REG - TBC Bank Group PLC - Final Results
20/02/2020 07:00
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RNS Number : 5797D TBC Bank Group PLC 20 February 2020
TBC BANK GROUP PLC ("TBC Bank")
4Q 2019 UNAUDITED CONSOLIDATED FINANCIAL RESULTS AND FY 2019 PRELIMINARY
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 necessary regulatory approvals and licenses, the impact of
developments in the Georgian economic, 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 regulation 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's
accounts and financial statements. The areas in which the management's
accounts might differ from the International Financial Reporting Standards
and/or U.S. generally accepted accounting principles could be significant; you
should consult your own professional advisors and/or conduct your own due
diligence for a complete and detailed understanding of such differences and
any implications they might have on the relevant financial information
contained in this presentation. Some numerical figures included in this report
have been subjected to rounding adjustments. Accordingly, numerical figures
shown as totals in certain tables might not be an arithmetic aggregation of
the figures that preceded them.
Fourth Quarter 2019 Unaudited Consolidated Financial Results and Full Year
2019 Preliminary Unaudited Consolidated Financial Results Conference Call
TBC Bank Group PLC ("TBC PLC") announces that its consolidated financial
results for the fourth quarter 2019 and preliminary consolidated financial
results for the full year 2019 will be published on Thursday, 20 February 2020
at 7.00 am GMT (11.00 am GET).
On that day, Vakhtang Butskhrikidze, CEO, and Giorgi Shagidze, CFO, will host
a conference call to discuss the results.
Date & time: Thursday, 20 February 2020 at 14.00 (GMT) / 15.00 (CET) /
9.00 (EST)
Please dial-in approximately five minutes before the start of the call quoting
the password
TBC:
Password: TBC
UK Toll Free: 0808 109 0700
Standard International Access: +44 (0) 20 3003 2666
USA Toll Free: 1 866 966 5335
New York New York: +1 212 999 6659
Russia Toll Free: 8 10 8002 4902044
Moscow: +7 (8) 495 249 9843
Replay Numbers
Replay Passcode: 8513998
UK Toll Free: 0800 633 8453
Standard International Access: +44 (0) 20 8196 1998
USA Toll Free: 1 866 583 1035
Russia Toll Free: 8 10 8002 4832044
Moscow: +7 (8) 495 249 9840
Contacts
Zoltan Szalai Anna Investor Relations Department
Romelashvili
Director of International Media and Investor Relations
Head of Investor Relations
E-mail: ZSzalai@Tbcbank.com.ge
Tel: +44 (0) 7908 242128 E-mail: IR@tbcbank.com.ge E-mail: IR@tbcbank.com.ge
Web: www.tbcbankgroup.com Tel: +(995 32) 227 27 27 Tel: +(995 32) 227 27 27
Address: 68 Lombard St, London EC3V 9LJ, United Kingdom Web: www.tbcbankgroup.com Web: www.tbcbankgroup.com
Address: 7 Marjanishvili St. Tbilisi, Georgia 0102 Address: 7 Marjanishvili St. Tbilisi, Georgia 0102
Table of Contents
4Q and FY 2019 Results Announcement
TBC Bank - Background
Performance Highlights
Letter from the Chief Executive Officer
Operating Overview
Recent Developments
International Expansion
Economic Overview
Unaudited Consolidated Financial Results Overview for 4Q 2019
Unaudited Consolidated Financial (#_Toc32572535) Results Overview for FY 2019
Additional Disclosures
1) Subsidiaries of TBC Bank Group PLC
2) Update on strategic objectives
3) Reconciliation of reported IFRS consolidated figures with the underlying
numbers
4) Net gains from currency swaps
5) TBC Insurance
6) Azerbaijan
7) ESG ratings and scores
8) Loan book breakdown by stages according IFRS 9
TBC Bank Group PLC ("TBC Bank")
TBC Bank Announces Unaudited Preliminary 4Q and FY 2019 and Consolidated
Financial Results:
Underlying Profit for the period for the FY 2019 up by 19.8% YoY to GEL 545.1
million
Reported Profit for the period for the FY 2019 up by 23.5% YoY to GEL 540.3
million
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.
TBC Bank - Background
TBC Bank is the largest banking group in Georgia, where 99.6% of its business
is concentrated, with a 38.2% market share by total assets. It offers retail,
corporate, and MSME banking nationwide.
These unaudited financial results are presented for TBC Bank Group PLC ("TBC
Bank" or "the Group"), which was incorporated on 26 February 2016 as the
ultimate holding company for JSC TBC Bank Georgia. TBC Bank became the parent
company of JSC TBC Bank Georgia on 10 August 2016, following the Group's
restructuring. As this was a common ownership transaction, the results have
been presented as if the Group existed at the earliest comparative date as
allowed under the International Financial Reporting Standards ("IFRS"), as
adopted by the European Union. TBC Bank successfully listed on the London
Stock Exchange's premium listing segment on 10 August 2016.
TBC Bank Group PLC's financial results are prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union ("EU") and the Companies Act 2006 applicable to companies
reporting under IFRS. The Group classifies and separately discloses certain
incomes and expenses, which are non-recurring by nature and are caused by
extraordinary events, as one-off items in order to provide a consistent view
and enable better analysis of the financial performance of the Group. Adjusted
performance is an alternative performance measure (APM) and the reconciliation
of the underlying profit and loss items with the reported profit and loss
items and the underlying ratios are given under Annex 3 section on pages
45-46.
Performance Highlights
4Q 2019 P&L Highlights
o Profit for the period amounted to GEL 160.0 million (4Q 2018: GEL 130.1
million)
o Return on average equity (ROE) stood at 24.7% (4Q 2018: 24.3%)
o Return on average assets (ROA) stood at 3 .5% (4Q 2018: 3.5%)
o Cost to income of ТBC Bank standalone 1 (#_ftn1) was 36.2% (4Q 2018:
37.0%)
o Cost to income of TBC Bank Group PLC 41.8% (4Q 2018: 39.7%)
o Cost of risk stood at -0.2% (4Q 2018: 1.4%)
o Net interest margin (NIM) stood at 5.3% (4Q 2018: 6.7%)
o Risk adjusted net interest margin (NIM) stood at 5.4% (4Q 2018: 5.4%)
o Basic earnings per share stood at 2.92 (4Q 2018: 2.40)
o Diluted earnings per share 2.91 (4Q 2018: 2.37)
FY 2019 P&L Highlights
o Underlying profit for the period amounted to GEL 545.1 million (FY 2018:
GEL 454.9 million)
o Reported profit for the period amounted to GEL 540.3 million (FY 2018: GEL
437.4 million)
o Underlying return on average equity (ROE) amounted to 22.6% (FY 2018:
22.8%)
o Reported return on average equity (ROE) amounted to 22.4% (FY 2018: 22.0%)
o Underlying return on average assets (ROA) amounted to 3.3% (FY 2018: 3.3%)
o Reported return on average assets (ROA) amounted to 3.2% (FY 2018: 3.2%)
o Cost to income of ТBC Bank standalone 2 (#_ftn2) was 35.9% (FY 2018:
35.6%)
o Underlying cost to income of TBC Bank Group PLC stood at 39.5% (FY 2018:
37.8%)
o Reported Cost to income of TBC Bank Group PLC stood at 39.9% (FY 2018:
37.8%)
o Cost of risk on loans stood at 0.7% (FY 2018: 1.6%)
o Net interest margin (NIM) stood at 5.6% (FY 2018: 6.9%)
o Risk adjusted net interest margin (NIM) stood at 4.8% (FY 2018: 5.4%)
o Basic earnings per share stood at 9.83 (FY 2018: 8.07)
o Diluted earnings per share 9.76 (FY 2018: 8.00)
Balance Sheet Highlights as of 31 December 2019
o Total assets amounted to GEL 18,410.3 million as of 31 December 2019, up
by 18.8% YoY
o Gross loans and advances to customers stood at GEL 12,662.0 million as of
31 December 2019, up by 22.1% YoY
o Net loans to deposits + IFI 3 (#_ftn3) funding stood at 104.8%, up by
14.9 pp YoY, and Regulatory Net Stable Funding Ratio (NSFR), effective from 30
September 2019, stood at 126.7%
o NPLs were 2.7%, down by 0.4 pp YoY
o NPLs coverage ratios stood at 91.1%, or 194.2% with collateral, on 31
December 2019 compared to 102.7% or 216.4% with collateral, as of 31 December
2018
o Total customer deposits amounted to GEL 10,049.3 million as of 31
December 2019, up by 7.5% YoY
o As of 31 December 2019, the Bank's Basel III CET 1, Tier 1 and Total
Capital Adequacy Ratios per NBG methodology stood at 12.0%, 14.6% and 19.1%
respectively, while minimum requirements amounted to 10.4%, 12.5% and 17.5%
respectively
Market Share(( 4 (#_ftn4) ))
o Market share by total assets reached 38.2% as of 31 December 2019,
remaining the same YoY
o Market share by total loans was 39.5% as of 31 December 2019, up by 0.7 pp
YoY
o Market share of total deposits reached 39.0% as of 31 December, down by
2.2 pp YoY
4Q 2019 operating highlights
o The number of affluent customers reached 82.5 thousand as of 31 December
2019, up by 102% YoY
o 93% of all transactions were conducted through digital channels (4Q 2018:
91%)
o The number of digital transactions amounted to 21.6 million up by 20.0%
YoY, while the number of branch transactions stood at 1.7 million, down by
0.2% YoY
o The penetration ratio for internet or mobile banking 5 (#_ftn5) stood at
45% for 4Q 2019 (4Q 2018: 40%)
o The penetration ratio for mobile banking 6 (#_ftn6) stood at 44% for 4Q
2019 (4Q 2018: 40%)
Income Statement Highlights
in thousands of GEL 4Q'19 4Q'18 Change YoY FY'19 FY'18 Change YoY
Net interest income 209,318 214,803 -2.6% 801,539 778,022 3.0%
Net fee and commission income 54,844 44,064 24.5% 187,290 157,530 18.9%
Other operating non-interest income 7 (#_ftn7) 40,075 53,395 -24.9% 139,414 151,916 -8.2%
Credit loss allowance 224 (44,036) NMF (91,992) (166,239) -44.7%
Operating income after credit loss allowance 304,461 268,226 13.5% 1,036,251 921,229 12.5%
Operating expenses (127,124) (123,904) 2.6% (450,726) (411,029) 9.7%
Profit before tax 177,337 144,322 22.9% 585,525 510,200 14.8%
Income tax expense (17,313) (14,235) 21.6% (45,184) (72,765) -37.9%
Profit for the period 160,024 130,087 23.0% 540,341 437,435 23.5%
Underlying profit for the period 160,024 130,087 23.0% 545,105 454,861 19.8%
Balance Sheet and Capital Highlights
Dec-19 Dec-18 Change YoY
in thousands of GEL
Total Assets 18,410,274 15,497,993 18.8%
Gross Loans 12,661,955 10,372,582 22.1%
Customer Deposits 10,049,324 9,352,142 7.5%
Total Equity 2,647,655 2,205,968 20.0%
Regulatory Common Equity Tier I Capital (Basel III) 1,871,892 1,629,594 14.9%
Regulatory Tier I Capital (Basel III) 2,281,706 1,678,716 35.9%
Regulatory Total Capital (Basel III) 2,974,029 2,351,269 26.5%
Regulatory Risk Weighted Assets (Basel III) 15,593,925 13,154,872 18.5%
Key Ratios 4Q'19 4Q'18 Change YoY FY'19 FY'18 Change YoY
Underlying ROE 24.7% 24.3% 0.4 pp 22.6% 22.8% -0.2 pp
Reported ROE 24.7% 24.3% 0.4 pp 22.4% 22.0% 0.4 pp
Underlying ROA 3.5% 3.5% 0.0 pp 3.3% 3.3% 0.0 pp
Reported ROA 3.5% 3.5% 0.0 pp 3.2% 3.2% 0.0 pp
NIM 5.3% 6.7% -1.4 pp 5.6% 6.9% -1.3 pp
Risk adjusted NIM 5.4% 5.4% 0.0 pp 4.8% 5.4% -0.6 pp
Cost to income of standalone Bank 8 (#_ftn8) 36.2% 37.0% -0.8 pp 35.9% 35.6% 0.3 pp
Underlying cost to income 41.8% 39.7% 2.1 pp 39.5% 37.8% 1.7 pp
Reported Cost to income 41.8% 39.7% 2.1 pp 39.9% 37.8% 2.1 pp
Cost of risk -0.2% 1.4% -1.6 pp 0.7% 1.6% -0.9 pp
FX adjusted cost of risk -0.1% 1.3% -1.4 pp 0.7% 1.5% -0.8 pp
NPL to gross loans 2.7% 3.1% -0.4 pp 2.7% 3.1% -0.4 pp
NPLs coverage ratio exc. collateral 91.1% 102.7% -11.6 pp 91.1% 102.7% -11.6 pp
CET 1 CAR (Basel III) 12.0% 12.4% -0.4 pp 12.0% 12.4% -0.4 pp
Regulatory Tier 1 CAR (Basel III) 14.6% 12.8% 1.8 pp 14.6% 12.8% 1.8 pp
Regulatory Total CAR (Basel III) 19.1% 17.9% 1.2 pp 19.1% 17.9% 1.2 pp
Leverage (Times) 7.0x 7.0x 0.0x 7.0x 7.0x 0.0x
Letter from the Chief Executive Officer
I am delighted to present our strong financial and operating results for the
full year 2019 and to provide an overview of the recent macroeconomic
developments in Georgia.
Our underlying consolidated net profit 9 (#_ftn9) for the full year 2019
reached GEL 545.1 million (reported net profit amounted to GEL 540.3 million),
up by 19.8% compared to 2018, while our underlying return on equity was 22.6%
and our underlying return on assets stood at 3.3% (the reported return on
equity stood at 22.4% and our reported return on assets stood at 3.2%).
In 2019, our operating income amounted GEL 1,128.2, up by 3.7% year-on-year,
which was supported by increase in net fee and commission income and net
interest income. The growth in net interest income was related to
re-classification of net gains on currency swaps in the amount of GEL 28.6
million from other operating income, which offset by the decline in net
interest income related to introduction of responsible lending regulation from
1 January 2019, limiting the Bank's ability to lend money to higher-yield
retail customers. Consequently, the net interest margin decreased by 1.3 pp
year-on-year and stood at 5.6% in 2019 and 5.3% in the fourth quarter of 2019.
By the end of 2019, the net interest margin has been fully rebased to the new
level and we expect it to stabilize at the 2019 fourth quarter level.
The growth in net profit was also strongly supported by a decrease in credit
loss allowance, which was driven by improved performance across all segments
and change in the product mix. As a result, our cost of risk stood at 0.7% in
2019 compared to 1.6% in 2018. We also updated our guidance on cost of risk
for 2020 and expect it to be around 1.0%, given the positive effects of the
responsible lending regulation on loan book quality.
In 2019, our operating expenses increased by 9.7% year-on-year or 8.3% on an
underlying basis, resulting in an underlying cost-to-income ratio of 39.5%
(the reported cost-to-income ratio stood at 39.9%), up by 1.7 pp year-on-year.
The increase in the cost-to-income ratio was mainly related to investments in
our new ecosystems. Over the same period, the bank's standalone
cost-to-income ratio remained strong and stood at 35.9%. 10 (#_ftn10)
In terms of balance sheet growth, our loan book expanded by 22.1%
year-on-year, or by 17.9% on constant currency basis, mainly supported by
growth in the corporate and MSME segments. Over the same period, deposits
increased by 7.5% year-on-year, or by 2.9% on constant currency basis, driven
by our policy of reducing deposits due to high liquidity as a result of the
recent bond issuance. As a result, as of 31 December 2019, our loan book
market share stood at 39.5%, up by 0.7 pp year-on-year, while our deposit
market share stood at 39.0%, down by 2.2 pp year-on-year.
