Final Results

RNS Number : 5797D

TBC Bank Group PLC

20 February 2020

 

 

TBC BANK GROUP PLC ("TBC Bank")

4Q 2019 UNAUDITED CONSOLIDATED FINANCIAL RESULTS AND FY 2019 PRELIMINARY UNAUDITED CONSOLIDATED FINANCIAL RESULTS
 

Forward-Looking Statements

This document contains forward-looking statements; such forward-looking statements contain known and unknown risks, uncertainties and other important factors, which may cause the actual results, performance or achievements of TBC Bank Group PLC ("the Bank" or the "Group") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others, the achievement of anticipated levels of profitability, growth, cost and recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Georgian economic, political and legal environment, financial risk management and the impact of general business and global economic conditions.

None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects are based are accurate or exhaustive or, in the case of the assumptions, entirely covered in the document. These forward-looking statements speak only as of the date they are made, and subject to compliance with applicable law and regulation the Bank expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in the document to reflect actual results, changes in assumptions or changes in factors affecting those statements.

Certain financial information contained in this presentation, which is prepared on the basis of the Group's accounting policies applied consistently from year to year, has been extracted from the Group's unaudited management's accounts and financial statements. The areas in which the management's accounts might differ from the International Financial Reporting Standards and/or U.S. generally accepted accounting principles could be significant; you should consult your own professional advisors and/or conduct your own due diligence for a complete and detailed understanding of such differences and any implications they might have on the relevant financial information contained in this presentation. Some numerical figures included in this report have been subjected to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them.

 

Fourth Quarter 2019 Unaudited Consolidated Financial Results and Full Year 2019 Preliminary Unaudited Consolidated Financial Results Conference Call

TBC Bank Group PLC ("TBC PLC") announces that its consolidated financial results for the fourth quarter 2019 and preliminary consolidated financial results for the full year 2019 will be published on Thursday, 20 February 2020 at 7.00 am GMT (11.00 am GET).

On that day, Vakhtang Butskhrikidze, CEO, and Giorgi Shagidze, CFO, will host a conference call to discuss the results.

Date & time: Thursday, 20 February 2020 at 14.00 (GMT) / 15.00 (CET) / 9.00 (EST)

Please dial-in approximately five minutes before the start of the call quoting the password TBC: 

Password:	TBC
UK Toll Free:	0808 109 0700
Standard International Access:	[phone]
USA Toll Free:	1 866 966 5335
New York New York:	[phone]
Russia Toll Free:	8 10 8002 4902044
Moscow:	[phone]

Replay Numbers
Replay Passcode:	8513998
UK Toll Free:	0800 633 8453
Standard International Access:	[phone]
USA Toll Free:	1 866 583 1035
Russia Toll Free:	8 10 8002 4832044
Moscow:	[phone]

Contacts

Zoltan Szalai Director of International Media and Investor Relations  E-mail: [e-mail]  Tel:  [phone] Web: www.tbcbankgroup.com Address:  68 Lombard St, London EC3V 9LJ, United Kingdom

Anna Romelashvili        Head of Investor Relations E-mail: [e-mail]  Tel:  +(995 32) 227 27 27 Web: www.tbcbankgroup.com Address: 7 Marjanishvili St. Tbilisi, Georgia 0102

Investor Relations Department E-mail: [e-mail]  Tel:  +(995 32) 227 27 27 Web: www.tbcbankgroup.com Address: 7 Marjanishvili St. Tbilisi, Georgia 0102

Table of Contents

4Q and FY 2019 Results Announcement

TBC Bank - Background

Performance Highlights

Letter from the Chief Executive Officer

Operating Overview

Recent Developments

International Expansion

Economic Overview

Unaudited Consolidated Financial Results Overview for 4Q 2019

Unaudited Consolidated FinancialResults Overview for FY 2019

Additional Disclosures

1)Subsidiaries of TBC Bank Group PLC

2)Update on strategic objectives

3)Reconciliation of reported IFRS consolidated figures with the underlying numbers

4)Net gains from currency swaps

5)TBC Insurance

6) Azerbaijan

7) ESG ratings and scores

8) Loan book breakdown by stages according IFRS 9

 

TBC Bank Group PLC ("TBC Bank")

TBC Bank Announces Unaudited Preliminary 4Q and FY 2019 and Consolidated Financial Results:

Underlying Profit for the period for the FY 2019 up by 19.8% YoY to GEL 545.1 million

Reported Profit for the period for the FY 2019 up by 23.5% YoY to GEL 540.3 million

 European Union Market Abuse Regulation EU 596/2014 requires TBC Bank Group PLC to disclose that this announcement contains Inside Information, as defined in that Regulation.

TBC Bank - Background

TBC Bank is the largest banking group in Georgia, where 99.6% of its business is concentrated, with a 38.2% market share by total assets. It offers retail, corporate, and MSME banking nationwide.

These unaudited financial results are presented for TBC Bank Group PLC ("TBC Bank" or "the Group"), which was incorporated on 26 February 2016 as the ultimate holding company for JSC TBC Bank Georgia. TBC Bank became the parent company of JSC TBC Bank Georgia on 10 August 2016, following the Group's restructuring. As this was a common ownership transaction, the results have been presented as if the Group existed at the earliest comparative date as allowed under the International Financial Reporting Standards ("IFRS"), as adopted by the European Union. TBC Bank successfully listed on the London Stock Exchange's premium listing segment on 10 August 2016.

TBC Bank Group PLC's financial results are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and the Companies Act 2006 applicable to companies reporting under IFRS. The Group classifies and separately discloses certain incomes and expenses, which are non-recurring by nature and are caused by extraordinary events, as one-off items in order to provide a consistent view and enable better analysis of the financial performance of the Group. Adjusted performance is an alternative performance measure (APM) and the reconciliation of the underlying profit and loss items with the reported profit and loss items and the underlying ratios are given under Annex 3 section on pages 45-46.

Performance Highlights

4Q 2019 P&L Highlights 

o  Profit for the period amounted to GEL 160.0 million (4Q 2018: GEL 130.1 million)

o  Return on average equity (ROE) stood at 24.7% (4Q 2018: 24.3%)

o  Return on average assets (ROA) stood at 3 .5% (4Q 2018: 3.5%)

o  Cost to income of ТBC Bank standalone[1]was 36.2% (4Q 2018: 37.0%)

o  Cost to income of TBC Bank Group PLC 41.8% (4Q 2018: 39.7%)

o  Cost of risk stood at -0.2% (4Q 2018: 1.4%)

o  Net interest margin (NIM) stood at 5.3% (4Q 2018: 6.7%)

o  Risk adjusted net interest margin (NIM) stood at 5.4% (4Q 2018: 5.4%)

o  Basic earnings per share stood at 2.92 (4Q 2018: 2.40)

o  Diluted earnings per share 2.91 (4Q 2018: 2.37) 

FY 2019 P&L Highlights

o  Underlying profit for the period amounted to GEL 545.1 million (FY 2018: GEL 454.9 million)

o  Reported profit for the period amounted to GEL 540.3 million (FY 2018: GEL 437.4 million)

o  Underlying return on average equity (ROE) amounted to 22.6% (FY 2018: 22.8%)

o  Reported return on average equity (ROE) amounted to 22.4% (FY 2018: 22.0%)

o  Underlying return on average assets (ROA) amounted to 3.3% (FY 2018: 3.3%)

o  Reported return on average assets (ROA) amounted to 3.2% (FY 2018: 3.2%)

o  Cost to income of ТBC Bank standalone[2] was 35.9% (FY 2018: 35.6%)

o  Underlying cost to income of TBC Bank Group PLC stood at 39.5% (FY 2018: 37.8%)

o  Reported Cost to income of TBC Bank Group PLCstood at 39.9% (FY 2018: 37.8%)

o  Cost of risk on loans stood at 0.7% (FY 2018: 1.6%)

o  Net interest margin (NIM) stood at 5.6% (FY 2018: 6.9%)

o  Risk adjusted net interest margin (NIM) stood at 4.8% (FY 2018: 5.4%)

o  Basic earnings per share stood at 9.83 (FY 2018: 8.07)

o  Diluted earnings per share 9.76 (FY 2018: 8.00) 

Balance Sheet Highlights as of 31 December 2019

o  Total assets amounted to GEL 18,410.3 million as of 31 December 2019, up by 18.8% YoY

o  Gross loans and advances to customers stood at GEL 12,662.0 million as of 31 December 2019, up by 22.1% YoY

o  Net loans to deposits + IFI[3] funding stood at 104.8%, up by 14.9 pp YoY, and Regulatory Net Stable Funding Ratio (NSFR), effective from 30 September 2019, stood at 126.7%

o  NPLs were 2.7%, down by 0.4 pp YoY

o  NPLs coverage ratios stood at 91.1%, or 194.2% with collateral, on 31 December 2019 compared to 102.7% or 216.4% with collateral, as of 31 December 2018

o  Total customer deposits amounted to GEL 10,049.3 million as of 31 December 2019, up by 7.5% YoY

o  As of 31 December 2019, the Bank's Basel III CET 1, Tier 1 and Total Capital Adequacy Ratios per NBG methodology stood at 12.0%, 14.6% and 19.1% respectively, while minimum requirements amounted to 10.4%, 12.5% and 17.5% respectively

Market Share^[4]

o  Market share by total assets reached 38.2% as of 31 December 2019, remaining the same YoY

o  Market share by total loans was 39.5% as of 31 December 2019, up by 0.7 pp YoY

o  Market share of total deposits reached 39.0% as of 31 December, down by 2.2 pp YoY

4Q 2019 operating highlights

o  The number of affluent customers reached 82.5 thousand as of 31 December 2019, up by 102% YoY

o  93% of all transactions were conducted through digital channels (4Q 2018: 91%)

o  The number of digital transactions amounted to 21.6 million up by 20.0% YoY, while the number of branch transactions stood at 1.7 million, down by 0.2% YoY

o  The penetration ratio for internet or mobile banking[5] stood at 45% for 4Q 2019 (4Q 2018: 40%)

o  The penetration ratio for mobile banking[6] stood at 44% for 4Q 2019 (4Q 2018: 40%)

Income Statement Highlights
in thousands of GEL	4Q'19		4Q'18	Change YoY	FY'19	FY'18	Change YoY
Net interest income		209,318	214,803	-2.6%	801,539	778,022	3.0%
Net fee and commission income		54,844	44,064	24.5%	187,290	157,530	18.9%
Other operating non-interest income[7]		40,075	53,395	-24.9%	139,414	151,916	-8.2%
Credit loss allowance		224	(44,036)	NMF	(91,992)	(166,239)	-44.7%
Operating income after credit loss allowance		304,461	268,226	13.5%	1,036,251	921,229	12.5%
Operating expenses		(127,124)	(123,904)	2.6%	(450,726)	(411,029)	9.7%
Profit before tax		177,337	144,322	22.9%	585,525	510,200	14.8%
Income tax expense		(17,313)	(14,235)	21.6%	(45,184)	(72,765)	-37.9%
Profit for the period		160,024	130,087	23.0%	540,341	437,435	23.5%
Underlying profit for the period		160,024	130,087	23.0%	545,105	454,861	19.8%

Balance Sheet and Capital Highlights
	Dec-19	Dec-18	Change YoY
in thousands of GEL
Total Assets	18,410,274	15,497,993	18.8%
Gross Loans	12,661,955	10,372,582	22.1%
Customer Deposits	10,049,324	9,352,142	7.5%
Total Equity	2,647,655	2,205,968	20.0%
Regulatory Common Equity Tier I Capital (Basel III)	1,871,892	1,629,594	14.9%
Regulatory Tier I Capital (Basel III)	2,281,706	1,678,716	35.9%
Regulatory Total Capital (Basel III)	2,974,029	2,351,269	26.5%
Regulatory Risk Weighted Assets (Basel III)	15,593,925	13,154,872	18.5%

Key Ratios	4Q'19		4Q'18	Change YoY	FY'19	FY'18	Change YoY
Underlying ROE		24.7%	24.3%	0.4 pp	22.6%	22.8%	-0.2 pp
Reported ROE		24.7%	24.3%	0.4 pp	22.4%	22.0%	0.4 pp
Underlying ROA		3.5%	3.5%	0.0 pp	3.3%	3.3%	0.0 pp
Reported ROA		3.5%	3.5%	0.0 pp	3.2%	3.2%	0.0 pp
NIM		5.3%	6.7%	-1.4 pp	5.6%	6.9%	-1.3 pp
Risk adjusted NIM		5.4%	5.4%	0.0 pp	4.8%	5.4%	-0.6 pp
Cost to income of standalone Bank[8]		36.2%	37.0%	-0.8 pp	35.9%	35.6%	0.3 pp
Underlying cost to income		41.8%	39.7%	2.1 pp	39.5%	37.8%	1.7 pp
Reported Cost to income		41.8%	39.7%	2.1 pp	39.9%	37.8%	2.1 pp
Cost of risk		-0.2%	1.4%	-1.6 pp	0.7%	1.6%	-0.9 pp
FX adjusted cost of risk		-0.1%	1.3%	-1.4 pp	0.7%	1.5%	-0.8 pp
NPL to gross loans		2.7%	3.1%	-0.4 pp	2.7%	3.1%	-0.4 pp
NPLs coverage ratio exc. collateral		91.1%	102.7%	-11.6 pp	91.1%	102.7%	-11.6 pp
CET 1 CAR (Basel III)		12.0%	12.4%	-0.4 pp	12.0%	12.4%	-0.4 pp
Regulatory Tier 1 CAR (Basel III)		14.6%	12.8%	1.8 pp	14.6%	12.8%	1.8 pp
Regulatory Total CAR (Basel III)		19.1%	17.9%	1.2 pp	19.1%	17.9%	1.2 pp
Leverage (Times)		7.0x	7.0x	0.0x	7.0x	7.0x	0.0x

Letter from the Chief Executive Officer

I am delighted to present our strong financial and operating results for the full year 2019 and to provide an overview of the recent macroeconomic developments in Georgia.

Our underlying consolidated net profit[9] for the full year 2019 reached GEL 545.1 million (reported net profit amounted to GEL 540.3 million), up by 19.8% compared to 2018, while our underlying return on equity was 22.6% and our underlying return on assets stood at 3.3% (the reported return on equity stood at 22.4% and our reported return on assets stood at 3.2%).

In 2019, our operating income amounted GEL 1,128.2, up by 3.7% year-on-year, which was supported by increase in net fee and commission income and net interest income. The growth in net interest income was related to re-classification of net gains on currency swaps in the amount of GEL 28.6 million from other operating income, which offset by the decline in net interest income related to introduction of responsible lending regulation from 1 January 2019, limiting the Bank's ability to lend money to higher-yield retail customers. Consequently, the net interest margin decreased by 1.3 pp year-on-year and stood at 5.6% in 2019 and 5.3% in the fourth quarter of 2019. By the end of 2019, the net interest margin has been fully rebased to the new level and we expect it to stabilize at the 2019 fourth quarter level.

The growth in net profit was also strongly supported by a decrease in credit loss allowance, which was driven by improved performance across all segments and change in the product mix. As a result, our cost of risk stood at 0.7% in 2019 compared to 1.6% in 2018. We also updated our guidance on cost of risk for 2020 and expect it to be around 1.0%, given the positive effects of the responsible lending regulation on loan book quality.

