REG - TBC Bank Group PLC - 1Q 2022 Results
18/05/2022 07:00
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RNS Number : 8501L TBC Bank Group PLC 18 May 2022
TBC BANK GROUP PLC ("TBC Bank")
1Q 2022 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
Forward-Looking Statements
This document contains forward-looking statements; such forward-looking
statements contain known and unknown risks, uncertainties and other important
factors, which may cause the actual results, performance or achievements of
TBC Bank Group PLC ("the Bank" or "the Group") to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements are based on numerous
assumptions regarding the Bank's present and future business strategies and
the environment in which the Bank will operate in the future. Important
factors that, in the view of the Bank, could cause actual results to differ
materially from those discussed in the forward-looking statements include,
among others: the achievement of anticipated levels of profitability; growth,
cost and recent acquisitions; the impact of competitive pricing; the ability
to obtain the necessary regulatory approvals and licenses; the impact of
developments in the Georgian economy; the impact of COVID-19; the political
and legal environment; financial risk management; and the impact of general
business and global economic conditions.
None of the future projections, expectations, estimates or prospects in this
document should be taken as forecasts or promises, nor should they be taken as
implying any indication, assurance or guarantee that the assumptions on which
such future projections, expectations, estimates or prospects are based are
accurate or exhaustive or, in the case of the assumptions, entirely covered in
the document. These forward-looking statements speak only as of the date they
are made, and, subject to compliance with applicable law and regulations, the
Bank expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements contained in the
document to reflect actual results, changes in assumptions or changes in
factors affecting those statements.
Certain financial information contained in this presentation, which is
prepared on the basis of the Group's accounting policies applied consistently
from year to year, has been extracted from the Group's unaudited management
accounts and financial statements. The areas in which the management accounts
might differ from the International Financial Reporting Standards and/or U.S.
generally accepted accounting principles could be significant; you should
consult your own professional advisors and/or conduct your own due diligence
for a complete and detailed understanding of such differences and any
implications they might have on the relevant financial information contained
in this presentation. Some numerical figures included in this report have been
subjected to rounding adjustments. Accordingly, the numerical figures shown as
totals in certain tables might not be an arithmetic aggregation of the figures
that preceded them.
First Quarter Consolidated Financial Results Conference Call
TBC Bank Group PLC ("TBC PLC") published its unaudited consolidated financial
results for the first quarter 2022 on Wednesday, 18 May 2022 at 7 am BST. The
management team will host a conference call on the day at 2 pm BST to discuss
the results.
Please click the link below to join the webinar:
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Or use the following dial-ins:
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Free) or 0 800 031 5717 (Toll Free) or 0 800 260 5801 (Toll Free)
Webinar ID 915 9583 7278#, please dial the ID number slowly.
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Contacts
Zoltan Szalai Anna Romelashvili Investor Relations Department
Director of International Media and Investor Relations
Head of Investor Relations
E-mail: ZSzalai@Tbcbank.com.ge
Tel: +44 (0) 7908 242128
E-mail: IR@tbcbank.com.ge
E-mail: IR@tbcbank.com.ge
Web: www.tbcbankgroup.com
Tel: +(995 32) 227 27 27
(../../../../IR%20Dep/A_Quarterly_Result/2021/3Q%20%202021/A_presentation%20and%20report/www.tbcbankgroup.com) Tel: +(995 32) 227 27 27
Web: www.tbcbankgroup.com
Web: www.tbcbankgroup.com (../../../../IR%20Dep/A_Quarterly_Result/2021/3Q%20%202021/A_presentation%20and%20report/www.tbcbankgroup.com)
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Table of Contents
1Q Results Announcement
Key Highlights
Letter from the Chief Executive Officer
Economic Overview
Unaudited Consolidated Financial Results Overview for 1Q 2022
Additional Disclosures
1) TBC Bank - Background
2) Subsidiaries of TBC Bank Group PLC
3) TBC Insurance
4) Fast growing digital bank in Uzbekistan
5) Loan book breakdown by stages according IFRS 9
6) Re-segmentation of certain balance sheet items
7) Glossary
TBC Bank announces unaudited 1Q Consolidated Financial Results
The Market leader in Georgia with robust profitability and steady growth,
supported by solid capital
Continued strong progress in exploiting our international growth potential
European Union Market Abuse Regulation EU 596/2014 requires TBC Bank Group PLC
to disclose that this announcement contains Inside Information, as defined in
that Regulation.
Key Highlights
The economic recovery continued in 1Q 2022 despite the adverse impact from the
war in Ukraine
The Georgian economy rebounded sharply in 2021, achieving an annual growth
rate of 10.4% after a -6.8% decline in 2020. Despite the adverse impact of war
in Ukraine, this growth momentum continued in the beginning of the 2022, only
partially driven by the low base effect a year ago. According to preliminary
estimates of the National Statistics Office of Georgia, the Georgian economy
expanded by 14.4% year-on-year in the first quarter, with a solid increase of
10.6% year-on-year in March 2022.
Solid start of the year… - In the first quarter of 2022, our net profit
amounted to GEL 224 million, up by 46% year-on-year. This growth was driven by
strong income generation across the board. As a result, our ROE for the first
quarter of 2022 year stood at 24.3%, up by 4.0 pp year-on-year.
…backed by strong capital and liquidity levels - As of 31 March 2022, CET1,
Tier 1, and Total Capital ratios stood at 14.6%, 17.6% and 21.0%,
respectively, and remained comfortably above the minimum regulatory
requirements by 2.4%, 3.0% and 1.7%, accordingly. As of 31 March 2022, our net
stable funding (NSFR) and liquidity coverage (LCR) ratios stood at 127% and
116%, respectively, comfortably above the regulatory minimum of 100%.
Our Georgian banking franchise continued to strengthen its leadership
position… - We continue to be market leaders in total loans and deposits. In
1Q 2022, our loan book increased by 21% year-on-year in constant currency
terms, in line with the overall growth of the banking sector, which translated
into a 38.9% market share, up by 0.4 pp over the year. Over the same period,
our deposit base increased by 13% in constant currency terms and our market
share in total deposits amounted to 40.3% as of 31 March 2022, up by 0.5 pp
year-on-year.
…while our Uzbek business kept on growing - Our Uzbek business continues to
expand in line with our expectations. By the end of April, the number of
registered and monthly active users of our digital banking app reached 1.6
million and 300,000, respectively. Over the same period, our retail loan and
deposit books amounted to GEL 160 million and GEL 193 million, respectively.
In parallel, we continued to expand our Uzbek payments business, Payme. As a
result, the number of registered users reached 6.0 million, up by 78%
year-on-year, while the number of monthly active digital users amounted to 1.8
million, up by 64% year-on-year, by the end of March 2022. During 1Q 2022, net
profit was GEL 5.8 million, up by 93% year-on-year.
Increasing our digital footprint across the Group- In the first quarter of
2022, our monthly active retail digital users stood at 2.8 million, up by 64%
year-on-year, while daily active retail digital users almost reached 1.0
million, up by 71% over the same period.
Strong progress in our payment business - Our payment business recorded strong
results on both the issuing and acquiring side in the first quarter of 2022.
The volume of transactions conducted by TBC cards increased by 31%
year-on-year, while the volume of transactions at TBC Bank terminals grew by
57% over the same period.
Letter from the Chief Executive Officer
After a strong recovery in 2021, we entered 2022 from a position of strength
and continued to deliver robust financial results in the first quarter of
2022, despite instability in the region caused by the war in Ukraine. As a
result, our net income amounted to GEL 224 million, up by 46% year-on-year,
while our return on equity stood at 24.3%, compared to 20.3% a year ago. Our
strong capital generation enables the Board to recommend a final dividend for
2021 of GEL 2.16 per share at the upcoming 2022 AGM, which together with the
interim dividend paid in September 2021, will equal a total dividend of GEL
3.66 per share. The total dividend pay-out ratio for 2021 will be 25% in line
with our mid-term guidance of 25-35%.
I am also delighted to report that on Group level, our monthly active digital
users stood at 2.8 million in March 2022, up by 64% year-on-year, while daily
active digital users almost reached 1 million up by 71% over the same period.
