximum exposure to
credit risk on these loans .
Presented below is an analysis of issued, activated and utilised cash loans based on their checks as at the end of the reporting period:
In units
Cash loans limits
Up to 100 RR thousand
100-150 RR thousand
150-250 RR thousand
250-350 RR thousand
350-600 RR thousand
More than 600 RR thousand
Total number of cash loans (in units)
31 December 2023
31 December 2022
101 686
97 207
138 868
146 731
154 398
105 112
744 002
73 515
64 564
92 655
104 321
115 433
48 507
498 995
The credit loss allowance charge during the year ended 31 December 2023 presented in the tables above differs from the amount presented
in the consolidated statement of profit or loss and other comprehensive income for the period due to RR 6,651 million recovery of amounts
previously written-off as uncollectible, due to RR 4,971 million recovery from the purchased loans in excess of their gross carrying amount,
and due to RR 2,198 million charge of ECL for credit related commitments .
The credit loss allowance charge during the year ended 31 December 2022 presented in the tables above differs from the amount presented
in the consolidated statement of profit or loss and other comprehensive income for the period due to RR 5,660 million recovery of amounts
previously written-off as uncollectible, due to RR 3,902 million recovery from the purchased loans in excess of their gross carrying amount,
and due to RR 3,196 million charge of ECL for credit related commitments .
The amount of the recovery received from written-off loans and purchased loans during the period was credited directly to the credit loss
allowance line in the consolidated statement of profit or loss and other comprehensive income.
Uncollectible assets are partly written-off against the related credit 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.
The contractual amount outstanding of loans and advances to customers which were written off during the year ended 31 December 2023
and are still subject to enforcement activity is equal to RR 21,583 million (2022: RR 15,029 million) .
The amount of the ECL for credit related commitments is accounted separately from ECL for credit card loans and is included in other finan-
cial liabilities in the consolidated statement of financial position.
During the year ended 31 December 2023 the Group sold credit-impaired loans to third parties (external debt collection agencies) by the
means of transferring all subsequent risks and rewards without recourse to the buyer, which resulted into derecognition of gross amount of
RR 3,543 million and credit loss allowance of RR 3,032 million. The difference between the carrying amount of these loans and the consider-
ation received was recognised as gains in the amount of RR 31 million within credit loss allowance for loans and advances to customers and
credit related commitments for the year ended 31 December 2023 .
During the year ended 31 December 2022 the Group sold credit-impaired loans to third parties (external debt collection agencies) by the
means of transferring all subsequent risks and rewards without recourse to the buyer, which resulted into derecognition of gross amount of
RR 2,020 million and credit loss allowance of RR 1,925 million. The difference between the carrying amount of these loans and the consid-
eration received was recognised as losses in the amount of RR 41 million within credit loss allowance for loans and advances to customers
and credit related commitments for the year ended 31 December 2022 .
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 units
Credit card limits
Up to 20 RR thousand
20-60 RR thousand
60-100 RR thousand
100-140 RR thousand
140-200 RR thousand
More than 200 RR thousand
Total number of cards (in units)
31 December 2023
31 December 2022
2 458 199
2 252 619
1 859 161
1 506 701
1 552 212
1 275 924
10 904 816
1 796 428
1 695 332
1 494 887
975 006
1 193 358
585 054
7 740 065
F-69
F-70
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
8 Loans and Advances to Customers (Continued)
Loans and advances to customers at 31 December 2023 are disclosed as follows:
In millions of RR
Credit card loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
Gross carrying amount
Credit loss allowance
Carrying amount
Cash loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPLе
Gross carrying amount
Credit loss allowance
Carrying amount
Secured Loans
- 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 impaired)
Purchased/
originated credit
impaired
Total
245 207
174 636
30 745
-
-
450 588
(26 622)
423 966
103 944
84 636
1 249
-
-
189 829
(10 084)
179 745
82 886
18 687
1 630
-
-
103 203
(905)
102 298
-
2 160
5 288
9 734
-
17 182
(10 654)
6 528
-
3 862
1 796
2 716
-
8 374
(5 606)
2 768
-
6 122
1 073
756
-
7 951
(1 346)
6 605
-
-
-
10 358
69 686
80 044
(53 720)
26 324
-
-
-
1 447
16 340
17 787
(13 746)
4 041
-
-
-
-
3 466
3 466
(1 549)
1 917
-
-
-
-
245 207
176 796
36 033
20 092
248
69 934
248
548 062
-
(90 996)
248
457 066
-
-
-
-
859
859
103 944
88 498
3 045
4 163
17 199
216 849
-
(29 436)
859
187 413
-
-
-
-
-
-
-
-
82 886
24 809
2 703
756
3 466
114 620
(3 800)
110 820
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 impaired)
Purchased/
originated credit
impaired
Total
35 967
18 755
157
-
-
54 879
(1 268)
53 611
87 694
41 358
1 561
-
-
130 613
(3 993)
126 620
14 545
11 842
432
-
-
26 819
(1 151)
25 668
-
973
319
366
-
1 658
(622)
1 036
-
3 543
1 294
1 615
-
6 452
(3 058)
3 394
-
4 511
345
614
-
5 470
(2 102)
3 368
-
-
-
42
3 453
3 495
(2 773)
722
-
-
-
-
10 140
10 140
(8 422)
1 718
-
-
-
-
1 896
1 896
(1 402)
494
-
-
-
-
185
185
35 967
19 728
476
408
3 638
60 217
-
(4 663)
185
55 554
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
87 694
44 901
2 855
1 615
10 140
147 205
(15 473)
131 732
14 545
16 353
777
614
1 896
34 185
(4 655)
29 530
F-71
F-72
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 8 Loans and Advances to Customers (Continued)
Loans and advances to customers at 31 December 2022 are disclosed as follows:
In millions of RR
Credit card loans
- Excellent
- Good
- Monitor
- Sub-standard
- NPL
Gross carrying amount
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
Stage 1
(12-months
ECL)
Stage 2
(lifetime
ECL for SICR)
Stage 3
(lifetime ECL for
credit impaired)
Purchased/
originated credit
impaired
Total
115 502
163 907
35 125
-
-
314 534
(25 461)
289 073
40 434
57 294
892
-
-
98 620
(7 125)
91 495
44 532
18 685
1 820
-
-
65 037
(769)
64 268
-
2 251
4 617
7 671
-
14 539
(9 480)
5 059
-
3 848
1 203
1 656
-
6 707
(4 206)
2 501
-
6 042
1 019
749
-
7 810
(1 584)
6 226
-
-
-
10 594
59 063
69 657
(46 453)
23 204
-
-
-
1 456
13 474
14 930
(11 567)
3 363
-
-
-
-
2 760
2 760
(1 244)
1 516
-
-
-
-
115 502
166 158
39 742
18 265
466
59 529
466
399 196
-
(81 394)
466
317 802
-
-
-
-
40 434
61 142
2 095
3 112
1 010
14 484
1 010
121 267
-
(22 898)
1 010
98 369
-
-
-
-
-
-
-
-
44 532
24 727
2 839
749
2 760
75 607
(3 597)
72 010
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 impaired)
Purchased/
originated credit
impaired
Total
19 349
23 009
132
-
-
42 490
(1 343)
41 147
42 970
21 947
1 376
-
-
66 293
(2 637)
63 656
2 638
3 738
42
-
-
6 418
(400)
6 018
-
982
300
385
-
1 667
(744)
923
-
3 608
1 014
1 164
-
5 786
(2 830)
2 956
-
505
91
181
-
777
(246)
531
-
-
-
48
3 281
3 329
(2 826)
503
-
-
-
-
7 098
7 098
(5 674)
1 424
-
-
-
-
1 267
1 267
(1 141)
126
-
-
-
-
407
407
19 349
23 991
432
433
3 688
47 893
-
(4 913)
407
42 980
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42 970
25 555
2 390
1 164
7 098
79 177
(11 141)
68 036
2 638
4 243
133
181
1 267
8 462
(1 787)
6 675
F-73
F-74
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 8 Loans and Advances to Customers (Continued)
The effect of collateral on credit impaired assets at 31 December 2022 is as follows.
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 26 .
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 2023 the gross carrying amount of the loans in courts was RR 62,508 million (31 Decem-
ber 2022: RR 52,649 million) .
Description of collateral held for loans to individuals carried at amortised cost is as follows at 31 December 2023:
In millions of RR
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)
Secured loans
Car loans
Total
84 947
21 060
-
84 947
104 244
125 304
106 007
104 244
210 251
Description of collateral held for loans to individuals carried at amortised cost is as follows at 31 December 2022:
Over-collateralised assets
Under-collateralised assets
Gross carrying amount
of the assets
Value
of collateral
Gross carrying
amount of the assets
Value
of collateral
2 641
1 394
7 211
2 618
119
5 704
65
1 566
In millions of RR
Credit impaired
assets:
Secured loans
Car loans
The values of collateral considered in this disclosure are after a valuation haircut of 15% (2022: 15%) for residential real estate and 20%
(2022: 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 2023 (2022: same).
Refer to Note 32 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 26 . Information on related party balances is disclosed in Note 34 .
Secured loans
Car loans
Total
9 Brokerage Receivables and Brokerage Payables
In millions of RR
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)
63 277
10 505
-
54 943
63 277
65 448
73 782
54 943
128 725
In the disclosure above the difference between collateralised gross carrying amounts and total gross carrying amount of the respective
loans represents unsecured exposures of RR 51,574 million (31 December 2022: RR 26,059 million) . Unsecured loans arise as a result of the
fact that the borrowers have two months to register their cars as collateral for car loans as well as the application of a conservative discount
in determining the carrying value of collateral for secured and car loans applied .
The extent to which collateral and other credit enhancements mitigate credit risk for financial assets carried at amortised cost that are credit
impaired, is presented by disclosing collateral values separately for (i) those assets where collateral and other credit enhancements are
equal to or exceed carrying value of the asset (“over-collateralised assets”) and (ii) those assets where collateral and other credit 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 2023 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
3 183
1 980
9 684
4 271
283
8 160
176
1 880
In millions of RR
31 December 2023
31 December 2022
Amounts receivable from brokers and clearing organizations
Total brokerage receivables
Amounts payable to brokers and clearing organizations
Total brokerage payables
42 345
42 345
9 416
9 416
26 747
26 747
8 258
8 258
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 2023 the fair value of collateral of brokerage receivables was RR 43,244 million (31 December 2022: RR 27,250 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 2023 the fair value of collateral of brokerage payables was RR 11,126 million (31 December 2022: RR 9,483 million) .
ECL measurement approach, interest rate, maturity and geographical risk concentration analysis are disclosed in Note 26 . Refer to Note
29 for the disclosure of the offsetting assets and liabilities. Refer to Note 32 for the disclosure of the fair value of brokerage receivables and
brokerage payables .
F-75
F-76
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
10 Tangible Fixed Assets, Intangible Assets and Right-of-use Assets
The right of use assets by class of underlying items are analysed as follows:
Tangible fixed assets
Intangible assets
s
t
n
e
m
e
v
o
r
p
m
i
d
l
o
h
e
s
a
e
L
t
n
e
m
-
p
i
u
q
E
e
l
b
i
g
n
a
t
l
a
t
o
T
s
t
e
s
s
a
d
e
x
fi
s
e
l
c
i
h
e
V
d
e
s
i
l
a
t
i
p
a
C
d
e
r
i
u
q
c
A
g
n
i
d
l
i
u
B
d
n
a
L
s
t
e
s
s
a
e
l
b
i
g
n
a
t
n
i
l
a
t
o
T
In millions of RR
Cost
31 December 2021
396
4 219
13 819
1 179
61
19 674
8 109
16 190
24 299
Additions
Disposals
-
-
-
-
2 826
1 025
21
3 872
13 288
2 482
15 770
(262)
-
(39)
(301)
(486)
(3 117)
(3 603)
31 December 2022
396
4 219
16 383
2 204
43
23 245
20 911
15 555
36 466
Additions
Disposals
-
-
878
9 730
-
(342)
92
-
41
10 741
18 409
7 544
25 953
-
(342)
(4 632)
(2 410)
(7 042)
31 December 2023
396
5 097
25 771
2 296
84
33 644
34 688
20 689
55 377
Depreciation
and amortisation
31 December 2021
Charge for the year (Note 23)
Disposals
31 December 2022
Charge for the year (Note 23)
Disposals
31 December 2023
Net book value
-
-
-
-
-
-
-
(218)
(5 972)
(523)
(25)
(6 738)
(2 899)
(6 331)
(9 230)
(43)
(1 983)
(170)
(14)
(2 210)
(3 886)
(2 352)
(6 238)
-
2
1
6
9
339
2 760
3 099
(261)
(7 953)
(692)
(33)
(8 939)
(6 446)
(5 923)
(12 369)
(46)
(2 593)
(136)
(1)
(2 776)
(7 206)
(2 855)
(10 061)
-
150
-
-
150
2 675
769
3 444
(307)
(10 396)
(828)
(34)
(11 565)
(10 977)
(8 009)
(18 986)
31 December 2022
396
3 958
8 430
1 512
10
14 306
14 465
9 632
24 097
31 December 2023
396
4 790
15 375
1 468
50
22 079
23 711
12 680
36 391
The amortisation of intangible assets charge during the year ended 31 December 2023 presented in the table above differs from the amount
presented in the Note 23 due to RR 153 million (2022: RR 74 million) charge included in the insurance service expense according to IFRS 17
requirements . Refer to Note 22 .
Intangible assets additions in the amount of RR 18,409 million related to the capitalised software developments by companies of the Group
during the year ended 31 December 2023 (2022: RR 13,288 million) .
Other intangible assets acquired during the year ended 31 December 2023 and 2022 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 typ-
ically for fixed periods up to 12 years. The Group does not have extension or termination options of its lease agreements other than lease
agreements of low value items .
In millions of RR
Carrying amount at 31 December 2021
Additions
Depreciation charge (Note 23)
Carrying amount at 31 December 2022
Additions
Depreciation charge (Note 23)
Carrying amount at 31 December 2023
Office premises
1 028
21 246
(1 690)
20 584
4 177
(3 017)
21 744
In 2022, in accordance with the requirements of IFRS 16, the Group recognized right-of-use-asset amounted to RR 18,531 million and relat-
ed lease liabilities amounted to RR 18,061 million as a result of the completion of the construction of a new office building, which the Group
signed a lease agreement for . Refer to Note 17 .
Lease liabilities included in other similar expense were RR 2,265 million during the year ended 31 December 2023 (2022: RR 1,007 million) .
Expenses relating to leases of low-value assets and short-term leases in the amount of RR 1,905 million are included in administrative and
other operating expenses (2022: RR 2,026 million). Refer to Note 23. Total cash outflow for long-term rental contract leases during the year
ended 31 December 2023 was RR 3,365 million (2022: RR 659 million) .
11 Other Financial and Non-financial Assets
In millions of RR
31 December 2023
31 December 2022*
1 January 2022*
Other Financial Assets
Settlement of operations with plastic cards
Restricted assets
Trade receivables of the Insurance Company
Broker commissions and settlement with exchange
receivable
Trade receivables
Other
Total Other Financial Assets
Other Non-Financial Assets
Prepaid expenses
Capital expenditure
Other
Total Other Non-Financial Assets
29 126
6 604
2 967
4 815
3 977
5 068
52 557
18 923
15 357
2 559
36 839
22 014
5 703
1 405
784
3 899
3 414
37 219
9 380
2 926
1 902
14 208
42 995
-
740
142
8 586
281
52 744
5 996
-
2 082
8 078
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
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 .
F-77
F-78
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
11 Other Financial and Non-financial Assets (Continued)
13 Customer Accounts
Restricted assets represents balances on correspondent and clearing accounts, as well as settlement accounts for payments on matured
coupons and bonds blocked in the banks and non-banking organizations under sanctions .
In millions of RR
Restricted assets
Gross carrying amount
Provisions charged
Total restricted assets
31 December 2023
31 December 2022
19 903
(13 299)
6 604
10 985
(5 282)
5 703
At 31 December 2023, included in other financial assets are receivables and investments in associates (31 December 2022: same).
As at 31 December 2023 prepaid expenses consist of prepayments for TV advertising, marketing, IT support, plastic cards, rents, security,
ATM-service and others (31 December 2022: same) .
The table below discloses the credit quality of other financial assets based on credit risk grades:
In millions of RR
31 December 2023
31 December 2022*
1 January 2022*
Excellent
Good
Monitor
Итого прочие финансовые активы
7 982
37 693
6 882
52 557
11 742
16 889
8 588
37 219
29 850
21 115
1 779
52 744
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
Refer to Note 26 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 26 for the ECL measurement approach. Refer to Note 32 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 26.
