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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the Tinkoff Group Third Quarter 2021 IFRS Results Investor Call. Our speakers today are Oliver Hughes, Co-CEO, Pavel Fedorov; Co-CEO; and Ilya Pisemsky, CFO. At this time, I would like to turn the conference over to Oliver Hughes. Please go ahead, sir.
Thank you, and hello to everybody. I'm pleased to report another super quarter for Tinkoff. In the third quarter, we reached 18.5 million total customers, an increase of 6.4 million in the last year. Our third quarter revenue grew 48% year-on-year to RUB 71.7 billion. And our net profit reached RUB 16.5 billion for the quarter, up 31% year-on-year. While we continue to invest in growth, we still maintain an industry-leading return on equity of 42.6%. Our entrepreneurial product-led and technology-driven business model continues to deliver fast growth of our customer base, rapid time to market and cutting-edge financial and lifestyle products and services. All this without compromising on focus, profitability and return on capital, and we're ever ready to react to changes in the operating and economic environment. As you can see, 2021 is looking good. Tinkoff is unswervingly moving to the next level in terms of ambitions, business complexity and social responsibility. At the end of October, the Central Bank of Russia designated Tinkoff a systemically important financial institution. While we still think of ourselves as the disruptors, even upstarts of the financial sector in Russia, this just goes to show how far we've come in a short space of time. It also shows the positive impact we're making. This will further boost our brand as a strong, reliable institution that Russian customers can trust for all of their financial needs, be it transacting, borrowing, saving, investing, insuring, et cetera. As the world's first and only systemically important fintech, we feel that there are still tons we can do to digitize financial and nonfinancial products for all Russian consumers. The scope for growth is enormous. Our financial ecosystem continues to expand and satisfy more and more of our customers' financial needs. Our current account and debit card product, Tinkoff Black, is the fastest-growing transactional product in the market. Our expanding loan book, both in size and breadth of secured and unsecured products shows that Tinkoff has become a leading source of convenient, affordable and responsibly disbursed credit to the Russian population. Tinkoff Investments remains the go-to platform investors of all types to invest and save their money. Tinkoff business is now opening 1/3 of all new accounts for individual entrepreneurs in the country. We're moving into larger-sized SMEs and starting to provide credit to a segment that has historically struggled to attract much needed financing. Tinkoff Acquiring is powering the move to a cashless online commerce experience. Tinkoff Insurance is starting to make inroads into the highly concentrated car insurance market, which is ripe for disruption. Tinkoff's lifestyle offering is growing its share of consumer wallet and becoming a highly engaging platform. And if that isn't enough, the launch of new products and business lines like BNPL, mortgage and Merchant Solutions significantly expand our $50 billion net revenue TAM as presented earlier this year, adding further optionality to our ability to acquire, engage and monetize customers. We see growth opportunities everywhere we look. We've also begun planting the seed for Tinkoff to grow virtually indefinitely by initiating our careful yet potentially very value-accretive international expansion. More about that from Pavel later. To this end, we've been busy putting in place the right enablers to make sure we can deliver on all our plans. First, our corporate governance continues to strengthen. Our Board now includes a majority of independent nonexecutive directors that bring breadth of experience across finance, investments and geographies. They have a broad network of contacts that are extremely useful for us when thinking about trends, new businesses and storming ideas. Our newly formed committees have hit the ground running. Our Strategy Committee, chaired by Nitin Sehgal of Cora Capital has met 4 times since it was formed back in April, discussing wide-ranging topics covering merchant solutions, Tinkoff's venture into Neo private banking, international expansion, digital insurance and much more. Our Sustainability Committee has been advising us on ESG priorities and targets in preparation for the upcoming release of our ESG strategy, and we're committed to appointing at least 1 more independent director as well as making one of the independent directors chairperson next year. We believe the caliber of these appointments should give the market further conviction that the right oversight and advice is in place for Tinkoff to continue building a sustainable business and deploying capital profitably. Second, on the broader ESG front, we'll be ready to present our ESG strategy in the first half of next year. Right now, we're making a head start and disclosing for the first time our greenhouse gas inventory across all 3 relevant scopes for 2019 and 2020. This makes us one of the first fintechs in the world to do so. Following this, you can expect us to establish a real actionable climate strategy and provide the market with a comprehensive overview of all of our activities across financial inclusion, financial education, cybersecurity, data privacy, diversity and much more. We see these as key initiatives that will ensure the long-term sustainability of our business. Third, of the recent AGM, we received approval from shareholders to increase our share capital by up to 5% within the next 3 years as well as to expand the reach of our MLTIP and to fund it through share issuance of up to 1.5% per annum. We're grateful that shareholders supported our Board in putting the right mechanisms in place for us to fund the huge growth opportunities ahead of us in Russia to seed our first international moves as well as to attract, retain and reward the leadership and tech talent that will enable us to execute on all of this. And last but not least, we continue to strengthen our already deep management bench. We've firmly at the operational helm of our risen business. We have added top quality management, both at the platform as well as the business line level. And to reflect our ever-growing business scope, we and the Board decided that the business would benefit from expanding our executive bandwidth at the very top of our organization by creating the position of a co-CEO and appointing Pavel Fedorov to it. I'll let Pavel introduce himself in a second, but I believe this is a fantastic addition to the team. Pavel brings a wealth of experience and complementary knowledge to Tinkoff, especially in the areas of partnerships to ramp up our growth in Russia and internationally, finance and M&A, regulatory dialogue and international expansion. He also shares Tinkoff's partnership and entrepreneurial approach and are slotted in perfectly to our unique culture and the existing team. He quickly made his mark as an adviser on international expansion under Board member. We look forward to working with him much more closely. And so without further ado, I'll invite Pavel to introduce himself. Over to you.
