Page 40 - GEORptAug22

TBC Bank announces $76mnn net income for Q1
Long-Term IDR.”
Looking at operating environment risks, the ratings agency said: “Georgia's operating environment is sensitive to external shocks given the economy's reliance on commodity exports and remittances (particularly from Russia). The war in Ukraine and resultant international sanctions on Russia will cause the Russian economy to contract, putting pressure on Georgia's economy through trade, remittances and tourism channels.
“Fitch has revised Georgia's GDP growth estimates for 2022 to 3.2% from 5.8%. In addition, dollarisation in the banking sector is high, as is Georgia's external debt (albeit largely comprising long-standing support from official creditors). A robust regulatory and legal framework adds to the Georgian banking sector's resistance to operating environment pressure.”
Terabank's business profile is vulnerable to a deterioration in the operating environment given its small size, lack of revenue diversification, focus on smaller businesses and limited pricing power, Fitch observed, adding: “Terabank's market shares are low in the concentrated Georgian banking sector with 2.3% of total sector loans at end-2021, although slightly higher in SME banking (5.1%).”
TBC Bank in Georgia announced its 1Q22 results on 18 May, showing the bank's net income amounted to GEL224mn ($76mn), up by 46% y/y, while the return on equity stood at 24.3%, compared to 20.3% in 2021. Operating income was GEL413mn because of the low base in 2021, caused by the partial lock-down in January and mid-February 2021.
"Our strong capital generation enables the board to recommend a final dividend for 2021 of GEL2.16/share at the upcoming 2022 AGM, which together with the interim dividend paid in September 2021, will equal a total dividend of GEL3.66/share", the bank said. The total dividend pay-out ratio for 2021 will be 25% in line with mid-term guidance of 25-35%.
The bank expects strong GDP growth in 2022 at around 5.5%, citing "the resilience of the Georgian economy" amid the war in Ukraine. The recovery started in the 2Q21, reaching 28.9% growth in real GDP, and gradually slowing down to 8.8% in Q421. "Despite the adverse impact of the war in Ukraine, this growth momentum continued in the beginning of 2022, only partially driven by the low base effect a year ago," the bank said. According to preliminary estimates of the National Statistics Office of Georgia, the Georgian economy expanded by 14.4% y/y in Q1, with a solid increase of 10.6% y/y in March.
Bank credit increased by 18% y/y by the end of 1Q22, compared to 18.2% by the end of 4Q21. In terms of segments, retail lending growth accelerated the most, increasing from 18% at the end of 4Q21 to 19.7% at the end of 1Q22. MSME (micro, small and medium-sized enterprise) lending also grew from 22.3% at the end of 1Q21 to 22.5%, while in the same period corporate lending slowed by 2.8 pp, amounting to 12.8%.
40 GEORGIA Country Report August 2022 www.intellinews.com