Q2 2026 Lion Finance Group PLC Earnings Call

August 11, 2026

Speaker #2: You have joined the meeting as an attendee and will be muted throughout the meeting.

Nini Arshakuni: Our performance and results for Q2 and the H1 2026. My name is Nini Arshakuni, I am Head of IR, and today I will be moderating this call. I am joined, as always, by the Group CEO, Archil Gachechiladze, as well as Bank of Georgia CFO, Giorgi Shagidze, Ameriabank's CFO, Hovhannes Toroyan, and our Group Economist, Akaki Tsereteli. We will go through the results presentation first, and then in the H2 of this call, you will be able to ask questions. Please be aware that this call is being recorded. With that, I will first hand over to Archil for the opening remarks, and then we will continue with the deep dive. Archil, please go ahead.

Nini Arshakuni: Our performance and results for Q2 and the H1 2026. My name is Nini Arshakuni, I am Head of IR, and today I will be moderating this call. I am joined, as always, by the Group CEO, Archil Gachechiladze, as well as Bank of Georgia CFO, Giorgi Shagidze, Ameriabank's CFO, Hovhannes Toroyan, and our Group Economist, Akaki Liqokelii. We will go through the results presentation first, and then in the H2 of this call, you will be able to ask questions. Please be aware that this call is being recorded. With that, I will first hand over to Archil for the opening remarks, and then we will continue with the deep dive. Archil, please go ahead.

Speaker #3: Our performance and results for the second quarter and the first half of 2026. My name is Nini Arshakuni. I'm Head of IR, and today I'll be moderating this call.

Speaker #3: I'm joined, as always, by the Group CEO, Archil Gachechiladze; Group as well as Bank of Georgia CFO, Georgi Shagidze; Ameriabank's CFO, Juanes Toroyan; and our Group Economist, Akaki Liqokeli.

Speaker #3: We'll present, we'll go through the results, presentation first, and then in the second half of this call, you'll be able to ask questions. Please be aware that this call is being recorded, and with that, I'll first hand over to Archil for the opening remarks, and then we'll continue with the deep dives.

Speaker #3: Archil, please go ahead.

Speaker #4: Thank you for joining the call. I'm very happy to report a very strong quarter. In the second quarter, we had, we registered a very high-quality franchise which is shown in the net promoter score in both markets, being very high, as well as a significant growth of our retail franchise which is reflected in growth of monthly active users in Georgia reaching very close to half of the half of the population, meaning the total population including the small kids and so forth and not all bankable of 1.9 million, which is 13.3% higher than last year.

Archil Gachechiladze: Thank you for joining the call. I am very happy to report a very strong quarter. In Q2, we registered a very high quality of the franchise, which is shown in the Net Promoter Score in both markets, being very high, as well as the significant growth of our retail franchise, which is reflected in growth of monthly active users in Georgia, reaching very close to half of the population, meaning the total population, including the small kids and so forth, who are not all bankable, of 1.9 million, which is 13.3% higher than last year. Much higher growth, so stronger penetration happening in Armenia, getting close to 400,000 monthly active users. What is also interesting is that in Georgia, we also achieved more than 1 million daily active users, so that more than 1 million people open our application daily.

Archil Gachechiladze: Thank you for joining the call. I am very happy to report a very strong quarter. In Q2, we registered a very high quality of the franchise, which is shown in the Net Promoter Score in both markets, being very high, as well as the significant growth of our retail franchise, which is reflected in growth of monthly active users in Georgia, reaching very close to half of the population, meaning the total population, including the small kids and so forth, who are not all bankable, of 1.9 million, which is 13.3% higher than last year. Much higher growth, so stronger penetration happening in Armenia, getting close to 400,000 monthly active users. What is also interesting is that in Georgia, we also achieved more than million daily active users, so that more than million people open our application daily.

Speaker #4: And much higher growth, so a stronger penetration happening in Armenia, getting close to 400,000 monthly active users. What's also interesting is that in Georgia, we also achieved more than a million daily active users, so that more than a million people open our application daily.

Archil Gachechiladze: In terms of the revenue numbers, our Q2 was up by 23.4% and 19.6% for the H1. Profit was similarly strong growth, where we had 20.6% growth in Q2, and 17.3% for the H1. Also, which was very strong showing, was the balance sheet growth, both on loans as well as deposits with 23% and 26.8% accordingly. That is in constant currency. As you may remember, we guide about 15% growth, but usually deliver around 20% over the last few years as the macro has been stronger than the average outlook that we have for longer term. Having said that, 23% is even stronger than our historic average. That is happening while we have a lower than guided cost of risk of 0.6% in Q2 and 0.5% for the H1, and delivering about 27% return on equity.

Archil Gachechiladze: In terms of the revenue numbers, our Q2 was up by 23.4% and 19.6% for the H1 of the year. Profit was similarly strong growth, where we had 20.6% growth in Q2, and 17.3% for the half year. Also, which was very strong showing, was the balance sheet growth, both on loans as well as deposits with 23% and 26.8% accordingly. That is in constant currency. As you may remember, we guide about 15% growth, but usually deliver around 20% over the last few years as the macro has been stronger than the average outlook that we have for longer term. Having said that, 23% is even stronger than our historic average. That is happening while we have a lower than guided cost of risk of 0.6% in Q2 and 0.5% for the H1, and delivering about 27% return on equity.

Speaker #4: In terms of the revenue numbers, our second quarter was up by 23.4% and 19.6% for the first half year. And profit was similarly strong growth, where we had 20.6% growth in the first quarter, the second quarter, sorry, and 19, 17.3% for the half year.

Speaker #4: Also, what was very strong showing was balanced growth, both on loans as well as deposits, with 23% and 26.8%, accordingly. That's in constant currency.

Speaker #4: As you may remember, we guide about 15% growth, but usually deliver around 20% over the last few years as the macro has been stronger than the average outlook that we have for longer term.

Speaker #4: Having said that, 23% is even stronger than our historic average. And that's happening while we have a lower than guided cost of risk of 0.6% in the second quarter and 0.5% for the first half year, and delivering about 27% return on equity.

Speaker #4: So very strong numbers, not only in terms of profitability but growth in terms of revenue as well as balance sheet. We also had positive operating jobs in both markets and then obviously combined.

Archil Gachechiladze: Very strong numbers, not only in terms of profitability, but growth in terms of revenue as well as balance sheet. We also had positive operating jaws in both markets and then obviously combined. All in all, very good numbers as well as strong numbers in terms of the quality of the franchise shown in terms of coverage of monthly active users and the satisfaction of the customers. I am very appreciative of the whole team's efforts that lead and deliver these results. With that, I will let Akaki Tsereteli tell us about the macroeconomic environment in Armenia and Georgia.

Speaker #4: So all in all, very, very good numbers as well as strong numbers in terms of the quality of the franchise shown in terms of coverage of monthly active users and the satisfaction of the customers.

Speaker #4: I am very appreciative of the whole team's efforts that lead and deliver these results. With that, I will let Akaki tell us about the macroeconomic environment in Armenia and Georgia.

Akaki Tsereteli: Hello, everyone. I will share with you the recent macroeconomic developments and outlook for our core markets, Georgia and Armenia. Let me start with growth performance. In H1 of the year, Georgian economy has demonstrated and maintained strong growth performance with real GDP growth reaching 7.9% year-on-year. With this strong number and also improving economic resilience, we have revised our full year real GDP growth forecast for 2026 from 7% to 7.5%. The Armenian economy expanded by 4% year-on-year in Q1, reflecting high base effect from the previous year and some pre-election uncertainty. The preliminary numbers show that growth trajectory improved significantly from Q2, and our full year real GDP growth outlook for Armenia is 5.5%.

Akaki Liqokeli: Hello, everyone. I will share with you the recent macroeconomic developments and outlook for our core markets, Georgia and Armenia. Let me start with growth performance. In H1 of the year, Georgian economy has demonstrated and maintained strong growth performance with real GDP growth reaching 7.9% year-on-year. With this strong number and also improving economic resilience, we have revised our full year real GDP growth forecast for 2026 from 7% to 7.5%. The Armenian economy expanded by 4% year-on-year in Q1, reflecting high base effect from the previous year and some pre-election uncertainty. The preliminary numbers show that growth trajectory improved significantly from Q2, and our full year real GDP growth outlook for Armenia is 5.5%.

Speaker #5: Hello, everyone. I will share with you the recent macroeconomic developments and outlook for our core markets, Georgia and Armenia. Let me start with growth performance.

Speaker #5: In the first half of the year, Georgian economy has demonstrated and maintained strong growth performance with real GDP growth reaching 7.9% year on year.

Speaker #5: With this strong number and also improving economic resilience, we have revised our full-year real GDP growth forecast for 2026 from 7% to 7.5%. The Armenian economy expanded by 4% year on year in the first quarter, reflecting a high base effect from the previous year and some pre-election uncertainty.

Speaker #5: The preliminary numbers show that growth trajectory improved significantly from quarter two and our full-year real GDP growth performance growth outlook for Armenia is 5.5%.

Speaker #5: Overall, this growth projections remain significantly above the peer median and they are expected to be driven by services in the following years as it was the case in the previous periods as the right-hand side chart shows.

Akaki Tsereteli: Overall, these growth projections remain significantly above the peer median, and they are expected to be driven by services in the following years, as it was the case in the previous periods, as the right-hand side chart shows. This service-led growth is expected to be broad-based, export-oriented, and productivity enhancing. To give you a few highlights in this area, Armenia launched the largest AI factory in the CIS region just a few days ago, and Georgia has moved on to the construction phase of its first deep sea port. The strong growth performance has been also supported by diversified and resilient external sector inflows, including export proceeds, tourism revenues, and remittances. As this slide shows, the overall inflows continues to increase in H1 2026, despite escalations in tensions in the Middle East. The resilient inflows have also supported currency strength.

Akaki Liqokeli: Overall, these growth projections remain significantly above the peer median, and they are expected to be driven by services in the following years, as it was the case in the previous periods, as the right-hand side chart shows. This service-led growth is expected to be broad-based, export-oriented, and productivity enhancing. To give you a few highlights in this area, Armenia launched the largest AI factory in the CIS region just a few days ago, and Georgia has moved on to the construction phase of its first deep sea port. The strong growth performance has been also supported by diversified and resilient external sector inflows, including export proceeds, tourism revenues, and remittances. As this slide shows, the overall inflows continues to increase in H1 2026, despite escalations in tensions in the Middle East. The resilient inflows have also supported currency strength.

Speaker #5: This service-led growth is expected to be broad-based export-oriented and productivity-enhancing to give you a few highlights in this area. Armenia launched the largest AI factory in the CIS region just a few days ago and Georgia has moved on to the construction phase of its first deep-sea port.

Speaker #5: The strong growth performance has also been supported by diversified and resilient external sector inflows, including export proceeds, tourism revenues, and remittances. As this slide shows, the overall inflows continued to increase in the first half of 2026, despite escalations in tensions in the Middle East.

Speaker #5: The resilient inflows have also supported currency strength. Georgian Lari and Armenian Drum continue to appreciate against the US dollar in the first seven months of 2026.

Akaki Tsereteli: Georgian lari and Armenian dram continued to appreciate against the US dollar in the first seven months of 2026. In fact, these two currencies are among the three best performers in the broader region, as the right-hand side chart shows. Importantly, the strength of Georgian lari and Armenian dram has been also underpinned by credible macroeconomic policy frameworks in the two countries, reflected in declining deposit dollarization trend and also growing demand for local currency government securities among international investors. These structural drivers are expected to remain in place in the following years and support local currency values. The currency strength also contributes to price stability, and in recent months, we have seen signs of inflation stabilization in both countries following some uptick in previous periods, driven by global increases in food and energy prices.

Akaki Liqokeli: Georgian lari and Armenian dram continued to appreciate against the US dollar in the first seven months of 2026. In fact, these two currencies are among the three best performers in the broader region, as the right-hand side chart shows. Importantly, the strength of Georgian lari and Armenian dram has been also underpinned by credible macroeconomic policy frameworks in the two countries, reflected in declining deposit dollarization trend and also growing demand for local currency government securities among international investors. These structural drivers are expected to remain in place in the following years and support local currency values. The currency strength also contributes to price stability, and in recent months, we have seen signs of inflation stabilization in both countries following some uptick in previous periods, driven by global increases in food and energy prices.