Our capital position and liquidity levels continue to be strong. As of 31
December 2019, our regulatory CET 1, tier 1 and total capital adequacy ratios
per Basel III guidelines stood at 12.0%, 14.6% and 19.1% respectively, while
minimum requirements amounted to 10.4%, 12.5% and 17.5% respectively. Our
regulatory liquidity coverage ratio stood at 110% compared to the minimum
requirement of 100%, while the regulatory net stable funding ratio (NSFR) per
Basel III guidelines stood at 127%, above the minimum requirement of 100%.
Regarding macro developments, the Georgian economy demonstrated continued
strong performance in fourth quarter 2019 and expanded by 5.3% 11 (#_ftn11)
year-on-year, following 5.8% growth in Q3 2019, while the growth for the full
year 2019 was estimated to be 5.2%. High GDP growth was mainly supported by
solid external inflows driven by stronger exports and remittances, which grew
by 15.9% and 13.1% year-on-year in the fourth quarter respectively, as well as
by recovering tourism. The number of tourists went up by 12.0% year-on-year,
while tourism revenue increased by 5.4% over the same period, mainly driven by
strong growth in the number of visitors from the EU, Turkey and other
neighbouring countries. The expansionary fiscal stance and relatively strong
increase in lending also contributed to GDP growth. The 5.2% growth of the
economy for the full year 2019 is particularly encouraging given the backdrop
of the challenges the economy faced in 2019, the most important being Russia's
flight ban.
Turning to the development of our business, I would like to start with our
progress in Uzbekistan:
o In January 2020, we obtained a preliminary banking licence in Uzbekistan,
which is an essential step in the process of launching our banking operations
in the country in the near future. As previously announced, our strategy is to
develop a greenfield, next-generation banking ecosystem for retail and MSME
customers in Uzbekistan. The primary focus will be on digital channels,
including our neobank, Space. For our Uzbek venture, we are planning to join
forces with International Financial Institutions and a local partner. Our
plans foresee a minimum 51% shareholding. We have already secured interest
from the EBRD and IFC and have reached an agreement on the main terms with the
Uzbek-Oman Investment Company to act as our local partner.
o Last year, we launched several important preparatory work-streams,
including implementation of the core banking system in co-operation with a
local IT company. We also set up a pilot branch in Tashkent for proof of
concept and built a core team for the bank. Thus, we are well advanced in the
process and expect to obtain the final licence and start banking operations in
summer 2020.
o The total amount of the initial investment from all the shareholders is
expected to be US$ 40 million, which we plan to invest in two stages: US$ 12
million before receiving the licence, and US$ 28 million after receiving the
licence. In terms of our product offerings, we plan to start with consumer
loans, car loans, savings and current accounts and add mortgages and MSME
loans later.
o In parallel, we are actively developing our payments business in the
country through our recently acquired subsidiary, Payme, which is the leading
payments company in the country, already serving around 1.8 million customers.
The company is growing rapidly, and in 2019, its revenue went up by 84% and
amounted to GEL 8.6 million, while its EBITDA reached GEL 4.5 million, up by
77% year-on-year.
In December 2019, we also launched our point-of-sale consumer financing
operations in Uzbekistan, which is already available at 15 locations and we
plan to expand to 50 locations by the end of 2020.
Another important development during the quarter was signing the partnership
agreement between our neobank, Space, and Visa, a world's leader in digital
payments. This will allow us to jointly develop innovative, user-centric and
secure banking solutions and expand our digital banking footprint beyond
Georgia.
Finally, I would like to give you an update about recent changes to the
composition of the Management Board of JSC TBC Bank. David Chkonia, our Chief
Risk Officer, left the bank at the end of his contractual term in order to
pursue other career opportunities. Consequently, Nino Masurashvili, deputy
CEO, who was previously in charge of retail banking development, has been
appointed as the new Chief Risk Officer and Tornike Gogichaishvili, Deputy CEO
and Chief Operations Officer (COO) of the Bank has been appointed to lead the
retail banking business. The functions that were previously carried out by the
COO have been re-allocated to be the responsibility of the CFO and the Deputy
CEO, SME & Micro Banking. I would like to thank David Chkonia for his
significant contribution to enhancing our risk management system and to wish
him success in his future career. Also, I would like to wish Nino Masurashvili
and Tornike Gogichaishvili success in their new roles.
Outlook
In 2019, we recorded strong financial results and made significant progress
against our strategic priorities, including the development of customer
focused ecosystems and international expansion in Uzbekistan. This lays a
solid foundation for further development of these initiatives and I am very
excited about our ambitious plans for 2020. Our leading digital capabilities,
outstanding customer experience and advanced data analytical capabilities,
coupled with our strong team spirit, make me confident that we are well
positioned to achieve sustainable growth and to deliver superior results to
our shareholders. Therefore, I would like to reiterate our medium-term
targets: ROE of above 20%, cost to income ratio below 35%, dividend pay-out
ratio of 25-35% and loan book growth of around 10-15%.
Operating Overview
Recent Developments
Preliminary banking licence in Uzbekistan
o TBC PLC has obtained a preliminary banking licence in Uzbekistan, which is
an essential step in the process to launch our banking operations in the
country in the near future.
o As previously announced, TBC PLC's strategy is to develop a greenfield,
next-generation banking ecosystem for retail and MSME customers in Uzbekistan.
The primary focus will be on digital channels, including our neobank, Space.
For more information about the international strategy in Uzbekistan please
refer pages 11-12.
New borrowings from IFIs
o TBC Bank has signed a loan agreement in the amount of GEL 90 million
equivalent with the European Investment Bank (EIB). The funds are available to
draw either in EUR, USD or GEL. The five-year loan facility will be used
primarily to finance micro, small and medium size businesses in Georgia and
support the development of private enterprise.
o TBC Bank has signed three loan agreements totaling USD 23 million
equivalent in Georgian Lari (GEL) with the European Bank for Reconstruction
and Development (EBRD). Funding will be available for investments in green
technology, especially in climate adaptation and mitigation technologies.
Structural Changes of the Management Board
TBC Bank has appointed a new Chief Risk Officer, following the departure of
the previous Chief Risk Officer at the end of his contractual term in order to
pursue other career opportunities. As a result, TBC Bank has decided to
implement the following structural changes to the composition of the
Management Board:
o Nino Masurashvili, Deputy CEO, who had previously been in charge of retail
banking development of TBC Bank, has been appointed as the new Chief Risk
Officer;
o Tornike Gogichaishvili, Deputy CEO and Chief Operations Officer of the
Bank, has been appointed to lead the Bank's retail banking business;
o Certain functions that have previously been carried out directly by the
COO have been re-allocated to be the responsibility of the CFO or the Deputy
CEO, SME & Micro Banking.
Digital Channels
Our neobank, Space, has signed a partnership agreement with Visa, a world's
leader in digital payments, to jointly develop innovative banking services and
expand digital banking footprints in new geographies. Through the partnership,
Visa will work with Space to jointly develop innovative, user-centric and
secure banking solutions and help Space in their ambitions to expand to other
countries focusing on CISSEE.
Awards
TBC Bank has won a number of prestigious awards from leading industry
magazines:
o TBC Bank was named 'Bank of the Year 2019 in Georgia' by The Banker
magazine in its annual country awards. This award is recognition of the bank's
strong financial performance, coupled with superior customer experience and
fully-fledged digital capabilities. The criteria for choosing country winners
for this award included digital transformation, efficiency and internal
capabilities to move into a new era.
o TBC Bank was named the 'Best Foreign Exchange Provider 2020 in Georgia' by
Global Finance Magazine. The criteria for choosing the country winners for
this award included transaction volume, market share and scope of global
coverage as well as the quality of customer service, pricing and the use of
innovative technologies.
o The bank received the 'Best Trade Finance Provider in Georgia' award in
2020 from Global Finance and was also named 'Market Leader' and 'Best Service
Provider' in Georgia in the Trade Finance Survey 2020 conducted by Euromoney.
These awards recognise TBC Bank's leading position in trade finance and
emphasize the Bank's successful cooperation with international networks.
International Expansion
Uzbekistan
Preliminary Banking Licence
In January 2020, TBC Group PLC obtained a preliminary banking licence in
Uzbekistan, which is an essential step in the process to launch our banking
operations in the country in the near future. Obtaining a banking licence is a
two-step process, wherein the banks are first granted a preliminary licence,
after which they are expected to meet certain predefined requirements to
receive the final licence.
Milestones completed before preliminary banking licence:
o Core Banking deployment;
o Launch of digital pilot branch;
o Key staff on boarded;
o Agreement of key terms and conditions with international and local
shareholders.
Main targets for 2020:
o Meet technical requirements to obtain licence
o Data center and core banking implementation;
o Security systems;
o Get operations up and running.
o Investments in 2020:
o USD 12 mln to be invested in the share capital before obtaining licence;
o Further USD 28 mln to be invested into the share capital.
o Branches
o Initially launch 5 branches for friends and families;
o Scale up to 20 branches by the end of the year.
o Space platform
o Serve customers through space platform.
Product launch estimated plan of the greenfield bank:
o Short term
o Consumer loans;
o Auto loans;
o Saving accounts;
o Current accounts.
o Medium term
o Mortgages;
o MSME loans.
Financial targets for greenfield bank:
o 1(st) Year
o Loss around USD 6-8 mln.
o 2(nd) Year
o Break Even.
o Medium target
o ROE in the range of TBC Group's target
o Loan book target up to USD 700 mln
Other initiatives:
o Payments - Payme
o Revenue and EBITDA increased by 84.0% and 76.9% YoY, respectively for FY
2019;
o Number of transactions increased by 24.5% YoY.
o Consumer Financing - Vendoo
o 55 point of sales by the end of 2020;
o USD 10.2 million outstanding portfolio by the end of 2020;
o 61,700 installments by the end of 2020.
o Online tickets - TKT.uz
o Selling tickets of: cinema, theater, concerts, transport, sport and etc.;
o First transaction occurred in late December 2019.
Organizational structure:
Expected Supervisory Board Composition:
o Chairman - Giorgi Shagidze, Deputy CEO, CFO of TBC Bank (Project lead
until launch); Former Global Operations Executive at Barclays Bank PLC
o Board Member - Nikoloz Kurdiani, Deputy CEO of TBC Bank; Former Head of
the Retail Division of ATF Bank, UniCredit Group in Kazakhstan
o Independent Board Member - Wojciech Sobieraj, CEO of Aion Bank; Former CEO
of Alior Bank
o Independent Board Member - Sharof Sharipov, CFO of Token Group (US/UK);
Former CFO of 10x Future Technologies
o Independent Board Member - Seit Devdariani, Project Coordinator for EBRD
project: PFI Capacity-Building Technical Cooperation Programme (Azerbaijan),
Former CEO of BBMB Bank (Belarus)
Expected composition of the Management Board:
o CEO - Sandro Rtveladze, Group Head of Retail Banking and a country
director of Bayport Savings and Loans Plc. (Ghana) at Bayport Financial
Services (in a process of exiting current employment); Former Deputy CEO at
Liberty Bank (Georgia)
o CFO - Vano Baliashvili, Former Deputy CEO, COO of TBC Bank; Also served as
CFO at TBC Bank
o COO - Rostom Talakhadze, Former Head of logistics of TBC Bank
o CTO - Nikoloz Mamulashvili, Former Head of Development of TBC Bank
o Deputy CEO - Sitora R. Tulyaganova, Former Head of Legal, InFinBank
Other Key Staff:
o Head of Commercial - Evgeniy Vishnevskiy, Former Commercial Director at
Uzbektelecom
o Head of HR - Hilola Suleymanova, Former Managing Partner of DaVinci
Management Consulting
o Chief Accountant - Aida Nazirova, Former Chief Accountant of Ipak Yuli
Bank
Additional Information Disclosure
The following materials in connection with TBC PLC's financial results are
disclosed on our Investor Relations website at http://tbcbankgroup.com/
(http://tbcbankgroup.com/) under the Results Announcement
(https://www.tbcbankgroup.com/investors/results-center/) section.
Economic Overview
Economic growth and the external sector
GDP growth came in at 5.3% YoY in 4Q 2019 and averaged 5.2% YoY in 2019,
according to GeoStat's initial estimates. The growth was broad-based across
different sectors of the economy. In the first 9 months of 2019, trade and
repairs (+7.4% YoY), real estate (+5.9% YoY), transport and logistics (+7.5%
YoY), information and communication (+14.5% YoY) and the construction sector
(+5.2% YoY) all significantly contributed to overall GDP growth.
As for the external sector, the overall dynamics of the external balance
remained healthy despite the negative impact stemming from the Russian flight
ban. Reflecting lower tourism inflows, the balance of trade in services
declined slightly from 12.7% of GDP in 2018 to 12.4% of GDP in trailing four
quarters as of 3Q 2019. However, this decline was counteracted by the lower
deficit of trade in goods (down by 1.9% of GDP), as well as by a more moderate
improvement in the income account deficit (down by 0.5% of GDP). As a result,
the Current Account (CA) balance to GDP ratio improved to 4.5% as of the last
four quarters ending in 3Q 2019, compared to 6.8% in 2018. The CA deficit
continued to be fully financed with FDI inflows, which posted +13.7% YoY
growth in 3Q 2019 after a declining trend from very high levels. As of the
last four quarters ending in 3Q 2019, net FDI stood at 4.9% of GDP. Despite
being somewhat below the average of the past couple of years, FDI inflows at
current levels are still quite high when compared to peer countries in the
neighbourhood, as well as in Central and Eastern Europe.
The positive tendency in the major components of the CA balance continued in
4Q 2019 as well. Following the dip in tourism inflows in 3Q 2019 (-6.9% YoY in
USD terms), it recovered quickly to 5.4% YoY growth in USD terms in 4Q 2019,
on the back of strong growth in the number of visitors from the EU, Turkey,
and other neighbouring countries, offsetting the negative impact of a falling
number of visitors from Russia. Growth of the exports of goods improved to
15.9% YoY in 4Q, compared to an 11.1% increase in the first 9 months of 2019.
Similarly, remittance inflows also accelerated to 13.1% YoY in 4Q 2019. At the
same time, imports of goods also posted a stronger growth towards the end of
the year (+5.6% YoY in 4Q 2019). Overall, based on the dynamics of the major
components, the CA balance probably improved further in 4Q 2019 YoY.
Exchange rate, inflation and credit
The GEL exchange rate depreciation since June 2019 has been the major factor
behind the rise in inflation up to 7% as of the end of 2019. In response to
higher inflationary pressures, the NBG tightened the monetary policy rate from
6.5% at the beginning of September to 9.0% as of the end of 2019. A tighter
monetary policy stance in GEL, coupled with the strong external sector,
contributed to a stronger GEL exchange rate. By the end of 2019, the USD/GEL
exchange rate stood at 2.87, down by 3.0% QoQ. The monthly inflation dynamics
indicate some moderation of inflation by the end of 2019. According to the
latest projections of the central bank, CPI inflation is projected to
gradually decline towards the target, starting from 2Q 2020, before reaching
the target by the end of 2020.
