Lion Finance Group PLC · LSE:BGEO
Lion Finance — Bank of Georgia — Q3 2004 Earnings Presentation
35 slides from Lion Finance's earnings presentation, Oct 7, 2004
Slide 1: Financing Georgia's Future: Q3 2004 Performance Update & Investor Presentation
Financing Georgia’s Future Q3 2004 Performance Update & Investor Presentation This presentation is neither an offer to sell, nor a solicitation of an offer to buy, any securities
Slide 2: Caution regarding forward-looking statements
Caution regarding forward-looking statements This presentation contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial p
Slide 3: Q3 2004 Highlights
Q3 2004 Highlights Q3 2004 Highlights • Revenues GEL10.0 million, +6% qoq • Expenses GEL 6.0 million, -12% qoq • Operating Profit GEL 4.0 million, + 51% qoq • Net Profit GEL 0.5 million, +209% qoq • Net Interest Margin 10%, -70 qoq Q3 2004 PERFORMANCE UPDATE & 10/7/2004 3 www.bog.ge/ir INVESTOR PRES
Slide 4: Quarterly Performance - Revenue and Costs
Quarterly Performance - Revenue and Costs GEL million 12.0 yoy + 6.1% qoq + 5.7% 10.0 8.0 6.0 Revenue 9.4 10.2 10.0 9.5 10.0 4.0 2.0 0.0 -2.0 -4.8 -5.3 -6.0 Costs -6.4 -6.8 -4.0 -6.0 yoy +26.2% qoq -12.0% -8.0 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q3 2004 PERFORMANCE UPDATE & 10/7/2004 4 www.bog.ge/ir INVES
Slide 5: Quarterly Performance – Operating Profit
Quarterly Performance – Operating Profit GEL million 6 4.9 5 4.7 4.0 4.0 4 3.6 3.4 2.6 3 2 1 0 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Net provisions Income tax Net Income Q3 2004 PERFORMANCE UPDATE & 10/7/2004 5 www.bog.ge/ir INVESTOR PRESENTATION
Slide 6: Loans and Deposits
Loans and Deposits GEL million Loan Book 180 Provisions 170 • Loan Book Growth Net Loans 11.0 160 8.7 yoy 16.0% 150 9.3 140 7.6 9.0 qoq 6.1% 130 158.2 149.1 144.3 120 136.4 139.6 110 100 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 GEL million Deposits • Deposit Growth 190 yoy 50.7% Current Accounts 170 T ime Depo
Slide 7: Bank of Georgia At A Glance
Bank of Georgia At A Glance GEL mln, unless otherwise noted YE 2003 Market Share 30-Sep-04 Assets 230.12 17.2% 279.25 Loans, of which 141.78 19.4% 158.21 Retail Loans 59.22 23.1% 56.36 Corporate Loans 82.56 16.5% 101.85 Deposits 126.17 17.2% 177.43 Risk Weighted Assets 312.42 NA 357.21 Shares outsta
Slide 8: The only investable stock in Georgia
The only investable stock in Georgia GEB Stock Trading & Liquidity Developments 2001 2002 2003 Q1 2004 Q2 2004 Q3 2004 Trading Volume, GEL 4,871,737 800,816 229,359 65,803 695,507 8,513,555 Growth, y-o-y % 328.8% -83.6% -71.4% 13.2% 1202.9% 31787.2% As % of MCap 15.2% 2.3% 1.1% 0.3% 3.0% 22.3% As %
Slide 9: Supportive shareholders & lenders
Supportive shareholders & lenders BoG Shareholder Structure Core Shareholders August 26, 2004 Shares % Victor Gelovani 1,471,675 17.3% Management currently owns EBRD 1,548,878 18.2% approximately 200,000 shares DEG 1,250,000 14.7% G&T Securities 534,265 6.3% New management share ownership Subtot
Slide 10: Key developments 2003/YTD 2004
Key developments 2003/YTD 2004 Retail Banking Corporate & Investment Banking Asset Management Insurance Consumer loan portfolio Assets Client assets at Galt & No direct presence grew from GEL39 mln at Taggart Securities grew in the insurance Corporate loan book grew from YE 2002 to GEL59 mln at from
Slide 11: Recent performance overview
Recent performance overview GEL ‘000, unless otherwise noted CAGR Year ending December 31 st 2001 2002 2003 YTD 2004* '01-'03 Net Interest Income 16,614 17,935 24,419 21.2% 18,015 Interest Income 22,532 25,119 32,299 19.7% 25,116 From Loans 21,353 22,675 30,004 18.5% 23,426 From securities (T-Bills)
Slide 12: Lending overview
Lending overview Total Portfolio = GEL158.2 mln (as of September 30, 2004) Corporate Lending Total Portfolio = GEL 101.9 mln Consumer Goods Other 22.2% 4.4% T rade and Services 36.8% yoy + 32.8% qoq + 11.1% T ransportation & Construction & Communications Real Estate 3.5% 16.1% Mining & Processing
