BOGG PLC 4Q22 & FY22 preliminary financial results

RNS Number : 0705Q
Bank of Georgia Group PLC
16 February 2023
 

 

 

 

 

Bank of Georgia

Group PLC

Fourth Quarter and Full Year 2022

Preliminary Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name of authorised official of issuer responsible for making notification:

Nini Arshakuni, Head of Investor Relations

 

 

www.bankofgeorgiagroup.com



 

ABOUT BANK OF GEORGIA GROUP PLC

 

Bank of Georgia Group PLC (the "Group" and on the LSE: BGEO LN) is a UK-incorporated holding company. The Group mainly comprises: a) retail banking and payments business (Retail Banking); and b) corporate banking and investment banking operations (Corporate and Investment Banking) in Georgia. 

 

JSC Bank of Georgia ("Bank of Georgia", "BOG", or the "Bank"), a systematically important and leading universal bank in Georgia, is the core entity of the Group. The Bank is a leader in the payments business and financial mobile application, with strong retail and corporate banking franchises. In line with our digital strategy, the Group focuses on expanding technological and advanced data analytics capabilities to offer more personalised solutions and seamless experiences to our customers. Employee empowerment, customer satisfaction, and data-driven decision-making, together with the strength of the banking franchise, are key enablers of the Group's sustainable value creation. By building on its competitive strengths and uncovering more opportunities, the Group is committed to delivering strong profitability sustainably and maximising shareholder value.

 

The Group expects to benefit from the growth of the Georgian economy, and through both its Retail Banking and Corporate and Investment Banking operations, it aims to deliver on its strategy and its key medium-term objectives  ̶ at least 20% return on average equity (ROAE) and c.10% growth of its loan book.

 

 

4Q22 AND FY22 RESULTS AND CONFERENCE CALL DETAILS

 

Bank of Georgia Group PLC announces the Group's preliminary consolidated financial results for the fourth quarter and full year 2022. Unless otherwise noted, numbers in this announcement are given for 4Q22 and FY22 and comparisons are with 4Q21 and FY21. The results are based on International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom, are unaudited and derived from management accounts. The results announcement is also available on the Group's website at www.bankofgeorgiagroup.com .

 

The information in this Announcement in respect of full year 2022 preliminary results, which was approved by the Board of Directors on 15 February 2023, does not constitute statutory accounts within the meaning of Section 434 of the UK Companies Act 2006. The statutory accounts for the year ended 31 December 2021 have been filed with the Registrar of Companies, and the audit reports were unqualified and contained no statements in respect of Sections 498 (2) or (3) of the UK Companies Act 2006. The consolidated financial statements for the year ended 31 December 2022 will be included in the Annual Report and Accounts expected to be published in March 2023, which will be filed with the Registrar of Companies following Bank of Georgia Group PLC's Annual General Meeting.

 

A webinar with investors and analysts will be held on 16 February 2022, at 14:00 GMT / 15:00 CET / 09:00 EST.

 

Webinar instructions:

 

Please click the link below to join the webinar:

https://bankofgeorgia.zoom.us/j/92928157803?pwd=eW14Q1pCcjlLZ080aWRlei9pQk9BUT09

 

Webinar ID: 929 2815 7803

Passcode: 974381

 

Or use the following international dial-in numbers available at: https://bankofgeorgia.zoom.us/u/acIOeZXfHc

 

Webinar ID: 929 2815 7803 #

Passcode: 974381

 

 

 

 

 

 

CONTENTS

 

 

4

Macroeconomic developments

 


5

4Q22 and FY22 financial highlights

 


6

Financial highlights

 


7

Strategic highlights

 


8

Chief Executive Officer's statement

 


9

Discussion of results

 


14

Discussion of segment results

14

Retail Banking

16

Corporate and Investment Banking

 


18

Selected financial and operating information

 


23

Glossary

 


24

Company information

 

 

FORWARD-LOOKING STATEMENTS

 

This announcement contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development. Although Bank of Georgia Group PLC believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements, certain of which are beyond our control, include, among other things: macro risk, including domestic instability; regional instability risk; credit risk; liquidity and funding risk; capital risk; market risk; regulatory and legal risk; financial crime risk; information security and data protection risks; operational risk; human capital risk; COVID-19 pandemic risk; model risk; climate change risk; and other key factors that could adversely affect our business and financial performance, as indicated elsewhere in this document and in past and future filings and reports of the Group, including the 'Principal risks and uncertainties' included in Bank of Georgia Group PLC's Annual Report and Accounts 2021 and in 2Q22 and 1H22 results release . No part of this document constitutes, or shall be taken to constitute, an invitation or inducement to invest in Bank of Georgia Group PLC or any other entity within the Group, and must not be relied upon in any way in connection with any investment decision. Bank of Georgia Group PLC and other entities within the Group undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Nothing in this document should be construed as a profit forecast.



 

MACROECONOMIC DEVELOPMENTS

 

Strong growth momentum

During the fourth quarter, the Georgian economy maintained its recent strong momentum despite the ongoing war in Ukraine and global interest rate and inflationary trends. Continued inbound migration and relocation of capital boosted domestic demand. According to preliminary data, real GDP grew 9.5% year-on-year in the fourth quarter, and estimated real GDP growth for full year 2022 was 10.1%. The export of goods and services was the main driver of growth along with increased investment expenditure. Consumption spending slowed due to high inflation and tightened lending conditions. Nonetheless, domestic demand remains strong, supported by increased revenues from the external sector and fiscal spending. The overall growth was broad-based, with primary contributions from transport and communications, hospitality, and other services sectors.

 

Resilient external sector

Georgia's exports of goods moderated in 4Q22, growing 18.6% year-on-year, resulting in a 31.8% y-o-y growth in 2022. The slowdown was mainly due to a reduction in global commodity prices. Import growth remained robust on the back of strong economic activity. The widening trade deficit was offset by the continued recovery in tourism inflows and surge in money transfers from abroad. Tourism revenues exceeded the 2019 level by 45.7% in 4Q22, resulting in a 7.6% growth vs 2019 for 2022. Remittances grew 142.2% y-o-y in 4Q22 on the back of ongoing inbound migration. Given the positive dynamics in all sources of inflows, Georgia's external balance improved significantly in 2022.

 

Healthy bank lending growth

Bank lending slowed further in the fourth quarter of 2022, resulting in 12.1% year-on-year growth on a constant currency basis vs 14.5% y-o-y growth in 3Q22. Tighter lending conditions, driven by higher interest rates on FX loans and the NBG's decision to reduce the maximum tenor of uncollateralised consumer loans to three years, have weighed on credit demand. Local currency lending remains the primary driver of credit growth leading to a sustained reduction in bank loan dollarisation, which stood at 44.8% at 31 December 2022, down 5.9 ppts vs last year.

 

Improved fiscal performance

Georgia's fiscal performance continues to improve. Consolidated budget tax revenues increased by 37.3% year-on-year in 4 Q22. In December 2022, the Government of Georgia revised the planned budget deficit for 2022 down to 3.1% of GDP, reflecting better-than-expected tax revenues on the back of strong economic activity. Total public debt at year-end 2022 reached 39.6% of GDP, down from 49.7% in 2021, due to GEL appreciation and strong GDP growth. Overall, the positive growth outlook and the Government's commitment to fiscal consolidation supported by IMF's stand-by facilities are expected to ensure fiscal sustainability in the following years.

 

Topped-out inflation and tight monetary policy

Headline CPI inflation slowed to 9.8% year-on-year in December 2022 (vs 10.4% in November 2022). The diminishing effects of strong GEL and recent reduction in global commodity prices on domestic inflation have been partially offset by increased demand-side pressures amid strong economic activity. Currently, inflation is mainly driven by elevated food prices and housing costs. Decelerating producer and import price inflation, however, indicates that consumer prices should keep slowing down over the following months. Monetary policy remains tight, with the NBG policy rate at 11.0% since March 2022. According to the NBG's current guidance, inflation is expected to approach the 3% target by the end of 2023.

 

Strong GEL

Strong external inflows, tight monetary policy, and improved sentiment have supported the local currency. GEL appreciated by 12.5% against USD during 2022. In January 2023, GEL further gained additional 1.9% against USD. GEL is expected to remain stable in the medium term, supported by strong external inflows and positive growth outlook.

 

 

 

 

 

 

 

 

4 Q22 AND FY22 FINANCIAL HIGHLIGHTS [1]

 

 

GEL thousands

4Q22

4Q21

Change y-o-y

3Q22

Change

q-o-q

 

FY22

FY21

Change y-o-y

INCOME STATEMENT HIGLIGHTS










Interest income 

607,652

509,563

19.2%

574,626

5.7%


2,256,881

1,851,044

21.9%

Interest expense 

(273,007)

(239,492)

14.0%

(279,555)

-2.3%


(1,074,546)

(897,103)

19.8%

Net interest income 

334,645

270,071

23.9%

295,071

13.4%

 

1,182,335

953,941

23.9%

Net fee and commission income 

97,932

64,100

52.8%

79,662

22.9%


317,491

232,431

36.6%

Net foreign currency gain

125,395

34,495

263.5%

150,686

-16.8%


466,094

109,099

327.2%

Net other income (without one-off items)

26,930

10,579

154.6%

1,092

2366.1%


36,092

70,206

-48.6%

Operating income

584,902

379,245

54.2%

526,511

11.1%

 

2,002,012

1,365,677

46.6%

Operating expenses 

(181,062)

(150,772)

20.1%

(160,870)

12.6%

 

(641,186)

(507,952)

26.2%

Profit (loss) from associates

128

128

0.0%

250

-48.8%


754

(3,781)

NMF

Operating income before cost of risk

403,968

228,601

76.7%

365,891

10.4%

 

1,361,580

853,944

59.4%

Cost of risk 

(52,675)

(7,744)

NMF

(48,048)

9.6%


(119,068)

(51,412)

131.6%

Net operating income before non-recurring items and income tax

351,293

220,857

59.1%

317,843

10.5%

 

1,242,512

802,532

54.8%

Net non-recurring items 

329

(62)

NMF

428

-23.1%


1,038

(590)

NMF

Profit before income tax and one-off items

351,622

220,795

59.3%

318,271

10.5%

 

1,243,550

801,942

55.1%

Income tax expense

(25,723)

(20,076)

28.1%

(28,053)

-8.3%


(111,376)

(74,824)

48.9%

Profit adjusted for one-off items

325,899

200,719

62.4%

290,218

12.3%

 

1,132,174

727,118

55.7%

One-off items

311,825

-

-

-

 

 311,825

-

Profit

637,724

200,719

217.7%

290,218

119.7%

 

1,443,999

727,118

98.6%

Earnings per share (basic)

14.10

4.25

NMF

6.27

124.9%

 

30.99

15.22

103.6%

Earnings per share (diluted)

13.61

4.12

NMF

6.19

119.9%

 

30.33

14.88

103.8%

 

GEL thousands

Dec-22

Dec-21

Change y-o-y

Sep-22

Change q-o-q

BALANCE SHEET HIGHLIGHTS






Liquid assets

10,367,600

6,047,616

71.4%

9,486,712

9.3%

Cash and cash equivalents

3,584,843

1,520,562

135.8%

2,773,069

29.3%

Amounts due from credit institutions

2,433,028

1,931,390

26.0%

2,406,119

1.1%

Investment securities

4,349,729

2,595,664

67.6%

4,307,524

1.0%

Loans to customers and finance lease receivables [2]

16,861,706

16,168,973

4.3%

16,162,942

4.3%

Property and equipment

398,855

378,808

5.3%

400,874

-0.5%

Total assets

28,901,900

23,430,076

23.4%

26,988,984

7.1%

Client deposits and notes

18,261,397

14,038,002

30.1%

17,193,088

6.2%

Amounts due to credit institutions

5,266,653

4,318,445

22.0%

4,937,760

6.7%

Borrowings from DFIs

1,867,454

2,135,301

-12.5%

1,940,822

-3.8%

Short-term loans from central banks

1,715,257

1,413,333

21.4%

2,060,324

-16.7%

Loans and deposits from commercial banks

1,683,942

769,811

118.7%

936,614

79.8%

Debt securities issued

645,968

1,518,685

-57.5%

774,152

-16.6%

Total liabilities

24,653,078

20,337,168

21.2%

23,375,621

5.5%

Total equity

4,248,822

3,092,908

37.4%

3,613,363

17.6%

Book value per share

94.07

65.65

43.3%

78.81

19.4%









 

Ratios were adjusted for a one-off GEL 391.1 million of other income due to the settlement of an outstanding legacy claim, and a one-off GEL 79.3 million tax expense due to an amendment to the current corporate taxation model in Georgia.

