TBC BANK GROUP PLC ("TBC Bank")

2Q AND 1H 2025 UNAUDITED CONSOLIDATED

FINANCIAL RESULTS

 

 

Forward-looking statements

 

This document contains forward-looking statements; such forward-looking statements contain known and unknown risks, uncertainties and other important factors, which may cause the actual results, performance or achievements of TBC Bank Group PLC ("the Bank" or "the Group" or "TBCG") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Bank's present and future business strategies and the environment in which the Bank will operate in the future. Important factors that, in the view of the Bank, could cause actual results to differ materially from those discussed in the forward-looking statements include, among others: the achievement of anticipated levels of profitability; growth, cost and recent acquisitions; the impact of competitive pricing; the ability to obtain the necessary regulatory approvals and licenses; the impact of developments in the Georgian and Uzbek economies; the impact of Russia-Ukraine war; the political and legal environment; financial risk management; and the impact of general business and global economic conditions.

 

None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises, nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects are based are accurate or exhaustive or, in the case of the assumptions, entirely covered in the document. These forward-looking statements speak only as of the date they are made, and, subject to compliance with applicable law and regulations, the Bank expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in the document to reflect actual results, changes in assumptions or changes in factors affecting those statements.

 

Certain financial information contained in this management report, which is prepared on the basis of the Group's accounting policies applied consistently from year to year, has been extracted from the Group's unaudited management accounts and financial statements. The areas in which the management accounts might differ from the International Financial Reporting Standards could be significant; you should consult your own professional advisors and/or conduct your own due diligence for a complete and detailed understanding of such differences and any implications they might have on the relevant financial information contained in this presentation. Some numerical figures included in this report have been subjected to rounding adjustments. Accordingly, the numerical figures shown as totals in certain tables might not be an arithmetic aggregation of the figures that preceded them.

 

 

 

2Q and 1H 2025 consolidated financial results conference call details

 

TBC Bank Group PLC ("TBC PLC") has published its unaudited consolidated financial results for the 2Q and 1H 2025 on Friday, 8 August 2025 at 7.00 AM BST. The management team will host a conference call at 2.00 PM BST.

 

 

To participate in the conference call live video webinar, please register using the following link:

https://www.netroadshow.com/events/login?show=ee411daa&confId=85305

You will receive access details via email.

 

 

 

 

 

Contacts

 

 

 

Andrew Keeley Director of Investor Relations     E-mail:  [email protected] Tel:  +44 (0) 7791 569834 Web: www.tbcbankgroup.com

Anna Romelashvili                                              Head of Investor Relations     E-mail:  [email protected]  Tel:  +(995) 577 205 290 Web: www.tbcbankgroup.com

Investor Relations Department       E-mail:  [email protected]  Tel:  +(995 32) 227 27 27 Web: www.tbcbankgroup.com

 

Table of contents

 

2Q and 1H 2025 unaudited consolidated financial results announcement

 

Interim management report

Financial highlights

Operational highlights

Letter from the Chief Executive Officer

Economic overview

Unaudited consolidated financial results overview for 2Q 2025

Unaudited consolidated financial results overview for 1H 2025

Additional information

1)Financial disclosures by business lines

2)Glossary

3)Ratio definitions and exchange rates

Risk management

Material existing and emerging risks

Statement of Directors' Responsibilities

 

 

Condensed Consolidated Interim Financial Statements (Unaudited)

Independent Review Report ..…………………………………………………………………....……….………….. 53

Condensed Consolidated Interim Statement of Financial Position……………………………………….….………. 55

Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income…….…...……….. 56

Condensed Consolidated Interim Statement of Changes in Equity……………………....…………………..……… 57

Condensed Consolidated Interim Statement of Cash Flows…………………………………………..……….…….. 58

Notes to the Condensed Consolidated Interim Financial Statements……………………………………………..…. 59

 

2Q and 1H 2025 unaudited consolidated financial results[1]

2Q 2025 profit of GEL 346 million, up by 5% YoY, with ROE at 24.3%.

1H 2025 profit of GE L 665 million, up by 6% YoY, with ROE at 23.7%.

 

European Union Market Abuse Regulation EU 596/2014 requires TBC Bank Group PLC to disclose that this announcement contains Inside Information, as defined in that Regulation.

 

Financial highlights

Income statement

In thousands of GEL	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
Net interest income	581,802	533,210	458,111	27.0%	9.1%	1,115,012	900,955	23.8%
Net fee and commission income	155,634	147,997	123,398	26.1%	5.2%	303,631	227,701	33.3%
Other non-interest income	97,191	93,005	96,922	0.3%	4.5%	190,196	167,755	13.4%
Total operating income	834,627	774,212	678,431	23.0%	7.8%	1,608,839	1,296,411	24.1%
Total credit loss allowance	(118,579)	(118,497)	(31,565)	NMF	0.1%	(237,076)	(76,696)	NMF
Operating expenses	(313,754)	(287,944)	(256,577)	22.3%	9.0%	(601,698)	(486,248)	23.7%
Net profit before tax	402,294	367,771	390,289	3.1%	9.4%	770,065	733,467	5.0%
Income tax expense	(56,019)	(49,265)	(60,991)	-8.2%	13.7%	(105,284)	(107,698)	-2.2%
Net profit	346,275	318,506	329,298	5.2%	8.7%	664,781	625,769	6.2%

 

Balance sheet

In thousands of GEL	Jun'25	Mar'25	Jun'24	Change YoY	Change QoQ
Total assets	41,963,000	40,228,911	35,780,415	17.3%	4.3%
Gross loans	28,469,934	27,350,103	24,611,372	15.7%	4.1%
Customer deposits*	23,305,837	22,320,114	20,699,482	12.6%	4.4%
Total equity	5,876,138	5,723,549	5,079,760	15.7%	2.7%
Number of ordinary shares	56,211,873	56,211,873	55,361,967	1.5%	0.0%

*Excludes MOF deposits

Key ratios

	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
ROE	24.3%	23.2%	27.1%	-2.8 pp	1.1 pp	23.7%	26.0%	-2.3 pp
ROA	3.4%	3.2%	3.8%	-0.4 pp	0.2 pp	3.3%	3.7%	-0.4 pp
NIM	7.1%	6.7%	6.4%	0.7 pp	0.4 pp	6.9%	6.4%	0.5 pp
Cost to income	37.6%	37.2%	37.8%	-0.2 pp	0.4 pp	37.4%	37.5%	-0.1 pp
Cost of risk	1.6%	1.4%	0.5%	1.1 pp	0.2 pp	1.5%	0.7%	0.8 pp
NPL to gross loans	2.5%	2.5%	2.1%	0.4 pp	0.0 pp	2.5%	2.1%	0.4 pp
NPL provision coverage ratio	78.2%	73.6%	74.6%	3.6 pp	4.6 pp	78.2%	74.6%	3.6 pp
Total NPL coverage ratio	142.4%	140.4%	141.6%	0.8 pp	2.0 pp	142.4%	141.6%	0.8 pp
Leverage (x)	7.1x	7.0x	7.0x	0.1x	0.1x	7.1x	7.0x	0.1x
EPS (GEL)	6.14	5.71	5.94	3.3%	7.4%	11.85	11.33	4.6%
Diluted EPS (GEL)	6.07	5.67	5.91	2.7%	7.2%	11.74	11.28	4.0%
BVPS (GEL)	103.14	99.74	90.32	14.2%	3.4%	103.14	90.32	14.2%
Georgia
CET 1 CAR	16.4%	16.4%	16.8%	-0.4 pp	0.0 pp	16.4%	16.8%	-0.4 pp
Tier 1 CAR	19.8%	19.9%	22.3%	-2.5 pp	-0.1 pp	19.8%	22.3%	-2.5 pp
Total CAR	23.0%	23.1%	25.9%	-2.9 pp	-0.1 pp	23.0%	25.9%	-2.9 pp
Uzbekistan
CET 1 CAR	18.5%	19.4%	12.6%	5.9 pp	-0.9 pp	18.5%	12.6%	5.9 pp
Tier 1 CAR	18.5%	19.4%	12.6%	5.9 pp	-0.9 pp	18.5%	12.6%	5.9 pp
Total CAR	20.0%	20.3%	16.4%	3.6 pp	-0.3 pp	20.0%	16.4%	3.6 pp

 

 

Operational highlights

Customer base

In thousands	Jun'25	Mar'25	Jun'24	Change YoY	Change QoQ
Total unique registered users	24,299	23,156	19,268	26%	5%
Georgia	3,537	3,499	3,360	5%	1%
Uzbekistan	20,762	19,657	15,908	31%	6%
Total monthly active customers	7,407	7,853	6,378	16%	-6%
Georgia	1,752	1,736	1,633	7%	1%
Uzbekistan	5,655	6,117	4,745	19%	-8%
Total digital monthly active users ("digital MAU")	6,809	7,223	5,695	20%	-6%
Georgia	1,154	1,106	950	21%	4%
Uzbekistan	5,655	6,117	4,745	19%	-8%
Total digital daily active users ("digital DAU")	2,401	2,547	1,884	27%	-6%
Georgia	545	521	441	24%	5%
Uzbekistan	1,856	2,026	1,443	29%	-8%
Digital DAU/MAU	35%	35%	33%	2 pp	0 pp
Georgia	47%	47%	46%	1 pp	0 pp
Uzbekistan	33%	33%	30%	3 pp	0 pp

Unique registered users of Uzbekistan have been reclassified since 4Q 2024

Uzbekistan - key highlights

In thousands of GEL	Jun'25	Mar'25	Jun'24	Change YoY	Change QoQ
Gross loans and advances to customers	2,463,960	2,150,075	1,201,673	105.0%	14.6%
Customer accounts	1,340,365	1,218,048	721,632	85.7%	10.0%

 

In thousands of GEL	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
Total operating income	169,765	161,051	91,081	86.4%	5.4%	330,816	165,126	100.3%
Net profit	32,329	21,561	23,779	36.0%	49.9%	53,890	42,216	27.7%
ROE	20.0%	13.7%	27.8%	-7.8 pp	6.3 pp	16.9%	25.7%	-8.8 pp

1Q and 1H 2025 financial results include a non-recurring credit impairment charge of GEL 24.6 mln (pre-tax) in Uzbekistan

 

 

Letter from the Chief Executive Officer[2]

I am pleased to report that we continued our strong start to the year with a profitable second quarter. In 2Q 2025, our operating income increased by 23% year-on-year and amounted to GEL 835 million, while our net profit reached GEL 346 million, up 5% year-on-year, delivering 24.3% ROE. This brought our 1H 2025 net profit to GEL 665 million, up 6% year-on-year, with 23.7% ROE.

 

I am also glad to announce that our strong profitability and robust capital position have enabled the Board to declare a quarterly dividend of GEL 1.75 per share for the second quarter of 2025, bringing the 1H 2025 payment to GEL 3.25. In addition, we have announced a GEL 75 million share buyback starting from the second half of August, a sign of our commitment to returning excess capital to shareholders.

 

Further expansion of our Uzbekistan ecosystem

The second quarter was marked by several significant developments in our Uzbekistan business. The popularity of our flagship debit card and daily banking product, Salom Card, has exceeded expectations, reaching over 0.5 million cards issued by the end of June. We also continued to build out our digital ecosystem through the launch of new products and strategic acquisitions. Notably, we completed the rollout of TBC Insurance and agreed to acquire a majority stake in BILLZ, Uzbekistan's leading SaaS platform for businesses serving the retail sector, which will strengthen our business banking proposition.

 

In addition, after establishing TBC Digital, the holding company overseeing TBC PLC's operations in Uzbekistan, we enhanced the company's governance and knowledge pool by appointing a supervisory board chaired by Oliver Hughes and joined by global fintech leaders David Nangle from VEF and Matthew Risley from QED Investors.

 

We are building a world-class digital ecosystem in Uzbekistan, and I am delighted that this has been recognized by TBC Uzbekistan's inclusion in the prestigious list of the world's top fintech companies prepared by CNBC and Statista, the first such recognition for an Uzbek or Central Asian business.

Robust core revenue generation

Our strong profitability remains underpinned by robust core revenue generation. Net interest income increased by 27% year-on-year, supported by loan book growth of 16% and an excellent net interest margin of 7.1%, up by 0.7 pp year-on-year and 0.4 pp quarter-on-quarter. This margin expansion was helped by higher Georgian loan yields and continued optimization of our liability structure, as well as the increasing contribution of Uzbekistan. Over the same period, net fee and commission income grew by 26% year-on-year, driven by strong performances in both Georgian and Uzbekistan payments businesses.

Operating expenses increased by 22% year-on-year in the second quarter as we continue to invest in business growth, with our Uzbek business accounting for 45% of the growth. Consequently, our cost-to-income ratio was at 37.6% in 2Q 2025, slightly down on the 37.8% of a year ago.

The cost of risk for our Georgian operations remained stable quarter-on-quarter at 0.8%, while in Uzbekistan it increased by 0.6 percentage points, reaching 9.9%. The pickup was driven to a large degree by planned moves into thin file, less data rich customer segments as part of our 'test and learn' approach, and the expansion of our network of POS lending partners into the long-tail of smaller partners. These elements are ultimately part of our learning curve, as we pilot new ideas, learn from the data, and scale only what delivers acceptable risk-adjusted returns.

Continued solid growth in Georgia alongside fast-paced expansion in Uzbekistan

In 2Q 2025, operating income from our Georgian financial services grew by 14% year-on-year, driven by continued business expansion. However, this was largely offset by higher provision expenses reflecting a normalization in the cost of risk as well as increased operating costs. As a result, net profit increased by 3%, with ROE standing at a very healthy 23.9%.

During 2Q 2025, our digital banking ecosystem in Uzbekistan continued to grow rapidly. Our loan book more than doubled to GEL 2.5 billion (USD 905 million), capturing 5.1% of the total retail loan market, while our retail deposits grew by 86% year-on-year, taking us to 4.1% market share. This growth drove TBC Uzbekistan's operating income up by 86% year-on-year, reaching GEL 170 million (USD 62 million), while net profit amounted to GEL 32 million (USD 12 million), up by 36% year-on-year, with 20% ROE. As a result, TBC Uzbekistan contributed 20% to the Group's total operating income and accounted for 9% of its net profit in 2Q 2025.

Looking ahead
The Group continued to deliver strong results in the first half of the year, reflecting solid progress across our strategic priorities. As we enter the second half of the year, we remain focused on meeting our 2025 targets and continuing to create long-term value for our shareholders.

 

Economic overview

Georgia

Economic growth stronger than expected

Georgia's real GDP increased by 7.1% year-on-year in the second quarter of 2025, averaging a robust 8.3% in the first half of the year, following 9.4% growth in 2024, according to Geostat. Despite relative moderation in monthly growth dynamics, the economic print remains stronger than the widely expected growth normalization trend would imply. Heightened political tensions resulted in lower tourism revenues and domestic demand at the end of 2024 and 1Q 2025, especially reflected through contracted spending on durable goods. However, a recovery in consumption was evident from March, with economic growth supported by continuously improving tourism, recovered migrant spending and slowing, though still strong credit activity.

Following the drop in December 2024, estimated net inflows into Georgia improved in the first quarter, driven by lower durable imports. Net inflows improved substantially in 2Q as well, as total exports of goods denominated in U.S. dollars rose by 20.9% year-on -year in the second quarter with domestic exports also strengthening, while imports of goods increased by only 0.8%. At the same time, while FDIs remained subdued, 5.0% growth in tourism revenues and 10.0% increase in remittances also contributed significantly to the improvement in net currency inflows into the country.

 

Fiscal consolidation continues

The government remains committed to fiscal consolidation, as it recorded a budget surplus equal to 0.5% of GDP in the 1H 2025, while public debt to GDP ratio declined to 35.1%.

Credit growth is moderating, though remains strong

Bank credit growth has moderated slightly from 16.6% year-on-year in March 2025 to 15.6% in June, at constant exchange rates. Given accelerating inflation, real credit growth also weakened, though it remained still strong at 11.2%. As for segments, while retail credit fell only slightly from 15.4% in March to 14.8% in June, the year-on-year growth of lending to legal entities declined from 17.9% to 16.6%. The gradual dedollarization of bank lending continued in 2Q 2025, with the share of foreign currency loans dropping slightly from 43.2% in March to 42.8% in June, at constant exchange rates.

GEL strengthens despite domestic and global challenges

Improved net currency inflows resulting from subdued imports and strong external inflows from exports of goods, tourism and remittances, has combined with a globally weakened USD and increased deposit larization in the 2Q 2025, leading to appreciation pressures on the national currency. Leveraging on this environment, the NBG scaled up reserve replenishment, purchasing around USD 880 million from the FX market in the second quarter, bringing its gross international reserves to USD 4.7 billion as of the end of June. Meanwhile, the national currency appreciated by around 3.1% against the USD compared to the end of 2024 and stood at 2.72 GEL per USD at the end of June 2025.

CPI inflation continued accelerating, standing at 4.0% in June, above the NBG 3.0% target. Higher inflation is being driven by the combination of low base effect, elevated domestic pressures and a partial pass-through of higher risks realized in food price dynamics globally. Consequently, the NBG has maintained an unchanged monetary policy rate ("MPR") at 8.0% since May 2024.

 

Uzbekistan

Continued strong economic performance

Uzbekistan's economic growth strengthened again to 7.5% year-on-year in 2Q 2025, averaging 7.2% in the first half of the year, compared to 6.5% in 2024. In terms of external trade, exports of goods in 2Q 2025 increased by an impressive 38.2% year-on-year due to higher gold exports. On the other hand, growth of imports was relatively moderate at 15.1%. Retail credit growth appears to be only slightly strengthening in 2Q 2025, standing at a robust 22.2% at the end of June, with mortgage credit expanding by 17.7% and non-mortgage credit by 25.0%.

Annual inflation in Uzbekistan stood at 8.7% in June, down from 10.3% in March and 9.8% in December 2024. The CBU maintained its monetary policy rate unchanged at 14.0% throughout the quarter, having increased it by 0.5 percentage points in March, citing sustained inflationary pressures. At the end of June 2025, the UZS was valued at 12,654 per US Dollar, having appreciated by around 2.2% compared to the end of 2024. UZS appreciation is supported by a globally weakened USD, moderated credit activity and the tighter CBU stance. At the same time, as of June, higher gold prices allowed the CBU to increase its international reserves by USD 7.4 billion (or 18%) YTD.

 

Economic growth forecasts

The IMF projects Georgia's economic growth in 2025 at 7.2%, while Fitch and the World Bank expect 5.6% and 5.5%, respectively. The real GDP growth forecasts for Uzbekistan by the World Bank, IMF and ADB stand at 5.9%, 5.9% and 6.6%, respectively. TBC Capital's projection for Georgia stands at 7.1%, and for Uzbekistan at 7.4%.

 

More information on the Georgian economy and financial sector can be found at www.tbccapital.ge.

 

Unaudited consolidated financial results overview for 2Q 2025

This statement provides a summary of the business and financial trends for 2Q 2025 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.

Please note that there might be slight differences in previous periods' figures due to rounding.

