My name is Becky, and I will be your operator today. All lines will be muted throughout the presentation portion of the call, with a chance for Q&A at the end. If you wish to ask a question during the webinar, please use the Raise Hand button if you've joined the call via Zoom. If you've joined us on the phone lines, please press Star followed by one on your telephone keypad. You can also submit any text questions via the Zoom chat box on your webinar. I will now hand over to your host, Andrew Keeley, Director of Investor Relations, to begin. Please go ahead.
Thanks very much, Becky, and welcome everybody to TBC Group's 4Q and full year 2025 results call. It's great to have you with us today. As usual, I'm joined on the call today by our Group CEO, Vakhtang Butskhrikidze, our Group CFO, Giorgi Megrelishvili, and we'll also be joined for Q&A by Oliver Hughes, our Head of International Business. We'll also start with a presentation from Vakhtang and Giorgi and then go to Q&A. With that, I'll hand over to Vakhtang. Thank you.
Thank you, Andrew. Hello, everyone, and thank you for joining us today. I am pleased to present our results for the first quarter and the full year of 2025. Overall, we had a very good final quarter, bringing 2025 to a successful conclusion. For the full year, the group delivered over GEL 1.4 billion net profit, up by 9% year-on-year, with 24%, 24.2% return on equity. As for the final quarter, it was a record quarter in which we also printed our highest return on equity of the year, with almost GEL 390 million net profit and 24.9% return on equity.
It was an excellent final quarter for our core Georgian franchise, with net profit up by 15% year-over-year and 25.7% return on equity, driven by a strong combination of robust loan growth and net interest margin and low cost of risk and strong cost controls. The quarter was more mixed in Uzbekistan, as the changes in regulations that I have previously discussed meant a slight contraction in lending, impacting revenues and earnings. That said, taking the year as a whole, the team made huge progress in scaling up the business, including 45% loan growth year-over-year, 67% revenue growth, and almost 1 million daily banking Salom card issued, and digital MAU topping 6 million.
As a result of our strong operating performance and a solid capital position, the board has declared a final dividend of 3.87 GEL per share, bringing the total 2025 dividend to 8.87 GEL, which is a 10% increase year-on-year. I won't dwell too long on this slide, but the main point I want to get across is that 2025 is another example of the TBC's long-term track record of delivering a nice combination of growth, profitability, and returns. Moving to our 2025 targets. Overall delivery against most of these targets has been good. Our digital monthly active user numbers have almost doubled over the past three years to 7.3 million . We have also consistently maintained return on equity above our 23% target level.
Similarly, we have been paying out at the top of our guided range. As we discussed at the third quarter results, unfortunately, net profit in 2025 came in lower than targeted due to some challenges in Uzbekistan. That said, taking the past three years as a whole, we have still grown our group's earnings by over 40%. We also delivered 90% loan CAGR in Uzbekistan above our target and comfortably surpassed our 5 million monthly active users target. Turning now to Georgia. As you can see, the Georgian economy remains strong, with the real GDP growth standing at 7.5% in 2025. We see growth starting to normalize, but our economists and IFIs, like Monetary Fund and the World Bank, still expect around 5% growth in 2026, which is not a bad figure at all.
The inflation rate is slightly above NBG's 3% target, driven by the combination of a low base of effect from 2024 and elevated domestic and global pressures on food prices. That said, we expect the NBG to resume cutting rate this year as inflation trends back down. 2025 was a strong year for our business in Georgia. We had a number of a good operational achievements through the year. This included, our flagship daily banking TBC card, hitting almost 1 million cards in issuance, a doubling of our retail brokerage customer base to over 100,000, and 50% growth in our market-leading affluent product, TBC Concept. We also saw a number of tangible developments driven by AI, with our mobile application chatbot launched in September and already handling over 100,000 iterations a month, with a 50% offloading rate.
