Source - LSE Regulatory
RNS Number : 8302S
TBC Bank Group PLC
09 November 2023
 

TBC BANK GROUP PLC ("TBC Bank")

3Q AND 9M 2023 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

 

 

Forward-Looking Statements

 

This document contains forward-looking statements; such forward-looking statements contain known and unknown risks, uncertainties and other important factors, which may cause the actual results, performance or achievements of TBC Bank Group PLC ("the Bank" or "the Group") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others: the achievement of anticipated levels of profitability; growth, cost and recent acquisitions; the impact of competitive pricing; the ability to obtain the necessary regulatory approvals and licenses; the impact of developments in the Georgian and Uzbek economies; the impact of COVID-19; the political and legal environment; financial risk management; and the impact of general business and global economic conditions.

 

None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises, nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects are based are accurate or exhaustive or, in the case of the assumptions, entirely covered in the document. These forward-looking statements speak only as of the date they are made, and, subject to compliance with applicable law and regulations, the Bank expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in the document to reflect actual results, changes in assumptions or changes in factors affecting those statements.

 

Certain financial information contained in this presentation, which is prepared on the basis of the Group's accounting policies applied consistently from year to year, has been extracted from the Group's unaudited management accounts and financial statements. The areas in which the management accounts might differ from the International Financial Reporting Standards and/or generally accepted U.S. accounting principles could be significant; you should consult your own professional advisors and/or conduct your own due diligence for a complete and detailed understanding of such differences and any implications they might have on the relevant financial information contained in this presentation. Some numerical figures included in this report have been subjected to rounding adjustments. Accordingly, the numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them.

 


3Q and 9M 2023 Consolidated Financial Results Conference Call Details

 

TBC Bank Group PLC ("TBC PLC") published its unaudited consolidated financial results for the third quarter and nine months of 2023 on Thursday, 9 November 2023 at 7.00 am GMT. The management team will host a conference call on the day at 2.00 pm GMT to discuss the results.

 

Please click the link below to join the webinar:

 

https://tbc.zoom.us/j/94193458741?pwd=VVVnTXgreTJ5KzdsR0o4MEFIdGtlUT09

Webinar ID: 941 9345 8741

Passcode: 083467

 

Other international numbers are available at:  https://tbc.zoom.us/u/ad7INMhaeO

 

 

The call will be held in two parts: the first part will comprise presentations, while participants will have the opportunity to ask questions during the second part. All participants will be muted throughout the webinar.

 

 

Webinar Instructions:

In order to ask questions, participants joining the webinar should use the "hand icon" visible at the bottom of the screen. The host will unmute those participants who have raised hands one after the other. Once the question is asked, the participant will be muted again. 

 

Call Instructions:

Participants who use the dial-in number to join the webinar should dial *9 to raise their hand.

 

 

Contacts

 



 

 


Andrew Keeley

Director of Investor Relations and International Media

 

E-mail:  AKeeley@tbcbank.com.ge

Tel:  +44 (0) 7791 569834

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

 

3Q and 9M 2023 Unaudited Consolidated Financial Results Announcement

 

Interim Management Report

Financial Highlights 

Operational Highlights 

Letter from the Chief Executive Officer 

Economic Overview 

Unaudited Consolidated Financial Results Overview for 3Q 2023 

Unaudited Consolidated Financial Results Overview for 9M 2023 

 

Additional Disclosures 

1)          TBC Bank - Background 

2)          Consolidated Financial Statements and Key Ratios 3Q 2023 

3)          Consolidated Financial Statements and Key Ratios 9M 2023 

4)          Business Line Definition 

5)          Financial Disclosures by Business Lines 

6)          Market shares in Georgia 

7)          Subsidiaries of TBC Bank Group PLC 

8)          Impact of Changed Accounting Treatment for Option Contracts 

9)          Replacement of IFRS 4 with IFRS 17 

10)Loan Book Breakdown by Stages According IFRS 9 

11)Glossary 

12)Ratio Definitions and Exchange Rates 

 



 

3Q and 9M 2023 Unaudited Consolidated Financial Results

3Q 2023 net profit of GEL 300 million, down by 6% YoY, with ROE at 27.6%.

9M 2023 net profit of GEL 849 million, up by 9% YoY, with ROE at 27.0%.

 

European Union Market Abuse Regulation EU 596/2014 requires TBC Bank Group PLC to disclose that this announcement contains Inside Information, as defined in that Regulation.

Financial Highlights

Income statement

in thousands of GEL

3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

9M'23

9M'22

Change YoY

Net interest income

427,934

399,338

340,415

25.7%

7.2%

1,194,063

932,606

28.0%

Net fee and commission income

104,152

105,636

85,872

21.3%

-1.4%

302,226

227,334

32.9%

Other operating non-interest income

83,133

81,792

163,344

-49.1%

1.6%

237,935

306,592

-22.4%

Operating profit

615,219

586,766

589,631

4.3%

4.8%

1,734,224

1,466,532

18.3%

Total credit loss allowance

(46,159)

(33,934)

(48,256)

-4.3%

36.0%

(133,261)

(99,846)

33.5%

Operating expenses

(218,087)

(203,560)

(176,240)

23.7%

7.1%

(604,427)

(490,825)

23.1%

Profit before tax

350,973

349,272

365,135

-3.9%

0.5%

996,536

875,861

13.8%

Income tax expense

(50,485)

(56,186)

(44,115)

14.4%

-10.1%

(148,002)

(96,296)

53.7%

Profit for the period

300,488

293,086

321,020

-6.4%

2.5%

848,534

779,565

8.8%

 

Balance sheet

in thousands of GEL

Sep'23

Jun'23

Sep'22

Change YoY

Change QoQ

Total Assets

29,956,393

28,878,826

27,631,688

8.4%

3.7%

Gross Loans

20,365,135

19,360,689

17,365,894

17.3%

5.2%

Customer Deposits

18,722,415

18,992,492

17,115,022

9.4%

-1.4%

Total Equity

4,473,400

4,331,529

3,879,676

15.3%

3.3%

CET 1 Capital (Basel III) per IFRS

3,966,901

3,920,004

n/a

n/a

1.2%

Tier 1 Capital (Basel III) per IFRS

4,502,561

4,443,544

n/a

n/a

1.3%

Total Capital (Basel III) per IFRS

5,058,696

4,947,830

n/a

n/a

2.2%

Risk Weighted Assets (Basel III) per IFRS

22,668,335

21,452,808

n/a

n/a

5.7%

Number of shares

55,140,216

55,140,216

55,479,420

-0.6%

0.0%

 

Key Ratios

 

3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

9M'23

9M'22

Change YoY

ROE

27.6%

28.1%

33.6%

-6.0 pp

-0.5 pp

27.0%

28.6%

-1.6 pp

ROE - Georgia FS

26.4%

27.8%

32.5%

-6.1 pp

-1.4 pp

25.9%

27.9%

-2.0 pp

ROA

4.1%

4.2%

4.8%

-0.7 pp

-0.1 pp

4.0%

4.1%

-0.1 pp

ROA - Georgia FS

4.2%

4.5%

5.0%

-0.8 pp

-0.3 pp

4.1%

4.3%

-0.2 pp

NIM

6.9%

6.8%

6.3%

0.6 pp

0.1 pp

6.7%

5.9%

0.8 pp

Cost to income

35.4%

34.7%

29.9%

5.5 pp

0.7 pp

34.9%

33.5%

1.4 pp

Cost to income - Georgia FS

31.5%

30.2%

25.7%

5.8 pp

1.3 pp

30.7%

28.6%

2.1 pp

Cost of risk

0.9%

0.6%

1.0%

-0.1 pp

0.3 pp

0.9%

0.7%

0.2 pp

NPL to gross loans

2.0%

2.1%

2.3%

-0.3 pp

-0.1 pp

2.0%

2.3%

-0.3 pp

NPL provision coverage ratio

87.6%

89.3%

99.6%

-12.0 pp

-1.7 pp

87.6%

99.6%

-12.0 pp

Total NPL coverage ratio

151.6%

153.7%

164.2%

-12.6 pp

-2.1 pp

151.6%

164.2%

-12.6 pp

CET 1 CAR (Basel III) per IFRS

17.5%

18.3%

n/a

n/a

-0.8 pp

17.5%

n/a

n/a

Tier 1 CAR (Basel III) per IFRS

19.9%

20.7%

n/a

n/a

-0.8 pp

19.9%

n/a

n/a

Total CAR (Basel III) per IFRS

22.3%

23.1%

n/a

n/a

-0.8 pp

22.3%

n/a

n/a

Leverage (Times)

6.7x

6.7x

7.1x

-0.4x

0x

6.7x

7.1x

-0.4x

EPS (GEL)

5.54

5.33

5.82

-4.8%

3.9%

15.44

14.19

8.8%

Diluted EPS (GEL)

5.45

5.25

5.74

-5.1%

3.8%

15.22

14.00

8.7%

BVPS (GEL)

80.81

78.21

69.18

16.8%

3.3%

80.81

69.18

16.8%

Georgia FS refers to Georgian financial services.

For the ratio definitions please refer to appendix 12.


Operational Highlights

Customer base

In millions 

Sep'23

Jun'23

Sep'22

Change YoY

Change QoQ

Total number of registered users

17.3

16.1

12.4

40%

7%

  Georgia

3.2

3.2

3.0

7%

0%

  Uzbekistan

14.1

12.9

9.4

50%

9%

Total MAU

5.3

5.1

3.9

36%

4%

   Georgia

1.6

1.6

1.4

14%

0%

   Uzbekistan

3.7

3.5

2.5

48%

6%

 

Digital customers

 In thousands

Sep'23

Jun'23

Sep'22

Change YoY

Change QoQ

Digital DAU Georgia

384

381

319

20%

1%

Digital MAU Georgia

874

849

735

19%

3%

Digital DAU/MAU Georgia

44%

45%

43%

1 pp

-1 pp

Digital DAU Group

1,436

1,434

1,073

34%

0%

Digital MAU Group

4,519

4,295

3,172

42%

5%

Digital DAU/MAU Group

32%

33%

34%

 -2 pp

 -1 pp

 

Uzbekistan - key highlights

In thousands of GEL

Sep'23

Jun'23

Sep'22

Change YoY

Change QoQ

Gross loans

632,013

526,843

268,976

NMF

20.0%

Customer accounts

515,586

457,340

296,563

73.9%

12.7%

 

 

3Q'23

2Q'23

Change QoQ

9M'23

Net profit (GEL, thousands)

13,684

12,505

9.4%

38,896

ROE

23.4%

22.1%

1.3 pp

24.6%

 

Georgian and Uzbek payments businesses 

In millions of GEL

3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

9M'23

9M'22

Change YoY

Net revenue - Georgia

69.5

71.0

59.5

16.8%

-2.1%

201.6

153.5

31.3%

Net revenue - Uzbekistan (Payme)

16.9

16.8

12.0

40.8%

0.6%

50.2

33.5

49.9%

 

TNET - digital lifestyle platform in Georgia

In millions

3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

9M'23

9M'22

Change YoY

Gross merchandise value (GMV, GEL)

44.8

52.8

28.5

57.2%

-15.2%

128.0

71.4

79.3%

Number of transactions

3.7

4.2

2.9

27.6%

-11.9%

11.3

8.8

28.4%

 

 

Letter from the Chief Executive Officer[1]

I am pleased to announce that 3Q 2023 has been another very strong and consistent quarter for TBC, helping us deliver an excellent result for our shareholders for the first nine months of the year. Our net profit for the third quarter amounted to GEL 300 million, up by 3% quarter-on-quarter, while our return on equity stood at a very impressive 27.6%. For 9M 2023, our net profit totaled GEL 849 million, a 9% year-on-year increase, while return on equity came in at 27.0%.