Oliver thank you so much for this kind introductory comments and good afternoon to all participants on today's call. As the first comment, it is my honor to join the team at Tinkoff an idea of me joining the executive team emerged a few months ago. One thing that really laid the foundation for our dialogue with a strong culture fit in personal chemistry, somehow well clicked and so how the CEO set up could work quite well. It was a very flat dynamic and partner-driven culture of Tinkoff. Joining the company was a 13-year experience in Morgan Stanley and having spent the last 10 years in senior roles in the Russian corporate context. My and our aspiration really is to build the executive set up that would leverage the very complementary skills that Oliver and myself have, and the setup that will be truly synergetic. With the new executive set up, Oliver will have more time to drive forward the operational excellence and organizational development of the company while my initial focus would include extending our reach with partnerships with M&A, addressing the broader regulatory agenda, enhancing the financial efficiency of the business and helping the company to scale domestically and internationally as well as some of the new business initiatives such as digital financial assets. A good case in point is regulation. As Oliver mentioned, we became a systemically important financial institution this quarter and the world's first and only fintech to have such a status and as such appreciate that driving forward the regulatory agenda will be key to unlocking new value for group, a specialist regulatory practices are rapidly evolving. International expansion, for example, will be done in close coordination with the Russian regulator. Progress on some of the key opportunities that we see in front of us, such as digital financial assets, I mean, opportunities which we are very excited about will require deep involvement and close dialogue with authorities. In a similar manner, another important focus area for us will be partnerships and sharply pointed M&A, where Tinkoff can attract new teams and pursue opportunities in new business segments and really ramp up the speed with which we approach some of the new ideas. International rollout of Tinkoff will be another point of focus at Tinkoff Global is now set up, and we'll be pursuing what we call a licenser strategy in several highly exciting emerging markets, which Ilya will explain further in the presentation. But as we discussed this many times, this will be a very careful, very disciplined approach. With the new team in place, we aim to keep improving the scalability of our model to new markets and geographies. The onus is on us to deliver, and I'm thrilled regarding the opportunities that lie ahead of the group. Thank you so much. And with this, I'm passing the word to Ilya Pisemsky, the CFO of the group. Thank you.
Hello, everyone. Well, I'd like now to discuss some of the main trends that we observed in our business throughout the third quarter and 9 months of 2021. Traditionally, I will start with the balance sheet composition on Slide 8. In the third quarter of 2021, assets of the group grew by 13.9% because of the strong net credit portfolio growth and due to the cash contribution from the perpetual bond issued in September, which we obviously weren't able to fully utilize yet. As a result of the latter, asset mix changed visibly from previous quarter with a cash balance growing from 11% to 18%. Our funding base is depicted on Slide 9. Healthy 10% growth that we observed in the second quarter continued with 14.2% growth in the third, with retail and SME accounts leading the pack with 15% and 17.5% in balance increases and wholesale funding coming back as we have successfully placed the perpetual bonds. The parameters of the bond are $600 million, 6% annual coupon paid quarterly and 5.25 years call option. This is a very favorable deal for us, both from the cost perspective, taking into account 6% inflation in the U.S. And from the capital management side, boosting our total capital adequacy 300 basis points up. If you please look into the chart at the bottom right, you can see that maturity distribution of our wholesale funding. Note, the 5.6 billion balance at the far right, these are the senior bonds backed by our home equity loans. The securitization that we've done in August was the first one in our history. Ironically, the initial funding model of Tinkoff 15 years ago assumed constant streams of securitization of credit portfolios. We will continue working in this area trying to establish a conveyor of securitization deals of our long-term assets. On Slide 10, you can see shareholders' equity increased by 10.6% in the third quarter to RUB 163 billion, thanks to strong quarterly profit and absence of the dividend. Our Basel ratios grew during the quarter with total capital adequacy growing noticeably to 23.5% on the back of the perpetual bond placement. Takeaway from the next slide, is that strong growth of the core equity of the bank allows us to hold on the core capital adequacy of 10% despite growing RWA density coming with recent regulatory initiatives. Obviously, this comes with the absence of dividends in the recent quarters. As you are all aware, Tinkoff Bank was awarded a systematically important bank status from January 22, which comes with greater responsibility and 100 basis points higher capital adequacy requirements, which means that our core capital adequacy will be a bit closer to the required minimum. Till we reiterate our long-term intention to keep a buffer over the prescribed CBR minimums at 200 basis points taking into account our ability to generate profit and manage the speed of growth of the loan book. Speaking about total capital adequacy, it was under pressure recently and decreased from 12.2% to 11.5% during the quarter. Central Bank of Russia has registered the new perpetual bond as a part of our regulatory capital, it's subsequent to the quarter end. So pro forma total capital adequacy stands at 14.9. Now I will turn to the income statement, starting on Slide 12, where you can see the breakdown of our revenue by major business verticals. You can see that the split between credit and noncredit components of the revenue steadily shifts towards noncredit, which for the third quarter represents 45% of total. Revenue grew 36% year-on-year to RUB 193.5 billion, adding 10% quarter-on-quarter. Our next slide is on cost management, where you can see that we -- we stepped up our investment into growth this year compared to 2020 9 months statistics distorted by the pandemic crisis slowdown. At the same time, quarterly graph shows a slight decrease of total cost-to-income ratio in the third quarter of 2021 from 50.1% to 47.5%. This is a seasonal thing as we spend proportionately less on acquisition in July, August and start picking up momentum again starting from September into the fourth quarter, which is traditionally a high season for all our businesses. This means that despite expected strong revenue growth in the fourth quarter, we will observe acquisition costs picking up again and cost-to-income ratio coming back into the 50% area. Core cost to income comprised for the large part of the employee compensation continued to increase quarter-on-quarter this year as we keep attracting new talent into the organization at a relatively expensive price. Taking into account the development of our businesses, products and platforms, talented professionals are a key success factor for us and hiring them is a priority. We still feel ourselves understaffed. So this part of the cost structure will continue to grow from IFRS perspective. At the same time, I'm glad to thank those of you who voted recently in favor of waiving preemption rights, which opens a possibility for us to issue up to 1.5% of GDRs annually to grant to our employees in our long-term incentive program. We have plans to greatly increase the participation in share motivation program. And in the future, we will start to show how this part of compensation affects our costs and cost-to-income ratios. Slide 14 shows the dynamic of our net income and the contribution that credit and noncredit businesses give to that growth. You can see that the third quarter net income climbed to RUB 16.5 billion, which is another record number in our history. Consumer finance was still the main contributor with noncredit part developed multidimensionally with current account business, hoping with significant investment into growth resulted in segment losses. It should be noted that in our segment reporting, the benefit of lower acquisition cost when cross-selling to debit cardholders accrues entirely to our consumer finance in the tech payments and InsurTech businesses, given that we do not use any internal transfer acquisition costs. This means that in spite of the negative result, the current account business is still accretive to earnings. On the next few slides, I will cover the results of each business segment one by one, starting with our bread-and-butter credit business on Slide 15. Our loan portfolio showed a solid 8.8% growth during the second quarter on the gross basis and third quarter, sorry, and 9.7% growth on a net basis. It was driven by all components of the credit book, including unsecured and cultural light loans. All segments contributed to the growth but secured loans, SME loans and point-of-sale loans grew faster from a lower base. Therefore, the share of credit card reduced further to 47% of