Lion Finance Group PLC · LSE:BGEO
Lion Finance — Bank of Georgia Group — FY2022 Earnings Presentation
61 slides from Lion Finance's earnings presentation, Feb 16, 2023
Slide 1: Investor Presentation 4Q22 and FY22
INVESTOR PRESENTATION 4Q22 and FY22 16 February 2023 Performance ww.bankofgeorgiagroup.com 1
Slide 2: Disclaimer – forward looking statements
Disclaimer – forward looking statements This presentation 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,
Slide 3: Delivering value in 2022
Delivering value in 2022 Highlights of the quarter December 2022 Profit ROE C/I GEL 326m 33.7% 31.0% up 62.4% y-o-y NPS MAU Highlights of the year 58 1.1m+ up 31.5% y-o-y Profit ROE C/I GEL 1,132m 32.4% 32.0% up 55.7% y-o-y Profit, ROE, and cost to income ratio were adjusted for a one-off GEL 391.1m
Slide 4: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES 4
Slide 5: Strong growth momentum maintained in 4Q22
Strong growth momentum maintained in 4Q22 Real GDP y-o-y growth Key drivers of growth in 2022: 44.8% 2021 1Q22 2Q22 3Q22 4Q22E 2022E Resilient inflows from exports and remittances, full recovery in tourism revenues 10.5% 15.0% 7.2% 9.8% 9.5% 10.1% Increased activity in transport and communicatio
Slide 6: External sector: exports, remittances, imports, tourism
800 0 200 400 600 800 0 200 400 600 -200 Jan-21 Jan-21 Feb-21 Feb-21 Mar-21 Mar-21 Apr-21 Apr-21 May-21 May-21 Jun-21 Jun-21 Remittances Jul-21 Jul-21 Aug-21 Aug-21 Source: GeoStat, NBG, GNTA Export of goods Sep-21 Sep-21 Oct-21 Oct-21 Nov-21 Nov-21 Dec-21 Dec-21 Export of goods, US$ m Jan-22 Jan-22
Slide 7: Expected normalisation of economic growth
Expected normalisation of economic growth Georgia’s economic growth forecast 10.5% 10.1% In 2023, real GDP growth is expected to slow to 4.8%, considering a high base after two 7.4% consecutive years of double-digit growth 6.4% 4.8% 4.8% 5.0% 5.0% 4.4% The main drivers of growth are expected to
Slide 8: Inflation started to decrease amid eased commodity price pressures
Inflation started to decrease amid eased commodity price pressures Monetary policy remains tight to curb inflation pressures Monetary policy rate Annual CPI inflation 16% 16% 5-year Annual Nov-22 Dec-22 14% average 14% Inflation was mainly driven by elevated Headline CPI 6.8% 10.4% 9.8% 12% 12% fo
Slide 9: GEL supported by sustained FX inflows and tight monetary policy
GEL supported by sustained FX inflows and tight monetary policy Currency movements vs. US$, 12/31/2021 – 12/31/2022 17.9% 12.5% 1.9% 1.5% 0.2% -3.8% -6.1% -7.1% -7.8% -34.7% -40.1% GEL continued to appreciate on the back of strong external inflows, tight monetary policy, and improved sentiments. T
Slide 10: Growing international reserves
1.0 0.0 3.0 4.0 5.0 6.0 2.0 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Source: NBG, BOG Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 external shocks Sep-18 International reserves Dec-18 Mar-19 Jun-19 Gross international reserves, US$ bn Sep-19 Dec-19 Mar-20 Jun-
Slide 11: Healthy banking sector, with dollarisation down
Healthy banking sector, with dollarisation down Bank loan book growth vs. nominal Loan and deposit dollarisation Non-performing bank loans to total GDP growth gross loans in selected countries, 1H2022 Nominal GDP growth, y-o-y Bank loan dollarisation Lithuania 0.5% Bank credit growth, y-o-y Bank dep
Slide 12: Reduced debt burden in the economy
Reduced debt burden in the economy Banking sector loans to households Public debt as % of GDP and legal entities as % of GDP Domestic public debt as % of GDP External public debt as % of GDP Household loans to GDP Legal entity loans to GDP Total public debt as % of GDP 60.2% 100% 100% 70% 70% 49.7%
Slide 13: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES 13
Slide 14: Who we are and what we focus on
Who we are and what we focus on A FTSE-250 company with a diversified institutional investor base Retail digital banking leader Top of mind and the most trusted bank in Georgia Consistently delivering high profitability (ROE above 20%) Highest standards of corporate governance and a strong focus on
Slide 15: Track record of strong performance
