Lion Finance Group PLC

Good afternoon, thank you for joining Lion Finance Group PLC's results call. Today we're presenting our results for the first quarter and the full year of 2025. My name is Ninia Arshakouni, I'm Head of IR and I'll be moderating today's call. I'm joined as always by the Group CEO, Archil Gaciciladze. We also have on the line, the CFO of Ameriabank, our banking subsidiary in Armenia, Holanest Oroyan, and our Group Economist, Akeli Kokeli. First, we'll start with the presentations, and in the second session of this call, you'll be able to ask your questions. And with that, I'll hand over to Archil first for opening remarks, and then we'll dive into our performance and the operating environment. Archil, you can go ahead.

Thank you, Nini. Hello, everyone. Thank you for joining the call. I will just have opening remarks followed by the macro review by Akonati. So, as you can see, we have delivered a record quarter and a record year, in fact, with our net income growing by 20.9%, just shy of 2.2 billion, delivering 28.4% return on equity. And in the quarter, that was just above 30% return on equity with 35.5%. cost income ratio and cost of risk, which is about half of what we usually expect through the cycle. So for the quarter, it was 0.3, but then for the full year, it was 0.4. Both of the strong franchises have delivered a very good increase in the quality of the franchise, which we measure by the satisfaction of the customers. as well as as well as the pickup of the of the monthly active users on the retail front and and also both of the franchises delivered above average or above expected or above guidance growth in our portfolio especially on the credit side but also on the on the deposit side so we are quite I'm quite happy with the results, and I would like to thank our Armenian and Georgian colleagues who have done a very good job in 2025. And as a kind reminder, Armenian bank full year In 2025 was the first year when Amelia Bank was for the full year part of the Lion Finance Group, hence the renaming, as you know. And as you can see, it has delivered substantial good growth, not only on the balance sheet side, but also on the retail coverage side. With this bright note, I would like Akaki to cover our macro. As you know, both of the countries have enjoyed a record-breaking macro performance over the last few years, which is continuing year by year. So, Akaki, would you tell us what to expect?

Thank you, Archie. Hello, everyone. I will be presenting the macroeconomic update for our core markets, Georgia and Armenia. Starting with growth performance, 2025 was another strong year for both countries. The Georgian economy expanded by 7.5%, fully in line with our expectations and supported by strong consumption spending and resilient external inflows. Meanwhile, Armenia surprised on the upside, delivering 7.2% real GDP growth. For 2026, we expect the strong growth momentum to persist, supported by ongoing strength of services and public capital expenditure. Real GDP growth in Georgia is expected at 6% and within the range of 5.5% to 6% in Armenia. Due to this strong growth in recent years, as you can see on the right-hand side, per capita income levels in both economies have been steadily growing and converging towards central and eastern European peers. While the baseline outlook remains positive, uncertainty is still elevated. Geopolitical tensions in the region create downside risks. However, both economies are well positioned to withstand potential shocks supported by solid macroeconomic buffers and prudent policy frameworks. Upside opportunities could also emerge, especially from the ongoing implementation of the historic peace agreement between Armenia and Azerbaijan. Solid external inflows have also supported local currency strength. Georgian Lari and Armenian DRAM have been relatively stable in recent years, recording modest but consistent gains against the US dollar. Notably, real effective exchange rates for both currencies have stabilized, reinforcing our assessment that currency valuations are broadly in line with fundamentals and supporting stable medium-term outlook. Currency strength is also important for low and stable inflation, which the two countries have enjoyed in recent years. The recent headline inflation uptick in Georgia is mostly related to food price pressures and core inflation remains low, reflecting well-anchored inflation expectations. Over 2026, we expect inflation to stay close to the central bank's 3% targets in both countries, underpinned by prudent monetary policies. In the second half of this year, we see room for around 50 basis points cuts by National Bank of Georgia, while the policy rate of the central bank of Armenia is expected to remain unchanged, as the current policy stance is assessed as broadly neutral. Both central banks have been very active in accumulating foreign currency reserves. due to strong foreign currency inflows and stable exchange rates. By the end of 2025, current exchange foreign currency reserves reached record high levels of US$6.2 billion in Georgia and US$5.1 billion in Armenia. Importantly, the current reserve levels are above the minimum deposit thresholds and they continue to increase. Another key pillar for macroeconomic stability is prudent management of public finances. Georgia and Armenia demonstrates fiscal discipline, have demonstrated fiscal discipline over the years. The Georgian government remains on a consolidation path with tight management of fiscal deficits at 2.5% of GDP and declining debt-to-GDP ratio. Meanwhile, the Armenian authorities have been successful in balancing ongoing spending needs with fiscal sustainability objectives. Despite elevated fiscal deficits in recent years, they managed to keep debt-to-GDP ratio broadly unchanged. This year, we expect fiscal policies in both countries to remain sound and supportive to growth, particularly through sustained public capital expenditure. And lastly, financial sectors in both countries have benefited from favorable macroeconomic environments and continue to support growth. We observe solid and strong expansion of lending, lower levels of loan dollarization and solid capital buffers. So this concludes my part. Back to you, Nini.