the total book. Still credit cards remain a key core product for us. In absolute numbers, it developed strongly with over 600,000 new credit card accounts utilized during the third quarter. The economics of our credit business is shown on Slide 17 and 18. Interest income for 9 months posted 24% growth year-on-year. Our headline gross interest yield on the credit portfolio decreased from 28.7% to 25.4% year-on-year, mostly due to the growing part of noncredit card loan portfolio. Our blended cost of borrowing declined from 4.3% to 3.4% year-on-year and was this low thanks to large inflows of cheaper SME, retail and brokerage accounts. In last 2 quarters, the trend has been reversed, though as the Central Bank of Russia started to increase its base rate. So cost of funding grew 20 basis points per quarter. It's incomparably low compared with 325 basis points. Central Bank cumulative rate increase in 2021, which in my view, shows our ability to effectively manage funding costs. The general expectation should be that funding costs will continue to increase a little bit in the fourth quarter of the year as well. But for the year, it will stay within the guidance announced earlier. Net interest margin declined year-on-year from 18.6% to 15.8% because of the reduction of the gross yield softened by the reduction of cost of funding. Cost of risk continued to improve after the initial coverage shock. So net interest margin after loan loss provision improved year-on-year from 10.5% to 13.4%. The next 2 slides give more granular information about the unsecured and secured part of the loan book, including gross yield and cost of risk. Slide 19 shows the unsecured loan book. You can see continuing improvement in asset quality and still very attractive risk-adjusted margins. And Slide 20 shows the secured part of the portfolio, split by current home equity loans. The average yield slightly peaked up to over 14% and cost of risk stabilized at 4.3%. Now some comments on our noncredit businesses on Slide 21 to 25, starting with debit card business. It was a very solid quarter again in terms of customer acquisition as we added 1.7 million customers to get to 12.3 million in total and 8 million active. TPV of purchases increased greatly and reached RUB 643 billion, which is 19.3% quarter-on-quarter pickup. While balances also grew noticeably to RUB 431 billion. Revenue added RUB 1.1 billion to RUB 10.5 billion for the quarter, net of cashback that we returned to our customers. And bottom line result is a loss of RUB 3.8 billion, coming mostly from acquisition of new customers. However, it's important that unit acquisition cost for each new utilized customer continue to be stable. We see more value in growing the customer base and in the potential synergetic effect with other business lines rather than a source of pure net income. Our SME business has found ways to increase profitable customer acquisition and big numbers after a retrenching period of a few quarters, that has improved its churn management. You can see from the Slide 22 that at the end of the quarter, we had almost 600,000 total customers and 364,000 active. We earned revenue of RUB 5.7 billion in fees are income and some interest on SME loans, which now we show separately, while our net income was strong at RUB 2.1 billion, contributing 10% of the group earnings in the third quarter. Our investment business keeps growing its customer base. At the end of the quarter, we had 2.6 million total customers and 1.7 million active. The RUB 540 billion in assets under custody. Deal volume was relatively flat, but we expected to resume growth in the fourth quarter, thanks to the higher volatility in the market. Nevertheless, the profitability did not suffer as we were able to increase revenue to RUB 4.8 billion level and increased quarterly profit before tax to RUB 1.3 billion. If you could please turn to Slide 24. Our acquisition business processed RUB 389 billion of TPV in the third quarter, which represents 2.5x growth year-on-year, capitalizing on the growth of our merchant base and Russian e-commerce. Combined with a stable commission of 1.7%, this led to revenue of RUB 6.8 billion for the quarter and profit before tax of RUB 1.5 billion. This business works both with large aggregators as well as individual merchants, roughly a 50-50 split. It's also an important part of value proposition to many of our SME customers. And now to the final slide of my presentation. You have already seen our quarterly profit number to reiterate another quarterly record of RUB 16.5 billion and RUB 46.8 billion for 9 months of 2021. Return on equity is holding over 40%, while return on assets is flat at 6.6% year-on-year. And now back to Oliver and Pavel.
Thanks a lot, Ilya. As I reflect on how 2021 has gone so far, I can say that we're pretty pleased with the performance of the group. We're ahead of plan on all of our 2023 strategic targets. Thanks to the very hard work of the thousands of employees who are building the most comprehensive, engaging and innovative financial and lifestyle ecosystem in Russia. Touching on our guidance for 2021, we're tracking well across all our metrics and have maintained our conservative guidance for net loan growth, cost of borrowing and share of noncredit revenue. We're slightly improving our cost of risk guidance to below 5%, and we're maintaining our RUB 60 billion plus net income guidance for this year as we continue to make investments in customer acquisition and hiring tech talent. And while it's early for us to guide on 2022, we're confident that we can deliver another year of great operational and financial performance and strong growth. We're going to provide the market with updated guidance on our 2023 objectives in the first quarter of next year. This month, Tinkoff is celebrating its 15th anniversary. We've achieved a lot where we geared up to do much, much more. While we're a large player in the Russian financial space, we maintain our start-up entrepreneurial spirit and the fight up about the opportunities ahead of us. We're deeply convinced of the scalability of our model and are ready for the challenge of international expansion. As always, we'll retain our humble approach and capital discipline as we learn the ropes outside our home market. but now more on that from Pavel.
Thank you, Oliver. The overall are going to be in Russia is rather simple. We obviously believe there is a tremendous value creation part in Russia And we are barely scratching the surface of it in some of our businesses. But as Oliver just said, we're convinced that our business model is scalable to other markets. We play the key role in driving financial inclusion forward in Russian market and aim to do the same in other geographies. if you want to sum it up, the DNA of our business is essentially a large debit card core that is driven to profitability by the well-executed credit business and cross sold to from asset management business. In a number of markets, where the regulator allows it, we will include digital financial assets and our offering on the asset management side. We believe that our operations should not be in any way, in a great area of fragrance arbitrage. And as such, we will be pursuing international opportunity on a full license basis. And that meaning a fully licensed commercial bank complemented as needed by the asset management licenses. Internally, we call it a license for strategy. The execution of the strategy is quite similar to the funneling approach we use in the remainder of our business. We basically built to license funnel. And as of today, we have engaged with regulators in a number of attractive emerging markets with core focus on some of the fast-growing economies in Southeast Asia. You might have seen the disclosure that we made on Philippines. It is one of the several dialogues we're now parallel tracking. And depending on where we see positive signals with regards to the past license, it is -- that market where we'll be executing and rolling out our platforms. I would roll out in some of those markets, we'll be working with local partners to accelerate the rollout of platforms or doing M&A for small banks and brokerage houses should that be an optimal way to obtain the license. Shareholders should see the license-first approach to several markets and essentially is probability weighted. dialogues, in our view, will not be progressing extremely fast. We'll take a bit of time and effort from our side, but we do believe that there is a great merit in extending our reach and talking to a number of regulators at the same time to prepare for our eventual engine. At this stage, I would also want to communicate that any capital commitments that we make outside Russia will not be material vis-a-vis our core Russian business. And if any, such commitments would be done on a highly disciplined and focus basis. We estimate that for initial stage that will involve statutory capital commitments, team and tax setup as well as the initial tests and altogether, this would not exceed an amount of about $200 million at the initial stage, yet this amount could vary depending on the order configuration that we're now trying to determine. As for further details, we'll be happy to provide more updates as we progress with these exciting opportunities that in long-term relief could have an order of magnitude impact for capitalization and overall prospects of the Tinkoff business. Thank you so much and may suggest please go to the Q&A part of our discussion. Thank you.
