REG - TBC Bank Group PLC - Final Results <Origin Href="QuoteRef">TBCG.L</Origin> - Part 2
22/02/2018 07:05
- Part 2: For the preceding part double click ID:nRSV6184Fa
Segments and Currencies
PAR 30 Dec-17 Sep-17
GEL FC Total GEL FC Total
Corporate 0.0% 2.0% 1.5% 0.3% 2.8% 2.1%
Retail 2.9% 2.0% 2.4% 3.2% 2.2% 2.7%
MSME 1.5% 3.1% 2.5% 1.7% 4.1% 3.2%
Total 2.1% 2.2% 2.2% 2.3% 2.9% 2.7%
(1 )loans overdue by more than 30 days to gross loans
Total
The total PAR 30 decreased by 0.5pp QoQ. The decrease in PAR 30 ratio in 4Q
2017 is related to improvement across all segment. PAR 30 in local currency
decreased by 0.2pp to 2.1%, while PAR 30 in foreign currency dropped by 0.7pp
to 2.2%.
Retail Segment
The retail segment PAR 30 amounted to 2.4%, down by 0.3% QoQ. The QoQ
decrease was related to the stable performance of the book. The retail PAR 30
in local currency decreased by 0.3pp to 2.9%, while the PAR 30 in foreign
currency decreased by 0.2pp to 2.0%.
Corporate
The corporate segment PAR 30 amounted to 1.5%, down by 0.6pp QoQ. The
corporate PAR 30 in local currency dropped by 0.3%, while the PAR 30 in
foreign currency decreased by 0.8pp to 2.0%.
MSME
The MSME segment PAR 30 amounted to 2.5%, down by 0.7pp QoQ. The decrease was
driven by the improved performance of the book. The MSME PAR 30 in local
currency decreased by 0.2pp to 1.5%, while PAR 30 in foreign currency was down
by 1.0pp to 3.1%.
NPLs
NPLs Dec-17 Sep-17
GEL FC Total GEL FC Total
Corporate 0.0% 4.2% 3.2% 0.3% 4.7% 3.4%
Retail 2.6% 2.8% 2.7% 2.8% 3.1% 2.9%
MSME 2.2% 6.0% 4.6% 2.7% 6.0% 4.8%
Total 2.1% 4.1% 3.3% 2.3% 4.3% 3.5%
Total
Total NPLs stood at 3.3%, down by 0.2 pp on a QoQ basis. The NPLs in local
currency decreased by 0.2pp to 2.1%, while NPLs in foreign currency dropped by
0.2pp to 4.1%.
Retail Segment
Retail NPLs stood at 2.7%, down by 0.2pp QoQ. The Retail NPLs in local
currency decreased by 0.2pp to 2.6%, while NPLs in foreign currency decreased
by 0.3pp to 2.8%.
Corporate
Corporate NPLs stood at 3.2% down by 0.2pp on a QoQ basis. The corporate NPLs
in local currency declined by 0.3pp to 0.0%, while NPLs in foreign currency
decreased by 0.5pp to 4.2%.
MSME
MSME NPLs declined by 0.2pp on a QoQ basis, to 4.6%. The MSME NPLs in local
currency decreased by 0.5pp to 2.2%, while NPLs in foreign currency remained
stable at 6.0%.
NPLs Coverage
NPLs Coverage Dec-17(including IFRS9 impact) Sep-17
Exc. Collateral Incl. Collateral Exc. Collateral Incl. Collateral
Corporate 86.6% 211.0% 52.5% 256.8%
Retail 154.0% 237.3% 120.6% 201.6%
MSME 54.6% 170.6% 49.7% 172.5%
Total 104.7% 209.4% 80.5% 206.8%
Total
NPL coverage ratios per IAS 39 stood at 81.8% and 186.5%, including
collateral.
Retail Segment
NPL coverage ratios per IAS 39 stood at 120.8% and 204.1%, including
collateral.
Corporate
NPL coverage ratios per IAS 39 stood at 63.2% and 187.7%, including
collateral.
MSME
NPL coverage ratios per IAS 39 stood at 46.1% and 162.2%, including
collateral.
Liabilities
As of 31 December 2017, TBC Bank's total liabilities amounted to GEL 11,075.5
million, up by 7.0% QoQ. The growth of GEL 728.8 million was primarily due to
a GEL 720.3 million, or 10.1%, increase in customer deposits. Total
liabilities also grew due to the rise in other financial liabilities by a GEL
28.4 million as well as the increase in subordinated debt by GEL15.6 million.
This effect was slightly offset by a GEL 55.2 million, or 2.1% decrease in
amounts due to credit institutions.
Liquidity
The Bank's liquidity ratio, as defined by the NBG, stood at 32.5% as of 31
December 2017, compared to 35.3% as of 30 September 2017. As of 31 December
2017, the newly introduced short term liquidity ratio, the total LCR, as
defined by NBG, was 112.7%, above the 100.0% limit, while the LCR for GEL and
FC stood at 95.6% and 122.9% respectively, - both higher of their respective
limits of 75% and 100%.
Total Equity
As of 31 December 2017, TBC's total equity amounted to GEL 1,890.5 million, up
by GEL 100.1 million from GEL 1,790.3 million as of 30 September 2017. The QoQ
change in equity was mainly due to the net profit contribution in respective
period.
Regulatory Capital
In December 2017, the National Bank of Georgia introduced new capital adequacy
requirements in order achieve better compliance with Basel III framework. More
information can be found on page 56.
According to the newly introduced methodology, as of 31 December 2017, the
Bank's Basel III Tier 1 and Total Capital Adequacy Ratios (CAR) stood at 13.4%
and 17.5%, respectively, compared to minimum required levels of 10.3% and
15.2%.
In December 2017, The Bank's Basel III Tier 1 Capital amounted to GEL 1,437.2
million. The Bank's Basel III Total Capital amounted to GEL 1,885.3 million.
Risk Weighted Assets amounted to GEL 10,753.2 million as of 31 December 2017.
Results by Segments and Subsidiaries
The segment definitions are as per below:
· Corporate - Legal Entities with an annual revenue of GEL 8.0
million or more or who have been granted a loan in an amount equivalent to USD
1.5 million or more. Some other business customers may also be assigned to
this segment or transferred to the MSME segment on a discretionary basis.
· MSME (Micro, Small and Medium) - all business customers who are
not included in either Corporate and Retail segments; or Legal Entities who
have been granted a Pawn shop loan;
· Retail - all non-business individual customers or individual
business customers who have been granted a loan in an amount equivalent below
USD 8.0 thousand. All individual customers are included in retail deposits.
· Corp. Centre - comprises of the Treasury, other support and back
office functions, and non-banking subsidiaries of the Group.
Businesses customers are all legal entities or individuals who have been
granted a loan for business purpose.
Income Statement by Segments
4Q Retail MSME Corporate Corp.Centre Total
Interest Income 147,324 49,741 60,468 30,488 288,020
Interest Expense (31,444) (3,468) (31,233) (56,482) (122,626)
Net Transfer Pricing (21,443) (14,554) 8,995 27,002 0
Net Interest Income 94,437 31,720 38,230 1,008 165,395
Fee and Commission Income 37,573 5,760 11,020 1,320 55,673
Fee and Commission Expense (11,801) (2,622) (1,630) (665) (16,719)
Net fee and Commission Income 25,772 3,138 9,390 655 38,954
Gross Insurance Profit 0 0 0 1,919 1,919
Gains Less Losses from Trading in Foreign Currencies 7,044 5,966 13,367 (754) 25,622
Foreign Exchange Translation Gains Less Losses/(Losses Less Gains) 0 0 0 92 92
Net Losses from Derivative Financial Instruments 0 0 0 3 3
(Losses Less Gains)/Gains Less Losses from Disposal of Investment Securities 0 0 0 93 93
Available for Sale
Other Operating Income 3,282 718 7,123 (131) 10,991
Share of profit of associates 0 0 0 249 249
Other Operating Non-Interest Income 10,326 6,684 20,489 (450) 37,049
Other Operating Non-Interest Income and Gross Insurance Profit 10,326 6,684 20,489 1,469 38,968
Provision for Loan Impairment (21,161) (3,078) (4,181) 0 (28,421)
(Provision)/Recovery of Provision for Liabilities, Charges and Credit Related 41 (18) (924) (118) (1,019)
Commitments
Recovery of Provision/(Provision) for Impairment of Investments in Finance 0 0 0 (79) (79)
Lease
(Provision)/Recovery of Provision for Impairment of other Financial Assets (31) 43 (6,586) (342) (6,917)
Operating income after provisions for impairment 109,383 38,489 56,416 2,593 206,882
Staff Costs (34,886) (7,042) (7,465) (4,712) (54,105)
Depreciation and Amortization (8,332) (1,377) (379) (337) (10,425)
Administrative and Other Operating Expenses (23,163) (4,479) (2,226) (5,243) (35,111)
Operating Expenses (66,381) (12,898) (10,070) (10,292) (99,640)
Profit before Tax 43,002 25,591 46,347 (7,698) 107,241
Income Tax Expense (5,612) (3,746) (7,235) 6,106 (10,487)
Profit for the Period 37,390 21,845 39,112 (1,592) 96,754
Portfolios by Segments
In thousands of GEL Dec-17 Sep-17
Loans and Advances to Customers
Consumer 2,128,658 1,972,012
Mortgage 2,069,728 1,900,186
Pawn 34,767 34,861
Retail 4,233,153 3,907,059
Corporate 2,475,392 2,128,478
MSME 1,844,671 1,732,096
Total Loans and Advances to Customers (Gross) 8,553,217 7,767,634
Less: Provision for Loan Impairment (227,864) (218,573)
Total Loans and Advances to Customers (Net) 8,325,353 7,549,061
Customer Accounts
Retail 4,378,265 4,015,754
Corporate 2,410,862 2,130,763
MSME 1,027,690 950,005
Total Customer Accounts 7,816,817 7,096,523
Retail Banking
As of 31 December 2017, retail loans stood at GEL 4,233.2 million, up by GEL
326.1 million, or 8.3%, QoQ. This increase was attributable to a GEL 169.5
million, or 8.9% increase in mortgage loans and a GEL 156.6 million, or 7.9%
increase in consumer loans. As of 31 December 2017, TBC Bank's retail loans
accounted for 40.2% market share of total individual loans. As of 31 December
2017, foreign currency loans represented 49.3% of the total retail loan
portfolio.
