- Profits reflect strong local economy
- Increased dividend and buyback please
- Shares surpass their previous peak
Shares in central European lender Bank of Georgia (BGEO) jumped 10% to a new high of £35.95, their highest level since coming to market in 2006, after the firm posted a 38% increase in first-half profits, a 65% increase in the interim dividend and a buyback.
Investors who purchased the shares three years ago would have almost quadrupled their money, making the FTSE 250-listed stock one of the best performers since the pandemic.
STRONG LOAN GROWTH
The Tbilisi-based bank reported an impressive 39% surge in net interest income for the six months to June to 768 million lari (£230 million) and a 44% increase in net fee income to 201 million lari (£60 million).
Foreign currency gains dipped by 10% to 170 million lari (£51 million) but ‘net other income’ increased 10-fold to 91 million lari (£27 million) so operating profits for the half were up 38% at 1.23 billion lari (£369 million).
Although the bank put aside 80 million lari (£24 million) for risky loans, it still posted a 41% increase in net profits and a 44% increase in earnings per share and registered a staggering 31% return on average equity.
‘The macroeconomic backdrop has been strong, with the Georgian economy growing at 7.6% year-on-year during the first six months of the year driven by robust external inflows and increased investment expenditure’, explained chief executive Archil Gachechiladze.
‘Overall, Bank of Georgia operates in a favorable macroeconomic environment with reduced leverage of the economy that creates room for healthy lending growth. Moreover, the local currency remains strong and international reserves are at an adequate level.’
RISING SHAREHOLDER RETURNS
Given the strength of the economy and its balance sheet, with high levels of capital buffers, the bank has announced an increase in shareholder returns.
The interim dividend has been raised by 65% to 3.06 lari (0.92 pence) per share, while the board has approved a further 62 million (£18.6 million) of share buybacks.
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