REG - TBC Bank Group PLC - 3Q and 9M 2023 Financial Results Report
09/11/2023 07:00
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RNS Number : 8302S TBC Bank Group PLC 09 November 2023
TBC BANK GROUP PLC ("TBC Bank")
3Q AND 9M 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
generally accepted U.S. 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.
3Q and 9M 2023 Consolidated Financial Results Conference Call Details
TBC Bank Group PLC ("TBC PLC") published its unaudited consolidated financial
results for the third quarter and nine months of 2023 on Thursday, 9 November
2023 at 7.00 am GMT. The management team will host a conference call on the
day at 2.00 pm GMT to discuss the results.
Please click the link below to join the webinar:
https://tbc.zoom.us/j/94193458741?pwd=VVVnTXgreTJ5KzdsR0o4MEFIdGtlUT09
(https://tbc.zoom.us/j/94193458741?pwd=VVVnTXgreTJ5KzdsR0o4MEFIdGtlUT09%0d)
Webinar ID: 941 9345 8741
Passcode: 083467
Other international numbers are available at:
(https://tbc.zoom.us/u/acVuboaB0) https://tbc.zoom.us/u/ad7INMhaeO
(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
3Q and 9M 2023 Unaudited Consolidated Financial Results Announcement
Interim Management Report
Financial Highlights (#_Toc148988192) (#_Toc148988192)
Operational Highlights (#_Toc148988193) (#_Toc148988193)
Letter from the Chief Executive Officer (#_Toc148988194) (#_Toc148988194)
Economic Overview (#_Toc148988195) (#_Toc148988195)
Unaudited Consolidated Financial Results Overview for 3Q 2023 (#_Toc148988196)
(#_Toc148988196)
Unaudited Consolidated Financial Results Overview for 9M 2023 (#_Toc148988197)
(#_Toc148988197)
Additional Disclosures (#_Toc148988198) (#_Toc148988198)
1) (#_Toc148988199) (#_Toc148988199) (#_Toc148988199) TBC
Bank - Background (#_Toc148988199) (#_Toc148988199)
2) (#_Toc148988200) (#_Toc148988200) (#_Toc148988200)
Consolidated Financial Statements and Key Ratios 3Q 2023 (#_Toc148988200)
(#_Toc148988200)
3) (#_Toc148988201) (#_Toc148988201) (#_Toc148988201)
Consolidated Financial Statements and Key Ratios 9M 2023 (#_Toc148988201)
(#_Toc148988201)
4) (#_Toc148988202) (#_Toc148988202) (#_Toc148988202)
Business Line Definition (#_Toc148988202) (#_Toc148988202)
5) (#_Toc148988203) (#_Toc148988203) (#_Toc148988203)
Financial Disclosures by Business Lines (#_Toc148988203) (#_Toc148988203)
6) (#_Toc148988204) (#_Toc148988204) (#_Toc148988204) Market
shares in Georgia (#_Toc148988204) (#_Toc148988204)
7) (#_Toc148988205) (#_Toc148988205) (#_Toc148988205)
Subsidiaries of TBC Bank Group PLC (#_Toc148988205) (#_Toc148988205)
8) (#_Toc148988206) (#_Toc148988206) (#_Toc148988206) Impact
of Changed Accounting Treatment for Option Contracts (#_Toc148988206)
(#_Toc148988206)
9) (#_Toc148988207) (#_Toc148988207) (#_Toc148988207)
Replacement of IFRS 4 with IFRS 17 (#_Toc148988207) (#_Toc148988207)
10)Loan Book Breakdown by Stages According IFRS 9 (#_Toc148988208)
(#_Toc148988208)
11)Glossary (#_Toc148988209) (#_Toc148988209)
12)Ratio Definitions and Exchange Rates (#_Toc148988210) (#_Toc148988210)
3Q and 9M 2023 Unaudited Consolidated Financial Results
3Q 2023 net profit of GEL 300 million, down by 6% YoY, with ROE at 27.6%.
9M 2023 net profit of GEL 849 million, up by 9% YoY, with ROE at 27.0%.
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
Income statement
in thousands of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ 9M'23 9M'22 Change YoY
Net interest income 427,934 399,338 340,415 25.7% 7.2% 1,194,063 932,606 28.0%
Net fee and commission income 104,152 105,636 85,872 21.3% -1.4% 302,226 227,334 32.9%
Other operating non-interest income 83,133 81,792 163,344 -49.1% 1.6% 237,935 306,592 -22.4%
Operating profit 615,219 586,766 589,631 4.3% 4.8% 1,734,224 1,466,532 18.3%
Total credit loss allowance (46,159) (33,934) (48,256) -4.3% 36.0% (133,261) (99,846) 33.5%
Operating expenses (218,087) (203,560) (176,240) 23.7% 7.1% (604,427) (490,825) 23.1%
Profit before tax 350,973 349,272 365,135 -3.9% 0.5% 996,536 875,861 13.8%
Income tax expense (50,485) (56,186) (44,115) 14.4% -10.1% (148,002) (96,296) 53.7%
Profit for the period 300,488 293,086 321,020 -6.4% 2.5% 848,534 779,565 8.8%
Balance sheet
in thousands of GEL Sep'23 Jun'23 Sep'22 Change YoY Change QoQ
Total Assets 29,956,393 28,878,826 27,631,688 8.4% 3.7%
Gross Loans 20,365,135 19,360,689 17,365,894 17.3% 5.2%
Customer Deposits 18,722,415 18,992,492 17,115,022 9.4% -1.4%
Total Equity 4,473,400 4,331,529 3,879,676 15.3% 3.3%
CET 1 Capital (Basel III) per IFRS 3,966,901 3,920,004 n/a n/a 1.2%
Tier 1 Capital (Basel III) per IFRS 4,502,561 4,443,544 n/a n/a 1.3%
Total Capital (Basel III) per IFRS 5,058,696 4,947,830 n/a n/a 2.2%
Risk Weighted Assets (Basel III) per IFRS 22,668,335 21,452,808 n/a n/a 5.7%
Number of shares 55,140,216 55,140,216 55,479,420 -0.6% 0.0%
Key Ratios
3Q'23 2Q'23 3Q'22 Change YoY Change QoQ 9M'23 9M'22 Change YoY
ROE 27.6% 28.1% 33.6% -6.0 pp -0.5 pp 27.0% 28.6% -1.6 pp
ROE - Georgia FS 26.4% 27.8% 32.5% -6.1 pp -1.4 pp 25.9% 27.9% -2.0 pp
ROA 4.1% 4.2% 4.8% -0.7 pp -0.1 pp 4.0% 4.1% -0.1 pp
ROA - Georgia FS 4.2% 4.5% 5.0% -0.8 pp -0.3 pp 4.1% 4.3% -0.2 pp
NIM 6.9% 6.8% 6.3% 0.6 pp 0.1 pp 6.7% 5.9% 0.8 pp
Cost to income 35.4% 34.7% 29.9% 5.5 pp 0.7 pp 34.9% 33.5% 1.4 pp
Cost to income - Georgia FS 31.5% 30.2% 25.7% 5.8 pp 1.3 pp 30.7% 28.6% 2.1 pp
Cost of risk 0.9% 0.6% 1.0% -0.1 pp 0.3 pp 0.9% 0.7% 0.2 pp
NPL to gross loans 2.0% 2.1% 2.3% -0.3 pp -0.1 pp 2.0% 2.3% -0.3 pp
NPL provision coverage ratio 87.6% 89.3% 99.6% -12.0 pp -1.7 pp 87.6% 99.6% -12.0 pp
Total NPL coverage ratio 151.6% 153.7% 164.2% -12.6 pp -2.1 pp 151.6% 164.2% -12.6 pp
CET 1 CAR (Basel III) per IFRS 17.5% 18.3% n/a n/a -0.8 pp 17.5% n/a n/a
Tier 1 CAR (Basel III) per IFRS 19.9% 20.7% n/a n/a -0.8 pp 19.9% n/a n/a
Total CAR (Basel III) per IFRS 22.3% 23.1% n/a n/a -0.8 pp 22.3% n/a n/a
Leverage (Times) 6.7x 6.7x 7.1x -0.4x 0x 6.7x 7.1x -0.4x
EPS (GEL) 5.54 5.33 5.82 -4.8% 3.9% 15.44 14.19 8.8%
Diluted EPS (GEL) 5.45 5.25 5.74 -5.1% 3.8% 15.22 14.00 8.7%
BVPS (GEL) 80.81 78.21 69.18 16.8% 3.3% 80.81 69.18 16.8%
Georgia FS refers to Georgian financial services.
For the ratio definitions please refer to appendix 12.
Operational Highlights
Customer base
In millions Sep'23 Jun'23 Sep'22 Change YoY Change QoQ
Total number of registered users 17.3 16.1 12.4 40% 7%
Georgia 3.2 3.2 3.0 7% 0%
Uzbekistan 14.1 12.9 9.4 50% 9%
Total MAU 5.3 5.1 3.9 36% 4%
Georgia 1.6 1.6 1.4 14% 0%
Uzbekistan 3.7 3.5 2.5 48% 6%
Digital customers
In thousands Sep'23 Jun'23 Sep'22 Change YoY Change QoQ
Digital DAU Georgia 384 381 319 20% 1%
Digital MAU Georgia 874 849 735 19% 3%
Digital DAU/MAU Georgia 44% 45% 43% 1 pp -1 pp
Digital DAU Group 1,436 1,434 1,073 34% 0%
Digital MAU Group 4,519 4,295 3,172 42% 5%
Digital DAU/MAU Group 32% 33% 34% -2 pp -1 pp
Uzbekistan - key highlights
In thousands of GEL Sep'23 Jun'23 Sep'22 Change YoY Change QoQ
Gross loans 632,013 526,843 268,976 NMF 20.0%
Customer accounts 515,586 457,340 296,563 73.9% 12.7%
3Q'23 2Q'23 Change QoQ 9M'23
Net profit (GEL, thousands) 13,684 12,505 9.4% 38,896
ROE 23.4% 22.1% 1.3 pp 24.6%
Georgian and Uzbek payments businesses
In millions of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ 9M'23 9M'22 Change YoY
Net revenue - Georgia 69.5 71.0 59.5 16.8% -2.1% 201.6 153.5 31.3%
Net revenue - Uzbekistan (Payme) 16.9 16.8 12.0 40.8% 0.6% 50.2 33.5 49.9%
TNET - digital lifestyle platform in Georgia
In millions 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ 9M'23 9M'22 Change YoY
Gross merchandise value (GMV, GEL) 44.8 52.8 28.5 57.2% -15.2% 128.0 71.4 79.3%
Number of transactions 3.7 4.2 2.9 27.6% -11.9% 11.3 8.8 28.4%
Letter from the Chief Executive Officer 1 (#_ftn1)
I am pleased to announce that 3Q 2023 has been another very strong and
consistent quarter for TBC, helping us deliver an excellent result for our
shareholders for the first nine months of the year. Our net profit for the
third quarter amounted to GEL 300 million, up by 3% quarter-on-quarter, while
our return on equity stood at a very impressive 27.6%. For 9M 2023, our net
profit totaled GEL 849 million, a 9% year-on-year increase, while return on
equity came in at 27.0%.
