TBC Bank Group PLC

National Storage Mechanism | Additional information RNS Number : 8426I TBC Bank Group PLC 10 August 2023 TBC BANK GROUP PLC ("TBC Bank") 2Q AND 1H 2023 UNAUDITED CONSOLIDATED FINANCIAL RESULTS Forward-Looking Statements This document contains forward-looking statements; such forward-looking statements contain known and unknown risks, uncertainties and other important factors, which may cause the actual results, performance or achievements of TBC Bank Group PLC ("the Bank" or "the Group") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others: the achievement of anticipated levels of profitability; growth, cost and recent acquisitions; the impact of competitive pricing; the ability to obtain the necessary regulatory approvals and licenses; the impact of developments in the Georgian and Uzbek economies; the impact of COVID-19; the political and legal environment; financial risk management; and the impact of general business and global economic conditions. None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises, nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects are based are accurate or exhaustive or, in the case of the assumptions, entirely covered in the document. These forward-looking statements speak only as of the date they are made, and, subject to compliance with applicable law and regulations, the Bank expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in the document to reflect actual results, changes in assumptions or changes in factors affecting those statements. Certain financial information contained in this presentation, which is prepared on the basis of the Group's accounting policies applied consistently from year to year, has been extracted from the Group's unaudited management accounts and financial statements. The areas in which the management accounts might differ from the International Financial Reporting Standards and/or generally accepted U.S. accounting principles could be significant; you should consult your own professional advisors and/or conduct your own due diligence for a complete and detailed understanding of such differences and any implications they might have on the relevant financial information contained in this presentation. Some numerical figures included in this report have been subjected to rounding adjustments. Accordingly, the numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them. 2Q and 1H 2023 Consolidated Financial Results Conference Call Details TBC Bank Group PLC ("TBC PLC") published its unaudited consolidated financial results for the second quarter and first half of 2023 on Thursday, 10 August 2023 at 7.00 am BST. The management team will host a conference call on the day at 2.00 pm BST to discuss the results. Please click the link below to join the webinar: https://tbc.zoom.us/j/98092026368?pwd=dW0yME1wc3FzQjlQNHNWN3pqc2FwUT09 Webinar ID: 980 9202 6368 Passcode: 525944 Other international numbers are available at: https://tbc.zoom.us/u/acM1CxH4j5 The call will be held in two parts: the first part will comprise presentations, while participants will have the opportunity to ask questions during the second part. All participants will be muted throughout the webinar. Webinar Instructions: In order to ask questions, participants joining the webinar should use the "hand icon" visible at the bottom of the screen. The host will unmute those participants who have raised hands one after the other. Once the question is asked, the participant will be muted again. Call Instructions: Participants who use the dial-in number to join the webinar should dial 9 to raise their hand. Contacts Andrew Keeley Director of Investor Relations and International Media E-mail: [email protected] Tel: +44 (0) 7791 569834 Web: www.tbcbankgroup.com Anna Romelashvili Head of Investor Relations E-mail: [email protected] Tel: +(995 32) 227 27 27 Web: www.tbcbankgroup.com Investor Relations Department E-mail: [email protected] Tel: +(995 32) 227 27 27 Web: www.tbcbankgroup.com Table of Contents 2Q and 1H 2023 Unaudited Consolidated Financial Results Announcement Interim Management Report Financial Highlights Operational Highlights Letter from the Chief Executive Officer Economic Overview Unaudited Consolidated Financial Results Overview for 2Q 2023 Unaudited Consolidated Financial Results Overview for 1H 2023 Additional Disclosures 1) TBC Bank - Background 2) Consolidated Financial Statements and Key Ratios 2Q 2023 3) Consolidated Financial Statements and Key Ratios 1H 2023 4) Financial Disclosures by Business Lines 5) Market shares in Georgia 6) Loan Book Breakdown by Stages According IFRS 9 7) Glossary 8) Ratio Definitions and Exchange Rates Material Existing and Emerging Risks Statement of Directors' Responsibilities Condensed Consolidated Interim Financial Statements (Unaudited) Independent Review Report ..��....��.��.. 46 Condensed Consolidated Interim Statement of Financial Position��.��.��. 48 Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income��.��...��.. 49 Condensed Consolidated Interim Statement of Changes in Equity��....��..�� 51 Condensed Consolidated Interim Statement of Cash Flows��..��.��.. 52 Notes to the Condensed Consolidated Interim Financial Statements��..��. 53 2Q and 1H 2023 Unaudited Consolidated Financial Results 2Q 2023 net profit reached GEL 293 million, up by 25% YoY, with ROE at 28.1%. 1H 2023 net profit stood at GEL 548 million, up by 20% YoY, with ROE at 26.7%. 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. The information in this announcement, which was approved by the Board of Directors on 9 August 2023, does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2022, which contained an unmodified audit report under Section 495 of the Companies Act 2006 and which did not make any statements under Section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006. The interim management report is on pages 5 to 43 and the Condensed Consolidated Interim Financial Statements (Unaudited) are on pages 44 to 96. Financial Highlights Inome statement in thousands of GEL 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ 1H'23 1H'22 Change YoY Net interest income 399,338 366,791 303,572 31.5% 8.9% 766,129 592,191 29.4% Net fee and commission income 105,636 92,438 75,572 39.8% 14.3% 198,074 141,462 40.0% Other operating non-interest income 81,792 73,010 84,965 -3.7% 12.0% 154,802 143,248 8.1% Operating profit 586,766 532,239 464,109 26.4% 10.2% 1,119,005 876,901 27.6% Total credit loss allowance (33,934) (53,168) (37,854) -10.4% -36.2% (87,102) (51,590) 68.8% Operating expenses (203,560) (182,780) (163,635) 24.4% 11.4% (386,340) (314,585) 22.8% Profit before tax 349,272 296,291 262,620 33.0% 17.9% 645,563 510,726 26.4% Income tax expense (56,186) (41,331) (28,056) NMF 35.9% (97,517) (52,181) 86.9% Profit for the period 293,086 254,960 234,564 24.9% 15.0% 548,046 458,545 19.5% Balance sheet in thousands of GEL Jun-23 Mar-23 Jun-22 Change YoY Change QoQ Total Assets 28,878,826 27,138,985 25,983,476 11.1% 6.4% Gross Loans 19,360,689 18,321,341 17,534,515 10.4% 5.7% Customer Deposits 18,992,492 17,297,630 15,772,905 20.4% 9.8% Total Equity 4,331,529 4,238,958 3,756,763 15.3% 2.2% CET 1 Capital (Basel III) per IFRS 3,920,004 3,667,479 n/a n/a 6.9% Tier 1 Capital (Basel III) per IFRS 4,443,544 4,179,559 n/a n/a 6.3% Total Capital (Basel III) per IFRS 4,947,830 4,601,884 n/a n/a 7.5% Risk Weighted Assets (Basel III) per IFRS 21,452,808 20,767,052 n/a n/a 3.3% Number of shares (in thousands) 55,140 54,991 55,156 0.0% 0.3% Key Ratios 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ 1H'23 1H'22 Change YoY ROE 28.1% 25.2% 25.7% 2.4 pp 2.9 pp 26.7% 25.9% 0.8 pp ROE - Georgia FS 27.8% 23.7% 25.1% 2.7 pp 4.1 pp 25.7% 25.4% 0.3 pp ROA 4.2% 3.6% 3.7% 0.5 pp 0.6 pp 3.9% 3.7% 0.2 pp ROA - Georgia FS 4.5% 3.8% 3.9% 0.6 pp 0.7 pp 4.1% 4.0% 0.1 pp NIM 6.8% 6.4% 5.8% 1.0 pp 0.4 pp 6.6% 5.7% 0.9 pp Cost to income 34.7% 34.3% 35.3% -0.6 pp 0.4 pp 34.5% 35.9% -1.4 pp Cost to income - Georgia FS 30.2% 30.4% 30.3% -0.1 pp -0.2 pp 30.3% 30.5% -0.2 pp Cost of risk 0.6% 1.1% 0.9% -0.3 pp -0.5 pp 0.9% 0.6% 0.3 pp NPL to gross loans 2.1% 2.2% 2.3% -0.2 pp -0.1 pp 2.1% 2.3% -0.2 pp NPL provision coverage ratio 89.3% 92.9% 99.8% -10.5 pp -3.6 pp 89.3% 99.8% -10.5 pp Total NPL coverage ratio 153.7% 154.8% 167.5% -13.8 pp -1.1 pp 153.7% 167.5% -13.8 pp CET 1 CAR (Basel III) per IFRS 18.3% 17.7% n/a n/a 0.6 pp 18.3% n/a n/a Tier 1 CAR (Basel III) per IFRS 20.7% 20.1% n/a n/a 0.6 pp 20.7% n/a n/a Total CAR (Basel III) per IFRS 23.1% 22.2% n/a n/a 0.9 pp 23.1% n/a n/a Leverage (Times) 6.7x 6.4x 6.9x -0.2x 0.3x 6.7x 6.9x -0.2x EPS (GEL) 5.33 4.57 4.26 25.1% 16.6% 9.90 8.37 18.3% Diluted EPS (GEL) 5.25 4.50 4.14 26.8% 16.7% 9.76 8.13 20.0% BVPS (GEL) 78.21 75.91 67.61 15.7% 3.0% 78.21 67.61 15.7% Georgia FS refers to Georgian financial services. For the ratio definitions please refer to appendix 8. Operational Highlights Customer base In millions Jun'23 Mar'23 Jun'22 Change YoY Change QoQ Total number of registered users 16.1 14.8 11.4 41% 9% Georgia 3.2 3.1 2.9 10% 3% Uzbekistan 12.9 11.7 8.5 52% 10% Total MAU 5.1 5.1 3.7 38% 0% Georgia 1.6 1.5 1.4 14% 7% Uzbekistan 3.5 3.6 2.3 52% -3% Digital customers In thousands Jun'23 Mar'23 Jun'22 Change YoY Change QoQ Digital DAU Georgia 381 368 311 23% 4% Digital MAU Georgia 849 829 704 21% 2% Digital DAU/MAU Georgia 45% 44% 44% 1 pp 1 pp Digital DAU Group 1,434 1,401 1,032 39% 2% Digital MAU Group 4,295 4,432 2,959 45% -3% Digital DAU/MAU Group 33% 32% 35% -2 pp 1 pp Uzbekistan - key highlights In thousands of GEL Jun'23 Mar'23 Jun'22 Change YoY Change QoQ Gross loans 526,843 407,993 181,345 NMF 29.1% Customer accounts 457,340 374,429 235,780 94.0% 22.1% 2Q'23 1Q'23 Change QoQ 1H'23 Net profit (GEL, thousands) 12,505 12,707 -1.6% 25,212 ROE 22.1% 28.1% -6.0 pp 25.1% Georgian and Uzbek payments businesses In millions of GEL 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ 1H'23 1H'22 Change YoY Net revenue - Georgia 71.0 61.1 50.7 40.0% 16.2% 132.1 94.0 40.5% Net revenue - Uzbekistan 16.8 16.5 12.0 40.0% 1.8% 33.3 21.5 54.9% TNET - digital lifestyle platform in Georgia In millions 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ 1H'23 1H'22 Change YoY Gross merchandise value (GMV, GEL) 52.8 30.4 28.1 87.9% 73.7% 83.2 42.9 93.9% Number of transactions 4.2 3.4 3.0 40.0% 23.5% 7.6 5.9 28.8% Letter from the Chief Executive Officer[1] I am delighted to report that 2Q 2023 has seen further progress on the strong start to the year that we achieved in 1Q 2023, giving us a very strong first half of the year. Our net profit amounted to GEL 293 million, up by 25% year-on-year, while our return on equity stood at 28.1%. For 1H 2023, our net profit stood at GEL 548 million, up by 20% year-on-year, with return on equity reaching 26.7%. I am proud to see that our fintech businesses in Uzbekistan are not only growing rapidly, but are also profitable, already accounting for almost 5% of the Group's profit in 1H 2023. In light of our consistently strong business performance, I am pleased to report that the Board has declared an interim dividend of GEL 2.55 per share, payable in October 2022. Updated mid-term targets While we are pleased with the progress we are making on a number of fronts, we believe it is important to keep pushing ourselves to achieve more as we both grow our customer base and help our customers transact more, both in Georgia and Uzbekistan. As such, we have revisited and updated our mid-term guidance, providing a set of targets for 2023-25 for both the Group as a whole and our Uzbekistan operations. More details are provided later in my letter, but these include a target of above GEL1.5 billion net profit for the group in 2025, with ROE of above 23%, and at least GEL 200 million net profit and 80% loan growth in Uzbekistan. We remain committed to combining profitable growth with returning capital to shareholders as appropriate, while continuing to invest in growth. Therefore, we are maintaining our dividend payout range at 25 to 35%. This is an ambitious set of targets, but one that I personally feel confident that my excellent team at TBC can meet and, hopefully, beat. I would also like to draw your attention to our improved disclosure in our financial statements and supplementary data, as we now provide full profit and loss and balance sheet split by our Georgian financial services, Uzbekistan and other businesses. We hope this will help enable investors and analysts to better model the key pillars of our business. Economic growth remains robust, Georgian rate cuts have begun Having expanded by 7.7% in 1Q 2023, the Georgian economy has continued to show robust growth, with an annual growth rate of 7.4% in 2Q 2023. This growth appears to be broad-based, notably with a material contribution from IT service exports. At the same time, annual headline inflation decreased to 0.3% in July, while the NBG remained hawkish throughout 2023 and delivered only a 0.5 pp cut from 11% in May and 0.25 pp in August. Uzbekistan's economic performance also remains strong, with 5.7% GDP growth in the 2Q 2023 and 5.6% in the first half of 2023. Strong financial and operating performance continued in 2Q 2023 In 2Q 2023, our operating income amounted to GEL 587 million, up by 26% year-on-year, driven by both interest and non-interest income. The growth in net interest income was led by an increase in net interest margin, up by 1.0 pp year-on-year to 6.8% in 2Q 2023, as well as loan book expansion of 10%. Over the same period, net fee and commission income increased by 40% year-on-year, mainly led by our payments business, while a slight decrease in other operating income was related to the normalization of FX gains. Importantly, our positive operating jaws translated into a lower cost to income ratio of 34.7%, down by 0.6 pp year-on-year. In terms of balance sheet growth, our gross loan book increased by 10% year-on -year, or by 16% in constant currency terms, with Uzbekistan accounting for 19% of the growth. Over the same period, customer deposits increased by 20%, or by 28% in constant currency terms, with a 7% contribution from Uzbekistan. Our liquidity and capital positions remain strong. As of 30 June 2023, our CET1, Tier 1 and Total Capital ratios[2] stood at 18.3%, 20.7% and 23.1%, respectively, and remained comfortably above the minimum regulatory requirements by 3.9 pp, 3.9 pp and 3.2 pp, correspondingly. At the same time, we continued to operate with a high liquidity buffer, with our net stable funding (NSFR)2 and liquidity coverage (LCR)2 ratios standing at 130% and 125%, respectively. Our key operational metrics also demonstrated good results. Our customer base continued to grow across the group, with retail monthly active users (MAU) reaching 5.1 million by the end of June 2023, out of which our Uzbek customers accounted for around 70%, compared to 3.7 million a year ago. At the same time, the number of digital MAU reached 4.3 million at the Group level, up by 45% year-on-year, driven by our fully digital Uzbek operations. This resulted in a group DAU/MAU ratio of 33% as of June 2023, while the DAU/MAU ratio for the Georgian business stood at 45%. Dynamic growth in our Uzbek business In 2Q 2023, our Uzbek fintech businesses (TBC UZ and Payme) continued to generate positive returns with their combined net profit amounting to GEL 12.5 million for 2Q 2023, while return on equity stood at 22.1%. The net profit for 1H 2023 stood at GEL 25.2 million and return on equity was 25.1%. This was driven by net interest income, led by a strong expansion of TBC UZ's retail loan book, and net fee and commission income, related to the growth in payments transaction volumes of Payme. At the end of 2Q 2023, TBC UZ retail loans amounted to GEL 527 million, up by 29% quarter-on-quarter, which translated into an unsecured consumer / micro loan market share[3] of 12.1%. At the same time, retail deposits reached GEL 457 million, up by 22% quarter-on-quarter, accounting for 2.6% of the retail deposit market share3. Meanwhile, in 2Q 2023, Payme's payments volumes rose by more than 40% year-on-year, reaching GEL 2.4 billion. I would also like to highlight that the acquisition of the remaining 49% minority share in our Uzbek payments subsidiary, Payme, in May 2023 was an important milestone for our expansion strategy in Uzbekistan. This will allow us to capture the strong synergy potential between our payments business and our digital bank, TBC UZ, by leveraging our large user base and diverse product range. Our digital ecosystem, TNET, demonstrated outstanding results Our digital ecosystem, TNET, achieved strong growth in 2Q 2023 with gross merchandise value (GMV) reaching GEL 53 million up by 88% year-on-year and 74% quarter-on-quarter. This was driven by several business initiatives, mainly in lifestyle and e-commerce. Looking ahead - updated mid-term guidance Our strong financial results, supported by the rapid growth of our fintechs in Uzbekistan, leaves me confident that we can continue to achieve superior results for our stakeholders. Therefore, I would like to present our updated mid-term targets for 2023-2025. �� For the Group: o Digital monthly active users of more than 7 mln o Net profit CAGR of more than 15% to above GEL 1.5 bln o ROE of above 23% o Dividend pay-out ratio of 25%-35% o TNET GMV of above GEL 500 mln. �� For Uzbekistan o Digital monthly active users of more than 5 mln o Net profit of above GEL 200 mln o Loan book CAGR of at least 80%. Both myself and the whole TBC team remain firmly committed to delivering the best possible services for our customers and meeting our ambitious business targets for the group over the next 2-3 years. Economic Overview Georgia Economic growth Even though Georgia's economic expansion moderated somewhat after reaching 10.1% in 2022, the growth in the first half of 2023 was still very strong, with real GDP increasing by 7.7% in 1Q YoY and by 7.4% in 2Q, with an average of 7.6% in the first two quarters, according to Geostat's estimates. External sector The sustained negative impact of lower international commodity prices on both exports and imports noticeably affected external sector activity in 2Q 2023. Specifically, exports and imports growth moderated to 14.8% and 11.8% YoY, respectively. However, when assessing the half year dynamics, external trade remained elevated with a 19.3% YoY increase in exports and a 20.4% increase in imports in the first six months. Importantly, these commodity price dynamics particularly affected domestic commodity exports, while re-exports continued to perform strongly. At the same time, the share of IT services in Georgian exports increased notably, with migrants arriving over the past year being a major driver. On the imports side, investment goods constituted a considerable share of imports, indicating positive investment sentiment. The terms of trade remained broadly stable, supporting economic growth and the GEL. Given last year's high base effect, which was caused by the high level of immigration in 2022, the annual growth of tourism inflows adjusted for the migration impact by the NBG normalized to 34.8% in 2Q 2023, while the figure for the half year was 57.9%. At the same time, while the share of conventional tourism in total inflows has increased lately, TBC Capital estimates that the YoY growth of tourism inflows in January-June 2023, including the expenses of migrants counted as residents by the NBG, was 81.8%. Remittances also maintained a positive momentum after adjustment for Russia, expanding by 42.7%[4] YoY in 2Q and by 22.0% in the first six months of 2023. FDIs slowed down in 1Q 2023 and decreased by 13.7% YoY, although the inflow remains strong considering the record-high level of investments last year. Fiscal stimulus The fiscal stimulus, although still sizable, negatively affected growth in 2021 as the deficit amounted to around 6.3% of GDP, after an expansionary 9.3% of GDP in 2020. In 2022, the deficit was even lower, at 2.5%. According to the Ministry of Finance, fiscal consolidation is expected to take place in the coming years with deficit-to-GDP ratios of 2.8% and 2.3% in 2023 and 2024, respectively. Credit growth As of June 2023, bank credit increased by 13.5% YoY, against 13.8% growth at the end of 1Q 2023, at constant exchange rates[5]. Amid further moderation in inflation, real credit growth strengthened from 8.3% YoY in March 2023 to 12.9% at the end of June 2023. Inflation, monetary policy, and the exchange rate Due to continued robust inflows, the US$/GEL exchange rate continued to perform strongly in 2Q 2023, although this trend was affected by shifts in the US$/GEL exchange rate expectations, likely driven by low inflation and the possibility of rate cuts, triggering deposit conversions from GEL to other currencies and a minor depreciation from 2.56 in March to 2.64 at the end of July. As a result of a stronger GEL and disinflationary pass-through from international markets, CPI inflation continued to decline from 5.3% in March to 0.3% in July 2023. While the import component caused headline inflation to cool down significantly, service inflation remained relatively rigid. The NBG remained hawkish throughout 2023 and delivered only a 0.5 pp cut from 11% in May and 0.25 pp in August. The NBG also accumulated a substantial amount of reserves with a net purchase of US$ 1,058 million on the FX market in January-June 2023, taking total gross international reserves to US$ 5.1 billion. Uzbekistan Uzbekistan also demonstrated solid economic activity with 5.7%[6] growth in the second quarter and 5.6% in the first half of 2023. External trade was strong as exports of goods increased by 18.6% and imports by 18.9% YoY in the same period6. Retail loan portfolio grew by 54.7% YoY at the end of May, with mortgage loans expanding by 26.7% and non-mortgage loans by 83.9%[7]. As in Georgia, inflation and the central bank policy rate also declined in Uzbekistan, from 12.3% and 15.0% in December 2022 to 9.0% and 14.0% in June 2023, respectively7. The US$/UZS continued its slight depreciation trend, standing at 11600.2 at the end of July 20237. While depreciating against the US$, in terms of REER the UZS gained value against Uzbekistan's main trade partners' currencies. Going forward After two, successive years of double-digit growth in Georgia, recent trends indicate that economic activity should moderate somewhat but remain strong in 2023, with the IMF and the NBG projecting growth of 6% and 5%, respectively, while TBC Capital's baseline stands at 7.2%. As for Uzbekistan, the consensus projection appears to be around 5.1%. More information on the Georgian economy and financial sector can be found at www.tbccapital.ge. Unaudited Consolidated Financial Results Overview for 2Q 2023 This statement provides a summary of the unaudited business and financial trends for 2Q 2023 for TBC Bank Group plc and its subsidiaries. The quarterly financial information and trends are unaudited. TBC Bank Group PLC's financial results have been prepared in accordance with the UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA). Total assets and total liabilities for 31-Mar-2023 were restated due to replacement of IFRS4 with IFRS17. For more details, please refer to Note 2. Please note that there might be slight differences in previous periods' figures due to rounding. Net Interest Income In 2Q 2023, net interest income amounted to GEL 399.3 million, up by 31.5% and 8.9% on a YoY and QoQ basis, respectively. The YoY rise in interest income of GEL 159.1 million, or 28.8%, was mostly attributable to an increase in interest income from loans related to a rise in the respective yield by 1.6 pp, as well as an increase in the loan portfolio of GEL 1,826.2 million, or 10.4%. The QoQ increase in interest income of GEL 39.7 million, or 5.9%, was mainly related to an increase in interest income from loans related to a 0.4 pp rise in the respective loan yield, as well as an increase in the loan portfolio of GEL 1,039.3 million, or 5.7%. Interest expense increased by GEL 63.3 million, or 25.4%, on a YoY basis, mainly related to an increase in the deposit portfolio of GEL 3,219.6 million, or 20.4%, and a 1.2 pp growth in deposit costs. On a QoQ basis, interest expense increased by GEL 7.1 million, or 2.3%, primarily driven by the increased portfolio in 2Q 2023 by GEL 1,694.9 million or 9.8%, while deposit cost remained stable. In 2Q 2023, our NIM stood at 6.8%, up by 1.0 pp and 0.4 pp on YoY and QoQ basis, respectively. In thousands of GEL 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Interest income 711,820 672,150 552,719 28.8% 5.9% Interest expense (312,482) (305,359) (249,147) 25.4% 2.3% Net interest income 399,338 366,791 303,572 31.5% 8.9% NIM 6.8% 6.4% 5.8% 1.0 pp 0.4 pp * Interest expense includes net interest gains from currency swaps Non-Interest Income In 2Q 2023, total non-interest income increased by 16.8% and 13.3% on a YoY and QoQ basis, respectively, amounting to GEL 187.4 million. Net fee and commission income increased by 39.8% and 14.3% on a YoY and QoQ basis, respectively. The increase was mainly related to increased payments transactions. In 2Q 2023, our Uzbek business contributed around 18% to the Group's net fee & commission income. In 2Q 2023, net gains from FX operations decreased by 8.1% on a YoY basis, which was mainly related to a high base of 2Q 2022, while on a QoQ basis they remained broadly stable. In thousands of GEL Non-interest income 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Net fee and commission income 105,636 92,438 75,572 39.8% 14.3% Net gains from currency derivatives, foreign currency operations and translation 61,127 60,601 66,520 -8.1% 0.9% Insurance profit 6,184 6,218 6,698 -7.7% -0.5% Other operating income 14,481 6,191 11,747 23.3% NMF Total other non-interest income 187,428 165,448 160,537 16.8% 13.3% Credit Loss Allowance Credit loss allowance for loans in 2Q 2023 amounted to GEL 29.4 million. In 2Q 2023, cost of risk stood at 0.6%. In thousands of GEL 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Credit loss allowance for loans to customers (29,384) (50,040) (39,025) -24.7% -41.3% Credit loss allowance for other transactions (4,550) (3,128) 1,171 NMF 45.5% Total credit loss allowance (33,934) (53,168) (37,854) -10.4% -36.2% Operating profit after expected credit losses and non-financial asset impairment losses 552,832 479,071 426,255 29.7% 15.4% Cost of risk 0.6% 1.1% 0.9% -0.3 pp -0.5 pp Operating Expenses In 2Q 2023, our operating expenses expanded by 24.4% and 11.4% on a YoY and QoQ basis, respectively. Both the YoY and QoQ increases were mainly driven by an overall expansion of business in 2Q 2023. Importantly, our investments in the business are driving higher revenues, and our cost to income ratio declined to 34.7%, while our Georgian financial services' cost to income stood at 30.2%. In thousands of GEL Operating expenses 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Staff costs (108,724) (103,426) (90,332) 20.4% 5.1% (Allowance)/recovery of provision for liabilities and charges (50) (71) 4 NMF -29.6% Depreciation and amortisation (29,587) (28,361) (24,321) 21.7% 4.3% Administrative and other operating expenses (65,199) (50,922) (48,986) 33.1% 28.0% Total operating expenses (203,560) (182,780) (163,635) 24.4% 11.4% Cost to income 34.7% 34.3% 35.3% -0.6 pp 0.4 pp Georgian financial services' cost to income 30.2% 30.4% 30.3% -0.1 pp -0.2 pp Net Profit Our net profit increased by 24.9% and 15.0% on a YoY and QoQ basis, respectively, and amounted to GEL 293.1 million, driven by robust income generation across the board, as well as strong asset quality. The growth in effective tax rate YoY is related to the changes in tax legislation effective from 1 January 2023, according to which, the corporate income tax rate for banks increased from 15% to 20% and the potential shift to Estonian Tax Model was abolished. As a result, in 2Q 2023 our ROE stood at 28.1%, while our ROA reached 4.2%. In thousands of GEL 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Profit before tax 349,272 296,291 262,620 33.0% 17.9% Income tax expense (56,186) (41,331) (28,056) NMF 35.9% Profit for the period 293,086 254,960 234,564 24.9% 15.0% Effective tax rate 16% 14% 11% 5 pp 2 pp ROE 28.1% 25.2% 25.7% 2.4 pp 2.9 pp Georgian financial services' ROE 27.8% 23.7% 25.1% 2.7 pp 4.1 pp ROA 4.2% 3.6% 3.7% 0.5 pp 0.6 pp Georgian financial services' ROA 4.5% 3.7% 3.9% 0.6 pp 0.8 pp Funding and Liquidity As of 30 June 2023, the total liquidity coverage ratio (LCR), as defined by the NBG, was 124.5%, above the 100% limit, while the LCR in GEL and FC stood at 130.4% and 119.2%, accordingly, above the respective limits of 75% and 100%. Over the same period, the net stable funding ratio (NSFR), as defined by the NBG, stood at 129.8%, compared to the regulatory limit of 100%. Jun'23 Mar'23 Change QoQ Minimum net stable funding ratio, as defined by the NBG 100.0% 100.0% 0.0 pp Net stable funding ratio as defined by the NBG 129.8% 131.3% -1.5 pp Net loans to deposits + IFI funding 90.6% 92.9% -2.3 pp Leverage (Times) 6.7x 6.4x 0.3x Minimum total liquidity coverage ratio, as defined by the NBG 100.0% 100.0% 0.0 pp Minimum LCR in GEL, as defined by the NBG 75.0% 75.0% 0.0 pp Minimum LCR in FC, as defined by the NBG 100.0% 100.0% 0.0 pp Total liquidity coverage ratio, as defined by the NBG 124.5% 135.7% -11.2 pp LCR in GEL, as defined by the NBG 130.4% 164.2% -33.8 pp LCR in FC, as defined by the NBG 119.2% 116.5% 2.7 pp * Ratios are calculated per IFRS Regulatory Capital for Georgian Bank As of 30 June 2023, our CET1, Tier 1 and Total Capital ratios stood at 18.3%, 20.7% and 23.1%, respectively, and remained above the minimum regulatory requirements by 3.9 pp, 3.9 pp and 3.2 pp, accordingly, per IFRS. The QoQ increases in all CET1, Tier 1 and Total capital adequacy ratios were mainly driven by strong net profit generation, which was partially offset by loan book growth. In thousands of GEL Jun'23 Mar'23 Change QoQ CET 1 Capital 3,920,004 3,667,479 6.9% Tier 1 Capital 4,443,544 4,179,559 6.3% Total Capital 4,947,830 4,601,884 7.5% Total Risk-weighted Exposures 21,452,808 20,767,052 3.3% Minimum CET 1 ratio 14.4% 14.3% 0.1 pp CET 1 Capital adequacy ratio 18.3% 17.7% 0.6 pp Minimum Tier 1 ratio 16.8% 16.7% 0.1 pp Tier 1 Capital adequacy ratio 20.7% 20.1% 0.6 pp Minimum total capital adequacy ratio 19.9% 19.7% 0.2 pp Total Capital adequacy ratio 23.1% 22.2% 0.9 pp Ratios and numbers are calculated per IFRS Loan Portfolio As of 30 June 2023, the gross loan portfolio reached GEL 19,360.7 million, up by 5.7% QoQ, or by 4.4% on a constant currency basis. By the end of June 2023, our Georgian financial services portfolio increased by 5.1% on a QoQ basis and reached GEL 18,816.1 million, with 3.9% growth on a constant currency basis. Over the same period, our Uzbek portfolio increased by 29.1% and stood at GEL 526.8 million, which translated into growth of 27.4% on a constant currency basis. In thousands of GEL Gross loans and advances to customers Jun'23 Mar'23 Change QoQ Georgian financial services (Georgia FS) 18,816,052 17,896,929 5.1% Retail Georgia 6,945,911 6,739,925 3.1% GEL 4,549,932 4,421,734 2.9% FC 2,395,979 2,318,191 3.4% CIB Georgia 6,920,263 6,493,610 6.6% GEL 2,321,704 2,371,886 -2.1% FC 4,598,559 4,121,724 11.6% MSME Georgia 4,949,878 4,663,394 6.1% GEL 2,675,925 2,577,034 3.8% FC 2,273,953 2,086,360 9.0% Uzbekistan 526,843 407,993 29.1% UZS 526,843 407,993 29.1% Total gross loans and advances to customers 19,360,689 18,321,341 5.7% * Total gross loans and advances to customers include Azerbaijan loan portfolio 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Loan yields 12.8% 12.4% 11.2% 1.6 pp 0.4 pp GEL 15.4% 14.9% 15.7% -0.3 pp 0.5 pp FC 8.4% 8.2% 6.6% 1.8 pp 0.2 pp UZS 43.0% 43.6% 42.4% 0.6 pp -0.6 pp Georgia FS 12.0% 11.7% 10.9% 1.1 pp 0.3 pp GEL 15.4% 14.9% 15.7% -0.3 pp 0.5 pp FC 8.4% 8.2% 6.6% 1.8 pp 0.2 pp Uzbekistan 43.0% 43.6% 42.4% 0.6 pp -0.6 pp UZS 43.0% 43.6% 42.4% 0.6 pp -0.6 pp Total loan yields 12.8% 12.4% 11.2% 1.6 pp 0.4 pp * Total loans yields include Azerbaijan Loan Portfolio Quality Total PAR 90 and NPL to gross loans slightly improved on the Group level, mainly driven by retail Georgia sub-segment. PAR 90 Jun'23 Mar'23 Change QoQ Georgia FS 1.1% 1.2% -0.1 pp Retail Georgia 0.9% 1.1% -0.2 pp CIB Georgia 0.6% 0.8% -0.2 pp MSME Georgia 2.3% 2.2% 0.1 pp Uzbekistan 2.2% 2.0% 0.2 pp Total PAR 90 1.2% 1.3% -0.1 pp * Total PAR 90 includes Azerbaijan In thousands of GEL Non-performing Loans (NPL) Jun'23 Mar'23 Change QoQ Georgia FS 387,626 386,474 0.3% Retail Georgia 127,833 138,234 -7.5% CIB Georgia 98,374 88,830 10.7% MSME Georgia 161,419 159,410 1.3% Uzbekistan 11,646 8,176 42.4% Total non-performing loans 400,989 396,433 1.1% * Total non-performing loans include Azerbaijan NPLs NPL to gross loans Jun'23 Mar'23 Change QoQ Georgia FS 2.1% 2.2% -0.1 pp Retail Georgia 1.8% 2.1% -0.3 pp CIB Georgia 1.4% 1.4% 0.0 pp MSME Georgia 3.3% 3.4% -0.1 pp Uzbekistan 2.2% 2.0% 0.2 pp Total NPL to gross loans 2.1% 2.2% -0.1 pp * Total NPL to gross loans include Azerbaijan NPLs NPL Coverage Jun'23 Mar'23 Provision Coverage Total Coverage Provision Coverage Total Coverage Georgia FS 85.3% 150.9% 89.7% 152.1% Retail Georgia 141.8% 192.4% 143.3% 188.1% CIB Georgia 49.4% 110.5% 51.5% 114.6% MSME Georgia 62.6% 142.7% 64.6% 140.9% Uzbekistan 180.0% 180.0% 189.7% 189.7% Total NPL coverage 89.3% 153.7% 92.9% 154.8% * Total NPL coverage include Azerbaijan loans coverage ** Total NPL coverage ratio includes provision and collateral coverage Cost of Risk In terms of cost of risk (CoR), the strong performance in 2Q 2023 was mainly driven by improved actual and estimated macroeconomic parameters in Georgia, which was also reflected in the strong performance of the loan book. Our Uzbekistan business contributed 0.1 pp to the total CoR. In Uzbekistan, CoR was broadly stable on a YoY basis, while the QoQ increase was driven by the higher portfolio growth compared to 1Q 2023. Cost of risk (CoR) 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Georgia FS 0.5% 1.0% 0.9% -0.4 pp -0.5 pp Retail Georgia 0.5% 1.4% 2.4% -1.9 pp -0.9 pp CIB Georgia 0.2% -0.1% -0.1% 0.3 pp 0.3 pp MSME Georgia 0.9% 2.1% 0.1% 0.8 pp -1.2 pp Uzbekistan 6.6% 5.6% 6.3% 0.3 pp 1.0 pp Total cost of risk 0.6% 1.1% 0.9% -0.3 pp -0.5 pp * Total cost of risk includes Azerbaijan CoR Deposit Portfolio The total deposit portfolio amounted to GEL 18,992.5 million, up by 9.8% QoQ or by 8.5% on a constant currency basis. As of 30 June 2023, the Georgian financial services portfolio increased by 9.9% on a QoQ basis and reached GEL 18,639.9 million, with 8.6% growth on a constant currency basis. Over the same period, our Uzbek portfolio increased by 22.1% and stood at GEL 457.3 million, translated into growth of 20.5% on a constant currency basis. In thousands of GEL Customer accounts Jun'23 Mar'23 Change QoQ Georgia FS 18,639,911 16,958,444 9.9% Retail Georgia 6,985,211 6,455,890 8.2% GEL 2,242,193 1,941,188 15.5% FC 4,743,018 4,514,702 5.1% CIB Georgia 9,048,955 8,302,775 9.0% GEL 5,169,170 4,641,378 11.4% FC 3,879,785 3,661,397 6.0% MSME Georgia 1,638,612 1,590,496 3.0% GEL 889,834 829,378 7.3% FC 748,778 761,118 -1.6% MOF 967,133 609,283 58.7% GEL 967,133 609,283 58.7% Uzbekistan 457,340 374,429 22.1% FC 1,322 1,196 10.5% UZS 456,018 373,233 22.2% Total customer accounts 18,992,492 17,297,630 9.8% * Total customer accounts are adjusted for eliminations Deposit rates 2Q'23 1Q'23 2Q'22 Change YoY Change QoQ Deposit rates 4.9% 4.9% 3.7% 1.2 pp 0.0 pp GEL 8.3% 8.8% 7.7% 0.6 pp -0.5 pp FC 0.8% 0.7% 0.9% -0.1 pp 0.1 pp UZS 25.0% 25.4% 23.0% 2.0 pp -0.4 pp Georgian financial services 4.5% 4.5% 3.5% 1.0 pp 0.0 pp GEL 8.4% 8.8% 7.8% 0.6 pp -0.4 pp FC 0.8% 0.7% 0.9% -0.1 pp 0.1 pp Uzbek business 24.9% 25.3% 23.0% 1.9 pp -0.4 pp FC 4.7% 4.9% n/a n/a -0.2 pp UZS 25.0% 25.4% 23.0% 2.0 pp -0.4 pp Total deposit rates 4.9% 4.9% 3.7% 1.2 pp 0.0 pp * Total deposits rates include MOF deposits Unaudited Consolidated Financial Results Overview for 1H 2023 This statement provides a summary of the unaudited business and financial trends for 1H 2023 for TBC Bank Group plc and its subsidiaries. The semi-annual financial information and trends are unaudited. TBC Bank Group PLC's financial results have been prepared in accordance with the UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA). Total equity and total liabilities were restated for 30-Jun-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 1H 2022. In addition, total assets and total liabilities for 30-Jun-2022 were restated due to replacement of IFRS4 with IFRS17. For more details, please refer to Note 2. Please also note that there might be slight differences in previous periods' figures due to rounding. Net Interest Income In 1H 2023, net interest income amounted to GEL 766.1 million, up by 29.4% on a YoY basis. The YoY rise in interest income by GEL 303.5 million, or 28.1%, was mostly attributable to an increase in interest income from loans related to a GEL 1,826.2 million, or 10.4%, increase in the respective portfolio, as well as a 1.6 pp rise in the respective yield. YoY interest expense increased by GEL 129.6 million, or 26.5%, mainly related to an increase in the deposit portfolio of GEL 3,219.6 million, or 20.4%, and a 1.2 pp growth in deposit cost. In 1H 2023, our NIM stood at 6.6%, up by 0.9 pp on a YoY basis. In thousands of GEL 1H'23 1H'22 Change YoY Interest income 1,383,970 1,080,462 28.1% Interest expense (617,841) (488,271) 26.5% Net interest income 766,129 592,191 29.4% NIM 6.6% 5.7% 0.9 pp * Interest expense includes net interest gains from currency swaps Non-Interest Income Total non-interest income amounted to GEL 352.9 million in 1H 2023, increasing by 23.9% on a YoY basis. Net fee and commission income increased by 40.0% on a YoY