Lion Finance Group LON: BGEO executives highlighted a “very solid quarter” marked by double-digit profitability and balance sheet growth, low credit losses, and continued momentum in both Georgia and Armenia, while also pointing to a supportive macroeconomic backdrop heading into 2026.
Management highlights: FTSE 100 milestone and group performance
Opening the call, Archil described 2026 as a landmark year for the company, noting that 20 years after joining the London Stock Exchange in 2006 via GDRs, Lion Finance Group had joined the FTSE 100. He characterized the inclusion as “a very special moment” that “summarizes the achievement over the last 20 years.”
Archil reiterated the group’s footprint—“two-thirds Georgia, roughly one-third Armenia”—and said Armenia is “increasing very rapidly.” He said the group serves about 2.7 million retail customers and has delivered close to a 30% return on equity on average over the last five years. He also cited a “very strong market share in Georgia of 38” and a number-one position in Armenia with a growing market share.
For the quarter, Archil said the group generated a 27.4% return on equity, which he noted was “slightly down with more capital.” He added that risk metrics remained strong, with a 2.1% NPL ratio and a 0.3% cost of risk, “well below our midterm guidance of 80 to 100 basis points.”
On balance sheet trends, he pointed to 23.3% year-on-year loan growth, with Armenia particularly strong, and deposits growing 17.5%. He also cited strong growth in net interest income and fee and commission income, while FX income was weaker, with “pressures” visible. Costs, he said, were “in line more or less with the revenue,” though management continued to emphasize cost discipline.
Macroeconomic backdrop: growth revised higher, inflation pressures
Akaki Liqokeli provided an update on macroeconomic conditions, saying both Georgia and Armenia entered 2026 “on a strong footing.” He cited preliminary first-quarter GDP growth of 9.1% year-on-year in Georgia and 7.1% in Armenia, with services as key growth drivers.
Based on the first-quarter performance and “demonstrated resilience,” Liqokeli said the company revised its full-year 2026 real GDP growth forecast to 7% for Georgia and 6% for Armenia.
He also addressed risks stemming from the “recent escalation in the Middle East,” primarily via higher energy prices and transport disruptions. However, he said impacts had been “muted” so far due to limited direct exposure, diversified inflows, and “sound macroeconomic policies.” In a prolonged conflict scenario, he also noted potential upside from increased strategic relevance of the “middle corridor,” as well as possible redirection of tourism and capital to the South Caucasus.
On currencies, Liqokeli said the Georgian lari and Armenian dram have remained broadly stable despite geopolitical tensions, supported by “strong macroeconomic fundamentals and prudent policies.” The main macro impact has been inflation, he said, as higher fuel prices added to food price pressures, pushing inflation higher in both countries. He expects headline inflation to remain elevated during the year before gradually returning toward central bank targets of 3% as supply-side pressures ease.
He noted monetary policy remained prudent. Liqokeli said the National Bank of Georgia raised the refinancing rate by 25 basis points, and he expects policy to remain “moderately tight” through the year. In Armenia, he said the central bank has held its refinancing rate at 6.5% since the start of the year, though communication has turned more hawkish, leaving open the possibility of “some modest tightening.”
He also pointed to continued reserve accumulation, with gross international reserves at $6.3 billion in Georgia and $5.5 billion in Armenia by end-March, both above IMF minimum adequacy thresholds. On fiscal policy, he said both countries have maintained discipline: Georgia’s debt-to-GDP continues to fall with deficits kept at 2.5% of GDP, while Armenia has held public debt-to-GDP “more or less stable” despite elevated deficits.
Georgia: profit growth, digital usage and payments scale
Giorgi Shagidze, joining his first results call with Lion Finance Group, described “another quarter of very strong results” in Georgian Financial Services. He reported profit growth of 11.6% to GEL 452 million and return on equity of 31.5%.
Shagidze said the loan book grew 17.8% year-on-year, with a 0.54% cost of risk and 2% NPLs. Deposits grew 13% year-on-year. He also cited retail monthly active customers (MAU) of 2.2 million and retail digital MAU of 1.9 million.
On the group’s “award-winning financial super app,” Shagidze highlighted that digital daily active users represented 52.7% and that 88% of all loans were granted through digital channels. He said customer satisfaction (CSAT) was 93% and referenced recognition from Global Finance as “World’s Best Digital Bank” for the second consecutive year, as well as an innovation award in AI in the region.
In payments, Shagidze said acquiring transaction volume grew 19.7% year-on-year, though quarter-over-quarter declined due to seasonality. He reported market share of 56.9%, POS terminals of 26.7 thousand (up 17% year-on-year), and issuing growth of 12.2% year-on-year. He said NPS reached 75%.
He added that quarter-over-quarter loan growth was 3.6%, with margins up around 30 basis points, while deposits grew 12.6% year-on-year, supporting de-dollarization. He said capital and liquidity buffers were “very comfortable,” with a CET capital buffer of 2.5 percentage points, LCR of 140%, and NSFR of 130%.
