TBC Bank Group PLC on Monday said its acquisition of Bank Republic has completed sooner than expected, helping to push its net profit in the first quarter of 2017 much higher compared to the previous year.
TBC Bank, the name of which traces back to its original name of Tbilisi Business Centre, is a Georgian bank head-quartered in Tblisi. TBC has completed its merger with Bank Republic, well ahead of the original schedule to complete the deal in the third quarter of 2017.
Bank Republic was acquired in October 2016 and was at the time the third largest Georgian bank in terms of gross loans, with a strong footprint in the retail segment.
TBC reported a net profit amounting to GEL96.6 million, or around GBP30.8 million, in the first three months of 2017, rising 65% from the previous year. Excluding Bank Republic, quarterly net profit was up 39%.
Return on equity amounted to 24.2% while the return on assets for the quarter was 3.7%.
TBC’s total operating income for the quarter was up over 40% from the previous year at GEL203.5 million, or GBP64.9 million. The cost to income ratio stood at 40.8% compared to 44.3% one year earlier and 51.2% at the end of December 2016. Cost of risk on loans stood at 0.9%, down from 1.1% a year earlier but up from 0.6% at the end of December.
The net interest margin stood at 6.6%, down from 7.7% from a year earlier while the risk-adjusted net interest margin of 5.1% in the first quarter was down from 6.4% a year a year earlier.
Total assets at the end of March totalled GEL10.36 billion, 56% higher than a year earlier. Excluding Bank Republic, total assets rose 36% year-on-year to reach GEL9.05 billion at the end of March 2017.
Gross loans and advances to customers stood at GEL7.12 billion at the end of March, up 59% from a year earlier or by 27% excluding Bank Republic. Total customer deposits stood at GEL6.07 billion at the end of the first quarter, up 55% year-on-year.
TBC’s regulatory Tier I and total capital adequacy ratios stood at 11.3% and 14.9%, respectively, at the end of March.
TBC said its market share in total assets increased by 4.2 percentage points in the first quarter compared to a year earlier but dipped by 0.1 percentage points compared to the final three months of 2016.
The one-off integration costs of the Bank Republic merger have amounted to GEL22.9 million, less than the expected GEL23.3 million. Moreover, the bank has upgraded annualised cost synergies guidance to GEL24.0 million from GEL20.5 million.
“One of our main strategic objectives for 2017 is to deepen the relationship with our clients and offer our existing and newly acquired Bank Republic customers the best-in-class products and services, including bancassurance products through our newly acquired insurance company, TBC Insurance” said TBC Bank.
“Our focus in this regard is to increase the product-per customer-ratio and non-interest income. Our strong cross-selling opportunity combined with the efficient cost control is expected to translate into a robust profit performance,” said the bank.
“At the same time, we will continue to grow in line with the market and aim to maintain our market share. As a result we have decided to increase our medium term dividend pay-out ratio target to 25% to 35% and at the same time have updated our loan book growth guidance to 15% and tier1 capital adequacy ratio to 10.5%. Finally, we maintain our medium-term cost-to-income guidance at below 40% and return on equity forecast of 20% plus,” TBC added.