basis, related to increased payments transactions both in Georgia and Uzbekistan. Our Uzbek business contributed 18% of the Group's net fee and commission income. In thousands of GEL Other non-interest income 1H'23 1H'22 Change YoY Net fee and commission income 198,074 141,462 40.0% Net gains from currency derivatives, foreign currency operations and translation 121,728 114,377 6.4% Insurance profit 12,402 10,965 13.1% Other operating income 20,672 17,906 15.4% Total other non-interest income 352,876 284,710 23.9% Credit Loss Allowance Credit loss allowance for loans in 1H 2023 amounted to GEL 79.4 million, which translated into a 0.9% cost of risk. In thousands of GEL 1H'23 1H'22 Change YoY Credit loss (allowance)/recovery for loans to customers (79,424) (50,522) 57.2% Credit loss allowance for other transactions (7,678) (1,068) NMF Total credit loss (allowance)/recovery (87,102) (51,590) 68.8% Operating income after expected credit and non-financial asset impairment losses 1,031,903 825,311 25.0% Cost of risk 0.9% 0.6% 0.3 pp Operating Expenses In 1H 2023, our operating expenses expanded by 22.8% on a YoY basis. In the first half of 2023, the annual increase in operating expenses was mainly driven by overall business expansion, both locally and internationally. Our investments into the business are continuing to drive strong income generation, and our cost to income ratio amounted to 34.5%, down by 1.4 pp, while our Georgian financial services' cost to income stood at 30.3%, down by 0.2 pp. In thousands of GEL Operating expenses 1H'23 1H'22 Change YoY Staff costs (212,150) (176,491) 20.2% Allowance of provision for liabilities and charges (121) (60) NMF Depreciation and amortisation (57,948) (47,332) 22.4% Administrative and other operating expenses (116,121) (90,702) 28.0% Total operating expenses (386,340) (314,585) 22.8% Cost to income 34.5% 35.9% -1.4 pp Georgian financial services' cost to income 30.3% 30.5% -0.2 pp Net Profit In 1H 2023, we delivered robust profitability and generated GEL 548.0 million in net profit, up by 19.5% YoY, driven by robust income generation across the board, as well as strong asset quality. The growth in effective tax rate YoY is related to the changes in tax legislation effective from 1 January 2023, according to which, the corporate income tax rate for banks increased from 15% to 20% and the potential shift to Estonian Tax Model was abolished. As a result, our ROE and ROA for 1H 2023 reached 26.7% and 3.9%, accordingly. In thousands of GEL 1H'23 1H'22 Change YoY Profit before tax 645,563 510,726 26.4% Income tax expense (97,517) (52,181) 86.9% Profit for the period 548,046 458,545 19.5% Effective tax rate 15% 10% 5 pp ROE 26.7% 25.9% 0.8 pp Georgian financial services' ROE 25.7% 25.4% 0.3 pp ROA 3.9% 3.7% 0.2 pp Georgian financial services' ROA 4.1% 4.0% 0.1 pp Loan Portfolio As of 30 June 2023, the gross loan portfolio reached GEL 19,360.7 million, up by 10.4% YoY or 16.4% on a constant currency basis. By the end of June 2023, the Georgian financial services' portfolio increased by 8.5% on a YoY basis and reached GEL 18,816.1 million, with 14.0% growth on a constant currency basis. Over the same period, our Uzbek portfolio increased almost three times and reached GEL 526.8 million. In thousands of GEL Gross loans and advances to customers Jun'23 Jun'22 Change YoY Georgian financial services (Georgia FS) 18,816,052 17,334,394 8.5% Retail Georgia 6,945,911 6,472,248 7.3% GEL 4,549,932 3,994,645 13.9% FC 2,395,979 2,477,603 -3.3% CIB Georgia 6,920,263 6,462,635 7.1% GEL 2,321,704 2,083,255 11.4% FC 4,598,559 4,379,380 5.0% MSME Georgia 4,949,878 4,399,511 12.5% GEL 2,675,925 2,357,652 13.5% FC 2,273,953 2,041,859 11.4% Uzbekistan 526,843 181,345 NMF UZS 526,843 181,345 NMF Total gross loans and advances to customers 19,360,689 17,534,515 10.4% * Total gross loans and advances to customers include Azerbaijan loan portfolio 1H'23 1H'22 Change YoY Loan yields 12.6% 11.0% 1.6 pp GEL 15.2% 15.6% -0.4 pp FC 8.3% 6.5% 1.8 pp UZS 43.1% 41.8% 1.3 pp Georgia FS 11.9% 10.8% 1.1 pp GEL 15.2% 15.6% -0.4 pp FC 8.3% 6.5% 1.8 pp Uzbekistan 43.1% 41.8% 1.3 pp UZS 43.1% 41.8% 1.3 pp Total loan yields 12.6% 11.0% 1.6 pp * Total loans yields include Azerbaijan Loan Portfolio Quality In 1H 2023, PAR 90 for our Georgia FS decreased by 0.3 pp YoY and stood at 1.1%. This improvement was observed across all sub-segments. Over the same period, NPL to gross loans stood at 2.1%, down by 0.2 pp. This decrease was mainly driven by the retail and MSME sub-segments. Over the same period, both PAR 90 and NPL for the Uzbek business remained broadly stable and stood at 2.2%. Par 90 Jun'23 Jun'22 Change YoY Georgia FS 1.1% 1.4% -0.3 pp Retail Georgia 0.9% 1.2% -0.3 pp CIB Georgia 0.6% 0.7% -0.1 pp MSME Georgia 2.3% 2.6% -0.3 pp Uzbekistan 2.2% 2.1% 0.1 pp Total PAR 90 1.2% 1.4% -0.2 pp * Total PAR 90 includes Azerbaijan In thousands of GEL Non-performing Loans (NPL) Jun'23 Jun'22 Change YoY Georgia FS 387,626 400,520 -3.2% Retail Georgia 127,833 147,847 -13.5% CIB Georgia 98,374 84,314 16.7% MSME Georgia 161,419 168,359 -4.1% Uzbekistan 11,646 3,849 NMF Total non-performing loans 400,989 407,855 -1.7% * Total non-performing loans include Azerbaijan NPLs NPL to gross loans Jun'23 Jun'22 Change YoY Georgia FS 2.1% 2.3% -0.2 pp Retail Georgia 1.8% 2.3% -0.5 pp CIB Georgia 1.4% 1.3% 0.1 pp MSME Georgia 3.3% 3.8% -0.5 pp Uzbekistan 2.2% 2.1% 0.1 pp Total NPL to gross loans 2.1% 2.3% -0.2 pp * Total NPL to gross loans include Azerbaijan NPLs NPL Coverage Jun'23 Jun'22 Provision Coverage Total Coverage Provision Coverage Total Coverage Georgia FS 85.3% 150.9% 97.6% 164.4% Retail Georgia 141.8% 192.4% 167.6% 218.4% CIB Georgia 49.4% 110.5% 55.4% 118.7% MSME Georgia 62.6% 142.7% 57.5% 139.9% Uzbekistan 180.0% 180.0% 142.5% 142.5% Total NPL coverage 89.3% 153.7% 99.8% 167.5% * Total NPL coverage include Azerbaijan loans coverage ** Total NPL coverage ratio includes provision and collateral coverage Cost of Risk In 1H 2023, our cost of risk amounted to 0.9%. In the first half of 2023, cost of risk (CoR) for our Georgia FS amounted to 0.8%, up by 0.2 pp on a YoY basis. The increase was mainly caused by the unusually low CoR for the MSME sub-segment in 1H 2022. Over the same period, cost of risk of our Uzbek business amounted to 6.1%, up by 0.7 pp on a YoY basis. The increase was mainly driven by the enhancement of the provisioning approach with more internal data accumulated since the launch of the Uzbek bank. Cost of risk (CoR) 1H'23 1H'22 Change YoY Georgia FS 0.8% 0.6% 0.2 pp Retail Georgia 1.0% 1.5% -0.5 pp CIB Georgia 0.0% -0.1% 0.1 pp MSME Georgia 1.5% 0.3% 1.2 pp Uzbekistan 6.1% 5.4% 0.7 pp Total cost of risk 0.9% 0.6% 0.3 pp * Total cost of risk includes Azerbaijan CoR Deposit Portfolio The total deposit portfolio amounted to GEL 18,992.5 million, increasing by 20.4% YoY or 27.5% on a constant currency basis. As of 30 June 2023, the Georgian financial services' portfolio increased by 19.4% on a YoY basis and reached GEL 18,639.9 million, with 26.0% growth on a constant currency basis. Over the same period, our Uzbek portfolio almost doubled and stood at GEL 457.3 million. In thousands of GEL Customer accounts Jun'23 Jun'22 Change YoY Georgia FS 18,639,911 15,612,455 19.4% Retail Georgia 6,985,211 5,671,380 23.2% GEL 2,242,193 1,571,547 42.7% FC 4,743,018 4,099,833 15.7% CIB Georgia 9,048,955 7,659,931 18.1% GEL 5,169,170 3,176,650 62.7% FC 3,879,785 4,483,281 -13.5% MSME Georgia 1,638,612 1,566,524 4.6% GEL 889,834 723,118 23.1% FC 748,778 843,406 -11.2% MOF 967,133 714,620 35.3% GEL 967,133 714,620 35.3% Uzbekistan 457,340 235,780 94.0% FC 1,322 - NMF UZS 456,018 235,780 93.4% Total customer accounts 18,992,492 15,772,905 20.4% * Total customer accounts are adjusted for eliminations Deposit rates 1H'23 1H'22 Change YoY Deposit rates 4.9% 3.7% 1.2 pp GEL 8.5% 7.6% 0.9 pp FC 0.7% 1.0% -0.3 pp UZS 25.1% 22.3% 2.8 pp Georgian financial services 4.5% 3.5% 1.0 pp GEL 8.6% 7.6% 1.0 pp FC 0.8% 1.0% -0.2 pp Uzbek business 25.0% 22.3% 2.7 pp FC 4.8% n/a n/a UZS 25.1% 22.3% 2.8 pp Total deposit rates 4.9% 3.7% 1.2 pp * Total deposit rates include MOF deposits Additional Disclosures 1) TBC Bank - Background TBC Bank Group PLC ("TBC PLC") is a public limited company registered in England and Wales. TBC PLC is the parent company of JSC TBC Bank ("TBC Bank") and a group of companies that principally operate in Georgia in the financial sector. TBC PLC also offers non-financial services via TNET, the largest digital ecosystem in Georgia. Since 2019, TBC PLC has expanded its operations into Uzbekistan by operating fast growing retail digital financial services in the country. TBC PLC is listed on the London Stock Exchange under the symbol TBCG and is a constituent of the FTSE 250 Index. It is also a member of the FTSE4Good Index Series and the MSCI United Kingdom Small Cap Index. TBC Bank, together with its subsidiaries, is a leading universal banking group in Georgia, with a total market share of 38.8% of customer loans and 40.1% of customer deposits as of 30 June 2023, according to data published by the National Bank of Georgia. 2) Consolidated Financial Statements and Key Ratios 2Q 2023 Consolidated Balance Sheet In thousands of GEL Jun'23 Mar'23 ASSETS Cash and cash equivalents 2,940,359 2,188,553 Due from other banks 52,550 38,738 Mandatory cash balances with National Bank of Georgia and the Central Bank of Uzbekistan 1,706,981 1,817,145 Loans and advances to customers 19,002,657 17,953,053 Investment securities measured at fair value through other comprehensive income 2,942,679 3,047,598 Bonds carried at amortised cost 87,213 30,967 Finance lease receivables 338,203 316,247 Investment properties 20,741 21,080 Current income tax prepayment 3,005 856 Deferred income tax asset 12,573 13,867 Other financial assets 266,969 258,135 Other assets 441,756 426,343 Premises and equipment 463,407 448,041 Right of use assets 117,634 112,977 Intangible assets 418,468 401,326 Goodwill 59,964 59,964 Investments in associates 3,667 4,095 TOTAL ASSETS 28,878,826 27,138,985 LIABILITIES Due to credit institutions 2,448,662 2,596,880 Customer accounts 18,992,492 17,297,630 Lease liabilities 87,324 79,989 Other financial liabilities 387,595 345,017 Current income tax liability 27,559 6,659 Debt Securities in issue 1,392,872 1,324,815 Deferred income tax liability 112,095 114,300 Provision for liabilities and charges 20,767 19,228 Other liabilities 91,839 67,026 Redemption liability 347,044 464,805 Subordinated debt 639,048 583,678 TOTAL LIABILITIES 24,547,297 22,900,027 EQUITY Share capital 1,682 1,676 Shares held by trust (75,470) (37,239) Share premium 272,930 261,719 Retained earnings 3,984,493 3,993,387 Merger reserve 402,862 402,862 Share based payment reserve 5,181 (2,815) Fair value reserve for investment securities measured at fair value through other comprehensive income 16,461 13,503 Cumulative currency translation reserve (36,804) (41,024) Other reserve (347,044) (464,805) Equity attributable to owners of the parent 4,224,291 4,127,264 Non-controlling interest 107,238 111,694 TOTAL EQUITY 4,331,529 4,238,958 TOTAL LIABILITIES AND EQUITY 28,878,826 27,138,985 Consolidated Income Statement and Other Comprehensive Income In thousands of GEL 2Q'23 1Q'23 2Q'22 Interest income 711,820 672,150 552,719 Interest expense (312,482) (305,359) (249,147) Net interest income 399,338 366,791 303,572 Fee and commission income 161,729 151,801 127,490 Fee and commission expense (56,093) (59,363) (51,918) Net fee and commission income 105,636 92,438 75,572 Insurance contract revenue 31,552 29,524 27,201 Reinsurance service result (1,517) (2,870) (614) Insurance service claims and expenses incurred (23,851) (20,436) (19,889) Insurance profit 6,184 6,218 6,698 Net gains from currency derivatives, foreign currency operations and translation 61,127 60,601 66,520 Net gains from disposal of investment securities measured at fair value through other comprehensive income 2,307 2,012 108 Other operating income 11,906 3,905 11,461 Share of profit of associates 268 274 178 Other operating non-interest income 75,608 66,792 78,267 Credit loss allowance for loans to customers (29,384) (50,040) (39,025) Credit loss (allowance)/recovery for finance lease receivable (1,059) (1,073) 883 Credit loss (allowance)/recovery for performance guarantees and credit related commitments (1,273) 337 (1,659) Credit loss (allowance)/recovery for other financial assets (2,136) (1,954) 992 Credit loss recovery/(allowance) for financial assets measured at fair value through other comprehensive income 134 (296) 1,183 Net impairment of non-financial assets (216) (142) (228) Operating income after expected credit and non-financial asset impairment losses 552,832 479,071 426,255 Losses from modifications of financial instruments - - - Staff costs (108,724) (103,426) (90,332) Depreciation and amortisation (29,587) (28,361) (24,321) (Allowance)/recovery of provision for liabilities and charges (50) (71) 4 Administrative and other operating expenses (65,199) (50,922) (48,986) Operating expenses (203,560) (182,780) (163,635) Profit before tax 349,272 296,291 262,620 Income tax expense (56,186) (41,331) (28,056) Profit for the period 293,086 254,960 234,564 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Movement in fair value reserve 2,958 8,036 (1,597) Exchange differences on translation to presentation currency 4,220 (5,166) (8,703) Other comprehensive income for the period 7,178 2,870 (10,300) Total comprehensive income for the period 300,264 257,830 224,264 Profit attributable to: - Shareholders of TBCG 288,791 248,668 233,799 - Non-controlling interest 4,295 6,292 765 Profit for the period 293,086 254,960 234,564 Total comprehensive income is attributable to: - Shareholders of TBCG 295,969 251,538 223,499 - Non-controlling interest 4,295 6,292 765 Total comprehensive income for the period 300,264 257,830 224,264 * Interest expense includes net interest gains from currency swaps Key Ratios 2Q'23 Total equity and total liabilities were restated for 30-Jun-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 2Q 2022. Average Balances The average balances included in this document are calculated as the average of the relevant monthly balances as of the end of each month. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes. Ratios (based on monthly averages, where applicable) 2Q'23 1Q'23 2Q'22 Profitability ratios: ROE1 28.1% 25.2% 25.7% ROA2 4.2% 3.6% 3.7% Cost to income3 34.7% 34.3% 35.3% NIM4 6.8% 6.4% 5.8% Loan yields5 12.8% 12.4% 11.2% Deposit rates6 4.9% 4.9% 3.7% Cost of funding7 5.6% 5.4% 4.8% Asset quality & portfolio concentration: Cost of risk9 0.6% 1.1% 0.9% PAR 90 to Gross Loans9 1.2% 1.3% 1.4% NPLs to Gross Loans10 2.1% 2.2% 2.3% NPL provision coverage11 89.3% 92.9% 99.8% Total NPL coverage12 153.7% 154.8% 167.5% Credit loss level to Gross Loans13 1.8% 2.0% 2.3% Related Party Loans to Gross Loans14 0.1% 0.1% 0.1% Top 10 Borrowers to Total Portfolio15 5.8% 6.0% 6.6% Top 20 Borrowers to Total Portfolio16 8.7% 9.0% 8.8% Capital & liquidity positions: Net Loans to Deposits plus IFI Funding17 90.6% 92.9% 97.7% Net Stable Funding Ratio 18 129.8% 131.3% n/a Liquidity Coverage Ratio 19 124.5% 135.7% n/a Leverage20 6.7x 6.4x 6.9x CET 1 CAR (Basel III)21 18.3% 17.7% n/a Tier 1 CAR (Basel III)22 20.7% 20.1% n/a Total 1 CAR (Basel III)23 23.1% 22.2% n/a * Ratios are calculated per IFRS For the ratio definitions and exchange rates, please refer to appendix 8. 3) Consolidated Financial Statements and Key Ratios 1H 2023 Consolidated Balance Sheet In thousands of GEL Jun'23 Jun'22 ASSETS Cash and cash equivalents 2,940,359 2,739,226 Due from other banks 52,550 42,552 Mandatory cash balances with National Bank of Georgia and the Central Bank of Uzbekistan 1,706,981 2,108,455 Loans and advances to customers 19,002,657 17,131,009 Investment securities measured at fair value through other comprehensive income 2,942,679 1,915,987 Bonds carried at amortised cost 87,213 27,962 Finance lease receivables 338,203 253,057 Investment properties 20,741 20,506 Current income tax prepayment 3,005 1,565 Deferred income tax asset 12,573 13,876 Other financial assets 266,969 365,207 Other assets 441,756 448,588 Premises and equipment 463,407 429,726 Right of use assets 117,634 77,039 Intangible assets 418,468 345,291 Goodwill 59,964 59,964 Investments in associates 3,667 3,466 TOTAL ASSETS 28,878,826 25,983,476 LIABILITIES Due to credit institutions 2,448,662 3,575,808 Customer accounts 18,992,492 15,772,905 Lease liabilities 87,324 70,491 Other financial liabilities 387,595 300,152 Current income tax liability 27,559 13,870 Debt Securities in issue 1,392,872 1,514,106 Deferred income tax liability 112,095 4,349 Provision for liabilities and charges 20,767 16,650 Other liabilities 91,839 69,571 Redemption liability 347,044 254,492 Subordinated debt 639,048 634,319 TOTAL LIABILITIES 24,547,297 22,226,713 EQUITY Share capital 1,682 1,682 Shares held by trust (75,470) (7,900) Share premium 272,930 283,430 Retained earnings 3,984,493 3,345,183 Merger reserve 402,862 402,862 Share based payment reserve 5,181 (12,488) Fair value reserve for investment securities measured at fair value through other comprehensive income 16,461 (25,609) Cumulative currency translation reserve (36,804) (18,023) Other reserve (347,044) (254,492) Equity attributable to owners of the parent 4,224,291 3,714,645 Non-controlling interest 107,238 42,118 TOTAL EQUITY 4,331,529 3,756,763 TOTAL LIABILITIES AND EQUITY 28,878,826 25,983,476 Consolidated Income Statement and Other Comprehensive Income In thousands of GEL 1H'23 1H'22 Interest income 1,383,970 1,080,462 Interest expense (617,841) (488,271) Net interest income 766,129 592,191 Fee and commission income 313,530 240,383 Fee and commission expense (115,456) (98,921) Net fee and commission income 198,074 141,462 Insurance contract revenue 61,076 51,369 Reinsurance service result (4,387) (3,260) Insurance service claims and expenses incurred (44,287) (37,144) Insurance profit 12,402 10,965 Net gains from currency derivatives, foreign currency operations and translation 121,728 114,377 Net gains from disposal of investment securities measured at fair value through other comprehensive income 4,319 2,225 Other operating income 15,811 15,558 Share of profit of associates 542 123 Other operating non-interest income 142,400 132,283 Credit loss allowance for loans to customers (79,424) (50,522) Credit loss allowance for finance lease receivable (2,132) (562) Credit loss allowance for performance guarantees and credit related commitments (936) (1,070) Credit loss allowance for other financial assets (4,090) (698) Credit loss (allowance)/recovery for financial assets measured at fair value through other comprehensive income (162) 1,268 Net impairment of non-financial assets (358) (6) Operating income after expected credit and non-financial asset impairment losses 1,031,903 825,311 Staff costs (212,150) (176,491) Depreciation and amortisation (57,948) (47,332) Allowance of provision for liabilities and charges (121) (60) Administrative and other operating expenses (116,121) (90,702) Operating expenses (386,340) (314,585) Profit before tax 645,563 510,726 Income tax expense (97,517) (52,181) Profit for the period 548,046 458,545 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Movement in fair value reserve 10,994 (14,747) Exchange differences on translation to presentation currency (946) (8,573) Other comprehensive income for the period 10,048 (23,320) Total comprehensive income for the period 558,094 435,225 Profit attributable to: - Shareholders of TBCG 537,459 458,465 - Non-controlling interest 10,587 80 Profit for the period 548,046 458,545 Total comprehensive income is attributable to: - Shareholders of TBCG 547,507 435,145 - Non-controlling interest 10,587 80 Total comprehensive income for the period 558,094 435,225 * Interest expense includes net interest gains from currency swaps Key Ratios 1H'23 Total equity and total liabilities were restated for 30-Jun-2022 due to a change in the accounting of option contracts. As a result, ROE and leverage ratios were restated for 1H 2022. Average Balances The average balances included in this document are calculated as the average of the relevant monthly balances as of the end of each month. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes. Ratios (based on monthly averages, where applicable) 1H'23 1H'22 Profitability ratios: ROE1 26.7% 25.9% ROA2 3.9% 3.7% Cost to income3 34.5% 35.9% NIM4 6.6% 5.7% Loan yields5 12.6% 11.0% Deposit rates6 4.9% 3.7% Cost of funding7 5.5% 4.8% Asset quality & portfolio concentration: Cost of risk9 0.9% 0.6% PAR 90 to Gross Loans9 1.2% 1.4% NPLs to Gross Loans10 2.1% 2.3% NPL provision coverage11 89.3% 99.8% Total NPL coverage12 153.7% 167.5% Credit loss level to Gross Loans13 1.8% 2.3% Related Party Loans to Gross Loans14 0.1% 0.1% Top 10 Borrowers to Total Portfolio15 5.8% 6.6% Top 20 Borrowers to Total Portfolio16 8.7% 8.8% Capital & liquidity positions: Net Loans to Deposits plus IFI Funding17 90.6% 97.7% Net Stable Funding Ratio 18 129.8% n/a Liquidity Coverage Ratio 19 124.5% n/a Leverage20 6.7x 6.9x CET 1 CAR (Basel III)21 18.3% n/a Tier 1 CAR (Basel III)22 20.7% n/a Total 1 CAR (Basel III)23 23.1% n/a * Ratios are calculated per IFRS For the ratio definitions and exchange rates, please refer to appendix 8. 4) Financial Disclosures by Business Lines The definitions of business lines are defined in Note 17. Consolidated Balance Sheet Mar'23 In thousands of GEL Georgia FS Uzbekistan Payme TBC UZ Other Group ASSETS Cash and cash equivalents 2,035,505 149,564 19,318 139,530 3,484 2,188,553 Due from other banks 38,708 - - - 30 38,738 Mandatory cash balances with National Bank of Georgia and Central Bank of Uzbekistan 1,814,320 2,825 - 2,825 - 1,817,145 Loans and advances to customers 17,550,137 392,483 - 392,483 10,433 17,953,053 Investment securities measured at fair value through other comprehensive income 3,047,597 - - - 1 3,047,598 Bonds carried at amortised cost 8,317 22,650 - 22,650 - 30,967 Finance lease receivables 285,724 24,075 - 24,075 6,448 316,247 Investment properties 21,080 - - - - 21,080 Current income tax prepayment 40 - - - 816 856 Deferred income tax asset 122 13,423 - 13,423 322 13,867 Other financial assets 274,727 2,676 5,348 - (19,268) 258,135 Other assets 413,708 12,652 1,947 10,705 (17) 426,343 Premises and equipment 431,318 12,491 2,219 10,272 4,232 448,041 Right of use assets 103,208 7,850 1,789 6,061 1,919 112,977 Intangible assets 321,687 22,201 1,052 21,149 57,438 401,326 Goodwill 28,197 1,912 - 1,912 29,855 59,964 Investments in associates 18,711 - - - (14,616) 4,095 TOTAL ASSETS 26,393,106 664,802 31,673 645,085 81,077 27,138,985 LIABILITIES Due to credit institutions 2,530,753 19,877 - 19,877 46,250 2,596,880 Customer accounts 16,958,443 374,429 - 383,713 (35,242) 17,297,630 Lease liabilities 69,988 8,520 1,784 6,736 1,481 79,989 Other financial liabilities 726,484 19,065 18,467 598 (400,532) 345,017 Current income tax liability 6,626 - - - 33 6,659 Debt Securities in issue 1,159,541 - - - 165,274 1,324,815 Deferred income tax liability 114,280 - - - 20 114,300 Provisions for liabilities and charges 19,228 - - - - 19,228 Other liabilities 51,335 17,695 1,145 19,222 (2,004) 67,026 Redemption liability - - - - 464,805 464,805 Subordinated debt 583,678 - - - - 583,678 TOTAL LIABILITIES 22,220,356 439,586 21,396 430,146 240,085 22,900,027 EQUITY Share capital 28,498 277,189 495 276,694 (304,011) 1,676 Shares held by trust - - - - (37,239) (37,239) Share premium 521,190 27,860 - 27,860 (287,331) 261,719 Retained earnings 3,667,049 (51,549) 14,059 (65,608) 377,887 3,993,387 Merger reserve - 67 67 - 402,795 402,862 Share based payment reserve (57,660) - - - 54,845 (2,815) Fair value reserve for investment securities measured at fair value through other comprehensive income 13,498 211 211 - (206) 13,503 Cumulative currency translation reserve - (28,562) (4,555) (24,007) (12,462) (41,024) Other reserve - - - - (464,805) (464,805) Net assets attributable to owners 4,172,575 225,216 10,277 214,939 (270,527) 4,127,264 Non-controlling interest 175 - - - 111,519 111,694 TOTAL EQUITY 4,172,750 225,216 10,277 214,939 (159,008) 4,238,958 TOTAL LIABILITIES AND EQUITY 26,393,106 664,802 31,673 645,085 81,077 27,138,985 * Includes intergroup eliminations ** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations Consolidated Balance Sheet Jun'23 In thousands of GEL Georgia FS Uzbekistan Payme TBC UZ Other Group ASSETS Cash and cash equivalents 2,866,361 68,577 3,976 64,828 5,421 2,940,359 Due from other banks 52,523 - - - 27 52,550 Mandatory cash balances with National Bank of Georgia and Central Bank of Uzbekistan 1,703,444 3,537 - 3,537 - 1,706,981 Loans and advances to customers 18,485,251 505,878 - 505,878 11,528 19,002,657 Investment securities measured at fair value through other comprehensive income 2,942,679 - - - - 2,942,679 Bonds carried at amortised cost 9,382 77,831 - 77,831 - 87,213 Finance lease receivables 305,761 25,366 - 25,366 7,076 338,203 Investment properties 20,741 - - - - 20,741 Current income tax prepayment 2,508 - - - 497 3,005 Deferred income tax asset 122 11,993 - 11,993 458 12,573 Other financial assets 282,803 1,850 5,482 - (17,684) 266,969 Other assets 424,040 16,715 2,056 14,659 1,001 441,756 Premises and equipment 446,146 12,803 2,450 10,353 4,458 463,407 Right of use assets 108,579 7,210 1,614 5,596 1,845 117,634 Intangible assets 329,917 22,916 2,182 20,734 65,635 418,468 Goodwill 28,197 1,912 - 1,912 29,855 59,964 Investments in associates 18,284 - - - (14,617) 3,667 TOTAL ASSETS 28,026,738 756,588 17,760 742,687 95,500 28,878,826 LIABILITIES Due to credit institutions 2,417,293 29,083 - 29,083 2,286 2,448,662 Customer accounts 18,639,911 457,340 - 457,567 (104,759) 18,992,492 Lease liabilities 77,869 8,018 1,677 6,341 1,437 87,324 Other financial liabilities 369,419 2,389 1,790 599 15,787 387,595 Current income tax liability 27,523 - - - 36 27,559 Debt Securities in issue 1,223,719 - - - 169,153 1,392,872 Deferred income tax liability 112,071 - - - 24 112,095 Provisions for liabilities and charges 20,767 - - - - 20,767 Other liabilities 58,215 28,652 3,300 28,984 4,972 91,839 Redemption liability - - - - 347,044 347,044 Subordinated debt 639,048 - - - - 639,048 TOTAL LIABILITIES 23,585,835 525,482 6,767 522,574 435,980 24,547,297 EQUITY - Share capital 28,498 277,189 495 276,694 (304,005) 1,682 Shares held by trust - - - - (75,470) (75,470) Share premium 521,190 27,860 - 27,860 (276,120) 272,930 Retained earnings 3,965,894 (48,584) 14,820 (63,404) 67,183 3,984,493 Merger reserve - 67 67 - 402,795 402,862 Share based payment reserve (91,320) - - - 96,501 5,181 Fair value reserve for investment securities measured at fair value through other comprehensive income 16,456 211 211 - (206) 16,461 Cumulative currency translation reserve - (25,637) (4,600) (21,037) (11,167) (36,804) Other reserve - - - - (347,044) (347,044) Net assets attributable to owners 4,440,718 231,106 10,993 220,113 (447,533) 4,224,291 Non-controlling interest 185 - - - 107,053 107,238 TOTAL EQUITY 4,440,903 231,106 10,993 220,113 (340,480) 4,331,529 TOTAL LIABILITIES AND EQUITY 28,026,738 756,588 17,760 742,687 95,500 28,878,826 * Includes intergroup eliminations ** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations Consolidated Income Statement and Other Comprehensive Income 1Q'23 In thousands of GEL Georgia FS Uzbekistan Payme TBC UZ Other *** Group Interest income 624,316 46,266 - 46,266 1,568 672,150 Interest expense (280,005) (23,138) (90) (23,048) (2,216) (305,359) Net interest income 344,311 23,128 (90) 23,218 (648) 366,791 Fee and commission income 129,740 20,863 18,261 5,309 1,198 151,801 Fee and commission expense (55,319) (4,005) (1,649) (5,063) (39) (59,363) Net fee and commission income 74,421 16,858 16,612 246 1,159 92,438 Insurance profit 6,398 - - - (180) 6,218 Net gains from currency derivatives, foreign currency operations and translation 62,914 68 2 66 (2,381) 60,601 Net gains from disposal of investment securities measured at fair value through other comprehensive income 2,012 - - - - 2,012 Other operating income 2,877 28 1 27 1,000 3,905 Share of profit of associates 274 - - - - 274 Other operating non-interest income 74,475 96 3 93 (1,561) 73,010 Credit loss allowance for loans to customers (45,198) (5,241) - (5,241) 399 (50,040) Credit loss allowance for finance lease receivable (786) (335) - (335) 48 (1,073) Credit loss recovery for performance guarantees and credit related commitments 337 - - - - 337 Credit loss allowance for other financial assets (1,680) (274) (179) (95) - (1,954) Credit loss allowance for financial assets measured at fair value through other comprehensive income (296) - - - - (296) Net recovery of non-financial assets 312 - - - (454) (142) Operating income after expected credit and non-financial asset impairment losses 445,896 34,232 16,346 17,886 (1,057) 479,071 Staff costs (86,607) (8,990) (2,217) (6,773) (7,829) (103,426) Depreciation and amortisation (24,587) (2,110) (248) (1,862) (1,664) (28,361) Allowance of provision for liabilities and charges (71) - - - - (71) Administrative and other operating expenses (38,803) (10,114) (2,279) (7,835) (2,005) (50,922) Operating expenses (150,068) (21,214) (4,744) (16,470) (11,498) (182,780) Profit before tax 295,828 13,018 11,602 1,416 (12,555) 296,291 Income tax expense (41,016) (311) - (311) (4) (41,331) Profit for the period 254,812 12,707 11,602 1,105 (12,559) 254,960 Profit attributable to: - Shareholders of TBCG 254,801 12,707 11,602 1,105 (18,840) 248,668 - Non-controlling interest 11 - - - 6,281 6,292 Profit for the period 254,812 12,707 11,602 1,105 (12,559) 254,960 * Interest expense includes net interest gains from currency swaps ** Includes intergroup eliminations *** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations Consolidated Income Statement and Other Comprehensive Income 2Q'23 In thousands of GEL Georgia FS Uzbekistan Payme TBC UZ Other *** Group Interest income 653,209 56,989 - 56,989 1,622 711,820 Interest expense (285,241) (27,228) (83) (27,145) (13) (312,482) Net interest income 367,968 29,761 (83) 29,844 1,609 399,338 Fee and commission income 136,481 24,978 18,451 17,204 270 161,729 Fee and commission expense (49,501) (6,467) (1,553) (15,591) (125) (56,093) Net fee and commission income 86,980 18,511 16,898 1,613 145 105,636 Insurance profit 6,362 - - - (178) 6,184 Net gains from currency derivatives, foreign currency operations and translation 70,405 15 1 14 (9,293) 61,127 Net gains from disposal of investment securities measured at fair value through other comprehensive income 2,307 - - - - 2,307 Other operating income 9,037 4 - 4 2,865 11,906 Share of profit of associates 268 - - - - 268 Other operating non-interest income 88,379 19 1 18 (6,606) 81,792 Credit loss allowance for loans to customers (22,054) (7,641) - (7,641) 311 (29,384) Credit loss allowance for finance lease receivable (473) (586) - (586) - (1,059) Credit loss allowance for performance guarantees and credit related commitments (1,273) - - - - (1,273) Credit loss allowance for other financial assets (2,030) (106) (84) (22) - (2,136) Credit loss recovery for financial assets measured at fair value through other comprehensive income 134 - - - - 134 Net impairment of non-financial assets (121) - - - (95) (216) Operating income after expected credit and non-financial asset impairment losses 517,510 39,958 16,732 23,226 (4,636) 552,832 Staff costs (90,862) (9,310) (2,767) (6,543) (8,552) (108,724) Depreciation and amortisation (25,706) (2,120) (237) (1,883) (1,761) (29,587) Allowance of provision for liabilities and charges (50) - - - - (50) Administrative and other operating expenses (47,488) (14,711) (3,427) (11,284) (3,000) (65,199) Operating expenses (164,106) (26,141) (6,431) (19,710) (13,313) (203,560) Profit before tax 353,404 13,817 10,301 3,516 (17,949) 349,272 Income tax (expense)/credit (54,942) (1,312) - (1,312) 68 (56,186) Profit for the period 298,462 12,505 10,301 2,204 (17,881) 293,086 Profit attributable to: - Shareholders of TBCG 298,452 12,505 10,301 2,204 (22,166) 288,791 - Non-controlling interest 10 - - - 4,285 4,295 Profit for the period 298,462 12,505 10,301 2,204 (17,881) 293,086 * Interest expense includes net interest gains from currency swaps ** Includes intergroup eliminations *** Includes Azerbaijan, TNET, other subsidiaries and intra-group eliminations Consolidated Key Ratios by Business Lines 1Q'23 Georgia FS Uzbekistan Group Profitability ratios: ROE1 23.7% 28.1% 25.2% ROA2 3.7% 8.9% 3.6% Cost to income3 30.4% 52.9% 34.3% NIM4 6.1% 19.7% 6.4% Loan yields5 11.7% 43.6% 12.4% Deposit rates6 4.5% 25.3% 4.9% Cost of funding7 5.1% 24.9% 5.4% Asset quality & portfolio concentration: Cost of risk8 1.0% 5.6% 1.1% PAR 90 to Gross Loans9 1.2% 2.0% 1.3% NPLs to Gross Loans10 2.2% 2.0% 2.2% NPL provision coverage11 89.7% 189.7% 92.9% Total NPL coverage12 152.1% 189.7% 154.8% 2Q'23 Georgia FS Uzbekistan Group Profitability ratios: ROE1 27.8% 22.1% 28.1% ROA2 4.5% 7.1% 4.2% Cost to income3 30.2% 54.1% 34.7% NIM4 6.5% 20.1% 6.8% Loan yields5 12.0% 43.0% 12.8% Deposit rates6 4.5% 24.9% 4.9% Cost of funding7 5.2% 24.5% 5.6% Asset quality & portfolio concentration: Cost of risk8 0.5% 6.6% 0.6% PAR 90 to Gross Loans9 1.1% 2.2% 1.2% NPLs to Gross Loans10 2.1% 2.2% 2.1% NPL provision coverage11 85.3% 180.0% 89.3% Total NPL coverage12 150.9% 180.0% 153.7% 1H'23 Georgia FS Uzbekistan Group Profitability ratios: ROE1 25.7% 25.1% 26.70% ROA2 4.1% 8.0% 3.9% Cost to income3 30.3% 53.6% 34.5% NIM4 6.3% 20.1% 6.6% Loan yields5 11.9% 43.1% 12.6% Deposit rates6 4.5% 25.0% 4.9% Cost of funding7 5.2% 24.6% 5.5% Asset quality & portfolio concentration: Cost of risk8 0.8% 6.1% 0.9% PAR 90 to Gross Loans9 1.1% 2.2% 1.2% NPLs to Gross Loans10 2.1% 2.2% 2.1% NPL provision coverage11 85.3% 180.0% 89.3% Total NPL coverage12 150.9% 180.0% 153.7% For the ratio definitions and exchange rates, please refer to appendix 8. 5) Market shares[8] in Georgia Market shares Jun'23 Mar'23 Jun'22 Change YoY Change QoQ Total loans 38.8% 39.1% 39.1% -0.3 pp -0.3 pp Individual loans 38.3% 38.4% 38.5% -0.2 pp -0.1 pp Legal entities loans 39.5% 39.8% 39.7% -0.2 pp -0.3 pp Total deposits 40.1% 39.3% 40.7% -0.6 pp 0.8 pp Individual deposits 37.9% 37.7% 39.2% -1.3 pp 0.2 pp Legal entities deposits 42.4% 41.1% 42.4% 0.0 pp 1.3 pp 6) Loan Book Breakdown by Stages According IFRS 9 In millions of GEL Total loans Jun'23 Mar'23 Jun'22 Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions 1 17,687 99 16,470 101 15,480 109 2 1,279 100 1,461 104 1,610 114 3 395 159 390 163 445 181 Total 19,361 358 18,321 368 17,535 404 Georgia FS Retail Jun'23 Mar'23 Jun'22 Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions 1 6,249 48 5,953 52 5,647 60 2 584 64 664 69 661 90 3 113 71 123 77 163 93 Total 6,946 183 6,740 198 6,471 243 Georgia FS CIB Jun'23 Mar'23 Jun'22 Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions 1 6,474 18 5,980 18 5,777 21 2 346 0 424 1 602 1 3 100 30 90 27 84 25 Total 6,920 48 6,494 46 6,463 47 Georgia FS MSME Jun'23 Mar'23 Jun'22 Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions 1 4,463 24 4,145 24 3,874 25 2 320 28 352 29 337 21 3 167 48 166 50 189 56 Total 4,950 100 4,663 103 4,400 102 Uzbekistan Jun'23 Mar'23 Jun'22 Stage Gross loans Loan loss provisions Gross loans Loan loss provisions Gross loans Loan loss provisions 1 492 8 384 7 171 3 2 22 4 15 3 6 0 3 13 9 9 6 4 2 Total 527 21 408 16 181 5 * Total loans include Azerbaijan loan portfolio 7) Glossary Terminology Definition BVPS Book value per share. Digital daily active users (Digital DAU) The number of retail digital users, who logged into our digital channels at least once per day. Digital monthly active users (Digital MAU) The number of retail digital users, who logged into our digital channels at least once a month. EPS Earnings per share. Gross merchandise value (GMV) GMV equals the total value of sales over the given period, including auctions through housing and auto platforms, as well as listing fees. IFI Internatiodnal Financial Institutions. Jaw ratio Difference between growth rate of operating income and expenses. NBG National Bank of Georgia. Net combined ratio Net insurance claims plus acquisition costs and administrative expenses divided by net earned premium. 8) Ratio Definitions and Exchange Rates Ratio definitions 1. Return on average total equity (ROE) equals net profit attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; annualised where applicable. 2. Return on average total assets (ROA) equals net profit of the period divided by monthly average total assets for the same period; annualised where applicable. 3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income). 4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions. 5. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers; annualised where applicable. 6. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits; annualised where applicable. 7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest-bearing liabilities; annualised where applicable. 8. Cost of risk equals credit loss allowance for loans to customers divided by monthly average gross loans and advances to customers; annualised where applicable. 9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period. 10. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period. 11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans. 12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans. 13. Credit loss level to gross loans equals credit loss allowance for loans to customers divided by the gross loan portfolio for the same period. 14. Related party loans to total loans equals related party loans divided by the gross loan portfolio. 15. Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided by the gross loan portfolio. 16. Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided by the gross loan portfolio. 17. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions. 18. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank standalone, based on IFRS. 19. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank standalone, based on IFRS. 20. Leverage equals total assets to total equity. 21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on IFRS. 22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on IFRS. 23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on IFRS. Exchange Rates To calculate the QoQ growth of the Balance Sheet items without the currency exchange rate effect, we used the US$/GEL exchange rate of 2.5604 as of 31 March 2023. To calculate the YoY growth without the currency exchange rate effect, we used the US$/GEL exchange rate of 2.9289 as of 30 June 2022. As of 30 June 2023, the US$/GEL exchange rate equalled 2.6177. For P&L items growth calculations without the currency effect, we used the average US$/GEL exchange rate for the following periods: 2Q 2023 of 2.5586, 1Q 2023 of 2.6372, 2Q 2022 of 2.9967, 1H 2023 of 2.5975, 1H 2022 of 3.0548. Material Existing and Emerging Risks Risk Management is a critical pillar of the Group's strategy. It is essential to identify emerging risks and uncertainties that could adversely impact the Group's performance, financial condition, and prospects. This section analyses the material principal and emerging risks and uncertainties that the Group faces. However, we cannot exclude the possibility of the Group's performance being affected by risks and uncertainties other than those listed below. Since there remains some uncertainty regarding the war in Ukraine, its potential impact is summarised as a separate risk in the emerging risks section. In this section, the main focus is on the key subsidiary of the Group - JSC TBC Bank (the Bank), the bank based in Georgia - unless there is a reference to the Group itself. PRINCIPAL RISKS AND UNCERTAINTIES 1. Credit risk is an integral part of the Group's business activities. Risk description Credit risk is the greatest material risk faced by the Group, given that the Group is principally engaged in traditional lending activities. The Group's customers include legal entities as well as individual borrowers. Due to the high level of dollarisation in Georgia's financial sector, currency-induced credit risk is a component of credit risk, which relates to risks arising from foreign currency-denominated loans to unhedged borrowers in the Group's portfolio. Credit risk also includes concentration risk, which is the risk related to credit portfolio quality deterioration as a result of large exposures to single borrowers or groups of connected borrowers, or loan concentration in certain economic industries. Losses may be further aggravated by unfavourable macroeconomic conditions. These risks are described in more detail as separate principal risks. In addition, credit risk also includes counterparty credit risk, as the Group engages in various financial transactions with both banking and non-banking financial institutions. Risk mitigation A comprehensive credit risk assessment framework is in place with a clear division of duties among the parties involved in the credit analysis and approval process. The credit assessment process differs by segment and product type to reflect the diverse nature of these asset classes. The rules for manual and automated underwriting are developed and validated by units within the risk function, which are independent of the origination and business development units. The Group uses a robust monitoring system to react promptly to macro and micro developments, identify weaknesses in the credit portfolio, and outline solutions to make informed risk management decisions. Monitoring processes are tailored to the specifics of individual segments, encompassing individual credit exposures, overall portfolio performance, and external trends that may impact the portfolio's risk profile. Additionally, the Group uses a comprehensive portfolio supervision system to identify weakened credit exposures and take prompt, early remedial actions when necessary. The Group's credit portfolio is highly diversified across customer types, product types and industry segments, which minimises credit risk at the Group level. As of 30 June 2023, the retail segment represented 38.7% of the total portfolio, which was comprised of 58.8% mortgage and 41.2% non-mortgage exposures. No single business sector represented more than 8% of the total portfolio as of 30 June 2023. Collateral represents the most significant credit risk mitigation tool for the Group, making effective collateral management one of the key risk management components. The Group has a largely collateralised portfolio in all its segments, with real estate representing a major share of collateral. As of 30 June 2023, 76.5% of the Group's portfolio was secured by cash, real estate or gold. To manage counterparty risk, the Bank internally defines limits on an individual basis for each counterparty, by limiting the expected loss from both treasury and trade finance exposures. As of 30 June 2023, the Bank's interbank exposure was concentrated among high "A" - grade credit rating' banks, assigned by external agencies, such as Fitch, Moody's and Standard and Poor's. Additionally, the Bank actively performs stress testing and scenario analysis in order to check the resilience of borrowers under various stress conditions. 2. The Bank faces currency-induced credit risk due to the high share of loans denominated in foreign currencies in the Bank's portfolio. Risk description While the Group's banking business in Uzbekistan is focused on lending in the local currency, the banking business in Georgia has a significant portfolio in foreign currencies. A potential material GEL depreciation is one of the most significant risks that could negatively impact portfolio quality. As of 30 June 2023, 50.7% of the Group's total gross loans and advances to customers (before provision for loan impairment) was denominated in foreign currencies. The income of many customers is directly linked to foreign currencies via remittances, tourism or exports. Nevertheless, customers may not be protected against significant fluctuations in the GEL exchange rate against the currency of the loan. The GEL remains in free float and is exposed to a range of internal and external factors that, in some circumstances, could lead to its depreciation. In the first half of 2023, the average US$/GEL currency exchange rate strengthened by 3.2% year-on-year. Risk mitigation Particular attention is paid to currency-induced credit risk, due to the high share of loans denominated in foreign currencies in the Bank's portfolio. The vulnerability to exchange rate depreciation is monitored in order to promptly implement an action plan, as and when needed. The ability to withstand a certain amount of exchange rate depreciation is incorporated into the credit underwriting standards, which also include significant currency depreciation buffers for unhedged borrowers. In addition, the Bank holds significant capital against currency-induced credit risk. Given the experience and knowledge built through recent currency volatility, the Bank is in a good position to promptly mitigate exchange rate depreciation risks. In January 2019, Georgian government authorities continued their efforts to reduce the economy's dependence on foreign currency financing by increasing the cap to GEL 200,000, under which loans must be disbursed in the local currency. In addition, under the NBG's responsible lending regulations, unhedged retail borrowers are required to have highly conservative Payment-to-Income (PTI) and Loan-to-Value (LTV) thresholds. The Bank has set a strategy to decrease the share of foreign currency loans in its total portfolio. Annual targets have been defined in the medium-term strategy, gradually decreasing the share of foreign currency. The Assets and Liabilities Committee (ALCO) is closely monitoring the achievement of these targets. 3. The Bank is exposed to concentration risk. Risk description The Bank has large individual exposures to single-name borrowers whose potential default would entail increased credit losses and higher impairment charges. The Bank's portfolio is well diversified across sectors, resulting in only a moderate vulnerability to sector concentration risks. However, should exposure to common risk drivers increase, the risks are expected to amplify accordingly. At a consolidated level, the Group's maximum exposure to the single largest industry (real estate) stood at 8% of the loan portfolio as of 30 June 2023. At the same time, exposure to the 20 largest borrowers stood at 8.7% of the loan portfolio. Risk mitigation The Bank constantly monitors the concentrations of its exposure to single counterparties, as well as sectors and common risk drivers, and introduces limits for risk mitigation. As part of its risk appetite framework, the Bank limits both single-name and sector concentrations. Stringent monitoring tools are in place to ensure compliance with the established limits. Moreover, the Bank has dedicated restructuring teams to manage borrowers who face financial difficulties. In addition, the concentration buffer under Pillar 2 helps to ensure that the Bank remains adequately capitalised to mitigate concentration risks. 4. The Group's performance may be compromised by adverse developments in the economic environment. Risk description A potential slowdown in economic growth in Georgia will likely have an adverse impact on the repayment capacity of borrowers, restraining their future investment and expansion plans. Negative macroeconomic developments could compromise the Group's performance in various ways, such as exchange rate depreciation, a spike in interest rates, rising unemployment, a decrease in household disposable income, falling property prices, worsening loan collateralisation, or falling debt service capabilities of companies as a result of decreasing sales. Potential political and economic instability in Georgia's neighboring countries and main trading/economic partners could negatively affect its economic outlook through worsening current and financial accounts in the balance of payments (e.g. decreased exports, tourism inflows, remittances and foreign direct investments). After two years of consecutive double-digit growth, Georgian economy again expanded by a very strong 7.6% in the first two quarters of 2023. The migration effect caused by Russian invasion of Ukraine appears to be enduring, while conventional tourism is recovering. Despite price-driven reductions in commodity exports and imports, foreign trade and FDIs also remained resilient. Disinflationary movement in consumer price dynamics, mainly driven by the imported component, led the annual CPI growth to decelerate, standing at 0.3% in July 2023. Strong inflows enabled the GEL to continue appreciating, however, this trend was affected by the shifts in the USD/GEL exchange rate expectations likely driven by the low inflation and possible rate cuts, triggering deposit conversions from GEL to FX and causing rate volatility in May and June. The NBG remained hawkish throughout 2023 and delivered only a 0.5 pp cut from 11% in May and 0.25 pp in August. Also, the central bank accumulated a substantial amount of reserves with net purchase of 1,058 USD mln in January-June 2023. Uzbekistan, the second country of Group operations, also demonstrated solid economic activity with 5.7% growth in the second quarter and 5.6% in the 1H of 2023. As in Georgia, inflation and central bank policy rate have also declined in Uzbekistan, from 12.3% and 15% in December to 9% and 14% in June, respectively. The USD/UZS maintained its slight depreciation trend standing at 11600.2 at the end of July 2023. While depreciating against the USD, in terms of REER against Uzbekistan's main trade partners' currencies, the UZS has gained a value. Risk mitigation To decrease its vulnerability to economic cycles, the Group identifies cyclical industries and proactively manages its underwriting approach and clients within its risk appetite framework. The Group has in place a macroeconomic monitoring process that relies on close, recurrent observation of the economic developments in Georgia and neighbouring countries to identify early warning signals indicating imminent economic risks. This system allows the Group to promptly assess significant economic and political events and analyse their implications for the Group's performance. These implications are duly translated into specific action plans with regards to reviewing underwriting standards, risk appetite metrics or limits, including the limits for each of the most vulnerable industries. Additionally, the stress testing and scenario analysis conducted during the credit review and portfolio-monitoring processes enables the Group to evaluate the impact of macroeconomic shocks on its business in advance. Resilience towards a changing macroeconomic environment is incorporated into the Group's credit underwriting standards. As such, borrowers are expected to withstand certain adverse economic developments through prudent financials, debt-servicing capabilities and conservative collateral coverage. Taking into account the regional crisis, the Group adjusted its risk management framework, leveraging its pre-existing stress testing practices. This included more thorough and frequent monitoring of the portfolio as well as stress testing, to ensure close control of changes in capital, liquidity, and portfolio quality in times of increased uncertainty. For more details on the developments in the economies of the Group's operations in 1H 2023, please refer to the Economic Overview section on pages 9-10. 5. The Bank faces the risk of not meeting the minimum regulatory requirements, which may compromise growth and strategic targets. Additionally, adverse changes in FX rates may impact capital adequacy ratios. Risk description The NBG sets a capital adequacy framework, with capital requirements consisting of a Pillar 1 minimum requirement, a Pillar 2 requirement, and combined (systemic, countercyclical and conservation) buffers. The buffers were introduced gradually, with the phase-in of concentration risk and Net GRAPE buffers completed in March 2023. The Bank's capitalization as of 30 June 2023 stood at: �� 18.3% for CET 1, with an updated regulatory minimum requirement of 14.4%; �� 20.7% for Tier 1, with an updated regulatory minimum requirement of 16.8%; and �� 23.1% for Total capital, with an updated regulatory minimum requirement of 19.9%. These ratios were above the respective regulatory minimums. In January 2023, the NBG made amendments to the systemic risk buffer calculation methodology. According to the new methodology, the current systemic risk buffer for TBC Bank amounts to 2.5%, while the buffer can be increased by 0.5% if the Bank's non-banking deposits market share in the previous three months exceeds 40%. The Bank must comply with the increased requirement for a 12-month period unless the average market share during the previous 12-month falls below 40%. In March 2023, the Financial Stability Committee of the NBG decided to set the neutral (base) rate of the countercyclical buffer at 1%. A 12-month deadline was set for banks to meet this requirement, effective from March 2024. GEL volatility remains a significant risk to the Bank's capital adequacy. A 10% GEL depreciation would translate into drops of 0.8 pp, 0.7 pp and 0.6 pp in the Bank's CET 1, Tier 1 and Total regulatory capital adequacy ratios, respectively. Risk mitigation The Bank undertakes stress testing and sensitivity analysis to quantify extra capital consumption under different scenarios. Such analyses indicate that the Bank holds sufficient capital to meet the current minimum regulatory requirements. These analyses are used to set appropriate risk appetite buffers internally, on top of the regulatory requirements. Capital forecasts, as well as the results of stress testing and what-if scenarios, are actively monitored with the involvement of the Bank's Executive Management and the Risk Committee of the Supervisory Board to help ensure prudent management and timely action, when needed. 6. The Group is exposed to regulatory and enforcement action risk. Risk description The Group's activities are highly regulated and thus face regulatory risk. In Georgia, the NBG sets lending limits and other economic ratios (including, but not limited to, lending, liquidity, and investment ratios) along with the mandatory capital adequacy ratio. In addition to comply with the minimum reserves and financial ratios, the Bank is required to submit periodic reports. It is also subject to the Georgian tax code and other relevant laws. Following the Company's listing on the London Stock Exchange's premium segment, the Group became subject to increased regulations from the UK Financial Conduct Authority. In addition to its banking operations, the Group also offers other regulated financial services products, including leasing, insurance and brokerage services. As a result of its expansion into Uzbekistan, the Group's regulatory compliance requirements have increased. Uzbekistan has a highly regulated banking environment. The Group is also subject to financial covenants in its debt agreements. For more information, see the Group's Audited Financial Statements. Risk mitigation The Group has established systems and processes to ensure full regulatory compliance, which are embedded in all levels of the Group's operations. The Group's "three lines of defence" model defines the roles and responsibilities for risk management. Each bank, in Georgia and Uzbekistan, has a dedicated compliance department, which acts as the second line of defence, reports directly to the respective Chief Executive Officer, and has a primary role in the management of regulatory compliance risk. The Group's Audit Committee is responsible for ensuring regulatory compliance at the Board level. The Group has the following processes and tools in place to identify, assess, monitor and report the risks in order to remain within the risk appetite limits: �� A regulatory change management process, according to which the Group conducts horizon scanning of upcoming regulatory requirements, analyzes changes to regulations and monitors the internal process compliance with the new requirements; �� Compliance checks/RCSA, which enable the Group to proactively identify, assess and manage regulatory incompliances; �� A new product risk approval process, which ensures that the new product/process is in compliance with regulatory requirements; �� Monitoring of KRI, as defined by the Group's risk appetite framework; �� Properly designed escalation procedures; and �� Regular trainings and awareness raising for staff. 7. The Group is exposed to financial sanctions risk. Risk description Various countries, groups of countries and organizations have for many years maintained various restrictions on activity with targeted countries, individuals or industries. The risks associated with those sanctions have increased, particularly in recent years. Historically, Georgia has enjoyed close business relations with Russia and Ukraine. The aggression launched by the Russian Federation against Ukraine on the 24th of February 2022 resulted in a vigorous international response, which included the imposition of the tough economic sanctions by the US, the EU, the UK and other countries. As a consequence, Russian and Belarusian members of legislative and government agencies, oligarchs, businessmen, state-owned companies, financial institutions and other legal entities have been directly sanctioned, while numerous economic restrictions and trade prohibitions have been enforced on specific sectors of activity and categories of goods and services in Russia, Belarus, Crimea and other occupied territories. Leading countries are tightening and expanding the sanctions program by extending some restrictions and adding new entities and individuals to their list. Moreover, as a consequence of the conflict, many Russian citizens have relocated to Georgia. Considering the level of interaction between the Bank, Russia and Russian citizens, and the amplitude of the sanctions' prohibitions and restrictions, the risk of being involved in attempts to circumvent sanctions has substantially increased. In addition to the sanctions risk related to Russia, a significant increase in international shipping costs has exposed Georgia to the risk of financing of transshipment via Iran for its import and export activities with Asian countries, which is prohibited by the US government. Breaches of the US, EU and UK sanctions regime would expose the Group to fines and regulatory actions by the local regulator, the National Bank of Georgia, and by US, EU or UK authorities and enforcement agencies. In addition to the regulatory risk, the Group also faces a reputational risk, mainly with its correspondent banks and other financial third party relationships. Risk mitigation In line with the Group's risk appetite and the instructions of the National Bank of Georgia, the Group implemented processes and procedures designed to ensure compliance with local, UN, US, EU and UK sanctions regimes. The Group seeks to avoid any transactions of any nature with direct or indirect sanctioned parties, goods or services, and to not facilitate in any manner the circumvention of UN, US, EU and UK sanctions programmes. To this effect, the Group has recently strengthened its sanctions programme via a number of actions with the support of external advisors: the performance of an enterprise-wide sanctions risk assessment, the issuance of a new Sanctions Policy and Procedure, and the reinforcement of client on-boarding and relationship management, while it continues to strengthen its close transactions monitoring and additional due diligence in case of Russian related transactions or potential transshipment via Iran, to review and fine-tune its screening tools and conduct enhanced sanctions training. 8. Liquidity risk is inherent in the Group's operations. Risk description While the Group currently has sufficient financial resources available to meet its obligations as they fall due, liquidity risk is inherent in banking operations and can be heightened by numerous factors. These include an overreliance on, or an inability to access, a particular source of funding, as well as changes in credit ratings or market-wide phenomena. Access to credit for companies in emerging markets is significantly influenced by the level of investor confidence and, as such, any factors affecting investor confidence (e.g. a downgrade in credit ratings, central bank or state interventions, or debt restructurings in a relevant industry) could influence the price or availability of funding for companies operating in any of these markets. The Bank is in compliance with the minimum liquidity requirements set by the NBG, which include the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). As of 30 June 2023, the net loan to deposits plus international financial institution funding ratio stood at 90.6%, the liquidity coverage ratio at 124.5%, and the net stable funding ratio at 129.8%. These figures are all well above the NBG's minimum requirements or guidance for such ratios. After the aggression launched by the Russian Federation against Ukraine, starting from March 2023 non-residents' deposits showed an uptrend, mainly due to Russian citizens relocating to Georgia. To avoid a potential negative impact on the liquidity position of the Georgian banking sector, in May 2023, NBG amended the LCR calculation guidelines, introducing a more conservative approach to the current and saving deposits placed by the migrants from the Russian Federation, effective from 1 September 2023. Risk mitigation To mitigate this risk, the Bank holds a solid liquidity position and performs outflow scenario analyses for both normal and stress circumstances to make sure that it has adequate liquid assets and cash inflows. The Group maintains a diversified funding structure to manage the respective liquidity risks. There is adequate liquidity to withstand significant withdrawals of customer deposits, but the unexpected and rapid withdrawal of a substantial number of deposits could have a material adverse impact on the Group's business, financial condition, and results of operations and/or prospects. Stress testing is a major tool for managing liquidity risk. Stress testing is performed within the ILAAP and Recovery Plan frameworks. The former assesses the adequacy of the liquidity position and relevant buffers and whether they can sustain plausible severe shocks, while the latter provides a set of possible actions that could be taken in the unlikely event of regulatory requirement breaches to support a fast recovery in the liquidity position. The liquidity risk position and compliance with internal limits are closely monitored by the Assets and Liabilities Management Committee (ALCO) of the Bank. 9. Any decline in the Group's net interest income or net interest margin (NIM) could lead to a reduction in profitability and the accumulation of organic capital. Risk description Net interest income accounts for most of the Group's total income. Consequently, fluctuations in its NIM affect the results of its operations. New regulations and the high level of competition could drive interest rates down, compromising the Group's profitability. At the same time, the cost of funding is largely exogenous to the Group and is derived from both local and international markets. In 1H 2023, the strong 0.9 pp YoY growth in NIM to 6.6% was mainly driven by loan yields growth and balance sheet management. As of 30 June 2023, GEL 5,038 million in assets (18%) and GEL 3,774 million in liabilities (16%) were floating in GEL, compared to GEL 3,347 million in assets (12%) and GEL 945 million in liabilities (4%) that were floating in relation to the LIBOR/SOFR/Euribor rates. The Bank was in compliance with the Economic Value of Equity (EVE) sensitivity limit set by the NBG of 15% of Tier 1 capital, with the ratio standing at 6.7% as of 30 June 2023. Risk mitigation The Bank continues to focus on fee and commission income growth to safeguard itself from possible margin compressions on lending and deposit products in the future. To meet its asset-liability objectives and manage the interest rate risk, the Bank uses a high-quality investment securities portfolio, long-term funding and derivative contracts. For more details, please refer to the interest rate risk in note 22. 10. The Group faces a growing and evolving threat of cyber-attacks. Risk description No material cyber-security breaches have happened at the Bank in recent years. Nonetheless, the Group's rising dependency on IT systems increases its exposure to potential cyber-attacks. Given their increasing sophistication, potential cyber-attacks may lead to significant security breaches. Such risks change rapidly and require continued focus and investment. Risk mitigation In order to mitigate the risks associated with cyber-attacks and ensure clients' security, the Group continuously updates and enhances its in-depth security strategy. It strives to evolve its mitigation mechanisms, covering multiple preventive and detective controls ranging from the data and end-point computers to edge firewalls. A Security Operations Centre has been built, which monitors every possible anomaly identified across the organisation's network in order to detect potential incidents and respond to them effectively. At least once a year, a full information security and cyber security threat analysis is performed, taking into consideration the relevant regional and sector specific perspectives. Moreover, at least once a year a detailed examination of information security matters is presented to the Technology and Data Committee of the Board. At least once every two years, as part of this analysis, an external consultant is contracted to assess the efficiency of our capabilities against industry best practices and real-world cyber-attack scenarios. This analysis gives the Group a broad overview and detailed insight, which help to further enhance its information and cyber security systems. In addition, cyber-attack readiness exercises are performed on a regular basis. These exercises evaluate the actual position of the Group in this area and provide a benchmark against international best practices. Employees play a crucial role in information security. As a result, annual mandatory training sessions are conducted for all employees, comprised of remote learning courses on security issues, fraud and phishing simulations, and informative emails to further assist our employees with information security matters. New employees are also given training as part of the onboarding process. These measures ensure that employees are fully aware of their responsibilities and are prepared for various security threats. The Information Security Steering Committee governs information and cyber security to ensure that relevant risks are at an acceptable level and that management processes are continuously improved. Moreover, disaster recovery plans are in place to ensure business continuity in case of need. In 2021, the Bank received an ISO 27001 certification for its information security management system, which demonstrates that the Bank is following robust information security practices effectively, in order to protect its information and information systems from different types of threats. In 2022, an ISO 27001 surveillance audit was completed, and the Bank retained the certification. In 2022, a Red Team exercise was carried out, the results of which were used to ensure that the Bank's in-depth security capabilities remain highly effective. In the same year, two more audits were conducted to assess the Bank against the Cyber Security Management Framework and the SWIFT Customer Security Controls Framework (CSCF). No critical findings and major non-compliances were identified during these exercises. The Cyber Security Management Framework is defined by National Bank of Georgia, based on the National Institute of Standards and Technology (NIST) Cyber Security Management Framework. The Group has not experienced any material information security breaches in the last three years. 11. The Group is exposed to the operational risk inherent in the Group's business, and, unless proactively managed, could materially impact the Group's profitability and reputation. Risk description One of the main risks that the Group faces is operational risk, which is the risk of loss resulting from internal and external fraud events, inadequate processes or products, business disruptions and systems failures, human error or damages to assets. The increased complexity and diversification of operations, coupled with the digitalisation of the banking sector, mean that fraud risks are evolving. External fraud events may arise from the actions of third parties against the Group, most frequently involving events related to banking cards, loans and client phishing. Internal fraud events arise from actions committed by the Group's employees, although such events happen less frequently. During the reporting period, the Group faced several instances of fraud, none of which had a material impact on the Group's profit and loss statement. The rapid growth in digital crime has exacerbated the threat of fraud, with fraudsters adopting new techniques and approaches to obtain funds illegally. Therefore, unless properly monitored and managed, the potential impact could become substantial. The Group is exposed to other operational risks such as: breakdowns in processes, controls or procedures; and system failures or cyber-attacks from an external party with the intention of making the Group's services or supporting infrastructure unavailable to its intended users, which in turn may jeopardise sensitive information and the financial transactions of the Group, its clients, or counterparties. Moreover, the Group is subject to risks that cause disruption to systems performing critical functions or business disruption arising from events wholly or partially beyond its control, such as natural disasters, transport or utility failures, etc., which may result in losses or reductions in service to customers and/or economic losses to the Group. The operational risks discussed above are also applicable where the Group relies on outsourcing services from third parties. Considering the dynamic environment and sophistication of both banking services and possible fraudsters, the importance of constantly improving processes, controls, procedures and systems is heightened to ensure risk prevention and reduce the risk of loss to the Group. Risk mitigation The Group actively monitors, detects and prevents risks arising from operational risk events and has permanent monitoring processes in place to detect unusual activities or process weaknesses in a timely manner. The risk and control self-assessment exercise (RCSA) focuses on identifying residual risks in key processes, subject to the respective corrective actions. Through our continuous efforts to monitor and mitigate operational risks, coupled with the high level of sophistication of our internal processes, the Group ensures the timely identification and control of operational risk-related activities.Various policies, processes and procedures are in place to control and mitigate operational risks, including, but not limited to: �� the Bank's Risk Assessment Policy, which enables thorough risk evaluation prior to the adoption of new products, services, or procedures; �� the Bank's Outsourcing Risk Management Policy, which enables the Bank to control outsourcing (vendor) risk arising from adverse events and risk concentrations due to failures in vendor selection, insufficient controls and oversight over a vendor and/or services provided by a vendor, and other impacts on the vendor; �� the Risk and Control Self-Assessment (RCSA) Policy, which enables the Group to continuously evaluate existing and potential risks, establish risk mitigation strategies and systematically monitor the progress of risk mitigation plans. The completion of these plans is also part of the respective managers' key performance indicators Moreover to further mitigate operational risks driven by fraudulent activities, the bank has introduced sophiticated ditigal fraud prevention system, which analyses client behaviour to further minimise external fraud threats. 12. The Group remains exposed to some reputational risk. Risk Description There are reputational risks to which the Group may be exposed, such as risks related to international sanctions imposed on Russia in response to the war in Ukraine, the potential exit of some correspondent banks from the country, isolated cases of anti-banking narratives in the media, particularly in the run-up to the election cycle, cases of phishing and other cybercrimes, as well as risks associated with the process of digitalisation. However, none of these risks is unique to the Group as they apply to the entire banking sector. Risk Mitigation To mitigate the possibility of reputational risks, the Group works continuously to maintain strong brand recognition among its stakeholders. The Group follows all relevant external and internal policies and procedures to minimise the impact of direct and indirect reputational risks. The Group monitors its brand value through public opinion studies and surveys and by receiving feedback from stakeholders on an ongoing basis. Dedicated internal and external marketing and communications teams actively monitor mainstream media and social media coverage on a daily basis. These teams monitor risks, develop scenarios and create respective contingency plans. The Group tries to identify early warning signs of potential reputational or brand damage in order to mitigate it and elevate it to the attention of the Board before it escalates. A special Task Force is in place at the top management level, comprised of strategic communications, marketing and legal teams, to manage reputational risks when they occur. Communications and cyber security teams conduct extensive awareness-raising campaigns on cyber security and financial literacy, involving the media, the Banking Association of Georgia and Edufin (TBC's inhouse financial education platform), aimed at mitigating and preventing cyber threats and phishing cases. 13. The Group faces the risk that its strategic initiatives do not translate into long-term sustainable value for its stakeholders. Risk Description The Group may face the risk of developing a business strategy that does not safeguard long-term value creation in an environment of changing customer needs, competition and regulatory restrictions. In addition, increased uncertainty stemming from the major economic and social disruptions caused by the war in Ukraine, may hamper the Group's ability to effectively develop and execute its strategic initiatives in a timely manner and thereby compromise its capacity for long-term value creation. Risk Mitigation The principal reason for building a portfolio of strategic initiatives is to diversify the Group's revenue and value pockets and to optimise the evolution of the enterprise value over the strategy time horizon. The Group conducts annual strategic review sessions involving the Board, executive management and middle management in order to ensure that it remains on the right track and assesses business performance from different perspectives, concentrating its analysis on key trends and market practices, both in regional and global markets. In addition, the Bank continuously works with the world's leading consultants in order to enhance its strategy. Furthermore, the Group conducts quarterly analyses and monitors the metrics used to measure strategy execution, and in case of any significant deviations, it takes corrective or mitigation actions. 