Slide 13: Lending overview
Lending overview Total Portfolio = GEL158.2 mln (as of September 30, 2004) Retail Lending Total Portfolio = GEL 56.4 mln; Total number of clients = 94,524 Consumer Other 19.2% 23.7% Retail Number of Avg. Loan Loans Size (GEL'000s) Consumer 4,844 2.2 Mortgage 751 19.0 Mortgage Lombard 86,522 0.2 25.4
Slide 14: Balance Sheet
Balance Sheet CAGR 2001 2002 2003 YTD 2004* As of December 31 st '01-'03 Cash and balance with NBG, CA 28,429 46,738 59,743 45.0% 74,649 Debt securities (including Treasuries ) 5,808 9,395 1,683 -46.2% 8,464 Treasuries 5,808 9,395 1,683 -46.2% 8,464 US$ and Other 0 0 0 na 0 Factoring 1,295 0 0 -100.
Slide 15: Asset quality
Asset quality Asset Quality NPLs by sector, Q3 2004 GEL mln, unless otherwise noted Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Overdues* 11.1 8.9 14.6 11.7 11.9 Trade and NPL** 5.2 9.6 9.9 9.9 12.7 Construction Services NPL/Loans 3.6% 6.4% 6.4% 6.3% 7.5% 3% 11% NPL coverage ratio 144.4% 94.0% 94.0% 87.2% 86.4% O
Slide 16: Outlook and growth drivers
Outlook and growth drivers Outlook for October-December 2004 Stable FX, Treasury yields Strong loan growth Moderate decrease in margins Continuing growth in Fees & Commissions (+ consolidation of G&T) Cost reduction initiatives launched Additional net provisions of up to GEL 2 mln made M
Slide 17: Bank of Georgia Investment Case
Bank of Georgia Investment Case The second-largest A “leveraged play” on Georgia’s economic growth bank in Georgia by both assets and capital Winning strategy for medium-term profitable growth A leading retail bank Zealous focus on creating attractive exit opportunities by by both retail loa
Slide 18: Ample exit opportunities
Ample exit opportunities Market Market Shares Shares of of Foreign Foreign Controlled Controlled Banks Banks 100% 100% 95% 95% 96% 98% 96% 98% 90% 86% 86% 88% 90% 88% 90% 90% 80% 80% 68% 68% 65% 65% 70% 61% 61% 70% 56% 56% 60% 60% 50% 50% 40% 40% 33% 33% 30% 30% Georgia: < 5% 20% 20% 7% 7% 10% 10% 0
Slide 19: Our Mission & Vision
Our Mission & Vision Our vision is to be recognized as the best financial services company in Georgia Our mission is to The largest Among the A leading A player in create long-term Georgian select leaders share of the the non-life value and deliver retail bank, in corporate domestic sector, cross- C
Slide 20: Strategic objectives
Strategic objectives We will achieve our Enhance profitability Streamline and optimize the branch network footprint (YE 2004) mission by Clean up the loan book (Q4 2004) accomplishing the Optimize headcount in the head office (Q1 2005) following strategic Consider outsourcing certain services (2
Slide 21: Operating environment 2004-2005
Operating environment 2004-2005 Retail Banking Corporate & Investment Banking Asset Management Increasing disposable Strong economic growth and Favorable legislative incomes, consumer increased demand for financing changes have paved sophistication and trust and value-added services from way to rapi
Slide 22: Strategic Action Plan
Strategic Action Plan Retail Banking Corporate & Investment Banking Asset Management Insurance Q4 2004 Play an active role in Establish integrated Client Consolidate control of Consider a the establishment of Coverage with Galt & Taggart Galt & Taggart bancassurance credit bureau strategy Roll out C
Slide 23: Developing a diversified portfolio of businesses
Developing a diversified portfolio of businesses Buy/Invest Life High Insurance/ Pensions Retail Banking Card Wealth Issuance/ Management Payroll Invest & Buy Invest through G&T Invest Investment Banking Corporate Banking Growth potential Support Low Low Current market penetration High Source: Bank
Slide 24: Building an integrated business model
