Earnings Release • Feb 24, 2017
Earnings Release
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TBC Bank Group PLC
24 February 2017
TBC BANK GROUP PLC ("TBC Bank")
FY 2016 AND 4Q 2016 PRELIMINARY Unaudited Financial Results
The information in this announcement relating to full year FY16 preliminary results, which were approved by the Board on 23 February 2017, do not constitute statutory accounts under section 434 of the UK Companies Act 2006. Financial statements for JSC TBC Bank Georgia were filed with the Georgian authorities in respect of FY15. No financial statements were filed in prior years for TBC Bank because the holding company was only incorporated in February 2016. The financial statements of TBC Bank will be included in the Annual Report and Accounts due to be published in March 2017, and filed with the Registrar of Companies in due course.
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 actual results, performance or achievements of TBC Bank Group PLC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others, the achievement of anticipated levels of profitability, growth, cost and recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Georgian economic, political and legal environment, financial risk management and the impact of general business and global economic conditions.
None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects are based are accurate or exhaustive or, in the case of the assumptions, entirely covered in the document. These forward-looking statements speak only as of the date they are made, and subject to compliance with applicable law and regulation the Bank expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in the document to reflect actual results, changes in assumptions or changes in factors affecting those statements.
Certain financial information contained in this presentation has been extracted from the Group's unaudited management accounts and financial statements. The areas in which management accounts might differ from International Financial Reporting Standards and/or U.S. generally accepted accounting principles could be significant and you should consult your own professional advisors and/or conduct your own due diligence for 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 Presentation have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them.
Fourth Quarter and Full Year 2016 Preliminary Unaudited Financial Results Conference Call
TBC Bank Group PLC ("TBC PLC") will release its fourth quarter and full year 2016 preliminary unaudited financial results on Friday, 24 February 2017 at 7am GMT (11am GET).
On that day, Vakhtang Butskhrikidze, CEO, and Giorgi Shagidze, CFO, will host a conference call to discuss the results.
Date & time: Friday, 24 February at 14.00 (GMT) / 15.00 (CET) / 9.00 (EST)
Please dial-in approximately 5 minutes before the start of the call quoting the password TBC Bank:
| Password: | TBC Bank |
| UK Toll Free: | 0808 109 0700 |
| Standard International Access: | +44 (0) 20 3003 2666 |
| USA Toll Free: | 1 866 966 5335 |
| New York New York: | +1 212 999 6659 |
| Russia Toll Free: | 8 10 8002 4902044 |
| Moscow: | +7 (8) 495 249 9843 |
| Replay Numbers | |
| Replay Passcode: | 7936347 |
| UK Toll Free: | 0800 633 8453 |
| Standard International Access: | +44 (0) 20 8196 1998 |
| USA Toll Free: | 1 866 583 1035 |
| Russia Toll Free: | 8 10 8002 4832044 |
| Moscow: | +7 (8) 495 249 9840 |
Contacts
| Sean Wade Director of International Media and IR E-mail: [email protected] Web: www.tbcgroupbank.com Tel: +44 (0) 7464 609025 Address: 68 Lombard St, London EC3V 9LJ, United Kingdom |
Anna Romelashvili Head of Investor Relations E-mail: [email protected] Web: www.tbcgroupbank.com Tel: +(995 32) 227 27 27 Address: 7 Marjanishvili St. Tbilisi, Georgia 0102 |
Investor Relations Department E-mail: [email protected] Web: www.tbcgroupbank.com Tel: +(995 32) 227 27 27 Address: 7 Marjanishvili St. Tbilisi, Georgia 0102 |
Table of Contents
Letter from the Chief Executive Officer
Results Overview FY 2016 and 4Q 2016
Results by Segments and Subsidiaries
Consolidated Financial Statements of TBC Bank
Other Selected Data of TBC Bank and Bank Republic
Bank Republic Financial Statements
TBC BANK Group PLC ("TBC Bank")
TBC Bank Announces FY 2016 and 4Q 2016 IFRS Consolidated Preliminary Results;
Net Profit for 2016 up by 36.4% YoY to GEL 298.3 million
The 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
These preliminary unaudited financial results are presented for TBC Bank Group PLC ("TBC Bank"), which was incorporated on 26 February 2016 as the ultimate holding company for JSC TBC Bank Georgia. TBC Bank became the parent company of JSC TBC Bank Georgia on 10 August 2016, following a group restructuring. As this was a common ownership transaction, the results have been presented as if the group existed at the earliest comparative date as allowable under International Financial Reporting Standards ("IFRS") as adopted by the European Union. TBC Bank successfully listed on the London Stock Exchange on 10 August 2016.
In Q4 2016, TBC Bank acquired Bank Republic, which is consolidated into these results for the first time.
Results reported below prior to 30 September 2016 relate to the group previously headed by JSC TBC Bank Georgia.
TBC Bank is the largest banking group in Georgia, and is listed on the Premium Segment of the London International Stock Exchange. Following the acquisition of Bank Republic during the year, TBC Bank is the leading universal bank in Georgia, offering retail, corporate, and SME banking across the country. TBC Bank accounts for 36.7% market share of the Georgian banking market by total assets, where 99.6% of its business is concentrated.
Financial Highlights (including effect of Bank Republic acquisition)
FY 2016 P&L Highlights
§ Net Profit for 2016 up by 36.4% YoY to GEL 298.3 million
§ Return on equity (ROE) amounted to 22.4% (20.6% without one-off effects) and Return on assets (ROA) to 3.9% (3.6% without one-off effects)
§ Total operating income for 2016 up by 18.0% YoY to GEL 681.1 million
§ Cost to income ratio stood at 45.8% (42.9% without one-off effects), compared to 43.9% in 2015
§ Cost of risk on loans stood at 1.0%, down by 0.7pp YoY
§ Net interest margin (NIM) stood at 7.8% in 2016, unchanged from 2015
Balance Sheet Highlights 31 December 2016
§ Total assets reached GEL 10,769.0 million as of 31 December 2016, up by 55.3% YoY and up by 42.0% QoQ
§ Gross loans and advances to customers increased to GEL 7,358.7 million as of 31 December 2016, up by 58.6% YoY and by 47.1% QoQ
§ Net loans to deposits and IFI funding stood at 93.4% and Net Stable Funding Ratio (NSFR) stood at 108.4%
§ NPLs stood at 3.5%, down by 1.3pp YoY and 1.1pp QoQ
§ NPLs coverage stood at 88.4%, (221.4% with collateral), compared to 84.3% as of 30 September 2016
§ Total customer deposits stood at GEL 6,454.9 million as of 31 December 2016, up by 54.5% YoY and up by 40.5% QoQ
§ Tier I and Total Capital Adequacy Ratios per Basel II/III stood at 10.4% and 14.2% respectively
§ Tier I and Total Capital Adequacy Ratios per Basel I stood at 21.3% and 28.1% respectively
4Q 2016 P&L Highlights
§ Net Profit for 4Q 2016 up by 31.6% YoY to GEL 88.0 million and up by 24.0% QoQ
§ Return on equity (ROE) amounted to 24.2% (23.5% without one-off effects) and return on assets (ROA) to 3.7% (3.5% without one-off effects)
§ Total operating income in 4Q 2016 up by 39.0% YoY and by 34.9% QoQ to GEL 218.3 million
§ Cost to income ratio stood at 51.2% (47.0% without one-offs), compared to 49.3% in 4Q 2015 and 40.5% in 3Q 2016
§ Cost of risk on loans stood at 0.6%, up by 0.5pp YoY and down by 0.5pp QoQ
§ Net interest margin (NIM) stood at 7.9%in 4Q 2016, compared to 8.3% in 3Q 2016 and 7.4% in 4Q 2015
Financial Highlights (excluding effect of Bank Republic acquisition)
FY 2016 P&L Highlights
§ Net Profit for 2016 up by 31.5% YoY to GEL 287.6 million
§ Return on equity (ROE) amounted to 21.6% (19.7% without one-off effects) and Return on assets (ROA) to 3.9% (3.6% without one-off effects).
§ Total operating income for 2016 up by 11.4% YoY to GEL 643.0 million
§ Cost to income ratio stood at 46.1% (43.4% without one-off effects), compared to 43.9% in 2015.
§ Cost of risk on loans stood at 0.8%, down by 0.9pp YoY.
§ Net interest margin (NIM) stood at 7.9% in 2016, up by 0.1pp
Balance Sheet Highlights 31 December 2016
§ Total assets reached GEL 9,212.5 million as of 31 December 2016, up by 32.8% YoY and up by 21.5% QoQ
§ Gross loans and advances to customers increased to GEL 5,911.2 million as of 31 December 2016, up by 27.4% YoY and by 18.1% QoQ
§ Net loans to deposits and IFI funding stood at 90.7%
§ NPLs stood at 4.0%, down by 0.8pp YoY and down 0.6pp QoQ
§ NPLs coverage stood at 90.5%, (216.8% with collateral), compared to 84.3% as of 30 September 2016.
§ Total customer deposits stood at GEL 5,641.1 million as of 31 December 2016, up by 35.0% YoY and up by 22.8% QoQ
4Q 2016 P&L Highlights
§ Net Profit for 4Q 2016 up by 15.6% YoY and up by 9.0% QoQ to GEL 77.4 million
§ Return on equity (ROE) amounted to 21.4% (20.0% without one-off effects) and return on assets (ROA) to 3.7% (3.4% without one-off effects).
§ Total operating income in 4Q 2016 up by 14.8% YoY and up by 11.4% QoQ to GEL 180.2 million
§ Cost to income ratio stood at 53.5% (49.7% without one-offs), compared to 49.3% in 4Q 2015 and 40.5% in 3Q 2016.
§ Cost of risk on loans stood at -0.1%, down by 0.3pp YoY and down by 1.2pp QoQ.
§ Net interest margin (NIM) stood at 7.8%in 4Q 2016, compared to 8.3% in 3Q 2016 and 7.4% in 4Q 2015.
Description of One-off Incomes and Expenses Incurred during 2016
§ Recovery of previously written off principal and interest (FY '16: GEL35.8 million; Q4: GEL35.8 million)
§ Tax credit (FY '16: GEL17.9 million; Q4: GEL 0 million)
§ Premium Listing costs (FY '16: GEL16.2 million; Q4: GEL0.3 million)
§ Currency effect on provisions (FY '16: GEL9.6 million; Q4: GEL16.8 million) or w/o BR (FY '16: GEL8.7 million; Q4: GEL16.0 million)
§ Gain on sale of investment securities (FY '16: GEL8.8 million; Q4: GEL 0 million)
§ Bank Republic acquisition related consulting costs (FY'16: GEL8.0 million; Q4: GEL8.0 million)
§ Interest income related to one large corporate customer (FY '16: GEL4.2 million; Q4: GEL 0 million)
§ Interest expense related to prepayment of subordinated loans (FY'16: GEL2.5 million; Q4:GEL2.5 million)
§ Staff redundancy provision (FY '16: GEL2.2 million; Q4: GEL 2.2 million)
§ Impairment of intangible assets of Bank Republic (FY '16: GEL2.0 million; Q4: GEL2.0 million)
Market Shares[1]
§ TBC Bank's market share in total assets increased by 3.3pp YoY and by 1.6pp QoQ, reaching 30.0% (36.7% with Bank Republic's total assets) as of 31 December 2016.
§ TBC Bank's market share in total loans was 31.1% (38.9% with Bank Republic's total loans) as of 31 December 2016, up by 2.4pp YoY and by 1.4pp QoQ.
§ In terms of individual loans, the Bank had a market share of 32.9% (44.2% with Bank Republic's total individual loans) as of 31 December 2016, up by 1.3pp YoY and 0.6pp QoQ. The market share for legal entity loans was 29.4% (33.6% with Bank Republic's total legal entity loans), up by 3.2pp YoY and by 2.1pp QoQ.
§ TBC Bank's market share of total deposits stood at 33.0% (37.8% with Bank Republic's total deposits) as of 31 December 2016, up by 4.0pp YoY and up by 2.4pp QoQ.
§ The Bank maintains its longstanding leadership in individual deposits with a market share of 37.2% (40.8% with Bank Republic's total individual deposits), up by 2.9pp YoY and up by 1.7pp QoQ. In terms of legal entity deposits, TBC Bank holds a market share of 28.0% (34.2% with Bank Republic's legal entity deposits), up by 4.6pp YoY and 2.9pp QoQ.
TBC Bank Secures Funds from FMO and EFSE
§ TBC Bank signed new loan agreements with European Fund for Southeast Europe (EFSE) and Netherlands Development Finance Company (FMO), attracting additionally $85 million to further expand its SME and Micro portfolio.
§ FMO facility has a full or partial conversion option into local currency subject to mutual agreement.
Changes in Management
§ Following the merger of Bank's Corporate and Investment Banking departments to provide clients with capital markets products and advisory services through a fully integrated franchise, George Tkhelidze, previously Chief Risk Officer, was appointed to lead the new CIB unit.
§ David Chkonia joined the bank in January 2017 and took role of Chief Risk Officer and Deputy CEO. David has an extensive background in risk management and international banking. Previously he was Director at Blackrock advising financial institutions and regulators on enterprise risk management, balance sheet strategy and regulation.
§ For more information about the corporate governance and the board structure see our website at www.tbcbankgroup.com
TBC Bank Named Bank of the Year in Georgia 2016 by the Banker
§ TBC Bank was named by the Banker as the Bank of the Year in Georgia 2016. Besides the Banker, in 2016 the bank won the Best Bank of the Year in Georgia awards from Euromoney, Global Finance, and EMEA Finance Magazines.
Strong Financial Performance
| Key Ratios | Y'16 | Y'15 | 4Q'16 | 3Q'16 |
| ROE | 23.0% | 21.3% | 27.0% | 23.4% |
| ROA | 3.5% | 3.4% | 4.3% | 3.8% |
| NIM | 7.6% | 8.1% | 8.4% | 8.3% |
| Cost of Risk | 1.5% | 1.5% | 3.2% | 0.8% |
| Cost to Income | 41.7% | 44.6% | 40.1% | 44.0% |
Accelerated growth and increased market shares
| Loans | Deposits | |||||
| Portfolios | 4Q 2016 | 3Q 2016 | Growth | 4Q 2016 | 3Q 2016 | Growth |
| Retail Segment | 1,061 | 893 | 18.8% | 329 | 383 | -14.1% |
| Business Segment | 415 | 347 | 19.6% | 484 | 340 | 42.4% |
| Total | 1,477 | 1,240 | 19.1%/9.9%[2] | 814 | 723 | 12.6%/3.9%2 |
| Market Share | 7.8% | 7.4% | 0.4pp | 4.8% | 4.8% | 0pp |
Accelerated growth in customer acquisition
§ Total number of customers grew by 7.0% in the last quarter and reached c.366,000 across all segments.
Stable employee turnover after the acquisition
§ Following the acquisition Bank Republic employee turnover in branches stayed stable at 6.0% or up 1pp QoQ.
Synergy Potential and one-off integration costs
§ Total expected run-rate synergies post recurring costs are expected to be over GEL 20.5 million, with one-off integration costs of GEL 23.3 million. Completion of full integration and achievement of run-rate synergies is expected in 3Q 2017.
Governance from 20th October 2016
Following the acquisition, a number of senior appointments were made to strengthen the governance of Bank Republic, including:
§ CEO - Nikoloz Kurdiani (assigned from TBC Bank)
§ CFO - Ketevan Tevzadze (Bank Republic CFO joining TBC group as deputy CFO)
§ CRO - David Chkonia (assigned from TBC Bank)
§ COO - Vano Baliashvili (assigned from TBC Bank)
§ Head of Corporate and Investment Banking - George Tkhelidze (assigned from TBC Bank)
All members of the Supervisory Board are senior executives of TBC Bank
Goodwill
§ As a result of acquisition a goodwill in the amount of GEL 24.2 million was created which is within the previously disclosed range of GEL 20-32 million
Additional Information Disclosure
Additional historical information for certain P&L, Balance Sheet and Capital items and on Asset Quality is disclosed on our Investor Relations website on http://tbcbankgroup.com/ under Financial Highlights section.
I am very pleased to report that 2016 has been another extremely successful year for TBC Bank, marked by two major events. Firstly, the successful listing of our shares on the Premium Segment of the London Stock Exchange; and secondly, the acquisition of JSC Bank Republic, Georgia's number three bank by total loans. The acquisition makes TBC Bank the largest bank in the country. In addition, we have achieved another set of strong financial results that were further enhanced by the contribution of Bank Republic from the point of acquisition on 20th October 2016.
Our consolidated net profit reached GEL 298.3 million for full year 2016 with Return on Equity of 22.4%, up by 2.3 pp year-on-year and a Return on Assets of 3.9%, up by 0.5 pp year-on-year. Without the contribution from Bank Republic, our net profit reached GEL 287.6 million for full year 2016 with Return on Equity of 21.6% and Return on Assets of 3.9%. Our increased profitability was supported by strong growth in both net interest income and non-interest income, which grew by 19.0% and 15.5% year-on-year respectively or by 13.2% and 6.9% without Bank Republic. The net interest margin stood at 7.8% or at 7.9% without Bank Republic. In addition, our cost to income ratio stood at 42.9% without one-off effects, down by 1.0 pp year-on-year, or at 45.8% with one-off effects.
We have also achieved strong balance sheet growth with both loans and deposit growth outperforming the market. In 2016, the loan book grew 27.4% year-on-year, or 19.5% on a constant currency rate, without Bank Republic. This growth was achieved across all segments, beating the market growth by 9.7% or 9.1% without the exchange rate effect. Including Bank Republic the growth rate reached 58.6% year-on-year and our market share in loans stood at 38.9% as of 31 December 2016. Over the same period, total deposits grew by 35.0% year-on-year or 26.1% on a constant currency basis without Bank Republic, and outstripped the market growth by 11.6% or 15.7% without the exchange rate effect. Including Bank Republic the growth was 54.5% year-on-year and our deposit market share reached 37.8% as of 31 December 2016.
We continue to maintain robust asset quality with a non-performing loan ratio of 3.5% at the year end, down by 1.3% on a year-on-year basis, while our non-performing coverage ratio stood at 88.4% or 221.4% with collateral. Without the Bank Republic effect, the non-performing loan ratio stood at 4.0% at the year end, while our non-performing coverage ratio stood at 90.5% or 216.8% with collateral. In addition, we continue to operate with strong capital and liquidity positions. Our total capital adequacy ratio (CAR) per Basel II/III regulation stood at 14.2% compared to the minimum requirement of 10.5%, and our Tier I Ratio per Basel II/III stood at 10.4% compared to the minimum requirement of 8.5%. Net loans to deposits + IFI funding stood at 93.4% and the net stable funding ratio (NSFR) stood at 108.4%.