Despite tighter monetary policy in GEL, lending growth remained solid, mostly
on the back of accelerated FX lending by the end of 2019, supported by the
lower reserve requirements and ample bank liquidity in FX. As of the end of
2019, the bank loan portfolio went up by 16.1% YoY, excluding the exchange
rate effect, mostly on the back of business lending (+23.3% YoY excl. FX
effect), strongly supporting the solid economic growth. At the same time,
retail growth was relatively slow (+6.0% YoY excl. FX effect), owing to
tighter prudential regulations. Despite some acceleration of FX lending,
de-dollarization of the financial sector remains a top priority for the
central bank; however, in future rather more attention is expected to be
devoted to de-dollarization of liabilities.
Fiscal spending
Fiscal spending significantly supported growth in 2019, with the budget
deficit estimated at 2.7% of GDP in 2019. The actual impact of the fiscal
sector on growth was even higher, taking into consideration the advance
payments made by the end of 2018, which supported growth in 2019. Taking into
account those advance payments, the fiscal deficit was estimated at around
4.2% of GDP, almost double the amount the previous year. Going forward,
according to the budget projections for 2020, the fiscal stance is expected to
be less expansionary for 2020 and more oriented towards social spending.
Nevertheless, the share of capital expenditures remains high and, on a macro
level, the budget is balanced.
Going forward
Above 5% economic growth for the full year 2019 once more underlines the
resilience and high growth potential of Georgian economy. This growth is
particularly encouraging on the backdrop of the challenges that economy faced
in 2019, the most important being Russia's flight ban. According to the TBC
research, projection of external inflows, credit and fiscal stance indicate to
5% growth in 2020, however, considering some possible election related
uncertainties, 4.5% remains a baseline scenario, close to the IMF 4.3% growth
projection (5.2% long term projection).
More information on the Georgian economy and financial sector can be found at
www.tbcresearch.ge (http://www.tbcresearch.ge) .
Unaudited Consolidated Financial Results Overview for 4Q 2019
This statement provides a summary of the unaudited business and financial
trends for 4Q 2019 for TBC Bank Group plc and its subsidiaries. The quarterly
financial information and trends are unaudited.
Starting from 1 January 2019, TBC Bank adopted IFRS 16. Therefore, the
comparative information for 2018 is not comparable to the information
presented for 2019.
TBC Bank Group PLC financial results are prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union ("EU") and the Companies Act 2006 applicable to companies
reporting under IFRS. The Group classifies and separately discloses certain
incomes and expenses, which are non-recurring by nature and are caused by
extraordinary events, as one-off items in order to provide a consistent view
and enable better analysis of the financial performance of the Group. Adjusted
performance is an alternative performance measure (APM) and the reconciliation
of the underlying profit and loss items with the reported profit and loss
items and the underlying ratios are given in Annex 3 on pages 45-46.
Please note, that there might be slight differences in previous periods'
figures due to rounding.
Net Interest Income
In 4Q 2019, net interest income amounted to GEL 209.3 million, down by 2.6%
YoY and up by 8.1% on QoQ basis.
The YoY increase in interest income was primarily related to an increase in
interest income from loans, which was related to an increase in the gross loan
portfolio of GEL 2,289.4 million, or 22.1%. This effect was partially offset
by a 1.3 pp drop in loan yields, mainly in the retail and MSME segments.
The decrease in retail loan yields was driven by the continued impact of the
NGB's regulation from January 2019, which limits the banks' ability to lend
money to higher-yield retail customers, while the decrease in MSME loan yields
was in line with the overall market trend.
Over the same period, interest expense increased by GEL 51.2 million, or
36.3%, which was mainly related to interest expense from bonds issued in
summer 2019, as well as increase in an interest expense from deposits. The
latter was related both to the growth in the respective portfolio by 7.5% YoY,
and to an increase in deposit cost by 0.3 pp over the same period.
The QoQ increase in interest income was mainly due to an increase in the loan
portfolio by GEL 981.7 million, or 8.4%, while loan yields remained broadly
stable. Over the same period, interest expense increased by GEL 10.7 million,
or 5.9%, mainly related to the increase in the NBG loan.
In 4Q 2019, we re-classified net gains on currency swaps from other operating
income to net interest income. More information is given in annex 4 on page
46.
Thus, our NIM was 5.3% down by 1.4 pp YoY and up by 0.2 pp on a QoQ basis,
while risk adjusted NIM for the period amounted to 5.4%, remained the same YoY
and up by 1.0 pp QoQ.
In thousands of GEL 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Interest income 392,154 366,472 355,543 10.3% 7.0%
Interest expense (191,891) (181,192) (140,740) 36.3% 5.9%
Net gains from currency swaps 9,055 8,355 N/A 100% 8.4%
Net interest income 209,318 193,635 214,803 -2.6% 8.1%
NIM 5.3% 5.1% 6.7% -1.4 pp 0.2 pp
Risk adjusted NIM 5.4% 4.4% 5.4% 0.0 pp 1.0 pp
Net fee and commission income
In 4Q 2019, net fee and commission income totalled GEL 54.8 million, up by
24.5% YoY and by 16.4% QoQ.
The YoY rise was mainly driven by an increase in net fee and commission income
from plastic card operations, and settlement transactions. The former increase
was mainly related to the increase in the number of active cards as well as
the increase in the number of POS terminals related to the overall growth of
the business. At the same time, the increase in net fee and commission income
from settlement transactions YoY mainly driven by the increase in the number
of TBC Status's clients (our affluent retail sub-segment),up by 102% YoY to
82.5 thousands.
On a QoQ basis, the rise was mainly driven by net fee and commission income
from card operations and settlement transactions as mentioned above as well as
seasonality.
In thousands of GEL 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Net fee and commission income
Card operations 16,649 13,479 13,110 27.0% 23.5%
Settlement transactions 24,887 18,355 16,971 46.6% 35.6%
Guarantees issued and letters of credit 8,831 8,197 7,368 19.9% 7.7%
Other 4,477 7,074 6,615 -32.3% -36.7%
Total net fee and commission income 54,844 47,105 44,064 24.5% 16.4%
Other Non-Interest Income
Total other non-interest income decreased by 24.9% YoY and increased by 2.7%
QoQ, amounting to GEL 40.1 million in 4Q 2019.
The YoY decrease was mainly driven by the high base of other operating income
last year due to the gain from sale of investment properties and the
recognition of an option to buy shares in one of our large corporate clients
in 2018. Another driver was the decrease in net income from foreign currency
operations related to the re-classification of net gains on currency swaps.
More information is given in annex 4 on page 46.
The QoQ increase was mainly driven by other operating income, due to the
gain from the sale of repossessed assets. This rise was slightly offset by the
decrease in net income from foreign currency operations, mainly due to higher
volatility in 3Q 2019.
Net insurance premium earned after claims and acquisition costs increased by
46.9% on YoY and by 18.3% QoQ, mainly related to the increased scale of the
insurance business. More information about TBC insurance can be found in
Annex 5 on page 47.
In thousands of GEL 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Other non-interest income
Net income from foreign currency operations 28,006 29,260 33,029 -15.2% -4.3%
Net insurance premium earned after claims and acquisition costs 12 (#_ftn12) 5,659 4,784 3,853 46.9% 18.3%
Other operating income 6,410 4,974 16,513 -61.2% 28.9%
Total other non-interest income 40,075 39,018 53,395 -24.9% 2.7%
Credit Loss Allowance
In 4Q 2019, total credit loss allowance amounted to GEL 0.2 million.
The YoY decrease was mainly due to decrease in credit loss allowance on loans
to customers, driven by strong performance in all segments, as well as a
portfolio product mix change, related to the responsible lending regulation
effective from 1 January 2019.
QoQ improvement was also related to strong performance across all segments.
In thousands of GEL 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Credit loss allowance for loan to customers 5,148 (20,695) (34,398) NMF NMF
Credit loss allowance for other transactions (4,924) (5,054) (9,638) -48.9% -2.6%
Total credit loss allowance 224 (25,749) (44,036) NMF NMF
Operating income after credit loss allowance 304,461 254,009 268,226 13.5% 19.9%
Cost of risk -0.2% 0.7% 1.4% -1.6 pp -0.9 pp
NMF - no meaningful figures
Operating Expenses
In 4Q 2019, total operating expenses expanded by 2.6% YoY and by 13.8% QoQ,
amounting to GEL 127.1 million.
YoY growth was mainly driven by increase in staff costs, driven by the overall
expansion of business as well as the increase in the share price 13 (#_ftn13)
over a three-year period for the purpose of top and middle management share
based bonuses accruals (while there was no material change in expected total
share compensation). This was partially offset by the decrease in
depreciation and amortizations expenses, which was driven by amendments in the
deprecation period of certain assets in 4Q
2019.
On QoQ basis, the increase was driven by administrative and other expenses and
resulted from seasonally high costs in 4Q. Over the same period depreciation
decreased by 43.1%, as mentioned above.
In 4Q 2019, cost to income stood at 41.8%, up by 2.1 pp YoY and 1.9 pp QoQ.
In thousands of GEL 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Operating expenses
Staff costs (68,934) (62,230) (63,213) 9.1% 10.8%
Provisions for liabilities and charges (2,632) (73) - NMF NMF
Depreciation and amortization (9,921) (17,433) (12,333) -19.6% -43.1%
Administrative & other operating expenses (45,637) (31,969) (48,358) -5.6% 42.8%
Total operating expenses (127,124) (111,705) (123,904) 2.6% 13.8%
Cost to income 41.8% 39.9% 39.7% 2.1 pp 1.9 pp
NMF - no meaningful figures
Net Income
Net income for the fourth quarter increased by GEL 29.9 million, or 23.0%, YoY
and increased by GEL 33.2 million, or 26.2%, QoQ, amounting to GEL 160.0
million.
As a result, ROE stood at 24.7%, up by 0.4 pp YoY and by 4.3 pp QoQ, while ROA
stood at 3.5%, stable on a YoY basis and up by 0.7 pp QoQ
In thousands of GEL 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Profit before tax 177,338 142,303 144,322 22.9% 24.6%
Income tax expense (17,313) (15,527) (14,235) 21.6% 11.5%
Profit for the period 160,025 126,776 130,087 23.0% 26.2%
ROE 24.7% 20.4% 24.3% 0.4 pp 4.3 pp
ROA 3.5% 2.8% 3.5% 0.0 pp 0.7 pp
Funding and Liquidity
In September 2019, we had high liquidity due to bond issuance in summer,
which was utilised during 4Q by increasing loan book.
31-Dec-19 30-Sep-19 Change
Minimum net stable funding ratio, as defined by the NBG 100% 100% 0.0 pp
Net stable funding ratio as defined by the NBG 126.7% 137.7% -11.0%
Net loans to deposits + IFI funding 104.8% 97.0% 7.9 pp
Leverage (Times) 7.0x 7.3x -0.3x
Minimum liquidity ratio, as defined by the NBG 30.0% 30.0% 0.0 pp
Liquidity ratio, as defined by the NBG 32.2% 39.2% -7.0 pp
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 75.0% 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 110.1% 131.6% -21.5 pp
LCR in GEL, as defined by the NBG 83.7% 87.7% -4.0 pp
LCR in FC, as defined by the NBG 128.4% 162.8% -34.4 pp
Regulatory Capital
As of 31 December 2019, the Bank's CET 1, Tier 1 and Total Capital adequacy
ratios stood at 12.0%, 14.6% and 19.1%, respectively, above the respective
minimum requirements of 10.4%, 12.5% and 17.5%.
CET 1 and Tier 1 capital adequacy ratios were broadly stable on a QoQ basis,
while the total capital adequacy ratio reduced by 0.3 pp, which was mainly
driven by the increase in loan portfolio and was partially offset by net
income generation.
In thousands of GEL 31-Dec-19 30-Sep-19 Change
CET 1 Capital 1,871,892 1,770,734 5.7%
Tier 1 Capital 2,281,706 2,191,792 4.1%
Total Capital 2,974,029 2,894,704 2.7%
Total Risk-weighted Exposures 15,593,925 14,889,695 4.7%
Minimum CET 1 ratio 10.4% 9.8% 0.6 pp
CET 1 Capital adequacy ratio 12.0% 11.9% 0.1 pp
Minimum Tier 1 ratio 12.5% 11.9% 0.6 pp
Tier 1 Capital adequacy ratio 14.6% 14.7% -0.1 pp
Minimum total capital adequacy ratio 17.5% 16.7% 0.8 pp
Total Capital adequacy ratio 19.1% 19.4% -0.3 pp
Loan Portfolio
As of 31 December 2019, the gross loan portfolio reached GEL 12,662.0 million,
up by 8.4% QoQ, or by 9.8% on a constant currency basis, which was mainly
supported by growth in the corporate segment due to the acquisition of both
large and mid-corporate clients. Over the same period, the proportion of gross
loans denominated in foreign currency increased by 0.5 pp on a QoQ basis and
accounted for 58.7% of total loans.
At the end of December 2019, our market share in total loans stood at 39.5% up
by 0.8 pp QoQ, while our loan market share in legal entities was 38.9% up by
1.2 pp QoQ and our loan market share in individuals stood at 40.0% up by 0.5
pp QoQ.
In thousands of GEL 31-Dec-19 30-Sep-19 Change
Loans and advances to customers
Retail 5,053,203 4,903,134 3.1%
Retail loans GEL 2,386,750 2,284,431 4.5%
Retail loans FC 2,666,453 2,618,703 1.8%
Corporate 4,660,473 4,029,321 15.7%
Corporate loans GEL 1,424,309 1,248,851 14.0%
Corporate loans FC 3,236,164 2,780,470 16.4%
MSME 2,948,279 2,747,802 7.3%
MSME loans GEL 1,419,804 1,354,789 4.8%
MSME loans FC 1,528,475 1,393,013 9.7%
Total loans and advances to customers 12,661,955 11,680,257 8.4%
4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Loan yields 10.9% 10.8% 12.2% -1.3 pp 0.1%
Loan yields GEL 15.7% 15.2% 17.4% -1.7 pp 0.5 pp
Loan yields FC 7.6% 7.7% 8.7% -1.1 pp -0.1 pp
Retail Loan Yields 11.8% 11.8% 13.6% -1.8 pp 0.0 pp
Retail loan yields GEL 17.1% 17.2% 20.7% -3.6 pp -0.1 pp
Retail loan yields FC 7.1% 7.3% 7.8% -0.7 pp -0.2 pp
Corporate Loan Yields 9.7% 9.2% 10.0% -0.3 pp 0.5%
Corporate loan yields GEL 13.3% 11.7% 10.9% 2.4 pp 1.7 pp
Corporate loan yields FC 8.2% 8.1% 9.7% -1.5 pp 0.1 pp
MSME Loan Yields 11.3% 11.2% 12.2% -0.9 pp 0.1 pp
MSME loan yields GEL 15.7% 15.0% 16.2% -0.5 pp 0.7 pp
MSME loan yields FC 7.2% 7.7% 8.6% -1.4 pp -0.5 pp
Loan Portfolio Quality
Total PAR 30 decreased by 0.3 pp on QoQ basis and stood at 1.7%. The decrease
was driven by improved performance across all segments. Moreover, our total
NPLs stood at 2.7%, down by 0.2 pp, which was attributable to the strong
performance of the retail and MSME segments.
