Bank of Georgia grows profits 15% but forecasts GDP to falter in 2015

20th Feb 2015 08:56

Thanks to a strong fourth-quarter for customer lending and its expansion into healthcare over the year, Bank of Georgia produced record annual revenues, profits and earnings in 2014.But the FTSE 250 banking group revised down its expectations for the Georgian national growth in 2015 as growth will be restricted by economic weakness in the region.As such it has revised its gross domestic product growth targets for Georgia in 2015 to between 1.5%-3%, "even though the Georgian economy is well diversified and resilient to external shocks".In 2014 Georgia delivered strong GDP growth at roughly 4.7%.For the full year, the company lifted revenue 11.3% to 605.6m Georgian lari (GEL), supporting 15% profits growth to GEL 240.8m and earnings per share (EPS) up 15.5% to GEL 6.85.Broker Numis said group EPS was slightly lower than its forecast GEL 7.0, due to a worse fall from the insurance businesses along with significantly lower revaluation gains within the property business, though the profit growth from the retail banking arm of 32% to GEL 153m was higher than its forecast of GEL 145m.The banking businesses delivered 23.8% customer lending growth, or 17.7% excluding currency effects, with strong performances in both the retail and corporate businesses. Customer lending in the final quarter of the year increased by 13.9%."These results reflect a continuing strong performance in each of our core banking and investment management businesses, demonstrating excellent customer lending growth with improving margins, balance sheet strength and strong profitability, together with substantial further progress in our healthcare and real estate businesses," said chief executive Irakli Gilauri.The healthcare business more than doubled revenue during the year, driven by organic growth and the impact of acquisitions that helped grow its market share n Georgia from 14.3% to 22.0% over the course of the year.At the same time, it said it foresaw a lari correction of 5-10% after two years of strengthening."Whilst there has not yet been any deterioration in asset quality, over the next 12 months we expect our cost of risk to be above our medium term target of 1.0-1.5%.Directors have agreed to recommend a 5% increase in the annual dividend to GEL 2.1 per share, payable in sterling at the prevailing rate.