I would also like to mention the standalone performance of Bank Republic. We took control of the Bank on completion of the acquisition on 20th of October 2016 and appointed a new CEO and replaced most of the Board members. The bank's performance has been strengthened further since then. The loan portfolio grew by 19.1% and the deposit portfolio increased by 12.6% over the last quarter in 2016 (or at 9.9% and 3.9% respectively at constant currency). Consequently, the loan market share was up by 0.4pp and reached 7.8% and deposit market share remained flat at 4.8%. During the same period the number of customers grew by 7.0% and reached c.366,000 clients, while employee turnover remained low at 6% in the front office. Bank Republic delivered strong financial results with return on equity standing at 23.0% and return on assets at 3.5% for the full year 2016. At the same time, the cost to income ratio was 41.7% and asset quality remained strong with the non-performing loan ratio standing at 3.1% and non-performing coverage ratio at 112% or 201% with collateral, respectively. The cost of risk stood at 1.3% for the full year 2016.
I would also like to comment briefly on recent economic developments in Georgia and the immediate outlook. Despite the recent economic slowdown in neighboring countries in the region, the Georgian economy has again proved resilient. The expansion in the construction, hotel, restaurant and real estate sectors helped to drive economic growth in 2016, overcoming a contraction in the transportation sector caused by lower trade volumes in the wider region. As a result, Georgia's real GDP expanded by 2.2% in 2016 according to initial estimates. Growth is expected to accelerate in 2017 with the International Monetary Fund (IMF) forecasting 4.0%, the highest in the region. The outlook for 2017 remains positive, with several large infrastructure projects planned and a free trade agreement with China coming into force in the second half of the year. This will further diversify Georgia's trade flows and reduce exposure to regional economic volatility. Following smooth parliamentary elections in late 2016, the political outlook remains stable and the government's liberal reform agenda remains in place. The abolition of tax on reinvested profit, which comes into force at the start of 2017 or from 2019 for financial institutions, is expected to further boost Georgia's profile as an attractive investment destination.
With regard to other recent corporate developments, I would like to highlight changes to our management structure. In November 2016, we merged our Corporate and Investment Banking departments to provide clients with capital markets products and advisory services through a fully integrated franchise. The resulting new CIB unit is headed by George Tkhelidze, who was previously Chief Risk Officer (CRO). I would like to congratulate George on his appointment and wish him the same success in this new role that he enjoyed as CRO. Replacing him is David Chkonia, who was appointed as a new Deputy CEO and CRO in January 2017 and brings extensive financial services and risk management expertise. I am confident that David will contribute a great deal to TBC Bank's future growth and development.
In terms of operational performance, our customer base reached 1.7 million, almost half of the Georgian population, which gives us vast opportunities for cross selling of our traditional core products. Our products per customer ratio for our retail business reached 3.68[3] as of 31 December 2016 and we plan to increase this by more than 15% over the medium-term. We continue to lead the Georgian service industry in terms of customer satisfaction, with the highest net promoter score (NPS)[4] not only in the banking sector, but across all major retail service providers in the country. We also continue to harness our remote channels and as a result by the end of 2016, 84%[5] of all retail transactions were remote and 55%[6] of sales were conducted digitally or through the call center. In addition, we significantly increased the number of transactions carried out via internet and mobile banking with mobile banking penetration jumping from 15% in December 2015 to 24% in December 2016.
Finally, I am also pleased to announce that TBC Bank has been named "Bank of the Year in Georgia 2016" by the Banker magazine. This is the eighth time that TBC Bank has been awarded this prestigious prize since 2002. 2016 has proved to be a very successful year for TBC in terms of external recognition, as we have also won best bank of the year in Georgia awards from Euromoney, Global Finance, and EMEA Finance Magazines.
Outlook
TBC Bank has closed 2016 with the strongest year in our history, and we will continue to maintain our focus in 2017 on delivering on our strategy and objectives. Our focus for 2017 is to further develop our advanced digital channel capabilities and superior customer experience. The successful integration of Bank Republic and the full realization of its synergy potential is also at the top of the agenda. In terms of financial goals, we continue to pursue our medium-term targets and are well on track to achieve them. As a result of strong growth and profitability in 2016, along with the cross-selling and cost-saving opportunities created by the Bank Republic acquisition, we maintain our medium-term ROE forecast of 20% plus. Our medium-term loan book growth target is 15-20% and we will continue to disburse a minimum of 25% of TBC Group's annual consolidated net income in the form of dividends. Finally, we maintain our medium-term cost-to-income guidance at below 40%.
Information set out below relating to the broad economic overview in 2016, and outlook for 2017, sets the context for TBC Bank's operating activities and financial results. Around 99% of TBC Bank's operations take place in Georgia and, although developments in the immediate Caucasus region are an important factor in the regional business climate, the bank's performance however is largely affected by the developments in the Georgian economy. The domestic economic environment remains stable and the banking sector continues to grow, supported by broader macroeconomic stability and attractive business climate.
Georgia's GDP growth averaged 2.2% YoY in 2016, according to the initial estimates of Geostat, slowing to an estimated 1.4% y/y in 4Q 2016 amid elevated uncertainties in countries in the region. In the first 9 months of 2016, GDP growth amounted to 2.6% on an annualized basis; the primary drivers of growth were construction (+11.1% YoY), manufacturing (+4.8% YoY), real estate (+6.6% YoY) and hotels and restaurants (+12.0% YoY). Transport and communication declined by 1.5%, affected by lower economic growth in the region, which consequently depressed regional trade volumes.
After close to zero inflation (+0.6% YoY) in 4Q 2016, inflation picked up in January 2017 to 3.9% YoY. This reversal in inflation was driven by increased excise taxes on tobacco, petroleum and cars, which led core inflation[7] to stand at 2.8% YoY. Higher excise taxes fed into higher inflation expectations in the economy. To respond to this unexpected shift in inflation expectations, the National Bank of Georgia (NBG) raised the policy rate by 0.25pps from 6.5% to 6.75% at the end of January 2017 and promised an additional 0.25pp rate hike in the coming quarter. Given that this inflation is primarily driven by one-off factors, the NBG is not expected to over-react even if inflation goes temporarily above its target of 4% in 2017.
The main components of the current account balance show positive trends. Exports of goods started to bottom out after two years of continuous decline. 4Q 2016 exports of goods increased by 7.5% YoY. Traditional export goods, such as Ferro-Alloys (+35.7% YoY), Wines (+29.5% YoY), other spirits (+47.6% YoY), and mineral water (+0.5% YoY) drove growth in 4Q 2016. Re-exports of cars also started to recover (+18% YoY), but remain at about one-fifth of the levels in 2013. From a regional perspective, exports to CIS increased by a solid 16.3% YoY, with the relative stability in Russia and Ukraine allowing Georgian exporters to partially regain their presence in these traditional markets. Exports to EU increased by a modest 4% YoY in 4Q 2016, while exports to other countries remained broadly unchanged. In 2016, exports to less traditional markets such as China (up 35%), Iran (up 30%) and other Gulf countries increased at higher rates, further diversifying Georgia's export profile and reducing its dependence on any particular country or region.
In 4Q 2016, imports of goods[8] increased by 6.3% YoY, driven by an increase in imports of capital and intermediate goods (+7%) and transportation (+17%). The recovery in oil prices negatively affected Georgia's trade balance, with imports of petroleum goods increasing by 15% YoY. Due to the increase in imports, the balance of trade worsened by 5.8% YoY. The deterioration in the balance of trade was partly offset by increasing inflows from tourism and remittances.
Georgia's dynamic tourism industry continued to grow in 4Q 2016, with visitor numbers increasing 5% YoY while the number of tourists[9] increased by a solid 16.8% YoY. Overall in 2016, the number of visitors went up by 7.6% YoY to 6.4 million people, contributing US$2.1 billion to the economy. The first indicators of growth in tourism revenues are very encouraging; as of January 2017, the number of international visitors in Georgia increased by 20% YoY.
Remittances, which represent a significant positive component in Georgia's current account balance, increased by 15.2% YoY, mainly supported by greater money transfers from Israel (+88.6%), the US (+32.8%), Turkey (+62.7%), Italy (+11.4%) and Greece (+20.5%). Money transfers from Russia (+1.6%) also showed the first signs of recovery by the end of 2016.
The sharp depreciation of the Turkish Lira and a stronger dollar were reflected in the USD/GEL exchange rate. By the end of 2016, the USD/GEL exchange rate depreciated by 10.5% YoY and by 12.3% QoQ. The USD reached a maximum of 2.78 GEL before stabilizing at around 2.70 GEL in January 2017. The real and nominal effective exchange rates of GEL remain slightly undervalued relative to their long-term trends, which should become supportive of exports of goods and services over the coming periods.
To cover the temporary gap in revenues that results from the profit tax reform, the government has raised excise taxes on tobacco, petroleum, gas, alcoholic drinks and cars. Reshuffling tax incentives should support growth over the longer term, with investing and re-investing made more attractive, while the consumption of currently very cheap tobacco and alcoholic drinks will be discouraged, which should be positive from the external trade balance perspective as well.
Fiscal policy remained pro-growth in 2016, with the fiscal deficit standing at around 40%, financed mostly by external liabilities. Despite this being over 3%, public debt levels remain at around 45.0% of GDP, below the ceiling of 60% set out in the constitution. In line with the government's debt management strategy, the share of domestic debt in the total public debt is gradually increasing - it stood at 21% at the end of 2016 - which reduces exchange rate risk and strengthens the sustainability profile of public debt.
In 2017, the fiscal deficit is projected to reach 4.2% of GDP. Despite remaining high, this is mostly driven by increased capital expenditures. The government's long-term reform agenda centers on infrastructure development in the country, which should support long-term economic growth by reducing transportation costs and better harnessing the potential of Georgia's regions. In addition, better transport infrastructure should strengthen the country's position as the region's transport and logistics hub. The immediate effect of increased capital spending should be lower unemployment and higher economic growth.
In recognition of its continued progress, Georgia moved up seven steps in the World Bank's 2017 Doing Business ranking, from 23rd in 2016 to 16th out of 190 countries surveyed globally. This placed it third in Eastern Europe and made it one of the top 10 countries in terms of annual improvement.
In 2016 Georgia signed a free trade agreement with the European Free Trade Area states (Iceland, Lichtenstein, Norway, Switzerland), representing a small but symbolic expansion of its free-trade partnerships. Georgia is gradually capitalizing on the free-trade agreement with the EU, while a step-by-step alignment of the Georgian regulatory environment to that of the EU means that a broader range of Georgian produced goods can enter the EU on favorable terms. The European Parliament approved visa free travel to Schengen countries for citizens of Georgia; this decision is expected to become operational in spring 2017, once the remaining technicalities are finalized. Visa free movement will be a valuable addition to the existing free trade deal and will enable Georgia to better utilize the abundant export potential offered by the EU market.
The outlook for 2017 is positive, with large infrastructure projects planned and a free trade agreement with China coming into force in the second half of the year, further diversifying Georgia's trade flows and reducing exposure to regional economic volatility. Following smooth parliamentary elections in late 2016, the political outlook appears stable and the government's liberal reform agenda remains in place. The abolition of tax on reinvested profit, which comes into force at the start of 2017, is expected to further boost Georgia's profile as an attractive investment destination.
Results Overview FY 2016 and 4Q 2016
| Income Statement Highlights | |||||||||||
| in thousands of GEL | Y'16 w/o BR acquisition | Y'16 | Y'15 | Change in % | 4Q'16 w/o BR acquisition | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY % | Change QoQ % | |
| Net Interest Income | 466,576 | 490,453 | 412,173 | 19.0% | 129,811 | 153,689 | 120,227 | 106,519 | 44.3% | 27.8% | |
| Net Fee and Commission Income | 88,076 | 90,268 | 72,291 | 24.9% | 26,200 | 28,392 | 22,194 | 19,807 | 43.3% | 27.9% | |
| Other Operating Non-Interest Income | 88,358 | 100,341 | 92,528 | 8.4% | 24,189 | 36,172 | 19,398 | 30,636 | 18.1% | 86.5% | |
| Provisioning Charges | -41,597 | -53,396 | -75,991 | -29.7% | 2,131 | -9,668 | -15,059 | -5,318 | 81.8% | -35.8% | |
| Operating Income after Provisions for Impairment | 601,413 | 627,667 | 501,002 | 25.3% | 182,331 | 208,586 | 146,759 | 151,644 | 37.5% | 42.1% | |
| Operating Expenses | -296,686 | -311,988 | -253,130 | 23.3% | -96,483 | -111,785 | -65,536 | -77,394 | 44.4% | 70.6% | |
| Profit Before Tax | 304,727 | 315,679 | 247,872 | 27.4% | 85,849 | 96,801 | 81,223 | 74,251 | 30.4% | 19.2% | |
| Income Tax Expense | -17,146 | -17,420 | -29,176 | -40.3% | -8,492 | -8,767 | -10,235 | -7,331 | 19.6% | -14.3% | |
| Profit for the Period | 287,581 | 298,258 | 218,697 | 36.4% | 77,356 | 88,034 | 70,988 | 66,920 | 31.6% | 24.0% | |
| Balance Sheet and Capital Highlights | |||||||||||
| Dec-16 | Sep-16 | Change QoQ | Dec-15 | Change YoY | |||||||
| In Millions | GEL w/o BR Acquisition | GEL | USD w/o BR Acquisition | USD | GEL | USD | GEL | USD | |||
| Total Assets | 9,213 | 10,769 | 3,481 | 4,069 | 7,584 | 3,255 | 42.0% | 6,935 | 2,896 | 55.3% | |
| Gross Loans | 5,911 | 7,359 | 2,233 | 2,780 | 5,004 | 2,148 | 47.1% | 4,639 | 1,937 | 58.6% | |
| Customer Deposits | 5,641 | 6,455 | 2,131 | 2,439 | 4,593 | 1,972 | 40.5% | 4,178 | 1,745 | 54.5% | |
| Total Equity | 1,576 | 1,583 | 595 | 598 | 1,389 | 596 | 14.0% | 1,218 | 509 | 29.9% | |
| Basel I Tier I Capital | - | 1,486 | - | 561 | 1,322 | 568 | 12.4% | 1,157 | 483 | 28.4% | |
| Basel I Risk Weighted Assets | - | 6,974 | - | 2,635 | 5,162 | 2,216 | 35.1% | 4,680 | 1,954 | 49.0% | |
| Basel II/III Tier I Capital | - | 1,041 | - | 393 | 1,125 | 483 | -7.4% | 953 | 398 | 9.2% | |
| Basel II/III Risk Weighted Assets | - | 10,021 | - | 3,786 | 8,428 | 3,618 | 18.9% | 7,476 | 3,122 | 34.0% | |
| Key Ratios | Y'16 w/o BR Acquisition | Y'16 | Y'15 | Change in % | 4Q'16* w/o BR Acquisition | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY | Change QoQ |
| ROAE | 21.6% | 22.4% | 20.1% | 2.3% | 21.4% | 24.2% | 20.6% | 23.1% | 1.1% | 3.6% |
| ROAA | 3.9% | 3.9% | 3.4% | 0.5% | 3.7% | 3.7% | 4.0% | 3.9% | -0.2% | -0.3% |
| Pre-Provision ROAE | 24.7% | 26.4% | 27.1% | -0.7% | 20.8% | 26.8% | 25.1% | 24.9% | 1.9% | 1.7% |
| Cost to Income | 46.1% | 45.8% | 43.9% | 1.9% | 53.5% | 51.2% | 40.5% | 49.3% | 1.9% | 10.7% |
| Cost of Risk | 0.8% | 1.0% | 1.7% | -0.7% | -0.1% | 0.6% | 1.1% | 0.2% | 0.5% | -0.5% |
| NPL to Gross Loans | 4.0% | 3.5% | 4.8% | -1.3% | 4.0% | 3.5% | 4.6% | 4.8% | -1.3% | -1.1% |
| Basel I Total CAR | - | 28.1% | 31.0% | -2.9% | - | 28.1% | 31.5% | 31.0% | -2.9% | -3.4% |
| Basel II/III Total CAR | - | 14.2% | 16.0% | -1.8% | - | 14.2% | 16.2% | 16.0% | -1.8% | -2.1% |
| Leverage (Times) | 5.8 | 6.8 | 5.7 | 1.1 | 5.8 | 6.8 | 5.5 | 5.7 | 1.1 | 1.3 |
Income Statement Discussion
| Net Interest Income | ||||||||||
| In thousands of GEL | Y'16 w/o BR Acquisition* | Y'16 | Y'15 | Change in % | 4Q'16 w/o BR Acquisition | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY | Change QoQ |
| Loans and Advances to Customers | 653,512 | 688,724 | 582,327 | 18.3% | 186,904 | 222,116 | 164,235 | 155,292 | 43.0% | 35.2% |
| Investment Securities Available for Sale | 23,101 | 25,707 | 20,927 | 22.8% | 5,241 | 7,847 | 5,679 | 5,862 | 33.9% | 38.2% |
| Due from Other Banks | 4,604 | 4,550 | 7,639 | -40.4% | 1,013 | 959 | 1,055 | 1,425 | -32.7% | -9.1% |
| Bonds Carried at Amortized Cost | 30,714 | 30,714 | 22,950 | 33.8% | 7,460 | 7,460 | 7,039 | 7,803 | -4.4% | 6.0% |
| Investment in Leases | 16,566 | 16,566 | 15,217 | 8.9% | 4,895 | 4,895 | 3,950 | 3,791 | 29.1% | 23.9% |
| Other | 165 | 165 | - | NMF | 67 | 67 | 98 | - | NMF | -31.7% |
| Interest Income | 728,663 | 766,426 | 649,059 | 18.1% | 205,581 | 243,344 | 182,056 | 174,172 | 39.7% | 33.7% |
| Customer Accounts | 147,270 | 154,840 | 137,489 | 12.6% | 40,316 | 47,886 | 36,501 | 36,156 | 32.4% | 31.2% |
| Due to Credit Institutions | 78,702 | 85,030 | 70,834 | 20.0% | 23,198 | 29,526 | 17,040 | 23,482 | 25.7% | 73.3% |
| Subordinated Debt | 34,337 | 34,325 | 26,363 | 30.2% | 11,774 | 11,762 | 7,847 | 7,438 | 58.1% | 49.9% |
| Debt Securities in Issue | 1,778 | 1,778 | 2,105 | -15.5% | 482 | 482 | 442 | 550 | -12.5% | 9.0% |
| Other | - | - | 94 | -100.0% | - | - | - | 28 | -100.0% | NMF |
| Interest Expense | 262,087 | 275,973 | 236,885 | 16.5% | 75,769 | 89,655 | 61,830 | 67,654 | 32.5% | 45.0% |
| Net Interest Income | 466,576 | 490,453 | 412,173 | 19.0% | 129,811 | 153,689 | 120,227 | 106,519 | 44.3% | 27.8% |
| Net Interest Margin | 7.9% | 7.8% | 7.8% | 0.0% | 7.8% | 7.9% | 8.3% | 7.4% | 0.5% | -0.4% |
NMF - Not Meaningful Figure
2016 to 2015 Comparison
Without the Bank Republic acquisition effect, net interest income grew by 13.2% YoY to GEL 466.6 million, resulting from a 12.3% higher interest income and 10.6% higher interest expense. The increase in interest income by GEL 79.6 million was mainly driven by the rise in interest income from loans to customers by GEL 71.2 million, or 12.2%, which is primarily related to the 27.4% gross loan portfolio increase, while loan yield declined from 13.6% to 13.5%, due to a decrease in GEL-denominated loans yield. The rise in interest income from investment securities is GEL 10.0 million, or 22.7%. This was primarily due to the increase in yields on such securities from 7.3% to 8.6% mainly due to the higher average refinancing rate through 2016. The rise in interest income included a one-off interest income gain of a GEL 9.6 million from the recovery of previously written-off loan interest from large borrower in 4Q 2016 as well as one-off interest income related to a corporate customer amounting to GEL 4.2 million in 3Q 2016. The yield on average interest earning assets amounted to 12.3%.