In the reporting period, retail deposits rose to GEL 4,378.3 million, up by
GEL 362.5 million or 9.0% QoQ. Retail deposits accounted for 41.3% market
share of total individual deposits. The increase in retail deposits was driven
by a GEL 182.3 million, or 10.2% rise in current deposits and a GEL 180.2
million, or 8.1% rise in term deposits. As of 31 December 2017 term deposits
accounted for 54.9% of the total retail deposit portfolio, while foreign
currency deposits represented 83.8% of the total retail deposit portfolio.
In 4Q 2017, retail loan yields and deposit rates stood at 14.2% and 2.9%
respectively. The segment's cost of risk on loans was 2.0%, down by 1.2pp QoQ,
the decrease is related to improved performance of the overall retail book.
The retail segment contributed 38.6%, or GEL 37.4 million, to the TBC's
total net income in 4Q 2017.
Corporate Banking
As of 31 December 2017, corporate loans amounted to GEL 2,475.4, up by GEL
346.9 million or 16.3% QoQ. Foreign currency loans accounted for 74.6% of the
total corporate loan portfolio. Market share in legal entities increased by
0.4pp QoQ to 36.0%.
As of the same date, corporate deposits totalled GEL 2,410.9 million, up by
GEL 280.1 million or 13.1% QoQ. Foreign currency corporate deposits
represented 49.8% of the total corporate deposit portfolio. Market share
increased by 2.1pp and stood at 37.9%.
In 4Q 2017, corporate loan yields and deposit rates stood at 10.0% and 5.3%,
respectively. In the same period, the cost of risk on loans was 0.7%. Negative
CoR in 2017 is driven by good performance of the book. In terms of
profitability, the corporate segment's net profit reached GEL 39.1 million, or
40.4% of the Bank's total net income.
MSME Banking
As of 31 December 2017, MSME loans amounted to GEL 1,844.7, up by GEL 112.6
million, or 6.5%, QoQ. Foreign currency loans accounted for 63.8% of the total
MSME portfolio.
As of the same date, MSME deposits stood at GEL 1,027.7 million, up by GEL
77.7 million or 8.2% QoQ. Foreign currency MSME deposits represented 53.7%
of the total MSME deposit portfolio.
In 4Q 2017, MSME loan yields and deposit rates stood at 10.9% and 1.4%,
respectively while the cost of risk on loans was 0.7%, down by 0.2pp QoQ
driven by improved of the loan book. In terms of profitability, net profit for
the MSME segment amounted to GEL 21.8 million, or 22.6%, of TBC's total net
income.
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance Sheet
In thousands of GEL Dec-17 Sep-17
Cash and cash equivalents 1,431,477 1,445,521
Due from other banks 39,643 41,696
Mandatory cash balances with National Bank of Georgia 1,033,818 1,020,695
Loans and advances to customers (Net) 8,325,353 7,549,061
Investment securities available for sale 657,938 685,210
Investment in associates 1,277 1,309
Investment securities held to maturity 449,538 428,163
Investments in finance leases 143,837 111,223
Investment properties 79,232 88,750
Goodwill 28,657 28,657
Intangible assets 83,492 69,864
Premises and equipment 366,913 321,431
Other financial assets 146,144 113,942
Deferred tax asset 2,855 3,592
Current income tax prepayment 19,084 18,380
Other assets 156,651 209,427
TOTAL ASSETS 12,965,910 12,136,922
LIABILITIES
Due to Credit Institutions 2,620,714 2,675,930
Customer accounts 7,816,817 7,096,523
Current income tax liability 447 362
Debt Securities in issue 20,695 19,818
Deferred income tax liability 602 851
Provisions for liabilities and charges 13,200 11,072
Other financial liabilities 91,753 59,616
Subordinated debt 426,788 411,193
Other liabilities 84,440 71,251
TOTAL LIABILITIES 11,075,457 10,346,615
EQUITY
Share capital 1,605 1,605
Share premium 714,651 714,651
Retained earnings 1,246,327 1,137,497
Group reorganisation reserve (162,167) (162,167)
Share based payment reserve (3,634) 7,291
Revaluation reserve for premises 70,045 70,045
Revaluation reserve for available-for-sale securities 1,731 863
Cumulative currency translation reserve (7,360) (7,301)
TOTAL EQUITY 1,861,198 1,762,485
Non-controlling interest 29,255 27,822
TOTAL EQUITY 1,890,453 1,790,307
TOTAL LIABILITIES AND EQUITY 12,965,910 12,136,922
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL 4Q'17 3Q'17 4Q'16
Interest income 288,020 258,252 243,344
Interest expense (122,626) (111,705) (89,655)
Net interest income 165,395 146,546 153,689
Fee and commission income 55,673 48,552 45,460
Fee and commission expense (16,719) (16,763) (17,068)
Net Fee and Commission Income 38,954 31,790 28,392
Gross insurance profit 1,919 1,773 256
Gains less losses from trading in foreign currencies 25,622 18,086 25,472
Foreign exchange translation gains less losses 92 2,245 (2,519)
Gains less losses/(losses less gains) from derivative financial instruments 3 (1) 94
(Losses less gains) / gains less losses from disposal of investment securities 93 0 498
available for sale
Share of profit of associates 249 84 0
Other operating income 10,991 6,572 12,372
Other operating non-interest income 37,049 26,985 35,916
Provision for loan impairment (28,421) (25,036) (10,405)
Provision for impairment of investments in finance lease (79) (285) (322)
Provision for/ (recovery of provision) performance guarantees and credit (1,019) (680) 2,787
related commitments
Provision for impairment of other financial assets (6,917) (1,097) (1,727)
Operating income after provisions for impairment 206,882 179,997 208,586
Staff costs (54,105) (46,620) (62,544)
Depreciation and amortisation (10,425) (9,317) (7,435)
Provision for liabilities and charges 0 0 (2,210)
Administrative and other operating expenses (35,111) (27,974) (39,595)
Operating expenses (99,640) (83,910) (111,785)
Profit before tax 107,241 96,086 96,801
Income tax expense (10,487) (9,327) (8,767)
Profit for the period 96,754 86,759 88,034
Other Comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Revaluation 946 1,929 (3,196)
Gains less losses reclassified to profit or loss upon disposal 0 0 (2,757)
Income tax recorded directly in other comprehensive income 0 0 248
Exchange differences on translation to presentation currency (60) 399 147
Items that will not be reclassified to profit or loss:
Income tax recorded directly in other comprehensive income 0 0 422
Other comprehensive income for the period 886 2,328 (5,136)
Total comprehensive income for the period 97,640 89,086 82,898
Profit attributable to:
- Owners of the Bank 95,367 85,524 89,359
- Non-controlling interest 1,388 1,235 (1,326)
Profit for the period 96,754 86,759 88,034
Total comprehensive income is attributable to:
- Owners of the Bank 96,179 87,881 84,224
- Non-controlling interest 1,461 1,205 (1,326)
Total comprehensive income for the period 97,640 89,086 82,898
4Q 2017 Bank Republic Financial Results Based on Internal Estimates
Bank Republic Profit and Loss
In thousands of GEL 4Q 2017
Interest income 35,016
Interest expense 9,217
Net interest income 25,799
Card operations -322
Settlement transactions 1,133
Guarantees and letters of credit 650
Other 90
Net fee and commission income 1,551
FX gain/losses 3,268
Other 1,579
Other non-interest income 4,847
Operating income 32,197
Staff costs 8,985
Depreciation and amortization 1,047
Administrative and other operating expenses 5,387
Operating expenses 15,418
Operating profit 16,778
Bank Republic Loan Portfolio
In thousands of GEL as of 31 December 2017
Total gross loans 1,096,158
Retail 714,959
Corporate 245,235
MSME 135,964
Bank Republic Deposit Portfolio
In thousands of GEL as of 31 December 2017
Total deposits 488,855
Retail 311,984
Corporate 113,406
MSME 63,464
Key Ratios
Average Balances
Average balances included in this document are calculated as the average of
the relevant monthly balances as of each month-end. Balances have been
extracted from TBC's unaudited and consolidated management accounts prepared
from TBC's accounting records. These were used by the Management for
monitoring and control purposes.