Maintaining strong economic growth despite the adverse impact of the war in
Ukraine
While the ongoing war in Ukraine poses challenges to the Georgian economy, the
negative spillover appears to be more limited than initially envisaged. In
particular, exports cooled but remained solid, mainly on the back of higher
prices. Furthermore, the tourism recovery strengthened, while remittances,
although slowing, maintained a positive growth rate. Despite some initial
volatility, the GEL also remained stable, on the back of relatively strong
inflows, broadly stable regional currencies and tight monetary policy. While
uncertainties remain high, we expect strong GDP growth in 2022 at around 5.5%,
once again demonstrating the resilience of the Georgian economy. Moreover,
the dynamics in Uzbekistan are quite promising, with GDP growth expected to
reach around 5.0% in 2022 according to our estimates.
A strong set of financial results for the first quarter 2022
In the first quarter of 2022, our operating income amounted to GEL 413
million, up by 33% year-on-year. Such high growth was to some extent
attributable to the low base last year, due to the partial lock-down in
January and mid-February 2021.
The growth in net interest income was driven by an improved net interest
margin, which increased by 0.9 pp year-on-year and reached 5.6% in the first
quarter 2022, as well as by an increase in our loan book of 13%. Over the same
period, net fee and commission income grew by 46%, while other operating
income 1 (#_ftn1) increased by 49%, mainly driven by FX operations. Our asset
quality also performed strongly, which translated into a cost of risk of 0.3%
in the first quarter 2022. Based on our assessment, the impact of Ukraine war
will not have material effect on our asset quality. At the same time, our cost
to income ratio improved by 2.7 pp year-on-year, amounting to 36.6% on the
back of positive operating jaws. As a result, our return on equity stood at
24.3%, up by 4.0 pp year-on-year, while our return on assets amounted to 3.7%,
up by 1.0 pp year-on-year.
Our liquidity and capital positions remain strong. Our CET1, Tier 1 and Total
Capital ratios stood at 14.6%, 17.6% and 21.0%, respectively, and remained
comfortably above the minimum regulatory requirements by 2.4%, 3.0% and 1.7%,
accordingly. At the same time, we continued to operate at high liquidity with
the net stable funding (NSFR) and liquidity coverage (LCR) ratios standing at
127% and 116%, respectively, as of 31 March 2022.
Continued growth of our Georgian banking franchise
Our Georgian banking franchise continued its steady growth in the first
quarter of 2022, slightly outperforming total banking sector growth both in
terms of total loans and total deposits, with respective market shares
reaching 38.9% and 40.3% as of 31 March 2022.
As of 31 March 2022, our loan book increased by 21% year-on-year in constant
currency terms and was broad based across the segments. Over the same period,
customer deposits increased by 13% in constant currency terms.
Strengthening our position on the Uzbek market
Our Uzbek business continues to expand in line with our expectations. By the
end of April 2022, the number of registered and monthly active digital users
of our digital banking app reached 1.6 million and 300,000, respectively. Over
the same period, our retail loan and deposit books amounted to GEL 160 million
and GEL 193 million, respectively.
In parallel, we continued to expand our Uzbek payments business, Payme. As a
result, the number of registered users reached 6.0 million, up by 78%
year-on-year, while the number of monthly active digital users amounted to 1.3
million, up by 68% year-on-year, by the end of March 2022. Over the same
period, the number and volume of transactions increased year-on-year by 46%
and 44%, respectively. In terms of financial results, revenues increased by
83% year-on-year and amounted to GEL 9.5 million, while net profit was GEL 5.8
million, up by 93% year-on-year.
Governance
I am delighted to report that TBC holds #8 position among FTSE 250 companies
in terms of women on boards and in leadership and #1 within the banking
sector, based on the FTSE Women Leaders Report 2021. I would also like to
highlight that our board structure is fully in line with the diversity and
inclusion targets set by the Hampton-Alexander Review and the Parker Review.
Outlook
Given the proven resilience of our business model and our solid financial
results, coupled with the promising macroeconomic outlook, we retain our
medium-term guidance despite regional challenges. Therefore, I would like to
re-iterate our medium-term targets for the key financial measures: ROE of
above 20%, a cost to income ratio below 35%, a dividend pay-out ratio of
25-35% and annual loan growth of around 10-15%.
Economic Overview
Economic growth
The Georgian economy rebounded sharply in 2021, achieving an annual growth
rate of 10.4% after a -6.8% decline in 2020. The recovery started in the
second quarter of 2021, reaching 28.9% growth in real GDP, and gradually
slowing down to 8.8% in the fourth quarter of 2021. Despite the adverse impact
of the war in Ukraine, this growth momentum continued in the beginning of the
2022, only partially driven by the low base effect a year ago. According to
preliminary estimates of the National Statistics Office of Georgia, the
Georgian economy expanded by 14.4% year-on-year in the first quarter, with a
solid increase of 10.6% in March.
External sector
The external sector continued its strong performance in 1Q 2022, with exports
and imports growing by 43.3% and 35.7% year-on-year, respectively. Despite the
adverse impact of Russia's invasion of Ukraine, the goods trade data looked
promising in March. Even with the decrease of exports to Ukraine (-93.1%
year-on-year) and Russia (-55.8% year-on-year), total growth remained solid at
26.3% on the back of higher prices and increased contributions from other
countries. As anticipated, the exports of destination sensitive products were
most affected by the decrease in foreign demand because they were difficult to
redirect in a short period of time, while products non-sensitive to
destination such as commodities remained resilient.
The recovery in tourism even strengthened, supported by the impact of
migration, reaching 68.1% of 2019 levels in the first quarter of 2022.
Inflows of remittances increased by 9.2% year-on-year in the first quarter of
2022. Double-digit growth rates of 12.7% and 13.7% year-on-year in January and
February, respectively, fell to a 2.6% year-on-year increase in March, mainly
due to the decline from Russia.
Fiscal stimulus
The fiscal stimulus, although still sizable, negatively affected growth in
2021 as the deficit amounted to around 6.3% of GDP, after an expansionary 9.3%
of GDP in 2020. Importantly, the major source of deficit financing in
2020-2021 was external, largely compensating for the pandemic-related drop in
net inflows. According to the Ministry of Finance, fiscal consolidation is
expected to take place in the coming years with deficit-to-GDP ratios of 4.4%,
3.0% and 2.7% in 2022, 2023 and 2024, respectively. At the same time,
government debt, which reached its mandated ceiling of 60% of GDP in 2020,
normalized at an estimated 51.1% of GDP by the end of 2021. Going forward, the
debt-to-GDP ratio is expected to decline gradually to 49.0% by the end of
2024.
Credit growth
By the end of 1Q 2022, bank credit increased by 18% year-on-year, compared to
18.2% by the end of 4Q 2021. In terms of segments, retail lending growth
accelerated the most, increasing from 18% at the end of 4Q 2021 to 19.7% at
the end of 1Q 2022. MSME lending also grew from 22.3% at the end of 4Q 2021 to
22.5%, while in the same period corporate lending slowed by 2.8 pp, amounting
to 12.8%.
Inflation, monetary policy and the exchange rate
As a result of rapidly worsening expectations in the end of the February and
the beginning of the March, the USD/GEL overshoot reached 3.44, before
appreciating back to an average of 3.07 by the end of the month.
Even though annual inflation slowed in March, it still remained elevated at
11.8%. Considering increased commodity prices on international markets and
existing uncertainties regarding supply chains due to the sanctions imposed on
Russia, the NBG decided to increase its policy rate by 0.5 percentage points
from 10.5% to 11.0%.
Going forward
Despite the downside factors arising from Ukraine-Russia conflict, TBC Capital
projections indicate a relatively high growth rate of 5.5% in 2022, on the
back of very strong pre-conflict growth momentum and the overall relatively
moderate negative spillover. At the same time, according to the IMF's latest
projections 2 (#_ftn2) , the Georgian economy should grow by 3.2% and 5.8% in
2022 and 2023, respectively.
More information on the Georgian economy and financial sector can be found at
www.tbccapital.ge (http://www.tbccapital.ge/) .
Unaudited Consolidated Financial Results Overview for 1Q 2022
This statement provides a summary of the unaudited business and financial
trends for 1Q 2022 for TBC Bank Group plc and its subsidiaries. The quarterly
financial information and trends are unaudited.
Please note that there might be slight differences in previous periods'
figures due to rounding.