Thank you, Akaki, for the overview. Now we're back to Archil.

who will uh discuss our performance first in georgia yes one second let me share the presentation there we go so um in georgia the uh numbers were as we said uh ahead of um

ahead of our expectations. So our net profits for the quarter was just shy of 460 million Lari, which was 17% growth on year-on-year and return on equity of certainly 2.7%. And in terms of loan book growth, we were at 16.1%. As you may remember, we got 10 plus percent. So 16% was a strong showing, and our digital monthly active user continued to grow by 15% year-on-year, reaching 1.8 million. We have our retail app and the business mobile app, both are digital. quite capable applications that do a lot of different things. And we have a list here. But what's interesting is that second year in a row, we won the world's best digital bank by global finance. and uh there were very big names in the run-up at the end uh big um uh big mobile um digital banks basically the biggest uh in in europe uh so um in terms of the monthly active users you can say that we are up by 15 percent but also on a daily active it's up by more than that which was 24 achieving uh this guy of one million customers which uh the is increasing. Customer engagement is an ever-increasing number, which is very good showing. Also, on the legal side, so on the company side, we had an increase of 14% year-on-year, achieving 133,000 companies that use our mobile application. Obviously, Internet is used there as well. We are increasing our... sales uh with with digital um and then we have achieved new heights of uh 71 in the fourth quarter um achieving 71 of all products are being sold digitally and you can see that in loans as well in deposits we are increasing the share of sales which are done digitally And that is based on small differences or small improvements that we do to each product. On the net promoter score, which is part of our DNA No customer satisfaction and the focus on that is part of the DNA and this MPS is more like a Like a quick measure of how we are doing overall Now we have achieved new highs of 76 showing at the end of December and just shows you that our franchise is Enjoying the high moment or highest quality it has ever been in fact In terms of our payments acquiring volumes, we are up by 22.6% and market share of 55.8%, 0.1% down year-on-year. But basically, it's the strongest showing. As you can see, what makes me also very happy is... number of people using our our Visa Visa MasterCard or let's say they're the parts not just to do master visa mastercard and Amex because Amex debit is something that we do as well we do is up by 13% year-on-year to to 1.64 million people in Georgia which is which makes us happy to see that although we are a leading retail franchise in the country and in the region, we can say that it's still increasing double-digit number of people using our cards on a monthly active user basis, which is something that makes us happy and lays a strong ground for further growth going forward. Our loan portfolio, as we discussed, grew by 15.9% or 16.1% in constant currency basis. On a quarterly basis, that was 4.5%. Deposit continued to grow 13.6%. Having said that, and we'll discuss it later, that high liquidity is waiting on our name, so we would like to go below 40%. Market share we had is 41, and we'd like to do it so that we don't hurt the um franchise so that people will still have uh bankers that are top choice for the for keeping their money uh on the capital position side as you can see there are very strong buffers there and the liquidity side slightly higher than than we usually uh keep um on on this note i would like to ask colonists to cover the armenian side which has uh delivered a fantastic uh results please

