3Q and 9M 2022 Results Report

RNS Number : 2446F

TBC Bank Group PLC

04 November 2022

 

TBC BANK GROUP PLC ("TBC Bank")

3Q AND 9M 2022 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

Forward-Looking Statements

This document contains forward-looking statements; such forward-looking statements contain known and unknown risks, uncertainties and other important factors, which may cause the actual results, performance or achievements of TBC Bank Group PLC ("the Bank" or "the Group") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others: the achievement of anticipated levels of profitability; growth, cost and recent acquisitions; the impact of competitive pricing; the ability to obtain the necessary regulatory approvals and licenses; the impact of developments in the Georgian economy; the impact of COVID-19; the political and legal environment; financial risk management; and the impact of general business and global economic conditions.

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

Certain financial information contained in this presentation, which is prepared on the basis of the Group's accounting policies applied consistently from year to year, has been extracted from the Group's unaudited management accounts and financial statements. The areas in which the management accounts might differ from the International Financial Reporting Standards and/or 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, the numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them.

3Q and 9M 2022 Consolidated Financial Results Conference Call

TBC Bank Group PLC ("TBC PLC") published its unaudited consolidated financial results for the third quarter and nine months of 2022 on Friday, 4 November 2022 at 7 am GMT. The results discussion will be held during the Capital Markets Day 2022, which is conducted on the same day and starts at 10 am GMT. The detailed agenda can be found on the company's website. A webcast of the event will be available via the TBC Bank website at www.tbcbankgroup.com .

In addition, the management team will provide a live presentation at 2.00 pm GMT on 9 November 2022 via the Investor

Meet Company platform to review the 3Q 2022 results. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9.00 am GMT the day before the meeting or  at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet TBC Bank Group PLC via:

https://www.investormeetcompany.com/tbc-bank-group-plc/register-investor

Investors who already follow TBC Bank Group PLC on the Investor Meet Company platform will automatically be invited.

Contacts

 

Zoltan Szalai Director of International Media and Investor Relations   E-mail:  [e-mail]  Tel:  [phone] Web: www.tbcbankgroup.com

Anna Romelashvili                                             Head of Investor Relations E-mail:  [e-mail]  Tel:  +(995 32) 227 27 27 Web: www.tbcbankgroup.com

Investor Relations Department E-mail:  [e-mail]  Tel:  +(995 32) 227 27 27 Web: www.tbcbankgroup.com

Table of Contents

3Q and 9M 2022 Results Announcement

Key Highlights  

Letter from the Chief Executive Officer  

Economic Overview  

Unaudited Consolidated Financial Results Overview for 3Q 2022  

Unaudited Consolidated Financial Results Overview for 9M 2022  

Additional Disclosures  

1)   TBC Bank - Background  

2)   Subsidiaries of TBC Bank Group PLC  

3)   TBC Insurance  

4)   Fast Growing Digital Bank in Uzbekistan  

5)   Loan Book Breakdown by Stages According IFRS 9  

6)   Glossary  

TBC Bank announces unaudited 3Q and 9M 2022 Consolidated Financial Results

In 3Q 2022 our net profit stood at GEL 321 mln up by 55% YoY, while our ROE reached 31.1%.

The market leader in Georgia with robust profitability and steady growth, supported by solid capital.

Continued strong progress in exploiting our international growth potential.

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.

Key Highlights[1]

Our both operating countries continued strong momentum. The Georgian economy demonstrated strong growth in the third quarter on the back of a robust rebound in the tourism sector, including the effect of migration, solid exports and remittances. As a result, real GDP grew by 9.7% and 10.2% in the third quarter and nine months of 2022, respectively. Strong net inflows also contributed to the appreciation of the GEL. As in many other countries, inflation remains a challenge, although some evidence of moderation is becoming visible. Uzbekistan also once again demonstrated the resilience and solid economic activity with the first nine months and third quarter growth of 5.8% and 6.4%, respectively. We have retained our GDP growth forecast of above 10% for Georgia and upgraded our outlook for Uzbekistan from 5.0% to 5.5%.

Continued robust financial performance… - In the third quarter of 2022, our net profit amounted to GEL 321 million with 55% annual growth, driven by both interest and non-interest income streams . As a result, our ROE for the third quarter of 2022 stood at 31.1%, while our ROA amounted to 4.8%. For the nine months of 2022, our net profit amounted to GEL 780 million, up by 28% year-on-year, with ROE of 26.6% and ROA of 4.1%.

…backed by prudent capital and liquidity levels - As of 30 September 2022, our CET1, Tier 1, and Total Capital ratios stood at 15.3%, 18.0% and 21.4%, respectively, and remained comfortably above the minimum regulatory requirements by 3.5%, 3.9% and 3.7%, accordingly. As of 30 September 2022, our net stable funding (NSFR) and liquidity coverage (LCR) ratios stood at 133% and 143%, respectively, comfortably above the regulatory minimum of 100%. 

Our Georgian banking franchise maintained its leadership positions… - We continue to be market leaders in total loans and deposits. As of 30 September 2022, our loan book increased by 19% year-on-year in constant currency terms, which translated into a 38.8% market share, up by 0.4 pp over the year. Over the same period, our deposit base increased by 29% in constant currency terms and our market share in total deposits amounted to 40.0% as of 30 September 2022, down by 0.1 pp year-on-year.

…while our Uzbek business continued its growth and generated positive returns - This quarter is also marked by the remarkable achievements of our Uzbek operations, which started to generate positive returns. T he total net income of our Uzbek operations amounted to GEL 1.7 million in the third quarter 2022. By the end of September 2022, the number of registered users and downloads of our digital banking app reached 2.1 million and 2.8 million, respectively. At the same time, our retail loan and deposit books amounted to GEL 269 million and GEL 297 million, up by 48% and 26%, respectively, compared to the previous quarter.

We also continued to expand our Uzbek payments business, Payme. The number of monthly active users increased by 62% year-on-year and reached 2.1 million in September 2022, while the volume of transactions also increased by 64% year-on-year in the third quarter of 2022. Over the same quarter, revenues increased by 79% year-on-year and amounted to GEL 12.0 million, while net profit was GEL 7.5 million, up by 97% year-on-year.

Increasing our customer base across the Group with strong focus on digitalisation - In September 2022, our monthly active users (MAU) increased to 3.9 million users, compared to 2.8 million a year ago. Over the same period, our digital retail monthly active users stood at 3.2 million, up by 53% year-on-year, while digital retail daily active users reached 1.1 million, up by 62% over the same period.

Introducing our new mid-term targets

Uzbek business contribution to the Group's net income	Immaterial as of 3Q 2022	10-15%
Monthly active users (MAU)	3.9 mln as of Sep-2022	7mln

Re-iterating our existing mid-term targets

Annual loan book growth	10-15%
ROE	20%+
Dividend payout ratio	25-35%
Cost to income	<35%

Letter from the Chief Executive Officer^[2]

I am pleased to present exceptionally strong financial results for the third quarter 2022.  Our net income amounted to GEL 321 million, up by 55% year-on-year, and our return on equity stood at 31.1%. For the nine months of 2022, our net income stood at GEL 780 million, up by 28% year-on-year, with return on equity reaching 26.6%.

This quarter is also marked by the remarkable achievements of our Uzbek operations, which started to generate positive returns. T he total net income of our Uzbek operations amounted to GEL 1.7 million in the third quarter 2022.

On a group level, the total number of active monthly users reached 3.9 million in September 2022, up by 40% year-on-year, around 80% of whom are digital users.

Our both operating countries continued strong momentum. The Georgian economy demonstrated strong growth in the third quarter on the back of a robust rebound in the tourism sector, including the effect of migration, solid exports and remittances. As a result, real GDP grew by 9.7% and 10.2% in the third quarter and nine months of 2022, respectively. Strong net inflows also contributed to the appreciation of the GEL. As in many other countries, inflation remains a challenge, although some evidence of moderation is becoming visible. Uzbekistan also once again demonstrated the resilience and solid economic activity with the first nine months and third quarter growth of 5.8% and 6.4%, respectively. We have retained our GDP growth forecast of above 10% for Georgia and upgraded our outlook for Uzbekistan from 5.0% to 5.5%.

Strong financial performance

In the third quarter of 2022, our operating income amounted to GEL 590 million, up by 59% year-on-year. This growth was driven by a strong performance both on the interest income and non-interest income side, with a substantial contribution from our FX operations due to a combination of factors, including a high volume of transactions and wider spreads. The increase in net interest income was the result of the continued expansion of our loan book and a higher net interest margin, which amounted to 6.3% in the third quarter of 2022, up by 1 .0 pp year-on-year. We also demonstrated strong growth in fee and commission income, which grew by 25% year-on-year mainly driven by our payment's operations both in Georgia and Uzbekistan. Our cost of risk continued its normalization trend, which started in the second quarter of 2022, and amounted to 1.0% in the third quarter. Over the same period, our cost to income ratio reached a record low level of 29.9%, down by 5.5 percentage points year-on-year.

In terms of balance sheet growth, our loan book increased by 19% year-on-year and remained broadly stable quarter-on-quarter in constant currency terms, resulting in a loan market share of 38.8% as of 30 September 2022.

Our capital and liquidity positions also remained strong. As of 30 September 2022, our CET1, Tier 1 and Total Capital stood comfortably above the minimum regulatory requirements by 3.5%, 3.9% and 3.7%, accordingly. At the same time, our net stable funding (NSFR) and liquidity coverage (LCR) ratios stood at 133% and 143%, accordingly, by the end of September 2022, compared to the respective limits of 100%.

Strong growth in our Uzbek businesses

At the end of September 2022, the number of registered users of our digital banking app in Uzbekistan reached 2.1 million, while our retail loan and deposit books amounted to GEL 269 million and GEL 297 million, respectively.

In parallel, our Uzbek payment business, Payme, continues its rapid expansion. The number of active monthly users reached 2.1 million at the end of September 2022, compared to 1.3 million a year ago. In the third quarter 2022, the volume of transactions increased by 64% year-on-year. At the same time, the number of registered merchants reached up to 55,000 . Over the same quarter, revenues increased by 79% year-on-year and amounted to GEL 12.0 million, while net profit was GEL 7.5 million, up by 97% year-on-year.