Speaker #5: And in fact, these two currencies are among the best performers three best performance in the broader region as the right-hand side chart shows. Importantly, the strength of Georgian Lari and Armenian Drum has been also underpinned by credible macroeconomic policy frameworks in the two countries, reflected in declining deposit dollarization trend and also growing demand for local currency government securities among internationally investors.

Speaker #5: This structural drivers are expected to remain in place in the following years and support local currency values. The currency strength also contributes to price stability and in recent months we have seen signs of inflation stabilization in both countries following some uptick in previous periods.

Speaker #5: Driven by global increases in food and energy prices. More importantly, service price inflation has been relatively stable in both countries reinforcing our confidence that inflation should go back to central banks 3% target next year as base effects unwind.

Akaki Tsereteli: More importantly, service price inflation has been relatively stable in both countries, reinforcing our confidence that inflation should go back to central banks' 3% targets next year as base effects unwind. The central banks continue to be attentive of remaining inflation risks as global commodity markets remain volatile. In May, the National Bank of Georgia increased its policy rate by 25 basis points, signaling its continued commitment to price stability. For the rest of the year, we do not anticipate any policy rate moves from either central bank. In 2027, we see room for around 75 basis point cuts by National Bank of Georgia as it gradually exits moderately tight policy stance. The central banks have been also actively building international reserves. This has been enabled by resilient inflows and ongoing trend of deposit de-dollarization.

Akaki Liqokeli: More importantly, service price inflation has been relatively stable in both countries, reinforcing our confidence that inflation should go back to central banks' 3% targets next year as base effects unwind. The central banks continue to be attentive of remaining inflation risks as global commodity markets remain volatile. In May, the National Bank of Georgia increased its policy rate by 25 basis points, signaling its continued commitment to price stability. For the rest of the year, we do not anticipate any policy rate moves from either central bank. In 2027, we see room for around 75 basis point cuts by National Bank of Georgia as it gradually exits moderately tight policy stance. The central banks have been also actively building international reserves. This has been enabled by resilient inflows and ongoing trend of deposit de-dollarization.

Speaker #5: The central banks continue to be attentive of remaining inflation risks as global commodity markets remain volatile. In May, the National Bank of Georgia increased its policy rate by 25 basis points signaling its continued commitment to price stability.

Speaker #5: For the rest of the year, we do not anticipate any policy rate moves from either central bank and in 2027 we see room for around 75 basis point cuts by National Bank of Georgia as it gradually exits moderately tight policy stance.

Speaker #5: The central banks have been also actively building international reserves. This has been enabled by resilient inflows and ongoing trend of deposit dedollarization. As of end July, gross reserves reached new record highs of 7.5 billion US dollars in Georgia and 6.2 billion in Armenia.

Akaki Tsereteli: As of end July, gross reserves reached new record highs of $7.5 billion in Georgia and $6.2 billion in Armenia. Importantly, the reserve levels remain within adequacy ranges, providing solid buffers against possible external shocks. Also, higher reserve levels have been a major factor behind improving credit outlooks of both countries recently. Fiscal policy is another pillar of macroeconomic resilience. Both Georgia and Armenia continue to demonstrate fiscal discipline through prudent management of public debt. As this chart shows, the Georgian authorities remain on a deleveraging path, maintaining narrow fiscal deficits. The Armenian authorities have managed to stabilize public debt levels despite temporarily elevated spending needs. In both countries, public debt continues to de-dollarize, reducing the fiscal sector's exposure to exchange rate movements. Lastly, the banking sectors in Georgia and Armenia have benefited from favorable macroeconomic conditions. They continue to deliver robust growth and sustain strong asset quality.

Akaki Liqokeli: As of end July, gross reserves reached new record highs of $7.5 billion in Georgia and $6.2 billion in Armenia. Importantly, the reserve levels remain within adequacy ranges, providing solid buffers against possible external shocks. Also, higher reserve levels have been a major factor behind improving credit outlooks of both countries recently. Fiscal policy is another pillar of macroeconomic resilience. Both Georgia and Armenia continue to demonstrate fiscal discipline through prudent management of public debt. As this chart shows, the Georgian authorities remain on a deleveraging path, maintaining narrow fiscal deficits. The Armenian authorities have managed to stabilize public debt levels despite temporarily elevated spending needs. In both countries, public debt continues to de-dollarize, reducing the fiscal sector's exposure to exchange rate movements. Lastly, the banking sectors in Georgia and Armenia have benefited from favorable macroeconomic conditions. They continue to deliver robust growth and sustain strong asset quality.

Speaker #5: This importantly the reserve levels remain within adequacy ranges providing solid buffers against possible external shocks. Also higher reserve levels have been a major factor behind improving credit outlooks of both countries recently.

Speaker #5: Fiscal policy is another pillar of macroeconomic resilience. Both Georgia and Armenia continue to demonstrate fiscal discipline through prudent management of public debt. As this chart show, the Georgian authorities remain on a deleveraging path, maintaining narrow fiscal deficits.

Speaker #5: The Armenian authorities have managed to stabilize public debt levels despite temporarily elevated spending needs. In both countries, public debt continues to dedollarize, reducing the fiscal sector's exposure to exchange rate movements.

Speaker #5: And lastly, the banking sectors in Georgia and Armenia have benefited from favorable macroeconomic conditions. They continue to deliver robust growth and sustain strong asset quality.

Speaker #5: Long dollarization levels remain low by historical standards with recent uptick in Armenia-related to business lending. Capitalizations are highest among the regional peers in Georgia and Armenia as measured by tier one capital to assets ratios.

Akaki Tsereteli: Loan dollarization levels remain low by historical standards, with a recent uptick in Armenia related to business lending. Capitalizations are highest among the regional peers in Georgia and Armenia as measured by Tier 1 capital to assets ratios. This demonstrates prudent risk management practices in both countries and a conservative supervisory approach. This concludes my part. Thank you, and back to you, Nini.

Akaki Liqokeli: Loan dollarization levels remain low by historical standards, with a recent uptick in Armenia related to business lending. Capitalizations are highest among the regional peers in Georgia and Armenia as measured by Tier 1 capital to assets ratios. This demonstrates prudent risk management practices in both countries and a conservative supervisory approach. This concludes my part. Thank you, and back to you, Nini.

Speaker #5: This demonstrates prudent risk management practices in both countries and conservative supervisory approach. So this concludes my part. Thank you and back to you, Nini.

Speaker #1: Thank you, Akaki. Now Georgi will walk us through the main highlights of the Georgian financial services first.

Nini Arshakuni: Thank you, Akaki. Now Giorgi will walk us through the main highlights of the Georgian Financial Services first.

Speaker #4: Thank you, Akaki. Thank you, Nini. Let me share the presentation. So good afternoon, everyone. As you as Axel said, we had another quarter or very strong financial performance across the board.

Giorgi Shagidze: Thank you, Akaki. Thank you, Nini. Let me share the presentation. Good afternoon, everyone. As Archil said, we had another quarter of very strong financial performance across the board. I will be now going through Georgian Financial Services, so we will start with the highlights for the quarter. Our profit for the quarter grew by 15.4% year on year, and for the H1 of the year, it grew by 13.5%. This resulted into the return on equity of 30.4% and 30.9%, respectively. Our loan book grew by 17.1% at constant currency rate and 24.2% in deposits. If we exclude Ministry of Finance deposit, the growth was about 18.4%. Retail monthly active customers grew by 9.5%, reaching 2.28 million, and retail digital monthly active users grew by 13.3%, reaching 1.92 million.

Speaker #4: I'll be now going through Georgian financial services and we'll start with the highlights for the quarter. Our profit for the quarter grew by 14.15.4% year on year.

Speaker #4: And for the first half of the year, it grew by 13.5%. This resulted in a return on equity of 30.4% and 30.9%, respectively. Our loan book grew by 17.1% at constant currency rate, and 24.2% in deposits.

Speaker #4: If we exclude the Ministry of Finance deposit, the growth was about 18.4%. Retail monthly active customers grew by 9.5%, reaching 2.208 million, and retail digital monthly active users grew by 13.3%, reaching 1.92 million.

Speaker #4: Now this slide basically shows why we believe our customer growth is durable and it is supported by broad digital ecosystems as you can see on the left-hand side of the slide.

Giorgi Shagidze: This slide basically shows why we believe our customer growth is durable, and it is supported by broad digital ecosystems, as you can see on the left-hand side of the slide. On the right-hand side, I can stress a few numbers. On the retail app, our customer satisfaction was very high at 92%, with the scores at App Store and Google Play at 4.6 and 4.7 respectively. Our digital daily active users reached 1 million, so pretty much 1 million people open our app every day. 88% of our loans were granted through digital channels. In business banking app, a similar dynamics with the customer satisfaction score at 92%, digital monthly active users being at 84% of total monthly active customers. Here, too, at the App Store and Google Play, we have very high scores at 4.9.

Speaker #4: On the right-hand side, I can stress a few numbers. On the retail side, our customer satisfaction was very high at 92%, with the scores at the Apple Store and Google Play at 4.6 and 4.7, respectively.

Speaker #4: Our digital daily active users reached 1 million so pretty much 1 million people open our app every day. 88% of our loans were granted through digital channels.

Speaker #4: In business banking, we see similar dynamics, with the customer satisfaction score at 92%. Digital monthly active users are at 84% of total monthly active customers.

Speaker #4: Tier two at the Apple Store and Google Play, we have very high scores at 4.9. And I want finally on this slide to reiterate that global finance named us as the world's best digital bank in both 2024 and 2025 years.

Giorgi Shagidze: I want finally on this slide to reiterate that Global Finance named us as the world's best digital bank in both 2024 and 2025 years. Moving on to payments slide. Payments are one of the core pillars for the ecosystems that I mentioned. You can see a very strong growth in acquiring volumes, 20% year on year or 12.7% quarter over quarter. In terms of issuing, this growth was 11.9% year on year in terms of number of cards, reaching 1.7 million, which is about 2.5% growth quarter over quarter. We reached 28.8 thousand active merchant terminals, which was 13.3% growth year on year. Finally, our market share for the acquiring volumes was further strengthened, reaching 56.7%.

Speaker #4: Moving on to payment slide. Payments are one of the core pillars for the ecosystems that I mentioned. You can see a very strong growth in acquiring volumes 20% year on year or 12% or 12.7% quarter over quarter.

Speaker #4: In terms of issuing, this growth was 11.9% year on year in terms of number of cards reaching 1.7 million which is about 2.5% growth quarter over quarter.

Speaker #4: We reached 28.8 thousand active merchant terminals which were 13.3% growth year on year. And finally, our market share for the acquiring volumes were farthest strengthened reaching 56.7%.

Speaker #4: Now in terms of in terms of customers centricity, which represent which is shown here in terms of net promoter score, it's approximately doubled over the period shown and then for the recent six quarter it was more than 70%.

Giorgi Shagidze: Now, in terms of customer centricity, which is shown here in terms of Net Promoter Score, it approximately doubled over the period shown, and then for the recent six quarters, it was more than 70%. While it little bit dropped last two quarters, it is still within the acceptable statistical noise and being above 70%, it is extraordinarily high, on par with very strong customers or the best customer-centric banks in the world. This allows us to anticipate customer needs and wants before the customers approach us and then translate it into the respective financials as we do this. Loan and deposit growth was strong as well, 17.1% at the constant currency rate growth of the loan year on year, or 4.2% growth of the loan book quarter over quarter. The growth was across the board, corporate and retail banking leading the growth in loans.

Speaker #4: While it has dropped a little bit in the last two quarters, it is still within the acceptable statistical noise and, being above 70%, it is extraordinarily high—on par with very strong customers or the best customer-centric banks in the world.

Speaker #4: This allows us to anticipate customer needs and wants before the customers approach us and then translate it into the respective financials as we as we as we do this.

Speaker #4: Loan and deposit growth was strong as well 17.1% at the constant currency rate growth of the loan year on year or 4.2% growth of the loan book quarter over quarter.

Speaker #4: The growth was across the board corporate and retail banking leading the growth in loans. The de-dollarization remained broadly stable with 57.8% local currency loans contributing to total loans.

