TIDMTBCG
RNS Number : 4046N
TBC Bank Group PLC
20 May 2020
TBC BANK GROUP PLC ("TBC Bank")
1Q 2020 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
Forward-Looking Statements
This document contains forward-looking statements; such
forward-looking statements contain known and unknown risks,
uncertainties and other important factors, which may cause the
actual results, performance or achievements of TBC Bank Group PLC
("the Bank" or the "Group") to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Forward-looking statements are
based on numerous assumptions regarding the Bank's present and
future business strategies and the environment in which the Bank
will operate in the future. Important factors that, in the view of
the Bank, could cause actual results to differ materially from
those discussed in the forward-looking statements include, among
others, the achievement of anticipated levels of profitability,
growth, cost and recent acquisitions, the impact of competitive
pricing, the ability to obtain necessary regulatory approvals and
licenses, the impact of developments in the Georgian economic,
impact of COVID-19, political and legal environment, financial risk
management and the impact of general business and global economic
conditions.
None of the future projections, expectations, estimates or
prospects in this document should be taken as forecasts or promises
nor should they be taken as implying any indication, assurance or
guarantee that the assumptions on which such future projections,
expectations, estimates or prospects are based are accurate or
exhaustive or, in the case of the assumptions, entirely covered in
the document. These forward-looking statements speak only as of the
date they are made, and subject to compliance with applicable law
and regulation the Bank expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained in the document to reflect
actual results, changes in assumptions or changes in factors
affecting those statements.
Certain financial information contained in this presentation,
which is prepared on the basis of the Group's accounting policies
applied consistently from year to year, has been extracted from the
Group's unaudited management's accounts and financial statements.
The areas in which the management's accounts might differ from the
International Financial Reporting Standards and/or U.S. generally
accepted accounting principles could be significant; you should
consult your own professional advisors and/or conduct your own due
diligence for a complete and detailed understanding of such
differences and any implications they might have on the relevant
financial information contained in this presentation. Some
numerical figures included in this report have been subjected to
rounding adjustments. Accordingly, numerical figures shown as
totals in certain tables might not be an arithmetic aggregation of
the figures that preceded them.
F irst Quarter 2020 Unaudited Consolidated Financial Results
TBC Bank Group PLC ("TBC PLC") will release its first quarter
2020 unaudited consolidated financial results on Wednesday, 20 May
2020 at 7.00 am BST (10.00 am GET), while the results call will be
held at 14.00 (BST) / 15.00 (CEST) / 9.00 (EDT).
The detailed agenda of the call is given below:
Agenda
1 4.00 - 14.15 Government and NBG response to COVID-19 - Papuna
Lezhava, Vice Governor of the National Bank of Georgia
14.15 - 14.25 Macro overview - Otar Nadaraia, Chief
Economist
14.25 - 14.35 Strategic and operating review - Vakhtang
Butskhrikidze, CEO
14.35 - 14.45 Financial review - Giorgi Shagidze, Deputy CEO,
CFO
14.45 - 14.55 Risk management - Nino Masurashvili, Deputy CEO,
CRO
14.55 - 15.30 Q&A
Please click the link below to join the webinar:
https://tbc.zoom.us/j/94292196126?pwd=cjBNZ1hhQmdVdyt4L2lVc1NmblRqQT09
Meeting ID: 942 9219 6126
Password: 848124
Or use the following dial-ins:
o Georgia : +995 3224 73988 or +995 7067 77954 or 800 100 293
(Toll Free)
o Russian Federation: 8800 100 6938 (Toll Free) or 8800 301 7427
(Toll Free)
o United Kingdom: 0 800 031 5717 (Toll Free) or 0 800 260 5801
(Toll Free) or 0 800 358 2817 (Toll Free)
o US: 877 853 5257 (Toll Free) or 888 475 4499 (Toll Free) or
833 548 0276 (Toll Free) or 833 548 0282 (Toll Free)
Webinar ID: 942 9219 6126#, please dial the ID number slowly
Other international numbers available at: https://tbc.zoom.us/u/acsM3n7M8Q
The call will be held in two parts. The first part will be
comprised of presentations and during the second part of the call,
you 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 "hand icon" which you will
see at the bottom of the screen. The host will unmute those
participants one after another who have raised hands. After the
questions is asked, participant will be muted again.
Call Instructions
For those participants who will be using dial in number to join
the webinar, please dial *9 to raise the hand.
Contacts
Zoltan Szalai Anna Romelashvili Investor Relations Department
Director of International Head of Investor Relations
Media and Investor Relations
E-mail: ZSzalai@Tbcbank.com.ge E-mail: IR@tbcbank.com.ge E-mail: IR@tbcbank.com.ge
Tel: +44 (0) 7908 242128 Tel: +(995 32) 227 27 Tel: +(995 32) 227 27
Web: www.tbcbankgroup.com 27 27
Address: 68 Lombard Web: www.tbcbankgroup.com Web: www.tbcbankgroup.com
St, London EC3V 9LJ, Address: 7 Marjanishvili Address: 7 Marjanishvili
United Kingdom St. Tbilisi, Georgia St. Tbilisi, Georgia
0102 0102
Table of Contents
1Q 2020 Results Announcement
TBC Bank - Background
1Q 2020 Highlights
Letter from the Chief Executive Officer
Operating Overview
Georgia is fighting the virus more effectively
Our employee and customer support
COVID-19 related charges
Our focus to withstand COVID-19 impact
TBC Uzbekistan
Our mid-term targets
Economic Overview
Unaudited Consolidated Financial Results Overview for 1Q
2020
Additional Disclosures
1) Subsidiaries of TBC Bank Group PLC
2) Our Ecosystems
3) Reconciliation of reported IFRS consolidated figures with the
numbers without COVID-19 impact
4) Net gains from currency swaps
5) TBC Insurance
6) Main terms of shareholders' agreement with Yelo Bank
7) Loan book breakdown by stages according IFRS 9
TBC Bank Group PLC ("TBC Bank")
1Q 2020 Consolidated Financial Results:
Profit for the period without COVID-19 impact [1] for 1Q 2020 up
by 14.3% YoY to GEL 152.4 million
European Union Market Abuse Regulation EU 596/2014 requires TBC
Bank Group PLC to disclose that this announcement contains Inside
Information, as defined in that Regulation.
TBC Bank - Background
TBC Bank is the largest banking group in Georgia, where 99.6% of
its business is concentrated, with a 38.4% market share by total
assets. It offers retail, corporate, and MSME banking
nationwide.
These unaudited financial results are presented for TBC Bank
Group PLC ("TBC Bank" or "the Group"), which was incorporated on 26
February 2016 as the ultimate holding company for JSC TBC Bank
Georgia. TBC Bank became the parent company of JSC TBC Bank Georgia
on 10 August 2016, following the Group's restructuring. As this was
a common ownership transaction, the results have been presented as
if the Group existed at the earliest comparative date as allowed
under the International Financial Reporting Standards ("IFRS"), as
adopted by the European Union. TBC Bank successfully listed on the
London Stock Exchange's premium listing segment on 10 August
2016.
TBC Bank Group PLC's financial results are prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("EU") and the Companies
Act 2006 applicable to companies reporting under IFRS. The Group
separately classifies and discloses certain incomes and expenses,
which are non-recurring by nature and are caused by extraordinary
events, in order to provide a consistent view and enable better
analysis of the financial performance of the Group. Adjusted
performance is an alternative performance measure (APM) and the
reconciliation of the profit and loss items without COVID-19 impact
with the reported profit and loss items and the respective ratios
are given under Annex 3 section on pages 31-32.
1Q 2020 Highlights
Due to the COVID-19 pandemic, the following non-recurring
charges were made to the profit and loss statement:
o Modifications, in the amount of GEL 30.6 million, related to
losses incurred on loans and advances to customers and investments
in leases to reflect the decrease in the present value of
cash-flows resulting from to the three-months grace period granted
to borrowers. The grace periods were granted due to COVID-19
pandemic.
o Front-loaded, extra redit loss allowance was created, in the
amount of GEL 215.7 million (or GEL 210.9 million for loan redit
loss allowance), to prepare for the potential impact of the
COVID-19 pandemic on the Georgian economy, resulting in an
additional 1.7% cost of risk for the first quarter.
1Q 2020 P&L Highlights [2]
o Profit for the period without COVID-19 impact amounted to GEL
152.4 million (1Q 2019: GEL 133.3 million)
o Reported profit/ ( loss ) for the period amounted to GEL (
57.0 ) million (1Q 2019: GEL 133.3 million)
o Return on average equity (ROE) without COVID-19 impact stood
at 22.4% (1Q 2019: 23.8%)
o Return on average assets (ROA) without COVID-19 impact stood
at 3 .3% (1Q 2019: 3.6%)
o Pre-provision ROE stood at 28.7% (1Q 2019: 29.7%)
o Cost to income of TBC Bank Group PLC stood at 36.5% (1Q 2019:
37.7%)
o Standalone cost to income ratio of the Bank [3] was 31.5% (1Q
2019: 34.8%)
o Cost of risk without the COVID-19 impact stood at 0.9% (1Q
2019: 1.4%)
o COVID-19 related cost of risk stood at 1.7% ( not
annualized)
o Net interest margin (NIM) stood at 5.1% (1Q 2019: 6.2%)
o Risk adjusted net interest margin [4] (NIM) stood at 4.2% (1Q
2019: 4.8%)
Balance Sheet Highlights as of 31 March 2020
o Total assets amounted to GEL 20,030.6 million as of 31 March
2020, up by 32.0% YoY
o Gross loans and advances to customers stood at GEL 13,929.6
million as of 31 March 2020 , up by 34 . 4 % YoY or at 19.6% on a
constant currency basis
o Net loans to deposits + IFI [5] funding stood at 101.8%, up by
11.3 pp YoY, and Regulatory Net Stable Funding Ratio (NSFR),
effective from 30 September 2019, stood at 128.2%
o NPLs were 2.9%, down by 0.4 pp YoY
o NPLs coverage ratios stood at 133.8%, or 107.2% with
collateral, on 31 March 2020 compared to 100.1% or 110.5% with
collateral, as of 31 March 2019
o Total customer deposits amounted to GEL 11,209.1 million as of
31 March 2020, up by 22.3% YoY or at 7.8% on constant currency
basis
o As of 31 March 2020, the Bank's Basel III CET 1, Tier 1 and
Total Capital Adequacy Ratios per NBG methodology stood at 9.1%,
12.0% and 16.7% respectively, while minimum eased regulatory
requirements amounted to of 6.9%, 8.8%, and 13.3%. respectively
Market Share ([6])
o Market share by total assets reached 38.4% as of 31 March
2020, up by 1.0 pp YoY
o Market share by total loans was 39.4% as of 31 March 2020, up
by 1.0 pp YoY
o Market share of total deposits reached 39.8% as of 31 March
2020, down by 0.6 pp YoY
1Q 2020 operating highlights
o The number of affluent customers reached 90.0 thousand as of
31 March 2020, up by 108% YoY
o 94% of all transactions were conducted through digital
channels (1Q 2019: 92%)
o The number of digital transactions amounted to 21.0 million,
up by 19.0% YoY, while the number of branch transactions stood at
1.4 million, up by 13.8% YoY
o The penetration ratio for internet or mobile banking [7] stood
at 48% for 1Q 2020 (1Q 2019: 44%)
o The penetration ratio for mobile banking [8] stood at 44% for
1Q 2020 (1Q 2019: 39%)
Income Statement Highlights
--------------------------------- --- ---------- ---------------------- ------ -------
in thousands of GEL 1Q'20 4Q'19 1Q'19 Change Change
YoY QoQ
-------------------------------- ---------------- ---------------------- ------ ------- -------
Net interest income 207,959 209,318 201,137 3.4% -0.6%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Net fee and commission income 43,552 54,844 41,806 4.2% -20.6%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Other operating non-interest
income [9] 38,745 40,075 29,003 33.6% -3.3%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Reported credit loss allowance (247,737) 224 (33,095) NMF NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
Credit loss allowance without
COVID-19 impact (32,036) 224 (33,095) -3.2% NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
Reported operating income after
credit loss allowance 42,519 304,461 238,851 -82.2% -86.0%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Operating income after credit
loss allowance without COVID-19
impact* 258,220 304,461 238,851 8 .1% -15.2%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Losses from modifications related (30,643) - - NMF NMF
to COVID-19
---------------------------------- -------------- ---------- ------------------ ------- ---------
Operating expenses (105,830) (127,124) (102,514) 3.2% -16.8%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Reported profit/ ( loss ) before
tax (93,954) 177,337 136,337 NMF NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
Profit/ ( loss ) before tax
without COVID-19 impact* 152,390 177,337 136,337 11.8% -14.1%
---------------------------------- -------------- ---------- ------------------ ------- ---------
Reported income tax expense 36,948 (17,313) (3,015) NMF NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
COVID-19 related tax effect (36,951) - - NMF NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
Income tax expense without
COVID-19 impact* (3) (17,313) (3,015) NMF NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
Reported profit/ ( loss ) for the
period (57,006) 160,024 133,322 NMF NMF
---------------------------------- -------------- ---------- ------------------ ------- ---------
Profit / (loss) for the period
without COVID-19 impact* 152,387 160,024 133,322 14.3% -4.8%
---------------------------------- -------------- ---------- ------------------ ------- ---------
*Without COVID-19 related credit loss allowances and losses from
modifications
Mar-20 Dec-19 Mar-19 Change Change
Balance Sheet and Capital Highlights YoY QoQ
----------- ----------- ----------- ------- -------
in thousands of GEL
----------------------------------------------------- ----------- ----------- ----------- ------- -------
Total Assets 20,030,573 18,410,274 15,172,306 32.0% 8.8 %
Gross Loans 13,929,640 12,661,955 10,366,915 34.4% 10.0 %
Customer Deposits 11,209,150 10,049,324 9,166,789 22.3% 11.5 %
Total Equity 2,573,177 2,647,655 2,347,756 9.6% -2.8%
Regulatory Common Equity Tier I Capital (Basel III) 1,518,950 1,871,892 1,698,420 -10.6% -18.9%
Regulatory Tier I Capital (Basel III) 1,987,693 2,281,706 1,746,745 13.8% -12.9%
Regulatory Total Capital (Basel III) 2,767,850 2,974,029 2,421,461 14.3% -6.9%
Regulatory Risk Weighted Assets (Basel III) 16,604,960 15,590,927 12,689,740 30.9% 6.5%
----------------------------------------------------- ----------- ----------- ----------- ------- -------
Key Ratios 1Q'20 4Q'19 1Q'19 Change YoY Change
QoQ
------------------------------- -------- ------ ------- ----------- --------
ROE 22.4%* 24.7% 23.8% -1.4 pp -2.3 pp
ROA 3.3%* 3.5% 3.6% -0.3 pp -0.2 pp
Pre-provision ROE 28.7% 24.7% 29.7% -1.0 pp 4.0 pp
NIM 5.1% 5.3% 6.2% -1.1 pp -0.2 pp
Risk adjusted NIM 4.2%** 5.4% 4.8% -0.6 pp -1.2 pp
Cost to income 36.5% 41.8% 37.7% -1.2 pp -5.3 pp
Standalone cost to income
of the Bank [10] 31.5% 36.2% 34.8% -3.3 pp 4. 7 pp
Cost of risk without COVID-19
impact 0.9%* -0.2% 1.4% -0.5 pp 1.1 pp
COVID-19 related cost of 1.7% - - NMF NMF
risk (not annualized)
NPL to gross loans 2.9% 2.7% 3.3% -0.4 pp 0.2 pp
NPLs coverage ratio exc.
