TBC Bank Group (LON:TBCG) reported what CEO Vakhtang Butskhrikidze called “a good start to the year” in the first quarter, with gross net profit of GEL 365 million, up 15% year-on-year, and return on equity (ROE) of 23.4%.
Georgia remained the main profit driver, delivering net profit of GEL 362 million, up 14% year-on-year, with ROE of 24.1%, supported by 12% year-on-year loan growth. In Uzbekistan, management said the business continued to recalibrate its loan book following regulatory changes, pressuring revenues and profitability, though net profit was still up 14% year-on-year with a “double-digit” ROE, according to Butskhrikidze.
Georgia: macro tailwinds, loan and deposit growth
Against that backdrop, Butskhrikidze said TBC revised its Georgia GDP growth outlook upward to 7.4%.
Operationally, the CEO highlighted that the bank maintained leading market positions in Georgia, citing a 37% share in both loans and deposits. Gross loans rose 2% quarter-on-quarter and 12% year-on-year, with “cash loans” continuing to grow strongly and corporate and investment banking (CIB) posting 15% year-on-year growth. Customer deposits increased 14% year-on-year.
Digital engagement also continued to expand. Butskhrikidze said digital monthly active users (MAU) in Georgia rose 19% year-on-year and the daily active user (DAU) to MAU ratio reached about 50%.
Uzbekistan: product traction amid loan book recalibration
In Uzbekistan, Butskhrikidze said real GDP grew 8.7% in the first quarter and inflation moderated to 7.1% as of March, though he warned that rising global commodity prices could push inflation higher in the near term.
Management pointed to continued strong customer and product momentum. Butskhrikidze said Salom Card issuance exceeded 1 million and Osmon credit card issuance topped 180,000, with high activation rates and increasing contribution to deposits and loan books. Payments total value reached $2.6 billion in the first quarter, up 40% year-on-year. He also said the group now has 1.1 million active subscriptions across TBC Plus and Payme Plus.
The company also highlighted steps to diversify its Uzbek loan book. Butskhrikidze said business lending in Uzbekistan is becoming a larger share of the portfolio, with more than 185,000 business loans issued to date and business loans representing 18% of the total loan book. He said the bank expects to continue growing this area, supported by plans to launch collateralized loans “in the next few months.”
In product development, management cited the first-quarter launch of the TBC Business app, planned launches of collateralized loans and auto loans, and new Payme features including buy-now-pay-later for Payme travel. Butskhrikidze also said the company launched an AI assistant, “Lola,” inside the TBC Bank mobile application, aimed at enabling faster development of “intelligent financial services.”
Group financials: NIM resilience, costs and asset quality
CFO Giorgi Megrelishvili said first-quarter results were a “solid start of the year,” noting that the quarterly decline versus Q4 reflected seasonality. He emphasized the group’s ROE of 23.4% was above its 23% target.
On revenue, Megrelishvili said topline income rose more than 10% year-on-year to GEL 859 million, driven primarily by 17% growth in net interest income. Non-interest income was “slightly down year on year,” mainly due to the Georgia business. He attributed this to the ongoing build-out of TBC Card alongside “lower bonuses and cash backs” from schemes this year. Megrelishvili said the bank expects Georgia fee and commission income to be flat in 2026, with year-on-year growth “to pick up latest from H2.”
Net interest margin (NIM) at the group level remained around 7%, he said. Georgia NIM increased 20 basis points quarter-on-quarter, driven by consumer loan growth and balance sheet management. Uzbekistan NIM “ticked down slightly” due to higher liquidity and lower loan yields.
Costs rose 20% year-on-year, which Megrelishvili said was mainly due to a lower cost base in the prior-year quarter, along with the launch of new bonus schemes and normal business growth. He said Georgia cost growth is expected to stabilize to the “low teens,” supporting a return to a cost-to-income ratio around 37%-38% over coming quarters.
On asset quality, Megrelishvili said cost of risk increased by 10 basis points compared to last year. Georgia cost of risk remained “very healthy” at 60 basis points, while Uzbekistan saw an increase that management had previously guided, driven by seasonality, residual provisioning on back-book cash loans, and loan book contraction.
