9th May 2014 10:05
LONDON (Alliance News) - Bank of Georgia Holdings PLC Friday reported an increase in first-quarter pretax profit, as revenue increased at a faster rate than operating expenses.
In a statement, Bank of Georgia Holdings said pretax profit increased to GEL63.9 million in the quarter ended March 31, from GEL50.5 million in the corresponding quarter a year earlier. Revenue rose by 12% to GEL137.5 million, while operating expenses rose by 10% to GEL59.2 million, mainly due to higher salaries and other employee benefits.
The increase in revenue was driven by higher net interest income, which grew by 10% to GEL79.7 million, as well as net healthcare revenue, which doubled to GEL7.8 million.
Chief Executive Irakli Gilauri said net interest income grew as a result of an increase in customer lending. Yet the rise owed more to a 7.8% decrease in interest expense than the 1.2% increase in interest income due to deposit rate cuts that occurred in 2013.
Bank of Georgia Holdings has been expanding its healthcare business, and Gilauri said the full effects of its the numerous acquisitions it has made in the area in recent months was not fully realised in the results because the integration of the new hospitals has just begun.
However, net fee and commission income fell by 2.8% to GEL19.9 million due to costs of adding to clients in express banking, and higher plastic card fees. Fee and commission expense also increased following outsourcing of the bank's cash collection service, the costs of which effectively shifted to fee and commission expense from salaries and other employee benefits.
Net insurance revenue fell by 17% to GEL9.7 million due to lower insurance premiums earned as the recently introduced state-funded healthcare coverage has started to gradually shift to the direct management by the state away from insurance companies.
"With current excess liquidity and our solid capital level, we believe we are strongly positioned to benefit from the continuation of macro-economic improvement in 2014, for which (the International Monetary Fund) estimates a 5.0% growth. We are looking forward to continue delivering on our targets for the full year on the back of the encouraging 7.4% estimated real GDP growth in [the first-quarter of] 2014," Gilauri said in a statement.
Bank of Georgia Holdings shares were Friday quoted at 2,660.00 pence, down 0.5%.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Bank Of Georgia Group