Consolidated income statement and other comprehensive income

In thousands of GEL	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ
Interest income	1,144,935	1,071,739	878,549	30.3%	6.8%
Interest expense	(563,133)	(538,529)	(420,438)	33.9%	4.6%
Net interest income	581,802	533,210	458,111	27.0%	9.1%
Fee and commission income	259,013	231,504	200,874	28.9%	11.9%
Fee and commission expense	(103,379)	(83,507)	(77,476)	33.4%	23.8%
Net fee and commission income	155,634	147,997	123,398	26.1%	5.2%
Net insurance income	14,039	8,735	9,100	54.3%	60.7%
Net gains from currency derivatives, foreign currency operations and translation	77,775	78,157	85,647	-9.2%	-0.5%
Other operating income	5,077	5,974	2,029	NMF	-15.0%
Share of profit of associates	300	139	146	NMF	NMF
Other operating non-interest income	97,191	93,005	96,922	0.3%	4.5%
Credit loss allowance for loans to customers	(105,128)	(106,594)	(27,665)	NMF	-1.4%
Credit loss allowance for other financial items and net impairment for non-financial assets	(13,451)	(11,903)	(3,900)	NMF	13.0%
Operating income after expected credit losses	716,048	655,715	646,866	10.7%	9.2%
Staff costs	(162,940)	(144,951)	(135,653)	20.1%	12.4%
Depreciation and amortisation	(40,924)	(38,650)	(35,614)	14.9%	5.9%
Administrative and other operating expenses	(109,890)	(104,343)	(85,310)	28.8%	5.3%
Operating expenses	(313,754)	(287,944)	(256,577)	22.3%	9.0%
Net profit before tax	402,294	367,771	390,289	3.1%	9.4%
Income tax expense	(56,019)	(49,265)	(60,991)	-8.2%	13.7%
Net profit	346,275	318,506	329,298	5.2%	8.7%
Net profit attributable to:
- Shareholders of TBCG	340,862	316,552	324,595	5.0%	7.7%
- Non-controlling interest	5,413	1,954	4,703	15.1%	NMF
Other comprehensive income:
Other comprehensive expense for the period	(52,025)	(16,060)	(41,840)	24.3%	NMF
Total comprehensive income for the period	294,250	302,446	287,458	2.4%	-2.7%

 

Consolidated balance sheet

In thousands of GEL	Jun'25	Mar'25	Change QoQ
ASSETS
Cash and cash equivalents	3,548,840	3,281,957	8.1%
Due from other banks	111,130	52,470	NMF
Mandatory cash balances with the NBG and the CBU	2,408,487	2,549,087	-5.5%
Loans and advances to customers and finance lease receivables	27,908,768	26,855,888	3.9%
Investment securities	5,260,446	4,640,823	13.4%
Repurchase receivables	-	228,045	NMF
Investment properties	11,569	14,698	-21.3%
Current income tax prepayment	11,546	22,492	-48.7%
Deferred income tax asset	4,254	3,595	18.3%
Other financial assets	436,784	480,372	-9.1%
Other assets	1,538,293	1,415,760	8.7%
Intangible assets	662,919	623,760	6.3%
Goodwill	59,964	59,964	0.0%
TOTAL ASSETS	41,963,000	40,228,911	4.3%
LIABILITIES
Due to credit institutions	7,181,100	7,754,371	-7.4%
Customer accounts	23,921,726	22,529,442	6.2%
Other financial liabilities	1,138,603	820,244	38.8%
Current income tax liability	23,416	1,444	NMF
Deferred income tax liability	51,774	54,489	-5.0%
Debt Securities in issue*	1,861,021	1,512,224	23.1%
Other liabilities	212,332	216,522	-1.9%
Subordinated debt	1,151,490	1,138,204	1.2%
Redemption liability	545,400	478,422	14.0%
TOTAL LIABILITIES	36,086,862	34,505,362	4.6%
EQUITY
Share capital	1,719	1,719	0.0%
Shares held by trust	(49,862)	(50,424)	-1.1%
Share premium	411,088	411,088	0.0%
Retained earnings	5,590,920	5,286,370	5.8%
Other reserves	(222,807)	(107,391)	NMF
Equity attributable to owners of the parent	5,731,058	5,541,362	3.4%
Non-controlling interest	145,080	182,187	-20.4%
TOTAL EQUITY	5,876,138	5,723,549	2.7%
TOTAL LIABILITIES AND EQUITY	41,963,000	40,228,911	4.3%

* Debt securities in issue include Additional Tier 1 capital subordinated notes

 

Ratios

Ratios (based on monthly averages, where applicable)	2Q'25	1Q'25	2Q'24
Profitability ratios:
ROE1	24.3%	23.2%	27.1%
ROA2	3.4%	3.2%	3.8%
Cost to income3	37.6%	37.2%	37.8%
NIM4	7.1%	6.7%	6.4%
Loan yields5	14.5%	14.0%	12.9%
Deposit rates6	5.8%	5.6%	5.2%
Cost of funding7	6.8%	6.6%	6.0%
Asset quality & portfolio concentration:
Cost of risk9	1.6%	1.4%	0.5%
PAR 90 to gross loans9	1.7%	1.6%	1.5%
NPLs to gross loans10	2.5%	2.5%	2.1%
NPL provision coverage11	78.2%	73.6%	74.6%
Total NPL coverage12	142.4%	140.4%	141.6%
Credit loss level to gross loans13	2.0%	1.8%	1.6%
Related party loans to gross loans14	0.0%	0.0%	0.1%
Top 10 borrowers to total portfolio15	4.9%	5.3%	5.8%
Top 20 borrowers to total portfolio16	7.8%	8.0%	8.6%
Capital & liquidity positions:
Net loans to deposits plus IFI funding17	103.5%	105.4%	102.0%
Leverage (x)18	7.1x	7.0x	7.0x
Georgia
Net stable funding ratio19	124.4%	125.6%	118.2%
Liquidity coverage ratio20	116.3%	119.0%	118.1%
CET 1 CAR21	16.4%	16.4%	16.8%
Tier 1 CAR22	19.8%	19.9%	22.3%
Total 1 CAR23	23.0%	23.1%	25.9%
Uzbekistan
CET 1 CAR24	18.5%	19.4%	12.6%
Tier 1 CAR25	18.5%	19.4%	12.6%
Total 1 CAR26	20.0%	20.3%	16.4%

Funding and liquidity in Georgia

	Jun'25	Mar'25	Change QoQ
Minimum net stable funding ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Net stable funding ratio as defined by the NBG	124.4%	125.6%	-1.2 pp
Minimum total liquidity coverage ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Minimum LCR in GEL, as defined by the NBG	75%	75.0%	0.0 pp
Minimum LCR in FC, as defined by the NBG	100.0%	100.0%	0.0 pp
Total liquidity coverage ratio, as defined by the NBG	116.3%	119.0%	-2.7 pp
LCR in GEL, as defined by the NBG	115.7%	118.9%	-3.2 pp
LCR in FC, as defined by the NBG	116.6%	119.1%	-2.5 pp

Regulatory capital

Georgia

In thousands of GEL	Jun'25	Mar'25	Change QoQ
CET 1 capital	4,917,529	4,814,010	2.2%
Tier 1 capital	5,938,879	5,851,748	1.5%
Total capital	6,874,774	6,786,892	1.3%
Total risk-weighted assets	29,939,526	29,337,803	2.1%
Minimum CET 1 ratio	14.7%	14.6%	0.1 pp
CET 1 capital adequacy ratio	16.4%	16.4%	0.0 pp
Minimum Tier 1 ratio	16.9%	16.9%	0.0 pp
Tier 1 capital adequacy ratio	19.8%	19.9%	-0.1 pp
Minimum total capital adequacy ratio	19.9%	19.9%	0.0 pp
Total capital adequacy ratio	23.0%	23.1%	-0.1 pp

 

 

Uzbekistan

In thousands of GEL	Jun'25	Mar'25	Change QoQ
CET 1 capital	538,892	535,639	0.6%
Tier 1 capital	538,892	535,639	0.6%
Total capital	581,838	559,526	4.0%
Total risk-weighted assets	2,912,132	2,758,355	5.6%
Minimum CET 1 ratio	8.0%	8.0%	0.0 pp
CET 1 capital adequacy ratio	18.5%	19.4%	-0.9 pp
Minimum Tier 1 ratio	10.0%	10.0%	0.0 pp
Tier 1 capital adequacy ratio	18.5%	19.4%	-0.9 pp
Minimum total capital adequacy ratio	13.0%	13.0%	0.0 pp
Total capital adequacy ratio	20.0%	20.3%	-0.3 pp

Loan portfolio

As of 30 June 2025, the gross loan portfolio reached GEL 28,469.9 million, up by 4.1% QoQ, or up by 3.4% QoQ on a constant currency basis.

By the end of June 2025, our Georgia FS loan portfolio increased by 3.2% on a QoQ basis and reached GEL 25,992.6 million, with 2.5% QoQ growth on a constant currency basis. Over the same period, our Uzbek portfolio increased by 14.6% QoQ, or up by 13.9% QoQ on a constant currency basis.

In thousands of GEL Gross loans and advances to customers	Jun'25	Mar'25	Change QoQ
Georgian financial services ("Georgia FS")*	25,992,620	25,182,536	3.2%
Retail Georgia	9,124,930	8,834,964	3.3%
CIB Georgia	10,491,098	10,055,992	4.3%
MSME Georgia	5,902,254	5,827,911	1.3%
Uzbekistan	2,463,960	2,150,075	14.6%
Total gross loans and advances to customers**	28,469,934	27,350,103	4.1%

Gross loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

* Georgia FS includes sub-segment eliminations
** Total gross loans and advances to customers include Azerbaijan

	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ
Loan yields	14.5%	14.0%	12.9%	1.6 pp	0.5 pp
GEL	14.5%	14.2%	13.8%	0.7 pp	0.3 pp
FC	8.9%	8.7%	8.8%	0.1 pp	0.2 pp
UZS	42.7%	44.2%	44.1%	-1.4 pp	-1.5 pp
Georgia FS	11.9%	11.6%	11.3%	0.6 pp	0.3 pp
GEL	14.5%	14.2%	13.8%	0.7 pp	0.3 pp
FC	8.9%	8.7%	8.8%	0.1 pp	0.2 pp
Uzbekistan	42.7%	44.2%	44.1%	-1.4 pp	-1.5 pp
UZS	42.7%	44.2%	44.1%	-1.4 pp	-1.5 pp
Total loan yields*	14.5%	14.0%	12.9%	1.6 pp	0.5 pp

Loan yields include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

* Total loan yields include Azerbaijan

Loan portfolio quality

PAR 90	Jun'25	Mar'25	Change QoQ
Georgia FS*	1.5%	1.5%	0.0 pp
Retail Georgia	0.8%	0.7%	0.1 pp
CIB Georgia	1.2%	0.9%	0.3 pp
MSME Georgia	2.8%	3.4%	-0.6 pp
Uzbekistan	3.9%	2.1%	1.8 pp
Total PAR 90**	1.7%	1.6%	0.1 pp

PAR 90 include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

* Georgia FS includes sub-segment eliminations
** Total PAR 90 includes Azerbaijan

In thousands of GEL Non-performing Loans ("NPL")	Jun'25	Mar'25	Change QoQ
Georgia FS*	613,751	600,215	2.3%
Retail Georgia	147,242	133,020	10.7%
CIB Georgia	157,590	152,263	3.5%
MSME Georgia	281,300	288,613	-2.5%
Uzbekistan	101,170	68,275	48.2%
Total non-performing loans**	717,615	671,071	6.9%

Non-performing loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total non-performing loans include Azerbaijan

NPL to gross loans	Jun'25	Mar'25	Change QoQ
Georgia FS*	2.4%	2.4%	0.0 pp
Retail Georgia	1.6%	1.5%	0.1 pp
CIB Georgia	1.5%	1.5%	0.0 pp
MSME Georgia	4.8%	5.0%	-0.2 pp
Uzbekistan	4.1%	3.2%	0.9 pp
Total NPL to gross loans**	2.5%	2.5%	0.0 pp

Non-performing loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total NPL to gross loans include Azerbaijan

	Jun'25		Mar'25
NPL Coverage	Provision Coverage	Total Coverage**	Provision Coverage	Total Coverage**
Georgia FS*	62.6%	137.3%	59.5%	134.1%
Retail Georgia	129.5%	181.7%	127.2%	186.9%
CIB Georgia	43.3%	113.8%	40.2%	111.8%
MSME Georgia	40.7%	124.9%	40.4%	123.9%
Uzbekistan	169.7%	169.7%	192.6%	192.6%
Total NPL coverage**	78.2%	142.4%	73.6%	140.4%

Non-performing loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total NPL coverage includes Azerbaijan

Cost of risk ("CoR")	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ
Georgia FS*	0.8%	0.8%	0.3%	0.5 pp	0.0 pp
Retail Georgia	1.8%	1.3%	0.4%	1.4 pp	0.5 pp
CIB Georgia	0.2%	0.3%	-0.1%	0.3 pp	-0.1 pp
MSME Georgia	0.5%	0.8%	0.5%	0.0 pp	-0.3 pp
Uzbekistan	9.9%	9.3%	5.7%	4.2 pp	0.6 pp
Total cost of risk**	1.6%	1.4%	0.5%	1.1 pp	0.2 pp

Cost of risk include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total cost of risk includes Azerbaijan

 

Deposit portfolio

As of 30 June 2025, the deposit portfolio reached GEL 23,921.7 million, up by 6.2% QoQ both in nominal terms and on a constant currency basis.

By the end of June 2025, our customer deposit portfolio in Georgia (excluding MOF) reached GEL 22,030. 9 million, up by 4.2% QoQ, and also up by 4.2% QoQ on a constant currency basis. Meanwhile, our Uzbekistan deposit portfolio increased by 10.0% QoQ, or up by 9.4% QoQ on a constant currency basis.

In thousands of GEL Customer accounts	Jun'25	Mar'25	Change QoQ
Georgia FS*	22,646,812	21,355,609	6.0%
Retail Georgia	8,719,633	8,269,131	5.4%
CIB Georgia	11,521,115	11,122,655	3.6%
MSME Georgia	1,951,125	1,913,434	2.0%
MOF	615,889	209,328	NMF
Uzbekistan	1,340,365	1,218,048	10.0%
Total customer accounts**	23,921,726	22,529,442	6.2%

* Georgian FS includes sub-segment eliminations
** Total customer accounts are adjusted for eliminations

	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ
Deposit rates	5.8%	5.6%	5.2%	0.6 pp	0.2 pp
GEL	7.9%	8.1%	7.6%	0.3 pp	-0.2 pp
FC	1.9%	1.8%	1.3%	0.6 pp	0.1 pp
UZS	24.9%	24.7%	24.8%	0.1 pp	0.2 pp
Georgian financial services	4.6%	4.7%	4.6%	0.0 pp	-0.1 pp
GEL	7.9%	8.1%	7.6%	0.3 pp	-0.2 pp
FC	1.9%	1.8%	1.3%	0.6 pp	0.1 pp
Uzbek business	24.8%	24.5%	24.8%	0.0 pp	0.3 pp
UZS	24.9%	24.7%	24.8%	0.1 pp	0.2 pp
FC	5.5%	2.8%	2.3%	3.2 pp	2.7 pp
Total deposit rates*	5.8%	5.6%	5.2%	0.6 pp	0.2 pp

* Total deposits rates include MOF deposits

 

Unaudited consolidated financial results overview for 1H 2025

This statement provides a summary of the business and financial trends for 1H 2025 for TBC Bank Group plc and its subsidiaries. The financial information and trends are unaudited.

Please note that there might be slight differences in previous periods' figures due to rounding.

Consolidated income statement and other comprehensive income

In thousands of GEL	1H'25	1H'24	Change YoY
Interest income	2,216,674	1,718,903	29.0%
Interest expense	(1,101,662)	(817,948)	34.7%
Net interest income	1,115,012	900,955	23.8%
Fee and commission income	490,517	380,362	29.0%
Fee and commission expense	(186,886)	(152,661)	22.4%
Net fee and commission income	303,631	227,701	33.3%
Net insurance income	22,774	16,903	34.7%
Net gains from currency derivatives, foreign currency operations and translation	155,932	147,116	6.0%
Other operating income	11,051	3,631	NMF
Share of profit of associates	439	105	NMF
Other operating non-interest income	190,196	167,755	13.4%
Credit loss allowance for loans to customers	(211,722)	(71,565)	NMF
Credit loss allowance for other financial items and net impairment for non-financial assets	(25,354)	(5,131)	NMF
Operating income after expected credit and non-financial asset impairment losses	1,371,763	1,219,715	12.5%
Staff costs	(307,891)	(262,216)	17.4%
Depreciation and amortisation	(79,574)	(69,722)	14.1%
Administrative and other operating expenses	(214,233)	(154,310)	38.8%
Operating expenses	(601,698)	(486,248)	23.7%
Net profit before tax	770,065	733,467	5.0%
Income tax expense	(105,284)	(107,698)	-2.2%
Net profit	664,781	625,769	6.2%
Net profit attributable to:
- Shareholders of TBCG	657,414	617,400	6.5%
- Non-controlling interest	7,367	8,369	-12.0%
Other comprehensive income:
Other comprehensive expense for the period	(68,085)	(34,164)	99.3%
Total comprehensive income for the period	596,696	591,605	0.9%

 

Consolidated balance sheet

In thousands of GEL	Jun'25	Jun'24	Change YoY
ASSETS
Cash and cash equivalents	3,548,840	3,688,366	-3.8%
Due from other banks	111,130	20,742	NMF
Mandatory cash balances with the NBG and the CBU	2,408,487	1,511,508	59.3%
Loans and advances to customers and finance lease receivables	27,908,768	24,226,246	15.2%
Investment securities	5,260,446	4,213,106	24.9%
Investment properties	11,569	14,506	-20.2%
Current income tax prepayment	11,546	1,704	NMF
Deferred income tax asset	4,254	990	NMF
Other financial assets	436,784	306,561	42.5%
Other assets	1,538,293	1,207,297	27.4%
Intangible assets	662,919	529,425	25.2%
Goodwill	59,964	59,964	0.0%
TOTAL ASSETS	41,963,000	35,780,415	17.3%
LIABILITIES
Due to credit institutions	7,181,100	4,846,332	48.2%
Customer accounts	23,921,726	21,464,578	11.4%
Other financial liabilities	1,138,603	683,382	66.6%
Current income tax liability	23,416	4,350	NMF
Deferred income tax liability	51,774	52,882	-2.1%
Debt Securities in issue*	1,861,021	1,849,800	0.6%
Other liabilities	212,332	226,562	-6.3%
Subordinated debt	1,151,490	1,152,841	-0.1%
Redemption liability	545,400	419,928	29.9%
TOTAL LIABILITIES	36,086,862	30,700,655	17.5%
EQUITY
Share capital	1,719	1,689	1.8%
Shares held by trust	(49,862)	(66,982)	-25.6%
Share premium	411,088	292,734	40.4%
Retained earnings	5,590,920	4,796,051	16.6%
Other reserves	(222,807)	(101,634)	NMF
Equity attributable to owners of the parent	5,731,058	4,921,858	16.4%
Non-controlling interest	145,080	157,902	-8.1%
TOTAL EQUITY	5,876,138	5,079,760	15.7%
TOTAL LIABILITIES AND EQUITY	41,963,000	35,780,415	17.3%

* Debt securities in issue include Additional Tier 1 capital subordinated notes

Ratios

Ratios (based on monthly averages, where applicable)	1H'25	1H'24
Profitability ratios:
ROE1	23.7%	26.0%
ROA2	3.3%	3.7%
Cost to income3	37.4%	37.5%
NIM4	6.9%	6.4%
Loan yields5	14.3%	12.9%
Deposit rates6	5.7%	5.3%
Cost of funding7	6.7%	5.9%
Asset quality & portfolio concentration:
Cost of risk9	1.5%	0.7%
PAR 90 to gross loans9	1.7%	1.5%
NPLs to gross loans10	2.5%	2.1%
NPL provision coverage11	78.2%	74.6%
Total NPL coverage12	142.4%	141.6%
Credit loss level to gross loans13	2.0%	1.6%
Related party loans to gross loans14	0.0%	0.1%
Top 10 borrowers to total portfolio15	4.9%	5.8%
Top 20 borrowers to total portfolio16	7.8%	8.6%
Capital & liquidity positions:
Net loans to deposits plus IFI funding17	103.5%	102.0%
Leverage (x)18	7.1x	7.0x
Georgia
Net stable funding ratio19	124.4%	118.2%
Liquidity coverage ratio20	116.3%	118.1%
CET 1 CAR21	16.4%	16.8%
Tier 1 CAR22	19.8%	22.3%
Total 1 CAR23	23.0%	25.9%
Uzbekistan
CET 1 CAR24	18.5%	12.6%
Tier 1 CAR25	18.5%	12.6%
Total 1 CAR26	20.0%	16.4%

 

Funding and liquidity in Georgia

	Jun'25	Jun'24	Change YoY
Minimum net stable funding ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Net stable funding ratio as defined by the NBG	124.4%	118.2%	6.2 pp
Minimum total liquidity coverage ratio, as defined by the NBG	100.0%	100.0%	0.0 pp
Minimum LCR in GEL, as defined by the NBG	75%	75.0%	0.0 pp
Minimum LCR in FC, as defined by the NBG	100.0%	100.0%	0.0 pp
Total liquidity coverage ratio, as defined by the NBG	116.3%	118.1%	-1.8 pp
LCR in GEL, as defined by the NBG	115.7%	100.0%	15.7 pp
LCR in FC, as defined by the NBG	116.6%	129.5%	-12.9 pp

Regulatory capital

Georgia

In thousands of GEL	Jun'25	Jun'24	Change YoY
CET 1 capital	4,917,529	4,344,472	13.2%
Tier 1 capital	5,938,879	5,749,522	3.3%
Total capital	6,874,774	6,671,739	3.0%
Total risk-weighted assets	29,939,526	25,791,645	16.1%
Minimum CET 1 ratio	14.7%	14.6%	0.1 pp
CET 1 capital adequacy ratio	16.4%	16.8%	-0.4 pp
Minimum Tier 1 ratio	16.9%	16.9%	0.0 pp
Tier 1 capital adequacy ratio	19.8%	22.3%	-2.5 pp
Minimum total capital adequacy ratio	19.9%	20.0%	-0.1 pp
Total capital adequacy ratio	23.0%	25.9%	-2.9 pp

 

 

Uzbekistan

In thousands of GEL	Jun'25	Jun'24	Change YoY
CET 1 capital	538,892	297,508	81.1%
Tier 1 capital	538,892	297,508	81.1%
Total capital	581,838	385,153	51.1%
Total risk-weighted assets	2,912,132	2,355,255	23.6%
Minimum CET 1 ratio	8.0%	8.0%	0.0 pp
CET 1 capital adequacy ratio	18.5%	12.6%	5.9 pp
Minimum Tier 1 ratio	10.0%	10.0%	0.0 pp
Tier 1 capital adequacy ratio	18.5%	12.6%	5.9 pp
Minimum total capital adequacy ratio	13.0%	13.0%	0.0 pp
Total capital adequacy ratio	20.0%	16.4%	3.6 pp

Loan portfolio

As of 30 June 2025, the gross loan portfolio reached GEL 28,469.9 million, up by 15.7% YoY, or up by 16.0% YoY on a constant currency basis.