Thank you, Archil, and greetings, everyone. I'll be showing the presentation Yes, so as Archer mentioned, this quarter was another breaking record quarter for us in terms of performance. Our net profit for the quarter grew 38%, and annualized standalone net profit grew about like 24%. Our return on equity was 26.8% and the long portfolio growth was also astonishing 28% in constant currency basis and this was very diversified between both retail and corporate portfolios. Our time deposits grew 33% year over year, showing the very strong trust of our customers towards our franchise. Total attractions from customers grew 22% on a constant currency basis. And again, we are very happy with this. All these are well above the benchmarks and guidelines that we have shared earlier. We are very happy also to mark that our mall and doll ratios are growing at astonishing over 25% per annum. In terms of digital infrastructure, we do continue to heavily invest into improving our digital infrastructure both internally as well as customer facing part. And our mobile app has already incorporated most of the Beyond Banking services, so it has become a very good ecosystem for our customers to meet a number of their needs, including investments in terms of brokerage, my home, my car, and so on and so forth. We have enhanced the digital payments in our ecosystem and mobile application and technically the number of transactions through our online banking have more than doubled within one year span. We have launched our loyalty program in Q4 of 2025, and we are very happy and enthusiastic about it. We hear a lot of compliments from customers already, so we do believe that it's going to be another very strong pillar for us to bond our long-term relationship with our customers. And again, we do continue to invest heavily into financial education, both for the kids as well as for the adults. And My Ameristar is application targeting kids and mostly educational part of that. And we are very happy to see the uptake on that as well. We do have very positive dynamics in terms of coverage of retail sector. Here you can see more than 45% of growth for malls and dolls. And we are currently serving one-third of the adult population of Armenia, and this gives us a lot of much bigger opportunities for growth in the local market, and we are very happy with it. At the same time, I cannot fail mentioning about very positive dynamics of digital uptake and engagement ratios that show that whatever improvements we are doing to our systems are actually to the benefit of our customer base. In terms of portfolios, the very strong macroeconomic situation in the country. leads to very healthy and positive demand for loans. And you can see that we were able to increase our loan portfolio by 28% in Q4 of 2025, year over year. And we do expect to see very positive dynamics going into 2026 as well. As I mentioned, the growth has been very balanced between retail and corporate. But with the retail portfolio, we see that the share of consumer loans is growing a bit faster than mortgages that constitute about half of the portfolio of the retail banking in Armenia. Deposits and attractions from customers are also growing very, very fast. And we can see that 22% roughly growth of total attraction from customers comes to prove it. It's very important also to note that 60% of our deposits already constitute deposits in IMD. And this is a result of a rapid increase of the number of customers. Over the last year only, we have increased the number of customers by 33%. At the same time, it's also a result of the very stable macroeconomic situation and very stable currency of Armenian gram. AmeriBank has been continuing to improve its market share. We are at 21.7% in terms of loans and 19.5% in terms of deposits. And as we have announced earlier, this really shows the additional growth opportunities that we see in the local market. In Q4 alone, 96% of all the loans dispersed by Ameribank retail sector were loans that were underwritten through our online channels, technically AI and machine learning based on the writing algorithms that cover it. That gives us opportunity to reach out to technically any Armenian citizen across the country with very low costs. In terms of liquidity, just like the Georgian here, we have been over liquid towards the end of the year. You can see from the ratios. And at the same time, in terms of capital position, I want to mention that while technically the capital position was tight by the end of the year, We did enhance our capital position already in December. It just came into factor in January when Central Bank of Armenia approved it as part of our regulatory equity. We're talking about 30 million euros. And effectively, by end of January, our capital position was already 17.5. And later, in early February, we were able to and do the first inaugural 50 million US dollar 81 notes that will elevate our capital position by another 86 basis points further. So we are very confident in both in terms of our capital position and liquidity position. This is very short. I'm going to hand it over back to Arjun.

Thank you.

Thank you, Hovhannes.