Key Ratios
Ratios (based on monthly averages, where applicable) 4Q'17 3Q'17 4Q'16
Underlying ROE(1) 21.0% 20.0% 23.5%
Reported ROE(2) 21.0% 19.8% 24.2%
Underlying ROA(3) 3.0% 3.0% 3.5%
Reported ROA(4) 3.0% 2.9% 3.7%
Underlying Cost to Income(5) 41.0% 39.8% 47.0%
Reported Cost to Income(6) 41.0% 40.5% 51.2%
Cost of Risk(7) 1.4% 1.3% 0.6%
NIM(8) 6.4% 6.2% 7.9%
Risk Adjusted NIM(9) 5.2% 5.0% 6.3%
Loan Yields(10) 12.3% 11.9% 13.8%
Risk Adjusted Loan Yields(11) 11.1% 10.7% 12.6%
Deposit rates(12) 3.5% 3.4% 3.3%
Yields on interest Earning Assets(13) 11.2% 10.9% 12.5%
Cost of Funding(14) 4.6% 4.5% 4.5%
Spread(15) 6.6% 6.4% 8.0%
PAR 90 to Gross Loans(16) 1.4% 1.6% 1.3%
NPLs to Gross Loans(17) 3.3% 3.5% 3.5%
NPLs coverage per IAS 39(18) 81.8% 80.5% 88.4%
NPLs coverage with collateral per IAS 39(19) 186.5% 206.8% 222.5%
NPLs coverage per IFRS 9(20) 104.7% N/A N/A
NPLs coverage with collateral per IFRS 9(21) 209.4% N/A N/A
Provision Level to Gross Loans(22) 2.7% 2.8% 3.1%
Related Party Loans to Gross Loans(23) 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(24) 8.2% 8.6% 7.6%
Top 20 Borrowers to Total Portfolio(25) 12.4% 12.3% 11.3%
Net Loans to Deposits plus IFI Funding(26) 92.5% 91.5% 93.4%
Net Stable Funding Ratio(27) 124.4% 134.5% 108.4%
Liquidity Coverage Ratio(28) 113% 115.2% N/A
Leverage(29) 6.9x 6.8x 6.8x
Regulatory Tier 1 CAR (Basel III)(30) 13.4% 14.1%** N/A
Regulatory Total CAR (Basel III)(31) 17.5% 18.6%** N/A
Regulatory Tier 1 CAR (Basel II/III)(32) 10.3%* 10.8% 10.4%
Regulatory Total CAR (Basel II/III)(33) 13.5%* 14.5% 14.2%
*Estimated Basel II/III ratios as of 31 December 2017 ** estimated Basel III
ratios according to new NBG regulation which came into force from the end of
2017
Ratio definitions
1. Underlying return on average total equity (ROE) equals underlying net
income attributable to owners divided by monthly average of total shareholders
'equity attributable to the PLC's equity holders for the same period adjusted
for the respective one-off items; Annualized where applicable.
2.Return on average total equity (ROE) equals net income attributable to
owners divided by monthly average of total shareholders 'equity attributable
to the PLC's equity holders for the same period; Annualized where applicable.
3. Underlying return on average total assets (ROA) equals underlying net
income of the period divided by monthly average total assets for the same
period. Annualised where applicable.
4. Return on average total assets (ROA) equals net income of the period
divided by monthly average total assets for the same period. Annualised where
applicable.
5. Underlying cost to income ratio equals total underlying operating expenses
for the period divided by the total underlying revenue for the same period.
(Revenue represents the sum of net interest income, net fee and commission
income and other non-interest income).
6. 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).
7. Cost of risk equals provision for loan impairment divided by monthly
average gross loans and advances to customers. Annualized where applicable.
8. 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 corporate shares, net investment in
finance lease, net loans, amount due from credit institutions. The latter
excludes all items from cash and cash equivalents, excludes EUR mandatory
reserves with NBG which currently has negative interest, and includes other
earning items from due from banks.
9. Risk Adjusted Net interest margin is NIM minus cost of risk without one
-offs and currency effect
10. Loan yields equal interest income on loans and advances to customers
divided by monthly average gross loans and advances to customers. Annualised
where applicable.
11. Risk Adjusted Loan yield is loan yield minus cost of risk without one-offs
and currency effect
12. Deposit rates equal interest expense on customer accounts divided by
monthly average total customer deposits. Annualised where applicable.
13. Yields on interest earning assets equal total interest income divided by
monthly average interest earning assets. Annualized where applicable.
14. Cost of funding equals total interest expense divided by monthly average
interest bearing liabilities. Annualised where applicable.
15. Spread equals difference between yields on interest earning assets
(including but not limited to yields on loans, securities and due from banks)
and cost of funding (including but not limited to cost of deposits, cost on
borrowings and due to banks).
16. 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.
17. NPLs to gross loans equals loans with 90 days past due on principal or
interest payments, and loans with 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.
18. NPLs coverage ratio equals total loan loss provision calculated per IAS 39
divided by the NPL loans.
19. NPLs coverage with collateral ratio equals loan loss provision calculated
per IAS 39 plus total collateral amount of NPL loans (excluding third party
guarantees) discounted at 30-50% depending on segment type divided by the NPL
loans.
20. NPLs coverage ratio equals total loan loss provision calculated per IFRS 9
divided by the NPL loans.
21. NPLs coverage with collateral ratio equals loan loss provision calculated
per IFRS 9 plus total collateral amount of NPL loans (excluding third party
guarantees) discounted at 30-50% depending on segment type divided by the NPL
loans.
22. Provision level to gross loans equals loan loss provision divided by the
gross loan portfolio for the same period.
23. Related party loans to total loans equals related party loans divided by
the gross loan portfolio.
24. Top 10 borrowers to total portfolio equals total loan amount of top 10
borrowers divided by the gross loan portfolio.
25. Top 20 borrowers to total portfolio equals total loan amount of top 20
borrowers divided by the gross loan portfolio.
26. Net loans to deposits plus IFI funding ratio equals net loans divided by
total deposits plus borrowings received from international financial
institutions.
27. Net stable funding ratio equals available amount of stable funding divided
by required amount of stable funding as defined in Basel III. NSFR ratio for
before 2Q 2017 is calculated per updated internal methodology in line with
Basel 2014 guidelines.
28. Liquidity coverage ratio equals high-quality liquid assets divided by
total net cash outflow amount as defined by NBG.
29. Leverage equals total assets to total equity.
30. Regulatory tier 1 CAR equals tier I capital divided by total risk weighted
assets, both calculated in accordance with the pillar 1 requirements of NBG
Basel III standards. The reporting started from the end of 2017. Calculations
are made for TBC Bank stand-alone, based on local standards.
31. Regulatory total CAR equals total capital divided by total risk weighted
assets, both calculated in accordance with the pillar 1 requirements of NBG
Basel III standards. The reporting started from the end of 2017. Calculations
are made for TBC Bank stand-alone, based on local standards.
32. Regulatory Tier 1 CAR equals Tier I Capital divided by total risk weighted
assets, both calculated in accordance with the NBG Basel II/III requirements.
33. Regulatory Total CAR equals total capital divided by total risk weighted
assets, both calculated in accordance with the NBG Basel II/III requirements
Exchange Rates
To calculate the QoQ growth of the Balance Sheet items without the currency
exchange rate effect, we used USD/GEL exchange rate of 2.4767 as of 30
September 2017. For the calculations of the YoY growth without the currency
exchange rate effect, we used USD/GEL exchange rate of 2.6468 as of 31
December 2016. The USD/GEL exchange rate as of 31 December 2017 equalled
2.5922. For P&L items growth calculations without currency effect, we used
the average USD/GEL exchange rate for the following periods: 4Q 2017 of
2.5933, 3Q 2017 of 2.4207, 4Q 2016 of 2.4958.
Preliminary Unaudited Consolidated Financial Results Overview FY 2017
The information contained in this announcement and its appendices relating to
full year FY17 preliminary results, which were approved by the Board on 21
February 2018, do not constitute statutory accounts under section 434 of the
UK Companies Act 2006. The financial statements of TBC Bank will be included
in the Annual Report and Accounts due to be published in March 2018, and filed
with the Registrar of Companies in due course.
TBC Bank Group PLC financial results are adjusted for certain one-off items,
to enable better analysis of the Group's performance. The reconciliation of
the underlying profit and loss items with the reported profit and loss items
and the underlying ratios are given under the annex 21 section on pages 56-57.
To further enhance the analysis, the Group separately discloses Bank Republic
(BR) effects in 2016 and 2017. Detailed information is given in the annex 22
on pages 58-61.
Income Statement Highlights
in thousands of GEL Y'17 Y'16 Change
Net Interest Income 604,015 490,453 23.2%
Net Fee and Commission Income 125,961 90,268 39.5%
Other Operating Non-Interest Income 131,009 100,341 30.6%
Provisioning Charges (106,907) (53,396) 100.2%
Operating Income after Provisions for Impairment 754,078 627,667 20.1%
Operating Expenses (359,400) (311,988) 15.2%
Profit Before Tax 394,678 315,679 25.0%
Income Tax Expense (34,750) (17,420) 99.5%
Profit for the Year 359,928 298,258 20.7%
Underlying profit for the Year 369,214 273,318 35.1%
Balance Sheet and Capital Highlights
Dec-17 Dec-16 Change
In Millions GEL USD GEL USD
Total Assets 12,965.9 5,001.9 10,769.0 4,068.7 20.4%
Gross Loans 8,553.2 3,299.6 7,358.7 2,780.2 16.2%
Customer Deposits 7,816.8 3,015.5 6,454.9 2,438.8 21.1%
Total Equity 1,890.5 729.3 1,582.6 597.9 19.5%
Regulatory Tier I Capital (Basel III)* 1,437.2 554.4 N/A N/A N/A
Regulatory Total Capital (Basel III)* 1,885.3 727.3 N/A N/A N/A
Regulatory Tier I Capital (Basel II/III) 1,437.2** 554.4** 1,041.2 422.5 38.0%
Regulatory Total Capital (Basel II/III) 1,883.8** 727.7** 1,422.0 576.9 32.5%
Regulatory Risk Weighted Assets (Basel III)* 10,753.2 4,148.3 N/A N/A N/A
Regulatory Risk Weighted Assets (Basel II/III) 13,908.9** 5,365.7** 10,021.5 4,065.8 38.8%
*per new NBG regulation, which came into force in December 2017,
**Figures are based on internal estimates and are presented for comparison
purpose
Key Ratios 13 (#_ftn13) Y'17 Y'16 Change
Underlying ROE 21.4% 20.6% 0.8%
Reported ROE 20.9% 22.4% -1.5%
Underlying ROA 3.2% 3.6% -0.4%
Reported ROA 3.1% 3.9% -0.8%
Underlying Cost to Income 40.5% 42.9% -2.4%
Reported Cost to Income 41.7% 45.8% -4.1%
Cost of Risk 1.2% 1.0% 0.2%
NPL to Gross Loans 3.3% 3.5% -0.2%
Regulatory Tier 1 CAR (Basel III)* 13.4% N/A N/A
Regulatory Total CAR (Basel III)* 17.5% N/A N/A
Regulatory Tier 1 CAR (Basel II/III) 10.3%** 10.4% -0.1%
Regulatory Total CAR (Basel II/III) 13.5%** 14.2% -0.7%
Leverage (Times) 6.9x 6.8x 0.1x
*per new NBG regulation, which came into force in December 2017,
**Figures are based on internal estimates and are presented for comparison
purpose
Income Statement Discussion
Net Interest Income
In thousands of GEL Y'17 Y'16 Change YoY
Loans and Advances to Customers 919,796 688,724 33.6%
Investment Securities Available for Sale 43,735 25,707 70.1%
Due from Other Banks 14,806 4,550 NMF
Bonds Carried at Amortized Cost 32,328 30,714 5.3%
Investment in Leases 23,273 16,566 40.5%
Other 0 165 -100.0%
Interest Income 1,033,939 766,426 34.9%
Customer Accounts 233,884 154,840 51.0%
Due to Credit Institutions 157,122 85,030 84.8%
Subordinated Debt 36,975 34,325 7.7%
Debt Securities in Issue 1,943 1,778 9.3%
Interest Expense 429,924 275,973 55.8%
Net Interest Income 604,015 490,453 23.2%
Net Interest Margin 6.5% 7.8% -1.3%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In FY 2017, net interest income grew by 23.2% YoY to GEL 604.0 million (GEL
493.3 million without the Bank Republic estimated contribution effect),
resulting from a 34.9% higher interest income and 55.8% higher interest
expense.
