MANAGEMENT REPORT
AND FINANCIAL STATEMENTS 2024
Strengthening
Market Leadership
Through Innovation
20
24
Make people’s
lives easier
TBC BANK1
A leading financial services
group in Georgia
1
TBC Bank refers to JSC TBC Bank (the Bank) and its subsidiaries (together Group).
Contents
MANAGEMENT REPORT
8 - 125
144 - 265
128 - 141
GOVERNANCE
FINANCIAL STATEMENTS
268 - 275
ADDITIONAL INFORMATION
Overview
TBC at a glance
8
Proven track record of growth and profitability 10
Executive Committee team of JSC TBC Bank 12
Reflections from the top
Chairman’s statement
14
Letter from the CEO
16
Our strategic approach
Our operating environment and adapting to
evolving market trends
18
Our business model
20
Our strategic priorities
22
Our key performance indicators
24
Business review
28
How we create value for our stakeholders
Our customers
50
Our employees
54
Our community
60
Our investors
64
Additional disclosures
Risk management
70
Material existing and emerging risks
74
ESG strategy
94
Climate-related financial disclosures 2024
100
Supervisory Board biographies
128
Corporate governance
132
Independent auditor’s report
144
Consolidated statement of financial position 150
Consolidated statement of profit or loss
and Other Comprehensive Income
151
Consolidated statement of
changes in equity
152
Consolidated statement of cash flows
153
Separate statement of financial position
154
Separate statement of profit or loss and
other comprehensive income
155
Separate statement of changes in equity
156
Separate statement of cash flows
157
Notes to the consolidated and
separate financial Statements
158
Glossary
268
Alternative performance measures
270
Abbreviations
275
Management Report
1
CHAPTER
OVERVIEW
Who we are
Powered by:
A comprehensive range of financial
services
• TBC Bank: Retail, MSME, CIB & WM
• TBC Leasing
A leading financial services group in Georgia
38.5%
Market share1 in total loans
39.3% as of 31 Dec 2023
38.1%
Market share1 in total deposits
40.1% as of 31 Dec 2023
TBC at a glance
GEL 1.2 bln
3.5 mln
494 K
1,050 K
1,701 K
GEL 21.9 bln
GEL 25.0 bln
25.1%
32.8%
47%
63%
5.8%
Group’s key financial highlights2
Group’s key operational highlights2
NET PROFIT
ROE
GROSS LOAN
PORTFOLIO4
NIM
COST TO
INCOME
DEPOSIT
PORTFOLIO
UNIQUE REGISTERED
USERS
MONTHLY ACTIVE
CUSTOMERS
+11% YoY
+6% YoY
+0.8pp YoY
-0.3pp YoY
+6% YoY
+14%3 YoY
-0.5pp YoY
+14% YoY
+17% YoY
+1pp YoY
-4pp YoY
+8%3 YoY
DIGITAL MAU
NPS5
DIGITAL DAU
DIGITAL DAU/MAU
1
Based on data published by the National Bank of Georgia (NBG) on the analytical tool Tableau, as of 31 December 2024.
2
Definitions and detailed calculations of the APMs are provided in the section “Additional Information”, under “Alternative Performance Measures”.
3
Growth in constant currency.
4 Includes finance lease receivables.
5
The Net Promoter Score (NPS) was measured based on a survey conducted by the independent research company Sonar in December 2024, for
retail customers.
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
8
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
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ADDITIONAL INFORMATION
9
FINANCIAL STATEMENTS
MANAGEMENT REPORT
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ADDITIONAL INFORMATION
OVERVIEW CONTINUED
Proven track record of growth and
profitability
Net profit (GEL mln)
433
546
2018
2019
2020
2021
2022
2023
337
843
1,023
1,119
CAGR 19%
2024
1,245
Return on equity (ROE)
22.0%
23.8%
26.3%
26.0%
25.4%
12.9%
2018
2019
2020
2021
2022
2023
25.1%
2024
Gross loan portfolio (GEL bln)*
Cost to income
* Includes finance lease receivables
10.6
12.9
15.5
17.2
18.2
21.7
2018
2019
2020
2021
2022
2023
CAGR 15%
25.0
2024
2018
2019
2020
2021
2022
2023
32.0%
37.8%
37.7%
35.1%
32.5%
28.8%
32.8%
2024
10
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
11
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
OVERVIEW CONTINUED
Executive Committee team
of JSC TBC Bank
GVANTSA MURGHVLIANI
Head of Human Capital
Management
TORNIKE GOGICHAISHVILI
Deputy CEO, MSME and Affluent
Banking
GEORGE TKHELIDZE
Deputy CEO, Corporate & Investment
Banking, Wealth Management
NIKOLOZ GVABERIDZE
Retail Lending and Operations
Director
BIDZINA MATSABERIDZE
Chief Information Office
GIORGI MEGRELISHVILI
Deputy CEO, Chief Financial
Officer
VAKHTANG BUTSKHRIKIDZE
Group Chief Executive Officer (CEO)
NINO MASURASHVILI
Deputy CEO, Chief Risk Officer
12
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
13
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Chairman’s statement
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
STRENGTHENING GOVERNANCE AND ENSURING
RESILIENCE
Over the past year, we have steadily reinforced the
foundations for sustainable growth. We have made
significant progress in further strengthening our
corporate governance framework, which—combined
with more rigorous risk management, internal controls,
and compliance standards—has enhanced our resilience
to potential shocks, both internal and geopolitical. By
integrating best practices of corporate governance, risk
management and controls throughout the organisation,
we have increased our ability to navigate complex
environments with greater confidence.
In parallel, we have ensured that our talent management,
performance measurement, remuneration, and
incentive structures remain fully aligned with our
strategic objectives and this will continue to be a key
focus given our ambitions. Recruiting both local and
international expertise at various levels, reinforcing
succession planning, and establishing an Executive
Committee at TBC Bank JSC have all contributed to a
more agile, accountable, and future-ready organisation.
Underpinned by a robust governance model, we
continue to foster inclusive growth, advance our ESG
initiatives, empower youth and SMEs, and leverage
digital capabilities to deliver sustainable value.
Finally, our commitment to technological advancement
and the ethical use of artificial intelligence has laid the
groundwork for further integrating technology into our
business processes. We remain focused on strengthening
our cybersecurity infrastructure and advancing data
analytics capabilities, ensuring that we are well-
positioned to continue delivering tangible results.
BUILDING A SUSTAINABLE FUTURE
At TBC, financial results are not the sole measure of our
success. We are deeply committed to advancing our
Environmental, Social, and Governance (ESG) efforts, and
in 2024, we achieved a number of significant milestones:
• Sustainable financing. Our sustainability portfolio
reached GEL 1.7 billion, up by 41% year-on-year,
surpassing our target of GEL 1.4 billion.
• Diversity and inclusion. We remain committed to
fostering diversity, with women making up 37% of our
middle managers2.
• Education and awareness. Through our long-term
educational platform, ESG Academy, we launched
the Green Mindset and Green Financing course,
benefiting 300 employees and customers in 2024.
This initiative is designed to raise awareness of
climate-related risks, sustainable business models,
and practices.
LOOKING AHEAD
Reflecting on the successes of the past year, our
strategic focus remains clear to build on Georgia’s strong
foundation. Our advancements in digital banking and
consistently robust financial performance highlight our
ability to meet evolving customer needs. Our leadership
team, comprising seasoned professionals with extensive
international experience, has been instrumental in
driving these achievements. Their insights will ensure
we remain agile, innovative, and responsive to new
opportunities.
Arne Berggren
Chairman
1 April 2025
Chairman’s
statement
DEAR SHAREHOLDERS,
I am delighted to report that TBC Bank has delivered
another year of excellent results. Our net profit increased
by 11% year-on-year, reaching a record GEL 1.2 billion,
while ROE exceeded 25% again.
These achievements are particularly impressive amid
ongoing regional geopolitical challenges and, in
particular, the heightened political tensions in Georgia in
late 2024. Given this backdrop, the entire management
team focused on ensuring the stability of our businesses
by developing comprehensive scenarios and actions
plans to mitigate any potential negative impacts, on
meeting the needs of our customers, and on delivering
consistent and strong results for our stakeholders.
ADVANCING STRATEGIC OBJECTIVES
Our strategy is carefully designed to ensure sustainable
and profitable growth, maximise stakeholder value, and
deliver on our mission of making people’s lives easier.
• Build on our leading position in Georgian banking.
Our market-leading operations in Georgia remain the
cornerstone of TBC’s strength, with c. 40% market
share1 in assets, loans, and deposits. We proudly
serve 1.7 million retail monthly active customers—
two-thirds of the country’s total bankable population.
This year, we achieved strong balance sheet
growth across all segments and delivered robust
profitability, driven by resilient interest income
and an increased share of capital-efficient fee and
commission income.
• Increase digital engagement. Digitalisation remains
a key driver of our value proposition. In 2024, we
further expanded our digital services, driving
substantial growth in online adoption. As a result,
digital monthly active users (MAU) increased by 14%
to 1.1 million, and our DAU-to-MAU ratio improved to
47%, representing growth of 1 percentage points.
2024 was a year of strong growth and
record profitability for TBC Bank,
driven by continued market leadership.
These results were achieved despite
the complex geopolitical landscape in
Georgia and the wider region.
REFLECTIONS FROM THE TOP
1
Based on data published by the National Bank of Georgia (NBG).
2
Branch managers, division and department heads, as well as mid-
senior level positions at the Group’s subsidiary.
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
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14
FINANCIAL STATEMENTS
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Letter from the CEO
FINANCIAL STATEMENTS
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ADDITIONAL INFORMATION
We are also increasingly utilising AI in our operations
and services. These applications range from credit
underwriting and personalised offer generation to
advanced document screening and authentication using
computer vision.
FINANCIAL HIGHLIGHTS
2024 was an excellent year in terms of financial
performance. Our total operating income grew by 11%
year-on-year to GEL 2,374 million. This growth was
broad-based, driven particularly by a strong 19% year-
on-year rise in net fee and commission income and 6%
year-on-year increase in net interest income. Our cost-
to-income ratio stood at 32.8%, reflecting our continued
investment in technology. The cost of risk was 0.5%,
indicative of our prudent risk management practices
and the still strong economic growth in the countries in
which we operate. As a result, our net profit increased by
11% and amounted to GEL 1,245 million, while the return
on equity stood at 25.1%, underscoring the profitability
and resilience of our business model.
Additionally, our capital position remains solid. Our CET1,
Tier 1, and Total Capital ratios stood at 16.8%, 20.4%, and
23.8%, respectively, all significantly above the minimum
regulatory requirements, highlighting our robust capital
strength.
INVESTING IN OUR PEOPLE
Our talented team of over 9,200 is the driving force
behind our success. Our Executive Management
boasts diverse global expertise, with members bringing
experience from leading financial institutions across
Europe and Asia. This rich talent pool reflects our ability
to attract world-class professionals, who are drawn to our
environment where innovative ideas and collaboration
thrive.
LOOKING AHEAD
As we step into 2025, we are energised by the
opportunities ahead whilst we also recognise the
challenges we face. With a robust risk management and
performance culture, we are confident in our ability to
navigate uncertainties, seize growth opportunities, and
deliver sustainable value to all our stakeholders. We will
continue to deepen our market leadership and pursue
innovation to meet evolving customer needs. With a
solid financial foundation, a talented and diverse team,
and a clear vision, we are well-positioned to maximise
the opportunities ahead and deliver on our strategy.
Vakhtang Butskhrikidze
CEO
1 April 2025
Letter from
the CEO
OVERVIEW OF 2024 OPERATING ENVIRONMENT
2024 was a highly successful year for TBC Bank. We
achieved record profits driven by strong balance sheet
growth. While the geopolitical and domestic backdrops
in Georgia were at times challenging, the macro
environment remained positive throughout the year, with
GDP growth of 9.5%, driven by strong tourism revenues
and real credit growth.
DELIVERING EXCELLENCE
We remain a highly profitable market leader in Georgia,
with 14% year-on-year loan book growth on a constant
currency basis helping fuel 11% net profit growth and
an excellent 25.1% ROE, despite the monetary easing
cycle bringing margin pressures. Our market share
across loans, deposits, and assets is close to 40%, but we
consistently strive to improve our customers’ everyday
banking experience. Our Net Promoter Score (NPS)1
stood at 63% in December 2024, reinforcing our position
as the bank of choice for our 1.7 million customers .
Among our product innovations during the year, we
launched the redesigned TBC Card, offering a seamless
combination of daily banking services and a revamped
loyalty programme.
In CIB, we streamlined credit processes, reducing
time-to-cash by 30%, introduced new FX pricing
solutions, and hosted the first International Georgian
Capital Markets Conference. Meanwhile in MSME we
launched digital MSME pre-approved loans and more
than doubled the maximum limit to GEL 0.5 million for
automatically approved loans.
Our progress in digital transformation has further
strengthened our market presence. Digital monthly
active users (MAU) reached 1.1 million, an 14% increase
year-on-year, while daily active users (DAU) also grew
by 17% year-on-year to 494 thousand, highlighting
high levels of customer engagement with our digital
platforms. More of our products and services are now
being accessed digitally: for example, the share of
consumer loans issued fully digitally increased by 13pp
to 73% in 2024 as the number of digitally disbursed loans
increased by 75% year-on-year. In turn, as the average
number of in-branch transactions declines, falling by
25% year-on-year, this is enabling us to transform our
branch network from traditional transactional branches
into advisory hubs offering value-added products and
services.
1
The Net Promoter Score (NPS) was measured based on a survey
conducted by the independent research company Sonar in
December 2024, for retail custumers.
With a robust 11% growth in net profit
and ROE of 25.1%, we continue to
demonstrate the strength of our
business model and the effectiveness
of our strategy.
REFLECTIONS FROM THE TOP CONTINUED
17
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16
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Our operating environment and
adapting to evolving market trends
1
Based on data published by the National Bank of Georgia, as of 31 December 2024.
2
Based on data published by the National Bank of Georgia as of 31 December 2024; in this context, corporate refers to legal entities.
3
Based on internal estimates for FY 2024.
4 Based on internal estimates, as of 31 December 2024.
In December 2024, the National Bank of Georgia
(NBG) increased the ceiling for unhedged FC
loans from GEL 400,000 to GEL 500,000, effective
January 1, 2025, to promote the use of the national
currency (larisation). Additionally, in December
2024, the NBG raised the reserve requirement
on FC liabilities by 5 percentage points to 25%,
effective December 19, 2024. The objective of
these regulations is to promote further larisation
in the financial system.
TBC Bank undertook comprehensive measures
to ensure seamless compliance with the updated
lending criteria, conducting a thorough review
of its lending policies, systems, and portfolio to
ensure all loans within the specified threshold are
appropriately aligned with the new regulation.
The increase of the reserve requirement to 25%
creates a ceteris paribus negative effect on the
Bank’s capital and profit and loss statement.
However, the Bank adapted its capital and liquidity
management to the anticipated changes.
The Georgian banking sector is characterised by a
well-established duopoly, with two major players—
TBC Bank and Bank of Georgia—dominating
the market. Together, these institutions control
approximately 80%1 of the total assets in
the sector, reflecting a highly concentrated
competitive landscape.
During 2024, TBC Bank further strengthened
its leadership in the CIB segment, maintaining
the largest market share across all key products,
including loans and deposits at 39.2%2 and 40.8%2,
respectively. The Bank also solidified its position
as the market leader in MSME Banking, with 66%3
of newly registered companies choosing TBC for
their accounts.
In the affluent segment, TBC Concept retained
its leading position, with its loan book increasing
by 8% year-on-year on a constant currency basis.
TBC Bank also outperformed the market in fast
consumer loans (FCL) growth, increasing its FCL
portfolio by 50% year-on-year and achieving
a market share of 29.2%4. This performance
underscores TBC’s strong focus on growing
its presence in unsecured lending, further
diversifying its portfolio, and driving market
expansion.
ECONOMY
REGULATORY CHANGES
COMPETITIVE LANDSCAPE
2024 was a politically lively year in Georgia.
Tensions were heightened during the spring
protests and following the October 2024
parliamentary elections, which reduced
confidence in GEL and raised uncertainty both
domestically and internationally. Expecting the
national currency to weaken in October, the Bank’s
customers proactively converted a large part of
their deposits into FC (foreign currency) starting
from August 2024, while the demand for GEL
credit increased, causing depreciation pressure
and a GEL liquidity deficit on the market. At the
same time, while FC inflows remained broadly
strong throughout the year, the National Bank of
Georgia also intervened heavily on the FX market,
keeping the GEL broadly stable between 2.70-2.80
range per USD. Heightened political tensions at
the end of the year had a limited negative effect
on tourism, consumer spending on durable
goods, as well as expectations regarding inflows
and general economic stability. Indeed, despite
these challenges, Georgia’s real GDP growth
remained robust in December, increasing by 6.7%
year-on-year, while the full year growth in 2024
was a very strong 9.5%.
TBC Bank has in place a comprehensive stress-
testing framework to effectively address and
assess the impact of increased volatility. In
addition, the Group developed various post-
election scenarios, allowing it to proactively
manage its liquidity position and effectively
mitigate risks to its capital and portfolio quality.
TECHNOLOGY
Technological advances continue to reshape
the financial services industry. TBC Bank
Georgia has achieved significant strides in its
digital transformation, cybersecurity, and data
innovation efforts in 2024. Key milestones include
establishing a cloud-based disaster recovery
site and centralised DDoS (Distributed Denial-
of-Service) protection to ensure resilience,
insourcing digital platforms for enhanced
development capabilities, and modernising
architecture to reduce legacy risks. Cybersecurity
has been strengthened with a centralised Security
Operations Centre, proactive threat measures,
and compliance with global information security
policies. Additionally, a cloud-based data platform
and AI-driven innovations have accelerated
decision-making and personalised customer
experiences, fostering a culture of data-driven
empowerment among employees.
GEORGIA
USD 33.8 bln
USD 4.4 bln
Ba2 negative
CREDIT RATINGS
GROSS INTERNATIONAL
RESERVES
NOMINAL GDP 2024
35-39
1.9%
INFLATION (DEC-2024)
AVERAGE AGE
GDP PER CAPITA, PPP
3.7 mln
USD 9,146
8.0%
POPULATION
GDP PER CAPITA
MONETARY POLICY
RATE (DEC-2024)
USD 28,177
OUR STRATEGIC APPROACH
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ADDITIONAL INFORMATION
OUR STRATEGIC APPROACH CONTINUED
Our business model is based on our ambition to deliver the best possible financial services to our
customers in Georgia, which in turn helps us acquire new customers.
In Georgia, over the past 30 years and more, we have created the country’s leading financial
services business, spanning retail, MSME, and corporate as well as a number of additional
services in payments and leasing services.
Our business model
HOW WE
DELIVER
HOW WE CREATE
VALUE FOR
WHAT WE
DELIVER
Digital-first strategy
Continuous digital innovation
throughout our business, including
building new AI solutions
Prudent risk management
Apply risk-adjusted profitability
approach in decision-making. Ensure
the Group maintains a high degree of
resilience
Data-driven approach
Utilise our advanced data analytics
capabilities to offer convenient and
frictionless services for our customers
and to optimise business processes
Outstanding team
Attract, develop and retain the best
talent
• Payments
• Leasing
Colleagues
Support our colleagues in their
professional development and provide
rewarding career opportunities
Customers
Provide tailored solutions and the best
possible customer experience for our
clients
Community
Support business development and
foster job creation, as well as take an
active part in CSR and ESG activities
Investors
Continue to create value by
generating sustainable returns for
our shareholders and maintaining
effective, long-term relationships with
our debt holders
Financial services
• Retail banking
• MSME banking
• CIB & WM banking
Group-level synergies
Our business units are interrelated and mutually reinforcing, creating a cohesive
ecosystem that drives efficiency, enhances customer value, and fosters innovation. By
leveraging shared expertise, digital capabilities, and centralised governance, we deliver
seamless experiences to our customers.
20
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Our strategic priorities
Our strategic priorities
Our strategy aims to deliver our mission to make people’s lives easier.
We achieve this through providing best-in-class financial services to individuals and
companies in Georgia.
Each of our priorities has been carefully chosen and analysed to ensure that it
contributes towards maintaining the Group’s high profitability, strong growth profile,
and customer trust.
Focus on offloading physical channels and developing digital
solutions
Increase the number of digital active users and their daily
engagement
Drive productivity and efficiency through digital, automatised
processes
Increase digital engagement
Strengthen the Bank’s position in the mass retail segment and maintain
our commanding position in private banking, MSME, affluent retail, and
corporate segments
Grow capital-efficient fee and commission income, with a particular
focus on payments
Enhance underwriting quality, powered by advanced AI solutions and
data analytics capabilities
Attract and develop the best talent
Build on our market leading
position
Be a reliable partner for our individuals and business customers
Design customer-tailored financial services and products
seamlessly delivered across all channels
Accelerate the development of innovative digital solutions enabling
AI-based personalised customer experience
Continue improving our
customer experience
OUR STRATEGIC APPROACH CONTINUED
23
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ADDITIONAL INFORMATION
Our key performance indicators
Our key performance indicators
We use a broad range of financial and non-financial measures in order to monitor our
performance and provide a balanced view that takes into account the interests of all our
stakeholders. The Board regularly reviews the key performance indicators (KPIs) in order to
ensure that they continue to show whether our strategy is working and securing the long-
term sustainable growth of the Group. Due consideration is also given to the selection of
the most relevant KPIs for the executive management’s remuneration in order to better
align their interests with those of our stakeholders.
NET PROFIT
(GEL mln)
RETURN ON
EQUITY (ROE)1
COST TO
INCOME RATIO1
Our net profit increased by 11% YoY,
driven by strong income generation
across the board.
Our high ROE was driven by a
stable NIM and robust asset quality.
The increase in our cost-to-
income ratio was driven by our
continued investment in tech
nology. We remain committed to
optimising operational efficien
cy while strategically investing
in growth.
Group-wide financial KPIs
STRONG GROWTH AND PROFITABILITY
SOLID BALANCE SHEET
OUR STRATEGIC APPROACH CONTINUED
2022
2023
2024
1,023
1,119
1,245
2022
2023
2024
26.0%
25.4%
25.1%
2022
2023
2024
28.8%
32.0%
32.8%
1
Definitions and detailed calculations of the APMs are provided in the section “Additional Information”, under “Alternative Performance Measures”.
2
Starting from 1 January 2023, capital adequacy ratios are based on IFRS accounting standards, whilst the numbers for the previous years were
calculated based on the local accounting standards.
3
Includes finance lease receivables.
CET 1 CAPITAL
RATIO1,2
Our CET1 ratio remained well above the
minimum regulatory requirements. We
are committed to maintaining strong
capital buffers to ensure financial
stability and resilience.
NON-PERFORMING
LOANS (NPLs)1,3
Our asset quality remained
robust. We aim to manage risk
prudently, fostering sustainable
earnings growth and resilience.
2022
2023
2024
2.2%
2.0%
2.2%
Min. requirements
2022
2023
2024
15.5%
17.4%
16.8%
11.6%
14.3%
14.4%
25
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
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ADDITIONAL INFORMATION
OUR STRATEGIC APPROACH CONTINUED
LOAN GROWTH AT
CONSTANT
CURRENCY1
DEPOSIT GROWTH
AT CONSTANT
CURRENCY
Our loan book increased 14% year-
on-year, with growth led by CIB and
retail. Our aim is to grow in line with
the market.
Our deposits grew by 8%, with
similar contributions from both the
retail and corporate segments.
We aim to grow in line with the
market while carefully managing
our liquidity needs.
STEADY GROWTH
14.0%
18.7%
2022
2023
2024
14.1%
30.2%
11.6%
2022
2023
2024
8.1%
CUSTOMER NET
PROMOTER SCORE
(NPS)3
EMPLOYEE NET
PROMOTER SCORE
(ENPS)4
The NPS ratio has shown some
volatility but has consistently
remained above 60% over the past
three years, reflecting our strong
commitment to maintaining high
customer satisfaction levels.
Our ENPS declined in 2024 due to
structural changes aimed at enhanc
ing efficiency and agility. We remain
committed to maintaining a high
level of employee satisfaction.
HIGH EMPLOYEE AND CUSTOMER SATISFACTION LEVELS
61%
67%
2022
2023
2024
63%
59%
58%
2022
2023
2024
51%
Key performance indicators
1
Includes finance lease receivables.
2
Terms are defined in the section “Additional Information”, under “Glossary”.
3
The Net Promoter Score (NPS) was measured based on a survey conducted by the independent research company Sonar in December 2024, for retail
customers.
4 The Employee Net Promoter Score (ENPS) was measured in the last quarter of 2024 by an independent consultant for the Bank’s employees.
Specific KPIs
DIGITAL MONTHLY
ACTIVE USERS2 (‘000)
DIGITAL DAILY ACTIVE
USERS / MONTHLY ACTIVE
USERS (DAU/MAU)2
Our digital monthly active users
continued to grow by 14% YoY.
Daily digital engagement among
our users increased in 2024, driven
by the diversification and enhance
ment of our digital offerings, in line
with our strategic goal of deepen
ing customer interaction.
48%
46%
2022
2023
2024
47%
INCREASED DIGITAL FOOTPRINT
2022
2023
2024
801
921
1,050
MONTHLY ACTIVE
CARDHOLDERS2 (‘000)
MONTHLY ACTIVE
CUSTOMERS2 (MLN)
Robust payment trends are fueled by
the rise in the number of active retail
cardholders.
In line with our strategy, we con
tinue to grow our monthly active
customers.
GROWING CUSTOMER BASE AND ENGAGEMENT
1.5
1.6
2022
2023
2024
1.7
838
928
2022
2023
2024
1,026
26
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
27
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
BUSINESS REVIEW
Business review
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BANKING SERVICES
Retail Banking
Leading retail
banking franchise
Medium, Small and
Micro Enterprises
(MSME) Banking
Top choice bank
for MSMEs
Corporate and
Investment
(CIB) Banking
Leading CIB and
wealth management
(WM) franchise
COMPLEMENTARY SERVICES
TBC Leasing
Leading leasing
services provider
Highlights
GEL 25.0 bln
GROSS LOAN PORTFOLIO1
+14% YoY2
GEL 21.9 bln
DEPOSIT PORTFOLIO
+8% YoY2
GEL 1,245 mln
NET PROFIT
+11% YoY
25.1%
ROE
-0.3pp YoY
1,050 K
DIGITAL MONTHLY
ACTIVE USERS (MAU)
+14% YoY
47%
DAU/MAU
+1pp YoY
1
Includes finance lease receivables.
2
Growth in constant currency.
TBC Bank is a leading financial services group in Georgia, across retail, corporate and
MSME segments. We hold approximately 40% market share in both total loans and
deposits. Our core banking services are complemented by fee-generating activities,
including payments, leasing, and digital classifieds.
Georgia
29
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
Retail banking
In 2024, our retail loan book achieved solid growth, driven by both mortgage and
consumer lending, with fast consumer loans performing particularly well thanks to
improved sales processes.
RETAIL
Affluent retail
Mass retail
• A leading position across the mass retail segment;
• A full suite of financial products and services;
• Acclaimed digital channels;
• Efficient, convenient and accommodating next-gen branches.
• Number one choice for affluent customers;
• Innovative, flexible subscription model offering tailored products
and services;
• Strong positioning in lifestyle offerings.
MEASURING SUCCESS IN 2024
YEAR IN REVIEW
STRENGTHENING OUR LEADERSHIP POSITION IN THE RETAIL SEGMENT
In 2024, our retail loan book grew by 15% year-on-year on a constant currency basis, driven by both mortgage and non-
mortgage lending. The mortgage portfolio increased by 8% on a constant currency basis, accounting for 59% of the
total retail loan portfolio, solidifying our position as the leading player in the mortgage market. Non-mortgage lending,
which is mainly comprised of secured consumer loans and fast consumer loans, grew by 28% on a constant currency
basis. Notably, fast consumer loans experienced particularly strong growth, driven by major improvements in our sales
processes. This resulted in an 50% increase in fast consumer loans—significantly outpacing the 35% growth observed
among other market players. Our retail deposits also demonstrated strong growth, increasing by 11% year-on-year on a
constant currency basis. As a result, our market shares1 in retail loans and deposits stood at 37.6% and 35.9%, respectively.
RETAIL GROSS LOANS
(GEL BLN)
Our affluent segment, TBC Concept, serving around 128,000 customers, also continued to generate strong results and
maintained its leadership position in the market, with affluent NPS2 at 69%. TBC Concept loan book and deposit portfolio
increased by 8% and 13% year-on-year, respectively, on a constant currency basis, accounting for 60% of our retail loans and
54% of our retail deposits.
DIGITAL CHANNELS REMAIN OUR TOP PRIORITY
In 2024, we made significant progress in enhancing the quality, availability, flexibility, and scalability of our digital
platforms through the transition of our back-end systems to a microservices architecture. This decentralised approach
empowers our teams to drive faster innovation with greater autonomy, while aligning development efforts with the
company’s broader strategic goals.
We are equally focused on delivering an exceptional user experience. By embedding quality assurance practices and
principles into every phase of the digital product development lifecycle—from initial conception to deployment and
beyond—we ensure that our platforms meet the highest standards. Incremental development, paired with data-driven
decision-making and A/B testing, enables us to continuously refine and improve our features based on real user feedback.
In 2024, we introduced a range of new features to our mobile banking app, including a new digital onboarding feature
reducing processing time from 3–8 minutes to 1 minute, instant P2P transfers, the Car Add-On, QR installment services,
and analysts’ recommendations for investments. These updates contributed to an increase in digital monthly active
users (MAU), rising by 14% to 1.1 million. Additionally, our ratio of digital daily active users (DAU) to MAU improved from
46% in 2023 to 47% in 2024, demonstrating increased daily engagement with our digital banking services. Furthermore,
we made notable progress in our digital sales strategy. By enhancing the user experience and simplifying the loan
application process within our mobile app, we successfully increased the share of fast consumer loans sold digitally to
73%, compared to 60% in 2023.
1
Market shares are based on data published by the National Bank of Georgia on analytical tool Tableau. In this context, retail refers to individual
customers.
2
The Net Promoter Score (NPS) was measured based on survey conducted by the independent research company Sonar in December 2024.
GEL 8.7 bln
(2023: GEL 7.5 bln)
RETAIL LOANS
GEL 8.5 bln
(2023: GEL 7.5 bln)
RETAIL DEPOSITS
1.7 mln
(2023: 1.6 mln)
MONTHLY ACTIVE
CUSTOMERS
1,050 K
(2023: 921 K)
DIGITAL MONTHLY
ACTIVE USERS (MAU)
Mortgage
Fast consumer loans
Secured consumer loans
Other
31 Dec 2024
31 Dec 2023
17%
59%
3%
21%
GEL 8.7 bln
Mortgage
4.7
5.1
Secured
consumer
loans
1.3
1.5
Fast
consumer
loans
1.2
1.8
RETAIL GROSS LOANS BREAKDOWN
BY PRODUCTS AS OF 31 DEC 2024
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
Mobile app that makes
users’ everyday lives easier
• Transactions
• Instant P2P transfers (2024)
• Payments
• Loyalty points redemptions (2024)
• Remittances
• Automatic payments & transfers
• Subscriptions
• Car add-on (2024)
• Card E2E order & renewal (2024)
• Offers from partner merchants
• Special offers for the affluent
segment (2024)
• Lifestyle benefits: airport services,
concept events (2024)
• Opening an investment account
• Online trading
• Managing investment portfolio
• Invest on autopilot (2024)
• Analyst recommendation (2024)
• Online chat (2024) lending
products
• Show pensions saving
• Link other banks’ accounts
(open banking)
• Insurance activation: travel,
MTPL, Casco
• End-to-end online consumer
lending
• Pre-approved credit limits
• Buy-now-pay-later
• Loan prepayment
• Loan refinancing
• QR installments (2024)
• End-to-end online deposit
• Activation “MySafe”
• Early withdrawal of online
deposits (2024)
Daily banking
Lending products
Investments
Savings
Lifestyle & loyalty
More than just banking
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
TBC Card
BRANCH COVERAGE MODEL TRANSFORMATION
In line with our digitalisation strategy, we are transforming our branch network from traditional transactional branches
into advisory hubs. Our primary objective is to develop an infrastructure and coverage model that optimises branch
usage, delivering both exceptional customer experiences and enhanced employee satisfaction. To achieve this, we are in
the process of redefining frontline roles to emphasize personalised advisory services in specific products. Additionally,
we are reshaping our incentive schemes and introducing updated customer experience (CX) metrics as a key
performance indicator (KPI) for our employees, ensuring that customer-centricity remains at the core of our operations.
REINFORCING CUSTOMER LOYALTY
In late 2024, we launched a redesigned debit card, TBC Card, which redefines convenience and puts customers at the
centre of the experience. The product design process was entirely reimagined, shifting from traditional banking to
a customer-centric approach that addresses users’ needs and desires in innovative ways. This new offering includes
an updated loyalty programme, unique rewards, a comprehensive spending scheme, and all daily banking services
seamlessly integrated into one super product. These enhanced card plans will serve as a key entry point to attract both
existing and new customers, while our mass affluent and affluent segments will benefit from premium offerings tailored
to middle- and high-income consumers.
In addition, during the second half of 2024, we transitioned our loyalty programme from a tier-based progressive model
to a barrier-free rewards system, enabling all customers to benefit from it. The reward structure was changed from
points-based accumulation to instant cashback, which is deposited into Ertguli Loyalty Accounts and can be redeemed
directly into customers’ current or card accounts. This change, supported by extensive campaigns, significantly boosted
customer engagement, with the “redeem to account” feature being particularly well-received — over 460,000 customers
used it within the first four months of its launch.
To further enhance our capabilities, we implemented a new data-driven platform that streamlines offer management
processes and enables automated communication journeys across all channels. In 2024, we successfully migrated
the majority of our offer management processes to this platform, laying the groundwork for more efficient, automated
workflows. Looking ahead to 2025, our goal is to integrate all key sales processes into automated communication
journeys, delivering a seamless, intelligent, and customer-centric experience.
The new TBC Card is designed with a customer-first approach, delivering
exceptional benefits like cashback on every transaction, free cash
withdrawals at any ATM across Georgia, and much more. It’s a card that
redefines convenience and puts our customers at the centre of the
experience.
Awards
Georgia’s Best Digital Bank 2024
Euromoney
From Global Business and Finance Magazine
Best Digital Banking
Brand of The Year
in Georgia 2024
Best Digital Bank
in Georgia 2024
Most Innovative
Digital Bank
in Georgia 2024
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
Medium, small and micro
enterprises (MSME) banking
In 2024, TBC Bank consolidated its leadership in the MSME segment, achieving robust
growth in loans while maintaining strong brand loyalty and customer trust.
MSME
Micro and SME
• A full range of financial products and solutions from start-ups to
well-established enterprises;
• Fast loan approval process driven by high automatisation levels;
• Convenient subscription model;
• Best-in-class business support programme.
MEASURING SUCCESS IN 2024
YEAR IN REVIEW
TOP CHOICE FOR MSME CLIENTS
We remain the top choice for MSME customers, serving c.61,000 monthly active customers3, with 66% of newly
registered businesses choosing TBC Bank as their primary financial partner. Our top-of-mind (TOM)2 awareness stood at
45% in December 2024, reflecting our strong brand presence and customer loyalty.
In 2024, our MSME loan book grew by 8% year-on-year on a constant currency basis, driven by micro sub-segment.
Notably, the share of micro loans in the total MSME loan book continued to increase and reached 53% by the year end,
up by 2pp year-on-year. Over the same period, MSME deposits increase by 6% year-on-year on a constant currency
basis.
MSME GROSS LOAN
PORTFOLIO (GEL BLN)
MSME GROSS LOANS BREAKDOWN
BY SUB-SEGMENTS AS OF 31 DEC 2024
31 Dec
2023
31 Dec
2024
5.5
5.9
REFINING OUR DIGITAL SOLUTIONS
This year, we introduced a loan disbursement feature for SME customers within our business internet banking platform.
This feature enables customers to take pre-approved loans directly through digital channels, providing an efficient and
seamless process. For those without a pre-approved loan, the system facilitates easy online applications, with increased
automatic approval levels, within pre-defined risk parameters. In certain cases, branch visits may still be required. This
development is aimed at streamlining loan access for SMEs, enhancing flexibility, and improving overall customer
satisfaction.
In 2024, we also enabled small and medium businesses to subscribe to business plans digitally through our Internet
banking platform. Previously, customers had to visit a branch to choose their preferred plan, but now they can select and
subscribe to the most suitable option entirely online. These business plans offer a streamlined approach by bundling
services and transactions under a single plan, eliminating the need for separate fees. This digital shift provides greater
convenience and flexibility for our SME clients.
ADVANCING AUTOMATION LEVELS
In 2024, we made a key improvement to our loan approval process by increasing the maximum limit for automatically
approved loans from GEL 200,000 to GEL 500,000. This improvement allowed us to reduce the average time-to-yes
from 4 days to just 7 hours for these loans. The faster approval time significantly improves the customer experience,
allowing our SME clients to access essential financing more quickly and efficiently.
Additionally, we automated over 15 loan-related processes that were previously handled manually, further streamlining
operations and improving the customer experience. These advancements underscore our commitment to enhancing
efficiency and flexibility for our SME clients.
1
Based on internal estimates for the full year 2024.
2
Based on an external survey conducted by an independent research company, ACT, in December 2024.
3
Includes monthly active MSME legal entities.
GEL 5.9 bln
(2023: GEL 5.5 bln)
MSME LOANS
GEL 2.0 bln
(2023: GEL 1.9 bln)
MSME DEPOSITS
66%
(2023: 68%)
OF NEWLY REGISTERED
BUSINESSES CHOOSE TBC1
45%
(2023: 40%)
TOP-OF-MIND (TOM)2
Micro
SME
47%
53%
GEL 5.9 bln
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
SKA
ENHANCING OUR MERCHANT EXPERIENCE
This year, we launched a new product called Qreat, a payment solution tailored specifically for HORECA businesses.
Available exclusively at TBC Bank in Georgia, Qreat allows businesses to receive payments via QR codes, eliminating
the need for a POS terminal. This innovation simplifies the payment process for companies, offering a more flexible and
cost-effective solution to meet their operational needs.
We continued to enhance our Merchant Hub platform, focusing on providing valuable analytics for merchants. One of
the key updates is the introduction of Single Sign-In, allowing customers to access the Merchant Hub using their internet
banking credentials. Additionally, new features include reporting on loyalty programme transactions, tip analytics for
restaurants and cafes, and reports on account-to-account transactions. These updates are designed to empower
merchants with deeper insights into their business operations, improving decision-making and efficiency.
In addition to introducing new products and technological solutions, this year we established a dedicated team of
account managers available 24/7 to support our merchants. This initiative ensures that merchants have immediate
access to assistance for their banking needs, enhancing our customer service and fostering stronger relationships with
our clients.
EXPANDING OUR BUSINESS SUPPORT PROGRAMME
Over the past decade, TBC has offered the leading business support programme on the market, which includes several
key components:
• Startup support: Specially designed loan product and subscription plan for early stage start-ups; Special courses and
mentorship opportunities. By the end of 2024, we had 383 clients with an outstanding loan book of GEL 100 million.
• Business Education: In 2024, we conducted 36 trainings and consulting sessions, attended by 4,020 business owners
and managers, aimed at enhancing their skills and knowledge.
• Monthly Community Meetups: In 2024, we organised 9 meetups in Tbilisi and various regions, attracting up to 900
attendees, fostering networking and collaboration among local businesses.
• Annual Business Award: Highlighting exceptional contributions and achievements within the business community.
In 2024, we introduced a new project for women entrepreneurs:
• Supporting women in business - a new loan product specifically designed for female entrepreneurs. Recognising
that collateral is a significant barrier for women in Georgia, this loan offers female founders up to GEL 500,000
without the need for collateral, supported by our lenders and various governmental programmes. Additionally,
this loan features pricing benefits, allowing women to borrow at the lowest available interest rates. This initiative
underscores our commitment to empowering women in business and fostering their success in the entrepreneurial
landscape.
We remain dedicated to driving economic growth in rural communities and improving job prospects by offering
affordable and accessible financial solutions to local businesses. Through our collaboration with key government
initiatives like “Enterprise Georgia” and “Preferential Agro Credit”, we aim to bolster local industries, particularly in
agriculture. These programmes provide financial relief through government-backed interest rate reductions. In 2024, we
issued nearly 2,000 such loans, amounting to GEL 515 million.
A Journey of Growth and Expansion
Established in 2019, SKA has become a prominent leader in Georgia’s
healthy food café market, earning a reputation for innovation and quality.
TBC has partnered with SKA from the very beginning, providing a start-up
loan in 2019 to support its launch. Since then, we have continued to back its
journey of growth and success.
In 2024, with TBC’s ongoing support, SKA expanded internationally by
opening two new branches in Prague, marking a significant milestone in its
growth story.
Awards
Best SME Bank in Georgia 2024
Global Finance
38
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
Corporate and investment banking
(CIB) & wealth management (WM)
In 2024, our CIB loan book grew by 17% year-on-year, with strong sectoral diversification
and low concentration risk. Additionally, our focus on transactional banking and digital
innovations, such as a subscription-based FX pricing model, drove significant growth in
non-interest income.
MEASURING SUCCESS IN 2024
GEL 9.9 bln
CIB LOANS
(2023: GEL 8.3 bln)
GEL 11.3 bln
CIB DEPOSITS
(2023: GEL 10.2 bln)
GEL 2.6 bln
AUM
(2023: GEL 2.1 bln)
CIB & WM
Wealth management
Corporate
The largest and most trusted partner for corporates with
leading position both in loans and deposits.
An established wealth management business with growing
financial advisory and brokerage franchises.
Investment banking
TBC Capital – the leading investment bank in corporate
debt capital markets (DCM) transactions and research.
GEL 253 mln
NON-INTEREST INCOME
(2023: GEL 206 mln)
YEAR IN REVIEW
CORPORATE BANKING
BROAD-BASED GROWTH STRENGTHENING MARKET SHARE
With a strong emphasis on delivering superior customer service and experience, TBC Corporate Banking excels in
fostering high levels of customer loyalty and satisfaction. In 2024, this was reflected in an excellent NPS1 of 82%, reflecting
our commitment to providing personalised, high-touch interactions that make our customers feel valued and help build
lasting relationships.
Our CIB loan book grew by 17% year-on-year in constant currency terms in 2024, remaining well-diversified across a
wide range of sectors within the Georgian economy. We saw particularly strong growth in sectors such as construction,
production and trade of consumer goods, and tourism. As a result, our market share2 in corporate loans stood at 43.5%
at the end of 2024. At the same time, the concentration of our largest borrowers remains low, with the top 10 borrowers
accounting for less than 6% of the total loan book. In addition to these efforts, we are diversifying our risk profile through
loan syndication, which has also increased our fee and commission income.
We continue to lead the market in trade finance, with our GEL 2.8 billion guarantees portfolio up 14% in constant currency
terms, representing a 48.1% market share3. Our factoring portfolio also saw strong growth, reaching GEL 243 million—an
18% year-on-year increase on a constant currency basis.
GROWTH IN TRANSACTIONAL BANKING SERVICES ACROSS ALL FRONTS
Our strategic focus on transactional banking led to a 23% year-on-year increase in non-interest income. This was driven
by the launch of a subscription-based FX pricing model on our mobile and internet banking platforms. This innovative
feature allows clients to execute transactions digitally, access personalised exchange rates tailored to their performance
across any currency pair, and operate without the need for intervention from an FX manager.
We have also introduced an additional FX functionality designed to enhance business client convenience. This new
feature enables the Bank to prepare negotiated FX orders on behalf of clients and deliver them directly to their Internet
Banking platform. Clients can then approve these orders with a single click. The process not only saves time but also
significantly reduces transaction duration and errors, as it is entirely digital and free from manual input. As a result of
these innovations, the total volume of FX transactions reached GEL 28.8 billion in 2024, up 33% year-on-year.
In cash management, we offer our clients a unique opportunity with our exclusive bulk cash depository machines
(CDMs), offering seamless support for managing large cash volumes. With over 100 CDMs across our branches, this
service has become essential to our customers. In 2024, responding to increased demand, we enhanced this offering
by introducing the ability to collect USD in our CDMs. As a result, cash management volumes from corporate clients
grew by 13% year-on-year, reaching GEL 7.8 billion. This service represents a significant additional source of fee and
commission income, further bolstering our revenue streams.
ENHANCING DIGITAL EXPERIENCE
Throughout 2024, we have managed the credit process in a digital environment, integrating automation at every stage—
from project processing to disbursement. This optimisation digitalised each step, significantly streamlining operations
and enhancing efficiency. This digital shift reduced time-to-cash by 30%, boosting overall efficiency and providing
faster, more seamless experiences for our clients.
In 2023, we introduced a digital platform enabling clients to sign legal documents remotely, entirely online. By 2024, 76%
of all agreements were signed electronically, saving clients time and eliminating the need for thousands of printed pages.
This achievement underscores our commitment to convenience, efficiency, and sustainability.
1
Net Promoter Score (NPS) was measured internally in December 2024.
2
Based on internal estimates as of 31 December 2024.
3
Based on the National Bank of Georgia (NBG) published data as of 31 December 2024.
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Silk Real Estate
Silk Real Estate, Georgia’s leading real estate management company
and a member of Silk Road Group, oversees upscale hotels, luxury
residential projects, renowned restaurants, and leisure facilities.
Focused on bespoke guest experiences and sustainability, the company
operates Radisson Blu hotels in Tbilisi, Batumi, and Radisson Collection
in Tsinandali Estate. Silk Real Estate recently joined the Sustainable
Hospitality Alliance to promote eco-friendly practices.
TBC Bank has been Silk Real Estate’s trusted partner since 2016 and
is supporting its expansion with the new five-star Hotel Telegraph
in Tbilisi. This 239-room property, part of the Republic Square
development, will feature bar and restaurant areas, event spaces, a gym,
and a jazz club, enhancing Tbilisi’s cityscape.
Additionally, TBC Capital acted as joint lead manager for Silk Real
Estate’s first bond placement, raising USD 40 million and EUR 7 million.
This milestone drew strong interest from local and international
investors, testament to the company’s ongoing success. TBC Bank
remains dedicated to supporting Silk Road Group’s growth and
innovation in Georgia’s hospitality sector.
BUSINESS REVIEW CONTINUED
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
42
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
INVESTMENT BANKING AND WEALTH MANAGEMENT
TBC Capital is a leading provider of investment banking solutions and Georgia’s largest research house, offering a
comprehensive range of customised services in brokerage and finance advisory. We serve high-net-worth individuals,
retail investors, corporations, and financial institutions across Georgia and the Caucasus region.
DRIVING CAPITAL MARKET DEVELOPMENT AND INNOVATION IN GEORGIA
Georgia’s debt capital market continues to develop, fueled by growing interest from local corporate issuers in 2024.
During the year, TBC Capital has maintained its position as the dominant player, with a market share1 of c.60%, and
solidified our leadership in the debt capital market.
In 2024, we successfully acted as the Lead Manager for several notable transactions. This includes the first tranche of
Nikora Trade JSC’s GEL 120 million bond programme - a GEL 60 million issuance, which stands as the largest GEL-
denominated corporate bond of the year. Additionally, TBC Capital served as Lead Manager for four public issuances by
Tegeta Motors, which were successfully diversified across GEL, USD, and EUR. It is noteworthy that Georgian corporates
actively participated in the Eurobond market in 2024, completing three issuances. TBC Capital also played a role in
advancing sustainable finance. The green bonds issued by Georgia Global Utilities (GGU) in July 2024, where we acted
as Co-Manager for the USD 300 million issuance, are listed on Euronext Dublin, while we also actively participated in the
sustainability bonds issued locally by BasisBank. TBC Capital remains committed to supporting the growth of Georgia’s
capital market.
ADVANCING INVESTMENT ACCESS WITH INNOVATIVE DIGITAL SOLUTIONS
In 2024, we continued to develop the investment platform in TBC’s mobile bank by adding more advisory and automated
portfolio management services. This platform provides a convenient and commission-free investing experience for over
6,500 equities and exchange-traded funds listed on American Stock Exchanges and reflects our commitment to making
sophisticated financial services accessible to a wider demographic.
During the year we also launched a new multi-asset and cross-device trading platform with advanced trading and
analytical tools designed for TBC Capital’s more sophisticated investment clients. The platform is designed with an
efficient, low-cost execution and custody chain, providing our clients with seamless access to global equity markets.
DELIVERING INSIGHTFUL RESEARCH
Our research division supports decision-makers with comprehensive and timely macroeconomic and sector-specific
analyses relating to Georgia and the broader regional landscape. This includes consistent weekly, monthly, and quarterly
publications. We consistently expand our content to include new offers, including new exclusive reports for our clients.
During 2024, TBC Capital also held more than 40 individual and large-scale presentations and conferences with clients
and wider audiences on such topics as Energy & Insurance industries. In aggregate, TBC Capital delivered up to 200
publications in 2024, and the complete list can be accessed at www.tbccapital.ge. Moreover, over the course of the
year, TBC Capital ran several large-scale conferences catering to both local and international stakeholders invested in
Georgia.
EXPANDING OUR REACH AND ENHANCING SOLUTIONS IN WEALTH MANAGEMENT
Our Wealth Management team continues to offer a wide range of personalised banking and investment products to our
clients, as well as exclusive lifestyle benefits for premium events in the country. In 2024, we focused on attracting new
clients and enhancing our services and product offerings:
• We have significantly strengthened our team with the appointment of a new Head of Wealth Management. With
over 25 years of experience in the international banking sector, our new leadership brings extensive expertise in
wealth management, driving a more streamlined process for delivering exceptional client service and strategic
growth. This new leadership will play a key role in delivering exceptional value to our clients and reinforcing our
position as a leader in the industry.
• We have intensified our efforts to attract non-resident clients by enhancing the account opening process, making
it easier and more convenient. To this end, we introduced a video on-boarding platform for our wealth management
clients that enables us to open accounts and initiate services remotely without the need for clients to physically visit
a bank branch.
• Furthermore, we broadened our range of diversified investment products, incorporating a range of strategies to
better align with the evolving needs and preferences of our clients. We also extended our reach within Georgia
by establishing a new branch in Batumi, the second largest city of Georgia, further enhancing our presence in the
country.
As a result of these initiatives, our total WM assets under management (AUM) increased by 20% in 2024 to GEL 4.4 billion
by year-end.
In 2024, we hosted the inaugural WM Forum, an event designed to broaden and deepen the understanding of our
international partners and international prospective clients about Georgia, Georgia’s banking sector, and our Bank’s
wealth management capabilities. The goal of the conference was to promote Georgia as an attractive investment
destination and wealth management booking centre and to introduce our domestic and international investment
banking and brokerage services, as well as to showcase the country’s unique culture and hospitality.
Awards
1
Market share calculations include both public and private corporate bond placements in the local market, excluding back-to-back transactions
involving International Financial Institutions (IFIs) and Eurobond transactions, during 2024.
The Best
Treasury & Cash
Management
Bank 2024
The Best
Corporate Bank
in Georgia 2024
Market Leader
and Best Service
Provider in
Trade Finance
in Georgia 2024
The Best
FX Bank in
Georgia 2024
Global Finance
Euromoney
The Best
Private Bank in
Georgia 2024
The Best
Private Bank in
Georgia 2024
The Best
FX Bank in
Georgia 2024
The Best
Investment Bank
in Georgia 2024
44
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
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MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
Capital Markets
International Conference
In response to the dynamic growth of the local capital market, TBC
Capital achieved a significant milestone by hosting Georgia’s first-
ever annual Capital Markets International Conference in Tbilisi. The
conference had over 350 attendees and featured leading entities from
both local and international capital markets, including J.P. Morgan,
Citi, Fidelity Investments, the National Bank of Georgia, the Ministry of
Economy and Sustainable Development of Georgia, Baker McKenzie,
Dentons, BLC Law, Amundi, ADB, EBRD, IFC, along with Georgian
issuers, and others. During the conference, participants discussed
their capital market experiences, current market trends, and future
development prospects.
BUSINESS REVIEW CONTINUED
47
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46
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
BUSINESS REVIEW CONTINUED
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
TBC Leasing
In 2024, we focused on strengthening our position in both the MSME and Retail
segments. As a result, our total leasing portfolio increased by 17% year-on-year on a
constant currency basis, reaching GEL 444 million.
MEASURING SUCCESS IN 2024
1
Based on internal estimates.
2
Based on UK Good Governance Fund, Leasing Market Research.
AT A GLANCE
A wholly owned subsidiary of TBC Bank, TBC Leasing offers an alternative source of financing to our retail and MSME
clients. As of the end of 2024, it had an 86.3% share1 of the leasing market.
Our technical expertise and specialised knowledge allow us to provide comprehensive asset finance solutions coupled
with complementary advisory services. These include financial leasing, operating leasing, and sale and leasebacks. We
serve customers all across Georgia, reaching them through authorised dealerships, vendors, direct sales channels, and
TBC Bank branches. Leveraging TBC Bank’s extensive sales network gives us a significant competitive edge.
YEAR IN REVIEW
In 2024, we focused on broadening our presence in both the MSME and Retail segments. Through deep market analysis and
close client collaboration, we gained valuable insights into the evolving financial needs and preferences of our customers.
In order to support the MSME segment, we successfully secured substantial financial resources from our partner
International Financial Institutions in 2024, inlcuding a EUR 10 million credit facility from Cassa Depositi e Prestiti (CDP),
the Italian Financial Institution for International Development Cooperation. This milestone transaction marked CDP’s first
investment in Georgia, establishing a historic precedent in the country’s financial sector by attracting new international
institutional capital. The facility is aimed at enhancing financial inclusion and promoting local entrepreneurship.
In the retail segment, we introduced several new services:
• Vehicle trade-in service: this innovative service allows retail customers to easily trade in their old vehicles while
purchasing new ones through a streamlined, one-stop process. At any TBC Leasing branch, customers can present
their vehicles for assessment, after which the evaluated value is applied to the purchase of a new car. The remaining
balance can then be financed through leasing, offering a seamless and customer-centric experience.
• Motorcycle leasing: this service allows customers to finance their chosen motorcycle in a single day. It requires
no additional collateral and offers a minimal down payment, ensuring a fast and accessible financing solution for
motorcycle enthusiasts.
• Specialised leasing product tailored for taxi drivers: this offering enables customers to either acquire a new vehicle
or upgrade an existing one.
In addition, we have improved our customer engagement by increasing our touchpoints across various channels.
As part of our targeted marketing initiatives, we have advertised across radio platforms to enhance brand visibility,
engaged cinema audiences through pre-show videos to capture a diverse demographic, and leveraged Google Ads to
strategically target potential customers through digital channels. We have also advertised on TikTok, not only boosting
top-of-mind awareness (TOM), but also generating valuable leads. In addition, we collaborated with influencers and
YouTubers to further extend our reach, enhance brand recognition, and drive customer acquisition.
As a result, our total leasing portfolio grew by 17% year-on-year on a constant currency basis in 2024, reaching GEL 444
million. The MSME portfolio increased by 8% year-on-year on a constant currency basis, amounting to GEL 378 million in
2024, while the retail portfolio expanded by 110% over the same period on a constant currency basis, comprised of new
cars, used cars and other retail products.
LOOKING AHEAD
The Georgian leasing market has grown at a 7.3% 5-year CAGR, and there remains significant growth potential due to its
relatively low penetration. Currently, leasing volumes represent only about 1% of Georgia’s GDP, which is considerably
lower than peer countries, where leasing typically makes up 4-5%2 of GDP. We believe TBC Leasing is well-positioned to
capitalise on the continued structural growth of this market.
86.3%
(2023: 86.2%)
MARKET SHARE1
GEL 40 mln
(2023: GEL 32 mln)
GREEN LEASING
PORTFOLIO
(2023: GEL 377 mln)
GEL 444 mln
TOTAL LEASING
PORTFOLIO
(2023: GEL 19.6 mln)
GEL 20.3 mln
NET PROFIT
MSME LEASING
PORTFOLIO (GEL MLN)
31 Dec
2023
31 Dec
2024
345
378
RETAIL LEASING
PORTFOLIO (GEL MLN)
31 Dec
2023
31 Dec
2024
32
66
48
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR CUSTOMERS
Our customers
We are dedicated to making our customers’ lives easier. Through innovative digital
solutions and personalised services, we work to create seamless experiences for
individuals and businesses.
MEASURING SUCCESS IN 2024
Customer experience (CX) is a top priority for TBC and we tailor our products and services to meet the evolving
needs of all customers. We support financial inclusion by ensuring both physical and digital accessibility. We provide a
comprehensive network of branches, ATMs, and self-service terminals in Georgia, including in remote areas. At the same
time, we continue to expand our digital services, driving significant growth in digital adoption, with a 14% increase in
monthly active users in Georgia in 2024.
MANAGING CUSTOMER EXPERIENCE AND SATISFACTION
We operate a Customer Experience Competence Centre (CX Centre), which is responsible for developing and refining
strategies to enhance customer satisfaction, loyalty, and engagement across the Bank. The CX Centre comprises a
Service Culture Lead, Customer Experience System Lead, as well as Customer Experience Partners (CX Partners) and
an Employee Experience Partner. The Leads focus on improving the company’s service culture and CX management
systems through a variety of projects and initiatives. CX Partners serve as a bridge between our customers and internal
teams, gathering customer feedback to guide the development of new products and improve existing processes.
Meanwhile, the Employee Experience Partner addresses employee concerns, ensuring they have the best possible
experience within the company.
We also run a CX Committee at the executive level, comprised of senior leaders from key business units and CX Partners.
This Committee oversees the work of the CX Partners, ensuring alignment with broader strategic goals. CX Partners
regularly report to the CX Committee, highlighting pain points, proposing solutions, and recommending changes to
continuously improve the customer experience.
To further enhance our service culture, over the past year the CX Competence Centre has implemented several key
initiatives:
• Launched a micro-bug system, allowing employees to quickly address issues with any product or service, ensuring
timely resolutions.
• Introduced the TBCX Awards to recognise employees who excel in their roles, based on customer satisfaction
results.
• Continued to elevate customer experience in our contact centre and branches by conducting workshops for
frontline middle management, strengthening their service leadership capabilities.
• Promoted the creation of memorable interactions through our “WOW Experience” guideline, which generated 180
WOW ideas, with the top 10 ideas receiving awards.
• Began work on ensuring our branches and online channels are accessible to individuals with disabilities, including
implementing standards for serving visually impaired customers.
1
The Net Promoter Score (NPS) was measured based on a survey conducted by the independent research company Sonar in December 2024.
2
The Net Promoter Score (NPS) was measured based on a survey conducted by the independent research company Anova in December 2024.
3
Based on internal estimates, for Georgian corporate businesses as of 31 December 2024.
63%
RETAIL NPS1
(2023: 67%)
69%
CONCEPT NPS2
(2023: 65%)
We manage a comprehensive Complaints Management System to ensure that every customer concern is addressed
both efficiently and effectively. Customers can submit complaints through various channels, including branches and
online platforms. Each complaint is evaluated in accordance with legal guidelines and resolved in a timely manner. In
2024, we handled up to 7,040 complaints, achieving a 62% resolution rate, further demonstrating our commitment to
customer satisfaction and prompt issue resolution. Over the same period, the Customer Support Department identified
and addressed 816 pain points to proactively prevent claims and issues.
Regular client feedback plays a crucial role in our continuous improvement efforts. Each year, we engage with over half a
million participants through internal and external surveys to monitor our Customer Satisfaction Index (CSI). In addition,
we leverage Medallia, a leading international CX management platform, to gather real-time feedback from our mobile
and internet banking platforms immediately after transactions, enabling us to promptly address customer concerns and
enhance the overall user experience.
The Net Promoter Score (NPS) is a key metric we use to measure customer loyalty and satisfaction. Since 2023, we began
segmenting the NPS by business lines. This approach provided deeper insights into the unique needs and experiences
of each customer segment, allowing us to tailor strategies for more targeted improvements and stronger customer
relationships.
PROTECTING CUSTOMERS’ PERSONAL INFORMATION
As we continue to expand our digital infrastructure, we remain committed to safeguarding the personal information of
our customers, employees, and business partners. Our comprehensive Data Protection Policy (DPP) ensures compliance
with all relevant regulations including GDPR and domestic personal data protection law. The Bank’s data protection
officer oversees compliance with relevant DPP requirements and works closely with all departments to promote a culture
of privacy. To meet the regulatory requirements, we conduct regular risk assessments, define mitigation strategies, and
monitor the fulfillment of the agreed action plan. Additionally, we work closely with Bird & Bird GDPR Representative
Services SRL, our EU representative, to oversee data processing, handle complaints, and liaise with regulatory authorities.
TBC also has a comprehensive Information Security Policy that outlines the company’s approach to safeguarding
information. Our ISO 27001-certified Information Security Management System (ISMS) covers policies for IT operations,
cloud security, cyber security incident management, business continuity, and information security risk management.
Our Data Leak Prevention System actively monitors for potential breaches, while our Access Control Policy ensures that
employees only have access to data relevant to their roles. Notably, no significant data breaches were reported in 2024.
Maintaining a strong risk culture is crucial to us, and employee training plays a key role in this effort. Our staff regularly
have training on data privacy protocols. In 2024, we further strengthened our security measures by providing specialised
data privacy training to nearly 7,200 employees.
82%
CIB NPS3
(2023: 81%)
50
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR CUSTOMERS CONTINUED
TBCX Award
The TBCX Award, held annually, celebrates individuals and teams who excel
in delivering exceptional customer and colleague care. At the 2024 TBCX
Awards, we honored outstanding contributions to customer experience,
including:
• Top customer-centric employees at branches and the Customer Care
Centre, based on customer satisfaction surveys;
• Exceptional internal service teams recognised for outstanding support
to colleagues;
• Teams resolving key pain points for customers and employees;
• WOW experience award for creating positive and memorable customer
moments.
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR EMPLOYEES
Our employees
We are committed to fostering a safe, thriving workplace that encourages personal
growth, values diversity, equity, and inclusion, and empowers every team member.
By doing so, we ensure our employees receive the highest quality support and
development opportunities.
MEASURING SUCCESS IN 2024
OVERVIEW
At TBC, we are committed to fostering an organisational culture that is both supportive and empowering. Our vision is
to provide equal opportunities for professional growth while prioritising a healthy work-life balance for our employees.
We strive to create an inclusive environment where collaboration, respect, and cultural diversity thrive. By encouraging a
global perspective, we aim to inspire innovation and foster a sense of belonging across our workforce.
Our leadership team, led by the CEO, plays a pivotal role in shaping and upholding our corporate values. Through
regular communication, strategy updates, and key achievement sharing, we ensure alignment and engagement across
the organisation. We also host diverse activities to gather feedback and maintain a dynamic cultural environment that
resonates with our team.
Recognising and celebrating employee achievements is central to our approach. We regularly share success stories
through internal communication channels and have implemented reward programmes to promote service excellence
and customer satisfaction.
Employee feedback is a cornerstone of our strategy. Our annual fully anonymous Employee Engagement Survey provides
invaluable insights into satisfaction and workplace attitudes. These findings are analysed and presented to the executive
team and Supervisory Board to inform strategic decisions. In 2024, our ENPS declined by 7pp year-on-year and stood at
51%. The decrease was related to the structural changes aimed at enhancing efficiency and agility. We remain committed
to maintaining a high level of employee satisfaction.
OUR MAIN STRATEGIC PRIORITIES
Talent acquisition and remuneration
We are committed to developing a world-class ecosystem for talent acquisition and professional development. Our
proactive approach encompasses rigorous monitoring of labour market trends in Georgia and other international
markets. This broad outlook allows us to attract top-tier professionals globally, particularly in key areas such as business
operations, finance, risk management, and information technology.