I am glad to share that it was another positive quarter of dynamic growth and
continuing profitability for our fintech businesses in Uzbekistan, bringing 9M
2023 net profit to GEL 39 million, accounting for 5% of the Group's earnings,
and with the loan book now contributing an 8% share of total group retail
loans.
I also want to mention the appointment of Oliver Hughes, former CEO of Tinkoff
Group, in September as head of international operations. We are delighted to
welcome such a high calibre addition to the executive management team and we
think Oliver, Nika and the team in Tashkent can take our Uzbekistan operations
to a new level in the coming years.
The economic backdrop remains supportive
The Georgian economy continues to post very strong growth, with GDP expanding
by 5.4% in the third quarter of 2023 and 6.8% in 9M 2023. Importantly, large
central bank and fiscal buffers continue to be accumulated. Uzbekistan's
economic performance also remains impressive, with 6.1% GDP growth in 3Q 2023
and 5.8% in the first nine months of 2023. While inflation in Georgia is
already below target, we are also seeing deceleration in Uzbekistan,
suggesting that both countries are in easing cycles, which should be
supportive for the economic outlook.
Our strong financial and operating performance continued in 3Q 2023
We continue to see very strong core revenue dynamics. In 3Q 2023, our
operating income reached GEL 615 million, showing a 4% year-on-year increase
(from an unusually high base in 3Q 2022), driven by both interest and
non-interest income. Net interest income rose 26% year-on-year, buoyed by a
highly resilient net interest margin, which rose 60 bps year-on-year to 6.9%
in 3Q 2023. Over the same period, net fee and commission income increased by
21% year-on-year. Notably, despite continuing to invest in digitalization and
scaling up our Uzbek operations, our favorable operating income dynamics
enable us to maintain a group cost/income ratio of around 35%.
Our focus on providing high quality and convenient digital financial services
continues to bear fruit, with digital MAU reaching 4.5 million at the Group
level, up by a very impressive 1.3 million customers in the past 12 months,
led by our fully digital Uzbek operations. This resulted in a group DAU/MAU
ratio of 32% as of September 2023, while the DAU/MAU ratio for the Georgian
business stood at 44%.
On the balance sheet side, our credit dynamics remain positive. Our gross loan
book increased by 17% year-on-year as of 30 September 2023, or by 19% in
constant currency terms. Our asset quality remained very sound in 3Q 2023,
translating into a 0.9% cost of risk, with the share of NPLs continuing to
decline, to 2.0%. On the funding side, customer deposits increased by 9%
year-on-year, or by 12% in constant currency terms.
Our liquidity and capital positions remain strong. As of 30 September 2023,
our CET1, Tier 1 and Total Capital ratios(( 2 (#_ftn2) )) stood at 17.5%,
19.9% and 22.3%, respectively, and remained comfortably above the minimum
regulatory requirements by 3.1 pp, 3.1 pp and 2.4 pp, correspondingly. At the
same time, we continued to operate with a high liquidity buffer, with our net
stable funding (NSFR)(2) and liquidity coverage (LCR)(2) ratios standing at
124% and 114%, respectively.
Rock solid business in Georgia combined with dynamic growth in Uzbekistan
Our recently revised financial disclosures highlight the respective strengths
of our core financial services operations in Georgia and Uzbekistan. Georgia
continues to deliver excellent profitability, with 26.4% ROE in 3Q 2023 and
25.9% for 9M 2023, while on the balance sheet side, gross loans increased by
17% year-on-year on a constant currency basis.
Our Uzbek fintech businesses (TBC UZ and Payme) continued to generate positive
returns in the third quarter of 2023, with their combined net profit amounting
to GEL 14 million, while ROE stood at 23.4%, and 24.6% for 9M 2023.
As of 9M 2023, TBC UZ retail loans amounted to GEL 632 million, up by 20%
quarter-on-quarter, giving us an unsecured consumer / micro loan market
share 3 (#_ftn3) of 12.5%. At the same time, retail deposits reached GEL 516
million, up by 13% quarter-on-quarter, accounting for 3.0% retail deposit
market share(3). Meanwhile, in 3Q 2023, Payme's payment volumes rose by 41%
year-on-year, reaching GEL 16.9 billion.
TNET retains strong growth momentum
In the third quarter of 2023, our digital lifestyle ecosystem, TNET, continued
to deliver robust growth, with GEL 45 million gross merchandise value (GMV),
up by 57% year-on-year. This was driven by strong progress in the lifestyle
and e-commerce verticals.
Planning for a strong end of year
Finally, I would like to thank all our shareholders for their continued
support as we look to deliver on our strategic targets over the next few
years. We are pleased with what we have achieved so far this year and will
strive to deliver a strong end to the year during the final quarter.
Economic Overview
Georgia
Economic growth remains robust
Georgia' economy continued to perform strongly in 3Q 2023, with real GDP
growth of 5.4%, according to Geostat's estimates. This follows 7.7% growth in
1Q YoY and 7.5% in 2Q, implying 6.8% in 9M 3023.
External sector - positive tourism and FDI, but slowing export and import
growth
As we saw in 2Q 2023, the sustained negative impact of lower international
commodity prices on both exports and imports noticeably affected external
sector activity in 3Q 2023. Specifically, export and import growth fell to
1.6% and 7.9% YoY, respectively. Importantly, these commodity price dynamics
particularly affected domestic commodity exports, while re-exports continued
to perform strongly. At the same time, the notable increase of the share of IT
services in Georgian exports continued, with a major driver being the arrival
of migrants over the past year. At the same time, investment goods constituted
a considerable share of imports, indicating positive investment sentiment.
Given last year's high base effect, which was caused by the high level of
immigration in 2022, the annual growth of tourism inflows fell further to 5.3%
in 3Q 2023 as migrants are gradually being counted as residents by the NBG and
hence being exluded from the tourism sector, while the figure for the first
nine months was 29.2%. At the same time, the share of conventional tourism in
total inflows has increased lately. TBC Capital estimates that the YoY growth
of tourism inflows in January-September 2023, including the spending of
migrants counted as residents by the NBG, was 42.3% while excluding migrants
it reached 30.1%. Remittances also maintained a positive momentum after
adjustment for Russia, increasing by 13.8% 4 (#_ftn4) YoY in 3Q and by 47.5%
in the first nine months of 2023. After a slowdown in 1Q, FDI increased by
29.9% YoY in 2Q 2023.
Fiscal consolidation underway
It is important to highlight that the strong recent economic growth is not a
result of fiscal stimulus. In fact, fiscal consolidation is underway. After
reaching 9.3% of GDP in 2020 and a lower, but still large, level of 6.1% in
2021, the budget deficit stood at 3.1% in 2022. According to the Ministry of
Finance, further fiscal consolidation is expected with deficit-to-GDP ratios
of 2.8% and 2.5% in 2023 and 2024, respectively.
Credit growth still strong
As of September 2023, bank credit increased by 14.8% YoY, against 13.5% growth
at the end of 2Q 2023, at constant exchange rates 5 (#_ftn5) . At the same
time, as inflation remained stably low, the YoY growth in real credit
increased from 12.9% in June to 14.1% in September 2023.
Low inflation enables monetary policy easing
The combination of low inflation and NBG rate cuts affecting exchange rate
expectations and normalizing inflows has driven a minor depreciation in the
US$/GEL exchange rate from 2.62 at the end of June to 2.68 at the end of
September.
As a result of a broadly stable GEL and sustained disinflationary pass-through
from international markets, CPI inflation stabilized well below the NBG target
of 3%, standing at 0.7% YoY in September. At the same time, relatively rigid
service inflation and higher pressures on imports due to volatile oil prices,
contributed to marginally elevated MoM figures. The NBG has remained cautious
and delivered this year's third rate cut of only 25 basis points in September,
reducing the MPR to 10.0%. The central bank has continued accumulating
substantial amounts of reserves with a net purchase of US$ 1,390 million on
the FX market in January-September 2023, however, it started selling those in
response to exchange rate volatility from September. Total gross international
reserves still increased to US$ 5.3 billion as of Septmeber 2023,with net
reserves of US$ 2.8 billion having doubled over the past 18 months.
Uzbekistan
Uzbekistan also demonstrated solid economic activity with 6.1% 6 (#_ftn6)
growth in the third quarter and 5.8% in the first nine months of 2023.
External trade was strong as exports of goods increased by 37.7% and imports
by 32.5% YoY in the 3Q and by 24.2% and 23.6%(6) in the first nine months of
2023, respectively. The retail loan portfolio grew by 53.8% YoY at the end of
September, with mortgage credit expanding by 26.5% and non-mortgages by
79.1% 7 (#_ftn7) . Annual inflation increased marginally from 9.0% in June to
9.2% in September, while the central bank kept its monetary policy rate
unchanged at 14.0% throughout the quarter. The US$/UZS continued its slight
depreciation trend, standing at 12,175 at the end of September 2023(7), while
the REER remained broadly unchanged.
