Shares in TBC Bank (LSE:TBCG) dropped 15% after its interim results revealed second-quarter profits below consensus, largely due to a higher cost of risk in Uzbekistan.
The group reported profits of GEL402 million for the period, up 3% year-on-year, but short of market expectations of GEL425 million. Net profits rose 5% year-on-year, while return on equity remained robust at 24.3%.
A strong balance sheet and solid capital generation enabled the board to declare a dividend of GEL1.75 and launch a GEL75 million share buyback, underlining financial strength.
Net interest margin improved by 40 basis points, supported by higher loan yields and reduced funding costs.
In Georgia, strong economic growth and double-digit increases in gross loans and deposits contributed to performance.
The cost of risk remained steady at 0.8%. In Uzbekistan, the business now accounts for 20% of group operating income, but a ‘test and learn’ approach to new segments pushed the cost of risk to 9.9%.
Peel Hunt maintained its 6,000p target price and 'buy' recommendation, noting the group’s attractive valuation and prospects for double-digit growth.
The shares fell 770p to 4,300p.