Our mid-term targets

I am confident that the strength of our Georgian banking franchise, coupled with our international operations, will ensure strong growth and profitability in years to come. Therefore, I would like to re-iterate our exiting mid-term targets: ROE to above 20%, annual loan book growth to 10-15%, and a dividend pay-out ratio to 25-35%.  At the same time, we remain committed to operating at efficient levels and retain our cost to income ratio guidance at below 35%.

We have also added two new mid-term targets: our Uzbek operations to contribute to 10-15% of the Group's net income and to achieve 7 million active monthly users on a Group level.

Economic Overview

Economic growth

Despite the adverse impact of the war in Ukraine, Georgian economic growth remained solid in 2022, reaching 10.5% year-on-year in the first half, 9.7% in Q3, leading to a 10.2% in the first nine months of 2022.

External sector

The external sector continued its strong performance. Specifically, in the third quarter exports and imports grew by 40.5% and 29.0% year-on year, respectively. While the major driver of the growth in exports in 3Q 2022 was surging prices internationally, some increase was also observed on the back of real growth. Overall, Georgia's terms of trade remained resilient, further supporting growth and the GEL. At the same time, investment goods continued to have a high share of imports, especially after adjusting for the impact of higher oil prices, indicating positive sentiments and an increase of capacity in a wide range of sectors.

The recovery in tourism, supported by the migration effect, further strengthened and even exceeded 2019 levels in July, August and September, reaching 122.0% of 2019 levels in the third quarter of 2022, up from 85.3% of the previous quarter. Remittance inflows also remained strong, increasing by 32.7%^[3] year-on-year in the third quarter.

Fiscal stimulus 

The fiscal stimulus, although still sizable, negatively affected growth in 2021 as the deficit amounted to around 6.3% of GDP, after an expansionary 9.3% of GDP in 2020. This year, the deficit is expected to be even lower. According to the Ministry of Finance, fiscal consolidation is expected to take place in the coming years with deficit-to-GDP ratios of 3.2%, 2.8% and 2.3% in 2022, 2023 and 2024, respectively.

Credit growth

By the end of 3 Q 2022, bank credit increased by 14.7% year-on-year, compared to 18.7% by the end of 2Q 2022. The major reason was slower corporate lending activity on the back of large prepayments, leading to a 6.5% YoY growth at the end of 3Q 2022 compared to 15.5% at the end of 2Q 2022. MSME and retail lending YoY growth also moderated, though only somewhat. Namely, from 20.3% at the end of 2Q 2022 to 18.5% at the end of 3Q 2022, and from 20.3% to 19.2%, respectively.

Inflation, monetary policy, and the exchange rate

After a sharp deterioration of expectations amid the war by the end of 1Q 2022, and the recovery in value in the second quarter, the USD/GEL further strengthened and appreciated to 2.83 by the end of September, having been at 2.93 at the end of June.

In September, inflation came in at 11.5% YoY, compared 10.9% in August. Although a number of key commodity prices have recovered, a disinflationary pass-through from international markets is expected to take place in the 4^th quarter, taking into account the time lag needed on the local market to adjust from this year's peak commodity price levels. Moreover, the higher probability of a global slowdown, the normalization of growth in Georgia and a stronger GEL suggest that the CPI inflation will gradually decrease. Therefore, the NBG is likely to introduce gradual monetary policy easing, probably from the beginning of the next year.

Going forward

TBC Capital's projections indicate over 10% growth in 2022. The main drivers are the recovery in tourism, including the migration impact, strong exports and remittances, and gradually recovering FDI inflows.

Mor e information on the Georgian economy and financial sector can be found at www.tbccapital.ge .

Unaudited Consolidated Financial Results Overview for 3Q 2022

This statement provides a summary of the unaudited business and financial trends for 3Q 2022 for TBC Bank Group plc and its subsidiaries. The quarterly financial information and trends are unaudited.

TBC Bank Group PLC's financial results has been prepared in accordance with UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).

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

Financial Highlights

Income Statement Highlights
in thousands of GEL	3Q'22		2Q'22		3Q'21		Change YoY		Change QoQ
Net interest income	340,415		303,572		259,390		31.2%		12.1%
Net fee and commission income	85,872		75,572		68,631		25.1%		13.6%
Other operating non-interest income	163,344		84,965		43,952		NMF		92.2%
Operating profit	589,631		464,109		371,973		58.5%		27.0%
Total credit loss allowance	(48,256)		(37,854)		(5,106)		NMF		27.5%
Losses from modifications of financial instruments	-		-		(104)		-100.0%		NMF
Operating expenses	(176,240)		(163,635)		(131,695)		33.8%		7.7%
Profit before tax	365,135		262,620		235,068		55.3%		39.0%
Income tax expense	(44,115)		(28,056)		(27,921)		58.0%		57.2%
Profit for the period	321,020		234,564		207,147		55.0%		36.9%

Balance Sheet and Capital Highlights
in thousands of GEL	Sep-22		Jun-22		Sep-21			Change YoY	Change QoQ
Total Assets	27,676,309		26,027,081		23,701,241			16.8%	6.3%
Gross Loans	17,365,894		17,534,515		15,963,520			8.8%	-1.0%
Customer Deposits	17,115,022		15,772,905		14,338,537			19.4%	8.5%
Total Equity	4,252,816		4,010,695		3,448,193			23.3%	6.0%
CET 1 Capital (Basel III)	3,126,561		3,069,501		2,565,560			21.9%	1.9%
Tier 1 Capital (Basel III)	3,693,601		3,655,281		2,955,910			25.0%	1.0%
Total Capital (Basel III)	4,378,258		4,357,184		3,693,637			18.5%	0.5%
Risk Weighted Assets (Basel III)	20,487,074		20,519,966		19,143,450			7.0%	-0.2%

Key Ratios	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
ROE	31.1%	24.1%	24.1%	7.0 pp	7.0 pp
Bank's standalone ROE [4]	31.9%	25.1%	30.9%	1.0 pp	6.8 pp
ROA	4.8%	3.7%	3.6%	1.2 pp	1.1 pp
Bank's standalone ROA 4	4.9%	3.9%	4.5%	0.4 pp	1.0 pp
NIM	6.3%	5.8%	5.3%	1.0 pp	0.5 pp
Cost to income	29.9%	35.3%	35.4%	-5.5 pp	-5.4 pp
Bank's standalone cost to income 4	24.1%	27.8%	25.8%	-1.7 pp	-3.7 pp
Cost of risk	1.0%	0.9%	-0.1%	1.1 pp	0.1 pp
NPL to gross loans	2.3%	2.3%	3.1%	-0.8 pp	0.0 pp
NPL provision coverage ratio	99.6%	99.8%	94.3%	5.3 pp	-0.2 pp
Total NPL coverage ratio	164.2%	167.5%	169.3%	-5.1 pp	-3.3 pp
CET 1 CAR (Basel III)	15.3%	15.0%	13.4%	1.9 pp	0.3 pp
Tier 1 CAR (Basel III)	18.0%	17.8%	15.4%	2.6 pp	0.2 pp
Total CAR (Basel III)	21.4%	21.2%	19.3%	2.1 pp	0.2 pp
Leverage (Times)	6.5x	6.5x	6.9x	-0.4x	0.0x

Net Interest Income

In 3Q 2022, net interest income amounted to GEL 340.4 million, up by 31.2% YoY and by 12.1% on a QoQ basis.

The YoY rise in interest income of GEL 128.8 million, or 27.0%, was mostly attributable to an increase in interest income from loans related to the GEL 1,402.4 million, or 8.8%, increase in the respective portfolio, a 1.4 pp rise in the respective yield.

The increase in interest income on a QoQ basis of GEL 52.7 million, or 9.5%, was mainly related to a 0.7 pp rise in the respective loan yield , while the loan book remained broadly stable.

Interest expense increased by GEL 47.7 million, or 22.0%, on a YoY basis, mainly related to an increase in the deposit portfolio of GEL 2,776.5 million, or 19.4%, and a 0.4 pp growth in deposit costs.

On a QoQ basis, interest expense increased by GEL 15.8 million, or 6.4%, primarily driven by an increase in the deposit portfolio of GEL 1,342.1 million, up by 8.5%, while the cost of deposits went up by 0.2 pp.

In 3Q 2022, our NIM stood at 6.3%, up by 1.0 pp on YoY and 0.5 pp on a QoQ basis.

In thousands of GEL	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Interest income	605,395	552,719	476,636	27.0%	9.5%
Interest expense*	(264,980)	(249,147)	(217,246)	22.0%	6.4%
Net interest income	340,415	303,572	259,390	31.2%	12.1%
NIM	6.3%	5.8%	5.3%	1.0 pp	0.5 pp

* Interest expense includes net interest gains from currency swaps

Non-Interest Income

Total non-interest income doubled in 3Q 2022 on a YoY basis and increased by 55.2% on a QoQ basis, amounting to GEL 249.2 million.

Net fee and commission income increased by 25.1% YoY and 13.6% on a Q o Q basis. The increase was mainly related to increased payments transactions both in Georgia and Uzbekistan.

Net gains from FX operations demonstrated exceptional results in 3Q 2022, mainly related to the high volume of transactions and wider spreads.

In 3Q 2022, net insurance profit increased on a YoY and QoQ basis, which was mainly driven by overall business growth.

In thousands of GEL	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Non-interest income
Net fee and commission income	85,872	75,572	68,631	25.1%	13.6%
Net gains from currency derivatives, foreign currency operations and translation	145,712	66,520	29,102	NMF	NMF
Net insurance premium earned after claims and acquisition costs[5]	10,020	6,698	6,019	66.5%	49.6%
Other operating income	7,612	11,747	8,831	-13.8%	-35.2%
Total other non-interest income	249,216	160,537	112,583	NMF	55.2%

Credit Loss Allowance

Credit loss allowance for loans in 3Q 2022 amounted to GEL 41.4 million, which translated into a cost of risk of 1.0% on an annualised basis.