Giorgi Shagidze: The de-dollarization remains broadly stable with 57.8% local currency loans contributing to total loans. In terms of deposits, the growth was 24.2% constant currency rate. As I said, if we exclude Ministry of Finance deposit, the growth would be 18.4% year-on-year and 3.5% quarter-over-quarter. In the quarterly growth here, the SME led the percentage growth-wise. In terms of the de-dollarization, the local currency deposits contributed to 58.1% to total deposits. This brings to final slide of my part of the presentation. With the growth and strong profitability actually further strengthened our positions both for capital and for liquidity. We operate with the buffers comfortably above the minimum respective requirements. In terms of capital, we operate 2.7, 3.4, and 2.2 percentage point above the respective CET1, Tier 1, and total capital requirements.

Speaker #4: In terms of deposits, the growth was 24.2% constant currency rate as I said if we exclude Ministry of Finance deposit the growth would be 18.4% year on year and 3.5% quarter over quarter.

Speaker #4: Now in the quarterly growth here the the SME led percentage growth wise and then in terms of the de-dollarization the local currency deposits contributed to 58.1% to total deposits.

Speaker #4: And this brings to final slide of my part of the presentation with the growth and strong profitability actually farther strengthened our positions both for capital and for liquidity.

Speaker #4: We operate with the buffers comfortably above the minimum respective requirements in terms of capital we operate 2.7 3.4 and 2.2% point above the respective CT1 tier one and total capital requirements.

Speaker #4: In terms of liquidity coverage ratio, we were at 152% and net stable funding ratio at 132.9%, both above the minimum 100% requirements. Now, we will be deploying the liquidity in dollars, supporting growth.

Giorgi Shagidze: In terms of liquidity coverage ratio, we were at 152%, and net stable funding ratio at 132.9%, both above the minimum 100% requirements. We will be deploying the liquidity in dollars supporting the growth. The liquidity in local currency may remain the same, but we optimize cost of funding so that the high liquidity also has positive impact on our profitability. Thank you, and Nini, please.

Speaker #4: The liquidity in local currency may remain the same but we optimize cost of funding so that the high liquidity also has positive impact on our profitability.

Speaker #4: So, thank you. And Nina, please.

Speaker #1: Thank you Georgi. And now let's move on to the Armenian financial services and Jovanes will discuss the results.

Nini Arshakuni: Thank you, Giorgi. Now let's move on to the Armenian Financial Services, and Hovhannes will discuss the results.

Speaker #3: Yes, thank you. I’m very happy to also share some pretty impressive results for the second quarter for the Armenian financial services. For the second quarter, our net profit grew about 50% year over year. For the first six months, the growth was slightly more than 42%, reaching 272 million GEL. Return on equity by the end of the second quarter was 23.1%. These were predominantly due to two factors. On one hand, we had very significant and impressive growth on the balance sheet: our loan book grew by almost 37% in constant currency, and deposits grew 37.1% on a constant currency basis, with NIM stable from one quarter to another.

Hovhannes Toroyan: Yes. Thank you. I am very happy to share also pretty impressive results for the second quarter for the Armenian Financial Services. For the second quarter, our net profit grew about 50% year-over-year. For the first six months, the growth was slightly more than 42% to reach AMD 272 million. Return on equity, by the end of the second quarter, was 23.1%, and these were predominantly due to two factors. On one hand, we had very significant and impressive growth on the balance sheet. Our loan book grew by almost 37% in constant currency, and deposits grew 37.1% in constant currency basis, with NIM stable from one quarter to another. At the same time, there is also a significant boost by non-interest income.

Speaker #3: At the same time and there is also a significant boost by non-interest income indeed our net fee and commission income grew by more than 38% year over year and net foreign currency gain grew 19.3% year over year cost to income ratio came down lower than 40% for Q2.

Hovhannes Toroyan: Indeed, our net fee and commission income grew by more than 38% year over year, and net foreign currency gain grew 19.3% year over year. Cost-income ratio came down lower than 40% for Q2. We do continue to grow extensively. Our monthly active customers grew by almost 28%, to surpass half a million. Our digital MAU grew much faster at 47% year over year. This growth of accelerated MAU and DAUs is predominantly to our digital ecosystem that we have been building around the super app that goes beyond banking functionality. As presented earlier, it has two main pillars. On one hand, we are building a system to satisfy the customer needs, in terms of their banking and financial needs, both in terms of functionality and user experience. At the same time, it is built around microservice architecture for better scalability.

Speaker #3: We do it continue to grow extensively our monthly active customers grew by almost 28% to surpass half a million and as during the previous quarters our digital mall grew much faster at 47% year over year and this growth of accelerated mall and DAOs is predominantly to to our digital ecosystem that we have been building around the super app that goes beyond banking functionality.

Speaker #3: And as presented earlier it has two main pillars on one hand we're building a system to satisfy the customer needs in terms of their banking and financial needs both in terms of functionality and user experience.

Speaker #3: At the same time it's built around microservice architecture for better scalability. And here you can see different pillars that are building this banking and beyond banking proposition for our customer base.

Hovhannes Toroyan: Here you can see different pillars that are building this banking and beyond banking proposition for our customer base. As already mentioned, our digital MAU grew by 47% year over year. Our DAU grew even faster, 58% year over year. Our digital engagement increased by almost 10 percentage points to surpass 75% by end of the Q2. We launched our Maya Mayor star, that is a retail application for kids, last year, and it is really picking up, both for financial educational purpose, as well as to satisfy very basic needs of younger population. Here you can also see more details about our loan portfolio and deposit portfolio. Our loan portfolio in constant currency grew almost 37%. The structure continues to be very balanced in terms of foreign currency, and 65% is loans in FX, and 45% is local currency.

Speaker #3: And as already mentioned, our digital mall grew by 47% year over year. Our DAU grew even faster, 58% year over year, and our digital engagement increased by almost 10 percentage points to surpass 75% by the end of Q2.

Speaker #3: We launched our Maya Mayor Star that is retail application for kits last year and it is really picking up both for education financial educational purposes as well as to satisfy very basic needs of younger population.

Speaker #3: Here you can also see more details about our loan portfolio and deposit portfolio. Our loan portfolio, in constant currency, grew almost 37%. The structure continues to be very balanced in terms of foreign currency: 55% of loans are in FX, and 45% are in local currency.

Hovhannes Toroyan: The mix of local currency has slightly gone down, and this is predominantly the fact that our corporate loans grew a bit faster. Indeed, year over year, it grew 45%, despite being the largest in the country. This really reflects and resembles with the large infrastructure and private projects that are unleashing in the country, as Akaki also presented. Our retail loans grew 26.8% in constant currency based, and consumer loans grew 39%. In terms of our deposits, the dollarization continues to evolve, and this is predominantly due to the fact of having very stable Armenian dram over the course of last few years. The growth overall was slightly more than 37% in constant currency basis, whereas the share of local currency is slightly more than 60%. We do continue to be the largest lender in the economy, and to the households as well.

Speaker #3: The mix of for local currency has slightly gone down and this is predominantly due to the fact that our corporate loans grew a bit faster indeed year over year it grew 45% despite being the largest in the country.

Speaker #3: And this really reflects and resembles really the large infrastructure and private projects that are unleashing in the country as Akaki also presented. Our retail loans grew 26.8% in constant currency based and consumer loans grew 39%.

Speaker #3: In terms of our deposits, the dollarization continues to evolve, and this is predominantly due to the fact of having a very stable Armenian dram over the course of the last few years.

Speaker #3: The growth overall was slightly more than 37% in constant currency basis whereas the share of local currency is slightly more than 60%. We do continue to be the largest lender in the economy and to the households as well.

Speaker #3: At the same time we were able to increase our market share both in terms of loans by 1.7% point as well as for deposits by 1.1% point.

Hovhannes Toroyan: At the same time, we were able to increase our market share, both in terms of loans by 1.7 percentage point as well as for deposits by 1.1 percentage point. I think it is also important to mention that beyond simply lending and attracting from customers, our transactional banking has seen very significant boost. Indeed, our acquiring business volume grew by 48% year over year. At the same time, our issuing business payment. In terms of capital position, we were able to improve and have more than 1.5 percentage point headroom on top of the CBA requirement. These changes have been predominantly due to three factors. One, we did distribute the second tranche of our AT1 notes. As you might remember, we had the first tranche in February of this year at 8.5% coupon. The second tranche of, again, 50 million US dollars was distributed in April by 8.0 coupon.

Speaker #3: I think it's also important to mention that beyond simply lending and attracting from customers our transactional banking has seen very significant boost. Indeed our acquiring business volume grew by 48% year over year at the same time our issuing business payment mall grew by more than 60% year over year to surpass 400,000.

Speaker #3: In terms of capital position, we were able to improve and have more than a 1.5 percentage point headroom on top of the CBI requirements, and these changes have been predominantly due to three factors.

Speaker #3: We did distribute the second tranche of our 81 notes. As you might remember, we had the first tranche in February of this year at an 8.5% coupon. The second tranche, again $50 million US dollars, was distributed in April at an 8.0% coupon. At the same time, the Central Bank of Armenia introduced some easing on risk-based requirements for SMEs starting from April, aligning with the Basel III requirements. As a result of these changes, we were also able to pay our first dividends to the group, in the amount of 157 million JAL.

Hovhannes Toroyan: At the same time, Central Bank of Armenia introduced some easing on risk weights for the SMEs starting from April, aligning it with the Basel III requirements. As a result of these changes also, we were able to pay our first dividends to the group at the amount of AMD 157 million. We continue to have very comfortable liquidity position as well. Our LCR sits at 180 and our NSFR is 126. This is it for me, then I will be happy to take more questions later. Thank you.

Speaker #3: We continue to have very comfortable liquidity position as well. Our LCR sits at 180 and our NSFR is 126. This is it for me.

Speaker #3: And then I'll be happy to take more questions later. Thank you.

Speaker #1: No problem. Thank you Johannes and now we're handing over back to Archil who will summarize the results and discuss it them from the book perspective.

Nini Arshakuni: Thank you, Hovhannes, and now we are handing over back to Archil, who will summarize the results and discuss them from the group perspective.

Archil Gachechiladze: Hovhannes, I think the group results are good. Hello? I think the group results are good, but when I hear Ameriabank separately, it is hard back to follow because 35% increase in loan and deposits and then 40% in acquiring volumes, payment acquiring is not an easy thing to follow. Just 1 second. I am going to mute a second. How are we doing? Yes. To summarize what it translates into the group numbers, the operating income has gone up by 19.5% for the quarter year-over-year, 17.3% for H1. We saw that the net interest income has gone up year-over-year by 21.8%, of which 18% was Georgia and 28.6% was Armenia. Obviously, Armenia is experiencing much higher growth, although Georgian is also not too bad with about 17% growth or on constant currency.

Speaker #2: Johannes, I think the group results are good. Hello. I think the group results are good, but when I hear Amelia Bank separately, it's a hard act to follow because a 35% increase in loans and deposits and then 40% in acquiring volumes—payment acquiring is, you know, is a tough thing to follow.

Speaker #2: Just one second, I'm going to a second. Hello? Yeah. So, to summarize what it translates into the group numbers: the operating income has gone up by 19.5% for the quarter year-over-year, and 17.3% for the first half.

Speaker #2: And we saw that the net interest income has gone up year over year by 21.8% of which 18% was Georgia and 28.6% was Armenia obviously Armenia is experiencing much higher growth although Georgian is also not too bad with about 17% growth on constant currency.

Archil Gachechiladze: Net non-interest income goes up by 14.2%, slightly less in Georgia, 7.1%, and we will see the breakdown of the fee and commission and FX separately. Armenia was up by almost 30% year-over-year, which was very strong showing. Now, in terms of how that breaks down is that net fee and commission income showed a very healthy growth of 26.3%, of which 25% year-over-year was Georgia, which benefited from a lower base last year. If you normalize for that, which was something to do with the Visa and Mastercard fee structure, which unwound within Q4. So if you normalize that, it would be around 17%, if I am not mistaken. Normalized, sorry, 22.3%. Then, in terms of Armenia had also an adjustment last year. We did not have something in the base, which this time it is there.

Speaker #2: Net non-interest income was up by 14.2%. Slightly less in Georgia, 7.1%. We'll see the breakdown of this, of the fee and commission and FX, separately.