 

KEY RATIOS

4Q22

4Q21

3Q22

 

FY22

FY21

ROAA1

4.7%

3.5%

4.4%


4.4%

3.2%

ROAE1

33.7%

26.4%

32.4%


32.4%

25.8%

Net interest margin

5.7%

5.3%

5.3%


5.4%

4.9%

Loan yield

12.0%

11.0%

11.6%


11.5%

10.6%

Liquid assets yield

4.2%

4.0%

4.2%


4.3%

3.5%

Cost of funds

4.6%

4.8%

4.9%


4.9%

4.6%

Cost of client deposits and notes

3.4%

3.5%

3.6%


3.6%

3.6%

Cost of amounts due to credit institutions

8.5%

8.3%

9.1%


8.9%

7.3%

Cost of debt securities issued

7.5%

6.8%

7.3%


7.1%

6.9%

Cost/income1

31.0%

39.8%

30.6%


32.0%

37.2%

NPLs to gross loans

2.7%

2.4%

2.4%


2.7%

2.4%

NPL coverage ratio

66.4%

95.5%

89.4%


66.4%

95.5%

NPL coverage ratio, adjusted for discounted value of collateral

128.9%

147.7%

138.0%


128.9%

147.7%

Cost of credit risk

0.9%

-0.2%

1.0%


0.8%

0.0%

NBG (Basel III) CET 1 capital adequacy ratio

14.7%

13.2%

14.8%


14.7%

13.2%

Minimum regulatory requirement

11.6%

11.5%

11.6%

 

11.6%

11.5%

NBG (Basel III) Tier I capital adequacy ratio

16.7%

15.0%

17.0%


16.7%

15.0%

Minimum regulatory requirement

13.8%

13.6%

13.8%

 

13.8%

13.6%

NBG (Basel III) Total capital adequacy ratio

19.8%

19.3%

20.3%


19.8%

19.3%

Minimum regulatory requirement

17.2%

17.7%

17.2%

 

17.2%

17.7%













FINANCIAL HIGHLIGHTS

Operating income before cost of risk (adjusted for one-off items) was up 76.7% y-o-y in the fourth quarter to GEL 404.0 million and up 59.4% y-o-y for the full year to GEL 1,361.6 million.

· The Group delivered strong y-o-y and q-o-q top-line growth during the fourth quarter, with non-interest income generation underpinned by the growth of the Georgian economy.

· We ended the full year with operating income (adjusted for one-off items) of GEL 2,002 million, up 46.6% y-o-y, driven by a strong performance across core revenue lines, with a four-fold increase in net foreign currency gains on the back of migrant inflows, increased activity, and higher spreads throughout the year.

· The Group delivered positive operating leverage y-o-y in 4Q22 and FY22 and improved the cost to income ratio to 31.0% in 4Q22 vs 39.8% in 4Q21, and to 32.0% in FY22 vs 37.2% in FY21.

  Asset quality remains strong

· Cost of credit risk ratio was 0.9% in 4Q22 (-0.2% in 4Q21 and 1.0% in 3Q22) and 0.8% in FY22 (0.0% in FY21).  

· NPLs to gross loans increased to 2.7% at 31 December 2022 (2.4% at 31 December 2021 and 2.4% at 30 September 2022), driven by a one-off methodological change as we are aligning our internal NPL definitions more closely to IFRS Stage 3 definitions. Excluding this change, NPLs to gross loans ratio would have decreased to 2.2% at 31 December 2022.

Robust bottom-line growth and high profitability

· The Group's profit (adjusted for one-off items) amounted to GEL 325.9 million in 4Q22 (up 62.4% y-o-y and up 12.3% q-o-q). Profit for the full year was GEL 1,132.2 million (up 55.7% y-o-y). ROAE (adjusted) stood at 33.7% in 4Q22 (26.4% in 4Q21 and 32.4% in 3Q22), and was 32.4% in FY22 (25.8% in FY21).

· Reported profit in 4Q22 amounted to GEL 637.7 million (up 217.7% y-o-y and up 119.7% q-o-q). Reported profit for full year was GEL 1,444.0 million (up 98.6% y-o-y).

 

Moderate loan book growth and strength of our deposit franchise

· Loan book grew 4.3% y-o-y and 4.3% q-o-q during the fourth quarter. On a constant currency basis, the loan portfolio increased by 12.9% y-o-y and by 4.8% q-o-q.

· Significant growth of client deposits and notes was achieved again during the fourth quarter - 30.1% y-o-y and 6.2% q-o-q in nominal terms and 43.2% y-o-y and 8.5% q-o-q on a constant currency basis, mainly driven by the Retail Banking segment.

 

Strong capital and liquidity positions

· At 31 December 2022, the Bank's Basel III Common Equity Tier 1, Tier 1, and Total capital adequacy ratios stood at 14.7%, 16.7%, and 19.8%, respectively, all comfortably above the minimum requirements of 11.6%, 13.8% and 17.2%, respectively. The one-off other income of GEL 391.1m, recorded in the fourth quarter of the year, arose at the holding company level and is therefore not reflected in the Bank's capital ratios, which are calculated within the regulated Bank - JSC Bank of Georgia.

· Liquidity coverage ratio stood at 132.4% at 31 December 2022 vs 124.0% at 31 December 2021 and 121.4% at 30 September 2022, above the 100% minimum requirement.

 

Capital distribution

· On 20 October 2022, the Group paid an interim dividend of GEL 1.85 per ordinary share.

· In December 2022, we completed the GEL 112.7 million share buyback and cancellation programme, having repurchased and cancelled 1,670,446 ordinary shares.  

· The Board intends to increase the share buyback and cancellation programme by up to GEL 148 million.

· At the 2023 Annual General Meeting, the Board also intends to recommend for shareholder approval a final dividend for 2022 of GEL 5.80 per share payable in Pounds Sterling at the prevailing rate. This would make a total dividend paid in respect of the Group's 2022 earnings of GEL 7.65 per share.

 



 

STRATEGIC HIGHLIGHTS [3]

 

Dec-22

Dec-21

Change

y-o-y

Sep-22

Change

q-o-q

 

ACTIVE CUSTOMERS






 

Number of monthly active legal entities

81,342

64,707

25.7%

75,561

7.7%

 

Number of monthly active customers (total)

1,713,781

1,459,200

17.4%

1,621,545

5.7%

 

DIGITAL






 

Monthly active digital users (individual clients)

1,121,434

852,711

31.5%

1,005,248

11.6%

 

Share of MAU in total active individuals

68.7%

61.1%


65.0%


 

DAU/MAU

47.6%

44.2%


45.2%


 


 

Volume in GEL thousands, figures in thousands

4Q22

4Q21

Change

y-o-y

3Q22

Change

q-o-q

 

FY22

FY21

Change

y-o-y

 

DI GITAL










 

Number of transactions in mBank and iBank

52,466

35,402

48.2%

45,029

16.5%


174,093

114,057

52.6%

 

Volume of transactions in mBank and iBank

14,430,342

6,624,465

117.8%

11,450,224

26.0%


42,330,936

20,963,783

101.9%

 

Product offloading rate

40.0%

28.4%


34.0%






 

PAYMENTS










 

Number of active POS terminals (offline and online)

34.9

27.4

27.2%

32.8

6.3%


34.9

27.4

27.2%

Volume of transactions in BOG's acquiring

3,223,209

2,108,919

52.8%

2,765,830

16.5%


10,212,789

6,858,671

48.9%

CUSTOMER SATISFACTION










Net promoter score (NPS)

58.4

54.5


60.1

















 























Strong franchise growth

· We increased Bank of Georgia's customer base to 1.7 million monthly active customers at 31 December 2022 - a 17.4% increase vs 31 December 2021 and a 5.7% increase vs 30 September 2022.

· The number of monthly active digital users (MAU; individuals) was up 31.5% y-o-y and up 11.6% q-o-q to 1.1 million at 31 December 2022. The share of MAU in total active individuals increased to 68.7% at 31 December 2022, up from 61.1% at 31 December 2021 and 65.0% at 30 September 2022, reflecting the increasing adoption of our market-leading digital platforms.  

Digital channels 

· We significantly increased the share of product sales through digital channels - to 40.0% in 4Q22 vs 28.4% in 4Q21 and vs 34.0% in 3Q22.

· 96.4% of total transactions were non-branch transactions in 4Q22, with the share of transactions via mBank/iBank at 58.2%, up from 50.8% in 4Q21. 

· In the fourth quarter we fully launched sCoolApp, the first financial mobile application for school students in Georgia. Our goal is to increase basic financial literacy of young people by enabling access to digital financial services and a variety of educational content that will be built into the app. At 31 December 2022, 33,167 school students were monthly active users of the app.

Payments

· Bank of Georgia's market share in acquiring increased to 50.3% in 4Q22 vs 43.0% in 4Q21. The volume of transactions executed through BOG's offline and online terminals was up 52.8% y-o-y in the fourth quarter of 2022 and up 48.9% for the full year.

· Bank of Georgia's cards were used for payments at least once by 1.0 million individuals in December 2022 (up 33.0% y-o-y, up 11.8% q-o-q).  

Customer satisfaction

· Net Promoter Score (NPS) stood at 58.4 in the fourth quarter (up 3.9 points y-o-y and down 1.7 points q-o-q).  

 

 

CHIEF EXECUTIVE OFFICER'S STATEMENT

2022 was an unprecedented year - which started with the war in Ukraine, which shocked us all, and which, sadly, remains ongoing.  Our thoughts remain with the Ukrainian people, and I hope this horrible human suffering ends soon.

