RNS Number : 7421Y
TBC Bank Group PLC
13 May 2019
TBC BANK GROUP PLC ("TBC Bank")
1Q 2019 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.
First Quarter 2019 Unaudited Consolidated Financial Results
TBC Bank Group PLC ("TBC PLC") will release its first quarter 2019 unaudited consolidated financial results on Monday, 13 May 2019 at 7.00 am BST (10.00 am GET).
On the same day at 14.00 (BST) / 15.00 (CEST) / 9.00 (EDT), Vakhtang Butskhrikidze, CEO, and Giorgi Shagidze, CFO, will host a conference call to discuss the results.
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:
9490274
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 Director of International Media and Investor Relations E-mail: ZSzalai@Tbcbank.com.ge Tel: +44 (0) 7908 242128 Web: www.tbcbankgroup.com Address: 68 Lombard St, London EC3V 9LJ, United Kingdom
Anna Romelashvili Head of Investor Relations E-mail: IR@tbcbank.com.ge Tel: +(995 32) 227 27 27 Web: www.tbcbankgroup.com Address: 7 Marjanishvili St. Tbilisi, Georgia 0102
Investor Relations Department E-mail: IR@tbcbank.com.ge Tel: +(995 32) 227 27 27 Web: www.tbcbankgroup.com Address: 7 Marjanishvili St. Tbilisi, Georgia 0102
Table of Contents
1Q 2019 Results Announcement
TBC Bank - Background
Financial Highlights
Recent Developments
Development of Customer Focused Ecosystems
Letter from the Chief Executive Officer
Economic Overview
Unaudited Consolidated Financial Results Overview for 1Q 2019
Additional Disclosures
TBC BANK Group PLC ("TBC Bank")
1Q 2019 Consolidated Financial Results:
Net Profit for 1Q 2019 up by 36.7% YoY to GEL 133.3 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 99.8% of its business is concentrated, with a 37.4% 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 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.
Financial Highlights
1Q 2019 P&L Highlights
§ Net profit amounted to GEL 133.3 million (1Q 2018: GEL 97.5 million; 4Q 2018: GEL 130.1 million)
§ Return on equity (ROE) amounted to 23.8% (1Q 2018 : 21.0%; 4Q 2018: 24.3%)
§ Return on assets (ROA) amounted to 3.6 % (1Q 2018: 3.2%; 4Q 2018: 3.5%)
§ Total operating income amounted to GEL 271.9 million (1Q 2018: GEL 238.7 million; 4Q 2018: GEL 312.3 million)
§ Cost to income was 37.7% (1Q 2018: 38.1%; 4Q 2018: 39.7%)
§ Cost of risk stood at 1.4% (1Q 2018: 1.3%; 4Q 2018: 1.4%)
§ FX adjusted cost of risk stood at 1.4% (1Q 2018: 1.7%; 4Q 2018: 1.3%)
§ Net interest margin (NIM) stood at 6.1% (1Q 2018: 6.9%; 4Q 2018: 6.7%)
§ Risk adjusted net interest margin (NIM) stood at 4.7% (1Q 2018: 5.2%; 4Q 2018: 5.4%)
Balance Sheet Highlights as of 31 March 2019
§ Total assets amounted to GEL 15,172.3 million as of 31 March 2019, up by 22.3% YoY and down by 2.1% QoQ
§ Gross loans and advances to customers stood at GEL 10,366.9 million as of 31 March 2019, up by 22.9% YoY and down by 0.1% QoQ
§ Net loans to deposits + IFI funding stood at 90.5% and Net Stable Funding Ratio (NSFR) stood at 123.8%[1]
§ NPLs were 3.3%, up by 0.2 pp YoY and QoQ
§ NPLs coverage ratios stood at 100.1%, or 210.8% with collateral, on 31 March 2019 compared, to 114.6% or 225.8% with collateral, as of 31 March 2018 and 102.7%, or 216.4% with collateral on 31 December 2018
§ Total customer deposits amounted to GEL 9,166.8 million as of 31 March 2019, up by 20.4% YoY and down by 2.0% QoQ
§ As of 31 March 2019, the Bank's Basel III tier 1 and total capital adequacy ratios per NBG methodology stood at 13.8% and 19.1% respectively, while minimum requirements amounted to 11.9% and 16.9%
Market Shares[2]
§ Market share by total assets reached 37.4% as of 31 March 2019, up by 2.1pp YoY and down by 0.8pp QoQ
§ Market share by total loans was 38.4% as of 31 March 2019, up by 0.6pp YoY and down by 0.4pp QoQ
§ In terms of individual loans, TBC Bank had a market share of 39.3% as of 31 March 2019, down by 0.3pp YoY and by 0.7pp QoQ. The market share for legal entity loans was 37.4%, up by 1.8pp YoY and stable on QoQ basis
§ Market share of total deposits reached 40.4% as of 31 March 2019, up by 1.5pp YoY and down by 0.8pp QoQ
§ Market share of individual deposits stood at to 39.5%, down by 1.1pp YoY and by 1.7pp on QoQ. In terms of legal entity deposits, TBC Bank holds a market share of 41.4%, up by 4.4pp YoY and up by 0.2pp QoQ.
Recent Developments
Payme - Expansion in Uzbekistan
TBC Bank has acquired 51% stake of LLC Inspired, a leading payment platform in Uzbekistan trading under the Payme brand.
Payme is a leading profitable payment service provider in Uzbekistan supplying high-quality payment solutions to its 1.3 million customers, including a marketplace platform for loans from certain Uzbek banks.
The company has grown rapidly in recent years, increasing its number of clients by around 70% during 2018, while its revenue and net income grew by 41.9% and 24.5% respectively year-on-year. The steady growth also continued in the first quarter 2019 with revenue and net profit growing by 21.9% and 73.0% quarter-on-quarter respectively.
The acquisition of Payme is another important step in our planned expansion into Uzbekistan. It will enable us to gain immediate access to a large customer base in the country and use our core digital strengths in Georgia to innovate the Uzbekistani market. With Payme joining our effort, we intend to further develop the payment business and also use it as a platform to develop new ecosystems in the country.
Awards
§ The Best Bank in Georgia 2019 - For the eighth consecutive year, TBC Bank has been awarded the Best Bank in Georgia 2019 by the prestigious Global Finance magazine, underlining our ongoing commitment to offering the very best banking services to our customers.
§ Special Award for Responsible Capitalism in Adversity - TBC Bank's CEO Vakhtang Butskhrikidze has won the Special Award for Responsible Capitalism in Adversity from the prestigious FIRST organisation - a multidisciplinary international affairs organization, which aims to enhance dialogue between leaders in industry, finance and government.
§ FMO - In October 2018, TBC Bank signed a loan agreement in the amount of GEL 103 million with FMO, the Dutch Development Bank. The local currency funding was obtained by FMO through a public placement of bonds on the Georgian Stock Exchange. This transaction was selected by EMEA Finance as the Best Local Currency Loan of 2018.
Development of Customer Focused Ecosystems
In order to integrate better with our customers, we started to develop customer focused ecosystems, which are closely linked with our financial products and services and enable us to create synergies with our core banking offerings.
E-commerce
§ In August 2018 we purchased Swoop, Georgia's well-known online discount and sales company for USD 70,000.
§ We have started developing an e-commerce market place in Georgia through building an innovative digital trading platform, Vendoo.
§ Our estimated investment for the next two years will be around USD 2-3 million.
Progress since acquisition:
§ Assembled a team of experienced professionals in digital business.
§ Designed a brand new cloud technology platform based on open source.
§ Beta version of the platform is already launched with electronics and personal care products on the following web-page: www.vendoo.ge. The launch of the full version is scheduled in May.
Real Estate
§ In January 2019, we acquired 90% shares of the real estate platform Allproperty.ge for USD 225,000.
§ Started developing digital real estate ecosystem, that will offer our customers a wide range of products and services, including finding the suitable real estate, comparing different properties, getting financing, buying furniture, and many more.
§ Our estimated investment for the next two years is set at around USD 2 million.
Progress since acquisition:
§ Strengthened the management team.
§ Designed target agile operating model.
§ Started rebranding through new brand name Livo and developing new platform www.livo.ge.
§ Data mining and lead generation practices have been implemented.
Additional Information Disclosure
Additional historical information for certain P&L, balance sheet and capital items, and on asset quality is disclosed on our Investor Relations website on http://tbcbankgroup.com/ under the Financial Highlights section.
Letter from the Chief Executive Officer
I am pleased to present the financial results for the first quarter 2019 and update you on our operating performance as well as provide an overview of the recent macroeconomic developments in Georgia.
Our consolidated net profit for the first quarter of 2019 reached GEL 133.3 million, up by 36.7% year-on-year, while our return on equity was 23.8% and our return on assets stood at 3.6%. Our robust profitability was supported by strong growth in net fee and commission income of 19.7% and other operating income of 16.9% year-on-year, as well as positive operating jaws leading to the reduction of the cost to income ratio by 0.4 percentage points to 37.7%. Over the same period, cost of risk remained at 1.4%.
As anticipated, our net interest margin decreased in the first quarter of 2019 mainly due to the new regulation limiting the banks' ability to lend money to higher-yield retail customers. The requirement came into force at the beginning of the year leading to the contraction in net interest margin by 0.5 percentage points. A further decrease of 0.1 percentage points was related to our higher than usual liquidity levels resulting in a net interest margin of 6.1% in the reporting period. Over the same period, our effective interest rate on loans decreased by 0.7 percentage points quarter-on-quarter and stood at 11.5% in first quarter 2019 driven by new regulation as well as decrease in NBG refinance rate.
In terms of balance sheet, our loan book expanded by 22.9% year-on-year, supported by growth across all business segments, which resulted in a market share of 38.4%, up by 0.6 percentage points year-on-year. Over the same period, deposits increased by 20.4%, expanding our deposit market share to 40.4%, up by 1.5 percentage points year-on-year.
We continue to operate with solid capital and liquidity levels. As of 31 March 2019, our tier 1 and total capital adequacy ratios (CAR) per Basel III guidelines were 13.8% and 19.1%, respectively, compared to 12.8% and 17.9% as of year-end and well above the corresponding minimum requirements of 11.9% and 16.9%. The increase in capital ratios were mainly related to the net profit generated in the quarter and the optimization of the credit risk weighted assets, as well as decrease in the market risk. As of 31 March 2019, our net loans to deposits + IFI funding ratio stood at 90.5% and the net stable funding ratio (NSFR) was 123.8%[3].
I am also pleased with the results of our insurance subsidiary, TBC Insurance, which continues to generate strong growth and strengthen its position as a leading player in the market. In the first quarter of 2019, its P&C and life insurance market share increased by 3.3 percentage points year-on-year and stood at 22.8%[4], while over the same period its market share in the retail segment amounted to 39.8%[4].
Regarding Georgia's macro environment, in the first quarter 2019 real GDP growth averaged 4.7% year-on-year, per initial estimates of GeoStat. Over the same period, the growth of exports, tourism and remittance inflows moderated and stood at 9.1% year-on-year. This reflects a slower growth in Georgia's trading partners and continued economic difficulties in Turkey. The total banking loan portfolio growth continues to moderate, primarily reflecting the regulations on retail lending, and, as of 31 March 2019, it had increased by 14.0% year-on-year, excluding FX effect[5]. From the segments perspective corporate, MSME and retail loans grew respectively by 12.9%, 21.8% and 11.2% year-on-year. It should be also noted, that in April 2019, the international rating company Standard&Poor's (S&P) improved Georgia's sovereign rating from stable to positive and confirmed the rating at "BB". The positive outlook primarily reflects the S&P's position that Georgia's economic and external performance has the potential to outperform its current forecast over the next 12 months. It also reflects the country's continued compliance with the conditions of the existing funded IMF arrangement.
