Bank of Georgia Group PLC: history, ownership, mission, how it works & makes money

A Brief History of Bank of Georgia Group PLC

Bank of Georgia Group PLC, established in 1994, has evolved significantly since its inception as a commercial bank in the post-Soviet space. Initially named the Bank of Georgia, it transitioned to Bank of Georgia Group PLC in 2019 following its listing on the London Stock Exchange, where it raised £250 million through an IPO. This marked a significant milestone, enhancing its visibility and investor base.

As a leading universal bank in Georgia, it offers a diverse range of financial services including retail banking, corporate banking, investment banking, and insurance. The bank has consistently expanded its market presence, reporting a substantial total assets increase from ₾5.6 billion in 2016 to approximately ₾11.5 billion in 2022. This growth reflects the bank's strategic focus on increasing lending and investment activities in the region.

In 2021, Bank of Georgia Group PLC reported a net profit of ₾355 million, a significant improvement from ₾287 million in 2020. The increase in profitability can be attributed to a rise in net interest income, which reached ₾744 million in 2021, compared to ₾616 million in the previous year. This was driven by a growing loan portfolio, which expanded by 14% year-on-year.

As of the end of 2022, Bank of Georgia maintained a loan portfolio of approximately ₾8.4 billion, with a diverse offering that includes personal loans, business loans, and mortgages. In addition, its non-performing loans ratio stood at 2.4%, showcasing effective risk management practices.

The bank's capital adequacy ratio was reported at 17.8% in 2022, significantly above the regulatory requirement of 10%. This strong capital position provides resilience against economic fluctuations and supports continued growth strategies.

In terms of customer base, Bank of Georgia had over 2.6 million customers as of December 2022, reflecting a strong presence in both retail and corporate sectors. Its mobile banking application had over 1.1 million downloads, indicating a shift towards digital banking solutions.

Below is a table summarizing key financial metrics of Bank of Georgia Group PLC over recent years:

In recent developments, Bank of Georgia has capitalized on technology and innovation. The bank invested over ₾70 million in digital transformation projects in 2022, aiming to enhance customer experience and operational efficiency. This strategic move aligns with industry trends where digital banking has become essential for customer retention and growth.

Furthermore, the bank's stock performance has been resilient, with shares trading at approximately £10.50 as of early October 2023, reflecting a market capitalization close to ₾1.5 billion. The stock's performance has been supported by consistent dividend payouts, with a yield of around 4.2%.

Overall, the history of Bank of Georgia Group PLC reflects a consistent growth trajectory backed by solid financial performance, strategic investments, and a commitment to digital banking leadership in the region.

A Who Owns Bank of Georgia Group PLC

Bank of Georgia Group PLC, a prominent banking and financial services provider in Georgia, operates as a subsidiary of Bank of Georgia Holdings PLC. As of the latest available data, the ownership structure is composed of a diverse group of institutional and individual investors.

Ownership Breakdown

Among the institutional investors, several notable firms have significant stakes in Bank of Georgia Group PLC. These include:

• Investment funds such as BlackRock, Inc. with an ownership of approximately 7.5%.
• Goldman Sachs Asset Management, which holds about 3.2%.
• Other prominent hedge funds and investment firms contributing to the remaining institutional ownership.

Market Capitalization and Share Performance

As of October 2023, Bank of Georgia Group PLC boasts a market capitalization of approximately $1.5 billion. The share price has demonstrated significant volatility, with a year-to-date increase of approximately 25%.

Recent Financial Performance

For the third quarter of 2023, Bank of Georgia Group reported the following financial metrics:

• Net Interest Income: $110 million
• Net Profit: $45 million, reflecting a year-on-year growth of 15%.
• Total Assets: $5.6 billion
• Return on Equity (ROE): 12.5%

The financial results indicate a robust performance driven by increased lending and improved asset quality.

Major Shareholders

The following individuals and entities are among the largest shareholders as of the latest reporting period:

• Archil Gachechiladze - Chief Executive Officer, 3.0% ownership.
• Irakli Gilauri - Executive Chairman, 2.5% ownership.
• Various other private and institutional investors account for the remaining ownership percentages.

Bank of Georgia Group PLC's diverse ownership profile and solid financial performance position it well within the competitive landscape of Georgian banking. The continued interest from institutional investors underscores the company's growth potential and strategic direction.

Bank of Georgia Group PLC Mission Statement

The mission statement of Bank of Georgia Group PLC emphasizes its commitment to delivering high-quality financial services to customers while ensuring sustainable growth. The bank aims to be the leading retail and corporate bank in Georgia, focusing on innovation and customer satisfaction.

As of June 30, 2023, Bank of Georgia reported a total assets amounting to GEL 24.3 billion, showcasing its strong position within the Georgian banking sector. The bank's focus on increasing market share is evident in its strategic initiatives aimed at expanding its customer base through tailored products and services.

In 2022, the bank's net profit surged to GEL 744 million, reflecting a significant increase of 37% year-on-year. This strong performance is attributed to a robust increase in net interest income, which reached GEL 1.4 billion, up 24% compared to the previous year.

