1Q25 results

Lion Finance Group PLC announces the Group's consolidated financial results for the first quarter of 2025. Unless otherwise indicated, all figures in this announcement relate to 1Q25, with year-on-year comparisons to 1Q24 and quarter-on-quarter comparisons to 4Q24, adjusted for one-off items.

The results are based on UK adopted international accounting standards, are unaudited and derived from management accounts.

Earnings call on 15 May 2025, 14:00 BST

https://bankofgeorgia.zoom.us/j/94089360555

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Segmentation guide

Following the acquisition of Ameriabank at the end of March 2024, the Group's results are presented by the following Business Divisions: 1) Georgian Financial Services (GFS), 2) Armenian Financial Services (AFS), and 3) Other Businesses.

·      GFS mainly comprises JSC Bank of Georgia and the investment bank JSC Galt and Taggart

·      AFS includes Ameriabank CJSC

·      Other Businesses includes JSC Belarusky Narodny Bank (BNB), which serves retail and SME clients in Belarus; JSC Digital Area, a digital ecosystem in Georgia including e-commerce, ticketing, and inventory management SaaS; Lion Finance Group PLC, the holding company; and other small entities and intragroup eliminations. 

Lion Finance Group PLC delivers 1Q25 consolidated profit before one-off items[1] of GEL 513.1m, up 39.0% year-on-year

The Group posted a return on average equity (ROAE) of 28.7% in 1Q25.

·      The Group's loan book increased by 23.2% y-o-y to GEL 34,137.1m as at 31 March 2025 (up 20.8% y-o-y in constant currency), driven by robust growth in both the Georgian and Armenian businesses.

·      As at 31 March 2025, Bank of Georgia's Digital MAU among retail customers amounted to 1.6 million individuals (up 17.1% y-o-y), while Ameriabank's - 245 thousand individuals (up 53.1% y-o-y). Unlocking the upside potential in the mass retail segment in Armenia remains one of the priorities for the Group.

CEO statement

We began 2025 on a strong footing in our core markets of Georgia and Armenia. As at 31 March 2025, the Group's total assets reached GEL 53.8 billion, representing a y-o-y increase of 26.7%. Book value per share also rose to GEL 170.99, up 25.8% y-o-y and up 5.1% q-o-q.

While global economic and geopolitical developments, such as shifts in trade policies and the situation in Ukraine, continue to make headlines, we remain confident in the resilience of our core markets. Our analysis indicates minimal direct impact on Georgia and Armenia from potential US tariffs, and the opportunities presented by the Middle Corridor connecting Asia and Europe offer significant medium-to-long-term upside for the region. The macroeconomic environments in both Georgia and Armenia are creating a favorable backdrop for our operations. In Georgia, the economy's performance has surpassed expectations, with real GDP growth at 9.3% y-o-y in the first quarter of 2025. This strong showing has led us to increase our full-year GDP growth forecast to 6.8%. Furthermore, the Georgian Lari has appreciated by 2% against the US dollar in the first four months of the year. Armenia's macroeconomic outlook remains also positive, with a projected 4.5% real GDP growth for 2025.

We continued to deliver on our strategic priorities in Georgia, where we have built the top-of-mind banking franchise, delivering robust customer franchise growth and high profitability. I would like to highlight a record-high Net Promoter Score of 73 achieved in the first quarter - an exceptional result for a universal bank. Digital product sales continue to rise - in 1Q25, 67% of retail product sales happened through digital channels, up 10 percentage points y-o-y. Customer-centricity and technological excellence underpin everything we do, and this ultimately translates into sustained high profitability levels. Georgian Financial Services (GFS)'s loan portfolio grew by 18.0% y-o-y in constant currency, reaching GEL 24,049.1 million as at 31 March 2025. This robust growth supported net interest income expansion, although net interest margin was pressured by higher-than-usual liquidity levels maintained following the parliamentary elections in Georgia - this represents an upside as we deploy excess liquidity moving forward. While fee and commission income grew at a double-digit rate, rising fee and commission expenses weighed on net fee and commission growth, which came in at 6.2% y-o-y in 1Q25. Addressing these expenses is an ongoing priority for the team. The portfolio quality remained very healthy, and, overall, GFS reported a profit of GEL 405.1 million in the first quarter, up 9.4% y-o-y.