Building an integrated business model Benefits of the Integrated coverage of top 50 Benefit from derived integrated business corporate clients demand for consumer model lending from the payroll services client Strong management base Shared expertise Market retail asset Cross-sell synergies Retail Ba
Slide 25: The Georgian Financial Services Market
The Georgian Financial Services Market Q3 2004 PERFORMANCE UPDATE & 10/7/2004 25 www.bog.ge/ir INVESTOR PRESENTATION
Slide 26: The Georgian economy
The Georgian economy In GEL '000, unless otherwise noted 2002A 2003A 2004F Demographic Parameters Population, thousand people, of which 4,586 4,546 4,591 Economically active 2,175 2,096 2,130 % of Total population 47.4% 46.1% 46.4% Retired 1,065 992 996 % of Total population 23.2% 21.8% 21.7% Under
Slide 27: The Georgian banking sector
The Georgian banking sector Georgia (2003) CIS (2002) Balkans (2002) CEE (2002) EU (2001) Georgia is one of the Total Loans/GDP (%) 9.79% 17% 14% 32% 172% most underbanked Total Deposits/GDP (%) 9.15% 22% 25% 53% 186% Banking Assets per capita (EUR) 113 628 695 4,336 64,535 markets in Emerging Banki
Slide 28: Retail banking
Retail banking Retail deposit base is Retail Deposit & Loan Penetration small, although retail Cr oatia lending comprises a Czech Republic relatively high share Hungar y of the overall loan portfolio (thanks to P oland low-end lombard Rus s ia loans) Romania GEORGIA Retail banking in the 0.0% 5.0% 1
Slide 29: Retail banking
…as consumer Retail banking demand for financial services becomes more sophisticated Basic products Banking Pe ne tration Accounts per hundred people C ard Pene tration % of population ATM Penetration Branch Penetration ATMs per mln people Branches per mln people 2004/2005 Account Czech Rep ub lic 7
Slide 30: Corporate banking: the beginning of evolution cycle
Corporate g banking: p the beginning g of evolution p cycle Beginning Growth Maturity Formal regulation More experienced clients Experienced clients Inexperienced clients Healthy demand for Demand for investment High lending traditional commercial banking products concentration banking
Slide 31: Corporate banking: sizing the market 2004-2006
Corporate banking: sizing the market 2004-2006 Introduction Service/Product Banking Wallet Size p.a.* Cash Management, FX, Local Salary Inbound Business of Multinationals & Pensions, Custody, Corporate 15 Finance Loans, FX, Trade Finance, Asset Based Finance, Salary & Pensions, 60 G&T Top 75 & Large
Slide 32: Preparing for an era of decreasing yields
Preparing for an era of decreasing yields As the spreads Loan Spreads, % Net Banking Revenue Breakdown continue to decline, Western Europe while the Lari remains Western Europe Poland Poland strong Croatia Croatia Georgia 2006F Georgia 2006F Georgia 2003A Georgia 2003A Bulgaria The banking sector’s
Slide 33: The Georgian insurance sector
The Georgian insurance sector Very low insurance In GEL '000, unless otherwise noted 2000 2001 2002 2003 penetration and Number of insurance companies 17 22 27 25 density rates Gross premium income 18,088 25,392 25,305 38,417 Gross premium income as % of GDP 0.30% 0.38% 0.35% 0.48% Gross premium inc
Slide 34: The Georgian insurance sector
The Georgian insurance sector Breakdown of insurance premiums by types of insurance COMPARISON OF GEORGIAN AND RUSSIAN MACROECONOMIC CONDITIONS TO THE In GEL '000, unless otherwise noted 2000 2001 2002 2003 LEVELS WHEN LIFE INSURANCE BEGAN TO TAKE OFF IN POLAND Property 2,534 4,481 5,736 9,666 Georg
Slide 35: The Georgian insurance sector
The Georgian insurance sector The sector is highly concentrated, with four companies accounting for almost 70% of the market Insurance Premium Breakdown in 2003 Market Shares in 2003 Aldagi Imedi-L BCI GPIH Aldagi Imedi-L BCI GPIH Property 13.4% 53.1% 16.4% 24.8% 12.3% 46.7% 7.7% 11.5% Medical 8.5