These are very impressive results from Armenia. And Armenia is continuing to deliver very strong results also on the macro side. And as Hovhannes mentioned, it's very good that we are increasing the number of customers that we are serving. And having said that, we only serve about one-third of the adult population in Armenia. So there's plenty of growth that can happen there. So now I will summarize what it means for the group results. So overall, the operating income up by 16.4% in the quarter and by 20.8% for the year, as you can see here. The net interest income was very strong, showing of 19.9% for the quarter and 25.9%. uh for the year the reason why we don't show armenia uh here for the year is that in the base year of 2024 one quarter is omitted so it will not be a right comparison uh as you remember we acquired uh uh the bank end of march uh in 2024. so net non-interest income was up by 10 percent um for the for the quarter and by 10.8% for the year. And I'll discuss a little bit there because there was some details that we should discuss. And we did disclose it in the results. i'll just mention that in the fourth quarter let's see in commission income was up by 33.8 but that was partly due to the fact that uh we um we got a new deal from uh the system providers um for the card payment system providers which uh was um starting from the first of april um so it covered the last three quarters in fact that it was booked in 2020 uh in the fourth quarter so the we we got three questions earlier today that what what what should you think going forward um and on the net fee and commission income side i think uh going forward we should expect growth to be somewhere between 15 and 20 percent so on the high teen side because not only we benefited for the last three quarters, but we benefit for the next five years with improved terms with the system providers. On the net effect side, we've seen a decrease in both markets, and on an annual basis, it's up by 5.1%. uh so there i think it's it's important to to to note that both of the currencies have been um have been very stable uh so we make uh we make more money at better margins when the volatility is there volatility has been down uh the competition has increased as well in georgia specifically but especially when you have a one-sided bet when the currency is getting stronger national bank provided a backstop to about 2.7 2.68 uh larry per per dollar uh that basically is a one-sided but it's hard to make money there uh so that's what we have been experiencing uh similar kind of trends in armenia as well but if there's volatility we'll make more money if there's no volatility we'll be let this to slightly increasing going forward So, I think it's, you know, it's already reflected that low volatility is already reflected in numbers and going forward we expect positive dynamics. Operating expenses were up by 14% for the group on the Georgian side, slightly higher than the revenue, but going forward, as we said, the overall as a group, we are expecting to have neutral or positive operating leverage. As you can see, in the fourth quarter, the group was 35.2 cost income, but notably Armenian side was 40.5. That kind of drop is partly for the cost control and partly due to the fact that third quarter was the last one where we amortized the retention bonus arrangement that we had with the key managers of the bank. So going forward, as I said, we expect neutral to slightly positive operating leverage going forward. The long portfolio growth was well ahead of our guidance, close to 20%, 19.7%, and the last quarter was 5.8%, where Georgia, as we said, contributed 4%, 4.5%, and quarter-over-quarter growth in Armenia was 8.5%, which was very significant. Overall, I think Hovhannes did mention that 28% was ahead of our expectation in Armenia in terms of growth. But what's interesting also is that fourth quarter of 2024 was a very big jump in loan growth. So with that high base to grow at 28%, especially on a Q over Q basis, you get the idea that the activity was very strong. uh is is there's a lot of positive dynamic happening there uh and a lot of uh of businesses are expecting to to grow so on the deposit side uh we grew 17.3 percent as you can see the breakdown there as well uh both of the franchise design are enjoying very high liquidity which is is uh show strength on one side but it also uh is a weight on on our uh costs of uh of interest uh net interest margin um was was slightly reduced in fourth quarter uh as i said probably due to the fact that uh uh it was uh increased cost in lobby and uh amd uh so local currency is becoming both markets in fact higher proportion and and the costs there have been a bit higher uh that will be a big focus going forward over the next couple of quarters Cost of risk, we were down at 0.3%. So for the annual costs came 40 basis points. Our NPL ratio remained 2.1. And although we had a slight increase in Armenia, but slight decrease in Georgia. So overall as a group, we are at 2.5 or 2.1% NPL ratio, which is just fine. in terms of npl coverage uh mainly the the decrease there it's automatic we didn't change any rules in fact uh the main reason why that change happens is because the proportion of the uh npl ratio is is increasingly towards the unsecured so there uh basically it's um that's uh that's what it's resolved uh profit before uh one offs uh as you can see uh we had uh 22.7 growth in the in the quarter so it's a very strong quarter in fact uh record record quarter uh and for the annual uh growth was also by 20.9 uh which is very strong and in armenia like a very very good role there uh we return an equity for the quarter at uh 30.1 percent nowadays uh every time return equity starts was three uh i'm relatively happy um and and for the for the full year i was less happy because it was 28.4 percent and not starting with three but you know who knows uh return average assets as you can see uh was up slightly from the previous quote time for the full year it was four percent uh all in all i think uh it's uh in Georgia and Armenia are very low. So we have almost twice as much capital as our peers in Eastern Europe. As a result of this, we have declared a dividend, which is an increase for the full year of 16.7%. Having said that, we are living significant buffers in both bands for strong growth because uh we have been over the last three years in fact we've been growing uh more than uh more than we indicated as our medium-term guidance and we want to be able to have that flexibility of deploying capital uh where the growth opportunities are uh for example in armenia with uh we did indicate that the acquisition that we were going to deploy the retained earnings which are quite strong to fund the growth, and that is very important to have that flexibility and ability as a group which is well-funded to, on one side, to pay dividends, which is growing year by year, and of 28.8%. just last year was 16.7% and going forward we expect positive dynamics there as well as ability to deploy our capital in growth opportunities be it organic or inorganic if it comes along. That's basically that. And as a reminder, our strategy is to be the main back for our customers and be excellent in customer experience and with our eyes on profitability. with annual book growth of about 15% and profitability of 20 plus although last few years has been closer to 28 to 30% and dividend payout ratio between 30 and 50 and there with as indicated in fact a couple of years ago we've been on the lower side which reflects our higher than higher than guided growth over the last three years that's about that and let's open up for questions because