I like the next slide, as it shows the highly consistent performance of our Georgian financial services business over the past three years, as we continually delivering mid-20% return on equity. We continue to be a leading player across most of the key banking segments in Georgia. In 2025, our gross loans were up by 11% year-on-year. I'd like to highlight particularly strong performance in cash loans, a key focus area for us, where our loan book portfolio grew by 36%. Meanwhile, our Georgian customer deposits increased by 12% over the same period. Digital engagement among our retail customers in Georgia continues to grow. Having brought our core banking technology platform in-house, 2025 was a year when we started to clearly see the benefits of having full control over all aspects of our digital banking.
With faster deployments and the direct customer experience, we have been strongly increasing our digital customer base. We added over 250,000 customers during the year, growth of 24% year-over-year. Engagement levels also remain very high, with a 47% DAU-to-MAU ratio, and we continue to see very high levels of digital unsecured loans and deposit issuance. Now, let's turn to our Uzbek businesses. Starting with the economy, the Uzbek economy remains highly dynamic, with real GDP growth of 7.7% in 2025. Inflation continued to decline to 7.3% in December. Importantly, seasonally adjusted annualized monthly inflation is now below the CBU's 5% target, which we think will help enable interest rate cuts this year. Next slide highlights some of the key milestones in our Uzbek business in 2025.
We scaled up our business in a number of areas during this year. In business lending, we have issued over 130,000 loans, while our Billz acquisition gives us access to more than 3,000 retail merchants, processing over $1.4 billion of transactions. At the same time, payment volumes have increased over 60% year-on-year to $9.2 billion. We have also had a great take-up of our daily banking products, such as Salom and Osmon cards. We also now have an excellent 600,000 Paym e Plus subscribers as we deepen engagement with our ecosystem customers. On the next slide, we have an overview of Uzbekistan's strong progress over the past three years. During this time, we have more than doubled our registered users to 23 million, and we have hit 6 million monthly active users.
As I mentioned earlier, our loan book has grown at 90% three-year CAGR, while our retail deposits have increased at 65% three-year CAGR to around $550 million. As mentioned previously, we saw a softening of operating income and the net profit in the final quarter. But for 2025 as a whole, operating income grew at excellent 67%, while we retained our 18% return on equity. Next slide shows Uzbekistan increasing market share and the material contribution to the group. By the end of 2025, our market share of our retail loans and deposits to debt, 4.2% and 3.8% respectively. TBC established itself as a top ten bank in both retail loans and deposits. In 2025, Uzbekistan contributed 9% of the group's net profit and 20% of the total operating income.
Before handing over to Giorgi, I'd like to mention a couple of other important pieces of recent news. As you may have seen, we recently announced some changes to our management team. I have decided to commit my time fully to my role as a group CEO, which will enable me to focus more closely on overall group strategy, including our business in Georgia and Uzbekistan, as well as exploring international opportunities. As a result, Giorgi Tkhelidze will take over from me as the CEO of TBC Group, Georgian subsidiary, Joint Stock Company, TBC Bank, effective from the first of March, subject to regulatory approval. Giorgi has been Deputy CEO for 12 years, the last 10 years of which he has been running CIB and Wealth Management. During this time, he has built these businesses into a dominant franchise they are today.
I'm very confident that Giorgi will be a great leader for our Georgia business. The other news, as you probably already know, is that we will be holding our Strategy Day next week in New York on Tuesday, 21st of February. I very much look forward to welcoming you to this event, and for those who are unable to join in person, there will be a live webcast as well. With that, I hand over to Giorgi.
Thank you, Vakhtang, and thanks, everyone, for joining our call today. Now, I am going to take you through our full-year Q4 results, and if we move to the slide 20, that shows our strong profitability. So the first quarter was a record quarter, again, where we delivered GEL 387 million net profit, up by 16% year-on-year. That translated into a very solid 24.9% return on equity, and full-year profit exceeded GEL 1.4 billion, up by 9%, and again, our return on equity was about 24%, precisely 24.2%. Now, if we move to the next slide, slide 21, that actually shows one of the key drivers of our solid profitability. Our top line increased by 15%, in Q4, year-on-year.