Going forward
After two, successive years of double-digit growth in Georgia, recent trends
indicate that economic activity should moderate somewhat but remain strong in
2023 at 6.6% and in 2024 at 4.8%, according to TBC Capital projections, while
the baseline for Uzbekistan stands at 6.1% and 5.4%, 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 3Q 2023
This statement provides a summary of the business and financial trends for 3Q
2023 for TBC Bank Group plc and its subsidiaries. The financial information
and trends are unaudited.
TBC Bank Group PLC's financial results have been prepared in accordance with
the UK-adopted International Accounting Standard (IAS) 34 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of
the Financial Conduct Authority (FCA).
Total equity and total liabilities were restated for 30-Sep-2022 due to a
change in the accounting of option contracts. As a result, ROE and leverage
ratios were restated for 9M 2022. In addition, total assets and total
liabilities for 30-Sep-2022 were restated due to replacement of IFRS 4 with
IFRS 17. For more details, please refer to appendix 8 and 9.
Please note that there might be slight differences in previous periods'
figures due to rounding.
Net Interest Income
In 3Q 2023, net interest income amounted to GEL 427.9 million, up by 25.7% and
7.2% on a YoY and QoQ basis, respectively.
The YoY rise in interest income of GEL 148.3 million, or 24.5%, was mostly
attributable to an increase in interest income from loans related to a rise in
the respective yield by 0.7 pp, as well as an increase in the loan portfolio
of GEL 2,999.2 million, or 17.3%.
The QoQ increase in interest income of GEL 41.8 million, or 5.9%, was mainly
related to an increase in interest income from loans on the back of growth in
the loan portfolio of GEL 1,004.4 million, or 5.2%.
Interest expense increased by GEL 60.7 million, or 22.9%, on a YoY basis,
mainly related to an increase in the deposit portfolio of GEL 1,607.4 million,
or 9.4%, and a 1.0 pp growth in deposit costs.
On a QoQ basis, interest expense increased by GEL 13.2 million, or 4.2%,
primarily driven by an increased average balance of our deposit portfolio,
while deposit costs remained stable.
In 3Q 2023, our NIM stood at 6.9%, up by 0.6 pp and 0.1 pp on a YoY and QoQ
basis, respectively.
In thousands of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Interest income 753,658 711,820 605,395 24.5% 5.9%
Interest expense* (325,724) (312,482) (264,980) 22.9% 4.2%
Net interest income 427,934 399,338 340,415 25.7% 7.2%
NIM 6.9% 6.8% 6.3% 0.6 pp 0.1 pp
* Interest expense includes net interest gains from currency swaps
Non-Interest Income
In 3Q 2023, our net fee and commission income increased by 21.3% YoY and
remained broadly stable on a QoQ basis. The YoY increase was mainly related to
increased payments transactions. In 3Q 2023, our Uzbek business contributed
more than 17% to the Group's net fee & commission income.
In 3Q 2023, net gains from currency operations were down by 54.0% on a YoY
basis, due to abnormally high FX revenues in 3Q 2022.
In thousands of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Non-interest income
Net fee and commission income 104,152 105,636 85,872 21.3% -1.4%
Net gains from currency derivatives, foreign currency operations and 66,968 61,127 145,712 -54.0% 9.6%
translation
Insurance profit 9,798 6,184 10,020 -2.2% 58.4%
Other operating income 6,367 14,481 7,612 -16.4% -56.0%
Total non-interest income 187,285 187,428 249,216 -24.9% -0.1%
Credit Loss Allowance
Credit loss allowance for loans in 3Q 2023 amounted to GEL 42.6 million, while
cost of risk stood at 0.9%.
In thousands of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Credit loss allowance for loans to customers (42,595) (29,384) (41,419) 2.8% 45.0%
Credit loss allowance for other transactions (3,564) (4,550) (6,837) -47.9% -21.7%
Total credit loss allowance (46,159) (33,934) (48,256) -4.3% 36.0%
Operating profit after expected credit losses and non-financial asset 569,060 552,832 541,375 5.1% 2.9%
impairment losses
Cost of risk 0.9% 0.6% 1.0% -0.1 pp 0.3 pp
Operating Expenses
In 3Q 2023, our operating expenses expanded by 23.7% and 7.1% on a YoY and QoQ
basis, respectively. Both increases were mainly driven by an overall expansion
of business in 3Q 2023.
In thousands of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Operating expenses
Staff costs (121,056) (108,724) (94,561) 28.0% 11.3%
(Allowance)/recovery of provision for liabilities and charges (34) (50) (2,000) -98.3% -32.0%
Depreciation and amortisation (29,286) (29,587) (26,684) 9.8% -1.0%
Administrative and other operating expenses (67,711) (65,199) (52,995) 27.8% 3.9%
Total operating expenses (218,087) (203,560) (176,240) 23.7% 7.1%
Cost to income 35.4% 34.7% 29.9% 5.5 pp 0.7 pp
Georgian financial services' cost to income 31.5% 30.2% 25.7% 5.8 pp 1.3 pp
Net Profit
Our net profit decreased by 6.4% and increased by 2.5% on a YoY and QoQ basis,
respectively and amounted to GEL 300.5 million. The YoY decline was driven by
abnormally high FX revenues in 3Q 2022.
As a result, in 3Q 2023 our ROE stood at 27.6%, while our ROA reached 4.1%.
In thousands of GEL 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Profit before tax 350,973 349,272 365,135 -3.9% 0.5%
Income tax expense (50,485) (56,186) (44,115) 14.4% -10.1%
Profit for the period 300,488 293,086 321,020 -6.4% 2.5%
Effective tax rate 14% 16% 12% 2 pp -2 pp
ROE 27.6% 28.1% 33.6% -6.0 pp -0.5 pp
Georgian financial services' ROE 26.4% 27.8% 32.5% -6.1 pp -1.4 pp
ROA 4.1% 4.2% 4.8% -0.7 pp -0.1 pp
Georgian financial services' ROA 4.2% 4.5% 5.0% -0.8 pp -0.3 pp
Funding and Liquidity
As of 30 September 2023, the total liquidity coverage ratio (LCR), as defined
by the NBG, was 114.1%, above the 100% limit, while the LCR in GEL and FC
stood at 105.7% and 121.0%, accordingly, above the respective limits of 75%
and 100%.
Over the same period, the net stable funding ratio (NSFR), as defined by the
NBG, stood at 124.1%, compared to the regulatory limit of 100%.
Sep'23 Jun'23 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* 124.1% 129.8% -5.7 pp
Net loans to deposits + IFI funding 96.9% 90.6% 6.3 pp
Leverage (Times) 6.7x 6.7x 0x
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* 114.1% 124.5% -10.4 pp
LCR in GEL, as defined by the NBG* 105.7% 130.4% -24.7 pp
LCR in FC, as defined by the NBG* 121.0% 119.2% 1.8 pp
* Ratios are calculated per IFRS
Regulatory Capital for Georgian Bank
As of 30 September 2023, our capital ratios remained at a prudent level and as
a result, per IFRS, our CET1, Tier 1 and Total Capital ratios stood at 17.5%,
19.9% and 22.3%, respectively, above the minimum regulatory requirements by
3.1 pp, 3.1 pp and 2.4 pp, accordingly.
The QoQ decreases in all CET1, Tier 1 and Total capital adequacy ratios were
largely driven by the interim dividend payment.
In thousands of GEL Sep'23 Jun'23 Change QoQ
CET 1 Capital 3,966,901 3,920,004 1.2%
Tier 1 Capital 4,502,561 4,443,544 1.3%
Total Capital 5,058,696 4,947,830 2.2%
Total Risk-weighted Assets 22,668,335 21,452,808 5.7%
Minimum CET 1 ratio 14.4% 14.4% 0.0 pp
CET 1 Capital adequacy ratio 17.5% 18.3% -0.8 pp
Minimum Tier 1 ratio 16.8% 16.8% 0.0 pp
Tier 1 Capital adequacy ratio 19.9% 20.7% -0.8 pp
Minimum total capital adequacy ratio 19.9% 19.9% 0.0 pp
Total Capital adequacy ratio 22.3% 23.1% -0.8 pp
Ratios and numbers are calculated per IFRS
Loan Portfolio
As of 30 September 2023, the gross loan portfolio reached GEL 20,365.1
million, up by 5.2% QoQ, or by 4.7% on a constant currency basis.
By the end of September 2023, our Georgian financial services loan portfolio
increased by 4.8% on a QoQ basis and reached GEL 19,715.8 million, with 4.2%
growth on a constant currency basis. Over the same period, our Uzbek portfolio
increased by 20.0% and stood at GEL 632.0 million, which translated into
growth of 24.1% on a constant currency basis.
In thousands of GEL Sep'23 Jun'23 Change QoQ
Gross loans and advances to customers
Georgian financial services (Georgia FS) 19,715,795 18,816,052 4.8%
Retail Georgia 7,131,727 6,945,911 2.7%
GEL 4,716,516 4,549,932 3.7%
FC 2,415,211 2,395,979 0.8%
CIB Georgia 7,380,388 6,920,263 6.6%
GEL 2,593,611 2,321,704 11.7%
FC 4,786,777 4,598,559 4.1%
MSME Georgia 5,203,680 4,949,878 5.1%
GEL 2,747,953 2,675,925 2.7%
FC 2,455,727 2,273,953 8.0%
Uzbekistan 632,013 526,843 20.0%
UZS 632,013 526,843 20.0%
Total gross loans and advances to customers* 20,365,135 19,360,689 5.2%
* Total gross loans and advances to customers include Azerbaijan loan
portfolio
3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Loan yields 12.6% 12.8% 11.9% 0.7 pp -0.2 pp
GEL 14.8% 15.4% 15.6% -0.8 pp -0.6 pp
FC 8.6% 8.4% 7.3% 1.3 pp 0.2 pp
UZS 41.9% 43.0% 44.2% -2.3 pp -1.1 pp
Georgia FS 11.7% 12.0% 11.5% 0.2 pp -0.3 pp
GEL 14.8% 15.4% 15.6% -0.8 pp -0.6 pp
FC 8.5% 8.4% 7.3% 1.2 pp 0.1 pp
Uzbekistan 41.9% 43.0% 44.2% -2.3 pp -1.1 pp
UZS 41.9% 43.0% 44.2% -2.3 pp -1.1 pp
Total loan yields* 12.6% 12.8% 11.9% 0.7 pp -0.2 pp
* Total loans yields include Azerbaijan
Loan Portfolio Quality
As of 30 September 2023, our PAR 90 and NPL to gross loans ratios remained
broadly stable for both the Georgian and Uzbek businesses on a QoQ basis.