Without the Bank Republic acquisition effect, interest expense increased by GEL 25.2 million, or 10.6%, mainly due to a GEL 7.9 million, or 11.1% higher interest expense on amounts due to credit institutions, a GEL 9.8 million, or 7.1% higher expense on amounts due to customer accounts and a GEL 8.0 million, or 30.3% higher interest expense on subordinated debt. The rise in interest expense on amounts due to credit institutions mainly resulted from the increase in the respective portfolio by GEL 365.7 million, or 32.8% and the increase of the cost of borrowing from 7.2% to 7.4%. The increased cost of GEL-denominated borrowings from 8.0% to 9.2% offset the decrease in the cost of Foreign-currency denominated borrowings from 6.5% to 6.0%. The rise in interest expense on amounts due to customer accounts resulted from the increase in the respective average portfolio, despite the decrease in the cost of deposits from 3.5% to 3.3% YoY. The rise in subordinated debt was mainly caused by a GEL 2.5 million one-off expense related to the prepayment of costly subordinated loans.
The Bank Republic acquisition effect increased net interest income by GEL 23.9 million, resulting from a GEL 37.8 million, or 5.8% contribution to interest income and a GEL 13.9 million, or 5.9% contribution to interest expense. Bank Republic's interest income is mainly attributable to a GEL 35.2 million income from loans to customers. Bank Republic's increased interest expense resulted from a GEL 7.6 million, or 5.5% contribution to interest expense on customer accounts and a GEL 6.3 million, or 8.9%, contribution to interest expense on amounts due to credit institutions. While Bank Republic's acquisition had a significant effect on balance sheet items growth, its effect on interest income was relatively limited due to limited number of days of financial results consolidation (72 days in the full year after 20th October 2016).
Consequently, with the Bank Republic acquisition effect, net interest income grew by 19.0% YoY to GEL 490.5 million, resulting from 18.1% higher interest income and 16.5% higher interest expense. As a result, NIM was 7.8% (7.6% without one-offs) in 2016, unchanged from 2015. Without the Bank Republic acquisition effect, NIM was 7.9% (7.7% without one-offs).
4Q 2016 to 4Q 2015 Comparison
Without the Bank Republic acquisition effect, net interest income increased by GEL 23.3 million, or 21.9% to GEL 129.8 million, as a result of a GEL 31.4 million, or 18.0% increase in interest income and a GEL 8.1 million, or 12.0% increase in interest expense, compared to 4Q 2015. Interest income increased due to a GEL 31.7 million, or 20.4% increase from loans including a one-off interest income of GEL 9.6 million from the recovery of previously written-off loan of a large borrower. This effect more than offset the decrease in loan yields which eventually grew from 13.6% to 13.8%. The yields on FC-denominated loan yields grew from 10.5% to 11.1%. However, the yields on GEL-denominated loans decreased from 19.2% to 18.5%.
Without the Bank Republic acquisition effect, interest expense increased by GEL 8.1 million, or 12.0%, which is mainly explained by the increase in interest expense on customer accounts by a GEL 4.2 million, or 11.5%, and by the increase in interest expense on subordinated debt by GEL 4.3 million, or 58.3%. The rise in interest expense on customer deposits resulted from the increase in customer deposit portfolio by 35.0%, despite the decrease in the cost of deposit by 0.3%. The rise in interest expense on Subordinated debt increased due to an increase in the respective portfolio by 29.9% and a GEL 2.5 million one-off expense, which was attributable to the prepayment of costly subordinated loans.
The Bank Republic acquisition effect increased net interest income by GEL 23.9 million in 4Q, resulting from a GEL 37.8 million, or 21.7% contribution to interest income and a GEL 13.9 million, or 20.5% contribution to interest expense. Bank Republic's interest income was primarily due to the interest income from loans to customers in the amount GEL 35.2 million. The Bank Republic acquisition effect increased interest expense by GEL 13.9 million, or 20.5%, resulting from a GEL 7.6 million, or 20.9%, contribution to interest expense on customer accounts and a GEL 6.3 million, or 26.9%, contribution to interest expense on amounts due to credit institutions.
Consequently, with the Bank Republic acquisition effect, net interest income grew by 44.3% to GEL 153.7 million, resulting from 39.7% higher interest income and 32.5% higher interest expense. NIM increased from 7.4% to 7.9% (7.5% without one-offs) on a YoY basis. Without the Bank Republic acquisition effect, NIM stood at 7.8% (7.4% without one-offs).
4Q 2016 to 3Q 2016 Comparison
Without the Bank Republic acquisition effect, net interest income increased by GEL 9.6 million, or 8.0%, as a result of GEL 23.5 million, or 12.9%, in higher interest income and GEL 13.9 million, or 22.5%, in higher interest expense. Interest income from loans increased by GEL 22.7 million, or by 13.8%, due to the 18.1% increase in the respective portfolio and a gain of GEL 9.6 million from the recovery of previously written-off loan interest from one large borrower. Interest income from investment securities remained broadly stable, while yield on securities decreased by 0.9pp to 7.5%, which was explained by the slightly lower average refinancing rate in 4Q 2016 compared to 3Q 2016. Yields on average interest earning assets amounted to 12.3%.
Without Bank Republic's acquisition effect interest expense increased by GEL 13.9 million, or 22.5%, which is mainly explained by a GEL 3.8 million, or 10.5% increased expense on customer accounts, by a GEL 6.2 million, or 36.1%. Increased expense on amounts due to credit institutions and by a GEL 3.9 million, or 50.0% increased expense on subordinated debt. The increase in interest expense on customer accounts was primarily caused by a GEL 1,047.9 million, or 22.8%, increase in respective portfolio. The effect was partially offset by a 0.2% lower deposit cost in 4Q 2016. The increase in interest expense on amounts due to credit institutions was mainly due to an increase in the respective portfolio by GEL 284.2 million, or 23.8%, and by an increase in yields on amounts due to credit institutions from 6.9% to 7.0%. The increase in interest expense on subordinated debt was primarily due to a GEL 2.5 million one-off expense related to a prepayment of a costly subordinated loans and the increase in respective portfolio by a GEL 84.7 million. As a result, the cost of the funding amounted to 4.4%.
The Bank Republic acquisition effect increased net interest income by GEL 23.9 million in 4Q, resulting from a GEL 37.8 million, or 20.7%, contribution to interest income and a GEL 13.9 million, or 22.5%, contribution to interest expense. Bank Republic interest income was primarily due to the interest income from loans to customers in the amount of GEL 35.2 million. Bank Republic's acquisition effect increased interest expense by a GEL 13.9 million, or 22.5%, which resulted from a GEL 7.6 million, or 20.7%, contribution to interest expense on customer accounts and a GEL 6.3 million, or 37.1% contribution to interest expense on amounts due to credit institutions.
Consequently, with the Bank Republic acquisition effect, net interest income grew by 27.8% to GEL 153.7 million, resulting from 33.7% higher interest income and 45.0% higher interest expense net. As a result, NIM dropped by 0.4pp to 7.9% (7.5% without one-offs). Without the Bank Republic acquisition effect, NIM dropped by 0.5pp to 7.8%.
| Fee and Commission Income | ||||||||||
| In thousands of GEL | Y'16 w/o BR Acquisition | Y'16 | Y'15 | Change in % | 4Q'16 w/o BR Acquisition | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY | Change QoQ |
| Card Operations | 60,081 | 61,115 | 49,424 | 23.7% | 17,799 | 18,832 | 15,434 | 13,964 | 34.9% | 22.0% |
| Settlement Transactions | 41,731 | 43,434 | 31,218 | 39.1% | 12,886 | 14,590 | 10,730 | 9,225 | 58.2% | 36.0% |
| Guarantees Issued | 10,982 | 11,699 | 8,949 | 30.7% | 2,591 | 3,308 | 2,259 | 2,611 | 26.7% | 46.4% |
| Issuance of Letters of Credit | 5,999 | 6,215 | 5,859 | 6.1% | 2,093 | 2,310 | 1,353 | 1,396 | 65.4% | 70.7% |
| Cash Transactions | 12,911 | 13,013 | 10,930 | 19.1% | 3,828 | 3,930 | 3,594 | 3,122 | 25.9% | 9.4% |
| Foreign Exchange Operations | 1,227 | 1,277 | 1,410 | -9.4% | 434 | 484 | 239 | 306 | 58.1% | 102.5% |
| Other | 5,815 | 6,046 | 6,048 | 0.0% | 1,775 | 2,006 | 1,502 | 1,944 | 3.2% | 33.6% |
| Fee and Commission Income | 138,746 | 142,800 | 113,837 | 25.4% | 41,406 | 45,460 | 35,112 | 32,567 | 39.6% | 29.5% |
| Card Operations | 33,805 | 34,906 | 27,169 | 28.5% | 10,039 | 11,140 | 8,856 | 8,778 | 26.9% | 25.8% |
| Settlement Transactions | 5,667 | 5,795 | 3,904 | 48.4% | 1,594 | 1,722 | 1,476 | 1,273 | 35.2% | 16.7% |
| Guarantees Received | 668 | 796 | 957 | -16.9% | 192 | 320 | 210 | 187 | 71.2% | 52.4% |
| Letters of Credit | 1,624 | 1,624 | 2,208 | -26.4% | 297 | 297 | 424 | 532 | -44.2% | -30.0% |
| Cash Transactions | 2,462 | 2,633 | 2,707 | -2.7% | 580 | 751 | 614 | 561 | 33.7% | 22.3% |
| Foreign Exchange Operations | 146 | 190 | 5 | NMF | 79 | 123 | - | 1 | NMF | NMF |
| Other | 6,298 | 6,587 | 4,597 | 43.3% | 2,427 | 2,717 | 1,339 | 1,427 | 90.4% | 102.9% |
| Fee and Commission Expense | 50,670 | 52,532 | 41,546 | 26.4% | 15,206 | 17,068 | 12,918 | 12,760 | 33.8% | 32.1% |
| Net Fee And Commission Income | 88,076 | 90,268 | 72,291 | 24.9% | 26,200 | 28,392 | 22,194 | 19,807 | 43.3% | 27.9% |
NMF - Not Meaningful Figure
2016 to 2015 Comparison
Without the Bank Republic acquisition effect, net fee and commission income amounted to GEL 88.1 million, up by a GEL 15.8 million, or 21.8%, which resulted from a GEL 24.9 million, or 21.9% higher fee and commission income and a GEL 9.1 million, or 22.0%, higher fee and commission expense. This rise resulted from a GEL 8.8 million, or 32.0% increase in net settlement transactions, which mainly resulted from the increased scale of operations in the subsidiary TBC Pay; a GEL 4.0 million, or 18.1%, increase in net card operations, a GEL 2.3 million, or 29.1% increase in net guarantees; and a GEL 2.2 million, or 27.1%, increase in net cash transactions.
The Bank Republic acquisition effect increased net fee and commission income by GEL 2.2 million, or 3.0%, which resulted from a GEL 4.1 million, or 3.6%, contribution to fee and commission income and a GEL 1.9 million, or 4.5% contribution to fee and commission expense.
As a result, net fee and commission income grew by GEL 18.0 million, or 24.9%. The net fee and commission income represented 13.3% of the total operating income.
4Q 2016 to 4Q 2015 Comparison
Without the Bank Republic acquisition effect, net fee and commission income amounted to GEL 26.2 million, up by GEL 6.4 million, or 32.3%, resulting from a GEL 8.8 million, or 27.1%, higher fee and commission income and a GEL 2.4 million, or 19.2%, higher fee and commission expense. The increase in net fee and commission income resulted from a GEL 3.3 million, or 42.0% rise, in net fee and commission income from settlement transactions, which was mainly driven by the increased scale of operations in the subsidiary TBC Pay from a GEL 2.6 million, or 49.7% increase in net card operations and a GEL 0.7 million, or 26.9% increase in net cash transactions.
Bank Republic's acquisition effect increased net fee and commission income by GEL 2.2 million, or 11.1%, resulting from a GEL 4.1 million, or 12.4%, contribution to fee and commission income and a GEL 1.9 million, or 14.6%, contribution to fee and commission expense.
As a result, net fee and commission income grew by GEL 8.6 million, or 43.3%.
4Q 2016 to 3Q 2016 Comparison
Without the Bank Republic acquisition effect, net fee and commission increased by GEL 4.0 million, or 18.1%, resulting from a GEL 6.3 million, or 17.9% higher fee and commission income and a GEL 2.3 million, or 17.7% higher fee and commission expense. The increase in net fee and commission income was primarily driven by a GEL 2.0 million, or 22.0% increase in net settlement transactions, which resulted from the increased scale of operations in subsidiary TBC Pay, a GEL 1.2 million, or 18.0% increase in net card operations; and a GEL 0.9 million increase in income from letters of credit. This increase was slightly offset by a GEL 0.8 million decrease in net other fee and commission income.
The Bank Republic acquisition effect increased net fee and commission income by a GEL 2.2 million, or 9.9%, resulted from a GEL 4.1 million, or 11.5%, contribution to fee and commission income and a GEL 1.9 million, or 14.4% contribution to fee and commission expense.
As a result, net fee and commission income grew by GEL 6.2 million, or by 27.9%.
| Other Operating Non-Interest Income | ||||||||||
| In thousands of GEL | Y'16 w/o BR acquisition effect | Y'16 | Y'15 | Change in % | 4Q'16 w/o BR Acquisition effect | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY | Change QoQ |
| Gains Less Losses from Trading in Foreign Currencies and Foreign Exchange Translations | 60,413 | 67,762 | 67,221 | 0.8% | 15,604 | 22,952 | 16,724 | 18,447 | 24.4% | 37.2% |
| Gains Less Losses/(Losses Less Gains) from Derivative Financial Instruments | -206 | -206 | -575 | -64.2% | 94 | 94 | 173 | 276 | -66.1% | -45.8% |
| Gain less Losses from Disposal of Investment Securities Available for Sale | 8,795 | 9,293 | - | NMF | - | 498 | - | - | NMF | NMF |
| Revenues from Cash-In Terminal Services | 1,100 | 1,100 | 777 | 41.5% | 300 | 300 | 292 | 237 | 26.3% | 2.8% |
| Revenues from Operational Leasing | 5,772 | 5,772 | 8,539 | -32.4% | 1,158 | 1,158 | 1,086 | 1,590 | -27.1% | 6.6% |
| Gain from Sale of Investment Properties | 2,470 | 3,685 | 4,896 | -24.7% | 2,239 | 2,393 | 0 | 4,516 | -47.0% | NMF |
| Gain from Sale of Inventories of Repossessed Collateral | 2,382 | 2,382 | 1,836 | 29.8% | 991 | 991 | 222 | 371 | 167.5% | NMF |
| Administrative Fee Income from International Financial Institutions | 644 | 644 | 708 | -9.0% | 139 | 139 | 147 | 158 | -11.8% | -5.1% |
| Revenues from Non-Credit Related Fines | 635 | 658 | 286 | 129.9% | 188 | 211 | 46 | 218 | -3.3% | NMF |
| Gain on Disposal of Premises and Equipment | 208 | 208 | 118 | 77.0% | 110 | 110 | 3 | 19 | NMF | NMF |
| Gross Insurance Profit | 256 | 256 | - | NMF | 256 | 256 | - | - | NMF | NMF |
| Gain from sale of financial option | - | - | 4,692 | NMF | - | - | - | 4,692 | NMF | NMF |
| Other | 5,888 | 8,787 | 4,031 | 118.0% | 3,110 | 7,070 | 706 | 112 | NMF | NMF |
| Other Operating Income | 19,355 | 23,492 | 25,883 | -9.2% | 8,492 | 12,628 | 2,501 | 11,912 | 6.0% | NMF |
| Other Operating Non-Interest Income | 88,358 | 100,341 | 92,528 | 8.4% | 24,189 | 36,172 | 19,398 | 30,636 | 18.1% | 86.5% |
NMF - Not Meaningful Figure
2016 to 2015 Comparison
Without the Bank Republic acquisition effect, other operating non-interest income decreased by GEL 4.2 million, or by 4.5%, to GEL 88.4 million. The decline was mainly driven by a GEL 6.8 million, or 10.1%, decline in gains less losses from trading in foreign currencies and foreign exchange translations. This was mainly caused by elevated income from FX operations in 2015, broadly related to the currency depreciation, volatility and related increased margins of the currency rate during 2015, as well as due to a one-off FX gain in 1Q 2015 with an estimated amount of a GEL 6.7 million. The decline in other operating income was a GEL 6.5 million, or 25.2%. It was partially due to the two one-off incomes in 4Q 2015: one from the sale of financial option related to one corporate client in the amount of GEL 4.7 million and the other one from the sale of an earlier foreclosed asset classified as an investment property in the amount of GEL 4.3 million. The further decrease was due to a GEL 2.8 decline in income from operational leasing. The decrease was largely offset by a one-off gain of a GEL 8.8 million in gains from the disposal of investment securities available for sale.
The Bank Republic acquisition effect increased other operating non-interest income by a GEL 12.0 million, or 13.0%, resulting from a GEL 7.3 million, or 10.9% contribution to gains less losses from trading in foreign currencies and foreign exchange translations and a GEL 4.1 million, or 16.0% increase in other operating income.