51%
EMPLOYEE NET
PROMOTER SCORE1
(2023: 58%)
37%
WOMEN IN MIDDLE
MANAGERIAL POSITIONS2
(2023: 37%)
85%
ENGAGEMENT
INDEX3
(2023: 88%)
To nurture the next generation of talent, we have implemented a highly regarded internship programme targeting
entry-level positions in our back-office operations. This initiative allows us to identify and recruit exceptional students
from Georgia’s premier academic institutions. Upon successful completion of a comprehensive one-year internship,
top-performing candidates are offered employment opportunities across various departments, including finance, risk
management, corporate affairs, marketing, IT, and data analytics.
Furthermore, we have forged robust partnerships with local universities and colleges, actively participating in job fairs,
conducting campus visits nationwide, and engaging in diverse marketing initiatives. These collaborative efforts are
designed to attract recent graduates across a broad spectrum of roles and foster a diverse, dynamic workforce.
We provide our employees with comprehensive and competitive remuneration packages that include a base salary,
performance-based bonuses, and a robust benefits package. This package features health insurance, critical illness and
life insurance coverage, paid sick leave, and six months of fully-paid maternity and paternity leave. Additional benefits
include a social assistance package in case of marriage, childbirth, and family member support, paid days off for all
employees and extra paid days off for employees with more than two children, as well as special social payments for
employees with more than four children.
Learning and development
TBC provides a comprehensive range of learning and development resources to its employees via TBC Academy,
tailored leadership development programmes, IT education and international qualifications.
• TBC Academy continued to offer various courses this year, such as Business, Agile, Law, and BrandX, with
participation from over 850 employees;
• TBC Leadership Academy delivered a training programme for middle managers in collaboration with highly rated
local and international organisations, including Bled School of Management and DEVELOR International. A total of
186 leaders participated in these courses, which covered critical topics such as Strategic Mindset, Collaboration,
Personal Development and Well-Being, Communication, Team Leadership, and Workplace Self-Intelligence;
• Since 2019, our internal IT Academy in Tbilisi has been a hub for tech education, offering courses in front-end and
back-end development, DevOps, and more. These courses are available free of charge to both our employees and
potential candidates. Led by experienced staff and industry professionals, the Academy has trained over 2,000
individuals from outside the organisation and 2,000 within, bringing in more than 400 skilled professionals to TBC
Group;
• We provide financial support to our employees to attend various external courses and gain international
certifications such as MBA, CFA, FRM, ACCA and others. More than 1,450 employees took part in these
programmes during 2024;
• In 2024, TBC introduced an AI-powered search platform to enhance operational efficiency and employee support.
Developed in collaboration with our Data Science team, this enterprise-wide tool helps employees quickly access
accurate information by analysing company documents. The platform serves two key functions:
– Knowledge base – provides comprehensive information on the Bank’s products and services, enabling front-line
employees to efficiently address customer inquiries;
– HR operations – streamlines internal processes by offering quick answers to HR-related questions, such as
vacation policies, insurance, and employee benefits, improving overall employee experience.
In 2024, TBC successfully launched an Employee Well-Being programme that included 440 employees across the
Group. This initiative focused on enhancing awareness of mental and physical health through activities such as art
therapy, motivational workshops, and seminars. All these initiatives were developed and implemented based on direct
feedback from our employees.
Performance management
Our performance management system is designed to boost productivity, foster open communication, and provide
constructive feedback. Aligned with the Group’s strategic goals, it emphasises clarity, fairness, and transparency. By
connecting individual goals with TBC’s priorities, we create an environment where both employees and the organisation
can grow. This approach supports personal development while driving organisational success toward our shared vision.
1
The Employee Net Promoter Score (ENPS) was measured in the last quarter of 2024 by an independent consultant for the Bank’s employees.
2
Branch managers, division and department heads, as well as mid-senior level positions at the Group’s subsidiary.
3
Engagement Index was measured in December 2024 by an independent consultant for the Bank’s employee’s and measures how much
employees feel involved and committed to TBC Bank.
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR EMPLOYEES CONTINUED
Key Performance Indicators (KPIs) form the foundation of our performance management system, cascading from
the Group’s overarching strategic goals down to specific, measurable outcomes for each employee. These KPIs are
directly aligned with TBC’s core objectives, such as financial performance, customer satisfaction, market expansion,
and operational efficiency. Leaders play an integral role in this process by translating high-level strategic goals into
actionable, measurable plans.
Using the SMART framework—Specific, Measurable, Attainable, Relevant, and Time-bound—KPIs provide clarity in
expectations and accountability for results. This approach offers employees a clear roadmap to success while ensuring
progress can be effectively tracked and measured. Depending on the business line, KPIs and targets may be set on a
monthly, quarterly, or annual basis, allowing for flexibility in meeting the distinct demands of each department.
To promote employee growth and development while supporting the achievement of KPIs, we leverage both the
Individual Development Plan (IDP) and the 360-degree feedback process. These tools are designed to ensure tailored
development opportunities and comprehensive performance insights for each team member.
• In collaboration with their managers, employees create IDPs that align personal development goals with the needs
of the organisation. These plans serve as personalised roadmaps for skills enhancement and career progression.
Managers are actively involved in reviewing and refining these plans, ensuring they are practical, achievable,
and tailored to the employee’s aspirations. By providing the necessary resources and support, managers enable
employees to achieve their developmental milestones and grow within the organisation;
• The 360-degree feedback process is a comprehensive evaluation system that gathers insights from peers,
subordinates, and managers, providing a holistic view of performance and competencies. Leaders are expected to not
only provide feedback but also facilitate a culture of continuous improvement. By incorporating multiple perspectives,
the process encourages transparency, celebrates individual strengths, and identifies areas for development, creating a
culture that nurtures both professional growth and team cohesion.
Diversity, equality and inclusion
We remain committed to building a diverse workforce that drives innovation, enhances decision-making, and fosters
a dynamic work environment. By bringing together varied experiences and perspectives, we are better equipped to
understand diverse customer needs, adapt to evolving market demands, and develop inclusive solutions. We place a
strong emphasis on empowering women and supporting their professional growth. Also, we have elaborated a long-term
approach for women to excel in middle management roles and break barriers in traditionally male-dominated fields such
as ICT and finance. To ensure progress, our ESG strategy outlines clear targets and action plans aligned with these goals.
Key initiatives include implementing a gender-disaggregated reporting system to monitor trends, providing onboarding
training for middle managers and HR specialists on gender-sensitive practices, ensuring gender-balanced applicant
pools, and incorporating gender-inclusive language in job descriptions.
We are guided by our Diversity, Equality, and Inclusion Policy, which provides a clear framework for integrating these
principles across all areas of the Group’s activities. This includes fostering inclusivity within our company, promoting
diversity in the marketplace, and making a positive impact in the broader community. The policy is available at: www.
tbcbankgroup.com.
Affirming our commitment as proud endorsers of the Women’s Empowerment Principles (WEPs), we pledge to actively
champion gender equality and amplify our dedication through public forums. Each year, we participate in the annual
assessment of WEPs signatory companies, conducted by UN Women Georgia, to report our data, progress, and thematic
activities or projects implemented in alignment with each principle
As part of our steadfast commitment to equality, diversity, and inclusion, we place a strong emphasis on training
initiatives that foster awareness and understanding among our employees. At TBC, all employees undergo mandatory
training on topics such as gender equality, diversity, sexual harassment, stereotypes and discrimination, and various
forms of violence. Additionally, we organise interactive face-to-face sessions designed to promote a healthy and
inclusive work environment. These sessions blend theoretical knowledge with practical exercises, encouraging active
participation and meaningful discussions to drive positive change across the organisation.
AI-powered search platform
In 2024, TBC introduced an AI-powered search platform to enhance
operational efficiency and employee support. Developed in collaboration
with our Data Science team, this enterprise-wide tool helps employees
quickly access accurate information by analysing company documents.
The platform serves two key functions:
1. Knowledge base – provides comprehensive information on the Bank’s
products and services, enabling front-line employees to efficiently
address customer inquiries;
2. HR operations – streamlines internal processes by offering quick answers
to HR-related questions, such as vacation policies, insurance, and
employee benefits, improving overall employee experience.
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR EMPLOYEES CONTINUED
GENDER PAY GAP1
We regularly review our pay levels and make sure that men and women are paid equally for doing the same type of job.
In 2024, our mean gender pay gap for the Bank’s employees was 46%, slightly increased compared to 2023 (44%), which
means that, on average, men received higher remuneration than women (mean gender pay gap in hourly pay). This is
mainly due to the higher number of women being employed in junior roles, including front-office customer service
positions. While for middle management, the mean gender pay gap was -3% in 2024 and -17% in 2023, which means that
women were better remunerated than men. We remain committed to achieving a better gender balance and increasing
the proportion of women working in senior and middle-level roles.
COMMITMENT TO ETHICS, DIVERSITY, INTEGRITY, AND RESPONSIBILITY
TBC Group is committed to conducting business with the highest ethical standards, respecting human rights,
addressing environmental and community concerns, and fostering a culture where employees act with integrity,
responsibility, and mutual respect toward each other and all stakeholders.
To support this commitment, we have established a comprehensive set of Group-level policies, which are closely
monitored for adherence. These policies are regularly reviewed and updated to ensure they remain effective and
relevant.
These policies can be found on our website at www.tbcbankgroup.com and are comprised of:
• Code of Conduct and Ethics;
• Diversity, Equality and Inclusion Policy;
• Human Rights Policy;
• Anti-Financial Crime Policy;
• Incident Response Policy (Whistleblowing Policy);
• Global Data Protection Policy;
• Environmental and Climate Change Policy.
We also have an Employee Protection Policy Against Discrimination, Violence, and Harassment at the Bank level which
can be accessed at www.tbcbank.com.ge.
In 2024, we conducted mandatory training sessions tailored to various employee groups based on their specific
job responsibilities in the following areas: healthy work environment, environmental issues, code of conduct, data
and information security, fraud and operational risks, anti-corruption, anti-bribery, ethical issues and anti-money
laundering and sanctions. By the end of the year, more than 8,100 employees had successfully completed these training
programmes.
GENDER DISTRIBUTION ACROSS DIFFERENT POSITIONS*
Full Bank
72%
28%
63%
37%
18%
82%
* The data in the given table is presented for the Bank only
39%
61%
Middle
management
Front office
Back office
Female
Male
SUPERVISORY BOARD*
Female
Male
2022
2023
2024
29%
38%
38%
71%
62%
62%
EXECUTIVE COMMITTEE**
2022
2023
2024
17%
20%
25%
83%
80%
75%
MIDDLE MANAGERIAL POSITIONS***
2022
2023
2024
36%
37%
37%
64%
63%
63%
ALL EMPLOYEES
2022
2023
2024
69%
68%
69%
32%
31%
31%
* Throughout 2022, we had three female non-executive directors until Maria Luisa Cicognani stepped down from the Supervisory
Board in September 2022. On June 26, 2023 Janet Heckman was appointed to the Supervisory Board of JSC TBC Bank
** The data for 2022 and 2023 is presented for the Executive Management team. Executive Committee was established in 2024
*** Branch managers, division and department heads, as well as mid-senior level positions at the Group’s subsidiary
We have a diverse team consisting of experienced professionals and young, talented individuals fresh from top
universities in Georgia and abroad. We strongly believe that this mix of ages fosters a dynamic, high-performing team,
resulting in better outcomes.
AGE DIVERSITY STATISTICS AS OF DECEMBER 2024
30-39
Under 29
40-49
Over 50
13%
42%
42%
3%
1
The gender pay gap is calculated as of April 2024.
The tables below show the data at the Group level
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR COMMUNITY
Our community
We recognise our responsibility to drive positive social change and are dedicated to
building a brighter future for the communities we serve. Our diverse range of impactful,
sustainable corporate social responsibility (CSR) initiatives focuses on promoting
business growth, empowering young people and women, and supporting culture and
sports.
OUR CSR ACTIVITIES
Fostering MSME growth and entrepreneurship
In the constantly changing business environment, micro, small, and medium enterprises (MSMEs) are crucial drivers of
economic growth and entrepreneurship. TBC Bank, with its strong understanding of the specific challenges MSMEs
face, remains committed to empowering these businesses, helping them succeed and contribute to the nation’s
prosperity. For more detailed information on these initiatives, please refer to the MSME section on pages 36-39.
Empowering the younger generation
TBC has a long-standing tradition of supporting young talents, many of whom have grown into successful artists,
scientists, and professionals excelling in various fields both in Georgia and internationally. In 2024, TBC reaffirmed its
dedication to empowering the next generation through the following initiatives:
• The TBC Scholarship Programme concluded its impactful journey, marking the completion of one of Georgia’s
largest social responsibility initiatives since its launch in 2018. Over the years, TBC has partnered with 14
organisations specialising in children’s education and development, awarding scholarships to nearly 400
schoolchildren with exceptional talents in science, sports, and the arts.
• TBC Bank continued its general sponsorship of the Tbilisi 2024 International Book Festival, an event with a 27-year
legacy that has grown into one of Georgia’s largest educational fairs. The festival has become a dynamic platform
for connecting with the younger generation, with nearly 40% of its attendees belonging to Gen Z.
• With the general support and sponsorship of TBC, the TEDxTbilisi Youth event took place in 2024, bringing together
young thinkers and innovators. As part of the larger TEDxTbilisi initiative, this event serves as a platform for youth to
share their ideas and perspectives, fostering a culture of dialogue and creativity among younger generations. TBC’s
contribution included financial and communication support.
• In partnership with Geolab, TBC launched fully funded online technology courses for students in grades 9-12 as
part of the Tech School programme. As one of the company’s largest educational initiatives, this project benefits
students from all regions of Georgia. The programme provides three-month online courses in seven different
technological fields. By the end of 2024, Tech School had over 1,000 graduates throughout Georgia.
• TBC IT Academy continued to offer fully funded, intensive courses in high-demand IT fields for individuals aged
18 and above, successfully graduating over 2,000 students from across Georgia. This initiative reflects TBC’s
commitment to fostering tech talent and bridging the skills gap in the fast-evolving IT sector.
• Technovation Girls is a programme designed to empower girls aged 13 to 18 by enhancing their skills in technology
and entrepreneurship. Since 2023, TBC has been a main sponsor of this initiative. The programme encourages
participants to address real-life challenges by developing technological solutions that they create through an online
learning process.
• TBC Campus is a programme designed to offer free professional courses to young people aged 18-24 across
Georgia. Its goal is to equip students with vital skills in high-demand fields such as UI/UX Design, Graphic Design,
Advertising Content Creation, Digital Marketing, SEO, Business and Entrepreneurship, IT Project Management, and
Data Analysis. The programme is fully funded by TBC and delivered online, removing financial and geographical
barriers and providing access to top experts in these fields for young people throughout the country. The
programme’s design allows students from diverse educational and professional backgrounds to collaborate,
work on joint projects, and gain experience in a diverse environment. Launched in October 2024, the programme
enrolled 310 students in its first intake.
Creating equal opportunities for women
In 2024, we continued to support our existing projects in this area:
• For the fourth consecutive year, TBC and the USAID Economic Security Programme jointly hosted the Grace Hopper
Award, which honours outstanding women in the information and communication technology (ICT) industries across
six categories. The award also acknowledges individuals and organisations that have made significant contributions
to empowering women in the ICT industry and driving positive change within the sector in Georgia.
• The “500 Women in Tech” project is a vital initiative designed to eliminate gender bias in Georgia’s tech industry.
Developed in collaboration with the Business and Technology University of Tbilisi, UN Women, and the Government
of Norway, this 18-month programme provided women with the opportunity to pursue various professions in the tech
sector. A key aim of the programme was to empower women through continuous learning and skill development. To
advance this mission, more than 60 participants received additional training from TBC IT Academy after completing
the project’s courses.
Preserving cultural heritage
• Since 2003, TBC has been the main sponsor of the SABA Literary Award, the biggest and preeminent literary event
in Georgia. This year, up to 400 books were reviewed and 16 winners were chosen in 12 different categories, with
a prize fund of GEL 70,000. TBC and SABA also collaborate on www.saba.com.ge, the largest online platform for
Georgian electronic and audio books. The platform was established in 2012 and provides access to more than 7,500
audio and electronic books for approximately 400,000 users. In 2024, TBC sponsored an exhibition “The World
of the Etruscans. Treasure from the Museums of Chiusi, Civitavecchia, and Florence.” – organised by the Italian
Embassy. This exhibition included significant findings related to the Etruscan civilisation that were uncovered
during archaeological excavations in the Vani region of Georgia.
Promoting rugby development
TBC proudly supports the Georgian Rugby Federation, fostering collaboration across all levels of national teams,
including both male and female teams. Our partnership extends to the club level, featuring support for Georgia’s first
rugby franchise team, “Black Lion”. Established in 2021 to advance professional rugby in the country, Black Lion competes
in prestigious tournaments such as the Challenge Cup and the Rugby Europe Super Cup, proudly showcasing Georgian
rugby’s skill and potential on the international stage.
TBC is also committed to supporting the Georgian national youth rugby team, which plays a pivotal role in the sport’s
development within the country. The Under-20 team consistently excels in international competitions, regularly
participating in the World Rugby Under-20 Championship and the Under-20 Trophy, where they secure top rankings.
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR COMMUNITY CONTINUED
TBC Campus
Fully funded, online business courses for students from all across Georgia
TBC Campus is a fully funded online programme initiated by TBC,
offering free professional courses to 18-24-year-olds across Georgia. The
programme covers high-demand fields such as UI/UX Design, Graphic
Design, Advertising Content Creation, Digital Marketing, SEO, Business and
Entrepreneurship, IT Project Management, and Data Analysis. Launched in
October 2024, TBC Campus aims to equip students with vital skills, provide
access to top experts, and offer opportunities for collaborative project work,
effectively breaking down financial and geographical barriers.
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR INVESTORS
Our investors
FINANCIAL REVIEW
FINANCIAL DISCLOSURES
Consolidated income statement and other comprehensive income
Consolidated balance sheet
In thousands of GEL
31-Dec-2024
31-Dec-2023
Change YoY
ASSETS
Cash and cash equivalents
2,818,110
3,691,232
-23.7%
Due from other banks
20,153
11,135
81.0%
Mandatory cash balances with NBG
2,576,731
1,572,506
63.9%
Loans and advances to customers and finance lease receivables
24,620,005
21,329,327
15.4%
Investment securities
5,369,290
3,479,665
54.3%
Repurchase receivables
140,058
-
NMF
Investment properties
9,752
15,235
-36.0%
Current income tax prepayment
50,892
53
NMF
Deferred income tax asset
485
395
22.8%
Other financial assets
426,005
281,861
51.1%
Other assets
1,199,043
1,008,808
18.9%
Intangible assets
396,569
352,722
12.4%
Goodwill
28,197
28,197
0.0%
TOTAL ASSETS
37,655,290
31,771,136
18.5%
LIABILITIES
Due to credit institutions
7,316,632
4,346,951
68.3%
Customer accounts
21,941,222
19,942,516
10.0%
Other financial liabilities
373,905
276,496
35.2%
Current income tax liability
62
66,703
-99.9%
Deferred income tax liability
50,220
50,957
-1.4%
Debt Securities in issue*
1,172,101
1,264,085
-7.3%
Other liabilities
197,945
206,989
-4.4%
Subordinated debt
1,148,374
868,730
32.2%
TOTAL LIABILITIES
32,200,461
27,023,427
19.2%
EQUITY
Share capital
21,014
21,014
0.0%
Share premium
521,190
521,190
0.0%
Retained earnings
4,979,871
4,285,662
16.2%
Other reserves
(67,498)
(80,354)
-16.0%
Equity attributable to owners of the parent
5,454,577
4,747,512
14.9%
Non-controlling interest
252
197
27.9%
TOTAL EQUITY
5,454,829
4,747,709
14.9%
TOTAL LIABILITIES AND EQUITY
37,655,290
31,771,136
18.5%
* Debt securities in issue includes additional tier 1 capital subordinated notes
In thousands of GEL
2024
2023
Change YoY
Interest income
3,135,908
2,689,427
16.6%
Interest expense
(1,544,916)
(1,193,831)
29.4%
Net interest income
1,590,992
1,495,596
6.4%
Fee and commission income
677,004
571,391
18.5%
Fee and commission expense
(278,914)
(236,915)
17.7%
Net fee and commission income
398,090
334,476
19.0%
Net gains from currency derivatives,
foreign currency operations and translation
367,783
272,303
35.1%
Other operating income
16,515
29,080
-43.2%
Share of profit of associates
574
657
-12.6%
Other operating non-interest income
384,872
302,040
27.4%
Credit loss allowance for loans to customers
(109,510)
(130,380)
-16.0%
Credit loss allowance for other financial items and net impairment
for non-financial assets
(22,462)
(17,054)
31.7%
Operating income after expected credit and
non-financial asset impairment losses
2,241,982
1,984,678
13.0%
Staff costs
(439,830)
(385,471)
14.1%
Depreciation and amortisation
(118,283)
(99,643)
18.7%
Administrative and other operating expenses
(221,371)
(196,648)
12.6%
Operating expenses
(779,484)
(681,762)
14.3%
Net profit before tax
1,462,498
1,302,916
12.2%
Income tax expense
(217,782)
(183,858)
18.5%
Net profit
1,244,716
1,119,058
11.2%
Net profit attributable to:
- Shareholders of TBCG
1,244,661
1,119,025
11.2%
- Non-controlling interest
55
33
66.7%
Other comprehensive income, net of tax:
Other comprehensive income/(expense) for the period
26,179
7,450
NMF
Total comprehensive income for the period
1,270,895
1,126,508
12.8%
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR INVESTORS CONTINUED
Key ratios
Ratios (based on monthly averages, where applicable)
2024
2023
Change YoY
Profitability ratios:
ROE
25.1%
25.4%
-0.3 pp
ROA
3.7%
4.0%
-0.3 pp
Cost to income
32.8%
32.0%
0.8 pp
NIM
5.8%
6.3%
-0.5 pp
Loan yields
11.5%
12.0%
-0.5 pp
Deposit rates
4.7%
4.5%
0.2 pp
Cost of funding
5.4%
5.2%
0.2 pp
Asset quality & portfolio concentration:
Cost of risk
0.5%
0.7%
-0.2 pp
PAR 90 to gross loans
1.4%
1.1%
0.3 pp
NPLs to gross loans
2.2%
2.0%
0.2 pp
NPL provision coverage
61.7%
74.5%
-12.8 pp
Total NPL coverage
138.5%
145.3%
-6.8 pp
Credit loss level to gross loans
1.4%
1.5%
-0.1 pp
Related party loans to gross loans
0.1%
0.1%
0.0 pp
Top 10 borrowers to total portfolio
6.3%
6.3%
0.0 pp
Top 20 borrowers to total portfolio
9.1%
9.3%
-0.2 pp
Capital & liquidity positions:
Net loans to deposits plus IFI funding
99.9%
96.2%
3.7 pp
Leverage (x)
6.9x
6.7x
0.2x
Net stable funding ratio
123.9%
119.9%
4.0pp
Liquidity coverage ratio
125.5%
115.3%
10.2pp
CET 1 CAR
16.8%
17.4%
-0.6pp
Tier 1 CAR
20.4%
19.6%
0.8pp
Total 1 CAR
23.8%
22.1%
1.7pp
Definitions and detailed calculations of the APMs are provided in the section “Additional Information”, under “Alternative
Performance Measures”
PORTFOLIO ANALYSIS
Loan portfolio
As of 31 December 2024, the gross loan portfolio reached GEL 24,963.7 million, up by 15.3% year-on-year, or up by 14.1%
year-on-year on a constant currency basis.
Loan portfolio quality
In thousands of GEL
Gross loans and advances to customers
31-Dec-2024
31-Dec-2023
Change YoY
Retail
8,710,516
7,513,229
15.9%
CIB
9,863,777
8,283,723
19.1%
MSME
5,943,479
5,480,822
8.4%
Total gross loans and advances to customers*
24,963,655
21,656,248
15.3%
* Total gross loans and advances to customers include finance lease receivables, Azerbaijan and sub-segment eliminations
Loan yields
2024
2023
Change YoY
GEL
14.0%
15.1%
-1.1 pp
FC
8.9%
8.7%
0.2 pp
Total loan yields*
11.5%
12.0%
-0.5 pp
* Total loan yield include Azerbaijan and sub-segment eliminations
PAR 90
31-Dec-2024
31-Dec-2023
Change YoY
Retail
0.7%
0.8%
-0.1 pp
CIB
0.9%
0.7%
0.2 pp
MSME
2.9%
2.2%
0.7 pp
Total PAR 90*
1.4%
1.1%
0.3 pp
* Total PAR 90 include finance lease receivables, Azerbaijan and sub-segment eliminations
* Total NPLs include finance lease receivables, Azerbaijan and sub-segment eliminations
In thousands of GEL
Non-performing loans (NPL)
31-Dec-2024
31-Dec-2023
Change YoY
Retail
118,834
127,102
-6.5%
CIB
156,632
114,130
37.2%
MSME
263,460
183,829
43.3%
Total non-performing loans*
556,864
438,823
26.9%
NPL to gross loans
31-Dec-2024
31-Dec-2023
Change YoY
Retail
1.4%
1.7%
-0.3 pp
CIB
1.6%
1.4%
0.2 pp
MSME
4.4%
3.4%
1.0 pp
Total NPL to gross loans*
2.2%
2.0%
0.2 pp
* Total NPL to gross loans include finance lease receivables, Azerbaijan and sub-segment eliminations
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
HOW WE CREATE VALUE FOR OUR STAKEHOLDERS - OUR INVESTORS CONTINUED
31-Dec-2024
31-Dec-2023
NPL coverage
Provision coverage
Total coverage
Provision coverage
Total coverage
Retail
138.1%
201.1%
120.4%
179.5%
CIB
34.4%
106.0%
46.9%
110.6%
MSME
42.2%
126.3%
57.5%
136.0%
Total NPL coverage*
61.7%
138.5%
74.5%
145.3%
* Total NPL coverage include finance lease receivables, Azerbaijan and sub-segment eliminations
Cost of risk (CoR)
2024
2023
Change YoY
Retail
0.9%
0.8%
0.1 pp
CIB
0.1%
0.1%
0.0 pp
MSME
0.5%
1.4%
-0.9 pp
Total cost of risk*
0.5%
0.7%
-0.2 pp
* Total CoR include finance lease receivables, Azerbaijan and sub-segment eliminations
Deposit portfolio
As of 31 December 2024, the deposit portfolio reached GEL 21,941.2 million, up by 10.0% year-on-year, or up by 8.1% year-
on-year on a constant currency basis.
* Total customer accounts include sub-segment eliminations
In thousands of GEL
Customer accounts
31-Dec-2024
31-Dec-2023
Change YoY
Retail
8,478,788
7,469,587
13.5%
CIB
11,308,306
10,200,321
10.9%
MSME
2,043,554
1,900,459
7.5%
MOF
214,426
515,079
-58.4%
Total customer accounts*
21,941,222
19,942,516
10.0%
Deposit rates
2024
2023
Change YoY
GEL
7.8%
8.4%
-0.6 pp
FC
1.4%
0.9%
0.5 pp
Total deposit rates*
4.7%
4.5%
0.2 pp
* Total deposit rates include MOF yields and sub-segment eliminations
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
ADDITIONAL DISCLOSURES - RISK MANAGEMENT
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 Supervisory 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 Supervisory 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 Supervisory 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 Supervisory Board to make sure that they remain
aligned with the Group’s desired level of risk-taking.
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
ADDITIONAL DISCLOSURES - RISK MANAGEMENT CONTINUED
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.
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
idiosyncatic 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.
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MANAGEMENT REPORT
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ADDITIONAL DISCLOSURES - MATERIAL EXISTING AND EMERGING RISKS
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 Supervisory 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 2024
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 operational market – Georgia.
The political climate in Georgia has been strained following the parliamentary elections on October 26th, as opposition
parties opposed the 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 some participants. Consequently, the United States, the United Kingdom, and
several European countries have imposed personal sanctions on some government individuals, whereas the European
Union has suspended the visa-free travel for Georgian diplomats. While no further measures targeting the country or
its institutions in general have been implemented to date, continuous tensions and general uncertainty in the political
environment remain as a potential risk source in 2025 as well.
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. More broadly, political tensions at the end of the year had a negative, though rather moderate effect on tourism
and consumer spending on durable goods. Overall, while some signs of slowdown have appeared in politically turbulent
December, economic and credit activity remained still strong so far as real GDP growth actually accelerated in 2024,
averaging a robust 9.5%, following 7.8% in 2023 and consecutive double-digit growth in 2021 and 2022, while total credit
increased by 17.0% YoY at the end of December.
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.
Risk description
The Group’s performance is dependent on geopolitical developments in Georgia.
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.
The materialisation of these risks could severely hamper economic activity in Georgia, 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 Supervisory 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 covers money laundering, terrorist financing, bribery and corruption, and sanctions risks. The risks
associated with sanctions have increased, particularly in recent years. Therefore the Group’s specific focus in 2024
remained on managing and improving the sanctions risk control environment.
Historically, Georgia has enjoyed close business relations with Russia and Ukraine. The aggression launched by the
Russian Federation against Ukraine on the 24th of February 2022 resulted in a vigorous international response, which
included the imposition of tough economic sanctions by the US, the EU, the UK, and other countries. As a consequence,
Russian and Belarusian members of legislative and government agencies, oligarchs, businessmen, state-owned
companies, financial institutions, and other legal entities have been directly sanctioned, while numerous economic
restrictions and trade prohibitions have been enforced on specific sectors of activity and categories of goods and
services in Russia, Belarus, and occupied territories of Ukraine. Leading countries are tightening and expanding the
sanctions programme by extending some restrictions and adding new entities and individuals to their list. The growing
complexity and scale of sanctions, coupled with the escalating political situation in Georgia, have led to increased
scrutiny from international financial institutions and our partner correspondent banks, which have adopted a more
cautious approach driven by a limited risk appetite, resulting in tighter requirements for transaction processing and
more frequent, rigorous due diligence procedures. Moreover, as a consequence of the conflict, many Russian citizens
have relocated to Georgia. Considering the level of interaction between the Group, Russia, and Russian citizens, and the
breadth of the sanctions’ prohibitions and restrictions, the risk of being involved in attempts to circumvent sanctions has
substantially increased.
In December 2023, the Office of Foreign Assets Control (OFAC), the US sanctioning authority, issued an executive
order with which Georgian financial institutions had to comply. Specifically, in accordance with this restriction, the Bank
applies increased scrutiny to any transactions involving Russian entities operating in the Russian economy or somehow
connected to Russian military-industrial bases.
The adoption of the new decree by the Georgian regulator on controlling the flow of restricted products of EU/UK/US
origin to Russia and Belarus (and vice versa) has led the Group to implement further controls and AI/technology based
tools to effectively control the flow of embargoed goods to restricted territories.
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ADDITIONAL DISCLOSURES - MATERIAL EXISTING AND EMERGING RISKS CONTINUED
In 2024, the NBG conducted an inspection (covering the period of Feb 2022–Nov 2023) of the Bank’s processes
regarding compliance with sanctions regulations related to Iran, Russia and Belarus. The Bank’s measures were deemed
effective with some shortcomings, resulting in minor penalties applied to specific clients.
The ongoing political tensions put Georgian high officials and businessmen in spotlight for sanctions by US and UK. In
September, the US took action by designating two individuals linked to the spread of disinformation and hate speech,
as well as two government officials associated with the response to recent protests. In December, 2024 US and UK have
designated members of the Georgian government and US has designated informal leader in response to the political
crisis that followed the parliamentary elections. There is a likelihood that individuals with close ties to the government
may face sanctions in the future.
In addition to the sanctions risk related to Russia, a significant increase in international shipping costs, the crisis in the
Red Sea and the ongoing crisis in the Middle East have led to a surge in freight shipping from China instead of sea
routes. This situation has exposed Georgia to the risk of financing transshipments via Iran for its import and export
activities with Asian countries, a practice prohibited by the US government. Breaches of the US, EU, and UK sanctions
regime would expose the Group to fines and regulatory actions by both the National Bank of Georgia and the US, EU,
and UK authorities and enforcement agencies. In addition to the regulatory risk, the Group also faces a reputational risk,
mainly with its correspondent banks and other financial third party relationships.
Risk mitigation
The Group has a zero tolerance stance towards any prospect of breaching or facilitating the breach or avoidance of
UN, UK, US, and EU sanctions. The Group is committed to avoiding any deals or transactions with direct or indirect
sanctioned parties or goods or services.
The Group has adopted a Group-wide Financial Crime Policy that sets requirements in the following key risk areas:
money laundering, terrorist financing, bribery, corruption, and sanctions. The policy applies to all Group member
companies, business activities, and employees. Employees receive training on financial crime risk management.
Employees are made aware of the Group’s appetite for and approach to financial crime management as well as the
potential consequences following the failure to comply with the policy.
The Group aims to protect its customers, shareholders, and society from financial crime and any resulting threat. 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. It has
a long-standing ambition to meet the respective industry best practice standards.
The Group has implemented internal policies, procedures, and detailed instructions designed to prevent any association
with money laundering, financing of terrorism, or any other unlawful activities such as bribery, corruption, sanctions, or tax
evasion. The Group’s AML/CTF compliance programme, as implemented, comprises written policies, procedures, internal
controls and systems including, but not limited to: policies and procedures to ensure compliance with AML laws and
regulations; KYC and customer due diligence procedures; a customer acceptance policy; screening against a global list of
terrorists, vessels, specially designated nationalities, and relevant financial and other sanctions lists; regular staff training
and awareness raising; and procedures for monitoring and reporting suspicious activities by the Bank’s customers.
The Bank has specific material resources dedicated to sanctions risk management. It has:
• Purchased software and databases that assist the Bank in sanctions risk mitigation;
• Engaged external advisers to produce recommendations on improvements in sanctions risk management;
• Engaged external audits to assess internal policies and procedures;
• Empowered dedicated staff with the relevant, specific knowledge; and
• Made new arrangements within the Compliance Department, as part of which new human resources were added to
the divisions.
As part of the second line of defence, the Bank’s Compliance Department seeks to manage risk in accordance with the
risk appetite defined by the Group and promotes a strong risk culture throughout the organisation. The Group has a
sophisticated, artificial intelligence-based AML solution in place to enable AML Officers to monitor clients’ transactions
and identify suspicious behaviour. Using data analytics and machine learning, the Group developed an anomaly
detection tool to bring very complex cases to the surface, using client network analysis to identify organised money
laundering cases and enriched pre-defined patterns to create an automated system. This approach has an immense
business value as it uncovers cases in ways that would otherwise be prohibitively expensive, since manual analysis of
these transactions is an extremely time-consuming process for AML officers. The tool compiles all these incidents into
dashboards and presents them to AML officers for further action.
The Bank’s Compliance Department works on constantly improving the software to increase operational efficiency
and decrease false-positive alerts, to which end a new external consultant company was hired. The Bank performs an
enterprise-wide AML/CTF/Sanctions Risk Assessment annually, in line with the approved methodology. Overall Group-
wide residual risks for the year 2023 were assessed as medium. The Bank’s Compliance Department addresses areas of
attention in a timely and proper manner. In response to the ever emerging challenges in sanctions compliance, a new
Sanctions Control division has been established within the Compliance Department, which is hiring new staff in order to
better address threats of sanctions circumvention.
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) - 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 31 December 2024, 47.0% 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 2024,
the average USD/GEL currency exchange rate depreciated by 3.5% 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 31 December 2024. At the same time, exposure to the 20 largest borrowers stood at 9% 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 31
December 2024, the retail segment represented 35.2% of total portfolio, which was comprised of 58.8% mortgage and
41.2% non-mortgage exposures. No single business sector represented more than 11% of the total portfolio as of 31
December 2024.
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.
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GOVERNANCE
ADDITIONAL INFORMATION
ADDITIONAL DISCLOSURES - MATERIAL EXISTING AND EMERGING RISKS CONTINUED
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.
The decision by the NBG’s Financial Stability Committee, dated November 27, 2024, requires commercial banks to
increase the unhedged foreign currency loan limit from current 400,000 GEL to 500,000 GEL. This directive mandates
that loans or bank credits of up to 500,000 GEL must be disbursed exclusively in the national currency, ensuring greater
financial stability and reducing the risk of foreign currency exposure to borrowers. The amendment is planned to come
into force on January 1, 2025. This is the second increase in the ceiling on unhedged foreign loan amounts. Previously,
the limit was increased from 300,000 GEL to 400,000 GEL on May 1st 2024 in order to promote larisation. In addition, in
November 2024, the National Bank of Georgia increased the reserve requirement on foreign currency liabilities by 5pp
from 20% to 25% 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 CICR 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 fulfill 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 TBC Bank, collateral is a key factor in mitigating credit risk, forming a large part of loan portfolio. The 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 TBC Bank (approved by the Supervisory 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 system 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 31 December 2024, 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 0.9pp, 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.
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ADDITIONAL DISCLOSURES - MATERIAL EXISTING AND EMERGING RISKS CONTINUED
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
amounts 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,
including internal political tensions and potential adverse developments in the countries of operation that are discussed
in the first two sections of “Principal Risks and Uncertainties”. 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 Supervisory 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 ALCO of JSC TBC Bank.
Group’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 Risk Management (FRM)
division is responsible for developing procedures and policy documents and setting risk appetites on funding and
market liquidity risk management. In addition, the FRM 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 99.9%, 96.2%, and 89.1%, as at 31 December 2024, 2023, and 2022, 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 and part of the loans are at fixed interest rates, while most of the Bank’s
borrowings are at a floating interest rate. In addition, the Bank actively uses floating and combined interest rate structures
in its loan portfolio. Since the assets and liabilities have different re-pricing 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 Supervisory 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 ALCO of the Group. 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 Risk Management division separately monitor JSC TBC Bank’s
compliance with the set limits daily. In order to safeguard against the inherent volatility in the foreign exchange market,
the Bank employs a risk management process aimed at mitigating FX risk. This involves the strategic use of spot, forward,
and other related transactions.
To assess currency risk, the Group 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 31 December 2024 and 2023, this sensitivity analysis did not reveal
any significant potential effect on the Group’s equity: as of 31 December 2024, the maximum loss with a 99% confidence
interval was equal to GEL 11.4 million, compared to a maximum loss of GEL 10.2 million as of 31 December 2023.
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Interest rate risk: To mitigate interest rate risk, the Group 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. Please see details in Interest Rate Risk in Note 35.
Interest rate risk in the Group 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 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 its respective reporting are periodically provided to the Management Board, the Supervisory Board, and
the Risk Committee.
To minimise 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, 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 2024, the slight decrease 0.5pp year-on-year in NIM to 5.8% was mainly driven by decreasing NBG Refinance while
partially offset by positive increase in foreign currency 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 the Georgian market. This safeguards the Group from
potential margin compressions on lending and deposit products in the future.
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 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 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 2024, no significant
materialisation of the abovementioned macroeconomic risks were observed in the countries of the Group’s operations.
After expanding by 10.6% in 2021, 11.0% in 2022, and 7.8% in 2023, the Georgian economy remained on this strong growth
track in 2024, with real GDP increasing by 9.5%. Consumption, tourism and strong real credit growth contributed the
most in this year’s high print, unlike the declined FDIs and partially remittances, as well as migration-related inflows that
moderated slightly. Despite a higher level of economic activity, elevation in consumer prices was limited, meaning that
annual CPI inflation remained below the NBG’s 3% target throughout the year, averaging 1.9% in December. Low inflation
and signs of a global monetary easing cycle enabled the central bank to deliver three rate cuts in 2024, reducing the
monetary policy rate from 9.5% to 8.0%. The NBG was also active in the foreign exchange market. While strong inflows
supported the stability of the GEL throughout the year, weakening market expectations due to heightened political
tensions in the country drove deposit conversions into foreign currencies, putting pressure on the GEL exchange rate.
This prompted the central bank to intervene heavily, selling around USD 917 million from currency reserves, mostly prior
to the October parliamentary elections, compared to purchases of around USD 483 million over the year, bringing its
gross international reserves down to USD 4.4 billion.
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 credit review and portfolio-monitoring
processes informed by stress testing and scenario analysis, enables 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 collateral coverage.
In response to the regional crisis, the Group relied on its strong Risk Management Framework, leveraging its pre-existing
stress testing practices. This included comprehensive 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.
For more detailed analysis and insights about the economic developments in Georgia, please refer to www.tbccapital.ge.
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
banking operations, the Group also offers other regulated financial services products, including leasing, insurance, and
brokerage services.
The Group is also subject to financial covenants in its debt agreements. For more information, see the Group’s Audited
Financial Statements.
Risk mitigation
The Group has implemented robust systems and processes to ensure comprehensive regulatory compliance,
embedding these practices in all levels of the organisation. The Group’s “three lines of defence” model defines the roles
and responsibilities for managing and mitigating regulatory risk.
The first line of defence is responsible for managing compliance risks within their respective areas, with the Bank’s
operational teams taking ownership of day-to-day risk management. The Compliance Department plays a critical role
as the second line of defence, supporting and monitoring compliance efforts across the Group. The Chief Compliance
Officer oversees compliance within the Bank and reports quarterly to the relevant committee of the Supervisory Board,
with a managerial reporting line to the CRO. The Group’s Audit Committee is responsible for ensuring regulatory
compliance at the Supervisory Board level.
The Bank’s compliance programme encompasses a wide range of activities designed to address compliance risks
effectively, including the development of compliance policies, employee trainings, risk-based oversight, and rigorous
monitoring of regulatory adherence.
The Compliance Department manages regulatory risk through the following key actions:
• Monitoring and ensuring that changes in laws and regulations are implemented in a timely manner by the process owners;
• Participating in the risk approval process for new products;
• Analysing customer complaints, operational risk events, internal audit findings, and litigation cases to proactively
identify process weaknesses; and
• Conducting annual compliance risk assessments and checks of internal processes.
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The Bank’s Compliance Department ensures that the results of these activities are addressed in a timely and appropriate
manner. Additionally, as part of its oversight role, the department defines key risk metrics and tracks them in accordance
with the Bank’s Risk Appetite Framework. Any breaches of predefined limits are promptly escalated to the relevant
boards for action. In line with the Bank’s commitment to safeguarding personal data and ensuring compliance with
relevant data protection regulations, the Bank has appointed a Data Protection Officer (DPO). The DPO is responsible
for overseeing the Bank’s Data Protection Strategy and ensuring that the organisation remains compliant with applicable
laws, including the General Data Protection Regulation (GDPR).
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 preventing) 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 a 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 Supervisory Board sets
the operational risk appetite, while compliance with the established risk appetite limits is monitored regularly by the
Supervisory 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 2024.
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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;
– An external audit of the NBG’s Cyber Security Framework, which is based on the NIST Cyber Security
Management Framework;
– Independent internal IT audit team is assessing effectiveness of critical components of information security
management system;
– External surveillance audits of ISO 27001;
– 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.
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, two prominent risks are noteworthy, each
presenting unique challenges to the preservation and efficacy of the Group’s information assets. The first risk centres on
the imperative need for data quality, which is a cornerstone of sound decision-making, regulatory compliance, and overall
risk management. This challenge emanates from diverse sources, encompassing errors during data entry, the lack of
standardised 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.
Simultaneously, the Group confronts a second pivotal risk associated with outdated and sometimes obsolete infrastructure.
Legacy systems, characterised by outdated hardware and software, present a formidable challenge by impeding the
seamless flow of data and obstructing the adoption of cutting-edge technologies. The risk intensifies with the rapid pace of
technological advancements, rendering legacy infrastructure susceptible to security vulnerabilities and compliance issues.
Moreover, the limited scalability of outdated systems constrains the Group’s ability to process and analyse vast datasets
efficiently, thereby impinging on the agility required for informed decision-making in the fast-paced financial landscape.
Risk mitigation
Mitigating these data risks requires a holistic and strategic approach tailored to the Group. To address the challenge of
data quality, the Bank is adopting advanced data quality management systems, implementing data profiling techniques,
and enforcing stringent data governance policies. Strategic investments in technologies like machine learning and
artificial intelligence can automate the detection and correction of data anomalies, fostering a proactive stance towards
maintaining accurate and consistent data. Cultivating a data-driven culture within the organisation, along with clear data
lineage and documentation practices, enhances transparency and traceability.
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In tackling the risks associated with outdated infrastructure, the Group has embarked on a strategic and phased
modernisation approach. Investing in state-of-the-art technologies such as cloud computing and virtualisation is
imperative for increased flexibility, scalability, and security. A comprehensive assessment of the existing infrastructure,
coupled with a roadmap for migration and upgrades, enables a systematic transition without disrupting critical
operations. Embracing DevOps practices facilitates continuous integration and deployment, fostering a culture of
agility and adaptability. Through these proactive measures, the Group is positioning itself to capitalise on emerging
opportunities while effectively mitigating the risks associated with both compromised data quality and outdated
technological foundations.
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. 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 government foreign policy choices. 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 digitalisation of products and services provided by the
Group. Cyber risks could turn into reputational risk if they negatively impact 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 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 Supervisory 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 JSC TBC Bank 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 in Georgia 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.
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JSC TBC Bank 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 2,000 individuals
from outside the organisation and 2,000 within it.
In 2024, as part of our internal training program, 30 courses were launched across various disciplines such as SQL Basic
/ Advance, Power BI Basic / Advance, Manual Testing, BABOK etc. These courses aimed to equip over 500 employees
with essential technical skills. Additionally, three brand-new courses were introduced: .NET, Python (Basic), and a DevOps
course tailored for developers and DevOps Course for Agile Coaches.
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’s
Code of Ethics serves as a moral compass for all staff and sets high ethical standards that each employee is required to
uphold. The Bank’s employees undertake and perform their responsibilities with honesty and integrity. 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 entrusts different departments and divisions with carrying out the task of managing,
mitigating, and eliminating conduct risk across all of the Bank’s operations with clients and other stakeholders. The
Compliance, Human Capital, and Operational Risk departments cooperate to create a unified conduct Risk Management
Framework and assist business lines and departments in the following ways:
1. Developing and maintaining policies and procedures to ensure that individual employees and departments comply
with regulatory provisions, best practices, the Code of Conduct, and the Code of Ethics;
2. Maintaining liaison with the Compliance Department, administering policies and procedures in conjunction with
the Compliance Department, and investigating complaints about the conduct of the department, its manager, or its
employees;
3. Ensuring that front-line employees provide product information that is accurate and complete, and is conveyed
both in writing and orally in a simple, understandable manner, regardless of the level of sophistication of the client;
4. Keeping records of client interactions and emails containing sensitive and sales-related information, such as
information concerning the acquisition of new clients and the formulation of complex product offers;
5. Providing periodic training to all employees regarding evolving compliance standards within the Group, ensuring
that new employees are educated regarding proper conduct;
6. Creating a culture of openness that encourages employees to speak out without fear of punishment, preventing
and detecting conflicts of interest, creating moral incentive programmes, creating bonuses, and achieving a risk-
adequate incentive and disciplinary policy for the Group;
7. Investing considerable time and effort in investigating, analysing, implementing, and monitoring sales and after-
sales activities, and putting proper conduct into the required job skills, which ensures that conduct risk is not just
managed by risk management units, including compliance departments.
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 74.3% 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 June 2024, the Group released its full-scale sustainability report for the year 2023 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 2023. It presents our
endeavours to create value for our employees, clients, suppliers, partners, and society as a whole. The Sustainability
Report 2023 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 Parent Company of JSC TBC Bank (TBC Group PLC) 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 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 2024.
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.
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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:
In thousands of GEL
31-Dec-2024
31-Dec-2023
31-Dec-2022*
CET 1 capital
4,843,167
4,235,033
3,333,039
Tier 1 capital
5,895,717
4,772,913
3,873,439
Tier 2 capital
966,246
601,388
643,086
Total regulatory capital
6,861,963
5,374,301
4,516,525
Risk-weighted exposures:
Credit risk-weighted exposures
24,948,193
21,018,445
18,818,597
Risk-weighted exposures for market risk
96,836
69,880
86,250
Risk-weighted exposures for operational risk
3,797,799
3,248,365
2,603,225
Total risk-weighted exposures
28,842,828
24,336,690
21,508,072
Minimum CET 1 ratio
14.4%
14.3%
11.6%
CET 1 capital adequacy ratio
16.8%
17.4%
15.5%
Minimum Tier 1 ratio
16.7%
16.6%
13.8%
Tier 1 capital adequacy ratio
20.4%
19.6%
18.0%
Minimum total capital adequacy ratio
19.7%
19.8%
17.3%
Total capital adequacy ratio
23.8%
22.1%
21.0%
GEL volatility has been and remains a significant risk to the Bank’s capital adequacy. A 10% GEL depreciation would
translate into a 0.9pp, 0.7pp, and 0.6pp drop in the Bank’s excess CET 1, Tier 1, and Total regulatory capital, respectively.
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 in 2024.
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 31 December 2024, the ratios were well above the prudential limits set by the NBG, as follows:
* 2022 figures are shown in accordance with NBG accounting as at that time local GAAP was in force
Funding & Liquidity
31-Dec-2024
31-Dec-2023
31-Dec-2022
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
123.9%
119.9%
135.3%
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
75.0%
75.0%
75.0%
Minimum LCR in FC, as defined by the NBG
100.0%
100.0%
100.0%
Total liquidity coverage ratio, as defined by the NBG
125.5%
115.3%
146.6%
LCR in GEL, as defined by the NBG
127.7%
109.8%
164.2%
LCR in FC, as defined by the NBG
124.7%
120.1%
135.9%
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 in 2024.
FX risk
JSC TBC Bank is required to maintain open currency positions in line with the NBG’s limits:
• 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.
Interest rate risk
JSC TBC Bank assess 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 31 December 2024, TBC Bank’s EVE ratio stood at
8.97%, comfortably below the regulatory limit (15%).
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ADDITIONAL DISCLOSURES - ESG STRATEGY
ESG strategy
Our role is connected to our responsibility to contribute to a better future through
innovation and technology, to increase the accessibility of financial services, and to
enable our customers to be a part of the globalised world.
Our commitment to sustainable development derives from our role as the leading financial institution in Georgia’s
development. We recognise our significant impact on the country’s economy and our vital role in fostering business
growth, employment, and societal progress.
Our ESG Strategy underscores our dedication to making a lasting, sustainable impact. We are committed to being the
foremost advocate of Environmental, Social, and Governance (ESG) principles, not only within our country but also
across the broader region. By integrating ESG considerations into our operations, we aim to drive positive change,
support sustainable development, and lead by example. A key component of our strategy is the transition to a low-
carbon economy. We are actively working to reduce our carbon footprint and promote renewable energy sources. This
involves lending to customers who invest in green technologies, supporting low-carbon projects, and encouraging
sustainable practices across all sectors.
Raising awareness of ESG principles is also central to our strategy. We engage with stakeholders through educational
initiatives, transparent reporting, and collaborative efforts to promote a deeper understanding of sustainability issues.
Furthermore, in 2024, we conducted dedicated ESG surveys among our employees, investors, and customers. To ensure
our ESG initiatives align with stakeholder expectations and support our strategic sustainability goals, we identified key
ESG topics of interest and importance to employees, investors, and customer. Using this feedback, we refine our ESG
initiatives to ensure they address stakeholder expectations and support our strategic sustainability goals.
We prioritise diversity and inclusion within our organisation and in the communities we serve. We believe that diverse
perspectives drive innovation and strengthen our ability to address complex challenges. We are committed to creating
an inclusive environment where all individuals feel valued and respected. In 2024, we worked on a comprehensive
diversity concept covering three main activity streams: physical and digital accessibility of products and services,
inclusive employment, and accessibility of marketing events. This one-year project was supported by the Asian
Development Bank through the TSCFP Disability Inclusion Project1. As a result, we created a solid foundation for our
Diversity Action Plan, rolled out in following years.
Our ESG strategy reflects our responsibility to foster economic growth, social well-being, and environmental
stewardship, ensuring that our contributions benefit both present and future generations. The ESG Strategy is reviewed
and approved by the Supervisory Board annually, while implementation is overseen by ESG-related committees at the
Supervisory Board and executive management levels.
The ESG Strategy defines several key areas and targets with different time horizons:
Enhanced
governance of
ESG and climate-
related risks and
opportunities
Sustainable
portfolio growth
Access to green
and sustainable
financing sources
Customer
awareness, investor
confidence, and
employee diversity
Impact
measurement
and reporting
• We started incorporating the standards of the Science-Based Targets Initiative into our performance measurement
methodology.
• The share of renewable energy in our total electricity consumption in the regions grew up to 50%.
• The TBC ESG Academy launched the first green mindset and green financing course for our employees and
customers.
• Share of women in ICT Risk and Finance reached 46%.
• The number of participants in our educational programs in ICT areas reached 724, achieving 42% representation for
women and 41% for participants from the regions.
The ESG Strategy follows a strategic road map, which reflects the milestones of our sustainability journey for the
following years. In 2024, we actively continued to implement our initiatives to fulfil our targets, which are divided into four
pillars: direct environmental impact, indirect environmental impact, social impact, and governance.
Pillars 1 and 2: Direct and indirect environmental impact
2022 ESG Strategy target / initiative
2023 status
2024 status
ESG governance framework established
at both Supervisory Board and executive
management levels Enhance ESG
governance and achieve a higher maturity
level
Enhance ESG governance and achieve a
higher maturity level
The higher maturity level achieved
Regular reporting on key parameters to the
ESG-related Committees at Supervisory
Board and executive management level
established
Increased granularity and automation of
reporting, regular reporting on climate-
related risks, scenario analysis, stress
testing, and ESG risk appetite
A robust reporting framework on
environmental and climate-related matters
established, including deep-dive sessions on
TCFD, Paris Agreement alignment, financed
emissions and other relevant topics
Volume of GEL 782 million was achieved2
Volume of GEL 1.23 billion was achieved
Volume of GEL 1.73 billion was achieved
Climate Change Policy developed and
approved3
Development of sectoral guidelines in line
with the Climate Risk Radar of the National
Bank of Georgia (NBG)
Implementation of the ESG guidelines of the
National Bank of Georgia4
The NBG introduced the Green and Social
Taxonomies, developed in line with the
best international taxonomies
The NBG Green Taxonomy implemented;
the respective documentation, procedure,
calculation tools implemented and training
for responsible staff conducted
The Social Taxonomy has been
implemented.
The green lending procedure
implemented
Harmonisation of the green lending
procedure and the green taxonomy of the
NBG
Harmonisation of the green lending
procedure and the green taxonomy of the
NBG
Increase customer loyalty, investor
confidence, and employee motivation
Establishment of ESG training framework
for all TBC employees
Measure ESG awareness among employees
and customers
Conduct an ESG Survey for investors
ESG awareness index among employees
measured
ESG surveys among investors conducted
ESG matters integrated into customers’
surveys
ESG strategies in material subsidiaries
developed
ESG Strategies implemented and
supporting ESG function at the Group level
established
ESG Strategies updated to reflect the
progress made during 2023
To define the net-zero target for direct
environmental performance
The Group’s direct performance towards the
Paris Agreement targets for the reduction of
GHG emissions measured
Develop a plan to enable our direct
environmental impact to also reach net-zero
Develop a plan to enable our indirect
environmental impact to reach net zero
A methodology to calculate financed
emissions based on the PCAF approaches
developed and financed emissions
calculated for seven asset classes
The Group’s indirect performance has been
measured against the Paris Agreement
targets for the reduction of GHG emissions
1
As part of the Asian Development Bank Trade and Supply Chain Finance Program’s (TSCFP) Disability Inclusion Project for Financial Institutions,
ADB is funding the provision of timeboxed consultancy support for banks across Asia and the Pacific. ADB has contracted GDI to provide
consultancy services for banks under this programme, and TBC Bank is receiving this consultancy offer free of charge, as funded by ADB. As agreed
with TBC Bank, the scope of consultancy support provided by GDI Hub includes technical, training, and advisory services.
2
Renewable energy and energy-efficiency loans, women and youth financing, NBG green and social taxonomy, green bonds and social guarantees.
More details are given on page 125.
3
www.tbcbankgroup.com.
4 www.nbg.gov.ge, in force starting from January 2025.
Key achievements in 2024:
• The total volume of our sustainable loan portfolio reached GEL 1.73 billion, increasing by 40.5% since the end of
2023, when it stood at GEL 1.23 billion.
• We measured our performance against the Paris Agreement targets for the reduction of GHG emissions.
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Pillar 3: Social Impact
In order to expand our focus on diversity, gender, and inclusion issues, we have developed a Diversity, Equality and
Inclusion Policy (available at our website, www.tbcbankgroup.com), which sets targets and establishes a methodology
to advance diversity, equality, and inclusion, integrating its approach into the company’s operations and management
processes and focusing on diverse areas including gender, multicultural, multigenerational, and disability backgrounds.
We remain committed to having a gender-balanced workforce and a culture that supports and empowers women. At
the Bank level, we defined targets for women participation in different positions. The main target for women in middle
manager and agile leaders is set at 43% for 2025. Similar affirmative targets are set at other subsidiaries of the Group, as
well. In the coming year, we are going to introduce a target for middle managerial positions at the Group level.
2022 ESG Strategy target / initiative
2023 status
2024 status
Diversity, Equality and Inclusion (DEI)
Policy, targets, and action plan defined
Share of women in middle managers and
agile leaders at 40%
Share of women in middle managers and
agile leaders at 40%
Comprehensive ESG training framework
covering all TBC employees and different
responsibility levels established
GEL 5 mln target for impact procurement
Measure ESG awareness among employees
and customers Development of diversity
action plan
Pillar 4: Governance
The Group’s ESG Strategy is reviewed and approved by the Supervisory Board annually, while implementation is
overseen by two ESG-related committees at the Supervisory Board and executive management levels. During the year,
the Committee steered and supported the implementation of strategy, policies, and programmes in relation to ESG
matters for the Group and its subsidiaries, ensuring that the Group’s ESG Strategy is implemented effectively, meeting its
objectives across all business areas.
In 2024, we continued implementation of individual ESG strategies in significant subsidiaries of the Group. Several
workshops were conducted with staff from the subsidiaries and working groups were established.
2022 ESG Strategy target / initiative
2023 status
2024 status
ESG governance framework established
at both Supervisory Board and executive
management levels
Enhance ESG governance and achieve
a higher maturity level
The higher maturity level achieved
Regular reports on key parameters to the
ESG-related Committees at Supervisory
Board and executive management level
established
Increased granularity and automation of
reporting, regular reporting on climate-
related risks, scenario analysis, stress
testing, ESG risk appetite
On-going process
Separate ESG Strategies developed
Implementation of ESG Strategies in
subsidiaries
ESG Strategies updated to reflect the
progress made during 2023
In 2025, we will continue to follow our strategic plan, focusing on the following topics:
Sustainable portfolio
In 2025, we will continue to focus on the growth of our sustainable portfolio. The ESG strategy sets an ambitious target
of GEL 2 billion for the sustainable portfolio. The ESG strategy sets aspirational targets, such as net-zero greenhouse gas
(GHG) emissions related to our direct environmental impact by 2030 and an increase in the sustainable portfolio, which
consists of renewable energy loans, energy efficiency loans, and financing with social components such as women and
youth financing, supporting start-ups and rural enterprises.
Transition plan
In 2025, we will focus on the implementation of detailed transition plans, based on the measurement results of the
Group’s performance against the Paris Agreement targets for the reduction of GHG emissions. To support the process,
we contracted an international consultant company and local and international experts and developed a detailed scope
of work covering the following activities: development of tailored green products and assessment methodologies,
sectoral guidelines for climate risk assessment, footprint assessments of selected customers, and building institutional
capacity.
ESG Academy
In 2023, we established the ESG Academy in order to raise awareness and knowledge of ESG topics, including green
and social financing, regulatory requirements, diversity and affirmative approaches, sustainable business models and
practices among the Bank’s customers as well as TBC employees. The first training programme, “The Green Mind-Set
and Green Financing”, was launched in March 2024, with support from two partner international financial institutions, the
Green for Growth Fund (GGF) and the European Fund for Southeast Europe (EFSE). More than 300 employees attended
the training course in 2024. The programme will train an additional 600 employees and 300 retail, MSME and corporate
customers by the end of 2025.
Implementation of the IFRS S1 and S2
In June 2023, the International Sustainability Standards Board (ISSB) issued IFRS S1 General Requirements for Disclosure
of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. In 2025, we will focus on
implementation of these requirements. Since we have published our disclosures in line with the requirements of the Task
Force on Climate-Related Financial Disclosures (TCFD) since 2021, we will build on the existing disclosure and reporting
framework.
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Responsible Large
Company of the Year
TBC was named the Responsible Large Company of the Year
for its outstanding efforts in addressing environmental, social,
and governance challenges affecting employees, customers, the
environment, and society.
The contest was organised by the Centre for Strategic Research and
Development of Georgia (CSRDG) under the ”Civil Society Initiative”
project, funded by the European Union (EU) and the Konrad Adenauer
Foundation (KAS).
ADDITIONAL DISCLOSURES - ESG STRATEGY CONTINUED
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Climate-related financial
disclosures 2024
INTRODUCTION
We set out below our climate-related financial disclosures, which are consistent with the TCFD recommendations and
recommended disclosures. The TCFD Recommendations are structured around four content pillars: (i) Governance;
(ii) Strategy; (iii) Risk Management; and (iv) Metrics & Targets. Under each pillar there are eleven recommendations to
support effective disclosure. We consider ourselves fully consistent with the TCFD requirements.
In 2024, we enhanced further our climate-related approach. We reviewed our assessments of climate-related transitional
and physical risks on a sectoral level and incorporated the ESG Risk Radar considerations of the National Bank of Georgia
(NBG)1. Furthermore, we updated our climate stress testing framework in line with the Climate Stress Testing Framework
of the NBG in order to incorporate parameters that are better tailored to the local context. We made meaningful progress
in calculating our financed emissions and identifying a pathway aligned with the Paris Agreement targets. The results
will provide a foundation to develop our plan to enable our indirect environmental impact to reach net-zero as soon
as practicable thereafter. We understand that the transition to a lower-carbon and sustainable economy requires both
internal knowledge building and awareness raising among customers, businesses, and the public. We focus on internal
capacity building, involving in-house and external experts on a variety of topics: green lending, the NBG green taxonomy,
the impact of climate change, climate-related risks, and scenario analysis. As the sustainability landscape evolves
with new information and greater standardisation, TBC will continue to refine and expand its disclosures to provide
meaningful information to stakeholders.
It should be noted that the data we have used provide the best available approach to reporting the progress made,
notwithstanding the challenges that exist given the incompleteness and novelty of the data sets and the methodologies
required for the Georgian environment, in which most of our activities occur. We expect the availability and reliability
of the required data to improve over time, and we intend to integrate improved data into our reporting as it becomes
available.
Below is the disclosure prepared by the Group concerning the implementation of the TCFD recommendations:
Recommended disclosure
Short summary
Where to find
Governance
a) Describe the organisation’s governance around climate-related risks and opportunities
Process, frequency,
and training
– The Supervisory Board approves and oversees the Group’s ESG Strategy
in order to address specifically the Group’s targets and initiatives that
relate to climate change, its direct and indirect environmental impact, and
sustainable development across the Group.
– The ESG and Ethics Committee have been established at the Supervisory
Board level.
– In parallel with regular working meetings with the executive functions of
the Bank, the ESG and Ethics Committee met four times during 2024.
– The Supervisory Board has established a diverse and comprehensive
training agenda, which is reviewed annually.
Page 103
Committee
accountability
– The Supervisory Board retains primary responsibility for overseeing the
implementation of the strategy, as part of its commitment to having direct
oversight over the Group’s climate-related issues.
– The role of the ESG and Ethics Committee has been formalised to support
and advise the Supervisory Board in its oversight of the implementation
of: (i) the strategy; (ii) policies; and (iii) programmes of the Company and
its subsidiaries in relation to ESG matters, ensuring that the ESG strategy is
implemented across all of the Group’s relevant businesses.