Financial Highlights
Income Statement Highlights
in thousands of GEL 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Net interest income 288,619 275,445 225,131 28.2% 4.8%
Net fee and commission income 65,890 71,068 45,293 45.5% -7.3%
Other operating non-interest income 58,283 42,159 40,665 43.3% 38.2%
(file:///C%3A/Users/PPapidze/Desktop/Results%20Q1%202022/1Q%202022%20Support%20file%20for%20the%20report.xlsx#RANGE!A15)
3 (#_ftn3)
Total credit loss allowance (13,736) (6,040) (17,244) -20.3% NMF
Operating profit after expected credit losses 399,056 382,632 293,845 35.8% 4.3%
Losses from modifications of financial instrument - (31) (1,487) -100.0% -100.0%
Operating expenses (150,950) (157,213) (122,240) 23.5% -4.0%
Profit before tax 248,106 225,388 170,118 45.8% 10.1%
Income tax expense (24,125) (26,915) (17,131) 40.8% -10.4%
Profit for the period 223,981 198,473 152,987 46.4% 12.9%
Balance Sheet and Capital Highlights
in thousands of GEL Mar-22 Dec-21 Mar-21 Change YoY Change QoQ
Total Assets 25,056,340 24,508,561 23,617,046 6.1% 2.2%
Gross Loans 17,320,213 17,047,391 15,332,209 13.0% 1.6%
Customer Deposits 15,081,429 15,038,172 14,239,837 5.9% 0.3%
Total Equity 3,896,760 3,692,229 3,125,735 24.7% 5.5%
CET 1 Capital (Basel III) 2,964,648 2,759,894 2,059,599 43.9% 7.4%
Tier 1 Capital (Basel III) 3,584,908 3,379,414 2,550,144 40.6% 6.1%
Total Capital (Basel III) 4,279,803 4,102,927 3,327,134 28.6% 4.3%
Risk Weighted Assets (Basel III) 20,358,187 20,217,629 18,921,231 7.6% 0.7%
Key Ratios 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
ROE 24.3% 22.1% 20.3% 4.0 pp 2.2 pp
Bank's standalone ROE 25.6% 23.2% 21.5% 4.1 pp 2.4 pp
(file:///C%3A/Users/PPapidze/Desktop/Results%20Q1%202022/1Q%202022%20Support%20file%20for%20the%20report.xlsx#RANGE!A15)
4 (#_ftn4)
ROA 3.7% 3.3% 2.7% 1.0 pp 0.4 pp
Bank's standalone ROA(4) 3.9% 3.4% 2.7% 1.2 pp 0.5 pp
NIM 5.6% 5.4% 4.7% 0.9 pp 0.2 pp
Cost to income 36.6% 40.4% 39.3% -2.7 pp -3.8 pp
Bank's standalone cost to income(4) 28.7% 32.2% 33.1% -4.4 pp -3.5 pp
Cost of risk 0.3% -0.1% 0.5% -0.2 pp 0.4 pp
NPL to gross loans 2.4% 2.4% 4.8% -2.4 pp 0.0 pp
NPL provision coverage ratio 96.0% 99.9% 81.0% 15.0 pp -3.9 pp
Total NPL coverage ratio 167.9% 175.3% 154.4% 13.5 pp -7.4 pp
CET 1 CAR (Basel III) 14.6% 13.7% 10.9% 3.7 pp 0.9 pp
Tier 1 CAR (Basel III) 17.6% 16.7% 13.5% 4.1 pp 0.9 pp
Total CAR (Basel III) 21.0% 20.3% 17.6% 3.4 pp 0.7 pp
Leverage (Times) 6.4x 6.7x 7.6x -1.2x -0.3x
Net Interest Income
In 1Q 2022, net interest income amounted to GEL 288.6 million, up by 28.2% YoY
and by 4.8% on a QoQ basis.
The YoY rise in interest income by GEL 87.1 million, or 19.8%, was mostly
attributable to an increase in interest income from loans related to the GEL
1,988.0 million, or 13.0%, increase in the respective portfolio, as well as a
1.0 pp rise in the respective yield, which was related to a hike in the
refinance rate and a shift in portfolio composition towards GEL loans.
The increase in interest income on a QoQ basis of GEL 17.7 million, or 3.5%,
was mainly driven by an increase in interest income from loans to customers,
related both to an increase in the loan portfolio by GEL 272.8 million, or
1.6%, and to a 0.1 pp rise in loan effective rates.
Interest expense remained broadly stable on a QoQ basis. YoY interest expense
increased by 7.7%, mainly related to an increase in the deposit portfolio of
GEL 841.6 million, or 5.9%, and a 0.2 pp growth in deposit cost. Over the same
period, the share of the deposits portfolio in total liabilities went up to
71%, compared to 69% a year ago.
Net gains from currency swaps amounted to GEL -1.2 million in 1Q 2022, mainly
related to the increased volume of USD/GEL swaps. The losses in currency swaps
were offset by the lower interest expense of borrowed funds.
In 1Q 2022, our NIM stood at 5.6%, up by 0.9 pp on YoY and 0.2 pp on a QoQ
basis.
In thousands of GEL 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Interest income 527,743 510,035 440,613 19.8% 3.5%
Interest expense (237,914) (239,839) (220,980) 7.7% -0.8%
Net gains from currency swaps (1,210) 5,249 5,498 NMF NMF
Net interest income 288,619 275,445 225,131 28.2% 4.8%
NIM 5.6% 5.4% 4.7% 0.9 pp 0.2 pp
Non-Interest Income
Total non-interest income amounted to GEL 124.2 million in 1Q 2022, increasing
by 44.5% YoY and 9.7% on a QoQ basis.
Total non-interest income increased YoY, driven by strong growth of net fee
and commission income related to the revival of business activities after the
partial lockdown in 1Q 2021, as well as our business initiatives, while the
quarterly decrease was related to the seasonally low activity in 1Q 2022.
Net gains from FX operations demonstrated exceptional results in 1Q 2022,
mainly related to increased margins and volume due to the high volatility of
the exchange rate over the quarter.
The net insurance premium decreased on a QoQ basis, due to the high base in
the previous quarter, related to a non-recurring reinsurance adjustment in the
amount of 2.7 million GEL in 4Q 2021. This slight annual decrease was mainly
driven by increased losses on motor insurance, which was caused by unusual
weather conditions.
In thousands of GEL 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Non-interest income
Net fee and commission income 65,890 71,068 45,293 45.5% -7.3%
Net gains/(losses) from currency derivatives, foreign currency operations and 47,857 27,984 28,496 67.9% 71.0%
translation
Net insurance premium earned after claims and acquisition costs 5 (#_ftn5) 4,267 7,654 4,403 -3.1% -44.3%
Other operating income 6,159 6,521 7,766 -20.7% -5.6%
Total non-interest income 124,173 113,227 85,958 44.5% 9.7%
Credit Loss Allowance
Credit loss allowance for loans in 1Q 2022 amounted to GEL 13.7 million, which
translated into a 0.3% cost of risk, in line with the strong performance of
the loan book across all segments. These provision charges were attributable
to the retail and MSME segments, which were partially offset by the recovery
of provision charges in the CIB segment.
In thousands of GEL 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Recovery of/(charges to) credit loss allowance for loan to customers (11,497) 3,171 (17,549) -34.5% NMF
Credit loss allowance for other transactions (2,239) (9,211) 305 NMF -75.7%
Total credit loss allowance (13,736) (6,040) (17,244) -20.3% NMF
Operating profit after expected credit losses 399,056 382,632 293,845 35.8% 4.3%
Cost of risk 0.3% -0.1% 0.5% -0.2 pp 0.4 pp
Operating Expenses
In 1Q 2022, our operating expenses expanded by 23.5% YoY and decreased by 4.0%
on a QoQ basis.
In 1Q 2022, the YoY increase in our operating expenses was mainly driven by
staff costs, due to the expansion of business, both locally and
internationally. Also, there was an increase in administrative and other
operating expenses, which was mainly attributable to the growth of our Uzbek
business. The decrease on a QoQ basis was due to seasonally low activity in 1Q
2022.
Our cost to income ratio amounted to 36.6%, while the Bank's standalone cost
to income stood at 28.7%.
