REG - TBC Bank Group PLC - 1Q 2023 Results Report
11/05/2023 07:00
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RNS Number : 0149Z TBC Bank Group PLC 11 May 2023
TBC BANK GROUP PLC ("TBC Bank")
1Q 2023 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 and Uzbek economies; 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.
1Q 2023 Consolidated Financial Results Conference Call Details
TBC Bank Group PLC ("TBC PLC") published its unaudited consolidated financial
results for the first quarter of 2023 on Thursday, 11 May 2023 at 7.00 am BST.
The management team will host a conference call on the day at 2.00 pm BST to
discuss the results.
Please click the link below to join the webinar:
https://tbc.zoom.us/j/97362691166?pwd=RUE0NFA1Y3dHNVZWWVNwQ3E3bmFKUT09
(https://tbc.zoom.us/j/94805472323?pwd=U2dLYW1IZHZKdW9qcmJ6YVVwZmlCZz09)
Webinar ID: 973 6269 1166
Passcode: 859674
Other international numbers are available at: https://tbc.zoom.us/u/ax59I7ipl
(https://tbc.zoom.us/u/acVuboaB0)
The call will be held in two parts: the first part will comprise
presentations, while participants will have the opportunity to ask questions
during the second part. All participants will be muted throughout the webinar.
Webinar Instructions:
In order to ask questions, participants joining the webinar should use the
"hand icon" visible at the bottom of the screen. The host will unmute those
participants who have raised hands one after the other. Once the question is
asked, the participant will be muted again.
Call Instructions:
Participants who use the dial-in number to join the webinar should dial *9 to
raise their hand.
Contacts
Andrew Keeley Anna Romelashvili Investor Relations Department
Director of Investor Relations and International Media
Head of Investor Relations
E-mail: AKeeley@tbcbank.com.ge
Tel: +44 (0) 7791 569834
E-mail: IR@tbcbank.com.ge
E-mail: IR@tbcbank.com.ge
Web: www.tbcbankgroup.com (https://www.tbcbankgroup.com/)
Tel: +(995 32) 227 27 27
Tel: +(995 32) 227 27 27
Web: www.tbcbankgroup.com (https://www.tbcbankgroup.com/)
Web: www.tbcbankgroup.com (https://www.tbcbankgroup.com/)
Table of Contents
1Q 2023 Unaudited Consolidated Financial Results Announcement
Financial highlights (#_Toc134452455) (#_Toc134452455)
Operational highlights (#_Toc134452456) (#_Toc134452456)
Letter from the Chief Executive Officer (#_Toc134452457) (#_Toc134452457)
Economic Overview (#_Toc134452458) (#_Toc134452458)
Unaudited Consolidated Financial Results Overview for 1Q 2023 (#_Toc134452459)
(#_Toc134452459)
Additional Disclosures (#_Toc134452460) (#_Toc134452460)
1) (#_Toc134452461) TBC Bank - Background (#_Toc134452461) (#_Toc134452461)
2) (#_Toc134452462) Consolidated Financial Statements and Key Ratios 1Q 2023
(#_Toc134452462) (#_Toc134452462)
3) (#_Toc134452463) Segment Definitions (#_Toc134452463) (#_Toc134452463)
4) (#_Toc134452464) Segments Profitability 1Q 2023 (#_Toc134452464)
(#_Toc134452464)
5) (#_Toc134452465) TBC Bank UZ (#_Toc134452465) (#_Toc134452465)
6) (#_Toc134452466) Market shares in Georgia (#_Toc134452466)
(#_Toc134452466)
7) (#_Toc134452467) Subsidiaries of TBC Bank Group PLC (#_Toc134452467)
(#_Toc134452467)
8) (#_Toc134452468) Impact of Changed Accounting Treatment for Option
Contracts (#_Toc134452468) (#_Toc134452468)
7) TBC Insurance (#_Toc134452469) (#_Toc134452469)
9) (#_Toc134452470) Expanding Our Payments Business in Uzbekistan
(#_Toc134452470) (#_Toc134452470)
10)Uzbek Financials (#_Toc134452471) (#_Toc134452471)
11)Loan Book Breakdown by Stages According IFRS 9 (#_Toc134452472)
(#_Toc134452472)
12)Glossary (#_Toc134452473) (#_Toc134452473)
1Q 2023 Unaudited Consolidated Financial Results
Robust profitability with 1Q 2023 net profit reaching GEL 255 million, up by
14% YoY, with ROE 25.2%.
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.
Financial highlights 1 (#_ftn1)
Key profit & loss highlights
1Q 2023
Robust profitability - In 1Q 2023, our net profit totalled GEL 255 million, up
by 14% YoY, and our ROE and ROA stood at 25.2% and 3.6%, respectively.
Strong income generation - In 1Q 2023, our operating profit amounted to GEL
532 million, up by 29% YoY, driven by strong income generation across the
board. In 1Q 2023, our net interest margin (NIM) stood at 6.4%, up by 0.8 pp
YoY.
Efficient cost management - In 1Q 2023, our cost to income ratio improved by
2.3 pp YoY and stood at 34.3%.
Low cost of risk- In 1Q 2023, our cost of risk was within our normalised range
of 1% for Georgian operations, resulting in 1.1% at the Group level.
Our Uzbek operations continue to generate positive returns - During 1Q 2023,
the operating income of our Uzbek operations increased more than three times
YoY and amounted to GEL 40 million, while net profit reached GEL 13 million.
Over the same period, the combined ROE for our Uzbek businesses stood at
28.1%.
Key balance sheet highlights
Healthy asset quality - As of 31 March 2023, our NPL to gross loans stood at
2.2%, while NPL provision and total coverage ratios stood at 93% and 155%,
respectively.
Prudent capital and liquidity levels - As of 31 March 2022, our CET1, Tier 1,
and Total Capital ratios per the new IFRS methodology stood at 17.7%, 20.1%
and 22.2%, respectively, and remained comfortably above the minimum regulatory
requirements by 3.4 pp, 3.4 pp and 2.5 pp, accordingly. At the same time, our
net stable funding (NSFR) and liquidity coverage (LCR) ratios per the new IFRS
methodology stood at 131% and 136%, respectively, comfortably above the
regulatory minimum of 100%.
Strong growth in Georgia - By the end of the 1Q 2023, our loan book increased
by 17% YoY in constant currency terms, which translated into a 39.1% market
share, up by 0.2 pp over the year. Over the same period, our deposit base
increased by 28% in constant currency terms and our market share in total
deposits amounted to 39.3% as of 31 March 2023, down by 1.0 pp YoY.
Continued rapid growth of our Uzbek banking operations - By the end of March
2023, TBC UZ Bank's retail loans and deposits amounted to GEL 408 million and
GEL 384 million, compared to GEL 144 million and GEL 169 million a year ago.
As a result, our retail micro loan and deposit market shares reached 10.8% and
2.5% at the end of 1Q 2023.
Operational highlights
Fast growing customer base
million 31-Mar-2023 31-Mar-2022 Change YoY
Total number of registered users 14.8 10.4 42%
Total MAU 5.1 3.5 46%
MAU Georgia 1.5 1.4 7%
MAU Uzbekistan 3.6 2.1 71%
Expanding digital footprint across the Group
thousands 31-Mar-2023 31-Mar-2022 Change YoY
Digital DAU Georgia 368 291 26%
Digital MAU Georgia 829 672 23%
Digital DAU/MAU Georgia 44% 43% 1 pp
Digital DAU Group 1,401 963 45%
Digital MAU Group 4,432 2,832 56%
Digital DAU/MAU Group 32% 34% -2 pp
Solid growth of our Georgian and Uzbek Payments businesses
In billions of GEL 1Q'23 1Q'22 Change YoY
Merchant acquiring transactions volume in Georgia 2.5 2.1 19%
Volume of transactions with TBC cards in Georgia 6.4 4.8 33%
Payments volume of Payme in Uzbekistan 2.2 1.4 57%
The largest digital ecosystem in Georgia
in millions of GEL 1Q'23 1Q'22 Change YoY
Gross merchandise value (GMV) 30 15 100%
Loans disbursed through leads 24 22 9%
Letter from the Chief Executive Officer( 2 (#_ftn2) )
After a highly successful 2022, we continued to deliver robust financial
results in 1Q 2023. As a result, our net profit amounted to GEL 255 million,
up by 14% year-on-year, while our return on equity stood at 25.2% and our
return on assets was 3.6%. The macroeconomic environment was also supportive.