[Operator Instructions] Our first question comes from Mehmet Sevim from JPMorgan.
So my first one will be on net interest margins, please. On the one hand, the gross yield is still quite resilient and the quarterly drop still looks quite contained. But on the other hand, we also see the cost of funding increasing now sequentially on the back of the rate hike. So what's your views for margins going forward with taking into account the recent developments? My second question will be on international expansion and many thanks for the color that you provided so far. Is there anything more specific that you can share on the timing of the first entrants? And have there been any new developments with your communications with the central banks, for example, in the Philippines? How close are you getting to it? And -- You also comment that you may be doing M&A. Is there a new approach that you're thinking? And have there been -- is there anything specific that you're looking at in some of the markets? And finally, with the AGM approval, do you have any thoughts about the timing of the potential share capital increase, please?
So I'll probably start with the margin question. First, well, we will continue to diversify our loan mix and our culturalized loan such as home equity, car loans and starting from the end of this quarter, mortgages, they will make our yield -- combined yield lower, and that will continue into the future. Probably at some point in time, it will flat now, but it's definitely not next year. At the same time, cost of borrowing, well, we are in a rising rate market. In my view, it will continue into the first half of 2022 at least. Therefore, our cost of funds will probably be slowly creeping up. But again, you see that we are quite resilient in the growth of our rate as well our current situation allows us to basically to keep our rates very low, still our products very attractive. So our net interest margin will continue to go down. Again, I can only reiterate that at the same time, our -- well, as we increase loan amount on -- with the addition of culturalized loans, our acquisition cost to prepare per customer. is going down proportionately. And also, cost of risk in these segments are significantly lower. And therefore, it also helps our bottom line. So on an NPV basis, on a portfolio basis, if you issue, it's very attractive even compared to what we have on a single credit card portfolio.
On the international, Mehmet, thank you so much for your question. If you allow me to elaborate, I don't think you should expect in terms of planning and modeling. Any material news coming out of our international business for next a few months, I think we'll provide an update in the first quarter. At this stage, we're obviously in very close regulatory dialogue with BSP and Philippines, and we're talking to a number of regulators, I think at this stage, it's premature to say that we have a clear timetable that has been established for obtaining the license. So I think that probably would be the right time for giving you an update. In terms of M&A, as I mentioned, we will not be looking at doing any material or major M&A in the market of focus primarily because we're essential builders of business. We are not acquirers of business. We are not looking to acquire a business. We're looking to acquire a license in a market where that could be a convenient shortcut because the license acquisition with the bank would still be subject to regulatory approvals. Just in some cases, I mean that seems to be a faster and more efficient way to do it rather than applying for a new license. So that is the process ongoing. And I think at this stage, there would be no more specifics because there is no material impact on any of our sort of numbers from this perspective.
Yes. And a couple of words on the timing of our hypothetical capital raise. You're absolutely right in that -- our Board of Directors has been authorized by AGM to raise up to 5% of new capital to fund our growth. But our thinking behind this authority is pretty straightforward. And it dovetails into what Ilya has already explained about our dividend policy. We continue to be very capital generative in terms of our organic business. We continue to stick with our decision to suspend our dividend payments for -- throughout 2021 and into 2022. So the terminal of this hypothetical rate is definitely not about this year. And it's going to depend on a few moving parts related to the optimal growth in Russia that we deem sort of visible for next year and the pace of our development outside of Russia. So early next year, we'll figure out our strategy in both directions, which will define our decision about the capital raise.
Maybe I would just add a little color to that, that bank is not the only one profitable unit within our group. We also have insurance arm, which is profitable. We have collection agency, which is profitable. So to finance small infusions of capital and the potential foreign adventures, we can do it even without raising additional capital.
Would that be reallocation of capital, let's say, from insurance to the new business that.
Sorry. Well, the insurance company, well, dividends to the holding company in the past, and we may continue to do so. And then this money at the holding level can be infused into other ventures. All the streams to the bank level, for example. So it's, again, -- now we have all the cards.
Elena Tsareva, BCS Global Markets.
Congratulations with another record results. I have several questions, perhaps I can one by one. So first, on customers. So the growth of customers is very impressive and like second quarter in row. So maybe you could share any one-off impact you could see maybe from high interest rates or something that just number of customers. And it also looks like you are on quarter 2 achieve your 2023 target of customers. So if you can share what could you see beyond by terms of total customers and perhaps you can say what kind of evolution of products per customer you can see now. This is the first question. Another question I have, you have a very interesting and very impressive additions. And perhaps you could share, for example, e-commerce does the new hiring imply any changes to the strategy? And another question on dividends. So the headlines of dividends, especially for first quarter. Is this referred to fourth quarter net profit or you imply a due suspension of dividends going forward? And maybe final quick one question on Philippines. So there were headlines that regulate advice to apply for full banking license rather than for digital neo-bank license. So what's the rationale there you catch there?
