Bank of Georgia (BGEO) - Georgia's largest bank - delivered a solid first-half performance, despite the formerly fast-growth Georgian economy having slowed fairly dramatically in the period.
In fact, the country's economic growth fell to 1.8 per cent in the first half, compared with 6.1 per cent growth during 2012 - the economy is now forecast to grow by 3.5 per cent for 2013. That slower backdrop appears to have made itself felt on the bank's loan book growth - the corporate book, for example, declined 6.2 per cent in the first quarter. What's more, earnings growth wasn't helped by a substantially increased total bad debt charge - that rose 160 per cent year on year to GEL36.3m (£14.1m). That said, credit quality still doesn't look bad - that charge is tiny compared with the GEL3.1bn loan book and the lender's non-performing loans represent just 4.1 per cent of the book.
Moreover, the bank boasts a tier-one capital ratio of 22.9 per cent - perhaps double the capital cushion seen at most western banks. Meanwhile, the net interest margin, despite slipping 50 basis points to 7.7 per cent, is still chunky by western bank standards.
Broker Numis Securities expects full-year pre-tax profit of GEL239m and EPS of GEL5.8 (from GEL212.8m and GEL5.22 in 2012).
BANK OF GEORGIA (BGEO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,874p | MARKET VALUE: | £639m | |
| TOUCH: | 1,874-1,878p | 12-MONTH HIGH: | 1,914p | LOW: 985p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | GEL30.8 | |||
| Half-year to 30 Jun | Pre-tax profit (GELm) | Earnings per share (GEL) | Dividend per share (p) |
|---|---|---|---|
| 2012 | 104 | 2.57 | nil |
| 2013 | 111 | 2.70 | nil |
| % change | +7 | +5 | - |
£1=GEL2.58 | |||