After double-digit expansion for two consecutive years, the Georgian economy
maintained its strong growth momentum with real GDP increasing by 7.2% in 1Q
2023. This growth was driven by strong inflows across the board, from net
exports to tourism and remittances.
Our healthy capital generation enabled the Board to recommend a final dividend
for 2022 of GEL 2.95 per share at the upcoming 2023 AGM which, together with
the interim dividend paid in October 2022, equals a total dividend for 2022 of
GEL 5.45 per share. In addition, we have completed a share buyback in the
amount of c. GEL 50 million. This represents a 30% dividend payout ratio,
supplemented by a buyback equivalent of c. 5%, bringing total distribution as
a share of net profit to 35% for 2022.
A strong start to the year
In 1Q 2023, our operating income amounted to GEL 532 million, up by 29%
year-on-year, driven by both interest and non-interest income. The growth in
net interest income was led by an improved net interest margin, which
increased by 0.8 pp year-on-year and reached 6.4% in 1Q 2023. Over the same
period, net fee and commission income grew by an excellent 40% year-on-year,
while other operating income 3 (#_ftn3) increased by 25%, mainly driven by FX
operations.
Our asset quality also performed strongly, which translated into cost of risk
of 1.1% in 1Q 2023, while the cost of risk for our Georgian operations was
only 1.0%. Over the same period, the NPL ratio remained stable at 2.2%. At the
same time, our cost to income ratio improved by 2.3 pp year-on-year and
amounted to 34.3% on the back of positive operating jaws.
In terms of balance sheet growth, our loan book increased by 17% year-on-year
in constant currency terms, mainly driven by the retail and MSME segments,
translating into a total loan market share of 39.1% in Georgia. Over the same
period, customer deposits increased by 28% in constant currency terms, leading
to a total deposit market share of 39.3% in Georgia.
Our liquidity and capital positions remain strong. Our CET1, Tier 1 and Total
Capital ratios under the new IFRS methodology adopted by the NBG stood at
17.7%, 20.1% and 22.2%, respectively, and remained comfortably above the
minimum regulatory requirements by 3.4 pp, 3.4 pp and 2.5 pp, accordingly. At
the same time, we continued to operate at high liquidity with our net stable
funding (NSFR) and liquidity coverage (LCR) ratios standing at 131% and 136%,
respectively, as of 31 March 2023 under the new IFRS methodology.
Growing customer base and digital engagement driven by our profitable Uzbek
fintechs
We continued to grow our customer base across the group, with retail monthly
active users (MAU) exceeding 5 million by the end of March 2023, out of which
our Uzbek customers accounted for around 70%, compared to 3.5 million a year
ago. In terms of digital engagement, the number of digital MAU also grew
significantly and reached 4.4 million at the Group level, up by 56%
year-on-year, driven by Uzbek operations which are fully digital. This
resulted in a group DAU/MAU ratio of 32% as of March 2023, while the DAU/MAU
ratio for the Georgian business stood at 44%.
Importantly, after reaching breakeven in 3Q 2022, our Uzbek fintech businesses
(TBC UZ and Payme) continued to generate positive returns with their combined
net profit amounting to GEL 12.7 million for 1Q 2023, while return on equity
stood at an excellent 28.1%. Moreover, we are delighted to announce that TBC
UZ became profitable on a standalone monthly basis at the beginning of 2023,
after just two years of operations.
We also achieved strong results on the balance sheet side in Uzbekistan. In 1Q
2023, TBC UZ retail loans amounted to GEL 408 million, up by 17%
quarter-on-quarter, which translated into retail micro loan market share 4
(#_ftn4) of 10.8%. Over the same period, retail deposits reached GEL 384
million, up by 16% quarter-on-quarter, accounting for 2.5% of the retail
deposit market share(4). In parallel, we continued to expand our Uzbek
payments business, Payme, which grew its payments volume by 57% year-on-year,
reaching GEL 2.2 billion.
Launching the first Georgian supper app
I am also pleased to report that our digital ecosystem TNET launched the first
super app in the country in late March 2023. Currently, the app combines two
lifestyle platforms (TKT.ge and Swoop) and one e-commerce platform (Vendoo)
into a single consumer app. Over time, other TNET platforms will also be
integrated into the super app. I am confident that with its high customer base
of 1.5 million MAU, TNET has great potential to become a must-have app for
Georgians in the years to come and to make a positive contribution to the
Group's fee and commission income and retail loan generation. In 1Q 2023, TNET
continued to generate strong growth, with its gross merchandise value doubling
year-on-year to reach GEL 30 million.
Looking ahead
Finally, I would like to reiterate our medium-term targets: ROE of above 20%,
a cost to income ratio below 35%, a dividend payout ratio of 25-35%, and
annual loan growth of around 10-15%. We also aim for our Uzbek operations to
contribute 10-15% of the Group's net profit and to achieve 7 million active
monthly users at the Group level in the medium-term.
Economic Overview
Economic growth
After expanding by 10.1% in 2022, economic growth in Georgia started to
normalise in the first quarter of 2023. According to Geostat's estimates, real
GDP grew by 7.2% on average in the first quarter of 2023.
External sector
Despite lower international commodity prices, which negatively affected both
exports and imports, external sector activity still remained strong in 1Q
2023. Specifically, exports and imports increased by 24.7% and 21.0% YoY,
respectively. The price dynamics especially affected domestic commodity
exports, while re-exports maintained at strong performance. On the imports
side, investment goods constituted a considerable share of imports, indicating
positive investment sentiment. The terms of trade remained broadly stable,
supporting economic growth and the GEL.
Having the highest growth contribution, tourism inflows adjusted for the
migration impact by the NBG, increased by a remarkable 102.0% YoY in 1Q 2023.
Remittances also maintained robust growth even after adjustment for Russia,
expanding by 35.1% 5 (#_ftn5) YoY over the same period. FDIs slowed down in
4Q 2022 and decreased by 21.2% YoY, though, for the full year 2022, FDIs still
increased by an impressive 61.1% YoY. Importantly, higher FDI levels not only
arose on the back of reinvested earnings but were also due to much stronger
additional equity investments.
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. In 2022, the deficit was even lower, at 2.5%. According to the
Ministry of Finance, fiscal consolidation is expected to take place in the
coming years with deficit-to-GDP ratios of 2.8% and 2.3% in 2023 and 2024,
respectively.
Credit growth
As of March 2023, bank credit increased by 13.8% YoY, against 12.1% growth at
the end of 2022, at constant exchange rates. Amid moderation in inflation, the
real credit growth strengthened even more from 2.3% YoY in December 2022 to
8.3% at the end of March 2023.
Inflation, monetary policy, and the exchange rate
The US$/GEL exchange rate continued its strong performance, further
appreciating to 2.50 at the end of April from 2.68 by the end of 2022, on the
back of strong external inflows, coupled with tight monetary policy and
improved sentiments.
As a result of a stronger GEL and disinflationary pass-through from
international markets, CPI inflation declined sharply from 9.8% at the end of
2022 to 2.7% in April 2023. While the import component caused headline
inflation to cool down significantly, the NBG kept its monetary policy rate at
11% throughout the quarter, cutting the rate by 0.5% only in May following the
evidence of cooling in underlying measures such as domestic inflation.
Going forward
After double-digit growth for two years in a row, the consensus projection
indicates that growth will normalize in 2023 with the IMF, the World Bank and
the NBG projecting 4% real GDP growth and the Georgian government, 5%.
