Banking

TBC Bank declares £22.8m share buyback programme

TBC Bank shares jump as London-listed Georgian lender reveals £22.8m share buyback and dividend hike

  • One-third of shares being bought are set to go to an employee benefit trust
  • The bank reported profits falling by 6.3% due to a spike in credit loss allowances
  • TBC said it would be hiking its interim dividend by two-thirds to 2.5 lari per share

London-listed TBC Bank has announced a share buyback programme as it posted another robust set of quarterly results.

The Georgian bank said it had approved the purchase of up to 75 million Georgian lari (£22.8million) of its own stock, with a third of the amount set to be transferred to an employee benefit trust for future share awards.

The remaining two-thirds will start being purchased sometime by mid-October and are being bought in order to reduce the group’s share capital.

Acquisition: TBC Bank said it had approved the purchase of up to £22.8million of its own stock, with a third of the amount set to be transferred to an employee benefit trust

TBC also revealed it would be hiking its interim dividend by two-thirds to 2.5 lari per share, which came alongside the firm publishing second-quarter results that showed its operating income surging by 22 per cent from the previous year.

Most of the income growth was attributed to net interest income soaring by a quarter thanks to an expansion of loans on its portfolio, as well as interest rate hikes in response to rising inflation.

At the same time, non-interest income was buoyed by a surge in customers using the group’s cards for payment transactions in both Georgia and Uzbekistan.

However, total profits fell by 6.3 per cent to 234.6 million lari due to a spike in credit loss allowances and the company spending significant sums hiring more staff as part of plans to expand its Uzbek division.

In spite of all this, Tbilisi-based TBC managed to report a positive result against a much more uncertain economic and political backdrop resulting from Russia’s recent full-scale invasion of Ukraine.

It told investors on Friday: ‘Although the challenging geopolitical environment continues to be a matter of concern, the Georgian economy has once again demonstrated its resilience.

‘While the tourism recovery has slowed following the Russian invasion in Ukraine, the negative impact was balanced by higher migration to the country.

‘Moreover, despite a surge in oil prices, Georgia’s terms of trade remain stable, and remittance inflows are high.’

The company reiterated its medium-term targets for a return on equity exceeding 20 per cent and loan growth of between 10 and 15 per cent, on top of a cost-to-income ratio of under 35 per cent.

Set up precisely three decades ago soon after the fall of the Soviet Union by two businessmen with just $500 of starting capital, TBC has advanced to become Georgia’s biggest private banking firm when measured by total deposits and loans. 

It joined the London Stock Exchange’s main market in 2014, raising nearly $300million in its initial public offering despite investor concerns about the Russian annexation of Crimea.

The recent escalation of the Ukraine war has also left investors nervous, yet the bank is forecasting the Georgian economy to grow by more than 10 per cent this year, having rebounded by 10.4 per cent in 2021.

TBC Bank Group shares closed trading 6.7 per cent higher at £16.50 on Friday, meaning their value has increased by over 81 per cent in the past two years.

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