Finally, I would like to update you on our progress towards our strategic priorities:
· Digitalization. In the first quarter of 2019, our offloading ratio in the retail segment reached 91.9%[6], up by 2.9 percentage points year-on-year, while sales conducted through digital channels amounted to 44.7%. Furthermore, our mobile banking penetration increased by 5.7 percentage points year-on-year and amounted to 36.7%, while the mobile or internet banking penetration ratio grew by 3.9 percentage pionts to reach 41.9%.
· Agile transformation. We have also successfully completed the first wave of our agile transformation and established the new organisation structure for our back office operations, which we believe will lead to faster time-to-market, improved productivity and higher employee engagement.
· Ecosystems. We continue to actively develop our e-commerce platform, Vendoo by deploying a brand new cloud technology based on open source. The launch of the marketplace is scheduled in May 2019 with electronics and personal care products. In relation to our real estate platform, we have designed a target agile operating model, implemented data mining and lead generation practices and started the rebranding process.
· International expansion:
o Uzbekistan. In April 2019, we acquired a 51% stake in Payme, a leading payment platform in Uzbekistan, for a consideration of USD 5.5 million. Payme supplies high-quality payment solutions to its 1.3 million customers through facilitating utility payments, P2P transfers, loan repayments, mPOS for QR-based payments and e-commerce purchases. It also provides a marketplace platform for loans from selected Uzbek banks. Payme has grown rapidly in recent years, increasing the number of clients by around 70% during 2018, while during the same period its revenue and net profit grew by 41.9% and 24.5% respectively. The steady growth also continued in the first quarter 2019 with revenue and net profit growing by 21.9% and 73.0% quarter-on-quarter respectively. The acquisition of Payme is another important step in our planned expansion into Uzbekistan. It will enable us to gain immediate access to a large customer base in the country and use our core digital strengths in Georgia to innovate in the Uzbek market. With Payme joining our effort, we intend to further develop the payment business and also use it as a platform to develop new ecosystems in the country.
o Azerbaijan. I am proud to report that our joint efforts with Nikoil Bank's management continue to pay off. The bank has generated a net profit of USD 1.8 million in the first quarter 2019 on the back of improved income generation and cost efficiency.
Overall, I am delighted with our first quarter financial and operating results and I feel confident that we are well-positioned to achieve sustainable growth and to deliver high returns to our shareholders. Therefore, we 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 10-15%.
Economic Overview[7]
Economic growth
Economic growth remained strong in 2018, despite the higher volatility in Georgia's economic partners and the contractionary fiscal stance domestically GDP increased by 4.7% the 4.8% of 2017. The growth was broad-based across almost all sectors, with trade and repairs (+5.9% YoY), transport and communications (+8.2% YoY), real estate (+12.1% YoY), and manufacturing (+3.4% YoY), as major drivers in 2018. Almost all other sectors posted growth rates. Construction declined by 3.1% YoY mostly due to the finalisation of the BP's SCPX project and underperformance in the public infrastructure spending, while the development of residential and non-residential buildings maintained solid growth. In 1Q 2019 real GDP growth averaged 4.7% YoY, per initial estimates of GeoStat.
Positive tendency of the CA balance improvement continued in 4Q 2018 as well with CA deficit to GDP ratio at 7.7% in 2018 compared to 8.8% in 2017. This is mostly due to the robust growth of tourism, exports and remittance inflows as well as the narrower income account deficit for 2018. FDI inflows, representing a major source of financing for the CA deficit, declined by 34.9% YoY and came in at still solid 7.9% of GDP in 2018 - this is a normalised level following the above trend inflows over 2014-17. The reduction mostly reflected the finalisation of the BP's SCPX project and the change of ownership of non-resident companies to residents as well as repayment of some FDI related debt.
Growth of exports, tourism and remittance inflows moderated and stood at 9.1% YoY in 1Q 2019, reflecting the normalisation of growth in Georgia's economic partners and continued economic difficulties in Turkey. Also, the effect of stronger USD should be considered as when measured in EUR and GEL, better reflecting the underlying value of assets in the country, growth of inflows stood at 18.1% and 17.2% YoY, respectively.
Imports of goods further declined by 4.7% YoY, due to the retail lending regulations, lower oil prices, high base effect in the previous year reflecting some one-off imports in 1Q 2018 and a stronger USD. As a result, balance of trade in goods improved by a solid 14.2% YoY.
The National Bank of Georgia continued to refill reserves and purchased sizeable USD 186 million - an estimated 7% of 1Q 2019 GDP. As of the end of March, the NBG's gross international reserves stood at USD 3.5 billion, up by 15.2% YoY. The estimated net international reserves exceeded the lower threshold for June 2019 as defined at USD 1.456 billion for June 2019 as defined in the agreement with the IMF by around USD 200 million.
Growth of bank loan portfolio continues to moderate, primarily reflecting regulations on retail lending. As of 1Q 2019 the total bank loan portfolio increased by 14.0% YoY, excluding the FX effect[8]. From a segment perspective, corporate, MSME and retail loans increased by 12.9%, 21.8% and 11.2% YoY, respectively. Excluding one-offs in corporate segment, total loan portfolio growth would have stood at an estimated 15.3% YoY with corporate segment up by 17.0%. Overall, even taking into account one-offs, slower growth of the loan portfolio is still evident driven by retail lending regulations on the one hand and normalizing growth rates in business credit following cyclical pick up in 2018 on the other. Bank loans-to-GDP ratio stood at 64.7% in 2018, up by 5.8 pp from end 2017, driven by the higher credit growth and the exchange rate weakening. When measured in constant currency terms, the bank loans-to-GDP ratio remains close to its long-term trend, indicating that there are no signs of excessive lending growth.
Following the contractionary stance in 2018, budget spending accelerated since the beginning of 2019. In Q1 2019 the total government spending went up by 15.5% YoY. The budget deficit stood at an estimated 0.2% of GDP, compared to surplus of 1.9% over the same period last year. Stronger fiscal spending, coupled with sizeable advance payments by the end of 2018, is expected to provide significant growth stimulus in the coming months.
Annual inflation stood at 3.7% as of March 2019, mostly driven by an higher excise tax on tobacco, increased prices on travel and a low base effect. Excluding the one-off impact of excise taxes, CPI inflation remained somewhat below the NBG's 3% target. Low inflation, relatively lower risks to inflation stemming from the external sector, and likely weak demand side pressures on prices, led the NBG to cut the policy rate twice, from 7% at the end of 2018 to 6.5%. During their latest meeting on the 1st of May monetary policy committee left the policy rate unchanged at 6.5%.
As of the end of March 2019, the USD/GEL exchange rate depreciated by 11.5% YoY, while the EUR/GEL exchange rate depreciated by a more modest 1.5% YoY. Over the same period, the GEL real effective exchange rate was almost unchanged, depreciating by only 0.1% YoY.
Resilience of Georgia's economy have been confirmed by the S&P as the agency improved the outlook to Georgia's credit rating from stable to positive. According to the rating commentary, demonstrated economic resilience amid turbulent region over 2014-18, efforts to widen the exports and foreign investment geography along with the continued investments in infrastructure, country's its strong institutional framework compared to region economies in the wider region, stable public debt levels and prudent policymaking all remain supportive to the country's credit rating.
Going forward
Georgia continues to position itself as an attractive business environment with structural reforms and high GDP growth potential. According to the IMF's recently published World Economic Outlook[9], Georgian economy is projected to increase at 4.6% in 2019 and 5.0% in 2020. Thereafter, over 2021-2024 the economy is expected to expand at 5.2%.
More information on the Georgian economy and financial sector can be found at www.tbcresearch.ge
Unaudited Consolidated Financial Results Overview for 1Q 2019
This statement provides a summary of the unaudited business and financial trends for 1Q 2019 for TBC Bank Group plc and its subsidiaries. The quarterly financial information and trends are unaudited.
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. 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.
Please note, that there might be slight differences in previous periods' figures due to rounding.
Income Statement Highlights
in thousands of GEL
1Q'19
4Q'18
1Q'19
Change YoY
Change QoQ
Net interest income
196,958
214,803
175,403
12.3%
-8.3%
Net fee and commission income
41,807
44,064
34,919
19.7%
-5.1%
Other operating non-interest income
33,181
53,395
28,377
16.9%
-37.9%
Credit loss allowance
(33,095)
(44,036)
(39,463)
-16.1%
-24.8%
Operating income after credit loss allowance
238,851
268,226
199,236
19.9%
-11.0%
Operating expenses
(102,514)
(123,904)
(90,932)
12.7%
-17.3%
Profit before tax
136,337
144,322
108,304
25.9%
-5.5%
Income tax expense
(3,015)
(14,235)
(10,778)
-72.0%
-78.8%
Profit for the period
133,322
130,087
97,526
36.7%
2.5%
Balance Sheet and Capital Highlights
Mar-19
Dec-18
Change QoQ
Mar-18
Change YoY
In thousands of GEL
GEL
USD
GEL
USD
GEL
USD
Total Assets
15,172,306
5,637,329
15,497,993
5,790,179
-2.1%
12,401,047
5,136,285
22.3%
Gross Loans
10,366,915
3,851,867
10,372,582
3,875,283
-0.1%
8,432,916
3,492,758
22.9%
Customer Deposits
9,166,789
3,405,956
9,352,142
3,494,038
-2.0%
7,610,804
3,152,255
20.4%
Total Equity
2,347,756
872,318
2,205,968
824,168
6.4%
1,930,404
799,538
21.6%
Regulatory Tier I Capital (Basel III)
1,746,745
649,010
1,678,716
627,182
4.1%
1,517,250
628,417
15.1%
Regulatory Total Capital (Basel III)
2,421,461
899,703
2,351,269
878,454
3.0%
1,943,425
804,931
24.6%
Regulatory Risk Weighted Assets (Basel III)
12,689,740
4,714,922
13,154,872
4,914,769
-3.5%
10,999,578
4,555,823
15.4%
Key Ratios
1Q'19
4Q'18
1Q'18
Change YoY
Change QoQ
ROE
23.8%
24.3%
21.0%
2.8 pp
-0.5 pp
ROA
3.6%
3.5%
3.2%
0.4 pp
0.1 pp
NIM
6.1%
6.7%
6.9%
-0.8 pp
-0.6 pp
Cost to income
37.7%
39.7%
38.1%
-0.4 pp
-2.0 pp
Cost of risk
1.4%
1.4%
1.3%
0.1 pp
0.0 pp
FX adjusted Cost of Risk
1.4%
1.3%
1.7%
-0.3 pp
0.1 pp
NPL to gross loans
3.3%
3.1%
3.1%
0.2 pp
0.2 pp
Regulatory tier 1 CAR (Basel III)
13.8%
12.8%
13.8%
0.0 pp
1.0 pp
Regulatory total CAR (Basel III)
19.1%
17.9%
17.7%
1.4 pp
1.2 pp
Leverage (times)
6.5x
7.0x
6.4x
0.1x
-0.5x
Income Statement Discussion
Net Interest Income
In thousands of GEL
1Q'19
4Q'18
1Q'18
Change YoY
Change QoQ
Loans and advances to customers
292,055
309,106
256,053
14.1%
-5.5%
Investment securities measured at fair value through other comprehensive income
19,934
16,612
13,168
51.4%
20.0%
Due from other banks
5,866
6,261
4,919
19.3%
-6.3%
Bonds carried at amortised cost
9,429
11,752
8,037
17.3%
-19.8%
Investment in leases
10,631
11,812
7,672
38.6%
-10.0%
Interest income
337,915
355,543
289,849
16.6%
-5.0%
Customer accounts
75,133
70,288
62,922
19.4%
6.9%
Due to credit institutions
49,246
58,247
41,477
18.7%
-15.5%
Subordinated debt
15,672
11,939
9,640
62.6%
31.3%
Finance Lease
637
-
-
NMF
NMF
Debt securities in issue
269
266
407
-33.9%
1.1%
Interest expense
140,957
140,740
114,446
23.2%
0.2%
Net interest income
196,958
214,803
175,403
12.3%
-8.3%
Net interest margin
6.1%
6.7%
6.9%
-0.8 pp
-0.6 pp
NMF - no meaningful figures
1Q 2019 to 1Q 2018 Comparison
Net interest income increased by GEL 21.6 million, or 12.3%, to GEL 197.0 million, compared to 1Q 2018, driven by a GEL 48.1 million, or 16.6%, higher interest income and a GEL 26.5 million, or 23.2%, higher interest expense.