According to TBC Capital's projections, the economy is expected to grow by
around 6% in 2023.
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 2023
This statement provides a summary of the unaudited business and financial
trends for 1Q 2023 for TBC Bank Group plc and its subsidiaries. The quarterly
financial information and trends are unaudited.
Total equity and total liabilities were restated for 31-Mar-2022 due to a
change in accounting of option contracts. As a result, ROE and leverage ratios
were restated for 1Q 2022. For more details, please refer to the additional
disclosure section on page 24. Please also note that there might be slight
differences in previous periods' figures due to rounding.
Financial Highlights
Income Statement Highlights
in thousands of GEL 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Net interest income 366,791 357,446 2.6% 288,619 27.1%
Net fee and commission income 92,438 95,332 -3.0% 65,890 40.3%
Other operating non-interest income 73,010 151,454 -51.8% 58,283 25.3%
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6 (#_ftn6)
Operating profit 532,239 604,232 -11.9% 412,792 28.9%
Total credit loss allowance (53,168) (33,054) 60.9% (13,736) NMF
Operating expenses (182,780) (200,495) -8.8% (150,950) 21.1%
Profit before tax 296,291 370,683 -20.1% 248,106 19.4%
Income tax expense (41,331) (146,909) -71.9% (24,125) 71.3%
Profit for the period 254,960 223,774 13.9% 223,981 13.8%
EPS, GEL 4.57 3.98 14.8% 4.11 11.2%
Diluted EPS, GEL 4.50 3.91 15.1% 3.99 12.8%
Balance Sheet and Capital Highlights
in thousands of GEL Mar-23 Dec-22 Change QoQ Mar-22 Change YoY
Total Assets 27,189,182 29,032,176 -6.3% 25,056,340 8.5%
Gross Loans 18,321,341 18,204,971 0.6% 17,320,213 5.8%
Customer Deposits 17,297,630 18,036,533 -4.1% 15,081,429 14.7%
Total Equity 4,238,958 3,965,950 6.9% 3,642,420 16.4%
CET 1 Capital (Basel III)* 3,667,479 3,835,846 -4.4% n/a n/a
Tier 1 Capital (Basel III)* 4,179,559 4,376,246 -4.5% n/a n/a
Total Capital (Basel III)* 4,601,884 4,784,099 -3.8% n/a n/a
Risk Weighted Assets (Basel III)* 20,767,052 21,219,008 -2.1% n/a n/a
* Numbers are calculated per the new IFRS methodology. The numbers as of
31-Dec-2022 are pro forma.
Key Ratios 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
ROE 25.2% 22.3% 2.9 pp 26.0% -0.8 pp
Bank's standalone ROE 23.0% 19.6% 3.4 pp 25.6% -2.6 pp
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7 (#_ftn7)
ROA 3.6% 3.1% 0.5 pp 3.7% -0.1 pp
Bank's standalone ROA(7) 3.6% 3.0% 0.6 pp 3.9% -0.3 pp
NIM 6.4% 6.3% 0.1 pp 5.6% 0.8 pp
Cost to income 34.3% 33.2% 1.1 pp 36.6% -2.3 pp
Bank's standalone cost to income(7) 28.8% 28.5% 0.3 pp 28.7% 0.1 pp
Cost of risk 1.1% 0.6% 0.5 pp 0.3% 0.8 pp
NPL to gross loans 2.2% 2.2% 0.0 pp 2.4% -0.2 pp
NPL provision coverage ratio 92.9% 93.7% -0.8 pp 96.0% -3.1 pp
Total NPL coverage ratio 154.8% 155.6% -0.8 pp 167.9% -13.1 pp
Leverage (Times) 6.4x 7.3x -0.9x 6.9x -0.5x
CET 1 CAR (Basel III)* 17.7% 18.1% -0.4 pp n/a n/a
Tier 1 CAR (Basel III)* 20.1% 20.6% -0.5 pp n/a n/a
Total CAR (Basel III)* 22.2% 22.5% -0.3 pp n/a n/a
* Ratios are calculated per the new IFRS methodology. The ratios as of 4Q 2022
are pro forma.
Net Interest Income
In 1Q 2023, net interest income amounted to GEL 366.8 million, up by 27.1% and
2.6% on a YoY and QoQ basis, respectively.
The YoY rise in interest income of GEL 144.4 million, or 27.4%, was mostly
attributable to an increase in interest income from loans related to a rise in
the respective yield by 1.6 pp, as well as an increase in the loan portfolio
of GEL 1,001.1 million, or 5.8%.
The QoQ increase in interest income of GEL 27.2 million, or 4.2%, was mainly
related to an increase in interest income from loans related to a 0.3 pp rise
in the respective loan yield, as well as an increase in the loan portfolio of
GEL 116.4 million, or 0.6%. Another contributor to the interest income was the
increased portfolio of investment securities as well as increased yield.
Interest expense increased by GEL 66.2 million, or 27.7%, on a YoY basis,
mainly related to an increase in the deposit portfolio of GEL 2,216.2 million,
or 14.7%, and a 1.2 pp growth in deposit costs.
On a QoQ basis, interest expense increased by GEL 17.8 million, or 6.2%,
primarily driven by the increased average portfolio in 1Q 2023 compared to 4Q
2022, as well as higher deposit rates in up by 0.6 pp in 1Q.
In 1Q 2023, our NIM stood at 6.4%, up by 0.8 pp and 0.1 pp on YoY and QoQ
basis, respectively.
In thousands of GEL 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Interest income 672,150 644,981 4.2% 527,743 27.4%
Interest expense* (305,359) (287,535) 6.2% (239,124) 27.7%
Net interest income 366,791 357,446 2.6% 288,619 27.1%
NIM 6.4% 6.3% 0.1 pp 5.6% 0.8 pp
* Interest expense includes net interest gains from currency swaps
Non-Interest Income
In 1Q 2023, total non-interest income increased by 33.2% on a YoY basis and
decreased by 33.0% on a QoQ basis, amounting to GEL 165.4 million.
Net fee and commission income increased by an excellent 40.3% YoY and
decreased by 3.0% on a QoQ basis. The YoY increase was mainly related to
increased payments transactions, while the quarterly decrease was related to
the seasonally low activity in 1Q 2023. Importantly, our Uzbek operations
contributed around 18% to the Group net fee & commission income.
In 1Q 2023, net gains from FX operations increased by 26.6% on a YoY basis,
while they decreased on a QoQ basis. The annual increase was related to a high
volume of transactions and a wider spread, while the quarterly decrease was
related to the normalisation of the high base in 4Q 2022.
Net insurance profit in 1Q 2023 increased by 45.7% YoY, while it decreased by
24.3% on a QoQ basis. The annual increase in net insurance premium was mainly
related to business growth, while the quarterly decrease was mainly driven by
increased losses and in motor insurance products, caused by the inflationary
effect on repair costs.
In thousands of GEL 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Non-interest income
Net fee and commission income 92,438 95,332 -3.0% 65,890 40.3%
Net gains from currency derivatives, foreign currency operations and 60,601 138,777 -56.3% 47,857 26.6%
translation
Net insurance premium earned after claims and acquisition costs 8 (#_ftn8) 6,218 8,218 -24.3% 4,267 45.7%
Other operating income 6,191 4,459 38.8% 6,159 0.5%
Total other non-interest income 165,448 246,786 -33.0% 124,173 33.2%
Credit Loss Allowance
Credit loss allowance for loans in 1Q 2023 amounted to GEL 50.0 million. In 1Q
2023, cost of risk was within our normalised range of 1% for Georgian
operations, resulting in 1.1% at the Group level.
In thousands of GEL 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Credit loss (allowance)/recovery for loans to customers (50,040) (27,002) 85.3% (11,497) NMF
Credit loss allowance for other transactions (3,128) (6,052) -48.3% (2,239) 39.7%
Total credit loss allowance (53,168) (33,054) 60.9% (13,736) NMF
Operating profit after expected credit losses and non-financial asset 479,071 571,178 -16.1% 399,056 20.1%
impairment losses
Cost of risk 1.1% 0.6% 0.5 pp 0.3% 0.8 pp
Operating Expenses
In 1Q 2023, our operating expenses expanded by 21.1% on a YoY basis and
decreased by 8.8% on a QoQ basis.
