TBC BANK GROUP PLC ("TBC Bank")
4Q 2021 UNAUDITED CONSOLIDATED FINANCIAL RESULTS AND FY 2021 PRELIMINARY UNAUDITED CONSOLIDATED FINANCIAL RESULTS
Forward-Looking Statements
This document contains forward-looking statements; such forward-looking statements contain known and unknown risks, uncertainties and other important factors, which may cause the actual results, performance or achievements of TBC Bank Group PLC ("the Bank" or "the Group") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others: the achievement of anticipated levels of profitability; growth, cost and recent acquisitions; the impact of competitive pricing; the ability to obtain the necessary regulatory approvals and licenses; the impact of developments in the Georgian economy; the impact of COVID-19; the political and legal environment; financial risk management; and the impact of general business and global economic conditions.
None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises, nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects are based are accurate or exhaustive or, in the case of the assumptions, entirely covered in the document. These forward-looking statements speak only as of the date they are made, and, subject to compliance with applicable law and regulations, the Bank expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in the document to reflect actual results, changes in assumptions or changes in factors affecting those statements.
Certain financial information contained in this presentation, which is prepared on the basis of the Group's accounting policies applied consistently from year to year, has been extracted from the Group's unaudited management accounts and financial statements. The areas in which the management accounts might differ from the International Financial Reporting Standards and/or U.S. generally accepted accounting principles could be significant; you should consult your own professional advisors and/or conduct your own due diligence for a complete and detailed understanding of such differences and any implications they might have on the relevant financial information contained in this presentation. Some numerical figures included in this report have been subjected to rounding adjustments. Accordingly, the numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them.
Fourth Quarter and Full Year 2021 Consolidated Financial Results Conference Call
TBC Bank Group PLC ("TBC PLC") publishes its unaudited consolidated financial results for the fourth quarter 2021 and preliminary consolidated financial results for the full year 2021 on Friday, 18 February 2022 at 7.00 am GMT (11.00 am GET). The results call will be held at 14.00 (GMT) / 15.00 (CET) / 9.00 (EST).
Please click the link below to join the webinar:
https://tbc.zoom.us/j/94960387119?pwd=ejRmMC93dnlFQTRNNm94VDhsMTN4QT09
Webinar ID: 949 6038 7119
Passcode: 419677
Or, use the following dial-ins:
· US: 833 548 0282 (Toll Free) or 877 853 5257 (Toll Free) or 888 475 4499 (Toll Free) or 833 548 0276 (Toll Free)
· Georgia: +995 7067 77954 or +995 3224 73988 or 800 100 293 (Toll Free)
· United Kingdom: 0 800 260 5801 (Toll Free) or 0 800 358 2817 (Toll Free) or 0 800 456 1369 (Toll Free) or 0 800 031 5717 (Toll Free)
· Russia: 8800 301 7427 (Toll Free) or 8800 100 6938 (Toll Free)
Webinar ID 949 6038 7119#, please dial the ID number slowly.
Other international numbers available at: https://tbc.zoom.us/u/aef0FWxaD4
The call will be held in two parts: the first part will comprise presentations, while participants will have the opportunity to ask questions during the second part. All participants will be muted throughout the webinar.
Webinar Instructions:
In order to ask questions, participants who will be joining through the webinar should use the "hand icon" that will be visible at the bottom of the screen. The host will unmute those participants who have raised hands one after another. After the question is asked, the participant will be muted again.
Call Instructions:
Participants who will be using the dial in number to join the webinar should dial *9 to raise their hand.
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
| Anna Romelashvili Head of Investor Relations
E-mail: IR@tbcbank.com.ge Tel: +(995 32) 227 27 27 Web: www.tbcbankgroup.com
| Investor Relations Department
E-mail: IR@tbcbank.com.ge Tel: +(995 32) 227 27 27 Web: www.tbcbankgroup.com
|
Table of Contents
4Q and FY 2021 Results Announcement
Key Highlights
Letter from the Chief Executive Officer
Economic Overview
Unaudited Consolidated Financial Results Overview for 4Q 2021
Unaudited Consolidated Financial Results Overview for FY 2021
Additional Disclosures
1)TBC Bank - Background
2)Subsidiaries of TBC Bank Group PLC
3)TBC Insurance
4)Fast growing digital bank in Uzbekistan
5)Loan book breakdown by stages according IFRS 9
TBC Bank announces unaudited 4Q & preliminary unaudited FY 2021 Consolidated Financial Results
Continued delivery of robust profitability and steady growth, supported by solid capital
Strong progress in exploiting our international growth potential
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.
Key Highlights
The economic recovery continued in 4Q
Starting in the second quarter of 2021, the Georgian economy has rebounded from the pandemic at a remarkable speed, with real GDP increasing by 28.9% and 9.1% in the second and third quarters of 2021, respectively. According to the initial estimates of the National Statistics Office of Georgia, the recovery of economic activity continued in the last quarter of the year with 9.5% year-on-year real GDP growth. The Georgian economy is expected to have expanded by 10.6% during 2021, surpassing the 2019 level by 3.1%.
The group generated record high levels of profitability in 2021 … - Our net profit amounted to GEL 198.5 million (almost doubling year-on-year) and GEL 809.0 million (increasing by more than 2.5 times year-on-year), respectively, in 4Q 21and FY 2021. This growth was driven by strong income generation across all categories, as well as strong improvement in asset quality. As a result, our ROE for the fourth quarter and the full year stood at 22.1% and 24.4%, respectively.
.... coupled with prudent management of our capital and liquidity levels - As of 31 December 2021, CET1, Tier 1 and Total Capital ratios stood at 13.7%, 16.7% and 20.3%, respectively, and remained comfortably above the minimum regulatory requirements by 2.0%, 2.7% and 1.9%, respectively. As of 31 December 2021, our net stable funding (NSFR) and liquidity coverage (LCR) ratios stood at 127.3% and 115.8%, respectively, comfortably above the regulatory minimum of 100%.
Our Georgian banking franchise maintained its leadership position… - We continue to be market leaders in total loans and deposits. In 2021, our loan book increased by 18.0% year-on-year in constant currency terms, in line with the overall growth of the banking sector, which translated into a 38.8% market share. Over the same period, our deposit base increased by 25.1% in constant currency terms, significantly outpacing market growth. As a result, our market share in total deposits amounted to 40.4% as of 31 December 2021, up by 3.2 pp year-on-year.
…while our Uzbek business continued to expand - As of 31 December 2021, TBC UZ was present in all major regions of Uzbekistan, reaching more than 97% of the population, while the number of registered and monthly active users[1] of our digital banking app reached 1.1 million and 141,000 respectively. At the end of December 2021, the Bank's retail deposit portfolio amounted to GEL 207.5 million, while the retail loan book stood at GEL 92.8 million.
In parallel, we continued to expand our Uzbek payments business, Payme, by introducing new products and services as well as increasing our network. As a result, the number of registered users reached 5.2 million, while the number of monthly active users[2] amounted to 1.1 million by the end of 2021. Over the same period net profit was GEL 18.0 million, up by 111.7% year-on-year.
Increasing our digital footprint- In December 2021, the monthly active digital users[3] increased by 16.0% year-on-year, while average daily active digital users[4] increased by 23.9% over the same period. This resulted in 44.2% DAU/MAU,[5] up by 2.7 pp year-on-year.
Letter from the Chief Executive Officer
2021 was a year of strong recovery for TBC, coupled with remarkable progress in Uzbekistan. Having successfully adjusted to the post-COVID reality, we concentrated our efforts on increasing and diversifying our income streams in Georgia, while continuing to invest in our Uzbek banking operations to support future growth. The macroeconomic environment was also supportive throughout the year. As a result, our net income amounted to GEL 809 million and we delivered a record high return on equity of 24.4% in 2021.
The economic recovery continued into the fourth quarter
The Georgian economy continued its firm recovery in the fourth quarter of 2021. For the full year, real GDP growth reached 10.6%[6] , which was an exceptional performance. Importantly, this growth was broad-based and was reflected in almost all sources of inflows as well as in domestic demand, only FDI lagged behind, as investment demand takes longer to recover. Domestic demand was fueled by the normalization of saving levels after pandemic related highs and by low USD deposit rates, while the appreciation of the GEL in the second half of the year led to improved consumer and business sentiment. Furthermore, the 18.3% expansion in bank lending also provided much needed support to the economic recovery. Going forward, we expect a significant decrease in fiscal stimulus, although it should be more than compensated by continued strong exports, remittance inflows and the forecast recovery in tourism and FDI.
Strong financial results across the board backed by the solid capital
In 2021, our operating income amounted to GEL 1,452 million, up by 25.7% year-on-year, driven by an increase in both net interest income and non-interest income. The increase in the former was related to a higher net interest margin of 5.1%, compared to 4.7% in 2020, as well as 12.2% year-on-year growth in our loan book. Over the same period, net fee and commission income grew by an impressive 35.7%. The increase was broad-based and demonstrated the strength of our business model. In addition, other operating income[7] grew by 46.5% and made a meaningful contribution to the overall profitability, mainly driven by FX operations and the sale of investment property. Our robust income streams were further supported by strong performance on the asset side across all segments, with the cost of risk standing at minus 0.3% (ie. net recoveries) in 2021. This allowed us to continue investing in our Uzbek business, while keeping our cost to income ratio at 37.6% in 2021, slightly below the 2020 level of 37.9%. As a result, we recorded a return on equity of 24.4% and return on assets of 3.4% for the full year 2021.
Strong income generation, coupled with prudent management of our capital, allowed us to maintain strong capital positions. Our CET1, Tier 1 and Total Capital ratios stood at 13.7%, 16.7% and 20.3%, respectively, and remained comfortably above the minimum regulatory requirements by 2.0%, 2.7% and 1.9%, respectively. At the same time, we continued to operate at high liquidity with the net stable funding (NSFR) and liquidity coverage (LCR) ratios standing at 127.3% and 115.8%, respectively, as of 31 December 2021.
A steady progress in our core banking business in Georgia
We continue to be market leaders in total loans and deposits. In 2021, our loan book increased by 18.0% year-on-year in constant currency terms, in line with the overall growth of the banking sector, which translated into a 38.8% market share. Importantly, the quality of our loan book improved, with the non-performing loan ratio decreasing to 2.4% by the end of 2021, compared to 4.7% at the end of 2020. Over the same period, our deposit growth significantly outpaced market growth and increased by 25.1% in constant currency terms. As a result, our market share in total deposits amounted to 40.4% as of 31 December 2021, up by 3.2 pp year-on-year.
I am also delighted to report that our digitalization levels continue to increase. In the fourth quarter of 2021, the number of active retail digital users[8] increased by 8.1% year-on-year and reached 744,000. In addition, we made significant progress in expanding the number of monthly and daily active digital users[9], which reached 644,000 (up by 16.0% year-on-year) and 285,000 (up by 23.9% year-on-year) respectively in December 2021. The proportion of digital sales of our consumer loans amounted to 45%, while the deposit sales offloading ratio stood at 73%.
Furthermore, to ensure the maximum safety of our customers and employees, we ran a wide-scale campaign to encourage our staff to get vaccinated. As a result, around 85% of all our employees were vaccinated, or were scheduled to receive a vaccine, by the end of 2021.
Strengthening our position on the Uzbek market
I am very pleased with the progress that our fully digital Uzbek bank, TBC UZ, achieved in its first year of operations. Since launching our operations from scratch in Tashkent in October 2020, we have been steadily expanding our presence. By the end of 2021, we covered all major regions, representing around 97% of the country's population, through our 35 customer acquisition points and 10 showrooms, while the number of registered and monthly active users[10] of our digital banking app reached 1.1 million and 141,000, respectively. By the end of the year, our customer proposition in Uzbekistan expanded to unsecured consumer loans, current accounts and savings deposits as well as various payment solutions such as P2P transfers, bill payments, debit cards and the ability to attach other banks' cards to our mobile app. In addition, we launched auto loans in a friends and family mode in December 2021 and introduced term deposits and virtual cards to a wider public. In 2021, our retail loan and deposit books grew at a fast pace and reached GEL 92.8 million and GEL 207.5 million, respectively, as of 31 December 2021, which translated into retail market shares[11] of 0.5% and 2.0% accordingly. I am also delighted that TBC UZ has been named "the Best Digital Bank in Uzbekistan 2021" by Global Economics.
In parallel, we continued to expand our Uzbek payments business, Payme, by introducing new products and services as well as increasing our network. In the fourth quarter of 2021, we launched a virtual Visa card and added payments capabilities for railway and plane tickets. In addition, we signed partnership agreements with large international retailers such as Carrefour and Magnum enabling QR payments with the Payme app in these stores. As a result, the number of registered users reached 5.2 million, while the number of monthly active digital users[12] amounted to 1.1 million by the end of 2021. In 2021, the number and volume of transactions increased by 66.4% and 79.6%, respectively, year-on-year. In terms of financial results, revenues increased by 91% year-on-year and amounted to GEL 28.8 million, while net profit was GEL 18.0 million, up by 111.7% year-on-year.
Outlook
Our outstanding results for 2021 provide me with much confidence that we are on the right track and that our strategy is working. While our Georgian banking business will remain core to our strategy, the Uzbek market should give us a competitive edge by providing a material contribution to our growth and diversification over the years to come.
Finally, I would also like to re-iterate our medium-term guidance: ROE of above 20%, a cost to income ratio below 35%, a dividend pay-out ratio of 25-35% and annual loan growth of around 10-15%.
Thank you
I would like to close my letter by thanking our colleagues for their hard work and dedication and recognizing their individual contributions to our success. We have an exciting journey ahead of us and I am eagerly looking forward to it.