By the end of June 2025, our Georgia FS loan portfolio increased by 11.2% on a YoY and reached GEL 25,992.6 million, with 11.1% YoY growth on a constant currency basis. Over the same period, our Uzbek portfolio increased by 105.0%, or 112.9% on a constant currency basis.

 

In thousands of GEL Gross loans and advances to customers	Jun'25	Jun'24	Change YoY
Georgian financial services ("Georgia FS")*	25,992,620	23,378,409	11.2%
Retail Georgia	9,124,930	8,137,555	12.1%
CIB Georgia	10,491,098	9,082,113	15.5%
MSME Georgia	5,902,254	5,778,382	2.1%
Uzbekistan	2,463,960	1,201,673	105.0%
Total gross loans and advances to customers**	28,469,934	24,611,372	15.7%

Gross loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

* Georgia FS includes sub-segment eliminations
** Total gross loans and advances to customers include Azerbaijan

	1H'25	1H'24	Change YoY
Loan yields	14.3%	12.9%	1.4 pp
GEL	14.4%	14.0%	0.4 pp
FC	8.8%	8.9%	-0.1 pp
UZS	43.5%	43.6%	-0.1 pp
Georgia FS	11.8%	11.5%	0.3 pp
GEL	14.4%	14.0%	0.4 pp
FC	8.8%	8.8%	0.0 pp
Uzbekistan	43.5%	43.6%	-0.1 pp
UZS	43.5%	43.6%	-0.1 pp
Total loan yields*	14.3%	12.9%	1.4 pp

Loan yields include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

* Total loan yields include Azerbaijan

Loan portfolio quality

PAR 90	Jun'25	Jun'24	Change YoY
Georgia FS*	1.5%	1.4%	0.1 pp
Retail Georgia	0.8%	0.7%	0.1 pp
CIB Georgia	1.2%	0.9%	0.3 pp
MSME Georgia	2.8%	2.9%	-0.1 pp
Uzbekistan	3.9%	2.5%	1.4 pp
Total PAR 90**	1.7%	1.5%	0.2 pp

PAR 90 include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

* Georgia FS includes sub-segment eliminations
** Total PAR 90 includes Azerbaijan

In thousands of GEL Non-performing Loans ("NPL")	Jun'25	Jun'24	Change YoY
Georgia FS*	613,751	485,015	26.5%
Retail Georgia	147,242	112,924	30.4%
CIB Georgia	157,590	137,804	14.4%
MSME Georgia	281,300	211,772	32.8%
Uzbekistan	101,170	29,786	239.7%
Total non-performing loans**	717,615	516,009	39.1%

Non-performing loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total non-performing loans include Azerbaijan

NPL to gross loans	Jun'25	Jun'24	Change YoY
Georgia FS*	2.4%	2.1%	0.3 pp
Retail Georgia	1.6%	1.4%	0.2 pp
CIB Georgia	1.5%	1.5%	0.0 pp
MSME Georgia	4.8%	3.7%	1.1 pp
Uzbekistan	4.1%	2.5%	1.6 pp
Total NPL to gross loans**	2.5%	2.1%	0.4 pp

Non-performing loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total NPL to gross loans include Azerbaijan

	Jun'25		Jun'24
NPL Coverage	Provision Coverage	Total Coverage**	Provision Coverage	Total Coverage**
Georgia FS*	62.6%	137.3%	67.0%	138.0%
Retail Georgia	129.5%	181.7%	133.1%	195.6%
CIB Georgia	43.3%	113.8%	44.1%	108.8%
MSME Georgia	40.7%	124.9%	49.2%	127.2%
Uzbekistan	169.7%	169.7%	191.3%	191.3%
Total NPL coverage**	78.2%	142.4%	74.6%	141.6%

Non-performing loans include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total NPL coverage includes Azerbaijan

Cost of risk ("CoR")	1H'25	1H'24	Change YoY
Georgia FS*	0.8%	0.5%	0.3 pp
Retail Georgia	1.6%	0.8%	0.8 pp
CIB Georgia	0.2%	0.1%	0.1 pp
MSME Georgia	0.6%	0.6%	0.0 pp
Uzbekistan	10.2%	5.6%	4.6 pp
Total cost of risk**	1.5%	0.7%	0.8 pp

Cost of risk include finance lease receivables only on Georgia FS, Uzbekistan and Group levels

*Georgia FS includes sub-segment eliminations
** Total cost of risk includes Azerbaijan

Deposit portfolio

As of 30 June 2025, deposit portfolio reached GEL 23,921.7 million, up by 11.4% YoY, or up by 12.5% YoY on a constant currency basis.

By the end of June 2025, our customer deposit portfolio in Georgia (excluding MOF) reached GEL 22,030.9 million, up by 9.6% YoY, or up by 10.5% YoY on a constant currency basis. Meanwhile, our Uzbekistan deposit portfolio increased by 85.7% YoY, or up by 92.8% YoY on a constant currency basis.

In thousands of GEL Customer accounts	Jun'25	Jun'24	Change YoY
Georgia FS*	22,646,812	20,867,540	8.5%
Retail Georgia	8,719,633	7,830,406	11.4%
CIB Georgia	11,521,115	10,417,043	10.6%
MSME Georgia	1,951,125	1,960,795	-0.5%
MOF	615,889	765,096	-19.5%
Uzbekistan	1,340,365	721,632	85.7%
Total customer accounts**	23,921,726	21,464,578	11.4%

* Georgian FS includes sub-segment eliminations
** Total customer accounts are adjusted for eliminations

	1H'25	1H'24	Change YoY
Deposit rates	5.7%	5.3%	0.4 pp
GEL	7.9%	7.8%	0.1 pp
FC	1.9%	1.3%	0.6 pp
UZS	24.9%	25.2%	-0.3 pp
Georgian financial services	4.6%	4.7%	-0.1 pp
GEL	7.9%	7.8%	0.1 pp
FC	1.9%	1.3%	0.6 pp
Uzbek business	24.7%	25.1%	-0.4 pp
UZS	24.9%	25.2%	-0.3 pp
FC	4.2%	2.9%	1.3 pp
Total deposit rates*	5.7%	5.3%	0.4 pp

* Total deposits rates include MOF deposits

 

Additional information

1)   Financial disclosures by business lines

Business line definitions

The operating segments are defined as follows:

·  Georgian financial services ("Georgia FS") - include JSC TBC Bank with its Georgian subsidiaries and JSC TBC Insurance with its subsidiary. The Georgia financial service segment consists of three major business sub-segments, while the treasury, leasing and insurance businesses are combined into the corporate and other sub-segments:

o Corporate and investment banking ("CIB") - a legal entity/group of affiliated entities with an annual revenue exceeding GEL 20 million or which has been granted facilities of more than GEL 7.5 million. Some other business customers may also be assigned to the CIB segment or transferred to the micro, small and medium enterprises segment on a discretionary basis. In addition, CIB includes Wealth Management private banking services to high-net-worth individuals with a threshold of USD 250,000 on assets under management (AUM), as well as on discretionary basis;

o Retail - non-business individual customers;

o Micro, small and medium enterprises ("MSME") - business customers who are not included in the CIB sub-segment.

·  Uzbekistan - TBC Bank Uzbekistan with respective subsidiaries and Payme (Inspired LLC).

·  Other - includes non-material (including wholly owned subsidiary in Azerbaijan, TBC Kredit) or non-financial subsidiaries of the Group, and intra-group eliminations.

 

Georgian financial services

Profit and loss statement

In thousands of GEL	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
Interest income	885,549	845,776	752,671	17.7%	4.7%	1,731,325	1,489,504	16.2%
Interest expense	(434,459)	(436,673)	(364,481)	19.2%	-0.5%	(871,132)	(715,646)	21.7%
Net interest income	451,090	409,103	388,190	16.2%	10.3%	860,193	773,858	11.2%
Fee and commission income	195,794	172,187	164,483	19.0%	13.7%	367,981	312,975	17.6%
Fee and commission expense	(81,838)	(65,599)	(66,562)	23.0%	24.8%	(147,437)	(133,811)	10.2%
Net fee and commission income	113,956	106,588	97,921	16.4%	6.9%	220,544	179,164	23.1%
Net insurance income	13,827	8,945	9,290	48.8%	54.6%	22,772	17,266	31.9%
Net gains from currency derivatives, foreign currency operations and translation	81,034	84,090	88,170	-8.1%	-3.6%	165,124	152,799	8.1%
Other operating income	4,949	5,520	1,917	NMF	-10.3%	10,469	3,469	NMF
Share of profit of associates	300	139	146	NMF	NMF	439	105	NMF
Other operating non-interest income	100,110	98,694	99,523	0.6%	1.4%	198,804	173,639	14.5%
Credit loss allowance for loans to customers	(54,993)	(47,954)	(14,103)	NMF	14.7%	(102,947)	(50,928)	NMF
Credit loss allowance for other financial items and net impairment for non-financial assets	(6,476)	(5,359)	(2,792)	NMF	20.8%	(11,835)	(3,382)	NMF
Operating income after expected credit and non-financial asset impairment losses	603,687	561,072	568,739	6.1%	7.6%	1,164,759	1,072,351	8.6%
Staff costs	(124,069)	(105,795)	(105,855)	17.2%	17.3%	(229,864)	(207,095)	11.0%
Depreciation and amortisation	(32,325)	(31,267)	(30,013)	7.7%	3.4%	(63,592)	(59,278)	7.3%
Administrative and other operating expenses	(65,217)	(58,169)	(51,998)	25.4%	12.1%	(123,386)	(96,762)	27.5%
Operating expenses	(221,611)	(195,231)	(187,866)	18.0%	13.5%	(416,842)	(363,135)	14.8%
Net profit before tax	382,076	365,841	380,873	0.3%	4.4%	747,917	709,216	5.5%
Income tax expense	(49,973)	(48,201)	(57,166)	-12.6%	3.7%	(98,174)	(100,870)	-2.7%
Net profit	332,103	317,640	323,707	2.6%	4.6%	649,743	608,346	6.8%

Balance sheet highlights

In thousands of GEL	Jun'25	Mar'25	Jun'24	Change YoY	Change QoQ
Cash & NBG mandatory reserves	5,601,764	5,598,657	5,000,618	12.0%	0.1%
Due from other banks	104,170	49,449	20,708	NMF	NMF
Loans and advances to customers	25,608,360	24,825,243	23,053,614	11.1%	3.2%
Investment securities measured at fair value through OCI	5,000,111	4,702,153	4,110,036	21.7%	6.3%
Intangible assets and Goodwill	458,834	443,665	406,942	12.8%	3.4%
Other assets	1,825,283	1,758,688	1,491,030	22.4%	3.8%
TOTAL ASSETS	38,598,522	37,377,855	34,082,948	13.2%	3.3%
Due to credit institutions	6,646,158	7,243,202	4,675,711	42.1%	-8.2%
Customer accounts	22,646,812	21,355,609	20,867,540	8.5%	6.0%
Subordinated debt and debt securities in issue	2,291,411	2,311,275	2,682,703	-14.6%	-0.9%
Other liabilities	1,389,607	937,265	902,091	54.0%	48.3%
TOTAL LIABILITIES	32,973,988	31,847,351	29,128,045	13.2%	3.5%
Equity attributable to shareholders	5,624,237	5,530,226	4,954,687	13.5%	1.7%
Non-controlling interest	297	278	216	37.5%	6.8%
TOTAL EQUITY	5,624,534	5,530,504	4,954,903	13.5%	1.7%
TOTAL LIABILITIES AND EQUITY	38,598,522	37,377,855	34,082,948	13.2%	3.3%

Key ratios

Georgian financial services	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
Profitability ratios:
ROE1	23.9%	23.3%	26.9%	-3.0 pp	0.6 pp	23.6%	25.4%	-1.8 pp
ROA2	3.5%	3.4%	3.9%	-0.4 pp	0.1 pp	3.5%	3.8%	-0.3 pp
Cost to income3	33.3%	31.8%	32.1%	1.2 pp	1.5 pp	32.6%	32.2%	0.4 pp
NIM4	5.9%	5.5%	5.6%	0.3 pp	0.4 pp	5.7%	5.7%	0.0 pp
Loan yields5	11.9%	11.6%	11.3%	0.6 pp	0.3 pp	11.8%	11.5%	0.3 pp
Deposit rates6	4.6%	4.7%	4.6%	0.0 pp	-0.1 pp	4.6%	4.7%	-0.1 pp
Cost of funding7	5.6%	5.6%	5.4%	0.2 pp	0.0 pp	5.6%	5.4%	0.2 pp
Asset quality & portfolio concentration:
Cost of risk8	0.8%	0.8%	0.3%	0.5 pp	0.0 pp	0.8%	0.5%	0.3 pp
PAR 90 to gross loans9	1.5%	1.5%	1.4%	0.1 pp	0.0 pp	1.5%	1.4%	0.1 pp
NPLs to gross loans10	2.4%	2.4%	2.1%	0.3 pp	0.0 pp	2.4%	2.1%	0.3 pp
NPL provision coverage11	62.6%	59.5%	67.0%	-4.4 pp	3.1 pp	62.6%	67.0%	-4.4 pp
Total NPL coverage12	137.3%	134.1%	138.0%	-0.7 pp	3.2 pp	137.3%	138.0%	-0.7 pp

For the ratio definitions and exchange rates, please refer to appendix 3.

 

Uzbekistan business[3]

Profit and loss statement

In thousands of GEL	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
Interest income	258,522	224,843	123,740	108.9%	15.0%	483,365	225,064	114.8%
Interest expense	(123,268)	(101,576)	(56,729)	117.3%	21.4%	(224,844)	(103,757)	116.7%
Net interest income	135,254	123,267	67,011	101.8%	9.7%	258,521	121,307	113.1%
Fee and commission income	60,066	56,362	34,861	72.3%	6.6%	116,428	62,934	85.0%
Fee and commission expense	(22,028)	(18,326)	(10,771)	104.5%	20.2%	(40,354)	(18,670)	116.1%
Net fee and commission income	38,038	38,036	24,090	57.9%	0.0%	76,074	44,264	71.9%
Net insurance income	413	-	-	NMF	NMF	413	-	NMF
Net gains from currency derivatives, foreign currency operations and translation	(3,952)	(266)	(30)	NMF	NMF	(4,218)	(456)	NMF
Other operating income	12	14	10	20.0%	-14.3%	26	11	136.4%
Other operating non-interest expense	(3,527)	(252)	(20)	NMF	NMF	(3,779)	(445)	NMF
Credit loss allowance for loans to customers	(50,067)	(58,514)	(14,050)	256.3%	-14.4%	(108,581)	(25,803)	NMF
Credit loss allowance for other financial items and net impairment for non-financial assets	(7,352)	(5,705)	(1,029)	NMF	28.9%	(13,057)	(1,552)	NMF
Operating income after expected credit and non-financial asset impairment losses	112,346	96,832	76,002	47.8%	16.0%	209,178	137,771	51.8%
Staff costs	(25,943)	(23,104)	(15,028)	72.6%	12.3%	(49,047)	(28,002)	75.2%
Depreciation and amortisation	(5,722)	(4,674)	(3,153)	81.5%	22.4%	(10,396)	(5,912)	75.8%
Administrative and other operating expenses	(42,427)	(46,182)	(30,181)	40.6%	-8.1%	(88,609)	(54,816)	61.6%
Operating expenses	(74,092)	(73,960)	(48,362)	53.2%	0.2%	(148,052)	(88,730)	66.9%
Net profit before tax	38,254	22,872	27,640	38.4%	67.3%	61,126	49,041	24.6%
Income tax expense	(5,925)	(1,311)	(3,861)	53.5%	NMF	(7,236)	(6,825)	6.0%
Net profit	32,329	21,561	23,779	36.0%	49.9%	53,890	42,216	27.7%

Balance sheet highlights

In thousands of GEL	Jun'25	Mar'25	Jun'24	Change YoY	Change QoQ
Cash & CBU mandatory reserves	355,575	245,519	207,848	71.1%	44.8%
Due from other banks	6,936	2,996	-	NMF	131.5%
Loans and advances to customers	2,292,297	2,018,553	1,144,689	100.3%	13.6%
Intangible assets and Goodwill	113,634	93,461	60,633	87.4%	21.6%
Other assets	462,985	365,683	153,296	202.0%	26.6%
TOTAL ASSETS	3,231,427	2,726,212	1,566,466	106.3%	18.5%
Due to credit institutions	1,055,440	683,532	331,137	218.7%	54.4%
Customer accounts	1,340,365	1,218,048	721,632	85.7%	10.0%
Subordinated debt and debt securities in issue	37,084	37,878	46,869	-20.9%	-2.1%
Other liabilities	128,806	153,384	78,852	63.4%	-16.0%
TOTAL LIABILITIES	2,561,695	2,092,842	1,178,490	117.4%	22.4%
Equity attributable to shareholders	669,732	633,370	387,976	72.6%	5.7%
TOTQL EQUITY	669,732	633,370	387,976	72.6%	5.7%
TOTAL LIABILITIES AND EQUITY	3,231,427	2,726,212	1,566,466	106.3%	18.5%

Key ratios

Uzbekistan	2Q'25	1Q'25	2Q'24	Change YoY	Change QoQ	1H'25	1H'24	Change YoY
Profitability ratios:
ROE1	20.0%	13.7%	27.8%	-7.8 pp	6.3 pp	16.9%	25.7%	-8.8 pp
ROA2	4.4%	3.5%	6.9%	-2.5 pp	0.9 pp	4.0%	6.7%	-2.7 pp
Cost to income3	43.6%	45.9%	53.1%	-9.5 pp	-2.3 pp	44.8%	53.7%	-8.9 pp
NIM4	22.9%	24.7%	24.4%	-1.5 pp	-1.8 pp	23.7%	24.0%	-0.3 pp
Loan yields5	42.7%	44.2%	44.1%	-1.4 pp	-1.5 pp	43.5%	43.6%	-0.1 pp
Deposit rates6	24.8%	24.5%	24.8%	0.0 pp	0.3 pp	24.7%	25.1%	-0.4 pp
Cost of funding7	22.9%	23.3%	23.1%	-0.2 pp	-0.4 pp	23.1%	23.6%	-0.5 pp
Asset quality & portfolio concentration:
Cost of risk8	9.9%	9.3%	5.7%	4.2 pp	0.6 pp	10.2%	5.6%	4.6 pp
PAR 90 to gross loans9	3.9%	2.1%	2.5%	1.4 pp	1.8 pp	3.9%	2.5%	1.4 pp
NPLs to gross loans10	4.1%	3.2%	2.5%	1.6 pp	0.9 pp	4.1%	2.5%	1.6 pp
NPL provision coverage11	169.7%	192.6%	191.3%	-21.6 pp	-22.9 pp	169.7%	191.3%	-21.6 pp
Total NPL coverage12	169.7%	192.6%	191.3%	-21.6 pp	-22.9 pp	169.7%	191.3%	-21.6 pp

For the ratio definitions and exchange rates, please refer to appendix 3.

