1st Quarter Results

Released : 10 May 2017 07:00

RNS Number : 6669E
Bgeo Group PLC
10 May 2017
 

 

 

 

 

 

BGEO Group PLC

1st quarter 2017 results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

www.BGEO.com

 

 

Name of authorised official of issuer responsible for making notification:

Giorgi Alpaidze, Head of Finance, Funding and Investor Relations

 

 

 

 

 

 

 

BGEO Group PLC 1Q 2017 Results Earnings call

 

BGEO Group PLC ("BGEO" or the "Group") will publish its financial results for the 1st quarter 2017 at 07:00 London time on Wednesday, 10 May 2017. The results announcement will be available on the Group's website at www.bgeo.com. An investor/analyst conference call, organised by BGEO, will be held on, 10 May 2017, at 14:00 UK / 15:00 CET / 9:00 U.S Eastern Time. The duration of the call will be 60 minutes and will consist of a 15-minute update and a 45-minute Q&A session.

 

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30-Day replay:

Pass code for replays / Conference ID: 19245138

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UK Local Dial In: 08443386600

USA Free Call Dial In: 1 (866) 247-4222

 

 

 

 

FORWARD LOOKING STATEMENTS

This announcement 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, plans or intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development. Although BGEO Group PLC believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements, certain of which are beyond our control, include, among other things: currency fluctuations, including depreciation of the Georgian Lari, and macroeconomic risk; corporate loan portfolio exposure risk; regional tensions; regulatory risk; cyber security, information systems and financial crime risk; investment business strategy risk; and other key factors that we have indicated could adversely affect our business and financial performance, which are contained elsewhere in this document and in our past and future filings and reports, including the 'Principal Risks and Uncertainties' included in BGEO Group PLC's Annual Report and Accounts 2016. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in BGEO Group PLC or any other entity, and must not be relied upon in any way in connection with any investment decision. BGEO Group PLC undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Nothing in this document should be construed as a profit forecast.

 

TABLE OF CONTENTS

 

 

1Q17 Results Highlights

4



Chief Executive Officer's Statement

7



Financial Summary

9



Discussion of Results

11



Discussion of Banking Business Results

11



Discussion of Segment Results

15

§ Retail Banking

15

§ Corporate Investment Banking

18

§ Utility & Energy Business

21

§ Healthcare Business

25

§ Real Estate Business

28



Selected Financial and Operating Information

31



Company Information

37

 

 

 

 

 

 

 

 

 

 

 

 

About BGEO Group

 

The Group: BGEO Group PLC ("BGEO"- LSE: BGEO LN) is a UK incorporated holding company of a Georgia-focused investment platform. BGEO invests, via its subsidiaries, in the banking and non-banking sectors in Georgia (BGEO and its subsidiaries, the "Group"). BGEO aims to deliver on a 4x20 strategy: (1) at least 20% ROAE; (2) at least 20% growth of our Banking Business retail loan book; (3) at least 20% IRR;  and (4) up to 20% of the Group's profit from its Investment Business.

Banking Business: Our Banking Business comprises at least 80% of the Group's profit. JSC Bank of Georgia ("BOG" or the "Bank") is the main entity in the Group's Banking Business. The Banking Business consists of Retail Banking, Corporate Banking and Investment Management businesses at its core and other banking businesses such as P&C Insurance ("Aldagi"), leasing, payment services and banking operations in Belarus ("BNB"). The Group strives to benefit from the underpenetrated banking sector in Georgia especially through its Retail Banking services.

Investment Business: Our Investment Business comprises up to 20% of the Group's profit and consists of Georgia Healthcare Group ("Healthcare Business" or "GHG") - an LSE (London Stock Exchange PLC) premium listed company, m2 Real Estate ("Real Estate Business" or "m2"), Georgia Global Utilities ("Utility and Energy Business" or "GGU") and Teliani Valley ("Beverage Business" or "Teliani"). Georgia's fast-growing economy provides opportunities in a number of underdeveloped markets and the Group is well positioned to capture growth opportunities in the Georgian corporate sector.



BGEO Group PLC announces the Group's first quarter 2017 consolidated results. Unless otherwise indicated, numbers are for the first quarter 2017 and comparisons are with the first quarter 2016. The results are based on International Financial Reporting Standards ("IFRS") as adopted by the European Union, are unaudited and derived from management accounts.

BGEO highlights

§ 1Q17 profit was GEL 108.2mln (US$ 44.2mln/GBP 35.6mln), up 24.3% y-o-y

§ 1Q17 basic earnings per share ("EPS") was GEL 2.64 (US$ 1.08 per share/GBP 0.87 per share), up 25.7% y-o-y

§ Book value per share was GEL 58.0, up 15.5% y-o-y

§ Total equity attributable to shareholders was GEL 2,208.9mln, up 14.2% y-o-y

§ Total assets increased to GEL 12,606.5mln, up 25.1% y-o-y

§ As of 5 May 2017, GEL 321.1mln1 liquid assets were held at the holding company level, of which, GEL 173.7mln was unallocated

§ 1Q17 GDP growth was 5.0%, while inflation was 4.2% and the Lari appreciated by 7.6% against the US Dollar

 

1Of GEL 321.1mln at 5 May 2017, GEL 99.5mln is earmarked for regular dividends in respect of 2016 financial year, while GEL 47.9mln is pledged as collateral for borrowings from Georgian commercial banks

 

Banking Business highlights

1Q17 performance

§ Revenue was GEL 221.4mln (up 20.2% y-o-y and down 4.8% q-o-q)

§ Net Interest Margin ("NIM") was 7.4% (down 10 bps y-o-y and down 20 bps q-o-q)

§ Loan Yield stood at 14.0% (down 40 bps y-o-y and down 40 bps q-o-q)

§ Cost of Funds stood at 4.6% (down 40 bps y-o-y and flat q-o-q)

§ Cost to Income ratio was 36.1% (37.9% in 1Q16 and 37.5% in 4Q16)

§ Cost of credit risk stood at GEL 48.3mln (up 37.8% y-o-y and down 31.9% q-o-q)

§ Cost of Risk ratio was 2.4% (2.3% in 1Q16 and 4.2% in 4Q16)

§ Profit was GEL 86.9mln (up 24.7% y-o-y and up 15.4% q-o-q)

§ Return on Average Assets ("ROAA") was 3.2% (3.0% in 1Q16 and 2.9% in 4Q16)

§ Return on Average Equity ("ROAE") was 23.5% (21.2% in 1Q16 and 20.1% in 4Q16) 

Balance sheet strength supported by solid capital and liquidity positions

§ The net loan book reached GEL 6,470.8mln, up 19.9% y-o-y and down 3.2% q-o-q. The growth on a constant-currency basis was 17.4% y-o-y and 2.1% q-o-q

§ Customer funds increased to GEL 5,591.7mln, up 12.7% y-o-y and down 2.4% q-o-q. The growth on a constant-currency basis was 10.1% y-o-y and 3.5% q-o-q

§ Net Loans to Customer Funds and DFI ratio stood at 96.1% (91.6% at 31 March 2016 and 95.3% at 31 December 2016)

§ Leverage was at 6.4-times as at 31 March 2017, compared to 6.1-times at 31 March 2016

§ NBG (Basel 2/3) Tier I and Total CAR stood at 11.2%2 and 16.3%, respectively, at 31 March 2017

§ NBG Liquidity Ratio was 37.4% at 31 March 2017, compared to 47.3% at 31 March 2016

 

2Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for regular dividends in respect of the 2016 financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO's AGM on 1 June 2017. Excluding this amount, NBG (Basel 2/3) Tier I and Total CAR would be 10.1% and 15.2%, respectively

 

Resilient growth momentum sustained across major business lines

§ Retail Banking ("RB") continues to deliver strong franchise growth. Retail Banking revenue reached GEL 141.2mln in 1Q17, up 32.8% y-o-y and down 4.4% q-o-q

§ The Retail Banking net loan book reached GEL 3,891.1mln as of 31 March 2017, up 34.1% y-o-y and down 0.3% q-o-q. The growth on a constant-currency basis was 31.8% y-o-y, well above our strategic target of 20%+, and 4.2% q-o-q. As a result, retail loan book's share accounted for 62.6% of Bank's gross loan book of at 31 March 2017 (56.5% as of 31 March 2016)

§ Retail Banking client deposits increased to GEL 2,393.8mln as of 31 March 2017, up 25.9% y-o-y and down 0.8% q-o-q. The growth on a constant-currency basis was 22.9% y-o-y and 5.3% q-o-q

§ The number of Retail Banking clients reached 2.2mln at the end of 1Q17, up 8.2% from 2.0mln at the end of 1Q16

§ Solo - our premium banking brand - continues its strong growth. Solo, which offers a fundamentally different approach to premium banking and targets the mass affluent client segment, more than doubled its client base since April 2015, when we launched Solo in its current format. As of 31 March 2017, the number of Solo clients reached 21,657. Our goal is to significantly increase our market share in the mass affluent segment, which stood below 13% at the beginning of 2015, when we launched Solo in its current format

§ Our Retail Banking product to client ratio remained at 2.0 in 1Q17, flat y-o-y and q-o-q. As we complete the transformation of our retail banking operations from the product-based model into the client-centric model we expect that it will have a positive impact on the Retail Banking's product to client ratio in the future. We completed the implementation of the client-centric model in 28 branches as of 31 March 2017 and are currently in process of converting eight additional branches. We have seen outstanding sales growth in transformed branches, with the number of products sold to our clients increasing by over 100% compared to the base-line figures

§ Corporate Investment Banking ("CIB") is successfully delivering its risk deconcentration strategy, having reduced the concentration of our top 10 CIB clients to 11.3% at the end of 1Q17, down from 12.1% a year ago. The CIB's net loan book amounted to GEL 2,226.9mln at 31 March 2017, up 3.9% y-o-y, and down 7.0% q-o-q. On a constant-currency basis, the loan portfolio was largely flat y-o-y and q-o-q. The CIB's net fee and commission income was GEL 5.7mln or 9.9% of the total CIB revenue in 1Q17 compared to GEL 7.0mln or 11.9% a year ago. The decline was mainly driven by the decrease in fee and commission income from guarantees and letters of credit as we reduced our large guarantee and letters of credit exposures (refer to the Banking Business discussion below for more detailed discussion). CIB's ROAE increased to 18.3% in 1Q17 from 17.6% in 1Q16, primarily as a result of improved cost of risk. We continue to target a) further reductions in the CIB's loan portfolio concentration, b) growth of our fee income business, and c) improvements of CIB ROAE

§ Investment Management's Assets Under Management ("AUM") increased to GEL 1,568.6mln3, up 16.7% y-o-y, reflecting higher bond issuance activity by our brokerage arm Galt & Taggart, as our clients increasingly access these new products

 

3Wealth Management client deposits, Galt & Taggart client assets, Aldagi Pension Fund and Wealth Management client assets under Bank of Georgia's custody

 

Investment Business Highlights

 

§ Our Investment Business contributed GEL 21.3mln or 19.7% to the Group's profits in 1Q17, up from GEL 17.4mln a year ago and GEL 13.4mln a quarter ago. GEL 14.0mln from the 1Q17 Investment Business profit was attributable to shareholders of the Group, while the rest primarily related to non-controlling shareholders of GHG

§ During March 2017, we sold 1,013,317 GHG shares (the "Disposal"), representing approximately 0.8% of GHG's issued share capital. The Disposal was achieved through private sales transactions conducted on an arms-length and commercial basis. Following the Disposal, we continue to hold 84,618,503 shares of GHG, or 64.3% of GHG's issued share capital. As a result of the Disposal, the Group received total gross proceeds of GEL 11.3mln (US$ 4.5mln/GBP 3.7mln) and realized a gain of GEL 7.4mln (US$ 3.0mln), which was recorded through an increase in shareholders' equity in 1Q17

§ Our healthcare business, Georgia Healthcare Group PLC ("GHG") continued to deliver strong revenue performance across all business lines. GHG recorded net revenue of GEL 186.0mln (up 157.7% y-o-y and up 37.5% q-o-q). During 1Q17, GHG achieved further diversification of its revenues. GHG's total net revenue mix was 34.1%, 58.4% and 7.5% from the healthcare services business, the pharma business and the medical insurance business, respectively. GHG delivered quarterly EBITDA of GEL 25.1mln, up 46.3% y-o-y. This growth was primarily driven by GHG's expansion into the Pharmaceutical business by acquiring controlling equity stakes in JSC GPC ("GPC"), Georgia's third-largest chain of pharmacies, in May 2016 and JSC ABC Pharmacia ("ABC" or "Pharmadepot"), Georgia's fourth largest chain of pharmacies, in January 2017. These acquisitions resulted in GHG becoming the number one player in the pharma market, similar to GHG's positions in the healthcare services and the medical insurance markets. Consequently, GHG reported net profit of GEL 13.0mln in 1Q17 (up 8.4% y-o-y)

§ Our real estate business, m2 Real Estate ("m2") continued its strong project execution and sales momentum in 1Q17. In 1Q17, m2 achieved sales of US$ 10.1mln, selling a total of 143 apartments, compared to US$ 5.5mln sales and 53 apartments sold in 1Q16. In 1Q17, m2 recognised revenue of GEL 2.6mln and delivered a net profit of GEL 0.6mln

§ Effective 1 January 2017, the Group, inclusive of m2, early adopted the new revenue recognition standard, IFRS 15, which requires revenue recognition according to the percentage of completion method. Prior to 1 January 2017, m2 recognized revenues under IAS 18 upon completion and handover of the units to customers. As a result, comparison of 1Q17 figures to those in 2016 needs to take into consideration the material impact of the adoption of the new revenue recognition standard 

§ Our utility and energy business, Georgia Global Utilities ("GGU"), delivered stable revenue and cost performance in 1Q17 and achieved revenue of GEL 28.6mln (up 0.1% y-o-y), EBITDA of GEL 14.8mln (up 1.8% y-o-y) and profit of GEL 7.7mln (up 39.4% y-o-y). The significant y-o-y increase in GGU's profit was primarily driven by the absence of GEL 1.2mln income tax expense resulting from the change in corporate tax legislation in Georgia (please see BGEO's 4Q16 and full year 2016 preliminary results announcement available on our web-site, www.BGEO.com, for more details regarding the change in corporate tax legislation). Since BGEO owned 25% of GGU's equity stake until July 2016, we reported our share of GGU's profits under "profit from associates" in our income statement during this period. We started consolidating GGU's financial results from 21 July 2016, when we completed the acquisition of the remaining 75% equity stake in GGU, as part of our Investment Business and included it in the segment results discussion as a separate business

§ Our beverages business, Teliani, is on track to launch beer production in 2Q17 on the back of completion of the beer brewery construction in 2016. Teliani will brew Heineken under a ten-year exclusive licence agreement to sell Heineken brands in Georgia, Armenia and Azerbaijan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHIEF EXECUTIVE OFFICER'S STATEMENT

 

I am pleased to report that each of the Group's businesses has made good progress in implementing key strategic priorities during the first quarter of 2017, and that the Group maintained its earnings momentum in the seasonally quiet start of the year. Our profit of GEL 108.2 million in the quarter increased by 24.3%, compared to the first quarter of 2016, whilst basic earnings per share increased by 25.7% to GEL 2.64 over the same period. Banking business profits grew by 24.7% year-on-year, supported by excellent franchise growth in the retail bank, where we now have 2.2 million customers, resilient margins and a strong cost performance. There was a similarly strong performance in the Group's investment businesses, which delivered a 22.5% increase in profits year-on-year.

At the BGEO Group level, revenue growth was 36.6% year-on-year. Retail banking net interest income grew by 34.6%, offsetting a slight decline in corporate investment banking net interest income as we continue to rebalance the retail/corporate business mix.  The net loan book increased by 19.9%, over the last twelve months, and by 17.4% on a constant-currency basis, and the retail bank now represents 62.6% of the Bank's gross loan book. We also continued to reposition the corporate bank to reduce concentration risk. Costs continue to be well managed, and the banking business cost to income ratio improved to 36.1%, from 37.9% a year ago and 37.5% in the fourth quarter of last year. Revenues from the investment businesses more than doubled as a result of strong business growth, both organic and via acquisitions, in the healthcare business and the consolidation of Georgia Global Utilities. 

Overall banking business asset quality during the first quarter of the year remained robust, with the annualised cost of risk ratio at 2.4% in the quarter, compared to 2.3% in 1Q16, and 4.2% in 4Q16. This is a solid performance, against the backdrop of the recent Lari volatility, at a time when we are also gradually improving our non-performing loans coverage ratio.    

In addition to the Group's strong earnings performance, returns have also continued to be high. In the banking business, the return on average equity was 23.5%, compared to 21.2% in the first quarter of 2016, largely reflecting the continued shift towards the higher return retail banking business. In the healthcare services business the EBITDA margin remained at 25.3%, notwithstanding the impact of the ongoing rapid roll-out of a number of hospital and outpatient clinic services. The Group continues to demonstrate its high growth and high return characteristics.

Within our investment businesses, Georgia Healthcare Group (GHG) again delivered a strong revenue performance, reflecting both good levels of organic growth (10.1% year-on-year) and the impact of the benefits of recent acquisitions, particularly in the pharmaceutical business, starting to be captured. This has led to the further diversification of GHG's revenues - an important objective for GHG. In January 2017, GHG completed the acquisition of the Pharmadepot chain of pharmacies to create, together with the GPC chain we acquired in mid-2016, the largest chain of pharmacies in Georgia with a market share by revenues of 29%. GHG is now also the largest purchaser of pharmaceutical products in Georgia, which creates significant cost and revenue synergy opportunities to be captured. GHG delivered quarterly EBITDA of GEL 25.1 million, and the business remains on track to deliver continued strong earnings progress and, achieve its target to more than double 2015 healthcare services revenues by 2018. 

Our real estate business, m2 Real Estate, continues to develop its apartment projects very successfully, with its strong project execution and sales performance delivering total sales in the first quarter of US$10.1 million, compared to US$5.5 million in the first quarter of 2016. In our water utility and energy business, GGU, the management team continues to focus on improving energy efficiency and reducing water loss rates and delivered a net profit of GEL 7.7 million, a year-on-year increase of 39.4%.    

The Group's capital position remains strong, with capital being held both in the regulated banking business and at the holding company level. Within the bank, the NBG (Basel 2/3) Tier 1 Capital Adequacy ratio was 11.2%4, and the Total Capital Adequacy ratio was 16.3%, both comfortably ahead of the Bank's minimum capital requirements. In addition, as of 5 May 2017, over GEL 300 million liquid assets were held at the Group level, which includes the Group's 2016 regular dividend of GEL c.99.5 million that is intended to be paid out in July 2017. From a funding perspective, the Bank's NBG Liquidity ratio was 37.4%, and the Liquidity Coverage ratio was 178.1%, both of which reflect the Bank's continuing strong liquidity position. Balance sheet leverage remained low at 6.4 times.

