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TBC Bank Group PLC (TBCG)

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Thursday 18 November, 2021

TBC Bank Group PLC

3rd Quarter Results

RNS Number : 7363S
TBC Bank Group PLC
18 November 2021
 


 

TBC BANK GROUP PLC ("TBC Bank")

3 Q AND 9M 2021 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.

 

 

Third Quarter and Nine months of 2021 Unaudited Consolidated Financial Results Conference Call

  

TBC Bank Group PLC ("TBC PLC") publishes its unaudited consolidated financial results for the third quarter and the first nine months of 2021 on Thursday, 18 November 2021 at 7.00 am GMT (11.00 am GET), while 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/97719750220?pwd=dVlNciswem4vQjZLUW1CWWt2b3lIZz09

 

 

Webinar ID: 977 1975 0220

Passcode: 124283

 

Or, use the following dial-ins:

 

· Georgia: +995 3224 73988  or +995 7067 77954  or 800 100 293 (Toll Free)

· United Kingdom: 0 800 031 5717 (Toll Free) or 0 800 260 5801 (Toll Free) or 0 800 358 2817 (Toll Free) or 0 800 456 1369 (Toll Free)

· US: 833 548 0276 (Toll Free) or 833 548 0282 (Toll Free) or 877 853 5257 (Toll Free) or 888 475 4499 (Toll Free)

· Russia: 8800 100 6938 (Toll Free) or 8800 301 7427 (Toll Free)

 

 

Webinar ID 977 1975 0220#, 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  during the second part of the call, participants will have the opportunity to ask questions. All participants will be muted throughout the webinar.

 

Webinar Instructions:

For those participants who will be joining through the webinar, in order to ask questions, please use the "hand icon" that you will see 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:

For those participants who will be using the dial in number to join the webinar, please dial *9 to raise your hand.

 

 

 

 

 

 

Contacts

 

 

Zoltan Szalai

Director of International Media and Investor Relations 

 

E-mail: [email protected] 

Tel:  +44 (0) 7908 242128

Web: www.tbcbankgroup.com

 

Anna Romelashvili 

Head of Investor Relations

 

 

E-mail: [email protected] 

Tel:  +(995 32) 227 27 27

Web: www.tbcbankgroup.com

 

Investor Relations Department

 

 

 

E-mail: [email protected] 

Tel:  +(995 32) 227 27 27

Web: www.tbcbankgroup.com

 

 

 

 

 

 

Table of Contents

 

3Q and 9M 2021 Results Announcement

 

Key Highlights

Letter from the Chief Executive Officer

Economic Overview

Unaudited Consolidated Financial Results Overview for 3Q 2021

Unaudited Consolidated Financial Results Overview for 9M 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)Reclassification of certain balance sheet profit and loss items and changes in methodology

6)Loan book breakdown by stages according IFRS 9

7)Reconciliation of Return on Equity (ROE) with ROE before expected credit loss allowances

 

 

 

 

 

TBC Bank's Unaudited 3Q and 9M 2021 Consolidated Financial Results

 

Continued to deliver 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

 

Economic recovery continued in 3Q - After a record-high rebound of 29.9% in 2Q 2021, which was driven by pent-up demand and re-opening of the economy, GDP posted solid, 9.0% YoY real growth in 3Q 2021. Importantly, the growth has been broad-based, supported by strong external inflows and increased domestic demand.In the first nine months of 2021, the economy grew by 11.3% YoY in real terms, surpassing the 2019 level by 4.8%. For the FY 2021 and 2022, our GDP growth outlook is 10.5% and 6.0%, respectively.

 

The group maintained robust profitability… - Our net profit amounted to GEL 207.1 million (up by 35.8% YoY) and GEL 610.5 million (almost tripled YoY), respectively, in 3Q and 9M 2021. The growth was driven by increased operating income spread across all revenue categories, further supported by recoveries in loan provision charges.  As a result, our ROE for 3Q and 9M stood at 24.1% and 25.3%, respectively. 

 

.... backed by solid capital levels, allowing the resumption of dividend payments- CET1, Tier 1 and Total Capital ratios stood at 13.4%, 15.4% and 19.3%, respectively, comfortably above the prudent respective minimum regulatory requirements of 11.3%, 13.5% and 17.9%. The strong capital generation over the quarter fully offset the interim dividend payment of GEL 81.8 million in September 2021.

 

Our Georgian banking franchise maintained steady growth across all business segment… - Our loan book increased by 12.6% year-on-year in constant currency terms, mainly driven by the CIB and MSME segments, which translated into a 38.4% market share as of 30 September 2021.  Over the same period, our deposits increased by 20.0% in constant currency terms. As a result, our market share in total deposits amounted to 40.1% as of 30 September 2021. We hold the #1 position in the market in terms of both loan and deposit market shares.

 

…while our Uzbek bank continued to expand its operations having secured strong IFI support - In September, we entered into a partnership with IFC and the EBRD. Under the terms of the agreement, by the end of 2021, IFC and the EBRD will, subject to certain conditions, each invest USD 9.4 million into TBC UZ in exchange for up to a 20% equity interest each. TBC PLC will retain 60% ownership of TBC UZ.

 

As of 31 October 2021, the number of registered and active users of TBC UZ's digital banking app reached around 785,000 and 170,000, respectively. We already cover 25 regions of the country through our 33 customer acquisition points and 8 showrooms. At the end of October 2021, the bank's deposit portfolio amounted to GEL115.0 million, while the loan book stood at GEL 59.8 million. 

 

Further progress towards digitalization - In 3Q, we launched a fully end-to-end digital consumer loan disbursement process in our mobile banking, which is expected to accelerate our sales through remote channels. We have also launched 'open banking' in our mobile banking for our retail and business customers.

 

In 3Q, the number of transactions conducted in remote channels amounted to 37.2 million, up by 24.8% and 6.0% on a YoY and QoQ basis, respectively. Over the same period, the number of active digital users increased by 10.7% YoY or 2.3% QoQ and amounted to 704 thousands. Our sales offloading in consumer loans[1] and deposits[2] stood at 52% and 74%, respectively.

 

JSC TBC Bank successfully issued $75 million Additional Tier 1 Capital Perpetual Subordinated Notes on 4 November 2021 - The new issue attracted solid demand from investors across the EU, the UK and the US, evidencing strong investor appetite for TBC Bank's credit story. The AT1 issue will allow TBC Bank to maintain an efficient capital structure and strong capital base to fund mid-term growth opportunities. 

 

TBC Bank Group PLC was re-included in the FTSE 250 index from 27 October 2021 on the back of the strong recovery in our share price.

 

 

Letter from the Chief Executive Officer  

I am delighted to present another strong set of financial results for the third quarter 2021, supported by the continued revival of business activities on the back of a sustained macroeconomic recovery. The quarter was also marked by a significant achievement for our Uzbek banking subsidiary, TBC UZ. After extensive negotiations, we have entered into a partnership with the International Finance Corporation ("IFC") and the European Bank for Reconstruction and Development ("EBRD"), whereby IFC and the EBRD will invest equity into TBC UZ to support its continued growth. Furthermore, I am pleased that our subsidiary, JSC TBC Bank, successfully issued additional Tier 1 Capital Perpetual Subordinated Notes in the amount of USD 75 million. This AT1 issuance will allow us to maintain solid growth while retaining a prudent and optimal capital structure well above regulatory requirements. 

 

I am also delighted that our efforts have been reflected in a strong recovery of our share price, which resulted in our re-inclusion into the FTSE 250 index from 27 October 2021.

 

Economic recovery continued into the third quarter 

The Georgian economy has continued a firm recovery in the third quarter of 2021. According to the preliminary estimates of Geostat[3], after a record-high rebound of 29.9% in the second quarter, the economy posted solid, 9.0% year-on-year real growth. In the first nine months of 2021, real GDP expanded by 11.3% year-on-year, surpassing the 2019 level by 4.8%. Importantly, this growth was broad-based, supported by strong external inflows and increased domestic demand. The exceptional performance in exports, the continued strong flow of remittances, and a gradual recovery in tourism, together with record-low interest rates on US$ deposits, stimulated consumer spending and real estate investments. Banking sector credit displayed a solid rebound in the third quarter with 15.8% year-on-year growth in FX adjusted terms, which is also strongly supportive of economic growth. While COVID-19 related uncertainties pose downside risks to the outlook, real GDP growth for the year is expected to be above 10.0%.

 

The Bank continued to deliver strong financial results in the third quarter

In the third quarter of 2021, our consolidated net profit amounted to GEL 207.1 million, up by 35.8% year-on-year, while our return on equity and return on assets stood at 24.1% and 3.6%, respectively.

 

The main driver of our profitability was the strong growth in our net interest income, which resulted in a net interest margin of 5.3%, up by 0.7 pp year-on-year. Our operating income was further supported by an increase in net fee and commission income, which grew by 44.5% year-on-year. This growth was driven by increased business activities combined with various initiatives on the payments side and strong results generated by our retail affluent sub-segment.

 

In the third quarter, we recorded a strong performance on the asset quality side across all segments. As a result, our cost of risk stood at -0.1% and had a positive contribution to our net profits. Over the same period, our operating expenses increased by 16.8% year-on-year, driven by the expansion of our Uzbek bank and increased business activities. The cost to income for the period stood at 35.4%, down by 3.1 pp year-on-year.

 

Our loan book increased by 12.6% year-on-year in constant currency terms, mainly driven by the CIB and MSME segments, which translated into a 38.4% market share. Over the same period, our deposits increased by 20.0% in constant currency terms across the board. As a result, our market share in total deposits amounted to 40.1% as of 30 September 2021.

 

As of 30 September 2021, our CET1, Tier 1 and Total Capital ratios stood at 13.4%, 15.4% and 19.3%, respectively, comfortably above the respective minimum regulatory requirements of 11.3%, 13.5% and 17.9%.  The strong capital generation over the quarter fully offset the interim dividends payments, in the amount of GEL 81.8 million, in September 2021.  We continue to maintain a robust liquidity position, with net stable funding (NSFR) and liquidity coverage ratios (LCR) standing at 127% and 116%, respectively, as of 30 September 2021.

 

Further progress towards digitalization

I would like to highlight several important business developments during the quarter. On the retail side, we have launched a digital consumer loan disbursement process in our mobile banking, which is expected to accelerate our sales through remote channels. We have also launched open banking in our mobile banking for our retail and business customers. Open banking brings together all clients' accounts from various Georgian banks and allows them to check their accounts at one place, thus saving a lot of time and effort. I am pleased that our consistent efforts towards innovation and digitalization have been recognized internationally with multiple digital regional awards from Global Finance magazine.

 

In terms of operating metrics, the number of retail  remote transactions during the third quarter of 2021 increased by 24.8% year-on-year and by 6.0% quarter-on-quarter. Retail digital users also demonstrated a growing trend and increased by 10.7% year-on-year and 2.3% quarter-on-quarter, while mobile and internet banking penetration ratio amounted to 56%.  Over the same period, the number of digital sales also remained strong. The consumer loan sales offloading ratio[4] amounted to 52%, while the deposit sales offloading ratio[5] continued to remain high at 74%.

 

Securing strong IFI support for our growing Uzbek bank

In September, we entered into a partnership with IFC and the EBRD, marking another important milestone in our Uzbek expansion. Under the terms of the agreement, by the end of 2021, IFC and EBRD will, subject to certain conditions, each invest USD 9.4 million into TBC UZ in exchange for up to a 20% equity interest each. TBC PLC will retain 60% ownership of TBC UZ. In addition, IFC and the EBRD have agreed, subject to certain conditions, to make additional capital injections of, in aggregate, up to USD 34.3 million in the period up to 2024. This partnership will allow us to accelerate our growth in the country and offer a wide range of innovative and affordable products to the Uzbek population.

 

This was another successful quarter for our Uzbek bank, which continued its rapid growth across the board. The number of registered and active users of our digital banking app reached 785,000 and 170,000, respectively, as of 31 October 2021. We already cover 25 regions of the country through our 33 customer acquisition points, while we also operate several showrooms for customer relationship purposes. As of end of October, our deposit portfolio growth significantly outpaced the loan book growth and reached GEL 115.0 million, while the loan book stood at GEL 59.8 million. 