2)   Glossary

Terminology	Definition
ADB	Asian Development Bank
BVPS	Book value per share
CBU	Central Bank of Uzbekistan
Consumer loans	Unsecured loans to individuals
Digital daily active users (Digital DAU)	The number of retail digital users who logged into our digital channels at least once per day
Digital monthly active users (Digital MAU)	The number of retail digital users who logged into our digital channels at least once a month
EPS	Earnings per share
FC	Foreign currency
Gross/net loans	Includes gross/net loans and advances to customers and gross/net finance lease receivables
IMF	International Monetary Fund
Monthly active customers (MAC)	For Georgian business, an individual user who has at least one active product as of the reporting date or performed at least one transaction during the past month. For Uzbekistan business, an individual user who logged into the digital application at least once during the month
NBG	National Bank of Georgia
NMF	No Meaningful Figure

 

3)   Ratio definitions and exchange rates

Ratio definitions

1. Return on average total equity (ROE) equals profit attributable to owners divided by the monthly average of total shareholders' equity attributable to the PLC's equity holders for the same period; annualised where applicable.

2. Return on average total assets (ROA) equals profit of the period divided by monthly average total assets for the same period; annualised where applicable.

3. Cost to income ratio equals total operating expenses for the period divided by the total revenue for the same period. (Revenue represents the sum of net interest income, net fee and commission income and other non-interest income).

4. Net interest margin (NIM) is net interest income divided by monthly average interest-earning assets; annualised where applicable. Interest-earning assets include investment securities (excluding CIB shares), net investment in finance lease, net loans, and amounts due from credit institutions.

5. Loan yields equal interest income on loans and advances to customers divided by monthly average gross loans and advances to customers; annualised where applicable.

6. Deposit rates equal interest expense on customer accounts divided by monthly average total customer deposits; annualised where applicable.

7. Cost of funding equals sum of the total interest expense and net interest gains on currency swaps (entered for funding management purposes), divided by monthly average interest-bearing liabilities; annualised where applicable.

8. Cost of risk equals credit loss allowance for loans to customers divided by monthly average gross loans and advances to customers; annualised where applicable.

9. PAR 90 to gross loans ratio equals loans for which principal or interest repayment is overdue for more than 90 days divided by the gross loan portfolio for the same period.

10. NPLs to gross loans equals loans with 90 days past due on principal or interest payments, and loans with a well-defined weakness, regardless of the existence of any past-due amount or of the number of days past due divided by the gross loan portfolio for the same period.

11. NPL provision coverage equals total credit loss allowance for loans to customers divided by the NPL loans.

12. Total NPL coverage equals total credit loss allowance plus the minimum of collateral amount of the respective NPL loan (after applying haircuts in the range of 0%-50% for cash, gold, real estate and PPE) and its gross loan exposure divided by the gross exposure of total NPL loans.

13. Credit loss level to gross loans equals credit loss allowance for loans to customers divided by the gross loan portfolio for the same period.

14. Related party loans to total loans equals related party loans divided by the gross loan portfolio.

15. Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided by the gross loan portfolio.

16. Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided by the gross loan portfolio.

17. Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus borrowings received from international financial institutions.

18. Leverage equals total assets to total equity.

19. Net stable funding ratio equals the available amount of stable funding divided by the required amount of stable funding as defined by NBG in line with Basel III guidelines. Calculations are made for TBC Bank standalone.

20. Liquidity coverage ratio equals high-quality liquid assets divided by the total net cash outflow amount as defined by the NBG. Calculations are made for TBC Bank standalone.

21. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone.

22. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone.

23. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG Basel III standards. Calculations are made for TBC Bank standalone.

24. CET 1 CAR equals CET 1 capital divided by total risk weighted assets, both calculated in accordance with requirements of the CBU in national accounting standards. Calculations are made for TBC UZ Bank standalone.

25. Tier 1 CAR equals tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the CBU in national accounting standards. Calculations are made for TBC UZ Bank standalone.

26. Total CAR equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the CBU in national accounting standards. Calculations are made for TBC UZ Bank standalone.

Exchange rates

To calculate the QoQ growth of the balance sheet items without the currency exchange rate effect, we used the USD/GEL exchange rate of 2.7673 as of 31 March 2025. To calculate the YoY growth without the currency exchange rate effect, we used the USD/GEL exchange rate of 2.8101 as of 30 June 2024 . As of 30 June 2025, the USD/GEL exchange rate equalled 2.7236. For P&L items growth calculations without the currency effect, we used the average USD/GEL exchange rate for the following periods: 1Q 2025 of 2.8137 and 2Q 2024 of 2.7396. As of 2Q 2025, the USD/GEL exchange rate equalled 2.7418, 1H 2025 of 2.7776, 1H 2024 of 2.7054.

Risk management

Overview

The Group operates a strong, independent, business-minded risk management framework. Its main objective is to safeguard the long-term earnings capacity of the balance sheet on the basis of risk-adjusted returns. This objective is achieved through the implementation of an effective risk management framework. The Group has adopted four primary risk management principles to better accomplish its major objectives:

•       Govern risks transparently to ensure clear understanding of risk landscape, cross-functional alignment in risk management practices, and stakeholder trust. Transparency and consistency in risk-related processes and policies form the foundation for effective risk management and reinforcement of stakeholder trust. Communicating risk goals and strategic priorities to governing bodies and providing a comprehensive follow-up in an accountable manner are key priorities for the staff responsible for risk management;

•       Manage risks prudently to promote long-term earnings growth and resilience. Risk management balances strategic risk-taking for earnings growth with robust safeguards against market disruptions, enabling the Group to pursue opportunities while withstanding stress events;

•       Ensure that risk management underpins the implementation of strategy. The risk management function is embedded throughout the organisation to support achievement of strategic objectives. It promotes identification and management of risks at all levels. The risk management function provides a framework under which stakeholders are empowered to make risk-based decisions by identifying, quantifying, and adequately pricing risks. It also creates the conditions for formulating risk mitigation actions, thus supporting the long-term generation of desired returns and the achievement of planned targets;

•       Use risk management to gain a competitive advantage. Providing tools for faster decision-making and supporting business operations, ensuring the long-term earnings growth and resilience of the business model, establishes risk management as a core component of the Group's competitive strategy.

Risk management framework

The Group employs a comprehensive, enterprise-wide Risk Management Framework, placing a strong emphasis on cultivating a robust risk culture throughout the organisation. This framework is strategically designed to ensure that effective governance capabilities and methodologies are in place, facilitating sound risk management and informed decision-making.

Aligned with the Group's overarching strategic objectives, the Risk Management Framework establishes standards and objectives while delineating roles and responsibilities. The Group's principal risks, as detailed in this section, are systematically controlled and managed within the framework, promoting consistency across the organisation and its subsidiaries.

Led by the Chief Risk Officer and developed by the Group's independent Risk function, the framework undergoes an annual review and approval process by the Board. It encompasses risk governance through the Group's "three lines of defence" operating model.

The Group's risk appetite, supported by a robust set of principles, policies, and practices, defines the acceptable levels of tolerance for various risks. This structured approach guides risk-taking within established boundaries, ensuring a proactive and disciplined risk management stance.

The Group operates under the principle that all teams share responsibility for managing risk, with a particular emphasis on those facing the client. However, the Risk function assumes a crucial role in overseeing and monitoring risk management activities. This includes development of the framework and ensuring adherence to supporting policies, standards, and operational procedures. The Chief Risk Officer regularly reports to the Board Risk Committee on the Group's risk profile, performance, and the effectiveness of the Group's internal control system.

Moreover, the Group has instituted a rigorous process to identify and manage material and emerging threats. These threats, which are deemed to potentially adversely affect the Group's ability to meet its strategic objectives, are regularly reported to the Board. The Group's applied, comprehensive approach considers the interdependence of material and emerging threats, enhancing the overall risk intelligence provided to stakeholders.

Governance

The Group's risk governance structure is crafted to ensure robust oversight and strategic decision-making within risk management. At its core, risk-focused committees and risk functions assume pivotal roles in orchestrating effective risk management practices within the Group as a whole and its individual subsidiaries.

At the Supervisory Board level, while the boards are responsible for overseeing risk management, in some instances activities within risk management and control are delegated to risk-focused committees for effective handling. These committees' responsibilities encompass aligning risk practices with strategic goals, setting the risk appetite, discussing and approving risk policies, fostering a culture of responsible risk-taking, and monitoring risk identification and assessment processes. The committees are tasked with overseeing regular assessments of emerging and principal risks that could impact the business model, performance, solvency, and liquidity. Their leadership is critical for effective risk management and the long-term viability of the Group.

At the Management Board level, committees assume a crucial role in steering effective risk management within TBC's subsidiaries. Whether through a single risk committee or multiple committees with more granular scopes (e.g. financial risks, reputational risk, or information security), their responsibilities include closely overseeing risk exposures and making key decisions on risk mitigation and control. While specific duties may differ, the overall mission remains consistent: aligning risk management practices with regulatory requirements and risk tolerance. In cases where smaller-scale Group companies do not have their own risk committees, the Management Board itself assumes these responsibilities.

Risk culture and the three lines of defence

At the core of the Group's Risk Management Framework and practices is a robust risk culture that underscores the institution's commitment to prudent and strategic risk-taking. The Group expects its leaders to demonstrate strong risk management behaviour, providing clarity on the desired level of risk taking, developing their respective capabilities and frameworks, and motivating employees to ensure risk-minded decision making.

The key principles governing risk culture across all the Group's subsidiaries include: Board leadership (the Board sets the tone and establishes a foundation for a risk-aware culture throughout the organisation); employee understanding and accountability (the Group ensures that employees at every level understand the institution's approach to risk, with a clear understanding that individuals are accountable for their actions concerning risk-taking behaviours aligned with the Group's standards); communication (open, transparent, and effective communication is fundamental to the Group's risk culture); and remuneration incentives (the Group reinforces its risk culture by aligning remuneration incentives with sound risk management practices).

This holistic approach to risk culture ensures that the Group and its subsidiaries are equipped with a resilient and proactive mindset, where risk management is ingrained in the organisational DNA.

To comprehensively manage risks, the Group ensures adherence to the three lines of defence model:

·      First Line of Defence: Business lines, as frontline defenders, engage in risk-taking activities with awareness of their impact on risks that may contribute to or hinder the achievement of the Group's objectives. A well established risk culture is fundamental to risk-taking decisions.

·      Second Line of Defence: Risk management functions ensure effective risk management and controls by consolidating expertise, identifying, measuring, and monitoring risks, and assisting the first line. They act independently from the business lines and provide frameworks and tools for effective risk management.

·      Third Line of Defence: The internal audit function provides assurance to the Board of Directors that the risk management and control efforts of both the first and second lines of defence meet the expectations set by the Board of Directors.

Risk appetite

Risk appetite is defined as the set of acceptable limits that shape the combined level of risk that the Group or its key subsidiaries are prepared to accept in pursuit of return and value creation consistent with the approved strategy. The Group's Risk Appetite Framework, which governs enterprise risk management, establishes the extent and process of permissible risk-taking to guide the Group's business outcomes.

Considering the ever-changing risk profile of the Group, the Risk Appetite Frameworks of the Group and its key subsidiaries are regularly reviewed, updated, and approved by the Board to make sure that they remain aligned with the Group's desired level of risk-taking.

Risk identification

The identification of risks serves as the foundational step in the Group's risk management process. This process systematically recognises and documents any potential direct or indirect risks that could impact the achievement of organisational objectives. To ensure comprehensive, anticipatory identification of these risks, this process leverages input both from the Group's lines of defence within the organisation and from external stakeholders.

The risk identification process within the Group is governed by the Risk Registry Framework. Regular reviews and adjustments of the Risk Registry are undertaken to ensure its consistent relevance and effectiveness.

Risk measurement

The Group places significant emphasis on a comprehensive approach to risk measurement, aligning with its commitment to proactive risk management practices. Each identified risk direction is accompanied by tools for quantitative and qualitative measurement. The process is dynamic, continuously adapting to changes in the financial landscape and regulatory environment. Regular reviews and assessments ensure the effectiveness of the risk measurement tools and methodologies.

Risk mitigation

Risk mitigation is a proactive approach aimed at minimising the potential negative consequences of risks. To proactively approach every material risk, the Group develops and implements harmonised risk policies and frameworks, which play a key role by:

·      Setting standards and guidelines - risk policies outline the standards and guidelines for how risks should be managed within the organisation and provide a structured approach to addressing risks, ensuring consistency and compliance with regulatory and internal requirements.

·      Defining roles and responsibilities - risk policies clarify the roles and responsibilities of different individuals and departments in the risk mitigation process.

·      Establishing procedures - risk policies provide a guiding framework for developing procedures for risk mitigation activities.

All policies are subject to regular reviews and updates to adapt to new challenges and refine its risk management strategies over time.

Risk monitoring and reporting

Risk reporting is a cornerstone of the Group's robust Risk Management Framework. The Group and its subsidiaries are mandated to establish robust risk reporting processes. These processes are designed to regularly communicate material risk exposures and the overall risk profile to the Supervisory and Management Boards and to senior management.

Regular monitoring is essential to ensure compliance with the established risk appetite and regulatory limits. It serves as a proactive measure to observe the evolution of the prevailing risk environment. The Group emphasises a structured approach to risk reporting, including monitoring, to effectively capture, assess, and communicate risks. This ensures the provision of clear and timely information, fostering accountability among stakeholders in managing and addressing risks.

In addition to routine reporting, ad-hoc reporting can be triggered by key vulnerabilities, significant risk identification, or deviations from the targeted risk profile. This agile approach ensures that the risk reporting mechanism remains responsive to emerging risks and evolving circumstances.

Internal control

TBC Group has established its streamlined Integrated Control Assurance Framework, seamlessly aligning its risk, control, compliance, and internal audit functions for integrity, efficiency, and regulatory compliance. This comprehensive framework ensures meticulous adherence to policies and procedures, catering to the diverse needs of our products and services. It also enables an integrated, unified repository of audit findings and risk-related insights generated from our first, second, and third lines of defence and our regulatory and legal functions, reflecting our commitment to transparency and accountability.

The Internal Control Framework extends to the evaluation, testing, and follow-up of high and critical-risk processes, while simultaneously focusing on enhancing risk awareness and refining internal controls. Continuous monitoring and improvement initiatives are integral components of the framework, enhancing operational effectiveness. This approach fosters a culture of internal control, showcasing our dedication to excellence in managing internal controls and risks.

Stress testing and contingency planning

It is essential for the Group to examine its financial performance under conditions that diverge from baseline expectations. For that reason, the Group subjects itself to various stress scenarios in order to identify vulnerabilities, quantify potential losses, and assess the sufficiency of its risk mitigation measures. Currently, JSC TBC Bank has established its own comprehensive stress testing framework, which encompasses a range of scenarios to assess its resilience. This includes scenarios related to capital, liquidity, credit, cyber and other risk factors relevant to the prevailing risk environment. Stress testing is crucial to evaluate the ability to withstand adverse conditions, such as economic downturns, market volatility, and unforeseen events. Regular reviews and adjustments are essential to ensure the consistent relevance and effectiveness of the stress testing frameworks. Stress testing procedures have also been implemented for TBC Uzbekistan, focusing on the economic and financial environment of the market in Uzbekistan.

The Bank regularly performs stress test exercises. Stress tests are conducted within predefined frameworks such as ICAAP, ILAAP and Recovery Planning, and/or on an ad-hoc basis to assess the impact of certain system-wide or idiosyncratic events on the Bank's capital, liquidity, and financial positions. Although the overall stress testing approach is consistent, the severity of the stress scenarios differs according to the relevant framework.

In addition to stress testing analysis, the Recovery Plan serves as a strategic blueprint for both the Supervisory Board and the management to ensure its readiness for specific stress conditions. The Recovery Plan provides clear recovery options with specific steps to be undertaken including transparent and timely communication to internal and external stakeholders. The framework is subject to regular reviews and adjustments to ensure its consistent relevance and effectiveness.

The Bank also has a Business Continuity Plan in place. This plan ensures that the organisation is prepared to respond effectively to disruptions. By outlining strategies to maintain revenue streams and minimise financial losses during disruptions, these practices help to safeguard the organisation's financial stability and long-term viability.

 

Material existing and emerging risks

Risk management is a critical pillar of the Group's strategy. It is essential to identify emerging risks and uncertainties that could adversely impact the Group's performance, financial condition, and prospects. This section analyses the material principal and emerging risks and uncertainties that the Group faces. However, we cannot exclude the possibility of the Group's performance being affected by risks and uncertainties other than those listed below.

The Board has undertaken a robust assessment of both the principal and emerging risks facing the Group and the long-term viability of the Group's operations, in order to determine whether to adopt the going concern basis of accounting.

PRINCIPAL RISKS AND UNCERTAINTIES

SPECIFIC FOCUS IN 1H 2025

1. The Group is exposed to the potential adverse effects of internal political tensions and uncertainty in its countries of operation.

Risk description

The Group's performance is highly vulnerable to geopolitical developments in its two major operational markets -Georgia and Uzbekistan.

The political climate in Georgia has been strained following the parliamentary elections on October 26^th 2024, as opposition parties disputed the election results, with tensions increasing after November 28th when Government announced a temporary suspension of EU integration talks until the end of 2028. The announcement sparked protests that began in Tbilisi and spread across the major cities of Georgia. Street demonstrations have been ongoing for weeks, followed by interventions by law enforcement and the detention of several protesters. Political tensions relatively lowered in the country throughout the first half of 2025, with moderated scale of street demonstrations, however, jail sentences for several opposition leaders and protesters might revive the tensions, especially around local government elections scheduled for October by the government. Against this backdrop, Georgia's political environment continues to be influenced by evolving international dynamics, including shifting relations with key global and regional partners. While no direct measures affecting the broader economy or institutions have been introduced by the U.S. or European countries, increased scrutiny and changes in international engagement contribute to an atmosphere of uncertainty, which remains a potential risk factor in 2025.

The most notable economic consequence of political tensions throughout 2024 was increased pressure on the GEL exchange rate. Due to election related expectation of a depreciation in the national currency in October, the Bank's customers began to convert a substantial part of their deposits into foreign currencies in August 2024, as demand for national currency credit increased, causing downward pressure on the GEL and a liquidity deficit in the market. At the same time, while foreign currency inflows remained broadly strong throughout the year, the National Bank of Georgia (NBG) intervened heavily in the foreign exchange market, spending around USD 700 million in September-October to keep the GEL stable in a range between 2.70-2.75 USD, followed by the purchase of USD 153 million in November and December. Political tensions peaked at the end of November when the GEL responded by depreciating against the USD, peaking at 2.87 GEL per USD on December 4th, while stabilising at around 2.80 at the end of the year. At the same time, these developments created a buffer against future GEL depreciation, with foreign currency deposits expected to be converted back to the national currency, providing the market with foreign currency liquidity that would support the GEL. Indeed, throughout the 1H of 2025, deposit conversions have flattened and the trend of gradually switching back to the GEL appears to have started. At the same time, lower imports driven by moderated spending on durable goods, as opposed to stronger exports, have led to the improved net currency inflows to the country. Combined with globally weakened USD, these factors enabled the NBG to scale up USD-buying side interventions on the market, purchasing around USD 880 million in Mar-Jun 2025, while the GEL has appreciated by around 3.1% against the USD compared to the end of 2024, with USD/GEL exchange rate standing at 2.72 as of June 30.

More broadly, political tensions had a negative, though rather moderate effect on tourism and consumer spending on durable goods at the end of 2024 and in the first months of 2025, though, recovery in both spending dynamics was evident from March. Overall, while some signs of slowdown have appeared in politically turbulent December, economic and credit activity remained stronger than expected so far with only gradual moderation towards the long-term trend. Real GDP growth averaged to a robust 8.3% in the first half of 2025, following 9.4% in 2024, 7.8% in 2023 and consecutive double-digit growth in 2021 and 2022, while total credit increased by 15.6% YoY at the end of June.

