Bank of Georgia Group’s Strong Earnings and Growth

Bank of Georgia Group Plc ((GB:BGEO)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Bank of Georgia Group Plc painted a picture of robust financial health, with notable growth in both Georgian and Armenian operations. The sentiment was largely positive, driven by strong loan and deposit growth, despite some concerns about inflation in Georgia and subdued non-interest income in Armenia. The overall outlook remains optimistic, buoyed by the resilience of local economies and the company’s global recognition for its digital banking prowess.

Strong Customer Franchise Growth

The Bank of Georgia Group reported a remarkable 22% growth in its loan book in constant currency, with quarterly profits reaching GEL 547 million, an 8% increase from the previous year. The return on average equity stood at an impressive 28%, underscoring the bank’s strong customer franchise growth.

Georgian Subsidiary Performance

The Georgian subsidiary delivered a return on equity of 32%, with loans growing 16% year-on-year. Additionally, the number of retail monthly active users increased by nearly 15%, highlighting the subsidiary’s robust performance.

Armenian Operations Achievement

In Armenia, the bank’s loan book grew by 36.5% in constant currency, and the deposit portfolio expanded by 28.6%. Profits surged by 22% year-over-year to GEL 111.5 million, with return on equity improving to 21.8%, marking a significant achievement for the Armenian operations.

Global Recognition for Digital Banking

Bank of Georgia Group’s digital banking capabilities received global acclaim, being recognized as the Best Digital Bank in the World by Global Finance for the second consecutive year, further solidifying its position as a leader in digital innovation.

Improved Macroeconomic Conditions

The bank reported stable local currencies against the U.S. dollar, with real GDP growth forecasts for 2025 set at 7.5% for Georgia and 5% for Armenia, reflecting improved macroeconomic conditions in the region.

Inflation Concerns in Georgia

Despite the positive outlook, there were concerns about inflation in Georgia, with the headline number rising to 5.2% year-on-year in October, which could pose challenges in the near term.

Subdued Non-Interest Income

The bank faced muted performance in net non-interest income, particularly in Armenia, due to high client acquisition costs, which remains a point of concern.

Slight Increase in Non-Performing Loans

There was a slight increase in non-performing loan ratios, primarily due to the reclassification of some small hotels, but the bank assured that there is no systemic underlying issue.

Forward-Looking Guidance

Looking ahead, the bank provided a strategic outlook emphasizing continued growth in the loan book, particularly in Armenia. The company expects real GDP growth of 7.5% for Georgia and 5% for Armenia by 2025, despite regional geopolitical uncertainties. Strategic insights were shared on digital banking expansion and capital distribution, including plans for a quarterly dividend and buyback.

In summary, the Bank of Georgia Group’s earnings call conveyed a positive sentiment, highlighting strong financial performance and strategic growth initiatives. Despite some challenges, such as inflation and subdued non-interest income, the bank remains well-positioned for future growth, supported by its digital banking capabilities and resilient local economies.