 

Over the same period, our Uzbek payments business Payme continued its strong growth, as its number of registered users reached 4 million, while the number and volume of transactions increased by an impressive 47.6% and 58.8% respectively year-on-year. As a result, its revenue for the third quarter amounted to GEL 6.7 million, increasing by 54.6% over the same period.

 

Outlook

Going forward, we will continue to leverage our strong Georgian franchise to maintain high profitability levels backed by the solid capital levels, while harnessing our Uzbek businesses to accelerate our growth.

 

To conclude, I would 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 10-15%.

 

 

Economic Overview

 

Economic growth

A remarkable 29.9% surge in the second quarter of 2021 confirmed that, instead of recovery, the economy is experiencing a restart. Furthermore, despite the hindered tourism rebound in August-September and slower than expected vaccination rates, according to Geostat's initial estimates the second quarter was followed by 9.9% year-on-year expansion in July, 10.3% in August, and 6.9% in September, amounting to average year-on-year growth of 9.0% in 3Q 2021. It is expected that the Georgian economy will expand by 10.5% year-on-year, surpassing the 2019 level by 3.6% in 2021.

 

External sectors

The external sector continued its strong performance in 3Q 2021 with exports growing by 21.9% year-on-year and 15.8% compared with 3Q 2019. Notably, domestic exports lead the recovery with the share of domestic exports in total exports increasing significantly, from 59.4% in 3Q 2019 to 71.9% in 3Q 2021. Despite the still ongoing recovery in tourism related imports and re-exports, imports of goods also went up by 23.8% YoY in 3Q 2021 and by 9.9% when compared with the same period of 2019. Importantly, the rebound in the trade in goods was broad based, reflecting the increased overall external as well as domestic demand. 

 

Remittance inflows have stabilized after a 53.5% YoY surge in the second quarter, amounting to 10.2% YoY in 3Q 2021 or 28.2% compared to 3Q 2019. Although part of the rebound compared with 2019 can be attributed to border closures and more cash remittances being transferred 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 the NBG's estimates.

The recovery in tourism inflows has continued its strong performance, with 1230.6% year-on-year growth in 3Q 2021 on the back of the low base in 3Q 2020 due to the COVID-19 pandemic, equaling a 50.2% recovery compared to the same period of 2019. Notably, the growth is primarily lead by the recovery of high spending countries. While compared to the previous quarter's inflows standing at 28.0% of 2Q 2019, the 3Q 2021 numbers are impressive, the recovery in August-September has somewhat stalled on the back of another wave of COVID-19 pandemic. Overall, even taking into account increased risks due to a higher number of infection cases, TBC Capital's latest projection of tourism inflows to recover by around 37.5% in 2021 compared to 2019 still looks reasonable[6]

 

Fiscal stimulus 

The fiscal deficit is expected to remain sizable in 2021 at an estimated 6.7% of GDP following a deficit of 9.3% of GDP in 2020. According to the Ministry of Finance, further fiscal consolidation is expected in the coming years with deficit-to-GDP ratios of 4.4%, 3.0% and 2.7% in 2022, 2023 and 2024, respectively. Importantly, the major source of deficit financing in 2020-2021 was an external one, largely compensating for the pandemic related drop in net inflows. 

 

Credit growth

By the end of 3Q 2021, bank credit growth increased to 15.8% year-on-year, compared to a 12.6% year-on-year growth by the end of 2Q 2021. In terms of segments, MSME lending growth has increased by 0.4 pp from 1Q 2021 to 2Q 2021 and amounted to 20.1% year-on-year. Corporate lending also increased from 7.4% at the end of 2Q 2021 to 15.4%. Growth in the retail sector increased by 0.6 pp to 13.2% year-on-year on the back of stronger non-mortgage credit. As for housing finance, the year-on-year increase declined from 14.1% to 12.0%, however, on the back of the higher base effect.

 

Inflation, monetary policy and the exchange rate

After the appreciation of the GEL in the second quarter, the currency has remained broadly stable, even with the depreciating TRY, gaining 1.2% value in the third quarter against the greenback. In contrast to the GEL, inflationary pressures have continued throughout the third quarter, mainly caused by increasing commodity and food prices on the international markets, reaching 12.3% year-on-year in September 2021, up from 9.9% in June 2021. However, monthly seasonally adjusted inflation in September was already below the 3% target. As expected, despite higher commodity prices and the rebound of the economy, the GEL has curbed the price increase, although with some time lag. To curb the aforementioned inflationary pressures the NBG increased its main refinancing rate by 50 bps to 10.0% in August, coupled with 93.7 million USD in FX interventions, 60 million of which was sold in September.

 

Going forward

As the growth in the third quarter has solidified our projection of restart rather than recovery, TBC Capital holds an unchanged forecast for real GDP growth in 2021 of 10.5%, followed by a slightly downward, revised 6.0% growth forecast in 20222. The IMF projects that the Georgian economy will grow by 7.7% in 2021 and by 5.8% in 2022[7], while the World Bank's October release forecasts 8.0% and 5.5% growth rates in 2021 and 2022, respectively[8].

 

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

 

 

 

Unaudited Consolidated Financial Results Overview for 3Q 2021

This statement provides a summary of the unaudited business and financial trends for 3Q 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

 

 

 

 

in thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Net interest income

259,390

242,767

211,784

22.5%

6.8%

Net fee and commission income

68,631

63,008

47,499

44.5%

8.9%

Other operating non-interest income[9]

43,952

74,512

33,913

29.6%

-41.0%

Total credit loss allowance

(5,106)

45,291

(14,146)

-63.9%

NMF

Operating profit after expected credit losses

366,867

425,578

279,050

31.5%

-13.8%

Losses from modifications of financial instrument

(104)

(104)

(1,763)

-94.1%

0.0%

Operating expenses

(131,695)

(134,688)

(112,793)

16.8%

-2.2%

Profit before tax

235,068

290,786

164,494

42.9%

-19.2%

Income tax expense

(27,921)

(40,394)

(11,906)

NMF

-30.9%

Profit for the period

207,147

250,392

152,588

35.8%

-17.3%

 

 Balance Sheet and Capital Highlights

 

 

 

 

 

in thousands of GEL

Sep-21

Jun-21

Sep-20

Change YoY

Change QoQ

Total Assets

    23,701,241

  22,091,541

  21,866,972

8.4%

7.3%

Gross Loans

         15,963,520

  15,274,926

  14,590,777

9.4%

4.5%

Customer Deposits

  14,338,537

  12,870,418

  12,343,414

16.2%

11.4%

Total Equity

  3,448,193

  3,336,825

  2,826,387

22.0%

3.3%

CET 1 Capital (Basel III)

 2,565,560

  2,382,595

  1,738,739

47.6%

7.7%

Tier 1 Capital (Basel III)

 2,955,910

  2,837,805

  2,211,178

33.7%

4.2%

Total Capital (Basel III)

   3,693,637

  3,573,282

  2,984,109

23.8%

3.4%

Risk Weighted Assets (Basel III)

         19,143,450

  18,275,845

  17,478,610

9.5%

4.7%

 

 

Key Ratios

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

ROE

24.1%

31.0%

22.0%

2.1 pp

-6.9 pp

Bank's standalone ROE[10]

30.9%

34.7%

23.3%

7.6 pp

-3.8 pp

ROA

3.6%

4.4%

2.9%

0.7 pp

-0.8 pp

Bank's standalone ROA[10]

4.5%

4.7%

2.9%

1.6 pp

-0.2 pp

NIM

5.3%

5.0%

4.6%

0.7 pp

0.3 pp

Cost to income

35.4%

             35.4%

38.5%

-3.1 pp

0.0 pp

Bank's standalone cost to income[10]

25.8%

             28.6%

33.2%

-7.4 pp

-2.8 pp

Cost of risk

-0.1%

-1.3%

0.2%

-0.3 pp

1.2 pp

NPL to gross loans

3.1%

3.4%

3.5%

-0.4 pp

-0.3 pp

NPL provision coverage ratio

94.3%

91.3%

104.6%

-10.3 pp

3.0 pp

Total NPL coverage ratio

169.3%

169.6%

180.0%

-10.7 pp

-0.3 pp

CET 1 CAR (Basel III)

13.4%

13.0%

9.9%

3.5 pp

0.4 pp

Tier 1 CAR (Basel III)

15.4%

15.5%

12.7%

2.7 pp

-0.1 pp

Total CAR (Basel III)

19.3%

19.6%

17.1%

2.2 pp

-0.3 pp

Leverage (Times)

6.9x

6.6x

7.7x

-0.8x

0.3x

 

Net Interest Income

In 3Q 2021, net interest income amounted to GEL 259.4 million, up by 22.5% YoY and 6.8% on a QoQ basis.

The YoY rise in interest income by GEL 50.4 million, or 11.8%, was mostly attributable to an increase in interest income from loans related to a growth in the respective portfolio of GEL 1,372.7 million, or 9.4%, together with an increase in the respective yield by 0.5 pp due to a rise in the refinance rate. In addition, the shift of the portfolio composition towards GEL loans had a positive effect on loan yields.

In 3Q 2021, interest expense increased only by GEL 9.4 million, or 4.3%, mainly driven by an increase in interest expense from deposits. This increase was related to a growth in the respective portfolio of GEL 1,995.1 million, or 16.2% YoY, which was partially offset by the decrease in the cost of deposits by 0.2 pp. Over the same period, interest expense from other borrowed funds decreased by GEL 6.6 million, or 9.8%, on the back of a decline in the respective portfolio by GEL 777.4 million, or 19.9%, which more than offset the increase in the respective yield by 0.7 pp that was driven by the higher refinance rate. In addition, the change in liability structure towards deposits had a positive effect on our cost of funding, which dropped by 0.2 pp on a YoY basis. 

The increase in interest income on a QoQ basis of GEL 18.1 million, or 3.9%, was mainly driven by an increase in interest income from loans to customers on the back of an increase in the loan portfolio by GEL 688.6 million, or 4.5%, and a 0.3 pp increase in loan effective rates. This increase was mainly attributable to GEL loan yields, on the back of an increase in the refinance rate, as well as a shift of the portfolio composition towards high-yield GEL loans.

The increase in interest expense of GEL 3.5 million, or 1.6% on a QoQ basis, was mainly driven by an increase in customer account by GEL 1,468.1 million or 11.4%, as well as a 0.1 pp increase in the cost of deposits.

In 3Q 2021, our NIM stood at 5.3%, up by 0.7 pp YoY and 0.3 pp on a QoQ basis.

In thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Interest income

476,636

458,572

426,232

11.8%

3.9%

Interest expense

(226,991)

(223,456)

(217,639)

4.3%

1.6%

Net gains from currency swaps

9,745

7,651

3,191

NMF

27.4%

Net interest income

259,390

242,767

211,784

22.5%

6.8%

 

 

 

 

 

 

NIM

5.3%

5.0%

4.6%

0.7 pp

0.3 pp

 

 

Net fee and commission income

In 3Q 2021, net fee and commission income totaled GEL 68.6 million, up by 44.5% YoY and 8.9% QoQ.

The YoY increase was spread across all categories and was mainly driven by increased business activities combined with our various initiatives including: a review of the pricing model of our merchants together with the acquisition of several large merchants, the popularization of our subscription model for mass retail customers, and the fine-tuning of our offerings for affluent customers. This growth was further supported by our fast growing Uzbek subsidiary, Payme.

The increase on a QoQ basis was mainly driven by an increase in structuring fees for loans and guarantees in the corporate segment, as well as fine-tuning our offerings for affluent customers.

In thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Net fee and commission income

 

 

 

 

 

Card operations

21,275

22,627

11,318

88.0%

-6.0%

Settlement transactions

31,386

28,435

22,535

39.3%

10.4%

Guarantees issued and letters of credit

10,188

9,561

9,624

5.9%

6.6%

Other

5,782

2,385

4,022

43.8%

NMF

Total net fee and commission income

68,631

63,008

47,499

44.5%

8.9%

 

 

Other Non-Interest Income

Total other non-interest income increased by 29.6% YoY and decreased by 41.0% QoQ and amounted to GEL 44.0 million in 3Q 2021.