As a result, net other operating income grew by GEL 7.8 million or 8.4%.
4Q 2016 to 4Q 2015 Comparison
Without the Bank Republic acquisition effect, other non-interest operating income decreased by GEL 6.5 million, or 21.0%, to GEL 24.2 million. The decline was driven by a Gel 2.8 million, or 15.4% decrease in gain less loss from trading in foreign currencies and foreign exchange translations, which was driven by the decreased margins for foreign currency translation. The decline in other operating income was a GEL 3.4 million, or 28.7 % which was mainly related to the one-off incomes mentioned above.
Bank Republic's acquisition effect increased other operating non-interest income by a GEL 12.0 million, or 39.1%, resulting from a GEL 7.3 million, or 39.8% contribution to Gains less losses from trading in foreign currencies and foreign exchange translations and a GEL 4.1 million, or 34.7% increase in Other operating income.
As a result, other operating non-interest income increased by GEL 5.5 million, or 18.1%.
4Q 2016 to 3Q 2016 Comparison
Without the Bank Republic acquisition effect, other operating non-interest income increased by GEL 4.8 million, or 24.7%. The increase was primarily driven by a GEL 2.2 million increase in gains from the sale of investment properties and a GEL 0.8 million increase in gains from the sale of inventories of repossessed collateral. This increase was partially offset by a GEL 1.1 million, or 6.7% decrease in gains less losses from trading in foreign currencies and foreign exchange translations, resulting from a lower FX margin compared to 3Q 2016.
The Bank Republic acquisition effect increased other operating non-interest income by a GEL 12.0 million, or 61.8%, resulting from a GEL 7.3 million, or 43.9% contribution to gains less losses from trading in foreign currencies and foreign exchange translations and a GEL 4.1 million increase in other operating income.
As a result, other operating non-interest income increased by GEL 16.8 million, or 86.5%.
| Provision for Impairment | ||||||||||
| In thousands of GEL | Y'16 w/o BR Acquisition | Y'16 | Y'15 | Change in % | 4Q'16 w/o BR Acquisition | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY | Change QoQ |
| Provision for Loan Impairment | -36,997 | -49,201 | -72,791 | -32.4% | 1,799 | -10,405 | -13,518 | -2,055 | NMF | -23.0% |
| Provision for Impairment of Investments in Finance Lease | -558 | -558 | -967 | -42.3% | 2,341 | -322 | -126 | -344 | -6.4% | 156.3% |
| Provision for/(Recovery of Provision) Performance Guarantees and Credit Related Commitments | -1,217 | -771 | 1,117 | -169.0% | -322 | 2,787 | -1,481 | -1,945 | NMF | NMF |
| Provision for Impairment of Other Financial Assets | -2,814 | -2,855 | -3,351 | -14.8% | -1,686 | -1,727 | 66 | -974 | 77.4% | NMF |
| Impairment of Investment Securities Available for Sale | -11 | -11 | - | NMF | - | - | - | - | NMF | NMF |
| Total Provision Charges for Impairment | -41,597 | -53,396 | -75,991 | -29.7% | 2,131 | -9,668 | -15,059 | -5,318 | 81.8% | -35.8% |
| Operating Income after Provisions for Impairment | 601,413 | 627,667 | 501,002 | 25.3% | 182,331 | 208,586 | 146,759 | 151,644 | 37.5% | 42.1% |
| Cost of Risk | 0.8% | 1.0% | 1.7% | -0.7% | -0.1% | 0.6% | 1.1% | 0.2% | 0.5% | -0.5% |
NMF - Not Meaningful Figure
2016 to 2015 Comparison
Without the Bank Republic acquisition effect, total provision charges declined by GEL 34.4 million to a GEL 41.6 million. This decrease was driven by the decreased charges on loans by a GEL 35.8 million. Decreased charges on loans were mainly driven by the recovery of a provision expense in the amount of GEL 26.2 million in 4Q 2016 on a previously written off corporate exposure and the overall improved performance of the corporate book, which more than offset the negative effect of currency devaluation GEL 8.7 million. The effect was magnified by a GEL 0.4 million decrease in the provision for impairment of investments in financial leases, more than offsetting a GEL 2.3 million increase in provision charges on performance guarantees and credit related commitments as a result of the increase in the respective portfolios.
The Bank Republic acquisition effect increased total provision charges for impairment by GEL 11.8 million, which was mainly caused by the increase in provision for loan impairment. Consequently, in 2016, total provision charges declined by GEL 22.6 million to GEL 53.4 million, compared to FY 2015.
As a result, in 2016, the cost of risk stood at 1.0%, compared to 1.7% in 2015. Without the Bank Republic acquisition effect, the cost of risk stood at 0.8% down by 0.9 pp compared to FY in 2015. The cost of risk without one-off effect and currency effect stood at 1.1% in 2016 or 1.3% without Bank Republic acquisition effect. With Bank Republic but without fair value adjustment required by the IFRS consolidation rules, the cost of risk without both one-offs would amount to 1.0% in Q4 and 1.2% in FY 2016
4Q 2016 to 4Q 2015 Comparison
Without the Bank Republic acquisition effect, total provision charges decreased by GEL 7.4 million. This decrease was caused by a GEL 3.9 million decrease in provision for loan impairment and GEL 4.3 million decrease in provision for performance guarantees and credit related commitments. The decrease in loan provision expenses was driven by a large recovery in the corporate segment, which more than offset a technical rise in provisions related to the local currency depreciation in the amount of GEL 16.0million.
With the Bank Republic acquisition effect, in 4Q 2016 total provision charges increased by GEL 4.4 million to a GEL 9.7 million. This increase is explained by a GEL 8.4 million increase in provision for loan impairment. This effect was partially offset by a GEL 4.8 million decrease in provision for performance guarantees and credit related commitments.
In 4Q 2016, the cost of risk stood at 0.6%, compared to 0.2% in 4Q 2015. Without the Bank Republic acquisition effect, the cost of risk stood at -0.1%, down by 0.3 pp compared to 4Q 2015. The cost of risk without one-off effect and currency effect stood at 1.2% in 4Q 2016 or 0.6% without Bank Republic acquisition effect.
4Q 2016 to 3Q 2016 Comparison
Without the Bank Republic acquisition effect, total provision charges decreased by GEL 17.2 million. This decrease was caused by a GEL 15.3 million decrease in provision for loan impairment, and GEL 3.8 million decrease in provision for performance guarantees and credit related commitments. Decrease in loan provision expenses was driven by a large recovery in the corporate segment, which more than offset by technical rise in provisions related to the local currency depreciation as explained above.
With the Bank Republic acquisition effect, on a QoQ basis, total provision charges decreased by a GEL 5.4 million, or 35.8%. This decrease was explained by a GEL 4.3 million decrease in provision for performance guarantees and credit related commitments and a GEL 3.1 million decrease in provision for loan impairment. This effect was partially offset by a GEL 1.8 million increase in provision for impairment of other financial assets.
The cost of risk on loans stood at 0.6%, compared to 1.1% in 3Q 2016. Without Bank Republic's acquisition effect, the cost of risk stood at -0.1% down by 1.2 pp compared to 3Q 2016.
Further details on asset quality can be found under Balance Sheet Discussion section.
| Operating Expenses | |||||||||||
| In thousands of GEL | Y'16 w/o BR Acquisition effect | Y'16 | Y'15 | Change in % | 4Q'16 w/o BR Acquisition effect | 4Q'16 | 3Q'16 | 4Q'15 | Change YoY | Change QoQ | |
| Staff Costs | 164,604 | 172,221 | 142,777 | 20.6% | 54,927 | 62,544 | 40,205 | 42,445 | 47.4% | 55.6% | |
| Depreciation and Amortization | 28,141 | 28,082 | 26,286 | 6.8% | 7,494 | 7,435 | 7,037 | 7,347 | 1.2% | 5.7% | |
| Provision for liabilities and charges | 2,210 | 2,210 | 1,102 | 100.6% | 2,210 | 2,210 | - | 1,102 | 100.6% | NMF | |
| Professional services | 29,178 | 29,926 | 8,418 | NMF | 10,227 | 10,976 | 2,143 | 3,464 | NMF | NMF | |
| Advertising and marketing services | 13,352 | 13,796 | 11,451 | 20.5% | 5,824 | 6,268 | 2,682 | 3,627 | 72.8% | 133.7% | |
| Rent | 17,308 | 18,294 | 16,468 | 11.1% | 4,654 | 5,639 | 4,257 | 4,319 | 30.6% | 32.5% | |
| Utility services | 4,896 | 5,108 | 4,501 | 13.5% | 1,261 | 1,474 | 1,212 | 1,262 | 16.8% | 21.6% | |
| Intangible asset enhancement | 7,446 | 7,446 | 6,062 | 22.8% | 1,840 | 1,840 | 1,905 | 1,886 | -2.5% | -3.4% | |
| Taxes other than on income | 4,440 | 4,699 | 4,598 | 2.2% | 763 | 1,022 | 1,185 | 1,204 | -15.1% | -13.8% | |
| Communications and supply | 3,127 | 4,183 | 3,433 | 21.9% | 880 | 1,937 | 742 | 839 | 130.9% | 161.1% | |
| Stationary and other office expenses | 3,262 | 3,448 | 3,471 | -0.7% | 856 | 1,041 | 773 | 1,176 | -11.4% | 34.7% | |
| Insurance | 2,635 | 2,687 | 2,301 | 16.8% | 681 | 733 | 684 | 382 | 91.8% | 7.1% | |
| Security services | 1,814 | 1,883 | 1,622 | 16.1% | 491 | 560 | 442 | 414 | 35.1% | 26.5% | |
| Premises and equipment maintenance | 2,799 | 3,889 | 2,959 | 31.4% | 860 | 1,949 | 671 | 973 | 100.2% | 190.6% | |
| Business trip expenses | 1,823 | 1,880 | 1,589 | 18.3% | 597 | 654 | 350 | 417 | 56.9% | 86.7% | |
| Transportation and vehicles maintenance | 1,320 | 1,386 | 1,328 | 4.3% | 359 | 425 | 319 | 359 | 18.3% | 33.0% | |
| Charity | 884 | 884 | 928 | -4.7% | 185 | 185 | 214 | 139 | 32.9% | -13.5% | |
| Personnel training and recruitment | 1,207 | 1,272 | 1,230 | 3.4% | 439 | 504 | 259 | 462 | 9.0% | 94.2% | |
| Write-down of current assets to fair value less costs to sell | -4,424 | -4,424 | -178 | NMF | -2,779 | -2,779 | -1,697 | 297 | NMF | 63.8% | |
| Loss on disposal of Inventory | 1,690 | 1,690 | 86 | NMF | 1,038 | 1,038 | 115 | 22 | NMF | NMF | |
| Loss on disposal of investment properties | - | 61 | 3 | NMF | - | 61 | - | - | NMF | NMF | |
| Loss on disposal of premises and equipment | 423 | 423 | 34 | NMF | 90 | 90 | 259 | 34 | 167.3% | -65.1% | |
| Impairment of intangible assets | 19 | 19 | 4,982 | -99.6% | - | - | - | 2,862 | -100.0% | NMF | |
| Gains/(losses) on initial recognition of assets at rates above/below market | - | - | - | NMF | - | - | - | - | NMF | NMF | |
| Acquisition costs | 207 | 207 | - | NMF | 207 | 207 | - | - | NMF | NMF | |
| Gross Change in IBNR | - | - | - | NMF | - | - | - | - | NMF | NMF | |
| Other | 8,324 | 10,718 | 7,679 | 39.6% | 3,377 | 5,771 | 1,776 | 2,361 | 144.4% | NMF | |
| Administrative and Other Operating Expenses | 101,731 | 109,474 | 82,964 | 32.0% | 31,851 | 39,595 | 18,294 | 26,500 | 49.4% | 116.4% | |
| Operating Expenses | 296,686 | 311,988 | 253,130 | 23.3% | 96,483 | 111,785 | 65,536 | 77,394 | 44.4% | 70.6% | |
| Profit before Tax | 304,727 | 315,679 | 247,872 | 27.4% | 85,849 | 96,801 | 81,223 | 74,251 | 30.4% | 19.2% | |
| Income Tax Expense | -17,146 | -17,420 | -29,176 | -40.3% | -8,492 | -8,767 | -10,235 | -7,331 | 19.6% | -14.3% | |
| Profit for the Period | 287,581 | 298,258 | 218,697 | 36.4% | 77,356 | 88,034 | 70,988 | 66,920 | 31.6% | 24.0% | |
| Cost to Income | 46.1% | 45.8% | 43.9% | 1.9% | 53.5% | 51.2% | 40.5% | 49.3% | 1.9% | 10.7% | |
| ROAE | 21.6% | 22.4% | 20.1% | 2.3% | 21.4% | 24.2% | 20.6% | 23.1% | 1.1% | 3.6% | |
| ROAA | 3.9% | 3.9% | 3.4% | 0.5% | 3.7% | 3.7% | 4.0% | 3.9% | -0.2% | -0.3% |
NMF - Not Meaningful Figure
2016 to 2015 Comparison
Without the Bank Republic acquisition effect, total operating expenses increased to GEL 296.7 million, or 17.2% compared to FY 2015. This increase primarily resulted from a GEL 21.8 million, or 15.3% increase in staff costs, related to the increased scale, performance of the business and the changing environment, and GEL 18.8 million or 22.6% increase in administrate expenses. The administrate expensive increased due to one-off expenses related to professional services out of which a GEL 16.2 million is attributable to Premium Listing expenses (GEL 0.3 million in 4Q 2016) and a GEL 8.0 million related to consulting and investment banks fees in connection with the Bank Republic acquisition. The increase in provision for liabilities and charges included one-off expense mainly related to staff redundancy provision related to Bank Republic's acquisition in the amount of GEL 2.2 million above due to upcoming merger. Without one-off expenses mentioned above, administrative and other operating expense decreased by 7.8% due to GEL 5.0 million higher impairment of intangible assets in 2015 and overall increased efficiency across various units.
The Bank Republic acquisition effect increased total operating expenses by GEL 15.3 million, or 6.0%, out of which staff costs accounted for was GEL 7.6 million, or 5.3%. Consequently, total operating expenses, grew by a GEL 58.9 million, or 23.3%. Bank Republic administrate expenses included one-off effect of impairment of intangible asset in the amount of GEL 2.0 million related to the upcoming merger.
As a result, the cost to income ratio was 45.8% (42.9% without one-off effects) in 2016, compared to 43.9% in 2015. Without the Bank Republic acquisition effect, the cost to income ratio was 46.1% in 2016 (43.4% without one-off effects).
4Q 2016 to 4Q 2015 Comparison
Without the Bank Republic acquisition effect, total operating expenses increased to GEL 96.5 million, up by a GEL 19.1 million, or 24.7%. The increase resulted primarily from a GEL 12.5 million, or 29.4%, increase in staff costs related to the increased scale and performance of the business and the changing environment as well as GEL 5.4 million or 20.2% increase in administrative expenses mainly due to one-off expenses mentioned above. The increase in provision for liabilities and charges included one-off expense mainly related to staff redundancy provision related to the Bank Republic acquisition in the amount of GEL 2.2 million mentioned above due to upcoming merger.
The Bank Republic acquisition effect increased total operating expenses by GEL 15.3 million, or 19.8%. The contribution to staff cost was GEL 7.6 million, or 17.9%. Consequently, total operating expenses grew by a GEL 34.4 million, or 44.4%. Bank Republic administrate expenses included one-off effect of impairment of intangible asset in the amount of GEL 2.0 million mentioned above.
As a result, the cost to income ratio stood at 51.2% (47.0% without one-offs) in 4Q 2016, compared to 49.3% in 4Q 2015. Without Bank Republic's acquisition effect, the cost to income ratios was 53.5% (49.7% without one-offs) in 4Q 2016
4Q 2016 to 3Q 2016 Comparison
Without the Bank Republic acquisition effect, operating expenses increased by GEL 30.9 million, or 47.2%, to GEL 96.5 million. The increase primarily resulted from a GEL 14.7 million, or 36.6% increase in staff expenses related to the increased scale, performance of the business and the changing environment and GEL 13.6 million or 74.1% increase in administrative expenses mainly due to one-off expenses mentioned above. Further increases in administrative cost is mostly seasonal. The increase in provision for liabilities and charges included one-off expense related to staff redundancy provision related to the Bank Republic acquisition in the amount of GEL 2.2 million as mentioned above.
The Bank Republic acquisition effect increased operating expenses by GEL 15.3 million, or 23.3%. The increase mainly stemmed from a GEL 7.6 million, or 18.9% increase in staff cost expenses. Consequently, total operating expenses grew by a GEL 46.2 million, or 70.6%.
As a result, the cost to income ratio stood at 51.2% (47.0% without one-offs) in 4Q 2016, compared to a 40.5% in 3Q 2016. Without Bank Republic's acquisition effect, the cost to income ratios was 53.5% (49.7% without one-offs) in 4Q 2016.
Net Income
In 2Q 2016 the bank re-measured its deferred tax assets/liability per IFRS in order to reflect the change in Georgian Tax Code in relation to corporate income tax. The deferred tax assets/liabilities were re-measured to the amount that will be estimated to be utilized in the period from 1 July 2016 to 31 December 2016/31 December 2018. The effect of re-measurement on P&L was GEL 17.9 million.
As a result, in 4Q net income grew by 31.6% to GEL 88.0 million YoY and up by 24.0% QoQ . ROE stood at 24.2% (23.5% without one-offs), up by 1.1pp YoY and up by 3.6pp QoQ. ROA stood at 3.7% (3.5% without one-offs), down by 0.2pp YoY and 0.3pp QoQ. Without the Bank Republic acquisition effect net income in 4Q increased by 15.6% to a GEL 77.4 million YoY and up by 9.0% QoQ. ROE stood at 21.4% (20.0% without one-offs), down by 1.7pp YoY and up by 0.8pp QoQ.
