(Alliance News) - TBC Bank Group PLC said Friday it has "adapted" to the Covid-19 pandemic but the global and Georgian economic outlook remains "difficult and uncertain".
"Our economists' latest analysis forecasts the Georgian economy to contract in 2020, which will have a negative impact on many businesses and individuals in the country," TBC said.
As a result, the lender said - in close co-ordination with the country's banking regulator, the National Bank of Georgia - it has created an extra loan loss provision buffer.
TBC said this will allow it to prepare for the potential damage of the pandemic on the Georgian economy.
At March 31, TBC booked additional provisions in accordance with local standards, at 3.0% to 3.3% of the loan book and resulting in an estimated up to 2.44% decrease in the CET1 capital adequacy ratio.
At December 31, TBC's CET1 ratio, Basel III, stood at 14.6%. The bank ended 2019 with a loan book totalling GEL12.66 billion, about USD3.98 billion.
The Georgian regulator has also announced a series of measures to help lenders get through the pandemic.
The measures include reducing Georgian banks' conservation buffer requirement of 2.5% of risk-weighted assets to 0%.
Elsewhere, the currency induced credit risk buffer requirement has been reduced by two-thirds indefinitely. Coupled with this, the phase-in of additional credit portfolio concentration risk buffer and net Grape buffer requirements on CET1 and Tier 1 capital, planned for the end of March, has been postponed.
The regulator is also allowing lenders in the country to reduce their liquidity coverage ratios. The eligibility criteria for repo-eligible securities is also being reviewed, with the aim of improving Georgian lira liquidity.
Finally, the regulator has postponed national stress testing, which was scheduled for the end of May.
As a result, TBC Bank's CET1, Tier 1 and Total CAR at March 31 are estimated at 8.7%, 11.5% and 16.1%, respectively.
These ratios remain "well above" the National Bank of Georgia's revised estimated minimum requirements of 7.0%, 8.8% and 13.4%, respectively.
TBC also noted its estimated liquidity coverage ratio of 109% and net stable funding ratio of 125% also remain above the minimum requirements.
"We are focusing on optimising our cost structure, re-arranging many processes and prioritising expenses, and are targeting TBC Bank's cost to income ratio for the full year ending 31 December 2020 to be broadly that achieved during 2019," TBC added.
Shares in TBC Bank 4.9% lower in London on Friday afternoon at 677.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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TBC Bank Group (TBCG)