It has been one year since Ameriabank joined our Group, and together we have delivered outstanding results. From the outset, we recognised Ameriabank's significant potential - particularly in the mass retail and SME segments. Key highlights include a 53.1% y-o-y increase in retail monthly active digital users to 245,000 individuals as at end of March 2025, reflecting our focus on developing relevant digital offerings. Net loans also increased significantly, rising by 30.9% y-o-y in constant currency to GEL 9,337.6 million as at 31 March 2025. Overall, Armenian Financial Services generated a profit of GEL 95.5 million, marking a substantial contribution to the Group's overall results.

In total, in 1Q25, the Group reported a profit before one-off items of GEL 513.1 million, up 39.0% y-o-y, resulting in a robust ROAE of 28.7%. This strong beginning reinforces our ability to generate sustainable value for our shareholders.

Archil Gachechiladze

CEO, Lion Finance Group PLC

14 May 2025

Macroeconomic developments: Georgia

Sustained economic growth momentum

The economy sustained strong growth in 1Q25, with real GDP expanding by 9.3% y-o-y. Economic activity remained broad-based, with major contributions from professional services, transport and storage, and IT sectors. Galt & Taggart forecasts real GDP growth of 6.8% in 2025 - an upward revision from the previous projection of 5%, reflecting stronger-than-expected performance in the first quarter. While downside risks remain, including global trade tensions, regional geopolitical instability, and domestic political strains, Georgia's demonstrated economic resilience and sound macroeconomic policies are expected to mitigate these challenges and support continued growth throughout the year.

Resilient external sector

In 1Q25, merchandise exports rose by 5.7% y-o-y, mainly driven by car re-exports. Imports of goods also remained robust, increasing by 20.1% y-o-y during the same period, supported by strong consumption. Tourism revenues saw slower growth, increasing by just 2.3% y-o-y, due to modest 2.2% y-o-y growth in international visitors. Money transfers declined by 3.2% y-o-y, reflecting a continued reduction in migrant-related inflows from Russia, partially offset by steadily increasing remittances from the EU and the US. Overall, external sector inflows are expected to remain resilient, supported by a diverse mix of income sources and geographical regions.

Near-target inflation and prudent monetary policy

Inflation saw a slight increase in 1Q25, driven by rising food and healthcare prices, partially offset by lower transport and communication service costs. Headline CPI inflation reached 3.5% y-o-y in March 2025, marginally above the National Bank of Georgia's (NBG) 3% target. Inflation is expected to remain above target in the near term, due to the low base effect from the previous year, but is projected to return to target by year-end. The NBG has maintained a tight monetary policy, holding the refinancing rate at 8.0% since May 2024, as inflationary risks persist.

Strong fiscal discipline

In 1Q25, consolidated budget tax revenues remained robust, rising by 5.3% y-o-y and exceeding the planned level by 2.3%. The Government remains committed to fiscal consolidation, with the fiscal deficit planned at 2.5% of GDP in 2025, in line with the 2024 level. The government-debt-to-GDP ratio is set to decline further to 35.9% in 2025, creating additional fiscal space to accommodate potential future spending needs.

Healthy bank lending

Bank lending remained strong during 1Q25, increasing by 16.6% y-o-y on a constant currency basis, following 17.0% y-o-y growth in 2024. Loan dollarisation stood at 43.1% at the end of March 2025 (down 0.2 ppts q-o-q). Deposit dollarisation stood at 52.8% in the same period (up 0.1 ppts q-o-q). The banking sector's credit portfolio remained healthy, with the non-performing loans to total gross loans ratio, according to the IMF, at 1.5% at the end of March 2025.

Easing pressures on GEL

The GEL strengthened against the US dollar by 2.0% in the first four months of 2025, following a 4.4% depreciation during the previous year. This recent appreciation was largely driven by a global weakening of the US dollar. Looking ahead, resilient external sector inflows and prudent macroeconomic policies are expected to support the GEL's value in the medium term.

More information on the Georgian economy and financial sector can be found at Galt & Taggart.