collateral 133.8% 91.1% 100.1% 33.7 pp 42.7 pp
CET 1 CAR (Basel III) 9.1% 12.0% 13.4% -4.3 pp -2.9 pp
Regulatory Tier 1 CAR (Basel
III) 12.0% 14.6% 13.8% -1.8 pp -2.6 pp
Regulatory Total CAR (Basel
III) 16.7% 19.1% 19.1% -2.4 pp -2.4 pp
Leverage (Times) 7.8x 7.0x 6.5x 1.3x 0.8x
-------------------------------- ------- ------ ------- ----------- --------
* Ratios without COVID-19 related credit loss allowances and losses from modifications.
** Risk adjusted NIM for 1Q 2020 equals NIM adjusted with cost
of risk without COVID-19 effect.
Letter from the Chief Executive Officer
I would like to update you on the measures that we have taken to
adjust to the new environment and withstand the challenges caused
by COVID-19, as well as present our financial and operating results
for the first quarter 2020. I would also like briefly to discuss
Georgia's macroeconomic outlook and the government's actions to
mitigate the negative impacts of the pandemic.
Georgia has been fighting COVID-19 quite effectively by imposing
strict shut-down measures in a timely manner, starting from
mid-March. As a result, the number of COVID-19 cases has been
relatively low compared to other countries. As the peak is believed
to have passed, starting from the beginning of May, the country is
gradually opening up and it is expected that most business
activities will be resumed by mid-summer.
On the back of this development, monthly estimates of GDP growth
demonstrate a gradual deterioration in economic activity in Georgia
since the beginning of 2020. In 1Q 2020, real GDP increased 1.5%
YoY, while the March growth estimate was negative 2.7% YoY. After
solid 17.6% YoY growth in January, tourism inflows decreased by
5.2% YoY in February and dropped sharply by around 70% in March. In
the same month, exports of goods and remittance inflows also took a
hit, though much more moderately with 22.1% and 9.0% YoY declines
respectively. Imports of goods also adjusted by 13.4% YoY. As the
containment measures became more stringent in April 2020, growth is
expected to turn even more negative in second quarter 2020 before
it starts to turn positive.
Alongside the relatively successful containment of the COVID-19
outbreak, the government also managed to secure the necessary
resources to cushion the shock on the economy and the exchange
rate. Given the announcement of around USD 1.6 bn in additional
funding for the Ministry of Finance and the National Bank of
Georgia ("NBG"), the fiscal sector is expected to be strongly
expansionary, partly offsetting the negative impact on growth.
Furthermore, the government announced a substantial international
package of support to the private sector. Meanwhile, the NBG has
introduced a more active FX intervention policy to increase the FX
supply to the economy during this period of distress. Overall,
based on the latest IMF projections, the Georgian economy is
expected to contract by 4.0% for the full year 2020 before
recovering to a growth of 4.0% in 2021. Our own macro projections
indicate a 4.5-5.5% slowdown in 2019 and 4.0-5.0% growth in
2021.
The NBG has implemented counter-cyclical measures to support the
financial stability of the banking system and to ensure the
provision of financial support to sectors of the economy affected
by the current turmoil. The measures include a significant
reduction in capital adequacy requirements and standby liquidity
support incentives. In addition, the NBG coordinated the creation
of loan loss provisions across the banking system.
In terms of our operating results, we have managed to change our
operating model swiftly and continue with our daily operations with
minimum disruption, while maintaining the health, safety and
well-being of our staff and customers as the number one priority.
We have introduced a number of additional security and infection
prevention measures in our branch network. We have also introduced
remote working practices for most of our head office and back
office units. As a result, today, 95% of our head office and back
office staff (including those in our call center) are working from
home, while our market-leading digital banking platform allows our
customers to continue with almost all of their banking transactions
from the safety of their own homes. Overall, the total number of
digital transactions grew by 19% year-on-year, mainly driven by
increased number of transactions conducted in mobile banking. As a
result, the off-loading ratio amounted to 94%, while mobile banking
penetration ratios stood at 44%, up by 5.1 pp year-on-year in the
first quarter 2020. In order to support our customers during this
difficult period, in March we introduced a three-month grace period
on principal and interest payments for all our individual and MSME
customers as well as those corporate customers whose business is
most exposed in the current situation.
Due to the COVID-19 pandemic, we have accounted for the
following non-recurring charges to our profit and loss statement in
the first quarter 2020, leading to a net loss of GEL 57.0
million:
o a net modification loss, in the amount of GEL 30.6 million, to
reflect the decrease in the present value of cash-flows resulting
from the three-month grace period granted to borrowers; and
o An extra, front-loaded credit loss allowances, in the amount
of GEL 215.7 million (or GEL 210.9 million for loans), to prepare
for the potential impact of the COVID-19 pandemic on the Georgian
economy, resulting in an additional 1. 7 % cost of risk for the
first quarter. Excluding this additional provision, the annualized
cost of risk stood at 0.9%.
Without COVID-19 impact, we recorded an operating income of GEL
290.3 million, up by 6.7% year-on-year, mainly driven by growth in
net interest income and FX income. Over the same period, our net
interest margin stood at 5.1%, down by 0.2 pp compared with the
previous quarter, primarily due to pressure on FC loan yields
driven by the decrease in the libor rate, the increase in GEL cost
of funding, as well as currency depreciation. At the same time, our
operating expenses remained broadly stable YoY, leading to a
cost-to-income ratio of 36.5%, down by 1.2% pp year-on-year.
Consequently, our net profit without COVID-19 impact stood at GEL
152.4 million in the first quarter 2020, which resulted in return
of equity without COVID-19 impact and return on assets without
COVID-19 impact of 22.4% and 3.3% respectively.
In constant currency terms, our loan book remained broadly
stable on a quarter-on-quarter basis, growing by 3.2%, while our
deposits increased by 2.3%. As a result, our market share in total
loans and total deposits stood at 39.4% and 39.8% respectively as
of 31 March 2020.
Our liquidity and capital positions remain strong. As of 30
March 2020, our net stable funding (NSFR) and liquidity coverage
ratios (LCR) stood at 124.7% (128.7% April 2020) and 107.6% (117.3%
April 2020) respectively. After the impact of the currency
depreciation and additional provisions related to the potential
impact of COVID-19, our CET1, Tier 1 and Total CAR stood at 9.1%,
12.0% and 16.7% respectively as of 31 March 2020, above the
corresponding eased minimum regulatory requirements of 6.9%, 8.8%
and 13.3%. As already announced, with the aim of preserving
capital, our Board of Directors has decided not to recommend the
payment of dividends at the upcoming annual general meeting.
In a significant development, in April 2020 we obtained our
banking licence in Uzbekistan, which will allow us to start our
operations in June 2020. Our strategy is to establish a greenfield,
next-generation banking ecosystem for retail and MSME customers in
Uzbekistan with a primary focus on digital and partnership-driven
channels. Given the current operating environment and the impact of
COVID-19, we have further optimised our business model with
enhanced emphasis on asset-light and cost-efficient operations.
We have already invested USD 12.6 million into the charter
capital of our Uzbek bank and expect to invest an additional USD
9.4 million by the end of 2020. Potential new shareholders,
including the European Bank for Reconstruction and Development, the
International Finance Corporation and the Uzbek-Oman Investment
Company, have also expressed their interest in participating in an
additional capital increase by our Uzbek bank later this year,
subject to their internal approvals. We will remain the majority
shareholder with 51% interest.
Our Uzbek payments subsidiary, Payme, continued to grow rapidly
in the first quarter of 2020. Its revenue increased by 47 % YoY,
while its EBITDA increased by 21 %. The number of customers reached
2 million as of 31 March 2020.
Going forward
In light of the COVID-19 pandemic, we have reviewed our
strategic priorities given increased pressure on capital and people
as well as emerging new opportunities. We have refreshed our
strategic priorities for the next 3 years. While the main themes
have not changed, we have prioritized digital channels, customer
centricity, data analytics and international expansion.
At the same time we will be concentrating on prudent management
of our capital and liquidity positions, leveraging our robust risk
management system to closely monitor and proactively manage asset
quality. In parallel, we will be focusing on cost optimization with
the aim of keeping the Bank's cost to income flat for 2020 compared
to 2019, despite the pressure on revenues and the currency
depreciation. In this regard, management has decided to forgo their
entire bonuses for 2020 and LTIP grants for the 2020 cycle.
The crisis has provided a strong validation of our digital
strategy and has also revealed a number of opportunities that we
will be exploring to further enhance our operational model. I feel
confident that we are well positioned to achieve sustainable growth
and to deliver superior results to our shareholders in the
medium-term, despite the short-term challenges caused by COVID-19.
Therefore, I would like to reiterate our medium-term targets: ROE
of above 20%, cost to income ratio below 35%, dividend pay-out
ratio of 25-35% and loan book growth of around 10-15%.
Operating Overview
Georgia is fighting the virus more effectively
Georgian economy is opening up from the lock-down
o From May 11, all kinds of production have been re-opened as
well as retail and whole-sale stores that do not sell clothes or
shoes.
o From May 18, the beauty salons have been re-opened as
well.
o All businesses regardless of category will have to abide by
hygiene standards set by the Ministry of Health, including
maintaining social distancing measures, wearing a mask in closed
commercial and other spaces.
o Also, all restrictions on entry and exit to Tbilisi have been
lifted from May 11.
o The gathering of more than 3 people has been allowed starting
from May 18.
o State of Emergency will be lifted on May 22.
o Georgia's domestic tourism is expected to re-open from June 15
and from July 1 the country will start receiving international
tourists.
Our employee and customer support
Our employee
o We have introduced additional security and infection
prevention measures in our branch network including glass barriers
for customer facing employees and antiseptic solutions for the
employees and customers.
o Operational model change has been implemented very swiftly,
with about 2,200 people, i.e. 95% of head and back offices (as well
as call center) already working from home.
o No loss of productivity or even increased productivity in some
cases.
Our customers
o We have granted a 3-month grace period on principal and
interest payments for individual and MSME customers as well as
those corporate customers who are most affected by the current
situation. The take-up rate per segments is as follows:
32%-corporate, 59%-MSME and 77%-retail.
o We have provided additional incentives to our customers to use
our market-leading digital banking platform such as a temporary
waiver of fees on money transfers and utilities payments in
internet and mobile banking.
COVID-19 related charges
Due to the COVID-19 pandemic, the following non-recurring
charges were made to our profit and loss statement:
Net modification losses, in the amount of GEL 30.6 million
o These modifications are related to losses incurred on loans
and advances to customers and investments in leases to reflect the
decrease in the present value of cash-flows resulting to the
three-months grace period granted to borrowers.
o The grace periods were granted due to COVID-19 pandemic and
are not expected to recur once business returns to normal.
Front-loaded, extra credit loss allowance, in accordance with
IFRS 9 in the amount of GEL 215.7 million (or GEL 210.9 million for
loans)
o These provisions were created to prepare for the potential
impact of the COVID-19 pandemic on the Georgian economy, resulting
in additional 1.7% cost of risk for the first quarter.
o For the purpose of collective assessment, the provisions were
created based on assessment of macro parameters in baseline and
downside scenarios, while in corporate segment, the Bank performed
individual assessment for the majority of potentially vulnerable
borrowers and assigned individual provisions
Due to the COVID-19 pandemic, the following non-recurring
charges were made to our regulatory capital:
o According to local standards, the additional credit loss
allowance stood at 3.1% of the loan book. As a result, our CET1
ratio decreased by 2.19% as of 31 March 2020.
