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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to today's TCS Group Holding PLC Fourth Quarter and Full Year 2020 IFRS Financial Results Conference Call. For your information, today's conference is being recorded. And at this time, I would like to hand the call over to Oliver Hughes, CEO. Please go ahead.
Thank you very much. Good afternoon to everybody. Today, I'm delighted to report the results of yet another record-breaking year for Tinkoff. In 2020, we delivered net profit of RUB 44.2 billion, up 22% year-on-year with an ROE of 41%. This was no easy feat given the tricky operating environment. And this once again testifies the resilience of our business model and the agility of our team. Before we get started, a note on some changes to our reporting structure, which we believe will improve investors' understanding of the key growth and profitability drivers of our business. Firstly, we're formally introducing 2 new customer number metrics. The concept of total customers represents those customers that have utilized the Tinkoff product and have not closed it. At the end of 2020, we had 13.3 million total customers, up 3.1 million from the end of 2019. The concept of active customers, what we also sometimes call financial now, represents those customers that have generated revenue for us over the last month. At the end of 2020, we had 9.1 million monthly active customers. These are not some puffed up headline fintech numbers that we often see of late, these are real customers that are loyal and have mainly chosen Tinkoff as their financial services provider. Secondly, we revamped our segmental disclosure. We now present our P&L across 7 different segments: Consumer Finance, Retail Debit Cards, SME Services, InvestTech, Acquiring and Payments, InsurTech and MVNO Services. It is worth noting that in 2020, the share of revenues from nonconsumer finance businesses, i.e., noncredit revenue, amounted to 37%; and the share of noncredit net profit also amounted to 37%, which was up from 31% and 18%, respectively, in 2019. These new reporting changes give extra visibility on the fundamental changes that have been happening in our business and provide further insights in both -- into both the pace of our growth and the diversification of our business. Now on to some of our operational and financial highlights. Our retail debit card business, Tinkoff Black, the main locomotive of our growth, is further accelerating. More and more Russians are realizing that this is a product they must have. The main reason it's gone viral are the easy -- ease of onboarding, a highly rewarding customer experience, the rich product and the unparalleled level of service. It also has a strong pull and cool factor. Total Tinkoff Black customers grew by 60% from 4.7 million customers, 7.5 million customers in 2020 with balances growing by a comparable 62% year-on-year. In the fourth quarter, our debit card TPV reached a record RUB 783 billion or 55% year-on-year. With every quarter, this product cements its pivotal role as both a major customer acquisition tool and a high-retention loyalty program for our ecosystem. On the start we've seen so far in '21 points to another sizzling year ahead. In the first couple of months, we've increased our run rate of daily opened accounts to over 25,000. Our InvestTech business, Tinkoff Investments, concluded the year on a high. And its brand has become synonymous with retail investments in Russia. In 2020, the Tinkoff Investments customer base grew 4x to over 1.25 million. Assets under custody grew 6x to over RUB 300 billion, and quarterly trading volumes grew 8x to RUB 4.2 trillion. 60% of all active customers on the Moscow Exchange are Tinkoff Investments customers, a market share that is 4x higher than that of the second largest player in the market. What's important is that we are catering to all types of investors, from first timers to active traders, all the way to high-net-worth individuals who need more of an advisory service. We really can say that we're forming this market as it evolves from an early stage. Our customers are generally similar to those that come through Tinkoff Black, young, urban, more mass affluent. Although this business line only broke even in mid '19, it has already become a meaningful bottom line driver. With some of the most attractive unit economics in our product portfolio, over time, we expect this business line to become the largest contributor to our bottom line out of all of the noncredit businesses. Tinkoff Business, our provider of SME Services, delivered outstanding results, adding 60,000 new customers to reach 385,000 total customers. Our increasing focus on medium-sized enterprises that are more NPV accretive is paying off. We grew balances by 48% year-on-year to almost RUB 90 billion. And this business line's profit before tax grew by 71% year-on-year. Our SME customer feels not only as a financial partner, but also as a partner that can help them grow their business with an impressive array of merchant solutions like cloud accounting; website construction; delivery services; CRM tools; and increasingly, SME lending. We believe SME represents a huge addressable market for us. Our Acquiring and Payments business, Tinkoff Acquiring, continues to ride the wave of digital payments in e-commerce. In the fourth quarter, our TPV grew by over 50% year-on-year to RUB 220 billion, contributing to 33% year-on-year growth in revenues and 79% year-on-year growth in profit before tax. The secret of this business line success is that our entire acquiring platform is developed in-house, making onboarding, integration and customer experience for our corporate customers significantly better than anywhere else in the market. Our conversion and fraud rates are the best in the industry. And we have tailored solutions for different market segments, enabling us to grow across a well-diversified set of merchants and industries. This is a highly technological and innovative business, as shown by the recent launch of Tinkoff Checkout, a one-stop payment platform that will combine all existing payment technologies of the Tinkoff ecosystem as well as new solutions, including services provided by CloudPayments, a leading Russian online payments aggregator, in which we hold a 95% stake. Any company can use Tinkoff Checkout solutions regardless of whether it has an SME current account with Tinkoff or not. We have big plans for the business line in 2021 as we build more solutions for our partners. Our Consumer Finance business also ended 2020 on a high after an understandably slower first half of the year. We delivered 14% net loan growth for the full year, ahead of our guidance of 10% despite virtually no growth in the first half of the year. The share of lower risk but high NPV collateralized loans grew to a record 19% of the portfolio, contributing to both growth and diversification of the consumer lending business. Our high-frequency asset quality data continues to give us the confidence that we're issuing positive NPV loans as we further ramp up our loan issuance volumes. With regard to the economic impact of the COVID pandemic, we currently don't see any delayed or unrealized negative effects on both our existing portfolio or on new issuance. With only a 2% market share of the total retail lending market, we believe that our credit business will generate high growth and high returns for many years to come. As you know, all of these products are integrated into one ecosystem, which is accessible to customers through our award-winning super app. Across all our main apps and interfaces, our group MAU reached 9.3 in the fourth quarter -- 9.3 million, up from 6 million a year ago; and our DAU reached 3.2 million, up from 1.9 million a year ago. Our ability to cross-sell existing products and consequently lengthen the lifetime value of our customers is constantly improving. This underpins the growth in products per customer from 1.3 at the end of 2019 to 1.4 at the end of 2020 in spite of the denominator effect from very fast customer growth. We believe we'll be able to further grow this metric, thanks to the Tinkoff Pro subscription, which, despite being at a very early stage, is already showing good traction in our customer base. By mid-February '21, we had more than 300,000 Tinkoff Pro subscribers. With that, I'll hand over to Ilya, who will take you through our fourth quarter results in more detail.
