Bank of Georgia confident after strong third quarter, election fallout

Bank of Georgia Group reported a strong third-quarter financial performance on Tuesday, with consolidated profit for the period rising by 42.5% year-on-year to GEL 509.3m (£145.29m), reflecting a return on average equity of 32.1%.

The FTSE 250 company said its Georgian financial services (GFS) division contributed GEL 411.4m to the quarterly profit, achieving a return on equity of 36.7%, while Armenian financial services (AFS), led by Ameriabank, delivered a profit of GEL 91.4m with a 23.1% return on equity.

Its loan book grew by 63.4% year-on-year as of 30 September, driven largely by the consolidation of Ameriabank and a 23.6% increase in Georgian Financial Services.

Bank of Georgia (BOG) continued to advance in its digital strategy, recently earning the title of ‘World's Best Digital Bank 2024’ from Global Finance.

The bank reported 1.9 million monthly active retail customers, a 12% year-on-year increase, with digital monthly active users (MAU) up by 20.4% to 1.5 million.

Payment transactions at BOG’s in-store and online terminals reached GEL 5.3bn in the third quarter, marking a 31.2% year-on-year rise and giving the bank a 57.3% market share in payment acquiring as of September.

Customer engagement remained a focus, with the bank’s net promoter score increasing to 67 in the quarter.

Ameriabank also saw growth in its digital customer base, with monthly active users rising by 39% year-on-year to 188,000.

The group’s Georgian loan book reached GEL 22.4bn, up 23.6% year-on-year, and Ameriabank’s loan book expanded to GEL 7.96bn, a quarterly increase of 3.1%.

Bank of Georgia Group said it had set medium-term targets that included 15% annual loan book growth, revised upward from 10% after the Ameriabank acquisition, a 20%+ return on equity, and an annual capital distribution ratio of 30% to 50% through dividends and share buybacks.

“We delivered another strong quarter, posting a record profit of GEL 509.3m and an ROE of 32.1%, driven by robust performances in our core business divisions in Georgia and Armenia, supported by lower cost of risk and strong macroeconomic fundamentals,” said chief executive officer Archil Gachechiladze.

“We continued to focus on our strategic priorities and advanced the integration process of Ameriabank, with our various strategic integration work streams progressing well and bringing the teams together.”

Gachechiladze said the political situation in Georgia had been “top of mind” for many of its stakeholders recently.

“As we navigate a period of post-election political tensions which, unsurprisingly and understandably, elevate emotions in everyone, we remain focused on serving the whole of Georgia, supporting our customers and communities as a key systemic universal bank.

“We do not expect this period to have any significant impact on the economy.

“Therefore, we maintain our real GDP growth forecasts at 9% and 6% for 2024 and 2025 respectively, with that growth being underpinned by strong domestic demand, resilient external sector inflows, and prudent macroeconomic management.”

At 0808 GMT, shares in Bank of Georgia Group were up 5.18% at 5,080p.

Reporting by Josh White for Sharecast.com.