Our focus to withstand COVID-19 impact
Liquidity
Attracted a number of new borrowings with a total amount of USD
15 3 .6 million in April 2020 and have built a strong funding
pipeline for the end of the year for total amount of USD 450
million.
As of 30 April 2020, LCR amounted to 117.3%, while NSFR stood at
128.3%.
Liquidity coverage ratio
(LCR) 107.6%
Minimum LCR requirement 100%
-------
Net stable funding ratio
(NSFR) 124.7%
-------
Minimum NSFR requirement 100%
-------
Ratios as of 31 March 2020
Capital
The Board has decided not to recommend dividends at the upcoming
AGM to support capital positions.
CET 1 Capital adequacy
ratio 9.1%
Minimum CET 1 requirements 6.9%
------
Tier 1 Capital adequacy
ratio 12.0%
------
Minimum Tier 1 requirements 8.8%
------
Total Capital adequacy
ratio 16.7%
------
Minimum total Capital adequacy
requirements 13.3%
------
Ratios as of 31 March 2020
Asset quality
Closely monitor and proactively manage asset quality
NPL to gross loans 2.9%
COVID-19 related cost of
risk (not annualized) 1.7%
-----
Cost of risk without COVID-19
effect 0.9%
-----
Ratios as of 31 March 2020
Profitability & cost control
Working on cost optimization program including forgoing entire
top management annual bonuses for 2020 and LTIP grants for the 2020
cycle. Our target is to maintain flat cost to income ratio for the
bank in 2020 compared to 2019 (35.9%) and achieve comfortable
profitability level.
Bank standalone cost to
income 31.5%
Cost to income 36.5%
------
Pre-provision ROE 28.7%
------
Ratios as of 31 March 2020
TBC Uzbekistan
Our strategy is to establish a greenfield, next-generation
banking ecosystem for retail and MSME customers in Uzbekistan with
a primary focus on digital and partnership-driven channels. Given
the current operating environment and impact from COVID-19, we have
further optimised our business model with the enhanced emphasis on
asset-light and cost-efficient operations.
Product offerings:
o Current and savings accounts;
o Cash loans, salary backed loans and car loans;
o Cards, mobile application and transactional capabilities;
o Point-of-sale consumer finance operations;
o Close cooperation with Payme, our Uzbek payments
subsidiary.
Funding:
o TBC PLC has already invested USD 12.6 million into the charter
capital of the Bank and expects to invest an additional USD 9.4
million by the end of 2020.
o We have already secured interest from our potential partners:
EBRD, IFC and the Uzbek-Oman Investment Company.
o Additional capital increase is planned later this year from
our partners.
o Our plans foresee a minimum 51% shareholding.
Financial targets:
Run-rate break-even is planned by the end of 2022 and our
medium-term targets are:
o ROE-in the range of TBC Group's target
o Loan book up to USD 700 million
The team:
o The Bank will be run by an experienced management board headed
by Chief Executive Officer Sandro Rtveladze, who previously held
the role of Group Head of Retail Banking at Bayport Financial
Services and prior to that was Deputy CEO at Liberty Bank in
Georgia.
Our mid-term targets
o In the light of COVID-19 pandemic, we have reviewed our
strategic priorities given increased pressure on capital and people
as well as emerging new opportunities.
o We have refreshed our strategic priorities for the next 3
years. While the main themes have not changed, we have prioritized
digital channels, customer centricity, data analytics and
international expansion.
o We believe our strategy of digital enabled growth and customer
centricity will make TBC even more distinctive, given the
acceleration of trends we see.
Our mid-term targets remain unchanged
Mid-term Targets Actual Performance
Q1 2020
Annual loan book growth 10-15% 34.4 %/ 19.6% *
(gross) [11]
------------------ ----------------------
ROE [12] 20%+ N/A
------------------ ----------------------
Cost to income ratio
[13] < 35% 36.5%
------------------ ----------------------
Dividend payout ratio 25-35% No dividend in 2020**
[14]
------------------ ----------------------
* Growth at constant currency
** The Board has decided not to recommend dividends at the
upcoming AGM to support capital positions
Additional Information Disclosure
The following materials in connection with TBC PLC's financial
results are disclosed on our Investor Relations website at
http://tbcbankgroup.com/ under the Results Announcement section
.
Economic Overview
Economic growth and external sector
The rapid spread of COVID-19 globally has taken its toll on the
domestic economy, with its first impact apparent in February 2020.
While the strong growth registered in 2019 (+ 5.1% YoY ) carried
over in January 2020 (+5.1% YoY), estimated GDP growth moderated to
2.2% YoY in February and slipped to negative 2.7% YoY in March, as
a
state of emergency was announced on 21(st) of March with a number of restrictions on domestic and international economic activity . According to initial estimates, almost all sectors declined in March 2020 with the exception of construction and ICT. Estimated GDP growth in 1Q 2020 remained at positive 1.5% YoY.
The tourism industry, which is one of the major pillars of the
Georgian economy, has been hit hardest. Following the exceptional
performance of tourism inflows in January, which grew 17.6% YoY in
USD terms, inflows receded by 5.2% YoY in February and fell by an
estimated 70% YoY in March. Exports of goods showed a similar
tendency, although the drop in March was relatively soft at 22.1%
YoY. Reflecting increased uncertainties, a sharp deterioration in
business and consumer sentiments and record low oil prices, imports
also fell by 13.4% YoY in March 2020, which meant that the trade
balance improved by 6.8% over the same period. As far as the
existing evidence suggests, remittance inflows proved more
resilient and declined only by 9.0% YoY in March 2020, despite
being affected both by lower oil prices and RUB depreciation, and
by stringent measures introduced in some key remitting countries
such as Italy and Spain.
Inflation, monetary policy and exchange rate
Since the beginning of the year, as the USD/Gel exchange rate
strengthened and the high base effect came into play, inflation
retreated to 6.1% YoY as of March 2020, compared to 7.0% YoY by the
end of 2019. However, following the sharp depreciation of the GEL
by the end of March, compounded by supply side constraints,
inflation increased to 6.9% YoY in April 2020, mostly driven by
higher food prices, while non-food inflation retreated on the back
of lower fuel prices as well as weak domestic demand. At the peak
of its depreciation, the GEL nominal effective exchange rate
weakened by 11.6% compared to the end 2019, before regaining some
of its value. In response to sharp exchange rate fluctuations, the
NBG sold USD 100 mln in March and an additional USD 20 mln by the
end of April. On top of the traditional interventions mechanism,
the central bank introduced a facility to intervene daily on the FX
market to smooth out the excess volatility of the currency without
resisting the underlying trend of the exchange rate.
Despite the depreciated exchange rate and somewhat higher
inflation in April 2020, the central bank started a gradual exit
from its tight monetary stance in response to expected downward
pressures on inflation once the short-term supply side shock fades.
The policy rate was reduced by 0.5 pp by the end of April 2020 and
the central bank pledged to continue to exit gradually from its
tight monetary stance, with the pace of movement depending on
changes in terms of inflation expectations. According to the
central bank, inflation will remain elevated over the next several
months and it will start to decline by the second half of the year,
before reaching the target of 3% in the first half of 2021.
Fiscal policy
In response to the deteriorating economic outlook, the Ministry
of Finance started to mobilize external financing to scale up
social as well as business support initiatives to mitigate the
potential damage from the COVID-19 outbreak and ensure
macroeconomic stability. The existing program with the IMF enabled
the country to tap donor financing in a timely manner. The total
amount of secured external financing for the government and the
central bank amounted to USD 1.6 bn, which should be sufficient for
the country to finance its spending needs as well as to fill the
gap in the balance of payments through central bank interventions.
According to the IMF, the budget deficit is expected to come in at
8.5% - an indication of a highly expansionary fiscal stance. With
these additional borrowings, the government is expected to launch
an unemployment support scheme for those who lost their jobs during
the COVID-19 outbreak as well as different social support schemes.
In addition, tax breaks, a credit guarantee fund and specific
sectoral programs are expected to be put in place to steer the
economy through these uncharted waters. In addition, the government
announced around USD 1.5 bn in direct international support to the
private sector.
Going forward
The unprecedented economic difficulties stemming from the
COVID-19 pandemic have created enormous challenges for the Georgian
economy. The first signs regarding the size of the fallout from the
virus outbreak were already visible in March 2020. A somewhat
steeper decline is expected in April-May 2020 before the state of
emergency is lifted gradually, when different sectors will likely
start to recover. Overall, per latest projections of the IMF, GDP
is likely to fall by 4% YoY in 2020 before recovering by 4.0% YoY
in 2021. Azerbaijan is also expected to face a 2.2% contraction in
2020 and to recover only modestly by 0.7% YoY in 2021. At the same
time, Uzbekistan stands out in the broader region as one of a very
few countries which will maintain growth at a positive 1.8% in 2020
before expanding strongly by 7.0% in 2021.
Unaudited Consolidated Financial Results Overview for 1Q
2020
This statement provides a summary of the unaudited business and
financial trends for 1Q 2020 for TBC Bank Group plc and its
subsidiaries. The quarterly financial information and trends are
unaudited.
TBC Bank Group PLC financial results are prepared in accordance
with International Financial Reporting Standards ("IFRS") as
adopted by the European Union ("EU") and the Companies Act 2006
applicable to companies reporting under IFRS. The Group separately
classifies and discloses certain incomes and expenses, which are
non-recurring by nature and are caused by extraordinary events, in
order to provide a consistent view and enable better analysis of
the financial performance of the Group. Adjusted performance is an
alternative performance measure (APM ) and the reconciliation of
the profit and loss items without COVID-19 impact with the reported
profit and loss items and the respective ratios are given in Annex
3 on pages 31-32. Please note, that there might be slight
differences in previous periods' figures due to rounding.
Net Interest Income
In 1Q 2020, net interest income amounted to GEL 208.0 million,
up by 3.4% YoY and down by 0.6% on a QoQ basis.
The YoY increase in interest income was primarily related to an
increase in interest income from loans, which was related to an
increase in the gross loan portfolio by GEL 3,562.7 million, or
34.4%, as well as currency depreciation. This effect was partially
offset by a 1.2 pp drop in loan yields across all segments in line
with the overall market trend as well the responsible lending
regulation that was effective from 1 January 2019, limiting the
Bank's ability to disburse loans to higher yield retail
customers.
Over the same period, interest expense increased by GEL 54.4
million, or 38.6%, which was mainly related to interest expense
from bonds issued in summer 2019, as well as an increase in the NBG
loan. Another driver was increased interest expense from deposits,
which was related to both the growth in the respective portfolio by
22.3% YoY and an increase in deposit cost by 0.2 pp over the same
period, driven by an increase in GEL deposits cost related to
currency devaluation.
The QoQ increase in interest income was mainly due to an
increase in the loan portfolio by GEL 1,267.7 million, or 10.0%,
this effect was partially offset by a 0.6 pp drop in loan yield,
related to an increase in FC loan yields driven by a rise in libor
rate. Over the same period, interest expense increased by GEL 3.5
million, or 1.8%, mainly related to the growth in the respective
portfolio by 11.5%, as well as increased in GEL cost of fund by 0.4
pp .st
Since 4Q 2019, we re-classified net gains from currency swaps
from other operating income to net interest income. In 1Q 2020, our
net gains from currency swaps decreased by 5.5% QoQ driven by
decline in the interest rate spread on the international markeSts.
More information about re-classification is given in annex 4 on
page 32.
Thus, our NIM was 5.1%, down by 1.1 pp YoY and 0.2 pp on a QoQ
basis, while our r isk adjusted NIM for the period amounted to
4.2%, down by 0.6 pp YoY and 1.2 pp QoQ.
In thousands of GEL 1Q'20 4Q'19 1Q'19 Change YoY Change QoQ
------------------------------- ---------- ---------- ---------- ----------- -----------
Interest income 394,779 392,154 337,915 16.8% 0.7%
------------------------------- ---------- ---------- ---------- ----------- -----------
Interest expense (195,377) (191,891) (140,957) 38.6% 1.8%
------------------------------- ---------- ---------- ---------- ----------- -----------
Net gains from currency swaps 8,557 9,055 4,179 NMF -5.5%
------------------------------- ---------- ---------- ---------- ----------- -----------
Net interest income 207,959 209,318 201,137 3.4% -0.6%
------------------------------- ---------- ---------- ---------- ----------- -----------
NIM 5.1% 5.3% 6.2% -1.1 pp -0.2 pp
------------------------------- ---------- ---------- ---------- ----------- -----------
Risk adjusted NIM 4.2% * 5.4% 4.8% -0.6 pp -1.2 pp
------------------------------- ---------- ---------- ---------- ----------- -----------
* Risk adjusted NIM for 1Q 2020 equals NIM adjusted with cost of
risk without COVID-19 effect
Net fee and commission income
In 1Q 2020, net fee and commission income totalled GEL 43.6
million, up by 4.2% YoY and down by 20.6% QoQ.
The YoY rise was mainly driven by an increase in net fee and
commission income from settlement transactions, and guarantees and
letters of credit issued. The former increase was mainly driven by
the increase in the number of TBC Status's clients (our affluent
retail sub-segment),up by 108% YoY to 90.0 thousands, while the
latter increase was related to an increase in the respective
portfolio by GEL 747.5 million, or 57.5% YoY.
