TBC Bank Group PLC

Good afternoon and welcome to the TBC Bank Group PLC third quarter 2022 results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. If questions are encouraged, you can be submitted at any time via the Q&A tab situated in the right-hand corner of your screen. Simply click on Q&A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today where published responses are appropriate to do so on the InvestorMeet company platform. Before we begin, we'd like to submit the following poll. I'd now like to hand over to the executive management team of TBC Bank Group, PLC. Good afternoon.

Good afternoon. Dear all, thank you very much for joining our call. I'd like to start today's presentation with a highlight of our key achievements during this third quarter. We continue with the market leader in Georgia with robust profitability and strong growth supported by solid capital. We also continue strong progress in exploiting our international growth potential. In the third quarter, the group generated the exceptional return of equity of 71.1%, while our set one ratio stood at 15.3%, which is above the minimum required level by 3.5 percentage points. We remind the best capitalized system is back in Georgia. Our loan book portfolio growth was 19%, while our deposit portfolio grew by 29% on a constant currency basis. In the third quarter, we continued to expand our position in the Uzbek market, and our loan book reached up to 300 million lari and deposits around 300 million lari. I'm also delighted to report that on the group's level, the number of digital daily activity users reached 1.1 million in September, while the number of digital monthly active users amounted to 3.2 million for the same period. On the next slide, I am pleased to announce that we are adding two new medium-term targets. Uzbek operations to account for 10 to 15% of the group's net profit and to achieve 7 million monthly active users on the group's level. Now I'd like to review recent macro developments briefly on the slide number five. In the first nine months of this year, GDP growth in Georgia reached 10.2% despite adverse impacts of the war in Ukraine. We expect the growth to stay at around the same level during the remaining three months, resulting in an estimated GDP growth of about 10% for the full year. Also on a positive side, the Lari continued to align with its strong term trend against the dollar. The next slide shows the drivers behind the strong GDP growth. The current geopolitical crisis has once again proved the resilience of the Georgian economy. Exports have remained strong on the back of countries other than Russia and Ukraine. And the recovery in tourism flows, partially supported by the immigration impact, contributed With strong exports, remittances, as well as recovering FDI inflows, supports about 10% GDP growth for the whole 2022 year. Also, inflation remains elevated and stood at 11.5% in September, and it is expected to gradually moderate. Now, let's move to the next slide. Here, I'd like to reiterate the group's positioning and highlight our huge fast growth potential. First of all, we are the market leader in Georgia, which diversifies business across all market segments. Secondly, we have the consistently delivered robust profitability and steady growth backed by the strong capital. Third, we stand out with the advanced omnichannel distribution network with the best-in-class digital consumer proposition and the largest ecosystem network. In addition, we have the fast-growing payment business in Georgia and Uzbekistan. And finally, our Uzbek operations give us a strategic advantage to deliver long-term growth and profitability. In line with our strong market position and growth strategy, we continue to increase the number of our customers every year. And at the end of September, we had 3.9 million monthly active users in two geographies. Moving on to slide number nine, we show our leading position in Georgia. As you can see from this slide, we hold leading position across all segments with steady growth levels. These leading positions indicate resilience and diversity of our business model and allow us to extract significant cross-segment synergies and efficiency. On the next slide, I'd like to summarize our key financial results for the third quarter. On a year-on-year basis, our net profit increased by an exceptional 55% and stood at 321 million lari. This growth was related to the strong income generation across the board with substantial contribution from non-interest income. Our return of equity in the quarter reached 31.1%, while return of assets amounted to 4.8%. As expected, our cost of risk started to normalize and amounted to an annualized 1% in the third quarter. Over the same period, our cost-to-income ratio strongly improved to 5.5 percentage points and stood at a little bit less than 30%. And our capital position remained strong. We set one ratio at 15.3%, as mentioned above. On the slide 11, I'd like to share with you an update on our digital ecosystem T-Net. We have the largest digital ecosystem in Georgia that consists of four digital verticals, lifestyle, housing, automobile, and e-commerce. We have 1.8 million unique annual visitors across all verticals, which is around 40% of the internet traffic among the Georgian websites. Our ecosystem allows us to leverage our large customer base on a data hub capabilities. First, to generate net fee and commission income. Second, create leads for loss. Third, strengthen our customer loyalty. And finally, increase our customer engagement. The following slide gives more details on the results of our digital ecosystem. Total gross merchandise volume is growing rapidly as our users are becoming more engaged. And at the same time, the number of leads generated increased four times year on year, and the loan conversion rate grew by 9%. As a result, loan disbursed reached 26 million lari, accounting around 8% of our total retail loan disbursed during the quarter. Now let's move to the slide 17, which illustrates the solid growth of our Georgian payment business. In the third quarter, the number of POS transactions and transactions with TBC cards increased by 28% and 30%, respectively, year on year. And also, it's important to highlight that our payment business is a significant contributor of our fee and commission income. On slide 14, you can see our digitalization metrics, both in Georgia and on the group's level. We have made strong progress in expanding our digital footprint on the group's level. As already mentioned, we have up to 3.2 million digital active users every month, while digital daily active users stood at 1.1 million in September. Importantly, our transaction of floating continues to be high at 99%, and our consumer lending and deposit sales of floating ratio also remains high at 70% in this third quarter. Now I'd like to update you more details about continued progress and rapid growth on our Uzbek banking operations. By the end of quarter, the number of downloads of our TBC use application increased to 2.8 million, while the number of registered users was 2.1 million. At the same time, as mentioned already, we reached up to 300 million lari in retail deposits and up to 270 million lari in our retail loan portfolio. Finally, on the slide 16, I'd like to highlight the strong performance of our payment subsidiary PayMe, which is the second largest payment provider in Uzbekistan. In the third quarter, PayMe continued its rapid growth in all major metrics. The number of monthly active users increased by 62% year-on-year and reached 2.1 million at the end of September. And total payments volume increased by around 64%. And over the same period, both revenues and the net profit continued their impressive growth and reached 12 million lari and 7.5 million lari, respectively. Now I'd like to hand over Gheorghi Gheorghi, please.