Macroeconomic developments: Armenia

Moderating but steady economic growth

Economic growth continued to moderate in 1Q25, as the temporary effects of migration and trade-related factors subsided. However, expansionary fiscal policy and eased monetary conditions continued to support growth momentum. The preliminary indicator of economic activity increased by 4.1% y-o-y in 1Q25, following a 5.9% real GDP growth in 2024. We expect real GDP to expand by 4.5% in 2025, driven by strong public spending and sustained credit growth. Macroeconomic policies remain prudent, underpinning the resilience of the Armenian economy.

External sector inflow normalisation and strong Dram

External trade turnover continued to decrease in 1Q25, following a temporary surge in re-exports of precious metals and stones in 2024. Consequently, exports of goods declined by 61.8% y-o-y, while imports contracted by 47.9% y-o-y in 1Q25. Money transfers, however, accelerated to 4.7% y-o-y during the same period, following a 2.5% y-o-y increase in 2024. This overall resilience of external sector inflows, coupled with the global weakening of the US dollar, contributed to a further 1.7% appreciation of the Armenian Dram against the US currency in the first four months of 2025, adding to a 2.0% gain in 2024.

Near-target inflation and neutral monetary policy

In early 2025, inflation saw a modest increase, driven by rising food and service prices. Headline CPI inflation was 3.3% y-o-y in March 2025, slightly above the Central Bank of Armenia's (CBA) 3% target. The CBA delivered its latest 25 bps rate cut in February 2025 and has maintained the refinancing rate at 6.75% since then. With the current refinancing rate considered by the CBA to be near its neutral level, further rate cuts are less probable in the baseline outlook.

Continued fiscal expansion

Fiscal policy is expected to remain expansionary in 2025 to accommodate spending on public infrastructure projects and social support programmes. As a result, the fiscal deficit is expected to widen to 5.5% of GDP this year (vs. 3.8% in 2024), leading to a notable increase in public debt to 54.5% of GDP (vs. 50.3% in 2024). While this fiscal expansion supports growth, it could pose risks to inflation and public debt sustainability. These risks, however, are mitigated by a demonstrated commitment to fiscal discipline and ongoing IMF stand-by arrangements.

Sound banking sector

The banking sector in Armenia remains highly profitable, with strong capital and liquidity positions. Estimated bank lending growth in 1Q25 was 30.2% y-o-y on a constant currency basis, following a 25.0% y-o-y growth in 2024. Lending growth was predominantly driven by local currency loans, leading to a further reduction in loan dollarisation (down 0.4 ppts y-o-y to 33.5% at the end of March 2025).

Delivering on our strategic priorities

The main bank

Being the main bank in customers' daily lives by leveraging the digital and payments ecosystems across our core markets.

Bank of Georgia (BOG)

The share of products sold through retail digital channels stood at 67% in 1Q25, up 10 ppts y-o-y and up 5 ppts q-o-q.

Bank of Georgia continued to develop its payments acquiring business. The volume of payment transactions in BOG's in-store/online POS terminals was up 31.9% y-o-y and down 6.2% q-o-q in the first quarter of 2025, to GEL 5.3 bn. BOG's payments acquiring market share stood at 55.9% in March 2025 (up 0.2 ppts y-o-y and down 1.2 ppts q-o-q).

Ameriabank

Ameriabank had 372,000 monthly active retail customers as at 31 March 2025 (up 25.9% y-o-y and up 4.3% q-o-q), of which Digital MAU was 245,000 (up 53.1% y-o-y and up 5.9% q-o-q).

Excellent customer experience

Anticipating customer needs and wants, and providing relevant products and services.

Bank of Georgia's Net Promoter Score (NPS)[2] reached a new record-high level of 73 in 1Q25 (61 in 1Q24 and 67 in 3Q24[3]).

Ameriabank measures its NPS internally on a monthly basis. The average score for 1Q25 was 77 (78 in 1Q24 and 75 in 4Q24).

Profitable growth

Growing the balance sheet profitably and focusing on areas with high growth potential.

·      Georgian Financial Services' loan book grew 19.3% y-o-y and 2.2% q-o-q, amounting to GEL 24,049.1 million as at 31 March 2025. Growth on a constant currency basis was 18.0% y-o-y and 2.3% q-o-q.