Despite the high levels of uncertainty and volatility during the year, however, the Georgian economy demonstrated strong growth momentum, resulting in an estimated 10.1% real GDP growth in 2022. One of the key drivers of growth during 2022 were strong external inflows, including FX inflows that were boosted by the inbound migration of people and relocation of capital from nearby countries, as well as increased activity in the transportation sector, as the rerouting of cargo from Central Asia amplified Georgia's position as an important transport, trading and logistics corridor for the region. On the back of these developments, we saw strong nominal GDP growth, a reduced current account deficit to around 3.1% of GDP, a reduced fiscal deficit to 3.1% of GDP, and a significant strengthening of GEL, which appreciated by 12.5% against the US Dollar during 2022. Inflation and tight monetary policy are still the main challenges, but Georgia's macroeconomic risks overall reduced significantly - public debt decreased to 39.6% of GDP, from 49.7% in 2021, and banking sector loans to GDP also decreased to 62.7%, from 71.5% a year ago. In addition, gross international reserves increased by 14.7% in 2022 to USD 4.9bn.  

The strength of the Georgian economy underpinned the recent growth momentum of Bank of Georgia. Our market-leading digital channels and payments solutions, coupled with top of mind customer franchise and a dedicated team with a strong customer-centric culture - ensured that we were well-positioned to benefit from the greater than expected economic growth. We reported strong financial results in the fourth quarter, culminating in an excellent full-year performance as operating income before cost of risk (adjusted for one-off items) was up 59.4% y-o-y, profit (adjusted for one-off items) was up 55.7% to GEL 1,132 million and a full-year return on average equity stood at 32.4% [4] . We maintained a strong balance sheet and continued investments in building the business. Full year basic earnings per share more than doubled to GEL 30.99 per share, and book value per share increased by 43.3% to GEL 94.07.

Over the last few years, we have invested significantly in our customer franchise and, as a result, are now delivering significant growth across our key performance metrics. The number of our monthly active retail clients grew 17.1% y-o-y to 1.6 million, which is a great result in a country of 3.6 million. Importantly, the number of monthly active digital users was up 31.5% y-o-y to 1.1 million - representing 68.7% of our monthly active customers, compared to 61.1% a year ago.  During the fourth quarter, we launched the first financial mobile application for school students in Georgia - Bank of Georgia's sCoolApp - ending December with 33,167 monthly active users. Financial inclusion is one of our main focus areas, and we aim to enable children to improve their financial literacy skills through engagement with the app and the educational content that we plan to embed into this channel.

Our payments business also continued to excel, with the volume of transactions through Bank of Georgia's acquiring up 52.8% y-o-y in the fourth quarter and up 48.9% y-o-y for the full year. Now more than 1 million individuals use our cards for payments at least monthly, a 33.0% increase over the last 12 months.

On the portfolio side, our loan book increased by 12.9% y-o-y on a constant currency basis, and deposit growth was outstanding, at 43.2% y-o-y on a constant currency basis, not only supported by migrant inflows, but also by high levels of local economic activity, reflecting the strength of our brand and customer franchise.

Good profitability and the improved GEL resulted in a strong capital position, with historically high levels of capital buffers. The CET1 ratio stood at 14.7% at 31 December 2022, more than 300 basis points above the minimum requirement. In addition, the one-off gain of GEL 391.1 million, recorded in the fourth quarter of the year, arose at the holding company level and is therefore not reflected in the Bank's capital ratios, which are calculated within the regulated Bank - JSC Bank of Georgia.

Considering the Group's strong performance during 2022, at the 2023 Annual General Meeting, the Board intends to recommend a final dividend for 2022 of GEL 5.80 per share, making a total dividend for 2022 of GEL 7.65 per share. In addition, the Board intends to increase the share buyback and cancellation programme by up to GEL 148 million. This represents an overall dividend and share buyback pay-out ratio for the year ended 31 December 2022 of 37%, in line with our capital distribution policy.

Going forward, although risks remain, given the importance of the South Caucasian corridor for the Central Asian economies, we expect Georgia's role in the region to strengthen, bringing in additional investments and economic activity in the energy, transport, and logistics sectors over the next few years. On our side, we remain well-positioned to capture the benefits of increased economic activity in the country, and to sustainably deliver strong growth and high profitability. 

Archil Gachechiladze,

CEO, Bank of Georgia Group PLC

15 February 2023


DISCUSSION OF RESULTS

The Group's business consists of three key business segments. (1) Retail Banking operations in Georgia comprising sub-segments that target mass retail, mass affluent and high-net-worth clients and MSMEs. (2) Corporate and Investment Banking operations in Georgia serving corporate and institutional customers and providing brokerage services through Galt & Taggart. (3) JSC Belarusky Narodny Bank - BNB - serving retail and SME clients in Belarus.

GEL thousands, unless otherwise noted


4Q22

4Q21

Change y-o-y

4Q22

Change q-o-q

 

FY22

FY21

Change y-o-y

OPERATING INCOME











Interest income 


607,652

509,563

19.2%

574,626

5.7%


2,256,881

1,851,044

21.9%

Interest expense 


(273,007)

(239,492)

14.0%

(279,555)

-2.3%


(1,074,546)

(897,103)

19.8%

Net interest income 

 

334,645

270,071

23.9%

295,071

13.4%

 

1,182,335

953,941

23.9%

Fee and commission income 


170,458

113,664

50.0%

147,207

15.8%


559,465

390,829

43.1%

Fee and commission expense 


(72,526)

(49,564)

46.3%

(67,545)

7.4%


(241,974)

(158,398)

52.8%

Net fee and commission income 

 

97,932

64,100

52.8%

79,662

22.9%

 

317,491

232,431

36.6%

Net foreign currency gain


125,395

34,495

263.5%

150,686

-16.8%


466,094

109,099

327.2%

Net other income (without one-off items)


26,930

10,579

154.6%

1,092

2366.1%


36,092

70,206

-48.6%

Operating income

 

584,902

379,245

54.2%

526,511

11.1%

 

2,002,012

1,365,677

46.6%

 











Net interest margin


5.7%

5.3%


5.3%



5.4%

4.9%


Average interest earning assets


23,154,159

20,257,844

14.3%

21,908,999

5.7%


21,765,305

19,510,848

11.6%

Average interest bearing liabilities


23,547,485

19,696,541

19.6%

22,437,533

4.9%


21,865,374

19,409,266

12.7%

Average net loans and finance lease receivables,


16,420,526

15,825,253

3.8%

16,081,414

2.1%


16,213,098

15,057,524

7.7%

Average net loans and finance lease receivables, GEL


8,681,922

7,155,129

21.3%

8,207,464

5.8%


8,009,664

6,493,966

23.3%

Average net loans and finance lease receivables, FC


7,738,604

8,670,124

-10.7%

7,873,950

-1.7%


8,203,434

8,563,558

-4.2%

Average client deposits and notes


17,785,715

13,717,739

29.7%

16,467,683

8.0%


15,876,171

13,766,622

15.3%

Average client deposits and notes, GEL


6,627,550

5,270,841

25.7%

6,378,171

3.9%


6,172,866

5,290,089

16.7%

Average client deposits and notes, FC


11,158,165

8,446,898

32.1%

10,089,512

10.6%


9,703,305

8,476,533

14.5%

Average liquid assets


9,871,678

6,023,591

63.9%

8,961,650

10.2%


8,178,417

6,283,441

30.2%

Average liquid assets, GEL


 3,395,553

2,811,276

20.8%

3,374,212

0.6%


3,305,624

2,651,356

24.7%

Average liquid assets, FC


 6,476,125

3,212,315

101.6%

5,587,438

15.9%


4,872,793

3,632,085

34.2%

Liquid assets yield

 

4.2%

4.0%


4.2%



4.3%

3.5%


Liquid assets yield, GEL

 

8.7%

8.3%


8.9%



8.9%

7.9%


Liquid assets yield, FC

 

1.8%

0.1%


1.1%



1.0%

0.1%


Loan yield

 

12.0%

11.0%


11.6%



11.5%

10.6%


Loan yield, GEL

 

15.7%

15.5%


16.0%



15.9%

15.1%


Loan yield, FC

 

7.7%

7.2%


7.0%



7.2%

7.1%


Cost of funds

 

4.6%

4.8%


4.9%



4.9%

4.6%


Cost of funds, GEL

 

9.1%

8.9%


9.5%



9.4%

8.2%


Cost of funds, FC

 

1.5%

2.2%


1.7%



1.8%

2.5%


 

Performance highlights

Operating income

· The Group generated operating income (adjusted for one-off items) of GEL 584.9m in 4Q22 (up 54.2% y-o-y and up 11.1% q-o-q), ending the full year of 2022 with operating income (adjusted for one-off items) of GEL 2,002.0m (up 46.6% y-o-y). The y-o-y growth was strong across key revenue lines.

· Net fee and commission income was GEL 97.9m in 4Q22 (up 52.8% y-o-y and up 22.9% q-o-q). The year-on-year increase was mainly driven by settlement operations and currency conversion operations, partly offset by cash operations. The quarter-on-quarter increase was driven by settlement operations and growth in advisory and brokerage service fees. Net fee and commission income amounted to GEL 317.5m during the full year of 2022 (up 36.6% y-o-y), mainly driven by settlement operations and currency conversion operations, partly offset by cash operations.

· Net foreign currency gain amounted to GEL 125.4m in the fourth quarter (up 263.5% y-o-y and down 16.8% q-o-q), and was GEL 466.1m for full year 2022 (up 327.2% y-o-y). The key drivers of the significant y-o-y boost to net foreign currency gain were increased migrant inflows to Georgia as well as higher spreads on the back of exchange rate volatility.

· Net other income (adjusted for one-off items) of GEL 26.9m in 4Q22 (up 154.6% y-o-y and up 24.7x q-o-q) was mainly driven by net gains from revaluation of investment properties as well as sale of repossessed assets and assets held for sale. For full year, net other income (adjusted for one-off items) amounted to GEL 36.1m (down 48.6% y-o-y), mainly due significant net gains from sale of real estate properties and investment securities recorded in 2021. Full year net other income also included a net loss related to the repurchase of US$ 129,987,000 of the Bank's US$ 350 million 6.00% Notes due 2023 under the tender offer announced and completed in September 2022.

 

 

NIM

· The increase in the net interest margin to 5.7% in the fourth quarter (up 40 bps y-o-y and up 40 bps q-o-q) was mainly driven by higher loan yield and decreased cost of funds, partially offset by higher levels of liquidity. NIM was 5.4% in FY22 (up 50 bps y-o-y), supported by increased loan yield, partly offset by increased cost of funds.

Loan yield was 12.0% in 4Q22, up 100 bps y-o-y and up 40 bps q-o-q. For the full year 2022, loan yield stood at 11.5% (up 90 bps y-o-y). The y-o-y increase was driven by GEL loans (15.7% in 4Q22 vs 15.5% 4Q21; 15.9% in FY22 vs 15.1% in FY21), reflecting the policy rate hikes by the NBG. Loan yield on foreign currency loans also picked up during the fourth quarter and stood at 7.7% vs 7.0% in 3Q22 and 7.2% in 4Q21, also reflecting higher interest rates globally.

Cost of funds was 4.6% in 4Q22, down 20 bps y-o-y and down 30 bps q-o-q. GEL cost of funds was up 20 bps y-o-y and down 40 bps q-o-q to 9.1% in the fourth quarter. Foreign currency cost of funds was down 70 bps y-o-y and down 20 bps q-o-q to 1.5%, on the back of the high volume of FC deposit inflows. For the full year, cost of funds stood at 4.9% (up 30 bps y-o-y). GEL cost of funds was 9.4% (up 120 bps y-o-y), driven by the policy rate hikes by the NBG. Foreign currency cost of funds was 1.8% (down 70 bps y-o-y).











