TBC Bank Group PLC

Hello, everybody. It's great to welcome you to our second quarter, first half 2025 results call. As usual, I'm joined on the call by our CEO, Vaktang Budskirikidze, and our CFO, Georgi Megrelishvili. We'll start with a presentation and then we'll move to Q&A. And with that, I'll hand over to Vaktang. Thank you.

Thank you, Andrew. Hello, everyone, and thank you for joining us today. I am pleased to present another strong set of results for the second quarter. As you can see, our gross net profit reached 346 million lari, up by 5% year-on-year, while return of equity was about 24%. In Georgia, we maintained high profitability with double-digit growth in our loan book and operating income, whilst maintaining a solid capital position. Over the same period, Uzbekistan's operating income increased by an excellent 86%, while our loan book more than doubled year-on-year. We also surpassed 20 million registered users, a great achievement. We continue to build out a digital ecosystem in Uzbekistan. In the second quarter, we launched the country's first fully digital insurance service. We also agreed to acquire Builds, which is Uzbekistan's leading SaaS platform for businesses serving the retail sector, thus strengthening our business banking proposition. In addition, I am proud to share that TBC Uzbekistan became the first and only business from Uzbekistan and Central Asia to be included in the world's top fintech companies list of 2025 by CNBC and Statista, which is excellent recognition for what Nika Oliver and the team are building. Thanks to our strong profits and the solid capital position, the Board has declared the second quarterly dividend of 1.75 Lari per share, bringing the total first half 2025 dividend to 3.25 Lari. We have also announced the 75 million Lari share buyback, which reflects our commitment to returning excess capital to shareholders. Now turning to Georgia. Georgia's economy continues to perform very well. Real GDP growth reached 7.1% in the second quarter, bringing first half of growth to 8.3%. And our macro team has upgraded its 2025 GDP growth forecast to 7.1%. The inflation rate reached 4% in June, surpassing the MBG's 3% target. Even so, inflation is expected to ease over the next few months. On the next slide, I want to highlight the consistent and high profitability that our Georgian business delivers quarter after quarter. Over the past three years, average return of equity has been about 25%, with the loan book growing in average at 17%. As we see on the slide eight, we continue to be a leader player in Georgia. In the second quarter, our gross loans increased by 11% year on year, and I'd like to highlight the excellent progress we are making in one of our key focus areas of unsecured consumer lending. As our first consumer loans increased by 45% year on year in the second quarter, and we continue to gain market share in this segment. Over the same period, our total customer deposits grew by 10% year on year. We continue to hold the strong positions across both lending and deposits, and we are consistently improving the way we serve individuals and the businesses. This leads nicely on to slide nine, which shows the growing trend of digital engagement within our retail customer base in Georgia. As of June, our digital monthly users exceeded 1.1 million with 66% penetration in our active customers. Over the same period, our daily active users to monthly active users ratio stood at a very decent 47%. I'd also like to highlight that our monthly active users have been consistently growing by around 50,000 quarter over quarter over the past year. Our growing share of fully digitally issued consumer loans and retail deposits shows that our customers are highly engaged with our digital channels. Digital customer loans issuance surpassed 80%, while deposit offloading reached 70% respectively. Now, on slide 10, I'm pleased to share that TBC Bank has been recognized as the best digital bank in Georgia by EverMoney, reflecting our ongoing commitment to innovation and digital excellence. For example, in the second quarter, we introduced a number of improvements to our mobile bank application, focused on personalization, seamless onboarding, smarter financial tools of PFM and robo-advisory, and improved user accessibility across key digital banking services. Now let's move to our Uzbekistan business and its economy. Like Georgia, the Uzbek economy also remained very strong, with real GDP growth of 7.5% in the second quarter, bringing the first half of 2025 growth to 7.2%. Inflation is also easing, dropping to 8.7% in June, supported by tighter monetary policy. Slide 13 provides an excellent snapshot of the great progress we have made over the past few years in Uzbekistan across all the major metrics. We have now over 20 million unique registered users, out of which almost 6 million are monthly active users. Our loan book has more than doubled year-on-year and now tops $900 million, while our deposit increased by 86%, reaching almost $500 million. Our operating income reached a record $62 million in the second quarter, doubled year-on-year in the first half, which is testament of the strength of our core business. Net profit came in at $12 million, up over 35% year-on-year. Now let's turn to some of our recent achievements in Uzbekistan. The uptake of our core daily banking product Salon Card has been excellent, with over half a million cards issued since its launch last November. At the same time, we have issued around 70,000 Osmond credit cards as we roll out the new and innovative product for the Uzbek market. In the second quarter, we also launched a fully digital insurance offering, starting with the credit life insurance and we plan to expand the portfolio to introduce a comprehensive suite of personal insurance products. To date, we have issued over 180,000 policies. Another major recent milestone was partnership with Build Uzbekistan's leading B2B SaaS platform for businesses serving the retail sector, serving more than 4,000 merchants. This will further strengthen our business banking proposition. And finally, slide 15 shows how our business in Uzbekistan continues to gain market share and is now a material contributor to the group. By the end of the second quarter, we held over 5% in the retail loans and over 4% in the retail deposits. Uzbekistan also generated 20% of the operating income and 9% of the group's net profit in the second quarter. With that, I want to pass to Georgi, please.

Thanks, Vaktan, and thanks all for joining our Q2 and H1 call today. So I will go through our financials and if we can move to the next slide, I'll start with slide 17. As you can see, it has been another very strong quarter from the profitability side. Our net profit has been 346 million Lari, up by 5% year on year. And this growth is particularly notable because if you remember last year, we had few elevated income, for example, for FX when the FX was quite volatile and also 10 million Lari recovery from the provision. But actually, despite that, we still delivered 5% growth in net incomes. That translated very nicely into 24% plus ROE. So if you go to the next slide to go through the key drivers, our top line growth is very strong. 23% year-on-year. And that's driven by all revenue lines. Net interest income is up by 27%. Non-interest income by 15%. That's driven by our very strong fee and commission income growth, 26% year-on-year. And that's continuing to our payment businesses in both countries. So if we go to next slide, slide 19. That shows another driver of our profitability growth. We see that NIM actually exceeded 7% level. It's been a while since we've seen this level, and we do hope to remain at this level for a while in the foreseeable future. The 40 basis points quarterly growth was driven by two factors. One, of course, TB Uzbekistan Shia is growing. It's a portfolio that is much higher yield, higher margin loans. But on the other side, we're also very pleased to see that NIM increased in Georgia as well. It was up by 40 basis points to 5.9%. And that's driven by how kind of increasing loan yields. Vakhtang mentioned our consumer loans are going up. That's one of the driver. We are very happy to see our strategy working out. And also continuous management of our balance sheet. That also supports our NIM increase. Now, if you go to the next slide, slide 20. so our cost problem dynamics remain unshapable quite stable we increased 22 percent year over year because we are scaling our business both in georgia in into tbc uzbekistan 45 percent cost growth coming outside georgia but on the other hand we are growing our revenues as well because as you can see uh our cost to income ratio remained almost flat actually it's even slightly ticked down to 37.6 percent so if you go to the next slide slide 21 So again, we are seeing, so now I would like to discuss our cost of risk dynamics. In Q2, our group's cost of risk stood around 1.6%. It's up by 20 basis points, but breaking down by the countries, Georgia, cost of risk remains stable on the quarterly basis, 80 basis points, no change, very stable, very healthy level. While the cost of risk in Uzbekistan stood at 9.9%, that's obviously a higher level than we actually expected, but that's driven by a few factors. Over the past few quarters, we have been testing our new SINA files, less data-rich customer segments in our core ICL products. As well, we actually also grew into our post-merchant partners into the longer tail. This is part of our data-driven test and learn approach, and although much of this new business is profitable, in H2 we will ease down a bit in some of the newer segments and will remain focused on profitable growth. We have also seen some, let's say, operational issues around collections that mainly was due to telecoms capacity, which is basically a function of very strong loan growth, but we have sorted out this issue already. Overall, we do expect our cost of risk to remain around, to be around 7% to 10% range over next few quarters, but we will ensure the business delivers high profitability. One thing I also would like to highlight that we are seeing now positive trends, both first payment default, second payment defaults are coming down. July dynamics, the initial numbers are also showing the better trend and probably Q3, we should expect to be lower than Q2. So if I move to the next slide. Here we see our portfolio dynamics, both loan and customer funding are growing very nicely. Loan grows 16% year-on-year, customer deposits 14%, both on a constant currency basis. Probably if we go to the next slide, Andrew, 23%. so i know we'll move back to tbs uzbekistan here again we see very strong performance our top line is up by 100 our operating income doubled it is to 120 million usd our net profit also grew very nicely it was up by 36 percent maybe not as strong as 100 but still a very strong growth see The difference is driven by provisions that we expect to again stabilize quite shortly. And we do expect a very strong profitability growth over the next quarter or few quarters. Our return on equity is 20%. And again, we target to go our like mid 20 or higher 20 starting even from next quarter levels. So next slide. I'll continue on the typical Uzbekistan slides. The NIM was very healthy, 23%, although slightly softened compared to the last quarter, and there are few drivers. We have always kind of guided or communicated that maintaining into mid 20s is probably not realistic, but we do expect and are confident to remain 20% plus in territory. So the takedown is driven by general market dynamics that drives loan yields down, and as well as we diversify into products more and more, we will see like our again is coming down. However, on the other hand, we also see The funding cost is coming down, customers' deposit is coming down. So overall, it's more or less offset each other. But again, as I mentioned, probably it will continue coming down if we call 20% plus name coming down. I already covered risk side quite extensively. So I won't stop here and move to the next slide. On the loan side, another phenomenal outcome, our loan book. It's already 900 million plus USD. As you remember, our target is 1 billion by year end. We are almost there. So we don't have any, like, again, doubt achieving or let's say even overachieving this target. So our growth continues very strongly. And on the right hand side, it's the first time we are showing this data our portfolio break down our core product how we started in Uzbekistan is that cash loans still 78 percent however we are also seeing that other products are their share are also going up post landing 11 percent very pleased to see business lending is seven percent and credit cards already mentioned is now four percent around so this trend will continue our portfolio will shape and we'll show you the progress quarter over quarter now next slide Andrew So again, not much to say on the slides rather than we have very strong capital positions in both countries, comfortably above regulatory limits. So we remain very well capitalized in both countries. And if you go to the slide exactly, it's very strong capital positions combined with very high profitability that I have been talking throughout my presentation, allowed us to pay 75 million share buybacks that will start in the second half of August, and also to declare 1.25 Lari per share, Lari dividend. That brings our overall Lari, like our dividend for H1 is 325. That's significant increase compared to H1 last year. So we continue to generate like very strong profitability, have high capital positions and giving capital back to our, let's say, shareholders. So on this note, I will hand back to Vakhtang for some final comments before we open for Q&A.

