TBC Bank Group PLC on Thursday reported a sharp rise in annual profit, driven by a rise in income. For 2018, the FTSE 250-listed Georgian bank reported a 29% increase in pretax profit to GEL510.2 million, about GBP147 million, from GEL394.7, about GBP113 million. net profit amounted to GEL 454.9 million, 23% increase from 2017.
TBC attributed its "robust profitability" on strong income generation, improved cost efficiency and prudent risk management.
The bank's net interest income also increased 29% in 2018 to GEL778.0 million from GEL604.0 million in 2017.
TBC's operating expenses increased 14% to GEL411.0 million from GEL359.4 million.
The bank's net interest margin increased in the period to 6.9% from 6.5% at the end of 2017 as TBC's risk-weighted assets increased 22% to GEL13.15 billion from GEL10.75 billion.
Chief Executive Vakhtang Butskhrikidze said: "The Georgian economy continued to perform strongly in 2018 following the sharp recovery of 2017. According to initial estimates, GDP growth amounted to 4.8% in 2018, placing Georgia among the fastest-growing economies in the region. The core strengths of the economy - continuous reforms, diversified trade and investment inflows - as well as a prudent macroeconomic stance continued to pay off.
"Even with a number of unfavourable events in the region and considerably tighter fiscal policy domestically, the economy has stayed on the course of sustainable development. Banking sector loan growth continued to be solid in 2018, with the total loan portfolio expanding by 17.2% at a constant exchange rate. Lending was strong across both the business and retail segments, although a sharp slowdown in non-mortgage retail lending was notable following the introduction of a new regulation on retail lending in May 2018."
The Georgian bank's regulatory tier 1 capital adequacy ratio fell to 12.8% at the end of 2018% compared to 13.4% at the same time a year earlier.
TBC's gross loans increased 20% to GEL15.53 billion, with loans and advances to customers jumping 22% to GEL1.12 billion.
Customer deposits increased 20% to GEL9.35 billion from GEL7.82 billion.
In the fourth quarter, TBC's pretax profit jumped 14% to GEL144.3 million compared to the previous and was 34% higher than the fourth quarter of 2017.
The lender's net interest income followed the same growth trend in the fourth quarter, increasing 7.6% to GEL214.8 million on the third quarter and increasing 30% on the same period a year ago.
TBC's total assets totalled GEL15.53 billion at December 31, giving the bank a 38% market share of the Georgian banking sector.
Looking ahead, TBC reiterated its medium-term guidance targets of return on equity above 20%, a cost to income ratio below 35%, a dividend pay-out ratio of 25% to 35% and loan book growth of about 10% to 15%.
Yesterday, TBC has issued an official statement, that founders of TBC Badri Japaridze and Mamuka Khazaradze are stepping down from their positions at TBC Bank. TBC also announced an update to the National Bank of Georgia's inspection into TBC, saying it has withdrawn its appeal, will revise its supervisory board and pay a GEL1.1 million fine.
The National Bank of Georgia was conducting an inspection of TBC Bank JSC over "certain transactions" in 2007 and 2008. With the regulator claiming these transactions, which the regulator believes are related to the chairman and deputy chairman of TBC, did not comply with relevant Georgian law concerning conflicts of interest.
TBC appealed the decision but has since decided to withdraw the appeal.
TBC said: "Since TBC Bank takes into account the possible damage to the country's investment image and respects the role of the National Bank, as a qualified regulator, and despite the fact that the decisions of the National Bank was appealed in the court, JSC TBC Bank would like to announce that it will implement a restructuring of its supervisory board whereby the founding shareholders will not be represented at the supervisory Board of JSC TBC Bank."
The lender said its chair and deputy chair will remain in their positions on the board of TBC, which is a 100% shareholder of JSC TBC Bank.
The National Bank of Georgia welcomed the decision from Khazaradze and Japaridze saying it will have a "positive effect on the transparency of TBC and will increase investor confidence, which will ultimately have a positive effect on the development of TBC and the country's financial sector".
