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.