During the quarter the Group began to implement its recently approved two year US$50 million share buyback and cancellation programme. At the end of the first quarter, US$1.2 million of this programme had been completed.

From a macroeconomic perspective Georgia continues to deliver a strong performance. GDP growth expectations for Georgia in 2017 are now generally around 4-5%, significantly higher than the 2.7% growth delivered in 2016.  In March 2017, real GDP growth was 5.3% year-on-year based on estimates of National Statistics Office of Georgia. Core inflation remains well contained at 3.3% in April, while headline inflation rose to 6.1% in April due to one-offs. Overall, in the first quarter of the year, GDP growth was 5.0%, compared with 3.3% growth in the first quarter of 2016. In addition, the Lari has recently strengthened against the US Dollar, after a period of volatility at the end of 2016 and the beginning of 2017. Growth in exports and remittances as well as continued growth in tourist arrivals, supported the Lari's strengthening, encouraging the National Bank of Georgia to purchase  US$20 million in April, to mitigate the further appreciation of the Lari.

Supported by the improving macroeconomic performance in Georgia and the Group's continued focus on implementing its key strategic priorities, we remain well positioned to deliver good levels of earnings momentum from both the organic business growth in each of our banking and investment businesses, and from the benefits of recent strategic initiatives and acquisitions.

 

Irakli Gilauri,

Group CEO of BGEO Group PLC

 

4See the footnote 2 in Banking Business Highlights section on page 4


FINANCIAL SUMMARY

 

INCOME STATEMENT

BGEO Consolidated


Banking Business5


Investment Business

GEL thousands unless otherwise noted 

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q


1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q


1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q



















 Net banking interest income 

160,666

128,852

24.7%

155,403

3.4%


161,647

130,219

24.1%

158,371

2.1%


-

-

-

-

-

 Net fee and commission income 

29,885

27,814

7.4%

35,325

-15.4%


30,135

28,015

7.6%

36,645

-17.8%


-

-

-

-

-

 Net banking foreign currency gain

19,274

17,390

10.8%

28,516

-32.4%


19,274

17,390

10.8%

28,516

-32.4%


-

-

-

-

-

 Net other banking income

3,006

2,867

4.8%

2,199

36.7%


3,095

3,168

-2.3%

2,506

23.5%


-

-

-

-

-

 Gross insurance profit 

10,223

6,416

59.3%

9,171

11.5%


7,210

5,343

34.9%

6,445

11.9%


3,937

1,723

128.5%

3,557

10.7%

 Gross healthcare and pharma profit 

52,342

26,291

99.1%

42,221

24.0%


-

-

-

-

-


52,342

26,291

99.1%

42,221

24.0%

 Gross real estate profit 

2,701

5,978

-54.8%

1,339

101.7%


-

-

-

-

-


3,010

5,978

-49.6%

2,033

48.1%

 Gross utility and energy profit

17,444

-

-

21,600

-19.2%


-

-

-

-

-


17,527

-

-

21,671

-19.1%

 Gross other investment profit 

3,993

3,606

10.7%

9,697

-58.8%


-

-

-

-

-


3,981

3,675

8.3%

9,391

-57.6%

 Revenue 

299,534

219,214

36.6%

305,471

-1.9%


221,361

184,135

20.2%

232,483

-4.8%


80,797

37,667

114.5%

78,873

2.4%

 Operating expenses 

(120,974)

(83,242)

45.3%

(117,358)

3.1%


(79,996)

(69,863)

14.5%

(87,069)

-8.1%


(42,392)

(14,410)

194.2%

(32,163)

31.8%

 Operating income before cost of credit risk / EBITDA

178,560

135,972

31.3%

188,113

-5.1%


141,365

114,272

24.2%

145,414

-2.4%


38,405

23,257

65.1%

46,710

-17.8%

 Profit from associates

514

1,866

-72.5%

254

102.4%


514

-

-

-

-


-

1,866

-100.0%

254

-100.0%

 Depreciation and amortisation of investment business

(11,236)

(4,910)

128.8%

(9,615)

16.9%


-

-

-

-

-


(11,236)

(4,910)

128.8%

(9,615)

16.9%

 Net foreign currency gain (loss) from investment    business

6,955

(766)

NMF

(6,065)

NMF


-

-

-

-

-


6,955

(766)

NMF

(6,065)

NMF

 Interest income from investment business 

1,420

956

48.5%

1,551

-8.4%


-

-

-

-

-


2,298

964

138.4%

540

NMF

 Interest expense from investment business

(10,309)

(1,382)

NMF

(8,673)

18.9%


-

-

-

-

-


(12,397)

(2,947)

NMF

(11,673)

6.2%

 Operating income before cost of credit risk 

165,904

131,736

25.9%

165,565

0.2%


141,879

114,272

24.2%

145,414

-2.4%


24,025

17,464

37.6%

20,151

19.2%

 Cost of credit risk 

(49,245)

(36,143)

36.3%

(69,967)

-29.6%


(48,262)

(35,012)

37.8%

(70,873)

-31.9%


(983)

(1,131)

-13.1%

906

NMF

Net non-recurring items

(3,371)

1,366

NMF

698

NMF


(1,695)

(1,419)

19.5%

(1,056)

60.5%


(1,676)

2,785

NMF

1,754

NMF

Profit before income tax expense

113,288

96,959

16.8%

96,296

17.6%


91,922

77,841

18.1%

73,485

25.1%


21,366

19,118

11.8%

22,811

-6.3%

Income tax (expense) benefit

(5,115)

(9,912)

-48.4%

(7,553)

-32.3%


(5,045)

(8,178)

-38.3%

1,830

NMF


(70)

(1,734)

-96.0%

(9,383)

-99.3%

Profit

108,173

87,047

24.3%

88,743

21.9%


86,877

69,663

24.7%

75,315

15.4%


21,296

17,384

22.5%

13,428

58.6%

Earnings per share (basic)

2.64

2.10

25.7%

2.29

15.3%


2.27

1.78

27.4%

1.99

13.9%


0.37

0.32

16.3%

0.30

24.7%

Earnings per share (diluted)

2.55

2.10

21.4%

2.21

15.4%


2.19

1.78

23.0%

1.92

14.0%


0.36

0.32

12.3%

0.29

24.8%

 

 

           

BALANCE SHEET


BGEO Consolidated


Banking Business


Investment Business

GEL thousands unless otherwise noted


Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q


Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q


Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q




















Liquid assets


3,606,926

2,948,699

22.3%

3,914,596

-7.9%


3,404,237

2,876,357

18.4%

3,712,489

-8.3%


503,589

337,602

49.2%

554,192

-9.1%

     Cash and cash equivalents


1,285,483

1,359,219

-5.4%

1,573,610

-18.3%


1,198,457

1,330,094

-9.9%

1,482,106

-19.1%


353,485

288,512

22.5%

397,620

-11.1%

     Amounts due from credit institutions


1,090,111

764,435

42.6%

1,054,983

3.3%


973,787

720,442

35.2%

943,091

3.3%


146,798

47,936

206.2%

153,497

-4.4%

     Investment securities


1,231,332

825,045

49.2%

1,286,003

-4.3%


1,231,993

825,821

49.2%

1,287,292

-4.3%


3,306

1,154

186.5%

3,075

7.5%

Loans to customers and finance lease receivables


6,408,711

5,359,718

19.6%

6,648,482

-3.6%


6,470,771

5,394,565

19.9%

6,681,672

-3.2%


-

-

-

-

-

Property and equipment


1,388,938

835,651

66.2%

1,323,870

4.9%


342,495

333,243

2.8%

339,442

0.9%


1,046,443

502,408

108.3%

984,428

6.3%

Total assets


12,606,524

10,077,589

25.1%

12,989,453

-2.9%


10,678,758

9,030,055

18.3%

11,248,226

-5.1%


2,297,291

1,353,961

69.7%

2,194,926

4.7%

Client deposits and notes


5,294,462

4,698,558

12.7%

5,382,698

-1.6%


5,591,720

4,962,432

12.7%

5,730,419

-2.4%


-

-

-

-

-

Amounts due to credit institutions


3,133,422

1,719,920

82.2%

3,470,091

-9.7%


2,662,909

1,630,299

63.3%

3,067,651

-13.2%


532,573

124,468

327.9%

435,630

22.3%

     Borrowings from DFI


1,376,864

960,575

43.3%

1,403,120

-1.9%


1,143,408

926,210

23.5%

1,281,798

-10.8%


233,456

34,366

579.3%

121,323

92.4%

     Short-term loans from NBG


1,005,404

368,000

173.2%

1,085,640

-7.4%


1,005,404

368,000

173.2%

1,085,640

-7.4%


-

-

-

-

-

     Loans and deposits from commercial banks


751,154

391,345

91.9%

981,331

-23.5%


514,097

336,089

53.0%

700,213

-26.6%


299,117

90,102

232.0%

314,307

-4.8%

Debt securities issued


1,157,082

1,033,758

11.9%

1,255,643

-7.8%


827,024

957,474

-13.6%

858,037

-3.6%


338,292

81,116

317.0%

407,242

-16.9%

Total liabilities


10,153,771

7,926,740

28.1%

10,566,035

-3.9%


9,243,177

7,751,805

19.2%

9,819,375

-5.9%


1,280,119

481,362

165.9%

1,200,359

6.6%

Total equity


2,452,753

2,150,849

14.0%

2,423,418

1.2%


1,435,581

1,278,250

12.3%

1,428,851

0.5%


1,017,172

872,599

16.6%

994,567

2.3%

 

5Banking Business and Investment Business financials do not include inter-business eliminations. Detailed financials, including inter-business eliminations are provided on pages 31and 32


 

 

BANKING BUSINESS RATIOS

1Q17

1Q16

4Q16





ROAA

3.2%

3.0%

2.9%

ROAE

23.5%

21.2%

20.1%

Net Interest Margin

7.4%

7.5%

7.6%

Loan Yield

14.0%

14.4%

14.4%

Liquid assets yield

3.4%

3.1%

3.3%

Cost of Funds

4.6%

5.0%

4.6%

Cost of Client Deposits and Notes

3.5%

4.3%

3.5%

Cost of Amounts Due to Credit Institutions

6.3%

6.0%

6.4%

Cost of Debt Securities Issued

6.0%

7.2%

6.1%

Cost / Income

36.1%

37.9%

37.5%

NPLs To Gross Loans To Clients

4.6%

4.5%

4.2%

NPL Coverage Ratio

87.1%

86.0%

86.7%

NPL Coverage Ratio, Adjusted for discounted value of collateral

126.9%

122.6%

132.1%

Cost of Risk

2.4%

2.3%

4.2%

New NBG (Basel II) Tier I Capital Adequacy Ratio6

11.2%

10.1%

10.1%

New NBG (Basel II) Total Capital Adequacy Ratio6

16.3%

15.8%

15.4%

 

 

 

6Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for regular dividends in respect of the 2016 financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO's AGM on 1 June 2017. Excluding this amount, NBG (Basel 2/3) Tier I and Total CAR would be 10.1% and 15.2%, respectively, at 31 March 2017 and 9.1% and 14.4%, respectively, at 31 December 2016


 

DISCUSSION OF RESULTS

Discussion of Banking Business Results

 

The Group's Banking Business is comprised of several components. Retail Banking operations in Georgia principally provides consumer loans, mortgage loans, overdrafts, credit cards and other credit facilities, funds transfer and settlement services, and handling customers' deposits for both individuals as well as legal entities. The business targets the emerging retail, mass retail and mass affluent segments, together with small and medium enterprises and micro businesses. Corporate Investment Banking comprises Corporate Banking and Investment Management operations in Georgia. Corporate Banking principally provides loans and other credit facilities, funds transfers and settlement services, trade finance services, documentary operations support and handles saving and term deposits for corporate and institutional customers. The Investment Management business principally provides private banking services to high net worth clients. Property and Casualty ("P&C") principally provides property and casualty insurance services to corporate clients and insured individuals in Georgia. BNB, comprising JSC Belarusky Narodny Bank, principally provides retail and corporate banking services in Belarus. The following discussion refers to the Banking Business only.

 

 

REVENUE

GEL thousands, unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

 







 

 Banking interest income 

267,521

226,217

18.3%

258,414

3.5%

 

 Banking interest expense 

(105,874)

(95,998)

10.3%

(100,043)

5.8%

 

 Net banking interest income 

161,647

130,219

24.1%

158,371

2.1%

 

 Fee and commission income 

43,663

38,484

13.5%

50,135

-12.9%

 

 Fee and commission expense 

(13,528)

(10,469)

29.2%

(13,490)

0.3%

 

 Net fee and commission income 

30,135

28,015

7.6%

36,645

-17.8%

 

 Net banking foreign currency gain

19,274

17,390

10.8%

28,516

-32.4%

 

 Net other banking income

3,095

3,168

-2.3%

2,506

23.5%

 

    Net insurance premiums earned

12,847

9,550

34.5%

11,559

11.1%

 

    Net insurance claims incurred

(5,637)

(4,207)

34.0%

(5,114)

10.2%

 

 Gross insurance profit 

7,210

5,343

34.9%

6,445

11.9%

 

 Revenue 

221,361

184,135

20.2%

232,483

-4.8%

 







 

Net Interest Margin

7.4%

7.5%


7.6%


 

Average interest earning assets

8,866,822

7,013,413

26.4%

8,240,676

7.6%

 

Average interest bearing liabilities

9,383,683

7,681,953

22.2%

8,609,618

9.0%

 

Average net loans and finance lease receivables, currency blended

6,638,473

5,458,637

21.6%

6,134,296

8.2%

 

     Average net loans and finance lease receivables, GEL

2,035,225

1,489,518

36.6%

1,780,650

14.3%

 

     Average net loans and finance lease receivables, FC

4,603,248

3,969,119

16.0%

4,353,646

5.7%

 

Average client deposits and notes, currency blended

5,701,921

5,018,669

13.6%

5,236,265

8.9%

 

    Average client deposits and notes, GEL

1,382,631

1,195,744

15.6%

1,221,435

13.2%

 

    Average client deposits and notes, FC

4,319,290

3,822,925

13.0%

4,014,830

7.6%

 

Average liquid assets, currency blended

3,520,859

2,950,858

19.3%

3,307,646

6.4%

 

    Average liquid assets, GEL

1,374,729

1,127,353

21.9%

1,325,275

3.7%

 

    Average liquid assets, FC

2,146,130

1,823,505

17.7%

1,982,371

8.3%

 

Excess liquidity (NBG)

406,213

836,569

-51.4%

418,016

-2.8%

 

Liquid assets yield, currency blended

3.4%

3.1%


3.3%


 

    Liquid assets yield, GEL

7.3%

7.7%


7.3%


 

    Liquid assets yield, FC

0.9%

0.3%


0.6%


 

Loan yield, currency blended

14.0%

14.4%


14.4%


 

    Loan yield, GEL

22.5%

22.5%


22.9%


 

    Loan yield, FC

10.3%

11.0%


10.9%


 

Cost of Funds, currency blended

4.6%

5.0%


4.6%


 

    Cost of Funds, GEL

6.7%

6.8%


6.0%


 

    Cost of Funds, FC

3.8%

4.4%


4.1%


 

 

 

 

 

 

§ Banking Business revenue. We recorded strong quarterly revenue of GEL 221.4mln (up 20.2% y-o-y). Y-o-y revenue growth was primarily driven by the increase in net banking interest income resulting from the growth in our loan book, net banking foreign currency gain and the outstanding performance of our P&C insurance business

§ Net banking interest income. Our net banking interest income was up 24.1% in 1Q17 y-o-y. Net banking interest income was primarily driven by strong performance in our Retail Banking operations, which was slightly offset by the decline in CIB's net banking interest income

§ Our NIM was 7.4% in 1Q17, within our target range of 7.25% - 7.75%. 1Q17 loan yield and cost of funds were each down by 40bps y-o-y, while liquid assets yield increased by 30bps. However, 1Q17 NIM was lower by 10 bps y-o-y as a result of the NBG's decision in 2Q16 mandating an increase in minimum reserve requirements leading to an increased portion of liquid assets in total interest-earning assets. On a q-o-q basis, NIM was down by 20bps driven by 40bps decrease in loan yield, while cost of funds remained flat and liquid asset yield was up by 10bps

§ Loan yields. Loan yield stood at 14.0% for 1Q17 (down 40bps y-o-y and down 40bps q-o-q). This reflected 70bps decrease in the foreign currency denominated loan yield y-o-y, while the local currency denominated loan yield remained flat for the same period. As the share of local currency denominated loans in the total loan portfolio increased y-o-y, the effect of 70bps y-o-y decrease in foreign currency denominated loan yield was partially offset. The 40 bps decrease in loan yield q-o-q reflected the 60bps decrease in foreign currency denominated loan yield and 40 bps decrease in local currency denominated loan yield

§ Liquid assets yield. Our liquid asset yield increased to 3.4% (up 30bps y-o-y and up 10bps q-o-q). The foreign currency denominated liquid assets yield increased by 60pbs y-o-y as a result of the US Federal Reserve's decisions in December 2016 and March 2017 to raise interest rates by 50bps in aggregate, which triggered similar increases on interest rates paid by a) The National Bank of Georgia (the "NBG") on the Bank's obligatory reserves (foreign currency only) and b) correspondent banks on deposits placed by the Bank. However, this increase was partially offset by a decrease of the local currency denominated liquid assets yield by 40bps y-o-y and 0.8ppts y-o-y increase of the share of local currency denominated average liquid assets in 1Q17

§ Dollarisation. Dollarisation of our loan book decreased since last year as the demand for local currency denominated loans outpaced the demand for foreign currency denominated loans. The trend was supported by the Georgian government's "de-dollarisation" initiatives: a) a one-off program, effective from 15 January 2017 until 25 March 2017, allowing qualified borrowers to convert eligible US dollar denominated loans into GEL, at a discount compensated by the government, at the client's election and b) a new regulation, effective from 15 January 2017, restricting issuance of new loans in foreign currency with amounts less than GEL 100 thousand (equivalent) and representing approximately GEL 415mln (equivalent) of the Bank's loans based on 31 December 2016 data. At 31 March 2017, 33.5% of our net loans were denominated in GEL as compared to 27.6% at 31 March 2016 and 28.7% at 31 December 2016. The dollarisation of our average liquid assets decreased slightly to 61.0% in 1Q17, from 61.8% in 1Q16 - primarily due to a higher level of US Dollar liquidity accumulated at the beginning of the 2016 in connection with the liability management exercise of the Bank's outstanding Eurobonds, which was completed during the 3rd quarter 2016

§ Net Loans to Customer Funds and DFI ratio. Customer funds (client deposits and notes) increased by 12.7% y-o-y to GEL 5,591.7mln primarily driven by strong deposit generation in our Retail Banking operations where client deposits and notes grew by 25.9% y-o-y to GEL 2,393.8mln. We also increased our borrowings from DFIs by 23.5% y-o-y to GEL 1,143.4mln, in order to support growth in local currency lending. As a result, our Net Loans to Customer Funds and DFI ratio, which is closely monitored by management, stood at 96.1% (91.6% at 31 March 2016 and 95.3% at 31 December 2016)