The increase on a YoY basis was mainly attributable to business revival, further supported by net income from foreign currency operations due to an increase in the scale of FX transactions.

The decrease on a QoQ basis was mainly driven by other operating income due to an exceptionally high base in the previous quarter related to the gain from the disposal of one of our investment properties, in the amount of GEL 26.3 million.

In thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Other non-interest income

 

 

 

 

 

Net income from foreign currency operations

29,114

31,372

22,131

31.6%

-7.2%

Net insurance premium earned after claims and acquisition costs[11]

6,019

5,470

5,941

1.3%

10.0%

Other operating income

8,819

37,670

5,841

51.0%

-76.6%

Total other non-interest income

43,952

74,512

33,913

29.6%

-41.0%

 

Credit Loss Allowance

In 3Q cost of risk amounted to -0.1%, attributable to strong performance across all segments.

In thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Recovery of/(charges to) credit loss allowance for loan to customers

4,389

50,112

(5,884)

-174.6%

-91.2%

Credit loss allowance for other transactions

(9,495)

(4,821)

(8,262)

14.9%

97.0%

Total credit loss allowance

(5,106)

45,291

(14,146)

-63.9%

NMF

Operating profit after expected credit losses

366,867

425,578

279,050

31.5%

-13.8%

 

 

 

 

 

 

Cost of risk

-0.1%

-1.3%

0.2%

-0.3 pp

1.2 pp

 

 

Operating Expenses

In 3Q 2021, our operating expenses expanded by 16.8% YoY and slightly decreased on a QoQ basis.

The YoY increase was mainly attributable to an expansion of our Uzbek business, which resulted in an increase in the number of employees, as well as higher marketing expenses.

Overall, our cost to income ratio improved both on a YoY basis and amounted to 35.4%.

In thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Operating expenses

 

 

 

 

 

Staff costs

(74,643)

(77,757)

(62,255)

19.9%

-4.0%

Provisions for liabilities and charges

(54)

(54)

(2,059)

-97.4%

0.0%

Depreciation and amortization

(19,988)

(19,337)

(17,339)

15.3%

3.4%

Administrative & other operating expenses

(37,010)

(37,540)

(31,140)

18.9%

-1.4%

Total operating expenses

(131,695)

(134,688)

(112,793)

16.8%

-2.2%

 

 

 

 

 

 

Cost to income

35.4%

35.4%

38.5%

-3.1 pp

0.0 pp

Bank's standalone cost to income*

25.8%

28.6%

33.2%

-7.4 pp

-2.8 pp

 

 

 

 

 

 

* For the ratio calculation all relevant group recurring costs are allocated to the bank

 

 

 

Net Income

In 3Q, we continued to deliver strong profitability and generated GEL 207.1 million in net profit. The growth on a YoY basis was mainly due to increased operating income, spread across all revenue categories, further supported by recoveries in loan credit loss allowance expenses. The decline on a QoQ basis was mostly attributable to an exceptionally high base in the previous quarter (mainly due to gain from the disposal of one of our investment properties and recoveries in credit loss allowances).

As a result, our ROE and ROA for the third quarter reached 24.1% and 3.6%, accordingly.

 In thousands of GEL

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Losses from modifications of financial instruments

(104)

(104)

(1,763)

-94.1%

0.0%

Profit before tax

235,068

290,786

164,494

42.9%

-19.2%

Income tax expense

(27,921)

(40,394)

(11,906)

NMF

-30.9%

Profit for the period

207,147

250,392

152,588

35.8%

-17.3%

 

 

 

 

 

 

ROE

24.1%

31.0%

22.0%

2.1 pp

-6.9 pp

Bank's standalone ROE[12]

30.9%

34.7%

23.3%

7.6 pp

-3.8 pp

ROE before expected credit loss allowances

24.6%

26.0%

23.8%

0.8 pp

-1.4 pp

ROA

3.6%

4.4%

2.9%

0.7 pp

-0.8 pp

Bank's standalone ROA[12]

4.5%

4.7%

2.9%

1.6 pp

-0.2 pp

 

 

Funding and Liquidity

As of 30 September 2021, the total liquidity coverage ratio (LCR), as defined by the NBG, was 116.5%, above the 100% limit, while the LCR in GEL and FC stood at 98.0% and 125.5% respectively, above the respective limits of 75% and 100%. Over the same period, NSFR stood at 127.1%, compared to the regulatory limit of 100%.

 

30-Sep-21

30-Jun-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

127.1%

130.6%

-3.5 pp

 

 

 

 

Net loans to deposits + IFI funding

97.5%

102.8%

-5.3 pp

Leverage (Times)

6.9x

6.6x

0.3x

 

 

 

 

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

116.5%

127.1%

-10.6 pp

LCR in GEL, as defined by the NBG

98.0%

122.9%

-24.9 pp

LCR in FC, as defined by the NBG

125.5%

129.2%

-3.7 pp

 

 

Regulatory Capital

As of 30 September 2021, our capital adequacy ratios were comfortably above the minimum regulatory requirements.

The strong capital generation over the quarter fully offset the interim dividend payments in the amount of GEL 81.8 million in September.

On November 4, our subsidiary JSC TBC Bank successfully issued additional Tier 1 Capital Perpetual Subordinated Notes, in the amount of US$ 75 million, with a coupon of 8.9%. This AT1 issuance will allow us to maintain solid growth while keeping a prudent capital structure well above regulatory requirements.

In thousands of GEL

30-Sep-21

30-Jun-21

Change QoQ

 

 

 

 

CET 1 Capital

2,565,560

2,382,595

7.7%

Tier 1 Capital

2,955,910

2,837,805

4.2%

Total Capital

3,693,637

3,573,282

3.4%

Total Risk-weighted Exposures

19,143,450

18,275,845

4.7%

 

Minimum CET 1 ratio

11.3%

11.2%*

0.1 pp

CET 1 Capital adequacy ratio

13.4%

13.0%

0.4 pp

 

 

 

 

Minimum Tier 1 ratio

13.5%

13.5%*

0.0 pp

Tier 1 Capital adequacy ratio

15.4%

15.5%

-0.1 pp

 

 

 

 

Minimum total capital adequacy ratio

17.9%

17.8%*

0.1 pp

Total Capital adequacy ratio

19.3%

19.6%

-0.3 pp

* Minimum requirements with restored buffers

 

Loan Portfolio

As of 30 September 2021, the gross loan portfolio reached GEL 15,963.5 million, up by 4.5% QoQ, or up by 5.7% on a constant currency basis.

The proportion of gross loans denominated in foreign currency decreased by 1.4pp QoQ and accounted for 54.9% of total loans, while on a constant currency basis the proportion of gross loans denominated in foreign currency decreased by 0.8pp QoQ and stood at 55.5%.

As of 30 September 2021, our market share in total loans stood at 38.4%, up by 0.3pp QoQ. Our loan market share in legal entities was 38.6%, up by 0.6pp QoQ, and our loan market share in individuals stood at 38.2%, down by 0.1pp QoQ.

In thousands of GEL

30-Sep-21

30-Jun-21

Change QoQ

Loans and advances to customers

 

 

 

 

 

 

 

Retail

5,950,915

5,719,393

4.0%

Retail loans GEL

3,313,791

3,131,032

5.8%

Retail loans FC

2,637,124

2,588,361

1.9%

CIB

6,136,232

5,851,634

4.9%

CIB loans GEL

1,941,958

1,746,149

11.2%

CIB loans FC

4,194,274

4,105,485

2.2%

MSME

3,876,373

3,703,899

4.7%

MSME loans GEL

1,936,230

1,797,390

7.7%

MSME loans FC

1,940,143

1,906,509

1.8%

Total loans and advances to customers

15,963,520

15,274,926

4.5%

 

 

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

Loan yields

10.5%

10.2%

10.0%

0.5 pp

0.3 pp

Loan yields GEL

15.4%

15.1%

15.3%

0.1 pp

0.3 pp

Loan yields FC

6.6%

6.7%

6.6%

0.0 pp

-0.1 pp

Retail Loan Yields

12.0%

11.4%

11.5%

0.5 pp

0.6 pp

Retail loan yields GEL

16.3%

15.9%

16.6%

-0.3 pp

0.4 pp

Retail loan yields FC

6.6%

6.4%

6.5%

0.1 pp

0.2 pp

CIB Loan Yields

9.1%

9.0%

8.5%

0.6 pp

0.1 pp

CIB loan yields GEL

14.1%

13.8%

13.3%

0.8 pp

0.3 pp

CIB loan yields FC

6.8%

7.1%

7.0%

-0.2 pp

-0.3 pp

MSME Loan Yields

10.5%

10.2%

9.9%

0.6 pp

0.3 pp

MSME loan yields GEL

15.0%

15.0%

14.6%

0.4 pp

0.0 pp

MSME loan yields FC

6.0%

6.1%

6.1%

-0.1 pp

-0.1 pp

 

 

Loan Portfolio Quality

Total PAR 30 ratio stood at 2.3% and remained broadly stable on a QoQ basis. The decrease in the retail segment on the back of mortgage loans was offset by the MSME and CIB segments. The slight worsening in the CIB segment was due to several borrowers with overdue payments, which are expected to be repaid during the following month, while the increase in the MSME segment was driven by the SME sub-segment.

In 3Q, NPLs improved across all segments, mainly driven by resumed repayments from restructured retail and MSME.

Our NPLs had a 94% provision coverage as of 30 September 2021 and an additional 75% collateral coverage. Only 15% of NPLs were unsecured loans with strong provision coverage of 281%.

Par 30

30-Sep-21

30-Jun-21

Change QoQ

Retail

2.7%

3.0%

-0.3 pp

CIB

0.5%

0.3%

0.2 pp

MSME

4.6%

3.9%

0.7 pp

Total Loans

2.3%

2.2%

0.1 pp

 

 

 

 

 

 

Non-performing Loans

30-Sep-21

30-Jun-21

Change QoQ

Retail

3.6%

4.0%

-0.4 pp

CIB

1.5%

1.6%

-0.1 pp

MSME

4.7%

5.4%

-0.7 pp

Total Loans

3.1%

3.4%

-0.3 pp

 

 

NPL Coverage[13]

30-Sep-21

30-Jun-21

 

Provision Coverage

Total Coverage

Provision Coverage

Total Coverage

Retail

120.7%

189.3%

118.9%

190.3%

CIB

82.5%

151.2%

82.9%

157.0%

MSME

68.7%

154.5%

63.3%

151.8%

Total

94.3%

169.3%

91.3%

169.6%

 

 

Cost of risk 

The recoveries in credit loss allowances were due to a strong performance across all segments and translated into a - 0.1% cost of risk for 3Q 2021. In the retail segment, the main driver was mortgage loans, as well as recoveries in the written-off unsecured portfolio, while the improvement in the MSME cost of risk was driven by both the Micro and SME sub-segments. The recoveries in CIB were due to a strong loan book performance.

 

Cost of risk

3Q'21

2Q'21

3Q'20

Change YoY

Change QoQ

 

 

 

 

 

 

Retail

-0.2%

-0.2%

0.2%

-0.4 pp

0.0 pp

CIB

-0.2%

-2.0%

0.0%

-0.2 pp

1.8 pp

MSME

0.1%

-1.8%

0.4%

-0.3 pp

1.9 pp

Total

-0.1%

-1.3%

0.0%

-0.1 pp

1.2 pp

 

Deposit Portfolio

The total deposits portfolio increased by 11.4% QoQ, or 12.5% on a constant currency basis, and amounted to GEL 14,338.5 million.

This QoQ growth was mainly driven by the CIB segment, which was focused on attracting GEL deposits in line with our liquidity needs. The proportion of deposits denominated in a foreign currency increased by 2.0 pp QoQ and accounted for 63.7% of total deposits, while on a constant currency basis the proportion of deposits denominated in foreign currency decreased by 1.6 pp QoQ and stood at 64.1%.

As of 30 September 2021, our market share in deposits amounted to 40.1%, up by 2.3 pp QoQ, while our market share in deposits to legal entities stood at 40.0%, up by 4.3 pp QoQ. Our market share in deposits to individuals stood at 40.2%, up by 0.6 pp QoQ.