Thank you, Oliver. Okay. Well, the usual, I'd like to start with the balance sheet composition on Slide 5. Total assets of the group grew by 18.2% in the fourth quarter, which brought our asset growth for the full year to 48.1%. Substantial growth in cash balances during the fourth quarter was a result of strong inflow from SME and retail current accounts, pushing the share of the balance sheet -- cash in the balance sheet to 16% at the year-end. At the same time, in anticipation of interest rate increase, we decided not to grow the bond investment portfolio during the winter, and it remained flat during the quarter, fourth quarter, at slightly below RUB 240 billion, and then helped held proportionately to 28% of the total assets of the group. The structure of our securities portfolio can be seen on Slide 36 of the presentation. Throughout the year, we built a significant positive revaluation on this portfolio, which was realized during 2020, nicely contributing to our net income. Our net loan portfolio showed a solid 8.7% net loan growth in the fourth quarter, commencing the return to the pre-pandemic levels of lending. It's allowed to show double-digit growth for 2020 despite the portfolio decrease in the first half of the year. This growth was driven by several components of the credit book, which I will discuss later in detail. And observing the full year dynamic in the total net asset composition, we can see that proportionately, the net loan book declined to 44% of the total assets due to the faster growth of cash and investment portfolio. You can also see the increase in others, which rose by over RUB 100 billion and reached 13% of total portfolio -- of total assets. Please note that among usual other asset items, such as security deposits with payment systems, settlement fixed assets, there are also RUB 24 billion of short-term receivables from Tinkoff Investments customers who made margin trades before the year-end. We expect this balance to grow further in 2021, and we'll start showing separately at some point. Our funding base is depicted on Slide 6. It's growing strongly, mirroring asset growth. The total funding balance of the group grew by 48.3% year-on-year and by a stellar 18% in the fourth quarter, allowing us to build a significant liquidity buffer on the asset side. You can see that growth is most visible in retail current accounts, brokerage accounts and funds from SME customers, which grew by 62%, 500% and 49%, respectively, during the year. At the same time, the term deposit balance remained flat for the year as deposit rates went down significantly in the recent past and new possibilities to earn recently on the funds through our brokerage platform became widely available to the public. This is positive news for our profitability as we are spending less on interest expense and earning more in fees while keeping our customers happy. Ample liquidity on the asset side and generally short duration of our loan book allows to keep our asset liability management portfolio intact and liquidity ratios at high levels. Another funding source that did not grow much, apart from currency relation during 2020, was wholesale funding. Nevertheless, we are keeping an eye on the wholesale market, especially on the perpetual market, as our unused capacity for AT1 capital will be growing in absolute terms in '21 -- 2021, 2022. On Slide 7, you can see shareholders' equity increasing by 9% in the fourth quarter to RUB 127 billion, thanks to strong quarterly profits. Our Basel ratios went down a bit due to the yearly remeasuring of operational risk and IFRS. We also observed the reduction in RWA density as the share of loan portfolio in our assets declined compared to cash and investments. Capital ratios also came down a bit. N1.0 and N1.1 came down to 12.4% and 10.2%, respectively. Going forward, we target N1.0 above 12% and N1.1 above 9%. Now I will turn to the income statement. Starting on Slide 9 where you can see the breakdown of our profit and loss statement by the major business verticals. It's a graphical representation of what you can see in more detail in Note 4 segment analysis of our financial statements. Here, we show both revenue breakdown and net profit breakdown by business line. There are no internal transfer pricing costs applied. Therefore, you can see, for example, that our retail debit card business, while an important revenue generator, is essentially an entry point to the ecosystem and major source of cross-sell. And therefore, its bottom line representation's constantly brought to the million. In some periods, it's allowed to go below breakeven. Also, you can gather from this slide how seriously margin costs affect the business that are in investment play, such as InvestTech or Mobile. We hope this new level of granularity will give a better insight into the key drivers of profitability and growth of our business. Slide 10 is more familiar to our revenue dynamics. Compared to 2019, our revenue grew by 21% to almost RUB 196 billion. And most of this growth comes in the fourth quarter when we completely came out of our pandemic slowdown. The share of revenue from noncredit business lines rose from 31% in 2019 to 37% in 2020, even more visibly to 43% in the fourth quarter despite the strong growth of the trading business. This trajectory will continue in 2021. Our next slide is on cost management. Here, you can see that the third quarter returned to growth in acquisition costs. After 2 quarters of cost preservation continued into the fourth quarter, we see momentum to acquire more customers across all business verticals and cannot let ourselves miss this opportunity. So you can see that our acquisition costs more than doubled in the fourth quarter compared to the fourth quarter of last year or through this year's pandemic time and comprised almost half of total administrative costs. The growth in acquisition corresponds to the doubling figures in our trading stuff, such as [indiscernible] or newly utilized accounts. It also shows how our business model allows to manage costs very rapidly depending on the market conditions. And now we see this as an appropriate moment to spend more. On the moderate growth of nonacquisition admin costs, I should mention the salary increase implemented in November. Looking forward into 2021, we intend to keep our marketing efforts on this level in absolute terms with cost-to-income normalizing around 40%. Slide 12 shows the dynamic of our net income and the contribution that credit and noncredit businesses give to total growth. You can see that the fourth quarter net income is in line with that one of the third quarter despite the fact that we have set up customer acquisition costs. And you can also see that the magnitude of acquisition cost effects higher for noncredit businesses compared to credit. Despite this, the share of net income coming from noncredit businesses rose from 18% in 2019 to 37% in 2020. On the next slide, I will cover the results of each business segment one by one, starting with our bread and butter credit business on Slide 13. Our loan portfolio showed a healthy 7.4% growth during the fourth quarter on a gross basis and 8.7% growth for the year on a net basis. Looking forward into 2021, we see that the opportunities there and -- bearing a serious dislocations in the market will be -- can and should go faster. Growth in 2020 and in the fourth quarter was driven by several components of the credit book, including unsecured and capitalized loans. SME lending remains in test mode, but even there, positive results are starting to come through. In terms of the composition of the book, the share of credit cards is slowly, but gradually falling towards half of the loan book, now representing 57% of the total. Still, credit cards remain a key core product for us, and we still see huge potential in this market. In the fourth quarter, we added 800,000 new activated credit cards and 2.3 million cards in 2020 as a whole. The disbursements in other credit segments were also strong but from a lower base, which is the reason for the declining share of credit card part of the portfolio. And the economics of our credit business is shown on Slides 15 and 16. In 2020, interest income grew 15% to RUB 128 billion. Our headline gross interest yield on the credit portfolio decreased from 32.4% to 28.1% year-on-year mostly due to the growing part of noncredit card loan portfolio. This gives roughly a 1% third quarter reduction in yield, which rarely happened smoothly. And the fourth quarter of 2020 is a good example as the reduction in yield was less than 0.5% after a sharper descent in the third quarter. It is safe to assume that during 2020, gross yield will continue -- 2021, sorry, yield will continue to gradually move down to the 24% area as a result of the changing portfolio mix. Our blended cost of borrowing declined from 5.7% to 4% year-on-year and was lower at 3.3% in the fourth quarter, thanks to large inflows of cheaper SME, retail and brokerage accounts. Despite the recent increase in interest rates worldwide, we are optimistic about our