Interest income grew by GEL 48.1 million, or 16.6%, YoY to GEL 337.9 million, mainly due to an increase in interest income from loans and advances to customers of GEL 36.0 million, or 14.1%. This is primarily related to an increase in net loan portfolio of GEL 1,892.5 million, or 23.3%, YoY. This effect was partially offset by a 0.8 pp drop in loan yields, driven by a decrease in rates on both LC and FC-denominated loans. The gain in interest income was also driven by increased interest income from investment securities (comprising of investment securities measured at fair value through other comprehensive income and bonds carried at amortized cost) by GEL 8.2 million, or 38.5%, which resulted from a significant increase in the respective net portfolios by GEL 540.1 million, or 53.4%. This effect was partially offset by a 0.6 pp decline in respective yield, related to the declining refinance rate. The yield on interest earning assets decreased by 1.0 pp to 10.5%, compared to 1Q 2018.
The GEL 26.5 million, or 23.2%, YoY growth in interest expense to GEL 141.0 million in 1Q 2019 was mainly due to GEL 12.2 million, or 19.4%, increase in interest expense on customer accounts and a GEL 7.8 million, or 18.7%, increase in interest expense on amounts due to credit institutions. The rise in interest expense on customer accounts was attributable to a GEL 1,556.0 million, or 20.4%, increase in the respective portfolio and the expenses of the mandatory deposit insurance, which was reclassified to interest expense from administrative and other operating costs starting from January 1st 2019. Without this expense, the growth of interest expense on customer account would have been GEL 10.9 million, or 17.3%. Cost of deposits remained stable on a YoY basis. The higher interest expense on amounts due to credit institutions was attributable to a GEL 422.5 million, or 18.6%, growth in the respective portfolio. This effect was further magnified by a 0.1 pp increase in the respective yield to 7.1%. The cost of funding increased by 0.1 pp and stood at 4.5%.
Consequently, NIM stood at 6.1% in 1Q 2019, compared to 6.9% in 1Q 2018, while the risk adjusted NIM was 4.7%, compared to 5.2% in 1Q 2018.
1Q 2019 to 4Q 2018 Comparison
On a QoQ basis, net interest income declined by GEL 17.8 million, or 8.3% as a result of a GEL 17.6 million, or 5.0% decrease in interest income and a GEL 0.2 million, or 0.2% higher interest expense.
The decrease in interest income by GEL 17.6 million, or 5.0%, QoQ mainly resulted from the drop in interest income on loans by GEL 17.1 million, or 5.5%. This in turn was due to a decline in loan yields by 0.7 pp, which was attributable to a decrease in rates on both LC and FC-denominated loans. The net loan portfolio remained broadly stable on a QoQ basis. The decrease in interest income was also magnified by a decline in interest income from investment in leases by GEL 1.2 million, or 10.0%, due to decrease in the respective yield by 3.1 pp to 20.8%. This effect was partially offset by a GEL 4.4 million or 2.2% increase in portfolio of investment in leases. The yield on interest earning assets decreased by 0.6 pp from 11.1%, compared to 4Q 2018.
The increase in interest expense by GEL 0.2 million, or 0.2%, QoQ was primarily due to a GEL 4.8 million, or 6.9%, rise in interest expense on customer accounts. The main driver was a rise in the respective effective rate by 0.2 pp, to 3.3%, related to an increase in effective rate on LC-denominated deposits by 0.6 pp, to 5.9%. This effect was partially offset by a 0.1 pp drop in effective rate on FC-denominated deposit, to 1.9% and a decrease in customer accounts by GEL 185.4 million, or 2.0% on a QoQ basis. Another contributor to the rise in interest expense was the GEL 3.7 million, or 31.3% higher interest expense on subordinated loans. This resulted from a 0.2 pp rise in respective yield to 9.7%, which was further magnified by a GEL 13.4 million, or 2.1%, increase in the respective portfolio. The increase was offset by a drop in interest expense on amounts due to credit institutions by GEL 9.0 million, or 15.5%. This decline was primarily attributable to decrease in effective rate by 0.5 pp, to 7.1% and a decline in respective portfolio by GEL 338.9 million, or 11.2%, related to decreased borrowing from NBG. The cost of funding increased by 0.1 pp and stood at 4.5%.
Consequently, on a QoQ basis, NIM decreased by 0.6 pp and stood at 6.1%. Meanwhile risk adjusted NIM was down by 0.7 pp and stood at 4.7%.
Fee and Commission Income
In thousands of GEL
1Q'19
4Q'18
1Q'18
Change YoY
Change QoQ
Card operations
28,486
30,830
21,736
31.1%
-7.6%
Settlement transactions
17,617
19,319
16,239
8.5%
-8.8%
Guarantees issued
5,857
6,084
4,220
38.8%
-3.7%
Issuance of letters of credit
1,040
2,081
1,072
-3.0%
-50.0%
Cash transactions
3,169
4,209
4,445
-28.7%
-24.7%
Foreign currency exchange transactions
757
805
490
54.5%
-6.0%
Other
3,976
3,721
2,632
51.1%
6.9%
Fee and commission income
60,902
67,049
50,834
19.8%
-9.2%
Card operations
14,350
17,720
10,467
37.1%
-19.0%
Settlement transactions
2,749
2,347
2,142
28.3%
17.1%
Guarantees issued
402
415
306
31.4%
-3.1%
Letters of credit
389
382
260
49.6%
1.8%
Cash transactions
1,017
1,297
1,117
-9.0%
-21.6%
Foreign currency exchange transactions
28
2
2
NMF
NMF
Other
160
822
1,621
-90.1%
-80.5%
Fee and commission expense
19,095
22,985
15,915
20.0%
-16.9%
Card operations
14,136
13,110
11,269
25.4%
7.8%
Settlement transactions
14,868
16,972
14,097
5.5%
-12.4%
Guarantees
5,455
5,669
3,914
39.4%
-3.8%
Letters of credit
651
1,699
812
-19.8%
-61.7%
Cash transactions
2,152
2,912
3,328
-35.3%
-26.1%
Foreign currency exchange transactions
729
803
488
49.4%
-9.2%
Other
3,816
2,899
1,011
NMF
31.6%
Net fee and commission income
41,807
44,064
34,919
19.7%
-5.1%
NMF - no meaningful figures
1Q 2019 to 1Q 2018 Comparison
In 1Q 2019, net fee and commission income totalled GEL 41.8 million, up by GEL 6.9 million, or 19.7%, compared to 1Q 2018. This mainly resulted from an increase in net fee and commission income from card operations of GEL 2.9 million, or 25.4% and an increase in other net fee and commission income of GEL 2.8 million.
The rise in net fee and commission income from card operations is related to the increased number of active cards and POS terminals by 12.1% and 20.5% respectively. The increase in other net fee and commission income was mainly driven by corporate and investment banking segment performance.
1Q 2019 to 4Q 2018 Comparison
On a QoQ basis, net fee and commission income fell by GEL 2.3 million, or 5.1%, compared to 4Q 2018. This was primarily driven by a decline in net fee and commission income from settlement transactions of GEL 2.1 million, or 12.4% and a GEL 0.8 million decrease in net fee and commission income from cash transaction. This effect was partially offset by a GEL 1.0 million, or 7.8% increase in net fee and commission income from card operations.
The drop is explained by a seasonal high number of transactions, volumes and related fee and commission income in the fourth quarter.
Other Operating Non-Interest Income and Gross Insurance Profit
In thousands of GEL
1Q'19
4Q'18
1Q'18
Change YoY
Change QoQ
Net income from foreign currency operations
25,214
33,029
19,553
29.0%
-23.7%
Share of profit of associates
169
212
307
-45.0%
-20.3%
Gains less losses/(losses less gains) from derivative financial instruments
(158)
(184)
17
NMF
-14.1%
Gains less losses from disposal of investment securities measured at fair value through OCI
68
-
-
NMF
NMF
Revenues from sale of cash-in terminals
214
225
1,026
-79.1%
-4.9%
Revenues from operational leasing
863
1,731
1,575
-45.2%
-50.1%
Gain from sale of investment properties
148
7,392
1,041
-85.8%
-98.0%
Gain from sale of inventories of repossessed collateral
260
1,504
105
NMF
-82.7%
Revenues from non-credit related fines
68
367
142
-52.1%
-81.5%
Gain on disposal of premises and equipment
1,231
117
45
NMF
NMF
Other
1,375
5,149
2,520
-45.4%
-73.3%
Other operating income
4,159
16,485
6,454
-35.6%
-74.8%
Gross insurance profit[10]
3,729
3,853
2,046
82.3%
-3.2%
Other operating non-interest income and gross insurance profit
33,181
53,395
28,377
16.9%
-37.9%
NMF - no meaningful figures
1Q 2019 to 1Q 2018 Comparison
Total other operating non-interest income and gross insurance profit grew by GEL 4.8 million, or 16.9%, to GEL 33.2 million in 1Q 2019. This primarily resulted from the growth in net income from foreign currency operations by GEL 5.7 million, or 29.0% and the increase in gross insurance profit of GEL 1.7 million. This increase was partially offset by a GEL 2.3 million, or 35.6% decrease in other operating income. Higher net income from foreign currency operations resulted from an increased number and volume of FX transactions, broadly consistent with the growth of the scale of business.
Higher gross insurance profit mainly resulted from increased cross-selling of various insurance products. More information about TBC insurance can be found in Annex 23 on pages 33-34.
1Q 2019 to 4Q 2018 Comparison
On a QoQ basis, total other operating non-interest income and gross insurance profit decreased by GEL 20.2 million, or by 37.9%. This mainly resulted from the decline in net income from foreign currency operations by GEL 7.8 million, or 23.7%, a fall in gains from sale of investment property by GEL 7.2 million and a GEL 3.8 million, or 45.4% decrease in other operating income, mainly related to the recognition of an option to buy equity shares of one large corporate client in 4Q 2018. The decrease in net income from foreign currency was mainly driven by seasonal decrease in economic activity in the first quarter as compared to the most active fourth quarter.
Credit Loss Allowance
In thousands of GEL
1Q'19
4Q'18
1Q'18
Change YoY
Change QoQ
Credit loss allowance for loan to customers
(36,416)
(34,398)
(27,999)
30.1%
5.9%
Credit loss allowance for investments in finance lease
(41)
(779)
(240)
-82.9%
-94.7%
Credit loss allowance for performance guarantees and credit related commitments
432
(1,532)
(3,875)
NMF
NMF
Credit loss allowance for other financial assets
2,969
(7,305)
(7,326)
NMF
NMF
Credit loss allowance for financial assets measured at fair value through other comprehensive income
(39)
(22)
(23)
69.6%
77.3%
Total credit loss allowance
(33,095)
(44,036)
(39,463)
-16.1%
-24.8%
Operating income after credit loss allowance
238,851
268,226
199,236
19.9%
-11.0%
Cost of risk
1.4%
1.4%
1.3%
0.1 pp
0.0 pp
NMF - no meaningful figures
1Q 2019 to 1Q 2018 Comparison
In 1Q 2019, total credit loss allowance declined by GEL 6.4 million to GEL 33.1 million compared to 1Q 2018.