i think questions q a is is usually the most interesting parts not only for uh our audience but also for us yeah so we can open the floor uh for questions and we have a few raised hands from the analysts so uh the first we will be shilshah from jk morgan hi shield hi hope you can hear me yes

Great. I've got two questions, please, if you can help me. First, can I ask about the NIM outlook for the business going forward in the context of rate cuts coming in Georgia or expected some of the funding pressures you've seen in the fourth quarter? And then you've also said the local currency deposits, you know, you're going to be focusing on. on those I presume on the cost of those going forward so I'd be interested to hear firstly on the NIM outlook of the business going forward and then secondly I'd like to know a bit more about the tech infrastructure of the bank because we can clearly see the output of the tech in terms of the nps score the growth in the number of mobile active customers the number of sales on the digital channel but i'd be interested in you know what how many of your applications are on the cloud uh you know what sort of platforms are you using how many core banking systems are you using what are you doing in terms of ai which which i noticed is uh you know newly on the slide so you know a bit more information on the tech stack would be interesting please

uh so on the mean side you did mention all the negatives and you didn't mention the positive which is deploying this extra liquidity i mean we are drowning in extra liquidity which we either will deploy or push out of the bank so so that's uh so so on balance will either be flexed to to slightly um positive on the new side and that's in both markets uh on tech side uh we um We are either the largest or second largest technology company in the whole region. We employ 1,000 plus tech specialists, either digital specialists, in fact, be it on the programming side or just digital workers. We have translated that into the good numbers as well on the customer acquisition side as well as the balance sheet growth. A few years ago, basically, first of all, our core banking in Bank of Georgia is homemade. So it's fully homemade as well as the main applications, the retail app and the mobile app on retail as well as business. Armenia Alaska owners to cover it in a couple of minutes, but mostly home down there as well, but basically We have a few years ago said that we want to be we want to be cloud on cloud or cloud ready so about three four years ago we started to to integrate that thinking in the design and everyday development and we have been chopping up our core system into smaller pieces uh connected with apis which allows for the scale up not to be too expensive and different parts of the business so it's uh many parts of our data is on cloud and and the rest can be on cloud any minute but uh it's uh it's a it's a cost uh um it's a cost benefit uh exercise on on which case because uh um yeah that's because it's not cheap but otherwise in terms of technical capability of putting it everything on cloud and and and having it in smaller pieces 90 is down i mean there are small pieces that we are rewriting and and changing but otherwise it's it's it's very well um very well developed um also on the ai side we are experimenting in many different directions uh chatbot is the is the most uh most obvious one, but we have done a lot of different testing of different capability now in the processing payments, processing AML and other types of applications, as well as on the risk and underwriting. So while we focus on AI, A lot of times, we understood that there's more to be done on the automation side, so there's a lot of work going there, but not much more to report there. The only thing I can say is that it's a big focus, and going forward, it will deliver efficiency, but also more important, the speed of execution and quality, which will benefit our customers. Juanes?