In 2019, our operating expenses increased by 9.7% year-on-year or 8.3% on an underlying basis, resulting in an underlying cost-to-income ratio of 39.5% (the reported cost-to-income ratio stood at 39.9%), up by 1.7 pp year-on-year. The increase in the cost-to-income ratio was mainly related to investments in our new ecosystems. Over the same period, the bank's standalone cost-to-income ratio remained strong and stood at 35.9%.[10]

In terms of balance sheet growth, our loan book expanded by 22.1% year-on-year, or by 17.9% on constant currency basis, mainly supported by growth in the corporate and MSME segments. Over the same period, deposits increased by 7.5% year-on-year, or by 2.9% on constant currency basis, driven by our policy of reducing deposits due to high liquidity as a result of the recent bond issuance. As a result, as of 31 December 2019, our loan book market share stood at 39.5%, up by 0.7 pp year-on-year, while our deposit market share stood at 39.0%, down by 2.2 pp year-on-year.

Our capital position and liquidity levels continue to be strong. As of 31 December 2019, our regulatory CET 1, tier 1 and total capital adequacy ratios per Basel III guidelines stood at 12.0%, 14.6% and 19.1% respectively, while minimum requirements amounted to 10.4%, 12.5% and 17.5% respectively. Our regulatory liquidity coverage ratio stood at 110% compared to the minimum requirement of 100%, while the regulatory net stable funding ratio (NSFR) per Basel III guidelines stood at 127%, above the minimum requirement of 100%.

Regarding macro developments, the Georgian economy demonstrated continued strong performance in fourth quarter 2019 and expanded by 5.3%[11] year-on-year, following 5.8% growth in Q3 2019, while the growth for the full year 2019 was estimated to be 5.2%. High GDP growth was mainly supported by solid external inflows driven by stronger exports and remittances, which grew by 15.9% and 13.1% year-on-year in the fourth quarter respectively, as well as by recovering tourism. The number of tourists went up by 12.0% year-on-year, while tourism revenue increased by 5.4% over the same period, mainly driven by strong growth in the number of visitors from the EU, Turkey and other neighbouring countries. The expansionary fiscal stance and relatively strong increase in lending also contributed to GDP growth. The 5.2% growth of the economy for the full year 2019 is particularly encouraging given the backdrop of the challenges the economy faced in 2019, the most important being Russia's flight ban.

Turning to the development of our business, I would like to start with our progress in Uzbekistan:

o  In January 2020, we obtained a preliminary banking licence in Uzbekistan, which is an essential step in the process of launching our banking operations in the country in the near future. As previously announced, our strategy is to develop a greenfield, next-generation banking ecosystem for retail and MSME customers in Uzbekistan. The primary focus will be on digital channels, including our neobank, Space. For our Uzbek venture, we are planning to join forces with International Financial Institutions and a local partner. Our plans foresee a minimum 51% shareholding. We have already secured interest from the EBRD and IFC and have reached an agreement on the main terms with the Uzbek-Oman Investment Company to act as our local partner. 

o  Last year, we launched several important preparatory work-streams, including implementation of the core banking system in co-operation with a local IT company. We also set up a pilot branch in Tashkent for proof of concept and built a core team for the bank. Thus, we are well advanced in the process and expect to obtain the final licence and start banking operations in summer 2020.

o  The total amount of the initial investment from all the shareholders is expected to be US$ 40 million, which we plan to invest in two stages: US$ 12 million before receiving the licence, and US$ 28 million after receiving the licence. In terms of our product offerings, we plan to start with consumer loans, car loans, savings and current accounts and add mortgages and MSME loans later.

o  In parallel, we are actively developing our payments business in the country through our recently acquired subsidiary, Payme, which is the leading payments company in the country, already serving around 1.8 million customers. The company is growing rapidly, and in 2019, its revenue went up by 84% and amounted to GEL 8.6 million, while its EBITDA reached GEL 4.5 million, up by 77% year-on-year.

In December 2019, we also launched our point-of-sale consumer financing operations in Uzbekistan, which is already available at 15 locations and we plan to expand to 50 locations by the end of 2020.

Another important development during the quarter was signing the partnership agreement between our neobank, Space, and Visa, a world's leader in digital payments. This will allow us to jointly develop innovative, user-centric and secure banking solutions and expand our digital banking footprint beyond Georgia.

Finally, I would like to give you an update about recent changes to the composition of the Management Board of JSC TBC Bank. David Chkonia, our Chief Risk Officer, left the bank at the end of his contractual term in order to pursue other career opportunities. Consequently, Nino Masurashvili, deputy CEO, who was previously in charge of retail banking development, has been appointed as the new Chief Risk Officer and Tornike Gogichaishvili, Deputy CEO and Chief Operations Officer (COO) of the Bank has been appointed to lead the retail banking business. The functions that were previously carried out by the COO have been re-allocated to be the responsibility of the CFO and the Deputy CEO, SME & Micro Banking. I would like to thank David Chkonia for his significant contribution to enhancing our risk management system and to wish him success in his future career. Also, I would like to wish Nino Masurashvili and Tornike Gogichaishvili success in their new roles.

Outlook

In 2019, we recorded strong financial results and made significant progress against our strategic priorities, including the development of customer focused ecosystems and international expansion in Uzbekistan. This lays a solid foundation for further development of these initiatives and I am very excited about our ambitious plans for 2020. Our leading digital capabilities, outstanding customer experience and advanced data analytical capabilities, coupled with our strong team spirit, make me confident that we are well positioned to achieve sustainable growth and to deliver superior results to our shareholders. Therefore, I would like to reiterate our medium-term targets: ROE of above 20%, cost to income ratio below 35%, dividend pay-out ratio of 25-35% and loan book growth of around 10-15%. 

Operating Overview

Recent Developments

Preliminary banking licence in Uzbekistan

o  TBC PLC has obtained a preliminary banking licence in Uzbekistan, which is an essential step in the process to launch our banking operations in the country in the near future.

o  As previously announced, TBC PLC's strategy is to develop a greenfield, next-generation banking ecosystem for retail and MSME customers in Uzbekistan. The primary focus will be on digital channels, including our neobank, Space.

 For more information about the international strategy in Uzbekistan please refer pages 11-12.

New borrowings from IFIs

o  TBC Bank has signed a loan agreement in the amount of GEL 90 million equivalent with the European Investment Bank (EIB). The funds are available to draw either in EUR, USD or GEL. The five-year loan facility will be used primarily to finance micro, small and medium size businesses in Georgia and support the development of private enterprise.

o  TBC Bank has signed three loan agreements totaling USD 23 million equivalent in Georgian Lari (GEL) with the European Bank for Reconstruction and Development (EBRD). Funding will be available for investments in green technology, especially in climate adaptation and mitigation technologies.

Structural Changes of the Management Board

TBC Bank has appointed a new Chief Risk Officer, following the departure of the previous Chief Risk Officer at the end of his contractual term in order to pursue other career opportunities. As a result, TBC Bank has decided to implement the following structural changes to the composition of the Management Board:

o  Nino Masurashvili, Deputy CEO, who had previously been in charge of retail banking development of TBC Bank, has been appointed as the new Chief Risk Officer;

o  Tornike Gogichaishvili, Deputy CEO and Chief Operations Officer of the Bank, has been appointed to lead the Bank's retail banking business;

o  Certain functions that have previously been carried out directly by the COO have been re-allocated to be the responsibility of the CFO or the Deputy CEO, SME & Micro Banking.

Digital Channels

Our neobank, Space, has signed a partnership agreement with Visa, a world's leader in digital payments, to jointly develop innovative banking services and expand digital banking footprints in new geographies. Through the partnership, Visa will work with Space to jointly develop innovative, user-centric and secure banking solutions and help Space in their ambitions to expand to other countries focusing on CISSEE.

Awards

TBC Bank has won a number of prestigious awards from leading industry magazines:

o  TBC Bank was named 'Bank of the Year 2019 in Georgia' by The Banker magazine in its annual country awards. This award is recognition of the bank's strong financial performance, coupled with superior customer experience and fully-fledged digital capabilities. The criteria for choosing country winners for this award included digital transformation, efficiency and internal capabilities to move into a new era.

o  TBC Bank was named the 'Best Foreign Exchange Provider 2020 in Georgia' by Global Finance Magazine. The criteria for choosing the country winners for this award included transaction volume, market share and scope of global coverage as well as the quality of customer service, pricing and the use of innovative technologies.

o  The bank received the 'Best Trade Finance Provider in Georgia' award in 2020 from Global Finance and was also named 'Market Leader' and 'Best Service Provider' in Georgia in the Trade Finance Survey 2020 conducted by Euromoney. These awards recognise TBC Bank's leading position in trade finance and emphasize the Bank's successful cooperation with international networks.

International Expansion

Uzbekistan

Preliminary Banking Licence

In January 2020, TBC Group PLC obtained a preliminary banking licence in Uzbekistan, which is an essential step in the process to launch our banking operations in the country in the near future. Obtaining a banking licence is a two-step process, wherein the banks are first granted a preliminary licence, after which they are expected to meet certain predefined requirements to receive the final licence.

Milestones completed before preliminary banking licence:

o  Core Banking deployment;

o  Launch of digital pilot branch;

o  Key staff on boarded;

o  Agreement of key terms and conditions with international and local shareholders.

Main targets for 2020:

o  Meet technical requirements to obtain licence

o  Data center and core banking implementation;

o  Security systems;

o  Get operations up and running.

o  Investments in 2020:

o  USD 12 mln to be invested in the share capital before obtaining licence;

o  Further USD 28 mln to be invested into the share capital.

o  Branches

o  Initially launch 5 branches for friends and families;

o  Scale up to 20 branches by the end of the year.

o  Space platform

o  Serve customers through space platform.

Product launch estimated plan of the greenfield bank:

o  Short term

o  Consumer loans;

o  Auto loans;

o  Saving accounts;

o  Current accounts.

o  Medium term

o  Mortgages;

o  MSME loans.

Financial targets for greenfield bank:

o  1^st Year

o  Loss around USD 6-8 mln.

o  2^nd Year

o  Break Even.

o  Medium target

o  ROE in the range of TBC Group's target

o  Loan book target up to USD 700 mln

Other initiatives:

o  Payments - Payme

o  Revenue and EBITDA increased by 84.0% and 76.9% YoY, respectively for FY 2019;

o  Number of transactions increased by 24.5% YoY.

o  Consumer Financing - Vendoo

o  55 point of sales by the end of 2020;

o  USD 10.2 million outstanding portfolio by the end of 2020;

o  61,700 installments by the end of 2020.

o  Online tickets - TKT.uz

o  Selling tickets of: cinema, theater, concerts, transport, sport and etc.;

o  First transaction occurred in late December 2019.

Organizational structure:

Expected Supervisory Board Composition:

o  Chairman - Giorgi Shagidze, Deputy CEO, CFO of TBC Bank (Project lead until launch); Former Global Operations Executive at Barclays Bank PLC

o  Board Member - Nikoloz Kurdiani, Deputy CEO of TBC Bank; Former Head of the Retail Division of ATF Bank, UniCredit Group in Kazakhstan

o  Independent Board Member - Wojciech Sobieraj, CEO of Aion Bank; Former CEO of Alior Bank

o  Independent Board Member - Sharof Sharipov, CFO of Token Group (US/UK); Former CFO of 10x Future Technologies

o  Independent Board Member - Seit Devdariani, Project Coordinator for EBRD project: PFI Capacity-Building Technical Cooperation Programme (Azerbaijan), Former CEO of BBMB Bank (Belarus)

 Expected composition of the Management Board:

o  CEO - Sandro Rtveladze, Group Head of Retail Banking and a country director of Bayport Savings and Loans Plc. (Ghana) at Bayport Financial Services (in a process of exiting current employment); Former Deputy CEO at Liberty Bank (Georgia)

o  CFO - Vano Baliashvili, Former Deputy CEO, COO of TBC Bank; Also served as CFO at TBC Bank

o  COO - Rostom Talakhadze, Former Head of logistics of TBC Bank

o  CTO - Nikoloz Mamulashvili, Former Head of Development of TBC Bank

o  Deputy CEO - Sitora R. Tulyaganova, Former Head of Legal, InFinBank

 Other Key Staff:

o  Head of Commercial - Evgeniy Vishnevskiy, Former Commercial Director at Uzbektelecom

o  Head of HR - Hilola Suleymanova, Former Managing Partner of DaVinci Management Consulting

o  Chief Accountant - Aida Nazirova,  Former Chief Accountant of Ipak Yuli Bank

Additional Information Disclosure

The following materials in connection with TBC PLC's financial results are disclosed on our Investor Relations website at http://tbcbankgroup.com/ under the Results Announcement section. 

Economic Overview

Economic growth and the external sector

GDP growth came in at 5.3% YoY in 4Q 2019 and averaged 5.2% YoY in 2019, according to GeoStat's initial estimates.  The growth was broad-based across different sectors of the economy. In the first 9 months of 2019, trade and repairs (+7.4% YoY), real estate (+5.9% YoY), transport and logistics (+7.5% YoY), information and communication (+14.5% YoY) and the construction sector (+5.2% YoY) all significantly contributed to overall GDP growth. 

As for the external sector, the overall dynamics of the external balance remained healthy despite the negative impact stemming from the Russian flight ban. Reflecting lower tourism inflows, the balance of trade in services declined slightly from 12.7% of GDP in 2018 to 12.4% of GDP in trailing four quarters as of 3Q 2019. However, this decline was counteracted by the lower deficit of trade in goods (down by 1.9% of GDP), as well as by a more moderate improvement in the income account deficit (down by 0.5% of GDP). As a result, the Current Account (CA) balance to GDP ratio improved to 4.5% as of the last four quarters ending in 3Q 2019, compared to 6.8% in 2018. The CA deficit continued to be fully financed with FDI inflows, which posted +13.7% YoY growth in 3Q 2019 after a declining trend from very high levels. As of the last four quarters ending in 3Q 2019, net FDI stood at 4.9% of GDP. Despite being somewhat below the average of the past couple of years, FDI inflows at current levels are still quite high when compared to peer countries in the neighbourhood, as well as in Central and Eastern Europe.

The positive tendency in the major components of the CA balance continued in 4Q 2019 as well. Following the dip in tourism inflows in 3Q 2019 (-6.9% YoY in USD terms), it recovered quickly to 5.4% YoY growth in USD terms in 4Q 2019, on the back of strong growth in the number of visitors from the EU, Turkey, and other neighbouring countries, offsetting the negative impact of a falling number of visitors from Russia. Growth of the exports of goods improved to 15.9% YoY in 4Q, compared to an 11.1% increase in the first 9 months of 2019. Similarly, remittance inflows also accelerated to 13.1% YoY in 4Q 2019. At the same time, imports of goods also posted a stronger growth towards the end of the year (+5.6% YoY in 4Q 2019). Overall, based on the dynamics of the major components, the CA balance probably improved further in 4Q 2019 YoY.