Par 30 31-Dec-19 30-Sep-19 Change
Retail 2.1% 2.3% -0.2 pp
Corporate 0.5% 0.8% -0.3 pp
MSME 2.8% 3.0% -0.2 pp
Total Loans 1.7% 2.0% -0.3 pp
Non-performing Loans 31-Dec-19 30-Sep-19 Change
Retail 3.0% 3.2% -0.2 pp
Corporate 1.8% 1.8% 0.0 pp
MSME 3.8% 4.3% -0.5 pp
Total Loans 2.7% 2.9% -0.2 pp
NPL Coverage Dec-19 Sep-19
Exc. Collateral Incl. Collateral Exc. Collateral Incl. Collateral
Corporate 97.1% 241.4% 118.5% 317.8%
Retail 111.1% 182.9% 113.2% 183.9%
MSME 59.7% 173.7% 64.9% 179.2%
Total 91.1% 194.2% 97.7% 209.9%
Cost of risk
The total cost of risk for 4Q 2019 stood at -0.2% down by 1.6 pp YoY and by
0.9 pp on a QoQ basis.
The YoY decrease was driven by the product mix change as well as robust credit
quality across all segments, while the decrease on a QoQ basis was related to
the strong performance across all segments.
In Q4 2019, retail cost of risk decreased by 2.6pp YoY and 1.1pp QoQ, driven
by the strong performance of retail segment, translated into improved credit
risk parameters and change in product mix in retail portfolio, due to
responsible lending regulation.
In Q4 2019, MSME cost of risk decreased by 0.9pp QoQ and YoY, mainly due to
the SME sub segment. Decrease in SME portfolio is driven by repayment of
several impaired borrowers, as well as overall strong performance of the
portfolio, resulting in improved credit risk parameters. In case of the Micro
segment, cost of risk remained broadly stable.
Cost of Risk 4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Retail 0.3% 1.4% 2.9% -2.6 pp -1.1 pp
Corporate -0.2% 0.4% 0.1% -0.3 pp -0.6 pp
MSME -1.0% -0.1% -0.1% -0.9 pp -0.9 pp
Total -0.2% 0.7% 1.4% -1.6 pp -0.9 pp
Deposit Portfolio
The total deposits portfolio increased by 1.5% QoQ and amounted to 10,049.3
million, while on a constant currency basis the total deposit portfolio was up
by 3.3%. The slow growth in deposits is related to our high liquidity due to
the recent bonds issuance in the summer. The proportion of deposits
denominated in foreign currency increased by 0.4 pp on a QoQ basis and
accounted for 65.9% of total deposits.
By the end December 2019, our market share in deposits amounted to 39.0% down
by 0.3 pp QoQ and our market share in deposits to legal entities stood at
40.6% up by 0.5 pp QoQ. Our market share in deposits to individuals stood at
37.9% down by 0.7 pp QoQ.
In thousands of GEL 31-Dec-19 30-Sep-19 Change
Customer Accounts
Retail 5,673,917 5,550,227 2.2%
Retail deposits GEL 1,098,681 1,057,854 3.9%
Retail deposits FC 4,575,236 4,492,373 1.8%
Corporate 3,187,319 3,242,875 -1.7%
Corporate deposits GEL 1,735,746 1,770,123 -1.9%
Corporate deposits FC 1,451,573 1,472,752 -1.4%
MSME 1,188,088 1,104,221 7.6%
MSME deposits GEL 594,388 586,603 1.3%
MSME deposits FC 593,700 517,618 14.7%
Total Customer Accounts 10,049,324 9,897,323 1.5%
4Q'19 3Q'19 4Q'18 Change YoY Change QoQ
Deposit rates 3.4% 3.2% 3.1% 0.3 pp 0.2 pp
Deposit rates GEL 6.0% 5.3% 5.3% 0.7 pp 0.7 pp
Deposit rates FC 2.0% 2.1% 2.0% 0.0 pp -0.1 pp
Retail Deposit Yields 2.9% 2.8% 2.6% 0.3 pp 0.1 pp
Retail deposit rates GEL 5.1% 4.4% 4.6% 0.5 pp 0.7 pp
Retail deposit rates FC 2.3% 2.4% 2.2% 0.1 pp -0.1 pp
Corporate Deposit Yields 5.1% 4.7% 4.5% 0.6 pp 0.4 pp
Corporate deposit rates GEL 7.9% 6.9% 6.8% 1.1 pp 1.0 pp
Corporate deposit rates FC 1.5% 1.8% 1.8% -0.3 pp -0.3 pp
MSME Deposit Yields 0.9% 1.0% 1.0% -0.1 pp -0.1 pp
MSME deposit rates GEL 1.5% 1.5% 1.6% -0.1 pp 0.0 pp
MSME deposit rates FC 0.3% 0.3% 0.3% 0.0 pp 0.0 pp
Segment definition and PL
Business Segments
The segment definitions are as follows (updated in 2019):
· Corporate - a legal entity/group of affiliated entities with an
annual revenue exceeding GEL 12.0 million or which have been granted
facilities with more than GEL 5.0 million. Some other business customers may
also be assigned to the corporate segment or transferred to the MSME segment
on a discretionary basis;
· Retail - non-business individual customers; all individual
customers are included in retail deposits;
· MSME - business customers who are not included in the corporate
segment; or legal entities which have been granted a pawn shop loan; or
individual customers of the fully-digital bank, Space; and
· Corporate centre and other operations - comprises the Treasury,
other support and back office functions, and non-banking subsidiaries of the
Group.
Business customers are all legal entities or individuals who have been granted
a loan for business purposes.
Income Statement by Segments
4Q'19 Retail MSME Corporate Corp.Centre Total
Interest income 147,780 81,014 107,974 55,386 392,154
Interest expense (41,085) (2,757) (41,292) (106,757) (191,891)
Net gains from currency swaps - 9,055 9,055
Net transfer pricing (18,069) (28,729) 869 45,929 -
Net interest income 88,626 49,528 67,551 3,613 209,318
Fee and commission income 60,488 7,837 12,770 5,656 86,751
Fee and commission expense (26,483) (2,777) (2,133) (515) (31,907)
Net fee and commission income 34,005 5,061 10,637 5,141 54,844
Net insurance premium earned after claims and acquisition costs - - - 5,659 5,659
Net income from foreign currency operations 8,018 6,304 13,311 (8,607) 19,026
Foreign exchange translation gains less losses/(losses less gains) - - - 8,980 8,980
Net gains/(losses) from derivative financial instruments 2 - - (6) (4)
Gains less Losses from Disposal of Investment Securities Measured at Fair - - - 20 20
Value through Other Comprehensive Income
Other operating income 2,032 187 1,211 2,846 6,276
Share of profit of associates - - - 118 118
Other operating non-interest income and insurance profit 10,052 6,491 14,522 9,010 40,075
Credit loss allowance for loans to customers (4,246) 6,797 2,597 - 5,148
Credit loss allowance for performance guarantees and credit related (13) (235) (42) - (290)
commitments
Credit loss allowance for investments in finance lease - - - 615 615
Credit loss allowance for other financial assets (3,683) (11) (228) (1,243) (5,165)
Credit loss allowance for financial assets measured at fair value through - - (49) (35) (84)
other comprehensive income
Profit before G&A expenses and income taxes 124,741 67,631 94,987 17,101 304,461
Staff costs (34,765) (12,379) (11,059) (10,731) (68,934)
Depreciation and amortization (7,247) (1,253) (280) (1,141) (9,921)
Provision for liabilities and charges - - - (2,632) (2,632)
Administrative and other operating expenses (17,448) (4,480) (4,646) (19,063) (45,637)
Operating expenses (59,460) (18,112) (15,985) (33,567) (127,124)
Profit before tax 65,281 49,519 79,002 (16,466) 177,337
Income tax expense (6,060) (4,438) (7,256) 441 (17,313)
Profit for the year 59,221 45,081 71,746 (16,025) 160,024
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance Sheet
In thousands of GEL Dec-19 Sep-19
Cash and cash equivalents 1,003,583 1,349,260
Due from other banks 33,605 30,297
Mandatory cash balances with National Bank of Georgia 1,591,829 1,954,662
Loans and advances to customers 12,349,399 11,344,779
Investment securities measured at fair value through other comprehensive 985,293 1,177,963
income
Bonds carried at amortized cost 1,022,684 871,640
Investments in finance leases 256,660 241,840
Investment properties 72,667 78,449
Current income tax prepayment 25,695 29,599
Deferred income tax asset 2,173 2,179
Other financial assets 133,736 243,330
Other assets 255,712 205,066
Premises and equipment 385,736 381,065
Right of use assets 59,693 59,040
Intangible assets 167,597 134,837
Goodwill 61,558 63,215
Investments in associates 2,654 2,536
TOTAL ASSETS 18,410,274 18,169,757
LIABILITIES
Due to credit institutions 3,593,901 3,613,093
Customer accounts 10,049,324 9,897,323
Lease liabilities 59,898 62,126
Other financial liabilities 113,608 96,781
Current income tax liability 1,634 1,128
Debt Securities in issue 1,213,598 1,251,649
Deferred income tax liability 21,331 21,142
Provisions for liabilities and charges 23,128 22,729
Other liabilities 95,162 88,672
Subordinated debt 591,035 615,939
TOTAL LIABILITIES 15,762,619 15,670,582
EQUITY
Share capital 1,682 1,682
Shares held by trust (27,516) (15)
Share premium 848,459 828,936
Retained earnings 1,953,364 1,794,060
Group re-organisation reserve (162,167) (162,167)
Share based payment reserve (17,803) (28,104)
Revaluation reserve for premises 56,374 56,606
Fair value reserve (6,476) 7,345
Cumulative currency translation reserve (6,850) (6,367)
Net assets attributable to owners 2,639,067 2,491,976
Non-controlling interest 8,588 7,199
TOTAL EQUITY 2,647,655 2,499,175
TOTAL LIABILITIES AND EQUITY 18,410,274 18,169,757
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL 4Q'19 3Q'19 4Q'18
Interest income 392,154 366,472 355,543
Interest expense (191,891) (181,192) (140,740)
Net gains from currency swaps 9,055 8,355 N/A
Net interest income 209,318 193,635 214,803
Fee and commission income 86,751 76,795 67,049
Fee and commission expense (31,907) (29,690) (22,985)
Net fee and commission income 54,844 47,105 44,064
Net insurance premiums earned 12,386 9,821 7,023
Net insurance claims incurred and agents' commissions (6,727) (5,037) (3,170)
Net insurance premium earned after claims and acquisition costs 5,659 4,784 3,853
Net income from foreign currency operations 19,026 25,266 28,258
Net gain/(losses) from foreign exchange translation 8,980 3,994 4,771
Net gains/(losses) from derivative financial instruments (4) (32) (184)
Gains less losses from disposal of investment securities measured at fair 20 2 -
value through other comprehensive income
Other operating income 6,276 4,831 16,485
Share of profit of associates 118 173 212
Other operating non-interest income 34,416 34,234 49,542
Credit loss allowance for loans to customers 5,148 (20,695) (34,398)
Credit loss allowance for investments in finance lease 615 (211) (779)
Credit loss allowance for performance guarantees and credit related (290) (1,474) (1,532)
commitments
Credit loss allowance for other financial assets (5,165) (3,513) (7,305)
Credit loss allowance for financial assets measured at fair value through (84) 144 (22)
other comprehensive income
Operating income after credit loss allowance for impairment 304,461 254,009 268,226
Staff costs (68,934) (62,230) (63,213)
Depreciation and amortization (9,921) (17,433) (12,333)
(Provision for)/ recovery of liabilities and charges (2,632) (73) -
Administrative and other operating expenses (45,637) (31,969) (48,358)
Operating expenses (127,124) (111,705) (123,904)
Profit before tax 177,337 142,304 144,322
Income tax expense (17,313) (15,527) (14,235)
Profit for the period 160,024 126,777 130,087
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve (13,828) (5,327) 3,757
Exchange differences on translation to presentation currency (483) 111 340
Items that will not be reclassified to profit or loss:
Revaluation of premises and equipment - - 10,749
Income tax recorded directly in other comprehensive income - - 2,788
Other comprehensive income for the period (14,311) (5,216) 17,634
Total comprehensive income for the period 145,713 121,561 147,721
Profit attributable to:
- Shareholders of TBCG 159,416 125,244 129,952
- Non-controlling interest 608 1,533 135
Profit for the period 160,024 126,777 130,087
Total comprehensive income is attributable to:
- Shareholders of TBCG 145,122 120,034 147,628
- Non-controlling interest 591 1,527 93
Total comprehensive income for the period 145,713 121,561 147,721
Key Ratios
Average Balances
The average balances included in this document are calculated as the average
of the relevant monthly balances as of each month-end. Balances have been
extracted from TBC's unaudited and consolidated management accounts, which
were prepared from TBC's accounting records. These were used by the management
for monitoring and control purposes.
Key Ratios
Ratios (based on monthly averages, where applicable) 4Q'19 3Q'19 4Q'18
Profitability ratios:
ROE(2) 24.7% 20.4% 24.3%
ROA(4) 3.5% 2.8% 3.5%
ROE before credit loss allowance(5) 24.7% 24.6% 32.5%
Cost to Income(7) 41.8% 39.9% 39.7%
NIM(8) 5.3% 5.1% 6.7%
Risk Adjusted NIM(9) 5.4% 4.4% 5.4%
Loan Yields(10) 10.9% 10.8% 12.2%
Risk Adjusted Loan Yields(11) 11.0% 10.1% 10.9%
Deposit rates(12) 3.4% 3.2% 3.1%
Yields on interest Earning Assets(13) 9.9% 9.8% 11.1%
Cost of Funding(14) 4.9% 4.8% 4.4%
Spread(15) 5.2% 5.2% 6.6%
Asset quality and portfolio concentration:
Cost of Risk(16) -0.2% 0.7% 1.4%
PAR 90 to Gross Loans(17) 1.1% 1.2% 1.2%
NPLs to Gross Loans(18) 2.7% 2.9% 3.1%
NPLs coverage(19) 91.1% 97.7% 102.7%
NPLs coverage with collateral(20) 194.2% 209.9% 216.4%
Credit loss level to Gross Loans(21) 2.5% 2.9% 3.2%
Related Party Loans to Gross Loans(22) 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(23) 8.3% 9.0% 10.1%
Top 20 Borrowers to Total Portfolio(24) 12.3% 13.0% 14.2%
Capital optimisation:
Net Loans to Deposits plus IFI Funding(25) 104.8% 96.9% 89.9%
Net Stable Funding Ratio(26) 126.7% 137.7% 129.3%*
Liquidity Coverage Ratio(27) 110.1% 131.6% 113.9%
Leverage(28) 7.0x 7.3x 7.0x
CET 1 CAR (Basel III)(29) 12.0% 11.9% 12.4%
Regulatory Tier 1 CAR (Basel III)(30) 14.6% 14.7% 12.8%
Regulatory Total 1 CAR (Basel III)(31) 19.1% 19.4% 17.9%
(*) Based on internal estimates
Ratio definitions
1. Underlying return on average total equity (ROE) equals underlying net
income attributable to owners divided by the monthly average of total
shareholders' equity attributable to the PLC's equity holders for the same
period adjusted for the respective one-off items; annualised where applicable.
2. Reported return on average total equity (ROE) equals net income
attributable to owners divided by the monthly average of total shareholders'
equity attributable to the PLC's equity holders for the same period;
annualised where applicable.
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. Reported 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. Return on average total equity (ROE) before credit loss allowance equals
net income attributable to owners excluding all credit loss allowance divided
by the monthly average of total shareholders 'equity attributable to the PLC's
equity holders for the same period.
6. Underlying cost to income ratio equals total underlying 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. Reported 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).
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, and amounts due from credit institutions. The latter
excludes all items from cash and cash equivalents, excludes EUR mandatory
reserves with NBG that currently have negative interest, and includes other
earning items from due from banks.
9. Risk Adjusted Net Interest Margin is NIM minus the cost of risk without
one-offs and the 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 the 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; annualised 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. Cost of risk equals credit loss allowance for loans to customers divided
by monthly average gross loans and advances to customers; annualised where
applicable.