This was primarily attributable to a recovery of credit loss allowance for other financial assets driven by a single corporate debtor. The recovery was partially offset by a GEL 8.4 million increase in credit loss allowance for loans to customers. GEL appreciation in 1Q 2018 had a positive effect on credit loss allowance for loans to customers.
In 1Q 2019, the cost of risk stood at 1.4% (1.4% without the FX effect), compared to 1.3% (1.7% without the FX effect) in 1Q 2018.
1Q 2019 to 4Q 2018 Comparison
On a QoQ basis, total credit loss allowance declined by GEL 10.9 million to GEL 33.1 million.
This was attributable to a recovery of credit loss allowance for other financial assets due to a single corporate debtor.
In 1Q 2019, the cost of risk stood at 1.4% (1.4% without the FX effect), compared to 1.4% (1.3% without the FX effect) in 4Q 2018.
Operating Expenses
In thousands of GEL
1Q'19
4Q'18
1Q'18
Change YoY
Change QoQ
Staff costs
57,753
63,213
52,116
10.8%
-8.6%
Provisions for liabilities and charges
(200)
-
-
NMF
NMF
Depreciation and amortization
16,169
12,333
10,470
54.4%
31.1%
Professional services
3,526
5,385
2,962
19.0%
-34.5%
Advertising and marketing services
4,478
10,738
4,527
-1.1%
-58.3%
Expenses related to lease contracts[11]
2,630
-
-
NMF
NMF
Rent
-
6,666
5,864
NMF
NMF
Utility services
1,947
1,602
1,735
12.2%
21.5%
Intangible asset enhancement
2,741
3,672
2,494
9.9%
-25.4%
Taxes other than on income
1,817
1,356
1,656
9.7%
34.0%
Communications and supply
1,435
1,422
1,034
38.8%
0.9%
Stationary and other office expenses
1,119
1,312
1,184
-5.5%
-14.7%
Insurance
229
2,558
485
-52.8%
-91.0%
Security services
504
522
496
1.6%
-3.4%
Premises and equipment maintenance
2,035
1,767
1,035
96.6%
15.2%
Business trip expenses
409
706
320
27.8%
-42.1%
Transportation and vehicles maintenance
410
549
378
8.5%
-25.3%
Charity
1,004
332
280
NMF
NMF
Personnel training and recruitment
291
1,006
176
65.3%
-71.1%
Write-down of current assets to fair value less costs to sell
-
(19)
(3)
-100.0%
-100.0%
Loss on disposal of Inventory
14
1
20
-30.0%
NMF
Loss on disposal of investment properties
-
36
31
-100.0%
-100.0%
Loss on disposal of premises and equipment
233
425
278
-16.2%
-45.2%
Impairment of intangible assets
-
1
-
NMF
-100.0%
Other
3,970
8,321
3,394
17.0%
-52.3%
Administrative & other operating expenses
28,792
48,358
28,346
1.6%
-40.5%
Operating expenses
102,514
123,904
90,932
12.7%
-17.3%
Profit before tax
136,337
144,322
108,304
25.9%
-5.5%
Income tax expense
(3,015)
(14,235)
(10,778)
-72.0%
-78.8%
Profit for the period
133,322
130,087
97,526
36.7%
2.5%
Cost to income
37.7%
39.7%
38.1%
-0.4 pp
-2.0 pp
ROE
23.8%
24.3%
21.0%
2.8 pp
-0.5 pp
ROA
3.6%
3.5%
3.2%
0.4 pp
0.1 pp
NMF - no meaningful figures
1Q 2019 to 1Q 2018 Comparison
In 1Q 2019, total operating expenses expanded by GEL 11.6 million, or 12.7% YoY to GEL 102.5 million, primarily due to an increase in staff costs of GEL 5.6 million, or 10.8% YoY and a rise in depreciation and amortization, of GEL 5.7 million, or 54.4%. The growth in staff cost was mainly driven by a higher scale and performance, while increase in depreciation and amortization was primarily related to IFRS 16.
We have continued to deliver positive operational JAWS ratio[12], leading to a decrease in cost to income ratio by 0.4 pp to 37.7% in 1Q 2019.
1Q 2019 to 4Q 2018 Comparison
On a QoQ basis, total operating expenses decreased by GEL 21.4 million, or 17.3%. This was primarily attributable to a GEL 19.6 million, or 40.5% decline in administrative & other operating expenses and a GEL 5.5 million, or 8.6% drop in staff cost. The decrease in operating expenses was related to seasonally high costs across various categories of expenses in 4Q.
Our cost to income ratio improved by 2.0 pp from 39.7%, compared to 4Q 2018.
Net Income
Net income for the first quarter increased by GEL 3.2 million, or 2.5%, QoQ and by GEL 35.8 million, or 36.7%, YoY and amounted to GEL 133.3 million.
As a result, ROE stood at 23.8%, up by 2.8 pp YoY and down by 0.5 pp QoQ, while ROA stood at 3.6%, up by 0.4 pp YoY and down by 0.1 pp QoQ.
Balance Sheet Discussion
In thousands of GEL
Mar-19
Dec-18
Change QoQ
Mar-18
Change YoY
Cash, due from banks and mandatory cash balances with NBG
2,373,893
2,637,036
-10.0%
2,246,989
5.6%
Loans and advances to customers (Net)
10,029,320
10,038,452
-0.1%
8,136,820
23.3%
Financial securities
1,550,767
1,659,442
-6.5%
1,010,659
53.4%
Fixed and intangible assets & investment property
570,047
561,020
1.6%
531,297
7.3%
Right of use assets
60,951
-
NMF
-
NMF
Other assets
587,328
602,043
-2.4%
475,282
23.6%
Total assets
15,172,306
15,497,993
-2.1%
12,401,047
22.3%
Due to credit institutions
2,692,585
3,031,503
-11.2%
2,270,119
18.6%
Customer accounts
9,166,789
9,352,142
-2.0%
7,610,804
20.4%
Debt securities in issue
13,415
13,343
0.5%
19,371
-30.7%
Subordinated debt
664,330
650,919
2.1%
402,058
65.2%
Other liabilities
287,431
244,118
17.7%
168,291
70.8%
Total liabilities
12,824,550
13,292,025
-3.5%
10,470,643
22.5%
Total equity
2,347,756
2,205,968
6.4%
1,930,404
21.6%
NMF - no meaningful figures
Assets
As of 31 March 2019, the Group's total assets amounted to GEL 15,172.3 million, up by GEL 2,771.3 million, or by 22.3% YoY. The increase was mainly due to the rise in net loans to customers by GEL 1,892.5 million, or by 23.3% YoY. The YoY increase in total assets also resulted from a GEL 540.1 million, or 53.4%, rise in financial securities compared to 31 March 2018.
On a QoQ basis, total assets dropped by GEL 325.7 million, or 2.1%, mainly due to a GEL 263.1 million, or 10.0%, decline in liquid assets (comprising cash, due from banks and mandatory cash balances with the NBG) and a GEL 108.7 million or 6.5% decrease in financial securities. The decline was slightly offset by an increase in fixed and intangible assets & investment property by GEL 70.0 million, or 12.5%.
As of 31 March 2019, the gross loan portfolio reached GEL 10,366.9 million, up by 22.9% YoY and down by 0.1% QoQ. At the same time, gross loans denominated in foreign currency accounted for 59.6% of total loans, compared to 58.2% and 60.1% as of 31 March 2018 and 31 December 2018 respectively.
Asset Quality
Borrowers with FX income
31-Mar-19
31-Dec-18
31-Mar-18
Segments
% of FX loans
of which borrowers with FX income**
% of FX loans
of which borrowers with FX income**
% of FX loans
of which borrowers with FX income**
Retail
56.0%
28.7%
56.1%
28.5%
49.4%
25.4%
Non-mortgage
19.9%
23.6%
19.9%
24.1%
18.0%
24.5%
Mortgage
81.1%
29.6%
82.7%
29.3%
80.1%
25.6%
Corporate
70.0%
51.4%*
71.5%
51.4%*
75.6%
53.1%*
MSME
52.2%
14.3%
53.1%
15.2%
53.2%
14.9%
Total loan portfolio
59.6%
34.4%
60.1%
34.0%
58.2%
34.0%
(Based on internal estimates)
* Pure exports account for 6.4%, 7.0% and 7.0% of total corporate FX denominated loans as at 31 March 2019, 31 December 2018 and 31 March 2018, respectively.
** FX income implies both direct and indirect income.
PAR 30 by Segments and Currencies
Mar-19
Dec-18
Mar-18
GEL
FC
Total
GEL
FC
Total
GEL
FC
Total
Corporate
1.1%
1.2%
1.2%
0.7%
0.3%
0.4%
0.0%
1.1%
0.9%
Retail
4.4%
1.8%
2.9%
4.0%
1.5%
2.6%
2.9%
1.7%
2.3%
MSME
2.7%
3.5%
3.1%
2.4%
3.2%
2.8%
1.9%
3.5%
2.7%
Total
3.2%
1.9%
2.4%
2.8%
1.4%
2.0%
2.2%
1.9%
2.0%
Loans overdue by more than 30 days to gross loans
Total
Total PAR 30 increased by 0.4 pp on QoQ basis as well as on YoY basis, standing at 2.4%, which was driven by increase of PAR 30 in all segments.
Retail Segment
The retail segment's PAR 30 amounted to 2.9%, up by 0.3 pp QoQ and by 0.6pp YoY. The increase was mainly attributable to higher yield products such as credit cards and unsecured consumer loans, which have been substantially reduced by new regulations this year.
Corporate
The corporate segment's PAR 30 amounted to 1.2%, up by 0.8 pp QoQ and by 0.3 pp YoY. This was driven by two mid-sized corporate clients.
MSME
The MSME segment's PAR 30 increased by 0.3 pp QoQ and by 0.4 pp YoY and stood at 3.1% as of 31 March 2019. This was mainly driven by SME sub-segment.
NPLs
Mar-19
Dec-18
Mar-18
GEL
FC
Total
GEL
FC
Total
GEL
FC
Total
Corporate
1.7%
3.0%
2.6%
1.6%
3.1%
2.7%
0.9%
3.0%
2.5%
Retail
4.3%
2.3%
3.2%
3.7%
2.3%
2.9%
2.4%
3.0%
2.7%
MSME
3.0%
5.6%
4.4%
2.6%
5.5%
4.2%
2.6%
6.2%
4.5%
Total
3.3%
3.2%
3.3%
2.9%
3.3%
3.1%
2.2%
3.7%
3.1%
Total
Total NPLs rose by 0.2 pp on QoQ and YoY basis and stood at 3.3%. The increase was mainly driven by consumer loans.
Retail Segment
The retail segment's NPLs remained increased by 0.3 pp QoQ and by 0.5 pp YoY and stood at 3.2%, driven by consumer loans.
Corporate
On both QoQ and YoY basis, the corporate segment's NPLs ratio remained broadly stable.
MSME
The MSME segment's NPLs increased by 0.2 pp QoQ and was broadly stable on YoY basis. QoQ increase was due to both SME and micro sub-segments.
NPLs Coverage
Mar-19
Dec-18
Mar-18
Exc. Collateral
Incl. Collateral
Exc. Collateral
Incl. Collateral
Exc. Collateral
Incl. Collateral
Corporate
95.4%
288.7%
96.4%
286.9%
103.8%
275.5%
Retail
123.8%
190.0%
132.4%
204.4%
157.6%
235.6%
MSME
71.4%
175.2%
68.4%
174.0%
70.2%
179.2%
Total
100.1%
210.8%
102.7%
216.4%
114.6%
225.8%
Liabilities
As of 31 March 2019, TBC Bank's total liabilities amounted to GEL 12,824.6 million, up by GEL 2,353.9 million, or by 22.5% YoY. This primarily resulted from a GEL 1,556.0 million, or 20.4%, increase in customer accounts and GEL 422.5 million or 18.6% increase in amounts due to credit institutions.