And to conclude the part of the call, I'd like to revisit our strategy targets. I'm confident that we are well on track to meet our Group's net income target for this year. As for Uzbekistan, it remains our plan and expectation that we will hit our earnings target. As our top line growth shows, it is still a very good operating environment in Uzbekistan. That said, the developments in the first half Now, all around the regulatory headwinds and cost of risk with the fraud in the first quarter and the softer risk number in the second quarter make it more difficult to meet our earnings target. But I can assure you that the team is working extremely hard to achieve this. And I'd also like to mention that we plan to outline our future plans and the new strategic targets for the next few years at our strategy day in early 2026, following the release of our full year 2025 results. Thank you for your attention and we are happy to answer your questions.

Thank you. If you'd like to ask a question and have joined a call via Zoom, please press the raise hand icon on your screen. Alternatively, you can use the Q&A chat box to submit a written question. And if you have joined us on the phone lines, please press star followed by one on your telephone keypad. When prepared to ask your question, please ensure your line is unmuted locally.

Thanks very much, Carla. So first question comes from Rahim at Investec. Rahim, please go ahead. Your line is open. I think you need to unmute yourself.

Hi, good afternoon. Hopefully you can hear me. Three questions, if I may. The first was just to try and get some guidance on the outlook for NIM. That's obviously a source of strong performance in the quarter, just to help us understand what the four-year outlook might be would be helpful. The second was, I guess, a little bit on the flip side, was just the outlook for cost of risk. Obviously, Georgia's been quite, quite stable but you know should we how should we be thinking about you know uzbekistan uh given the the the uh the test and learn processes that's been going on there um And then finally, just staying with Uzbekistan, obviously, the move into insurance is obviously quite an interesting one. Just your initial take on how that's being received by clients and what the source of kind of upside is in terms of the medium term and what we should be looking for next in that regard. Thank you.