In thousands of GEL

30-Sep-21

30-Jun-21

Change QoQ

Customer Accounts

 

 

 

 

 

 

 

Retail

5,593,535

5,301,114

5.5%

Retail deposits  GEL

1,353,608

1,282,793

5.5%

Retail deposits FC

4,239,927

4,018,321

5.5%

CIB

6,834,386

5,939,188

15.1%

CIB deposits  GEL

2,681,148

2,218,972

20.8%

CIB deposits FC

4,153,238

3,720,216

11.6%

MSME

1,433,603

1,384,189

3.6%

MSME deposits  GEL

688,598

662,605

3.9%

MSME deposits FC

745,005

721,584

3.2%

Total Customer Accounts*

14,338,537

12,870,418

11.4%

* Total deposit portfolio includes Ministry of Finacne deposits in the amount of, GEL 246 million and GEL 477 million as of 30 June 2021 and 30 September 2021, respectively.

 

 

3Q'21

2Q'21

3Q'20

Change

YoY

Change

QoQ

Deposit rates

3.5%

3.4%

3.7%

-0.2 pp

0.1 pp

Deposit rates GEL

6.9%

6.6%

6.7%

0.2 pp

0.3 pp

Deposit rates FC

1.6%

1.7%

2.0%

-0.4 pp

-0.1 pp

Retail Deposit Yields

2.3%

2.2%

2.7%

-0.4 pp

0.1 pp

Retail deposit rates GEL

4.8%

4.7%

5.5%

-0.7 pp

0.1 pp

Retail deposit rates FC

1.5%

1.5%

1.8%

-0.3 pp

0.0 pp

CIB Deposit Yields

4.5%

4.0%

4.4%

0.1 pp

0.5 pp

CIB deposit rates GEL

8.5%

8.3%

7.8%

0.7 pp

0.2 pp

CIB deposit rates FC

1.9%

2.1%

2.5%

-0.6 pp

-0.2 pp

MSME Deposit Yields

0.9%

0.8%

1.0%

-0.1 pp

0.1 pp

MSME deposit rates GEL

1.6%

1.4%

1.6%

0.0 pp

0.2 pp

MSME deposit rates FC

0.2%

0.3%

0.4%

-0.2 pp

-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 on 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

3Q'21

Retail

MSME

CIB

Corp. Centre

Total

Interest income

176,551

100,263

140,501

59,321

476,636

Interest expense

(32,230)

(3,244)

(72,311)

(119,206)

(226,991)

Net gains from currency swaps

-

-

-

9,745

9,745

Net transfer pricing

(44,594)

(41,080)

22,192

63,482

-

Net interest income

99,727

55,939

90,382

13,342

259,390

Fee and commission income

68,712

14,615

31,588

7,775

122,690

Fee and commission expense

(18,529)

(9,542)

(22,971)

(3,017)

(54,059)

Net fee and commission income

50,183

5,073

8,617

4,758

68,631

Net insurance premium earned after claims and acquisition costs

-

-

-

6,019

6,019

Net gains/(losses) from currency derivatives, foreign currency operations and translation

10,643

6,867

15,604

(4,012)

29,102

Gains less Losses from Disposal of Investment Securities Measured at Fair Value through Other Comprehensive Income

-

-

9

3,854

3,863

Other operating income

1,845

264

485

2,204

4,798

Share of profit of associates

-

-

-

170

170

Other operating non-interest income and insurance profit

12,488

7,131

16,098

8,235

43,952

Recovery of/(charges to) credit loss allowance for loans to customers

2,297

(852)

2,944

-

4,389

Recovery of/(charges to) credit loss allowance for performance guarantees and credit related commitments

33

196

(6,926)

-

(6,697)

Recovery of/(charges to) credit loss allowance for net investments in leases

-

-

-

142

142

Credit loss allowance for other financial assets

17

-

533

(3,587)

(3,037)

Recovery of/(charges to) credit loss allowance for financial assets measured at fair value through other comprehensive income

-

-

192

232

424

Net impairment of non-financial assets

125

47

15

(514)

(327)

Profit/(loss) before G&A expenses and income taxes

164,870

67,534

111,855

22,608

366,867

Losses from modifications of financial instruments

(46)

-

(58)

-

(104)

Staff costs

(33,089)

(14,090)

(11,570)

(15,894)

(74,643)

Depreciation and amortization

(12,895)

(2,921)

(1,344)

(2,828)

(19,988)

Provision for liabilities and charges

-

-

-

(54)

(54)

Administrative and other operating expenses

(18,049)

(4,924)

(4,092)

(9,945)

(37,010)

Operating expenses

(64,033)

(21,935)

(17,006)

(28,721)

(131,695)

Profit before tax

100,791

45,599

94,791

(6,113)

235,068

Income tax expense

(8,158)

(3,713)

(7,941)

(8,109)

(27,921)

Profit

92,633

41,886

86,850

(14,222)

207,147

Consolidated Financial Statements of TBC Bank Group PLC

Consolidated Balance sheet

In thousands of GEL 

Sep-21

Jun-21

Cash and cash equivalents

1,960,441

1,414,414

Due from other banks

64,894

59,314

Mandatory cash balances with National Bank of Georgia

2,095,848

2,117,157

Loans and advances to customers

15,504,311

14,796,968

Investment securities measured at fair value through other comprehensive income

2,253,510

2,022,385

Bonds carried at amortized cost

1,118

10,069

Net investments in leases

237,557

245,261

Investment properties

32,444

33,407

Current income tax prepayment

4,856

14,966

Deferred income tax asset

9,216

6,747

Other financial assets[14]

383,890

287,761

Other assets

352,191

311,218

Premises and equipment

378,514

371,909

Right of use assets

52,944

51,160

Intangible assets

305,088

284,555

Goodwill

59,964

59,964

Investments in associates

4,455

4,286

TOTAL ASSETS 

23,701,241

22,091,541

LIABILITIES 

 

 

Due to credit institutions

3,361,515

3,482,830

Customer accounts 

14,338,537

12,870,418

Lease liabilities

53,627

53,755

Other financial liabilities14 

165,710

124,308

Current income tax liability 

16,559

653

Debt Securities in issue

1,507,969

1,445,614

Deferred income tax liability 

7,684

18,457

Provisions for liabilities and charges 

28,275

21,435

Other liabilities 

137,086

  101,265

Subordinated debt 

636,086

635,981

TOTAL LIABILITIES 

20,253,048

  18,754,716

EQUITY 

 

 

Share capital

1,682

1,682

Shares held by trust

(25,489)

(25,489)

Share premium

848,459

848,459

Retained earnings

2,790,447

2,680,951

Group re-organisation reserve

(162,167)

(162,167)

Share based payment reserve

(8,811)

  (15,348)

Fair value reserve

(1,207)

170

Cumulative currency translation reserve

(7,065)

(5,199)

Net assets attributable to owners

3,435,849

  3,323,059

Non-controlling interest 

12,344

  13,766

TOTAL EQUITY 

3,448,193

  3,336,825

TOTAL LIABILITIES AND EQUITY 

23,701,241

  22,091,541

 

 

Consolidated Statement of Profit or Loss and Other Comprehensive Income

In thousands of GEL 

3Q'21

2Q'21

3Q'20

Interest income

476,636

458,572

426,232

Interest expense

(226,991)

(223,456)

(217,639)

Net gains from currency swaps

9,745

7,651

3,191

Net interest income

259,390

242,767

211,784

Fee and commission income

122,690

105,045

87,677

Fee and commission expense

(54,059)

(42,037)

(40,178)

Net fee and commission income

68,631

63,008

47,499

Net insurance premiums earned

16,818

16,146

14,199

Net insurance claims incurred and agents' commissions

(10,799)

(10,676)

(8,258)

Net insurance premium earned after claims and acquisition costs

6,019

5,470

5,941

Net gains/(losses) from currency derivatives, foreign currency operations and translation

29,102

31,688

22,174

Gains less losses from disposal of investment securities measured at fair value through other comprehensive income

3,863

4,653

-

Other operating income

4,798

32,491

5,645

Share of profit of associates

170

210

153

Other operating non-interest income

37,933

69,042

27,972

Recovery of/(charges to) credit loss allowance for loans to customers

4,389

50,112

(5,884)

Recovery of/(charges to) credit loss allowance for net investments in leases

142

(1,204)

(2,661)

Recovery of/(charges to) credit loss allowance for performance guarantees and credit related commitments

(6,697)

1,284

1,968

Credit loss allowance for other financial assets

(3,037)

(5,689)

(6,481)

Recovery of/(charges to) credit loss allowance for financial assets measured at fair value through other comprehensive income

424

1,248

(368)

Net impairment of non-financial assets

(327)

(460)

(720)

Operating profit after expected credit losses

366,867

425,578

279,050

Losses from modifications of financial instruments

(104)

(104)

(1,763)

Staff costs

  (74,643)

(77,757)

(62,255)

Depreciation and amortization

  (19,988)

(19,337)

(17,339)

(Provision for)/ recovery of liabilities and charges

  (54)

(54)

(2,059)

Administrative and other operating expenses

  (37,010)

(37,540)

(31,140)

Operating expenses

  (131,695)

(134,688)

(112,793)

Profit before tax

  235,068

290,786

164,494

Income tax expense

  (27,921)

(40,394)

(11,906)

Profit

  207,147

250,392

152,588

Other comprehensive income:

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

Movement in fair value reserve

  (1,375)

(36,758)

9,486

Exchange differences on translation to presentation currency

  (1,866)

(5,976)

4,753

Other comprehensive income for the period

  (3,241)

(42,734)

14,239

Total comprehensive income for the period

  203,906

207,658

166,827

Profitattributable to:

 

 

 

 - Shareholders of TBCG

  204,892

247,945

150,756

 - Non-controlling interest

  2,255

2,447

1,832

Profit

  207,147

250,392

152,588

Total comprehensive income is attributable to:

 

 

 

 - Shareholders of TBCG

  201,662

205,195

165,002

 - Non-controlling interest

  2,244

2,463

1,825

Totalcomprehensive income for the period

  203,906

207,658

166,827

 

 

Consolidated Statement of Cash Flows

In thousands of GEL

30-Sep-2021

30-Jun-2021

Cash flows from (used in) operating activities

 

 

Interest received

  1,393,345

  906,444

Interest received on currency swaps

  22,894

  13,149

Interest paid

  (658,355)

  (452,751)

Fees and commissions received

  284,273

  170,658

Fees and commissions paid

  (133,149)

  (78,793)

Insurance and reinsurance received

  68,437

  43,358

Insurance claims paid

  (26,354)

  (16,239)

Income received from trading in foreign currencies

  58,592

  32,659

Other operating income received

  53,477

  28,880

Staff costs paid

  (227,775)

  (134,594)

Administrative and other operating expenses paid

  (114,125)

  (79,430)

Income tax paid

  (11,893)

  (4,446)

Cash flows from operating activities before changes in operating assets and liabilities

  709,367

  428,895

Net change in operating assets

 

 

Due from other banks and mandatory cash balances with the National Bank of Georgia

  57,244

  23,326

Loans and advances to customers

  (1,650,871)

  (711,980)

Net investments in lease

  28,358

  24,158

Other financial assets

  (159,404)

  (38,835)

Other assets

  5,740

  14,151

Net change in operating liabilities

 

 

Due to credit institutions

  91,328

  11,940

Customer accounts

  2,287,018

  667,190

Other financial liabilities

  (115,735)

  (137,291)

Other liabilities and provision for liabilities and charges

  23,992

  16,659

Net cash flows (used in)/from operating activities

  1,277,037

  298,213

Cash flows from (used in) investing activities

 

 

Acquisition of investment securities measured at fair value through other comprehensive income

  (598,141)

  (196,871)

Proceeds from redemption at maturity/disposal of investmentsecurities measured at fair value through other comprehensiveincome

  929,431

  757,583

Proceeds from redemption of bonds carried at amortised cost

  28,351

  19,633

Acquisition of premises, equipment and intangible assets

  (111,148)

  (91,993)

Proceeds from disposal of premises, equipment and intangible assets

  13,833

  6,334

Proceeds from disposal of investment property

  44,464

  20,210

Net cash used in investing activities

  306,790

  514,896

Cash flows from (used in) financing activities

 

 