Net income for 2016 stood at GEL 298.3 million, up by 36.4% YoY. ROE stood at 22.4% (20.6% without one-offs), up by 2.3pp YoY. ROA stood at 3.9% (3.6%without one-offs), up by 0.5pp YoY. Without the Bank Republic acquisition effect, net income for 2016 stood at GEL 287.6 million, up by 31.5% YoY and ROA stood at 3.9% up by 0.5pp YoY
| Balance Sheet Discussion | ||||||
| In millions of GEL | Dec-16 w/o BR Acquisition | Dec-16 | Sep-16 | Dec-15 | Change QoQ | Change YoY |
| Cash, Due from Banks and Mandatory Cash Balances with NBG | 1,767 | 1,961 | 1,532 | 1,203 | 27.9% | 63.0% |
| Loans and Advances to Customers (Net) | 5,697 | 7,134 | 4,810 | 4,445 | 48.3% | 60.5% |
| Financial Securities | 652 | 803 | 606 | 679 | 32.5% | 18.2% |
| Fixed and Intangible Assets & Investment Property | 379 | 471 | 375 | 350 | 25.5% | 34.6% |
| Other Assets | 717 | 401 | 261 | 258 | 53.9% | 55.5% |
| Total Assets | 9,213 | 10,769 | 7,584 | 6,935 | 42.0% | 55.3% |
| Due to Credit Institutions | 1,479 | 2,198 | 1,195 | 1,114 | 83.9% | 97.3% |
| Customer Accounts | 5,641 | 6,455 | 4,593 | 4,178 | 40.5% | 54.5% |
| Debt Securities in Issue | 24 | 24 | 24 | 22 | -3.0% | 8.3% |
| Subordinated Debt | 368 | 368 | 284 | 284 | 29.9% | 29.9% |
| Other Liabilities | 125 | 142 | 99 | 120 | 43.5% | 18.6% |
| Total Liabilities | 7,637 | 9,186 | 6,195 | 5,717 | 48.3% | 60.7% |
| Total Equity | 1,576 | 1,583 | 1,389 | 1,218 | 14.0% | 29.9% |
Assets
Without the Bank Republic acquisition effect, the Bank's total assets amounted GEL 9,215.5 million, up by GEL 2,277.5 million, or 32.8%, YoY. This hike primarily resulted from a GEL 1,252.4 million, or 28.2%, rise in net loans to customers and a GEL 564.3 million or 46.9% increase in Liquid Assets (cash, due from banks and mandatory and mandatory cash balances with NBG).
The Bank Republic acquisition effect increased total assets by GEL 1,556.5 million, or 22.4%. The increase primarily resulted from a GEL 1,436 million, or 32.3% increase in net loans to customers. Consequently, with the Bank Republic acquisition effect, as of 31 December 2016, TBC Bank's total assets amounted a GEL 10,769.0 million, up by GEL 3,834.0 million, or 55.3%, YoY.
Without the Bank Republic acquisition effect, the Bank's total assets increased by a GEL 1,628.8 million, or 21.5%, on a QoQ basis. The increase was primarily due to a GEL 887.8 million, or 18.5% increase in net Loans and advances to customers.
The Bank Republic acquisition effect increased total assets by 20.5%, which was explained by a 29.9% increase in net loans to customers. Consequently, with the Bank Republic's acquisition effect on a QoQ basis, total assets expanded by GEL 3,185.3 million, or 42.0%. The rise was mainly due to a GEL 2,324.2 million, or 48.3%, hike in net loans to customers and a GEL 428.1 million, or 27.9% increase in liquid assets (cash, due from banks and mandatory cash balances with NBG).
The liquid assets to liability ratio stood at 30.1%, compared to 32.7% as of 31 December 2015 and 33.5% as of 31 September 2016. Without the Bank Republic acquisition effect, the liquid assets to liability ratio stood at 31.7%.
As of 31 December 2016, the gross loan portfolio amounted to GEL 7,358.7 million, up by 58.6% YoY and by 47.1% QoQ. Gross loans denominated in foreign currency accounted for 65.9% of total gross loans, compared to 64.9% as of 31 December 2015 and 63.4% as of 30 September 2016. Without the Bank Republic's acquisition effect, the gross loan portfolio amounted to GEL 5,911.2 million, up by 27.4% YoY and by 18.1% QoQ. Gross loans denominated in foreign currency accounted for 66.3% of total gross loans.
As of 31 December 2016, NPLs stood at 3.5%, compared to 4.8% and 4.6% as of 31 December 2015 and 30 September 2016, respectively. The NPLs provision coverage ratio stood at 88.4% (221.4% including collateral), compared to 87.4% as of 31 December 2015 and 84.3% as of 30 September 2016. Without the Bank Republic acquisition effect, NPLs stood at 4.0%. The NPLs provision coverage ratio stood at 90.5% (216.8% including collateral).
Asset Quality
Foreign Currency Income Linked Borrowers without Bank Republic effect[10]
| 31-Dec-16 | 30-Sep-16 | |||
| Segments | FC share | FC linked income borrowers share | FC share | FC linked income borrowers share |
| Retail | 60.5% | 32.6% | 58.2% | 32.9% |
| Consumer | 26.2% | 21.8% | 25.1% | 21.1% |
| Mortgage | 89.8% | 24.9% | 89.5% | 24.4% |
| Pawn | 68.4% | 95.5% | 66.5% | 93.7% |
| Corporate | 78.1% | 58.4%[11] | 75.2% | 60.6%[12] |
| SME | 80.6% | 23.9% | 80.8% | 25.3% |
| Micro | 38.6% | 4.0% | 33.1% | 4.0% |
| Total Loan Portfolio | 66.3% | 38.9% | 63.4% | 39.6% |
| PAR 30 by Segments and Currencies | ||||||||||||
| Par 30 | Dec-16 | Sep-16 | Dec-15 | |||||||||
| GEL wo BR | GEL | FC w/o BR | FC | Total w/o BR | Total | GEL | FC | Total | GEL | FC | Total | |
| Corporate | 0.0% | 0.0% | 1.2% | 1.2% | 0.9% | 0.9% | 0.1% | 1.0% | 0.8% | 0.1% | 1.1% | 0.9% |
| Retail | 2.1% | 1.9% | 2.6% | 2.3% | 2.4% | 2.2% | 2.3% | 2.8% | 2.6% | 2.1% | 2.5% | 2.3% |
| SME | 0.6% | 0.6% | 4.0% | 4.2% | 3.3% | 3.5% | 1.2% | 3.9% | 3.4% | 1.8% | 3.8% | 3.5% |
| Micro | 4.8% | 4.6% | 3.7% | 3.7% | 4.4% | 4.2% | 3.7% | 4.3% | 3.9% | 2.7% | 5.6% | 3.5% |
| Total | 2.1% | 1.9% | 2.4% | 2.3% | 2.3% | 2.2% | 2.1% | 2.4% | 2.3% | 1.8% | 2.3% | 2.1% |
Total
Without Bank Republic's acquisition effect, PAR 30 stood at 2.3% and remained broadly stable both YoY and QoQ basis. With Bank Republic's acquisition effect, PAR 30 stood at 2.2%.
Retail Segment
Without Bank Republic's acquisition effect, PAR 30 stood at 2.4% down by 0.2pp QoQ. The decrease was driven by both GEL and FC denominated loans. On YoY basis PAR30 remained broadly stable. With Bank Republic's acquisition effect, PAR 30 stood at 2.2%, down by 0.4pp QoQ and 0.2pp YoY.
Corporate
Without Bank Republic's acquisition effect, PAR 30 stood at 0.9% increased by 0.2pp QoQ and remained unchanged YoY. With Bank Republic's acquisition effect, PAR 30 stood at 0.9% increased by 0.1pp QoQ and remained unchanged YoY.
SME
Without Bank Republic's acquisition effect, PAR 30 stood at 3.3% down by 0.1pp QoQ and 0.2pp YoY driven by improved performance of SME standalone portfolio. With Bank Republic's acquisition effect, PAR 30 stood at 3.5% up by 0.1pp QoQ and remained unchanged YoY.
Micro
Without Bank Republic's acquisition effect, PAR 30 stood at 4.4% up by 0.5pp QoQ and 0.8 YoY. The increase was mainly due to particular sub-segment of agro loans for which overdue loans have increased due to one-off event related to animal farming. With Bank Republic's acquisition effect, PAR 30 stood at 4.2% increased by 0.3pp QoQ and 0.7pp YoY.
| NPLs by Segments and Currencies | ||||||||||||
| NPLs | Dec-16 | Sep-16 | Dec-15 | |||||||||
| GEL* | GEL | FC* | FC | Total* | Total | GEL | FC | Total | GEL | FC | Total | |
| Corporate | 1.0% | 0.7% | 6.4% | 6.0% | 5.2% | 4.6% | 1.1% | 9.1% | 7.1% | 0.6% | 10.2% | 7.9% |
| Retail | 1.5% | 1.4% | 3.5% | 2.8% | 2.7% | 2.3% | 1.7% | 3.6% | 2.8% | 1.8% | 3.3% | 2.7% |
| SME | 1.8% | 1.7% | 6.5% | 6.5% | 5.6% | 5.6% | 1.7% | 6.7% | 5.7% | 5.0% | 4.4% | 4.5% |
| Micro | 3.5% | 3.4% | 5.0% | 4.3% | 3.5% | 3.8% | 3.0% | 6.2% | 4.1% | 2.5% | 8.5% | 4.2% |
| Total | 1.8% | 1.6% | 5.1% | 4.4% | 4.0% | 3.5% | 1.9% | 6.2% | 4.6% | 1.9% | 6.4% | 4.8% |
Total
Without Bank Republic's acquisition effect, NPL decreased by 0.6pp QoQ and 0.8pp YoY to 4.0%. Decrease in NPLs is mainly driven by improved performance of the corporate loan book. With Bank Republic's acquisition effect, NPL stood at 3.5%, down by 1.1pp QoQ and 1.3pp YoY.
Retail Segment
Without Bank Republic's acquisition effect, NPL decreased by 0.1pp QoQ to 2.7% and remained unchanged YoY. With Bank Republic's acquisition effect, NPL stood at 2.3%, down by 0.5pp QoQ and 0.4pp YoY.
Corporate
Without Bank Republic's acquisition effect, NPL stood at 5.2% decreased by 1.9pp QoQ and 2.7pp YoY. Decrease in NPLs is driven by recovery of several corporate borrowers. With Bank Republic's acquisition effect NPL stood at 4.6% decreased by 2.5pp QoQ and 3.2pp YoY.
SME
Without Bank Republic's acquisition effect, NPL decreased by 0.1pp QoQ and increased by 1.1pp YoY. NPLs in GEL denominated loans remain low at 1.8%, while FC denominated NPL increased by 2.1pp YoY due to local currency depreciation in 2015 and macro developments in Azerbaijan. With Bank Republic's acquisition effect, NPL stood at 5.6% decreased by 0.1pp QoQ and increased by 1.1 YoY.
Micro
Without Bank Republic's acquisition effect, NPL stood at 4.1% unchanged from QoQ and down by 0.1 YoY. With Bank Republic's acquisition effect, NPL stood at 3.8% decreased by 0.3pp QoQ and 0.4pp YoY.
| NPLs Coverage | ||||||||
| NPLs Coverage | Dec-16 | Sep-16 | Dec-15 | |||||
| Exc. Collateral* | Exc. Collateral | Incl. Collateral* | Incl. Collateral | Exc. Collateral | Incl. Collateral | Exc. Collateral | Incl. Collateral | |
| Corporate | 94.5% | 93.5% | 252.5% | 257.5% | 79.6% | 223.5% | 91.3% | 222.3% |
| Retail | 103.5% | 98.4% | 200.2% | 202.6% | 106.2% | 200.9% | 101.5% | 199.5% |
| SME | 49.1% | 48.1% | 169.7% | 184.7% | 47.5% | 164.3% | 44.1% | 193.7% |
| Micro | 111.7% | 111.5% | 216.5% | 217.7% | 106.0% | 200.3% | 87.5% | 188.8% |
| Total | 90.5% | 88.4% | 216.8% | 221.4% | 84.3% | 205.0% | 87.4% | 209.9% |
As of December 2016 the NPLs provision coverage ratio stood at 88.4% (221.4% with collateral), compared to 84.3% as of 30 September 2016 and 87.4% as of 31 December 2015. Without Bank Republic's acquisition effect NPLs provision coverage ratio stood at 90.5% (216.8% with collateral).
Liabilities
Without the Republic acquisition effect, the Bank's total liabilities amounted to GEL 7,636.9 million, up by 33.6% YoY and 23.3% QoQ. The YoY growth of GEL 1,920.3 million was primarily due to increase in customer accounts in the amount of a GEL 1,463.2 million, or 35.0%. The QoQ growth of GEL 1,441.8 million, or 23.3% mainly resulted from a GEL 1,047.9, million, or 22.8%, increase in customer deposits.
The Bank Republic acquisition effect increased the Bank's total liabilities by GEL 1,550 million, or 25.0% QoQ. The increase resulted from a GEL 718.3 million, or 60.1% rise in amounts due to credit institutions and by a GEL 813.8 million, or 17.7% rise in customer accounts. Consequently, with the Bank Republic acquisition effect, TBC Bank's total liabilities amounted to GEL 9,186.4 million, up by 60.7% YoY and by 48.3% QoQ.
Without the Bank Republic acquisition effect, liabilities grew by GEL 1,441.8 million, or 23.3% QoQ. This mainly resulted from a GEL 1,047.9 million or 22.8% increase in customer deposits.
Bank Republic's acquisition effect increased the Bank's total liabilities by a 27.1% YoY, which resulted from an increase in the amounts due to credit institutions by 64.5% and the increase in customer accounts by 19.5%. Consequently, with the Bank Republic acquisition effect liabilities grew by GEL 2,991.3 million, or 48.3%.
Liquidity
The Bank's average liquidity ratio, as defined by the central bank, stood at 30.8% as of 31 December 2016, compared to 34.4% and 34.9% as of 31 December 2015 and 30 September 2016 respectively.
Total Equity
Without the Bank Republic's acquisition effect, total equity amounted to GEL 1,575.6 million, up by GEL 357.2 million, or 29.3% YoY as of 31 December 2015 and by GEL 187.0 million, or 13.5%, increase as of 30 September 2016, mainly due to the increase in net profits.
As a result, with the Bank Republic's acquisition effect, TBC's total equity amounted to GEL 1,582.6 million, up by a GEL 364.2 million, or 29.9% as of 31 December 2015 and GEL 194.0 million, or 14.0% QoQ, as of 30 September 2016.
Regulatory Capital
As of 31 December 2016, the Bank's Basel II/III[13] Tier 1 and Total Capital Adequacy Ratios (CAR) stood at 10.4% and 14.2%, respectively, compared to 12.8% and 16.0% as of 31 December 2015, and 13.3% and 16.2% as of 30 September 2016. The minimum capital requirements set by the NBG for Basel II/III Tier 1 and Total Capital Adequacy Ratios are 8.5% and 10.5%, respectively.
Tier 1 Capital decreased by GEL 83.3 million or by 7.4% QoQ mainly due to investment in Republic Bank, which despite a total investment of GEL 351.0 million decreases the tier 1 capital only by GEL 266.2 million until the full merger. This decrease was partially offset by increase in net profit per local accounting standard in the amount of GEL 72.5 million (out of which GEL 27.0 million was related to the dividend income from subsidiaries), and the increase in the share capital of JSC TBC Bank in the amount of GEL 100.0 million by TBC Bank Group PLC for the purpose of optimization of the group's capital structure.
In terms of total capital, in addition to the above, the Bank has drowned down the ADB subordinated loan with the amount of USD 50.0 million. As a result, the increase in tier 2 capital more than offset the decrease in Tier 1 Capital and eventually Total Capital grew by GEL 53.3 million or 3.9%.
Risk Weighted Assets stood at GEL 10,021.5 million as of 31 December 2016, up by GEL 2,545.0 million YoY and up by GEL 1,593.7 million QoQ. The increase in Risk Weighted Assets was mainly related to the increase in loan portfolio and devaluation of the local currency against US dollar.
As a result, Tier 1 and Total Capital Adequacy Ratios (CAR) decreased by 2.9 pp and 2.1 pp respectively, out of which -2.3pp change in Tier 1 and -1.2pp change in Total Capital is directly attributable to The Bank Republic acquisition.
The table below shows the theoretical impact of Bank Republic merger on capital ratios if applied to December figures (the actual merger is planned in 3Q 2017). As a result, Tier 1 Capital Adequacy Ratio increased by 0.1 pp and Total Capital adequacy ratio decreases by 0.5. pp.
| GEL Million | 31-Dec-16 | Merger Impact if Applied to December |
| Tier 1 Capital | 1,041 | 1,283 |
| Total Capital | 1,422 | 1,664 |
| Risk Weighted Assets | 10,021 | 12,193 |
| Tier 1 Capital Adequacy Ratio | 10.4% | 10.5% |
| Total Capital Adequacy Ratio | 14.2% | 13.7% |
As of 31 December 2016 the Bank's Basel I consolidated Tier 1 Capital Ratio stood at 21.4% and Total consolidated Capital Ratio stood at 28.2% compared to 25.6% and 31.5% as of 30 September 2016 and 24.7% and 30.9% as of 31 December 2015.
The segment definitions are as per below:
· The Corporate segment includes business customers that have annual revenues of GEL 8.0 million or more, or have been granted a loan in an amount equivalent to USD 1.5 million or more. Some other business customers may also be assigned to the Corporate segment on a discretionary basis;
· The Micro segment business customers with loans below USD 70,000, as well as pawn loans, credit cards and cash cover loans granted in TBC Bank Constanta branches, and deposits up to USD 20,000 in urban areas and up to USD 100,000 in rural areas of the customers of TBC Bank Constanta branches. Some other customers may also be assigned to the Micro segment on a discretionary basis;
· The SME segment includes business customers that are not included in either the Corporate or Micro segments. Some other legal entity customers may also be assigned to the SME segment on a discretionary basis;
· The Retail segment includes individuals that are not included in the other categories.
· Corporate Centre and Other Operations comprise the Treasury, other support and back office functions, and non-banking subsidiaries of the Group.