·      Armenian Financial Services' loan book grew 36.7% y-o-y and 0.8% q-o-q, amounting to GEL 9,337.6 as at 31 March 2025. Growth on a constant currency basis was 30.9% y-o-y and 1.3% q-o-q.

Our key targets for the medium term are:

·      c.15% annual growth of the Group's loan book (the target was revised up from c.10% following the acquisition of Ameriabank in March 2024)

·      20%+ return on average equity

·      30-50% annual capital distribution ratio (dividends and share buybacks)

1Q25 unaudited consolidated results

Given the first-time consolidation of Ameriabank's P&L in 2Q24, the y-o-y growth rates at the Group level have been significantly impacted by the consolidation. To see the underlying performance of our businesses in Georgia and Armenia, please see pages 9 to 11 and 12 to 14, respectively.   

Performance highlights

·      The Group generated operating income of GEL 978.7m in 1Q25 (up 52.0% y-o-y and down 5.2% q-o-q). A significant growth driver in the y-o-y perspective was the consolidation of Ameriabank's income statement since the second quarter of 2024. For reference, GFS operating income grew by 10.8% y-o-y in 1Q25.

o  On a q-o-q basis, the decline in operating income was driven by a decrease in net non-interest income in GFS and AFS, mainly attributable to a high base in the prior quarter and the seasonally slower first quarter across both Business Divisions.   

·      The Group's operating expenses amounted to GEL 342.9m in 1Q25 (up 82.4% y-o-y and down 7.5% q-o-q). The y-o-y growth was mainly driven by the consolidation of Ameriabank. GFS also contributed to this growth, recording a 18.2% y-o-y increase, impacted by executive management termination costs and Bank of Georgia's first-time contribution to the resolution fund[7].

·      The Group's profit before one-off items was GEL 513.1m in 1Q25 (up 39.0% y-o-y and up 1.7% q-o-q). ROAE was 28.7% in 1Q25 (27.7% in 1Q24 and 29.6% in 4Q24).

Asset quality

·    Loan portfolio quality has remained healthy. Cost of credit risk ratio was 0.2% in 1Q25 (0.3% in 1Q24 and 0.5% in 4Q24), driven by robust performances in both the Georgian and Armenian operations. The NPLs to gross loans ratio also remained flat q-o-q.

·      NPL coverage ratio stood at 59.3% (72.3% in 1Q24 and 63.0% in 4Q24), driven by the well-collateralised nature of the NPL portfolio.

Portfolio highlights

·      Loans to customers, factoring and finance lease receivables amounted to GEL 34,137.1m as at 31 March 2025, up 23.2% y-o-y (up 20.8% y-o-y in constant currency). The y-o-y increase is attributable to loan book expansion across both key Business Divisions: GFS and AFS. GFS recorded a 19.3% y-o-y growth (up 18.0% in constant currency), while AFS recorded a 36.7% y-o-y loan book expansion (up 30.9% in constant currency).

·      Client deposits and notes amounted to GEL 33,969.3m as at 31 March 2025, up 19.9% y-o-y (up 17.3% y-o-y in constant currency). The y-o-y increase is attributable to growth across both key Business Divisions: GFS and AFS. GFS recorded a 19.7% y-o-y growth (up 18.0% y-o-y in constant currency), while AFS recorded a 20.6% y-o-y growth in deposits (up 15.3% y-o-y in constant currency).

Business Division results 

Following the acquisition of Ameriabank in March 2024, the Group results are presented by the following Business Divisions: 1) Georgian Financial Services (GFS), 2) Armenian Financial Services (AFS), and 3) Other Businesses.

Georgian Financial Services (GFS)

Georgian Financial Services (GFS) mainly comprises JSC Bank of Georgia and investment bank JSC Galt and Taggart.  

Performance highlights

·      GFS delivered operating income of GEL 685.5m in 1Q25, up 10.8% y-o-y and down 6.3% q-o-q. The y-o-y expansion was predominantly driven by net interest income. The q-o-q decline was due to reduced non-interest income lines, mainly reflecting seasonal patterns.

·      Interest income grew by a robust 21.6% y-o-y. Interest expense growth was higher, at 31.5% y-o-y, but we have an upside as we deploy the accumulated excess liquidity.

