TBC Bank Q2 Profit up 12% on Georgia Loan Growth

TBC Bank Group PLC reported Q2 2026 net profit of GEL386 million, a 12% increase from the prior year, according to data from GN markets/earnings. The company maintained a return on equity of 23.6%, marking the fourteenth consecutive quarter with returns above 23%. Total operating income rose 10% year-on-year, driven by a 13% expansion in net interest income and a 14% quarter-on-quarter rebound in fee and commission revenue.

Cost efficiency improved significantly, with the cost-to-income ratio dropping nearly two percentage points to 38.3%. The group declared a dividend of GEL1.75 per share for the quarter, bringing the first-half total to GEL3.5 per share, an 8% year-on-year increase. These results reflect strong performance in the Georgian market, where net interest income grew 19% and unsecured consumer loans expanded by 36%.

Uzbekistan Asset Quality Challenges

Asset quality in Uzbekistan remains a primary concern for the group. The group’s non-performing loan ratio increased by 0.3 percentage points to 3.3%, driven by deterioration in the Uzbekistan portfolio. Management attributed this to the extension of the write-off period from 270 to 360 days and the aging of loan vintages originated 12 to 18 months ago. The cost of risk in Uzbekistan is projected to rise to the low mid-teens in Q3 2026, impacting overall provisioning.

Despite these credit headwinds, credit card issuance in Uzbekistan more than doubled year-on-year to exceed 1.2 million units, with credit cards now representing 10% of the local loan book. Payment volumes in the market reached GEL3.2 billion in H1 2026, up 54% year-on-year. However, the deposit portfolio in Uzbekistan declined 7% quarter-on-year, contributing to the broader challenge of stabilizing the loan book.

Digital Engagement and Fee Outlook

Group digital monthly active users decreased by 6% year-on-year to 7.2 million, despite a 19% increase in Georgia. The daily active user to monthly active user ratio in Georgia reached 50%, indicating high engagement among local customers. The overall decline in digital engagement reflects specific pressures in the Uzbekistan market, where the loan book contraction and deposit outflows reduced the active user base.

Forward Guidance and Regulatory Risks

Management expects full-year 2026 fee and commission income to remain flat year-on-year. This outlook is influenced by ongoing investments in card and loyalty programs in Georgia and potential regulatory changes affecting interchange fees. In Uzbekistan, regulatory uncertainty persists, including a paused risk-weight framework for consumer loans and potential modifications to automatic collection systems, which could further affect capital requirements and provisioning levels.

The group anticipates that the cost of risk in Uzbekistan will remain elevated in the coming quarters due to the seasoning of older vintages and the extended write-off timeline. While Georgia continues to drive growth through robust loan expansion and digital adoption, the overall group performance will depend on stabilizing asset quality in the Uzbekistan market and managing regulatory headwinds.