Proceeds from other borrowed funds

  1,755,171

  1,757,879

Redemption of other borrowed funds

  (2,914,700)

  (2,736,476)

Repayment of principal of lease liabilities

  (8,417)

  (5,591)

Redemption of subordinated debt

  (12,562)

  (12,562)

Proceeds from debt securities in issue

  49,346

 -

Dividends paid

  (84,159)

  (1,741)

Net cash flows from financing activities

  (1,215,321)

  (998,491)

Effect of exchange rate changes on cash and cash equivalents

  (43,470)

  (35,609)

Net (decrease)/ increase in cash and cash equivalents

  325,036

  (220,991)

Cash and cash equivalents at the beginning of the year

  1,635,404

  1,635,405

Cash and cash equivalents at the end of the year

  1,960,440

  1,414,414

 

 

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)

3Q'21

2Q'21

3Q'20

 

 

 

 

Profitability ratios:

 

 

 

ROE1

24.1%

31.0%

22.0%

ROA2

3.6%

4.4%

2.9%

ROE before expected credit loss allowances3

24.6%

26.0%

23.8%

Cost to income4

35.4%

35.4%

38.5%

NIM5

5.3%

5.0%

4.6%

Loan yields6

10.5%

10.2%

10.0%

Deposit rates7

3.5%

3.4%

3.7%

Yields on interest earning assets8

9.9%

9.5%

9.4%

Cost of funding9

4.7%

4.6%

4.9%

Spread10

5.2%

4.9%

4.5%

 

 

 

 

Asset quality & portfolio concentration:

 

 

 

Cost of risk11

-0.1%

-1.3%

0.2%

PAR 90 to Gross Loans12

1.3%

1.2%

1.3%

NPLs to Gross Loans13

3.1%

3.4%

3.5%

NPL provision coverage14

94.3%

91.3%

104.6%

Total NPL coverage15

169.3%

169.6%

180.0%

Credit loss level to Gross Loans16

2.9%

3.1%

3.7%

Related Party Loans to Gross Loans17

0.0%

0.1%

0.1%

Top 10 Borrowers to Total Portfolio18

7.7%

7.8%

7.9%

Top 20 Borrowers to Total Portfolio19

11.4%

11.9%

12.0%

 

 

 

 

Capital & liquidity positions:

 

 

 

Net Loans to Deposits plus IFI* Funding20

97.5%

102.8%

97.5%

Net Stable Funding Ratio21

127.1%

130.6%

127.0%

Liquidity Coverage Ratio22

116.5%

127.1%

123.6%

Leverage23

6.9x

6.6x

7.7x

CET 1 CAR (Basel III)24

13.4%

13.0%

9.9%

Tier 1 CAR (Basel III)25

15.4%

15.5%

12.7%

Total 1 CAR (Basel III)26

19.3%

19.6%

17.1%

* 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. Return on average total equity (ROE) before expected credit loss allowances equals net income attributable to owners excluding all credit loss allowance with respective tax effects, but after net modification losses divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period.

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

5. 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.

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

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

8. Yields on interest earning assets equal total interest income divided by monthly average interest earning assets; annualised where applicable.

9. Cost of funding equals total interest expense divided by monthly average interest bearing liabilities; annualised where applicable.

10. Spread equals difference between yields on interest earning assets (including but not limited to yields on loans, securities and due from banks) and cost of funding (including but not limited to cost of deposits, cost on borrowings and due to banks).

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

12. 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.

13. 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.

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

15. 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.

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

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

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

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

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

21. 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.

22. 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.

23. Leverage equals total assets to total equity.

24. 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.

25. 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.

26. 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 3.1603 as of 30 June 2021. As of 30 September 2021 the USD/GEL exchange rate equaled 3.1228. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: 3Q 2021 of 3.1204, 2Q 2021 of 3.3271, 3Q 2020 of 3.1021.

 

 

 

Unaudited Consolidated Financial Results Overview for 9M 2021

This statement provides a summary of the unaudited business and financial trends for 9M 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

9M'21

9M'20

Change YoY

Net interest income

  727,288

  604,108

20.4%

Net fee and commission income

  176,932

  130,568

35.5%

Other operating non-interest income[15]

  159,129

  98,818

61.0%

Total credit loss allowance

  22,941

  (273,822)

NMF

Operating profit after expected credit losses

  1,086,290

  559,672

94.1%

Losses from modifications of financial instrument

  (1,695)

  (35,933)

NMF

Operating expenses

  (388,623)

  (314,328)

23.6%

Profit before tax

  695,972

  209,411

NMF

Income tax expense/(credit)

  (85,446)

  12,377

NMF

Profit for the period

  610,526

  221,788

NMF

 

 

Balance Sheet and Capital Highlights

 

 

 

in thousands of GEL

Sep-21

         Sep-20

Change YoY

Total Assets

  23,701,241

  21,866,972

8.4%

Gross Loans

  15,963,520

  14,590,777

9.4%

Customer Deposits

  14,338,537

  12,343,414

16.2%

Total Equity

  3,448,193

  2,826,387

22.0%

CET 1 Capital (Basel III)

  2,565,560

  1,738,739

47.6%

Tier 1 Capital (Basel III)

  2,955,910

  2,211,178

33.7%

Total Capital (Basel III)

  3,693,637

  2,984,109

23.8%

Risk Weighted Assets (Basel III)

  19,143,450

  17,478,610

9.5%

 

 

Key Ratios

9M'21

9M'20

Change YoY

ROE

25.3%

11.0%

14.3 pp

Bank's standalone ROE[16]

32.2%

21.50%

10.7 pp

ROA

3.5%

1.5%

2.0 pp

Bank's standalone ROA[16]

4.6%

2.7%

1.9 pp

NIM

5.0%

4.7%

0.3 pp

Cost to income

36.5%

37.7%

-1.2 pp

Bank's standalone cost to income[16]

28.8%

32.4%

-3.7 pp

Cost of risk

-0.3%

2.0%

-2.3 pp

NPL to gross loans

3.1%

3.5%

-0.5 pp

NPL provision coverage ratio

94.3%

104.6%

-10.4 pp

Total NPL coverage ratio

169.3%

180.0%

-10.7 pp

CET 1 CAR (Basel III)

13.4%

9.9%

3.5 pp

Tier 1 CAR (Basel III)

15.4%

12.7%

2.7 pp

Total CAR (Basel III)

19.3%

17.1%

2.2 pp

Leverage (Times)

6.9x

7.7x

-0.8x

Net Interest Income

In 9M 2021, net interest income amounted to GEL 727.3 million, up by 20.4% YoY, whereby interest income and interest expense increased by 13.3% and 7.3%, respectively.

The YoY increase in interest income was primarily related to an increase in interest income from loans, which was driven by an increase in the gross loan portfolio of GEL 1,372.7 million, or 9.4% and an increase in loan yield of 0.2pp due to a higher refinance rate, as well as s shift of the portfolio composition towards GEL loans. 

The increase in interest expense was primarily related to an increase in interest expense from deposits due to an increase in the respective portfolio of GEL 1,995.1 million, or 16.2%. Over the same period, the cost of deposits declined by 0.1 pp. In addition, the change in the liability structure towards deposits had a positive effect on the cost of funding. As a result, the cost of funding decreased by 0.4 pp YoY and stood at 4.6% in 9M 2021.

In 9M 2021, our NIM stood at 5.0%, up by 0.3 pp YoY.

In thousands of GEL

9M'21

9M'20

Change YoY

Interest income

1,375,821

1,214,125

13.3%

Interest expense

(671,427)

(625,730)

7.3%

Net gains from currency swaps

22,894

15,713

45.7%

Net interest income

727,288

604,108

20.4%

 

 

 

 

NIM

5.0%

4.7%

0.3 pp

 

Net fee and commission income

In 9M 2021, net fee and commission income totalled GEL 176.9 million, up by 35.5% YoY. The increase was spread across all major sub-categories and was mainly driven by increased business activities combined with our various initiatives including: a review of the pricing model of our merchants together with the acquisition of several large merchants, the popularization of our subscription model for mass retail customers, as well as the fine-tuning of our offerings for affluent customers. This growth was further supported by our fast growing Uzbek subsidiary, Payme.

 

In thousands of GEL

9M'21

9M'20

Change YoY

Net fee and commission income

 

 

 

Card operations

54,226

34,820

55.7%

Settlement transactions

84,388

60,547

39.4%

Guarantees issued and letters of credit

29,151

27,543

5.8%

Other

9,167

7,658

19.7%

Total net fee and commission income

176,932

130,568

35.5%

 

 

Other Non-Interest Income

Total other non-interest income increased by 61.0% YoY and amounted to GEL 159.1 million in 9M 2021.  The YoY increase was driven by growth in net income from foreign currency operations and growth in other operating income. The former increase was driven by an increase in the scale of FX transactions, while the later increase was driven by a gain from the disposal of one of our investment properties, in the amount of GEL 26.3 million.

 

In thousands of GEL

9M'21

9M'20

Change YoY

Other non-interest income

 

 

 

Net income from foreign currency operations

88,994

69,910

27.3%

Net insurance premium earned after claims and acquisition costs[17]

15,892

16,222

-2.0%

Other operating income

54,243

12,686

NMF

Total other non-interest income

159,129

98,818

61.0%

 

 

 

 

 

  

Credit Loss Allowance

Total credit loss allowance in 9M 2021 amounted to GEL 22.9 million. This significant decrease on a year-on-year basis was driven by recoveries in 2Q and 3Q 2021 across all segments and by a high base in 9M 2020 due to the creation of COVID-19 related provisions.

In thousands of GEL

9M'21

9M'20

Change YoY

Recovery of/(charges to) credit loss allowance for loans to customers

36,952

(255,100)

NMF

Credit loss allowance for other transactions

(14,011)

(18,722)

-25.2%

Total credit loss allowance

22,941

(273,822)

NMF

Operating income after credit loss allowance

1,086,290

559,672

94.1%

 

 

 

 

Cost of risk

-0.3%

2.0%

-2.3 pp

NMF - no meaningful figures

 

Operating Expenses

In 9M 2021, our total operating expenses expanded by 23.6% YoY.

The YoY growth in staff costs was mainly attributable to the low base of share-based payments in 9M 2020, as a result of the reversal of management's bonuses and an increase in staff bonuses related to revival of business activities in 9M 2021. Another driver was the expansion of our Uzbek business, which resulted in an increase in the number of employees.

The increase in administrative and other operating expenses was mainly related to our Uzbek business, as well as the revival of business activities in Georgia.

The cost to income ratio stood at 36.5%, down by 1.2 pp YoY, while the Bank's standalone cost to income was 28.8%, down by 3.7 pp over the same period.

In thousands of GEL

9M'21

9M'20

Change YoY

Operating expenses

 

 

 

Staff costs

(222,714)

(176,261)

26.4%

Provisions for liabilities and charges

(63)

(1,982)

-96.8%

Depreciation and amortization

(56,689)

(49,554)

14.4%

Administrative & other operating expenses

(109,157)

(86,531)

26.1%

Total operating expenses

(388,623)

(314,328)

23.6%

 

 

 

 

Cost to income

36.5%

37.7%

-1.2 pp

Bank's standalone cost to income*

28.8%

32.4%

-3.7 pp

* For the ratio calculation all relevant group recurring costs are allocated to the bank

NMF - no meaningful figures

 

Net Income

In 9M 2021, our solid profitability was related to a strong performance in operating profit across all categories, as well as recoveries in credit loss allowances across all segments.

As a result, our ROE stood at 25.3%, ROE before expected credit loss allowances stood at 24.4% and ROA stood at 3.5%.

In thousands of GEL

9M'21

9M'20

Change YoY

Losses from modifications of financial instruments

(1,695)

(35,933)

-95.3%

Profit before tax

695,972

209,411

NMF

Income tax expense/(credit)

(85,446)

12,377

NMF

Profit for the period

610,526

221,788

NMF

 

 

 

 

ROE

25.3%

11.0%

14.3 pp

Bank's standalone ROE[18]

32.2%

21.5%

10.7 pp

ROE before expected credit loss allowances

24.4%

23.6%

0.8 pp

ROA

3.5%

1.5%

2.0 pp

Bank's standalone ROA[18]

4.6%

2.7%

1.9 pp

 

 Funding and Liquidity

As of 30 September 2021, the total liquidity coverage ratio, as defined by the NBG, was 116.5%, above the 100% limit, while the LCR in GEL and FC stood at 98.0% and 125.5% respectively, above the respective limits of 75% and 100%.