I am glad to share that it was another positive quarter of dynamic growth and continuing profitability for our fintech businesses in Uzbekistan, bringing 9M 2023 net profit to GEL 39 million, accounting for 5% of the Group's earnings, and with the loan book now contributing an 8% share of total group retail loans.

I also want to mention the appointment of Oliver Hughes, former CEO of Tinkoff Group, in September as head of international operations. We are delighted to welcome such a high calibre addition to the executive management team and we think Oliver, Nika and the team in Tashkent can take our Uzbekistan operations to a new level in the coming years. 

 

The economic backdrop remains supportive

The Georgian economy continues to post very strong growth, with GDP expanding by 5.4% in the third quarter of 2023 and 6.8% in 9M 2023. Importantly, large central bank and fiscal buffers continue to be accumulated. Uzbekistan's economic performance also remains impressive, with 6.1% GDP growth in 3Q 2023 and 5.8% in the first nine months of 2023. While inflation in Georgia is already below target, we are also seeing deceleration in Uzbekistan, suggesting that both countries are in easing cycles, which should be supportive for the economic outlook.

Our strong financial and operating performance continued in 3Q 2023

We continue to see very strong core revenue dynamics. In 3Q 2023, our operating income reached GEL 615 million, showing a 4% year-on-year increase (from an unusually high base in 3Q 2022), driven by both interest and non-interest income. Net interest income rose 26% year-on-year, buoyed by a highly resilient net interest margin, which rose 60 bps year-on-year to 6.9% in 3Q 2023. Over the same period, net fee and commission income increased by 21% year-on-year. Notably, despite continuing to invest in digitalization and scaling up our Uzbek operations, our favorable operating income dynamics enable us to maintain a group cost/income ratio of around 35%.

Our focus on providing high quality and convenient digital financial services continues to bear fruit, with digital MAU reaching 4.5 million at the Group level, up by a very impressive 1.3 million customers in the past 12 months, led by our fully digital Uzbek operations. This resulted in a group DAU/MAU ratio of 32% as of September 2023, while the DAU/MAU ratio for the Georgian business stood at 44%.

On the balance sheet side, our credit dynamics remain positive. Our gross loan book increased by 17% year-on-year as of 30 September 2023, or by 19% in constant currency terms. Our asset quality remained very sound in 3Q 2023, translating into a 0.9% cost of risk, with the share of NPLs continuing to decline, to 2.0%. On the funding side, customer deposits increased by 9% year-on-year, or by 12% in constant currency terms.

Our liquidity and capital positions remain strong. As of 30 September 2023, our CET1, Tier 1 and Total Capital ratios[2] stood at 17.5%, 19.9% and 22.3%, respectively, and remained comfortably above the minimum regulatory requirements by 3.1 pp, 3.1 pp and 2.4 pp, correspondingly. At the same time, we continued to operate with a high liquidity buffer, with our net stable funding (NSFR)2 and liquidity coverage (LCR)2 ratios standing at 124% and 114%, respectively.

Rock solid business in Georgia combined with dynamic growth in Uzbekistan

Our recently revised financial disclosures highlight the respective strengths of our core financial services operations in Georgia and Uzbekistan. Georgia continues to deliver excellent profitability, with 26.4% ROE in 3Q 2023 and 25.9% for 9M 2023, while on the balance sheet side, gross loans increased by 17% year-on-year on a constant currency basis.

Our Uzbek fintech businesses (TBC UZ and Payme) continued to generate positive returns in the third quarter of 2023, with their combined net profit amounting to GEL 14 million, while ROE stood at 23.4%, and 24.6% for 9M 2023.

As of 9M 2023, TBC UZ retail loans amounted to GEL 632 million, up by 20% quarter-on-quarter, giving us an unsecured consumer / micro loan market share[3] of 12.5%. At the same time, retail deposits reached GEL 516 million, up by 13% quarter-on-quarter, accounting for 3.0% retail deposit market share3. Meanwhile, in 3Q 2023, Payme's payment volumes rose by 41% year-on-year, reaching GEL 16.9 billion.

 

TNET retains strong growth momentum

In the third quarter of 2023, our digital lifestyle ecosystem, TNET, continued to deliver robust growth, with GEL 45 million gross merchandise value (GMV), up by 57% year-on-year. This was driven by strong progress in the lifestyle and e-commerce verticals.

Planning for a strong end of year

Finally, I would like to thank all our shareholders for their continued support as we look to deliver on our strategic targets over the next few years. We are pleased with what we have achieved so far this year and will strive to deliver a strong end to the year during the final quarter.


 

Economic Overview

Georgia

Economic growth remains robust

Georgia' economy continued to perform strongly in 3Q 2023, with real GDP growth of 5.4%, according to Geostat's estimates. This follows 7.7% growth in 1Q YoY and 7.5% in 2Q, implying 6.8% in 9M 3023.

External sector - positive tourism and FDI, but slowing export and import growth

As we saw in 2Q 2023, the sustained negative impact of lower international commodity prices on both exports and imports noticeably affected external sector activity in 3Q 2023. Specifically, export and import growth fell to 1.6% and 7.9% YoY, respectively. Importantly, these commodity price dynamics particularly affected domestic commodity exports, while re-exports continued to perform strongly. At the same time, the notable increase of the share of IT services in Georgian exports continued, with a major driver being the arrival of migrants over the past year. At the same time, investment goods constituted a considerable share of imports, indicating positive investment sentiment.

Given last year's high base effect, which was caused by the high level of immigration in 2022, the annual growth of tourism inflows fell further to 5.3% in 3Q 2023 as migrants are gradually being counted as residents by the NBG and hence being exluded from the tourism sector, while the figure for the first nine months was 29.2%. At the same time, the share of conventional tourism in total inflows has increased lately. TBC Capital estimates that the YoY growth of tourism inflows in January-September 2023, including the spending of migrants counted as residents by the NBG, was 42.3% while excluding migrants it reached  30.1%. Remittances also maintained a positive momentum after adjustment for Russia, increasing by 13.8%[4] YoY in 3Q and by 47.5% in the first nine months of 2023. After a slowdown in 1Q, FDI increased by 29.9% YoY in 2Q 2023.

Fiscal consolidation underway

It is important to highlight that the strong recent economic growth is not a result of fiscal stimulus. In fact, fiscal consolidation is underway. After reaching 9.3% of GDP in 2020 and a lower, but still large, level of 6.1% in 2021, the budget deficit stood at 3.1% in 2022. According to the Ministry of Finance, further fiscal consolidation is expected with deficit-to-GDP ratios of 2.8% and 2.5% in 2023 and 2024, respectively.

Credit growth still strong

As of September 2023, bank credit increased by 14.8% YoY, against 13.5% growth at the end of 2Q 2023, at constant exchange rates[5]. At the same time, as inflation remained stably low, the YoY growth in real credit increased from 12.9% in June to 14.1% in September 2023.

Low inflation enables monetary policy easing

The combination of low inflation and NBG rate cuts affecting exchange rate expectations and normalizing inflows has driven a minor depreciation in the US$/GEL exchange rate from 2.62 at the end of June to 2.68 at the end of September.

As a result of a broadly stable GEL and sustained disinflationary pass-through from international markets, CPI inflation stabilized well below the NBG target of 3%, standing at 0.7% YoY in September. At the same time, relatively rigid service inflation and higher pressures on imports due to volatile oil prices, contributed to marginally elevated MoM figures. The NBG has remained cautious and delivered this year's third rate cut of only 25 basis points in September, reducing the MPR to 10.0%. The central bank has continued accumulating substantial amounts of reserves with a net purchase of US$ 1,390 million on the FX market in January-September 2023, however, it started selling those in response to exchange rate volatility from September. Total gross international reserves still increased to US$ 5.3 billion as of Septmeber 2023,with net reserves of US$ 2.8 billion having doubled over the past 18 months.

Uzbekistan

Uzbekistan also demonstrated solid economic activity with 6.1%[6] growth in the third quarter and 5.8% in the first nine months of 2023. External trade was strong as exports of goods increased by 37.7% and imports by 32.5% YoY in the 3Q and by 24.2% and 23.6%6 in the first nine months of 2023, respectively. The retail loan portfolio grew by 53.8% YoY at the end of September, with mortgage credit expanding by 26.5% and non-mortgages by 79.1%[7]. Annual inflation increased marginally from 9.0% in June to 9.2% in September, while the central bank kept its monetary policy rate unchanged at 14.0% throughout the quarter. The US$/UZS continued its slight depreciation trend, standing at 12,175 at the end of September 20237, while the REER remained broadly unchanged.

Going forward

After two, successive years of double-digit growth in Georgia, recent trends indicate that economic activity should moderate somewhat but remain strong in 2023 at 6.6% and in 2024 at 4.8%, according to TBC Capital projections, while the baseline for Uzbekistan stands at 6.1% and 5.4%, respectively.

More information on the Georgian economy and financial sector can be found at www.tbccapital.ge.


Unaudited Consolidated Financial Results Overview for 3Q 2023

This statement provides a summary of the business and financial trends for 3Q 2023 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.

TBC Bank Group PLC's financial results have been prepared in accordance with the UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).

Total equity and total liabilities were restated for 30-Sep-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 9M 2022. In addition, total assets and total liabilities for 30-Sep-2022 were restated due to replacement of IFRS 4 with IFRS 17. For more details, please refer to appendix 8 and 9.

Please note that there might be slight differences in previous periods' figures due to rounding.

Net Interest Income

In 3Q 2023, net interest income amounted to GEL 427.9 million, up by 25.7% and 7.2% on a YoY and QoQ basis, respectively.

The YoY rise in interest income of GEL 148.3 million, or 24.5%, was mostly attributable to an increase in interest income from loans related to a rise in the respective yield by 0.7 pp, as well as an increase in the loan portfolio of GEL 2,999.2 million, or 17.3%.