In thousands of GEL	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Credit loss allowance for loans to customers	(41,419)	(39,025)	4,389	NMF	6.1%
Credit loss recovery/(allowance) for other transactions	(6,837)	1,171	(9,495)	-28.0%	NMF
Total credit loss allowance	(48,256)	(37,854)	(5,106)	NMF	27.5%
Operating profit after expected credit losses and non-financial asset impairment losses	541,375	426,255	366,867	47.6%	27.0%
Cost of risk	1.0%	0.9%	-0.1%	1.1 pp	0.1 pp

Operating Expenses

In 3Q 2022, our operating expenses expanded by 33.8% YoY and 7.7% on a QoQ basis.

The YoY increase in staff costs was driven by the expansion of our business, both locally and internationally, as well as performance costs. Approximately one third of administrative and other operating expenses was attributable to the growth of our Uzbek business.

Our cost to income ratio amounted to 29.9%, while the Bank's standalone cost to income stood at 24.1%.

In thousands of GEL	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Operating expenses
Staff costs	(94,561)	(90,332)	(74,643)	26.7%	4.7%
Recovery/(allowance) of provision for liabilities and charges	(2,000)	4	(54)	NMF	NMF
Depreciation and amortization	(26,684)	(24,321)	(19,988)	33.5%	9.7%
Administrative and other operating expenses	(52,995)	(48,986)	(37,010)	43.2%	8.2%
Total operating expenses	(176,240)	(163,635)	(131,695)	33.8%	7.7%
Cost to income	29.9%	35.3%	35.4%	-5.5 pp	-5.4 pp
Bank's standalone cost to income[6]	24.1%	27.8%	25.8%	-1.7 pp	-3.7 pp

Net Income

In 3Q 2022, we generated GEL 321.0 million in net profit, up by 55.0% YoY and by 36.9% on a QoQ basis. The increase was supported by strong income generation across the board, with a substantial contribution from non-interest income.

As a result, our ROE and ROA for 3Q 2022 reached 31. 1 % and 4.8%, accordingly.

In thousands of GEL	3Q'22	2Q'22	3Q'22	Change YoY	Change QoQ
Losses from modifications of financial instruments	-	-	(104)	-100.0%	NMF
Profit before tax	365,135	262,620	235,068	55.3%	39.0%
Income tax expense	(44,115)	(28,056)	(27,921)	58.0%	57.2%
Profit for the period	321,020	234,564	207,147	55.0%	36.9%
ROE	31.1%	24.1%	24.1%	7.0 pp	7.0 pp
Bank's standalone ROE6	31.9%	25.1%	30.9%	1.0 pp	6.8 pp
ROA	4.8%	3.7%	3.6%	1.2 pp	1.1 pp
Bank's standalone ROA6	4.9%	3.9%	4.5%	0.4 pp	1.0 pp

Funding and Liquidity

As of 30 September 2022, the total liquidity coverage ratio (LCR), as defined by the NBG, was 142.8%, above the 100% limit, while the LCR in GEL and FC stood at 135.9% and 145.0%, accordingly, above the respective limits of 75% and 100%.

Over the same period, NSFR stood at 133.1%, compared to the regulatory limit of 100%.

	Sep-22	Jun-22	Change QoQ
Minimum net stable funding ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Net stable funding ratio as defined by the NBG	133.1%	126.7%	6.4 pp
Net loans to deposits + IFI funding	89.1%	97.7%	-8.6 pp
Leverage (Times)	6.5x	6.5x	0x
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%	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	142.8%	121.2%	21.6 pp
LCR in GEL, as defined by the NBG	135.9%	113.3%	22.6 pp
LCR in FC, as defined by the NBG	145.0%	124.5%	20.5 pp

Regulatory Capital

As of 30 September 2022, our CET1, Tier 1 and Total Capital ratios stood at 15. 3 %, 1 8 . 0 % and 21. 4 %, respectively, and remained comfortably above the minimum regulatory requirements by 3.5%, 3.9% and 3.7%, accordingly.

The QoQ increase in the CET1 capital adequacy ratio was mainly driven by net income generation and the appreciation of the local currency, partially offset by the impact of the interim dividend payment.

In thousands of GEL	Sep-22	Jun-22	Change QoQ
CET 1 Capital	3,126,561	3,069,501	1.9%
Tier 1 Capital	3,693,601	3,655,281	1.0%
Total Capital	4,378,258	4,357,184	0.5%
Total Risk-weighted Exposures	20,487,074	20,519,966	-0.2%
Minimum CET 1 ratio	11.8%	12.1%	-0.3 pp
CET 1 Capital adequacy ratio	15.3%	15.0%	0.3 pp
Minimum Tier 1 ratio	14.1%	14.5%	-0.4 pp
Tier 1 Capital adequacy ratio	18.0%	17.8%	0.2 pp
Minimum total capital adequacy ratio	17.7%	18.3%	-0.6 pp
Total Capital adequacy ratio	21.4%	21.2%	0.2 pp

Loan Portfolio

As of 30 September 2022, the gross loan portfolio reached GEL 17,365.9 million, down by 1.0% QoQ or up by 2.3% on a constant currency basis.

The proportion of gross loans denominated in foreign currency decreased by 3.0 pp on a QoQ basis and accounted for 48.9% of total loans. On a constant currency basis, the proportion of gross loans denominated in foreign currency decreased by 1.4 pp QoQ and stood at 50.5%.

As of 30 September 2022, our market share in total loans stood at 38.8%, down by 0.3 pp on a QoQ basis. Our loan market share in legal entities was 39.1%, down by 0.6 pp on a QoQ basis. Our loan market share in individuals remained stable and stood at 38.5% on a QoQ basis.

In thousands of GEL	Sep-22	Jun-22	Change QoQ
Loans and advances to customers
Retail	6,871,351	6,666,569	3.1%
Retail loans GEL	4,230,472	3,994,645	5.9%
Retail loans FC	2,640,879	2,671,924	-1.2%
CIB	5,918,394	6,462,635	-8.4%
CIB loans GEL	2,096,791	2,083,255	0.6%
CIB loans FC	3,821,603	4,379,380	-12.7%
MSME	4,576,149	4,405,311	3.9%
MSME loans GEL	2,544,976	2,357,651	7.9%
MSME loans FC	2,031,173	2,047,660	-0.8%
Total loans and advances to customers	17,365,894	17,534,515	-1.0%

	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Loan yields	11.9%	11.2%	10.5%	1.4 pp	0.7 pp
Loan yields GEL	15.6%	15.7%	15.4%	0.2 pp	-0.1 pp
Loan yields FC	8.2%	7.2%	6.6%	1.6 pp	1.0 pp
Retail Loan Yields	13.9%	13.2%	12.0%	1.9 pp	0.7 pp
Retail loan yields GEL	16.5%	16.6%	16.3%	0.2 pp	-0.1 pp
Retail loan yields FC	9.9%	8.4%	6.6%	3.3 pp	1.5 pp
CIB Loan Yields	10.2%	9.3%	9.1%	1.1 pp	0.9 pp
CIB loan yields GEL	14.3%	14.3%	14.1%	0.2 pp	0.0 pp
CIB loan yields FC	8.1%	7.0%	6.8%	1.3 pp	1.1 pp
MSME Loan Yields	11.2%	10.9%	10.5%	0.7 pp	0.3 pp
MSME loan yields GEL	15.2%	15.3%	15.0%	0.2 pp	-0.1 pp
MSME loan yields FC	6.4%	6.0%	6.0%	0.4 pp	0.4 pp

Loan Portfolio Quality

On a QoQ basis, total Par 30 and NPL ratios remained stable at 2.3%.

The 0.3 pp increase in the retail Par 30 ratio was related to an unsecured consumer portfolio, while improvement in MSME Par 30 was driven by SME sub-segment.

The QoQ improvement in the NPL ratio for the MSME segment was driven by both, micro and SME sub-segments. For the retail and CIB segments, NPL ratio remained broadly stable.

Par 30	Sep-22	Jun-22	Change QoQ
Retail	2.8%	2.5%	0.3 pp
CIB	0.6%	0.7%	-0.1 pp
MSME	3.6%	3.8%	-0.2 pp
Total Loans	2.3%	2.2%	0.1 pp

Non-performing Loans	Sep-22	Jun-22	Change QoQ
Retail	2.3%	2.2%	0.1 pp
CIB	1.4%	1.3%	0.1 pp
MSME	3.6%	3.9%	-0.3 pp
Total Loans	2.3%	2.3%	0.0 pp

NPL Coverage	Sep-22			Jun-22
	Provision Coverage	Total Coverage	Provision Coverage		Total Coverage
Retail	162.7%	206.9%	171.8%		223.1%
CIB	56.6%	121.8%	55.4%		118.7%
MSME	58.6%	143.0%	59.0%		143.1%
Total	99.6%	164.2%	99.8%		167.5%

Cost of risk

In 3Q 2022 , the cost of risk amounted to 1.0%.

The cost of risk in the retail segment improved on a QoQ basis, mainly attributable to the sale of a written off portfolio, while the YoY increase was driven by COVID-19 related recoveries in 2021. The cost of risk for the CIB segment amounted to 0.0%, attributable to the overall strong performance of the CIB portfolio as well as the decrease of the loan portfolio. Over the same period, the cost of risk for MSMEs amounted to 0.5%, which started to normalize following very low ratios in previous quarters.

Cost of risk	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Retail	2.1%	2.5%	-0.2%	2.3 pp	-0.4 pp
CIB	0.0%	-0.1%	-0.2%	0.2 pp	0.1 pp
MSME	0.5%	0.0%	0.1%	0.4 pp	0.5 pp
Total	1.0%	0.9%	-0.1%	1.1 pp	0.1 pp

Deposits Portfolio

The total deposits portfolio amounted to GEL 17,115.0 million, increasing by 8.5% QoQ or 11.5% on a constant currency basis.