PAR 90 Sep'23 Jun'23 Change QoQ
Georgia FS 1.2% 1.1% 0.1 pp
Retail Georgia 0.9% 0.9% 0.0 pp
CIB Georgia 0.5% 0.6% -0.1 pp
MSME Georgia 2.5% 2.3% 0.2 pp
Uzbekistan 2.1% 2.2% -0.1 pp
Total PAR 90* 1.2% 1.2% 0.0 pp
* Total PAR 90 includes Azerbaijan
In thousands of GEL Sep'23 Jun'23 Change QoQ
Non-performing Loans (NPL)
Georgia FS 399,230 387,626 3.0%
Retail Georgia 129,162 127,833 1.0%
CIB Georgia 94,940 98,374 -3.5%
MSME Georgia 175,128 161,419 8.5%
Uzbekistan 13,584 11,646 16.6%
Total non-performing loans* 413,520 400,989 3.1%
* Total non-performing loans include Azerbaijan NPLs
NPL to gross loans Sep'23 Jun'23 Change QoQ
Georgia FS 2.0% 2.1% -0.1 pp
Retail Georgia 1.8% 1.8% 0.0 pp
CIB Georgia 1.3% 1.4% -0.1 pp
MSME Georgia 3.4% 3.3% 0.1 pp
Uzbekistan 2.1% 2.2% -0.1 pp
Total NPL to gross loans* 2.0% 2.1% -0.1 pp
* Total NPL to gross loans include Azerbaijan NPLs
Sep'23 Jun'23
NPL Coverage Provision Coverage Total Coverage** Provision Coverage Total Coverage**
Georgia FS 82.5% 148.6% 85.3% 150.9%
Retail Georgia 136.0% 189.2% 141.8% 192.4%
CIB Georgia 52.0% 111.4% 49.4% 110.5%
MSME Georgia 59.5% 138.8% 62.6% 142.7%
Uzbekistan 199.9% 199.9% 180.0% 180.0%
Total NPL coverage* 87.6% 151.6% 89.3% 153.7%
* Total NPL coverage include Azerbaijan loans coverage
** Total NPL coverage ratio includes provision and collateral coverage
Cost of Risk
Given strong asset quality trends in 3Q 2023, our cost of risk (CoR) remained
within the expected range and stood at 0.9%.
The CoR for our Georgia FS decreased slightly YoY due to strong asset quality
dynamics and stood at 0.7%. Over the same period, CoR for our Uzbek business
amounted to 7.3%, also down slightly on a YoY basis. The QoQ increase in
Uzbekistan was mainly driven by the fast growth of the portfolio.
Cost of risk (CoR) 3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Georgia FS 0.7% 0.5% 0.9% -0.2 pp 0.2 pp
Retail Georgia 1.1% 0.5% 2.0% -0.9 pp 0.6 pp
CIB Georgia 0.0% 0.2% 0.0% 0.0 pp -0.2 pp
MSME Georgia 0.9% 0.9% 0.5% 0.4 pp 0.0 pp
Uzbekistan 7.3% 6.6% 7.5% -0.2 pp 0.7 pp
Total cost of risk* 0.9% 0.6% 1.0% -0.1 pp 0.3 pp
* Total cost of risk includes Azerbaijan CoR
Deposit Portfolio
By the end of September 2023, the total deposit portfolio amounted to GEL
18,722.4 million, down by 1.4% QoQ or by 2.2% on a constant currency basis.
As of 30 September 2023, the Georgian financial services portfolio decreased
by 1.8% on a QoQ basis and reached GEL 18,300.5 million, down by 2.7% on a
constant currency basis. Over the same period, our Uzbek portfolio increased
by 12.7% and stood at GEL 515.6 million, which translated into growth of 16.6%
on a constant currency basis.
In thousands of GEL Sep'23 Jun'23 Change QoQ
Customer accounts
Georgia FS 18,300,484 18,639,911 -1.8%
Retail Georgia 7,097,710 6,985,211 1.6%
GEL 2,224,730 2,242,193 -0.8%
FC 4,872,980 4,743,018 2.7%
CIB Georgia 8,861,056 9,048,955 -2.1%
GEL 4,911,419 5,169,170 -5.0%
FC 3,949,637 3,879,785 1.8%
MSME Georgia 1,730,701 1,638,612 5.6%
GEL 940,724 889,834 5.7%
FC 789,977 748,778 5.5%
MOF 611,017 967,133 -36.8%
GEL 611,017 967,133 -36.8%
Uzbekistan 515,586 457,340 12.7%
FC 1,640 1,322 24.1%
UZS 513,946 456,018 12.7%
Total customer accounts* 18,722,415 18,992,492 -1.4%
* Total customer accounts are adjusted for eliminations
3Q'23 2Q'23 3Q'22 Change YoY Change QoQ
Deposit rates 4.9% 4.9% 3.9% 1.0 pp 0.0 pp
GEL 8.2% 8.3% 7.4% 0.8 pp -0.1 pp
FC 0.9% 0.8% 0.9% 0.0 pp 0.1 pp
UZS 24.4% 25.0% 23.6% 0.8 pp -0.6 pp
Georgian financial services 4.4% 4.5% 3.6% 0.8 pp -0.1 pp
GEL 8.2% 8.4% 7.5% 0.7 pp -0.2 pp
FC 0.9% 0.8% 0.9% 0.0 pp 0.1 pp
Uzbek business 24.4% 24.9% 23.6% 0.8 pp -0.5 pp
FC 4.1% 4.7% 0.0% 4.1 pp -0.6 pp
UZS 24.4% 25.0% 23.6% 0.8 pp -0.6 pp
Total deposit rates* 4.9% 4.9% 3.9% 1.0 pp 0.0 pp
* Total deposits rates include MOF deposits
Unaudited Consolidated Financial Results Overview for 9M 2023
This statement provides a summary of the business and financial trends for 9M
2023 for TBC Bank Group plc and its subsidiaries. The financial information
and trends are unaudited.
TBC Bank Group PLC's financial results have been prepared in accordance with
the UK-adopted International Accounting Standard (IAS) 34 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of
the Financial Conduct Authority (FCA).
Total equity and total liabilities were restated for 30-Sep-2022 due to a
change in the accounting of option contracts. As a result, ROE and leverage
ratios were restated for 9M 2022. In addition, total assets and total
liabilities for 30-Sep-2022 were restated due to replacement of IFRS 4 with
IFRS 17. For more details, please refer to appendix 8 and 9.
Please also note that there might be slight differences in previous periods'
figures due to rounding.
Net Interest Income
In 9M 2023, net interest income amounted to GEL 1,194.1 million, up by 28.0%
on a YoY basis.
The YoY rise in interest income by GEL 451.8 million, or 26.8%, was mostly
attributable to an increase in interest income from loans related to a GEL
2,999.2 million, or 17.3%, increase in the respective portfolio, as well as a
1.2 pp rise in the respective yield.
YoY interest expense increased by GEL 190.3 million, or 25.3%, mainly related
to an increase in the deposit portfolio of GEL 1,607.4 million, or 9.4%, and a
1.1 pp growth in deposit cost.
In 9M 2023, our NIM stood at 6.7%, up by 0.8 pp on a YoY basis.
In thousands of GEL 9M'23 9M'22 Change YoY
Interest income 2,137,628 1,685,857 26.8%
Interest expense* (943,565) (753,251) 25.3%
Net interest income 1,194,063 932,606 28.0%
NIM 6.7% 5.9% 0.8 pp
* Interest expense includes net interest gains from currency swaps
Non-Interest Income
Total non-interest income amounted to GEL 540.2 million in 9M 2023, increasing
by 1.2% on a YoY basis.
Net fee and commission income increased by 32.9% on a YoY basis, related to
increased payments transactions both in Georgia and Uzbekistan. Over the same
period, given a high base in 2022, revenues from FX operations normalised and
decreased by 27.4%. Our Uzbek business contributed 18% of the Group's net fee
and commission income.
In thousands of GEL 9M'23 9M'22 Change YoY
Non-interest income
Net fee and commission income 302,226 227,334 32.9%
Net gains from currency derivatives, foreign currency operations and 188,696 260,089 -27.4%
translation
Insurance profit 22,200 20,985 5.8%
Other operating income 27,039 25,518 6.0%
Total non-interest income 540,161 533,926 1.2%
Credit Loss Allowance
Credit loss allowance for loans in 9M 2023 amounted to GEL 122.0 million,
which translated into a 0.9% cost of risk.
In thousands of GEL 9M'23 9M'22 Change YoY
Credit loss (allowance)/recovery for loans to customers (122,019) (91,941) 32.7%
Credit loss allowance for other transactions (11,242) (7,905) 42.2%
Total credit loss (allowance)/recovery (133,261) (99,846) 33.5%
Operating income after expected credit and non-financial asset impairment 1,600,963 1,366,686 17.1%
losses
Cost of risk 0.9% 0.7% 0.2 pp
Operating Expenses
In 9M 2023, our operating expenses expanded by 23.1% on a YoY basis.
In the first nine months of 2023, the annual increase in operating expenses
was mainly driven by overall business expansion, both locally and
internationally.
In thousands of GEL 9M'23 9M'22 Change YoY
Operating expenses
Staff costs (333,206) (271,052) 22.9%
Allowance of provision for liabilities and charges (155) (2,060) -92.5%
Depreciation and amortisation (87,234) (74,016) 17.9%
Administrative and other operating expenses (183,832) (143,697) 27.9%
Total operating expenses (604,427) (490,825) 23.1%
Cost to income 34.9% 33.5% 1.4 pp
Georgian financial services' cost to income 30.7% 28.6% 2.1 pp
Net Profit
In 9M 2023, we delivered robust profitability and generated GEL 848.5 million
in net profit, up by 8.8% YoY, driven by strong income generation, as well as
strong asset quality.