On a QoQ basis, total liabilities dropped by GEL 467.5 million, or 3.5%. The decrease was mainly driven by decline in amounts due to credit institutions by GEL 338.9 million, or 11.2% and in customer accounts by GEL 185.4 million, or 2.0%. The decrease in customer accounts on a QoQ basis was related to seasonality, reduction in loan growth due to new regulation and retail deposit reduction mostly in January before the settlement of the dispute with NBG (for further details please refer to our website: www.tbcbankgroup.com).
Liquidity
As of 31 March 2019 the Bank's liquidity ratio, as defined by the NBG, stood at 35.9%, compared to 33.3% and 30.8% as of 31 December 2018 and 31 March 2018 respectively, above the NBG limit of 30%. As of 31 March 2019, the total liquidity coverage ratio (LCR), as defined by the NBG, was 117.5%, above the 100.0% limit. The LCR in GEL and FC stood at 111.9% and 122.2% respectively, above the respective limits of 75% and 100%.
Total Equity
As of 31 March 2019, TBC's total equity totalled GEL 2,347.8 million, up by GEL 417.4 million from GEL 1,930.4 million as of 31 March 2018. The YoY change in equity was primarily attributable to net profit contribution of GEL 473.2 million during last 12 months, which was partially offset by dividend distribution of GEL 88.9 million in May 2018.
On a QoQ basis TBC's total equity increased by GEL 141.8 million, or 6.4%. The QoQ change in equity was due to increase in net income by GEL 133.3 million.
Regulatory Capital
As of 31 March 2019 the Bank's Basel III tier 1 and total capital adequacy ratios (CAR) stood at 13.8% and 19.1%, respectively, compared to the minimum required levels of 11.9% and 16.9%. In comparison, as of 31 March 2018, the Bank's Basel III tier 1 and total capital adequacy ratios (CAR) stood at 13.8% and 17.7%, respectively, higher than the minimum required levels of 10.2% and 15.0%. As of 31 December 2018 the Bank's Basel III tier 1 and total capital adequacy ratios (CAR) stood at 12.8% and 17.9%, respectively, higher than the minimum required levels of 11.8% and 16.7%. We are exploring the opportunity to further strengthen our capital structure through AT1 security, which could be in the form of an USD denominated AT1 note issuance in 2019.
In 31 March 2019, the Bank's Basel III tier 1 capital amounted to GEL 1,746.7 million, up by GEL 229.5 million, or 15.1%, compared to March 2018, due to an increase in net income. The Bank's Basel III total capital amounted to GEL 2,421.5 million, up by GEL 478.0 million, or 24.6%, YoY. The increase in total capital was attributable to the generated income within the period, as well as attraction of new subordinated loans with total amount GEL 230.5 million. Risk weighted assets stood at GEL 12,689.7 million as of 31 March 2019, up by GEL 1,690.2 million, or 15.4%, compared to March 2018, mainly related to the rise in loan book, as well as growth in risk weighted assets for operational risk.
On a QoQ basis, the Bank's Basel III tier 1 capital amounted increased by GEL 68.0 million, or 4.1%, compared to December 2018, while the Bank's Basel III total capital increased by GEL 70.2 million, or 3.0%, YoY. The increase in tier 1 capital and total capital was attributable to the increase in net income. Risk weighted assets decreased by GEL 465.1 million, or 3.5%, compared to December 2018, mainly related to the optimization of the credit risk weighted assets, as well as decrease in market risk.
Results by segments and subsidiaries
The segment definitions are as follows:
· 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 MSME on a discretionary basis;
· MSME (Micro, Small and Medium) - business customers who are not included in either the corporate or the retail segments; or legal entities who have been granted a pawn shop loan; or individual customers of the newly launched, fully digital bank - Space;
· Retail - non-business individual customers or individual business customers who have been granted mortgage loans; all individual customers are included in retail deposits;
· Corporate Centre - comprises the Treasury, other support and back office functions, and the non-banking subsidiaries of the Group;
Business customers are all legal entities or individuals who have been granted a loan for business purposes.
Summary of key changes:
· Some customers were moved to the corporate segment on a discretionary basis considering practical aspects of client account servicing and administration. As a result, the corporate loan portfolio increased by GEL 128 million and the corporate deposit portfolio grew by GEL 70 million.
Income Statement by Segments
1Q'19
Retail
MSME
Corporate
Corp.Centre
Total
Interest income
145,814
69,376
78,904
43,821
337,915
Interest expense
(34,666)
(2,204)
(38,898)
(65,189)
(140,957)
Net transfer pricing
(17,024)
(23,463)
11,585
28,902
-
Net interest income
94,124
43,709
51,591
7,534
196,958
Fee and commission income
44,021
5,255
11,250
376
60,902
Fee and commission expense
(15,727)
(1,666)
(1,603)
(99)
(19,095)
Net fee and commission income
28,294
3,589
9,647
277
41,807
Gross insurance profit
-
-
-
3,729
3,729
Net income from foreign currency operations
6,159
4,446
12,207
(1,225)
21,587
Foreign exchange translation gains less losses/(losses less gains)
-
-
-
3,627
3,627
Net losses from derivative financial instruments
(148)
-
-
(10)
(158)
Gains less losses from disposal of investment securities measured at fair value through OCI
-
-
-
68
68
Other operating income
2,409
460
264
1,026
4,159
Share of profit of associates
-
-
-
169
169
Other operating non-interest income and insurance profit
8,420
4,906
12,471
7,384
33,181
Credit loss allowance for loan to customers
(27,359)
(9,485)
428
-
(36,416)
Credit loss allowance for performance guarantees and credit related commitments
393
183
(144)
-
432
Credit loss allowance for investments in finance lease
-
-
-
(41)
(41)
Credit loss allowance for other financial assets
38
-
3,864
(933)
2,969
Credit loss allowance for financial assets measured at fair value through other comprehensive income
-
-
(39)
-
(39)
Profit before G&A expenses and income taxes
103,910
42,902
77,818
14,221
238,851
Staff costs
(33,134)
(11,368)
(8,164)
(5,087)
(57,753)
Depreciation and amortization
(12,499)
(2,015)
(717)
(938)
(16,169)
Provision for liabilities and charges
-
-
-
200
200
Administrative and other operating expenses
(17,769)
(4,800)
(2,925)
(3,298)
(28,792)
Operating expenses
(63,402)
(18,183)
(11,806)
(9,123)
(102,514)
Profit before tax
40,508
24,719
66,012
5,098
136,337
Income tax expense
(5,217)
(3,750)
(9,871)
15,823
(3,015)
Profit for the year
35,291
20,969
56,141
20,921
133,322
Portfolios by Segments
In thousands of GEL
Mar-19
Dec-18
Mar-18
Loans and advances to customers
Non-mortgage
1,882,816
1,989,516
1,961,411
Mortgage
2,695,457
2,709,183
2,007,914
Retail
4,578,273
4,698,699
3,969,325
Corporate
3,364,911
3,177,289
2,489,516
MSME
2,423,731
2,496,594
1,974,075
Total loans and advances to customers (Gross)
10,366,915
10,372,582
8,432,916
Less:credit loss allowancefor loans to customers
(337,595)
(334,130)
(296,096)
Total loans and advances to customers (Net)
10,029,320
10,038,452
8,136,820
Customer accounts
Retail
4,914,927
5,103,971
4,197,277
Corporate
3,316,436
3,230,653
2,474,559
MSME
935,426
1,017,518
938,968
Total Customer accounts
9,166,789
9,352,142
7,610,804
Retail Banking
As of 31 March 2019, retail loans stood at GEL 4,578.3 million, up by GEL 608.9 million, or 15.3%, YoY and they accounted for 39.3% market share of total individual loans. Compared to December 2018, retail loans declined by GEL 120.4 million, or 2.6%. As of March 2019 foreign currency loans represented 56.0% of the total retail loan portfolio.
In the reporting period, retail deposits stood at GEL 4,914.9 million, up by GEL 717.7 million, or 17.1%, YoY and accounted for 39.5% market share of total individual deposits. On a QoQ basis, retail deposits decreased by GEL 189 million, or 3.7%. As of 31 March 2019 term deposits accounted for 54.3% of the total retail deposit portfolio, while foreign currency deposits represented 80.8% of the total.
In 1Q 2019, retail loan yields and deposit rates stood at 12.8% and 2.8%, respectively. The segment's cost of risk on loans was 2.4% . The retail segment contributed 26.5%, or GEL 35.3 million, to the total net income in 1Q 2019.
Corporate Banking
As of 31 March 2019, corporate loans amounted to GEL 3,364.9 million, up by GEL 747.4 million, or 30.0%, YoY and up by GEL 59.7 million, or 1.9% QoQ without re-segmentation effect[13]. Foreign currency loans accounted for 70.0% of the total corporate loan portfolio as of March 2019. The market share of total legal entities loans stood at 37.4%.
As of the same date, corporate deposits totalled GEL 3,316.4 million, up by GEL 771.9 million, or 31.2%, YoY and up by GEL 15.9 million, or 0.5%, QoQ without re-segmentation effect[14]. Foreign currency corporate deposits represented 41.9% of the total corporate deposit portfolio. The market share of total legal entities deposits stood at 41.4%.
In 1Q 2019, corporate loan yields and deposit rates stood at 9.5% and 4.9%, respectively. In the same period, the cost of risk on loans was -0.1%. In terms of profitability, the corporate segment's net profit reached GEL 56.1 million, or 42.1%, of the total net income.
MSME Banking
As of 31 March 2019, MSME loans amounted to GEL 2,423.7 million, up by GEL 577.6 million, or 29.3%, YoY and up by GEL 55.1 million, or 2.2%, QoQ without re-segmentation effect1. Foreign currency loans accounted for 52.2% of the total MSME portfolio.
As of the same date, MSME deposits stood at GEL 935.4 million, up by GEL 66.4 million, or 7.1%, YoY and down by GEL 12.2 million, or 1.2%, QoQ without re-segmentation effect2. Foreign currency MSME deposits represented 46.1% of the total MSME deposit portfolio.
In 1Q 2019, MSME loan yields and deposit rates stood at 11.7% and 0.9% respectively, while the cost of risk on loans was 1.6%. In terms of profitability, net profit for the MSME segment amounted to GEL 21.0 million, or 15.7%, of the total net income.