Without the Bank Republic estimated contribution effect, the interest income
increased by GEL 142.0 million, or 19.5% YoY, mainly driven by a higher
interest income from loans to customers by GEL 114.3 million, or 17.5%. This
is primarily related to the 26.2% gross loan portfolio increase. A rise in
interest income from investment securities (comprising both investment
securities available for sale and bonds carried at amortized cost) of GEL 13.5
million, or 25.1%, also contributed to the overall increase in loan portfolio.
That in turn was driven by the significant rise in the respective portfolio.
In addition, net interest income from due from other banks grew by GEL 7.7
million, which was also determined by the large increase in respective
portfolio.
In FY 2017 the Bank Republic effect mainly contributed a GEL 152.0 million, or
16.5% to the interest income from loans and advances to customers, which
totalled GEL 1,033.9 million, and GEL 8.7 million, or 11.5%, to interest
income from investment securities, which amounted to GEL 76.1 million. As a
result, the overall Bank Republic estimated contribution effect was GEL 163.3
million, or 15.8%, to the interest income.
Loan yields declined over the same period from 13.4% to 12.1%. The drop was
driven by a decrease in rates on FC-denominated loans, from 10.4% to 9.1%, as
well as by decline in GEL-denominated loans rates from 19.0% to 16.9% broadly
in line with the overall market trend. The decline of yields on investment
securities, from 8.6% to 7.8%, over the same period is related to a lower
average refinance rate in the country in FY 2017 compared to FY 2016. As a
result, the yields on average interest earning assets dropped from 12.2% in FY
2016 to 11.1% in FY 2017.
In the reporting period, without the Bank Republic estimated contribution
effect, interest expense increased by GEL 115.3 million, or 44.0% YoY. The
rise was mainly due to a higher interest expense on due to customer accounts
by GEL 61.2 million, or 41.6%, and due to credit institutions by GEL 54.9
million or 69.8%. The growth in interest expense on both customer accounts and
on due to credit institutions was driven by the large increase in respective
portfolios related to the overall business growth.
The Bank Republic estimated contribution effect added GEL 25.4 million, or
10.9%, to the interest expense on customer accounts, which amounted to GEL
233.9 million in FY 2017, and GEL 23.5 million or 15.0% to interest expense on
interest expense due to credit institutions, which amounted to GEL 157.1
million. As a result, the overall Bank Republic contribution effect was a GEL
52.5 million, or 12.2%, to the interest expense.
The cost of deposits increased slightly by 0.1pp to 3.4% in FY 2017 and in the
same period the cost of borrowing dropped to 6.5%, from 7.0% in FY 2016. This
was mainly due to the 1.2 pp decrease in rates on Lari-denominated borrowings
and the 0.2 pp decrease in rates on FC-denominated borrowings. As a result,
the cost of funding ratio remained flat at 4.5%.
Consequently, NIM was 6.5% in FY 2017, compared to underlying NIM of 7.6% in
FY 2016 (or reported NIM of 7.8%)
Fee and Commission Income
In thousands of GEL Y'17 Y'16 Change
Card Operations 82,525 61,115 35.0%
Settlement Transactions 59,739 43,434 37.5%
Guarantees Issued 15,121 11,699 29.2%
Letters of Credit 5,735 6,215 -7.7%
Cash Transactions 17,424 13,013 33.9%
Foreign Exchange Operations 1,339 1,277 4.9%
Other 12,060 6,046 99.5%
Fee and Commission Income 193,944 142,800 35.8%
Card Operations 46,360 34,906 32.8%
Settlement Transactions 7,421 5,795 28.1%
Guarantees Issued 1,801 796 126.3%
Letters of Credit 1,072 1,624 -34.0%
Cash Transactions 4,393 2,633 66.8%
Foreign Exchange Operations 94 190 -50.4%
Other 6,841 6,587 3.9%
Fee and Commission Expense 67,983 52,532 29.4%
Card Operations 36,165 26,209 38.0%
Settlement Transactions 52,317 37,639 39.0%
Guarantees 13,320 10,903 22.2%
Letters of Credit 4,663 4,592 1.6%
Cash Transactions 13,031 10,380 25.5%
Foreign Exchange Operations 1,245 1,086 14.6%
Other 5,219 (541) NMF
Net Fee and Commission Income 125,961 90,268 39.5%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In FY 2017, net fee and commission income totalled GEL 126.0 million, marking
an increase of GEL 35.7 million, or 39.5%, compared to FY 2016. The rise
resulted mainly from a GEL 14.7 million, or 39.0%, gain in net fee and
commission income from settlement transactions; a GEL 10.0 million, or 38.0%,
increase in net card operations; a GEL 2.7 million, or 25.5%, rise in net cash
transactions, and a GEL 2.4 million, or 22.2%, increase in net guarantees. The
Bank Republic estimated contribution was GEL 6.9 million, or 5.5%, in the net
fee and commission income.
Net fee and commission income from card operations expanded due to increase in
number of active cards by 36% YoY, as well as a rise in number of POS
terminals by 12% YoY. Net Fee and commission income from settlement
transactions increased mainly due to increased commission income from money
transfers by 40% and increased volume of settlement transactions by 44% for
one of the subsidiaries, TBC Pay.
Other Operating Non-Interest Income and Gross Insurance Profit
In thousands of GEL Y'17 Y'16 Change
Gains Less Losses from Trading in Foreign Currencies and Foreign Exchange 91,473 67,762 35.0%
Translations
Share of Profit of Associates 909 0 NMF
Gains Less Losses/(Losses Less Gains) from Derivative Financial Instruments (36) (206) -82.3%
Gains less Losses from Disposal of Investment Securities Available for Sale 93 9,293 -99.0%
Revenues from Cash-In Terminal Services 1,093 1,100 -0.6%
Revenues from Operational Leasing 6,544 5,772 13.4%
Gain from Sale of Investment Properties 4,353 2,623 66.0%
Gain from Sale of Inventories of Repossessed Collateral 2,383 2,382 0.1%
Administrative Fee Income from International Financial Institutions 0 644 -100.0%
Revenues from Non-Credit Related Fines 1,408 658 114.1%
Gain on Disposal of Premises and Equipment 1,017 208 NMF
Other 14,998 9,848 52.3%
Other Operating Income 31,797 23,236 64.2%
Other Operating Non-Interest Income 124,236 100,085 24.1%
Gross Insurance Profit 6,773 256 NMF
Other Operating Non-Interest Income and Gross Insurance Profit 131,009 100,341 30.6%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In FY 2017 total other operating non-interest income and gross insurance
profit increased by GEL 30.7 million, or by 30.6%, YoY to GEL 131.0 million in
FY 2017. This increase was mainly driven by a GEL 23.7 million or 35.0% rise
in net gains less losses from trading in foreign currencies and foreign
exchange translations mainly driven by increased trade volume and Bank
Republic contribution. Another large contributor to the increase in other
operating non-interest income and gross insurance profit is a GEL 6.5 million
increase in gross insurance profit from our subsidiary- TBC Insurance, which
was acquired in October 2016. As a result, the group's consolidated figures
include contribution from TBC Insurance only in the 4Q 2016, while it has been
consolidated on a full year basis in 2017.
During 2017, we have significantly increased number of customers to around
277,000 from only 3,000, which in turn led to high increase in gross written
premium which amounted to GEL12.2 million in 2017 on a standalone basis. As
a result, market share 14 (#_ftn14) increased to 13% from 3.5% establishing
TBC Insurance as the third largest player on market. More information about
TBC insurance can be found in annex 20 on page 55.
The growth is also due to a GEL 1.7 million increase in gain from the sale of
investment properties as well as GEL 5.2 gain in the "other" subsection of
other operating income. The latter is mainly attributable to GEL 2.6 million
reimbursed taxes; a GEL 2.9 million related to fair value adjustment of
previously acquired portfolio due to a better than expected performance, and a
GEL 2.1 million related to expense sharing programme by our partner payment
technology companies. The rise across these items was largely offset by a GEL
8.8 million drop in net gains less losses from disposal of investment
securities available for sale due to one-off gain from sale of investment
security in 2Q 2016. The Bank Republic's estimated contribution in total other
operating non-interest income was GEL 22.8 million or 17.4%, out of which GEL
14.1 million was related to gains less losses from trading in foreign
currencies and foreign exchange translations.
