TBC Bank Group PLC

Thank you, everybody, for joining our first quarter results call today. As usual, I'm joined on the call by our Group CEO, Vakhten Boutskiri-Kidze, our Group CFO, Georgi Megrelishvili, and our Head of International, Oliver Hughes. We'll start with a presentation and then we'll go to Q&A. And with that, I'll hand over to Vakhten. Thank you.

Thank you, Andrew. Hello, everyone, and thank you for joining us today. I am pleased to present our results for the first quarter. We made a good start to the year delivery. Group's net profit of L365 million, up by 15% year-on-year, with return of equity of 23.4%. Georgia had another strong and consistent quarter, with net profit of L362 million, up by 14% year-on-year, and return of equity of 24.1%. helped by a decent start to the year in lending as loans rose by 12% year-on-year. In Uzbekistan, as we had previously guided, we continued to recalibrate our loan book in the first quarter, which impacted our revenues and overall profitability, but net profit was still up by 14% year-on-year, with double-digit return of equity. But we continue to successfully diversify our loan book, including building out our business lending with more than $150 million portfolio and we see a very good momentum across our core verticals and product pipeline. Overall, following the first quarter, I believe our growth outlook for the full year remains on track. Turning now to Georgia. Georgia's economy continues to post dynamic growth, with real GDP growth accelerating to 9.1% in the first quarter. As elsewhere in the world, the Middle East conflict has impacted inflation, which has ticked up to 4.3% in March. In response to today, the National Bank of Georgia has raised the refinance rate by 25 bps to 8.25%. Reflecting this strong start to the year for the Georgian economy, we have revised upwards our GDP growth outlook to 7.4%. Slide 7 simply highlights the consistently high profitability that our Georgian franchise generates, with many serial quarters of return of equity around the mid-20s. One additional observation is that you can see the first quarter is typically a bit softer than following quarters, which is something we expect to see this year as well. We continue to be a leading player across most key banking segments in Georgia with 37% share of both loans and deposits. The first quarter saw decent growth with gross loss up by 2% quarter on quarter and rising by 12% year on year. Cash loss continued to show strong growth while we also had a very decent 15% year on year growth in CIB business. Meanwhile, our customer deputies are up by 40% year on year. Slide 9 shows how digital engagement among our retail customers in Georgia continues to grow. With digital mass select users up by 90% year-on-year, and our Dow-to-Mow ratio now standing at around 50%, a good achievement as more of our customers interact with us on a daily basis. We also continue to see the high share of unsecured consumer loans and retail deposits issued fully digitally. Now I'm pleased to share that we have been received increasing recognition from our innovation, technology and digital customer experience, including recent awards from The Banker, Global Finance, Euromoney and The Digital Banker. These awards reflect the efforts we have made to provide the best possible customer experience for our customers. Now let's turn to our Uzbekistan business. As with Georgia, Uzbekistan economy continues to post remarkable growth with real GDP growth of 8.7% in the first quarter. Inflation moderated to 7.1% also as of March. However, recent increases in global commodity prices are likely to push inflation in the near term. On the slide 13, we continue to see very strong traction across the businesses. Our daily banking product continues to scale, with Salon card issuance now about 1 million and Dosmon credit card issuance about 180,000. We see high activation rates across both products, and both are starting to become more material contributors to our deposit and loan books. Payments total value in the first quarter reached $2.6 billion, up by 40% year-on-year, as more customers use PayMe and TBC for a range of daily payment activities. Indeed, we now have 1.1 million active customer subscriptions across TBC Plus and PayMe Plus. On the lending side, our loan book is diversifying and business lending is becoming a larger part of the portfolio with over 185,000 business loans issued to date and business loans now representing 18% of the total loan book. We expect this year to continue growing, helped by the upcoming launch of collateralized loans in the next few months. On this slide 14, we see that the strong momentum across our core verticals is supported by an active product development pipeline. In the first quarter, we launched TBC business application, and this slide also sets out several planned launches in the coming months, including collateralized loans and auto loans. We have also rolled out new features in PayMe, including BMPL for PayMe travel. We continue to build out a proprietary AI infrastructure with the recent launch of AI Assistant Lola inside the TBC Bank mobile application. This launch laid the foundation for the fast development and intelligent financial services, and there will be more to come in the coming months as we expand Lola's capabilities. Now, my final slide looks at some of the key core metrics of our Uzbek business over the past three years. As you can see, while user numbers remain very impressive, loan growth and profitability have taken a hit over the past couple of quarters as we have adapted the business to regulatory changes around the consumer lending. While this process has not been easy, it is laying the foundation for a well-diversified business over the next few years. As we also expect to see, low growth is recovering in the second half of the year, which will be good to see. Thank you very much for your attention and I will now hand over to Georgi.