14. The Group is exposed to risks related to its ability to attract and retain highly qualified employees. Risk Description The Group faces the risk of losing key personnel or failing to attract, develop and retain skilled or qualified employees based on its objectives. The transformation into a digital company leads to increased demand for IT professionals across the Group. Risk Mitigation The aim of the Group is to adapt to the rapidly changing business environment, increase leadership capabilities, achieve a high level of engagement among employees, and equip them with the necessary skills. To this end, the Group actively monitors the labor market both in Georgia and abroad, proactively recruiting the best candidates and expanding the networks of key personnel. The Group treats all employees equally and fairly, supporting and coaching them to succeed. Ensuring equal opportunity in all areas of human resource management such as selection, promotion, training and development, is critical to retaining employee engagement and satisfaction across our workforce. We have a succession planning framework developed for senior positions in order to ensure a smooth transition and to offer promotion opportunities to employees. In addition, we launched a Talent Management framework, ensuring the constant identification of the talent and monitoring their development within the Group. In order to support professional education and work-based learning in the field of technology, TBC Bank established TBC IT Academy in 2019, which continues to strengthen the IT ecosystem in the country. TBC IT academy is fully funded by TBC Bank and teaches key skills such as Front-end and Back-end development, Android and iOS mobile development, a DevOps, Java, Test Automation and OutSystems. Candidates selected for courses have the opportunity to become highly paid professionals in the field of information technology by working on bootcamps, practical lectures, mentorship sessions and real projects under the guidance of leading specialists of TBC Bank. Courses are updated through consultations with top management, which allows us to integrate the latest trends in the field into the teaching process. The IT academy also enables the Bank to ensure the development of technological skills of existing employees, allowing them to transition into tech-based professions and digitize and automate their day-to-day work. Since 2020, more than 1000 employees have been trained in the academy in a wide range of topics including Tech Upskilling, SQL Basic, SQL Advance, Power BI, Manual Testing, and BA. In the post-pandemic world, we allow all back-office employees to work remotely or from the office. This initiative not only resulted in improved employee satisfaction levels, but also increased efficiency across the Group. EMERGING RISKS Emerging risks have significant unknown components and may affect the performance of the Group over a long-term horizon. We believe the following risks have the potential to increase in significance over time and could have a similar impact on the Group as the principal risks. 1. The Group's performance may be compromised by adverse developments in the region, in particular the war in Ukraine, the possible spread of the geopolitical crisis and/or the potential outflow of migrants from Georgia. Risk description While inflows to the Georgian economy are quite diversified, the country is still vulnerable to geopolitical and economic developments in its region. In particular, the Russian invasion of Ukraine, the consequent sanctions imposed on Russia and the resulting elevated uncertainties have an adverse impact on the Georgian economy. At the same time, while the migration effect continues to make an important contribution to economic growth in 2023, any sizeable outflow could lead to a deterioration in the business environment. The reverse would probably be the case in any rapid conflict resolution scenario, which would create positive economic spill overs as well, such as the likely stronger rebound of growth in Russia and Ukraine. Moreover, the Russian invasion of Ukraine and related uncertainties going forward pose a risk to the business environment in Uzbekistan, including but not limited to the geopolitical tensions in Central Asia. Risk mitigation The Group actively employs stress testing and other risk measurement and monitoring tools to ensure that early triggers are identified and translated into specific action plans to minimize the negative impact on the Bank's capital adequacy, liquidity, and portfolio quality in times of increased uncertainty. 2. The Group is exposed to the risks inherent in international operations. Risk description Our subsidiary, TBC Bank Uzbekistan, launched its operations in 2020. We have already invested US$ 64 million in the charter capital of the Bank while our partners, EBRD and IFC, have invested a total of US$ 44 million. Our payments business in Uzbekistan, Payme, is one of the industry leaders in the country, providing payment services to retail and business clients. In May 2023, the Group the acquired the minority share in Payme and currently owns 100%. Our plans foresee a minimum 51% shareholding in our international businesses. Our Uzbek operations are expected to contribute up to GEL 200 million to the Group's net profit over the medium to long term. Both TBC Bank Uzbekistan and Payme operate through digital channels; a disruption of the digital platforms deployed may have a material negative impact on their operations. The risk management framework deployed at TBC Bank Uzbekistan enables the Group to manage potential disruptions swiftly. The risk posed by the operating environment in Uzbekistan may change the Group's risk profile. This investment exposes the Group to Uzbekistan's macroeconomic, political and regulatory environments, including but not limited to exposure to risks arising from credit, market, operational and capital adequacy risks as well as risks related to political stability. The Uzbek economy is well diversified with no major reliance on a particular industry. It has one of the lowest public debts as a percentage of GDP in the region and high international reserves, implying macroeconomic stability as well as room for future high growth. The Government of Uzbekistan plans to reform the economy and open the country up to foreign investment. While the operational environment in Uzbekistan can be assessed as attractive, there are important risks that could materially affect the Group's performance in the country. Among others, this includes the possible spread of the geopolitical crisis to Central Asia. Risk mitigation The Group's strategy is to follow an asset-light, limited capital investment approach with a strong focus on digital channels and to invest in stages, to make sure that we are comfortable with the results and the operating environment before committing additional investment. The digital platform supporting TBC Bank Uzbekistan has strong governance and risk management practices in place, which enable the Bank to identify and resolve problems in a timely manner. The Group partners with international financial institutions, which have taken a shareholding in the Uzbek bank in order to ensure the funding of our business plan and provide sufficient flexibility across our operations in Uzbekistan. Payme has strengthened its risk management structure by establishing operational risk, information security and compliance risk management functions. Furthermore, the Company has developed a comprehensive risk management plan and is currently working on implementation of the TBC Group Risk management framework and practices. Overall, from the Group's perspective, international expansion will result in the diversification of business lines and revenue streams, balancing the overall risk profile of the Group. 3. The Group is exposed to the risks arising from climate change. Risk description The risks associated with climate change have both a physical impact, arising from more frequent and severe weather changes, and a transitional impact that may entail extensive policy, legal and technological changes to reduce the ecological footprint of households and businesses. For the Group, both risks could materialise through impaired asset values and the deteriorating creditworthiness of our customers, which could result in a reduction of the Group's profitability. The Group may also become exposed to reputational risks because of its lending to, or other business operations with, customers deemed to be contributing to climate change. Risk mitigation The Group's objective is to act responsibly and manage the environmental and social risks associated with its operations in order to minimise negative impacts on the environment. This approach enables us to reduce our ecological footprint by using resources efficiently and promoting environmentally friendly measures in order to mitigate climate change. The Group has in place an Environmental Policy, which governs its Environmental Management System ("EMS") and ensures that the Group's operations adhere to the applicable environmental, health, safety and labor regulations and practices. We take all reasonable steps to support our customers in fulfilling their environmental and social responsibilities. The management of environmental and social risks is embedded in the Group's lending process through the application of the EMS. The Group has developed risk management procedures to identify, assess, manage and monitor environmental and social risks. These procedures are fully integrated in the Group's credit risk management process. Our Environmental Policy is fully compliant with Georgian environmental legislation and follows international best practices (the full policy is available at www.tbcbankgroup.com). In order to increase our understanding of climate-related risks to the Bank's loan portfolio, in 2021 the Bank performed a high-level sectoral risk assessment, since different sectors might be vulnerable to different climate-related risks over different time horizons. The risk assessment focused on economic sectors such as energy, oil and gas, metals and mining, tourism, agriculture, food industry, healthcare, construction and real estate. In 2022, we advanced our TCFD framework further, especially in strategic planning and risk management. The Bank aims to increase its understanding of climate-related risks and their longer-term impacts over the coming years, which will enable it to further develop its approach to mitigation. Furthermore, the Group's portfolio has strong collateral coverage, with around 74% of the loan book collateralised with cash, real estate or gold. Since the collateral evaluation procedure includes monitoring, any need to change collateral values arises from our regular collateral monitoring process. In June 2023, the Group released its full-scale sustainability report for the year 2022 in reference to Global Reporting Initiative (GRI) standards. The Global Reporting Initiative (GRI) helps the private sector to understand and realise its role and influence on sustainable development issues such as climate change, human rights and governance. The report is designed for all interested parties and groups in Georgia and abroad and aims to give them clear, fact-based information about the social, economic and environmental impact of our activities in 2022. It presents our endeavours to create value for our employees, clients, suppliers, partners and society as a whole. The Sustainability Report 2022 is available at www.tbcbankgroup.com. Statement of Directors' Responsibilities The Directors are required to prepare the condensed consolidated financial statements on a going concern basis unless it is not appropriate. They are satisfied that the Group has the resources to continue in business for the foreseeable future and that the financial statements continue to be prepared on a going concern basis. The Directors confirm that to the best of their knowledge: �� the financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK, and the Disclosure Guidance and Transparency Rules ('DTR') sourcebook of the UK's Financial Conduct Authority; �� this Interim Report 2023 gives a true, fair, balanced and understandable view of the assets, liabilities, financial position and profit or loss of the Company; and �� this Interim Report 2023 includes a fair review of the information required by: o DTR 4.2.7R, being an indication of: important events that have occurred during the first six months of the financial year ending 31 December 2023 and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and o DTR 4.2.8R, being: related party transactions that have taken place in the first six months of the financial year ending 31 December 2023, which have materially affected the financial position or performance of TBC Bank during that period; and any changes in the related parties transactions described in the Annual Report and Accounts 2022 that could materially affect the financial position or performance of TBC Bank during the first six months of the financial year ending 31 December 2023. Signed on behalf of the Board by: Vakhtang Butskhrikidze CEO 9 August 2023 TBC Bank Group PLC Board of Directors: Chairman Arne Berggren Executive Directors Vakhtang Butskhrikidze (CEO) Non-executive Directors Eran Klein Tsira Kemularia Janet Heckman Per Anders Fasth Thymios Kyriakopoulos Nino Suknidze Rajeev Sawhney TBC BANK GROUP PLC Condensed Consolidated Interim Financial Statements (Unaudited) 30 June 2023 Contents Independent Review Report.................................................................................................................................46 Unaudited Condensed Consolidated Interim Financial Statements Condensed Consolidated Interim Statement of Financial Position......................................................................48 Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income.....................49 Condensed Consolidated Interim Statement of Changes in Equity.................................................................... 51 Condensed Consolidated Interim Statement of Cash Flows............................................................................... 52 Notes to the Condensed Consolidated Interim Financial Statements 1 Introduction 2 Significant Accounting Policies 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies 4 Cash and Cash Equivalents 5 Due from Other Banks 6 Mandatory Cash Balances with the National Bank of Georgia and the Central Bank of Uzbekistan 7 Loans and Advances to Customers 8 Premises, Equipment and Intangible Assets 9 Due to Credit Institutions 10 Customer Accounts 11 Provisions for Performance Guarantees, Credit Related Commitment Liabilities and Charges 12 Debt Securities in Issue 13 Subordinated Debt 14 Equity 15 Share Based Payments 16 Earnings per Share 17 Segment Analysis 18 Interest Income and Expense 19 Fee and Commission Income and Expense 20 Net Gains from Currency Derivatives, Foreign Currency Operations and Translation 21 Income Taxes 22 Financial and Other Risk Management 23 Contingencies and Commitments 24 Fair Value Disclosures 25 Related Party Transactions Independent review report to TBC Bank Group plc Report on the condensed consolidated interim financial statements Our conclusion We have reviewed TBC Bank Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the 2Q and 1H 2023 Financial Results of TBC Bank Group plc for the 6 month period ended 30 June 2023 (the "period"). Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. The interim financial statements comprise: �� the Condensed Consolidated Interim Statement of Financial Position as at 30 June 2023; �� the Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income for the period then ended; �� the Condensed Consolidated Interim Statement of Cash Flows for the period then ended; �� the Condensed Consolidated Interim Statement of Changes in Equity for the period then ended; and �� the explanatory notes to the interim financial statements. The interim financial statements included in the 2Q and 1H 2023 Financial Results of TBC Bank Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. Basis for conclusion We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. We have read the other information contained in the 2Q and 1H 2023 Financial Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements. Conclusions relating to going concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern. Responsibilities for the interim financial statements and the review Our responsibilities and those of the directors The 2Q and 1H 2023 Financial Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the 2Q and 1H 2023 Financial Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the 2Q and 1H 2023 Financial Results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so. Our responsibility is to express a conclusion on the interim financial statements in the 2Q and 1H 2023 Financial Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. PricewaterhouseCoopers LLP Chartered Accountants Edinburgh 9 August 2023 in thousands of GEL Note 30 June 2023 (Unaudited) 31 December 2022 (Restated, unaudited) ASSETS Cash and cash equivalents 4 2,940,359 3,860,813 Due from other banks 5 52,550 41,854 Mandatory cash balances with National Bank of Georgia and the Central Bank of Uzbekistan 6 1,706,981 2,049,985 Loans and advances to customers 7 19,002,657 17,832,606 Investment securities measured at fair value through other comprehensive income 2,942,679 2,885,088 Bonds carried at amortised cost 87,213 37,392 Repurchase receivables - 267,495 Finance lease receivables 338,203 312,334 Investment properties 20,741 22,154 Current income tax prepayment 3,005 430 Deferred income tax asset 12,573 16,705 Other financial assets 266,969 235,963 Other assets 441,756 422,928 Premises and equipment 8 463,407 442,886 Right of use assets 117,634 112,625 Intangible assets 8 418,468 383,198 Goodwill 59,964 59,964 Investments in associates 3,667 3,721 TOTAL ASSETS 28,878,826 28,988,141 LIABILITIES Due to credit institutions 9 2,448,662 3,940,660 Customer accounts 10 18,992,492 18,036,533 Other financial liabilities 387,595 294,546 Current income tax liability 27,559 1,647 Deferred income tax liability 112,095 112,877 Debt securities in issue 12 1,392,872 1,361,573 Provision for liabilities and charges 11 20,767 19,908 Other liabilities 91,839 101,736 Lease liabilities 87,324 84,770 Subordinated debt 13 639,048 590,148 Redemption liability 14 347,044 477,329 TOTAL LIABILITIES 24,547,297 25,021,727 EQUITY Share Capital 14 1,682 1,681 Shares held by trust 14 (75,470) (7,900) Treasury shares - (25,541) Share premium 272,930 269,938 Retained earnings 3,984,493 3,745,191 Merger reserve 402,862 402,862 Share based payment reserve 15 5,181 1,090 Fair value reserve for investment securities measured at fair value through other comprehensive income 16,461 5,467 Cumulative currency translation reserve (36,804) (35,858) Other reserve 14 (347,044) (477,329) Equity attributable to owners of the parent 4,224,291 3,879,601 Non-controlling interest 107,238 86,813 TOTAL EQUITY 4,331,529 3,966,414 TOTAL LIABILITIES AND EQUITY 28,878,826 28,988,141 Starting from January 2023 the Group has adopted IFRS 17 and according to the standard requirements retrospectively applied presentation of respective balances for 2022 as described in note 2. The condensed consolidated interim financial statements on pages 48 to 96 were approved by the Board of Directors on 9 August 2023 signed on its behalf by: _________ Vakhtang Butskhrikidze Chief Executive Officer Six months ended Note 30 June 2023 (Unaudited) 30 June 2022 (Restated, unaudited) In thousands of GEL Interest income 18 1,383,970 1,080,462 Interest income calculated using effective interest rate method 18 1,343,535 1,049,545 Other interest income 18 40,435 30,917 Interest expense 18 (656,865) (489,988) Net interest gains on currency swaps 18 39,024 1,717 Net interest income 766,129 592,191 Fee and commission income 19 313,530 240,383 Fee and commission expense 19 (115,456) (98,921) Net fee and commission income 198,074 141,462 Insurance contract revenue 61,076 51,369 Reinsurance service result (4,387) (3,260) Insurance service claims and expenses incurred (44,287) (37,144) Insurance profit 12,402 10,965 Net gains from currency derivatives, foreign currency operations and translation 20 121,728 114,377 Net gains from disposal of investment securities measured at fair value through other comprehensive income 4,319 2,225 Other operating income 15,811 15,558 Share of profit of associates 542 123 Other operating non-interest income 142,400 132,283 Credit loss allowance for loans to customers 7 (79,424) (50,522) Credit loss allowance for finance lease receivables (2,132) (562) Credit loss allowance for performance guarantees 11 (1,424) (1,352) Credit loss reversal for credit related commitments 11 488 282 Credit loss allowance for other financial assets (4,090) (698) Credit loss (allowance)/reversal for financial assets measured at fair value through other comprehensive income (162) 1,268 Net impairment of non-financial assets (358) (6) Operating income after expected credit and non-financial asset impairment losses 1,031,903 825,311 Staff costs (212,150) (176,491) Depreciation and amortization 8 (57,948) (47,332) Allowance of provision for liabilities and charges (121) (60) Administrative and other operating expenses (116,121) (90,702) Operating expenses (386,340) (314,585) Profit before tax 645,563 510,726 Income tax expense (97,517) (52,181) Profit for the period 548,046 458,545 Other comprehensive income for the period: Items that may be reclassified subsequently to profit or loss: Movement in fair value reserve for investment securities measured at fair value through other comprehensive income 10,994 (14,747) Exchange differences on translation to presentation currency (946) (8,573) Other comprehensive income/(expense) for the period 10,048 (23,320) Total comprehensive income for the PERIOD 558,094 435,225 Starting from January 2023 the Group has adopted IFRS 17 and according to the standard requirements retrospectively applied presentation of respective balances for 2022 as described in note 2. Six months ended 30 June 2023 30 June 2022 In thousands of GEL Note (Unaudited) (Unaudited) Profit is attributable to: - Shareholders of TBCG 537,459 458,465 - Non-controlling interest 10,587 80 Profit for the period 548,046 458,545 Total comprehensive income is attributable to: - Shareholders of TBCG 547,507 435,145 - Non-controlling interest 10,587 80 Total comprehensive income for the period 558,094 435,225 Earnings per share for profit attributable to the owners of the Group: - Basic earnings per share 16 9.90 8.37 - Diluted earnings per share 16 9.76 8.13 in thousands of GEL Note Share Capital Shares held by trust Share premium Treasury shares Merger reserve Share based payments reserve Other Reserves Fair value reserve for investment securities at FVTOCI Cumulative currency translation reserve Retained earnings Total equity excluding non-controlling interest Non-controlling interest Total Equity Balance as of 31 December 2021 (as originally presented) 1,682 (25,489) 283,430 - 402,862 (5,135) (238,455) (10,862) (9,450) 3,007,132 3,405,715 48,059 3,453,774 Impact of adopting IFRS 17 2 - - - - - - - - - 182 182 - 182 Balance as of 31 December 2021 (restated) 1,682 (25,489) 283,430 - 402,862 (5,135) (238,455) (10,862) (9,450) 3,007,314 3,405,897 48,059 3,453,956 Profit for the six months ended 30 June 2022 (unaudited) - - - - - - - - - 458,465 458,465 80 458,545 Other comprehensive expense for six months ended 30 June 2022 (unaudited) - - - - - - - (14,747) (8,573) - (23,320) - (23,320) Total comprehensive (expense)/income for six months ended 30 June 2022 (unaudited) - - - - - - - (14,747) (8,573) 458,465 435,145 80 435,225 Share based payment expense 15 - - - - - 13,857 - - - - 13,857 - 13,857 Delivery of SBP shares to employees - 17,589 - - - (21,210) - - - - (3,621) - (3,621) Dividends declared 14 - - - - - - - - - (118,653) (118,653) (6,393) (125,046) Sale of interest to NCI - - - - - - - - - 432 432 (432) - Purchase of additional interest from NCI - - - - - - - - - (1,150) (1,150) (676) (1,826) Remeasurement of redemption liability - - - - - - (16,037) - - - (16,037) - (16,037) Other movements - - - - - - - - - (1,225) (1,225) 1,480 255 Balance as of 30 June 2022 (restated, unaudited) 1,682 (7,900) 283,430 - 402,862 (12,488) (254,492) (25,609) (18,023) 3,345,183 3,714,645 42,118 3,756,763 Balance as of 31 December 2022 (as originally presented) 1,681 (7,900) 269,938 (25,541) 402,862 1,090 (477,329) 5,467 (35,858) 3,744,727 3,879,137 86,813 3,965,950 Impact of adopting IFRS 17 2 - - - - - - - - - 464 464 - 464 Balance as of 1 January 2023 (restated) 1,681 (7,900) 269,938 (25,541) 402,862 1,090 (477,329) 5,467 (35,858) 3,745,191 3,879,601 86,813 3,966,414 Profit for the six months ended 30 June 2023 (unaudited) - - - - - - - - - 537,459 537,459 10,587 548,046 Other comprehensive income/(expense) for the six months ended 30 June 2023 (unaudited): - - - - - - - 10,994 (946) - 10,048 - 10,048 Disposal of investment securities measured at fair value through other comprehensive income - - - - - - - (4,089) - - (4,089) - (4,089) Other effects during the period - - - - - - - 15,083 (946) - 14,137 - 14,137 Total comprehensive income for the six months ended 30 June 2023 (unaudited) - - - - - - - 10,994 (946) 537,459 547,507 10,587 558,094 Share issue for scrip dividend 5 - 11,211 - - - - - - - 11,216 - 11,216 Share based payment expense 15 - - - - - 15,140 - - - - 15,140 - 15,140 Delivery of SBP shares to employees - 7,334 - - - (11,049) - - - - (3,715) - (3,715) Shares cancelled (4) - (8,219) 8,223 - - - - - - - - - Share buy-back 14 - (50,102) - (7,484) - - - - - - (57,586) - (57,586) Shares transferred to shares held by trust - (24,802) - 24,802 - - - - - - - - - Dividends declared - - - - - - - - - (159,976) (159,976) (15,657) (175,633) Capital injection from NCI shareholders - - - - - - - - - - - 28,996 28,996 Purchase of additional interest from NCI - - - - - - 141,234 - - (137,750) 3,484 (3,484) - Remeasurement of redemption liability - - - - - - (10,949) - - - (10,949) - (10,949) Other movements - - - - - - - - - (431) (431) (17) (448) Balance as of 30 June 2023 (unaudited) 1,682 (75,470) 272,930 - 402,862 5,181 (347,044) 16,461 (36,804) 3,984,493 4,224,291 107,238 4,331,529 Certain amounts do not correspond to the 2022 condensed consolidated interim statements as they reflect the certain restatements as described in note 2. Starting from January 2023 the Group has adopted IFRS 17 and according to the standard requirements retrospectively applied presentation of respective balances for 2022 as described in note 2. Six months ended In thousands of GEL Note 30 June 2023 (Unaudited) 30 June 2022 (Restated, unaudited) Cash flows from operating activities Interest received 1,317,323 1,066,917 Interest received on currency swaps 18 39,024 1,717 Interest paid (639,389) (457,690) Fees and commissions received 326,436 238,253 Fees and commissions paid (152,638) (100,019) Insurance contract revenue received 69,641 58,476 Insurance service claims and expenses paid (31,014) (25,406) Cash received from trading in foreign currencies 87,999 181,032 Other operating income received 26,934 15,176 Staff costs paid (226,318) (203,676) Administrative and other operating expenses paid (122,773) (109,560) Income tax paid (77,804) (141,955) Cash flows from operating activities before changes in operating assets and liabilities 617,421 523,265 Net change in operating assets Due from other banks and mandatory cash balances with the National Bank of Georgia and the Central Bank of Uzbekistan 280,201 69,536 Loans and advances to customers (1,458,877) (1,379,575) Finance lease receivables (24,530) 21,659 Other financial assets (45,569) 18,613 Other assets 43,486 (3,306) Net change in operating liabilities Due to other banks (406,557) 216,265 Customer accounts 1,256,933 1,353,808 Other financial liabilities 68,167 (5,920) Other liabilities and provision for liabilities and charges 18,999 1,902 Net cash flows from operating activities 349,674 816,247 Cash flows from/(used in) investing activities Acquisition of investment securities measured at fair value through other comprehensive income (497,536) (823,569) Proceeds from redemption at maturity/disposal of investment securities measured at fair value through other comprehensive income 700,760 829,150 Acquisition of bonds carried at amortised cost (125,091) (133,443) Proceeds from redemption of bonds carried at amortised cost 72,513 152,162 Acquisition of premises, equipment and intangible assets 8 (80,730) (80,250) Proceeds from disposal of premises, equipment and intangible assets 8 456 6,991 Proceeds from disposal of investment properties 1,963 4,241 Dividend received 696 - Net cash from/(used in) investing activities 73,031 (44,718) Cash flows (used in)/from financing activities Proceeds from other borrowed funds 213,120 1,691,343 Redemption of other borrowed funds (1,275,176) (1,232,431) Repayment of principal of lease liabilities (9,227) (7,872) Proceeds from subordinated debt 69,154 46,259 Redemption of subordinated debt (2,618) - Proceeds from debt securities in issue 134,420 47,209 Redemption of debt securities in issue (64,200) (161,978) Purchase of additional interest from minority shareholders (146,571) (1,826) Cash injection from NCI shareholders 28,996 - Cash paid for share buy-back (58,991) - Dividends paid (165,782) (5,867) Net cash flows (used in)/from financing activities (1,276,875) 374,837 Effect of exchange rate changes on cash and cash equivalents (66,284) (129,277) Net (decrease)/ increase in cash and cash equivalents (920,454) 1,017,089 Cash and cash equivalents at the beginning of the period 4 3,860,813 1,722,137 Cash and cash equivalents at the end of the period 4 2,940,359 2,739,226 *These amounts do not correspond to the 2022 condensed consolidated interim statements as they reflect the certain restatements as described in note 2. Management has changed the classification of Purchase of additional interest from minority shareholders for 2022 as required by IFRS standards and moved it from investing to financing activities. 1 Introduction Principal activity. TBC Bank Group PLC is a public limited by shares company, incorporated in the United Kingdom. TBC Bank Group PLC held 99.88% of the share capital of JSC TBC Bank (hereafter the "Bank") as at 30 June 2023 (31 December 2022: 99.88%), thus representing the Bank's ultimate parent company. The Bank is a parent of a group of companies incorporated in Georgia, Azerbaijan and Uzbekistan and its primary business activities include providing banking, leasing, insurance, brokerage and card processing services to corporate and individual customers. TBC Bank Group PLC and its subsidiaries is referred as "TBCG" or "Group". The Group's list of subsidiaries is provided below. The shares of TBCG ("TBCG Shares") were admitted to the Premium Listing segment of the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange PLC's main market for listed securities effective on 10 August 2016 (the "Admission"). TBC Bank Group PLC's registered legal address is 100 Bishopsgate, C/O Law Debenture, London, England, EC2N 4AG. Registered number of TBC Bank Group PLC is 10029943. The Bank is the Group's main operating unit and it accounts for most of the Group's activities. JSC TBC Bank was incorporated on 17 December 1992 and is domiciled in Georgia. The Bank is a joint stock company limited by shares and was arranged in accordance with Georgian regulations. The Bank's registered address and place of business is 7 Marjanishvili Street, 0102 Tbilisi, Georgia. The Bank's principal business activity is universal banking operations that include corporate, small and medium enterprises, retail and micro operations within Georgia. The Bank has been operating since 20 January 1993 under a general banking license issued by the National Bank of Georgia ("NBG"). In 2018, the Bank launched a fully digital bank, Space. In 2020, TBC Bank Group PLC established TBC Bank Uzbekistan JSC, which is operating through the Space digital banking platform. The Bank had 125 branches[9] within Georgia as at 30 June 2023. (As at 30 June 2022: 131 branches). The Group had 10,679 employees mainly within Georgia as at 30 June 2023. (As at 30 June 2022: 10,065 employees). As at 30 June 2023 and 31 December 2022, the following shareholders directly owned more than 3% of the total outstanding shares of the Group. Other shareholders individually owned less than 3% of the outstanding shares. As at 30 June 2023 and 31 December 2022, the Group had no ultimate controlling party. Shareholders 30 June 2023 ownership interest 31 December 2022 ownership interest Dunross & Co. 6.53% 6.58% Allan Gray Investment Management 5.35% 5.66% BlackRock 4.31% 3.99% Vanguard Group 4.27% 3.91% JPMorgan Asset Management 3.83% 3.86% Fidelity International 3.03% 3.88% European Bank for Reconstruction and Development 3.00% 3.54% Founders 15.90% 16.04% Other 53.78% 52.54% Total 100.00% 100.00% * Includes effective ownership of Mamuka Khazaradze and Badri Japaridze. ** Other includes individual as well as corporate shareholders. 1 Introduction (Continued) The condensed consolidated interim financial statements ("financial statements") include the following principal subsidiaries: Proportion of voting rights and ordinary share capital Subsidiary Name 30 June 2023 31 December 2022 Principal place of business or incorporation Year of incorpo-ration Industry JSC TBC Bank 99.88% 99.88% Tbilisi, Georgia 1992 Banking United Financial Corporation JSC 99.53% 99.53% Tbilisi, Georgia 2001 Card processing TBC Capital LLC 100.00% 100.00% Tbilisi, Georgia 1999 Brokerage TBC Leasing JSC 100.00% 100.00% Tbilisi, Georgia 2003 Leasing TBC Kredit LLC 100.00% 100.00% Baku, Azerbaijan 1999 Non-banking credit institution TBC Pay LLC 100.00% 100.00% Tbilisi, Georgia 2008 Processing TBC Invest-Georgia LLC 100.00% 100.00% Ramat Gan, Israel 2011 Financial services Index LLC 100.00% 100.00% Tbilisi, Georgia 2009 Real estate management TBC Asset Management LLC 100.00% 100.00% Tbilisi, Georgia 2021 Asset management Globally Diversified Bond Fund JSC 100.00% N/A Tbilisi, Georgia 2023 Asset management TBC Insurance JSC 100.00% 100.00% Tbilisi, Georgia 2014 Insurance Redmed LLC 100.00% 100.00% Tbilisi, Georgia 2019 Healthcare e-commerce T Net LLC 100.00% 100.00% Tbilisi, Georgia 2019 Asset management Online Tickets LLC[10] N/A 100.00% Tbilisi, Georgia 2015 Retail Trade TKT UZ 100.00% 100.00% Tashkent, Uzbekistan 2019 Retail Trade Artarea.ge LLC 100.00% 100.00% Tbilisi, Georgia 2012 PR and marketing SABA LLC 85.00% 85.00% Tbilisi, Georgia 2012 Education TBC Art Gallery LLC 100.00% 100.00% Tbilisi, Georgia 2012 PR and marketing Inspired LLC[11] 100.00% 51.00% Tashkent, Uzbekistan 2011 Processing Marjanishvili 7 LLC 100.00% 100.00% Tbilisi, Georgia 2020 Banking experience improving service TBC Bank Uzbekistan JSC 60.24% 60.24% Tashkent, Uzbekistan 2020 Banking TBC Fin service LLC 100.00% 100.00% Tashkent, Uzbekistan 2019 Retail leasing TBC Group Support LLC 100.00% 100.00% Tbilisi, Georgia 2020 Group risk and knowledge centre Space JSC 100.00% 100.00% Tbilisi, Georgia 2021 Software services Space International JSC 100.00% 100.00% Tbilisi, Georgia 2021 Software services The Group has investments in the following associates: Associate name 30 June 2023 31 December 2022 Principal place of business or incorporation Year of incorporation Principal activities CreditInfo Georgia JSC 21.05% 21.05% Tbilisi, Georgia 2005 Financial intermediation Tbilisi Stock Exchange JSC 28.83% 28.83% Tbilisi, Georgia 2015 Finance, Service Georgian Central Securities Depository JSC 26.90% 26.90% Tbilisi, Georgia 1999 Finance, Service Georgian Stock Exchange JSC[12] 17.31% 17.31% Tbilisi, Georgia 1999 Finance, Service Kavkasreestri JSC12 10.01% 10.01% Tbilisi, Georgia 1998 Finance, Service The country of incorporation is also the principal area of operation of each of the above subsidiaries and associates. 