17. 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.
18. 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.
19. NPLs coverage ratio equals total credit loss allowance for loans to
customers calculated per IFRS 9 divided by the NPL loans.
20. NPLs coverage with collateral ratio equals credit loss allowance for loans
to customers per IFRS 9 plus the total collateral amount of NPL loans
(excluding third party guarantees) discounted at 30-50% depending on segment
type divided by the NPL loans.
21. Credit loss level to gross loans equals credit loss allowance for loans to
customers divided by the gross loan portfolio for the same period.
22. Related party loans to total loans equals related party loans divided by
the gross loan portfolio.
23. Top 10 borrowers to total portfolio equals the total loan amount of the
top 10 borrowers divided by the gross loan portfolio.
24. Top 20 borrowers to total portfolio equals the total loan amount of the
top 20 borrowers divided by the gross loan portfolio.
25. Net loans to deposits plus IFI funding ratio equals net loans divided by
total deposits plus borrowings received from international financial
institutions.
26. 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.
27. Liquidity coverage ratio equals high-quality liquid assets divided by the
total net cash outflow amount as defined by the NBG.
28. Leverage equals total assets to total equity.
29. Regulatory CET 1 CAR equals CET 1 capital divided by total risk weighted
assets, both calculated in accordance with the Pillar 1 requirements of the
NBG Basel III standards. The reporting started from the end of 2017.
Calculations are made for TBC Bank stand-alone, based on local standards.
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 the
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 the
NBG Basel III standards. The reporting started from the end of 2017.
Calculations are made for TBC Bank stand-alone, based on local standards.
Exchange Rates
To calculate the QoQ growth of the Balance Sheet items without the currency
exchange rate effect, we used the USD/GEL exchange rate of 2.9552 as of 30
September 2019. For the calculations of the YoY growth without the currency
exchange rate effect, we used the USD/GEL exchange rate of 2.6766 as of 31
December 2018. As of 31 December 2019 the USD/GEL exchange rate equaled
2.8677. For P&L items growth calculations without currency effect, we used
the average USD/GEL exchange rate for the following periods: FY 2019 of
2.8192, FY 2018 of 2.5345, 4Q 2019 of 2.9458, 3Q 2019 of 2.9194, 4Q 2018 of
2.6752.
Unaudited Consolidated Financial Results Overview for FY 2019
This statement provides a summary of the unaudited business and financial
trends for FY 2019 for TBC Bank Group plc and its subsidiaries. The financial
information and trends are unaudited.
Starting from 1 January 2019, TBC Bank adopted IFRS 16. Therefore, the
comparative information for 2018 is not comparable to the information
presented for 2019.
TBC Bank Group PLC financial results are prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union ("EU") and the Companies Act 2006 applicable to companies
reporting under IFRS. The Group classifies and separately discloses certain
incomes and expenses, which are non-recurring by nature and are caused by
extraordinary events, as one-off items in order to provide a consistent view
and enable better analysis of the financial performance of the Group. Adjusted
performance is an alternative performance measure (APM) and the reconciliation
of the underlying profit and loss items with the reported profit and loss
items and the underlying ratios are given under Annex 3 section on pages
45-46.
Please note, that there might be slight differences in previous periods'
figures due to rounding.
Net Interest Income
In FY 2019, net interest income amounted to GEL 801.5 million down by 3.0%
YoY.
The YoY increase in interest income was primarily related to an increase in
interest income from loans, which was related to growth of gross loan
portfolio by GEL 2,289.4 million, or 22.1%. This effect was partially offset
by a 1.3 pp drop in loan yields, mainly in the retail and MSME segments. The
decrease in retail loan yields was driven by a continued impact of the NGB's
regulation from January 2019, which limits the banks' ability to lend money to
higher-yield retail customers, while the decrease in MSME loan yields was in
line with the overall market trend.
Over the same period, interest expense increased by GEL 157.6 million, or
31.1%, which was mainly related to interest expense from bonds issued in
summer 2019, as well as the increase in interest expense from deposits. The
latter was related both to growth in the respective portfolio by 7.5% YoY and
to an increase in deposit cost by 0.1 pp over the same period.
In 2019, we re-classified net gains on currency swaps from other operating
income to net interest income. More information is given in annex 4 on page
46.
Consequently, NIM stood at 5.6% in FY 2019, compared to 6.9% in FY 2018, while
risk adjusted NIM for the same period amounted to 4.8%, down by 0.6 pp YoY.
In thousands of GEL FY'19 FY'18 Change YoY
Interest income 1,436,843 1,284,235 11.9%
Interest expense (663,860) (506,213) 31.1%
Net gains from currency swaps 28,556 N/A 100%
Net interest income 801,539 778,022 3.0%
NIM 5.6% 6.9% -1.3 pp
Risk adjusted NIM 4.8% 5.4% -0.6 pp
Net fee and commission income
In FY 2019, net fee and commission income totalled GEL 187.3 million, up by
18.9% on a YoY basis.
The increase on a YoY basis was spread across all categories and was related
to overall growth of business.
In thousands of GEL FY'19 FY'18 Change YoY
Net fee and commission income
Card operations 56,037 50,174 11.7%
Settlement transactions 73,228 62,051 18.0%
Guarantees issued and letters of credit 30,289 23,414 29.4%
Other 27,736 21,891 26.7%
Total net fee and commission income 187,290 157,530 18.9%
Other Non-Interest Income
Total other non-interest income decreased by 8.2% on a YoY basis and amounted
to GEL 139.4 million in FY 2019. This primarily resulted from decrease in
other operating income due to high base last year as mentioned above. Another
driver was the decrease in net income from foreign currency operations related
to the re-classification of net gains on currency swaps. More information is
given in annex 4 on page 46.
This decrease was partially offset by increase in net insurance premium earned
after claims and acquisition costs, which increased by 50.8% YoY, mainly
related to the increased scale of the insurance business. More information
about TBC insurance can be found in Annex 5 on page 47.
In thousands of GEL FY'19 FY'18 Change YoY
Other non-interest income
Net income from foreign currency operations 101,467 106,874 -5.1%
Net insurance premium earned after claims and acquisition costs 14 (#_ftn14) 18,510 12,275 50.8%
Other operating income 19,437 32,767 -40.7%
Total other non-interest income 139,414 151,916 -8.2%
Credit Loss Allowance
In FY 2019, total credit loss allowance amounted to GEL 92.0 million, down by
44.7% on a YoY basis.
The decrease was mainly related to credit loss allowance on loans to
customers, which was driven by strong performance in all segments, as well as
the portfolio product mix change, related to the responsible lending
regulation effective from 1 January 2019.
In thousands of GEL FY'19 FY'18 Change YoY
Credit Loss Allowance
Credit loss allowance for loan to customers (82,030) (143,723) -42.9%
Credit loss allowance for other transactions (9,962) (22,516) -55.8%
Total credit loss allowance (91,992) (166,239) -44.7%
Operating income after credit loss allowance 1,036,251 921,229 12.5%
Cost of risk 0.7% 1.6% -0.9 pp
Operating Expenses
In FY 2019, total reported operating expenses expanded 9.7% on a YoY basis and
amounted to GEL 450.8 million, while over the same period underlying operating
expenses increased by 8.3% and stood at GEL 445.1 million.
The increase was primarily due to an increase in staff costs and a rise in
depreciation and amortization. The increase in staff costs was due to
expansion of business as well as increase in share price over the three year
period for the purpose of top and middle management share based bonuses
accruals. The increase in depreciation and amortization was mainly due to the
adoption of IFRS 16 from January 2019, which led to the reclassification of
leases from administrating expenses to depreciation.
As a result, our cost to income ratio increased by 2.1 pp and stood 39.9% in
FY 2019, while underlying cost to income was 39.5% up by 1.7 pp YoY.
In thousands of GEL FY'19 FY'18 Change YoY
Operating expenses
Staff costs (247,803) (220,354) 12.5%
Provisions for liabilities and charges (1,264) (4,000) -68.4%
Depreciation and amortization (59,478) (45,740) 30.0%
Administrative & other operating expenses (142,181) (140,935) 0.9%
Total Reported operating expenses (450,726) (411,029) 9.7%
Total Underlying operating expenses (445,121) (411,029) 8.3%
Reported Cost to income 39.9% 37.8% 2.1 pp
Underlying Cost to income 39.5% 37.8% 1.7 pp
Net Income
Reported net income for the full year 2019 increased by GEL 102.9 million, or
23.5% and stood at GEL 540.3 million. Without one-off items our net income
would have increased by GEL 90.2 million, or 19.8% and amounted to GEL 545.1
million.
As a result, ROE stood at 22.4%, up by 0.4 pp YoY, while ROA remained
unchanged and stood at 3.2%. Our underlying ROE stood at 22.6% down by 0.2 pp
YoY, while ROA stood at 3.3% and remained the same over the same period.
In thousands of GEL FY'19 FY'18 Change YoY
Profit before tax 585,525 510,200 14.8%
Income tax expense (45,184) (72,765) -37.9%
Reported Profit for the period 540,341 437,435 23.5%
Underlying Profit for the period 545,105 454,861 19.8%
Reported ROE 22.4% 22.0% 0.4 pp
Underlying ROE 22.6% 22.8% -0.2 pp
Reported ROA 3.2% 3.2% 0.0 pp
Underlying ROA 3.3% 3.3% 0.0 pp
Funding and Liquidity
31-Dec-19 31-Dec-18 Change
Minimum net stable funding ratio, as defined by NBG 100.0% N/A N/A
Net stable funding ratio 126.7% 129.3% 15 (#_ftn15) -2.6%
Net loans to deposits + IFI funding 104.8% 89.9% 14.9%
Leverage (Times) 7.0x 7.0x 0.0x
Minimum liquidity ratio, as defined by the NBG 30.0% 30.0% 0.0%
Liquidity ratio, as defined by the NBG 32.2% 33.3% -1.1%
Minimum total liquidity coverage ratio, as defined by the NBG 100.0% 100.0% 0.0%
Minimum LCR in GEL, as defined by the NBG 75.0% 75.0% 0.0%
Minimum LCR in FC, as defined by the NBG 100.0% 100.0% 0.0%
Total liquidity coverage ratio, as defined by the NBG 110.1% 113.9% -3.8%
LCR in GEL, as defined by the NBG 83.7% 102.5% -18.8%
LCR in FC, as defined by the NBG 128.4% 121.1% 7.3%
Regulatory Capital
As of 31 December 2019, the Bank's Basel III CET 1 capital stood at 12.0%,
down by 0.4 pp on a YoY basis. The drop was mainly driven by the increased
portfolio and GEL depreciation during 2019. This effect was partially offset
by net income generation over the same period. Our Tier 1 and Total capital
ratios increased by 1.8 pp and 1.2 pp respectively. The increase was mainly
driven by income generation and issuance of AT1 instrument (in the amount of
USD 125 million) in summer 2019.
In thousands of GEL 31-Dec-19 31-Dec-18 Change
CET 1 Capital 1,871,892 1,629,594 14.9%
Tier 1 Capital 2,281,706 1,678,716 35.9%
Total Capital 2,974,029 2,351,269 26.5%
Total Risk-weighted Exposures 15,593,925 13,154,872 18.5%
Minimum CET 1 ratio 10.4% 8.3% 2.1 pp
CET 1 Capital adequacy ratio 12.0% 12.4% -0.4 pp
Minimum Tier 1 ratio 12.5% 10.3% 2.2 pp
Tier 1 Capital adequacy ratio 14.6% 12.8% 1.8 pp
Minimum total capital adequacy ratio 17.5% 15.8% 1.7 pp
Total Capital adequacy ratio 19.1% 17.9% 1.2 pp
Loan Portfolio
As of 31 December 2019, the gross loan portfolio reached GEL 12,662.0 million,
up by 22.1% YoY, or by 17.9% on a constant currency basis. This was mainly
supported by growth in the corporate segments (as well as by the
re-segmentation of certain clients from the MSME segment in 1Q 2019 in the
amount of GEL 128.0 mln). Over the same period, the proportion of gross loans
denominated in foreign currency decreased by 1.4 pp on a YoY basis and
accounted for 58.7% of total loans, while on a constant currency basis the
proportion of gross loans denominated in foreign currency increased by 2.9 pp
and stood at 57.2%.
At the end of December 2019, our market share in total loans stood at 39.5% up
by 0.7 pp YoY, while our loan market share in legal entities was 38.9% up by
1.6 pp YoY, and our loan market share in individuals stood at 40.0% and
remained the same YoY.
In thousands of GEL 31-Dec-19 31-Dec-18 Change
Loans and advances to customers
Retail 5,053,203 4,698,699 7.5%
Retail loans GEL 2,386,750 2,063,283 15.7%
Retail loans FC 2,666,453 2,635,416 1.2%
Corporate 4,660,473 3,177,289 46.7%
Corporate loans GEL 1,424,309 905,372 57.3%
Corporate loans FC 3,236,164 2,271,917 42.4%
MSME 2,948,279 2,496,594 18.1%
MSME loans GEL 1,419,804 1,170,343 21.3%
MSME loans FC 1,528,475 1,326,251 15.2%
Total loans and advances to customers 12,661,955 10,372,582 22.1%
FY'19 FY'18 Change YoY
Loan yields 11.0% 12.3% -1.3 pp
Loan yields GEL 15.7% 17.8% -2.1 pp
Loan yields FC 7.8% 8.5% -0.7 pp
Retail Loan Yields 12.1% 14.2% -2.1 pp
Retail loan yields GEL 18.0% 20.8% -2.8 pp
Retail loan yields FC 7.3% 7.9% -0.6 pp
Corporate Loan Yields 9.3% 9.5% -0.2 pp
Corporate loan yields GEL 11.6% 11.0% 0.6 pp
Corporate loan yields FC 8.4% 9.0% -0.6 pp
MSME Loan Yields 11.4% 12.1% -0.7 pp
MSME loan yields GEL 15.4% 16.2% -0.8 pp
MSME loan yields FC 7.7% 8.7% -1.0 pp
Loan Portfolio Quality
The total PAR 30 improved by 0.3 pp on a YoY basis, driven by the retail
segment, while total NPLs stood at 2.7%, down by 0.4 pp, which was primarily
attributable to the strong performance of the corporate and MSME segments.
Par 30 31-Dec-19 31-Dec-18 Change
Retail 2.1% 2.6% -0.5 pp
Corporate 0.5% 0.4% 0.1 pp
MSME 2.8% 2.8% 0.0 pp
Total Loans 1.7% 2.0% -0.3 pp
Non-performing Loans 31-Dec-19 31-Dec-18 Change
Retail 3.0% 2.9% 0.1 pp
Corporate 1.8% 2.7% -0.9 pp
MSME 3.8% 4.2% -0.4 pp
Total Loans 2.7% 3.1% -0.4 pp
NPLs Coverage Dec-19 Dec-18
Exc. Collateral Incl. Collateral Exc. Collateral Incl. Collateral
Corporate 97.1% 241.4% 96.2% 286.9%
Retail 111.1% 182.9% 132.4% 204.4%
MSME 59.7% 173.7% 68.4% 174.0%
Total 91.1% 194.2% 102.7% 216.4%
Cost of risk
The total cost of risk for FY 2019 stood at 0.7%, down by 0.9 pp YoY, driven
by the change of product mix, as well as by robust credit quality across all
segments, related to the responsible lending regulation effective from 1
January 2019.
