18th Feb 2014 09:12
LONDON (Alliance News) - Bank of Georgia Holdings PLC Tuesday reported record earnings for its last financial year, with Chief Executive Irakli Gilauri attributing the 15% increase in pretax profit to the success of the company's strategic initiatives launched over the past few years, while its healthcare and insurance subsidiary is gearing up to float on a stock exchange later this year.
Reporting its results for 2013, Bank of Georgia Holdings said it made a GEL245.3 million pretax profit, compared with GEL212.8 million in 2012, buoyed by net interest income and net insurance revenue growth.
The growth in net interest income and net insurance revenue was more than enough to outweigh the effects of broadly flat net fee and commission income and a small decline in net healthcare revenue, said the firm, with overall revenue growth of 9.5% to GEL545.5 million.
Chief Executive Gilauri said the record revenue and profit figures were driven by strategic decisions taken over the last three years; diversifying revenue, controlling costs, and growing the loan book and improving asset quality.
The company's diversification initiative saw, amongst other steps in the bank's payments services, the roll out of 240,000 'Express Cards' last year. These combine travel cards for the Tbilisi bus and metro and the contactless loyalty programme linked to customers' current accounts. Gilauri said its efforts in real estate, which was started in 2010 from bad loans, had seen it turn a problem into an opportunity, while he also said the vertical integration of the healthcare and insurance businesses resulted in Aldagi, its healthcare and insurance subsidiary, contributing 10.9% of the company's revenue and 12.0% of its profit.
"BGH and Aldagi are currently preparing to list Aldagi's healthcare-related business on an international stock exchange," Gilauri said.
But Gilauri has no intention of resting on his laurels, pointing to his plans for the future, as he says the company is "determined" to maintain its market leadership.
"Our market leadership is built on our strong Retail and Corporate Banking businesses, which together are the backbone of the Bank of Georgia franchise. As to Retail Banking, our Express banking is at the heart of our strategy. The success of Express Banking is expected to significantly increase our retail client base," he said.
"We believe that further development of our Express banking businesses is directly linked to Express technologies, and we intend to continue investing in IT, which we consider to be pivotal for the future in of banking industry," he added.
"We plan to build the growth on the back of further diversified revenue sources. Knowledge and understanding of the market, both Georgian and regional, and proven superior access to international capital will be the drivers of our Investment Management business growth."
Gilauri said the company intends to launch its first investment management products this year, with the longer-term aim of building them up to create, "an important fee-generating business."
"Expansion through payments business in Georgia has already started, and the newest addition is the Express Merchant business, which is an additional revenue source of income from small retailers that are not yet part of the card payment system. We will be focusing on turning payment systems into a significant base for our revenue generation and we are also preparing to leverage our knowledge of IT and payment business by beginning to export IT and payment business in the region," he said.
Bank of Georgia said it intends to declare a dividend of GEL2.0 a share, up from last year's GEL1.5 a share.
Bank of Georgia shares were Tuesday quoted at 2,353.48 pence, up 85.48 pence, or 3.8%.
By Samuel Agini; [email protected]; @samuelagini
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