The proportion of deposits denominated in a foreign currency decreased by 4.2 pp on a QoQ basis and stood at 56.6% of total deposits. On a constant currency basis, the proportion of deposits denominated in a foreign currency decreased by 3.0 pp QoQ and accounted for 57.8% of total deposits.

As of 30 September 2022, our market share in deposits amounted to 40.0%, down by 0.7 pp on a QoQ basis, while our market share in deposits to legal entities stood at 41.6%, down by 0.8 pp QoQ. Our market share in deposits to individuals stood at 38.7%, down by 0.5 pp QoQ.

In thousands of GEL	Sep-22	Jun-22	Change QoQ
Customer Accounts
Retail	6,345,634	5,906,886	7.4%
Retail deposits GEL	1,661,392	1,571,548	5.7%
Retail deposits FC	4,684,242	4,335,338	8.0%
CIB	7,817,418	7,589,188	3.0%
CIB deposits GEL	3,683,976	3,170,605	16.2%
CIB deposits FC	4,133,442	4,418,583	-6.5%
MSME	1,640,701	1,562,211	5.0%
MSME deposits GEL	770,924	718,622	7.3%
MSME deposits FC	869,777	843,589	3.1%
Total Customer Accounts*	17,115,022	15,772,905	8.5%

* Total deposit portfolio includes Ministry of Finance deposits in the amount of GEL 1,311 million and GEL 715 million as of 30 Sep 2022 and 30 Jun 2022, respectively.

	3Q'22	2Q'22	3Q'21	Change YoY	Change QoQ
Deposit rates	3.9%	3.7%	3.5%	0.4 pp	0.2 pp
Deposit rates GEL	7.4%	7.7%	6.9%	0.5 pp	-0.3 pp
Deposit rates FC	1.5%	1.4%	1.6%	-0.1 pp	0.1 pp
Retail Deposit Yields	3.0%	2.8%	2.3%	0.7 pp	0.2 pp
Retail deposit rates GEL	5.6%	5.6%	4.8%	0.8 pp	0.0 pp
Retail deposit rates FC	2.0%	1.8%	1.5%	0.5 pp	0.2 pp
CIB Deposit Yields	4.8%	4.5%	4.5%	0.3 pp	0.3 pp
CIB deposit rates GEL	9.3%	9.5%	8.5%	0.8 pp	-0.2 pp
CIB deposit rates FC	1.2%	1.2%	1.9%	-0.7 pp	0.0 pp
MSME Deposit Yields	0.7%	0.7%	0.9%	-0.2 pp	0.0 pp
MSME deposit rates GEL	1.3%	1.3%	1.6%	-0.3 pp	0.0 pp
MSME deposit rates FC	0.2%	0.2%	0.2%	0.0 pp	0.0 pp

Segment definitions and PL

Business Segments

Following the annual review of our business segmentation, the limits for the corporate segment have been changed as follows:

·     annual revenue limit increased from GEL 12.0 million to GEL 20.0 million; and

·     granted facilities limit raised from GEL 5.0 million to GEL 7.0 million.

The definition has been updated starting from 1st of January 2022. The updated changes are reflected in the segment definitions below:

·     Corporate - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 20.0 million or which has been granted facilities of more than GEL 7.0 million. Some other business customers may also be assigned to the CIB segment or transferred to the MSME segment on a discretionary basis. In addition, CIB includes Wealth Management private banking services to high-net-worth individuals with a threshold of US$ 250,000 on assets under management (AUM), as well as on a discretionary basis;

·     Retail - Non-business individual customers including the fully-digital bank, Space. The business is broadly divided into two segments:

o  Mass retail

o  Affluent retail (customers eligible for affluent retail have >3,000 GEL in monthly income)

Since 2021, WM & VIP individual customers have been managed in the CIB directory;

·     MSME - Business customers (Legal entities and private individual customers that generate income from business activities), who are not included in the CIB segment;

·     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 Segment

3Q'22	Retail	MSME	CIB	Corp. Centre	Total
Interest income	237,252	126,881	158,880	82,382	605,395
Interest expense	(46,499)	(2,954)	(91,339)	(124,188)	(264,980)
Net transfer pricing	(65,310)	(62,157)	39,606	87,861	-
Net interest income	125,443	61,770	107,147	46,055	340,415
Fee and commission income	93,325	8,745	19,341	15,263	136,674
Fee and commission expense	(42,914)	(3,847)	(3,522)	(519)	(50,802)
Net fee and commission income	50,411	4,898	15,819	14,744	85,872
Insurance profit	-	-	-	10,020	10,020
Net gains/(losses) from currency derivatives, foreign currency operations and translation	26,273	15,341	33,563	70,535	145,712
Net gains/(losses) from disposal of investment securities measured at fair value through other comprehensive income	-	-	2,662	(2)	2,660
Other operating income	2,029	190	304	2,345	4,868
Share of (loss)/profit of associates	-	-	(106)	190	84
Other operating non-interest income and insurance profit	28,302	15,531	36,423	83,088	163,344
Credit loss (allowance)/recovery for loans to customers	(36,563)	(5,598)	742	-	(41,419)
Credit loss (allowance)/recovery for finance leases receivables	-	-	-	(716)	(716)
Credit loss (allowance)/recovery for performance guarantees and credit related commitments	(26)	(33)	(375)	-	(434)
Credit loss (allowance)/recovery for other financial assets	(1,575)	(416)	(1,468)	(1,582)	(5,041)
Credit loss (allowance)/recovery for financial assets measured at fair value through other comprehensive income	-	-	261	(146)	115
Net (impairment)/ recovery of non-financial assets	93	128	9	(991)	(761)
Operating profit after expected credit and non-financial asset impairment losses	166,085	76,280	158,558	140,452	541,375
Staff costs	(39,321)	(16,788)	(16,427)	(22,025)	(94,561)
Depreciation and amortization	(16,032)	(3,753)	(1,779)	(5,120)	(26,684)
Provision for liabilities and charges	-	-	-	(2,000)	(2,000)
Administrative and other operating expenses	(24,630)	(6,414)	(5,107)	(16,844)	(52,995)
Operating expenses	(79,983)	(26,955)	(23,313)	(45,989)	(176,240)
Profit before tax	86,102	49,325	135,245	94,463	365,135
Income tax (expense)/credit	(9,350)	(6,151)	(16,739)	(11,875)	(44,115)
Profit for the period	76,752	43,174	118,506	82,588	321,020

In 1Q 2022, the management reclassified net fee and commission income from acquiring and issuing business, utility payments income as well as fee expense on self-service and POS terminal transactions to the retail segment from other segments.

Consolidated Financial Statements of TBC Bank Group PLC

Consolidated Balance Sheet

In thousands of GEL	Sep-22	Jun-22
Cash and cash equivalents	3,764,435	2,739,226
Due from other banks	48,623	42,552
Mandatory cash balances with National Bank of Georgia and Central Bank of Uzbekistan	2,219,506	2,108,455
Loans and advances to customers	16,962,397	17,131,009
Investment securities measured at fair value through other comprehensive income	2,492,579	1,915,987
Bonds carried at amortized cost	64,030	27,962
Finance lease receivables	261,217	253,057
Investment properties	22,930	20,506
Current income tax prepayment	1,505	1,565
Deferred income tax asset	14,439	13,876
Other financial assets	432,672	402,621
Other assets	443,587	454,779
Premises and equipment	426,129	429,726
Right of use assets	95,625	77,039
Intangible assets	363,096	345,291
Goodwill	59,963	59,964
Investments in associates	3,576	3,466
TOTAL ASSETS	27,676,309	26,027,081
LIABILITIES
Due to credit institutions	3,619,566	3,575,808
Customer accounts	17,115,022	15,772,905
Lease liabilities	76,890	70,491
Other financial liabilities	351,580	283,154
Current income tax liability	14,294	13,870
Debt Securities in issue	1,466,022	1,514,106
Deferred income tax liability	2,157	4,349
Provisions for liabilities and charges	33,550	31,000
Other liabilities	122,534	116,384
Subordinated debt	621,878	634,319
TOTAL LIABILITIES	23,423,493	22,016,386
EQUITY
Share capital	1,693	1,682
Shares held by trust	(7,900)	(7,900)
Treasury shares	(20,389)	-
Share premium	297,923	283,430
Retained earnings	3,527,017	3,344,623
Merger reserve	402,862	402,862
Share based payment reserve	(3,523)	(12,488)
Fair value reserve for investment securities measured at fair value through other comprehensive income	(6,674)	(25,609)
Cumulative currency translation reserve	(19,648)	(18,023)
Net assets attributable to owners	4,171,361	3,968,577
Non-controlling interest	81,455	42,118
TOTAL EQUITY	4,252,816	4,010,695
TOTAL LIABILITIES AND EQUITY	27,676,309	26,027,081

