Page 48 - GEORptAug21

8.1.5 Bank news
Georgia’s TBC Bank says payout curbs to go as capital buffers restored
Bank of Georgia posts “robust” Q1 profit
TBC Bank Group said on July 16 that Georgian curbs on distributions have now been lifted as it plans to "fully restore" capital buffers by the end of the month.
TBC Bank explained that it plans to restore the capital buffers that were temporarily suspended by the National Bank of Georgia in March last year, due to Covid-19. Capital buffers refer to the minimum amount of capital financial firms must hold onto.
"This will result in lifting any regulatory restrictions on any capital distributions by TBC Bank," the company added.
The lender also said: "The improved macroeconomic outlook coupled with a robust financial performance puts TBC Group in a strong position to maintain solid capital levels and to continue with its growth strategy both in Georgia and Uzbekistan, while at the same time to resume the payment of dividends to shareholders."
TBC noted that as of June 30, its CET1 capital ratio was 13.04%, topping the 11.24% minimum requirement with restored buffers. The capital adequacy ratios stand "comfortably" above the minimum, the company said.
TBC Bank also approved a change to its dividend policy to allow semi-annual payments. What's more, it is mulling an interim dividend in respect to the first half of 2021.
Bank of Georgia Group, which owns one of the two leading Georgian banks, on May 19 reported swinging to a profit in the first quarter. The lender said it was helped by higher interest income and a rise in the use of its digital platforms. On May 18, Bank of Georgia's main rival TBC reported “above expectations” earnings.
Bank of Georgia recorded a profit before tax and one-off items of Georgian lari (GEL) 152mn ($45.2mn) compared to a GEL113mn loss in the first quarter of 2020.
First-quarter performance was described as "robust" by the bank, with net interest income up 7.7% at GEL212mn. Net fee and commission income rose by 21% y/y to GEL48.7mn.
Bank of Georgia said its loan book increased by 11% y/y to GEL14.2bn, reflecting continued strong loan origination levels in the corporate, MSME and mortgage segments during the pre-COVID-19 period.
The ratio of net loans to customer funds plus development finance institution borrowings stood at 90% on March 31, compared to 105% a year previously. The total profit of the 15 commercial banks operating in Georgia was GEL412mn ($120mn, under local accounting standards) in the first quarter of the year; that was seen by analysts as sturdy.
Compared to 2020, the Georgian banks' profitability has improved radically.
In the first quarter of 2020, they reported losses of GEL747mn, resulting from setting aside provisions in the amount of GEL1.1bn to offset possible loan losses generated by the coronavirus crisis that was imminent at that time. However, even filtering out the effect of the provisioning, the profitability of the banks has improved in 2021 by a double-digit rate (16%), which exceeds both inflation and currency depreciation.
Fitch Ratings revised its outlooks on TBC Bank and Bank of Georgia, as well as Liberty Bank, to stable from negative, at the end of March, while affirming their respective long-term issuer default ratings (IDRs).
48 GEORGIA Country Report August 2021 www.intellinews.com