Economic Overview
Economic growth
Starting from the second quarter of 2021, the Georgian economy has rebounded from the pandemic at a remarkable speed - real GDP increased by 28.9% and 9.1% in the second and third quarters of 2021, respectively. According to the initial estimates of the National Statistics Office of Georgia, the recovery of economic activity continued in the last quarter of the year with 9.5% year-on-year real GDP growth. According to initial estimates, the Georgian economy expanded by 10.6% year-on-year in 2021, surpassing the 2019 level by 3.1%
External sector
The external sector continued its strong performance in 4Q 2021, with exports growing by 34.2% year-on-year and by 18.6% compared to 4Q 2019. Notably, despite re-exports having a lower base effect from a year ago, domestic exports still led the recovery with the share of domestic value-added exports in total exports increasing significantly, from 61.3% in 4Q 2019 to 76.2% in 4Q 2021. Despite the slower recovery in tourism-related imports and re-exports, imports of goods also went up by 31.6% YoY in 4Q 2021 and by 10.1% when compared to the same period in 2019. Importantly, the rebound in the trade in goods was broad-based, reflecting increased overall external as well as domestic demand.
Remittance inflows remained strong, increasing by 16.7% year-on-year in 4Q 2021 and by 35.0% when compared to the same period in 2019. Although part of the rebound compared to 2019 can be attributed to border closures and the greater transfer of cash remittances through digital channels, overall growth is still substantial given that the share of cash inflows is only likely to be around 10.0%-15.0%, according to NBG estimates.
The recovery in tourism inflows continued with an eightfold year-on-year increase in 4Q 2021, equaling 55.3% of such inflows in the same period in 2019. Notably, this growth was primarily led by the return of tourists from higher-spending countries. Total tourism inflows during 2021 amounted to 38.1% of their 2019 level.
FDI inflows are taking longer to recover. While in 3Q, the latest period for which data is available, there was an increase of 1.4% YoY, this was on the back of higher reinvested earnings as equity and debt financing declined sharply.
Fiscal stimulus
The fiscal stimulus, although still sizable, negatively affected growth in 2021 as the deficit amounted to around 6.3% of GDP, after an expansionary 9.3% of GDP in 2020. Importantly, the major source of deficit financing in 2020-2021 was external, largely compensating for the pandemic-related drop in net inflows. According to the Ministry of Finance, fiscal consolidation is expected to take place in the coming years with deficit-to-GDP ratios of 4.4%, 3.0% and 2.7% in 2022, 2023 and 2024, respectively. At the same time, government debt, which reached its mandated ceiling of 60% of GDP in 2020, is already normalized at an estimated 51.1% of GDP by the end of 2021. Going forward, amid fiscal consolidation, the debt-to-GDP ratio is expected to decline gradually to 49.0% by the end of 2024.
Credit growth
By the end of 2021, bank credit growth increased to 18.3% year-on-year, compared to 15.8% year-on-year growth by the end of 3Q 2021. In terms of segments, retail lending growth accelerated the most, increasing from 13.2% at the end of 3Q 2021 to 18.0% year-on-year growth at the end of 4Q 2021, mostly on the back of stronger non-mortgage credit. MSME lending also increased from 20.6% at the end of 3Q 2021 to 22.4%. Corporate lending growth remained largely unchanged, increasingby 0.2 pp from 3Q 2021 to 4Q 2021 and amounted to 15.6% year-on-year. Higher expansion in the retail segment was highly pronounced, moving from 4.8 pp in the previous quarter to.
Inflation, monetary policy and the exchange rate
Despite challenges such as the unprecedented weakening of the TRY, the GEL remained stable throughout Q4 2021. During the quarter, the GEL appreciated slightly against the USD from 3.12 to 3.10, whereas the real effective exchange rate appreciated by 6.8%.
At the end of 2021, annual inflation remained elevated at 13.9%, although monthly inflation dynamics are already around their target level. In December 2021, the NBG increased its policy rate by 0.5 percentage points from 10.0% to 10.5%.
Assuming moderating inflation, a continued recovery in tourism inflows and a stable exchange rate, we expect the NBG to start cutting rates in 2022, although such plans may be put on hold if significantly increased geopolitical risks and the continued uncertainty related to the pandemic put the GEL under renewed pressure.
Going forward
According to TBC Capital expectations, GDP growth is likely to be around 6.0% in 2022. This is based on assumption that tourism inflows will reach 80.0% of 2019 inflows in USD terms (after only reaching 38.1% in 2021). Thereafter, the economy will gradually normalize, expanding by 5.5% in 2023 and by 5.0% in 2024 - close to its trend rate of around 5.2%.
According to the World Bank's latest projections[13], the Georgian economy is forecast to grow by 5.5% and 5.0% in 2022 and 2023, respectively.
More information on the Georgian economy and financial sector can be found at www.tbccapital.ge.
Unaudited Consolidated Financial Results Overview for 4Q 2021
This statement provides a summary of the unaudited business and financial trends for 4Q 2021 for TBC Bank Group plc and its subsidiaries. The quarterly financial information and trends are unaudited.
TBC Bank Group PLC's financial results has been prepared in accordance with UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).
Please note that there might be slight differences in previous periods' figures due to rounding.
Financial Highlights
| Income Statement Highlights |
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| in thousands of GEL | 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ | ||||
| Net interest income | 275,445 | 259,390 | 231,325 | 19.1% | 6.2% | ||||
| Net fee and commission income | 71,068 | 68,631 | 52,199 | 36.1% | 3.6% | ||||
| Other operating non-interest income[14] | 42,159 | 43,952 | 38,573 | 9.3% | -4.1% | ||||
| Total credit loss allowance* | (6,040) | (5,106) | (84,186) | -92.8% | 18.3% | ||||
| Operating profit after expected credit losses* | 382,632 | 366,867 | 237,911 | 60.8% | 4.3% | ||||
| Operating expenses* | (157,213) | (131,695) | (123,134) | 27.7% | 19.4% | ||||
| Losses from modifications of financial instrument | (31) | (104) | (5,082) | -99.4% | -70.2% | ||||
| Profit before tax | 225,388 | 235,068 | 109,695 | NMF | -4.1% | ||||
| Income tax expense | (26,915) | (27,921) | (8,994) | NMF | -3.6% | ||||
| Profit for the period | 198,473 | 207,147 | 100,701 | 97.1% | -4.2% | ||||
* Certain amounts do not correspond to 4Q 2020 operating expense figures and operating income after expected credit losses as they reflect the reclassifications made by the management between net impairment of non-financial assets and administrative and other operating expenses.
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Balance Sheet and Capital Highlights |
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| in thousands of GEL | Dec-21 | Sep-21 | Dec-20 | Change YoY | Change QoQ | |||||
| Total Assets | 24,508,561 | 23,701,241 | 22,577,805 | 8.6% | 3.4% | |||||
| Gross Loans | 17,047,391 | 15,963,520 | 15,200,520 | 12.2% | 6.8% | |||||
| Customer Deposits | 15,038,172 | 14,338,537 | 12,572,728 | 19.6% | 4.9% | |||||
| Total Equity | 3,692,229 | 3,448,193 | 2,935,934 | 25.8% | 7.1% | |||||
| CET 1 Capital (Basel III) | 2,759,894 | 2,565,560 | 1,911,233 | 44.4% | 7.6% | |||||
| Tier 1 Capital (Basel III) | 3,379,414 | 2,955,910 | 2,385,181 | 41.7% | 14.3% | |||||
| Total Capital (Basel III) | 4,102,927 | 3,693,637 | 3,137,912 | 30.8% | 11.1% | |||||
| Risk Weighted Assets (Basel III) | 20,217,629 | 19,143,450 | 18,301,477 | 10.5% | 5.6% | |||||
| Key Ratios | 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
| ROE | 22.1% | 24.1% | 13.7% | 8.4 pp | -2.0 pp |
| Bank's standalone ROE[15] | 23.2% | 30.9% | 15.4% | 7.8 pp | -7.7 pp |
| ROA | 3.3% | 3.6% | 1.8% | 1.5 pp | -0.3 pp |
| Bank's standalone ROA15 | 3.4% | 4.5% | 1.9% | 1.5 pp | -1.1 pp |
| NIM | 5.4% | 5.3% | 4.8% | 0.6 pp | 0.1 pp |
| Cost to income | 40.4% | 35.4% | 38.2% | 2.2 pp | 5.0 pp |
| Bank's standalone cost to income15 | 32.2% | 25.8% | 33.4% | -1.2 pp | 6.4 pp |
| Cost of risk | -0.1% | -0.1% | 2.0% | -2.1 pp | 0.0 pp |
| NPL to gross loans | 2.4% | 3.1% | 4.7% | -2.3 pp | -0.7 pp |
| NPL provision coverage ratio | 99.9% | 94.3% | 85.6% | 14.3 pp | 5.6 pp |
| Total NPL coverage ratio | 175.3% | 169.3% | 159.4% | 15.9 pp | 6.0 pp |
| CET 1 CAR (Basel III) | 13.7% | 13.4% | 10.4% | 3.3 pp | 0.3 pp |
| Tier 1 CAR (Basel III) | 16.7% | 15.4% | 13.0% | 3.7 pp | 1.3 pp |
| Total CAR (Basel III) | 20.3% | 19.3% | 17.1% | 3.2 pp | 1.0 pp |
| Leverage (Times) | 6.7x | 6.9x | 7.7x | -1.0x | -0.2x |
Net Interest Income
In 4Q 2021, net interest income amounted to GEL 275.4 million, up by 19.1% YoY and 6.2% on a QoQ basis.
The YoY rise in interest income by GEL 56.2 million, or 12.4%, was mostly attributable to an increase in interest income from loans related to an increase in the respective portfolio of GEL 1,846.9 million, or 12.2%, together with a rise in the respective yield by 0.5 pp. This rise was related to a hike in the refinance rate and a shift of the portfolio composition towards GEL loans.
On a YoY basis, interest expense increased by GEL 12.0 million, or 5.3%, mainly driven by an increase in interest expense from deposits. This increase was related to growth in the respective portfolio of GEL 2,465.4 million, or 19.6% YoY, which was partially offset by a decrease in the cost of deposits by 0.2 pp on the back of a sharp drop in the rates of FX deposits. Over the same period, the share of the deposits portfolio in total liabilities went up to 72%, compared to 64% a year ago.
The increase in interest income on a QoQ basis of GEL 33.4 million, or 7.0%, was mainly driven by an increase in interest income from loans to customers, related both to an increase in the loan portfolio by GEL 1,083.9 million, or 6.8%, and to a 0.2 pp rise in loan effective rates. The higher yields in 4Q were attributable to the shift of the portfolio composition towards high-yield GEL loans.
The interest expense increased by GEL 17.3 million, or 5.7% on a QoQ basis. This growth was driven by an increase in interest expense from bonds issued in November 2021, as well as a rise in interest expense from NBG loans due to an increase in the refinance rate. Another driver was a rise in interest expense from deposits related to the growth in the respective portfolio by 4.9% YoY, although this effect was partially offset by a 0.1 pp lower cost of deposit in 4Q.
In 4Q 2021, our NIM stood at 5.4%, up by 0.6 pp YoY and 0.1 pp on a QoQ basis.
| In thousands of GEL | 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
| Interest income | 510,035 | 476,636 | 453,874 | 12.4% | 7.0% |
| Interest expense | (239,839) | (226,991) | (227,786) | 5.3% | 5.7% |
| Net gains from currency swaps | 5,249 | 9,745 | 5,237 | 0.2% | -46.1% |
| Net interest income | 275,445 | 259,390 | 231,325 | 19.1% | 6.2% |
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| NIM | 5.4% | 5.3% | 4.8% | 0.6 pp | 0.1 pp |
Non-Interest Income
Total other non-interest income amounted to GEL 113.2 million in 4Q 2021 and increased by 24.7% YoY, remaining stable on a QoQ basis.
The growth in net fee and commission income was particularly impressive and was spread across various categories including payments, settlements, and other operations. Such a strong growth was related to the revival of business activities, as 4Q 2020 was adversely affected by COVID-19 related restrictive measures.
| In thousands of GEL | 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
| Non-interest income |
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| Net fee and commission income | 71,068 | 68,631 | 52,199 | 36.1% | 3.6% |
| Net income from currency derivatives, foreign currency operations and translation | 27,984 | 29,102 | 28,085 | -0.4% | -3.8% |
| Net insurance premium earned after claims and acquisition costs[16] | 7,654 | 6,019 | 3,263 | NMF | 27.2% |
| Other operating income | 6,521 | 8,831 | 7,225 | -9.7% | -26.2% |
| Total other non-interest income | 113,227 | 112,583 | 90,772 | 24.7% | 0.6% |
Credit Loss Allowance
In 4Q the cost of risk amounted to -0.1%, driven by the strong performance of the CIB segment, while the higher CoR in 4Q 2020 was driven by COVID-19 related uncertainties.
| In thousands of GEL | 4Q'21 | 3Q'21 | 4Q'20 (as restated) | Change YoY | Change QoQ |
| Recovery of/(charges to) credit loss allowance for loan to customers | 3,171 | 4,389 | (75,711) | NMF | -27.8% |
| Credit loss allowance for other transactions* | (9,211) | (9,495) | (8,475) | 8.7% | -3.0% |
| Total credit loss allowance* | (6,040) | (5,106) | (84,186) | -92.8% | 18.3% |
| Operating profit after expected credit losses* | 382,632 | 366,867 | 237,911 | 60.8% | 4.3% |
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| Cost of risk | -0.1% | -0.1% | 2.0% | -2.1 pp | 0.0 pp |
* Certain amounts do not correspond to 4Q 2020 operating expense figures and operating income after expected credit losses as they reflect the reclassifications made by the management between net impairment of non-financial assets and administrative and other operating expenses.