On a QoQ basis, the decrease was spread across all categories,
related to seasonality and the overall slow-down of business
operations due to the COVID-19 outbreak.
In thousands of GEL 1Q'20 4Q'19 1Q'19 Change YoY Change QoQ
----------------------------------------- ------- ------- ------- ----------- -----------
Net fee and commission income
----------------------------------------- ------- ------- ------- ----------- -----------
Card operations 12,540 16,649 14,136 -11.3% -24.7%
Settlement transactions 19,843 24,887 14,868 33.5% -20.3%
Guarantees issued and letters of credit 8,421 8,831 6,106 37.9% -4.6%
Other 2,748 4,477 6,697 -59.0% -38.6%
----------------------------------------- ------- ------- ------- ----------- -----------
Total net fee and commission income 43,552 54,844 41,807 4.2% -20.6%
----------------------------------------- ------- ------- ------- ----------- -----------
Other Non-Interest Income
Total other non-interest income increased by 33.6% YoY and
decreased by 3.3% QoQ, amounting to GEL 38.7 million in 1Q
2020.
The YoY increase was mainly attributable to strong growth in net
income from foreign currency operations, which was driven by an
increase in the number and volume of FX transactions across all
segments as well as increased spread due to the higher volatility
of the local currency in 1Q 2020.
The slight decrease QoQ was related to the decrease in other
operating income and net insurance premium earned after claims and
acquisition costs due to seasonality. This decrease was partially
offset by the increase in net income from foreign currency
operations, due to the higher volatility of the local currency, as
mentioned above.
Net insurance premium earned after claims and acquisition costs
increased by 28.7% YoY, mainly related to the overall increase of
the insurance business. More information about TBC insurance can be
found in Annex 5 on page 33.
In thousands of GEL 1Q' 20 4Q'19 1Q'19 Change YoY Change QoQ
----------------------------------------------------------------- ------- ------- ------- ----------- -----------
Other non-interest income
----------------------------------------------------------------- ------- ------- ------- ----------- -----------
Net income from foreign currency operations 28,642 28,006 21,036 36.2% 2.3%
Net insurance premium earned after claims and acquisition costs
[15] 4,800 5,659 3,729 28.7% -15.2%
Other operating income 5,303 6,410 4,238 25.1% -17.3%
----------------------------------------------------------------- ------- ------- ------- ----------- -----------
Total other non-interest income 38,745 40,075 29,003 33.6% -3.3%
----------------------------------------------------------------- ------- ------- ------- ----------- -----------
Credit Loss Allowance
Credit loss allowance for loans in 1Q 2020 amounted to GEL 241.0
million, out of which GEL 210.9 million was COVID-19 related, which
translated into additional 1.7% cost of risk. The largest impact
comes from the retail segment, followed by the MSME.
Other credit loss allowance amounted to GEL 6.7 million, out of
which GEL 4.8 million was COVID-19 related.
In thousands of GEL 1Q'20 4Q'19 1Q'19 Change Change
YoY QoQ
----------------------------------- ---------- -------- --------- ------- -------
Credit loss allowance for loan
to customers without COVID-19
impact* (30,158) 5,148 (36,416) 17.2% NMF
COVID-19 related credit loss (210,867) - - NMF NMF
allowance for loans
Credit loss allowance for other
transactions without COVID-19
impact* (1,878) (4,924) 3,321 NMF -61.9%
---------- -------- --------- -------
COVID-19 related credit loss (4,834) - - NMF NMF
allowance for other transactions
---------- -------- --------- -------
Reported total credit loss
allowance (247,737) 224 (33,095) NMF NMF
----------------------------------- ---------- -------- --------- ------- -------
Total credit loss allowance
without COVID-19 impact* (32,036) 224 (33,095) -3.2% N MF
----------------------------------- ---------- -------- --------- ------- -------
Reported operating income after
credit loss allowance 42,519 304,461 238,851 -82.2% -86.0%
----------------------------------- ---------- -------- --------- ------- -------
Operating income after credit
loss allowance without COVID-19
impact* 258,220 304,461 238,851 8.1% -15.2%
----------------------------------- ---------- -------- --------- ------- -------
COVID-19 related cost of risk 1.7% - - NMF NMF
(not annualized)
----------------------------------- ---------- -------- --------- ------- -------
Cost of risk without COVID-19 - 0.5
impact 0.9%* -0.2% 1.4% pp 1.1 pp
----------------------------------- ---------- -------- --------- ------- -------
*COVID-19 impact is related to the credit loss allowances
NMF - no meaningful figures
Operating Expenses
In 1Q 2020, total operating expenses increased by 3.2% YoY and
decreased by 16.8% QoQ, amounting to GEL 105.8 million.
On a QoQ basis, the decrease in staff cost was driven by a
decline in share base payment expense, due to the fact that
management waived their right to receive 2020 annual bonus and LTIP
for the 2020-2022 performance period as well as seasonality.
Administrative & other expenses also decreased QoQ due to
seasonality. At the same time, the increase in depreciation was
caused by a high base in 4Q 2019, due to amendments in the
depreciation period of certain assets.
As a result, in 1Q 2020, our cost to income ratio stood at
36.5%, down by 1.2 pp YoY and 5.3 pp QoQ.
In thousands of GEL 1Q'20 4Q'19 1Q'19 Change YoY Change QoQ
------------------------------------------- ---------- ---------- ---------- ----------- -----------
Operating expenses
------------------------------------------- ---------- ---------- ---------- ----------- -----------
Staff costs (56,802) (68,934) (57,753) -1.6% -17.6%
Provisions for liabilities and charges 133 (2,632) 200 -33.5% NMF
Depreciation and amortization (15,788) (9,921) (16,169) -2.4% 59.1%
Administrative & other operating expenses (33,375) (45,637) (28,792) 15.9% -26.9%
------------------------------------------- ---------- ---------- ---------- ----------- -----------
Total operating expenses (105,830) (127,124) (102,514) 3.2% -16.8%
------------------------------------------- ---------- ---------- ---------- ----------- -----------
Cost to income 36.5% 41.8% 37.7% -1.2 pp -5.3 pp
------------------------------------------- ---------- ---------- ---------- ----------- -----------
NMF - no meaningful figures
Net Income
Due to the COVID-19 pandemic, the Group incurred a losses from
modifications related to COVID-19, in the amount of GEL 30.6
million, to reflect the decrease in the present value of cash-flows
resulting from a three-month grace period granted to borrowers. The
modifications are related to losses incurred on l oans and advances
to customers and investments in leases due to the COVID-19 events
and are not expected to recur again in normal course of the
business.
In 1Q 2020, we recorded a net loss of GEL 57.0 million due to
the following COVID-19 related charges: a net modification loss of
GEL 30.6 million and COVID-19 related total credit loss allowance
in the amount of GEL 215.7 million.
Our net income without COVID-19 impact for the first quarter
amounted to GEL 152.4 million, up by 14.3%, YoY and down by 4.8%
QoQ. The increase was mainly due to growth in net interest income
and FX income.
Income tax expense without COVID-19 impact is calculated as
follows: the reported income tax is reduced by the COVID-19 related
tax expense, in the amount of GEL 37.0 million, which is 15% of
COVID-19 losses from modification and credit loss allowances of GEL
30.6 million and GEL 215.7 million, respectively.
As a result, our ROE without COVID-19 impact stood at 22.4%,
down by 1.4 pp YoY and 2.3 pp QoQ, while ROA without COVID-19
impact stood at 3.3%, down by 0.3 pp YoY and 0.2 pp QoQ.
In thousands of GEL 1Q'20 4Q'19 1Q'19 Change YoY Change QoQ
------------------------------------------------------- --------- --------- -------- ----------- -----------
Losses from modifications related to COVID-19 30,643 - - NMF NMF
------------------------------------------------------- --------- --------- -------- ----------- -----------
Reported profit/(loss) before tax (93,954) 177,337 136,337 NMF NMF
------------------------------------------------------- --------- --------- -------- ----------- -----------
Profit/(loss) before tax without COVID-19 impact* 152,390 177,337 136,337 11.8% -14.1%
------------------------------------------------------- --------- --------- -------- ----------- -----------
Reported income tax expense 36,948 (17,313) (3,015) NMF NMF
------------------------------------------------------- --------- --------- -------- ----------- -----------
COVID-19 related tax expense (36,951) - - - -
------------------------------------------------------- --------- --------- -------- ----------- -----------
Income tax expense without COVID-19 impact* (3) (17,313) (3,015) NMF NMF
------------------------------------------------------- --------- --------- -------- ----------- -----------
Reported profit/(loss) for the period (57,006) 160,024 133,322 NMF NMF
------------------------------------------------------- --------- --------- -------- ----------- -----------
Profit/(loss) for the period without COVID-19 impact* 152,387 160,024 133,322 14.3% -4.8%
------------------------------------------------------- --------- --------- -------- ----------- -----------
ROE 22.4%* 24.7% 23.8% -1.4 pp -2.3 pp
------------------------------------------------------- --------- --------- -------- ----------- -----------
ROA 3.3%* 3.5% 3.6% -0.3 pp -0.2 pp
------------------------------------------------------- --------- --------- -------- ----------- -----------
* COVID-19 impact is related to the credit loss allowances and
losses from modifications
Funding and Liquidity
As of 30 April 2020, the total liquidity coverage ratio, as
defined by the NBG, was 117.3% , above the 100% limit, while the
LCR in GEL and FC stood at 113.6% and 119.0% respectively, above
the respective limits of 75% and 100%.
As of 30 April 2020, NSFR stood at 128.3%, compared to
regulatory limit of 100%, effective from September 2019.
31-Mar-20 31-Dec-19 31-Mar-19 Change Change QoQ
YoY
--------------------------------------------------------- ---------- ---------- ---------- ---------- -----------
Minimum net stable funding ratio, as defined by the NBG 100% 100% 100% 0.0 pp 00 pp
Net stable funding ratio as defined by the NBG 124.7% 126.7% 128.2%* -3.5 pp -2.0 pp
Net loans to deposits + IFI funding 101.8% 104.8% 90.5% 11.3 pp -3.0 pp
Leverage (Times) 7.8x 7.0x 6.5x 1.3x 0.8 pp
Minimum liquidity ratio, as defined by the NBG 30.0% 30.0% 30.0% 0.0 pp 0.0 pp
Liquidity ratio, as defined by the NBG 30.6% 32.2% 35.9% - 5 .3 pp - 1.6 pp
Minimum total liquidity coverage ratio, as defined by
the NBG 100.0% 100.0% 100.0% 0.0 pp 0.0 pp
Minimum LCR in GEL, as defined by the NBG 75.0% 75.0% 75.0% 0.0 pp 0.0 pp
Minimum LCR in FC, as defined by the NBG 100.0% 100.0% 100.0% 0.0 pp 0.0 pp
Total liquidity coverage ratio, as defined by the NBG 107.6% 110.1% 117.5% -9.9 pp -2.5 pp
LCR in GEL, as defined by the NBG 107.0% 83.7% 111.9% -4.9 pp 23.3 pp
LCR in FC, as defined by the NBG 107.8% 128.4% 122.2% -14.4 pp -20.6 pp
--------------------------------------------------------- ---------- ---------- ---------- ---------- -----------
*Based on internal estimates
Regulatory Capital
Due to the COVID-19 pandemic, the NBG is implementing
countercyclical measures to support the financial stability of the
banking system and to ensure provision of financial support to
sectors of the economy affected by the current turmoil. In relation
to capital adequacy requirements, the following measures have been
taken:
o Postponing the phasing in of additional capital requirements
planned in March 2020, with a 0.44 pp effect on TBC's CET 1;
o Allowing banks to use the conservation buffer (currently at
2.5pp on CET1) and 2/3 of CICR buffer resulted in the release of
1.0-2.0% of capital across our CET1, Tier 1 and Total CAR;
o Leaving open the possibility of releasing all pillar 2 buffers
(remaining 1/3 CICR, HHI and Net Grape buffers) in the range of
1.0-4.0% of capital across our CET1, Tier 1 and Total CAR.
As of 31 March 20, the Bank's CET 1, Tier 1 and Total Capital
adequacy ratios stood at 9.1%, 12.0% and 16.7%, respectively, above
the respective eased minimum requirements of 6.9%, 8.8% and
13.3%.
Total capital, Tier 1 capital and CET 1 capital decreased by
18.9%, 12.9% and 6.9% on a QoQ basis, respectively. The main reason
for this decrease was additional provision charges created
according to local standards in relation to the COVID 19 pandemic,
in the amount of 3.1% of the loan book . The QoQ growth in
risk-weighted assets was mainly related to the currency
depreciation.