Risk mitigation

The Group implemented appropriate measures to minimise the potential negative effect on the Bank's performance and the availability of its services to customers. The Bank utilises a comprehensive stress testing framework and a range of risk measurement and monitoring tools. The effect of more severe stress assumptions is assessed as part of the annual Recovery Plan process. In addition, the Group has specifically developed several theoretical scenarios analysing the possible outcomes of the parliamentary elections, and designed stress tests to calibrate the potential effects on the Bank's performance.

2. The Group's performance may be compromised by adverse developments in the region, in particular the war in Ukraine, the possible spread of the geopolitical crisis and/or the potential outflow of migrants from Georgia, and further military escalation in the Middle East, which could have a material impact on the operating environment in Georgia and Uzbekistan.

Risk description

The Group's performance is dependent on geopolitical developments in its two major operation markets - Georgia and Uzbekistan.

Although inflows to the Georgian economy are quite diversified, the country is still vulnerable to geopolitical and economic developments in the region. Risks that are still tangible stemming from the Russian invasion of Ukraine and the consequent sanctions imposed on Russia, with the resulting elevated uncertainties, remain the major external potential threat to the Georgian economy. The country is also exposed to renewed military conflicts in its breakaway regions occupied by Russia, while some relatively distant conflicts, such as the escalation in the Middle East, might affect the Georgian economy through a stronger USD, higher oil prices, migration flows, etc.

While the migration effect is moderating, it continues to make an important contribution to economic activity; therefore, any sizeable outflow could lead to a deterioration in the business environment. The reverse would probably be the case in any rapid conflict resolution scenario, which would be likely to create positive economic spillover effects, such as strong rebound growth in Russia and Ukraine.

Moreover, the Russian invasion of Ukraine, related economic policies, and geopolitical uncertainties pose a risk to the business environment in Uzbekistan, including but not limited to geopolitical tensions in Central Asia.

The materialisation of these risks could severely hamper economic activity in Georgia and Uzbekistan, and negatively impact the business environment and the client and customer base of the Group.

Risk mitigation

The Group actively employs stress testing and other risk measurement and monitoring tools to ensure that early triggers are identified and translated into specific action plans to minimise any negative impact on the Bank's capital adequacy, liquidity, and portfolio quality. In extreme stress cases, where regulatory requirements may be breached, the Bank has a Recovery Plan in place, which helps to guide the Board and the management through the process of recovery of the capital and/or liquidity positions within a prescribed timeframe.

3. The Group's operating region introduces financial crime risk.

Risk description

Financial crime risk encompasses money laundering, terrorist financing, bribery and corruption, and sanctions-related risks. Sanctions risk, in particular, has continued to escalate in recent years. As such, in the first half of 2025, the Group maintained a strong focus on managing and enhancing its sanctions risk control framework.

Georgia has historically maintained close business and financial ties with both Russia and Ukraine. However, the Russian Federation's full-scale invasion of Ukraine on 24 February 2022 triggered a robust international response, including the imposition of extensive economic sanctions by the US, EU, UK, and other global partners. These sanctions targeted a broad range of Russian and Belarusian government officials, oligarchs, businesses, financial institutions, and state-owned enterprises, along with sectoral restrictions and export/import bans across critical industries.

Since late 2023, leading sanctioning authorities have continued to tighten and expand restrictions, targeting Russia's military, energy, and trade sectors through multiple packages in early 2024 and 2025. The growing complexity and evolving scope of these measures, alongside escalating political tensions in Georgia, have intensified scrutiny from international financial institutions and correspondent banks. These institutions have adopted a more cautious stance, implementing stricter requirements for transaction monitoring and customer due diligence.

The relocation of a significant number of Russian nationals to Georgia has further elevated sanctions risk. Given the Group's interactions with Russian entities and individuals, there is an increased risk of exposure to sanctions circumvention attempts.

In December 2023, the US Office of Foreign Assets Control (OFAC) issued an executive order requiring Georgian financial institutions to apply enhanced scrutiny to transactions involving Russian entities operating within the Russian economy, particularly those linked to military-industrial activities. Since then, additional sanctions packages from the EU, UK, and US have introduced further restrictions aimed at disrupting sanctions evasion networks and undermining support for Russia's war effort.

Domestically, the adoption of new regulatory measures by the Georgian authorities-designed to control the re-export of restricted goods of EU/UK/US origin to Russia and Belarus-has prompted the Group to further enhance its sanctions controls. This includes implementing AI-driven monitoring tools and bolstering trade surveillance systems to prevent the illicit flow of sanctioned goods to or from restricted jurisdictions.

Political developments in Georgia during late 2024 and early 2025 have also contributed to the evolving risk landscape. In response to rising concerns around democratic backsliding, the US and UK imposed sanctions on several Georgian government officials and public figures. In April 2025, a second round of targeted measures extended to members of the judiciary. There remains an ongoing risk of additional designations involving individuals with close ties to the ruling political establishment, depending on how the domestic situation unfolds.

While the Red Sea crisis has eased, emerging trade corridors such as the Middle Corridor have gained prominence. Previously, Georgia faced risks related to Iran-linked transshipments in its Asia-bound trade, particularly in routes affected by US sanctions. However, these risks have diminished as trade flows shift toward alternative pathways.

Non-compliance with the US, EU, or UK sanctions regimes could result in significant regulatory penalties and enforcement actions by both the National Bank of Georgia and international authorities. Beyond regulatory consequences, the Group remains exposed to reputational risks, particularly with correspondent banks and other critical financial partners.

Risk mitigation

The Group maintains a zero-tolerance policy towards any breach or facilitation of breaches of UN, UK, US, and EU sanctions. We are committed to restricting any dealings with sanctioned parties or goods and services, whether directly or indirectly.

In line with our commitment, the Group has implemented a comprehensive Anti-Financial Crime Policy that addresses key risk areas, including money laundering, terrorist financing, bribery, corruption, and sanctions. This policy applies uniformly across all Group member companies, business activities, and employees. To ensure adherence, employees receive regular training on financial crime risk management and are made aware of the Group's approach and the potential consequences of non-compliance.

Our objective is to protect our customers, shareholders, and society from financial crime and associated threats. The Group is fully committed to complying with applicable international and domestic laws and regulations related to financial crime, as well as relevant legislation in other countries where Group member financial institutions operate. We strive to meet industry best practice standards consistently.

To prevent any association with unlawful activities such as money laundering, terrorist financing, bribery, corruption, sanctions violations, or tax evasion, the Group has implemented internal policies, procedures, and detailed instructions. Our Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) compliance program includes:

·      Policies and procedures to ensure compliance with AML laws and regulations.

·      Know Your Customer (KYC) and customer due diligence procedures.

·      A customer acceptance policy.

·      Screening against global sanctions lists of all relevant authorities.

·      Regular staff training and awareness-raising.

·      Procedures for monitoring and reporting suspicious activities.

 

The Bank has allocated specific resources to sanctions risk management, including:

 

·      Acquisition of software and databases to assist in sanctions risk mitigation.

·      Engagement of external advisers to provide recommendations for improvements.

·      Conducting external audits to assess internal policies and procedures.

·      Empowering dedicated staff with the relevant knowledge.

·      Establishing new arrangements within the Compliance Division, including the addition of new human resources.

 

As part of the second line of defence, the Bank's Compliance Division manages risk in accordance with the risk appetite defined by the Group and promotes a strong risk culture throughout the organisation. The Group has implemented a sophisticated, artificial intelligence-based AML solution to enable AML Officers to monitor client transactions and identify suspicious behaviour. This system utilizes data analytics and machine learning to detect anomalies, identify organized money laundering activities, and create automated systems for pattern recognition. The tool compiles incidents into dashboards for AML officers to take further action. The Bank's Compliance Division continuously works to enhance the efficiency of AI- and technology-based tools by addressing a broader spectrum of constraints.

The Bank conducts an annual Enterprise-Wide Risk Assessment (EWRA) in line with the approved methodology, separately evaluating the inherent risks and control environments for Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) and Sanctions risks. AML/CTF Risk: The final risk level was assessed as Medium, which is lower than the Medium-High classification in the National Risk Assessment (NRA) for the banking sector. Sanctions Risk: The final risk level was assessed as Medium-Tending High, reflecting heightened geopolitical concerns.  

The Bank remains committed to robust financial crime compliance and continues to reinforce the role and capacity of its AML and Sanctions Controls Departments.

FINANCIAL RISKS

1. The majority of the Group's earnings capacity is generated via credit risk bearing asset side elements.

Risk description

Credit risk is the greatest material risk faced by the Group, given that the Group is principally engaged in traditional lending activities. It is the risk of losses due to the failure of a customer or counterparty to meet their obligations to settle outstanding amounts in accordance with agreed terms. The Group's customers include legal entities as well as individual borrowers. Due to the high level of dollarisation in Georgia's financial sector, currency-induced credit risk is a component of credit risk, which relates to risks arising from foreign currency-denominated loans to unhedged borrowers in the Group's portfolio. Credit risk also includes concentration risk, which is the risk related to credit portfolio quality deterioration as a result of large exposures to single borrowers or groups of connected borrowers, or loan concentration in certain economic industries. Losses incurred due to credit risk may be further aggravated by unfavourable macroeconomic conditions.

Currency-induced credit risk (CICR) - While the Group's banking business in Uzbekistan is focused on lending in the local currency, the banking business in Georgia has a significant credit portfolio in foreign currencies. A potential material GEL depreciation is one of the most significant risks that could negatively impact credit portfolio quality. As of 30 June 2025, 51.7% of the Group's total gross loans and advances to customers (before provision for loan impairment) was denominated in foreign currencies. The income of many customers is directly linked to foreign currencies via remittances, tourism, or exports. Nevertheless, customers may not be protected against significant fluctuations in the GEL exchange rate against the currency of the loan. The GEL remains in free float and is exposed to a range of internal and external factors that, in some circumstances, could lead to its depreciation. In the first half of 2025, the average USD/GEL currency exchange rate depreciated by 1.5% year-on-year.

Concentration risk - Although the Group is exposed to single-name and sectoral concentration risks, the Group's portfolio is well diversified both across sectors and single-name borrowers, resulting in only a moderate vulnerability to concentration risks. However, should exposure to common risk drivers increase, the risks are expected to amplify accordingly. At a consolidated level, the Group's maximum exposure to the single largest industry (real estate) stood at 11% of the loan portfolio as of 30 June 2025. At the same time, exposure to the 20 largest borrowers stood at 7.8% of the loan portfolio.

In addition, credit risk also includes counterparty credit risk, as the Group engages in various financial transactions with both banking and non-banking financial institutions. Through performing banking services such as lending in the interbank money market, settling a transaction in the interbank foreign exchange market, entering into interbank transactions related to trade finance, or investing in securities, the Group is exposed to the risk of losses due to the failure of a counterparty bank to meet its obligations.

Risk mitigation

A comprehensive Credit Risk Assessment Framework is in place with a clear division of duties among the parties involved in the credit analysis and approval process. The credit assessment and monitoring processes differ by segment and product type to reflect the diverse nature of these asset classes. The Group's credit portfolio is highly diversified across customer types, product types, and industry segments, which minimises credit risk at the Group level. As of 30 June 2025, the GFS (Georgian Financial Services) accounted 91.3% of total portfolio, with retail segment comprising 35.1%. Within the retail segment, mortgage and non-mortgage exposures amounted 56.5% and 43.5% respectively.

Credit approval

The Group focuses on robust credit-granting by establishing clear lending criteria and efficient credit risk assessment processes, including CICR and concentration risk.

Credit assessments vary by segment and product, reflecting the characteristics of the different asset classes. Decisions are either automated or manually assessed, following segment-specific guidelines. Automated decisions use internal credit risk scorecards, aiming for increased automation to enhance decision speed and competitive advantage. For loans needing manual review or unsuited to automation, credit committees decide, based on the client's indebtedness and risk profile, in legal compliance. These committees, structured in multiple tiers, review and approve loans, differing by size and risk of the credit product.

To address the CICR, the client's ability to withstand a certain amount of exchange rate depreciation is incorporated into the credit underwriting framework, which also includes significant currency depreciation buffers for unhedged borrowers.

By the decision of the NBG's Financial Stability Committee, dated November 27, 2024 commercial banks were required to increase the unhedged foreign currency loan limit from current 400,000 GEL to 500,000 GEL. This directive mandated that loans or bank credits of up to 500,000 GEL must have been disbursed exclusively in the national currency, ensuring greater financial stability and reducing the risk of foreign currency exposure to borrowers. The amendment came into force on January 1, 2025. On May 28, 2025 a further adjustment was announced-raising the limit from GEL 500,000 to GEL 750,000, taking effect on August 1, 2025.

Since the beginning of 2024 this is the third increase in the ceiling on unhedged foreign loan amounts. Before, the limit was increased from 300,000 GEL to 400,000 GEL on May 1st 2024 in order to promote larisation. As of mid‑2025, the reserve requirement on foreign currency liabilities remains unchanged at 25%. Previously, the National Bank of Georgia increased the reserve requirement by 5pp from 20% to 25% in November 2024, to further support larisation of the banking system.

Credit monitoring

The Group emphasises proactive risk management, with credit risk monitoring as a core element. We use a robust system to quickly respond to macro and micro changes, identifying vulnerabilities in our credit portfolio to make informed decisions. Our risk resilience involves regular monitoring of concentration risk, CICR, and other credit risk factors. We employ a portfolio supervision system to detect weaknesses in credit exposures, analyse risk trends, and recommend actions against emerging risks. Particular attention is paid to CICR due to the high share of loans denominated in foreign currencies in the Bank's portfolio. Vulnerability to exchange rate depreciation is monitored in order to promptly implement an action plan, as and when needed. Given the experience and knowledge built through recent currency volatility, the Bank is in a good position to promptly mitigate exchange rate depreciation risks.

Tailoring monitoring to segment specifics, we focus on individual credit exposures, portfolio performance, and external trends affecting risk profiles. Our vigilant stance includes early-warning systems to identify financial deterioration or fraud in clients' positions. These systems track signs like overdue days, refinancing, LTV changes, or tax liens. Large overdue exposures receive individual monitoring to assess clients' loan servicing capabilities.

In fraud prevention, we monitor first payment defaults across credit experts, bank branches, or companies employing our clients. Our institutions have credit monitoring and reporting processes for their Supervisory and Management Boards or risk committees, ensuring transparency and informed decision-making.

In addition to our underwriting and monitoring efforts, relevant buffers are built into our capital adequacy requirements to ensure that our banks are sufficiently capitalised to cover CICR, concentration risk, and credit risk in general. We utilise stress testing and sensitivity analysis to assess our credit portfolio's resilience, preparing for different economic conditions and evolving client needs.

Credit risk appetite

The credit risk appetite of the Group is defined by the Risk Appetite Frameworks of the Group and its financial institution subsidiaries, guiding credit risk-taking. These frameworks offer qualitative guidance and quantitative limits to set acceptable credit risk levels. Key quantitative metrics include NPL proportion, cost of risk, and NPL coverage. Risk appetite frameworks also set strict limits and ensure close monitoring of Currency-Induced Credit Risk and Concentration Risk, covering sectoral and single-name concentrations.

Credit ratings are essential in determining credit risk tolerance. They provide a thorough assessment of a borrower's creditworthiness, which is crucial for understanding their ability to fulfil their financial commitments. These ratings are fundamental in establishing guidelines for acceptable risk levels and are integrated into our Risk Management Framework. They enhance our ability to define and manage credit risk, allowing for a detailed understanding of borrower creditworthiness, leading to informed decision-making and appropriate risk threshold setting.

We approach credit risk by combining comprehensive Risk Appetite Frameworks with the strategic use of credit ratings. This integrated approach enables the Group to effectively navigate the changing credit risk landscape with resilience and agility.

Collateral management

In our Georgian Bank, collateral is a key factor in mitigating credit risk, forming a large part of loan portfolios, while in our Uzbekistan bank, the loan portfolio is solely unsecured. The Georgian Bank accepts diverse collaterals like real estate, cash deposits, vehicles, equipment, inventory, precious metals, securities, and third-party guarantees, according to credit product type and the borrower's credit risk. Real estate is a major collateral component, while a centralised unit oversees collateral management, ensuring its adequacy in credit risk mitigation.

The Collateral Management Framework includes policy-making, independent valuation, a haircut system during underwriting, monitoring (revaluations, statistical analysis), and portfolio analysis. The Bank's Collateral Management and Appraisal Department defines collateral management policy for the Group (approved by Supervisory Board of PLC) and procedures on collateral management & valuation for the JSC TBC Bank (approved by the Board). The department aligns appraisal services with International Valuation Standards, acting regulations of the National Bank of Georgia, and internal rules, authorises appraisal reports, and manages the collateral monitoring process. High-value assets are re-evaluated annually, while low-value collaterals undergo statistical monitoring.

The Collateral Management and Appraisal Department's quality checks systems for valuations involves internal staff reviews and external company assessments. Collateral management activities are largely automated through a web application that is integrated with other banking systems.

Collections and recoveries

In managing credit risk, the Group activates collection and recovery procedures when clients miss payments or their financial standing deteriorates, threatening exposure coverage. This process begins after failed attempts at restructuring non-performing exposures. Specialised teams in each segment handle overdue exposures, creating loan recovery plans tailored to clients' specific situations and adhering to our ethical code.

Our collections processes involve supporting clients struggling to meet their obligations. The strategies depend on exposure size and type, with customised plans for different customer subgroups based on their risk levels. The goal is to negotiate with clients to secure cash recoveries through revised payment schedules as the primary repayment source.

If acceptable terms are not reached, recovery may involve selling assets or repossessing collateral. Foreclosure may be initiated through legal processes if negotiation fails. Additional recovery strategies include sale of the unsecured portfolio to third parties (debt collection agencies).

These measures reflect our commitment to responsible credit risk management, safeguarding financial stability, and maintaining ethical standards within the Group.

Counterparty risk

To manage counterparty risk, the Group defines limits on an individual basis for each counterparty, while on a portfolio basis it limits the expected loss from treasury, trade finance and other business exposures. As of 30 June 2025, the Bank's interbank exposure was concentrated with banks that external agencies, such as Fitch, Moody's and Standard and Poor's, have assigned high A-grade credit ratings.

2. The Bank underwrites the responsibility to adhere at all times to minimum regulatory requirements on capital, which may compromise growth and strategic targets. Additionally, adverse changes in FX rates may impact capital adequacy ratios.

Risk description

Capital risk is a significant focus area for the Group. Capital risk is the risk that a bank may not have a sufficient level of capital to maintain its normal business activities, and to meet its regulatory capital requirements under normal or stressed operating conditions. The management's objectives in terms of capital management are to maintain appropriate levels of capital to support the business strategy, meet regulatory and stress testing-related requirements, and safeguard the Group's ability to continue as a going concern.

The Group's ability to comply with regulatory requirements can be affected by both internal and external factors. Some key concerns include the deterioration of asset quality leading to losses, reductions in income, rising expenses, and potential difficulties in raising capital.

Local currency volatility has been and remains a significant risk for the JSC TBC Bank's capital adequacy. A 10% GEL depreciation would translate into a 0.8pp, 0.7pp and 0.6pp drop in JSC TBC Bank's excess CET 1, Tier 1 and Total regulatory capital, respectively.

Risk mitigation

The Group's entities undertake stress testing and sensitivity analysis to quantify extra capital consumption under different scenarios. Such analyses indicate that the Bank holds sufficient capital to meet the current minimum regulatory requirements. Capital forecasts, as well as the results of stress testing and what-if scenarios, are actively monitored with the involvement of the Bank's Executive Management and the Risk Committee of the Supervisory Board to help ensure prudent management and timely action, when needed. These analyses are used to set appropriate risk appetite buffers internally, on top of the regulatory requirements.

The Bank regularly performs stress tests serving multiple purposes. They are performed routinely, either under the frameworks listed or on an ad-hoc basis, to assess the magnitude of certain stressful environments. Stress tests are performed for the Internal Capital Adequacy Assessment Process (ICAAP), regulatory stress tests and the Recovery Plan, among other purposes.