The growth in the effective tax rate YoY is related to changes in tax
legislation effective from 1 January 2023, which increased the corporate
income tax rate for banks from 15% to 20% and abolished the potential shift to
the Estonian Tax Model.
As a result, our ROE and ROA for 9M 2023 were 27.0% and 4.0%, respectively.
In thousands of GEL 9M'23 9M'22 Change YoY
Profit before tax 996,536 875,861 13.8%
Income tax expense (148,002) (96,296) 53.7%
Profit for the period 848,534 779,565 8.8%
Effective tax rate 15% 11% 4 pp
ROE 27.0% 28.6% -1.6 pp
Georgian financial services' ROE 25.9% 27.9% -2.0 pp
ROA 4.0% 4.1% -0.1 pp
Georgian financial services' ROA 4.1% 4.3% -0.2 pp
Loan Portfolio
As of 30 September 2023, the gross loan portfolio reached GEL 20,365.1
million, up by 17.3% YoY or 19.1% on a constant currency basis.
By the end of September 2023, the Georgian financial services' portfolio
increased by 15.4% on a YoY basis and reached GEL 19,715.8 million, with 16.7%
growth on a constant currency basis. Over the same period, our Uzbek portfolio
more than doubled, reaching GEL 632.0 million.
In thousands of GEL Sep'23 Sep'22 Change YoY
Gross loans and advances to customers
Georgian financial services (Georgia FS) 19,715,795 17,077,558 15.4%
Retail Georgia 7,131,727 6,588,985 8.2%
GEL 4,716,516 4,230,472 11.5%
FC 2,415,211 2,358,513 2.4%
CIB Georgia 7,380,388 5,918,394 24.7%
GEL 2,593,611 2,096,791 23.7%
FC 4,786,777 3,821,603 25.3%
MSME Georgia 5,203,680 4,570,179 13.9%
GEL 2,747,953 2,544,976 8.0%
FC 2,455,727 2,025,203 21.3%
Uzbekistan 632,013 268,976 NMF
UZS 632,013 268,976 NMF
Total gross loans and advances to customers* 20,365,135 17,365,894 17.3%
* Total gross loans and advances to customers include Azerbaijan loan
portfolio
9M'23 9M'22 Change YoY
Loan yields 12.6% 11.4% 1.2 pp
GEL 15.0% 15.6% -0.6 pp
FC 8.4% 6.8% 1.6 pp
UZS 42.6% 42.7% -0.1 pp
Georgia FS 11.8% 11.0% 0.8 pp
GEL 15.0% 15.6% -0.6 pp
FC 8.4% 6.8% 1.6 pp
Uzbekistan 42.6% 42.7% -0.1 pp
UZS 42.6% 42.7% -0.1 pp
Total loan yields* 12.6% 11.4% 1.2 pp
* Total loans yields include Azerbaijan
Loan Portfolio Quality
As of 30 September 2023, our asset quality metrics remained strong with NPL to
gross loan at 2.0%, down 30bps YoY.
Par 90 Sep'23 Sep'22 Change YoY
Georgia FS 1.2% 1.3% -0.1 pp
Retail Georgia 0.9% 1.3% -0.4 pp
CIB Georgia 0.5% 0.5% 0.0 pp
MSME Georgia 2.5% 2.4% 0.1 pp
Uzbekistan 2.1% 2.9% -0.8 pp
Total PAR 90* 1.2% 1.3% -0.1 pp
* Total PAR 90 includes Azerbaijan
In thousands of GEL Sep'23 Sep'22 Change YoY
Non-performing Loans (NPL)
Georgia FS 399,230 394,205 1.3%
Retail Georgia 129,162 152,241 -15.2%
CIB Georgia 94,940 80,084 18.6%
MSME Georgia 175,128 161,880 8.2%
Uzbekistan 13,584 7,712 76.1%
Total non-performing loans* 413,520 404,966 2.1%
* Total non-performing loans include Azerbaijan NPLs
NPL to gross loans Sep'23 Sep'22 Change YoY
Georgia FS 2.0% 2.3% -0.3 pp
Retail Georgia 1.8% 2.3% -0.5 pp
CIB Georgia 1.3% 1.4% -0.1 pp
MSME Georgia 3.4% 3.5% -0.1 pp
Uzbekistan 2.1% 2.9% -0.8 pp
Total NPL to gross loans* 2.0% 2.3% -0.3 pp
* Total NPL to gross loans include Azerbaijan NPLs
Sep'23 Sep'22
NPL Coverage Provision Coverage Total Coverage** Provision Coverage Total Coverage**
Georgia FS 82.5% 148.6% 98.2% 163.1%
Retail Georgia 136.0% 189.2% 163.8% 209.7%
CIB Georgia 52.0% 111.4% 56.6% 121.8%
MSME Georgia 59.5% 138.8% 57.1% 139.7%
Uzbekistan 199.9% 199.9% 123.0% 123.0%
Total NPL coverage* 87.6% 151.6% 99.6% 164.2%
* Total NPL coverage include Azerbaijan loans coverage
** Total NPL coverage ratio includes provision and collateral coverage
Cost of Risk
In 9M 2023, our cost of risk (CoR) amounted to 0.9%.
The CoR for our Georgia FS remained stable YoY and stood at 0.7%, while CoR
for our Uzbek business amounted to 6.6%, up by 0.3 pp on a YoY basis.
Cost of risk (CoR) 9M'23 9M'22 Change YoY
Georgia FS 0.7% 0.7% 0.0 pp
Retail Georgia 1.0% 1.7% -0.7 pp
CIB Georgia 0.0% -0.1% 0.1 pp
MSME Georgia 1.3% 0.3% 1.0 pp
Uzbekistan 6.6% 6.3% 0.3 pp
Total cost of risk* 0.9% 0.7% 0.2 pp
* Total cost of risk includes Azerbaijan CoR
Deposit Portfolio
The total deposit portfolio amounted to GEL 18,722.4 million, increasing by
9.4% YoY or 12.2% on a constant currency basis.
As of 30 September 2023, the Georgian financial services' portfolio increased
by 8.7% on a YoY basis to GEL 18.300.5 million, with 11.0% growth on a
constant currency basis. Over the same period, our Uzbek portfolio almost
doubled and stood at GEL 515.6 million.
In thousands of GEL Sep'23 Sep'22 Change YoY
Customer accounts
Georgia FS 18,300,484 16,837,237 8.7%
Retail Georgia 7,097,710 6,049,335 17.3%
GEL 2,224,730 1,661,392 33.9%
FC 4,872,980 4,387,943 11.1%
CIB Georgia 8,861,056 7,830,648 13.2%
GEL 4,911,419 3,684,493 33.3%
FC 3,949,637 4,146,155 -4.7%
MSME Georgia 1,730,701 1,645,985 5.1%
GEL 940,724 775,704 21.3%
FC 789,977 870,281 -9.2%
MOF 611,017 1,311,269 -53.4%
GEL 611,017 1,311,269 -53.4%
Uzbekistan 515,586 296,563 73.9%
FC 1,640 10 NMF
UZS 513,946 296,553 73.3%
Total customer accounts* 18,722,415 17,115,022 9.4%
* Total customer accounts are adjusted for eliminations
9M'23 9M'22 Change YoY
Deposit rates 4.9% 3.8% 1.1 pp
GEL 8.4% 7.5% 0.9 pp
FC 0.8% 0.9% -0.1 pp
UZS 24.9% 22.7% 2.2 pp
Georgian financial services 4.5% 3.5% 1.0 pp
GEL 8.5% 7.5% 1.0 pp
FC 0.8% 0.9% -0.1 pp
Uzbek business 24.8% 22.7% 2.1 pp
FC 4.4% 0.0% 4.4 pp
UZS 24.9% 22.7% 2.2 pp
Total deposit rates* 4.9% 3.8% 1.1 pp
* Total deposit rates include MOF deposits
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, together with its subsidiaries, is a leading universal banking group
in Georgia, with a total market share of 39.1% of customer loans and 37.5% of
customer deposits as of 30 September 2023, according to data published by the
National Bank of Georgia on the analytical tool Tableau.