Page 104
Examples of the Board and
relevant Board committees
taking climate into account
– Key topics covered in 2024 by the ESG and Ethics Committee are as
follows: the Group’s direct GHG emissions; a review of the Environmental
and Climate Change Policy; a review of the Exclusion List and ESG risk
appetite; and a review of the climate action strategy, including progress
reports on TCFD implementation.
Page 104
b) Describe executive management’s role in assessing and managing climate-related risks and opportunities
Who is responsible for
climate-related risks and
opportunities
– Since March 2021, responsibility for climate change-related risks and
opportunities has been assigned to the executive level ESG Committee.
Page 104
How management reports
to the Board
– The ESG Committee’s responsibilities also include the review and
monitoring of climate-related risks and opportunities as well as the
establishment of an effective mitigation and control system to manage
identified (material) climate-related risks. The ESG Committee meets on a
quarterly basis.
Page 104
Processes used to inform
management
– The implementation of the ESG strategy is supported by the various
organisational functions responsible for ESG matters: the Environmental
and Social Risk Management Team, the ESG Department, and the ESG
competences centre – a working group initiated in order to support the
enhancement of the TCFD framework.
– Furthermore, the Environmental Committee oversees the implementation
and operation of the Environmental Management System. The ESG
Department and Environmental and Social Risk Management Team
regularly report to the Environmental Committee, which reports to the
Chief Risk Officer.
Page 104
Strategy
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and
long term - Page
Short-, medium-,
and long-term time
horizons
– The time horizons considered in the assessment are short (0-3 years),
medium (4-8 years), and long (over eight years). The levels of possible
impact are classified as low, medium, or high.
Page 105
Climate-related risks
– As a summary of the potential impact of the various transition risks and
physical risks identified, the transitional risks in Georgia and on the Bank’s
activities are low.
– The overall assessment of the potential impact of acute and chronic
physical risks on Georgia and on the Bank’s activities is medium in a long-
term perspective. Currently, no material impact on the Bank’s activities is
observable.
Page 107
Climate-related
opportunities
– The main opportunity directions are energy-efficiency and renewable
energy financing. However, we offer a wide range of other green and
climate-related financing to our customers.
Page 112
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and
financial planning
Impact on strategy,
business, and financial
planning
– In 2024, we continued to incorporate climate and broader ESG
considerations into our financial planning processes. The Group aligned
loan portfolio growth planning with risks and opportunities in different
business segments: retail, MSME, and corporate. Climate-related
opportunities were also addressed by economic sector.
Page 113
Recommended disclosure
Short summary
Where to find
1
www.nbg.gov.ge
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Impact on products and
services
– The main opportunity directions are energy-efficiency and renewable
energy financing. However, we offer a wide range of other green and
climate-related financing to our customers.
Page 114
Transition plan
– We made meaningful progress in calculating our financed emissions
and identifying a pathway aligned with the Paris Agreement targets. The
results will provide a foundation to develop a transition plan to reach net-
zero as soon as practicable thereafter.
Page 100
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario
Scenarios used
– The Delayed Transition with Medium Chronic Physical Risks scenario was
chosen from the Disorderly category. This scenario was selected because
it represents one of the highest transition risk scenarios, reflecting the
substantial challenges that may arise if global climate action is delayed
and then implemented abruptly.
Page 115
Conclusions
– The results by segments show that the potential impacts on non-
performing loans (NPLs) in the retail, micro, SME, and corporate segments
are immaterial. A few sectors show negative trends, such as agriculture,
construction, industry, and non-renewable energy. However, considering
that these are front-loaded effects, the results become negligible.
Page 116
Risk Management
a) Describe the organisation’s processes for identifying and assessing climate-related risks
Process
– The Group has reviewed all of its operational activities, procured items,
and outsourced services that it can control (present and planned), and has
identified all environmental aspects relevant to the business.
Page 117
Integration into policies
and procedures
– The Group has a comprehensive Environmental and Climate Change
Policy in place, which governs our Environmental Management System
(EMS) and climate-related framework within the Group.
Page 117
b) Describe the organisation’s processes for managing climate-related risks
Process
– The Bank has developed E&S risk management procedures to identify,
assess, manage, and monitor environmental and social risks which are
fully compliant with Georgian environmental legislation and follow
international best practices. In 2024, the National Bank of Georgia (NBG)
developed its ESG Guidelines through a Double Materiality Perspective.
Following the guidelines, TBC Bank integrated climate risk components
into its existing E&S risk assessment procedure, defined exposure
limits, and developed appropriate templates. TBC developed tailored
approaches for different business segments and economic activities.
Page 119
Decision-making
– Projects that are to be financed are classified according to E&S categories
(low, medium, high and A category), based on analysis; where necessary,
deep-dive analysis and due diligence are performed. When categorising
the transaction in line with the E&S risk categories, priority is given to the
higher risk.
Page 120
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
organisation’s overall risk management
Integration process
– The Bank has developed E&S risk management procedures, which are
fully integrated into the credit risk management process and are routinely
applied to SMEs and corporate customers.
– In 2024, the National Bank of Georgia (NBG) developed its ESG Guidelines
through a Double Materiality Perspective. Following the guidelines,
TBC Bank integrated climate risk components into its existing E&S
risk assessment procedure, defined exposure limits, and developed
appropriate templates. The Bank developed tailored approaches for
different business segments and economic activities. Furthermore, the
ESG Profile Methodology, which was piloted in 2023, has been integrated
in the overall risk management process.
Page 119
Metrics and Targets
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process
Metrics used to assess
the direct environmental
performance
– GHG emissions, consumption of energy, water, and paper
Page 122
Metrics used to assess
the indirect impact
– Financed emissions
– Sustainable portfolio
Page 124
Page 125
b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions and the related risks
Our own operations
– The summary of Scope 1, Scope 2, and Scope 3 GHG emissions
(international flights), 2024 targets versus actual results, as well as targets
for 2025 are disclosed.
Page 122
Financed emissions
– Financed emissions - The Partnership for Carbon Accounting Financials
(PCAF) has developed methods for different asset classes that can be
used to calculate the financed emissions.
Page 124
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
against targets
Targets set and progress
– GHG emissions (Scope 1 and Scope 2), water and paper.
– The total sustainable portfolio volume exceeded the 2024 target volume
GEL 1.4 billion by GEL 333 million. The target for 2025 is set at GEL 2 billion.
Page 124
Page 125
Recommended disclosure
Short summary
Where to find
Recommended disclosure
Short summary
Where to find
DEFINING MATERIAL TOPICS FOR CLIMATE-RELATED FINANCIAL DISCLOSURES
The materiality of topics covered in the climate-related financial disclosures is informed by different factors: a) climate-
related topics which are included in TBC’s ESG Strategy; b) stakeholder engagement results, which provide information
about the issues that are most important and relevant to our stakeholders (the stakeholder engagement process
is described in more detail in the Annual Report of TBCBank Group PLC on page 154); and c) regulatory disclosure
rules and the expectations of international financial institutions and external ESG rating agencies. For certain topics,
as specified below, we also defined numeric materiality thresholds such as share in total assets (3%) or share in GHG
emissions (40%), which are referenced in the respective parts of the disclosure. The ESG and Ethics Committee at the
Supervisory Board level, the ESG Committee at the executive level, and the responsible organisational bodies – the ESG
Department, the Environmental and Social Risk Management Team, the Enterprise Risk Management Department, the
Investors Relations Department and the International Financial Markets Department - regularly discuss emerging and
existing topics that matter to our stakeholders and consider them in our ESG and climate action strategy.
1. GOVERNANCE
1.1. The Supervisory Board’s oversight of climate-related risks and opportunities
The Supervisory Board approves and oversees the Group’s ESG Strategy in order to address the Group’s targets and
initiatives that relate to climate change, its direct and indirect environmental impact, and sustainable development across
the Group. The ESG Strategy also covers customers, employees, suppliers, wider society, financial inclusion, employee
relations, talent management, workplace diversity, and inclusion. The Supervisory Board retains the primary responsibility
for overseeing the implementation of the strategy as part of its commitment to having direct oversight over the Group’s
climate-related issues.
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In January 2022, the Group established an Environmental, Social and Governance (ESG) and Ethics Committee at the
Supervisory Board level. This reflects the importance of sustainability in TBC’s corporate governance and allows the
Supervisory Board members to dedicate more time and attention to ESG topics.
The role of the Committee has been formalised to support and advise the Supervisory Board in its oversight of the
implementation of the strategy, policies, and programmes of the Company and its subsidiaries in relation to ESG matters
and ensuring that the ESG strategy is implemented across all of the Group’s relevant businesses. Furthermore, the ESG
and Ethics Committee supports the Supervisory Board in promoting its collective vision of values, conduct, and culture
and overseeing the efforts of the executive management of Joint Stock Company TBC Bank to foster: (i) a culture of
ethics; (ii) appropriate conduct; and (iii) employee ethical engagement within the Group. The Committee provides
strategic guidance on climate-related matters and reports to the Supervisory Board, which has overall oversight.
The ESG and Ethics Committee met four times during 2024 and covered the following topics: a) a regular review of and
status update on the Group’s ESG strategy, including its climate action strategy, and implementation plans; b) monitoring
of their execution; and c) oversight and recommendations to the Board for approval of the Group’s disclosures on ESG
matters, including reporting in line with the TCFD principles, in the Annual Report and Accounts. The key topics covered
in 2024 by the ESG and Ethics Committee were as follows: tracking progress against the ESG Strategy’s targets, such
as the volume of the sustainable portfolio; the Group’s direct GHG emissions; review of the Environmental and Climate
Change Policy, the Human Rights Policy and the Diversity, Equality and Inclusion Policy; review of the Exclusion List1
and ESG risk appetite definitions; review of the Climate Action Strategy, including the progress reports on the TCFD
implementation; the involvement of external consultants in climate-related topics; review of TCFD reporting for the
Annual Report 2023 and the Sustainability Report 2023; and the ESG and climate-related training agenda for TBC staff.
The Supervisory Board is supported by the Risk Committee. Progress against the reporting metrics, such as the volume
of the sustainable portfolio, is reported to the Risk Committee, which also receives updates four times a year through the
Chief Risk Officers’ (CRO) report. In 2023, we integrated the ESG Risk Appetite into our Risk Appetite Framework (RAF).
As a result, the ESG Risk Appetite results are also reported to the Risk Committee on a quarterly basis. Furthermore,
the responsibilities of the Audit Committee include the review of annual reports, including TCFD reporting, as well as
following up on compliance through policies, procedures, and regulations.
The Human Resources and Remuneration Committee covered the ESG-related Key Performance Indicators of the
executive management. Please see more details in the Annual Report of TBCBank Group PLC on the page 206.
The Supervisory Board has established a diverse and comprehensive training agenda, which is reviewed annually. The
Group’s Secretarial team creates a general training catalogue at the beginning of each year, which covers all relevant
areas of Risk, Audit, Remuneration and Governance. The catalogue includes an effective mix of publicly available
and client-tailored webinars, analytical materials, and opportunities for live discussion with industry participants. The
providers of these training opportunities include the Big Four accounting firms, external legal advisors, chartered
institutes (such as the Institute of Directors and the Governance Institute), and, where relevant, senior professionals with
specific subject matter expertise. Directors use the training catalogue in order to create their bespoke training calendars
and exchange knowledge during Supervisory Board meetings or via the Group’s dedicated Supervisory Board platform.
1.2. Executive management’s role
At the executive level, responsibility for climate change-related risks and opportunities is assigned to the ESG
Committee, which was established by the executive management in March 2021. The ESG Committee is responsible for
implementing the ESG strategy and approving annual action plans and separate, detailed action plans for key projects.
The committee meets every quarter to monitor the progress and implementation status of these action plans. In 2024,
it covered the following climate-related topics in its four meetings: TCFD reporting; the TCFD implementation action
plan; the ESG risk appetite; progress against ESG Strategy targets such as the volume of the sustainable portfolio; the
Environmental and Climate Change Policy; direct GHG emissions reports; the ESG and climate-related training agenda
for the TBC staff; and the involvement of external international and local experts in the development of climate-related
approaches and methodologies. The ESG Committee’s responsibilities also include the review and monitoring of
climate-related risks and opportunities as well as the establishment of an effective mitigation and control system to
manage identified (material) climate-related risks.
The implementation of the ESG strategy is supported by a number of organisational functions responsible for ESG
matters: the Environmental and Social Risk Management Team, the ESG Department, and the ESG competences centre,
which is a working group designed to support the enhancement of the TCFD framework.
Furthermore, the Environmental Committee meets on a quarterly basis and oversees the implementation and operation
of the Environmental Management System, which includes addressing resource consumption and other environmental
impacts of TBC Bank’s daily operations. The ESG Department and the Environmental and Social Risk Management
Team regularly report on the environmental management plans and results to the Environmental Committee. The
Environmental Committee reports directly to the Chief Risk Officer.
2. STRATEGY
The Group’s objective is to act responsibly and manage the environmental and social risks associated with its operations.
Furthermore, we aim to contribute to and enable positive impacts on the environment. In order to achieve this, the Group
has clearly defined processes in place to identify and assess climate-related risks to our business. This approach enables
the Group to reduce our ecological footprint by using resources efficiently and promoting environmentally friendly
measures in order to mitigate climate change.
The Bank has reviewed all the operational activities, procured items, and outsourced services that it can control (present
and planned), and has identified all the environmental aspects relevant to the business. The direct environmental impact
of our business activity arises from energy, water, fuel, and other resource usage, waste, and emissions. The Bank has
established a comprehensive internal environmental system to manage its GHG emissions and is committed to reducing
them by closely monitoring its consumption of resources. In order to evaluate the significance of the impact for each of
the categories, we have developed a comprehensive evaluation methodology and applied it to the whole Group. Based
on this, annual goals are defined and specific initiatives and programmes are developed to attain them.
Since 2020, TBC has an ISO 14001:2015 certificate for its Environmental Management System. In 2021 and 2022,
TBC successfully completed the re-certification process. The renewal of the certificate for 2023 was conducted in
December 2023 and the following re-certification in 2024 was also completed successfully. More information about the
Environmental Management System can be found in the Risk Management section of this chapter on pages 119-122.
In 2021, the Group developed and approved its ESG Strategy. In 2024, we updated our ESG Strategy in order to reflect the
progress made during 2023 and adjust the targets and initiatives for future years.
1
List of activities which are excluded from financing.
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The Group’s ambition is to be the leading supporter of ESG principles in Georgia and the wider region. We aspire to
make our environmental impact net-zero. By developing our measurement methodologies and improving our data, we
have been able to define our net-zero pathway for direct environmental impact (Scope 1 and Scope 2 GHG emissions)
more accurately. We aim to achieve a net-zero direct environmental impact by 2030.
In 2024, we also continued to develop our plan to enable our indirect environmental impact (Scope 3 emissions) to reach
net-zero. We developed tools to calculate and model future GHG emissions in line with the Paris Agreement targets.
The GHG emissions pathways have been constructed based on the Science Based Initiatives targets3. Considering
the current state and accuracy level of data, we consider ourselves to be on the path towards a net-zero target in 2050.
Moreover, we seek to achieve net-zero for our environmental performance earlier and are developing a long-term
transition plan to reduce GHG emissions.
In December 2023, the Bank received support from the Technical Assistance of the Global Climate Partnership Fund
S.A., SICAV-SIF. The support comprised one year of consultancy services to support the Bank’s alignment with the Paris
Agreement targets for the reduction of GHG emissions. The project aimed to establish a methodology and suggest a
data collection process to measure and monitor the Group’s carbon footprint, as well as to ensure these results were
reported and clearly communicated to both internal and external stakeholders. The consultancy services, provided by
RINA Consulting S.p.A., covered the following sub-projects:
• Calculation of financed carbon emissions and refinement of the carbon assessment methodology;
• Calculation of TBC’s alignment with the Paris Agreement targets and elaboration of future emission scenarios; and
• Development of respective guidelines and forecasting tools based on the Science Based Initiative’s pathways.
This process was supported by climate-related training to strengthen the Bank’s capacity, knowledge, and capabilities
to manage decarbonisation action plans and to integrate them in TBC’s strategy and activities. In 2024, four different
training sessions and workshops were conducted, covering topics such as the Paris Agreement, net-zero targets,
transition planning, financed emissions, data collection and accuracy.
Since 2023, TBC has been implementing several different initiatives to support the management of climate-related risks
and opportunities:
• Advisory and product services for customers;
• Sectoral approach towards climate-related risks and opportunities;
• Climate-related training for TBC staff;
• Green taxonomy training and capacity building of TBC employees;
• Green mindset and green technology training for customers.
2.1. Climate-related risks and opportunities
Climate-related risks
The table below contains a summary of the potential transitional and physical risks identified by the Group for the
Georgian environment.
The time horizons considered in the assessment are short (0-3 years), medium (4-8 years), and long (above eight years).
The levels of possible impact are classified as low, medium, or high. The categories of low, medium, and high risk were
applied to compare the relative risk of sectors and risk categories. They do not indicate the materiality of the respective
risk. The same is true of the judgements of the riskiness of sub-categories of transitional or physical risk compared
to other sub-categories. Since these judgements are relative rather than absolute, they cannot be compared to other
countries or regions.
2022 ESG Strategy target / initiative
2023 status
2024 status
Target volume for 2022 was
GEL 750 million;
Volume of GEL 782 million was
achieved.
Target volume for 2023 was
GEL 1 billion;
Volume of GEL 1.23 billion was
achieved.
Target volume for 2024 was
GEL 1.4 billion;
Volume of GEL 1.73 billion was achieved.
Climate Change Policy developed and
approved1.
Development of sectoral guidelines –
Climate Risk Radar of the NBG.
Implementation of the ESG guidelines
of the National Bank of Georgia2.
The National Bank of Georgia
introduced the Green and Social
Taxonomy, developed in line with the
best international taxonomies. The
implementation process has been
finalised.
Green Taxonomy implemented.
Social Taxonomy implemented.
Green loan procedure implemented.
Harmonisation of the green loan
procedure and the Green Taxonomy
of the National Bank of Georgia (NBG).
Harmonisation of the green loan
procedure and the Green Taxonomy of
the National Bank of Georgia (NBG).
The framework on ESG profiles for
corporate customers developed.
Framework on ESG profiles
implemented for Top 20 corporate
customers.
The ESG Profile Methodology, which
was piloted in 2023, has been integrated
in the overall risk management process.
Development of ESG risk appetite
Regular reporting, monitoring, and
review established.
Definitions of the ESG risk appetite
updated.
Establishment of ESG training
framework for all TBC employees
Measure ESG awareness among
employees and customers.
ESG Survey for investors.
ESG awareness index among
employees measured.
ESG surveys among investors
conducted.
ESG matters integrated into customers’
surveys.
Separate ESG Strategies in material
subsidiaries developed.
ESG Strategies implemented and
supporting ESG function at the Group
level established.
ESG Strategies updated to reflect the
progress made during 2023.
Net-zero target for direct environmental
performance.
The Group’s direct performance has
been measured against the Paris
Agreement targets for the reduction
of GHG emissions.
Develop a plan to enable our direct
environmental impact to also reach net
zero.
Develop a plan to enable our indirect
environmental impact to also reach
net zero.
A methodology to calculate financed
emissions based on the PCAF
approaches has been developed
and financed emissions have been
calculated for six asset classes.
The Group’s indirect performance
has been measured against the Paris
Agreement targets for the reduction of
GHG emissions.
1
www.tbcbankgroup.com
2
www.nbg.gov.ge, in force starting from January 2025.
3
The Science Based Targets initiative (SBTi) is a corporate climate action organisation that enables companies and financial institutions worldwide to
play their part in combating the climate crisis (www.sciencebasedtargets.org)
The table below summarises the environmental and climate-related initiatives of the ESG Strategy in 2024:
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TBC ESG Academy
In 2024, TBC started its first ESG Academy course „Green Mindset and
Green Financing“ for employees and customers to raise awareness
about climate change, sustainable development and business models
as well as international best practices.
This course was co-created by TBC Bank and DEVELOR, with financial
support from the European Union through the technical assistance
programs of two European funds: the EFSE Development Facility and
the GGF Technical Assistance Facility.
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Transition risks
Physical risks
Risk sources
Policy and legal
Technology
Market
Reputation
Acute
Chronic
Types of
risks
– Enhanced
regulatory
environmental
and mandated
requirements:
may introduce
minimum
standard or
expectations
on green
credentials of
product outputs
or business
operations, and/
or enhanced
emissions-
reporting
obligations
– Substitution
of existing
products
and services
with lower
emissions
options,
including
requirements
to replace
manufacturing
technology
with cleaner
alternatives
– Investment in
technology
to reduce
emissions
or improve
the energy
efficiency of
operations and
households
– Changing
customer
behaviour,
including a
deliberate
move
to lower
carbon
footprint
products
– Increased
cost of raw
materials,
increased
volatility
and costs,
sourcing
restrictions
for carbon
heavy raw
materials
– Shifts in
consumer
preferences
to green
products
– Stigmatisation
of the sector,
resulting
in reduced
revenue from
negative
impacts on
workforce
management
and planning
(e.g., employee
attraction and
retention)
– Increased
stakeholder
concern or
negative
stakeholder
feedback
– Increased
severity of
extreme
weather
events
such as
floods
– Changes in
precipitation
patterns
and extreme
variability
in weather
patterns
affecting food
production
and living
environment
– Rising mean
temperatures
affecting
working
conditions,
living
conditions,
and local
infrastructure
– Rising
sea levels
affecting local
ecosystems,
increasing
subsidence,
and flood risks
Time
horizon
Medium
Long
Medium
Long
Medium
Long
Level of
potential
impacts
affecting
customers
and TBC
Low
Low
Low
Low
Medium
Medium
The overall and sectoral assessments of transitional and physical risks are given below. Each sector that has a share of 1%
or greater in the Bank’s gross loan portfolio is assessed separately. Furthermore, carbon-related sectors such as metals
and mining, oil and gas, are assessed separately, despite of having a share under 1%. The time horizon indicates when the
respective risk will start to materialise, while the level of potential impacts gives the level of the risk. It is assumed that the
level of risks remains the same in the following periods.
In 2024, we enhanced further our climate-related approaches. We reviewed our assessments of climate-related
transitional and physical risks on a sectoral level and incorporated the ESG Risk Radar considerations of the National
Bank of Georgia (NBG)1, especially for the short-term perspective. The scoring system of the ESG Risk Radar has been
applied for all sectors in Georgia classified as main sectors by the NACE sector codes (Eurostat 2008). Currently, the
highest score is 9, indicating that no critical sectors have yet been identified in Georgia. However, some sectors with
scores of 7, 8, and 9 need to be considered as potentially high risk, while others (scores 5 and 6) render the portfolio
vulnerable to climates risks2. The ESG Risk Radar provides a foundation for the assessment of climate-related risks on
a sectoral and customer level. We consider the ESG Risk Radar scores when addressing the risks and opportunities of
climate-related activities. We developed our internal ESG profiles methodology based on the ESG Risk Radar. More
details are given in the section on the overall risk management process on pages 121-122. Furthermore, the opportunities
related to climate-exposed sectors are given below in the section on climate-related opportunities on page 116.
1
www.nbg.gov.ge
2
Score 7 - A Agriculture, Forestry and Fishing, Growing of non-perennial Crops, Forestry and Logging, Manufacture of Food Products, Manufacture
of Chemicals and Chemical Products, Electricity, Gas, Steam and Air Conditioning Supply, Water Supply, Sewerage, Waste Management and
Remediation Activities. Score 6 - Growing of perennial Crops, Animal Production, Fishing and Aquaculture, Manufacturing, Manufacture of
Tobacco Products, Manufacture of Coke and refined Petroleum Products, Manufacture of Motor Vehicles, Trailers and Semi-Trailers, Construction,
Transportation and Storage (www.nbg.gov.ge).
Low risk
High risk
Medium risk
Energy & utilities
Real estate
Transportation
Mining
Oil & gas
Agriculture
Construction
Food industry
Hospitality & leisure
Trade
Financial services
Services
Healthcare
TRANSITION RISKS
Energy & utilities
Real estate
Transportation
Mining
Oil & gas
Agriculture
Construction
Food industry
Hospitality & leisure
Trade
Financial services
Services
Healthcare
Short term
Medium term
Long term
PHYSICAL RISK
Short term
Medium term
Long term
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THE OVERALL ASSESSMENT OF THE IMPACT OF TRANSITIONAL POLICY AND LEGAL MEASURES
TBC Bank has assessed the potential impact of the policy measures laid out in Georgia’s 2030 Climate Change Strategy1
and Climate Strategy Action Plan2 on the different economic sectors that it finances. As a summary of the potential
impact of the various transition risks identified, the transitional risks in Georgia and on the TBC Bank’s activities are low.
Given that trade and services dominate the Georgian economy, the policy measures outlined in Georgia’s 2030 Climate
Change Strategy will have a low overall impact on those economic sectors, especially in the short and medium term.
Taking into consideration Georgia’s status as a transitional, growing economy, Georgia’s 2030 Climate Change Strategy
aims not to impede GDP growth with policy measures but rather to support a smooth transition where necessary. It is
worth noting that the economic sectors most affected by transitional risks worldwide, such as mining, crude petroleum,
natural gas and metal ores, manufacturing coke and refined petroleum products3, are only present to a very limited extent
in Georgia, resulting in the transitional measures having a low overall impact on economic growth, if any.
Technology risk
Technology risk is a subcategory of transition risk. The technology risk related to climate change, unnecessary
investments in technological development, or missing investments in technological improvements are assessed to be
low in Georgia. Georgian companies invest very little in the development of new green technologies; rather, they benefit
from technologies developed in other, technologically advanced countries and deploy technologies which are already
tested and established. Therefore, failed investments are unlikely to occur.
Market and reputational risk
Market risk is low, as consumer behaviour in Georgia shows a very slow trend towards lower carbon footprint products.
For reputational risk, no material impact is expected, as TBC Bank has developed Environmental and Social Risk
Management Procedures to identify, assess, manage, and monitor environmental and social risks. These procedures
are fully compliant with Georgian environmental legislation and follow international best practices. Please see more
information about the environmental management system on pages 119-122.
THE OVERALL ASSESSMENT OF THE IMPACT OF THE ACUTE AND CHRONIC PHYSICAL RISKS
Georgia’s geographical location and natural conditions, as a small country with a mountainous landscape, a Black Sea
coastal zone, and semi-arid areas in the Southeast, contribute to the country’s vulnerability to the physical risks of climate
change. The sectors that are thought to be most vulnerable to climate change in Georgia include agriculture, forestry,
tourism, and healthcare4.
The impact of acute and chronic physical risks on economic sectors which are financed by TBC Bank will materialise
over time. For the Group, risks can materialise through the impairment of asset values and deterioration in the
creditworthiness of customers operating in Georgia. Certain geographic areas and economic sectors, such as winter
resorts and agricultural land, are already partially affected and might deteriorate further in the medium term. The overall
assessment of the potential impact of acute and chronic physical risks on Georgia and on TBC Bank’s activities is
medium in a long-term perspective. Currently, no material impact on TBC Bank’s activities is observable. It is understood
that climate change risks are largely associated with longer-term impacts; however, those longer-term impacts are
unclear, especially considering the shorter-term maturity structure of the Bank’s loan portfolio.
Climate-related opportunities
Climate-related opportunities are directly linked with climate risks and economic sectors that have significant negative
environmental impact and/or might be potentially affected by climate risks. The financing of mitigation measures that
reduce GHG emissions covers sectors such as transportation, building, energy generation and transmission, agriculture,
and manufacturing. Adaptation to climate change covers sectors of agriculture, infrastructure, tourism, and water
resources.
TBC’s approach corresponds with the Climate Action Plan of Georgia for the implementation of the Nationally
Determined Contribution targets that are given below:
• To mitigate projected greenhouse gas emissions in the transport sector by 15% by 2030;
• To support the low carbon development of the building sector through encouraging energy efficient technologies
and services;
• To mitigate projected greenhouse gas emissions in the energy generation and transmission sector by 15% by 2030;
• To support the low carbon development of agriculture sector through encouraging climate smart agricultural
technologies and services;
1
www.mepa.gov.ge
2
www.mepa.gov.ge
3
Key elements of the 2021 Biennial Exploratory Scenario: Financial risks from climate change | Bank of England
4 www.unfccc.int
• To support the low carbon development of industry sector through encouraging innovative, climate-friendly
technologies and services, in order to mitigate projected emissions by 5%;
• To support the low carbon development of the waste sector through encouraging the innovative, climate-friendly
technologies and services.
We acknowledge the importance of sustainable lending and are actively implementing a standardised approach to
sustainable finance, including energy efficiency, renewable energy, and resource efficiency financing for our retail
and business clients. The largest part of our sustainable portfolio consists of energy efficiency, renewable energy, and
resource efficiency financing and equals GEL 952 million out of GEL 1.73 billion. The remaining part of the sustainable
portfolio consists of women and youth financing, affordable housing, and start-up loans. The growth targets of the
sustainable portfolio are set in the ESG Strategy annually; the targets are defined after considering customer needs for
green financing and discussions with respective business departments of TBC Bank. For 2025, the target volume of GEL
2 billion was approved by the Board of Directors.
Considering the existing potential of renewable energy production, TBC became the leading partner in Georgia in local
renewable energy financing, including hydropower stations.
We actively cooperate with international partners to attract financing for sustainable lending:
• TBC is actively mobilising green funds from partner international financial institutions to promote sustainable
economic growth, primarily by financing energy efficiency, resource efficiency, and renewable energy projects.
Those facilities will help local businesses and households to become more competitive by investing in high-
performance technologies and adopting energy-efficient practices. In addition, financing is coupled with technical
assistance programmes, providing know-how and technical expertise to borrowers and ensuring that their green
investments are successfully implemented. Several green facilities have grant incentives in place as well. As of
year-end 2024, TBC had various green facilities in place, totalling up to GEL 960 million, from which around GEL 460
million has been attracted within 2024 from long-standing international partners, such as EIB, EBRD, GGF, IFC and
DEG;
• In addition, in 2022, after receiving accreditation from the Green Climate Fund (GCF) in 2021, TBC signed an
Accreditation Master Agreement (AMA), which is the central instrument setting out the basic terms and conditions
to work with the Green Climate Fund (GCF). This authorises TBC Bank to access and mobilise financial resources
from the GCF and formalises TBC’s accountability in carrying out GCF-approved projects appropriately;
• The Bank acknowledges the importance of addressing gender equality and the empowerment of women and
has in place several facilities that promote women’s entrepreneurship by supporting increased access to finance,
providing non-financial services as well as knowledge-sharing opportunities. In addition, the Bank has dedicated
funds supporting young borrowers and entrepreneurs, providing loans for education, mortgage loans, and loans to
start businesses;
• TBC Bank has in place several guarantee facilities with a special focus on start-ups, women, and regional
entrepreneurs. These risk-sharing instruments serve as a partial substitute for collateral and enable the Bank
to increase access to financing for underserved target groups, granting them better growth and development
opportunities.
2.2. Climate-related risks and opportunities on the businesses, strategy, and financial planning
In 2024, we have been focusing on the development of detailed transitional plans, which are based on the results of
measuring the Group’s performance against the Paris Agreement targets for the reduction of GHG emissions. To support
this process, we contracted an international consultancy company and local and international experts and developed
a detailed scope of work covering the following: calculation of financed emissions, carbon reporting, Paris Agreement
alignment, development of a decarbonisation action plan and carbon impact assessment methodology, carbon footprint
assessments of selected customers, and building institutional capacity.
To support our transition plan, we have already implemented several different measures:
• We installed solar power plants in two locations with a total capacity of 130 kW. Total investments equal to GEL
23,000. The share of renewable energy in our total electricity consumption in the regions grew up to 50%;
• We are gradually increasing the share of electric and hybrid cars in our car fleet, which is currently equal to 67% of
the total car fleet;
• Starting in 2022, we installed energy-efficient heating / cooling systems in all newly renovated branches; total
investment, including construction works, amounts to GEL 2.3 million;
• During 2024, we renewed a part of the IT infrastructure with energy-efficient servers. As a result, the computational
resources of the servers increased by 20-30%, without leading to any additional electricity consumption, hence
these changes led to saving 20-30% in potential energy expenditure;
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• Furthermore, we are going to install 36 electric charger stations at our head office and other premises; this planned
investment amounts to GEL 450,000.
In order to support the greening of our portfolio and reduce our financed emissions (Scope 3), we are enhancing our
green financing efforts:
• We are increasing our volume of green financing every year;
• In 2024, we exceeded our strategic target of GEL 1.4 billion for the sustainable portfolio volume by 24 % and reached
GEL 1.73 billion;
• Acquired green funding from various international financial institutions is increasing every year. As of 2024, it stands
at GEL 960 million.
The main opportunities lie in energy-efficiency and renewable energy financing. However, we offer a wide range of
other green and climate-related financing to our customers. The table below provides a summary of climate-related
opportunities by sector.
Sector
% in standalone
Bank’s loan book
GHG Emissions
Contribution1
Climate Risk
Score2
Product Catalogue
Agriculture
4.6%
4
7
Energy-efficiency loans
Climate-smart technologies
New irrigation systems
Automotive
1.3%
4
5
Hybrid and electric cars,
Euro 5, Euro 6 and Euro 7 cars
Energy-efficiency loans
Industry autos
Construction
6.9%
3
6
Energy-efficiency loans for construction projects,
Production of energy-efficient building materials.
Energy-efficiency loans for machinery / appliances
Charging stations for electric cars
Energy &
utilities
4.7%
4
7
Renewable energy financing
Charging stations for electric cars
Food industry
5.4%
4
7
Energy-efficiency loans (warehouses, storage,
appliances, cars)
Individuals
37.1%
N/A
N/A
Energy-efficiency mortgages
Hybrid and electric car loans
Manufacturing
0.7%
3.5
6
Energy-efficiency loans (machinery, appliances,
buildings)
Carbon filtering
Metals and
mining
0.8%
4
5
Energy-efficiency loans (machinery, appliances,
buildings)
Oil and gas
1.2%
4
7
Energy-efficiency loans for building charging
stations for electric cars
Real estate
9.5%
3
5
Energy-efficiency loans
Renewable energy financing (solar panels)
Transportation
1.4%
3.5
6
Hybrid and electric cars,
Euro 5, Euro 6 and Euro 7 cars, buses, trucks
In 2024, we continued to incorporate climate and broader ESG considerations into our financial planning processes.
Additional qualitative considerations related to climate and ESG matters were incorporated in the 2024 financial planning
cycle. In 2024, the Group also continued aligning loan portfolio growth planning with the risks and opportunities in
different business segments: retail, MSME and corporate.
As of the end of 2024, the sustainable portfolio of the Bank, which equals to GEL 1.73 billion, includes exposures with
different purposes, such as: energy-efficiency loans, electric car loans, renewable energy financing for solar panels and
hydro power plants.
Sector
% in standalone Bank’s loan book Share in the sustainable portfolio
Focus areas for financing in 2024
Retail
segment
36%
1%
Energy-efficiency
Electric and hybrid cars
Mortgages
Solar panels
MSME
segment
24%
6%
Energy-efficiency
Renewable energy
Climate-smart technologies
Hybrid and electric cars
Industry autos
Corporate
segment
40%
93%
Energy-efficiency
Renewable energy
Climate-smart technologies
New irrigation systems
Industry autos
In 2025, we will focus on integrating tailored sectoral transitions plans and Paris Agreement alignment considerations
into the financial planning process, elaborating the respective methodologies and tools and increasing our internal
expertise and capacity.
2.3. Climate-related scenarios
TBC is taking significant steps to develop its scenario analysis capabilities to better understand and act on the
implications of climate-related risks and opportunities for our business and customers. The development of climate
related scenario analysis is a challenge, as the availability, accessibility, and suitability of climate data and subsector
information for financial risk analysis, as well as climate-related risk modelling capabilities, are very limited in Georgia and
still evolving. Despite these limitations, the scenario analysis allows us to test a range of possible future climate pathways
and understand the nature and magnitude of the risks they present. The purpose of scenario analysis is not to forecast
the future but to understand and prepare to manage the risks that could arise.
In 2024, the National Bank of Georgia (NBG) has developed a comprehensive Climate Stress Testing Framework1 that
integrates multiple analytical modules and specialised tools to assess both acute physical risks and transition risks. By
covering both physical and transition risks, the framework provides a holistic view of the challenges posed by climate
change. It also uses NGFS scenarios as reference scenarios to align the stress tests with globally recognised standards.
The framework is comprehensive, covering both retail (Household sector) and non-retail portfolios (Corporate sector),
ensuring that all significant exposures within Georgia’s financial sector are evaluated for potential climate-related
vulnerabilities.
The Climate Stress Testing Framework
The Climate Stress Testing Framework includes3:
• Acute Physical Climate Risk Module4 which focuses on assessing the immediate impacts of extreme weather
events on the Georgian economy and financial system. This module utilises historical data, scenario construction,
and advanced modelling techniques to project the economic damage associated with specific hazards such
as heatwaves, extreme precipitation, and wind events. These projections are then used to evaluate the broader
economic impacts, including potential changes in GDP and sectoral outputs.
• Transition Risk and Chronic Physical Risk Module5, which addresses the longer-term risks associated with gradual
climate change and the transition to a low-carbon economy. By analysing scenarios such as delayed transition
pathways, this module examines how abrupt policy changes, technological shifts, and market dynamics can affect
the financial sector.
1
The Climate Risk Radar assigns a GHG-emissions contribution score according to the National Greenhouse Gas Inventory Report of Georgia 1990-
2017.
2
The Climate Risk Radar defines 4 risk categories: 0-3 neglectable, 4-5 vulnerable, 6-7 high risk, 8-10 critical. There are no sectors with a critical risk
profile.
3
www.nbg.gov.ge
4 The NGFS does not provide acute climate risk assessments and scenarios specific to Georgia; therefore, alternative sources were needed. The GIZ
Study, “Supporting Climate Resilient Economic Development in Georgia,” offers essential information on historical and projected climate hazards
and their economic effects for Georgia. In particular, it analyses past extreme climate events and the resulting monetary damages. These findings
are then utilised to synthesise the anticipated differential effects of heatwaves, extreme precipitation, and extreme wind events on various sectors of
the Georgian economy. (GIZ. 2022. Supporting Climate Resilient Economic Development in Georgia: www.giz.de)
5
For Georgia, these projections are generated using three Integrated Assessment Models (IAMs): REMIND-MAgPIE, MESSAGEix-GLOBIOM, and
GCAM. Each of these models produces different projections of key climate-related and socio-economic variables, which are categorized into
several scenarios. The REMIND-MAgPIE model was selected as the preferred tool for analysing long-term climate change scenarios relevant to
Georgia due to several reasons: a) the REMIND-MAgPIE model groups Georgia into a region that is more aligned with its primary trading partners
and economies with similar structures; b) the REMIND-MAgPIE model was found to be closer in its CO2 emissions projections, particularly in the
energy sector; c) REMIND-MAgPIE was observed to provide more realistic projections, especially under the Net Zero 2050 scenario, and predicted
lower and more plausible carbon prices and government carbon-tax revenues compared to MESSAGEix-GLOBIOM; d) the REMIND-MAgPIE model
displayed more logical and consistent relationships between GDP growth and energy consumption, particularly in the industrial sector.
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• Stress Test Module for Corporate Sector is designed to assess the exposure of corporate loans to climate-related
risks, focusing on the potential impacts on non-performing loans (NPLs), loan loss provisions within each sector
and banks’ capital adequacy. It integrates outputs from both the acute physical and transition risk modules to
project sector-specific NPL ratios under various climate scenarios. This approach allows for a detailed analysis of
how different industries within the corporate sector might be affected by climate-related risks, particularly those
industries that are more carbon-intensive or less able to pass on costs associated with climate policies. The module
uses NBG’s Top-Down Stress Test Model to simulate the financial impacts on bank capital and overall sector
stability.
• Stress Test Module for Household Sector evaluates the impact of climate-related risks on household loans,
focusing on NPL ratios, loan loss provisions and their effect on banks’ capital adequacy. It utilises projections of key
variables, such as real estate prices and loan-to-value ratios, under different climate scenarios. By assessing the
household sector’s vulnerability to both acute physical and transition risks, this module provides insights into the
broader impacts on financial stability, enabling a comprehensive evaluation of potential stress factors on household
loan portfolios.
A key aspect of this modelling approach is the deviation from traditional Input-Output (IO) models. Typically, in IO
models, gross output is determined endogenously from the exogenous final demand. However, in the context of extreme
weather events, this assumption does not hold. Such events impose significant supply-side constraints on affected
industries, limiting their ability to meet future demand for their goods. As a result, for these industries, final demand can
no longer be considered exogenous because it must now account for the supply limitations imposed by the climate
shock.
To address this complexity, a Mixed Endogenous/Exogenous Model (MEEM) is employed. This approach accommodates
the simultaneous supply and demand constraints that arise when industries face disruptions due to acute physical risks.
The MEEM, as described by Miller and Blair (1985), allows for a more accurate representation of the economic dynamics
in scenarios where industries cannot fulfil the exogenously set demands due to physical constraints1.
Extreme weather events are treated as one-time shocks, with effects projected for the year following their occurrence,
i.e., a one-year projection. However, the impacts of these hazards on subsequent years are also incorporated through
frontloading. Frontloading ensures that the cumulative effects of each hazard on GDP and sectoral Gross Value Added
(GVA) are captured, providing a more comprehensive picture of the long-term economic impacts.
In addition to GDP projections, additional macroeconomic variables are required as inputs to the NBG’s top-down
stress test model. ARDL models2 are particularly well-suited for studying the relationships between macroeconomic
indicators (such as GDP, inflation, and interest rates) over time. They help to examine how changes in one variable affect
another across different time horizons and to forecast future values of variables based on their historical patterns and
relationships.
Scenario Selection
The NGFS has designed seven scenarios as part of its Phase IV, all of which share similar socio-economic assumptions
and account for the recent energy market implications, such as those arising from the war in Ukraine. These scenarios
are categorized into four groups: Orderly Scenarios (three scenarios), Disorderly Scenarios, Hot House World Scenarios
(two scenarios), Too Little, Too Late Scenarios. The Delayed Transition with Medium Chronic Physical Risks scenario was
chosen from the Disorderly category. This scenario was selected because it represents one of the highest transition risk
scenarios, reflecting the substantial challenges that may arise if global climate action is delayed and then implemented
abruptly. Delayed Transition assumes global emissions do not decrease until 2030, requiring strong policies thereafter
to limit warming to below 2°C. This scenario involves higher transition risks due to delayed and uneven policy
implementation across countries. Additional expert judgment was applied to the results to make them more relevant and
appropriate to the Georgian context.
Conclusions
Acute Physical Climate Risk Scenario: The results by segments show that the potential impacts on non-performing loans
(NPLs) in the retail, micro, SME, and corporate segments are immaterial. A few sectors show negative trends, such as
agriculture, construction, industry, and non-renewable energy. However, considering that these are front-loaded effects,
the results become negligible.
Transition Risk and Chronic Physical Risk Scenario: The results by segments show that the potential impacts on non-
performing loans (NPLs) in the retail, micro, SME, and corporate segments are negligible.
1
www.nbg.gov.ge
2
The Auto Regressive Distributed Lag (ARDL) model is a key tool for analysing economic time series data, especially when variables may be
interrelated over time. The key features of ARDL models include their flexibility in capturing dynamic relationships between variables, their ability
to account for both short-term and long-term effects, and their usefulness in analysing complex economic relationships. In the case of a climate
stress test exercise, ARDL models are utilised to assess the long-run relationship between various macroeconomic variables—such as the nominal
effective exchange rates, real estate prices—and real GDP growth. The results of these assessments are the Long-Run Multipliers (LRMs) for each
macroeconomic variable, which are then used to generate projections for each variable. (www.nbg.gov.ge)
Even if the climate stress tests are not forecasting tools, they indicate the level of resilience towards climate shocks,
especially in the short and medium term. Longer-term effects cannot be observed sufficiently, as the local regulator
limits the maximum maturity of a loan is limited to 15 years, with a few exceptions; hence the average maturity of the
TBC’s loan portfolio is shorter than the 30-year time-horizon of climate stress testing. Furthermore, the climate stress
tests show that the most vulnerable sectors are energy (non-renewable) & utilities and oil and gas, if the transition risks
materialise. However, as mentioned above, transition risk is rather low in Georgia.
3. RISK MANAGEMENT
Processes for identifying and assessing climate-related risks
TBC has a comprehensive Environmental and Climate Change Policy in place, which governs our Environmental
Management System (“EMS”) and climate-related framework within the Group. Our Environmental and Climate Change
Policy ensures that we:
• establish methodologies to advance climate action and integrate the respective approaches into the operations
and management processes of the Group;
• comply with applicable environmental, health and safety, and labour regulations;
• use sound environmental, health and safety, and labour practices; and
• take reasonable steps to ensure that our customers also fulfil their environmental and social responsibilities.
Our Environmental and Climate Change Policy is fully compliant with Georgian environmental legislation and follows
international best practices. The full policy is available at www.tbcbankgroup.com.
Our EMS is based on four pillars:
• Internal environmental activities;
• Environmental and social risk management in lending;
• Sustainable finance; and
• External communications
INTERNAL ENVIRONMENTAL ACTIVITIES
Calculation of greenhouse gas (“GHG”) emissions
The implementation of an internal EMS addresses the Group’s consumption of resources. The Bank has reviewed all
its operational activities, procured items, and outsourced services that it can control (present and planned), and has
identified all of the environmental aspects relevant to the business. These are sub-categorised into indirect and direct
environmental aspects, analysed through a comprehensive scorecard, and managed accordingly.
TBC Bank has established a comprehensive internal environmental system to manage and report on the Group’s GHG
emissions and is committed to reducing its GHG emissions by closely monitoring its consumption of energy, water, and
paper. The guidelines for documenting environmental data have been developed and responsible staff in subsidiary
companies have been assigned to collect and provide the required data. More details on the Group’s GHG emissions
and targets are given in the section on metrics and targets on pages 124-126.
Lending operations
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 can materialise through the impairment of
asset values and a deterioration in the creditworthiness of customers, which could result in a reduction in the Group’s
profitability. The Group may also become exposed to reputational risks because of lending to, or other business
operations with, customers deemed to be contributing to climate change.
As mentioned above, climate risks can materialise through the impairment of asset values and the deteriorating
creditworthiness of customers. In order to increase its understanding of climate-related risks on the Bank’s loan portfolio,
the Bank performs annual sectoral risk assessments, as different sectors might be vulnerable to different climate-related
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risks over different time horizons. The risk assessment process and content are based on TCFD recommendations,
climate-related documents published by the Bank of England, the climate change assessments of Georgia performed
as part of the IPCC reports, the ESG Risk Radar of the NBG, and the targets and strategy 2030 defined by the Georgian
Government to achieve the National Determined Contribution of Georgia1. The assessment of levels and impacts might
change in the future, based on further reviews of the methodology, deep-dive analyses, and increased understanding of
the impact of climate change risks.
The sectoral assessment was performed with the involvement of the business and credit risk specialists responsible for
the respective economic sectors in the Bank.
The sectoral distribution of the loan portfolio as of 31 December 2024 is given in the table below:
1
A nationally-determined contribution (NDC) is a national plan highlighting climate change mitigation, including climate-related targets for
greenhouse gas emission reductions, policies and measures governments aim to implement in response to climate change and as a contribution to
achieve the global targets set out in the Paris Agreement.
The maturity of assets is essential when defining the different time horizons for analysis and when assessing the
materiality of climate-related risks for the different sectors. The maturity structure of the loan portfolio shows that the
majority of assets are distributed in much shorter time horizons than the timeframe in which the impacts of climate
change, especially of physical risks, may arise in Georgia.
The maturity distribution of the loan portfolio as of 31 December 2024 is given in the table below for standalone Bank:
Gross loans by sectors for standalone Bank
Total exposure
(GEL mln)
% of gross
portfolio
Individual
9,126.8
37.2%
Real estate
2,816.1
11.5%
Trade
1,686.9
6.9%
Construction
1,578.8
6.4%
Other
1,391.5
5.7%
Food industry
1,353.3
5.5%
Hospitality & leisure
1,323.6
5.4%
Agriculture
1,044.9
4.3%
Energy & utilities
895.6
3.7%
Healthcare
580.5
2.4%
Services
585.9
2.4%
Financial services
471.3
1.9%
Transportation
380.7
1.6%
Oil & gas
299.9
1.2%
Pawn shops
245.5
1.0%
Automotive
217.7
0.9%
Metals and mining
191.4
0.8%
Manufacturing
176.2
0.7%
Media & publishing
115.8
0.4%
Communication
34.0
0.1%
NGOs & public sector
1.3
0.0%
Government sector
0.1
0.0%
Total loans to customers
24,517.8
100%
Sector
Total exposure
(GEL mln)
% of gross
portfolio
Volume of
loans <8y
% of
loans <8y
Volume of
loans <15y
% of
loans <15y
Individual
9,126.8
37.2%
4,751.4
52%
8,355.6
92%
Real estate
2,816.1
11.5%
2,141.6
76%
2,816.1
100%
Trade
1,686.9
6.9%
1,510.2
90%
1,686.7
100%
Construction
1,578.8
6.4%
1,394.1
88%
1,578.8
100%
Other
1,391.5
5.7%
1,099.1
79%
1,391.5
100%
Food industry
1,353.3
5.5%
1,183.3
87%
1,353.3
100%
Hospitality & leisure
1,323.6
5.4%
572.4
43%
1,322.3
100%
Agriculture
1,044.9
4.3%
877.9
84%
1,044.9
100%
Energy & utilities
895.6
3.7%
415.0
46%
872.6
97%
Healthcare
580.5
2.4%
485.5
84%
580.5
100%
Services
585.9
2.4%
369.0
63%
585.7
100%
Financial services
471.3
1.9%
458.1
97%
471.3
100%
Transportation
380.7
1.6%
340.3
89%
380.7
100%
Oil & gas
299.9
1.2%
287.3
96%
299.9
100%
Pawn shops
245.5
1.0%
245.4
100%
245.4
100%
Automotive
217.7
0.9%
178.6
82%
217.7
100%
Metals and mining
191.4
0.8%
157.2
82%
191.4
100%
Manufacturing
176.2
0.7%
148.5
84%
176.2
100%
Media & publishing
115.8
0.4%
109.5
95%
115.8
100%
Communication
34.0
0.1%
33.8
99%
34.0
100%
NGOs & public sector
1.3
0.0%
1.1
85%
1.3
100%
Government sector
0.1
0.0%
0.1
100%
0.1
100%
Total loans to
customers (gross)
24,517.8
100%
16,759.4
68%
23,721.8
97%
Processes for managing climate-related and environmental risks in lending
Since 2012, TBC Bank has had a process in place to consider environmental and social risk that aims to mitigate
climate change, which was established in line with industry guidelines. TBC Bank has developed E&S risk management
procedures to identify, assess, manage, and monitor environmental and social risks that are fully compliant with
Georgian environmental legislation, follow international best practices, and incorporate appropriate consideration of
IFC Performance Standards, EBRD Performance Requirements (PRs), and ADB’s Safeguard Requirements (SRs). These
procedures are fully integrated into the credit risk management process and are routinely applied to SMEs and corporate
customers. In collaboration with partner IFIs, TBC Bank has developed a clear E&S risk categorisation matrix. Projects
that are to be financed are analysed and classified according to E&S risk categories (low, medium, high and A category);
where necessary, deep-dive analysis and due diligence are performed.
In 2024, we have been integrating the ESG Risk Radar scoring approach of the NBG into the environmental and social
risk categorisation of the client’s business activities. Starting from 2025, our approach will include three components:
environmental risk, social risk and climate risk. The risk categories of each component may differ for different business
activities. When finalising each transaction’s E&S risk category, priority is given to the most important risk component.
Additionally, specialised external companies are involved in the detailed E&S risk assessment of Category A projects,
such as hydroelectric plants. In 2023, TBC Bank developed an ESG Profile Methodology for its top 20 corporate
customers, with the aim of incorporating an ESG Profile scorecard in the overall risk management process. In 2024,
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the methodology was refined further. ESG factors such as climate adaptation, transition to low-carbon activities,
implementation of green technologies, diversity and inclusion, and good corporate governance are considered during
the assessment and respective scores are assigned based on expert judgment. The ESG profile consists of four main
components:
• Climate change – covering physical and transitional risks;
• Environmental – covering environmental and social risks;
• Social – covering diversity, employee benefits and equal/fair pay;
• Governance – covering ESG governance, the Company’s disclosures, and diversity at Board and executive
management levels.
The results of the assessment will be useful for the development of decarbonisation and transition plans. The ESG Profile
Methodology is considered to be at an initial stage and will evolve in the future as TBC’s knowledge and expertise and
the local regulatory framework for climate-related topics develop.
The table depicts the business loan portfolio broken down by E&S categories, by loan volumes.
High
Category A
30%
29%
1%
4%
11%
17%
Medium
Low
55%
52%
0.0%
10%
20%
30%
40%
50%
60%
70%
2024
2023
BUSINESS GROSS LOAN PORTFOLIO BREAKDOWN BY E&S CATEGORIES (BY SHARES)
Low risk – transactions with minimal or no adverse social, environmental, and/or climate impacts, which are not generally
subject to further assessment (beyond their identification as such), except for the requirement for customer’s (assent/
certification/disclosure) to/of compliance/non-compliance with local and national environmental, health and safety and
labour laws and regulations.
Medium risk – transactions with limited potential for adverse social, environmental, and/or climate impacts that are few in
number, generally site-specific, largely reversible, clearly evident at the time of the assessment, and readily addressable
through mitigation measures, which typically require a limited or focused environmental and/or social assessment, or
straightforward application of environmental siting, pollution standards, design criteria, or construction standards.
High risk – transactions with potentially highly significant, negative, and/or long-term environmental, social and/or
climate impacts, the magnitude of which may be difficult to determine at the loan application stage. These typically
require analysis of environmental and social risks and impacts in the context of the total area of influence of the
customer’s operations. As part of the risk assessment, the client will identify individuals and groups that may be
differentially or disproportionately affected by its operations.
Category A – transactions with potentially significant adverse social, environmental, and/or climate impacts that may
be diverse, irreversible, or unprecedented, the assessment of which usually requires inputs from independent external
experts and may require the involvement of IFI E&S specialists in the due diligence assessment process.
In addition, we strive to make a positive contribution to the development of private companies and assist them in the
proper management of environmental and social risks related to their business activities. In cases where we identify
any non-compliance with local legislative requirements and/or TBC’s standards, we develop Environmental and Social
Action Plans (ESAP) for our clients to assist them in enhancing their environmental performance and we closely monitor
their implementation.
Other risk categories
Climate risk might impact other, more traditional risk categories for banking such as: market risk, operational risk, liquidity
risk, and reputational risk. A summary of the assessment is given in the table below. Certain risk factors, which were
identified for operational and reputational risks, are already covered under the existing risk management framework.
Banking risk types
Impact from physical risk
Impact from transition risk
Market risk
No material impact expected
No material impact expected
Liquidity risk
No material impact expected
No material impact expected
Operational risk
Extreme events that would cause damage to
the Group’s own sites could affect its ability
to provide services to its clients (e.g., lack of
electricity supply, inability for employees to work
in premises).
No material impact expected
No material impact expected
Reputational risk
No material impact expected
Financing to high-emitting borrowers
could affect brand image, as perceived
by stakeholders.
No material impact expected
Supply chain monitoring
As one of the largest purchasers in the country, we acknowledge and understand the social, economic, and
environmental impact of our procurement decisions and operations. In 2019, we developed an Environmental and
Social Risk Management Questionnaire in order to screen suppliers. We also regularly assess our long-term contractor
companies’ environmental and social risks. In case we identify any non-compliance with our E&S standards, our ESRM
team develops implementation Environmental and Social Action Plans (ESAPs) for each company and monitors their
implementation.
Raising environmental awareness among our employees
We believe that raising environmental awareness among our employees is vital for the effective implementation of EMS
and to encourage new eco-friendly ideas and initiatives within the organisation.
For this purpose, we actively run various environmental, climate-related and social training programmes, which include:
• Training on environmental and climate change topics for new employees;
• Climate change and green lending training for credit and front office staff;
• An annual mandatory online EMS and climate e-learning course for all staff, followed by a self-evaluation test;
• TBC ESG Academy with the green mindset and green financing course for front- and back-office staff.
In 2024, 92% of all staff, including senior management, successfully passed an online course and a self-evaluation test
about TBC’s EMS.
EXTERNAL COMMUNICATION
TBC pays significant attention to external communication of E&S matters with existing and potential customers and
other stakeholders. The feedback and recommendations received from our stakeholders and other interested parties
enable us to continuously improve our E&S performance.
Our grievance mechanism enables any interested party to register complaints with regards to E&S issues via our website
www.tbcbank.com.ge. All complaints are thoroughly analysed and addressed in a timely manner.
TBC Bank has successfully passed the third-year surveillance audit of the Environmental Management System, ISO
14001:2015. This means that TBC’s Environmental System is managed in accordance with international standards and
requirements. The 2024 certification process was completed successfully.
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TBC Bank annually discloses its Environmental and Social Performance Annual Report to all its partner International
Financial Institutions. The report includes detailed information about Environmental and Social Risk Management in
Lending, the distribution of the Bank’s business portfolio in terms of environmental and social risk, a breakdown of its
sustainable portfolio, respective procedure updates etc.
Since 2019, TBC Bank releases its annual full-scale Sustainability Report, which is prepared in accordance with Global
Reporting Initiative (GRI) standards. The Sustainability Report helps the Company to understand its role and influence on
sustainable development issues such as climate change, human rights, and social welfare. The report is available at www.
tbcbankgroup.com.
4. METRICS AND TARGETS
The metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk
management process
The metrics related to the Group’s own operations
TBC Bank has established a comprehensive internal environmental system to manage and report on the Group’s GHG
emissions and is committed to reducing its GHG emissions by closely monitoring its consumption of energy, water, and
paper. The guidelines for documenting environmental data have been developed and responsible staff in subsidiary
companies have been assigned to collect and provide the required data. TBC Bank also commissioned Bureau Veritas
Georgia LLC, an independent consultant and certification company, to verify the measurements of its GHG emissions.
The company provided a limited assurance covering historical data and information.
Below is a summary of TBC Group’s results in terms of Scope 1, Scope 2, and Scope 3 (flights) GHG emissions, water and
paper consumption, performance against 2024 targets, and targets for 2025.
Total GHG emissions (CO2) (tonnes) and KPIs
Actual
2022
Actual
2023
Actual
2024
2024
target
2024
result
2025
targets
Scope 1* - Fuel combustion
(heating, vehicles, generators)
3,175
3,042
3,076
Increase below 5%
1%
4%
Scope 2 - Electricity consumption
1,489
1,470
1,494
Increase below 4%
2%
-3%
Scope 3 - International flights
506
1,591
539
Decrease -44%
-66%
0%
Total emissions (tCO2)
5,170
6,103
5,109
Decrease -8%
-16%
2%
Total emissions per full time employee (tCO2/pp)
0.62
0.70
0.56
Decrease -8%
-20%
-6%
Water consumption per employee (m3/pp)
8.90
8.62
7.23
Increase 3%
-16%
13%
Printing paper per person in reams
12.67
12.24
11.03
Increase 1%
-10%
-9%
Scope 1 - In 2024, this indicator increased by 1% compared to 2023 and remained significantly below the target level of an
increase of 5%. The measures implemented by TBC Bank to optimize its Scope 1 emissions are listed on the page 113 of
the chapter.
Scope 2 – In 2024, total electricity consumption increased by 2% compared to 2023 and remained below the target
level of an increase of 4%. The measures implemented by TBC Bank to optimize its Scope 2 emissions from electricity
consumption are listed on the page 113 of the chapter.
Scope 3 – In 2024, business flights decreased by 66%, surpassing the estimated reduction of 44% for the year.
Overall, total emissions decreased by 16% in 2024 compared to 2023 levels, while total emissions per full time employee
decreased by 20% over the same period.
In 2024, water consumption per employee decreased by 16% year-on-year, while usage of printing paper went down by
10%.
Calculation methodology
To calculate the GHG inventory, we took the following steps: we set organisational boundaries, established the
operational scope, and developed a structured approach for data collection and the calculation of carbon dioxide (CO2)
equivalent. This report describes all emission sources required under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013 (Scope 1 and 2) and, additionally, the emissions under Scope 3 that are applicable
to the business. In preparing emissions data, the UK Government’s Greenhouse Gas Conversion Factors for Company
Reporting 2017 and National IPCC emission factors for electricity (tCO2*/MWhe) were used. The required data were
collected and a report was generated for TBC Bank’s main activities, as follows:
Scope 1 (the combustion of fuel and operation of facilities) includes emissions from the combustion of natural gas, diesel
and/or petrol in equipment at TBC Bank’s owned and controlled sites, including the combustion of petrol, diesel fuel,
natural gas etc. in TBC Bank-owned transportation vehicles.
Scope 2 (purchased electricity for own use, such as lighting, office appliances, cooling, etc.) includes emissions from the
use of electricity at TBC Bank-owned and controlled sites. To calculate the emissions, the conversion factor for National
IPCC emission factors for electricity (tCO2*/MWhe) was used.
Scope 3 includes emissions from all air business travel (short/medium/long and international haul). It should be noted
that information on the travel class was considered and an “economy class” conversion factor has been used for the
emissions calculation from the following link: www.atmosfair.de.
Intensity Ratio - we calculate intensity ratios in line with the Streamlined Energy and Carbon Reporting (SECR)
guidelines, www.secrhub.co.uk.
Scope 3 emissions
We have a direct or indirect impact on the environment through our activities. However, in the case of financial
institutions, the main source of Greenhouse Gas (GHG) emissions is not the emissions produced directly by our business
processes or their own energy consumption, but GHG emissions produced by other sectors that are financed by us.
These types of emissions are known as financed emissions.
The table below depicts which of the 15 categories of Scope 3 emissions have been included and which are considered
to be immaterial or irrelevant to the business.
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#
Scope 3 category
GHG calculation approach
1
Purchased goods and services
Not material
2
Capital goods
Not relevant
3
Fuel- and energy-related activities
(not included in scope 1 or scope 2)
Not relevant
4
Upstream transportation and distribution
Not relevant
5
Waste generated in operations
Not material
6
Business travel
Included (flights)
7
Employee commuting
Not material
8
Upstream leased assets
Not material
9
Downstream transportation and distribution
Not material
10
Processing of sold products
Not relevant
11
Use of sold products
Not material
12
End-of-life treatment of sold products
Not relevant
13
Downstream leased assets
Not relevant
14
Franchises
Not relevant
15
Investments
Included - financed emissions: debt investments (with
known use of proceeds) and project finance
Seven categories are considered not relevant, as TBC Bank does not cover these activities. Six other categories are
assessed as not material, as those activities does not constitute typical activities for TBC Bank as a financial institution.
We consider two categories – business travel and investments – to be material based on the materiality threshold of 40%:
business travel is a material part of our direct impact, while financed emissions constitute more than 40% of the total
GHG emissions (indirect impact).
Financed emissions (Scope 3)
The Partnership for Carbon Accounting Financials (PCAF) has developed methods for different asset classes, which
were used by TBC to calculate the financed emissions (PCAF 2022). In total, six asset classes are considered. The
financed emissions by asset class as of December 2024 are presented below:
N.
Country Name
Financed GHG Emissions GgCO2e/y
TOTAL
3,443.1
1
Listed equity and corporate bonds
66.4
2
Business loans and unlisted equity
2,921.3
3
Project finance
-15.5
4
Commercial real estate
7.6
5
Mortgages
35.9
6
Motor vehicle loans
0.6
7
Sovereign debt
426.8
Sustainable portfolio
The climate action initiatives are part of TBC’s overall ESG strategy, which is reviewed and approved by the Supervisory
Board annually. The ESG Strategy 2025-2027 reflects the Paris Agreement alignment considerations that were developed
in 2024. We evaluated the existing portfolio to understand its carbon footprint and identify areas for improvement. This
process enabled us to understand our Paris Agreement alignment and define our way forward, based on the Science
Based Initiative’s standards. We developed a transition plan which includes divesting from high-carbon assets, investing
in green technologies, and engaging with our customers to improve their sustainability practices. We continuously
monitor the portfolio’s performance against the set goals and regularly report the progress to our stakeholders.