Track record of strong performance 32.4% 27.0% ROE* 26.4% 26.1% 25.8% Loan book YoY 21.4% growth 18.9% 19.8% 20%+ 13.0% c.10% 19.0% 22.0% 12.9% 13.9% 10.2% 4.3% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Nominal Constant currency basis PAYOUT 36% 33% 34% 32% 30% 30% 35%** 37%** RATIO: 600 539
Slide 16: Our customers are becoming more digital and engaged
Our customers are becoming more digital and engaged Figures given for JSC Bank of Georgia standalone Active users (retail) Building a financial super app thousands Monthly active clients MAU DAU +17.1% 1,632 y-o-y 1,492 1,546 1,394 1,429 1,121 +31.5% 959 1,005 y-o-y 853 892 533 +41.4% 398 439 454 37
Slide 17: sCoolApp | the first financial mobile application for juniors
sCoolApp | the first financial mobile application for juniors Monthly active digital users Money request Application skins Animations Fun features 33,167 Check 23,436 available balance 9,495 sCool Card details and transactions Oct-22 Nov-22 Dec-22 Special offers Addressable market Piggy Bank Total a
Slide 18: Focusing on increasing sales in digital channels
Focusing on increasing sales in digital channels Figures given for JSC Bank of Georgia standalone Number of transactions Product offloading millions thousands Share of +74.9% mBank/iBank 50.8% 53.7% 53.9% 55.8% 58.2% transactions +46.9% 90.2 700 642 100.0% 80.7 3.2 76.6 90.0% 2.7 12.0 600 69.6 80.0%
Slide 19: Full digital experience for our business customers
Full digital experience for our business customers Figures given for JSC Bank of Georgia standalone Monthly active digital users Number of transactions thousands millions +39.0% +32.4% +10.1% +12.4% 4.4 58 52 3.9 3.7 47 3.3 41 43 2.9 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 4Q21 1Q22 2Q22 3Q22 4Q22 79% Cu
Slide 20: Payments business – our daily touchpoint with customers
Payments business – our daily touchpoint with customers Figures given for JSC Bank of Georgia standalone Acquiring - volume of payment transactions Issuing – payment MAU GEL millions thousands +52.8% +33.0% +16.5% +11.8% 3,223 1,040 2,766 2,291 1,000 930 2,109 767 1,922 883 641 723 812 617 782 1,999
Slide 21: Fostering a customer-centric culture
Fostering a customer-centric culture Figures given for JSC Bank of Georgia standalone NPS* 60 Engaging with customers proactively and responding in real 58 55 54 time 52 49 47 Anticipating customer needs, wants, and future behavior 46 42 43 39 38 Harnessing strong human relationships with data analy
Slide 22: Empowering our employees
Empowering our employees Figures given for JSC Bank of Georgia standalone eNPS 58 60 61 Focusing on employee experience 53 50 46 Fostering a high-trust environment and strong feedback culture Attracting and developing top talent Doing business in line with our core values and business principles Nov
Slide 23: ESG year in review
ESG year in review Approved the Bank’s Climate Strategy and Climate Risk Management Framework Reached more than 100,000 school students with educational initiatives in our communities and through the newly launched sCoolApp Opened 7 Ideathecas - multifunctional libraries in public schools acro
Slide 24: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES 24
Slide 25: Financial highlights
Financial highlights 4Q FY 33.7% ROE 32.4% Loans 31 Dec 2022 GEL 16.9bn +4.3% y-o-y +12.9% y-o-y 0.9% Cost of credit risk ratio 0.8% +4.3% q-o-q +4.8% q-o-q On a constant currency basis 31.0% Cost to income ratio 32.0% Deposits 31 Dec 2022 GEL 18.3bn +30.1% y-o-y +43.2% y-o-y +6.2% q-o-q +8.5% q-o-q
Slide 26: Strong underlying performance
Strong underlying performance All currency data are in GEL m unless otherwise stated Net non-interest income* Operating income* +129.2% +99.1% +54.2% +46.6% +8.1% +11.1% 820 250 36 585 2,002 231 527 214 1 27 495 7 396 250 820 466 379 231 1,366 214 151 125 412 124 126 109 124 412 109 1 70 11 64 109 3
Slide 27: Investing for growth while maintaining the focus on efficiency
Investing for growth while maintaining the focus on efficiency All currency data are in GEL m unless otherwise stated Operating expenses Cost to income ratio* +20.1% +26.2% +12.6% 181 641 1 4 161 161 151 32 508 111 39.8% 1 1 1 138 37.2% 28 27 4 25 2 35.0% 94 164 25 55 37 38 32.5% 32.0% 44 34 130 30.
