By Josh White
Date: Thursday 10 Nov 2022
LONDON (ShareCast) - (Sharecast News) - Bank of Georgia reported a rise in third-quarter pre-tax profit on Thursday, with its performance underpinned by wider growth in the Georgian economy.
The FTSE 250 bank said its profit before tax for the period totalled GEL 318.3m (£103.26m), up from GEL 206m in the same period last year.
Its net interest income was 21% firmer year-on-year at GEL 295.1m, although net fee and commission income was 1.7% weaker at GEL 79.7m.
Bank of Georgia's net interest margin rose 30-basis points year-on-year to 5.3% in the quarter, although it was flat on the quarter.
On a nine-month basis, the lender's net interest margin was 5.3%, up 50-basis points on the year, with the margin supported by a higher loan yield, but negatively impacted by higher levels of liquidity.
Looking at the loan book, the firm said its lending portfolio was up 12.9% year-on-year and up 2.3% quarter-on-quarter at constant currency.
The board said the yearly growth was driven by the consumer, mortgage, and micro and small-to-medium enterprise (MSME) portfolios, whereas the growth on the quarter was driven by the consumer, mortgage and SME portfolios, partly offset by reduced micro and corporate loan books.
In nominal terms, the loan book was up 3.7% year-on-year and down 0.8% over the quarter, which the directors put down to the continuing appreciation of the lari against the dollar.
The bank recorded "significant growth" in client deposits and notes during the quarter, up 40.3% on the year and 17.2% over the second quarter at constant currency.
That, the board said, reflected the strength of its customer franchise, with nominal growth coming in at 29.1% on the year and 13.9% over the quarter.
Bank of Georgia said its capital position remained "robust", with its common equity tier 1 (CET1) capital increasing 80 basis points over the quarter, driven by "robust" internal capital generation, partially offset by business growth.
As at 30 September, the bank's Basel III common equity tier 1, tier 1, and total capital adequacy ratios stood at 14.8%, 17%, and 20.3%, respectively - all "comfortably above" the minimum respective requirements of 11.6%, 13.8% and 17.2%.
Its liquidity coverage ratio increased to 121.4% as at 30 September, compared to 112.7% a year earlier and 113.5% at the end of June.
The bank said its coverage ratio continued to be "comfortably above" the 100% minimum requirement.
"As we approach the end of 2022, we continue to operate against a backdrop of regional and global challenges," said chief executive officer Archil Gachechiladze.
"However, the Georgian economy has performed much better than we anticipated in the beginning of the year."
Following upward revisions by international organisations and local authorities, the group said full-year real GDP growth was now expected to come in at 10.2%.
The debt burden on the economy had meanwhile reduced, with bank loans-to-GDP down to 62% in the third quarter, from the peak of 77.6% in 2020.
Public debt-to-GDP was expected to fall to 39.6% in 2022, meanwhile, down from 60.1% during 2020.
"In Bank of Georgia, our entire team has remained committed to supporting each other and our customers," Gachechiladze said.
"The net promoter score is now 60, an all-time high result, compared with the mid-30s three years ago, reflecting a major improvement in customer experience.
"We finished the third quarter with more than one million monthly active digital users - 65% of all monthly active individual clients - and, importantly, almost half of them use our mobile app and internet banking platform daily."
Archil Gachechiladze noted that an interim dividend of GEL 1.85 per share for the period through June was paid on 20 October.
The GEL 112.7m share buyback and cancellation programme was meanwhile ongoing, and as at 1 November 1,269,273 shares had been repurchased and cancelled at a total cost of GEL 78.9m.
"As Georgia's role as a transport, trading, and logistics corridor in the region is strengthening, the attention from international companies and investors will likely increase, and Bank of Georgia remains well-positioned to continue serving the country and our customers during this important period of time."
At 1200 GMT, shares in Bank of Georgia Group were up 2.9% at 2,485p.
Reporting by Josh White for Sharecast.com.
Email this article to a friend
or share it with one of these popular networks: