TBC Bank shares jump as London-listed Georgian lender unveils £22.8m share buyback and dividend increase
- One-third of the shares purchased go to an employee benefit trust
- The bank reported profits declined 6.3% as a result of a spike in loan loss provisions
- TBC said it would increase its interim dividend by two-thirds to 2.5 lari per share
London-listed TBC Bank has announced a share buyback program as it has again released a robust set of quarterly results.
The Georgian bank said it had approved the purchase of up to 75 million Georgian lari (£22.8 million) of its own shares, with one-third of the amount being transferred to an employee benefits trust for future share awards.
The remaining two-thirds will be acquired sometime in mid-October and purchased to reduce the group’s share capital.
Takeover: TBC Bank said it had approved the purchase of up to £22.8m in treasury shares, with one third of the amount being transferred to an employee benefits trust fund
TBC also announced it would increase its interim dividend by two-thirds to 2.5 lari per share, coinciding with the release of its second quarter results, which show operating income up 22 percent from the prior year.
Most of the income growth was attributed to a quarter increase in net interest income due to a loan expansion on the portfolio, as well as interest rate hikes in response to rising inflation.
At the same time, non-interest income was boosted by an increase in customers using the group’s cards for payment transactions in both Georgia and Uzbekistan.
However, total profit fell 6.3 percent to lari 234.6 million due to a spike in loan loss compensation and the company spent significant amounts on hiring more staff as part of plans to expand its Uzbek division.
Despite all this, Tbilisi-based TBC managed to report a positive result against a much more uncertain economic and political backdrop due to Russia’s recent large-scale invasion of Ukraine.
It told investors on Friday: “While the challenging geopolitical environment remains a concern, the Georgian economy has once again shown its resilience.
While tourism recovery has slowed after the Russian invasion of Ukraine, the negative impact has been offset by increased migration to the country.
“In addition, despite a strong increase in oil prices, Georgia’s terms of trade remain stable and there is a high influx of remittances.”
The company reiterated its medium-term goals for a return on equity of more than 20 percent and loan growth of between 10 and 15 percent, on top of a cost-income ratio of less than 35 percent.
Founded exactly three decades ago, shortly after the collapse of the Soviet Union by two businessmen with just $500 in seed capital, TBC has grown into Georgia’s largest private banking company by total deposits and loans.
It entered the main market of the London Stock Exchange in 2014, raising nearly $300 million in its first public offering, despite investor concerns over Russia’s annexation of Crimea.
The recent escalation of the war in Ukraine has also made investors nervous, but the bank predicts that the Georgian economy will grow by more than 10 percent this year, after recovering from 10.4 percent in 2021.
Shares TBC Bank Group closed 6.7 percent higher on Friday at £16.50, meaning their value is up more than 81 percent over the past two years.