14th May 2020 11:15
(Alliance News) - Bank of Georgia Group PLC on Thursday reported a loss for the first quarter as the lender was forced to dramatically up its cost of risk.
Shares in the Georgian lender were down 10% in London on Thursday mid-morning at 791.00 pence each.
In the three months to March 31, Bank of Georgia recorded a pretax loss of GEL113.0 million, about GBP28.9 million, compared to a GEL110.9 million profit the year before.
The lender upped its cost of risk to GEL241.4 million in the quarter from GEL42.7 million the year before.
"These are unprecedented times, and I have been greatly impressed by the response to the new daily challenges faced by the management team and all of our colleagues and customers - which just underlines the strength and quality of the bank's brand and customer franchise," Chief Executive Archil Gachechiladze said.
Gachechiladze said the first quarter was "characterised by two distinct periods". In January and February he said the lender continued its very strong momentum from 2019, seeing strong growth slightly ahead of internal expectations.
He continued: "The Covid-19 global pandemic then created economic, medical and social challenges that are unprecedented in modern times. Whilst the full extent of the pandemic is very difficult to assess, the outbreak in Georgia has not been as severe as in many other countries, as the Georgian Government took significant early actions to reduce the spread of the virus, which included early flight bans, and school and business closures. This early action was essential to what has, so far, been an extremely well-managed response to the pandemic throughout the country. We are also encouraged with the Government's recent decision to start easing the lockdown restrictions in Tbilisi, as part of a gradual easing of restrictions, and to plan to re-open Georgia's borders to foreign tourists from July 1."
Bank of Georgia's net interest income improved 3.7% year on year in the quarter to GEL197.1 million from GEL190.0 million. Operating income was 6.1% higher to GEL274.5 million.
The lender's net interest margin worsened to 5.0% from 6.0%. But its loan book saw strong growth year on year, rising to GEL13.14 billion from GEL9.57 billion.
At the end of the quarter, the lender's NBG (Basel III) CET1 capital adequacy ratio stood at 8.3%, lower than the 12.7% seen at the same point the year before.
Bank of Georgia confirmed it will not pay a 2019 dividend but plans to return to a targeted payout ratio range of 25% to 40% "as soon as practically possible".
By Paul McGowan; [email protected]
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