WOOD Flash – TBC Bank: 1Q25 results and conference call

TBC has reported 1Q25 net income of GEL 318m, falling 14% short of our estimate (GEL 372m) and 10% below the consensus forecast of GEL 352m. Total revenues missed our estimate by 5%. There was a small GEL 11m NII miss that was mitigated by a GEL 8m beat in fees. Trading and other income was 25% below expectations; however, this line is typically volatile. The more material and complex deviation was in provisions, which came in at GEL 118m vs. our GEL 83m expectation. The miss was related to a GEL 25m provision charge related to a market-wide salary data fraud. TBC views this charge – which added over 500 basis points to the cost of risk in Uzbekistan – as a one-off, and we believe this assessment is reasonable. In our view, had this been the result of a deeper underwriting issue, the bank would have halted or significantly slowed down lending. We view this one-off as a growing pain for Uzbekistan’s developing consumer lending market. Perhaps it also acts as a reminder of the business risks in this newly minted frontier economy, rather than a reflection of any fundamental weakness in TBC’s underwriting. We rate TBC a BUY, with a GBP 38/share PT.