Thanks. I'll take the first two questions on the NIM and cost of risk and what will cover the insurance business bit. So to start with outlook for NIM, as I mentioned, we target to remain at 7% plus and all at the group level. In Uzbekistan, we are at 23%. There will be some decline. It will be gradual, not immediate. Probably, as I mentioned, we are confident it will be 20% plus, maybe a few pluses. It depends on the quarter. Not very quickly as well. In Georgia, we landed 5.9%. Generally, in the medium term, we are comfortable with five levels. Next few quarters, it can easily be high fives. So our expectation will be again high fives. That's on the NIM side. And we do expect nice growth into net interest income both in Georgia and Uzbekistan at group level. so if i go to the cost of risk outlook in georgia the portfolio is very stable we have very robust and decent credit quality again as we guide somewhere between 80 and 100 basis points is our let's say normalized cost of risk and we do expect to like to stay at this level, sometimes maybe a bit lower. On Uzbekistan, of course, there are a few moving parts and I just would like to take some time to cover that because probably some of you may have questions and to kind of clear out this topic. First of all, I would like to highlight that It's a gross business, the frontier market. And we have been coming to this point without any bumps, but again, it's frontier market. We need to grow business into new, less data-rich segments. One thing I would like to highlight, for example, two sorts of Uzbekistan population have never taken a loan. So in credit bureau, we only have one sort of the population. Therefore, we need to understand which segments are profitable. We can go gather the data. That's exactly our test and learn approach that we are taking. And that helps us to gather data, determine most profitable segments that will fill our growth profitably. We have done a lot of tests to understand which segments now we can do good business. We have quite a clear idea. Of course, these tests have a cost and that's exactly the cost we are coming through, but they also have benefits that will be coming through like next few quarters or actually in the longer period. The bulk of the business also we booked is profitably just immediate short-term pains that we are taking at the moment. We have done our job and now we are slowing down a bit also in some newer segments a bit. Also, and we'll focus on the kind of to continue our profitable growth strategy. Now also, that means that we are continuing the strategy in a disciplined, data-driven and risk-heavy lending strategy. And we will continue expanding into new segments to integrate new data sources, understand new customers. And as I mentioned, we are already seeing our first payment defaults coming down, second payment defaults are coming down. and we are carefully looking at the profitability level. So generally, as I said, like probably somewhere seven to 10% next few quarters is the right level to think about, and we need to see how business evolves. But our key focus will be, as I mentioned, next few quarters to kind of go back to meet to high 20 return on equities, that's high profitability. On a longer term stabilized basis, 30% plus return on equity for this business remains untouched. So that's the level we will be targeting. So that's about the cost of risk. And I hand it back now to Vakhtang for the third part.

Yes, as we mentioned already in our presentation, we began our insurance business just recently, a few months ago, and we are in the beginning of our journey. So we sell only the credit life insurance product, but we have plans how to bring the new type of insurance product as we are a big micro and SME business. in addition to other products in the bank. But till now it's a beginning. So I mentioned in my part of the presentation, we sold only 180,000 insurance products to the market, but as this market is growing up, so it's a huge potential for us. And not only insurance products, but also as We mentioned in the presentation, we have more than 500,000 debit cards, we have more than 70,000 credit cards, and the businesses are growing up. There is a huge potential in fee and commission income, and probably in the coming quarters, we will see high growth in fee and commission income from the insurance and from the other type of the fee income. But more details and the long-term views will be... I will bring on our investor day what I mentioned in the beginning in the first quarter of the next year.

That's great. Thank you both very much.

Thanks, Rahim. Next question comes from TJ Boy. TJ, please go ahead. Your line is open.

Hi, good morning from the US. Thank you so much for the call. I have a question on Uzbekistan. I saw you share the chat of your market share in retail loans. Can you just clarify what is included in your definition of retail loans? Does that include both secured and unsecured and personal loans, credit cards, just a little bit more color on how you define retail loans and would be helpful and have a follow-up after that.

It's all the loans that retail customers take. It's credit cards, secured mortgages as well. That makes 5% even more impressive because we don't have any mortgage businesses or secured businesses at the moment. We just have ICL and credit cards and we are already at 5%.

Okay, and so you intend to go into mortgages at some point?

not in the immediate future. At the moment, we are happy what we are doing. We see our product suit, like after long period, who knows what happens, but it's not our focus.

Okay. 26 minimum.

Okay.

And then car loans, does that, does Vita loans include car loans for you? We have- Like auto loans?

Yeah, yeah. Auto loans, we have it, but very small part. It's not a material in the portfolio of our business.

