Bank of Georgia 3Q13 ROE exceeds 20%

Bank of Georgia Holdings (BGEO LN), Georgia’s leading bank, reported on November 13 strong results for 3Q and 9M2013. Its revenue increased 8.4% yoy to GEL 401 mln in 9M13, driven by 11.1% yoy growth in net interest income (to GEL 231 mln) and a 60.5% yoy increase in net insurance revenue (to GEL 35 mln). The key driver for net interest income growth was not an increase in lending activity (its loan portfolio rose just 7.2% yoy), but a decrease in the cost of deposits to 5.8% in 9M13 (vs. 75% in 9M12), which allowed the bank to cut its interest expense by 6.7% yoy.

The holding’s cost/income ratio improved to 41% in 9M13 (vs. 45.2% a year before), which enabled it to report a 15.8% yoy increase in profit to GEL 154 mln (GBP 57.4 mln, or GBP 1.62/share) for the period. In 3Q13 alone, the holding’s profit amounted to GEL 59 mln (GBP 21.9 mln, or GBP 0.62/share). The bank’s ROE in 3Q13 stood at 20.6%, more than 1pp higher compared to 3Q12 and 2Q13.