Slide 28: Increased deposits reflecting the strength of our franchise
Increased deposits reflecting the strength of our franchise All currency data are in GEL m unless otherwise stated Loan portfolio Deposit portfolio +4.3% +30.1% +12.9% +43.2% +6.2% +4.3% +8.5% +4.8% 18,261 16,862 17,193 16,169 16,289 16,300 16,163 14,517 15,100 14,038 7,659 8,007 11,569 8,820 8,715
Slide 29: Focusing on profitability while maintaining strong competitive positions
Focusing on profitability while maintaining strong competitive positions Market share – gross loans Market share – customer deposits 38.9% 39.1% 39.5% 40.4% 40.3% 40.7% 40.0% 40.3% 38.8% 38.8% 37.8% 37.5% 38.7% 38.9% 35.7% 36.0% 36.2% 36.2% 36.1% 36.4% Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Dec-21 Mar-2
Slide 30: Increase in NIM driven by higher loan yield
Increase in NIM driven by higher loan yield Net interest margin Loan yield, cost of funds, cost of deposits 12.0% 11.5% 11.1% 11.4% 11.6% 11.0% 10.6% 5.7% 5.4% 5.3% 5.3% 5.3% 5.3% 4.9% 4.8% 5.0% 5.2% 4.9% 4.9% 4.6% 4.6% 3.5% 3.7% 3.7% 3.6% 3.4% 3.6% 3.6% 4Q21 1Q22 2Q22 3Q22 4Q22 FY21 FY22 4Q21 1Q22
Slide 31: High quality loan portfolio
High quality loan portfolio All currency data are in GEL m unless otherwise stated Cost of credit risk ratio Loan portfolio quality NPL coverage 95.5% 97.3% 89.6% 89.4% 66.4% 1.0% 0.9% 0.8% NPL coverage adjusted for collateral value 0.8% 0.6% 147.7% 153.0% 138.0% 138.0% 128.9% 0.0% -0.2% 4Q21 1Q22 2
Slide 32: Robust bottom-line growth and profitability
Robust bottom-line growth and profitability All currency data are in GEL m unless otherwise stated Profit (adjusted)* ROE* +62.4% +55.7% 32.8% 33.7% 32.4% +12.3% 32.4% 30.7% 1,132 26.4% 25.8% 326 275 290 241 727 201 4Q21 1Q22 2Q22 3Q22 4Q22 FY21 FY22 4Q21 1Q22 2Q22 3Q22 4Q22 FY21 FY22 Profit (report
Slide 33: Continued strong capital generation
Continued strong capital generation Figures given for JSC Bank of Georgia standalone Evolution of capital ratios during 4Q22 Minimum Capital Potential impact 30 Sep 4Q22 Business Currency Capital 31 Dec requirement facility of a 10% GEL 2022 profit growth impact distribution 2022 (31 Dec devaluation
Slide 34: Continued strong capital generation
Continued strong capital generation Figures given for JSC Bank of Georgia standalone Capital adequacy ratios and minimum requirements Risk-weighted assets +12.8% 20.3% +4.5% 19.7% 19.8% 19.8% 19.3% 1.6% 2.1% 2.3% 3.0% 2.6% 17.0% 16.4% 16.7% 20,279 15.0% 15.4% 14.8% 14.7% 13.7% 1.3% 14.0%2.4% 3.2% 2.