Yeah, in the Armenian operations, we are using the two major software from third parties. The core banking is from the leading provider in the country, and at the same time, CRM is one of the leading international solutions that we use. Other than that, the other major parts, namely mobile banking, online banking, are internally developed At the same time, we are also technically one of the largest technological companies in the country, despite tech being one of the strategically important sectors for the country, with a number of employees engaged into tech development that we have. We also have this agile framework, so product teams are working through this agile mechanism, and we do deploy machine learning and AI in certain areas, mainly in a number of areas to improve internal efficiency as well as to improve the customer experience. For example, one of the latest beta types of the applications we've seen internally was analyzing the needs or potential needs of the customers to be able to come up with the best next offer for the customers. As I mentioned, 96% of all the retail loans that we've dispersed in fourth quarter were through our online and automated models, machine learning and AI models. So technically for us, that means A, the writing process is 38 times cheaper than it would have been through conventional landing technique, and B, it also means outreach to technically anybody on the territory of Armenia. and obviously that's another perspective that we look at it and clearly we're also at the doorsteps of the unleashing all the opportunities that these new technologies with in hand for our sector so we are very optimistic that we're going to be using ai in general wider with better benefits

Thank you. That's very helpful. If I can have just one quick follow up. When you say that you have the potential for outreach to all of Armenia or to all of Georgia, is this a direct to consumer method or are you using sort of online tools or online aggregators? You know, what's your method of distribution of these loans?

In case of Armenia, it's technically mostly direct. We are rarely using other platforms as an aggregator to outreach our customer base. But technologically, and we do have a number of customers today that can become customer of Ameriabank remotely sitting on their couch. They can apply for a loan remotely sitting at their home or office. So this actually, and with the pretty significant penetration ratio of mobile and internet usage across population. We see our digital platforms, our own digital platforms, gaining very good and positive traction over the last few years, and that's actually also being represented by more than 45% growth of our MALs and DALs. As I said, our transactions more than doubled. 96% of retail loans through online platforms. So all these are kind of early indicators that whatever we have been doing for the last four or five years are actually kind of giving their results already.

I'll cover the Georgian side. So we have 1 million users daily in the country of 3.7 million people. So short answer is yes, we do it directly. And the long answer is that we are the biggest brand not only in the financial intermediation where the top of mind is 57%, but we are the biggest brand in the country, period. mean it's it's bigger than any other brand uh so when when you know say do we do it directly or not yes we do it directly we have uh still have a very significant branch network very significant atm network and we are the biggest brand in the country uh overall and philosophy finance um So that basically gives you an idea that we are not the back office of some kind of intermediary, but we are the main intermediary in the country.

Thank you. Thank you, Shil. So the next question is from Alex from Romer. Hi, Alex.

Hi. Can you hear me?

Yes, yes, go ahead.

Yes, thank you for this opportunity. Can we please differentiate between outlook for loans between Georgia and Armenia? Clearly the dynamics are somewhat different. This is my first question. Yeah, and I'll follow up with the second one.

I'll do it.

So 10 plus in Georgia, 20 plus in Armenia. That's very short and sweet. Thank you. And if I can address the elephant in the room, inclusion in FTSE 100, do you expect it to happen imminently?

As economists like to say, all else being equal, yes.

Yeah, that's great. That's great. Thank you. And finally, I appreciate that you deploy your capital very, very efficiently. But is there a scope for increasing the levels of distribution from 30%?

Absolutely. But as long as we grow at 20% instead of 15%, As long as as we are open to the many opportunities Being you know major banks and smaller economies And and such opportunities may come along we would like to keep a little bit of Buffers there, you know if either one or the other don't don't don't play out for a longer period of time and we grow it out or not well certain because any instead of 20 like we've been growing all the last three years and then of course we will return more capital. And our distribution is between 30 and 50. So I think it's a mirror image. So either we grow more and we deploy capital, and I think we've been very disciplined and showed our investors that we don't throw around the money. So we either deploy it in businesses which are generating 25% to 30% return on equity, or we are looking at acquisitions of of similar kind of returns so if this doesn't happen then of course we will return more uh but i hope it will happen so until those things are happening we will be on the lower side of the distribution guidance of 30 to 50 and if it happens less then we'll we'll grow uh capital returns that's great thank you so much thank you alex

The next question is from Jens Ehrenberg. Hi, Jens.

Hi, Mimi. Thanks. Can you hear me all right?

Yes, yes.