§ Net fee and commission income. Net fee and commission income performance is mainly driven by the strong performance in our settlement operations supported by the success of our Express banking franchise. This was partially offset by a decline in the CIB's fees from guarantees and letters of credit, driven by the deconcentration efforts in the CIB segment. Excluding the income from guarantees and letters of credit, net fee and commission income was GEL 26.9mln for 1Q17, up 16.2% y-o-y

§ Net banking foreign currency gain. In line with the continued volatility of the GEL exchange rate, net banking foreign currency gain was up 10.8% y-o-y for 1Q17 and down 32.4% q-o-q. Volatility was more elevated in 4Q16 compared to 1Q16 and 1Q17. Retail Banking and the CIB businesses contributed 93.0% to the total 1Q17 net banking foreign currency gain

§ Net other banking income. The 23.5% q-o-q increase in net other banking income in 1Q17 was largely driven by the absence of losses on derivative financial instruments recorded in 4Q16

§ Gross insurance profit. Our P&C franchise, Aldagi, delivered record quarterly gross insurance profit in 1Q17. Net insurance premiums earned increased by 34.5% y-o-y and net insurance claims incurred increased by 34.0% y-o-y, driving y-o-y growth in gross insurance profit by 34.9%. The strong performance was mainly attributable to the improved quality of the insurance portfolio, which benefited from the termination of relationships with loss making clients

OPERATING INCOME BEFORE NON-RECURRING ITEMS; COST OF CREDIT RISK; PROFIT FOR THE PERIOD

GEL thousands, unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q







Salaries and other employee benefits

(46,257)

(39,806)

16.2%

(50,052)

-7.6%

Administrative expenses

(23,219)

(20,058)

15.8%

(25,714)

-9.7%

Banking depreciation and amortisation

(9,759)

(9,138)

6.8%

(9,841)

-0.8%

 Other operating expenses 

(761)

(861)

-11.6%

(1,462)

-47.9%

 Operating expenses 

(79,996)

(69,863)

14.5%

(87,069)

-8.1%

 Profit from associate

514

-

NMF

-

NMF

 Operating income before cost of credit risk 

141,879

114,272

24.2%

145,414

-2.4%

 Impairment charge on loans to customers 

(41,341)

(32,218)

28.3%

(69,920)

-40.9%

 Impairment charge on finance lease receivables

(139)

(513)

-72.9%

3,124

NMF

 Impairment charge on other assets and provisions

(6,782)

(2,281)

197.3%

(4,077)

66.3%

 Cost of credit risk 

(48,262)

(35,012)

37.8%

(70,873)

-31.9%

 Net operating income before non-recurring items 

93,617

79,260

18.1%

74,541

25.6%

 Net non-recurring items 

(1,695)

(1,419)

19.5%

(1,056)

60.5%

 Profit before income tax 

91,922

77,841

18.1%

73,485

25.1%

 Income tax (expense) benefit

(5,045)

(8,178)

-38.3%

1,830

NMF

 Profit

86,877

69,663

24.7%

75,315

15.4%

 

§ Operating expenses increased to GEL 80.0mln in 1Q17 (up 14.5% y-o-y and down 8.1% q-o-q). Growth in revenues outpaced growth in operating expenses leading to y-o-y positive operating leverage of 5.7% in 1Q17. This represents an improvement compared to y-o-y negative operating leverages of 3.3% and 6.8% in 1Q16 and 4Q16, respectively. 1Q17 operating expenses y-o-y and q-o-q changes were driven by:

-       Increase in y-o-y salaries and employee benefits by 16.2% mainly reflects organic growth of our Retail Banking Business, while q-o-q decrease of 7.6% was attributable to seasonally slower activity of Retail Banking Business in 1Q17 compared to 4Q16

-       Administrative expenses increased y-o-y by 15.8%, primarily driven by rent and repair and maintenance costs as compared with the same period last year. The increase was attributable to the combined effect of the larger branch network and the higher average quarterly exchange rate during 1Q17 as the vast majority of branch rental agreements are denominated in US Dollar. The decrease in q-o-q administrative expenses by 9.7% reflects higher seasonal marketing activities in 4Q16

§ Cost of Risk ratio. Banking Business Cost of Risk ratio was 2.4% in 1Q17, up 10bps y-o-y and down 180bps q-o-q. Cost of Risk was positively impacted by the GEL's appreciation against major foreign currencies during 1Q17. CIB Cost of Risk ratio was down 180bps y-o-y and 630bps q-o-q, while RB Cost of Risk ratio was up 90bps y-o-y and 140bps q-o-q, largely driven by headwinds from GEL's depreciation in 4Q16

§ Quality of the Banking Business loan book remained resilient in 1Q17 as evidenced by following closely monitored metrics:

-       NPLs. NPLs were GEL 311.9mln, up 23.8% y-o-y and up 5.8% q-o-q. The q-o-q increase reflects increase in BNB's NPLs, as a result of the difficult economic environment in Belarus, and RB's NPLs

-       NPLs to gross loans. NPLs to gross loans were 4.6% as of 31 March 2017, up 10 bps y-o-y and 40bps q-o-q. Our Retail Banking NPLs to gross loans stood flat at 1.7% as of 31 March 2017 and 31 March 2016, up from 1.4% as of 31 December 2016. The CIB NPLs to gross loans was 8.2%, compared to 7.4% as of 31 March 2016 and 8.0% as of 31 December 2016

-       The NPL coverage ratio. The NPL coverage ratio stood at 87.1% as of 31 March 2017, compared to 86.0% as of 31 March 2016 and 86.7% as of 31 December 2016. Our NPL coverage ratio adjusted for the discounted value of collateral was 126.9% as of 31 March 2017, compared to 122.6% as of 31 March 2016 and compared to 132.1% as of 31 December 2016

-       Past due rates. Our 15 days past due rate for retail loans stood at 1.4% as of 31 March 2017 compared to 1.1% as of 31 March 2016 and 1.2% as of 31 December 2016. 15 days past due rate for our mortgage loans stood at 0.9% as of 31 March 2017 compared to 0.6% as of 31 March 2016 and 0.6% as of 31 December 2016

§ The 197.3% y-o-y and 66.3% q-o-q increase in impairment charges on other assets and provisions reflects the impairment of a repossessed asset

§ Income tax (expense) benefit. The y-o-y and q-o-q movements in income taxes reflect the impacts of changes in corporate taxation model, approved by the Parliament of Georgia in May 2016, on our Banking Business deferred tax assets and liabilities

§ As a result of the foregoing, the 1Q17 Banking Business profit was GEL 86.9mln (up 24.7% y-o-y and up 15.4% q-o-q), while ROAE increased to 23.5% in 1Q17 (up 230bps y-o-y and up 340bps q-o-q)

§ BNB - the Group's banking subsidiary in Belarus - generated a profit of GEL 0.7mln in 1Q17 (down 84.3% y-o-y and up GEL 4.8mln q-o-q); BNB's earnings were negatively impacted by increased levels of cost of risk due to the weak macro-economic conditions in Belarus. BNB's loan book reached GEL 335.5mln at 31 March 2017, up 4.9% y-o-y, mostly reflecting an increase in corporate and consumer loans. Client deposits were GEL 235.9mln, up 2.2% y-o-y at 31 March 2017. The significant improvement in BNB's performance on a q-o-q basis was driven by the absence of one-off costs recorded in 4Q16 related to higher cost of risk, PPE impairment charges and losses from investment property revaluation. However, BNB continued to remain well-capitalised, with Capital Adequacy Ratios well above the requirements of its regulating Central Bank. As at 31 March 2017, total CAR was 15.8%, comfortably above 10% minimum requirement of the National Bank of the Republic of Belarus ("NBRB"), while Tier I CAR was 9.9%, above NBRB's 6% minimum requirement. Return on Average Equity ("ROAE") for BNB was 3.2% in 1Q17 (22.9% in 1Q16 and negative 21.9% in 4Q16)

§ In 1Q17, the Group's ownership in BNB increased from 80.0% to 95.0% following the exercise by the International Finance Corporation ("IFC") of the put option which was granted to IFC in July 2010 as part of its purchase of a 19.99% equity stake in BNB. The price paid by the Group for BNB's 15.0% equity stake amounted to USD c.6mln (GEL 16mln). Following the transaction, IFC continues to hold 4.99% of BNB's equity

BANKING BUSINESS BALANCE SHEET HIGHLIGHTS

GEL thousands, unless otherwise noted 

Mar-17

Mar-16

Change

y-o-y

 

Dec-16

Change

q-o-q







Liquid assets

3,404,237

2,876,357

18.4%

3,712,489

-8.3%

Liquid assets, GEL

1,312,152

1,050,741

24.9%

1,455,296

-9.8%

Liquid assets, FC

2,092,085

1,825,616

14.6%

2,257,193

-7.3%

Net loans and finance lease receivables

6,470,771

5,394,565

19.9%

6,681,672

-3.2%

Net loans and finance lease receivables, GEL

2,170,530

1,488,050

45.9%

1,920,422

13.0%

Net loans and finance lease receivables, FC

4,300,241

3,906,515

10.1%

4,761,250

-9.7%

Client deposits and notes

5,591,720

4,962,432

12.7%

5,730,419

-2.4%

Client deposits and notes, GEL

1,472,494

1,113,787

32.2%

1,331,918

10.6%

Client deposits and notes, FC

4,119,226

3,848,645

7.0%

4,398,501

-6.3%

Amounts due to credit institutions

2,662,909

1,630,299

63.3%

3,067,651

-13.2%

Borrowings from DFIs

1,143,408

926,210

23.5%

1,281,798

-10.8%

Short-term loans from central banks

1,005,404

368,000

173.2%

1,085,640

-7.4%

        Loans and deposits from commercial banks

514,097

336,089

53.0%

700,213

-26.6%

Debt securities issued

827,024

957,474

-13.6%

858,037

-3.6%

Liquidity and CAR ratios






Net loans / client deposits and notes

115.7%

108.7%


116.6%


Net loans / client deposits and notes + DFIs

96.1%

91.6%


95.3%


Liquid assets as percent of total assets

31.9%

31.9%


33.0%


Liquid assets as percent of total liabilities

36.8%

37.1%


37.8%


NBG liquidity ratio

37.4%

47.3%


37.7%


Excess liquidity (NBG)

406,213

836,569

-51.4%

418,016

-2.8%

New NBG (Basel II) Tier I Capital Adequacy Ratio7

11.2%

10.1%


10.1%


New NBG (Basel II) Total Capital Adequacy Ratio7

16.3%

15.8%


15.4%


 

Our Banking Business balance sheet remained highly liquid (NBG Liquidity ratio of 37.4%) and well-capitalised (Tier I ratio, NBG Basel 2/3 of 11.2%7) with a well-diversified funding base (Client Deposits and notes to Total Liabilities of 60.5%).

§ Liquidity. The NBG liquidity ratio stood at 37.4% at 31 March 2017 compared to 47.3% a year ago, and against a regulatory minimum requirement of 30.0%. Liquid assets increased to GEL 3,404.2mln at 31 March 2017, up 18.4% y-o-y, largely driven by a) the increase in obligatory reserves as a result of the change in respective NBG regulation in 2Q16 and b) increase in local currency corporate bonds, which are used by the Bank as collateral for short-term borrowings from the NBG

§ Diversified funding base. Short-term borrowings from the NBG grew by 173.2% y-o-y due to the increase in local currency sourcing from International Financial Institutions whose GEL-denominated bonds were pledged as collateral against NBG loans

§ Loan book. Our net loan book and financial lease receivables stood at GEL 6,470.8mln, up 19.9% y-o-y and down 3.2% q-o-q, with retail representing 62.6% of the total loan portfolio at 31 March 2017 (56.5% at 31 March 2016 and 60.9% at 31 December 2016), in line with our target to increase RB's share in total loan book to 65%. The growth on a constant-currency basis was 17.4% y-o-y and 2.1% q-o-q. While both local and foreign currency portfolios experienced strong y-o-y growth, local currency loan portfolio demonstrated outstanding y-o-y increase of 45.9%, which was partially driven by the Georgian government's "de-dollarisation" initiatives and our goal to increase the share of local currency loans in our portfolio  

 

7Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for regular dividends in respect of the 2016 financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO's AGM on 1 June 2017. Excluding this amount, NBG (Basel 2/3) Tier I and Total CAR would be 10.1% and 15.2%, respectively, at 31 March 2017 and 9.1% and 14.4%, respectively, at 31 December 2016

Discussion of Segment Results

The segment results discussion is presented for Retail Banking (RB), Corporate Investment Banking (CIB), Utility & Energy Business (GGU), Healthcare Business (GHG) and Real Estate Business (m2 Real Estate).

Banking Business Segment Result Discussion

Retail Banking (RB)

Retail Banking provides consumer loans, mortgage loans, overdrafts, credit card facilities and other credit facilities as well as funds transfer and settlement services and the handling of customer deposits for both individuals and legal entities, encompassing the emerging mass retail segment (through our Express brand), retail mass market segment and SME and micro businesses (through our Bank of Georgia brand), and the mass affluent segment (through our Solo brand).

 

GEL thousands, unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

 

INCOME STATEMENT HIGHLIGHTS






 

Net banking interest income 

111,511

82,832

34.6%

111,109

0.4%

 

Net fee and commission income 

22,245

19,239

15.6%

26,810

-17.0%

 

Net banking foreign currency gain

6,492

3,590

80.8%

8,825

-26.4%

 

Net other banking income

982

711

38.1%

989

-0.7%

 

Revenue 

141,230

106,372

32.8%

147,733

-4.4%

 

Salaries and other employee benefits

(27,865)

(23,607)

18.0%

(31,149)

-10.5%

 

Administrative expenses

(16,835)

(14,521)

15.9%

(17,287)

-2.6%

 

Banking depreciation and amortisation

(7,991)

(7,383)

8.2%

(8,052)

-0.8%

 

Other operating expenses 

(475)

(496)

-4.2%

(818)

-41.9%

 

Operating expenses 

(53,166)

(46,007)

15.6%

(57,306)

-7.2%

 

Profit from associate

514

-

NMF

-

NMF

 

Operating income before cost of credit risk

88,578

60,365

46.7%

90,427

-2.0%

 

Cost of credit risk

(33,687)

(18,184)

85.3%

(19,272)

74.8%

 

Net non-recurring items 

(482)

(561)

-14.1%

(1,921)

-74.9%

 

Profit before income tax 

54,409

41,620

30.7%

69,234

-21.4%

 

Income tax (expense)

(3,592)

(3,844)

-6.6%

(1,235)

190.9%

 

Profit

50,817

37,776

34.5%

67,999

-25.3%

 







 

BALANCE SHEET HIGHLIGHTS






 

Net loans, Currency Blended

3,891,063

2,901,189

34.1%

3,902,306

-0.3%

 

Net loans, GEL

1,783,345

1,266,966

40.8%

1,530,661

16.5%

 

Net loans, FC

2,107,718

1,634,223

29.0%

2,371,645

-11.1%

 

Client deposits, Currency Blended

2,393,754

1,902,042

25.9%

2,413,569

-0.8%

 

Client deposits, GEL

616,383

447,620

37.7%

603,149

2.2%

 

Client deposits, FC

1,777,371

1,454,422

22.2%

1,810,420

-1.8%

 

of which:






 

Time deposits, Currency Blended

1,426,012

1,205,935

18.2%

1,437,644

-0.8%

 

Time deposits, GEL

255,955

196,668

30.1%

228,047

12.2%

 

Time deposits, FC

1,170,057

1,009,267

15.9%

1,209,597

-3.3%

 

Current accounts and demand deposits, Currency Blended

967,742

696,107

39.0%

975,925

-0.8%

 

Current accounts and demand deposits, GEL

360,428

250,952

43.6%

375,102

-3.9%

 

Current accounts and demand deposits, FC

607,314

445,155

36.4%

600,823

1.1%

 


 

KEY RATIOS






 

ROAE Retail Banking

27.2%

24.3%


35.8%


 

Net interest margin, currency blended

8.8%

9.2%


9.3%


 

Cost of risk

3.4%

2.5%


2.0%


 

Cost of funds, currency blended

5.3%

6.5%


5.1%


 

Loan yield, currency blended

15.9%

17.4%


16.4%


 

Loan yield, GEL

24.9%

25.4%


25.4%


 

Loan yield, FC

9.4%

10.9%


10.1%

 

 

Cost of deposits, currency blended

3.0%

3.5%


3.1%


 

Cost of deposits, GEL

4.4%

4.8%


4.0%


 

Cost of deposits, FC

2.6%

3.2%


2.7%


 

Cost of time deposits, currency blended

4.4%

5.1%


4.5%


 

Cost of time deposits, GEL

8.7%

9.7%


8.6%


 

Cost of time deposits, FC

3.6%

4.3%


3.7%


 

Current accounts and demand deposits, currency blended

0.9%

0.9%


0.8%


 

Current accounts and demand deposits, GEL

1.4%

1.1%


1.1%


 

Current accounts and demand deposits, FC

0.6%

0.7%


0.6%


 

Cost / income ratio

 

 

37.6%

43.3%


38.8%


Performance highlights

§ Retail Banking continued its strong performance across all major business lines and recorded a total revenue of GEL 141.2mln in 1Q17 (up 32.8% y-o-y)

§ Net banking interest income experienced a 34.6% y-o-y growth on the back of the strong growth in the Retail Banking loan book, while q-o-q growth was modest at 0.4% due to seasonal factors. Record quarterly net banking interest income was supported by the increase in the local currency loan portfolio, which generated 15.5ppts higher yield than foreign currency loan portfolio during 1Q17

§ The Retail Banking net loan book reached GEL 3,891.1mln, up 34.1% y-o-y. Our local currency denominated loan book grew at a faster pace (up 40.8% y-o-y) than the foreign currency denominated loan book (up 29.0% y-o-y). As a result, loan book dollarisation decreased to 54.2% at 31 March 2017 from 56.3% at 31 March 2016 and 60.8% at 31 December 2016

§ The loan book growth was a product of continued strong loan origination levels delivered across all Retail Banking segments:

-       Consumer loan originations amounted to GEL 302.4mln in 1Q17, leading to an outstanding consumer loans balance of GEL 944.0mln at 31 March 2017, up 44.8% y-o-y

-       Micro loan originations totalled GEL 236.5mln in 1Q17, resulting in an outstanding micro loans balance of GEL 872.8mln at 31 March 2017, up 55.1% y-o-y

-       SME loan originations amounted to GEL 118.9mln in 1Q17, leading to an outstanding SME loans balance of GEL 463.4mln at 31 March 2017, up 29.2% y-o-y

-       Mortgage loan originations totalled GEL 213.0mln in 1Q17, resulting in an outstanding mortgage loans balance of GEL 1,187.0mln at 31 March 2017, up 34.3% y-o-y

