LONDON (ShareCast) - (Sharecast News) - Bank of Georgia Group reported continued "outstanding" profitability and "solid" balance sheet growth momentum in its third quarter results on Thursday, with revenue rising 19.4% to GEL 266.61m (£77.85m).
The FTSE 250 company said its profit before non-recurring items and income tax was ahead 15.7% at GEL 117.06m, though basic earnings per share fell 12.4% GEL 2.18.

Loans to customers and finance lease receivables grew 25.5% to GEL 8.72bn, while client deposits and notes were 21.1% higher at GEL 7.93bn.

"The group has delivered another quarter of strong balance sheet expansion and superior profitability, with good franchise growth and returns in both the retail and corporate investment banking businesses, despite an impact on the business from the Georgian lari's 6.7% depreciation against the US dollar during the third quarter," said Bank of Georgia chief executive officer Kaha Kiknavelidze.

"The return on average equity continues to improve, and in the third quarter increased to 25.8%, from an adjusted ROAE of 25.2% in the previous quarter."

Kiknavelidze said franchise growth in retail banking was the driver of third quarter year-on-year revenue growth, supported by customer lending growth.

"The retail bank's clear focus over the last few months has been on growing the mortgage and SME portfolios more rapidly than the unsecured consumer lending portfolios, and loan originations in these portfolios have been particularly strong."

In the third quarter of 2018, the mortgage and SME portfolios grew by 16.6% and 10.8%, respectively, Kiknavelidze said, calling it a "robust performance" that had resulted from targeted and capital efficient lending campaigns.

"The retail banking client base continues to grow strongly reflecting the success of the bank's digital penetration growth and the increased use of more cost effective remote channels.

"As a result, the Retail Bank now has more than 2.4 million customers, an increase of nearly 7% over the last 12 months."

Bank of Georgia also made "strong progress" in corporate investment banking business, with lending growth now more balanced between retail and corporate banking.

Customer lending in CIB grew 24.3% year-on-year, and 10.1% quarter-on-quarter.

On a constant currency basis, the board said those growth rates were 19.0% and 4.5% respectively.

"In addition, we have also made further progress in reducing concentration risk in CIB, and have reduced the concentration of our top 10 corporate borrowers to only 9.9% of our lending portfolio," said Kiknavelidze.

"This lending growth in CIB has also supported much improved net fee and commission income which, during the first nine months of 2018, increased by 17.1%, and has supported a 21.4% growth in profit before non-recurring items and income tax in CIB."

Kiknavelidze said the bank's overriding priority was its focus on profitability, and it was continuing to deliver a return on equity comfortably ahead of its target of at least 20% ROAE.

"I expect further de-dollarisation of our lending book and strong growth in more capital efficient mortgage lending to continue to enable us to deliver superior returns within the Georgian banking sector, which will be supported over the next few years by many of the government's economic growth initiatives.

"Our clear objective is to maintain our successful approach to strong, capital efficient, lending growth and superior profitability."

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