GEL thousands

4Q22

4Q21

Change y-o-y

3Q22

Change q-o-q

 

FY22

FY21

Change y-o-y

OPERATING EXPENSES, COST OF RISK, PROFIT










Salaries and other employee benefits

(93,698)

(80,501)

16.4%

(94,641)

-1.0%


(362,019)

(281,087)

28.8%

Administrative expenses

(54,931)

(43,552)

26.1%

(38,398)

43.1%


(164,450)

(129,524)

27.0%

Depreciation, amortisation and impairment

(31,717)

(25,256)

25.6%

(27,209)

16.6%


(111,089)

(93,618)

18.7%

Other operating expenses 

(716)

(1,463)

-51.1%

(622)

15.1%


(3,628)

(3,723)

-2.6%

Operating expenses 

(181,062)

(150,772)

20.1%

(160,870)

12.6%

 

(641,186)

(507,952)

26.2%

Profit (loss) from associates

128

128

0.0%

250

-48.8%


754

(3,781)

NMF

Operating income before cost of risk

403,968

228,601

76.7%

365,891

10.4%

 

1,361,580

853,944

59.4%

Expected credit loss /impairment charge on loans to customers

(37,535)

9,836

NMF

(38,002)

-1.2%


(128,678)

(1,452)

NMF

Expected credit loss /impairment charge on finance lease receivables

472

(3,406)

NMF

(1,500)

NMF


(3,208)

(4,950)

-35.2%

Other expected credit gain (loss) and impairment charge on other

assets and provisions

(15,612)

(14,174)

10.1%

(8,546)

82.7%


12,818

(45,010)

NMF

Cost of risk 

(52,675)

(7,744)

NMF

(48,048)

9.6%

 

(119,068)

(51,412)

131.6%

Net operating income before non-recurring items and income tax

351,293

220,857

59.1%

317,843

10.5%

 

1,242,512

802,532

54.8%

Net non-recurring items 

329

(62)

NMF

428

-23.1%


1,038

(590)

NMF

Profit before income tax 

351,622

220,795

59.3%

318,271

10.5%

 

1,243,550

801,942

55.1%

Income tax expense

(25,723)

(20,076)

28.1%

(28,053)

-8.3%


(111,376)

(74,824)

48.9%

Profit adjusted for one-off items  

325,899

200,719

62.4%

290,218

12.3%

 

1,132,174

727,118

55.7%

One-off in other income

391,100

 -

 -


391,100

-

One-off income tax expense

(79,275)

-

-


(79,275)

-

Profit

637,724

200,719

217.7%

290,218

119.7%

 

1,443,999

727,118

98.6%

 

Operating expenses and efficiency

· Operating expenses amounted to GEL 181.1m in 4Q22 (up 20.1% y-o-y and up 12.6% q-o-q). The year-on year growth was mainly driven by business growth, continuing investments in strategic areas, particularly IT, as well as the inflationary environment. The quarter-on-quarter growth was mainly driven by activities typical for the year end, including increased costs in marketing and advertising, and some consulting fees. Operating expenses amounted to GEL 641.2m for the full year, up 26.2% y-o-y.

· Notably, the Group delivered positive operating leverage y-o-y in 4Q22 and FY22, improving the cost to income ratio to 31.0% in 4Q22 vs 39.8% in 4Q21. Cost to income ratio for full year 2022 was 32.0% vs 37.2% in 2021.

Cost of risk 

· Cost of credit risk ratio was 0.9% in 4Q22 (-0.2% in 4Q21 and 1.0% in 3Q22) and 0.8% in FY22 (0.0% in FY21). Expected credit loss provisions on loans and finance lease receivables posted during the fourth quarter amounted to GEL 37.1m, driven by Retail Banking.

One-off items

· We posted significant one-off items in the fourth quarter:

A GEL 391.1 million one-off other income relates to the settlement of a dispute over terms and enforcement of a historic collateral option with regard to an industrial asset linked to one of the Group's legacy defaulted borrowers. An outstanding claim was settled at the end of 2022 and the Group recognised the GEL 391.1 million one-off income at fair value in its consolidated financial statements. This other income arose at the holding company level and is not therefore reflected in the Bank's capital ratios, which are calculated within the regulated Bank - JSC Bank of Georgia.

A GEL 79.3 million one-off expense due to the re-measurement of deferred taxes as a result of an amendment to the current corporate taxation model in Georgia applicable to financial institutions, which passed into law on 28 December 2022 and became effective with regard to 2023 taxable profits. The previous taxation model, effective for 2022 results, implied a 15% tax rate charged to banks' taxable profit before tax, regardless of retention or distribution status, although this was previously expected to change on 1 January 2023 to a zero corporate tax rate on retained earnings and a 15% corporate tax rate on distributed earnings. This expected change did not happen, and the existing model of taxation of banks has been maintained. At the same time, the existing corporate tax rate for banks was increased from 15% to 20% for 2023 taxable earnings, and dividends issued from 2023 profits and subsequent periods will no longer be taxed (existing dividend tax rate is 5%). In addition, with effect from 2023, taxable interest income and deductible Expected Credit Losses will be defined per IFRS, instead of local National Bank of Georgia regulations.

Profitability

· The Group's profit adjusted for one-off items was GEL 325.9m in 4Q22 (up 62.4% y-o-y, up 12.3% q-o-q). For the full year, the adjusted profit was GEL 1,132.2m (up 55.7% y-o-y).

· Return on average equity (adjusted) was 33.7% in 4Q22 (26.4% in 4Q21 and 32.4% in 3Q22). For the full year 2022, adjusted ROAE was 32.4% (25.8% in FY21).

 

GEL thousands, unless otherwise noted

Dec-22

Dec-21

Change

y-o-y

Sep-22

Change q-o-q

BALANCE SHEET HIGHLIGHTS






Liquid assets

10,367,600

6,047,616

71.4%

9,486,712

9.3%

Liquid assets, GEL

3,461,218

2,819,195

22.8%

3,374,039

2.6%

Liquid assets, FC

6,906,382

3,228,421

113.9%

6,112,673

13.0%

Net loans and finance lease receivables

16,861,706

16,168,973

4.3%

16,162,942

4.3%

Net loans and finance lease receivables, GEL

8,854,286

7,348,911

20.5%

8,503,690

4.1%

Net loans and finance lease receivables, FC

8,007,420

8,820,062

-9.2%

7,659,252

4.5%

Client deposits and notes

18,261,397

14,038,002

30.1%

17,193,088

6.2%

  Client deposits and notes, GEL

6,692,834

5,426,211

23.3%

6,440,570

3.9%

  Client deposits and notes, FC

11,568,562

8,611,791

34.3%

10,752,518

7.6%

Amounts due to credit institutions

5,266,653

4,318,445

22.0%

4,937,760

6.7%

Borrowings from DFIs

1,867,454

2,135,301

-12.5%

1,940,822

-3.8%

Short-term loans from central banks

1,715,257

1,413,333

21.4%

2,060,324

-16.7%

Loans and deposits from commercial banks

1,683,942

769,811

118.7%

936,614

79.8%

Debt securities issued

645,968

1,518,685

-57.5%

774,152

-16.6%







Loan book

· Net loans and finance lease receivable amounted to GEL 16,861.7m at 31 December 2022, up 4.3% y-o-y and up 4.3% q-o-q in nominal terms. Growth on a constant-currency basis was 12.9% y-o-y and 4.8% q-o-q. The year-on-year nominal growth was mainly driven by consumer portfolio (up 25.4%), mortgages (up 5.1%) and SME portfolio (up 10.5%), partly offset by reduced corporate portfolio (down 4.4%) due to GEL appreciation, as the majority of corporate loans are denominated in foreign currency. The quarter-on-quarter growth in both nominal and constant currency terms was driven by corporate, SME, and consumer portfolios, partly offset by reduced micro loan book.

· De-dollarisation trend continues in y-o-y perspective, as the share of foreign currency denominated loans was 47.5% at 31 December 2022 vs 54.5% at 31 December 2021 and vs 47.4% at 30 September 2022.

· The share of non-performing loans in gross loans increased to 2.7% at 31 December 2022 (up 30 bps y-o-y and up 30 bps q-o-q), mainly driven by a one-off methodological change as we are seeking to align our internal NPL definitions more closely to IFRS Stage 3 definitions. We classified some Retail Stage 3 loans that had already been provisioned as NPLs. Consequently, the NPL coverage ratio decreased to 66.4% at 31 December 2022 vs 95.5% at 31 December 2021 and vs 89.4% at 30 September 2022. NPL coverage is supported by a high level of collateralisation of the NPL portfolio.

· The positive asset quality trend during the year is also reflected in an improvement in stage 3 loans to gross loans to 3.4% at 31 December 2022 (3.8% at 31 December 2021 and 3.5% at 30 September 2022).

 

GEL thousands, unless otherwise noted


Dec-22

Dec-21

Change

y-o-y

Sep-22

Change q-o-q

NON-PERFORMING LOANS







NPLs


471,577

394,720

19.5%

398,229

18.4%

NPLs to gross loans


2.7%

2.4%


2.4%


 NPLs to gross loans, RB


2.5%

1.8%


2.0%


 NPLs to gross loans, CIB


3.4%

3.6%


3.1%


NPL coverage ratio


66.4%

95.5%


89.4%


NPL coverage ratio adjusted for the discounted value of collateral


128.9%

147.7%


138.0%


Stage 3 ratio [5]


3.4%

3.8%


3.5%


 

 

 

Deposits

· Client deposits and notes amounted to 18,261.4m at 31 December 2022 (up 30.1% y-o-y, up 6.2% q-o-q), mainly driven by increased migrant/client flows and subsequent growth in current and demand deposits. On a constant currency basis deposits increased by 43.2% y-o-y and 8.5% q-o-q.

· 63.3% of client deposits and notes were denominated in foreign currency at 31 December 2022, vs 61.3% at 31 December 2021 vs 62.5% at 30 September 2022.

Liquid assets

· Liquid assets increased significantly and amounted to GEL 10,367.6m at 31 December 2022 (up 71.4% y-o-y, up 9.3% q-o-q). The y-o-y growth was mainly driven by a substantial growth of client deposits. As at 31 December 2022, the share of liquid assets to total assets stood at 35.9% at 31 December 2022, vs 25.8% at 31 December 2021 vs 35.2% at 30 September 2022.

