- Shares jump on earnings upgrades for 2022
- New GEL 40 million (£11.9 million) share buyback
- Interim dividend increased by 25%
Shares in Bank of Georgia (BGEO) rose 5% to £19.16 in early trading following the release of forecast-beating first-half results.
The strength of the results surprised analysts and prompted several to upgrade earnings estimates for this year. The market has also been encouraged by the announcement of an additional GEL 40 million buy back.
Profit before tax increased by 53% compared to the first half of 2021, to GEL 547 million, or Georgia lari, or approximately £11.9 million. Operating income rose 39.5% to GEL 891 million, although costs also rose fast, up 30.6% to GEL 299 million.
There has been a marked improvement in the return on equity that was 31.8% in the first half, compared to a 25.6% a year ago. 2021.
GEORGIAN GROWTH
As one of Georgia’s two dominant banks, Bank of Georgia is benefiting from the rapid pace of industry development in a region seeing strong GDP growth. World Bank estimates point to 5.5% and 5% GDP expansion this year and 2023.
The small Black Sea nation saw GDP growth of 10.4% in 2021 as its economy bounced back from the pandemic.
The company’s capital ratio CET1 jumped 30 basis points in the second quarter to 14%, 2.3% ahead of the minimum requirement, providing headroom for a new round of share buybacks. Bank of Georgia is already in the middle of a GEL 72.7 million buyback , and the latest GEL 40 million program,me will be in addition to that.
The interim dividend has also been increased by an eye-watering 25% to GEL 1.85 per share.
FOREIGN EXCHANGE GAINS
The results have been boosted by a significant increase in foreign exchange currency gains. These reached GEL 125 million in the second quarter versus normal quarterly levels of GEL 30 million.
The burgeoning tourist sector has enabled Bank of Georgia to leverage its position as the largest Georgian payments business.
Commenting on today’s first half results, Peel Hunt analyst Robert Sage said he expected to increase full year 2022 pre-tax profit estimates by more than 10%.
Numis analyst James Hamilton continued the upbeat commentary, saying that he believes ‘Bank of Georgia offers lower risk, materially higher returns and structurally superior growth, compared to every UK lender.’