That was mainly driven by excellent performance into net interest income. It was up by 23%. Our non-interest income remains flat, but that was mainly driven by very high FX revenues in Q4 last year, as you may remember. And on a full year basis, we also have a great 20% increase year-on-year, and that was driven both by net interest and fee and commission income. So now if we move to the slide 22, like I'm very glad to see NIM actually retains at a very solid level, 7%, broadly stable quarter-over-quarter. That was supported by 6% Georgian NIM, that actually stood its ground. And on the full year basis, we saw NIM increasing by 30 basis points. That was mainly driven by increasing share of TBC UZ into our portfolio.
Moving now, next slide, slide 23. So we are very much focused on our cost. As you can see, growth was actually very well contained, both for the quarter and for the full year. In Q4 year-on-year basis, it increased just 10%, and the full year basis, 18%. That translated into decreasing cost to income ratio, both for the quarter and full year. On the full year basis, it landed at 37.5%, down by 40 basis points. Now moving to the slide 24, we I would like to touch on our credit risk. It's like we saw our cost of risk declining by 50 basis points to 1.1%. We saw this decrease in both Georgia and TBC Uzbekistan. That's very nice dynamics to see.
I would like to comment a bit on the Georgian cost of risk that was below our normalized level. The better risk profile was supported by model recalibration and higher recoveries. In 2026, we do expect Georgian cost of risk to be at lower end of our normalized range, around 80 basis points. Now moving to slide 25, our balance sheet growth. We see that also we had great growth into both on loan and customer funding side. Loans increased 12%, customer funding, 13%, both on constant currency basis. However, as the Q4 was also exceptionally strong, by 5% year-on-year, and driven by Georgian increase of 6%. Now, next slide, slide 26. Our capital positions, and despite that high growth, we do maintain very healthy capital levels, well above regulatory limits in both countries.
Now moving to slide 27, exactly the strong capital position allows us to distribute a decent level of capital to our shareholders. As Vakhtang mentioned, our board has approved 3.87 GEL final dividend. That brings full year dividend to 8.87 GEL, 10% up year-on-year, bringing dividend payout ratio to 35%. However, we also just completed GEL 75 million buyback, and with this, we returned 40% capital back. On this note, I would like to thank you and open for Q&A. Thank you.
Thanks very much, Giorgi and Vakhtang. We'll now open up for a Q&A. So if you have a question, please raise your hand. Yeah, the first question is from Alex Kantarovich of Roemer Capital. Alex, please go ahead. Your line's open.
Yes, I hope you can hear me. Yes? Hello?
Yep, yep, we can hear you.
Oh, yeah, thanks. My first question is on OpEx. It was kind of flattish in Q4, which is fairly unusual, given that normally banks have elevated OpEx in Q4, and so did you historically in the previous years. So can you comment on that? Second question is, can you give us a bit more color on cost of risk? Seems like NPLs were sort of steady and a bit elevated, and in Uzbekistan cost of risk, whatever it was in the quarter, 8%-9%. And you obviously guide higher cost of risk for 2026, so suddenly you have this drop in Q4, which kind of caught my eye.
The third question is on capital restrictions on cash loans, and clearly, your loan portfolio actually dropped quarter-on-quarter in Uzbekistan. If you can comment on the details, how cash loans compare to SME as kind of substitute, and what we can expect going forward? Thank you.
Giorgi, you are on mute.
Oh, sorry, I was on the mute. So Oliver, I'll take the first question on the cost, and probably you can cover Uzbekistan cost of risk and cash flows. So to start on OpEx, it increased in Q4 10% year-on-year for Georgia, 18% for the group. But as I mentioned, we managed our cost very consciously. We spread our cost throughout the year, so it is what it is. That actually, this indicates our strong control of the cost that results in our very strongest profitability.
Thank you.
Hi, Alex. It's good to speak again.
Hello, Oliver.
Yeah, on cost of risk, as you said, NPLs ticked up throughout the year. But in terms of cost of risk, if you compare third quarter to fourth quarter, as we previously signaled, it was, it topped out in quarter two, quarter three, and then started to come down in quarter four. So that was exactly as planned and communicated. So basically, we had a load of tests that we'd done in the latter part of, let's say the second half of 2024, early 2025. As we pushed into thin file segments, stuff that we've communicated thoroughly in the past, and, and that started to mature and come through the numbers in, from quarter two onwards in Uzbekistan.