12 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 2023
31 December 2022
6 154
689
6 843
2 060
-
2 060
Liabilities of RR 689 million (31 December 2022: nil) represent sale and repurchase agreements with debt securities at AC (Note 7) .
At 31 December 2023 collateral for swap contracts was RR 3,003 million and included in the сorrespondent accounts (31 December 2022:
RR 1,250 million) .
Refer to Note 32 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 26 . Refer to Note 29 and 30 for information on the amounts included in due to banks received
under sale and repurchase agreements and fair value of securities pledged .
In millions of RR
Individuals
- Current/demand accounts
- Term deposits
- Brokerage accounts
IE and SME
- Current/demand accounts
- Term deposits
Other legal entities
- Term deposits
- Current/demand accounts
Total customer accounts
31 December 2023
31 December 2022
727 314
619 325
98 620
246 323
21 413
1
276
660 537
194 876
116 218
207 054
13 147
150
4
1 713 272
1 191 986
Refer to Note 32 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 26 . Information on related party balances is disclosed in Note 34 .
14 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 statements.
As at 31 December 2023 the carrying value of borrowings through securitisation transaction amounted to RR 1,061 million (31 December
2022: RR 2,199 million) that are represented by Class A bonds . The carrying value of the securitised home equity loans amounted to RR
1,857 million as at 31 December 2023 (31 December 2022: RR 2,958 million) . Refer to Note 8 . The fair value of the securitised home equity
loans does not differ materially from the carrying value as at 31 December 2023 (31 December 2022: same). The resulting net position
amounted to RR 796 million (31 December 2022: RR 759 million) .
F-79
F-80
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 15 Subordinated Debt
16 Insurance Contract Assets and Liabilities
In millions of RR
Insurance contract assets:
- Assets under reinsurance contracts, excluding
other previously recognized cash flows
Insurance contract assets
Insurance contract liabilities:
- Insurance contract liabilities other than assets
for acquisition cash flows and other occurred cash
flows
- Assets in relation to acquisition cash flows
Insurance contract liabilities
31 December 2023
31 December 2022*
1 January 2022*
1 463
1 463
22 119
(259)
21 860
693
693
15 438
(215)
15 223
14
14
9 921
(136)
9 785
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
In millions of RR
31 December 2023
31 December 2022
Perpetual subordinated loan notes issued in September 2021
Perpetual subordinated loan notes issued in June 2017
Total subordinated debt
38 974
19 564
58 538
30 817
15 096
45 913
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 mil-
lion) with zero premium . The Group has a right to repay the notes at its discretion starting from 15 September 2027 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 . Starting from 15 September 2023 the interest rate increased to 11 .99% p .a .
During the three months ended 31 December 2023 the Group repurchased 6,734 subordinated perpetual bonds (TCS-perp) at market price
for RR 348 million . The net gains from repurchase of subordinated bonds in the amount of RR 263 million are recognised in the consolidated
statement of profit or loss and other comprehensive income.
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 credi-
tors in accordance with the legislation of the Russian Federation .
As a result of the sanctions, the Group’s ability to make interest payments to the holders under its Eurobonds issued in 2017 and 2021
through the usual channels was undermined by the assets freeze restrictions . In this regard, the Group cancelled interest payments for the
two coupon periods (March and June 2023) under its Eurobonds to avoid discrimination between bondholders and to focus on finding a
practical and lawful solution to remedy this situation by the time of the next scheduled coupon payment . On 20 September and 20 December
2023 the Group resumed coupon payments for the 3rd and 4th quarters in fulfilment of its obligations under a subordinated loan notes to the
holders whose rights are recorded in the Russian depository infrastructure. The fulfilment of Eurobond coupon payment obligations to hold-
ers whose rights are registered in foreign depository infrastructure or foreign brokers remains technically impossible due to the imposed
sanctions . The Group is exploring all options available in the current circumstances for making payments to all categories of investors .
On 27 November 2023 the Group replaced USD 146 .2 million of Eurobonds issued in 2017 . The replacement share represents 48 .74% of the
original volume with a nominal value of USD 300 million, with coupon rate of 11 .99% and no stated maturity .
On 30 November 2023 the Group replaced USD 288 .7 million of Eurobonds issued in 2021 . The replacement share represents 48 .11% of the
original volume with a nominal value of USD 600 million, with coupon rate of 6 .0% and no stated maturity .
Holders of Eurobonds whose rights are recorded in the Russian depositories may participate in the replacement. The nominal, coupon rate
and maturity of the replacement bonds remained the same . All coupon payments on replacement bonds will be made in Russian rubles at the
Central Bank exchange rate on the payment date .
The perpetual subordinated loan participation notes are traded on the Moscow Exchange . Interest rate, maturity and geographical risk con-
centration analysis of subordinated debt is disclosed in Note 26. Refer to Note 32 for the disclosure of the fair value of financial instruments.
F-81
F-82
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 16 Insurance contract assets and liabilities (Continued)
Reconciliation of insurance liabilities is presented below:
In millions of RR
31 December 2023
31 December 2022
s
s
o
l
g
n
i
d
u
l
c
x
E
t
n
e
n
o
p
m
o
c
C
R
L
n
e
n
o
p
m
o
c
s
s
o
L
s
s
o
l
g
n
i
d
u
l
c
x
E
t
n
e
n
o
p
m
o
c
n
e
n
o
p
m
o
c
s
s
o
L
C
I
L
l
a
t
o
T
C
R
L
C
I
L
l
a
t
o
T
Insurance contract liabilities
at 1 January
9 080
275
5 868
15 223
6 422
151
3 212
9 785
Insurance revenue
(56 558)
-
-
(56 558)
(41 311)
-
-
(41 311)
Insurance service expenses
(except reinsurance)
Incurred claims and other directly
attributable expenses
Changes that relate to past service -
adjustments to the LIC
Losses on onerous contracts and
reversal of those losses
Insurance acquisition cash flows
amortisation
Insurance service expenses
(except reinsurance)
-
-
-
-
-
133
2 790
-
16 890
16 890
(1 982)
(1 982)
-
-
-
-
-
125
12 306
12 306
(523)
(523)
-
-
125
2 163
133
-
-
2 790
2 163
-
2 790
133
14 908
17 831
2 163
125
11 783
14 071
In millions of RR
31 December 2023
31 December 2022
s
s
o
l
g
n
i
d
u
l
c
x
E
t
n
e
n
o
p
m
o
c
C
R
L
(26)
Investment components
Allocation from assets for insurance
acquisition cash flows to groups of
insurance contracts
Cash flows
Premiums received
61 661
Claims and other directly attributable
expenses paid
-
Insurance acquisition cash flows
(3 015)
n
e
n
o
p
m
o
c
s
s
o
L
-
-
-
-
s
s
o
l
g
n
i
d
u
l
c
x
E
t
n
e
n
o
p
m
o
c
n
e
n
o
p
m
o
c
s
s
o
L
C
I
L
l
a
t
o
T
C
R
L
C
I
L
l
a
t
o
T
-
(26)
(80)
-
61 661
43 646
(13 541)
(13 541)
-
-
(3 015)
(1 865)
-
-
-
-
-
-
(80)
-
43 646
(9 252)
(9 252)
-
(1 865)
(9 252)
32 529
Total cash flows
58 646
-
(13 541)
45 105
41 781
Net insurance contract liabilities
at 31 December
14 044
408
7 408
21 860
9 077
276
5 870
15 223
Insurance service result
(53 768)
133
14 908
(38 727)
(39 148)
125
11 783
(27 240)
Total insurance finance expenses from
insurance contracts issued represent-
ed by amounts recognised in profit
or loss
Total insurance finance expenses from
insurance contracts issued represent-
ed by amounts recognised in OCI
Insurance finance expenses
Total changes in the statement
of comprehensive income
112
-
112
-
-
-
227
339
102
(54)
173
(54)
285
-
102
-
-
-
113
215
14
127
14
229
(53 656)
133
15 081
(38 442)
(39 046)
125
11 910
(27 011)
F-83
F-84
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
16 Insurance contract assets and liabilities (Continued)
17 Other Financial and Non-financial Liabilities
Reconciliation of insurance assets is presented below:
2023
2022
Remaining
coverage
Excluding
indemnity
component
Losses
incurred
Total
Remaining
coverage
Excluding
indemnity
component
Losses
incurred
Total
In millions of RR
Net balance at 1 January
267
426
693
14
-
14
Net income/(expenses) from
reinsurance contracts held
Reinsurance expenses
(1 611)
-
(1 611)
(415)
-
(415)
-
-
1 825
1 825
(48)
(48)
-
-
491
491
-
-
(1 611)
1 777
166
(415)
491
76
-
-
10
10
10
10
-
-
-
-
-
-
(1 611)
1 787
176
(415)
491
76
Claims recovered
Changes that relate to past service -
adjustments to incurred claims
Net income/(expense) from
reinsurance contracts held
Finance income from reinsurance
contracts held
Insurance finance income
Total amounts recognised in
comprehensive income
Cash flows
Premiums paid net of ceding commis-
sions and other directly attributable
expenses paid
1 739
-
1 739
Recoveries from reinsurance
-
(1 145)
(1 145)
Total cash flows
1 739
(1 145)
594
Net balance at 31 December
395
1 068
1 463
668
-
668
267
-
(65)
(65)
668
(65)
603
426
693
In millions of RR
Other financial liabilities
Settlement of operations with plastic cards
Trade payables
Credit related commitments (Note 28)
Loyalty programs
Other
Total other financial liabilities
Other non-financial liabilities
Lease liabilities
Taxes payable other than income tax
Accrued administrative expenses
Liabilities under MLTIP
Other
Total other non-financial liabilities
31 December 2023
31 December 2022*
1 January 2022*
100 547
14 408
8 728
4 055
1 882
129 620
24 364
8 540
4 268
4 247
113
41 532
64 760
12 540
6 530
3 353
2 690
89 873
21 268
2 653
3 349
4 905
313
32 488
48 879
11 510
3 334
2 802
2 421
68 946
1 052
3 167
3 291
-
307
7 817
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
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 . Taxes payable other than income tax are mainly represented by social tax accruals .
Accrued administrative expenses are mainly represented by accrued staff costs.
F-85
F-86
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 17 Other Financial and Non-financial Liabilities (Continued)
The main movements in the table presented above are described as follows:
Movements in the credit loss allowance for credit related commitments were as follows for the year ended 31 December 2023:
In millions of RR
At 31 December 2022
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
assumptions and estimates
Movements other than transfers
and new originated or purchased loans
Total charge/(recovery) to profit or loss for
the period
At 31 December 2023
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL for SICR)
Gross
committed amount
6 511
3 684
8 728
(23)
(35)
(237)
(1 182)
2 207
8 718
19
6 530
-
6 530
2
(33)
(4)
26
(9)
10
3 684
3 334
(21)
(68)
(241)
(1 156)
2 198
8 728
Movements in the credit loss allowance for credit related commitments were as follows for the year ended 31 December 2022:
• new originated or purchased category represents the day one 12-month ECL for the undrawn part of the purchased loans and loans to
new borrowers (for this particular product) before the first payment became due;
• transfers between Stage 1 and Stage 2 due to undrawn limits experiencing significant increases (or decreases) of credit risk and the
consequent “step up” (or “step down”) between 12-month and Lifetime ECL . Transfers present the amount of credit loss allowance for
loan commitments charged or recovered at the moment of transfer of a loan commitment among the respective stages;
• movements other than transfers and new originated or purchased loans category represents all other movements of ECL for loan com-
mitments in particular related to changes in gross carrying amounts of associated loans 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 26. Refer to Note 32 for
disclosure of fair value of other financial liabilities. Refer to Note 26 for analysis of loan commitments by credit risk grades.
18 Share Capital, Share Premium and Treasury Shares
In millions of RR except
for the number of
shares
Number
of authorised
shares
Number of
outstanding
shares
Ordinary
shares
Share
premium
Treasury
shares
Total
At 1 January 2022
224 218 678
199 305 492
230
26 998
(2 567)
24 661
GDRs and shares transferred
under MLTIP
-
-
At 31 December 2022
224 218 678
199 305 492
At 31 December 2023
224 218 678
199 305 492
-
230
230
-
682
26 998
(1 885)
26 998
(1 885)
682
25 343
25 343
At 31 December 2023 the total number of outstanding shares is 199,305,492 shares (31 December 2022: same) with a par value of USD
0 .04 per share (31 December 2022: same) .
In millions of RR
At 31 December 2021
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 assumptions
and estimates
Movements other than transfers and new originat-
ed or purchased loans
Total charge to profit or loss for the year
At 31 December 2022
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL for SICR)
Gross
committed amount
At 31 December 2023 and 2022 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 34 .
3 318
1 745
8 728
(33)
(62)
973
570
3 193
6 511
16
3 334
At 31 December 2023 the total number of treasury shares is 602,975 (31 December 2022: same) .
-
6 530
4
(28)
-
27
3
19
1 745
3 334
(29)
(90)
973
597
3 196
6 530
During the year ended 31 December 2023 no GDRs were repurchased by the Group (2022: same) .
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.
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)
2023
80 490
2022
20 982
198 703
198 703
203 649
205 010
405,08
395,24
105,59
102,35
F-87
F-88
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 18 Share Capital, Share Premium and Treasury Shares (Continued)
No dividends were declared during the year ended 31 December 2023 and 2022 .
Reconciliation of the number of shares used for basic and diluted EPS:
In thousands
Note
2023
2022
Weighted average number of ordinary shares in issue used for basic
earnings per ordinary share calculation
Number of shares attributable for MLTIP
34
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
198 703
198 703
5 406
(460)
7 046
(739)
203 649
205 010
In millions of RR
2023
2022
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
Due to banks
Other borrowed funds
RR denominated bonds
56 734
50 436
27 396
22 359
6 854
125
4 560
717
139
25
26 254
20 977
3 054
151
3 784
1 234
251
1 067
19 Net Interest Income
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
Placements with other banks and non-bank credit organizations
Debt securities and repurchase receivables at FVOCI
Brokerage operations
Debt securities and repurchase receivables at AC
2023
2022
Total interest expense calculated using the effective interest
rate method
62 175
56 772
Other similar expense
Lease liabilities
Total interest expense
Expenses on deposit insurance programme
Net interest income
2 265
64 440
5 498
230 323
1 007
57 779
4 076
143 897
236 754
147 579
35 464
18 412
14 313
12 353
8 633
33 083
13 734
9 898
6 630
168 550
115 998
18 802
11 157
10 158
8 387
4 048
17 438
7 232
5 754
6 629
Total interest income calculated using the effective interest
rate method
300 099
205 603
Other similar income
Financial assets at FVTPL
Total interest income
162
300 261
149
205 752
F-89
F-90
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
20 Fee and Commission Income and Expense
Replenishment fee is a payment from a client for the replenishing an amount greater than the maximum .
2023
2022
Marketing services fee represents a fee from SME for the advertising and information services .
In millions of RR
Fee and commission income
Acquiring commission
SME services commission
Brokerage fee
SMS fee
Subscription fee
Income from MVNO services
Foreign currency exchange transactions fee
Fee for money transfers
Interchange fee
Cash withdrawal fee
Lifestyle commission
Replenishment fee
Marketing services fee
Other fees receivable
37 451
19 097
15 905
11 228
10 780
9 591
6 320
6 047
4 058
1 847
1 654
1 239
314
2 581
31 070
14 933
12 702
6 667
5 664
4 767
22 647
9 509
4 773
1 631
754
1 103
438
1 365
Total fee and commission income
128 112
118 023
Fee and commission income represents the following main types:
Acquiring commission represents commission for processing card payments from online and offline points of sale.
SME services commission represents commission for services to individual entrepreneurs and small to medium businesses .
Brokerage fee includes trading fee and brokerage account service fee .
SMS fee represents fee for messages sent to the customers for notification and transaction’s authentication.
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 .
Income from MVNO services represents income from providing mobile services such as full coverage across Russia and international roam-
ing, offering a number of value-added options such as virtual numbers, music and video streaming services, etc.
Fee for selling credit protection was reclassified from the line “Fee and commission income” to the line “Insurance revenue” in the
consolidated statement of profit and loss and other comprehensive income due to implementation of IFRS 17. Refer to Note 36 for further
information .
Refer to Note 35 that describes the types of revenues recognized on a point in time basis and on the over time basis .