Thanks, Wachtank. Really great, Korta. great financials and results. And I'll start with slide 19 that shows kind of our, I would say, outstanding financials and results. So, in Q3, our net profit, as Wachtank already mentioned, increased by actually impressive 55% year-on-year, and that's driven by continuation of our strong revenue trend that we have been delivering since the banks started. And as I mentioned, substation contribution was from our non-interest income that I'm going to touch a bit later. So as a result, we are looking at an ROI of 31.1% for the quarter, probably one of the best that we have seen so far. So, and I'll now go to slide two, where I will deep dive a bit more into our profitability drivers. As I mentioned, both actually interest and non-interest income streams performed extremely well. And NIM, our NIM continued upward journey and increased post year on year. It's 100 basis points and quarter on quarter basis and landed at 6.3%. Name increase is mainly driven by loan composition and loan yield effects. On non-interest side, the contribution is twofold. The first one is the strong ethics growth due to high volume of transactions, wider spreads, but also new treasury products. Net fee and commission income actually increased by higher payment. Transactions as well as our new business as a product that we put in place. So all that actually resulted in a very robust and strong non-interest growth. So I would like to move now to slide 21. to review our operating expenses. So in Q3, the increase was 34% year-on-year, and that was mainly driven by we expand our business both locally, let's say, into Uzbekistan, that also resulted in higher staff and admin costs. We actually put money into technology. We continue to invest into our business to ensure its ongoing strength and growth. In addition, staff costs also increased due to performance costs driven by higher income. However, the key point is that consistent with the previous periods, our income grew at much faster rate and our cost to income ratio decreased in Q3 to 29.9%. It's not only below our target of 35%, but I think it's the first time it is below 30%. Now, I would like to go to slide 22 that shows a very strong book quality. As of 30th of September 22, MPL remained stable quarter and quarter at very healthy 2.3%. Year-on-year trend actually is mainly driven by resumed payments from loans in retail and MSME segments. That was still like COVID tail last year and since NSVC customers start paying and our MPL is at 2.3%. Total provision coverage was very robust, 164%. And in Q3, cost of effects actually continued to, I would say, within our normalized range that we anticipated and landed at 1%. So I would like now to go to slide 23, as it shows performance of our low and funding portfolios. Year on year, the loan book growth was very high at 90%, that's actually above our guidance, 10 to 15% on a constant currency basis. And that was mainly driven by our MSME I would say retail segments. However, on quarter-on-quarter basis, our loan portfolio remained more or less stable, up by 2%, and the driver was actually the repayment from one CIB client. That is also the reason why CIB portfolio actually decreased a bit. As for the customer funding side, the growth was more prominent. We actually outpaced the market and that resulted in actually to increase our customer funding share. I will touch that point later on in one of the following slides. Now, I would like to move to slide 24, where you can see our very solid capital position. Our capital ratios remain at very strong levels at quarter end, and all of them are well above the minimum regulatory requirements. And key point to mention here is that the ratios increased despite paying a generous dividend in September, and the majority of growth was delivered by our net profit. And that also was supported by sex legal law. Now I would like to move on slide 25 that shows our very strong liquidity and funding base. This year of customer funding in total liabilities, as I already mentioned, increased and reached 73%. It is up by two percentage points on a year-on-year basis. I-5 funding that includes both senior and sub-laws is around 1.9 billion, that is 8% of total liabilities. And our liquidity ratios, both LCR and NSFR, continue to be valuable, the regulatory requirements, Here, I also would like to highlight that our LCR on Basel basis is 351%. And I would like to conclude with slide 26, with our promised and long awaited financials of our Uzbekistan business. To start with, I'm very pleased to announce that our Uzbekistan business consisting of our fully digital consumer banking and payment subsidiaries, TBC, Uz and PayMe, turned profitable in Q3 2022. In addition, I also would like to highlight that we expect Uzbekistan bank itself to be profitable for 2023 and throughout the year. For the third quarter, TBC bank's TBC use name was 60.2% and cost of risk was 7.4%. That provides us very healthy risk actuality, risk-based name. And here I would like also to announce the mid-term targets of our Uzbekistan business. First, it's 30% plus ROE. Second, 5 million MAU. And third, 10 to 50% share in groups that profit. So that concludes my part. Thank you. And I would like to hand back now to Vakhtang. Vakhtang, please.