August 21, 2017 / 7:19 AM / a year ago

UPDATE 1-Georgia's TBC Bank second-quarter profit jumps on strong lending

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By Noor Zainab Hussain

Aug 21 (Reuters) - TBC Bank Group Plc, Georgia’s largest retail bank, reported a 37.2 percent jump in second-quarter underlying net profit on Monday, as economic growth and a stable currency boosted lending.

Net interest margin was 6.8 percent in the quarter, down 1.1 percentage points from a year earlier, said TBC, which became Georgia’s largest bank by loans and deposits after buying JSC Bank Republic from France’s Societe Generale and the European Bank for Reconstruction and Development.

Underlying net profit rose to 86.3 million laris ($36.2 million) in the quarter ended June, from 62.9 million laris a year earlier.

“Accelerated economic development and a stable currency rate in 2Q 2017 continue to underpin sound growth in the banking sector,” TBC Bank said.

Last week Rival BGEO Group Plc, which is planning to split its banking and investment businesses, reported a jump in second-quarter pretax profit, driven by its banking and healthcare arms.

Georgia’s economy expanded 4.5 percent in the first half of this year, up from 2.9 percent in the same period in 2016, after a rise in exports and remittances from abroad. The government forecasts the growth at 4 percent in 2017.

The economy has a good chance of exceeding the official 4 percent growth projection this year, Economy minister Giorgi Gakharia said in June, thanks to private sector developments and the government spending on infrastructure projects.

TBC said second-quarter cost-to-income ratio stood at 44.9 percent, compared to 45.1 percent a year earlier.

Gross loans and advances to customers stood at 7.39 billion laris at June end, a rise of 56.8 percent from a year earlier.

TBC Bank’s market share in total loans grew by 9.8 percentage points to 38 percent at June end and underlying return on equity (ROE) amounted to 20.4 percent in the quarter, compared with 9.9 percent a year earlier.

The bank cited favourable macroeconomic conditions and stuck to its medium-term ROE forecast of over 20 percent and loan book growth target of about 15 percent.

Shareholders of the bank, which was listed on the London Stock Exchange in 2014, include the World Bank’s International Finance Corp, the EBRD and JPMorgan.

FMO, the Dutch development bank, and SocGen sold their stakes in the Georgian Bank this year. ($1 = 2.3845 laris) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Gopakumar Warrier)

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