Elena, thanks for the questions. So I'll take the first couple and And then Ilya with divident pay and Pavel, the Philippines. So we are indeed growing very quickly in terms of customer numbers. As you know, that's our key metric, and it's our key metric because the number of new customers that we bring new to group determines to a large extent our cross-sell. So does the cross-sell exist in 2 dimensions, it's the number of products per customer, number of products, specifically per active customer. But the more customers we have, the more we can cross sell. So we have a number of different channels to which we bring those new customers, new to group customers. And obviously, the main one is Tinkoff Black, and Ilya mentioned Tinkoff Black in his opening remarks. So Tinkoff Black is actually accelerating in terms of growth. We've had 2 very large marketing campaigns this year. So organic growth is accelerating because we get the network effect and word of mouth orality. But we've supercharged that by doing 2 marketing campaign already this year, and we've got a third one just about to start. And their runaway successes. So some months, we've been said, is overtaking Sparebank in the number of customers that we're bringing on board. So this contributes to the very high growth of our customer base, which over the last 12 months has grown by 6.4 million new customers, taking us to this current number of 18.5 million. But Tinkoff Black, the current account product, current account/debit card/mobile app isn't the only high-growth acquisition channel. We also have sales finance/installments/BNPL. We have investments in the brokerage business, which brings in tons of new customers and some other businesses as well, actually, insurance is really starting to show some encouraging signs. So we're bringing customers in a number of different ways. And as I say, accelerating that customer growth because we think this is an excellent time to fire on all cylinders and really invest, as you can see from the OpEx, a lot of which is growth related. So this brings us much closer to our 2023 target of 16.5 million monthly active customers, revenue paying customers, much closer than -- so this event will happen a lot quicker than the end of 2023, which is what your question is about. So we're not going to make any revised projections or give any new targets. But obviously, as we go into next year, we'll understand from our planning processes where we're going to end up by 2023, and we'll think about revising those targets, if appropriate. But by the end of this year, we're going to have 14 million active customers. So we're well on the way to our target, as you can see. And it wasn't actually that long ago. I remember when we met investors and had calls like this, I used to talk about our target at the end of 2023 being 14 million active customers, and we are already as you can see just how well we're managing to execute on that growth plan. So at some point, rather than talking about 20 million customers, which we'll have by the end of the year, total customers we'll be talking about 30 and maybe more. So please watch out for news in this space. Maybe just before I move off it really is a testament to how we are able to execute, how we're able to scale up channels, how we're able to build product and onboarding processes, maintain a high quality of service despite rapid growth and build fantastic interface. All of this just goes to show that even in a market that looks like it's highly competitive and fairly mature in terms of banking services with a very strong players in it, you can still disrupt and bring in lots of customers. So on E-commerce, just before I answer the e-commerce but we'll talk about not just Ilya Kretov, who joined us from eBay a month or so ago. There's other people we've been bringing in. So this speaks to the point about strengthening the management team, deepening our bench. So as you know, we have a fantastic managers in the Tinkoff team, some of whom or many of whom have been with the organization since the very beginning 15 years ago, but the few have joined us along the way. We've grown amazing talent within the organization, so people who came as fresh graduates or even people came to students who -- many of whom are leading our platforms, functions and business lines. But we've also been hiring people in because we can't grow people fast enough inside the organization to keep up with the pace of our developments, and we need to bring in people with strong skills and new experience. So as well as Ilya Kretov, who heads up what we call Merchant Solutions/Tinkoff E-commerce, which I'll talk about in just 1 second. We also have some other new joiners, so people we haven't talked about that much -- So, who joined us as COO already a couple of years ago now from Luxoft. Romano who joined us. He was in Yandex for a while, then, if I recall, SpareBank Ato. He joined us about 6 months ago to manage our platforms, was in delivery -- I'll say, Delivery Club and Malu Group, who is the CPO. He joined us a couple of months ago to have a lifestyle and loyalty and people have -- I can't mention it because it's quite a long list. So we really are building up muscles in different areas. So what Ilya Kretov is going to do? He is basically building a suite of services to service online retailers to move our offering beyond the core, which is obviously payment solutions and financial services, consumer lending services for merchants like BNPL and also financing solutions in terms of SME lending. To move it beyond that and into for example, connectors to marketplaces, constructor website design, maybe recruitment services, data management services, traffic generation services. Lots of other stuff which will cement our position in the online retail space. So basically merchant solutions and enable us to grow our core financial and payments businesses even further. It's a space that we really like. We've seen studying what's happening in other markets. And Neri Tollardo, our Head of Strategy, has been doing a lot of work on this and bringing lots of ideas as well as internally generated ideas. And we think that this could be another huge opportunity for us. Ilya?
Well, on dividends.
Sorry, if I just may quickly follow up on the product to customer data, if you can provide a -- any update on this?
Instrument data rather per customer.Right. So currently, we're at 1.5 revenue-bearing products per active customer. So it was 1.3 a long ago. End of last year, I think it was about 1.4 beginning of this year. So now we're up to 1.5%. Our target by the end of 2023 is 1.7, 1.8. And we think we can get it up to 2. So we're well on target. So we're growing extensively, i.e., people coming in to new to group to the organization, which gives us this 18.5 million customer number. And we're growing in terms of penetration by selling more of those products and services. One of our selling people are taking those services in a prepay within the ecosystem. And over to Ilya.
Yes. So basically, if a customer likes us and stays with us for about a year, it's almost 100% probability that a customer will take another product and sometimes more. And about the dividend this morning, we spoke to press, and I can just repeat what I said back then that given that we became a strategically important bank and we have a higher pressure on core capital, it is highly unlikely that we would pay dividends -- any dividends at the beginning of next year. And then as we are capital generative and depending on the speed of growth of our lending business, we will look if we can resume or cannot resume the dividend payments closer to 2023. So again, but it's important to understand that there was no decisions on that made. It's just my opinion as the CFO of the group. That's it.
Well, if you could -- if you allow me to comment on the question, it was Elena from you on the Philippines. Yes, I mean that is correct. I mean we have applied for a full banking license. I mean, as you've seen from news, BSP has reformed somewhat the process of digital life applications, the number of license is going to issue. We're in close dialogue with BSP. I mean it's a very high-quality discussion at this stage. Obviously, the progress will keep you updated.
Our next question comes from Mikhail Butkov from Goldman Sachs.
My first question is quite broad one. Can you maybe share some preliminary outlook for the next year and maybe which of the trends do you expect to change to I meant basically what sustainable lending portfolio growth do you see in the light of higher requirements from the Central Bank and maybe also some comments on asset quality? The second question is on -- actually on buy now pay later product, if you could provide some updates there? And the third one, also on SMEs. So you had some aspiration to attract new, larger customers into the SME segment? Where are you currently on these targets?
