TBC Bank's bottom line hammered by loan loss provisions
TBC Bank Group
3,345.00p
13:29 25/04/24
TBC Bank reported a sharp drop in first half profits as the Covid-19 pandemic swept across Georgia and the broader region, forcing it to bolster its loan loss reserves in a hurry.
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On an after tax basis, over the six months ending in June, the lender's bottom line shrank by 72.7% to GEL 69.2m as net interest margins narrowed from 6.0% during the comparable year ago period to 4.7%.
Yet the greatest drag on earnings was the additional credit loss allowance to the tune of £215.7m that it booked in the first quarter, in anticipation of the toll which the pandemic was likely to take on its clients.
Of that amount, GEL 210.9m was for loans.
A further GEL 9.0m allowance was booked by its Azeri arm, TBC Kredit.
In turn, TBC Bank's return on average assets (ROA) fell to 0.7% from 3.3% 12 months before.
Yet the proportion of non-performing loans fell by two tenths of a percentage point during the half to reach 2.9%.
TBC finished the period with a Basel III common equity tier one ratio of 10.0%.