In millions of RR
Fee and commission expense
Payment system
Service fee
Costs of MVNO services
Banking and other fees
Payment channels
Total fee and commission expense
2023
2022
30 341
11 941
6 574
5 726
465
55 047
28 830
4 383
3 102
3 672
986
40 973
Payment systems fee represents fee for Mir (National payment card system), through which all transactions on MasterCard, Visa and other
payment systems’ services are made . Service fee represents fee for statement printing, mailing service, SMS services and others . Costs of
MVNO services represent expenses for the traffic, telecommunications service and roaming. Banking and other fee represents fee for bank-
ing, clearing and depository service fee, encashment and ATM service fee . Payment channels represent fee paid to third parties through
whom borrowers make loan repayments .
21 Customer Acquisition Expense
In millions of RR
Marketing and advertising
Staff costs
Cards issuing expenses
Partnership expenses
Credit bureaux
Telecommunication expenses
Other acquisition
2023
41 775
18 453
6 142
1 368
1 242
582
883
2022*
23 704
11 445
3 439
1 246
964
553
361
Foreign currency exchange transactions fee represents a commission for foreign exchange transactions of the Group's customers .
Total customer acquisition expenses
70 445
41 712
Fee for money transfers represents commission for money transfers to the bank’s account through various payment channels and services .
Interchange fee represents a fee charged to merchants for every credit or debit card transaction .
Cash withdrawal fee represents a fee charged for cash withdrawal transactions .
Lifestyle commission represent income from the customers received for the lifestyle non-financial services provided by a mobile application
(online booking of flights, hotels, theater and cinema tickets, etc.).
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
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 4,112 million for the year ended 31 December 2023
(2022: RR 2,443 million) .
F-91
F-92
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
22 Insurance Revenue and Insurance Service Expense
23 Administrative and Other Operating Expenses
In millions of RR
Insurance revenue
Insurance revenue from contracts measured under the PAA
Total Insurance revenue
Insurance service expense
Incurred claims and other directly attributable expenses
Changes that relate to past service - adjustments to the LIC
Losses on onerous contracts and reversal of those losses
Insurance acquisition cash flows amortisation
Insurance service expense
Net income/(expense) from reinsurance contracts held
Reinsurance expenses - contracts measured under the PAA
Claims recovered
Changes that relate to past service - adjustments to incurred claims
Net income/(expense) from reinsurance contracts held
Finance expenses from insurance contracts issued
Total Insurance service expense
Insurance service result
2023
2022*
56 558
56 558
(16 896)
1 983
(133)
(2 789)
(17 835)
(1 611)
1 836
(47)
178
(340)
(17 997)
38 561
41 311
41 311
(12 149)
523
(125)
(2 249)
(14 000)
(415)
483
-
68
(215)
(14 147)
27 164
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
Incurred claims and other directly attributable expenses include amortisation of intangible assets in the amount of RR 153 million for the
year ended 31 December 2023 (2022: RR 74 million) according to IFRS 17 requirements .
In millions of RR
Staff costs
Amortization of intangible assets
IT and software support
Write-off of fixed and intangible assets
Depreciation of right-of-use assets
Depreciation of fixed assets
Short-term and low-value lease
Professional services
Office maintenance and office supplies
Collection expenses
Communication services
Security expenses
Other taxes and levies
Charity
Other administrative expenses
Note
10
10
10
2023
85 074
9 908
8 470
3 524
3 017
2 776
1 905
1 815
1 108
979
556
545
533
438
2 206
2022*
67 768
6 164
4 665
1 059
1 690
2 210
1 985
1 402
748
604
481
307
3 018
266
1 350
Total administrative and other operating expenses
122 854
93 717
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
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 2023 amounted to RR 9 million (2022: RR 6 .4 mln) . The total fees charged by the
Company's statutory auditor for the year ended 31 December 2023 for other assurance services amounted to RR 0 .7 million (2022: nil), for
tax compliance services amounted to RR 0 .4 million (2022: RR 0 .1 million) and for other non-assurance services amounted to RR 0 .1 million
(2022: RR 0 .3 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
Total
2023
15 920
15 920
3 588
9
3 597
2022
11 391
11 391
7 731
106
7 837
Refer to Note 34 for details of each share-based remuneration program .
The average number of employees employed by the Group during the reporting year, including those who are working under civil contracts,
was 70,414 (2022: 64,857) .
F-93
F-94
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
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 2023 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 contract liabilities
Deferred tax assets
31 December
2022
(Charged)/
credited to profit or loss
31 December
2023
6 187
(914)
(3 942)
(313)
(4 656)
(1 347)
2 758
4 246
21
(27)
(165)
98
1 946
(6 187)
914
3 942
329
4 677
1 347
(2 976)
(4 246)
(21)
27
165
295
(1 734)
-
-
-
16
21
-
(218)
-
-
-
-
393
212
24 Income Taxes
Income tax expense comprises the following:
In millions of RR
Current tax
Deferred tax
Total income tax expense
2023
18 063
4 354
22 417
2022
15 006
(5 996)
9 010
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
On 4 August 2023, the President of the Russian Federation approved Federal Law No . 414-FZ on Windfall Tax . Under the provisions of the
Federal Law, the Group is a taxpayer of the windfall tax .
Windfall tax falls in scope of IAS 12 Income Taxes . The amount of the Group's windfall tax expense and payable, calculated at a rate of 10%,
is RR 1,848 million . The Group has made a windfall tax security deposit in the amount of RR 924 million, which in the consolidated statement
of cash flows is presented adjacent to the line item Income tax paid. As a result of the security deposit paid, the Group is eligible to a windfall
tax deduction in the amount of the above security deposit payment . Accordingly, the applicable windfall tax rate was 5% .
The income tax rate applicable to the majority of the Group’s income is 20% (2022: 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% (2022: 12 .5%) .
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% (2022: 20%)
Tax effect of items, which are not deductible or assessable for taxation purposes:
- Non-deductible expenses
- Other expenses
- Unrecognised tax losses
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
Windfall tax
2023
2022*
103 349
29 770
20 670
5 954
1 778
(51)
1
(906)
1
924
3 547
190
-
(676)
(5)
-
Income tax expenses for the year
22 417
9 010
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January
2023 .
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% (2022: 20%).
F-95
F-96
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
The deferred tax liabilities effect of the movements in temporary differences for the year ended 31 December 2022 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 contract liabilities
Deferred tax liabilities
31 December
2021
(Charged)/credited
to profit or loss
Credited
to OCI
31 December
2022
(185)
(764)
(153)
(389)
1 858
(1 093)
(38)
206
(73)
3
(1 183)
(49)
(1 860)
185
764
153
389
325
1 093
31
(206)
73
(3)
1 183
49
4 036
-
-
-
-
(2 183)
-
-
-
-
-
-
-
(2 183)
-
-
-
-
-
-
(7)
-
-
-
-
-
(7)
24 Income Taxes (Continued)
The deferred tax liabilities effect of the movements in temporary differences for the year ended 31 December 2023 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
2022
(Charged)/
credited to profit
or loss
Credited
to OCI
31 December
2023
-
-
-
-
-
-
(7)
-
-
-
-
-
(7)
3 518
(4 417)
(3 925)
(187)
(10 146)
148
4 840
4 638
170
265
(595)
-
-
-
-
-
231
-
-
-
-
-
-
-
3 518
(4 417)
(3 925)
(187)
(9 915)
148
4 833
4 638
170
265
(595)
-
(2 620)
231
(2 396)
The deferred tax assets effect of the movements in temporary differences for the year ended 31 December 2022 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 contract assets
Deferred tax assets
31 December
2021
(Charged)/credited
to profit or loss
31 December
2022
-
-
-
-
-
-
-
-
-
-
-
-
-
6 187
(914)
(3 942)
(313)
(4 656)
(1 347)
2 758
4 246
21
(27)
(165)
98
6 187
(914)
(3 942)
(313)
(4 656)
(1 347)
2 758
4 246
21
(27)
(165)
98
1 946
1 946
F-97
F-98
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
25 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.
• Permanent employment;
• Permanent income .
Сredit cards are issued with a limit of up to RR 1 million, with monthly debt repayment.
Securitisation Lease liabilities
Total
For POS loans minimum requirements are listed below:
For cash loans, minimum requirements are listed below:
• The requested loan term is up to 5 years;
• Cash loan volume does not exceed RR 5 million .
Liabilities from financing activities
In millions of RR
At 31 December 2021
Cash flows from repayments
Foreign exchange adjustments
Other non-cash movements
At 31 December 2022
Cash flows from repayments
Foreign exchange adjustments
Other non-cash movements
At 31 December 2023
Debt
securities in
issue
Perpetual
subordinated
debts
21 680
(21 098)
-
(281)
301
(331)
-
30
-
59 657
(4 427)
(4 912)
(4 405)
45 913
(892)
12 510
1 007
58 538
3 806
(1 604)
-
(3)
2 199
(1 135)
-
(3)
1 052
(659)
86 195
(27 788)
-
(4 912)
20 875
16 186
21 268
69 681
(3 365)
-
6 461
(5 723)
12 510
7 495
1 061
24 364
83 963
Other non-cash movements for the lease liabilities are presented by the additions of the net present value of the lease payments according
to IFRS 16 .
26 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 coun-
terparties giving rise to financial assets. The Group grants retail loans and SME loans to customers across all regions of Russia, therefore its
credit risk is broadly diversified.
The management of the Group takes special measures to mitigate growing credit risk such as decreasing of credit limits for unreliable
clients, diversifying of modes of work with overdue borrowers, toughening of scoring for the new borrowers etc .
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 28) .
The Bank has a credit committee, which establishes general principles for lending to individual borrowers . According to these principles,
the minimum requirements for potential customers are listed below:
• Citizenship of the Russian Federation;
• Age from 18 to 70 y .o ., but not older than 70 y .o . at the time of loan repayment;
• Availability of a cell-phone;
• The requested loan amount should exceed RR 3 thousand;
• The requested loan term is from 3 to 36 months;
• The amount of one POS loan does not exceed RR 500 thousand .
For secured loans minimum requirements are listed below:
• The requested loan secured with a car amount does not exceed RR 7 million, loan term is up to 7 years . The requirement for the car is in
good condition of driving with an age not more than 15 years, availability of a vehicle registration certificate and vehicle passport;
• The requested loan secured with a real estate amount does not exceed RR 30 million, loan term is up to 15 years . The requirement for the
real estate is an apartment in the apartment building within the Russian Federation, which is free from any encumbrances .
For car loans minimum requirements are listed below:
• The requested loan term is up to 5 years;
• Car loan volume does not exceed RR 8 million;
• 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 million and loan term to 6 months;
• Credit line under government contract: loan volumes up to RR 10 million, loan term - until the end of the contract, maximum 12 months;
• Gap financing: a short-term overdrafts to close cash gaps up to RR 10 million, loan term up to 45 days;
• Investment credit line secured by real estate: loan volumes up to RR 15 million and loan term to 10 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 200 million and loan term to 10 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 .
F-99
F-100
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
Management of the Group manages the credit risk on unused limits on credit cards in the following way:
a)
if the credit card loan is overdue for more than 7 days, its account will be blocked till repayment;
b)
if the borrower had lost his/her source of income, then borrower account might be blocked till verification of his/her new employment;
c)
if borrower’s loan debt burden in other banks is substantially bigger than at the time of loan origination or the credit quality of the bor-
rower decreases significantly then the borrower’s limit for credit might be reduced accordingly.
When customers experience serious difficulties with their current debt servicing, they may be offered loan restructuring. In this case the
Bank stops accrual of interest, commissions and fines and the debt amount is restructured according to a fixed instalment payment plan
with not more than 36 equal monthly payments . Another way of working with overdue loans is initiation of the state court process . This
collection option statistically gives greater recovery than the sale of credit-impaired loans .
Defaulted clients that could be subject to the court process are chosen by the Bank’s Collection Department considering the following
criteria:
a)
b)
c)
d)
e)
the client’s account balance was fixed, accrual of interest stopped;
information about the client is considered to be up to date;
the client denied restructuring program;
term of limitation of court actions has not expired;
court process is economically justified.
When loans become unrecoverable or not economically viable to pursue further collection efforts, the Collection Department may decide to
sell these loans to a debt collection agency . The Collection Department considers the following criteria for credit-impaired loans qualifying
for sale to external debt collection agencies:
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; and
• Doubtful – facilities that require closer monitoring and remedial management .
For measuring credit risk and grading loans and advances to customers, credit related commitments and those financial instruments which
do not have risk grades estimated by external international rating agencies, the Group applies risk grades and the corresponding range of
probabilities of default (PD):
Master scale credit risk grade
Corresponding interval
Excellent
Good
Monitor
Sub-standard
NPL
For credit cards: non-overdue with PD < 5%;
for POS loans and secured loans: not overdue with a probability of default of less than 2 .5%;
for other types of loans: not overdue with a probability of default of less than 5% .
For credit cards: non-overdue with PD greater than or equal to 5% but less than 25%
All non-overdue loans that do not meet the excellent level
For credit cards: the PD is greater than or equal to 25%, or from 1 to 30 overdue;
for other types of loans: from 1 to 30 days overdue
From 31 to 90 days overdue, or restructured loans from 0 to 90 days overdue;
More than 90 days overdue .
a)
loans remain unpaid after all collection procedures were performed (no payment during last 4-6 months);
Each master scale credit risk grade is assigned a specific degree of creditworthiness:
b) the debtor cannot be either reached or found for the previous 4 months;
c) the debtor has no assets and there is no expectation he/she will have any in the future;
d) the debtor has died and there is no known estate or guarantor;
e)
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 Russian authorized credit rating agency ACRA in case these financial
instruments have risk grades estimated by national rating agencies (using ACRA ratings and in case of their absence – Expert RA or National
RA ratings adjusting them to ACRA’s categories using a reconciliation table) .
The Group applies risk grades and the corresponding range of probabilities of default (PD):
Master scale credit risk grade
Excellent
Good
Monitor
Sub-standard
Doubtful
Corresponding interval
31 December 2023
PD < 0 .1%
with PD range of or equal to 0 .1%
and less than 4 .8%
PD in the range of or equal to 4 .8%
and less 8 .8%
PD in the range of or equal to 8 .8%
and less 20 .5%
PD in the range of or equal to 20 .5%
and less 47 .4%
Corresponding interval
31 December 2022
PD < 0 .1%
with PD range of or equal to 0 .1%
and less than 2 .5%
PD in the range of or equal to 2 .5%
and less 12 .5%
PD in the range of or equal to 12 .5%
and less 18 .5%
PD in the range of or equal to 18 .5%
and less 30%
• 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 probability-weighted esti-
mate 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
debt amount in the event of default and the flows that the Group would expect to receive.
F-101
F-102
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
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 36 months, cash
loans to 60 months, secured loans to 180 months, car loans to 84 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 .
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 as a SICR, the financial instrument is
Lifetime ECL – losses that result from all possible default events over the remaining lifetime period of the financial instrument.
moved to Stage 2 but is not yet deemed to be credit-impaired, the loss allowance is based on lifetime ECLs;
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.
Default and credit-impaired assets – assets for which a default event has occurred .
The default definition stated above should be applied to all types of financial assets of the Group.
An instrument is considered to no longer be in default (i .e . to have “cured”) when it no longer meets any of the default criteria .
• 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.
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 .
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 .
Examples of shared characteristics include type of customer, product type, credit risk rating, date of initial recognition, overdue level and
repayment statistics .
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 .
The different segments reflect differences in PD. The appropriateness of groupings is monitored and reviewed on a periodic basis by the
Risk Management Department .
For interbank operations, bonds issued by banks and bonds issued by corporates and sovereigns:
• 30 days past due;
• award of risk grade “Doubtful”;
• decrease of assigned external rating by 2 notches, which corresponds to an approximate increase of PD by 2 .5 times .
For credit card loans:
• 30 days past due; or
• threshold defined on an individual basis using existing scoring models: increase of the 12-month PD compared to 12-month PD 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 .
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% .
In general, ECL is the multiplication of the following credit risk parameters: EAD, PD and LGD (definitions of the parameters are provided
above) . The general approach used for ECL calculation is stated below .
where:
— probability of default (can’t be higher than 100%);
— exposure at default;
— loss given default;
— adjustment to PD and LGD depending on macroeconomic factors .
F-103
F-104
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 26 Financial and Insurance Risk Management (Continued)
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 .
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
behavioral characteristics . For other products debt at the time of default 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 behavioral charac-
teristics and adjusted for forward-looking information when appropriate . Based on borrower-specific PDs the exposures are allocated
to segments to which average PD for the segment is applied .