The YoY increase was mainly driven by an overall expansion of business, while
the QoQ decrease was largely attributable to the seasonally high base in 4Q
2022.
Our cost to income ratio amounted to 34.3%, while the Bank's standalone cost
to income stood at 28.8%.
In thousands of GEL 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Operating expenses
Staff costs (103,426) (103,764) -0.3% (86,159) 20.0%
(Allowance)/recovery of provision for liabilities and charges (71) (140) -49.3% (64) 10.9%
Depreciation and amortisation (28,361) (27,181) 4.3% (23,011) 23.2%
Administrative and other operating expenses (50,922) (69,410) -26.6% (41,716) 22.1%
Total operating expenses (182,780) (200,495) -8.8% (150,950) 21.1%
Cost to income 34.3% 33.2% 1.1 pp 36.6% -2.3 pp
Bank's standalone cost to income 9 (#_ftn9) 28.8% 28.5% 0.3 pp 28.7% 0.1 pp
Net Profit
In 1Q 2023, our income tax expenses increased on a YoY and decreased on a QoQ
basis and amounted to GEL 41.3 million. The YoY increase was related to the
increased tax rate due to changes in the taxation model in Georgia, as well as
increased profit for the period, while the QoQ decrease was related to a
one-off income tax expense in 4Q 2022, in the amount of GEL 112.9 million.
Our net profit increased by 13.8% and 13.9% on a YoY and QoQ basis,
respectively and amounted GEL 255 million. Without the one-off tax charge
mentioned above, net profit would have decreased by 24.3% on a QoQ basis.
As a result, in 1Q 2023 our ROE stood at 25.2%, while our ROA reached 3.6%.
In thousands of GEL 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Profit before tax 296,291 370,683 -20.1% 248,106 19.4%
Income tax expense (41,331) (146,909) -71.9% (24,125) 71.3%
Profit for the period 254,960 223,774 13.9% 223,981 13.8%
ROE 25.2% 22.3% 2.9 pp 26.0% -0.8 pp
Bank's standalone ROE(9) 23.0% 19.6% 3.4 pp 25.6% -2.6 pp
ROA 3.6% 3.1% 0.5 pp 3.7% -0.1 pp
Bank's standalone ROA(9) 3.6% 3.0% 0.6 pp 3.9% -0.3 pp
Funding and Liquidity
As of 31 March 2023, the total liquidity coverage ratio (LCR), as defined by
the NBG per the new IFRS methodology, was 135.7%, above the 100% limit, while
the LCR in GEL and FC stood at 164.2% and 116.5%, accordingly, above the
respective limits of 75% and 100%.
Over the same period, the net stable funding ratio (NSFR), as defined by the
NBG per the new IFRS methodology, stood at 131.3%, compared to the regulatory
limit of 100%.
Mar-23 Dec-22 Change QoQ
Minimum net stable funding ratio, as defined by the NBG 100.0% 100.0% 0.0 pp
Net stable funding ratio as defined by the NBG* 131.3% 139.7% -8.4 pp
Net loans to deposits + IFI funding 92.9% 88.5% 4.4 pp
Leverage (Times) 6.4x 7.3x -0.9x
Minimum total liquidity coverage ratio, as defined by the NBG 100.0% 100.0% 0.0 pp
Minimum LCR in GEL, as defined by the NBG 75% 75.0% 0.0 pp
Minimum LCR in FC, as defined by the NBG 100.0% 100.0% 0.0 pp
Total liquidity coverage ratio, as defined by the NBG* 135.7% 147.9% -12.2 pp
LCR in GEL, as defined by the NBG* 164.2% 164.4% -0.2 pp
LCR in FC, as defined by the NBG* 116.5% 137.9% -21.4 pp
* Ratios are calculated per the new IFRS methodology. The ratios as of
31-Dec-2022 are pro forma.
Regulatory Capital
As of 31 March 2023, our CET1, Tier 1 and Total Capital ratios stood at 17.7%,
20.1% and 22.2%, respectively, and remained above the minimum regulatory
requirements by 3.4 pp, 3.4 pp and 2.5 pp, accordingly, per the new IFRS
methodology.
The QoQ decrease of our capital adequacy ratios was mainly driven by accrual
of pending dividends and group investments, which were partly offset by GEL
appreciation and net profit generation.
In thousands of GEL Mar-23 Dec-22 Change QoQ
CET 1 Capital 3,667,479 3,835,846 -4.4%
Tier 1 Capital 4,179,559 4,376,246 -4.5%
Total Capital 4,601,884 4,784,099 -3.8%
Total Risk-weighted Exposures 20,767,052 21,219,008 -2.1%
Minimum CET 1 ratio 14.3% 14.0% 0.3 pp
CET 1 Capital adequacy ratio 17.7% 18.1% -0.4 pp
Minimum Tier 1 ratio 16.7% 16.2% 0.5 pp
Tier 1 Capital adequacy ratio 20.1% 20.6% -0.5 pp
Minimum total capital adequacy ratio 19.7% 19.6% 0.1 pp
Total Capital adequacy ratio 22.2% 22.5% -0.3 pp
Ratios and numbers are calculated per the new IFRS methodology. The ratios and
numbers as of 31-Dec-2022 are pro forma.
Loan Portfolio
As of 31 March 2022, the gross loan portfolio reached GEL 18,321.3 million, up
by 5.8% YoY and 0.6% QoQ, or up by 17.3% YoY and 3.0% QoQ on a constant
currency basis.
The proportion of gross loans denominated in foreign currency decreased by 4.9
pp YoY and increased by 0.7 pp on a YoY and QoQ basis and accounted for 48.9%
of total loans. On a constant currency basis, the proportion of gross loans
denominated in foreign currency increased by 0.1 pp on a YoY basis and stood
at 53.9%.
In thousands of GEL Mar-23 Dec-22 Change QoQ Mar-22 Change YoY
Loans and advances to customers
Retail 7,159,209 7,113,087 0.6% 6,582,652 8.8%
Retail loans GEL 4,421,734 4,374,224 1.1% 3,763,609 17.5%
Retail loans FC 2,737,475 2,738,863 -0.1% 2,819,043 -2.9%
CIB 6,493,610 6,282,469 3.4% 6,461,554 0.5%
CIB loans GEL 2,371,886 2,435,737 -2.6% 2,040,940 16.2%
CIB loans FC 4,121,724 3,846,732 7.1% 4,420,614 -6.8%
MSME 4,668,522 4,809,415 -2.9% 4,276,007 9.2%
MSME loans GEL 2,577,034 2,627,760 -1.9% 2,191,308 17.6%
MSME loans FC 2,091,488 2,181,655 -4.1% 2,084,699 0.3%
Total loans and advances to customers 18,321,341 18,204,971 0.6% 17,320,213 5.8%
1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Loan yields 12.4% 12.1% 0.3 pp 10.8% 1.6 pp
Loan yields GEL 14.9% 15.1% -0.2 pp 15.5% -0.6 pp
Loan yields FC 9.7% 9.0% 0.7 pp 6.9% 2.8 pp
Retail Loan Yields 14.3% 14.0% 0.3 pp 12.6% 1.7 pp
Retail loan yields GEL 15.5% 15.8% -0.3 pp 16.5% -1.0 pp
Retail loan yields FC 12.3% 11.1% 1.2 pp 7.6% 4.7 pp
CIB Loan Yields 11.0% 10.6% 0.4 pp 9.2% 1.8 pp
CIB loan yields GEL 13.9% 14.0% -0.1 pp 14.1% -0.2 pp
CIB loan yields FC 9.2% 8.6% 0.6 pp 6.9% 2.3 pp
MSME Loan Yields 11.5% 11.4% 0.1 pp 10.6% 0.9 pp
MSME loan yields GEL 14.9% 15.0% -0.1 pp 15.1% -0.2 pp
MSME loan yields FC 7.3% 7.0% 0.3 pp 6.0% 1.3 pp
Loan Portfolio Quality
PAR 30 ratio increased on a QoQ and YoY basis. The increase was mainly
attributable to two exposures in the CIB segment, one of which was resolved as
of April 2023, while the other of which is expected to be resolved in May
2023.
