TINKOFF CREDIT SYSTEMS INTERIM REPORT FOR THE SECOND QUARTER 2008

Press release August 29, 2008

Business growth has been strong throughout the first half of 2008. As of 30 June 2008 the Group total assets increased 166% comparing to the year-end and comprised USD 270,265 thousand. The credit card portfolio has grown from USD 26,752 thousand on 31 December 2007 to USD 98,728 thousand on 30 June 2008, an increase of 369%. New card issuance has been the main driver of portfolio growth, with total credit card issuance increasing from 48,000 on 31 December 2007 to 181,213 on 30 June 2008. Increasing issuance volumes have led to increased rates of card activation that reached over 1,000 per day by June.

Portfolio quality continues to improve with each month. The improvement in incoming vintages (and therefore in credit decisions) can be seen from the decrease in the number of customers who were 30 days or more delinquent on their third statement, which fell from 13.9% on 31 December 2007 to 6.4% on 30 June 2008. These delinquency rates put the company on par with market leaders in its peer group and continue to reduce month on month.

The average credit limit assigned to new customers was reduced from USD 1,398 on 31 December 2007 to USD 865 by 30 June 2008. The average current limit as of 30 June 2008 was USD 1,284 as a result of credit limit increases to credit-worthy customers. Average limit utilization increased from 71.7% in December 2007 to 77.6% in June 2008.

The company completed its third round of funding (previous rounds were a Rouble bond issue in October 2007 and a ‘Club’ loan in December 2007) in June 2008. A Eurobond for Euro 70m was placed successfully by the Group in Sweden through the investment bank Ohman. This transaction will be listed on the Swedish Stock Exchange by the end of 2008. Goldman Sachs exercised its 5% option increasing its stake in Egidaco to 15%, and Vostok Nafta provided a USD 30 000 thousand bridge loan that is currently being converted into equity in Egidaco (also 15%).

Total interest income from credit cards grew from USD 4,101 thousand in 2007 to USD 23,050 thousand at the end of the first half of 2008, giving an average monthly gross yield of 73.5%. Interest income from credit cards under IFRS grew from USD 2,218 thousand in 2007 to USD 16,903 thousand. Under IFRS the Group has to defer certain components of its interest income (such as cash withdrawal fee) for up to a year.

The gains made as a result of more efficient mailings and improved targeting have been offset by increasing postal tariffs. In the the first half of 2008, customer acquisition expense stands at 23.7% of total operating expenses. Second largest single expense was interest expense (22.7%), followed by loan-loss provisions (21.3%), communication and information expenses (6.7%), service fees (6.6%) and staff costs (6.5%). All other expenses accounted for 12.5% of total operating expenses.

The Group incurs net loss which is explained by the start-up nature of the business.


Egidaco Investments Limited

For additional information

Oliver Hughes, President
tel: +7 495 648 1000
e-mail: o.hughes@tcsbank.ru

Ilya Pisemsky, CFO
tel: +7 495 648-1000
e-mail: i.pisemsky@tcsbank.ru

web: www.eginvestments.net/