In thousands of GEL 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Operating expenses
Staff costs (86,159) (86,589) (70,314) 22.5% -0.5%
(Provision for)/ recovery of liabilities and charges (64) 90 45 NMF NMF
Depreciation and amortization (23,011) (23,203) (17,364) 32.5% -0.8%
Administrative & other operating expenses (41,716) (47,511) (34,607) 20.5% -12.2%
Total operating expenses (150,950) (157,213) (122,240) 23.5% -4.0%
Cost to income 36.6% 40.4% 39.3% -2.7 pp -3.8 pp
Bank's standalone cost to income 6 (#_ftn6) 28.7% 32.2% 33.1% -4.4 pp -3.5 pp
Net Income
In 1Q 2022, we delivered robust profitability and generated GEL 224.0 million
in net profit, driven by strong income generation across the board. Despite
the low seasonality in first quarter, we managed to increase out net profit by
a solid 12.9% on a quarterly basis.
As a result, our ROE and ROA for 1Q 2022 reached 24.3% and 3.7%, accordingly.
In thousands of GEL 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Losses from modifications of financial instruments - (31) (1,487) -100.0% -100.0%
Profit before tax 248,106 225,388 170,118 45.8% 10.1%
Income tax expense (24,125) (26,915) (17,131) 40.8% -10.4%
Profit for the period 223,981 198,473 152,987 46.4% 12.9%
ROE 24.3% 22.1% 20.3% 4.0 pp 2.2 pp
Bank's standalone ROE(6) 25.6% 23.2% 21.5% 4.1 pp 2.4 pp
ROA 3.7% 3.3% 2.7% 1.0 pp 0.4 pp
Bank's standalone ROA(6) 3.9% 3.4% 2.7% 1.2 pp 0.5 pp
Funding and Liquidity
As of 31 March 2022, the total liquidity coverage ratio (LCR), as defined by
the NBG, was 116.1%, above the 100% limit, while the LCR in GEL and FC stood
at 110.0% and 119.2%, respectively, above the respective limits of 75% and
100%. Over the same period, NSFR stood at 126.9%, compared to the regulatory
limit of 100%. The YoY decrease in the liquidity ratios was related to the
utilization of excess liquidity in March 2021.
Mar-22 Dec-21 Change QoQ Mar-21 Change YoY
Minimum net stable funding ratio, as defined by the NBG 100.0% 100.0% 0.0 pp 100.0% 0.0 pp
Net stable funding ratio as defined by the NBG 126.9% 127.3% -0.4 pp 131.4% -4.5 pp
Net loans to deposits + IFI funding 101.4% 100.9% 0.5 pp 92.2% 9.2 pp
Leverage (Times) 6.4x 6.7x -0.3x 7.6x -1.2x
Minimum total liquidity coverage ratio, as defined by the NBG 100.0% 100.0% 0.0 pp 100.0% 0.0 pp
Minimum LCR in GEL, as defined by the NBG 75% 75.0% 0.0 pp n/a n/a!
Minimum LCR in FC, as defined by the NBG 100.0% 100.0% 0.0 pp 100.0% 0.0 pp
Total liquidity coverage ratio, as defined by the NBG 116.1% 115.8% 0.3 pp 136.7% -20.6 pp
LCR in GEL, as defined by the NBG 110.0% 107.7% 2.3 pp 140.8% -30.8 pp
LCR in FC, as defined by the NBG 119.2% 120.8% -1.6 pp 135.5% -16.3 pp
We continuously review different funding alternatives, including possible new
local and hard-currency bond financings on the international debt capital
markets and will continue considering opportunities to manage our debt
portfolio in line with the principles of our debt management strategy, subject
to market conditions.
Regulatory Capital
As of March 2022, our CET1, Tier 1 and Total Capital ratios stood at 14.6%,
17.6% and 21.0%, respectively, and remained comfortably above the minimum
regulatory requirements by 2.4%, 3.0% and 2.7%, accordingly.
The YoY increase in the CET 1 capital adequacy ratio was mainly driven by net
income generation and GEL appreciation, which was partially offset by growth
in the loan book, while the higher Tier 1 and total capital adequacy ratios
were further supported by the issuance of an AT1 Bond in the amount of USD 75
million in November 2021.
The QoQ increase in CET 1 capital adequacy ratio was mainly driven by net
income generation, partially offset by growth in the loan book.
In Q1 2022, CET1 and Tier 1 capital requirements increased by 0.5 pp and 0.6
pp QoQ, respectively, driven by the further introduction of concentration risk
and net GRAPE buffers by the NBG, in line with the updated phase in the
schedule. The final increase in the requirements in line with the phase-in
schedule is planned for 1Q 2023.
In thousands of GEL Mar-22 Dec-21 Change QoQ Mar-21 Change YoY
CET 1 Capital 2,964,648 2,759,894 7.4% 2,059,599 43.9%
Tier 1 Capital 3,584,908 3,379,414 6.1% 2,550,144 40.6%
Total Capital 4,279,803 4,102,927 4.3% 3,327,134 28.6%
Total Risk-weighted Exposures 20,358,187 20,217,629 0.7% 18,921,231 7.6%
Minimum CET 1 ratio 12.2% 11.7% 0.5 pp 7.8% 4.4 pp
CET 1 Capital adequacy ratio 14.6% 13.7% 0.9 pp 10.9% 3.7 pp
Minimum Tier 1 ratio 14.6% 14.0% 0.6 pp 9.7% 4.9 pp
Tier 1 Capital adequacy ratio 17.6% 16.7% 0.9 pp 13.5% 4.1 pp
Minimum total capital adequacy ratio 18.3% 18.4% -0.1 pp 13.7% 4.6 pp
Total Capital adequacy ratio 21.0% 20.3% 0.7 pp 17.6% 3.4 pp
Loan Portfolio
As of 31 March 2022, the gross loan portfolio reached GEL 17,320.2 million, up
by 13.0% YoY and 1.6% QoQ, or up by 20.6% YoY and 1.9% QoQ on a constant
currency basis.
The proportion of gross loans denominated in foreign currency decreased by 5.4
pp YoY and 0.1 pp on a QoQ basis, and accounted for 53.8% of total loans. On a
constant currency basis, the proportion of gross loans denominated in foreign
currency decreased by 2.4 pp YoY and stood at 56.8%.
As of 31 March 2022, our market share in total loans stood at 38.9%, up by 0.4
pp YoY and 0.1 pp on a QoQ basis. Our loan market share in legal entities was
39.3%, up by 1.3 pp YoY and 0.2 pp on a QoQ basis. Our loan market share in
individuals stood at 38.6%, down by 0.4 pp YoY while remaining stable on a QoQ
basis.
In thousands of GEL Mar-22 Dec-21 Change QoQ Mar-21 Change YoY
Loans and advances to customers
Retail 6,582,652 6,358,345 3.5% 5,793,385 13.6%
Retail loans GEL 3,763,609 3,580,468 5.1% 3,012,532 24.9%
Retail loans FC 2,819,043 2,777,877 1.5% 2,780,853 1.4%
CIB 6,461,554 6,547,741 -1.3% 5,939,056 8.8%
CIB loans GEL 2,040,940 2,188,776 -6.8% 1,629,821 25.2%
CIB loans FC 4,420,614 4,358,965 1.4% 4,309,235 2.6%
MSME 4,276,007 4,141,305 3.3% 3,599,768 18.8%
MSME loans GEL 2,191,308 2,082,204 5.2% 1,615,949 35.6%
MSME loans FC 2,084,699 2,059,101 1.2% 1,983,819 5.1%
Total loans and advances to customers 17,320,213 17,047,391 1.6% 15,332,209 13.0%
The comparative figures for 1Q 2021 do not correspond with the figures
disclosed in 1Q 2021 financial report, since they include re-segmentation
effect as described in appendix 6.