Net interest income reached GEL 481.8m in 1Q25, growing by 14.1% y-o-y and by 2.3% q-o-q.

o  In 1Q25, NIM stood at 5.7%, down 0.6 ppts y-o-y. Although the core lending margin was slightly up in the y-o-y perspective, the overall margin was negatively impacted by the higher share of lower-margin liquid assets in the asset mix.  

·      Net fee and commission income totalled GEL 114.0m in 1Q25, up 6.2% y-o-y and down 10.2% q-o-q. Although we achieved double-digit y-o-y growth in fee income, net fee and commission income growth was lower due to increased payment systems costs and a higher volume of more costly transactions. The q-o-q decline mainly reflects the seasonally slower quarter.

·      Net FX gain amounted to GEL 82.7m in 1Q25, up 1.3% y-o-y and down 23.2% q-o-q. Although FX gains from client-driven inflows experienced a double-digit y-o-y growth, this was largely offset by a translation loss from a currency derivative instrument.

·      Net other income was GEL 7.0m in 1Q25, down 5.5% y-o-y and down 73.2% q-o-q. The quarterly reduction primarily stems from a high comparison base, as 4Q24 included a significant revaluation gain on investment property.

·      Operating expenses totalled GEL 196.8m in 1Q25, representing a 18.2% y-o-y increase and a 10.4% q-o-q decrease. The y-o-y growth was largely due to employee costs, which were impacted by the termination costs of executive management. Additionally, Bank of Georgia's contributions to the resolution fund6 were recorded for the first time. Excluding these two items (c. GEL 10 million), operating expenses would have increased by c.12% y-o-y.

The high base of operating expenses in 4Q24, driven by year-end administrative and staff costs, explains the subsequent quarterly decline, which is largely due to seasonal factors.

·      Cost of credit risk ratio stood at 0.2% in 1Q25 (0.3% in 1Q24 and 0.6% in 4Q24), underpinned by strong results across the whole portfolio.

·      GFS delivered a profit of GEL 405.1m in 1Q25, up 9.4% y-o-y and up 3.0% q-o-q, translating into an ROAE of 32.0%.

Portfolio highlights  

Portfolio highlights: Loans to customers, factoring and finance lease receivables

·      Customer lending continued to expand, with GFS's net loans, factoring, and finance lease receivables reaching GEL 24,049.1m as at 31 March 2025 - up 19.3% y-o-y (up 18.0% in constant currency) and up 2.2% q-o-q (up 2.3% in constant currency). The y-o-y growth was broad-based, led by RB and CIB, with SME also contributing.

o  58.1% of the loan book was denominated in GEL as at 31 March 2025 (55.8% as at 31 March 2024 and 57.7% as at 31 December 2024).

·      Client deposits and notes reached GEL 24,820.7m as at 31 March 2025 - up 19.7% y-o-y (up 18.0% in constant currency) and up 3.2% q-o-q (up 3.6% in constant currency). The y-o-y growth was broad-based, led by RB and CIB, with SME also contributing.

o  GEL-denominated client deposits made up 47.0% of all client deposits as at 31 March 2025 (46.8% as at 31 March 2024 and 47.2% as at 31 December 2024).

Liquidity

·      Bank of Georgia's LCR was 133.5% as at 31 March 2025, and the NSFR stood at 131.4% as at the same date. Both ratios were well above the regulatory minimum requirement of 100%.

Capital position

·    Bank of Georgia continues to operate with solid capital adequacy levels, following the capital distribution-related deductions from regulatory capital. As at 31 March 2025, the Bank's Basel III CET1, Tier1, and Total capital ratios stood at 16.4%, 19.6%, and 21.2%, respectively, all above the minimum requirements of 15.2%, 17.3%, 20.2%, respectively. The movement in capital adequacy ratios during the first quarter and the potential impact of a 10% devaluation of GEL is as follows: 

·      Bank of Georgia's minimum capital requirements for December 2025 are expected to be 15.2%, 17.3% and 20.2% for CET1, Tier1, and Total capital ratios respectively.