Slide 35: Strong liquidity position
Strong liquidity position Liquidity coverage and net stable Net loans to customer funds and DFIs funding ratios JSC Bank of Georgia standalone (Basel III liquidity) 115.2% 132.5% 132.4% 131.9% 112.2% 130.7% 130.6% 130.9% 107.9% 124.0% 100.0% 121.4% 97.9% 95.5% 94.0% 92.3% 116.2% 113.5% 84.5% 83.8% D
Slide 36: Diversified funding structure
Diversified funding structure All currency data are in GEL m unless otherwise stated Interest-bearing liabilities Borrowed funds maturity profile (USD, million)* As at 31 December 2022 +21.6% +5.5% 302 24,174 22,905 21,419 646 19,875 20,610 774 2,113 82 1,300 2,290 1,416 3,154 1,519 2,266 2,647 2,44
Slide 37: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES: ADDITIONAL INFORMATION AND SEGMENT RESULTS 37
Slide 38: Bank of Georgia's diversified loan book
Bank of Georgia’s diversified loan book All currency data are in GEL m unless otherwise stated As at 31 December 2022 30.1% Total gross loans: GEL 16,580m 4,989 Allowance for ECL: GEL 285m Total net loans: GEL 16,295m 69.9% 11,591 Retail Banking Corporate Banking Portfolio figures given for JSC Bank
Slide 39: Retail Banking portfolio by product
Retail Banking portfolio by product All currency data are in GEL m unless otherwise stated 11,591 11,171 11,271 10,993 10,581 4.5% 4.5% 4.5% 4.6% 4.7% 27.2% As at 31 December 2022 24.4% 25.3% 26.2% 23.8% Total gross loans: GEL 11,591m Allowance for ECL: GEL 222m 33.9% 34.6% 34.5% 33.4% 32.4% Total n
Slide 40: Corporate Banking loan portfolio by sector
Corporate Banking loan portfolio by sector Real estate Other 15.4% As at 31 December 2022 27.3% Total gross loans: GEL 4,989m Allowance for ECL: GEL 63m Manufacturing 14.8% Total net loans: GEL 4,926m Trade 8.7% Hospitality 12.6% Top 10 CB borrowers: 20.4% of CB gross loan book Electricity, gas and
Slide 41: Borrowers and FX risk
Borrowers and FX risk % is given for Bank of Georgia standalone gross loan portfolios FC loans exposed to FC loans with no FX risk* (% of exposure to FX risk (% segment portfolio) of segment portfolio) 28.7% 4.8% Retail Banking Mortgages 11.1% 3.3% 2.8% 1.0% Consumer loans 14.8% 0.5% MSME Corporate
Slide 42: Retail Banking – loan and deposit portfolio
Retail Banking – loan and deposit portfolio All currency data are in GEL m unless otherwise stated Loan portfolio Deposit portfolio +9.8% +30.1% +16.4% +44.7% +3.0% +8.8% +3.2% +11.2% Growth on a 12,433 10,350 10,740 10,925 11,042 11,369 11,429 constant 9,558 9,858 10,260 currency 4,249 4,058 3,765
Slide 43: Corporate Banking – loan and deposit portfolio
Corporate Banking – loan and deposit portfolio All currency data are in GEL m unless otherwise stated Loan portfolio Deposit portfolio -3.4% +20.2% +9.1% +27.3% +7.6% -3.0% +8.1% -1.9% 5,101 4,847 4,814 4,926 Growth on a 4,975 4,825 4,580 constant 4,195 4,270 4,015 currency 1,800 1,803 basis 1,456 1
Slide 44: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES: ADDITIONAL MACROECONOMIC INFORMATION 44
Slide 45: Diversified and resilient economy
Diversified and resilient economy Gross domestic product Nominal GDP by sector, 9M22 Nominal GDP per capita, US$ Real GDP growth, % 10.5% 10.1% Trade 14.6% 7.4% 6.4% Other 4.8% 4.8% 5.0% 28.1% 4.4% 3.6% 3.0% 2.9% Manufacturing 12.9% 4,062 4,023 5,023 4,696 4,359 6,639 4,624 4,256 4,013 4,739 4,422 4
Slide 46: One of the fastest-growing economies in the region
Ukraine 0.0% Belarus 1.1% Azerbaijan 1.2% Croatia 1.4% Source: IMF Russia 1.7% Bulgaria 1.7% Czech Rep. 1.9% Slovak Rep. 2.1% Hungary 2.7% 2011-2021 average Latvia 2.8% Poland 4.5% Romania 3.4% Kazakhstan 3.5% Lithuania 3.6% Estonia 3.7% Moldova 3.7% Armenia 3.7% Comparative real GDP growth rates, G
Slide 47: Positive growth outlook amid regional instability
Positive growth outlook amid regional instability Real GDP growth forecasts 14% 14% Georgia 12% 12% Middle East & Central Asia 10% 10% Emerging & Developing Europe 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% -2% -2% -4% -4% -6% -6% -8% -8% 2024F 2011 2013 2017 2018 2014 2015 2016 2019 2012 2020 2021 2022E 2023F S