Total non-performing loans (NPL) remained stable on a QoQ basis and improved
on a YoY basis, across all segments. In MSME, the main driver of YoY
improvement was SME sub-segment.
Par 30 Mar-23 Dec-22 Change QoQ Mar-22 Change YoY
Retail 2.6% 2.6% 0.0 pp 2.3% 0.3 pp
CIB 1.9% 0.5% 1.4 pp 1.1% 0.8 pp
MSME 3.4% 3.1% 0.3 pp 3.9% -0.5 pp
Total Loans 2.5% 2.0% 0.5 pp 2.3% 0.2 pp
Non-performing Loans Mar-23 Dec-22 Change QoQ Mar-22 Change YoY
Retail 2.1% 2.2% -0.1 pp 2.2% -0.1 pp
CIB 1.4% 1.3% 0.1 pp 1.6% -0.2 pp
MSME 3.4% 3.4% 0.0 pp 4.1% -0.7 pp
Total Loans 2.2% 2.2% 0.0 pp 2.4% -0.2 pp
NPL Coverage Mar-23 Dec-22 Mar-22
Provision Coverage Total Provision Coverage Total Provision Coverage Total
Coverage* Coverage* Coverage*
Retail 147.1% 190.9% 149.4% 191.8% 169.3% 230.1%
CIB 51.4% 114.6% 57.9% 119.9% 47.5% 115.0%
MSME 66.1% 143.8% 58.8% 139.2% 64.3% 147.7%
Total 92.9% 154.8% 93.7% 155.6% 96.0% 167.9%
* Total NPL coverage ratio includes provision and collateral coverage.
Cost of Risk
In 1Q 2023, cost of risk was within our normalised range of 1% for Georgian
operations, resulting in 1.1% at the Group level.
The increase in MSME CoR was related to the micro unsecured loan portfolio,
while the Uzbek portfolio contribution to the total retail cost of risk was
0.2 pp.
Cost of risk 1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Retail 1.6% 0.9% 0.7 pp 0.6% 1.0 pp
CIB -0.1% 0.1% -0.2 pp -0.1% 0.0 pp
MSME 2.0% 0.9% 1.1 pp 0.3% 1.7 pp
Total 1.1% 0.6% 0.5 pp 0.3% 0.8 pp
Deposits Portfolio
The total deposits portfolio amounted to GEL 17,297.6 million, up by 14.7% YoY
and down by 4.1% QoQ, or up by 28.1% YoY and down by 1.4% QoQ on a constant
currency basis.
The proportion of deposits denominated in a foreign currency decreased by 10.7
pp and 1.1 pp on a YoY and QoQ basis, respectively, and stood at 53.7% of
total deposits. On a constant currency basis, the proportion of deposits
decreased by 5.8 pp YoY and accounted for 58.6% of total deposits.
In thousands of GEL Mar-23 Dec-22 Change QoQ Mar-22 Change YoY
Customer Accounts
Retail 6,823,290 6,866,003 -0.6% 5,618,872 21.4%
Retail deposits GEL 1,941,188 1,905,377 1.9% 1,461,142 32.9%
Retail deposits FC 4,882,102 4,960,626 -1.6% 4,157,730 17.4%
CIB 8,273,622 9,001,120 -8.1% 7,567,725 9.3%
CIB deposits GEL 4,630,163 4,931,741 -6.1% 2,844,528 62.8%
CIB deposits FC 3,643,459 4,069,379 -10.5% 4,723,197 -22.9%
MSME 1,591,435 1,756,968 -9.4% 1,487,665 7.0%
MSME deposits GEL 824,807 902,611 -8.6% 657,057 25.5%
MSME deposits FC 766,628 854,357 -10.3% 830,608 -7.7%
Total Customer Accounts* 17,297,630 18,036,533 -4.1% 15,081,429 14.7%
* Total deposit portfolio includes Ministry of Finance deposits in the amount
of GEL 609 million, GEL 412 million and GEL 407 million as of 31 Mar 2023, 31
Dec 2022 and 31 Mar 2022, respectively.
1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
Deposit rates 4.9% 4.3% 0.6 pp 3.7% 1.2 pp
Deposit rates GEL 8.8% 7.9% 0.9 pp 7.5% 1.3 pp
Deposit rates FC 1.6% 1.6% 0.0 pp 1.5% 0.1 pp
Retail Deposit Yields 3.7% 3.3% 0.4 pp 2.7% 1.0 pp
Retail deposit rates GEL 7.2% 5.7% 1.5 pp 5.3% 1.9 pp
Retail deposit rates FC 2.4% 2.4% 0.0 pp 1.8% 0.6 pp
CIB Deposit Yields 6.1% 5.2% 0.9 pp 4.5% 1.6 pp
CIB deposit rates GEL 10.3% 9.6% 0.7 pp 9.4% 0.9 pp
CIB deposit rates FC 0.9% 1.0% -0.1 pp 1.4% -0.5 pp
MSME Deposit Yields 0.7% 0.7% 0.0 pp 0.7% 0.0 pp
MSME deposit rates GEL 1.2% 1.2% 0.0 pp 1.1% 0.1 pp
MSME deposit rates FC 0.2% 0.2% 0.0 pp 0.2% 0.0 pp
Additional Disclosures
1) TBC Bank - Background
TBC Bank Group PLC ("TBC PLC") is a public limited company registered in
England and Wales. TBC PLC is the parent company of JSC TBC Bank ("TBC Bank")
and a group of companies that principally operate in Georgia in the financial
sector. TBC PLC also offers non-financial services via TNET, the largest
digital ecosystem in Georgia. Since 2019, TBC PLC has expanded its operations
into Uzbekistan by operating fast growing retail digital financial services in
the country. 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.
TBC Bank is the largest banking group in Georgia, where 97.3% of its business
is concentrated, with a 37.8% market share by total assets. It offers retail,
CIB and MSME banking nationwide.