So that top down started to come down, and the trend, when you look at all of our leading indicators, means that that will continue. There is some volatility, for sure. Some of it's seasonal. So, for example, in quarter one, you always see a bit of an uptick, so numbers can be softer in quarter one for seasonal reasons, and that will be true again this year. But it will still be within our range, the corridor that we provided of 7%-10% in terms of cost of risk, and that trend will continue throughout the year. However, it has to be said that we are moving, pivoting during the first half of this year, as again, previously communicated.
So, the loan book, in terms of what we call ICL, instant cash loans, which is called micro loans in Uzbekistan, is running off on the bank side, and I'll come onto that in a second when I answer your third question. And we're scaling up other products, so credit cards, business loans, and we'll be launching secured loans, hopefully second quarter going into the third quarter, starting with auto loans. So the mix of the loan book is changing. Yeah, some of those are products which have been around for a while, but we're scaling.
Others are new products which we'll be learning, and there'll be a different loan book mix, and therefore, stuff moving around a little bit on the cost of risk side as we build and scale those businesses. But as I say, we expect our cost of risk to come in within the corridor, as previously guided, of 7%-10%. On the third question, we had some regulatory changes, as obviously, we discussed a lot over the last couple of quarters in Uzbekistan.
The central bank, for a number of different reasons, including tackling inflation and bringing that down, including stimulating the growth of SME lending, including preventing the long-term build-up of potential risks in consumer lending in the country, decided to cap the portfolio shares of various unsecured asset classes. So that covered auto loans, which had been the portfolio cap of 25%, had been in place for a while. They added to that portfolio cap, 25% caps on microloans, credit cards. And that happened in April last year, and then in November, they decided to accelerate that by announcing risk weights, which are being reintroduced, also based on portfolio shares, and they come into force, the new risk weights, from the 1st of July this year. Again, we talked about this on the last call.
We are basically pivoting. We've done a few things in order to make sure that we climb into the new structure of our loan book that the Central Bank wants to see in the medium term. While the share of ICLs, microloans, has been declining, as we run off our loan book in that particular class on the bank's balance sheet, we have been ramping up credit cards, we've been ramping up business loans, and there's a couple of different products in terms of business loans. We'll be adding more over, during the course of this year, and as I said, we'll be launching secured loans in the next couple of quarters. This means that the loan book's changing.
That also explains what you saw coming through in terms of the numbers on, the loan book, which dropped in quarter four last year. We expect that, in the first half of this year, it'll be maybe diminishing, maybe reducing a little bit more, the loan book, or flat, and then as we go into the second half of the year, that'll pick up again, and we'll go back into, into growth. And we expect growth to be maybe around 20%, maybe more, for this year in total for the year of the gross loan book.
Okay, okay, that's actually quite positive. 20% for the year is positive. Thank you very much, Oliver.
Thanks, Alex. Next question is from Piers Brown of Investec. Piers, please go ahead. Your line is open. Piers, can you hear us? Can you go ahead?
We can't hear Piers.
We can't hear you.
Yes, we may take another question.
Yeah, we'll come back to you, Piers, 'cause we can't hear you. Can we have Dmitry from Wood? Dmitry, please go ahead.
Thank you very much, Andrew, and hello, everyone. Congrats on the results. I have two general questions, if I may. The first one is, at this moment of time, I mean, at least in the end of 2025, how many % of deposits in Georgia were still opened by Russians, Ukrainians, and Belarusians? And since we are in the process of the negotiations, how much would that close if we would see a ceasefire or the end of the war? That's the first question. And the second one, I noticed that on your macro forecast for Georgia, specifically, you are a bit more conservative than IMF and World Bank, and on Uzbek, you are more bullish. I was just wondering why is that? What are the main reasons for that? Thank you very much.
Giorgi, please answer the first question, and the second question I will take.