The QoQ increase in interest income of GEL 41.8 million, or 5.9%, was mainly related to an increase in interest income from loans on the back of growth in the loan portfolio of GEL 1,004.4 million, or 5.2%.

Interest expense increased by GEL 60.7 million, or 22.9%, on a YoY basis, mainly related to an increase in the deposit portfolio of GEL 1,607.4 million, or 9.4%, and a 1.0 pp growth in deposit costs.

On a QoQ basis, interest expense increased by GEL 13.2 million, or 4.2%, primarily driven by an increased average balance of our deposit portfolio, while deposit costs remained stable.

In 3Q 2023, our NIM stood at 6.9%, up by 0.6 pp and 0.1 pp on a YoY and QoQ basis, respectively.

In thousands of GEL

 3Q'23

 2Q'23

 3Q'22

Change YoY

Change QoQ

Interest income

753,658

711,820

605,395

24.5%

5.9%

Interest expense*

(325,724)

(312,482)

(264,980)

22.9%

4.2%

Net interest income

427,934

399,338

340,415

25.7%

7.2%


 

 

 

 

 

NIM

6.9%

6.8%

6.3%

0.6 pp

0.1 pp

* Interest expense includes net interest gains from currency swaps

 

Non-Interest Income

In 3Q 2023, our net fee and commission income increased by 21.3% YoY and remained broadly stable on a QoQ basis. The YoY increase was mainly related to increased payments transactions. In 3Q 2023, our Uzbek business contributed more than 17% to the Group's net fee & commission income.

In 3Q 2023, net gains from currency operations were down by 54.0% on a YoY basis, due to abnormally high FX revenues in 3Q 2022. 

In thousands of GEL

Non-interest income

 3Q'23

 2Q'23

 3Q'22

Change YoY

Change QoQ

Net fee and commission income

104,152

105,636

85,872

21.3%

-1.4%

Net gains from currency derivatives, foreign currency operations and translation

66,968

61,127

145,712

-54.0%

9.6%

Insurance profit

9,798

6,184

10,020

-2.2%

58.4%

Other operating income

6,367

14,481

7,612

-16.4%

-56.0%

Total non-interest income

187,285

187,428

249,216

-24.9%

-0.1%

 

Credit Loss Allowance

Credit loss allowance for loans in 3Q 2023 amounted to GEL 42.6 million, while cost of risk stood at 0.9%.

In thousands of GEL

 3Q'23

 2Q'23

 3Q'22

Change YoY

Change QoQ

Credit loss allowance for loans to customers

(42,595)

(29,384)

(41,419)

2.8%

45.0%

Credit loss allowance for other transactions

(3,564)

(4,550)

(6,837)

-47.9%

-21.7%

Total credit loss allowance

(46,159)

(33,934)

(48,256)

-4.3%

36.0%

Operating profit after expected credit losses and non-financial asset impairment losses

569,060

552,832

541,375

5.1%

2.9%


 

 

 



Cost of risk

0.9%

0.6%

1.0%

-0.1 pp

0.3 pp

Operating Expenses

In 3Q 2023, our operating expenses expanded by 23.7% and 7.1% on a YoY and QoQ basis, respectively. Both increases were mainly driven by an overall expansion of business in 3Q 2023.

In thousands of GEL

Operating expenses

 3Q'23

 2Q'23

 3Q'22

Change YoY

Change QoQ

Staff costs

(121,056)

(108,724)

(94,561)

28.0%

11.3%

(Allowance)/recovery of provision for liabilities and charges

(34)

(50)

(2,000)

-98.3%

-32.0%

Depreciation and amortisation

(29,286)

(29,587)

(26,684)

9.8%

-1.0%

Administrative and other operating expenses

(67,711)

(65,199)

(52,995)

27.8%

3.9%

Total operating expenses

(218,087)

(203,560)

(176,240)

23.7%

7.1%







Cost to income

35.4%

34.7%

29.9%

5.5 pp

0.7 pp

Georgian financial services' cost to income

31.5%

30.2%

25.7%

5.8 pp

1.3 pp

 

Net Profit

Our net profit decreased by 6.4% and increased by 2.5% on a YoY and QoQ basis, respectively and amounted to GEL 300.5 million. The YoY decline was driven by abnormally high FX revenues in 3Q 2022.

As a result, in 3Q 2023 our ROE stood at 27.6%, while our ROA reached 4.1%.

 In thousands of GEL

 3Q'23

 2Q'23

 3Q'22

Change YoY

Change QoQ

Profit before tax

350,973

349,272

365,135

-3.9%

0.5%

Income tax expense

(50,485)

(56,186)

(44,115)

14.4%

-10.1%

Profit for the period

300,488

293,086

321,020

-6.4%

2.5%

Effective tax rate

14%

16%

12%

2 pp

-2 pp







ROE

27.6%

28.1%

33.6%

-6.0 pp

-0.5 pp

Georgian financial services' ROE

26.4%

27.8%

32.5%

-6.1 pp

-1.4 pp

ROA

4.1%

4.2%

4.8%

-0.7 pp

-0.1 pp

Georgian financial services' ROA

4.2%

4.5%

5.0%

-0.8 pp

-0.3 pp

 

Funding and Liquidity

As of 30 September 2023, the total liquidity coverage ratio (LCR), as defined by the NBG, was 114.1%, above the 100% limit, while the LCR in GEL and FC stood at 105.7% and 121.0%, accordingly, above the respective limits of 75% and 100%.

Over the same period, the net stable funding ratio (NSFR), as defined by the NBG, stood at 124.1%, compared to the regulatory limit of 100%.

 

Sep'23

Jun'23

Change QoQ

Minimum net stable funding ratio, as defined by the NBG

100.0%

100.0%

0.0 pp

Net stable funding ratio as defined by the NBG*

124.1%

129.8%

-5.7 pp

 




Net loans to deposits + IFI funding

96.9%

90.6%

6.3 pp

Leverage (Times)

6.7x

6.7x

0x

 




Minimum total liquidity coverage ratio, as defined by the NBG

100.0%

100.0%

0.0 pp

Minimum LCR in GEL, as defined by the NBG

75%

75.0%

0.0 pp

Minimum LCR in FC, as defined by the NBG

100.0%

100.0%

0.0 pp

 




Total liquidity coverage ratio, as defined by the NBG*

114.1%

124.5%

-10.4 pp

LCR in GEL, as defined by the NBG*

105.7%

130.4%

-24.7 pp

LCR in FC, as defined by the NBG*

121.0%

119.2%

1.8 pp

* Ratios are calculated per IFRS

Regulatory Capital for Georgian Bank

As of 30 September 2023, our capital ratios remained at a prudent level and as a result, per IFRS, our CET1, Tier 1 and Total Capital ratios stood at 17.5%, 19.9% and 22.3%, respectively, above the minimum regulatory requirements by 3.1 pp, 3.1 pp and 2.4 pp, accordingly.

The QoQ decreases in all CET1, Tier 1 and Total capital adequacy ratios were largely driven by the interim dividend payment.

In thousands of GEL

Sep'23

Jun'23

Change QoQ

CET 1 Capital

3,966,901

3,920,004

1.2%

Tier 1 Capital

4,502,561

4,443,544

1.3%

Total Capital

5,058,696

4,947,830

2.2%

Total Risk-weighted Assets

22,668,335

21,452,808

5.7%

 




Minimum CET 1 ratio

14.4%

14.4%

0.0 pp

CET 1 Capital adequacy ratio

17.5%

18.3%

-0.8 pp

 




Minimum Tier 1 ratio

16.8%

16.8%

0.0 pp

Tier 1 Capital adequacy ratio

19.9%

20.7%

-0.8 pp

 




Minimum total capital adequacy ratio

19.9%

19.9%

0.0 pp

Total Capital adequacy ratio

22.3%

23.1%

-0.8 pp

Ratios and numbers are calculated per IFRS

Loan Portfolio

As of 30 September 2023, the gross loan portfolio reached GEL 20,365.1 million, up by 5.2% QoQ, or by 4.7% on a constant currency basis.

By the end of September 2023, our Georgian financial services loan portfolio increased by 4.8% on a QoQ basis and reached GEL 19,715.8 million, with 4.2% growth on a constant currency basis. Over the same period, our Uzbek portfolio increased by 20.0% and stood at GEL 632.0 million, which translated into growth of 24.1% on a constant currency basis.

In thousands of GEL

Gross loans and advances to customers

Sep'23

Jun'23

Change QoQ

Georgian financial services (Georgia FS)

19,715,795

18,816,052

4.8%

Retail Georgia

7,131,727

6,945,911

2.7%

GEL

4,716,516

4,549,932

3.7%

FC

2,415,211

2,395,979

0.8%

CIB Georgia

7,380,388

6,920,263

6.6%

GEL

2,593,611

2,321,704

11.7%

FC

4,786,777

4,598,559

4.1%

MSME Georgia

5,203,680

4,949,878

5.1%

GEL

2,747,953

2,675,925

2.7%

FC

2,455,727

2,273,953

8.0%

Uzbekistan

632,013

526,843

20.0%

UZS

632,013

526,843

20.0%

Total gross loans and advances to customers*

20,365,135

19,360,689

5.2%

* Total gross loans and advances to customers include Azerbaijan loan portfolio


3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

Loan yields

12.6%

12.8%

11.9%

0.7 pp

-0.2 pp

GEL

14.8%

15.4%

15.6%

-0.8 pp

-0.6 pp

FC

8.6%

8.4%

7.3%

1.3 pp

0.2 pp

UZS

41.9%

43.0%

44.2%

-2.3 pp

-1.1 pp

Georgia FS

11.7%

12.0%

11.5%

0.2 pp

-0.3 pp

GEL

14.8%

15.4%

15.6%

-0.8 pp

-0.6 pp

FC

8.5%

8.4%

7.3%

1.2 pp

0.1 pp

Uzbekistan

41.9%

43.0%

44.2%

-2.3 pp

-1.1 pp

UZS

41.9%

43.0%

44.2%

-2.3 pp

-1.1 pp

Total loan yields*

12.6%

12.8%

11.9%

0.7 pp

-0.2 pp

* Total loans yields include Azerbaijan

Loan Portfolio Quality

As of 30 September 2023, our PAR 90 and NPL to gross loans ratios remained broadly stable for both the Georgian and Uzbek businesses on a QoQ basis.