2) Consolidated Financial Statements and Key Ratios 1Q 2023
Consolidated Balance Sheet
In thousands of GEL Mar-23 Dec-22 Mar-22
Cash and cash equivalents 2,188,553 3,860,813 1,962,460
Due from other banks 38,738 41,854 58,348
Mandatory cash balances with National Bank of Georgia and Central Bank of 1,817,145 2,049,985 2,243,280
Uzbekistan
Loans and advances to customers 17,953,053 17,832,606 16,917,292
Investment securities measured at fair value through other comprehensive 3,047,598 2,885,088 1,898,005
income
Bonds carried at amortised cost 30,967 37,392 48,565
Repurchase receivables - 267,495 -
Finance lease receivables 316,247 312,334 254,087
Investment properties 21,080 22,154 20,396
Current income tax prepayment 856 430 817
Deferred income tax asset 13,867 16,705 14,368
Other financial assets 301,697 273,805 330,750
Other assets 432,978 429,121 429,996
Premises and equipment 448,041 442,886 406,855
Right of use assets 112,977 112,625 76,251
Intangible assets 401,326 383,198 331,618
Goodwill 59,964 59,964 59,964
Investments in associates 4,095 3,721 3,288
TOTAL ASSETS 27,189,182 29,032,176 25,056,340
LIABILITIES
Due to credit institutions 2,596,880 3,940,660 3,353,903
Customer accounts 17,297,630 18,036,533 15,081,429
Lease liabilities 79,989 84,770 71,891
Other financial liabilities 326,683 275,781 136,479
Current income tax liability 6,659 1,647 4,563
Debt Securities in issue 1,324,815 1,361,573 1,737,192
Deferred income tax liability 114,300 112,877 9,424
Provisions for liabilities and charges 35,503 34,988 26,019
Other liabilities 119,282 149,920 106,836
Redemption liability 464,805 477,329 254,340
Subordinated debt 583,678 590,148 631,844
TOTAL LIABILITIES 22,950,224 25,066,226 21,413,920
EQUITY
Share capital 1,676 1,681 1,682
Shares held by trust (37,239) (7,900) (7,900)
Treasury shares - (25,541) -
Share premium 261,719 269,938 283,430
Retained earnings 3,993,387 3,744,727 3,230,348
Merger reserve 402,862 402,862 402,862
Share based payment reserve (2,815) 1,090 (18,362)
Fair value reserve for investment securities measured at fair value through 13,503 5,467 (24,006)
other comprehensive income
Cumulative currency translation reserve (41,024) (35,858) (15,276)
Other reserve (464,805) (477,329) (254,340)
Net assets attributable to owners 4,127,264 3,879,137 3,598,438
Non-controlling interest 111,694 86,813 43,982
TOTAL EQUITY 4,238,958 3,965,950 3,642,420
TOTAL LIABILITIES AND EQUITY 27,189,182 29,032,176 25,056,340
Consolidated Income Statement and Other Comprehensive Income
In thousands of GEL 1Q'23 4Q'22 1Q'22
Interest income 672,150 644,981 527,743
Interest expense* (305,359) (287,535) (239,124)
Net interest income 366,791 357,446 288,619
Fee and commission income 151,801 166,042 112,893
Fee and commission expense (59,363) (70,710) (47,003)
Net fee and commission income 92,438 95,332 65,890
Net insurance premiums earned 24,099 25,088 20,215
Net insurance claims incurred and agents' commissions (17,881) (16,870) (15,948)
Net insurance premium earned after claims and acquisition costs 6,218 8,218 4,267
Net gains from currency derivatives, foreign currency operations and 60,601 138,777 47,857
translation
Net gains from disposal of investment securities measured at fair value 2,012 926 2,117
through other comprehensive income
Other operating income 3,905 3,388 4,097
Share of profit of associates 274 145 (55)
Other operating non-interest income 66,792 143,236 54,016
Credit loss (allowance)/recovery for loans to customers (50,040) (27,002) (11,497)
Credit loss recovery/(allowance) for finance lease receivable (1,073) 558 (1,445)
Credit loss (allowance)/recovery for performance guarantees and credit related 337 (1,217) 589
commitments
Credit loss allowance for other financial assets (1,954) (4,416) (1,690)
Credit loss (allowance)/recovery for financial assets measured at fair value (296) (521) 85
through other comprehensive income
Net impairment of non-financial assets (142) (456) 222
Operating income after expected credit and non-financial asset impairment 479,071 571,178 399,056
losses
Losses from modifications of financial instruments - - -
Staff costs (103,426) (103,764) (86,159)
Depreciation and amortisation (28,361) (27,181) (23,011)
(Allowance)/recovery of provision for liabilities and charges (71) (140) (64)
Administrative and other operating expenses (50,922) (69,410) (41,716)
Operating expenses (182,780) (200,495) (150,950)
Profit before tax 296,291 370,683 248,106
Income tax expense (41,331) (146,909) (24,125)
Profit for the period 254,960 223,774 223,981
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve 8,036 12,147 (13,150)
Exchange differences on translation to presentation currency (5,166) (17,919) 130
Other comprehensive income for the period 2,870 (5,772) (13,020)
Total comprehensive income for the period 257,830 218,002 210,961
Profit attributable to:
- Shareholders of TBCG 248,668 217,756 224,666
- Non-controlling interest 6,292 6,018 (685)
Profit for the period 254,960 223,774 223,981
Total comprehensive income is attributable to:
- Shareholders of TBCG 251,538 211,984 211,646
- Non-controlling interest 6,292 6,018 (685)
Total comprehensive income for the period 257,830 218,002 210,961
* Interest expense includes net interest gains from currency swaps
Key Ratios
Average Balances
The average balances included in this document are calculated as the average
of the relevant monthly balances as of the end of each month. 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.
Ratios (based on monthly averages, where applicable) 1Q'23 4Q'22 1Q'22
Profitability ratios:
ROE(1) 25.2% 22.3% 26.0%
ROA(2) 3.6% 3.1% 3.7%
Cost to income(3) 34.3% 33.2% 36.6%
NIM(4) 6.4% 6.3% 5.6%
Loan yields(5) 12.4% 12.1% 10.8%
Deposit rates(6) 4.9% 4.3% 3.7%
Cost of funding(7) 5.4% 5.0% 4.8%
Asset quality & portfolio concentration:
Cost of risk(9) 1.1% 0.6% 0.3%
PAR 90 to Gross Loans(9) 1.3% 1.2% 1.3%
NPLs to Gross Loans(10) 2.2% 2.2% 2.4%
NPL provision coverage(11) 92.9% 93.7% 96.0%
Total NPL coverage(12) 154.8% 155.6% 167.9%
Credit loss level to Gross Loans(13) 2.0% 2.0% 2.3%
Related Party Loans to Gross Loans(14) 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(15) 6.0% 5.3% 6.7%
Top 20 Borrowers to Total Portfolio(16) 9.0% 8.3% 10.2%
Capital & liquidity positions:
Net Loans to Deposits plus IFI* Funding(17) 92.9% 88.5% 101.4%
Net Stable Funding Ratio** (18) 131.3% 139.7% n/a
Liquidity Coverage Ratio** (19) 135.7% 147.9% n/a
Leverage(20) 6.4x 7.3x 6.9x
CET 1 CAR** (Basel III)(21) 17.7% 18.1% n/a
Tier 1 CAR** (Basel III)(22) 20.1% 20.6% n/a
Total 1 CAR** (Basel III)(23) 22.2% 22.5% n/a
* International Financial Institutions
** Ratios are calculated per the new IFRS methodology. The ratios as of
31-Dec-2022 are pro forma.
Ratio definitions
1. Return on average total equity (ROE) equals net profit 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 profit 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 standalone,
based on IFRS.
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 standalone, based on IFRS.
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 standalone, based IFRS.
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 standalone, based on IFRS.
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 standalone, based on IFRS.
Exchange Rates
To calculate the QoQ growth of the Balance Sheet items without the currency
exchange rate effect, we used the US$/GEL exchange rate of 2.7020 as of 31
December 2022. For the calculations of YoY growth without the currency
exchange rate effect, we used the US$/GEL exchange rate of 3.1013 as of 31
March 2022. As of 31 March 2023, the US$/GEL exchange rate equalled 2.5604.
For P&L items growth calculations without currency effect, we used the
average US$/GEL exchange rate for the following periods: 1Q 2023 of 2.6366,4Q
2022 of 2.7339, 1Q 2022 of 3.1136.
3) Segment Definitions
Business Segments
· Corporate - a legal entity/group of affiliated entities with an
annual revenue exceeding GEL 15.0 million or which has been granted facilities
of more than GEL 6.0 million. Some other business customers may also be
assigned to the CIB segment or transferred to the MSME segment on a
discretionary basis. In addition, CIB includes Wealth Management (WM) private
banking services to high-net-worth individuals with a threshold of US$ 250,000
on assets under management (AUM), as well as on a discretionary basis;
· Retail - Non-business individual customers including the
fully-digital bank, Space. The business is broadly divided into two segments:
o Mass retail; and
o Affluent retail (customers eligible for affluent retail have >3,000 GEL
in monthly income).
Since 2021, individual WM and VIP customers have been managed in the CIB
directory;
· MSME - Business customers (Legal entities and private individual
customers that generate income from business activities), 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.