• Lifetime PDs – the estimated probability of a default occurring over the remaining life of the financial instrument . This parameter is used
to calculate lifetime ECLs for Stage 2 and Stage 3 exposures . An assessment of a lifetime PD is based on the latest available historic
default data using product specific lifetime periods defined above . To calculate Lifetime PD, the Group developed lifetime PD curves
based on the 12-month PD data .
LGD represents the Group's expectation of the extent of loss on a defaulted exposure:
• For credit cards, POS loans in stages 1, 2 and 3, also car loans in stages 1, 2, losses in the event of default are calculated using the port-
folio approach based on statistics of repayments of defaulted loans for the period for 36 months;
• For cash loans in stages 1, 2 and 3 and car loans in stage 3 losses in the event of default are calculated using the portfolio approach
based on statistics of repayments of defaulted loans for the period for 30 months;
• For SME loans - losses in the event of default are calculated using the portfolio approach based on statistics of repayments of defaulted
loans for the period for 12 months, for SME overdrafts – 15 months;
• For secured cash loans, credit lines for SME and BNPL loans losses in the event of default are calculated using current market data on
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 national rating agencies - ACRA and in case of rating’s absence – Expert RA or National RA (2022: same) .
Forward-looking information incorporated in the ECL models. The calculation of ECLs incorporates forward-looking information .
Starting from 2022, given the high degree of uncertainty associated with the geopolitical situation the Group assesses the impact of the
economic environment on the applicable estimates used in calculating ECLs based on actual historical data on defaults in previous crises,
as well as using expert estimates based on the duration and strength of the crises . As with any forecast, however, the projections and
likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly
different from those projected.
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 mod-
els 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) inter-
est 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 2023
At 31 December 2022
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1 992 953
(1 780 119)
(5 524)
207 310
1 321 780
(1 168 650)
(5 435)
147 695
97 101
(117 330)
8 506
(11 723)
124 168
(130 134)
6 401
435
28 035
(21 991)
14 741
(17 073)
1 072
(1 848)
101
(837)
-
-
-
-
1 197
(1 412)
(8)
6 044
31 620
(20 656)
-
10 964
(2 332)
23 124
(25 232)
(8)
(2 116)
(776)
(736)
(223)
3 158
(3 118)
272
(964)
-
-
6 501
(7 059)
(155)
40
(692)
(713)
2 135 200
(1 940 610)
2 974
197 564
1 510 623
(1 355 813)
803
155 613
In millions of RR
RR
USD
CNY
Euro
HKD
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 31 .
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%
(2022: by 20%)
USD weakening by 20%
(2022: by 20%)
CNY strengthening by 20%
(2022: by 20%)
СNY weakening by 20%
(2022: by 20%)
At 31 December 2023
At 31 December 2022
Impact on profit
for the year
Impact
on total equity
Impact on profit
for the year
Impact
on total equity
(1 836)
(1 836)
1 836
1 836
947
(947)
947
(947)
61
(61)
61
(61)
1 529
1 529
(1 529)
(1 529)
F-105
F-106
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
Euro strengthening by 20%
(2022: by 20%)
Euro weakening by 20%
(2022: by 20%)
HKD strengthening by 20%
(2022: by 20%)
HKD weakening by 20%
(2022: by 20%)
GBP strengthening by 20%
(2022: by 20%)
GBP weakening by 20%
(2022: by 20%)
(365)
365
(122)
122
(115)
115
(365)
365
(122)
122
(115)
115
(295)
295
6
(6)
(97)
97
(295)
295
6
(6)
(97)
97
The exposure was calculated only for monetary balances denominated in currencies other than the functional currency of the respective
entity of the Group .
Interest rate risk. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial
position and cash flows. Interest margins may increase as a result of such changes but may reduce or create losses in the event that unex-
pected 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 (2022: 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
and insurance assets and liabilities at carrying amounts, categorized by the earlier of contractual interest repricing or maturity dates:
In millions of RR
31 December 2023
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
No stated
maturity
Total
Total financial assets
920 911
317 257
202 124
429 834
261 453
6 604
2 138 183
Total financial liabilities
(949 502)
(358 012)
(199 978)
(274 218)
(158 909)
-
(1 940 619)
Net interest
sensitivity gap at
31 December 2023
31 December 2022
(28 591)
(40 755)
2 146
155 616
102 544
6 604
197 564
Total financial assets
639 295
224 438
126 055
268 368
247 784
5 703
1 511 643
Total financial liabilities
(811 128)
(324 587)
(95 087)
(81 722)
(43 506)
-
(1 356 030)
Net interest
sensitivity gap at
31 December 2022
(171 833)
(100 149)
30 968
186 646
204 278
5 703
155 613
Assets with no stated maturity are represented by the restricted assets .
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 implies assessment of impact
on net interest income of a shift in interest rates by 200 basis points . At 31 December 2023, if interest rates at that date had been 200 basis
points lower/higher (31 December 2022: 200 basis points), with all other variables held constant, profit for the year would have been RR
3,951 million (31 December 2022: RR 3,205 million) lower/higher, equity would have been RR 3,951 million (31 December 2022: RR 3,205
million) lower/higher .
The Group monitors interest rates for its financial instruments. The table below summarizes weighted average interest rates for the years
2023 and 2022 based on reports reviewed by key management personnel .
At 31 December 2023
At 31 December 2022
RR
USD
EURO
CNY
Other
RR
USD
EURO
CNY
Other
In % p.a.
Assets
Cash and cash equivalents
0,1
0,0
0,1
1,1
0,0
1,0
0,0
-0,1
0,0
Loans and advances to
customers
Due from banks
Investments in securities
Repurchase receivables
Brokerage receivables
Liabilities
Due to banks
Customer accounts
Other borrowed funds
Debt securities in issue
Brokerage payables
Subordinated debt
30,1
10,6
7,5
7,5
24,6
12,3
8,1
7,9
-
23,7
-
4,0
-
2,8
-
26,4
-
0,2
-
-
22,0
7,9
3,4
-
-
2,8
2,5
-
-
-
0,0
-
-
-
-
-
-
-
0,3
1,1
-
-
-
-
-
-
3,8
-
-
28,2
2,0
5,8
-
-
-
5,4
-
1,7
-
2,9
-
23,9
21,1
21,9
-
12,1
0,0
-
-
-
-
5,8
7,9
0,0
22,5
-
0,0
0,9
-
-
21,2
8,2
-
0,5
-
-
-
-
-
-
3,3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0,1
-
-
-
-
The sign “-” in the table above means that the Group does not have the respective assets or liabilities in the corresponding currency .
F-107
F-108
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
The geographical concentration of the Group’s financial and insurance assets and liabilities at 31 December 2022 is set out below:
Geographical risk concentrations. The geographical concentration of the Group’s financial and insurance assets and liabilities at 31
December 2023 is set out below:
In millions of RR
Financial assets
Russia
OECD
Other
Non-OECD
Listed
Total
Russia
OECD
Other
Non-OECD
Listed
Total
Cash and cash equivalents
473 552
3 466
34 543
In millions of RR
Financial assets
Cash and cash equivalents
717 739
1 361
5 054
Mandatory cash balances with the CBRF
Due from other banks
Loans and advances to customers
Financial derivatives
Investments in securities
Repurchase receivables
Brokerage receivables
Insurance contract assets
Other financial assets
Total financial assets
Financial liabilities
Due to banks
Customer accounts
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance contract liabilities
Other financial liabilities
Total financial liabilities
3 189
5 312
972 115
2 983
328 275
845
42 345
1 463
45 953
2 120 219
6 843
1 713 272
1 061
9
9 416
-
21 860
129 620
1 882 081
Credit related commitments (Note 28)
677 471
-
-
-
-
-
-
-
-
6 604
7 965
-
-
-
-
-
-
-
-
-
-
-
-
297
-
4 648
-
-
-
-
9 999
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58 538
-
-
724 154
3 189
5 312
972 412
2 983
332 923
845
42 345
1 463
52 557
2 138 183
6 843
1 713 272
1 061
9
9 416
58 538
21 860
129 620
58 538
1 940 619
-
677 471
Mandatory cash balances with the CBRF
Due from other banks
Loans and advances to customers
Financial derivatives
Investments in securities
Brokerage receivables
Guarantee deposits with payment systems
Insurance contract assets
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 contract liabilities
Other financial liabilities
1 690
450
605 872
1 020
-
-
-
-
-
-
583
-
307 253
13 209
5 340
26 747
-
693
37 147
-
6
-
-
-
-
-
72
1 454 424
16 681
40 538
2 060
1 191 986
-
2 199
217
8 258
-
15 223
89 845
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28
28
-
-
-
-
-
-
-
-
-
-
-
-
-
-
301
-
-
-
45 913
-
-
511 561
1 690
450
606 455
1 020
325 802
26 747
6
693
37 219
1 511 643
2 060
1 191 986
301
2 199
217
8 258
45 913
15 223
89 873
46 214
1 356 030
-
400 898
Total financial liabilities
1 309 788
Credit related commitments (Note 28)
677 471
400 898
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 2023 and 2022 .
Liquidity risk. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The
Group is exposed to daily calls on its available cash resources from unused limits on issued credit cards, retail deposits from customers,
current accounts and due to banks . Liquidity risk is managed by the Financial Department and the Risk Management Department on a regu-
lar basis .The Group seeks to maintain a stable funding base primarily consisting of amounts due to retail and corporate customer accounts
and deposits, debt securities .
F-109
F-110
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
The maturity analysis of financial and insurance liabilities at 31 December 2022 is as follows:
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.
In millions of RR
Financial 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
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 2023 and 2022. The CFO and the Head of Risk Management Department receive 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 transac-
tions and repayments, statistics on credit card issuance and credit card limit utilisation, inflow and outflow of retail deposits, changes in
the investment securities portfolio, level of expected outflows such as operating costs and financing activities. The CFO then ensures the
availability of an adequate portfolio of short-term liquid assets, made up of an amount on the correspondent account with the CBRF and
overnight deposits with banks, to ensure that sufficient liquidity is maintained within the Group as a whole. Liquidity stress testing is carried
out on a regular basis by the Finance Department and the Risk Management Department in accordance with various scenarios, taking into
account the models of outflow and inflow of cash on account balances and repayments of credit card debt.
The table below shows liabilities at 31 December 2023 by their remaining contractual maturity . The amounts of liabilities disclosed in the
maturity table are the contractual undiscounted cash flows and net 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 and insurance liabilities at 31 December 2023 is as follows:
In millions of RR
Financial liabilities
Due to banks
Customer accounts
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance contract liabil-
ities
Other financial liabilities
Lease liabilities
Credit related commitments
(Note 28)
Total potential future
payments for financial
obligations
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
6 843
-
-
-
-
6 843
812 639
192 165
170 140
191 966
374 593
1 741 503
-
51
9 416
288
4 687
122 566
817
-
-
-
-
51
-
1 061
102
-
-
6 193
-
1 061
6 397
9 416
855
1 242
2 350
68 356
73 091
3 743
1 770
2 473
2 757
1 830
2 504
8 868
2 245
4 260
1 805
1 209
21 860
129 620
27 567
37 621
677 471
-
-
-
-
677 471
1 634 778
201 006
178 524
210 852
479 723
2 704 883
Due to banks
810
-
-
-
1 250
2 060
Customer accounts
753 881
177 987
100 626
85 832
77 387
1 195 713
Debt securities in issue
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance contract
liabilities
Other financial liabilities
Lease liabilities
Credit related
commitments (Note 29)
Total potential future
payments for
financial obligations
-
-
53
8 258
302
2 643
84 644
127
-
-
-
-
579
2 225
1 606
352
-
-
49
-
772
1 981
1 564
784
301
2 199
103
-
-
-
6 397
-
301
2 199
6 602
8 258
1 923
43 109
46 685
6 330
1 435
1 721
2 044
624
32 890
15 223
89 873
35 874
400 898
-
-
-
-
400 898
1 251 616
182 749
105 776
99 844
163 701
1 803 686
Financial derivatives receivable and payable are disclosed in the Note 31 . The tables above present only the gross payables .
Insurance contract liabilities 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 economic situation of recent years could
led to an increase in liquidity risk in the banking system of the Russian Federation, but this did not happen due to the adequate response and
support measures of the Bank of Russia .
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 .
F-111
F-112
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
The expected maturity analysis of financial instruments at carrying amounts as monitored by management at 31 December 2022 is present-
ed in the table below .
The expected maturity analysis of financial instruments at carrying amounts as monitored by management at 31 December 2023 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
From 1 to
5 years
More
than 5
years
No
stated
maturity
Total
In millions of RR
Financial assets
Total financial assets
1 129 441
154 117
144 768
189 605
424 444
89 091
6 717
2 138 183
6 717
52 557
Financial liabilities
In millions of RR
Financial assets
Cash and cash
equivalents
Mandatory cash
balances with the CBRF
701 854
22 300
-
-
-
Due from other banks
-
3 125
2 162
1 501
340
305
347
25
696
-
Loans and advances to
customers
126 215
128 352
142 301
189 233
341 113
45 198
Financial derivatives
3
Investments in securities
210 535
Repurchase receivables
Brokerage receivables
Insurance contract
assets
Other financial assets
845
42 345
1 463
44 680
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 980
-
78 495
43 893
-
-
-
1 160
-
-
-
-
Financial liabilities
Due to banks
6 843
-
-
-
-
Customer accounts
805 982
182 907
163 862
186 661
373 860
Other borrowed funds
Financial derivatives
-
9
Brokerage payables
9 416
-
-
-
-
-
-
1 061
-
-
-
-
-
-
1 143
1 143
2 319
53 933
Other financial liabilities
122 566
4 687
3 743
1 770
2 757
1 830
8 868
1 805
2 245
1 209
949 503
189 563
169 592
201 154
430 807
Subordinated debt
Insurance contract
liabilities
Total financial
liabilities
Net liquidity gap
at 31 December 2023
Cumulative liquidity
gap at 31 December
2023
-
-
-
-
-
-
-
-
-
-
-
-
724 154
3 189
5 312
972 412
2 983
332 923
845
42 345
1 463
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6 843
1 713 272
1 061
9
9 416
58 538
21 860
129 620
1 940 619
Demand and
less than 1
month
From 1 to 3
months
From 3 to 6
months
From 6 to
12 months
From 1 to
5 years
More
than 5
years
No stated
maturity
Cash and cash equivalents
494 434
17 127
-
-
-
1 027
-
156
-
131
-
139
-
237
450
Mandatory cash balances
with the CBRF
Due from other banks
Loans and advances to
customers
83 847
97 928
102 608
112 147
181 607
28 318
Financial derivatives
61
Investments in securities
202 136
Brokerage receivables
26 747
Guarantee deposits with
payment systems
Insurance contract assets
1
693
-
-
-
1
-
-
-
-
1
-
-
-
-
1
-
-
2
-
959
-
63 583
60 083
-
-
-
-
-
-
-
Other financial assets
24 266
125
81
71
6 867
5 809
37 219
Total financial assets
833 212
115 337
102 821
112 358
253 705
88 401
5 809
1 511 643
Total
511 561
1 690
450
606 455
1 020
325 802
26 747
6
693
-
-
-
-
-
-
-
-
-
Due to banks
810
-
-
-
1 250
Customer accounts
724 102
110 046
92 656
98 110
167 072
-
-
194
8 258
-
-
-
-
-
-
-
-
301
2 199
23
-
-
-
-
-
-
880
880
1 760
42 393
2 643
84 644
2 225
1 606
1 981
1 564
6 330
2 044
1 435
624
820 651
114 757
97 081
110 158
213 383
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 060
1 191 986
301
2 199
217
8 258
45 913
15 223
89 873
-
1 356 030
12 561
580
5 740
2 200
40 322
88 401
5 809
155 613
12 561
13 141
18 881
21 081
61 403 149 804
155 613
-
Debt securities in issue
Other borrowed funds
Financial derivatives
Brokerage payables
Subordinated debt
Insurance contract
liabilities
Other financial liabilities
Total financial liabil-
ities
Net liquidity gap at 31
December 2022
Cumulative liquidity
gap at 31 December
2022
179 938
(35 446)
(24 824)
(11 549)
(6 363)
89 091
6 717
197 564
179 938
144 492
119 668
108 119
101 756
190 847
197 564
-
All current accounts of individuals are classified using outflow curve (2022: same).
F-113
F-114
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
26 Financial and Insurance Risk Management (Continued)
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.
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.
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 .
The Group has developed a Financial Stability Restoration Plan (the “Plan”) in emergency situations . The main purpose of this Plan is, in the
event of a liquidity crisis and/or deterioration in the Group’s financial position, to preserve the Group’s capital and identify sources of liquid-
ity replenishment. The plan provides for the formation of effective measures that correspond to stress conditions, which should stabilize the
situation and restore the liquidity and financial stability of 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 .