Speaker #2: And the Armenia was up by almost 30% year over year which was very strong showing. Now in terms of how that breaks down is that net fee and commission income was showed a very healthy growth of 26.3% of which 25% year over year was was Georgia which benefited from from a lower base last year.

Speaker #2: And if you normalize for that which was something to do with the reason of the card fee structure which unwound it in the fourth quarter so if you normalize that it would it would be around 17% from not mistaken normalized sorry 22.3%.

Speaker #2: And then in terms of Armenia, Armenia had also an adjustment last year within half—something in the base, which this time it is there.

Speaker #2: And if you if you adjust it for for that and normalized the net fee and commission income growth would be 27.5% in the year over year in the quarter.

Archil Gachechiladze: And if you adjust it for that and normalized, the net fee and commission income growth would be 27.5% in the year-over-year in the quarter. In net FX, Georgia had a slight decline, so it continues to be a very competitive environment in Georgia for the FX, but showed a very strong growth in Armenia of 19.3%, which is welcome news. Operating expenses were 12.8% combined, of which 13.9% was for Georgia and 2.6% was Armenia. If you adjust for the base effect of the sign-up bonus, which ended last in Q3, you would be looking at 13.5% in Armenia. In both markets, the operating ratios were positive and obviously the combined was positive as well. You can see that in the cost-income ratio, the overall group's cost-income ratio reduced by 2 percentage points from year-over-year in Q2.

Speaker #2: In in net effects Georgia had a slight decline so the continues to be a very competitive environment in Georgia for for for the effects but showed a very strong growth in Armenia of 19.3% which is welcome news.

Speaker #2: And operating expenses were 12.8% combined, of which 13.9% was Georgia and 2.6% was Armenia. If you adjust for the base effect of the signup bonus, which ended last in the third quarter, you would be looking at 13.5% in Armenia.

Speaker #2: Imposed markets the operating jobs were positive and obviously the combined was positive as well. And you can see that in the cost income ratio the overall group's cost income ratio reduced by two percentage points from year over year in the quarter second quarter.

Speaker #2: As you can see from 36.4 to 34.4. And in Georgia the reduction was slight in Armenia slightly bigger one for the reasons that we discussed.

Archil Gachechiladze: As you can see, from 36.4% to 34.4%. In Georgia, the reduction was slight, in Armenia, a slightly bigger one for the reasons that we discussed. So, being under 35% for the combined entity is a comfortable place to be. As we described, the growth overall for the group was 23%, and 26.8% for the deposits. Both well above our medium-term guidance. Our net interest margin stayed stable in Armenia, and showed a slight uptick in Georgia, because of slight reduction in deposits and slight uptick in the loans. So nothing significant really happened there, but it was still positive. Going forward, we should expect growth stability, where we join those, but there will be some offsetting factors as well.

Speaker #2: So being under 35 for the combined entity is a comfortable place to be. As we describe the growth overall for the group was 23% and 26.8% for the deposits.

Speaker #2: Post well above our medium-term guidance. Net interest margin stayed stable in Armenia and showed a slight uptick in Georgia because of a slight reduction in deposits and a slight uptick in loans.

Speaker #2: So, nothing significant really happened there, but it was still positive. Going forward, we should expect broad stability around $20, but there will be some offsetting factors as well.

Archil Gachechiladze: Cost of risk, although it was slightly up in Armenia, mainly due to the consumer loan proportion becoming larger, but otherwise, it is still well below our income guidance of 80 to 100 basis points. So 0.6. For the half year, it came out to be 0.5. So the coverage didn't change much, and the profitability, as we discussed, was 20.6% higher year-over-year, and 17.3% for the full year. Return on equity stayed around 27%, and return on average assets was a very strong showing, also just shy of 4%. So all in all of this translates into stronger capital distribution. So the board recommended a Q2 dividend of three lari and five tetri. Since last year, we had dividend only for the half a year, so not quarterly. The half year number compares to the previous half year number, which is up by 15.7%.

Speaker #2: Cost of risk although it was slightly up in Armenia mainly due to the consumer loan proportion becoming larger but otherwise it's still well below our internal guidance of 80 to 100 base points.

Speaker #2: So, 0.6, and for the half year it came out to be 0.5. So the coverage didn't change much. And the profitability, as we discussed, was 20.6% higher year over year, and 17.3% for the full year.

Speaker #2: Return on equity stayed around 27% and return on average assets was was a very strong showing also just shy of 4%. So all in all all of this translates into into stronger capital distribution so the board the board recommended second quarter dividend of three lari and five tetri since last year we had dividend only for the half a year so not not quarterly.

Speaker #2: The half year number compares to the previous half year number by which is up by 15.7%. So we are continuing to strongly increase the capital distribution and there will be also another 59 million lari spent on the invested in the stock as as as the share buyback.

Archil Gachechiladze: So we are continuing to strongly increase the capital distribution, and there will be also another 59 million lari invested in the stock as the share buyback. So we will be continuing our tradition of two-thirds to one-third, roughly, dividend versus buyback. So this is to summarize the fact, which we already mentioned a couple of times, that our midterm growth, which is 15%, we are beating that target very strongly with 23% in both markets. By the way, we are ahead of the market growth. In terms of the return on equity, we are also well above our return guidance at 27%, and we are distributing about 30% given the fact that we are growing much faster than our midterm areas. So we are deploying capital at a very comfortable rate and sitting at very comfortable buffers as well.

Speaker #2: So we'll be continuing that our tradition of two thirds one third roughly dividend versus versus buyback. So this is to summarize the the fact which we already mentioned a couple of times that our our midterm growth which is 15% we are repeating that target very strongly with 23% in both markets by the way we are ahead of the market growth.

Speaker #2: And in customer and in terms of the return on equity we are also well above our midterm guidance at 27%. And we are distributing about 30% given the fact that we are growing much faster than than our midterm average.

Speaker #2: So we are deploying capital at very profitable rates, and sitting at very comfortable buffers as well. So that's on our side.

Archil Gachechiladze: That is that on our side, and we will stop here and open for Q&A.

Speaker #2: And we will stop here and open for Q&A.

Speaker #1: Yeah, and so basically, we can move to the Q&A, and we have a few raised hands already from our analysts. The first on the line is Jens Ehrenberg.

Nini Arshakuni: Yeah. We can move to the Q&A, and we have a few raised hands already from our analysts. The first on the line is Jens Arenberg. Hi, Jens.

Speaker #1: Hi Jens.

Jens Arenberg: Hi, Nini. Hi, guys. Thanks very much for the presentation, and I suppose well done on another very strong quarter. Just a couple from my side. Firstly, on Georgia, I appreciate, Archil Gachechiladze, you said there was not too much that happened on the NIM. I think this is the second quarter in a row where you are well ahead of my expectations on the NIM. Is there anything that came out of this that will give you more confidence in the sustainability of the NIM as to where it is right now? Secondly, for Hovhannes Toroyan, on Armenia. I think you have highlighted the investment in infrastructure activity that has been supporting the corporate side. I suppose, how much do you think will that remain a key driver for the business?

Jens Ehrenberg: Hi, Nini. Hi, guys. Thanks very much for the presentation, and I suppose well done on another very strong quarter. Just a couple from my side. Firstly, on Georgia, I appreciate, Archil Gachechiladze, you said there was not too much that happened on the NIM. I think this is the second quarter in a row where you are well ahead of my expectations on the NIM. Is there anything that came out of this that will give you more confidence in the sustainability of the NIM as to where it is right now? Secondly, for Hovhannes Toroyan, on Armenia. I think you have highlighted the investment in infrastructure activity that has been supporting the corporate side. I suppose, how much do you think will that remain a key driver for the business?

Speaker #3: Hi Nini. Hi guys. Thanks very much for the for the presentation. And I suppose well done on another very very strong quarter. Just a couple of from my side.

Speaker #3: Firstly, on Georgia, I appreciate actually you said there was not too much that happened on the NIM. I think this is the second quarter in a row where you're well ahead of my expectations on the NIM.

Speaker #3: So, is there anything that came out of this that would give you, I don't know, that would give you sort of more confidence in the sustainability of the NIM as to where it is right now?

Speaker #3: And then secondly for Jovanis on on Armenia I think you've you've highlighted the investment in infrastructure activity that's been supporting the corporate side. I suppose how much do you think will will that remain a key driver for the business and more broadly how should we think about sort of the split between really the underlying market growth versus further market share gains in in Ameria Bank?

Jens Arenberg: More broadly, how should we think about the split between really the underlying market growth versus further market share gains in Ameriabank?

Jens Ehrenberg: More broadly, how should we think about the split between really the underlying market growth versus further market share gains in Ameriabank?

Archil Gachechiladze: So maybe I will start with NIM. Yes, we believe that the ability to retain that NIM is very strong. So we will be slightly higher, slightly lower. It does not really change much overall in the big picture. I understand that it is good to calculate exactly, but life does not happen like this. Right now, what we can see is that there is pressure that NIM can slightly increase, in fact, but I think there are also some other factors that could reduce it. So we are seeing growth stability, and we feel quite strongly about it. So, yeah. That is all I can say about that. Hovhannes?

Speaker #2: So maybe I'll start with NIM. So so yes we we believe that the ability to to retain that NIM is is very strong. So we'll be slightly higher slightly lower it it doesn't really change much overall in the big picture.

Speaker #2: I understand that it's it's good to calculate exactly but the life doesn't happen like this. Right now what we can see is that there's pressure that that NIM can slightly increase in fact but but I think there are also some some other factors that could reduce it.

Speaker #2: So we are saying broad stability, and we feel quite strongly about it. So, yeah, that's all I can say about that.

Speaker #2: Jovanis?

Speaker #4: Yes, thank you. I mean, we have been presenting that the overall economic outlook in the country is very positive. It has been very positive for the last couple of years, and for the near future we still remain very positive, as Akaki presented.

Hovhannes Toroyan: Yes, thank you. We have been presenting that the overall economic output in the country is very positive. It has been very positive for the last couple of years, and for the near future, we still remain very positive as Akaki presented. It is not only due to the large-scale projects that are happening in the country, but also the overall base or the macroeconomic stability is there. So Ameriabank, being the largest lender in Armenia, obviously is taking advantage of the situation in a good way that is being able to serve more and more customers, both that existed here and also the new large projects that are being established.

Speaker #4: And it is not only due to the large-scale projects that are happening in the country, but also the overall base or the macroeconomic stability is there.

Speaker #4: So Ameria Bank being the largest lender in Armenia obviously is take I mean taking advantage of the situation in a good way that is being able to serve more and more customers both that existed here and also the new large projects that are being established.

Speaker #4: So if you look backwards, and if we look at our plans as well, there is a very solid growth for the market overall, but we have been beating the market year after year, and we will continue to do that as well.

Hovhannes Toroyan: If you look backwards and if we look at our trends as well, there is a very solid growth for the market overall, but we have been beating the market year after year, and we will be continuing to do that as well. So I would anticipate that due to the very positive macroeconomic environment, overall the banking system will continue its significant growth. But we will do our best to win over some of our competitors to increase our market share as well as alongside growing overall market.

Speaker #4: So I would anticipate that, overall, due to the very positive macroeconomic environment, the banking system will continue its significant growth. But we will do our best to win over some of our competitors to increase our market share, as well as grow alongside the overall market.

Speaker #2: Yes especially with the retail rollout right. I mean it's this four years Ameria Bank has been number one premium brand. Number one brand in corporate and number one premium retail brand which is rolled out to the mass retail using the digital capabilities.

Archil Gachechiladze: Yes, especially with the retail rollouts, right? These four years, Ameriabank has been number 1 premium brand, number 1 brand in corporate and number 1 premium retail brand, which is rolled out to the mass retail using the digital capabilities. So that will very much continue. It is just shy of 400,000 monthly active users and can easily be well above 1 million. So this will take years, obviously, but it will be happening.

Speaker #2: So that will very much continue. I mean it's just shy of 400,000 monthly active users and can easily be well above one million. So this will take years obviously but it will be happening.

Jens Arenberg: Understood. That is very helpful. Thank you.

Jens Ehrenberg: Understood. That is very helpful. Thank you.

Speaker #3: Understood. That's very helpful. Thank you.

