Bank of Georgia reports strong 1Q14 results

Georgian leading financial group Bank of Georgia Holdings (BGEO LN) reported a 27% yoy increase in its bottom line to GEL 53.7 mln in 1Q14, the holding reported on May 9. Its ROAE improved to 17.7% in 1Q14 vs. 15.9% a year before. 

The group’s revenue increased 11.8% yoy to GEL 137.5 mln in 1Q14, driven by a 9.8% yoy growth in net interest income (to GEL 79.7 mln), as well as a doubled income from its healthcare business (to GEL 7.8 mln) and a good performance of its real estate business that has added to a 2.7x yoy growth in “other operating income” to GEL 9.4 mln. At the same time, the holding reported a 2.8% yoy decline in net fees and commissions income (to GEL 19.9 mln) on a 34.5% yoy inflation of commission expenses, which Bank of Georgia attributes to an increase of client acquisition costs and a shift to outsource some operations. Its net insurance revenue declined 17.2% yoy to GEL 9.7 mln, due to a decline in health insurance premiums, as the Georgian government commenced a gradual shift towards directly managing state-funded insurance policies that were previously managed by private insurance companies. 

The group’s operating costs increased 9.8% yoy to GEL 59.2 mln, and its cost of credit risks decreased 22.9% yoy to GEL 13.3 mln, which allowed Bank of Georgia to report an increase in its bottom line. 

Bank of Georgia’s net loans increased 18.1% yoy to GEL 3.49 bln and customer funds increased 8.8% yoy to GEL 3.1 bln as of end-1Q14. Its Tier I capital adequacy ratio improved to 23.8% as of end-1Q14, compared to 23.2% a year before. 

Commenting on the group’s results, CEO Iralki Gilauri stated that Bank of Georgia is “strongly positioned to benefit from the continuation of macro-economic improvement in 2014, for which the IMF estimates a 5.0% growth”.