The ESG strategy sets sustainable portfolio volume targets, which consists of renewable energy loans, energy efficiency
loans, and financing with social components, etc. As of 31 December 2024, the total sustainable portfolio3 stood at GEL
1.73 billion, which exceeds the 2024 target volume of GEL 1.4 billion by 24%. The target for 2025 is set at GEL 2 billion. The
table below depicts the sustainable portfolio development as of 31 December 2024.
1
www.nbg.gov.ge - The calculation methodology for business loans was developed by the National Bank of Georgia within the project “Promotion of
Rural Finance for Sustainable MSE Development in the South Caucasus and Ukraine”, implemented by DSIK and funded by the German Ministry for
Economic Cooperation and Development (BMZ).
2
The calculation methodologies for the other five asset classes were developed by TBC in cooperation with the consultant company RINA, supported
by the Global Climate Partnership Fund. The calculation methodologies consider the PCAF approach.
3
Our sustainable portfolio includes: a) energy efficiency, youth support, and women in business loans financed by special purpose funds received
from IFIs; b) loans financing renewable energy, which include all hydro power plants financed by the Bank; c) financing of startup companies and
affordable housing which are categorised based on the Social Taxonomy of the National Bank of Georgia (NBG); d) green loans, which are assessed
based on criteria defined by the Green Taxonomy of the NBG; e) social guarantees supporting affordable housing projects, which are categorised
based on the Social Taxonomy of the NBG (www.nbg.gov.ge); and f) green and sustainability-linked bonds aligned with the ICMA (International
Capital Markets Association) Green Bond Principles and Sustainability-linked Bond Principles.
Sustainable portfolio development
In 2024, our renewable energy portfolio impact (avoided GHG emissions) amounted to 7,616 tCO2, according to the
electricity generation data and estimates of the external consultant under the Green for Growth Fund (GGF) Technical
Assistance Facility represented by Finance in Motion GmbH and financed by the European Union under the EU4Energy
Initiative.
Since 2022, ESG-related KPIs have been included in the long-term incentive plans for executive remuneration. Executive
management KPIs are linked to the target volumes of the sustainable portfolio and other sustainable assets. For more
details, please see the Human Resources and Remuneration Committee Report in the Annual Report of TBC Bank Group
PLC, page 206.
Calculation methodology
• Text
• Business loans1
• Project finance
• Retail mortgages
• Commercial real estate
• Corporate bonds
• Sovereign debts2
SUSTAINABLE PORTFOLIO 2023
482
181
202
143
41
32
GEL 1.23 bln
144
9
SUSTAINABLE PORTFOLIO 2024
415
574
22
195
28
98
GEL 1.73 bln
221
34
Renewable energy
Green bonds
Youth support
NBG green taxonomy
Energy efficiency
Social guarantees
WiB
NBG social taxonomy
Green guarantees
146
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Governance
2
CHAPTER
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
SUPERVISORY BOARD BIOGRAPHIES
Supervisory Board biographies
ARNE BERGGREN
TSIRA KEMULARIA
PER ANDERS FASTH
JANET HECKMAN
POSITION
Chair
Senior Independent Supervisory Board Member
Independent Supervisory Board Member
Independent Supervisory Board Member
COMMITTEE
Chair of CGN, Member of RemCo
Member of AC, CGN, and RemCo
Chair of AC, Member of RC and CGN
Chair of RemCo, Member of RC
APPOINTED
Board: 18 July 2019, Chair: 1 March 2021
Board: 10 September 2018, Senior Independent Director:
15 September 2021
1 July 2021
26 June 2023
NATIONALITY
Swedish
British
Swedish
American
CAREER
Arne has worked in the financial services industry for more than 30
years. He has held several senior leadership and advisory positions
at prominent financial institutions, including the IMF, World Bank,
Swedbank, Carnegie Investment Bank AB and the Swedish Ministry of
Finance and Bank Support Authority. Arne played a leading role in the
handling of the Swedish banking crisis in 1991-93 and assisted the FRA
in Thailand and FSC/ KAMCO in South Korea during the Asian crisis.
Arne has also served as an independent Non-Executive Director in
asset management companies in Turkey and Slovenia, and in Greece
at Piraeus Bank.
Tsira is an experienced finance executive with over 25 years of
experience in a broad range of roles. Currently, Tsira is a Vice President
for FTSE100 energy major, Shell’s, Corporate segment and the UK
Country Controller. She is also a member of Shell’s UK Management
Board and is a Trustee of a BG Pensions Scheme.
Over the years, Tsira’s management roles have covered a number of
finance disciplines such as; Head of Internal Audit for Shell’s Commodity
business globally, Head of Shell’s Group Pension Group Strategy and
Standards, CFO of Shell’s commodity trading business in the Caribbean,
M&A, Commercial Finance Management role for Russia & CIS and
Commodity Market Risk Management for crude oil trading in Europe.
Over the past 25 years, Per Anders has served as CEO at SBAB Bank, Hoist
Finance and European Resolution Capital as well as CFO and other senior
executive positions at the leading North-European bank SEB. He has also
gained extensive strategic consulting experience having spent 10 years at top-
tier consultancies McKinsey & Company and QVARTZ (now Bain & Company).
Per Anders has been a non-executive director of more than 15 financial
institutions in Europe. In addition, he has extensive professional experience
from having worked in more than 20 European countries as a non-executive
director and advisor to corporations and governments.
Janet was the Managing Director for the Southern and Eastern Mediterranean
(SEMED) Region at the European Bank for Reconstruction and Development
(EBRD) from February 2017 until December 2019. Based in Cairo, she was also
the Country Head for Egypt.
She currently serves as a non-executive director on the boards of Astana
International Exchange, Air Astana, Kazakhstan and Citi Kazakhstan. During
her long career at Citi, she spent time as EMEA Corporate and Investment
Managing Director and held a number of field roles across EMEA, and was
responsible for Global Relationship Banking across CEEMEA.
SKILLS &
EXPERIENCE
Experience in international financial institutions and advising
governments;
Board membership and committee chairing experience in other UK
listed banks;
Experience in investment banking activities and in leading bank
restructurings;
Deep understanding of strategic planning and implementation.
More than 25 years of in-depth experience across the energy sector
including regulated commodity trading and financial services;
Chartered Director and Fellow with the Institute of Directors in London,
UK;
Former member of the British-Georgian Society and former Chair of
the Georgian Community in the UK;
Relevant experience and expertise in information security risk
management.
Extensive CEO and senior executive experience, having spent more than 20
years at leading banks and other financial institutions;
Over 40 years of accumulated experience as an independent non-executive
director;
Strong listed corporate governance, leadership and strategic advisory skills;
Significant financial reporting, investor relations and internal controls
experience;
Relevant experience from the financial information technologies (fintech) and
credit management industries across Europe.
Over 30 years’ experience in corporate, investment and development banking;
Extensive expertise in global relationship banking. 15 years’ experience in
operations management;
Relevant experience of developing and delivering business plans and strategic
change in a wide range of jurisdictions, including across Central and Eastern
Europe, North Africa, the Middle East and Central Asia. This included the
establishment of key partnerships with national governments.
CONTRIBUTION
TO THE COMPANY
With more than 25 years of international banking experience,
coupled with his background and broad experience, Arne provides
a valuable perspective as Chair to the Board. Arne plays a pivotal
role in supporting the Company’s relationship with its major
shareholders, and, through his extensive experience in navigating
economic uncertainty, is invaluable in meeting the challenges
facing the Company and the wider sector. As Chair of the Corporate
Governance and Nominations Committee, Arne has secured a
number of high calibre appointments in recent years. This has been
instrumental in ensuring the composition of the Board matches the
culture, strategy and leadership needs of the Company.
Tsira’s specialist knowledge in the areas of financial services, risk
management and internal audit enables her to contribute to, and
constructively challenge on, a wide range of Board matters. As a
Chartered Director, Tsira’s leadership qualities ensure she can act as
a sound advisor to the Chair and represent the interests of the other
Directors. Tsira brings significant regulatory, strategic and international
financial services expertise and knowledge of financial markets to the
Board.
Per Anders is regarded as a financial expert in the context of audit and risk
committee work. He has extensive experience of operating in regulatory
environments and is widely regarded in both the corporate and financial
world. Per Anders’s broad leadership and global executive experience brings
a wide perspective to his role as Chair of the Audit Committee and in Board
discussions and decision-making.
Janet brings her extensive knowledge of financial services and corporate
banking to the Board, with her past experiences in the formulation and delivery
of strategy for regional operations at the EBRD.
EXTERNAL
APPOINTMENTS
Chairman of Hoting Innovations AB
Shell International Ltd - VP Corporate and UK Controller, and director
of various Shell Group entities
Company Nominated Trustee Director of the British Gas Trustee
Solutions Ltd, a closed pension fund (post British Gas acquisition by
Shell)
Chairman of Lyra Financial Wealth AB
Board member of Atle Investment Management/Services AB
Board member and audit committee chair of JSB Ukrgasbank
Board member and audit committee chair of Astana International Exchange
Board member of Air Astana, Kazakhstan
Board member of Citibank Kazakhstan
128
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
SUPERVISORY BOARD BIOGRAPHIES CONTINUED
ERAN KLEIN
THYMIOS P. KYRIAKOPOULOS
RAJEEV SAWHNEY
NINO SUKNIDZE
POSITION
Independent Supervisory Board Member
Independent Supervisory Board Member
Independent Supervisory Board Member
Independent Supervisory Board Member
COMMITTEE
Chair of ESGE, Member of TD and RC
Chair of RC, Member of AC and TD
Chair of TD, Member of ESGE and RemCo
Member of AC, ESGE, RemCo and CGN
APPOINTED
1 July 2021
1 July 2021
29 November 2021
29 November 2021
NATIONALITY
British
Greek
Indian
Georgian
CAREER
Eran is a Non-Executive Director on the Board of TBC Bank Group plc,
where he chairs the ESG and Ethics Committee. He is also a board
member at Chapter Zero Uzbekistan and Chapter Zero Ukraine &
Caucasus. Until recently, he served as a non-executive director at
PrivatBank, the largest bank in Ukraine, where he chaired the Risk
Committee during the war.
Eran is an experienced international banker. Over a career spanning
more than two decades, he held senior roles at leading financial
institutions such as Citibank, Deutsche Bank, ING, and Commerzbank.
Covering both developed and emerging markets, he has focused on
a range of functions within banking, including risk, banking strategy,
ESG, technology, corporate governance, geopolitical environment,
credit, and financial services regulation. He is particularly enthusiastic
about the intersection of ESG, technology (including cyber, AI, and
digital), and risk.
Eran holds an LLM (Master of Laws) with distinction from Chuo
University, Japan’s leading law faculty, as well as an MSc (Sloan
Masters) from London Business School, UK.
Thymios is a senior banking executive with considerable international
experience. He specialises in investment management, operational
transformation, balance sheet optimisation, risk management,
and financial engineering. He served on the board of the Hellenic
Corporation of Assets and Participations, the Greek sovereign wealth
fund, as Chairman of its Investment and Risk Committee. He also
served as Chairman of the Risk Committee of Attica Bank SA and is a
member of the Board of Directors of Agreed Payments SA. Thymios
was executive general manager and chief risk officer of Piraeus Bank
S.A, a leading listed Greek Bank, Managing Director at Goldman Sachs
Inc. in the fixed income currencies and commodities trading division,
and has held board and executive roles in insurtech, fintech, financial
services and advisory sectors.
Rajeev has 40 years’ experience as a senior corporate growth executive. He
specialises in digital technologies and has served in financial services and
various other industry sectors in Europe, North America and Asia. Rajeev
previously held the positions of Executive Chairman and non-executive
director of OXSIGHT Ltd, a medical technology innovation company, and
an Oxford University spin off. He was formerly a senior advisor to the CEO
at global IT services firm Zensar Ltd in the UK and a member of the advisory
board at Garble Cloud Inc., a cybersecurity company in Silicon Valley, USA.
Prior to that, Rajeev gained strong operational experience as President of HCL
Technologies and at the financial services firm, Mphasis, a Hewlett Packard
company. Rajeev has been on the World Economic Forum expert Task Force
on Low-Carbon Economic Prosperity, and contributed at the World Economic
Forum Summer Davos on climate change deliberations.
Nino is a business lawyer with over 20 years’ experience in the Georgian market.
She has a deep understanding of, and expertise in, various areas of practice
including banking, finance, corporate, regulation, competition and capital
markets. Previously, Nino served as general counsel at JSC Bank of Georgia.
Before joining TBC Bank Group PLC, she held various positions at the
Georgian offices of international law firms Dentons and DLA Piper over a
period of more than 11 years. Currently Nino is the managing partner of the law
firm Suknidze & Partners LLC.
SKILLS &
EXPERIENCE
Extensive experience in banking, credit, capital markets and financial
regulations;
Extensive experience in ESG;
Expertise in risk, corporate governance, strategy and structuring;
Extensive Emerging Markets banking and stakeholder management
experience;
Relevant experience and expertise in information security risk
management.
Extensive experience in global capital markets, corporate and retail
credit, regional banking operations, and financial engineering;
Expert risk manager, investment manager, and balance sheet
optimiser; operational transformation leadership and crisis
management spanning systemic banks and fintech;
Strong governance, risk and asset management oversight skills for
both listed and quasi-governmental entities.
Strong global corporate leadership experience of more than 40 years;
Significant advisory and executive experience with technology and
cybersecurity companies in financial services and other industry sectors;
Extensive expertise in Human Resource management;
Relevant experience and expertise in information security risk management.
Strong financial services background;
Extensive experience as a leading legal counsel in major financial services
sector transactions and listings;
Considerable governance, regulatory and risk management experience,
including at an LSE-listed company;
Experience in advising companies across a range of sectors, including
telecommunications, pharmaceuticals, energy and commerce.
CONTRIBUTION
TO THE COMPANY
Eran brings to the Board extensive and varied risk, ESG, technology,
governance, financial regulation and strategy experience that he
has gained at large financial institutions and consulting fields in
both developed and developing markets, making him an ideal fit to
spearhead the ESG and Ethics Committee agenda, on behalf of the
Group.
Thymios brings extensive governance, financial and operational
experience. His deep knowledge allows him to support and contribute
to the strategic direction of the Company while controlling the path
used in its implementation. Having led investment and risk functions
in internationally listed banks and acted as chair of the investment
committee of a national wealth fund, and chair of the risk committee of
a listed Greek bank, Thymios’s broad multijurisdictional risk expertise
enables him to bring innovative and positive insights to his role as
Chair of the Risk Committee.
Rajeev brings the extensive international leadership and general management
perspective that he has gained from the technology and fintech sectors to the
Board. He provides valuable insights into the Company’s increasingly important
technological evolution. In line with this, he has been appointed Chair of
the Technology and Data Committee, where he provides key support and
leadership in these areas.
Nino is an experienced domestic and international lawyer with particular
expertise in regulated sectors, where she has counselled on a wide range
of legal, regulatory and business issues. Nino’s valuable experience brings a
considered perspective to the Board, and enriches discussion and strategic
thought.
EXTERNAL
APPOINTMENTS
Supervisory board member of Chapter Zero Ukraine and Caucasus
Advisory board member of Chapter Zero Uzbekistan
Board Member of Agreed Payments SA
No current additional board appointments
Board member at Care Caucasus, a charity organisation in Georgia
Member of the Board of Directors of the American Chamber of Commerce in
Georgia (AMCHAM)
Managing Partner at Suknidze & Partners
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FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
133
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
132
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
CORPORATE GOVERNANCE
Corporate governance
Joint Stock Company TBC Bank (the “Bank”) is the
main subsidiary of TBC Bank Group PLC, a company
incorporated in England and Wales and listed on the
premium segment of the London Stock Exchange. The
Bank’s Corporate Governance is in compliance with the
requirements of the National Bank of Georgia’s Code on
Corporate Governance for Commercial Banks, dated
26 September 2018, as amended from time to time
(the “Code”). At the same time, the Bank also complies
with the highest standards of corporate governance as
prescribed by the UK Corporate Governance Code.
The main shareholder of the Bank is TBC Bank Group
PLC, which holds 99.9% of the Bank’s share capital. The
rights of the shareholders are governed by the Law of
Georgia on Entrepreneurs and the Law on the Activities
of Commercial Banks and also set out in the Charter of
the Bank publicly available at www.tbcbank.ge.
General meeting of shareholders (the “General
Meeting”) is the supreme governing body of the Bank.
The shareholders of the Bank, among other things,
are entitled to attend the General Meetings and
participate in voting, receive the dividends and demand
explanations from the members of the Management
Board of the Bank1 and the Supervisory Board on
the issues included in the agenda of the meeting.
The General Meeting by a simple majority of votes
presented or represented, decides on the different
matters, including (but not limited to) election and
dismissal of the members of the Supervisory Board,
approval of the reports of the Management Board
and Supervisory Board, approval of annual financial
statement, setting the compensation of the members
of the Supervisory Board, approval or rejection of the
profit (dividend) distribution proposal. In addition,
subject to requirements of the laws of Georgia, the
General Meeting may make a decision with a majority
of more than 75% of the votes presented or represented
on amending the charter of the Bank, approval of
reduction of share capital of the Bank, taking action for
liquidation, commencement of a general assignment
to creditors or voluntary winding up under applicable
bankruptcy, insolvency or similar laws and on approving
a merger division or other reorganisation.
The affairs of the Bank are supervised by the Bank’s
Supervisory Board (“Supervisory Board”) ensures. The
Company operates a “mirror board” policy approach
OVERVIEW
•
Approved ambitious Bank and segmental strategies
to drive long-term growth, strong profitability,
stable shareholder returns and value creation of the
enterprise;
•
Successfully strengthened governance mechanisms
by introducing a refreshed corporate governance
framework;
•
Further enhanced risk management practices and
strengthened control functions across the Bank’s
lines of defence, including a roll-out of an integrated
Internal Controls framework across the Bank to ensure
robust oversight and compliance;
•
Made further improvements to organisational
structures for greater efficiency, agility, and alignment
with strategic objectives;
•
Achieved significant progress in recruitment of top
international talent and enhanced succession planning
for senior roles to support long-term growth and
stability;
•
Strengthened the Bank’s remuneration framework
to align with market best practices, incentivise
performance, and support long-term strategic
objectives;
•
Enhanced technology and data capabilities to improve
decision-making, operational efficiency, and customer
experience;
•
Reviewed the cyber-security systems to ensure
ongoing robustness; and
•
Advanced the Bank’s ESG initiatives by integrating
sustainability into business operations and achieving key
milestones in environmental, social, and governance goals.
GOVERNANCE HIGHLIGHTS FOR 2024:
to its main subsidiary, the Bank. Composition of PLC Board and the Supervisory Board including respective committees mirror at
both levels in terms of non-executive membership.2 There is also equivalent committee structure of the Supervisory Board as the
PLC Board’s committees. The work of the PLC Board, the Supervisory Board and their respective committees is carefully balanced,
dividing functions according to whether they are supervising the matters that affect the Group or those concerning solely the Bank.
As a result, the Group’s governance structure ensures adequate oversight and accountability, as well as clear segregation of duties.
The Supervisory Board ensures that the Bank’s governance structure enables adequate oversight and accountability, as well as a clear
segregation of duties. The involvement of all governance levels in risk management, the clear segregation of authority, and effective
communications between different entities facilitate clarity regarding the strategic and risk objectives, adherence to the established
risk appetite, risk budget and sound risk management. The centralised Enterprise Risk Management (ERM) function ensures effective
development, communication and implementation of risk strategy and risk appetite across the Bank and its subsidiaries.
The Supervisory Board has established six Committees:
• The Corporate Governance and Nomination Committee.
• The Audit Committee.
• The Risk Committee.
• The Human Resources and Remuneration Committee.
• The Technology and Data Committee.
• The ESG and Ethics Committee.
The Bank recognises the importance of ensuring diversity and sees significant benefit to our business in having the Supervisory
Board and management team that is drawn from a diverse range of backgrounds, since this brings the required expertise, cultural
diversity and different perspectives to the board discussions and helps to improve the quality of decision making. There are a
number of talented women in key positions. The Bank will continue to ensure that consideration of all future appointments to
the Supervisory Board and management board supports the diversity aims.
At the date of this report, in line with the “independence” criteria set by the Code, the Supervisory Board comprises eight
independent, non-executive members: Arne Berggren (Chairman), Tsira Kemularia (Senior Independent member), Per Anders Fasth,
Thymios P. Kyriakopoulos, Eran Klein, Nino Suknidze, Rajeev Sawhney, and Janet Heckman.
In addition, the Bank has in place an effective internal control system in order to ensure accurate and reliable financial reporting.
The Bank has a well-defined framework of accountability and delegation of authority, as well as policies and procedures that include
financial planning and reporting; preparation of monthly management accounts; project governance; information security; and
review of the disclosures within the annual report and accounts from the respective leads, to appropriately disclose all relevant
developments in the year and to meet the requirements of a true and fair presentation.
DIVISION OF RESPONSIILITIES
The roles of Chairman and Chief Executive Officer are separately held, and their responsibilities are well defined. The role and remits
of each of the Supervisory Board Committees, alongside details of how each Committee has fulfilled that role and remit over 2024,
are set out on pages 138-142.
1
General Director of the Bank (CEO) and Deputy General Directors (Deputy CEOs)
2
The Chief Executive Officer is not a member of the supervisory board of JSC TBC Bank, in accordance with the requirements of Georgian
legislation.
BOARD
SHAREHOLDERS
EXTERNAL
AUDITORS
AGM
• Corporate Governance & Nomination Committee
• Audit Committee
• Risk Committee
• Human Resources and Remuneration Committee
• Technology & Data Committee
• ESG & Ethics Committee
COMMITTEES
• Management Board
CHIEF EXECUTIVE OFFICER
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
135
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
CORPORATE GOVERNANCE CONTINUED
134
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
COMPANY SECRETARY
Giorgi Giguashvili was appointed as the Company Secretary in August 2022. The appointment and removal of the Company
Secretary are at the discretion of the Supervisory Board.
SUPERVISORY BOARD ATTENDANCE 2024
The Supervisory Board and Committee attendance at meetings is set out below. During 2024, the Supervisory Board has continued
to meet using an effective mix of in-person meetings, as well as meetings organized via teleconference. Chairs of each Supervisory
Board Committee provide a report on Committee business at each Supervisory Board meeting, including the matters being
recommended by a Committee for Supervisory Board approval.
Attendance at the Supervisory Board and respective committee meetings in 2024 have been as follows:
Provides a sounding supervisory board to the
Chairman, and serves as an intermediary for other
supervisory board members, as well as being
available to shareholders where necessary.
SENIOR INDEPENDENT MEMBER OF
THE SUPERVISORY BOARD (SID)
The Chairman’s principal responsibility is leadership
and the effective running of the Supervisory Board.
CHAIRMAN
SUPERVISORY BOARD MEMBERS
Provide constructive challenge to the executive,
as well as being a sounding supervisory board to
the Chairman where necessary. Additionally, being
collectively responsible, with the whole Supervisory
Board, for the long-term success of the Bank and
delivery of sustainable value to shareholders.
The CEO’s principal responsibility is running the
Bank’s businesses. He is responsible for all executive
management matters affecting the Bank.
CHIEF EXECUTIVE OFFICER
Board Member
Board
Corporate
Governance &
Nomination
Committee
Human
Resources &
Remuneration
Committee
Audit
Committee
Risk
Committee
ESG & Ethics
Committee
Technology
& Data
Committee
Arne Berggren
14/14
5/5
6/6
-
-
-
-
Tsira Kemularia1
14/14
-
6/6
8/8
-
1/1
-
Per Anders Fasth
14/14
-
6/6
8/8
11/11
-
-
Eran Klein
14/14
-
-
-
11/11
4/4
4/4
Thymios Kyriakopoulos
14/14
-
-
8/8
11/11
-
4/4
Rejeev Sawhney
14/14
5/5
-
-
-
4/4
4/4
Nino Suknidze
14/14
5/5
-
8/8
-
-
-
Janet Heckman
14/14
-
6/6
-
11/11
4/4
-
1
Tsira Kemularia stepped down from the ESG & Ethics Committee on 15 February 2024 and was appointed to the Corporate Governance and
Nominations Committee on 15 February 2024.
Corporate Governance and
Nomination Committee Report
•
Arne Berggren (Chairman of the Committee)
•
Tsira Kemularia*
•
Per Anders Fasth* (joined 12 February 2025)
•
Rajeev Sawhney* (stepped down 12 February 2025)
•
Nino Suknidze*
Meeting attendance shown on page 134
*Independent Supervisory Board Member
Arne Berggren has chaired the Committee since January 2022.
He has held several senior leadership and advisory positions at
prominent financial institutions.
Only Committee members have the right to attend meetings,
but the Chairman of the Committee may invite other attendees
to attend all or part of any meeting if appropriate or necessary.
•
Supervisory Board Composition and
Succession Planning
•
Supervisory Board Induction and Training
•
Supervisory Board Effectiveness
•
Supervisory Board Appointments, Evaluation
and Succession Planning
•
Talent management
•
Corporate Governance
More information on the Corporate Governance and
Nomination Committee’s roles and responsibilities can be
found in its Terms of Reference, reviewed in February 2025,
which have been adopted by the Supervisory Board and are
available on the Bank’s website: www.tbcbank.ge.
The Corporate Governance and Nomination
Committee is constituted to ensure that the
Bank has an appropriate governance framework
and structure. In addition, the Committee
ensures that future leadership needs are met by
regularly reviewing the structure, size, diversity
and composition (including skills, knowledge
and experience) of the Supervisory Board, as well
as developing succession plans for executive
management and other critical roles within the
Bank. The Committee findings and reports are
regularly delivered to the Supervisory Board, at
least on a quarterly basis.
COMMITTEE PURPOSE
During the year the Committee focused on:
• Development of an enhanced corporate
governance framework: A revised corporate
governance framework was successfully
introduced for the Bank, reflecting best
practices and strengthening governance
mechanisms across all operations.
• Organisational structure improvements:
Implementation of key improvements in the
organisational structure to ensure greater
efficiency, agility and alignment with the
Bank’s strategic objectives.
• Succession plan enhancement: The
Committee further advanced the Bank’s
succession planning efforts, ensuring a
robust pipeline of leadership talent to support
sustainable growth and long-term stability.
• Recruitment of top talent: The Committee
achieved significant progress in recruiting top
talents for executive management, enhancing
the Bank’s leadership capabilities and global
competitiveness.
• Diversity and Inclusion: This was an integral
factor in much of the Committee’s work
across the year.
SUMMARY OF KEY ACTIVITIES IN 2024
CHAIRMAN AND COMMITTEE BACKGROUND
MEMBERS OF THE COMMITTEE
KEY AREAS OF RESPONSIBILITY
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
136
137
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Audit Committee Report
•
Per Anders Fasth* (Chairman of the Committee)
•
Tsira Kemularia*
•
Thymios P. Kyriakopoulos*
•
Nino Suknidze*
Meeting attendance shown on page 1374
*Independent Supervisory Board Member
•
Accounting and Financial Statements
•
External Financial Reporting and Investor Relations
•
Internal Controls
•
Internal Audit
•
Compliance with Regulatory and Legal Requirements
•
External Audit
•
Non-Audit Services
More information on the Committee can be found in its Terms
of Reference, revised in February 2025, which have been
adopted by the Supervisory Board and are available on the
Bank’s website: www.tbcbank.ge.
The Audit Committee assists the Supervisory Board
in fulfilling supervisory oversight responsibilities in
relation to integrity of accounting, external financial
reporting and investor relations, internal controls,
compliance with regulatory and legal requirements,
the effectiveness of the risk management framework
and system of internal audit, external audit, and non-
audit services of the Bank and its subsidiaries.
COMMITTEE PURPOSE
During the year the Committee focused on:
•
Strengthening the effectiveness of the internal
controls systems and Internal Control Function
throughout the Bank. The Committee reviewed
reports on internal controls during the year
which included regular updates on matters such
as the progress made by the Internal Control
Function, and focussing on the engagement
of Internal Control Champions within the Bank
and implementation of Control Methodologies.
Review of this work will remain a focus for 2025.
•
Oversight and review of the work of the
Compliance Department.
•
Ensuring the effectiveness and independence
of the Bank’s internal audit activities. The
Committee reviewed an External Quality
Assessment Review conducted by EY, which
confirmed TBC Bank’s continued commitment
to maintaining a highly effective internal audit
function that delivers value and supports the
organisation’s strategic priorities.
•
Ensuring the effectiveness and objectivity of the
Bank’s external auditor.
•
The financial performance and the integrity
of the annual and interim financial statements.
The Committee also took steps to ensure that,
when taken as a whole, the Annual Report is fair,
balanced and understandable.
SUMMARY OF KEY ACTIVITIES IN 2024
Per Anders Fasth has chaired the Committee since June 2021.
He has extensive experience in leading financial institutions
and is considered by the Supervisory Board to have recent and
relevant financial experience. All members of the Committee
are independent Supervisory Board members.
The Chairman of the Committee, and the Committee as
a whole, is supported by a senior management team with
extensive financial management experience, and he reports
back to the Supervisory Board on matters considered by the
Committee.
The Supervisory Board is satisfied that the Committee as
a whole has the competence relevant to the sector and its
members have an appropriate level of experience of corporate
financial matters.
CHAIRMAN AND COMMITTEE BACKGROUND
MEMBERS OF THE COMMITTEE
KEY AREAS OF RESPONSIBILITY
Risk Committee Report
The Risk Committee assists and advises the
Supervisory Board in overseeing the enterprise-wide
risk management framework and establishing a risk
appetite structure. It ensures that this framework
aligns with the Bank’s growth strategy while fostering
a robust culture of prudent risk decision-making.
The Committee systematically reviews risk analyses
to uphold the highest governance standards and
to provide a solid foundation for the Supervisory
Board’s strategic decisions. Its sweeping oversight
responsibilities encompass assessing principal and
emerging risks that impact the business model,
earnings capacity, capital adequacy and liquidity.
COMMITTEE PURPOSE
Throughout the year the Committee focused on risk
management priorities emanating from the Bank’s
strategy and the prevailing operating environment:
•
Enhancement of Risk Strategy and Appetite
Framework: The Committee refined the Bank’s
risk strategy and risk appetite framework to
ensure alignment with strategic objectives.
•
Recovery Plan Refinement: The Bank’s recovery
plan was reviewed and enhanced to bolster
resilience against systemic and idiosyncratic risks.
•
Geopolitical Preparedness: The Committee
assessed strategic preparedness concerning
various geopolticial scenarios, with particular
attention to Georgia’s election dynamics.
•
Governance Evaluations: In-depth evaluations of
governance standards were conducted, focusing
on the organisation’s key functions.
•
Risk and Returns Trade Off: Systematic balance
sheet optimisation practices were strengthened
to optimise the trade off between earnings
capacity and underwritten risk.
•
Financial Risk Monitoring: The financial risk
position was closely monitored, leveraging a
plethora of tools with special attention given
to the Internal Capital Adequacy Assessment
Process (ICAAP) and Internal Liquidity Adequacy
Assessment Process (ILAAP).
These initiatives underscore the Committee’s com
mitment to maintaining robust risk management
practices and ensuring the Bank’s resilience in a dy
namic environment to the Internal Capital Adequacy
Assessment Process (ICAAP) and Internal Liquidity
Adequacy Assessment Process (ILAAP).
SUMMARY OF KEY ACTIVITIES IN 2024
•
Thymios P. Kyriakopoulos* (Chairman of the Committee)
•
Per Anders Fasth*
•
Janet Heckman*
•
Eran Klein*
Meeting attendance shown on page 134
*Independent Supervisory Board Member
•
Risk Appetite and Risk Framework
•
Financial Risk Management
•
Operational Resilience
•
Compliance, Regulatory and Legal Risk
The Risk Committee also reviews the statement concerning
internal risk management and the Group’s Viability Statement
included in this Annual Report on page 118.
More information on the Risk Committee can be found in its
Terms of Reference, revised in February 2025, which have been
adopted by the Supervisory Board and are available on the
Company’s website: www.tbcbank.ge.
Thymios P. Kyriakopoulos has chaired the Committee since
2021. He has extensive experience in global capital markets,
balance sheet management, regional banking of supervised
entities and is an expert investment and risk manager. He
is considered by the Supervisory Board to have recent and
relevant risk management experience. All members of the
Committee are independent Supervisory Board members.
The Committee acts independently of executive management
to fulfil its duties to shareholders and to ensure that their
interests are properly protected.
CHAIRMAN AND COMMITTEE BACKGROUND
MEMBERS OF THE COMMITTEE
KEY AREAS OF RESPONSIBILITY
CORPORATE GOVERNANCE CONTINUED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
138
139
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Human Resources and
Remuneration Committee Report
•
Janet Heckman* (Chairman of the Committee)
•
Arne Berggren*
•
Per Anders Fasth* (stepped down 12 February 2025)
•
Tsira Kemularia*
•
Rajeev Sawhney* (joined 12 February 2025)
Meeting attendance shown on page 134
*Independent Supervisory Board Member
•
Human resources and related policies
•
Remuneration Policy and Share based remuneration
•
Wider Workforce remuneration
The Committee ensures the Bank’s remuneration policy
adheres to regulations, fosters long-term success, and fairly
and responsibly rewards employees, aligning compensation
with both corporate and individual performance.
Comprehensive information regarding the Committee’s
responsibilities can be found in the Human Resources and
Remuneration Committee Terms of Reference, accessible on
Bank’s website: www.tbcbank.ge.
The role of the Committee is to ensure, that:
a. The strategies, policies and practices of the Bank
and its subsidiaries regarding human resources
and remuneration support the Bank’s strategic
objectives;
b. The remuneration policy and practices of the Bank
are, in accordance with statutory and regulatory
requirements, designed to support and promote
the long-term success of the Bank and to reward
colleagues fairly and responsibly with a clear link to
corporate and individual performance;
c. Executive remuneration is linked to the Bank’s
values, execution of its long-term strategy
and aligned to the wider Bank stakeholders’
expectations;
d. The remuneration policy and practices are fairly and
consistently applied across the Bank.
COMMITTEE PURPOSE
During the year the Committee focused on:
• Development and approval of the TBC
Bank Remuneration Policy to ensure
alignment with regulatory expectations,
market practices, and the Bank’s long-term
strategic objectives.
• Review and approval of the 2024
KPI performance of the Bank’s top
management, ensuring a robust and
transparent assessment process, and
approval of the KPI targets for 2025.
• Review of the Bank’s HR Strategy for the
period 2025–2028, with particular focus
on talent development and the alignment
of human capital priorities with the Bank’s
strategic goals.
SUMMARY OF KEY ACTIVITIES IN 2024
Ms. Heckman brings extensive expertise in financial services
and corporate banking, with a proven track record in the
formulation and execution of strategy for regional operations
at the EBRD, as well as leading corporate and commercial
activities as a managing director with Citibank. Her background
makes her well-suited to guide the Company as it seeks to
capitalise on the significant growth potential of the Uzbek
market.
CHAIRMAN AND COMMITTEE BACKGROUND
MEMBERS OF THE COMMITTEE
KEY AREAS OF RESPONSIBILITY
Technology & Data
Committee Report
•
Rajeev Sawhney* (Chairman of the Committee)
•
Eran Klein*
•
Thymios P. Kyriakopoulos*
Meeting attendance shown on page 134
*Independent Supervisory Board Member
Rajeev Sawhney has chaired the Committee since 2022. He has
extensive experience in digital technologies and has served in
Information Technology, Financial Services and various other
industry sectors in Europe.
The Chairman of the Committee and Committee as a whole
is supported by a senior management team with extensive
technology & data management experience, and he reports
back to the Supervisory Board on matters considered by the
Committee.
•
Technology Transformation
•
Opportunities and Risks
•
Resilience and Continuity
•
Technology & Data Structure and Investment
More information on the Committee can be found in its Terms
of Reference, revised in February 2025, which have been
adopted by the Supervisory Board and are available on the
Bank’s website: www.tbcbank.ge.
The Technology & Data Committee assists
the Supervisory Board in fulfilling its oversight
of the Bank’s technology and data strategy by
providing strategic leadership and direction.
It works to ensure the Supervisory Board’s
focus on key strategic matters in relation to
technology, digital systems and platforms,
data, analytics, and cyber security, as well as
re-imagining digitalisation. It maintains a strong
focus on leveraging IT, information security and
data capabilities to support business growth as
well as solidifying a dominant market position.
COMMITTEE PURPOSE
In 2024, TBC Bank, led by the Committee, has
taken significant steps in leveraging technology,
enhancing cybersecurity, and embarking
on a transformation of data capabilities, in
conjunction with generative AI, to support
the Bank’s strategic goals. These efforts aim
to ensure operational resilience, accelerate
innovation, and provide enhanced experiences
for customers across all touchpoints.
During the year, the Committee received
updates on the challenges faced and
achievements made in these areas, including
on disaster recovery capabilities, IT governance
and an improved customer experience. The
Committee maintained a strong focus on
information security and data capabilities to
support business growth.
SUMMARY OF KEY ACTIVITIES IN 2024
CHAIRMAN AND COMMITTEE BACKGROUND
MEMBERS OF THE COMMITTEE
KEY AREAS OF RESPONSIBILITY
CORPORATE GOVERNANCE CONTINUED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
140
141
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
ESG & Ethics Committee Report
•
Eran Klein* (Chairman of the Committee)
•
Janet Heckman*
•
Tsira Kemularia* (stepped down 15 February 2024)
•
Rajeev Sawhney*
•
Nino Suknidze* (joined 12 February 2025)
Meeting attendance shown on page 134
*Independent Supervisory Board Member
•
ESG & Ethics Oversight
•
ESG Targets and Strategic Recommendations
More information on the Committee can be found in its Terms
of Reference, revised in February 2025, which have been
adopted by the Supervsory Board and are available on the
Bank’s website: www.tbcbank.ge.
The ESG and Ethics Committee supports the
Supervisory Board in its development, approval and
oversight of the implementation of various strategies,
policies and programmes in relation to Environmental,
Social and Governance (“ESG”) matters for the
Bank and its subsidiaries, and seeks to promote the
collective vision of values, conduct and culture within
the Bank. In recent years, the Bank has taken several
steps to enhance its ESG framework through the
development of an ESG strategy. The ESG strategy
reaffirms the Bank’s commitment to make a long-
term, sustainable contribution to the country and
the wider region. The Committee is also responsible
for providing strategic guidance and reviewing the
Bank’s climate strategy and climate related matters,
including disclosures and ensuring that these align
with the Bank’s strategic priorities.
COMMITTEE PURPOSE
The Committee received regular updates on the
adoption of the ESG Strategy, the development of
the ESG framework and how behavioural change
is being achieved throughout the organisation. It
also has a role in reviewing ESG-driven business
opportunities, shaping policies related to ESG,and
overseeing the Bank’s ESG disclosures.
SUMMARY OF KEY ACTIVITIES IN 2024
Eran Klein has chaired the Committee since 2022. Eran is an
experienced international banker and lawyer. Over a period
spanning more than two decades, he has held senior roles
in leading financial institutions such as Deutsche Bank, ING,
Citibank and Commerzbank, across developed and emerging
markets. Eran is certified in Championing Sustainability from
the Boardroom by Stanford University’s Doerr School of
Sustainability and currently serves on two regional Chapter
Zero boards. The Board considers him to have the necessary
experience to support the Group’s ESG strategy, as well as
all other matters considered by the Board, including risk
management, technology and banking strategy.
The Chairman of the Committee is supported by a senior
management team with extensive ESG experience, and reports
to the Supervisory Board on the various ESG strategies and
implementations considered by the Committee.
The Supervisory Board is satisfied that the Committee as
a whole has the competence relevant to the sector, and its
members possess an appropriate level of experience in ESG
matters.
CHAIRMAN AND COMMITTEE BACKGROUND
MEMBERS OF THE COMMITTEE
KEY AREAS OF RESPONSIBILITY
Responsibility statement
Responsibility statement
The Management Report and Financial Statements have been prepared in accordance with applicable laws and
regulations.
We confirm that to the best of our knowledge that:
• The Group’s and the Bank’s Financial Statements, which have been prepared in accordance with the IFRS standards,
give a true and fair view of the assets, liabilities, financial position and profit or loss of the Bank and the undertakings
included in the consolidation taken as a whole;
• The Management Report includes a fair review of the development and performance of the business and of the
position of the Bank and the Group, together with a description of the principal risks and uncertainties they face;
and
• The Management Report and Financial Statements, taken as a whole, are fair, balanced and understandable, and
provide the information necessary for the shareholders to assess the Bank’s and Group’s position, performance,
business and strategy.
This responsibility statement was approved by the Supervisory Board and Management Board:
Vakhtang Butskhrikidze
CEO
1 April 2025
Arne Berggren
Chairman
1 April 2025
CORPORATE GOVERNANCE CONTINUED
Financial Statements
3
CHAPTER
Independent Auditor’s Report
• Overall Group materiality: GEL 73.1 million, which represents
approximately 5% of Group’s profit before tax.
• Overall Bank materiality: GEL 71.0 million, which represents
approximately 5% of Bank’s profit before tax.
• Our scoping was determined based on legal entities’ contribution to
profit before tax and other key line items in the financial statements.
• Expected credit loss allowance for loans and advances to customers.
Materiality
Group
scoping
Key audit
matters
Our audit approach
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated and separate financial statements. In particular, we considered where management made subjective
judgements; for example, in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable
assurance whether the consolidated and separate financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated and
separate financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall Group and Bank materiality for the consolidated and separate financial statements as a whole as set out in the
table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually
and in aggregate on the consolidated and separate financial statements as a whole.
Overall Group and Bank
materiality
Group: GEL 73.1 million (2023: GEL 65.2 million)
Bank: GEL 71.0 million (2023: GEL 63.1 million)
How we determined it
Approximately 5% of profit before tax
Rationale for the
materiality benchmark
applied
We chose profit before tax as it is a primary measure used by the shareholders in
assessing the performance of the Group and the Bank and is a generally accepted
benchmark for determining audit materiality.
We chose 5% which is consistent with quantitative materiality thresholds used for profit-
oriented companies in this sector.
To the Shareholders and the Supervisory Board of JSC TBC Bank
Our opinion
In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the
consolidated and separate financial position of JSC TBC Bank (the “Bank”) and its subsidiaries (together – the “Group”)
as at 31 December 2024, and the Group’s and the Bank’s consolidated and separate financial performance and
consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting
Standards, with the disclosure requirements of the order N284/04 of the President of the National Bank of Georgia and
with the disclosure requirements of the Law of Georgia on Accounting, Reporting and Auditing.
What we have audited
The Group’s and the Bank’s consolidated and separate financial statements comprise:
• the consolidated and separate statements of financial position as at 31 December 2024;
• the consolidated and separate statements of profit or loss and other comprehensive income for the year then
ended;
• the consolidated and separate statements of changes in equity for the year then ended;
• the consolidated and separate statements of cash flows for the year then ended; and
• the notes to the consolidated and separate financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate
financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the Bank in accordance with the International Code of Ethics for Professional
Accountants (including International Independence Standards) issued by the International Ethics Standards Board for
Accountants (IESBA Code) and the ethical requirements of the National Bank of Georgia that are relevant to our audit
of the consolidated and separate financial statements of banks. We have fulfilled our other ethical responsibilities in
accordance with the IESBA Code and the ethical requirements of the National Bank of Georgia.
PricewaterhouseCoopers Georgia LLC, I/C 405220611
King David Business Centre, 7th floor, #12 M. Aleksidze Street, Tbilisi 0171, Georgia
Tel: +995 (32) 250 80 50, www.pwc.com/ge
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated and separate financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Independent auditor’s report
145
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GOVERNANCE
ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
144
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
INDEPENDENT AUDITORS’ REPORT
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
consolidated and separate financial statements as a whole, taking into account the structure of the Group and the
Bank, the accounting processes and controls, and the industry in which the Group and the Bank operate.
The Group’s banking activities are primarily carried out in Georgia, with small subsidiary operations in two other
countries. The Group’s business activities comprise of four segments for which it manages and reports its operating
results and financial position, namely Retail Banking, Corporate and Investment Banking, Micro Small and Medium
Enterprises (‘MSME’) and Corporate Centre.
The Bank is the largest component of the Group. Its main operations are Retail and Commercial banking, with all
significant operations based in Georgia. The business of the Bank is primarily based in Georgia, and represents 98.0%
of the Group’s total assets and 97.2% of profit before tax.
Our audit approach and composition of our team were tailored to the structure of the Group. We did not use
component auditors for audit of in-scope areas. We performed a full scope audit of the only significant component
of the Group – the Bank. We also performed an audit of the material financial statement line items of one insignificant
component of the Group. Based on the procedures we performed over the reporting units, our audit scoping covered
98.2% of revenue (comprising interest income and fee and commission income) and 99% of total assets of the Group.
We also performed other audit procedures including testing information technology general controls and other
relevant controls related to financial reporting, to mitigate the risk of material misstatement.
Other information
Management is responsible for the other information. The other information comprises the Management Report (but
does not include the consolidated and separate financial statements and our auditor’s report thereon).
Our opinion on the consolidated and separate financial statements does not cover the Management Report.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the
Management Report and, in doing so, consider whether the Management Report is materially inconsistent with the
consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the
Management Report, we are required to report that fact. We have nothing to report in this regard.
In addition, we are required by the Law of Georgia on Accounting, Reporting and Auditing to express an opinion
whether certain parts of the Management Report comply with respective regulatory normative acts and to consider
whether the Management Report includes the information required by the Law of Georgia on Accounting, Reporting
and Auditing.
Based on the work undertaken in the course of our audit, in our opinion:
• the information given in the Management Report for the financial year for which the consolidated and separate
financial statements are prepared is consistent with the consolidated and separate financial statements;
• the information given in the Management Report complies with the requirements of paragraph 6 and paragraph 7
(c), (g) of article 7 of the Law of Georgia on Accounting, Reporting and Auditing;
• the information given in the Management Report includes the information required by paragraph 7 (a), (b), (d) – (f)
and paragraph 8 of article 7 of the Law of Georgia on Accounting, Reporting and Auditing.
Responsibilities of management and those charged with governance for the consolidated and
separate financial statements
Management is responsible for the preparation and fair presentation of the consolidated and separate financial
statements in accordance with International Financial Reporting Standards, with the disclosure requirements of
the order N284/04 of the President of the National Bank of Georgia, and with the disclosure requirements of the
Law of Georgia on Accounting, Reporting and Auditing, and for such internal control as management determines is
necessary to enable the preparation of the consolidated and separate financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s
and the Bank’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 management either intends to liquidate the Group or the Bank or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s and the Bank’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
INDEPENDENT AUDITORS’ REPORT CONTINUED
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GOVERNANCE
ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
146
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
Key audit matter
How our audit addressed the key audit matter
Expected credit loss allowance on loans and advances to
customers (Group and Bank)
Refer to Note 2 - Material Accounting Policy Information and
Other Explanatory Information, Note 3 - Sources of Estimation
Uncertainty and Judgements in Applying Accounting Policies,
Note 9 - Loans and Advances to Customers and Note 35 -
Financial and Other Risk Management in the separate and
consolidated financial statements.
We focused on this area as the management’s estimates
regarding the expected credit loss (‘ECL’) allowance for loans
and advances to customers are complex, require a significant
degree of judgement and are subject to a high degree of
estimation uncertainty.
Under IFRS 9, Financial Instruments, management is required
to determine the credit loss allowance expected to occur over
either the next 12-month period or the remaining life of an asset,
depending on the stage allocation of the individual asset. This
staging is determined by assessing whether or not there has
been a significant increase in credit risk (‘SICR’) or default of the
borrower since loan origination.
Management has designed and developed a number of models
to meet the requirements of IFRS 9 and implemented an IT
system for ECL estimation. Among others, management applies
judgement to the models in situations where past experience
is not considered to be reflective of future outcomes due to
limited or incomplete data.
Areas of the most significance relate to appropriateness
of model methodologies as well as the judgements and
assumptions used in the determination of the modelled ECL
allowance. These include:
•
Judgemental criteria applied for identification of
SICR, involving qualitative assessment of borrowers’
creditworthiness (relevant to Corporate and SME portfolios);
•
Critical assumptions used in estimation of loss given default
(‘LGD’) and probability of default (‘PD’).
We gained an understanding and evaluated the design and
implementation of the key controls over the determination of
ECL allowance and tested their operating effectiveness. These
controls included among others:
•
Controls over model performance monitoring, including
periodic reviews of the policy and models, testing model
estimates against actual outcomes and approval of model
methodology changes;
•
Control over governance of independent validation unit;
•
Review and approval of the key assumptions used for
estimating LGDs and PDs;
•
Controls over the accuracy of key parameters (such as PD,
LGD) used by the calculation engine;
•
Controls over regular monitoring of the financial standing of
the borrowers;
•
Controls over the automated ECL calculation by the relevant
IT system; and
•
The Allowance Committee’s assessment and approval of
ECL modelled outputs.
We assessed whether the ECL model methodologies
developed by management comply with IFRS 9. We evaluated
and challenged the application of the judgemental criteria
set by management for determining whether there had been
a SICR (applicable to Corporate and SME portfolios). We
assessed the reasonableness of the critical assumptions
applied in estimation of LGDs and PDs. We involved our credit
risk modelling specialists in performing the above procedures.
We reperformed the calculation of ECL for selected portfolios
and assessed whether management’s ECL calculations were
consistent with the approved model methodologies.
We critically evaluated key aspects of model monitoring and
validation (“backtesting” of projected ECL) performed by
management relating to model performance and stability. We
have critically assessed the monitoring results and challenged
explanations for deviations from the expectation. We evaluated
whether model methodologies were updated to address the
results of backtesting, where relevant.
We evaluated adequacy of the disclosures related to expected
credit loss allowance on loans and advances to customers.
• Identify and assess the risks of material misstatement of the consolidated and separate financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s and the Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s and the Bank’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Group or the Bank to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements,
including the disclosures, and whether the consolidated and separate financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information
of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and review of the audit work performed for the
purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated and separate financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Levan Kankava.
PricewaterhouseCoopers Georgia LLC (Reg.# SARAS-F-775813)
Levan Kankava (Reg.# SARAS-A-592839)
1 April 2025
Tbilisi, Georgia
INDEPENDENT AUDITORS’ REPORT CONTINUED
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ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
148
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
150
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
151
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Consolidated statement of financial position Consolidated statement of profit or loss and
Other Comprehensive Income
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
In thousands of GEL
Note
2024
2023*
Interest income
28
3,135,908
2,689,427
Interest income calculated using effective interest rate method
28
3,045,945
2,614,687
Other interest income
28
89,963
74,740
Interest expense
28
(1,626,914)
(1,276,932)
Net interest on currency swaps
28
81,998
83,101
Net interest income
1,590,992
1,495,596
Fee and commission income
29
677,004
571,391
Fee and commission expense
29
(278,914)
(236,915)
Net fee and commission income
398,090
334,476
Net gains from derivatives, foreign currency operations and translation
30
367,783
272,303
Other operating income*
16,515
29,080
Share of profit of associates
574
657
Other operating non-interest income
384,872
302,040
Credit loss allowance for loans to customers
9
(109,510)
(130,380)
Credit loss allowance for finance lease receivables
13
(4,754)
(1,996)
Credit loss allowance for other financial assets and other assets*
(5,762)
(11,483)
Net impairment of non-financial assets
(2,146)
(3,575)
Impairment loss due to write-down of the asset held for sale
(9,800)
-
Operating income after expected credit and non-financial asset impairment losses
2,241,982
1,984,678
Staff costs
31
(439,830)
(385,471)
Depreciation and amortization
15,16
(118,283)
(99,643)
Administrative and other operating expenses*
32
(221,371)
(196,648)
Operating expenses
(779,484)
(681,762)
Profit before tax
1,462,498
1,302,916
Income tax expense
33
(217,782)
(183,858)
Profit for the year
1,244,716
1,119,058
Other comprehensive income/(expense) for the year, net of tax
Items that may be reclassified subsequently to profit or loss:
Net gains reclassified to profit or loss upon disposal of investment securities
10
(1,512)
(5,327)
Movement in fair value reserve for investment securities measured at fair value through other comprehensive income
10
26,971
12,205
Exchange differences on translation to presentation currency
720
572
Other comprehensive income for the year, net of tax
26,179
7,450
Total comprehensive income for the year
1,270,895
1,126,508
Profit is attributable to:
–
Shareholders of the Bank
1,244,661
1,119,025
–
Non-controlling interest
55
33
Profit for the year
1,244,716
1,119,058
Total comprehensive income is attributable to:
–
Shareholders of the Bank
1,270,840
1,126,475
–
Non-controlling interest
55
33
Total comprehensive income for the year
1,270,895
1,126,508
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
*To improve the quality and understandability of the consolidated statement of profit or loss and other comprehensive income, the Group has revisited
presentation of these line items. Further details are disclosed in note 2.
The consolidated and the separate financial statements on pages 150 to 265 were approved for issue by the
Supervisory Board on 1 April 2025 and signed on its behalf by:
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
Vakhtang Butskhrikidze
Chief Executive Officer
In thousands of GEL
Note
31 December
2024
31 December
2023*
31 December
2022*
ASSETS
Cash and cash equivalents
6
2,818,110
3,691,232
3,786,098
Due from other banks
7
20,153
11,135
6,298
Mandatory cash balances with NBG
8
2,576,731
1,572,506
2,047,564
Loans and advances to customers
9
24,187,344
20,958,532
17,497,442
Investment securities
10
5,364,624
3,475,461
2,884,728
Repurchase receivables
11
140,058
-
267,495
Finance lease receivables
13
432,661
370,795
288,886
Investment properties
9,752
15,235
22,154
Current income tax prepayment
50,892
53
27
Deferred income tax asset
33
485
395
2,064
Other financial assets
12
426,005
281,861
246,998
Other assets*
14
541,289
409,697
415,448
Premises and equipment
15
559,760
491,324
424,252
Right of use assets
16
102,660
111,991
100,209
Intangible assets
15
396,569
352,722
311,150
Goodwill
17
28,197
28,197
28,197
TOTAL ASSETS
37,655,290
31,771,136
28,329,010
LIABILITIES
Due to credit institutions
18
7,316,632
4,346,951
3,885,360
Customer accounts
19
21,941,222
19,942,516
17,841,357
Other financial liabilities
21
373,905
276,496
250,518
Current income tax liability
33
62
66,703
601
Deferred income tax liability
33
50,220
50,957
112,877
Debt securities in issue*
20
109,141
715,801
661,445
Other liabilities*
22
117,534
123,579
100,294
Lease liabilities
34
80,411
83,410
72,240
Subordinated debt
23
1,148,374
868,730
590,148
Additional Tier 1 capital subordinated notes*
24
1,062,960
548,284
548,368
TOTAL LIABILITIES
32,200,461
27,023,427
24,063,208
EQUITY
Share capital
25
21,014
21,014
21,014
Share premium
521,190
521,190
521,190
Retained earnings
4,979,871
4,285,662
3,783,180
Share based payment reserve
26
(98,937)
(85,614)
(57,556)
Other reserves*
31,439
5,260
(2,190)
Equity attributable to owners of the Bank
5,454,577
4,747,512
4,265,638
Non-controlling interest
37
252
197
164
TOTAL EQUITY
5,454,829
4,747,709
4,265,802
TOTAL LIABILITIES AND EQUITY
37,655,290
31,771,136
28,329,010
Giorgi Megrelishvili
Chief Financial Officer
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
152
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
153
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
In thousands of GEL
Note
2024
2023
Cash flows from operating activities
Interest received
3,072,330
2,611,910
Interest received on currency swaps
28
81,998
83,101
Interest paid
(1,596,943)
(1,250,007)
Fees and commissions received
677,004
570,656
Fees and commissions paid
(325,322)
(235,436)
Cash received from trading in foreign currencies
259,555
219,711
Other operating income received
16,179
28,502
Staff costs paid
(415,809)
(355,553)
Administrative and other operating expenses paid
(229,144)
(178,079)
Income tax paid
(335,502)
(180,137)
Cash flows from operating activities before changes in operating assets and liabilities
1,204,346
1,314,668
Net change in operating assets
Due from other banks and mandatory cash balances with the NBG
(959,660)
472,792
Loans and advances to customers
(3,216,509)
(3,494,277)
Finance lease receivables
(46,438)
(25,568)
Other financial assets
13,352
(131,449)
Other assets
(26,044)
105,407
Net change in operating liabilities
Due to other banks
81,262
249,415
Customer accounts
1,619,025
2,079,384
Other financial liabilities
165,927
32,257
Other liabilities
(6,247)
2,092
Net cash flows from/(used in) operating activities
(1,170,986)
604,721
Cash flows from/(used in) investing activities
Acquisition of investment securities
10
(7,349,079)
(1,563,326)
Proceeds from disposal of investment securities
10
715,242
383,122
Proceeds from redemption at maturity of investment securities
10
4,699,257
854,540
Acquisition of premises, equipment and intangible assets
(203,914)
(202,645)
Proceeds from disposal of premises, equipment and intangible assets
896
4,672
Proceeds from disposal of investment properties
10,953
7,220
Proceeds from disposal of subsidiary, net of disposed cash
-
1,527
Cash received from recharge agreement
9,477
-
Dividend received
680
696
Net cash flows used in investing activities
(2,116,488)
(514,194)
Cash flows from/(used in) financing activities
Proceeds from other borrowed funds
34
4,523,016
1,894,337
Redemption of other borrowed funds
34
(1,652,889)
(1,698,671)
Repayment of principal of lease liabilities
34
(17,685)
(12,999)
Proceeds from subordinated debt
34
236,586
287,589
Redemption of subordinated debt
34
(3,040)
(15,867)
Share based payment recharge paid
(26,899)
(50,740)
Proceeds from debt securities in issue and AT1
34
816,683
95,820
Redemption of debt securities in issue and AT1
34
(982,445)
(43,058)
Dividends paid
(550,470)
(616,065)
Net cash flows from/(used in) financing activities
2,342,857
(159,654)
Effect of exchange rate changes on cash and cash equivalents
71,495
(25,739)
Net decrease in cash and cash equivalents
(873,122)
(94,866)
Cash and cash equivalents at the beginning of the year
6
3,691,232
3,786,098
Cash and cash equivalents at the end of the year
6
2,818,110
3,691,232
CONSOLIDATED STATEMENT OF CASH FLOWS
in thousands of GEL
Note
Share
capital
Share
premium
Share based
payments reserve
Other
reserves*
Retained
earnings
Total equity
excluding non-
controlling interest
Non-
controlling
interest
Total
equity
Balance as of 1 January 2023
21,014
521,190
(57,556)
(2,190)
3,783,180
4,265,638
164
4,265,802
Profit for the year
-
-
-
-
1,119,025
1,119,025
33
1,119,058
Other comprehensive income
for 2023
-
-
-
7,450
-
7,450
-
7,4 50
Total comprehensive income
for 2023
-
-
-
7,450
1,119,025
1,126,475
33
1,126,508
Share based payment expense
26
-
-
26,397
-
-
26,397
-
26,397
Dividends declared
-
-
-
-
(616,065)
(616,065)
-
(616,065)
Tax effect for delivery of SBP
shares to employees
-
-
(3,715)
-
-
(3,715)
-
(3,715)
Share based payment recharge
by parent company
-
-
(50,740)
-
-
(50,740)
-
(50,740)
Other movements
-
-
-
-
(478)
(478)
-
(478)
Balance as of 31 December 2023
21,014
521,190
(85,614)
5,260
4,285,662
4,747,512
197
4,747,709
Profit for the year
-
-
-
-
1,244,661
1,244,661
55
1,244,716
Other comprehensive income
for 2024
-
-
-
26,179
-
26,179
-
26,179
Total comprehensive income
for 2024
-
-
-
26,179
1,244,661
1,270,840
55
1,270,895
Share based payment expense
26
-
-
25,166
-
-
25,166
-
25,166
Dividends declared
-
-
-
-
(550,470)
(550,470)
-
(550,470)
Tax effect for delivery of SBP
shares to employees
-
-
(11,590)
-
-
(11,590)
-
(11,590)
Share based payment recharge
by parent company
-
-
(26,899)
-
-
(26,899)
-
(26,899)
Other movements
-
-
-
18
18
-
18
Balance as of 31 December 2024
21,014
521,190
(98,937)
31,439
4,979,871
5,454,577
252
5,454,829
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
*To improve the quality and understandability of the consolidated statement of changes in equity, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
Consolidated statement of changes in equity Consolidated statement of cash flows
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
154
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
155
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
SEPARATE STATEMENT OF FINANCIAL POSITION
SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
in thousands of GEL
Note
31 December 2024
31 December 2023*
31 December 2022*
ASSETS
Cash and cash equivalents
6
2,765,181
3,633,314
3,747,594
Due from other banks
7
20,129
1,107
6,269
Mandatory cash balances with NBG
8
2,576,731
1,572,506
2,047,564
Loans and advances to customers
9
24,188,589
20,965,695
17,505,605
Investment securities*
10
5,389,337
3,498,655
2,904,714
Repurchase receivables
11
140,058
-
267,495
Investment properties
9,752
15,235
21,292
Investments in subsidiaries and associates
42
35,101
34,460
34,041
Current income tax prepayment
49,699
-
-
Other financial assets
12
431,635
350,086
299,720
Other assets*
14
400,404
358,737
349,885
Premises and equipment
15
534,054
462,570
398,964
Right of use assets
16
101,956
111,560
98,228
Intangible assets
15
352,883
318,744
285,884
Goodwill
17
27,502
27,502
27,502
TOTAL ASSETS
37,023,011
31,350,171
27,994,757
LIABILITIES
Due to credit institutions
18
6,971,630
4,099,700
3,669,727
Customer accounts
19
22,140,849
20,115,103
17,976,594
Other financial liabilities
21
221,687
208,254
187,464
Current income tax liability
-
67,556
1,576
Deferred income tax liability
33
50,220
50,957
112,877
Debt securities in issue*
20
19,380
634,777
615,941
Other liabilities*
22
108,789
115,617
93,301
Lease liabilities
34
79,570
82,908
70,280
Subordinated debt
23
1,098,698
826,546
560,278
Additional Tier 1 capital subordinated notes*
24
1,062,119
547,015
547,175
TOTAL LIABILITIES
31,752,942
26,748,433
23,835,213
EQUITY
Share Capital
25
21,014
21,014
21,014
Share premium
521,190
521,190
521,190
Retained earnings
4,789,253
4,133,317
3,669,480
Share based payment reserve
26
(99,146)
(86,143)
(57,556)
Other Reserves*
37,758
12,360
5,416
TOTAL EQUITY
5,270,069
4,601,738
4,159,544
TOTAL LIABILITIES AND EQUITY
37,023,011
31,350,171
27,994,757
The consolidated and the separate financial statements on pages 150 to 265 were approved for issue by the
Supervisory Board on 1 April 2025 and signed on its behalf by:
Vakhtang Butskhrikidze
Chief Executive Officer
Giorgi Megrelishvili
Chief Financial Officer
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
*To improve the quality and understandability of the separate statement of financial position, the Group has revisited presentation of these line items.
Further details are disclosed in note 2.