As of 30 September 2021, NSFR stood at 127.1%, compared to the regulatory limit of 100%.

 

30-Sep-21

30-Sep-20

Change YoY

Minimum net stable funding ratio, as defined by the NBG

100%

100%

0.0 pp

Net stable funding ratio as defined by the NBG

127.1%

127.5%

3.1 pp

 

 

 

 

Net loans to deposits + IFI funding

97.5%

105.3%

-7.8 pp

Leverage (Times)

6.9x

7.7x

-0.8x

 

 

 

 

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%*

n/a

NMF

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

116.5%

124.8%

-8.3 pp

LCR in GEL, as defined by the NBG

98.0%

141.0%

-43.0 pp

LCR in FC, as defined by the NBG

125.5%

117.3%

8.2 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 3.5 pp, 2.7 pp and 2.2 pp, respectively. The increase was mainly driven by strong net income generation and local currency appreciation, which was partially offset by an increase in the loan book, and other changes in capital and RWA. 

 

In thousands of GEL

30-Sep-21

30-Sep-20

Change YoY

 

 

 

 

CET 1 Capital

2,565,560

1,738,739

47.6%

Tier 1 Capital

2,955,910

2,211,178

33.7%

Total Capital

3,693,637

2,984,109

23.8%

Total Risk-weighted Exposures

19,143,450

17,478,610

9.5%

 

 

 

 

Minimum CET 1 ratio

11.3%

6.9%

4.4 pp

CET 1 Capital adequacy ratio

13.4%

9.9%

3.5 pp

 

 

 

 

Minimum Tier 1 ratio

13.5%

8.7%

4.8 pp

Tier 1 Capital adequacy ratio

15.4%

12.7%

2.7 pp

 

 

 

 

Minimum total capital adequacy ratio

17.9%

13.2%

4.7 pp

Total Capital adequacy ratio

19.3%

17.1%

2.2 pp

 

 

Loan Portfolio

As of 30 September 2021, the gross loan portfolio reached GEL 15,963.5 million, up by 9.4% YoY or up by 12.6% on a constant currency basis, with CIB and MSME segments showing the highest growth rates of 16.5% and 15.8% respectively, followed by retail with 7.0%, on a constant currency basis. The proportion of gross loans denominated in foreign currency decreased by 6.5 pp YoY and accounted for 54.9% of total loans, while on a constant currency basis the proportion of gross loans denominated in foreign currency was down by 5.2 pp YoY and stood at 56.2%.

As of 30 September 2021, our market share in total loans stood at 38.4%, down by 0.9 pp YoY, while our loan market share in legal entities was 38.6%, down by 0.2 pp over the same period, and our loan market share in individuals stood at 38.2%, down by 1.6 pp QoQ.

In thousands of GEL

30-Sep-21

30-Sep-20

Change YoY

Loans and advances to customers

 

 

 

Retail

5,950,915

5,696,529

4.5%

Retail loans GEL

3,313,791

2,811,912

17.8%

Retail loans FC

2,637,124

2,884,617

-8.6%

CIB

6,136,232

5,457,119

12.4%

CIB loans GEL

1,941,958

1,308,998

48.4%

CIB loans FC

4,194,274

4,148,121

1.1%

MSME

3,876,373

3,437,129

12.8%

MSME loans GEL

1,936,230

1,506,741

28.5%

MSME loans FC

1,940,143

1,930,388

0.5%

Total loans and advances to customers

15,963,520

14,590,777

9.4%

 

 

9M'21

9M'20

Change YoY

Loan yields

10.2%

10.0%

0.2 pp

Loan yields GEL

15.0%

15.2%

-0.2 pp

Loan yields FC

6.6%

6.7%

-0.1 pp

Retail Loan Yields

11.5%

11.3%

0.2 pp

Retail loan yields GEL

16.0%

16.4%

-0.4 pp

Retail loan yields FC

6.4%

6.4%

0.0 pp

CIB Loan Yields

8.9%

8.7%

0.2 pp

CIB loan yields GEL

13.6%

13.3%

0.3 pp

CIB loan yields FC

7.0%

7.0%

0.0 pp

MSME Loan Yields

10.1%

10.2%

-0.1 pp

MSME loan yields GEL

14.8%

15.0%

-0.2 pp

MSME loan yields FC

6.0%

6.2%

-0.2 pp

 

 

 

Loan Portfolio Quality

On a YoY basis, total par 30 increased by 0.6 pp. The increase was mainly driven by the low base in September 2020, which in turn was caused by the payment holidays offered to Retail and MSME borrowers affected by the COVID-19 pandemic.

 

Our NPL ratio improved by 0.4 pp YoY and amounted to 3.1%. The main driver was the CIB segment on the back of the recoveries of several borrowers during the previous 12 months due to the improved portfolio quality.

 

Par 30

30-Sep-21

30-Sep-20

Change YoY

Retail

2.7%

1.6%

1.1 pp

CIB

0.5%

1.2%

-0.7 pp

MSME

4.6%

2.9%

1.7 pp

Total Loans

2.3%

1.7%

0.6 pp

 

Non-performing Loans

30-Sep-21

30-Sep-20

Change YoY

Retail

3.6%

3.4%

0.2 pp

CIB

1.5%

2.6%

-1.1 pp

MSME

4.7%

5.2%

-0.5 pp

Total Loans

3.1%

3.5%

-0.4 pp

 

NPL Coverage

30-Sep-21

30-Sep-20

 

Provision Coverage

Total Coverage

Provision Coverage

Total Coverage

 

Retail

120.7%

189.3%

158.9%

227.9%

 

CIB

82.5%

151.2%

114.4%

191.8%

 

MSME

68.7%

154.5%

68.6%

154.5%

 

Total

94.3%

169.3%

104.6%

215.8%

 

        

 

 Cost of risk

The total cost of risk for 9M 2021 stood at -0.3%, down by 2.8 pp YoY.  The recoveries in credit loss allowances were related to the improved macro outlook on the back of the better than expected economic performance, as well as repayment from a single large CIB borrower.

Cost of Risk

9M'21

9M'20

Change YoY

 

 

 

 

Retail

0.2%

4.3%

-4.1 pp

CIB

-0.8%

0.7%

-1.5 pp

MSME

-0.3%

2.6%

-2.9 pp

Total

-0.3%

2.5%

-2.8 pp

 

 

Deposit Portfolio

The total deposits portfolio increased by 16.2% YoY across all segments and amounted to GEL 14,338.5 million, while on a constant currency basis the total deposit portfolio increased by 20.0% over the same period. The proportion of deposits denominated in foreign currency was up by 0.1 pp YoY and accounted for 63.7% of total deposits, while on a constant currency basis the proportion of deposits denominated in foreign currency increased by 1.3 pp YoY and stood at 64.9%.

As of 30 September 2021, our market share in deposits amounted to 40.1%, up by 1.8 pp YoY, and our market share in deposits to legal entities stood at 40.0%, up by 1.7 pp over the same period. Our market share in deposits to individuals stood at 40.2%, up by 1.9 pp QoQ.

In thousands of GEL

30-Sep-21

30-Sep-20

Change YoY

Customer Accounts

 

 

 

Retail

5,593,535

4,705,769

18.9%

Retail deposits GEL

1,353,608

1,158,361

16.9%

Retail deposits FC

4,239,927

3,547,408

19.5%

CIB

6,834,386

5,494,408

24.4%

CIB deposits GEL

2,681,148

1,876,576

42.9%

CIB deposits FC

4,153,238

3,617,832

14.8%

MSME

1,433,603

1,304,952

9.9%

MSME deposits GEL

688,598

604,798

13.9%

MSME deposits FC

745,005

700,154

6.4%

Total Customer Accounts*

14,338,537

12,343,414

16.2%

* Total deposit portfolio includes Ministry of Finance deposits in the amount of GEL 856 million and GEL 477 million as of 30 September 2020 and 30 September 2021, respectively.

 

 

9M'21

9M'20

Change

YoY

Deposit rates

3.4%

3.5%

-0.1 pp

Deposit rates GEL

6.6%

6.4%

0.2 pp

Deposit rates FC

1.7%

1.9%

-0.2 pp

Retail Deposit Yields

2.3%

2.6%

-0.3 pp

Retail deposit rates GEL

4.8%

5.4%

-0.6 pp

Retail deposit rates FC

1.5%

1.7%

-0.2 pp

CIB Deposit Yields

4.2%

4.5%

-0.3 pp

CIB deposit rates GEL

8.2%

8.1%

0.1 pp

CIB deposit rates FC

2.1%

2.5%

-0.4 pp

MSME Deposit Yields

0.8%

0.9%

-0.1 pp

MSME deposit rates GEL

1.5%

1.6%

-0.1 pp

MSME deposit rates FC

0.3%

0.3%

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 on 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

9M'21

Retail

MSME

CIB

Corp. Centre

Total

Interest income

501,802

277,497

411,903

184,619

1,375,821

Interest expense

(95,617)

(8,849)

(193,512)

(373,449)

(671,427)

Net gains from currency swaps

 

 

 

22,894

22,894

Net transfer pricing

(118,403)

(108,731)

47,057

180,077

-

Net interest income

287,782

159,917

265,448

14,141

727,288

Fee and commission income

171,665

36,836

78,449

21,893

308,843

Fee and commission expense

(42,956)

(24,177)

(57,725)

(7,053)

(131,911)

Net fee and commission income

128,709

12,659

20,724

14,840

176,932

Net insurance premium earned after claims and acquisition costs

-

-

-

15,892

15,892

Net gains/(losses) from currency derivatives, foreign currency operations and translation

24,844

18,597

38,180

7,665

89,286

Gains less Losses from Disposal of Investment Securities Measured at Fair Value through Other Comprehensive Income

-

-

524

10,380

10,904

Other operating income

5,639

707

2,127

33,808

42,281

Share of profit of associates

-

-

-

766

766

Other operating non-interest income and insurance profit

30,483

19,304

40,831

68,511

159,129

Recovery of/(charges to) credit loss allowance for loans to customers

(7,860)

8,648

36,164

-

36,952

Recovery of/(charges to) credit loss allowance for performance guarantees and credit related commitments

438

122

(5,327)

-

(4,767)

Credit loss allowance for net investments in leases

-

-

-

(2,373)

(2,373)

Credit loss allowance for other financial assets

(3,292)

-

(92)

(4,979)

(8,363)

Recovery of/(charges to) credit loss allowance for financial assets measured at fair value through other comprehensive income

-

-

930

1,336

2,266

Net impairment of non-financial assets

235

68

22

(1,099)

(774)

Profit/(loss) before G&A expenses and income taxes

436,495

200,718

358,700

90,377

1,086,290

Losses from modifications of financial instruments

(688)

(93)

(914)

-

(1,695)

Staff costs

(100,644)

(40,369)

(33,710)

(47,991)

(222,714)

Depreciation and amortization

(36,954)

(8,330)

(3,798)

(7,607)

(56,689)

Provision for liabilities and charges

-

-

-

(63)

(63)

Administrative and other operating expenses

(56,064)

(15,073)

(11,710)

(26,310)

(109,157)

Operating expenses

(193,662)

(63,772)

(49,218)

(81,971)

(388,623)

Profit before tax

242,145

136,853

308,568

8,406

695,972

Income tax expense

(23,506)

(15,096)

(32,787)

(14,057)

(85,446)

Profit

218,639

121,757

275,781

(5,651)

610,526

Consolidated Financial Statements of TBC Bank Group PLC

Consolidated Balance sheet

In thousands of GEL 

Sep-21

Sep-20

Cash and cash equivalents

1,960,441

1,454,973

Due from other banks

64,894

39,941

Mandatory cash balances with National Bank of Georgia

2,095,848

2,024,080

Loans and advances to customers

15,504,311

14,055,807

Investment securities measured at fair value through other comprehensive income

2,253,510

1,346,770

Bonds carried at amortized cost*

1,118

1,322,203

Net investments in leases

237,557

268,430

Investment properties

32,444

83,458

Current income tax prepayment

4,856

58,721

Deferred income tax asset

9,216

602

Other financial assets[19]