-       Originations of loans disbursed at merchant locations amounted to GEL 42.7mln in 1Q17, resulting in outstanding loans disbursed at merchant locations of GEL 108.3mln at 31 March 2017, down 1.4% y-o-y (the lack of growth in the outstanding balance in this product reflects increased client conversions to consumer loans and credit cards)

§ Retail Banking client deposits increased to GEL 2,393.8mln, up 25.9% y-o-y, notwithstanding a decrease in the cost of deposits of 50bps y-o-y. The dollarisation level of our deposits decreased to 74.3% from 76.5% at 31 March 2016 and from 75.0% at 31 December 2016. This is in line with the current decreasing trend of cost on foreign currency denominated deposits (down 60 bps y-o-y and down 10 bps q-o-q). The spread between the cost of RB's client deposits widened to 1.8ppts during 1Q17 (GEL: 4.4%; FC: 2.6%) compared to 1.6ppts in 1Q16 (GEL: 4.8%; FC: 3.2%) and 1.3ppts in 4Q16 (GEL: 4.0%; FC: 2.7%). Local currency denominated deposits increased at a faster pace to GEL 616.4mln (up 37.7% y-o-y and 2.2% q-o-q), as compared to foreign currency denominated deposits that grew to GEL 1,777.4 mln (up 22.2% y-o-y and down 1.8% q-o-q)

§ Retail Banking NIM was 8.8% in 1Q17, down 40bps y-o-y and down 50bps q-o-q. The lower NIM y-o-y was attributable to 150bps decrease in loan yield, while cost of funds decreased by only 120bps. On a q-o-q basis, loan yield was down by 50bps and cost of funds was up by 20bps, thus, leading to 50bps decrease in NIM

§ The number of Retail Banking clients reached 2.2mln, up 8.2% y-o-y and up 2.2% q-o-q, while the number of total cards outstanding amounted to 2,099,488, up 8.0% y-o-y and up 2.1% q-o-q

§ Our express banking franchise, the major driver of Retail Banking's fee and commission income, added 16,645 Express Banking customers during 1Q17 and 51,203 clients since 1Q16, accumulating a total of 488,612 clients at 31 March 2017. The growth in the client base was achieved largely by the increased offering of cost-effective remote channels. The strong client growth supported an organic increase in our Retail Banking net fee and commission income to GEL 22.2mln in 1Q17, up 15.6% y-o-y

§ Our Express Banking business continues to deliver strong growth as we further develop our mass market Retail Banking strategy:

-       In order to better serve the different needs of our Express Banking customers, we have expanded our payment services through various distance channels including ATMs, Express Pay Terminals, internet and mobile banking and the provision of simple and clear products and services to our existing customers as well as the emerging bankable population

-       As of 31 March 2017, 1,315,489 Express Cards were outstanding, compared to 1,113,745 cards outstanding as of 31 March 2016 and 1,279,113 cards as of 31 December 2016. 129,128 Express Cards were issued in 1Q17, up 14.4% y-o-y and down 30.3% q-o-q

-       The number of Express Pay terminals stood at 2,723 at 31 March 2017, compared to 2,627 terminals at 31 March 2016 and 2,729 at 31 December 2016. Express Pay terminals are an alternative to tellers, placed at bank branches as well as various other venues (groceries, shopping centres, bus stops, etc.), and are used for bank transactions such as credit card and consumer loan payments, utility bill payments and mobile telephone top-ups

-       The utilisation of Express Pay terminals continued to grow in 1Q17. The volume of transactions reached GEL 968.8mln, up 46.2% y-o-y and up 3.5% q-o-q, while the number of transactions was 25.2mln, down 12.7% y-o-y and down 7.4% q-o-q. This decrease resulted from management's decision to introduce transaction fees on non-banking transactions processed through Express Pay terminals. However, while this introduction negatively affected the number of transactions, the decrease was more than offset by the total fees charged to the clients leading to 92.3% y-o-y increase in fee income from express pay terminals

-       Increased Point of Sales ("POS") footprint to 8,814 desks and 4,740 contracted merchants as of 31 March 2017, up from 6,690 desks and 3,356 contracted merchants as of 31 March 2016 and up from 8,516 desks and 4,514 contracted merchants as of 31 December 2016

-       The number of POS terminals reached 10,774, up 31.9% from 8,168 as of 31 March 2016 and up 4.0% from 10,357 as of 31 December 2016

-       The volume of transactions through the Bank's POS terminals grew to GEL 266.1mln in 1Q17, up 50.9% y-o-y and down 8.3% q-o-q, reflecting the seasonality trend in 4Q16 given the clients' increased spending during the holidays

-       The number of transactions via Internet banking increased to 1.7mln in 1Q17, up from 1.3mln in 1Q16 and flat compared to 1.7 mln in 4Q16, with transaction volume reaching GEL 437.4mln, up 101.7% y-o-y and flat q-o-q

-     The number of transactions via mobile banking application reached 1.0mln in 1Q17, doubling from 0.5mln in 1Q16 and up from 0.9mln in 4Q16, with volume of transactions reaching GEL 94.4mln, up 162.6% y-o-y and up 5.3% q-o-q

§ The number of Solo clients reached 21,657 at the end of 1Q17, up 161.5% since its re-launch in April 2015. We have now launched 11 Solo lounges, of which 8 are located in Tbilisi, the capital city, and 3 in major regional cities of Georgia. In 1Q17, annualised profit per Solo client was GEL 1,865 compared to a profit of GEL 75 and GEL 59 per Express and mass retail clients, respectively. Product to client ratio for Solo segment was 6.8, compared to 3.2 and 1.7 for Express and mass retail clients, respectively. While Solo clients currently represent c.1.0% of our total retail client base, they contributed 22.1% to our retail loan book, 38.2% to our retail deposits, 12.7% to our net interest income and 13.5% to our net fee and commission income. Our goal is to significantly increase our market share in this segment, which stood below 13% at the beginning of 2015 when we launched Solo in its current format

§ RB cost to income ratio remained well-controlled and improved to 37.6% in 1Q17, down by 570 bps y-o-y and down 120bps q-o-q. The significant improvement resulted from the increasing utilisation of our Solo lounges coupled with the growth of Express Banking franchise, which has the most cost-efficient model among our three Retail Banking segments

§ RB cost of risk remains contained despite headwinds - RB cost of credit risk was GEL 33.7mln in 1Q17 (up 85.3% y-o-y and up 74.8% q-o-q). As a result, Cost of Risk ratio was 3.4% in 1Q17, up from 2.5% in 1Q16 and 2.0% in 4Q16. The increase in cost of risk mainly reflected the following two factors: a) increased pace of loan growth in express and micro express loan portfolio during 1Q17, which are characterized with the highest cost of risk ratios in the RB's loan portfolio and the highest loan yields and b) impact from a major fire at one of the largest shopping centres located in downtown Tbilisi, which destroyed the inventory of some of RB's Micro and SME clients and negatively affected their creditworthiness

§ As a result of the above described factors, Retail Banking profit totaled GEL 50.8mln in 1Q17 (up 34.5% y-o-y and down 25.3% q-o-q). Retail Banking continued to deliver an outstanding ROAE, which stood at 27.2% in 1Q17, compared to 24.3% in 1Q16 and 35.8% in 4Q16

 



 

Corporate Investment Banking (CIB)

CIB comprises (1) loans and other credit facilities to the country's large corporate clients as well as other legal entities, excluding SME and micro businesses. The services include fund transfers and settlements services, currency conversion operations, trade finance services and documentary operations as well as handling savings and term deposits for corporate and institutional customers. The Corporate Banking Business also includes finance lease facilities provided by the Bank's leasing operations (the Georgian Leasing Company) and (2) Wealth Management and the brokerage arm of the Bank, Galt & Taggart. Bank of Georgia Wealth Management provides private banking services to high-net-worth individuals and offers investment management products internationally through representative offices in London, Budapest, Istanbul and Tel Aviv. Galt & Taggart brings under one brand corporate advisory, private equity and brokerage services. In its brokerage business, Galt & Taggart serves regional and international markets, including hard-to-reach frontier economies.

 

GEL thousands, unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

INCOME STATEMENT HIGHLIGHTS






 Net banking interest income 

37,949

38,250

-0.8%

39,168

-3.1%

 Net fee and commission income 

5,666

7,020

-19.3%

8,133

-30.3%

 Net banking foreign currency gain

11,429

11,368

0.5%

16,158

-29.3%

 Net other banking income

2,259

2,587

-12.7%

2,518

-10.3%

 Revenue 

57,303

59,225

-3.2%

65,977

-13.1%

 Salaries and other employee benefits

(12,346)

(11,155)

10.7%

(12,368)

-0.2%

 Administrative expenses

(3,535)

(3,355)

5.4%

(4,943)

-28.5%

 Banking depreciation and amortisation

(1,217)

(1,272)

-4.3%

(1,262)

-3.6%

 Other operating expenses 

(157)

(231)

-32.0%

(330)

-52.4%

 Operating expenses 

(17,255)

(16,013)

7.8%

(18,903)

-8.7%

 Operating income before cost of credit risk

40,048

43,212

-7.3%

47,074

-14.9%

 Cost of credit risk 

(8,699)

(14,138)

-38.5%

(42,172)

-79.4%

 Net non-recurring items 

(1,155)

(856)

34.9%

2,267

NMF

 Profit before income tax 

30,194

28,218

7.0%

7,169

321.2%

 Income tax (expense) benefit

(1,912)

(2,687)

-28.8%

2,885

NMF

 Profit

28,282

25,531

10.8%

10,054

181.3%







BALANCE SHEET HIGHLIGHTS






Letters of credit and guarantees, standalone*

506,433

541,567

-6.5%

511,615

-1.0%

Net loans and finance lease receivables, Currency Blended

2,226,884

2,144,299

3.9%

2,394,876

-7.0%

Net loans and finance lease receivables, GEL

398,105

220,295

80.7%

400,395

-0.6%

Net loans and finance lease receivables, FC

1,828,779

1,924,004

-4.9%

1,994,481

-8.3%

Client deposits, Currency Blended

2,929,377

2,868,846

2.1%

3,059,150

-4.2%

Client deposits, GEL

897,239

797,875

12.5%

772,253

16.2%

Client deposits, FC

2,032,138

2,070,971

-1.9%

2,286,897

-11.1%

Time deposits, Currency Blended

1,136,852

1,200,565

-5.3%

1,230,627

-7.6%

Time deposits, GEL

138,404

165,311

-16.3%

135,002

2.5%

Time deposits, FC

998,448

1,035,254

-3.6%

1,095,625

-8.9%

Current accounts and demand deposits, Currency Blended

1,792,525

1,668,281

7.4%

1,828,523

-2.0%

Current accounts and demand deposits, GEL

758,835

632,564

20.0%

637,251

19.1%

Current accounts and demand deposits, FC

1,033,690

1,035,717

-0.2%

1,191,272

-13.2%

Assets under management

1,568,550

1,343,821

16.7%

1,591,963

-1.5%







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 






RATIOS






ROAE, Corporate Investment Banking

18.3%

17.6%


6.1%


Net interest margin, currency blended

3.4%

3.7%


3.6%


Cost of risk

0.3%

2.1%


6.6%


Cost of funds, currency blended

5.0%

4.4%


5.1%


Loan yield, currency blended

10.7%

10.3%


11.1%


Loan yield, GEL

12.5%

13.1%


13.0%


Loan yield, FC

10.3%

10.2%


10.8%


Cost of deposits, currency blended

3.9%

4.5%


3.6%


Cost of deposits, GEL

6.6%

8.0%


5.0%


Cost of deposits, FC

2.9%

3.1%


3.2%


Cost of time deposits, currency blended

5.6%

6.0%


5.8%


Cost of time deposits, GEL

9.6%

9.6%


9.2%


Cost of time deposits, FC

5.1%

5.3%


5.4%


Current accounts and demand deposits, currency blended

2.8%

3.4%


2.0%


Current accounts and demand deposits, GEL

6.0%

7.5%


3.9%


Current accounts and demand deposits, FC

0.9%

0.8%


1.0%


Cost / income ratio

30.1%

27.0%


28.7%


Concentration of top ten clients

11.3%

12.1%


11.8%


 

*Off-balance sheet item

 

 

Performance highlights

 

§ CIB's key focus is to increase its ROAE and we are doing this by deconcentrating our corporate loan book and decreasing credit losses, while focusing on further growing our fee generating business through the investment management and trade finance franchises, which we believe are the strongest in the region

-       CIB is successfully following its loan portfolio deconcentration strategy. The concentration of our top 10 Corporate Investment Banking clients reduced to 11.3% at the end of 1Q17, down from 12.1% a year ago and 11.8% at the end of 4Q16

-       CIB revenue reflects our continuous efforts towards the de-concentration strategy. Net banking interest income was down by 0.8% y-o-y and down by 3.1% q-o-q. The y-o-y decline in net banking interest income reflects the y-o-y increase in the currency blended cost of funds, only partially offset by the increase in loan book size and loan yields during the same period. The q-o-q decline is in line with the decrease in loan book size, also affected by declining loan yields

-       The CIB net fee and commission income represented GEL 5.7mln or 9.9% of total CIB revenue in 1Q17 compared to GEL 7.0mln or 11.9% a year ago and GEL 8.1mln or 12.3% in 4Q16. The decline was mainly driven by the decrease in fee and commission income from guarantees and letters of credit (net income from guarantees and letters of credit was down by GEL1.6mln or 33.9% y-o-y and down by GEL 0.4mln or 11.7% q-o-q), reflecting our ongoing risk de-concentration efforts

-       The CIB cost of credit risk significantly improved to GEL 8.7mln for 1Q17 (down 38.5% y-o-y and down 79.4% q-o-q), which largely benefited from GEL's 7.6% appreciation against USD during 1Q17 resulting in decreased GEL values of allowances for foreign currency denominated loans

-       As a result of the foregoing, the CIB ROAE increased to 18.3% in 1Q17, compared to 17.6% a year ago and 6.1% in 4Q16

§ CIB's loan book de-dollarisation continued in 1Q17 as the share of foreign currency denominated loans declined to 82.1%, compared to 89.7% a year ago. This trend reflects the increased volatility of the local currency against the US Dollar, as corporate clients have increasingly started to prefer local currency borrowing. The loan book de-dollarisation was also supported by decreasing loan yields for GEL denominated loans (12.5% for 1Q17, down 60bps y-o-y and 50bps q-o-q)

§ In 1Q17, dollarisation of our CIB deposits decreased to 69.4% from 72.2% a year ago and 74.8% in 4Q16 as a result of  the increased deposit rates in local currency and decreased deposit rates in foreign currency. In 1Q17, the cost of deposits in local currency stood at 6.6%, up 160 bps q-o-q, while the cost of deposits in foreign currency decreased by 20 bps y-o-y and 30bps q-o-q to 2.9%. As a result, total deposits reached GEL 2,929.4, up 2.1% y-o-y and down 4.2% q-o-q. On a constant currency basis, total deposits stayed flat y-o-y and were up 1.2% q-o-q

§ CIB recorded a NIM of 3.4% in 1Q17, down 30bps y-o-y and down 20bps q-o-q. The y-o-y decrease in the CIB's NIM resulted from 40bps increase in loan yield, which was more than offset by 60bps increase in cost of funds. The q-o-q decrease in NIM reflected 40bps decrease in loan yield, the impact of which was slightly offset by 10bps decline in cost of funds

§ In line with continued volatility the GEL exchange rate, our net banking foreign currency gain reached GEL 11.4mln in 1Q17 (up 0.5% y-o-y and down 29.3% q-o-q)

§ CIB's cost to income ratio increased to 30.1% from 27.0% in 1Q16 and from 28.7% in4Q16. The increase resulted from the intensified de-concentration efforts, which led to a higher reduction in revenues with less impact on the operating costs. CIB's operating expenses were up 7.8% on y-o-y driven by 10.7% increase in salaries and other employee benefits as a result of CIB's investments in attracting the talent to accelerate the de-concentration efforts and restructuring of its corporate recovery team. However, the benefits of these undertakings are positively reflected in CIB's lower cost of risk ratio, which stood at 0.3% in 1Q17 (down from 2.1% in 1Q16 and 6.6% in 4Q16)      

§ As a result, Corporate Investment Banking profit reached GEL 28.3mln in 1Q17, up 10.8% y-o-y and 181.3% q-o-q

Performance highlights of wealth management operations

§ The AUM of the Investment Management segment increased to GEL 1,568.6mln 1Q17, up 16.7% y-o-y and down 1.5% q-o-q. This includes a) deposits of Wealth Management franchise clients and b) assets held at Bank of Georgia Custody, c) Galt & Taggart brokerage client assets and d) Aldagi pension scheme assets

§ Wealth Management deposits were GEL 1,061.4mln, up 1.3% y-o-y, growing at a compound annual growth rate (CAGR) of 16.7% over the last five-year period. Q-o-q, Wealth Management deposits were down 3.7%. The cost of deposits stood at 4.1% in 1Q17, down 60bps y-o-y and down 40bps q-o-q. The decline in cost of deposits and the impact of Wealth Management clients switching from deposits to local bonds, as Galt & Taggart has offered a number of local bond issuances - yielding higher rates than deposits - to Wealth Management clients, were reflected in the Wealth Management deposit balances

§ We served 1,385 wealth management clients from 68 countries as of 31 March 2017

§ Galt & Taggart continues to develop local capital markets.