*To improve the quality and understandability of the separate statement of profit or loss and other comprehensive income, the Group has revisited
presentation of these line items. Further details are disclosed in note 2.
in thousands of GEL
Note
2024
2023*
Interest income
28
3,041,622
2,612,787
Interest expense
28
(1,600,718)
(1,257,002)
Net interest on currency swaps
28
81,998
83,101
Net interest income
1,522,902
1,438,886
Fee and commission income
29
635,767
532,339
Fee and commission expense
29
(328,720)
(279,491)
Net fee and commission income
307,047
252,848
Net gains from derivatives, foreign currency operations and translation
30
368,720
273,591
Other operating income*
29,581
41,645
Share of profit of associates
847
657
Other operating non-interest income
399,148
315,893
Credit loss allowance for loans to customers
9
(114,225)
(131,465)
Credit loss allowance for other financial assets and other assets*
(3,442)
(6,861)
Net impairment of non-financial assets
(1,641)
(1,562)
Operating income after expected credit and non-financial asset impairment losses
2,109,789
1,867,739
Staff costs
31
(396,344)
(349,513)
Depreciation and amortization
(107,664)
(89,224)
Administrative and other operating expenses*
32
(183,804)
(166,894)
Operating expenses
(687,812)
(605,631)
Profit before tax
1,421,977
1,262,108
Income tax expense
33
(215,589)
(182,243)
Profit for the year
1,206,388
1,079,865
Other comprehensive income/(expense) for the year, net of tax:
Items that may be reclassified subsequently to profit or loss:
Net gains reclassified to profit or loss upon disposal of investment securities
(1,512)
(5,327)
Movement in fair value reserve for investment securities measured at fair value through other comprehensive
income, net of tax
26,910
12,271
Other comprehensive income for the year, net of tax
25,398
6,944
Total comprehensive income for the year
1,231,786
1,086,809
Separate statement of financial position
Separate statement of profit or loss and
other comprehensive income
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
156
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
157
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Separate statement of changes in equity
Separate statement of cash flows
SEPARATE STATEMENT OF CASH FLOWS
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
in thousands of GEL
Note
Share
capital
Share
premium
Share based
payment
reserve
Other
reserves*
Retained
earnings
Total
Balance as of 1 January 2023
21,014
521,190
(57,556)
5,416
3,669,480
4,159,544
Profit for the year
-
-
-
-
1,079,865
1,079,865
Other comprehensive income for
2023:
-
-
-
6,944
-
6,944
Total comprehensive income for
2023
-
-
-
6,944
1,079,865
1,086,809
Share based payment expense
26
-
-
25,868
-
-
25,868
Dividends declared
-
-
-
-
(616,065)
(616,065)
Share based payment recharge by
parent company
-
-
(50,740)
-
-
(50,740)
Tax effect for delivery of SBP shares to
employees
-
-
(3,715)
-
-
(3,715)
Other movement
-
-
-
-
37
37
Balance as of 31 December 2023
21,014
521,190
(86,143)
12,360
4,133,317
4,601,738
Profit for the year
-
-
-
-
1,206,388
1,206,388
Other comprehensive income for 2024
-
-
-
25,398
-
25,398
Total comprehensive income for
2024
-
-
-
25,398
1,206,388
1,231,786
Share based payment expense
26
-
-
25,355
-
-
25,355
Dividends declared
-
-
-
-
(550,470)
(550,470)
Share based payment recharge by
parent company
-
-
(26,899)
-
-
(26,899)
Tax effect for delivery of SBP shares to
employees
-
-
(11,459)
-
-
(11,459)
Other movement
-
-
-
-
18
18
Balance as of 31 December 2024
21,014
521,190
(99,146)
37,758
4,789,253
5,270,069
SEPARATE STATEMENT OF CHANGES IN EQUITY
The notes set out on pages 158 to 265 form an integral part of these consolidated and separate financial statements.
in thousands of GEL
Note
2024
2023
Cash flows from operating activities
Interest received
2,989,348
2,534,237
Interest received on currency swaps
28
81,998
83,101
Interest paid
(1,570,608)
(1,228,477)
Fees and commissions received
635,760
531,606
Fees and commissions paid
(375,128)
(278,000)
Cash received from trading in foreign currencies
357,203
219,729
Other operating income received
12,454
19,485
Staff costs paid
(373,615)
(321,550)
Administrative and other operating expenses paid
(195,070)
(150,332)
Income tax paid
(332,942)
(178,468)
Cash flows from operating activities before changes in operating assets and liabilities
1,229,400
1,231,331
Net change in operating assets
Due from other banks and mandatory cash balances with the NBG
(969,665)
482,791
Loans and advances to customers
(3,220,471)
(3,494,058)
Other financial assets
84,484
(85,096)
Other assets
76,616
91,174
Net change in operating liabilities
Due to other banks
81,664
248,764
Customer accounts
1,655,961
2,119,973
Other financial liabilities
(17,220)
27,026
Other liabilities and provision for liabilities and charges
(9,620)
3,800
Net cash flows used in operating activities
(1,088,851)
625,705
Cash flows from/(used in) investing activities
Acquisition of investment securities
(7,349,079)
(1,591,596)
Proceeds from disposal of investment securities
713,750
387,887
Proceeds from redemption at maturity of investment securities
4,699,257
874,540
Dividends received
17,812
20,656
Proceeds from disposal of subsidiary
-
1,540
Acquisition of premises, equipment and intangible assets
(186,471)
(180,309)
Proceeds from disposal of premises, equipment and intangible assets
989
3,581
Proceeds from disposal of investment properties
10,701
4,746
Cash received from recharge agreement
9,775
-
Net cash flows used in investing activities
(2,083,266)
(478,955)
Cash flows from/(used in) financing activities
Proceeds from other borrowed funds
10
4,319,722
1,721,055
Redemption of other borrowed funds
10
(1,545,934)
(1,553,680)
Repayment of principal of lease liabilities
10
(17,244)
(12,145)
Proceeds from subordinated debt
231,038
262,582
Redemption of subordinated debt
(3,040)
(2,618)
Proceeds from debt securities in issue and AT1
805,050
17,011
Redemption of debt securities in issue and AT1
(979,244)
-
Dividends paid
(550,470)
(616,065)
Share based payment recharge paid
(26,897)
(50,740)
Net cash flows from/(used in) financing activities
2,232,981
(234,600)
Effect of exchange rate changes on cash and cash equivalents
71,003
(26,430)
Net decrease in cash and cash equivalents
(868,133)
(114,280)
Cash and cash equivalents at the beginning of the year
6
3,633,314
3,747,594
Cash and cash equivalents at the end of the year
6
2,765,181
3,633,314
*To improve the quality and understandability of the separate statement of changes in equity, the Group has revisited presentation of these line items.
Further details are disclosed in note 2.
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
158
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
159
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
Notes to the consolidated and separate
financial Statements
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Subsidiaries and associates. The consolidated financial statements include the following principal subsidiaries:
1. INTRODUCTION CONTINIUED
Proportion of voting
rights and ordinary
share capital held as of
31 December
Subsidiary name
2024
2023
Principal place of
business or
incorporation
Year of
incorp-
oration
Functional
Currency
Principal activities
United Financial Corporation
JSC
99.53%
99.53%
Tbilisi, Georgia
2001
GEL
Card processing
TBC Capital LLC
100.00%
100.00%
Tbilisi, Georgia
1999
GEL
Brokerage
TBC Leasing JSC
100.00%
100.00%
Tbilisi, Georgia
2003
GEL
Leasing
TBC Kredit LLC
100.00%
100.00%
Baku, Azerbaijan
1999
AZN
Non-banking credit
institution
TBC Pay LLC
100.00%
100.00%
Tbilisi, Georgia
2008
GEL
Payment processing
TBC Invest-Georgia LLC
100.00%
100.00%
Ramat Gan, Israel
2011
ILS
Financial services
TBC Asset Management LLC
100.00%
100.00%
Tbilisi, Georgia
2021
GEL
Asset management
1. INTRODUCTION
Principal activity. TBC Bank JSC (hereafter the “Bank”) was incorporated on 17 December 1992 and is domiciled in
Georgia. The Bank is a joint stock company limited by shares and was set up in accordance with Georgian regulations.
The Bank’s principal business activity is universal banking operations that include corporate, small and medium
enterprises (“SME”), retail and micro-operations within Georgia. The Bank is a parent of a group of companies
(hereafter the “Group”) incorporated in Georgia and Azerbaijan. Their primary business activities include providing
banking, leasing, brokerage and card processing services to corporate and individual customers. The Bank has been
operating since 20 January 1993 under a general banking license issued by the National Bank of Georgia (“NBG”). The
Bank’s registered address and place of business is 7 Marjanishvili Street, 0102 Tbilisi, Georgia. The Bank was registered
by District Court of Vake and the registration number is 204854595.
The Bank has 125 (2023:123) branches1 within Georgia.
TBC Bank Group PLC (“TBCG”) is a public limited by shares company, incorporated in the United Kingdom. TBCG
held 99.88% of the share capital of TBC Bank JSC as at 31 December 2024 (2023: 99.88%) thus representing the Bank’s
ultimate and direct parent company. TBC Bank Group PLC’s registered legal address is 100 Bishopsgate, C/O Law
Debenture, London, England, EC2N 4AG. Registered number of TBC Bank Group PLC is 10029943.
As of 31 December 2024, and 2023 the Bank's shareholder structure was as follows:
% Of ownership interest held as of 31 December
Shareholders
2024
2023
Dunross & Co.
6.84%
6.50%
Allan Gray Investment Management
4.62%
3.88%
BlackRock
4.60%
4.72%
Vanguard Group
4.24%
4.39%
JPMorgan Asset Management
3.75%
3.81%
Mamuka Khazaradze and Badri Japaridze
15.40%
15.83%
Other*
60.55%
60.87%
Total
100.00%
100.00%
* Other includes individual as well as corporate shareholders.
* The Group has a significant influence on Georgian Stock Exchange JSC and Kavkasreestri JSC with representatives in management board.
1
Excluding pawnshop units.
% of ownership interest held as of 31 December
Shareholders
2024
2023
TBC Bank Group PLC
99.88%
99.88%
Other
0.12%
0.12%
Total
100.00%
100.00%
As of 31 December 2024, and 31 December 2023, the shareholder structure of TBC Bank Group PLC by beneficiary
ownership interest was as follows:
The Group has investments in the following associates:
Proportion of voting rights
and ordinary share
capital held as of
31 December
Associate name
2024
2023
Principal place of
business or
incorporation
Year of
incorp-
oration
Principal
activities
CreditInfo Georgia JSC
21.08%
21.08%
Tbilisi, Georgia
2005
Financial intermediation
Tbilisi Stock Exchange JSC
28.87%
28.87%
Tbilisi, Georgia
2015
Finance, Service
Georgian Central Securities
Depository JSC
22.87%
22.87%
Tbilisi, Georgia
1999
Finance, Service
Georgian Stock Exchange JSC*
17.33%
17.33%
Tbilisi, Georgia
1999
Finance, Service
Kavkasreestri JSC*
10.03%
10.03%
Tbilisi, Georgia
1998
Finance, Service
The country of incorporation is also the principal area of operation of each of the above subsidiaries and associates.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
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1. INTRODUCTION CONTINIUED
1. INTRODUCTION CONTINIUED
The Group’s corporate structure consists of a number of related undertakings, comprising subsidiaries and associates,
which are not consolidated or equity accounted due to immateriality. A full list of these undertakings, the country of
incorporation and the ownership of each share class is set out below.
Proportion of voting rights
and ordinary share capital
held as of 31 December
Company name
2024
2023
Principal place
of business or
incorporation
Year of
incorp-
oration
Principal activities
TBC Invest International LLC*
100.00%
100.00%
Tbilisi, Georgia
2016
Investment Vehicle
University Development Fund*
33.33%
33.33%
Tbilisi, Georgia
2007
Education
Natural Products of Georgia LLC*
25.00%
25.00%
Tbilisi, Georgia
2001
Trade, Service
TBC Trade LLC*
100.00%
100.00%
Tbilisi, Georgia
2008
Trade, Service
Diversified Credit Portfolio JSC
100.00%
100.00%
Tbilisi, Georgia
2021
Asset Management
Diversified Credit Portfolio JSC 2
100.00%
N/A
Tbilisi, Georgia
2024
Asset Management
Diversified Credit Portfolio JSC 3
100.00%
N/A
Tbilisi, Georgia
2024
Asset Management
Globally Diversified bond fund JSC
100.00%
100.00%
Tbilisi, Georgia
2023
Asset Management
*Dormant
Operating environment of the Group Most of the Group’s activities are located in Georgia, that displays certain
characteristics of an emerging market. The legal, tax and regulatory frameworks continue to develop and are subject to
frequent changes and varying interpretations (Note 34). Amid the global geopolitical shifts, supply chain disruptions,
redirection of trade and migration flows due to the Russian-Ukrainian war in recent post-pandemic years, Georgia has
maintained a strong economic performance. The real GDP has increased by 10.6% in 2021, 11% in 2022 and 7.8% in 2023,
which, despite 2024 being a politically turbulent year, was followed by a robust 9.4% expansion. Consumption, tourism,
and strong real credit growth contributed the most in this year’s strong growth, unlike the declined foreign direct
investments (FDI) and partially remittances, as well as migration-related inflows that moderated slightly.
While inflows to the Georgian economy are quite diversified, the country is still vulnerable to geopolitical and
economic developments in its region and beyond. In particular, uncertainties related to the Russian-Ukrainian conflict
and consequent developments may have an adverse impact on the Georgian economy. At the same time, the risks
related to heightened domestic political tensions remain tangible, negatively affecting the GEL stability, tourism and
FDI inflows and general economic environment. The country is also exposed to a lower though still tangible risk of
resurged 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 the stronger USD, higher oil prices,
migration flows, etc.
At the same time, while the migration effect has started to moderate in 2024, no longer contributing to growth,
the impact still maintains a tangible share in total economic activity, hence, 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 create positive economic spill-overs as well, such as the likely stronger rebound of growth in
Russia and Ukraine.
However, the baseline strongly depends on global developments. While the Georgian economy is so far resilient
against elevated geopolitical risks and adverse economic impacts of Russia’s invasion of Ukraine, there is a
probability of more severe spill-over effects, as well as risks of other global disruptions provoked by potential political
repercussions, regional conflicts, supply chain obstructions, potential global health issues such as pandemics, etc. The
materialization of these risks could severely hamper economic activity in Georgia, and negatively impact the business
environment and clients of the Group.
For the purpose of measurement of expected credit losses (“ECL”), the Group uses supportable forward-looking
information, including forecasts of macroeconomic variables. As with any economic forecast, however, the projections
and likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual
outcomes may be significantly different from those projected.
Climate Impact
The Group has reviewed the exposure to climate-related risks, but has not identified any risks that could significantly
impact the financial performance or position of the Group as at 31 December 2024. See more details outlined in risk
management disclosures in note 35.
2.MATERIAL ACCOUNTING POLICY INFORMATION AND OTHER EXPLANATORY INFORMATION
Basis of preparation. These consolidated and separate financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) under the historical cost convention as modified by the initial
recognition of financial instruments based on fair value, and by the revaluation of financial instruments categorised at
fair value through profit or loss (“FVTPL”) and at fair value through other comprehensive income (“FVOCI”), with the
disclosure requirements of the order N284/04 of the President of the National Bank of Georgia dated 26 December
2018, and with the disclosure requirements of the Law of Georgia on Accounting, Reporting and Auditing. The
principal accounting policies applied in the preparation of these consolidated and separate financial statements are
set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
Going Concern. The Board has fully reviewed the available information pertaining to the principal existing and
emerging risks, strategy, financial health, profitability of operations, liquidity and solvency of the Group, and
determined that the Group’s business remains a going concern. The Directors have not identified any material
uncertainties that could threaten the going concern assumption and have a reasonable expectation that the Group has
adequate resources to remain operational and solvent for the foreseeable future (which is, for this purpose, a period of
12 months from the date of approval of these financial statements).
Accordingly, the accompanying financial statements are prepared in line with the going concern basis of accounting.
Presentation currency. These consolidated financial statements are presented in thousands of Georgian Lari (“GEL
thousands”), unless otherwise indicated.
Consolidated financial statements. Subsidiaries are those investees that the Group controls. The Group may have
power over an investee even when it holds less than the majority of voting power in it. In such a case, the Group
assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to
determine if it has de-facto power over the investee. Subsidiaries are consolidated from the date on which control is
transferred to the Group and are deconsolidated from the date on which control ceases.
Separate financial statements. Investments in subsidiaries – The Bank accounts investments at the original cost of
the investment until the investment is de-recognised or impaired for its separate financial statements. The carrying
amounts of the investments are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, the assets’ recoverable amounts are estimated. Value in use is determined by
the present value of expected future cash flows discounted to present value. An impairment loss is recognised when
the carrying amount of the investments exceeds its recoverable amount. Impairment losses are recognised in profit or
loss.
Business combinations and goodwill accounting. Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured at the fair value of the consideration, including contingent
consideration, given at the acquisition date. Acquisition-related costs are recognised as an expense in the profit
or loss in the period in which they are incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured at their fair values at the acquisition date, irrespective of the extent
of any non-controlling interest.
The Group measures the non-controlling interest that represents the current ownership’s interest and entitles the
holder to a proportionate share of net assets in the event of liquidation on a transaction-by-transaction basis, either
at: (a) fair value, or (b) the non-controlling interest’s proportionate share of net assets of the acquired entity. Non-
controlling interests that are not present ownership interests are measured at fair value.
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Goodwill is measured by deducting the acquiree’s net assets from the aggregate of the consideration transferred for
the acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in the acquiree held
immediately before the acquisition date.
The Group tests goodwill for impairment at least annually and whenever there are indications that goodwill may be
impaired. Goodwill is allocated to the cash-generating units, or groups of cash-generating units, that are expected
to benefit from the synergies of the business combination. Such units or group of units represent the lowest level at
which the Group monitors goodwill and are not larger than an operating segment. Gains or losses on disposal of an
operation within a cash generating unit to which goodwill has been allocated include the carrying amount of goodwill
associated with the disposed operation. This is generally measured on the basis of the relative values of the disposed
operation and the portion of the cash-generating unit which is retained.
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments
issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent consideration
arrangements, but excludes acquisition related costs such as advisory, legal, valuation and similar professional
services.
Transaction costs incurred for issuing equity instruments are deducted from the equity; transaction costs incurred for
issuing debt are deducted from the carrying amount and all other transaction costs associated with the acquisition are
expensed.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated;
unrealised losses are also eliminated unless the cost cannot be recovered. The Bank and all of its subsidiaries use
uniform accounting policies consistent with the Group’s policies.
Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests that are
not owned, directly or indirectly, by the Bank. Non-controlling interest forms a separate component of the Group’s
equity.
Purchases and sales of non-controlling interests. The Group applies the economic entity model to account for
transactions with owners of non-controlling interest (“NCI”). Any difference between the purchase consideration and
the carrying amount of non-controlling interest acquired is recorded as a capital transaction directly in equity. The
Group recognises the difference between sales consideration and carrying amount of non-controlling interest sold as
a capital transaction in the statement of changes in equity.
Initial recognition of financial instruments. Financial instruments at fair value through profit or loss (“FVTPL”) are
initially recorded at fair value. All other financial instruments are initially recorded at fair value adjusted for transaction
costs.
Financial assets – classification and subsequent measurement – measurement categories. The Group classifies
financial assets in the following measurement categories: FVTPL, fair value through other comprehensive
income (“FVOCI”) and amortised cost (“AC”). The classification and subsequent measurement of debt financial
assets depends on: (i) the Group’s business model for managing the related assets portfolio and (ii) the cash flow
characteristics of the asset. The line items Financial Assets and Financial Liabilities in the statement of financial
position include those assets and liabilities that are in the scope of IFRS 17 for disclosure purposes.
Financial assets – reclassification. Financial instruments are reclassified only when the business model for managing
the portfolio, as a whole, changes. The reclassification has a prospective effect and takes place from the beginning of
the first reporting period that follows after the change in the business model.
Financial assets impairment – expected credit loss (ECL) allowance. The Group assesses, on a forward-looking
basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures arising from loan commitments
and financial guarantee contracts. The Group measures ECL and recognises credit loss allowance at each reporting
date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by
evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information
that is available without undue cost and effort at the end of each reporting period about past events, current
conditions and forecasts of future conditions.
The Group applies a three-stage model for impairment, based on changes in credit quality since initial recognition.
The Group’s definition of defaulted assets and definition of default is based on the occurrence of one or more loss
events, described further in Note 35:
• Stage 1: A financial instrument that is not defaulted on initial recognition is classified in Stage 1. Financial assets in
Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events
possible within the next 12 months or until contractual maturity, if shorter (“12 Months ECL”);
• Stage 2: If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset is
transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis (“Lifetime ECL”). If a SICR is no
longer observed, the instrument will move back to Stage 1. Financial instrument moves back from stage 2 to stage
1 with 6-month cure period in case of loans previously having default flag, while restructured loans remain in stage
2 until the restructured status is removed. In order to remove restructured status, the borrower should make at least
12 consecutive payments, unless financial monitoring is performed. Refer to Note 35 for a description of how the
Group determines, on a forward-looking basis, when a SICR has occurred;
• Stage 3: Defaulted assets are transferred to Stage 3 and allowance for Lifetime ECL is recognized.
Change in ECL is recognized in the statement of profit or loss with a corresponding allowance reported as a decrease
in carrying value of the financial asset on the statement of financial position. For financial guarantees and credit
commitments, provision for ECL is reported as a liability in Provisions for Liabilities and Charges.
Finance lease receivables – expected credit loss (ECL) allowance
The ECL is determined in the same way as for loans and advances measured at AC and recognised through an
allowance account to write down the receivables’ net carrying amount to the present value of expected cash flows
discounted at the interest rates implicit in the lease investments. There is a ‘three stage’ approach which is based
on the change in credit quality of financial lease receivables since initial recognition. Immediate loss that is equal to
the 12-month ECL is recorded on initial recognition of financial leases that are not defaulted. In case of a significant
increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. The estimated future cash
flows reflect the cash flows that may result from obtaining and selling the assets subject to the lease.
The Group normally structures its finance lease contracts so that the lessee makes a minimum prepayment of 20% of
the equipment purchase price at the inception of the lease term. The Group holds title to the leased assets during the
lease term. The title to the asset under the finance lease contract is transferred to the lessees at the end of the contract
terms, including full repayment of lease payments. Generally, the lease terms are up to five years.
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. The main
types of collateral obtained are:
• Leased assets;
• Down payment;
• Real estate properties;
• Third party guarantees.
The financial effect of collateral is presented by disclosing the collateral values separately for (i) those assets where
collateral and other credit enhancements are equal to or exceed the assets’ carrying value (“over-collateralised assets”)
and (ii) those assets where collateral and other credit enhancements are less than the assets’ carrying value (“under-
collateralised assets”).
The Group classifies its portfolio into three stages:
• Stage 1 – assets for which no significant increase of credit risk since initial recognition is identified;
• Stage 2 – assets for which significant increase in credit risk since initial recognition is identified;
• Stage 3 – defaulted exposures.
For stage 1 exposures the Group creates 12 months expected credit losses, whereas for stage 2 and stage 3 lifetime
expected credit losses are created.
For the Stage 2 classification purposes the Group applies both quantitative and the qualitative criteria including, but
not limited to:
• 30 days past due (DPD) overdue;
• Downgrade of the risk category of the borrower since initial recognition;
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Default definition includes criteria such as: (i) 90 DPD overdue (ii) distressed restructuring and (iii) other criteria
indicating the borrower’s unlikeness to repay the liabilities.
The Group incorporates forward looking information (FLI) for both individual and collective assessment. For FLI
purposes the Group defines three scenarios, which are:
• Baseline (most likely);
• Upside (better than most likely);
• Downside (worse than most likely).
The Group derives the baseline macro scenario and takes into account projections from various external sources –
the National Bank of Georgia, Ministry of Finance, IMF as well as other IFIs- to ensure the alignment to the consensus
market expectations. Refer to Note 35 for the description of how the Group incorporates FLI in ECL calculations.
Upside and downside scenarios are defined based on the framework developed by the Bank’s macroeconomic unit.
The Group calculates expected impairment losses for each scenario. In order to come up with the final expected credit
loss figures the bank applies probability weighted average approach where probabilities of each scenario are used as
weights.
Write-offs. The loans are collectively assessed for write off based on overdue days criteria or are individually
evaluated, depending on the loan segment and product type. Loans are written off when recovery is deemed highly
unlikely. For retail and micro loans, write-off is based on overdue days criteria, while for business loans the need for
write-off additionally is assessed individually.
Financial assets- derecognition and modification. The Group derecognises financial assets when (a) the assets
are redeemed or the rights to cash flows from the assets otherwise expired or (b) the Group has transferred the
rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement while (i)
also transferring substantially all risks and rewards of ownership of the assets or (ii) neither transferring nor retaining
substantially all risks and rewards of ownership, but not retaining control. Control is retained if the counterparty does
not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose
restrictions on the sale. The Group sometimes renegotiates or otherwise modifies the contractual terms of the
financial assets.
The Group assesses whether the modification of contractual cash flows is substantial, in which it considers certain
qualitative and quantitative factors combined. Based on below shown internally developed methodology there are
certain qualitative triggers which lead to asset derecognition with no further quantitative testing required. These
qualitative criteria are included in the list below:
• Change in contract currency;
• Consolidation of two or more loans into one new loan;
• Change in counterparty;
• Loan with no predetermined payment schedule is changed with loan with schedule or vice versa;
• Change in contractual interest rate due to market environment changes.
The Group compares the original and revised expected cash flows to assets whether the risks and rewards of the
asset are substantially different as a result of the contractual modification. It should be assessed whether change
in contractual cash flow is substantial (significance defined as 10% change). If the test result is above 10% threshold,
loan should be derecognized, whereas if the test is passed and result is below or equal to 10%, financial asset can be
assessed as modified.
If above mentioned qualitative and quantitative criteria are not met, then modification does not result in derecognition.
The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by the original
effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the
carrying amount of the modified financial asset and are amortised over the remaining term of the modified financial
asset.
Financial liabilities – measurement categories. Financial liabilities are classified as subsequently measured at AC,
except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading
(e.g., short positions in securities), contingent consideration recognised by an acquirer in a business combination
and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan
commitments.
Mandatory cash balances with the National Bank of Georgia. Mandatory cash balances with National Bank of
Georgia are carried at AC and represent mandatory reserve deposits that are not available to finance the Group’s
Day to day operations. Hence, they are not considered as part of cash and cash equivalents for the purposes of the
consolidated statement of cash flows.
Due from other banks. Amounts due from other banks are recorded when the Group advances money to counterparty
banks. Amounts due from other banks are carried at AC when: (i) they are held for the purposes of collecting
contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at fair value through profit
or loss (FVTPL). Otherwise, they are carried at fair value (FV).
Investments in debt securities. Based on the business model and the cash flow characteristics, the Group classifies
investments in debt securities as carried at AC, FVOCI or FVTPL. Debt securities are carried at AC if they are held for
collection of contractual cash flows and where those cash flows represent solely payments of principal and interest
(“SPPI”), and if they are not voluntarily designated at FVTPL in order to significantly reduce an accounting mismatch.
Debt securities are carried at FVOCI if they are held for collection of contractual cash flows and for selling, where those
cash flows represent SPPI, and if they are not designated at FVTPL. Interest income from these assets is calculated
using the effective interest method and recognised in profit or loss. An impairment allowance estimated using the
expected credit loss model is recognised in profit or loss for the year. All other changes in the carrying value are
recognised in OCI. When the debt security is derecognised, the cumulative gain or loss previously recognised in OCI
is reclassified from OCI to profit or loss.
Investments in equity securities. Financial assets that meet the definition of equity from the issuer’s perspective -
instruments that do not contain a contractual obligation to pay cash and that represent a residual interest in the issuer’s
net assets - are considered investments in equity securities by the Group.
Investments in equity securities are measured at FVTPL, except where the Group elects at initial recognition to
irrevocably designate an equity investment at FVOCI. The Group’s policy is to designate equity investments as FVOCI
when those investments are held for strategic purposes other than solely to generate investment returns.
For FVTPL investments, fair value changes are recognised in profit or loss. For FVOCI investments, fair value changes
are recognised in other comprehensive income (OCI), with no reclassification to profit or loss upon disposal.
Debt securities in issue. Debt securities in issue include promissory notes, bonds, certificates of deposit and
debentures issued by the Group. Debt securities are measured at AC. If the Group purchases its own debt securities in
issue, they are removed from the consolidated statement of financial position and the difference between the carrying
amount of the liability and the consideration paid is included in gains arising from retirement of debt.
Additional Tier 1 capital subordinated notes. The Group classifies additional Tier 1 (AT1) capital subordinated debt
Notes as financial liabilities measured at amortized cost using the effective interest rate (EIR) method. Interest expense
is recognised in profit or loss based on the effective interest rate. Foreign exchange gains or losses arising from
currency translation of these notes are recognised in profit or loss. AT1 notes may be written down, converted into
equity, or otherwise modified under the resolution regime implemented by the National Bank of Georgia.
Loans and advances to customers. Loans and advances to customers are recorded when the Group advances money
to purchase or originate a loan due from a customer.
Impairment allowances are determined based on the forward-looking ECL models. Note 35 provides information
about inputs, assumptions and estimation techniques used in measuring ECL, including an explanation of how the
Group incorporates forward-looking information in the ECL models.
Repossessed collateral. Repossessed collateral represents non-financial assets acquired by the Group to settle
overdue loans. The assets are initially recognised at fair value when acquired and included in premises and equipment,
investment property or repossessed collateral within other assets depending on their nature and the Group’s intention
in respect of recovery of these assets and are subsequently re-measured and accounted for in accordance with
the accounting policies for these categories of assets. Repossessed assets are recorded at the lower of cost or net
realisable value.
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Finance lease receivables. Where the Group is a lessor in a lease that substantially transfers all risks and rewards
incidental to ownership to the lessee, the assets leased out are presented as finance lease receivables and carried at
the present value of the future lease payments. Finance lease receivables are initially recognised at commencement
(when the lease term begins) using a discount rate determined at inception (the early date of the lease agreement and
the date of commitment by the parties to the principal provisions of the lease).
The difference between the gross receivable and the present value represents unearned finance income. This
income is recognised over the term of the lease using the net investment method (before tax), which reflects a
constant periodic rate of return. The interest income on stage 3 exposures is recognized on a carrying amount after
deducting ECL. Incremental costs directly attributable to negotiating and arranging the lease are included in the initial
measurement of the finance lease receivables and reduce the amount of income recognised over the lease term.
Finance income from leases is recorded within interest income in the profit or loss.
Customer accounts. Customer accounts are non-derivative financial liabilities to individuals, state or corporate
customers and are carried at AC.
Subordinated debt. Subordinated debt can only be paid in the event of a liquidation after the claims of other higher
priority creditors have been met and is included in the Bank’s “Tier 2” capital. Subordinated debt is carried at AC.
Debt securities in issue. Debt securities in issue include promissory notes, bonds and debentures issued by the
Group. Debt securities are stated at AC. If the Group purchases its own debt securities in issue, they are removed from
the consolidated statement of financial position and the difference between the carrying amount of the liability and
the consideration paid is included in gains arising from retirement of debt.
Derivative financial instruments. Derivative financial instruments, including foreign exchange contracts, interest rate
futures, forward rate agreements, currency and interest rate swaps, currency and interest rate options are recognized
at their fair value. The Group also enters into offsetting deposits with its counterparty banks to exchange currencies.
Such deposits, while legally separate, are aggregated and accounted for as a single derivative financial instrument
(currency swap) on a net basis where (i) the deposits are entered into at the same time and in contemplation of one
another, (ii) they have the same counterparty, (iii) they relate to the same risk and (iv) there is no apparent business
purpose for structuring the transactions separately that could not also have been accomplished in a single transaction.
All derivative instruments are carried as assets when fair value is positive and as liabilities when fair value is negative.
The Group does not apply hedge accounting in respect of the majority of its hedging strategies. However, the Group
applies fair value hedge accounting from time to time in respect of certain transactions, such as foreign exchange
risk hedges on monetary positions hedged by foreign exchange forwards and swaps. The Group applies IFRS 9
requirements for hedge accounting. The total amount of transactions for which fair value hedge accounting is applied
is immaterial in 2024.
When derivative instruments are entered into with a view to decrease cost of funding, respective interest effect is
presented as a separate line of statement of comprehensive income, within net interest income.
Premises and equipment. Premises and equipment are stated at cost, less accumulated depreciation and provision
for impairment, where required. Cost of premises and equipment of acquired subsidiaries is the estimated fair value at
the date of acquisition.
At the end of each reporting period management assesses whether there is any indication of impairment of premises
and equipment. If any such indication exists, management estimates the recoverable amount to determine whether an
impairment loss should be recognised.
Intangible assets. Intangible assets, other than goodwill, have definite useful lives and primarily comprise capitalized
computer software, accounted for using the cost model. Acquired software licenses are capitalized based on
acquisition and implementation costs, while directly attributable development costs are capitalized if future economic
benefits are probable. Capitalized costs include staff and direct overheads, whereas maintenance costs are expensed
as incurred.
Depreciation and amortisation. Land and construction in progress are not depreciated. Depreciation on other items
of premises and equipment and right-of-use assets and amortisation of intangible assets are calculated using the
straight-line method to allocate their cost less their residual values over their estimated useful lives as follows:
Asset
Useful life
Premises
40 – 110 years;
Furniture and fixtures
5 – 8 years;
Computers and office equipment
3 – 8 years;
Motor vehicles
4 – 5 years;
Other equipment
2 – 10 years;
Right-of-use assets
Term of the underlying lease;
Intangible assets
1 – 20 years;
The residual value of an asset is nil if the Group expects to use the asset until the end of its physical life. The assets’
residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Investment property. Investment property is stated at cost less accumulated depreciation and provision for
impairment, where required. It is amortised on a straight-line basis over an expected useful life of 30 to 50 years. Land
included in investment property is not depreciated. Residual values of investment properties are estimated to be nil. In
case of any indication that the investment properties may be impaired, the Group estimates the recoverable amount as
the higher of value in use and fair value less costs to sell.
Earned rental income is recorded in profit or loss for the year within other operating income.
Accounting for leases by the Group as a lessee. The Group leases office, branches and service centre premises.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is recognised at cost and depreciated over the shorter of
the asset's useful life and the lease term on a straight-line basis.
Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
•
variable lease payment that are based on an index or a rate;
•
amounts expected to be payable by the lessee under residual value guarantees;
•
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
•
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
As an exception to the above, the Group accounts for short-term leases and leases of low value assets by recognising
the lease payments as an operating expense on a straight-line basis.
In determining the lease term, management of the Group considers all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or
periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated).
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
168
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169
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MANAGEMENT REPORT
2.MATERIAL ACCOUNTING POLICY INFORMATION AND OTHER EXPLANATORY INFORMATION CONTINUED
2.MATERIAL ACCOUNTING POLICY INFORMATION AND OTHER EXPLANATORY INFORMATION CONTINUED
Income taxes. Income taxes are provided in the consolidated financial statements in accordance with the legislation
enacted or substantively enacted by the end of reporting period in the respective territories that the Bank and its
subsidiaries operate. The income tax charge/credit comprises of current tax and deferred tax and is recognised in
profit or loss except if it is recognised directly in other comprehensive income because it relates to transactions that
are also recognised, in the same or a different period, directly in other comprehensive income.
Current tax is the amount expected-to-be-paid to or recovered from the tax authorities in respect of taxable profits
or losses for the current and prior periods. Taxable profits or losses are based on estimates if consolidated financial
statements are authorised prior to filing relevant tax returns. Taxes, other than on income, are recorded within
administrative and other operating expenses.
Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of reporting
period that are expected to apply to the extent of time when the temporary differences will reverse or the tax loss carry
forwards will be utilised.
Deferred income tax is provided on post-acquisition retained earnings of subsidiaries, except where the Group
controls the subsidiary’s dividend policy and it is probable that the difference will not reverse through dividends or
otherwise in the foreseeable future.
Share capital. Ordinary shares with discretionary dividends are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Any
excess of the fair value of consideration received over the par value of shares issued is recorded as share premium in
equity.
Dividends. Dividends are recorded in equity in the period in which they are declared. Any dividends declared after the
end of the reporting period and before the consolidated financial statements are authorised for issue, are disclosed in
the subsequent events note.
Income and expense recognition. Interest income and expense are recorded for all debt instruments, other than
those at FVTPL, using the effective interest method. As part of interest income or expense this method defers all fees
paid or received between the parties to the contract that are an integral part of the effective interest rate, transaction
costs and all other premiums or discounts. The group does not have Interest income on debt instruments at FVTPL.
Fees integral to the effective interest rate include origination fees received or paid by the entity relating to the creation
or acquisition of a financial asset or issuance of a financial liability, for example fees for evaluating creditworthiness,
evaluating and recording guarantees or collateral, negotiating the terms of the instrument and for processing
transaction documents. Commitment fees received by the Group to originate loans at market interest rates are integral
to the effective interest rate if it is probable that the Group will enter into a specific lending arrangement and does not
expect to sell the resulting loan shortly after origination. The Group does not designate loan commitments as financial
liabilities at FVTPL.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets,
except for (i) financial assets that have become defaulted (Stage 3), for which interest income is calculated by applying
the effective interest rate to their AC, net of the ECL provision, and (ii) financial assets that are purchased or originated
defaulted, for which the original credit-adjusted effective interest rate is applied to the AC.
All other fees, commissions and other income and expense items are generally recorded when earned by reference to
completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total
services to be provided.
For cross currency basis swaps interest component calculation, notional amount is multiplied by contractual interest
rate for respective period. While making allocation of an interest income/(expense) from FX Swaps transactions,
annualized spread earned interest income/(expense) is calculated and distributed linearly throughout the lifetime of
the contract.
Fee and commission income. Fee and commission income is recognised over time on a straight-line basis as the
services are rendered, when the customer simultaneously receives and consumes the benefits provided by the
Group’s performance. Such income includes recurring fees for account maintenance, account servicing fees, account
subscription fees, annual plastic card fees etc. Variable fees are recognised only to the extent that management
determines that it is highly probable that a significant reversal will not occur.
Other fee and commission income is recognised at a point in time when the Group satisfies its performance
obligation, usually upon execution of the underlying transaction. The amount of fee or commission received or
receivable represents the transaction price for the services identified as distinct performance obligations. Such
income includes fees for arranging a sale or purchase of foreign currencies on behalf of a customer, fees for
processing payment transactions, plastic card transactions, merchant fees, fees for cash settlements, collection or
cash disbursements, etc.
Foreign currency translation. The Group’s presentation currency is the Georgian Lari. TBCG’s and the Bank’s
presentation currency is the Georgian Lari. The functional currency of each of the Group’s consolidated entities is the
currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are
initially recorded in the functional currency, converted at the rate of exchange ruling at the date of the transaction.
The results and financial position of each group entity (the functional currency of none of which is a currency of a
hyperinflationary economy) are translated into the presentation currency as follows:
(i) Assets and liabilities for each statement of financial position presented are translated at the closing rate at the end
of the respective reporting period;
(ii) Income and expenses are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions);
(iii) Components of equity are translated at the historic rate; and
(iv) All resulting exchange differences are recognised in other comprehensive income.
After losing control over a foreign operation, the exchange differences previously recognised in other comprehensive
income are reclassified to profit or loss for the year as part of the gain or loss on disposal. On partial disposal of a
subsidiary without loss of control, the related portion of accumulated currency translation differences is reclassified to
non-controlling interest within equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate.
The closing rates of exchange used for translating foreign currency balances for the year 2024, 2023 and 2022 were as
follows:
31 December 2024
31 December 2023
31 December 2022
GBP/GEL
3.5349
3.4228
3.2581
USD/GEL
2.8068
2.6894
2.702
EUR/GEL
2.9306
2.9753
2.8844
AZN/GEL*
1.651
1.5806
1.5924
*AZN - Azerbaijan Manat
Staff costs and related contributions. Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary
benefits as well as the cash settled part of the share-based payment schemes are accrued in the year in which the
associated services are rendered by the Group’s employees.
Segment reporting. Operating segments are reported in a manner consistent with the internal reporting provided to
the Group’s chief operating decision maker. Segments whose revenue, result or assets are ten percent or more of all
the segments are reported separately.
Share based payments. A share-based payment arrangement is an agreement between the entity and another
party (including an employee) that entitles the other party to receive cash or other assets of the entity for amounts
that are based on the price (or value) of equity instruments (including shares) of the entity or another group entity, or
equity instruments (including shares or share options) of the entity or another group entity, provided the specified
vesting conditions, if any, are met. Under the share-based compensation plan the Group receives services from the
management as consideration for equity instruments of the Group. The fair value of the employee services received
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
170
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MANAGEMENT REPORT
2.MATERIAL ACCOUNTING POLICY INFORMATION AND OTHER EXPLANATORY INFORMATION CONTINUED
2.MATERIAL ACCOUNTING POLICY INFORMATION AND OTHER EXPLANATORY INFORMATION CONTINUED
in exchange for the grant of the equity instruments is recognised as an expense. The total amount to be expensed
is determined by the reference to the fair value of the equity instruments granted, excluding the impact of any non-
market service and performance vesting conditions. Non-market vesting conditions are included in the assumptions
about the number of equity instruments that are expected to vest. The total amount expensed is recognised over
the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each
balance sheet date, the Group revises its estimates of the number of equity instruments that are expected to vest
based on the non-marketing vesting conditions. It recognises the impact of the revision of original estimates, if any,
in profit or loss, with a corresponding adjustment to equity. Increase in equity on accrued shares resulting from the
equity settled scheme is accounted for under share based payment reserve. The Bank pays recharge amount to the
TBC Bank Group PLC and the share-based reserve is debited correspondingly. This takes place when treasury shares
are purchased by employee benefit trust (EBT) on TBC Bank Group PLC level. When portions of a single grant vest
on two or more dates the entity applies graded vesting for accounting of share-based payment arrangement. Vesting
period of each tranche of the grant ends when the employee owns the shares with no further service restrictions.
Under graded vesting scheme the expense for earlier years is higher than for later years. Each tranche is expensed over
its own service period with a credit entry being equity.
Change in presentation of financial statements
During the current financial year, the Group has reviewed and revised the presentation of certain line items in
its consolidated financial statements to provide more reliable and relevant information, to improve clarity and
comparability with industry practices, as well as to remove immaterial items from the primary statements. These
changes have been applied retrospectively, and comparative figures for the past two years (2023 and 2022) have been
revised accordingly.
Reclassification of Statement of Financial Position’s Line Items
Reclassification of investment in associates to other assets:
In thousands of GEL
31 December
2023
(previously
stated) Reclassification
31 December
2023
(revised)
31 December
2022
(previously
stated) Reclassification
31 December
2022
(revised)
The Group
Provisions for
liabilities and charges
21,060
(21,060)
-
19,908
(19,908)
-
Other liabilities
102,519
21,060
123,579
80,386
19,908
100,294
The Bank
Provisions for
liabilities and charges
21,060
(21,060)
-
19,908
(19,908)
-
Other liabilities
94,557
21,060
115,617
73,393
19,908
93,301
Reclassification of provisions for liabilities and charges to other liabilities:
Reclassification of additional Tier 1 capital subordinated notes out of debt securities in issue:
Reclassification of fair value reserve for investment securities measured at fair value through other comprehensive
income and cumulative currency translation reserve to other reserves:
In thousands of GEL
31 December
2023
(previously
stated) Reclassification
31 December
2023
(revised)
31 December
2022
(previously
stated) Reclassification
31 December
2022
(revised)
The Group
Debt securities in
issue
1,264,085
(548,284)
715,801
1,209,813
(548,368)
661,445
Additional Tier 1
capital subordinated
notes
-
548,284
548,284
-
548,368
548,368
The Bank
Debt securities in
issue
1,181,792
(548,284)
633,508
1,163,116
(548,368)
614,748
Additional Tier 1
capital subordinated
notes
-
548,284
548,284
-
548,368
548,368
In thousands of GEL
31 December
2023
(previously
stated) Reclassification
31 December
2023
(revised)
31 December
2022
(previously
stated) Reclassification
31 December
2022
(revised)
The Group
Fair value reserve for
investment securities
measured at fair
value through other
comprehensive
income
12,345
(12,345)
-
5,467
(5,467)
-
Cumulative currency
translation reserve
(7,085)
7,085
-
(7,657)
7,657
-
Other reserves
-
5,260
5,260
-
(2,190)
(2,190)
The Bank
Fair value reserve for
investment securities
measured at fair
value through other
comprehensive
income
12,345
(12,345)
-
5,467
(5,467)
-
Other reserves
-
12,345
12,345
-
5,467
5,467
In thousands of GEL
31 December
2023
(previously
stated) Reclassification
31 December
2023
(revised)
31 December
2022
(previously
stated) Reclassification
31 December
2022
(revised)
The Group
Investment in
associates
4,204
(4,204)
-
3,721
(3,721)
-
Other assets
405,493
4,204
409,697
411,727
3,721
415,448
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
172
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173
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MANAGEMENT REPORT
2.MATERIAL ACCOUNTING POLICY INFORMATION AND OTHER EXPLANATORY INFORMATION CONTINUED
Reclassification of Statement of Profit and Loss’s Line Items
Reclassification of net gains from disposal of investment securities measured at fair value through other
comprehensive income to other operating income:
Reclassification of credit loss allowance for performance guarantees, for credit related commitments and for financial
assets measured at fair value through other comprehensive income to credit loss allowance for other financial assets
and other assets:
In thousands of GEL
2023
(Previously stated)
Reclassification
2023
(Revised)
The Group
Net gains from disposal of
investment securities measured
at fair value through other
comprehensive income
5,880
(5,880)
-
Other operating income
23,200
5,880
29,080
The Bank
Net gains from disposal of
Investment securities measured
at fair value through other
comprehensive income
5,880
(5,880)
-
Other operating income
35,765
5,880
41,645
In thousands of GEL
2023
(Previously stated)
Reclassification
2023
(Revised)
The Group
Credit loss allowance for
performance guarantees
(1,381)
1,381
-
Credit loss recovery for credit
related commitments
477
(477)
-
Credit loss (allowance)/recovery
for financial assets measured
at fair value through other
comprehensive income
(1,006)
1,006
-
Credit loss allowance for other
financial assets and other assets
(9,573)
(1,910)
(11,483)
The Bank
Credit loss allowance for
performance guarantees
(1,381)
1,381
-
Credit loss recovery for credit
related commitments
477
(477)
-
Credit loss (allowance)/recovery
for financial assets measured
at fair value through other
comprehensive income
(974)
974
-
Credit loss allowance for other
financial assets and other assets
(4,983)
(1,878)
(6,861)
3. SOURCES OF ESTIMATION UNCERTAINTY AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
Critical Judgements and Estimates
The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and
judgements are continually evaluated and are based on the management’s experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The management also
makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies.
Judgements and estimates that have the most significant effect on the amounts recognised in the consolidated
financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and
liabilities are the following:
Judgements and estimates related to ECL measurement. Measurement of ECLs is a significant estimate that
involves determination of methodology, development of models and preparation of data inputs. Expert management
judgement is also an essential part of estimating expected credit losses.
Management considers management judgements and estimates in calculating ECL as follows:
Judgements used to define criteria used in definition of default. The Bank defines default using both quantitative
and qualitative criteria. Borrower is classified as defaulted if:
• any amounts of contractual repayments are past due more than 90 days; or
• factors indicating the borrower’s unlikeliness-to-pay.
Unlikeliness to repay is qualitative and quantitative criteria based on clients monitoring/financial stability.
In addition, default exit criteria are defined using judgement as well as whether default should be applied on a
borrower or exposure level. For more details on the methodology please see Note 35.
Judgements used to define criteria for assessing, if there has been a significant increase in credit risk (SICR) which
is defined using both quantitative and qualitative criteria.
Qualitative factors usually include judgements around delinquency period of more than 30 days on contractual
repayments; exposure is restructured, but is not defaulted; borrower is classified as “watch”.
The Bank evaluates the change in the probability of default parameter for each specific exposure on a quantitative
basis, comparing it to a predefined threshold since its initial recognition. When the absolute relative change in the
probability of default surpasses the specified threshold, it is considered a Significant Increase in Credit Risk (SICR),
leading to the transfer of the exposure to Stage 2. The quantitative indicator for SICR is utilized in retail and micro
segments, provided there is a substantial number of observations for accurate assessment. Refer to note 35 for more
details of SICR thresholds.
Judgements used for calculation of credit risk parameters namely probability of default (PD) and loss given default
(LGD). The judgements include and are not limited by:
(i) definition of the segmentation for risk parameters estimation purposes,
(ii) decision whether simplified or more complex models can be used,
(iii) time since default date after which no material recoveries are expected,
(iv) collateral haircuts from market value as well as the average workout period for collateral discounting.
The table below describes sensitivity on 10% increase of PD and LGD estimates. For sensitivity calculation purposes,
the staging has been maintained unchanged:
In thousands of GEL
31 December 2024
31 December 2023
10% increase (decrease) in PD
estimates
Increase (decrease) credit loss allowance
on loans and advances by GEL 16,425 (GEL
15,218).
Increase (decrease) credit loss allowance
on loans and advances by GEL 16,177 (GEL
15,210).
10% increase (decrease) in
LGD estimates
Increase (decrease) credit loss allowance
on loans and advances by GEL 25,351 (GEL
26,679).
Increase (decrease) credit loss allowance
on loans and advances by GEL 24,778 (GEL
26,679).
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
174
175
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
4. ADOPTION OF NEW OR REVISED STANDARDS AND INTERPRETATIONS
The following amended standards became effective from 1 January 2024:
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022 and
effective for annual periods beginning on or after 1 January 2024). The amendments relate to the sale and leaseback
transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendments require the seller-
lessee to subsequently measure liabilities arising from the transaction and in a way that it does not recognise any gain
or loss related to the right of use that it retained. This means deferral of such a gain even if the obligation is to make
variable payments that do not depend on an index or a rate.
Classification of liabilities as current or non-current – Amendments to IAS 1 (originally issued on 23 January 2020
and subsequently amended on 15 July 2020 and 31 October 2022, ultimately effective for annual periods beginning
on or after 1 January 2024). These amendments clarify that liabilities are classified as either current or non-current,
depending on the rights that exist at the end of the reporting period. Liabilities are non-current if the entity has a
substantive right, at the end of the reporting period, to defer settlement for at least twelve months. The guidance no
longer requires such a right to be unconditional. The October 2022 amendment established that loan covenants to be
complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting
date. Management’s expectations whether they will subsequently exercise the right to defer settlement do not affect
classification of liabilities. A liability is classified as current if a condition is breached at or before the reporting date
even if a waiver of that condition is obtained from the lender after the end of the reporting period. Conversely, a loan
is classified as non-current if a loan covenant is breached only after the reporting date. In addition, the amendments
include clarifying the classification requirements for debt a company might settle by converting it into equity.
‘Settlement’ is defined as the extinguishment of a liability with cash, other resources embodying economic benefits
or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into
equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate
component of a compound financial instrument.
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements (issued on 25 May 2023 and effective for annual periods beginning on or after 1 January 2024). In
response to concerns of the users of financial statements about inadequate or misleading disclosure of financing
arrangements, in May 2023, the IASB issued amendments to IAS 7 and IFRS 7 to require disclosure about entity’s
supplier finance arrangements (SFAs). These amendments require the disclosures of the entity’s supplier finance
arrangements that would enable the users of financial statements to assess the effects of those arrangements on the
entity’s liabilities and cash flows and on the entity’s exposure to liquidity risk. The purpose of the additional disclosure
requirements is to enhance the transparency of the supplier finance arrangements. The amendments do not affect
recognition or measurement principles but only disclosure requirements.
The adoption of new pronouncements had no impact on the Group, or the impact was insignificant enough that
disclosure was not required.
5. NEW ACCOUNTING PRONOUNCEMENTS
The Group has not early adopted any of the amendments effective after 31 December 2024. The Group expects the
amendments will have an insignificant effect, when adopted, or is in the process of assessment of the scale of any
potential impact on the consolidated financial statements of the Group and the separate financial statements of Bank.
Amendments to IAS 21 Lack of Exchangeability (Issued on 15 August 2023 and effective for annual periods
beginning on or after 1 January 2025). In August 2023, the IASB issued amendments to IAS 21 to help entities assess
exchangeability between two currencies and determine the spot exchange rate, when exchangeability is lacking.
An entity is impacted by the amendments when it has a transaction or an operation in a foreign currency that is not
exchangeable into another currency at a measurement date for a specified purpose. The amendments to IAS 21 do
not provide detailed requirements on how to estimate the spot exchange rate. Instead, they set out a framework under
which an entity can determine the spot exchange rate at the measurement date. When applying the new requirements,
it is not permitted to restate comparative information. It is required to translate the affected amounts at estimated
spot exchange rates at the date of initial application, with an adjustment to retained earnings or to the reserve for
cumulative translation differences. The Group is currently assessing the impact of the amendments on its financial
statements.
Amendments to the Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS 7
(issued on 30 May 2024 and effective for annual periods beginning on or after 1 January 2026). On 30 May 2024, the
IASB issued amendments to IFRS 9 and IFRS 7 to:
(a) clarify the date of recognition and derecognition of some financial assets and liabilities, with a new exception for
some financial liabilities settled through an electronic cash transfer system;
(b) clarify and add further guidance for assessing whether a financial asset meets the solely payments of principal and
interest (SPPI) criterion;
(c) add new disclosures for certain instruments with contractual terms that can change cash flows (such as some
instruments with features linked to the achievement of environment, social and governance (ESG) targets); and
(d) update the disclosures for equity instruments designated at fair value through other comprehensive income
(FVOCI).
The Group is currently assessing the impact of the amendments on its financial statements.
Annual Improvements to IFRS Accounting Standards (Issued in July 2024 and effective from 1 January 2026). IFRS 1
was clarified that a hedge should be discontinued upon transition to IFRS Accounting Standards if it does not meet the
‘qualifying criteria’, rather than ‘conditions’ for hedge accounting, in order to resolve a potential confusion arising from
an inconsistency between the wording in IFRS 1 and the requirements for hedge accounting in IFRS 9. IFRS 7 requires
disclosures about a gain or loss on derecognition relating to financial assets in which the entity has a continuing
involvement, including whether fair value measurements included ‘significant unobservable inputs. This new phrase
replaced reference to ‘significant inputs that were not based on observable market data’. The amendment makes the
wording consistent with IFRS 13. In addition, certain IFRS 7 implementation guidance examples were clarified and text
added that the examples do not necessarily illustrate all the requirements in the referenced paragraphs of IFRS 7. IFRS
16 was amended to clarify that when a lessee has determined that a lease liability has been extinguished in accordance
with IFRS 9, the lessee is required to apply IFRS 9 guidance to recognise any resulting gain or loss in profit or loss. This
clarification applies to lease liabilities that are extinguished on or after the beginning of the annual reporting period in
which the entity first applies that amendment. In order to resolve an inconsistency between IFRS 9 and IFRS 15, trade
receivables are now required to be initially recognised at ‘the amount determined by applying IFRS 15’ instead of at
‘their transaction price (as defined in IFRS 15)’. IFRS 10 was amended to use less conclusive language when an entity
is a ‘de-facto agent’ and to clarify that the relationship described in paragraph B74 of IFRS 10 is just one example of
a circumstance in which judgement is required to determine whether a party is acting as a de-facto agent. IAS 7 was
corrected to delete references to ‘cost method’ that was removed from IFRS Accounting Standards in May 2008 when
the IASB issued amendment ‘Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate’. The Group
is currently assessing the impact of the amendments on its financial statements.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
176
177
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MANAGEMENT REPORT
IFRS 18 Presentation and Disclosure in Financial Statements (Issued on 9 April 2024 and effective for annual
periods beginning on or after 1 January 2027). In April 2024, the IASB has issued IFRS 18, the new standard on
presentation and disclosure in financial statements, with a focus on updates to the statement of profit or loss. The key
new concepts introduced in IFRS 18 relate to:
• the structure of the statement of profit or loss;
• required disclosures in the financial statements for certain profit or loss performance measures that are reported
outside an entity’s financial statements (that is, management-defined performance measures); and
• enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes
in general.
IFRS 18 will replace IAS 1; many of the other existing principles in IAS 1 are retained, with limited changes. IFRS 18 will
not impact the recognition or measurement of items in the financial statements, but it might change what an entity
reports as its ‘operating profit or loss’. IFRS 18 will apply for reporting periods beginning on or after 1 January 2027 and
also applies to comparative information.
The Group expects the amendments will have an insignificant effect, when adopted, or is in the process of assessment
of the scale of any potential impact on the consolidated financial statements of the Group and the separate financial
statements of TBC Bank Group PLC.
IFRS 19 Subsidiaries without Public Accountability: Disclosures (Issued on 9 May 2024 and effective for annual
periods beginning on or after 1 January 2027). The International Accounting Standard Board (IASB) has issued a new
IFRS Accounting Standard for subsidiaries. IFRS 19 permits eligible subsidiaries to use IFRS Accounting Standards with
reduced disclosures.
Applying IFRS 19 will reduce the costs of preparing subsidiaries’ financial statements while maintaining the usefulness
of the information for users of their financial statements. Subsidiaries using IFRS Accounting Standards for their own
financial statements provide disclosures that may be disproportionate to the information needs of their users. IFRS 19
will resolve these challenges by:
•
enabling subsidiaries to keep only one set of accounting records – to meet the needs of both their parent
company and the users of their financial statements;
•
reducing disclosure requirements – IFRS 19 permits reduced disclosure better suited to the needs of the users of
their financial statements.
IFRS 19 will not have impact as the Group is not eligible to apply it.
Contracts Referencing Nature-dependent Electricity Amendments to IFRS 9 and IFRS 7 (Issued on 18 December
2024 and effective from 1 January 2026). The IASB has issued amendments to help companies better report
the financial effects of nature-dependent electricity contracts, which are often structured as power purchase
agreements (PPAs). Current accounting requirements may not adequately capture how these contracts affect a
company’s performance. To allow companies to better reflect these contracts in the financial statements, the IASB
has made targeted amendments to IFRS 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures.
The amendments include: (a) clarifying the application of the ‘own-use’ requirements; (b) relaxing certain hedge
accounting requirements if these contracts are used as hedging instruments; and (c) adding new disclosure
requirements to enable investors to understand the effect of these contracts on financial performance and cash flows.
The Group is currently assessing the impact of the amendments on its financial statements.
5. NEW ACCOUNTING PRONOUNCEMENTS CONTINUED
In thousands of GEL
31 December
2024
31 December
2023
Cash on hand
848,814
936,988
Cash balances with the National Bank of Georgia (other than mandatory reserve deposits)
289,382
707,183
Correspondent accounts and overnight placements with other banks
646,382
1,019,684
Placements with and receivables from other banks with original maturities of less than
three months
1,033,679
1,027,493
Total gross amount of cash and cash equivalents
2,818,257
3,691,348
Less: Credit loss allowance
Stage 1
(147)
(116)
Total cash and cash equivalents
2,818,110
3,691,232
6. CASH AND CASH EQUIVALENTS
As of 31 December 2024, 87% of the correspondent accounts and overnight placements with other banks was placed
with OECD (Organization for Economic Co-operation and Development) banking institutions (31 December 2023:
93%).
As of 31 December 2024, GEL 960,638 thousand was placed on interbank term deposits with four OECD banks and
none with non-OECD (as at 31 December 2023 GEL 1,020,150 thousand was placed on interbank term deposits with
one OECD bank and none with non-OECD bank).
Interest rate analysis of cash and cash equivalents is disclosed in Note 35.
The credit-ratings of correspondent accounts and overnight placements with other banks are as follows:
In thousands of GEL
31 December
2024
31 December
2023
AA
25,051
317,762
AA-
8,202
1,162
A+
446,356
532,414
A
28,544
250
A-
65,979
96,294
BBB+
-
814
BBB
1,833
1,598
BBB-
30,904
409
BB+
1,663
11,050
BB
4,380
4,483
BB-
10,601
5,180
B+
13,107
47,272
B
9,720
734
B-
42
262
Total correspondent accounts and overnight placements with other banks
646,382
1,019,684
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
178
179
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
In thousands of GEL
31 December
2024
31 December
2023
AAA
205,904
158,810
A
233,102
-
A-
-
296,785
BBB+
43,959
348,308
BBB
477,673
223,590
BB
70,000
-
B
3,041
-
Total placements with and receivables from other banks with original maturities of less
than three months
1,033,679
1,027,493
In thousands of GEL
31 December
2024
31 December
2023
Cash on hand
825,384
911,831
Cash balances with the National Bank of Georgia (other than mandatory reserve deposits)
289,382
707,183
Correspondent accounts and overnight placements with other banks
616,883
986,923
Placements with and receivables from other banks with original maturities of less than
three months
1,033,679
1,027,493
Total gross amount of cash and cash equivalents
2,765,328
3,633,430
Less: Credit loss allowance
Stage 1
(147)
(116)
Total cash and cash equivalents
2,765,181
3,633,314
6. CASH AND CASH EQUIVALENTS CONTINUED
The credit rating of placements with and receivables from other banks with original maturities of less than three
months stands as follows:
The table illustrates the ratings by international agencies Standard & Poor’s and Fitch Ratings. When different
credit ratings are designated by the agencies, the highest designated rating for this asset is used, for those financial
institutions which are not assigned credit ratings, country ratings are used.
Cash and cash equivalents of the Bank are as follows:
7. DUE FROM OTHER BANKS
8. MANDATORY CASH BALANCES WITH NATIONAL BANK OF GEORGIA
Amounts due from other banks include placements with original maturities of more than three months, that are not
collateralised and do not represent past due amounts at the 31 December 2024 and 31 December 2023.
Credit ratings of placements with and receivables from other banks with original maturities of more than three months
and restricted cash were as follows:
In thousands of GEL
31 December
2024
31 December
2023
A
10,910
-
BBB
-
446
B+
9,243
10,689
Total placements with and receivables from other banks with original maturities of
more than three months and restricted cash
20,153
11,135
As at 31 December 2024 the Group had 2 placements, with original maturities of more than three months and with
aggregated amounts above GEL 5,000 thousand (2023: 1).
The total aggregated amounts of placements with and receivables from other banks with original maturities of more
than three months were GEL 19,481 thousand (2023: GEL 10,446 thousand) or 96.7% of the total amount due from other
banks (2023: 93.8%).
As at 31 December 2024 GEL 693 thousand (2023: GEL 693 thousand) were kept on deposits as restricted cash under
an arrangement with a credit card company or credit card related services with other banks.
For the estimated fair values of due from other bank balances please refer to Note 40.
For the purpose of ECL measurement due from other banks balances are included in Stage 1. The ECL for these
balances as at 31 December 2024 is GEL 22 thousand (2023: GEL 3.8 thousand).
Mandatory cash balances with the National Bank of Georgia represent amounts deposited with the NBG. Resident
financial institutions are required to maintain an interest-earning obligatory reserve with the NBG, the amount of which
depends on the level of funds attracted by the financial institutions. The Bank earned up to 8.19%, 0% and 0% annual
interest in GEL, USD and EUR, respectively, on mandatory reserve with NBG during the year 2024 (2023: 10.48%, 0%
and 0% in GEL, USD and EUR, respectively).