Operating Expenses
In 4Q 2021, our operating expenses expanded by 27.7% YoY and 19.4% on a QoQ basis.
The YoY increase in our operating expenses was mainly driven by staff annual bonuses and seasonal increase of administrative expenses, mainly discretionary costs. The increase on a QoQ basis was due to seasonally high costs in 4Q.
Our cost to income ratio amounted to 40.4%, while the Bank's standalone cost to income stood at 32.2%.
| In thousands of GEL | 4Q'21 | 3Q'21 | 4Q'20 (as restated) | Change YoY | Change QoQ |
| Operating expenses |
|
|
|
|
|
| Staff costs | (86,589) | (74,643) | (67,782) | 27.7% | 16.0% |
| Provisions for liabilities and charges | 90 | (54) | (724) | NMF | NMF |
| Depreciation and amortization | (23,203) | (19,988) | (18,838) | 23.2% | 16.1% |
| Administrative & other operating expenses* | (47,511) | (37,010) | (35,790) | 32.7% | 28.4% |
| Total operating expenses* | (157,213) | (131,695) | (123,134) | 27.7% | 19.4% |
|
|
|
|
|
|
|
| Cost to income | 40.4% | 35.4% | 38.2% | 2.2 pp | 5.0 pp |
| Bank's standalone cost to income17 | 32.2% | 25.8% | 33.4% | -1.2 pp | 6.4 pp |
* Certain amounts do not correspond to 4Q 2020 operating expense figures and operating income after expected credit losses as they reflect the reclassifications made by the management between net impairment of non-financial assets and administrative and other operating expenses.
Net Income
In 4Q, we continued to deliver strong profitability and generated GEL 198.5 million in net profit. The YoY increase was attributable to the revival of business activities, while on a QoQ basis it remained broadly stable.
As a result, our ROE and ROA for the fourth quarter reached 22.1% and 3.3%, accordingly.
| In thousands of GEL | 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
| Losses from modifications of financial instruments | (31) | (104) | (5,082) | -99% | -70% |
| Profit before tax | 225,388 | 235,068 | 109,695 | NMF | -4% |
| Income tax expense | (26,915) | (27,921) | (8,994) | NMF | -4% |
| Profit for the period | 198,473 | 207,147 | 100,701 | 97.1% | -4% |
|
|
|
|
|
|
|
| ROE | 22.1% | 24.1% | 13.7% | 8.4 pp | -2.0 pp |
| Bank's standalone ROE[17] | 23.2% | 30.9% | 15.4% | 7.8 pp | -7.7 pp |
| ROA | 3.3% | 3.6% | 1.8% | 1.5 pp | -0.3 pp |
| Bank's standalone ROA17 | 3.4% | 4.5% | 1.9% | 1.5 pp | -1.1 pp |
Funding and Liquidity
As of 31 December 2021, the total liquidity coverage ratio (LCR), as defined by the NBG, was 115.8%, above the 100% limit, while the LCR in GEL and FC stood at 107.7% and 120.8% respectively, above the respective limits of 75% and 100%. Over the same period, NSFR stood at 127.3%, compared to the regulatory limit of 100%.
|
| Dec-21 | Sep-21 | Change QoQ |
| Minimum net stable funding ratio, as defined by the NBG | 100.0% | 100.0% | 0.0 pp |
| Net stable funding ratio as defined by the NBG | 127.3% | 127.1% | 0.2 pp |
|
|
|
|
|
| Net loans to deposits + IFI funding | 100.9% | 97.5% | 3.4 pp |
| Leverage (Times) | 6.7x | 6.9x | -0.2x |
|
|
|
|
|
| Minimum total liquidity coverage ratio, as defined by the NBG | 100.0% | 100.0% | 0.0 pp |
| Minimum LCR in GEL, as defined by the NBG | 75% | 75% | 0.0 pp |
| Minimum LCR in FC, as defined by the NBG | 100.0% | 100.0% | 0.0 pp |
|
|
|
|
|
| Total liquidity coverage ratio, as defined by the NBG | 115.8% | 116.5% | -0.7 pp |
| LCR in GEL, as defined by the NBG | 107.7% | 98.0% | 9.7 pp |
| LCR in FC, as defined by the NBG | 120.8% | 125.5% | -4.7 pp |
Regulatory Capital
As of December 2021, our CET1, Tier 1 and Total Capital ratios stood at 13.7%, 16.7% and 20.3%, respectively, and remained comfortably above the minimum regulatory requirements by 2.0%, 2.7% and 1.9%, accordingly.
The increase on a QoQ basis in CET1 was mainly driven by net income generation, which was partially offset by growth in the loan book, while the higher Tier 1 and total capital adequacy ratios were further supported by issuance of AT1 Bond in the amount of USD 75 million in November 2021 (which had 1.1% positive effect on both ratios).
| In thousands of GEL | Dec-21 | Sep-21 | Change QoQ |
|
|
|
|
|
| CET 1 Capital | 2,759,894 | 2,565,560 | 7.6% |
| Tier 1 Capital | 3,379,414 | 2,955,910 | 14.3% |
| Total Capital | 4,102,927 | 3,693,637 | 11.1% |
| Total Risk-weighted Exposures | 20,217,629 | 19,143,450 | 5.6% |
| Minimum CET 1 ratio | 11.7% | 11.3% | 0.4 pp |
| CET 1 Capital adequacy ratio | 13.7% | 13.4% | 0.3 pp |
|
|
|
|
|
| Minimum Tier 1 ratio | 14.0% | 13.5% | 0.5 pp |
| Tier 1 Capital adequacy ratio | 16.7% | 15.4% | 1.3 pp |
|
|
|
|
|
| Minimum total capital adequacy ratio | 18.4% | 17.9% | 0.5 pp |
| Total Capital adequacy ratio | 20.3% | 19.3% | 1.0 pp |
Loan Portfolio
As of 31 December 2021, the gross loan portfolio reached GEL 17,047.4 million, up by 6.8% QoQ, or up by 8.0% on a constant currency basis.
The proportion of gross loans denominated in foreign currency decreased by 1.0 pp QoQ and accounted for 53.9% of total loans, while on a constant currency basis the proportion of gross loans denominated in foreign currency decreased by 0.5 pp QoQ and stood at 54.5%.
As of 31 December 2021, our market share in total loans stood at 38.8%, up by 0.4 pp QoQ. Our loan market share in legal entities was 39.1%, up by 0.5 pp QoQ, and our loan market share in individuals stood at 38.6%, up by 0.4 pp QoQ.
| In thousands of GEL | Dec-21 | Sep-21 | Change QoQ |
| Loans and advances to customers |
|
|
|
|
|
|
|
|
| Retail | 6,358,345 | 5,950,915 | 6.8% |
| Retail loans GEL | 3,580,468 | 3,313,791 | 8.0% |
| Retail loans FC | 2,777,877 | 2,637,124 | 5.3% |
| CIB | 6,547,741 | 6,136,232 | 6.7% |
| CIB loans GEL | 2,188,776 | 1,941,958 | 12.7% |
| CIB loans FC | 4,358,965 | 4,194,274 | 3.9% |
| MSME | 4,141,305 | 3,876,373 | 6.8% |
| MSME loans GEL | 2,082,204 | 1,936,230 | 7.5% |
| MSME loans FC | 2,059,101 | 1,940,143 | 6.1% |
| Total loans and advances to customers | 17,047,391 | 15,963,520 | 6.8% |
|
| 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
| Loan yields | 10.7% | 10.5% | 10.2% | 0.5 pp | 0.2 pp |
| Loan yields GEL | 15.4% | 15.4% | 15.3% | 0.1 pp | 0.0 pp |
| Loan yields FC | 6.7% | 6.6% | 6.8% | -0.1 pp | 0.1 pp |
| Retail Loan Yields | 12.2% | 12.0% | 12.0% | 0.2 pp | 0.2 pp |
| Retail loan yields GEL | 16.4% | 16.3% | 16.8% | -0.4 pp | 0.1 pp |
| Retail loan yields FC | 6.9% | 6.6% | 7.1% | -0.2 pp | 0.3 pp |
| CIB Loan Yields | 9.2% | 9.1% | 8.4% | 0.8 pp | 0.1 pp |
| CIB loan yields GEL | 14.2% | 14.1% | 13.0% | 1.2 pp | 0.1 pp |
| CIB loan yields FC | 6.8% | 6.8% | 6.9% | -0.1 pp | 0.0 pp |
| MSME Loan Yields | 10.6% | 10.5% | 9.9% | 0.7 pp | 0.1 pp |
| MSME loan yields GEL | 15.1% | 15.0% | 14.6% | 0.5 pp | 0.1 pp |
| MSME loan yields FC | 6.0% | 6.0% | 6.3% | -0.3 pp | 0.0 pp |
Loan Portfolio Quality
Total PAR 30 ratio stood at 2.0%, down by 0.3 pp on a QoQ basis. This decrease was driven by the Retail and MSME segments.
In 4Q, NPL improved across all segments, mainly driven by resumed repayments of restructured loans in the Retail and MSME segments.
Our NPLs provision coverage stood at 100% as of 31 December 2021, with an additional 75% collateral coverage. Only 18% of NPLs were unsecured loans[18] with strong provision coverage of 281%.
| Par 30 | Dec-21 | Sep-21 | Change QoQ | ||||
| Retail | 2.2% | 2.7% | -0.5 pp | ||||
| CIB | 0.6% | 0.5% | 0.1 pp | ||||
| MSME | 4.0% | 4.6% | -0.6 pp | ||||
| Total Loans | 2.0% | 2.3% | -0.3 pp | ||||
|
|
|
|
| ||||
| Non-performing Loans | Dec-21 | Sep-21 | Change QoQ |
| |||
| Retail | 2.4% | 3.6% | -1.2 pp |
| |||
| CIB | 1.4% | 1.5% | -0.1 pp |
| |||
| MSME | 4.0% | 4.7% | -0.7 pp |
| |||
| Total Loans | 2.4% | 3.1% | -0.7 pp |
| |||
| NPL Coverage[19] | Dec-21 | Sep-21 | ||
|
| Provision Coverage | Total Coverage | Provision Coverage | Total Coverage |
| Retail | 158.8% | 224.6% | 120.7% | 189.3% |
| CIB | 56.8% | 126.4% | 82.5% | 151.2% |
| MSME | 68.0% | 155.5% | 68.7% | 154.5% |
| Total | 99.9% | 175.3% | 94.3% | 169.3% |
Cost of risk
Our cost of risk improved significantly on a YoY basis and remained the same QoQ. The YoY decrease was mainly driven by provision recoveries in the CIB segment, which was attributable to a few stage 3 borrowers and the strong performance of the CIB segment in 2021.
| Cost of risk | 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
|
|
|
|
|
|
|
| Retail | 1.2% | -0.2% | 2.7% | -1.5 pp | 1.4 pp |
| CIB | -1.5% | -0.2% | 0.2% | -1.7 pp | -1.3 pp |
| MSME | 0.1% | 0.1% | 3.9% | -3.8 pp | 0.0 pp |
| Total | -0.1% | -0.1% | 2.0% | -2.1 pp | 0.0 pp |
Deposit Portfolio
The total deposits portfolio increased by 4.9% QoQ, or 5.8% on a constant currency basis, and amounted to GEL 15,038.2 million.
The proportion of deposits denominated in a foreign currency decreased by 0.2 pp QoQ and accounted for 63.5% of total deposits, while on a constant currency basis the proportion of deposits denominated in foreign currency increased by 0.1 pp QoQ and stood at 63.8%.
As of 31 December 2021, our market share in deposits amounted to 40.4%, up by 0.3 pp QoQ, while our market share in deposits to legal entities stood at 40.5%, up by 0.5 pp QoQ. Our market share in deposits to individuals stood at 40.3%, up by 0.1 pp QoQ.
| In thousands of GEL | Dec-21 | Sep-21 | Change QoQ |
| Customer Accounts |
|
|
|
|
|
|
|
|
| Retail | 5,837,333 | 5,593,535 | 4.4% |
| Retail deposits GEL | 1,492,325 | 1,353,608 | 10.2% |
| Retail deposits FC | 4,345,008 | 4,239,927 | 2.5% |
| CIB | 7,330,543 | 6,834,386 | 7.3% |
| CIB deposits GEL | 2,934,167 | 2,681,148 | 9.4% |
| CIB deposits FC | 4,396,376 | 4,153,238 | 5.9% |
| MSME | 1,558,676 | 1,433,603 | 8.7% |
| MSME deposits GEL | 756,135 | 688,598 | 9.8% |
| MSME deposits FC | 802,541 | 745,005 | 7.7% |
| Total Customer Accounts* | 15,038,172 | 14,338,537 | 4.9% |
* Total deposit portfolio includes Ministry of Finacne deposits in the amount of, GEL 477 million and GEL 312 million as of 30 Sep. and 31 Dec 2021, respectively.
|
| 4Q'21 | 3Q'21 | 4Q'20 | Change YoY | Change QoQ |
| Deposit rates | 3.4% | 3.5% | 3.6% | -0.2 pp | -0.1 pp |
| Deposit rates GEL | 6.8% | 6.9% | 6.6% | 0.2 pp | -0.1 pp |
| Deposit rates FC | 1.5% | 1.6% | 2.0% | -0.5 pp | -0.1 pp |
| Retail Deposit Yields | 2.4% | 2.3% | 2.6% | -0.2 pp | 0.1 pp |
| Retail deposit rates GEL | 4.9% | 4.8% | 5.1% | -0.2 pp | 0.1 pp |
| Retail deposit rates FC | 1.6% | 1.5% | 1.8% | -0.2 pp | 0.1 pp |
| CIB Deposit Yields | 4.8% | 4.5% | 4.2% | 0.6 pp | 0.3 pp |
| CIB deposit rates GEL | 8.9% | 8.5% | 7.8% | 1.1 pp | 0.4 pp |
| CIB deposit rates FC | 1.6% | 1.9% | 2.5% | -0.9 pp | -0.3 pp |
| MSME Deposit Yields | 0.6% | 0.9% | 1.0% | -0.4 pp | -0.3 pp |
| MSME deposit rates GEL | 1.1% | 1.6% | 1.7% | -0.6 pp | -0.5 pp |
| MSME deposit rates FC | 0.2% | 0.2% | 0.3% | -0.1 pp | 0.0 pp |
Segment definition and PL
Business Segments
The segment definitions are as follows:
· Corporate and Investment Banking (CIB) - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 12.0 million or which has been granted facilities of more than GEL 5.0 million. Some other business customers may also be assigned to the CIB segment or transferred to the MSME segment on a discretionary basis. In addition, CIB includes Wealth Management private banking services to high-net-worth individuals with a threshold of US$ 250,000 of assets under management (AUM), as well as on a discretionary basis;
· Retail - non-business individual customers; or individual customers of the fully digital bank, Space.