Armenia: rapid expansion, AT1 issuance, and digital adoption
Hovhannes reported what he called a “very strong performance” in Armenia, with profit up 35% year-on-year to GEL 129 million and return on equity of 21.8%. He said the loan book grew 34.6% in constant currency terms and deposits grew almost 30% year-on-year.
He also highlighted customer and digital growth: monthly active users increased more than 33% and digital MAU rose more than 47% to 362,000. He said there remains “much bigger opportunities for growth” given digital MAU is still below half a million.
Hovhannes said online banking penetration reached 83.7%, up nearly 5 percentage points year-on-year. Digital MAU-to-MAU rose 7.2 points to 73%, while DAU-to-MAU was 44%, up 2.5 points.
On portfolio composition, he said both segments grew but corporate lending grew faster, resulting in a slight increase in the share of FX-denominated loans in the first quarter. On deposits, he said the share of AMD-denominated balances increased, which he attributed to customer base growth. He reported market share by loans of 22% (up 1.7 percentage points year-on-year) and deposits of 19.5% (up 1 point year-on-year).
He also discussed capital actions, saying the company issued its first-ever AT1 notes locally: $50 million at an 8.5% coupon, completed “within 6 days” in February. He said this improved capital headroom to roughly 1.1% above Central Bank of Armenia requirements. He added a second tranche—$50 million at an 8% coupon—had been announced for local allocation. Liquidity remained well above requirements, with LCR above 200% and NSFR above 125%.
Group financials, capital return, and Q&A themes
Archil said operating income rose 15%, driven by an 18.4% increase in net interest income. He described non-interest income as “slightly subdued,” though he said net fee and commission income grew strongly year-on-year in both markets. In Georgia, he cited a new deal with system operators as a contributor. In Armenia, he referenced one M&A transaction that contributed GEL 5 million out of GEL 30, describing it as “not a major one.”
He reiterated that FX income remained under pressure and consistent with prior guidance that the company did not expect significant volatility. Operating expenses grew less than revenues, resulting in positive operating jaws, and Archil said the cost-income ratio remained “just below 35%.”
On net interest margins, Archil said the group was flat, with “slower margin in Armenia and higher margin in Georgia.” In Armenia, he cited higher funding costs from a higher proportion of dram funding and the impact of Tier 1 issuance and other debt issuances, plus lower yields due to several large corporate loans. In Georgia, he said the bank reduced deposit pricing by about 10 basis points and deployed excess liquidity for another roughly 20 basis points benefit.
Archil said profit rose 14% year-on-year, with ROE of 27.4% and return on average assets “at almost 4%.”
He also announced a capital distribution totaling GEL 177 million:
- GEL 122 million in dividends
- About GEL 55 million to be invested in the company’s own stock
He said this equated to GEL 2.85 per share “for the first quarter only,” and noted the group moved to quarterly dividends from the third quarter of the prior year. He added that distribution was at the low end of the group’s guided 30%-50% range to build capital buffers and support “higher than expected growth.”
During Q&A, executives addressed margin dynamics and costs. On Georgia, Archil said NIM should remain “flattish,” with a higher refinancing rate marginally positive. He also said the group aims to stay under 40% deposit market share to avoid an additional 50 basis point capital requirement. On costs, he said labor cost inflation in Georgia has remained double-digit and that the bank expects “neutral to positive operating jaws going forward.”
For Armenia, Hovhannes said management expects “slight recovery of NIM” later in the year as AT1 costs normalize and excess liquidity and sub-debt funding are utilized alongside ongoing growth, with improvement more likely in the second half. He also said the company targets a midterm cost-income ratio below 40% in Armenia, noting recent investments in infrastructure including opening branches—four last year and five this year—while emphasizing that branches handle less than 1% of operations due to high digital penetration.
On FX revenues, Archil said the quarter’s level was “fair to assume” as a low-volatility baseline unless conditions change materially. On credit quality, he said underwriting standards have not changed and that strong economic growth has supported benign asset quality; he added management does not expect major deterioration absent an economic slowdown.
Asked about M&A, Archil said it is “very difficult” to find markets combining high growth, stable currency, and governance standards similar to the group’s home markets, but noted the company is looking at opportunities in Southeastern Europe and Central Asia and would compare acquisitions versus share buybacks as a capital allocation benchmark.
Closing the call, Archil said the group expects strong growth in both economies and believes franchise quality is at “the highest level we’ve ever been historically,” positioning Lion Finance Group to benefit from the macro environment while continuing to contribute to it.
About Lion Finance Group LON: BGEO
Lion Finance Group PLC (formerly Bank of Georgia Group PLC) is a FTSE 250 holding company whose main subsidiaries provide banking and financial services in the high-growth Georgian and Armenian markets through leading, customer-centric, universal banks – Bank of Georgia in Georgia and Ameriabank in Armenia. By building on our competitive strengths, we are committed to driving business growth, sustaining high profitability, and generating strong returns, while creating opportunities for our stakeholders and making a positive contribution in the communities where we operate.
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