Thanks, Wachtang, and thanks all for joining our call today. I'll take you through the financial performance of the Q1, and then we'll move to next slide, 17. It was a solid start of the year, as you can see. The net profit was $365 million, up by 15% year-on-year. The quarterly decline is just normal, let's say, seasonality versus Q4, and the return on equity was 23.4%, above our 23% target. So overall, I would like to reiterate Wachter's comments that we feel confident that this first quarter provides a very good foundation to meet our strong growth targets. Now, Andrew, if you move to slide 18 to discuss the key drivers of our profitability. Top line was up by more than 10%, as you can see, WGs to 859 million lari. That was mainly fooled by net interest income of 17%. Non-international income growth was a bit softer side as we guided. It was slightly down year on year and it's mainly driven by Georgia business. As we continue to build our TPC card but with lower bonuses and cashbacks from our schemes this year. We do expect Georgia fee and commission income to be flat this year, with year-on-year growth to pick up latest from H2. Strong take-up of TBC card is actually feeding into cross-sell, as you can see, such as consumer loans or cashless accounts, and that drives our strong net interest income. Overall, we do expect to have a double-digit top line growth this year. Also, I am very pleased to see that group name actually remained at 7% level. Georgia name was up by 20 basis points on quarter-on-quarter. That was driven by strong loan growth into consumer loans, as I mentioned already, and robust balance sheetless management. Our Uzbekistan name ticked down slightly as we guided. That was only because of higher, let's say, liquidity as we're still getting funds from our clients and the lower lawless bills. If we move to slide 19, Our cost grows. Our cost grew by 20% year-on-year. That was mainly driven by lower cost base in Q1 last year, as you clearly see from the charts. Also, we had some new launching of the bonus schemes and the normal business growth. So we do expect Georgia cost growth to actually stabilize to low teens, and that will translate into returning to our cost-to-income ratio that we have seen last few quarters, around 37%, maybe less, 8%. Now, please, let's move to the next slide, slide 20, to our asset quality. Our cost of risk was up by 10 basis points compared to last year. However, Georgia cost of risk actually remained very healthy at 60 basis points. But we saw the pickup in our TBC Uzbekistan business, as we also guided, that was mainly driven some seasonality, also some residual provisioning of the back book cash loans and the contraction of the loan book. Now, if we turn to the next slide, slide 21, to have a look at our balance sheet growth, the portfolio growth was strong. We were up double digits both for customer funding and gross loans, and we do expect to continue strongly. So not much to say on this slide. If we move to slide 22. Again, I'm not going to spend too much time on this slide as little has changed. We have a comfortable capital buffers, well above regulatory minimum requirements. Now, if you move to slide 23. So our strong, powerful capital position, our profitability actually allows us to continue to pay dividend. This quarter, we will be paying 1.75 Lari per share that will be paid in September. And if we move to the last slide, 24. And finally, I would like to reiterate our three years group financial targets that we laid out at our strategy day in late February. And we remain committed to meet those targets. So those are to grow our loan book 50% plus, deliver ROA 27% plus, and our payout ratio to be between 25 and 45%. So on this note, I'd like to... open for a Q&A, please.