13.May.2019 15:34
Financial Sector

Strong loan book propels TBC Bank's quarterly profit

Strong loan book propels TBC Bank's quarterly profit
Georgia’s largest retail lender TBC Bank Group on Monday posted its biggest quarterly profit jump in seven quarters, as its loan book grew on the back of a stable economy.

The Tbilisi-based bank, which listed in London in 2016 to gain more access to a global investor base, said net profit advanced 37% to 133.3 million laris ($48.8 million) for the three months ended March 31 from a year earlier.

TBC serves retail, corporate and small- and medium-sized enterprise (SME) customers in Georgia, and said gross loans and advances to customers rose 22.9% to 10.37 billion laris.

Economic growth in Georgia, a former Soviet republic, slowed in the first quarter, but jumped 6% in March.

Historically, economic strength in the country has helped TBC and its main rival Bank of Georgia enjoy strong lending growth, which in turn has bolstered profits.

However, TBC’s net interest margin (NIM) - the main indicator of a bank’s financial strength - slipped to 6.1% from 6.9%, as new regulations limited its ability to lend to higher-yield retail customers.

TBC said growth of its loan portfolio continued to moderate due to the new rules, after already warning in February of a sharp slowdown in non-mortgage retail lending.

Bank of Georgia had also alerted markets in February that growth of unsecured consumer loans would moderate due to the new rules and said it would lead to banks seeing a shift towards lending to corporates, SMEs and the mortgage sector.

TBC’s CEO Vakhtang Butskhrikidze said its SME and corporate segments helped offset the hit from the new rules, which include updated caps on payment-to-income and loan-to-value ratios and the introduction of Basel III capital adequacy requirements.

“New regulation decreases the portion of higher-yield consumer loans into the total portfolio ... that decreases the total yield on the loans and therefore the net interest margin,” Butskhrikidze told Reuters.

The CEO said there was an impact of 50 basis points on NIM due to the changes in the first quarter.

The FTSE-250 member, started with just $500 in capital nearly a quarter century ago, said its market share of total deposits rose 1.5 percentage points to 40.4% as of March 31.

After becoming Georgia’s biggest retail lender following its purchase of JSC Bank Republic a few years ago, TBC now has 2.4 million customers and 7,300 employees.

($1 = 2.7300 laris)

Source - Reuters



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