PAR 90

Sep'23

Jun'23

Change QoQ

Georgia FS

1.2%

1.1%

0.1 pp

Retail Georgia

0.9%

0.9%

0.0 pp

CIB Georgia

0.5%

0.6%

-0.1 pp

MSME Georgia

2.5%

2.3%

0.2 pp

Uzbekistan

2.1%

2.2%

-0.1 pp

Total PAR 90*

1.2%

1.2%

0.0 pp

* Total PAR 90 includes Azerbaijan

 

In thousands of GEL
Non-performing Loans (NPL)

Sep'23

Jun'23

Change QoQ

Georgia FS

399,230

387,626

3.0%

Retail Georgia

129,162

127,833

1.0%

CIB Georgia

94,940

98,374

-3.5%

MSME Georgia

175,128

161,419

8.5%

Uzbekistan

13,584

11,646

16.6%

Total non-performing loans*

413,520

400,989

3.1%

* Total non-performing loans include Azerbaijan NPLs

NPL to gross loans

Sep'23

Jun'23

Change QoQ

Georgia FS

2.0%

2.1%

-0.1 pp

Retail Georgia

1.8%

1.8%

0.0 pp

CIB Georgia

1.3%

1.4%

-0.1 pp

MSME Georgia

3.4%

3.3%

0.1 pp

Uzbekistan

2.1%

2.2%

-0.1 pp

Total NPL to gross loans*

2.0%

2.1%

-0.1 pp

* Total NPL to gross loans include Azerbaijan NPLs

 

Sep'23

Jun'23

NPL Coverage 

Provision Coverage

Total Coverage**

Provision Coverage

Total Coverage**

Georgia FS

82.5%

148.6%

85.3%

150.9%

Retail Georgia

136.0%

189.2%

141.8%

192.4%

CIB Georgia

52.0%

111.4%

49.4%

110.5%

MSME Georgia

59.5%

138.8%

62.6%

142.7%

Uzbekistan

199.9%

199.9%

180.0%

180.0%

Total NPL coverage*

87.6%

151.6%

89.3%

153.7%


* Total NPL coverage include Azerbaijan loans coverage
** Total NPL coverage ratio includes provision and collateral coverage

Cost of Risk

Given strong asset quality trends in 3Q 2023, our cost of risk (CoR) remained within the expected range and stood at 0.9%.

The CoR for our Georgia FS decreased slightly YoY due to strong asset quality dynamics and stood at 0.7%. Over the same period, CoR for our Uzbek business amounted to 7.3%, also down slightly on a YoY basis. The QoQ increase in Uzbekistan was mainly driven by the fast growth of the portfolio.

Cost of risk (CoR)

3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

Georgia FS

0.7%

0.5%

0.9%

-0.2 pp

0.2 pp

Retail Georgia

1.1%

0.5%

2.0%

-0.9 pp

0.6 pp

CIB Georgia

0.0%

0.2%

0.0%

0.0 pp

-0.2 pp

MSME Georgia

0.9%

0.9%

0.5%

0.4 pp

0.0 pp

Uzbekistan

7.3%

6.6%

7.5%

-0.2 pp

0.7 pp

Total cost of risk*

0.9%

0.6%

1.0%

-0.1 pp

0.3 pp

* Total cost of risk includes Azerbaijan CoR

Deposit Portfolio

By the end of September 2023, the total deposit portfolio amounted to GEL 18,722.4 million, down by 1.4% QoQ or by 2.2% on a constant currency basis.

As of 30 September 2023, the Georgian financial services portfolio decreased by 1.8% on a QoQ basis and reached GEL 18,300.5 million, down by 2.7% on a constant currency basis. Over the same period, our Uzbek portfolio increased by 12.7% and stood at GEL 515.6 million, which translated into growth of 16.6% on a constant currency basis.

In thousands of GEL

Customer accounts

Sep'23

Jun'23

Change QoQ

Georgia FS

18,300,484

18,639,911

-1.8%

Retail Georgia

7,097,710

6,985,211

1.6%

GEL

2,224,730

2,242,193

-0.8%

FC

4,872,980

4,743,018

2.7%

CIB Georgia

8,861,056

9,048,955

-2.1%

GEL

4,911,419

5,169,170

-5.0%

FC

3,949,637

3,879,785

1.8%

MSME Georgia

1,730,701

1,638,612

5.6%

GEL

940,724

889,834

5.7%

FC

789,977

748,778

5.5%

MOF

611,017

967,133

-36.8%

GEL

611,017

967,133

-36.8%

Uzbekistan

515,586

457,340

12.7%

FC

1,640

1,322

24.1%

UZS

513,946

456,018

12.7%

Total customer accounts*

18,722,415

18,992,492

-1.4%

* Total customer accounts are adjusted for eliminations

 

3Q'23

2Q'23

3Q'22

Change YoY

Change QoQ

 Deposit rates

4.9%

4.9%

3.9%

1.0 pp

0.0 pp

 GEL

8.2%

8.3%

7.4%

0.8 pp

-0.1 pp

 FC

0.9%

0.8%

0.9%

0.0 pp

0.1 pp

 UZS

24.4%

25.0%

23.6%

0.8 pp

-0.6 pp

Georgian financial services

4.4%

4.5%

3.6%

0.8 pp

-0.1 pp

 GEL

8.2%

8.4%

7.5%

0.7 pp

-0.2 pp

 FC

0.9%

0.8%

0.9%

0.0 pp

0.1 pp

Uzbek business

24.4%

24.9%

23.6%

0.8 pp

-0.5 pp

    FC

4.1%

4.7%

0.0%

4.1 pp

-0.6 pp

UZS

24.4%

25.0%

23.6%

0.8 pp

-0.6 pp

Total deposit rates*

4.9%

4.9%

3.9%

1.0 pp

0.0 pp

* Total deposits rates include MOF deposits

 

 

Unaudited Consolidated Financial Results Overview for 9M 2023

This statement provides a summary of the business and financial trends for 9M 2023 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.

TBC Bank Group PLC's financial results have been prepared in accordance with the UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).

Total equity and total liabilities were restated for 30-Sep-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 9M 2022. In addition, total assets and total liabilities for 30-Sep-2022 were restated due to replacement of IFRS 4 with IFRS 17. For more details, please refer to appendix 8 and 9.

Please also note that there might be slight differences in previous periods' figures due to rounding.

Net Interest Income

In 9M 2023, net interest income amounted to GEL 1,194.1 million, up by 28.0% on a YoY basis.

The YoY rise in interest income by GEL 451.8 million, or 26.8%, was mostly attributable to an increase in interest income from loans related to a GEL 2,999.2 million, or 17.3%, increase in the respective portfolio, as well as a 1.2 pp rise in the respective yield.

YoY interest expense increased by GEL 190.3 million, or 25.3%, mainly related to an increase in the deposit portfolio of GEL 1,607.4 million, or 9.4%, and a 1.1 pp growth in deposit cost.

In 9M 2023, our NIM stood at 6.7%, up by 0.8 pp on a YoY basis.

In thousands of GEL

9M'23

9M'22

Change YoY

Interest income

2,137,628

1,685,857

26.8%

Interest expense*

(943,565)

(753,251)

25.3%

Net interest income

1,194,063

932,606

28.0%


 

 


NIM

6.7%

5.9%

0.8 pp

* Interest expense includes net interest gains from currency swaps

 

Non-Interest Income

Total non-interest income amounted to GEL 540.2 million in 9M 2023, increasing by 1.2% on a YoY basis.

Net fee and commission income increased by 32.9% on a YoY basis, related to increased payments transactions both in Georgia and Uzbekistan. Over the same period, given a high base in 2022, revenues from FX operations normalised and decreased by 27.4%. Our Uzbek business contributed 18% of the Group's net fee and commission income.

In thousands of GEL

Non-interest income

9M'23

9M'22

Change YoY

Net fee and commission income

302,226

227,334

32.9%

Net gains from currency derivatives, foreign currency operations and translation

188,696

260,089

-27.4%

Insurance profit

22,200

20,985

5.8%

Other operating income

27,039

25,518

6.0%

Total non-interest income

540,161

533,926

1.2%

 

Credit Loss Allowance

Credit loss allowance for loans in 9M 2023 amounted to GEL 122.0 million, which translated into a 0.9% cost of risk.

In thousands of GEL

9M'23

9M'22

Change YoY

Credit loss (allowance)/recovery for loans to customers

(122,019)

(91,941)

32.7%

Credit loss allowance for other transactions

(11,242)

(7,905)

42.2%

Total credit loss (allowance)/recovery

(133,261)

(99,846)

33.5%

Operating income after expected credit and non-financial asset impairment losses

1,600,963

1,366,686

17.1%


 



Cost of risk

0.9%

0.7%

0.2 pp

 

Operating Expenses

In 9M 2023, our operating expenses expanded by 23.1% on a YoY basis.

In the first nine months of 2023, the annual increase in operating expenses was mainly driven by overall business expansion, both locally and internationally.

 

In thousands of GEL

Operating expenses

9M'23

9M'22

Change YoY

Staff costs

(333,206)

(271,052)

22.9%

Allowance of provision for liabilities and charges

(155)

(2,060)

-92.5%

Depreciation and amortisation

(87,234)

(74,016)

17.9%

Administrative and other operating expenses

(183,832)

(143,697)

27.9%

Total operating expenses

(604,427)

(490,825)

23.1%

 




Cost to income

34.9%

33.5%

1.4 pp

Georgian financial services' cost to income

30.7%

28.6%

2.1 pp

 

Net Profit

In 9M 2023, we delivered robust profitability and generated GEL 848.5 million in net profit, up by 8.8% YoY, driven by strong income generation, as well as strong asset quality.

The growth in the effective tax rate YoY is related to changes in tax legislation effective from 1 January 2023, which increased the corporate income tax rate for banks from 15% to 20% and abolished the potential shift to the Estonian Tax Model.

As a result, our ROE and ROA for 9M 2023 were 27.0% and 4.0%, respectively.

In thousands of GEL

9M'23

9M'22

Change YoY

Profit before tax

996,536

875,861

13.8%

Income tax expense

(148,002)

(96,296)

53.7%

Profit for the period

848,534

779,565

8.8%

Effective tax rate

15%

11%

4 pp

 


 


ROE

27.0%

28.6%

-1.6 pp

Georgian financial services' ROE

25.9%

27.9%

-2.0 pp

ROA

4.0%

4.1%

-0.1 pp

Georgian financial services' ROA

4.1%

4.3%

-0.2 pp

 


 

Loan Portfolio

As of 30 September 2023, the gross loan portfolio reached GEL 20,365.1 million, up by 17.3% YoY or 19.1% on a constant currency basis.

By the end of September 2023, the Georgian financial services' portfolio increased by 15.4% on a YoY basis and reached GEL 19,715.8 million, with 16.7% growth on a constant currency basis. Over the same period, our Uzbek portfolio more than doubled, reaching GEL 632.0 million.