Capital position

· During the fourth quarter, the Bank's Basel III CET1 capital ratio decreased by 10 bps, Tier1 capital ratio decreased by 30 bps, while Total capital ratio decreased by 50 bps and stood at 14.7%, 16.7%, and 19.8%, respectively, all comfortably above the minimum requirements of 11.6%, 13.8%, and 17.2%, respectively. The movement in capital adequacy ratios in 4Q22 and the potential impact of a 10% devaluation of local currency is as follows:

 


30 Sep 2022

4Q22

profit

Business growth

Currency impact

Capital distribution

Capital facility impact

31 Dec

2022

 

 

 

Potential impact

of a 10% GEL devaluation













CET1 capital adequacy ratio

14.8%

1. 1 %

-0.9%

0.3%

-0.7%

0.0%

1 4 . 7 %




- 1.0%

Tier I capital adequacy ratio

17.0%

1. 1 %

-1.1%

0.3%

-0.7%

0.0%

1 6 . 7 %




-0. 9 %

Total capital adequacy ratio

20.3%

1. 1 %

-1.2%

0. 2 %

-0.7%

0.0%

19 . 8 %




-0. 8 %

 

Since January 2023, the NBG has transitioned to IFRS-based accounting. The Bank's capital ratios and requirements as at 31 December 2022 based on the IFRS accounting were:

 

Capital ratios

Capital requirements

CET1

17.7%

14.5%

Tier1

19.7%

16.7%

Total capital

21.7%

20.2%

The IFRS-based ratios in the table above are presented on a management basis and are not officially approved by the NBG on the basis that they were not mandatory as of the reporting date.  

The Bank's minimum capital requirements, reflecting the full loading of Basel III capital requirements, to be completed in 2023, which remain subject to ongoing annual regulatory reviews, are currently expected to be as follows:  

 

Capital requirements (Dec-23)

CET1

14.8%

Tier1

17.1%

Total capital

20.2%

 

Capital distribution

· In August 2022 the Board of Directors declared an interim dividend of GEL 1.85 per share in respect of the period ended 30 June 2022 to ordinary shareholders of Bank of Georgia Group PLC. The interim dividend was paid on 20 October 2022.

· In addition, the Board extended the share buyback and cancellation programme by an additional GEL 40 million. The Group completed the share buyback and cancelation programme in December 2022. Since the announcement of the Group's share buyback and cancellation programme on 30 June 2022, the Group bought back and cancelled 1,670,446 ordinary shares at a total cost of GEL 112.7 million. As at 31 December 2022, the number of shares with voting rights amounted to 47,498,982.

· The Board intends to increase the share buyback and cancellation programme by up to GEL 148 million.

· At the 2023 Annual General Meeting, the Board also intends to recommend for shareholder approval a final dividend for 2022 of GEL 5.80 per share payable in Pounds Sterling at the prevailing rate. This would make a total dividend paid, from the profits of JSC Bank of Georgia, in respect of the Group's 2022 earnings of GEL 7.65 per share.

 

 


 

 

DISCUSSION OF SEGMENT RESULTS

RETAIL BANKING (RB)

GEL thousands, unless otherwise noted

4Q22

4Q21

Change y-o-y

3Q22

Change y-o-y

 

FY22

FY21

Change

y-o-y











INCOME STATEMENT HIGHLIGHTS










Interest income 

432,542

351,458

23.1%

427,876

1.1%


1,633,958

1,266,028

29.1%

Interest expense 

(220,285)

(190,291)

15.8%

(226,775)

-2.9%


(865,990)

(683,497)

26.7%

Net interest income 

212,257

161,167

31.7%

201,101

5.5%

 

767,968

582,531

31.8%

Net fee and commission income 

81,000

50,116

61.6%

63,084

28.4%

 

256,287

178,928

43.2%

Net foreign currency gain

77,242

17,234

348.2%

91,211

-15.3%


277,608

58,139

377.5%

Net other income

12,987

3,527

268.2%

3,588

262.0%


21,401

25,869

-17.3%

Operating income

383,486

232,044

65.3%

358,984

6.8%

 

1,323,264

845,467

56.5%

Salaries and other employee benefits

(64,601)

(59,875)

7.9%

(65,775)

-1.8%


(251,530)

(205,055)

22.7%

Administrative expenses

(42,540)

(33,965)

25.2%

(28,510)

49.2%


(126,811)

(102,138)

24.2%

Depreciation, amortisation and impairment

(28,131)

(21,622)

30.1%

(24,416)

15.2%


(99,739)

(80,127)

24.5%

Other operating expenses 

(481)

(1,079)

-55.4%

(336)

43.2%


(2,574)

(2,595)

-0.8%

Operating expenses 

(135,753)

(116,541)

16.5%

(119,037)

14.0%

 

(480,654)

(389,915)

23.3%

Profit from associates

128

128

0.0%

250

-48.8%


754

(3,781)

NMF

Operating income before cost of risk

247,861

115,631

114.4%

240,197

3.2%

 

843,364

451,771

86.7%

Cost of risk 

(44,255)

(20,003)

121.2%

(44,327)

-0.2%


(172,702)

(72,351)

138.7%

Profit before non-recurring items and income tax

203,606

95,628

112.9%

195,870

3.9%

 

670,662

379,420

76.8%

Net non-recurring items 

502

(11)

NMF

427

17.6%


1,241

20

NMF

Profit before income tax 

204,108

95,617

113.5%

196,297

4.0%

 

671,903

379,440

77.1%

Income tax expense

(17,887)

(7,897)

126.5%

(15,970)

12.0%


(63,189)

(32,956)

91.7%

Profit adjusted for one-off income tax expense

186,221

87,720

112.3%

180,327

3.3%

 

608,714

346,484

75.7%

One-off income tax expense

(42,085)

-

-


(42,085)

-

Profit 

144,136

87,720

64.3%

180,327

-20.1%

 

566,629

346,484

63.5%

 










BALANCE SHEET HIGHLIGHTS










Net loans, standalone

11,368,907

10,349,776

9.8%

11,041,753

3.0%


11,368,907

10,349,776

9.8%

Net loans, standalone, GEL

7,515,389

6,201,310

21.2%

7,276,565

3.3%


7,515,389

6,201,310

21.2%

Net loans, standalone, FC

3,853,518

4,148,466

-7.1%

3,765,188

2.3%


3,853,518

4,148,466

-7.1%

Client deposits, standalone

12,432,717

9,557,682

30.1%

11,429,060

8.8%


12,432,717

9,557,682

30.1%

Client deposits, standalone, GEL

3,716,801

2,904,521

28.0%

3,297,912

12.7%


3,716,801

2,904,521

28.0%

Client deposits, standalone, FC

8,715,916

6,653,161

31.0%

8,131,148

7.2%


8,715,916

6,653,161

31.0%

of which:










Time deposits

5,395,511

5,462,952

-1.2%

5,256,659

2.6%


5,395,511

5,462,952

-1.2%

Time deposits, standalone, GEL

1,842,959

1,534,172

20.1%

1,716,259

7.4%


1,842,959

1,534,172

20.1%

Time deposits, standalone, FC

3,552,552

3,928,780

-9.6%

3,540,400

0.3%


3,552,552

3,928,780

-9.6%

Current accounts and demand deposits

7,037,206

4,094,730

71.9%

6,172,401

14.0%


7,037,206

4,094,730

71.9%

Current accounts and demand deposits, standalone, GEL

1,873,842

1,370,349

36.7%

1,581,653

18.5%


1,873,842

1,370,349

36.7%

Current accounts and demand deposits, standalone, FC

5,163,364

2,724,381

89.5%

4,590,748

12.5%


5,163,364

2,724,381

89.5%

Assets under management

1,953,970

1,503,529

30.0%

2,001,693

-2.4%


1,953,970

1,503,529

30.0%











KEY RATIOS










ROAE [6]

32.2%

19.7%


33.4%



29.0%

21.4%


Net interest margin

4.8%

4.4%


4.8%



4.7%

4.2%


Cost of risk

1.4%

0.7%


1.4%



1.5%

0.7%


Cost of funds

5.6%

6.0%


6.0%



6.0%

5.6%


Loan yield

12.7%

11.7%


12.7%



12.4%

11.3%


Loan yield, GEL

15.9%

15.6%


16.1%



16.0%

15.3%


Loan yield, FC

6.5%

5.8%


6.2%



6.1%

5.9%


Cost of deposits

2.3%

2.5%


2.4%



2.5%

2.6%


Cost of deposits, GEL

6.9%

6.8%


7.3%



7.2%

6.2%


Cost of deposits, FC

0.5%

0.8%


0.4%



0.5%

1.2%


Cost of time deposits

4.5%

3.9%


4.3%



4.3%

3.8%


Cost of time deposits, GEL

11.2%

10.7%


11.3%



11.2%

9.9%


Cost of time deposits, FC

1.2%

1.4%


0.9%



1.0%

1.9%


Current accounts and demand deposits

0.6%

0.7%


0.6%



0.6%

0.8%


Current accounts and demand deposits, GEL

2.3%

2.2%


2.6%



2.4%

2.3%


Current accounts and demand deposits, FC

0.0%

0.0%


-0.1%



0.0%

0.1%


Cost / income ratio

35.4%

50.2%


33.2%



36.3%

46.1%












Performance highlights

· Operating income amounted to GEL 383.5m in 4Q22 (up 65.3% y-o-y, up 6.8% q-o-q) and GEL 1,323.3m for FY22 (up 56.5% y-o-y). The y-o-y top-line growth was mainly driven by net interest income growth (up 31.7% y-o-y) and also by strong non-interest income generation, particularly net foreign currency gains. The q-o-q growth was mainly driven by net fee and commission income and net other income, partially offset by lower net foreign currency gains. Operating income before cost of risk for the full year amounted to GEL 843.4m (up 86.7% y-o-y), supported by strong net FX gains, up 5x.

· Operating income before cost of risk more than doubled y-o-y in 4Q22 and amounted to GEL 247.9m (up 114.4% y-o-y, up 3.2% q-o-q).  

· RB's NIM stood at 4.8% in 4Q22, up 40 bps y-o-y and flat q-o-q. The y-o-y increase was driven by higher loan yield and lower cost of funds, partly offset by excess liquidity. NIM for the full year amounted to 4.7%, up 50 bps y-o-y, reflecting higher loan yield (up 110 bps y-o-y) and lower cost of funds (down 40 bps y-o-y), partly offset by excess liquidity.

· Cost of credit risk ratio was 1.4% in 4Q22 (up 70 bps y-o-y and flat q-o-q), and 1.5% for the FY22 (up 80 bps y-o-y), mainly driven by unsecured consumer and micro portfolios.  

· Retail Banking's profit (adjusted for one-off item) was GEL 186.2m (up 112.3% y-o-y and up 3.3% q-o-q) in 4Q22 and GEL 608.7m in FY22 (up 75.7% y-o-y). RB's adjusted ROAE was 32.2% in 4Q22 (19.7% in 4Q21 and 33.4% in 3Q22). For the full year, adjusted ROAE stood at 29.0% (21.4% in FY22).

 

Portfolios

· Net loans and finance receivables stood at GEL 11,368.9m at 31 December 2022, up 9.8% y-o-y and up 3.0% q-o-q. On a constant currency basis, the loan book increased by 16.4% y-o-y and by 3.2% q-o-q in 4Q22. Loan book growth was mainly driven by consumer loans, SME loans, and mortgages both for y-o-y and q-o-q periods. The nominal reduction in micro lending largely reflected the impact of GEL's appreciation against the USD during the year. Foreign currency denominated loans represented 33.9% of total RB loans at 31 December 2022, compared with 40.1% at 31 December 2021, and 34.1% at 30 September 2022.