Consolidated Statement of Profit or Loss and Other Comprehensive Income

In thousands of GEL	3Q'22	2Q'22	3Q'21
Interest income	605,395	552,719	476,636
Interest expense*	(264,980)	(249,147)	(217,246)
Net interest income	340,415	303,572	259,390
Fee and commission income	136,674	127,490	122,690
Fee and commission expense	(50,802)	(51,918)	(54,059)
Net fee and commission income	85,872	75,572	68,631
Net insurance premiums earned	26,207	23,053	16,818
Net insurance claims incurred and agents' commissions	(16,187)	(16,355)	(10,799)
Net insurance premium earned after claims and acquisition costs	10,020	6,698	6,019
Net gains from currency derivatives, foreign currency operations and translation	145,712	66,520	29,102
Net gains from disposal of investment securities measured at fair value through other comprehensive income	2,660	108	3,863
Other operating income	4,868	11,461	4,798
Share of profit/(losses) of associates	84	178	170
Other operating non-interest income	153,324	78,267	37,933
Credit loss allowance for loans to customers	(41,419)	(39,025)	4,389
Credit loss recovery/(allowance) for finance lease receivable	(716)	883	142
Credit loss (allowance)/recovery for performance guarantees and credit related commitments	(434)	(1,659)	(6,697)
Credit loss recovery/(allowance) for other financial assets	(5,041)	992	(3,037)
Credit loss recovery for financial assets measured at fair value through other comprehensive income	115	1,183	424
Net (impairment)/recovery of non-financial assets	(761)	(228)	(327)
Operating income after expected credit and non-financial asset impairment losses	541,375	426,255	366,867
Losses from modifications of financial instruments	-	-	(104)
Staff costs	(94,561)	(90,332)	(74,643)
Depreciation and amortization	(26,684)	(24,321)	(19,988)
Recovery/(allowance) of provision for liabilities and charges	(2,000)	4	(54)
Administrative and other operating expenses	(52,995)	(48,986)	(37,010)
Operating expenses	(176,240)	(163,635)	(131,695)
Profit before tax	365,135	262,620	235,068
Income tax expense	(44,115)	(28,056)	(27,921)
Profit for the period	321,020	234,564	207,147
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve	18,929	(1,597)	(1,375)
Exchange differences on translation to presentation currency	137	(8,703)	(1,866)
Other comprehensive income for the period	19,066	(10,300)	(3,241)
Total comprehensive income for the period	340,086	224,264	203,906
Profit attributable to:
- Shareholders of TBCG	318,985	233,799	204,892
- Non-controlling interest	2,035	765	2,255
Profit for the period	321,020	234,564	207,147
Total comprehensive income is attributable to:
- Shareholders of TBCG	338,051	223,499	201,662
- Non-controlling interest	2,035	765	2,244
Total comprehensive income for the period	340,086	224,264	203,906

* Interest expense includes net interest gains from currency swaps

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.

Ratios (based on monthly averages, where applicable)	3Q'22	2Q'22	3Q'21
Profitability ratios:
ROE1	31.1%	24.1%	24.1%
ROA2	4.8%	3.7%	3.6%
Cost to income3	29.9%	35.3%	35.4%
NIM4	6.3%	5.8%	5.3%
Loan yields5	11.9%	11.2%	10.5%
Deposit rates6	3.9%	3.7%	3.5%
Cost of funding7	4.8%	4.8%	4.5%
Asset quality & portfolio concentration:
Cost of risk9	1.0%	0.9%	-0.1%
PAR 90 to Gross Loans9	1.3%	1.4%	1.3%
NPLs to Gross Loans10	2.3%	2.3%	3.1%
NPL provision coverage11	99.6%	99.8%	94.3%
Total NPL coverage12	164.2%	167.5%	169.3%
Credit loss level to Gross Loans13	2.3%	2.3%	2.9%
Related Party Loans to Gross Loans14	0.1%	0.1%	0.0%
Top 10 Borrowers to Total Portfolio15	6.0%	6.6%	7.7%
Top 20 Borrowers to Total Portfolio16	9.0%	8.8%	11.4%
Capital & liquidity positions:
Net Loans to Deposits plus IFI** Funding17	89.1%	97.7%	97.5%
Net Stable Funding Ratio18	133.1%	126.7%	127.1%
Liquidity Coverage Ratio19	142.8%	121.2%	116.5%
Leverage20	6.5x	6.5x	6.9x
CET 1 CAR (Basel III)21	15.3%	15.0%	13.4%
Tier 1 CAR (Basel III)22	18.0%	17.8%	15.4%
Total 1 CAR (Basel III)23	21.4%	21.2%	19.3%

*The Group enters into swap agreements denominated in foreign currencies with a view to decrease cost of funding. The respective interest effect is presented within net interest income but has not been previously included in the cost of funding ratio calculation. As the contracts reached a significant volume, the Group revisited the presentation of effects in the cost of funding ratio and decided to include interest effect from swap agreements in the calculation of cost of funding. The change was made retrospectively, and the ratios of previous periods have also been restated.

** International Financial Institutions

Ratio definitions

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

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

3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income).

4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions.

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

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

7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest-bearing liabilities; annualised where applicable.

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

9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period.

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

11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans.

12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans.

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

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

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

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

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

18. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank standalone, based on local standards.

19. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank standalone, based on local standards.

20. Leverage equals total assets to total equity.

21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on local standards.

22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on local standards.

23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on local standards.

Exchange Rates

To calculate the QoQ growth of the Balance Sheet items without the currency exchange rate effect, we used the US$/GEL exchange rate of 3.4118 as of 31 March 2021. As of 30 September 2022, the US$/GEL exchange rate equalled 2.8352. For the P&L items growth calculations without the currency effect, we used the average US$/GEL exchange rate for the following periods: 3Q 2022 of 2.8254, 2Q 2022 of 2.9962, 3Q 2021 of 3.1208.

Unaudited Consolidated Financial Results Overview for 9M 2022

This statement provides a summary of the unaudited business and financial trends for 9M 2022 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.

TBC Bank Group PLC's financial results has been prepared in accordance with UK-adopted International Accounting Standard (IAS) 34 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority (FCA).

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

Financial Highlights

Income Statement Highlights
in thousands of GEL	9M'22		9M'21		Change YoY
Net interest income	932,606		727,288		28.2%
Net fee and commission income	227,334		176,932		28.5%
Other operating non-interest income	306,592		159,129		92.7%
Operating profit	1,466,532		1,063,349		37.9%
Total credit loss (allowance)/recovery	(99,846)		22,941		NMF
Losses from modifications of financial instruments	-		(1,695)		-100.0%
Operating expenses	(490,824)		(388,623)		26.3%
Profit before tax	875,862		695,972		25.8%
Income tax expense	(96,296)		(85,446)		12.7%
Profit for the period	779,566		610,526		27.7%

Balance Sheet and Capital Highlights
in thousands of GEL	Sep-22		Sep-21		Change YoY
Total Assets	27,676,309		23,701,241		16.8%
Gross Loans	17,365,894		15,963,520		8.8%
Customer Deposits	17,115,022		14,338,537		19.4%
Total Equity	4,252,816		3,448,193		23.3%
CET 1 Capital (Basel III)	3,126,561		2,565,560		21.9%
Tier 1 Capital (Basel III)	3,693,601		2,955,910		25.0%
Total Capital (Basel III)	4,378,258		3,693,637		18.5%
Risk Weighted Assets (Basel III)	20,487,074		19,143,450		7.0%

Key Ratios	9M'22	9M'21	Change YoY
ROE	26.6%	25.3%	1.3 pp
Bank's standalone ROE [7]	27.7%	29.3%	-1.6 pp
ROA	4.1%	3.5%	0.6 pp
Bank's standalone ROA7	4.2%	4.0%	0.2 pp
NIM	5.9%	5.0%	0.9 pp
Cost to income	33.5%	36.5%	-3.0 pp
Bank's standalone cost to income7	26.6%	28.8%	-2.2 pp
Cost of risk	0.7%	-0.3%	1.0 pp
NPL to gross loans	2.3%	3.1%	-0.8 pp
NPL provision coverage ratio	99.6%	94.3%	5.3 pp
Total NPL coverage ratio	164.2%	169.3%	-5.1 pp
CET 1 CAR (Basel III)	15.3%	13.4%	1.9 pp
Tier 1 CAR (Basel III)	18.0%	15.4%	2.6 pp
Total CAR (Basel III)	21.4%	19.3%	2.1 pp
Leverage (Times)	6.5x	6.9x	-0.4x

Net Interest Income

In 9M 2022, net interest income amounted to GEL 932.6 million, up by 28.2% on a YoY basis.

The YoY rise in interest income by GEL 310.0 million, or 22.5%, was mostly attributable to an increase in interest income from loans related to the GEL 1,402.4 million, or 8.8%, increase in the respective portfolio, as well as a 1.2 pp rise in the respective yield.

YoY interest expense increased by GEL 104.7 million, or 16.1%, mainly related to an increase in the deposit portfolio of GEL 2,776.5 million, or 19.4%, and increased deposit costs up by 0.4 pp.

In 9M 2022, our NIM stood at 5.9%, up by 0.9 pp on a YoY basis.

In thousands of GEL	9M'22	9M'21	Change YoY
Interest income	1,685,858	1,375,821	22.5%
Interest expense*	(753,251)	(648,533)	16.1%
Net interest income	932,607	727,288	28.2%
NIM	5.9%	5.0%	0.9 pp

* Interest expense includes net interest gains from currency swaps

Non-Interest Income

Total non-interest income amounted to GEL 533.9 million during 9M 2022, increasing by 58.9% on a YoY basis.

Net fee and commission income increased by 28.5% on a YoY basis, related to increased payment transactions both in Georgia and Uzbekistan.

Net gains from FX operations increased approximately three times on a YoY basis, mainly related to increased margins and the high volatility of the exchange rate.

The decrease in other operating income was related to the gain from the disposal of our investment property in the amount of GEL 26.3 million in 2Q 2021.

In thousands of GEL	9M'22	9M'21	Change YoY
Other non-interest income
Net fee and commission income	227,334	176,932	28.5%
Net gains from currency derivatives, foreign currency operations and translation	260,088	89,286	NMF
Net insurance premium earned after claims and acquisition costs	20,985	15,892	32.0%
Other operating income	25,519	53,951	-52.7%
Total other non-interest income	533,926	336,061	58.9%

Credit Loss Allowance

Credit loss allowance for loans during 9M 2022 amounted to GEL 91.9 million, which translated into a 0.7% cost of risk.

In thousands of GEL	9M'22	9M'21	Change YoY
Credit loss (allowance)/recovery for loans to customers	(91,941)	36,952	NMF
Credit loss allowance for other transactions	(7,905)	(14,011)	-43.6%
Total credit loss (allowance)/recovery	(99,846)	22,941	NMF
Operating income after expected credit and non-financial asset impairment losses	1,366,687	1,086,290	25.8%
Cost of risk	0.7%	-0.3%	1.0 pp

Operating Expenses

During 9M 2022, our operating expenses expanded by 26.3% on a YoY basis.

During 9M 2022, the annual increase in operating expenses was mainly driven by increased staff costs due to the expansion of business, both locally and internationally. The increase in administrative and other operating expenses was mainly related to marketing activities and the maintenance of intangible assets, primarily attributable to the growth of our Uzbek business .