Speaker #1: Thank you, Jens. So, the next question comes from Shilsha. Hi, Shilsha.

Nini Arshakuni: Thank you. The next question comes from Shil Shah. Hi.

Shil Shah: Hello. How are you guys? Can you hear me?

Sheel Shah: Hello. How are you guys? Can you hear me?

Speaker #2: I hear you guys. Can you—can you hear me?

Speaker #1: Yes.

Nini Arshakuni: Yes.

Speaker #2: Yes, right. I've got a couple, if you can help me, please. First, on the Georgian deposit market shares—on slide 20, you can see that there's a little bit of a dip in terms of Georgia.

Archil Gachechiladze: Yeah.

Nini Arshakuni: Okay.

Shil Shah: Great. I have got a couple if you can help me, please. First, on the Georgian deposit market shares, on slide 20, you can see that there is a little bit of a dip in terms of Georgia, also TBC Bank. Is there anything here going on in terms of competition we should be thinking about, or is that more the strategy to get below the 40 and then we can get the 50 basis points capital release on the back of that as well? That is the first question.

Sheel Shah: Great. I have got a couple if you can help me, please. First, on the Georgian deposit market shares, on slide 20, you can see that there is a little bit of a dip in terms of Georgia, also TBC Bank. Is there anything here going on in terms of competition we should be thinking about, or is that more the strategy to get below the 40 and then we can get the 50 basis points capital release on the back of that as well? That is the first question.

Speaker #2: Also, TBC, is there anything here going on in terms of competition we should be thinking about, or is that more the strategy to get below the 40, and then we can get the 50 bps capital release on the back of that as well?

Speaker #2: That's the first question. It's engineered, basically. We've been targeting to go below 40 without upselling customers too much. So, I mean, we can easily go under 40 in one month.

Archil Gachechiladze: It's engineered, basically. We've been targeting to go below 40% without upsetting customers too much. We can easily go under 40% in one month, but you don't want to be a place where people don't think of you when they want to deposit money, right? It has taken us time and very careful consideration how to do it. But yes, that's exactly right. We want it to be below 40%, and that capital release will take some time, though, because the way it applies, it's the last 12 months average has to be below 40%. It will take us six to 12 months to get there. But yes, that's what we should anticipate, 50 bps release.

Speaker #2: But you don't want to be a place where people don't think of you when they want to deposit money, right? So it has taken us time and very careful consideration to figure out how to do it.

Speaker #2: But yes that's exactly right. I mean we we wanted to be able to to be below 40 and that capital release will take some time though because the the way it's applied is the last 12 months average has to be below 40.

Speaker #2: So it will take us 6 to 12 months to get there. But yes, that's what we should anticipate—50 bips release.

Speaker #3: Thank you. That's helpful. And and then secondly you've given the capital ratio for for Georgia. You've given it for Armenia and you can see a dividend upstream for both to the group.

Shil Shah: Thank you. That's helpful. Secondly, you've given the capital ratio for Georgia, you've given it for Armenia, and you can see a dividend upstream for both to the group. What's the capital position of the group? Because that's the dividend paying entity, that's also the acquisition entity. In terms of CET1 there and the excess capital held at that level, how does that look?

Sheel Shah: Thank you. That's helpful. Secondly, you've given the capital ratio for Georgia, you've given it for Armenia, and you can see a dividend upstream for both to the group. What's the capital position of the group? Because that's the dividend paying entity, that's also the acquisition entity. In terms of CET1 there and the excess capital held at that level, how does that look?

Speaker #3: What what's the capital position of the group? Because that's the dividend paying entity. That's also the acquisition entity. And in terms of CET1 there and and and sort of the excess capital held at that level how does that look?

Speaker #2: There's no leverage there. Georgi, do you want to cover that?

Archil Gachechiladze: There's no leverage there. Giorgi, do you want to cover that?

Speaker #5: Yeah. We don't have any capital requirement at the group level. It is a holding company. We do keep some cash to meet various expense requirements, as well as some cash for future growth.

Hovhannes Toroyan: Yeah, we don't have any capital requirement at the group level. It is a holding company. We do keep some cash to meet various Operating Expense requirements as well as some cash for future growth. There is no capital requirements at the group level.

Giorgi Shagidze: Yeah, we don't have any capital requirement at the group level. It is a holding company. We do keep some cash to meet various Operating Expense requirements as well as some cash for future growth. There is no capital requirements at the group level.

Speaker #5: There are no capital requirements at the group level.

Archil Gachechiladze: But in terms of the capital position, do you remember the capital position there? It is like $60 million, maybe more or less, but it is all cash.

Speaker #2: But in terms of the capital position I think it's do you remember the the the capital position there? It's like 60 million dollars maybe more or less but it's all cash.

Nini Arshakuni: Yeah.

Sheel Shah: Yeah.

Speaker #2: So we don't have many assets there other than the holding company, and we killed any leverage there a number of years ago.

Archil Gachechiladze: So we do not have much assets there other than the holding company, and we killed any leverage there for a number of years ago. So there is not much there, and this little bit of cash is a buffer.

Speaker #2: So there's not much there and there's a little bit of cash as a buffer.

Speaker #3: Okay. That's that's helpful. And then finally just on cost of risk in Armenia is there anything that we should be thinking about there as the consumer loans are growing quite fast and and there was a pickup there in terms of retail cost of risk?

Shil Shah: Okay. That is helpful. Then finally, just on cost of risk in Armenia, is there anything that we should be thinking about there as the consumer loans are growing quite fast, and there was a pickup there in terms of retail cost of risk?

Sheel Shah: Okay. That is helpful. Then finally, just on cost of risk in Armenia, is there anything that we should be thinking about there as the consumer loans are growing quite fast, and there was a pickup there in terms of retail cost of risk?

Speaker #4: Well, I mean, if we look—when we look at it product by product, by all the products, we're still way below our midterm guidance, and we are very comfortable at the levels that they are at.

Hovhannes Toroyan: Well, when we look at it as product by product, by all the products, we are still way below our midterm guidance, and we are very comfortable at the levels that they are at. Obviously, consumer loans in general are a bit more risky, but with higher yield. So technically, in terms of risk reward combination, we are very comfortable with the yield and risk level for the consumer loans as well. But obviously, the more the structure of the balance sheet will change, we may see some changes to the risk position as well as net interest income position.

Speaker #4: Obviously consumer loans in general are a bit more risky but with higher yield. So technically in terms of risk reward combination we are very comfortable with the yield and risk level for the consumer loans as well.

Speaker #4: But as the structure of the balance sheet changes, we may see some changes to the risk position as well as the net interest income position.

Speaker #3: Great. Thank you.

Shil Shah: Great. Thank you.

Sheel Shah: Great. Thank you.

Archil Gachechiladze: The overall numbers are comfortable. Obviously, when you are looking at the 40% increase year-over-year, we will be looking at different subgroups and dissecting and so forth, but overall numbers are still very solid.

Speaker #2: The overall overall numbers are comfortable. Obviously when you're when you're looking at the 40 percent increase year over year we'll be looking at a different subgroups and dissecting and so forth.

Speaker #2: But overall, numbers are still very solid.

Speaker #1: I think Shil is done with questions. Thank you, Shil. The next on the line is Alex Kantarovich.

Nini Arshakuni: I think she was done with questions. Thank you, Shil. The next on the line is Alex Kantarovich.

Alex Kantarovich: Thank you for this opportunity. I hope you can hear me. Great results. It was pleasure to go through them. I would like to ask about the H2. With the regular adjustments for seasonality of OpEx, for example, if H2 trends would be broadly comparable to the H1. This is my first question. The second question is much broader. Given that there were reports of certain geopolitical issues for Armenia with Russia, if you can see any macroeconomic impact potentially, that would be my worry. Other than that, once again, great trends, great results. Thank you.

Speaker #4: Thank you. Thank you for this opportunity. I hope you can hear me. Great results—it was a pleasure to go through them. I would like to ask about the second half.

Speaker #4: If the regular adjustments for seasonality of OPEX—for example, if second-half trends would be broadly comparable to the first half. This is my first question.

Speaker #4: The second question is much broader. Given that there were reports of certain geopolitical issues for Armenia with Russia, if you can see any macroeconomic impact potentially, that will be my worry.

Speaker #4: Other than that, once again, great trends, great results. Thank you.

Speaker #2: Yes. In terms of the second half, we have all the reasons to believe that it will be as strong as the first half.

Archil Gachechiladze: Yes. In terms of the H2, we have all the reasons to believe that it will be as strong as the H1. Usually, in fact, it is more. If we look at the history of our banks, given the high growth and because the Q1 is slightly slower, usually H2 is better in terms of activity and so forth. There are no guarantees, obviously, but the anticipations are all positive. Regarding Hovhannes, do you want to cover the

Speaker #2: Usually, in fact, it's more. So, if you look at the history of our banks, given the high growth and because the first quarter is slightly slower, usually the second half is, you know, better.

Speaker #2: In terms of activity and so forth, there are no guarantees, obviously, but the anticipations are all positive. Regarding homelessness, do you want to cover that?

Hovhannes Toroyan: Yeah, sure. In terms of the recent development of the relationship between Armenia and Russia, there are some limitations on the foreign trade, but that covers less than 8% of the trade with Russia. Obviously, in a short-term perspective, there have been some sub-sectors that have experienced some shock. The government of Armenia has taken certain measures to minimize this impact, and when we discuss the issue with our customers, we feel that by and large, the measures that have been taken by the government of Armenia are, we can call it enough to cover that short-term shock. Today, most of those products are being exported to other countries, mostly to Europe or other regions.

Speaker #4: Yeah, sure. In terms of the recent development of the relationship between Armenia and Russia, I mean there are some limitations on foreign trade, but that covers less than 8 percent of the trade with Russia.

Speaker #4: So and obviously in a short term perspective there have been some subsectors that have experienced some shock. The government of Armenia has taken certain measures to minimize this impact and when we discuss the issue with our customers we feel that by and large the measures that have been taken by the government of Armenia are that we can call it enough to cover that short short term shock.

Speaker #4: And today, most of those products are being exported to other countries, mostly to Europe or other regions. So, we do not really anticipate, in the midterm to long term, any significant impact from the limitations that have been introduced over the previous two months on the development or economic development of the country.

Hovhannes Toroyan: We do not really anticipate in the midterm to long term any significant impact of the limitations that have been introduced over the previous 2 months on the economic development of the country. It is fully in line with the recent reports that have been on Armenia in terms of forecast of GDP growth and so on.

Speaker #4: And it is fully in line with the recent reports that have been on Armenia, in terms of forecasted GDP growth and so on.

Alex Kantarovich: That is great. Very clear. Thank you.

Speaker #2: That's great. Very clear. Thank you.

Speaker #1: Thank you, Alex. Next in line is Dmitri Vlasov.

Nini Arshakuni: Thank you, Alex. The next on the line is Dmitry Vlasov.

Speaker #6: Thank you very much for the opportunity to ask questions. Again, congrats on very strong results. My questions would be about Armenia, and they are also a bit broad.

Dmitry Vlasov: Thank you very much for the opportunity to ask questions. Again, congrats on very strong results. My questions would be about Armenia, also a bit broad ones. The first one is about your ambition to get to 30% plus market share at some point in midterm. Is this organic or also includes potentially some inorganic capabilities? The second one is on the overall market. The figures are very impressive, and we see very little slowdown in the market overall. Do you have the understanding when we would see a bit of normalization and slowdown? Thank you very much.

Speaker #6: So, the first one is about your ambition to get to 30% plus market share at some point in the midterm. Is this organic, or does it also include potentially some inorganic capabilities?

Speaker #6: And then the second one is on the overall market. Like the figures are very impressive and we see very little slowdown in the market overall.

Speaker #6: Do you have any insight into when we might see a bit of normalization or slowdown? Thank you very much.

Archil Gachechiladze: Regarding the acquisition versus organic growth, maybe I'll cover that, Hovhannes, then take the second question. We would be open. First of all, our default case is to go on with the organic growth. Obviously, we'll be open for the inorganic, but that would depend on the regulators' openness to seeing such merger, given the fact that we are already the largest player on the market. Having said that, who knows? Our default case is organic. Please, Hovhannes.