2) Consolidated Financial Statements and Key Ratios 3Q 2023
Consolidated Statement of Financial Position
In thousands of GEL Sep'23 Jun'23
ASSETS
Cash and cash equivalents 2,648,469 2,940,359
Due from other banks 38,954 52,550
Mandatory cash balances with National Bank of Georgia and the Central Bank of 1,904,010 1,706,981
Uzbekistan
Loans and advances to customers 20,003,021 19,002,657
Investment securities measured at fair value through other comprehensive 3,071,046 2,942,679
income
Bonds carried at amortised cost 65,289 87,213
Finance lease receivables 364,077 338,203
Investment properties 20,629 20,741
Current income tax prepayment 16,062 3,005
Deferred income tax asset 10,721 12,573
Other financial assets 259,771 266,969
Other assets 449,322 441,756
Premises and equipment 481,867 463,407
Right of use assets 116,262 117,634
Intangible assets 442,989 418,468
Goodwill 59,964 59,964
Investments in associates 3,940 3,667
TOTAL ASSETS 29,956,393 28,878,826
LIABILITIES
Due to credit institutions 3,330,925 2,448,662
Customer accounts 18,722,415 18,992,492
Lease liabilities 88,893 87,324
Other financial liabilities 515,000 387,595
Current income tax liability 17,958 27,559
Debt Securities in issue 1,432,393 1,392,872
Deferred income tax liability 109,854 112,095
Provision for liabilities and charges 20,384 20,767
Other liabilities 93,184 91,839
Redemption liability 363,871 347,044
Subordinated debt 788,116 639,048
TOTAL LIABILITIES 25,482,993 24,547,297
EQUITY
Share capital 1,682 1,682
Shares held by trust (75,470) (75,470)
Share premium 272,930 272,930
Retained earnings 4,145,795 3,984,493
Merger reserve 402,862 402,862
Share based payment reserve 12,672 5,181
Fair value reserve for investment securities measured at fair value through 10,855 16,461
other comprehensive income
Cumulative currency translation reserve (42,759) (36,804)
Other reserve (363,869) (347,044)
Equity attributable to owners of the parent 4,364,698 4,224,291
Non-controlling interest 108,702 107,238
TOTAL EQUITY 4,473,400 4,331,529
TOTAL LIABILITIES AND EQUITY 29,956,393 28,878,826
Consolidated Income Statement and Other Comprehensive Income
In thousands of GEL 3Q'23 2Q'23 3Q'22
Interest income 753,658 711,820 605,395
Interest expense (325,724) (312,482) (264,980)
Net interest income 427,934 399,338 340,415
Fee and commission income 170,479 161,729 136,674
Fee and commission expense (66,327) (56,093) (50,802)
Net fee and commission income 104,152 105,636 85,872
Insurance contract revenue 35,056 31,552 30,376
Reinsurance service result (3,245) (1,517) (1,958)
Insurance service claims and expenses incurred (22,013) (23,851) (18,398)
Insurance profit 9,798 6,184 10,020
Net gains from currency derivatives, foreign currency operations and 66,968 61,127 145,712
translation
Net gains from disposal of investment securities measured at fair value 1,553 2,307 2,660
through other comprehensive income
Other operating income 4,443 11,906 4,868
Share of profit of associates 371 268 84
Other operating non-interest income 73,335 75,608 153,324
Credit loss allowance for loans to customers (42,595) (29,384) (41,419)
Credit loss (allowance)/recovery for finance lease receivable (3,035) (1,059) (716)
Credit loss (allowance)/recovery for performance guarantees and credit related 644 (1,273) (434)
commitments
Credit loss (allowance)/recovery for other financial assets (963) (2,136) (5,041)
Credit loss recovery/(allowance) for financial assets measured at fair value (497) 134 115
through other comprehensive income
Net impairment of non-financial assets 287 (216) (761)
Operating income after expected credit and non-financial asset impairment 569,060 552,832 541,375
losses
Staff costs (121,056) (108,724) (94,561)
Depreciation and amortisation (29,286) (29,587) (26,684)
(Allowance)/recovery of provision for liabilities and charges (34) (50) (2,000)
Administrative and other operating expenses (67,711) (65,199) (52,995)
Operating expenses (218,087) (203,560) (176,240)
Profit before tax 350,973 349,272 365,135
Income tax expense (50,485) (56,186) (44,115)
Profit for the period 300,488 293,086 321,020
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve (5,607) 2,958 18,929
Exchange differences on translation to presentation currency (5,955) 4,220 137
Other comprehensive income for the period (11,562) 7,178 19,066
Total comprehensive income for the period 288,926 300,264 340,086
Profit attributable to:
- Shareholders of TBCG 299,022 288,791 318,985
- Non-controlling interest 1,466 4,295 2,035
Profit for the period 300,488 293,086 321,020
Total comprehensive income is attributable to:
- Shareholders of TBCG 287,460 295,969 338,051
- Non-controlling interest 1,466 4,295 2,035
Total comprehensive income for the period 288,926 300,264 340,086
* Interest expense includes net interest gains from currency swaps
Key Ratios 3Q'23
Total equity and total liabilities were restated for 30-Sep-2022 due to a
change in the accounting of option contracts. As a result, ROE and leverage
ratios were restated for 3Q 2022.
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) 3Q'23 2Q'23 3Q'22
Profitability ratios:
ROE(1) 27.6% 28.1% 33.6%
ROA(2) 4.1% 4.2% 4.8%
Cost to income(3) 35.4% 34.7% 29.9%
NIM(4) 6.9% 6.8% 6.3%
Loan yields(5) 12.6% 12.8% 11.9%
Deposit rates(6) 4.9% 4.9% 3.9%
Cost of funding(7) 5.4% 5.6% 4.8%
Asset quality & portfolio concentration:
Cost of risk(9) 0.9% 0.6% 1.0%
PAR 90 to Gross Loans(9) 1.2% 1.2% 1.3%
NPLs to Gross Loans(10) 2.0% 2.1% 2.3%
NPL provision coverage(11) 87.6% 89.3% 99.6%
Total NPL coverage(12) 151.6% 153.7% 164.2%
Credit loss level to Gross Loans(13) 1.8% 1.8% 2.3%
Related Party Loans to Gross Loans(14) 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(15) 6.0% 5.8% 6.0%
Top 20 Borrowers to Total Portfolio(16) 8.9% 8.7% 9.0%
Capital & liquidity positions:
Net Loans to Deposits plus IFI Funding(17) 96.9% 90.6% 89.1%
Net Stable Funding Ratio** (18) 124.1% 129.8% n/a
Liquidity Coverage Ratio** (19) 114.1% 124.5% n/a
Leverage(20) 6.7x 6.7x 7.1x
CET 1 CAR* (Basel III)(21) 17.5% 18.3% n/a
Tier 1 CAR* (Basel III)(22) 19.9% 20.7% n/a
Total 1 CAR* (Basel III)(23) 22.3% 23.1% n/a
* Ratios are calculated per IFRS
For the ratio definitions and exchange rates, please refer to appendix 12.
3) Consolidated Financial Statements and Key Ratios 9M 2023
Consolidated Statement of Financial Position
In thousands of GEL Sep'23 Sep'22
ASSETS
Cash and cash equivalents 2,648,469 3,764,435
Due from other banks 38,954 48,623
Mandatory cash balances with National Bank of Georgia and the Central Bank of 1,904,010 2,219,506
Uzbekistan
Loans and advances to customers 20,003,021 16,962,397
Investment securities measured at fair value through other comprehensive 3,071,046 2,213,608
income
Bonds carried at amortised cost 65,289 64,030
Repurchase receivables - 278,971
Finance lease receivables 364,077 261,217
Investment properties 20,629 22,930
Current income tax prepayment 16,062 1,505
Deferred income tax asset 10,721 14,439
Other financial assets 259,771 395,571
Other assets 449,322 436,067
Premises and equipment 481,867 426,129
Right of use assets 116,262 95,625
Intangible assets 442,989 363,096
Goodwill 59,964 59,963
Investments in associates 3,940 3,576
TOTAL ASSETS 29,956,393 27,631,688
LIABILITIES
Due to credit institutions 3,330,925 3,619,566
Customer accounts 18,722,415 17,115,022
Lease liabilities 88,893 76,890
Other financial liabilities 515,000 367,545
Current income tax liability 17,958 14,294
Debt Securities in issue 1,432,393 1,466,022
Deferred income tax liability 109,854 2,157
Provision for liabilities and charges 20,384 18,894
Other liabilities 93,184 76,139
Redemption liability 363,871 373,605
Subordinated debt 788,116 621,878
TOTAL LIABILITIES 25,482,993 23,752,012
EQUITY
Share capital 1,682 1,693
Shares held by trust (75,470) (7,900)
Treasury shares - (20,389)
Share premium 272,930 297,923
Retained earnings 4,145,795 3,527,482
Merger reserve 402,862 402,862
Share based payment reserve 12,672 (3,523)
Fair value reserve for investment securities measured at fair value through 10,855 (6,674)
other comprehensive income
Cumulative currency translation reserve (42,759) (19,648)
Other reserve (363,869) (373,605)
Equity attributable to owners of the parent 4,364,698 3,798,221
Non-controlling interest 108,702 81,455
TOTAL EQUITY 4,473,400 3,879,676
TOTAL LIABILITIES AND EQUITY 29,956,393 27,631,688
Consolidated Income Statement and Other Comprehensive Income
In thousands of GEL 9M'23 9M'22
Interest income 2,137,628 1,685,857
Interest expense* (943,565) (753,251)
Net interest income 1,194,063 932,606
Fee and commission income 484,009 377,057
Fee and commission expense (181,783) (149,723)
Net fee and commission income 302,226 227,334
Insurance contract revenue 96,133 81,746
Reinsurance service result (7,632) (5,219)
Insurance service claims and expenses incurred (66,301) (55,542)
Insurance profit 22,200 20,985
Net gains from currency derivatives, foreign currency operations and 188,696 260,089
translation
Net gains from disposal of investment securities measured at fair value 5,872 4,885
through other comprehensive income
Other operating income 20,254 20,426
Share of profit of associates 913 207
Other operating non-interest income 215,735 285,607
Credit loss allowance for loans to customers (122,019) (91,941)
Credit loss allowance for finance lease receivable (5,167) (1,278)
Credit loss allowance for performance guarantees and credit related (292) (1,504)
commitments
Credit loss allowance for other financial assets (5,053) (5,739)
Credit loss (allowance)/recovery for financial assets measured at fair value (659) 1,383
through other comprehensive income
Net impairment of non-financial assets (71) (767)
Operating income after expected credit and non-financial asset impairment 1,600,963 1,366,686
losses
Staff costs (333,206) (271,052)
Depreciation and amortisation (87,234) (74,016)
Allowance of provision for liabilities and charges (155) (2,060)
Administrative and other operating expenses (183,832) (143,697)
Operating expenses (604,427) (490,825)
Profit before tax 996,536 875,861
Income tax expense (148,002) (96,296)
Profit for the period 848,534 779,565
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve 5,387 4,182
Exchange differences on translation to presentation currency (6,901) (8,436)
Other comprehensive income for the period (1,514) (4,254)
Total comprehensive income for the period 847,020 775,311
Profit attributable to:
- Shareholders of TBCG 836,481 777,450
- Non-controlling interest 12,053 2,115
Profit for the period 848,534 779,565
Total comprehensive income is attributable to:
- Shareholders of TBCG 834,967 773,196
- Non-controlling interest 12,053 2,115
Total comprehensive income for the period 847,020 775,311
* Interest expense includes net interest gains from currency swaps
Key Ratios 9M'23
Total equity and total liabilities were restated for 30-Sep-2022 due to a
change in the accounting of option contracts. As a result, ROE and leverage
ratios were restated for 9M 2022.