In December 2024, Fitch Ratings has affirmed Georgia’s Long-Term Foreign and Local Currency Issuer Default Rating
(IDRs) at ‘BB’, and has revised the Outlook to Negative from Stable. The country ceiling is affirmed at ’BBB- ‘, while
short-term foreign and local-currency IDRs are kept at ‘B’.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
180
181
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Total loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2024
19,582,557
1,294,317
399,875
21,276,749
87,734
82,019
148,464
318,217
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(2,443,317)
2,508,188
(64,871)
-
(59,627)
77,007
(17,380)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(38,921)
(468,396)
507,317
-
(9,380)
(68,458)
77,838
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
1,609,204 (1,607,413)
(1,791)
-
97,781
(96,437)
(1,344)
-
New originated or
purchased
12,678,621
-
-
12,678,621
174,483
-
-
174,483
Derecognised or
fully repaid during
the period
(6,772,106)
(179,478)
(91,771) (7,043,355)
(70,953)
(13,963)
(29,343)
(114,259)
Net repayments
(2,291,843)
(140,961)
(67,421) (2,500,225)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments*
-
-
-
-
(121,171)
88,285
138,978
106,092
Movements without impact on credit loss allowance charge for the period:
Write-offs
-
-
(154,175)
(154,175)
-
-
(154,175)
(154,175)
Changes in accrued
interest
12,068
1,457
8,406
21,931
-
-
-
-
Modification
1,816
241
(69)
1,988
5
2
43
50
Foreign exchange
movements
223,423
10,486
4,146
238,055
540
278
1,019
1,837
At 31 December
2024
22,561,502
1,418,441
539,646
24,519,589
99,412
68,733
164,100
332,245
In thousands of GEL
31 December
2024
31 December
2023
Corporate loans
9,848,706
8,263,605
Loans to micro, small and medium enterprises
5,948,420
5,486,788
Consumer loans
3,595,510
2,796,622
Mortgage loans
5,126,953
4,729,734
Total gross loans and advances to customers at amortised cost (AC)
24,519,589
21,276,749
Less: credit loss allowance
(332,245)
(318,217)
Stage 1
(99,412)
(87,734)
Stage 2
(68,733)
(82,019)
Stage 3
(164,100)
(148,464)
Total loans and advances to customers at amortised cost (AC)
24,187,344
20,958,532
9. LOANS AND ADVANCES TO CUSTOMERS
As at 31 December 2024 loans and advances to customers carried at GEL 1,118,011 thousand have been pledged for the
borrowings from the National Bank of Georgia (2023: GEL 701,285 thousand). The loans and advances to customers are
pledged under the monetary policy framework for the borrowings from the National Bank of Georgia.
No post model overlays have been processed as of 31 December 2024 (PMAs amounted nil for YE 2023).
The following tables disclose the changes in the credit loss allowance and gross carrying amount for loans and
advances to customers carried at amortised cost between the beginning and the end of the reporting period. Below
main movements in the table are described:
• Transfers occur between Stage 1, 2 and 3, due to significant increases (or decreases) of credit risk or exposures
becoming defaulted in the period, and the consequent “step up” (or “step down”) between 12-month and Lifetime
ECL. It should be noted, that:
- For loans, which existed at the beginning of the period, opening exposures are disclosed as transfer amounts;
- For newly issued loans, exposures upon issuance are disclosed as transfer amounts;
• New originated or purchased gives us information regarding gross loans issued and corresponding credit loss
allowance created during the period (however, exposures which were issued and repaid during the period and
issued to refinance existing loans are excluded);
• Derecognised during the period refers to the balance of loans and credit loss allowance at the beginning of the
period, which were fully repaid during the period. Exposures which were issued and not fully repaid during the
period, written off or refinanced by other loans, are excluded;
• Net repayments refer to the net changes in gross carrying amounts, which is loan disbursements less repayments,
excluding loans that were fully repaid;
• Write-offs refer to write off of loans during the period;
• Foreign exchange movements refer to the translation of assets denominated in foreign currencies and effect to
translation in presentational currency for foreign subsidiary;
• Net re-measurement due to stage transfers and risk parameters changes refers to the movements in ECL as a result
of transfer of exposure between stages or changes in risk parameters and forward-looking expectations;
• Modification refers to changes in terms that do not result in derecognition;
• Re-segmentation refers to the transfer of loans from one reporting segment to another. For presentation purposes,
amounts are rounded to the nearest thousands of GEL, which in certain cases is disclosed as nil.
For details of expected credit loss (ECL) methodology refer to note 35.
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
182
183
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Total loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2023
16,065,731
1,401,961
389,584
17,857,276
101,747
96,993
161,094
359,834
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(2,401,874)
2,453,776
(51,902)
-
(72,440)
89,871
(17,431)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(42,694)
(403,372)
446,066
-
(4,110)
(84,615)
88,725
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
1,776,304 (1,775,676)
(628)
-
120,613
(120,502)
(111)
-
New originated or
purchased
12,302,923
-
- 12,302,923
173,184
-
-
173,184
Derecognised or
fully repaid during
the period
(5,902,762)
(220,021)
(102,823) (6,225,606)
(82,258)
(14,507)
(25,152)
(121,917)
Net repayments
(2,363,801)
(182,730)
(69,388)
(2,615,919)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments*
-
-
-
-
(149,021)
114,521
154,983
120,483
Movements without impact on credit loss allowance charge for the period:
Write-offs
-
-
(214,676)
(214,676)
-
-
(214,676)
(214,676)
Changes in accrued
interest
29,106
14,581
2,159
45,846
-
-
-
-
Modification
1,457
116
167
1,740
-
-
-
-
Foreign exchange
movements
118,167
5,682
1,316
125,165
19
258
1,032
1,309
At 31 December
2023
19,582,557
1,294,317
399,875
21,276,749
87,734
82,019
148,464
318,217
*
Movements with impact on credit loss allowance charge for the period differs from the statement of profit or loss with amount of recoveries and
unwinding of discount of GEL 56,806 thousand in 2024 (2023: GEL 41,371 thousand). The amount of recoveries include recoveries from sale of written
off portfolio in the amount of GEL 7,047 thousand sold in 2024 (2023: GEL 22,023 thousand).
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Corporate loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2024
7,739,101
410,366
114,138
8,263,605
18,454
2,445
32,606
53,505
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(384,704)
411,661
(26,957)
-
(1,759)
3,960
(2,201)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(19,209)
(85,929)
105,138
-
(5,533)
(1,645)
7,178
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
54,757
(54,757)
-
-
211
(209)
(2)
-
New originated or
purchased
5,206,364
-
-
5,206,364
34,834
-
-
34,834
Derecognised or
fully repaid during
the period
(3,969,700)
(37,114)
(14,537)
(4,021,351)
(44,166)
(100)
(2,030)
(46,296)
Net repayments
130,101
(12,213)
(7,269)
110,619
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
12,257
(2,968)
18,012
27,301
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
161,798
3,972
(3,170)
162,600
981
14
-
995
Write-offs
-
-
(16,827)
(16,827)
-
-
(16,827)
(16,827)
Changes in accrued
interest
(3,106)
(3,193)
5,565
(734)
-
-
-
-
Modification
947
354
9
1,310
3
-
4
7
Foreign exchange
movements
137,653
4,958
509
143,120
242
31
122
395
At 31 December
2024
9,054,002
638,105
156,599
9,848,706
15,524
1,528
36,862
53,914
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
184
185
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Corporate loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2023
5,741,400
458,334
82,735
6,282,469
18,930
1,214
26,314
46,458
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime (from
Stage 1 and
Stage 3 to Stage
2)
(249,739)
257,551
(7,812)
-
(1,577)
2,489
(912)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(19,441)
(52,600)
72,041
-
(1,827)
(1,479)
3,306
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
143,209
(143,209)
-
-
387
(387)
-
-
New originated or
purchased
5,772,067
-
-
5,772,067
55,225
-
-
55,225
Derecognised or
fully repaid during
the period
(3,610,212)
(82,079)
(23,742)
(3,716,033)
(49,056)
(147)
(1,184)
(50,387)
Net repayments
(375,006)
(39,646)
(8,327)
(422,979)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(4,449)
737
8,487
4,775
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
259,557
-
(468)
259,089
794
-
(236)
558
Write-offs
-
-
(3,184)
(3,184)
-
-
(3,184)
(3,184)
Changes in accrued
interest
19,587
9,492
2,039
31,118
-
-
-
-
Modification
286
(158)
49
177
-
-
-
-
Foreign exchange
movements
57,393
2,681
807
60,881
27
18
15
60
At 31 December
2023
7,739,101
410,366
114,138
8,263,605
18,454
2,445
32,606
53,505
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
MSME
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2024
4,982,978
325,283
178,527
5,486,788
24,158
32,785
51,797
108,740
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(695,446)
714,111
(18,665)
-
(16,250)
22,040
(5,790)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(5,548)
(234,570)
240,118
-
(1,087)
(30,809)
31,896
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
435,001
(434,154)
(847)
-
28,604
(27,425)
(1,179)
-
New originated or
purchased
2,910,982
-
-
2,910,982
65,295
-
-
65,295
Derecognised or
fully repaid during
the period
(1,108,843)
(51,950)
(48,626)
(1,209,419)
(7,448)
(5,220)
(13,287)
(25,955)
Net repayments
(1,000,832)
(63,067)
(48,267)
(1,112,166)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(63,725)
32,429
37,783
6,487
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
(145,839)
(4,140)
3,139
(146,840)
(878)
(36)
-
(914)
Write-offs
-
-
(41,377)
(41,377)
-
-
(41,377)
(41,377)
Changes in accrued
interest
7,779
2,625
1,185
11,589
-
-
-
-
Modification
205
(105)
(110)
(10)
-
5
13
18
Foreign exchange
movements
43,095
2,731
3,047
48,873
267
124
566
957
At 31 December
2024
5,423,532
256,764
268,124
5,948,420
28,936
23,893
60,422
113,251
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
186
187
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
MSME
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2023
4,327,742
317,830
163,843
4,809,415
24,938
23,961
47,213
96,112
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(802,913)
819,936
(17,023)
-
(20,758)
25,443
(4,685)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(3,870)
(178,452)
182,322
-
(481)
(28,153)
28,634
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
515,803
(515,799)
(4)
-
33,285
(33,285)
-
-
New originated or
purchased
2,842,810
-
-
2,842,810
50,094
-
-
50,094
Derecognised or
fully repaid during
the period
(847,740)
(58,116)
(37,221)
(943,077)
(7,066)
(5,102)
(8,977)
(21,145)
Net repayments
(841,731)
(64,387)
(42,853)
(948,971)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(55,121)
49,770
57,130
51,779
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
(250,327)
(192)
-
(250,519)
(753)
(27)
-
(780)
Write-offs
-
-
(67,981)
(67,981)
-
-
(67,981)
(67,981)
Changes in accrued
interest
8,768
1,968
(3,361)
7,375
-
-
-
-
Modification
241
144
10
395
-
-
-
-
Foreign exchange
movements
34,195
2,351
795
37,341
20
178
463
661
At 31 December
2023
4,982,978
325,283
178,527
5,486,788
24,158
32,785
51,797
108,740
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Consumer loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2024
2,541,789
192,212
62,621
2,796,622
43,249
39,243
46,223
128,715
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(566,302)
573,074
(6,772)
-
(40,009)
44,296
(4,287)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(7,147)
(113,441)
120,588
-
(1,912)
(34,815)
36,727
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
388,230
(387,991)
(239)
-
61,619
(61,489)
(130)
-
New originated or
purchased
3,146,128
-
-
3,146,128
72,987
-
-
72,987
Derecognised or
fully repaid during
the period
(1,300,916)
(40,353)
(17,447)
(1,358,716)
(19,159)
(7,405)
(10,415)
(36,979)
Net repayments
(876,847)
(34,978)
(6,494)
(918,319)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(63,355)
57,073
70,340
64,058
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
1,840
744
-
2,584
(75)
60
(25)
(40)
Write-offs
-
-
(91,837)
(91,837)
-
-
(91,837)
(91,837)
Changes in accrued
interest
7,743
2,610
2,109
12,462
-
-
-
-
Modification
189
(36)
13
166
2
(4)
8
6
Foreign exchange
movements
5,995
332
93
6,420
21
54
118
193
At 31 December
2024
3,340,702
192,173
62,635
3,595,510
53,368
37,013
46,722
137,103
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
188
189
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Mortgage loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2024
4,318,689
366,456
44,589
4,729,734
1,873
7,546
17,838
27,257
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(796,865)
809,342
(12,477)
-
(1,609)
6,711
(5,102)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(7,017)
(34,456)
41,473
-
(848)
(1,189)
2,037
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
731,216
(730,511)
(705)
-
7,347
(7,314)
(33)
-
New originated or
purchased
1,415,147
-
-
1,415,147
1,367
-
-
1,367
Derecognised or
fully repaid during
the period
(392,647)
(50,061)
(11,161)
(453,869)
(180)
(1,238)
(3,611)
(5,029)
Net repayments
(544,265)
(30,703)
(5,391)
(580,359)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(6,348)
1,751
12,843
8,246
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
(17,799)
(576)
31
(18,344)
(28)
(38)
25
(41)
Write-offs
-
-
(4,134)
(4,134)
-
-
(4,134)
(4,134)
Changes in accrued
interest
(348)
(585)
(453)
(1,386)
-
-
-
-
Modification
475
28
19
522
-
1
18
19
Foreign exchange
movements
36,680
2,465
497
39,642
10
69
213
292
At 31 December
2024
4,743,266
331,399
52,288
5,126,953
1,584
6,299
20,094
27,977
Gross carrying amount
Credit loss allowance
Consumer loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2023
2,192,423
229,992
89,805
2,512,220
55,579
62,118
65,655
183,352
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(565,976)
574,754
(8,778)
-
(47,921)
52,925
(5,004)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(15,056)
(138,941)
153,997
-
(1,311)
(53,302)
54,613
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
397,663
(397,137)
(526)
-
77,556
(77,452)
(104)
-
New originated or
purchased
2,298,090
-
-
2,298,090
66,479
-
-
66,479
Derecognised or
fully repaid during
the period
(1,066,323)
(36,625)
(30,583)
(1,133,531)
(25,903)
(8,003)
(11,134)
(45,040)
Net repayments
(708,525)
(44,736)
(7,413)
(760,674)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(81,173)
62,833
79,475
61,135
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
5,124
1,021
(27)
6,118
(17)
82
(6)
59
Write-offs
-
-
(137,900)
(137,900)
-
-
(137,900)
(137,900)
Changes in accrued
interest
883
3,538
4,122
8,543
-
-
-
-
Modification
405
39
45
489
-
-
-
-
Foreign exchange
movements
3,081
307
(121)
3,267
(40)
42
628
630
At 31 December
2023
2,541,789
192,212
62,621
2,796,622
43,249
39,243
46,223
128,715
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
190
191
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Gross carrying amount
Credit loss allowance
Mortgage loans
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL
for SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2023
3,804,166
395,805
53,201
4,253,172
2,300
9,700
21,912
33,912
Movements with impact on credit loss allowance charge for the period:
Transfers:
– to lifetime
(from Stage 1
and Stage 3 to
Stage 2)
(783,246)
801,535
(18,289)
-
(2,184)
9,014
(6,830)
-
– to defaulted
(from Stage 1
and Stage 2 to
Stage 3)
(4,327)
(33,379)
37,706
-
(491)
(1,681)
2,172
-
– to 12-months
ECL (from Stage
2 and Stage 3 to
Stage 1)
719,629
(719,531)
(98)
-
9,385
(9,378)
(7)
-
New originated or
purchased
1,389,956
-
-
1,389,956
1,386
-
-
1,386
Derecognised or
fully repaid during
the period
(378,487)
(43,201)
(11,277)
(432,965)
(233)
(1,255)
(3,857)
(5,345)
Net repayments
(438,539)
(33,961)
(10,795)
(483,295)
-
-
-
-
Net
re-measurement
due to stage
transfers, changes
in risk parameters
and repayments
-
-
-
-
(8,278)
1,181
9,891
2,794
Movements without impact on credit loss allowance charge for the period:
Re-segmentation
(14,354)
(829)
495
(14,688)
(24)
(55)
242
163
Write-offs
-
-
(5,611)
(5,611)
-
-
(5,611)
(5,611)
Changes in accrued
interest
(132)
(417)
(641)
(1,190)
-
-
-
-
Modification
525
91
63
679
-
-
-
-
Foreign exchange
movements
23,498
343
(165)
23,676
12
20
(74)
(42)
At 31 December
2023
4,318,689
366,456
44,589
4,729,734
1,873
7,546
17,838
27,257
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
in thousands of GEL
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL
for SICR)
Stage 3
(lifetime ECL for
defaulted)
Total
Corporate loans risk category
- Very low
8,870,847
-
-
8,870,847
- Low
182,630
469,886
-
652,516
- Moderate
525
168,219
-
168,744
- Default
-
-
156,599
156,599
Gross carrying amount
9,054,002
638,105
156,599
9,848,706
Credit loss allowance
(15,524)
(1,528)
(36,862)
(53,914)
Carrying amount
9,038,478
636,577
119,737
9,794,792
Loans to MSME risk category
- Very low
4,371,686
10,659
-
4,382,345
- Low
997,903
78,450
-
1,076,353
- Moderate
52,714
129,810
-
182,524
- High
1,229
37,845
-
39,074
- Default
-
-
268,124
268,124
Gross carrying amount
5,423,532
256,764
268,124
5,948,420
Credit loss allowance
(28,936)
(23,893)
(60,422)
(113,251)
Carrying amount
5,394,596
232,871
207,702
5,835,169
Consumer loans risk category
- Very low
1,708,666
4,135
-
1,712,801
- Low
1,320,107
21,076
-
1,341,183
- Moderate
311,929
128,030
-
439,959
- High
-
38,932
-
38,932
- Default
-
-
62,635
62,635
Gross carrying amount
3,340,702
192,173
62,635
3,595,510
Credit loss allowance
(53,368)
(37,013)
(46,722)
(137,103)
Carrying amount
3,287,334
155,160
15,913
3,458,407
Mortgage loans risk category
- Very low
3,567,829
10,691
-
3,578,520
- Low
1,117,222
107,742
-
1,224,964
- Moderate
58,215
190,032
-
248,247
- High
-
22,934
-
22,934
- Default
-
-
52,288
52,288
Gross carrying amount
4,743,266
331,399
52,288
5,126,953
Credit loss allowance
(1,584)
(6,299)
(20,094)
(27,977)
Carrying amount
4,741,682
325,100
32,194
5,098,976
The credit quality of loans to customers carried at amortised cost at 31 December 2024 is as follows:
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
192
193
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
The credit quality of loans to customers carried at amortised cost at 31 December 2023 is as follows:
The contractual amounts outstanding on loans to customers that have been written off during the period partially or
fully, but are still subject to enforcement activity was principal amount GEL 58,220 thousand (31 December 2023: GEL
45,163 thousand) and accrued interest GEL 7,784 thousand (31 December 2023: GEL 6,323 thousand).
in thousands of GEL
Stage 1
(12-months ECL)
Stage 2
(lifetime ECL
for SICR)
Stage 3
(lifetime ECL for
defaulted)
Total
Corporate loans risk category
- Very low
7,590,132
3,358
-
7,593,490
- Low
147,609
400,886
-
548,495
- Moderate
1,360
6,122
-
7,482
- Default
-
-
114,138
114,138
Gross carrying amount
7,739,101
410,366
114,138
8,263,605
Credit loss allowance
(18,454)
(2,445)
(32,606)
(53,505)
Carrying amount
7,720,647
407,921
81,532
8,210,100
Loans to MSME risk category
- Very low
4,400,875
20,477
-
4,421,352
- Low
562,589
88,843
-
651,432
- Moderate
19,514
159,257
-
178,771
- High
-
56,706
-
56,706
- Default
-
-
178,527
178,527
Gross carrying amount
4,982,978
325,283
178,527
5,486,788
Credit loss allowance
(24,158)
(32,785)
(51,797)
(108,740)
Carrying amount
4,958,820
292,498
126,730
5,378,048
Consumer loans risk category
- Very low
1,681,233
7,155
-
1,688,388
- Low
730,098
24,492
-
754,590
- Moderate
130,458
126,245
-
256,703
- High
-
34,320
-
34,320
- Default
-
-
62,621
62,621
Gross carrying amount
2,541,789
192,212
62,621
2,796,622
Credit loss allowance
(43,249)
(39,243)
(46,223)
(128,715)
Carrying amount
2,498,540
152,969
16,398
2,667,907
Mortgage loans risk category
- Very low
3,776,199
17,893
-
3,794,092
- Low
518,078
176,355
-
694,433
- Moderate
24,412
146,396
-
170,808
- High
-
25,812
-
25,812
- Default
-
-
44,589
44,589
Gross carrying amount
4,318,689
366,456
44,589
4,729,734
Credit loss allowance
(1,873)
(7,546)
(17,838)
(27,257)
Carrying amount
4,316,816
358,910
26,751
4,702,477
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
Economic sector risk concentrations within the customer loan portfolio are as follows:
31 December 2024
31 December 2023
in thousands of GEL
Amount
%
Amount
%
Individual
9,138,702
37%
7,912,653
37%
Real estate
2,816,094
11%
2,020,022
9%
Trade
1,686,918
7%
1,340,622
6%
Construction
1,578,826
6%
1,471,145
7%
Food industry
1,353,283
6%
1,154,925
5%
Hospitality, restaurants & leisure
1,323,642
5%
1,252,741
6%
Agriculture
1,044,920
4%
988,519
5%
Energy & utilities
895,637
4%
997,117
5%
Services
590,700
2%
506,086
2%
Healthcare
580,472
2%
623,301
3%
Financial services
456,224
2%
325,356
2%
Transportation
380,751
2%
302,072
1%
Pawn shops
245,453
1%
208,236
1%
Automotive
217,673
1%
282,777
1%
Metals and mining
191,429
1%
179,519
1%
Communication
34,004
< 1%
55,000
< 1%
Other
1,984,861
8%
1,656,658
9%
Total gross loans and
advances to customers
24,519,589
100%
21,276,749
100%
As of 31 December 2024, the Group had 9 borrowers (2023: 7 borrowers) with aggregated gross loan amounts above
GEL 100,000 thousand. The total aggregated amount of these loans was GEL 1,472,144 thousand (2023: GEL 1,111,275
thousand) or 5.6% of the gross loan portfolio (2023: 5.2%).
The amount and type of collateral required depend on an assessment of the credit risk of the counterparty. There are
three key types of collateral:
• Real estate;
• Movable property including fixed assets, inventory and precious metals;
• Financial assets including deposits, shares, and third-party guarantees.
The financial effect of collateral is presented by disclosing the collateral values separately for (i) those assets where
collateral and other credit enhancements are equal to or exceed the assets’ carrying value (“over-collateralised assets”)
and (ii) those assets where collateral and other credit enhancements are less than the assets’ carrying value (“under-
collateralised assets”).
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
194
195
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
31 December 2024
Over-collateralised assets
Under-collateralised assets
in thousands of GEL
Carrying value
of the assets
Fair value
of collateral
Carrying value
of the assets
Fair value
of collateral
Corporate loans
5,809,411
18,351,209
4,039,295
1,276,205
Consumer loans
1,372,297
3,533,669
2,223,213
28,355
Mortgage loans
4,887,712
10,672,774
239,241
98,636
Loans to micro, small and medium
enterprises
4,767,331
11,395,454
1,181,089
398,545
Total
16,836,751
43,953,106
7,682,838
1,801,741
31 December 2023
Over-collateralised assets
Under-collateralised assets
in thousands of GEL
Carrying value
of the assets
Fair value
of collateral
Carrying value
of the assets
Fair value
of collateral
Corporate loans
4,716,371
12,729,581
3,547,234
1,224,531
Consumer loans
1,156,883
2,817,061
1,639,739
41,741
Mortgage loans
4,407,048
12,190,665
322,686
156,424
Loans to micro, small and medium
enterprises
4,261,346
9,594,104
1,225,442
435,223
Total
14,541,648
37,331,411
6,735,101
1,857,919
31 December 2024
Over-collateralised assets
Under-collateralised assets
in thousands of GEL
Carrying value
of the assets
Fair value
of collateral
Carrying value
of the assets
Fair value
of collateral
Cash cover
495,484
533,785
66,434
58,543
Gold
230,831
310,572
10,487
10,339
Inventory
860,198
6,280,516
326,944
161,456
Real estate
15,248,883
36,824,105
2,490,223
1,571,304
Other
1,355
4,128
47
99
Unsecured and secured solely by
third party guarantees
-
-
4,788,703
-
Total
16,836,751
43,953,106
7,682,838
1,801,741
The effect of collateral as at 31 December 2024:
The effect of collateral as at 31 December 2023:
As at 31 December 2024 loans and advances to customers which were over-collateralised and credit loss allowance
was nil, amounted to GEL 2,228,380 thousand (2023: GEL 1,770,547 thousand).
The effect of collateral by types as at 31 December 2024:
31 December 2023
Over-collateralised assets
Under-collateralised assets
in thousands of GEL
Carrying value
of the assets
Fair value
of collateral
Carrying value
of the assets
Fair value
of collateral
Cash cover
669,592
713,715
89,559
70,797
Gold
171,256
222,339
31,283
30,609
Inventory
367,392
3,078,135
365,947
158,663
Real estate
13,333,408
33,317,222
2,472,023
1,597,850
Unsecured and secured solely by
third party guarantees
-
-
3,776,289
-
Total
14,541,648
37,331,411
6,735,101
1,857,919
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
The effect of collateral by types as at 31 December 2023:
The financial effect of collateral is determined by comparing the fair value of collateral to outstanding gross loans and
advances on the reporting date.
Stage 3 loans presented by segments and collateral classes as at 31 December 2024 are the following:
Loans
in thousands of GEL
Corporate
MSME
Consumer
Mortgage
Total fair value of
collaterals
Cash cover
727
1,485
1
-
1,072
Gold
-
37
1,096
-
1,303
Inventory
5,577
4,891
-
-
69,057
Real estate
141,076
245,640
15,521
51,598
769,206
Other
-
1
55
-
74
Unsecured and secured solely by
third party guarantees
9,219
16,070
45,962
690
-
Total
156,599
268,124
62,635
52,288
840,712
Loans
in thousands of GEL
Corporate
MSME
Consumer
Mortgage
Total fair value of
collaterals
Cash cover
267
169
3
-
282
Gold
-
271
1,015
-
1,240
Inventory
12,445
1,238
-
-
30,397
Real estate
94,767
155,409
18,592
43,486
643,117
Unsecured and secured solely by
third party guarantees
6,659
21,440
43,011
1,103
-
Total
114,138
178,527
62,621
44,589
675,036
Stage 3 loans presented by segments and collateral classes as at 31 December 2023 are the following:
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
196
197
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
9. LOANS AND ADVANCES TO CUSTOMERS CONTINUED
At the central level a specific unit manages collateral to ensure that they serve as an adequate mitigation for credit
risk management purposes. In line with the Group's internal policies, collateral provided to loans are evaluated by
the Internal Appraisal Group (external reviewers are used in case of loans to related parties or specific cases when
complex objects are appraised). The Internal Appraisal Group is part of the collateral management unit and, in order
to ensure adequate and objective appraisal procedures, it is independent from the loan granting process. Real estate
collateral of significant value is re-evaluated annually by internal appraisers. Statistical methods are used to monitor
the value of real estate collateral that are of non-significant value and other types of collateral such as movable assets
and precious metals.
In some instances, where the discounted recovery from the liquidation of collateral (adjusted for the liquidity haircut
and discounted for the period of expected workout time) is larger than the estimated exposure at default, no credit loss
allowance is recognised. Collateral values include the contractual price of third-party guarantees, which, due to their
nature, are capped at the loan’s carrying value. The values of third-party guarantees in the tables above amounted to
GEL 79,080 thousand and GEL 62,610 thousand as of 31 December 2024 and 2023, respectively. Refer to Note 40 for the
estimated fair value of each class of loans and advances to customers. Interest rate analysis of loans and advances to
customers is disclosed in Note 35. Information on related party balances is disclosed in Note 42.
For the year ended 31 December 2024 amortised cost of loans with lifetime ECL immediately before contractual
modification that was not a derecognition event was GEL 1,358,144 thousand (31 December 2023: GEL 891,977
thousand). During 2024, gains less losses recognised in profit or loss on modifications of loans with lifetime ECL that
did not lead to derecognition was GEL (0) thousand (2023: GEL (1) thousand).
For the year ended 31 December 2024 gross carrying amount of loans that were contractually modified (without
derecognition) in the past when measured at lifetime ECL and which were reclassified to Stage 1 (12 months ECL)
during the current year was GEL 354,202 thousand (31 December 2023: GEL 513,241 thousand).
The gross carrying amount of loans by stages that have been modified since initial recognition at a time when the loss
allowance was measured at an amount equal to lifetime expected credit losses and for which the loss allowance has
changed during the reporting period to an amount equal to 12-month expected credit losses loans are the following:
In thousands of GEL
31 December 2024
31 December 2023
Stage 1
265,864
243,759
Stage 2
49,586
191,879
Stage 3
1,417
50,160
Total
316,867
485,798
10. INVESTMENT SECURITIES
In thousands of GEL
31 December
2024
31 December
2023
Corporate bonds
Gross carrying amount
1,317,070
1,225,537
Stage 1
(444)
(422)
Fair value adjustment
(992)
(114)
Corporate bonds measured at FVTOCI
1,315,634
1,225,001
Ministry of Finance of Georgia treasury bills
Gross carrying amount
2,617,815
1,934,373
Stage 1
(4,848)
(3,707)
Fair value adjustment
39,133
13,466
Ministry of Finance of Georgia treasury bills at FVTOCI
2,652,100
1,944,132
Foreign government treasury bills
Gross carrying amount
1,395,463
304,881
Stage 1
(7)
(16)
Fair value adjustment
182
(1,015)
Foreign government treasury bills at FVTOCI
1,395,638
303,850
Total investment securities excluding corporate shares
5,363,372
3,472,983
Corporate shares – unquoted
1,252
2,478
Total investment securities
5,364,624
3,475,461
All debt securities in 2024 and 2023 except for corporate bonds and foreign government treasury bills are issued by
the Government of Georgia and National Bank of Georgia. The country rating for Georgia stands at ‘BB’ with negative
outlook (as assigned by Fitch rating agency in December 2024). 75.2% of corporate bonds are issued by AAA rated
international financial institutions, 10.3% of corporate bonds are issued by BBB rating, 3.2% by B+ rating and 11.3% by
BB rating. Information includes credit ratings assigned by the international rating agencies (Standard & Poor’s, Fitch),
for those financial institutions which are not assigned credit ratings, country ratings are used. The foreign government
treasury bills include treasury bills issued by the Governments of the United States of America (99.9% of the total
foreign government treasury bills in 2024 and 99.5% in 2023) and Uzbekistan (0.1% of the total foreign government
treasury bills in 2024 and 0.5% in 2023). The country ratings for the United States of America and Uzbekistan stand at
‘AA+’ and ‘BB-’ respectively as assigned by Fitch rating agency in December 2024.
The Group designated investments in corporate shares disclosed in the above table as equity securities at FVTOCI.
The FVTOCI designation was made because the investments are expected to be held primarily for medium-term
investment purposes instead of short-term profit making from subsequent sales.
As at 31 December 2024 investment securities measured at fair value through other comprehensive income carried at
GEL 2,538,803 thousand have been pledged for the borrowings from the National Bank of Georgia (2023: GEL 970,019
thousand).
The investment securities measured at fair value through other comprehensive income are pledged under the
monetary policy framework for the borrowings from the National Bank of Georgia. The pledged instruments are the
treasury bills issued by the government of Georgia (78% of the total in 2024 and 100% in 2023) and corporate bonds
(22% of the total in 2024 and nil in 2023).
198
199
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
In thousands of GEL
2024
2023
Carrying amount as of 1 January
3,475,461
2,884,728
Purchases
7,349,079
1,563,326
Disposals
(715,242)
(383,122)
Redemption at maturity
(4,699,257)
(854,540)
Revaluation
25,459
6,878
Interest income accrued
329,008
284,495
Interest income received
(289,436)
(275,820)
Effect of translation to presentation currency
30,764
(16,975)
Transfer from/(to) repurchase receivables
(140,058)
267,495
Changes in credit loss allowance
(1,154)
(1,004)
Carrying amount as of 31 December
5,364,624
3,475,461
10. INVESTMENT SECURITIES CONTINUED
The movements in investment securities measured at fair value through other comprehensive income are as follows:
11. REPURCHASE RECEIVABLES
In thousands of GEL
31 December
2024
31 December
2023
31 December
2022
Investment securities measured at FVTOCI sold under sale and
repurchase agreements
140,058
-
267,495
Total repurchase receivables
140,058
-
267,495
In thousands of GEL
31 December
2024
31 December
2023
Derivative financial assets
166,144
41,038
Receivables from plastic card service providers
72,999
26,591
Receivables on credit card services and money transfers
67,519
73,056
Receivable on terminated leases
56,670
61,639
Receivables on guarantees and letters of credit
23,990
32,347
Advances paid to promotional service provider
20,091
19,774
Derivatives margin
13,501
20,762
Receivable from insurance service provides
7,101
13,965
Government subsidy related receivables
4,283
4,565
Trade receivables
3,570
4,009
Prepayments for purchase of leasing assets
1,309
1,405
Receivables from sales of non-financial assets
413
400
Investment held at fair value through profit or loss
-
8,062
Other
28,481
30,709
Total gross amount of other financial assets
466,071
338,322
Less: credit loss allowance
(40,066)
(56,461)
Total other financial assets
426,005
281,861
In thousands of GEL
31 December
2024
31 December
2023
Derivative financial assets
167,578
40,919
Receivables from plastic card service providers
72,999
26,591
Receivables on credit card services and money transfers
66,727
72,260
Receivables on guarantees and letters of credit
23,990
32,347
Advances paid to promotional service provider
20,091
19,774
Derivatives margin
13,501
20,762
Receivable from insurance service provides
7,101
13,965
Government subsidy related receivables
4,283
4,565
Receivables from sales of non-financial assets
413
400
Trade receivables
138
779
Investment held at fair value through profit or loss
-
8,062
Other
62,237
128,239
Total gross amount of other financial assets
439,058
368,663
Less: credit loss allowance
(7,423)
(18,577)
Total other financial assets
431,635
350,086
Other financial assets of the Bank comprise the following:
Repurchase receivables represent securities sold under sale and repurchase agreements which the counterparty has
the right, by contract or custom, to sell or repledge.
As at 31 December 2024 credit loss allowance for Investment securities measured at FVTOCI sold under sale and
repurchase agreements was nil (2023: nil). Meanwhile credit risk category of total portfolio is classified as very low.
12. OTHER FINANCIAL ASSETS
Other financial assets of the Group comprise the following:
200
201
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
In thousands of GEL
Due in 1
year
Due
between 1
and 2 years
Due
between 2
and 3 years
Due
between 3
and 4 years
Due
between 4
and 5 years
Due in 5
years or
more
Total
Lease payments receivable
210,102
126,546
83,832
58,387
39,223
88,216
606,306
Unearned finance income
(48,595)
(40,394)
(24,157)
(16,293)
(10,579)
(22,222)
(162,240)
Credit loss allowance
(4,629)
(2,488)
(1,340)
(962)
(601)
(1,385)
(11,405)
Present value of lease payments
receivable
156,878
83,664
58,335
41,132
28,043
64,609
432,661
In thousands of GEL
Due in 1
year
Due
between 1
and 2 years
Due
between 2
and 3 years
Due
between 3
and 4 years
Due
between 4
and 5 years
Due in 5
years or
more
Total
Lease payments receivable
172,834
121,230
70,102
46,185
28,990
77,249
516,590
Unearned finance income
(44,846)
(30,807)
(18,991)
(12,424)
(7,964)
(22,059)
(137,091)
Credit loss allowance
(3,041)
(2,101)
(1,182)
(718)
(512)
(1,150)
(8,704)
Present value of lease payments
receivable
124,947
88,322
49,929
33,043
20,514
54,040
370,795
For fair values refer to Note 40.
13. FINANCE LEASE RECEIVABLES
As at 31 December 2024 finance lease receivables comprised of GEL 432,661 thousand (2023: GEL 370,795 thousand).
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. The main
types of collateral obtained are:
• Leased assets;
• Down payment;
• Real estate properties.
The financial effect of collateral is presented by disclosing the collateral values separately for (i) those assets where
collateral and other credit enhancements are equal to or exceed the assets’ carrying value (“over-collateralized
assets”) and (ii) those assets where collateral and other credit enhancements are less than the assets’ carrying value
(“undercollateralized assets”).
Finance lease payments receivable and their present values as of 31 December 2024 are as follows:
12. OTHER FINANCIAL ASSETS CONTINUED
The Group’s other financial asset gross portfolio with the related credit loss allowance as of December 31, 2024, and
2023 is as follows:
13. FINANCE LEASE RECEIVABLES CONTINUED
Gross carrying amount
Credit loss allowance
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL for
SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL for
SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2024
299,243
58,605
21,651
379,499
2,828
3,033
2,843
8,704
Transfers
– to lifetime (from Stage 1
and Stage 3 to Stage 2)
(51,214)
53,935
(2,721)
-
(522)
1,106
(584)
-
– to defaulted (from Stage 1
and Stage 2 to Stage 3)
(2,483)
(12,216)
14,699
-
(237)
(411)
648
-
– to 12-months ECL (from
Stage 2 and Stage 3 to
Stage 1)
7,524
(7,362)
(162)
-
763
(705)
(58)
-
New originated or purchased
223,725
-
-
223,725
4,274
-
-
4,274
Derecognised or fully repaid
during the period
(80,949)
(25,631)
(12,450) (119,030)
(732)
(1,615)
(1,762)
(4,109)
Net repayments
(38,913)
(2,594)
(4,342)
(45,849)
-
-
-
-
Foreign exchange
movements
1,482
297
351
2,130
(19)
9
(23)
(33)
Other movements
(32)
31
3,592
3,591
-
-
-
-
Net re-measurement due
to stage transfers, changes
in risk parameters and
repayments
-
-
-
-
(1,589)
2,824
1,334
2,569
At 31 December 2024
358,383
65,065
20,618 444,066
4,766
4,241
2,398
11,405
31 December 2024
31 December 2023
In thousands of GEL
Gross amount
Credit loss
allowance
Gross amount
Credit loss
allowance
Stage 1
387,672
1,261
245,665
4,776
Stage 2
3,597
493
3,991
1,260
Stage 3
74,802
38,312
88,666
50,425
Total
466,071
40,066
338,322
56,461
31 December 2024
31 December 2023
In thousands of GEL
Gross amount
Credit loss
allowance
Gross amount
Credit loss
allowance
Stage 1
425,695
1,261
346,382
4,690
Stage 2
823
493
1,180
1,259
Stage 3
12,540
5,669
21,101
12,628
Total
439,058
7,423
368,663
18,577
The Bank’s other financial asset gross portfolio with the related credit loss allowance as of December 31, 2024, and
2023 is as follows:
Finance lease payments receivable and their present values as of 31 December 2023 are as follows:
The following table discloses the changes in the credit loss allowance and gross carrying amount for finance lease
receivables between the beginning and the end of the reporting period:
202
203
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
13. FINANCE LEASE RECEIVABLES CONTINUED
Gross carrying amount
Credit loss allowance
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL for
SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
Stage 1
(12-months
ECL)
Stage 2
(Lifetime
ECL for
SICR)
Stage 3
(Lifetime
ECL for
defaulted)
Total
At 1 January 2023
242,914
36,718
17,854
297,486
4,122
2,173
2,305
8,600
Transfers
– to lifetime (from Stage 1
and Stage 3 to Stage 2)
(50,476)
53,033
(2,557)
-
(1,209)
1,248
(39)
-
– to defaulted (from Stage 1
and Stage 2 to Stage 3)
(16,357)
(5,018)
21,375
-
(966)
(354)
1,320
-
– to 12-months ECL (from
Stage 2 and Stage 3 to
Stage 1)
4,109
(3,459)
(650)
-
255
(157)
(98)
-
New originated or purchased
214,299
-
-
214,299
2,916
-
-
2,916
Derecognised or fully repaid
during the period
(60,814)
(12,998)
(9,868)
(83,680)
(1,169)
(653)
(1,515)
(3,337)
Net repayments
(35,522)
(10,161)
(5,405)
(51,088)
(158)
(61)
(7)
(226)
Foreign exchange
movements
948
306
52
1,306
9
9
10
28
Other movements
142
184
850
1,176
-
-
-
-
Net re-measurement due
to stage transfers, changes
in risk parameters and
repayments
-
-
-
-
(972)
828
867
723
At 31 December 2023
299,243
58,605
21,651
379,499
2,828
3,033
2,843
8,704
As at 31 December 2024, credit quality of finance lease receivables is analysed below:
in thousands of GEL
Stage 1
(12-months ECL)
Stage 2
(Lifetime ECL for
SICR)
Stage 3
(Lifetime ECL for
defaulted)
Total
Finance lease receivables risk category
– Very low
336,451
-
-
336,451
– Low
21,932
10,440
-
32,372
– Moderate
-
48,220
-
48,220
– High
-
6,405
-
6,405
– Default
-
-
20,618
20,618
Gross carrying amount
358,383
65,065
20,618
444,066
Credit loss allowance
(4,766)
(4,241)
(2,398)
(11,405)
Carrying amount
353,617
60,824
18,220
432,661
13. FINANCE LEASE RECEIVABLES CONTINUED
As at 31 December 2023, credit quality of finance lease receivables is analysed below:
The effect of collateral as at 31 December 2024:
The effect of collateral as at 31 December 2023:
The following table presents the potential ECL balances without consideration of collateral:
31 December 2024
Over-collateralised Assets
Under-collateralised Assets
in thousands of GEL
Gross carrying value
of the assets
Fair value of
collateral
Gross carrying value of
the assets
Fair value of
collateral
Finance lease receivables
334,337
535,210
109,729
78,257
Total
334,337
535,210
109,729
78,257
31 December 2023
Over-collateralised Assets
Under-collateralised Assets
in thousands of GEL
Gross carrying value
of the assets
Fair value of
collateral
Gross carrying value of
the assets
Fair value of
collateral
Finance lease receivables
290,573
435,885
88,926
72,935
Total
290,573
435,885
88,926
72,935
31 December 2024
31 December 2023
in thousands of GEL
Gross carrying
amount
Credit loss
allowance without
collaterals
Gross carrying
amount
Credit loss
allowance without
collaterals
Stage 1
358,383
(5,594)
299,243
(3,721)
Stage 2
65,065
(5,853)
58,605
(3,200)
Stage 3
20,618
(2,914)
21,651
(3,697)
Total
444,066
(14,361)
379,499
(10,618)
in thousands of GEL
Stage 1
(12-months ECL)
Stage 2
(Lifetime ECL for
SICR)
Stage 3
(Lifetime ECL for
defaulted)
Total
Finance lease receivables risk category
– Very low
250,267
6,785
-
257,052
– Low
48,976
10,194
-
59,170
– Moderate
-
30,065
-
30,065
– High
-
11,561
-
11,561
– Default
-
-
21,651
21,651
Gross carrying amount
299,243
58,605
21,651
379,499
Credit loss allowance
(2,828)
(3,033)
(2,843)
(8,704)
Carrying amount
296,415
55,572
18,808
370,795
204
205
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
14. OTHER ASSETS
Repossessed collateral represents tangible assets acquired by the Group in settlement of defaulted loans, which is
expected to be disposed in the foreseeable future. The assets do not meet the definition of non-current assets held
for sale and are classified as inventories in accordance with IAS 2 “Inventories”. The assets were initially recognised at
the lower of cost and net realisable value when acquired. In 2024, collaterals repossessed for settlement of defaulted
loans amounted to GEL 127,281 thousand (2023: GEL 97,602 thousand).
For certain repossessed collateral, the Group has granted previous owners a right to repurchase the repossessed
collateral at prices equal to or higher than the carrying value of the loan at the date of repossession. This right is usually
effective for a period of 6 to 24 months from the repossession date, during this time the repossessed collateral may not
be disposed to third parties. In some cases, prolongation of repurchase right is offered to the owners of the property.
As at 31 December 2024, the carrying value of the repossessed collaterals subjected to the repurchase agreement was
GEL 138,269 thousand (2023: GEL 116,087 thousand).
Other assets of the Bank are as follows:
in thousands of GEL
31 December 2024
31 December 2023
31 December 2022
Current other assets
Repossessed collateral
318,033
277,332
269,006
Prepayments for purchase of leasing assets
118,641
28,900
28,595
Prepayments for other assets
41,532
34,729
47,859
Prepaid taxes other than income tax
2,372
5,301
5,860
Other inventories
6,748
12,458
14,741
Total current other assets
487,326
358,720
366,061
Non-current other assets
Prepayments for construction in progress
30,370
37,713
22,460
Assets purchased for leasing purposes
7,428
923
1,049
Investments in associates*
4,666
4,204
3,721
Assets repossessed from terminated leases
4,483
3,543
16,531
Prepaid insurance of leasing assets
4,050
2,961
2,364
Other
2,966
1,633
3,262
Total non-current other assets
53,963
50,977
49,387
Total other assets
541,289
409,697
415,448
in thousands of GEL
31 December 2024
31 December 2023
31 December 2022
Current other assets
Repossessed collateral
317,548
276,700
267,987
Prepayments for other assets
39,478
33,388
47,037
Other inventories
12,440
10,165
11,775
Total current other assets
369,466
320,253
326,799
Non-current other assets
Prepayments for construction in progress
30,320
37,663
22,409
Other
618
821
677
Total non-current other assets
30,938
38,484
23,086
Total other assets
400,404
358,737
349,885
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
15. PREMISES, EQUIPMENT AND INTANGIBLE ASSETS
*Office and other equipment include furniture and fixtures, computer and office equipment, motor vehicles as well as other equipment.
**Construction in progress consists of construction and refurbishment of branch premises and the Bank’s new headquarter, that will be transferred to
premises upon completion.
in thousands of GEL
Land, premises
and leasehold
improvements
Office and other
equipment*
Construction
in progress**
Total
premises and
equipment
Intangible
assets
At cost
1 January 2023
196,625
313,755
129,198
639,578
475,856
Additions
6,624
52,662
46,222
105,508
91,995
Disposals
(2,534)
(6,437)
(248)
(9,219)
(583)
Impairment (charge)/reversal
519
256
(474)
301
-
Effect of translation to presentation
currency
(5)
(10)
-
(15)
(3)
31 December 2023
201,229
360,226
174,698
736,153
567,265
Additions
6,483
64,519
35,263
106,265
103,281
Transfers within premises and equipment
(111)
2
109
-
-
Transfers to investment property
(7,311)
-
-
(7,311)
-
Disposals
(16,943)
(6,587)
(26)
(23,556)
(17)
Impairment reversal/(charge)
-
(125)
-
(125)
(63)
Effect of translation to presentation
currency
(2)
21
-
19
26
31 December 2024
183,345
418,056
210,044
811,445
670,492
Accumulated depreciation /
amortisation
1 January 2023
(39,698)
(175,628)
-
(215,326)
(164,706)
Depreciation / amortisation charge
(2,754)
(21,047)
-
(23,801)
(51,664)
Reversal of elimination of accumulated
depreciation
(3,299)
(8,083)
-
(11,382)
1,845
Disposals effect on depreciation
524
5,144
-
5,668
27
Effect of translation to presentation
currency
5
7
-
12
(45)
31 December 2023
(45,222)
(199,607)
-
(244,829)
(214,543)
Depreciation / amortisation charge
(2,538)
(28,278)
-
(30,816)
(61,091)
Disposals effect on depreciation due to
transfer to investment property
1,562
-
-
1,562
-
Disposals effect on depreciation
16,104
6,308
-
22,412
1,727
Effect of translation to presentation
currency
(34)
20
-
(14)
(16)
31 December 2024
(30,128)
(221,557)
-
(251,685)
(273,923)
Carrying amount
31 December 2023
156,007
160,619
174,698
491,324
352,722
31 December 2024
153,217
196,499
210,044
559,760
396,569
As of 31 December 2024, GEL 534,054 thousand of premises and equipment and GEL 352,883 thousand of intangible
assets were attributable to the Bank (2023: GEL 462,570 thousand and GEL 318,744 thousand). Construction in
progress consists of construction and refurbishment of branch premises and the Bank’s new headquarter, that will be
transferred to premises upon completion.
Other assets of the Group are as follows:
206
207
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
16. RIGHT OF USE ASSETS
The Group leases offices, branches and service centres. Rental contracts are typically made for fixed periods of 1 to 14
years.
Leases are recognised as a right-of-use asset and a corresponding liability from the date when the leased asset
becomes available for use by the Group.
The movements in right of use of assets are as follows:
in thousands of GEL
2024
2023
Carrying amount at 1 January
111,991
100,209
Additions of new contracts
12,790
30,450
Decreases in value from substantial changes in contractual terms
(753)
(3,160)
Disposals
(5,888)
(3,470)
Depreciation charge
(26,083)
(23,606)
Disposals effect on depreciation
10,603
11,568
Carrying amount at 31 December
102,660
111,991
The lease agreements do not impose any covenants, other than the security interests in the leased assets that are held
by the lessor. Leased assets cannot be used as collateral for borrowings.
Expenses relating to short-term leases amounted GEL 1,181 thousand during 2024 (2023: GEL 814 thousand) and
expenses relating to leases of low-value assets amounted GEL 8,531 thousand during 2024 (2023: GEL 6,961 thousand).
These expenses are included in administrative and other operating expenses.
17. GOODWILL
As at 31 December 2024 the carrying amount of Goodwill represented GEL 28,197 thousand (2023: GEL 28,197 thousand).
Goodwill Impairment Test
Goodwill is allocated to cash-generating units (CGUs, which represent the lowest level within the Group at which the
goodwill is monitored by the Management and which are not larger than a segment) as follows:
in thousands of GEL
31 December
2024
31 December
2023
Bank Republic JSC
24,166
24,166
Bank Republic Retail
11,088
11,088
Bank Republic Corporate
7,491
7,491
Bank Republic MSME
4,791
4,791
Bank Republic Other
796
796
Other
4,031
4,031
Total carrying amount of goodwill
28,197
28,197
The recoverable amount of each CGU was determined based on value-in-use calculations. These calculations use
cash flow projections based on financial budgets covering a three-year period. Cash flows beyond the three-year
period are extrapolated using the estimated growth rates stated below, which is relevant for the market, where CGU is
operating.
31 December
2024
31 December
2023
Bank Republic JSC
Growth rate applied to free cash flow to equity beyond three years
5.0% p.a.
5.2% p.a.
Pre-tax discount rate
14.2% p.a.
14.0% p.a.
Key assumptions used for value-in-use calculations are following:
17. GOODWILL CONTINUED
Pre-tax discount rate used for value-in-use calculations is the assumption to which the recoverable amount is most
sensitive. The management determined the budgeted gross margin based on past performance and its market
expectations. The weighted average long term growth rates used are consistent with the forecasts included in the
industry reports. The discount rates reflect specific risks related to the relevant CGUs.
If pre-tax discount rate applied to the discounted cash flows of CGUs have been 10% higher than the management’s
estimates or growth rate beyond three years of free cash flow to equity had been 10% lower, the Group would not need
to reduce the carrying value of goodwill or carrying value of net assets of the CGU. The following table shows the
summary analysis of CGUs’ recoverable amounts and discount rates.
2024
2023
Difference between
recoverable Amount
and carrying amount
Discount rate at
which carrying
amount equals
value in use
Difference between
recoverable Amount
and carrying amount
Discount rate at
which carrying
amount equals
value in use
Bank Republic Retail
4,785,755
39.4% p.a.
4,014,022
36.77% p.a.
Bank Republic Corporate
4,966,633
32.99% p.a.
5,264,087
36.29% p.a.
Bank Republic MSME
2,044,636
29.66% p.a.
1,465,722
25.62% p.a.
208
209
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
18. DUE TO CREDIT INSTITUTIONS
in thousands of GEL
31 December
2024
31 December
2023
Due to other banks
Correspondent accounts and overnight placements
366,412
263,600
Deposits from banks
610,036
629,252
Total due to other banks
976,448
892,852
Other borrowed funds
Borrowings from foreign banks and international financial institutions
2,954,861
2,286,371
Borrowings from other local banks and financial institutions
81,404
46,973
Borrowings from National Bank of Georgia
3,303,919
1,120,755
Total other borrowed funds
6,340,184
3,454,099
Total amounts due to credit institutions
7,316,632
4,346,951
in thousands of GEL
31 December
2024
31 December
2023
Due to other banks
Correspondent accounts and overnight placements
366,412
263,600
Deposits from banks
610,036
629,252
Total due to other banks
976,448
892,852
Other borrowed funds
Borrowings from foreign banks and international financial institutions
2,691,263
2,086,093
Borrowings from National Bank of Georgia
3,303,919
1,120,755
Total other borrowed funds
5,995,182
3,206,848
Total amounts due to credit institutions
6,971,630
4,099,700
Refer to Note 35 for the disclosure of the maturity analysis of Due to credit institutions.
Refer to Note 10 for Investment securities measured at FVOCI sold under sale and repurchase agreements.
Due to credit institutions of the Bank are as follows:
in thousands of GEL
31 December
2024
31 December
2023
State and public organisations
Current/settlement accounts
1,085,073
1,129,559
Term deposits
336,037
556,672
Other legal entities
Current/settlement accounts
6,103,037
7,228,054
Term deposits
3,031,608
1,183,946
Individuals
Current/settlement accounts
5,737,140
5,270,799
Term deposits
5,648,327
4,573,486
Total customer accounts
21,941,222
19,942,516
31 December 2024
31 December 2023
in thousands of GEL
Amount
%
Amount
%
Individuals
11,382,337
52%
9,842,452
49%
Financial services
2,549,415
12%
1,828,336
9%
Trade
1,701,311
8%
1,805,484
9%
Energy & utilities
1,139,221
5%
920,555
5%
Services
885,085
4%
754,889
4%
Construction
838,761
4%
755,125
4%
Transportation
816,464
4%
708,925
4%
Real estate
575,421
3%
545,278
3%
Government sector
529,445
2%
823,516
4%
Healthcare
155,719
1%
206,274
1%
Hospitality & leisure
128,893
1%
228,611
1%
Agriculture
68,783
< 1%
77,871
< 1%
Metals and mining
23,619
< 1%
23,321
< 1%
Other
1,146,748
5%
1,421,879
7%
Total customer accounts
21,941,222
100%
19,942,516
100%
As of 31 December 2024, the Group had 170 customers (2023: 154 customers) with balances above GEL 10,000
thousand. Their aggregate balance was GEL 8,410,955 thousand (2023: GEL 7,281,004 thousand) or 38.3% of total
customer accounts (2023: 36.5%).
As of 31 December 2024, included in customer accounts are deposits of GEL 80,281 thousand and GEL 206,934
thousand (2023: GEL 146,550 thousand and GEL 208,214 thousand) held as collateral for irrevocable commitments
under letters of credit and guarantees issued, respectively. The latter is discussed in note 36. As of 31 December 2024,
deposits held as collateral for loans to customers amounted to GEL 592,328 thousand (2023: GEL 784,512 thousand).
Refer to Note 40 for the disclosure of the fair value of each class of customer accounts. Information on related party
balances is disclosed in Note 42.
19. СUSTOMER ACCOUNTS
State and public organisations include government owned profit orientated businesses.
Economic sector concentrations within customer accounts are as follows:
Due to credit institutions of the Group are as follows:
Customer accounts of the Group are as follows:
210
211
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
19. СUSTOMER ACCOUNTS CONTINUED
in thousands of GEL
Currency
Carrying amount as
of 31 December
2024
Maturity
date
Coupon
rate
Weighted average
effective interest rate
USD
19,083
4/29/2030
8%
8.54%
GEL
90,058
3/20/2026-6/27/2026
3M TIBR + 2.75%
13%
Total debt securities
in issue
109,141
in thousands of GEL
Currency
Carrying amount as
of 31 December
2023
Maturity
date
Coupon
rate
Weighted average
effective interest rate
USD
633,664
6/19/2024-4/29/2030
5.8%-8%
6.56%
GEL
78,881
3/20/2026-6/27/2026
3M TIBR + 2.75%
14%
AZN
3,256
6/6/2024-7/15/2024
12%
12%
Total debt
securities in issue*
715,801
in thousands of GEL
Currency
Carrying amount as
of 31 December
2022
Maturity
date
Coupon
rate
Weighted average
effective interest rate
USD
614,748
6/19/2024
5.8%
6.40%
GEL
38,550
3/20/2023
3M TIBR + 3.25%
13%
AZN
8,147
9/23/2023-7/15/2024
12%
12%
Total debt securities
in issue*
661,445
20. DEBT SECURITIES IN ISSUE CONTINUED
20. DEBT SECURITIES IN ISSUE
On March 20 2023, TBC Leasing JSC placed senior secured bonds of amount GEL 100 million on the Georgian Stock
Exchange JSC out of which as of June 30 2023 GEL 88.71 million was sold to investors. The coupon rate of securities is
variable, 2.75% added to the 3-month Tbilisi Interbank Interest rate. Fitch rates the bonds ‘BB- ‘.
On April 27 2023, the Bank has issued USD 30 million 7-year, 8% subordinated notes, through the private placement,
out of which as of June 30 2023 USD 6.7 million was sold to investors. The debt ranks after all other creditors in case of
liquidation, except AT1 Notes listed in note 24.
On June 28 2023, TBC Leasing JSC issued Green Bonds of amount GEL 15 million on the Georgian Stock Exchange
JSC. The coupon rate of securities is variable, 2.75% added to the 3-month Tbilisi Interbank Interest rate. Fitch rates the
bonds ‘BB- ‘.
On July 14 2022 the TBC Kredit LLC issued interest-baring paperless unsecured bond in the amount of AZN 1 million,
with 2-year maturity at 12%.
On June 7 2022 the TBC Kredit LLC issued interest-baring paperless unsecured bond in the amount of AZN 1 million,
with 2-year maturity at 12%.
Customer accounts of the Bank are as follows:
in thousands of GEL
31 December 2024
31 December 2023
State and public organisations
Current/settlement accounts
1,085,073
1,129,559
Term deposits
336,037
556,672
Other legal entities
Current/settlement accounts
6,263,037
7,387,472
Term deposits
3,071,235
1,197,115
Individuals
Current/settlement accounts
5,737,140
5,270,799
Term deposits
5,648,327
4,573,486
Total customer accounts
22,140,849
20,115,103
21. OTHER FINANCIAL LIABILITIES
Other financial liabilities of the Group comprise the following:
in thousands of GEL
31 December
2024
31 December
2023
Trade payables
135,711
75,630
Derivative financial liabilities
93,176
62,474
Liabilities for leasing activities
53,914
28,428
Payables to plastic card service providers
20,963
34,628
Transfers in transit
19,321
15,424
Payable to deposit insurance agency
2,026
1,385
Security deposits for finance lease receivables
591
467
Prepayments related to guarantees
368
471
Other accrued liabilities
47,835
57,589
Total other financial liabilities
373,905
276,496
in thousands of GEL
31 December
2024
31 December
2023
Derivative financial liabilities
93,099
62,447
Trade payables
36,888
35,207
Payables to plastic card service providers
22,484
35,818
Transfers in transit
19,321
15,424
Payable to deposit insurance agency
2,026
1,385
Prepayments related to guarantees
368
471
Other accrued liabilities
47,501
57,502
Total other financial liabilities
221,687
208,254
Refer to Note 40 for disclosure of the fair value of other financial liabilities.
Other financial liabilities of the Bank comprise the following:
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
212
213
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
22. OTHER LIABILITIES
23. SUBORDINATED DEBT
Other liabilities comprise the following:
in thousands of GEL
31 December
2024
31 December
2023
31 December
2022
Accrued employee benefit costs
77,426
61,334
52,060
Advances received
18,092
15,670
15,164
Provisions for liabilities and charges*
17,261
21,060
19,908
Taxes payable other than on income
3,891
15,978
4,101
Other
864
9,537
9,061
Total other liabilities
117,534
123,579
100,294
All of the above liabilities are expected to be settled within twelve months after the year-end.
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
in thousands of GEL
Grant
date
Maturity
date
Currency
Agreement
interest rate
Outstanding
amount
in GEL
Nederlandse Financierings-
Maatschappij voor
Ontwikkelingslanden N.V. FMO
2/1/2024
1/16/2034
EUR
9.48%
181,244
Asian Developement Bank
10/18/2016
12/31/2026
USD
8.22%
142,314
DEG
9/26/2023
9/26/2033
EUR
9.04%
90,117
EBRD London
11/20/2023
11/21/2033
USD
10.83%
86,038
Global Climate Partnership Fund
11/20/2018
11/21/2033
USD
10.36%
70,123
Nederlandse Financierings-
Maatschappij voor
Ontwikkelingslanden N.V. FMO
4/17/2024
1/16/2034
EUR
9.48%
60,404
European Fund for Southeast
Europe
12/21/2018
12/21/2028
USD
8.84%
56,343
BlueOrchard Microfinance Fund
6/9/2023
6/9/2033
USD
10.53%
55,986
BlueOrchard Microfinance Fund
12/14/2018
7/21/2031
USD
11.23%
43,929
Green for Growth Fund
12/18/2015
12/16/2030
USD
10.90%
43,280
BlueOrchard Microfinance Fund
12/14/2018
12/14/2028
USD
9.28%
42,083
European Fund for Southeast
Europe
12/18/2015
12/16/2030
USD
10.90%
21,639
European Fund for Southeast
Europe
3/15/2016
3/17/2031
USD
10.90%
21,634
ResponsAbility SICAV (Lux) Micro
and SME Finance Fund
11/30/2018
11/30/2033
USD
10.38%
16,479
ResponsAbility SICAV (Lux) Micro
and SME Finance Fund
4/7/2022
4/7/2032
USD
10.19%
14,538
ResponsAbility SICAV (Lux) Micro
and SME Finance Leaders
4/7/2022
4/7/2032
USD
10.19%
11,688
ResponsAbility SICAV (Lux) -
Financial Inclusion Fund
4/7/2022
4/7/2032
USD
10.19%
11,117
ResponsAbility SICAV (Lux) -
Financial Inclusion Fund
11/30/2018
11/30/2033
USD
10.38%
8,657
ResponsAbility SICAV (Lux) Micro
and SME Finance Leaders
4/7/2022
4/7/2032
USD
10.19%
5,416
ResponsAbility SICAV (Lux) -
Microfinance Leaders
11/30/2018
11/30/2033
USD
10.38%
2,793
Triple Jump Innovation Fund
3/14/2023
4/15/2028
USD
9.00%
8,704
Triple Jump Innovation Fund
3/14/2023
4/15/2028
USD
9.00%
5,563
Private lenders
6/8/2017-8/8/2023
6/10/2030-8/8/2031
USD
8.25-9.5%
148,285
Total subordinated debt
1,148,374
As of 31 December 2024, subordinated debt comprised of:
214
215
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
24. ADDITIONAL TIER 1 CAPITAL SUBORDINATED NOTES
As at 31 December 2024, additional Tier 1 capital subordinated notes, comprised of:
As at 31 December 2023, additional Tier 1 capital subordinated notes, comprised of:
As at 31 December 2022, additional Tier 1 capital subordinated notes, comprised of:
On April, 30 2024, JSC TBC Bank has successfully issued US $300 million, 10.25% coupon rate, perpetual subordinated
callable additional Tier 1 capital notes, which were met with strong investor demand from the EU, UK, and US. The
European Bank for Reconstruction and Development (EBRD) has acted as an anchor investor for 20% of issued Capital
Notes. The notes were listed on Euronext Dublin’s Global Exchange Market and rated B2 by Moody’s.
On October 28 2021, the Bank completed the transaction of USD 75 million 8.894% coupon rate additional Tier 1 capital
perpetual subordinated notes issue (“AT1 Notes”). The AT1 Notes are listed on the regulated market of Euronext Dublin
and are rated B- by Fitch.