1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Loan yields 10.8% 10.7% 9.8% 1.0 pp 0.1 pp
Loan yields GEL 15.5% 15.4% 14.6% 0.9 pp 0.1 pp
Loan yields FC 6.9% 6.7% 6.6% 0.3 pp 0.2 pp
Retail Loan Yields 12.6% 12.2% 11.1% 1.5 pp 0.4 pp
Retail loan yields GEL 16.5% 16.4% 15.8% 0.7 pp 0.1 pp
Retail loan yields FC 7.6% 6.9% 6.2% 1.4 pp 0.7 pp
CIB Loan Yields 9.2% 9.2% 8.7% 0.5 pp 0.0 pp
CIB loan yields GEL 14.1% 14.2% 12.8% 1.3 pp -0.1 pp
CIB loan yields FC 6.9% 6.8% 7.1% -0.2 pp 0.1 pp
MSME Loan Yields 10.6% 10.6% 9.6% 1.0 pp 0.0 pp
MSME loan yields GEL 15.1% 15.1% 14.3% 0.8 pp 0.0 pp
MSME loan yields FC 6.0% 6.0% 5.9% 0.1 pp 0.0 pp
The comparative rates for 1Q 2021 do not correspond with the rates disclosed
in 1Q 2021 financial report, since they include re-segmentation effect as
described in appendix 6.
Loan Portfolio Quality
Par 30 improved YoY and increased by 0.3 pp on a QoQ basis. The YoY
improvement was mainly related to the retail segment. The QoQ increase was
mainly attributable to two CIB borrowers and is expected to settle in 2Q 2022.
NPLs improved across all segments on a YoY basis. This improvement was mainly
driven by resumed repayments on restructured loans in the Retail and MSME
segments. On a QoQ basis, total NPLs remained stable, while CIB NPLs increased
by 0.2 pp QoQ, mainly attributable to one stage III CIB borrower.
Par 30 Mar-22 Dec-21 Change QoQ Mar-21 Change YoY
Retail 2.3% 2.2% 0.1 pp 3.1% -0.8 pp
CIB 1.1% 0.6% 0.5 pp 1.2% -0.1 pp
MSME 3.9% 4.0% -0.1 pp 3.8% 0.1 pp
Total Loans 2.3% 2.0% 0.3 pp 2.5% -0.2 pp
The comparative ratios for 1Q 2021 do not correspond with the ratios disclosed
in 1Q 2021 financial report, since they include re-segmentation effect as
described in appendix 6.
Non-performing Loans Mar-22 Dec-21 Change QoQ Mar-21 Change YoY
Retail 2.2% 2.4% -0.2 pp 6.0% -3.8 pp
CIB 1.6% 1.4% 0.2 pp 2.2% -0.6 pp
MSME 4.1% 4.0% 0.1 pp 6.9% -2.8 pp
Total Loans 2.4% 2.4% 0.0 pp 4.8% -2.4 pp
The comparative ratios for 1Q 2021 do not correspond with the ratios disclosed
in 1Q 2021 financial report, since they include re-segmentation effect as
described in appendix 6.
NPL Coverage Mar-22 Dec-21 Mar-21
Provision Coverage Total Coverage Provision Coverage Total Coverage Provision Coverage Total Coverage
Retail 169.3% 230.1% 158.8% 224.6% 95.0% 161.7%
CIB 47.5% 115.0% 56.8% 126.4% 81.9% 150.5%
MSME 64.3% 147.7% 68.0% 155.5% 61.1% 146.4%
Total 96.0% 167.9% 99.9% 175.3% 81.0% 154.4%
The comparative ratios for 1Q 2021 do not correspond with the ratios disclosed
in 1Q 2021 financial report, since they include re-segmentation effect as
described in appendix 6.
Cost of risk
In 1Q 2022, the cost of risk amounted to 0.3%, in line with the strong
performance of the loan book across all segments.
Cost of risk 1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Retail 0.6% 1.2% 0.9% -0.3 pp -0.6 pp
CIB -0.1% -1.5% -0.2% 0.1 pp 1.4 pp
MSME 0.3% 0.1% 0.9% -0.6 pp 0.2 pp
Total 0.3% -0.1% 0.5% -0.2 pp 0.4 pp
The comparative ratios for 1Q 2021 do not correspond with the ratios disclosed
in 1Q 2021 financial report, since they include re-segmentation effect as
described in appendix 6.
Deposit Portfolio
The total deposits portfolio amounted to GEL 15,081.4 million, increasing by
5.9% YoY and 0.3% QoQ, or 13.5% YoY and 0.4% QoQ on a constant currency basis.
The proportion of deposits denominated in a foreign currency decreased by 3.8
pp and increased by 0.9 pp on a YoY and QoQ basis, respectively, and stood at
64.4% of total deposits. On a constant currency basis, the proportion of
deposits decreased by 1.4 pp YoY and accounted for 66.8% of total deposits.
As of 31 March 2022, our market share in deposits amounted to 40.3%, up by 0.5
pp YoY and down by 0.1 pp on a QoQ basis, while our market share in deposits
to legal entities stood at 41.0%, up by 1.2 pp YoY and 0.5 pp QoQ. Our market
share in deposits to individuals stood at 39.6%, down by 0.2 pp YoY and 0.7 pp
QoQ.
In thousands of GEL Mar-22 Dec-21 Change QoQ Mar-21 Change YoY
Customer Accounts
Retail 5,618,872 5,837,333 -3.7% 5,381,805 4.4%
Retail deposits GEL 1,461,142 1,492,325 -2.1% 1,278,497 14.3%
Retail deposits FC 4,157,730 4,345,008 -4.3% 4,103,308 1.3%
CIB 7,567,725 7,330,543 3.2% 6,728,126 12.5%
CIB deposits GEL 2,844,528 2,934,167 -3.1% 1,803,883 57.7%
CIB deposits FC 4,723,197 4,396,376 7.4% 4,924,243 -4.1%
MSME 1,487,665 1,558,676 -4.6% 1,287,528 15.5%
MSME deposits GEL 657,057 756,135 -13.1% 607,763 8.1%
MSME deposits FC 830,608 802,541 3.5% 679,765 22.2%
Total Customer Accounts* 15,081,429 15,038,172 0.3% 14,239,837 5.9%
The comparative figures for 1Q 2021 do not correspond with the figures
disclosed in 1Q 2021 financial report, since they include re-segmentation
effect as described in appendix 6.
* Total deposit portfolio includes Ministry of Finance deposits in the amount
of, GEL 407 million, GEL 312 million and 842 GEL million as of 31 Mar 2022, 31
Dec 2021 and 31 Mar 2021, respectively.
1Q'22 4Q'21 1Q'21 Change YoY Change QoQ
Deposit rates 3.7% 3.4% 3.5% 0.2 pp 0.3 pp
Deposit rates GEL 7.5% 6.8% 6.6% 0.9 pp 0.7 pp
Deposit rates FC 1.5% 1.5% 1.9% -0.4 pp 0.0 pp
Retail Deposit Yields 2.7% 2.4% 2.5% 0.2 pp 0.3 pp
Retail deposit rates GEL 5.3% 4.9% 5.0% 0.3 pp 0.4 pp
Retail deposit rates FC 1.8% 1.6% 1.7% 0.1 pp 0.2 pp
CIB Deposit Yields 4.5% 4.8% 3.9% 0.6 pp -0.3 pp
CIB deposit rates GEL 9.4% 8.9% 7.9% 1.5 pp 0.5 pp
CIB deposit rates FC 1.4% 1.6% 2.2% -0.8 pp -0.2 pp
MSME Deposit Yields 0.7% 0.6% 0.8% -0.1 pp 0.1 pp
MSME deposit rates GEL 1.1% 1.1% 1.4% -0.3 pp 0.0 pp
MSME deposit rates FC 0.2% 0.2% 0.2% 0.0 pp 0.0 pp
The comparative rates for 1Q 2021 do not correspond with the rates disclosed
in 1Q 2021 financial report, since they include re-segmentation effect as
described in appendix 6.
Segment definitions and PL
Business Segments
The segment definitions are as follows:
· Corporate and Investment Banking (CIB) - a legal entity/group of
affiliated entities with an annual revenue exceeding GEL 12.0 million or which
has been granted facilities of more than GEL 5.0 million. Some other business
customers may also be assigned to the CIB segment or transferred to the MSME
segment on a discretionary basis. In addition, CIB includes Wealth Management
private banking services to high-net-worth individuals with a threshold of
US$ 250,000 of assets under management (AUM), as well as on a discretionary
basis;
· Retail - non-business individual customers, or individual customers
of the fully digital bank, Space.
· MSME - business customers who are not included in the CIB segment;
· Corporate centre and other operations - comprises the Treasury,
other support and back office functions, and non-banking subsidiaries of the
Group.