Our cost to income ratio amounted to 33.5%, while the Bank's standalone cost to income stood at 26.6%.

In thousands of GEL	9M'22	9M'21	Change YoY
Operating expenses
Staff costs	(271,052)	(222,714)	21.7%
Allowance of provision for liabilities and charges	(2,060)	(63)	NMF
Depreciation and amortization	(74,016)	(56,689)	30.6%
Administrative and other operating expenses	(143,696)	(109,157)	31.6%
Total operating expenses	(490,824)	(388,623)	26.3%
Cost to income	33.5%	36.5%	-3.0 pp
Bank's standalone cost to income[8]	26.6%	28.8%	-2.2 pp

Net Income

In 9M 2022, we delivered robust profitability and generated GEL 779.6 million in net profit, up by 27.7% YoY, driven by both interest and non-interest income streams.

As a result, our ROE and ROA for 9M 2022 reached 26.6% and 4.1%, accordingly.

In thousands of GEL	9M'22	9M'21	Change YoY
Losses from modifications of financial instruments	-	(1,695)	NMF
Profit before tax	875,863	695,972	25.8%
Income tax expense	(96,296)	(85,446)	12.7%
Profit for the period	779,567	610,526	27.7%
ROE	26.6%	25.3%	1.3 pp
Bank's standalone ROE8	27.7%	29.3%	-1.6 pp
ROA	4.1%	3.5%	0.6 pp
Bank's standalone ROA8	4.2%	4.0%	0.2 pp

Funding and Liquidity

As of 30 September 2022, the total liquidity coverage ratio (LCR), as defined by the NBG, was 142.8%, above the 100% limit, while the LCR in GEL and FC stood at 135.9% and 145.0%, accordingly, above the respective limits of 75% and 100%.

Over the same period, NSFR stood at 133.1%, compared to the regulatory limit of 100%.

	Sep-22	Sep-21	Change YoY
Minimum net stable funding ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Net stable funding ratio as defined by the NBG	133.1%	127.1%	6.0 pp
Net loans to deposits + IFI funding	89.1%	97.5%	-8.4 pp
Leverage (Times)	6.5x	6.9x	-0.4x
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%	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	142.8%	116.5%	26.3 pp
LCR in GEL, as defined by the NBG	135.9%	98.0%	37.9 pp
LCR in FC, as defined by the NBG	145.0%	125.5%	19.5 pp

Regulatory Capital

As of September 2022, our CET1, Tier 1 and Total Capital ratios stood at 15.3%, 18.0% and 21.4%, respectively, and remained comfortably above the minimum regulatory requirements by 3.5%, 3.9% and 3.7%, accordingly.

The YoY increase in, CET1 Tier 1 and total capital adequacy ratios were mainly driven by net income generation and the appreciation of the local currency, partially offset by the issued 2021 final and 2022 interim dividends.

In thousands of GEL	Sep-22	Sep-21	Change YoY
CET 1 Capital	3,126,561	2,565,560	21.9%
Tier 1 Capital	3,693,601	2,955,910	25.0%
Total Capital	4,378,258	3,693,637	18.5%
Total Risk-weighted Exposures	20,487,074	19,143,450	7.0%
Minimum CET 1 ratio	11.8%	11.3%	0.5 pp
CET 1 Capital adequacy ratio	15.3%	13.4%	1.9 pp
Minimum Tier 1 ratio	14.1%	13.5%	0.6 pp
Tier 1 Capital adequacy ratio	18.0%	15.4%	2.6 pp
Minimum total capital adequacy ratio	17.7%	17.9%	-0.2 pp
Total Capital adequacy ratio	21.4%	19.3%	2.1 pp

Loan Portfolio

As of 30 September 2022, the gross loan portfolio reached GEL 17,365.9 million, up by 8.8% YoY or 18.8% on a constant currency basis.

The proportion of gross loans denominated in foreign currency decreased by 6.0 pp on a YoY basis and accounted for 48.9% of total loans. On a constant currency basis, the proportion of gross loans denominated in foreign currency decreased by 1.7 pp YoY and stood at 53.2%.

As of 30 September 2022, our market share in total loans stood at 38.8%, up by 0.4 pp on a YoY basis. Our loan market share in legal entities was 39.1%, up by 0.5 pp YoY. Our loan market share in individuals stood at 38.5%, up by 0.3 pp on a YoY basis.

In thousands of GEL	Sep-22	Sep-21	Change YoY
Loans and advances to customers
Retail	6,871,351	5,950,915	15.5%
Retail loans GEL	4,230,472	3,313,791	27.7%
Retail loans FC	2,640,879	2,637,124	0.1%
CIB	5,918,394	6,136,232	-3.6%
CIB loans GEL	2,096,791	1,941,958	8.0%
CIB loans FC	3,821,603	4,194,274	-8.9%
MSME	4,576,149	3,876,373	18.1%
MSME loans GEL	2,544,976	1,936,230	31.4%
MSME loans FC	2,031,173	1,940,143	4.7%
Total loans and advances to customers	17,365,894	15,963,520	8.8%

	9M'22	9M'21	Change YoY
Loan yields	11.4%	10.2%	1.2 pp
Loan yields GEL	15.6%	15.0%	0.6 pp
Loan yields FC	7.5%	6.6%	0.9 pp
Retail Loan Yields	13.3%	11.5%	1.8 pp
Retail loan yields GEL	16.5%	16.0%	0.5 pp
Retail loan yields FC	8.6%	6.4%	2.2 pp
CIB Loan Yields	9.6%	8.9%	0.7 pp
CIB loan yields GEL	14.2%	13.6%	0.6 pp
CIB loan yields FC	7.4%	7.0%	0.4 pp
MSME Loan Yields	10.9%	10.1%	0.8 pp
MSME loan yields GEL	15.2%	14.8%	0.4 pp
MSME loan yields FC	6.2%	6.0%	0.2 pp

Loan Portfolio Quality

On a YoY basis, Par 30 remained at stable levels across the segments and amounted to 2.3%, while total NPL improved by 0.8 pp and amounted to 2.3%. The decrease in NPL was mainly driven by resumed repayments on restructured loans in the retail and MSME segments.

Par 30	Sep-22	Sep-21	Change YoY
Retail	2.8%	2.7%	0.1 pp
CIB	0.6%	0.5%	0.1 pp
MSME	3.6%	4.6%	-1.0 pp
Total Loans	2.3%	2.3%	0.0 pp

Non-performing Loans	Sep-22	Sep-21	Change YoY
Retail	2.3%	3.6%	-1.3 pp
CIB	1.4%	1.5%	-0.1 pp
MSME	3.6%	4.7%	-1.1 pp
Total Loans	2.3%	3.1%	-0.8 pp

NPL Coverage	Sep-22			Sep-21
	Provision Coverage	Total Coverage	Provision Coverage		Total Coverage
Retail	162.7%	206.9%	120.7%		189.3%
CIB	56.6%	121.8%	82.5%		151.2%
MSME	58.6%	143.0%	68.7%		154.5%
Total	99.6%	164.2%	94.3%		169.3%

Cost of risk

In 9M 2022, the cost of risk amounted to 0.7%, started normalizing after material COVID-19 related recoveries in 2021.

Cost of risk	9M'22	9M'21	Change YoY
Retail	1.8%	0.2%	1.6 pp
CIB	-0.1%	-0.8%	0.7 pp
MSME	0.3%	-0.3%	0.6 pp
Total	0.7%	-0.3%	1.0 pp

Deposit Portfolio

The total deposits portfolio amounted to GEL 17,115.0 million, increasing by 19.4% YoY or 28.9% on a constant currency basis.

The proportion of deposits denominated in a foreign currency decreased by 7.1 pp YoY and stood at 56.6% of total deposits. On a constant currency basis, the proportion of deposits decreased by 3.9 pp YoY and accounted for 59.8% of total deposits.

As of 30 September 2022, our market share in deposits amounted to 40.0%, down by 0.1 pp on a YoY basis, while our market share in deposits to legal entities stood at 41.6%, up by 1.6 pp YoY. Our market share in deposits to individuals stood at 38.7%, down by 1.5 pp on a YoY basis.

In thousands of GEL	Sep-22	Sep-21	Change YoY
Customer Accounts
Retail	6,345,634	5,593,535	13.4%
Retail deposits GEL	1,661,392	1,353,608	22.7%
Retail deposits FC	4,684,242	4,239,927	10.5%
CIB	7,817,418	6,834,386	14.4%
CIB deposits GEL	3,683,976	2,681,148	37.4%
CIB deposits FC	4,133,442	4,153,238	-0.5%
MSME	1,640,701	1,433,603	14.4%
MSME deposits GEL	770,924	688,598	12.0%
MSME deposits FC	869,777	745,005	16.7%
Total Customer Accounts*	17,115,022	14,338,537	19.4%

* Total deposit portfolio includes Ministry of Finance deposits in the amount of, GEL 1,311 million and GEL 477 million as of 30 Sep 2022 and 30 Sep 2021, respectively.

	9M'22	9M'21	Change YoY
Deposit rates	3.8%	3.4%	0.4 pp
Deposit rates GEL	7.5%	6.6%	0.9 pp
Deposit rates FC	1.5%	1.7%	-0.2 pp
Retail Deposit Yields	2.8%	2.3%	0.5 pp
Retail deposit rates GEL	5.5%	4.8%	0.7 pp
Retail deposit rates FC	1.9%	1.5%	0.4 pp
CIB Deposit Yields	4.6%	4.2%	0.4 pp
CIB deposit rates GEL	9.4%	8.2%	1.2 pp
CIB deposit rates FC	1.3%	2.1%	-0.8 pp
MSME Deposit Yields	0.7%	0.8%	-0.1 pp
MSME deposit rates GEL	1.2%	1.5%	-0.3 pp
MSME deposit rates FC	0.2%	0.3%	-0.1 pp

Segment definitions and PL

Business Segments

Following the annual review of our business segmentation, the limits for the corporate segment have been changed as follows:

·     annual revenue limit increased from GEL 12.0 million to GEL 20.0 million; and

·     granted facilities limit raised from GEL 5.0 million to GEL 7.0 million.