The insurance risk management process covers all stages, from the stage of development of insurance rates to the settlement of losses .
The main steps in the insurance risk management process include:
• Underwriting and regulation of tariff policy;
• Efficiency of the loss settlement process;
• Diversification of the insurance portfolio .
Tariff policy. The process of underwriting and regulation of the tariff policy includes the formation of tariffs for certain areas of activity
based on the analysis of results for previous periods, existing market conditions and the Insurance Company's strategy .
The insurance tariff is set on the basis of the analysis of the expected loss ratio based on Group’s insurance portfolio and similar products
on the market, the commission ratio based on the analysis of product profitability and commission rates for similar products on the market,
and the analysis of the average market rate. When developing tariffs, factors such as expected inflation and changes in the legislation of the
Russian Federation are also taken into account .
The Insurance Company monitors the correctness of the calculation of the insurance premium under the insurance contract by analysing, on
a regular basis, the deviations of the actual received premiums from the estimated premiums .
Loss settlement process. In accordance with the insurance contract, the policyholder is obliged to notify the insurance company of a
loss within a certain period of time . Losses are settled by specialized units, other than selling business units . The insurance claims will be
paid only after receiving all the necessary documents confirming the fact of the insured event. Also, if necessary, economic security 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 Insurance Company does not operate outside the Russian Federation and is exposed to risks associated with
the geographical features of the regions of the Russian Federation .
Sensitivity analysis. The following analyses the possible changes in the key assumptions used in the calculation of insurance liabilities
Effect of changes in the key assumptions as at 31 December 2023:
In millions of RR
except for the
number of claims
Change in
assumtions
Effect on insurance
obligations other
than life insurance
Effect on the reinsuers'
share in insurance
obligations other
than life insurance
Effect on
profit
before tax
Effect on
equity
The average cost of
insurance claims
The average number of
claims
– 10%
+ 10%
– 10%
+ 10%
(781)
781
(781)
781
108
(108)
108
(108)
673
(673)
673
(673)
422
(422)
422
(422)
Effect of changes in the key assumptions as at 31 December 2022:
In millions of RR
except for the
number of claims
Change in
assumtions
Effect on insurance
obligations other
than life insurance
Effect on the reinsuers'
share in insurance
obligations other
than life insurance
Effect on
profit
before tax
Effect on
equity
The average cost of
insurance claims
The average number of
claims
– 10%
+ 10%
– 10%
+ 10%
(500)
500
(500)
500
27
(27)
27
(27)
473
(473)
473
(473)
422
(422)
422
(422)
27 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 the
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 total equity as shown in the consolidated statement of financial position. The
amount of capital that the Group managed as of 31 December 2023 was RR 283,915 million (31 December 2022: RR 205,913 million) .
In October 2021 the Bank was added to the CBRF’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 is
obliged to comply with the additional capital adequacy buffers +1% to the minimum required statutory equity capital adequacy ratio (N1.0).
Compliance with capital adequacy ratios set by the CBRF is monitored daily, and reports with their calculation are reviewed and signed by
the Chief Executive Officer and Chief accountant, then submitted to the CBRF in accordance with the deadlines set by the regulator. 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 2023 was RR 244,634
million, and the equity capital adequacy ratio (N1 .0) was 12 .84% (31 December 2022: RR 208,776 million and 16 .62%) . Minimum required
statutory equity capital adequacy ratio (N1 .0) was 9% as at 31 December 2023 (31 December 2022: 9%) .
F-115
F-116
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 27 Management of Capital (Continued)
28 Contingencies and Commitments
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
Translation reserve
Other reserves
Less intangible assets
Non-controlling interest
Common Equity Tier 1 (CET1)
Additional Tier 1 (Subordinated debt)
Tier 1 capital
Total capital
Risk weighted assets (RWA)
Credit risk
Operational risk
Market risk
31 December 2023
31 December 2022
230
26 998
(1 885)
2 433
261 354
(5 434)
4
43
(36 391)
172
247 524
58 538
306 062
306 062
1 324 997
450 536
39 103
230
26 998
(1 885)
2 731
180 864
(3 214)
243
2
(24 097)
(56)
181 816
45 913
227 729
227 729
927 170
340 046
32 072
Total risk weighted assets (RWA)
1 814 636
1 299 288
Common equity Tier 1 capital adequacy ratio (CET1 /Total RWA), %
Tier 1 capital adequacy ratio (Tier 1 capital /Total RWA), %
Total capital adequacy ratio (Total capital /Total RWA), %
13,6%
16,9%
16,9%
14,0%
17,5%
17,5%
Starting from 2022 due to the suspension of services by the international rating agency Fitch, the Group applies risk assessments established
by the Russian rating agency ACRA to assess credit risk and classify financial instruments according to the level of credit risk. The Group
assessed that the effect of the transition is immaterial for both reporting period and comparative information. The Group and the Bank have
complied with all externally imposed capital requirements throughout the year ended 31 December 2023 and 2022 .
The size of the solvency margin calculated by the Insurance Company in accordance with the requirements of the legislation of the Russian
Federation is presented by the standard ratio of capital and assumed liabilities which was 4 .87 at 31 December 2023 and 2 .64 at 31 December
2022 .
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 by the tax authorities . Russian tax administration is
gradually strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with
tax incompliant counterparties . Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preced-
ing 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 Cooper-
ation 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 pos-
sible, 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 income 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 controlled
by a legal entity and a rate of 13% if it is controlled by an individual . As a result, management reassessed the Group’s tax positions and
recognised current tax expense as well as deferred taxes that arose from the expected taxable manner of recovery of the relevant Group’s
operations to which the CFC legislation applies to and to the extent that the Group (rather than its owners) is obliged to settle such taxes .
As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of
such uncertain areas that may reduce the overall tax rate of the Group . While management currently estimates that the tax positions and
interpretations that it has taken can probably be sustained, there is a possible risk that outflow of resources will be required should such
tax positions and interpretations be challenged by the tax authorities . The impact of any such challenge, were it to be successful, 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
2023 and 2022 no material tax risks were identified.
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 2023 and 2022 .
Capital commitment related to the office construction. The future cash outflows to which the Group is exposed due to the construc-
tion and repairs of a new office building and which are not reflected in the liabilities amounted to RR 4,826 million as at 31 December 2023 (31
December 2022: RR 19,222 million) .
Условные обязательства, связанные со строительством офиса. Будущие оттоки денежных средств, которые ожидает
Группа в связи со строительством и ремонтом нового офисного здания и которые не отражены в обязательствах, составили
4 826 млн руб. по состоянию на 31 декабря 2023 года (31 декабря 2022 года: 19 222 млн руб.).
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 .
F-117
F-118
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
28 Contingencies and Commitments (Continued)
The following table contains an analysis of credit related commitments by credit quality at 31 December 2022 based on credit risk grades .
Most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to
maturity of credit related commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term
commitments .
Performance guarantees are contracts that provide compensation if another party fails to perform a contractual obligation . Such contracts
do not transfer credit risk . The risk under performance guarantee contracts is the possibility that the insured event (i .e . the failure to perform
the contractual obligation by another party) occurs. The key risks the Group faces are significant fluctuations in the frequency and severity of
payments incurred on such contracts relative to expectations . The Group uses a scoring model to predict levels of such payments . Claims must
be made before the contract matures and most claims are settled within short term . This allows the Group to achieve a high degree of certainty
about the estimated payments and therefore future cash flows.
Outstanding credit related commitments and performance guarantees are as follows:
In millions of RR
Credit related commitments
- Excellent
- Good
- Monitor
Unrecognised gross amount
Credit loss allowance
31 December 2023
31 December 2022
Unrecognised net amount
Stage 1
(12-months ECL)
Stage 2
(lifetime
ECL for SICR)
Stage 3
(lifetime ECL for
credit impaired)
357 170
46 735
3 004
406 909
(6 511)
400 398
-
152
367
519
(19)
500
-
-
-
-
-
-
Total
357 170
46 887
3 371
407 428
(6 530)
400 898
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
Total performance guarantees issued, net of provisions
656 648
29 551
(8 728)
677 471
-
-
392 204
15 224
(6 530)
400 898
2
2
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 .
Mandatory cash balances with the CBRF of RR 3,189 million as at 31 December 2023 (31 December 2022: RR 1,690 million) represent manda-
tory reserve deposits which are not available to finance the Bank's day to day operations.
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 con-
ditions 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 .
The following table contains an analysis of credit related commitments by credit quality at 31 December 2023 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)
629 961
48 664
6 926
685 551
(8 718)
676 833
-
188
460
648
(10)
638
-
-
-
-
-
-
Total
629 961
48 852
7 386
686 199
(8 728)
677 471
F-119
F-120
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 29 Offsetting Financial Assets and Financial Liabilities
Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at 31 December 2023:
Net amount after
offsetting in the
consolidated
statement
of financial position
Amounts subject to master
netting and similar
arrangements not set off in
the consolidated statement
of financial position
Net
amount of
exposure
Gross amounts
before offsetting
Financial
instruments
Cash
collateral
476 063
42 345
2 979
476 063
493 162
42 345
43 244
-
-
2 979
-
6 154
521 387
521 387
536 406
6 154
3 003
689
9 416
1 061
3 003
2 979
689
9 416
1 061
845
11 126
1 857
14 169
14 169
16 807
-
-
-
-
-
-
-
-
-
24
-
-
-
24
In millions of RR
ASSETS
Reverse repurchase agree-
ments
Brokerage receivables
Financial derivatives
Total assets subject
to offsetting, master
netting and similar
arrangement
LIABILITIES
Correspondent accounts
and overnight placements
of other banks
Sale and repurchase agree-
ments with other banks
Brokerage payables
Other borrowed funds
Total liabilities subject
to offsetting, master
netting and similar
arrangement
Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at 31 December 2022:
Net amount after
offsetting in the
consolidated
statement
of financial position
Amounts subject to master
netting and similar
arrangements not set off in
the consolidated statement of
financial position
Net
amount of
exposure
Gross amounts
before offsetting
Financial
instruments
Cash
collateral
252,399
26,747
937
252,399
254,683
26,747
27,250
-
-
937
-
2,060
280,083
280,083
281,933
2,060
1,250
8,258
2,199
1,250
8,258
2,199
937
9,483
2,958
11,707
11,707
13,378
-
-
-
-
-
-
-
-
313
-
-
313
In millions of RR
ASSETS
Reverse repurchase agree-
ments
Brokerage receivables
Financial derivatives
Total assets subject
to offsetting, master
netting and similar
arrangement
LIABILITIES
Correspondent accounts
and overnight placements
of other banks
Brokerage payables
Other borrowed funds
Total liabilities subject
to offsetting, master
netting and similar
arrangement
As at 31 December 2023 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 (2022: same). The disclosure does not apply to loans and advanc-
es to customers and related customer deposits .
F-121
F-122
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 30 Transfers of Financial Assets
31 Financial Derivatives
The Group transferred financial assets in transactions that did not qualify for derecognition in the current periods.
The table below shows the amount of operations under sale and repurchase agreements which the Group enters into in the normal course of
business:
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
Debt securities at FVOCI pledged under repurchase
agreements
Notes
12
Total
31 December 2023
31 December 2022
Carrying
amount of
the assets
Carrying
amount of
the associat-
ed liabilities
Carrying
amount of
the assets
Carrying
amount of the
associated
liabilities
-
-
689
689
-
-
-
-
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:
In millions of RR
Cash and cash equivalents
Brokerage receivables
Total
31 December 2023
31 December 2022
Amounts
granted
under repo
agreements
Fair value of
securities
received as
collateral
Amounts
granted
unde repo
agreements
Fair value of
securities
received as
collateral
476 063
493 162
252 399
254 683
42 345
43 244
26 747
27 250
518 408
536 406
279 146
281 933
Notes
5
9
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 payable on settlement (-)
- EUR receivable on settlement (+)
- Other currencies receivable on
settlement (+)
Fair value of foreign exchange
forwards and swaps
31 December 2023
31 December 2022
Contracts with
positive fair value
Contracts with
negative fair value
Contracts with
positive fair value
Contracts with
negative fair value
8 507
-
(5 524)
-
-
2 983
(1)
-
-
-
(8)
(9)
6 455
-
(5 435)
-
-
1 020
(31)
(23)
-
(8)
(155)
(217)
F-123
F-124
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
32 Fair Value of Financial Instruments
The description of valuation techniques and the description of the inputs used in the fair value measurement for level 2 measurements at 31
December 2023 are as follows:
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 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) .
(а) 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
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
31 December 2023
31 December 2022
Loans and advances
to customers
Financial derivatives
Total assets recurring fair
value measurements
LIABILITIES AT FAIR VALUE
Financial derivatives
Total liabilities recurring
fair value measurements
206 338
19 200
2 544
228 082
99 249
114 475
2 380
216 104
-
-
9
9
-
-
9
9
-
-
217
217
-
-
217
217
Investments in securities categorised in level 2 are represented by liquid debt securities classified in “Good” credit risk grade.
In 2023, the transfer of Investments in securities from level 2 to level 1 occurred as a result of the restoration of market activity, trading
volumes rose up following the growth of the Moscow Exchange index after a fall in 2022 .
ASSETS AT FAIR VALUE
Investments in securities
16 217
Investments in securities
194 323
16 217
2 247
212 787
89 267
113 455
1 797
204 519
Precious metals
12 015
-
12 015
9 982
-
-
-
-
297
297
2 983
-
2 983
-
-
-
9 982
583
583
1 020
-
1 020
Foreign exchange swaps and
forwards
Discounted cash flows adjusted for
counterparty credit risk
2 983
-
-
In millions of RR
ASSETS AT FAIR VALUE
Fair value
Valuation technique
Inputs used
- Selection of an indicative paired
bid and ask Cbonds quotes when
comparing preliminary pairs of
quotes on exchange trading floors,
then comparing with the quotes
from OTC market participants;
- Indicative quotes from the Cbonds
price center;
- Observable quotes for comparable
securities adjusted by multiplicator
depending on the degree of the
market activity
- Quotes from the automated fair val-
ue system for financial instruments
of NSD price center* .
Russian ruble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
CDS quotes assessment of coun-
terparty credit risk or reference
entities .
Russian ruble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
Discounted cash flows adjusted for
counterparty credit risk
CDS quotes assessment of coun-
terparty credit risk or reference
entities .
Total recurring fair value
measurements at level 2
LIABILITIES AT FAIR VALUE
Foreign exchange swaps and
forwards
Total recurring fair value
measurements at level 2
19 200
9
9
* NSD Valuation Center is a fair value measurement service for bonds and other financial instruments, accredited by the CBRF.
F-125
F-126
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
32 Fair Value of Financial Instruments (Continued)
The valuation technique, inputs used in the fair value measurement for level 3 measurements and related sensitivity to reasonably possible
changes in those inputs are as follows at 31 December 2023:
Fair value
Valuation technique
Inputs used
2 247 Market multiplicators based on the
similar publicly traded companies
Market capitalization and profitabili-
ty ratios of similar publicly traded
companies
Expected discounted cash flow.
Risk-free rate .
The description of valuation techniques and the description of the inputs used in the fair value measurement for level 2 measurements at 31
December 2022 are as follows:
In millions of RR
ASSETS AT FAIR VALUE
Fair value
Valuation technique
Inputs used
In millions of RR
Corporate shares
Loans and advances to customers
297 Discounted cash flows adjusted for
counterparty credit risk
Total recurring fair value
measurements at level 3
2 544
- Selection of an indicative paired
bid and ask Cbonds quotes when
comparing preliminary pairs of
quotes on exchange trading floors,
then comparing with the quotes
from OTC market participants;
- Observable quotes for comparable
securities adjusted by multiplicator
depending on the degree of the
market activity
Investments in securities
113 455
Foreign exchange swaps and
forwards
Discounted cash flows adjusted for
counterparty credit risk
1 020
Total recurring fair value
measurements at level 2
LIABILITIES AT FAIR VALUE
114 475
Foreign exchange swaps and
forwards
Total recurring fair value meas-
urements at level 2
Discounted cash flows adjusted for
counterparty credit risk
217
217
- Indicative quotes from the Cbonds
price center;
- Quotes from the automated fair
value system for financial instru-
ments of NSD price center* .
Russian ruble curve .
USD Dollar Swaps Curve .
EUR Swaps Curve .
CDS quotes assessment of coun-
terparty credit risk or reference
entities .
Russian ruble 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 2023 .
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 .
