Bank of Georgia 9M 2014 Results Presentation November 2014
Contents Bank of Georgi gia a Overv rview ew Georgian ian Macro Overv rview ew Bank of Georgi gia a Q3 Q3 2014 and 9M 2014 Results lts Overv rview ew and Analyses es Business ess Segment t Discuss ussio ion Appendices Page 2 www.bogh.co.uk November 2014
The leading bank in Georgia Leading market position: No. 1 bank in Georgia by assets (31.6%), Sustainable growth combined with strong capital, loans (32.0%), client deposits (27.5%) and equity (32.3%) 1 liquidity and robust profitability Underpenetrated market with stable growth perspectives: Real Change GDP average growth rate of 5.9% for 2004-2013. Geostat estimates US$ mln 2 9M 2014 2013 2012 2011 2013/2012 3 3.2% GDP growth in 2013 and 5.9% in 9M 2014. Loans/GDP grew Total assets 3,889.3 3,755.7 3,413.8 2,793.1 15.3% from 9.1% to 39.4% from 2003-2013, still below regional average; Loans to customers, net 2,184.2 2,029.0 1,866.6 1,566.4 13.9% Deposits/GDP grew from 8.6% to 38.4% over the period. Customer funds 4 1,762.3 1,795.6 1,625.5 1,637.6 15.8% Total equity 758.0 714.8 639.5 486.5 17.1% Strong brand name recognition and retail banking franchise: Revenue 5 249.3 313.5 298.5 244.7 9.4% Offers the broadest range of financial products to the retail market Profit 99.5 120.6 108.4 81.2 16.6% through a branch network of 217 branches, 521 ATMs and 2,217 Express Pay Terminals to c.1.4 million customers as of 30 September 2014 Experienced management with deep understanding of The only Georgian company with credit ratings from all three local market and a strong track record: global rating agencies: S&P: ‘BB - ’, Moody's: ‘B1/Ba3’ (foreign 30 Sep 2014 30 Sep 2004 Change and local currency), Fitch Ratings: ‘BB - ’; outlooks are ‘Stable’ Market capitalisation (US$ mln) 1,425.5* 20.7 68.9x High standards of transparency and governance: The only entity Total assets (US$ mln) 3,889.3 151.8 25.6x 32% 18% 14ppts Market share by total assets from Georgia to be listed on the premium segment of the Main Market of the London Stock Exchange (LSE:BGEO) since February * Market capitalisation for Bank of Georgia Holdings PLC, the Bank’s holding company, as of 29 October 2014, GBP/USD exchange rate of 1.6005 2012. LSE listed through GDRs since 2006. Only private entity to issue Eurobonds from the Caucasus: US$400 million Eurobonds outstanding including US$150 raised through a tap issue in November 2013. The bonds are currently trading at a historical low yield of c.5.3% 1 Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 30 September 2014 www.nbg.gov.ge 4 Amounts due to customers 2 US$/GEL 1.7524, 1.7363, 1.6567 and 1.6703 as at 30 September 2014, 31 December 2013, 31 December 2012 and 31 December 2011, respectively 5 Revenue adjusted for one-off currency gain by BNB in 2012 and one-off BYR hedge in 2011 3 Changes in GEL Page 3 www.bogh.co.uk November 2014
Shareholder structure and share price Bank of Georgia Holdings PLC (BGH) (LSE: BGEO) a UK-incorporated Share price performance holding company of JSC Bank of Georgia. As of 30 Sep 2014, BGH’s Third largest Up 213% since premium shareholder structure was as follows: listing *** growth stock in 4.4% 1.9% FTSE 250 in 2013 GBP Unvested/unawarded shares for 28 management and employees 23 38.7% Vested shares held by management and employees 18 UK and US institutional investors* 13 55.0% Emerging market institutional investors 8 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 • BGEO is included in the FTSE 250 and FTSE All Share Index Funds as of 18 June 2012 BGEO LN GDR Average daily trading volume Average daily number of shares traded 250,000 $10,200,000 195,000 $5,300,000 118,000 55,000 $2,000,000 $950,000 2011 2012 2013 9M 2014 2011 2012 2013 9M 2014 *Mostly non-emerging market shareholders since premium listing; management estimates **Share price change calculated from the last price of BGEO LI on 27 February 2012 to the price of BGEO LN on 29 October 2014 Page 4 www.bogh.co.uk November 2014
3x20%: Growth story over time with dividends UK corporate governance FTSE 250 ROE c.20% TIER I c.20% Growth th c.20% Dividends Record profitability: Net loan book 3 grew 16.6% y-o-y to Two types of dividends are Conservative National Bank of • Revenue up 9.0% y-o-y to GEL 436.9 GEL 3,827.6 million, while client targeted: Georgia (NBG) regulation: • Recurring - linked to recurring mln in 9M 2014 and up 12.4% y-o-y to • deposits increased 7.4% y-o-y to Risk weighting of FX assets at GEL 155.4 mln in Q3 2014 GEL 3,060.8 million 175%. Bank’s leverage stayed profit • Profit up 13.4% y-o-y to GEL 174.3 mln • One-off(s) – linked to Cost of client deposits declined to largely flat year-to-date at 4.1x in 9M 2014, up 6.3% y-o-y to GEL 62.3 4.3% in 9M 2014 from 5.8% in 9M as of 30 September 2014 divestments & de-dollarisation mln in Q3 2014 2013. RB Cost of Client Deposits: • Strong internal cash generation An annual dividend of GEL 2.0 per Non-interest income increased by 11.7% 3.9% in 9M 2014 vs 5.4% in 9M to support loan growth without share was paid for 2013, up 33% y- y-o-y to GEL 190.1 mln in 9M 2014 and 2013; CB Cost of Client Deposits: compromising capital ratios: o-y translating into a payout ratio in Q3 2014 increased by 18.2% y-o-y to 2.9% in 9M 2014 vs 5.0% in 9M • of 33.7% and dividend yield of BIS Tier I Capital Adequacy GEL 68.9 mln 2013 • 2.7% Ratio (CAR) of 22.7% and BIS Adjusted ROAE 1 stood at 18.9% in 9M Consumer driven franchise with Total CAR of 26.4% as of 30 The Board will aim to maintain a 2014 and at 19.2% in Q3 2014 robust sales force September 2014 dividend payout ratio in the 25%- Operational efficiency and scale: • Strong growth across the board • • 40% range Cost to Income ratio at 43.3% in 9M NBG (Basel 2/3) Tier I CAR and supported by synergistic businesses ‘14, Q3 ‘14 Cost to Income of 42.5% Total CAR stood at 11.2% and • Increase in contribution from • Positive q-o-q operating leverage in Q3 14.2% as of 30 September 2014 synergistic business in the group’s 2014 of 5.1 ppts profit. Healthcare, P&C Insurance Prudent risk management: • and real estate businesses contributed Cost of Risk 2 of 1.2% in 9M 2014, 14.1% to the Group’s revenue and compared to 1.5% in 9M 2013. Cost of 14.2% to profit in 9M 2014 Risk stood at 1.6% in Q3 2014 compared to 1.6% in Q3 2013 and 0.9% in Q2 2014 1 Adjusted for one-off impairment of available-for-sale investments in BG Bank in Ukraine in Q2 2014 2 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 3 Including finance lease receivables Page 5 www.bogh.co.uk November 2014
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