The definition has been updated starting from 1st of January 2022. The updated changes are reflected in the segment definitions below:

·     Corporate - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 20.0 million or which has been granted facilities of more than GEL 7.0 million. Some other business customers may also be assigned to the CIB segment or transferred to the MSME segment on a discretionary basis. In addition, CIB includes Wealth Management private banking services to high-net-worth individuals with a threshold of US$ 250,000 on assets under management (AUM), as well as on a discretionary basis;

·     Retail - Non-business individual customers including the fully-digital bank, Space. The business is broadly divided into two segments:

o  Mass retail

o  Affluent retail (customers eligible for affluent retail have >3,000 GEL in monthly income)

o  Since 2021, the WM & VIP individual customers have been managed in the CIB directory;

·     MSME - Business customers (Legal entities and private individual customers that generate income from business activities), who are not included in the CIB segment;

·     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

9M'22	Retail	MSME	CIB	Corp. Centre	Total
Interest income	656,587	353,527	463,714	212,029	1,685,857
Interest expense	(125,571)	(8,285)	(256,076)	(363,319)	(753,251)
Net transfer pricing	(187,204)	(166,534)	91,360	262,378	-
Net interest income	343,812	178,708	298,998	111,088	932,606
Fee and commission income	252,558	24,050	58,830	41,619	377,057
Fee and commission expense	(124,628)	(9,627)	(7,709)	(7,759)	(149,723)
Net fee and commission income	127,930	14,423	51,121	33,860	227,334
Insurance profit	-	-	-	20,985	20,985
Net gains/(losses) from currency derivatives, foreign currency operations and translation	59,741	39,024	93,044	68,280	260,089
Net gains/(losses) from disposal of investment securities measured at fair value through other comprehensive income	-	-	3,572	1,313	4,885
Other operating income	4,294	572	1,248	14,312	20,426
Share of (loss)/profit of associates	-	-	(232)	439	207
Other operating non-interest income and insurance profit	64,035	39,596	97,632	105,329	306,592
Credit loss (allowance)/recovery for loans to customers	(86,495)	(9,268)	3,822	-	(91,941)
Credit loss (allowance)/recovery for finance leases receivables	-	-	-	(1,278)	(1,278)
Credit loss (allowance)/recovery for performance guarantees and credit related commitments	120	46	(1,670)	-	(1,504)
Credit loss (allowance)/recovery for other financial assets	(1,607)	(416)	(406)	(3,310)	(5,739)
Credit loss (allowance)/recovery for financial assets measured at fair value through other comprehensive income	-	-	121	1,262	1,383
Net (impairment)/ recovery of non-financial assets	70	(89)	340	(1,088)	(767)
Operating profit after expected credit and non-financial asset impairment losses	447,865	223,000	449,958	245,863	1,366,686
Staff costs	(119,964)	(47,864)	(43,544)	(59,680)	(271,052)
Depreciation and amortization	(45,321)	(10,576)	(4,995)	(13,124)	(74,016)
Provision for liabilities and charges	-	-	-	(2,060)	(2,060)
Administrative and other operating expenses	(69,402)	(17,808)	(14,897)	(41,590)	(143,697)
Operating expenses	(234,687)	(76,248)	(63,436)	(116,454)	(490,825)
Profit before tax	213,178	146,752	386,522	129,409	875,861
Income tax (expense)/credit	(23,001)	(16,095)	(42,173)	(15,027)	(96,296)
Profit for the period	190,177	130,657	344,349	114,382	779,565

In 1Q 2022, the management reclassified net fee and commission income from acquiring and issuing business, utility payments income as well as fee expense on self-service and POS terminal transactions to retail segment from other segments.

Consolidated Financial Statements of TBC Bank Group PLC

Consolidated Balance sheet

In thousands of GEL	Sep-22	Sep-21
Cash and cash equivalents	3,764,435	1,960,441
Due from other banks	48,623	64,894
Mandatory cash balances with National Bank of Georgia and Central Bank of Uzbekistan	2,219,506	2,095,848
Loans and advances to customers	16,962,397	15,504,311
Investment securities measured at fair value through other comprehensive income	2,492,579	2,253,510
Bonds carried at amortized cost	64,030	1,118
Finance lease receivables	261,217	237,557
Investment properties	22,930	32,444
Current income tax prepayment	1,505	4,856
Deferred income tax asset	14,439	9,216
Other financial assets	432,672	383,890
Other assets	443,587	352,191
Premises and equipment	426,129	378,514
Right of use assets	95,625	52,944
Intangible assets	363,096	305,088
Goodwill	59,963	59,964
Investments in associates	3,576	4,455
TOTAL ASSETS	27,676,309	23,701,241
LIABILITIES
Due to credit institutions	3,619,566	3,361,515
Customer accounts	17,115,022	14,338,537
Lease liabilities	76,890	53,627
Other financial liabilities	351,580	165,710
Current income tax liability	14,294	16,559
Debt Securities in issue	1,466,022	1,507,969
Deferred income tax liability	2,157	7,684
Provisions for liabilities and charges	33,550	28,275
Other liabilities	122,534	137,086
Subordinated debt	621,878	636,086
TOTAL LIABILITIES	23,423,493	20,253,048
EQUITY
Share capital	1,693	1,682
Shares held by trust	(7,900)	(25,489)
Treasury shares	(20,389)	-
Share premium	297,923	283,430
Retained earnings	3,527,017	2,793,033
Merger reserve	402,862	402,862
Share based payment reserve	(3,523)	(8,811)
Fair value reserve for investment securities measured at fair value through other comprehensive income	(6,674)	(1,207)
Cumulative currency translation reserve	(19,648)	(7,065)
Net assets attributable to owners	4,171,361	3,438,435
Non-controlling interest	81,455	9,758
TOTAL EQUITY	4,252,816	3,448,193
TOTAL LIABILITIES AND EQUITY	27,676,309	23,701,241

Consolidated Statement of Profit or Loss and Other Comprehensive Income

In thousands of GEL	9M'22	9M'21
Interest income	1,685,857	1,375,821
Interest expense *	(753,251)	(648,533)
Net interest income	932,606	727,288
Fee and commission income	377,057	300,284
Fee and commission expense	(149,723)	(123,352)
Net fee and commission income	227,334	176,932
Net insurance premiums earned	69,475	47,107
Net insurance claims incurred and agents' commissions	(48,490)	(31,215)
Net insurance premium earned after claims and acquisition costs	20,985	15,892
Net gains from currency derivatives, foreign currency operations and translation	260,089	89,286
Net gains from disposal of investment securities measured at fair value through other comprehensive income	4,885	10,904
Other operating income	20,426	42,281
Share of profit of associates	207	766
Other operating non-interest income	285,607	143,237
Credit loss (allowance)/recovery for loans to customers	(91,941)	36,952
Credit loss allowance for net finance leases receivables	(1,278)	(2,373)
Credit loss (allowance)/recovery for performance guarantees and credit related commitments	(1,504)	(4,767)
Credit loss allowance for other financial assets	(5,739)	(8,363)
Credit loss recovery for financial assets measured at fair value through other comprehensive income	1,383	2,266
Net impairment of non-financial assets	(767)	(774)
Operating income after expected credit and non-financial asset impairment losses	1,366,686	1,086,290
Losses from modifications of financial instruments	-	(1,695)
Staff costs	(271,052)	(222,714)
Depreciation and amortization	(74,016)	(56,689)
Allowance of provision for liabilities and charges	(2,060)	(63)
Administrative and other operating expenses	(143,697)	(109,157)
Operating expenses	(490,825)	(388,623)
Profit before tax	875,861	695,972
Income tax expense	(96,296)	(85,446)
Profit for the period	779,565	610,526
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Movement in fair value reserve	4,182	(12,361)
Exchange differences on translation to presentation currency	(8,436)	(4,940)
Other comprehensive income for the period	(4,254)	(17,301)
Total comprehensive income for the period	775,311	593,225
Profit attributable to:
- Shareholders of TBCG	777,450	604,061
- Non-controlling interest	2,115	6,465
Profit for the period	779,565	610,526
Total comprehensive income is attributable to:
- Shareholders of TBCG	773,196	586,780
- Non-controlling interest	2,115	6,445
Total comprehensive income for the period	775,311	593,225

* Interest expense includes net interest gains from currency swaps

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.

Ratios (based on monthly averages, where applicable)	9M'22	9M'21
Profitability ratios:
ROE1	26.6%	25.3%
ROA2	4.1%	3.5%
Cost to income3	33.5%	36.5%
NIM4	5.9%	5.0%
Loan yields5	11.4%	10.2%
Deposit rates6	3.8%	3.4%
Cost of funding7	4.8%	4.5%
Asset quality & portfolio concentration:
Cost of risk9	0.7%	-0.3%
PAR 90 to Gross Loans9	1.3%	1.3%
NPLs to Gross Loans10	2.3%	3.1%
NPL provision coverage11	99.6%	94.3%
Total NPL coverage12	164.2%	169.3%
Credit loss level to Gross Loans13	2.3%	2.9%
Related Party Loans to Gross Loans14	0.1%	0.0%
Top 10 Borrowers to Total Portfolio15	6.0%	7.7%
Top 20 Borrowers to Total Portfolio16	9.0%	11.4%
Capital & liquidity positions:
Net Loans to Deposits plus IFI** Funding17	89.1%	97.5%
Net Stable Funding Ratio18	133.1%	127.1%
Liquidity Coverage Ratio19	142.8%	116.5%
Leverage20	6.5x	6.9x
CET 1 CAR (Basel III)21	15.3%	13.4%
Tier 1 CAR (Basel III)22	18.0%	15.4%
Total 1 CAR (Basel III)23	21.4%	19.3%

*The Group enters into swap agreements denominated in foreign currencies with a view to decrease cost of funding. Respective interest effect is presented within net interest income, but has not been previously included in the cost of funding ratio calculation. As the contracts reached significant volume, the Group revisited the presentation of effects in the cost of funding ratio and decided to include interest effect from swap agreements in the calculation of cost of funding. The change was made retrospectively and ratios of previous periods have also been restated.