In thousands of GEL

Gross loans and advances to customers

Sep'23

Sep'22

Change YoY

Georgian financial services (Georgia FS)

19,715,795

17,077,558

15.4%

Retail Georgia

7,131,727

6,588,985

8.2%

GEL

4,716,516

4,230,472

11.5%

FC

2,415,211

2,358,513

2.4%

CIB Georgia

7,380,388

5,918,394

24.7%

GEL

2,593,611

2,096,791

23.7%

FC

4,786,777

3,821,603

25.3%

MSME Georgia

5,203,680

4,570,179

13.9%

GEL

2,747,953

2,544,976

8.0%

FC

2,455,727

2,025,203

21.3%

Uzbekistan

632,013

268,976

NMF

UZS

632,013

268,976

NMF

Total gross loans and advances to customers*

20,365,135

17,365,894

17.3%

* Total gross loans and advances to customers include Azerbaijan loan portfolio

9M'23

9M'22

Change YoY

Loan yields

12.6%

11.4%

1.2 pp

GEL

15.0%

15.6%

-0.6 pp

FC

8.4%

6.8%

1.6 pp

UZS

42.6%

42.7%

-0.1 pp

Georgia FS

11.8%

11.0%

0.8 pp

GEL

15.0%

15.6%

-0.6 pp

FC

8.4%

6.8%

1.6 pp

Uzbekistan

42.6%

42.7%

-0.1 pp

UZS

42.6%

42.7%

-0.1 pp

Total loan yields*

12.6%

11.4%

1.2 pp

* Total loans yields include Azerbaijan

 

Loan Portfolio Quality

As of 30 September 2023, our asset quality metrics remained strong with NPL to gross loan at 2.0%, down 30bps YoY.

Par 90

Sep'23

Sep'22

Change YoY

Georgia FS

1.2%

1.3%

-0.1 pp

Retail Georgia

0.9%

1.3%

-0.4 pp

CIB Georgia

0.5%

0.5%

0.0 pp

MSME Georgia

2.5%

2.4%

0.1 pp

Uzbekistan

2.1%

2.9%

-0.8 pp

Total PAR 90*

1.2%

1.3%

-0.1 pp

* Total PAR 90 includes Azerbaijan

 

In thousands of GEL
Non-performing Loans (NPL)

Sep'23

Sep'22

Change YoY

Georgia FS

399,230

394,205

1.3%

Retail Georgia

129,162

152,241

-15.2%

CIB Georgia

94,940

80,084

18.6%

MSME Georgia

175,128

161,880

8.2%

Uzbekistan

13,584

7,712

76.1%

Total non-performing loans*

413,520

404,966

2.1%

* Total non-performing loans include Azerbaijan NPLs

 

NPL to gross loans

Sep'23

Sep'22

Change YoY

Georgia FS

2.0%

2.3%

-0.3 pp

Retail Georgia

1.8%

2.3%

-0.5 pp

CIB Georgia

1.3%

1.4%

-0.1 pp

MSME Georgia

3.4%

3.5%

-0.1 pp

Uzbekistan

2.1%

2.9%

-0.8 pp

Total NPL to gross loans*

2.0%

2.3%

-0.3 pp

* Total NPL to gross loans include Azerbaijan NPLs

 

 

Sep'23

Sep'22

NPL Coverage 

Provision Coverage

Total Coverage**

Provision Coverage

Total Coverage**

Georgia FS

82.5%

148.6%

98.2%

163.1%

Retail Georgia

136.0%

189.2%

163.8%

209.7%

CIB Georgia

52.0%

111.4%

56.6%

121.8%

MSME Georgia

59.5%

138.8%

57.1%

139.7%

Uzbekistan

199.9%

199.9%

123.0%

123.0%

Total NPL coverage*

87.6%

151.6%

99.6%

164.2%


* Total NPL coverage include Azerbaijan loans coverage
** Total NPL coverage ratio includes provision and collateral coverage

Cost of Risk

In 9M 2023, our cost of risk (CoR) amounted to 0.9%.

The CoR for our Georgia FS remained stable YoY and stood at 0.7%, while CoR for our Uzbek business amounted to 6.6%, up by 0.3 pp on a YoY basis.

Cost of risk (CoR)

9M'23

9M'22

Change YoY

Georgia FS

0.7%

0.7%

0.0 pp

Retail Georgia

1.0%

1.7%

-0.7 pp

CIB Georgia

0.0%

-0.1%

0.1 pp

MSME Georgia

1.3%

0.3%

1.0 pp

Uzbekistan

6.6%

6.3%

0.3 pp

Total cost of risk*

0.9%

0.7%

0.2 pp

* Total cost of risk includes Azerbaijan CoR

Deposit Portfolio

The total deposit portfolio amounted to GEL 18,722.4 million, increasing by 9.4% YoY or 12.2% on a constant currency basis.

As of 30 September 2023, the Georgian financial services' portfolio increased by 8.7% on a YoY basis to GEL 18.300.5 million, with 11.0% growth on a constant currency basis. Over the same period, our Uzbek portfolio almost doubled and stood at GEL 515.6 million.

 

In thousands of GEL

Customer accounts

Sep'23

Sep'22

Change YoY

Georgia FS

18,300,484

16,837,237

8.7%

Retail Georgia

7,097,710

6,049,335

17.3%

GEL

2,224,730

1,661,392

33.9%

FC

4,872,980

4,387,943

11.1%

CIB Georgia

8,861,056

7,830,648

13.2%

GEL

4,911,419

3,684,493

33.3%

FC

3,949,637

4,146,155

-4.7%

MSME Georgia

1,730,701

1,645,985

5.1%

GEL

940,724

775,704

21.3%

FC

789,977

870,281

-9.2%

MOF

611,017

1,311,269

-53.4%

GEL

611,017

1,311,269

-53.4%

Uzbekistan

515,586

296,563

73.9%

FC

1,640

10

NMF

UZS

513,946

296,553

73.3%

Total customer accounts*

18,722,415

17,115,022

9.4%

* Total customer accounts are adjusted for eliminations

 

9M'23

9M'22

Change YoY

 Deposit rates

4.9%

3.8%

1.1 pp

 GEL

8.4%

7.5%

0.9 pp

 FC

0.8%

0.9%

-0.1 pp

 UZS

24.9%

22.7%

2.2 pp

Georgian financial services

4.5%

3.5%

1.0 pp

 GEL

8.5%

7.5%

1.0 pp

 FC

0.8%

0.9%

-0.1 pp

Uzbek business

24.8%

22.7%

2.1 pp

    FC

4.4%

0.0%

4.4 pp

UZS

24.9%

22.7%

2.2 pp

Total deposit rates*

4.9%

3.8%

1.1 pp

* Total deposit rates include MOF deposits

Additional Disclosures

1)   TBC Bank - Background

TBC Bank Group PLC ("TBC PLC") is a public limited company registered in England and Wales. TBC PLC is the parent company of JSC TBC Bank ("TBC Bank") and a group of companies that principally operate in Georgia in the financial sector. TBC PLC also offers non-financial services via TNET, the largest digital ecosystem in Georgia. Since 2019, TBC PLC has expanded its operations into Uzbekistan by operating fast growing retail digital financial services in the country. TBC PLC is listed on the London Stock Exchange under the symbol TBCG and is a constituent of the FTSE 250 Index. It is also a member of the FTSE4Good Index Series and the MSCI United Kingdom Small Cap Index.

TBC Bank, together with its subsidiaries, is a leading universal banking group in Georgia, with a total market share of 39.1% of customer loans and 37.5% of customer deposits as of 30 September 2023, according to data published by the National Bank of Georgia on the analytical tool Tableau.

2)   Consolidated Financial Statements and Key Ratios 3Q 2023

Consolidated Statement of Financial Position

In thousands of GEL 

Sep'23

Jun'23

ASSETS



Cash and cash equivalents

2,648,469

2,940,359

Due from other banks

38,954

52,550

Mandatory cash balances with National Bank of Georgia and the Central Bank of Uzbekistan

1,904,010

1,706,981

Loans and advances to customers

20,003,021

19,002,657

Investment securities measured at fair value through other comprehensive income

3,071,046

2,942,679

Bonds carried at amortised cost

65,289

87,213

Finance lease receivables

364,077

338,203

Investment properties

20,629

20,741

Current income tax prepayment

16,062

3,005

Deferred income tax asset

10,721

12,573

Other financial assets

259,771

266,969

Other assets

449,322

441,756

Premises and equipment

481,867

463,407

Right of use assets

116,262

117,634

Intangible assets

442,989

418,468

Goodwill

59,964

59,964

Investments in associates

3,940

3,667

TOTAL ASSETS

29,956,393

28,878,826

LIABILITIES     

 

 

Due to credit institutions

3,330,925

2,448,662

Customer accounts

18,722,415

18,992,492

Lease liabilities

88,893

87,324

Other financial liabilities

515,000

387,595

Current income tax liability

17,958

27,559

Debt Securities in issue

1,432,393

1,392,872

Deferred income tax liability

109,854

112,095

Provision for liabilities and charges

20,384

20,767

Other liabilities

93,184

91,839

Redemption liability

363,871

347,044

Subordinated debt

788,116

639,048

TOTAL LIABILITIES

25,482,993

24,547,297

EQUITY     

 

 

Share capital

1,682

1,682

Shares held by trust

(75,470)

(75,470)

Share premium

272,930

272,930

Retained earnings

4,145,795

3,984,493

Merger reserve

402,862

402,862

Share based payment reserve

12,672

5,181

Fair value reserve for investment securities measured at fair value through other comprehensive income

10,855

16,461

Cumulative currency translation reserve

(42,759)

(36,804)

Other reserve

(363,869)

(347,044)

Equity attributable to owners of the parent

4,364,698

4,224,291

Non-controlling interest

108,702

107,238

TOTAL EQUITY

4,473,400

4,331,529

TOTAL LIABILITIES AND EQUITY

29,956,393

28,878,826

 

Consolidated Income Statement and Other Comprehensive Income

In thousands of GEL 

 3Q'23

 2Q'23

 3Q'22

Interest income

753,658

711,820

605,395

Interest expense

(325,724)

(312,482)

(264,980)

Net interest income

427,934

399,338

340,415

Fee and commission income

170,479

161,729

136,674

Fee and commission expense

(66,327)

(56,093)

(50,802)

Net fee and commission income

104,152

105,636

85,872

Insurance contract revenue

35,056

31,552

30,376

Reinsurance service result

(3,245)

(1,517)

(1,958)

Insurance service claims and expenses incurred

(22,013)

(23,851)

(18,398)

Insurance profit

9,798

6,184

10,020

Net gains from currency derivatives, foreign currency operations and translation

66,968

61,127

145,712

Net gains from disposal of investment securities measured at fair value through other comprehensive income

1,553

2,307

2,660

Other operating income

4,443

11,906

4,868

Share of profit of associates

371

268

84

Other operating non-interest income

73,335

75,608

153,324

Credit loss allowance for loans to customers

(42,595)

(29,384)

(41,419)