-       Regional Fixed Income Market Watch. The report is released monthly and covers the debt markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine. Regional Fixed Income Market Watch provides market data for both locally and internationally listed debt issuances from these countries. Furthermore, the report includes country-level macro indicators, such as sovereign ratings, monetary policy rates, economic growth, fiscal and current account balances

-     Galt & Taggart Research continues to provide weekly economic (including economies of Georgia and Azerbaijan) and sectoral coverage. Galt & Taggart reports are available at www.galtandtaggart.comOther research since Galt & Taggart's launch in 2012 included coverage of/notes on the Georgian retail and office real estate market; the Georgian wine, agricultural, electricity, healthcare and tourism sectors; fixed income issuances, including Georgian Oil and Gas Corporation and Georgian Railway; and the Georgian State Budget

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Investment Business Segment Result Discussion

Utility & Energy Business (Georgia Global Utilities - GGU)

 

About GGU

Natural monopoly in the water business, with upside in electricity generation. Our utility and energy business is operated through the Group's wholly-owned subsidiary Georgia Global Utilities (GGU). GGU has two main business lines - a water utility and electric power generation. In its water utility business, GGU is a natural monopoly that supplies water and provides a wastewater service to 1.4mln people (more than one-third of Georgia's population) in three cities: Tbilisi, Mtskheta and Rustavi

GGU is self-sufficient in power for water transportation and it benefits from additional revenue from third-party electricity sales. GGU owns and operates three hydropower generation facilities (and manages an additional facility) with a total capacity of 149.1MW. It is also investing in additional capacity for electricity generation through the development of hydro power plants, as well as solar and wind power sources. Average annual production varies between 380GWh and 560GWh, depending on the level of rainfall during the year. GGU's average annual electricity consumption for its own account varies between 270GWh and 300GWh, which means GGU has self-sufficient power for water transportation and it benefits from additional revenue from third-party electricity sales. During the last few years the company has achieved efficiencies in terms of its own energy consumption. The involvement in hydro power production also provides revenue diversification

Room for efficiencies in water business from improving the worn-out infrastructure. Poor condition of pipeline infrastructure is the main reason for leaks and accidents, causing on average 70% water loss annually, out of which 50% is attributable to technical losses and 20% - to commercial losses. The current high level of water losses is significantly worse than the peer average and represents a strong efficiency upside for the business. GGU owns and operates a water supply network of around 2,700km and about 1,700km of wastewater pipelines. It also has 45 pumping stations, 84 service reservoirs with a total capacity of 320,000 m3 and one water treatment plant. Around 520,000,000 m3 of potable water is supplied from water production/treatment facilities annually. By improving the pipeline infrastructure and as a result of reducing the water supplied to its utility customers, GGU expects to free-up water supply for additional electricity generation, which in turn can be sold to third parties

Water tariff & regulation. The current water and wastewater tariff for residential customers stands at GEL 3.15 (per month, per capita) for non-metered customers and at GEL 0.27 per m3 for metered customers. All of GGU's commercial customers are metered and the tariff stands at GEL 4.42 per m3. The tariff is set per cubic meter of water consumed by customers. GNERC (Georgian National Energy and Water Supply Regulatory Commission) regulates GGU's water tariffs. GNERC is an independent regulatory body, not subject to direct supervision from any other state authority, but accountable to parliament. It is funded predominantly from the fees paid by market participants (0.2% of total revenues)

Strong cash flow generation is expected to enable GGU to sponsor stable dividend payouts to shareholders starting from 2018. GWP, a wholly owned subsidiary of GGU, which operates the water business, has a credit rating of BB- with stable outlook from Fitch

 

 

 

 

 

 

 

 

 

 

 

 

Standalone results

We acquired the 75% of GGU's equity interests that we did not previously own on 21 July 2016 and have consolidated its results since then. Prior to this, the net income from the Group's 25% stake in GGU was reported under "profit from associates". The results below refer to GGU's standalone numbers. GGU's stand-alone results, including the related comparative information, reflect the energy & utility business performance.

INCOME STATEMENT






 GEL thousands; unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q







Revenue from water supply to legal entities

18,336

16,986

7.9%

19,598

-6.4%

Revenue from water supply to individuals

7,911

7,597

4.1%

8,636

-8.4%

Revenue from electric power sales

1,191

3,267

-63.5%

3,641

-67.3%

Revenue from technical support

673

742

-9.3%

2,056

-67.3%

Other income

491

(29)

NMF

2,312

-78.8%

Revenue

28,602

28,563

0.1%

36,243

-21.1%

Provisions for doubtful trade receivables

274

(746)

NMF

687

-60.1%

Salaries and benefits

(4,121)

(3,784)

8.9%

(4,010)

2.8%

Electricity and transmission costs

(4,972)

(4,721)

5.3%

(3,748)

32.7%

Raw materials, fuel and other consumables 

(791)

(893)

-11.4%

85

NMF

Infrastructure assets maintenance expenditure 

(301)

(666)

-54.8%

(402)

-25.1%

General and administrative expenses

(787)

(710)

10.8%

(751)

4.8%

Operating taxes

(1,032)

(604)

70.9%

(1,155)

-10.6%

Professional fees

(430)

(612)

-29.7%

(819)

-47.5%

Insurance expense

(285)

(67)

NMF

(269)

5.9%

Other operating expenses

(1,370)

(1,236)

10.8%

(2,085)

-34.3%

Operating expenses

(13,815)

(14,039)

-1.6%

(12,467)

10.8%

EBITDA

14,787

14,524

1.8%

23,776

-37.8%

EBITDA Margin

52%

51%


66%


Depreciation and amortization

(4,803)

(5,390)

-10.9%

(3,753)

28.0%

EBIT

9,984

9,134

9.3%

20,023

-50.1%

EBIT Margin

35%

32%


55%


Net interest expense

(2,189)

(2,368)

-7.6%

(3,049)

-28.2%

Foreign exchange (losses) gains

(101)

(49)

106.1%

190

NMF

EBT

7,694

6,717

14.5%

17,164

-55.2%

Income tax expense

-

(1,199)

-100.0%

(1,659)

-100.0%

Profit

7,694

5,518

39.4%

15,505

-50.4%

Performance highlights

§ GGU recorded total revenue of GEL 28.6mln (flat y-o-y and down 21.1% q-o-q) 

-       Revenue from the water supply to legal entities and individuals reached GEL 26.2mln in 1Q17 (up 6.8% y-o-y and down 7.0% q-o-q), representing 91.8% of the total revenue in 1Q17 (86.1% in 1Q16 and 77.9% in 4Q16). Water consumption is characterised by seasonality, whereby sales in the 4th quarter normally exceed sales during the first quarter. Revenue from legal entities is generally the largest element of GGU's total revenue and their water consumption pattern is reflected in GGU's quarterly revenues. The y-o-y increase in revenue from water supply to both legal entities and individuals reflects the increased number of billed individual customers since 4Q16 and increased consumption in 1Q17 as compared to 1Q16 as a result of reconciliation of customer database with that of civil registry and replacement of  outdated water consumption meters for legal entities, which now reflects more accurate consumption volume and decreases water losses

-       Revenue from electricity power sales was GEL 1.2 million in 1Q17 (down 63.5% y-o-y and down 67.3% q-o-q), which was affected by reduced internal power generation in the first quarter 2017 from GGU's hydro power plants. This was a result of the unfavourable weather conditions during 1Q17 in eastern Georgia, where the delay in snow melting reduced water levels in the reservoir and therefore led to less power generation

-       The 67.3% q-o-q decrease in the technical support revenue in 1Q17 was due to the elevated number of new connections executed on behalf of the clients in 4Q16. Furthermore, the company early adopted the new revenue recognition standard, IFRS 15, which led to the y-o-y and q-o-q decrease in technical support revenue. Prior to 1 January 2017, GGU recognised the revenue upon connection of the customer to the water supply network. Effective 1 January 2017, the technical support fee is recognised into revenues gradually over the period of the useful life of the capitalised asset. The GEL 16.9 million impact was recorded through equity on 1 January 2017

-       Unregistered customers are one of the major reasons for unrecovered revenue. GGU regularly under-recovers its water revenue from residential consumers due to discrepancies between customers formally registered with the provider and actual customers. Currently there are 1.4mln people living in Tbilisi, Rustavi and Mtskheta regions, while only 1.2mln residents are registered with GGU. Some water is also being supplied, but is not billed for, resulting from the challenges associated with accurate accounting for water consumption. GGU is dealing with these issues by aligning its own customer databases with the state registry to identify the unregistered customers and improving metering. The company also created a monitoring group that identifies unregistered customers per household. The exercise is expected to increase the number of customer billed for water consumption and recover some of the past due revenues.  

§ GGU's operating expenses dropped slightly 1.6% y-o-y and were up 10.8% q-o-q:

-       The most material cost efficiency measure that GGU management focuses on is the infrastructure asset maintenance expenditure, which was down 54.8% y-o-y and down 25.1% q-o-q reflecting prudent rehabilitation works. The number of accidents on the infrastructure also declined by 298 during 1Q17 as compared to 1Q16. GGU actively invests in the rehabilitation of its infrastructure with a focus on improving efficiency in the medium to long-term

-       Starting from 1Q17, as part of an on-going process of reviewing receivable provisioning methodology, GGU revised certain estimates to enhance the method of provision estimation. Under the enhanced method GGU was able to identify the customers who were able to pay all their monthly bills on time, i.e. have no overdue bill balance. This change in accounting estimate had a positive impact on provision of doubtful receivables in the amount of GEL 2.9 million in 1Q17

-       Due to reduced power generation during 1Q17 discussed above, in order to support the day-to-day operations of the company, GGU acquired electricity from the open market for its own consumption. As a result, the electricity and transmission costs were up 5.3% y-o-y and up 32.7% q-o-q

-       Operating taxes were up 70.9% y-o-y, reflecting increase in GGU's property tax base due to the company's investments in its supply network

-       Professional fees decreased by 29.7% y-o-y and by 47.5% q-o-q. In 2016, the company was intensively spending on research on its existing infrastructure to identify further efficiency opportunities as well as areas for additional hydro power station development. In 1Q17, such spending was modest as GGU focused on addressing the identified efficiency opportunities

-       The y-o-y and q-o-q movements in income taxes reflect the impact of changes in corporate taxation model, approved by the Parliament of Georgia in May 2016

§ Consequently, GGU reported EBITDA of GEL 14.8mln in 1Q17 (up 1.8% y-o-y and down 37.8% q-o-q) and a profit of GEL 7.7mln in 1Q17 (up 39.4% y-o-y and down 50.4% q-o-q)

STATEMENT OF CASH FLOW






GEL thousands; unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q







Cash receipt from customers

30,582

29,254

4.5%

41,042

-25.5%

Cash paid to suppliers

(10,765)

(10,047)

7.1%

(8,066)

33.5%

Cash paid to employees

(3,758)

(2,801)

34.2%

(6,640)

-43.4%

Interest received

419

105

NMF

30

NMF

Interest paid

(2,356)

(2,510)

-6.1%

(2,653)

-11.2%

Taxes paid

(1,724)

(2,877)

-40.1%

(2,202)

-21.7%

     Restricted cash in Bank

945

(624)

NMF

(2,729)

NMF

Cash flow from operating activities

13,343

10,500

27.1%

18,782

-29.0%







Maintenance capex

(8,835)

(3,874)

128.1%

(8,801)

0.4%

Operating cash flow after maintenance capex

4,508

6,626

-32.0%

9,981

-54.8%







Purchase of PPE and intangible assets

(13,486)

(5,917)

127.9%

(9,572)

40.9%

Total cash used in investing activities

(13,486)

(5,917)

127.9%

(9,572)

40.9%







Proceeds from borrowings

-

380

-100.0%

27,562

-100.0%

Repayment of borrowings

(4,328)

(2,501)

73.1%

(6,565)

-34.1%

Dividends paid out

-

(54)

-100.0%

151

-100.0%

Total cash used in financing activities

(4,328)

(2,175)

99.0%

21,148

NMF







Exchange (losses)/gains on cash equivalents

(295)

(50)

NMF

556

NMF

Total cash (outflow)/inflow

(13,601)

(1,516)

NMF

22,113

NMF







Cash balance






Cash, beginning balance

27,511

11,633

136.5%

5,398

409.7%

Cash, ending balance

13,910

10,117

37.5%

27,511

-49.4%







 

 

§ GGU has good receivables collection rates within the 95-98% range from water supply. During the first quarter of 2017, the collection rate for legal entities and households was 98% and 94%, respectively. As a result, GGU had GEL 3.2mln overdue receivables outstanding at 31 March 2017. The Georgian water utility sector historically had a low receivables collection rates. The latest available countrywide data relates to 2005 and indicated an average collection rate of 65% in major cities. This is because electricity supply to residential customers was not allowed to be cut as a result of delays of water supply payments. GGU's collection rate began to improve significantly beginning in 2011, when a new arrangement with electricity suppliers was set up based on the amendment to Georgian Law on Electricity and Natural Gas. Since then, Tbilisi's electricity suppliers have assisted in improving GGU's receivables collection rates by disconnecting non-paying water customers from the electricity network. In return, electricity suppliers receive flat monetary compensation from GGU (c.GEL 1.3mln p.a. since 2015). As a result, GGU's collection rates for water supply receivables improved very quickly and have remained at around 96%

§ The electricity purchased by the company due to the seasonal reduction in power generation in 1Q17 was the trigger for the 7.1% y-o-y and 33.5% q-o-q increase in the cash paid to suppliers

§ GGU spent GEL 8.8mln on maintenance capex in 1Q17, which is significantly higher than it spent for the same period last year, reflecting the acceleration of the infrastructure maintenance program to improve the operational efficiencies. Consequently, the operating cash flow, after deducting maintenance capex, was GEL 4.5mln in 1Q17

 

BALANCE SHEET

GEL thousands; unless otherwise noted


Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q








Cash and cash equivalents


13,910

10,117

37.5%

27,511

-49.4%

Trade and other receivables


30,944

26,710

15.9%

29,499

4.9%

Inventories


3,108

3,635

-14.5%

3,048

2.0%

Current income tax prepayments


998

920

8.5%

735

35.8%

Total current assets


48,960

41,382

18.3%

60,793

-19.5%

Property, plant and equipment


346,048

294,419

17.5%

329,997

4.9%

Investment Property


18,922

19,484

-2.9%

18,728

1.0%

Intangible assets


1,207

1,143

5.6%

1,186

1.8%

Restructured trade receivables


178

23

NMF

307

-42.0%

Restricted Cash


4,008

3,141

27.6%

5,094

-21.3%

Deferred income tax


-

280

-100.0%

-

-

Other non-current assets


993

1,188

-16.4%

1,246

-20.3%

Total non-current assets


371,356

319,678

16.2%

356,558

4.2%

Total assets


420,316

361,060

16.4%

417,351

0.7%








Current borrowings


22,566

21,921

2.9%

22,617

-0.2%

Trade and other payables


28,172

22,461

25.4%

24,997

12.7%

Provisions for liabilities and charges


743

1,359

-45.3%

706

5.2%

Other taxes payable


2,718

1,684

61.4%

7,135

-61.9%

Total current liabilities


54,199

47,425

14.3%

55,455

-2.3%

Long term borrowings


79,242

49,907

58.8%

83,651

-5.3%

Deferred income tax liability


-

28,681

-100.0%

-

-

Deferred income


17,817

-

-

-

-

Total non-current liabilities


97,059

78,588

23.5%

83,651

-100.0%

Total liabilities


151,258

126,013

20.0%

139,106

8.7%








Share capital


2

2

0.0%

2

0.0%

Retained earnings


87,595

80,293

9.1%

96,782

-9.5%

Revaluation reserve


181,461

154,752

17.3%

181,461

0.0%

Total equity


269,058

235,047

14.5%

278,245

-3.3%

Total liabilities and equity


420,316

361,060

16.4%

417,351

0.7%

 

§ During 2016, GGU made significant progress towards reducing its foreign-exchange exposure. In particular, the company refinanced a large part of its US dollar-denominated debt with Lari-denominated debt. Currently 99.7% of GGU's borrowings are denominated in local currency.

§ The increase in property, plant and equipment is primarily due to additional investments into the company's infrastructure carried out during 2016 and 1Q17 in order to upgrade the network and further reduce water losses and achieve cost efficiencies

§ The revaluation reserve balance increased y-o-y primarily due to the deferred tax adjustment resulting from the change in the corporate income tax legislation in Georgia enacted in May 2016



 

Healthcare business (Georgia Healthcare Group - GHG)

Standalone results

The Georgia Healthcare Group PLC (GHG) is the leading integrated player in the Georgian healthcare ecosystem. GHG includes three different business lines: healthcare services business (consisting of hospital business and ambulatory business), pharma business and medical insurance. BGEO Group owned 64.3% of GHG at 31 March 2017, with the balance of the shares being held by the public (largely institutional investors). GHG's results are fully consolidated in BGEO Group's results. GHG's shares are listed on the London Stock Exchange. The results below refer to GHG standalone numbers and are based on GHG's reported results, which are published independently and available on GHG's web-site: www.ghg.com.ge

 

INCOME STATEMENT






GEL thousands; unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q







Revenue, gross

186,627

72,576

157.1%

136,031

37.2%

Corrections & rebates

(623)

(410)

52.0%

(790)

-21.1%

Revenue, net

186,004

72,166

157.7%

135,241

37.5%

Revenue from healthcare services

65,905

60,041

9.8%

66,814

-1.4%

Revenue from pharma

111,399

-

-

56,586

96.9%

Net insurance premiums earned

13,965

13,830

1.0%

16,312

-14.4%

Eliminations

(5,265)

(1,705)

208.8%

(4,471)

17.8%

Costs of services

(129,926)

(44,151)

194.3%

(89,626)

45.0%

Cost of healthcare services

(37,957)

(32,998)

15.0%

(34,802)

9.1%

Cost of pharma

(84,408)

-

-

(44,498)

89.7%

Cost of insurance services

(12,734)

(12,847)

-0.9%

(14,997)

-15.1%

Eliminations

5,173

1,694

205.4%

4,671

10.7%

Gross profit

56,078

28,015

100.2%

45,615

22.9%

Salaries and other employee benefits

(17,728)

(6,923)

156.1%

(12,757)

39.0%

General and administrative expenses

(13,352)

(3,202)

317.0%

(9,470)

41.0%

Impairment of healthcare services, insurance premiums and other receivables

(1,121)

(980)

14.4%

56

NMF

Other operating income

1,182

220

437.3%

845

39.9%

EBITDA

25,059

17,129

46.3%

24,289

3.2%

Depreciation and amortisation

(5,872)

(4,465)

31.5%

(5,316)

10.5%

Net interest expense

(7,119)

(1,656)

329.9%

(4,773)

49.2%

Net gain/(loss) from foreign currencies

2,778

(260)

NMF

(3,170)

NMF

Net non-recurring income/(expense)

(1,792)

1,968

NMF

1,982

NMF

Profit before income tax expense

13,054

12,716

2.7%

13,012

0.3%

Income tax benefit

(19)

(693)

NMF

(6,682)

NMF

of which: Deferred tax adjustments

-

-


(5,319)


Profit for the period

13,035

12,023

8.4%

6,330

105.9%







Attributable to:






  - shareholders of the Company

8,832

9,921

-11.0%

5,401

63.5%

  - non-controlling interests

4,203

2,102

100.0%

929

352.4%

of which: Deferred tax adjustments

-

-


(516)


 

For detailed income statement by healthcare services, medical insurance and pharma business, please see page 33

 

Performance highlights

§ GHG delivered record quarterly revenue of GEL 186.6mln (up 157.1% y-o-y and up 37.2% q-o-q). The y-o-y growth was driven by all business lines. GHG's 1Q17 results now fully reflect the pharma business performance GPC and Pharmadepot acquired in and consolidated from May 2016 and January 2017, respectively). The healthcare services business was the second biggest contributor to the y-o-y revenue growth, with strong organic growth of 10.1% in 1Q17. While y-o-y growth of net insurance premiums earned only contributed slightly to the company's revenue growth, the retention of medical insurance claims within GHG increased significantly to 35.6% from 14.2% a year ago. Q-o-q revenue growth was driven by the consolidation of the pharma business