The following table sets out the information on the financial results of TBC Bank's segments for 2016
| Y'16 | Retail | SME | Corporate | Micro | Corp. Centre | Total |
| Interest Income | 341,577 | 68,693 | 162,277 | 116,177 | 77,703 | 766,426 |
| Interest Expense | -99,664 | -7,796 | -45,586 | -1,794 | -121,133 | -275,973 |
| Net Transfer Pricing | -29,236 | -2,480 | -22,186 | -39,092 | 92,994 | - |
| Net Interest Income | 212,676 | 58,418 | 94,505 | 75,291 | 49,563 | 490,453 |
| Fee and Commission Income | 92,989 | 15,506 | 23,050 | 7,264 | 3,992 | 142,800 |
| Fee and Commission Expense | -40,467 | -3,908 | -3,395 | -3,763 | -999 | -52,532 |
| Net fee and Commission Income | 52,522 | 11,598 | 19,654 | 3,500 | 2,993 | 90,268 |
| Gains Less Losses from Trading in Foreign Currencies | 16,367 | 25,845 | 23,945 | 1,876 | 2,236 | 70,269 |
| Foreign Exchange Translation Gains Less Losses/(Losses Less Gains) | - | - | - | - | -2,507 | -2,507 |
| Net Losses from Derivative Financial Instruments | - | - | - | - | -206 | -206 |
| (Losses Less Gains)/Gains Less Losses from Disposal of Investment Securities Available for Sale | - | - | - | - | 9,293 | 9,293 |
| Other Operating Income | 5,714 | 783 | 9,837 | 351 | 6,807 | 23,492 |
| Other Operating Non-Interest Income | 22,082 | 26,628 | 33,782 | 2,227 | 15,623 | 100,341 |
| Provision for Loan Impairment | -56,835 | -15,774 | 49,548 | -26,141 | - | -49,201 |
| (Provision)/Recovery of Provision for Liabilities, Charges and Credit Related Commitments | -833 | 455 | -388 | -5 | - | -771 |
| Recovery of Provision/(Provision) for Impairment of Investments in Finance Lease | - | - | - | - | -558 | -558 |
| (Provision)/Recovery of Provision for Impairment of other Financial Assets | -91 | -92 | -863 | -62 | -1,747 | -2,855 |
| Recovery of Impairment/(Impairment) of Investment Securities Available for Sale | - | - | - | - | -11 | -11 |
| Profit before G&A Expenses and Income Taxes | 229,521 | 81,233 | 196,239 | 54,810 | 65,864 | 627,667 |
| Staff Costs | -87,918 | -17,591 | -23,995 | -30,116 | -12,601 | -172,221 |
| Depreciation and Amortization | -16,941 | -2,126 | -1,067 | -6,053 | -1,896 | -28,082 |
| Administrative and Other Operating Expenses | -54,329 | -8,673 | -6,763 | -15,977 | -25,942 | -111,684 |
| Operating Expenses | -159,188 | -28,390 | -31,824 | -52,146 | -40,439 | -311,988 |
| Profit before Tax | 70,334 | 52,843 | 164,414 | 2,664 | 25,425 | 315,679 |
| Income Tax Expense | -8,562 | -8,707 | -25,010 | -459 | 25,317 | -17,420 |
| Profit for the Year | 61,771 | 44,137 | 139,405 | 2,205 | 50,741 | 298,258 |
The following table sets out the information on the financial results of TBC Bank's segments for 2016 without Bank Republic's acquisition effect.
| Y'16 | Retail | SME | Corporate | Micro | Corp. Centre | Total |
| Interest Income | 315,158 | 67,839 | 157,098 | 113,417 | 75,151 | 728,663 |
| Interest Expense | -97,889 | -7,795 | -39,793 | -1,792 | -114,817 | -262,087 |
| Net Transfer Pricing | -29,236 | -2,480 | -22,186 | -39,092 | 92,994 | - |
| Net Interest Income | 188,033 | 57,564 | 95,119 | 72,533 | 53,328 | 466,576 |
| Fee and Commission Income | 92,006 | 15,011 | 20,520 | 7,260 | 3,949 | 138,746 |
| Fee and Commission Expense | -38,984 | -3,853 | -3,155 | -3,755 | -922 | -50,670 |
| Net fee and Commission Income | 53,021 | 11,158 | 17,364 | 3,505 | 3,027 | 88,076 |
| Gains Less Losses from Trading in Foreign Currencies | 15,650 | 24,702 | 21,726 | 1,876 | 2,236 | 66,190 |
| Foreign Exchange Translation Gains Less Losses/(Losses Less Gains) | - | - | - | - | -5,777 | -5,777 |
| Net Losses from Derivative Financial Instruments | - | - | - | - | -206 | -206 |
| (Losses Less Gains)/Gains Less Losses from Disposal of Investment Securities Available for Sale | - | - | - | - | 8,795 | 8,795 |
| Other Operating Income | 2,771 | 602 | 9,043 | 146 | 6,793 | 19,355 |
| Other Operating Non-Interest Income | 18,421 | 25,304 | 30,769 | 2,022 | 11,842 | 88,358 |
| Provision for Loan Impairment | -47,895 | -14,708 | 50,910 | -25,304 | - | -36,997 |
| (Provision)/Recovery of Provision for Liabilities, Charges and Credit Related Commitments | -833 | 10 | -388 | -5 | - | -1,217 |
| Recovery of Provision/(Provision) for Impairment of Investments in Finance Lease | - | - | - | - | -558 | -558 |
| (Provision)/Recovery of Provision for Impairment of other Financial Assets | -91 | -92 | -863 | -62 | -1,706 | -2,814 |
| Recovery of Impairment/(Impairment) of Investment Securities Available for Sale | - | - | - | - | -11 | -11 |
| Profit before G&A Expenses and Income Taxes | 210,656 | 79,236 | 192,911 | 52,688 | 65,922 | 601,413 |
| Staff Costs | -83,530 | -17,381 | -23,063 | -28,184 | -12,446 | -164,604 |
| Depreciation and Amortization | -16,905 | -2,125 | -1,062 | -6,037 | -2,012 | -28,141 |
| Administrative and Other Operating Expenses | -48,917 | -8,487 | -5,943 | -14,755 | -25,839 | -103,941 |
| Operating Expenses | -149,353 | -27,992 | -30,069 | -48,976 | -40,297 | -296,686 |
| Profit before Tax | 61,303 | 51,243 | 162,842 | 3,712 | 25,625 | 304,727 |
| Income Tax Expense | -6,839 | -8,438 | -24,733 | -548 | 23,413 | -17,146 |
| Profit for the Year | 54,464 | 42,805 | 138,109 | 3,165 | 49,038 | 287,581 |
The following table sets out the loans and customer deposits portfolios of TBC Bank's business segments as of 31 December 2016, 31 September 2016 and 31 December 2015.
| Portfolios by Segments | ||||
| In thousands of GEL | Dec-16 w/o BR Acquisition effect | Dec-16 | Sep-16 | Dec-15 |
| Loans and Advances to Customers | ||||
| Consumer | 1,152,700 | 1,663,550 | 1,025,120 | 871,997 |
| Mortgage | 1,272,057 | 1,811,695 | 1,015,550 | 905,274 |
| Pawn | 288,010 | 288,010 | 266,889 | 242,698 |
| Retail | 2,712,767 | 3,763,254 | 2,307,559 | 2,019,969 |
| Corporate | 1,789,309 | 2,060,171 | 1,471,931 | 1,500,104 |
| SME | 799,714 | 857,552 | 670,248 | 625,628 |
| Micro | 609,363 | 677,746 | 553,827 | 493,327 |
| Total Loans and Advances to Customers (Gross) | 5,911,153 | 7,358,724 | 5,003,564 | 4,639,029 |
| Less: Provision for Loan Impairment | -213,856 | -225,022 | -194,035 | -194,143 |
| Total Loans and Advances to Customers (Net) | 5,697,296 | 7,133,702 | 4,809,530 | 4,444,886 |
| Customer Accounts | ||||
| Retail Deposits | 3,336,914 | 3,666,384 | 2,734,133 | 2,469,878 |
| Corporate Deposits | 1,468,771 | 1,795,503 | 1,006,739 | 1,001,341 |
| SME Deposits | 747,203 | 888,475 | 769,968 | 633,211 |
| Micro Deposits | 88,235 | 104,586 | 82,397 | 73,501 |
| Total Customer Accounts | 5,641,123 | 6,454,949 | 4,593,237 | 4,177,931 |
Retail Banking
Without the Bank Republic acquisition effect, retail loans stood at GEL 2,712.8 million, up by 34.3% YoY and 17.6% QoQ. The YoY increase was mainly explained by a GEL 366.8 million increase in mortgage loans and a GEL 280.7 million increase in consumer loans. TBC Bank's retail loans accounted for 32.9% market share of total individual loans. As of 31 December 2016, foreign currency loans represented 60.5% of the total retail loan portfolio.
With the Bank Republic acquisition effect, as of 31 December 2016, retail loans stood at GEL 3,763.3 million, up by 86.3% YoY and by 63.1% QoQ. The YoY increase was mainly related to a GEL 791.6 million increase in consumer loans and a GEL 906.4 million increase in mortgage loans. TBC Bank's and Bank Republic's combined retail loans accounted for a 44.2% market share of total individual loans. As of 31 December 2016, foreign currency loans represented 62.0% of the total retail loan portfolio.
Without the Bank Republic acquisition effect, retail deposits stood at GEL 3,336.9 million, up by 35.1% YoY and 22.0% QoQ and accounted for a 37.2% market share of total individual deposits. The increase in retail deposits was mainly attributable to the increase in current deposits by 52.3%% YoY and 27.5% QoQ. Term deposits accounted for 58.5% of the total retail deposit portfolio as of 31 December 2016. Foreign deposits accounted for 87.8% of the total retail deposit portfolio.
With the Bank Republic acquisition effect, in the same period, retail deposits increased to GEL 3,666.4 million, up 48.4% YoY and 34.1% QoQ and accounted for a 40.8% market share of total individual deposits. The increase in retail deposits was mainly attributable to the increase in current deposits by 72.2% YoY and 44.2% QoQ. Term deposits accounted for 57.3% of the total retail deposit portfolio as of 31 December 2016. Foreign currency deposits accounted for 86.9% of the total retail deposit portfolio.
Without the Bank Republic acquisition effect, retail loan yields and deposit rates stood at 14.3% and 3.7% respectively, and the segment's cost of risk on loans was 2.2%. The retail segment contributed 18.9%, or GEL 54.5 million, to TBC's total net income in 2016. With the Bank Republic acquisition effect, retail loan yields and deposit rates stood at 14.1% and 3.6% respectively, and the segment's cost of risk on loans was 2.3%. The retail segment contributed 20.7%, or GEL 62.0 million, to TBC's total net income in 2016.
Corporate Banking
Without Bank Republic's acquisition effect, corporate loans amounted GEL 1,789.3 million, up by 19.3% YoY and 21.6% QoQ. Foreign currency loans accounted for 78.1% of the total corporate loan portfolio. With the Bank Republic acquisition effect, corporate loans amounted to GEL 2,060.2 million, up by 37.3% YoY and up by 40.0% QoQ. Foreign currency loans accounted for 74.3% of the total corporate loan portfolio.
Without Bank Republic's acquisition effect, corporate deposits totaled GEL 1,468.8 million, up by 46.7% YoY and 45.9% QoQ. Foreign currency corporate deposits represented 60.6% of the total corporate deposit portfolio. With the Bank Republic acquisition effect corporate deposits totaled GEL 1,795.5 million, up by 79.3% YoY and up by 78.3% QoQ. Foreign currency corporate deposits represented 57.9% of the total corporate deposit portfolio.
Without the Bank Republic acquisition effect loan yield and deposit rates stood at 10.8% and 3.9%, respectively. In the same period, the cost of risk on loans was -3.5%. In terms of profitability, the corporate segment's net profit reached GEL 138.1 million, or 48.0% of the Bank's total net income. With the Bank Republic acquisition effect, corporate loan yields and deposit rates stood at 10.7% and 4.2%, respectively. In the same period, the cost of risk on loans was -3.3%. In terms of profitability, the corporate segment's net profit reached GEL 139.5 million, or 46.8% of the Bank's total net income.
SME Banking
Without Bank Republic's acquisition effect, SME loans amounted to GEL 799.7 million, up by 27.8% YoY and 19.3% QoQ. Foreign currency loans accounted for 80.6% of the total SME portfolio. With the Bank Republic acquisition effect, SME loans amounted to GEL 857.6 million, up by 37.1% YoY and up by 27.9% QoQ. Foreign currency loans accounted for 81.3% of the total SME portfolio.
Without the Bank Republic acquisition effect, SME deposits stood at GEL 747.2 million, up by 18.0% YoY and down by 3.0% QoQ. Foreign currency SME deposits accounted for 61.2% of the total SME deposit portfolio. Consequently, with the Bank Republic's acquisition effect SME deposits stood at GEL 888.5 million, up by 40.3% YoY and 15.4% QoQ. Foreign currency SME deposits accounted for 58.6% of the total SME deposit portfolio.
Without the Bank Republic acquisition effect SME loan yields and deposit rates stood at 10.5% and 1.2%, respectively, while the cost of risk on loans was 2.3%. In terms of profitability, net profit for the SME segment amounted to GEL 42.8 million, or 14.9%, of TBC's total net income. Consequently, SME loan yields and deposit rates stood at 10.5% and 1.1%, respectively, while the cost of risk on loans was 2.4%. In terms of profitability, net profit for the SME segment amounted to GEL 44.1 million, or 14.8% of TBC's total net income.
Micro Banking
Without the Bank Republic acquisition effect micro loans totaled GEL 609.4 million, up by 23.5% YoY and 10.0% QoQ. Foreign currency loans represented 38.6% of the total micro loan portfolio. Consequently, with the Bank Republic's acquisition effect micro loans totaled GEL 677.7 million, up by 37.4% YoY and 22.4% QoQ. Foreign currency loans represented 42.5% of the total micro loan portfolio.
Without Bank Republic's acquisition effect micro deposits totaled GEL 88.2 million, up by 20.0% YoY and 7.1% QoQ. Foreign currency loans represented 60.7% of the total micro loan portfolio. Consequently, with the Bank Republic's acquisition effect micro customer deposits amounted to GEL 104.6 million, up by 42.3% YoY and 26.9% QoQ. Foreign currency micro deposits represented 59.2% of the total micro deposit portfolio.
Without the Bank Republic acquisition effect micro loan yields and deposit rates stood at 21.4% and 2.4%, respectively. In the same period, the cost of risk on loans was 4.8%. In terms of profitability, the micro segment's net profit reached GEL 3.2 million, or 1.1% of TBC's total net income. Consequently, with the Bank Republic acquisition effect micro loan yields and deposit rates stood at 21.4% and 2.3%, respectively. In the same period, the cost of risk on loans was 4.8%. In terms of profitability, the micro segment's net profit reached GEL 2.2 million, or 0.7% of TBC's total net income.