· MSME - business customers who are not included in the CIB segment;
· Corporate centre and other operations - comprises the Treasury, other support and back office functions, and non-banking subsidiaries of the Group.
Business customers are all legal entities or individuals who have been granted a loan for business purposes.
Income Statement by Segments
| 4Q'21 | Retail | MSME | CIB | Corp. Centre | Total |
| Interest income | 189,455 | 106,840 | 150,152 | 63,588 | 510,035 |
| Interest expense | (35,616) | (2,494) | (80,581) | (121,148) | (239,839) |
| Net gains from currency swaps | - | - | - | 5,249 | 5,249 |
| Net transfer pricing | (51,544) | (46,096) | 24,351 | 73,289 | - |
| Net interest income | 102,295 | 58,250 | 93,922 | 20,978 | 275,445 |
| Fee and commission income | 61,906 | 15,970 | 33,328 | 12,689 | 123,893 |
| Fee and commission expense | (15,939) | (9,681) | (22,992) | (4,213) | (52,825) |
| Net fee and commission income | 45,967 | 6,289 | 10,336 | 8,476 | 71,068 |
| Net insurance premium earned after claims and acquisition costs | - | - | - | 7,654 | 7,654 |
| Net gains/(losses) from currency derivatives, foreign currency operations and translation | 11,102 | 8,899 | 18,922 | (10,939) | 27,984 |
| Gains less losses from disposal of investment securities Measured at fair value through other comprehensive income | - | - | 888 | (636) | 252 |
| Other operating income | 2,362 | 170 | 550 | 3,116 | 6,198 |
| Share of profit of associates | - | - | - | 71 | 71 |
| Other operating non-interest income and insurance profit | 13,464 | 9,069 | 20,360 | (734) | 42,159 |
| Recovery of/(charges to) credit loss allowance for loans to customers | (18,935) | (1,473) | 23,579 | - | 3,171 |
| Recovery of/(charges to) credit loss allowance for performance guarantees and credit related commitments | (69) | 77 | 5,963 | - | 5,971 |
| Recovery of credit loss allowance for net investments in leases | - | - | - | 2,052 | 2,052 |
| Credit loss allowance for other financial assets | (15) | - | (421) | (5,927) | (6,363) |
| Recovery of credit loss allowance for financial assets measured at fair value through other comprehensive income | - | - | 174 | 163 | 337 |
| Net impairment of non-financial assets | (294) | (1,441) | (7,976) | (1,497) | (11,208) |
| Operating income after expected credit and non-financial asset impairment losses | 142,413 | 70,771 | 145,937 | 23,511 | 382,632 |
| Staff costs | (35,274) | (13,459) | (17,017) | (20,839) | (86,589) |
| Depreciation and amortization | (14,604) | (3,333) | (1,541) | (3,725) | (23,203) |
| Provision for liabilities and charges | - | - | - | 90 | 90 |
| Administrative and other operating expenses | (19,231) | (5,148) | (6,749) | (16,383) | (47,511) |
| Operating expenses | (69,109) | (21,940) | (25,307) | (40,857) | (157,213) |
| Losses from modifications of financial instruments | - | - | (31) | - | (31) |
| Profit/(loss) before tax | 73,304 | 48,831 | 120,599 | (17,346) | 225,388 |
| Income tax expense | (8,694) | (6,039) | (16,070) | 3,888 | (26,915) |
| Profit/(loss) | 64,610 | 42,792 | 104,529 | (13,458) | 198,473 |
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance sheet
| In thousands of GEL | Dec-21 | Sep-21 (as restated) |
| Cash and cash equivalents | 1,722,137 | 1,960,441 |
| Due from other banks | 79,142 | 64,894 |
| Mandatory cash balances with National Bank of Georgia | 2,087,141 | 2,095,848 |
| Loans and advances to customers | 16,637,145 | 15,504,311 |
| Investment securities measured at fair value through other comprehensive income | 1,938,196 | 2,253,510 |
| Bonds carried at amortized cost | 49,582 | 1,118 |
| Net investments in leases | 262,046 | 237,557 |
| Investment properties | 22,892 | 32,444 |
| Current income tax prepayment | 194 | 4,856 |
| Deferred income tax asset | 12,357 | 9,216 |
| Other financial assets[20] | 453,115 | 383,890 |
| Other assets | 397,079 | 352,191 |
| Premises and equipment | 392,506 | 378,514 |
| Right of use assets | 70,513 | 52,944 |
| Intangible assets | 319,963 | 305,088 |
| Goodwill | 59,964 | 59,964 |
| Investments in associates | 4,589 | 4,455 |
| TOTAL ASSETS | 24,508,561 | 23,701,241 |
| LIABILITIES |
|
|
| Due to credit institutions | 2,984,176 | 3,361,515 |
| Customer accounts | 15,038,172 | 14,338,537 |
| Other financial liabilities20 | 139,811 | 165,710 |
| Current income tax liability | 86,762 | 16,559 |
| Deferred income tax liability | 10,979 | 7,684 |
| Debt securities in issue | 1,710,288 | 1,507,969 |
| Provision for liabilities and charges | 25,358 | 28,275 |
| Other liabilities | 130,972 | 137,086 |
| Lease Liabilities | 66,167 | 53,627 |
| Subordinated debt | 623,647 | 636,086 |
| TOTAL LIABILITIES | 20,816,332 | 20,253,048 |
| EQUITY |
|
|
| Share capital | 1,682 | 1,682 |
| Shares held by trust | (25,489) | (25,489) |
| Share premium* | 283,430 | 283,430 |
| Retained earnings | 3,007,132 | 2,793,033 |
| Merger reserve* | 402,862 | 402,862 |
| Share based payment reserve | (5,135) | (8,811) |
| Fair value reserve | (10,862) | (1,207) |
| Cumulative currency translation reserve | (9,450) | (7,065) |
| Net assets attributable to owners | 3,644,170 | 3,435,849 |
| Non-controlling interest | 48,059 | 9,758 |
| TOTAL EQUITY | 3,692,229 | 3,448,193 |
| TOTAL LIABILITIES AND EQUITY | 24,508,561 | 23,701,241 |
* Certain amounts do not correspond to September 2021 consolidated statement of financial position as they reflect the reclassifications made by the management for merger reserve.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
| In thousands of GEL | 4Q'21 | 3Q'21 (as restated) | 4Q'20 (as restated) |
| Interest income | 510,035 | 476,636 | 453,874 |
| Interest expense | (239,839) | (226,991) | (227,786) |
| Net gains from currency swaps | 5,249 | 9,745 | 5,237 |
| Net interest income | 275,445 | 259,390 | 231,325 |
| Fee and commission income* | 123,893 | 110,546 | 87,748 |
| Fee and commission expense* | (52,825) | (41,915) | (35,549) |
| Net fee and commission income | 71,068 | 68,631 | 52,199 |
| Net insurance premiums earned | 18,883 | 16,818 | 12,542 |
| Net insurance claims incurred and agents' commissions | (11,229) | (10,799) | (9,279) |
| Net insurance premium earned after claims and acquisition costs | 7,654 | 6,019 | 3,263 |
| Net gains/(losses) from currency derivatives, foreign currency operations and translation | 27,984 | 29,102 | 28,085 |
| Gains less losses from disposal of investment securities measured at fair value through other comprehensive income | 252 | 3,863 | 578 |
| Other operating income | 6,198 | 4,798 | 6,890 |
| Share of profit of associates | 71 | 170 | (243) |
| Other operating non-interest income | 34,505 | 37,933 | 35,310 |
| Recovery of/(charges to) credit loss allowance for loans to customers | 3,171 | 4,389 | (75,711) |
| Recovery of/(charges to) credit loss allowance for net investments in leases | 2,052 | 142 | (1,459) |
| Recovery of/(charges to) credit loss allowance for performance guarantees and credit related commitments | 5,971 | (6,697) | 2,067 |
| Credit loss allowance for other financial assets | (6,363) | (3,037) | (3,364) |
| Recovery of/(charges to) credit loss allowance for financial assets measured at fair value through other comprehensive income | 337 | 424 | (903) |
| Net impairment of non-financial assets* | (11,208) | (327) | (4,816) |
| Operating profit after expected credit losses* | 382,632 | 366,867 | 237,911 |
| Staff costs | (86,589) | (74,643) | (67,782) |
| Depreciation and amortization | (23,203) | (19,988) | (18,838) |
| (Provision for)/ recovery of liabilities and charges | 90 | (54) | (724) |
| Administrative and other operating expenses* | (47,511) | (37,010) | (35,790) |
| Operating expenses* | (157,213) | (131,695) | (123,134) |
| Losses from modifications of financial instruments | (31) | (104) | (5,082) |
| Profit before tax | 225,388 | 235,068 | 109,695 |
| Income tax expense | (26,915) | (27,921) | (8,994) |
| Profit | 198,473 | 207,147 | 100,701 |
| Other comprehensive income: |
|
|
|
| Items that may be reclassified subsequently to profit or loss: |
|
|
|
| Movement in fair value reserve | (9,657) | (1,375) | 3,163 |
| Exchange differences on translation to presentation currency | (2,385) | (1,866) | (1,211) |
| Other comprehensive income for the period | (12,042) | (3,241) | 1,952 |
| Total comprehensive income for the period | 186,431 | 203,906 | 102,653 |
| Profit attributable to: |
|
|
|
| - Shareholders of TBCG | 196,721 | 204,892 | 99,371 |
| - Non-controlling interest | 1,752 | 2,255 | 1,330 |
| Profit | 198,473 | 207,147 | 100,701 |
| Total comprehensive income is attributable to: |
|
|
|
| - Shareholders of TBCG | 184,659 | 201,662 | 101,297 |
| - Non-controlling interest | 1,772 | 2,244 | 1,356 |
| Total comprehensive income for the period | 186,431 | 203,906 | 102,653 |
* Certain amounts do not correspond to 3Q 2021 and 4Q 2020 Consolidated Statement of Profit or Loss and Other Comprehensive Income as they reflect the reclassifications made by the management between a) net impairment of non-financial assets and administrative and other operating expenses; and b) commission income and commission expenses.
Consolidated Statement of Cash Flows
| In thousands of GEL | Dec-21 | Sep-21 |
| Cash flows from (used in) operating activities |
|
|
| Interest received | 1,981,768 | 1,393,345 |
| Interest received on currency swaps | 28,143 | 22,894 |
| Interest paid | (867,209) | (658,355) |
| Fees and commissions received | 414,505 | 284,273 |
| Fees and commissions paid | (188,214) | (133,149) |
| Insurance and reinsurance received | 96,601 | 68,437 |
| Insurance claims paid | (36,806) | (26,354) |
| Income received from trading in foreign currencies | 113,043 | 58,592 |
| Other operating income received | 75,378 | 53,477 |
| Staff costs paid | (307,633) | (227,775) |
| Administrative and other operating expenses paid | (195,188) | (114,125) |
| Income tax paid | (13,756) | (11,893) |
| Cash flows from operating activities before changes in operating assets and liabilities | 1,100,632 | 709,367 |
| Net change in operating assets |
|
|
| Due from other banks and mandatory cash balances with the National Bank of Georgia | 393,174 | 57,244 |
| Loans and advances to customers | (3,085,488) | (1,650,871) |
| Net investments in lease | (499) | 28,358 |
| Other financial assets | (213,126) | (159,404) |
| Other assets | 5,077 | 5,740 |
| Net change in operating liabilities |
|
|
| Due to credit institutions | 132,826 | 91,328 |
| Customer accounts | 2,821,952 | 2,287,018 |
| Other financial liabilities | (144,867) | (115,735) |
| Other liabilities and provision for liabilities and charges | 36,791 | 23,992 |
| Net cash flows from operating activities | 1,046,472 | 1,277,037 |
| Cash flows from/ (used in) investing activities |
|
|
| Acquisition of investment securities measured at fair value through other comprehensive income | (797,285) | (598,141) |
| Proceeds fromdisposal of investment securities measured at fair value through other comprehensive income | 1,025,775 | 929,431 |
| Proceeds from redemption at maturity of investment securities measured at fair value through other comprehensive income | 412,204 | - |
| Acquisition of bonds carried at amortised cost | (47,784) | - |
| Proceeds from redemption of bonds carried at amortised cost | 26,296 | 28,351 |
| Acquisition of premises, equipment and intangible assets | (163,222) | (111,148) |
| Proceeds from disposal of premises, equipment and intangible assets | 20,826 | 13,833 |
| Purchase of additional interest from minority shareholders | (17,215) | - |
| Proceeds from sale of investment to NCI | 57,039 | - |
| Proceeds from disposal of investment property | 23,639 | 44,464 |
| Net cash flows from investing activities | 540,273 | 306,790 |
| Cash flows from (used in) financing activities |
|
|
| Proceeds from other borrowed funds | 1,750,443 | 1,755,171 |
| Redemption of other borrowed funds | (3,338,139) | (2,914,700) |
| Repayment of principal of lease liabilities | (12,825) | (8,417) |
| Redemption of subordinated debt | (12,562) | (12,562) |
| Proceeds from debt securities in issue | 295,457 | 49,346 |
| Dividends paid | (87,723) | (84,159) |
| Net cash used in financing activities | (1,405,349) | (1,215,321) |
| Effect of exchange rate changes on cash and cash equivalents | (94,664) | (43,470) |
| Net increase in cash and cash equivalents | 86,732 | 325,036 |
| Cash and cash equivalents at the beginning of the year | 1,635,405 | 1,635,404 |
| Cash and cash equivalents at the end of the year | 1,722,137 | 1,960,440 |
Key Ratios
Average Balances
The average balances included in this document are calculated as the average of the relevant monthly balances as of each month-end. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.