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance Sheet
In thousands of GEL
Mar-19
Dec-18
Mar-18
Cash and cash equivalents
927,830
1,166,911
1,245,562
Due from other banks
29,981
47,316
23,311
Mandatory cash balances with National Bank of Georgia
1,416,082
1,422,809
978,116
Loans and advances to customers
10,029,320
10,038,452
8,136,820
Investment securities measured at fair value through other comprehensive income
889,137
1,005,239
580,784
Bonds carried at amortised cost
661,630
654,203
429,875
Investments in finance leases
208,243
203,802
145,546
Investment properties
84,055
84,296
76,690
Current income tax prepayment
11,102
2,116
8,454
Deferred income tax asset
1,973
2,097
2,527
Other financial assets
124,093
167,518
127,851
Other assets
207,518
192,792
160,662
Premises and equipment
366,327
367,504
369,610
Right of use assets
60,951
-
-
Intangible assets
119,665
109,220
84,997
Goodwill
31,798
31,286
28,657
Investments in associates
2,601
2,432
1,585
TOTAL ASSETS
15,172,306
15,497,993
12,401,047
LIABILITIES
Due to Credit Institutions
2,692,585
3,031,503
2,270,119
Customer accounts
9,166,789
9,352,142
7,610,804
Other financial liabilities
171,421
98,714
90,499
Current income tax liability
36
63
44
Debt Securities in issue
13,415
13,343
19,371
Deferred income tax liability
19,337
22,237
663
Provisions for liabilities and charges
18,250
18,767
12,467
Other liabilities
78,387
104,337
64,618
Subordinated debt
664,330
650,919
402,058
TOTAL LIABILITIES
12,824,550
13,292,025
10,470,643
EQUITY
Share capital
1,672
1,650
1,626
Share premium
831,773
796,854
753,298
Retained earnings
1,657,330
1,523,879
1,266,299
Group reorganisation reserve
(162,166)
(162,166)
(162,166)
Share based payment reserve
(43,080)
(16,294)
(24,608)
Revaluation reserve for premises
56,701
57,240
70,039
Fair value reserve
9,702
8,680
4,146
Cumulative currency translation reserve
(7,295)
(6,937)
(7,425)
Net assets attributable to owners
2,344,637
2,202,906
1,901,209
Non-controlling interest
3,119
3,062
29,195
TOTAL EQUITY
2,347,756
2,205,968
1,930,404
TOTAL LIABILITIES AND EQUITY
15,172,306
15,497,993
12,401,047
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL
1Q'19
4Q'18
1Q'18
Interest income
337,915
355,543
289,849
Interest expense
(140,957)
(140,740)
(114,446)
Net interest income
196,958
214,803
175,403
Fee and commission income
60,902
67,049
50,834
Fee and commission expense
(19,095)
(22,985)
(15,915)
Net fee and commission income
41,807
44,064
34,919
Net insurance premiums earned
7,329
7,023
4,435
Netinsuranceclaims incurred and agents' commissions
(3,600)
(3,170)
(2,389)
Insurance profit
3,729
3,853
2,046
Net income from foreign currency operations
21,587
28,258
17,080
Net gain/(losses) from foreign exchange translation
3,627
4,771
2,473
Net gains/(losses) from derivative financial instruments
(158)
(184)
17
Gains less losses from disposal of investment securities measured at fair value through other comprehensive income
68
-
-
Other operating income
4,159
16,485
6,454
Share of profit of associates
169
212
307
Other operating non-interest income
29,452
49,542
26,331
Credit loss allowance for loan to customers
(36,416)
(34,398)
(27,999)
Credit loss allowance for investments in finance lease
(41)
(779)
(240)
Credit loss allowance for performance guarantees and credit related commitments
432
(1,532)
(3,875)
Credit loss allowance for other financial assets
2,969
(7,305)
(7,326)
Credit loss allowance for financial assets measured at fair value through other comprehensive income
(39)
(22)
(23)
Operating income after credit loss allowance for impairment
238,851
268,226
199,236
Staff costs
(57,753)
(63,213)
(52,116)
Depreciation and amortization
(16,169)
(12,333)
(10,470)
(Provision for)/ recovery of liabilities and charges
200
-
-
Administrative and other operating expenses
(28,792)
(48,358)
(28,346)
Operating expenses
(102,514)
(123,904)
(90,932)
Profit before tax
136,337
144,322
108,304
Income tax expense
(3,015)
(14,235)
(10,778)
Profit for the period
133,322
130,087
97,526
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve
1,023
3,757
2,374
Exchange differences on translation to presentation currency
(358)
340
(67)
Items that will not be reclassified to profit or loss:
Revaluation of premises and equipment
(539)
10,749
-
Income tax recorded directly in other comprehensive income
-
2,788
-
Other comprehensive income for the period
126
17,634
2,307
Total comprehensive income for the period
133,448
147,721
99,833
Profit attributable to:
- Shareholders of TBCG
133,237
129,952
95,758
- Non-controlling interest
85
135
1,768
Profit for the period
133,322
130,087
97,526
Total comprehensive income is attributable to:
- Shareholders of TBCG
133,363
147,628
98,031
- Non-controlling interest
85
93
1,802
Total comprehensive income for the period
133,448
147,721
99,833
Consolidated Statements of Cash Flows
In thousands of GEL
31-Mar-19
31-Mar-18
Cash flows from/(used in) operating activities
Interest received
332,214
286,870
Interest paid
(128,621)
(114,810)
Fees and commissions received
61,001
50,177
Fees and commissions paid
(19,076)
(15,988)
Insurance premium received
15,568
10,632
Insurance claims paid
(2,083)
(4,547)
Income received from trading in foreign currencies
21,588
17,080
Other operating income received
(7,403)
(6,747)
Staff costs paid
(68,852)
(81,180)
Administrative and other operating expenses paid
(39,165)
(34,351)
Income tax paid
(15,619)
(113)
Cash flows from operating activities before changes in operating assets and liabilities
149,552
107,023
Net change in operating assets
Due from other banks and mandatory cash balances with the National Bank of Georgia
44,243
24,793
Loans and advances to customers
(14,169)
(254,413)
Investment in finance lease
(9)
(10,397)
Other financial assets
49,780
27,467
Other assets
(6,977)
2,262
Net change in operating liabilities
Due to other banks
159,324
27,601
Customer accounts
(199,925)
142,411
Other financial liabilities
11,798
(10,447)
Financial lease liabilities
(3,202)
-
Other liabilities and provision for liabilities and charges
2,039
406
Net cash from operating activities
192,454
56,706
Cash flows from/(used in) investing activities
Acquisition of investment securities measured at fair value through other comprehensive income
(29,994)
(80,411)
Proceeds from redemption at maturity of investment securities measured at fair value through other comprehensive income
145,921
158,849
Acquisition of bonds carried at amortised cost
(119,747)
(56,429)
Proceeds from redemption of bonds carried at amortised cost
98,613
71,405
Acquisition of premises, equipment and intangible assets
(24,729)
(15,394)
Disposal of premises, equipment and intangible assets
4,965
910
Proceeds from disposal of investment property
1,414
4,192
Acquisition of subsidiaries, net of cash acquired
(596)
-
Net cash used in investing activities
75,847
83,122
Cash flows from/(used in) financing activities
Proceeds from other borrowed funds
267,489
645,260
Redemption of other borrowed funds
(778,163)
(935,698)
Proceeds from subordinated debt
-
-
Redemption of subordinated debt
-
-
Proceeds from debt securities in issue
(14)
75
Redemption of debt securities in issue
-
-
Dividends paid
-
-
Issue of ordinary shares
-
17,397
Net cash flows from financing activities
(510,688)
(272,966)
Effect of exchange rate changes on cash and cash equivalents
3,306
(52,777)
Net increase in cash and cash equivalents
(239,081)
(185,915)
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
927,830
1,245,562
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 prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.
Key Ratios
Ratios (based on monthly averages, where applicable)
1Q'19
4Q'18
1Q'18
ROE1
23.8%
24.3%
21.0%
ROA2
3.6%
3.5%
3.2%
ROE before credit loss allowance3
29.7%
32.5%
29.6%
Cost to income4
37.7%
39.7%
38.1%
Cost of risk5
1.4%
1.4%
1.3%
FX adjusted cost of risk6
1.4%
1.3%
1.7%
NIM7
6.1%
6.7%
6.9%
Risk adjusted NIM8
4.7%
5.4%
5.2%
Loan yields9
11.5%
12.2%
12.3%
Risk adjusted loan yields10
10.1%
10.9%
10.6%
Deposit rates11
3.3%
3.1%
3.3%
Yields on interest earning assets12
10.5%
11.1%
11.5%
Cost of funding13
4.5%
4.4%
4.4%
Spread14
6.0%
6.6%
7.1%
PAR 90 to gross loans15
1.3%
1.2%
1.2%
NPLs to gross loans16
3.3%
3.1%
3.1%
NPLs coverage17
100.1%
102.7%
114.6%
NPLs coverage with collateral18
210.8%
216.4%
225.8%
Credit loss level to gross loans19
3.3%
3.2%
3.5%
Related party loans to gross loans20
0.1%
0.1%
0.1%
Top 10 borrowers to total portfolio21
9.6%
10.1%
9.4%
Top 20 borrowers to total portfolio22
13.5%
14.2%
13.4%
Net loans to deposits plus IFI Funding23
90.5%
89.9%
93.2%
Net stable funding ratio*24
123.8%
124.2%
124.5%
Liquidity coverage ratio25
117.5%
113.9%
104.6%
Leverage26
6.5x
7.0x
6.4x
Regulatory tier 1 CAR (Basel III)27
13.8%
12.8%
13.8%
Regulatory total 1 CAR (Basel III)28
19.1%
17.9%
17.7%
(*)Per updated methodology.
Ratio definitions
1. Return on average total equity (ROE) equals net income attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; annualised where applicable.
2. Return on average total assets (ROA) equals net income of the period divided by the monthly average total assets for the same period. Annualised where applicable.
3. 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.
4. 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).
5. Cost of risk equals credit loss allowance for loans to customers divided by monthly average gross loans and advances to customers; annualised where applicable.
6. FX adjusted cost of risk is calculated based on currency rates of the respective prior periods.
7. 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 which currently has negative interest, and includes other earning items from due from banks.
8. Risk Adjusted Net interest margin is NIM minus the cost of risk without one-offs and currency effect.
9. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers; annualised where applicable.
10. Risk Adjusted Loan yield is loan yield minus the cost of risk without one-offs and currency effect.
11. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits; annualised where applicable.
12. Yields on interest earning assets equal total interest income divided by monthly average interest earning assets; annualised where applicable.
13. Cost of funding equals total interest expense divided by monthly average interest bearing liabilities; annualised where applicable.
14. 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).
15. 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.
16. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.
17. NPLs coverage ratio equals total credit loss allowance for loans to customers calculated per IFRS 9 divided by the NPL loans.
18. NPLs coverage with collateral ratio equals credit loss allowance for loans to customers per IFRS 9 plus total collateral amount of NPL loans (excluding third party guarantees) discounted at 30-50% depending on segment type divided by the NPL loans.
19. Credit loss level to gross loans equals credit loss allowance for loans to customers divided by the gross loan portfolio for the same period.
20. Related party loans to total loans equals related party loans divided by the gross loan portfolio.
21. Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided by the gross loan portfolio.
22. Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided by the gross loan portfolio.
23. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions.
24. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined in Basel III.
25. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG.
26. Leverage equals total assets to total equity.
27. 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.
28. 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 2.6766 as of 31 December 2018. For the calculations of the YoY growth without the currency exchange rate effect, we used the USD/GEL exchange rate of 2.4144 as of 31 March 2018. As of 31 March 2019 the USD/GEL exchange rate equalled 2.6914. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: 1Q 2019 of 2.6680, 4Q 2018 of 2.6752, 1Q 2018 of 2.4854.