Exchange rate, inflation and credit

The GEL exchange rate depreciation since June 2019 has been the major factor behind the rise in inflation up to 7% as of the end of 2019. In response to higher inflationary pressures, the NBG tightened the monetary policy rate from 6.5% at the beginning of September to 9.0% as of the end of 2019. A tighter monetary policy stance in GEL, coupled with the strong external sector, contributed to a stronger GEL exchange rate. By the end of 2019, the USD/GEL exchange rate stood at 2.87, down by 3.0% QoQ. The monthly inflation dynamics indicate some moderation of inflation by the end of 2019. According to the latest projections of the central bank, CPI inflation is projected to gradually decline towards the target, starting from 2Q 2020, before reaching the target by the end of 2020.

Despite tighter monetary policy in GEL, lending growth remained solid, mostly on the back of accelerated FX lending by the end of 2019, supported by the lower reserve requirements and ample bank liquidity in FX. As of the end of 2019, the bank loan portfolio went up by 16.1% YoY, excluding the exchange rate effect, mostly on the back of business lending (+23.3% YoY excl. FX effect), strongly supporting the solid economic growth. At the same time, retail growth was relatively slow (+6.0% YoY excl. FX effect), owing to tighter prudential regulations. Despite some acceleration of FX lending, de-dollarization of the financial sector remains a top priority for the central bank; however, in future rather more attention is expected to be devoted to de-dollarization of liabilities.

Fiscal spending

Fiscal spending significantly supported growth in 2019, with the budget deficit estimated at 2.7% of GDP in 2019. The actual impact of the fiscal sector on growth was even higher, taking into consideration the advance payments made by the end of 2018, which supported growth in 2019. Taking into account those advance payments, the fiscal deficit was estimated at around 4.2% of GDP, almost double the amount the previous year. Going forward, according to the budget projections for 2020, the fiscal stance is expected to be less expansionary for 2020 and more oriented towards social spending. Nevertheless, the share of capital expenditures remains high and, on a macro level, the budget is balanced.

Going forward

Above 5% economic growth for the full year 2019 once more underlines the resilience and high growth potential of Georgian economy. This growth is particularly encouraging on the backdrop of the challenges that economy faced in 2019, the most important being Russia's flight ban. According to the TBC research, projection of external inflows, credit and fiscal stance indicate to 5% growth in 2020, however, considering some possible election related uncertainties, 4.5% remains a baseline scenario, close to the IMF 4.3% growth projection (5.2% long term projection).

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

Unaudited Consolidated Financial Results Overview for 4Q 2019

This statement provides a summary of the unaudited business and financial trends for 4Q 2019 for TBC Bank Group plc and its subsidiaries. The quarterly financial information and trends are unaudited.

Starting from 1 January 2019, TBC Bank adopted IFRS 16. Therefore, the comparative information for 2018 is not comparable to the information presented for 2019.

TBC Bank Group PLC financial results are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and the Companies Act 2006 applicable to companies reporting under IFRS. The Group classifies and separately discloses certain incomes and expenses, which are non-recurring by nature and are caused by extraordinary events, as one-off items in order to provide a consistent view and enable better analysis of the financial performance of the Group. Adjusted performance is an alternative performance measure (APM) and the reconciliation of the underlying profit and loss items with the reported profit and loss items and the underlying ratios are given in Annex 3 on pages 45-46.

Please note, that there might be slight differences in previous periods' figures due to rounding.

Net Interest Income

In 4Q 2019, net interest income amounted to GEL 209.3 million, down by 2.6% YoY and up by 8.1% on QoQ basis.

The YoY increase in interest income was primarily related to an increase in interest income from loans, which was related to an increase in the gross loan portfolio of GEL 2,289.4 million, or 22.1%. This effect was partially offset by a 1.3 pp drop in loan yields, mainly in the retail and MSME segments.  The decrease in retail loan yields was driven by the continued impact of the NGB's regulation from January 2019, which limits the banks' ability to lend money to higher-yield retail customers, while the decrease in MSME loan yields was in line with the overall market trend.

Over the same period, interest expense increased by GEL 51.2 million, or 36.3%, which was mainly related to interest expense from bonds issued in summer 2019, as well as increase in an interest expense from deposits. The latter was related both to the growth in the respective portfolio by 7.5% YoY, and to an increase in deposit cost by 0.3 pp over the same period.

The QoQ increase in interest income was mainly due to an increase in the loan portfolio by GEL 981.7 million, or 8.4%, while loan yields remained broadly stable. Over the same period, interest expense increased by GEL 10.7 million, or 5.9%, mainly related to the increase in the NBG loan.

In 4Q 2019, we re-classified net gains on currency swaps from other operating income to net interest income. More information is given in annex 4 on page 46.

Thus, our NIM was 5.3% down by 1.4 pp YoY and up by 0.2 pp on a QoQ basis, while risk adjusted NIM for the period amounted to 5.4%, remained the same YoY and up by 1.0 pp QoQ.

In thousands of GEL	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Interest income	392,154	366,472	355,543	10.3%	7.0%
Interest expense	(191,891)	(181,192)	(140,740)	36.3%	5.9%
Net gains from currency swaps	9,055	8,355	N/A	100%	8.4%
Net interest income	209,318	193,635	214,803	-2.6%	8.1%
NIM	5.3%	5.1%	6.7%	-1.4 pp	0.2 pp
Risk adjusted NIM	5.4%	4.4%	5.4%	0.0 pp	1.0 pp

Net fee and commission income

In 4Q 2019, net fee and commission income totalled GEL 54.8 million, up by 24.5% YoY and by 16.4% QoQ.

The YoY rise was mainly driven by an increase in net fee and commission income from plastic card operations, and settlement transactions. The former increase was mainly related to the increase in the number of active cards as well as the increase in the number of POS terminals related to the overall growth of the business. At the same time, the increase in net fee and commission income from settlement transactions YoY mainly driven by the increase in the number of TBC Status's clients (our affluent retail sub-segment),up by 102% YoY to 82.5 thousands.

On a QoQ basis, the rise was mainly driven by net fee and commission income from card operations and settlement transactions as mentioned above as well as seasonality.

In thousands of GEL	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Net fee and commission income
Card operations	16,649	13,479	13,110	27.0%	23.5%
Settlement transactions	24,887	18,355	16,971	46.6%	35.6%
Guarantees issued and letters of credit	8,831	8,197	7,368	19.9%	7.7%
Other	4,477	7,074	6,615	-32.3%	-36.7%
Total net fee and commission income	54,844	47,105	44,064	24.5%	16.4%

Other Non-Interest Income

Total other non-interest income decreased by 24.9% YoY and increased by 2.7% QoQ, amounting to GEL 40.1 million in 4Q 2019.

The YoY decrease was mainly driven by the high base of other operating income last year due to the gain from sale of investment properties and the recognition of an option to buy shares in one of our large corporate clients in 2018. Another driver was the decrease in net income from foreign currency operations related to the re-classification of net gains on currency swaps. More information is given in annex 4 on page 46.

 The QoQ increase was mainly driven by other operating income, due to the gain from the sale of repossessed assets. This rise was slightly offset by the decrease in net income from foreign currency operations, mainly due to higher volatility in 3Q 2019.

Net insurance premium earned after claims and acquisition costs increased by 46.9% on YoY and by 18.3% QoQ, mainly related to the increased scale of the insurance business. More information about TBC insurance can be found in Annex 5 on page 47.

In thousands of GEL	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Other non-interest income
Net income from foreign currency operations	28,006	29,260	33,029	-15.2%	-4.3%
Net insurance premium earned after claims and acquisition costs[12]	5,659	4,784	3,853	46.9%	18.3%
Other operating income	6,410	4,974	16,513	-61.2%	28.9%
Total other non-interest income	40,075	39,018	53,395	-24.9%	2.7%

Credit Loss Allowance

In 4Q 2019, total credit loss allowance amounted to GEL 0.2 million.

The YoY decrease was mainly due to decrease in credit loss allowance on loans to customers, driven by strong performance in all segments, as well as a portfolio product mix change, related to the responsible lending regulation effective from 1 January 2019.

QoQ improvement was also related to strong performance across all segments.

In thousands of GEL	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Credit loss allowance for loan to customers	5,148	(20,695)	(34,398)	NMF	NMF
Credit loss allowance for other transactions	(4,924)	(5,054)	(9,638)	-48.9%	-2.6%
Total credit loss allowance	224	(25,749)	(44,036)	NMF	NMF
Operating income after credit loss allowance	304,461	254,009	268,226	13.5%	19.9%
Cost of risk	-0.2%	0.7%	1.4%	-1.6 pp	-0.9 pp

NMF - no meaningful figures

Operating Expenses

In 4Q 2019, total operating expenses expanded by 2.6% YoY and by 13.8% QoQ, amounting to GEL 127.1 million.

YoY growth was mainly driven by increase in staff costs, driven by the overall expansion of business as well as the increase in the share price[13] over a three-year period for the purpose of top and middle management share based bonuses accruals  (while there was no material change in expected total share compensation).  This was partially offset by the decrease in depreciation and amortizations expenses, which was driven by amendments in the deprecation period of certain assets in 4Q 2019.   

On QoQ basis, the increase was driven by administrative and other expenses and resulted from seasonally high costs in 4Q. Over the same period depreciation decreased by 43.1%, as mentioned above.

In 4Q 2019, cost to income stood at 41.8%, up by 2.1 pp YoY and 1.9 pp QoQ.

In thousands of GEL	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Operating expenses
Staff costs	(68,934)	(62,230)	(63,213)	9.1%	10.8%
Provisions for liabilities and charges	(2,632)	(73)	-	NMF	NMF
Depreciation and amortization	(9,921)	(17,433)	(12,333)	-19.6%	-43.1%
Administrative & other operating expenses	(45,637)	(31,969)	(48,358)	-5.6%	42.8%
Total operating expenses	(127,124)	(111,705)	(123,904)	2.6%	13.8%
Cost to income	41.8%	39.9%	39.7%	2.1 pp	1.9 pp

NMF - no meaningful figures

Net Income

Net income for the fourth quarter increased by GEL 29.9 million, or 23.0%, YoY and increased by GEL 33.2 million, or 26.2%, QoQ, amounting to GEL 160.0 million.

As a result, ROE stood at 24.7%, up by 0.4 pp YoY and by 4.3 pp QoQ, while ROA stood at 3.5%, stable on a YoY basis and up by 0.7 pp QoQ

In thousands of GEL	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Profit before tax	177,338	142,303	144,322	22.9%	24.6%
Income tax expense	(17,313)	(15,527)	(14,235)	21.6%	11.5%
Profit for the period	160,025	126,776	130,087	23.0%	26.2%
ROE	24.7%	20.4%	24.3%	0.4 pp	4.3 pp
ROA	3.5%	2.8%	3.5%	0.0 pp	0.7 pp

Funding and Liquidity

In September 2019, we had high liquidity due to bond issuance in summer, which was utilised during 4Q by increasing loan book.  

	31-Dec-19	30-Sep-19	Change
Minimum net stable funding ratio, as defined by the NBG	100%	100%	0.0 pp
Net stable funding ratio as defined by the NBG	126.7%	137.7%	-11.0%
Net loans to deposits + IFI funding	104.8%	97.0%	7.9 pp
Leverage (Times)	7.0x	7.3x	-0.3x
Minimum liquidity ratio, as defined by the NBG	30.0%	30.0%	0.0 pp
Liquidity ratio, as defined by the NBG	32.2%	39.2%	-7.0 pp
Minimum total liquidity coverage ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Minimum LCR in GEL, as defined by the NBG	75.0%	75.0%	0.0 pp
Minimum LCR in FC, as defined by the NBG	100.0%	100.0%	0.0 pp
Total liquidity coverage ratio, as defined by the NBG	110.1%	131.6%	-21.5 pp
LCR in GEL, as defined by the NBG	83.7%	87.7%	-4.0 pp
LCR in FC, as defined by the NBG	128.4%	162.8%	-34.4 pp

Regulatory Capital

As of 31 December 2019, the Bank's CET 1, Tier 1 and Total Capital adequacy ratios stood at 12.0%, 14.6% and 19.1%, respectively, above the respective minimum requirements of  10.4%, 12.5% and 17.5%.

CET 1 and Tier 1 capital adequacy ratios were broadly stable on a QoQ basis, while the total capital adequacy ratio reduced by 0.3 pp, which was mainly driven by the increase in loan portfolio and was partially offset by net income generation.

In thousands of GEL	31-Dec-19	30-Sep-19	Change
CET 1 Capital	1,871,892	1,770,734	5.7%
Tier 1 Capital	2,281,706	2,191,792	4.1%
Total Capital	2,974,029	2,894,704	2.7%
Total Risk-weighted Exposures	15,593,925	14,889,695	4.7%
Minimum CET 1 ratio	10.4%	9.8%	0.6 pp
CET 1 Capital adequacy ratio	12.0%	11.9%	0.1 pp
Minimum Tier 1 ratio	12.5%	11.9%	0.6 pp
Tier 1 Capital adequacy ratio	14.6%	14.7%	-0.1 pp
Minimum total capital adequacy ratio	17.5%	16.7%	0.8 pp
Total Capital adequacy ratio	19.1%	19.4%	-0.3 pp

Loan Portfolio

As of 31 December 2019, the gross loan portfolio reached GEL 12,662.0 million, up by 8.4% QoQ, or by 9.8% on a constant currency basis, which was mainly supported by growth in the corporate segment due to the acquisition of both large and mid-corporate clients. Over the same period, the proportion of gross loans denominated in foreign currency increased by 0.5 pp on a QoQ basis and accounted for 58.7% of total loans.

At the end of December 2019, our market share in total loans stood at 39.5% up by 0.8 pp QoQ, while our loan market share in legal entities was 38.9% up by 1.2 pp QoQ and our loan market share in individuals stood at 40.0% up by 0.5 pp QoQ.

In thousands of GEL	31-Dec-19	30-Sep-19	Change
Loans and advances to customers
Retail	5,053,203	4,903,134	3.1%
Retail loans  GEL	2,386,750	2,284,431	4.5%
Retail loans FC	2,666,453	2,618,703	1.8%
Corporate	4,660,473	4,029,321	15.7%
Corporate loans  GEL	1,424,309	1,248,851	14.0%
Corporate loans FC	3,236,164	2,780,470	16.4%
MSME	2,948,279	2,747,802	7.3%
MSME loans  GEL	1,419,804	1,354,789	4.8%
MSME loans FC	1,528,475	1,393,013	9.7%
Total loans and advances to customers	12,661,955	11,680,257	8.4%

	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Loan yields	10.9%	10.8%	12.2%	-1.3 pp	0.1%
Loan yields  GEL	15.7%	15.2%	17.4%	-1.7 pp	0.5 pp
Loan yields FC	7.6%	7.7%	8.7%	-1.1 pp	-0.1 pp
Retail Loan Yields	11.8%	11.8%	13.6%	-1.8 pp	0.0 pp
Retail loan yields  GEL	17.1%	17.2%	20.7%	-3.6 pp	-0.1 pp
Retail loan yields FC	7.1%	7.3%	7.8%	-0.7 pp	-0.2 pp
Corporate Loan Yields	9.7%	9.2%	10.0%	-0.3pp	0.5%
Corporate loan yields  GEL	13.3%	11.7%	10.9%	2.4 pp	1.7 pp
Corporate loan yields FC	8.2%	8.1%	9.7%	-1.5 pp	0.1 pp
MSME Loan Yields	11.3%	11.2%	12.2%	-0.9pp	0.1 pp
MSME loan yields  GEL	15.7%	15.0%	16.2%	-0.5 pp	0.7 pp
MSME loan yields FC	7.2%	7.7%	8.6%	-1.4 pp	-0.5 pp

Loan Portfolio Quality

Total PAR 30 decreased by 0.3 pp on QoQ basis and stood at 1.7%. The decrease was driven by improved performance across all segments. Moreover, our total NPLs stood at 2.7%, down by 0.2 pp, which was attributable to the strong performance of the retail and MSME segments.