Armenian Financial Services (AFS)

Armenian Financial Services (AFS) comprises Ameriabank CJSC

Ameriabank was consolidated at the end of March 2024. AFS Income Statement results were consolidated on the Group level for the first time in 2Q24. To provide more comparable growth trends with previous periods, the performance of standalone Ameriabank has been disclosed on page 14: Ameriabank: standalone financial information. Ameriabank's standalone financial information is presented for informational purposes only, is different from AFS results due to fair value adjustments and allocation of certain Group expenses to Business Divisions, and is not included in the consolidated results.

Performance highlights

In order to provide clearer context regarding underlying performance, we present Ameriabank's standalone figures, which indicate a 30.3% y-o-y growth in operating income, mainly driven by strong net interest income generation (up 37.9% y-o-y), and a 35.2% y-o-y rise in profit to GEL 113.9 million for the first quarter of 2025, with ROAE standing at 24.7%. See the next page for standalone results (not consolidated).

AFS performance

·      In 1Q25, operating income amounted to GEL 248.2m, down 8.6% q-o-q. This decline was driven by two primary factors: First, net fee and commission income decreased from the previous quarter, reflecting a high comparison base in 4Q24 that included a significant advisory fee of GEL c. 10.3m and an incentive fee of GEL c.5.6m from payment systems. Second, foreign currency gains declined due to exchange rate volatility during December 2024, combined with seasonally high client currency conversions in 4Q24. These decreases were partially offset by a 5.8% growth in net interest income.

·      Operating expenses decreased by 6.0% q-o-q to GEL 120.5m. This was mainly due to lower staff cost, as well as reduced administrative expenses. The reduced administrative expenses reflect a comparison with a high level in 4Q24, which included seasonal marketing expenditure and higher consulting fees.

·      Loan portfolio quality remained healthy, with the cost of credit risk ratio at 0.2% in 1Q25 (0.3% in 4Q24).

·      Overall, AFS generated GEL 95.5m in profit in 1Q25, with ROAE standing at 21.1%.

Portfolio highlights          

·      Loans to customers, factoring and finance lease receivables stood at GEL 9,337.6m as at 31 March 2025 (up 36.7% y-o-y and up 0.8% q-o-q). Growth on a constant currency basis was 30.9% y-o-y and 1.3% q-o-q.

o  59.5% of the loan book was denominated in Armenian Drams as at 31 March 2025 (58.1% as at 31 March 2024 and 58.9% as at 31 December 2024).

o  Ameriabank had the highest market share in Armenia by total loans - 20.3% as at 31 March 2025 (19.5% as at 31 March 2024 and 20.9% as at 31 December 2024)[9].

·      Client deposits and notes stood at GEL 7,866.9m as at 31 March 2025 (up 20.6% y-o-y and down 1.0% q-o-q). On a constant currency basis, deposits were up 15.3% y-o-y and down 0.6% q-o-q.

o  55.9% of client deposits and notes were denominated in Armenian Drams as at 31 March 2025 (47.9% as at 31 March 2024 and 57.0% as at 31 December 2024).

o  Client deposits and notes and local debt securities issued (treated similarly to deposits) amounted to GEL 8,836.4m, up 21.3% y-o-y and down 1.6% q-o-q.

o  Ameriabank had the second highest market share by total deposits in Armenia - 18.5% as at 31 March 2025 (18.1% as at 31 March 2024 and 18.5% as at 31 December 2024)9^,[10].

·      Armenian Financial Services maintains a diversified funding structure with customer deposits and local debt securities representing 77.5% of total liabilities and the ratio of loans to customer deposits + local debt securities and DFI funding standing at 95.8% as at 31 March 2025.   

Liquidity                                                            

·      Ameriabank has maintained a strong liquidity position, with CBA LCR at 229.8% and CBA NSFR at 126.5% as at 31 March 2025, well above the minimum regulatory requirements of 100%.

Capital position

·      At 31 March 2025, Ameriabank's CET1, Tier1, and Total capital ratios stood at 14.7%, 14.7%, and 16.8%, respectively, all above the minimum requirements of 11.7%, 13.8%, 16.5%, respectively. Internal capital generation as well as other measures including additional capital instruments are expected to support capital levels in the near future.

Ameriabank: unaudited standalone financial information (not included in the consolidated results)

The following table is presented for information purposes only to show the performance of Ameriabank. It has been prepared consistently with the accounting policies adopted by the Group in preparing its consolidated financial statements.