Speaker #2: Regarding the the acquisition versus organic growth maybe I'll cover that more or less. And then take the second question. So we would be open I mean first of all our default case is is to go on with the operate organic growth.

Speaker #2: Obviously, we would be open to the inorganic, but that would depend on the regulators' openness to seeing such a merger, given the fact that we are already the largest player in the market.

Speaker #2: Having said that, who knows? But, you know, our default case is organic. Please go on.

Speaker #4: Yes, in terms of market position, you're right. I mean, overall, the market has produced very good numbers for the last couple of years, and when we look at the macroeconomic forecasts—both done internally within our group as well as by third parties—we still remain pretty optimistic about overall development.

Hovhannes Toroyan: Yes, in terms of market position, you're right. Overall, the market has produced very good numbers for the last couple of years. When we look at the macroeconomic forecasts both done internally within our group as well as third party, we still remain pretty optimistic about overall development. Also, as presented for Ameriabank in particular, we do expect to grow a bit faster than the market and in both sectors, for corporate and retail. For retail, as Archil mentioned, it's predominantly due to the rollout, and we see very impressive results in terms of growth. Our MAU is growing at 47%. Acquiring business is growing at 48%. Our consumer loans are growing at 39%, and indeed, more than 96% of those loans are A-to-Z automated.

Speaker #4: Also, as presented for Ameria Bank in particular, we do expect to grow faster than the market in both sectors—for corporate and retail.

Speaker #4: For retail as Archil mentioned it's predominantly due to the rollout. And we see very impressive results in terms of growth. Our MAO is growing at 47 percent acquiring business is growing at 40 8 percent.

Speaker #4: Our consumer loans are growing at 39 percent, and indeed more than 96 percent of those loans are A-to-Z automated. So it not only enables us to lend to a bigger chunk of the population, but also the cost of loan underwriting is going down significantly.

Hovhannes Toroyan: So it not only enables us to lend to bigger chunk of the population, but also the cost of loan underwriting is going down significantly. We do hope to continue these developments further, and we still remain very positive both for the banking sector overall and also, we plan to beat the market in terms of overall growth.

Speaker #4: So, we do hope to continue these developments further. And we still remain very positive, both for the banking sector overall, and also we plan to beat the market in terms of overall growth.

Speaker #6: Thank you very much. Could I have a very quick follow-up on the Venezuelan market share? Could you please remind me what sort of regulatory cap there is on the market share in Armenia?

Dmitry Vlasov: Thank you very much. Could I have a very quick follow-up on the vino market share? Could you please remind me what the regulatory cap on the market share in Armenia? Thank you.

Speaker #6: Thank you.

Hovhannes Toroyan: There is no regulatory market cap in Armenia, at least as of today, because we are the largest lender, and we are slightly shy of 23%. As of today, there is no cap.

Speaker #4: There is no regulatory market cap in Armenia, at least as of today, because we are the largest lender and we are slightly shy of 23 percent.

Speaker #4: As of today, there is no cap.

Speaker #6: Thank you very much. That's clear.

Dmitry Vlasov: Thank you very much. That's clear.

Archil Gachechiladze: Just to be clear, there is no cap in Georgia either. But on the deposit side, from the financial system stability point of view, above 40%, there is higher capital requirements, and it is just not worth it to go much further than that on the deposit side.

Speaker #2: Just to be clear there's no cap in Georgia either. But on the deposit side from the financial system stability point of view above 40 percent there's higher capital requirements and it's just not worth it to go much further than that.

Speaker #2: On the deposit side.

Speaker #6: Thank you.

Dmitry Vlasov: Thank you.

Speaker #1: Thank you, Dmitri. The next question is from Ben Meyer. Hi, Ben.

Nini Arshakuni: Thank you, Dmitry. The next question is from Ben Maher. Hi, Ben.

Ben Maher: Hi. I have just got three questions, please. The first one is on the customer spread in Armenia. I think in local currency, it is still showing signs of pressure. I think last quarter it was mainly driven by the deposits, but this quarter seems more on the asset side. So just interested in any color behind that. Second question is, again, in Armenia. Cost growth is still well below revenue growth. I am just interested, do you expect this to continue, or how do you expect cost growth to evolve in the H2 relative to revenue growth? My final question, I think it was already touched upon potential M&A in Armenia. Capital buffers obviously now are comfortably above your minimums. If you do not necessarily pull the trigger on Armenia, how do you view new potential markets? Are there any countries that you are particularly interested in? Thank you.

Speaker #7: Hi. I have three questions, please. The first one is on the customer spread in Armenia. I think in local currency it's still showing signs of pressure.

Speaker #7: I think last quarter it was mainly driven by the deposits, but this quarter seems more on the asset side. So, just interested in any color behind that.

Speaker #7: Second question is again in Armenia. Cost growth is still well below revenue growth. I'm just interested—how do you, you know, do you expect this to continue, or how do you expect cost growth to evolve?

Speaker #7: And the second half, relative to revenue growth. And then my final question, I think we've already touched upon, you know, potential M&A in Armenia.

Speaker #7: Capital buffers obviously now are comfortably above your minimums. How do you view, you know, if you don't necessarily pull the trigger in Armenia, how do you view new markets, new potential markets? Are there any kind of countries you're particularly interested in?

Speaker #7: Thank you.

Speaker #4: Let me cover the second and third ones, and then I'll ask you to repeat the first question, Ben. Sorry, I didn't quite get the question.

Hovhannes Toroyan: Let me cover the second and third one. Then I will ask you to repeat the first question, Ben. Sorry, I did not really quite get the question. So in terms of having a positive jaws ratio for the last couple of years, that has been enabled predominantly due to the investments that we have been doing into our digitalization in general. As I mentioned, for example, in terms of underwriting, the cost of single loan underwriting for consumer loans is going up more than 3 times. Moreover, in terms of overall coverage option, today we are able to serve any customer on the territory of Armenia without having physical presence nearby. You have seen, and I have mentioned it several times about our growth rate of MAUs and DAUs, that our customers tend to use our digital channels more.

Speaker #4: So, in terms of having a positive Joe's ratio for the last couple of years, that has been enabled predominantly due to the investments that we have been making into our digitalization in general.

Speaker #4: As I mentioned for example in terms of underwriting the cost of single loan underwriting for consumer loans is going up more than 30 times and moreover I mean in terms of overall coverage option today we are able to serve any customer on the territory of Armenia without having like physical presence nearby and we see you've seen and I've mentioned it several times about our growth rate of miles and dollars that our customers tend to use our digital channels more and due to the fact that the single usage is technically the marginal cost of usage of our mobile banking or other digital channels is close to zero I think it's very much expected that costs are growing much slower than revenues.

Hovhannes Toroyan: Due to the fact that the single usage is technically the marginal cost of usage of our mobile banking or other digital channels is close to zero, I think it is very much expected that costs are growing much slower than revenues. Plus, on the revenues, we do already experience significant network effect, and that was something that we were talking about 2 years ago, that our rolling into mass market would enable us network effect on the revenue or asset side as well. Now when we are serving more than 500,000 monthly active customers, we are getting more and more of that, and you can see it in our P&L as well as on our balance sheet. If you do not mind repeating the first question.

Speaker #4: Plus on the revenues we do already experience significant network effect and that was something that we were talking about two years ago that our rolling into mass market would enable us network effect on the revenue or asset side as well.

Speaker #4: And now, when we are serving more than 500,000 monthly active customers, we are getting more and more of that. You can see it in our P&L, as well as on our balance sheet.

Speaker #4: If you don't mind like repeating the first question?

Speaker #7: Yeah, just on the customer spread. In local currency, it's down again quarter-on-quarter. Just interested in any color behind that. Thank you.

Ben Maher: It was just on the customer spread in local currency. It is down again Q on Q. Just interested in any color behind that. Thank you.

Speaker #4: Yeah. So there there has been some changes in the regulatory environment where the central bank where our required reserves in the central bank of Armenia in local currency have been reduced.

Hovhannes Toroyan: Yeah. So there has been some changes in the regulatory environment where our required reserves in the Central Bank of Armenia in local currency have been reduced. Instead, we have been reserving in FX, and that has created temporarily additional excess liquidity in local currency in the local market. That has had its impact on the short term in terms of rates, both on the borrowing and lending side. We do expect that to normalize by the end of the year. Overall, for both technically currencies, we anticipate in the mid-term to have broadly stable spreads that will translate into broadly stable NIM.

Speaker #4: And instead, we have been reserving in FX, and that has created temporarily additional or excess liquidity in local currency in the local market. That has had its impact in the short term in terms of rates, both on the borrowing and lending side.

Speaker #4: We do expect that to normalize by the end of the year. And overall, for both technical currencies, we anticipate in the midterm to have broadly stable spreads that will translate into broadly stable NIM.

Ben Maher: Great. Thank you.

Speaker #7: Great. Thank you.

Speaker #2: And the third one was, what are the other markets that we would consider looking at as a group to enter? And we laid it out during the investor meeting in June that the target markets would be the Baltics, the Balkans, and two countries in Central Asia, two large countries.

Archil Gachechiladze: The third one was, what are the other markets that we would consider looking at as a group to enter? We laid it out during the investor meeting in June that the target markets would be the Baltics, the Balkans, and 2 countries in Central Asia, 2 large countries. Having said that, because we are focused on the largest players in the market, top 3 or top 5 maximum in some of the larger countries, that also means that we will be waiting and looking for the right opportunity.

Speaker #2: Having said that because we're we are focused on on the largest players in the market top three or top five maximum some of the larger countries that also means that we we will be waiting and seeing the looking for the right opportunity.

Ben Maher: Great. Thank you.

Speaker #7: Great. Thank you.

Speaker #1: Thank you, Ben. Next in line is Simon Ellis.

Nini Arshakuni: Thank you, Ben. The next on the line is Simon Nellis.

Simon Nellis: Hi. Thanks very much for the opportunity. Congratulations on the strong result. Just a quick question on the dividend from Armenia. Are you going to be paying dividends regularly from that business, or is it going to be an annual event?Roughly how much of the earnings do you expect to be upstreaming? That would be my first question. Sorry if you have touched on this before, but could you just elaborate on the outlook for margins in both Georgia and Armenia a bit? Is the sharp increase in margin we saw in Georgia sustainable, or do you expect that to normalize somewhat? Thank you.

Speaker #8: Hi. Hi. Thanks very much for the opportunity. Congratulations on the strong result. Just a quick question on the dividend from Armenia. Are you going to be paying dividends regularly from that business, or is it going to be an annual event?

Speaker #8: And roughly how much of the earnings do you expect to be upstreaming? That would be my first question. And then, yeah, sorry if you've touched on this before, but could you just elaborate on the outlook for margins in both Georgia and Armenia a bit?

Simon Nellis: Roughly how much of the earnings do you expect to be upstreaming? That would be my first question. Sorry if you have touched on this before, but could you just elaborate on the outlook for margins in both Georgia and Armenia a bit? Is the sharp increase in margin we saw in Georgia sustainable, or do you expect that to normalize somewhat? Thank you.

Speaker #8: Is the the sharp increase in margin we saw in Georgia sustainable or or do you expect that to to normalize somewhat? Thank you.

Speaker #2: So, I'll start with the last one. The margins we expect to be broadly stable in both markets. There are different kinds of moves on the positive and negative sides, which I think will offset each other.

Archil Gachechiladze: I will start with the last one. The margins we expect broadly stable in both markets. There are different kind of moves on the positive and negative sides, which will be, I think, offsetting each other. In short, we will be deploying more liquidity, dollar liquidity in Georgia. Having said that, there are slightly some other changes that are offsetting. In Armenia, it should be more or less stable going forward at 6%, as we can see. What was the other one?

Speaker #2: In short, there’s slightly more dollar liquidity that will be deploying in Georgia. Having said that, there are some other changes that are offsetting it.

Speaker #2: In Armenia, it should be more or less stable going forward. It's 6%, as we can see. What was the other one?

Simon Nellis: It was on the evidence.

Speaker #8: It was on the dividends.

Nini Arshakuni: On the evidence.

Hovhannes Toroyan: On the evidence.

Speaker #4: Dividends.

Speaker #2: On the dividends. Yeah on the dividend side it's it's a business that's delivering right now 22 23% return on equity and growing at 35.