383,890

263,979

Other assets

352,191

259,736

Premises and equipment

378,514

359,001

Right of use assets

52,944

59,040

Intangible assets

305,088

207,670

Goodwill

59,964

60,296

Investments in associates

4,455

2,265

TOTAL ASSETS 

23,701,241

21,866,972

LIABILITIES 

 

 

Due to credit institutions

3,361,515

4,127,175

Customer accounts 

14,338,537

12,343,414

Lease liabilities

53,627

67,131

Other financial liabilities14 

165,710

183,376

Current income tax liability 

16,559

565

Debt Securities in issue

1,507,969

1,527,318

Deferred income tax liability 

7,684

4,370

Provisions for liabilities and charges 

28,275

25,417

Other liabilities 

137,086

79,171

Subordinated debt 

636,086

682,648

TOTAL LIABILITIES 

20,253,048

19,040,585

EQUITY 

 

 

Share capital

1,682

1,682

Shares held by trust

(25,489)

(34,451)

Share premium

848,459

848,459

Retained earnings

2,790,447

2,180,291

Group re-organisation reserve

(162,167)

(162,167)

Share based payment reserve

(8,811)

(25,222)

Fair value reserve

(1,207)

7,994

Cumulative currency translation reserve

(7,065)

(931)

Net assets attributable to owners

3,435,849

2,815,655

Non-controlling interest 

12,344

10,732

TOTAL EQUITY 

3,448,193

2,826,387

TOTAL LIABILITIES AND EQUITY 

23,701,241

21,866,972

* In 2020, the Group changed its business model in relation to certain portfolio of bonds carried at amortized cost (Ministry of Finance Treasury Bills). The respective reclassifications have been applied prospectively from 1 January 2021, as required by IFRS. As a result of reclassification, Bonds carried at amortized cost in the amount of GEL 1,059,946 thousand has been transferred to Investment securities measured at fair value through other comprehensive income with the fair value of GEL 1,086,008 thousand. The difference has been recognized in other comprehensive income as required by IFRS

 

 

Consolidated Statement of Profit or Loss and Other Comprehensive Income

In thousands of GEL 

9M'21

9M'20

Interest income

1,375,821

1,214,125

Interest expense

(671,427)

(625,730)

Net gains from currency swaps

22,894

15,713

Net interest income

727,288

604,108

Fee and commission income

308,843

226,429

Fee and commission expense

(131,911)

(95,861)

Net fee and commission income

176,932

130,568

Net insurance premiums earned

47,107

40,817

Net insurance claims incurred and agents' commissions

(31,215)

(24,595)

Net insurance premium earned after claims and acquisition costs

15,892

16,222

Net gains/(losses) from currency derivatives, foreign currency operations and translation

89,286

69,933

Gains less losses from disposal of investment securities measured at fair value through other comprehensive income

10,904

(1,202)

Other operating income

42,281

13,622

Share of profit of associates

766

243

Other operating non-interest income

143,237

82,596

Recovery of/(charges to) credit loss allowance for loans to customers

36,952

(255,100)

Credit loss allowance for net investments in leases

(2,373)

(6,939)

Recovery of/(charges to) credit loss allowance for performance guarantees and credit related commitments

(4,767)

1,171

Credit loss allowance for other financial assets

(8,363)

(10,703)

Recovery of/(charges to) credit loss allowance for financial assets measured at fair value through other comprehensive income

2,266

(906)

Net impairment of non-financial assets

(774)

(1,345)

Operating profit after expected credit losses

1,086,290

559,672

Losses from modifications of financial instruments

(1,695)

(35,933)

Staff costs

  (222,714)

(176,261)

Depreciation and amortization

  (56,689)

(49,554)

(Provision for)/ recovery of liabilities and charges

  (63)

(1,982)

Administrative and other operating expenses

  (109,157)

(86,531)

Operating expenses

  (388,623)

(314,328)

Profit before tax

  695,972

209,411

Income tax expense/credit

  (85,446)

12,377

Profit

  610,526

221,788

Other comprehensive income:

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

Movement in fair value reserve

  (12,361)

14,470

Exchange differences on translation to presentation currency

  (4,940)

5,918

Other comprehensive income for the period

  (17,301)

20,388

Total comprehensive income for the period

  593,225

242,176

Profit attributable to:

 

 

 - Shareholders of TBCG

  604,061

218,381

 - Non-controlling interest

  6,465

3,407

Profit

  610,526

221,788

Total comprehensive income is attributable to:

 

 

 - Shareholders of TBCG

  586,780

238,795

 - Non-controlling interest

  6,445

3,381

Totalcomprehensive income for the period

  593,225

242,176

 

 

Consolidated Statements of Cash Flows 

In thousands of GEL

30-Sep-21

30-Sep-20

Cash flows from/(used in) operating activities

 

 

Interest received

  1,393,345

  969,382

Interest received on currency swaps

  22,894

  15,713

Interest paid

  (658,355)

  (584,266)

Fees and commissions received

  284,273

  215,013

Fees and commissions paid

  (133,149)

  (96,408)

Insurance and reinsurance received

  68,437

  63,044

Insurance claims paid

  (26,354)

  (19,761)

Income received from trading in foreign currencies

  58,592

  (90,487)

Other operating income received

  53,477

  13,709

Staff costs paid

  (227,775)

  (179,576)

Administrative and other operating expenses paid

  (114,125)

  (96,610)

Income tax paid

  (11,893)

  (34,797)

Cash flows from operating activities before changes in operating assets and liabilities

  709,367

  174,956

Net change in operating assets

 

 

Due from other banks and mandatory cash balances with the National Bank of Georgia

  57,244

  (1,162,590)

Loans and advances to customers

  (1,650,871)

  (512,478)

Net investments in lease

  28,358

  10,159

Other financial assets

  (159,404)

  (149,733)

Other assets

  5,740

  12,146

Net change in operating liabilities

 

 

Due to credit institutions

  91,328

  102,451

Customer accounts

  2,287,018

  1,248,989

Other financial liabilities

  (115,735)

  49,203

Other liabilities and provision for liabilities and charges

  23,992

  3,726

Net cash flows from operating activities

  1,277,037

  (223,171)

Cash flows from/(used in) investing activities

 

 

Acquisition of investment securities measured at fair value through other comprehensive income

  (598,141)

  (535,542)

Proceeds from redemption at maturity/disposal of investmentsecurities measured at fair value through other comprehensiveincome

  929,431

  223,059

Acquisition of bonds carried at amortised cost

 -

  (630,009)

Proceeds from redemption of bonds carried at amortised cost

  28,351

  333,486

Acquisition of premises, equipment and intangible assets

  (111,148)

  (136,184)

Proceeds from disposal of premises, equipment and intangible assets

  13,833

  36,860

Proceeds from disposal of investment property

  44,464

  3,162

Acquisition of subsidiaries and associates

 -

  695

Net cash used in investing activities

  306,790

  (704,473)

Cash flows from/(used in) financing activities

 

 

Proceeds from other borrowed funds

  1,755,171

  1,972,144

Redemption of other borrowed funds

  (2,914,700)

  (1,703,260)

Repayment of principal of lease liabilities

  (8,417)

  (3,773)

Redemption of subordinated debt

  (12,562)

 -

Proceeds from debt securities in issue

  49,346

  114,030

Redemption of debt securities in issue

 

  (2)

Dividends paid

  (84,159)

  (1,992)

Net cash flows from financing activities

  (1,215,321)

  377,147

Effect of exchange rate changes on cash and cash equivalents

  (43,470)

  1,001,885

Net increase in cash and cash equivalents

  325,036

  451,388

Cash and cash equivalents at the beginning of the period

  1,635,404

  1,003,585

Cash and cash equivalents at the end of the period

  1,960,440

  1,454,973

 

 

 

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)

9M'21

9M'20

Profitability ratios:

 

 

ROE1

25.3%

11.0%

ROA2

3.5%

1.5%

ROE before expected credit loss allowances3

24.4%

23.6%

Cost to income4

36.5%

37.7%

NIM5

5.0%

4.7%

Loan yields6

10.2%

10.0%

Deposit rates7

3.4%

3.5%

Yields on interest earning assets8

9.5%

Cost of funding9

4.6%

5.0%

Spread10

4.9%

4.5%

 

 

 

Asset quality & portfolio concentration:

 

 

Cost of risk11

-0.3%

2.0%

PAR 90 to Gross Loans12

1.3%

1.3%

NPLs to Gross Loans13

3.1%

3.5%

NPL provision coverage14

94.3%

104.6%

Total NPL coverage15

169.3%

180.0%

Credit loss level to Gross Loans16

2.9%

3.7%

Related Party Loans to Gross Loans17

0.0%

0.1%

Top 10 Borrowers to Total Portfolio18

7.7%

7.9%

Top 20 Borrowers to Total Portfolio19

11.4%

12.0%

 

 

 

Capital & liquidity positions:

 

 

Net Loans to Deposits plus IFI* Funding20

97.5%

97.5%

Net Stable Funding Ratio21

127.1%

127.0%

Liquidity Coverage Ratio22

116.5%

123.6%

Leverage23

6.9x

7.7x

CET 1 CAR (Basel III)24

13.4%

9.9%

Tier 1 CAR (Basel III)25

15.4%

12.7%

Total 1 CAR (Basel III)26

19.3%

17.1%

* 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. Return on average total equity (ROE) before expected credit loss allowances equals net income attributable to owners excluding all credit loss allowance with respective tax effects, but after net modification losses divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period.

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

5. 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.

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

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

8. Yields on interest earning assets equal total interest income divided by monthly average interest earning assets; annualised where applicable.

9. Cost of funding equals total interest expense divided by monthly average interest bearing liabilities; annualised where applicable.

10. Spread equals difference between yields on interest earning assets (including but not limited to yields on loans, securities and due from banks) and cost of funding (including but not limited to cost of deposits, cost on borrowings and due to banks).

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

12. 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.

13. 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.

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

15. 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.

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

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

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

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

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

21. 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.

22. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG.

23. Leverage equals total assets to total equity.

24. CET 1 CAR equals CET 1 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.

25. 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.

26. 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 YoY growth of the Balance Sheet items without the currency exchange rate effect, we used the USD/GEL exchange rate of 3.2878 as of 30 September 2020. As of 30 September 2021 the USD/GEL exchange rate equaled 3.1228. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: 9M 2021 of 3.2532, 9M 2020 of 3.0557. 

 

 

 

 

 

Additional Disclosures

 

1)  TBC Bank - Background

 

TBC Bank is the largest banking group in Georgia, where 99.5% of its business is concentrated, with a 39.2% 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 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).

