Lion Finance Group (BGEO) Q2 2024 earnings summary

Executive summary

• 1H24 consolidated profit reached GEL 799m, up 16% year-over-year, with 2Q24 profit at GEL 430m (up 11% year-over-year), driven by Ameriabank consolidation and strong digital engagement.

• Adjusted profit (excluding Ameriabank ECL charge) was GEL 480m in 2Q24, with ROE at 31.3% and ROAE for 1H24 at 28.4%.

• Interim dividend of GEL 3.38 per share declared, with a GEL 73.4m share buyback and cancellation executed.

• Digital MAU in Georgia up 20.3% to 1.5m; Armenia up 43% to 173k.

• Strong economic growth in Georgia (9.5% GDP) and Armenia (6.4% GDP) supports robust banking sector performance.

Financial highlights

• Group operating income rose 42.2% year-over-year in 1H24; net interest income up 37.6% and net fee and commission income up 28.3%.

• Loan portfolio expanded 64.5% year-over-year to GEL 30.1bn; deposit portfolio up 56.3% to GEL 30.7bn.

• Net interest margin stable at 6.3% in 2Q24 and 1H24.

• Cost/income ratio at 35.6% (below 30% in Georgia standalone); operating expenses grew due to Ameriabank consolidation.

• Basic EPS for 1H24 was GEL 33.37, up 113.2% year-over-year.

Outlook and guidance

• Medium-term targets: c.15% annual loan book growth, ROAE above 20%, and 30–50% payout ratio.

• GEL and AMD expected to remain stable, supported by strong economic growth and external inflows.

• Cost-to-income ratio expected to remain around 35% (lower in Georgia, higher in Armenia).

• Cost of risk in Georgia expected to normalize around 1% through the cycle.

• Cost growth in Georgia expected to normalize by end-2024 as wage inflation moderates.