 

GEL thousands, unless otherwise noted

 

4Q22

4Q21

Change y-o-y

3Q22

Change q-o-q

 

FY22

FY21

Change y-o-y

RETAIL BANKING LOAN BOOK BY PRODUCT

 










Loan originations

 










Consumer loans


859,120

858,067

0.1%

841,217

 

2.1%


3,353,673

2,737,779

 

22.5%

Mortgage loans


404,559

484,407

-16.5%

412,796

-2.0%


1,520,022

1,747,404

-13.0%

Micro loans


282,340

497,325

-43.2%

284,255

-0.7%


1,346,051

1,736,510

-22.5%

SME loans


467,562

434,009

7.7%

381,461

22.6%


1,582,590

1,564,334

1.2%












Outstanding balance

 










Consumer loans


3,218,477

2,567,361

25.4%

3,016,506

 

6.7%


3,218,477

2,567,361

 

25.4%

Mortgage loans


4,157,864

3,956,204

5.1%

4,043,025

2.8%


4,157,864

3,956,204

5.1%

Micro loans


1,977,280

1,980,691

-0.2%

2,096,381

-5.7%


1,977,280

1,980,691

-0.2%

SME loans


1,777,902

1,608,857

10.5%

1,663,113

6.9%


1,777,902

1,608,857

10.5%

 

· RB client deposits increased to GEL 12,432.7m at 31 December 2022, up 30.1% y-o-y and up 8.8% q-o-q. On a constant currency basis, deposits increased by 44.7% y-o-y and by 11.2% q-o-q in 4Q22. The main growth driver was current and demand deposits. Dollarisation level of client deposits in RB is broadly stable, at 70.1% at 31 December 2022 (69.6% at 31 December 2021 and 71.1% at 30 September 2022).



 

CORPORATE AND INVESTMENT BANKING (CIB)

 

 

GEL thousands, unless otherwise noted

4Q22

4Q21

Change y-o-y

3Q22

Change q-o-q

 

FY22

FY21

Change y-o-y

INCOME STATEMENT HIGHLIGHTS










Interest income 

160,388

136,500

17.5%

131,625

21.9%


501,292

10.5%

Interest expense 

(46,740)

(39,881)

17.2%

(45,366)

3.0%


(169,586)

4.6%

Net interest income 

113,648

96,619

17.6%

86,259

31.8%

 

331,706

13.6%

Net fee and commission income 

14,157

13,175

7.5%

11,658

21.4%


47,869

3.5%

Net foreign currency gain

33,612

13,788

143.8%

42,057

-20.1%


37,619

229.6%

Net other income (without one-off items)

11,503

6,377

80.4%

(2,752)

NMF


43,979

-67.5%

Operating income

172,920

129,959

33.1%

137,222

26.0%

 

461,173

22.4%

Salaries and other employee benefits

(20,388)

(14,387)

41.7%

(21,224)

-3.9%


(52,836)

53.3%

Administrative expenses

(7,232)

(5,397)

34.0%

(4,275)

69.2%


(16,781)

7.7%

Depreciation, amortisation and impairment

(1,685)

(2,313)

-27.2%

(1,252)

34.6%


(8,551)

-38.1%

Other operating expenses 

(437)

(341)

28.2%

(209)

109.1%


(892)

43.8%

Operating expenses 

(29,742)

(22,438)

32.6%

(26,960)

10.3%

 

(79,060)

33.6%

Profit from associates

-

-


-

Operating income before cost of risk

143,178

107,521

33.2%

110,262

29.9%

 

382,113

20.1%

Cost of risk 

(5,210)

12,730

NMF

(5,263)

-1.0%


22,662

250.6%

Profit before non-recurring items and income tax

137,968

120,251

14.7%

104,999

31.4%

 

404,775

33.0%

Net non-recurring items 

(1)

-100.0%

-


(78)

-100.0%

Profit before income tax 

137,968

120,250

14.7%

104,999

31.4%

 

404,697

33.0%

Income tax expense

(9,145)

(11,247)

-18.7%

(7,914)

15.6%


(38,473)

14.5%

Profit adjusted for one-off items

128,823

109,003

18.2%

97,085

32.7%

 

366,224

35.0%

One-off in other income

391,100

-

-


-

One-off income tax expense

(33,653)

-

-


-

Profit 

486,270

109,003

346.1%

97,085

400.9%

 

366,224

132.6%

 










BALANCE SHEET HIGHLIGHTS










Net loans and finance lease receivables

4,926,264

5,100,938

-3.4%

4,579,637

7.6%


5,100,938

-3.4%

Net loans and finance lease receivables, GEL

1,321,797

1,113,914

18.7%

1,205,020

9.7%


1,113,914

18.7%

Net loans and finance lease receivables, FC

3,604,467

3,987,024

-9.6%

3,374,617

6.8%


3,987,024

-9.6%

Client deposits

4,824,646

4,015,449

20.2%

4,974,592

-3.0%


4,015,449

20.2%

Client deposits, standalone, GEL

3,021,179

2,559,463

18.0%

3,175,024

-4.8%


2,559,463

18.0%

Client deposits, standalone, FC

1,803,467

1,455,986

23.9%

1,799,568

0.2%


1,455,986

23.9%

of which:









Time deposits

1,520,701

1,258,019

20.9%

1,710,185

-11.1%


1,258,019

20.9%

Time deposits, standalone, GEL

1,412,130

1,106,874

27.6%

1,599,201

-11.7%


1,106,874

27.6%

Time deposits, standalone, FC

108,571

151,145

-28.2%

110,984

-2.2%


151,145

-28.2%

Current accounts and demand deposits

3,303,945

2,757,430

19.8%

3,264,407

1.2%


2,757,430

19.8%

Current accounts and demand deposits, standalone, GEL

1,609,049

1,452,589

10.8%

1,575,823

2.1%


1,452,589

10.8%

Current accounts and demand deposits, standalone, FC

1,694,896

1,304,841

29.9%

1,688,584

0.4%


1,304,841

29.9%

Letters of credit and guarantees

1,812,231

1,728,569

4.8%

1,728,654

4.8%


1,728,569

4.8%

Assets under management

1,480,894

1,469,315

0.8%

1,301,022

13.8%


1,469,315

0.8%











KEY RATIOS










ROAE [7]

36.5%

39.2%


29.9%



34.6%


Net interest margin

6.3%

5.8%


5.1%



5.1%


Cost of risk

0.0%

-1.8%


0.1%



-1.2%


Cost of funds

3.2%

3.0%


3.2%



2.5%


Loan yield

10.2%

9.2%


8.9%



8.7%


Loan yield, GEL

14.8%

14.3%


14.7%



13.5%


Loan yield, FC

8.6%

7.8%


7.1%



7.5%


Cost of deposits

6.2%

5.6%


6.2%



5.5%


Cost of deposits, GEL

9.7%

8.4%


9.7%



8.0%


Cost of deposits, FC

-0.2%

0.3%


-0.1%



0.6%


Cost of time deposits

11.0%

9.0%


10.8%



8.2%


Cost of time deposits, GEL

11.6%

10.1%


11.3%



9.1%


Cost of time deposits, FC

1.4%

1.9%


1.5%



2.0%


Current accounts and demand deposits

3.7%

4.0%


3.4%



3.5%


Current accounts and demand deposits, GEL

7.8%

7.1%


7.6%



6.7%


Current accounts and demand deposits, FC

-0.3%

0.1%


-0.2%



0.3%


Cost / income ratio 6

17.2%

17.3%


19.6%



17.1%


Concentration of top ten clients

5.9%

8.3%


5.7%



8.3%












 

 

Performance highlights

· Operating income (adjusted for one-off item) amounted to GEL 172.9m in 4Q22 (up 33.1% y-o-y, up 26.0% q-o-q) and GEL 564.6m in FY22 (up 22.4%). The year-on-year growth in 4Q22 and FY22 was driven by significant foreign currency gains posted throughout 2022 as well as net interest income generation. The q-o-q growth was mainly driven by net interest income and net other income, partially offset by lower net foreign currency gain.

· Operating income before cost of risk (adjusted for one-off item) was GEL 143.2m in 4Q22 (up 33.2% y-o-y and up 29.9% q-o-q) and GEL 459.0m in FY22 (up 20.1%).

· NIM stood at 6.3% in 4Q22, up 50 bps y-o-y and up 120 bps q-o-q, and at 5.6% in FY22, up 50 bps y-o-y. CIB's NIM was positively impacted by higher loan yield on foreign currency loans (up 80 bps y-o-y, up 150 bps q-o-q).

· Cost of risk ratio was 0.0% in 4Q22 (-1.8% in 4Q21). For the full year cost of risk ratio stood at -1.0%, driven by some recoveries.

· CIB recorded a profit (adjusted for one-off items) of GEL 128.8m in 4Q22 (up 18.2% y-o-y, up 32.7% q-o-q). For the full year  profit (adjusted for one-off items) amounted to GEL 494.4m (up 35.0% y-o-y). The adjusted ROAE in was 36.5% in 4Q22, vs 39.2% in 4Q21, vs 29.9% in 3Q22. For the full year, the adjusted ROAE was 39.1% vs 34.6% in 2021.

· CIB's reported profit, due to a significant one-off, was GEL 486.3m in 4Q22, and GEL 851.8m in FY22. The unadjusted ROAE was 138.1% in 4Q22 and 67.4% for the full year.

 

Portfolios

· Net loans and finance receivables stood at GEL 4,926.3m at 31 December 2022, down 3.4% y-o-y and up 7.6% q-o-q. The year-on-year nominal decrease was due to GEL appreciation that resulted in a decrease of foreign currency denominated net loans and finance receivables by 9.6%. On a constant currency basis, loan book increased by 9.1% y-o-y and by 8.1% q-o-q in 4Q22. Foreign currency denominated loans represented 73.2% of total CIB loans at 31 December 2022, compared with 78.2% at 31 December 2021 and 73.7% at 30 September 2022. The concentration of top ten CIB clients was 5.9% at 31 December 2022 (8.3% at 31 December 2021 and 5.7% at September 2022). 

· Client deposits and notes amounted to GEL 4,824.6m at 31 December 2022, up 20.2% y-o-y and down 3.0% q-o-q. On a constant currency basis, deposits increased by 27.3% y-o-y and decreased by 1.9% q-o-q in 4Q22. Foreign currency denominated deposits represented 37.4% of total CIB deposits at 31 December 2022, compared with 36.3% at 31 December 2021, and 36.2% at 30 September 2022.