| Key Ratios |
|
|
|
|
|
|
|
|
| Ratios (based on monthly averages, where applicable) | 4Q'21 | 3Q'21 | 4Q'20 |
|
|
|
|
|
| Profitability ratios: |
|
|
|
| ROE1 | 22.1% | 24.1% | 13.7% |
| ROA2 | 3.3% | 3.6% | 1.8% |
| Cost to income3 | 40.4% | 35.4% | 38.2% |
| NIM4 | 5.4% | 5.3% | 4.8% |
| Loan yields5 | 10.7% | 10.5% | 10.2% |
| Deposit rates6 | 3.4% | 3.5% | 3.6% |
| Cost of funding7 | 4.6% | 4.5%* | 4.7%* |
|
|
|
|
|
| Asset quality & portfolio concentration: |
|
|
|
| Cost of risk9 | -0.1% | -0.1% | 2.0% |
| PAR 90 to Gross Loans9 | 1.1% | 1.3% | 1.5% |
| NPLs to Gross Loans10 | 2.4% | 3.1% | 4.7% |
| NPL provision coverage11 | 99.9% | 94.3% | 85.6% |
| Total NPL coverage12 | 175.3% | 169.3% | 159.4% |
| Credit loss level to Gross Loans13 | 2.4% | 2.9% | 4.0% |
| Related Party Loans to Gross Loans14 | 0.1% | 0.0% | 0.0% |
| Top 10 Borrowers to Total Portfolio15 | 6.8% | 7.7% | 7.9% |
| Top 20 Borrowers to Total Portfolio16 | 10.5% | 11.4% | 12.1% |
|
|
|
|
|
| Capital & liquidity positions: |
|
|
|
| Net Loans to Deposits plus IFI** Funding17 | 100.9% | 97.5% | 101.2% |
| Net Stable Funding Ratio18 | 127.3% | 127.1% | 126.0% |
| Liquidity Coverage Ratio19 | 115.8% | 116.5% | 134.2% |
| Leverage20 | 6.7x | 6.9x | 7.7x |
| CET 1 CAR (Basel III)21 | 13.7% | 13.4% | 10.4% |
| Tier 1 CAR (Basel III)22 | 16.7% | 15.4% | 13.0% |
| Total 1 CAR (Basel III)23 | 20.3% | 19.3% | 17.1% |
*The Group enters into swap agreements denominated in foreign currencies with a view to decrease cost of funding. Respective interest effect is presented within net interest income, but has not been previously included in the cost of funding ratio calculation. As the contracts reached significant volume, the Group revisited the presentation of effects in the cost of funding ratio and decided to include interest effect from swap agreements in the calculation of cost of funding. The change was made retrospectively and ratios of previous periods have also been restated.
** International Financial Institutions
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 monthly average total assets for the same period; annualised where applicable.
3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income).
4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions.
5. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers; annualised where applicable.
6. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits; annualised where applicable.
7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest bearing liabilities; annualized where applicable.
8. Cost of risk equals credit loss allowance for loans to customers divided by monthly average gross loans and advances to customers; annualised where applicable.
9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period.
10. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.
11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans.
12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans.
13. Credit loss level to gross loans equals credit loss allowance for loans to customers divided by the gross loan portfolio for the same period.
14. Related party loans to total loans equals related party loans divided by the gross loan portfolio.
15. Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided by the gross loan portfolio.
16. Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided by the gross loan portfolio.
17. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions.
18. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank stand-alone, based on local standards.
19. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank stand-alone, based on local standards.
20. Leverage equals total assets to total equity.
21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank stand-alone, based on local standards.
22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank stand-alone, based on local standards.
23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank 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 3.1228 as of 30 September 2021. For the calculations of the YoY growth without the currency exchange rate effect, we used the USD/GEL exchange rate of 3.2766 as of 31 December 2020. As of 31 December 2021 the USD/GEL exchange rate equaled 3.0976. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: 4Q 2021 of 3.1254, 3Q 2021 of 3.1204, 4Q 2020 of 3.2705.
Unaudited Consolidated Financial Results Overview for FY 2021
This statement provides a summary of the unaudited business and financial trends for FY 2021 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.
TBC Bank Group PLC's financial results has been prepared in accordance with UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).
Financial Highlights
| Income Statement Highlights |
| |||
| in thousands of GEL | FY'21 | FY'20 | Change YoY | |
| Net interest income | 1,002,732 | 835,433 | 20.0% | |
| Net fee and commission income | 248,000 | 182,767 | 35.7% | |
| Other operating non-interest income[21] | 201,288 | 137,391 | 46.5% | |
| Total credit loss allowance* | 16,900 | (358,008) | NMF | |
| Operating profit after expected credit losses* | 1,468,920 | 797,583 | 84.2% | |
| Operating expenses* | (545,834) | (437,462) | 24.8% | |
| Losses from modifications of financial instrument | (1,726) | (41,015) | -95.8% | |
| Profit before tax | 921,360 | 319,106 | NMF | |
| Income tax expense/(credit) | (112,361) | 3,383 | NMF | |
| Profit for the period | 808,999 | 322,489 | NMF | |
* Certain amounts do not correspond to 2020 Consolidated Statement of Profit or Loss and Other Comprehensive Income as they reflect the reclassification made by the management between net impairment of non-financial assets and administrative and other operating expenses.
|
Balance Sheet and Capital Highlights |
|
|
| ||
| in thousands of GEL | Dec-21 | Dec-20 | Change YoY | ||
| Total Assets | 24,508,561 | 22,577,805 | 8.6% | ||
| Gross Loans | 17,047,391 | 15,200,520 | 12.2% | ||
| Customer Deposits | 15,038,172 | 12,572,728 | 19.6% | ||
| Total Equity | 3,692,229 | 2,935,934 | 25.8% | ||
| CET 1 Capital (Basel III) | 2,759,894 | 1,911,233 | 44.4% | ||
| Tier 1 Capital (Basel III) | 3,379,414 | 2,385,181 | 41.7% | ||
| Total Capital (Basel III) | 4,102,927 | 3,137,912 | 30.8% | ||
| Risk Weighted Assets (Basel III) | 20,217,629 | 18,301,477 | 10.5% | ||
| Key Ratios | FY'21 | FY'20 | Change YoY |
| ROE | 24.4% | 11.7% | 12.7 pp |
| Bank's standalone ROE[22] | 27.7% | 13.1% | 14.6 pp |
| ROA | 3.4% | 1.6% | 1.8 pp |
| Bank's standalone ROA22 | 3.8% | 1.7% | 2.1 pp |
| NIM | 5.1% | 4.7% | 0.4 pp |
| Cost to income | 37.6% | 37.9% | -0.3 pp |
| Bank's standalone cost to income22 | 29.7% | 32.7% | -3.0 pp |
| Cost of risk | -0.3% | 2.4% | -2.7 pp |
| NPL to gross loans | 2.4% | 4.7% | -2.3 pp |
| NPL provision coverage ratio | 99.9% | 85.6% | 14.3 pp |
| Total NPL coverage ratio | 175.3% | 159.4% | 15.9 pp |
| CET 1 CAR (Basel III) | 13.7% | 10.4% | 3.3 pp |
| Tier 1 CAR (Basel III) | 16.7% | 13.0% | 3.7 pp |
| Total CAR (Basel III) | 20.3% | 17.1% | 3.2 pp |
| Leverage (Times) | 6.7x | 7.7x | -1.0x |
Net Interest Income
In 2021, net interest income amounted to GEL 1,002.7 million, up by 20.0% YoY, whereby interest income and interest expense increased by 13.1% and 6.8%, respectively.
The YoY increase in interest income was primarily related to an increase in interest income from loans, which was related both an increase in the gross loan portfolio of GEL 1,846.9 million, or 12.2%, and a rise in loan yield of 0.2 pp. The upper loan rate was due a shift of the portfolio composition towards GEL loans.
The increase in interest expense was primarily related to an increase in interest expense from deposits, which was due to an increase in the respective portfolio of GEL 2,465.4 million, or 19.6%. Over the same period, the cost of deposits declined by 0.2 pp. In addition, the change in the liability structure towards deposits (from 64% as of 31 December 2020 to 72% as of 31 December 2021, as mentioned above) had a positive effect on the cost of funding. As a result, the cost of funding decreased by 0.3 pp YoY and stood at 4.5% in 2021.
In 2021, our NIM stood at 5.1%, up by 0.4 pp YoY.
| In thousands of GEL | FY'21 | FY'20 | Change YoY |
| Interest income | 1,885,856 | 1,667,999 | 13.1% |
| Interest expense | (911,267) | (853,516) | 6.8% |
| Net gains from currency swaps | 28,143 | 20,950 | 34.3% |
| Net interest income | 1,002,732 | 835,433 | 20.0% |
|
|
|
|
|
| NIM | 5.1% | 4.7% | 0.4 pp |
Non-Interest Income
Total other non-interest income increased by 40.3% YoY and amounted to GEL 449.3 million in 2021. The YoY growth was driven by a strong rebound across all categories, further amplified by a gain from sale of one of our investment properties in 2Q 2021 (the gain from this transaction is included in other operating income).
| In thousands of GEL | FY'21 | FY'20 | Change YoY |
| Non-interest income |
|
|
|
| Net fee and commission income | 248,000 | 182,767 | 35.7% |
| Net income from currency derivatives, foreign currency operations and translation | 117,270 | 98,018 | 19.6% |
| Net insurance premium earned after claims and acquisition costs[23] | 23,546 | 19,485 | 20.8% |
| Other operating income | 60,472 | 19,888 | NMF |
| Total other non-interest income | 449,288 | 320,158 | 40.3% |
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|
|
NMF - no meaningful figures
Credit Loss Allowance
Total credit loss allowance in 2021 amounted to GEL 16.9 million. This significant decrease on a year-on-year basis was driven by improved performance across all segments in 2021 and by a high base in 2020, due to the reflection of COVID-19 impact on the credit loss allowances.
| In thousands of GEL | FY'21 | FY'20 (as restated) | Change YoY |
| Recovery of/(charges to) credit loss allowance for loans to customers | 40,123 | (330,811) | NMF |
| Credit loss allowance for other transactions* | (23,223) | (27,197) | -14.6% |
| Total credit loss allowance* | 16,900 | (358,008) | NMF |
| Operating income after expected credit and non-financial asset impairment losses * | 1,468,920 | 797,583 | 84.2% |
|
|
|
|
|
| Cost of risk | -0.3% | 2.4% | -2.7 pp |
* Certain amounts do not correspond to 2020 operating income after expected credit and non-financial asset impairment losses as they reflect the reclassifications made by the management between net impairment of non-financial assets and administrative and other operating expenses.
NMF - no meaningful figures
Operating Expenses
In 2021, our total operating expenses expanded by 24.8% YoY.
In 2021, the increase in our operating expenses was mainly driven by staff costs, due to higher performance related costs, including management's variable compensation, which was waived in 2020, as well as to the growing scale of our Uzbek business. At the same time, the increase in administrative and other expenses across the board was due to low base in 2020 and increased business activities.
The cost to income ratio stood at 37.6%, down by 0.3 pp YoY, while the Bank's standalone cost to income was 29.7%, down by 3.0 pp over the same period.
| In thousands of GEL | FY'21 | FY'20 (as restated) | Change YoY |
| Operating expenses |
|
|
|
| Staff costs | (309,302) | (244,043) | 26.7% |
| Provisions for liabilities and charges | 27 | (2,706) | NMF |
| Depreciation and amortization | (79,891) | (68,392) | 16.8% |
| Administrative & other operating expenses* | (156,668) | (122,321) | 28.1% |
| Total operating expenses* | (545,834) | (437,462) | 24.8% |
|
|
|
|
|
| Cost to income | 37.6% | 37.9% | -0.3 pp |
| Bank's standalone cost to income24 | 29.7% | 32.7% | -3.0 pp |
* Certain amounts do not correspond to 2020 operating expense figures as they reflect the reclassifications made by the management between net impairment of non-financial assets and administrative and other operating expenses.
Net Income
In 2021, our record high profitability was driven by strong income generation across all categories, as well as by reversals of provision charges.