Thanks, Mikhail. Yes. So we're not giving any guidance for next year. We'll do that at the beginning of next year. But I made a comment in my opening text, which basically says that we see strong momentum going into 2022. We don't see any headwinds. We like what we see so far. But obviously, there's always the usual operational challenges that go with growth. So kind of more of the same from 2021 going to 2022. It's hiring. It's making sure that we have all the people in place operationally in terms of tech development, in terms of product to continue to grow at this rapid rate. There's also obviously regulation. Regulation has been coming down the this year, we'll continue to next year. So nothing new. There's some new forms of regulation. But if you think about the mix of our loan disbursement, there's much more happening in terms of secured lending. Our loan book is already 25% secured loans. And secured loans are growing more quickly than unsecured loans. Credit cards great business. It's our heritage, but that will -- is a much more mature product in a more mature market and will grow more slowly, although probably for the year, this year, it will grow by 25%, 30%. And we, as you know, continue to grow by applying our ages old philosophy, which is giving a lower ticket as we can for a shorter duration as we can. If it's a long duration in a larger ticket, then it will be a secured product as opposed to unsecured. And so we've always been very disciplined about this. We continue to be disciplined. In terms of our underwriting, we bake in PTI and DTI. So we have a very low -- much lower than market average if you look at the large consumer lenders in Russia, PTI threshold, PTI level in our in our customer base. So for us, what we see in 2022 doesn't show any warning signals. Obviously, we're always vigilant as you know, and they're very conservative in our underwriting approach, but we see another good year next year in terms of our ability to do considerable growth in consumer lending. In terms of asset quality, we're not seeing any red indicators or even on a yellow indicators or number indicators at the moment. We see very good leading indicators on all of the consumer lending products, secured, and unsecured. We see delinquency rate, which is either stable or even coming down in some cases, nothing that would cause us to believe that we should slow down or change TAC. But obviously, we will have the base effects. We will have grown significantly this year at 50% plus by the time we get to the end of the year in terms of our loan book. And obviously, you can't maintain those rates on a bigger base. So we'll see how it goes, and please wait for more specifics at the beginning of next year as said. In terms of BNPL. So we have a product called Dolyame, which is short installments. But to the customer, this looks like a deferred payment, which basically what it is, yes, so you can pay right now using a debit card. You can pay right now using a credit card in the grace period and pay at the end of the grace period or you can pay using Dolyame in 4 installments over a 6-week period and make a down payment right now at 25% of the sum. This is still in test because it's only been around for 6, 7 months. We're the first to roll it out. But we're doing quite a significant amount of applications per month. I won't give any numbers on that yet, but is growing really quite quickly. And obviously, the more partners we sign up, the more merchants we sign up the larger the application inflow. But we're still data gathering data, still fine-tuning, still working out the customer journey management and the integration into checkout, signing up with new partners. It's obviously a big new business line, which is B2B, B2C. But we're firm believers in this. We're investing resource. We've got a cracking team working on this. And I think probably in around 6 months, we'll be able to communicate to you guys some specific numbers. But right now, we like the trajectory.
SMEs, On SMEs, let me comment just very quickly. Obviously, just a substantial growth quarter-on-quarter. So we -- as you saw, we brought in 50,000 additional clients to our SME business. Clearly, this is one of the areas of positive surprises as we see that vis-a-vis the market in the coming quarters to dynamics. The -- I think at this stage, we're experimenting with the credit portfolio of the SME business, really building up the processes, building up the committees and procedures for controlling the credit exposure to make sure that this is a very disciplined and very coherent process. So that process is ongoing. I think as we move forward, the share of the credit revenue from the SME business will increase, and that will be complemented by the -- all the initiatives that Oliver has just explained on the Emerging Solutions side, and we see that as a very exciting growth opportunity going forward.
Great. And just sort of very small follow-up on. Among the 50,000 new clients. So do you see the change in mix, so larger clients, larger merchants become the clients of TCS. So this is the question.
Yes. No, Mikhail. Obviously, we are seeing an improvement. And obviously, we are catching more and more of the segment, especially when it comes to the online story. Yes, so the answer is yes.
We'll now take our next question from Gabor Kemeny from Autonomous Research.
I'd like to stay with the loan growth outlook. You mentioned that the leading indicators seem supportive. Can you talk a bit about this further like what leading indicators, look at on lending and how these are developing? And from what I heard so far, it seems that a 50% plus loan growth is very achievable over the coming period. Is this -- would you think this is a fair interpretation? And then specifically on the regulation, I understand that there is a new draft regulation in the Russian parliament, which would seek to potentially limit the consumer unsecured lending for the banking sector. Could you comment on the potential impact? And last question is, I understand that the CBR is particularly looking at the payment to income ratios of the banks. Would you be able to give us some pointers on the PTI profile of your loan book?
Sure. So I'll kick off, Ilya may want to chip in. So I'll give some more leading indicators in terms of credit quality. But just before I do, I didn't say that we can grow by 50% plus in 2022. That's why I think you thought you heard, but that's not what I said. So we will have finished this year. We're basically meeting our guidance of 50% plus loan book growth this year, net loan book growth. What will have for 2022 is something that we'll communicate to the market a little bit nearer the time, yes, so basically at the beginning of next year. So I'm not giving any numbers or any projections for next year. But what I did say is that certainly, everything we see, the macro in Russia and our own numbers in terms of asset quality and portfolio metrics, including portfolio economics are definitely supportive of another very good year in terms of a strong profitable loan growth next year. So on the leading indicators, the ones that we look at and the ones we communicate with you guys on a regular basis are obviously first payment default, second payment default, which talk to the the quality of new vintages that we're booking. And obviously, the bounce around depending we're doing, the channel determined by channels, they're determined by test, they're determined by seasonality, determined by wobbles due to COVID and things like that. But what we're seeing is that they are where we'd like them to be. Obviously, we're talking about lots of different loan types now, but they're all in a good place. More importantly is the health of the back book, so the customers have been in the book for a while. This is the delinquency rate is the rate with which the rate with which customers in the back book go into delinquency as opposed to new vintages that we're booking. And here, this is obviously a key rate. A key indicator we see that very either stable across all of the lending products or actually slightly going down. Some are going down because we have tightened up a little bit as we go into the back end of the year to manage capital and the P&L. This is something we've communicated many times in the past. It's something that we do sometimes from year to year. But there's a kind of longer-term trend of ticking down of the delinquency entry rate, which just shows a longer-term trend of increasing or improving credit quality. And the reason for that, I think, is because we're doing more and more cross-sell. So a larger share of loan origination is done as a result of cross-selling to our existing customer base. And we obviously have even more information data on our existing customers. We have a relationship with them with very often our current account customers. and that we can make even better decisions. And that's going to be a long-term trend going into the future. We also look at the collection rates -- collections rates, this is collections efficiency. So it's the speed at which once a customer has gone into delinquency, we can either return them to current status or they go deeper into delinquency from first, second, third cycle to 90 plus. And here, we see nothing on toward collections efficiency, obviously deteriorated during the COVID spike last year. And then it improved basically from the summer onwards and it