 



 

§

SELECTED FINANCIAL INFORMATION

 

INCOME STATEMENT


BANK OF GEORGIA GROUP PLC CONSOLIDATED

 










GEL thousands, unless otherwise noted

4Q22

4Q21

Change y-o-y

3Q22

Change q-o-q

 

FY22

FY21

Change y-o-y











Interest income 

607,652

509,563

19.2%

574,626

5.7%


2,256,881

1,851,044

21.9%

Interest expense 

(273,007)

(239,492)

14.0%

(279,555)

-2.3%


(1,074,546)

(897,103)

19.8%

Net interest income 

334,645

270,071

23.9%

295,071

13.4%

 

1,182,335

953,941

23.9%

Fee and commission income 

170,458

113,664

50.0%

147,207

15.8%


559,465

390,829

43.1%

Fee and commission expense 

(72,526)

(49,564)

46.3%

(67,545)

7.4%


(241,974)

(158,398)

52.8%

Net fee and commission income 

97,932

64,100

52.8%

79,662

22.9%

 

317,491

232,431

36.6%

Net foreign currency gain

125,395

34,495

263.5%

150,686

-16.8%

 

466,094

109,099

327.2%

  Net other income without one-off items

26,930

10,579

154.6%

1,092

NMF


36,092

70,206

-48.6%

  One-off other income

391,100

-

-


391,100

-

Net other income

418,030

10,579

NMF

1,092

NMF

 

427,192

70,206

508.5%

Operating income

976,002

379,245

157.4%

526,511

85.4%

 

2,393,112

1,365,677

75.2%

Salaries and other employee benefits

(93,698)

(80,501)

16.4%

(94,641)

-1.0%


(362,019)

(281,087)

28.8%

Administrative expenses

(54,931)

(43,552)

26.1%

(38,398)

43.1%


(164,450)

(129,524)

27.0%

Depreciation, amortisation and impairment

(31,717)

(25,256)

25.6%

(27,209)

16.6%


(111,089)

(93,618)

18.7%

Other operating expenses 

(716)

(1,463)

-51.1%

(622)

15.1%


(3,628)

(3,723)

-2.6%

Operating expenses 

(181,062)

(150,772)

20.1%

(160,870)

12.6%

 

(641,186)

(507,952)

26.2%

Profit (loss) from associates

128

128

0.0%

250

-48.8%


754

(3,781)

NMF

Operating income before cost of risk

795,068

228,601

247.8%

365,891

117.3%

 

1,752,680

853,944

105.2%

Expected credit loss /impairment charge on loans to customers

(37,535)

9,836

NMF

(38,002)

-1.2%


(128,678)

(1,452)

NMF

Expected credit loss /impairment charge on finance lease receivables

472

(3,406)

NMF

(1,500)

NMF


(3,208)

(4,950)

-35.2%

Other expected credit gain (loss) and impairment charge on other

assets and provisions

(15,612)

(14,174)

10.1%

(8,546)

82.7%


12,818

(45,010)

NMF

Cost of risk 

(52,675)

(7,744)

NMF

(48,048)

9.6%

 

(119,068)

(51,412)

131.6%

Net operating income before non-recurring items and income tax

742,393

220,857

236.1%

317,843

133.6%

 

1,633,612

802,532

103.6%

Net non-recurring items 

329

(62)

NMF

428

-23.1%


1,038

(590)

NMF

Profit before income tax expense

742,722

220,795

236.4%

318,271

133.4%

 

1,634,650

801,942

103.8%

  Income tax expense without one-off expense

(25,723)

(20,076)

28.1%

(28,053)

-8.3%


(111,376)

(74,824)

48.9%

  One-off income tax expense

(79,275)

-

-


(79,275)

-

Income tax expense

(104,998)

(20,076)

NMF

(28,053)

NMF

 

(190,651)

(74,824)

154.8%

Profit 

637,724

200,719

217.7%

290,218

119.7%

 

1,444,999

727,118

98.6%

 










 










Attributable to:










- shareholders of the Group

636,607

199,889

218.5%

288,918

120.3%

 

1,439,507

723,806

98.9%

- non-controlling interests

1,117

830

34.6%

1,300

-14.1%

 

4,492

3,312

35.6%

 










Earnings per share (basic)

14.10

4.25

NMF

6.27

124.9%

 

30.99

15.22

103.6%

Earnings per share (diluted)

13.61

4.12

NMF

6.19

119.9%

 

30.33

14.88

103.8%

 

 


 

 

 

 

BALANCE SHEET HIGHLIGHTS


 

BANK OF GEORGIA GROUP PLC CONSOLIDATED








GEL thousands, unless otherwise noted


Dec-22

Dec-21

Change y-o-y

Sep-22

Change q-o-q








Cash and cash equivalents


3,584,843

1,520,562

135.8%

2,773,069

29.3%

Amounts due from credit institutions


2,433,028

1,931,390

26.0%

2,406,119

1.1%

Investment securities


4,349,729

2,595,664

67.6%

4,307,524

1.0%

Loans to customers and finance lease receivables


16,861,706

16,168,973

4.3%

16,162,942

4.3%

Accounts receivable and other loans


397,990

3,680

NMF

5,547

NMF

Prepayments


43,612

40,878

6.7%

45,814

-4.8%

Inventories


17,096

11,514

48.5%

16,629

2.8%

Right of use assets


117,387

80,186

46.4%

102,568

14.4%

Investment property


166,546

226,849

-26.6%

174,725

-4.7%

Property and equipment


398,855

378,808

5.3%

400,874

-0.5%

Goodwill


33,351

33,351

0.0%

33,351

0.0%

Intangible assets


149,441

144,251

3.6%

149,344

0.1%

Income tax assets


864

292

195.9%

171

NMF

Other assets


317,886

246,947

28.7%

366,363

-13.2%

Assets held for sale


29,566

46,731

-36.7%

43,944

-32.7%

Total assets

 

28,901,900

23,430,076

23.4%

26,988,984

7.1%

Client deposits and notes


18,261,397

14,038,002

30.1%

17,193,088

6.2%

Amounts due to credit institutions


5,266,653

4,318,445

22.0%

4,937,760

6.7%

Debt securities issued


645,968

1,518,685

-57.5%

774,152

-16.6%

Lease liability


114,470

87,662

30.6%

101,973

12.3%

Accruals and deferred income


106,366

80,157

32.7%

92,632

14.8%

Income tax liabilities


99,533

110,868

-10.2%

24,794

301.4%

Other liabilities


158,691

183,349

-13.4%

251,222

-36.8%

Total liabilities

 

24,653,078

20,337,168

21.2%

23,375,621

5.5%

Share capital


1,563

1,618

-3.4%

1,587

-1.5%

Additional paid-in capital


393,640

492,243

-20.0%

424,087

-7.2%

Treasury shares


(83)

(75)

10.7%

(88)

-5.7%

Other reserves


14,564

(3,223)

NMF

(18,568)

NMF

Retained earnings


3,821,889

2,588,463

47.7%

3,189,848

19.8%

Total equity attributable to shareholders of the Group

 

4,231,573

3,079,026

37.4%

3,596,866

17.6%

Non-controlling interests


17,249

13,882

24.3%

16,497

4.6%

Total equity

 

4,248,822

3,092,908

37.4%

3,613,363

17.6%

Total liabilities and equity

 

28,901,900

23,430,076

23.4%

26,988,984

7.1%

Book value per share

 

94.07

65.65

43.3%

78.81

19.4%

 



 

 

BELARUSKY NARODNY BANK (BNB)

 

GEL thousands, unless otherwise noted

4Q22

4Q21

Change y-o-y

3Q22

Change q-o-q

 

FY22

FY21

Change y-o-y

INCOME STATEMENT HIGHLIGHTS










Net interest income 

8,721

12,277

-29.0%

7,691

13.4%


37,511

39,676

-5.5%

Net fee and commission income 

2,740

769

NMF

4,864

-43.7%


11,500

5,476

110.0%

Net foreign currency gain

14,541

3,473

318.7%

17,418

-16.5%


64,493

13,341

383.4%

Net other income

2,620

930

181.7%

359

NMF


1,170

1,242

-5.8%

Operating income

28,622

17,449

64.0%

30,332

-5.6%

 

114,674

59,735

92.0%

Operating expenses 

(15,693)

(12,000)

30.8%

(14,900)

5.3%


(55,432)

(39,675)

39.7%

Operating income before cost of risk

12,929

5,449

137.3%

15,432

-16.2%

 

59,242

20,060

195.3%

Cost of risk 

(3,210)

(471)

NMF

1,542

NMF


(25,827)

(1,723)

NMF

Net non-recurring items 

(173)

(50)

NMF

1

NMF


(203)

(532)

-61.8%

Profit before income tax 

9,546

4,928

93.7%

16,975

-43.8%

 

33,212

17,805

86.5%

Income tax expense

(2,228)

(932)

139.1%

(4,169)

-46.6%


(7,684)

(3,395)

126.3%

Profit 

7,318

3,996

83.1%

12,806

-42.9%

 

25,528

14,410

77.2%

 

 

 







BALANCE SHEET HIGHLIGHTS







 







Cash and cash equivalents


640,018

186,050

244.0%

523,360

22.3%

Amounts due from credit institutions


74,778

8,719

757.6%

12,269

509.5%

Investment securities


60,361

69,794

-13.5%

50,151

20.4%

Loans to customers and finance lease receivables


538,166

662,297

-18.7%

495,764

8.6%

Other assets


68,043

54,060

25.9%

69,370

-1.9%

Total assets

 

1,381,366

980,920

40.8%

1,150,914

20.0%

Client deposits and notes


1,034,124

516,634

100.2%

811,653

27.4%

Amounts due to credit institutions


172,389

309,812

-44.4%

176,585

-2.4%

Debt securities issued


2,745

7,327

-62.5%

5,481

-49.9%

Other liabilities


20,670

12,490

65.5%

21,171

-2.4%

Total liabilities

 

1,229,928

846,263

45.3%

1,014,890

21.2%

Total equity

 

151,438

134,657

12.5%

136,024

11.3%

Total liabilities and equity

 

1,381,366

980,920

40.8%

1,150,914

20.0%

 

 

BNB has continued to be focused on its core domestic retail and small business customers, with a particular focus on digitising the business, growing its customer franchise and building customer deposits. As a result, customer lending increased by 8.6% q-o-q and client deposits increased by 27.4% q-o-q during the fourth quarter.

In the first quarter of 2022, we reassessed our assets in BNB due to deteriorated expectations, resulting in a GEL 49.3m total negative effect on equity in 1Q22. Throughout the following quarters, BNB has demonstrated operational resilience and a focus on maintaining solid liquidity and capital positions. The capital ratios, calculated in accordance with the National Bank of the Republic of Belarus's standards, were above the minimum requirements at 31 December 2022 -  Tier 1 capital adequacy ratio at 9.5% (minimum requirement of 7.0%) and Total capital adequacy ratio at 16.7% (minimum requirement of 12.5%).

