Bank of Georgia first quarter profits jumps on lending increase

20th May 2015 08:07

Bank of Georgia reported a higher first quarter profit, driven by an increase in lending and by the acquisition of Privatbank.In the three months to the end of March, the FTSE 250 group reported profit of 62.3m Georgian Lari (GEL) (£17.4m), a 16% increase year-on-year, while net interest margin rose 0.3% to 7.8%.The lender, has more than a third of Georgian banks' market share based on total assets, reported earnings per share of GEL 1.63, up 7.9% from the corresponding period in 2014 but down 10.4% from the previous quarter.In a statement on Wednesday, the bank said the weakness of the Lari against the dollar, which drove an increase in currency gains and a 43% increase in the group's GEL average interest earning assets.The group's interest margin was 7.8%, falling to 7.3% when excluding the effects of the acquisition of Ukraine-based PrivatBank's Georgian subsidiary.Cost to income declined marginally from 43.1% to 42.1% and net loan book up 40.3% year-on-year.Analysts at Peel Hunt reiterated their 'hold' rating on the stock, adding the forecast remained unchanged, although the volatile market remained a risk."We believe that to a large extent the more cautious economic picture is reflected in the current share price, although we continue to remain slightly cautious given the volatile sentiment towards developing markets," they said in a note.Bank of Georgia shares were up 1.97% to 1,731.52p at 08:37 on Wednesday.