** International Financial Institutions

Ratio definitions

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

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

3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income).

4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions.

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

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

7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest-bearing liabilities; annualised where applicable.

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

9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period.

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

11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans.

12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans.

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

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

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

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

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

18. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank standalone, based on local standards.

19. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank standalone, based on local standards.

20. Leverage equals total assets to total equity.

21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on local standards.

22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on local standards.

23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone, based on local standards.

Exchange Rates

To calculate the YoY growth without the currency exchange rate effect, we used the US$/GEL exchange rate of 3.1228 as of 30 September 2021. As of 30 September 2022, the US$/GEL exchange rate equalled 2.8352. For the P&L items growth calculations without the currency effect, we used the average US$/GEL exchange rate for the following periods: 9M 2022 of 2.9705, 9M 2021 of 3.2563.

Additional Disclosures

1)   TBC Bank - Background

TBC Bank Group PLC ("TBC PLC") is a public limited company registered in England and Wales. TBC PLC is the parent company of JSC TBC Bank ("TBC Bank") and a group of companies that principally operate in Georgia in the financial sector and other closely related fields. TBC PLC also recently expanded its operations in Uzbekistan. TBC PLC is listed on the London Stock Exchange under the symbol TBCG and is a constituent of the FTSE 250 Index. It is also a member of the FTSE4Good Index Series and the MSCI United Kingdom Small Cap Index.

TBC Bank is the largest banking group in Georgia, where 98.0% of its business is concentrated, with a 38.6% market share by total assets. It offers retail, CIB and MSME banking nationwide.

2)   Subsidiaries of TBC Bank Group PLC[9] 

	Ownership / voting	Country	Year of incorporation	Industry	Total Assets
					(after elimination)
Subsidiary	% as of 30 Sep 2022				Amount	% in TBC Group
					GEL'000
JSC TBC Bank	99.9%	Georgia	1992	Banking	26,577,178	96.03%
United Financial Corporation JSC	99.5%	Georgia	1997	Card processing	23,069	0.08%
TBC Capital LLC	100.0%	Georgia	1999	Brokerage	4,131	0.01%
TBC Leasing JSC	100.0%	Georgia	2003	Leasing	321,219	1.16%
TBC Kredit LLC	100.0%	Azerbaijan	1999	Non-banking credit institution	23,084	0.08%
TBC Pay LLC	100.0%	Georgia	2009	Processing	47,169	0.17%
Index LLC	100.0%	Georgia	2011	Real estate management	106	0.00%
TBC Invest LLC	100.0%	Israel	2011	PR and marketing	288	0.00%
TBC Asset management LLC	100.0%	Georgia	2021	Asset Management	0	0.00%
JSC TBC Insurance	100.0%	Georgia	2014	Insurance	99,376	0.36%
Redmed LLC	100.0%	Georgia	2019	E-commerce	1,639	0.01%
T NET LLC*	100.0%	Georgia	2019	Asset Management	34,308	0.12%
Online Tickets LLC**	100.0%	Georgia	2015	Software Services	5,019	0.02%
TKT UZ	100.0%	Uzbekistan	2019	Retail Trade	61	0.00%
Artarea.ge LLC	100.0%	Georgia	2021	PR and marketing	58	0.00%
Marjanishvili 7 LLC	100.0%	Georgia	2020	Food and Beverage	854	0.00%
Space JSC	100.0%	Georgia	2021	Software Services	0	0.00%
Space International JSC	100.0%	Georgia	2021	Software Services	44,843	0.16%
TBC Group Support LLC	100.0%	Georgia	2020	Risk Monitoring	15	0.00%
Inspired LLC	51.0%	Uzbekistan	2011	Processing	33,530	0.12%
TBC Bank JSC UZ	60.2%	Uzbekistan	2020	Banking	441,095	1.59%
TBC Fin Service LLC***	100.0%	Uzbekistan	2019	Retail Leasing	19,268	0.07%

* In June 2022, TBC Net LLC legal name was changed to T Net LLC and the dormant companies are excluded from the list.

** In May 2022, TBC Bank Group PLC finalized acquisition process of remaining 45% interest in Online Tickets LLC.

*** In April 2022, Vendoo Uz legal name was changed to TBC Fin service LLC and moved under TBC Bank Uzbekistan

.

3)   TBC Insurance

TBC Insurance is a wholly-owned subsidiary of TBC Bank, which was acquired by the Group in October 2016 and is the main bancassurance partner for the Bank, with a share of around 30.1% in its total gross written premium (GWP) as of 30 September 2022.

TBC Insurance serves its customers with a highly digitalized approach, which includes a website and a mobile app for health insurance. The company is represented in both the non-health and health insurance segments. In 2021, TBC Insurance was well regarded by its customers with an NPS[10] of 65% - the best score among its peers.

In 3Q 2022, net profit including health insurance amounted 6,719 thousand, up by 86.7% YoY or up by 81.3% on a QoQ basis. The increase in net profit was driven by overall business growth, increased efficiency, as well as higher interest income. The QoQ reduction on gross written premium (GWP) was related to the high base in 2Q 2022, due to several large corporate accounts.

Information excluding health insurance	3 Q'22	2 Q'22	3 Q'21	9M'22	9M'21
In thousands of GEL
Gross written premium	3 1 , 385	30 , 769	26,125	89,504	70,220
Net earned premium[11]	2 5 , 6 4 0	2 3 , 349	19,238	69,923	54,486
Net profit	5,446	3 , 358	3,951	11,556	10,358
Net combined ratio	81.3%	88 . 4 %	80.2%	87.6%	81.7%
Information including health insurance	3 Q'22	2 Q'22	3 Q'21	9M'22	9M'21
In thousands of GEL
Gross written premium	35,746	3 9 , 071	28,851	108,956	80,780
Net earned premium	32,700	2 9 , 224	22,268	87,780	62,938
Net profit	6,719	3 , 706	3,598	12,985	8,638
Net combined ratio	81.0%	89 .5%	85.0%	88.4%	87.6%

Note: IFRS standalone data

Non-health market shares[12]	3Q'22	2Q'22	3Q'21
Retail segment	38.6%	35.7%	39.6%
Total	26.1%	22.0%	25.6%

4)   Fast Growing Digital Bank in Uzbekistan

in thousands	Jun'21	Sep'21	Dec'21	Mar'22	Jun'22	Sep'22
# of total registered users	302	667	1,140	1,499	1,758	2,058
# of downloads	391	897	1,548	2,011	2,386	2,834
Retail gross loan portfolio* (GEL)	25,239	52,493	92,825	143,640	181,343	268,976
Retail deposit portfolio** (GEL)	15,543	91,979	207,510	168,669	235,780	296,563
# of total cards issued (cumulative figures)	66	117	224	312	377	451
# of other cards attached (cumulative figures)	126	328	386	550	695	852
Total monthly number of transactions	563	906	1,739	2,036	2,298	2,342

* Loans in Uzbekistan are disbursed in local currency

** Current, savings and time accounts. Deposits in Uzbekistan are accepted in local currency.

5)   Loan Book Breakdown by Stages According IFRS 9

Total (in million GEL)

	30-Sep-22		30-Jun-22		30-Sep-21
Stage	Gross	LLP rate*	Gross	LLP rate*	Gross	LLP rate*
1	15,456	0.7%	15,480	0.7%	13,557	0.9%
2	1,487	7.6%	1,610	7.1%	1,737	5.7%
3	423	42.5%	445	40.6%	670	34.9%
Total	17,366	2.3%	17,535	2.3%	15,964	2.9%

CIB (in million GEL)

	30-Sep-22		30-Jun-22		30-Sep-21
Stage	Gross	LLP rate*	Gross	LLP rate*	Gross	LLP rate*
1	5,313	0.4%	5,777	0.4%	5,285	0.9%
2	525	0.2%	602	0.2%	728	0.5%
3	80	31.4%	84	30.0%	123	20.1%
Total	5,918	0.8%	6,463	0.7%	6,136	1.2%

MSME (in million GEL)

	30-Sep-22		30-Jun-22		30-Sep-21
Stage	Gross	LLP rate*	Gross	LLP rate*	Gross	LLP rate*
1	4,087	0.6%	3,877	0.6%	3,206	0.7%
2	313	6.7%	338	6.3%	445	6.6%
3	177	29.1%	190	30.2%	225	32.3%
Total	4,577	2.1%	4,405	2.3%	3,876	3.2%

Retail (in million GEL)

	30-Sep-22		301-Jun-22		30-Sep-21
Stage	Gross	LLP rate*	Gross	LLP rate*	Gross	LLP rate*
1	6,056	1.1%	5,826	1.1%	5,066	1.1%
2	649	14.1%	670	13.7%	564	11.8%
3	166	62.3%	171	57.6%	321	42.5%
Total	6,871	3.8%	6,667	3.8%	5,951	4.4%

* LLP rate is defined as credit loss allowances divided by gross loans

6)   Glossary

Terminology	Definition
Daily active users (DAU)	The number of retail digital users, who logged into our digital channels at least once per day.
Monthly active users (MAU)	The number of retail digital users, who logged into our digital channels at least once a month.

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[1] Note: For better presentation purposes, certain financial numbers are rounded the nearest whole number.

[2] Note: For better presentation purposes, certain financial numbers are rounded the nearest whole number

[3] Remittances from Russia are adjusted for double counting with tourism inflows and other similar effects, based on TBC Capital estimates.

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

[5] Net insurance premium earned after claims and acquisition costs can be reconciled to the standalone net insurance profit (as shown in Annex 3) 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.

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

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

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

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

[10] The Net Promoter Score (NPS) was measured in January 2022 by an independent research company, Anova

[11] Net earned premium equals earned premium minus the reinsurer's share of earned premium.

[12] Market shares are based on internal estimates, excluding border motor third party liability (MTPL) insurance. Source is Insurance State Supervision Service of Georgia.

 

END

 

 

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