Business customers are all legal entities or individuals who have been granted
a loan for business purposes.
Income Statement by Segments
1Q'22 Retail MSME CIB Corp. Centre Total
Interest income 200,881 109,089 151,172 66,601 527,743
Interest expense (38,835) (2,498) (81,194) (116,597) (239,124)
Net transfer pricing (59,485) (49,410) 24,498 84,397 -
Net interest income 102,561 57,181 94,476 34,401 288,619
Fee and commission income 74,494 7,225 19,380 11,794 112,893
Fee and commission expense (38,581) (2,695) (2,066) (3,661) (47,003)
Net fee and commission income 35,913 4,530 17,314 8,133 65,890
Net insurance premium earned after claims and acquisition costs - - - 4,267 4,267
Net gains/(losses) from currency derivatives, foreign currency operations and 15,026 11,303 28,394 (6,866) 47,857
translation
Gains less Losses from Disposal of Investment Securities Measured at Fair - - 910 1,207 2,117
Value through Other Comprehensive Income
Other operating income 787 105 537 2,668 4,097
Share of profit of associates - - (126) 71 (55)
Other operating non-interest income and insurance profit 15,813 11,408 29,715 1,347 58,283
Recovery of/(charges to) credit loss allowance for loans to customers (9,250) (3,537) 1,290 - (11,497)
Recovery of/(charges to) credit loss allowance for performance guarantees and 110 32 447 - 589
credit related commitments
Recovery of/(charges to) credit loss allowance for net investments in leases - - - (1,445) (1,445)
Credit loss allowance for other financial assets (10) - (562) (1,118) (1,690)
Recovery of/(charges to) credit loss allowance for financial assets measured - - (12) 97 85
at fair value through other comprehensive income
Net impairment of non-financial assets 72 (245) 340 55 222
Profit/(loss) before G&A expenses and income taxes 145,209 69,369 143,008 41,470 399,056
Staff costs (38,848) (14,715) (12,565) (20,031) (86,159)
Depreciation and amortization (14,154) (3,307) (1,553) (3,997) (23,011)
Provision for liabilities and charges - - - (64) (64)
Administrative and other operating expenses (19,916) (5,193) (4,396) (12,211) (41,716)
Operating expenses (72,918) (23,215) (18,514) (36,303) (150,950)
Profit before tax 72,291 46,154 124,494 5,167 248,106
Income tax expense (8,124) (4,678) (11,636) 313 (24,125)
Profit 64,167 41,476 112,858 5,480 223,981
In 1Q 2022, the management reclassified net fee and commission income from
acquiring and issuing business, utility payments income as well as fee expense
on self-service and POS terminal transactions to retail segment from other
segments.
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance sheet
In thousands of GEL Mar-22 Dec-21 Mar-21
Cash and cash equivalents 1,962,460 1,722,137 2,425,584
Due from other banks 58,348 79,142 54,189
Mandatory cash balances with National Bank of Georgia 2,243,280 2,087,141 2,364,760
Loans and advances to customers 16,917,292 16,637,145 14,742,344
Investment securities measured at fair value through other comprehensive 1,898,005 1,938,196 2,284,697
income
Bonds carried at amortized cost 48,565 49,582 17,748
Net investments in leases 254,087 262,046 272,090
Investment properties 20,396 22,892 65,605
Current income tax prepayment 817 194 62,022
Deferred income tax asset 14,368 12,357 1,453
Other financial assets 330,750 453,115 292,410
Other assets 429,996 397,079 265,299
Premises and equipment 406,855 392,506 377,273
Right of use assets 76,251 70,513 54,535
Intangible assets 331,618 319,963 272,597
Goodwill 59,964 59,964 59,964
Investments in associates 3,288 4,589 4,476
TOTAL ASSETS 25,056,340 24,508,561 23,617,046
LIABILITIES
Due to credit institutions 3,353,903 2,984,176 3,612,067
Customer accounts 15,081,429 15,038,172 14,239,837
Lease liabilities 71,891 66,167 60,934
Other financial liabilities 136,479 139,811 153,606
Current income tax liability 4,563 86,762 697
Debt Securities in issue 1,737,192 1,710,288 1,583,929
Deferred income tax liability 9,424 10,979 21,865
Provisions for liabilities and charges 26,019 25,358 22,526
Other liabilities 106,836 130,972 87,888
Subordinated debt 631,844 623,647 707,962
TOTAL LIABILITIES 21,159,580 20,816,332 20,491,311
EQUITY
Share capital 1,682 1,682 1,682
Shares held by trust (7,900) (25,489) (25,494)
Share premium 283,430 283,430 283,430
Retained earnings 3,230,348 3,007,132 2,434,185
Group re-organisation reserve 402,862 402,862 402,862
Share based payment reserve (18,362) (5,135) (19,288)
Fair value reserve (24,006) (10,862) 36,929
Cumulative currency translation reserve (15,276) (9,450) 759
Net assets attributable to owners 3,852,778 3,644,170 3,115,065
Non-controlling interest 43,982 48,059 10,670
TOTAL EQUITY 3,896,760 3,692,229 3,125,735
TOTAL LIABILITIES AND EQUITY 25,056,340 24,508,561 23,617,046
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL 1Q'22 4Q'21 1Q'21
Interest income 527,743 510,035 440,613
Interest expense (237,914) (239,839) (220,980)
Net gains from currency swaps (1,210) 5,249 5,498
Net interest income 288,619 275,445 225,131
Fee and commission income 112,893 123,893 81,108
Fee and commission expense (47,003) (52,825) (35,815)
Net fee and commission income 65,890 71,068 45,293
Net insurance premiums earned 20,215 18,883 14,143
Net insurance claims incurred and agents' commissions (15,948) (11,229) (9,740)
Net insurance premium earned after claims and acquisition costs 4,267 7,654 4,403
Net gains/(losses) from currency derivatives, foreign currency operations and 47,857 27,984 28,496
translation
Gains less losses from disposal of investment securities measured at fair 2,117 252 2,388
value through other comprehensive income
Other operating income 4,097 6,198 4,992
Share of profit of associates (55) 71 386
Other operating non-interest income 54,016 34,505 36,262
Recovery of/(charges to) credit loss allowance for loans to customers (11,497) 3,171 (17,549)
Recovery of/(charges to) credit loss allowance for net investments in leases (1,445) 2,052 (1,311)
Recovery of/(charges to) credit loss allowance for performance guarantees and 589 5,971 646
credit related commitments
Credit loss allowance for other financial assets (1,690) (6,363) 363
Recovery of/(charges to) credit loss allowance for financial assets measured 85 337 594
at fair value through other comprehensive income
Net impairment of non-financial assets 222 (11,208) 13
Operating profit after expected credit losses 399,056 382,632 293,845
Losses from modifications of financial instruments - (31) (1,487)
Staff costs (86,159) (86,589) (70,314)
Depreciation and amortization (23,011) (23,203) (17,364)
(Provision for)/ recovery of liabilities and charges (64) 90 45
Administrative and other operating expenses (41,716) (47,511) (34,607)
Operating expenses (150,950) (157,213) (122,240)
Profit before tax 248,106 225,388 170,118
Income tax expense (24,125) (26,915) (17,131)
Profit 223,981 198,473 152,987
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve (13,150) (9,657) 25,772
Exchange differences on translation to presentation currency 130 (2,385) 2,903
Other comprehensive income for the period (13,020) (12,042) 28,675
Total comprehensive income for the period 210,961 186,431 181,662
Profit attributable to:
- Shareholders of TBCG 224,666 196,721 151,224
- Non-controlling interest (685) 1,752 1,763
Profit 223,981 198,473 152,987
Total comprehensive income is attributable to:
- Shareholders of TBCG 211,646 184,659 179,923
- Non-controlling interest (685) 1,772 1,739
Total comprehensive income for the period 210,961 186,431 181,662
Key Ratios
Average Balances
The average balances included in this document are calculated as the average
of the relevant monthly balances as of each month-end. Balances have been
extracted from TBC's unaudited and consolidated management accounts, which
were prepared from TBC's accounting records. These were used by the management
for monitoring and control purposes.