So it's overwhelmingly on secured loans? Okay. And then what about microloans, SMEs? That is classified separately, right? Or is that part of retail loans? It's separate. It's separate. Okay. And what do you think is realistic? So you're at 5% share of retail loans today. What do you think is realistic market share that you can have in Uzbekistan retail loans, say, three to five years from now?

Yeah, so thank you for this question. But as we mentioned already, we want to bring that next few years, I mean, three to five years plans, what we want to achieve in Georgia, in Uzbekistan, in probably February, March on the investor day. We will have very ambitious plans. Minimum, we will target minimum to go to 8% to 10%, but more detailed and clear plans we'll bring in the first quarter of 2026.

Okay, thank you. And can I ask another question? Do I have? Okay. Yeah, so I'm still learning about the Uzbekistan banking sector, but one of the things that struck me was that liquidity is still like a challenge from a system-wide point of view. So you have system LDR that's about sort of 28% based on the recent AMF report that I see, and correct me if I'm wrong, but that's the number that I saw. Which means that to sustain at the pace of growth that you're delivering, you have to continue to gain market share of deposits from the incumbents because system-wide liquidity is constrained. So first of all, do you agree with that hypothesis? And can you elaborate a little bit more on your deposit strategy? and part of that includes targeting deposits of established conventional banks.

Thanks, and I'll take that question. So to start with, I agree that customer funding is one of the probably the areas we found a bit more constrained a few years ago when we entered, but one of the strategies we took, we started as a deposit taker in the country, and since then we have been, and then we added loans, and since then we have been growing really nicely assume already we have four percent market share as a digital bank it's very kind of we are one of the fastest growing market let's say deposit market therefore we are going to get like a big model actual market share we don't see any issues and as the questions comes how the market is developing and how the market will grow and we see very nice it's frontier market it just started people are learning on saving culture and it's and the regulator the local government is like again promoting this and we do expect this trend to change and become better and better as time passes as we've seen in many other countries. So to kind of summarize on one front on deposit sides, we are expecting the deposit growth to actually accelerate in the country and we need to continue getting the big share. On the other hand, another question is how we are going to fund, because obviously our target growth can't be really funded, I will be very frank and direct here, only through customer funding. But we don't see any issues here, because we are very capable of wholesale funding. And there are a few things on this, for example, in Georgia we operate with every iFi eco name, honestly. Well, probably there's another kind of none within that work. And now we are working with IFI to fund Uzbekistan business and we have already more than dozen deals with them. So it's both in like local currency and against the funds, this circle is going up and up and increasing. Another thing is the wholesale fund capital markets. We just like printed 200 million USD, let's equivalent bond into some. We so far, it was a top option. So far, we only used 140 million. We still have 60 million to be used. And if needed, it's used because that will become part of the capital markets. Therefore, we do have capacity, capability to fund any gap. So I would say, let's say wholesale funding. So we don't foresee any challenges on that side.

Thank you. I have another question, but I'll go back to the Q&A so I can give other people an opportunity to ask their questions.

It's fine, TJ. While you're on, you can just ask.

Okay, this will do. I find out what I promised. And so, no, on asset quality, so I do recognize there's a massive opportunity for consumer lending in Uzbekistan. You mentioned the statistics. That's only about a third of households have taken credit. But one of the things that I read was that household credit has also expanded a lot over the last five years or so. And we are now starting to see signs. I mean, it might be like pockets, but we see signs of stress. You had an incident in your last quarter or and then the central bank, it seems like it's trying to restrain consumer credits in certain segments. So what are you learning in the cause of the point that you made earlier about going into certain sectors to I'm sorry, I'm missing the frame of what I used, but you were indicating that you were taking lessons to be able to better serve the community. the individual borrower. So what are the key lessons that you've learned about credits in Kazakhstan in terms of mitigating risks?