Par 30	31-Dec-19	30-Sep-19	Change
Retail	2.1%	2.3%	-0.2 pp
Corporate	0.5%	0.8%	-0.3 pp
MSME	2.8%	3.0%	-0.2 pp
Total Loans	1.7%	2.0%	-0.3 pp

Non-performing Loans	31-Dec-19	30-Sep-19	Change
Retail	3.0%	3.2%	-0.2 pp
Corporate	1.8%	1.8%	0.0 pp
MSME	3.8%	4.3%	-0.5 pp
Total Loans	2.7%	2.9%	-0.2 pp

NPL Coverage	Dec-19		Sep-19
	Exc. Collateral	Incl. Collateral	Exc. Collateral	Incl. Collateral
Corporate	97.1%	241.4%	118.5%	317.8%
Retail	111.1%	182.9%	113.2%	183.9%
MSME	59.7%	173.7%	64.9%	179.2%
Total	91.1%	194.2%	97.7%	209.9%

Cost of risk 

The total cost of risk for 4Q 2019 stood at -0.2% down by 1.6 pp YoY and by 0.9 pp on a QoQ basis.

The YoY decrease was driven by the product mix change as well as robust credit quality across all segments, while the decrease on a QoQ basis was related to the strong performance across all segments.

In Q4 2019, retail cost of risk decreased by 2.6pp YoY and 1.1pp QoQ, driven by the strong performance of retail segment, translated into improved credit risk parameters and change in product mix in retail portfolio, due to responsible lending regulation.

In Q4 2019, MSME cost of risk decreased by 0.9pp QoQ and YoY, mainly due to the SME sub segment. Decrease in SME portfolio is driven by repayment of several impaired borrowers, as well as overall strong performance of the portfolio, resulting in improved credit risk parameters. In case of the Micro segment, cost of risk remained broadly stable.

Cost of Risk	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Retail	0.3%	1.4%	2.9%	-2.6 pp	-1.1 pp
Corporate	-0.2%	0.4%	0.1%	-0.3 pp	-0.6 pp
MSME	-1.0%	-0.1%	-0.1%	-0.9 pp	-0.9 pp
Total	-0.2%	0.7%	1.4%	-1.6 pp	-0.9 pp

Deposit Portfolio

The total deposits portfolio increased by 1.5% QoQ and amounted to 10,049.3 million, while on a constant currency basis the total deposit portfolio was up by 3.3%. The slow growth in deposits is related to our high liquidity due to the recent bonds issuance in the summer. The proportion of deposits denominated in foreign currency increased by 0.4 pp on a QoQ basis and accounted for 65.9% of total deposits.

By the end December 2019, our market share in deposits amounted to 39.0% down by 0.3 pp QoQ and our market share in deposits to legal entities stood at 40.6% up by 0.5 pp QoQ. Our market share in deposits to individuals stood at 37.9% down by 0.7 pp QoQ.

In thousands of GEL	31-Dec-19	30-Sep-19	Change
Customer Accounts
Retail	5,673,917	5,550,227	2.2%
Retail deposits  GEL	1,098,681	1,057,854	3.9%
Retail deposits FC	4,575,236	4,492,373	1.8%
Corporate	3,187,319	3,242,875	-1.7%
Corporate deposits  GEL	1,735,746	1,770,123	-1.9%
Corporate deposits FC	1,451,573	1,472,752	-1.4%
MSME	1,188,088	1,104,221	7.6%
MSME deposits  GEL	594,388	586,603	1.3%
MSME deposits FC	593,700	517,618	14.7%
Total Customer Accounts	10,049,324	9,897,323	1.5%

	4Q'19	3Q'19	4Q'18	Change YoY	Change QoQ
Deposit rates	3.4%	3.2%	3.1%	0.3 pp	0.2 pp
Deposit rates GEL	6.0%	5.3%	5.3%	0.7 pp	0.7 pp
Deposit rates FC	2.0%	2.1%	2.0%	0.0 pp	-0.1 pp
Retail Deposit Yields	2.9%	2.8%	2.6%	0.3 pp	0.1 pp
Retail deposit rates GEL	5.1%	4.4%	4.6%	0.5 pp	0.7 pp
Retail deposit rates FC	2.3%	2.4%	2.2%	0.1 pp	-0.1 pp
Corporate Deposit Yields	5.1%	4.7%	4.5%	0.6 pp	0.4 pp
Corporate deposit rates GEL	7.9%	6.9%	6.8%	1.1 pp	1.0 pp
Corporate deposit rates FC	1.5%	1.8%	1.8%	-0.3 pp	-0.3 pp
MSME Deposit Yields	0.9%	1.0%	1.0%	-0.1 pp	-0.1 pp
MSME deposit rates GEL	1.5%	1.5%	1.6%	-0.1 pp	0.0 pp
MSME deposit rates FC	0.3%	0.3%	0.3%	0.0 pp	0.0 pp

 

Segment definition and PL

Business Segments

The segment definitions are as follows (updated in 2019):

· Corporate - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 12.0 million or which have been granted facilities with more than GEL 5.0 million. Some other business customers may also be assigned to the corporate segment or transferred to the MSME segment on a discretionary basis;

· Retail - non-business individual customers; all individual customers are included in retail deposits;

· MSME - business customers who are not included in the corporate segment; or legal entities which have been granted a pawn shop loan; or individual customers of the fully-digital bank, Space; and

· Corporate centre and other operations - comprises the Treasury, other support and back office functions, and non-banking subsidiaries of the Group.

Business customers are all legal entities or individuals who have been granted a loan for business purposes.

Income Statement by Segments

4Q'19	Retail	MSME	Corporate	Corp.Centre	Total
Interest income	147,780	81,014	107,974	55,386	392,154
Interest expense	(41,085)	(2,757)	(41,292)	(106,757)	(191,891)
Net gains from currency swaps	-			9,055	9,055
Net transfer pricing	(18,069)	(28,729)	869	45,929	-
Net interest income	88,626	49,528	67,551	3,613	209,318
Fee and commission income	60,488	7,837	12,770	5,656	86,751
Fee and commission expense	(26,483)	(2,777)	(2,133)	(515)	(31,907)
Net fee and commission income	34,005	5,061	10,637	5,141	54,844
Net insurance premium earned after claims and acquisition costs	-	-	-	5,659	5,659
Net income from foreign currency operations	8,018	6,304	13,311	(8,607)	19,026
Foreign exchange translation gains less losses/(losses less gains)	-	-	-	8,980	8,980
Net gains/(losses) from derivative financial instruments	2	-	-	(6)	(4)
Gains less Losses from Disposal of Investment Securities Measured at Fair Value through Other Comprehensive Income	-	-	-	20	20
Other operating income	2,032	187	1,211	2,846	6,276
Share of profit of associates	-	-	-	118	118
Other operating non-interest income and insurance profit	10,052	6,491	14,522	9,010	40,075
Credit loss allowance for loans to customers	(4,246)	6,797	2,597	-	5,148
Credit loss allowance for performance guarantees and credit related commitments	(13)	(235)	(42)	-	(290)
Credit loss allowance for investments in finance lease	-	-	-	615	615
Credit loss allowance for other financial assets	(3,683)	(11)	(228)	(1,243)	(5,165)
Credit loss allowance for financial assets measured at fair value through other comprehensive income	-	-	(49)	(35)	(84)
Profit before G&A expenses and income taxes	124,741	67,631	94,987	17,101	304,461
Staff costs	(34,765)	(12,379)	(11,059)	(10,731)	(68,934)
Depreciation and amortization	(7,247)	(1,253)	(280)	(1,141)	(9,921)
Provision for liabilities and charges	-	-	-	(2,632)	(2,632)
Administrative and other operating expenses	(17,448)	(4,480)	(4,646)	(19,063)	(45,637)
Operating expenses	(59,460)	(18,112)	(15,985)	(33,567)	(127,124)
Profit before tax	65,281	49,519	79,002	(16,466)	177,337
Income tax expense	(6,060)	(4,438)	(7,256)	441	(17,313)
Profit for the year	59,221	45,081	71,746	(16,025)	160,024

Consolidated Financial Statements of TBC Bank Group PLC

Consolidated Balance Sheet
In thousands of GEL		Dec-19			Sep-19
Cash and cash equivalents		1,003,583			1,349,260
Due from other banks		33,605			30,297
Mandatory cash balances with National Bank of Georgia		1,591,829			1,954,662
Loans and advances to customers		12,349,399			11,344,779
Investment securities measured at fair value through other comprehensive income		985,293			1,177,963
Bonds carried at amortized cost		1,022,684			871,640
Investments in finance leases		256,660			241,840
Investment properties		72,667			78,449
Current income tax prepayment		25,695			29,599
Deferred income tax asset		2,173			2,179
Other financial assets		133,736			243,330
Other assets		255,712			205,066
Premises and equipment		385,736			381,065
Right of use assets		59,693			59,040
Intangible assets		167,597			134,837
Goodwill		61,558			63,215
Investments in associates		2,654			2,536
TOTAL ASSETS		18,410,274			18,169,757
LIABILITIES
Due to credit institutions		3,593,901			3,613,093
Customer accounts		10,049,324			9,897,323
Lease liabilities		59,898			62,126
Other financial liabilities		113,608			96,781
Current income tax liability		1,634			1,128
Debt Securities in issue		1,213,598			1,251,649
Deferred income tax liability		21,331			21,142
Provisions for liabilities and charges		23,128			22,729
Other liabilities		95,162			88,672
Subordinated debt		591,035			615,939
TOTAL LIABILITIES		15,762,619			15,670,582
EQUITY
Share capital		1,682			1,682
Shares held by trust		(27,516)			(15)
Share premium		848,459			828,936
Retained earnings		1,953,364			1,794,060
Group re-organisation reserve		(162,167)			(162,167)
Share based payment reserve		(17,803)			(28,104)
Revaluation reserve for premises		56,374			56,606
Fair value reserve		(6,476)			7,345
Cumulative currency translation reserve		(6,850)			(6,367)
Net assets attributable to owners		2,639,067			2,491,976
Non-controlling interest		8,588			7,199
TOTAL EQUITY		2,647,655			2,499,175
TOTAL LIABILITIES AND EQUITY		18,410,274			18,169,757
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL	4Q'19		3Q'19			4Q'18
Interest income	392,154		366,472			355,543
Interest expense	(191,891)		(181,192)			(140,740)
Net gains from currency swaps	9,055		8,355			N/A
Net interest income	209,318		193,635			214,803
Fee and commission income	86,751		76,795			67,049
Fee and commission expense	(31,907)		(29,690)			(22,985)
Net fee and commission income	54,844		47,105			44,064
Net insurance premiums earned	12,386		9,821			7,023
Net insurance claims incurred and agents' commissions	(6,727)		(5,037)			(3,170)
Net insurance premium earned after claims and acquisition costs	5,659		4,784			3,853
Net income from foreign currency operations	19,026		25,266			28,258
Net gain/(losses) from foreign exchange translation	8,980		3,994			4,771
Net gains/(losses) from derivative financial instruments	(4)		(32)			(184)
Gains less losses from disposal of investment securities measured at fair value through other comprehensive income	20		2			-
Other operating income	6,276		4,831			16,485
Share of profit of associates	118		173			212
Other operating non-interest income	34,416		34,234			49,542
Credit loss allowance for loans to customers	5,148		(20,695)			(34,398)
Credit loss allowance for investments in finance lease	615		(211)			(779)
Credit loss allowance for performance guarantees and credit related commitments	(290)		(1,474)			(1,532)
Credit loss allowance for other financial assets	(5,165)		(3,513)			(7,305)
Credit loss allowance for financial assets measured at fair value through other comprehensive income	(84)		144			(22)
Operating income after credit loss allowance for impairment	304,461		254,009			268,226
Staff costs	(68,934)		(62,230)			(63,213)
Depreciation and amortization	(9,921)		(17,433)			(12,333)
(Provision for)/ recovery of liabilities and charges	(2,632)		(73)			-
Administrative and other operating expenses	(45,637)		(31,969)			(48,358)
Operating expenses	(127,124)		(111,705)			(123,904)
Profit before tax	177,337		142,304			144,322
Income tax expense	(17,313)		(15,527)			(14,235)
Profit for the period	160,024		126,777			130,087
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve	(13,828)		(5,327)			3,757
Exchange differences on translation to presentation currency	(483)		111			340
Items that will not be reclassified to profit or loss:
Revaluation of premises and equipment	-		-			10,749
Income tax recorded directly in other comprehensive income	-		-			2,788
Other comprehensive income for the period	(14,311)		(5,216)			17,634
Total comprehensive income for the period	145,713		121,561			147,721
Profit attributable to:
- Shareholders of TBCG	159,416		125,244			129,952
- Non-controlling interest	608		1,533			135
Profit for the period	160,024		126,777			130,087
Total comprehensive income is attributable to:
- Shareholders of TBCG	145,122		120,034			147,628
- Non-controlling interest	591		1,527			93
Totalcomprehensive income for the period	145,713		121,561			147,721

Key Ratios

Average Balances

The average balances included in this document are calculated as the average of the relevant monthly balances as of each month-end. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.

Key Ratios
Ratios (based on monthly averages, where applicable)	4Q'19	3Q'19	4Q'18
Profitability ratios:
ROE2	24.7%	20.4%	24.3%
ROA4	3.5%	2.8%	3.5%
ROE before credit loss allowance5	24.7%	24.6%	32.5%
Cost to Income7	41.8%	39.9%	39.7%
NIM8	5.3%	5.1%	6.7%
Risk Adjusted NIM9	5.4%	4.4%	5.4%
Loan Yields10	10.9%	10.8%	12.2%
Risk Adjusted Loan Yields11	11.0%	10.1%	10.9%
Deposit rates12	3.4%	3.2%	3.1%
Yields on interest Earning Assets13	9.9%	9.8%	11.1%
Cost of Funding14	4.9%	4.8%	4.4%
Spread15	5.2%	5.2%	6.6%
Asset quality and portfolio concentration:
Cost of Risk16	-0.2%	0.7%	1.4%
PAR 90 to Gross Loans17	1.1%	1.2%	1.2%
NPLs to Gross Loans18	2.7%	2.9%	3.1%
NPLs coverage19	91.1%	97.7%	102.7%
NPLs coverage with collateral20	194.2%	209.9%	216.4%
Credit loss level to Gross Loans21	2.5%	2.9%	3.2%
Related Party Loans to Gross Loans22	0.1%	0.1%	0.1%
Top 10 Borrowers to Total Portfolio23	8.3%	9.0%	10.1%
Top 20 Borrowers to Total Portfolio24	12.3%	13.0%	14.2%
Capital optimisation:
Net Loans to Deposits plus IFI Funding25	104.8%	96.9%	89.9%
Net Stable Funding Ratio26	126.7%	137.7%	129.3%*
Liquidity Coverage Ratio27	110.1%	131.6%	113.9%
Leverage28	7.0x	7.3x	7.0x
CET 1 CAR (Basel III)29	12.0%	11.9%	12.4%
Regulatory Tier 1 CAR (Basel III)30	14.6%	14.7%	12.8%
Regulatory Total 1 CAR (Basel III)31	19.1%	19.4%	17.9%

(*) Based on internal estimates

Ratio definitions

1. Underlying return on average total equity (ROE) equals underlying net income attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period adjusted for the respective one-off items; annualised where applicable.