The key objective of the regulatory stress test is to define the net stress test buffer under the capital adequacy minimum requirement framework. Starting from 2018, regulatory stress tests are performed and submitted to the regulator upon their request.

The purpose of the ICAAP is to identify all the material risks faced by the Bank and to have an internal view of the capital needed to cover those risks. The objective of the ICAAP is to contribute to the Bank's continuity from a capital perspective by ensuring that it has sufficient capital to bear its risks, absorb losses and follow a sustainable strategy, even during a stress period.

Stress testing under the Recovery Plan assumes more severe stress scenarios, specifically aimed at breaching regulatory requirements and assessing the Bank's ability to recover the capital position with the help of viable recovery options within a reasonable timeframe.

Under the risk appetite and the capital planning process, the Bank sets aside capital as a buffer to withstand certain amount of local currency fluctuation.

3. The Group inherently is exposed to funding and market liquidity risks.

Liquidity risk is the risk that the Group either may not have sufficient financial resources available to meet all its obligations and commitments as they fall due, or may only be able to access those resources at a high cost.

Liquidity risk is categorised into two risk types: funding liquidity risk and market liquidity risk.

a.     Funding liquidity risk is the risk that the Group will not be able to efficiently meet both expected and unexpected current and future cash flows without affecting either its daily operations or its financial condition under both normal conditions and during a crisis. 

b.     Market liquidity risk is the risk that the Group cannot easily offset or eliminate a position at the then-current market price because of inadequate market depth or market disruption.

While the Group currently has sufficient financial resources available to meet its obligations as they fall due, liquidity risk is inherent in banking operations and can be heightened by numerous factors. These include an over-reliance on, or an inability to access, a particular source of funding, as well as changes in credit ratings or market-wide phenomena. Access to credit for companies in emerging markets is significantly influenced by the level of investor confidence and, as such, any factors affecting investor confidence (e.g. a downgrade in credit ratings, central bank or state interventions, or debt restructurings in a relevant industry) could influence the price or the ability to access the funding necessary to make payments in respect of the Group's future indebtedness.

Both funding and market liquidity risks can emerge from a number of factors that are beyond the Group's control. There is adequate liquidity to withstand significant withdrawals of customer deposits, but the unexpected and rapid withdrawal of a substantial number of deposits could have a material adverse impact on the Group's business, financial condition, and results of operations and/or prospects.

Risk mitigation

The Group's liquidity risk is managed though the Board's Group Liquidity Risk Management Policy. The Assets and Liabilities Management Committee (ALCO) is the core asset-liability management body ensuring that the principal objectives of the Group's Liquidity Risk Management Policy are met on a daily basis. The approved Liquidity Risk Management Framework ensures the Group meets it payment obligations under both normal and stress situations.

To mitigate the liquidity risk, the Group holds a solid liquidity position by maintaining comfortable buffers over the regulatory minimum requirements. All regulatory ratios are monitored regularly, with an early-warning system in place to detect potential adverse liquidity events. This is facilitated by the Risk Appetite Frameworks of the Group's relevant financial institutions, which set buffers over the regulatory limits, ensuring early detection of potential liquidity vulnerabilities. The liquidity risk position and compliance with internal limits are closely monitored by the ALCOs of JSC TBC Bank and JSC UZ TBC Bank.

JSC TBC Bank's liquidity risk is managed by the Balance Sheet Management division and Treasury department and is monitored by the Management Board and the ALCO, within their pre-defined functions. The Financial and Capital Risk Management (FCRM) division is responsible for developing procedures and policy documents and setting risk appetites on funding and market liquidity risk management. In addition, the FCRM performs liquidity risk assessments and communicates the results to the Management Board and the Risk Committee of the Supervisory Board on a regular basis.

The Bank maintains a diversified funding structure to manage the respective liquidity risks. The Bank's principal sources of liquidity include customer deposits and accounts, borrowings from local and international banks and financial institutions, subordinated loans from international financial institution investors, local interbank short-duration term deposits and loans, proceeds from the sale of investment securities, principal repayments on loans, interest income, and fee and commission income. The Bank relies on relatively stable deposits from Georgia as its main source of funding. The Bank also monitors the deposit concentration for large deposits and sets limits for deposits by non-Georgian residents in its deposit portfolio.

To maintain and further enhance its liability structure, the Bank sets targets for deposits and funds received from international financial institution investors in its risk appetite via the respective ratios. The loan to deposit and IFI funding ratio (defined as the total value of net loans divided by the sum of the total value of deposits and funds received from international financial institutions) stood at 103.5%, 102.0% and 92.2%, as at 30 June 2025, 2024 and 2023, respectively.

The management believes that, in spite of a substantial portion of customers' accounts being on demand, the diversification of these deposits by the number and type of depositors, coupled with the Bank's past experience, indicates that these customer accounts provide a long-term and stable source of funding for the Bank. Moreover, the Bank's liquidity risk management includes the estimation of maturities for its current deposits. The estimate is based on statistical methods applied to historic information about the fluctuations of customer account balances.

Stress testing is a major tool for managing liquidity risk. Stress testing exercises are performed within the ILAAP and Recovery Plan Frameworks as well as on an ad hoc basis, when there is a significant change in the prevailing risk environment. The former assesses the adequacy of the liquidity position and relevant buffers and whether they can sustain plausible severe shocks, while the latter provides a set of possible actions that could be taken in the unlikely event of regulatory requirement breaches to support a fast recovery in the liquidity position. The recovery plan encompasses a Liquidity Contingency Funding Plan which, along with the risk indicators and mitigation actions, outlines the roles and responsibilities of those involved in executing the plan. Both the ILAAP and the Recovery Plan are performed by the Bank on an annual basis.

4. Market risk arises from optimising capital allocation and asset liability management operations.

Risk description

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates, and equity prices.

Foreign exchange (FX) risk arises from the potential change in foreign currency exchange rates, which can affect the value of a financial instrument. This risk stems from the open currency positions created due to mismatches in foreign currency assets and liabilities. The Group identifies, assesses, monitors, and communicates the risk arising from exchange rate movements and the factors that influence this risk.

Interest rate risk arises from potential changes in market interest rates that can adversely affect the value of the Group's financial assets and liabilities. This risk can arise from maturity mismatches between assets and liabilities, as well as from the re-pricing characteristics of such assets and liabilities.

The biggest share of the Bank's deposits, more than  half of the borrowings and part of the loans are at fixed interest rates. In addition, the Bank actively uses floating and combined interest rate structures in its loan portfolio. Since the assets and liabilities have different repricing characteristics, their corresponding interest margins may increase or decrease as a result of market interest rate changes potentially entailing negative effect on net interest income.

Risk Mitigation

The Group's market risk is governed through the Board's Group FX Risk Management and Group Interest Rate Risk Management policies.

FX risk: To mitigate FX Risk, the Group sets risk appetite and operational limits on the level of exposure by currency as well as on aggregate exposure positions that are more conservative than those set by the regulators. Compliance with the limits is closely monitored by the respective ALCOs of JSC TBC Bank and JSC UZ TBC Bank. Compliance with these limits is also reported periodically to the Management Board and to the Supervisory Board and its Risk Committee.

In addition, the treasury department and financial and capital risk management division separately monitor the Group's compliance with the set limits daily. In order to safeguard against the inherent volatility in the foreign exchange market, the Group employs a risk management process aimed at mitigating FX risk. This involves the strategic use of spot, forward, and swap transactions.

To assess currency risk, JSC TBC Bank performs a VAR sensitivity analysis on a regular basis. This analysis calculates the effect on the Group's income determined by the worst possible movements of currency rates against the Georgian Lari, with all other variables held constant. During the years ended 30 June 2025 and 2024, this sensitivity analysis did not reveal any significant potential effect on the Group's equity: as of 30 June 2025, the maximum loss with a 99% confidence interval was equal to GEL 11.9 million, compared to a maximum loss of GEL 11.7 million as of 30 June 2024.

Interest Rate Risk: To mitigate interest rate risk, JSC TBC Bank considers numerous stress scenarios, including different yield curve shifts and behavioural adjustments to cash flows (such as deposit withdrawals or loan prepayments), to calculate the impact on one year profitability and the enterprise value of equity. In addition, appropriate limits on both net interest income (NII) and economic value of equity (EVE) sensitivities are set within the Risk Appetite Framework approved by the Supervisory Board.

Interest rate risk in JSC TBC Bank is managed by the Balance Sheet Management division and the Treasury department and is monitored by the ALCO. The ALCO decides on actions that are necessary for effective interest rate risk management and follows up on their implementation. The Financial and Capital Risk Management division is responsible for developing guidelines and policy documents and setting the risk appetite for interest rate risk. The major aspects of interest rate risk management development and the respective reporting is periodically provided to the Management Board, the Supervisory Board, and the Risk Committee.

To minimize interest rate risk, the Bank regularly monitors interest rate (re-pricing) gaps by currencies and, in case of need, decides to enter into interest rate derivatives contracts.

Furthermore, many of the Bank's loans to customers contain a clause allowing it to adjust the interest rate on the loan in case of adverse interest rate movements, thereby limiting exposure to interest rate risk. The management also believes that the Group's interest rate margins provide a reasonable buffer to mitigate the effect of a possible adverse interest rate movement.

5. Any decline in the Group's net interest income or net interest margin (NIM) could lead to a reduction in profitability, impacting the accumulation of organic capital.

Risk description

Net interest income accounts for most of the Group's total income. Potential new regulations, along with a high level of competition in Georgia and Uzbekistan, may negatively impact the Group's net interest margin. At the same time, the cost of funding is largely exogenous to the Group and is derived from both local and international markets.

In 1H 2025, NIM amounted to 6.9%, with an 0.5% YoY increase, mainly driven by higher loan yields, partially offset by an increase in funding costs. In addition, Uzbekistan continues to contribute positively to the Group's NIM.

Risk mitigation

The Group continues to focus on the growth of fee and commission income, driven by increased efforts towards customer experience-related initiatives and innovative products in both the Georgian and Uzbekistan markets. This safeguards the Group from potential margin compressions on lending and deposit products in the future. Additionally, the scale-up of operations in Uzbekistan prevents a decrease in NIM on a Group level and ensures the diversification of income streams, aligning with the Group's profitability goals in compliance with the strategy and medium-term targets.

To meet its asset-liability objectives and manage the interest rate risk, the Group uses a high-quality investment securities portfolio, long-term funding, and derivative contracts.

6. The Group's performance may be compromised by adverse developments in the economic environment.

Risk description

A potential slowdown in economic growth in Georgia or Uzbekistan will likely have an adverse impact on the repayment capacity of borrowers, restraining their future investment and expansion plans. Negative macroeconomic developments could compromise the Group's performance in various ways, such as exchange rate depreciation, a sizable decline in gold prices, a spike in interest rates, rising unemployment, a decrease in household disposable income, falling property prices, worsening loan collateralisation, or falling debt service capabilities of companies as a result of decreasing sales. Potential political and economic instability in Georgia's or Uzbekistan's neighbouring countries and main trading/economic partners could negatively affect their economic outlook through worsening current and financial accounts in the balance of payments (e.g. decreased exports, tourism inflows, remittances and foreign direct investments). As for 1H 2025, despite politically still somewhat tense environment in Georgia and global geopolitical shifts, no significant materialisation of the abovementioned macroeconomic risks was observed in the countries of the Group's operations.

Georgian economy expanded by double digits in 2021-2022, 7.8% in 2023 and, despite internal political turbulence, by 9.4% in 2024. The strong growth momentum continued in 2025 as well with only gradual moderation towards the long term-trend as the real GDP grew by 8.3% on average in the first half of the year. Strong real credit growth, improved external trade balance and robust currency inflows from tourism and remittances contributed the most in the higher than expected economic print, unlike the declined FDIs and broadly flat migrant expenses. Here it should be underlined that, while largely re-export driven exports posted strong growth in 2025, improved trade balance was resulted due to weaker imports, especially of durable goods, pointing to the somewhat restrained domestic demand affected by market expectations. On the backdrop of strengthened net currency inflows, deposit conversions gradually switching back from the FX to GEL and globally weakened USD, the National Bank of Georgia focused on replenishing its international reserves in the 1H 2025. The NBG purchased around USD 880 million from the FX market, increasing its gross reserves to USD 4.7 billion, while the GEL exchange rate appreciated by around 3.1% against the USD. At the same time, consumer price inflation has accelerated in the country, though, in line with expectations, standing at 4.0% in June, slightly above the NBG 3% target. Still, taking strong growth and elevating inflation in consideration, the NBG maintained its monetary policy rate unchanged at 8.0%.

Uzbekistan, the second country of the Group's operations, also demonstrated solid economic activity, with real GDP growth in the first half of 2025 accelerating to 7.2%, following 6.5% in 2024. The external trade balance improved as USD-denominated exports grew by 29.2% YoY due to historically high gold prices, while imports increased by weak 4.7%, affected by lower car imports. FDIs remained resilient while remittances experienced a significant 27% increase in annual terms in the 1H of 2025, partially driven by strengthening of Uzbekistan's trade partners' currencies against the USD. At the same time, while the depreciation trend of the UZS against the USD weakened over 2024, Uzbekistan national currency even strengthened against the greenback by around 2.1% in the first half of the year, supported by the CBU's tight stance, globally weakened USD, decelerating consumer credit growth and higher gold prices, which enabled the CBU to substantially increase its international reserves. On the other hand, despite the gradual deceleration trend, especially in month-over-month dynamics, inflation remained high in Uzbekistan, standing at 8.7% YoY in June 2025, compared to 9.8% at the end of 2024. In response, the central bank has increased its monetary policy rate by 0.5 percentage points in March, bringing the MPR to 14.0%.

Risk mitigation

To decrease its vulnerability to economic cycles, the Group identifies cyclical industries and proactively manages its underwriting approach and clients within its Risk Appetite Framework. The Group has in place a macroeconomic monitoring process that relies on close, recurrent observation of the economic developments in Georgia and neighbouring countries to identify early warning signals indicating imminent economic risks. This system allows the Group to promptly assess significant economic and political events and analyse their implications for the Group's performance. These implications are duly translated into specific action plans with regards to reviewing underwriting standards, risk appetite metrics, and limits, including the limits for each of the most vulnerable industries. Additionally, the stress testing and scenario analysis conducted during the credit review and portfolio-monitoring processes enable the Group to evaluate the impact of macroeconomic shocks on its business in advance. Resilience towards a changing macroeconomic environment is incorporated into the Group's credit underwriting standards. As such, borrowers are expected to withstand certain adverse economic developments through prudent financials, debt-servicing capabilities, and conservative collateral coverage.

Taking into account the regional crisis, the Group adjusted its Risk Management Framework, leveraging its pre-existing stress testing practices. This included more thorough and frequent monitoring of the portfolio as well as stress testing, to ensure close control of changes in capital, liquidity, and portfolio quality in times of increased uncertainty.

NON-FINANCIAL RISKS

1. The Group is exposed to regulatory and enforcement action risk.

Risk description

The Group's operations are subject to a complex regulatory environment, which introduces various regulatory risks. In Georgia, the NBG sets lending limits and other economic ratios (including, but not limited to, lending, liquidity, and investment ratios) along with the mandatory capital adequacy ratio. In addition to complying with the minimum reserves and financial ratios, the Bank is required to submit periodic reports. It is also subject to the Georgian tax code and other relevant laws.

Following its listing on the London Stock Exchange's premium segment, the Group became subject to additional oversight by the UK's Financial Conduct Authority (FCA), resulting in increased regulatory scrutiny. In addition to its core banking operations, the Group also offers a range of regulated financial services products, including leasing, insurance, brokerage and investment services. Moreover, with the Group's expansion into Uzbekistan, its regulatory obligations have increased, as the banking sector in Uzbekistan is highly regulated and requires strict compliance with local laws and supervisory requirements.

The Group is also subject to financial covenants in its debt agreements. For more information, see the Group's Audited Financial Statements.

As the Bank increases its use of AI and machine learning models, particularly in areas such as credit risk, fraud detection, and customer segmentation, we are continuously working on enhancing our model risk management framework to ensure transparency, explainability, and regulatory compliance. All AI applications are subject to ethical reviews and risk assessments to prevent bias, discrimination, and unfair treatment of customers.  We ensure that all AI systems comply with applicable data protection laws, including the General Data Protection Regulation (GDPR). Privacy impact assessments are conducted for AI tools that process personal data.  A cross-functional AI governance group-including Compliance, Model, Legal, and Technology-oversees adherence to data privacy standards and the ethical handling of customer data. We actively monitor global regulatory developments related to AI and digital technologies.The Bank's risk management framework has been expanded to incorporate AI-specific governance, including explainability requirements, bias detection, and periodic validation protocols.

Risk mitigation

The Group has implemented robust systems and processes to ensure comprehensive regulatory compliance, embedding these practices all levels of the organisation. The Group's "three lines of defence" model clearly defines the roles and responsibilities for identifying, managing and mitigating regulatory and compliance risks. This structured approach supports proactive risk management and reinforces a strong compliance culture throughout the Group.

The first line of defence is responsible for managing compliance risks within their respective business areas, with the Bank's operational teams taking ownership of day-to-day risk identification and mitigation. The Compliance Division serves as the second line of defence, supporting and monitoring compliance efforts across the Group through providing independent oversight, guidance, and monitoring of compliance activities across the Group. The Chief Compliance Officer oversees compliance within the Bank and reports quarterly to the Audit Committee of the Supervisory Board, while maintaining a managerial reporting line to the Chief Risk Officer (CRO). The Group's Audit Committee is responsible for overseeing the effectiveness of the regulatory compliance framework and ensuring alignment with applicable laws and standards at the Board level.

The Group's compliance programme encompasses a wide range of activities designed to address compliance risks effectively, including the development and maintenance of compliance policies, regular employee trainings, risk-based oversight, and rigorous monitoring of regulatory adherence.

The Compliance Division manages regulatory risk through the following key actions:

·      Monitoring and ensuring that changes in laws and regulations are implemented in a timely and effective manner by the respective process owners;

·      Participating in the risk approval and review process for new products and services to ensure regulatory compliance;

·      Analysing customer complaints, operational risk events, internal audit findings, and litigation cases to proactively identify and address process or control weaknesses;

·    Conducting annual compliance risk assessments and targeted reviews of internal processes to ensure ongoing alignment with regulatory expectations;

·      Engaging in regular dialogue with regulators and industry bodies to stay informed on regulatory developments and best practices;

·      Performing thematic and ad-hoc compliance reviews in higher-risk areas or in response to emerging risks; and

·      Maintaining a whistleblower mechanism that allows for the confidential reporting of compliance concerns, thereby promoting a culture of transparency and accountability.

The Compliance Division ensures that the outcomes of these activities are addressed promptly and appropriately. In its oversight capacity, the Division establishes key risk indicators and monitors them in line with the Group's Risk Appetite Framework. Any breaches of established thresholds are immediately escalated to the relevant boards for timely resolution.

Demonstrating its commitment to safeguarding personal data and maintaining compliance with relevant data protection laws, the Bank has appointed a Data Protection Officer (DPO). The DPO is responsible for overseeing the Bank's Data Protection Strategy and ensuring ongoing compliance with applicable regulations, including the General Data Protection Regulation (GDPR). To further support GDPR compliance within the European Union, the Bank has also engaged a representative legal firm based in the EU to act as its official EU representative.

2. The Group is exposed to legal risk.

Risk description

Legal risk refers to the potential for loss, whether financial or reputational, resulting from penalties, damages, fines, or other forms of financial detriment, which impacts or could impact one or more entities of the Group and/or its employees, business lines, operations, products and/or its services, and results from the failure of the Group to meet its legal obligations, including regulatory, contractual or non-contractual requirements.

Risk mitigation

The legal function as a second line of defence is an independent function hierarchically integrated with all the Group's legal teams. The Group's businesses and lines have responsibility for identifying and escalating legal risk in their area to the legal function.

The legal function is entrusted with the responsibility of (a) managing (including prevention) legal risks; and (b) interpreting the laws and regulations applicable to the Group's activities and providing legal advice and guidance to the Group. The management of the legal risks includes defining the relevant legal risk policies, developing Group-wide risk appetite for legal risk, and oversight of the implementation of controls to manage and escalate legal risk. The advisory responsibility of the legal function is to provide legal advice to Executive Officers and the Board of Directors in a manner that meets the highest standards.