Key Ratios
Ratios (based on monthly averages, where applicable) 1Q'22 4Q'21 1Q'21
Profitability ratios:
ROE(1) 24.3% 22.1% 20.3%
ROA(2) 3.7% 3.3% 2.7%
Cost to income(3) 36.6% 40.4% 39.3%
NIM(4) 5.6% 5.4% 4.7%
Loan yields(5) 10.8% 10.7% 9.2%
Deposit rates(6) 3.7% 3.4% 3.5%
Cost of funding(7) 4.8% 4.6% 4.4%
Asset quality & portfolio concentration:
Cost of risk(9) 0.3% -0.1% 0.5%
PAR 90 to Gross Loans(9) 1.3% 1.1% 1.6%
NPLs to Gross Loans(10) 2.4% 2.4% 4.8%
NPL provision coverage(11) 96.0% 99.9% 81.0%
Total NPL coverage(12) 167.9% 175.3% 154.4%
Credit loss level to Gross Loans(13) 2.3% 2.4% 3.8%
Related Party Loans to Gross Loans(14) 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(15) 6.7% 6.8% 8.2%
Top 20 Borrowers to Total Portfolio(16) 10.2% 10.5% 12.4%
Capital & liquidity positions:
Net Loans to Deposits plus IFI* Funding(17) 101.4% 100.9% 92.2%
Net Stable Funding Ratio(18) 126.9% 127.3% 131.4%
Liquidity Coverage Ratio(19) 116.1% 115.8% 136.7%
Leverage(20) 6.4x 6.7x 7.6x
CET 1 CAR (Basel III)(21) 14.6% 13.7% 10.9%
Tier 1 CAR (Basel III)(22) 17.6% 16.7% 13.5%
Total 1 CAR (Basel III)(23) 21.0% 20.3% 17.6%
* International Financial Institutions
Ratio definitions
1. Return on average total equity (ROE) equals net income attributable to
owners divided by the monthly average of total shareholders' equity
attributable to the PLC's equity holders for the same period; annualised where
applicable.
2. Return on average total assets (ROA) equals net income of the period
divided by monthly average total assets for the same period; annualised where
applicable.
3. Cost to income ratio equals total operating expenses for the period divided
by the total revenue for the same period. (Revenue represents the sum of net
interest income, net fee and commission income and other non-interest income).
4. Net interest margin (NIM) is net interest income divided by monthly average
interest-earning assets; annualised where applicable. Interest-earning assets
include investment securities (excluding CIB shares), net investment in
finance lease, net loans, and amounts due from credit institutions.
5. Loan yields equal interest income on loans and advances to customers
divided by monthly average gross loans and advances to customers; annualised
where applicable.
6. Deposit rates equal interest expense on customer accounts divided by
monthly average total customer deposits; annualised where applicable.
7. Cost of funding equals sum of the total interest expense and net interest
gains on currency swaps (entered for funding management purposes), divided by
monthly average interest bearing liabilities; annualised where applicable.
8. Cost of risk equals credit loss allowance for loans to customers divided by
monthly average gross loans and advances to customers; annualised where
applicable.
9. PAR 90 to gross loans ratio equals loans for which principal or interest
repayment is overdue for more than 90 days divided by the gross loan portfolio
for the same period.
10. NPLs to gross loans equals loans with 90 days past due on principal or
interest payments, and loans with a well-defined weakness, regardless of the
existence of any past-due amount or of the number of days past due divided by
the gross loan portfolio for the same period.
11. NPL provision coverage equals total credit loss allowance for loans to
customers divided by the NPL loans.
12. Total NPL coverage equals total credit loss allowance plus the minimum of
collateral amount of the respective NPL loan (after applying haircuts in the
range of 0%-50% for cash, gold, real estate and PPE) and its gross loan
exposure divided by the gross exposure of total NPL loans.
13. Credit loss level to gross loans equals credit loss allowance for loans to
customers divided by the gross loan portfolio for the same period.
14. Related party loans to total loans equals related party loans divided by
the gross loan portfolio.
15. Top 10 borrowers to total portfolio equals the total loan amount of the
top 10 borrowers divided by the gross loan portfolio.
16. Top 20 borrowers to total portfolio equals the total loan amount of the
top 20 borrowers divided by the gross loan portfolio.
17. Net loans to deposits plus IFI funding ratio equals net loans divided by
total deposits plus borrowings received from international financial
institutions.
18. Net stable funding ratio equals the available amount of stable funding
divided by the required amount of stable funding as defined by NBG in line
with Basel III guidelines. Calculations are made for TBC Bank stand-alone,
based on local standards.
19. Liquidity coverage ratio equals high-quality liquid assets divided by the
total net cash outflow amount as defined by the NBG. Calculations are made for
TBC Bank stand-alone, based on local standards.
20. Leverage equals total assets to total equity.
21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both
calculated in accordance with requirements of the NBG Basel III standards.
Calculations are made for TBC Bank stand-alone, based on local standards.
22. Tier 1 CAR equals tier I capital divided by total risk weighted assets,
both calculated in accordance with the requirements of the NBG Basel III
standards. Calculations are made for TBC Bank stand-alone, based on local
standards.
23. Total CAR equals total capital divided by total risk weighted assets, both
calculated in accordance with the requirements of the NBG Basel III standards.
Calculations are made for TBC Bank stand-alone, based on local standards.
Exchange Rates
To calculate the QoQ growth of the Balance Sheet items without the currency
exchange rate effect, we used the USD/GEL exchange rate of 3.0976 as of 31
December 2021. For the calculations of the YoY growth without the currency
exchange rate effect, we used the USD/GEL exchange rate of 3.4118 as of 31
March 2021. As of 31 March 2022, the USD/GEL exchange rate equaled 3.1013. For
P&L items growth calculations without currency effect, we used the average
USD/GEL exchange rate for the following periods: 1Q 2022 of 3.1091,4Q 2021 of
3.1253, 1Q 2021 of 3.3142.
Additional Disclosures
1) TBC Bank - Background
TBC Bank is the largest banking group in Georgia, where 98.6% of its business
is concentrated, with a 38.6% market share by total assets. It offers retail,
CIB, and MSME banking nationwide.
These unaudited financial results are presented for TBC Bank Group PLC ("TBC
Bank" or "the Group"), which was incorporated on 26 February 2016 as the
ultimate holding company for JSC TBC Bank Georgia. TBC Bank became the parent
company of JSC TBC Bank Georgia on 10 August 2016, following the Group's
restructuring. As this was a common ownership transaction, the results have
been presented as if the Group existed at the earliest comparative date as
allowed under the International Financial Reporting Standards ("IFRS"), as
adopted by the United Kingdom. TBC PLC is listed on the London Stock Exchange
under the symbol TBCG and is a constituent of the FTSE 250 index. It is also a
member of the FTSE4Good Index Series and the MSCI United Kingdom Small Cap
Index.
The consolidated financial statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 and, for the group, in accordance with
international financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union.
2) Subsidiaries of TBC Bank Group PLC 7 (#_ftn7)
Ownership / voting Country Year of incorporation Industry Total Assets
(after elimination)
Subsidiary % as of Amount % in TBC Group
31 March 2022
GEL'000
JSC TBC Bank 99.9% Georgia 1992 Banking 24,193,693 96.56%
United Financial Corporation JSC 99.5% Georgia 1997 Card processing 21,187 0.08%
TBC Capital LLC 100.0% Georgia 1999 Brokerage 4,626 0.02%
TBC Leasing JSC 100.0% Georgia 2003 Leasing 315,534 1.26%
TBC Kredit LLC 100.0% Azerbaijan 1999 Non-banking credit institution 23,207 0.09%
TBC Pay LLC 100.0% Georgia 2009 Processing 46,664 0.19%
Index LLC 100.0% Georgia 2011 Real estate management 393 0.00%
TBC Invest LLC 100.0% Israel 2011 PR and marketing 316 0.00%
TBC Asset management LLC 100.0% Georgia 2021 Asset Management 0 0.00%
JSC TBC Insurance 100.0% Georgia 2014 Insurance 86,783 0.35%
Redmed LLC 100.0% Georgia 2019 E-commerce 1,604 0.01%
TBC NET LLC* 100.0% Georgia 2019 Asset Management 30,315 0.12%
Online Tickets LLC 55.0% Georgia 2015 Software Services 2,711 0.01%
TKT UZ 75.0% Uzbekistan 2019 Retail Trade 75 0.00%
Vendoo LLC (Geo) 100.0% Georgia 2019 Retail Leasing 1,625 0.01%
Mypost LLC 100.0% Georgia 2019 Postal Service 108 0.00%
Billing Solutions LLC 51.0% Georgia 2019 Software Services 412 0.00%
F Solutions LLC 100.0% Georgia 2019 Software Services 11 0.00%
Artarea.ge LLC 100.0% Georgia 2021 PR and marketing 62 0.00%
Marjanishvili 7 LLC 100.0% Georgia 2020 Food and Beverage 846 0.00%
Space JSC 100.0% Georgia 2021 Software Services 0 0.00%
Space International JSC 100.0% Georgia 2021 Software Services 35,059 0.14%
TBC Group Support LLC 100.0% Georgia 2020 Risk Monitoring 7 0.00%
Inspired LLC 51.0% Uzbekistan 2011 Processing 26,354 0.11%
TBC Bank JSC UZ 100.0% Uzbekistan 2020 Banking 245,350 0.98%
LLC Vendoo (UZ Leasing) 100.0% Uzbekistan 2019 Retail Leasing 19,395 0.08%
* At the end of 2021, we merged most of our ecosystem companies into a single
entity, TBC Net JSC
3) TBC Insurance
TBC Insurance is a wholly-owned subsidiary of TBC Bank, which was acquired by
the Group in October 2016 and is the main bancassurance partner for the Bank,
with a share of around 29% in its total gross written premium (GWP) as of 31
March 2022.