Slide 48: Unemployment down to historically low levels
Unemployment down to historically low levels Employment data Composition of employment Employed, '000 persons Unemployment rate, % 1,500 30% 100% 100% 27.2%26.7% 11.3% 26.4% Industry 25% 31.9% 1,200 23.0% 80% 80% Self- 18.9% 21.9%21.7%21.6% Agriculture employed 20.6% 19.2% 19.4% 18.5% 20% 18.1% 17.6
Slide 49: Improved fiscal parameters on the back of strong economic growth
Improved fiscal parameters on the back of strong economic growth Fiscal balance as % of GDP Consolidated budget tax revenues, GEL m 2020 2021 2022 2,000 +29.9% y-o-y growth in 2022 -1.9% 1,800 -2.0% -2.1% -2.2% -2.4% -2.3% -1.7% -2.7% 1,600 -3.1% -2.3% -2.3% -2.6% -2.8% -2.8% 1,400 1,200 -6.1% -5.3%
Slide 50: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES: CORPORATE GOVERNANCE 50
Slide 51: We are a FTSE-250 company with a diversified institutional investor base
We are a FTSE-250 company with a diversified institutional investor base Top 10 shareholders Shareholder base by country 30 December 2022 30 December 2022 Shareholder name Ownership 1 JSC Georgia Capital* 20.6% 2 M&G Investment Management Ltd 4.1% 25.1% 3 Dimensional Fund Advisors (DFA) LP 4.1% 40.3
Slide 52: Board of Directors – promoting sustainable value creation
Board of Directors – promoting sustainable value creation Mel Carvill, Non-Executive Chair Hanna Loikkanen, Senior Independent Non-Executive Experience: formerly Senior Independent Director of Sanne Group Plc, Director Head of Corporate Finance and M&A, and Strategic Planning and Chief Experience: N
Slide 53: Diverse and experienced management team creating opportunities
Diverse and experienced management team creating opportunities Archil Gachechiladze, Chief Executive Officer Sulkhan Gvalia, Deputy CEO, Chief Financial Officer With the Group since 2009, serving in various senior positions, With the Group since 2004, serving in various senior positions, including a
Slide 54: Diverse and experienced management team creating opportunities
Diverse and experienced management team creating opportunities Zurab Masurashvili, Deputy CEO*, Head of SME Business Mikheil Gomarteli, Deputy CEO, Strategic Projects Banking Direction With the Group since 1997, serving in various senior positions. With the Group since 2015. Previously, Head of Expr
Slide 55: ESG scores from independent rating agencies
ESG scores from independent rating agencies ISS* ENVIRONMENT 3 SOCIAL 3 GOVERNANCE 3 MSCI** Bank of Georgia falls into the highest scoring range relative to global peers CCC B BB BBB A AA AAA LAGGARD AVERAGE LEADER FTSE4GOOD Index Included in the global responsible investment index FTSE4GOOD since 2
Slide 56: Contents
Contents MACROECONOMIC HIGHLIGHTS GROUP OVERVIEW AND STRATEGY 4Q22 AND FY22 RESULTS APPENDICIES: FINANCIAL INFORMATION 56
Slide 57: Income statement highlights
Income statement highlights Change Change Change GEL thousands 4Q22 4Q21 y-o-y 3Q22 q-o-q FY22 FY21 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
Slide 58: Balance sheet highlights
Balance sheet highlights GEL thousands Change Change Dec-22 Dec-21 y-o-y Sep-22 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
Slide 59: Key ratios
Key ratios KEY RATIOS 4Q22 4Q21 3Q22 FY22 FY21 ROAA* 4.7% 3.5% 4.4% 4.4% 3.2% ROAE* 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 d
Slide 60: Definitions
Definitions Cost of funds Interest expense of the period divided by monthly average interest bearing liabilities; Cost of deposits Interest expense on client deposits and notes of the period divided by monthly average client deposits and notes Cost of credit risk Expected loss on loans to cust
Slide 61: Company information
Company information Registered Address Auditors 42 Brook Street Ernst & Young LLP London W1K 5DB 25 Churchill Place United Kingdom Canary Wharf Registered under number 10917019 in England and Wales London E14 5EY United Kingdom Secretary Computershare Company Secretarial Services Limited Registrar T