Cost of Risk FY'19 FY'18 Change YoY
Retail 1.6% 2.7% -1.1 pp
Corporate -0.1% 0.4% -0.5 pp
MSME 0.3% 0.7% -0.4 pp
Total 0.7% 1.6% -0.9 pp
Deposit Portfolio
The total deposit portfolio increased by 7.5% YoY and amounted to GEL 10,049.3
million, while on a constant currency basis the total deposit portfolio was up
by 2.9%. The proportion of deposits denominated in foreign currency increased
by 0.2 pp on a YoY basis and accounted for 65.9% of total deposits, while on a
constant currency basis the proportion of deposits denominated in foreign
currency increased by 1.3 pp and stood at 64.4%.
By the end December 2019, our market share in deposits amounted to 39.0% down
by 2.2 pp YoY, and our market share in deposits to legal entities stood at
40.6% down by 0.7 pp. Our market share in deposits to individuals stood at
37.9%, down by 3.3 pp YoY.
In thousands of GEL 31-Dec-19 31-Dec-18 Change
Customer Accounts
Retail 5,673,917 5,103,971 11.2%
Retail deposits GEL 1,098,681 935,339 17.5%
Retail deposits FC 4,575,236 4,168,632 9.8%
Corporate 3,187,319 3,230,653 -1.3%
Corporate deposits GEL 1,735,746 1,754,282 -1.1%
Corporate deposits FC 1,451,573 1,476,371 -1.7%
MSME 1,188,088 1,017,518 16.8%
MSME deposits GEL 594,388 515,827 15.2%
MSME deposits FC 593,700 501,691 18.3%
Total Customer Accounts 10,049,324 9,352,142 7.5%
FY'19 FY'18 Change YoY
Deposit rates 3.3% 3.2% 0.1 pp
Deposit rates GEL 5.8% 5.6% 0.2 pp
Deposit rates FC 2.0% 2.1% -0.1 pp
Retail Deposit Yields 2.8% 2.7% 0.1 pp
Retail deposit rates GEL 5.0% 4.4% 0.6 pp
Retail deposit rates FC 2.3% 2.4% -0.1 pp
Corporate Deposit Yields 4.9% 4.9% 0.0 pp
Corporate deposit rates GEL 7.4% 7.5% -0.1 pp
Corporate deposit rates FC 1.7% 1.9% -0.2 pp
MSME Deposit Yields 0.9% 1.0% -0.1 pp
MSME deposit rates GEL 1.5% 1.7% -0.2 pp
MSME deposit rates FC 0.3% 0.4% -0.1 pp
Segment definition and PL
Business Segments
The segment definitions are as follows (updated in 2019):
· Corporate - a legal entity/group of affiliated entities with an
annual revenue exceeding GEL 12.0 million or which have been granted
facilities of more than GEL 5.0 million. Some other business customers may
also be assigned to the corporate segment or transferred to the MSME segment
on a discretionary basis;
· Retail - non-business individual customers; all individual
customers are included in retail deposits;
· MSME - business customers who are not included in the corporate
segment; or legal entities which have been granted a pawn shop loan; or
individual customers of the fully-digital bank, Space; and
· Corporate centre and other operations - comprises the Treasury,
other support and back office functions, and non-banking subsidiaries of the
Group.
Business customers are all legal entities or individuals who have been granted
a loan for business purposes.
Income Statement by Segments
FY'19 Retail MSME Corporate Corp.Centre Total
Interest income 582,788 299,451 356,652 197,952 1,436,843
Interest expense (152,751) (10,202) (160,064) (340,843) (663,860)
Net gains on currency swaps - - - 28,556 28,556
Net transfer pricing (66,951) (101,424) 31,352 137,023 -
Net interest income 363,086 187,825 227,940 22,688 801,539
Fee and commission income 207,258 26,271 49,338 10,564 293,431
Fee and commission expense (88,679) (9,081) (7,069) (1,312) (106,141)
Net fee and commission income 118,579 17,190 42,269 9,252 187,290
Net insurance premium earned after claims and acquisition costs - - - 18,510 18,510
Net income from foreign currency operations 30,990 24,220 49,851 (25,782) 79,279
Foreign exchange translation gains less losses/(losses less gains) - - - 22,188 22,188
Net gains/(losses) from derivative financial instruments (264) - - (16) (280)
Gains less Losses from Disposal of Investment Securities Measured at Fair - - - 169 169
Value through Other Comprehensive Income
Other operating income 9,563 1,093 2,953 5,307 18,916
Share of profit of associates - - - 632 632
Other operating non-interest income and insurance profit 40,289 25,313 52,804 21,008 139,414
Credit loss allowance for loans to customers (77,323) (7,968) 3,261 - (82,030)
Credit loss allowance for performance guarantees and credit related 411 124 (2,691) - (2,156)
commitments
Credit loss allowance for investments in finance lease - - - 582 582
Credit loss allowance for other financial assets (3,545) (11) 2,211 (6,753) (8,098)
Credit loss allowance for financial assets measured at fair value through - - (141) (149) (290)
other comprehensive income
Profit before G&A expenses and income taxes 441,497 222,473 325,653 46,628 1,036,251
Staff costs (134,143) (48,018) (38,360) (27,282) (247,803)
Depreciation and amortization (45,522) (7,210) (2,571) (4,175) (59,478)
Provision for liabilities and charges - - - (1,264) (1,264)
Administrative and other operating expenses (77,563) (21,094) (17,127) (26,397) (142,181)
Operating expenses (257,228) (76,322) (58,058) (59,118) (450,726)
Profit before tax 184,269 146,151 267,595 (12,490) 585,525
Income tax expense (18,101) (14,825) (29,048) 16,790 (45,184)
Profit for the year 166,168 131,326 238,547 4,300 540,341
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance Sheet
In thousands of GEL Dec-19 Dec-18
Cash and cash equivalents 1,003,583 1,166,911
Due from other banks 33,605 47,316
Mandatory cash balances with National Bank of Georgia 1,591,829 1,422,809
Loans and advances to customers 12,349,399 10,038,452
Investment securities measured at fair value through other comprehensive 985,293 1,005,239
income
Bonds carried at amortized cost 1,022,684 654,203
Investments in finance leases 256,660 203,802
Investment properties 72,667 84,296
Current income tax prepayment 25,695 2,116
Deferred income tax asset 2,173 2,097
Other financial assets 133,736 167,518
Other assets 255,712 192,792
Premises and equipment 385,736 367,504
Right of use assets 59,693 -
Intangible assets 167,597 109,220
Goodwill 61,558 31,286
Investments in associates 2,654 2,432
TOTAL ASSETS 18,410,274 15,497,993
LIABILITIES
Due to credit institutions 3,593,901 3,031,503
Customer accounts 10,049,324 9,352,142
Lease liabilities 59,898 -
Other financial liabilities 113,608 98,714
Current income tax liability 1,634 63
Debt Securities in issue 1,213,598 13,343
Deferred income tax liability 21,331 22,237
Provisions for liabilities and charges 23,128 18,767
Other liabilities 95,162 104,337
Subordinated debt 591,035 650,919
TOTAL LIABILITIES 15,762,619 13,292,025
EQUITY
Share capital 1,682 1,650
Shares held by trust (27,516) -
Share premium 848,459 796,854
Retained earnings 1,953,364 1,523,879
Group re-organisation reserve (162,167.00) (162,168)
Share based payment reserve (17,803) (16,294)
Revaluation reserve for premises 56,374 57,240
Fair value reserve (6,476) 8,680
Cumulative currency translation reserve (6,850) (6,935)
Net assets attributable to owners 2,639,067 2,202,906
Non-controlling interest 8,588 3,062
TOTAL EQUITY 2,647,655 2,205,968
TOTAL LIABILITIES AND EQUITY 18,410,274 15,497,993
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL FY'19 FY'18
Interest income 1,436,843 1,284,235
Interest expense (663,860) (506,213)
Net gains from currency swaps 28,556 N/A
Net interest income 801,539 778,022
Fee and commission income 293,431 235,701
Fee and commission expense (106,141) (78,171)
Net fee and commission income 187,290 157,530
Net insurance premiums earned 38,199 23,601
Net insurance claims incurred and agents' commissions (19,689) (11,326)
Net insurance premium earned after claims and acquisition costs 18,510 12,275
Net income from foreign currency operations 79,279 91,678
Net gain/(losses) from foreign exchange translation 22,188 15,196
Net gains/(losses) from derivative financial instruments (280) 173
Gains less losses from disposal of investment securities measured at fair 169 2
value through other comprehensive income
Other operating income 18,916 31,438
Share of profit of associates 632 1,154
Other operating non-interest income 120,904 139,641
Credit loss allowance for loans to customers (82,030) (143,723)
Credit loss allowance for investments in finance lease 582 (1,765)
Credit loss allowance for performance guarantees and credit related (2,156) (4,056)
commitments
Credit loss allowance for other financial assets (8,098) (16,609)
Credit loss allowance for financial assets measured at fair value through (290) (86)
other comprehensive income
Operating income after credit loss allowance for impairment 1,036,251 921,229
Staff costs (247,803) (220,354)
Depreciation and amortization (59,478) (45,740)
(Provision for)/ recovery of liabilities and charges (1,264) (4,000)
Administrative and other operating expenses (142,181) (140,935)
Operating expenses (450,726) (411,029)
Profit before tax 585,525 510,200
Income tax expense (45,184) (72,765)
Profit for the period 540,341 437,435
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve (15,156) 6,949
Exchange differences on translation to presentation currency 85 425
Items that will not be reclassified to profit or loss:
Revaluation of premises and equipment - 10,749
Income tax recorded directly in other comprehensive income - (2,363)
Other comprehensive income for the period (15,071) 15,760
Total comprehensive income for the period 525,270 453,195
Profit attributable to:
- Shareholders of TBCG 537,895 435,078
- Non-controlling interest 2,446 2,357
Profit for the period 540,341 437,435
Total comprehensive income is attributable to:
- Shareholders of TBCG 522,843 450,901
- Non-controlling interest 2,427 2,294
Total comprehensive income for the period 525,270 453,195
Consolidated Statements of Cash Flows
In thousands of GEL 31-Dec-19 31-Dec-18
Cash flows from/(used in) operating activities
Interest received 1,388,852 1,224,606
Interest paid (647,427) (501,984)
Fees and commissions received 282,715 235,508
Fees and commissions paid (106,526) (78,140)
Insurance premium received 76,101 54,682
Insurance claims paid (21,787) (15,174)
Income received from trading in foreign currencies 79,287 91,678
Other operating income received 44,248 11,407
Staff costs paid (216,465) (202,897)
Administrative and other operating expenses paid (169,582) (136,670)
Income tax paid (70,413) (34,918)
Cash flows from operating activities before changes in operating assets and 639,003 648,098
liabilities
Net change in operating assets
Due from other banks and mandatory cash balances with the National Bank of (22,009) (343,772)
Georgia
Loans and advances to customers (2,013,577) (1,718,446)
Investment in finance lease (43,719) (54,784)
Other financial assets 19,612 (35,570)
Other assets 1,577 (4,486)
Net change in operating liabilities
Due to other banks (1,938) 69,755
Customer accounts 272,023 1,371,675
Other financial liabilities (8,267) (12,136)
Change in finance lease liabilities (6,453)
Other liabilities and provision for liabilities and charges 5,816 3,618
Net cash flows (used in)/from operating activities (1,157,932) (76,048)
Cash flows from/(used in) investing activities
Acquisition of investment securities measured at fair value through other (1,781,816) (717,729)
comprehensive income
Proceeds from disposal of investment securities measured at fair value through 240,603 14,781
other comprehensive income
Proceeds from redemption at maturity of investment securities measured at fair 1,598,536 370,571
value through other comprehensive income
Acquisition of subsidiaries, net of cash acquired (39,297) 809
Acquisition of bonds carried at amortised cost (613,383) (395,717)
Proceeds from redemption of bonds carried at amortised cost 216,871 200,658
Acquisition of premises, equipment and intangible assets (120,333) (89,263)
Proceeds from disposal of premises, equipment and intangible assets 13,225 813
Cash acquired 2,996 -
Proceeds from disposal of investment property 13,338 42,515
Net cash used in investing activities (469,260) (572,562)
Cash flows from/(used in) financing activities
Proceeds from other borrowed funds 1,819,899 1,776,489
Redemption of other borrowed funds (1,392,897) (1,515,562)
Proceeds from subordinated debt - 255,900
Redemption of subordinated debt (104,079) (60,910)
Proceeds from debt securities in issue 1,176,049 (7,596)
Redemption of debt securities in issue (14,296) -
Dividends paid (91,928) (85,484)
Acquisition of non-controlling interest in subsidiary - -
Net cash flows from financing activities 1,392,748 362,837
Effect of exchange rate changes on cash and cash equivalents 71,116 21,207
Net increase in cash and cash equivalents (163,328) (264,566)
Cash and cash equivalents at the beginning of the year 1,166,911 1,431,477
Cash and cash equivalents at the end of the year 1,003,583 1,166,911
Key Ratios
Average Balances
The average balances included in this document are calculated as the average
of the relevant monthly balances as of each month-end. Balances have been
extracted from TBC's unaudited and consolidated management accounts, which
were prepared from TBC's accounting records. These were used by the management
for monitoring and control purposes.
Key Ratios
Ratios (based on monthly averages, where applicable) FY'19 FY'18
Profitability ratios:
Underlying ROE(1) 22.6% 22.8%
Reported ROE(2) 22.4% 22.0%
Underlying ROA(3) 3.3% 3.3%
Reported ROA(4) 3.2% 3.2%
ROE before credit loss allowance(5) 26.3% 30.4%
Underlying Cost to Income(6) 39.5% 37.8%
Reported Cost to Income(7) 39.9% 37.8%
NIM(8) 5.6% 6.9%
Risk Adjusted NIM(9) 4.8% 5.4%
Loan Yields(10) 11.0% 12.3%
Risk Adjusted Loan Yields(11) 10.3% 10.8%
Deposit rates(12) 3.3% 3.2%
Yields on interest Earning Assets(13) 10.0% 11.4%
Cost of Funding(14) 4.7% 4.4%
Spread(15) 5.5% 7.0%
Asset quality and portfolio concentration:
Cost of Risk(16) 0.7% 1.6%
PAR 90 to Gross Loans(17) 1.1% 1.2%
NPLs to Gross Loans(18) 2.7% 3.1%
NPLs coverage(19) 91.1% 102.7%
NPLs coverage with collateral(20) 194.2% 216.4%
Credit loss level to Gross Loans(21) 2.5% 3.2%
Related Party Loans to Gross Loans(22) 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(23) 8.3% 10.1%
Top 20 Borrowers to Total Portfolio(24) 12.3% 14.2%
Capital optimisation:
Net Loans to Deposits plus IFI Funding(25) 104.8% 89.9%
Net Stable Funding Ratio(26) 126.7% 129.3%*
Liquidity Coverage Ratio(27) 110.1% 113.9%
Leverage(28) 7.0x 7.0x
CET 1 CAR (Basel III)(29) 12.0% 12.4%
Regulatory Tier 1 CAR (Basel III)(30) 14.6% 12.8%
Regulatory Total 1 CAR (Basel III)(31) 19.1% 17.9%
(*) Based on internal estimates
Ratio definitions
1. Underlying return on average total equity (ROE) equals underlying net
income attributable to owners divided by the monthly average of total
shareholders' equity attributable to the PLC's equity holders for the same
period adjusted for the respective one-off items; annualised where applicable.
2. Reported return on average total equity (ROE) equals net income
attributable to owners divided by the monthly average of total shareholders'
equity attributable to the PLC's equity holders for the same period;
annualised where applicable.