§ In 1Q17, GHG achieved a well-diversified revenue mix, spread across all three segments of the Georgian healthcare ecosystem. 35% of its revenues came from healthcare services business, 58% from pharma business and the remaining 7% from medical insurance business. This level of diversification was achieved through the GHG's entrance and further expansion into the pharma business, which is funded largely out-of-pocket and therefore, has helped GHG to further diversify its revenue by payment sources

§ In 1Q17, GHG continued to focus on extracting operating efficiencies and synergies across the business lines. As anticipated, healthcare services business margins are temporarily reduced due to the launches of new healthcare facilities and services, which are currently in their rapid build-out phase and the impact of higher utilities costs. GHG achieved growing gross profit margins in its pharma business and an improved loss ratio in its medical insurance business. The recent launches of two large hospitals in Tbilisi and a number of new services have reduced the healthcare services business gross margin, as expected. GHG expects the rapid build-out phase to last for 12-18 months. Meanwhile, GHG continues working towards increasing the utilisation of healthcare facilities particularly through elective care services, and realising further cost synergies in medical disposables procurement as a result of consolidating the procurement with the pharma business. This process is ongoing and the costs savings are expected to be reflected throughout the year. Since the acquisition of pharma business, GHG has focused on implementing initiatives toward improving margins, which is reflected in the strong improvement in the pharma business gross margin, up 280bps q-o-q. Initiatives include improving pricing from pharmaceuticals manufacturers, improving the mix of products and offerings to increase the mix of higher margin products and the introduction of higher-margin generic and contract manufactured products in its pharmacies. GHG's medical insurance business has also improved its margins by focusing on higher margin revenues and optimising its cost base, which has resulted in an improved loss ratio of 84.6%, down from 86.4% a year ago. GHG remains on track to improve the loss ratio to the targeted level of less than 80%

§ GHG reported record EBITDA of GEL 25.1mln in 1Q17 (up 46.3% y-o-y and up 3.2% q-o-q). The EBITDA margin for healthcare services business was 25.3% in 1Q17, compared to 29.5% in 1Q16 and 31.9% in 4Q16. Temporary reduction in EBITDA margin was due to the roll-outs explained above, as well as increase in tariffs of utilities on the back of winter season. We expect the healthcare services business margins to rebound gradually, and we continue to expect c.30% EBITDA margin in 2018. The healthcare services business was the main contributor to GHG's 1Q17 EBITDA, contributing 67.1% in total. The pharma business reported GEL 8.7 million EBITDA in 1Q17, improving the pharma business EBITDA margin to 7.8%, from 6.0% in 4Q16 and we are on track to deliver our goal of more than 8% EBITDA margin in the pharma business

§ GHG's profit totaled GEL 13.0mln in 1Q17 (up 8.4% y-o-y and up 105.9% q-o-q; up 11.9% q-o-q on a normalised basis). The healthcare services was main driver contributing GEL 7.2mln, followed by the pharma business, which contributed GEL 7.0mln. GHG's profit was partially offset by the loss of GEL 1.1mln reported by the medical insurance business  

§ GHG continued sizeable development projects by actively invested in healthcare facilities as well as consolidating the pharma business entities was reflected in the y-o-y growth of depreciation and amortisation,  which were up 31.5%. The q-o-q increase is fully attributable to consolidating Pharmadepot's results since January 2017

§ The increase in interest expense is due to three main factors: 1) Lower base in 2016. At the end of 2015 and the beginning of 2016, GHG prepaid local bank debt to utilise the available cash post-IPO, subsequently realising significant savings in interest expense throughout 2016. From the second quarter of 2016 and in the first quarter of 2017, GHG sourced longer-term and less expensive funding from both local commercial banks and DFIs and utilised funds on the development of healthcare facilities; 2) At the beginning of 2017, GHG raised GEL 33.0mln from a local commercial bank to pay the first tranche of consideration payable for the Pharmadepot acquisition. The increased debt balance in 1Q17, has resulted in increased interest expense; and 3) Recognised interest expense of GEL 0.4mln, due to unwinding of a discount resulting from remaining consideration payable, in the amount of US$13.0mln to Pharmadepot's former selling shareholders as part of the total purchase price, payment of which will be carried out over the next five years. Discounted present value accounting is an IFRS requirement and does not result in actual cash outflow on interest

§ The foreign currency gains are mainly attributable to the pharma business, and resulted from a decrease in foreign currency denominated payables to suppliers as a result of the appreciation of GEL by the end of 1Q17. Additionally, GHG recorded a gain on the revaluation of the remaining consideration payable to ABC's former selling shareholders, in the amount of US$13.0mln described above 

§ GHG's balance sheet increased substantially over the last twelve months, reaching GEL 1,109.5mln as at 31 March 2017. The growth of total assets by 50.4% y-o-y was largely driven by a 24.8% increase in property and equipment, reflecting investments in the renovation of hospitals, the roll-out of ambulatory clinics and the consolidation of the pharma business, as a result of the two acquisitions completed in May 2016 and in January 2017. The high level of cash and bank deposits at the end of 1Q17 reflects the receipt of DFI funding of GEL 61.0mln, which will be utilised in the upcoming period for the capex pipeline. The pharma business consolidation primarily affected inventories and goodwill. Out of the GEL 96.8mln inventory balance at the end of 1Q17, GEL 82.3mln was attributable to the pharma business. The y-o-y increase in accounts payable is also attributable to consolidating the pharma business. Out of the GEL 94.1mln accounts payable balance, GEL 63.4mln relates to the pharma business

§ As part of the Pharmadepot acquisition contract, the selling shareholders have a put option to sell their remaining 33% stake in the combined pharma business to GHG during the period from 1 January 2023 to 31 December 2023. In accordance with IFRS requirements, GHG recognised GEL 55.0mln (present value) liability to purchase the remaining 33% shares - included in other liabilities account, resulting in an increase in the balance as at 31 March 2017. Non-controlling interest arising from consolidated pharma business, GEL 22.0mln, was fully de-recognised in-line with IFRS requirements. The difference between the redemption liability of GEL 55.0mln and the non-controlling interest of GEL 22.0mln was recorded to equity, resulting in a reduction of equity through other reserves account by GEL 33.0mln

§ During 1Q17, GHG continued to invest in the development of its healthcare facilities. GHG spent a total of GEL 20.5mln on capital expenditures, primarily on the extensive renovations of the Deka and Sunstone hospitals, as well as enhancing its service mix and introducing new services to cater to previously unmet patient needs. Of this, maintenance capex was GEL 2.6mln

-       The renovation of the first phase of Sunstone (c.332 beds) was completed two months ahead of the initial schedule, within budget and in April 2017, GHG opened the hospital with 220 newly renovated beds

-       The renovation and full launch of Deka (c.320 beds) is on budget and on target for completion by year-end according to the revised (slightly delayed) schedule announced in February. In August 2016, GHG opened Deka's diagnostic centre, which is one of the largest in Tbilisi. The opening of the diagnostic centre was the first step toward developing Deka into a flagship multi-profile hospital in Georgia

§ As of 31 March 2017, GHG operates ten ambulatory clusters consisting of 13 district ambulatory clinics and 28 express ambulatory clinics that provide outpatient diagnostic and treatment services

§ As of 31 March 2017, GHG operates 35 hospitals with a total of 2,557 beds, including 15 referral hospitals with a total of 2,092 beds, which provide secondary or tertiary level healthcare services and 20 community hospitals with a total of 465 beds, which provide basic outpatient and inpatient healthcare services

§ GHG's healthcare services market share by number of beds was 23.4% as 31 March 2017. The market share increased further in April 2017 up to 24.6% as a result of the launching the first phase of Sunstone hospital 

§ GHG's hospital bed occupancy rate was 610.5% in 1Q17 (60.4% % in 1Q16, 57.6% in 4Q16)

-       GHG's referral hospital bed occupancy rate was 68.1% in 1Q17 (66.7% in 1Q16, 65.3% in 4Q16)

§ The average length of stay was 5.3 days in 1Q17 (4.9 in 1Q16, 5.0 in 4Q16)

-       The average length of stay at referral hospitals was 5.6 days in 1Q17 (5.2 days in 1Q16, 5.2 days in 4Q16)

§ In 1Q17 GHG's pharma business had:

-       c.2.0mln retail customer interactions per month

-       c.0.5mln loyalty card members

-       Average transaction size of GEL 13.6

-       c.29% market share measured by sales

-       Total number of bills issued 6.4mln

§ In GHG's medical insurance business:

-       The number of insured clients was 135,000 as of 31 March 2017

-       Medical insurance market share was 35.3% based on net insurance premium revenue as of 31 December 2016

-       Insurance renewal rate was 77.3% in 1Q17

 

 



Real estate business (m2 Real Estate or m2)

Standalone results8

Our Real Estate business is operated through the Group's wholly-owned subsidiary m2 Real Estate, which develops residential property in Georgia. m2 Real Estate outsources the construction and architecture works, whilst itself focusing on project management and sales. The Group's Real Estate business serves to meet the unsatisfied demand in Tbilisi for housing through its well-established branch network and sales force, while stimulating the Bank's mortgage lending business. The business has also recently begun hotel development in the under-developed mid-price sector.

The net revenue trend between the first quarter of 2017 and both the first and fourth quarters of 2016 is not comparable given the early adoption of IFRS 15 from 1 January 2017. Prior to 1 January 2017, m2 recognised revenues from sales of residential units upon completion and handover of the units to customers in line with IAS 18, while under IFRS 15 revenue is recognized according to the percentage of completion method.

 

8Prior to 1Q17, m2 Real Estate results presented were segment results, i.e. including Group elimination and consolidation adjustments. Effective 1Q17, and similar to GGU and GHG, we will report stand-alone results for m2 Real Estate

 

INCOME STATEMENT






GEL thousands, unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q







 Revenue from apartment sales

18,399

27,992

-34.3%

9,356

96.7%

 Cost of apartment sale

(17,109)

(22,099)

-22.6%

(7,811)

119.0%

 Net revenue from apartment sales

1,290

5,893

-78.1%

1,545

-16.5%

 Revenue from operating leases

899

589

52.6%

859

4.7%

 Cost of operating leases

(83)

(47)

76.6%

(44)

88.6%

 Net revenue from operating leases

816

542

50.6%

815

0.1%

 Revaluation of commercial property

479

-

NMF

1,430

-66.5%

 Gross real estate profit 

2,585

6,435

-59.8%

3,790

-31.8%

 Gross other investment profit 

11

88

-87.5%

48

-77.1%

 Revenue 

2,596

6,523

-60.2%

3,838

-32.4%

 Salaries and other employee benefits

(407)

(297)

37.0%

(374)

8.8%

 Administrative expenses

(1,427)

(1,027)

38.9%

(1,202)

18.7%

 Operating expenses 

(1,834)

(1,324)

38.5%

(1,576)

16.4%

 EBITDA

762

5,199

-85.3%

2,262

-66.3%

 Depreciation and amortisation

(66)

(53)

24.5%

(65)

1.5%

 Net foreign currency (loss) gain

(194)

386

NMF

(58)

NMF

 Interest income

189

-

NMF

410

-53.9%

 Interest expense

(48)

(74)

-35.1%

(30)

60.0%

 Net operating income before non-recurring items 

643

5,458

-88.2%

2,519

-74.5%

 Net non-recurring items 

(76)

(23)

NMF

(96)

-20.8%

 Profit before income tax 

567

5,435

-89.6%

2,423

-76.6%

 Income tax (expense)

-

(815)

-100.0%

(2,949)

-100.0%

 Profit (loss)  

567

4,620

-87.7%

(526)

NMF

Performance highlights

§ m2 Real Estate started 2017 strongly as the number of apartments sold almost tripled, and its portfolio of yielding assets increased by 22.9% in 1Q17, compared to 1Q16

§ Net revenue from the sale of apartments in 1Q17 was GEL 1.3mln (down 78.1% y-o-y and down 16.5% q-o-q). In 1Q16, m2 Real Estate completed three projects and reported revenue for all sold residential units handed over to customers in these projects within 1Q16. As a result, 1Q17 revenues reflect a y-o-y decline

§ Net revenue from operating leases increased 50.6% y-o-y and 0.1% q-o-q supported by the growth in commercial real estate portfolio which reached GEL 42.0mln at 31 March 2017 (up 22.9% y-o-y and up 1.1% q-o-q). As a result, the portfolio of yielding assets represented 14.2% of m2 Real Estate's total assets at 31 March 2017, compared to 11.4% a year ago and 11.2% at 31 December 2016

§ Revaluation of commercial property was down in 1Q17 as compared to 4Q16 due to relatively higher amount of gains from investment property revaluation recorded as a result of completion of large yielding asset construction in 4Q16

§ Consequently, m2 recognised a total revenue of GEL 2.6mln (down 60.2% y-o-y and down 32.4% q-o-q) and net profit of GEL 0.6mln (down 87.7% y-o-y and up GEL 1.1mln q-o-q) in 1Q17

§ In 1Q17, m2 sold a total of 143 apartments with the total sales value of US$ 10.1mln, compared to 53 apartments sold with the total sales value of US$ 5.5mln during 1Q16 and 112 apartments with a sales value of US$ 8.3mln in 4Q16

§ m2 has started ten projects since its establishment in 2010, of which, six projects have already been completed, while the construction of four projects is ongoing. m2 completed all of its projects on or ahead of scheduled time and within the budget. The four ongoing projects carry the following characteristics:

1.     Kartozia Street project: the largest ever project carried out by m2, with a total of 819 apartments in a central location in Tbilisi, out of which, 383 units are already sold

2.     Skyline project - a luxury residential apartment building in the Old Tbilisi neighbourhood with few apartments (19 in total, out of which, 9 are already sold), with prices amounting to twice of m2 Real Estate's average prices charged on other projects.

3.     Kazbegi Street II project - a mixed-use development with 302 residential apartments and a hotel (m2 Real Estate has the exclusive right to develop Wyndham Ramada Anchor hotels in Georgia) with a capacity of 152 rooms. The construction started in June 2016, with sales of 127 apartments to date

4.     50 Chavchavadze Avenue project - the project is located in the central part of Tbilisi with a total of 82 apartments, out of which, 31 are sold

m2 expects that Skyline project will be completed in 2Q17, while the completion of the remaining three projects will fall into 2018. Currently, a total of 704 units are available for sale, out of the total of 2,894 apartments either already developed or under development phase

§ m2 has a very good track record of selling apartments. Out of the 1,672 apartments completed to date since inception, only 32 or 1.9% remain in stock as available for sale. The four on-going  projects, described above, have a total capacity of 1,222 apartments, of which, 550 apartments or 45.0% are sold

OPERATING DATA

Completed and on-going projects, as of 31 March 2017

 


Project name

Number of apartments

Number of apartments sold

Number of apartments sold as % of total

Number of apartments available for sale

Start date (construction)

Planned Completion date (construction)

Actual Completion date (construction)

Construction completed %

Completed projects

1,672

1,640

98.1%

32




100%

 

1

Chubinashvili Street

123

123

100.0%

0

Sep-10

-

Aug-12

100%

2

Tamarashvili Street

525

523

99.6%

2

May-12

-

Jun-14

100%

3

Kazbegi Street

295

295

100.0%

0

Dec-13

-

Feb-16

100%

4

Nutsubidze Street

221

221

100.0%

0

Dec-13

-

Sep-15

100%

5

Tamarashvili Street II

270

266

98.5%

4

Jul-14

-

Jun-16

100%

6

Moscow Avenue

238

212

89.1%

26

Sep-14

-

Jun-16

100%

On-going projects

1,222

550

45.0%

672





 

7

Kartozia Street

819

383

46.8%

436

Nov-15

Oct-18

-

45%

 

8

Skyline

19

9

47.4%

10

Dec-15

May-17

-

85%

 

9

Kazbegi Street II

302

127

42.1%

175

Jun-16

Nov-18

-

18%

 

10

50 Chavchavadze Ave.

82

31

37.8%

51

Oct-16

Feb-18

-

13%

 


Total

2,894

2,190

75.7%

704





 

§ Since its inception, m2 Real Estate unlocked US$ 16.4mln in total land value from the six completed projects, while an additional US$ 16.5mln in land value is expected to be unlocked from the four on-going projects

FINANCIAL DATA

for completed and on-going projects, as of 31 March 2017

#

Project name

Total Sales (US$ mln)

Recognised as revenue (US$ mln including VAT)

Deferred revenue (US$ mln including VAT)

Deferred revenue  expected to be recognised as revenue in 2017 including VAT)

Land value unlocked (US$)

Realised & Expected IRR

Completed projects

138.1

138.1



16.4


1

Chubinashvili street

 9.9

                                9.9

-

-

                      0.9

47%

2

Tamarashvili street

 48.5

                              48.5

-

-

                      5.4

46%

3

Kazbegi Street

 27.3

                              27.2

-

-

                      3.6

165%

4

Nutsubidze Street

 17.4

                               17.4

-

-

                      2.2

58%

5

Tamarashvili Street II

 24.3

                              24.3

-

-

                      2.7

71%

6

Moscow avenue

 10.7

                               10.7

-

-

                       1.6

31%

On-going projects

46.8

22.5

24.3

19.8

16.5


7

Kartozia Street

 28.4

12.7

 15.7

13.4

 5.8

60%

8

Skyline

 4.1

3.7

 0.4

0.4

 3.1

329%

9

Kazbegi Street II

 10.7

4.3

 6.4

4.4

 4.3

51%

10

50 Chavchavadze ave.

 3.6

1.8

 1.8

1.6

 3.3

75%


Total

184.8

160.5

24.3

19.8

32.9


§ The number of apartments financed with BOG mortgages in all m2 Real Estate projects was 1,000, with an aggregate amount of GEL 118.5mln

BALANCE SHEET

GEL thousands, unless otherwise noted

Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q













Cash and cash equivalents

48,636

49,003

-0.7%

93,210

-47.8%

Amounts due from credit institutions

179

-

-

-

-

Investment securities

1,515

2,001

-24.3%

2,842

-46.7%

Accounts receivable

6,130

981

524.9%

703

772.0%

Prepayments

17,842

23,449

-23.9%

20,746

-14.0%

Inventories

83,922

94,881

-11.6%

113,009

-25.7%

Investment property, of which:

110,831

118,187

-6.2%

113,829

-2.6%

       Land bank

68,789

83,967

-18.1%

72,251

-4.8%

       Commercial real estate

42,042

34,220

22.9%

41,578

1.1%

Property and equipment

9,110

1,528

496.2%

7,050

29.2%

Other assets

17,557

10,147

73.0%

20,839

-15.7%

Total assets

295,722

300,177

-1.5%

372,228

-20.6%







Amounts due to credit institutions

38,912

37,118

4.8%

42,818

-9.1%

Debt securities issued

62,278

46,771

33.2%

103,077

-39.6%

Deferred income

53,670

87,465

-38.6%

77,925

-31.1%

Other liabilities

7,657

18,817

-59.3%

14,725

-48.0%

Total liabilities

162,517

190,171

-14.5%

238,545

-31.9%







Share capital

4,180

4,180

0.0%

4,180

0.0%

Additional paid-in capital

86,227

83,612

3.1%

85,467

0.9%

Other reserves

13,469

-

100%

15,538

-13.3%

Retained earnings

29,329

22,214

32.0%

28,498

2.9%

Total equity

133,205

110,006

21.1%

133,683

-0.4%

Total liabilities and equity

295,722

300,177

-1.5%

372,228

-20.6%

 

§ m2 Real Estate has a solid and well managed balance sheet. As of 31 March 2017, total assets were GEL 295.7mln (down 1.5% y-o-y and down 20.6% q-o-q), constituting 16.4% cash, 6.0% prepayments, 28.4% inventories (apartments in development), 37.5% investment property (land bank and commercial real estate),  and 11.7% all other assets. Borrowings, which consist of debt raised from Development Financial Institutions ("DFIs") and debt securities issued in the local market, represent 34.2% of the total balance sheet. 