Additional Disclosures
Subsidiaries of TBC Bank Group PLC[15]
Ownership / voting % as of 31 March 2019
Country
Year of incorporation
Industry
Total Assets (after elimination)
Subsidiary
Amount GEL'000
% in TBC Group
JSC TBC Bank
99.9%
Georgia
1992
Banking
14,746,354
97.19%
United Financial Corporation JSC
98.7%
Georgia
2001
Card processing
9,393
0.06%
TBC Capital LLC
100.0%
Georgia
1999
Brokerage
6,082
0.04%
TBC Leasing JSC
99.6%
Georgia
2003
Leasing
269,612
1.78%
TBC Kredit LLC
100.0%
Azerbaijan
1999
Non-banking credit institution
30,484
0.20%
Banking System Service Company LLC
100.0%
Georgia
2009
Information services
956
0.01%
TBC Pay LLC
100.0%
Georgia
2008
Processing
32,797
0.22%
Index LLC
100.0%
Georgia
2009
Real estate management
611
0.00%
Real Estate Management Fund JSC*
0.0%
Georgia
2010
Real estate management
21
0.00%
TBC Invest LLC
100.0%
Israel
2011
PR and marketing
156
0.00%
BG LLC*
0.0%
Georgia
2018
Asset management
12,786
0.08%
JSC TBC Insurance
100.0%
Georgia
2014
Insurance
58,607
0.39%
Swoop JSC
100.0%
Georgia
2010
Retail Trade
922
0.01%
All Property LTD
90.0%
Georgia
2013
Real Estate
134
0.00%
GE Commerce LTD
100.0%
Georgia
2018
Retail Trade
1,053
0.01%
(*)The Group has de facto control over these subsidiaries
1) Earnings per Share
In GEL
1Q 2019
4Q 2018
1Q 2018
Earnings per share for profit attributable to the owners of the Group:
- Basic earnings per share
2.45
2.40
1.80
- Diluted earnings per share
2.45
2.37
1.79
Source: IFRS Consolidated
2) Sensitivity Analysis
Sensitivity Analysis
31-Mar-19
10% Currency Devaluation Effect
NIM*
-0.14%
Technical Cost of Risk
+0.11%
Regulatory Total Capital
2,421
2,466
Regulatory Capital adequacy ratios tier 1 and total capital decrease by
0.63% - 0.82%
(*) Linear depreciation is assumed for NIM sensitivity analysis
Source: IFRS statements and Management Figures
3) The share of selected FC denominated P/L Items
Selected P&L Items1Q 2019
FC % of Respective Totals
Interest Income
40%
Interest Expense
49%
Fee and Commission Income
30%
Fee and Commission Expense
67%
Administrative Expenses
18%
Source: IFRS statements and Management figures
4) Open Interest Rate Position as of 31 March 2019
Open interest rate position in GEL
GEL 662m
Open interest rate position in FC
GEL2,610 m
GEL m
% share in totals
GEL m
% share in totals
Assets
3,361
22%
Assets
4,353
29%
Securities with fixed yield(≤1y)*
391
25%
Nostro**
85
24%
Securities with floating yield
542
35%
NBG Reserves**
1,416
96%
Loans with floating yield
2,272
22%
NBG Deposits
0
0%
Reserves in NBG
137
9%
Libor Loans
2,852
28%
Interbank loans& Deposits & Repo
19
5%
Interest Rate Swap
0
0%
Liabilities
2,699
21%
Current accounts***
788
9%
Liabilities
1,743
14%
Saving accounts***
524
6%
Senior Loans
1,324
56%
Refinancing Loan of NBG & MoF Deposits
808
34%
Subordinated Loans
419
63%
Interbank Loans &Deposits & Repo
63
20%
IFI Borrowings
516
22%
(*) 52% of the less than 1 year securities are maturing in 6 months.
(**) Income on NBG reserves and Nostros are calculated as benchmark minus margin whereby benchmarks are correlated with Libor. From June 2018, according to NBG regulation is it possible to apply negative interest rates on NBG reserves and correspondent accounts. However, negative rate is floored by 0% in case of USD and by (-0.6)% in case of EUR accounts.
(***) The Bank considers that current and saving deposits promptly react to interest rate changes on the market (within 1 month prior notification).
5) Yields and Rates
Yields and Rates
1Q'19
4Q'18
3Q'18
2Q'18
1Q'18
Loan yields
11.5%
12.2%
12.4%
12.5%
12.3%
Retail loan yields GEL
19.6%
20.7%
20.8%
21.3%
20.5%
Retail loan yields FX
7.4%
7.8%
7.9%
8.0%
8.4%
Retail Loan Yields
12.8%
13.6%
14.1%
14.7%
14.6%
Corporate loan yields GEL
10.8%
10.9%
11.0%
11.4%
11.2%
Corporate loan yields FX
9.0%
9.7%
9.1%
8.7%
8.6%
Corporate Loan Yields
9.5%
10.0%
9.6%
9.4%
9.2%
MSME loan yields GEL
15.7%
16.2%
16.6%
15.9%
15.0%
MSME loan yields FX
8.1%
8.6%
8.9%
8.5%
8.9%
MSME Loan Yields
11.7%
12.2%
12.6%
12.0%
11.3%
Deposit rates
3.3%
3.1%
3.3%
3.3%
3.3%
Retail deposit rates GEL
5.4%
4.6%
4.4%
4.3%
4.4%
Retail deposit rates FX
2.2%
2.2%
2.3%
2.4%
2.5%
Retail Deposit Yields
2.8%
2.6%
2.7%
2.7%
2.8%
Corporate deposit rates GEL
7.5%
6.8%
7.5%
7.9%
8.0%
Corporate deposit rates FX
1.6%
1.8%
2.0%
1.9%
2.0%
Corporate Deposit Yields
4.9%
4.5%
4.9%
5.2%
5.2%
MSME deposit rates GEL
1.4%
1.6%
1.7%
1.7%
1.8%
MSME deposit rates FX
0.3%
0.3%
0.4%
0.4%
0.5%
MSME Deposit Yields
0.9%
1.0%
1.0%
1.0%
1.1%
Yields on Securities
7.5%
7.6%
7.8%
7.7%
8.1%
Source: IFRS Consolidated
6) Risk Adjusted Yields & Cost of Risk
Risk-adjusted Yields
1Q'19
4Q'18
3Q'18
2Q'18
1Q'18
Loan yields
10.1%
10.9%
10.9%
10.8%
10.6%
Retail Loan Yields
10.4%
10.6%
11.6%
12.1%
11.6%
Corporate Loan Yields
9.6%
10.1%
9.1%
8.6%
9.3%
MSME Loan Yields
10.1%
12.4%
11.8%
11.1%
9.8%
1Q'19
4Q'18
3Q'18
2Q'18
1Q'18
Cost of Risk
1.4%
1.4%
1.9%
1.8%
1.3%
Retail
2.4%
2.9%
2.7%
2.6%
2.7%
Corporate
-0.1%
0.1%
1.1%
0.9%
-0.8%
MSME
1.6%
-0.1%
1.2%
1.0%
1.0%
Source: IFRS Consolidated
7) Loan Quality per NBG
Sub-Standard, Doubtful and Loss (SDL) Loans Ratio per NBG
Mar-19
Dec-18
Sep-18
Jun-18
Mar-18
SDL Loans as % of Gross Loans
3.9%
3.6%
3.8%
3.3%
3.1%
Source: NBG
8) Cross Sell Ratio[16] and Number Active Products
Mar-19
Sep-18
Mar-18
Sep-17
Mar-17
Cross Sell Ratio
3.75
3.85
3.88
3.78
3.57
Number of Active Products (in million)
4.62
4.58
4.58
4.06
3.16
Source: Management's figures.
9) Diversified Deposit Base
Status: monthly income >=GEL 3,000 or loans/deposits >=GEL 30,000
VIP: deposit >=USD 100,000 as well as on discretionary basis; WM: >=USD 100,000 as well as on discretionary basis
Wealth Management includes UHNW and HNW non-resident clients
Source: IFRS consolidated.
11) Number of Transactions in Digital Channels (in thousands)
1Q 19
1Q 18
1Q 17
1Q 16
Internet banking number of transactions
2,499
2,449
2,098
1,669
Mobile banking number of transactions
9,194
5,315
2,622
1,150
Source: Management figures.
12) Penetration Ratios of Digital Channels
1Q 19
1Q 18
1Q 17
1Q 16
Internet or Mobile Banking Penetration Ratio*
42%
38%
34%
32%
Mobile Banking Penetration Ratio**
37%
31%
25%
17%
Source: Management figures.
* Internet or Mobile Banking penetration equals active clients of Interment or Mobile Banking divided by total active clients.
** Mobile Banking penetration equals active clients of Mobile Banking divided by total active clients.
13) Number of Active Clients (in thousands)
Mar-19
Mar-18
Mar-17
Mar-16
Internet or mobile banking
529
447
298
220
Mobile banking
411
365
219
121
Source: Management figures.
14) Distribution of Transactions in Digital Channels
1Q 19
Mobile Banking
29%
Internet Banking
11%
Branches
8%
TBC Pay terminals
21%
ATMs
30%
Other
1%
92% of all transactions are conducted through digital channels
15) Distribution of Sales in Channels
1Q 19
1Q 18
1Q 17
1Q 16
IB, MB, ATM, Web
45%
30%
24%
27%
Branches & Call Centre
55%
70%
76%
73%
45% of sales are conducted through digital channels*.
* For products being offered through remote channels: pre-approved loans, credit cards, limit increase and opening of accounts.
16) Percentage of Selected Product Sales in Digital Channels
1Q 19
1Q 18
1Q 17
Deposits
72%
59%
50%
Pre-approved loans
23%*
35%
14%
Debit cards
26%
14%
-
* The decrease is due to new regulations.
17) POS Terminal Transactions
Mar-19
Dec-18
Sep-18
Jun-18
Mar-18
POS number of transactions (in millions)
26.6
27.4
24.1
22.3
17.9
POS volume of transactions (in mln GEL)
1,017
1,117
986
850
661
* Data includes e-commerce and excludes transactions at POS terminals in TBC Bank's branches.
18) Funding repayment ladder
Subordinated and Senior Loans' Principal Amount Outflow by Year (USD million)
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Senior loans
113.9
182.1
261.1
107.0
89.4
36.8
28.2
10.6
4.6
-
Subordinated loans
6.4
13.9
11.1
11.4
32.2
1.1
39.0
72.9
16.1
37.0
Source: Management figures, revolving non IFI loans from NBG are excluded.
19) NPL Build Up (in GEL million)
NPLs
NPLs as of Dec-18
Real Growth
FX Effect
Write-Offs
Repossessed
NPLs as of Mar-19
Retail
137
43
-
(34)
(2)
144
Corporate
85
4
-
-
(2)
87
MSME
103
12
1
(7)
(3)
106
Total
325
59
1
(41)
(7)
337
20) Net Write-Offs, 1Q 2019
In GEL million
Write-Offs
Recoveries
Net Write-Offs
Retail
(34)
4
(30)
Corporate
-
1
1
MSME
(7)
3
(4)
Total
(41)
8
(33)
Source: IFRS Consolidated.
21) Portfolio Breakdown by Collateral Types as of 31-Mar-19
Cash Cover
2%
Gold
3%
Inventory
9%
Real Estate
67%
Third Party Guarantees
6%
Other
2%
Unsecured
11%
72% of the loans are secured by cash, gold and real estate.
Source: IFRS Consolidated.
22) Loan to Value by Segments as of 31-Mar-19
Retail
Corporate
MSME
Total
56%
49%
47%
51%
Mortgage loan's LTV stood at 51%
23) TBC Insurance
TBC Insurance is a rapidly growing, wholly owned subsidiary of TBC Bank and it is the Bank's main bancassurance partner. The company was acquired by the Group in October 2016 and it 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 22.8% and 39.8% market shares[17] without border motor third party liability (MTPL) insurance, respectively in 1Q 2019[18].
TBC insurance serves both individual and legal entities and it 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 for 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, as well as a Georgian-speaking chat-bot B-Bot, which is available through Facebook messenger.
In 1Q 2019, TBC Insurance achieved strong growth results. The gross written premium grew by 39.8% YoY and amounted to GEL 17.5 million driven by strong focus on cross-selling. Over the same period, the net combined ratio[19] increased by 6.8 pp and stood at 82.8%. This was mainly driven by several new products launched at the end of December 2018 leading to the increase in operating expenses. As a result, the net profit for 1Q 2019 stood at GEL 2.0 million without subsidiaries. At the same time TBC insurance maintains strong capital levels, with solvency ratio above regulatory minimum of 100%, standing at 140.8%.
In thousands of GEL
1Q'19
4Q'18
3Q'18
2Q'18
1Q'18
Gross written premium
17,471
17,075
15,833
14,677
12,494
Net earned premium[20]
10,677
10,554
9,841
8,804
6,458
Net profit
2,004
2,556
2,271
1,497
1,260
1Q'19
4Q'18
3Q'18
2Q'18
1Q'18
Net combined ratio
82.8%
80.7%
78.8%
81.0%
76.0%
Market share
22.8%
23.0%
20.7%
18.5%
19.5%
Figures are provided without subsidiaries of TBC Insurance: Swoop JSC, GE Commerce LTD, All Property LTD.
