TBC Bank shares spike over 6% as annual profits surge 15%

TBC Bank Group PLC (LON:TBCG) have seen their shares spike following a strong set of annual results, published on Thursday.

The Georgian bank said that it had seen a double digit rise in annual profit which was the headline statistic in the annual update.

The firm praised the strong performance in its corporate lending department, as this sector drove the firm’s strong loan book performance.

Across 2019, TBC Bank recorded GEL585.5 million in pretax profit, which is a 15% climb compared to GEL510.2 million in 2018.

The firm also said that its’ net interest income rose 3% in 2019 from GEL778 a year ago to GEL801.5 million.

The bank also told the market that operating expenses rose 9.7% in 2019 to GEL450.7 million from GEL411.0 million in 2018, and, as a result, its cost-to-income ratio worsened to 39.9% from 37.8% – which was one of the dampened takes from the update.

TBC finished 2019 with a gross loan book of GEL12.66 billion, again showing a 22% rise from the GEL10.37 billion figure seen at the end of 2018. Notably, net interest margin fell from 6.9% to 5.6%.

Looking at their customer deposits, these amounted to GEL10.05 billion, up 7.5% from the year before at GEL9.35 billion.

A notable rise came from TBC’s retail loan book, where this was up 7.5% year on year. Corporate Loans grew 47% while its Micro, Small, & Medium Enterprises loan book rose 18%.

Going forward, the firm said that it had laid solid foundations for further customer initiatives and that there are ambition plans in place.

The CEO of TBC Bank commented:

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

TBC’s strong quarterly update

The results today show a clear plan to build, and in November the firm gave another steady update.

The FTSE 250 listed bank said its net profit for the three months to September 30 increased 18% to GEL126.8 million from GEL107.4 million in the same period a year ago. Additionally, pretax profit rose 13% to GEL142.3 million.

Third quarter net interest income fell 6.7% to GEL186.2 million, while fee & commission income rallied 20% to GEL47.1 million.
Other operating non-interest income increased 19% to GEL46.4 million.

Net interest margin for the third quarter fell to 5.0% from 6.9%. Year-to-date margin fell 1.5 percentage point to 5.5%.

TBC has backed their medium-term target of return on equity of above 20%, cost to income ratio below 35%, dividend payout ratio of 25% to 35% and loan book growth of 10% to 15%.

In the third quarter, the company’s return on equity fell to 20.4% from 21.2% and cost to income ratio increased to 39.9% from 37.4%.

TBC Bank have clearly made an emphasis to build and grow as a firm – something which has to be admired.

Shares in TBC Bank trade at 1,392p (+6.26%). 20/2/20 13:07BST.

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