Lion Finance Group PLC (STU:GEB) (Full Year 2025) Earnings Call Highlights: Record Growth and ...

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Net Income Growth: 20.9% increase, reaching just shy of GEL2.2 billion.

Return on Equity (ROE): 28.4% for the year; over 30% in the quarter.

Cost to Income Ratio: 35.5% for the quarter.

Cost of Risk: 0.3% for the quarter, 0.4% for the full year.

Georgia Net Profit: GEL460 million for the quarter, 17% year-on-year growth.

Georgia Loan Book Growth: 16.1% year-on-year.

Digital Monthly Active Users in Georgia: 15% year-on-year growth, reaching 1.8 million.

Armenia Net Profit Growth: 38% for the quarter, 24% annualized standalone growth.

Armenia Loan Portfolio Growth: 28% year-on-year.

Armenia Deposits Growth: 33% year-on-year.

Operating Income Growth: 16.4% for the quarter, 20.8% for the year.

Net Interest Income Growth: 19.9% for the quarter, 25.9% for the year.

Net Non-Interest Income Growth: 10% for the quarter, 10.8% for the year.

Loan Portfolio Growth: 19.7% for the year, 5.8% in the last quarter.

Net Interest Margin: Slight reduction in the fourth quarter.

Dividend Increase: 16.7% for the full year.

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For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Lion Finance Group PLC (STU:GEB) reported a record year with net income growing by 20.9%, reaching nearly GEL2.2 billion.

The company achieved a return on equity of 28.4% for the year and over 30% for the quarter.

Both Georgian and Armenian operations showed strong growth, with Ameriabank in Armenia delivering a 38% increase in quarterly net profit.

The digital transformation efforts have been successful, with a 15% increase in digital monthly active users in Georgia and significant digital engagement in Armenia.

The macroeconomic environment in Georgia and Armenia remains strong, with GDP growth of 7.5% and 7.2% respectively, supporting the company's performance.

Geopolitical tensions in the region pose downside risks to the company's operations.

The cost of risk, although lower than expected, remains a concern with a slight increase in Armenia.

The net interest margin slightly reduced in the fourth quarter due to increased costs in local currencies.

The company faces competition in the Georgian market, with competitors aiming to grow their retail presence.

High liquidity levels are weighing on the company's interest costs, and there is a need to manage deposit market share below 40% in Georgia.

Q: Can you provide the outlook for Net Interest Margin (NIM) considering the expected rate cuts in Georgia and funding pressures? Also, could you elaborate on the bank's tech infrastructure? A: Archil Gachechiladze, CEO, stated that despite the negatives, such as funding pressures, the deployment of extra liquidity could result in a flat to slightly positive NIM outlook. Regarding tech infrastructure, Lion Finance Group is one of the largest tech employers in the region, with a focus on cloud readiness and AI integration. The core banking system is homemade, and significant investments are made in digital and AI capabilities to enhance customer experience and operational efficiency.

Q: What is the growth outlook for loans in Georgia and Armenia? A: Archil Gachechiladze, CEO, mentioned that the growth outlook for loans is 10% plus in Georgia and 20% plus in Armenia, reflecting different market dynamics and opportunities in each country.

Q: Is there potential for increasing the dividend payout from the current 30% level? A: Archil Gachechiladze, CEO, indicated that while there is potential to increase the dividend payout, the focus remains on maintaining buffers for growth opportunities, including M&A. If growth slows, the company may consider increasing capital returns.

Q: How sustainable is the cost-to-income ratio improvement in Armenia, and what is the competitive landscape in Georgia? A: Hovhannes Toroyan, CFO, stated that the cost-to-income ratio improvement in Armenia is sustainable, with expectations to maintain or improve it further. In Georgia, Archil Gachechiladze, CEO, noted that competition is strong but manageable, with a focus on quality and user experience.

Q: What are the reasons behind the strong consumer lending growth, and are there any signs of financial strain? A: Archil Gachechiladze, CEO, explained that strong consumer lending growth is driven by improved offerings and increased disposable incomes. There are no signs of financial strain, and asset quality remains robust.