Okay. So generally, like, before the war, our total share of non-resident deposits were around 30.5%-40%. Nowadays, it's around 60%-70%. Therefore, we don't have any major concentration of the deposits from the migrants, as we call them, and we don't have any dependency on the liquidity. Therefore, even if suddenly, like, whoever put deposit the minimum number decides to kind of walk away, we won't have any liquidity. So that's. Hopefully, that answers your question.
Yeah. As the answer on the second question about the growth for the GDP, so as I mentioned already in my part of the presentation, our internal target, 5%. I agree, probably it looks pessimistic assumption, and just to remember in 2025, two times we made upgrade of the forecast for 2025. But what we see, we are already February, probably, it looks that, the economy will grow more. But for the budgeting purposes, we prepare to have a more pessimistic assumptions for our, for our targets and for our guides.
Thank you.
Thanks, Dmitry. Okay, next question is from Rahim at Cavendish. Rahim, please go ahead.
Hi, good afternoon. Hopefully, you can hear me. Three questions if I may. The first was just to get a sense on the outlook for NIMs, if we can, in the two jurisdictions. I mean, Oliver, you talked a little bit about cost of risk movements in Uzbekistan because of the loan book shift, so it'd be useful to understand that from an NIM perspective, and then obviously the same for Georgia. The second question was just on, you know, Uzbekistan in terms of the regulatory changes.
I was just wondering if there was any remorse from the central bank or any other emotions that came out as a result of the changes that they've implemented, any regret or how have they received the changes to the industries, or the response to the industry's activity there? And then just third factor, and thanks for your comments with respect to your evolving role. Just a sense on how you see opportunities with respect to M&A in the international business as well, and how your increased focus on that, you know, how we should think about that over the next year or so. Thank you.
Mm-hmm.
Thanks, Rahim. Good to see you again on the call. So now I'll take the first question on the NIM. So Georgia NIM, we expect to remain at the same level as it is, around 6%, high 5s. We don't expect material changes. Now, on Uzbekistan side, generally, we've seen like high teens in Q4. That's the level probably we may continue in Q1, Q2, but it will gradually start picking up to high, to, to around twenties, high teens. That would be our expectations, as gradually funding costs will tick down over the period. There is a timing link, and that will be kind of will be caught up. That's on the NIM side... and I'll hand over to Oliver to go on the exchanges.
Sure, yeah. Maybe just to spell out the outlook for Uzbekistan as we see it today. And again, please bear in mind that things are still moving around in an environment which is a little bit fluid, as we've said. So as Giorgi just explained, we expect to finish the year with NIMs recovering to around 20% for the year. We expect the loan book to grow by +20%, and that will be backloaded in the second half of the year, as I said earlier. And thirdly, we expect our ROEs to be at least what they were last year, if not higher, but we'll see how it goes in the rest of the year.
In terms of the regulatory backdrop, so it's pretty busy, let's put it that way. So there's a lot going on as the regulator implements its very new policies. So there's actually been more regulation coming out since we had our last call. Some of it in payments, some of it in consumer lending, on secured and unsecured, including the introduction of DTI, so debt- to- income ratios, on top of payment- to- income ratios, PTI. There's lots of stuff happening on the anti-fraud side, on cybersecurity, so it's busy. In terms of emotions of the regulator, I'm not sure if the regulators are supposed to have emotions, but they obviously have an agenda. The agenda is quite a forthright one. This is the environment in which we're in.
This happens in different markets, especially markets that are learning and adjusting, and let's say frontier/emerging markets. Again, this goes with the territory. So, organizations such as ourselves, which are high growth and high adaptation, do well in these environments, where we deliberately chose this country, yeah, 'cause it has some challenges, which makes it interesting, but also lots of upside when you get it right. And we have a very good execution track record. We adapt this year. We've talked about this a lot... and we're already doing lots of stuff to respond, get ourselves back on the front foot, and launching tons of new products and services, and we like the direction of travel. But it remains a little bit interesting, let's put it that way.
Yeah. And to take, I will take the last question. What are our plans for international expansion? We don't have any specific timing in mind, but on the other hand, we are open and looking at different international opportunities, and we, we believe that we have our competitive advantages, taking digital, retail, SME, and other type of thing, advantages, competitive advantages.