Archil Gachechiladze: On the dividend side, it is a business that is delivering right now 22% to 23% return on equity and growing at 35%. Obviously we will not be counting on giving out too much money. Having said that, given the regulatory change and the deployment of the Tier 1 capital, additional Tier 1 capital, we had a little bit of extra capital, and we thought it was a good idea to pull it out. In other words, until we see very high growth, we will be reinvesting the capital or retained earnings in Armenia. When it normalizes closer to 10% to 15% in a number of years' times, then obviously we will be taking up and channeling up the extra dividends, extra earnings. We shouldn't count on forward because the expectation is that the high growth will continue, 20%-plus.

Speaker #2: So, obviously, we will not be counting on getting out too much money. Having said that, given the regulatory change and the deployment of the Tier One capital, additional Tier One capital, we had a little bit of extra capital, and we thought it was a good idea to pull it out.

Speaker #2: In other words until we see very high growth we'll be we'll be reinvesting the capital or retained earnings in Armenia. When it normalizes closer to 10 to 15 you know in number of years times then then obviously we'll be taking up and channeling up the extra dividends.

Speaker #2: Extra earnings. But, you know, we shouldn't count on those going forward because the expectation is that the high growth will continue—20-plus percent.

Speaker #8: Understood. Very clear. Thank you.

Simon Nellis: Understood. Very clear. Thank you.

Speaker #1: Thank you Simon. The next question comes from Melker Samuelson. Hi Melker.

Nini Arshakuni: Thank you, Simon. The next question comes from Melker Samuelsson. Hi, Melker.

Melker Samuelsson: Good evening, guys. Congratulations to another strong set of numbers. I wanted to ask on the slide for the liquidity on GFS, you report the increase in both LCR as well as net stable funding. You mentioned you're doing a liquidity exercise to see overlaps. Could you elaborate a little on that strategy, what you're trying to do, and some quantification as well as, I guess, both on the deposit as well as other sources of funding? Thank you very much.

Speaker #8: Hey guys, congratulations on another strong set of numbers. I wanted to ask about the slide on liquidity for GFS. You report an increase in both LCR as well as net stable funding.

Speaker #8: And you mentioned you're doing a liquidity exercise to sort of see over that. Could you maybe elaborate a little bit on that strategy—what you're trying to do—and provide some quantification as well, I guess both on the deposit side as well as other sources of funding?

Speaker #8: Thank you very much.

Archil Gachechiladze: Giorgi, do you want to take it?

Speaker #2: Yeah, we do want to take it.

Speaker #3: Yeah, so from the perspective of liquidity, indeed, both increased, and you may remember that we even issued the bonds about one and a half months ago, which further strengthened it.

Giorgi Shagidze: Yeah. From the perspective of liquidity, indeed both increased, and you may remember that we even issued the bonds about 1 and a half months ago when it further strengthened it. What we will be doing is that in terms of the dollar liquidity, we will be using it to support the growth, but for the liquidity in the lari, the high liquidity most likely will remain. What we are doing is that we are optimizing the cost of that liquidity so that it still has positive impact on our balance and on our financials. Number-wise, I think the dollar liquidity, which is not reported here, will decrease most likely by 10 percentage points, and then we may see these numbers to go down, not dramatically, though, if I'm answering your question.

Speaker #3: What we will be doing is that, in terms of the dollar liquidity, we will be using it to support the growth. But for the liquidity in lari, the high liquidity most likely will remain. What we are doing is that we are optimizing the cost of that liquidity so that it still has a positive impact on our balance and on our financials.

Speaker #3: Number-wise, I think the dollar liquidity which is not reported here will decrease most likely by 10 percentage points. And then we may see these numbers go down, but not dramatically though.

Speaker #3: If I'm answering your question.

Speaker #8: Yeah, and that's mostly via term deposits, or like, what's the deposit strategy to lower it? Do you reduce term deposits, or—just elaborate a little bit on that?

Melker Samuelsson: Yeah. That's mostly via term deposits or what's the deposit strategy to lower it, that you reduce term deposit or just elaborate a little on that.

Speaker #3: Oh sure. I mean, mostly they are the large deposits that could be term or current accounts when it comes to corporate. But then again, we try to be careful, as Archil said, that next time the customer needs to deposit money, we still need to be here.

Giorgi Shagidze: Mostly they are the large deposits that could be term or current account when it comes to corporate. But then again, we try to be careful, as Archil said, that next time the customer needs to deposit money, so we still need to be here. Then it is mix of large, term, and current accounts.

Speaker #3: And then it is a mix of large-term and current accounts.

Melker Samuelsson: Okay. Very clear. Thank you.

Speaker #8: Okay. Very clear. Thank you.

Speaker #3: Thank you.

Giorgi Shagidze: Thank you.

Speaker #1: Thank you, Melker. The next question is from Roman Fuzaylov. Hi, Roman.

Nini Arshakuni: Thank you, Melker. The next question is from Roman Fuzaylov. Hi, Roman.

Speaker #5: Hi, guys. Can you hear me?

Roman Fuzaylov: Hi, guys. Can you hear me?

Speaker #1: Yes.

Nini Arshakuni: Yes.

Speaker #2: Yes.

Archil Gachechiladze: Yes.

Roman Fuzaylov: Great. Thanks for the call. Congrats on the results. Really fantastic numbers again. A couple of questions for me. The first one on Armenia, I saw that the loan-to-deposit ratio remains, I think, about 125% to 130%. I wonder over time whether there is a plan to bring that number below 100%, or if you are comfortable continuing to operate at this level. If there is a plan to bring it down, whether that will be a source of margin pressure over time at the Armenia business as you replace some of that funding with deposit funding or maybe not. The second question is, on international expansion, there was a big transaction in your target geography with Luminor being acquired by OTP Bank during the quarter.

Speaker #5: Great. Thanks for for the call. Congrats on the results. Really fantastic numbers again. A couple of questions for me. The first one on Armenia and I saw that the loan to deposit ratio remains I think about 125 130%.

Speaker #5: And I wonder, over time, whether there is a plan to bring that number below 100, or if you're comfortable continuing to operate at this level.

Speaker #5: And if if there is a plan to bring it down whether that will be a source of margin pressure over time at the Armenia business as you replace some of that funding with with deposit funding or or or or maybe not.

Speaker #5: The second question is on on international expansion there was a big transaction in your kind of target geography with Luminor being acquired by by OTP during the quarter.

Speaker #5: I wonder if that was something that you guys looked at whether that was of interest or or or or not if you had any comments on that.

Roman Fuzaylov: I wonder if that was something that you guys looked at, whether that was of interest or not, if you had any comments on that. Thank you.

Speaker #5: Thank you.

Speaker #2: So, we start with the last one. I cannot comment on it.

Archil Gachechiladze: Let me start with the last one. I cannot comment on that.

Roman Fuzaylov: Hmm. Okay. I guess that's simple.

Speaker #5: Okay, okay. I guess that's simple.

Hovhannes Toroyan: For the Armenian operations, you're right, our loan-to-deposit ratio is above 100%. That's somewhere where we are feeling very comfortable because if you look at the mix of our liabilities, we have a significant chunk of the IFI borrowings that we consider very stable on long term.

Speaker #4: For the Armenian operations, you're right. Our loan-to-deposit ratio is about 100%. But I mean, that's somewhere where we are feeling very comfortable because, if you look at the mix of our liabilities, we have a significant chunk of the IFI borrowings that we consider very stable in the long term.

Speaker #4: So it really helps us in terms of, because local borrowings are usually much shorter term contractually—obviously, behaviorally they're getting longer tenure—but contractually they're shorter term.

Hovhannes Toroyan: It really helps us in terms of those local borrowings are usually much shorter term contractually. Obviously, behaviorally, they're getting longer tenure, but contractually they are shorter term. Hence, we always prepare to mix it with the long-term IFI borrowings that are giving us also better comfort in terms of our gaps. Over the times, we have confirmed that these funds are very stable in their nature, and whenever needed, we were able to rely on them as well. Despite having a loan-to-deposit ratio formally above 100%, without inclusion of the DFI borrowings obviously, due to the fact that we're working with more than 1,000 DFIs, one of the most active partners of the DFIs in Armenia, it gives us full comfort.

Speaker #4: Hence, we always prefer to mix it with the long-term IFI borrowings that are also giving us better comfort in terms of our gaps. Over time, we have confirmed that these funds are very stable in their nature, and whenever needed, we were able to rely on them as well.

Speaker #4: So despite having loan to deposit ratio formerly above 100% without inclusion of a DFI borrowings obviously due to the fact that we're working with more than a dozen DFIs one of them more most active partners of a DFIs in Armenia it it gives us full comfort.

Roman Fuzaylov: Is there a meaningful chunk of non-DFI borrowing on the Armenian liabilities mix or no?

Speaker #5: Is there a meaningful chunk of non-DFI borrowing in the Armenian liabilities mix, or no?

Speaker #4: We do have non-DFI FI borrowings from international financial institutions as well. But their size is much smaller.

Hovhannes Toroyan: We do have non-DFI FI borrowings from International Financial Institutions as well, but their size is much smaller.

Speaker #5: Okay. Okay. Thank you Roman. Thank you guys.

Roman Fuzaylov: Okay. Thank you, Roman. Thank you.

Hovhannes Toroyan: Plus, we also have some funds, mostly due to the trade finance operation. We are the largest trade finance operator in the country, but that is also shorter term and in terms of size, it is smaller, thus more significant than simple FI borrowings.

Speaker #4: And plus we also have some funds mostly due to the trade finance operation. We have we have the we are the largest trade finance operator in the country.

Speaker #4: So but that is also shorter term and in terms of size it's smaller those more significant than simple FI borrowings.

Speaker #2: And Roman right now a lot of IFIs are are highly motivated to increase the exposure in in Armenia.

Archil Gachechiladze: Roman, right now, a lot of IFIs are highly motivated to increase their exposure in Armenia.

Roman Fuzaylov: Interesting. We should expect that sort of structure to sustain 100% plus for the foreseeable future?

Speaker #5: Interesting. So we we we we should expect that sort of structure to sustain 100% plus for the foreseeable future.

Hovhannes Toroyan: For the next few years, yes.

Speaker #2: For the next few years yes.

Speaker #5: Okay. Understood. Thank you guys.

Roman Fuzaylov: Right. Understood. Thank you both.

Speaker #2: And and and surprisingly what what you can see is what we have seen in Georgia as well over the years is that in times of crisis in fact that IFI funding is is increased.

Archil Gachechiladze: Surprisingly, what you can see is what we have seen in Georgia as well over the years is that in times of crisis, in fact, that IFI funding is increased. It is countercyclical, and it is very stabilizing for the emerging markets like ourselves.

Speaker #2: So it's countercyclical and it's it's very stabilizing for the emerging markets like ourselves.

Speaker #5: Yeah. Makes sense. Okay. Thank you.

Roman Fuzaylov: Yep, makes sense. Okay, thank you.

Speaker #1: Thank you. Thank you Roman. So I think so Jens has a raised hand but I think he forgot to put it down. There is one question from Nikolai Dimitrov.

Nini Arshakuni: Thank you, Roman. Jens has a raised hand, but I think you forgot to put it down. There is one question from Nikolai Dimitrov. He is asking, "We are observing blockbuster numbers in Armenia. Where are you in the process of repositioning Ameriabank? Would you say you are 70% there or the process is almost complete?

Speaker #1: He's asking where observing blockbuster numbers in Armenia where are you in the process of repositioning Amiria Bank? Would you say you are 70% there or or the process is almost complete?

Archil Gachechiladze: Definitely not complete, and we are not 70% there. In terms of what we would like to see is we would like to see more than 1 million monthly active users, and other deposit and loan products being offered to our retail clients there. Roman, do you want to say anything there?

Speaker #2: Definitely not complete. And we are not 70% there. In terms of what we would like to see is we would like to see more than million monthly active users.

Speaker #2: And other deposit and loan products are being offered to our retail clients there. Do you want to say anything there?

