Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bank of Georgia Group PLC (BDGSF, Financial) reported a record profit of GEL509 million for Q3 2024, marking a 42.5% increase compared to the previous year.
- The company achieved a return on equity of 32% with a low cost of risk at 0.2%, indicating strong financial performance.
- The bank was recognized as the best digital bank in the world by Global Finance Magazine, highlighting its digital capabilities.
- Monthly active users of the bank's retail application grew by 20% year-on-year, surpassing 1.5 million users, demonstrating strong customer engagement.
- Operating income increased by 45.9%, with net interest income growing by 52.6% and non-interest income by 33.3%.
Negative Points
- The bank experienced a slight decrease in net fee and commission income quarter-over-quarter in both Georgia and Armenia due to one-off events.
- There was a GEL10 million charge related to a special shopping day promotion, which, while popular, impacted financials negatively.
- The cost-to-income ratio for Armenia was just below 50%, indicating room for improvement in operational efficiency.
- The net interest margin was 10 basis points lower, reflecting pressure on deposit rates despite a declining rate environment.
- The bank's share price experienced volatility due to political uncertainties related to recent elections in Georgia.
Q & A Highlights
Q: Are there any other regions or countries where Bank of Georgia Group PLC would like to expand?
A: Archil Gachechiladze, CEO, stated that while they would like to be a top 3 player in various geographies, any expansion would depend on affordability, the ability to add value, and favorable macroeconomic conditions. They are not currently focused on any specific markets for expansion.
Q: What is the nature of the new legislation in Armenia, and what are the potential risks or opportunities?
A: The legislation concerns the framework for Tier 1 instruments, which currently do not exist in Armenia. This would allow Ameriabank to issue Tier 1 instruments, enhancing its capital position for growth or dividends. The CEO sees this as an opportunity for capital attraction and growth.
Q: Why has Ameriabank been increasing its headcount, and why is the salary per headcount higher compared to Georgia Financial Services?
A: The CEO explained that the differences in pay structures are due to local market conditions and Ameriabank's focus on top corporate and premium retail banking, which requires different staffing compared to the more mass retail-focused Bank of Georgia.
Q: Given the strong profits, does it make sense to increase the NPL coverage ratio or set aside capital for a "rainy day"?
A: The CEO emphasized that provisioning is based on expected losses, and over-providing would misrepresent reality. The bank maintains conservative policies and sticks to them.
Q: How has Bank of Georgia managed to maintain its net interest margin (NIM) despite a declining rate environment?
A: The CEO attributed the stable NIM to the rebuy of a Tier 1 instrument, which reduced costs. However, there was pressure on deposit costs, limiting the ability to decrease deposit rates further.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