Great. Thank you all very much.
Thank you, Rahim. And we'll go back to Piers at Investec. Piers, let's have another go.
Yeah. Hi, everybody. You able to hear me this time?
Yes, all good.
Excellent, good. Yeah, I've got one probably for Giorgi and one for Oliver. Maybe just on the question for Oliver, just clarification on Uzbekistan. You gave that very helpful slide on page 27, which gives the current breakdown of the loan book, as per the central bank methodology, and you've got sort of 71% there in micro loans. Is that the number that we need to look at, that needs to move to 25? And as I sort of understood it from your earlier answer, you sort of think you can get there by just rebalancing the book, i.e., growing the other businesses rather than shrinking necessarily the absolute level of outstanding micro loans. So if you could just clarify if that's the right understanding.
And the second question for Giorgi on the Georgian business, just on the retail cash loans progress, I mean, that's 36% growth year-on-year. The book's now GEL 2.4 billion. How should we think about the future opportunity there? You know, what sort of market share have you got? What's the size of the market? Where do you think the market share could get to? And, you know, is that GEL 2.4 billion number gonna get a lot bigger? Has it still got a lot of growth potential ahead of it? Thanks.
Thanks for the questions, Piers. So I'll start. So on that slide, which you referred to, I think it was 27, yeah. There are two parts to it. On the left-hand side, you can see the consolidated numbers, which is very important, yeah. So that's the group-wide Uzbekistan group-wide numbers, which I'll come back to in a second. And on the right-hand side, the text at the bottom is what you're asking about, which is the central bank view, because that's... They look at the bank's balance sheet. Yeah. So we got the share of our microloans down to 70% by year-end, from what was over 90% at the beginning of the year.
The direction of travel is downwards because it has to be, and we believe we will be below 50%, that's what we're aiming for, on the bank's balance sheet by the end of the year. Thereafter, it will decline more, because obviously, we have to get to the 25% target by January 1, 2029, if not before. So that's the bank's, the bank view of the answer to your question. However, we have a group, so we have lots of, well, not other, but several other balance sheets. We have the microfinance organization, we have TBC Nasiya, which is installment loans or installment finance. And we also have a new company that we're using for BNPL. So there are different balance sheets that we can deploy.
And we've actually restarted microloans, or instant cash loans, as we call them, on the MFO balance sheet. We're doing this in a very gentle way, just building it up and restarting the machine. Which means that you will see one of the sources of growth coming back into the overall consolidated balance sheet view this year from the microfinance organization's balance sheet off the bank's balance sheet. So I think the short answer to your question is, on the bank's balance sheet, this is our way of climbing into the structure below 20, sorry, below 50%, ICL share, microloan share, by the end of this year. But the growth will be coming from other non-microloan asset classes that we're building in the bank or we're scaling up.
Example, credit cards, which is already 7% of the bank's balance sheet, and stuff which is off the bank's balance sheet. So there's plenty going on.
Now to your cash loan side. Probably, I will hold back the answer on these questions for 2 days when, during Strategy Day, my colleagues will cover it in more detail. So our strategies, goals, and directions, I don't want to put a spoiler. What I can say, we have a big focus on cash loans. It will be a big driver of our profitability, and we are very comfortable making a great progress. How and exact targets to come in 2 or 3 days' time, 21st, on Tuesday, and I'm pretty certain you will be pleased with what you'll hear.
Great. Thanks very much. I look forward to hearing all about it next week.
Thank you. Piers, it doesn't seem like there's any further questions in the queue at the moment. Becky, do we have any on the phone line?
We currently have no questions on the phone line.
Okay, then, all that remains for me to say is thank you very much for joining our full year call. It's great to see so much interest. Just to reiterate, we hope we will meet again shortly, next Tuesday, in New York and via the webcast for our Strategy Day. So thank you very much, and with that, it's goodbye from us. Thank you.
Thank you. See you next week. Bye.
Bye.
This concludes today's webinar. Thank you, everyone, for joining. You may now disconnect your lines.