Provision for Impairment
In thousands of GEL Y'17 Y'16 Change
Provision for Loan Impairment (93,823) (49,201) 90.7%
Provision for Impairment of Investments in Finance Lease (492) (558) -11.8%
Provision for/(Recovery of Provision) Performance Guarantees and Credit (153) (771) -80.2%
Related Commitments
Provision for Impairment of Other Financial Assets (12,439) (2,855) NMF
Impairment of Investment Securities Available for Sale 0 (11) -100.0%
Total Provision Charges for Impairment (106,907) (53,396) 100.2%
Operating Income after Provisions for Impairment 754,078 627,667 20.1%
Cost of Risk 1.2% 1.0% 0.2%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In 2017, total provision charges rose to GEL 106.9 million, up by GEL 53.5
million, compared to FY 2016, mainly driven by the increased charges on loans
by GEL 44.6 million and a GEL 9.6 million rise in provision for impairment of
other financial assets. The cost of risk on increased by 0.2pp to 1.2%.
Further details on asset quality are available under the Balance Sheet
Discussion section.
Operating Expenses
In thousands of GEL Y'17 Y'16 Change
Staff Costs 203,100 172,221 17.9%
Provisions for Liabilities and Charges (2,495) 2,210 NMF
Depreciation and Amortization 37,265 28,082 32.7%
Professional services 14,332 29,926 -52.1%
Advertising and marketing services 18,430 13,796 33.6%
Rent 23,132 18,294 26.4%
Utility services 6,067 5,108 18.8%
Intangible asset enhancement 10,304 7,446 38.4%
Taxes other than on income 5,670 4,699 20.7%
Communications and supply 4,063 4,183 -2.9%
Stationary and other office expenses 4,936 3,448 43.2%
Insurance 2,461 2,687 -8.4%
Security services 1,965 1,883 4.3%
Premises and equipment maintenance 5,413 3,889 39.2%
Business trip expenses 2,021 1,880 7.5%
Transportation and vehicles maintenance 1,637 1,386 18.2%
Charity 1,045 884 18.2%
Personnel training and recruitment 1,444 1,272 13.5%
Write-down of current assets to fair value less costs to sell (538) (4,424) -87.8%
Loss on disposal of Inventory 1,239 1,690 -26.7%
Loss on disposal of investment properties 442 61 NMF
Loss on disposal of premises and equipment 492 423 16.2%
Impairment of intangible assets 1,916 19 NMF
Acquisition costs 2,447 207 NMF
Other 12,612 10,718 17.7%
Administrative and Other Operating Expenses 121,530 109,474 11.0%
Operating Expenses 359,400 311,988 15.2%
Profit before Tax 394,678 315,679 25.0%
Income Tax Expense (34,750) (17,420) 99.5%
Profit for the Year 359,928 298,258 20.7%
Cost to Income 41.7% 45.8% -4.1%
ROE 20.9% 22.4% -1.5%
ROA 3.1% 3.9% -0.8%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
Total operating expenses, excluding one-offs and the Bank Republic estimated
contribution effect, amounted to GEL 287.7 million, up by GEL 17.5 million, or
6.5% YoY. The growth was mainly driven by a GEL 15.3 million increase in
administrative expenses and a GEL 4.4 million rise in depreciation and
amortization.
In FY 2016, the one-off costs related to the Premium Listing and the Bank
Republic integration amounted to GEL 16.2 million and GEL 12.2 million
respectively. In FY 2017, one-off costs were related to the Bank Republic
integration and totalled GEL 10.9 million.
Out of the total operating expenses the Bank Republic estimated contribution
amounted to GEL 60.8 million, or 16.9%, of which staff costs amounted to GEL
35.2 million and administrative and other operating expenses to GEL 20.9
million. Total operating expense including one-offs and the Bank Republic
estimated contribution effect amounted to GEL 359.4 million.
Annualized cost synergies are expected to be GEL 24 million. In 2017, the
estimated realized synergies were around GEL 20.5 million. As a result, the
cost to income ratio stood at 41.7% (40.5% with one-offs) in FY 2017, compared
to 45.8% (42.9% with one-offs) in FY 2016.
Balance Sheet Discussion
In millions of GEL Dec-17 Dec-16 Change
Cash, Due from Banks and Mandatory Cash Balances with NBG 2,504.9 1,960.5 27.8%
Loans and Advances to Customers (Net) 8,325.4 7,133.7 16.7%
Financial Securities 1,107.5 803.7 37.8%
Fixed and Intangible Assets & Investment Property 529.6 470.6 12.5%
Other Assets 498.5 400.5 24.5%
Total Assets 12,965.9 10,769.0 20.4%
Due to Credit Institutions 2,620.7 2,197.6 19.3%
Customer Accounts 7,816.8 6,454.9 21.1%
Debt Securities in Issue 20.7 23.5 -12.0%
Subordinated Debt 426.8 368.4 15.9%
Other Liabilities 190.4 142.0 34.1%
Total Liabilities 11,075.5 9,186.4 20.6%
Total Equity 1,890.5 1,582.6 19.5%
Assets
As of 31 December 2017, TBC Bank's total assets amounted to GEL 12,965.9
million, up by GEL 2,196.9 million, or 20.4%, YoY. This was mainly due to the
increase in gross loans to customers by the GEL 1,194.5 million, or 16.2%. In
addition, the YoY rise resulted from a GEL 303.8 million, or 37.8%, increase
in financial securities, a GEL 486.3 million or 51.5% increase in cash and
cash equivalents, a GEL 52.9 million, or 16.8% increase in premises and
equipment and a GEL 22.5 million, or 37.0% increase in intangible assets,
largely attributable to the Bank Republic estimated contribution effect.
Asset Quality
PAR 30(1) by Segments and Currencies
PAR 30 Dec-17 Dec-16
GEL FC Total GEL FC Total
Corporate 0.0% 2.0% 1.5% 0.0% 1.4% 1.0%
Retail 2.9% 2.0% 2.4% 2.5% 2.3% 2.4%
MSME 1.5% 3.1% 2.5% 1.8% 3.5% 3.0%
Total 2.1% 2.2% 2.2% 1.9% 2.3% 2.2%
(1 )loans overdue by more than 30 days to gross loans
Total
The total PAR 30 ratio remained stable YoY at 2.2%. PAR 30 in local currency
increased by 0.2pp to 2.1%, while PAR 30 in foreign currency dropped by 0.1pp
to 2.2%.
Retail Segment
The retail segment PAR 30 amounted to 2.4%, unchanged from December 2016. The
Retail PAR 30 in local currency increased by 0.4pp to 2.9%, while PAR 30 in
foreign currency declined by 0.3pp to 2.0%.
Corporate
The corporate segment PAR 30 amounted to 1.5%, an increase of 0.5pp YoY. The
increase is driven by one large borrower falling in PAR 30; this exposure is
guaranteed by the AAA rated Export Development Agency, according to
international credit rating agencies.
The corporate PAR 30 in local currency remained stable at 0.0%, while PAR 30
in foreign currency rose by 0.6pp to 2.0%.
MSME
The MSME segment PAR 30 amounted to 2.5%, down by 0.5% YoY. The decrease is
driven by overall improved performance of the book. The MSME PAR 30 in local
currency decreased by 0.3pp to 1.5%, while PAR 30 in foreign currency
decreased by 0.4pp to 3.1%.
NPLs
NPLs Dec-17 Dec-16
GEL FC Total GEL FC Total
Corporate 0.0% 4.2% 3.2% 0.7% 6.1% 4.8%
Retail 2.6% 2.8% 2.7% 1.8% 3.0% 2.5%
MSME 2.2% 6.0% 4.6% 1.8% 4.9% 4.0%
Total 2.1% 4.1% 3.3% 1.6% 4.4% 3.5%
Total
Total NPLs stood at 3.3% down by 0.2 pp on YoY basis. The NPLs in local
currency increased by 0.5pp to 2.1%, while NPLs in foreign currency decreased
by 0.3pp to 4.1%.
Retail Segment
Retail NPLs stood at 2.7% up by 0.2pp on YoY. The Retail NPLs in local
currency increased by 0.8pp to 2.6%, while NPLs in foreign currency declined
by 0.2pp
- More to follow, for following part double click ID:nRSV6184Fc ment on a discretionary basis.
· MSME (Micro, Small and Medium) - all business customers who are not included in either Corporate and Retail
segments; or Legal Entities who have been granted a Pawn shop loan;
· Retail - all non-business individual customers or individual business customers who have been granted a loan in an
amount equivalent below USD 8.0 thousand. All individual customers are included in retail deposits.
· Corp. Centre - comprises of the Treasury, other support and back office functions, and non-banking subsidiaries of
the Group.
Businesses customers are all legal entities or individuals who have been granted a loan for business purpose.