cost of funding remaining at the same low levels. Interest margin declined year-on-year by 4% because of the reduction of the gross yield and in the fourth quarter due to exceptional inflow of retail funding. Cost of risk improved a bit in the fourth quarter, but more importantly, it has improved significantly in the second half of 2020, owing the V-shaped nature of the COVID pandemic crisis in Russia. As a reminder, we also still have RUB 5 billion of macro factor adjustment that we incurred throughout 2020. The improvement in cost of risk allowed our risk-adjusted net interest margin to remain over 13%. The annual 4% decrease in our risk-adjusted net interest margin from 15.4% to 11.3% is a result both of the reduction in gross margins and elevated credit risk in first and second quarters of 2020. The next slide gives more granular information about the unsecured and secured part of the loan book, including gross yield and cost of risk. Slide 17 shows more material unsecured loan book where we can see mild improvement in asset quality, but still very attractive risk-adjusted margins. Slide 18 shows the younger secured part of the portfolio where the risk parameters and NPLs are not yet fully shaped on faster-growing portfolio but are heading in the right direction. What is very clear is that this portfolio has lower cost of risk than our unsecured portfolio. This was the case both during the pandemic crisis and now. And now some comments on our noncredit businesses on Slides 19 to 23. Starting with our debit card business. With 7.5 million total customers and with almost a RUB 323 billion of balance sheet, our current account business contributed RUB 21.2 billion in revenues in 2020, net of the cash back. We continue to develop this product as the cornerstone of subsequent cross-sell opportunities. We still intend to keep our bottom line results for this business close to breakeven. And note that in the first half of the year, the profit before tax from this segment were in positive territory because of the realized gains on our Tinkoff portfolio. We see more value in growing the customer base and in the potential synergistic effect with other business lines rather than as a source of pure net income. Our SME business is returning to growth after a balancing -- after a rebalancing phase, focusing more on the client profitability rather than the absolute growth in number of customers. At the end of 2019, we had 385,000 customers. So at SME, we have 385,000 total customers with almost RUB 90 billion balances on SME current accounts. And we earned revenue of RUB 11.5 billion in fees, better income and some interest on some loans. Our focus on the client profitability is coming through. Our profit before tax grew 71% year-on-year to RUB 5.6 billion while revenue grew 17% year-on-year. 2022 was a year of exponential growth also for our investment business for 1.5 million customers utilized brokerage accounts on our Tinkoff Investments platform with quarterly transaction volumes well over RUB 4 trillion compared to RUB 0.5 billion -- RUB 0.5 trillion just a year ago. Our assets under custody grew sixfold year-on-year to almost RUB 315 billion. This business line revenue grew over 8x year-on-year. Tinkoff Investments business contribution to group net result is already visible despite the fact that we still spend proportionally high amounts on product development and customer acquisition. This was particularly visible in the fourth quarter when we were on certain TV campaigns for this vertical. We will continue to develop our platform, product position and grow our customer base in 2021, as always, trying to find a fine line between the profitability and growth. We are already a market leader by a number of customers, but the retail brokerage market itself is only starting to develop. So there is a lot of room to grow. And if you could please turn to Slide 23. Acquiring is a business line which is benefiting from the accelerated transition to e-commerce. Our Internet acquiring business is the second largest in Russia, providing best-in-class conversion metrics for our merchants. Including our offline acquiring business, we processed more than RUB 210 billion of TPV in the fourth quarter, which represents 52% growth year-on-year. Combined with a stable commission of 1.7%, this led to revenues of RUB 11.2 billion during 2020, up by 33% year-on-year. Profit before tax rose 52% year-on-year to RUB 2.3 billion. This business works both with large aggregators and as well as dealer merchants with 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. We have already seen our profit -- quarterly profit number, and just to reiterate, in line with the previous quarter in spite of acquisition activity stepping up a gear. The group annual profit of RUB 44.2 billion is 22% higher than a year ago despite the -- amidst the pandemic crisis in the middle of the year. Return on equity is normalizing around 40% while remaining industry leading. Return on assets went down to 6.4% due to additional provisions charged during the pandemic and due to the extra liquidity obtained before the year-end by ultra-successful current accounts and investment business. And now back to Oliver for closing remarks.
Thanks, Ilya. Despite all, 2020 was yet another good year for Tinkoff. We launched several new innovative products. We grew our customer base significantly. We deepened relationships with our customers. We delivered strong and diversified earnings growth in the process. This is a result of our customer-centric approach, our technological capabilities, our disciplined approach to capital allocation and our organizational mindset. We're confident we can do this for many more years to come, and we'll provide more detail about how we'll do this and our medium-term targets during our Strategy Day scheduled for April 7. In the meantime, we're recommending a dividend of RUB 0.24 per share for the fourth quarter. 2021 will be another interesting year for us. As we move towards the end of the first quarter of 2021, we have very strong growth momentum and think this is the right time to move up another gear. We see both organic and potentially inorganic growth opportunities through acquisitions of businesses complementary to ours. We believe that allocating capital to additional growth now is the best way of guaranteeing a sustainable and profitable business into the future. For that reason, we plan to temporarily suspend our dividend payouts for the next 3 or 4 quarters as we assess these organic and inorganic ways to boost our growth. We'll also be looking to buy back up to 1 million GDRs to fund our new management long-term incentive program, as previously communicated to the market. At the same time, we're pressing ahead with our corporate governance enhancement program. The declassification of Oleg Tinkov's Class B shares into Class A shares at the beginning of the year paved the way for changes to the TCSGH Board. We're looking to build on the great work of our existing Board by bringing in new members that can further enhance existing oversight functions, but also bring a strong strategic dimension to the Board. The Board will steer Tinkoff Group as it grows its business, makes larger capital allocation decisions and thinks about international moves. We'll expand the Board in waves to around 9 directors, most of whom will be independent. We'll create 4 committees. In addition to the existing Audit and Remuneration Committees, we'll create Sustainability Committee and the Strategy Committee. The Board will meet more regularly, and its work will be much more visible. Your thoughts and feedback on this are always welcome. We'll reveal more details on this over the next few months and as they become available. Lastly, today, we're also announcing our guidance for 2021. First, we expect our net loan book growth to be more than 30% with potential opportunities to meaningfully exceed this. Second, we expect cost of risk to be 7% to 8%. Third, we expect cost of borrowing to be 3% to 4%. Fourth, we expect the share of noncredit revenues to be more than 40%. Fifth, we expect net profit to be at least RUB 55 billion, meaning we expect to deliver more than 24% year-on-year growth. With that, I'll wrap up our session, and we're ready to take your questions. Thank you.
[Operator Instructions] And we've got -- we will take our first question from Elena Tsareva from BCS Global Market.
Congratulations for great results, record earnings in a very specific year. So I will -- I have several questions. I will ask them one by one. So my first question is about customer base. So for now, you already reached quite a solid number of customers, like 13.3 million, and it was partially also helped by some restrictions last year on the back of the COVID, right, for it's sort of -- some of the support. And given there is like already like a solid base and you just target 7 million to grow in 3 years, so what could be the main drivers from the kind like you already set a good base and maybe this effect of last year just fading away? This will be my first question.