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) 9M'23 9M'22
Profitability ratios:
ROE(1) 27.0% 28.6%
ROA(2) 4.0% 4.1%
Cost to income(3) 34.9% 33.5%
NIM(4) 6.7% 5.9%
Loan yields(5) 12.6% 11.4%
Deposit rates(6) 4.9% 3.8%
Cost of funding(7) 5.5% 4.8%
Asset quality & portfolio concentration:
Cost of risk(9) 0.9% 0.7%
PAR 90 to Gross Loans(9) 1.2% 1.3%
NPLs to Gross Loans(10) 2.0% 2.3%
NPL provision coverage(11) 87.6% 99.6%
Total NPL coverage(12) 151.6% 164.2%
Credit loss level to Gross Loans(13) 1.8% 2.3%
Related Party Loans to Gross Loans(14) 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(15) 6.0% 6.0%
Top 20 Borrowers to Total Portfolio(16) 8.9% 9.0%
Capital & liquidity positions:
Net Loans to Deposits plus IFI Funding(17) 96.9% 89.1%
Net Stable Funding Ratio** (18) 124.1% n/a
Liquidity Coverage Ratio** (19) 114.1% n/a
Leverage(20) 6.7x 7.1x
CET 1 CAR* (Basel III)(21) 17.5% n/a
Tier 1 CAR* (Basel III)(22) 19.9% n/a
Total 1 CAR* (Basel III)(23) 22.3% n/a
* Ratios are calculated per IFRS
For the ratio definitions and exchange rates, please refer to appendix 12.
4) Business Line Definition
According to the updated segment definition starting from 1 January 2023, the
operating segments are defined as follows:
Georgian financial services include JSC TBC Bank with its Georgian
subsidiaries and JSC TBC Insurance, with its subsidiaries. The Georgia
financial service segment consist of three major business sub-segments, while
the treasury, leasing and insurance businesses are combined into the corporate
and other sub-segments:
· Corporate and investment banking (CIB) - a legal entity/group of
affiliated entities with an annual revenue exceeding GEL 20.0 million or which
has been granted facilities of more than GEL 7.5 million. Some other business
customers may also be assigned to the CIB sub-segment or transferred to the
MSME sub-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 in assets under management (AUM), as well as on a
discretionary basis;
· Retail - non-business individual customers;
· Micro, small and medium enterprises (MSME) - business customers who
are not included in the CIB sub-segment;
Uzbekistan - TBC Bank Uzbekistan with respective subsidiaries and Payme
(Inspired LLC);
Other - includes non-material or non-financial subsidiaries of the group and
intra-group eliminations.
5) Financial Disclosures by Business Lines
Consolidated Statement of Financial Position Sep'23
In thousands of GEL Georgia FS Uzbekistan* Payme TBC UZ Other** Group
ASSETS
Cash and cash equivalents 2,594,629 47,811 752 47,151 6,029 2,648,469
Due from other banks 38,923 - 4,417 - 31 38,954
Mandatory cash balances with National Bank of Georgia and Central Bank of 1,899,949 4,061 - 4,061 - 1,904,010
Uzbekistan
Loans and advances to customers 19,386,577 604,856 - 604,856 11,588 20,003,021
Investment securities measured at fair value through other comprehensive 3,071,046 - - - - 3,071,046
income
Bonds carried at amortised cost 11,199 54,090 - 54,090 - 65,289
Finance lease receivables 328,757 27,950 - 27,950 7,370 364,077
Investment properties 20,629 - - - - 20,629
Current income tax prepayment 15,506 - - - 556 16,062
Deferred income tax asset 123 10,200 - 10,200 398 10,721
Other financial assets 271,833 4,995 5,430 - (17,057) 259,771
Other assets 427,873 19,777 3,968 15,809 1,672 449,322
Premises and equipment 462,594 14,731 4,613 10,118 4,542 481,867
Right of use assets 108,331 6,218 1,462 4,756 1,713 116,262
Intangible assets 343,711 27,642 3,420 24,222 71,636 442,989
Goodwill 28,198 1,912 - 1,912 29,854 59,964
Investments in associates 18,555 - - - (14,615) 3,940
TOTAL ASSETS 29,028,433 824,243 24,062 805,125 103,717 29,956,393
LIABILITIES
Due to credit institutions 3,278,155 46,504 - 46,504 6,266 3,330,925
Customer accounts 18,300,485 515,586 - 520,096 (93,656) 18,722,415
Lease liabilities 80,502 7,015 1,565 5,450 1,376 88,893
Other financial liabilities 587,417 2,298 1,257 1,041 (74,715) 515,000
Current income tax liability 17,939 - - - 19 17,958
Debt Securities in issue 1,264,218 - - - 168,175 1,432,393
Deferred income tax liability 109,854 - - - - 109,854
Provisions for liabilities and charges 20,384 - - - - 20,384
Other liabilities 68,111 18,888 2,973 16,349 6,185 93,184
Redemption liability - - - - 363,871 363,871
Subordinated debt 788,116 - - - - 788,116
TOTAL LIABILITIES 24,515,181 590,291 5,795 589,440 377,521 25,482,993
EQUITY
Share capital 28,498 277,948 1,254 276,694 (304,764) 1,682
Shares held by trust - - - - (75,470) (75,470)
Share premium 521,190 27,860 - 27,860 (276,120) 272,930
Retained earnings 4,037,519 (38,836) 21,798 (60,634) 147,112 4,145,795
Merger reserve - 67 67 - 402,795 402,862
Share based payment reserve (85,001) - - - 97,673 12,672
Fair value reserve for investment securities measured at fair value through 10,849 211 211 - (205) 10,855
other comprehensive income
Cumulative currency translation reserve - (33,298) (5,063) (28,235) (9,461) (42,759)
Other reserve - - - - (363,869) (363,869)
Net assets attributable to owners 4,513,055 233,952 18,267 215,685 (382,309) 4,364,698
Non-controlling interest 197 - - - 108,505 108,702
TOTAL EQUITY 4,513,252 233,952 18,267 215,685 (273,804) 4,473,400
TOTAL LIABILITIES AND EQUITY 29,028,433 824,243 24,062 805,125 103,717 29,956,393
* Includes intra-group eliminations
** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations
Consolidated Income Statement and Other Comprehensive Income 3Q'23
In thousands of GEL Georgia FS Uzbekistan** Payme TBC UZ Other Group
***
Interest income 683,275 68,549 88 68,549 1,834 753,658
Interest expense* (292,486) (32,379) (77) (32,391) (859) (325,724)
Net interest income 390,789 36,170 11 36,158 975 427,934
Fee and commission income 144,172 24,632 18,619 16,807 1,675 170,479
Fee and commission expense (59,771) (6,540) (1,705) (15,610) (16) (66,327)
Net fee and commission income 84,401 18,092 16,914 1,197 1,659 104,152
Insurance profit 9,939 - - - (141) 9,798
Net gains from currency derivatives, foreign currency operations and 68,938 56 6 50 (2,026) 66,968
translation
Net gains from disposal of investment securities measured at fair value 1,553 - - - - 1,553
through other comprehensive income
Other operating income 2,492 36 - 36 1,915 4,443
Share of profit of associates 371 - - - - 371
Other operating non-interest income 83,293 92 6 86 (252) 83,133
Credit loss allowance for loans to customers (32,173) (10,694) - (10,694) 272 (42,595)
Credit loss allowance for finance lease receivable (2,459) (575) - (575) (1) (3,035)
Credit loss recovery for performance guarantees and credit related commitments 644 - - - - 644
Credit loss allowance for other financial assets (986) 23 (3) 26 - (963)
Credit loss allowance for financial assets measured at fair value through (497) - - - - (497)
other comprehensive income
Net recovery of non-financial assets 29 - - - 258 287
Operating income after expected credit and non-financial asset impairment 523,041 43,108 16,928 26,198 2,911 569,060
losses
Staff costs (101,647) (10,047) (2,289) (7,758) (9,362) (121,056)
Depreciation and amortisation (25,077) (2,255) (297) (1,958) (1,954) (29,286)
Allowance of provision for liabilities and charges (34) - - - - (34)
Administrative and other operating expenses (49,056) (15,929) (3,415) (12,532) (2,726) (67,711)
Operating expenses (175,814) (28,231) (6,001) (22,248) (14,042) (218,087)
Profit before tax 347,227 14,877 10,927 3,950 (11,131) 350,973
Income tax expense (49,175) (1,193) (13) (1,180) (117) (50,485)
Profit for the period 298,052 13,684 10,914 2,770 (11,248) 300,488
Profit attributable to: - - - - - -
- Shareholders of TBCG 298,041 13,684 10,914 2,770 (12,703) 299,022
- Non-controlling interest 11 - - - 1,455 1,466
Profit for the period 298,052 13,684 10,914 2,770 (11,248) 300,488
* Interest expense includes net interest gains from currency swaps
** Includes intra-group eliminations
*** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations
Consolidated Income Statement and Other Comprehensive Income 9M'23
In thousands of GEL Georgia FS Uzbekistan** Payme TBC UZ Other Group
***
Interest income 1,960,800 171,804 88 171,804 5,024 2,137,628
Interest expense* (857,732) (82,745) (250) (82,584) (3,088) (943,565)
Net interest income 1,103,068 89,059 (162) 89,220 1,936 1,194,063
Fee and commission income 410,393 70,473 55,331 39,320 3,143 484,009
Fee and commission expense (164,591) (17,012) (4,907) (36,264) (180) (181,783)
Net fee and commission income 245,802 53,461 50,424 3,056 2,963 302,226
Insurance profit 22,699 - - - (499) 22,200
Net gains from currency derivatives, foreign currency operations and 202,257 139 9 130 (13,700) 188,696
translation
Net gains from disposal of investment securities measured at fair value 5,872 - - - - 5,872
through other comprehensive income
Other operating income 14,406 68 1 67 5,780 20,254
Share of profit of associates 913 - - - - 913
Other operating non-interest income 246,147 207 10 197 (8,419) 237,935
Credit loss allowance for loans to customers (99,425) (23,576) - (23,576) 982 (122,019)
Credit loss allowance for finance lease receivable (3,718) (1,496) - (1,496) 47 (5,167)
Credit loss allowance for performance guarantees and credit related (292) - - - - (292)