In thousands of GEL 31-Mar-20 31-Dec-19 31-Mar-19 Change YoY Change QoQ
-------------------------------------- ----------- ----------- ----------- ----------- -----------
CET 1 Capital 1,518,950 1,871,892 1,698,420 -10.6% -18.9%
Tier 1 Capital 1,987,693 2,281,706 1,746,745 13.8% -12.9%
Total Capital 2,767,850 2,974,029 2,421,461 14.3% -6.9%
Total Risk-weighted Exposures 16,604,960 15,590,927 12,689,740 30.9% 6.5%
-------------------------------------- ----------- ----------- ----------- ----------- -----------
Minimum CET 1 ratio 6.9% 10.4% 9.8% -2.9 pp -3.5 pp
CET 1 Capital adequacy ratio 9.1% 12.0% 11.9% -2.8 pp -2.9 pp
Minimum Tier 1 ratio 8.8% 12.5% 11.9% -3.1 pp -3.7 pp
Tier 1 Capital adequacy ratio 12.0% 14.6% 14.7% -2.7 pp -2.6 pp
Minimum total capital adequacy ratio 13.3% 17.5% 16.7% -3.4 pp -4.2 pp
Total Capital adequacy ratio 16.7% 19.1% 19.4% -2.7 pp -2.4 pp
-------------------------------------- ----------- ----------- ----------- ----------- -----------
Loan Portfolio
As of 31 March 2020, the gross loan portfolio reached GEL
13,929.6 million, up by 34.4% YoY and 10.0% QoQ, or by 19.6% YoY
and 3.2% QoQ at a constant currency basis.
The YoY increase was spread across all segments, with the
largest contribution from the corporate segment. The latter was
driven by the acquisition of both large and mid-corporate clients,
as well as by the re-segmentation of certain clients from the MSME
segment in 1Q 2020 in the amount of GEL 88.7 million. The
proportion of gross loans denominated in foreign currency increased
by 2.8 pp YoY and 3.7 pp QoQ and accounted for 62.4 % of total
loans, while on a constant currency basis the proportion of gross
loans denominated in foreign currency increased by 1.2 pp QoQ and
stood at 59.9%.
As of 31 March 2020, our market share in total loans stood at
39.4% up by 1.0 pp YoY and down by 0.1 pp QoQ. While our loan
market share in legal entities was 38.5%, up by 1.1 pp and down by
0.4 pp QoQ, and our loan market share in individuals stood at
40.0%, up by 1.0 pp YoY and 0.3 pp QoQ.
In thousands of GEL 31-Mar-20 31-Dec-19 31-Mar-19 Change YoY Change
QOQ
--------------------------------------- ----------- ----------- ----------- ----------- --------
Loans and advances to customers
--------------------------------------- ----------- ----------- ----------- ----------- --------
Retail 5,485,120 5,053,203 4,578,273 19.8% 8.5%
Retail loans GEL 2,445,016 2,386,750 2,015,721 21.3% 2.4%
Retail loans FC 3,040,104 2,666,453 2,562,552 18.6% 14.0%
Corporate 5,209,833 4,660,473 3,364,911 54.8% 11.8%
Corporate loans GEL 1,358,616 1,424,309 1,010,283 34.5% -4.6%
Corporate loans FC 3,851,217 3,236,164 2,354,628 63.6% 19.0%
MSME 3,234,687 2,948,279 2,423,730 33.5% 9.7%
MSME loans GEL 1,432,858 1,419,804 1,158,605 23.7% 0.9%
MSME loans FC 1,801,829 1,528,475 1,265,125 42.4% 17.9%
--------------------------------------- ----------- ----------- ----------- ----------- --------
Total loans and advances to customers 13,929,640 12,661,955 10,366,914 34.4% 10.0%
--------------------------------------- ----------- ----------- ----------- ----------- --------
1Q'20 4Q'19 1Q'19 Change YoY Change
QoQ
--------------------------------------- ----------- ----------- ----------- ----------- --------
Loan yields 10.3% 10.9% 11.5% -1.2 pp -0.6 pp
Loan yields GEL 15.5% 15.7% 16.5% -1.0 pp -0.2 pp
Loan yields FC 6.8% 7.6% 8.2% -1.4 pp -0.8 pp
Retail Loan Yields 11.2% 11.8% 12.8% -1.6 pp -0.6 pp
Retail loan yields GEL 16.7% 17.1% 19.6% -2.9 pp -0.4 pp
Retail loan yields FC 6.4% 7.1% 7.4% -1.0 pp -0.7 pp
Corporate Loan Yields 9.0% 9.7% 9.5% -0.5 pp -0.7 pp
Corporate loan yields GEL 13.3% 13.3% 10.8% 2.5 pp 0.0 pp
Corporate loan yields FC 7.3% 8.2% 9.0% -1.7 pp -0.9 pp
MSME Loan Yields 10.8% 11.3% 11.7% -0.9 pp -0.5 pp
MSME loan yields GEL 15.6% 15.7% 15.7% -0.1 pp -0.1 pp
MSME loan yields FC 6.4% 7.2% 8.1% -1.7 pp -0.8 pp
--------------------------------------- ----------- ----------- ----------- ----------- --------
Loan Portfolio Quality
Without COVID-19 impact, total PAR 30 was up by 0.6 pp QoQ or
down by 0.1 pp YoY, and stood at 2.3% as of 31 March 2020. The QoQ
increase was driven by all segments.
Over the same period, NPL ratio improved by 0.4pp YoY before
COVID-19 effect, due to overall improved performance of the book as
well as portfolio growth and remained broadly stable QoQ. The
COVID-19 impact is not yet realized partially due to payment
holidays offered to our customers.
On a QoQ basis, NPL coverage ratio increased due to COVID-19
related credit loss allowance and currently stable NPL level.
31-Mar-20 31-Dec-19 31-Mar-19 Change YoY Change QoQ
Par 30
------------- ---------- ---------- ---------- ----------- -----------
Retail 2.4% 2.1% 2.9% -0.5 pp 0.3 pp
Corporate 1.6% 0.5% 1.2% 0.4 pp 1.1 pp
MSME 3.2% 2.8% 3.1% 0.1 pp 0.4 pp
------------- ---------- ---------- ---------- ----------- -----------
Total Loans 2.3% 1.7% 2.4% -0.1 pp 0.6 pp
------------- ---------- ---------- ---------- ----------- -----------
Non-performing Loans 31-Mar-20 31-Dec-19 31-Mar-19 Change YoY Change QoQ
---------------------- ---------- ---------- ---------- ----------- -----------
Retail 2.9% 3.0% 3.2% -0.3 pp -0.1 pp
Corporate 2.1% 1.8% 2.6% -0.5 pp 0.3 pp
MSME 5.9% 3.8% 4.4% 1.5 pp 2.1 pp
---------------------- ---------- ---------- ---------- ----------- -----------
Total Loans 2.9% 2.7% 3.3% -0.4 pp 0.2 pp
---------------------- ---------- ---------- ---------- ----------- -----------
NPL Coverage Mar-20 Dec-19 Mar-19
Exc. Incl. Exc. Collateral Incl. Exc. Collateral Incl.
Collateral Collateral Collateral Collateral
-------------- --------------- --------------- ---------------- --------------- ---------------- ---------------
Corporate 99.8% 238.6% 97.1% 241.4% 95.4% 288.7%
Retail 199.5% 277.0% 111.1% 182.9% 123.8% 190.0%
MSME 84.7% 201.5% 59.7% 173.7% 71.4% 175.2%
-------------- --------------- --------------- ---------------- --------------- ---------------- ---------------
Total 133.8% 241.0% 91.1% 194.2% 100.1% 210.8%
-------------- --------------- --------------- ---------------- --------------- ---------------- ---------------
Cost of risk
The total cost of risk without COVID-19 effect for 1Q 2020 stood
at 0.9%, down by 0.5 pp YoY and up by 1.1 pp QoQ. The QoQ decrease
was due to unusually low impairment charges in 4Q 2019 across all
segments, while YoY decrease is driven by retail and MSME
segments.
Cost of Risk 1Q'20 ratios 1Q'20 COVID-19 4Q'19 1Q'19 Change YoY Change QoQ
without COVID-19 impact on without COVID-19 without COVID-19
impact cost of risk* impact impact
-------------- ------------------ --------------- ------ ------ ------------------ ------------------
Retail 1.8% 2.8% 0.3% 2.4% -0.6 pp 1.5 pp
Corporate 0.3% 0.4% -0.2% -0.1% 0.4 pp 0.5 pp
MSME 0.6% 1.5% -1.0% 1.6% -1.0 pp 1.6 pp
-------------- ------------------ --------------- ------ ------ ------------------ ------------------
Total 0.9% 1.7% -0.2% 1.4% -0.5 pp 1.1 pp
-------------- ------------------ --------------- ------ ------ ------------------ ------------------
* Not annualized
Deposit Portfolio
The total deposits portfolio increased by 22.3% YoY and 11.5%
QoQ and amounted to GEL 11,209.2 million, while on a constant
currency basis the total deposit portfolio was up by 7.8% YoY and
2.3% QoQ. The proportion of deposits denominated in foreign
currency increased by 3.1pp YoY or 0.4 pp on a QoQ basis and
accounted for 66.3% of total deposits, while on a constant currency
basis the proportion of deposits denominated in foreign currency
decreased by 2.7 pp QoQ and stood at 63.2%.
As of 31 March 2020, our market share in deposits amounted to
39.8%, down by 0.6 pp and up by 0.8 pp QoQ and our market share in
deposits to legal entities stood at 42.1%, up by 0.8 pp YoY and 1.5
pp QoQ. Our market share in deposits to individuals stood at 37.9%,
down by 1.6% YoY, and remained the same QoQ.
In thousands of GEL 31-Mar-20 31-Dec-19 31-Mar-19 Change YoY Change
QoQ
---------------------------- ----------- ----------- ---------- ----------- -------
Customer Accounts
---------------------------- ----------- ----------- ---------- ----------- -------
Retail 6,166,759 5,673,917 4,914,927 25.5% 8.7%
Retail deposits GEL 1,049,071 1,098,681 945,632 10.9% -4.5%
Retail deposits FC 5,117,688 4,575,236 3,969,295 28.9% 11.9%
Corporate 3,892,288 3,187,319 3,316,436 17.4% 22.1%
Corporate deposits GEL 2,248,487 1,735,746 1,925,243 16.8% 29.5%
Corporate deposits FC 1,643,801 1,451,573 1,391,193 18.2% 13.2%
MSME 1,150,103 1,188,088 935,426 22.9% -3.2%
MSME deposits GEL 483,750 594,388 504,039 -4.0% -18.6%
MSME deposits FC 666,353 593,700 431,387 54.5% 12.2%
---------------------------- ----------- ----------- ---------- ----------- -------
Total Customer Accounts 11,209,150 10,049,324 9,166,789 22.3% 11.5%
---------------------------- ----------- ----------- ---------- ----------- -------
1Q'20 4Q'19 1Q'19 Change Change
YoY QoQ
------------------------------ ------ ------ ------ -------- --------
Deposit rates 3.5% 3.4% 3.3% 0.2 pp 0.1 pp
Deposit rates GEL 6.4% 6.0% 5.9% 0.5 pp 0.4 pp
Deposit rates FC 1.9% 2.0% 1.9% 0.0 pp -0.1 pp
Retail Deposit Yields 2.8% 2.9% 2.8% 0.0 pp -0.1 pp
Retail deposit rates GEL 5.4% 5.1% 5.4% 0.0 pp 0.3 pp
Retail deposit rates FC 2.3% 2.3% 2.2% 0.1 pp 0.0 pp
Corporate Deposit Yields 5.3% 5.1% 4.9% 0.4 pp 0.2 pp
Corporate deposit rates
GEL 8.2% 7.9% 7.5% 0.7 pp 0.3 pp
Corporate deposit rates
FC 1.5% 1.5% 1.6% -0.1 pp 0.0 pp
MSME Deposit Yields 0.9% 0.9% 0.9% 0.0 pp 0.0 pp
MSME deposit rates GEL 1.5% 1.5% 1.4% 0.1 pp 0.0 pp
MSME deposit rates FC 0.3% 0.3% 0.3% 0.0 pp 0.0 pp
------------------------------ ------ ------ ------ -------- --------
Segment definition and PL
Business Segments
The segment definitions are as follows:
-- Corporate - a legal entity/group of affiliated entities with
an annual revenue exceeding GEL 12.0 million or which have been
granted facilities with more than GEL 5.0 million. Some other
business customers may also be assigned to the corporate segment or
transferred to the MSME segment on a discretionary basis;
-- Retail - non-business individual customers; all individual
customers are included in retail deposits;
-- MSME - business customers who are not included in the
corporate segment; or legal entities which have been granted a pawn
shop loan; or individual customers of the fully-digital bank,
Space; and
-- Corporate centre and other operations - comprises the
Treasury, other support and back office functions, and non-banking
subsidiaries of the Group.
Business customers are all legal entities or individuals who
have been granted a loan for business purposes.