 

2)  Subsidiaries of TBC Bank Group PLC[20] 

 

 

 

Ownership / voting
% as of 30 September 2021

Country

Year of incorporation

Industry

Total Assets 
(after elimination)

Subsidiary

Amount

GEL'000

% in TBC Group

JSC TBC Bank

97.0%

Georgia

1992

Banking

23,033,409

97.00%

  United Financial  Corporation JSC

99.5%

Georgia

1997

Card processing

18,308

0.08%

  TBC Capital LLC

100.0%

Georgia

1999

Brokerage

4,134

0.02%

  TBC Leasing JSC

100.0%

Georgia

2003

Leasing

324,831

1.37%

  TBC Kredit LLC

100.0%

Azerbaijan

1999

Non-banking credit institution

17,593

0.07%

  TBC Pay LLC

100.0%

Georgia

2009

Processing

42,359

0.18%

  Index LLC

100.0%

Georgia

2011

Real estate management

1,513

0.01%

  TBC Invest LLC

100.0%

Israel

2011

PR and marketing

419

0.00%

JSC TBC Insurance

100.0%

Georgia

2014

Insurance

76,129

0.33%

  Redmed LLC

100.0%

Georgia

2019

E-commerce

1,373

0.00%

TBC Ecosystem Companies

100.0%

Georgia

2019

Asset Management

37,435

0.16%

  Swoop JSC

100.0%

Georgia

2010

Retail Trade

733

0.00%

  LLC Online Tickets

55.0%

Georgia

2015

Software Services

3,079

0.01%

  TKT UZ

75.00%

Uzbekistan

2019

Retail Trade

111

0.00%

  My.ge LLC

100.0%

Georgia

2008

E-commerce, Housing and Auto

24,123

0.10%

  LLC Vendoo (Geo)

100.0%

Georgia

2019

Retail Leasing

3,401

0.01%

  LLC Mypost

100.0%

Georgia

2019

Postal Service

108

0.00%

  LLC Billing Solutions

51.00%

Georgia

2019

Software Services

423

0.00%

  All property.ge LLC

90.0%

Georgia

2013

Real estate management

4,521

0.02%

  LLC F Solutions

100.0%

Georgia

2019

Software Services

11

0.00%

TBC Connect LLC

100.0%

Georgia

2020

Software Services

3

0.00%

JSC Space

100.0%

Georgia

2021

Software Services

29,603

0.12%

TBC Concept

100.0%

Georgia

2020

Food Industry

867

0.00%

Artarea.ge LLC

100.0%

Georgia

2021

PR and marketing

62

0.00%

Saba

85.0%

Georgia

2012

Education

62

0.00%

Art Gallery

100.0%

Georgia

2012

PR and marketing

0

0.00%

Space International JSC

100.0%

Georgia

2021

Software Services

32,998

0.14%

TBC Group Support LLC

100.0%

Georgia

2020

Risk Management

1

0.00%

Inspired LLC

51.0%

Uzbekistan

2011

Processing

29,761

0.13%

TBC Bank UZ JSCB

100.0%

Uzbekistan

2020

Banking

65,836

0.28%

LLC Vendoo (UZ Leasing)

100.00%

Uzbekistan

2019

Consumer financing

2,638

0.01%

 

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 25.6% and 39.6% market shares[21] without border motor third party liability (MTPL) insurance, respectively, in 3Q 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 have accumulated sufficient market knowledge and claims statistics, we expanded our value proposition to the mid-premium segment.

In 3Q 2021, net profit including the health insurance business amounted to GEL 3,598 thousand. The QoQ 26.4% increase in net profit, including the health insurance business, was mainly driven by strong business growth. On a YoY basis, the net profit increased moderately and was affected by a high base in 3Q 2020, due to reduced level of claims related to COVID-19.

Information excluding health insurance

3Q'21

2Q'21

3Q'20

9M'21

9M'20

In thousands of GEL

 

 

 

 

 

Gross written premium

26,125

22,831

19,186

70,220

56,329

Net earned premium[22]

19,238

18,595

15,821

54,486

47,359

Net profit

3,951

3,512

3,868

10,358

8,960

 

 

 

 

 

 

Net combined ratio

80.2%

81.6%

77.0%

81.7%

80.9%

 

 

Information including health insurance

3Q'21

2Q'21

3Q'20

9M'21

9M'20

In thousands of GEL

 

 

 

 

 

Gross written premium

28,851

26,414

21,557

80,780

63,292

Net earned premium

22,268

21,539

18,015

62,938

52,662

Net profit

3,598

2,846

3,378

8,638

7,742

 

 

 

 

 

 

Net combined ratio

85.0%

88.0%

83.0%

87.6%

85.6%

Note: IFRS standalone data

 

 

 

4)  Fast growing digital bank in Uzbekistan

in thousands

Jan'21

Feb'21

Mar'21

Apr'21

May'21

Jun'21

Jul'21

Aug'21

Sep'21

Oct'21

# of total registered users

28

68

98

157

230

302

403

547

667

785

# of downloads

29

71

103

189

284

391

555

747

897

1,040

Loan portfolio* (GEL)

153

413

953

6,144

14,997

25,239

31,797

45,771

52,493

59,805

Deposit portfolio** (GEL)

1,108

2,227

2,839

6,543

11,567

15,543

49,585

81,055

91,979

114,969

# of total cards issued

(cumulative figures)

8

18

31

42

54

66

78

96

117

139

# of other cards attached (cumulative figures)

4

15

29

49

81

126

187

264

328

443

Total monthly number of transactions

27

87

203

323

407

563

626

817

906

1,098

* Unsecured consumer loan with the average ticket size of GEL 2,100

** Current and savings accounts

 

 

 

5)  Reclassification of certain balance sheet profit and loss items and changes in methodology

In 1Q 2021, we reclassified certain BS and PL items for all quarters of 2020 and 1Q 2021, as outlined below.

 

Wealth Management and Space business reclassification

Following structural changes in the Management Board, starting from January 2021, Deputy CEO George Tkhelidze, head of Corporate and Investment Banking, assumed responsibility for the Wealth Management business. As a result, we reclassified all relevant BS and PL items of the Wealth Management business from Retail Banking to Corporate and Investment Banking.

 

Following the demerger of the Space segment into a separate entity, the management has re-considered the classification of Space from the MSME to the retail segment. The underlying rationale was the composition of product base, offered by Space to its customers. The majority of such products are consumer, fast consumer and installment loans, which by their nature represent the retail segment. As a result, the management believes that analyzing Space as a part of the retail segment would be more meaningful for users of the financial statements.

 

The amounts of the Wealth Management and Space loan and deposit portfolios are given in a table below:

 

 

Wealth Management

Space

 

Loan book (million GEL)

Deposit portfolio (million GEL)

Loan book

(million GEL)

Deposit portfolio

(million GEL)

September 2021

151.1

2,451.1

31.3

13.7

June 2021

142.8

2,193.7

30.9

13.3

September 2020

133.1

2,002.3

33.8

8.2

 

 

Reclassification of other non-financial assets impairment

In 2021, the Group reclassified the impairment/recovery of non-financial assets from "Administrative and other operating expenses" to "Impairment of other non-financial assets". A significant part of any impairment/recoveries recorded is related to repossessed assets and investment properties. The management believes that those type of assets are not actively used in daily operations, but are primarily targeted for sale in the future. Considering the nature of those expenses/recovery, such a presentation is more appropriate and would increase the understandability and clarity of the Group's financial statements. The presentation of comparative figures has been adjusted to conform to the presentation of the current period amounts:

 

 

As originally presented

at 30 September 2020

Reclassification

As reclassified at

30 September 2020

Impairment of other non-financial assets

-

(720)

720

Administrative and other operating expenses

(31,860)

720

(31,140)

 

Changes in methodology - NPL collaterals coverage

In 1Q 2021, in order to further increase the focus on collateral coverage, the Bank reviewed its methodology and applied a more conservative approach: namely, under the updated methodology, the collateral amount is capped at the respective loan amount. The NPL coverages for all four quarters of 2020 have been recalculated as per the updated methodology.

 

The table below outlines the NPL coverage ratios as of 30 September 2020, calculated as per the previous and the updated methodologies.

 

 

Collateral coverage

Total NPL coverage

(provisions plus collateral)

Per previous methodology

Per updated methodology

Per previous methodology

Per updated methodology

Retail

156%

121%

237%

189%

CIB

75%

83%

225%

151%

MSME

72%

69%

186%

155%

Total

105%

94%

216%

169%

 

 

 

6)  Loan book breakdown by stages according IFRS 9

 

Total (in million GEL)

 

30-Sep-21

30-Jun-21

30-Sep-20

Stage

Gross

LLP rate*

Gross

LLP rate*

Gross

LLP rate*

1

13,557

0.9%

12,709

0.9%

11,814

1.5%

2

1,737

5.7%

1,803

5.6%

2,303

8.2%

3

670

34.9%

763

34.4%

474

34.7%

Total

15,964

2.9%

15,275

3.1%

14,591

3.7%

 

 

CIB (in million GEL)

 

30-Sep-21

30-Jun-21

30-Sep-20

Stage

Gross

LLP rate*

Gross

LLP rate*

Gross

LLP rate*

1

5,285

0.9%

4,899

0.9%

4,430

1.1%

2

728

0.5%

826

1.0%

866

1.1%

3

124

20.1%

127

18.8%

161

30.6%

Total

6,137

1.2%

5,852

1.3%

5,457

1.9%

 

 

MSME (in million GEL)

 

30-Sep-21

30-Jun-21

30-Sep-20

Stage

Gross

LLP rate*

Gross

LLP rate*

Gross

LLP rate*

1

3,206

0.7%

2,997

0.6%

2,808

1.2%

2

445

6.6%

458

6.3%

479

9.1%

3

225

32.3%

249

31.5%

150

30.6%

Total

3,876

3.2%

3,704

3.4%

3,437

3.6%

 

 

Retail (in million GEL)

 

30-Sep-21

30-Jun-21

30-Sep-20

Stage

Gross

LLP rate*

Gross

LLP rate*

Gross

LLP rate*

1

5,066

1.1%

4,813

1.0%

4,576

2.2%

2

564

11.8%

519

12.3%

958

14.2%

3

321

42.5%

387

41.4%

163

42.5%

Total

5,951

4.4%

5,719

4.8%

5,697

5.4%

* LLP rate is defined as credit loss allowances divided by gross loans

 

 

7)  Reconciliation of Return on Equity (ROE) with ROE before expected credit loss allowances

 

 

Income Statement Highlights

 

 

 

 

 

#

in thousands of GEL

3Q'21

2Q'21

3Q'20

9M'21

9M'20

1.

Net interest income

259,390

242,767

211,784

727,288

604,108

2.

Net fee and commission income

63,008

47,499

176,932

130,568

3.

Other operating non-interest income

74,512

33,913

159,129

98,818

4.

Credit loss allowance

45,291

-14,146

22,941

-273,822

5.

Operating profit after expected credit losses

425,578

279,050

1,086,290

559,672

6.

Losses from modifications of financial instrument

-104

-1,763

-1,695

-35,933

7.

Operating expenses

-134,688

-112,793

-388,623

-314,328

8.

Profit before tax

290,786

164,494

695,972

209,411

9.

Income tax expense

-40,394

-11,906

-85,446

12,377

10.

Profit for the period

207,147

250,392

152,588

610,526

221,788

12.

Profit for the period less Non-controlling interest

204,892

247,946

150,755

604,062

218,381

13.

Income tax expense of credit loss allowance

-562

4,684

-1,255

2,525

-24,286

14.

Profit before Credit loss allowances less Non-controlling interest and respective tax effect

(12 - 4 + 13)

209,436

207,339

163,646

583,646

467,917

 

 

#

in thousands of GEL

3Q'21

2Q'21

3Q'20

9M'21

9M'20

15.

Average equity attributable to the PLC's equity holders

3,377,931

3,203,351

2,731,868

3,195,731

2,653,246

16.

Return on equity (ROE) (12÷15)*

24.1%

31.0%

22.0%

25.3%

11.0%

17.

Return on equity (ROE) before expected credit loss allowances (14÷15)*

24.6%

26.0%

23.8%

24.4%

23.6%

*annualised where applicable

 

 

 

 

 

 

 

 

 


[1] Consumer loans offloading ratios equals the number of consumer loans issued via remote channels divided by total number of such loans issued;

[2] Deposit offloading ratio equals the number of time and savings deposits opened via remote channels divided by total number of such deposits opened.

[3]   National Statistics Office of Georgia

[4]    Is calculated as the number consumer loans issued via remote channels divided by total number of such loans issued.

[5]   Is calculated as the number of time and savings deposits opened through remote channels divided by total number of such deposits opened.

[9] Other operating non-interest income includes net insurance premium earned after claims and acquisition costs.

[10] For the ratio calculation, all relevant group recurring costs are allocated to the bank.

[11] 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.

[12] For the ratio calculation, all relevant group recurring costs are allocated to the bank.

[13] In 1Q 2021, we updated the calculation methodology of NPL collateral coverage; please refer to annex 5 for more details.

[14]   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).

[15] Other operating non-interest income includes net insurance premium earned after claims and acquisition costs.

[16] For the ratio calculation, all relevant group recurring costs are allocated to the bank.

[17] 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.

[18] For the ratio calculation, all relevant group recurring costs are allocated to the bank.

[19]   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).

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

[21] Market shares are based on internal estimates. Source is Insurance State Supervision Service of Georgia. Total non-health and retail market share in 3Q 2021 including MTPL stood at 24 . 5 % and 35 . 4 % respectively.

[22] Net earned premium equals earned premium minus the reinsurer's share of earned premium.

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