Okay. So maybe we should do that one first then. And by the way, while I'm answering this, I think Ilya Pisemsky fell off the line, so let him back in. Let him back in, that would be great. Thank you. So we did indeed get a boost last year, Elena, from the COVID crisis. So the fact that people were in lockdown, it's a mild lockdown, as we remember, in Russia. But still, there was a lot of restrictions on movement. And that definitely gave us a bit of a boost as we basically were one of the few remaining available alternatives for people who wanted to open an account and do all of their banking activities. However, I can't say that -- as was implied in your question, that we saw this kind of one-off boost as a result of last year's COVID crisis and then it kind of went back to normal. That's not the case. We used last year to develop all sorts of new acquisition channels, scale up existing acquisition channels to tweak products, bring out new features and enrich the existing products that we have in our lineup. And we're actually accelerating growth on -- in every single one of our business lines without exception. So you'll see that the numbers that we gave you at the end of 2020, 13.3 million total customers and 9.1 million active customers, monthly active customers, they've actually grown a lot already just in the first 2 or 3 months of 2021. So we're accelerating that rate of growth. The main drivers of this are Tinkoff Black; our debit card SME is doing nicely; obviously, Tinkoff Investments; credit cards as well; and basically, the whole array of products. So you should expect to see really quite a material uptick in the pace of growth of the customer base.
My second question is on 2021 guidance, in particular, on cost of risk. So it looks like for the fourth quarter, cost of risks were running quite low and your 2021 guidance implies that you cut from the levels of the second half of last year. So what kind of conservatism you imply in this 2021 guidance? Do you see any particular risk to arise? Or you'll see some specific credit products some cost of risk to normalize or go higher?
Ilya, do you want -- are you back on the line? Do you want to take on the cost of risk of credit?
Yes. Yes. I'm back on the line. And well, we are going to grow faster this year than we did last year for obvious reasons and probably faster than in -- even in the second half of last year. And when you grow your -- build your portfolios faster, you have some front-loading effects in your cost of risk. So that's one of the reasons to remain on a conservative side. Another one is, obviously, we never know if there could be something again with the second wave of the pandemic crisis. So maybe that would require also additional provisions. We'll see. Hopefully, we will exceed our guidance, but it's better to be on a conservative side.
Understood.
Probably, I also should mention that fourth quarter is also is seasonally lowest -- year after year, seasonally lowest cost of risk. That's maybe not exactly the most indicative of the year yet.
And last question from my side. So I would just like to ask that your suspension of dividends and intention to buy back up to 1 million GDRs to fund MLTP -- MLTIP, sorry, means that you do not need to have a share -- additional share issued to fund the program. And is there any particular details on what Oliver mentioned about organic or inorganic business opportunities in any specific direction you can share with us now? That is my next question.
Thanks, Elena. That's probably a good question for Sergei Pirogov to answer.
Yes. Absolutely, Elena. Well, at this point, the quantum of what we can communicate is very limited to what has already been said. We just want to make sure that we have sufficient dry powder in our arsenal should we see a timely opportunity for organic or inorganic growth. So this might potentially include a decision to allocate more capital into a faster credit portfolio growth or a small time M&A of interesting companies with complementary set of skills and competencies to the -- well, in the areas where we're boosting our presence outside of the credit space. So for that reason, we just want to be armed appropriately to be in a position to move fast should need arise. So for that reason, we estimated that we need approximately the additional capital, which we'll have accumulated in record of 4 quarters. And part of that capital will, as we stated, be allocated to our limited buyback program simply because we want to make sure that we are prefunding our newly approved MLTIP for at least 1 year ahead of [ divested ] timing. And in 3 or 4 quarters, we're going to gauge where we stand with respect to our capital position. And in case we see that we have excess capital, we'll stay true to our long-standing policy and distribute the "excess capital" back to the shareholders. But we'll have to be patient for 3 or 4 quarters to gauge whether this is going to happen and to what extent and for us to assess the quantum of the excess capital, which might potentially be distributed down the line.
But did I get you right that there is no need to -- for additional share issuance to fund this MLTIP?
No. It's not on the card as it stands right now.
Got it. Yes.
So maybe just to add there -- sorry, Elena, just to add a tiny bit more color there. So this is definitely -- we're being asked about this by different people. So this is definitely not about a new capital raise. We don't need to. So this is all about growth. It's why we're slowing down the dividends. We have extra potential to grow the loan book, as Sergei said, this year. But also just a little bit of more detail. In terms of potential M&A, we would like to boost our business in payments, in investments, in small business, and there's a few opportunities that we may be looking at during the year.
We'll now take our next question from Mikhail Shlemov from VTB Capital.
Also congratulations on the great results. Those are really outstanding. So first, a couple of questions from me. First of all, I would like to deep dive a little bit more into the loan growth guidance. Oliver, you have been talking about that 30% loan growth is probably the lower end of what you're actually having in mind for this year and can be ever actually potentially much higher. We would appreciate the color basically of what other scenarios which you are looking that perhaps this depends on the new product launches, perhaps mortgages, which you have been telling the market that you've been thinking about on how this basically plays down with this loan growth guidance would be probably interesting. The second question is coming regarding the new segmental disclosure, specifically the InsurTech segment, which is actually the second in terms of the bottom line contributor in the whole group. I was wondering whatever this segment does include credit protection or just like a pure standard property, travel and motor insurance, which you have out there. And if there is a credit protection there, what is the approximate percentage of it there? And probably last, but definitely not the least, we have been seeing the trend of the interest rates going higher. I was wondering if you -- I know that your -- majority of your loan book is fixed interest rate. But I was wondering how you think the high interest rates are going to filter through the P&L, perhaps you have found or run some sensitivity surrounding this.
Thanks very much, Mikhail. So I'll take the first one on loan growth guidance, and I suspect Ilya will do numbers 2 and 3, segment analysis and interest rate. So we've given our guidance, 30% plus with potential to grow significantly more than 30%. But basically, we want to see how the year pans out because life has told us that things can change quite quickly, especially of late. And therefore, we want to basically promise to the market what we definitely know we can deliver and are not overpromising and underdeliver. So we know we can do a very healthy, very solid, I'm sure you'll agree, 30% plus with the potential to do more, depending on how the year pans out, depending on how the credit environment, the competitive environment looks, et cetera, et cetera. So far, we like what we see. We said that we've been ramping up our growth. We're firing on all cylinders in all of our business lines, including all of the lending business lines, without exception. This 30% plus with extra possibility of growing is not factoring in mortgage. So your question, Mikhail, was -- is that if we launch mortgage, the answer is no. We are thinking about launching mortgage. It's a market that we'd like to enter at some point, but we have lots of stuff going on and we don't want to basically take on more than we can chew in terms of resource. And therefore, mortgage may wait a little bit or will make a kind of pinpointed entry into that space. So if we grow more than 30% in terms of net loan book growth this year, it's going to come from all the stuff that we're ramping up, which are, as usual, credit cards, which is a very strong market; personal loans, which are doing okay at the moment; and secured personal loans, so home equity; car loans, which are going very well indeed through all the different channels that we use, so that's through dealers and direct; and actually, point of sale, which is going great guns and is now a profitable business line for us on a stand-alone basis, not just an acquisition channel for cross-sell. And so all lending products will be ramped up throughout the year, and that could well give us a materially larger -- higher growth rate than 30%. That's what we meant.
Okay. Oliver, that's very helpful.