Income Statement by Segments
4Q Retail MSME Corporate Corp.Centre Total
Interest Income 147,324 49,741 60,468 30,488 288,020
Interest Expense (31,444) (3,468) (31,233) (56,482) (122,626)
Net Transfer Pricing (21,443) (14,554) 8,995 27,002 0
Net Interest Income 94,437 31,720 38,230 1,008 165,395
Fee and Commission Income 37,573 5,760 11,020 1,320 55,673
Fee and Commission Expense (11,801) (2,622) (1,630) (665) (16,719)
Net fee and Commission Income 25,772 3,138 9,390 655 38,954
Gross Insurance Profit 0 0 0 1,919 1,919
Gains Less Losses from Trading in Foreign Currencies 7,044 5,966 13,367 (754) 25,622
Foreign Exchange Translation Gains Less Losses/(Losses Less Gains) 0 0 0 92 92
Net Losses from Derivative Financial Instruments 0 0 0 3 3
(Losses Less Gains)/Gains Less Losses from Disposal of Investment Securities Available for Sale 0 0 0 93 93
Other Operating Income 3,282 718 7,123 (131) 10,991
Share of profit of associates 0 0 0 249 249
Other Operating Non-Interest Income 10,326 6,684 20,489 (450) 37,049
Other Operating Non-Interest Income and Gross Insurance Profit 10,326 6,684 20,489 1,469 38,968
Provision for Loan Impairment (21,161) (3,078) (4,181) 0 (28,421)
(Provision)/Recovery of Provision for Liabilities, Charges and Credit Related Commitments 41 (18) (924) (118) (1,019)
Recovery of Provision/(Provision) for Impairment of Investments in Finance Lease 0 0 0 (79) (79)
(Provision)/Recovery of Provision for Impairment of other Financial Assets (31) 43 (6,586) (342) (6,917)
Operating income after provisions for impairment 109,383 38,489 56,416 2,593 206,882
Staff Costs (34,886) (7,042) (7,465) (4,712) (54,105)
Depreciation and Amortization (8,332) (1,377) (379) (337) (10,425)
Administrative and Other Operating Expenses (23,163) (4,479) (2,226) (5,243) (35,111)
Operating Expenses (66,381) (12,898) (10,070) (10,292) (99,640)
Profit before Tax 43,002 25,591 46,347 (7,698) 107,241
Income Tax Expense (5,612) (3,746) (7,235) 6,106 (10,487)
Profit for the Period 37,390 21,845 39,112 (1,592) 96,754
Portfolios by Segments
In thousands of GEL Dec-17 Sep-17
Loans and Advances to Customers
Consumer 2,128,658 1,972,012
Mortgage 2,069,728 1,900,186
Pawn 34,767 34,861
Retail 4,233,153 3,907,059
Corporate 2,475,392 2,128,478
MSME 1,844,671 1,732,096
Total Loans and Advances to Customers (Gross) 8,553,217 7,767,634
Less: Provision for Loan Impairment (227,864) (218,573)
Total Loans and Advances to Customers (Net) 8,325,353 7,549,061
Customer Accounts
Retail 4,378,265 4,015,754
Corporate 2,410,862 2,130,763
MSME 1,027,690 950,005
Total Customer Accounts 7,816,817 7,096,523
Retail Banking
As of 31 December 2017, retail loans stood at GEL 4,233.2 million, up by GEL 326.1 million, or 8.3%, QoQ. This increase was
attributable to a GEL 169.5 million, or 8.9% increase in mortgage loans and a GEL 156.6 million, or 7.9% increase in
consumer loans. As of 31 December 2017, TBC Bank's retail loans accounted for 40.2% market share of total individual
loans. As of 31 December 2017, foreign currency loans represented 49.3% of the total retail loan portfolio.
In the reporting period, retail deposits rose to GEL 4,378.3 million, up by GEL 362.5 million or 9.0% QoQ. Retail deposits
accounted for 41.3% market share of total individual deposits. The increase in retail deposits was driven by a GEL 182.3
million, or 10.2% rise in current deposits and a GEL 180.2 million, or 8.1% rise in term deposits. As of 31 December 2017
term deposits accounted for 54.9% of the total retail deposit portfolio, while foreign currency deposits represented 83.8%
of the total retail deposit portfolio.
In 4Q 2017, retail loan yields and deposit rates stood at 14.2% and 2.9% respectively. The segment's cost of risk on loans
was 2.0%, down by 1.2pp QoQ, the decrease is related to improved performance of the overall retail book. The retail
segment contributed 38.6%, or GEL 37.4 million, to the TBC's total net income in 4Q 2017.
Corporate Banking
As of 31 December 2017, corporate loans amounted to GEL 2,475.4, up by GEL 346.9 million or 16.3% QoQ. Foreign currency
loans accounted for 74.6% of the total corporate loan portfolio. Market share in legal entities increased by 0.4pp QoQ to
36.0%.
As of the same date, corporate deposits totalled GEL 2,410.9 million, up by GEL 280.1 million or 13.1% QoQ. Foreign
currency corporate deposits represented 49.8% of the total corporate deposit portfolio. Market share increased by 2.1pp and
stood at 37.9%.
In 4Q 2017, corporate loan yields and deposit rates stood at 10.0% and 5.3%, respectively. In the same period, the cost of
risk on loans was 0.7%. Negative CoR in 2017 is driven by good performance of the book. In terms of profitability, the
corporate segment's net profit reached GEL 39.1 million, or 40.4% of the Bank's total net income.
MSME Banking
As of 31 December 2017, MSME loans amounted to GEL 1,844.7, up by GEL 112.6 million, or 6.5%, QoQ. Foreign currency loans
accounted for 63.8% of the total MSME portfolio.
As of the same date, MSME deposits stood at GEL 1,027.7 million, up by GEL 77.7 million or 8.2% QoQ. Foreign currency MSME
deposits represented 53.7% of the total MSME deposit portfolio.
In 4Q 2017, MSME loan yields and deposit rates stood at 10.9% and 1.4%, respectively while the cost of risk on loans was
0.7%, down by 0.2pp QoQ driven by improved of the loan book. In terms of profitability, net profit for the MSME segment
amounted to GEL 21.8 million, or 22.6%, of TBC's total net income.
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance Sheet
In thousands of GEL Dec-17 Sep-17
Cash and cash equivalents 1,431,477 1,445,521
Due from other banks 39,643 41,696
Mandatory cash balances with National Bank of Georgia 1,033,818 1,020,695
Loans and advances to customers (Net) 8,325,353 7,549,061
Investment securities available for sale 657,938 685,210
Investment in associates 1,277 1,309
Investment securities held to maturity 449,538 428,163
Investments in finance leases 143,837 111,223
Investment properties 79,232 88,750
Goodwill 28,657 28,657
Intangible assets 83,492 69,864
Premises and equipment 366,913 321,431
Other financial assets 146,144 113,942
Deferred tax asset 2,855 3,592
Current income tax prepayment 19,084 18,380
Other assets 156,651 209,427
TOTAL ASSETS 12,965,910 12,136,922
LIABILITIES
Due to Credit Institutions 2,620,714 2,675,930
Customer accounts 7,816,817 7,096,523
Current income tax liability 447 362
Debt Securities in issue 20,695 19,818
Deferred income tax liability 602 851
Provisions for liabilities and charges 13,200 11,072
Other financial liabilities 91,753 59,616
Subordinated debt 426,788 411,193
Other liabilities 84,440 71,251
TOTAL LIABILITIES 11,075,457 10,346,615
EQUITY
Share capital 1,605 1,605
Share premium 714,651 714,651
Retained earnings 1,246,327 1,137,497
Group reorganisation reserve (162,167) (162,167)
Share based payment reserve (3,634) 7,291
Revaluation reserve for premises 70,045 70,045
Revaluation reserve for available-for-sale securities 1,731 863
Cumulative currency translation reserve (7,360) (7,301)
TOTAL EQUITY 1,861,198 1,762,485
Non-controlling interest 29,255 27,822
TOTAL EQUITY 1,890,453 1,790,307
TOTAL LIABILITIES AND EQUITY 12,965,910 12,136,922
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL 4Q'17 3Q'17 4Q'16
Interest income 288,020 258,252 243,344
Interest expense (122,626) (111,705) (89,655)
Net interest income 165,395 146,546 153,689
Fee and commission income 55,673 48,552 45,460
Fee and commission expense (16,719) (16,763) (17,068)
Net Fee and Commission Income 38,954 31,790 28,392
Gross insurance profit 1,919 1,773 256
Gains less losses from trading in foreign currencies 25,622 18,086 25,472
Foreign exchange translation gains less losses 92 2,245 (2,519)
Gains less losses/(losses less gains) from derivative financial instruments 3 (1) 94
(Losses less gains) / gains less losses from disposal of investment securities available for sale 93 0 498
Share of profit of associates 249 84 0
Other operating income 10,991 6,572 12,372
Other operating non-interest income 37,049 26,985 35,916
Provision for loan impairment (28,421) (25,036) (10,405)
Provision for impairment of investments in finance lease (79) (285) (322)
Provision for/ (recovery of provision) performance guarantees and credit related commitments (1,019) (680) 2,787
Provision for impairment of other financial assets (6,917) (1,097) (1,727)
Operating income after provisions for impairment 206,882 179,997 208,586
Staff costs (54,105) (46,620) (62,544)
Depreciation and amortisation (10,425) (9,317) (7,435)
Provision for liabilities and charges 0 0 (2,210)
Administrative and other operating expenses (35,111) (27,974) (39,595)
Operating expenses (99,640) (83,910) (111,785)
Profit before tax 107,241 96,086 96,801
Income tax expense (10,487) (9,327) (8,767)
Profit for the period 96,754 86,759 88,034
Other Comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Revaluation 946 1,929 (3,196)
Gains less losses reclassified to profit or loss upon disposal 0 0 (2,757)
Income tax recorded directly in other comprehensive income 0 0 248
Exchange differences on translation to presentation currency (60) 399 147
Items that will not be reclassified to profit or loss:
Income tax recorded directly in other comprehensive income 0 0 422
Other comprehensive income for the period 886 2,328 (5,136)
Total comprehensive income for the period 97,640 89,086 82,898
Profit attributable to:
- Owners of the Bank 95,367 85,524 89,359
- Non-controlling interest 1,388 1,235 (1,326)
Profit for the period 96,754 86,759 88,034
Total comprehensive income is attributable to:
- Owners of the Bank 96,179 87,881 84,224
- Non-controlling interest 1,461 1,205 (1,326)
Total comprehensive income for the period 97,640 89,086 82,898
4Q 2017 Bank Republic Financial Results Based on Internal Estimates
Bank Republic Profit and Loss
In thousands of GEL 4Q 2017
Interest income 35,016
Interest expense 9,217
Net interest income 25,799
Card operations -322
Settlement transactions 1,133
Guarantees and letters of credit 650
Other 90
Net fee and commission income 1,551
FX gain/losses 3,268
Other 1,579
Other non-interest income 4,847
Operating income 32,197
Staff costs 8,985
Depreciation and amortization 1,047
Administrative and other operating expenses 5,387
Operating expenses 15,418
Operating profit 16,778
Bank Republic Loan Portfolio
In thousands of GEL as of 31 December 2017
Total gross loans 1,096,158
Retail 714,959
Corporate 245,235
MSME 135,964
Bank Republic Deposit Portfolio
In thousands of GEL as of 31 December 2017
Total deposits 488,855
Retail 311,984
Corporate 113,406
MSME 63,464
Key Ratios
Average Balances
Average balances included in this document are calculated as the average of the relevant monthly balances as of each
month-end. Balances have been extracted from TBC's unaudited and consolidated management accounts prepared from TBC's
accounting records. These were used by the Management for monitoring and control purposes.