Okay, probably I'll take that question. To start with, there are a few bits and I'll try to break them down. The first bit, like you mentioned in Q1, it was isolated. One of incident has nothing to do overall credit quality of the country or cycle. It was very unfortunate event that we contained. We extensively discussed that in Q1 and we are confident that we closed all the loopholes from this perspective. So I will just split that bit from the overall credit quality. So on the credit quality side, We don't see any signs of the cycles. So like as I mentioned in the few courses, yes, our cost of risk is ticking up and also the regulator trying to put the cap on the consumer lending. So I'll try again to split these two parts. From regulator perspective, putting 25% cap is more as in to try and to push and somehow facilitate SME lending. So their key focus is to increase the business and MSME business since we are their focus and they want to see more activity into there. That's one, probably one intention. And as I mentioned, there's no science, but in future there may be some science. So for example, they are somehow trying to preemptive and kind of like work, let's say in advance to ensure that it is managed and controlled growth within the sector. these are the two aspects from regulator side so again that's not happening because they see any credit quality or cost of this upstick on our side i already mentioned it's again we don't see any issues in the high single digits we understand it's our test and learn approach it's lessons it's i'd say we are actually investing into this to understand well the pocket and profitable segments. We are to grow, how to grow, and we are on top of these things at the moment. And as I mentioned, now we are going to slow down in a few sectors that we found are not very profitable. We are going to grow into more, some other segments we found to be very profitable. And you will see again from our profitability numbers from the next few quarters and years to come.

And then do you want to highlight any specific sectors that you probably would want to pull back from and sectors where you see more opportunities?

It is all consumer and very specific internal credit segments. I don't think it's somehow very technical things, but we have our very technical detailed split of different customers as a profile.

Okay. Thank you. Thank you so much. I appreciate the time. Thank you.

Thanks, Tijia. Jan from Wood, your line is open, please go ahead. Hi, Jan, can you hear us?

Okay, now I think I'm unmuted. Okay. Thank you for this presentation. So on Uzbekistan, actually all my questions are on Uzbekistan, but on monthly active users in the country, it looks like there's a decline queue on queue. Given the new product launches, what should we make of that? That's my first question. And on NIMM, Can you maybe talk about the yields on new products that you launch so we can maybe get an idea about how the spreads on those look like? And finally, on cost of risk, I'm just trying to gauge how much of a correction you expect because the 7% to 10% range is pretty wide. So I was wondering if you could narrow it a bit for us. for modeling purposes. Thank you.

Thank you, Jerem. Hi. I will take the first question and Georgi will take the second question. About the MAU, the main reason of the MAU in Uzbekistan is the pay-me. The pay-me, the reason is the regulations. Recently, we changed the requirements on the customer. Like the banks, the requirement is to ask the customers' IDs. Before, it's for the total market, and before it was just the name and the mobile number. But if you look in the medium term, it's better for us because we will know customers better. And we made already that changes, and we are making a lot of promotions, services, and now we are bringing good customers. And now we have already July figures, and the situation in Payme is stabilized. And probably from there, the growth will begin to grow up. So that was the main reason. To summarize, the reason was in payment, but in Bendy Bank, we continue to grow up the customers.

Okay, understood. Just to clarify, Vaktang, so the regulator requires more information from the customer?

Yeah, ID requirement came in the payment providers, which was not before. We were asking only name and the mobile number. But now, to ask.

Great, thank you.

Okay, thanks. So I'll cover second and third question. On the new side, probably it's like, let me cover these questions. As I mentioned, for the new products, again, we just launched them. It's very early days. It's about very premature because we are experimenting and trying kind of, again, to find the best sweet spot. So I would say it's very early to speak and guiding any kind of levels. Probably we need to wait before year end. And somewhere early next year or Saturday, we will provide more details over the new products. But in general level, some, as I mentioned, 20% fuel plus is neem in the short term and 20% plus, at least in the medium to long term, is something we expect on this side. On cost of resilience, I mentioned it's a frontier market. It's like many things are moving around. and we make decisions on a daily basis on a profitability and risk adjusted profitability basis so it's very difficult to say and like we will make the one things that we can assure that our decisions are very data driven very conscious uh whatever is coming and uh or whatever, like within this range, we should focus on profitability. So as I mentioned, mid to high 20s in the short term, next few quarters, and overall longer term, 30% plus, again, few pluses for the business is the right level to see and get courage, just one less input into this profitability.

Understood. Thanks, Georgi.

Thanks, Jan. I think we have a couple of questions on the phone lines. Karl, I'll hand over to you.

Our first question from the phone lines comes from Simon G. Nellis with Seed Group.

Oh, hi. Can you hear me?

Yes.

Hello? Hi, we can hear you. Yeah, actually, most of my questions have been answered. I just have one last technical one, which is the OCI was quite a large negative this quarter. If you could give some color on that. The other comprehensive income was a big negative.

I can't at the moment.

The other comprehensive income, Simon, yeah?