Income Statement by Segments
1Q'20 Retail MSME Corporate Corp.Centre Total
------------------------------------ ---------- --------- ---------- ------------ ----------
Interest income 143,993 80,756 110,711 59,319 394,779
Interest expense (41,238) (2,597) (45,416) (106,126) (195,377)
Net gains from currency swaps - - - 8,557 8,557
Net transfer pricing (18,570) (31,136) 2,250 47,456 -
Net interest income 84,185 47,023 67,545 9,206 207,959
------------------------------------ ---------- --------- ---------- ------------ ----------
Fee and commission income 52,574 6,434 12,276 2,430 73,714
Fee and commission expense (25,071) (2,793) (1,903) (395) (30,162)
Net fee and commission income 27,503 3,641 10,373 2,035 43,552
------------------------------------ ---------- --------- ---------- ------------ ----------
Net insurance premium earned
after claims and acquisition
costs - - - 4,800 4,800
Net income from foreign currency
operations 10,128 7,959 15,301 3,540 36,928
Foreign exchange translation
gains less losses/(losses
less gains) - - - (8,286) (8,286)
Net gains/(losses) from derivative
financial instruments - - - (7) (7)
Gains less Losses from Disposal
of Investment Securities Measured
at Fair Value through Other
Comprehensive Income - - - 278 278
Other operating income 1,449 64 648 2,733 4,894
Share of profit of associates - - - 137 137
Other operating non-interest
income and insurance profit 11,577 8,023 15,949 3,195 38,744
------------------------------------ ---------- --------- ---------- ------------ ----------
Credit loss allowance for
loans to customers (166,532) (51,099) ( 23,394) - (241,025)
Credit loss allowance for
performance guarantees and
credit related commitments (1,151) (1,253) 380 - (2,024)
Credit loss allowance for
investments in finance lease - - - (870) (870)
Credit loss allowance for
other financial assets (197) - (1,682) (1,355) (3,234)
Credit loss allowance for
financial assets measured
at fair value through other
comprehensive income - - (132) (452) (584)
Profit/(loss) before G&A expenses
and income taxes (44,615) 6,335 69,040 11,759 42,518
------------------------------------ ---------- --------- ---------- ------------ ----------
Losses from modifications
related to COVID-19 (21,200) (6,778) (1,065) (1,600) (30,643)
------------------------------------ ---------- --------- ---------- ------------ ----------
Staff costs (27,014) (12,229) (7,072) (10,487) (56,802)
Depreciation and amortization (10,823) (2,672) (1,001) (1,293) (15,789)
Provision for liabilities
and charges - - - 136 136
Administrative and other operating
expenses (17,449) (5,759) (3,407) (6,760) (33,375)
Operating expenses (55,286) (20,660) (11,480) (18,403) (105,830)
------------------------------------ ---------- --------- ---------- ------------ ----------
Profit/(loss) before tax (121,102) (21,102) 56,495 8,245 (93,954)
------------------------------------ ---------- --------- ---------- ------------ ----------
Income tax expense 32,949 7,824 (4,784) 959 36,948
------------------------------------ ---------- --------- ---------- ------------ ----------
( 88,154
Profit/(loss) for the year ) (13,278) 51,711 (7,286) (57,006)
------------------------------------ ---------- --------- ---------- ------------ ----------
Income Statement without COVID-19 impact [16] by Segments
1Q'20 Retail MSME Corporate Corp.Centre Total
------------------------------------ --------- --------- ---------- ------------ ----------
Interest income 143,993 80,756 110,711 59,319 394,779
Interest expense (41,238) (2,597) (45,416) (106,126) (195,377)
Net gains from currency swaps - - - 8,557 8,557
Net transfer pricing (18,570) (31,136) 2,250 47,456 -
Net interest income 84,185 47,023 67,545 9,206 207,959
------------------------------------ --------- --------- ---------- ------------ ----------
Fee and commission income 52,574 6,434 12,276 2,430 73,714
Fee and commission expense (25,071) (2,793) (1,903) (395) (30,162)
Net fee and commission income 27,503 3,641 10,373 2,035 43,552
------------------------------------ --------- --------- ---------- ------------ ----------
Net insurance premium earned
after claims and acquisition
costs - - - 4,800 4,800
Net income from foreign currency
operations 10,128 7,959 15,301 3,540 36,928
Foreign exchange translation
gains less losses/(losses
less gains) - - - (8,286) (8,286)
Net gains/(losses) from derivative
financial instruments - - - (7) (7)
Gains less Losses from Disposal
of Investment Securities Measured
at Fair Value through Other
Comprehensive Income - - - 278 278
Other operating income 1,449 64 648 2,733 4,894
Share of profit of associates - - - 138 138
Other operating non-interest
income and insurance profit 11,577 8,023 15,949 3,196 38,745
------------------------------------ --------- --------- ---------- ------------ ----------
Credit loss allowance for (4,21
loans to customers (22,685) 6 ) (3,255) - (30,156)
Credit loss allowance for
performance guarantees and
credit related commitments 375 51 678 - 1,104
Credit loss allowance for
investments in finance lease - - - (870) (870)
Credit loss allowance for
other financial assets 2 - (177) (1,355) (1,530)
Credit loss allowance for
financial assets measured
at fair value through other
comprehensive income - - (132) (452) (584)
Profit/(loss) before G&A expenses
and income taxes 100,957 54,522 90,981 11,760 258,220
------------------------------------ --------- --------- ---------- ------------ ----------
Staff costs (27,014) (12,229) (7,072) (10,487) (56,802)
Depreciation and amortization (10,823) (2,672) (1,001) (1,293) (15,789)
Provision for liabilities
and charges - - - 136 136
Administrative and other operating
expenses (17,449) (5,759) (3,407) (6,760) (33,375)
Operating expenses (55,286) (20,660) (11,480) (18,404) (105,830)
------------------------------------ --------- --------- ---------- ------------ ----------
Profit/(loss) before tax 45,671 33,862 79,501 -6,644 152,390
------------------------------------ --------- --------- ---------- ------------ ----------
Income tax expense 7,933 (420) (8,235) 719 -3
------------------------------------ --------- --------- ---------- ------------ ----------
Profit/(loss) for the year 53,604 32,502 72,206 (5,925) 152,387
------------------------------------ --------- --------- ---------- ------------ ----------
Consolidated Financial Statements of TBC Bank Group PLC
Consolidated Balance Sheet
--------------
In thousands of GEL Mar-20 Dec-19 Mar-19
-------------------------------------------------------------------- ----------- ----------- --------------
Cash and cash equivalents 1,127,242 1,003,583 927,830
Due from other banks 34,699 33,605 29,981
Mandatory cash balances with National Bank of Georgia 1,900,285 1,591,829 1,416,082
Loans and advances to customers 13,388,126 12,349,399 10,029,320
Investment securities measured at fair value through other
comprehensive income 999,578 985,293 889,137
Bonds carried at amortized cost 1,051,603 1,022,684 661,630
Investments in finance leases 281,717 256,660 208,243
Investment properties 70,926 72,667 84,055
Current income tax prepayment 25,771 25,695 11,102
Deferred income tax asset 19,028 2,173 1,973
Other financial assets 188,196 133,736 124,093
Other assets 245,359 255,712 207,519
Premises and equipment 393,678 385,736 366,327
Right of use assets 58,182 59,693 60,951
Intangible assets 181,283 167,597 119,665
Goodwill 62,108 61,558 31,798
Investments in associates 2,792 2,654 2,601
TOTAL ASSETS 20,030,573 18,410,274 15,172,307
-------------------------------------------------------------------- ----------- ----------- --------------
LIABILITIES
Due to credit institutions 3,767,185 3,593,901 2,692,585
Customer accounts 11,209,150 10,049,324 9,166,789
Lease liabilities 66,513 59,898 58,277
Other financial liabilities 139,223 113,608 113,144
Current income tax liability 465 1,634 36
Debt Securities in issue 1,488,024 1,213,598 13,415
Deferred income tax liability 5 21,331 19,337
Provisions for liabilities and charges 25,861 23,128 18,250
Other liabilities 77,743 95,162 78,387
Subordinated debt 683,227 591,035 664,330
TOTAL LIABILITIES 17,457,396 15,762,619 12,824,550
-------------------------------------------------------------------- ----------- ----------- --------------
EQUITY
Share capital 1,682 1,682 1,672
Shares held by trust (34,451) (27,516) -
Share premium 848,459 848,459 831,773
Retained earnings 1,896,450 1,953,364 1,657,330
Group re-organisation reserve (162,167) (162,167) (162,166)
Share based payment reserve (36,177) (17,803) (43,080)
Revaluation reserve for premises 56,249 56,374 56,701
Fair value reserve (1,454) (6,476) 9,702
Cumulative currency translation reserve (3,683) (6,850) (7,295)
Net assets attributable to owners 2,564,908 2,639,067 2,344,637
-------------------------------------------------------------------- ----------- ----------- --------------
Non-controlling interest 8,269 8,588 3,119
----------- ----------- --------------
TOTAL EQUITY 2,573,177 2,647,655 2,347,756
-------------------------------------------------------------------- ----------- ----------- --------------
TOTAL LIABILITIES AND EQUITY 20,030,573 18,410,274 15,172,306
-------------------------------------------------------------------- ----------- ----------- --------------
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
In thousands of GEL 1Q'20 4Q'19 1Q'19
---------------------------------------------------------------------------------- ---------- ---------- ----------
Interest income 394,779 392,154 337,915
Interest expense (195,377) (191,891) (140,957)
Net gains from currency swaps 8,557 9,055 4,179
Net interest income 207,959 209,318 201,137
---------------------------------------------------------------------------------- ---------- ---------- ----------
Fee and commission income 73,714 86,751 60,902
Fee and commission expense (30,162) (31,907) (19,096)
Net fee and commission income 43,552 54,844 41,807
---------------------------------------------------------------------------------- ---------- ---------- ----------
Net insurance premiums earned 13,233 12,386 7,329
Net insurance claims incurred and agents' commissions (8,433) (6,727) (3,600)
---------------------------------------------------------------------------------- ---------- ---------- ----------
Net insurance premium earned after claims and acquisition costs 4,800 5,659 3,729
---------------------------------------------------------------------------------- ---------- ---------- ----------
Net income from foreign currency operations 36,928 19,026 17,409
Net gain/(losses) from foreign exchange translation (8,286) 8,980 3,627
Net gains/(losses) from derivative financial instruments (7) (4) (158)
Gains less losses from disposal of investment securities measured at fair value
through other
comprehensive income 278 20 68
Other operating income 4,894 6,276 4,159
Share of profit of associates 137 118 169
Other operating non-interest income 33,944 34,416 25,274
---------------------------------------------------------------------------------- ---------- ---------- ----------
Credit loss allowance for loans to customers (241,025) 5,148 (36,416)
Credit loss allowance for investments in finance lease (870) 615 (41)
Credit loss allowance for performance guarantees and credit related commitments (2,024) (290) 432
Credit loss allowance for other financial assets (3,234) (5,165) 2,969
Credit loss allowance for financial assets measured at fair value through other
comprehensive
income (584) (84) (39)
Operating income after credit loss allowance for impairment 42,518 304,461 238,851
---------------------------------------------------------------------------------- ---------- ---------- ----------
Losses from modifications related to COVID-19 (30,643) - -
---------------------------------------------------------------------------------- ---------- ---------- ----------
Staff costs (56,802) (68,934) (57,753)
Depreciation and amortization (15,788) (9,921) (16,169)
(Provision for)/ recovery of liabilities and charges 136 (2,632) 200
Administrative and other operating expenses (33,375) (45,637) (28,792)
Operating expenses (105,829) (127,124) (102,514)
---------------------------------------------------------------------------------- ---------- ---------- ----------
Profit/(loss) before tax (93,954) 177,337 136,337
---------------------------------------------------------------------------------- ---------- ---------- ----------
Income tax expense 36,948 (17,313) (3,015)
---------- ---------- ----------
Profit/(loss) for the period (57,006) 160,024 133,322
---------------------------------------------------------------------------------- ---------- ---------- ----------
Other comprehensive income:
---------------------------------------------------------------------------------- ---------- ---------- ----------
Items that may be reclassified subsequently to profit or loss:
---------------------------------------------------------------------------------- ---------- ---------- ----------
Movement in fair value reserve 5,022 (13,828) 1,023
---------------------------------------------------------------------------------- ---------- ---------- ----------
Exchange differences on translation to presentation currency 3,167 (483) (358)
---------------------------------------------------------------------------------- ---------- ---------- ----------
Items that will not be reclassified to profit or loss:
---------------------------------------------------------------------------------- ---------- ---------- ----------
Revaluation of premises and equipment - (539)
---------------------------------------------------------------------------------- ---------- ---------- ----------
Income tax recorded directly in other comprehensive income - -
---------------------------------------------------------------------------------- ---------- ---------- ----------
Other comprehensive income for the period 8,189 (14,311) 126
---------------------------------------------------------------------------------- ---------- ---------- ----------
Total comprehensive income for the period (48,817) 145,713 133,448
---------------------------------------------------------------------------------- ---------- ---------- ----------
Profit/(loss) attributable to:
---------------------------------------------------------------------------------- ---------- ---------- ----------
- Shareholders of TBCG (57,475) 159,416 133,237
---------------------------------------------------------------------------------- ---------- ---------- ----------
- Non-controlling interest 469 608 85
---------------------------------------------------------------------------------- ---------- ---------- ----------
Profit/(loss) for the period (57,006) 160,024 133,322
---------------------------------------------------------------------------------- ---------- ---------- ----------
Total comprehensive income is attributable to:
---------------------------------------------------------------------------------- ---------- ---------- ----------
- Shareholders of TBCG (49,267) 145,122 133,363
---------------------------------------------------------------------------------- ---------- ---------- ----------
- Non-controlling interest 450 591 85
---------------------------------------------------------------------------------- ---------- ---------- ----------
Total comprehensive income for the period (48,817) 145,713 133,448
---------------------------------------------------------------------------------- ---------- ---------- ----------
Consolidated Statements of Cash Flows
In thousands of GEL 31-Mar-20 31-Dec-19 31-Mar-19