Hovhannes Toroyan: Yeah, it depends. If the question is on the results, then certainly, we are not halfway where we want to be and where we plan to be. If we are talking about the product mix positioning in the market, then probably we are well beyond the 50% of the way that we have gone. If you look Ameriabank as a kind of top of mind, where we were a few years ago and where we are now, we have almost doubled the top of mind kind of recognition of the brand. Because, as Archil mentioned, 10 years ago, Ameriabank was perceived as a, let us say, exclusive bank for a middle-income population. Today, it is openly regarded as a bank for all, and that is very important.

Speaker #4: Yeah. I mean if we're it depends. If the question is on the results definitely I mean we are not halfway where we want to be and we where we we plan to be.

Speaker #4: But if we are talking about the product mix positioning in the market, then probably we are well beyond the 50% of the weight that we've gone.

Speaker #4: I mean if you look Amiria Bank as a at the top of mind where we were a few years ago and where we are now I mean we have almost doubled the top of mind kind of recognition of the brand.

Speaker #4: And because as Archil mentioned 10 years ago Amiria Bank was perceived as a let's say exclusive bank for middle income population today it's openly regarded as a bank for all.

Speaker #4: And that's very important at the same time all our product and propositions that we have rolled out for the mass market for middle income market I think those those are also very important significant moves to cover the needs of different layers or different segments of the population.

Hovhannes Toroyan: At the same time, all our products and propositions that we have rolled out for the mass market, for middle income market, I think those are also very important, significant moves to cover the needs of different layers or different segments of the population. If the question is on the results, yes, definitely we are not halfway there. In terms of being prepared for it, I would say we are more than half.

Speaker #4: So if the question is on the results yes definitely we are not halfway there. On in terms of being prepared for it I would say we're more than half.

Archil Gachechiladze: Thank you, Roman. Very well said. The coverage and the potential in the market is quite large. There are a lot of large projects being implemented in Armenia, the entrepreneurial spirit is there, and we have a very strong team on the market. The brand and operation is top of the line. With all of that, we believe that the current coverage of retail of just shy of 400,000 can triple over the years. That is a fantastic opportunity in a high-growth environment.

Speaker #2: Thank you, Roman. Very well said. But the coverage and the potential in the market is quite large. There are lots of large projects being implemented in Armenia.

Speaker #2: Then entrepreneurial spirit is is is there. And we have a very strong team on the market. The brand and operation is is top of the line.

Speaker #2: So with all of that we believe that the current coverage of retail of just shy of 400,000 can can triple over the years. So that that's a fantastic opportunity in a high growth environment.

Speaker #1: I see one raised hand from then Mihailov. So let me try to.

Nini Arshakuni: I see one raised hand from Dan Mikhaylov, so let me try to

Dan Mikhaylov: Hello, this is Dan from Vergent. Am I audible?

Speaker #5: Hello. This is Dan from Virgint. Am I audible? Great. Congratulations on the results. I just had a question on Armenia. If I look at Amiria Bank's standalone disclosures I see that loans classified under agriculture forestry and timber account for about 11% of gross loans.

Archil Gachechiladze: Yeah.

Dan Mikhaylov: Great. Congratulations on the results. I just had a question on Armenia. If I look at Ameriabank's standalone disclosures, I see that loans classified under agriculture, forestry, and timber account for about 11% of gross loans. Hovhannes, I was wondering if you could shed some light on what these exposures are, given that you mentioned that you had these conversations with the clients. You are not seeing a lot of risk from the trade restrictions that Russia has imposed on Armenian exports. That will be much appreciated.

Speaker #5: Ivanis was wondering if you could shed some light on what these exposures are, given that you mentioned that you had these conversations with the clients.

Speaker #5: You're not seeing a lot of risk from the trade restrictions that Russia has imposed on Armenian exports. Sure, that would be most appreciated.

Speaker #4: Yeah. So our exposure to the agricultural sector is mostly industrial scale agriculture. So we are talking about it's we do not really have at least significant exposure to the smaller farms.

Hovhannes Toroyan: Our exposure to the agricultural sector is mostly industrial-scale agriculture. We are talking about, we do not really have at least significant exposure to the smaller farms. We are talking about large greenhouses, large gardens, and so on, that deploy the latest technology that are much more efficient. When we would compare in terms of production capabilities, they are several times higher than the sector average. A chunk of it also has been developed during the recent years, post-COVID, when the government of Armenia launched a new project of modernization of the agricultural sector and deployed two new projects of co-financing or subsidizing some of the costs of industrial, large-scale agricultural projects.

Speaker #4: So we are talking about large greenhouses large gardens and so on. And that deploy the latest technology that are much more efficient and then when we compare in terms of production capabilities there are several times higher than the sector average.

Speaker #4: And a chunk of it is also has been developed during the recent years post COVID when the government of Armenia launched a new project of modern modern modernization of the agricultural sector.

Speaker #4: And deployed two new projects of co-financing or subsidizing some of the costs of industrial large scale agricultural projects. And as I mentioned obviously we have done initial analysis and when it comes to the recent limitations in terms of Russian export while some of our customers have been exporting to Russia earlier we see that in the midterm or even long-term perspective this change that has been introduced over the last two three months will not really cause any significant risk neither on their business nor on our balance sheet.

Hovhannes Toroyan: As I mentioned, obviously, we have done initial analysis and when it comes to the recent limitations in terms of Russian export, while some of our customers have been exporting to Russia earlier, we see that in the midterm or even long-term perspective, this change that has been introduced over the last 2, 3 months will not really pose any significant risk, neither on their business nor on our balance sheet.

Dan Mikhaylov: Clear. Thank you. Just as a follow-up, have you had any requests to restructure any of these loans? Because I seem to recall that the government has now rolled out an interest rate subsidy scheme to support agricultural borrowers.

Speaker #5: Leah, thank you. Just as a follow-up, have you had any requests to restructure any of these loans? The government has now rolled out an interest rate subsidy scheme to support agricultural borrowers.

Speaker #4: Yeah. As I mentioned earlier I mean the bigger thing was like short-term shock and as most of this large scale customers have been under the government either co-financing or subsidy programs the government has actually announced that they're extending these programs because some of them were maturing this year next year.

Hovhannes Toroyan: Yeah. As I mentioned earlier, the bigger thing was short-term shock, and as most of these large-scale customers have been under the government, either co-financing or subsidy programs, the government has actually announced that they are extending these programs, because some of them were maturing this year or next year. That will technically take away the short-term shock from the customers. So that is one of the examples where the measures taken by the government were able to protect these players. And hence, as I said, yes, there are being some complications in terms of finding new routes of transportation. Entering new markets is never that easy. But I think on the both political level as well as actually the developments that we see on the ground are very much promising that these customers should not have any problems, neither this year or in the near future.

Speaker #4: That will technically kind of take away the short-term shock from the customers. So that's one of the examples where the measures taken by the government were able to kind of protect these players and hence as I said yes there are being some complications in terms of finding new routes of transportation entering new markets is never that easy.

Speaker #4: But I think on the both political level as well as actually we see the the developments that we see on the ground are very much promising that these customers should now have any problems neither this year or in the near future.

Speaker #5: Sounds very encouraging. Thank you so much.

Dan Mikhaylov: Sounds very encouraging. Thank you so much.

Speaker #4: Sure.

Hovhannes Toroyan: Sure.

Speaker #1: Thank you, Dan. Thank you. Sorry.

Nini Arshakuni: Thank you, Dan. Thank you.

Archil Gachechiladze: Dan, to provide a little bit more color. Oh, Dan has left. That is all right.

Speaker #2: Then to provide a little bit more color Dan has left. That's all right.

Nini Arshakuni: I should have let him in.

Speaker #1: You can I get should I let him in?

Archil Gachechiladze: To provide more color.

Speaker #2: So so this this project.

Operator: The host would like you to unmute your microphone.

Speaker #3: The host would like you to unmute your microphone. You can press star six.

Archil Gachechiladze: Are top of the line in terms of technology.

Operator: You can press star 6 to unmute.

Archil Gachechiladze: Deploying the latest technology from the, in case of orchards, let's say, the Italian trees and the tree privatization and so forth, that's the highest level, highly automated, brand new. The reality is that as they change the target market, their margins will be squeezed. Having said that, their business model was outrageously comfortable. Even by changing one market to the other, of course, they'll make less money, but they should be fine. The larger ones have very strong sponsor supporters also. We have gone through a detailed risk assessment and don't expect a major charge on that.

Speaker #2: Technology from the you know in case of orchards let's say the Italian trees and and the drip irrigation and so forth that the the highest level automated highly automated brand new.

Speaker #2: The reality is that as they change the market the target market their margins will be squeezed. Having said that their business model was was outrageously outrageously profitable.

Speaker #2: So even by by changing one market to the other of course they will make less money. But they should be they should be fine.

Speaker #2: So the larger ones have very strong sponsor support as well. So we have gone through a detailed risk assessment and don't expect a major major charge on that.

Speaker #1: Thank you. Our children is one the the only only question left in the Q&A chat from Daniela Mirkov. Are widening widening EU sanctions creating any compliance risk for Bank of Georgia and do we have any exposure to the oil refinery?

Nini Arshakuni: Thank you. Archil, there is one, the only question left in the Q&A chat from Daniella Mirkov. Are widening EU sanctions creating any compliance risks for Bank of Georgia? Do we have any exposure to the oil refinery today?

Speaker #1: To the.

Speaker #2: We we don't in fact. So we didn't bank the the company. So that's that's not you know it doesn't create any any any risks.

Archil Gachechiladze: We don't, in fact. We didn't bank the company. It doesn't create any risks with that, so no.

Speaker #2: With that so. No.

Nini Arshakuni: No more questions.

Speaker #1: No no more questions.

Speaker #2: What we know, in fact, on that for everything is that they are in detailed negotiations with the European authorities to see what they can do. It is basically because their business model is still very valid, working on the non-Russian oil, given how demanded the refinery capacity has become worldwide.

Archil Gachechiladze: What we know, in fact, on that whole everything is that they are in detailed negotiations with the European authorities to see what they can do, basically, because their business model is still very valid, working on the non-Russian oil, given how demanded the refinery capacity has become worldwide.

Nini Arshakuni: No more questions.

Speaker #1: No more questions.

Archil Gachechiladze: That is what they will do, but we are not exposed, no. Should we summarize, Nini?

Speaker #2: What what they will do. But we're not exposed now. Should we summarize Nini then?

Speaker #1: Oh yes.

Nini Arshakuni: Yes.

Archil Gachechiladze: I am glad to say that this is a very strong quarter. We are delivering 27% return on equity with a very solid capital position, which is the highest in the wider region, in fact. We are growing at 20%-plus in almost everything. In loans, 23%, in deposits, 28%. In acquiring business, 20%-plus in Georgia and 48% in Armenia. Deepening and strengthening the Georgian franchise, growing rapidly Armenian franchise, doing all of this while having positive Operating Expense jaws in both markets, and then obviously combined, and growing the top franchise, which is delivering 27%, growing at 20%-plus. I think that combination speaks for itself. I will leave you with this. I hope that for our shareholders, this is a positive news, and this will stay as a positive news with you as you take your vacation.

Speaker #2: I I'm glad to glad to say that this is a very strong quarter. So as we are delivering 27% return on equity with very solid capital position which is the highest in the wider region in fact.

Speaker #2: And we are growing at 20 plus percent in almost everything. So in loans 23 in deposits 28. In in acquiring business 20 plus in Georgia and 48% in in Armenia.

Speaker #2: So deepening and strengthening the Georgian franchise growing rapidly Armenian franchise doing all of this while having positive operating jobs in both markets and then obviously combined and and and growing the the top franchise which is delivering 27% growing at 20 plus percent.

Speaker #2: So I think that combination is speaks for itself. And I will leave you with this. And I hope that for our shareholders this is a positive news and this will stay as a positive news with you as you take your vacation.

Speaker #2: And I wish you to to to rest well and come back energized after the August holidays. Thank you very much.

Archil Gachechiladze: I wish you to rest well and come back energized after the August holidays. Thank you very much.

Speaker #1: Thank you. Everyone take care. Bye bye. Bye.

Nini Arshakuni: Thank you, everyone. Take care. Bye-bye.

Archil Gachechiladze: You too.

Nini Arshakuni: Bye.

Operator: Goodbye

Browse all earnings call transcripts

Q2 2026 Lion Finance Group PLC Earnings Call

Request TrialDemo

Lion Finance Group

Earnings