The senior management of the legal function oversees, challenges and monitors the legal risk profile and effectiveness of the legal risk control environment across the Group. The legal risk profile and control environment are reviewed by management through business risk committees and control committees. The Group Risk Committee is the most senior executive body responsible for reviewing and monitoring the effectiveness of legal risk management across the Group.

3. The Group's operational complexity generates operational risk that could in turn adversely impact profitability and reputation.

Risk description

One of the main risks that the Group faces is operational risk, which is the risk of loss resulting from internal and external fraud events, inadequate processes or products, business disruptions and systems failures, human error or damages to assets. Operational risk also implies losses driven by legal, compliance, or cybersecurity risks.

The Group is exposed to many types of operational risk, including: fraudulent and other internal and external criminal activities; breakdowns in processes, controls or procedures; and system failures or cyber-attacks from an external party with the intention of making the Group's services or supporting infrastructure unavailable to its intended users, which in turn may jeopardise sensitive information and the financial transactions of the Group, its clients, counterparties, or customers.

Moreover, the Group is subject to risks that cause disruption to systems performing critical functions or business disruption arising from events wholly or partially beyond its control, such as natural disasters, transport or utility failures, etc., which may result in losses or reductions in service to customers and/or economic losses to the Group.

The operational risks discussed above are also applicable where the Group relies on outsourcing services from third parties. Considering the dynamic environment and sophistication of both banking services and possible fraudsters, the importance of constantly improving processes, controls, procedures and systems is heightened to ensure risk prevention and reduce the risk of loss to the Group.

The increased complexity and diversification of operations, coupled with the digitalisation of the banking sector, mean that fraud risks are evolving. External fraud events may arise from the actions of third parties against the Group, most frequently involving events related to banking cards, loans, and client phishing. Internal fraud events arise from actions committed by the Group's employees, although such events happen less frequently. During the reporting period, the Group faced several instances of fraud, none of which had a material impact on the Group's profit and loss statement. The rapid growth in digital crime has exacerbated the threat of fraud, with fraudsters adopting new techniques and approaches to obtain funds illegally. Therefore, unless properly monitored and managed, the potential impact could become substantial.

Risk mitigation

To oversee and mitigate operational risk, the Group maintains an Operational Risk Management Framework, which is an overarching document that outlines the general principles for effective operational risk management and defines the roles and responsibilities of the various parties involved in the process. Policies and procedures enabling the effective management of operational risks complement the framework. The Management Board ensures a strong internal control culture within the Group, where control activities are an integral part of operations. The Board sets the operational risk appetite, while compliance with the established risk appetite limits is monitored regularly by the Board's Risk Committee.

The Group utilises the three lines of defence principle, where the Operational and Investment Risk Management Department serves as a second line of defence, responsible for implementing the framework and appropriate policies and methodologies to enable the Group to manage operational risks.

The Group actively monitors, detects, and prevents risks arising from operational risk events and has permanent monitoring processes in place to detect unusual activities or process weaknesses in a timely manner. The Risk and Control Self-Assessment exercise (RCSA) focuses on identifying residual risks in key processes, subject to the respective corrective actions. Through our continuous efforts to monitor and mitigate operational risks, coupled with the high level of sophistication of our internal processes, the Group ensures the timely identification and control of operational risk-related activities. Various policies, processes, and procedures are in place to control and mitigate operational risks, including, but not limited to:

·      The Group's Risk Assessment Policy, which enables thorough risk evaluation prior to the adoption of new products, services, or procedures;

·      The Group's Outsourcing Risk Management Policy, which enables the Group to control outsourcing (vendor) risk arising from adverse events and risk concentrations due to failures in vendor selection, insufficient controls and oversight over a vendor and/or services provided by a vendor, and other impacts on the vendor;

·      The Risk and Control Self-Assessment (RCSA) Policy, which enables the Group to continuously evaluate existing and potential risks, establish risk mitigation strategies and systematically monitor the progress of risk mitigation plans. The completion of these plans is also part of the respective managers' key performance indicators;

·      The Group's Operational Risk Event Identification Policy, which enables the Group to promptly report on operational risk events, perform systematic root-cause analysis of such events, and take corrective measures to prevent the recurrence of significant losses. A unified operational loss database enhances further quantitative and qualitative analysis. The Operational Risk Event Identification Policy also oversees the occurrence of IT incidents and the respective activities targeted at solving the identified problems;

·      The Group's Operational Risk Awareness Programme, which provides regular trainings to the Group's employees and strengthens the Group's internal risk culture;

·      The Group also utilises risk transfer strategies, including obtaining various insurance policies to transfer the risks of critical operational losses.

The Operational and Investment Risk Management Department has reinforced its risk assessment teams and methodologies to further fine-tune the existing control environment. The same applies to the set of actions aimed at homogenising operational risk management processes throughout the Group's member companies.

During the reporting period, one of the key operational risk management focus areas was the RCSA exercise, which reviewed the Group's top priority processes and identified areas of improvement.

Moreover, to further mitigate operational risks driven by fraudulent activities, the Group has introduced a sophisticated digital fraud prevention system, which analyses client behaviour to further minimise external fraud threats.

The Operational Risk Management Framework and its complementary policies were updated to ensure effective execution of the operational risk management programme.

4. The Group's digitally oriented operational footprint faces a growing and evolving threat of cyber-attacks.

Risk description

The Group's rising dependency on digital systems increases its exposure to potential cyber-attacks. Given their increasing sophistication, potential cyber-attacks may lead to significant security breaches. Such risks change rapidly and require continued focus and investment. Due to the dynamics and complexity of the current environment, the Group is continuously monitoring the security threat landscape.

In the past three years, the Bank has not experienced any material cybersecurity breaches, and there have been no significant third-party cybersecurity incidents in 1H 2025.

Risk mitigation

The Group has in place a comprehensive information and cyber security management systems to mitigate the risk of cyber-attacks, as described below.

Threat landscape

In order to adequately address the challenges posed by cyberattacks, we are continuously analysing the Group's cyber threat landscape and assessing all relevant threat scenarios and actors, considering their intentions and capabilities, as well as the tactics, techniques, and procedures they are using or may use during their campaigns. Our focus is to be prepared against Advanced Persistent Threats. Among the many different threat vectors we are covering and monitoring, the top six are below:

·      Attacks against internet facing applications and infrastructure;

·      Software supply chain attacks;

·      Phishing and other social engineering attacks against our customers;

·      Phishing and other social engineering attacks against our employees;

·      Insider threats;

·      Ransomware and extortion-based cyber threats.

 

Our vision and strategic objectives

Information and cyber security are an integral part of the Group's governance practices and strategic development. The Group's cyber security vision and strategy are fully aligned with its business vision and strategy and address all the challenges identified during the threat landscape analysis.

Our vision is to strengthen our security in depth approach, enable secure and innovative businesses, and maintain a continuous improvement cycle. Our strategic objectives are:

·      To enhance our defence in depth approach by strengthening the team and implementing cutting-edge technologies, in order to maintain resilience against Advanced Persistent Threats, which may come from state-sponsored actors or organised cybercriminals;

·      To maintain compliance with industry leading information and cyber security standards, sustain a continuous improvement cycle for our information and business continuity management systems, and be one step ahead of regulatory requirements; and

·      To optimise and automate security processes, and provide security services seamlessly to the Group's business (where possible);

·      Foster a security-first culture by embedding cybersecurity awareness across the organisation, ensuring employees and stakeholders are actively engaged in reducing risk.

Our security in depth approach and cyber-resilience programme

In order to follow our vision and achieve our strategic objectives, we run effective information and cyber security programmes, functions and systems, as follows:

·      Layered preventive controls are in place, covering all relevant logical and physical segments and layers of the organisation and infrastructure in order to minimise the likelihood of successful initial access:

-      Data security controls

-      Identity and access controls

-      Endpoint security controls

-      Infrastructure security controls

-      Cloud security controls

-      Application security controls

-      Internal and perimeter network security control

-      Physical security controls

 

·      A professional team is in charge of effectively implementing, assuring the effectiveness of, maintaining and fine-tuning the preventive controls mentioned above. The number and level of expertise of the team members is significant. Our team members hold industry leading certificates and work on a daily basis to strengthen and extend their professional skill sets.

·      Layers of preventive controls in conjunction with a comprehensive awareness programme provide the best combination in order to minimise the likelihood of successful attacks. Our robust awareness programme helps employees and customers to improve their cyber hygiene, understand the risks associated with their actions, identify any cyberattacks they might face during day-to-day operations, and improve the overall risk culture. Our awareness programme provides relevant materials to all key roles, from the Management Board to IT engineers and developers. It covers annual trainings and attestations for all employees, newcomer trainings and attestations, social engineering simulations, security tips and notifications for all employees, security awareness raising campaigns for customers, and more.

·      Since we believe that 100% prevention is not achievable, the Group has threat hunting capabilities and a security operations centre in place to monitor every possible anomaly in near real-time that is identified across the organisation's network in order to detect potential incidents and respond in a timely and effective manner to minimise the negative impact of possible attacks. To be up-to-date and track the techniques and tactics of our adversaries, we are elaborating cyber threat intelligence procedures according to industry best practices and following the MITRE ATTACK framework.

·      Information security governance and effective risk management processes, which covers third-party and supply chain risks as well, ensure that the Bank has the correct guidance, makes risk-informed decisions in compliance with its risk appetite, complies with regulatory requirements, and achieves a continuous improvement cycle. The Information Security Committee, which is chaired by the CEO, has the ultimate responsibility to assure that an appropriate level of security is maintained and a continuous improvement cycle of management processes is achieved. The Bank is in compliance with the NIST Cyber Security Management Framework and its Information Security Management System is ISO/IEC 27001:2022 certified.

·      In addition, the Bank further strengthens its cyber resilience through an effective Business Continuity Management System and Cyber Insurance Policy, in order to manage contingencies and recover from serious disruptions with minimum possible impact.

 

How we measure and assure an acceptable level of security

To assess and assure an acceptable level of information and cyber security, we rely on external/internal audit reports, red teaming exercise reports, and the results of continuous penetration tests, which are conducted by our highly professional internal team and reputable external third-party partners.

·      On an annual basis we conduct:

·      An external audit of the SWIFT Customer Protection Framework;

o  An external audit of the NBG's Cyber Security Framework, which is based on the NIST Cyber Security Management Framework;

o  Independent internal IT audit team is assessing effectiveness of critical components of information security management system;

o  External surveillance audits of ISO 27001;

o  Penetration tests against internet facing applications and critical infrastructure with the help of our highly reputable partners.

·      Our internal team is in charge of continuous penetration tests of internal and external applications and infrastructure.

·      We conduct regular red and purple teaming exercises and assess our security capabilities against real world advanced threat actors

The abovementioned external audits did not identify any material findings. If such findings do arise, they are addressed as part of the continuous improvement process.

5. The Group identifies risk in its growing dependence on data.

Risk description

In the domain of data management and data governance within the Group, the most prominent risk continues to center on data quality. This is a cornerstone of sound decision-making, regulatory compliance, and overall risk management. The challenge stems from diverse sources, including errors during data entry, lack of standardized formats, and inconsistencies across data sources. The ramifications of compromised data quality include financial losses, operational inefficiencies, regulatory non-compliance, and reputational damage. The complexity is further heightened in dynamic market environments, necessitating robust mechanisms for data validation and cleansing.

In addition to this, a new and increasingly significant risk arises from the adoption and deployment of artificial intelligence (AI) technologies across the Group. The use of AI brings opportunities for automation, enhanced insight, and predictive capabilities; however, it also introduces potential risks relating to model accuracy, biased decision-making, data privacy breaches, and ethical considerations. Poorly governed AI solutions could expose the Group to new regulatory scrutiny and reputational risks, as well as operational inefficiencies if they fail to perform as intended or scale properly.

Risk mitigation

Mitigating data quality risks require a holistic and strategic approach. To address this challenge, the Group continues to implement advanced data quality management systems, rigorous data governance policies, and data profiling techniques. Strategic investments in automation, machine learning, and artificial intelligence can further support proactive detection and correction of data anomalies, ensuring accuracy and consistency. Cultivating a data-driven culture, with robust data lineage and documentation practices, also enhances transparency and traceability.

To manage AI-related risks, the Group is putting in place a strong AI governance framework that emphasizes ethics, fairness, and transparency. This includes thorough validation of AI models before deployment, continuous monitoring of model performance and output, and ensuring adherence to applicable regulatory and legal requirements. The Group is also investing in upskilling teams to understand AI systems and their risks, as well as engaging cross-functional expertise-from data scientists and compliance officers to IT security-to establish clear accountability and oversight. These measures will enable the Group to leverage AI's potential safely and responsibly while protecting its data assets and stakeholders.

6. The Group is exposed to Model Risk.

Risk description

In accordance with regulatory guidance and industry best practices, the Group has developed model identification standards, which clearly define what constitutes a model and provide objective criteria for model identification.

The Group increasingly relies on statistical, machine learning, and artificial intelligence models to enhance important decision-making processes, enabled by access to diverse data sources and the adoption of big data technologies.

Increasing reliance on models requires a robust model risk management framework to prevent adverse consequences related to mistakes made during model development, implementation, or usage. With the expanding adoption of Generative AI (GenAI) models, the Group is actively developing model risk management frameworks specifically tailored to address the unique risks and characteristics of GenAI. The Group defines model risk as a risk of potential financial losses, poor business decisions, and reputational damage that may arise from such model-related deficiencies.

Risk mitigation

The Group manages model risk through its Model Risk Management (MRM) function, which operates as the second line of defence to identify, measure, and monitor model risk across the Group. MRM is structured around two pillars: governance and validation.

The governance pillar establishes and maintains the Group's model risk management framework through policies, standards, and risk appetite limits. This framework defines key stakeholder roles and responsibilities throughout the model lifecycle. The governance pillar also maintains the model inventory and oversees adherence to model risk appetite limits.

The validation pillar provides independent assessment of models through conceptual and technical validations, evaluating model design, methodology, and performance in accordance with established policies and standards.

The MRM function uses model tiering to drive its risk-based validation approach, systematically identifying and assessing model risks through initial and ongoing validations. Model tiering, along with the nature and severity of identified risks, determines appropriate mitigation measures, which range from increased validation frequency and enhanced testing to model recalibration or redevelopment. All mitigation actions aim to maintain model risk within the Group's defined risk appetite, with heightened scrutiny applied to higher-tiered models.

7. The Group remains exposed to reputational risk.

Risk description

There are reputational risks to which the Group may be exposed, such as country risks and compliance risks, related to the challenging geopolitical environment in the region, international sanctions regimes, as well as domestic turbulences due to disputed elections and ongoing protests. Banks are easy targets for anti-banking narratives in mainstream and social media platforms. These narratives intensify in the run-up to elections. There are also risks related to phishing and other cybercrimes that come with the increased digitalization of products and services provided by the Group. Cyber risks could turn into reputational risk if they impact negatively on the Group's reputation as a provider of the best digital services and products to customers. It should be noted that most of these risks are not unique to the Group, but apply to the entire banking sector.

Risk mitigation

To prevent or mitigate reputational risks, the Group works continuously to maintain strong brand recognition among its stakeholders and engages with them on a constant basis, particularly with the customers, employees, media, regulators, business associations, IFIs, and the diplomatic community among others. 

The Group has put a Task Force in place at the senior management level comprised of the CEO, the CRO, the marketing and brand lead, the strategic communications lead and the general counselor to address and manage reputational risks. Additionally, and in close cooperation with international consultants, the Task Force has developed an overall strategy including communications plans, contingencies, and tools to mitigate, prevent and respond to any risks.

The Group complies with all relevant external and internal policies and protocol mechanisms to prevent or minimise the impact of direct and indirect reputational risks. Dedicated internal and external marketing teams monitor the brand value through public opinion polls and studies and by receiving feedback from stakeholders on an ongoing basis. Communications teams actively monitor mainstream media and social media on a daily basis, identifying early warning signs of potential reputational or brand damage to mitigate and, whenever necessary, elevate potential risks to the attention of the Task Force or the Supervisory Board before they escalate.

Communications and cyber security teams conduct extensive awareness-raising campaigns on cyber security and financial literacy. The teams also brief the media so that it is aware of potential risks impacting the sector.  TBC also has an inhouse financial education platform Edufin which is aimed at raising awareness about cyber threats and phishing.

8. The Group faces the risk that its strategic initiatives do not translate into long-term sustainable value for its stakeholders.

Risk description

The Group may face the risk of falling short in developing and executing a business strategy that ensures sustained value creation while adapting to evolving customer needs, increasing competition, and changing regulatory requirements.

Additionally, uncertainties from economic and social disruptions in the region may hinder the Group's timely execution of its strategy, potentially compromising its capacity for long-term value creation.

Risk mitigation

To mitigate the combined risks from a local and international perspective, the Group employs a multifaceted approach.

The formation of our strategic portfolio is primarily driven by the Group's strategy to broaden and diversify our business revenue streams. Thorough curation is conducted in the execution of strategy involving the Board, the executive management, and middle management. These sessions serve as crucial checkpoints to ensure alignment with the Group's strategic long-term objectives and guiding principles.

Moreover, monitoring the performance of strategic projects extends to quarterly analyses and tracking of metrics used to measure strategy execution. In case of significant deviations, corrective or mitigation actions are promptly implemented.

9. The Group is exposed to risks related to its ability to attract and retain highly qualified employees.

Risk description

As the Group becomes increasingly digitally focused, it requires more IT professionals in its various departments. This shift accentuates the risk of potentially losing key personnel. In the highly competitive tech job market, this challenge extends not only to retaining these valuable employees but also to attracting, developing, and keeping new skilled workers. Ensuring these employees align with the Group's objectives is vital. The situation calls for strategic planning in human resources to effectively manage this risk while supporting the Group's digital evolution.

Risk mitigation

The aim of the Group is to adapt to the rapidly changing business environment, increase leadership capabilities, achieve a high level of engagement among employees, and equip them with the necessary skills. Our proactive approach encompasses rigorous monitoring of labour market dynamics not only in Georgia but also in Uzbekistan and beyond. To realise this ambition, we are dedicated to cultivating a world-class talent acquisition and development ecosystem.

We create a robust international talent pipeline by regularly engaging with potential candidates, including passive job seekers with diverse profiles. We work on building an attractive international hiring brand. The Group treats all employees equally and fairly, supporting and coaching them to succeed.

We equip our people with the tools and frameworks for continuous learning, supported by a constant feedback loop. We give our staff an opportunity to grow and expand internationally. We have developed a Succession Planning Framework for senior positions in order to ensure a smooth transition and to offer promotion opportunities to employees. In addition, we have launched a Talent Management Framework, ensuring the constant identification of talented staff and monitoring their development within the Group.

We monitor human capital risks and measure efficiency using the following metrics: Employee turnover and retention, Quality of hire, Mobility rate, Employee Net Promoter Score (ENPS), Employee Pulse surveys, Key employee metrics, Performance management and Individual Development Plans (IDPs), and Customer Net Promoter Score (NPS). In terms of compensation, we conduct multiple salary market studies to ensure we provide competitive conditions for our employees.

The Group reviews and updates its organisational policies to ensure they are inclusive and equitable. This includes flexible work arrangements, accommodations for diverse needs, and inclusive benefits packages.

Our internal IT Academy has been a hub for tech education, offering courses in front-end, back-end development, DevOps, and more. These courses are accessible at no cost to both our employees and potential candidates. Under the guidance of experienced staff and industry professionals, the Academy has successfully trained over 2,100 individuals from outside the organisation and 2,400 within it. This initiative has resulted in the recruitment of 500 skilled professionals to TBC Group, thereby enhancing the overall IT ecosystem in the country. The TBC IT Academy is currently conducting the selection process for five specialized courses: Frontend Development, Backend Development, DevOps, iOS, and Android Development. Each course group will consist of 30 carefully selected participants, with the most outstanding students being offered employment opportunities within the TBC Group upon successful completion of the program.

Furthermore, both TBC Bank Uzbekistan and Payme have made significant strides in advancing their IT Academy initiatives in Uzbekistan. In 2024, new courses in Data Analytics, Backend Development, Quality Assurance, and Test Automation were introduced in partnership with leading technology universities, contributing to the development of local technological expertise and talent.

10. The Group is exposed to conduct risk.

Risk description

Conduct risk is defined as the risk of failing to achieve fair outcomes for customers and other stakeholders. The Bank recognises that effective management of conduct risk is essential to maintaining customer trust, protecting its reputation, and delivering long-term value.