2. Reported return on average total equity (ROE) equals net income attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; annualised where applicable.

3. Underlying return on average total assets (ROA) equals underlying net income of the period divided by monthly average total assets for the same period; annualised where applicable.

4. Reported return on average total assets (ROA) equals net income of the period divided by monthly average total assets for the same period; annualised where applicable.

5. Return on average total equity (ROE) before credit loss allowance equals net income attributable to owners excluding all credit loss allowance divided by the monthly average of total shareholders 'equity attributable to the PLC's equity holders for the same period.

6. Underlying cost to income ratio equals total underlying 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).

7. Reported 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).

8. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities excluding corporate shares, net investment in finance lease, net loans, and amounts due from credit institutions. The latter excludes all items from cash and cash equivalents, excludes EUR mandatory reserves with NBG that currently have negative interest, and includes other earning items from due from banks.

9. Risk Adjusted Net Interest Margin is NIM minus the cost of risk without one-offs and the currency effect.

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

11. Risk Adjusted Loan yield is loan yield minus the cost of risk without one-offs and currency effect.

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

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

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

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

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

17. 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.

18. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.

19. NPLs coverage ratio equals total credit loss allowance for loans to customers calculated per IFRS 9 divided by the NPL loans.

20. NPLs coverage with collateral ratio equals credit loss allowance for loans to customers per IFRS 9 plus the total collateral amount of NPL loans (excluding third party guarantees) discounted at 30-50% depending on segment type divided by the NPL loans.

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

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

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

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

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

26. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines.

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

28. Leverage equals total assets to total equity.

29. Regulatory CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with the Pillar 1 requirements of the NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC Bank stand-alone, based on local standards.

30. Regulatory tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the Pillar 1 requirements of the NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC Bank stand-alone, based on local standards.

31. Regulatory total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the Pillar 1 requirements of the NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC Bank stand-alone, based on local standards.

Exchange Rates

To calculate the QoQ growth of the Balance Sheet items without the currency exchange rate effect, we used the USD/GEL exchange rate of 2.9552 as of 30 September 2019. For the calculations of the YoY growth without the currency exchange rate effect, we used the USD/GEL exchange rate of 2.6766 as of 31 December 2018. As of 31 December 2019 the USD/GEL exchange rate equaled 2.8677. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: FY 2019 of 2.8192, FY 2018 of 2.5345, 4Q 2019 of 2.9458, 3Q 2019 of 2.9194, 4Q 2018 of 2.6752.

Unaudited Consolidated Financial Results Overview for FY 2019 

This statement provides a summary of the unaudited business and financial trends for FY 2019 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.

Starting from 1 January 2019, TBC Bank adopted IFRS 16. Therefore, the comparative information for 2018 is not comparable to the information presented for 2019.

TBC Bank Group PLC financial results are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and the Companies Act 2006 applicable to companies reporting under IFRS. The Group classifies and separately discloses certain incomes and expenses, which are non-recurring by nature and are caused by extraordinary events, as one-off items in order to provide a consistent view and enable better analysis of the financial performance of the Group. Adjusted performance is an alternative performance measure (APM) and the reconciliation of the underlying profit and loss items with the reported profit and loss items and the underlying ratios are given under Annex 3 section on pages 45-46.

Please note, that there might be slight differences in previous periods' figures due to rounding.

Net Interest Income

In FY 2019, net interest income amounted to GEL 801.5 million down by 3.0% YoY.

The YoY increase in interest income was primarily related to an increase in interest income from loans, which was related to growth of gross loan portfolio by GEL 2,289.4 million, or 22.1%. This effect was partially offset by a 1.3 pp drop in loan yields, mainly in the retail and MSME segments.  The decrease in retail loan yields was driven by a continued impact of the NGB's regulation from January 2019, which limits the banks' ability to lend money to higher-yield retail customers, while the decrease in MSME loan yields was in line with the overall market trend.

Over the same period, interest expense increased by GEL 157.6 million, or 31.1%, which was mainly related to interest expense from bonds issued in summer 2019, as well as the increase in interest expense from deposits. The latter was related both to growth in the respective portfolio by 7.5% YoY and to an increase in deposit cost by 0.1 pp over the same period.

In 2019, we re-classified net gains on currency swaps from other operating income to net interest income. More information is given in annex 4 on page 46.

Consequently, NIM stood at 5.6% in FY 2019, compared to 6.9% in FY 2018, while risk adjusted NIM for the same period amounted to 4.8%, down by 0.6 pp YoY.

In thousands of GEL	FY'19	FY'18	Change YoY
Interest income	1,436,843	1,284,235	11.9%
Interest expense	(663,860)	(506,213)	31.1%
Net gains from currency swaps	28,556	N/A	100%
Net interest income	801,539	778,022	3.0%
NIM	5.6%	6.9%	-1.3 pp
Risk adjusted NIM	4.8%	5.4%	-0.6 pp

Net fee and commission income

In FY 2019, net fee and commission income totalled GEL 187.3 million, up by 18.9% on a YoY basis.

The increase on a YoY basis was spread across all categories and was related to overall growth of business.

In thousands of GEL	FY'19	FY'18	Change YoY
Net fee and commission income
Card operations	56,037	50,174	11.7%
Settlement transactions	73,228	62,051	18.0%
Guarantees issued and letters of credit	30,289	23,414	29.4%
Other	27,736	21,891	26.7%
Total net fee and commission income	187,290	157,530	18.9%

Other Non-Interest Income

Total other non-interest income decreased by 8.2% on a YoY basis and amounted to GEL 139.4 million in FY 2019. This primarily resulted from decrease in other operating income due to high base last year as mentioned above. Another driver was the decrease in net income from foreign currency operations related to the re-classification of net gains on currency swaps. More information is given in annex 4 on page 46.

This decrease was partially offset by increase in net insurance premium earned after claims and acquisition costs, which increased by 50.8% YoY, mainly related to the increased scale of the insurance business. More information about TBC insurance can be found in Annex 5 on page 47.

In thousands of GEL	FY'19	FY'18	Change YoY
Other non-interest income
Net income from foreign currency operations	101,467	106,874	-5.1%
Net insurance premium earned after claims and acquisition costs[14]	18,510	12,275	50.8%
Other operating income	19,437	32,767	-40.7%
Total other non-interest income	139,414	151,916	-8.2%

Credit Loss Allowance

In FY 2019, total credit loss allowance amounted to GEL 92.0 million, down by 44.7% on a YoY basis. 

The decrease was mainly related to credit loss allowance on loans to customers, which was driven by strong performance in all segments, as well as the portfolio product mix change, related to the responsible lending regulation effective from 1 January 2019.

In thousands of GEL	FY'19	FY'18	Change YoY
Credit Loss Allowance
Credit loss allowance for loan to customers	(82,030)	(143,723)	-42.9%
Credit loss allowance for other transactions	(9,962)	(22,516)	-55.8%
Total credit loss allowance	(91,992)	(166,239)	-44.7%
Operating income after credit loss allowance	1,036,251	921,229	12.5%
Cost of risk	0.7%	1.6%	-0.9 pp

Operating Expenses

In FY 2019, total reported operating expenses expanded 9.7% on a YoY basis and amounted to GEL 450.8 million, while over the same period underlying operating expenses increased by 8.3% and stood at GEL 445.1 million.

The increase was primarily due to an increase in staff costs and a rise in depreciation and amortization. The increase in staff costs was due to expansion of business as well as increase in share price over the three year period for the purpose of top and middle management share based bonuses accruals. The increase in depreciation and amortization was mainly due to the adoption of IFRS 16 from January 2019, which led to the reclassification of leases from administrating expenses to depreciation. 

As a result, our cost to income ratio increased by 2.1 pp and stood 39.9% in FY 2019, while underlying cost to income was 39.5% up by 1.7 pp YoY.

In thousands of GEL	FY'19	FY'18	Change YoY
Operating expenses
Staff costs	(247,803)	(220,354)	12.5%
Provisions for liabilities and charges	(1,264)	(4,000)	-68.4%
Depreciation and amortization	(59,478)	(45,740)	30.0%
Administrative & other operating expenses	(142,181)	(140,935)	0.9%
Total Reported operating expenses	(450,726)	(411,029)	9.7%
Total Underlying operating expenses	(445,121)	(411,029)	8.3%
Reported Cost to income	39.9%	37.8%	2.1 pp
Underlying Cost to income	39.5%	37.8%	1.7 pp

Net Income

Reported net income for the full year 2019 increased by GEL 102.9 million, or 23.5% and stood at GEL 540.3 million. Without one-off items our net income would have increased by GEL 90.2 million, or 19.8% and amounted to GEL 545.1 million.

As a result, ROE stood at 22.4%, up by 0.4 pp YoY, while ROA remained unchanged and stood at 3.2%. Our underlying ROE stood at 22.6% down by 0.2 pp YoY, while ROA stood at 3.3% and remained the same over the same period.

In thousands of GEL	FY'19	FY'18	Change YoY
Profit before tax	585,525	510,200	14.8%
Income tax expense	(45,184)	(72,765)	-37.9%
Reported Profit for the period	540,341	437,435	23.5%
Underlying Profit for the period	545,105	454,861	19.8%
Reported ROE	22.4%	22.0%	0.4 pp
Underlying ROE	22.6%	22.8%	-0.2 pp
Reported ROA	3.2%	3.2%	0.0 pp
Underlying ROA	3.3%	3.3%	0.0 pp

Funding and Liquidity

	31-Dec-19	31-Dec-18	Change
Minimum net stable funding ratio, as defined by NBG	100.0%	N/A	N/A
Net stable funding ratio	126.7%	129.3%[15]	-2.6%
Net loans to deposits + IFI funding	104.8%	89.9%	14.9%
Leverage (Times)	7.0x	7.0x	0.0x
Minimum liquidity ratio, as defined by the NBG	30.0%	30.0%	0.0%
Liquidity ratio, as defined by the NBG	32.2%	33.3%	-1.1%
Minimum total liquidity coverage ratio, as defined by the NBG	100.0%	100.0%	0.0%
Minimum LCR in GEL, as defined by the NBG	75.0%	75.0%	0.0%
Minimum LCR in FC, as defined by the NBG	100.0%	100.0%	0.0%
Total liquidity coverage ratio, as defined by the NBG	110.1%	113.9%	-3.8%
LCR in GEL, as defined by the NBG	83.7%	102.5%	-18.8%
LCR in FC, as defined by the NBG	128.4%	121.1%	7.3%

Regulatory Capital

As of 31 December 2019, the Bank's Basel III CET 1 capital stood at 12.0%, down by 0.4 pp on a YoY basis. The drop was mainly driven by the increased portfolio and GEL depreciation during 2019. This effect was partially offset by net income generation over the same period.  Our Tier 1 and Total capital ratios increased by 1.8 pp and 1.2 pp respectively. The increase was mainly driven by income generation and issuance of AT1 instrument (in the amount of USD 125 million) in summer 2019.

In thousands of GEL	31-Dec-19	31-Dec-18	Change
CET 1 Capital	1,871,892	1,629,594	14.9%
Tier 1 Capital	2,281,706	1,678,716	35.9%
Total Capital	2,974,029	2,351,269	26.5%
Total Risk-weighted Exposures	15,593,925	13,154,872	18.5%
Minimum CET 1 ratio	10.4%	8.3%	2.1 pp
CET 1 Capital adequacy ratio	12.0%	12.4%	-0.4 pp
Minimum Tier 1 ratio	12.5%	10.3%	2.2 pp
Tier 1 Capital adequacy ratio	14.6%	12.8%	1.8 pp
Minimum total capital adequacy ratio	17.5%	15.8%	1.7 pp
Total Capital adequacy ratio	19.1%	17.9%	1.2 pp

Loan Portfolio

As of 31 December 2019, the gross loan portfolio reached GEL 12,662.0 million, up by 22.1% YoY, or by 17.9% on a constant currency basis. This was mainly supported by growth in the corporate segments (as well as by the re-segmentation  of certain clients from the MSME segment in 1Q 2019 in the amount of GEL 128.0 mln). Over the same period, the proportion of gross loans denominated in foreign currency decreased by 1.4 pp on a YoY basis and accounted for 58.7% of total loans, while on a constant currency basis the proportion of gross loans denominated in foreign currency increased by 2.9 pp and stood at 57.2%.

At the end of December 2019, our market share in total loans stood at 39.5% up by 0.7 pp YoY, while our loan market share in legal entities was 38.9% up by 1.6 pp YoY, and our loan market share in individuals stood at 40.0% and remained the same YoY.

In thousands of GEL	31-Dec-19	31-Dec-18	Change
Loans and advances to customers
Retail	5,053,203	4,698,699	7.5%
Retail loans  GEL	2,386,750	2,063,283	15.7%
Retail loans FC	2,666,453	2,635,416	1.2%
Corporate	4,660,473	3,177,289	46.7%
Corporate loans  GEL	1,424,309	905,372	57.3%
Corporate loans FC	3,236,164	2,271,917	42.4%
MSME	2,948,279	2,496,594	18.1%
MSME loans  GEL	1,419,804	1,170,343	21.3%
MSME loans FC	1,528,475	1,326,251	15.2%
Total loans and advances to customers	12,661,955	10,372,582	22.1%

	FY'19	FY'18	Change YoY
Loan yields	11.0%	12.3%	-1.3 pp
Loan yields  GEL	15.7%	17.8%	-2.1 pp
Loan yields FC	7.8%	8.5%	-0.7 pp
Retail Loan Yields	12.1%	14.2%	-2.1 pp
Retail loan yields  GEL	18.0%	20.8%	-2.8 pp
Retail loan yields FC	7.3%	7.9%	-0.6 pp
Corporate Loan Yields	9.3%	9.5%	-0.2 pp
Corporate loan yields  GEL	11.6%	11.0%	0.6 pp
Corporate loan yields FC	8.4%	9.0%	-0.6 pp
MSME Loan Yields	11.4%	12.1%	-0.7 pp
MSME loan yields  GEL	15.4%	16.2%	-0.8 pp
MSME loan yields FC	7.7%	8.7%	-1.0 pp

Loan Portfolio Quality

The total PAR 30 improved by 0.3 pp on a YoY basis, driven by the retail segment, while total NPLs stood at 2.7%, down by 0.4 pp, which was primarily attributable to the strong performance of the corporate and MSME segments.