 


 

KEY RATIOS

 

BANK OF GEORGIA GROUP PLC CONSOLIDATED

 

 








 

 

4Q22

4Q21

3Q22

 

 

FY22

FY21

 

 








Profitability

 








ROAA (adjusted for one-off items)


4.7%

3.5%

4.4%



4.4%

3.2%

ROAA (reported)


9.1%

3.5%

4.4%

 


5.6%

3.2%

ROAE (adjusted for one-off items)


33.7%

26.4%

32.4%



32.4%

25.8%

RB ROAE (adjusted for one-off items)

 

32.2%

19.7%

33.4%

 


29.0%

21.4%

CIB ROAE (adjusted for one-off items)

 

36.5%

39.2%

29.9%

 


39.1%

34.6%

ROAE (reported)


66.1%

26.4%

32.4%

 


41.4%

25.8%

  RB ROAE (reported)


24.9%

19.7%

33.4%

 


27.0%

21.4%

  CIB ROAE(reported)


138.1%

39.2%

29.9%

 


67.4%

34.6%

Net interest margin


5.7%

5.3%

5.3%



5.4%

4.9%

RB NIM

 

4.8%

4.4%

4.8%

 


4.7%

4.2%

CIB NIM

 

6.3%

5.8%

5.1%

 


5.6%

5.1%

Loan yield


12.0%

11.0%

11.6%



11.5%

10.6%

RB loan yield

 

12.7%

11.7%

12.7%

 


12.4%

11.3%

CIB loan yield

 

10.2%

9.2%

8.9%

 


9.3%

8.7%

Liquid assets yield


4.2%

4.0%

4.2%



4.3%

3.5%

Cost of funds


4.6%

4.8%

4.9%



4.9%

4.6%

Cost of client deposits and notes


3.4%

3.5%

3.6%



3.6%

3.6%

RB cost of client deposits and notes

 

2.3%

2.5%

2.4%

 


2.5%

2.6%

CIB cost of client deposits and notes

 

6.2%

5.6%

6.2%

 


6.2%

5.5%

Cost of amounts due to credit institutions


8.5%

8.3%

9.1%



8.9%

7.3%

Cost of debt securities issued


7.5%

6.8%

7.3%



7.1%

6.9%

Operating leverage, Y-O-Y (adjusted)


34.1%

-0.4%

25.7%



20.4%

7.8%

Operating leverage, Y-O-Y (reported)


137.3%

-0.4%

25.7%



49.0%

7.8%

Operating leverage, Q-O-Q


-1.5%

-8.8%

6.4%



N/A

N/A

Operating leverage, Q-O-Q (reported)


72.8%

-8.8%

6.4%



N/A

N/A

Efficiency

 








Cost / income (adjusted for one-off items)


31.0%

39.8%

30.6%



32.0%

37.2%

RB cost / income

 

35.4%

50.2%

33.2%

 


36.3%

46.1%

CIB cost / income (adjusted for one-off items)

 

17.2%

17.3%

19.6%

 


18.7%

17.1%

Cost / income (reported)


18.6%

39.8%

30.6%

 


26.8%

37.2%

  CIB cost / income (reported)


5.3%

17.3%

19.6%

 


11.1%

17.1%

Liquidity

 








NBG liquidity coverage ratio


132.4%

124.0%

121.4%



132.4%

124.0%

Liquid assets to total assets


35.9%

25.8%

35.2%



35.9%

25.8%

Liquid assets to total liabilities


42.1%

29.7%

40.6%



42.1%

29.7%

Net loans to client deposits and notes


92.3%

115.2%

94.0%



92.3%

115.2%

Net loans to client deposits and notes + DFIs


83.8%

100.0%

84.5%



83.8%

100.0%

Leverage


5.8

6.6

6.5



5.8

6.6

Asset quality:

 








NPLs (in GEL)


 471,577

394,720

398,229



471,577

394,720

NPLs to gross loans to clients


2.7%

2.4%

2.4%



2.7%

2.4%

NPL coverage ratio


66.4%

95.5%

89.4%



66.4%

95.5%

NPL coverage ratio adjusted for discounted value of collateral


128.9%

147.7%

138.0%



128.9%

147.7%

Cost of credit risk


0.9%

-0.2%

1.0%



0.8%

0.0%

RB cost of credit risk

 

1.4%

0.7%

1.4%

 


1.5%

0.7%

CIB cost of credit risk

 

0.0%

-1.8%

0.1%

 


-1.0%

-1.2%

Capital Adequacy:

 








NBG (Basel III) CET1 capital adequacy ratio


14.7%

13.2%

14.8%



14.7%

13.2%

  Minimum regulatory requirement


11.6%

11.5%

11.6%



11.6%

11.5%

NBG (Basel III) Tier1 capital adequacy ratio


16.7%

15.0%

17.0%



16.7%

15.0%

  Minimum regulatory requirement


13.8%

13.6%

13.8%



13.8%

13.6%

NBG (Basel III) Total capital adequacy ratio


19.8%

19.3%

20.3%



19.8%

19.3%

Minimum regulatory requirement


17.2%

17.7%

17.2%



17.2%

17.7%

 


 

 

 



 

 

FX rates


 

 

 



 

 

GEL/USD exchange rate (period-end)


2.7020

3.0976

2.8352



2.7020

3.0976

GEL/GBP exchange rate (period-end)


3.2581

4.1737

3.0751



3.2581

4.1737










Shares outstanding









  Ordinary shares outstanding - period end


44,982,831

46,900,982

45,637,351



44,982,831

46,900,982

  Treasury shares outstanding - period end


2,516,151

2,268,446

2,592,234



2,516,151

2,268,446

  Total shares outstanding

 

47,498,982

49,169,428

48,229,585



47,498,982

49,169,428

 

 

 

 









 


















ADDITIONAL OPERATING DATA


4Q22

4Q21

3Q22

 

FY22

FY21

Our employees:







Bank of Georgia (standalone)

6,597

6,207

6,428


6,597

6,207

BNB

774

547

710


774

547

Others

1,020

1,062

1,036


1,020

1,062

Total

8,391

7,816

8,174

 

8,391

7,816

Our network

 

 

 

 



Number of branches

211

211

211


211

211

Number of ATMs

1,006

989

994


1,006

989

Number of BOG Pay terminals

3,145

3,134

3,152


3,145

3,134

Cards

 






Number of cards issued

504,114

432,685

396,223


1,459,193

1,052,067

Number of cards outstanding

2,966,405

2,290,716

2,705,148


2,966,405

2,290,716

BOG Pay terminals

 






Number of transactions via BOG Pay terminals

22,394,969

21,102,054

21,507,156


84,349,391

77,491,726

Volume of transactions via BOG Pay terminals (GEL thousands)

4,478,695

3,426,763

4,254,676


15,734,733

11,767,105

POS terminals

 






Number of active merchants (including e-commerce)

14,507

11,442

13,560


14,507

11,442

Number of active POS terminals (including e-commerce)

34,884

27,426

32,813


34,884

27,426

 

 

 

 

 

 

 

 

 


 

GLOSSARY

§ Active merchant At least one transaction executed within the past month

§ Active POS terminal At least one transaction executed within the past month in BOG's POS terminal

§ Basic earnings per share Profit for the period attributable to shareholders of the Group divided by the weighted average number of outstanding ordinary shares over the same year

§ Book value per share Total equity attributable to shareholders of the Group divided by ordinary shares outstanding at period-end; Ordinary shares outstanding at period-end equals number of ordinary shares at period-end less number of treasury shares at period-end

§ Cost of credit risk Expected loss on loans to customers and finance lease receivables for the period divided by monthly average gross loans to customers and finance lease receivables over the same period

§ Cost of deposits Interest expense on client deposits and notes of the period divided by monthly average client deposits and notes

§ Cost of funds Interest expense of the period divided by monthly average interest bearing liabilities

§ Cost to income ratio Operating expenses divided by operating income

§ Interest-bearing liabilities Amounts owed to credit institutions, client deposits and notes, and debt securities issued

§ Interest-earning assets (excluding cash) Amounts due from credit institutions, investment securities (but excluding corporate shares) and net loans to customers and finance lease receivables

§ Leverage (times) Total liabilities divided by total equity

§ Liquid assets Cash and cash equivalents, amounts due from credit institutions and investment securities

§ Liquidity coverage ratio (LCR) High quality liquid assets (as defined by the NBG) divided by net cash outflows over the next 30 days (as defined by the NBG)

§ Loan yield Interest income from loans to customers and finance lease receivables divided by monthly average gross loans to customers and finance lease receivables

§ Monthly active digital user (MAU) - a user with at least one login within past month in mBank/iBank

§ NBG (Basel III) Common Equity Tier I (CET1) capital adequacy ratio Common Equity Tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG

§ NBG (Basel III) Tier I capital adequacy ratio Tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG

§ NBG (Basel III) Total capital adequacy ratio Total regulatory capital divided by total risk weighted assets, both calculated in accordance with the requirements of the NBG

§ Net interest margin (NIM) Net interest income of the period divided by monthly average interest earning assets excluding cash for the same period

§ Net stable funding ratio (NSFR) Available amount of stable funding (as defined by the NBG) divided by the required amount of stable funding (as defined by the NBG)

§ Non-performing loans (NPLs) The principal and interest on loans overdue for more than 90 days and any additional potential losses estimated by management

§ NPL coverage ratio Allowance for expected credit loss of loans and finance lease receivables divided by NPLs

§ NPL coverage ratio adjusted for discounted value of collateral Allowance for expected credit loss of loans and finance lease receivables divided by NPLs (discounted value of collateral is added back to allowance for expected credit loss)

§ One-off items - significant items that do not arise during ordinary course of business

§ Operating leverage Percentage change in operating income less percentage change in operating expenses

§ Return on average total assets (ROAA) Profit for the period divided by monthly average total assets for the same period

§ Return on average total equity (ROAE) Profit for the period attributable to shareholders of the Group divided by monthly average equity attributable to shareholders of the Group for the same period

§ NMF Not meaningful


 

COMPANY INFORMATION

 

Bank of Georgia Group PLC

 

Registered Address

42 Brook Street

London W1K 5DB

United Kingdom

www.bankofgeorgiagroup.com

Registered under number 10917019 in England and Wales

 

Secretary

Computershare Company Secretarial Services Limited

The Pavilions

Bridgwater Road

Bristol BS13 8FD

United Kingdom

 

Stock Listing

London Stock Exchange PLC's Main Market for listed securities

Ticker: "BGEO.LN"

 

Contact Information

Bank of Georgia Group PLC Investor Relations

Telephone: +44(0) 203 178 4052; +995 322 444444 (7515)

E-mail: ir@bog.ge

 

Auditors

Ernst & Young LLP

25 Churchill Place

Canary Wharf

London E14 5EY

United Kingdom

 

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS99 6ZZ

United Kingdom

 

Please note that Investor Centre is a free, secure online service run by our Registrar, Computershare,

giving you convenient access to information on your shareholdings.

Investor Centre Web Address - www.investorcentre.co.uk .

Investor Centre Shareholder Helpline - +44 (0)370 873 5866

 

Share price information

  Shareholders can access both the latest and historical prices via the website  

  www.bankofgeorgiagroup.com 

 

 

 

 

 

 

 

 



[1] During the fourth quarter the Group also posted significant one-off items, namely a one-off GEL 391.1 million of other income due to the settlement of an outstanding legacy claim and a one-off GEL 79.3 million expense due to the amendment to the current corporate taxation model in Georgia applicable to financial institutions. Throughout the report, we have adjusted the relevant P&L lines and ratios for these one-off items to present the Group's underlying performance. You can find unadjusted P&L and ratios on pages 18 and 21.

[2] Throughout this announcement, gross loans to customers and respective allowance for impairment are presented net of expected credit loss (ECL) on contractually accrued interest income. These do not have an effect on the net loans to customers balance. Management believes that netted-off balances provide the best representation of the loan portfolio position

[3] Data in this section presented for Bank of Georgia (standalone)

[4] Figures adjusted for a one-off GEL 391.1 million other income due to the settlement of an outstanding legacy claim, and a one-off GEL 79.3 million tax expense due to an amendment to the current corporate taxation model in Georgia.

[5] Includes Stage 3 loans and defaulted POCI loans

[6] Figures adjusted for a one-off GEL 42.1 million tax expense due to an amendment to the current corporate taxation model in Georgia.

[7] Adjusted for a one-off GEL 391.1 million other income due to the settlement of an outstanding legacy claim, and a one-off GEL 33.7 million tax expense due to an amendment to the current corporate taxation model in Georgia.

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