1 Introduction (Continued) The Group's corporate structure consists of related undertakings, comprising subsidiaries and associates, not consolidated or equity accounted for due to immateriality. A full list of these undertakings, the country of incorporation and the ownership of each share class is set out below. Proportion of voting rights and ordinary share capital Company name 30 June 2023 31 December 2022 Principal place of business or incorporation Year of incorpo-ration Industry TBC Invest International LLC[13] 99.88% 99.88% Tbilisi, Georgia 2016 Investment Vehicle University Development Fund13 33.29% 33.29% Tbilisi, Georgia 2007 Education Natural Products of Georgia LLC13 24.97% 24.97% Tbilisi, Georgia 2001 Trade, Service TBC Trade LLC13 99.88% 99.88% Tbilisi, Georgia 2008 Trade, Service Diversified Credit Portfolio JSC 99.88% 99.88% Tbilisi, Georgia 2021 Asset Management Freeshop.ge LLC13 100.00% 100.00% Tbilisi, Georgia 2010 Retail Trade The.ge LLC13 100.00% 100.00% Tbilisi, Georgia 2012 Retail Trade Mypost LLC13 100.00% 100.00% Tbilisi, Georgia 2019 Postal Service Billing Solutions LLC13 51.00% 51.00% Tbilisi, Georgia 2019 Software Services Vendoo LLC (Geo)13 100.00% 100.00% Tbilisi, Georgia 2018 Retail Leasing F Solutions LLC13 100.00% 100.00% Tbilisi, Georgia 2016 Software Services Operating environment of the Group Georgia, where Group's most activities are located, displays certain characteristics of an emerging market. The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations (Note 22). Despite initial expectations of negative impact of Russia-Ukrainian war on the Georgian economy, the growth came in at 10.1% in 2022 driven not only by the migration inflow and increased remittances, but also on the back of increased net export of goods and FDIs. The strong momentum continues as the first half GDP growth came in at 7.6%, which exceeded previous expectations. Important to note that the main driver was net exports, with an increased share of IT sector. Consequently, the outlook for the Georgian economy has improved with 7.0%, 4.8% and 5.3% in 2023, 2024 and 2025, respectively. However, the baseline strongly depends on the global developments. While the Georgian economy is so far resilient against recently elevated global slowdown risks and adverse economic impacts of Russia's invasion of Ukraine, there is a probability of more severe spill-over effects. The materialization of these risks could severely restrict economic activity in Georgia, negatively impact business environment and clients of the Group. For the purpose of measurement of expected credit losses ("ECL") the Group uses supportable forward-looking information, including forecasts of macroeconomic variables. As with any economic forecast, however, the projections and likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected. Climate Impact Although global market conditions have affected market confidence and consumer spending patterns, the Group remains well placed to continue displaying strong financial results. The Group has reviewed its exposure to climate-related risks, but has not identified any risks that could significantly impact the financial performance or position of the Group as at 30 June 2023. See more details outlined in risk management disclosures in note 22. 2 Significant Accounting Policies Basis of preparation. These condensed consolidated interim financial statements for six months ended 30 June 2023 for the Group has been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA), and in accordance with UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting'. These condensed consolidated interim financial statements do not include all the notes, normally included in annual consolidated financial statements. Accordingly, this report is to be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2022, which were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 and, for the group, in accordance with, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. 2 Significant Accounting Policies (Continued) These condensed consolidated interim financial statements have been reviewed, not audited. The auditor's review conclusion is included in this report. These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2022 were approved by the board of directors on 13 April 2023 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of the matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. Going Concern. The Board has fully reviewed the available information pertaining to the material existing and emerging risks, strategy, financial health, profitability of operations, liquidity, and solvency of the Group, and determined that the Group's business remains a going concern. The Directors have not identified any material uncertainties that could threaten the going concern assumption and have a reasonable expectation that the Group has adequate resources to remain operational and solvent for the foreseeable future (which is, for this purpose, a period of 12 months from the date of approval of these financial statements). In reaching this assessment, the Directors have specifically considered the implications of political instability in the region and the war in Ukraine on the Group's performance and projected funding and capital position and also taken into account the impact of further stress scenarios. Accordingly, the accompanying financial statements are prepared in line with the going concern basis of accounting. Presentation currency. These condensed consolidated interim financial statements are presented in thousands of Georgian Lari ("GEL thousands"), except per-share amounts and unless otherwise indicated. Restatement to recognise the redemption liability for put option with non-controlling interest. In 2019 and 2021 the TBC Bank Group PLC has entered into option agreements with minority shareholders of Inspired LLC and TBC Bank Uzbekistan JSC, respectively. According to the option agreements above, the parties are granted call and put options to acquire or sell the non-controlling interest shares, within pre-defined periods at an agreed price. The terms of call and put options are symmetrical to each other. As far as the businesses in Uzbekistan continue growing, the Group has reassessed the accounting treatment for put options granted to minority shareholders under the option agreements. After the careful consideration, the Group has identified that according to IAS 32 requirements, the present value of the put option exercise price should have been recognised as a redemption liability, which may arise in future for potential acquisition of NCI shares, since the decision to do so is wholly at the discretion of the minority shareholders. The standard requirement holds, even if the put option is out of the money and NCI shareholders are not expected to exercise the option in future. As a result of the above, in the annual consolidated financial statements for the year ended 31 December 2022 the Group has restated previous year balances by recognising redemption liability for put options at initial recognition and accordingly comparative figures for 30 June 2022 in condensed consolidated interim financial statements have been restated. Considering that the ownership interest has been retained by minority shareholders, the non-controlling interest has not been derecognised in the statement of financial position and the offsetting effect of redemption liability has been recognised in the other reserves. The redemption liability has been subsequently remeasured for the end of each reporting period, the effects of which have been reflected by adjusting redemption liability and other reserve balances, respectively. in thousands of GEL 30 June 2022 (As originally presented) Restatement 30 June 2022 (As restated) Redemption liability - 254,492 254,492 Other reserves - (254,492) (254,492) Changes in presentation of the consolidated statement of cash flows of TBC Bank Group PLC within operating activity To correct the presentation of cash flow items related to foreign exchange differences within the operating activities of consolidated statements of cash flows of TBC Bank Group PLC, the management corrected certain financial statement line items in 2022 annual report and accordingly comparative figures for 30 June 2022 in condensed consolidated interim financial statements. For details refer to the table below and for further information refer to note 20: in thousands of GEL 30 June 2022 (As originally presented) Restatement 30 June 2022 (As restated) Cash received from trading in foreign currencies 122,269 58,763 181,032 Other financial assets (3,765) 22,378 18,613 Customer accounts 1,413,867 (60,059) 1,353,808 Other financial liabilities 15,162 (21,082) (5,920) 2 Significant Accounting Policies (Continued) Consolidated financial statements. Subsidiaries are those investees, including structured entities, that the Group controls because it (i) has power to direct relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of investor's returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether the Group has power over another entity. For a right to be substantive, the holder must have practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than the majority of voting power in it. In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, such as those that relate to fundamental changes of investee's activities or apply only in exceptional circumstances, do not prevent the Group from controlling an investee. Subsidiaries are consolidated from the date on which control is transferred to the Group, and are deconsolidated from the date on which control ceases. Accounting policies and relevant changes within. The same accounting policies and methods of computation were followed in the preparation of this condensed consolidated interim financial statements as compared with the annual consolidated financial statements of the Group for the year ended 31 December 2022. Interim period tax measurement. Interim period income tax expense is accrued using the effective tax rate that would be applicable to expected total annual earnings, that is, the estimated weighted average annual effective income tax rate applied to the pre-tax income of the interim period. Adoption of New or Revised Standards and Interpretations. The Group adopts every required standard enhancement that becomes effective during the period. During six months period ended 2023, apart from IFRS 17 which is stated below the Group did not have effects or it was immaterial to disclose from adopting the new pronouncements effective from 1 January 2023: Deferred tax related to assets and liabilities arising from a single transaction - Amendments to IAS 12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023). Classification of liabilities as current or non-current, deferral of effective date - Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023). Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). The amendment to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting estimates. Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant accounting policies. IFRS 17 "Insurance Contracts" (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2022, the effective date subsequently modified to 1 January 2023 by the Amendments to IFRS 17 as discussed below). In May 2017, the IASB issued IFRS 17, Insurance Contracts. IFRS 17 replaces IFRS 4 and sets out principles for the recognition, measurement, presentation and disclosure of insurance contracts that are in the scope of IFRS 17. In June 2020, the IASB issued Amendments to IFRS 17, introducing various changes to assist entities implementing the Standard, and moving an effective date to 1 January 2023. Scope. IFRS 17 applies to the following contracts: (a) insurance contracts issued by the Group, (b) reinsurance contracts held by the Group and (c) investment contracts with discretionary participation features issued by the Group. IFRS 17 generally applies to the whole set of rights and obligations created by an insurance contract. Cash flows generated by such rights and obligations should normally be incorporated in the measurement of assets and liabilities associated with an insurance contract. However, an insurance contract can also contain components which are excluded from the scope of IFRS 17 and should be accounted for under different standards, subject to specific criteria: (a) embedded derivatives, (b) investment components, and (c) promises to transfer to a policyholder distinct goods or services other than insurance contract services. Level of aggregation. IFRS 17 requires to identify portfolios of insurance contracts. A portfolio of insurance contracts is defined as insurance contracts that are subject to similar risks and managed together. Portfolios should be further disaggregated into profitability-based groups of insurance contracts that are, on initial recognition: (a) onerous, if any, (b) profitable, with no significant possibility of subsequently becoming onerous, if any, and (c) remaining contracts, if any. IFRS 17 prohibits to include contracts issued more than one year apart in the same group, a requirement commonly referred to as annual cohort requirement. Contract boundary. The contract boundary concept is used to determine which cash flows should be considered in the measurement of an insurance contract. Cash flows that are not within the boundary of an insurance contract relate to future insurance contracts. The Group generally determines the contract boundary with a reference to its ability to reprice the insurance contract as a whole. 2 Significant Accounting Policies (Continued) Expected future cash flows. Included in the measurement of each group of contracts within the scope of IFRS 17 are all the future cash flows within the boundary of each group of contracts. The estimates of these future cash flows are based on probability-weighted expected future cash flows. The Group estimates which cash flows are expected and the probability that they will occur as at the measurement date. In making these expectations, the Group uses information about past events, current conditions, and forecasts of future conditions. Where estimates of expenses-related cash flows are determined at the portfolio level or higher, they are allocated to groups of contracts on a systematic basis, such as activity-based costing method. The Group has determined that this method results in a systematic and rational allocation. Similar methods are consistently applied to allocate expenses of a similar nature. Expenses of an administrative policy maintenance nature are allocated to groups of contracts based on the gross earned premium of groups. Discount rates. The estimates of future cash flows should be adjusted to reflect the time value of money and the financial risks related to future cash flows, such as currency and liquidity risk associated with those cash flows, to the extent that the financial risks have not been included in the estimates of cash flows. The discount rates should: (a) reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance contracts, (b) be consistent with observable current market prices for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts, in terms of, for example, timing, currency and liquidity, and (c) exclude the effect of factors that influence such observable market prices but do not affect the future cash flows of the insurance contracts. As the Group issues insurance contracts with 1 year or less contract boundary, discounting is ignored. Risk adjustment for non-financial risk. The risk adjustment for non-financial risk is included in the expected cash flows to represent compensation required for bearing the non-financial risk arising from uncertainty in future cash flows. Under IFRS 17 requirements, the risk adjustment for non-financial risk includes: (a) the degree of diversification benefit that the entity includes when determining the compensation that it requires for bearing that risk, and (b) both favourable and unfavourable outcomes in a way that reflects the entity's degree of risk aversion. Contractual service margin. The contractual service margin (CSM) is a component of the carrying amount of the asset or liability for a group of insurance contracts representing the unearned profit that the entity will recognize as it provides insurance contract services under the insurance contracts in the group. Pattern of CSM recognition would be thus determined based on the coverage units, reflecting the pattern under which the insurance contract service benefit is transferred to the policyholder of the insurance contracts. Insurance contract services are the services that the Group provides to a policyholder of an insurance contract and comprise of coverage for an insurance event. Considering the short-term nature of the Group's insurance contracts and the insurance coverage that is evenly distributed over time, the Group uses contract period as a coverage unit for each portfolio. Measurement approaches. IFRS 17 allows to apply following measurement approaches to insurance contracts issued and reinsurance contracts held: (a) general model, (b) premium allocation approach and (c) variable fee approach. General model. This approach is applied to all insurance contracts, unless they have direct participation features or the contract is eligible for, and the entity elects to apply, the premium allocation approach. Premium allocation approach. This approach is an optional simplification of the measurement of the liability for remaining coverage, for insurance contracts with short-term coverage. A group of insurance contracts is eligible for the premium allocation approach if, at inception: (a) each contract in the group has a coverage period (that is, the period in which the entity provides insurance contract services) of one year or less; or (b) the measurement of the liability for remaining coverage for the group using the premium allocation approach is reasonably expected to produce a measurement which is not materially different from using the general model or the variable fee approach. The Group uses Premium allocation approach (PAA) for its total portfolio. The difference between PAA and IFRS 4 accounting policy consists of calculation of risk adjustment under IFRS 17 and change in exchange rate effect on liability for remaining coverage. Variable fee approach. This approach is applied to insurance contracts with direct participation features. Such contracts are substantially investment-related service contracts under which an entity promises an investment return based on underlying items. This approach cannot be used for the measurement of reinsurance contracts issued or held. The Group does not use Variable fee approach for any of its contracts. Insurance finance income and expenses. Insurance finance income or expenses reflect the changes in the carrying amount of the group of insurance contracts that relate to financial risks. They comprise the effect of the time value of money (that is, the accretion of interest on all of the fulfilment cash flows, the risk adjustment for non-financial risk and the contractual service margin) as well as the effect of financial risk and changes in financial risks. IFRS 17 allows, as an accounting policy, to disaggregate insurance finance income or expenses for the period between profit or loss and other comprehensive income. The Group's policy is to account total insurance finance income and expenses in the statement of profit or loss. Reinsurance contracts held. IFRS 17 allows options in presenting income or expenses from reinsurance contracts held, other than insurance finance income or expenses. The Group elected to present a single net amount in net expenses from reinsurance contracts held. 2 Significant Accounting Policies (Continued) IFRS 17 Transition. Adoption of IFRS 17 affected financial reporting processes and procedures of the Group, as applications of the core principles outlined above has required additional information to be gathered and processed. After the transition to IFRS 17 the Group has used following measurement approaches for its insurance subsidiary, depending on the type of contract: Product classification Measurement model Motor Insurance Insurance contracts Premium allocation approach Border MTPL Insurance contracts Premium allocation approach Property Insurance Insurance contracts Premium allocation approach Agro (Crop) Insurance Insurance contracts Premium allocation approach TBC Bank Borrowers' Credit Life Insurance Insurance contracts Premium allocation approach Health-related Insurance Insurance contracts Premium allocation approach Liability and Other Insurance Insurance contracts Premium allocation approach The Group has applied the full retrospective approach for all of its portfolios of insurance contracts. For each group of contracts, cash flows related to the future service are shown as Liability for Remaining Coverage (LRC) or Asset for Remaining Coverage (ARC), depending on the sign of the net cash flow. Insurance receivables, Deferred acquisition costs, Unearned premium reserve and Commission payables are combined to form LRC / ARC. Similarly, Reinsurance Share in UPR, Commission receivable from reinsurance, Reinsurance Payables and Reinsurance commission reserve together form ARC / LRC depending on the sign of the net cash flows. Liability for Incurred Claims (LIC) represents Company's obligation to investigate and pay valid claims for insured events that have already occurred, including events that have occurred but for which claims have not yet been reported. Reported But Not Settled (RBNS) and Incurred But Not Reported (IBNR) claims reserves are combined to form LIC. Asset for Incurred Claims (AIC) shows reinsurance share in LIC and is calculated in a similar manner. Aforementioned elements are presented in a following way below: �� Insurance contract assets, �� Reinsurance contract assets, �� Insurance contract liabilities, �� Reinsurance contract liabilities 2 Significant Accounting Policies (Continued) Effects on Condensed Consolidated Interim Statement of Financial Position, after the transition to IFRS 17 are presented below: in thousands of GEL 31 December 2022 (as originally presented) Effect of Adopting of IFRS 17 recorded directly through equity 31 December 2022 (as restated following IFRS 17 Adoption) Other assets 429,121 (6,193) 422,928 Reinsurer's assets 10,351 (10,351) - Deferred acquisition cost 1,997 (1,997) - Insurance contract assets - 48 48 Reinsurance contract assets - 6,107 6,107 Other financial assets 273,805 (37,842) 235,963 Insurance and reinsurance receivables 45,069 (37,842) 7,227 Provisions for liabilities and charges 34,988 (15,080) 19,908 Provision related to insurance activities 15,080 (15,080) - Other financial liabilities 275,781 18,765 294,546 Other financial liabilities 9,368 (2,425) 6,943 Insurance contracts liabilities under IFRS 4 12,846 (12,846) - Reinsurance contract liabilities - 6,945 6,945 Insurance contracts liabilities under IFRS 17 - 27,091 27,091 Other liabilities 149,920 (48,184) 101,736 Other liabilities 48,184 (48,184) - Totals do not reconcile to the below breakdown considering these amounts represent only insurance related balances. Total effect of adoption of IFRS 17 amounted GEL 464 thousand and is recorded directly through equity in retained earnings. in thousands of GEL 31 December 2021 (as originally presented) Effect of Adopting of IFRS 17 recorded directly through equity 31 December 2021 (as restated following IFRS 17 Adoption) Other assets 397,079 (3,970) 393,109 Reinsurer's assets 8,834 (8,834) - Deferred acquisition cost 1,474 (1,474) - Reinsurance contract assets - 6,338 6,338 Other financial assets 453,115 (29,115) 424,000 Insurance and reinsurance receivables 32,474 (29,115) 3,359 Provisions for liabilities and charges 25,358 (9,512) 15,846 Provision related to insurance activities 9,512 (9,512) - Other financial liabilities 139,811 13,568 153,379 Other financial liabilities 6,635 (2,202) 4,433 Insurance contracts liabilities under IFRS 4 7,825 (7,825) - Reinsurance contract liabilities - 3,599 3,599 Insurance contracts liabilities under IFRS 17 - 19,996 19,996 Other liabilities 130,972 (37,323) 93,649 Other Liabilities 37,323 (37,323) - * Totals do not reconcile to the below breakdown considering these amounts represent only insurance related balances. ** Total effect of adoption of IFRS 17 amounted GEL 182 thousand and is recorded directly through equity in retained earnings. 2 Significant Accounting Policies (Continued) Effects on Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income, after the transition to IFRS 17 are presented below: in thousands of GEL 30 June 2022 (as originally presented) IFRS 17 adoption effect 30 June 2022 (as restated) Insurance premium earned 51,369 (51,369) - Reinsurers share in insurance premium earned (8,100) 8,100 - Insurance claims (37,144) 37,144 - Reinsures share in insurance claims 4,840 (4,840) - Insurance contract revenue - 51,369 51,369 Reinsurance service result - (3,260) (3,260) Insurance service claims and expenses incurred - (37,144) (37,144) 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and judgements are continually evaluated and are based on the management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements and estimates that have the most significant effect on the amounts recognised in the condensed consolidated interim financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities are the following: Judgements and estimates related to ECL measurement. Measurement of ECLs is a significant estimate that involves determination of methodology, development of models and preparation of data inputs. Expert management judgement is also an essential part of calculating expected credit losses. Management considers the significant management judgements and estimates in calculating ECL as follows: Judgements used to define criteria used in definition of default. The Bank defines default using both quantitative and qualitative criteria. Borrower is classified as defaulted if: �� any amount of contractual repayments is past due more than 90 days; or �� factors indicating the borrower's unlikeliness-to-pay. In addition, default exit criteria is defined using judgement as well as whether default should be applied on a borrower or exposure level. Judgements used to define criteria for assessing if there has been a significant increase in credit risk (SICR) which is defined using both quantitative and qualitative criteria. Qualitative factors usually include judgements around delinquency period of more than 30 days on contractual repayments; exposure is restructured, but is not defaulted; borrower is classified as "watch". On a quantitative basis the Bank assess change in probability of default parameter for each particular exposure since initial recognition and compares it to the predefined threshold. When absolute change in probability of default exceeds the applicable threshold, SICR is deemed to have occurred and exposure is transferred to Stage 2. Quantitative indicator of SICR is applied to retail and micro segments, where the Bank has sufficient number of observations. The table below represents the sensitivity analysis of (i) 20% decrease of SICR thresholds (quantitative criteria applied for retail and micro exposures described above. (ii) 10% increase in total number of stage 2 borrowers: In thousands of GEL 30 June 2023 31 December 2022 20% decrease in SICR thresholds Increase credit loss allowance on loans and advances by GEL 1,686. Change of the Bank's cost of credit risk ratio by 2 basis points Increase credit loss allowance on loans and advances by GEL 2,106. Change of the Bank's cost of credit risk ratio by 1 basis points. 10% increase in Number of Stage 2 Contracts Increase credit loss allowance on loans and advances by GEL 1,325. Change of the Bank's cost of credit risk ratio by 1 basis points Increase credit loss allowance on loans and advances by GEL 1,639. Change of the Bank's cost of credit risk ratio by 1 basis points. Judgements used for calculation of credit risk parameters namely exposure at default (EAD), probability of default (PD) and loss given default (LGD). The judgements include and are not limited by: (i) definition of the segmentation for risk parameters estimation purposes, (ii) decision whether simplified or more complex models can be used, (iii) time since default date after which no material recoveries are expected, (iv) collateral haircuts from market value as well as the average workout period for collateral discounting. 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) The table below describes sensitivity on 10% increase of PD and LGD estimates: In thousands of GEL 30 June 2023 31 December 2022 10% increase (decrease) in PD estimates Increase (decrease) credit loss allowance on loans and advances by GEL 18,294 (GEL 17,324). Change of the Bank's cost of credit risk ratio by 21 (19) basis points Increase (decrease) credit loss allowance on loans and advances by GEL 19,891 (GEL 18,843). Change of the Bank's cost of credit risk ratio by 12 (11) basis points 10% increase (decrease) in LGD estimates Increase (decrease) credit loss allowance on loans and advances by GEL 27,388 (GEL 29,326). Change of the Bank's cost of credit risk ratio by 31 (33) basis points Increase (decrease) credit loss allowance on loans and advances by GEL 31,635 (GEL 31,770). Change of the Bank's cost of credit risk ratio by 19 (19) basis points Estimates used for forward-looking macroeconomic scenarios and judgements made for their probability weightings. For forward-looking information purposes, the Bank defines three macro scenarios. The scenarios are defined as baseline (most likely), upside (better than most likely) and downside (worse than most likely) scenarios of the state of the Georgian economy. Estimates applied in differentiating between these three scenarios represent GDP, USD/GEL rate, RE price, employment levels, monetary policy rate and other macro variables. Under usual conditions, the scenario weights applied are 50%, 25% and 25% for the base case, upside and downside scenarios respectively. As at 30 June 2023 the weights remained the same as at 31 December 2022 - 50%, 25% and 25% for the base, upside and downside scenarios respectively. Based on the changes of the macro environment the Bank modifies the weightings based on expert judgement. The table below describes the unweighted ECL for each economic scenario as at 30 June 2023: In thousands of GEL Baseline Upside Downside Weighted Corporate 48,044 48,044 50,301 48,608 MSME 104,068 102,655 106,152 104,208 Consumer 175,814 174,893 177,017 175,522 Mortgage 29,655 29,478 29,988 29,694 Total 357,581 355,070 363,458 358,032 The table below describes the unweighted ECL for each economic scenario as at 31 December 2022: In thousands of GEL Baseline Upside Downside Weighted Corporate 45,775 45,456 48,827 46,458 MSME 95,991 94,270 98,169 96,112 Consumer 195,873 194,897 196,927 195,883 Mortgage 33,856 33,520 34,422 33,912 Total 371,495 368,143 378,345 372,365 The following table describes the key macroeconomic variables under each scenario for future 3-year period as at 30 June 2023: Baseline Upside Downside Growth rates YoY, % 2023 2024 2025 2023 2024 2025 2023 2024 2025 GDP 7.0% 4.8% 5.3% 8.0% 6.9% 8.1% 5.9% 2.5% 2.3% USD/GEL rate end of period (EOP) 2.6 2.7 2.6 2.30 2.4 2.2 2.8 3.0 2.9 RE Price (in USD) 20.9% -6.6% -0.2% 23.2% -0.7% 5.9% 17.5% -16.3% -10.1% Employment 2.6% 0.4% 0.6% 2.9% 0.9% 1.3% 2.2% -0.1% 0.0% Monetary policy rate (EOP, Level) 9.5% 8.0% 7.8% 9.0% 7.2% 6.8% 10.4% 9.4% 9.5% The following table describes the key macroeconomic variables under each scenario for future 3-year period as at 31 December 2022: Baseline Upside Downside Growth rates YoY, % 2023 2024 2025 2023 2024 2025 2023 2024 2025 GDP 3.5% 5.4% 5.2% 5.2% 7.9% 8.4% 1.7% 2.7% 1.9% USD/GEL rate (EOP) 2.80 2.65 2.60 2.47 2.31 2.24 3.06 2.92 2.90 RE Price (in USD) 19.8% -2.0% -1.3% 24.2% 4.1% 4.8% 11.6% -13.1% -12.5% Employment (EOP) 1.9% -0.8% -0.2% 2.5% -0.1% 0.6% 1.5% -1.3% -0.9% Monetary policy rate (EOP, Level) 9.0% 7.8% 7.8% 8.4% 7.0% 6.8% 10.1% 9.3% 9.6% 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) The Bank assessed the impact of changes in GDP growth, unemployment and monetary policy rate variables on ECL as a most critical estimates applied in ECL assessment. The sensitivity analysis was performed separately for each of the variable to show their significant in ECL assessment, but changes in those variables may not happen in isolation as various economic factors tend to be correlated across the scenarios. The variables were adjusted in all three macroeconomic scenarios and the staging has been maintained unchanged. From the assessment of forward looking scenarios, management is comfortable with the scenarios capturing the non-linearity of the losses. The table below shows the impact of +/-20% change in GDP growth, unemployment and monetary policy variables across all scenarios on the Bank's ECL as at 30 June 2023: Change in GDP growth Change in unemployment Change in Monetary Policy in thousands of GEL 20% increase 20% decrease 20% increase 20% decrease 20% increase 20% decrease Impact on ECL (1,054) 1,215 1,057 (964) 696 (604) The table below shows the impact of +/-20% change in GDP growth, unemployment and monetary policy variables across all scenarios on the Bank's ECL as at 31 December 2022: Change in GDP growth Change in unemployment Change in Monetary Policy in thousands of GEL 20% increase 20% decrease 20% increase 20% decrease 20% increase 20% decrease Impact on ECL (987) 1,038 1,341 (1,231) 710 (616) Individual assessment: Individual assessment is mainly used for stage 2 and stage 3 individually significant borrowers. For selecting individually significant exposures, the management uses the following estimated thresholds above which exposures[14] are selected for individual review: for stage 2 - to GEL 10 million and for stage 3 - GEL 4 million. Additionally, the Bank may arbitrarily designate selected exposures to individual measurement of ECL based on the Bank's credit risk management or underwriting departments' decision. The individual assessment takes into account latest available information in order to define ECL under baseline, upside and downside scenarios. Post Model Adjustments PMAs are a specific set of management adjustments to address known model limitations, either in model methodology or model inputs. PMAs are made based on analysis of model inputs and parameters to determine the required modifications in order to improve model accuracy. Post model overlays. Post model overlays (PMOs) reflect management judgement that mainly rely on expert judgement and are applied directly to expected credit losses at an aggregated level. Once implemented, post model overlays and adjustments are re-assessed at each reporting date to determine the validity of the adjustments. The appropriateness of PMAs and PMOs is subject to rigorous review and challenge. The post model overlays and adjustments review and the approval process go through same phases as the ECL process governance. As at 31 December 2022 Bank introduced a PMA for clients affected by the Russian invasion in Ukraine. Specifically, the default definition was modified for restructured, war-affected exposures amounting to GEL 5,170 thousand as at 30 June 2023 (GEL 8,174 thousand as at December 2022). Restructured exposures are transferred to stage 2 instead of stage 3, however, for that particular exposures a lower number of days past due ('DPD') will be used for default recognition: namely, instead of applying a standard 90 DPD, default will be recognised earlier at 30 DPD after the end of grace period. The effect of this PMA on staging shares amounts to 0.03 PP (0.05 pp as at December 2022). while the effect on ECL amounted to GEL 600 thousand as at 30 June 2023 (GEL 2,340 thousand as at 31 December 2022) in case those exposures were in stage 3. 4 Cash and Cash Equivalents In thousands of GEL 30 June 2023 31 December 2022 Cash on hand 1,021,023 1,243,238 Cash balances with the National Bank of Georgia and Central bank of Uzbekistan (other than mandatory reserve deposits) 409,083 334,823 Correspondent accounts and overnight placements with other banks 947,119 1,446,565 Placements with and receivables from other banks with original maturities of less than three months 563,380 466,596 Reverse sale and repurchase agreements with other banks with original maturities of less than three months - 370,022 Total gross amount of cash and cash equivalents 2,940,605 3,861,244 Less: credit loss allowance by stages (246) (431) Stage 1 (246) (431) Total cash and cash equivalents 2,940,359 3,860,813 As 30 June 2023, 95% of the correspondent accounts and overnight placements with other banks was placed with OECD (The Organization for Economic Co-operation and Development) banking institutions (31 December 2022: 95%). As 30 June 2023, GEL 364,807 thousand was placed on interbank term deposits with two OECD banks and none with non-OECD (As at 31 December 2022, GEL 303,206 thousand was placed on interbank term deposits with one OECD bank and none with non-OECD bank). Interest rate analysis of cash and cash equivalents is disclosed in Note 22. 5 Due from Other Banks Amounts due from other banks include placements with original maturities of more than three months, that are not collateralised and represent neither past due nor impaired amounts at the 30 June 2023 and 31 December 2022. As at 30 June 2023 the Group had 1 placement, with original maturities of more than three months and with aggregated amounts above GEL 5,000 thousand amounting GEL 13,111 thousand (2022: none). The total aggregated amount of placements with other banks with original maturities of more than three months was GEL 52,245 thousand (2022: GEL 41,161 thousand) or 99.4% of the total amount due from other banks (2022: 98.4%). As at 30 June 2023 GEL 681 thousand (2022: GEL 693 thousand) were kept on deposits as restricted cash under an arrangement with a credit card company or credit card related services with other banks. For the estimated fair values of due from other bank balances please refer to Note 24. For the purpose of ECL measurement due from other banks balances are included in Stage 1. The ECL for these balances at 30 June 2023 is GEL 376 thousand (2022: GEL 19 thousand). 