24) Regulatory Capital
Total capital and tier 1 capital limits
31-Mar-2019 Actual
31-Dec-2019 F
31-Dec-2020 F
31-Dec-2021 F
Tier 1
Total
Tier 1
Total
Tier 1
Total
Tier 1
Total
Minimum Requirement
6.0%
8.0%
6.0%
8.0%
6.0%
8.0%
6.0%
8.0%
Conservation Buffer
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
Counter-Cyclical Buffer
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Systemic Buffer
1.0%
1.0%
1.5%
1.5%
2.0%
2.0%
2.5%
2.5%
Pillar 1 buffers
9.5%
11.5%
10.0%
12.0%
10.5%
12.5%
11.0%
13.0%
Pillar 2
2.4%
5.4%
2.5%-4.0%
4.0%-5.5%
2.5%-4.0%
4.0%-5.5%
2.5%-4.0%
4.0%-5.5%
Total
11.9%
16.9%
12.5%-14.0%
16.0%-17.5%
13.0%-14.5%
16.5%-18.0%
13.5%-15.0%
17.0%-18.5%
25) NBG Initiatives
The new regulation on responsible lending to individuals:
Starting from January 2019, the National Bank of Georgia has adopted the regulation on responsible lending to individuals, which replaces the former regulation introduced in May 2018. The regulation requires financial institutions to conduct solvency analysis of a borrower before issuing a loan and it also sets new limits on Payment to Income (PTI) and Loan to Value (LTV) for individual loans. The thresholds are different for domestic and foreign currency loans in order to protect a borrower and the financial system against the risks stemming from exchange rate fluctuations.
Maximum Payment to Income Ratios:
Monthly income, net (in GEL)
For non-hedged borrower in case of maximum/contractual maturity
For hedged borrowers in case of maximum/contractual maturity
<1,000
20% / 25%
25% / 35%
>=1,000-2,000<
35% / 45%
>=2,000-4,000<
25% / 30%
45% / 55%
>=4,000
30% / 35%
50% / 60%
Maximum Loan to Value Ratios:
Maximum loan to value ratio (LTV) for GEL loans
85%
Maximum loan to value ratio (LTV) for foreign currency loans
70%
Maximum tenures:
Mortgage
15 years
Consumer mortgages collateralized by real estate
10 years
Auto Loans
6 years
Other consumer loans
4 years
26) Space - fully digital bank
Date
# of app. downloads
# of registered customers
loans in thousands GEL
30-Jun-2018
99,646
47,657
1,112
30-Sep-2018
186,044
72,447
5,814
31-Dec-2018
258,846
93,994
14,693
31-Mar-2019
292,423
114,675
16,843
27) International strategy: expansion into Azerbaijan market
Main highlights
• TBC Bank and Nikoil Bank agreed on shareholders agreement in late December 2018 and signed it in early January 2019.
• Our shareholding in the joint entity will be 8.34%.
• We will have the right to exercise a call option during the next four years to obtain 50%+1 shareholding in the joint entity.
• The call option is based on a fixed price formula and in most scenarios it is between 1-1.15x of the merged entity's book value (it is closer to the book value when exercised in later years).
• Our additional estimated investment during the next four years will be consistent with our 8.34% shareholding and is estimated to be around USD 3-5 million per year.
Strengthening Management Team
Existing management team of the joint entity
CEO -
Nikoloz Shurghaia
First Deputy CEO, Head of MSME -
Farhad Hajinski
Deputy CEO, Head of Retail -
Fuad Tagiyev
New management team of the joint entity
COO -
Nukri Tetrashvili, former CEO at TBC Kredit
CDM -
Senior Digital Manager with a solid track record at large Georgian bank
CRO -
David Tediashvili, former Head of Retail Credit Risk Department at TBC Bank
CFO -
Emil Dushdurov, former Associate Director, Deal Advisory at KPMG Azerbaijan
CIO -
Avtandil Tabatadze, former strategic projects manager at TBC Bank
Current Developments
Loans Disbursements (USD '000)
Number of customers
1Q 2018
11,738
61,012
4Q 2018
29,376
61,275
1Q 2019
25,030
66,691
Mid-term vision
In USD millions
1Q 2019 results of Nikoil Bank*
Mid-term targets of joint entity
Loan Portfolio
c. 227
c. 1,400
Equity
c. 36
c. 200
ROE
NMF
20%+
*Based on management accounts.
• Core segments: Retail and MSME (not large SMEs and Corporates);
• 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.
28) International strategy: digital greenfield bank in Uzbekistan
This is still in the concept stage and subject to approval (including approval from the authorities), therefore it could change as we progress. The license is expected in 2019.
Why Uzbekistan?
• Large underpenetrated market:
• with a population of more than 33.45 million
• retail loans to GDP stood at 7.2% at the end of 2018
• Similar history as part of the Soviet Union and good cultural links
• Right time given the implementation of reforms, many of which were designed by former Georgian government officials
• Both Uzbekistan and Georgia are included into China's One Belt One Road initiative
• No digital bank operates in Uzbekistan currently
Strategic Positioning
• Build a next generation bank for retail and MSME
• Focus on digital channels and SPACE
• Operate asset light, smart branches
• Establishing the highest standards of corporate governance
• Simple and intuitive products and processes
• Transparent and straightforward commissions structure
• Best customer experience
• Automated decision making system.
Main highlights
• Initial investments from TBC Bank around USD 20-30 million, resulting in 51% shareholding
• Medium to long-term financial targets after license is granted:
• Achieve sustainable ROE up to 25%
• Cost to income ratio below 35%
Our Uzbek and Azerbaijan subsidiaries together will contribute c. 30% to the Group's loan book.
Upcoming Events
· Opening pilot branch in 2019 for a proof of concept
· Core banking implementation with local IT company
· Multichannel development including Space
· Our international partners, EBRD and IFC have expressed their interest to participate in this project subject to completion of their internal procedures and approvals
· We have reached an agreement on main terms with Uzbek-Oman Investment Company (UOIC) to act as our local partner.
29) Payme
Main Highlights
· TBC Bank Group PLC has entered into an agreement to acquire a 51% stake in LLC Inspired, a leading profitable payment platform in Uzbekistan under the Payme brand
· The consideration for the 51% stake is USD 5.5 million, implying a valuation of USD 10.8 million for Payme
· TBC Bank has also entered into a put/call arrangement for the remaining 49% of Payme, which, in normal circumstances, may only be exercised between the fourth and seventh anniversary of the date of completion of the transaction
· The exercise price will depend on a set of parameters including Payme's revenue, EBIT and the number of active customers that Payme achieves.
Strategic Positioning
The transaction is in line with TBC Bank's international strategy to expand its regional operations, giving us the immediate access to a large customer base in the country and use our core digital strengths in Georgia to innovate in the Uzbekistani market.
Management Team
· Founded in 2011 and continues to be managed by the three original founding shareholders;
· The team was strengthened by two other shareholders:
o one acting as Business Development and Research Director;
o the other as the Chief Technology Officer.
The management team will remain with Payme on a long-term basis and will continue to be actively involved in the development and execution of Payme's strategy.
Payme Financial and Operating Highlights
In million USD
1Q 19
Growth QoQ
Revenue
0.6
21.9%
Net profit
0.4
73.0%
Number of customers
1.3
13.6%
Product Types
§ Utility and Top-up
§ E-commerce Acquiring and Payment GW
§ P2P
§ White Label Mobile Banking
§ Loan Repayment
§ Invoicing System
§ mPOS for QR Payments
§ Personal Finance Manager
30) Nikoil Bank Financials
Profit & Loss Statement
In thousands of USD
1Q'19
4Q'18
1Q'18
Interest income
4,610
4,280
3,630
Interest expense
(2,069)
(2,068)
(2,414)
Net interest income
2,541
2,212
1,216
Fee and commission income
551
958
486
Fee and commission expense
(267)
(426)
(221)
Net Fee and Commission Income
284
532
265
Net income from foreign currency operations
176
313
350
Net gain/(losses) from foreign exchange translation
(1)
119
10
Gains less losses/(losses less gains) from derivative financial instruments
-
(28)
-
Other operating non-interest income
175
404
360
Credit loss allowance of loans
2,326
(23,670)
135
Credit loss allowance of other financial assets
44
(8,446)
(68)
Operating income after credit loss allowance
5,370
(28,968)
1,908
Staff costs
(2,036)
(2,276)
(1,544)
Depreciation and amortisation
(321)
(312)
(344)
Administrative and other operating expenses
(1,165)
(1,519)
(996)
Operating expenses
(3,522)
(4,107)
(2,884)
Profit before tax
1,848
(33,075)
(976)
Income tax expense
-
-
0
Profit for the period
1,848
(33,075)
(976)
Balance Sheet
In thousands of USD
31-Mar-19
31-Dec-18
31-Mar-18
Cash and cash equivalents
44,711
29,591
59,728
Due from other banks
36,654
26,833
21,483
Net Loans
135,655
120,704
166,375
Investment securities measured at fair value through other comprehensive income
7,085
46,794
14,517
Current income tax prepayment
4
2
82
Deferred income tax asset
768
768
768
Other financial assets
10,252
545
12,548
Other assets
1,100
7,195
577
Premises and equipment (Net)
5,663
5,571
5,782
Intangible assets (Net)
1,849
1,924
2,008
TOTAL ASSETS
243,741
239,927
283,868
Due to other banks
20,152
20,152
23,708
Customer Accounts
136,900
137,244
150,785
Other borrowed funds
41,112
41,237
33,823
Other financial liabilities
4,998
3,054
5,287
Subordinated debt
5,000
5,000
15,000
TOTAL LIABILITIES
208,162
206,687
228,603
Share capital
204,705
204,705
144,118
Additional paid-in-capital
500
500
500
Retained earnings
(169,626)
(171,965)
(89,353)
TOTAL EQUITY
35,579
33,240
55,265
TOTAL LIABILITIES AND EQUITY
243,741
239,927
283,868
[1]Per updated methodology.
[2]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.
[3]Per updated methodology.
[4]The calculation of the market share figure excludes the mandatory third-party liability (MTLP) insurance that foreign vehicles entering Georgia are required to buy at the border. This was introduced in March 2018 and the premium collected is shared evenly between 17 insurance companies, thus reducing our market share. Including the MTPL, our total market shares stood at 21.3% and our retail market share amounted to 32.9% as of 1Q 2019.
[5]Taking into account loans issued in EUR and USD.
[6]The number of transactions conducted through remote channels divided by the total number of transactions.
[7]Latest available information.
[8]Taking into account loans issued in EUR and USD.
[9]IMF WEO April 2019 update.
[10]Gross insurance profit can be reconciled to the standalone net insurance profit (as shown in Annex 23 on pages 33-34) as follows: gross insurance profit minus credit loss allowance, administrative expenses and taxes, plus fee and commission income and net interest income.
[11] As at 1 January 2019, the group adopted IFRS 16, under which short term and low value lease contracts, also contracts that do not qualify for lease arrangements and taxes on lease contracts are expensed under this category of administrative expenses
[12]Total operating income growth minus operating expense growth.
[13]In 1Q 2019, GEL 128 million was transferred from MSME to corporate loans.
[14]In 1Q 2019, GEL 70 million was transferred from MSME to corporate deposits.
[15]TBC Bank Group PLC became the parent company of JSC TBC Bank on 10 August 2016.
[16]Cross-sell ratio is defined as the number of active products divided by the number of active customers.
[17]Or 21.3% and 32.9% respectively, with MTPL insurance. Starting from March 1, 2018 border MTPL was introduced and GWP was divided evenly between 17 insurance companies, therefore it has decreased our market share.
[18]Based on internal estimates.
[19]Net insurance claims plus acquisition costs and administrative expenses divided net earned premium.
[20]Net earned premium equals earned premium minus reinsurer's share of earned premium.
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