Par 30	31-Dec-19	31-Dec-18	Change
Retail	2.1%	2.6%	-0.5 pp
Corporate	0.5%	0.4%	0.1 pp
MSME	2.8%	2.8%	0.0 pp
Total Loans	1.7%	2.0%	-0.3 pp

Non-performing Loans	31-Dec-19	31-Dec-18	Change
Retail	3.0%	2.9%	0.1 pp
Corporate	1.8%	2.7%	-0.9 pp
MSME	3.8%	4.2%	-0.4 pp
Total Loans	2.7%	3.1%	-0.4 pp

NPLs Coverage	Dec-19		Dec-18
	Exc. Collateral	Incl. Collateral	Exc. Collateral	Incl. Collateral
Corporate	97.1%	241.4%	96.2%	286.9%
Retail	111.1%	182.9%	132.4%	204.4%
MSME	59.7%	173.7%	68.4%	174.0%
Total	91.1%	194.2%	102.7%	216.4%

Cost of risk 

The total cost of risk for FY 2019 stood at 0.7%, down by 0.9 pp YoY, driven by the change of product mix, as well as by robust credit quality across all segments,related to the responsible lending regulation effective from 1 January 2019. 

Cost of Risk	FY'19	FY'18	Change YoY
Retail	1.6%	2.7%	-1.1 pp
Corporate	-0.1%	0.4%	-0.5 pp
MSME	0.3%	0.7%	-0.4 pp
Total	0.7%	1.6%	-0.9 pp

 Deposit Portfolio

 

The total deposit portfolio increased by 7.5% YoY and amounted to GEL 10,049.3 million, while on a constant currency basis the total deposit portfolio was up by 2.9%. The proportion of deposits denominated in foreign currency increased by 0.2 pp on a YoY basis and accounted for 65.9% of total deposits, while on a constant currency basis the proportion of deposits denominated in foreign currency increased by 1.3 pp and stood at 64.4%.

By the end December 2019, our market share in deposits amounted to 39.0% down by 2.2 pp YoY, and our market share in deposits to legal entities stood at 40.6% down by 0.7 pp. Our market share in deposits to individuals stood at 37.9%, down by 3.3 pp YoY.

In thousands of GEL	31-Dec-19	31-Dec-18	Change
Customer Accounts
Retail	5,673,917	5,103,971	11.2%
Retail deposits  GEL	1,098,681	935,339	17.5%
Retail deposits FC	4,575,236	4,168,632	9.8%
Corporate	3,187,319	3,230,653	-1.3%
Corporate deposits  GEL	1,735,746	1,754,282	-1.1%
Corporate deposits FC	1,451,573	1,476,371	-1.7%
MSME	1,188,088	1,017,518	16.8%
MSME deposits  GEL	594,388	515,827	15.2%
MSME deposits FC	593,700	501,691	18.3%
Total Customer Accounts	10,049,324	9,352,142	7.5%

	FY'19	FY'18	Change YoY
Deposit rates	3.3%	3.2%	0.1 pp
Deposit rates GEL	5.8%	5.6%	0.2 pp
Deposit rates FC	2.0%	2.1%	-0.1 pp
Retail Deposit Yields	2.8%	2.7%	0.1 pp
Retail deposit rates GEL	5.0%	4.4%	0.6 pp
Retail deposit rates FC	2.3%	2.4%	-0.1 pp
Corporate Deposit Yields	4.9%	4.9%	0.0 pp
Corporate deposit rates GEL	7.4%	7.5%	-0.1 pp
Corporate deposit rates FC	1.7%	1.9%	-0.2 pp
MSME Deposit Yields	0.9%	1.0%	-0.1 pp
MSME deposit rates GEL	1.5%	1.7%	-0.2 pp
MSME deposit rates FC	0.3%	0.4%	-0.1 pp

 

Segment definition and PL

Business Segments

The segment definitions are as follows (updated in 2019):

· Corporate - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 12.0 million or which have been granted facilities of more than GEL 5.0 million. Some other business customers may also be assigned to the corporate segment or transferred to the MSME segment on a discretionary basis;

· Retail - non-business individual customers; all individual customers are included in retail deposits;

· MSME - business customers who are not included in the corporate segment; or legal entities which have been granted a pawn shop loan; or individual customers of the fully-digital bank, Space; and

· Corporate centre and other operations - comprises the Treasury, other support and back office functions, and non-banking subsidiaries of the Group.

Business customers are all legal entities or individuals who have been granted a loan for business purposes.

Income Statement by Segments

FY'19	Retail	MSME	Corporate	Corp.Centre	Total
Interest income	582,788	299,451	356,652	197,952	1,436,843
Interest expense	(152,751)	(10,202)	(160,064)	(340,843)	(663,860)
Net gains on currency swaps	-	-	-	28,556	28,556
Net transfer pricing	(66,951)	(101,424)	31,352	137,023	-
Net interest income	363,086	187,825	227,940	22,688	801,539
Fee and commission income	207,258	26,271	49,338	10,564	293,431
Fee and commission expense	(88,679)	(9,081)	(7,069)	(1,312)	(106,141)
Net fee and commission income	118,579	17,190	42,269	9,252	187,290
Net insurance premium earned after claims and acquisition costs	-	-	-	18,510	18,510
Net income from foreign currency operations	30,990	24,220	49,851	(25,782)	79,279
Foreign exchange translation gains less losses/(losses less gains)	-	-	-	22,188	22,188
Net gains/(losses) from derivative financial instruments	(264)	-	-	(16)	(280)
Gains less Losses from Disposal of Investment Securities Measured at Fair Value through Other Comprehensive Income	-	-	-	169	169
Other operating income	9,563	1,093	2,953	5,307	18,916
Share of profit of associates	-	-	-	632	632
Other operating non-interest income and insurance profit	40,289	25,313	52,804	21,008	139,414
Credit loss allowance for loans to customers	(77,323)	(7,968)	3,261	-	(82,030)
Credit loss allowance for performance guarantees and credit related commitments	411	124	(2,691)	-	(2,156)
Credit loss allowance for investments in finance lease	-	-	-	582	582
Credit loss allowance for other financial assets	(3,545)	(11)	2,211	(6,753)	(8,098)
Credit loss allowance for financial assets measured at fair value through other comprehensive income	-	-	(141)	(149)	(290)
Profit before G&A expenses and income taxes	441,497	222,473	325,653	46,628	1,036,251
Staff costs	(134,143)	(48,018)	(38,360)	(27,282)	(247,803)
Depreciation and amortization	(45,522)	(7,210)	(2,571)	(4,175)	(59,478)
Provision for liabilities and charges	-	-	-	(1,264)	(1,264)
Administrative and other operating expenses	(77,563)	(21,094)	(17,127)	(26,397)	(142,181)
Operating expenses	(257,228)	(76,322)	(58,058)	(59,118)	(450,726)
Profit before tax	184,269	146,151	267,595	(12,490)	585,525
Income tax expense	(18,101)	(14,825)	(29,048)	16,790	(45,184)
Profit for the year	166,168	131,326	238,547	4,300	540,341

Consolidated Financial Statements of TBC Bank Group PLC

Consolidated Balance Sheet
In thousands of GEL	Dec-19		Dec-18
Cash and cash equivalents	1,003,583		1,166,911
Due from other banks	33,605		47,316
Mandatory cash balances with National Bank of Georgia	1,591,829		1,422,809
Loans and advances to customers	12,349,399		10,038,452
Investment securities measured at fair value through other comprehensive income	985,293		1,005,239
Bonds carried at amortized cost	1,022,684		654,203
Investments in finance leases	256,660		203,802
Investment properties	72,667		84,296
Current income tax prepayment	25,695		2,116
Deferred income tax asset	2,173		2,097
Other financial assets	133,736		167,518
Other assets	255,712		192,792
Premises and equipment	385,736		367,504
Right of use assets	59,693		-
Intangible assets	167,597		109,220
Goodwill	61,558		31,286
Investments in associates	2,654		2,432
TOTAL ASSETS	18,410,274		15,497,993
LIABILITIES
Due to credit institutions	3,593,901		3,031,503
Customer accounts	10,049,324		9,352,142
Lease liabilities	59,898		-
Other financial liabilities	113,608		98,714
Current income tax liability	1,634		63
Debt Securities in issue	1,213,598		13,343
Deferred income tax liability	21,331		22,237
Provisions for liabilities and charges	23,128		18,767
Other liabilities	95,162		104,337
Subordinated debt	591,035		650,919
TOTAL LIABILITIES	15,762,619		13,292,025
EQUITY
Share capital	1,682		1,650
Shares held by trust	(27,516)		-
Share premium	848,459		796,854
Retained earnings	1,953,364		1,523,879
Group re-organisation reserve	(162,167.00)		(162,168)
Share based payment reserve	(17,803)		(16,294)
Revaluation reserve for premises	56,374		57,240
Fair value reserve	(6,476)		8,680
Cumulative currency translation reserve	(6,850)		(6,935)
Net assets attributable to owners	2,639,067		2,202,906
Non-controlling interest	8,588		3,062
TOTAL EQUITY	2,647,655		2,205,968
TOTAL LIABILITIES AND EQUITY	18,410,274		15,497,993
Consolidated Statement of Profit or Loss and Other Comprehensive Income
In thousands of GEL		FY'19	FY'18
Interest income		1,436,843	1,284,235
Interest expense		(663,860)	(506,213)
Net gains from currency swaps		28,556	N/A
Net interest income		801,539	778,022
Fee and commission income		293,431	235,701
Fee and commission expense		(106,141)	(78,171)
Net fee and commission income		187,290	157,530
Net insurance premiums earned		38,199	23,601
Net insurance claims incurred and agents' commissions		(19,689)	(11,326)
Net insurance premium earned after claims and acquisition costs		18,510	12,275
Net income from foreign currency operations		79,279	91,678
Net gain/(losses) from foreign exchange translation		22,188	15,196
Net gains/(losses) from derivative financial instruments		(280)	173
Gains less losses from disposal of investment securities measured at fair value through other comprehensive income		169	2
Other operating income		18,916	31,438
Share of profit of associates		632	1,154
Other operating non-interest income		120,904	139,641
Credit loss allowance for loans to customers		(82,030)	(143,723)
Credit loss allowance for investments in finance lease		582	(1,765)
Credit loss allowance for performance guarantees and credit related commitments		(2,156)	(4,056)
Credit loss allowance for other financial assets		(8,098)	(16,609)
Credit loss allowance for financial assets measured at fair value through other comprehensive income		(290)	(86)
Operating income after credit loss allowance for impairment		1,036,251	921,229
Staff costs		(247,803)	(220,354)
Depreciation and amortization		(59,478)	(45,740)
(Provision for)/ recovery of liabilities and charges		(1,264)	(4,000)
Administrative and other operating expenses		(142,181)	(140,935)
Operating expenses		(450,726)	(411,029)
Profit before tax		585,525	510,200
Income tax expense		(45,184)	(72,765)
Profit for the period		540,341	437,435
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve		(15,156)	6,949
Exchange differences on translation to presentation currency		85	425
Items that will not be reclassified to profit or loss:
Revaluation of premises and equipment		-	10,749
Income tax recorded directly in other comprehensive income		-	(2,363)
Other comprehensive income for the period		(15,071)	15,760
Total comprehensive income for the period		525,270	453,195
Profit attributable to:
- Shareholders of TBCG		537,895	435,078
- Non-controlling interest		2,446	2,357
Profit for the period		540,341	437,435
Total comprehensive income is attributable to:
- Shareholders of TBCG		522,843	450,901
- Non-controlling interest		2,427	2,294
Totalcomprehensive income for the period		525,270	453,195

Consolidated Statements of Cash Flows
In thousands of GEL	31-Dec-19	31-Dec-18
Cash flows from/(used in) operating activities
Interest received	1,388,852	1,224,606
Interest paid	(647,427)	(501,984)
Fees and commissions received	282,715	235,508
Fees and commissions paid	(106,526)	(78,140)
Insurance premium received	76,101	54,682
Insurance claims paid	(21,787)	(15,174)
Income received from trading in foreign currencies	79,287	91,678
Other operating income received	44,248	11,407
Staff costs paid	(216,465)	(202,897)
Administrative and other operating expenses paid	(169,582)	(136,670)
Income tax paid	(70,413)	(34,918)
Cash flows from operating activities before changes in operating assets and liabilities	639,003	648,098
Net change in operating assets
Due from other banks and mandatory cash balances with the National Bank of Georgia	(22,009)	(343,772)
Loans and advances to customers	(2,013,577)	(1,718,446)
Investment in finance lease	(43,719)	(54,784)
Other financial assets	19,612	(35,570)
Other assets	1,577	(4,486)
Net change in operating liabilities
Due to other banks	(1,938)	69,755
Customer accounts	272,023	1,371,675
Other financial liabilities	(8,267)	(12,136)
Change in finance lease liabilities	(6,453)
Other liabilities and provision for liabilities and charges	5,816	3,618
Net cash flows (used in)/from operating activities	(1,157,932)	(76,048)
Cash flows from/(used in) investing activities
Acquisition of investment securities measured at fair value through other comprehensive income	(1,781,816)	(717,729)
Proceeds from disposal of investment securities measured at fair value through other comprehensive income	240,603	14,781
Proceeds from redemption at maturity of investment securities measured at fair value through other comprehensive income	1,598,536	370,571
Acquisition of subsidiaries, net of cash acquired	(39,297)	809
Acquisition of bonds carried at amortised cost	(613,383)	(395,717)
Proceeds from redemption of bonds carried at amortised cost	216,871	200,658
Acquisition of premises, equipment and intangible assets	(120,333)	(89,263)
Proceeds from disposal of premises, equipment and intangible assets	13,225	813
Cash acquired	2,996	-
Proceeds from disposal of investment property	13,338	42,515
Net cash used in investing activities	(469,260)	(572,562)
Cash flows from/(used in) financing activities
Proceeds from other borrowed funds	1,819,899	1,776,489
Redemption of other borrowed funds	(1,392,897)	(1,515,562)
Proceeds from subordinated debt	-	255,900
Redemption of subordinated debt	(104,079)	(60,910)
Proceeds from debt securities in issue	1,176,049	(7,596)
Redemption of debt securities in issue	(14,296)	-
Dividends paid	(91,928)	(85,484)
Acquisition of non-controlling interest in subsidiary	-	-
Net cash flows from financing activities	1,392,748	362,837
Effect of exchange rate changes on cash and cash equivalents	71,116	21,207
Net increase in cash and cash equivalents	(163,328)	(264,566)
Cash and cash equivalents at the beginning of the year	1,166,911	1,431,477
Cash and cash equivalents at the end of the year	1,003,583	1,166,911

Key Ratios

Average Balances

The average balances included in this document are calculated as the average of the relevant monthly balances as of each month-end. Balances have been extracted from TBC's unaudited and consolidated management accounts, which were prepared from TBC's accounting records. These were used by the management for monitoring and control purposes.