Key Ratios
Ratios (based on monthly averages, where applicable) 4Q'17 3Q'17 4Q'16
Underlying ROE1 21.0% 20.0% 23.5%
Reported ROE2 21.0% 19.8% 24.2%
Underlying ROA3 3.0% 3.0% 3.5%
Reported ROA4 3.0% 2.9% 3.7%
Underlying Cost to Income5 41.0% 39.8% 47.0%
Reported Cost to Income6 41.0% 40.5% 51.2%
Cost of Risk7 1.4% 1.3% 0.6%
NIM8 6.4% 6.2% 7.9%
Risk Adjusted NIM9 5.2% 5.0% 6.3%
Loan Yields10 12.3% 11.9% 13.8%
Risk Adjusted Loan Yields11 11.1% 10.7% 12.6%
Deposit rates12 3.5% 3.4% 3.3%
Yields on interest Earning Assets13 11.2% 10.9% 12.5%
Cost of Funding14 4.6% 4.5% 4.5%
Spread15 6.6% 6.4% 8.0%
PAR 90 to Gross Loans16 1.4% 1.6% 1.3%
NPLs to Gross Loans17 3.3% 3.5% 3.5%
NPLs coverage per IAS 3918 81.8% 80.5% 88.4%
NPLs coverage with collateral per IAS 3919 186.5% 206.8% 222.5%
NPLs coverage per IFRS 920 104.7% N/A N/A
NPLs coverage with collateral per IFRS 921 209.4% N/A N/A
Provision Level to Gross Loans22 2.7% 2.8% 3.1%
Related Party Loans to Gross Loans23 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio24 8.2% 8.6% 7.6%
Top 20 Borrowers to Total Portfolio25 12.4% 12.3% 11.3%
Net Loans to Deposits plus IFI Funding26 92.5% 91.5% 93.4%
Net Stable Funding Ratio27 124.4% 134.5% 108.4%
Liquidity Coverage Ratio28 113% 115.2% N/A
Leverage29 6.9x 6.8x 6.8x
Regulatory Tier 1 CAR (Basel III)30 13.4% 14.1%** N/A
Regulatory Total CAR (Basel III)31 17.5% 18.6%** N/A
Regulatory Tier 1 CAR (Basel II/III)32 10.3%* 10.8% 10.4%
Regulatory Total CAR (Basel II/III)33 13.5%* 14.5% 14.2%
*Estimated Basel II/III ratios as of 31 December 2017 ** estimated Basel III ratios according to new NBG regulation which came into force from the end of 2017
Ratio definitions
1. Underlying return on average total equity (ROE) equals underlying net income attributable to owners divided by monthly
average of total shareholders 'equity attributable to the PLC's equity holders for the same period adjusted for the
respective one-off items; Annualized where applicable.
2.Return on average total equity (ROE) equals net income attributable to owners divided by monthly average of total
shareholders 'equity attributable to the PLC's equity holders for the same period; Annualized where applicable.
3. Underlying return on average total assets (ROA) equals underlying net income of the period divided by monthly average
total assets for the same period. Annualised where applicable.
4. Return on average total assets (ROA) equals net income of the period divided by monthly average total assets for the
same period. Annualised where applicable.
5. Underlying cost to income ratio equals total underlying operating expenses for the period divided by the total
underlying revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income
and other non-interest income).
6. 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).
7. Cost of risk equals provision for loan impairment divided by monthly average gross loans and advances to customers.
Annualized where applicable.
8. 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 corporate shares, net investment in finance
lease, net loans, amount due from credit institutions. The latter excludes all items from cash and cash equivalents,
excludes EUR mandatory reserves with NBG which currently has negative interest, and includes other earning items from due
from banks.
9. Risk Adjusted Net interest margin is NIM minus cost of risk without one -offs and currency effect
10. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and
advances to customers. Annualised where applicable.
11. Risk Adjusted Loan yield is loan yield minus cost of risk without one-offs and currency effect
12. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits.
Annualised where applicable.
13. Yields on interest earning assets equal total interest income divided by monthly average interest earning assets.
Annualized where applicable.
14. Cost of funding equals total interest expense divided by monthly average interest bearing liabilities. Annualised where
applicable.
15. Spread equals difference between yields on interest earning assets (including but not limited to yields on loans,
securities and due from banks) and cost of funding (including but not limited to cost of deposits, cost on borrowings and
due to banks).
16. 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.
17. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with 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.
18. NPLs coverage ratio equals total loan loss provision calculated per IAS 39 divided by the NPL loans.
19. NPLs coverage with collateral ratio equals loan loss provision calculated per IAS 39 plus total collateral amount of
NPL loans (excluding third party guarantees) discounted at 30-50% depending on segment type divided by the NPL loans.
20. NPLs coverage ratio equals total loan loss provision calculated per IFRS 9 divided by the NPL loans.
21. NPLs coverage with collateral ratio equals loan loss provision calculated per IFRS 9 plus total collateral amount of
NPL loans (excluding third party guarantees) discounted at 30-50% depending on segment type divided by the NPL loans.
22. Provision level to gross loans equals loan loss provision divided by the gross loan portfolio for the same period.
23. Related party loans to total loans equals related party loans divided by the gross loan portfolio.
24. Top 10 borrowers to total portfolio equals total loan amount of top 10 borrowers divided by the gross loan portfolio.
25. Top 20 borrowers to total portfolio equals total loan amount of top 20 borrowers divided by the gross loan portfolio.
26. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from
international financial institutions.
27. Net stable funding ratio equals available amount of stable funding divided by required amount of stable funding as
defined in Basel III. NSFR ratio for before 2Q 2017 is calculated per updated internal methodology in line with Basel 2014
guidelines.
28. Liquidity coverage ratio equals high-quality liquid assets divided by total net cash outflow amount as defined by NBG.
29. Leverage equals total assets to total equity.
30. Regulatory tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with
the pillar 1 requirements of NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for
TBC Bank stand-alone, based on local standards.
31. Regulatory total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the
pillar 1 requirements of NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC
Bank stand-alone, based on local standards.
32. Regulatory Tier 1 CAR equals Tier I Capital divided by total risk weighted assets, both calculated in accordance with
the NBG Basel II/III requirements.
33. Regulatory Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the
NBG Basel II/III requirements
Exchange Rates
To calculate the QoQ growth of the Balance Sheet items without the currency exchange rate effect, we used USD/GEL exchange
rate of 2.4767 as of 30 September 2017. For the calculations of the YoY growth without the currency exchange rate effect,
we used USD/GEL exchange rate of 2.6468 as of 31 December 2016. The USD/GEL exchange rate as of 31 December 2017 equalled
2.5922. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the
following periods: 4Q 2017 of 2.5933, 3Q 2017 of 2.4207, 4Q 2016 of 2.4958.
Preliminary Unaudited ConsolidatedFinancial Results Overview FY 2017
The information contained in this announcement and its appendices relating to full year FY17 preliminary results, which
were approved by the Board on 21 February 2018, do not constitute statutory accounts under section 434 of the UK Companies
Act 2006. The financial statements of TBC Bank will be included in the Annual Report and Accounts due to be published in
March 2018, and filed with the Registrar of Companies in due course.
TBC Bank Group PLC financial results are adjusted for certain one-off items, to enable better analysis of the Group's
performance. The reconciliation of the underlying profit and loss items with the reported profit and loss items and the
underlying ratios are given under the annex 21 section on pages 56-57. To further enhance the analysis, the Group
separately discloses Bank Republic (BR) effects in 2016 and 2017. Detailed information is given in the annex 22 on pages
58-61.
