Bank of Georgia Holdings plc, the holding company of JSC Bank of Georgia and its subsidiaries, Georgia's leading bank, announces today the consolidated results for year ended 31 December 2012 (IFRS based, derived from management accounts with such announcement approved by the board of directors of BGH on 15 February 2013).
The Bank reported full-year 2012 profit of GEL 179.6 million (US$ 108.4 million/GBP 67.4 million), or GEL 5.22 per share (US$3.15 per share/GBP1.96 per share). Unless otherwise mentioned, all comparisons refer to the full year 2011 results.
Positive operating leverage maintained with strong profitability
o Net interest margin of 7.9% in 2012, compared to 7.8% in 2011;
Q4 2012 NIM increased to 7.8% from 7.3% in Q3 2012.
o Revenue increased by GEL 64.5 million, or 14.9%, y-o-y, to GEL 498.3 million; excluding the benefit of the one-off currency hedge gains in 2011, revenue increased by 21.9%;
Q4 2012 revenue grew 11.1% y-o-y to GEL 128.3 million; excluding the benefit of the one-off currency hedge in Q4 2011, Q4 2012 revenue grew 15.5%.
o Positive operating leverage maintained, as operating expenses increased at a lower rate than revenue, up 5.2% y-o-y to GEL 221.2 million; excluding the 2011 one-off gains, operating leverage was 16.7%;
Q4 2012 operating expenses were largely flat q-o-q at GEL 54.0 million.
o Cost to Income ratio improved to 44.4% from 48.5% in 2011, and to 42.1% in Q4 2012 from 44.4% in Q3 2012.
o Profit before tax from continuing operations of GEL 212.8 million, up by GEL 40.7 million, or 23.7%; excluding the benefit of one-off currency hedge gains in 2011, profit grew 44.7%.
o Profit for the period increased by GEL 43.8 million, or 32.3%, to GEL 179.6 million.
o Earnings per share (basic) increased by 17.6% to GEL 5.22.
o Return on Average Assets (ROAA) increased to 3.5%, compared to 3.2%.
o Return on Average Equity (ROAE) increased to 19.1%, from 18.3%.
Strong balance sheet and capital position maintained
o Cost of Funds declined to 7.3% in 2012, compared to 8.0%.
Q4 2012 Cost of Funds of 6.6%, down from 7.1% in Q3 2012 and 8.4% in Q4 2011.
o Net loan book increased by 18.2% during the year , while client deposits increased 2.7%, reflecting the Bank's strategy to improve its cost of funding by reducing high interest paying corporate deposits;
In US$ terms the net loan book increased by 19.2% reflecting the stable currency position.
Retail Banking client deposits grew 15.5%, Wealth Management client deposits grew 33.2%, Corporate Banking declined 17.1%, reflecting the targeted outflow of high-interest paying deposits.
o Cost of Risk increased to 1.3% in 2012 from 0.9% in 2011, reflecting the absence of the previous year's net releases and recoveries and higher provisions in the second half of 2012.
o Strong funding and liquidity position with a Net Loans to Customer Funds ratio of 114.8%. Net Loans to Customer Funds and Long-Term IFI Funding ratio was 91.9%. National Bank of Georgia (NBG) liquidity ratio of 41.1%, compared to 37.8% a year ago and to a 30% minimum requirement by the NBG.
o BIS Tier 1 capital adequacy ratio improved to 22.0%.
o Book Value per Share increased by 16.7% y-o-y to GEL 30.33 (US$18.31/GBP11.38).
o Balance Sheet leverage reduced to 4.3 times at 31 December 2012, compared to 4.7 times at 31 December 2011 and 4.5 times at 30 September 2012.
Business highlights
o Strong performances from each of the Bank's businesses in Georgia - Corporate Banking and Retail Banking reported continued loan growth and improving efficiencies.
o Retail Banking continues to deliver strong franchise growth, supported by the successful roll-out of the Express Banking strategy in 2012.
o Corporate Banking has delivered strong, well-diversified balance sheet growth over the last 12 months; customer lending grew 23.1%
o Wealth Management continued to expand its client franchise with deposits increasing by 33.2% to GEL 605.2 million during the year.
o Excellent progress in developing the Bank's synergistic businesses: Insurance and Healthcare business expansion through acquisition of Imedi L International. Integration successfully executed, realising annual synergies of GEL 8.7 million; Affordable Housing completed its pilot project of an 123 apartment building realising SBRE's first profit of GEL 1.7 million; a second 522 apartment building project is in progress.
Dividend
The Bank is well positioned to further improve its performance in 2013 and this, combined with continued strong profitability and capital ratios, has led the Board to review the Bank's dividend policy. The Board intends to recommend at the AGM an annual dividend of GEL 1.5 per share payable in British Sterling at the prevailing rate. This represents a significant increase of 114.3%, compared to the annual dividend of GEL 0.70 per share last year, a payout ratio of 28.7% and a dividend yield for shareholders of 5.5%, calculated on the basis of the preliminary results and using the 31 December 2012 share price of GBP 10.30. When the Bank announces that the Board is recommending any dividend to the AGM, the Bank will also announce details of the dividend timetable applicable to such dividend. Going forward, the Board will aim to maintain a dividend payout ratio in the 25%-40% range,"