F-127
F-128
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 32 Fair Value of Financial Instruments (Continued)
The valuation technique, inputs used in the fair value measurement for level 3 measurements and related sensitivity to reasonably possible
changes in those inputs are as follows at 31 December 2022:
In millions of RR
Fair value
Valuation technique
Inputs used
Coupon payment schedule, with
the transfer of expected coupons to
receive in the flow. All coupons with
maturity before 30 June 2025 were
postponed to this date . The discount
rate is calculated on the basis of
foreign exchange quotes on the OTC
market, adjusted for the credit spread .
Market capitalization and profitabil-
ity ratios of similar publicly traded
companies
Discounted cash flows
Market multiplicators based on the
similar publicly traded companies
Discounted cash flows adjusted for
counterparty credit risk
Expected discounted cash flow.
Risk-free rate .
Investments in securities
Corporate shares
Loans and advances to customers
921
876
583
Total recurring fair value meas-
urements at level 3
2,380
Changes of the fair value measurements at Level 3 for the year ended 31 December 2023 and 2022 are as follows:
In millions of RR
Fair value as at 31 December 2021 - Level 3
Other interest income
Net losses from foreign exchange translation
Net losses from revaluation of convertible loan
Fair value as at 31 December 2022 - Level 3
Additions
Other interest income
Net gains from foreign exchange translation
Net losses from revaluation of convertible loan
Fair value as at 31 December 2023 - Level 3
Loans and advances to
customers
3 971
20
(603)
(2 805)
583
144
24
157
(611)
297
(б) 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:
In millions of RR
Level 1
Level 2
Level 3
Carrying
value
Level 1
Level 2
Level 3
Carrying
value
31 December 2023
31 December 2022
FINANCIAL ASSETS CARRIED
AT AMORTISED COST
Cash and cash equivalents
- Cash on hand
78 905
-
-
78 905
56 895
-
-
56 895
Investments in securities
97 663
Repurchase receivables
729
- Cash balances with the CBRF
(other than mandatory reserve
deposits)
- Placements with other banks
and non-bank credit organi-
zations
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
- Restricted assets
- Trade receivables
- Insurance's financial assets
- Broker commissions and
settlement with exchange
receivable
- Other receivables
Total financial assets
carried at amortised cost
-
71 283
-
71 283
-
106 693
-
106 693
-
573 966
-
-
3 189
5 312
-
-
-
-
42 345
-
-
-
-
-
-
-
-
-
973 202
972 115
-
-
-
42 345
29 126
-
29 126
-
6 604
3 977
2 967
4 815
5 068
-
-
-
-
6 604
3 977
2 967
4 815
5 068
573 966
-
347 973
-
347 973
-
-
-
-
-
3 189
5 312
-
-
1 690
450
120 136
102 718
845
-
-
-
-
1 690
450
121 283
-
606 577
605 872
6
-
6
26 747
-
-
-
-
26 747
22 014
-
22 014
-
5 703
5 703
3 899
1 405
784
3 414
-
-
-
-
3 899
1 405
784
3 414
-
-
-
-
-
-
-
-
-
-
177 297
742 048
979 806
1 920 653
159 613
515 069
612 286
1 304 828
F-129
F-130
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
32 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:
In millions of RR
Level 1
Level 2
Level 3
Carrying
value
Level 1
Level 2
Level 3
Carrying
value
31 December 2023
31 December 2022
FINANCIAL LIABILITIES
CARRIED AT AMORTISED
COST
Due to banks
Brokerage payables
Customer accounts
Individuals
- Current/demand accounts
- Term deposits
- Brokerage accounts
SME
- Current/demand accounts
- Term deposits
Other legal entities
- Current/demand accounts
- Term deposits
-
-
-
-
-
-
-
-
-
6 843
9 416
727 314
638 583
98 620
246 323
22 262
276
1
-
-
-
-
-
-
-
-
-
6 843
9 416
727 314
619 325
98 620
246 323
21 413
276
1
-
-
-
-
-
-
-
-
-
2 060
8 258
660 537
175 360
116 218
207 054
14 857
4
150
-
-
-
-
-
-
-
-
-
2 060
8 258
660 537
194 876
116 218
207 054
13 147
4
150
In millions of RR
Level 1
Level 2
Level 3
Carrying
value
Level 1
Level 2
Level 3
Carrying
value
31 December 2023
31 December 2022
Debt securities in issue
RR Bonds issued on domestic
market
Other borrowed funds
Borrowings through securitisa-
tion transaction
Subordinated debt
-
889
-
-
-
-
304
-
1 061
1 845
-
-
-
301
-
2 199
Perpetual subordinated debts
-
21 244
19 564
58 538
-
12 770
15 096
45 913
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
-
100 547
-
100 547
-
64 760
-
-
-
-
14 408
-
4 055
1 882
-
-
-
-
14 408
8 728
4 055
1 882
-
-
-
-
12 540
-
3 353
2 690
-
-
-
-
-
64 760
12 540
6 530
3 353
2 690
889
1 891 774
19 564
1 918 750
2 149
1 280 611
15 096
1 340 590
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 2023 and 2022 the fair value of the debt securities in issue and subordinated debt has been calculated based on quoted
prices from the Moscow Exchange, where the Group’s debt securities are listed and traded .
Weighted average discount rates used in determining fair value as of 31 December 2023 and 2022 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
31 December 2023
31 December 2022
656 648
392 204
0,0
10,6
9,8
11,5
30,1
24,7
1,0
2,0
8,6
0,0
28,2
22,9
F-131
F-132
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
32 Fair Value of Financial Instruments (Continued)
33 Presentation of Financial Instruments by Measurement Category
Weighted average discount rates used in determining fair value as of 31 December 2023 and 2022 are disclosed below (Continued):
Liabilities
Due to banks
Customer accounts
Debt securities in issue
Other borrowed funds
Brokerage payables
Subordinated debt
Lease liabilities
31 December 2023
31 December 2022
12,3
4,3
-
7,9
23,5
12,0
9,9
12,1
3,6
10,3
7,9
21,8
12,9
10,4
Discount rates used in determining fair value of investments in securities, debt securities in issue, other borrowed funds and subordinated
debt represent a weighted average yield as of reporting date . A bond's yield to maturity rises or falls depending on its market value and how
many payments remain to be made .
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 2023:
In millions of RR
AC
FVTPL
FVOCI
Total
Cash and cash equivalents
- Cash on hand
78 905
- Cash balances with the CBRF
(other than mandatory reserve
deposits)
- Placements with other banks and
non-bank credit organizations
Mandatory cash balances with
the CBRF
Due from other banks
Loans and advances
to customers
Financial derivatives
Investments in securities
Repurchase receivables
Brokerage receivables
Other financial assets
- Settlement of operations with
plastic cards receivable
- Restricted assets
- Insurance's financial assets
- Trade receivables
- Broker commissions and settle-
ment with exchange receivable
- Other receivables
71 283
573 966
3 189
5 312
972 115
-
120 136
845
42 345
29 126
6 604
2 967
3 977
4 815
5 068
-
-
-
-
-
297
2 983
6 411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78 905
71 283
573 966
3 189
5 312
972 412
2 983
206 376
332 923
-
-
-
-
-
-
-
-
845
42 345
29 126
6 604
2 967
3 977
4 815
5 068
TOTAL FINANCIAL ASSETS
1 920 653
9 691
206 376
2 136 720
F-133
F-134
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
33 Presentation of Financial Instruments by Measurement Category
(Continued)
The following table provides a reconciliation of classes of financial assets with these measurement categories as of 31 December 2022:
34 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 .
In millions of RR
AC
FVTPL
FVOCI
Total
The outstanding balances with related parties were as follows:
Cash and cash equivalents
- Cash on hand
56 895
- Cash balances with the CBRF
(other than mandatory reserve
deposits)
- Placements with other banks and
non-bank credit organizations
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
Brokerage receivables
Other financial assets
- Settlement of operations with
plastic cards receivable
- Restricted assets
- Insurance's financial assets
- Trade receivables
- Broker commissions
and settlement with exchange
receivable
- Other receivables
106 693
347 973
1 690
450
605 872
-
6
121 283
26 747
-
22 014
5 703
1 405
3 899
784
3 414
-
-
-
-
-
583
1 020
-
4 627
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56 895
106 693
347 973
1 690
450
606 455
1 020
6
199 892
325 802
-
-
-
-
-
-
-
-
26 747
-
22 014
5 703
1 405
3 899
784
3 414
TOTAL FINANCIAL ASSETS
1 304 828
6 230
199 892
1 510 950
As of 31 December 2023 and 2022 all of the Group’s financial liabilities except derivatives were carried at amortised cost.
In millions of RR
ASSETS
Cash and cash equivalents
Loans and advances to customers (average
interest rate: 3 .4-8% p .a . (31 December 2022:
1 .7-3 .9% p .a .)):
- Gross carrying amount
- Credit loss allowance
Other financial assets
TOTAL ASSETS
LIABILITIES
Due to banks
Customer accounts, including brokerage ac-
counts (average interest rate: 4 .0-14 .1% p .a . (31
December 2022: 5 .4-6 .8% p .a .))
Other non-financial liabilities
TOTAL LIABILITIES
EQUITY
Share-based payment reserve
- Management long-term incentive program
TOTAL EQUITY
31 December 2023
31 December 2022
Key
management
personnel
Associates and
other related
parties
Key
management
personnel
Associates and
other related
parties
-
710
718
(8)
-
710
-
12 596
1 517
14 113
1 906
1 906
-
-
-
-
113
113
-
49
-
49
-
-
-
849
884
(35)
-
849
-
9 289
2 787
12 076
2 431
2 431
186
-
-
-
106
292
20
4
-
24
-
-
F-135
F-136
31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
34 Related Party Transactions (Continued)
The income and expense items with related parties were as follows:
In millions of RR
Interest income calculated using the effective
interest rate method
Other similar income
Interest expense calculated using effective
interest rate method
Net gains/(losses) from foreign exchange trans-
lation
Net losses from financial assets at FVTPL
Credit loss allowance for loans and advances to
customers
2023
2022
Key
management
personnel
Associates and
other related
parties
Key
management
personnel
Associates and
other related
parties
148
-
(357)
-
-
27
13
58
(3)
127
-
(1 057)
40
-
(126)
-
-
-
48
15
-
(720)
(2 861)
-
-
Administrative and other operating expenses
(5 121)
(7)
(7 428)
Key management compensation is presented below:
In millions of RR
Short-term benefits:
- Salaries
- Short-term bonuses
- Other related compensation
- Social tax
Long-term benefits:
- Management long-term incentive program
- Key employees retention plan
Total
2023
2022
2 414
1 251
84
566
806
806
5 121
2 545
1 017
40
517
3 297
3 297
7 428
Management long-term incentive program. On 31 March 2016 the Group introduced a MLTIP as both a long-term incentive and a
retention tool for the management of the Group . Total number of GDRs granted to the management is 21,929 thousand as at 31 December
2023 (31 December 2022: 21,533) .
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 not entitled to the dividends before the vesting date . Participants leaving the Group lose their right for the unvested
parts of the grants .
The fair value of the awards as at grant dates, each year during 2016-2022, is determined on the basis of market quotes of GDRs as at those
dates . Weighted-average fair value of the awards in 2022 was USD 3 .2 per 1 GDR . In 2022, the grants introduced during 2016-2020 have
been fully vested .
The fair value of the awards granted in 2023 is determined on the basis of market quotes of GDRs in the Moscow Exchange as at those dates .
Weighted-average fair value of the awards in 2023 was RR 3,006 per 1 GDR .
Each grant provided in 2021 and 2022 is vested over 5 years . The delivery dates as of which the GDRs are allowed to be sold by the partici-
pants correspond to the vesting dates, each subsequent 31 May or 30 June .
The only grant provided in 2023 is vested over 3 years . The delivery dates as of which the GDRs are allowed to be sold by the participants
correspond to the vesting dates, each subsequent 31 May .
The following table discloses the changes in the numbers of GDRs attributable to the MLTIP:
In thousands
At 31 December 2021
Granted
Vested
Forfeited
At 31 December 2022
Granted
Vested
Forfeited
At 31 December 2023
Number of GDRs
attributable to the MLTIP
7 019
4 293
(1 733)
(2 533)
7 046
396
(1 197)
(839)
5 406
35 Material Accounting Policy Information
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 36. Management prepared these consolidated financial statements on a going concern basis.
Consolidated financial statements. Subsidiaries are those investees, including structured entities, that the Group controls because the
Group (i) has power to direct relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable
returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of investor’s
returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing wheth-
er 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 .
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
35 Material Accounting Policy Information (Continued)
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 com-
mon control. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair
values at the acquisition date, irrespective of the extent of any non-controlling interest .
The Group measures non-controlling interest that represents present ownership interest and entitles the holder to a proportionate share of net
assets in the event of liquidation on a transaction by transaction basis, either at: (a) fair value, or (b) the non-controlling interest's proportionate
share of net assets of the acquiree . Non-controlling interests that are not present ownership interests are measured at fair value .
Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration transferred for the acquiree, the
amount of non-controlling interest in the acquiree and fair value of an interest in the acquiree held immediately before the acquisition date . Any
negative amount (“negative goodwill”) is recognised in profit or loss, after management reassesses whether it identified all the assets acquired
and all liabilities and contingent liabilities assumed, and reviews appropriateness of their measurement .
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities
incurred or assumed, including fair value of assets or liabilities from contingent consideration arrangements, but excludes acquisition related
costs such as advisory, legal, valuation and similar professional services . Transaction costs incurred for issuing equity instruments are deduct-
ed 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 com-
pany 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 carry-
ing 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 accompa-
nying a shareholding of between 20 and 50 percent of the voting rights . Investments in associates are accounted for using the equity method of
accounting and are initially recognised at cost. The carrying amount of associates includes goodwill identified on acquisition less accumulated
credit losses, if any . Dividends received from associates reduce the carrying value of the investment in associates . Other post-acquisition
changes in Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is
recorded in the consolidated profit or loss for the year as share of result of associates, (ii) the Group’s share of other comprehensive income is
recognised in other comprehensive income and presented separately, (iii); all other changes in the Group’s share of the carrying value of net
assets of associates are recognised in profit or loss within the share of result of associates.
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 addi-
tion, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly
disposed of the related assets or liabilities . This may mean that amounts previously recognised in other comprehensive income are recycled to
profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously
recognised in other comprehensive income are reclassified to profit or loss, where appropriate.
Financial instruments – key measurement terms. Depending on their classification financial instruments are carried at fair value or
amortised cost as described below .
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market partic-
ipants at the measurement date . The best evidence of fair value is price in an active market . An active market is one in which transactions
for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of
financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability and the
quantity held by the entity .
This is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the
position in a single transaction might affect the quoted price.
The price within the bid-ask spread which management considers to be the most representative of fair value for quoted financial assets and
liabilities is the weighted average price of a trading day (WAP) . WAP calculation takes into account transactions made during main and ad-
ditional trading session (for securities admitted to additional trading session may differ from the weighted average price of the main trading
session). 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 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 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 32 .
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 repay-
ments, 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
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 35 Material Accounting Policy Information (Continued)
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 instru-
ments 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 observa-
ble 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:
1) solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”); or
2) 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”);
3) 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.
Debt securities are analysed individually, based on the purpose of the acquisition . Currently, the Group possesses “hold to collect con-
tractual cash flows” and “hold to collect contractual cash flows and sell” and “other” business models for its debt securities portfolio. The
Group included 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 repre-
sent solely payments of principal and interest (the SPPI test) . Financial assets with embedded derivatives are considered in their entirety
when determining whether their cash flows are consistent with the SPPI feature.
In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement, i.e.
interest includes only consideration for credit risk, time value of money, other basic lending risks and profit margin.
Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending arrangement, the financial
asset is classified and measured at FVTPL. The SPPI assessment is performed on initial recognition of an asset and it is not subsequently
reassessed. However, if the contractual terms of the asset are modified, the Group considers if the contractual cash flows continue to be
consistent with a basic lending arrangement in assessing whether the modification is substantial. See below for “Financial assets – 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 con-
tracts . 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 loss-
es on debt instruments at FVOCI .
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 35 Material Accounting Policy Information (Continued)
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 26 for a description of how the Group determines when a SICR has occurred .
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 26 for a description of how the Group defines credit-impaired assets and default.
For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always measured at a lifetime ECL. Note
26 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 .
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 assets.
The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors:
any new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency
denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset, or a significant 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 finan-
cial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities).
Financial liabilities – derecognition. Financial liabilities are derecognised when they are extinguished (i .e . when the obligation speci-
fied in the contract is discharged, cancelled or expires).
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.