Ilya?
Okay. On insurance care -- InsurTech, well, yes, as always, this comprised of 2 major components, captive and non-captive. And captive includes insurance on credit via health protection, insurance -- credit protection insurance, also property insurance for our culturalized lending. It also has some car insurance in there because we cross-sell a lot of insurance products to our customers, leasing customers. And in the revenue, captive would be probably 2/3 right now, maybe less. And the rest is non-captive and non-captive is predominantly auto. And again, maybe to reiterate, the -- we -- when the bank has an agent that sells trade protection insurance, it's done on a monthly basis and some of the commission is -- also sits in the bank's P&L. Not 100% goes to the insurance. I hope I answered that. And remind me, Mikhail, what's on the interest rates again.
Yes. The last question was actually on the sensitivity to high interest rates. So we're basically seeing the trend of interest rates going higher. And actually, the CBR, therefore, is starting to be more hawkish. I always wonder how it would affect your P&L or you could run us through some sensitivities.
Well, so far, there's a change in interest rates and it's approximately 50 basis points across the markets. It -- we only had some complications on our investment portfolio. So we have some negative correlation in the first months of the year, which sits in the capital. As for the loan portfolio, it's probably will be negligible. We price for risk and not specifically targets interest rate in the market. For the funding costs, it may have an implication if the -- basically, they're the biggest bank. And first of all, Sberbank, they will start increasing rates on deposits and the whole market will follow. But I don't see it as a likely event. So probably on the funding side, it's also the smaller check for us. If we go for wholesale, then probably it will have some implications. But again, we didn't borrow on the wholesale market for quite a lot for quite some time. And anyway, it would be hopefully cheaper than the deals we made a few years ago.
Andrey Pavlov-Rusinov, Goldman Sachs.
And congratulations with the results. And also thanks for the new disclosures, especially segmental one, it's very helpful. I got a couple of questions. First of all, could you please share some data on your cross-sell metrics throughout the business? How it -- if you could share how it changed throughout the fourth quarter or throughout the entire 2020. And my second question is with regards to your customer acquisitions expenses. Did I understand correctly that you mentioned throughout the presentation that essentially, the fourth quarter base is a reasonable base to expect on average per quarter throughout 2021, so this kind of RUB 9 billion is a reasonable one to assume on average. That's pretty much it from me.
Andrey, yes. So I'll take the cross-sell question. The number that we gave is 1.3 revenue-bearing products per customer at the end of 2019, which increased to 1.4 revenue-bearing products to -- per customer at the end of 2020. So despite the quite significant growth by almost 30% of the customer base geared up throughout the year, we still managed to increase the number of products per customer. And that's growing as we move forward. We've given these kind of targets out. So we'd like to get that up to 1.7 by the end of 2023. We were absolutely confident in these numbers. Right now, we don't have more granular metrics to give you, to be honest with you. But that's something that you should tune into the Strategy Day presentations for on the 7th of April where we'll be giving lots of information about that and there are some really quite deep metrics. So we'd rather do that in a kind of structured way in a few weeks' time.
Maybe I'll touch on acquisition costs. Well, yes, I mentioned that they're -- basically, the level of expenses that we reached in the fourth quarter is more representative to what you might expect in 2021. Again, it's -- I wouldn't stick to a specific number per quarter. That could be higher or lower. So that, we cannot guide. We never did guide on acquisition costs because if we see additional opportunity to spend money on customer acquisition, we do it regardless to cost-to-income ratio. It's just cool and prudent to be the right strategy for us. But for what I see, at least 2 months into 2021, the money we spent in the fourth quarter on customer acquisition is a kind of reasonable level.
Andrey Kulakov, Gazprombank.
Congrats with fantastic results. I've got a question about your -- this year guidance. So given summing up all the factors that you're mentioning, the acceleration of the loan book, the decreasing of the cost of risk and the decreasing of the borrowing costs, so your probably net income guidance looks a bit conservative. Could you please shed some light and to announce in this equation the cost of the cost growth overall and the net interest margin? So what are your expectations without -- with particular guidance, I understand that you're not guiding it, but sort of what are in your mind when you're given the guidance on net income? What will it be the like the erosion of the net interest margin and to what extent it could be would be very helpful. And another question is about your cost of funding, just minor clarification. Your expectations of the 3%, 4% is connected to the shifting mix towards current accounts or you're not ruling out that you put lower rates on some deposit products. That's it.
Ilya, are you there?
Yes. Should I take on the product mix?
Yes.
Well, as I said that in 2020, we saw on average a 1% reduction in our gross yield. And that's mostly because of the change in our product mix, lending product mix in our loan portfolio. And probably this such trend will continue in 2021. We'll see that our gross yield will continue to slide down a little bit. And again, it doesn't always come smoothly. So it probably won't be an exact 1%, 0.5% every quarter. So it could be more, could be less. But on average, I think it's safe to assume between 0.5% to 1% per quarter on average. That's what we might expect. On our funding cost, you're absolutely right. We take a consideration that we will have more and more of our cheaper funding on brokerage accounts, current accounts and SME account compared to the share of term deposits. And therefore, that might lead to a reduction in interest in our funding costs. At the same time, as we discussed a few minutes ago, there was an increase about 50 basis points across the market on interest rates. That might have an opposite direction for funding costs. So I think it's safe to assume that we will stay where we are. The funding cost is already very low. For us, historically low. And therefore, we assume that for this year, we should sort of prepare ourselves for a 3% to 4% range of funding costs.
May I have one clarification on the gross yield side? If we do not take into account the change in mix, so where -- in what segments do you see the downside risks in terms of rates? Where could the competition drive rates down? Or where is -- like it could be any downward pressure?
Well, the -- I see the downward pressure in the credit card business, but not for the reason of competition, but more for the reason that we are sort of historically shifting, drifting towards the mass affluent audience. We use bigger limits, more transactional, less borrowing, do not withdraw cash from credit cards, all the normal things. And therefore, this behavior puts a certain pressure on an average yield on the credit card portfolio. Well, that's also important to bear in mind that in this segment, the risks are also lower than on a smaller regional part of the portfolio.
Andrew Keeley from Sberbank.
I feel my questions have been answered. So I've got a question on regulation. I'm just wondering whether you have any update on the possible plans mentioned by the regulator to try and capture more of the real cost of borrowing in the PSK calculations. And I guess a kind of further question on regulation, are there -- do you have any kind of concerns that the CBR may unwind some of the kind of regulatory easing that we saw last autumn on consumer loan risk weights, especially if you're going to be growing at 30% plus and potentially meaningfully higher than that? And is that kind of guiding your dividend suspension decision at all? And then final bit on regulation is just have you been involved in discussions with the Central Bank about regulating ecosystems? And if so, can you shed any light on that?