As a result, our ROE stood at 24.4%, ROA stood at 3.4%.
| In thousands of GEL | FY'21 | FY'20 | Change YoY |
| Losses from modifications of financial instruments | (1,726) | (41,015) | -95.8% |
| Profit before tax | 921,360 | 319,106 | NMF |
| Income tax expense/(credit) | (112,361) | 3,383 | NMF |
| Profit for the period | 808,999 | 322,489 | NMF |
|
|
|
|
|
| ROE | 24.4% | 11.7% | 12.7 pp |
| Bank's standalone ROE[24] | 27.7% | 13.1% | 14.6 pp |
| ROA | 3.4% | 1.6% | 1.8 pp |
| Bank's standalone ROA24 | 3.8% | 1.7% | 2.1 pp |
Funding and Liquidity
In 2021, we utilized access liquidity generated in 2020 and our liquidity coverage ratio, as defined by the NBG was 115.8%, above the 100% limit, while the LCR in GEL and FC stood at 107.7% and 120.8% respectively, above the respective limits of 75% and 100%.
As of 31 December 2021, NSFR stood at 127.3%, compared to the regulatory limit of 100%.
|
| Dec-21 | Dec-20 | Change YoY |
| Minimum net stable funding ratio, as defined by the NBG | 100.0% | 100.0% | 0.0 pp |
| Net stable funding ratio as defined by the NBG | 127.3% | 126.0% | 1.3 pp |
|
|
|
|
|
| Net loans to deposits + IFI funding | 100.9% | 101.2% | -0.3 pp |
| Leverage (Times) | 6.7x | 7.7x | -1.0x |
|
|
|
|
|
| Minimum total liquidity coverage ratio, as defined by the NBG | 100.00% | 100.0% | 0.0 pp |
| Minimum LCR in GEL, as defined by the NBG | 75%* | n/a | NMF |
| Minimum LCR in FC, as defined by the NBG | 100.00% | 100.0% | 0.0 pp |
|
|
|
|
|
| Total liquidity coverage ratio, as defined by the NBG | 115.8% | 134.2% | -18.4 pp |
| LCR in GEL, as defined by the NBG | 107.7% | 132.2% | -24.5 pp |
| LCR in FC, as defined by the NBG | 120.8% | 134.9% | -14.1 pp |
* In May 2021, NBG restored the NBG GEL LCR limit, which was temporarily removed for one year
Regulatory Capital
On a YoY basis, the Bank's CET1, Tier 1 and Total capital adequacy ratios increased by 3.3 pp, 3.7 pp and 3.2 pp, respectively. This increase was mainly driven by strong net income generation, the issuance of an AT1 Bond in November 2021 in the amount of USD 75 million, and by local currency appreciation, which was partially offset by an increase in the loan book.
| In thousands of GEL | Dec-21 | Dec-20 | Change YoY |
|
|
|
|
|
| CET 1 Capital | 2,759,894 | 1,911,233 | 44.4% |
| Tier 1 Capital | 3,379,414 | 2,385,181 | 41.7% |
| Total Capital | 4,102,927 | 3,137,912 | 30.8% |
| Total Risk-weighted Exposures | 20,217,629 | 18,301,477 | 10.5% |
|
|
|
|
|
| Minimum CET 1 ratio | 11.7% | 7.4% | 4.3 pp |
| CET 1 Capital adequacy ratio | 13.7% | 10.4% | 3.3 pp |
|
|
|
|
|
| Minimum Tier 1 ratio | 14.0% | 9.2% | 4.8 pp |
| Tier 1 Capital adequacy ratio | 16.7% | 13.0% | 3.7 pp |
|
|
|
|
|
| Minimum total capital adequacy ratio | 18.4% | 13.7% | 4.7 pp |
| Total Capital adequacy ratio | 20.3% | 17.1% | 3.2 pp |
Loan Portfolio
As of 31 December 2021, the gross loan portfolio reached GEL 17,047.4 million, up by 12.2% YoY or by 18.0% on a constant currency basis. The proportion of gross loans denominated in foreign currency decreased by 5.5 pp YoY and accounted for 53.9% of total loans, while on a constant currency basis the proportion of gross loans denominated in foreign currency was down by 3.2 pp YoY and stood at 56.2%.
As of 31 September 2021, our market share in total loans stood at 38.8%, down by 0.2 pp YoY, while our loan market share in legal entities was 39.1%, up by 0.5 pp over the same period, and our loan market share in individuals stood at 38.6%, down by 0.8 pp QoQ.
| In thousands of GEL | Dec-21 | Dec-20 | Change YoY |
| Loans and advances to customers |
|
|
|
| Retail | 6,358,345 | 5,846,274 | 8.8% |
| Retail loans GEL | 3,580,468 | 3,007,484 | 19.1% |
| Retail loans FC | 2,777,877 | 2,838,790 | -2.1% |
| CIB | 6,547,741 | 5,831,871 | 12.3% |
| CIB loans GEL | 2,188,776 | 1,599,857 | 36.8% |
| CIB loans FC | 4,358,965 | 4,232,014 | 3.0% |
| MSME | 4,141,305 | 3,522,375 | 17.6% |
| MSME loans GEL | 2,082,204 | 1,559,127 | 33.5% |
| MSME loans FC | 2,059,101 | 1,963,248 | 4.9% |
| Total loans and advances to customers | 17,047,391 | 15,200,520 | 12.2% |
|
| FY'21 | FY'20 | Change YoY |
| Loan yields | 10.3% | 10.1% | 0.2 pp |
| Loan yields GEL | 15.1% | 15.3% | -0.2 pp |
| Loan yields FC | 6.5% | 6.7% | -0.2 pp |
| Retail Loan Yields | 11.7% | 11.5% | 0.2 pp |
| Retail loan yields GEL | 16.1% | 16.5% | -0.4 pp |
| Retail loan yields FC | 6.1% | 6.6% | -0.5 pp |
| CIB Loan Yields | 9.0% | 8.6% | 0.4 pp |
| CIB loan yields GEL | 13.7% | 13.2% | 0.5 pp |
| CIB loan yields FC | 7.0% | 7.0% | 0.0 pp |
| MSME Loan Yields | 10.2% | 10.2% | 0.0 pp |
| MSME loan yields GEL | 14.9% | 14.9% | 0.0 pp |
| MSME loan yields FC | 6.0% | 6.3% | -0.3 pp |
Loan Portfolio Quality
On a YoY basis, total par 30 improved by 0.6 pp. The decrease was mainly driven by the Retail segment on the back of write-offs of the unsecured loans and strong performance of the mortgage portfolio.
Our NPL ratio improved by 2.3 pp YoY and amounted to 2.4%. The recovery was observed in all segments, mainly driven by resumed repayments on COVID-19 restructured loans.
|
Par 30 | Dec-21 | Dec-20 | Change YoY |
| Retail | 2.2% | 3.5% | -1.3 pp |
| CIB | 0.6% | 1.0% | -0.4 pp |
| MSME | 4.0% | 3.7% | 0.3 pp |
| Total Loans | 2.0% | 2.6% | -0.6 pp |
| Non-performing Loans | Dec-21 | Dec-20 | Change YoY |
| Retail | 2.4% | 5.8% | -3.4 pp |
| CIB | 1.4% | 2.4% | -1.0 pp |
| MSME | 4.0% | 6.5% | -2.5 pp |
| Total Loans | 2.4% | 4.7% | -2.3 pp |
| NPL Coverage | Dec-21 | Dec-20 | |||||
|
| Provision Coverage | Total Coverage | Provision Coverage | Total Coverage |
| ||
| Retail | 158.8% | 224.6% | 102.4% | 170.3% |
| ||
| CIB | 56.8% | 126.4% | 77.1% | 148.0% |
| ||
| MSME | 68.0% | 155.5% | 66.4% | 150.5% |
| ||
| Total | 99.9% | 175.3% | 85.6% | 159.4% |
| ||
Cost of risk
The total cost of risk for 2021 stood at -0.3%, down by 2.7 pp YoY. This significant decrease on a year-on-year basis was driven by improved performance across all segments in 2021 and by a high base in 2020 due to the reflection of COVID-19 impact on the credit loss allowances.
| Cost of Risk | FY'21 | FY'20 | Change YoY | ||
|
|
|
|
| ||
| Retail | 0.5% | 3.8% | -3.3 pp | ||
| CIB | -1.0% | 0.6% | -1.6 pp | ||
| MSME | -0.2% | 3.0% | -3.2 pp | ||
| Total | -0.3% | 2.4% | -2.7 pp | ||
|
|
|
|
| ||
Deposit Portfolio
The total deposits portfolio increased by 19.6% YoY across all segments and amounted to GEL 15,038.2 million, while on a constant currency basis the total deposit portfolio increased by 25.1% over the same period. The proportion of deposits denominated in foreign currency was down by 2.8 pp YoY and accounted for 63.5% of total deposits, while on a constant currency basis the proportion of deposits denominated in foreign currency increased by 1.2 pp YoY and stood at 65.1%.
As of 31 December 2021, our market share in deposits amounted to 40.4%, up by 3.2 pp YoY, and our market share in deposits to legal entities stood at 40.5%, up by 6.0 pp over the same period. Our market share in deposits to individuals stood at 40.3%, up by 0.8 pp YoY.
| In thousands of GEL | Dec-21 | Dec-20 | Change YoY |
| Customer Accounts |
|
|
|
| Retail | 5,837,333 | 4,975,661 | 17.3% |
| Retail deposits GEL | 1,492,325 | 1,236,594 | 20.7% |
| Retail deposits FC | 4,345,008 | 3,739,067 | 16.2% |
| CIB | 7,330,543 | 5,717,347 | 28.2% |
| CIB deposits GEL | 2,934,167 | 1,833,122 | 60.1% |
| CIB deposits FC | 4,396,376 | 3,884,225 | 13.2% |
| MSME | 1,558,676 | 1,368,490 | 13.9% |
| MSME deposits GEL | 756,135 | 661,941 | 14.2% |
| MSME deposits FC | 802,541 | 706,549 | 13.6% |
| Total Customer Accounts* | 15,038,172 | 12,572,728 | 19.6% |
* Total deposit portfolio includes Ministry of Finance deposits in the amount of GEL 511 million and GEL 312 million as of 31 December 2020 and 31 December 2021, respectively.
|
| FY'21 | FY'20 | Change YoY |
| Deposit rates | 3.4% | 3.6% | -0.2 pp |
| Deposit rates GEL | 6.7% | 6.5% | 0.2 pp |
| Deposit rates FC | 1.5% | 2.0% | -0.5 pp |
| Retail Deposit Yields | 2.4% | 2.6% | -0.2 pp |
| Retail deposit rates GEL | 4.9% | 5.3% | -0.4 pp |
| Retail deposit rates FC | 1.3% | 1.7% | -0.4 pp |
| CIB Deposit Yields | 4.3% | 4.4% | -0.1 pp |
| CIB deposit rates GEL | 8.5% | 8.1% | 0.4 pp |
| CIB deposit rates FC | 2.0% | 2.5% | -0.5 pp |
| MSME Deposit Yields | 0.8% | 0.9% | -0.1 pp |
| MSME deposit rates GEL | 1.4% | 1.6% | -0.2 pp |
| MSME deposit rates FC | 0.2% | 0.3% | -0.1 pp |
Segment definition and PL
Business Segments
The segment definitions are as follows:
· Corporate and Investment Banking (CIB) - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 12.0 million or which has been granted facilities of more than GEL 5.0 million. Some other business customers may also be assigned to the CIB segment or transferred to the MSME segment on a discretionary basis. In addition, CIB includes Wealth Management private banking services to high-net-worth individuals with a threshold of US$ 250,000 of assets under management (AUM), as well as on discretionary basis;
· Retail - non-business individual customers; or individual customers of the fully digital bank, Space.
· MSME - business customers who are not included in the CIB segment;
· Corporate centre and other operations - comprises the Treasury, other support and back office functions, and non-banking subsidiaries of the Group.
Business customers are all legal entities or individuals who have been granted a loan for business purposes.