4) Segments Profitability 1Q 2023
Income Statement by Segment
1Q'23 Retail MSME CIB Corp. Centre Total
Interest income 251,042 132,560 176,123 112,425 672,150
Interest expense (62,894) (2,769) (126,980) (112,716) (305,359)
Net transfer pricing (50,002) (56,411) 76,516 29,897 -
Net interest income 138,146 73,380 125,659 29,606 366,791
Fee and commission income 99,209 7,707 22,163 22,722 151,801
Fee and commission expense (46,439) (4,000) (3,229) (5,695) (59,363)
Net fee and commission income 52,770 3,707 18,934 17,027 92,438
Insurance profit - - - 6,218 6,218
Net gains from currency derivatives, foreign currency operations and 19,936 11,818 24,285 4,562 60,601
translation
Net gains from disposal of investment securities measured at fair value - - - 2,012 2,012
through other comprehensive income
Other operating income 1,601 253 273 1,778 3,905
Share of profit of associates - - 1 273 274
Other operating non-interest income and insurance profit 21,537 12,071 24,559 14,843 73,010
Credit loss (allowance)/recovery for loans to customers (28,212) (23,571) 1,743 - (50,040)
Credit loss allowance for finance leases receivables - - - (1,073) (1,073)
Credit loss recovery for performance guarantees and credit related commitments 113 182 42 - 337
Credit loss allowance for other financial assets (73) - (1,170) (711) (1,954)
Credit loss allowance for financial assets measured at fair value through - - (190) (106) (296)
other comprehensive income
Net recovery/(impairment) of non-financial assets 183 103 25 (453) (142)
Operating profit after expected credit and non-financial asset impairment 184,464 65,872 169,602 59,133 479,071
losses
Staff costs (44,934) (19,414) (15,518) (23,560) (103,426)
Depreciation and amortisation (15,767) (4,662) (2,924) (5,008) (28,361)
Provision for liabilities and charges - - - (71) (71)
Administrative and other operating expenses (21,593) (6,939) (4,066) (18,324) (50,922)
Operating expenses (82,294) (31,015) (22,508) (46,963) (182,780)
Profit before tax 102,170 34,857 147,094 12,170 296,291
Income tax expense (11,179) (5,059) (20,698) (4,395) (41,331)
Profit for the period 90,991 29,798 126,396 7,775 254,960
5) TBC Bank UZ
Balance Sheet
In thousands of GEL Mar-23 Dec-22 Mar-22
Cash and cash equivalents 139,530 54,083 18,921
Due from other banks 2,825 2,439 1,922
Gross loans and advances to customers 407,993 347,695 143,640
Provisions for loans impairment (15,510) (12,532) (4,069)
Investment securities measured at fair value through other comprehensive 22,650 33,632 47,019
income
Finance lease receivables 24,075 23,448 13,647
Deferred income tax asset 13,423 14,589 12,252
Other assets 10,705 6,487 7,227
Premises and equipment 10,272 11,732 8,124
Right of use assets 6,061 7,442 10,155
Intangible assets 21,149 18,443 22,095
Goodwill 1,912 1,912 -
TOTAL ASSETS 645,085 509,370 280,933
LIABILITIES
Due to banks - 3,489 5,569
Customer accounts 383,713 330,976 168,669
Borrowed funds 19,877 6,828 11,075
Lease liabilities 6,736 8,214 8,100
Other financial liabilities 598 273 1,335
Other liabilities 19,222 11,502 5,699
TOTAL LIABILITIES 430,146 361,282 200,447
EQUITY
Share capital 276,694 213,427 131,940
Share premium 27,860 18,416 7,424
Share based payment reserve - - 1,525
Retained earnings (65,608) (66,714) (56,496)
Other reserve (24,007) (17,041) (3,907)
Profit for the year - - -
TOTAL EQUITY 214,939 148,088 80,486
TOTAL LIABILITIES AND EQUITY 645,085 509,370 280,933
Income Statement
In thousands of GEL 1Q'23 4Q'22 1Q'22
Interest income 46,266 39,193 16,881
Interest expense (23,048) (21,344) (12,298)
Net interest income 23,218 17,849 4,583
Fee and commission income 5,309 1,207 483
Fee and commission expense (5,063) (513) (1,762)
Net fee and commission income 246 694 (1,279)
Net gains/(losses) from currency derivatives, foreign currency operations and 66 (18) (451)
translation
Other operating income 27 - -
Other operating non-interest income 93 (18) (451)
Credit loss (allowance)/recovery for loans to customers (5,241) (5,880) (1,167)
Other credit loss (allowance)/recovery (430) (1,634) (198)
Operating income after expected credit and non-financial asset impairment 17,886 11,011 1,488
losses
Staff costs (6,773) (5,971) (6,901)
Depreciation and amortization (1,862) (1,970) (1,737)
Administrative and other operating expenses (7,835) (5,614) (5,555)
Operating expenses (16,470) (13,555) (14,193)
Profit before tax 1,416 (2,544) (12,705)
Income tax (expense)/credit (311) 1,457 2,380
Profit for the period 1,105 (1,087) (10,325)
6) Market shares 10 (#_ftn10) in Georgia
Market shares 31-Mar-2023 31-Dec-2022 Change YoY 31-Mar-2022 Change YoY
Total loans 39.1% 39.5% -0.4 pp 38.9% 0.2 pp
Individual loans 38.4% 38.4% 0 pp 38.6% -0.2 pp
Legal entities loans 39.8% 40.8% -1 pp 39.3% 0.5 pp
Total deposits 39.3% 40.3% -1 pp 40.3% -1.0 pp
Individual deposits 37.7% 38.1% -0.4 pp 39.6% -1.9 pp
Legal entities deposits 41.1% 42.9% -1.8 pp 41.0% 0.1 pp
7) Subsidiaries of TBC Bank Group PLC 11 (#_ftn11)
Ownership / voting Country Year of incorporation Industry Total Assets
(after elimination)
Subsidiary % as of Amount % in TBC Group
31-Mar 2023
GEL'000
JSC TBC Bank 99.9% Georgia 1992 Banking 25,832,361 95.01%
United Financial Corporation JSC 99.5% Georgia 2001 Card processing 26,224 0.10%
TBC Capital LLC 100.0% Georgia 1999 Brokerage 5,449 0.02%
TBC Leasing JSC 100.0% Georgia 2003 Leasing 375,557 1.38%
TBC Kredit LLC 100.0% Azerbaijan 1999 Non-banking credit institution 19,783 0.07%
TBC Pay LLC 100.0% Georgia 2008 Processing 42,966 0.16%
Index LLC 100.0% Georgia 2009 Real estate management 153 0.00%
TBC Invest LLC 100.0% Israel 2011 PR and marketing 331 0.00%
TBC Asset management LLC 100.0% Georgia 2021 Asset Management 193 0.00%
JSC TBC Insurance 100.0% Georgia 2014 Insurance 119,415 0.44%
Redmed LLC 100.0% Georgia 2019 E-commerce 1,792 0.01%
T NET LLC 100.0% Georgia 2019 Asset Management 35,459 0.13%
Online Tickets LLC 100.0% Georgia 2015 Software Services 5,912 0.02%
TKT UZ 100.0% Uzbekistan 2019 Retail Trade 46 0.00%
Artarea.ge LLC 100.0% Georgia 2012 PR and marketing 52 0.00%
Marjanishvili 7 LLC 100.0% Georgia 2020 Food and Beverage 798 0.00%
Space JSC 100.0% Georgia 2021 Software Services 0 0.00%
Space International JSC 100.0% Georgia 2021 Software Services 56,376 0.21%
TBC Group Support LLC 100.0% Georgia 2020 Risk Monitoring 40 0.00%
Inspired LLC 51.0% Uzbekistan 2011 Processing 33,795 0.12%
TBC Bank JSC UZ 60.2% Uzbekistan 2020 Banking 606,082 2.23%
TBC Fin Service LLC 100.0% Uzbekistan 2019 Retail Leasing 26,398 0.10%
.