Andrew, yes, I'll try and take this question. So Mrs. Nabiullina did indeed mention a potential to tweak the PSK calculation. And that was made in her speech to the -- basically the meeting of banks, which take place every year in February where the Central Bank senior figures address the market. And she repeated a theme, which has been muted a few times in the past, about change in this calculation to include fees and insurance as opposed to the current basis for the calculation, which is one of this is mandatory for the customer. So they can't not take or the influences or affect the interest rate if they don't take it and obviously, the interest rate itself. And so this is something which is being discussed from time to time. It seems to be maybe slightly higher on the agenda at the moment, but we have no further information as to when exactly this may find its way into some kind of document. So obviously, we'll be talking with the other banks through the associations and directly to the Central Bank and are making sure that we're keeping an eye on this one. And, well, just to reiterate where we are, traditionally, in terms of the tests that are done by the Central Bank, and there's a block within the Central Bank called the Department for Consumer Protection, which is if a customer can -- basically did not take the insurance, the additional credit insurance, which actually provides them with all sorts of protection from loss of income and disability, which means that they can't service their credit card debt. If they don't take that or they've taken it initially and then they want to switch it off, in our case, they can do that through the mobile app by writing through chat, by calling the call center, whatever. And so that means that we've always passed all of the tests, and it's very transparent and for disclosed. We think that's a good framework and one that doesn't distort the market in terms of different pricing for different -- radically different products with different fees. And so that's the line that we'll continue to maintain, and we'll see where this one takes us. But right now, we have no more information than what was actually said by Mrs. Nabiullina a month or so ago. In terms of risk weights, could there be an unwinding of some of the regulatory easing, particularly in the area of risk weights? It's possible. And the Central Bank has always used this as a way of cooling the market when they think the market is speeding up. But what we've been telling you about our particular case during this call is too cost specific there. So we're doing 2 things which are driving that growth. Well, 3 things. Number one, we're obviously bringing new customers into the ecosystem and on lending products as well. Number two, we're building from a very low base. As Ilya described before, new lending businesses, we're scaling them up, but they're still very small. So it gives you a high headline number of 30%. But let's face it, it doesn't make a huge dent on the Russian consumer lending landscape in absolute terms. And number three, we have a lot of cross-sell. We've got more and more customers coming in through different products, but mainly Tinkoff Black to whom we then cross-sell. And these are mass affluent customers that Ilya was just talking about. So if you like, the narrative from us to the Central Bank is a very different one than just knocking out very large volumes of personal loans, unsecured personal loans and mortgage. And so we're in a different space in terms of the quality and the nature of that growth. But that said, if the Central Bank sees that the market is speeding up and they're doing what they consider to be overheating, then they could well bring various instruments to bear. One of them could well be risk weights. But that is not the reason why we took the decision to suspend dividend payments for this year. That's all about growth opportunities and M&A this year. It's obviously nothing to do with risk weights. And the third question? Oh, it was on ecosystems. So there's -- I suspect there's preparation going on at the moment for a white paper, I suspect. That's probably where we're going to end up. And which various government institutions, probably led by the Central Bank, will lay out their thoughts on ecosystems and their effect on the competition. So we've had a couple of conversations over the last few months with senior people. And the Central Bank with the departments or state are looking into the longer-term effects, what this does to the market, how it shapes the market, how it shapes the consumer, will it restrict consumers' access to different services. More importantly, in the context of this discussion, will it restrict access to different products and services by various institutional players, which will reduce their ability to compete. And if they decide that there are risks around competition and/or risks around data, personal data, consumer data, then they may start creating regulatory framework. But it's way too early to give any information on that because they're still at an information gathering stage and opinion forming stage.
Okay. Oliver, that's very handy. And just a second question on -- just on how you're kind of counting things, which you've changed quite a bit. I see that -- I think your kind of total current account customers, when you published your third quarter numbers, were 10.7 million. And then in the fourth quarter, I think you have 7.5 million. Now obviously, you have lost 3 million customers. So I was just wondering, yes, whether you can just clarify the difference in those accounting numbers.
Ilya, do you want to take this or shall I take it?
Well, we took a tougher metrics on all our product lines, including current accounts. So that's more of a -- it's a shorter period of when the customer is actually active and bringing us profit from doing any kind of transaction.
Okay.
So basically, maybe just start to that slide here. So we've been trying to -- over the last, basically, 1 year, 1.5 years, we've been talking more about customer numbers as everybody has noticed. And as I made in my opening comments, as I stated, there are 2 categories. The first is the wider category of customers with a utilized account that hasn't been closed. And then a much narrower net metric, which we call financial MAU, or monthly active users, which is a slightly smaller number, obviously. So that's 9.1 million and the total number is 13.3 million. That was at the end of last year, and that's where -- they're both growing very quickly. So we're trying to basically standardize. That's what we've been doing over the last 12 months or so, standardize all the numbers, the different metrics across the whole of the product set. And so I'm not sure I completely understood the question, Andrew, I'm afraid. But I think that probably explains why you get these 2 different sets of numbers.
Andrzej Nowaczek from HSBC.
In fact, my two questions are exactly on the segmental data. One is on brokerage. And there, I see a relatively high acquisition costs. I wonder if this will continue to be correlated with a number of customers or is there a point where the jaws, so to speak, start widening?
Well, that's a relatively new business for us. And therefore, we -- the number of newly acquired customers every period bit quarter or month is relatively high to -- compared to the number of customers that's already in this vertical. And therefore, that's basically a problem of smaller base. And we expect that when we -- this business became more mature, then the customer acquisition cost is proportionately to the -- basically, comparely to other businesses would become reasonably lower. So as you named it, the jaws will widen for this reason. Another reason for the Tinkoff Investment acquisition costs to be quite high, we are -- run several TV campaigns, and that's an expensive thing to do. And it's not directly attributable to a specific customer that -- who came in. We thought that it's the right moment obviously to introduce more of -- more Tinkoff Investments on TV compared to other more established businesses like lending, for example. We will run TV campaigns, obviously, this year as well. And I don't think I'm in a position to say if it would be skewed towards any business vertical, probably we'll give air to all of them.
And on insurance, I can see that the premium -- income from premiums increases would be expected. But claims value decreased, and that must be COVID-related. And I'm guessing it must be largely quarter issuance related. Am I correct? And therefore, is there a risk that now that the environment is normalizing, there will be a sharp increase in claims this year?
Well, in part, you are right. Because during the COVID, people didn't use their cards much and, therefore, claims really fell through the month of April, May, June and even July. But that's part of the story. Second part of the story actually goes back to 2019 when we run certain tests on OSAGO insurance, car insurance. And the claims there are significantly higher than we expected. And that was sort of a negative results financially, those debts. So we asked, gathered some information on what we need. From that, we adjusted our policy, adjusted our risk practices. And therefore, in 2021, claims on auto insurance reduced. So that's the second part of the story.
And our next question comes from Mehmet Sevim from JPMorgan.
And I join my colleagues in congratulating you for the results. I'll have just a few questions on the brokerage business, please. So first of all, how should we think about the bottom line contribution of the business as you're scaling it up? You mentioned very attractive unit economics, which I believe you're not realizing at this growth stage over that. So if we assume revenues grew meaningfully, say, 10x from the current levels, how would the cost base of the segments grow in relation to it? Or put simply, where would you see the cost income for the business in the longer term? And coming back to the revenue model, transaction volumes on a per customer basis seemed to be quite high. So if I do the calculation based on the numbers that you report today, I arrive at RUB 16 million of annualized transaction volumes per customer. How would you explain this? And would you expect this to decline over time as the customer base grows?
