Georgian bank TBC's profits jump, settles dispute with regulator

(Adds TBC chairman's statement, central bank statement)

TBILISI, Feb 21 (Reuters) - Georgia's biggest retail bank TBC Bank Group Plc reported a 21.5 percent jump in full-year earnings on Thursday and took action to resolve a dispute with the country's central bank over its corporate bank subsidiary.

TBC, which serves retail, corporate and small and medium-sized enterprise customers across the country, said profit rose to 437.4 million lari ($165.24 million) in the 12 months ended Dec (Shanghai: 600875.SS - news) . 31 from 359.9 million lari, a year earlier.

TBC's corporate division, TBC Bank JSC, said it would pay about 1 million lari to the National Bank (Athens: ETEE.AT - news) of Georgia related to an investigation into certain transactions.

TBC Bank JSC also said it would end legal action against the central bank, restructure its supervisory board and that the founding shareholders would step down from that board.

Mamuka Khazaradze, who is chairman of TBC Bank Group's board, said he had stepped down as chairman of the supervisory board of TBC Bank JSC as he did not want to harm the bank's reputation further.

"Hopefully, this decision will positively affect the bank's development in a stable and calm environment," he said in a statement posted on his Facebook (NasdaqGS: FB - news) page.

Khazaradze also said that as a result of the legal dispute, the bank's reputation had been stained and its international shareholders suffered a loss of $200 million in one month. London-listed bank's shares fell sharply last week, but bounced back on Thursday and were up about 6 percent by 1154 GMT.

"The bank cannot be in a long court dispute with its regulator," Khazaradze said.

Badri Japaridze also stepped down as vice-chairman of TBC Bank JSC's supervisory, but remained in TBC Bank Group.

The country's National Bank welcomed Khazaradze's decision.

"This (decision) will have a positive effect on the transparency of the (TBC) bank and will increase investor confidence, which will ultimately have a positive effect on the development of the bank and the country's financial sector," the National Bank said in a statement.

Last week, the country's central bank had asked TBC's chairman and vice-chairman to step down from the board of TBC Bank JSC in relation to the investigation.

TBC Bank Group, which listed in London in 2014, said net interest margin - the main indicator of a bank's financial strength - expanded to 6.9 percent for the year from 6.5 percent.

The Tbilisi-based lender's market share in total loans rose by 1.8 percentage points to 38.8 percent as of Dec. 31, while gross loans and advances to customers surged 19.7 percent to 10.37 billion laris at the end of 2018.

The Georgian banking industry is dominated by TBC and its main competitor, Bank of Georgia, which last week warned that growth of unsecured consumer loans would moderate on the back of new regulations.

While TBC also flagged a sharp slowdown in non-mortgage retail lending following the introduction of the new regulation, it stuck to its medium-term goals that target loan book growth in the range of 10-15 percent.

Lending growth of both banks are buoyed by a strong Georgian economy. The former Soviet republic, home to pipelines that carry oil and gas from the Caspian region to Europe, saw its economy expand by 4.8 percent in 2018. ($1 = 2.6470 lari) (Reporting by Muvija M in Bengaluru and Margarita Antidze in Tbilisi; Editing by Bernard Orr and Jane Merriman)