continues to improve. So again, this moves around a little bit for seasonal reasons. The January holidays and May holidays, summer holidays, but we see that it's either stable or improving slightly. So nothing in our leading indicators would give us cause for concern. In terms of PTI, I'm starting to answer your third question. So this is important, if you like, a segue. So PTI is obviously something we look at very carefully. And there are a couple of pockets of increasing PTI and DTI across the market. So one is micro finance lending. And this is people who have less access or no access to credit from banking institutions basically who go to microfinance organizations and get payday loans or similar -- shorter-term loans, which are much more expensive. And that's growing. It's not a huge part of the consumer lending landscape by any means, it's still very small, but it's been growing. And I think when the centric things higher PTI and where risk may be accumulating then that might be one of the areas. So we keep a close eye on that. And the other area that the Central Bank has exercised about, and this is now answering your question, Gabor. This is longer-term loans. So Tinkoff has been very disciplined over the years about not issuing personal loans or any unsecured loans for longer than 3 years. So just for full disclosure, we have a very small test of personal unsecured personal loans for slightly longer than 3 years, but basically, 99% of our volume is under 3 years in term. And most of it is below 2, 2.5. However, there are some lenders who are offering loans for a term of 5, even 7 years. And this is ironically partially as a result of the introduction of PTI legislation with central regulation, I should say. And we won the Central Bank that this could happen when the Central Bank was actually working on this PTI framework and the new regulation. So basically, what happens is that a bank can't issue a loan because their economics don't work. The unit economics don't stack up. I can't issue a loan with an existing cost base of less than 3 years. And so because of the way it's priced, it means in order to meet the PTI threshold of 50%, they -- so they don't get extra risk weight supplied. They just lengthen the term of the loan. So as a result, we've seen this this increase in longer-term loans, which the Central Bank, in my view, quite rightly thinks is a systemic risk. So the Central Bank is now thinking of applying extra risk weights to loans longer than x years and not quite worked out what x years is, but it's probably going to be 5 years, in my view, which is good. So it means that it's more costly in terms of capital allocation for a bank to issue a loan of longer than this x number of years. In terms of PTI in our particular book, we obviously monitor this closely because it's baked into our scoring algorithms underwriting. We have -- if you compare us to, say, the top 10 consumer lenders in the country, we have one of the lowest levels of customers who have a PTI above 50%, after which risk weights are applied. And that's where we want to be. So now segueing into the second question on regulation and sector specific segmental regulation, which is the piece of legislation currently going through the statutory books, which will be passed fairly soon and be enforced at some point next year. One of the areas is definitely going to be longer-term loans. So we've already dealt with that. And in general, the Central Bank's idea here is that they don't have enough arrows in their quiver to regulate the market in consumer lending in general. So basically, they have one-to-one instrument, which is risk weights. And we know they've increased risk weights a couple of times recently, but risk weights have a certain effect, but the effect is limited, is not finite. And so they need something else. So this something else is this segmental regulation, where they can go in. But if it's a systemically important bank and obviously well established and responsible lenders, there's no individual regulation, but the Central Bank will have the ability to regulate individually nonsystemic banks. But that's not the -- if the legislation is passed in its current form. But that's not what Central Bank's intention. The Central Bank's intention is to regulate different segments of the market where they see risk building up or risk of overheating or maybe a speed of growth that they don't like in a particular product segment or PTI segment. So that's how it's going to be applied. We don't have any details because the Central Bank doesn't have a policy because the law has not been passed yet. We'll see how it pans out, but we're pretty sure that with our diversified loan book, multiproduct approach, most of it coming from cross-sell, an increasingly large share coming from cross-sell. And the fact that we have a low PTI, low loan amount and short duration approach short term, sorry, -- That means that we're highly unlikely to be significantly affected by this. So sorry for a long answer, but it's an important question.
Our next question comes from Andrew Keeley from Sber CIB.
I have a couple of questions. One is on your InvestTech business. You've talked about some of the other new products that you've been rolling out. It would be good to get a bit more color on Tinkoff Private and ECM and DCM businesses that you've launched and how they kind of fit into the broader InvestTech business? And I'm just interested in -- given back in May, when we had this InvestTech strategy session and the targets were basically above RUB 40 billion revenue for 2023 and above 5 million active clients, which when we look now, I mean we're looking at -- that's more than doubling the revenues over the next couple of years. Active clients have added about, I think, 0.7 million, around about 1.7 million now. So I'm interested, do you think that these targets are still likely because they certainly seem kind of quite aggressive? We're seeing pretty bold targets where we are now, perhaps compared to where we were in May. And what will be the things that you think will be able to drive hitting those targets?
Andrew, it's Neri here. I'll take this question. So look, think of private is the continuation of our strategy to give each customer segment what they really want. So as you know, we have several different, let's call them, tariffs from the newbies into the market that are not really trading much to the more frequent traders, then we had introduced a more premium segment. And then we decided to go even a little bit beyond that in terms of net worth. So we're not out there competing with the large Swiss banks necessarily. But we've identified a pretty sizable niche of several hundreds of thousands of Russians, new economy millionaires that are interested in a digital solution for managing it, what are becoming relatively sizable amounts of money. So we've got this little bit of an internal tagline that we want to be the Swiss bank on your mobile phone. So to that end, we developed a new -- let's call it sub business line that actually goes a little bit beyond Tinkoff investments. So obviously, the investments it is important. But it also includes a specific debit card product, a specific credit card product and a different level of service where you get your own personal manager that you can bother any time of the day, any time of the week. So again, the idea is to grow all parts of the businesses across all different segments. Here, at the private end, especially in Russia, having an ECM and DCM angle is very important. We do see a lot of demand for IPOs and customers that have access to interesting IPOs do move their funds and move at times very sizable funds into Tinkoff. So this year, we've already had quite a few successful deals. We were one of the leading parties in the CIAN IPO. We recently -- we're the leading book runner on the St. Petersburg Exchange, IPO. We've gotten decent allocation in some global fintech IPOs that sourced a lot of demand locally. So the idea here is to help diversify the business to some extent, away from the trading commissions that are more common in the lower end of the net worth space. And add to it larger sources of that can be monetized in different ways and through less brokerage-like commissions. So the ECM and DCM space is growing up nicely because on the one hand, we have lots of customers that want to access these deals. And on the other hand, we have lots of corporates coming to us saying we would like to access this new pool of liquidity and capital for our own instruments. On the long-term growth opportunity, we stand by our targets. We do think that the opportunity is still very sizable, that Russians are still predominantly saving through cash and deposits. Of course, we might have to look through a little bit of cyclicality in the business. As we said earlier this year, we did see quite high trading volumes and we had expected them to subside somewhat. Now we're in an environment where interest rates are going up a little bit, so that will obviously play somewhat against us. But we think that the structural attractiveness of the market hasn't changed that people will be looking for better ways to save and they will be looking to do it through platforms that are easy to use and that provide the best service in the market. So I would say, look through some of the near-term cyclicality and let's focus on the structural long-term opportunity.