Well, I'll start on the cost side customer acquisition and other costs that basically right now drive the bottom line results of Tinkoff Investment down. That's right. While revenue grows quite nicely for this business, the bottom line contribution gets significantly smaller. But that's -- again, that's -- the major reason for this is very high growth. And high growth comes with acquisition costs, direct and indirect in case of TV campaigns. And this, basically if you acquire a customer now, he will be bringing new profit later maybe for quite a long period. So that's basically the work for the future. And similar with the product development costs, we are still in the development phase for this product. And therefore, we spend a lot on development and that's IT specialists, their salaries. And proportionally, again, to the revenue of this business, it's proportionally higher. And therefore, again, as this business gets into the more mature stage, this will have to improve. In terms of customer acquisition costs, obviously, it should -- it's not a customer acquisition cost. In terms of efficiency as a cost -- cost-to-income ratio for this specific business, it will -- at some point, it will have to go down. But I wouldn't expect it to happen in just -- in the nearest quarters because we still spend a lot on acquisition and spend a lot on business development. So it's probably -- will start be noticeable towards the end of this year and into 2022.
And then on the second question, which I'm trying to work out what exactly this refers to. So you said something about transaction volumes of RUB 16 million per customer per year. That presumably doesn't refer to Tinkoff Investments, the brokerage business. I'm not sure where that number comes from, the 6 -- we don't have any transaction volumes similar to that, that I'm aware of.
I guess what it is, is basically dividing 1 number in the presentation by another and get to certain average, but this average cannot be applied to an average customer because there are -- there is sort of group of customers within Tinkoff Investments who does a lot of trade. And it's -- sometimes it's automated with robots and stuff. And there are some small corporate, even corporate clients that do algorithm trade. But there are lots of customers who have a portfolio and basically have a sit-and-wait approach. So it's -- the averaging is not the right thing here.
Okay. That's very clear. And maybe just one follow-up on this then. Given you're offering the 3 different types of accounts catering to customers with I guess different behaviors, as you also suggest, do you or have you shared or can you share with us the portion of customers in the different categories like investor, trader, premium, et cetera? Or is that something that you haven't done?
Well, I think we will have to keep this information about the granularity of these segment groups to our Investor Day 7th of April.
Okay. Very clear. And just one final one then. Regarding your new definitions for the new customers, how can we reconcile the total brokerage customers that you have now with the numbers that MOEX reports in terms of the brokerage accounts opened by Tinkoff on that platform, which you, I believe, used to report previously? So is there a connection between the two? Or is there a way we can follow, monitor this? Or is it just the way that you define brokerage customers, which is very different than what MOEX does?
So there are -- we're not -- the number that we've disclosed is active accounts, yes, on the brokerage side. Broadly speaking, monthly active. So the data that you see on the MOEX Exchange, if I'm not mistaken, is total opened accounts. And I may even be incorrect in saying, well, I think they're technically opened accounts. But it's not necessarily our stricter metric of an opened account. So to be honest with you, it's one way of tracking what's happening in the market. But I think the best way to track what's happening in our business is basically to look at our disclosures. And as we've said, they'll be getting more and more granular as we go by.
Gabor Kemeny, Autonomous Research.
I have a few follow-up questions, please. First one is on the client number. The 20 million client target, is this for the active clients or for the total clients? And in relation to this client number as well, now most of the first quarter is behind us, how do you see the customer numbers trending in the first few months of the year? And secondly, on the cost income, a follow-up. Did I get you correctly that you are expecting the cost-to-income ratio to trend towards 40% this year? Then a broader question on the SME business, which seems to be showing a quite impressive momentum. The revenue per customer has been trending up in this business. Can you talk a bit about the drivers and the outlook for SME, please?
So thank you. So I'll take the first question on customer numbers and what we're seeing trending right now. Ilya will take questions number two and three. So three was about SME business. So the 20 million number, which is the target, the long-range ambition, as we've been previously calling it, is total customers. So that's opened -- utilized accounts, sorry, but not closed, that's total customers by the end of 2023, which would have given us 13 million to 14 million monthly active customers because around 70% of the customer base of that total customer base are active on a monthly basis. So that will be giving us around 13 million, 14 million monthly active customers by the end of 2023. However, you probably gathered that we've been ramping up. We've been accelerating the rate at which we're bringing customers in, particularly on Tinkoff Black, but by no means that's not the only business line, which has been speeding up. And so the growth in our active customer base is noticeably higher than it was even a year ago. And so we'll reach the number of active customers, monthly active customers, a lot earlier than the end of 2023. So we won't get ahead of ourselves because you'll be seeing -- you'll see a lot more information on that in the strategy presentations on the 7th of April, as we said many times today. But that just gives you a bit of a preview. So we'll hit 20 million total customers and 13 million, 14 million active customers a lot quicker than we were originally anticipating, i.e., at the end of 2023, and that's what we used to be communicating. So please watch this space and then come to the Strategy Day, and we'll tell you more about it. So that's the answer to your quarter 1 trend question as well. So you can see that we're speeding up on a monthly basis, and I believe we can speed up even more. Ilya?
Okay. So, well, yes, I will try to sort of give more a granular light on customer -- on cost-to-income ratio for the whole organization in 2021. Again, we are not guiding on this because we -- if we see the opportunity, we try to pursue it immediately. And therefore, if we'll be able to spend more, we will spend more profitably because we take our decisions based on an NPV approach. And therefore, it's -- the profitability stability is embedded into every customer tracked into the system. But again, the -- what I tried to say when I was talking about our costs, obviously, we're on the right in the third, fourth quarter after a slowdown in the first half of the year. And that -- for some outsiders, that might even look scary because we -- basically, the trajectory of this growth is quite high. And that is why I'm saying that it's obviously this trajectory cannot sort of continue. In 2021, there will be some normalization of cost-to-income ratio. But the level of this normalization won't be 30% like, for example, in the first half of the year. It's more likely to be around 40%. But again, I'm not guiding this, I don't know, 39% or 42%. I don't know. But it's definitely this trajectory will change from growth to more stable line. On SME, it's -- the question, as I understood it, is why we are -- sort of struggled to get more revenue per customer. Well, when we started this business and we were growing quite fast, but we start with the clients which were very similar to retail clients, which were already sort of marked into -- in acquiring and servicing. And these were the sort of the very micro of SME segment. They are individual entrepreneurs and very small businesses. And these type of customers don't bring you much of the profit. And we are sort of turning more to the bigger customers, the bigger companies and entered into the M segment this year. There are obviously less customers to get every period because the pool of this customer primarily is smaller. The companies are more stable. They all have relationships with certain banks. But if -- I mean you have to spend more in absolute terms to get yourself this kind of customer. But if you get this customer, you're able to earn much more compared to new entrepreneurs and very small businesses. And that might seem as an obvious -- sort of obvious move, but -- and one might say, "Well, why didn't you do it earlier?" But this requires a lot of development on the product side because bigger companies, obviously, they require more attention, specific product catered to their specific needs. And therefore, we're not just sitting and waiting, we were preparing for this move. That's the answer.