On July 3 2019 the Bank completed the transaction of a debut inaugural USD 125 million 10.75% coupon rate additional
Tier 1 capital perpetual subordinated notes issue. The AT1 Notes are listed on the regulated market of Euronext Dublin
and are rated B- by Fitch. The AT1 Notes have been simultaneously listed on JSC Georgian Stock Exchange, making it
the first dual-listed international offering of additional Tier 1 capital notes from Georgia.
in thousands of GEL
Currency
Carrying amount as of
31 December 2024
Coupon rate
Weighted average
effective interest rate
USD
1,062,960
8.9%-10.3%
10.63%
Total additional Tier 1 capital
subordinated notes
1,062,960
in thousands of GEL
Currency
Carrying amount as of
31 December 2023
Coupon rate
Weighted average
effective interest rate
USD
548,284
8.9%-10.8%
10.84%
Total additional Tier 1 capital
subordinated notes*
548,284
in thousands of GEL
Currency
Carrying amount as of
31 December 2022
Coupon rate
Weighted average
effective interest rate
USD
548,368
8.9%-10.8%
10.84%
Total additional Tier 1 capital
subordinated notes*
548,368
in thousands of GEL
Grant
date
Maturity
date
Currency
Agreement
interest
rate
Outstanding
amount
in GEL
Asian Development Bank
10/18/2016
12/31/2026
USD
10.1%
136,732
DEG
9/26/2023
9/26/2033
EUR
9.7%
90,669
EBRD London
11/20/2023
11/21/2033
USD
11.4%
80,864
Global Climate Partnership Fund
11/20/2018
11/20/2028
USD
11.8%
67,576
European Fund for Southeast
Europe
12/21/2018
12/21/2028
USD
8.8%
53,999
BlueOrchard Microfinance Fund
06/09/2023
06/09/2033
USD
11.5%
53,604
Green for Growth Fund
12/18/2015
12/16/2030
USD
11.8%
41,572
BlueOrchard Microfinance Fund
12/14/2018
12/15/2025
USD
9.3%
40,363
BlueOrchard Microfinance Fund
12/14/2018
12/14/2028
USD
9.3%
40,296
European Fund for Southeast
Europe
12/18/2015
12/16/2030
USD
11.8%
20,785
European Fund for Southeast
Europe
3/15/2016
3/17/2031
USD
11.8%
20,780
ResponsAbility SICAV (Lux) -
Micro and SME Finance Fund
11/30/2018
11/30/2028
USD
11.9%
16,025
ResponsAbility SICAV (Lux) -
Micro and SME Finance Fund
04/07/2022
04/07/2032
USD
11.4%
13,943
ResponsAbility SICAV (Lux)
- Micro and SME Finance
Leaders
04/07/2022
04/07/2032
USD
11.4%
11,209
ResponsAbility SICAV (Lux) -
Financial Inclusion Fund
04/07/2022
04/07/2032
USD
11.4%
10,662
ResponsAbility SICAV (Lux) -
Financial Inclusion Fund
11/30/2018
11/30/2028
USD
11.9%
8,418
Triple Jump Innovation Fund
3/14/2023
4/15/2028
USD
9.0%
8,330
ResponsAbility SICAV (Lux)
- Micro and SME Finance
Leaders
04/07/2022
04/07/2032
USD
11.4%
5,194
ResponsAbility SICAV (Lux) -
Microfinance Leaders
11/30/2018
11/30/2028
USD
11.9%
2,716
Private Lenders
06/08/2017-
08/08/2023
11/18/2024-
08/08/2031
USD
8-9.5%
144,993
Total subordinated debt
868,730
As of 31 December 2023, subordinated debt comprised of:
23. SUBORDINATED DEBT CONTINUED
The debt ranks after all other creditors in case of liquidation, except AT1 Notes listed in note 24.
Refer to Note 40 for the disclosure of the fair value of subordinated debt. Information on related party balances is
disclosed in Note 42.
As at 31 December 2024, GEL 49,676 thousand of the total subordinated debt is attributed to TBC Leasing JSC (31
December 2023: GEL 42,184 thousand).
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
216
217
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
MANAGEMENT REPORT
25. EQUITY
Share capital
in thousands of GEL, unless otherwise indicated
Number of
ordinary shares
Share capital
As of 31 December 2023
52,539,769
21,014
As of 31 December 2024
52,539,769
21,014
In thousands of GEL
31 December
2024
31 December
2023
31 December
2022
Fair value reserve for investment securities at FVTOCI
37,804
12,345
5,467
Currency translation reserve
(6,365)
(7,085)
(7,657)
Total other reserves*
31,439
5,260
(2,190)
Each share has a nominal value of GEL 0.4 per share (31 December 2023: GEL 0.4 per share). All issued ordinary shares
are fully paid and entitled to dividends.
Dividends
in thousands of GEL
2024
2023
Dividends payable at 1 January
747
747
Interim dividend:
Dividends declared during the year
159,001
220,398
Dividends paid during the year:
(159,001)
(220,398)
Prior year final dividend:
Dividends declared during the year
391,469
395,667
Dividends paid during the year:
(391,469)
(395,667)
Dividends payable at 31 December
747
747
On August 8 2024, JSC TBC Bank’s shareholders agreed on an interim dividend of GEL 3.03 per share. The dividend
was paid on November 4 2024.
On February 15 2024, JSC TBC Bank’s shareholders passed a resolution to declare a final dividend of GEL 7.46 per
share. The dividend was paid on May 7 2024 and July 5 2024.
On August 11 2023, JSC TBC Bank’s shareholders agreed on an interim dividend of GEL 4.20 per share. The dividend
was paid on October 4 2023.
On March 27 2023, JSC TBC Bank’s shareholders passed a resolution to declare a final dividend of GEL 7.54 per share.
The dividend was paid on May 5 2023.
Other reserves
26. SHARE BASED PAYMENTS
2024 remuneration scheme – Executive Management Board of the Bank
TBC Bank Group PLC (“TBC PLC”) announced a directors’ remuneration policy, which was approved by shareholders
at the 2024 AGM and provides the framework for directors’ remuneration for the three-year period from 2024-2026.
In consideration of the evolving strategy, the maturity of the business, and local market practices, there was a proposal
to alter the structure of the incentive model. The change involved transitioning from separate annual bonuses
delivered in shares and an LTIP scheme to a unified incentive known as the “Combined Incentive Plan.” This new plan
integrates short and long-term performance elements, incorporating a substantial long-term share-based deferral.
The new arrangement replaced the existing remuneration plan for Executive Management Board of the Bank starting
in 2024. Therefore, the 2024 year has been modified with the new plan. Modification did not result in acceleration as
the terms have not been worsened for scheme participants.
New plan for the Executive Management Board of the Bank from 2024 includes the following components regarding
share remuneration:
• Shares Salary will be subject to a 3-year holding period and will be released in three equal annual tranches after one,
two and three years respectively at 33%-33%-34% (not subject to any continuing service requirements, malus or
claw back).
• Variable Pay – Combined Incentive Plan (“CIP”), which includes a three-step performance assessment process:
1. Performance Gateway – Eligibility for payments under the Combined Incentive Plan is subject to passing
gateway criteria, measured over the Annual KPI Performance Period. The Gateway criteria are based on measures
of financial soundness (including capital, liquidity and profitability).
2. Annual KPI performance scorecard – Based on performance against the Annual KPI targets, the
Remuneration Committee will determine an overall payout percentage of salary. The payout is split between:
a “Share Award” – 40% of the total will be paid in shares which must be held for at least three years (subject to
3-year claw back) and a “Long-Term Share Award” – 60% of the total will be awarded as a deferred award of shares
which will vest after five years. (Subject to continued employment, malus and a 3-year claw back)
3. TSR shareholder alignment mechanism – The grant value of a Long-Term Share Award (60%) determined by
the stringent performance assessment in Performance Step 1 and Performance Step 2 may be scaled back by up
to 50% if TBC’s Total Shareholder Return (“TSR”) is not at least in line with a weighted TSR index.
• Shareholding Requirement – Minimum shareholding requirement of 200% of base salary.
The participants are entitled to receive dividends on the Share Salary and the Share Award (40% of variable
remuneration).
Upon vesting, dividend equivalents in respect of the Lont-Term Share Award will be payable in cash equal to the
dividends paid on the underlying shares between the date the arad was made and the vesting date.No dividends or
divident equivalents will be paid on any Award (or part therefore) that lapses on or befor vesting.
2022-2023 remuneration scheme
The below section explains only the components that are still expensed based on the 2022-2023 schemes until
vesting. The remuneration system was approved by shareholders at the TBC Bank Group PLC’s Annual General
Meeting in June 2021 and came into effect on 1 January 2022. It covers the period 2022-2023. The Share salary from
previous systems have already vested.
Variable Remuneration
Variable remuneration of the Top Management consisted of the annual bonus delivered in shares (the “Annual Bonus”)
and the share awards under the Long-Term Incentive Plan (the “LTIP Award”). 60% of variable remuneration is the LTIP
Award and the remaining 40% constituted the Annual Bonus.
(a) Annual Bonus under Deferred Share plan 2022-2023 Annual Bonus is delivered in TBC PLC shares. The Executive
Management Board of the Bank received the annual bonus entirely in TBC PLC shares and it did not comprise any
cash component. Annual Bonus award is subject to a holding period (but not continued employment) over 2 years
period with 50% being released after one year and remaining 50% being released at the end of second year. The
Annual Bonus is subject to malus and claw back provisions as described in the Deferred Share Plan. During the
holding period, participants are entitled to vote at the shareholder meetings and receive dividends.
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
218
219
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
The Management Board (the “Board”) is the chief operating decision maker (CODM) and it reviews the Group’s internal
reporting in order to assess the performance and to allocate resources.
The operating segments are defined as follows:
• Corporate – 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 US$ 250,000 on assets under management (AUM), as well as on discretionary basis;
• Retail – non-business individual customers;
• Micro, small and medium enterprises – business customers who are not included in the CIB segment;
• Corporate center, other and sub-segment eliminations - comprises the treasury operations, TBC Leasing, sub-
segment eliminations, non-material or non-financial subsidiaries of the group and intra-group eliminations.
The Group has standard annual re-segmentations, after which some of the clients are reallocated between micro,
small and medium enterprises and corporate segments.
The Board of Directors assesses the performance of the operating segments based on a measure of profit before
income tax.
The reportable segments are the same as the operating segments.
No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Group’s
total revenue in 2024 and 2023.
The vast majority of the Group’s revenues are attributable to Georgia. A geographic analysis of origination of the
Group’s assets and liabilities is given in Note 35.
Allocation of indirect expenses is performed based on drivers identified for each type of cost where possible. If there
is no identifiable driver for any type of expense/overhead cost, those expenses are allocated between segments based
on the same logic as applied for the expenses with similar nature (e.g., other operating expenses would follow the
pattern of closest category of operating expenses).
The intersegment transfer pricing methodology is an internally developed tool founded on matched maturity logics.
It is used to effectively manage liquidity and mitigate interest rate risks within the Group. The process entails the
corporate centre borrowing monetary amounts (deposits) from different business segments. Compensation for
each deposit is based on its specific currency, duration, type, liquidity and capital requirements, ensuring equitable
treatment for each segment. In turn, business segments borrow funds from the corporate centre to finance loans and
other assets. The pricing for each borrowing transaction is determined based on factors such as the currency, loan
type (fixed, floating, mixed interest rates), loan duration, and capital requirement.
Segment disclosure below for 2024 is prepared with the effect of 2024 re-segmentations as described above.
31 December
2024
31 December
2023
Number of unvested shares at the beginning of the period
1,194,124
2,044,604
Number of shares granted
128,320
248,306
Change in estimates of number of shares expected to vest
(92,321)
(764,037)
Change in number of shares based on actual share price, exchange rate and KPI
accomplishment
44,417
(95,653)
Number of shares vested
(304,279)
(239,096)
Number of unvested shares at the end of the period
970,261
1,194,124
26. SHARE BASED PAYMENTS CONTINUED
(b) Long Term Incentive Plan (LTIP) 2022-2023 The level of LTIP Award grant was determined pro rata from the
LTIP maximum opportunity based on the assessment of the base i.e., prior year’s Annual Bonus corporate KPIs
performance. LTIP Awards granted would then be subject to 3-year LTIP forward-looking performance conditions
and would vest at the end of 5-year period following the grant. LTIP Award forward-looking KPIs were set at the
beginning of each year in relation to that year’s cycle by the Remuneration Committee. The Participants are not
entitled to any dividend or voting rights until the LTIP Award vests.
Middle Management
Middle management receives cash bonuses, as well as share-based awards. According to the scheme, each year,
subject to predefined performance conditions, a certain number of shares are awarded to most of the middle
managers in the Group. The performance features key performance indicators (KPIs) divided into (i) corporate and (ii)
individual. The corporate KPIs are mainly related to achieving profitability, efficiency, and portfolio quality metrics set
by the Board as well as non-financial indicators regarding to customers’ experience and employees’ engagement. The
individual performance indicators are set on an individual basis and are used to calculate the number of shares to be
awarded to each employee. Once awarded, all shares carry service conditions and, before those conditions are met,
are eligible for dividends; however, they cannot be sold or transferred to third parties.
Service conditions foresee continuous employment until the gradual transfer of the full title to the scheme participants
is complete. Vesting conditions are 33%, 33%, 34% per year for the 3-year period since the award date. Under this
compensation system the total vesting period extends to 4 years since the grant date. In addition, the variable
remuneration structure for other identified Material Risk Taker (“MRT”) employees, below the level of executive
management board members of TBC Bank JSC, is subject to regulatory requirements and is in line with the NBG CG
Code. For MRT employees holding end date for non-deferred variable remuneration is 6 months after award date.
Currently, 2-year remuneration scheme for 2023-2024 years is being granted.
Tabular information on the schemes is given below:
Expense recognised as staff cost during the period was GEL 19,520 thousand (31 December 2023: GEL 24,682
thousand).
The fair value of the employee services received in exchange for the grant of the equity instruments is determined
by the nature of the award. Currently there are several types of share-based award schemes as described above. The
deferred share salary and deferred share bonus are the grants of the possible bonus pool amount, which will be based
on the performance conditions. The fair value of the award is determined by the present value of the amount as at
grant date and probable performance conditions accomplishment. The LTIP and long-term plan are the awards of
potential maximum share numbers also up to performance conditions. The fair value of the award as of the grant date
is determined by the grant date share price and probable performance conditions accomplishment. The fair value
amount of 2024 performance related grants are GEL 34,650 thousand.
Tax part of the existing bonus system is accounted for on an equity settled basis.
Staff costs related to equity settled part of the share-based payment schemes are recognised in the income
statement on a pro-rata basis over the vesting period of each relevant scheme tranche and corresponding entry is
credited to share based payment reserve in equity.
27. SEGMENT ANALYSIS
220
221
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
27. SEGMENT ANALYSIS CONTINUED
27. SEGMENT ANALYSIS CONTINUED
A summary of the Group’s reportable segments for the years ended 31 December 2024 and 2023 is provided below:
in thousands of GEL
Corporate
Retail
Micro, small
and medium
enterprises
Corporate center, other
and sub-segment
eliminations*
Total
Interest income
947,845
998,077
642,023
547,963
3,135,908
Interest expense
(663,406)
(219,741)
(27,479)
(716,288)
(1,626,914)
Net interest on currency swaps
10,762
2,432
286
68,518
81,998
Inter-segment interest income/(expense)
315,969
(204,645)
(274,633)
163,309
-
Net interest income
611,170
576,123
340,197
63,502
1,590,992
Fee and commission income
125,197
457,848
93,375
584
677,004
Fee and commission expense
(16,103)
(194,444)
(60,952)
(7,415)
(278,914)
Net fee and commission income
109,094
263,404
32,423
(6,831)
398,090
Net gains from derivatives, foreign currency operations
and translation
143,348
104,540
52,239
67,656
367,783
Other operating income
1,303
8,928
2,886
3,398
16,515
Share of profit of associate
(273)
-
-
847
574
Other operating non-interest income
144,378
113,468
55,125
71,901
384,872
Credit loss (allowance)/recovery for loans to customers
(10,628)
(73,326)
(30,271)
4,715
(109,510)
Credit loss allowance for finance lease receivables
-
-
-
(4,754)
(4,754)
Credit loss allowance for other financial assets and
other assets
(1,047)
205
(1,300)
(3,620)
(5,762)
Net impairment of non-financial assets
(454)
(711)
(617)
(364)
(2,146)
Impairment loss due to write-down of the asset held for
sale
-
-
-
(9,800)
(9,800)
Operating income after expected credit and non-
financial asset impairment losses
852,513
879,163
395,557
114,749
2,241,982
Staff costs
(81,936)
(243,655)
(91,523)
(22,716)
(439,830)
Depreciation and amortization
(14,424)
(78,761)
(22,646)
(2,452)
(118,283)
Administrative and other operating expenses
(24,154)
(135,215)
(34,014)
(27,988)
(221,371)
Operating expenses
(120,514)
(457,631)
(148,183)
(53,156)
(779,484)
Profit before tax
731,999
421,532
247,374
61,593
1,462,498
Income tax expense
(110,471)
(60,310)
(37,314)
(9,687)
(217,782)
Profit for the year
621,528
361,222
210,060
51,906
1,244,716
in thousands of GEL
Corporate
Retail
Micro, small
and medium
enterprises
Corporate center, other
and sub-segment
eliminations**
Total
Interest income
792,698
879,106
584,108
433,515
2,689,427
Interest expense
(554,873)
(172,430)
(14,039)
(535,590)
(1,276,932)
Net interest on currency swaps
4,805
644
41
77,611
83,101
Inter-segment interest income/(expense)
310,127
(197,526)
(236,024)
123,423
-
Net interest income
552,757
509,794
334,086
98,959
1,495,596
Fee and commission income
105,418
379,799
87,206
(1,032)
571,391
Fee and commission expense
(17,578)
(161,999)
(52,859)
(4,479)
(236,915)
Net fee and commission income
87,840
217,800
34,347
(5,511)
334,476
Net gains from derivatives, foreign currency operations
and translation
110,127
85,214
48,535
28,427
272,303
Other operating income*
7,887
6,289
3,237
11,667
29,080
Share of profit of associate
-
-
-
657
657
Other operating non-interest income
118,014
91,503
51,772
40,751
302,040
Credit loss (allowance)/recovery for loans to customers
(7,980)
(52,911)
(70,574)
1,085
(130,380)
Credit loss allowance for finance lease receivables
-
-
-
(1,996)
(1,996)
Credit loss allowance for other financial assets and
other assets*
(7,735)
159
92
(3,999)
(11,483)
Net impairment of non-financial assets
(987)
(879)
(276)
(1,433)
(3,575)
Operating income after expected credit and non-
financial asset impairment losses
741,909
765,466
349,447
127,856
1,984,678
Staff costs
(72,796)
(202,752)
(86,321)
(23,602)
(385,471)
Depreciation and amortization
(12,173)
(65,897)
(19,317)
(2,256)
(99,643)
Administrative and other operating expenses
(22,013)
(125,580)
(33,178)
(15,877)
(196,648)
Operating expenses
(106,982)
(394,229)
(138,816)
(41,735)
(681,762)
Profit before tax
634,927
371,237
210,631
86,121
1,302,916
Income tax expense
(90,565)
(49,322)
(31,361)
(12,610)
(183,858)
Profit for the year
544,362
321,915
179,270
73,511
1,119,058
*The Group has not separated eliminations separately considering their immateriality. Meanwhile other operating income includes intergroup
dividends of GEL 17,000 thousand.
*To improve the quality and understandability of the consolidated statement of profit or loss and other comprehensive income, the Group has
revisited presentation of these line items. Further details are disclosed in note 2.
**The Group has not separated eliminations separately considering their immateriality. Meanwhile other operating income includes intergroup
dividends of GEL 20,000 thousand.
in thousands of GEL
Corporate
Retail
Micro, small
and medium
enterprises
Corporate
center, other
Total
Gross loans and advances to customers
9,863,777
8,710,516
5,943,479
1,817
24,519,589
Customer accounts
11,308,306 8,478,788
2,043,554
110,574
21,941,222
Goodwill
7,491
14,350
5,560
796
28,197
Credit related commitments and performance guarantees
2,802,249
159,288
450,460
(208)
3,411,789
222
223
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
MANAGEMENT REPORT
27. SEGMENT ANALYSIS CONTINUED
in thousands of GEL
Corporate
Retail
Micro, small
and medium
enterprises
Corporate
center, other
Total
Gross loans and advances to customers
8,283,723
7,513,229
5,480,822
(1,025)
21,276,749
Customer accounts
10,200,321
7,469,587
1,900,459
372,149
19,942,516
Goodwill
7,491
14,350
5,560
796
28,197
Credit related commitments and performance guarantees
2,831,610
161,874
486,756
(939)
3,479,301
in thousands of GEL
2024
2023
Interest income calculated using effective interest method
Loans and advances to customers
2,558,827
2,224,514
Investment securities
329,008
284,495
Due from other banks
154,375
99,777
Repurchase receivables
447
3,077
Other financial assets
3,288
2,824
Other interest income
Finance lease receivables
89,963
74,740
Total interest income
3,135,908
2,689,427
Interest expense
Customer accounts
(974,133)
(813,715)
Due to credit institutions
(408,278)
(288,250)
Debt securities in issue and AT1
(130,745)
(104,147)
Subordinated debt
(109,118)
(67,539)
Other interest expense
Lease Liabilities
(4,640)
(3,281)
Total interest expense
(1,626,914)
(1,276,932)
Net interest on currency swaps
81,998
83,101
Net interest income
1,590,992
1,495,596
28. INTEREST INCOME AND EXPENSE
Interest income and expense of the Group are as follows:
During 2024 interest accrued on defaulted loans amounted to GEL 38,249 thousand (2023: 36,161 GEL thousand).
During 2024 capitalised interest expense in the amount of GEL 4,262 thousand (2023: GEL 2,391 thousand) was
attributable to the development of the Group’s headquarters. The capitalisation rate used to determine the amount of
borrowing costs eligible for capitalisation is weighted average of interest-bearing liabilities by currencies: 8.2% in GEL,
2.8% in USD and 2.7% in EUR. (2023: 9.0% in GEL, 2.1% in USD and 1.0% in EUR). For details of construction in progress
please refer to Note 15.
in thousands of GEL
2024
2023
Interest income calculated using effective interest method
Loans and advances to customers
2,554,942
2,221,832
Investment securities
331,990
287,835
Due from other banks
152,031
97,677
Repurchase receivables
447
3,077
Other financial assets
2,212
2,366
Total interest income
3,041,622
2,612,787
Interest expense
Customer accounts
(982,929)
(821,549)
Due to credit institutions
(387,906)
(273,545)
Debt securities in issue and AT1
(120,489)
(94,321)
Subordinated debt
(105,085)
(64,632)
Other interest expense
Lease Liabilities
(4,309)
(2,955)
Total interest expense
(1,600,718)
(1,257,002)
Net interest on currency swaps
81,998
83,101
Net interest income
1,522,902
1,438,886
28. INTEREST INCOME AND EXPENSE CONTINUED
Interest income and expense of the Bank are as follows:
224
225
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Below tables disclose fee and commission income and expense by segments. For the definition of the segments refer
to note 27.
2024
in thousands of GEL
Retail
Micro, small and
medium enterprises
Corporate
Corporate center, other
and sub-segment
eliminations
Total
Fee and commission income in respect of financial instruments not at fair value through profit or loss:
–
Card operations
318,442
59,183
-
-
377,625
–
Settlement transactions
123,603
18,192
17,490
(101)
159,184
–
Guarantees issued
146
6,883
47,241
-
54,270
–
Cash transactions
5,319
4,539
9,206
-
19,064
–
Issuance of letters of credit
-
120
5,944
(11)
6,053
–
Foreign exchange operations
182
1,000
5,214
(21)
6,375
–
Other
10,156
3,458
40,102
717
54,433
Total fee and commission income
457,848
93,375
125,197
584
677,004
Fee and commission expense in respect of financial instruments not at fair value through profit or loss:
–
Card operations
(169,405)
(41,181)
-
-
(210,586)
–
Settlement transactions
(4,702)
(7,495)
(4,534)
(4)
(16,735)
–
Cash transactions
(7,712)
(2,486)
(8,533)
(2,843)
(21,574)
– Guarantees received
(5)
(240)
(1,597)
-
(1,842)
– Letters of credit
-
(24)
(1,185)
(3)
(1,212)
– Foreign exchange operations
(21)
-
-
17
(4)
– Other
(12,599)
(9,526)
(254)
(4,582)
(26,961)
Total fee and commission expense
(194,444)
(60,952)
(16,103)
(7,415)
(278,914)
Net fee and commission income
263,404
32,423
109,094
(6,831)
398,090
29. FEE AND COMMISSION INCOME AND EXPENSE
Net gains from derivatives, foreign currency operations and translation for the following years are as follows:
2023
in thousands of GEL
Retail
Micro, small and
medium enterprises
Corporate
Corporate center, other
and sub-segment
eliminations
Total
Fee and commission income in respect of financial instruments not at fair value through profit or loss:
–
Card operations
257,211
53,245
8
(5)
310,459
–
Settlement transactions
110,055
17,785
14,214
(92)
141,962
–
Guarantees issued
25
6,059
38,608
-
44,692
–
Cash transactions
4,010
4,935
8,039
-
16,984
–
Issuance of letters of credit
1
120
8,013
(31)
8,103
–
Foreign exchange operations
114
783
4,546
(8)
5,435
–
Other
8,383
4,279
31,990
(896)
43,756
Total fee and commission income
379,799
87,206
105,418
(1,032)
571,391
Fee and commission expense in respect of financial instruments not at fair value through profit or loss:
–
Card operations
(141,793)
(33,468)
-
14
(175,247)
–
Settlement transactions
(6,826)
(9,251)
(5,571)
(37)
(21,685)
–
Cash transactions
(5,514)
(2,584)
(6,347)
(3,143)
(17,588)
– Guarantees received
-
(276)
(1,706)
-
(1,982)
– Letters of credit
-
(38)
(2,517)
(3)
(2,558)
– Foreign exchange operations
(8)
-
-
(2)
(10)
– Other
(7,857)
(7,241)
(1,439)
(1,308)
(17,845)
Total fee and commission expense
(161,998)
(52,858)
(17,580)
(4,479)
(236,915)
Net fee and commission income
217,801
34,348
87,838
(5,511)
334,476
29. FEE AND COMMISSION INCOME AND EXPENSE CONTINUED
30. NET GAINS FROM DERIVATIVES, FOREIGN CURRENCY OPERATIONS AND TRANSLATION
in thousands of GEL
2024
2023
Net gains from trading in foreign currencies
452,518
201,457
Net gains/(losses) from foreign exchange translation
(85,396)
71,179
Net gains/(losses) from derivative financial instruments other than derivatives on foreign
currency
661
(333)
Total net gains from derivatives, foreign currency operations and translation
367,783
272,303
226
227
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Share based compensation represents remuneration paid in shares and is excluded as non-cash in the consolidated
and separate statement of cash flows.
Breakdown of monthly average number of employees by categories is as follows:
Number of employees of the Group are as follows:
in thousands of GEL
2024
2023
Wages and salaries
Salaries and bonuses
393,911
332,848
Share based compensation
19,520
24,682
Pension contributions
9,056
6,882
Other compensation cost
17,343
21,059
Salaries and other employee benefits
439,830
385,471
in thousands of GEL
2024
2023
Wages and salaries
Salaries and bonuses
354,569
300,517
Share based compensation
19,413
24,153
Pension contributions
7,663
6,222
Other compensation cost
14,699
18,621
Salaries and other employee benefits
396,344
349,513
Staff costs of the Group are as follows:
31. STAFF COSTS
Staff costs of the Bank are as follows:
Position
2024
2023
Top Management
Temporary
-
-
Permanent
5
5
Middle Management
Temporary
4
-
Permanent
314
289
Other Employees
Temporary
938
1,000
Permanent
7,888
7,443
Total
9,149
8,737
Position
2024
2023
Top Management
Temporary
-
-
Permanent
5
5
Middle Management
Temporary
-
-
Permanent
258
243
Other Employees
Temporary
882
938
Permanent
7,094
6,669
Total
8,239
7,855
Number of employees of the Bank are as follows:
Administrative and other operating expenses of the Group are as follows:
32. ADMINISTRATIVE AND OTHER OPERATING EXPENSES
in thousands of GEL
2024
2023
Advertising and marketing services
38,912
46,464
Intangible asset maintenance
37,773
25,982
Professional services
34,036
25,408
Taxes other than on income
13,554
12,859
Insurance
10,519
8,707
Occupancy and rent*
9,713
7,774
SMS service fees
9,687
5,535
Premises and equipment maintenance
9,284
9,405
Utilities services
8,982
9,368
Communications and supply
7,209
6,457
Stationery and other office expenses
5,664
5,304
Personnel training and recruitment
4,152
5,562
Transportation and vehicle maintenance
3,472
2,865
Representative expenses
2,574
4,310
Business trip expenses
2,423
2,027
Security services
2,242
1,956
Loss on disposal of repossessed collateral
1,159
661
Charity
1,123
1,110
Loss on disposal of premises and equipment
722
599
Recovery for liabilities and charges
(212)
-
Other
18,383
14,295
Total administrative and other operating expenses
221,371
196,648
*Includes short-term leases, low value leases not recognised under IFRS 16 scope.
228
229
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
32. ADMINISTRATIVE AND OTHER OPERATING EXPENSES CONTINUED
in thousands of GEL
2024
2023
Advertising and marketing services
37,763
45,369
Intangible asset maintenance
32,652
22,332
Professional services
31,359
23,981
SMS service fees
9,687
5,535
Utilities services
8,598
8,959
Premises and equipment maintenance
8,457
8,231
Taxes other than on income
7,635
6,985
Communications and supply
6,190
5,317
Occupancy and rent*
5,878
5,604
Stationery and other office expenses
5,196
4,943
Personnel training and recruitment
3,849
5,374
Insurance
2,685
2,495
Representative expenses
2,481
4,268
Business trip expenses
2,188
1,859
Security services
2,010
1,739
Charity
1,123
1,094
Transportation and vehicle maintenance
990
749
Loss on disposal of repossessed collateral
953
579
Loss on disposal of premises and equipment
298
539
Recovery for liabilities and charges
(212)
-
Other
14,024
10,942
Total administrative and other operating expenses
183,804
166,894
*Includes short-term leases, low value leases not recognised under IFRS 16 scope.
Administrative and other operating expenses of the Bank are as follows:
* In 2024 other assurance services include services in relation to issuance of AT1 notes.
32. ADMINISTRATIVE AND OTHER OPERATING EXPENSES CONTINUED
33. INCOME TAXES
in thousands of GEL
Audit
Audit Related
Other Services
Total
2024
Audit of the annual financial statements of the Group
and subsidiaries
1,782
-
-
1,782
Review of the interim financial statements of the
Group and subsidiaries
-
517
-
517
Other assurance services*
-
-
976
976
Total auditors’ remuneration
1,782
517
976
3,275
2023
Audit of the annual financial statements of the Group
and subsidiaries
1,862
-
-
1,862
Review of the interim financial statements of the
Group and subsidiaries
-
237
-
237
Total auditors’ remuneration
1,862
237
-
2,099
in thousands of GEL
2024
2023
Current tax charge
217,931
246,196
Deferred tax credit
(149)
(62,338)
Total income tax expense for the year
217,782
183,858
The table below presents the total remuneration for the Group’s auditor:
Income tax comprises of the following:
Current income tax liability to the regulatory authorities is generally paid on a quarterly basis. The amount is calculated
by dividing previous year current income tax amount by 4 equal portions. The liability is settled in the following year,
based on current income tax liability amount as at Year end.
The weighted average income tax rate is 2024: 20% (2023: 20%), when the income tax rate applicable to the majority of
subsidiaries income ranged from 15% - 20% (2023: 15% - 20%).
The UK has enacted legislation to implement the Organisation for Economic Cooperation and Development (OECD)
minimum level of tax for multinational groups rules (Pillar Two), effective from 1 January 2024 and applicable to the
period ended 31 December 2024. The ultimate parent of the Bank (TBCG) is therefore in the scope of the Pillar Two
rules and has performed an assessment of potential exposure of the group to Pillar Two income taxes for the period
ended 31 December 2024. The assessment performed concluded that there should be no material liability arising
given it’s effective tax rate in each jurisdiction in which the Bank operates.
Services provided by auditors other than the Group’s auditor in 2024 amounted to GEL 1,427 thousand (2023: GEL 1,548
thousand), with GEL 319 thousand attributed to audit services (2023: GEL 329 thousand).
230
231
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
33. INCOME TAXES CONTINUED
in thousands of GEL
2024
2023
Statutory rate
20%
20%
Profit before tax
1,462,498
1,302,916
Theoretical tax charge at weighted average applicable tax rate of 20% (2023: 20%)
291,586
259,595
Tax effect of items which are not deductible or assessable for taxation purposes:
Income which is exempt from taxation
(74,875)
(70,860)
Non-deductible expenses
1,071
654
Effects of changes in tax legislation
-
(5,146)
Other differences
-
(385)
Total income tax expense for the year
217,782
183,858
Reconciliation between the expected and the actual taxation expense/(credit) is provided below:
Differences between financial reporting framework and statutory taxation regulations in Georgia and Azerbaijan give
rise to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes
and their tax bases. The tax effect of the movements in these temporary differences is detailed below and is recorded
at the rate of 20% (2023: 20%) for Georgia and 20% (2023: 20%) for Azerbaijan.
Income which is exempt from taxation includes interest income from placements in NBG, Georgian Government
Treasury bills and IFI securities. Non-deductible expenses include penalties paid and charity expenses towards
beneficiary which are not registered charity organizations.
33. INCOME TAXES CONTINUED
in thousands of GEL
1
January
2024
Credited/
(charged) to
profit or loss
Credited to other
comprehensive
income
Effect of
currency
translation
31
December
2024
Tax effect of (taxable)/deductible temporary differences and tax loss carry forwards
Premises and equipment and intangibles
(58,620)
2,266
-
-
(56,354)
Loans and advances to customers
-
13
-
26
39
Other financial assets
5,570
1,075
613
-
7,258
Other assets
259
107
-
-
366
Other financial liabilities
(306)
-
-
-
(306)
Other liabilities
423
(452)
-
39
10
Share based payment
5,938
(2,622)
-
-
3,316
Goodwill
(3,403)
(238)
-
-
(3,641)
Investments in associates
(423)
-
-
-
(423)
Net deferred tax asset/(liability)
(50,562)
149
613
65
(49,735)
Recognised deferred tax asset
395
25
-
65
485
Recognised deferred tax liability
(50,957)
124
613
(50,220)
Net deferred tax asset/(liability)
(50,562)
149
613
65
(49,735)
in thousands of GEL
1
January
2023
Credited/
(charged) to
profit or loss
Charged to other
comprehensive
income
Effect of
currency
translation
31
December
2023
Tax effect of (taxable)/deductible temporary differences and tax loss carry forwards
Premises and equipment and intangibles
(50,887)
(5,906)
-
(1,827)
(58,620)
Loans and advances to customers
1,847
(1,847)
-
-
-
Other financial assets
4,754
1,076
(260)
-
5,570
Other assets
329
(70)
-
-
259
Other financial liabilities
(724)
418
-
-
(306)
Other liabilities
(923)
1,346
-
-
423
Share based payment
4,302
1,636
-
-
5,938
Goodwill
(4,987)
1,584
-
-
(3,403)
Investments in associates
(423)
-
-
-
(423)
One off reimbursement for different tax and
IFRS bases*
(64,101)
64,101
-
-
-
Net deferred tax asset/(liability)
(110,813)
62,338
(260)
(1,827)
(50,562)
Recognised deferred tax asset
2,064
158
-
(1,827)
395
Recognised deferred tax liability
(112,877)
62,180
(260)
-
(50,957)
Net deferred tax asset/(liability)
(110,813)
62,338
(260)
(1,827)
(50,562)
* The amount had no effect on the consolidated statement of profit and loss and other comprehensive income, as far as, one off deferred tax
reimbursements required due to the changes in tax legislation in 2022, has been recorded to current income tax of 2023, leaving no effect on tax
expenses.
Deferred tax assets/liabilities as of 31 December 2024 and 31 December 2023 are the following:
232
233
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
33. INCOME TAXES CONTINUED
35. FINANCIAL AND OTHER RISK MANAGEMENT
34. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
in thousands of GEL
Other
borrowed
funds
Debt
securities in
issue
Additional
Tier 1 capital
subordinated
notes
Subordinated
debt
Lease
liabilities
Total
Liabilities from financing
activities at 1 January 2023
3,250,395
661,445
548,368
590,148
72,240
5,122,596
Proceeds from principal **
1,894,337
95,820
-
287,589
-
2,277,746
Redemption of principal
(1,698,671)
(43,058)
-
(15,867)
(12,999)
(1,770,595)
Interest accrued
228,250
48,815
55,332
67,539
3,281
403,217
Interest paid
(225,081)
(55,592)
(52,842)
(63,184)
(3,551)
(400,250)
Other non-cash movements*
-
-
-
-
24,519
24,519
Foreign exchange adjustments
4,869
8,371
(2,574)
2,505
(80)
13,091
Liabilities from financing
activities at 31 December 2023
3,454,099
715,801
548,284
868,730
83,410
5,670,324
Proceeds from principal
4,523,016
11,633
805,050
236,586
-
5,576,285
Redemption of principal
(1,652,889)
(641,686)
(340,759)
(3,040)
(17,685)
(2,656,059)
Interest accrued
215,648
28,505
102,240
109,118
4,640
460,151
Interest paid
(215,404)
(28,821)
(101,758)
(99,699)
(4,729)
(450,411)
Other non-cash movements*
-
-
-
-
11,310
11,310
Foreign exchange adjustments
15,714
23,709
49,903
36,679
3,465
129,470
Liabilities from financing
activities at 31 December 2024
6,340,184
109,141
1,062,960
1,148,374
80,411
8,741,070
* Other non-cash movements represent additions less terminations for finance lease contracts.
**Principal is amortised cost without accrued interest and any other costs.
In the context of the Group’s current structure and Georgian tax legislation, tax losses and current tax assets of
different group companies may not be offset against current tax liabilities and taxable profits of other group
companies. Therefore, deferred tax assets and liabilities are offset only when they relate to the same taxable entity and
the same taxation authority.
The table below sets out movements in the Group’s liabilities from financing activities for each of the periods
presented. The items of these liabilities are those that are reported as financing activities in the statement of cash
flows.
Credit Quality
Depending on the type of financial asset the Group may utilize different sources of asset credit quality information
including credit ratings assigned by the international rating agencies (Standard & Poor’s, Fitch), credit scoring
information from credit bureau and internally developed credit ratings. Financial assets are classified in an internally
developed credit quality grades by taking into account the internal and external credit quality information in
combination with other indicators specific to the particular exposure (e.g., delinquency). The Group defines following
credit quality grades:
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
• Very low risk – exposures demonstrate strong ability to meet financial obligations;
• Low risk – exposures demonstrate adequate ability to meet financial obligations;
• Moderate risk – exposures demonstrate satisfactory ability to meet financial obligations;
• High risk – exposures that require closer monitoring, and
• Default – exposures in default, with observed credit impairment.
The table below shows internal and external grades used in ECL calculation.
Internal rating grades
External ratings
Credit
quality
grade
Rating for
consumer
loans
Ratings for Loans to
micro, small and
medium enterprises
Rating for
corporate
loans
Credit bureau (when
applicable)
International credit agency
ratings (when applicable)
Very low
1-10
1-2
1-10
A; B; C1; C2; C3
A1.3; A1.4; A1.5; A2; A3; B1; B2
Low
11-21
3-5
11-18
A; B; C1; C2; C3; D1; D2; D3
A2; A3; B1; B2; B3; C1
Moderate
22-35
6-9
19-31 A; B; C1; C2; C3; D1; D2; D3;
E1; E2; E3
A1.3; A1.4; A1.5; A2; A3; B1; B2;
B3; C1; C2; C3
High
36-44
10-16
32-56
D1; D2; D3; E1; E2; E3
A1.3; A1.4; A1.5; A2; A3; B1; B2;
B3; C1; C2; C3; D1; D2; D3
Expected credit loss (ECL) measurement
ECL is a probability-weighted estimate of the present value of future cash shortfalls. An ECL measurement is unbiased
and is determined by evaluating a range of possible outcomes. ECL measurement is based on four components used
by the Group: Probability of Default (“PD”), Exposure at Default (“EAD”), Loss Given Default (“LGD”) and Discount Rate.
The estimates consider forward looking information, that is, ECLs reflect probability weighted development of key
macroeconomic variables that have an impact on credit risk.
The Group uses is a three-stage model for ECL measurement and classifies its borrowers across three stages:
The Group classifies its exposures as Stage 1 if no significant deterioration in credit quality occurred since initial
recognition and the instrument was not defaulted when initially recognized. The exposure is classified to Stage 2
if the significant deterioration in credit quality was identified since initial recognition but the financial instrument
is not considered defaulted. The exposures for which the defaulted indicators have been identified are classified
as Stage 3 instruments. The Expected Credit Loss (ECL) amount differs depending on exposure allocation to one
of the Stages. In the case of Stage 1 instruments, the ECL represents that portion of the lifetime ECL that can be
attributed to default events potentially occurring within the next 12 months from the reporting date. In case of Stage
2 instruments, the ECL represents the lifetime ECL, i.e., credit losses that can be attributed to possible default events
during the whole lifetime of a financial instrument. Generally, lifetime is set equal to the remaining contractual maturity
of the financial instrument. Factors such as existence of contractual repayment schedules, options for extension of
repayment maturity and monitoring processes held by The Group affect the lifetime determination. In case of Stage 3
instruments, default event has already incurred and the lifetime ECL is estimated based on the expected recoveries.
Definition of default
Financial assets for which the Group observed occurrence of one or more loss events are classified in Stage 3.
The Group uses both quantitative and qualitative criteria for the definition of default. The borrower is classified as
defaulted if at least one of the following occurred:
• Any amount of contractual repayments is past due more than 90 days;
• Factors indicating the borrower’s unlikeliness-to-pay.
In case of individually significant borrower’s The Group additionally applies criteria including but not limited to:
bankruptcy proceedings, significant fraud in the borrower’s business that significantly affected its financial condition,
breach of the contract terms etc. For SME and corporate borrowers, default is identified on the counterparty level,
meaning that all the claims against the borrower are treated as defaulted. As for retail and micro exposures, facility level
234
235
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
Mortgage
0% - 9.4%
Consumer (further divided into subgroups to apply thresholds)
0% - 27.4%
Micro (further divided into subgroups to apply thresholds)
0% - 27.0%
default definition is applied considering additional pulling effect criteria. If the amount of defaulted exposure exceeds
predefined threshold, all the claims against the borrower are classified as defaulted. Once a financial instrument is
classified as defaulted, it remains as such until it no longer meets any of the default criteria for a consecutive period of
six months, in which case exposure is considered to no longer be in default (i.e. to have cured). Probation period of six
months has been determined on analysis of likelihood of a financial instrument returning to default status after curing.
Exposures which are moved to stage 2 from default state are kept there for certain period before transferring to Stage 1
and classified as fully performing instruments again.
Significant increase in credit risk (“SICR”)
Financial assets for which the Group identifies significant increase in credit risk since its origination are classified in
Stage 2. SICR indicators are recognized at financial instrument level even though some of them refer to the borrower’s
characteristics. The Group uses both quantitative and qualitative indicators of SICR.
Quantitative criteria
On a quantitative basis the Group assesses change in probability of default parameter for each particular exposure
since initial recognition and compares it to the predefined threshold. When absolute relative change in probability
of default exceeds the applicable threshold, SICR is deemed to have occurred and exposure is transferred to Stage
2. While defining and applying SICR thresholds, the Bank considers product type, age of the contracts and rating at
origination, therefore, SICR threshold for each particular sub segment vary. Below we disclose the threshold ranges
across the relevant sub groups in percentage points triggering contract to move to the stage 2:
Qualitative criteria
Financial asset is transferred to Stage 2 and lifetime ECLs is measured if at least one of the following SICR qualitative
criteria is observed:
• delinquency period of more than 30 days on contractual repayments;
• exposure is restructured, but is not defaulted;
• borrower is classified as “watch”.
The Group has not rebutted the presumption that there has been significant increase in credit risk since origination
when financial asset becomes more than 30 days past due. This qualitative indicator of SICR together with debt
restructuring is applied to all segments. Particularly for corporate and SME segment the Group uses downgrade of
risk category since origination of the financial instrument as a qualitative indicator of SICR. Based on the results of the
monitoring, borrowers are classified across different risk categories. In case there are certain weaknesses present,
which if materialised may lead to loan repayment problems, borrowers are classified as “watch” category. Although
watch borrowers’ financial standing is sufficient to repay obligations, these borrowers are closely monitored and
specific actions are undertaken to mitigate potential weaknesses. Once the borrower is classified as “watch” category,
it is transferred to Stage 2. If any of the SICR indicators described above occur, financial instrument is transferred to
Stage 2. Financial assets may be moved back to Stage 1, if SICR indicators are no longer observed.
ECL measurement
The Group utilizes two approaches for ECL measurement – individual assessment and collective assessment.
Individual assessment is mainly used for stage 2 and stage 3 individually significant borrowers. For selecting
individually significant exposures, the management uses the following estimated thresholds above which exposures1
are selected for individual review: for stage 2 - to GEL 10 million and for stage 3 - GEL 4 million. Additionally, the Group
may arbitrarily designate selected exposures to individual measurement of ECL based on the Group’s credit risk
management or underwriting departments’ decision. The individual assessment takes into account the latest available
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
1 Total exposure of the bank toward the borrower or group of interconnected borrowers
information in order to define ECL under baseline, upside and downside scenarios.
The Group uses the discounted cash flow (DCF) method for the determination of recovery amount under individual
assessment. In order to ensure the accurate estimation of recoverable amount the Group utilizes scenario analysis
approach. Scenarios may be defined considering the specifics and future outlook of individual borrower, sector the
borrower operates in or changes in values of collateral. In case of scenario analysis, The Group forecasts recoverable
amount for each scenario and estimates respective losses. Ultimate ECL is calculated as the weighted average of
losses expected in each scenario, weighted by the probability of scenario occurring.
As for the non-significant and non-impaired significant borrower’s the Group estimates expected credit losses
collectively. For the collective assessment and risk parameters estimation purposes the exposures are grouped into
homogenous risk pools based on similar credit risk characteristics. Common credit risk characteristics of the Group
include but are not limited to: Stage (Stage 1, Stage 2 or Stage 3), type of counterparty (individual vs business), type
of product, rating (external or internal), overdue status, restructuring status, months in default category or any other
characteristics that may differentiate certain sub-segments for risk parameter’s estimation purposes. Number of pools
differs for different products/segments considering specifics of portfolio and availability of data within each pool.
Collective ECL is the sum of the multiplications of the following credit risk parameters: EAD, PD and LGD, that are
defined as explained below, and discounted to present value using the instrument’s effective interest rate.
The key principles of calculating the credit risk parameters:
Exposure at default (EAD)
The EAD represents estimation of exposure to credit risk at the time of default occurring during the life of financial
instrument. The EAD parameter used for the purpose of the ECL calculation is time-dependent, i.e., the Group allows
for various values of the parameter to be applied to subsequent time periods during the lifetime of an exposure. Such
structure of the EAD is applied to all Stage 1 and Stage 2 financial instruments. In case of Stage 3 financial instruments
and defaulted POCI assets, the EAD vector is one-element with current EAD as the only value. EAD is determined
differently for amortising financial instruments with contractual repayment schedules and for revolving facilities. For
amortising products EAD is calculated considering the contractual repayments of principal and interest over the
12-month period for facilities classified in Stage 1 and over lifetime period for remaining instruments. It is additionally
adjusted to include the effect of reduction in exposure due to prepayments - Namely full prepayment ratio. Full
Prepayment Ratio (FPR) parameter represents the probability that a financial instrument will be fully prepaid during
the particular period to maturity. For the purpose of calculating Full Prepayment Ratio, the Group make the analysis of
the historical data of the contracts fully prepaid until the maturity. For revolving facilities, the Bank calculates the EAD
based on the expected limit utilisation percentage conditional on the default event.
Probability of default (PD)
Probability of default parameter reflects the likelihood of a default of a facility over a particular time horizon. It provides
an estimate of the likelihood that a borrower will be unable to meet its contractual debt obligations. The PD parameter
is time-dependent (i.e. has a specific term structure) and is applied to all non-defaulted contracts. Taking into account
specific nature of different segments of clients for which the PD is estimated as well as unique characteristics that
drive their default propensity, the PD is modelled differently for Retail and Micro segments and Corporate and SME
segments. PD assessment approach is also differentiated for different time horizons and is further adjusted due to
expected influence of macroeconomic variables as forecasted for the period (see ‘Forward Looking Information”
section for further details on incorporation of macroeconomic expectations in ECL calculation). FLI adjustment is
applied on PD for the three-year period, given the uncertainty involved in the macroeconomic forecasts for the longer
time horizon. Two types of PDs are used for calculating ECLs: 12-month and lifetime PD. Lifetime PDs represent the
estimated probability of a default occurring over the remaining life of the financial instrument and it is a sum of the 12
months marginal PDs over the life of the instrument. The Group generally uses number-based approach of PD model
construction, however for the nonhomogeneous portfolio’s, exposure-weighted approach is utilised. The Group uses
different statistical approaches such as the extrapolation of 12-month PDs based on migration matrixes, developing
lifetime PD curves based on the historical default data and gradual convergence of long-term PD with the long-term
default rate.
236
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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
Loss given default (LGD)
The LGD parameter represents the share of an exposure that would be irretrievably lost if a borrower defaults. For
Stage 1 and Stage 2 financial instruments, the LGD is estimated for each period in the instrument’s lifetime and reflects
the share of the expected EAD for that period that will not be recovered over the remaining lifetime of the instrument
after the default date. For Stage 3 financial instruments, the LGD represents the share of the EAD as of reporting
date that will not be recovered over the remaining life of that instrument. Assessment of LGD varies by the type of
counterparty, segment, type of product, securitization level, availability of historical observations and portfolio sale.
The general LGD estimation process employed by the Group is based on the assumption that after the default of the
exposure, two mutually exclusive scenarios are possible. Non-sold scenario-The exposure either leaves the default
state (cure scenario) or does not leave the default state and will be subject to recovery process (non-cure scenario);
Sold scenario- exposure is sold. The probability that an exposure is sold, probability of a cure and the probability that
a cured exposure defaults again are all determined in the estimation process. Risk parameters applicable to both
sub-scenarios, i.e. cure rates and recovery rates, are estimated by means of migration matrices approach, whereas the
probability of sale is determined by expert judgement until enough data is gathered to allow for statistical estimation.
For each LGD portfolio the Group defines the recovery horizon for non-sold exposures and maximum period for
an exposure to be sold (which is set at the average time-to-sale), after which no material recoveries are assumed.
Recovery horizon is defined by data analytics and expert judgment. For certain portfolios based on the limitations of
observations alternative versions of the general approach may be applied. For significant corporate exposures, the
Group uses the LGD modelling approach that is based on realized recoveries from historical defaults, adjusted with
approximation of future recoveries from individually assessed defaulted exposures. In order to model LGD for SME
and non-significant corporate borrowers, the Group is estimating recoverable amount from the collateral and assumes
that no recoveries from cash is expected. In order to estimate recoverable amount from the collateral the Group is
applying respective haircuts defined for different types of collateral and discounts them using effective interest rate
over the realization period. In addition, at each reporting date, the Group makes the decision which historical data
horizon should be used in order to model recoveries.
Forward-looking information
The measurement of unbiased, probability weighted ECL requires inclusion of forward-looking information obtainable
without undue cost or effort. For forward-looking information purposes, the Group defines three macro scenarios.
The scenarios are defined as baseline (most likely), upside (better than most likely) and downside (worse than most
likely) scenarios of the state of the economy. To derive the baseline macro-economic scenario, the Group takes into
the account forecasts from various external sources – the National Bank of Georgia, Ministry of Finance, International
Monetary Fund (IMF) as well as other International Financial Institutions (IFIs) – in order to ensure the alignment to the
consensus market expectations. Upside and downside scenarios are defined based on the framework developed by
the Group’s macroeconomic unit.
The Group uses statistical models and historical relationship between the various macroeconomic factors and default
observations to derive forward-looking adjustments. In case these models do not provide reasonable results either
from statistical or business perspective, the Group may apply expert judgment or use an alternative approach. As at
31 December 2024, the Group employs statistical models to derive forward looking adjustment in all segments except
for corporate. In corporate segment, due to the insignificance of the statistical models, the Group does not apply FLI
adjustment. The baseline, upside and downside scenarios were assigned probability weighing of 50%, 25% and 25%,
respectively.
The forward-looking information is incorporated in collective assessment of expected credit losses of retail and
MSME portfolios and individually assessed exposures.
Model maintenance and validation
The Group regularly reviews its methodology and assumptions to reduce any difference between the estimates and
the actual credit loss. Such back-testing (including back-casting) is performed at least once a year. As part of the back-
testing process, the Group evaluates actual realization of the risk parameters and their consistency with the model
estimates. Additionally staging criteria are also analysed within the back-testing process. The results of back-testing
the ECL measurement methodology are communicated to the Group Management and further actions for tuning the
models and assumptions are defined after discussions between authorised persons.
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
Risk governance
ECL impairment models were developed by internal credit risk governance division with the involvement of external
consultants. The division runs the models to calculate ECL each month. They are also responsible for model back-
testing, analytics and governance.
Economic scenarios and probability weights are prepared by macro-financial analysis unit.
All the assumptions, including PMAs and PMOs used in the ECL measurement go through a review and approval
process:
• Chief Economist reviews and approves the forward-looking scenarios and respective weights;
• Internal allowance committee reviews and approves appropriateness of the estimates and judgements as well as
PMAs and PMOs used in ECL measurement on a regular basis; internal committee includes Head of ERM, Heads
of Portfolio Credit Risk Management divisions and CRO, who ultimately approves ECL results as of each reporting
date.
• Models used in calculation, as well as back-testing process is also validated by the model risk management division.
Climate risk. The Group’s largest operations are located in Georgia hence the climate risk overview is done by the
management from Georgian perspective. The Georgia’s 2030 Climate Change Strategy and Climate Action Plan
lays out different policy measures on which TBC Bank based its identification of the potential impact of the policy
measures on different economic sectors. As a summary of the potential impact of the various transition risks and
physical risks identified, the transitional risks in Georgia are low, considering, that trade and services dominate the
Georgian economy, the policy measures outlined in the Georgia’s 2030 Climate Change Strategy will have overall
low impact on the economic sectors, especially in short and medium term. The Georgia’s 2030 Climate Change
Strategy takes into consideration that Georgia is a transitional and growing economy, and therefore the government
strategy is not to impede the growth of the GDP with policy measures and rather to support a smooth transition where
necessary. It is worth noting, that the economic sectors most affected by transitional risks world-wide such as mining
crude petroleum, natural gas and metal ores, manufacturing coke and refined petroleum products are present to a
very limited extend in Georgia, resulting in a low overall impact of transitional measures on economic growth, if any.
In order to increase the understanding of climate-related risks on its loan portfolio, the Bank performed a high-level
sectoral risk assessment, as different sectors might be vulnerable to different climate-related risks over different time
horizons; furthermore, the Bank performed climate stress testing of the credit portfolio. The maturity structure of the
loan portfolio shows that the largest part of assets is distributed in the time horizons that are much shorter than the
impacts of climate change, especially of physical risks, can be materialized in Georgia. Therefore, the bank has not
made any adjustment to the level of provisions purely related to climate risk. On the other hand, the understanding of
climate related risks, which have longer-term impacts need to be increased in coming years, therefore, when the bank
has a more definitive analysis, it will further develop the approach, how to consider climate risks in provisioning. No
post model adjustments (PMAs) or Post model overlays (PMOs) have been posted for 2024 in this regard.
Geographical risk concentrations
Assets, liabilities, credit related commitments and performance guarantees have generally been attributed to
geographic regions based on the country in which the counterparty is located. Balances legally outstanding to/from
off-shore companies which are closely related to Georgian counterparties are allocated to the caption “Georgia”. Cash
on hand and premises and equipment have been allocated based on the country in which they are physically held.
Tables below includes geographical concentration by country of incorporation. Loans and advances to OECD and
Non-OECD resident customers, as well as to Georgian customers, are issued to the entities most of which are based
and performing in Georgia.
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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
in thousands of GEL
Georgia
OECD
Non-OECD
Total
Assets
Cash and cash equivalents
1,242,758
1,525,239
50,113
2,818,110
Due from other banks
9,223
10,907
23
20,153
Mandatory cash balances with NBG
2,576,731
-
-
2,576,731
Loans and advances to customers
23,464,645
439,607
283,092
24,187,344
Investment securities
2,843,367
1,926,150
595,107
5,364,624
Repurchase receivables
-
140,058
-
140,058
Finance lease receivables
429,435
-
3,226
432,661
Other financial assets
269,809
126,301
29,895
426,005
Total financial assets
30,835,968
4,168,262
961,456
35,965,686
Non-financial assets
1,686,614
225
2,765
1,689,604
Total assets
32,522,582
4,168,487
964,221
37,655,290
Liabilities
Due to credit institutions
3,975,766
2,724,140
616,726
7,316,632
Customer accounts
17,895,389
1,396,081
2,649,752
21,941,222
Debt securities in issue
109,141
-
-
109,141
Additional Tier 1 capital subordinated
notes
1,062,960
-
-
1,062,960
Other financial liabilities
288,140
85,624
141
373,905
Lease liabilities
79,354
-
1,057
80,411
Subordinated debt
162,552
843,508
142,314
1,148,374
Total financial liabilities
23,573,302
5,049,353
3,409,990
32,032,645
Non-financial liabilities
166,022
647
1,147
167,816
Total liabilities
23,739,324
5,050,000
3,411,137
32,200,461
Net balance sheet position
8,783,258
(881,513)
(2,446,916)
5,454,829
Performance guarantees
1,434,295
471,593
85,499
1,991,387
Undrawn credit lines
612,776
1,309
1,106
615,191
Letters of credit issued
242,967
-
1,180
244,147
Financial guarantees issued
557,239
1,149
2,676
561,064
The geographical concentration of the Group’s assets and liabilities as of 31 December 2024 is set out below by
country of incorporation:
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
in thousands of GEL
Georgia
OECD
Non-OECD
Total
Assets
Cash and cash equivalents
1,685,000
1,968,167
38,065
3,691,232
Due from other banks
10,661
446
28
11,135
Mandatory cash balances with NBG
1,572,506
-
-
1,572,506
Loans and advances to customers
20,328,591
338,835
291,106
20,958,532
Investment securities
2,184,130
695,552
595,779
3,475,461
Finance lease receivables
363,303
-
7,492
370,795
Other financial assets
254,599
25,236
2,026
281,861
Total financial assets
26,398,790
3,028,236
934,496
30,361,522
Non-financial assets
1,407,504
201
1,909
1,409,614
Total assets
27,806,294
3,028,437
936,405
31,771,136
Liabilities
Due to credit institutions
1,696,854
1,997,341
652,756
4,346,951
Customer accounts
16,934,364
933,114
2,075,038
19,942,516
Debt securities in issue*
712,546
-
3,255
715,801
Additional Tier 1 capital subordinated
notes*
548,284
-
-
548,284
Other financial liabilities
214,346
61,882
268
276,496
Lease liabilities
82,482
-
928
83,410
Subordinated debt
153,323
578,675
136,732
868,730
Total financial liabilities
20,342,199
3,571,012
2,868,977
26,782,188
Non-financial liabilities
237,602
683
2,954
241,239
Total liabilities
20,579,801
3,571,695
2,871,931
27,023,427
Net balance sheet position
7,226,493
(543,258)
(1,935,526)
4,747,709
Performance guarantees
1,134,832
439,939
60,147
1,634,918
Undrawn credit lines
1,045,632
787
2,596
1,049,015
Letters of credit issued
282,757
-
914
283,671
Financial guarantees issued
509,855
1,065
777
511,697
The geographical concentration of the Group’s assets and liabilities as of 31 December 2023 is set out below by
country of incorporation:
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
Market risk. 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. Management sets risk
appetite limits on the value of risk that may be accepted, which is monitored on a regular basis. These limits provide
buffers over regulatory limits, ensuring early detection of potential losses in the event of more significant market
movements.
Currency risk. Foreign exchange rate 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
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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
mismatches in foreign currency assets and liabilities. The NBG requires the Bank to monitor both balance sheet and
total aggregate (including off-balance sheet) open currency positions and to maintain the later one within 20% of the
Bank’s regulatory capital. The Asset-Liability Management Committee (“ALCO”) has set limits on the level of exposure
by currency as well as on aggregate exposure positions which are more conservative than those set by the NBG. The
Bank’s compliance with such limits is monitored daily by the heads of the Treasury department and Financial Risk
Management division.
Currency risk management framework is governed through the Foreign Exchange Risk Management Policy. The
table below summarises the Group’s exposure to foreign currency exchange rate risk at the balance sheet date. While
managing open currency position the Group considers part of the provisions to be denominated in the USD, Euro and
other currencies. Gross amount of currency swap deposits is included in derivatives. Therefore, total financial assets
and liabilities below are not traceable with either balance sheet or liquidity risk management tables, where net amount
of gross currency swaps is presented.
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
As of 31 December 2024
in thousands of GEL
Monetary
financial
assets
Monetary
financial
liabilities
Derivatives
Net position
GEL
18,063,663
15,190,461
1,305,743
4,178,945
USD
12,957,258
13,366,016
242,210
(166,548)
EUR
4,829,498
3,323,537
(1,499,193)
6,768
Other
115,267
169,892
85,499
30,874
Total
35,965,686
32,049,906
134,259
4,050,039
As of 31 December 2023
in thousands of GEL
Monetary
financial
assets
Monetary
financial
liabilities
Derivatives
Net position
GEL
15,308,291
13,003,203
1,404,462
3,709,550
USD
10,221,224
11,037,953
684,157
(132,572)
EUR
4,671,064
2,585,038
(2,114,187)
(28,161)
Other
160,943
177,054
27,257
11,146
Total
30,361,522
26,803,248
1,689
3,559,963
USD strengthening by 15% (weakening 15%) would decrease Group’s profit or loss and equity in 2024 by GEL 24,982
thousand (increase by GEL 24,982 thousand). Euro strengthening by 15% (weakening 15%) would increase Group’s profit
or loss and equity in 2024 by GEL 1,015 thousand (decrease by GEL 1,015 thousand).
USD strengthening by 15% (weakening 15%) would decrease Group’s profit or loss and equity in 2023 by GEL 19,886
thousand (increase by GEL 19,886 thousand). Euro strengthening by 15% (weakening 15%) would decrease Group’s
profit or loss and equity in 2023 by GEL 4,224 thousand (increase by GEL 4,224 thousand).
Interest rate risk. Interest rate risk arises from potential changes in the market interest rates that can adversely affect
the fair value or future cash flows of the financial instrument. This risk can arise from maturity mismatches of assets and
liabilities, as well as from the re-pricing characteristics of such assets and liabilities.
The biggest share of the Bank’s deposits and loans are at fixed interest rates, while major part of the Bank’s borrowings
is at a floating interest rate. In addition, the Bank actively uses floating and combined1 interest rate structures in its loan
portfolio. In case of need, the Bank also applies for interest rate risk hedging instruments in order to mitigate interest
rate risk. 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 the Bank’s exposure to interest rate risk. The
management also believes that the Bank’s interest rate margins provide a reasonable buffer to mitigate the effect of
possible adverse interest rate movements.
1 In case of combined interest rates, interest rate is fixed for a pre-agreed term, and switches to floating interest rate after the term passes.
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
The Group employs an advanced framework for the management of interest rate risk by establishing appropriate
Risk Appetite limits, monitoring compliance with them and preparing forecasts. From September, 2020 the NBG
introduced regulation on interest rate risk and set the limit for Economic Value of Equity (EVE) sensitivity at 15% of
NBG Tier 1 Capital. The main principles and assumptions of NBG IRR methodology are in line with Basel standards
developed for IRR management purposes.
According to NBG guidelines the net interest income sensitivity under parallel shifts of interest rate scenarios is
maintained for monitoring purposes, while EVE sensitivity is calculated under 6 predefined stress scenarios of interest
rate changes and the limit is applied to the worst-case scenario result.