Credit loss (allowance)/recovery for finance lease receivable

(3,035)

(1,059)

(716)

Credit loss (allowance)/recovery for performance guarantees and credit related commitments

644

(1,273)

(434)

Credit loss (allowance)/recovery for other financial assets

(963)

(2,136)

(5,041)

Credit loss recovery/(allowance) for financial assets measured at fair value through other comprehensive income

(497)

134

115

Net impairment of non-financial assets

287

(216)

(761)

Operating income after expected credit and non-financial asset impairment losses

569,060

552,832

541,375

Staff costs

(121,056)

(108,724)

(94,561)

Depreciation and amortisation

(29,286)

(29,587)

(26,684)

(Allowance)/recovery of provision for liabilities and charges

(34)

(50)

(2,000)

Administrative and other operating expenses

(67,711)

(65,199)

(52,995)

Operating expenses

(218,087)

(203,560)

(176,240)

Profit before tax

350,973

349,272

365,135

Income tax expense

(50,485)

(56,186)

(44,115)

Profit for the period

300,488

293,086

321,020

Other comprehensive income:




Items that may be reclassified subsequently to profit or loss:




Movement in fair value reserve

(5,607)

2,958

18,929

Exchange differences on translation to presentation currency

(5,955)

4,220

137

Other comprehensive income for the period

(11,562)

7,178

19,066

Total comprehensive income for the period

288,926

300,264

340,086

Profit attributable to:




 - Shareholders of TBCG

299,022

288,791

318,985

 - Non-controlling interest

1,466

4,295

2,035

Profit for the period

300,488

293,086

321,020

Total comprehensive income is attributable to:




 - Shareholders of TBCG

287,460

295,969

338,051

 - Non-controlling interest

1,466

4,295

2,035

Total comprehensive income for the period

288,926

300,264

340,086

* Interest expense includes net interest gains from currency swaps

 

 

 Key Ratios 3Q'23

Total equity and total liabilities were restated for 30-Sep-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 3Q 2022.

Average Balances

The average balances included in this document are calculated as the average of the relevant monthly balances as of the end of each month. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.

Ratios (based on monthly averages, where applicable)

3Q'23

2Q'23

3Q'22

 




Profitability ratios:




ROE1

27.6%

28.1%

33.6%

ROA2

4.1%

4.2%

4.8%

Cost to income3

35.4%

34.7%

29.9%

NIM4

6.9%

6.8%

6.3%

Loan yields5

12.6%

12.8%

11.9%

Deposit rates6

4.9%

4.9%

3.9%

Cost of funding7

5.4%

5.6%

4.8%





Asset quality & portfolio concentration:




Cost of risk9

0.9%

0.6%

1.0%

PAR 90 to Gross Loans9

1.2%

1.2%

1.3%

NPLs to Gross Loans10

2.0%

2.1%

2.3%

NPL provision coverage11

87.6%

89.3%

99.6%

Total NPL coverage12

151.6%

153.7%

164.2%

Credit loss level to Gross Loans13

1.8%

1.8%

2.3%

Related Party Loans to Gross Loans14

0.1%

0.1%

0.1%

Top 10 Borrowers to Total Portfolio15

6.0%

5.8%

6.0%

Top 20 Borrowers to Total Portfolio16

8.9%

8.7%

9.0%





Capital & liquidity positions:




Net Loans to Deposits plus IFI Funding17

96.9%

90.6%

89.1%

Net Stable Funding Ratio** 18

124.1%

129.8%

n/a

Liquidity Coverage Ratio** 19

114.1%

124.5%

n/a

Leverage20

 6.7x

 6.7x

 7.1x

CET 1 CAR* (Basel III)21

17.5%

18.3%

n/a

Tier 1 CAR* (Basel III)22

19.9%

20.7%

n/a

Total 1 CAR* (Basel III)23

22.3%

23.1%

n/a

* Ratios are calculated per IFRS 

For the ratio definitions and exchange rates, please refer to appendix 12.


3)   Consolidated Financial Statements and Key Ratios 9M 2023

Consolidated Statement of Financial Position

In thousands of GEL 

Sep'23

Sep'22

ASSETS



Cash and cash equivalents

2,648,469

3,764,435

Due from other banks

38,954

48,623

Mandatory cash balances with National Bank of Georgia and the Central Bank of Uzbekistan

1,904,010

2,219,506

Loans and advances to customers

20,003,021

16,962,397

Investment securities measured at fair value through other comprehensive income

3,071,046

2,213,608

Bonds carried at amortised cost

65,289

64,030

Repurchase receivables

-

278,971

Finance lease receivables

364,077

261,217

Investment properties

20,629

22,930

Current income tax prepayment

16,062

1,505

Deferred income tax asset

10,721

14,439

Other financial assets

259,771

395,571

Other assets

449,322

436,067

Premises and equipment

481,867

426,129

Right of use assets

116,262

95,625

Intangible assets

442,989

363,096

Goodwill

59,964

59,963

Investments in associates

3,940

3,576

TOTAL ASSETS

29,956,393

27,631,688

LIABILITIES

 


Due to credit institutions

3,330,925

3,619,566

Customer accounts

18,722,415

17,115,022

Lease liabilities

88,893

76,890

Other financial liabilities

515,000

367,545

Current income tax liability

17,958

14,294

Debt Securities in issue

1,432,393

1,466,022

Deferred income tax liability

109,854

2,157

Provision for liabilities and charges

20,384

18,894

Other liabilities

93,184

76,139

Redemption liability

363,871

373,605

Subordinated debt

788,116

621,878

TOTAL LIABILITIES

25,482,993

23,752,012

EQUITY

 


Share capital

1,682

1,693

Shares held by trust

(75,470)

(7,900)

Treasury shares

-

(20,389)

Share premium

272,930

297,923

Retained earnings

4,145,795

3,527,482

Merger reserve

402,862

402,862

Share based payment reserve

12,672

(3,523)

Fair value reserve for investment securities measured at fair value through other comprehensive income

10,855

(6,674)

Cumulative currency translation reserve

(42,759)

(19,648)

Other reserve

(363,869)

(373,605)

Equity attributable to owners of the parent

4,364,698

3,798,221

Non-controlling interest

108,702

81,455

TOTAL EQUITY

4,473,400

3,879,676

TOTAL LIABILITIES AND EQUITY

29,956,393

27,631,688

 

Consolidated Income Statement and Other Comprehensive Income

In thousands of GEL 

9M'23

9M'22

Interest income

2,137,628

1,685,857

Interest expense*

(943,565)

(753,251)

Net interest income

1,194,063

932,606

Fee and commission income

484,009

377,057

Fee and commission expense

(181,783)

(149,723)

Net fee and commission income

302,226

227,334

Insurance contract revenue

96,133

81,746

Reinsurance service result

(7,632)

(5,219)

Insurance service claims and expenses incurred

(66,301)

(55,542)

Insurance profit

22,200

20,985

Net gains from currency derivatives, foreign currency operations and translation

188,696

260,089

Net gains from disposal of investment securities measured at fair value through other comprehensive income

5,872

4,885

Other operating income

20,254

20,426

Share of profit of associates

913

207

Other operating non-interest income

215,735

285,607

Credit loss allowance for loans to customers

(122,019)

(91,941)

Credit loss allowance for finance lease receivable

(5,167)

(1,278)

Credit loss allowance for performance guarantees and credit related commitments

(292)

(1,504)

Credit loss allowance for other financial assets

(5,053)

(5,739)

Credit loss (allowance)/recovery for financial assets measured at fair value through other comprehensive income

(659)

1,383

Net impairment of non-financial assets

(71)

(767)

Operating income after expected credit and non-financial asset impairment losses

1,600,963

1,366,686

Staff costs

(333,206)

(271,052)

Depreciation and amortisation

(87,234)

(74,016)

Allowance of provision for liabilities and charges

(155)

(2,060)

Administrative and other operating expenses

(183,832)

(143,697)

Operating expenses

(604,427)

(490,825)

Profit before tax

996,536

875,861

Income tax expense

(148,002)

(96,296)

Profit for the period

848,534

779,565

Other comprehensive income:



Items that may be reclassified subsequently to profit or loss:



Movement in fair value reserve

5,387

4,182

Exchange differences on translation to presentation currency

(6,901)

(8,436)

Other comprehensive income for the period

(1,514)

(4,254)

Total comprehensive income for the period

847,020

775,311

Profit attributable to:



 - Shareholders of TBCG

836,481

777,450

 - Non-controlling interest

12,053

2,115

Profit for the period

848,534

779,565

Total comprehensive income is attributable to:



 - Shareholders of TBCG

834,967

773,196

 - Non-controlling interest

12,053

2,115

Total comprehensive income for the period

847,020

775,311

* Interest expense includes net interest gains from currency swaps

 

 

Key Ratios 9M'23

Total equity and total liabilities were restated for 30-Sep-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 9M 2022.

Average Balances

The average balances included in this document are calculated as the average of the relevant monthly balances as of the end of each month. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.

Ratios (based on monthly averages, where applicable)

9M'23

9M'22

 



Profitability ratios:

 


ROE1

27.0%

28.6%

ROA2

4.0%

4.1%

Cost to income3

34.9%

33.5%

NIM4

6.7%

5.9%

Loan yields5

12.6%

11.4%

Deposit rates6

4.9%

3.8%

Cost of funding7

5.5%

4.8%




Asset quality & portfolio concentration:

 


Cost of risk9

0.9%

0.7%

PAR 90 to Gross Loans9

1.2%

1.3%

NPLs to Gross Loans10

2.0%

2.3%

NPL provision coverage11

87.6%

99.6%

Total NPL coverage12

151.6%

164.2%

Credit loss level to Gross Loans13

1.8%

2.3%

Related Party Loans to Gross Loans14

0.1%

0.1%

Top 10 Borrowers to Total Portfolio15

6.0%

6.0%

Top 20 Borrowers to Total Portfolio16

8.9%

9.0%




Capital & liquidity positions:

 


Net Loans to Deposits plus IFI Funding17

96.9%

89.1%

Net Stable Funding Ratio** 18

124.1%

n/a

Liquidity Coverage Ratio** 19

114.1%

n/a

Leverage20

 6.7x

 7.1x

CET 1 CAR* (Basel III)21

17.5%

n/a

Tier 1 CAR* (Basel III)22

19.9%

n/a

Total 1 CAR* (Basel III)23

22.3%

n/a

* Ratios are calculated per IFRS

For the ratio definitions and exchange rates, please refer to appendix 12.