-------------------------------------------------------------- ------------ ------------ ----------
Cash flows from/(used in) operating activities
Interest received 343,993 1,388,852 332,214
Interest paid (143,355) (647,427) (128,621)
Fees and commissions received 70,010 282,715 61,001
Fees and commissions paid (30,504) (106,526) (19,076)
Insurance premium received 22,347 76,101 15,568
Insurance claims paid (11,259) (21,787) (2,083)
Income received from trading in foreign currencies 36,907 79,287 21,588
Other operating income received 2,535 44,248 (7,403)
Staff costs paid (44,993) (216,465) (68,852)
Administrative and other operating expenses paid (41,585) (169,582) (39,165)
Income tax paid (80) (70,413) (15,619)
Cash flows from operating activities before changes in
operating assets and liabilities 204,015 639,003 149,551
-------------------------------------------------------------- ------------ ------------ ----------
Net change in operating assets
Due from other banks and mandatory cash balances with the
National Bank of Georgia (74,492) (22,009) 44,243
Loans and advances to customers (191,641) (2,013,577) (14,169)
Investment in finance lease 980 (43,719) (9)
Other financial assets (48,589) 19,612 49,780
Other assets 16,622 1,577 (6,977)
Net change in operating liabilities
Due to other banks 35,387 (1,938) 159,324
Customer accounts 163,321 272,023 (199,925)
Other financial liabilities 62,034 (8,267) 11,798
Change in finance lease liabilities (4,100) (6,453) (3,202)
Other liabilities and provision for liabilities and charges 3,275 5,816 2,039
Net cash flows (used in)/from operating activities 166,811 (1,157,932) 192,452
-------------------------------------------------------------- ------------ ------------ ----------
Cash flows from /(used in) investing activities
Acquisition of investment securities measured at fair value
through other comprehensive income (85,681) (1,781,816) (29,994)
Proceeds from disposal of investment securities measured at
fair value through other comprehensive
income 24,984 240,603 19,182
Proceeds from redemption at maturity of investment securities
measured at fair value through
other comprehensive income 57,266 1,598,536 126,739
Acquisition of subsidiaries, net of cash acquired - (39,297) (596)
Acquisition of bonds carried at amortised cost (139,561) (613,383) (119,747)
Proceeds from redemption of bonds carried at amortised cost 100,970 216,871 98,613
Acquisition of premises, equipment and i ntangible assets (44,151) (120,333) (24,729)
Proceeds from disposal of premises, equipment and i ntangible
assets 12,836 13,225 4,965
Cash acquired - 2,996 -
Proceeds from disposal of investment property 3,129 13,338 1,414
Net cash used in investing activities (70,208) (469,260) 75,847
-------------------------------------------------------------- ------------ ------------ ----------
Cash flows from /(used in) financing activities
Proceeds from other borrowed funds 1,321,226 1,819,899 267,489
Redemption of other borrowed funds (1,434,930) (1,392,897) (778,163)
Proceeds from subordinated debt - - -
Redemption of subordinated debt - (104,079) -
Proceeds from debt securities in issue 70,516 1,176,049 (14)
Redemption of debt securities in issue - (14,296) -
Dividends paid - (91,928) -
Net cash flows from financing activities (43,188) 1,392,748 (510,687)
-------------------------------------------------------------- ------------ ------------ ----------
Effect of exchange rate changes on cash and cash equivalents 74,345 71,116 3,306
-------------------------------------------------------------- ------------ ------------ ----------
Net increase in cash and cash equivalents 123,659 (163,328) (239,082)
-------------------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at the beginning of the year 1,003,583 1,166,911 1,166,911
-------------------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at the end of the year 1,127,242 1,003,583 927,829
-------------------------------------------------------------- ------------ ------------ ----------
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) 1Q'20 4Q'19 1Q'19
------------------------------------------------------ ------- ------- ----------
Profitability ratios:
ROE(1) 22.4%* 24.7% 23.8%
ROA(2) 3.3%* 3.5% 3.6%
Pre-provision ROE(3) 28.7% 24.7% 29.7%
Cost to income(4) 36.5% 41.8% 37.7%
NIM(5) 5.1% 5.3% 6.2%
Risk Adjusted NIM(6) 4.2%** 5.4% 4.8%
Loan yields(7) 10.3% 10.9% 11.5%
Risk adjusted loan yields(8) 9.4%** 11.0% 10.1%
Deposit rates(9) 3.5% 3.4% 3.3%
Yields on interest earning assets(10) 9.7% 9.9% 10.5%
Cost of funding(11) 5.0% 4.9% 4.5%
Spread(12) 5.0% 5.2% 6.0%
------------------------------------------------------ ------- ------- ----------
Asset quality and portfolio concentration:
Cost of risk without COVID-19 impact(13) 0.9%* -0.2% 1.4%
COVID-19 related cost of risk stood(14) 1.7% - -
PAR 90 to Gross Loans(15) 1.2% 1.1% 1.3%
NPLs to Gross Loans(16) 2.9% 2.7% 3.3%
NPLs coverage(17) 133.8% 91.1% 100.1%
NPLs coverage with collateral(18) 241.0% 194.2% 210.8%
Credit loss level to Gross Loans(19) 3.9% 2.5% 3.3%
Related Party Loans to Gross Loans(20) 0.1% 0.1% 0.1%
Top 10 Borrowers to Total Portfolio(21) 8.7% 8.3% 9.6%
Top 20 Borrowers to Total Portfolio(22) 12.9% 12.3% 13.5%
------------------------------------------------------ ------- ------- ----------
Capital optimisation:
Net Loans to Deposits plus IFI Funding(23) 101.8% 104.8% 90.5%
Net Stable Funding Ratio(24) 124.7% 126.7% 128.2%***
Liquidity Coverage Ratio(25) 107.6% 110.1% 117.5%
Leverage(26) 7.8x 7.0x 6.5x
CET 1 CAR (Basel III)(27) 9.1% 12.0% 13.4%
Regulatory Tier 1 CAR (Basel III)(28) 12.0% 14.6% 13.8%
Regulatory Total 1 CAR (Basel III)(29) 16.7% 19.1% 19.1%
------------------------------------------------------ ------- ------- ----------
* COVID-19 impact is related to the credit loss allowances and losses from modifications
** Risk adjusted ratios for 1Q 2020 adjusted with cost of risk
without COVID-19 effect
*** Based on internal estimates
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 credit loss
allowance equals net income attributable to owners excluding all
credit loss allowance divided by the monthly average of total
shareholders 'equity attributable to the PLC's equity holders for
the same period.
4. Cost to income ratio equals total operating expenses for the
period divided by the total revenue for the same period. (Revenue
represents the sum of net interest income, net fee and commission
income and other non-interest income).
5. Net interest margin (NIM) is net interest income divided by
monthly average interest-earning assets; annualised where
applicable. Interest-earning assets include investment securities
excluding corporate shares, net investment in finance lease, net
loans, and amounts due from credit institutions. The latter
excludes all items from cash and cash equivalents, excludes EUR
mandatory reserves with NBG that currently have negative interest,
and includes other earning items from due from banks.
6. Risk adjusted net Interest Margin is NIM minus the cost of
risk without one-offs and the currency effect.
7. Loan yields equal interest income on loans and advances to
customers divided by monthly average gross loans and advances to
customers; annualised where applicable.
8. Risk adjusted Loan yield is loan yield minus the cost of risk
without one-offs and currency effect.
9. Deposit rates equal interest expense on customer accounts
divided by monthly average total customer deposits; annualised
where applicable.
10. Yields on interest earning assets equal total interest
income divided by monthly average interest earning assets;
annualised where applicable.
11. Cost of funding equals total interest expense divided by
monthly average interest bearing liabilities; annualised where
applicable.
12. 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).
13. Cost of risk equals credit loss allowance for loans to
customers divided by monthly average gross loans and advances to
customers; annualised where applicable.
14. COVID-19 related cost of risk equals additional credit loss
allowance to cover pentation losses in relation to COVID-19,
divided by gross loan portfolio; not annualized.
15. PAR 90 to gross loans ratio equals loans for which principal
or interest repayment is overdue for more than 90 days divided by
the gross loan portfolio for the same period.
16. NPLs to gross loans equals loans with 90 days past due on
principal or interest payments, and loans with 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.
17. NPLs coverage ratio equals total credit loss allowance for
loans to customers calculated per IFRS 9 divided by the NPL
loans.
18. NPLs coverage with collateral ratio equals credit loss
allowance for loans to customers per IFRS 9 plus the total
collateral amount of NPL loans (excluding third party guarantees)
discounted at 30-50% depending on segment type divided by the NPL
loans.
19. Credit loss level to gross loans equals credit loss
allowance for loans to customers divided by the gross loan
portfolio for the same period.
20. Related party loans to total loans equals related party
loans divided by the gross loan portfolio.
21. Top 10 borrowers to total portfolio equals the total loan
amount of the top 10 borrowers divided by the gross loan
portfolio.
22. Top 20 borrowers to total portfolio equals the total loan
amount of the top 20 borrowers divided by the gross loan
portfolio.
23. Net loans to deposits plus IFI funding ratio equals net
loans divided by total deposits plus borrowings received from
international financial institutions.
24. Net stable funding ratio equals the available amount of
stable funding divided by the required amount of stable funding as
defined by NBG in line with Basel III guidelines.
25. Liquidity coverage ratio equals high-quality liquid assets
divided by the total net cash outflow amount as defined by the
NBG.
26. Leverage equals total assets to total equity.
27. Regulatory CET 1 CAR equals CET 1 capital divided by total
risk weighted assets, both calculated in accordance with the Pillar
1 requirements of the NBG Basel III standards. The reporting
started from the end of 2017. Calculations are made for TBC Bank
stand-alone, based on local standards.
28. Regulatory tier 1 CAR equals tier I capital divided by total
risk weighted assets, both calculated in accordance with the Pillar
1 requirements of the NBG Basel III standards. The reporting
started from the end of 2017. Calculations are made for TBC Bank
stand-alone, based on local standards.
29. Regulatory total CAR equals total capital divided by total
risk weighted assets, both calculated in accordance with the Pillar
1 requirements of the NBG Basel III standards. The reporting
started from the end of 2017. Calculations are made for TBC Bank
stand-alone, based on local standards.
Exchange Rates
To calculate the QoQ growth of the Balance Sheet items without
the currency exchange rate effect, we used the USD/GEL exchange
rate of 2.8677 as of 31 December 2019. For the calculations of the
YoY growth without the currency exchange rate effect, we used the
USD/GEL exchange rate of 2.6914 as of 31 March 2019. As of 31 March
2020 the USD/GEL exchange rate equalled 3.2845. For P&L items
growth calculations without currency effect, we used the average
USD/GEL exchange rate for the following periods: 1Q 2020 of 2.9267,
4Q 2019 of 2.9458, 1Q 2019 of 2.6680.
Additional Disclosures
1) Subsidiaries of TBC Bank Group PLC [17]
Ownership Country Year Industry Total Assets
/ voting of incorporation (after elimination)
% as of
31 March
2020
---------- ----------- ------------------ -------------------- ------------------------
Subsidiary Amount % in
GEL'000 TBC Group
--------------------- ---------- ----------- ------------------ -------------------- ----------- -----------
JSC TBC Bank 99.9% Georgia 1992 Banking 19,488,303 97.29%
United Financial
Corporation
JSC 98.7% Georgia 1997 Card processing 11,449 0.06%
TBC Capital
LLC 100.0% Georgia 1999 Brokerage 11, 088 0.06%
TBC Leasing
JSC 100.0% Georgia 2003 Leasing 339,331 1.69%
TBC Kredit Non-banking
LLC 100.0% Azerbaijan 1999 credit institution 27,358 0.14%
TBC Pay LLC 100.0% Georgia 2009 Processing 32,382 0.16%
Real estate
Index LLC 100.0% Georgia 2011 management 947 0.00%
TBC Invest
LLC 100.0% Israel 2011 PR and marketing 292 0.00%
JSC TBC Insurance 100.0% Georgia 2014 Insurance 54,025 0.27%
Redmed LLC 100.0% Georgia 2019 E-commerce 495 0.00%
TBC International
LLC 100.0% Georgia 2019 Asset management 446 0.00%
Swoop JSC 100.0% Georgia 2010 Retail Trade 420 0.00%
LLC Online
Tickets 55.0% Georgia 2015 Software Services 1,808 0.01%
TKT UZ 75.00% Uzbekistan 2019 Retail Trade 273 0.00%
E-commerce,
Housing and
My.ge LLC 65.0% Georgia 2008 Auto 6,6 82 0.03%
LLC Vendoo
(Geo) 100.0% Georgia 2019 Retail Leasing 3,483 0.02%
LLC Mypost 100.0% Georgia 2019 Postal Service 195 0.00%
LLC Billing
Solutions 51.00% Georgia 2019 Software Services 338 0.00%
All property.ge Real estate
LLC 90.0% Georgia 2013 management 2,247 0.01%
LLC F Solutions 100.00% Georgia 2019 Software Services 4 0.00%
Inspired LLC 51.0% Uzbekistan 2011 Processing 5,904 0.03%
LLC Vendoo (UZ
Leasing) 100.00% Uzbekistan 2019 Consumer financing 8,961 0.04%
2) Our Ecosystems
Our mission: Make life easier
Financial services with a strong focus on digital:
o Book value as of 31 March 2020 - GEL 2.4 billion
o Total assets as of 31 March 2020 - GEL 20.1 billion
o Number of customers as of 31 March 2020 - 2.7 million
Ecosystems:
o Revenue [18] - GEL 23.6 million for 1Q 2020, up by 56% YoY
o Net profit [19] - GEL 9.0 million for 1Q 2020, up by 26%
YoY
o Number of visitors [20] in March 2020 -5.9 million
o TBC Bank drives 24% of the ecosystems' revenue
Our customer-centric ecosystems
We are increasing our touchpoints with customers by creating
secure customer centric digital ecosystems, that help our customers
to satisfy their needs in the most convenient and seamless way
possible
Our ambitions are to:
o Establish new standards of customer experience
o Facilitate digital sales and engagement
o Create new revenue streams
o Collect more valuable customer data
Payments ecosystem [21]
1Q 20 1Q 19 Change
Number of payments (million) 91.5 69.0 32.6%
------ ------ -------
Payments ecosystem 66.4 46.4 43.1%
------ ------ -------
Other payments business 25.1 22.6 11.1%
------ ------ -------
Volume of payments (GEL
billion) 41.2 37.4 10.2%
------ ------ -------
Payments ecosystem 3.5 2.4 45.8%
------ ------ -------
Other payments business 37.7 35.0 7.7%
------ ------ -------
o We are Number 1 in E-com & POS transactions volume, with a
market share of above 60% [22]
o We are among the world's best with over 86% [23] of payments
being contactless
o We have a great innovation record with a lot of "first in the
region" payment innovations such as stickers, P2P, contactless cash
withdrawal, Voice payments, Apple Pay, ATM QR withdrawal and TBC
Bracelets
Our aspirations
o Annual growth rate for payments commission income of 20%
o Increase annual net revenue from GEL 109 mln (with 42%
contribution from ecosystems) in 2018 to GEL 218 mln by 2022
3) Reconciliation of reported IFRS consolidated figures with the
numbers without COVID-19 impact [24]
Item ( in thousands 1Q 2020 Description Reason for exclusion
of GEL ) from the Group's
current reported
performance
Losses from modifications (30,643) Modifications are related These costs are
related to COVID-19 to losses incurred on loans significant and
and advances to customers nonrecurring in
and investments in leases nature, and therefore
due to COVID-19 events are not indicative
and are not expected to of the Group's
recur again in normal course current performance.
of the business.