Interest rate risk is managed by the Balance Sheet Management division and is monitored by the ALCO, which decides
on actions that are necessary for effective interest rate risk management and follows up on their implementation.
Financial Risk Management division is responsible for developing procedures, policy document and setting risk
appetite for interest rate risk. The major aspects of interest rate risk management development and the respective
reporting are periodically provided to the Management Board, the Supervisory Board’s Risk Committee.
Following main assumptions under NBG IRR Regulation and Basel 2016 guidelines, at 31 December, 2024, if market
interest rates for each currency had been 200 basis points higher, with all other variables held constant, profit would
have been equivalent GEL 14 million lower, mainly as a result of relatively closed NII gaps and higher balances of
mandatory NBG USD reserves, which earn no interest in upward interest rate scenario (2023: GEL 24 million higher). If
market interest rates for each currency at 31 December, 2024 had been 200 basis points lower with all other variables
held constant, profit for the year would have been equivalent GEL 11 million higher, mainly as a result of relatively
closed NII gaps and higher balances of mandatory NBG USD reserves, which is not charged in downward interest rate
scenario unless interest rates turn negative (2023: GEL 42 million lower). Compared to the last year, in 2024 in both of
the scenarios the effects have been muted due to the relatively closed NII gaps.
At 31 December, 2024, if interest rates had been 200 basis points lower, with all other variables held constant, other
comprehensive income would have been GEL 100 million higher (2023: GEL 47.3 million), as a result of an increase in
the fair value of fixed rate financial assets measured at fair value through other comprehensive income and repurchase
receivables. If interest rates at 31 December, 2024 had been 200 basis points higher with all other variables held
constant, Other comprehensive income would have been GEL 100 million lower (2023: GEL 47.3 million), as a result of
decrease in the fair value of fixed rate financial assets measured at fair value through other comprehensive income.
Liquidity Risk. The liquidity risk is the risk that TBC Bank either does not have sufficient financial resources available
to meet all of its obligations and commitments as they fall due or can access those resources only at a high cost.
The risk is managed by the Balance Sheet Management division and Treasury Department and is monitored by the
ALCO, within their pre-defined functions. Financial Risk Management (FRM) division is responsible for developing
procedures, policy document and setting risk appetite on funding and market liquidity risk management. In addition,
FRM performs liquidity risk assessment and communicates the results to the MB and Risk Committee of the
Supervisory Board on a regular basis.
The principal objectives of the TBC Bank’s liquidity risk management policy are to: (i) ensure the availability of funds in
order to meet claims arising from total liabilities and off-balance sheet commitments, both actual and contingent, at an
economic price; (ii) recognise any structural mismatch existing within TBC Bank’s statement of financial position and
set monitoring ratios to manage funding in line with well-balanced growth; and (iii) monitor liquidity and funding on an
on-going basis to ensure that approved business targets are met without compromising the risk profile of the Bank.
The liquidity risk is categorised into two risk types: the funding liquidity risk and the market liquidity risk.
Funding liquidity risk is the risk that TBC will not be able to efficiently meet both expected and unexpected current
and future cash flow and collateral needs without affecting either its daily operations or its financial condition. To
manage funding liquidity risk TBC Bank uses the Liquidity Coverage ratio and the Net Stable Funding ratio set, forth
under Basel III, and defined further by the NBG. In addition, the Bank performs stress tests and “what-if” scenario
analysis. For NBG LCR the limits are set by currency (GEL, FC, Total). TBC monitors compliance with NBG LCR limits on
a daily basis. On a monthly basis the Bank also monitors compliance with the set limit for NBG NSFR.
The Liquidity Coverage Ratio is used to help manage short-term liquidity risks. The Bank’s liquidity risk management
framework is designed to comprehensively project cash flows arising from assets, liabilities and off-balance sheet
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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
items over certain time buckets and ensure that NBG LCR limits, are met on a daily basis.
The Net Stable Funding ratio is used for long-term liquidity risk management to promote resilience over a longer time
horizon by creating additional incentives for TBC Bank to rely on more stable sources of funding on a continuous
basis. The Bank also monitors deposit concentration for large deposits and sets the limits for non-Georgian residents’
deposits share in total deposit portfolio.
The Bank relies on relatively stable deposits from Georgia as the main source of funding. In order to maintain and
further enhance the liability structure TBC Bank sets the targets for deposits and IFI funding within the Bank’s risk
appetite.
The Bank’s liquidity position was strong as of 31 December 2024, both LCR and NSFR ratios above the NBG minimum
requirements of 100%.
Maturity analysis. The table below summarizes the maturity analysis of the Group’s financial liabilities, based on
remaining undiscounted contractual obligations as of 31 December 2024 subject-to-notice repayments are treated as
if notice were to be given immediately. However, the Group expects that many customers will not request repayment
on the earliest date the Group could be required to pay and the table does not reflect the expected cash flows
indicated by the Group’s deposit retention history.
The maturity analysis of undiscounted financial liabilities as of 31 December 2024 is as follows:
in thousands of GEL
Less than
3 months
From 3 to
12 months
From 1 to
5 Years
Over
5 years
Total
Due to credit institutions
4,092,984
983,942
2,644,733
129,029
7,850,688
Customer accounts – individuals
8,203,918
2,636,804
699,565
37,905
11,578,192
Customer accounts – other
8,558,454
540,630
1,781,545
93,607
10,974,236
Other financial liabilities
302,272
39,726
9,904
-
351,902
Lease liabilities
12,682
30,256
88,062
18,362
149,362
Subordinated debt
31,157
84,183
659,124
1,118,968
1,893,432
Debt securities in issue
2,851
8,543
98,486
19,302
129,182
Additional Tier 1 capital subordinated notes
9,364
95,695
420,233
1,052,814
1,578,106
Foreign exchange forwards and swaps:
– Inflows
(2,576,849)
(1,203,747)
(127,834)
- (3,908,430)
– Outflows
2,632,675
1,234,019
134,912
-
4,001,606
Performance guarantees
2,027,985
-
-
-
2,027,985
Financial guarantees
566,230
-
-
-
566,230
Letters of credit
121,989
143,145
15,199
-
280,333
Undrawn credit lines
615,191
-
-
-
615,191
Total potential future payments for financial
obligations
24,600,903
4,593,196
6,423,929
2,469,987
38,088,015
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
in thousands of GEL
Less than
3 months
From 3 to
12 months
From 1 to
5 Years
Over
5 years
Total
Due to credit institutions
2,025,151
614,741
2,111,466
158,151
4,909,509
Customer accounts – individuals
6,837,847
2,316,324
770,225
94,784
10,019,180
Customer accounts – other
8,502,324
519,089
1,121,045
190,490
10,332,948
Other financial liabilities
249,622
9,957
16,917
-
276,496
Lease liabilities
10,108
23,951
80,264
22,019
136,342
Subordinated debt
15,219
71,053
618,564
696,276
1,401,112
Debt securities in issue*
3,002
643,448
100,104
20,147
766,701
Additional Tier 1 capital subordinated notes*
8,970
45,193
216,650
537,880
808,693
Foreign exchange forwards and swaps:
– Inflows
(2,636,719)
(165,372)
(213,640)
-
(3,015,731)
– Outflows
2,681,271
167,390
229,544
-
3,078,205
Performance guarantees
1,692,739
-
-
-
1,692,739
Financial guarantees
516,119
-
-
-
516,119
Letters of credit
135,347
164,018
11,118
-
310,483
Undrawn credit lines
1,049,014
-
-
-
1,049,014
Total potential future payments for financial
obligations
21,090,014
4,409,792
5,062,257
1,719,747
32,281,810
The maturity analysis of undiscounted financial liabilities as of 31 December 2023 is as follows:
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
The undiscounted financial liability analysis gap does not reflect the historical stability of the current accounts. Their
liquidation has historically taken place over a longer period than the one indicated in the tables above. These balances
are included in amounts due in less than three months in the tables above. Accordingly, the table does not reflect the
Management’s expectations as to actual cash outflows.
Term deposits included in the customer accounts are classified based on remaining contractual maturities, however,
according to the Georgian Civil Code, individuals have the right to withdraw their deposits prior to maturity, if they
partially or fully forfeit their right to accrued interest and the Group is obliged to repay such deposits upon the
depositor’s demand. Based on the Bank’s deposit retention history, the Management does not expect that many
customers will require repayment on the earliest possible date.
The Group does not use the above undiscounted maturity analysis to manage liquidity as it shows contractual terms
purely and disregard the actual expected behaviour of the instruments. Instead, the Group monitors the liquidity
gap analysis based on the expected maturities. In particular, expected maturities disclosure include customers’
deposits and contingent liabilities according to their behavioural analysis, while for undiscounted cash flow disclosure
purposes, demand deposits are put in on demand bucket.
244
245
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
in thousands of GEL
Less than
3 months
From 3 to
12 months
From 1 to
5 Years
Over
5 years
Total
Cash and cash equivalents
2,818,110
-
-
-
2,818,110
Due from other banks
-
8,595
10,910
648
20,153
Mandatory cash balances with NBG
2,576,731
-
-
-
2,576,731
Loans and advances to customers
2,423,040
4,480,304
10,608,623
6,675,377
24,187,344
Investment securities
5,364,624
-
-
-
5,364,624
Repurchase receivables
-
140,058
-
-
140,058
Finance lease receivables
59,723
92,320
216,006
64,612
432,661
Other financial assets
354,773
55,015
16,217
-
426,005
Total financial assets
13,597,001
4,776,292
10,851,756
6,740,637 35,965,686
in thousands of GEL
Less than
3 months
From 3 to
12 months
From 1 to
5 Years
Over
5 years
Total
Cash and cash equivalents
3,691,232
-
-
-
3,691,232
Due from other banks
10,029
446
-
660
11,135
Mandatory cash balances with NBG
1,572,506
-
-
-
1,572,506
Loans and advances to customers
1,901,522
4,065,620
8,610,524
6,380,866 20,958,532
Investment securities*
3,475,461
-
-
-
3,475,461
Finance lease receivables
48,516
75,836
192,381
54,062
370,795
Other financial assets
242,829
36,720
2,312
-
281,861
Total financial assets
10,942,095
4,178,622
8,805,217
6,435,588
30,361,522
As at 31 December 2024 the analysis by expected maturities of financial assets is as follows:
As at 31 December 2023 the analysis by expected maturities of financial assets is as follows:
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
As at 31 December 2024 the analysis by expected maturities is as follows:
in thousands of GEL
Less than
3 months
From 3 to
12 months
Over
1 years
Total
Cash and cash equivalents
2,818,110
-
-
2,818,110
Due from other banks
-
8,595
11,558
20,153
Mandatory cash balances with NBG
2,576,731
-
-
2,576,731
Loans and advances to customers
2,423,040
4,480,304
17,284,000
24,187,344
Investment securities
5,364,624
-
-
5,364,624
Repurchase receivables
-
140,058
-
140,058
Finance lease receivables
59,723
92,320
280,618
432,661
Other financial assets
354,773
55,015
16,217
426,005
Total financial assets
13,597,001
4,776,292
17,592,393 35,965,686
Due to credit institutions
4,060,929
802,585
2,453,118
7,316,632
Customer accounts
1,667,533
175,530
20,098,159
21,941,222
Debt securities in issue
2,801
7,947
98,393
109,141
Additional Tier 1 capital subordinated notes
9,279
90,240
963,441
1,062,960
Other financial liabilities
324,275
39,726
9,904
373,905
Lease liabilities
7,608
16,116
56,687
80,411
Subordinated debt
21,853
8,591
1,117,930
1,148,374
Total financial liabilities
6,094,278
1,140,735
24,797,632 32,032,645
Net liquidity gap as of 31 December 2024
7,502,723
3,635,557
(7,205,239)
3,933,041
Cumulative gap as of 31 December 2024
7,502,723
11,138,280
3,933,041
246
247
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
35. FINANCIAL AND OTHER RISK MANAGEMENT CONTINUED
As at 31 December 2023 the analysis by expected maturities is as follows:
in thousands of GEL
Less than
3 months
From 3 to
12 months
Over
1 years
Total
Cash and cash equivalents
3,691,232
-
-
3,691,232
Due from other banks
10,029
446
660
11,135
Mandatory cash balances with NBG
1,572,506
-
-
1,572,506
Loans and advances to customers
1,901,522
4,065,620
14,991,390 20,958,532
Investment securities
3,475,461
-
-
3,475,461
Finance lease receivables
48,516
75,836
246,443
370,795
Other financial assets
242,829
36,720
2,312
281,861
Total financial assets
10,942,095
4,178,622
15,240,805
30,361,522
Due to credit institutions
2,002,664
461,016
1,883,271
4,346,951
Customer accounts
1,651,240
257,259
18,034,017
19,942,516
Debt securities in issue*
2,933
623,991
88,877
715,801
Additional Tier 1 capital subordinated notes*
8,886
352,118
187,280
548,284
Other financial liabilities
249,622
9,956
16,918
276,496
Lease liabilities
6,944
14,539
61,927
83,410
Subordinated debt
7,164
8,298
853,268
868,730
Total financial liabilities
3,929,453
1,727,177
21,125,558
26,782,188
Net liquidity gap as of 31 December 2023
7,012,642
2,451,445
(5,884,753)
3,579,334
Cumulative gap as of 31 December 2023
7,012,642
9,464,087
3,579,334
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
The Management believes that the Group has sufficient liquidity to meet its current on- and off-balance sheet
obligations.
36. CONTINGENCIES AND COMMITMENTS
Legal and regulatory matters. When determining the level of provision to be set up with regards to such matters,
or the amount (not subject to provisioning) to be disclosed in the financial statements, the management seeks both
internal and external professional advice. The management believes that the provision recorded in these consolidated
financial statements is adequate and the amount (not subject to provisioning) need not be disclosed as it will not have
a material adverse effect on the financial condition or the results of future operations of the Group.
Tax legislation. Georgian and Azerbaijanian tax and customs legislation is subject to varying interpretations, and
changes, which can occur frequently. The management’s interpretation of the legislation as applied to the Group’s
transactions and activity may be challenged by the relevant authorities. In Azerbaijan, the tax review periods for the
five preceding calendar years remain open to review by authorities. In Georgia, the period of limitation for tax review
is three years. To respond to the risks, the Group has engaged external tax specialists to carry out periodic reviews
of Group’s taxation policies and tax filings. The Group’s management believes that its interpretation of the relevant
legislation is appropriate, and the Group’s tax and customs positions will be substantially sustained.
Compliance with covenants. The Group is subject to certain financial and non-financial covenants primarily related to
its borrowed funds. All these borrowed funds are subject to covenants, and the Group must remain in compliance with
these covenants at all times. Non-compliance with such covenants may result in negative consequences for the Group
including mandatory prepayment and declaration of default. The Group was in compliance with all covenants as of 31
December 2024 and 31 December 2023. Group’s financial covenants mainly consist of three major sub-categories. Key
covenants within each category and their compliance status are disclosed below:
Covenant Description
Status
Liquidity
Net Stable Funding Ratio (NSFR)
Complied
Liquidity Coverage Ratio (LCR)
Complied
Net loan to deposit and funding ratio
Complied
Capital Adequacy
Tier 1 capital ratio
Complied
Total capital ratio
Complied
Asset Quality
Net problem loans to total capital
Complied
Par 90 to Total Loan portfolio
Complied
Net Problem assets to total capital
Complied
For all financial covenants the Group monitors risks related to its potential breach.
Management of Capital. The Bank manages capital requirements under regulatory rules. The Bank complied with
all its imposed capital requirements for the year 2024 and 2023. Based on information provided internally to key
management personnel, the amount of capital that the Bank managed (the Bank’s total equity adjusted for regulatory
corrections) was GEL 4,843,167 thousand as of 31 December 2024 (2023: GEL 4,235,033 thousand), regulatory Tier 1
capital amounts to GEL 5,895,717 thousand (2023: GEL 4,772,913 thousand), total regulatory capital amounts to GEL
6,861,963 thousand (2023: GEL 5,374,301 thousand).
Credit related commitments and financial guarantees. The primary purpose of these instruments is to ensure that
funds are available to a customer as required. Financial guarantees and standby letters of credit, which represent the
irrevocable assurances that the Group will make payments in the event that a customer cannot meet its obligations to
third parties, carry the same credit risk as loans. Documentary and commercial letters of credit, that are underwritten
by the Group on behalf of a customer authorising a third party to draw drafts on the Group up to a stipulated amount
under specific terms and conditions, are collateralised by the underlying shipments of goods to which they relate or
cash deposits and therefore carry less risk than a direct borrowing.
248
249
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
36. CONTINGENCIES AND COMMITMENTS CONTINUED
in thousands of GEL
Stage 1
Stage 2
Stage 3
Undrawn credit lines
587,473
22,296
5,422
Letters of credit issued
244,147
-
-
Financial guarantees issued
558,990
2,001
73
Total credit related commitments (before provision)
1,390,610
24,297
5,495
in thousands of GEL
Stage 1
Stage 2
Stage 3
Undrawn credit lines
1,031,588
13,388
4,039
Letters of credit issued
283,671
-
-
Financial guarantees issued
509,835
1,139
723
Total credit related commitments (before provision)
1,825,094
14,527
4,762
Credit loss allowance for credit related commitments
Undrawn credit lines
(1,662)
(146)
-
Letters of credit issued
(327)
-
-
Financial guarantees issued
(762)
-
-
Credit loss allowance for credit related commitments
(2,751)
(146)
-
Total credit related commitments
1,387,859
24,151
5,495
Credit loss allowance for credit related commitments
Undrawn credit lines
(1,268)
(219)
-
Letters of credit issued
(428)
-
-
Financial guarantees issued
(783)
-
-
Credit loss allowance for credit related commitments
(2,479)
(219)
-
Total credit related commitments
1,822,615
14,308
4,762
Commitments to extend credit represent unused portions of authorisations to prolong credit in the form of loans,
guarantees or letters of credit. With respect to credit risk on commitments to extend credit, the Group is potentially
exposed to a loss in an amount equal to the total unused commitments. However, the likely amount of loss is lower than
the total unused commitments since most commitments to extend credit are contingent upon customers maintaining
specific credit standards. The Group monitors the term to maturity of credit related commitments because longer-
term commitments generally have a greater degree of credit risk than shorter-term ones.
As of 31 December 2024, outstanding credit related commitments presented by stages are as follows:
As of 31 December 2023, outstanding credit related commitments presented by stages are as follows:
36. CONTINGENCIES AND COMMITMENTS CONTINUED
The credit quality of contingencies and commitments is as follows at 31 December 2024:
31 December 2024
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(lifetime ECL
for SICR)
Stage 3
(lifetime ECL
for defaulted)
Total
Undrawn credit lines risk category
– Very low
545,410
890
-
546,300
– Low
37,283
15,650
-
52,933
– Moderate
4,779
4,811
-
9,590
– High
1
945
-
946
– Default
-
-
5,422
5,422
Gross carrying amount
587,473
22,296
5,422
615,191
Credit loss allowance
(1,662)
(146)
-
(1,808)
Letters of credit issued risk category
– Very low
244,147
-
-
244,147
– Low
-
-
-
-
– Moderate
-
-
-
-
– High
-
-
-
-
– Default
-
-
-
-
Gross carrying amount
244,147
-
-
244,147
Credit loss allowance
(327)
-
-
(327)
Financial guarantees issued risk category
– Very low
558,463
-
-
558,463
– Low
406
1,735
-
2,141
– Moderate
121
266
-
387
– High
-
-
-
-
– Default
-
-
73
73
Gross carrying amount
558,990
2,001
73
561,064
Credit loss allowance
(762)
-
-
(762)
250
251
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
36. CONTINGENCIES AND COMMITMENTS CONTINUED
31 December 2023
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(lifetime ECL
for SICR)
Stage 3
(lifetime ECL
for defaulted)
Total
Undrawn credit lines risk category
– Very low
978,851
3,999
-
982,850
– Low
48,596
4,454
-
53,050
– Moderate
4,140
3,895
-
8,035
– High
1
1,040
-
1,041
– Default
-
-
4,039
4,039
Gross carrying amount
1,031,588
13,388
4,039
1,049,015
Credit loss allowance
(1,268)
(219)
-
(1,487)
Letters of credit issued risk category
– Very low
283,671
-
-
283,671
– Low
-
-
-
-
– Moderate
-
-
-
-
– High
-
-
-
-
– Default
-
-
-
-
Gross carrying amount
283,671
-
-
283,671
Credit loss allowance
(428)
-
-
(428)
Financial guarantees issued risk category
– Very low
508,916
-
-
508,916
– Low
891
1,139
-
2,030
– Moderate
28
-
-
28
– High
-
-
-
-
– Default
-
-
723
723
Gross carrying amount
509,835
1,139
723
511,697
Credit loss allowance
(783)
-
-
(783)
The credit quality of contingencies and commitments is as follows at 31 December 2023:
The total outstanding contractual amount of undrawn credit lines, letters of credit, and guarantees does not
necessarily represent future cash requirements, as these financial instruments may expire or terminate without being
funded. Non-cancellable commitments as of 31 December 2024 were 234,369 GEL thousand (2023: 293,278 GEL
thousand).
Performance guarantees. Performance guarantees are contracts that provide compensation in case of another party
fails to perform a contractual obligation.
36. CONTINGENCIES AND COMMITMENTS CONTINUED
As of 31 December 2024, outstanding performance guarantees presented by stages are as follows:
in thousands of GEL
Stage 1
Stage 2
Stage 3
Outstanding amount
1,968,627
18,617
4,143
Credit loss allowance
(2,705)
(9)
(2,389)
Total performance guarantees
1,965,922
18,608
1,754
As of 31 December 2023, outstanding performance guarantees presented by stages are as follows:
The credit quality of performance guarantees is as follows at 31 December 2024:
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(lifetime ECL
for SICR)
Stage 3
(lifetime ECL
for defaulted)
Total
Performance guarantees risk category
– Very low
1,958,091
-
-
1,958,091
– Low
9,237
13,754
-
22,991
– Moderate
1,299
4,838
-
6,137
– High
-
25
-
25
– Default
-
-
4,143
4,143
Gross carrying amount
1,968,627
18,617
4,143
1,991,387
Credit loss allowance
(2,705)
(9)
(2,389)
(5,103)
in thousands of GEL
Stage 1
(12-months
ECL)
Stage 2
(lifetime ECL
for SICR)
Stage 3
(lifetime ECL
for defaulted)
Total
Performance guarantees risk category
– Very low
1,584,657
-
-
1,584,657
– Low
18,152
1,411
-
19,563
– Moderate
75
1,393
-
1,468
– High
-
-
-
-
– Default
-
-
29,230
29,230
Gross carrying amount
1,602,884
2,804
29,230
1,634,918
Credit loss allowance
(2,462)
(7)
(6,126)
(8,595)
The credit quality of performance guarantees is as follows at 31 December 2023:
in thousands of GEL
Stage 1
Stage 2
Stage 3
Outstanding amount
1,602,884
2,804
29,230
Credit loss allowance
(2,462)
(7)
(6,126)
Total performance guarantees
1,600,422
2,797
23,104
252
253
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
36. CONTINGENCIES AND COMMITMENTS CONTINUED
37. NON-CONTROLLING INTEREST
in thousands of GEL
Proportion of non-controlling
interest’s voting rights held
Profit attributable to non-
controlling interest
Accumulated non-controlling
interest in the subsidiary
United Financial Corporation JSC
0.47%
55
252
in thousands of GEL
Proportion of non-controlling
interest’s voting rights held
Profit attributable to
non-controlling interest
Accumulated non-controlling
interest in the subsidiary
United Financial Corporation JSC
0.47%
33
197
in thousands of GEL
Current
assets
Non-
current
assets
Current
liabilities
Non-
current
liabilities
Revenue
Profit
Total
comprehensive
income
Net cash
flows
United Financial
Corporation JSC
6,535
41,472
4,897
1,738
25,101
11,788
11,788
330
in thousands of GEL
Current
assets
Non-
current
assets
Current
liabilities
Non-
current
liabilities
Revenue
Profit
Total
comprehensive
income
Net cash
flows
United Financial
Corporation JSC
2,972
31,507
3,736
1,155
21,653
9,549
9,549
106
in thousands of GEL
2024
2023
GEL
1,736,983
1,681,587
USD
1,025,856
1,138,414
EUR
546,678
569,022
Other
102,272
90,278
Total
3,411,789
3,479,301
Fair value of credit related commitments was GEL 2,897 thousand as of 31 December 2024 (2023: GEL 2,698 thousand).
Total credit related commitments and performance guarantees are denominated in currencies as follows:
The following table provides information for each subsidiary with a non-controlling interest as of 31 December 2024:
Capital expenditure commitments. As of 31 December 2024, the Group has contractual capital expenditure
commitments amounting to GEL 123,044 thousand (2023: GEL 91,056 thousand). Out of total amount as at 31
December 2024, contractual commitments related to the head office construction amounted GEL 50,414 thousand
(2023: GEL 54,348 thousand).
The summarised financial information of these subsidiaries for the year ended 31 December 2024 was:
The following table provides information for each subsidiary with a non-controlling interest as of 31 December 2023:
The summarised financial information of these subsidiaries for the year ended 31 December 2023 was:
38. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES
As of 31 December 2024, financial instruments subject to offsetting, enforceable master netting and similar
arrangements were as follows:
in thousands of GEL
Gross amounts
before
offsetting in
the statement
of financial
position
(a)
Gross
amounts set
off in the
statement
of financial
position
(b)
Net amount
after
offsetting in
the statement
of financial
position
(c)=(a)-(b)
Amounts subject to master
netting and similar
arrangements not set off in
the statement of financial
position
Net
amount of
exposure
(c)-(d)-(e)
Financial
instruments
(d)
Cash collateral
received
(e)
Assets
Other financial assets:
– Receivables on credit card
services and money transfers
68,482
963
67,519
20,963
-
46,556
– Fair value of foreign exchange
forwards and swaps, included
in other financial assets
166,144
-
166,144
72,105
-
94,039
– Derivatives margin
13,501
-
13,501
13,501
-
-
Assets subject to offsetting,
master netting and similar
arrangement
248,127
963
247,164
106,569
-
140,595
Liabilities
Other financial liabilities:
– Payables on credit card
services and money transfers
21,926
963
20,963
20,963
-
-
– Fair value of foreign exchange
forwards and swaps, included
in other financial liabilities
93,176
-
93,176
72,105
13,501
7,570
Liabilities subject to offsetting,
master netting and similar
arrangement
115,102
963
114,139
93,068
13,501
7,570
254
255
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
in thousands of GEL
Gross amounts
before
offsetting in
the statement
of financial
position
(a)
Gross
amounts set
off in the
statement
of financial
position
(b)
Net amount
after
offsetting in
the statement
of financial
position
(c)=(a)-(b)
Amounts subject to master
netting and similar
arrangements not set off in
the statement of financial
position
Net
amount of
exposure
(c)-(d)-(e)
Financial
instruments
(d)
Cash collateral
received
(e)
Assets*
Other financial assets:
– Receivables on credit card
services and money transfers
73,056
-
73,056
34,628
-
38,428
– Fair value of foreign exchange
forwards and swaps, included
in other financial assets
41,038
-
41,038
797
-
40,241
– Derivatives margin
20,762
-
20,762
20,762
-
-
Assets subject to offsetting,
master netting and similar
arrangement
134,856
-
134,856
56,187
-
78,669
Liabilities*
Other financial liabilities:
– Payables on credit card
services and money transfers
34,628
-
34,628
34,628
-
-
– Fair value of foreign exchange
forwards and swaps, included
in other financial liabilities
62,474
-
62,474
797
20,762
40,915
Liabilities subject to offsetting,
master netting and similar
arrangement
97,102
-
97,102
35,425
20,762
40,915
38. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES CONTINUED
As of 31 December 2023, financial instruments subject to offsetting, enforceable master netting and similar
arrangements were as follows:
The amount set off in the statement of financial position reported in column (b) is the lower of (i) the gross amount
before offsetting reported in column (a) and (ii) the amount of the related instrument that is eligible for offsetting.
Similarly, the amounts in columns (d) and (e) are limited to the exposure reported in column (c) for each individual
instrument in order not to understate the ultimate net exposure.
The disclosure does not apply to loans and advances to customers and related customer deposits unless they are
netted-off in the statement of financial position.
39. DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, the Group enters into various derivative financial instruments, to manage currency,
liquidity and interest rate risks and for trading purposes.
in thousands of GEL
2024
2023
Fair value of foreign exchange forwards and swaps, included in other financial assets
166,144
41,038
Fair value of foreign exchange forwards and swaps, included in other financial liabilities
(93,176)
(62,474)
Total
72,968
(21,436)
Foreign Exchange Forwards and swaps
Foreign exchange derivative financial instruments the Group entered are generally traded in an over-the-counter
market with professional counterparties on standardised contractual terms and conditions. Derivatives have
potentially favourable (assets) or unfavourable (liabilities) conditions as a result of fluctuations in market interest rates,
foreign exchange rates or other variables relative to their terms. The aggregate fair values of derivative financial assets
and liabilities can fluctuate significantly from time to time.
The table below sets out fair values, at the balance sheet date, of currencies receivable or payable under foreign
exchange forwards and swaps the Group entered. The table reflects gross positions before the netting of any
counterparty positions (and payments) and covers the contracts with settlement dates after the respective balance
sheet date.
2024
2023
in thousands of GEL
Contracts
with
positive
fair value
Contracts
with
negative
fair value
Contracts
with
positive
fair value
Contracts
with
negative fair
value
Foreign exchange forwards and swaps: fair values, at the balance
sheet date, of
– USD payable on settlement (-)
(1,071,005) (3,420,255) (1,191,584)
(559,424)
– USD receivable on settlement (+)
4,283,353
431,473
68,788
2,345,437
– GEL payable on settlement (-)
(422,451)
(232,841)
(47,973)
(181,665)
– GEL receivable on settlement (+)
966,356
989,519 1,084,087
549,659
– EUR payable on settlement (-)
(3,546,479)
(187,570)
(33,344)
(2,309,183)
– EUR receivable on settlement (+)
31,965
2,165,510
132,593
93,920
– UZS payable on settlement (-)
(934)
(111,370)
-
(14,523)
– UZS receivable on settlement (+)
142,127
-
14,591
-
– Other payable on settlement (-)
(310,064)
(49,584)
(45,828)
(25,570)
– Other receivable on settlement (+)
93,276
321,942
59,708
38,875
Fair value of foreign exchange forwards and swaps
166,144
(93,176)
41,038
(62,474)
Net fair value of foreign exchange forwards and swaps
72,968
(21,436)
*In alignment with the Group’s internal reporting, this table has been updated by incorporating fair values of foreign exchange forwards and swaps and
derivative margin amounts into the table, providing additional useful information regarding the netting of other financial assets and liabilities.
256
257
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
GOVERNANCE
ADDITIONAL INFORMATION
MANAGEMENT REPORT
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
(a) Fair value hierarchy
Fair values of financial instruments are determined to a hierarchy that reflects the observability of significant market
inputs. The three levels of the fair value hierarchy are defined as following:
• Level 1 – Financial instruments if their value is observable in an active market.
• Level 2 - Financial instruments with quoted prices for similar instruments in active markets valued using models with
significant observable inputs are classified as level 2.
• Level 3 - Financial instruments valued using valuation techniques with significant inputs that are not based on
observable market data.
(b) Fair values of financial instruments carried at fair value
Recurring fair value measurements are those that the accounting standards require or permit in the statement of
financial position at the end of each reporting period. The level in the fair value hierarchy into which the recurring fair
value measurements are categorised as follows:
40. FAIR VALUE DISCLOSURES
31 December 2024
31 December 2023
in thousands of GEL
Level 1
Level 2
Level 3
Total fair
value
Level 1
Level 2
Level 3
Total fair
value
Assets carried at fair value
Financial assets
Investment securities measured at fair value through other comprehensive income
–
Corporate bonds
68,280
1,247,354
-
1,315,634
40,466
1,184,535
-
1,225,001
–
Foreign government treasury bills
1,395,638
-
- 1,395,638
303,850
-
-
303,850
–
Ministry of Finance of Georgia
treasury bills*
-
2,652,100
- 2,652,100
-
1,944,132
-
1,944,132
–
Repurchase receivables
140,058
-
-
140,058
-
-
-
-
–
Corporate shares
-
997
255
1,252
-
-
2,478
2,478
Investment securities measured at fair value through profit and loss
–
Foreign exchange forwards and
swaps, included in other financial
assets
-
166,144
-
166,144
-
41,038
-
41,038
–
Investment held at fair value through
profit or loss
-
-
-
-
-
-
8,062
8,062
Total assets recurring fair value
measurements
1,603,976 4,066,595
255 5,670,826
344,316
3,169,705
10,540 3,524,561
Liabilities carried at fair value
Financial liabilities
–
Foreign exchange forwards and
swaps, included in other financial
liabilities
-
93,176
-
93,176
-
62,474
-
62,474
Total liabilities recurring fair value
measurements
-
93,176
-
93,176
-
62,474
-
62,474
*In 2024, these instruments have been classified as level 2 following a reassessment of market activity.
40. FAIR VALUE DISCLOSURES CONTINUED
c) Level 3 fair value measurements
(i) Movements in Level 3 financial instruments
There were no transfers between levels 1, 2 and 3 during the year ended 31 December 2024 (2023: none).
(ii) Significant unobservable inputs to Level 3 financial instruments
The description of the valuation technique and the description of inputs used in the fair value measurement for level 3
measurements:
2024 Range
2023 Range
in thousands of GEL
Valuation
technique
Significant
unobservable
inputs
Min
Max
Min
Max
Units
Assets carried at fair value
- Corporate shares
Asset-based
approach
Book value per
share
1.00
33.00
1.00
33.00
GEL
– Investment held at fair
value through profit or
loss
Discounted
cash flow
model
Weighted average
borrowing USD
interest rate
-
-
1.95
1.95
%
258
259
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
40. FAIR VALUE DISCLOSURES CONTINUED
31 December 2024
in thousands of GEL
Level 1
Level 2
Level 3
Total fair value
Carrying value
Financial assets
Cash and cash equivalents
848,814
1,969,296
-
2,818,110
2,818,110
Due from other banks
-
20,153
-
20,153
20,153
Mandatory cash balances with NBG
-
2,576,731
-
2,576,731
2,576,731
Loans and advances to customers:
– Corporate loans
-
-
9,691,963
9,691,963
9,794,792
– Consumer loans
-
-
3,579,019
3,579,019
3,458,407
– Mortgage loans
-
-
5,005,377
5,005,377
5,098,976
– Loans to micro, small and medium
enterprises
-
-
5,860,016
5,860,016
5,835,169
Finance lease receivables
-
-
512,490
512,490
432,661
Other financial assets
-
259,861
-
259,861
259,861
Non-financial assets
Investment properties, at cost
-
-
17,135
17,135
9,752
Total assets (excluding assets with no fair
value hierarchy)
848,814
4,826,041 24,666,000
30,340,855
30,304,612
Financial liabilities
Customer accounts
-
12,925,258
8,931,273
21,856,531
21,941,222
Debt securities in issue
-
108,526*
-
108,526
109,141
Due to credit institutions
-
-
7,316,299
7,316,299
7,316,632
Other financial and lease liabilities
-
361,140
-
361,140
361,140
Subordinated debt
-
-
1,140,070
1,140,070
1,148,374
Additional Tier 1 capital subordinated notes
1,072,860
-
-
1,072,860
1,062,960
Total liabilities (excluding liability with no
fair value hierarchy)
1,072,860
13,394,924
17,387,642
31,855,426
31,939,469
Performance guarantees
-
-
5,103
5,103
5,103
Financial guarantees
-
-
762
762
762
Credit related commitments
-
-
2,135
2,135
2,135
Total credit related commitments and
performance guarantees
-
-
8,000
8,000
8,000
There were no changes in the valuation technique for the level 2 and level 3 recurring fair value measurements during
the year ended 31 December 2024 (2023: none).
(d) Assets and liabilities not measured at fair value but for which fair value is disclosed
Fair values analysed by level in the fair value hierarchy and carrying value of assets not measured at fair value are as
follows:
40. FAIR VALUE DISCLOSURES CONTINUED
31 December 2023
in thousands of GEL
Level 1
Level 2
Level 3
Total fair value
Carrying value
Financial assets
Cash and cash equivalents
936,988
2,754,244
-
3,691,232
3,691,232
Due from other banks
-
11,135
-
11,135
11,135
Mandatory cash balances with NBG
-
1,572,506
-
1,572,506
1,572,506
Loans and advances to customers:
– Corporate loans
-
-
8,312,499
8,312,499
8,210,100
– Consumer loans
-
-
2,925,207
2,925,207
2,667,907
– Mortgage loans
-
-
5,156,836
5,156,836
4,702,477
– Loans to micro, small and medium
enterprises
-
-
5,489,839
5,489,839
5,378,048
Finance lease receivables
-
-
354,884
354,884
370,795
Other financial assets
-
232,761
-
232,761
232,761
Non-financial assets
Investment properties, at cost
-
-
21,903
21,903
15,235
Total assets (excluding assets with no fair
value hierarchy)
936,988
4,570,646
22,261,168
27,768,802
26,852,196
Financial liabilities
Customer accounts
-
13,628,412
6,312,485
19,940,897
19,942,516
Debt securities in issue**
615,192
87,505*
-
702,697
715,801
Due to credit institutions
-
-
4,345,484
4,345,484
4,346,951
Other financial and lease liabilities
-
297,432
-
297,432
297,432
Subordinated debt
-
-
860,433
860,433
868,730
Additional Tier 1 capital subordinated notes**
548,284
-
-
548,284
548,284
Total liabilities (excluding liability with no
fair value hierarchy)
1,163,476
14,013,349
11,518,402
26,695,227
26,719,714
Performance guarantees
-
-
8,595
8,595
8,595
Financial guarantees
-
-
783
783
783
Credit related commitments
-
-
1,915
1,915
1,915
Total credit related commitments and
performance guarantees
-
-
11,293
11,293
11,293
* In 2024, these instruments have been classified as level 2 following a reassessment of market activity.
**To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
260
261
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
40. FAIR VALUE DISCLOSURES CONTINUED
41. PRESENTATION OF FINANCIAL INSTRUMENTS BY MEASUREMENT CATEGORY
in thousands of GEL
Amortised
cost
Fair value through other
comprehensive income
Fair value through
profit or loss
Total
Assets
Cash and cash equivalents
2,818,110
-
-
2,818,110
Due from other banks
20,153
-
-
20,153
Mandatory cash balances with NBG
2,576,731
-
-
2,576,731
Loans and advances to customers
24,187,344
-
-
24,187,344
Investment securities
-
5,364,624
-
5,364,624
Repurchase receivable
-
140,058
-
140,058
Other financial assets
259,861
-
166,144
426,005
Total financial assets subject to IFRS 9
measurement categories
29,862,199
5,504,682
166,144
35,533,025
Finance lease receivables
-
-
-
432,661
Non-financial assets
-
-
-
1,689,604
Total assets
29,862,199
5,504,682
166,144
37,655,290
The carrying amounts of cash and cash equivalents, due from other banks, other financial assets and liabilities,
subordinated debt, and credit related commitments and performance guarantees are considered to be a reasonable
approximation of fair value as they are short-term in nature or reprice to current market rates frequently.
The fair values in the level 2 and level 3 of fair value hierarchy were estimated using the discounted cash flows valuation
technique. The fair value of unquoted fixed interest rate instruments was calculated based on estimated future cash
flows expected to be received discounted at current interest rates for new instruments with similar credit risk and
remaining maturity. The fair value of investment properties was estimated using market comparatives.
Amounts due to credit institutions were discounted at the Group’s own incremental borrowing rate. Liabilities due
on demand were discounted from the first date that the Group could be required to pay the amount. There were no
changes in the valuation technique for the level 2 and level 3 measurements of assets and liabilities not measured at
fair values in the year ended 31 December 2024 (2023: none).
The following table provides a reconciliation of classes of financial assets with these measurement categories as of 31
December 2024:
41. PRESENTATION OF FINANCIAL INSTRUMENTS BY MEASUREMENT CATEGORY CONTINUED
42. RELATED PARTY TRANSACTIONS
in thousands of GEL
Amortised
cost
Fair value through other
comprehensive income
Fair value through
profit or loss
Total
Assets
Cash and cash equivalents
3,691,232
-
-
3,691,232
Due from other banks
11,135
-
-
11,135
Mandatory cash balances with NBG
1,572,506
-
-
1,572,506
Loans and advances to customers
20,958,532
-
-
20,958,532
Investment securities*
-
3,475,461
-
3,475,461
Other financial assets
232,761
-
49,100
281,861
Total financial assets subject to IFRS 9
measurement categories
26,466,166
3,475,461
49,100
29,990,727
Finance lease receivables
-
-
-
370,795
Non-financial assets
-
-
-
1,409,614
Total assets
26,466,166
3,475,461
49,100
31,771,136
Pursuant to IAS 24 “Related Party Disclosures”, parties are generally considered to be related if the parties are under
common control or one party has the ability to control the other or it can exercise significant influence over the other
party in taking financial or operational decisions. In considering each possible related party relationship, attention is
directed to the substance of the relationship, not merely the legal form:
• The key management personnel include the Management Board of the Bank.
• Related parties not included key management personnel are presented in other related parties.
Transactions between the Bank and its subsidiaries also meet the definition of related party transactions.
The following table provides a reconciliation of classes of financial assets with these measurement categories as of 31
December 2023:
For the measurement purposes, IFRS 9 classifies financial assets into the categories discussed in Note 2.
As of 31 December 2024, and 2023 all of the Group’s financial liabilities except for derivatives are carried at amortised
cost. Derivatives belong to the assets fair value through profit or loss measurement category under IFRS 9.
*To improve the quality and understandability of the consolidated statement of financial position, the Group has revisited presentation of these line
items. Further details are disclosed in note 2.
262
263
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
in thousands of GEL
Contractual
interest rate
Key
management
personnel
Other related
parties
Associates
Immediate
parent
Companies
under
common
control
2024
Gross amount of loans and
advances to customers
4.8%-36.0%
826
1,759
-
-
-
Customer accounts
0%-12.2%
10,411
43,839
5,798
66,882
66,266
Guarantees
-
-
-
-
-
276
2023
Gross amount of loans and
advances to customers
3.9%-36.0%
5,655
1,451
-
-
-
Credit loss allowance for loans and
advances to customers
-
-
1
-
-
-
Customer accounts
0%-12.4%
6,693
13,254
4,386
99,075
47,791
Guarantees
-
-
-
-
-
223
in thousands of GEL
Key
management
personnel
Other related
parties
Associates
Immediate
parent
Companies
under
common
control
2024
Interest income - loans and advances to
customers
100
359
-
-
-
Interest expense
342
968
248
2,661
6,009
Fee and commission income
14
75
4
14
1,236
Administrative and other operating expenses
(excluding staff costs)
423
599
-
-
-
2023
Interest income - loans and advances to
customers
248
96
-
-
-
Interest expense
348
236
183
9,280
5,060
Fee and commission income
18
82
2
8
1,625
Administrative and other operating expenses
(excluding staff costs)
727
795
-
-
-
42. RELATED PARTY TRANSACTIONS CONTINUED
As at 31 December 2024 and 2023 the Group’s outstanding balances with related parties were as follows:
The Group’s income and expense items with related parties except from key management compensation for the year
2024 and 2023 were as follows:
in thousands of GEL
Key management personnel
Other related parties
2024
Amounts disbursed to related parties during the year
2,496
1,671
Amounts repaid by related parties during the year
(4,658)
(4,699)
2023
Amounts disbursed to related parties during the year
2,081
2,435
Amounts repaid by related parties during the year
(2,882)
(2,003)
42. RELATED PARTY TRANSACTIONS CONTINUED
The aggregate loan amounts disbursed to and repaid by related parties during 2024 and 2023 were as follows:
As of 31 December 2024, and 2023 transactions and balances of the Bank with its subsidiaries were as follows:
in thousands of GEL
Contractual
interest rate
31 December
2024
Contractual
interest rate
31 December
2023
Gross amount of loans and advances granted to
subsidiaries
15.5%
15,045
12%-13%
20,082
Customer accounts of subsidiaries
0%-10.2%
199,626
0%-11.5%
172,587
Other Financial Assets
-
39,497
-
101,945
Other Financial Liabilities
-
8,921
-
6,681
Investment in subsidiaries
-
31,453
-
31,453
in thousands of GEL
31 December 2024
31 December 2023
Interest income
4,693
4,908
Interest expense
9,307
7,885
Fee and commission income
16,817
11,761
Fee and commission expense
57,076
48,347
Other operating income
17,129
21,311
Administrative and other operating expense
2,228
3,974
The income and expense items for the Bank with its subsidiaries were as follows:
As of 31 December 2024, and 2023 detailed breakdown of the Bank’s investment in subsidiaries and associates is as
follows:
in thousands of GEL
31 December 2024
31 December 2023
TBC Kredit LLC
12,760
12,760
TBC Leasing JSC
11,777
11,777
CreditInfo Georgia JSC
3,648
3,007
United Financial Corporation JSC
2,275
2,275
TBC Invest-Georgia LLC
1,883
1,883
TBC Capital LLC
1,838
1,838
TBC Asset Management LLC
850
850
TBC Pay LLC
70
70
Investment in subsidiaries and associates*
35,101
34,460
*Considering the immaterial movement between the years no detailed disclosure is made for changes compared to the prior year.
264
265
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
42. RELATED PARTY TRANSACTIONS CONTINUED
43. EVENTS AFTER REPORTING PERIOD
in thousands of GEL
2024
2023
Salaries and short-term bonuses
11,208
10,666
Equity-settled share-based compensation
9,972
11,695
Total
21,180
22,361
*Considering the immaterial movement between the years no detailed disclosure is made for changes compared to the prior year.
As of 31 December 2024, and 2023 detailed breakdown of the Group’s investment in associates is as follows:
On 11 February 2025 TBC Bank JSC has declared a final dividend for the year 2025 of GEL 6.11 per TBC Bank JSC share.
in thousands of GEL
31 December 2024
31 December 2023
Creditinfo Georgia JSC
3,648
3,007
Georgian Stock Exchange JSC
202
202
Tbilisi Stock Exchange JSC
816
995
Investment in associates*
4,666
4,204
Compensation of the key management personnel and Supervisory Board members is presented below:
* The Group holds a 33.33% ownership stake in University Development Fund, with a carrying amount of GEL 10 thousand as of 2024 (2023: GEL 10
thousand).
** The Group holds a 14.48% ownership stake in Givi Zaldastanishvili American Academy in Georgia JSC, with a carrying amount of GEL 50 thousand as
of 2024 (2023: GEL 50 thousand).
*** The Group holds a 25% ownership stake in United Clearing Centre JSC, with a carrying amount of GEL 162 thousand as of 2024 (2023: GEL 162
thousand).
A full list of related undertakings and the country of incorporation is set out below.
Company Name
Country of incorporation
JSC TBC Bank
7 Marjanishvili Street, 0102, Tbilisi, Georgia
United Financial Corporation JSC
154 Agmashenebeli Avenue, 0112, Tbilisi, Georgia
TBC Capital LLC
11 Chavchavadze Avenue, 0179, Tbilisi, Georgia
TBC Leasing JSC
76 Chavchavadze Avenue, 0162, Tbilisi, Georgia
TBC Kredit LLC
71-77, 28 May Street, AZ1010, Baku, Azerbaijan
TBC Pay LLC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
TBC Invest-Georgia LLC
7 Jabonitsky Street, 52520, Tel Aviv, Israel
TBC Invest International LLC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
University Development Fund*
1 Chavchavadze Avenue, 0128 , Tbilisi, Georgia
CreditInfo Georgia JSC
2 Tarkhnishvili Street, 0179, Tbilisi, Georgia
Natural Products of Georgia LLC
Georgia, Tbilisi, Vake District, Chavchavadze Avenue
I lane #2, apartment 59
Mobi Plus JSC
45 Vazha Pshavela Street, 0177, Tbilisi, Georgia
Mineral Oil Distribution Corporation JSC
11 Tskalsadeni Street, 0153, Tbilisi, Georgia
Georgian Card JSC
106 Beliashvili Street, 0159, Tbilisi Georgia
Georgian Central Securities Depositor JSC
Georgia, Tbilisi, Saburtalo district,Vazha-Pshavela avenue,
N 71, Office N 7, floor 7,block 10
Givi Zaldastanishvili American Academy in Georgia JSC**
37 Chavchavadze Avenue, 0162, Tbilisi Georgia
United Clearing Centre***
5 Sulkhan Saba Street, 0105, Tbilisi, Georgia
Banking and Finance Academy of Georgia
123, Agmashenebeli Avenue, 0112, Tbilisi, Georgia
Tbilisi's City JSC
15 Rustaveli Avenue, 0108, Tbilisi Georgia
TBC Trade LLC
11A Chavchavadze Ave, 0179, Tbilisi, Georgia
Tbilisi Stock Exchange JSC
Floor 2th block 8, 71 Vazha Pshavela Ave, Tbilisi, Georgia
Georgian Stock Exchange JSC
74a Chavchavadzis Avenue,Vake-Saburtalo,Tbilisi, Georgia
Kavkasreestri JSC
74a Chavchavadzis Avenue,Vake-Saburtalo,Tbilisi, Georgia
TBC Asset Management LLC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
Swift
1 Adele Avenue, B-1310, La Hulpe, Belgium
Diversified Credit Portfolio JSC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
Diversified Credit Portfolio 2 JSC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
Diversified Credit Portfolio 3 JSC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
Globally Diversified bond fund JSC
7 Marjanishvili Street, 0102, Tbilisi, Georgia
Additional Information
4
CHAPTER
268
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Bank
Joint Stock Company TBC Bank
Chairman
Chairman of Board of Directors of JSC TBC Bank
Code
The UK Corporate Governance Code
Company
TBC Bank Group PLC
Corporate and Investment Banking (CIB)
segment
A legal entity/group of affiliated entities with an annual revenue exceeding GEL 15.0
million or which has been granted facilities of more than GEL 6.0 million. Some other
business customers may also be assigned to the CIB segment or transferred to the
micro, small and medium enterprises (MSME) segment on a discretionary basis.
In addition, CIB includes wealth management (WM) private banking services to
high-net-worth individuals (HNWI) with a threshold of USD 250,000 on assets under
management (AUM), as well as on discretionary basis
DAU/MAU
Average daily active digital users divided by monthly active digital users. DAU/MAU is
calculated for the Bank internet and mobile banking only
Digital daily active users (DAU)
Monthly average number of individual digital users who logged into our digital
channels at least once per day
Digital monthly active users (MAU)
An individual user who logged into the digital application at least once during the
month
Director(s)
Members of the Board of TBC Bank Group PLC
ENPS (Employee Net Promoter Score)
The employee net promoter score measures employee loyalty and reflects the
likelihood of our colleagues recommending their workplace to their friends and family
ESG and Ethics Committee
Committee at the Board level to support and advise the Board of Directors in its
oversight of the ESG and climate-related matters
ESG Committee
Committee at the executive management level to support and advise the
management of TBC Bank in its oversight of the ESG and climate-related matters
Executive Management
Executive Management of JSC TBC Bank
Group
TBC Bank Group PLC and its subsidiary companies
Growth at constant currency basis
Refers to growth at fixed exchange rate of the starting period
Larisation
Larisation is a strategy implemented by the National Bank of Georgia (NBG) to reduce
the economy's dependence on foreign currencies and promote the stability of the
financial sector and broader economy
Monthly active cardholders (MACH)
Number of retail customers who made at least one transaction per month through
POS, e-commerce, or ATM using a TBC card
Micro loans
Includes collateralised business and agri loans up to GEL 1 million, as well as micro
businesses with a maximum turnover of GEL 2 million
MSME (Micro, Small and Medium) segment
Business customers (legal entities and private individual customers that generate
income from business activities) who are not included in the CIB segment
MSME monthly active customers
MSME legal entity that used Business mBank or iBank at least once, or had at least
one active credit product, or performed at least one debit transaction, or had any type
of deposit with a balance above a certain threshold
NPS (Net Promoter Score)
Net promoter score measures how willing customers are to recommend our products
and services to others
Retail monthly active customers
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 Uzbek
business, an individual user who logged into the digital application at least once
during the month
Retail segment
Non-business individual customers
Supervisory Board
Supervisory Board of Joint Stock Company TBC Bank
TBC Bank
TBC Bank Group PLC and its subsidiary companies
TBC Bank Group PLC
A public limited company registered in England and Wales. It is the parent company
of JSC TBC Bank (the Bank) and a group of companies that principally operate in
Georgia in the financial sector. It also offers non-financial services via TNET, the
largest digital ecosystem in Georgia. Since 2019, It has expanded its operations into
Uzbekistan by operating fast growing retail digital financial services in the country.
TBC Bank Group PLC is listed on the London Stock Exchange under the symbol
TBCG
TBC Capital
TBC Capital LLC
TBC JSC
TBC Bank JSC
TBC Leasing
TBC Leasing JSC
TBC PLC
TBC Bank Group PLC
TBCG
TBC Bank Group PLC
Glossary
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
GLOSSARY
270
271
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
Term
#
Type
Definition
Profitability
ROE
1
IFRS
based
Return on average total equity (ROE) equals profit attributable to owners divided by the monthly
average of total shareholders’ equity attributable to the equity holders for the same period;
annualised where applicable.
ROA
2
IFRS
based
Return on average total assets (ROA) equals profit of the period divided by monthly average
total assets for the same period; annualised where applicable.
Cost
to income
3
IFRS
based
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).
NIM
4
IFRS
based
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.
Loan
yields
5
IFRS
based
Loan yields equal interest income on loans and advances to customers divided by monthly
average gross loans and advances to customers; annualised where applicable.
Deposit rates
6
IFRS
based
Deposit rates equal interest expense on customer accounts divided by monthly average total
customer deposits; annualised where applicable.
Cost of funding
7
IFRS
based
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.
Asset quality & portfolio concentration
Cost of risk
8
IFRS
based
Cost of risk equals credit loss allowance for loans to customers divided by monthly average
gross loans and advances to customers; annualised where applicable.
PAR 90
to gross loans
9
IFRS
based
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.
NPLs
to gross loans
10 IFRS
based
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.
NPL provision
coverage
11
IFRS
based
NPL provision coverage equals total credit loss allowance for loans to customers divided by the
NPL loans.
Total NPL
coverage
12
IFRS
based
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.
Credit loss level
to gross loans
13
IFRS
based
Credit loss level to gross loans equals credit loss allowance for loans to customers divided by
the gross loan portfolio for the same period.
Related party loans
to gross loans
14 IFRS
based
Related party loans to total loans equals related party loans divided by the gross loan portfolio.
Top 10 Borrowers
to total portfolio
15
IFRS
based
Top 10 borrowers to total portfolio equals the total loan amount of the top 10 borrowers divided
by the gross loan portfolio.
Top 20 Borrowers
to total portfolio
16 IFRS
based
Top 20 borrowers to total portfolio equals the total loan amount of the top 20 borrowers divided
by the gross loan portfolio.
The Group utilises a wide range of alternative performance measures (APMs) to assess the Group’s performance.
These measures can be grouped under the following headings:
• Profitability
• Asset quality & portfolio concentration
• Capital & liquidity positions
Certain performance measures are calculated on standalone basis for the Bank only in order to highlight the
performance of the Bank, which is the major subsidiary of the Group, as well as facilitate peer comparison.
The regulatory performance measures are calculated in accordance with NBG’s requirements for the Bank only based
on local accounting standards.
Capital & liquidity positions
Net loans to
deposits plus
IFI funding
17
IFRS
based
Net loans to deposits plus IFI funding ratio equals net loans divided by total deposits plus
borrowings received from international financial institutions.
Leverage
18 IFRS
based
Leverage equals total assets to total equity
Net stable
funding ratio (NSFR)
Regulatory
based
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 only.
Liquidity
coverage ratio (LCR)
Regulatory
based
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 only.
CET 1 CAR
(Basel III)
Regulatory
based
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 only.
CET 1 CAR
(Basel III)
Regulatory
based
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 only.
CET 1 CAR
(Basel III)
Regulatory
based
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 only.
Alternative performance measures
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
ALTERNATIVE PERFORMANCE MEASURES
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273
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MANAGEMENT REPORT AND FINANCIAL STATEMENTS 2024
4
Reference to financial statements
2024
2023
Net interest income
Consolidated statement of profit and loss
and other comprehensive income
1,590,992
1,495,596
Monthly average interest earning assets
Not available
27,237,001
23,766,180
Net interest margin (NIM)
5.8%
6.3%
5
Reference to financial statements
2024
2023
Interest income from loans1
Note 28
2,648,790
2,299,254
Total monthly average loan portfolio
Not available
22,973,681
19,185,847
Loan yields1
11.5%
12.0%
6
Returns
Reference to financial statements
2024
2023
Interest expense from customer accounts
Note 28
(974,133)
(813,715)
Total monthly average deposits portfolio
Not available
20,924,276
18,110,786
Deposit rates
4.7%
4.5%
7
Reference to financial statements
2024
2023
Total Interest expense
Consolidated statement of profit and loss
and other comprehensive income
(1,544,916)
(1,193,831)
Monthly average interest bearing liabilities
Not available
28,383,358
23,096,316
Cost of fund
5.4%
5.2%
8
Reference to financial statements
2024
2023
Credit loss allowance for loans1
Consolidated statement of profit and loss
and other comprehensive income
(114,263)
(132,377)
Total monthly average loan portfolio
Not available
22,973,681
19,185,847
Cost of risks1
0.5%
0.7%
9
Reference to financial statements
2024
2023
Total principal or interest repayment is overdue
for more than 90 days1
Not available
344,085
248,145
Total gross loan portfolio1
Note 9, Note 13
24,963,655
21,656,248
Par 90 to gross loans1
1.4%
1.1%
10
Reference to financial statements
2024
2023
NPLs to gross loans equals loans with 90 days past
due on principal1
Not available
556,864
438,823
Total gross loan portfolio1
Note 9, Note 13
24,963,655
21,656,248
NPLs to gross loans1
2.2%
2.0%
11
Reference to financial statements
2024
2023
Total credit loss allowance for loans to customers1
Note 9, Note 13
343,650
326,921
NPL provision coverage1
Not available
556,864
438,823
NPL provision coverage1
61.7%
74.5%
3
Reference to financial statements
2024
2023
Total operating expenses
Consolidated statement of profit and loss
and other comprehensive income
779,484
681,762
Total revenue
Consolidated statement of profit and loss
and other comprehensive income
2,373,954
2,132,112
Cost to income
32.8%
32.0%
12
Reference to financial statements
2024
2023
Total NPL coverage1
Not available
771,036
637,504
Total NPL exposure1
Not available
556,864
438,823
Total NPL coverage1
138.5%
145.3%
13
Reference to financial statements
2024
2023
Total credit loss allowance for loans to customers1
Note 9, Note 13
343,650
326,921
Total gross loan portfolio1
Note 9, Note 13
24,963,655
21,656,248
Credit loss level to gross loans1
1.4%
1.5%
1
Reference to financial statements
2024
2023
Profit attributable to owners
Consolidated statement of profit and loss
and other comprehensive income
1,244,662
1,119,025
Monthly averages of total shareholders’ equity
attributable to owners
Not available
4,955,879
4,408,174
Return on average total equity (ROE)
25.1%
25.4%
These tables provide the reconciliation of the Group’s IFRS based alternative performance measures with Financial
Statements. Numbers in the following tables are presented in thousands of GEL unless otherwise stated.
2
Reference to financial statements
2024
2023
Profit attributable to owners
Consolidated statement of profit and loss
and other comprehensive income
1,244,662
1,119,025
Monthly averages of total assets
Not available
34,022,147
28,102,511
Return on average total assets (ROA)
3.7%
4.0%
1
Includes finance lease receivables.
ALTERNATIVE PERFORMANCE MEASURES CONTINUED
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ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
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16
Reference to financial statements
2024
2023
Top 20 borrowers
Not available
2,281,050
2,013,974
Total gross loan portfolio1
Note 9, Note 13
24,963,655
21,656,248
Top 20 borrowers1
9.1%
9.3%
18
Reference to financial statements
2024
2023
Total assets
Consolidated statement of financial position
37,655,290
31,771,136
Total equity
Consolidated statement of financial position
5,454,829
4,747,709
Leverage
6.9x
6.7x
17
Reference to financial statements
2024
2023
Net loans1
Consolidated statement of financial position
24,620,005
21,329,327
Deposits + IFI funding
Not available
24,656,696
22,165,127
Net loans to deposits + IFI funding1
99.9%
96.2%
ACCA
Association of chartered certified
accountants
AGM
Annual general meeting
ALCO
Asset-liability management committee
APM
Alternative performance measure
ATM
Automated teller machine
CAGR
Compounded annual growth rate
CAR
Capital adequacy ratio
CEO
Chief executive officer
CFA
Chartered financial analyst
CFO
Chief financial officer
CGU
Cash generating unit
CIB
Corporate investment banking
CIS
The Commonwealth of Independent States
COR
Cost of risk
CRO
Chief risk officer
CSR
Corporate social responsibility
DCF
Discounted cash flows
EBRD
European Bank for Reconstruction and
Development
ECL
Expected credit losses
EMEA
Europe, Middle East and Africa
EMS
Environmental management system
ENPS
Employee Net Promoter Score
ERM
Enterprise risk management
ESG
Environmental, social and governance
ESRM
Environmental and social risk management
EU
European Union
EUR
Euro
FC
Foreign currency
FDI
Foreign direct investment
FTSE
Financial Times Stock Exchange
FVTOCI
Fair value through other comprehensive
income
GBP
Great British pound, national currency of the UK
GDP
Gross domestic product
GEL
Georgian lari, national currency of Georgia
GHG
Greenhouse gas
NMF
Not meaningful figure
HNWI
High-net-worth individuals
HR
Human resources
IAS
International Accounting Standards
ICAAP
Internal capital adequacy assessment process
IDR
Issuer default rating
ILAAP
Internal liquidity adequacy assessment
process
IFC
International Finance Corporation
IFI
International financial institution
IFRS
International Financial Reporting Standards
IMF
International Monetary Fund
IPCC
Intergovernmental Panel on Climate Change
IPO
Initial public offering
IT
Information technology
JSC
Joint stock company
KPI
Key performance indicators
LSE
London Stock Exchange
LTIP
Long-term incentive plan
LTV
Loan to value
MBA
Master of business administration
MSME
Micro, small and medium-sized enterprises
NBG
National Bank of Georgia
NCI
Non-controlling interest
NIM
Net interest margin
NMF
No meaningful figure
NPS
Net promoter score
OCI
Other comprehensive income
OECD
Organisation for Economic Cooperation and
Development
PLC
Public limited company
POS
Point of sale
P2P
Peer-to-peer
ROA
Return on average assets
ROE
Return on average equity
SME
Small and medium-sized enterprises
SPPI
Solely payments of principal and interest
TCFD
Force on climate-related financial
disclosures
TOM
Top of mind score
UK
United Kingdom of Great Britain and Northern Ireland
USD
The US dollar, national currency of the United States
VAR
Value-at-risk
WM
Wealth management
15
Reference to financial statements
2024
2023
Top 10 borrowers
Not available
1,560,881
1,359,734
Total gross loan portfolio1
Note 9, Note 13
24,963,655
21,656,248
Top 10 borrowers1
6.3%
6.3%
14
Reference to financial statements
2024
2023
Related party loans
Note 42
17,643
27,198
Total gross loan portfolio1
Note 9, Note 13
24,963,655
21,656,248
Related party loans to gross loans1
0.1%
0.1%
1
Includes finance lease receivables.
Abbreviations
ALTERNATIVE PERFORMANCE MEASURES CONTINUED
MANAGEMENT REPORT
GOVERNANCE
ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
ABBREVIATIONS
MANAGEMENT REPORT
AND FINANCIAL
STATEMENTS 2024