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 repurchase
agreements made by the Bank with central counterparty to provide customers of the Bank who have brokerage accounts with the Bank
with possibility to acquire securities in case those customers have insufficient own funds to acquire those securities. Brokerage payables
represent funds attracted under sale and repurchase agreements made by the Bank with central counterparty to provide customers of the
Bank who have brokerage accounts with the Bank with the possibility to borrow securities and make a short sale . Brokerage receivables and
payables are short-term and accounted at amortised cost .
Mandatory cash balances with the CBRF. Mandatory cash balances with the CBRF are carried at amortised cost and represent
non-interest bearing mandatory reserve deposits which are not available to finance the Group’s day to day operations and hence are not
considered as part of cash and cash equivalents for the purposes of the consolidated statement of cash flows.
Due from other banks. Amounts due from other banks are recorded when the Group advances money to counterparty banks with no
intention of trading the resulting unquoted non-derivative receivable due on fixed or determinable dates. Amounts due from other banks are
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 35 Material Accounting Policy Information (Continued)
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 invest-
ments 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.
Precious metals. The Group holds precious metals for the purpose of generating a profit from fluctuations in price. Precious metals are
measured at fair value with gains or losses recognised in profit or loss.
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 26 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 recognised
at their fair value, which is normally evidenced by the amount of fees received . Such loan commitment fees are deferred and included in the
carrying value of the loan on initial recognition . At the end of each reporting period, the commitments are measured at the amount of the loss
allowance determined based on the expected credit loss model . For loan commitments (where those components can be separated from the
loan), a separate provision for ECL is recognised as a liability in the consolidated statement of financial position.
Performance guarantees. Performance guarantees are contracts that provide compensation if another party fails to perform a con-
tractual 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 effec-
tively provide a lender’s return to the counterparty, are treated as secured financing transactions. Securities sold under such sale and repur-
chase 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 receiva-
bles . 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.
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 guaran-
tee 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) .
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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:
The lease term includes any non-cancellable and optional extension periods which have been assessed as reasonably certain to be
exercised . The lease payments are discounted using the interest rate implicit in the lease . If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value in a similar economic environment with similar terms and conditions .
Building
Equipment
Vehicles
Leasehold improvements
Others (safes, fireproof cabinets)
Useful lives in years
99
3 - 10
5 -7
Shorter of their useful economic life and the term
of the underlying lease
20
The residual value of an asset is an estimated amount that the Group would currently obtain from disposal of the asset less the estimated
costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life . The assets’ residual values
and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period .
Intangible assets. Intangible assets are stated at cost less accumulated amortization . The Group’s intangible assets other than insur-
ance license have definite useful life and include capitalised acquired computer software and internally developed software. Develop-
ment 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 develop-
ment team and an appropriate portion of relevant overheads .
Computer software licenses acquired are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.
All other costs associated with computer software, e .g . its maintenance, are expensed when incurred . Capitalised computer software is
amortised on a straight line basis over expected useful lives of 1 to 10 years .
At each reporting date management assesses whether there is any indication of impairment of intangible assets with an indefinite useful
life . If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair
value less costs to sell and its value in use .
The carrying amount is reduced to the recoverable amount and the impairment loss is recognised in profit or loss. An impairment loss
recognised for an asset in prior years is reversed if there has been a change in the estimates used to determine the asset’s value in use or
fair value less costs to sell. Intangible assets including goodwill with indefinite useful life are tested annually for impairment.
Accounting for leases by the Group as a lessee. Leases, where the Group is the lessee, are recognised as a right-of-use asset and
a corresponding liability at the date at which the leased asset is available for use by the Group . Each lease payment is allocated between
the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate
of interest on the remaining balance of the liability for each period . The right-of-use asset is depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis .
Assets and liabilities arising from a lease are initially measured on a present value basis . Lease liabilities include the net present value of
the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable under cancellable and non-cancellable
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received,
any initial direct costs, and
dismantling and restoration costs.
As an exception to the above, the Group accounts for short-term leases and leases of low value assets by recognising the lease payments
as an operating expense on a straight line basis . Short-term leases are leases with a lease term of 12 months or less, and the lease
does not provide for the possibility of repurchase of the asset at the end of the contract . Low value assets are assets with a value of RR
300,000 or less at the date of conclusion of the contract .
Right-of-use assets are included in tangible fixed assets, lease liabilities are included in other non-financial liabilities in the consolidated
statement of financial position. Depreciation of right-of-use assets are recognised in administrative and other operating expenses in the
consolidated statement of profit or loss and other comprehensive income. Finance cost is recognised within other similar expense line
of the consolidated statement of profit or loss and other comprehensive income. Repayment of principal of lease liabilities is disclosed
within cash flows from financing activities of the consolidated statement of cash flows.
Adoption of IFRS 17 "Insurance Contracts". The Group issues insurance contracts without direct participation features .
Unit of account. The Group manages insurance contracts issued by product lines within an operating segment, where each product
line includes contracts that are subject to similar risks . All insurance contracts within a product line represent a portfolio of contracts .
Each portfolio is further disaggregated into groups of contracts that are issued within a calendar year (annual cohorts) and are (i) con-
tracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no significant possibility of becoming onerous
subsequently; or (iii) a group of remaining contracts . These groups represent the level of aggregation at which insurance contracts are
initially recognized and measured . Such groups are not subsequently reconsidered .
For each portfolio of contracts, the Group determines the appropriate level at which reasonable and supportable information is available
to assess whether these contracts are onerous at initial recognition and whether non-onerous contracts have a significant possibility
of becoming onerous. This level of granularity determines sets of contracts. The Group uses significant judgement to determine at what
level of granularity the Group has reasonable and supportable information that is sufficient to conclude that all contracts within a set are
sufficiently homogeneous and will be allocated to the same group without performing an individual contract assessment.
For contracts measured using the PAA, the Group assumes that no such contracts are onerous at initial recognition, unless facts and
circumstances indicate otherwise . If facts and circumstances indicate that some contracts are onerous, an additional assessment is
performed to distinguish onerous contracts from non-onerous ones . For non-onerous contracts, the Group assesses the likelihood of
changes in the applicable facts and circumstances in the subsequent periods in determining whether contracts have a significant possi-
bility of becoming onerous .
The Group applies IFRS 17 to all components of the contract . The Group does not have any contracts that require further separation or
combination of insurance contracts .
operating leases;
Recognition of insurance contracts. Groups of insurance contracts issued are initially recognized from the earliest of the following:
• 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-
• the beginning of the coverage period;
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 date when the first payment from the policyholder is due or actually received, if there is no due date; and
• when the Group determines that a group of contracts becomes onerous .
All issued insurance contracts of the Group are accounted under the PAA approach .
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35 Material Accounting Policy Information (Continued)
Accounting for contract modification and derecognition. An insurance contract is derecognized when it is:
• extinguished (i .e . when the obligation specified in the insurance contract expires or is discharged or cancelled); or
• the contract is modified and certain additional criteria are met .
When an insurance contract is modified by the Group as a result of an agreement with the counterparties or due to a change in regulations,
the Group treats changes in cash flows caused by the modification as changes in estimates of the fulfilment cash flows (FCF), unless the
conditions for the derecognition of the original contract are met .
The Group derecognizes the original contract and recognizes the modified contract as a new contract if any of the following conditions
are present:
• if the modified terms had been included at contract inception and the Group would have concluded that the modified contract:
i .
is not in scope of IFRS 17;
ii . results in different separable components;
iii . results in a different contract boundary; or
iv . belongs to a different group of contracts;
• the original contract represents an insurance contract with direct participation features, but the modified contract no longer meets that
definition, or vice versa; or
• the original contract was accounted for under the PAA, but the modification means that the contract no longer meets the eligibility crite-
ria for that approach .
Initial and subsequent measurement of groups of insurance and reinsurance contracts
Fulfilment cash flows within contract boundary. The FCF are the current estimates of the future cash flows within the contract
boundary of a group of contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjust-
ed to reflect the timing and the uncertainty of those amounts.
The estimates of future cash flows:
• are based on a probability weighted mean of the full range of possible outcomes;
• are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for market
variables; and
• reflect conditions existing at the measurement date.
The Group adjusts the estimated present value of future cash flow including the compensation that an insurer requires for bearing the
uncertainty arising from non-financial risks (Section "Risk adjustment for non-financial risk").
An explicit risk adjustment for non-financial risk is estimated separately from the other estimates. For contracts measured under the
PAA, unless the contracts are onerous, the explicit risk adjustment for non-financial risk is only estimated for the measurement of the
liability for incurred claims (LIC) .
The estimates of future cash flows are adjusted using the current discount rates to reflect the time value of money and the financial risks
related to those cash flows, to the extent not included in the estimates of cash flows. The discount rates reflect the characteristics of
the cash flows arising from the groups of insurance contracts, including timing, currency and liquidity of cash flows. The determination
of the discount rate that reflects the characteristics of the cash flows and liquidity characteristics of the insurance contracts requires
significant judgement and estimation.
In the estimation of future cash flows at the date of initial recognition, the Group includes all expected cash inflows and outflows under
insurance contracts. The subsequent cash flow assessment consists of cash flows of the remaining part of the insurance coverage and
cash flows of the incurred claims.
Contract boundary. The Group uses the concept of contract boundary to determine what cash flows should be considered in the
measurement of groups of insurance contracts . This assessment is reviewed every reporting period .
Cash flows are within the boundary of an insurance contract if they arise from the rights and obligations that exist during the period in
which the policyholder is obligated to pay premiums or the Group has a substantive obligation to provide the policyholder with insurance
coverage or other services . A substantive obligation ends when:
• the Group has the practical ability to reprice the risks of the particular policyholder or change the level of benefits so that the price fully
reflects those risks; or
• both of the following criteria are satisfied:
(i) the Group has the practical ability to reprice the contract or a portfolio of contracts so that the price fully reflects the reassessed risk
of that portfolio; and
(ii) the pricing of premiums related to coverage to the date when risks are reassessed does not reflect the risks related to periods be-
yond the reassessment date .
In assessing the practical ability to reprice, risks transferred from the policyholder to the Group, such as insurance risk and financial risk,
are considered; other risks, such as lapse or surrender and expense risk, are not included .
Riders, representing add-on provisions to a basic insurance policy that provide additional benefits to the policyholder at additional
cost, that are issued together with the main insurance contracts form part of a single insurance contract with all the cash flows within its
boundary .
Cash flows outside the insurance contracts boundary relate to future insurance contracts and are recognized when those contracts meet
the recognition criteria .
Insurance acquisition costs. The Group determines insurance acquisition cash flows as a cash flows arising from the costs of
selling, underwriting and starting a group of insurance contracts (issued or expected to be issued) that are directly attributable to the
portfolio of insurance contracts to which the group belongs .
Acquisition cash flows are attributed to the group of contracts on a systematic and rational basis. Insurance acquisition cash flows
directly attributable to a group of insurance contracts:
• to that group; and
• to groups that will include insurance contracts that are expected to arise from renewals of the insurance contracts in that group .
Acquisition cash flows that are not directly attributable to the group of contracts but are directly attributable to a portfolio of contracts,
are attributed to groups of contracts that are already included or are expected to be included in the portfolio .
Risk adjustment for non-financial risk. The risk adjustment for non-financial risk is applied to the present value of the estimated
future cash flows and reflects the compensation the Group requires for bearing the uncertainty about the amount and timing of the cash
flows from non-financial risk as the Group fulfils insurance contracts.
Initial and subsequent measurement - Groups of contracts measured under the PAA.
The Group uses the PAA for measuring contracts with coverage of one year or less, or when the Group reasonably expects that such a
simplification would produce a measurement of the LRC that would not differ materially from the one that would be produced by applying
the GMM .
For insurance contracts issued, insurance acquisition cash flows are deferred and recognized over the coverage period of contracts in
a group . For reinsurance contract held brokerage remuneration is recognized during the period of insurance coverage of the contracts
that are the part of the group .
For insurance contracts issued, on initial recognition, the Group measures the LRC at the amount of premiums received, less any acquisi-
tion cash flows paid and any amounts arising from the derecognition of the prepaid acquisition cash flows asset.
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For reinsurance contracts held, on initial recognition, the Group measures the remaining coverage at the amount of ceding premiums
paid .
The carrying amount of a group of insurance contracts issued at the end of each reporting period is the sum of:
• the LRC; and
• the LIC, comprising the FCF related to past service allocated to the group at the reporting date .
For insurance contracts issued, at each of the subsequent reporting dates, the LRC is:
• increased for premiums received in the period;
• decreased for insurance acquisition cash flows paid in the period;
• decreased for the amounts of expected premiums received recognized as insurance revenue for the services provided in the period;
• increased for the amortization of insurance acquisition cash flows in the period recognized as insurance service expenses; and
• increased for the adjustment of the financing component (if any exists).
If a group of contracts becomes onerous, the Group increases the carrying amount of the LRC to the amounts of the FCF determined
under the GMM with the amount of such an increase recognized in insurance service expenses . Subsequently, the Group amortizes the
amount of the loss component within the LRC by decreasing insurance service expenses . The loss component amortization is based on
the passage of time over the remaining coverage period of contracts within an onerous group .
If facts and circumstances indicate that the expected profitability of the onerous group during the remaining coverage has changed, then
the Group increasing the FCF to the level, that will be gained by applying the GMM while the amount of such increase is recognized in
Insurance service expenses, and a loss component is formed in relation to the amount of the recognized loss .
For contracts measured under the PAA, the LIC is measured similarly to the LIC’s measurement under the GMM. Future cash flows are
adjusted for the time value of money since insurance contracts mainly issued by the Group and measured under the PAA typically have a
settlement period of over one year .
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 amor-
tised cost .
Debt securities in issue. Debt securities are stated at amortised cost . If the Group purchases its own debt securities in issue, they
are removed from the consolidated statement of financial position and the difference between the carrying amount of the liability and the
consideration paid is included in a separate line of consolidated statement of profit or loss and other comprehensive income as gains/
losses from repurchase of debt securities in issue .
Subordinated debt. Subordinated debt can only be paid in the event of a liquidation after the claims of other higher priority creditors
have been met . Subordinated debt is carried at AC .
Other borrowed funds. Group’s securitisation activities involve home equity loans and are predominantly transacted using SPEs . In
a typical securitisation, the SPE purchases assets financed by proceeds received from the SPE’s issuance of debt certificates and other
notes of indebtedness .
These assets and liabilities are recorded on the balance sheet of the SPE and consolidated on the Group’s consolidated statement of
financial position, unless the accounting requirements for sale were met. At the current reporting date the Group has not made a secu-
ritisation 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 .
Financial derivatives. Financial derivatives represented by forwards and foreign currency swaps are carried at their fair value .
Derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative . Changes in the fair value of
financial derivatives are recorded in profit or loss within Net (losses)/gains from derivatives revaluation. The Group does not apply hedge
accounting .
Income taxes. Income taxes have been provided for in the consolidated financial statements in accordance with Russian legislation
and Cyprus legislation enacted or substantively enacted by the end of the reporting period . The income tax charge comprises current
tax and deferred tax and is recognised in profit or loss for the year except if it is recognised in other comprehensive income or directly
in equity because it relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or
directly in equity .
Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable profits or losses for the
current and prior periods. Taxable profits or losses are based on estimates if the consolidated financial statements are authorised prior
to filing relevant tax returns. Taxes other than on income are recorded within administrative and other operating expenses.
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial
recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a
transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit.
Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period which are expected
to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and
liabilities are netted only within the individual companies of the Group. Deferred tax assets for deductible temporary differences and tax
loss carry forwards are recorded only to the extent that it is probable that future taxable profit will be available against which the deduc-
tions can be utilised .
Deferred income tax is not recognised on post-acquisition retained earnings and other post acquisition movements in reserves of
subsidiaries, where the Group controls the subsidiary’s dividend policy and it is probable that the difference will not reverse through
dividends or otherwise in the foreseeable future .
Windfall tax. On 4 August 2023 the President of the Russian Federation approved Federal Law #414-FZ on Windfall tax which becomes
effective on 1 January 2024. Under the provisions of the Federal Law, the Group is a taxpayer of the windfall tax. Windfall tax falls in
scope of IAS 12 Income taxes, is recognized as a current income tax and is subject to respective income tax accounting policy as de-
scribed above .
Windfall tax is a one-off tax. Windfall tax expense and payable are recognized in the consolidated financial statements from the date
when the Federal Law was substantively enacted . Windfall tax not settled is recognized as a payable . Windfall tax expense and payable
are measured in the amount expected to be paid by the Group to the budget, using the tax rates and tax laws enacted or substantively
enacted by the end of the reporting period . When calculating the expected windfall tax rate, the Group considered whether it has paid
security deposit . The Group fully paid windfall tax at 31 December 2023 .