-------------------------- ---------- ------------------------------ -----------------------
COVID -19 Credit (215,701) Due to the COVID-19 pandemic These costs are
loss allowance TBC Bank Group PLC created significant and
effect an additional, front-loaded nonrecurring in
GEL 215.7 million credit nature, and therefore
loss allowances. are not indicative
of the Group's
current performance.
-------------------------- ---------- ------------------------------ -----------------------
in thousands of GEL 1Q 2020
----------------------------------------------------------- ---------------------------
Net interest income 207,959
----------------------------------------------------------- ---------------------------
Net fee and commission income 43,552
Net insurance premium earned after claims and acquisition
costs 4,800
Other operating income 33,945
----------------------------------------------------------- ---------------------------
Operating income 290,256
----------------------------------------------------------- ---------------------------
Credit loss allowance for loan to customers (30,158)
COVID-19 related credit loss allowance for loans (210,867)
Credit loss allowance for other transactions (1,878 )
---------------------------
COVID-19 related c redit loss allowance for other
transactions (4,834)
----------------------------------------------------------- ---------------------------
Reported credit loss allowance (247,737)
Credit loss allowance without COVID-19 impact (32,036)
----------------------------------------------------------- ---------------------------
Reported operating income after credit loss allowance 42,519
Operating income after credit loss allowance without
COVID-19 impact 258,220
----------------------------------------------------------- ---------------------------
Losses from modifications related to COVID-19 events (30,643)
----------------------------------------------------------- ---------------------------
Operating expenses (105,830)
----------------------------------------------------------- ---------------------------
Reported profit/(loss) before tax (93,954)
Profit/(loss) before tax without COVID-19 impact 152,390
----------------------------------------------------------- ---------------------------
Reported income Tax 36,948
----------------------------------------------------------- ---------------------------
COVID-19 related tax effect (36,951)
----------------------------------------------------------- ---------------------------
Income tax without COVID-19 impact (3)
----------------------------------------------------------- ---------------------------
Reported net profit/(loss) for the period (57,006)
Net profit/(loss) for the period without COVID-19
impact 152,387
----------------------------------------------------------- ---------------------------
Reported non-controlling interest (NCI) (469)
----------------------------------------------------------- ---------------------------
Non-controlling interest (NCI) without COVID-19 impact (67 9 )
----------------------------------------------------------- ---------------------------
Reported net profit/(loss) less NCI (57,475)
Net profit/(loss) less NCI without COVID-19 impact 151,708
----------------------------------------------------------- ---------------------------
in thousands of GEL 1Q 2020
Average reported equity attributable to the PLC's
equity holders 2,663,479
Adjustment for non-recurring items on monthly average
basis 55,623
Average equity without COVID-19 impact attributable
to the PLC's equity holders 2,719,102
Average total assets 18,692,926
------------------------------------------------------- ----------------------
1Q 2020
------------------------------------------------- --------
Return on equity (ROE) without Covid-19 impact* 22.4%
Return on assets (ROA) without Covid-19 impact* 3.3%
COVID-19 related cost of risk (not annualized) 1.7%
Cost of risk without COVID-19 impact* 0.9%
------------------------------------------------- --------
* Ratios without COVID-19 related credit loss allowances and
losses from modifications
4) Net gains from currency swaps
In 2019, the Group entered into swap agreements denominated in
foreign currencies in order to decrease its cost of funding. As the
contracts reached significant volume, the Group revisited the
presentation of effects in the statement of profit or loss.
Reclassifications from other non-interest operating income to net
interest income have been recorded for the first three quarters in
2019.
In thousands of GEL 1Q'20 4Q'19 1Q'19
Net gains from currency swaps 8,557 9,054 4,179
------ ------ ------
5) TBC Insurance
TBC Insurance is a rapidly growing, wholly owned subsidiary of
TBC Bank and is the Bank's main bancassurance partner. The company
was acquired by the Group in October 2016 and has since grown
significantly, becoming the second largest player on the P&C
and life insurance market and the largest player in the retail
segment, holding 22.1% and 42.5% market shares, ([25]) without
border motor third party liability (MTPL) insurance, respectively
in 1Q 2020, based on internal estimates.
TBC Insurance serves both individual and legal entities and
provides a broad range of insurance products covering motor,
travel, personal accident, credit life and property, business
property, liability, cargo, 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 2Q 2019, TBC Insurance entered the health insurance market
with a focus on the premium segment. Our strategy is to focus on
affluent individuals and capture the affluent market by leveraging
our strong brand name, leading digital capabilities and
cross-selling opportunities with payroll customers. Our medium-term
target is to reach 25% market share in the premium health insurance
business. In 1 Q 2020 , TBC Insurance health business line already
attracted 9,000 active clients, up by 75.0% QoQ.
In the light of the COVID-19 pandemic, TBC Insurance has created
a new life insurance product for individuals to ensure against
COVID-19 related health implications.
The total gross written premium grew by 15.6% YoY and amounted
to GEL 20.2 million. Over the same period, the net combined ratio
([26]) increased by 8.8 pp and stood at 91.5%, driven by the health
insurance business line; without the health insurance business, the
net combined ratio would have been 86.3%. As a result, net profit
for 1Q 2020 decreased by 3.8% YoY and reached GEL 1,9 million, or
GEL 2,5 million without health insurance. The QoQ decrease in net
profit was related to seasonality.
Information excluding health insurance 1Q'20 4Q'19 1Q'19
---------------------------------------- ------- ------- -------
In thousands of GEL
---------------------------------------- ------- ------- -------
Gross written premium 18,294 19,496 17,471
Net earned premium ([27]) 16,002 15,603 10,677
Net profit 2,517 2,973 2,042
Net combined ratio 86.3% 81.9% 82.8%
Information including health insurance 1Q'20 4Q'19 1Q'19
---------------------------------------- ------- ------- -------
In thousands of GEL
---------------------------------------- ------- ------- -------
Gross written premium 20,195 21,808 17,471
Net earned premium 17,317 16,367 10,677
Net profit 1,928 2,499 2,004
Net combined ratio 91.5% 86.5% 82.8%
1Q 2019 figures are provided without subsidiaries of TBC
Insurance: Swoop JSC, GE Commerce LTD, All Property LTD and 4Q 2019
and 1Q 2020 figures are given without Redmed LTD.
All figures in the above table are presented before
consolidation eliminations.
6) Main terms of shareholders' agreement with Yelo Bank
o TBC Bank and Yelo Bank (former Nikoil Bank) signed a
shareholders agreement in January 2019 to merge our Azeri
subsidiary, TBC Kredit (with total equity of USD 4.7 mln as of 31
March 2020) with Yelo Bank (with total equity of USD 37 mln as of
31 March 2020);
o The transaction is subject to regulatory approval, which is
pending;
o Our share in the joint entity will be 8.34% with a call option
to increase it to 50%+1 share within four years, based on a fixed
price formula;
o There is no capital commitment from TBC side;
o We are refreshing our approach in light of the COVID-19
pandemic and our expansion into Uzbekistan.
7) Loan book breakdown by stages according IFRS 9
Total (in million GEL)
Stage Gross % of total Allowance LLP rate
1 11,488 82.40% 133 1.2%
------- ----------- ---------- ---------
2 2,016 14.50% 252 12.5%
------- ----------- ---------- ---------
3 426 3.10% 157 36.8%
------- ----------- ---------- ---------
Total 13,930 100.00% 542 3.9%
------- ----------- ---------- ---------
Corporate (in million GEL)
Stage Gross % of total Allowance LLP rate
1 4,811 92.3% 51 1.1%
------ ----------- ---------- ---------
2 239 4.6% 3 1.0%
------ ----------- ---------- ---------
3 160 3.1% 53 32.6%
------ ----------- ---------- ---------
Total 5,210 100.0% 107 2.0%
------ ----------- ---------- ---------
MSME (in million GEL)
Stage Gross % of total Allowance LLP rate
1 2,577 79.6% 32 1.2%
------ ----------- ---------- ---------
2 540 16.7% 50 9.3%
------ ----------- ---------- ---------
3 118 3.7% 35 30.0%
------ ----------- ---------- ---------
Total 3,235 100.0% 117 3.6%
------ ----------- ---------- ---------
Consumer (in million GEL)
Stage Gross % of total Allowance LLP rate
1 1,433 72.1% 47 3.2%
------ ----------- ---------- ---------
2 482 24.3% 167 34.7%
------ ----------- ---------- ---------
3 72 3.6% 43 59.8%
------ ----------- ---------- ---------
Total 1,987 100.0% 257 12.9%
------ ----------- ---------- ---------
Mortgage (in million GEL)
Stage Gross % of total Allowance LLP rate
1 2,667 76.2% 3 0.1%
------ ----------- ---------- ---------
2 755 21.6% 32 4.3%
------ ----------- ---------- ---------
3 76 2.2% 26 34.2%
------ ----------- ---------- ---------
Total 3,498 100.0% 61 1.7%
------ ----------- ---------- ---------
[1] COVID-19 related credit loss allowances and losses from modifications.
[2] R atios without COVID-19 impact are calculated excluding
COVID-19 related credit loss allowances and losses from
modifications.
[3] For the ratio calculation all relevant group recurring costs are allocated to the Bank.
[4] Risk adjusted NIM for 1Q 2020 equals NIM adjusted with cost of risk without COVID-19 impact.
[5] International Financial Institutions.
[6] Market share figures are based on data from the National
Bank of Georgia (NBG). The NBG includes interbank loans for
calculating market share in loans.
[7] Internet or Mobile Banking penetration equals the number of
active clients of Internet or Mobile Banking divided by the total
number of active clients. Data includes Space figures.
[8] Mobile Banking penetration equals the number of active
clients of Mobile Banking divided by the number of total active
clients. Data includes Space figures.
[9] Other operating non-interest income includes n et insurance
premium earned after claims and acquisition costs.
[10] For the ratio calculation all relevant group recurring costs are allocated to the bank.
[11] 12-month growth rate
[12] Annualized
[13] Cost to income ratio calculated as ratio of operating
expenses to operating income (excl. loan impairment expense)
[14] The Board has decided not to recommend dividends at the
upcoming AGM to support capital positions
[15] Net insurance premium earned after claims and acquisition
costs can be reconciled to the standalone net insurance profit (as
shown in Annex 5 on page 33) 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.
[16] COVID-19 impact is related to the credit loss allowances
and losses from modifications
[17] TBC Bank Group PLC became the parent company of JSC TBC
Bank on 10 August 2016.
[18] Total ecosystems' revenue and net profit also includes net
fee and commission income from POS terminals and e-commerce, while
net profit also includes related operating costs
[19] Total ecosystems' revenue and net profit also includes net
fee and commission income from POS terminals and e-commerce, while
net profit also includes related operating costs
[20] Total number of visitors across all systems, some
individuals may be visitors of multiple systems. For Payme, the
number of registered customers is used
[21] Includes both retail & business payments.
[22] Source: NBG
[23] The data from Business Insider Intelligence was used for comparison purposes
[24] COVID-19 related credit loss allowances and losses from modifications
([25]) Market shares are based on internal estimates and are
given without border MTPL, which was introduced starting from March
2018 and GWP was divided evenly between 17 insurance companies.
Total non-health market share in 1Q 2020 including Border MTPL
stood at 20.8% and 34.8% respectively
([26]) Net insurance claims plus acquisition costs and
administrative expenses divided by net earned premium.
([27]) Net earned premium equals earned premium minus
reinsurer's share of earned premium.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFKZGMKNLVGGZM
(END) Dow Jones Newswires
May 20, 2020 02:00 ET (06:00 GMT)
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