| Ownership / voting % as of 30 December 2016 |
Country | Year of incorporation or acquisition | Industry | Total Assets (after elimination) |
|||
| Subsidiary | Amount GEL'000 |
% in TBC Group | |||||
| United Financial Corporation JSC | 98.7% | Georgia | 1997 | Card processing | 11,840 | 0.11% | |
| TBC Capital LLC | 100.0% | Georgia | 1999 | Brokerage | 1,497 | 0.01% | |
| TBC Leasing JSC | 99.6% | Georgia | 2003 | Leasing | 116,321 | 1.08% | |
| TBC Kredit LLC | 75.0% | Azerbaijan | 2008 | Non-banking credit institution | 39,951 | 0.37% | |
| Banking System Service Company LLC | 100.0% | Georgia | 2009 | Information services | 285 | 0.00% | |
| TBC Pay LLC | 100.0% | Georgia | 2009 | Processing | 24,775 | 0.23% | |
| Mali LLC | 100.0% | Georgia | 2011 | Real estate management | 189 | 0.00% | |
| Real Estate Management Fund JSC | 100.0% | Georgia | 2010 | Real estate management | 52 | 0.00% | |
| TBC Invest LLC | 100.0% | Israel | 2011 | PR and marketing | 193 | 0.00% | |
| Bank republic | 100.0% | Georgia | 2016 | Financial sector | 2,033,279 | 18.9% | |
| JSC TBC Bank | 98.4% | Georgia | 2016 | Financial sector | 8,553,379 | 79.51% | |
| TBC Insurance | 100.0% | Georgia | 2016 | Insurance | 5,199 | 0.05% |
Consolidated Financial Statements of TBC Bank Group PLC
| Consolidated Balance Sheet | ||||
| In thousands of GEL | Dec-16 w/o BR Acquisition effect | Dec-16 | Sep-16 | Dec-15 |
| Cash and cash equivalents | 875,862 | 945,180 | 843,431 | 720,347 |
| Due from other banks | 31,818 | 24,725 | 12,284 | 11,041 |
| Mandatory cash balances with National Bank of Georgia | 859,508 | 990,642 | 676,780 | 471,490 |
| Loans and advances to customers (Net) | 5,697,296 | 7,133,702 | 4,809,530 | 4,444,886 |
| Investment securities available for sale | 280,200 | 430,703 | 252,736 | 307,310 |
| Repurchase receivables | - | - | 57,232 | - |
| Investment securities held to maturity | 372,956 | 372,956 | 295,901 | 372,092 |
| Investments in Subsidiaries and Associates | 351,041 | - | - | - |
| Investments in finance leases | 95,031 | 95,031 | 77,496 | 75,760 |
| Investment properties | 67,245 | 95,615 | 71,122 | 57,600 |
| Goodwill | 4,491 | 28,658 | 2,726 | 2,726 |
| Intangible assets | 56,283 | 60,957 | 49,663 | 44,344 |
| Premises and equipment | 255,650 | 314,032 | 254,214 | 247,767 |
| Other financial assets | 90,765 | 94,627 | 62,799 | 64,317 |
| Deferred tax asset | 3,511 | 3,511 | 2,181 | 1,546 |
| Current income tax prepayment | 7,431 | 7,431 | 9,515 | 9,856 |
| Other assets | 163,443 | 171,263 | 106,103 | 103,914 |
| TOTAL ASSETS | 9,212,532 | 10,769,032 | 7,583,712 | 6,934,995 |
| LIABILITIES | ||||
| Due to Credit Institutions | 1,479,270 | 2,197,577 | 1,195,031 | 1,113,574 |
| Customer accounts | 5,641,123 | 6,454,949 | 4,593,237 | 4,177,931 |
| Current income tax liability | 479 | 2,578 | 551 | 912 |
| Debt Securities in issue | 23,508 | 23,508 | 24,227 | 21,714 |
| Deferred income tax liability | 1,716 | 5,646 | 1,822 | 29,244 |
| Provisions for liabilities and charges | 14,529 | 16,026 | 13,908 | 9,461 |
| Other financial liabilities | 43,900 | 50,998 | 42,732 | 39,435 |
| Subordinated debt | 368,381 | 368,381 | 283,637 | 283,648 |
| Other liabilities | 63,984 | 66,739 | 39,917 | 40,627 |
| TOTAL LIABILITIES | 7,636,889 | 9,186,401 | 6,195,063 | 5,716,546 |
| EQUITY | ||||
| Share capital | 1,581 | 1,581 | 1,494 | 19,587 |
| Share premium | 677,211 | 677,211 | 572,780 | 407,474 |
| Retained earnings | 782,330 | 793,007 | 781,463 | 712,743 |
| Share based payment reserve | 23,327 | 23,327 | 20,398 | 12,755 |
| Other reserves | 62,918 | 59,241 | -18,328 | 58,701 |
| TOTAL EQUITY | 1,547,367 | 1,554,366 | 1,357,808 | 1,211,260 |
| Non-controlling interest | 28,275 | 28,264 | 30,842 | 7,189 |
| TOTAL EQUITY | 1,575,643 | 1,582,631 | 1,388,649 | 1,218,449 |
| TOTAL LIABILITIES AND EQUITY | 9,212,532 | 10,769,032 | 7,583,712 | 6,934,995 |
| Consolidated Statement of Profit or Loss and Other Comprehensive Income | ||||||||||
| In thousands of GEL | Y'16 w/o BR Acquisition effect | Y'16 | Y'15 | 4Q'16 w/o BR Acquisition effect | 4Q'16 | 3Q'16 | 4Q'15 | |||
| Interest income | 728,663 | 766,426 | 649,059 | 205,581 | 243,344 | 182,056 | 174,172 | |||
| Interest expense | -262,087 | -275,973 | -236,885 | -75,769 | -89,655 | -61,830 | -67,654 | |||
| Net interest income | 466,576 | 490,453 | 412,173 | 129,811 | 153,689 | 120,227 | 106,519 | |||
| Fee and commission income | 138,746 | 142,800 | 113,837 | 41,406 | 45,460 | 35,112 | 32,567 | |||
| Fee and commission expense | -50,670 | -52,532 | -41,546 | -15,206 | -17,068 | -12,918 | -12,760 | |||
| Net Fee and Commission Income | 88,076 | 90,268 | 72,291 | 26,200 | 28,392 | 22,194 | 19,807 | |||
| Net insurance premium earned Net insurance claims incurred |
1,222 | 1,222 | - | 1,222 | 1,222 | - | - | |||
| -966 | -966 | - | -966 | -966 | - | - | ||||
| Gross Insurance profit | 256 | 256 | - | 256 | 256 | - | - | |||
| Gains less losses from trading in foreign currencies | 66,190 | 70,269 | 64,642 | 21,392 | 25,472 | 15,713 | 17,536 | |||
| Foreign exchange translation gains less losses | -5,777 | -2,507 | 2,579 | -5,789 | -2,519 | 1,012 | 912 | |||
| Gains less losses/(losses less gains) from derivative financial instruments | -206 | -206 | -575 | 94 | 94 | 173 | 276 | |||
| (Losses less gains) / gains less losses from disposal of investment securities available for sale | 8,795 | 9,293 | - | - | 498 | - | - | |||
| Other operating income | 19,099 | 23,236 | 25,883 | 8,236 | 12,372 | 2,501 | 11,912 | |||
| Other operating non-interest income | 88,102 | 100,085 | 92,528 | 23,933 | 35,916 | 19,398 | 30,636 | |||
| Provision for loan impairment | -36,997 | -49,201 | -72,791 | 1,799 | -10,405 | -13,518 | -2,055 | |||
| Provision for impairment of investments in finance lease | -558 | -558 | -967 | -322 | -322 | -126 | -344 | |||
| Provision for/ (recovery of provision) performance guarantees and credit related commitments | -1,217 | -771 | 1,117 | 2,341 | 2,787 | -1,481 | -1,945 | |||
| Provision for impairment of other financial assets | -2,814 | -2,855 | -3,351 | -1,686 | -1,727 | 66 | -974 | |||
| Impairment of investment securities available for sale | -11 | -11 | - | - | - | - | - | |||
| Operating income after provisions for impairment | 601,413 | 627,667 | 501,002 | 182,331 | 208,586 | 146,759 | 151,644 | |||
| Staff costs | -164,604 | -172,221 | -142,777 | -54,927 | -62,544 | -40,205 | -42,445 | |||
| Depreciation and amortisation | -28,141 | -28,082 | -26,286 | -7,494 | -7,435 | -7,037 | -7,347 | |||
| Provision for liabilities and charges | -2,210 | -2,210 | -1,102 | -2,210 | -2,210 | - | -1,102 | |||
| Administrative and other operating expenses | -101,731 | -109,474 | -82,964 | -31,851 | -39,595 | -18,294 | -26,500 | |||
| Operating expenses | -296,686 | -311,988 | -253,130 | -96,483 | -111,785 | -65,536 | -77,394 | |||
| Profit before tax | 304,727 | 315,679 | 247,872 | 85,849 | 96,801 | 81,223 | 74,251 | |||
| Income tax expense | -17,146 | -17,420 | -29,176 | -8,492 | -8,767 | -10,235 | -7,331 | |||
| Profit for the period | 287,581 | 298,258 | 218,697 | 77,356 | 88,034 | 70,988 | 66,920 | |||
| Other Comprehensive income: | ||||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||
| Revaluation | 2,122 | 522 | -2,436 | -1,605 | -3,196 | 573 | 1,252 | |||
| Gains less losses reclassified to profit or loss upon disposal | -8,853 | -11,611 | - | - | -2,757 | - | - | |||
| Income tax recorded directly in other comprehensive income | 1,401 | 1,649 | -479 | - | 247 | - | -149 | |||
| Exchange differences on translation to presentation currency | -948 | -948 | -12,075 | 147 | 147 | -770 | -10,864 | |||
| Items that will not be reclassified to profit or loss: | ||||||||||
| Revaluation of premises and equipment | - | - | 28,755 | - | - | - | 28,755 | |||
| Income tax recorded directly in other comprehensive income | 10,506 | 10,928 | -4,319 | - | 422 | - | -4,319 | |||
| Other comprehensive income for the year | 4,217 | 540 | 9,446 | -1,458 | -5,136 | -197 | 14,674 | |||
| Total comprehensive income for the year | 291,798 | 298,798 | 228,142 | 75,898 | 82,898 | 70,791 | 81,594 | |||
| Profit attributable to: | ||||||||||
| - Owners of the Bank | 288,631 | 299,146 | 218,879 | 78,845 | 89,359 | 69,526 | 67,563 | |||
| - Non-controlling interest | -1,050 | -887 | -182 | -1,489 | -1,326 | 1,462 | -643 | |||
| Profit for the period | 287,581 | 298,258 | 218,697 | 77,356 | 88,034 | 70,988 | 66,920 | |||
| Total comprehensive income is attributable to: | ||||||||||
| - Owners of the Bank | 292,848 | 299,686 | 228,324 | 77,387 | 84,223 | 69,238 | 82,237 | |||
| - Non-controlling interest | -1,050 | -887 | -182 | -1,489 | -1,326 | 1,462 | -643 | |||
| Total comprehensive income for the year | 291,798 | 298,798 | 228,142 | 75,898 | 82,898 | 70,791 | 81,594 | |||
| Consolidated Statements of Cash Flows | ||||||||||
| In thousands of GEL | Y'16 | Y'15 | ||||||||
| Cash flows from operating activities | ||||||||||
| Interest received | 745,273 | 633,093 | ||||||||
| Interest paid | -273,795 | -235,157 | ||||||||
| Fees and commissions received | 144,247 | 111,922 | ||||||||
| Fees and commissions paid | -52,154 | -41,569 | ||||||||
| Insurance premium received | 1,591 | - | ||||||||
| Insurance claims paid | -703 | - | ||||||||
| Income received from trading in foreign currencies | 70,411 | 64,642 | ||||||||
| Other operating income received | 8,411 | 18,006 | ||||||||
| Staff costs paid | -148,656 | -133,354 | ||||||||
| Administrative and other operating expenses paid | -104,077 | -79,669 | ||||||||
| Income tax paid | -34,279 | -48,678 | ||||||||
| Cash flows from operating activities before changes in operating assets and liabilities | 356,270 | 289,236 | ||||||||
| Net (increase) / decrease in operating assets | ||||||||||
| Due from other banks and mandatory cash balances with the National Bank of Georgia | -448,582 | -72,453 | ||||||||
| Loans and advances to customers | -1,195,187 | -364,896 | ||||||||
| Investment in finance lease | -11,687 | -12,994 | ||||||||
| Other financial assets | -22,965 | -13,198 | ||||||||
| Other assets | -36,628 | 7,159 | ||||||||
| Net increase / (decrease) in operating liabilities | - | |||||||||
| Due to other banks | 265,679 | -17,351 | ||||||||
| Customer accounts | 1,150,146 | 249,598 | ||||||||
| Other financial liabilities | 5,724 | -415 | ||||||||
| Other liabilities and provision for liabilities and charges | 332 | 1,341 | ||||||||
| Net cash (used in)/from operating activities | 63,101 | 66,027 | ||||||||
| Cash flows from investing activities | ||||||||||
| Acquisition of investment securities available for sale | -143,980 | -475,417 | ||||||||
| Proceeds from disposal of investment securities available for sale | 11,868 | - | ||||||||
| Proceeds from redemption at maturity of investment securities available for sale | 166,871 | 265,107 | ||||||||
| Acquisition of subsidiaries | -242,195 | - | ||||||||
| Acquisition of bonds carried at amortised cost | -304,109 | -183,084 | ||||||||
| Proceeds from redemption of bonds carried at amortised cost | 314,231 | 193,416 | ||||||||
| Acquisition of premises, equipment and intangible assets | -50,689 | -47,815 | ||||||||
| Disposal of premises, equipment and intangible assets | 1,273 | 1,306 | ||||||||
| Proceeds from disposal of investment property | 7,822 | 22,166 | ||||||||
| Cash acquired | 150,791 | |||||||||
| Net cash (used in)/ from investing activities | -88,118 | -224,321 | ||||||||
| Cash flows from financing activities | ||||||||||
| Proceeds from other borrowed funds | 903,502 | 582,198 | ||||||||
| Redemption of other borrowed funds | -666,160 | -310,267 | ||||||||
| Proceeds from subordinated debt | 136,817 | 60,510 | ||||||||
| Redemption of subordinated debt | -90,416 | -16,763 | ||||||||
| Proceeds from debt securities in issue | 6,257 | - | ||||||||
| Redemption of debt securities in issue | -4,636 | - | ||||||||
| Dividends paid | -54,560 | -39,128 | ||||||||
| Equity contribution of owners of non-controlling shareholders | - | - | ||||||||
| Issue of ordinary shares | -3,495 | - | ||||||||
| Transaction costs recognized directly in equity | - | - | ||||||||
| Purchase of additional shares in subsidiaries | - | - | ||||||||
| Net cash from /(used in) financing activities | 227,309 | 276,550 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | 22,536 | 69,973 | ||||||||
| Net increase / (decrease) in cash and cash equivalents | 224,829 | 188,229 | ||||||||
| Cash and cash equivalents at the beginning of the year | 720,351 | 532,118 | ||||||||
| Cash and cash equivalents at the end of the year | 945,180 | 720,347 | ||||||||
Average Balances
Average balances included in this document are calculated as the average of the relevant monthly balances as of each month-end. Balances have been extracted from TBC's unaudited and consolidated management accounts prepared from TBC's accounting records and used by the Management for monitoring and control purposes.
| Key Ratios* | |||||||
| Ratios (based on monthly averages, where applicable) | Y'16 w/o BR Acquisition effect | Y'16 | Y'15 | 4Q'16* w/o BR Acquisition effect | 4Q'16 | 3Q'16 | 4Q'15 |
| ROAE | 21.6% | 22.4% | 20.1% | 21.4% | 24.2% | 20.6% | 23.1% |
| ROAA | 3.9% | 3.9% | 3.4% | 3.7% | 3.7% | 4.0% | 3.9% |
| Pre-provision ROAE | 24.7% | 26.4% | 27.1% | 20.8% | 26.8% | 25.3% | 24.9% |
| Pre-provision ROAA | 4.5% | 4.6% | 4.6% | 3.6% | 4.1% | 4.8% | 4.2% |
| Cost to Income | 46.1% | 45.8% | 43.9% | 53.5% | 51.2% | 40.5% | 49.3% |
| Cost of Risk | 0.8% | 1.0% | 1.7% | -0.1% | 0.6% | 1.1% | 0.2% |
| NIM | 7.9% | 7.8% | 7.8% | 7.8% | 7.9% | 8.3% | 7.4% |
| Loan yields | 13.5% | 13.4% | 13.6% | 13.8% | 13.8% | 13.5% | 13.6% |
| Deposit rates | 3.3% | 3.3% | 3.5% | 3.1% | 3.3% | 3.3% | 3.4% |
| Yields on interest earning assets | 12.3% | 12.2% | 12.3% | 12.3% | 12.5% | 12.5% | 12.1% |
| Cost of Funding | 4.5% | 4.5% | 4.6% | 4.4% | 4.5% | 4.3% | 4.8% |
| Spread | 7.8% | 7.8% | 7.7% | 7.9% | 8.0% | 8.2% | 7.3% |
| PAR 90 to gross loans | 1.3% | 1.3% | 1.0% | 1.3% | 1.3% | 1.5% | 1.0% |
| NPLs to gross loans | 4.0% | 3.5% | 4.8% | 4.0% | 3.5% | 4.6% | 4.8% |
| NPLs coverage | 90.5% | 88.4% | 87.4% | 90.5% | 88.4% | 84.3% | 87.4% |
| NPLs coverage with collateral | 216.8% | 221.4% | 209.9% | 216.8% | 221.4% | 205.0% | 209.9% |
| Provision Level to Gross Loans | 3.6% | 3.1% | 4.2% | 3.6% | 3.1% | 3.9% | 4.2% |
| Net loans to deposits plus IFI funding | 90.7% | 93.4% | 94.8% | 90.7% | 93.4% | 93.8% | 94.8% |
| Leverage | 5.8 | 6.8 | 5.7 | 5.8 | 6.8 | 5.5 | 5.7 |
| BIS Tier 1 | 25.7% | 21.3% | 24.7% | 25.7% | 21.3% | 25.6% | 24.7% |
| Total BIS CAR | 32.0% | 28.1% | 31.0% | 32.0% | 28.1% | 31.5% | 31.0% |
| NBG Basel II/III Tier 1 CAR | 10.4% | 10.4% | 12.8% | 10.4% | 10.4% | 13.3% | 12.8% |
| NBG Basel II/III Total CAR | 14.2% | 14.2% | 16.0% | 14.2% | 14.2% | 16.2% | 16.0% |
Ratio definitions
1. Return on average total equity (ROAE) equals net income attributable to owners divided by monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; Pre-provision ROAE excludes all provision charges. annualized where applicable.
2. Return on average total assets (ROAA) equals net income of the period divided by monthly average total assets for the same period. Pre-provision ROAE excludes all provision charges. Annualized 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. Cost of risk equals provision for loan impairment divided by monthly average gross loans and advances to customers. Annualized where applicable.
5. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets. Annualized where applicable.
6. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers. Annualized where applicable.
7. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits. Annualized where applicable.
8. Yields on interest earning assets equals total interest income divided by monthly average interest earning assets. Annualized where applicable.
9. Cost of funding equals total interest expense divided by monthly average interest bearing liabilities. Annualized where applicable.
10. Spread equals difference between yields on interest earning assets (including but limited to yields on loans, securities and due from banks) and cost of funding (including but not limited to cost of deposits, cost on borrowings and due to banks)
11. 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.
12. NPLs to gross loans equal loans with 90 days past due on principal or interest payments, and loans with 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
13. NPLs coverage ratio equal loan loss provision divided by the NPL loans
14. NPLs coverage with collateral ratio is equal to loan loss provision plus total collateral amount (excluding third party guarantees) discounted at 30-50% depending on segment type divided by the NPL loans
15. Provision Level to Gross Loans equal loan loss provision divided by the gross loan portfolio for the same period.
16. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions
17. Leverage equals total assets to total equity
18. BIS Tier 1 capital adequacy ratio Tier 1 capital over total risk weighted assets, both calculated in accordance with Basel I requirements.
19. Total BIS CAR equals total capital over total risk weighted assets, both calculated in accordance with Basel I requirements.
20. NBG Basel II Tier 1 CAR equals Tier I Capital divided by total risk weighted assets, both calculated in accordance with the NBG Basel II requirements. After adoption of NBG Basel II/III requirements, the Bank also calculates its capital requirements and risk weighted assets separately for Pillar 1. Detailed instructions of Pillar 1 calculations are given by NBG. The reporting started from the end of 2012.
21. NBG Basel II Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the NBG Basel II requirements. After adoption of NBG Basel II/III requirements, the Bank also calculates its capital requirements and risk weighted assets separately for Pillar 1. Detailed instructions of Pillar 1 calculations are given by NBG. The reporting started from the end of 2012.
Exchange Rates
To calculate the Balance Sheet items' QoQ growth without currency exchange rate effect, we used USD/GEL exchange rate of 2.3297 as of 30 September 2016. For calculations of YoY growth without currency exchange rate effect, we used USD/GEL exchange rate of 2.3949 as of 31 December 2015. The USD/GEL exchange rate as of 31 December 2016 equaled 2.6468. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: FY 2016 of 2.3667, FY 2015 of 2.2702, 4Q 2016 of 2.4958, 3Q 2016 of 2.3224, 4Q 2015 of 2.3979.
Earnings per Share
| In GEL | 2015 | 2016 |
| Earnings per share for profit attributable to the owners of the Group: | ||
| - Basic earnings per share | 4.4 | 6.0 |
| - Diluted earnings per share | 4.4 | 5.9 |
Source: IFRS Consolidated
Sensitivity Scenario
| Sensitivity Scenario | 31-Dec-16 | 10% Currency Devaluation Effect |
| NIM* | -0.1% | |
| Technical Cost of Risk | +0.2% | |
| Total Capital per Basel II/III | 1,422 | 1,446 |
| Capital adequacy ratios per both tier 1 and total Basel II/III and NBG regulation decrease by | 0.71% - .84% |
(*) Linear depreciation is assumed for NIM sensitivity analysis
Source: IFRS statements and Management Figures
FC details for Selected P/L Items
| Selected P&L Items 4Q 2016 | FC % of Respective Totals |
| Interest Income | 49% |
| Interest Expense | 63% |
| Fee and Commission Income | 41% |
| Fee and Commission Expense | 61% |
| Administrative Expenses | 26% |
Source: IFRS statements and Management figures
GEL Refinance Rate and Libor Linked B/S Items 31 December 2016
| GEL Refinance Rate Gap | GEL -306 m | Libor Gap | GEL 640 m | |||
| GEL m | % share in totals | GEL m | % share in totals | |||
| Assets | 1,114 | 10% | Assets | 1,916 | 18% | |
| Securities with fixed yield(≤1y)* | 376 | 47% | Nostro** | 251 | 58% | |
| Securities with floating yield | 150 | 19% | NBG Reserves** | 991 | 88% | |
| Loans with Floating yield | 519 | 7% | Libor Loans | 628 | 9% | |
| Reserves in NBG | 63 | 6% | Interest Rate Options | 47 | N/A | |
| Interbank loans& Deposits & Repo | 7 | 2% | ||||
| Liabilities | 1,420 | 15% | Liabilities | 1,276 | 14% | |
| Current accounts*** | 629 | 10% | Senior Loans | 949 | 50% | |
| Saving accounts*** | 165 | 3% | Subordinated Loans | 328 | 89% | |
| Refinancing Loan of NBG | 397 | 21% | ||||
| Interbank Loans &Deposits & Repo | 75 | 24% | ||||
| IFI Borrowings | 154 | 8% |
(*) 73% of the less than 1 year securities are maturing in 6 months
(**) Income on NBG reserves and Nostros are calculated as benchmark minus margin whereby benchmarks are correlated with Libor. From March, 2016 according to NBG regulation is impossible to apply negative interest rates on NBG reserves and correspondent accounts, therefore these two items close the gap in case of both upward and downward movement of Libor rate.