Yeah, it was like a negative 52 million. I'm just wondering what was behind that. I guess it's securities driven, but... It's maybe aphids revolution.

It's only sick. It's nothing like that. It is security. I need to, again, I can't get online because I don't recall such a magnitude number. Maybe I need to check this.

Yes, we'll check and get back to you on that. Thanks very much. Okay, thank you.

The next question from the phone lines comes from Gustavo Campos with Jefferies.

Hello. Yes, thank you very much for the presentation. Congrats on the results. Yeah, I had a few questions. First of all, given the trajectory of the Larry, how do you see the contribution of Larry deposits in your balance sheet? Do you expect more contribution of Larry deposits compared to to other currencies? Do you also expect it to maybe potentially to increase the percentage of dollars or Euro loans in your loan portfolio? How do you see these two things evolving in the short term? Thank you.

That's okay, I'll take this as well. So probably if you see and if you observe over the extended period, dollarization both on loan and deposit side has been coming significantly. Like a few years ago, there have been times that it used to be 80%. Now it's around 50% both on loans and the deposit side. And that's a clear direction, intention, and target both for the bank and the regulator and for the system. So to decrease the dollarization in both areas. And as I mentioned, we are seeing very good progress. On the low side, it's increasing. On the deposit side, we have some small changes in trend in the last quarter. When you have a currency with volatility, the US dollar deposits increased. But now we are seeing the trend actually reversed and now large deposits are increasing. coming back and increasing. So general direction, what we should expect is that larisation will continue, larisation pace will increase. One thing we need to keep in mind is that Georgia is an open economy, so it can't become zero. So again, difficult to say which levels we should be. I don't know, 30, 35 or whatever. At the moment we are at 50%. So over time, and it won't be like overnight, it will be a journey, taking over through extended time, you should expect larisation on both sides to continue.

Also, to add to what Georgi is saying, you probably remember that recently the regulator in Georgia increased the minimum requirement, what could be disbarred in the local currency, and it went up to 800,000 laris. The regulator in Georgia has a plan also that the threshold will grow up in 2026. And de-dollarization on the asset side, on the loan side also helps to de-dollarize the liability side. So in the medium term, we believe that that trend will be continued by meaningful percentage points.

Thank you very much. And just as a quick follow-up, from looking at your dollars and your Euro loans, could you remind us if those are still like majority extended to to companies, to SMEs with no export revenues? Is that still the case?

Let's put it this way again. It was very subtle. When we are doing the underwriting, we, A, review the match of the FX side. And if there is some discrepancies between the income and the loan we do take sufficient I would say buffer for the potential ethics evaluation that is factored in also it was a collateral therefore what we can say is that from credit risk perspective that's probably the key driver is that a larry and ethics loans have the same credit risk and that was very well comfortable during covet on the retail side there's a lot of regulation and I won't go into details, we covered it a few times, but also on the legal entity side, when Larry devalued by 15%, we didn't see any kind of differences between the delinquency rates between ethics and Larry.

Understood. Yeah, thank you for the call. My last question is on... the total amount of like IFI loans you have that are maturing over the next 12 months. Could you please disclose the overall amount if you can?

It's probably like, it's not significant from what I can say. For example, last year we repaid 300 million euro bond without taking a new one. So we have a sufficient liquidity. We are very strong because we did not need. We have a very strong pipeline with IFIs. All I can say is it's not a very material amount and we have a much larger pipeline already for the next year.

Okay, thank you very much.

Thank you. So just as a reminder that I start one on your telephone keypad to ask you a question, or you can raise your hand if you are here on Zoom. We have no further questions in the queue.

We have covered every Q&A, Andrew. That's correct.

Yeah, I think we don't have any other questions at the moment. But just coming back to Simon's question, I think it's just purely a revaluation of the securities portfolio at fair value through other comprehensive income. And it was about 20 million, Larry, in the first half of the year. So nothing extraordinary there.

Because 52 million, I could not remember of such. Yeah, that's yeah.

Yeah, yeah. That's not the movement. Yeah. Okay. If there are no further questions, then yeah, just to say thank you everybody very much for joining the call and following TBC and our story and have a good summer. We look forward to seeing you in November with the third quarter results. And please keep in touch. Reach out if you have any questions you want to speak to us. We're always around. So thank you very much. And thank you for joining the call. Goodbye. Thank you.

Thank you, everyone. This concludes today's call. You may now disconnect. Have a great day.