Bank of Georgia’s commitment to enhancing customer experience is evident from its strong digital banking platform, which served over 1.4 million active users as of August 2023. The growth of the digital segment reinforces the bank's mission to facilitate accessible banking for all Georgians.

Moreover, the bank invests significantly in corporate social responsibility (CSR) initiatives, aiming to contribute positively to Georgian society. Their CSR expenditure in 2022 was approximately GEL 12 million, focusing on education, health, and community development.

In line with its mission, Bank of Georgia continues to explore strategic partnerships and acquisitions to strengthen its market position. The bank's focus on sustainable practices also aligns with its long-term vision to foster economic growth while considering environmental and social impacts.

How Bank of Georgia Group PLC Works

Bank of Georgia Group PLC operates as one of the largest financial institutions in Georgia, providing a wide range of banking and financial services. As of December 31, 2022, the bank reported total assets of approximately 7.7 billion USD. The group focuses on retail banking, corporate banking, investment banking, and wealth management. It serves over 2 million customers through a network of 250 branches and 700 ATMs across Georgia.

The bank's retail banking segment provides services such as personal loans, mortgages, and credit cards. As of Q2 2023, retail banking revenue accounted for roughly 62% of the group's total revenue, reflecting a year-on-year growth of 15%. Corporate banking, which includes lending and deposit services for businesses, contributed 30% to the total revenue.

Bank of Georgia’s asset quality remains a priority. The non-performing loan (NPL) ratio was reported at 3.2% in Q2 2023, compared to 3.5% in Q1 2022, demonstrating the bank's effective credit risk management practices. The bank maintains a strong capital position with a Common Equity Tier 1 (CET1) capital ratio of 12.9% as of Q2 2023, above the regulatory minimum of 10%.

The bank’s funding structure is supported by customer deposits, which constituted approximately 70% of the total liabilities in 2022. The total amount of customer deposits reached 5.3 billion USD, showing an increase of 12% year-on-year. This stable deposit base enables the bank to extend credit and manage liquidity effectively.

Investment banking services include advisory services, capital raising, and trading. In 2022, investment banking fees contributed approximately 8% to the total revenue, with significant deals completed in the energy and real estate sectors. The group also entered into strategic financing collaborations, enhancing its position in the market.

In terms of financial performance, the bank recorded a net profit of 132 million USD for the first half of 2023. This represents an increase of 18% compared to the same period in the previous year. The return on average equity (ROAE) stood at 18.5%, indicating effective management of shareholder funds.

Bank of Georgia is also investing in technology to improve customer experience and operational efficiency. The bank’s digital banking platform has seen significant adoption, with over 1 million active users as of Q2 2023. Digital transactions accounted for over 50% of total transactions in the retail banking segment.

Overall, Bank of Georgia Group PLC's diversified financial offerings, strong capital ratios, and strategic focus on technology position it well within the competitive landscape of the Georgian banking sector. The ongoing developments in its digital banking services further enhance its operational efficiency and customer engagement strategies.

How Bank of Georgia Group PLC Makes Money

Bank of Georgia Group PLC operates primarily in the financial sector, focusing on banking and financial services. Its revenue streams can be categorized into several key areas, including net interest income, fees and commissions, and other income sources. As of the latest financial data, the company reported net interest income of GEL 1.1 billion for the year ended December 31, 2022.

Net interest income is derived from the difference between the interest earned on loans and the interest paid on deposits. In 2022, the bank's net interest margin stood at 4.7%, reflecting efficient asset and liability management. The bank’s loan portfolio was approximately GEL 8.9 billion, with the retail banking segment representing 59% of total loans issued.

Bank of Georgia also generates significant revenue from fees and commissions. In 2022, the total fee and commission income reached GEL 329 million, growing by 22% year-on-year. This income includes fees from various banking services such as payment transactions, account maintenance, and investment advisory services. The growth reflects an increase in transaction volumes and enhanced service offerings.

In addition to traditional banking income, Bank of Georgia has expanded into investment banking and capital markets, contributing to its revenue. The bank reported an increase in income from investment securities, totaling GEL 190 million in 2022. This segment includes revenues from equity and debt securities as well as investment funds.

Other income sources, including foreign exchange transactions and the sale of financial products, accounted for an additional GEL 145 million in 2022. This income stream is essential during periods of high market volatility, where currency trading can yield substantial returns.

Overall, Bank of Georgia Group PLC's diversified income strategy, primarily focusing on retail and corporate banking, investment banking, and a robust fee structure, continues to contribute to its financial health and sustainability. The bank's total assets reached approximately GEL 14.4 billion by the end of 2022, showcasing its expansive operations in the region.

Furthermore, the bank maintains a strong capital position, with a Tier 1 capital ratio of 13.3% as of December 31, 2022, which exceeds the regulatory requirement. This situation provides the Bank of Georgia with a competitive advantage to extend loans and invest in growth opportunities, thereby enhancing its profitability.