Key Ratios
Ratios (based on monthly averages, where applicable)	FY'19	FY'18
Profitability ratios:
Underlying ROE1	22.6%	22.8%
Reported ROE2	22.4%	22.0%
Underlying ROA3	3.3%	3.3%
Reported ROA4	3.2%	3.2%
ROE before credit loss allowance5	26.3%	30.4%
Underlying Cost to Income6	39.5%	37.8%
Reported Cost to Income7	39.9%	37.8%
NIM8	5.6%	6.9%
Risk Adjusted NIM9	4.8%	5.4%
Loan Yields10	11.0%	12.3%
Risk Adjusted Loan Yields11	10.3%	10.8%
Deposit rates12	3.3%	3.2%
Yields on interest Earning Assets13	10.0%	11.4%
Cost of Funding14	4.7%	4.4%
Spread15	5.5%	7.0%
Asset quality and portfolio concentration:
Cost of Risk16	0.7%	1.6%
PAR 90 to Gross Loans17	1.1%	1.2%
NPLs to Gross Loans18	2.7%	3.1%
NPLs coverage19	91.1%	102.7%
NPLs coverage with collateral20	194.2%	216.4%
Credit loss level to Gross Loans21	2.5%	3.2%
Related Party Loans to Gross Loans22	0.1%	0.1%
Top 10 Borrowers to Total Portfolio23	8.3%	10.1%
Top 20 Borrowers to Total Portfolio24	12.3%	14.2%
Capital optimisation:
Net Loans to Deposits plus IFI Funding25	104.8%	89.9%
Net Stable Funding Ratio26	126.7%	129.3%*
Liquidity Coverage Ratio27	110.1%	113.9%
Leverage28	7.0x	7.0x
CET 1 CAR (Basel III)29	12.0%	12.4%
Regulatory Tier 1 CAR (Basel III)30	14.6%	12.8%
Regulatory Total 1 CAR (Basel III)31	19.1%	17.9%

(*) Based on internal estimates

Ratio definitions

1. Underlying return on average total equity (ROE) equals underlying net income attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period adjusted for the respective one-off items; annualised where applicable.

2. Reported return on average total equity (ROE) equals net income attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; annualised where applicable.

3. Underlying return on average total assets (ROA) equals underlying net income of the period divided by monthly average total assets for the same period; annualised where applicable.

4. Reported return on average total assets (ROA) equals net income of the period divided by monthly average total assets for the same period; annualised where applicable.

5. Return on average total equity (ROE) before credit loss allowance equals net income attributable to owners excluding all credit loss allowance divided by the monthly average of total shareholders 'equity attributable to the PLC's equity holders for the same period.

6. Underlying cost to income ratio equals total underlying 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).

7. Reported 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).

8. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities excluding corporate shares, net investment in finance lease, net loans, and amounts due from credit institutions. The latter excludes all items from cash and cash equivalents, excludes EUR mandatory reserves with NBG that currently have negative interest, and includes other earning items from due from banks.

9. Risk Adjusted Net Interest Margin is NIM minus the cost of risk without one-offs and the currency effect.

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

11. Risk Adjusted Loan yield is loan yield minus the cost of risk without one-offs and currency effect.

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

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

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

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

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

17. 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.

18. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.

19. NPLs coverage ratio equals total credit loss allowance for loans to customers calculated per IFRS 9 divided by the NPL loans.

20. NPLs coverage with collateral ratio equals credit loss allowance for loans to customers per IFRS 9 plus the total collateral amount of NPL loans (excluding third party guarantees) discounted at 30-50% depending on segment type divided by the NPL loans.

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

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

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

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

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

26. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines.

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

28. Leverage equals total assets to total equity.

29. Regulatory CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with the Pillar 1 requirements of the NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC Bank stand-alone, based on local standards.

30. Regulatory tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the Pillar 1 requirements of the NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC Bank stand-alone, based on local standards.

31. Regulatory total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the Pillar 1 requirements of the NBG Basel III standards. The reporting started from the end of 2017. Calculations are made for TBC Bank stand-alone, based on local standards.

Exchange Rates

To calculate the YoY growth of the Balance Sheet items without the currency exchange rate effect, we used the USD/GEL exchange rate of 2.6766 as of 31 December 2018. As of 31 December 2019, the USD/GEL exchange rate equalled 2.8677. For P&L items growth calculations without currency effect, we used the average USD/GEL exchange rate for the following periods: FY 2019 of 2.8192, FY 2018 of 2.5345.

Additional Disclosures

1)  Subsidiaries of TBC Bank Group PLC[16] 

	Ownership / voting % as of 31 December 2019	Country	Year of incorporation	Industry	Total Assets  (after elimination)
Subsidiary					Amount GEL'000	% in TBC Group
JSC TBC Bank	99.9%	Georgia	1992	Banking	17,892,883	97.21%
United Financial Corporation JSC	98.7%	Georgia	1997	Card processing	10,015	0.05%
TBC Capital LLC	100.0%	Georgia	1999	Brokerage	4,471	0.02%
TBC Leasing JSC	100.0%	Georgia	2003	Leasing	322,188	1.75%
TBC Kredit LLC	100.0%	Azerbaijan	1999	Non-banking credit institution	24,700	0.14%
TBC Pay LLC	100.0%	Georgia	2009	Processing	33,793	0.18%
Index LLC	100.0%	Georgia	2011	Real estate management	925	0.01%
TBC Invest LLC	100.0%	Israel	2011	PR and marketing	341	0.00%
JSC TBC Insurance	100.0%	Georgia	2014	Insurance	62,965	0.33%
Redmed LLC	100.0%	Georgia	2019	E-commerce	370	0.00%
TBC International LLC	100.0%	Georgia	2019	Asset management	367	0.00%
Swoop JSC	100.0%	Georgia	2010	Retail Trade	409	0.00%
LLC Online Tickets	55.0%	Georgia	2015	Software Services	2,434	0.01%
TKT UZ	75.00%	Uzbekistan	2019	Retail Trade	236	0.00%
My.ge LLC	65.0%	Georgia	2008	E-commerce, Housing and Auto	5,637	0.03%
LLC Vendoo (Geo)	100.0%	Georgia	2019	Retail Leasing	4,117	0.02%
LLC Mypost	100.0%	Georgia	2019	Postal Service	96	0.00%
LLC Billing Solutions	51.00%	Georgia	2019	Software Services	344	0.00%
All property.ge LLC	90.0%	Georgia	2013	Real estate management	1,179	0.01%
LLC F Solutions	100.00%	Georgia	2019	Software Services	10	0.00%
Inspired LLC	51.0%	Uzbekistan	2011	Processing	3,973	0.02%
LLC Vendoo (UZ Leasing)	100.00%	Uzbekistan	2019	Consumer financing	1,059	0.01%

2)  Update on strategic objectives

Our mission: Make life easier

Financial services with a strong focus on digital:

o  Book value as of 31 December 2019 - GEL 2.5 billion

o  Total assets as of 31 December 2019 - GEL 18.4 billion

o  Number of customers as of 31 December 2019 - 2.6 million

Ecosystems:

o  Revenue[17] - GEL 81.2 million for FY 2019, up by 79% YoY

o  Net profit[18] - GEL 37.9 million for FY 2019, up by 101% YoY

o  Number of visitors[19] in September 2019 -5.4 million

o  TBC Bank drives 22% of the ecosystems' revenue

Our customer centric ecosystems

We are increasing our touchpoints with customers by creating secure customer centric digital ecosystems that help our customers to satisfy their needs in the most convenient and seamless way possible.

Our ambitions are to:

o  Establish new standards of customer experience;

o  Facilitate digital sales and engagement;

o  Create new revenue streams; and

o  Collect more valuable customer data.

Payments ecosystem[20]

	FY 19	FY 18	Change
Number of payments (million)	332.6	253.6	31.2%
Payments ecosystem	236.4	172.7	36.9%
Other payments business	96.2	80.9	18.9%
Volume of payments (GEL billion)	154.1	126.6	21.7%
Payments ecosystem	11.8	8.8	34.1%
Other payments business	142.3	117.8	20.8%

o  We are Number 1 in E-com & POS transactions volume, with a market share of above 53%;[21]

o  We are among the world's best with over 86% of payments being contactless;[22] and

o  We have a great innovation record, with a lot of "first in the region" payment innovations such as stickers, P2P, contactless cash withdrawal, Voice payments, Apple Pay, ATM QR withdrawal and TBC Bracelets.

Our aspirations

o  Annual growth rate for payments commission income of 20%;

o  Increase annual net revenue from GEL 109 million (with 42% contribution from ecosystems) in 2018 to GEL 218 million by 2022.

TBC Pay

TBC Pay is one of Georgia's leading payment companies. TBC Pay operates a wide network of self-service terminals all over Georgia.

Services:

o  Traditional services: self-service terminals and an online platform (www.tbcpay.ge) that enable individuals to perform payments for various daily services instantly, in an interactive way, on a 24-hour basis;

o  New services: mobile application; the easiest instant money transfer services between Georgian cards; template management and e-wallet.

Financials:

o  The business is self-sustainable;

o  TBC Bank drives 25% of TBC Pay's revenue.

	FY 19	FY 20 F[23]
Revenue (GEL million)	33.7	34.2
Number of transactions (million)	53.0	55.8
EBITDA (GEL million)	16.9

Update for 4Q 2019:

In 4Q 2019, the volume and number of transactions increased by 7.9% and 4.2% QoQ, respectively.

Payme

Payme is a leading digital payment service provider in Uzbekistan, which supplies high-quality payment solutions to its 1.8 million users.[24]

Services:

o  Traditional services: Utility payments, P2P transfers, Loan repayments, mPOS for QR-based payments, E-commerce purchases;

o  New services: a new application, Payme 2.0, was created and the beta version was launched in July with an upgraded interface design and new capabilities.

Financials:

o  Investment in 2019 - USD 5.5 million for a 51% shareholding;

o  The business is self-sustainable and generating a positive cashflow.

	FY 19	FY 20 F[25]
Revenue (GEL million)	8.6	12.3
Number of registered users (thousand)	1,772	2,800
Number of transactions (million)	40.1	52.5
EBITDA (GEL million)	4.5

Update for 4Q 2019:

For FY 2019, revenue and EBITDA increased by 84.0% and 76.9%, respectively.

Housing ecosystem

Livo

Livo is the first housing digital ecosystem in Georgia, offering the full range of services needed when buying or renting a home, with an estimated share of the total digital traffic of 20%[26].

Services:

o  Traditional services: personal profiles, advertisements and 3D tours & photographers;

o  Innovative services: mortgage loans (TBC and VTB Bank) the first real-estate valuation service in Georgia within 24 hours, premier agent service for brokers.

Financials:

o  Investment in 2019 - USD 980,000 (USD 225,000 for 90% shareholding plus USD 755,000 for future development);

o  Planned investment in 2020 is GEL 2.0 million from TBC;

o  Break-even is planned in 3Q 2020;

o  TBC Bank drives 85% of Livo's revenue, which we plan to reduce to 65% in 2020.

Key financial data	FY 19	FY 20 F
Revenue (GEL million)	2.5/2.2[27]	5.2
EBITDA (GEL million)	-0.6

Key operating data	Dec - 19	Dec - 20 F
Number of unique visitors (thousand)[28]	274	350
Number of listings (thousand)	24	50

Update for 4Q 2019:

o  In 4Q 2019, the following services were added: mortgage insurance, a special service package for developers, and lead generation for developers and information about air pollution;

o  The number of listings increased by 41.2% in December compared to September;

MyHome.ge

MyHome.ge is the leading classified digital platform in Georgia for real-estate purchase and renting, with an estimated share of the total digital traffic of 35%.[29]

Services:

o  Traditional services: personal profiles, advertisements, drone & photographers;

o  Given the large number of current visitors, the strategy for 2020 is to diversify service offerings and increase revenue streams. 

Financials:

o  Allocated initial investment in August 2019, based on revenue contribution (35%), was GEL 6.7 million;[30]

o  The business is self-sustainable.

Key financial data	FY 19	FY 20 F
Revenue (GEL million)	1.4	2.2
EBITDA (GEL million)	0.4

Key operating data	Dec - 19	Dec - 20 F
Number of unique visitors (thousand)[31]	360	430
Number of listings (thousand)	140	145

Update for 4Q 2019

o  A dedicated module was added for developers, which allows them to manage their offerings easily;

o  The number of listings increased by 7.7% in December, compared to September.

E-commerce ecosystem

Vendoo

Vendoo is an asset light platform that acts a key intermediary between buyers and sellers, modelled on industry peers such as Alibaba and Rakuten.

The estimated total addressable market was around GEL 200 million in 2019, and is expected to grow by 30% in 2020.

Offerings:

o  Delivery within 24 hours;

o  Over 230 large merchants and following offerings: Electronics, personal care products, gardening & housing, toys, household chemistry, books & stationary and beverages; and

o  Synergies with our banking operations: installment loans, participation in a loyalty program called "Ertguli".

Financials:

o  Investment in 2018-2019 was GEL 7.2 million. In 2020, TBC plans to invest a further GEL 1.7 million;

o  Break-even is planned in 4Q 2021;

o  GMV[32] was GEL 2.9 mln in 2019 and is forecasted to reach GEL 14.0 million in 2020.

Key financial data[33]	FY 19	FY 20 F [34]
Revenue (GEL million)	2.4	12.0
EBITDA (GEL million)	(4.4)

Key operating data	Dec - 19	Dec - 20 F
Number of unique visitors (thousand)	337	500
SKUs[35] (thousand)	27	50

Update for 4Q 2019

o  GMV more than tripled QoQ and reached GEL 2.1 million in 4Q as a result of our wide-scale seasonal campaigns, while the number of SKUs increased by 35%;

o  Significantly strengthened its operations to meet the high demand.

MyMarket.ge & MyShop.ge

These platforms are the number one players in C2C and B2C e-commerce in Georgia, with an estimated share of the total digital traffic of 80%.[36]

Offerings:

o  Myshop is an online outlet platform offering a wide range of products;

o  Mymarket offers both brand new and secondary products as well as various household services.

Financials:

o  Allocated initial investment in August 2019 based on revenue contribution (22%) was GEL 4.2 million[37];

o  The business is self-sustainable.

Key financial data	FY 19	FY 20 F
Revenue (GEL million)	1.2	1.6
EBITDA (GEL million)	0.3

Key operating data	Dec - 19	Dec - 20 F
Number of unique visitors (thousand)	900	1,000
Number of sellers (thousand)	45	50

Update for 4Q 2019

o  Completely redesigned interface of Mymarket.ge webpage;

o  The number of unique visitors increased by 7.5% in December compared to September;

o  The number of sellers increased by 28.6% in December compared to September.

 Auto ecosystem

MyAuto.ge & MyParts.ge

MyAuto.ge and MyParts.ge are the market leader in automotive and spare parts, with an estimated share of the total digital traffic of 80%[38] in each.

Offerings:

o  Purchase and renting of secondary cars;

o  Purchase of auto parts;

o  MyAuto.ge has 50 dealers and 33,000 sellers;

o  MyParts.ge has 44 Merchants and 8,440 sellers.

Financials:

o  Allocated initial investment in August 2019 based on revenue contribution (43%) was GEL 8.5 million[39];

o  The business is self-sustainable. 

Key financial data	FY 19	FY 20 F
Revenue (GEL million)	2.5	3.6
EBITDA (GEL million)	0.9

Key operating data	Dec - 19	Dec - 20 F
Number of unique visitors (thousand)	1,550	1,600
Number of listings (thousand)	400	450

Update for 4Q 2019:

o  The number of unique visitors increased by 11.4% in December compared to September;

o  The number of listings increased by 15.9% in December compared to September.

