TBC Bank maintains guidance after 'solid' first quarter

TBC Bank reported a “solid start” to the year on Wednesday, with first quarter net profit rising 46% year-on-year to GEL 224m (£61.04m).

The FTSE 250 company said the growth was driven by strong income generation across the board, leading to its return on equity for the quarter to rise four percentage points over the year to 24.3%.

It also reported “strong” capital and liquidity levels with its CET1, tier 1 and total capital ratios standing at 14.6%, 17.6% and 21.0% on 31 March, respectively, remaining “comfortably above” the minimum regulatory requirements by 2.4%, 3% and 1.7%.

At the end of the period, the company’s net stable funding and liquidity coverage ratios stood at 127% and 116%, respectively, comfortably above the regulatory minimum of 100%.

TBC said its Georgian banking franchise continued to strengthen its leadership position, with its loan book increasing 21% year-on-year in constant currency terms, in line with the overall growth of the banking sector, which translated into a 38.9% market share, up 0.4 percentage points over the year.

Over the same period, its deposit base increased 13% in constant currency terms, and its market share in total deposits amounted to 40.3% on 31 March, up by 0.5 percentage points year-on-year.

The company’s Uzbek business, meanwhile, continued to expand in line with its expectations.

By the end of April, the number of registered and monthly active users of TBC’s Uzbek digital banking app reached 1.6 million and 300,000, respectively, and over the same period, its retail loan and deposit books amounted to GEL 160m and GEL 193m1, respectively.

At the same time, the firm continued to expand its Uzbek payments business, Payme, with registered users reaching six million, up by 78% year-on-year, while the number of monthly active digital users totalled 1.8 million, up 64% by the end of March.

During the first quarter, net profit there was GEL 5.8m, up 93% over the prior year.

TBC said it increased its digital footprint across the group, with monthly active retail digital users totalling 2.8 million at the end of the period, up 64% year-on-year, while daily active retail digital users reached almost one million, up 71%.

Finally, the firm recorded “strong progress” in its payment business on both the issuing and acquiring side in the first quarter.

The volume of transactions conducted by TBC cards increased 31% year-on-year, while the volume of transactions at TBC Bank terminals grew 57% over the same period.

“After a strong recovery in 2021, we entered 2022 from a position of strength and continued to deliver robust financial results in the first quarter of 2022, despite instability in the region caused by the war in Ukraine,” said chief executive officer Vakhtang Butskhrikidze.

“Our strong capital generation enables the Board to recommend a final dividend for 2021 of GEL 2.16 per share at the upcoming 2022 AGM, which together with the interim dividend paid in September 2021, will equal a total dividend of GEL 3.66 per share.

“The total dividend pay-out ratio for 2021 will be 25% in line with our mid-term guidance of 25% to 35%.”

Looking ahead, Butskhrikidze said given the “proven resilience” of TBC’s business model and its “solid” financial results, coupled with a “promising” macroeconomic outlook, the company retained its medium-term guidance despite regional challenges.

“Therefore, I would like to reiterate our medium-term targets for the key financial measures - return on equity of above 20%, a cost to income ratio below 35%, a dividend pay-out ratio of 25% to 35% and annual loan growth of around 10% to 15%.”

At 0952 BST, shares in TBC Bank Group were up 0.75% at 1,352p.

Reporting by Josh White at Sharecast.com.