8) Impact of Changed Accounting Treatment for Option Contracts
TBC Bank Group entered into put/call arrangements in April 2019 for the
remaining 49% of Payme (RNS #7827V
(https://otp.tools.investis.com/clients/uk/tbc_bank/rns/regulatory-story.aspx?cid=2168&newsid=1513163)
) and in September 2021 for the EBRD/IFCs 40% stake in TBC UZ Bank (RNS #5753N
(https://otp.tools.investis.com/clients/uk/tbc_bank/rns/regulatory-story.aspx?cid=2168&newsid=1246890)
). The exercise prices are dependent on a set of commercial and financial
parameters. Subsequently, there has been strong growth in the Group's Uzbek
business.
In 4Q 2022, the Group re-assessed the accounting treatment for these options.
Per IAS 32 requirements, in each case the present value of the put option
exercise price should have been recognised as a redemption liability, even if
the put option is out of the money and not expected to be exercised, with a
corresponding effect on equity from when the option was entered into - not
only at a potential option exercise date. Such a requirement arises because
the put option agreement was signed with holders of the non-controlling
interest (NCI) of the subsidiary entity.
The Group has therefore re-stated previous year balances by recognising a
redemption liability for put options and the equal and opposite effect on
other reserves in equity. Should the Group consequently purchase the shares of
the NCI shareholders the additional impact on equity should be limited to any
potential subsequent remeasurement of the redemption liability, as far as
other reserves in equity have already been recognised. Moreover, the
recognition of the redemption liability has no direct effect on the profit and
loss statement or regulatory capital ratios of TBC Bank.
In 1Q 2022, the Group recognised GEL 254 million as a redemption liability and
the equal and opposite effect on other reserves in equity.
1Q'22
Reported Restated
ROE 24.3% 26.0%
Leverage (times) 6.4x 6.9x
7) 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 25.0% in its total gross written premium (GWP) as of 31
March 2023.
The company is represented in both the non-health and health insurance
segments. In 2022, TBC Insurance was well regarded by its customers with an
NPS 12 (#_ftn12) of 73.5% - the best score among its peers.
In 1Q 2023, net profit amounted GEL 4,074 thousand, up by 59.1% YoY, or down
by 13.0% on a QoQ basis. The YoY increase in net profit was mainly driven by
overall business growth., while the QoQ decrease in net profit was driven by
the increased loss ratio on motor products, caused by the inflationary effect
on repair costs.
1Q'23 4Q'22 Change QoQ 1Q'22 Change YoY
In thousands of GEL
Gross written premium 44,420 38,190 16.3% 34,138 30.1%
Net earned premium 31,025 31,913 -2.8% 25,856 20.0%
Net profit 4,074 4,681 -13.0% 2,560 59.1%
Net combined ratio 93.50% 89.60% 3.9 pp 96.50% -3.0 pp
Note: IFRS standalone data
Market shares 13 (#_ftn13) 1Q'23 4Q'22 1Q'22
Retail non-health segment 39.4% 39.7% 40.4%
Total non-health 22.6% 26.9% 25.1%
Corporate health insurance 15.7% 13.7% 10.1%
9) Expanding Our Payments Business in Uzbekistan
Mar'23 Dec'22 QoQ Dec'21 YoY
Monthly active users (MAU),,mln 3.1 2.5 24% 1.6 56%
Active merchants 14 (#_ftn14) (GEL, thousands) 3.4 3.6 -6% 2.9 24%
Payments volume 15 (#_ftn15) (GEL, bln) 2,209 2,304 -4% 1,448 59%
10) Uzbek Financials
in millions of GEL
TBC UZ Bank 1Q'23 4Q'22 QoQ 1Q'22 YoY
Operating income 23.6 18.5 28% 2.9 714%
Net profit 1.1 (1.1) -200% (10.3) -111%
Payme 1Q'23 4Q'22 QoQ 1Q'22 YoY
Operating income 16.5 17.6 -6% 9.5 74%
Net profit 11.6 12.8 -9% 5.8 100%
Combined financials for Uzbek businesses 1Q'23 4Q'22 QoQ 1Q'22 YoY
Operating income 40.1 36.1 11% 12.4 223%
Net profit 12.7 11.7 9% (4.5) -382%
Combined financial metric for Uzbek businesses 1Q'23 4Q'22 QoQ
ROE (%) 28.1% 27.0% 1.1 pp
Financial metrics for TBC UZ Bank 1Q'23 4Q'22 QoQ
NIM (%) 19.7% 17.2% 2.5 pp
Cost of risk (%) 5.6% 7.6% 2.0 pp
11) Loan Book Breakdown by Stages According IFRS 9
Total (GEL million) 31-Mar-23 31-Dec-22 31-Mar-22
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 16,470 0.6% 16,395 0.7% 14,977 0.7%
2 1,461 7.1% 1,413 7.0% 1,848 6.1%
3 390 41.8% 397 41.8% 495 37.1%
Total 18,321 2.0% 18,205 2.0% 17,320 2.3%
CIB (GEL million) 31-Mar-23 31-Dec-22 31-Mar-22
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 5,980 0.3% 5,741 0.3% 5,664 0.4%
2 424 0.2% 458 0.2% 695 0.2%
3 90 30.0% 83 31.3% 103 23.9%
Total 6,494 0.7% 6,282 0.7% 6,462 0.8%
MSME (GEL million) 31-Mar-23 31-Dec-22 31-Mar-22
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 4,147 0.6% 4,328 0.6% 3,714 0.6%
2 354 8.5% 318 7.5% 353 7.2%
3 168 31.1% 163 28.7% 209 30.4%
Total 4,669 2.3% 4,809 2.0% 4,276 2.6%
Retail (GEL million) 31-Mar-23 31-Dec-22 31-Mar-22
Stage Gross LLP rate* Gross LLP rate* Gross LLP rate*
1 6,344 0.9% 6,326 1.0% 5,599 1.1%
2 682 10.7% 637 11.6% 801 10.6%
3 133 63.2% 150 60.9% 183 52.0%
Total 7,159 3.0% 7,113 3.2% 6,583 3.7%
* LLP rate is defined as credit loss allowances divided by gross loans
12) Glossary
Terminology Definition
Digital daily active users (Digital DAU) The number of retail digital users, who logged into our digital channels at
least once per day.
Digital monthly active users (Digital MAU) The number of retail digital users, who logged into our digital channels at
least once a month.
Gross merchandise value (GMV) GMV equals total value of sales over the given period, including auctions
through housing and auto platforms, as well as listing fees.
Lead Lead is a potential client who has expressed interest in the product.
Net combined ratio Net insurance claims plus acquisition costs and administrative expenses
divided by net earned premium.
1 (#_ftnref1) Note: For better presentation purposes, certain financial
numbers are rounded the nearest whole number.
2 (#_ftnref2) Note: For better presentation purposes, certain financial
numbers are rounded the nearest whole number.
(( 3 (#_ftnref3) )) Total non-interest income less net fee and commission
income.
4 (#_ftnref4) Based on data published by the Central Bank of Uzbekistan.
5 (#_ftnref5) Remittances from Russia are adjusted for double counting with
tourism inflows and other similar effects, based on TBC Capital estimates.
6 (#_ftnref6) Other operating non-interest income includes net insurance
premium earned after claims and acquisition costs.
7 (#_ftnref7) For the ratio calculation, all relevant group recurring costs
are allocated to the Bank.
8 (#_ftnref8) 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.
9 (#_ftnref9) For the ratio calculation, all relevant Group recurring costs
are allocated to the Bank.
10 (#_ftnref10) Based on data published by the National Bank of Georgia as
of 31 December 2022.
11 (#_ftnref11) TBC Bank Group PLC became the parent company of JSC TBC Bank
on 10 August 2016.
12 (#_ftnref12) Net Promoter Score (NPS) was measured in January 2023, by
Darti. an independent company.
13 (#_ftnref13) Market shares are based on internal estimates, excluding
border motor third party liability (MTPL) insurance. The source is the
Insurance State Supervision Service of Georgia.
14 (#_ftnref14) Merchants that have conducted at least one transaction
during the month.
15 (#_ftnref15) 99% of all transactions are fee-generating.
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