Space - Fully digital bank

Space was developed over the course of just 8 months[40] by a dedicated team of 35 professionals. Development costs before the launch of Beta version in May 2019 amounted to GEL 1.4 million. 

Key metrics as of 31 December 2019

Number of downloads	508 thousand
Total registered customers	181 thousand, out of whom 46% are TBC's dormant customers
Number of transactions (4Q'19)	1.2 mln, out of which 8% was conducted by TBC cards and 8% by other Georgian banks' cards
Transaction amount (4Q'19)	GEL 62 million, out of which 12% was conducted by TBC cards and 11% by other Georgian banks' cards
Loan portfolio	GEL 27 million
Number of borrowers	10 thousand
Number of total cards	121 thousand, out of which 27% was TBC cards and 18% other Georgian banks' cards
Number of space cards	65 thousand

Our Products

o  Instant Consumer Loan 24/7;

o  Instant Money Transfer to any bank 24/7;

o  Use app with other bank cards;

o  Mobile top and bill payments;

o  QR instalments; and

o  Deposits.

Transformation into a data driven organization

The goal is to strengthen TBC's market leading position by becoming a data driven organization.

Why?

In order to become customer centric company and reach a non-replicable competitive advantage on the market, which will:

o  Have a significant impact on our profitability;

o  Bring our superior customer experience to the next level; and

o  Reveal hidden opportunities.

How?

o  Implementing best-in-class data analytical projects across the bank, which have been designed with the help of world's leading consultants;

o  Building modern IT infrastructure; and

o  Developing strong in-house data analytical capabilities by recruiting and training the best talent.

Current Progress:

o  4 Data analytics projects have already been finished and 5 underway;

o  GEL 8.9 million extra profit in 2019.

Aspirations:

o  23 Data analytics projects already finished across the Bank; and

o  GEL 100 million annual extra profit by 2023.

3)  Reconciliation of reported IFRS consolidated figures with the underlying numbers

Item (in thousands of GEL )	FY 2019	FY 2018	Description	Reason for exclusion from the Group's current reported performance
Consulting fees	(5,605)		Consulting fees incurred in 2Q 2019, in relation to the recent events regarding historic matters surrounding TBC Bank. For further details, please see the following press release dated 21.02.2019.	These costs are significant and non-recurring in nature, and therefore are not indicative of the Group's current underlying performance.
Reversal of deferred tax gain	-	(17,426)	In 2018, TBC Bank reversed the one-off deferred tax gain recognized in 2016 due to the recent amendment to the Georgian Tax Code in relation to corporate income tax. The amendment, which came into force on 12 June 2018, postponed tax relief for re-invested profit from 1 January 2019 to 1 January 2023 for financial institutions.	These costs are significant and non-recurring in nature, and therefore are not indicative of the Group's current underlying performance.

in thousands of GEL	FY 2019	FY 2018
Reported net interest income	801,539	778,022
Reported net fee and commission income	187,290	157,530
Reported net insurance premium earned after claims and acquisition costs	18,510	12,275
Reported other operating income	120,904	139,641
Reported operating income	1,128,243	1,087,468
Reported total credit loss allowance	(91,992)	(166,239)
Reported operating income after provisions	1,036,251	921,229
Reported operating expenses	(450,726)	(411,029)
One-off consulting fees	5,605	-
Underlying operating expenses	(445,121)	(411,029)
Reported profit before tax	585,525	510,200
Underlying profit before tax	591,129	510,200
Reported income tax	(45,184)	(72,765)
Effect on tax of one-off items	(841)
Reversal of the one-off deferred tax gain		17,426
Underlying income tax	(46,024)	(55,339)
Reported profit for the period	540,341	437,435
Underlying profit for the period	545,105	454,861
Reported non-controlling interest (NCI)	2,446	2,357
Underlying NCI	2,446	2,357
Reported profit for the period less NCI	537,895	435,078
Underlying profit for the period less NCI	542,659	452,504

in thousands of GEL	FY 2019	FY 2018
Average reported equity attributable to the PLC's equity holders	2,397,141	1,977,359
Adjustment for one-off items on monthly average basis	6,079	10,088
Average underlying equity attributable to the PLC's equity holders	2,403,220	1,987,447
Average reported total assets	16,792,320	13,623,594
Adjustment for one-off items on monthly average basis	-	-
Average underlying total assets	16,792,320	13,623,594

	FY 2019	FY 2018
Reported cost to income	39.9%	37.8%
Underlying cost to income (APM)	39.5%	37.8%
Reported ROE	22.4%	22.0%
Underlying ROE (APM)	22.6%	22.8%
Reported ROA	3.2%	3.2%
Underlying ROA (APM)	3.3%	3.3%

4)  Net gains from currency swaps

In 2019, the Group entered into swap agreements denominated in foreign currencies in order to decrease its cost of funding. As the contracts reached significant volume, the Group revisited the presentation of effects in the Statement of profit or loss. Reclassifications from other non-interest operating income to net interest income have been recorded for the first three quarters in 2019. 2018 information has not been restated due to immateriality of amounts.

In thousands of GEL	4Q'19	3Q'19	2Q'19	1Q'19
Net gains from currency swaps	9,054	8,355	6,967	4,179

5)  TBC Insurance

TBC Insurance is a rapidly growing, wholly owned subsidiary of TBC Bank and is the Bank's main bancassurance partner. The company was acquired by the Group in October 2016 and has since grown significantly, becoming the second largest player on the P&C and life insurance market and the largest player in the retail segment, holding 21.3% and 36.4% market shares,^[41] without border motor third party liability (MTPL) insurance, respectively in 2019, based on internal estimates.

TBC Insurance serves both individual and legal entities and provides a broad range of insurance products covering motor, travel, personal accident, credit life and property, business property, liability, cargo and agro insurance products. The company differentiates itself through its advanced digital channels, which include TBC Bank's award-winning internet and mobile banking applications, a wide network of self-service terminals, a web channel, and B-Bot, a Georgian-speaking chat-bot that is available through Facebook messenger.

In 2Q 2019, TBC Insurance entered the health insurance market with a focus on the premium segment. Our strategy is to focus on affluent individuals and capture the affluent market by leveraging our strong brand name, leading digital capabilities and cross selling opportunities with payroll customers. Our medium-term target is to reach 25% market share in the premium health insurance business.

In 2019, TBC Insurance achieved strong growth results in non-health business lines. The gross written premium grew by 31.5% YoY and amounted to GEL 79.0 million. Over the same period, the net combined ratio^[42]  increased by 3.5 pp and stood at 82.8%, driven by increased operating expenses in health insurance, without health insurance business, net combined ratio would have been 79.1%.  As a result, net profit for 2019 increased by 12.5 % YoY and reached to GEL 8.5 million or GEL 9,792 million without health insurance.

Information excluding health insurance	4Q'19	3Q'19	4Q'18		12M'19	12M'18
In thousands of GEL
Gross written premium	19,496	18,999	17,075		75,523	60,079
Net earned premium[43]	15,603	13,412	10,554		51,910	35,657
Net profit	2,973	2,567	2,556		9,792	7,584
Net combined ratio	81.9%	77.8%	80.7%		79.1%	79.3%

Information including health insurance	4Q'19	3Q'19	4Q'18		12M'19	12M'18
In thousands of GEL
Gross written premium	21,808	19,760	17,075		79,031	60,079
Net earned premium	16,367	13,579	10,554		52,882	35,657
Net profit	2,499	2,227	2,556		8,533	7,584
Net combined ratio	86.5%	81.6%	80.7%		82.8%	79.3%

1Q and 2Q 2019 figures are provided without subsidiaries of TBC Insurance: Swoop JSC, GE Commerce LTD, All Property LTD and 3Q and 4Q 2019 figures are given without Redmed LTD;

All figures in the above table are presented before consolidation eliminations.

6) Azerbaijan

No investment has been made in relation to this project during 2019 and no material expenses were incurred.

Main highlights:

o  TBC Bank and Nikoil Bank concluded a shareholders agreement in late December 2018 and signed it in early January 2019. According to this agreement, TBC's shareholding in the joint entity will be 8.34%.  The transaction is subject to regulatory approval;

o  Currently, the bank is in the process of significant reorganization, which includes re-branding and shifting to digitalization. 

Achievements

o  Over the course of 2019, Nikoil Bank significantly enhanced its operations:

o  In late 2019, Nikoil Bank officially started rebranding and introduced a new name, logo and slogan. Nikoil Bank is now called Yelo Bank. The introduction of a new banking service model will take place in parallel with the process of updating the network of branches and transforming them to a completely new design;

o  New management team was recruited including: CDM, CRO, CFO and CIO, as well as Head of retail and MSME;

o  Core banking was revised and improved, including the data warehouse;

o  Risk management was improved in terms of operational risks, credit risks, and compliance.

Mid-term vision

In millions of USD	FY 19 results of Nikoil Bank[44]	Mid-term targets of joint entity
Gross loan portfolio	c. 228	c. 1,400
Equity	c. 34	c. 200
Return on equity	NMF	20% +

o  Core segments: Retail and MSME (not large SMEs and Corporates);

o  Product offerings: A mix of Nikoil Bank and TBC Bank products, adapted to the local needs and offered primarily through digital channels, including Space Bank.

7) ESG ratings and scores

MSCI - ESG Rating

In 2019, TBC Bank Group received a rating of A (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment.

ISS - ESG

TBC Bank Group PLC attained the above mentioned ESG scores from ISS as of 1 February 2020

Governance	2
Environment	3
Social	2

Lower Governance Risk = 1 - Higher Governance Risk = 10

Higher E&S Disclosure = 1 - Lower E&S Disclosure = 10

Sustainalytics

TBC Bank Group PLC holds 20.6 ESG rating as of 17 December 2019

Negligible	Low	Medium	High	Severe
0-10	10-20	20-30	30-40	40+

Relative performance

	Rank (1st = lowest risk)	Percentile (1st = lowest risk)
Banks (Industry Group)	83 out of 934	10th
Regional Banks (Subindustry)	11 out of 386	4th

8) Loan book breakdown by stages according IFRS 9

Total (in million GEL)

Stage	Gross	% of total	Allowance	LLP rate
1	11,552	91.2%	96	0.8%
2	757	6.0%	83	11.0%
3	353	2.8%	134	38.0%
Total	12,662	100.0%	313	2.5%

Corporate in million GEL

Stage	Gross	% of total	Allowance	LLP rate
1	4,435	95.2%	39	0.9%
2	104	2.2%	2	1.9%
3	122	2.6%	40	32.8%
Total	4,661	100.0%	81	1.7%

MSME (in million GEL)

Stage	Gross	% of total	Allowance	LLP rate
1	2,650	89.9%	18	0.7%
2	205	6.9%	19	9.3%
3	93	3.2%	29	31.2%
Total	2,948	100.0%	66	2.2%

Consumer (in million GEL)

Stage	Gross	% of total	Allowance	LLP rate
1	1,593	84.6%	37	2.3%
2	217	11.5%	52	24.0%
3	74	3.9%	45	60.8%
Total	1,884	100.0%	134	7.1%

Mortgage (in million GEL)

Stage	Gross	% of total	Allowance	LLP rate
1	2,874	90.7%	2	0.1%
2	231	7.3%	10	4.3%
3	64	2.0%	20	32.8%
Total	3,169	100.0%	32	1.0%

---

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

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

[3] International Financial Institutions

[4] Market share figures are based on data from the National Bank of Georgia (NBG). The NBG includes interbank loans for calculating market share in loans.

[5] Internet or Mobile Banking penetration equals the number of active clients of Internet or Mobile Banking divided by the total number of active clients.

[6] Mobile Banking penetration equals the number of active clients of Mobile Banking divided by the number of total active clients. Data includes Space figures

[7] Other operating non-interest income includes Net insurance premium earned after claims and acquisition costs

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

^[9] In 2019, the non-recurring costs included consulting fees in the amount of GEL 5.6 million paid in relation to historic matters surrounding TBC Bank. In 2018, one-off costs included the reversal of deferred tax gains due to a change in legislation in the amount of GEL 17.4 million.

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

^[11] Based on initial estimates of the National Statistics Office of Georgia.

[12] Net insurance premium earned after claims and acquisition costs can be reconciled to the standalone net insurance profit (as shown in Annex 5 on page 47) as follows: net insurance premium earned after claims and acquisition costs less credit loss allowance, administrative expenses and taxes, plus fee and commission income and net interest income.

[13] The new share based payments compensation scheme was approved in December 2018. Expense is accrued based on grant date share price, which was fixed at GBP 14.88 whilst grant date share price of old scheme was USD 11.00.  GEL/USD exchange rate at grant date was fixed at 2.2399 in old scheme, while in new schemes currency exchange rate is not fixed.

[14] Net insurance premium earned after claims and acquisition costs income after claims can be reconciled to the standalone net insurance profit (as shown in Annex 5 on page 47) as follows: net insurance premium earned after claims and acquisition costs less credit loss allowance, administrative expenses and taxes, plus fee and commission income and net interest income.

[15] Based on internal estimates 

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

[17] Total ecosystems revenue also includes net fee and commission income from POS terminals and e-commerce.

[18] Total ecosystems net profit also includes net fee and commission income and related operating costs from POS terminals and e-commerce.

[19] Total number of visitors across all systems; some individuals may be visitors of multiple systems. For Payme, the number of registered customers is used.

[20] Includes both retail & business payments. Payments ecosystem includes: Payme, TKT, TBC Pay, E-commerce and POS, while other payments business includes: ATM-TBC Cards, branch, internet and mobile banking.

[21] Source: NBG

[22] The data from Business Insider Intelligence was used for comparison purposes.

[23] Forecasted figures are given without the effects of new regulations effective from March 2020.

[24] Number of registered users

[25]   Updated forecasts

[26] Based on the number of visitors

[27] TBC Contribution from real estate evaluation

[28]   December is characterized by low demand in housing business. As a result, forecasted numbers of unique visitors for Dec-2020 are decreased compared to September for  both for Livo and Myhome

[29]   Based on number of visitors

[30] In August 2019 we acquired 65% of My.ge for GEL 19.45 million.

[31] December is characterized by low demand in housing business. As a result, forecasted numbers of unique visitors for Dec-2020 are decreased compared to September for  both for Livo and Myhome.

[32]   Gross merchandise Volume

[33] The revenue and EBITDA include Swoop figures.

[34] Per updated forecast for both financial and operating data

[35] Stock Keeping Units

[36] Based on number of visitors

[37] In August 2019 we acquired 65% of My.ge for GEL 19.45 million.

[38]   Based on number of visitors

[39]   In August 2019 we acquired 65% of My.ge for GEL 19.45 million

[40]   From launching the App's 1st prototype in Jan 2018 to the end of the beta version of Space in Sep 2018

^[41] Market shares are based on internal estimates and are given without border MTPL, which was introduced starting from March 2018 and GWP was divided evenly between 17 insurance companies. Total non-health market share in 2019 including Border MTPL stood at 19.7% and 29.9% respectively

^[42]   Net insurance claims plus acquisition costs and administrative expenses divided by net earned premium.

^[43] Net earned premium equals earned premium minus reinsurer's share of earned premium.

[44] Based on management accounts

 

END

 

 

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