§ m2 Real Estate currently has a land bank on its balance sheet with a total value of GEL 68.8mln. We do not expect the land bank to grow, as m2 Real Estate's strategy is to utilise its existing land plots within 3-4 years and, in parallel, start development of third-party land

               

 

 


SELECTED FINANCIAL INFORMATION

INCOME STATEMENT

BGEO Consolidated


Banking Business



Investment Business


Eliminations

GEL thousands, unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q


1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q


1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q


1Q17

1Q16

4Q16






















 Banking interest income 

265,662

224,810

18.2%

256,457

3.6%


267,521

226,217

18.3%

258,414

3.5%


-

-

-

-

-


(1,859)

(1,407)

(1,957)

 Banking interest expense 

(104,996)

(95,958)

9.4%

(101,054)

3.9%


(105,874)

(95,998)

10.3%

(100,043)

5.8%


-

-

-

-

-


878

40

(1,011)

 Net banking interest income 

160,666

128,852

24.7%

155,403

3.4%


161,647

130,219

24.1%

158,371

2.1%


-

-

-

-

-


(981)

(1,367)

(2,968)

 Fee and commission income 

43,267

38,149

13.4%

48,588

-11.0%


43,663

38,484

13.5%

50,135

-12.9%


-

-

-

-

-


(396)

(335)

(1,547)

 Fee and commission expense 

(13,382)

(10,335)

29.5%

(13,263)

0.9%


(13,528)

(10,469)

29.2%

(13,490)

0.3%


-

-

-

-

-


146

134

227

 Net fee and commission income 

29,885

27,814

7.4%

35,325

-15.4%


30,135

28,015

7.6%

36,645

-17.8%


-

-

-

-

-


(250)

(201)

(1,320)

 Net banking foreign currency gain

19,274

17,390

10.8%

28,516

-32.4%


19,274

17,390

10.8%

28,516

-32.4%


-

-

-

-

-


-

-

-

 Net other banking income

3,006

2,867

4.8%

2,199

36.7%


3,095

3,168

-2.3%

2,506

23.5%


-

-

-

-

-


(89)

(301)

(307)

 Net insurance premiums earned

25,795

21,824

18.2%

26,046

-1.0%


12,847

9,550

34.5%

11,559

11.1%


13,872

12,924

7.3%

15,318

-9.4%


(924)

(650)

(831)

 Net insurance claims incurred

(15,572)

(15,408)

1.1%

(16,875)

-7.7%


(5,637)

(4,207)

34.0%

(5,114)

10.2%


(9,935)

(11,201)

-11.3%

(11,761)

-15.5%


-

-

-

 Gross insurance profit 

10,223

6,416

59.3%

9,171

11.5%


7,210

5,343

34.9%

6,445

11.9%


3,937

1,723

128.5%

3,557

10.7%


(924)

(650)

(831)

 Healthcare and pharma revenue

172,131

58,348

195.0%

118,799

44.9%


-

-

-

-

-


172,131

58,348

195.0%

118,799

44.9%


-

-

-

 Cost of healthcare and pharma services

(119,789)

(32,057)

NMF

(76,578)

56.4%


-

-

-

-

-


(119,789)

(32,057)

NMF

(76,578)

56.4%


-

-

-

 Gross healthcare and pharma profit 

52,342

26,291

99.1%

42,221

24.0%


-

-

-

-

-


52,342

26,291

99.1%

42,221

24.0%


-

-

-

 Real estate revenue

19,893

28,764

-30.8%

9,813

102.7%


-

-

-

-

-


20,202

28,764

-29.8%

10,507

92.3%


(309)

-

(694)

 Cost of real estate

(17,192)

(22,786)

-24.6%

(8,474)

102.9%


-

-

-

-

-


(17,192)

(22,786)

-24.6%

(8,474)

102.9%


-

-

-

 Gross real estate profit 

2,701

5,978

-54.8%

1,339

101.7%


-

-

-

-

-


3,010

5,978

-49.6%

2,033

48.1%


(309)

-

(694)

Utility revenue

27,153

-

NMF

31,608

-14.1%


-

-

-

-

-


27,236

-

NMF

31,679

-14.0%


(83)

-

(71)

Cost of utility

(9,709)

-

NMF

(10,008)

-3.0%


-

-

-

-

-


(9,709)

-

NMF

(10,008)

-3.0%


-

-

-

Gross utility profit

17,444

-

NMF

21,600

-19.2%


-

-

-

-

-


17,527

-

NMF

21,671

-19.1%


(83)

-

(71)

 Gross other investment profit 

3,993

3,606

10.7%

9,697

-58.8%


-

-

-

-

-


3,981

3,675

8.3%

9,391

-57.6%


12

(69)

306

 Revenue 

299,534

219,214

36.6%

305,471

-1.9%


221,361

184,135

20.2%

232,483

-4.8%


80,797

37,667

114.5%

78,873

2.4%


(2,624)

(2,588)

(5,885)

 Salaries and other employee benefits

(67,531)

(47,413)

42.4%

(64,754)

4.3%


(46,257)

(39,806)

16.2%

(50,052)

-7.6%


(22,051)

(8,250)

167.3%

(15,459)

42.6%


777

643

757

 Administrative expenses

(42,733)

(25,016)

70.8%

(40,729)

4.9%


(23,219)

(20,058)

15.8%

(25,714)

-9.7%


(20,151)

(5,346)

NMF

(16,132)

24.9%


637

388

1,117

 Banking depreciation and amortisation

(9,759)

(9,138)

6.8%

(9,841)

-0.8%


(9,759)

(9,138)

6.8%

(9,841)

-0.8%


-

-

-

-

-


-

-

-

 Other operating expenses 

(951)

(1,675)

-43.2%

(2,034)

-53.2%


(761)

(861)

-11.6%

(1,462)

-47.9%


(190)

(814)

-76.7%

(572)

-66.8%


-

-

-

 Operating expenses 

(120,974)

(83,242)

45.3%

(117,358)

3.1%


(79,996)

(69,863)

14.5%

(87,069)

-8.1%


(42,392)

(14,410)

194.2%

(32,163)

31.8%


1,414

1,031

1,874

Operating income before cost of credit risk / EBITDA         

178,560

135,972

31.3%

188,113

-5.1%


141,365

114,272

23.7%

145,414

-2.8%


38,405

23,257

65.1%

46,710

-17.8%


(1,210)

(1,557)

(4,011)

 Profit from associates

514

1,866

-72.5%

254

102.4%


514

-

NMF

-

NMF


-

1,866

-100.0%

254

-100.0%


-

-

-

Depreciation and amortisation of investment business

(11,236)

(4,910)

128.8%

(9,615)

16.9%


-

-

-

-

-


(11,236)

(4,910)

128.8%

(9,615)

16.9%


-

-

-

 Net foreign currency gain from investment business

6,955

(766)

NMF

(6,065)

NMF


-

-

-

-

-


6,955

(766)

NMF

(6,065)

NMF


-

-

-

 Interest income from investment business 

1,420

956

48.5%

1,551

-8.4%


-

-

-

-

-


2,298

964

138.4%

540

NMF


(878)

(8)

1,011

 Interest expense from investment business

(10,309)

(1,382)

NMF

(8,673)

18.9%


-

-

-

-

-


(12,397)

(2,947)

NMF

(11,673)

6.2%


2,088

1,565

3,000

 Operating income before cost of credit risk 

165,904

131,736

25.9%

165,565

0.2%


141,879

114,272

24.2%

145,414

-2.4%


24,025

17,464

37.6%

20,151

19.2%


-

-

-

Impairment charge on loans to customers 

(41,341)

(32,218)

28.3%

(69,920)

-40.9%


(41,341)

(32,218)

28.3%

(69,920)

-40.9%


-

-

-

-

-


-

-

-

Impairment charge on finance lease receivables

(139)

(513)

-72.9%

3,124

NMF


(139)

(513)

-72.9%

3,124

NMF


-

-

-

-

-


-

-

-

Impairment charge on other assets and provisions

(7,765)

(3,412)

127.6%

(3,171)

144.9%


(6,782)

(2,281)

197.3%

(4,077)

66.3%


(983)

(1,131)

-13.1%

906

NMF


-

-

-

 Cost of credit risk 

(49,245)

(36,143)

36.3%

(69,967)

-29.6%


(48,262)

(35,012)

37.8%

(70,873)

-31.9%


(983)

(1,131)

-13.1%

906

NMF


-

-

-

 Net operating income before non-recurring items 

116,659

95,593

22.0%

95,598

22.0%


93,617

79,260

18.1%

74,541

25.6%


23,042

16,333

41.1%

21,057

9.4%


-

-

-

 Net non-recurring items 

(3,371)

1,366

NMF

698

NMF


(1,695)

(1,419)

19.5%

(1,056)

60.5%


(1,676)

2,785

NMF

1,754

NMF


-

-

-

 Profit before income tax 

113,288

96,959

16.8%

96,296

17.6%


91,922

77,841

18.1%

73,485

25.1%


21,366

19,118

11.8%

22,811

-6.3%


-

-

-

 Income tax (expense) benefit

(5,115)

(9,912)

-48.4%

(7,553)

-32.3%


(5,045)

(8,178)

-38.3%

1,830

NMF


(70)

(1,734)

-96.0%

(9,383)

-99.3%


-

-

-

 Profit

108,173

87,047

24.3%

88,743

21.9%


86,877

69,663

24.7%

75,315

15.4%


21,296

17,384

22.5%

13,428

58.6%


-

-

-

 Attributable to:






















- shareholders of BGEO

100,431

80,836

24.2%

87,136

15.3%


86,390

68,620

25.9%

75,871

13.9%


14,041

12,216

14.9%

11,265

24.6%


-

-

-

- non-controlling interests

7,742

6,211

24.6%

1,607

381.8%


487

1,043

-53.3%

(556)

NMF


7,255

5,168

40.4%

2,163

235.4%


-

-

-























Earnings per share basic

2.64

2.10

25.7%

2.29

15.3%

















Earnings per share diluted

2.55

2.10

21.4%

2.21

15.4%

















 

 

 

 

 

 

 

BALANCE SHEET

BGEO Consolidated


Banking Business


Investment Business


Eliminations

GEL thousands, unless otherwise noted

Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q


Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q


Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q


Mar-17

Mar-16

Change

y-o-y























Cash and cash equivalents

1,285,483

1,359,219

-5.4%

1,573,610

-18.3%


1,198,457

1,330,094

-9.9%

1,482,106

-19.1%


353,485

288,512

22.5%

397,620

-11.1%


(266,459)

(259,387)

(306,116)

Amounts due from credit institutions

1,090,111

764,435

42.6%

1,054,983

3.3%


973,787

720,442

35.2%

943,091

3.3%


146,798

47,936

206.2%

153,497

-4.4%


(30,474)

(3,943)

(41,605)

Investment securities

1,231,332

825,045

49.2%

1,286,003

-4.3%


1,231,993

825,821

49.2%

1,287,292

-4.3%


3,306

1,154

186.5%

3,075

7.5%


(3,967)

(1,930)

(4,364)

Loans to customers and finance lease receivables

6,408,711

5,359,718

19.6%

6,648,482

-3.6%


6,470,771

5,394,565

19.9%

6,681,672

-3.2%


-

-

-

-

-


(62,060)

(34,847)

(33,190)

Accounts receivable and other loans

143,417

84,715

69.3%

128,506

11.6%


4,081

5,144

-20.7%

56,495

-92.8%


139,787

81,955

70.6%

125,964

11.0%


(451)

(2,384)

(53,953)

Insurance premiums receivable

51,595

54,879

-6.0%

46,423

11.1%


22,751

16,567

37.3%

24,152

-5.8%


29,773

39,347

-24.3%

24,284

22.6%


(929)

(1,035)

(2,013)

Prepayments

101,297

67,633

49.8%

76,277

32.8%


28,468

24,649

15.5%

19,607

45.2%


73,055

42,984

70.0%

57,270

27.6%


(226)

-

(600)

Inventories

205,132

125,466

63.5%

188,344

8.9%


9,395

9,686

-3.0%

9,009

4.3%


195,737

115,780

69.1%

179,335

9.1%


-

-

-

Investment property

285,996

254,224

12.5%

288,227

-0.8%


155,463

134,310

15.7%

153,442

1.3%


130,533

119,914

8.9%

134,785

-3.2%


-

-

-

Property and equipment

1,388,938

835,651

66.2%

1,323,870

4.9%


342,495

333,243

2.8%

339,442

0.9%


1,046,443

502,408

108.3%

984,428

6.3%


-

-

-

Goodwill

157,824

73,192

115.6%

106,986

47.5%


49,592

49,592

0.0%

49,592

0.0%


108,232

23,600

358.6%

57,394

88.6%


-

-

-

Intangible assets

63,121

43,074

46.5%

58,907

7.2%


43,851

37,609

16.6%

41,350

6.0%


19,270

5,465

252.6%

17,557

9.8%


-

-

-

Income tax assets

11,277

36,712

-69.3%

24,043

-53.1%


8,214

27,321

-69.9%

20,638

-60.2%


3,063

9,391

-67.4%

3,405

-10.0%


-

-

-

Other assets

182,290

193,626

-5.9%

184,792

-1.4%


139,440

121,012

15.2%

140,338

-0.6%


47,809

75,515

-36.7%

56,312

-15.1%


(4,959)

(2,901)

(11,858)

Total assets

12,606,524

10,077,589

25.1%

12,989,453

-2.9%


10,678,758

9,030,055

18.3%

11,248,226

-5.1%


2,297,291

1,353,961

69.7%

2,194,926

4.7%


(369,525)

(306,427)

(453,699)

Client deposits and notes

5,294,462

4,698,558

12.7%

5,382,698

-1.6%


5,591,720

4,962,432

12.7%

5,730,419

-2.4%


-

-

-

-

-


(297,258)

(263,874)

(347,721)

Amounts due to credit institutions

3,133,422

1,719,920

82.2%

3,470,091

-9.7%


2,662,909

1,630,299

63.3%

3,067,651

-13.2%


532,573

124,468

327.9%

435,630

22.3%


(62,060)

(34,847)

(33,190)

Debt securities issued

1,157,082

1,033,758

11.9%

1,255,643

-7.8%


827,024

957,474

-13.6%

858,037

-3.6%


338,292

81,116

317.0%

407,242

-16.9%


(8,234)

(4,832)

(9,636)

Accruals and deferred income

131,372

142,766

-8.0%

130,319

0.8%


30,307

25,685

18.0%

25,242

20.1%


101,065

117,081

-13.7%

158,387

-36.2%


-

-

(53,310)

Insurance contracts liabilities

71,620

71,565

0.1%

67,871

5.5%


43,607

34,630

25.9%

41,542

5.0%


28,013

36,935

-24.2%

26,329

6.4%


-

-

-

Income tax liabilities

17,228

128,667

-86.6%

27,791

-38.0%


16,219

93,765

-82.7%

23,937

-32.2%


1,009

34,902

-97.1%

3,854

-73.8%


-

-

-

Other liabilities

348,585

131,506

165.1%

231,622

50.5%


71,391

47,520

50.2%

72,547

-1.6%


279,167

86,860

221.4%

168,917

65.3%


(1,973)

(2,874)

(9,842)

Total liabilities

10,153,771

7,926,740

28.1%

10,566,035

-3.9%


9,243,177

7,751,805

19.2%

9,819,375

-5.9%


1,280,119

481,362

165.9%

1,200,359

6.6%


(369,525)

(306,427)

(453,699)

Share capital

1,153

1,154

-0.1%

1,154

-0.1%


1,153

1,154

-0.1%

1,154

-0.1%


-

-

-

-

-


-

-

-

Additional paid-in capital

177,793

240,962

-26.2%

183,872

-3.3%


38,474

101,467

-62.1%

45,072

-14.6%


139,319

139,495

-0.1%

138,800

0.4%


-

-

-

Treasury shares

(40)

(29)

37.9%

(54)

-25.9%


(40)

(29)

37.9%

(54)

-25.9%


-

-

-

-

-


-

-

-

Other reserves

84,162

42,101

99.9%

102,269

-17.7%


(27,031)

(55,166)

-51.0%

(31,116)

-13.1%


111,193

97,267

14.3%

133,385

-16.6%


-

-

-

Retained earnings

1,945,830

1,650,094

17.9%

1,878,945

3.6%


1,416,885

1,212,492

16.9%

1,393,117

1.7%


528,945

437,602

20.9%

485,828

8.9%


-

-

-

Total equity attributable to shareholders of the Group

2,208,898

1,934,282

14.2%

2,166,186

2.0%


1,429,441

1,259,918

13.5%

1,408,173

1.5%


779,457

674,364

15.6%

758,013

2.8%


-

-

-

Non-controlling interests

243,855

216,567

12.6%

257,232

-5.2%


6,140

18,332

-66.5%

20,678

-70.3%


237,715

198,235

19.9%

236,554

0.5%


-

-

-

Total equity

2,452,753

2,150,849

14.0%

2,423,418

1.2%


1,435,581

1,278,250

12.3%

1,428,851

0.5%


1,017,172

872,599

16.6%

994,567

2.3%


-

-

-

Total liabilities and equity

12,606,524

10,077,589

25.1%

12,989,453

-2.9%


10,678,758

9,030,055

18.3%

11,248,226

-5.1%


2,297,291

1,353,961

69.7%

2,194,926

4.7%


(369,525)

(306,427)

(453,699)

Book value per share

58.00

50.21

15.5%

57.52

0.8%

















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

GEORGIA HEALTHCARE GROUP

 

 

INCOME STATEMENT

Healthcare services

Medical insurance

Pharma


Eliminations

GHG

 























GEL thousands; unless otherwise noted

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

 

1Q17

 

4Q16

Change

q-o-q

1Q17

1Q16

 

4Q16

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q























Revenue, gross

66,528

60,451

10.1%

67,604

-1.6%

13,965

13,830

1.0%

16,312

-14.4%

111,399

56,586

96.9%

(5,265)

(1,705)

(4,471)

186,627

72,576

157.1%

136,031

37.2%

Corrections & rebates

(623)

(410)

52.0%

(790)