[Operator Instructions] Our next question comes from Pierre Safa from Silver River Capital.
Congratulations on really fantastic results. So I had -- I actually had three questions, if I may. The first one is on the home equity secured product -- secured loan product. Can you discuss what you're seeing in terms of general competitiveness, how your rates compare with your key competitors? And how you -- what you're seeing, what your expectations for 2021? That's the first question. The second question is on your brokerage business. How should we think about the -- you obviously saw very significant growth in 2020. How should we think about the addressable market there? Can you elaborate a little more on the typical customer profile there? Are you seeing more of a tactical trading-oriented client? Or do you think you're starting to really build a business with customers who are willing to just invest over the long term and which obviously would have a potential impact on the sustainability of that revenue trend? And really trying to understand what the customer profile there is.And then the last question is just on the e-commerce potential. Is there an opportunity for Tinkoff to play in e-commerce in an asset-light way maybe through social selling or cross-selling into Tinkoff Black wherein potential classifieds or redirect into partner websites? Trying to understand if there's an opportunity there to take advantage of the very significant -- the daily active users you have can potentially cross-sell and redirect to partner websites.
Some big questions, Pierre, thanks. So I propose that Ilya maybe kicks off with home equity, and I'll pick up with growth in e-commerce.
Right. Well, we believe that the home equity market is -- has a very big potential in Russia. There was a lot of unencumbered property. And at some point in their sort of life, people might get certain needs where they need a bigger loan with a collateral provided. So I think this market will be growing and developing. And we are right now really scratching the surface. The competition with this specific product is probably not high. There are probably only a few players in the market. But it's important to understand that in our segment where we give a loan with approximately average size of RUB 1 million, the competition comes from unsecured installment loans with sort of long-duration unsecured loans that other players in the market provide. So obviously, Sberbank and VTB and some private banks, they give a much higher ticket on unsecured loans for assets, something like between RUB 250,000 to RUB 300,000. For them, its average is -- could be exactly around RUB 1 million there. And therefore, the competition for our secured lending business with their unsecured, which is actually a good news because our rate on these products look very competitive compared to -- well, amongst the rates of unsecured loans of these players. And obviously, big, big players, big lenders, such as Sberbank and VTB, they also have these products in their lineup. But I guess the segment -- the target amount for them are much higher. And therefore, we do not compete with them directly in these products. So I guess that's my answer.
Then -- so maybe on expectations in home equity as well. So we -- you know that we're very long-term bullish on this product. It's a new market. It's basically got a huge potential, which is more or less all untapped at the moment. The market itself right now is tiny. And it's going to be a long story. This isn't something which happens overnight, but we believe that the market can be created by people and unlock their equity through this type of product. And we're already one of the biggest players there. So a big fish in a small pond. And we think it will become a big pond over time, we will grow with it. And then so you'll see some more signs of growth this year in that business line. So moving on to brokerage. It's difficult to say exactly where this is going to come out in terms of market potential. So the addressable market, we reckon, is minimum 10 million retail investors. So right now, there's probably 3 million or 4 million on the market, which is obviously multiple fold more than they were 3 years ago even. So it's probably grown 10x already in the market, and it could grow significantly from here. The Central Bank, I think the number that they've used in the past is around 10 million in terms of potential. Maybe it could be bigger. Obviously, in a population the size of Russia's over 145 million people, it could well get to 20 million, 30 million over a longer period. But if we just think about the 10 million, you can see there's tons of growth. There's lots of people that still need to be brought into retail investing in the market. The profiles that we see -- so we see the full spectrum. We have low frequency buy-and-hold-type retail investors who will take 2 or 3 positions and sit with them. And that's obviously largely bonds, but it's also some household, let's say, blue chip equity names. We have higher frequency traders who are semiprofessional or professional. We have activist investors. We have the lower end of high-net-worth individuals who, I would say, are kind of -- I would categorize them as a new economy professionals, if you like, in the 30s and 40s, around that, and learning and want to invest directly themselves, but also they exhibit also all sorts of behavior. So they can trade a bit, but they'll also be largely buy-and-hold. So we have the full gamut. The buy-and-hold or the more -- the investors who are more likely buy-and-hold type of customer are obviously predominant in the portfolio in general, which is why Ilya answered the question before about the RUB 16 million number. I know understood where it comes from. In fact, he's quite rightly saying that you can't take an average because we've got this long tail, if you like, of buy-and-hold investors. And then a spike right at the end of that chart of people who are much higher frequency. Well, I think what's important to say here when it's profiling these investors is that these are our mass affluent, young professional, typically white collar, urban and very socially mobile people who have come into the Tinkoff ecosystem on Tinkoff Black, predominantly. So 70% of the customers on the Tinkoff Investments platform have come through Tinkoff Black. 30% have come from the open markets as we go direct to investor to sell our service. And so the profile of the Tinkoff Black customer is pretty well-known. Well, that's the same sort of chap who predominantly chap of this CapEx as well who are investing. And you're obviously seeing this. You know it better than us, as the people on this call. As you've seen these amazing trends over the last couple of years of a brand-new type of investor with a totally different investment ethos and approach to investing coming into the market, and we've captured a lot of that in Tinkoff Investments. And then coming on to e-commerce because time is marching on, and we've had a long call today. So we see a number of different ways of playing the e-commerce boom, which is now finally happening in Russia. Russia came a little bit late to the party, but now it's happening big time. And obviously, you've seen some of the guys who are in the market and a couple of them become public. So we're obviously on the acquiring and payment side. We have a significant presence in our market. And that's something that we're developing, as we mentioned several times on this call. In the lifestyle super app, we are also looking at different high-frequency, high-engagement subsections of e-commerce. So for example, fuel purchases, flower ordering, cinema, entertainment, maybe groceries, but that seems going to be -- like it's going to be a little bit tougher to crack, maybe fashion and tons of other categories. So those categories are being added bit by bit, and we're trying to -- we're working out how to work with them, who to -- to who we target that in our customer base, what offer we target, with which partners we work and basically how we package this. So there's a huge opportunity to drive engagement. It won't be a revenue generator for us. It would be a way of driving -- further driving engagement in our mobile app. More face time we have with the customer, more frequently they'll visit our mobile app. The more sticky they are, the longer lifetime value and the more we can basically sell other products and services from the Tinkoff ecosystem through which we can monetize them. And so that's a big growth area, which we really like. But again, that's a long story that we chip, chip away. And then another area is value-added services for merchants and partners. So not just the payments piece through Tinkoff Checkout, for example, but building around that and leveraging our infrastructure in payment, sales, maybe even logistics. So there's lots of ideas out there. And we're obviously very well positioned as an online player, as a player with lots of data, as a player with a very strong interface and UX and strong partner relationships. We're able to play in this whole space. Without going into e-commerce directly ourselves, we're not going to build a classifying site, we're not going to build a classified service, I should say, we're not going to build an e-commerce provider. We are going to be one of the partners. That's where we are.
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In that case, we'll wrap it up. Thank you very much, indeed, for your long question session. Very good questions. We always enjoy it, and I hope it was very informative. Have a good evening or morning wherever you are. Thank you.
This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.