(***) The Bank considers that current and saving deposits promptly react to interest rate changes on the market (within 1 month prior notification)
Source: IFRS Group Data
Yields and Rates
| Yields and Rates | FY 2016 w/o BR Acquisition effect | 4Q'16 w/o BR Acquisition effect | FY 2016 | 4Q'16 | 3Q'16 | 2Q'16 | 1Q'16 | 4Q'15 |
| Loan yields | 13.5% | 13.8% | 13.4% | 13.8% | 13.5% | 13.3% | 13.6% | 13.6% |
| Retail loan yields GEL | 20.3% | 20.5% | 20.2% | 21.2% | 20.3% | 20.2% | 20.2% | 20.4% |
| Retail loan yields FX | 10.1% | 9.8% | 9.9% | 9.8% | 9.9% | 10.2% | 10.9% | 11.3% |
| Retail Loan Yields | 14.3% | 14.2% | 14.1% | 14.3% | 14.2% | 14.3% | 14.6% | 14.9% |
| Corporate loan yields GEL | 12.0% | 10.0% | 11.1% | 8.6% | 12.4% | 13.7% | 13.2% | 12.5% |
| Corporate loan yields FX | 10.4% | 12.9% | 10.6% | 13.3% | 10.6% | 8.8% | 9.3% | 8.7% |
| Corporate Loan Yields | 10.8% | 12.2% | 10.7% | 12.0% | 11.0% | 9.7% | 10.1% | 9.6% |
| SME loan yields GEL | 12.6% | 11.8% | 12.8% | 12.6% | 12.2% | 13.2% | 14.2% | 13.0% |
| SME loan yields FX | 10.1% | 10.1% | 10.0% | 9.8% | 9.7% | 10.0% | 10.7% | 10.9% |
| SME Loan Yields | 10.5% | 10.4% | 10.5% | 10.3% | 10.1% | 10.5% | 11.3% | 11.3% |
| Micro loan yields GEL | 24.7% | 24.5% | 25.1% | 26.2% | 24.6% | 24.9% | 24.6% | 25.1% |
| Micro loan yields FX | 14.5% | 13.5% | 14.0% | 12.7% | 13.8% | 14.9% | 16.6% | 17.9% |
| Micro Loan Yields | 21.4% | 20.6% | 21.4% | 20.9% | 21.1% | 22.0% | 22.3% | 23.0% |
| Deposit rates | 3.3% | 3.1% | 3.3% | 3.3% | 3.3% | 3.4% | 3.6% | 3.4% |
| Retail deposit rates GEL | 4.0% | 3.8% | 3.9% | 3.9% | 4.1% | 4.1% | 3.9% | 3.6% |
| Retail deposit rates FX | 3.6% | 3.4% | 3.6% | 3.4% | 3.5% | 3.7% | 3.9% | 4.0% |
| Retail Deposit Yields | 3.7% | 3.5% | 3.6% | 3.5% | 3.6% | 3.7% | 3.9% | 4.0% |
| Corporate deposit rates GEL | 7.0% | 6.7% | 7.5% | 8.7% | 7.3% | 7.5% | 6.7% | 5.3% |
| Corporate deposit rates FX | 1.5% | 1.5% | 1.5% | 1.7% | 1.5% | 1.3% | 1.7% | 1.8% |
| Corporate Deposit Yields | 3.9% | 3.7% | 4.2% | 4.7% | 4.2% | 4.0% | 4.1% | 3.4% |
| SME deposit rates GEL | 2.2% | 1.7% | 1.7% | 0.4% | 2.1% | 2.5% | 2.4% | 2.0% |
| SME deposit rates FX | 0.5% | 0.6% | 0.7% | 1.1% | 0.4% | 0.4% | 0.7% | 1.4% |
| SME Deposit Yields | 1.2% | 1.0% | 1.1% | 0.8% | 1.1% | 1.3% | 1.3% | 1.6% |
| Micro deposit rates GEL | 2.8% | 2.4% | 2.5% | 1.6% | 2.7% | 3.2% | 3.2% | 2.7% |
| Micro deposit rates FX | 2.1% | 1.8% | 2.1% | 1.9% | 1.9% | 2.1% | 2.5% | 2.7% |
| Micro Deposit Yields | 2.4% | 2.0% | 2.3% | 1.8% | 2.2% | 2.6% | 2.8% | 2.7% |
| Yields on Securities | 8.6% | 8.0% | 8.6% | 8.1% | 8.3% | 9.1% | 9.4% | 8.5% |
Source: IFRS Consolidated
Loan Quality per NBG
Sub-Standard, Doubtful and Loss (SDL) Loans Ratio per NBG
| Dec-16 | Sep-16 | Jun-16 | Mar-16 | Dec-15 | |
| SDL Loans as % of Gross Loans | 4.3% | 5.1% | 6.9% | 7.2% | 6.8% |
Source: NBG
Cross Sell Ratio[15] and Number Active Products
| Dec-16 | Sep-16 | Aug-16 | Jul-16 | |
| Cross Sell Ratio | 3.68 | 3.55 | 3.45 | 3.35 |
| Number of Active Products (in millions) | 3.14 | 2.83 | 2.74 | 2.61 |
Source: Management figures
Diversified Deposit Base
Status: monthly income >=2,000 GEL or loans/deposits >=20,000 GEL
VIP: deposit >=100,000 USD as well as on discretionary basis; WM: >=50,000 USD
Wealth Management includes UHNW and HNW non-resident clients
| 31 December 2016 | Volume of Deposits | Number of Deposits |
| MASS | 35% | 95% |
| STATUS | 25% | 4.2% |
| VIP | 26% | 0.4% |
| Wealth Management | 14% | 0.2% |
Source: Management figures
Loan Concentration
| Dec-16 | Sep-16 | Jun-16 | Mar-15 | Dec-15 | |
| Top 20 Borrowers as % of total portfolio | 14.3% | 13.4% | 14.4% | 14.6% | 15.6% |
| Top 10 Borrowers as % of total portfolio | 9.0% | 8.6% | 9.0% | 9.2% | 9.9% |
| Related Party Loans as % of total portfolio | 0.1% | 0.1% | 0.1% | 0.2% | 0.1% |
Source: IFRS consolidated
Sales Breakdown (for products offered through Multichannel)
| Dec-16 | Sep-16 | Jun-16 | Mar-16 | Dec-15 | Sep-15 | Jun-15 | |
| Digital Channels | 26% | 24% | 23% | 27% | 21% | 25% | 12% |
| Call Center | 29% | 33% | 32% | 23% | 28% | 15% | 11% |
| Branches | 45% | 43% | 46% | 50% | 51% | 60% | 77% |
Source: Management figures
Number of Transactions in Digital Channels ('000)
| 4Q-16 | 3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | |
| Internet Banking Number of Transactions | 2,280 | 1,828 | 1,797 | 1,669 | 1,729 |
| Mobile Banking Number of Transactions | 2,532 | 1,814 | 1,485 | 1,151 | 1,008 |
Source: Management figures
Penetration Ratios of Digital Channels
| Dec-16 | Sep-16 | Jun-16 | Mar-16 | Dec-15 | Sep-15 | Jun-15 | |
| IB&MB Penetration Ratio | 37% | 34% | 34% | 32% | 32% | 26% | 23% |
| Internet Banking Penetration Ratio | 32% | 29% | 30% | 28% | 30% | 24% | 21% |
| Mobile Banking Penetration Ratio | 24% | 20% | 19% | 17% | 15% | 12% | 11% |
Source: Management figures
Mid-term targets for digital channels is to increase the penetration ratio of internet or mobile banking users to above 45% from the current level of 37% and to increase mobile banking penetration ratio to above 35% from the current level of 24%
Net outflow of borrowed funds
| Subordinated and Senior Loans' Principal Amount Outflow by Year (GEL million) | |||||||||
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
| 417.8 | 430.3 | 243.7 | 224.3 | 225.1 | 85.6 | 61.8 | 16.4 | 72.2 | 159.8 |
Source: Management figures
De-dollarization initiative by National Bank of Georgia
Starting form 17 January 2017 up today the Bank has converted loans in the total amount of GEL 18.6 million under National Bank of Georgia's de- dollarization program which envisages conversion of certain loans to individuals secured by real estate. Remaining total loans eligible for conversion as of 22 February 2017 equals around GEL 371.0 million.
Gross Loan Segmentation as of Dec-16
| TBC Bank | Bank Republic | TBC + Republic | |
| Corporate | 30% | 19% | 28% |
| Mortgage | 22% | 37% | 25% |
| Consumer Lending | 24% | 35% | 26% |
| Micro | 10% | 5% | 9% |
| SME | 14% | 4% | 12% |
| Total | 5,991 million | 1,447 million | 7,359 million |
Source: IFRS figures
Customer Deposits Segmentation as of Dec-16
| TBC Bank | Bank Republic | TBC + Republic | |
| Corporate | 26% | 40% | 28% |
| Retail | 59% | 40% | 57% |
| Micro | 2% | 2% | 2% |
| SME | 13% | 17% | 14% |
| Total | 5,641 million | 813 million | 6,455 million |
Source: IFRS figure
NPLs: Total Portfolio as of 31-Dec-16
| Bank Republic NPLs | Book Value | Total | Retail | Corporate | SME | Micro |
| Provision Coverage | 112% | 127% | 106% | 80% | 180% | |
| Collateral Coverage | 89% | 82% | 76% | 118% | 101% | |
| Total Coverage | 201% | 209% | 182% | 198% | 281% | |
| NPL | 3.1% | 2.0% | 4.4% | 15.2% | 1.5% | |
| Cost of Risk 4Q'16 | 3.2% | 4.6% | 3.6% | -20.9% | 3.6% | |
| Fair Value Adjusted | Total | Retail | Corporate | SME | Micro | |
| Provision Coverage | 61% | 67% | 56% | 35% | 106% | |
| Collateral Coverage | 219% | 150% | 392% | 351% | 157% | |
| Total Coverage | 280% | 217% | 448% | 386% | 263% | |
| NPL | 1.3% | 1.1% | 0.9% | 5.8% | 0.9% | |
| Cost of Risk 4Q'16 | 4.7% | 4.7% | 2.7% | 10.0% | 7.2% | |
| TBC Bank NPLs | Total | Retail | Corporate | SME | Micro | |
| Provision Coverage | 90% | 103% | 94% | 49% | 112% | |
| Collateral Coverage | 126% | 97% | 158% | 121% | 105% | |
| Total Coverage | 217% | 200% | 252% | 170% | 217% | |
| NPL | 4.0% | 2.7% | 5.2% | 5.6% | 4.1% | |
| Cost of Risk 4Q'16 | -0.1% | 2.6% | -7.7% | 3.1% | 4.9% | |
| TBC + BR NPLs | Total | Retail | Corporate | SME | Micro | |
| Provision Coverage | 88% | 98% | 94% | 48% | 112% | |
| Collateral Coverage | 133% | 104% | 164% | 137% | 106% | |
| Total Coverage | 221% | 203% | 257% | 185% | 218% | |
| NPL | 3.5% | 2.3% | 4.6% | 5.6% | 3.8% | |
| Cost of Risk 4Q'16 | 0.6% | 3.1% | -6.5% | 3.5% | 5.1% |
Source: IFRS figures
| Balance Sheet | ||
| In thousands of GEL | Full Year | 31.Dec.2016 (FV Adjusted) |
| Cash and cash equivalents | 235,865 | 235,865 |
| Due from other banks | 9,937 | 9,937 |
| Mandatory cash balances with National Bank of Georgia | 131,133 | 131,133 |
| Loans and advances to customers (Net) | 1,426,416 | 1,436,406 |
| Investment securities available for sale | 150,504 | 150,504 |
| Repurchase receivables | - | - |
| Bonds carried at amortized cost | - | - |
| Investments in finance leases | - | - |
| Investment properties | 28,558 | 28,370 |
| Goodwill | - | - |
| Intangible assets | 4,855 | 4,674 |
| Premises and equipment | 57,275 | 58,382 |
| Other financial assets | 6,470 | 3,862 |
| Deferred income tax asset | - | - |
| Current income tax prepayment | - | - |
| Other assets | 7,664 | 7,819 |
| TOTAL ASSETS | 2,058,677 | 2,066,951 |
| Due to Credit Institutions | 884,854 | 884,854 |
| Customer accounts | 813,826 | 813,826 |
| Current income tax liability | 2,099 | 2,099 |
| Debt Securities in issue | - | - |
| Deferred income tax liability | 3,730 | 3,931 |
| Provisions for liabilities and charges | 1,497 | 1,497 |
| Other financial liabilities | 24,539 | 24,098 |
| Subordinated debt | 17,029 | 17,029 |
| Other liabilities | 2,600 | 2,755 |
| TOTAL LIABILITIES | 1,750,174 | 1,750,088 |
| Share capital | 76,031 | 76,031 |
| Share premium | 39,914 | 39,914 |
| Retained earnings | 168,058 | 176,417 |
| Share based payment reserve | - | - |
| Other reserves | 24,500 | 24,500 |
| TOTAL EQUITY | 308,503 | 316,863 |
| Non-controlling interest | - | - |
| TOTAL LIABILITY AND EQUITY | 2,058,677 | 2,066,951 |
| Income Statement | Standalone | FV Adjusted | |
| In thousands of GEL | Full Year | 4Q'16 | 20.Oct. - 31.Dec |
| Interest income | 175,923 | 48,254 | 37,764 |
| Interest expense | (63,499) | (16,435) | (13,886) |
| Net interest income | 112,424 | 31,819 | 23,878 |
| Fee and commission income | 17,982 | 4,039 | 4,054 |
| Fee and commission expense | (7,818) | (2,305) | (1,861) |
| Net Fee and Commission Income | 10,164 | 1,743 | 2,193 |
| Gains less losses from trading in foreign currencies | 17,050 | 5,543 | 4,079 |
| Foreign exchange translation gains less losses | 3,094 | 3,213 | 3,269 |
| Gains less losses/(losses less gains) from derivative financial instruments | - | - | - |
| Losses less gains / (gains less losses) from disposal of investment securities available for sale | 5,000 | 3,252 | 498 |
| Other operating income | 3,439 | 1,711 | 4,137 |
| Other operating non-interest income | 28,583 | 13,719 | 11,983 |
| Provision for loan impairment | (19,866) | (10,606) | (12,204) |
| Provision for impairment of investments in finance lease | - | - | - |
| Provision for/ (recovery of provision) performance guarantees and credit related commitments | (9) | 408 | 446 |
| Provision for impairment of other financial assets | (50) | (50) | (41) |
| Impairment of investment securities available for sale | - | - | - |
| Operating income after provisions for impairment | 131,246 | 37,024 | 26,254 |
| Staff costs | (34,563) | (9,956) | (7,617) |
| Depreciation and amortization | (4,997) | (319) | 59 |
| Administrative and other operating expenses | (23,435) | (8,678) | (7,744) |
| Operating expenses | (62,995) | (18,954) | (15,302) |
| Profit before tax | 68,251 | 18,070 | 10,952 |
| Income tax expense | (3,210) | 2,547 | (275) |
| Profit for the period | 65,041 | 20,618 | 10,677 |
| Profit attributable to owners of the bank | - | - | - |
| Key Ratios | |||
| Standalone | FV Adjusted | ||
| Ratios (Based on quarterly averages, where applicable) | Full Year | Q4'2016 | 20.Oct. - 31.Dec |
| ROAE | 23.0% | 27.0% | 16.9% |
| ROAA | 3.5% | 4.3% | 2.8% |
| Pre-provision ROAE | 30.0% | 40.4% | 35.5% |
| Pre-provision ROAA | 4.6% | 6.4% | 6.0% |
| Cost: Income | 41.7% | 40.1% | 40.2% |
| Cost of Risk | 1.5% | 3.2% | 4.7% |
| NIM | 7.6% | 8.4% | 8.2% |
| Loan yields | 12.0% | 13.1% | 13.5% |
| Deposit rates | 4.0% | 4.0% | 5.0% |
| Yields on interest earning assets | 11.8% | 12.7% | 13.0% |
| Cost of Funding | 4.1% | 4.1% | 4.5% |
| Spread | 7.7% | 8.6% | 8.5% |
| PAR 90 to gross loans | 2.9% | 2.9% | 2.9% |
| NPLs to gross loans | 3.1% | 3.1% | 1.3% |
| NPLs coverage | 112.0% | 112.0% | 61.2% |
| NPLs coverage with collateral | 200.7% | 200.7% | 280.3% |
| Provision Level to Gross Loans | 3.4% | 3.9% | 0.8% |
| Leverage | 6.7 | 6.7 | 6.5 |
| BIS Tier 1 | 7.8% | 7.8% | 7.8% |
| Total BIS CAR | 12.3% | 12.3% | 12.3% |
| Basel II/III Tier 1 CAR | 10.4% | 10.4% | 10.4% |
| Basel II/III Total CAR | 12.2% | 12.2% | 12.2% |
[1] Market share figures are based on data from the National Bank of Georgia (NBG)
[2] Growth at constant currency rate QoQ
[3] Active products divided by active customers
[4] According to the latest IPM research conducted in November 2016
[5] Excluding POS terminal transactions
[6] For products that are offered through remote channels
[7] Excluding prices of food and energy.
[8] Import figures exclude imports of hepatitis C medicaments donated to Georgia for free.
[9] Visitors staying more than 24h in the country.
[10] Based on internal estimates
[11] Pure exports account for 12.1% of total Corporate USD denominated loans
[12] Pure exports account for 11.0% of total Corporate USD denominated loans
[13] The National Bank of Georgia enforced Basel II/III regulation in June 2014.
[14] TBC Bank Group PLC became the parent company of JSC TBC Bank on 10 August 2016
[15] Cross-sell ratio is defined as number of active products divided by the number of active customers
[16] Based on IFRS figures
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOOBRBUAUUAR
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