Income Statement by Segments
| FY'21 | Retail | MSME | CIB | Corp. Centre | Total |
| Interest income | 691,257 | 384,337 | 562,055 | 248,207 | 1,885,856 |
| Interest expense | (131,233) | (11,343) | (274,093) | (494,598) | (911,267) |
| Net gains from currency swaps | - | - | - | 28,143 | 28,143 |
| Net transfer pricing | (169,947) | (154,827) | 71,408 | 253,366 | - |
| Net interest income | 390,077 | 218,167 | 359,370 | 35,118 | 1,002,732 |
| Fee and commission income | 212,867 | 52,806 | 111,777 | 34,582 | 412,032 |
| Fee and commission expense | (38,191) | (33,858) | (80,717) | (11,266) | (164,032) |
| Net fee and commission income | 174,676 | 18,948 | 31,060 | 23,316 | 248,000 |
| Net insurance premium earned after claims and acquisition costs | - | - | - | 23,546 | 23,546 |
| Net gains/(losses) from currency derivatives, foreign currency operations and translation | 35,946 | 27,496 | 57,102 | (3,274) | 117,270 |
| Gains less losses from disposal of investment securities Measured at fair value through other comprehensive income | - | - | 1,412 | 9,744 | 11,156 |
| Other operating income | 8,001 | 877 | 2,677 | 36,924 | 48,479 |
| Share of profit of associates | - | - | - | 837 | 837 |
| Other operating non-interest income and insurance profit | 43,947 | 28,373 | 61,191 | 67,777 | 201,288 |
| Recovery of/(charges to) credit loss allowance for loans to customers | (26,795) | 7,175 | 59,743 | - | 40,123 |
| Recovery of credit loss allowance for performance guarantees and credit related commitments | 369 | 199 | 636 | - | 1,204 |
| Credit loss allowance for net investments in leases | - | - | - | (321) | (321) |
| Credit loss allowance for other financial assets | (3,307) | - | (513) | (10,906) | (14,726) |
| Recovery of credit loss allowance for financial assets measured at fair value through other comprehensive income | - | - | 1,104 | 1,498 | 2,602 |
| Net impairment of non-financial assets | (59) | (1,373) | (7,954) | (2,596) | (11,982) |
| Operating income after expected credit and non-financial asset impairment losses | 578,908 | 271,489 | 504,637 | 113,886 | 1,468,920 |
| Staff costs | (135,918) | (53,828) | (50,727) | (68,829) | (309,302) |
| Depreciation and amortization | (51,558) | (11,663) | (5,339) | (11,331) | (79,891) |
| Provision for liabilities and charges | - | - | - | 27 | 27 |
| Administrative and other operating expenses | (75,295) | (20,221) | (18,459) | (42,693) | (156,668) |
| Operating expenses | (262,771) | (85,712) | (74,525) | (122,826) | (545,834) |
| Losses from modifications of financial instruments | (688) | (93) | (945) | - | (1,726) |
| Profit/(loss) before tax | 315,449 | 185,684 | 429,167 | (8,940) | 921,360 |
| Income tax expense | (32,200) | (21,135) | (48,857) | (10,169) | (112,361) |
| Profit/(loss) | 283,249 | 164,549 | 380,310 | (19,109) | 808,999 |
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance sheet
| In thousands of GEL | Dec-21 | Dec-20 (as restated) |
| Cash and cash equivalents | 1,722,137 | 1,635,405 |
| Due from other banks | 79,142 | 50,805 |
| Mandatory cash balances with National Bank of Georgia | 2,087,141 | 2,098,506 |
| Loans and advances to customers | 16,637,145 | 14,594,274 |
| Investment securities measured at fair value through other comprehensive income* | 1,938,196 | 1,527,268 |
| Bonds carried at amortized cost* | 49,582 | 1,089,801 |
| Net investments in leases | 262,046 | 271,660 |
| Investment properties | 22,892 | 68,689 |
| Current income tax prepayment | 194 | 69,888 |
| Deferred income tax asset | 12,357 | 2,787 |
| Other financial assets[25] | 453,115 | 171,302 |
| Other assets | 397,079 | 266,960 |
| Premises and equipment | 392,506 | 372,956 |
| Right of use assets | 70,513 | 53,927 |
| Intangible assets | 319,963 | 239,523 |
| Goodwill | 59,964 | 59,964 |
| Investments in associates | 4,589 | 4,090 |
| TOTAL ASSETS | 24,508,561 | 22,577,805 |
| LIABILITIES |
|
|
| Due to credit institutions | 2,984,176 | 4,486,373 |
| Customer accounts | 15,038,172 | 12,572,728 |
| Other financial liabilities25 | 139,811 | 227,432 |
| Current income tax liability | 86,762 | 853 |
| Deferred income tax liability | 10,979 | 13,088 |
| Debt securities in issue | 1,710,288 | 1,496,497 |
| Provision for liabilities and charges | 25,358 | 25,335 |
| Other liabilities | 130,972 | 87,842 |
| Lease Liabilities | 66,167 | 58,983 |
| Subordinated debt | 623,647 | 672,740 |
| TOTAL LIABILITIES | 20,816,332 | 19,641,871 |
| EQUITY |
|
|
| Share capital | 1,682 | 1,682 |
| Shares held by trust | (25,489) | (33,413) |
| Share premium* | 283,430 | 283,430 |
| Retained earnings | 3,007,132 | 2,281,428 |
| Merger reserve* | 402,862 | 402,862 |
| Share based payment reserve | (5,135) | (20,568) |
| Fair value reserve* | (10,862) | 11,158 |
| Cumulative currency translation reserve | (9,450) | (2,124) |
| Net assets attributable to owners | 3,644,170 | 2,924,455 |
| Non-controlling interest | 48,059 | 11,479 |
| TOTAL EQUITY | 3,692,229 | 2,935,934 |
| TOTAL LIABILITIES AND EQUITY | 24,508,561 | 22,577,805 |
* Certain amounts do not correspond to the 2020 consolidated statement of financial position as they reflect the reclassifications made by the management: a) between merger reserve and share premium and b) change in business model for investment securities transferring them from under FVTOCI classification.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
| In thousands of GEL | FY'21 | FY'20 (as restated) |
| Interest income | 1,885,856 | 1,667,999 |
| Interest expense | (911,267) | (853,516) |
| Net gains from currency swaps | 28,143 | 20,950 |
| Net interest income | 1,002,732 | 835,433 |
| Fee and commission income* | 412,032 | 306,177 |
| Fee and commission expense* | (164,032) | (123,410) |
| Net fee and commission income | 248,000 | 182,767 |
| Net insurance premiums earned | 65,990 | 53,359 |
| Net insurance claims incurred and agents' commissions | (42,444) | (33,874) |
| Net insurance premium earned after claims and acquisition costs | 23,546 | 19,485 |
| Net gains from currency derivatives, foreign currency operations and translation | 117,270 | 98,018 |
| Gains less losses from disposal of investment securities measured at fair value through other comprehensive income | 11,156 | (624) |
| Other operating income | 48,479 | 20,512 |
| Share of profit of associates | 837 | - |
| Other operating non-interest income | 177,742 | 117,906 |
| Recovery of/(charges to) credit loss allowance for loans to customers | 40,123 | (330,811) |
| Credit loss allowance for net investments in leases | (321) | (8,398) |
| Recovery of credit loss allowance for performance guarantees and credit related commitments | 1,204 | 3,238 |
| Credit loss allowance for other financial assets | (14,726) | (14,067) |
| Recovery of/(charges to) credit loss allowance for financial assets measured at fair value through other comprehensive income | 2,602 | (1,809) |
| Net impairment of non-financial assets* | (11,982) | (6,161) |
| Operating profit after expected credit losses* | 1,468,920 | 797,583 |
| Staff costs | (309,302) | (244,043) |
| Depreciation and amortization | (79,891) | (68,392) |
| Recovery of liabilities and charges | 27 | (2,706) |
| Administrative and other operating expenses* | (156,668) | (122,321) |
| Operating expenses* | (545,834) | (437,462) |
| Losses from modifications of financial instruments | (1,726) | (41,015) |
| Profit before tax | 921,360 | 319,106 |
| Income tax (expense)/credit | (112,361) | 3,383 |
| Profit | 808,999 | 322,489 |
| Other comprehensive income: |
|
|
| Items that may be reclassified subsequently to profit or loss: |
|
|
| Movement in fair value reserve | (22,020) | 17,633 |
| Exchange differences on translation to presentation currency | (7,326) | 4,707 |
| Other comprehensive income for the period | (29,346) | 22,340 |
| Total comprehensive income for the period | 779,653 | 344,829 |
| Profit attributable to: |
|
|
| - Shareholders of TBCG | 800,782 | 317,752 |
| - Non-controlling interest | 8,217 | 4,737 |
| Profit | 808,999 | 322,489 |
| Total comprehensive income is attributable to: |
|
|
| - Shareholders of TBCG | 771,436 | 340,092 |
| - Non-controlling interest | 8,217 | 4,737 |
| Total comprehensive income for the period | 779,653 | 344,829 |
* Certain amounts do not correspond to 2020 Consolidated Statement of Profit or Loss and Other Comprehensive Income as they reflect the reclassifications made by the management between a) net impairment of non-financial assets and administrative and other operating expenses; and b) commission income and commission expenses.
Consolidated Statements of Cash Flows
| in thousands of GEL | Dec-21 | Dec-20 |
| Cash flows from/(used in) operating activities |
|
|
| Interest received | 1,981,768 | 1,462,815 |
| Interest received on currency swaps | 28,143 | 20,950 |
| Interest paid | (867,209) | (839,258) |
| Fees and commissions received | 414,505 | 297,024 |
| Fees and commissions paid | (188,214) | (133,385) |
| Insurance and reinsurance received | 96,601 | 86,447 |
| Insurance claims paid | (36,806) | (27,139) |
| Cash (paid)/received from trading in foreign currencies | 113,043 | (92,191) |
| Other operating income received | 75,378 | 48,402 |
| Staff costs paid | (307,633) | (238,577) |
| Administrative and other operating expenses paid | (195,188) | (134,348) |
| Income tax paid | (13,756) | (46,268) |
| Cash flows from operating activities before changes in operating assets and liabilities | 1,100,632 | 404,472 |
| Net change in operating assets |
|
|
| Due from other banks and mandatory cash balances with the National Bank of Georgia | 393,174 | (353,975) |
| Loans and advances to customers | (3,085,488) | (1,059,684) |
| Finance lease receivables | (499) | (2,902) |
| Other financial assets | (213,126) | (41,774) |
| Other assets | 5,077 | 33,109 |
| Net change in operating liabilities |
|
|
| Due to other banks | 132,826 | (32,294) |
| Customer accounts | 2,821,952 | 1,432,051 |
| Other financial liabilities | (144,867) | 115,370 |
| Other liabilities and provision for liabilities and charges | 36,791 | (8,153) |
| Net cash flows from operating activities | 1,046,472 | 486,220 |
| Cash flows from/(used in) investing activities |
|
|
| Acquisition of investment securities measured at fair value through other comprehensive income | (797,285) | (763,531) |
| Proceeds from disposal of investment securities measured at fair value through other comprehensive income | 1,025,775 | 287,917 |
| Proceeds from redemption at maturity of investment securities measured at fair value through other comprehensive income | 412,204 | 165,632 |
| Dividend received | - | 694 |
| Acquisition of bonds carried at amortised cost | (47,784) | (668,477) |
| Proceeds from redemption of bonds carried at amortised cost | 26,296 | 413,038 |
| Acquisition of premises, equipment and intangible assets | (163,222) | (164,379) |
| Proceeds from disposal of premises, equipment and intangible assets | 20,826 | 3,627 |
| Proceeds from disposal of investment properties | 23,639 | 13,513 |
| Purchase of additional interest from minority shareholders | (17,215) |
|
| Proceeds from sale of investment to NCI | 57,039 |
|
| Net cash flows from/ (used in) investing activities | 540,273 | (711,966) |
| Cash flows from/(used in) financing activities |
|
|
| Proceeds from other borrowed funds | 1,750,443 | 4,036,810 |
| Redemption of other borrowed funds | (3,338,139) | (3,324,230) |
| Repayment of principal of lease liabilities | (12,825) | (13,251) |
| Redemption of subordinated debt | (12,562) | - |
| Cash paid for share buy-back | - | (25,493) |
| Proceeds from debt securities in issue | 295,457 | 104,838 |
| Dividends paid | (87,723) | (1,344) |
| Net cash (used in)/from financing activities | (1,405,349) | 777,330 |
| Effect of exchange rate changes on cash and cash equivalents | (94,664) | 80,238 |
| Net increase in cash and cash equivalents | 86,732 | 631,822 |
| Cash and cash equivalents at the beginning of the year | 1,635,405 | 1,003,583 |
| Cash and cash equivalents at the end of the year | 1,722,137 | 1,635,405 |
Key Ratios
Average Balances
The average balances included in this document are calculated as the average of the relevant monthly balances as of each month-end. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.
| Key Ratios |
|
|
|
|
|
|
| Ratios (based on monthly averages, where applicable) | FY'21 | FY'20 |
|
|
|
|
| Profitability ratios: |
|
|
| ROE1 | 24.4% | 11.7% |
| ROA2 | 3.4% | 1.6% |
| Cost to income3 | 37.6% | 37.9% |
| NIM4 | 5.1% | 4.7% |
| Loan yields5 | 10.3% | 10.1% |
| Deposit rates6 | 3.4% | 3.6% |
| Cost of funding7 | 4.5% | 4.8%* |
|
|
|
|
| Asset quality & portfolio concentration: |
|
|
| Cost of risk9 | -0.3% | 2.4% |
| PAR 90 to Gross Loans9 | 1.1% | 1.5% |
| NPLs to Gross Loans10 | 2.4% | 4.7% |
| NPL provision coverage11 | 99.9% | 85.6% |
| Total NPL coverage12 | 175.3% | 159.4% |
| Credit loss level to Gross Loans13 | 2.4% | 4.0% |
| Related Party Loans to Gross Loans14 | 0.1% | 0.0% |
| Top 10 Borrowers to Total Portfolio15 | 6.8% | 7.9% |
| Top 20 Borrowers to Total Portfolio16 | 10.5% | 12.1% |
|
|
|
|
| Capital & liquidity positions: |
|
|
| Net Loans to Deposits plus IFI** Funding17 | 100.9% | 101.2% |
| Net Stable Funding Ratio18 | 127.3% | 126.0% |
| Liquidity Coverage Ratio19 | 115.8% | 134.2% |
| Leverage20 | 6.7x | 7.7x |
| CET 1 CAR (Basel III)21 | 13.7% | 10.4% |
| Tier 1 CAR (Basel III)22 | 16.7% | 13.0% |
| Total 1 CAR (Basel III)23 | 20.3% | 17.1% |
*The Group enters into swap agreements denominated in foreign currencies with a view to decrease cost of funding. Respective interest effect is presented within net interest income, but has not been previously included in the cost of funding ratio calculation. As the contracts reached significant volume, the Group revisited the presentation of effects in the cost of funding ratio and decided to include interest effect from swap agreements in the calculation of cost of funding. The change was made retrospectively and ratios of previous periods have also been restated.
** International Financial Institutions
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 monthly average total assets for the same period; annualised where applicable.
3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income).
4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions.
5. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers; annualised where applicable.
6. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits; annualised where applicable.
7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest bearing liabilities; annualized where applicable.
8. Cost of risk equals credit loss allowance for loans to customers divided by monthly average gross loans and advances to customers; annualised where applicable.
9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period.
10. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.
11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans.
12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans.
13. Credit loss level to gross loans equals credit loss allowance for loans to customers divided by the gross loan portfolio for the same period.
14. Related party loans to total loans equals related party loans divided by the gross loan portfolio.
15. Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided by the gross loan portfolio.
16. Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided by the gross loan portfolio.
17. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions.
18. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank stand-alone, based on local standards.
19. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank stand-alone, based on local standards.
20. Leverage equals total assets to total equity.
21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank stand-alone, based on local standards.
22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank stand-alone, based on local standards.
23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank 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 3.1228 as of 30 September 2021. For the calculations of the YoY growth without the currency exchange rate effect, we used the USD/GEL exchange rate of 3.2766 as of 31 December 2020. As of 31 December 2021 the USD/GEL exchange rate equaled 3.0976. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: FY 2021 of 3.2306, FY 2020 of 3.1097.
Additional Disclosures
1) TBC Bank - Background
TBC Bank is the largest banking group in Georgia, where 98.7% of its business is concentrated, with a 38.6% market share by total assets. It offers retail, CIB, 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 United Kingdom. TBC PLC is listed on the London Stock Exchange under the symbol TBCG and is a constituent of the FTSE 250 index. It is also a member of the FTSE4Good Index Series and the MSCI United Kingdom Small Cap Index.
TBC Bank Group PLC's financial results have been prepared in accordance with UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).
2) Subsidiaries of TBC Bank Group PLC[26]
|
| Ownership / voting | Country | Year of incorporation | Industry | Total Assets | |
| Subsidiary | Amount GEL'000 | % in TBC Group | ||||
| JSC TBC Bank | 99.9% | Georgia | 1992 | Banking | 23,564,174 | 96.13% |
| United Financial Corporation JSC | 99.5% | Georgia | 1997 | Card processing | 19,886 | 0.08% |
| TBC Capital LLC | 100.0% | Georgia | 1999 | Brokerage | 3,926 | 0.02% |
| TBC Leasing JSC | 100.0% | Georgia | 2003 | Leasing | 351,563 | 1.43% |
| TBC Kredit LLC | 100.0% | Azerbaijan | 1999 | Non-banking credit institution | 22,216 | 0.09% |
| TBC Pay LLC | 100.0% | Georgia | 2009 | Processing | 44,256 | 0.18% |
| Index LLC | 100.0% | Georgia | 2011 | Real estate management | 1,566 | 0.01% |
| TBC Invest LLC | 100.0% | Israel | 2011 | PR and marketing | 312 | 0.00% |
| TBC Asset management LLC | 100.0% | Georgia | 2021 | Asset Management | 0 | 0.00% |
| JSC TBC Insurance | 100.0% | Georgia | 2014 | Insurance | 80,175 | 0.33% |
| Redmed LLC | 100.0% | Georgia | 2019 | E-commerce | 1,498 | 0.00% |
| TBC NET LLC* | 100.0% | Georgia | 2019 | Asset Management | 58,302 | 0.24% |
| Swoop JSC** | N/A | Georgia | 2010 | Retail Trade | 657 | 0.00% |
| LLC Online Tickets | 55.0% | Georgia | 2015 | Software Services | 3,027 | 0.01% |
| TKT UZ | 75.00% | Uzbekistan | 2019 | Retail Trade | 103 | 0.00% |
| My.ge LLC** | N/A | Georgia | 2008 | E-commerce, Housing and Auto | 25,656 | 0.10% |
| Vendoo LLC (Geo) | 100.0% | Georgia | 2019 | Retail Leasing | 3,920 | 0.02% |
| Mypost LLC | 100.0% | Georgia | 2019 | Postal Service | 108 | 0.00% |
| Billing Solutions LLC | 51.00% | Georgia | 2019 | Software Services | 412 | 0.00% |
| All property.ge LLC** | N/A | Georgia | 2013 | Real estate management | 4,578 | 0.02% |
| LLC F Solutions | 100.0% | Georgia | 2019 | Software Services | 11 | 0.00% |
| TBC Connect LLC** | N/A | Georgia | 2020 | Software Services | 4 | 0.00% |
| Marjanishvili 7 LLC | 100.0% | Georgia | 2020 | Food and Beverage | 840 | 0.00% |
| Artarea.ge LLC | 100.0% | Georgia | 2021 | PR and marketing | 63 | 0.00% |
| Saba LLC | 85.0% | Georgia | 2012 | Education | 63 | 0.00% |
| TBC Art Gallery LLC | 100.0% | Georgia | 2012 | PR and marketing | 0 | 0.00% |
| Space JSC | 100.0% | Georgia | 2021 | Software Services | 31,683 | 0.13% |
| Space International JSC | 100.0% | Georgia | 2021 | Software Services | 31,683 | 0.13% |
| TBC Group Support LLC | 100.0% | Georgia | 2020 | Risk Monitoring | 1 | 0.00% |
| Inspired LLC | 51.0% | Uzbekistan | 2011 | Processing | 30,417 | 0.12% |
| TBC Bank JSC UZ | 60.2% | Uzbekistan | 2020 | Banking | 222,039 | 0.91% |
| LLC Vendoo (UZ Leasing) | 100.00% | Uzbekistan | 2019 | Retail Leasing | 3,920 | 0.02% |
* The company was renamed from TBC Ecosystem companies LLC to TBC Net LLC during 2021.
** The companies were merged with TBC Net LLC during 2021.
3) TBC Insurance
TBC Insurance, a wholly owned subsidiary of TBC Bank, is one of the leading players on the Georgian non-health insurance market. The company was acquired by the Group in October 2016 and has since grown significantly, becoming the second largest player on the property and casualty insurance and life insurance (non-health) market and the largest player in the retail segment, holding 26.7% and 40.0% market shares[27] without border motor third party liability (MTPL) insurance, respectively, in 4Q 2021 or 21.8% and 37.1% in the whole of 2021.
TBC Insurance serves both individual and legal entities and provides a broad range of insurance products covering motor, travel, personal accident, credit life and property, business property, liability, cargo, agro, and health insurance products. The company differentiates itself through its advanced digital channels, which include TBC Bank's award-winning internet and mobile banking applications, a wide network of self-service terminals, a web channel, and B-Bot, a Georgian-speaking chat-bot that is available through Facebook messenger.
In 2019, we entered the health insurance market, with a strategy to target the premium segment by providing a superior customer experience coupled with the most innovative approach to products and services. In 2021, as we accumulated sufficient market knowledge and claims statistics, we expanded our value proposition to the mid-premium segment.
In 2021, net profit including health insurance increased considerably related to business growth and non-recurring reinsurance adjustment in 4Q 2021.
| Information excluding health insurance | 4Q'21 | 3Q'21 | 4Q'20 | FY'21 | FY'20 |
| In thousands of GEL |
|
|
|
|
|
| Gross written premium | 25,571 | 26,125 | 21,322 | 95,790 | 77,652 |
| Net earned premium[28] | 20,124 | 19,238 | 16,595 | 74,609 | 63,954 |
| Net profit | 5,704 | 3,951 | 2,512 | 16,062 | 11,473 |
|
|
|
|
|
|
|
| Net combined ratio | 72.2% | 80.2% | 87.1% | 79.1% | 82.5% |
| Information including health insurance | 4Q'21 | 3Q'21 | 4Q'20 | FY'21 | FY'20 |
| In thousands of GEL |
|
|
|
|
|
| Gross written premium | 33,039 | 28,851 | 23,077 | 113,819 | 86,369 |
| Net earned premium | 24,497 | 22,268 | 18,696 | 87,435 | 71,359 |
| Net profit | 5,122 | 3,598 | 2,299 | 13,760 | 10,041 |
|
|
|
|
|
|
|
| Net combined ratio | 80.2% | 85.0% | 90.1% | 85.5% | 86.8% |
Note: IFRS standalone data
4) Fast growing digital bank in Uzbekistan
| in thousands | Jan'21 | Mar'21 | Jun'21 | Sep'21 | Dec'21 |
| # of total registered users | 28 | 98 | 302 | 667 | 1,140 |
| # of downloads | 29 | 103 | 391 | 897 | 1,548 |
| Retail gross loan portfolio* (GEL) | 153 | 953 | 25,239 | 52,493 | 92,825 |
| Retail deposit portfolio** (GEL) | 1,108 | 2,839 | 15,543 | 91,979 | 207,510 |
| # of total cards issued (cumulative figures) | 8 | 31 | 66 | 117 | 224 |
| # of other cards attached (cumulative figures) | 4 | 29 | 126 | 328 | 386 |
| Total monthly number of transactions | 27 | 203 | 563 | 906 | 1,739 |
* Loans in Uzbekistan are disbursed in local currency
** Current, savings and time accounts. Deposits in Uzbekistan are accepted in local currency.
5) Loan book breakdown by stages according IFRS 9
Total (in million GEL)
|
| 31-Dec-21 | 30-Sep-21 | 31-Dec-20 | |||
| Stage | Gross | LLP rate* | Gross | LLP rate* | Gross | LLP rate* |
| 1 | 14,602 | 0.7% | 13,557 | 0.9% | 11,861 | 1.1% |
| 2 | 1,935 | 6.2% | 1,737 | 5.7% | 2,448 | 5.8% |
| 3 | 510 | 36.4% | 670 | 34.9% | 892 | 37.4% |
| Total | 17,047 | 2.4% | 15,964 | 2.9% | 15,201 | 4.0% |
CIB (in million GEL)
|
| 31-Dec-21 | 30-Sep-21 | 31-Dec-20 | |||
| Stage | Gross | LLP rate* | Gross | LLP rate* | Gross | LLP rate* |
| 1 | 5,743 | 0.4% | 5,285 | 0.9% | 4,701 | 1.2% |
| 2 | 713 | 0.2% | 728 | 0.5% | 965 | 0.9% |
| 3 | 92 | 27.3% | 124 | 20.1% | 166 | 28.0% |
| Total | 6,548 | 0.8% | 6,137 | 1.2% | 5,832 | 1.9% |
MSME (in million GEL)
|
| 31-Dec-21 | 30-Sep-21 | 31-Dec-20 | |||
| Stage | Gross | LLP rate* | Gross | LLP rate* | Gross | LLP rate* |
| 1 | 3,520 | 0.6% | 3,206 | 0.7% | 2,633 | 0.8% |
| 2 | 413 | 7.8% | 445 | 6.6% | 630 | 7.4% |
| 3 | 208 | 29.0% | 225 | 32.3% | 260 | 32.9% |
| Total | 4,141 | 2.7% | 3,876 | 3.2% | 3,523 | 4.3% |
Retail (in million GEL)
|
| 31-Dec-21 | 30-Sep-21 | 31-Dec-20 | |||
| Stage | Gross | LLP rate* | Gross | LLP rate* | Gross | LLP rate* |
| 1 | 5,339 | 1.1% | 5,066 | 1.1% | 4,527 | 1.2% |
| 2 | 809 | 10.8% | 564 | 11.8% | 853 | 10.3% |
| 3 | 210 | 47.7% | 321 | 42.5% | 466 | 43.2% |
| Total | 6,358 | 3.9% | 5,951 | 4.4% | 5,846 | 5.9% |
* LLP rate is defined as credit loss allowances divided by gross loans
[1] Users who conducted at least one transaction during the month.
[2] Users who conducted at least one transaction during the month.
[3] Users of TBC Bank internet and mobile banking, who logged in to the system at least once during the month.
[4] Users of TBC Bank internet and mobile banking, who logged in to the system at least once during the day.
[5] The average daily active retail digital users divided by the monthly active retail digital users.
[6] According to our estimates based on Geostat preliminary data.
[7] Total non-interest income less net fee and commission income.
[8] Users of TBC Bank internet & mobile banking, Space & TBC Pay app, who logged in to the system at least once in the past 3 months.
[9] Monthly and daily active digital users include only TBC Bank internet and mobile banking users.
[10] Users who conducted at least one transaction during the month.
[11] Based on data published by the Central Bank of Uzbekistan.
[12] Users who conducted at least one transaction during the month.
[14] Other operating non-interest income includes net insurance premium earned after claims and acquisition costs.
[15] For the ratio calculation, all relevant group recurring costs are allocated to the bank.
[16] Net insurance premium earned after claims and acquisition costs can be reconciled to the standalone net insurance profit (as shown in Annex 3) as follows: net insurance premium earned after claims and acquisition costs less credit loss allowance, administrative expenses and taxes, plus fee and commission income and net interest income.
[17] For the ratio calculation, all relevant group recurring costs are allocated to the bank.
[18] Secured loans are those that are secured with cash, gold, real estate and other PPE
[19] In 1Q 2021, we updated the calculation methodology of NPL collateral coverage; please refer to annex 5 for more details.
[20] Other financial assets and liabilities do not contain offset amounts of omnibus accounts for TBC Capital (nominee accounts, where TBC Capital acts as a fiduciary on a client's behalf).
[21] Other operating non-interest income includes net insurance premium earned after claims and acquisition costs.
[22] For the ratio calculation, all relevant group recurring costs are allocated to the bank.
[23] Net insurance premium earned after claims and acquisition costs can be reconciled to the standalone net insurance profit (as shown in Annex 3) as follows: net insurance premium earned after claims and acquisition costs less credit loss allowance, administrative expenses and taxes, plus fee and commission income and net interest income.
[24] For the ratio calculation, all relevant group recurring costs are allocated to the bank.
[25] Other financial assets and liabilities do not contain offset amounts of omnibus accounts for TBC Capital (nominee accounts, where TBC Capital acts as a fiduciary on client's behalf).
[26] TBC Bank Group PLC became the parent company of JSC TBC Bank on 10 August 2016.
[27] Market shares are based on internal estimates. Source is Insurance State Supervision Service of Georgia. Total non-health and retail market share in 4Q 2021 including MTPL stood at 25.3% and 35.8% respectively or 20.9% and 33.6% in total 2021.
[28] Net earned premium equals earned premium minus the reinsurer's share of earned premium.
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