OREANDA-NEWS. On July 09, 2008 Home Credit & Finance Bank ("HCFB" or "the Bank"), rated Moody's Ba3/NP/D-, S&P B+/B, and one of the leading banks specializing in consumer banking in Russia, announced its financial results for the three months ended 31st March 2008 in accordance with International Financial and Reporting Standards (IFRS), reported the press-centre of HCFB.

"Home Credit & Finance Bank is delighted to have achieved such a strong set of first quarter results. We continue to deliver on our strategy of loan book diversification and profitable growth. Despite tougher global conditions the Russian consumer finance market continues to grow and the ongoing support of our parent, PPF Group, continues to enable us to take advantage of the market."
Jiri Smejc, Chairman of the Board of Directors

HIGHLIGHTS
Net profit for the period of RUB 717 million (Q1 2007: RUB 204 million) - an increase of 252%.
Continuing improvement in net interest income to RUB 4.6 billion (Q1 2007: RUB 2.8 billion) attributed to growth in all products.

Operating income increased 86% in the period to RUB 6.2 billion (Q1 2007: RUB 3.3 billion).
88% increase in the gross loan book from RUB 40 billion for Q1 2007 to RUB 76 billion Q1 2008.

Increase in the Bank's POS and Credit Card market shares with almost 31% and 11% respectively, maintaining HCFB's position as the second largest provider of POS and credit cards in Russia.

In line with the Bank's strategy, HCFB continued further diversification of its product portfolio with cash loans now comprising 13.8% of HCFB's gross loan book and credit cards accounting for 28.6%.

The HCFB branch network covers 80 regions across the Russian Federation serviced from 99 branches and 89 representative offices.

As of 31 March, 2008 HCFB's client base comprises 13.7 million customers, an increase of approximately 40% over the prior year period.

Maintenance of strong capitalisation with risk weighted CAR of 19.8%.

HCFB's cumulative net liquidity position within 12 months is positive - RUB 13.2 billion.

The funding position of the Bank is strong, having successfully placed its fifth domestic bond issue of total amount of RUB 4 billion in April 2008 and the largest Eurobond issue for \\$500 million in June 2008 and having received a ?900 million commitment from PPF Group. This covers the Bank's refinancing needs and supports further business growth.

The focus on risk management has continued to produce positive results with a further decrease in the NPLs calculated as a percentage of the gross loan book. NPLs fell from 14.2% in Q1 2007 to 11.9% in Q1 2008. NPL provision coverage reached 112.1% in Q1 2008 compared to 100.5% in Q1 2007.

In April 2008, the international rating agency Standard & Poor's affirmed HCFB rating at B+/B level, Moody's issued updated Credit Opinion on HCFB current ratings. Outlook for both ratings - stable.

BUSINESS
The consumer banking market in Russia has continued its expansion although this has been at a slower rate as the market matures. During the three months of 2008 the market grew by 8% with almost RUB 3.2 trillion in loans granted. The growth dynamics remain the same comparing with the same period for previous year when the growth rate was 9% which is mostly explained by the low season period.

HCFB continues to follow its strategy focused on evolving from a monoline product provider to a retail bank with a lending focus and diversified product offering. Consequently, the Bank has focused on the growth of its cash loan and credit card businesses.

The cash loans portfolio increased by 316% compared to Q1 2007 to RUB 10.4 billion. The credit card portfolio increased by 42% from the prior year up to RUB 21.6 billion. HCFB increased its market share in the credit card segment from 9.5% to 11% as of 31 March 2008, with over 7.7 million cards issued.

Pursuant to HCFB's strategy, the Bank has also achieved strong growth in its mortgage loan book. The Bank now has proven experience and a firm foothold in this market. Given market conditions, it is not expected that this sector will grow at the same rate in the short term, but the Bank will continue to monitor this sector. As at 31 March 2008, the mortgage portfolio equalled RUB 5.7 billion comprising approximately 8% of HCFB gross loan book.

Whilst the POS loan book still represents the largest part of the business with RUB 37 billion outstanding, and has grown by 67% compared to the same period of 2007, the POS loan book as a percentage of the gross loan book, decreased from 55.1% for Q1 2007 to 48.8% as of 31 March 2008. HCFB's POS loans market share has nevertheless strengthened from 22% in Q1 2007 to 30.6% in Q1 2008.

Importantly, the Bank has also focused on selectively increasing its distribution capabilities with the network of active POS outlets standing at approximately 30,000, an increase of nearly 30% from Q1 2007. The number of representative offices now stands at 89, while the branch network grew to 99 offices from 42 in Q1 2007, reflecting the Bank's strategy to become a retail bank with a lending focus. The Bank is consequently now present in 1,200 cities over 80 regions.

RESULTS
HCFB reported a record net profit of RUB 717 million for Q1 2008, an increase of 252% on Q1 2007 (RUB 204 million). This excellent growth was obtained due to several factors:

Net interest income increased to RUB 4.6 billion from RUB 2.8 billion due to the continued growth and diversification of the loan portfolio. The Bank also maintained a cost/income ratio of between 40-45%.

Additionally, the Bank has continued to improve its controls and risk procedures. The Bank has recently implemented a central system, allow it to manage credit scoring processes with more flexibility and improve response times. Consequently, the level of NPLs, as a percentage of the gross loan book has significantly decreased from 14.2% in Q1 2007 to 11.9% in Q1 2008. Provision for loan coverage has been increased from 100.5% to 112.1%.

Finally, HCFB's diversified funding base and strong capital position, with the support of its parent, PPF Group, enabled the Bank to maintain a risk-weighted capital adequacy ratio of 19.8%. The funding position of the Bank is strong, having successfully placed its fifth domestic bond issue of RUB 4 billion in April 2008 and the largest HCFB Eurobond issue for \\$500 million in June, 2008 and having received a ?900 million commitment from PPF Group. This covers the Bank's refinancing needs and supports further business growth.

In April 2008, the international rating agency Standard & Poor's affirmed HCFB rating at B+/B level, Moody's issued updated Credit Opinion on HCFB current ratings. Outlook for both ratings - stable.