TBC Insurance serves its customers with a highly digitalized approach, which
includes a website and a mobile app for health insurance. The company is
represented in both the non-health and health insurance segments. In 2021, TBC
Insurance was well regarded by its customers with an NPS 8 (#_ftn8) of 65% -
the best score among its peers.
In 1Q 2022, net profit including health insurance amounted GEL 2.6 million, up
by 16.7% YoY but down by 50.0% QoQ. The quarterly decrease was related to the
high base of the previous quarter, related to non-recurring reinsurance
adjustment in 4Q 2021. The annual increase was solid, despite the
deterioration in the net combined ratio, mainly due to higher losses from
motor insurance, as a result of unusual weather conditions.
Total insurance business 1Q'22 4Q'21 Change QoQ 1Q'21 Change YoY
In thousands of GEL
Gross written premium 34,138 33,039 3.3% 25,515 33.8%
Net earned premium 25,856 24,497 5.5% 19,131 35.2%
Net profit 2,560 5,122 -50.0% 2,193 16.7%
Net combined ratio 96.5% 80.2% 16.3 pp 90.1% 6.4 pp
Note: IFRS standalone data
Market shares 9 (#_ftn9) Mar-22 Dec-21 Mar-21
Retail segment 25.1% 26.7% 22.0%
Total market share 40.4% 40.0% 39.3%
4) Fast growing digital bank in Uzbekistan
in thousands Mar'21 Jun'21 Sep'21 Dec'21 Mar'22 Apr'22
# of total registered users 98 302 667 1,140 1,499 1,599
# of downloads 103 391 897 1,548 2,011 2,144
Retail gross loan portfolio* (GEL) 953 25,239 52,493 92,825 143,640 159,756
Retail deposit portfolio** (GEL) 2,839 15,543 91,979 207,510 168,669 193,063
# of total cards issued (cumulative figures) 31 66 117 224 312 341
# of other cards attached (cumulative figures) 29 126 328 386 550 611
Total monthly number of transactions 203 563 906 1,739 2,036 2,568
* Loans in Uzbekistan are disbursed in local currency
** Current, savings and time accounts. Deposits in Uzbekistan are accepted in
local currency.
5) Loan book breakdown by stages according IFRS 9
Total (in million GEL)
31-Mar-22 31-Dec-21 31-Mar-21
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 14,977 0.70% 14,602 0.70% 12,101 1.10%
2 1,848 6.10% 1,935 6.20% 2,296 5.40%
3 495 37.10% 510 36.40% 935 36.10%
Total 17,320 2.30% 17,047 2.40% 15,332 3.80%
The comparative figures and rates for 1Q 2021 do not correspond with the
figures and rates disclosed in 1Q 2021 financial report, since they include
re-segmentation effect as described in appendix 6.
CIB (in million GEL)
31-Mar-22 31-Dec-21 31-Mar-21
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 5,664 0.40% 5,743 0.40% 4,760 1.10%
2 695 0.20% 713 0.20% 991 0.90%
3 103 23.90% 92 27.30% 188 24.50%
Total 6,462 0.80% 6,548 0.80% 5,939 1.80%
The comparative figures and rates for 1Q 2021 do not correspond with the
figures and rates disclosed in 1Q 2021 financial report, since they include
re-segmentation effect as described in appendix 6.
MSME (in million GEL)
31-Mar-22 31-Dec-21 31-Mar-21
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 3,714 0.60% 3,520 0.60% 2,736 0.80%
2 353 7.20% 413 7.80% 582 6.90%
3 209 30.40% 208 29.00% 282 31.80%
Total 4,276 2.60% 4,141 2.70% 3,600 4.20%
The comparative figures and rates for 1Q 2021 do not correspond with the
figures and rates disclosed in 1Q 2021 financial report, since they include
re-segmentation effect as described in appendix 6.
Retail (in million GEL)
31-Mar-22 31-Dec-21 31-Mar-21
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 5,599 1.10% 5,339 1.10% 4,605 1.10%
2 800 10.60% 809 10.80% 723 10.40%
3 183 52.00% 210 47.70% 465 43.50%
Total 6,582 3.70% 6,358 3.90% 5,793 5.70%
The comparative figures and rates for 1Q 2021 do not correspond with the
figures and rates disclosed in 1Q 2021 financial report, since they include
re-segmentation effect as described in appendix 6.
* LLP rate is defined as credit loss allowances divided by gross loans
6) Re-segmentation of certain balance sheet items
In 3Q 2021, following the demerger of the Space segment into a separate
entity, the management has re-considered the classification of Space from the
MSME to the retail segment. The underlying rationale was the composition of
the product base offered by Space to its customers. The majority of these
products are consumer, fast consumer and installment loans, which by their
nature represent the retail segment. As a result, the management believes that
analyzing Space as part of the retail segment would be more meaningful for
users of the financial statements.
Changes for the portfolios are given in the table below:
from MSME to retail Loan book (million GEL) Deposit book (million GEL)
(Changes related to Space re-segmentation)
1Q 2021 31.9 12.0
The above-mentioned changes also had immaterial impact on loan yields, deposit
rates, Par 30, NPLs, NPL coverages, LLP rates and cost of risks.
7) Glossary
Terminology Definition
Active retail digital users The number retail digital users, who logged into our digital channels at least
once for the past 3 months.
Daily active users (DAU) The number of retail digital users, who logged into our digital channels at
least once per day.
DAU/MAU Average daily active users divided by monthly active users. TBC Group figure
includes TBC's digital channels in Georgia, as well as those at TBC UZ and
Payme.
Monthly active users (MAU) The number of retail digital users, who logged into our digital channels at
least once a month.
(( 1 (#_ftnref1) )) Total non-interest income less net fee and commission
income.
2 (#_ftnref2) IMF, World Economic Outlook, April 2022
(https://www.imf.org/en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022)
3 (#_ftnref3) Other operating non-interest income includes net insurance
premium earned after claims and acquisition costs.
4 (#_ftnref4) For the ratio calculation, all relevant group recurring costs
are allocated to the bank.
5 (#_ftnref5) Net insurance premium earned after claims and acquisition
costs can be reconciled to the standalone net insurance profit (as shown in
Annex 3) as follows: net insurance premium earned after claims and acquisition
costs less credit loss allowance, administrative expenses and taxes, plus fee
and commission income and net interest income.
6 (#_ftnref6) For the ratio calculation, all relevant group recurring costs
are allocated to the bank.
7 (#_ftnref7) TBC Bank Group PLC became the parent company of JSC TBC Bank
on 10 August 2016.
8 (#_ftnref8) The Net Promoter Score (NPS) was measured in January 2022 by
an independent research company, Anova
9 (#_ftnref9) Market shares are based on internal estimates, excluding
border motor third party liability (MTPL) insurance. Source is Insurance State
Supervision Service of Georgia.
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