 

4)   Business Line Definition

According to the updated segment definition starting from 1 January 2023, the operating segments are defined as follows:

Georgian financial services include JSC TBC Bank with its Georgian subsidiaries and JSC TBC Insurance, with its subsidiaries. The Georgia financial service segment consist of three major business sub-segments, while the treasury, leasing and insurance businesses are combined into the corporate and other sub-segments:

 

·      Corporate and investment banking (CIB) - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 20.0 million or which has been granted facilities of more than GEL 7.5 million. Some other business customers may also be assigned to the CIB sub-segment or transferred to the MSME sub-segment on a discretionary basis. In addition, CIB includes Wealth Management (WM) private banking services to high-net-worth individuals with a threshold of US$ 250,000 in assets under management (AUM), as well as on a discretionary basis;

·      Retail - non-business individual customers;

·      Micro, small and medium enterprises (MSME) - business customers who are not included in the CIB sub-segment;

Uzbekistan - TBC Bank Uzbekistan with respective subsidiaries and Payme (Inspired LLC);

Other - includes non-material or non-financial subsidiaries of the group and intra-group eliminations.


5)   Financial Disclosures by Business Lines

Consolidated Statement of Financial Position Sep'23

In thousands of GEL 

Georgia FS

Uzbekistan*

Payme

TBC UZ

Other**

Group

ASSETS







Cash and cash equivalents

2,594,629

47,811

752

47,151

6,029

2,648,469

Due from other banks

38,923

-

4,417

-

31

38,954

Mandatory cash balances with National Bank of Georgia and Central Bank of Uzbekistan

1,899,949

4,061

-

4,061

-

1,904,010

Loans and advances to customers

19,386,577

604,856

-

604,856

11,588

20,003,021

Investment securities measured at fair value through other comprehensive income

3,071,046

-

-

-

-

3,071,046

Bonds carried at amortised cost

11,199

54,090

-

54,090

-

65,289

Finance lease receivables

328,757

27,950

-

27,950

7,370

364,077

Investment properties

20,629

-

-

-

-

20,629

Current income tax prepayment

15,506

-

-

-

556

16,062

Deferred income tax asset

123

10,200

-

10,200

398

10,721

Other financial assets

271,833

4,995

5,430

-

(17,057)

259,771

Other assets

427,873

19,777

3,968

15,809

1,672

449,322

Premises and equipment

462,594

14,731

4,613

10,118

4,542

481,867

Right of use assets

108,331

6,218

1,462

4,756

1,713

116,262

Intangible assets

343,711

27,642

3,420

24,222

71,636

442,989

Goodwill

28,198

1,912

-

1,912

29,854

59,964

Investments in associates

18,555

-

-

-

(14,615)

3,940

TOTAL ASSETS    

29,028,433

824,243

24,062

805,125

103,717

29,956,393

LIABILITIES     







Due to credit institutions

3,278,155

46,504

-

46,504

6,266

3,330,925

Customer accounts    

18,300,485

515,586

-

520,096

(93,656)

18,722,415

Lease liabilities

80,502

7,015

1,565

5,450

1,376

88,893

Other financial liabilities

587,417

2,298

1,257

1,041

(74,715)

515,000

Current income tax liability  

17,939

-

-

-

19

17,958

Debt Securities in issue

1,264,218

-

-

-

168,175

1,432,393

Deferred income tax liability  

109,854

-

-

-

-

109,854

Provisions for liabilities and charges 

20,384

-

-

-

-

20,384

Other liabilities    

68,111

18,888

2,973

16,349

6,185

93,184

Redemption liability

-

-

-

-

363,871

363,871

Subordinated debt    

788,116

-

-

-

-

788,116

TOTAL LIABILITIES    

24,515,181

590,291

5,795

589,440

377,521

25,482,993

EQUITY     







Share capital

28,498

277,948

1,254

276,694

(304,764)

1,682

Shares held by trust

-

-

-

-

(75,470)

(75,470)

Share premium

521,190

27,860

-

27,860

(276,120)

272,930

Retained earnings

4,037,519

(38,836)

21,798

(60,634)

147,112

4,145,795

Merger reserve

-

67

67

-

402,795

402,862

Share based payment reserve

(85,001)

-

-

-

97,673

12,672

Fair value reserve for investment securities measured at fair value through other comprehensive income

10,849

211

211

-

(205)

10,855

Cumulative currency translation reserve

-

(33,298)

(5,063)

(28,235)

(9,461)

(42,759)

Other reserve

-

-

-

-

(363,869)

(363,869)

Net assets attributable to owners

4,513,055

233,952

18,267

215,685

(382,309)

4,364,698

Non-controlling interest    

197

-

-

-

108,505

108,702

TOTAL EQUITY    

4,513,252

233,952

18,267

215,685

(273,804)

4,473,400

TOTAL LIABILITIES AND EQUITY  

29,028,433

824,243

24,062

805,125

103,717

29,956,393

* Includes intra-group eliminations

** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations

 

Consolidated Income Statement and Other Comprehensive Income 3Q'23

In thousands of GEL 

Georgia FS

Uzbekistan**

Payme

TBC UZ

Other

***

 Group

Interest income

683,275

68,549

88

68,549

1,834

753,658

Interest expense*

(292,486)

(32,379)

(77)

(32,391)

(859)

(325,724)

Net interest income

390,789

36,170

11

36,158

975

427,934

Fee and commission income

144,172

24,632

18,619

16,807

1,675

170,479

Fee and commission expense

(59,771)

(6,540)

(1,705)

(15,610)

(16)

(66,327)

Net fee and commission income

84,401

18,092

16,914

1,197

1,659

104,152

Insurance profit

9,939

-

-

-

(141)

9,798

Net gains from currency derivatives, foreign currency operations and translation

68,938

56

6

50

(2,026)

66,968

Net gains from disposal of investment securities measured at fair value through other comprehensive income

1,553

-

-

-

-

1,553

Other operating income

2,492

36

-

36

1,915

4,443

Share of profit of associates

371

-

-

-

-

371

Other operating non-interest income

83,293

92

6

86

(252)

83,133

Credit loss allowance for loans to customers

(32,173)

(10,694)

-

(10,694)

272

(42,595)

Credit loss allowance for finance lease receivable

(2,459)

(575)

-

(575)

(1)

(3,035)

Credit loss recovery for performance guarantees and credit related commitments

644

-

-

-

-

644

Credit loss allowance for other financial assets

(986)

23

(3)

26

-

(963)

Credit loss allowance for financial assets measured at fair value through other comprehensive income

(497)

-

-

-

-

(497)

Net recovery of non-financial assets

29

-

-

-

258

287

Operating income after expected credit and non-financial asset impairment losses

523,041

43,108

16,928

26,198

2,911

569,060

Staff costs

(101,647)

(10,047)

(2,289)

(7,758)

(9,362)

(121,056)

Depreciation and amortisation

(25,077)

(2,255)

(297)

(1,958)

(1,954)

(29,286)

Allowance of provision for liabilities and charges

(34)

-

-

-

-

(34)

Administrative and other operating expenses

(49,056)

(15,929)

(3,415)

(12,532)

(2,726)

(67,711)

Operating expenses

(175,814)

(28,231)

(6,001)

(22,248)

(14,042)

(218,087)

Profit before tax

347,227

14,877

10,927

3,950

(11,131)

350,973

Income tax expense

(49,175)

(1,193)

(13)

(1,180)

(117)

(50,485)

Profit for the period

298,052

13,684

10,914

2,770

(11,248)

300,488

Profit attributable to:

-

-

-

-

-

-

 - Shareholders of TBCG

298,041

13,684

10,914

2,770

(12,703)

299,022

 - Non-controlling interest

11

-

-

-

1,455

1,466

Profit for the period

298,052

13,684

10,914

2,770

(11,248)

300,488

* Interest expense includes net interest gains from currency swaps

** Includes intra-group eliminations

*** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations


Consolidated Income Statement and Other Comprehensive Income 9M'23

In thousands of GEL 

Georgia FS

Uzbekistan**

Payme

TBC UZ

Other

***

Group

Interest income

1,960,800

171,804

88

171,804

5,024

2,137,628

Interest expense*

(857,732)

(82,745)

(250)

(82,584)

(3,088)

(943,565)

Net interest income

1,103,068

89,059

(162)

89,220

1,936

1,194,063

Fee and commission income

410,393

70,473

55,331

39,320

3,143

484,009

Fee and commission expense

(164,591)

(17,012)

(4,907)

(36,264)

(180)

(181,783)

Net fee and commission income

245,802

53,461

50,424

3,056

2,963

302,226

Insurance profit

22,699

-

-

-

(499)

22,200

Net gains from currency derivatives, foreign currency operations and translation

202,257

139

9

130

(13,700)

188,696

Net gains from disposal of investment securities measured at fair value through other comprehensive income

5,872

-

-

-

-

5,872

Other operating income

14,406

68

1

67

5,780

20,254

Share of profit of associates

913

-

-

-

-

913

Other operating non-interest income

246,147

207

10

197

(8,419)

237,935

Credit loss allowance for loans to customers

(99,425)

(23,576)

-

(23,576)

982

(122,019)

Credit loss allowance for finance lease receivable

(3,718)

(1,496)

-

(1,496)

47

(5,167)

Credit loss allowance for performance guarantees and credit related commitments

(292)

-

-

-

-

(292)

Credit loss allowance for other financial assets

(4,696)

(357)

(266)

(91)

-

(5,053)

Credit loss recovery for financial assets measured at fair value through other comprehensive income

(659)

-

-

-

-

(659)

Net impairment of non-financial assets

220

-

-

-

(291)

(71)

Operating income after expected credit and non-financial asset impairment losses

1,486,447

117,298

50,006

67,310

(2,782)

1,600,963

Staff costs

(279,116)

(28,347)

(7,273)

(21,074)

(25,743)

(333,206)

Depreciation and amortisation

(75,370)

(6,485)

(782)

(5,703)

(5,379)

(87,234)

Allowance of provision for liabilities and charges

(155)

-

-

-

-

(155)

Administrative and other operating expenses

(135,347)

(40,754)

(9,121)

(31,651)

(7,731)

(183,832)

Operating expenses

(489,988)

(75,586)

(17,176)

(58,428)

(38,853)

(604,427)

Profit before tax

996,459

41,712

32,830

8,882

(41,635)

996,536

Income tax (expense)/credit

(145,133)

(2,816)

(13)

(2,803)

(53)

(148,002)

Profit for the period

851,326

38,896

32,817

6,079

(41,688)

848,534

Profit attributable to:



 

 



 - Shareholders of TBCG

851,294

38,896

32,817

6,079

(53,709)

836,481

 - Non-controlling interest

32

-

-

-

12,021

12,053

Profit for the period

851,326

38,896

32,817

6,079

(41,688)

848,534

* Interest expense includes net interest gains from currency swaps

** Includes intra-group eliminations

*** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations

 

Consolidated Key Ratios by Business Lines

3Q'23

Georgia FS

Uzbekistan

Group

Profitability ratios:

 



ROE1

26.4%

23.4%

27.6%

ROA2

4.2%

6.8%

4.1%

Cost to income3

31.5%

51.9%

35.4%

NIM4

6.5%

20.9%

6.9%

Loan yields5

11.7%

41.9%

12.6%

Deposit rates6

4.4%

24.4%

4.9%

Cost of funding7

5.0%

24.0%

5.4%





Asset quality & portfolio concentration:

 



Cost of risk8

0.7%

7.3%

0.9%

PAR 90 to Gross Loans9

1.2%

2.1%

1.2%

NPLs to Gross Loans10

2.0%

2.1%

2.0%

NPL provision coverage11

82.5%

199.9%

87.6%

Total NPL coverage12

148.6%

199.9%

151.6%

 

9M'23

Georgia FS

Uzbekistan

Group

Profitability ratios:

 



ROE1

25.9%

24.6%

27.00%

ROA2

4.1%

7.5%

4.0%

Cost to income3

30.7%

53.0%

34.9%

NIM4

6.4%

20.4%

6.7%

Loan yields5

11.8%

42.6%

12.6%

Deposit rates6

4.5%

24.8%

4.9%

Cost of funding7

5.1%

24.4%

5.5%





Asset quality & portfolio concentration:

 



Cost of risk8

0.7%

6.6%

0.9%

PAR 90 to Gross Loans9

1.2%

2.1%

1.2%

NPLs to Gross Loans10

2.0%

2.1%

2.0%

NPL provision coverage11

82.5%

199.9%

87.6%

Total NPL coverage12

148.6%

199.9%

151.6%

 

For the ratio definitions and exchange rates, please refer to appendix 12.