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. Reported 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. Return on average total equity (ROE) before credit loss allowance equals
net income attributable to owners excluding all credit loss allowance divided
by the monthly average of total shareholders 'equity attributable to the PLC's
equity holders for the same period.
6. Underlying cost to income ratio equals total underlying 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. Reported 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).
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, and amounts due from credit institutions. The latter
excludes all items from cash and cash equivalents, excludes EUR mandatory
reserves with NBG that currently have negative interest, and includes other
earning items from due from banks.
9. Risk Adjusted Net Interest Margin is NIM minus the cost of risk without
one-offs and the 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 the 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; annualised 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. Cost of risk equals credit loss allowance for loans to customers divided
by monthly average gross loans and advances to customers; annualised where
applicable.
17. 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.
18. 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.
19. NPLs coverage ratio equals total credit loss allowance for loans to
customers calculated per IFRS 9 divided by the NPL loans.
20. NPLs coverage with collateral ratio equals credit loss allowance for loans
to customers per IFRS 9 plus the total collateral amount of NPL loans
(excluding third party guarantees) discounted at 30-50% depending on segment
type divided by the NPL loans.
21. Credit loss level to gross loans equals credit loss allowance for loans to
customers divided by the gross loan portfolio for the same period.
22. Related party loans to total loans equals related party loans divided by
the gross loan portfolio.
23. Top 10 borrowers to total portfolio equals the total loan amount of the
top 10 borrowers divided by the gross loan portfolio.
24. Top 20 borrowers to total portfolio equals the total loan amount of the
top 20 borrowers divided by the gross loan portfolio.
25. Net loans to deposits plus IFI funding ratio equals net loans divided by
total deposits plus borrowings received from international financial
institutions.
26. 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.
27. Liquidity coverage ratio equals high-quality liquid assets divided by the
total net cash outflow amount as defined by the NBG.
28. Leverage equals total assets to total equity.
29. Regulatory CET 1 CAR equals CET 1 capital divided by total risk weighted
assets, both calculated in accordance with the Pillar 1 requirements of the
NBG Basel III standards. The reporting started from the end of 2017.
Calculations are made for TBC Bank stand-alone, based on local standards.
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 the
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 the
NBG Basel III standards. The reporting started from the end of 2017.
Calculations are made for TBC Bank stand-alone, based on local standards.
Exchange Rates
To calculate the YoY growth of the Balance Sheet items without the currency
exchange rate effect, we used the USD/GEL exchange rate of 2.6766 as of 31
December 2018. As of 31 December 2019, the USD/GEL exchange rate equalled
2.8677. For P&L items growth calculations without currency effect, we used
the average USD/GEL exchange rate for the following periods: FY 2019 of
2.8192, FY 2018 of 2.5345.
Additional Disclosures
1) Subsidiaries of TBC Bank Group PLC 16 (#_ftn16)
Ownership / voting Country Year of incorporation Industry Total Assets
% as of 31 December 2019
(after elimination)
Subsidiary Amount % in TBC Group
GEL'000
JSC TBC Bank 99.9% Georgia 1992 Banking 17,892,883 97.21%
United Financial Corporation JSC 98.7% Georgia 1997 Card processing 10,015 0.05%
TBC Capital LLC 100.0% Georgia 1999 Brokerage 4,471 0.02%
TBC Leasing JSC 100.0% Georgia 2003 Leasing 322,188 1.75%
TBC Kredit LLC 100.0% Azerbaijan 1999 Non-banking credit institution 24,700 0.14%
TBC Pay LLC 100.0% Georgia 2009 Processing 33,793 0.18%
Index LLC 100.0% Georgia 2011 Real estate management 925 0.01%
TBC Invest LLC 100.0% Israel 2011 PR and marketing 341 0.00%
JSC TBC Insurance 100.0% Georgia 2014 Insurance 62,965 0.33%
Redmed LLC 100.0% Georgia 2019 E-commerce 370 0.00%
TBC International LLC 100.0% Georgia 2019 Asset management 367 0.00%
Swoop JSC 100.0% Georgia 2010 Retail Trade 409 0.00%
LLC Online Tickets 55.0% Georgia 2015 Software Services 2,434 0.01%
TKT UZ 75.00% Uzbekistan 2019 Retail Trade 236 0.00%
My.ge LLC 65.0% Georgia 2008 E-commerce, Housing and Auto 5,637 0.03%
LLC Vendoo (Geo) 100.0% Georgia 2019 Retail Leasing 4,117 0.02%
LLC Mypost 100.0% Georgia 2019 Postal Service 96 0.00%
LLC Billing Solutions 51.00% Georgia 2019 Software Services 344 0.00%
All property.ge LLC 90.0% Georgia 2013 Real estate management 1,179 0.01%
LLC F Solutions 100.00% Georgia 2019 Software Services 10 0.00%
Inspired LLC 51.0% Uzbekistan 2011 Processing 3,973 0.02%
LLC Vendoo (UZ Leasing) 100.00% Uzbekistan 2019 Consumer financing 1,059 0.01%
2) Update on strategic objectives
Our mission: Make life easier
Financial services with a strong focus on digital:
o Book value as of 31 December 2019 - GEL 2.5 billion
o Total assets as of 31 December 2019 - GEL 18.4 billion
o Number of customers as of 31 December 2019 - 2.6 million
Ecosystems:
o Revenue 17 (#_ftn17) - GEL 81.2 million for FY 2019, up by 79% YoY
o Net profit 18 (#_ftn18) - GEL 37.9 million for FY 2019, up by 101% YoY
o Number of visitors 19 (#_ftn19) in September 2019 -5.4 million
o TBC Bank drives 22% of the ecosystems' revenue
Our customer centric ecosystems
We are increasing our touchpoints with customers by creating secure customer
centric digital ecosystems that help our customers to satisfy their needs in
the most convenient and seamless way possible.
Our ambitions are to:
o Establish new standards of customer experience;
o Facilitate digital sales and engagement;
o Create new revenue streams; and
o Collect more valuable customer data.
Payments ecosystem 20 (#_ftn20)
FY 19 FY 18 Change
Number of payments (million) 332.6 253.6 31.2%
Payments ecosystem 236.4 172.7 36.9%
Other payments business 96.2 80.9 18.9%
Volume of payments (GEL billion) 154.1 126.6 21.7%
Payments ecosystem 11.8 8.8 34.1%
Other payments business 142.3 117.8 20.8%
o We are Number 1 in E-com & POS transactions volume, with a market
share of above 53%; 21 (#_ftn21)
o We are among the world's best with over 86% of payments being
contactless; 22 (#_ftn22) and
o We have a great innovation record, with a lot of "first in the region"
payment innovations such as stickers, P2P, contactless cash withdrawal, Voice
payments, Apple Pay, ATM QR withdrawal and TBC Bracelets.
Our aspirations
o Annual growth rate for payments commission income of 20%;
o Increase annual net revenue from GEL 109 million (with 42% contribution
from ecosystems) in 2018 to GEL 218 million by 2022.
TBC Pay
TBC Pay is one of Georgia's leading payment companies. TBC Pay operates a wide
network of self-service terminals all over Georgia.
Services:
o Traditional services: self-service terminals and an online platform
(www.tbcpay.ge (http://www.tbcpay.ge/) ) that enable individuals to perform
payments for various daily services instantly, in an interactive way, on a
24-hour basis;
o New services: mobile application; the easiest instant money transfer
services between Georgian cards; template management and e-wallet.
Financials:
o The business is self-sustainable;
o TBC Bank drives 25% of TBC Pay's revenue.
FY 19 FY 20 F 23 (#_ftn23)
Revenue (GEL million) 33.7 34.2
Number of transactions (million) 53.0 55.8
EBITDA (GEL million) 16.9
Update for 4Q 2019:
In 4Q 2019, the volume and number of transactions increased by 7.9% and 4.2%
QoQ, respectively.
Payme
Payme is a leading digital payment service provider in Uzbekistan, which
supplies high-quality payment solutions to its 1.8 million users. 24
(#_ftn24)
Services:
o Traditional services: Utility payments, P2P transfers, Loan repayments,
mPOS for QR-based payments, E-commerce purchases;
o New services: a new application, Payme 2.0, was created and the beta
version was launched in July with an upgraded interface design and new
capabilities.
Financials:
o Investment in 2019 - USD 5.5 million for a 51% shareholding;
o The business is self-sustainable and generating a positive cashflow.
FY 19 FY 20 F 25 (#_ftn25)
Revenue (GEL million) 8.6 12.3
Number of registered users (thousand) 1,772 2,800
Number of transactions (million) 40.1 52.5
EBITDA (GEL million) 4.5
Update for 4Q 2019:
For FY 2019, revenue and EBITDA increased by 84.0% and 76.9%, respectively.
Housing ecosystem
Livo
Livo is the first housing digital ecosystem in Georgia, offering the full
range of services needed when buying or renting a home, with an estimated
share of the total digital traffic of 20% 26 (#_ftn26) .
Services:
o Traditional services: personal profiles, advertisements and 3D tours &
photographers;
o Innovative services: mortgage loans (TBC and VTB Bank) the first
real-estate valuation service in Georgia within 24 hours, premier agent
service for brokers.
Financials:
o Investment in 2019 - USD 980,000 (USD 225,000 for 90% shareholding plus
USD 755,000 for future development);
o Planned investment in 2020 is GEL 2.0 million from TBC;
o Break-even is planned in 3Q 2020;
o TBC Bank drives 85% of Livo's revenue, which we plan to reduce to 65% in
2020.
Key financial data FY 19 FY 20 F
Revenue (GEL million) 2.5/2.2 27 (#_ftn27) 5.2
EBITDA (GEL million) -0.6
Key operating data Dec - 19 Dec - 20 F
Number of unique visitors (thousand) 28 (#_ftn28) 274 350
Number of listings (thousand) 24 50
Update for 4Q 2019:
o In 4Q 2019, the following services were added: mortgage insurance, a
special service package for developers, and lead generation for developers and
information about air pollution;
o The number of listings increased by 41.2% in December compared to
September;
MyHome.ge
MyHome.ge is the leading classified digital platform in Georgia for
real-estate purchase and renting, with an estimated share of the total digital
traffic of 35%. 29 (#_ftn29)
Services:
o Traditional services: personal profiles, advertisements, drone &
photographers;
o Given the large number of current visitors, the strategy for 2020 is to
diversify service offerings and increase revenue streams.
Financials:
o Allocated initial investment in August 2019, based on revenue contribution
(35%), was GEL 6.7 million; 30 (#_ftn30)
o The business is self-sustainable.
Key financial data FY 19 FY 20 F
Revenue (GEL million) 1.4 2.2
EBITDA (GEL million) 0.4
Key operating data Dec - 19 Dec - 20 F
Number of unique visitors (thousand) 31 (#_ftn31) 360 430
Number of listings (thousand) 140 145
Update for 4Q 2019
o A dedicated module was added for developers, which allows them to manage
their offerings easily;
o The number of listings increased by 7.7% in December, compared to
September.
E-commerce ecosystem
Vendoo
Vendoo is an asset light platform that acts a key intermediary between buyers
and sellers, modelled on industry peers such as Alibaba and Rakuten.
The estimated total addressable market was around GEL 200 million in 2019, and
is expected to grow by 30% in 2020.
Offerings:
o Delivery within 24 hours;
o Over 230 large merchants and following offerings: Electronics, personal
care products, gardening & housing, toys, household chemistry, books &
stationary and beverages; and
o Synergies with our banking operations: installment loans, participation in
a loyalty program called "Ertguli".
Financials:
o Investment in 2018-2019 was GEL 7.2 million. In 2020, TBC plans to invest
a further GEL 1.7 million;
o Break-even is planned in 4Q 2021;
o GMV 32 (#_ftn32) was GEL 2.9 mln in 2019 and is forecasted to reach GEL
14.0 million in 2020.
Key financial data 33 (#_ftn33) FY 19 FY 20 F 34 (#_ftn34)
Revenue (GEL million) 2.4 12.0
EBITDA (GEL million) (4.4)
Key operating data Dec - 19 Dec - 20 F
Number of unique visitors (thousand) 337 500
SKUs 35 (#_ftn35) (thousand) 27 50
Update for 4Q 2019
o GMV more than tripled QoQ and reached GEL 2.1 million in 4Q as a result of
our wide-scale seasonal campaigns, while the number of SKUs increased by 35%;
o Significantly strengthened its operations to meet the high demand.
MyMarket.ge & MyShop.ge
These platforms are the number one players in C2C and B2C e-commerce in
Georgia, with an estimated share of the total digital traffic of 80%. 36
(#_ftn36)
Offerings:
o Myshop is an online outlet platform offering a wide range of products;
o Mymarket offers both brand new and secondary products as well as various
household services.
Financials:
o Allocated initial investment in August 2019 based on revenue contribution
(22%) was GEL 4.2 million 37 (#_ftn37) ;
o The business is self-sustainable.
Key financial data FY 19 FY 20 F
Revenue (GEL million) 1.2 1.6
EBITDA (GEL million) 0.3
Key operating data Dec - 19 Dec - 20 F
Number of unique visitors (thousand) 900 1,000
Number of sellers (thousand) 45 50
Update for 4Q 2019
o Completely redesigned interface of Mymarket.ge webpage;
o The number of unique visitors increased by 7.5% in December compared to
September;
o The number of sellers increased by 28.6% in December compared to
September.
Auto ecosystem
MyAuto.ge & MyParts.ge
MyAuto.ge and MyParts.ge are the market leader in automotive and spare parts,
with an estimated share of the total digital traffic of 80% 38 (#_ftn38) in
each.
Offerings:
o Purchase and renting of secondary cars;
o Purchase of auto parts;
o MyAuto.ge has 50 dealers and 33,000 sellers;
o MyParts.ge has 44 Merchants and 8,440 sellers.
Financials:
o Allocated initial investment in August 2019 based on revenue contribution
(43%) was GEL 8.5 million 39 (#_ftn39) ;
o The business is self-sustainable.
Key financial data FY 19 FY 20 F
Revenue (GEL million) 2.5 3.6
EBITDA (GEL million) 0.9
Key operating data Dec - 19 Dec - 20 F
Number of unique visitors (thousand) 1,550 1,600
Number of listings (thousand) 400 450
Update for 4Q 2019:
o The number of unique visitors increased by 11.4% in December compared to
September;
o The number of listings increased by 15.9% in December compared to
September.
Space - Fully digital bank
Space was developed over the course of just 8 months 40 (#_ftn40) by a
dedicated team of 35 professionals. Development costs before the launch of
Beta version in May 2019 amounted to GEL 1.4 million.
Key metrics as of 31 December 2019
Number of downloads 508 thousand
Total registered customers 181 thousand, out of whom 46% are TBC's dormant customers
Number of transactions (4Q'19) 1.2 mln, out of which 8% was conducted by TBC cards and 8% by other Georgian
banks' cards
Transaction amount (4Q'19) GEL 62 million, out of which 12% was conducted by TBC cards and 11% by other
Georgian banks' cards
Loan portfolio GEL 27 million
Number of borrowers 10 thousand
Number of total cards 121 thousand, out of which 27% was TBC cards and 18% other Georgian banks'
cards
Number of space cards 65 thousand
Our Products
o Instant Consumer Loan 24/7;
o Instant Money Transfer to any bank 24/7;
o Use app with other bank cards;
o Mobile top and bill payments;
o QR instalments; and
o Deposits.
Transformation into a data driven organization
The goal is to strengthen TBC's market leading position by becoming a data
driven organization.
Why?
In order to become customer centric company and reach a non-replicable
competitive advantage on the market, which will:
o Have a significant impact on our profitability;
o Bring our superior customer experience to the next level; and
o Reveal hidden opportunities.