6 Mandatory Cash Balances with the National Bank of Georgia and the Central Bank of Uzbekistan Mandatory cash balances with the National Bank of Georgia ("NBG") represent amounts deposited with the NBG. Resident financial institutions are required to maintain an interest-earning obligatory reserve with the NBG, the amount of which depends on the level of funds attracted by the financial institutions. The Bank earned up to 10.86%, 0% and 0% annual interest in GEL, USD and EUR respectively on mandatory reserve with NBG during six months period ended 30 June 2023 (2022: 10.88%, 2.17% and (0.7%) in GEL, USD and EUR respectively). Mandatory cash balances with the Central Bank of Uzbekistan ("CBU") represents of 20% amount placed and frozen on special account with Central Bank of Uzbekistan ("CBU") 80% of amount maintained on corresponding account with CBU. Resident financial institutions are required to keep non-interest-earning obligatory balances with the CBU, the amount of which depends on the level of funds attracted by the financial institutions and through clients' accounts. The amount placed in CBU are denominated in UZS. In January 2023, Fitch Ratings has affirmed Georgia's Long-Term Foreign and Local Currency Issuer Default Rating (IDRs) at 'BB', the outlook was revised to Positive from Stable. The Country Ceiling Rating is affirmed at 'BBB- ', while short-term foreign and local-currency IDRs are kept at 'B'. 7 Loans and Advances to Customers In thousands of GEL 30 June 2023 31 December 2022 Corporate loans 6,920,263 6,282,469 Loans to micro, small and medium enterprises 4,955,391 4,809,415 Consumer loans 3,083,138 2,859,915 Mortgage loans 4,401,897 4,253,172 Total gross loans and advances to customers at amortised cost (AC) 19,360,689 18,204,971 Less: credit loss allowance (358,032) (372,365) Stage 1 (99,311) (107,354) Stage 2 (99,803) (99,161) Stage 3 (158,918) (165,850) Total loans and advances to customers at amortised cost (AC) 19,002,657 17,832,606 As at 30 June 2023, no loans and advances to customers have been pledged to local banks or other financial institutions as collateral with respect to other borrowed funds (31 December 2022: GEL 958,530 thousand). Total credit loss allowance includes PMAs amounted to GEL 600 thousand and GEL 2,340 thousand for 30 June 2023 and YE 2022 respectively. The following tables disclose the changes in the credit loss allowance and gross carrying amount for loans and advances to customers carried at amortised cost between the beginning and the end of the reporting periods. Major movements in the table are described below: �� Transfers occur between Stage 1, 2 and 3, due to significant increases (or decreases) of credit risk or exposures becoming defaulted in the period, and the consequent "step up" (or "step down") between 12-month and Lifetime ECL. It should be noted, that: o For loans, which existed at the beginning of the period, opening exposures are disclosed as transfer amounts, while subsequent changes are disclosed in other respective lines; o For newly issued loans, exposures upon issuance are disclosed as transfer amounts; �� New originated or purchased gives us information regarding gross loans issued and corresponding credit loss allowance created during the period (however, exposures which were issued and repaid during the period and issued to refinance existing loans are excluded); �� Derecognised during the period refers to the balance of loans and credit loss allowance at the beginning of the period, which were repaid during the period. Exposures which were issued and repaid during the period, written off or refinanced by other loans, are excluded; �� Net repayments refers to the net changes in gross carrying amounts, which is loan disbursements less repayments, excluding loans that were fully repaid; �� Write-offs refer to write off of loans during the period; �� Foreign exchange movements refers to the translation of assets denominated in foreign currencies and effect to translation in presentational currency for foreign subsidiary; �� Net re-measurement due to stage transfers and risk parameters changes refers to the movements in ECL as a result of transfer of exposure between stages or changes in risk parameters and forward looking expectations; �� Modification refers to changes in terms that do not result in derecognition; �� Re-segmentation refers to the transfer of loans from one reporting segment to another. For presentation purposes, amounts are rounded to the nearest thousands of GEL, which in certain cases is disclosed as nil. 7 Loans and Advances to Customers (Continued) Total loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2023 16,395,090 1,412,781 397,100 18,204,971 107,354 99,161 165,850 372,365 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (1,172,894) 1,198,217 (25,323) - (41,531) 51,537 (10,006) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (29,506) (229,468) 258,974 - (1,914) (48,400) 50,314 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 900,958 (900,359) (599) - 63,233 (63,088) (145) - New originated or purchased 5,746,738 - - 5,746,738 80,140 - - 80,140 Derecognised or fully repaid during the period (2,754,401) (106,327) (65,339) (2,926,067) (39,689) (5,368) (10,756) (55,813) Net repayments (1,257,680) (85,569) (46,092) (1,389,341) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments16 - - - - (67,333) 66,269 82,985 81,921 Movements without impact on credit loss allowance charge for the period: Write-offs - - (117,683) (117,683) - - (117,683) (117,683) Changes in accrued interest 27,164 6,963 (2,070) 32,057 - - - - Modification 966 108 76 1,150 - - - - Foreign exchange movements (169,540) (17,159) (4,437) (191,136) (949) (308) (1,641) (2,898) At 30 June 2023 17,686,895 1,279,187 394,607 19,360,689 99,311 99,803 158,918 358,032 Total loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2022 14,602,402 1,935,370 509,619 17,047,391 104,058 120,832 185,356 410,246 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (1,282,597) 1,360,185 (77,588) - (42,556) 71,545 (28,989) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (17,791) (183,725) 201,516 - (5,618) (48,929) 54,547 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 1,195,748 (1,183,785) (11,963) - 76,059 (75,608) (451) - New originated or purchased 4,748,310 - - 4,748,310 97,102 - - 97,102 Derecognised or fully repaid during the period (2,114,706) (103,815) (45,497) (2,264,018) (24,694) (7,603) (14,791) (47,088) Net repayments (1,001,427) (106,619) (35,604) (1,143,650) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments[15] - - - - (94,255) 54,772 67,009 27,526 Movements without impact on credit loss allowance charge for the period: Write-offs - - (80,121) (80,121) - - (80,121) (80,121) Changes in accrued interest (22,631) 3,780 3,903 (14,948) - - - - Modification 2,413 485 398 3,296 - - - - Foreign exchange movements (629,412) (112,300) (20,033) (761,745) (1,143) (1,039) (1,977) (4,159) At 30 June 2022 15,480,309 1,609,576 444,630 17,534,515 108,953 113,970 180,583 403,506 7 Loans and Advances to Customers (Continued) Corporate loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2023 5,741,400 458,334 82,735 6,282,469 18,930 1,214 26,314 46,458 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (34,151) 34,151 - - (119) 119 - - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (15,983) (29,808) 45,791 - (899) (1,168) 2,067 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 48,324 (48,324) - - 228 (228) - - New originated or purchased 2,537,235 - - 2,537,235 19,224 - - 19,224 Derecognised or fully repaid during the period (1,635,693) (47,874) (22,118) (1,705,685) (22,509) (121) (1,184) (23,814) Net repayments (288,995) (14,908) (5,273) (309,176) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - 3,091 688 3,281 7,060 Movements without impact on credit loss allowance charge for the period: Re-segmentation 182,572 - (468) 182,104 544 - (236) 308 Write-offs - - (1) (1) - - (1) (1) Changes in accrued interest 9,377 4,427 (264) 13,540 - - - - Modification 419 (17) 20 422 - - - - Foreign Exchange movements (70,517) (9,581) (547) (80,645) (324) (24) (279) (627) At 30 June 2023 6,473,988 346,400 99,875 6,920,263 18,166 480 29,962 48,608 Corporate loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2022 5,743,444 712,548 91,749 6,547,741 24,404 1,310 25,017 50,731 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (125,146) 126,638 (1,492) - (596) 1,225 (629) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (180) (15,283) 15,463 - (21) (126) 147 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 113,965 (102,115) (11,850) - 1,351 (976) (375) - New originated or purchased 1,605,744 - - 1,605,744 31,927 - - 31,927 Derecognised or fully repaid during the period (1,178,698) (32,914) (4,724) (1,216,336) (10,036) (170) (548) (10,754) Net repayments (113,347) (32,155) (1,651) (147,153) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (26,086) (185) 2,949 (23,322) Movements without impact on credit loss allowance charge for the period: Re-segmentation 63,965 12,049 - 76,014 171 10 - 181 Write-offs - - (1,127) (1,127) - - (1,127) (1,127) Changes in accrued interest (36,469) (52) 733 (35,788) - - - - Modification 1,000 81 39 1,120 - - - - Foreign Exchange movements (297,468) (67,020) (3,092) (367,580) (596) (48) (247) (891) At 30 June 2022 5,776,810 601,777 84,048 6,462,635 20,518 1,040 25,187 46,745 7 Loans and Advances to Customers (Continued) Loans to micro, small and medium enterprises Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2023 4,327,742 317,830 163,843 4,809,415 24,938 23,961 47,213 96,112 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (392,846) 400,430 (7,584) - (9,575) 11,562 (1,987) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (802) (96,199) 97,001 - (155) (13,398) 13,553 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 250,624 (250,624) - - 16,359 (16,359) - - New originated or purchased 1,190,006 - - 1,190,006 20,784 - - 20,784 Derecognised or fully repaid during the period (340,199) (19,918) (18,702) (378,819) (2,626) (1,223) (3,856) (7,705) Net repayments (376,187) (28,615) (29,105) (433,907) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (24,376) 24,783 26,729 27,136 Movements without impact on credit loss allowance charge for the period: Re-segmentation (176,568) (153) - (176,721) (514) (25) - (539) Write-offs - - (30,779) (30,779) - - (30,779) (30,779) Changes in accrued interest 18,804 1,288 (4,305) 15,787 - - - - Modifications 91 88 (18) 161 - - - - Foreign exchange movements (35,423) (1,813) (2,516) (39,752) (186) (35) (580) (801) At 30 June 2023 4,465,242 322,314 167,835 4,955,391 24,649 29,266 50,293 104,208 Loans to micro, small and medium enterprises Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2022 3,519,842 413,339 208,124 4,141,305 20,487 32,234 60,380 113,101 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (318,444) 343,438 (24,994) - (6,483) 15,053 (8,570) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (985) (69,996) 70,981 - (313) (12,804) 13,117 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 276,127 (276,127) - - 19,518 (19,518) - - New originated or purchased 1,260,886 - - 1,260,886 15,280 - - 15,280 Derecognised or fully repaid during the period (365,611) (24,171) (15,963) (405,745) (4,129) (2,024) (3,945) (10,098) Net repayments (304,876) (25,701) (16,854) (347,431) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (22,077) 8,656 18,630 5,209 Movements without impact on credit loss allowance charge for the period: Re-segmentation (59,468) (11,287) 27 (70,728) (134) 60 - (74) Write-offs - - (21,375) (21,375) - - (21,375) (21,375) Changes in accrued interest 15,971 2,509 1,002 19,482 - - - - Modifications 324 140 198 662 - - - - Foreign exchange movements (146,702) (14,248) (10,795) (171,745) (293) (276) (828) (1,397) At 30 June 2022 3,877,064 337,896 190,351 4,405,311 21,856 21,381 57,409 100,646 Consumer loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2023 2,521,782 240,812 97,321 2,859,915 61,186 64,286 70,411 195,883 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (337,432) 343,239 (5,807) - (30,694) 33,760 (3,066) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (10,884) (85,444) 96,328 - (634) (32,913) 33,547 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 207,994 (207,435) (559) - 41,134 (40,996) (138) - New originated or purchased 1,379,416 - - 1,379,416 39,562 - - 39,562 Derecognised or fully repaid during the period (601,282) (16,689) (17,885) (635,856) (14,437) (3,393) (3,167) (20,997) Net repayments (385,651) (24,705) (6,007) (416,363) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (41,182) 41,241 47,138 47,197 Movements without impact on credit loss allowance charge for the period: Re-segmentation 649 436 (27) 1,058 (13) 20 (5) 2 Write-offs - - (85,156) (85,156) - - (85,156) (85,156) Changes in accrued interest 588 1,671 2,767 5,026 - - - - Modification 262 (23) 19 258 - - - - Foreign exchange movements (23,552) (954) (654) (25,160) (411) (152) (406) (969) At 30 June 2023 2,751,890 250,908 80,340 3,083,138 54,511 61,853 59,158 175,522 7 Loans and Advances to Customers (Continued) Consumer loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2022 1,920,145 239,240 86,519 2,245,904 56,365 65,208 61,355 182,928 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (343,847) 354,918 (11,071) - (33,740) 40,719 (6,979) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (10,820) (78,136) 88,956 - (4,488) (34,428) 38,916 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 208,669 (208,556) (113) - 42,800 (42,724) (76) - New originated or purchased 1,265,105 - - 1,265,105 49,248 - - 49,248 Derecognised or fully repaid during the period (415,618) (20,118) (10,516) (446,252) (10,399) (4,287) (5,420) (20,106) Net repayments (386,266) (25,030) (6,817) (418,113) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (35,335) 55,247 35,894 55,806 Movements without impact on credit loss allowance charge for the period: Re-segmentation 1,353 (139) (27) 1,187 (52) (12) - (64) Write-offs - - (55,021) (55,021) - - (55,021) (55,021) Changes in accrued interest 1,274 2,392 2,911 6,577 - - - - Modification 647 156 66 869 - - - - Foreign exchange movements (22,303) (1,849) (779) (24,931) (113) (109) (92) (314) At 30 June 2022 2,218,339 262,878 94,108 2,575,325 64,286 79,614 68,577 212,477 Mortgage loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2023 3,804,166 395,805 53,201 4,253,172 2,300 9,700 21,912 33,912 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (408,465) 420,397 (11,932) - (1,143) 6,096 (4,953) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (1,837) (18,017) 19,854 - (226) (921) 1,147 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 394,016 (393,976) (40) - 5,512 (5,505) (7) - New originated or purchased 640,081 - - 640,081 570 - - 570 Derecognised or fully repaid during the period (177,227) (21,846) (6,634) (205,707) (117) (631) (2,549) (3,297) Net repayments (206,847) (17,341) (5,707) (229,895) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (4,866) (443) 5,837 528 Movements without impact on credit loss allowance charge for the period: Re-segmentation (6,653) (283) 495 (6,441) (17) 5 241 229 Write-offs - - (1,747) (1,747) - - (1,747) (1,747) Changes in accrued interest (1,605) (423) (268) (2,296) - - - - Modification 194 60 55 309 - - - - Foreign exchange movements (40,048) (4,811) (720) (45,579) (28) (97) (376) (501) At 30 June 2023 3,995,775 359,565 46,557 4,401,897 1,985 8,204 19,505 29,694 Mortgage loans Gross carrying amount Credit loss allowance In thousands of GEL Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for defaulted) Total At 1 January 2022 3,418,971 570,243 123,227 4,112,441 2,802 22,080 38,604 63,486 Movements with impact on credit loss allowance charge for the period: Transfers: - to lifetime (from Stage 1 and Stage 3 to Stage 2) (495,160) 535,191 (40,031) - (1,737) 14,548 (12,811) - - to defaulted (from Stage 1 and Stage 2 to Stage 3) (5,806) (20,310) 26,116 - (796) (1,571) 2,367 - - to 12-months ECL (from Stage 2 and Stage 3 to Stage 1) 596,987 (596,987) - - 12,390 (12,390) - - New originated or purchased 616,575 - - 616,575 647 - - 647 Derecognised or fully repaid during the period (154,779) (26,612) (14,294) (195,685) (130) (1,122) (4,878) (6,130) Net repayments (196,938) (23,733) (10,282) (230,953) - - - - Net re-measurement due to stage transfers, changes in risk parameters and repayments - - - - (10,757) (8,946) 9,536 (10,167) Movements without impact on credit loss allowance charge for the period: Re-segmentation (5,850) (623) - (6,473) 15 (58) - (43) Write-offs - - (2,598) (2,598) - - (2,598) (2,598) Changes in accrued interest (3,407) (1,069) (743) (5,219) - - - - Modification 442 108 95 645 - - - - Foreign exchange movements (162,939) (29,183) (5,367) (197,489) (141) (606) (810) (1,557) At 30 June 2022 3,608,096 407,025 76,123 4,091,244 2,293 11,935 29,410 43,638 7 Loans and Advances to Customers (Continued) The contractual amounts outstanding on loans to customers that have been written off during the period partially or fully, but are still subject to enforcement activity was principal amount GEL 16,070 thousand (31 December 2022: GEL 22,535 thousand), accrued interest GEL 1,741 thousand (31 December 2022: GEL 4,160 thousand) and accrued off balance sheet penalty GEL 1,808 thousand (31 December 2022: GEL 2,814 thousand). 7 Loans and Advances to Customers (Continued) The table below presents the economic sector risk concentrations within the customer loan portfolio: 30 June 2023 31 December 2022 In thousands of GEL Amount % Amount % Individual 7,826,447 40% 7,199,092 40% Real Estate 1,582,473 8% 1,564,352 9% Construction 1,261,093 6% 1,073,761 6% Hospitality, Restaurants & Leisure 1,164,669 6% 1,147,098 6% Trade 1,133,322 6% 1,054,958 6% Food Industry 953,053 5% 1,060,058 6% Agriculture 896,788 5% 822,779 5% Energy & Utilities 894,700 5% 947,441 5% Healthcare 514,024 3% 451,304 2% Services 415,782 2% 388,517 2% Automotive 321,471 2% 297,558 2% Transportation 248,758 1% 240,535 1% Pawn Shops 204,978 1% 196,489 1% Metals and Mining 177,267 1% 179,365 1% Financial Services 153,156 1% 262,675 1% Communication 39,531 0% 30,758 0% Other 1,573,177 8% 1,288,231 7% Total gross loans and advances to customers 19,360,689 100% 18,204,971 100% As of 30 June 2023, the Group had 181 borrowers (31 December 2022: 177 borrowers) with the aggregated gross loan amounts above GEL 10,000 thousand. The total aggregated amount of these loans was GEL 4,877,871 thousand (31 December 2022: GEL 4,510,504 thousand) or 25.2% of the gross loan portfolio (31 December 2022: 24.8%). The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. There are three key types of collateral: �� Real estate; �� Movable property including fixed assets, inventory and precious metals; �� Financial assets including deposits, shares, and third party guarantees. The gross carrying amount of loans by stages that have been modified since initial recognition at a time when the loss allowance was measured at an amount equal to lifetime expected credit losses and for which the loss allowance has changed during the reporting period to an amount equal to 12-month expected credit losses loans are the following: in thousands of GEL 30 June 2023 31 December 2022 Stage 1 808,287 354,308 Stage 2 93,524 184,044 Stage 3 1,420 49,975 Total 903,231 588,327 At the central level a specific unit manages collateral to ensure that they serve as an adequate mitigation for credit risk management purposes. In line with the Group's internal policies, collateral provided to loans are evaluated by the internal appraisal group (external reviewers are used in case of loans to related parties or specific cases when complex objects are appraised). The internal appraisal group is part of the collateral management unit and, in order to ensure adequate and objective appraisal procedures, it is independent from the loan granting process. Real estate collateral of significant value is re-evaluated annually by internal appraisers. Statistical methods are used to monitor the value of real estate collateral that are of non-significant value and other types of collateral such as movable assets and precious metals. In some instances, where the discounted recovery from the liquidation of collateral (adjusted for the liquidity haircut and discounted for the period of expected selling time) is larger than the estimated exposure at default, no credit loss allowance is recognised. Collateral values include the contractual price of third-party guarantees, which, due to their nature, are capped at the loan's carrying value. Refer to Note 24 for the estimated fair value of each class of loans and advances to customers. Interest rate analysis of loans and advances to customers is disclosed in Note 22. Information on related party balances is disclosed in Note 25. 8 Premises, Equipment and Intangible Assets In thousands of GEL Land, Premises and leasehold improvements Office and Other equipment Construction in progress Total premises and equipment Intangible Assets Total At Cost 1-Jan-22 205,892 294,568 110,489 610,949 450,482 1,061,431 Additions 6,848 32,986 15,503 55,337 57,515 112,852 Transfers within premises and equipment 4,390 - (4,390) - - - Transfer to financial leases and repossessed assets - (323) - (323) - (323) Disposals (424) (6,609) (1,475) (8,508) (7,531) (16,039) Impairment reversal/(charge) 618 (5) 490 1,103 - 1,103 Effect of translation to presentation currency (25) (223) (38) (286) (789) (1,075) 30-Jun-22 217,299 320,394 120,579 658,272 499,677 1,157,949 1-Jan-23 198,896 337,661 129,775 666,332 559,547 1,225,879 Additions 4,717 26,390 18,088 49,195 64,950 114,145 Disposals (151) (3,234) (436) (3,821) (240) (4,061) Impairment charge - (13) (247) (260) - (260) Effect of translation to presentation currency (23) (1,023) (31) (1,077) (1,212) (2,289) 30-Jun-23 203,439 359,781 147,149 710,369 623,045 1,333,414 Accumulated depreciation / amortisation 1-Jan-22 (46,144) (172,299) - (218,443) (130,519) (348,962) Depreciation / amortisation charge (3,011) (11,133) - (14,144) (23,886) (38,030) Elimination of accumulated depreciation / amortisation on disposals 127 3,805 - 3,932 - 3,932 Effect of translation to presentation currency 29 80 - 109 19 128 30-Jun-22 (48,999) (179,547) - (228,546) (154,386) (382,932) 1-Jan-23 (40,063) (183,383) - (223,446) (176,349) (399,795) Depreciation / amortisation charge (1,501) (12,508) - (14,009) (30,097) (44,106) Elimination of accumulated depreciation / amortisation on disposals 42 1,769 - 1,811 26 1,837 Reversal of elimination of accumulated depreciation (3,299) (8,083) - (11,382) 1,845 (9,537) Effect of translation to presentation currency 1 63 - 64 (2) 62 30-Jun-23 (44,820) (202,142) - (246,962) (204,577) (451,539) Carrying amount 30-Jun-22 168,300 140,847 120,579 429,726 345,291 775,017 30-Jun-23 158,619 157,639 147,149 463,407 418,468 881,875 Office and other equipment include furniture and fixtures, computer and office equipment, motor vehicles as well as other equipment. Depreciation and amortisation charge presented on the face of the statement of profit or loss and other comprehensive income include depreciation and amortisation charge of premises and equipment, investment properties and intangible assets. Construction in progress consists of construction and refurbishment of branch premises and the Bank's new headquarter, that will be transferred to premises upon completion. 9 Due to Credit Institutions In thousands of GEL 30 June 2023 31 December 2022 Due to other banks Correspondent accounts and overnight placements 163,513 334,081 Deposits from banks 64,245 41,957 Sale and repurchase agreements with other banks - 262,415 Total due to other banks 227,758 638,453 Other borrowed funds Borrowings from foreign banks and international financial institutions 2,192,536 2,192,451 Borrowings from other local banks and financial institutions 28,368 79,222 Borrowings from National Bank of Georgia - 1,030,534 Total other borrowed funds 2,220,904 3,302,207 Total amounts due to credit institutions 2,448,662 3,940,660 10 Customer Accounts In thousands of GEL 30 June 2023 31 December 2022 State and public organisations Current/settlement accounts 1,030,895 1,053,255 Term deposits 1,008,446 553,743 Other legal entities Current/settlement accounts 6,082,927 5,752,571 Term deposits 1,081,631 1,236,063 Individuals Current/settlement accounts 5,566,405 5,375,570 Term deposits 4,222,188 4,065,331 Total customer accounts 18,992,492 18,036,533 State and public organisations include government owned businesses. Economic sector concentrations within customer accounts are as follows: 30 June 2023 31 December 2022 In thousands of GEL Amount % Amount % Individuals 9,783,257 51% 9,432,022 52% Financial services 1,633,101 9% 1,164,373 6% Trade 1,542,820 8% 1,568,181 9% Government sector 1,340,466 7% 623,953 3% Services 803,204 4% 828,692 5% Construction 601,858 3% 773,603 4% Energy & utilities 547,786 3% 1,073,229 6% Real estate 526,164 3% 545,959 3% Transportation 500,192 3% 452,229 3% Healthcare 140,701 1% 169,611 1% Hospitality & leisure 218,113 1% 223,906 1% Agriculture 110,444 1% 77,068 1% Metals and mining 28,891 0% 26,514 0% Other 1,215,495 6% 1,077,193 6% Total customer accounts 18,992,492 100% 18,036,533 100% As at 30 June 2023 the Group had 145 customers (31 December 2022: 154 customers) with balances above GEL 10,000 thousand. Their aggregate balance was GEL 7,117,243 thousand (31 December 2022: GEL 6,275,976 thousand) or 37.5% of total customer accounts (31 December 2022: 34.8%). As at 30 June 2023 included in customer accounts are deposits of GEL 111,696 thousand and GEL 125,194 thousand (31 December 2022: GEL 72,591 thousand and GEL 188,699 thousand) held as collateral for irrevocable commitments under letters of credit and guarantees issued, respectively. The latter is discussed in Note 23. As at 30 June 2023, deposits held as collateral for loans to customers amounted to GEL 691,347 thousand (31 December 2022: GEL 478,295 thousand). Refer to Note 24 for the disclosure of the fair value of customer accounts. Information on related party balances is disclosed in Note 25. 11 Provisions for Performance Guarantees, Credit Related Commitment Liabilities and Charges Movements in provisions for performance guarantees, credit related commitment and liabilities and charges are as follows: In thousands of GEL Perfor-mance guarantees Credit related commitments Provision for other liabilities and charges Provision related to insurance activities Total Carrying amount as of 31 December 2022 7,206 3,177 10,152 14,453 34,988 Impact of adopting IFRS 17 - - (627) (14,453) (15,080) Carrying amount as of 1 January 2023 7,206 3,177 9,525 - 19,908 Charges less releases recorded in profit or loss 1,424 (488) 121 - 1,057 Effect of translation to presentation currency (71) (41) (86) - (198) Carrying amount at 30 June 2023 8,559 2,648 9,560 - 20,767 In thousands of GEL Perfor-mance guarantees Credit related commitments Provision for other liabilities and charges Provision related to insurance activities Total Carrying amount as of 1 January 2022 4,620 3,624 7,952 9,162 25,358 Charges less releases recorded in profit or loss 1,352 (282) 60 4,918 6,048 Effect of translation to presentation currency (139) (127) - (140) (406) Carrying amount at 30 June 2022 5,833 3,215 8,012 13,940 31,000 For details of IFRS 17 adoption please refer to note 2. Credit related commitments and performance guarantees: Impairment allowance estimation methods differ for (i) letter of credits and guarantees and (ii) undrawn credit lines. For letter of credits and guarantees allowance estimation purposes the Group applies the staged approach and classifies them in stage 1, stage 2 or stage 3. Significant stage 2 and stage 3 guarantees are assessed individually. Non-significant stage 3 as well as all stage 1 and stage 2 guarantees and letter of credits are assessed collectively using exposure, marginal probability of conversion, loss given default and discount factor. Amount of the expected allowance differs based on the classification of the facility in the respective stage. For impairment allowance assessment purposes, for undrawn exposures the Group distinguishes between revocable and irrevocable loan commitments. For revocable commitments, the Group does not create an impairment allowance. As for the irrevocable undisbursed exposures the Group estimates utilization parameter (which represents expected limit utilization percentage conditional on the default event) in order to convert off-balance part of the exposure to on-balance. Performance guarantees are contracts that provide compensation if another party fails to perform a contractual, commercial or legal obligation. Where the performance guarantee provides the Group with contractual indemnification rights to recover any payments made to the guarantee holder from the applicant and such rights are covered by collateral, they are treated as a loan commitment provided to the applicant, if the bank concludes that there is no event with commercial substance that could cause the bank to incur an overall loss on the guarantee arrangement. Such performance guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight line basis over the life of the contract. At the end of each reporting period, the performance guarantee contracts are measured at the higher of (i) the unamortised balance of the amount at initial recognition and (ii) the amount of the loss allowance determined based on the expected credit loss model. 12 Debt Securities in Issue As of 30 June 2023, debt securities in issue comprised of: in thousands of GEL Currency Carrying amount as of 30 June 2023 Maturity Date Coupon rate Effective interest rate Bonds issued on Irish Stock Exchange USD 595,952 6/19/2024 5.80% 6.50% Bonds issued on Irish Stock Exchange USD 332,490 10/3/2024 10.80% 11.40% Bonds issued on Irish Stock Exchange USD 198,556 2/4/2027 8.90% 9.90% Private placement USD 81,847 8/18/2024 5.00% 5.50% Bonds issued on Georgian Stock Exchange JSC GEL 68,737 3/20/2026 TIBR 3M+2.75% 15.31% Private placement USD 40,027 5/11/2024 6.00% 6.60% Private placement USD 39,342 3/20/2026 7.00% 7.60% Private placement USD 17,722 4/29/2030 8.00% 8.50% Bonds issued on Georgian Stock Exchange JSC GEL 10,262 6/27/2026 TIBR 3M+2.75% 15.31% Baku Stock Exchange CJSC AZN 4,780 9/23/2023 12.00% 12.40% Baku Stock Exchange CJSC AZN 1,547 6/6/2024 12.00% 12.40% Baku Stock Exchange CJSC AZN 1,610 7/15/2024 12.00% 12.40% Total debt securities in issue 1,392,872 12 Debt Securities in Issue (continued) As of 31 December 2022, debt securities in issue comprised of: in thousands of GEL Currency Carrying amount as of 31 December 2022 Maturity Date Coupon rate Effective interest rate Bonds issued on Irish Stock Exchange USD 614,748 6/19/2024 5.80% 6.40% Bonds issued on Irish Stock Exchange USD 342,698 10/3/2024 10.80% 11.40% Bonds issued on Irish Stock Exchange USD 204,477 2/4/2027 8.90% 9.90% Private placement USD 84,766 8/18/2024 5.00% 5.40% Private placement USD 40,838 5/11/2024 6.00% 6.10% Bonds issued on Georgian Stock Exchange JSC GEL 38,550 3/20/2023 TIBR 3M+3.25% 12.50% Private placement USD 27,349 3/19/2023 6.50% 7.10% Baku Stock Exchange CJSC AZN 4,904 9/23/2023 12.00% 12.40% Baku Stock Exchange CJSC AZN 1,652 6/6/2024 12.00% 12.40% Baku Stock Exchange CJSC AZN 1,591 7/15/2024 12.00% 12.40% Total debt securities in issue 1,361,573 On 20 March 2023 the TBC Bank Group PLC completed the transaction of USD 15 million 3-year 7% senior unsecured bonds issue (the "Notes"). The private placement is direct, unsecured and unsubordinated obligations of the Group, issued in Georgia. On 20 March 2023, TBC Leasing JSC placed senior secured bonds of amount GEL 100 million on the Georgian Stock Exchange JSC out of which as of 30 June 2023 GEL 88.71 million was sold to investors. The coupon rate of securities is variable, 2.75% added to the 3-month Tbilisi Interbank Interest rate. Fitch rates the bonds 'BB-'. On 27 April 2023, the Bank has issued USD 30 million 7-year, 8% Subordinated notes, through the private placement, out of which as of 30 June 2023 USD 6.7 million was sold to investors. On 28 June 2023, TBC Leasing JSC issued Green Bonds of amount GEL 15 million on the Georgian Stock Exchange JSC. The coupon rate of securities is variable, 2.75% added to the 3-month Tbilisi Interbank Interest rate. Fitch rates the bonds 'BB-'. On 14 July 2022 the TBC Kredit LLC issued interest-baring paperless unsecured bond in the amount of AZN 1 million, with 2 year maturity at 12%. On 7 June 2022 the TBC Kredit completed the transaction of AZN 1 million 2-year 12% named, interest-baring, paperless, unsecured bonds issue (the "Notes"). On 12 May 2022 the TBC Bank Group PLC completed the transaction of USD 15 million 2-year 6% senior unsecured bonds issue (the "Notes"). The private placement is direct, unsecured and unsubordinated obligations of the Group, issued in Georgia. On 6 April 2022 the Bank completed the partial redemption of 2019 issued senior bond in the amount of USD 55 million and incurred transaction fee of USD 0.2 million. Consideration paid amounted to USD 52 million. The difference between amount paid and amortised cost of the bond adjusted with transaction fee was accounted as a gain on extinguishment of debt in the amount of USD 2 million recognized within other operating income. On 28 October 2021, the Bank completed the transaction of USD 75 million 8.894% yield Additional Tier 1 Capital Perpetual Subordinated Notes issue ("AT1 Notes") and successfully returned to the international capital markets. The AT1 Notes are listed on the regulated market of Euronext Dublin and are rated B- by Fitch. On 23 September 2021 the TBC Kredit completed the transaction of AZN 3 million 2-year 12% named, interest-baring, paperless, unsecured bonds issue (the "Notes"). On 18 August 2021 the TBC Bank Group PLC completed the transaction of USD 31 million 3-year 5% senior unsecured bonds issue (the "Notes"). The private placement is direct, unsecured and unsubordinated obligations of the Group, issued in Georgia. On 3 July 2019 the Bank completed the transaction of a debut inaugural USD 125 million 10.75% yield Additional Tier 1 Capital Perpetual Subordinated Notes issue ("AT1 Notes"). The AT1 Notes are listed on the regulated market of Euronext Dublin and are rated B- by Fitch. The AT1 Notes have been simultaneously listed on JSC Georgian Stock Exchange, making it the first dual-listed international offering of additional Tier 1 Capital Notes from Georgia. On 19 June 2019 the Bank completed the transaction of a debut USD 300 million 5-year 5.75% (6% yield) senior unsecured bonds issue. The Notes are listed on the regulated market of Euronext Dublin and are rated Ba2 by Moody's and BB- by Fitch. The Notes have been simultaneously listed on JSC Georgian Stock Exchange, making it the first dual-listed international offering of senior unsecured Notes from Georgia. 