Income Statement Highlights
in thousands of GEL Y'17 Y'16 Change
Net Interest Income 604,015 490,453 23.2%
Net Fee and Commission Income 125,961 90,268 39.5%
Other Operating Non-Interest Income 131,009 100,341 30.6%
Provisioning Charges (106,907) (53,396) 100.2%
Operating Income after Provisions for Impairment 754,078 627,667 20.1%
Operating Expenses (359,400) (311,988) 15.2%
Profit Before Tax 394,678 315,679 25.0%
Income Tax Expense (34,750) (17,420) 99.5%
Profit for the Year 359,928 298,258 20.7%
Underlying profit for the Year 369,214 273,318 35.1%
Balance Sheet and Capital Highlights
Dec-17 Dec-16 Change
In Millions GEL USD GEL USD
Total Assets 12,965.9 5,001.9 10,769.0 4,068.7 20.4%
Gross Loans 8,553.2 3,299.6 7,358.7 2,780.2 16.2%
Customer Deposits 7,816.8 3,015.5 6,454.9 2,438.8 21.1%
Total Equity 1,890.5 729.3 1,582.6 597.9 19.5%
Regulatory Tier I Capital (Basel III)* 1,437.2 554.4 N/A N/A N/A
Regulatory Total Capital (Basel III)* 1,885.3 727.3 N/A N/A N/A
Regulatory Tier I Capital (Basel II/III) 1,437.2** 554.4** 1,041.2 422.5 38.0%
Regulatory Total Capital (Basel II/III) 1,883.8** 727.7** 1,422.0 576.9 32.5%
Regulatory Risk Weighted Assets (Basel III)* 10,753.2 4,148.3 N/A N/A N/A
Regulatory Risk Weighted Assets (Basel II/III) 13,908.9** 5,365.7** 10,021.5 4,065.8 38.8%
*per new NBG regulation, which came into force in December 2017,
**Figures are based on internal estimates and are presented for comparison purpose
Key Ratios 13 Y'17 Y'16 Change
Underlying ROE 21.4% 20.6% 0.8%
Reported ROE 20.9% 22.4% -1.5%
Underlying ROA 3.2% 3.6% -0.4%
Reported ROA 3.1% 3.9% -0.8%
Underlying Cost to Income 40.5% 42.9% -2.4%
Reported Cost to Income 41.7% 45.8% -4.1%
Cost of Risk 1.2% 1.0% 0.2%
NPL to Gross Loans 3.3% 3.5% -0.2%
Regulatory Tier 1 CAR (Basel III)* 13.4% N/A N/A
Regulatory Total CAR (Basel III)* 17.5% N/A N/A
Regulatory Tier 1 CAR (Basel II/III) 10.3%** 10.4% -0.1%
Regulatory Total CAR (Basel II/III) 13.5%** 14.2% -0.7%
Leverage (Times) 6.9x 6.8x 0.1x
*per new NBG regulation, which came into force in December 2017,
**Figures are based on internal estimates and are presented for comparison purpose
Income Statement Discussion
Net Interest Income
In thousands of GEL Y'17 Y'16 Change YoY
Loans and Advances to Customers 919,796 688,724 33.6%
Investment Securities Available for Sale 43,735 25,707 70.1%
Due from Other Banks 14,806 4,550 NMF
Bonds Carried at Amortized Cost 32,328 30,714 5.3%
Investment in Leases 23,273 16,566 40.5%
Other 0 165 -100.0%
Interest Income 1,033,939 766,426 34.9%
Customer Accounts 233,884 154,840 51.0%
Due to Credit Institutions 157,122 85,030 84.8%
Subordinated Debt 36,975 34,325 7.7%
Debt Securities in Issue 1,943 1,778 9.3%
Interest Expense 429,924 275,973 55.8%
Net Interest Income 604,015 490,453 23.2%
Net Interest Margin 6.5% 7.8% -1.3%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In FY 2017, net interest income grew by 23.2% YoY to GEL 604.0 million (GEL 493.3 million without the Bank Republic
estimated contribution effect), resulting from a 34.9% higher interest income and 55.8% higher interest expense.
Without the Bank Republic estimated contribution effect, the interest income increased by GEL 142.0 million, or 19.5% YoY,
mainly driven by a higher interest income from loans to customers by GEL 114.3 million, or 17.5%. This is primarily related
to the 26.2% gross loan portfolio increase. A rise in interest income from investment securities (comprising both
investment securities available for sale and bonds carried at amortized cost) of GEL 13.5 million, or 25.1%, also
contributed to the overall increase in loan portfolio. That in turn was driven by the significant rise in the respective
portfolio. In addition, net interest income from due from other banks grew by GEL 7.7 million, which was also determined by
the large increase in respective portfolio.
In FY 2017 the Bank Republic effect mainly contributed a GEL 152.0 million, or 16.5% to the interest income from loans and
advances to customers, which totalled GEL 1,033.9 million, and GEL 8.7 million, or 11.5%, to interest income from
investment securities, which amounted to GEL 76.1 million. As a result, the overall Bank Republic estimated contribution
effect was GEL 163.3 million, or 15.8%, to the interest income.
Loan yields declined over the same period from 13.4% to 12.1%. The drop was driven by a decrease in rates on FC-denominated
loans, from 10.4% to 9.1%, as well as by decline in GEL-denominated loans rates from 19.0% to 16.9% broadly in line with
the overall market trend. The decline of yields on investment securities, from 8.6% to 7.8%, over the same period is
related to a lower average refinance rate in the country in FY 2017 compared to FY 2016. As a result, the yields on average
interest earning assets dropped from 12.2% in FY 2016 to 11.1% in FY 2017.
In the reporting period, without the Bank Republic estimated contribution effect, interest expense increased by GEL 115.3
million, or 44.0% YoY. The rise was mainly due to a higher interest expense on due to customer accounts by GEL 61.2
million, or 41.6%, and due to credit institutions by GEL 54.9 million or 69.8%. The growth in interest expense on both
customer accounts and on due to credit institutions was driven by the large increase in respective portfolios related to
the overall business growth.
The Bank Republic estimated contribution effect added GEL 25.4 million, or 10.9%, to the interest expense on customer
accounts, which amounted to GEL 233.9 million in FY 2017, and GEL 23.5 million or 15.0% to interest expense on interest
expense due to credit institutions, which amounted to GEL 157.1 million. As a result, the overall Bank Republic
contribution effect was a GEL 52.5 million, or 12.2%, to the interest expense.
The cost of deposits increased slightly by 0.1pp to 3.4% in FY 2017 and in the same period the cost of borrowing dropped to
6.5%, from 7.0% in FY 2016. This was mainly due to the 1.2 pp decrease in rates on Lari-denominated borrowings and the 0.2
pp decrease in rates on FC-denominated borrowings. As a result, the cost of funding ratio remained flat at 4.5%.
Consequently, NIM was 6.5% in FY 2017, compared to underlying NIM of 7.6% in FY 2016 (or reported NIM of 7.8%)
Fee and Commission Income
In thousands of GEL Y'17 Y'16 Change
Card Operations 82,525 61,115 35.0%
Settlement Transactions 59,739 43,434 37.5%
Guarantees Issued 15,121 11,699 29.2%
Letters of Credit 5,735 6,215 -7.7%
Cash Transactions 17,424 13,013 33.9%
Foreign Exchange Operations 1,339 1,277 4.9%
Other 12,060 6,046 99.5%
Fee and Commission Income 193,944 142,800 35.8%
Card Operations 46,360 34,906 32.8%
Settlement Transactions 7,421 5,795 28.1%
Guarantees Issued 1,801 796 126.3%
Letters of Credit 1,072 1,624 -34.0%
Cash Transactions 4,393 2,633 66.8%
Foreign Exchange Operations 94 190 -50.4%
Other 6,841 6,587 3.9%
Fee and Commission Expense 67,983 52,532 29.4%
Card Operations 36,165 26,209 38.0%
Settlement Transactions 52,317 37,639 39.0%
Guarantees 13,320 10,903 22.2%
Letters of Credit 4,663 4,592 1.6%
Cash Transactions 13,031 10,380 25.5%
Foreign Exchange Operations 1,245 1,086 14.6%
Other 5,219 (541) NMF
Net Fee and Commission Income 125,961 90,268 39.5%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In FY 2017, net fee and commission income totalled GEL 126.0 million, marking an increase of GEL 35.7 million, or 39.5%,
compared to FY 2016. The rise resulted mainly from a GEL 14.7 million, or 39.0%, gain in net fee and commission income from
settlement transactions; a GEL 10.0 million, or 38.0%, increase in net card operations; a GEL 2.7 million, or 25.5%, rise
in net cash transactions, and a GEL 2.4 million, or 22.2%, increase in net guarantees. The Bank Republic estimated
contribution was GEL 6.9 million, or 5.5%, in the net fee and commission income.
Net fee and commission income from card operations expanded due to increase in number of active cards by 36% YoY, as well
as a rise in number of POS terminals by 12% YoY. Net Fee and commission income from settlement transactions increased
mainly due to increased commission income from money transfers by 40% and increased volume of settlement transactions by
44% for one of the subsidiaries, TBC Pay.
Other Operating Non-Interest Income and Gross Insurance Profit
In thousands of GEL Y'17 Y'16 Change
Gains Less Losses from Trading in Foreign Currencies and Foreign Exchange Translations 91,473 67,762 35.0%
Share of Profit of Associates 909 0 NMF
Gains Less Losses/(Losses Less Gains) from Derivative Financial Instruments (36) (206) -82.3%
Gains less Losses from Disposal of Investment Securities Available for Sale 93 9,293 -99.0%
Revenues from Cash-In Terminal Services 1,093 1,100 -0.6%
Revenues from Operational Leasing 6,544 5,772 13.4%
Gain from Sale of Investment Properties 4,353 2,623 66.0%
Gain from Sale of Inventories of Repossessed Collateral 2,383 2,382 0.1%
Administrative Fee Income from International Financial Institutions 0 644 -100.0%
Revenues from Non-Credit Related Fines 1,408 658 114.1%
Gain on Disposal of Premises and Equipment 1,017 208 NMF
Other 14,998 9,848 52.3%
Other Operating Income 31,797 23,236 64.2%
Other Operating Non-Interest Income 124,236 100,085 24.1%
Gross Insurance Profit 6,773 256 NMF
Other Operating Non-Interest Income and Gross Insurance Profit 131,009 100,341 30.6%
NMF -no meaningful figures
FY 2017 to FY 2016 Comparison
In FY 2017 total other operating non-interest income and gross insurance profit increased by GEL 30.7 million, or by 30.6%,
YoY to GEL 131.0 million in FY 2017. This increase was mainly driven by a GEL 23.7 million or 35.0% rise in net gains less
losses from trading in foreign currencies and foreign exchange translations mainly driven by increased trade volume and
Bank Republic contribution. Another large contributor to the increase in other operating non-interest income and
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