15th Aug 2019 08:30
(Alliance News) - TBC Bank Group PLC on Thursday reported strong interim profit growth as the bank's loan book rose sharply on a rise in mortgage lending.
In the six months to June 30, the Georgian lender's pretax profit increased 11% to GEL265.9 million, about GBP75.8 million, from GEL239.5 million, about GBP68.3 million, a year before.
TBC Bank's net interest income in the first half edged 6.6% higher year on year to GEL387.4 million from GEL363.6 million. Net fee & commission income grew 15% to GEL85.3 million.
"Despite recent board changes, we continue to operate in our usual manner capitalising on our leading market share, strong capital and liquidity positions and operational excellence for the benefit of our shareholders. I welcome the supporting statements made by the National Bank of the Georgia, European Bank for Reconstruction & Development and International Finance Corp in support of TBC," said Chief Executive Vakhtang Butskhrikidze.
Chair Mamuka Khazaradze and Deputy Chair Badri Japaridze stepped down from their roles after the Georgian public prosecutor charged the duo over transactions at the lender's banking subsidiary in 2007 and 2008.
The Georgian lender has since appointed senior independent director Nikoloz Enukidze as its new chair.
In February, Khazaradze and Japaridze stood down from their supervisory board roles at the bank's subsidiary, JSC TBC Bank, amid investigations being undertaken by the National Bank of Georgia and the Office of the Public Prosecutor.
The regulator was satisfied with the pair stepping down from JSC TBC Bank. The lender also paid a GEL1 million, or GBP274,926, fine. The Georgian public prosecutor, however, said it intends to charge the chair and deputy chair over the transactions.
Following these changes at the top, TBC Bank said it underwent a review of its governance structure and, taking into consideration feedback from shareholders, the lender will create a "mirror board" between its holding company TBC Bank Group PLC and its main banking subsidiary JSC TBC Bank.
Turning back to the lender's interim performance, TBC Bank ended the half with a loan book of GEL11.14 billion, 25% higher than the GEL8.90 billion recorded at the same point a year earlier. The lender's mortgage book jumped 35% year on year to GEL2.96 billion.
Loans & advances to customers made in the half increased 11% to GEL582.9 million from GEL526.4 million the year before.
The lender's net interest margin in the half worsened to 5.8% compared to 7.0% the year before.
"The pressure on net interest income was related to a continued impact of the regulation implemented in January 2019, that limits the ability of banks to lend money to higher-yield retail customers, an increase in minimum reserve requirements for foreign currency funds, as well as competition in interest rates," the lender explained.
Customer deposits were also 25% higher year on year at GEL9.88 billion compared to GEL7.93 billion.
The lender's operating expenses jumped 16% to GEL211.9 million from GEL183.0 million a year before. Staff costs increased 13% to GEL116.6 million. The lender has recently undergone vast board changes following a probe into its main banking subsidiary JSC TBC Bank.
As a result, the cost-to-income ratio in the half worsened to 38.9% versus 36.8% the year before.
TBC Bank ended the period with a tier one capital ratio of 12.4%, behind the 13.4% reported the year before.
TBC Bank reiterated its medium-term targets of a return on equity above 20%, a cost-to-income ratio below 35%, a dividend pay-out ratio between 25% to 35% and loan book growth of 10% to 15%. RoE in the first half was 22.3%.
Shares in TBC Bank were 1.4% higher in London on Thursday morning at 1,340.00 pence each.
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