commitments
Credit loss allowance for other financial assets (4,696) (357) (266) (91) - (5,053)
Credit loss recovery for financial assets measured at fair value through other (659) - - - - (659)
comprehensive income
Net impairment of non-financial assets 220 - - - (291) (71)
Operating income after expected credit and non-financial asset impairment 1,486,447 117,298 50,006 67,310 (2,782) 1,600,963
losses
Staff costs (279,116) (28,347) (7,273) (21,074) (25,743) (333,206)
Depreciation and amortisation (75,370) (6,485) (782) (5,703) (5,379) (87,234)
Allowance of provision for liabilities and charges (155) - - - - (155)
Administrative and other operating expenses (135,347) (40,754) (9,121) (31,651) (7,731) (183,832)
Operating expenses (489,988) (75,586) (17,176) (58,428) (38,853) (604,427)
Profit before tax 996,459 41,712 32,830 8,882 (41,635) 996,536
Income tax (expense)/credit (145,133) (2,816) (13) (2,803) (53) (148,002)
Profit for the period 851,326 38,896 32,817 6,079 (41,688) 848,534
Profit attributable to:
- Shareholders of TBCG 851,294 38,896 32,817 6,079 (53,709) 836,481
- Non-controlling interest 32 - - - 12,021 12,053
Profit for the period 851,326 38,896 32,817 6,079 (41,688) 848,534
* Interest expense includes net interest gains from currency swaps
** Includes intra-group eliminations
*** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations
Consolidated Key Ratios by Business Lines
3Q'23 Georgia FS Uzbekistan Group
Profitability ratios:
ROE(1) 26.4% 23.4% 27.6%
ROA(2) 4.2% 6.8% 4.1%
Cost to income(3) 31.5% 51.9% 35.4%
NIM(4) 6.5% 20.9% 6.9%
Loan yields(5) 11.7% 41.9% 12.6%
Deposit rates(6) 4.4% 24.4% 4.9%
Cost of funding(7) 5.0% 24.0% 5.4%
Asset quality & portfolio concentration:
Cost of risk(8) 0.7% 7.3% 0.9%
PAR 90 to Gross Loans(9) 1.2% 2.1% 1.2%
NPLs to Gross Loans(10) 2.0% 2.1% 2.0%
NPL provision coverage(11) 82.5% 199.9% 87.6%
Total NPL coverage(12) 148.6% 199.9% 151.6%
9M'23 Georgia FS Uzbekistan Group
Profitability ratios:
ROE(1) 25.9% 24.6% 27.00%
ROA(2) 4.1% 7.5% 4.0%
Cost to income(3) 30.7% 53.0% 34.9%
NIM(4) 6.4% 20.4% 6.7%
Loan yields(5) 11.8% 42.6% 12.6%
Deposit rates(6) 4.5% 24.8% 4.9%
Cost of funding(7) 5.1% 24.4% 5.5%
Asset quality & portfolio concentration:
Cost of risk(8) 0.7% 6.6% 0.9%
PAR 90 to Gross Loans(9) 1.2% 2.1% 1.2%
NPLs to Gross Loans(10) 2.0% 2.1% 2.0%
NPL provision coverage(11) 82.5% 199.9% 87.6%
Total NPL coverage(12) 148.6% 199.9% 151.6%
For the ratio definitions and exchange rates, please refer to appendix 12.
6) Market shares 8 (#_ftn8) in Georgia
Market shares Sep'23 Jun'23 Sep'22 Change YoY Change QoQ
Total loans 39.1% 38.8% 38.8% 0.3 pp 0.3 pp
Individual loans 38.0% 38.2% 38.4% -0.4 pp -0.2 pp
Legal entities loans 40.5% 39.6% 39.3% 1.2 pp 0.9 pp
Total deposits 37.5% 39.9% 40.0% -2.5 pp -2.4 pp
Individual deposits 36.6% 37.9% 38.7% -2.1 pp -1.3 pp
Legal entities deposits 38.5% 42.2% 41.5% -3.0 pp -3.7 pp
7) Subsidiaries of TBC Bank Group PLC 9 (#_ftn9)
Ownership / voting Country Year of incorporation Industry
Subsidiary % as of
30-Sep 2023
JSC TBC Bank 99.9% Georgia 1992 Banking
United Financial Corporation JSC 99.5% Georgia 2001 Card processing
TBC Capital LLC 100.0% Georgia 1999 Brokerage
TBC Leasing JSC 100.0% Georgia 2003 Leasing
TBC Kredit LLC 100.0% Azerbaijan 1999 Non-banking credit institution
TBC Pay LLC 100.0% Georgia 2008 Processing
Index LLC 100.0% Georgia 2009 Real estate management
TBC Invest LLC 100.0% Israel 2011 Financial services
TBC Asset management LLC 100.0% Georgia 2021 Asset Management
JSC TBC Insurance 100.0% Georgia 2014 Insurance
Redmed LLC 100.0% Georgia 2019 Healthcare
E-commerce
T NET LLC 100.0% Georgia 2019 Asset Management
TKT UZ 100.0% Uzbekistan 2019 Retail Trade
Artarea.ge LLC 100.0% Georgia 2012 PR and marketing
Marjanishvili 7 LLC 100.0% Georgia 2020 Food and Beverage
Space JSC 100.0% Georgia 2021 Software Services
Space International JSC 100.0% Georgia 2021 Software Services
TBC Group Support LLC 100.0% Georgia 2020 Risk Monitoring
Inspired LLC (Payme) 51.0% Uzbekistan 2011 Processing
TBC Bank JSC UZ 60.2% Uzbekistan 2020 Banking
TBC Fin Service LLC 100.0% Uzbekistan 2019 Retail Leasing
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=1246890)
) 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=1513163)
). The exercise prices are dependent on a set of commercial and financial
parameters.
Following the strong growth in the Group's Uzbek operations, the Group has
re-assessed the accounting treatment for these options in 4Q 2022. According
to 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 3Q 2022 balances by recognising a redemption
liability for put options and the equal and opposite effect on other reserves
in equity.
In May 2023 TBC Bank Group PLC finalized the acquisition process of the
remaining 49% interest of Inspired LLC. The acquisition price paid to minority
shareholders amounted to GEL 141,234 thousand. Accordingly, respective
redemption liability has been derecognized as it is fully settled at the
acquisition date.
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 3Q 2022, the Group recognised GEL 374 million as a redemption liability and
the equal and opposite effect on other reserves in equity.
3Q'22 Reported Restated
ROE 31.1% 33.6%
ROE (cumulative) 26.6% 28.6%
Leverage (times) 6.5x 7.1x
9) Replacement of IFRS 4 with IFRS 17
The adoption of IFRS 17 will affect the financial reporting processes and
procedures of the Group, as applications of the core principles outlined above
will require additional information to be gathered and processed, as well as
additional judgements to be made by the management. To ensure smooth and
timely adoption of IFRS 17, the Group launched a separate implementation
project. After the transition to IFRS 17 the Group will use premium allocation
approach for its insurance subsidiary for following insurance contracts: motor
insurance, border MTPL, property insurance, agro (crop) insurance,
health-related insurance and liability and other insurance with product
classification of insurance contract and measurement model of premium
allocation approach.
The Group has applied the full retrospective approach for all of its
portfolios of insurance contracts.
10) Loan Book Breakdown by Stages According IFRS 9
In millions of GEL Sep'23 Jun'23 Sep'22
Total loans*
Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions
1 18,674 98 17,687 99 15,456 110
2 1,305 102 1,279 100 1,487 113
3 386 162 395 159 423 180
Total 20,365 362 19,361 358 17,366 403
Georgia FS Retail Sep'23 Jun'23 Sep'22
Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions
1 6,438 46 6,249 48 5,796 63
2 584 61 584 64 638 90
3 110 68 113 71 155 96
Total 7,132 175 6,946 183 6,589 249
Georgia FS CIB Sep'23 Jun'23 Sep'22
Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions
1 6,955 18 6,474 18 5,313 19
2 330 1 346 0 525 1
3 95 31 100 30 80 25
Total 7,380 50 6,920 48 5,918 45
Georgia FS MSME Sep'23 Jun'23 Sep'22
Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions
1 4,680 23 4,463 24 4,079 23
2 358 31 320 28 315 21
3 166 51 167 48 177 48
Total 5,204 105 4,950 100 4,571 92
Uzbekistan Sep'23 Jun'23 Sep'22
Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions
1 593 10 492 8 255 3
2 25 6 22 4 6 1
3 14 11 13 9 8 6
Total 632 27 527 21 269 10
* Total loans include Azerbaijan loan portfolio
11) Glossary
Terminology Definition
BVPS Book value per share.
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.
EPS Earnings per share.
Gross merchandise value (GMV) GMV equals the total value of sales over the given period, including auctions
through housing and auto platforms, as well as listing fees.
NBG National Bank of Georgia.
12) Ratio Definitions and Exchange Rates
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 on 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$/GEL exchange rate of 2.6177 as of 30
June 2023. To calculate the YoY growth without the currency exchange rate
effect, we used the US$/GEL exchange rate of 2.8352 as of 30 September 2022.
As of 30 June 2023, the US$/GEL exchange rate equalled 2.6783. For P&L
items growth calculations without the currency effect, we used the average
US$/GEL exchange rate for the following periods: 3Q 2023 of 2.6215, 2Q 2023 of
2.5586, 3Q 2022 of 2.8235, 9M 2023 of 2.6056, 9M 2022 of 2.9769.
1 (#_ftnref1) Note: For better presentation purposes, certain financial
numbers are rounded the nearest whole number.
2 (#_ftnref2) Reported per IFRS.
3 (#_ftnref3) Based on data published by the Central Bank of Uzbekistan.
4 (#_ftnref4) Remittances from Russia are adjusted for double counting with
tourism inflows and other similar effects, based on TBC Capital estimates.
5 (#_ftnref5) Based on data published by NBG and FX-adjusted by TBC, based
on Dec-2022 end of period exchange rate.
6 (#_ftnref6) Based on data published by Uzstat.
7 (#_ftnref7) Based on data published by Central Bank of Uzbekistan.
8 (#_ftnref8) Based on data published by National Bank of Georgia on the
analytical tool Tableau.
9 (#_ftnref9) TBC Bank Group PLC became the parent company of JSC TBC Bank
on 10 August 2016.
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