Q&A: Uzbekistan loan dynamics, margins, regulation and strategic options
During Q&A, Head of International Business Oliver Hughes addressed questions about the slowdown in Uzbekistan’s business lending in the first quarter. He said the business lending portfolio includes “business cash loans” to self-employed borrowers and MSME lending. Hughes said business cash loan lending slowed because the company “slowed down to a trot, and actually stopped” cash lending in December and January due to regulatory changes, reducing leads into the funnel, though he said that lending has resumed.
Hughes said the Uzbekistan loan book contracted in Q1 and he expects Q2 to “bottom out,” with a return to “cautious growth” in Q3 and Q4. He said visibility remains limited, and that management expects to provide more clarity when reporting Q2 results.
On Uzbekistan NIM, Hughes said margins had been in the low 20s a year earlier but declined as the mix shifted away from higher-yielding cash loans due to regulatory changes and as yields were pressured by a “soft regulation” backdrop. He said Uzbekistan NIM was around 17% in Q1 and that management expects the downward trend to stop and recover, reiterating an expectation to reach “the region of 20% NIM” by year-end, supported by the restart of cash lending on the microfinance organization balance sheet, growth in business cash loans, and a larger credit card mix.
Hughes also said Uzbekistan operating costs should be “similar” to the current run rate but “maybe go up a little bit,” as the company invests again in people and acquisition costs such as marketing while trying to maintain tight cost control due to lower revenues during the rebalancing.
Asked about acquisition opportunities to accelerate portfolio rebalancing in Uzbekistan, Hughes said the group’s preference would be portfolio acquisitions, but “there is nothing for sale” at present. He said the company is not currently looking at acquisitions of banking institutions, while remaining open to smaller ecosystem-building deals, citing the previously announced OLX deal and the Billz acquisition as examples of incremental deals that can support growth.
On the possibility of an IPO of the Uzbekistan business, Hughes said it remains a strategic option “the group is thinking about,” but it is “too early to talk about that” while the business goes through its adjustment. Butskhrikidze added that the IPO is one option and said the group needs to grow the balance sheet and profitability, looking at the topic “in the 2 to 3 years” time frame.
Regulatory developments in Uzbekistan were also discussed. Hughes outlined that portfolio caps and higher risk weights for unsecured consumer loans are driving the need to reduce the cash loan share of the loan book and ramp up other products such as credit cards, business loans, auto loans, and secured SME loans. He said cash loans fell from 80% of the loan book at the end of Q3 last year to 66% at the end of Q1, adding that cash loans need to fall below 50% by the end of the year.
On cost of risk in Uzbekistan, Hughes said it was around 10% in Q1 and expected to be broadly similar in Q2. He also pointed to potential headwinds from possible restrictions on “auto collections,” where banks deduct funds via open banking APIs, noting that Uzbekistan’s payment systems UzCard and Humo have already introduced restrictions and that the central bank’s position is expected before August. He referenced prior guidance of a 7%-10% corridor for cost of risk and said the company hopes to stay within that range.
Hughes also addressed Uzbekistan user metrics, saying MAU has been “flattish” around 6 million due to the slowdown in cash lending—which drives transactional activity after disbursement—and due to payment-app regulatory changes introduced last spring requiring identification and re-onboarding for all users. He said payment volumes grew 40% year-on-year and that the payments business remains “very healthy,” with management expecting MAU to follow.
Dividend and targets
Megrelishvili said the group maintains “comfortable capital buffers” above regulatory minimums and will pay a dividend of GEL 1.75 per share, to be paid in September.
He reiterated the group’s three-year targets presented at its strategy day in late February:
- Loan book growth: 15%+
- ROE: 23%+
- Payout ratio: 25%-45%
Management closed the call by saying it expects to provide additional clarity on Uzbekistan’s trajectory with the second-quarter results in August.
About TBC Bank Group (LON:TBCG)
TBC Bank Group PLC (“TBC PLC”) is a public limited company registered in England and Wales. TBC PLC is the parent company of JSC TBC Bank (“TBC Bank”) and a group of companies that principally operate in Georgia in the financial sector. TBC Bank, together with its subsidiaries, is a leading universal banking group in Georgia. TBC PLC also offers non-financial services via TNET, the largest digital ecosystem in Georgia. Since 2019, TBC PLC has expanded its operations into Uzbekistan by operating fast growing retail digital financial services in the country.