Uncertain tax positions. The Group's uncertain tax positions are assessed by management at the end of each reporting period .
Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes
being levied if the positions were to be challenged by the tax authorities .
The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted at the end of reporting period
and any known court or other rulings on such issues .
Liabilities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of the expendi-
ture 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
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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 distribu-
tion 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, in-
cluding 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 consideration received is included in equity . The value of GDRs transferred out of treasury shares for the purposes of the
long-term incentive program for management of the Group are determined based on the weighted average cost .
Dividends. Dividends are recorded in equity in the period in which they are declared . Any dividends declared after the end of the
reporting period and before the consolidated financial statements are authorised for issue, are disclosed in the Note 38. The accounting
reports of the Group entities are the basis for profit distribution and other appropriations. The separate financial statements of the Com-
pany prepared in accordance with IFRS as adopted by the EU and in accordance with Cyprus Companies Law is the basis of available
reserves for distribution .
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 inter-
est 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 result-
ing 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.
Other income and expense recognition. All other income is generally recorded on an accrual basis by reference to completion of
the specific performance obligation assessed on the basis of measurement of the Group’s progress towards complete satisfaction of
that performance obligation .
All other expenses are generally recorded on an accrual basis by reference to completion of the specific transaction assessed on the
basis of the actual service provided as a proportion of the total services to be provided .
Other similar income. Other similar income represents interest income recorded for debt instruments measured at fair value through
profit or loss (“FVTPL”) and is recognised on an accrual basis using nominal interest rate.
Other similar expense. Other similar expense represents finance cost related to the discounted lease payments using the incremental
borrowing rate .
Fee and commission income and expense. Fee and commission income is recognised over time as the services are rendered, when
the customer simultaneously receives and consumes the benefits provided by the Group’s performance. Such income includes SMS fee,
part of SME services commission, part of brokerage fee and income from MVNO services which represents fixed monthly payments.
Variable fees are recognised only to the extent that management determines that it is highly probable that a significant reversal will not
occur .
Other fee and commission income is recognised at a point in time when the Group satisfies its performance obligation, usually upon
execution of the underlying transaction . The amount of fee or commission received or receivable represents the transaction price for the
services identified as distinct performance obligations. Such income includes acquiring commission, part of SME services commission,
brokerage fee and income from MVNO services, which represents payments for each transaction, fee for selling credit protection, inter-
change fee, cash withdrawal fee, foreign currency exchange transactions fee, fee for money transfers and other .
All fee and commission expenses are generally recorded on an accrual basis by reference to completion of the specific transaction
assessed on the basis of the actual service provided as a proportion of the total services to be provided .
Customer loyalty program. The group operates loyalty programs where retail clients accumulate points, which entitle them to
reimbursement of purchases made with credit and debit cards. A financial liability is recognised for the amount of fair value of points
expected to be redeemed until they are actually redeemed or expire with the corresponding entries to interest income calculated using
the effective interest rate method or commission expenses depending on whether the points were accumulated by credit card clients or
debit card clients respectively .
Insurance service result from insurance contracts issued
Insurance revenue. As the Group provides services under the group of insurance contracts, it reduces the LRC and recognizes
insurance revenue . The amount of insurance revenue recognized in the reporting period depicts the transfer of promised services at an
amount that reflects the portion of consideration the Group expects to be entitled to in exchange for those services.
For groups of insurance contracts measured under the PAA, the Group recognizes insurance revenue based on the passage of time over
the coverage period of a group of contracts, unless the expected pattern of incurring the insurance service expenses differs significantly
from the passage of time, in which case the latter should be used for expected premium receipts allocation to insurance revenue .
Insurance service expenses include the following:
Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for:
• incurred claims and benefits;
(а) financial assets that have become credit-impaired (Stage 3), for which interest revenue is calculated by applying the effective inter-
est rate to their AC (net of the ECL provision); and
(б) 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 di-
rectly 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 incurred directly attributable insurance service expenses;
• amortizations of insurance acquisition cash flows;
• changes that relate to past service (i .e . changes in the FCF relating to the LIC);
• changes that relate to future service (i .e . losses/reversals on onerous groups of contracts from changes in the loss components); and
• impairment of assets on insurance acquisition cash flows.
For contracts measured under the PAA, amortisation of acquisition cash flows is recognized based on the passage of time.
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 35 Material Accounting Policy Information (Continued)
Insurance finance income or expenses. Insurance finance income or expenses comprise the change in the carrying amount of the
group of insurance contracts arising from:
• the effect of the time value of money and changes in the time value of money; and
• the effect of financial risk and changes in financial risk.
For contracts measured under the PAA, the main amounts within insurance finance income or expenses are:
• interest accreted on the LIC; and
• the effect of changes in interest rates and other financial assumptions.
The Group disaggregates changes in the risk adjustment for non-financial risk between insurance service result and insurance finance
income or expenses:
1) financial gains or losses related to the unwinding of discount rates at the initial recognition of a group of contracts are recognized in
profit or loss;
2) the difference between the amount allocated to each period’s profit or loss based on this systematic allocation and the total insurance
finance income or expenses of the period is recognized in OCI.
Foreign currency translation and operations. The functional currency of the Company and most of its significant subsidiaries is
the Russian Ruble (“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 gains/(losses) 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 2023 the rate of exchange used for translating foreign currency balances was USD 1 = RR 89 .6883 (31 December
2022: USD 1 = RR 70 .3375), and the average rate of exchange was USD 1 = RR 85 .2466 for the year ended 31 December 2023 (the year
ended 31 December 2022: USD 1 = RR 68 .5494) .
Offsetting. Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position
only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or
to realise the asset and settle the liability simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must
be legally enforceable in all of the following circumstances: (i) in the normal course of business, (ii) the event of default and (iii) the event
of insolvency or bankruptcy .
Earnings per share. Earnings per share are determined by dividing the profit or loss attributable to owners of the Company by the weighted
average number of participating shares outstanding during the reporting year, excluding treasury shares . For the purpose of diluted earnings
per share calculation the Group considers dilutive effects of shares granted under employee share option plans.
Staff costs and related contributions. Wages, salaries, contributions to the Russian Federation Social Fund, 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 .
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 2023 the Group decided to show precious metals as a separate line item in the consolidated statement of
financial position outside of the other non-financial assets.
The effect of changes described above on the consolidated statement of financial position for the year ended 31 December 2022 is as
follows:
In millions of RR
Precious metals
Other non-financial assets
As originally
presented*
-
25 485
Adoption
of IFRS 17
-
(1 295)
Reclassification
As reclassified
9 982
(9 982)
9 982
14 208
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 Janu-
ary 2023 .
In 2023 the Group decided to reclassify liabilities under MLTIP from Other financial liabilities to Other non-financial liabilities in the con-
solidated statement of financial position. The management considers that such improved disclosure provides users of these consolidat-
ed financial statements with more relevant information.
The effect of reclassification on amounts described above on the consolidated statement of financial position for the year ended 31
December 2022 is as follows:
In millions of RR
Other financial liabilities
Other non-financial liabilities
As originally
presented*
96 229
28 248
Adoption
of IFRS 17
(1 451)
(665)
Reclassification
As reclassified
(4 905)
4 905
89 873
32 488
* See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 Janu-
ary 2023 .
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 36 Adoption of New or Revised Standards and Interpretations
The Group has adopted on 1 January 2023 IFRS 17 "Insurance Contracts" (issued on 18 May 2017 and effective for annual periods beginning on
or after 1 January 2021, the effective date subsequently modified to 1 January 2023 by the Amendments to IFRS 17) and related amendments
retrospectively, with a transition date of 1 January 2022, which led to changes in the accounting policy for the recognition and valuation of
insurance assets and liabilities with consequent restatements in the comparative financial periods. Changes in accounting policies related to
the application of IFRS 17 were made using a full retrospective approach to the transition .
The Group has determined that reasonable and supportable information was available for all contracts in force at the transition date . In addition,
for insurance contracts originated by the Group that are eligible for the PAA, the Group has concluded that only current and prospective infor-
mation was required to reflect circumstances at the transition date, which made the full retrospective application practicable.
Accordingly, the Group has recognized and measured each group of insurance contracts and each asset for insurance acquisition cash flows
paid at this category as if IFRS 17 had always been applied (except for conducting a retrospective impairment test), derecognized any existing
balances that would not exist had IFRS 17 always applied; and recognized any resulting net difference in equity.
The impact of the application of IFRS 17 on the Group's consolidated statement of financial position is presented below:
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
Insurance contract assets
Brokerage receivables
Current income tax assets
Tangible fixed assets and right-of-use assets
Intangible assets
As originally presented
As adopted
31 December 2021
1 January 2022
316 476
316 476
8 589
542
215 311
5 826
606 308
5 963
15 171
-
49 138
3 524
13 964
15 069
8 589
542
215 311
5 826
606 308
5 963
15 171
14
49 138
3 524
13 964
15 069
In millions of RR
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 contract liabilities
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
Other reserves
Equity attributable to shareholders of the Company
Non-controlling interest
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
As originally presented
As adopted
31 December 2021
1 January 2022
52 969
8 895
52 744
8 078
1 317 745
1 316 717
11 313
945 723
21 680
3 806
90
9 634
125
1 860
59 657
10 365
69 302
8 099
11 313
945 723
21 680
3 806
90
9 634
125
1 860
59 657
9 785
68 946
7 817
1 141 654
1 140 436
230
26 998
(2 567)
4 745
159 491
(13 131)
-
175 766
325
176 091
1 317 745
230
26 998
(2 567)
4 745
159 668
(13 131)
13
175 956
325
176 281
1 316 717
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
36 Adoption of New or Revised Standards and Interpretations (Continued)
In millions of RR
ASSETS
Cash and cash equivalents
Mandatory cash balances with the CBRF
Due from other banks
Investments in securities
Precious metals
Loans and advances to customers
Financial derivatives
Guarantee deposits with payment systems
Insurance contract assets
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
As originally presented
As adopted
31 December 2022
1 January 2023
511 561
511 561
1 690
450
325 802
-
606 455
1 020
6
-
26 747
109
1 946
34 890
24 097
39 217
25 485
1 690
450
325 802
9 982
606 455
1 020
6
693
26 747
109
1 946
34 890
24 097
37 219
14 208
1 599 475
1 596 875
In millions of RR
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 contract liabilities
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
Translation reserve
Other reserves
Equity attributable to shareholders of the Company
Non-controlling interest
TOTAL EQUITY
As originally presented
As adopted
31 December 2022
1 January 2023
2 060
2 060
1 191 986
1 191 986
301
2 199
217
8 258
2 437
7
45 913
15 844
96 229
28 248
301
2 199
217
8 258
2 437
7
45 913
15 223
89 873
32 488
1 393 699
1 390 962
230
26 998
(1 885)
2 731
180 729
(3 214)
243
-
205 832
(56)
205 776
230
26 998
(1 885)
2 731
180 864
(3 214)
243
2
205 969
(56)
205 913
TOTAL LIABILITIES AND EQUITY
1 599 475
1 596 875
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
36 Adoption of New or Revised Standards and Interpretations (Continued)
The impact of the application of IFRS 17 on the Group's consolidated statement of profit or loss and other comprehensive Income is
presented below:
In millions of RR
Profit for the period
As originally presented
As adopted
2022
20 802
2022
20 760
As originally presented
As adopted
Other comprehensive (loss)/income
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 interest income
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 interest income after сredit loss allowance
Fee and commission income
Fee and commission expense
Customer acquisition expense
Net losses from derivatives revaluation
Net gains from foreign exchange translation
Net losses from operations with foreign currencies
Net losses from precious metals revaluation
Net losses from disposals of investments in securities
Net losses from financial assets at FVTPL
Insurance revenue
Insurance service expense
Administrative and other operating expenses
Other provisions charge and impairment loss
Net gains from repurchase of subordinated debt
Other operating income
Profit before tax
Income tax expense
2022
205 603
149
(56 772)
(1 007)
(4 076)
143 897
(65 431)
(2 071)
(67 502)
76 395
125 083
(40 973)
(43 478)
(8 156)
5 335
(380)
(3 785)
(130)
(7 185)
33 793
(10 454)
(95 803)
(6 608)
4 564
1 608
29 826
(9 024)
2022
205 603
149
(56 772)
(1 007)
(4 076)
143 897
(65 431)
(2 071)
(67 502)
76 395
118 023
(40 973)
(41 712)
(8 156)
5 335
(380)
(3 785)
(130)
(7 185)
41 311
(14 147)
(93 717)
(6 608)
4 564
935
29 770
(9 010)
Items that may be reclassified to profit or loss
Debt securities at FVOCI and Repurchase receivables:
- Net losses arising during the period, net of tax
- Reversal of revaluation reserve, net of tax
- Net losses reclassified to profit or loss upon disposal, net of tax
Currency translation differences
Other reserves
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
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)
(2 081)
11 894
104
243
-
10 160
30 962
21 024
(222)
31 184
(222)
105,81
102,55
(2 081)
11 894
104
243
(11)
10 149
30 909
20 982
(222)
31 131
(222)
105,59
102,35
The following amended standards became effective from 1 January 2023, but did not have any material impact on the Group:
International Tax Reform – Pillar Two Model Rules – Narrow-scope amendments to IAS 12 (issued on 23 May 2023 and effective
for annual periods beginning on or after 1 January 2023) .
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Esti-
mates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting poli-
cies (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 .
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT
36 Adoption of New or Revised Standards and Interpretations (Continued)
Amendments to the IFRS for SMEs Accounting Standard (issued on 29 September 2023 and effective for annual periods beginning on
or after 1 January 2023) .
37 New Accounting Pronouncements
Certain new amendments have been issued that are mandatory for the annual periods beginning on or after 1 January 2024, which the Group
has not early adopted and which are not expected to have any material impact on the Group when adopted:
• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28 (issued on 11
September 2014 and effective for annual periods beginning on or after a date to be determined by the IASB).
• Classification of Liabilities as Current or Non-current Date (issued on 23 January 2020), Classification of Liabilities as Current or
Non-current - Deferral of Effective Date (issued on 15 July 2020) and Non-current Liabilities with Covenants (issued on 31 October
2022) – Amendments to IAS 1 (effective for annual periods beginning on or after 1 January 2024).
• Disclosures: Supplier Finance Arrangements - Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments (issued
on 25 May 2023 and effective for annual periods beginning on or after 1 January 2024)*.
• Lease Liability in a Sale and Leaseback Amendments to IFRS 16 – Amendments to IFRS 16 (issued on 22 September 2022 and effective
for annual periods beginning on or after 1 January 2024) . The amendments apply to sale and leaseback transactions where the transfer
of the asset qualifies as a ‘sale’ under IFRS 15 and the lease payments include variable lease payments that do not depend on an index or
rate .
• The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability – Amendments to IAS 21 Foreign Currencies – (issued on 15
August 2023 and effective for annual periods beginning on or after 1 January 2025)*.
* Denotes standards, interpretations and amendments which have not yet been endorsed by the European Union .
38 Events after the End of the Reporting Period
On 15 January 2024, at an Extraordinary General Meeting, the Company’s shareholders approved the deregistering of the Company from
the Register of the Registrar of Companies in Cyprus and the registering of the Company as a continuing company in the Russian Federation
(redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incorporated . The vast
majority of the Company's assets are located and generate revenue in Russia . Therefore, the reasons for redomiciling to Russia include,
among other things, maintaining the Company's strategic focus on the Russian market, preserving the equity value for all shareholders, and
ensuring execution of their rights .
The full name of the Company will be “International Public Joint-Stock Company TCS Holding” (IPJSC TCS Holding). The place of residence
of the Company be and is hereby changed to: Russkiy Island, Vladivostok Urban Okrug, Primorsky Krai, Russia .
The par value of the Company’s shares in RR shall be equivalent to the par value of the shares of the Company in U .S . dollar (USD 0 .04) at the
official exchange rate set by the Bank of Russia as of 12 December 2023 (1 USD = 90.9846 RUB). The charter capital of the Company shall
consist of 199,305,492 issued ordinary shares, and the amount the charter capital of the Company shall be equal to RR 725 million .
On 31 January 2024 the Company cancelled the listing of its GDRs on the Official List of the Financial Conduct Authority of the United King-
dom and the GDRs’ admission to trading on the LSE’s Main Market (delisting) .
On 1 March 2024, the Bank became subject of the Japan’s updated sanctions list .
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31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT tinkoff.ru
2023