 

 

6)   Market shares[8] in Georgia

Market shares

Sep'23

Jun'23

Sep'22

Change YoY

Change QoQ

Total loans

39.1%

38.8%

38.8%

0.3 pp

0.3 pp

Individual loans

38.0%

38.2%

38.4%

-0.4 pp

-0.2 pp

Legal entities loans

40.5%

39.6%

39.3%

1.2 pp

0.9 pp

Total deposits

37.5%

39.9%

40.0%

-2.5 pp

-2.4 pp

Individual deposits

36.6%

37.9%

38.7%

-2.1 pp

-1.3 pp

Legal entities deposits

38.5%

42.2%

41.5%

 -3.0 pp

 -3.7 pp

 


 

7)   Subsidiaries of TBC Bank Group PLC[9] 


Ownership / voting

Country

Year of incorporation

Industry



Subsidiary

% as of
30-Sep 2023



JSC TBC Bank

99.9%

Georgia

1992

Banking


United Financial Corporation JSC

99.5%

Georgia

2001

Card processing


TBC Capital LLC

100.0%

Georgia

1999

Brokerage


TBC Leasing JSC

100.0%

Georgia

2003

Leasing


TBC Kredit LLC

100.0%

Azerbaijan

1999

Non-banking credit institution


TBC Pay LLC

100.0%

Georgia

2008

Processing


Index LLC

100.0%

Georgia

2009

Real estate management


TBC Invest LLC

100.0%

Israel

2011

Financial services


TBC Asset management LLC

100.0%

Georgia

2021

Asset Management


JSC TBC Insurance

100.0%

Georgia

2014

Insurance


Redmed LLC

100.0%

Georgia

2019

Healthcare

E-commerce


T NET LLC

100.0%

Georgia

2019

Asset Management


    TKT UZ

100.0%

Uzbekistan

2019

Retail Trade


Artarea.ge LLC

100.0%

Georgia

2012

PR and marketing


Marjanishvili 7 LLC

100.0%

Georgia

2020

Food and Beverage


Space JSC

100.0%

Georgia

2021

Software Services


 Space International JSC

100.0%

Georgia

2021

Software Services


TBC Group Support LLC

100.0%

Georgia

2020

Risk Monitoring


Inspired LLC (Payme)

51.0%

Uzbekistan

2011

Processing


TBC Bank JSC UZ

60.2%

Uzbekistan

2020

Banking


    TBC Fin Service LLC

100.0%

Uzbekistan

2019

Retail Leasing


8)   Impact of Changed Accounting Treatment for Option Contracts

TBC Bank Group entered into put/call arrangements in April 2019 for the remaining 49% of Payme (RNS #7827V) and in September 2021 for the EBRD/IFCs 40% stake in TBC UZ Bank (RNS #5753N). The exercise prices are dependent on a set of commercial and financial parameters.

Following the strong growth in the Group's Uzbek operations, the Group has re-assessed the accounting treatment for these options in 4Q 2022. According to IAS 32 requirements, in each case the present value of the put option exercise price should have been recognised as a redemption liability, even if the put option is out of the money and not expected to be exercised, with a corresponding effect on equity from when the option was entered into - not only at a potential option exercise date. Such a requirement arises because the put option agreement was signed with holders of the non-controlling interest (NCI) of the subsidiary entity.

The Group has therefore re-stated 3Q 2022 balances by recognising a redemption liability for put options and the equal and opposite effect on other reserves in equity.

In May 2023 TBC Bank Group PLC finalized the acquisition process of the remaining 49% interest of Inspired LLC. The acquisition price paid to minority shareholders amounted to GEL 141,234 thousand. Accordingly, respective redemption liability has been derecognized as it is fully settled at the acquisition date. 

Should the Group consequently purchase the shares of the NCI shareholders the additional impact on equity should be limited to any potential subsequent remeasurement of the redemption liability, as far as other reserves in equity have already been recognised. Moreover, the recognition of the redemption liability has no direct effect on the profit and loss statement or regulatory capital ratios of TBC Bank.

In 3Q 2022, the Group recognised GEL 374 million as a redemption liability and the equal and opposite effect on other reserves in equity.

 3Q'22

Reported

Restated

ROE

31.1%

33.6%

ROE (cumulative)

26.6%

28.6%

Leverage (times)

6.5x

7.1x

9)   Replacement of IFRS 4 with IFRS 17

The adoption of IFRS 17 will affect the financial reporting processes and procedures of the Group, as applications of the core principles outlined above will require additional information to be gathered and processed, as well as additional judgements to be made by the management. To ensure smooth and timely adoption of IFRS 17, the Group launched a separate implementation project. After the transition to IFRS 17 the Group will use premium allocation approach for its insurance subsidiary for following insurance contracts: motor insurance, border MTPL, property insurance, agro (crop) insurance, health-related insurance and liability and other insurance with product classification of insurance contract and measurement model of premium allocation approach.

The Group has applied the full retrospective approach for all of its portfolios of insurance contracts.

10) Loan Book Breakdown by Stages According IFRS 9

In millions of GEL
Total loans*

Sep'23

Jun'23

Sep'22

Stage

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

1

18,674

98

17,687

99

15,456

110

2

1,305

102

1,279

100

1,487

113

3

386

162

395

159

423

180

Total

20,365

362

19,361

358

17,366

403

 







Georgia FS Retail

Sep'23

Jun'23

Sep'22

Stage

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

1

6,438

46

6,249

48

5,796

63

2

584

61

584

64

638

90

3

110

68

113

71

155

96

Total

7,132

175

6,946

183

6,589

249

 







Georgia FS CIB

Sep'23

Jun'23

Sep'22

Stage

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

1

6,955

18

6,474

18

5,313

19

2

330

1

346

0

525

1

3

95

31

100

30

80

25

Total

7,380

50

6,920

48

5,918

45

 







Georgia FS MSME

Sep'23

Jun'23

Sep'22

Stage

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

1

4,680

23

4,463

24

4,079

23

2

358

31

320

28

315

21

3

166

51

167

48

177

48

Total

5,204

105

4,950

100

4,571

92

 







Uzbekistan

Sep'23

Jun'23

Sep'22

Stage

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

Gross loans

Loan loss provisions

1

593

10

492

8

255

3

2

25

6

22

4

6

1

3

14

11

13

9

8

6

Total

632

27

527

21

269

10

* Total loans include Azerbaijan loan portfolio

11) Glossary

Terminology

Definition

BVPS

Book value per share.

Digital daily active users (Digital DAU)

The number of retail digital users, who logged into our digital channels at least once per day.

Digital monthly active users (Digital MAU)

The number of retail digital users, who logged into our digital channels at least once a month.

EPS

Earnings per share.

Gross merchandise value (GMV)

GMV equals the total value of sales over the given period, including auctions through housing and auto platforms, as well as listing fees.

NBG

National Bank of Georgia.

12) Ratio Definitions and Exchange Rates

Ratio definitions

1. Return on average total equity (ROE) equals net profit attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; annualised where applicable.

2. Return on average total assets (ROA) equals net profit of the period divided by monthly average total assets for the same period; annualised where applicable.

3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income).

4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions.

5. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers; annualised where applicable.

6. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits; annualised where applicable.

7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest-bearing liabilities; annualised where applicable.

8. Cost of risk equals credit loss allowance for loans to customers divided by monthly average gross loans and advances to customers; annualised where applicable.

9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period.

10. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.

11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans.

12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans.

13. Credit loss level to gross loans equals credit loss allowance for loans to customers divided by the gross loan portfolio for the same period.

14. Related party loans to total loans equals related party loans divided by the gross loan portfolio.

15. Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided by the gross loan portfolio.

16. Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided by the gross loan portfolio.

17. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions.

18. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank standalone, based on IFRS.

19. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank standalone, based on IFRS.

20. Leverage equals total assets to total equity.

21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on IFRS.

22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on IFRS.

23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on IFRS.

Exchange Rates

To calculate the QoQ growth of the Balance Sheet items without the currency exchange rate effect, we used the US$/GEL exchange rate of 2.6177 as of 30 June 2023. To calculate the YoY growth without the currency exchange rate effect, we used the US$/GEL exchange rate of 2.8352 as of 30 September 2022. As of 30 June 2023, the US$/GEL exchange rate equalled 2.6783. For P&L items growth calculations without the currency effect, we used the average US$/GEL exchange rate for the following periods: 3Q 2023 of 2.6215, 2Q 2023 of 2.5586, 3Q 2022 of 2.8235, 9M 2023 of 2.6056, 9M 2022 of 2.9769. 



[1] Note: For better presentation purposes, certain financial numbers are rounded the nearest whole number.

[2] Reported per IFRS.

[3] Based on data published by the Central Bank of Uzbekistan.

[4] Remittances from Russia are adjusted for double counting with tourism inflows and other similar effects, based on TBC Capital estimates.

[5] Based on data published by NBG and FX-adjusted by TBC, based on Dec-2022 end of period exchange rate.

[6] Based on data published by Uzstat.

[7] Based on data published by Central Bank of Uzbekistan.

[8] Based on data published by National Bank of Georgia on the analytical tool Tableau.

[9] TBC Bank Group PLC became the parent company of JSC TBC Bank on 10 August 2016.

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