The Bank's Code of Ethics serves as a moral compass for all staff and sets high ethical standards that each employee is required to uphold. Employees are required to carry out their responsibilities with honesty, integrity, and professionalism. They are critical to maintaining trust and confidence in its operations and upholding important values of trust, loyalty, prudence and care.

Additionally, the Bank's management understands that it bears responsibility for a diversified group of domestic and international investors, and needs to embrace the Bank's rules and mechanisms to protect customers and maintain the confidence of investors and financial markets. The Group's directors strive to establish the "tone from the top", which sets out the messages describing and illustrating the core components of good conduct.

Risk mitigation

In managing conduct risk, the Bank takes a coordinated approach, assigning responsibility to various divisions and departments to identify, mitigate, and eliminate conduct-related risks across all client and stakeholder interactions.

The Compliance, Human Capital, and Operational Risk functions work collaboratively to develop and maintain a unified Conduct Risk Management Framework. This framework supports business lines and operational units through the following key processes:

Policy and Procedure Development:

Establishing and regularly updating policies and procedures to ensure that all employees comply with relevant regulatory requirements, industry best practices, and the Bank's Code of Conduct and Code of Ethics.

Department Oversight and Complaint Management:

Maintaining a close working relationship with the Compliance Division to administer conduct-related policies, and investigating complaints regarding the conduct of the staff.

Client Communication Standards:

Ensuring that front-line staff provide clear, complete, and accurate product information-both orally and in writing-regardless of a client's financial knowledge or experience, thereby promoting fair treatment and transparency.

Recordkeeping and Monitoring:

Maintaining comprehensive records of client interactions and communications, particularly those involving sensitive topics or complex product offerings, to support transparency and accountability.

Employee Training:

Delivering regular, targeted training to all employees on conduct expectations and evolving compliance standards, with a strong focus on onboarding new hires and maintaining awareness of ethical standards across the Bank.

Culture and Incentives:

Promoting a culture of openness and accountability where employees feel empowered to raise concerns without fear of retaliation. The Bank actively prevents conflicts of interest and supports this with values-based incentive and disciplinary policies, moral incentive programmes, and risk-adjusted bonus schemes.

EMERGING RISKS

The Group recognises its exposure to risks arising from climate change.

Risk description

The risks associated with climate change have both a physical impact, arising from more frequent and severe weather changes, and a transitional impact that may entail extensive policy, legal, and technological changes to reduce the ecological footprint of households and businesses. For the Group, both risks could materialise through impaired asset values and the deteriorating creditworthiness of our customers, which could result in a reduction of the Group's profitability. The Group may also become exposed to reputational risks because of its lending to, or other business operations with, customers deemed to be contributing to climate change.

Risk mitigation

The Group has in place an Environmental and Climate Change Policy. The policy governs its Environmental Management System ("EMS") and ensures that the Group's operations adhere to the applicable environmental, health, safety, and labour regulations and practices. We take all reasonable steps to support our customers in fulfilling their environmental and social responsibilities. The management of environmental and social risks is embedded in the Group's lending process through the application of the EMS. The Group has developed risk management procedures to identify, assess, manage, and monitor environmental and social risks. These procedures are fully integrated in the Group's credit risk management process. To identify, assess, and manage risks associated with climate change, the Group introduced an overall climate risk assessment and conducted a general analysis to understand the maturity level of the climate-related framework. This general analysis covered assessment of existing policies and procedures, identification of areas for further development, and gap analysis. Following this analysis, the main focus areas were identified and reflected in the climate action strategy, in line with the Group's business strategy. Furthermore, our Environmental and Climate Change Policy is fully compliant with local environmental legislation and follows international best practices (the full policy is available at www.tbcbankgroup.com).

In order to increase our understanding of climate-related risks to the Bank's loan portfolio, the Bank performed a high- level sectoral risk assessment, since different sectors might be vulnerable to different climate-related risks over different time horizons. In 2024, we further developed our TCFD framework and measured the Group's indirect performance against the Paris Agreement targets for the reduction of GHG emissions. The results have been reflected in the Group's long-term transition plan. Furthermore, we implemented the climate stress-testing approach developed by the National Bank of Georgia. For more details, please find the section "Climate-related Financial Disclosures 2024".

The Bank aims to increase its understanding of climate-related risks and their longer-term impacts over the coming years, which will enable it to further develop its approach to mitigation. Furthermore, the Group's portfolio has strong collateral coverage, with around 68.3% of the loan book collateralised with cash, real estate, or gold. Since the collateral evaluation procedure includes monitoring, any need to change collateral values arises from our regular collateral monitoring process.

In May 2025, the Group released its full-scale sustainability report for the year 2024 in accordance with the Global Reporting Initiative (GRI) standards. The Global Reporting Initiative (GRI) helps the private sector to understand and realise its role and influence on sustainable development issues such as climate change, human rights, and governance.

The report is designed for all interested parties and groups in Georgia and abroad and aims to give them clear, fact-based information about the social, economic, and environmental impact of our activities in 2024. It presents our endeavours to create value for our employees, clients, suppliers, partners, and society as a whole. The Sustainability Report 2024 is available at www.tbcbankgroup.com.

At the executive level, responsibility for ESG and climate-related matters is assigned to the ESG Steering Committee, which was established by the Management Board in March 2021 and is responsible for implementing the ESG and climate action strategy and approving detailed annual and other action plans for key projects. The ESG Committee meets on a quarterly basis.

In January 2022, the Group established an Environmental, Social and Governance (ESG) and Ethics Committee at the Board level, as well as at the Supervisory Board level in line with the Company's "mirror boards" structure. This reflects the importance of sustainability in TBC's corporate governance and allows Board members to dedicate more time and focus to ESG topics. The Committee provides strategic guidance on climate-related matters and reports to the Board, which has overall oversight. For more details about the management of ESG matters, please find the section "ESG Strategy".

SELECTED REGULATIONS ON FINANCIAL RISKS

CAPITAL ADEQUACY

The Group's objectives in terms of capital management are to maintain appropriate levels of capital to support the business strategy, meet regulatory and stress testing-related requirements, and safeguard the Group's ability to continue as a going concern.

The Group complied with all its internally and externally imposed capital requirements throughout the first half of 2025.

Georgian subsidiary - JSC TBC Bank

In December 2017, the NBG adopted amendments to the regulations relating to capital adequacy requirements. These changes include amendments to the regulation on capital adequacy requirements for commercial banks, and the introduction of new requirements (i) on additional capital buffer requirements for commercial banks within Pillar 2; (ii) on the determination of the countercyclical buffer rate; and (iii) on the identification of systematically important banks and determination of systemic buffer requirements. The purpose of these amendments is to improve the quality of banks' regulatory capital and achieve better compliance with the Basel III framework.

The NBG developed the requirements for the transition process to International Financial Reporting Standards (IFRS) in 2020 - 2022. In January 2023, the NBG adopted amendments to the regulations relating to capital adequacy requirements, compelling commercial banks to comply with supervisory regulations that use IFRS-based numbers and approaches. Under the IFRS transition process, the NBG introduced a credit risk adjustment (CRA) buffer. The CRA buffer was implemented as a Pillar 2 requirement and was fully set on CET 1 capital.

In March 2023, the Financial Stability Committee of the NBG decided to set the neutral (base) rate of the countercyclical buffer at 1%. Banks are required to accumulate a countercyclical capital buffer according to a predetermined schedule: 0.25% by March 2024, 0.50% by March 2025, 0.75% by March 2026 and fully phased-in 1% by March 2027. The countercyclical buffer could be increased at times of strong credit activity and suspended during periods of stress.

In May 2023, the NBG introduced a new requirement on Minimum Requirements for Own Funds and Eligible Liabilities (MREL) under the Bank Recovery and Resolution Framework. According to the new requirements, commercial banks must hold specific amounts of equity, subordinated debt, and of qualifying non-deposit senior debt that could be subject to bail-in in the event of bank failure. However, this should not affect risks for existing senior creditors because the bank resolution legislation in Georgia already provides a credible mechanism for the bail-in of senior obligations. MREL implementation will be phased in gradually, starting from 10% of Total Liabilities and Own Funds (TLOF) on 1 January 2024, before increasing to 15% at end-2025, and 20% at end-2027. MREL-eligible instruments will include regulatory capital and senior, unsecured non-deposit obligations with maturities of at least one year, subject to the NBG's approval.

In November 2023, the NBG introduced the concept of a foreseeable dividend, which should be deducted from retained earnings. According to the regulation, a foreseeable dividend is considered to be the amount of a dividend approved or submitted for approval by the relevant entity defined by the charter of the commercial bank (Supervisory Board).

As another pillar of the NBG's de-dollarisation-oriented policy, in November 2024, the Monetary Policy Committee of the NBG increased the reserve requirement on foreign currency liabilities by 5pps from 20% to 25%.

In December 2024, the NBG also made amendments to the systemic risk buffer calculation methodology. According to the new methodology, the current systemic risk buffer for JSC TBC Bank amounts 2.5% and can be increased by 0.5% if the bank's share of non-bank deposits in the total non-bank deposits of commercial banks and microbanks equals or exceeds 40%, based on the average of the previous three consecutive months. Additionally, for every further 2-percentage-point increase (in multiples of two), the buffer will be raised by an additional 0.5%. The Bank must comply with the increased requirement in a 12-month period. If the bank's share of non-bank deposits over the past 12 consecutive months decreases by any multiple of 2% or falls below 40%, the buffer will be reduced by 0.5% for each such decrease. The upper limit for the systemic buffer is set at 5%.

The following table presents the capital adequacy ratios and minimum requirements:

	Jun'25	Mar'25	Jun'24
CET 1 capital	4,917,529	4,814,010	4,344,472
Tier 1 capital	5,938,879	5,851,748	5,749,522
Tier 2 capital	935,895	935,144	922,217
Total regulatory capital	6,874,774	6,786,892	6,671,739
Risk-weighted exposures:
Credit Risk-weighted exposures	25,985,507	25,259,747	22,459,700
Risk-weighted exposures for Market Risk	159,393	283,430	83,580
Risk-weighted exposures for Operational Risk	3,794,626	3,794,626	3,248,365
Total Risk-weighted exposures	29,939,526	29,337,803	25,791,645
Minimum CET 1 ratio	14.66%	14.6%	14.6%
CET 1 capital adequacy ratio	16.42%	16.4%	16.8%
Minimum Tier 1 ratio	16.92%	16.9%	16.9%
Tier 1 capital adequacy ratio	19.84%	19.9%	22.3%
Minimum total capital adequacy ratio	19.92%	19.9%	20.0%
Total capital adequacy ratio	22.96%	23.1%	25.9%

GEL volatility has been and remains a significant risk to the Bank's capital adequacy. A 10% GEL depreciation would translate into a 0.8 pp, 0.7 pp and 0.6 pp drop in the Bank's excess CET 1, Tier 1 and Total regulatory capital, respectively.

Uzbek subsidiary - JSC TBC Bank UZ

In June 2025, the Central Bank of Uzbekistan implemented targeted updates to the capital adequacy framework and reduced risk weight to 75% for specific loans issued to self-employed individuals and small businesses. This applies to loans of up to 300 million soums to self-employed individuals with verifiable income or stable bank turnover over the past six months and a debt burden of 50% or less, as well as to total loans to small businesses within 0.2% of the bank's regulatory capital or up to 15 billion soums, whichever is lower. These changes apply to loans disbursed after June 1, 2025 and positively impact the Bank's capital adequacy position.

As of 30 June 2025, the Bank met the requirements for regulatory capital set by Regulation On the Requirements for the Adequacy of the Capital of Commercial Banks No. 2693 dated July 6, 2015.

The following table presents the capital adequacy ratios and minimum requirements:

	Jun'25	Mar'25	Jun'24
Minimum CET 1 ratio	8.0%	8.0%	8.0%
CET 1 capital adequacy ratio	18.5%	19.4%	12.6%
Minimum Tier 1 capital	10.0%	10.0%	10.0%
Tier 1 capital adequacy ratio	18.5%	19.4%	12.6%
Minimum total capital adequacy ratio	13.0%	13.0%	13.0%
Total capital adequacy ratio	20.0%	20.3%	16.4%

 

LIQUIDITY

The Group's objectives in terms of liquidity management are to maintain appropriate levels of liquidity to support the business strategy, meet regulatory and stress testing-related requirements, and safeguard the Group's ability to continue as a going concern.

The Group complied with all its internally and externally imposed liquidity requirements half year 2025.

Georgian subsidiary - JSC TBC Bank

The Bank assesses LCR and NSFR per NBG guidelines, whereby the ratios implemented by the NBG have more conservative approaches than those set by Basel III standards. The LCR enhances short-term resilience. In addition to the total LCR limit set at 100%, the NBG defines limits per currency for the GEL and foreign currencies (FC). To promote larisation in Georgia, the NBG set a lower limit to GEL LCR than to FC LCR. FC Mandatory Reserves are wholly considered in HQLA (High Qualified Liquid Assets) for LCR purposes.

The NSFR is used for long-term liquidity risk management to promote resilience over a longer time horizon by creating additional incentives for JSC TBC Bank to rely on more stable sources of funding on a continuing basis. The regulatory limit is set at 100%.

As of 30 June 2025, the ratios were well above the prudential limits set by the NBG, as follows:

Funding & Liquidity	Jun'25	Mar'25	Jun'24
Minimum net stable funding ratio, as defined by the NBG	100.0%	100.0%	100.0%
Net stable funding ratio as defined by the NBG	124.4%	125.6%	118.2%
Minimum total liquidity coverage ratio, as defined by the NBG	100.0%	100.0%	100.0%
Minimum LCR in GEL, as defined by the NBG	75%	75.0%	75%
Minimum LCR in FC, as defined by the NBG	100.0%	100.0%	100.0%
Total liquidity coverage ratio, as defined by the NBG	116.3%	119.0%	118.1%
LCR in GEL, as defined by the NBG	115.7%	118.9%	100.0%
LCR in FC, as defined by the NBG	116.6%	119.1%	129.5%

 

Uzbek subsidiary - JSC TBC Bank UZ

The regulatory framework established by the Central Bank of Uzbekistan (CBU) mandates specific liquidity ratios for financial institutions to uphold financial stability and mitigate potential risks. In compliance with these regulations, financial institutions are required to maintain a High-Quality Liquid Assets/Total Assets ratio of 10%, ensuring a sufficient buffer of liquid assets to cover a proportion of their total assets.

Moreover, institutions are obligated to maintain a 25% Instant Liquidity Ratio, ensuring prompt liquidity availability for unforeseen financial obligations. Further reinforcing risk resilience, a Liquidity Coverage Ratio (LCR) of ≥100% is mandated, requiring sufficient high-quality liquid assets to offset potential liquidity shortfalls during stress periods.

In addition to these measures, financial entities must sustain a Net Stable Funding Ratio (NSFR) of ≥100%, highlighting the need for a stable funding structure over an extended time horizon to mitigate liquidity risks effectively. As of 30 June 2025, the Bank met the requirements set by the Regulator.

MARKET RISK

The Group's objectives in terms of market risk management are to support the business strategy, meet regulatory and stress testing-related requirements and safeguard the Group's ability to continue as a going concern.

The Group complied with all its internally and externally imposed market risk requirements half year 2025.

FX risk

JSC TBC Bank (Georgia) and TBC Bank Uzbekistan are required to maintain open currency positions in line with the NBG's and CBU's limits respectively.

·      The NBG requires the Bank to monitor both balance sheet and total aggregate (including off-balance sheet) open currency positions and to maintain the latter within 20% of the Bank's regulatory capital.

·      CBU limits are set separately for aggregate OCP and for each foreign currency position at 15% and 10% of UZ TBC's regulatory capital respectively. 

Interest rate risk

JSC TBC Bank (Georgia) assesses interest rate risk from both the Net Interest Income (NII) and Economic Value of Equity (EVE) perspectives. As per the regulatory requirements, the Bank assesses the impact of interest rate shock scenarios on EVE and NII. According to NBG guidelines, NII sensitivity under parallel shifts of interest rate scenarios is maintained for monitoring purposes, while EVE sensitivity is calculated under six predefined stress scenarios of interest rate changes, with the limit applied to the result of the worst-case scenario. As of 30 June 2025, TBC Bank's EVE ratio stood at 8.68%, comfortably below the regulatory limit (15%).

Statement of Directors' Responsibilities

The Directors are required to prepare the condensed consolidated financial statements on a going concern basis unless it is not appropriate. They are satisfied that the Group has the resources to continue in business for the foreseeable future and that the financial statements continue to be prepared on a going concern basis.

The Directors confirm that to the best of their knowledge:

·      the financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK, and the Disclosure Guidance and Transparency Rules ('DTR') sourcebook of the UK's Financial Conduct Authority;

·      this Interim Report 2025 gives a true, fair, balanced and understandable view of the assets, liabilities, financial position and profit or loss of the Company; and

·      this Interim Report 2025 includes a fair review of the information required by:

o  DTR 4.2.7R, being an indication of: important events that have occurred during the first six months of the financial year ending 31 December 2025 and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

o  DTR 4.2.8R, being: related party transactions that have taken place in the first six months of the financial year ending 31 December 2025, which have materially affected the financial position or performance of TBC Bank during that period; and any changes in the related parties transactions described in the Annual Report and Accounts 2024 that could materially affect the financial position or performance of TBC Bank during the first six months of the financial year ending 31 December 2025.

 

 

Signed on behalf of the Board by:

Vakhtang Butskhrikidze

CEO

7 August 2025

 

 

 

 

 

TBC Bank Group PLC Board of Directors:

 

Chairman Arne Berggren
Executive Directors Vakhtang Butskhrikidze (CEO)	Non-executive Directors Eran Klein Tsira Kemularia Janet Heckman Per Anders Fasth Thymios Kyriakopoulos Nino Suknidze Rajeev Sawhney

 

 

TBC BANK GROUP PLC

 

Condensed Consolidated Interim Financial

Statements (Unaudited)

 

 

30 June 2025

 

 

Table of contents

 

Independent Auditor's Report ...................................................................................................................................... 53

 

Condensed Consolidated Interim Statement of Financial Position .............................................................................. 55

Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income.............................. 56

Condensed Consolidated Interim Statement of Changes in Equity............................................................................... 57

Condensed Consolidated Interim Statement of Cash Flows.......................................................................................... 58

 

 

Notes to the condensed consolidated interim financial statements:

 

1. Introduction

2. Material Accounting Policy Information

3. Sources Of Estimation Uncertainty And Judgements In Applying Accounting Policies

4. Cash And Cash Equivalents

5. Due From Other Banks

6. Mandatory Cash Balances With NBG And CBU

7. Loans And Advances To Customers

8. Premises, Equipment And Intangible Assets

9. Due To Credit Institutions

10.Customer Accounts

11.Debt Securities In Issue

12.Subordinated Debt

13.Additional Tier 1 Capital Subordinated Notes

14.Equity

15.Share Based Payments

16.Earnings Per Share

17.Segment Analysis

18.Interest Income And Expense

19.Fee and Commission Income And Expense

20.Net Gains From Derivatives, Foreign Currency Operations and Translation

21.Income Taxes

22.Financial And Other Risk Management

23.Contingencies And Commitments

24.Fair Value Disclosures

25.Related Party Transactions

26.Events After Reporting Period

 

 

 

Independent review report to TBC Bank Group Plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed TBC Bank Group Plc's condensed consolidated interim financial statements (the "interim financial statements") in the 2Q and 1H 2025 Financial Results of TBC Bank Group Plc for the 6-month period ended 30 June 2025 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

·    the Condensed Consolidated Interim Statement of Financial Position as at 30 June 2025;

·    the Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income for the period then ended;

·    the Condensed Consolidated Interim Statement of Cash Flows for the period then ended;

·    the Condensed Consolidated Interim Statement of Changes in Equity for the period then ended; and

·    the explanatory notes to the interim financial statements.

The interim financial statements included in the 2Q and 1H 2025 Financial Results of TBC Bank Group Plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the 2Q and 1H 2025 Financial Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The 2Q and 1H 2025 Financial Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the 2Q and 1H 2025 Financial Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the 2Q and 1H 2025 Financial Results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the 2Q and 1H 2025 Financial Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

7 August 2025