-21.1%

-

-

-

-

-

-

-

-

-

-

-

(623)

(410)

52.0%

(790)

-21.1%

Revenue, net

65,905

60,041

9.8%

66,814

-1.4%

13,965

13,830

1.0%

16,312

-14.4%

111,399

56,586

96.9%

(5,265)

(1,705)

(4,471)

186,004

72,166

157.7%

135,241

37.5%

Costs of services

(37,957)

(32,998)

15.0%

(34,802)

9.1%

(12,734)

(12,847)

-0.9%

(14,997)

-15.1%

(84,408)

(44,498)

89.7%

5,173

1,694

4,671

(129,926)

(44,151)

194.3%

(89,626)

45.0%

Cost of salaries and other employee benefits

(23,095)

(19,752)

16.9%

(21,042)

9.8%

-

-

-

-

-

-

-

-

855

565

1,534

(22,240)

(19,187)

15.9%

(19,508)

14.0%

Cost of materials and supplies

(10,647)

(9,613)

10.8%

(10,616)

0.3%

-

-

-

-

-

-

-

-

1,363

275

761

(9,284)

(9,338)

-0.6%

(9,855)

-5.8%

Cost of medical service providers

(372)

(428)

-13.1%

(550)

-32.4%

-

-

-

-

-

-

-

-

14

12

39

(358)

(416)

-13.9%

(511)

-29.9%

Cost of utilities and other

(3,843)

(3,205)

19.9%

(2,594)

48.1%

-

-

-

-

-

-

-

-

142

92

189

(3,701)

(3,113)

18.9%

(2,405)

53.9%

Net insurance claims incurred

-

-

-

-

-

(11,812)

(11,953)

-1.2%

(13,911)

-15.1%

-

-

-

2,799

750

2,148

(9,013)

(11,203)

-19.5%

(11,763)

-23.4%

Agents, brokers and employee commissions

-

-

-

-

-

(922)

(894)

3.1%

(1,086)

-15.1%

-

-

-

-

-

-

(922)

(894)

3.1%

(1,086)

-15.1%

Cost of pharma - wholesale

-

-

-

-

-

-

-

-

-

-

(22,496)

(13,700)

64.2%

-

-

-

(22,496)

-

-

(13,700)

64.2%

Cost of pharma - retail

-

-

-

-

-

-

-

-

-

-

(61,912)

(30,797)

101.0%

-

-

-

(61,912)

-

-

(30,797)

101.0%

Gross profit

27,948

27,043

3.3%

32,012

-12.7%

1,231

983

25.2%

1,315

-6.4%

26,991

12,088

123.3%

(92)

(11)

200

56,078

28,015

100.2%

45,615

22.9%

Salaries and other employee benefits

(7,179)

(6,115)

17.4%

(6,676)

7.5%

(1,048)

(819)

28.0%

(1,320)

-20.6%

(9,616)

(4,561)

110.8%

116

11

(200)

(17,728)

(6,923)

156.1%

(12,757)

39.0%

General and administrative expenses

(4,082)

(2,483)

64.4%

(4,212)

-3.1%

(507)

(719)

-29.5%

(580)

-12.6%

(8,762)

(4,678)

87.3%

-

-

-

(13,352)

(3,202)

317.0%

(9,470)

41.0%

Impairment of healthcare services, insurance premiums and other receivables

(980)

(858)

14.2%

145

NMF

(113)

(122)

-7.4%

(89)

27.0%

(28)

-

-

-

-

-

(1,121)

(980)

14.4%

56

NMF

Other operating income

1,112

241

361.4%

269

313.4%

(7)

(21)

-66.7%

31

NMF

101

545

-81.5%

(24)

-

-

1,182

220

437.3%

845

39.9%

EBITDA

16,819

17,828

-5.7%

21,538

-21.9%

(444)

(698)

-36.4%

(643)

-30.9%

8,686

3,394

155.9%

-

-

-

25,059

17,129

46.3%

24,289

3.2%

EBITDA margin

25.3%

29.5%


31.9%


-3.2%

-5.0%


-3.9%


7.8%

6.0%

-

-

-

-

13.4%

23.6%


17.9%


Depreciation and amortisation

(4,939)

(4,261)

15.9%

(5,292)

-6.7%

(222)

(204)

8.8%

(226)

-1.8%

(711)

202

NMF

-

-

-

(5,872)

(4,465)

31.5%

(5,316)

10.5%

Net interest (expense) income

(4,116)

(2,259)

82.2%

(3,815)

7.9%

(210)

603

NMF

(242)

-13.2%

(2,793)

(548)

409.7%

-

-

(168)

(7,119)

(1,656)

329.9%

(4,773)

49.2%

Net gain (loss) from foreign currencies

695

(411)

NMF

(2,053)

NMF

(12)

151

NMF

(189)

-93.7%

2,095

(928)

- NMF

-

-

-

2,778

(260)

NMF

(3,170)

NMF

Net non-recurring (expense) income

(1,276)

1,968

NMF

2,704

NMF

(200)

-

-

(704)

-71.6%

(316)

(17)

NMF

-

-

-

(1,792)

1,968

NMF

1,982

NMF

Profit before income tax expense

7,183

12,865

-44.2%

13,082

-45.1%

(1,088)

(149)

NMF

(2,004)

-45.7%

6,961

2,103

231.0%

-

-

(168)

13,054

12,716

2.7%

13,012

0.3%

Income tax (expense) benefit

(11)

(712)

NMF

(5,439)

NMF

-

19

NMF

(845)

NMF

(8)

(398)

NMF

-

-

-

(19)

(693)

NMF

(6,682)

NMF

of which: Deferred tax adjustments

-

-

-

(4,321)

-

-

-

-

(798)

-


(200)

-

-

-

-

-

-

-

(5,319)

-

Profit for the period

7,172

12,153

-41.0%

7,643

-6.2%

(1,088)

(130)

NMF

(2,849)

-61.8%

6,953

1,705

307.8%

-

-

(168)

13,035

12,023

8.4%

6,330

105.9%























Attributable to:






















  - shareholders of the Company

5,764

10,051

-42.7%

6,714

-14.1%

(1,088)

(130)

NMF

(2,849)

-61.8%

4,157

1,705

143.8%

-

-

(168)

8,832

9,921

-11.0%

5,401

63.5%

  - non-controlling interests

1,408

2,102

-33.0%

929

51.6%

-

-

-

-

-

2,796

-

-

-

-

-

4,203

2,102

100.0%

929

352.4%

of which: Deferred tax adjustments

-

-

-

(516)

-

-

-

-

-

-

-

-


-

-

-

-

-

-

(516)

-

 

 

 

 

 

 


 

P&C INSURANCE (ALDAGI)

 

INCOME STATEMENT, HIGHLIGHTS

 


1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

GEL thousands, unless otherwise stated














 Net banking interest income 


767

725

5.8%

761

0.8%

 Net fee and commission income 


99

100

-1.0%

128

-22.7%

 Net banking foreign currency (loss) gain


(425)

(47)

NMF

809

NMF

 Net other banking income


223

131

70.2%

495

-54.9%

 Gross insurance profit 


7,122

5,665

25.7%

6,477

10.0%

 Revenue 


7,786

6,574

18.4%

8,670

-10.2%

 Operating expenses 


(3,157)

(2,767)

14.1%

(3,641)

-13.3%

 Operating income before cost of credit risk and non-recurring items


4,629

3,807

21.6%

5,029

-8.0%

 Cost of credit risk 


(242)

(173)

39.9%

(265)

-8.7%

 Profit before income tax 


4,387

3,634

20.7%

4,764

-7.9%

 Income tax (expense)


(637)

(545)

16.9%

(953)

-33.2%

 Profit 


3,750

3,089

21.4%

3,811

-1.6%

 

 

 

 

 

BELARUSKY NARODNY BANK (BNB)

 

INCOME STATEMENT, HIGHLIGHTS

 

1Q17

1Q16

Change

y-o-y

4Q16

Change

q-o-q

GEL thousands, unless otherwise stated












 Net banking interest income 

8,702

7,903

10.1%

8,043

8.2%

 Net fee and commission income 

2,350

1,862

26.2%

1,993

17.9%

 Net banking foreign currency gain

1,798

2,481

-27.5%

2,696

-33.3%

 Net other banking income (loss)

109

167

-34.7%

(1,064)

NMF

 Revenue 

12,959

12,413

4.4%

11,668

11.1%

 Operating expenses 

(6,400)

(4,490)

42.5%

(6,483)

-1.3%

 Operating income before cost of credit risk

6,559

7,923

-17.2%

5,185

26.5%

 Cost of credit risk 

(5,634)

(2,516)

123.9%

(9,163)

-38.5%

 Net non-recurring items 

(57)

(3)

NMF

(1,402)

-95.9%

 Profit (loss) before income tax 

868

5,404

-83.9%

(5,380)

NMF

 Income tax (expense) benefit

(199)

(1,144)

-82.6%

1,289

NMF

 Profit (loss)

669

4,260

-84.3%

(4,091)

NMF

 

 

BALANCE SHEET, HIGHLIGHTS

Mar-17

Mar-16

Change

y-o-y

Dec-16

Change

q-o-q

GEL thousands, unless otherwise stated












Cash and cash equivalents

66,619

93,904

-29.1%

70,211

-5.1%

Amounts due from credit institutions

3,981

3,986

-0.1%

3,560

11.8%

Loans to customers and finance lease receivables

335,538

319,740

4.9%

362,100

-7.3%

Other assets

126,727

49,825

154.3%

113,261

11.9%

Total assets

532,865

467,455

14.0%

549,132

-3.0%

Client deposits and notes

235,877

230,848

2.2%

233,501

1.0%

Amounts due to credit institutions

193,494

139,801

38.4%

212,495

-8.9%

Debt securities issued

25,512

15,906

60.4%

24,126

5.7%

Other liabilities

5,254

5,409

-2.9%

5,202

1.0%

Total liabilities

460,137

391,964

17.4%

475,324

-3.2%

Total equity attributable to shareholders of the Group

72,728

62,908

15.6%

59,205

22.8%

Non-controlling interests

-

12,583

-100.0%

14,603

-100.0%

Total equity

72,728

75,491

-3.7%

73,808

-1.5%

Total liabilities and equity

532,865

467,455

14.0%

549,132

-3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BANKING BUSINESS KEY RATIOS

1Q17

1Q16

4Q16

 

Profitability




 

ROAA, Annualised

3.2%

3.0%

2.9%

 

ROAE, Annualised

23.5%

21.2%

20.1%

 

RB ROAE

27.2%

24.3%

35.8%

 

CIB ROAE

18.3%

17.6%

6.1%

 

Net Interest Margin, Annualised

7.4%

7.5%

7.6%

 

RB NIM

8.8%

9.2%

9.3%

 

CIB NIM

3.4%

3.7%

3.6%

 

Loan Yield, Annualised

14.0%

14.4%

14.4%

 

RB Loan Yield

15.9%

17.4%

16.4%

 

CIB Loan Yield

10.7%

10.3%

11.1%

 

Liquid Assets Yield, Annualised

3.4%

3.1%

3.3%

 

Cost of Funds, Annualised

4.6%

5.0%

4.6%

 

Cost of Client Deposits and Notes, Annualised

3.5%

4.3%

3.5%

 

RB Cost of Client Deposits and Notes

3.0%

3.5%

3.1%

 

CIB Cost of Client Deposits and Notes

3.9%

4.5%

3.6%

 

Cost of Amounts Due to Credit Institutions, Annualised

6.3%

6.0%

6.4%

 

Cost of Debt Securities Issued

6.0%

7.2%

6.1%

 

Operating Leverage, Y-O-Y

5.7%

-3.3%

-6.8%

 

Operating Leverage, Q-O-Q

3.3%

-6.6%

-0.3%

 

Efficiency




 

Cost / Income

36.1%

37.9%

37.5%

 

RB Cost / Income

37.6%

43.3%

38.8%

 

CIB Cost / Income

30.1%

27.0%

28.7%

 

Liquidity




 

NBG Liquidity Ratio

37.4%

47.3%

37.7%

 

Liquid Assets To Total Liabilities

36.8%

37.1%

37.8%

 

Net Loans To Client Deposits and Notes

115.7%

108.7%

116.6%

 

Net Loans To Client Deposits and Notes + DFIs

96.1%

91.6%

95.3%

 

Leverage (Times)

                     6.4

                    6.1

                    6.9

 

Asset Quality:




 

NPLs (in GEL)

             311,940

            251,959

            294,787

 

NPLs To Gross Loans To Clients

4.6%

4.5%

4.2%

 

NPL Coverage Ratio

87.1%

86.0%

86.7%

 

NPL Coverage Ratio, Adjusted for discounted value of collateral

126.9%

122.6%

132.1%

 

Cost of Risk, Annualised

2.4%

2.3%

4.2%

 

RB Cost of Risk

3.4%

2.5%

2.0%

 

CIB Cost of Risk

0.3%

2.1%

6.6%

 

Capital Adequacy:




 

New NBG (Basel 2/3) Tier I Capital Adequacy Ratio9

11.2%

10.1%

10.1%

 

New NBG (Basel 2/3) Total Capital Adequacy Ratio9

16.3%

15.8%

15.4%

 

Selected Operating Data:




 

Total Assets Per FTE, BOG Standalone

                 2,060

                1,972

                2,242

 

Number Of Active Branches, Of Which:

                    279

                   266

                   278

 

 - Express Branches (including Metro)

                  130

                 114

                 128

 

 - Bank of Georgia Branches

                  138

                 144

                 139

 

 - Solo Lounges

                    11

                      8

                    11

 

Number Of ATMs

                    813

                   753

                   801

 

Number Of Cards Outstanding, Of Which:

          2,099,488

         1,943,175

         2,056,258

 

 - Debit cards

       1,307,135

      1,171,454

      1,255,637

 

 - Credit cards

          792,353

         771,721

         800,621

 

Number Of POS Terminals

               10,774

                8,175

              10,357

 

 

FX Rates:




 

GEL/US$ exchange rate (period-end)

             2.4452

2.3679             

             2.6468

 

GEL/GBP exchange rate (period-end)

             3.0418

             3.4110             

3.2579

 

 


Mar-17

Mar-16

Dec-16

Full Time Employees, Group, Of Which:

24,091

16,086

22,080

Total Banking Business Companies, of which:

6,898

6,183

6,720

 - Full Time Employees, BOG Standalone

5,183

4,580

5,016

 - Full Time Employees, BNB

622

562

611

 - Full Time Employees, Aldagi

293

259

289

 - Full Time Employees, BB other

800

782

804

Total Investment Business Companies, of which:

17,193

9,903

15,360

 - Full Time Employees, Georgia Healthcare Group

14,510

9,675

12,720

 - Full Time Employees, GGU

2,373

-

2,379

 - Full Time Employees, m2

84

59

80

 - Full Time Employees, IB Other

226

169

181

 

Shares Outstanding

Mar-17

Mar-16

Dec-16

Ordinary Shares Outstanding

38,085,220

38,523,409

37,657,229

Treasury Shares Outstanding

1,384,100

976,911

1,843,091

Total Shares Issued

39,469,320

39,500,320

39,500,320

 

 

 

 

9Capital adequacy ratios include GEL 99.5mln distributed as dividend from the Bank to the holding level on 29 December 2016. These funds are earmarked for regular dividends in respect of the 2016 financial year and will be paid on 7 July 2017, subject to approval by the shareholders at BGEO's AGM on 1 June 2017. Excluding this amount, NBG (Basel 2/3) Tier I and Total CAR would be 10.1% and 15.2%, respectively, at 31 March 2017 and 9.1% and 14.4%, respectively, at 31 December 2016

 

Annex:

 

Glossary


1.     Return on average total assets (ROAA) equals Profit for the period divided by monthly average total assets for the same period;

2.     Return on average total equity (ROAE) equals Profit for the period attributable to shareholders of BGEO divided by monthly average equity attributable to shareholders of BGEO for the same period;

3.     Net Interest Margin (NIM) equals Net Banking Interest Income of the period divided by monthly Average Interest Earning Assets Excluding Cash for the same period; Interest Earning Assets Excluding Cash comprise: Amounts Due From Credit Institutions, Investment Securities (but excluding corporate shares) and net Loans To Customers And Finance Lease Receivables;

4.     Loan Yield equals Banking Interest Income From Loans To Customers And Finance Lease Receivables divided by monthly Average Gross Loans To Customers And Finance Lease Receivables;

5.     Cost of Funds equals banking interest expense of the period divided by monthly average interest bearing liabilities; interest bearing liabilities include: amounts due to credit institutions, client deposits and notes, and debt securities issued;

6.     Operating Leverage equals percentage change in revenue less percentage change in operating expenses;

7.     Cost / Income Ratio equals operating expenses divided by revenue;

8.     NBG Liquidity Ratio equals daily average liquid assets (as defined by NBG) during the month divided by daily average liabilities (as defined by NBG) during the month;

9.     Liquid assets include: cash and cash equivalents, amounts due from credit institutions and investment securities;

10.   Leverage (Times) equals total liabilities divided by total equity;

11.   NPL Coverage Ratio equals allowance for impairment of loans and finance lease receivables divided by NPLs;

12.   NPL Coverage Ratio adjusted for discounted value of collateral equals allowance for impairment of loans and finance lease receivables divided by NPLs (discounted value of collateral is added back to allowance for impairment)

13.   Cost of Risk equals impairment charge for loans to customers and finance lease receivables for the period divided by monthly average gross loans to customers and finance lease receivables over the same period;

14.   New NBG (Basel 2/3) Tier I Capital Adequacy ratio equals Tier I Capital divided by total risk weighted assets, both calculated in accordance with the requirements the National Bank of Georgia instructions;

15.   New NBG (Basel 2/3) Total Capital Adequacy ratio equals total capital divided by total risk weighted assets, both calculated in accordance with the requirements of the National Bank of Georgia instructions;

16.   NMF - Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY INFORMATION

 

BGEO Group PLC

 

Registered Address

84 Brook Street

London W1K5EH

United Kingdom

www.BGEO.com

Registered under number 7811410 in England and Wales

Incorporation date: 14 October2011

 

Stock Listing

London Stock Exchange PLC's Main Market for listed securities

Ticker: "BGEO.LN"

 

Contact Information

BGEO Group PLC Investor Relations

Telephone: +44(0)2031784052; +995322444444 (ext. 3979)

E-mail: ir@BGEO.com

www.BGEO.com

 

Auditors

Ernst & Young LLP

25 Churchill Place

Canary Wharf

London E14 5EY

United Kingdom

 

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgewater Road

Bristol BS13 8AE

United Kingdom

 

Please note that Investor Centre is a free, secure online service run by our Registrar, Computershare, giving you convenient access to information on your shareholdings.

Investor Centre Web Address - www.investorcentre.co.uk

Investor Centre Shareholder Helpline - +44 (0)370 873 5866

 

Share price information

BGEO shareholders can access both the latest and historical prices via our website, www.BGEO.com

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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