Okay. That's helpful. I got a question on your staff cost. I mean, Ilya did touch upon this, and you kind of said he elaborates in the future. But it looks like there could be a pretty sizable increase in kind of MLTIP costs next year. I mean I think you did RUB 4 billion in 9 months this year, could be over RUB 20 billion next year based on your potential share issuance for this. Can you just give us some thoughts on how we should think about how this kind of fits into staff cost growth? I mean, obviously, I get that there's a lot of moving parts in terms of headcount increase, the rate at which you add new MLTIP members and the kind of switch from cash to kind of share-based kind of compensation. But should we be thinking about this more in terms of basically kind of operating leverage or cost income ratio. Just any thoughts on that and how you see that kind of outlook maybe to kind of cost income, if not for staff costs?
Well, I will start by saying that, yes, if we want to compete with tech companies, big tech companies, such as Yandex, for example, and with companies outside Russia in now more and more digital workspace. We have to do similar things. And you're pretty much aware that all these companies, they have long-term motivation programs for a large number of customers. So yes, we were going to do the same. Otherwise, it will be a prohibitively expensive exercise for us in not only hiring people who are expensive, but raising the salaries quite regularly. And if we do it on this, do it like these spending cash and doing expense on the operational level. that obviously has a high burden on our capital, right? And therefore, it's an obvious decision to lift it up and spend a little bit of our capital, which from IFRS perspective, still is a part of expense of P&L expense. But at the same time, if we look at this closer, you basically, you don't spend cash and you don't spend capital on this. So that's that's very good thing to do. Another thing is that you can pay relatively more, but you engage people for a longer period because you basically the prolonged your relationship in time by basically sort of in a cynical sort of words having occurred people. So again, a very good thing. There is a -- we will have a pressure on our costs next year, obviously, because of this. And one of the reasons that accounting-wise, if you have an equity-based program with vesting over several years. You start expensing the longer vestings from the first year of when the GGRs are granted. So in this sense, the -- each MLTIP program is very front-loaded. And especially now when securities trade, Well, very attractive numbers. That adds to the picture. I won't be giving a specific number. I guess it's a bit premature. But yes, that will be a significant portion of our cost that we hear you're absolutely right.
But again, you should look at this in the context of overall compensation to stuff, yes. So it's not sort of things which are separate items. The MLTIP programs; which are accounted for through the P&L and unfortunately, they're front loaded. It was just the way the IFRS accounting practice works. They are part of the growing battle for the hearts and minds of senior management talent in online and tech businesses, but also in -- for engineers at the end of the day. And so we basically have to do this in order to scale up, develop our capabilities and build out the business further in Russia and internationally. So those 2 lines should be looked at separate together also probably.
Okay. Yes. I understand that. And I mean do you have any comment on what you -- how you expect the cost/income ratio trend to go next year or not?
Well, again, we're never guiding on cost to income. And as Oliver said, it's probably not a time -- not a good time for guidance right now. We will do our guidance on the next investor call next -- beginning of next year. But well, I can already say that it's going to be elevated. So it will look more like this year and not like the 2020. So that's kind of a broad answer, but at this point.
Understood. Understood. And very quickly, final question. Tinkoff Pro, I didn't see in the press release the number of subs there, which I think you had in previous quarters. Can you update us on that?
Sure. I think that's probably an oversight on our part to be early because it's certainly not something we're wanting to exclude. Oliver, correct me if I'm wrong, but I think we're up to 1.2 million, 1.3 million subscribers to into our PRO subscription package. We have different subscriber packages, but that's the main one. so don't take that number as gospel, but it's been growing very strongly in the penetration, the 1.4, I'm being told by colleagues here, 1.4 million subscribers to subscription syncope. So penetration is growing very quickly. It's a very popular product. We like the way it engages customers and further boosts cross-sell. It also brings real value to the subscribers in addition to the good volume that they get from our products and services. So let's see a lot of mileage in still to come.
Olga Veselova, Bank of America.
Just one remaining question, remind us the sensitivity of your capital act to the OIBDA yield, if any visible at all.
Sorry, what was the question?
Yes, we missed that. It was a bit of interference on the line with.
The sensitivity of capital that yield? sovereign bond yields.
Yes. Well, I never thought about this in terms of sensitivity. But obviously, yes, we have portion of our treasury book in and they are longer term. And therefore, right now in the rising rate environment, they have negative valuation on our balance sheet. We think of this as an available for sale part of our treasury, but we rarely trade them. So it doesn't have any negative impact on our P&L. I don't remember the exact number of negative regulations, something like, I don't know, about RUB 10 billion or so in the capital so you can figure out the numbers themselves. If you want to -- you can call we'll give you detailed numbers on this. So yes, there is always an option for us to basically to make an investment portfolio where you do not rate securities and transfer part of our longer-term book there and get some additional capital, accounting capital because of that. But right now, where we are not doing this. So I hope it helps. But again, if you want to add more detail for your calculations, then we will be happy to provide it, please connect us.
[Operator Instructions] Our next question comes from Stephan Potgieter from UBS.
Most of my questions have been answered. I just have one on your expansion into mortgages or experimentation there. Could you provide more color on the economics of this business? Will it be on balance sheet? Or will it be funded through securitization? And so how does it actually work in terms of economics?
I'll probably try to answer that. So yes, we're not open this to the broad market yet. So we are experimenting on our own staff within Tinkoff, works sort of pretty well. But if we talk about the big launch, then we'll start with the refinancing. And the idea is that we don't have a very -- we don't have -- well, any disadvantage against big state banks in terms of cost of fund right now. And at the same time, we can distribute -- we can distribute our mortgages at a cheap price -- well, I mean cheaply from an acquisition standpoint because we will be cross-selling them to our existing customers. So if it's refinancing, we can see what our customers already have. And it was like more than RUB 2 trillion of disbursements to our customers in the last few years. So yes, so we have a lot of data when our customers have mortgages and when they clearly overpay for these mortgages. So offering them offering a seamless experience of transferring their balance to us. We'll hopefully at least that's our idea will hopefully be a quick and easy exercise for customers. and beneficial for us. And then next year, first half of next year, we will enter the mortgage market more wildly sort of beyond the refinancing. So that's the idea. But right now, we don't have any kind of specific results to share.
And there are no further questions in the queue. I would like to hand the call back over to Oliver Hughes for any additional or closing remarks. Over to you, Oliver.
I think that's it. Thank you very much indeed for your time, for your questions, for your interest and your support. We'll be in touch. Bye now.
Thank you. Bye.
Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen you may now disconnect.