How?
o Implementing best-in-class data analytical projects across the bank, which
have been designed with the help of world's leading consultants;
o Building modern IT infrastructure; and
o Developing strong in-house data analytical capabilities by recruiting and
training the best talent.
Current Progress:
o 4 Data analytics projects have already been finished and 5 underway;
o GEL 8.9 million extra profit in 2019.
Aspirations:
o 23 Data analytics projects already finished across the Bank; and
o GEL 100 million annual extra profit by 2023.
3) Reconciliation of reported IFRS consolidated figures with the
underlying numbers
Item (in thousands of GEL ) FY 2019 FY 2018 Description Reason for exclusion from the Group's current reported performance
Consulting fees (5,605) Consulting fees incurred in 2Q 2019, in relation to the recent events These costs are significant and non-recurring in nature, and therefore are not
regarding historic matters surrounding TBC Bank. For further details, please indicative of the Group's current underlying performance.
see the following press release
(https://otp.tools.investis.com/clients/uk/tbc_bank/rns/regulatory-story.aspx?cid=2168&newsid=1234908)
dated 21.02.2019.
Reversal of deferred tax gain - (17,426) In 2018, TBC Bank reversed the one-off deferred tax gain recognized in 2016 These costs are significant and non-recurring in nature, and therefore are not
due to the recent amendment to the Georgian Tax Code in relation to corporate indicative of the Group's current underlying performance.
income tax. The amendment, which came into force on 12 June 2018, postponed
tax relief for re-invested profit from 1 January 2019 to 1 January 2023 for
financial institutions.
in thousands of GEL FY 2019 FY 2018
Reported net interest income 801,539 778,022
Reported net fee and commission income 187,290 157,530
Reported net insurance premium earned after claims and acquisition costs 18,510 12,275
Reported other operating income 120,904 139,641
Reported operating income 1,128,243 1,087,468
Reported total credit loss allowance (91,992) (166,239)
Reported operating income after provisions 1,036,251 921,229
Reported operating expenses (450,726) (411,029)
One-off consulting fees 5,605 -
Underlying operating expenses (445,121) (411,029)
Reported profit before tax 585,525 510,200
Underlying profit before tax 591,129 510,200
Reported income tax (45,184) (72,765)
Effect on tax of one-off items (841)
Reversal of the one-off deferred tax gain 17,426
Underlying income tax (46,024) (55,339)
Reported profit for the period 540,341 437,435
Underlying profit for the period 545,105 454,861
Reported non-controlling interest (NCI) 2,446 2,357
Underlying NCI 2,446 2,357
Reported profit for the period less NCI 537,895 435,078
Underlying profit for the period less NCI 542,659 452,504
in thousands of GEL FY 2019 FY 2018
Average reported equity attributable to the PLC's equity holders 2,397,141 1,977,359
Adjustment for one-off items on monthly average basis 6,079 10,088
Average underlying equity attributable to the PLC's equity holders 2,403,220 1,987,447
Average reported total assets 16,792,320 13,623,594
Adjustment for one-off items on monthly average basis - -
Average underlying total assets 16,792,320 13,623,594
FY 2019 FY 2018
Reported cost to income 39.9% 37.8%
Underlying cost to income ((APM)) 39.5% 37.8%
Reported ROE 22.4% 22.0%
Underlying ROE ((APM)) 22.6% 22.8%
Reported ROA 3.2% 3.2%
Underlying ROA ((APM)) 3.3% 3.3%
4) Net gains from currency swaps
In 2019, the Group entered into swap agreements denominated in foreign
currencies in order to decrease its cost of funding. As the contracts reached
significant volume, the Group revisited the presentation of effects in the
Statement of profit or loss. Reclassifications from other non-interest
operating income to net interest income have been recorded for the first three
quarters in 2019. 2018 information has not been restated due to immateriality
of amounts.
In thousands of GEL 4Q'19 3Q'19 2Q'19 1Q'19
Net gains from currency swaps 9,054 8,355 6,967 4,179
5) TBC Insurance
TBC Insurance is a rapidly growing, wholly owned subsidiary of TBC Bank and is
the Bank's main bancassurance partner. The company was acquired by the Group
in October 2016 and has since grown significantly, becoming the second largest
player on the P&C and life insurance market and the largest player in the
retail segment, holding 21.3% and 36.4% market shares,(( 41 (#_ftn41) ))
without border motor third party liability (MTPL) insurance, respectively in
2019, based on internal estimates.
TBC Insurance serves both individual and legal entities and provides a broad
range of insurance products covering motor, travel, personal accident, credit
life and property, business property, liability, cargo and agro insurance
products. The company differentiates itself through its advanced digital
channels, which include TBC Bank's award-winning internet and mobile banking
applications, a wide network of self-service terminals, a web channel, and
B-Bot, a Georgian-speaking chat-bot that is available through Facebook
messenger.
In 2Q 2019, TBC Insurance entered the health insurance market with a focus on
the premium segment. Our strategy is to focus on affluent individuals and
capture the affluent market by leveraging our strong brand name, leading
digital capabilities and cross selling opportunities with payroll customers.
Our medium-term target is to reach 25% market share in the premium health
insurance business.
In 2019, TBC Insurance achieved strong growth results in non-health business
lines. The gross written premium grew by 31.5% YoY and amounted to GEL 79.0
million. Over the same period, the net combined ratio(( 42 (#_ftn42) ))
increased by 3.5 pp and stood at 82.8%, driven by increased operating expenses
in health insurance, without health insurance business, net combined ratio
would have been 79.1%. As a result, net profit for 2019 increased by 12.5 %
YoY and reached to GEL 8.5 million or GEL 9,792 million without health
insurance.
Information excluding health insurance 4Q'19 3Q'19 4Q'18 12M'19 12M'18
In thousands of GEL
Gross written premium 19,496 18,999 17,075 75,523 60,079
Net earned premium(( 43 (#_ftn43) )) 15,603 13,412 10,554 51,910 35,657
Net profit 2,973 2,567 2,556 9,792 7,584
Net combined ratio 81.9% 77.8% 80.7% 79.1% 79.3%
Information including health insurance 4Q'19 3Q'19 4Q'18 12M'19 12M'18
In thousands of GEL
Gross written premium 21,808 19,760 17,075 79,031 60,079
Net earned premium 16,367 13,579 10,554 52,882 35,657
Net profit 2,499 2,227 2,556 8,533 7,584
Net combined ratio 86.5% 81.6% 80.7% 82.8% 79.3%
1Q and 2Q 2019 figures are provided without subsidiaries of TBC Insurance:
Swoop JSC, GE Commerce LTD, All Property LTD and 3Q and 4Q 2019 figures are
given without Redmed LTD;
All figures in the above table are presented before consolidation
eliminations.
6) Azerbaijan
No investment has been made in relation to this project during 2019 and no
material expenses were incurred.
Main highlights:
o TBC Bank and Nikoil Bank concluded a shareholders agreement in late
December 2018 and signed it in early January 2019. According to this
agreement, TBC's shareholding in the joint entity will be 8.34%. The
transaction is subject to regulatory approval;
o Currently, the bank is in the process of significant reorganization, which
includes re-branding and shifting to digitalization.
Achievements
o Over the course of 2019, Nikoil Bank significantly enhanced its
operations:
o In late 2019, Nikoil Bank officially started rebranding and introduced a
new name, logo and slogan. Nikoil Bank is now called Yelo Bank. The
introduction of a new banking service model will take place in parallel with
the process of updating the network of branches and transforming them to a
completely new design;
o New management team was recruited including: CDM, CRO, CFO and CIO, as
well as Head of retail and MSME;
o Core banking was revised and improved, including the data warehouse;
o Risk management was improved in terms of operational risks, credit risks,
and compliance.
Mid-term vision
In millions of USD FY 19 results of Nikoil Bank(( 44 (#_ftn44) )) Mid-term targets of joint entity
Gross loan portfolio c. 228 c. 1,400
Equity c. 34 c. 200
Return on equity NMF 20% +
o Core segments: Retail and MSME (not large SMEs and Corporates);
o Product offerings: A mix of Nikoil Bank and TBC Bank products, adapted to
the local needs and offered primarily through digital channels, including
Space Bank.
7) ESG ratings and scores
MSCI - ESG Rating
In 2019, TBC Bank Group received a rating of A (on a scale of AAA-CCC) in the
MSCI ESG Ratings assessment.
ISS - ESG
TBC Bank Group PLC attained the above mentioned ESG scores from ISS as of 1
February 2020
Governance 2
Environment 3
Social 2
Lower Governance Risk = 1 - Higher Governance Risk = 10
Higher E&S Disclosure = 1 - Lower E&S Disclosure = 10
Sustainalytics
TBC Bank Group PLC holds 20.6 ESG rating as of 17 December 2019
Negligible Low Medium High Severe
0-10 10-20 20-30 30-40 40+
Relative performance
Rank (1(st) = lowest risk) Percentile (1(st) = lowest risk)
Banks (Industry Group) 83 out of 934 10th
Regional Banks (Subindustry) 11 out of 386 4th
8) Loan book breakdown by stages according IFRS 9
Total (in million GEL)
Stage Gross % of total Allowance LLP rate
1 11,552 91.2% 96 0.8%
2 757 6.0% 83 11.0%
3 353 2.8% 134 38.0%
Total 12,662 100.0% 313 2.5%
Corporate in million GEL
Stage Gross % of total Allowance LLP rate
1 4,435 95.2% 39 0.9%
2 104 2.2% 2 1.9%
3 122 2.6% 40 32.8%
Total 4,661 100.0% 81 1.7%
MSME (in million GEL)
Stage Gross % of total Allowance LLP rate
1 2,650 89.9% 18 0.7%
2 205 6.9% 19 9.3%
3 93 3.2% 29 31.2%
Total 2,948 100.0% 66 2.2%
Consumer (in million GEL)
Stage Gross % of total Allowance LLP rate
1 1,593 84.6% 37 2.3%
2 217 11.5% 52 24.0%
3 74 3.9% 45 60.8%
Total 1,884 100.0% 134 7.1%
Mortgage (in million GEL)
Stage Gross % of total Allowance LLP rate
1 2,874 90.7% 2 0.1%
2 231 7.3% 10 4.3%
3 64 2.0% 20 32.8%
Total 3,169 100.0% 32 1.0%
1 (#_ftnref1) For the ratio calculation all relevant group recurring costs
are allocated to the bank.
2 (#_ftnref2) For the ratio calculation all relevant group recurring costs
are allocated to the bank.
3 (#_ftnref3) International Financial Institutions
4 (#_ftnref4) Market share figures are based on data from the National Bank
of Georgia (NBG). The NBG includes interbank loans for calculating market
share in loans.
5 (#_ftnref5) Internet or Mobile Banking penetration equals the number of
active clients of Internet or Mobile Banking divided by the total number of
active clients.
6 (#_ftnref6) Mobile Banking penetration equals the number of active clients
of Mobile Banking divided by the number of total active clients. Data includes
Space figures
7 (#_ftnref7) Other operating non-interest income includes Net insurance
premium earned after claims and acquisition costs
8 (#_ftnref8) For the ratio calculation all relevant group recurring costs
are allocated to the bank.
(( 9 (#_ftnref9) ))In 2019, the non-recurring costs included consulting fees
in the amount of GEL 5.6 million paid in relation to historic matters
surrounding TBC Bank. In 2018, one-off costs included the reversal of deferred
tax gains due to a change in legislation in the amount of GEL 17.4 million.
10 (#_ftnref10) For the ratio calculation all relevant group recurring costs
are allocated to the bank
(( 11 (#_ftnref11) )) Based on initial estimates of the National Statistics
Office of Georgia.
12 (#_ftnref12) Net insurance premium earned after claims and acquisition
costs can be reconciled to the standalone net insurance profit (as shown in
Annex 5 on page 47) as follows: net insurance premium earned after claims and
acquisition costs less credit loss allowance, administrative expenses and
taxes, plus fee and commission income and net interest income.
13 (#_ftnref13) The new share based payments compensation scheme was
approved in December 2018. Expense is accrued based on grant date share price,
which was fixed at GBP 14.88 whilst grant date share price of old scheme was
USD 11.00. GEL/USD exchange rate at grant date was fixed at 2.2399 in old
scheme, while in new schemes currency exchange rate is not fixed.
14 (#_ftnref14) Net insurance premium earned after claims and acquisition
costs income after claims can be reconciled to the standalone net insurance
profit (as shown in Annex 5 on page 47) as follows: net insurance premium
earned after claims and acquisition costs less credit loss allowance,
administrative expenses and taxes, plus fee and commission income and net
interest income.
15 (#_ftnref15) Based on internal estimates
16 (#_ftnref16) TBC Bank Group PLC became the parent company of JSC TBC Bank
on 10 August 2016.
17 (#_ftnref17) Total ecosystems revenue also includes net fee and
commission income from POS terminals and e-commerce.
18 (#_ftnref18) Total ecosystems net profit also includes net fee and
commission income and related operating costs from POS terminals and
e-commerce.
19 (#_ftnref19) Total number of visitors across all systems; some
individuals may be visitors of multiple systems. For Payme, the number of
registered customers is used.
20 (#_ftnref20) Includes both retail & business payments. Payments
ecosystem includes: Payme, TKT, TBC Pay, E-commerce and POS, while other
payments business includes: ATM-TBC Cards, branch, internet and mobile
banking.
21 (#_ftnref21) Source: NBG
22 (#_ftnref22) The data from Business Insider Intelligence was used for
comparison purposes.
23 (#_ftnref23) Forecasted figures are given without the effects of new
regulations effective from March 2020.
24 (#_ftnref24) Number of registered users
25 (#_ftnref25) Updated forecasts
26 (#_ftnref26) Based on the number of visitors
27 (#_ftnref27) TBC Contribution from real estate evaluation
28 (#_ftnref28) December is characterized by low demand in housing
business. As a result, forecasted numbers of unique visitors for Dec-2020 are
decreased compared to September for both for Livo and Myhome
29 (#_ftnref29) Based on number of visitors
30 (#_ftnref30) In August 2019 we acquired 65% of My.ge for GEL 19.45
million.
31 (#_ftnref31) December is characterized by low demand in housing business.
As a result, forecasted numbers of unique visitors for Dec-2020 are decreased
compared to September for both for Livo and Myhome.
32 (#_ftnref32) Gross merchandise Volume
33 (#_ftnref33) The revenue and EBITDA include Swoop figures.
34 (#_ftnref34) Per updated forecast for both financial and operating data
35 (#_ftnref35) Stock Keeping Units
36 (#_ftnref36) Based on number of visitors
37 (#_ftnref37) In August 2019 we acquired 65% of My.ge for GEL 19.45
million.
38 (#_ftnref38) Based on number of visitors
39 (#_ftnref39) In August 2019 we acquired 65% of My.ge for GEL 19.45
million
40 (#_ftnref40) From launching the App's 1st prototype in Jan 2018 to the
end of the beta version of Space in Sep 2018
(( 41 (#_ftnref41) )) Market shares are based on internal estimates and are
given without border MTPL, which was introduced starting from March 2018 and
GWP was divided evenly between 17 insurance companies. Total non-health market
share in 2019 including Border MTPL stood at 19.7% and 29.9% respectively
(( 42 (#_ftnref42) ))( )Net insurance claims plus acquisition costs and
administrative expenses divided by net earned premium.
(( 43 (#_ftnref43) )) Net earned premium equals earned premium minus
reinsurer's share of earned premium.
44 (#_ftnref44) Based on management accounts
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