13 Subordinated Debt As of 30 June 2023, subordinated debt issued by the following counterparties comprised of: In thousands of GEL Grant Date Maturity Date Currency Agreement Interest Rate Outstanding amount in original currency Outstanding amount in GEL Asian Developement Bank 10/18/2016 12/31/2026 USD 9.99% 51,071 133,688 Private lenders 6/8/2017-3/31/2023 11/18/2024-6/30/2031 USD 8.00-8.50% 38,804 101,577 Global Climate Partnership Fund 11/20/2018 11/20/2028 USD 12.02% 25,091 65,681 European Fund for Southeast Europe 12/21/2018 12/21/2028 USD 8.84% 20,074 52,547 Green for Growth Fund 12/18/2015 12/16/2030 USD 10.95% 15,417 40,356 BlueOrchard Microfinance Fund 6/9/2023 6/9/2033 USD 11.48% 19,931 52,173 BlueOrchard Microfinance Fund 12/14/2018 12/15/2025 USD 9.28% 14,993 39,246 BlueOrchard Microfinance Fund 12/14/2018 12/14/2028 USD 9.28% 14,971 39,191 European Fund for Southeast Europe 12/18/2015 12/16/2030 USD 10.95% 7,708 20,177 European Fund for Southeast Europe 3/15/2016 3/17/2031 USD 10.95% 7,706 20,172 ResponsAbility SICAV (Lux) Micro and SME Finance Leaders 4/7/2022 4/7/2032 USD 10.79% 6,085 15,930 ResponsAbility SICAV (Lux) Micro and SME Finance Fund 11/30/2018 11/30/2028 USD 11.68% 5,957 15,594 ResponsAbility SICAV (Lux) Micro and SME Finance Fund 4/7/2022 4/7/2032 USD 10.79% 5,173 13,540 ResponsAbility SICAV (Lux) - Financial Inclusion Fund 4/7/2022 4/7/2032 USD 10.79% 3,956 10,354 ResponsAbility SICAV (Lux) - Financial Inclusion Fund 11/30/2018 11/30/2028 USD 11.68% 3,129 8,192 ResponsAbility SICAV (Lux) - Microfinance Leaders 11/30/2018 11/30/2028 USD 11.68% 1,009 2,642 Triple Jump Innovation Fund 3/14/2023 4/15/2028 USD 9.00% 3,051 7,988 Total subordinated debt 639,048 As of 31 December 2022, subordinated debt issued by the following counterparties comprised of: In thousands of GEL Grant Date Maturity Date Currency Agreement Interest Rate Outstanding amount in original currency Outstanding amount in GEL Asian Developement Bank 10/18/2016 12/31/2026 USD 12.19% 51,001 137,804 Private lenders 6/8/2017-12/6/2022 1/25/2023-3/31/2028 USD 8-9.5% 36,271 98,008 Global Climate Partnership Fund 11/20/2018 11/20/2028 USD 9.16% 25,097 67,813 European Fund for Southeast Europe 12/21/2018 12/21/2028 USD 8.84% 20,079 54,252 Green for Growth Fund 12/18/2015 12/16/2030 USD 9.74% 15,359 41,501 BlueOrchard Microfinance Fund 12/14/2018 12/15/2025 USD 9.28% 14,986 40,492 BlueOrchard Microfinance Fund 12/14/2018 12/14/2028 USD 9.28% 14,968 40,443 European Fund for Southeast Europe 12/18/2015 12/16/2030 USD 9.74% 7,679 20,749 European Fund for Southeast Europe 3/15/2016 3/17/2031 USD 9.74% 7,678 20,745 ResponsAbility SICAV (Lux) Micro and SME Finance Leaders 4/7/2022 4/7/2032 USD 9.94% 6,080 16,428 ResponsAbility SICAV (Lux) Micro and SME Finance Fund 11/30/2018 11/30/2028 USD 11.31% 5,955 16,091 ResponsAbility SICAV (Lux) Micro and SME Finance Fund 4/7/2022 4/7/2032 USD 9.94% 5,168 13,964 ResponsAbility SICAV (Lux) - Financial Inclusion Fund 4/7/2022 4/7/2032 USD 9.94% 3,952 10,679 ResponsAbility SICAV (Lux) - Financial Inclusion Fund 11/30/2018 11/30/2028 USD 11.31% 3,128 8,453 ResponsAbility SICAV (Lux) - Microfinance Leaders 11/30/2018 11/30/2028 USD 11.31% 1,009 2,726 Total subordinated debt 590,148 The debt ranks after all other creditors in case of liquidation, except AT1 Notes. Refer to Note 24 for the disclosure of the fair value of subordinated debt 14 Equity Share capital In thousands of GEL except for number of shares Number of ordinary shares Share capital As of 1 January 2022 55,155,896 1,682 Scrip dividend issued 536,515 18 Shares cancelled (589,645) (19) As of 31 December 2022 55,102,766 1,681 Scrip dividend issued 148,797 5 Shares cancelled (111,347) (4) As of 30 June 2023 55,140,216 1,682 As of 30 June 2023 the total authorised number of ordinary shares was 55,140,216 shares (31 December 2022: 55,102,766 shares). Each share has a nominal value of one British Penny. All issued ordinary shares are fully paid and entitled to dividends. Dividends On 18 April 2023, TBC Bank Group PLC's Board of directors declared a final dividend of GEL 2.95 per share payable by cash or shares (under TBC Bank Group PLC's scrip dividend program) at the option of the Shareholders. The record date was on 12 May 2023 and dividend was paid on 14 June 2023. As a result, the company has issued additional 148,797 shares to meet requests of those shareholders who opted to share dividend. On 12 August 2022, TBC Bank Group PLC's Board of directors declared an interim dividend of GEL 2.5 per share payable by cash or shares (under TBC Bank Group PLC's scrip dividend program) at the option of the Shareholders. The record date was on 16 September 2022 and dividend was paid on 14 October 2022. As a result, the company has issued additional 212,991 shares to meet requests of those shareholders who opted to share dividend. On 16 June 2022, TBC Bank Group PLC's shareholders passed a resolution to declare a final dividend of GEL 2.16 per share payable by cash or shares (under TBC Bank Group PLC's scrip dividend program) at the option of the Shareholders. The record date was on 17 June 2022 and dividend was paid on 15 July 2022. As a result, the company has issued additional 323,524 shares to meet requests of those shareholders who opted to share dividend. Shares held by trust Part of the shares are held by employee benefit trust (EBT) for the purpose of future employee share based payments plan. The number of shares held by trust as at 30 June 2023 comprised 1,125,706 shares (31 December 2022: 226,126 shares). The EBT has waived its rights to receive dividends on such shares. Other reserve in thousands of GEL 30 June 2023 31 December 2022 Other reserves at the beginning of the year 477,329 238,455 Derecognition of redemption liability during the period (141,234) - Remeasurement of redemption liability during the period 10,949 238,874 Other reserves at the end of the period 347,044 477,329 Remeasurement contains the effects of changes of exchange rate, unwinding accrual and expected results. Option agreement with TBC Bank Uzbekistan JSC minority shareholders In September 2021, the Group entered into the agreement with existing minority interest shareholders of TBC Bank Uzbekistan JSC allowing the parties to exercise call and put options for acquisition of minority shares. As part of the option agreement, the selling shareholders have a put option to sell their remaining minority stake in the TBC Bank Uzbekistan JSC beginning on the sixth anniversary of the date of the Investor Subscription Agreement continuing for so long thereafter as either option-holder holds any option-holder shares or has any obligation to subscribe for any option-holder shares under its Investor Subscription Agreement. During 2022 the Group has challenged the proper accounting treatment for put options granted to minority shareholders applied in previous periods, which has been revised and as a result caused the restatement of previous year balances (for more details please refer to Note 2). According to revisited accounting treatment, at initial recognition, the Group has recognised the present value of exercise price to purchase the remaining minority shares as redemption liability, having the offsetting side to other reserves in equity. The liability has been subsequently remeasured as required by IFRS by adjusting liability and other reserve balances. The non-controlling interest arising from the consolidated financial statements has not been de-recognised in line with IFRS requirements as ownership interest has been retained by minority shareholders. The redemption liability is carried at amortised cost and interest is unwound as well as subsequent remeasurement effects on each reporting date are recorded through other reserves in equity, as allowed by IFRS for transactions where the non-controlling participants remain exposed to the risks and rewards associated with the subsidiary's shares. 14 Equity (continued) Option agreement with Inspired LLC minority shareholders In April 2019, the Group entered into the agreement with existing minority interest shareholders of Inspired LLC allowing the parties to exercise call and put options for acquisition of minority shares. As part of the option agreement, the selling shareholders have a put option to sell their remaining minority stake in the Inspired LLC beginning from 48 months to 72 months (inclusive) from the closing date prescribed in the agreement. During 2022 the Group has challenged the proper accounting treatment for put options granted to minority shareholders applied in previous periods, which has been revised and as a result caused the restatement of previous year balances (for more details please refer to Note 2). According to revisited accounting treatment, at initial recognition, the Group has recognised the present value of exercise price to purchase the remaining minority shares as redemption liability, having the offsetting side to other reserves in equity. The liability has been subsequently remeasured as required by IFRS by adjusting liability and other reserve balances. Such requirement arises given the put option agreement had been signed with holders of the non-controlling interest (NCI) of subsidiary entity. The non-controlling interest arising from the consolidated financial statements has not been de-recognised in line with IFRS requirements as ownership interest has been retained by minority shareholders. The redemption liability is carried at amortised cost and interest is unwound as well as subsequent remeasurement effects on each reporting date are recorded through other reserves in equity, as allowed by IFRS. In May 2023 TBC Bank Group PLC finalized the acquisition process of the remaining 49% interest of Inspired LLC. The acquisition price paid to minority shareholders amounted to GEL 141,234 thousand. Accordingly, respective redemption liability has been derecognized as it is fully settled at the acquisition date. 15 Share Based Payments 2022-2024 remuneration scheme: The current compensation system was approved by shareholders at the TBC Bank Group PLC's Annual General Meeting in June 2021 and came into effect on 1 January 2022. It covers the period 2022-2024 inclusive. Share salary 2022-2024 The base salary of the executive management board members of the Bank, including TBC Bank Group PLC CEO (the "Top Management") is determined based on market practice and provides with a competitive fixed income to efficiently retain and reward TBC's leadership. For the CEO (both in his capacity as JSC TBC Bank's and TBC Bank Group PLC's CEO) the base salary comprises cash salary payable in GEL on a monthly basis and share salary. Salary shares are delivered during the first quarter of the second year (i.e. the year after the performance year). The number of shares is calculated based on the average share price of the last 10 days preceding the Remuneration Committee decision date. Shares do not have deferral period, are not subject to malus and claw back or any other restrictions and are vested immediately upon delivery. The Deputy CEO's base salary comprises only cash and is payable in GEL on a monthly basis. Variable Remuneration Variable remuneration of the Top Management consists of the annual bonus delivered in shares (the "Annual Bonus") and the share awards under Long Term Incentive Plan (the "LTIP Award"). 60% of variable remuneration is LTIP Award and the remaining 40% constitutes the Annual Bonus. Variable remuneration (Annual Bonus and LTIP Awards) are subject to meeting eligibility "gate KPIs", which, based on the Remuneration Committee's recommendation, can be amended every year by the Board, and will only be paid if the "gate KPIs" are met. (a) Annual Bonus under Deferred Share plan 2022-2024 Annual Bonus is delivered in TBC PLC shares. The Top Management receives annual bonus entirely in TBC PLC shares and it does not comprise any cash component. The Annual Bonus KPIs are set at the beginning of each year in relation to that year by the Remuneration Committee. The maximum opportunity of the Annual Bonus for each member of the Top Management is fixed at 135% of fixed salary. For achieving target performance, no more than 50% of the maximum Annual Bonus opportunity is payable. For threshold performance, no Annual Bonus is paid. The number of Shares to be allocated is calculated based on the average share price of the last 10 days preceding the Remuneration Committee's decision date. Annual Bonus share awards are governed by the Deferred Share Plan of TBC PLC as amended from time to time (the "Deferred Share Plan"). 15 Share Based Payments (Continued) The Top Management's Annual Bonus awards are subject to a holding period (but not continued employment) over 2 years period with 50% being released after one year and remaining 50% being released at the end of second year. The Annual Bonus is subject to malus and claw back provisions as described in the Deferred Share Plan. During the holding period, participants are entitled to vote at the shareholder meetings and receive dividends. (b) Long Term Incentive Plan (LTIP) 2022-2024 Long term incentive plan is used to provide a strong motivational tool to achieve long term performance conditions and to provide rewards to the extent those performance conditions are achieved. Performance conditions are chosen to align the Group's and the Bank's executive directors' interests with strategic objectives of the Group over multi-year periods and encourage a long-term view. The level of LTIP Award grant is determined pro rata from the LTIP maximum opportunity based on the assessment of the base i.e., prior year's Annual Bonus corporate KPIs performance. LTIP Awards granted will then be subject to 3-year LTIP forward-looking performance conditions and will vest at the end of 5-year period following the grant. LTIP Award forward-looking KPIs are set at the beginning of each year in relation to that year's cycle by the Remuneration Committee. The maximum opportunity of the LTIP Award in any given year is 161% of salary. 100% of the award will crystalize for achieving the maximum performance set for each measure. At threshold level of performance, for each measure, 25% of the award will crystalize. The Remuneration Committee has the discretion, any time after an award has been granted, to reduce (including to zero) an award if the Remuneration Committee considers that either the underlying financial performance of the Bank or the performance of the individual is such that the level of vesting cannot be justified. The Participants are not entitled to any dividend or voting rights until the LTIP Award vests. 2019-2021 remuneration system: The compensation system was approved by shareholders at the AGM on 21 May 2018 and came into effect on 1 January 2019 and it covers the period 2019-2021 inclusive. Deferred share salary 2019-2021 Part of the top management salary was paid with shares with the objective of closely promoting the long-term success of the Group and aligning senior executive directors' and shareholders' interests. Shares were usually delivered during the first quarter of the second year (i.e. the year after the performance year). 50% of the shares had 1 year deferral period and the remaining 50% were deferred for 2 years from the delivery date. The shares were registered in the trustees name as nominee for the participants and the participants were entitled to receive dividends. Starting from 2021, deferred share salary is no longer subject to the deferral and will be vested immediately upon delivery. Deferred Bonus plan 2019-2021 The annual bonus for the top management was determined as to the extent that the annual KPIs have been met. Shares were usually delivered during the first quarter of the second year (i.e. the year after the performance year) and the exact date was determined by the Board. 50% of the shares had 1 year deferral period and the remaining 50% was deferred for 2 years from the delivery date. The shares were registered in the trustees name as nominee for the participants and the participants were entitled to receive dividends. Annual KPIs were set by the Remuneration Committee at the beginning of each year in relation to that year and approved by the Board. To the extent that the KPIs were achieved, the Remuneration Committee may recommend to the Board whether an award may be made and the amount of such award. The Group did not pay guaranteed bonuses to executive directors. The nature of the KPIs with their specific weightings and targets is disclosed in the published annual report. Awards are subject to the Group's malus and clawback policies until the end of the relevant holding period. If at any time after making the award there is a material misstatement in the financial results for the year in respect of which the award was formally granted, the Remuneration Committee can recommend to the Board that some or all of the award for that year or any subsequent financial year that is unvested (or unpaid) to lapse (or not be paid). The number of shares was calculated based on the average share price of the last 10 days preceding the committee decision date. Long Term Incentive Plan (LTIP) 2019-2021 Long term incentive plan is used to provide a strong motivational tool to achieve long term performance conditions and to provide rewards to the extent those performance conditions are achieved. Performance conditions are chosen to align the Group's and the Bank's executive directors' interests with strategic objectives of the Group over multi-year periods and encourage a long-term view. In order for the shares to be delivered, the executive directors need to meet rolling performance conditions over the 3 year performance period. 15 Share Based Payments (Continued) Tabular information on the schemes is given below: 30 June 2023 31 December 2022 Number of unvested shares at the beginning of the period 2,044,604 2,125,246 Number of shares granted Number of shares granted - Deferred salary - 36,659 Number of shares granted - Deferred bonus - 286,301 Number of shares granted - LTIP - 424,114 Number of shares granted - Middle management, subsidiaries' management and other eligible employees 259,769 - Number of shares granted 259,769 747,074 Change in estimates for 2023-2024 awards (237,233) - Change in estimates of number of shares expected to be awarded (237,233) - Change in number of shares awarded for 2022 based on actual share price, exchange rate and KPI accomplishment (60,610) (35,879) Number of shares vested 2018 year award - 80% vesting - (456,815) 2019 year award - MM 33% vesting (48,838) (47,401) 2019 year award - TM 50% vesting - (137,779) 2020 year award - MM 33% vesting (14,846) (14,846) 2020 year award - TM 50% vesting (45,902) (45,902) 2021 year award - TM 100% vesting - (89,094) 2021 year award - MM 33% vesting (34,438) - 2021 year award - TM 50% vesting (64,307) - 2022 year award - TM 100% vesting (10,802) - Number of shares vested (219,133) (791,837) Number of unvested shares at the end of the period 1,787,397 2,044,604 2022 amounts represent 2022-2024 remuneration schemes for top management granted in 2022. 2023 amounts represent 2023-2024 remuneration schemes for middle management granted in 2023. Expense recognised as staff cost during the period was GEL 16,072 thousand (30 June 2022: GEL 13,857 thousand). Tax part of the existing bonus system is accounted under equity settled basis. Staff costs related to equity settled part of the share based payment schemes are recognised in the income statement on a straight line basis over the vesting period of each relevant tranche and corresponding entry is credited to share based payment reserve in equity. In 2019 the Group established employee benefit trust (EBT) set up by the Executive Equity Compensation Trustee - Sanne Fiduciary Services Limited (the "Trustee") which acts as the trustee of the Group's share based payments plan. It purchases TBC Bank Group PLC's shares from the open market and holds them before they are awarded to participants and vesting date is due. The number of shares to be purchased and held are instructed by the TBC Bank Group PLC's. The shares are presented as treasury shares under Shares held by trust category in the Statement of Financial Position until they are awarded to participants. As at 30 June 2023 the share number held by Trustee was 1,125,706 (31 December 2022: 226,126), which represents 2% of total outstanding shares (31 December 2022: 0.4%). 16 Earnings per Share Basic earnings per share are calculated by dividing the profit or loss attributable to the owners of the Group by the weighted average number of ordinary shares in issue during the period. In thousands of GEL except for number of shares 30 June 2023 30 June 2022 Profit for the period attributable to the owners of the Group 537,459 458,465 Weighted average number of ordinary shares in issue 54,264,880 54,772,304 Basic earnings per ordinary share attributable to the owners of the Group (expressed in GEL per share) 9.90 8.37 Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the Group by the weighted average number of ordinary shares adjusted for the effects of all dilutive potential ordinary shares during the year. Ordinary shares with dilutive potential represent those shares, that were granted to the participants of the share based payments scheme and are not yet distributed . In thousands of GEL except for number of shares 30 June 2023 30 June 2022 Profit for the period attributable to the owners of the Group 537,459 458,465 Weighted average number of ordinary shares in issue adjusted for the effects of all dilutive potential ordinary shares during the period 55,093,204 56,423,254 Diluted earnings per ordinary share attributable to the owners of the Group (expressed in GEL per share) 9.76 8.13 17 Segment Analysis The Management Board (the "Board") is the chief operating decision maker (CODM) and it reviews the Group's internal reporting in order to assess the performance and to allocate resources. Following changes to the Group's strategic focus, the management has reconsidered the existing segmentation of the Group by disclosing two major segments, while other relatively immaterial business directions are all combined into another segment, which is in line with how CODM analyses the Group results and make group level decisions. The segments are aggregated considering the similarity of business nature, geography and other economic characteristics: According to the updated segment definition starting from 1 January 2023, the operating segments are defined as follows: Georgian financial services include JSC TBC Bank with its Georgian subsidiaries and JSC TBC Insurance, with its subsidiaries. The Georgia financial service segment consist of three major business sub-segments, while treasury, leasing and insurance businesses are combined into corporate and other sub-segment: �� Corporate - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 20.0 million or which has been granted facilities of more than GEL 7.5 million. Some other business customers may also be assigned to the CIB sub-segment or transferred to the MSME sub-segment on a discretionary basis. In addition, CIB includes Wealth Management (WM) private banking services to high-net-worth individuals with a threshold of US$ 250,000 on assets under management (AUM), as well as on a discretionary basis; �� Retail - non-business individual customers; �� Micro, small and medium enterprises - business customers who are not included in the CIB segment; �� Corporate center and other - comprises the treasury operations, TBC Leasing and TBC Insurance. �� Uzbekistan operations - TBC Bank Uzbekistan with respective subsidiaries and Payme (Inspired LLC); �� Other operations and eliminations - includes non-material or non-financial subsidiaries of the group and intra-group eliminations. The reportable segments are the same as the operating segments. No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Group's total revenue in 2023 and 2022. Allocation of indirect expenses is performed based on drivers identified for each type of cost where possible. If there is no identifiable driver for any type of expense/overhead cost, those expenses are allocated between segments based on the same logic as applied for the expenses with similar nature (e.g. other operating expenses would follow the pattern of closest category of operating expenses). The intersegment transfer pricing methodology is an internally developed tool founded on matched maturity logics. It is used to effectively manage liquidity and mitigate interest rate risks within the Group. The process entails the corporate centre borrowing monetary amounts (deposits) from different business segments. Compensation for each deposit is based on its specific currency, duration, type, liquidity and capital requirements, ensuring equitable treatment for each segment. In turn, business segments borrow funds from the corporate centre to finance loans and other assets. The pricing for each borrowing transaction is determined based on factors such as the currency, loan type (fixed, floating, mixed interest rates), loan duration, and capital requirement. 17 Segment Analysis (Continued) A summary of the Group's reportable segments as 30 June 2023 and 2022 is provided below: Segment disclosure below is prepared with the effect of 2023 re-segmentations as described above: in thousands of GEL Corporate Retail Micro, small and medium enterprises Corporate centre and other Georgian financial services Uzbekistan operations Other operations and eliminations Total 30 June 2023 Interest income 361,534 430,853 275,633 209,505 1,277,525 103,255 3,190 1,383,970 Interest expense (260,180) (82,276) (5,933) (255,881) (604,270) (50,366) (2,229) (656,865) Net interest gains on currency swaps 2,130 224 14 36,656 39,024 - - 39,024 Inter-segment interest income/(expense) 152,459 (102,235) (114,778) 64,554 - - - - Net interest income 255,943 246,566 154,936 54,834 712,279 52,889 961 766,129 Fee and commission income 47,333 177,876 41,012 - 266,221 45,841 1,468 313,530 Fee and commission expense (8,354) (70,348) (23,575) (2,543) (104,820) (10,472) (164) (115,456) Net fee and commission income 38,979 107,528 17,437 (2,543) 161,401 35,369 1,304 198,074 Insurance profit/(loss) - - - 12,760 12,760 - (358) 12,402 Net gains/(losses) from derivatives, foreign currency operations and translation 52,044 41,197 24,176 15,902 133,319 83 (11,674) 121,728 Net gains from disposal of investment securities measured at fair value through other comprehensive income - - - 4,319 4,319 - - 4,319 Other operating income 7,033 3,373 1,117 391 11,914 32 3,865 15,811 Share of profit of associate - - - 542 542 - - 542 Other operating non-interest income/(expense) and insurance profit/(loss) 59,077 44,570 25,293 33,914 162,854 115 (8,167) 154,802 Credit loss (allowance)/reversal for loans to customers (733) (32,276) (34,243) - (67,252) (12,882) 710 (79,424) Credit loss (allowance)/reversal for finance lease receivables - - - (1,259) (1,259) (921) 48 (2,132) Credit loss (allowance)/reversal for performance guarantees (1,459) (2) 37 - (1,424) - - (1,424) Credit loss reversal for credit related commitments 171 149 168 - 488 - - 488 Credit loss allowance for other financial assets (2,033) (79) - (1,598) (3,710) (380) - (4,090) Credit loss allowance for financial assets measured at fair value through other comprehensive income (110) - - (52) (162) - - (162) Net recovery/(impairment) of non-financial assets 25 41 125 - 191 - (549) (358) Operating income/(expense) after expected credit and non-financial asset impairment losses 349,860 366,497 163,753 83,296 963,406 74,190 (5,693) 1,031,903 Staff costs (30,215) (91,157) (39,309) (16,788) (177,469) (18,300) (16,381) (212,150) Depreciation and amortization (5,991) (32,284) (9,505) (2,513) (50,293) (4,230) (3,425) (57,948) Provision for liabilities and charges - - - (121) (121) - - (121) Administrative and other operating expenses (8,350) (53,778) (14,427) (9,736) (86,291) (24,825) (5,005) (116,121) Operating expenses (44,556) (177,219) (63,241) (29,158) (314,174) (47,355) (24,811) (386,340) Profit/(loss) before tax 305,304 189,278 100,512 54,138 649,232 26,835 (30,504) 645,563 Income tax (expense)/release (44,320) (27,115) (14,985) (9,538) (95,958) (1,623) 64 (97,517) Profit/(loss) for the period 260,984 162,163 85,527 44,600 553,274 25,212 (30,440) 548,046 30 June 2023 Total gross loans and advances to customers reported 6,920,263 6,945,911 4,949,878 - 18,816,052 526,843 17,794 19,360,689 Total customer accounts reported 9,048,955 6,985,211 1,638,612 967,133 18,639,911 457,340 (104,759) 18,992,492 Total credit related commitments and performance guarantees 2,793,182 163,669 395,911 - 3,352,762 - - 3,352,762 17 Segment Analysis (Continued) For comparison purposes segment disclosure below is prepared with the effect of 2023 re-segmentations as described above: in thousands of GEL Corporate Retail Micro, small and medium enterprises Corporate centre and other Georgian financial services Uzbekistan operations Other operations and eliminations Total 30 June 2022 Interest income 312,653 388,836 218,574 120,011 1,040,074 37,163 3,225 1,080,462 Interest expense (166,332) (55,906) (4,770) (235,434) (462,442) (24,274) (3,272) (489,988) Net interest gains on currency swaps - - - 1,717 1,717 - - 1,717 Inter-segment interest income/(expense) 49,321 (121,894) (101,944) 174,517 - - - - Net interest income/(expense) 195,642 211,036 111,860 60,811 579,349 12,889 (47) 592,191 Fee and commission income 41,870 159,233 13,691 6 214,800 26,348 (765) 240,383 Fee and commission expense (4,186) (81,777) (5,787) (86) (91,836) (7,013) (72) (98,921) Net fee and commission income/(expense) 37,684 77,456 7,904 (80) 122,964 19,335 (837) 141,462 Insurance profit/(loss) - - - 11,044 11,044 - (79) 10,965 Net gains/(losses) from derivatives, foreign currency operations and translation 60,491 33,444 22,673 4,922 121,530 (358) (6,795) 114,377 Net gains from disposal of investment securities measured at fair value through other comprehensive income 910 - - 1,315 2,225 - - 2,225 Other operating income 944 2,289 382 7,303 10,918 5 4,635 15,558 Share of (loss)/profit of associate (126) - - 249 123 - - 123 Other operating non-interest income/(expense) and insurance profit/(loss) 62,219 35,733 23,055 24,833 145,840 (353) (2,239) 143,248 Credit loss reversal/(allowance) for loans to customers 4,178 (47,848) (6,443) - (50,113) (3,738) 3,329 (50,522) Credit loss (allowance)/reversal for finance lease receivables - - - (753) (753) (352) 543 (562) Credit loss (allowance)/reversal for performance guarantees (1,362) (3) 13 - (1,352) - - (1,352) Credit loss reversal for credit related commitments 67 149 66 - 282 - - 282 Credit loss reversal/(allowance) for other financial assets 1,062 (32) - (1,728) (698) - - (698) Credit loss (allowance)/reversal for financial assets measured at fair value through other comprehensive income (140) - - 1,408 1,268 - - 1,268 Net recovery/(impairment) of non-financial assets 331 (23) (217) (85) 6 - (12) (6) Operating income after expected credit and non-financial asset impairment losses 299,681 276,468 136,238 84,406 796,793 27,781 737 825,311 Staff costs (25,838) (79,853) (30,625) (9,784) (146,100) (18,530) (11,861) (176,491) Depreciation and amortization (3,125) (29,207) (6,779) (2,350) (41,461) (3,538) (2,333) (47,332) Provision for liabilities and charges - - - (60) (60) - - (60) Administrative and other operating expenses (8,305) (44,119) (10,743) (7,738) (70,905) (15,304) (4,493) (90,702) Operating expenses (37,268) (153,179) (48,147) (19,932) (258,526) (37,372) (18,687) (314,585) Profit/(loss) before tax 262,413 123,289 88,091 64,474 538,267 (9,591) (17,950) 510,726 Income tax (expense)/release (26,258) (13,651) (9,112) (7,362) (56,383) 4,342 (140) (52,181) Profit for the period 236,155 109,638 78,979 57,112 481,884 (5,249) (18,090) 458,545 30 June 2022 Total gross loans and advances to customers reported 6,688,195 6,472,248 4,173,951 - 17,334,394 181,345 18,776 17,534,515 Total customer accounts reported 7,708,834 5,671,379 1,517,621 714,620 15,612,454 235,780 (75,329) 15,772,905 Total credit related commitments and performance guarantees 2,517,672 168,123 345,985 - 3,031,780 - - 3,031,780 17 Segment Analysis (Continued) Segment disclosure below is prepared without the effect of 2023 re-segmentations as described above: in thousands of GEL Corporate Retail Micro, small and medium enterprises Corporate centre and other operations Total 30 June 2022 Interest income 304,834 419,335 226,646 129,647 1,080,462 Interest expense (164,737) (79,072) (5,331) (240,848) (489,988) Net interest gains on currency swaps - - - 1,717 1,717 Inter-segment interest income/(expense) 51,754 (121,894) (104,377) 174,517 - Net interest income 191,851 218,369 116,938 65,033 592,191 Fee and commission income 39,489 159,233 15,305 26,356 240,383 Fee and commission expense (4,187) (81,714) (5,780) (7,240) (98,921) Net fee and commission income 35,302 77,519 9,525 19,116 141,462 Insurance profit - - - 10,965 10,965 Net gains/(losses) from derivatives, foreign currency operations and translation 59,481 33,468 23,683 (2,255) 114,377 Net gains from disposal of investment securities measured at fair value through other comprehensive income 910 - - 1,315 2,225 Other operating income 944 2,265 382 11,967 15,558 Share of (loss)/profit of associate (126) - - 249 123 Other operating non-interest income and insurance profit 61,209 35,733 24,065 22,241 143,248 Credit loss reversal/(allowance) for loans to customers 3,080 (49,932) (3,670) - (50,522) Credit loss allowance for finance lease receivables - - - (562) (562) Credit loss (allowance)/reversal for performance guarantees (1,362) (3) 13 - (1,352) Credit loss reversal for credit related commitments 67 149 66 - 282 Credit loss reversal/(allowance) for other financial assets 1,062 (32) - (1,728) (698) Credit loss (allowance)/reversal for financial assets measured at fair value through other comprehensive income (140) - - 1,408 1,268 Net recovery/(impairment) of non-financial assets 331 (23) (217) (97) (6) Operating income after expected credit and non-financial asset impairment losses 291,400 281,780 146,720 105,411 825,311 Staff costs (27,117) (80,643) (31,076) (37,655) (176,491) Depreciation and amortization (3,216) (29,289) (6,823) (8,004) (47,332) Provision for liabilities and charges - - - (60) (60) Administrative and other operating expenses (9,790) (44,772) (11,394) (24,746) (90,702) Operating expenses (40,123) (154,704) (49,293) (70,465) (314,585) Profit before tax 251,277 127,076 97,427 34,946 510,726 Income tax expense (25,434) (13,651) (9,944) (3,152) (52,181) Profit for the period 225,843 113,425 87,483 31,794 458,545 30 June 2022 Total gross loans and advances to customers reported 6,462,635 6,666,569 4,405,311 - 17,534,515 Total customer accounts reported 7,589,188 5,906,886 1,562,211 714,620 15,772,905 Total credit related commitments and performance guarantees 2,485,086 168,123 378,571 - 3,031,780 17 Segment Analysis (Continued) Segment disclosure below is prepared with the effect of 2023 re-segmentations as described above: in thousands of GEL Corporate Retail Micro, small and medium enterprises Corporate centre and other Georgian financial services Uzbekistan operations Other operations and eliminations Total 30 June 2023 - Fee and commission income 47,333 177,876 41,012 - 266,221 45,841 1,468 313,530 - Other operating income 7,033 3,373 1,117 391 11,914 32 3,865 15,811 Total 54,366 181,249 42,129 391 278,135 45,873 5,333 329,341 Timing of revenue recognition: - At point in time 54,279 180,802 42,107 391 277,579 45,873 5,333 328,785 - Over a period of time 87 447 22 - 556 - - 556 For comparison purposes segment disclosure below is prepared with the effect of 2023 re-segmentations as described above: in thousands of GEL Corporate Retail Micro, small and medium enterprises Corporate centre and other Georgian financial services Uzbekistan operations Other operations and eliminations Total 30 June 2022 - Fee and commission income 41,870 159,233 13,691 6 214,800 26,348 (765) 240,383 - Other operating income 944 2,289 382 7,303 10,918 5 4,635 15,558 Total 42,814 161,522 14,073 7,309 225,718 26,353 3,870 255,941 Timing of revenue recognition: - At point in time 42,814 161,039 14,073 7,309 225,235 26,353 3,870 255,458 - Over a period of time - 483 - - 483 - - 483 Segment disclosure below is prepared without the effect of 2023 re-segmentations as described above: in thousands of GEL Corporate Retail Micro, small and medium enterprises Corporate centre and other operations Total 30 June 2022 - Fee and commission income 39,489 159,233 15,305 26,356 240,383 - Other operating income 944 2,265 382 11,967 15,558 Total 40,433 161,498 15,687 38,323 255,941 Timing of revenue recognition: - At point in time 40,433 161,015 15,687 38,323 255,458 - Over a period of time - 483 - - 483 18 Interest Income and Expense in thousands of GEL 30 June 2023 30 June 2022 Interest income calculated using effective interest method Loans and advances to customers 1,148,170 939,473 Investment securities measured at fair value through other comprehensive income 142,676 87,612 Due from other banks 47,797 16,279 Bonds carried at amortised cost 3,400 3,512 Other financial asset 1,492 2,669 Other interest income Finance lease receivables 40,435 30,917 Total interest income 1,383,970 1,080,462 Interest expense Customer accounts (428,316) (279,815) Due to credit institutions (143,143) (116,760) Subordinated debt (29,233) (25,803) Debt securities in issue (54,269) (65,726) Other interest expense Lease liabilities (1,904) (1,884) Total interest expense (656,865) (489,988) Net gains on currency swaps 39,024 1,717 Net interest income 766,129 592,191 During the six months ended 30 June 2023 the interest accrued on defaulted loans amounted to GEL 16,373 thousand (30 June 2022: 17,099 GEL thousand). During six months ended 30 June 2023 capitalized borrowing costs in the amount of GEL 994 thousand (six months ended 30 June 2022: GEL 897 thousand), was attributable to the development of the Bank's headquarters. The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is weighted average of interest bearing liabilities by currencies: 9.3% in GEL, 1.9% in USD and 0.7 % in EUR. (2022: 8.6% in GEL, 2.5% in USD and 0.5% in EUR). 19 Fee and Commission Income and Expense Fee and commission income and expense for 30 June 2023 and 2022 are as follows: in thousands of GEL 30 June 2023 30 June 2022 Fee and commission income in respect of financial instruments not at fair value through profit or loss: Card operations 142,649 111,175 Settlement transactions 93,521 82,936 Guarantees issued 20,943 19,851 Cash transactions 25,543 5,419 Issuance of letters of credit 4,379 3,165 Foreign exchange operations 2,494 2,526 Other 24,001 15,311 Total fee and commission income 313,530 240,383 Fee and commission expense in respect of financial instruments not at fair value through profit or loss: Card operations 83,024 70,863 Settlement transactions 11,196 10,337 Cash transactions 8,282 3,879 Guarantees received 907 1,470 Letters of credit 1,361 524 Foreign exchange operations 7 148 Other 10,679 11,700 Total fee and commission expense 115,456 98,921 Net fee and commission income 198,074 141,462 20 Net Gains from Currency Derivatives, Foreign Currency Operations and Translation in thousands of GEL 30 June 2023 30 June 2022 Net gains from trading in foreign currencies 90,261 182,329 Net gains/(losses) from foreign exchange translation 31,765 (68,059) Net (losses)/gains from derivative financial instruments other than derivatives on foreign currency (298) 107 Total net gains from currency derivatives, foreign currency operations and translation 121,728 114,377 Management has corrected the presentation of translation gains/losses from derivatives on foreign currency. Gains of GEL 60,060 thousand was presented as "Net gains/(losses) from foreign exchange translation" in 2022 interim condensed consolidated financial statement accounts and was reclassified to "Net gains from trading in foreign currencies", comparatives and condensed consolidated interim statement of cash flows has been restated accordingly. in thousands of GEL 30 June 2022 (As originally presented) Reclassification 30 June 2022 (as restated) Net gains from trading in foreign currencies 122,269 60,060 182,329 Net gains/(losses) from foreign exchange translation (7,999) (60,060) (68,059) 21 Income Taxes In 2022 the Government of Georgia has approved the changes to the current corporate tax model in Georgia for financial institutions applicable from 2023. According to the announced changes, the financial sector will no longer switch to the Estonian tax model, which was expected to exempt banks from paying corporate taxes on retained earnings and only required a payment of 15% corporate tax rate on distributed earnings. In addition, with the effect from 2023, the existing corporate tax rate for banks will be increased from 15% to 20% (applied for only taxable income portion, while non-taxable incomes are excluded). At the same time dividends will no longer be taxed with 5% dividend tax. As at 30 June 2023, the weighted average income tax rate is 20% (six months ended 30 June 2022: 15%). 