This article first appeared on GuruFocus.
Release Date: August 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Lion Finance Group PLC (FRA:GEB) reported a 19% year-on-year increase in profits for Q2, reaching GEL 513 million.
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The company achieved a strong return on equity of 27% in Q2 and 28% for the first half of 2025.
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Georgia and Armenia, the core markets, showed robust economic growth, with GDP growth of 8.3% and 6.3% respectively.
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The company experienced significant loan growth, particularly in Armenia with a 37.6% increase.
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Digital transformation efforts are paying off, with a 15.5% increase in retail digital market active users year over year.
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Non-interest income decreased by 2.2% year over year, partly due to a lack of large one-off items compared to the previous year.
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Operating expenses increased by 12.1%, with Georgia seeing a 15.7% rise, which may impact future profitability.
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The net interest margin saw a slight decline in Armenia, affecting overall profitability.
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There is increased competition in the fees and commission revenue segment, impacting revenue dynamics.
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The potential acquisition of HSBC Malta did not materialize, as a European buyer was preferred, limiting expansion opportunities.
Q: Could you explain the notable increase in net other income, especially in GFS, and discuss the potential acquisition of HSBC Malta? A: The increase in net other income was not significant, only about 2-3 million more in the Georgian case, mainly due to one-off gains on real estate sales. Regarding HSBC Malta, it was announced that a European bidder is preferred, so it’s no longer relevant for us. We prefer to be disciplined in our acquisitions, even if it means missing opportunities. – Unidentified_3
Q: How have the influx of immigrants from Russia and Belarus impacted your performance, and what are the expectations if the conflict ends? A: The initial inflow in 2022 was strong, with many establishing businesses in Georgia. Some have moved on, but many international companies have relocated, benefiting the IT sector. We expect these businesses to remain even after stabilization, contributing to export revenues and productivity gains. – Unidentified_3 and Unidentified_2
Q: What is the outlook for the cost of risk in Georgia, and how do you see operating expenses evolving? A: The cost of risk was slightly higher due to currency fluctuations but remains below our midterm expectations. We don’t expect it to reach 1% soon. Operating expenses should neutralize by the fourth quarter, despite double-digit salary growth in the country. – Unidentified_3