20th May 2015 12:52
LONDON (Alliance News) - Bank of Georgia Holdings PLC, the holding company for JSC Bank of Georgia, Wednesday reported higher first-quarter pretax profit, as higher revenue in its banking and healthcare operations more than offset lower contributions from insurance and real estate, sending its shares higher.
Shares in Bank of Georgia were up 4.7% in early afternoon trade on Wednesday to 1,777.00 pence, the best performer in the FTSE 100.
In a statement, the holding company said it made a GEL73.2 million pretax profit in the three months ended March 31, compared with GEL63.9 million in the corresponding period of the prior year, even as impairment charges for loans to customers jumped to GEL38.9 million from GEL9.1 million.
Bank of Georgia said asset quality was "robust", with the ratio of non-performing loans to gross loans to clients falling to 3.5% in the quarter from 3.8% in the the corresponding period of the prior year.
The company defined non-performing loans as "the principal and interest on loans overdue for more than 90 days and any additional potential losses estimated by management".
Chief Executive Irakli Gilauri said the company's results in terms of asset quality and non-performing loans was a "strong performance" given the Georgian lari's 16% devaluation against the US dollar during the quarter.
Gilauri said that performance "reflects our conservative lending policy that takes into account, at the time of the initial lending decision, any potential currency mismatch".
He said client take-up of an offer to "re-profile their borrowings" in the wake of the currency devaluation was limited, with just 610 customers with loans of USD21.7 million going ahead.
"The currency devaluation itself has created an increased provision of GEL11.9 million, as a result of the requirement to increase Lari denominated provisions against US dollar lending," Gilauri said.
Bank of Georgia's acquisition of Privatbank in January increased provisions by GEL8.2 million, which combined with other impairment charges increasing total cost of credit risk to GEL41.89 million from GEL13.3 million.
Net banking interest income, effectively the difference between interest received on money lent to customer and that paid out to savers, increased by about 50% to GEL121.0 million, while net fee and commission income rose by more than one-third to GEL26.9 million. Gross healthcare profit was up to GEL16.9 million from GEL9.3 million.
Gross insurance profit was down 22% to GEL7.6 million, while gross real estate profit was down to GEL1.2 million from GEL6.1 million.
Overall operating expenses increased to GEL76.1 million from GEL58.3 million, due to higher salaries and employee benefits, administrative expenses, and banking depreciation and amortisation.
In a separate statement published later on Wednesday, Bank of Georgia said its Georgia Healthcare Group subsidiary has signed a deal to acquire a 95% equity interest in Deka LLC, the owner of a 350-bed hospital in Tbilisi. Around 80 beds at the hospital are currently operational, with the remainder to be refurbished over the next 12 months.
The acquisition has been financed from the proceeds of Bank of Georgia's capital raise in December. No financial details on the acquisition were disclosed.
By Samuel Agini; [email protected]; @samuelagini
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