22 Financial and Other Risk Management Climate risk The Group's largest operations are located in Georgia hence the climate risk overview is done by the management from Georgian perspective. The Georgia's 2030 Climate Change Strategy and Climate Action Plan lays out different policy measures on which TBC Bank based its identification of the potential impact of the policy measures on different economic sectors. As a summary of the potential impact of the various transition risks and physical risks identified, the transitional risks in Georgia are low, considering, that trade and services dominate the Georgian economy, the policy measures outlined in the Georgia's 2030 Climate Change Strategy will have overall low impact on the economic sectors, especially in short and medium term. The Georgia's 2030 Climate Change Strategy takes into consideration that Georgia is a transitional and growing economy, and therefore the government strategy is not to impede the growth of the GDP with policy measures and rather to support a smooth transition where necessary. It is worth noting, that the economic sectors most affected by transitional risks world-wide such as mining crude petroleum, natural gas and metal ores, manufacturing coke and refined petroleum products are present to the extremely limited extend in Georgia, resulting in a low overall impact of transitional measures on economic growth, if any. In order to increase the understanding of climate-related risks on its loan portfolio, the Bank performed a high-level sectoral risk assessment, as different sectors might be vulnerable to different climate-related risks over different time horizons; furthermore, the Bank performed climate stress testing of the credit portfolio. The maturity structure of the loan portfolio shows that the largest part of assets is distributed in the time horizons that are much shorter than the impacts of climate change, especially of physical risks, can be materialized in Georgia. Therefore, the bank has not made any adjustment to the level of provisions purely related to climate risk. On the other hand, the understanding of climate related risks, which have longer-term impacts need to be increased in coming years, therefore, when the bank has a more definitive analysis, it will further develop the approach, how to consider climate risks in provisioning. No post model adjustments (PMAs) or Post model overlays (PMOs) have been posted for 2023 in this regard. Market risk The Bank follows the Basel Committee's definition of market risk as the risk of losses in on- and off-balance sheet positions arising from movements in market prices. This risk is principally made up of (a) risks pertaining to interest rate instruments and equities in the trading book and (b) foreign exchange rate risk (or currency risk) and commodities risk throughout the Bank. The Bank's strategy is not to be involved in trading book activity or investments in commodities. Accordingly, the Bank's exposure to market risk is primarily limited to foreign exchange rate risk in the structural book. Currency risk Foreign exchange rate risk arises from the potential change in foreign currency exchange rates, which can affect the value of a financial instrument. This risk stems from the open currency positions created due to mismatches in foreign currency assets and liabilities. The NBG requires the Bank to monitor both balance sheet and total aggregate (including off-balance sheet) open currency positions and to maintain the later one within 20% of the Bank's regulatory capital. The Asset-Liability Management Committee ("ALCO") has set limits on the level of exposure by currency as well as on aggregate exposure positions which are more conservative than those set by 22 Financial and Other Risk Management (Continued) the NBG. The Bank's compliance with such limits is monitored daily by the heads of the Treasury and Financial Risk Management Divisions. Currency risk management framework is governed through the Market Risk Management Policy. The table below summarises the Group's exposure to foreign currency exchange rate risk at the balance sheet date. While managing open currency position the Group considers part of the provisions to be denominated in the USD, Euro and other currencies. Gross amount of currency swap deposits is included in Derivatives. Therefore, total financial assets and liabilities below are not traceable with either balance sheet or liquidity risk management tables, where net amount of gross currency swaps is presented. As of 30 June 2023 in thousands of GEL Monetary financial assets Monetary financial liabilities Derivatives Net position Georgian Lari 13,369,478 (10,827,498) 661,793 3,203,773 US Dollar 8,587,407 (10,496,748) 1,898,903 (10,438) Euro 4,454,782 (1,932,377) (2,528,924) (6,519) Other 925,944 (712,137) (27,032) 186,775 Total 27,337,611 (23,968,760) 4,740 3,373,591 Starting from 2022 management presents the undiscounted gross amount of currency derivatives in currency risk management table above as it reflects Bank's actual risk management policy principles. The derivative amounts in the table above do not reconcile to note 24 as that one includes fair values of derivative financial instruments. As of 31 December 2022 in thousands of GEL Monetary financial assets Monetary financial liabilities Derivatives Net position Georgian Lari 13,473,913 (10,881,999) 528,501 3,120,415 US Dollar 9,133,236 (10,959,719) 1,826,759 276 Euro 4,210,470 (1,933,880) (2,323,860) (47,270) Other 705,911 (552,540) (31,929) 121,442 Total 27,523,530 (24,328,138) (529) 3,194,863 Starting from January 2023 the Group has adopted IFRS 17 and according to the standard requirements retrospectively applied presentation of respective balances for 2022 as described in note 2. US Dollar strengthening by 20% (weakening 20%) would decrease Group's profit or loss and equity in H1 2023 by GEL 2,088 thousand (increase by GEL 2,088 thousand). Euro strengthening by 20% (weakening 20%) would decrease Group's profit or loss and equity in 2023 by GEL 1,304 thousand (increase by GEL 1,304 thousand). US Dollar strengthening by 20% (weakening 20%) would increase Group's profit or loss and equity in 2022 by GEL 55 thousand (decrease by GEL 55 thousand). Euro strengthening by 20% (weakening 20%) would decrease Group's profit or loss and equity in 2022 by GEL 9,454 thousand (increase by GEL 9,454 thousand). Interest rate risk Interest rate risk arises from potential changes in the market interest rates that can adversely affect the fair value or future cash flows of the financial instrument. This risk can arise from maturity mismatches of assets and liabilities, as well as from the re-pricing characteristics of such assets and liabilities. The biggest share of the Bank's deposits and the part of the loans are at fixed interest rates, while a portion of the Bank's borrowings is at a floating interest rate. In case of need, the Bank also applies for interest rate risk hedging instruments in order to mitigate interest rate risk. Furthermore, many of the Bank's loans to customers contain a clause allowing it to adjust the interest rate on the loan in case of adverse interest rate movements, thereby limiting the Bank's exposure to interest rate risk. The management also believes that the Bank's interest rate margins provide a reasonable buffer to mitigate the effect of possible adverse interest rate movements. The Group employs an advanced framework for the management of interest rate risk by establishing appropriate Risk Appetite limits, monitoring compliance with them and preparing forecasts. From September 2020 the NBG introduced regulation on interest rate risk and set the limit for Economic Value of Equity (EVE) sensitivity at 15% of NBG Tier 1 Capital. The main principles and assumptions of NBG IRR methodology are in line with Basel standards and EBA guidelines developed for IRR management purposes. According to NBG guidelines the net interest income sensitivity under parallel shifts of interest rate scenarios are maintained for monitoring purposes, while EVE sensitivity is calculated under 6 predefined stress scenarios of interest rate changes and the limit is applied to the worst case scenario result. Interest rate risk is managed by the financial risk management division and is monitored by the ALCO, which decides on actions that are necessary for effective interest rate risk management and follows up on their implementation. The major aspects of interest rate risk management development and the respective reporting are periodically provided to the Management Board, the Supervisory Board and the Risk Committee. 22 Financial and Other Risk Management (Continued) Following main assumptions under NBG IRR Regulation and EBA 2018 guidelines, at 30 June, 2023, if interest rates had been 200 basis points higher, with all other variables held constant, net interest income would have been GEL 58 million higher, mainly as a result of higher interest income on variable interest assets (30 June 2022: GEL 92 million). If interest rates at 30 June, 2023 had been 200 basis points lower with all other variables held constant, net interest income for the year would have been GEL 65 million lower, mainly as a result of lower interest income on variable interest assets (30 June 2022: GEL 49 million). At 30 June, 2023, if interest rates had been 200 basis points lower, with all other variables held constant, other comprehensive income would have been GEL 30.1 million higher (30 June 2022: GEL 52.7 million), as a result of an increase in the fair value of fixed rate financial assets measured at fair value through other comprehensive income and repurchase receivables. If interest rates at 30 June, 2023 had been 200 basis points higher with all other variables held constant, Other comprehensive income would have been GEL 30.1 million lower (30 June 2022: GEL 43.1 million), as a result of decrease in the fair value of fixed rate financial assets measured at fair value through other comprehensive income. The Bank calculates the impact of changes in interest rates using both Net Interest Income and Economic Value sensitivity. Net Interest Income sensitivity measures the impact of a change of interest rates along the various maturities on the yield curve on the net interest revenue for the nearest year. Economic Value measures the impact of a change of interest rates along the various maturities on the yield curve on the present value of the Group's assets, liabilities and off-balance sheet instruments. When performing Net Interest Income and Economic Value sensitivity analysis, the Bank uses parallel shifts in interest rates as well as number of different scenarios. TBC Bank closely monitors the adverse effect of possible parallel yield curve shift scenarios on net interest income over a one-year period to ensure compliance with the predefined risk appetite of the Bank. In order to manage interest rate risk the Bank establishes appropriate limits. The Bank monitors compliance with the limits and prepares forecasts. ALCO decides on actions that are necessary for effective interest rate risk management and follows up on the implementation. Periodic reporting is done to Management Board and the Board's Risk, Committee. Liquidity risk The liquidity risk is the risk that TBC Bank either does not have sufficient financial resources available to meet all of its obligations and commitments as they fall due, or can access those resources only at a high cost. The risk is managed by the Financial Risk Management and Treasury Departments and is monitored by the ALCO. The principal objectives of the TBC Bank's liquidity risk management policy are to: (i) ensure the availability of funds in order to meet claims arising from total liabilities and off-balance sheet commitments, both actual and contingent, at an economic price; (ii) recognise any structural mismatch existing within TBC Bank's statement of financial position and set monitoring ratios to manage funding in line with well-balanced growth; and (iii) monitor liquidity and funding on an on-going basis to ensure that approved business targets are met without compromising the risk profile of the Bank. The liquidity risk is categorised into two risk types: the funding liquidity risk and the market liquidity risk. Funding liquidity risk The funding liquidity risk is the risk that TBC will not be able to efficiently meet both expected and unexpected current and future cash flow and collateral needs without affecting either its daily operations or its financial condition. To manage funding liquidity risk TBC Bank uses the Liquidity Coverage ratio and the Net Stable Funding ratio set, forth under Basel III, and defined further by the NBG. In addition the Bank performs stress tests and "what-if" scenario analysis. With Liquidity Coverage Ratio ("NBG LCR"), in addition to Basel III guidelines conservative approaches are applied to the deposits' withdrawal rates depending on the clients group's concentration. For NBG LCR the limits are set by currency (GEL, FC, Total). TBC monitors compliance with NBG LCR limits on a daily basis. On a monthly basis the Bank also monitors compliance with the set limit for NBG NSFR. The Liquidity Coverage Ratio is used to help manage short-term liquidity risks. The Bank's liquidity risk management framework is designed to comprehensively project cash flows arising from assets, liabilities and off-balance sheet items over certain time buckets and ensure that NBG LCR limits, are met on a daily basis. The Net Stable Funding ratio is used for long-term liquidity risk management to promote resilience over a longer time horizon by creating additional incentives for TBC Bank to rely on more stable sources of funding on a continuous basis. The Bank also monitors deposit concentration for large deposits and set limits for non-Georgian residents deposits share in total deposit portfolio. The management believes, that a strong and diversified funding structure is one of TBC Bank's differentiators. The Bank relies on relatively stable deposits from Georgia as the main source of funding. In order to maintain and further enhance the liability structure TBC Bank sets the targets for deposits and IFI funding within the Bank's risk appetite. The Bank's liquidity position was strong as of 30 June 2023, both LCR and NSFR ratios well above the NBG minimum requirements of 100%. 23 Contingencies and Commitments Legal and regulatory matters When determining the level of provision to be set up with regards to such matters, or the amount (not subject to provisioning) to be disclosed in the financial statements, the management seeks both internal and external professional advice. The management believes that the provision recorded in these condensed consolidated interim financial statements is adequate and the amount (not subject to provisioning) need not be disclosed as it will not have a material adverse effect on the financial condition or the results of future operations of the Group. Tax legislation Georgian, Azerbaijanian and Uzbekistan tax and customs legislation is subject to varying interpretations, and changes, which can occur frequently. The management's interpretation of the legislation as applied to the Group's transactions and activity may be challenged by the relevant authorities. In Uzbekistan and Azerbaijan, the tax review periods for the five preceding calendar years remain open to review by authorities. In Georgia, the period of limitation for tax review is three years. To respond to the risks, the Group has engaged external tax specialists to carry out periodic reviews of the Group's taxation policies and tax filings. The Group's management believes that its interpretation of the relevant legislation is appropriate, and the Group's tax and customs positions will be substantially sustained. During the first half of 2023, there were no new decisions from the Georgian tax authorities or judicial rulings that impacted our tax disputes. As such, our tax reserve level remained consistent at 7 million GEL, the same as it was at the end of 2022. Compliance with covenants The Group is subject to certain covenants primarily related to its borrowings. Non-compliance with such covenants may result in negative consequences for the Group including growth in the cost of borrowings and declaration of default. The Group was in compliance with all covenants as of 30 June 2023 and 31 December 2022. Management of capital The Bank manages capital requirements under regulatory rules. The Bank complied with all its externally imposed capital requirements throughout the reporting period. Credit related commitments and financial guarantees The primary purpose of these instruments is to ensure that funds are available to a customer as required. Financial guarantees and standby letters of credit, which represent the irrevocable assurances that the Group will make payments in the event that a customer cannot meet its obligations to third parties, carry the same credit risk as loans. Documentary and commercial letters of credit, that are written undertakings by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions, are collateralised by the underlying shipments of goods to which they relate or cash deposits and therefore carry less risk than a direct borrowing. Commitments to extend credit represent unused portions of authorisations to prolong credit in the form of loans, guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to a loss in an amount equal to the total unused commitments. However, the likely amount of loss is lower than the total unused commitments since most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to maturity of credit related commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term ones. 23 Contingencies and Commitments (Continued) As of 30 June 2023 outstanding credit related commitments are as follows: in thousands of GEL Stage 1 Stage 2 Stage 3 Undrawn credit lines 1,146,891 29,798 5,096 Letters of credit issued 192,627 - - Financial guarantees issued 435,552 1,012 2,104 Total credit related commitments (before provision) 1,775,070 30,810 7,200 Undrawn credit lines (1,248) (294) - Letters of credit issued (330) - - Financial guarantees issued (776) - - Credit loss allowance for credit related commitments (2,354) (294) - Total credit related commitments 1,772,716 30,516 7,200 As of 31 December 2022 Outstanding credit related commitments are as follows: in thousands of GEL Stage 1 Stage 2 Stage 3 Undrawn credit lines 1,008,262 40,296 2,667 Letters of credit issued 232,066 - - Financial guarantees issued 399,820 1,044 50 Total credit related commitments (before provision) 1,640,148 41,340 2,717 Undrawn credit lines (1,531) (364) (47) Letters of credit issued (436) - - Financial guarantees issued (799) - - Credit loss allowance for credit related commitments (2,766) (364) (47) Total credit related commitments 1,637,382 40,976 2,670 Performance guarantees. Performance guarantees are contracts that provide compensation in case of another party fails to perform a contractual obligation. Such contracts do not transfer credit risk. The risk under the performance guarantee contracts is the possibility that the insured event occurs (i.e.: the failure to perform the contractual obligation by another party). The key risks the Group faces are significant fluctuations in the frequency and severity of payments incurred on such contracts, relative to expectations. Outstanding amount of performance guarantees and respective provision by stages as of 30 June 2023 is stage 1 - GEL 1,512,302 thousand and GEL 2,686 thousand (31 December 2022: GEL 1,494,985 thousand and GEL 2,997 thousand), stage 2 - GEL 1,051 thousand and GEL 4 thousand (21 December 2022: GEL 12,704 thousand and GEL 4 thousand),stage 3 - GEL 26,329 thousand and GEL 5,869 thousand (31 December 2022: GEL 15,831 thousand and GEL 4,204 thousand). Fair value of credit related commitments and financial guarantees provisions was GEL 2,646 thousand as at 30 June 2023 (31 December 2022: GEL 3,177 thousand). Total credit related commitments and performance guarantees are denominated in currencies as follows: In thousands of GEL 30 June 2023 31 December 2022 Georgian Lari 1,596,932 1,457,283 US Dollars 1,123,843 1,195,206 Euro 552,422 484,040 Other 79,565 71,196 Total 3,352,762 3,207,725 Capital expenditure commitments. As at 30 June 2023, the Group had contractual capital expenditure commitments amounting to GEL 109,231 thousand (31 December 2022: GEL 134,674 thousand). Out of total amount contractual commitments related to the head office construction amounted GEL 76,046 thousand (31 December 2022: GEL 105,623 thousand). 24 Fair Value Disclosures (a) Recurring fair value measurements Recurring fair value measurements are those that the accounting standards require or permit in the statement of financial position at the end of each reporting period. The level in the fair value hierarchy into which the recurring fair value measurements are categorised as follows: 30 June 2023 in thousands of GEL Level 1 Level 2 Level 3 Total Fair Value Carrying value Assets carried at fair value Financial assets Investment securities measured at fair value through other comprehensive income - Corporate Bonds 55,772 1,256,076 - 1,311,848 1,311,848 - Foreign government treasury bills 34,596 - - 34,596 34,596 - Ministry of Finance of Georgia Treasury Bills 24,013 1,571,070 - 1,595,083 1,595,083 - Corporate shares - - 1,152 1,152 1,152 Investment securities measured at fair value through profit and loss - Foreign exchange forwards and gross settled currency swaps, included in other financial assets or due from banks - 81,457 - 81,457 81,457 -Investment held at fair value through profit or loss - - 7,782 7,782 7,782 Total assets recurring fair value measurements 114,381 2,908,603 8,934 3,031,918 3,031,918 Liabilities carried at fair value Financial liabilities Foreign exchange forwards and gross settled currency swaps, included in other financial liabilities - 93,575 - 93,575 93,575 Total liabilities recurring fair value measurements - 93,575 - 93,575 93,575 31 December 2022 in thousands of GEL Level 1 Level 2 Level 3 Total Fair Value Carrying value Assets carried at fair value Financial assets Investment securities measured at fair value through other comprehensive income - Corporate Bonds 36,763 1,251,816 - 1,288,579 1,288,579 - Foreign government treasury bills 35,617 - - 35,617 35,617 - Ministry of Finance of Georgia Treasury Bills 4,430 1,555,437 - 1,559,867 1,559,867 - Repurchase receivables 267,495 - - 267,495 267,495 - Corporate shares - - 1,025 1,025 1,025 Investment securities measured at fair value through profit and loss - Foreign exchange forwards and gross settled currency swaps, included in other financial assets or due from banks - 57,887 - 57,887 57,887 -Investment held at fair value through profit or loss - - 9,704 9,704 9,704 Total assets recurring fair value measurements 344,305 2,865,140 10,729 3,220,174 3,220,174 Liabilities carried at fair value Financial liabilities Foreign exchange forwards and gross settled currency swaps, included in other financial liabilities - 72,188 - 72,188 72,188 Total liabilities recurring fair value measurements - 72,188 - 72,188 72,188 24 Fair Value Disclosures (Continued) There were no transfers between levels during the six months ended 30 June 2023 (2022: none). The description of the valuation technique and the description of inputs used in the fair value measurement for level 2 measurements: in thousands of GEL 30 June 2023 31 December 2022 Valuation technique Inputs used ASSETS CARRIED AT FAIR VALUE - Ministry of Finance of Georgia Treasury Bills, foreign government treasury bills, corporate bonds 2,827,146 2,807,253 Discounted cash flows ("DCF") Government bonds yield curve - Foreign exchange forwards and gross settled currency swaps, included in due from banks 81,457 57,887 Forward pricing using present value calculations Official exchange rate, risk-free rate Total assets recurring fair value measurements at level 2 2,908,603 2,865,140 LIABILITIES CARRIED AT FAIR VALUE - Foreign exchange forwards included in other financial liabilities 93,575 72,188 Forward pricing using present value calculations Official exchange rate, risk-free rate Total liabilities recurring fair value measurements at level 2 93,575 72,188 The description of the valuation technique and the description of inputs used in the fair value measurement for level 3 measurements: in thousands of GEL 30 June 2023 31 December 2022 Valuation technique Inputs used Assets carried at fair value - Investment held at fair value through profit or loss 7,782 9,704 Discounted cash flows ("DCF") Weighted average borrowing interest rate - Corporate shares 1,152 1,025 Discounted cash flows ("DCF") Government bonds yield curve Total assets recurring fair value measurements at level 3 8,934 10,729 There were no changes in the valuation technique for the level 2 and level 3 recurring fair value measurements during the six month period ended 30 June 2023 (2021: none). Sensitivity of the input to fair value - increase/(decrease) in projected cash flows by 10% would result in increase/(decrease) in fair value by GEL 684 thousand/(GEL 684 thousand). (b) Assets and liabilities not measured at fair value but for which fair value is disclosed Fair values analysed by level in the fair value hierarchy and carrying value of assets not measured at fair value are as follows: 30 June 2023 in thousands of GEL Level 1 Level 2 Level 3 Total Fair Value Carrying Value FINANCIAL ASSETS Cash and cash equivalents 1,021,023 1,919,336 - 2,940,359 2,940,359 Due from other banks - 52,550 - 52,550 52,550 Mandatory cash balances with NBG and CBU - 1,706,981 - 1,706,981 1,706,981 Loans and advances to customers: - Corporate loans - - 7,009,164 7,009,164 6,871,655 - Consumer loans - - 3,163,706 3,163,706 2,907,616 - Mortgage loans - - 4,767,342 4,767,342 4,372,203 - Loans to micro, small and medium enterprises - - 4,915,202 4,915,202 4,851,183 Bonds carried at amortised cost - 87,213 - 87,213 87,213 Finance lease receivables - - 324,686 324,686 338,203 Other financial assets - - 177,730 177,730 177,730 NON-FINANCIAL ASSETS Investment properties, at cost - - 29,955 29,955 20,741 TOTAL ASSETS 1,021,023 3,766,080 20,387,785 25,174,888 24,326,434 FINANCIAL LIABILITIES Customer accounts - 12,680,227 6,293,651 18,973,878 18,992,492 Debt securities in issue 1,371,638 - - 1,371,638 1,392,872 Due to credit institutions - - 2,444,620 2,444,620 2,448,662 Other financial liabilities - - 381,344 381,344 381,344 Subordinated debt - - 628,008 628,008 639,048 TOTAL LIABILITIES 1,371,638 12,680,227 9,747,623 23,799,488 23,854,418 24 Fair Value Disclosures (Continued) 31 December 2022 in thousands of GEL Level 1 Level 2 Level 3 Total Fair Value Carrying Value Financial assets Cash and cash equivalents 1,243,238 2,617,575 - 3,860,813 3,860,813 Due from other banks - 41,854 - 41,854 41,854 Mandatory cash balances with NBG and CBU - 2,049,985 - 2,049,985 2,049,985 Loans and advances to customers: - Corporate loans - - 6,336,111 6,336,111 6,236,011 - Consumer loans - - 2,997,498 2,997,498 2,664,032 - Mortgage loans - - 4,863,317 4,863,317 4,219,260 - Loans to micro, small and medium enterprises - - 4,708,953 4,708,953 4,713,303 Bonds carried at amortised cost - 37,392 - 37,392 37,392 Finance lease receivables 312,300 312,300 312,334 Other financial assets - - 168,372 168,372 168,372 Non-financial assets Investment properties, at cost - - 25,683 25,683 22,154 Total assets 1,243,238 4,746,806 19,412,234 25,402,278 24,325,510 Financial liabilities Customer accounts - 12,181,397 5,841,319 18,022,716 18,036,533 Debt securities in issue 1,340,444 - - 1,340,444 1,361,573 Due to credit institutions - - 3,936,243 3,936,243 3,940,660 Other financial liabilities - - 307,128 307,128 307,128 Subordinated debt - - 587,218 587,218 590,148 Total liabilities 1,340,444 12,181,397 10,671,908 24,193,749 24,236,042 *Starting from January 2023 the Group has adopted IFRS 17 and according to the standard requirements retrospectively applied presentation of respective balances for 2022 as described in note 2. The fair values of financial assets and liabilities in the level 2 and level 3 of fair value hierarchy were estimated using the discounted cash flows valuation technique. The fair value of unquoted fixed interest rate instruments was calculated based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risk and remaining maturity. The fair value of investment properties was estimated using market comparatives. Amounts due to credit institutions were discounted at the Group's own incremental borrowing rate. Liabilities due on demand were discounted from the first date that the Group could be required to pay the amount. There were no changes in the valuation technique for the level 2 and level 3 measurements of assets and liabilities not measured at fair values in the six months ended 30 June 2023 (2022: none). 25 Related Party Transactions Pursuant to IAS 24 "Related Party Disclosures", parties are generally considered to be related if the parties are under common control or one party has the ability to control the other or it can exercise significant influence over the other party in taking financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form: �� Parties with material ownership stake (more than 5% beneficial ownership stake for 2023 and 2022) in the TBCG or with representatives in the Board of Directors are considered as Significant Shareholders. �� The key management personnel include members of TBCG's Board of Directors and the Management Board of the Bank. �� Related parties not included in significant shareholders and key management personnel are presented in other related parties. Transactions between TBC Bank Group PLC and its subsidiaries also meet the definition of related party transactions. Where these are eliminated on consolidation, they are not disclosed in the Group Financial Statements. 25 Related Party Transactions (Continued) The outstanding balances with related parties were as follows: in thousands of GEL Contractual interest rate Significant shareholders Key management personnel Other related parties Associates 30 June 2023 Gross amount of loans and advances to customers 3.9%-36.0% - 5,766 1,866 - Credit loss allowance for loans and advances to customers - - 1 2 - Customer accounts 0%-12.4% 2,564 12,346 32,468 2,149 31 December 2022 Gross amount of loans and advances to customers 4.4%-36.0% - 6,097 1,135 - Credit loss allowance for loans and advances to customers - - 3 - - Customer accounts 0%-12.5% 1,248 25,557 51,039 4,341 The Group's income and expense items with related parties except from key management compensation were as follows: in thousands of GEL Significant shareholders Key management personnel Other related parties Associates 30 June 2023 Interest income - loans and advances to customers - 121 46 - Interest expense 14 174 322 82 Fee and commission income 3 9 71 1 Administrative and other operating expenses (excluding staff costs) - 668 - - 30 June 2022 Interest income - loans and advances to customers - 100 49 - Interest expense 6 195 267 56 Interest expense with EBRD 22,488 - - - Fee and commission income 3 10 73 1 Administrative and other operating expenses (excluding staff costs) - 297 - - The aggregate loan amounts advanced to, and repaid, by related parties during the period end 30 June 2023 were as follows: In thousands of GEL Significant shareholders Key management personnel Other related parties Amounts advanced to related parties during the period 1 823 1,794 Amounts repaid by related parties during the period (1) (1,117) (1,117) Aggregate amounts of loans advanced to and repaid by related parties during the six months ended 30 June 2022 were as follows: In thousands of GEL Significant shareholders Key management personnel Other related parties Amounts advanced to related parties during the period 43 1,173 631 Amounts repaid by related parties during the period (59) (1,387) (647) The compensation of the TBCG Board of Directors and the Bank's Management Board is presented below: Expense over the six months ended In thousands of GEL 30 June 2023 30 June 2022 Salaries and related benefits 6,341 7,216 Equity-settled share-based compensation 8,230 10,109 Total 14,571 17,325 Included in salaries and bonuses for six months ended 30 June 2023 GEL 1,141 thousand relates to compensation for directors of TBCG paid by TBC Bank Group PLC (six months ended 30 June 2022: GEL 1,275 thousand). A full list of related undertakings and the country of incorporation is set out below. Company Name Country of incorporation JSC TBC Bank 7 Marjanishvili Street, 0102, Tbilisi, Georgia United Financial Corporation JSC 154 Agmashenebeli Avenue, 0112, Tbilisi, Georgia TBC Capital LLC 11 Chavchavadze Avenue, 0179, Tbilisi, Georgia TBC Leasing JSC 76 Chavchavadze Avenue, 0162, Tbilisi, Georgia TBC Kredit LLC 71-77, 28 May Street, AZ1010, Baku, Azerbaijan TBC Pay LLC 7 Marjanishvili Street, 0102, Tbilisi, Georgia TBC Invest-Georgia LLC 7 Jabonitsky street, 52520, Tel Aviv, Israel Index LLC 8 Tetelashvili, 0102,, Tbilisi, Georgia TBC Insurance JSC 24B, Al. Kazbegi Avenue, 0160, Tbilisi, Georgia TBC Invest International LLC 7 Marjanishvili Street, 0102, Tbilisi, Georgia University Development Fund 1 Chavchavadze Avenue, 0128, Tbilisi, Georgia CreditInfo Georgia JSC 2 Tarkhnishvili street, 0179, Tbilisi, Georgia Online Tickets LLC 3 Irakli Abashidze street, 0179, Tbilisi, Georgia VENDOO LLC (Geo) 44 Petre Kavtaradze Street, 0128, Tbilisi, Georgia Natural Products of Georgia LLC 1 Chavchavadze Avenue, 0128, Tbilisi, Georgia Mobi Plus JSC 45 Vajha Pshavela Street, 0177, Tbilisi, Georgia Mineral Oil Distribution Corporation JSC 11 Tskalsadeni Street, 0153, Tbilisi, Georgia Georgian Card JSC 106 Beliashvili Street, 0159, Tbilisi Georgia Georgian Central Securities Depositor JSC 74 Chavchavadze Avenue, 0162, Tbilisi, Georgia Givi Zaldastanishvili American Academy In Georgia JSC 37 Chavchavadze Avenue, 0162, Tbilisi Georgia United Clearing Centre 5 Sulkhan Saba Street, 0105, Tbilisi, Georgia Banking and Finance Academy of Georgia 123, Agmashenebeli Avenue, 0112, Tbilisi, Georgia Tbilisi's City JSC 15 Rustaveli Avenue, 0108, Tbilisi Georgia TBC Trade LLC 11A Chavchavadze Ave, 0179, Tbilisi, Georgia Redmed LLC 25 Al. Kazbegi Avenue, 0160, Tbilisi, Georgia T Net LLC 7 Marjanishvili st. Didube-chugureti District, Tbilisi,Georgia TKT UZ 12, Shota Rustaveli, Yakkasaray district, Tashkent, Uzbekistan Mypost LLC 129a Sh. Nutsubidze St. Vake,Tbilisi, Georgia Billing Solutions LLC 14 Khelovanta St. Isani, Tbilisi, Georgia F Solutions LLC 36, Kakheti Hwy, Isani-Samgori District, Tbilisi, Georgia Inspired LLC 1, Chust, Mirzo Ulugbek district, Tashkent, Uzbekistan TBC Fin service LLC 10B, Fidokor, Yakkasaray, Tashkent, Uzbekistan Marjanishvili 7 LLC 7 Marjanishvili st. Didube-chugureti District, Tbilisi,Georgia TBC Bank Uzbekistan JSC 118/1, Amir Temur Avenue, Yunusobod district, Tashkent, Uzbekistan TBC Group Support LLC 7 Marjanishvili st. Didube-chugureti District, Tbilisi,Georgia Tbilisi Stock Exchange JSC floor 2th block 8, 71 Vazha Pshavela Ave, Tbilisi, Georgia Georgian Stock Exchange JSC 74a chavchavadzis avenue, vake-saburtalo, Tbilisi, Georgia Kavkasreestri JSC 74a chavchavadzis avenue, vake-saburtalo, Tbilisi, Georgia Freeshop.ge LLC 74 chavchavadzis avenue, vake-saburtalo, Tbilisi, Georgia The.ge LLC 20 amaglebis st. old Tbilisi, Georgia SABA LLC 5, Gabashvili street, vake-saburtalo Tbilisi, Georgia Artarea.ge LLC 25 Al. Kazbegi Avenue, 0160, Tbilisi, Georgia TBC Art Gallery LLC 6, Tsimakuridze str, Tbilisi, Georgia TBC Asset Management LLC 7 Marjanishvili Street, 0102, Tbilisi, Georgia Swift 1 Adele Avenue, B-1310, La Hulpe, Belgium Space International JSC 7 Marjanishvili Street, 0102, Tbilisi, Georgia Space JSC 7 Marjanishvili Street, 0102, Tbilisi, Georgia Diversified Credit Portfolio JSC 7 Marjanishvili Street, 0102, Tbilisi, Georgia Globally Diversified Bond Fund JSC 7 Marjanishvili Street, 0102, Tbilisi, Georgia [1] Note: For better presentation purposes, certain financial numbers are rounded the nearest whole number. [2] Reported per IFRS. [3] Based on data published by the Central Bank of Uzbekistan. [4] Remittances from Russia are adjusted for double counting with tourism inflows and other similar effects, based on TBC Capital estimates. [5] Based on data published by NBG and FX-adjusted by TBC, based on Dec-2022 end of period exchange rate. [6] Based on data published by Uzstat. [7] Based on data published by Central Bank of Uzbekistan. [8] Based on data published by the National Bank of Georgia. [9] Excluding pawnshops units. [10] Online Tickets LLC was merged with T Net LLC during 2023. [11] In May 2023 TBC Bank Group PLC finalized acquisition of remaining 49% interest in Inspired LLC. [12] The Group has a significant influence on Georgian Stock Exchange JSC and Kavkasreestri JSC with representatives in management board. [13] Dormant. [14] Total exposure of the bank toward the borrower or group of interconnected borrowers. [15] Movements with impact on credit loss allowance charge for the period differs from statement of profit or loss with amount of recoveries GEL 26,824 thousand as at 30 June 2023 (30 June 2022: GEL 27,018 thousands). The amount of recoveries include recoveries from sale of written off portfolio in the amount of GEL 14,601 thousand sold in 2023. 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 [email protected] or visit www.rns.com. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy. END IR DZGGRDLFGFZM

AI Terminal

5225_ir_2023-08-10_fd0500dd-3f7c-45a5-8b17-86273a34a7b7.html

More from TBC Bank Group PLC

Talk to a Data Expert