Oh, super. Thank you very much. Thanks, guys. A couple of questions from my side. Firstly, just on Armenia, I suppose it's really good to see more sort of digital uptake there. It feels like with sort of 11% of penetration, the growth hetero there is still there. really enormous. Is that the right way to think about it, given you're sort of roughly at 47% in Georgia? Is the opportunity really that big? Secondly, on Armenia, I think we've had quite a material improvement in the cost-income ratio in the fourth quarter, and I appreciate you touched on that earlier, but just going forward is sort of the low 40s level. Do you reckon that is sustainable for Armenia going forward? And then lastly, I suppose, on the Georgian side, I believe we had one of your key competitors talk about their strategy yesterday and the intention to try and grow more on the retail side in Georgia. I'm just curious to see how you see the competitive situation on the ground at the moment and really what you expect going forward there. Thank you.

Do you want to take the opportunity of growth on the Armenian side? Sure.

We have indicated earlier that currently for midterm, we do envisage to grow our market share to 30%. So this is our midterm strategic objective as of today. Obviously, I mean, that's going to be a moving target as we go forward and you've seen that over the last few years we have improved our market share significantly and we do anticipate to be outperforming the market in the year 2026 and next two years as well. So, in that case, theoretically, maybe in a bit longer term, we could get closer to the market share where our Georgia peers are. current target is at 30%, so that's kind of where we want to be first and then we'll see how it goes. In terms of cost to income ratio, we do believe that the ratio that we reported in fourth quarter is more than sustainable. Moreover, as I mentioned, a number of initiatives that we've done within the bank have significantly improved our cost base. So we do expect to continue in that direction further. So I would say I would not be very surprised to see the higher 30s in terms of our cost to income ratio in the coming years.

Yes, regarding the competition, I think, first of all, I cannot comment on, you know, competitors' statements. The only thing I can say is that competition on the ground in each and every direction is nothing new. So as you can see, over the last 20 years, there has been a pretty strong competition between the two. Having said that, I think both players have been, of the fact that they don't want to destroy the profitability. So I think we are seeing a significant push and effort on the side of the quality, in terms of user experience, in terms of easiness of use, et cetera, et cetera. And all of that I think will continue. Having said that, we believe that we are very well placed. to continue delivering the strong numbers well ahead of the whole banking system.

Super. Thank you very much, guys.

Thank you. Thank you, Jens. So we have the next question. Sorry, let me just. We have the next question from Ben Meyer from KBW. Hi, Ben.

Hi. Can you hear me?

Yes. Hi.

I just got a couple of questions. The first one's on market shares. You mentioned you've been growing it in Armenia and this is a small decrease in the course from Georgia. particular reason for this and also could you just please clarify your I think there's a point on liquidity where you said you wanted to keep the deposit market share below 40% in Georgia and my second question is also on consumer lending it's been very strong through the year is this just household re-leveraging or do you think that's you know potentially early signs of some financial strain also as the quality has been doing very well so just interested in your thoughts and then on the share of time deposits in armenia that's being that's risen uh year and year although it's down slightly in the quarter how do you expect the share of these deposits to evolve in 2026 thank you uh i think ben i would not reach too much until the quarterly changes of market shares um they they are rather volatile so let me show you the

what you're referring to. So you're referring to this change here, the last quarter. And I would say look at the longer term, look at 10 years or more. For this particular year, you can see that 37.6% has become 37.8% for the full year. So it's fled to slightly increasing. um and um you know competitors numbers are different um so that's that's that and in terms of the retail uh deposit market share also is very strong here on the total deposit we're trying to decrease it below 40 percent without uh without losing the preferred preferred status in people's mind in terms of keeping their money so so we feel very strong on the local marketing class so when you look at the um i think the key characteristics when you look at the um when you look at the quality of the franchise is the nps score which kind of is like a body temperature measuring the health of the of the service uh but inside there are a lot of different um different sub segment uh top of mind most trusted those are some of the things that we are watching at and uh and all of those are basically record highs um so we are in a very very strong position i can say that probably the strongest position uh that the franchise has ever been in terms of the quality of the franchise and that's on the back of a very strong macro performance over the last few years and double-digit growth of average incomes as the unemployment rate comes down. So overall, very strong macro and a very strong franchise. So that's the combination that we have, and very similar in Armenia. Jovanes?

Yeah, it's very similar technically in Armenia, but we do expect to grow, obviously, our market share in the coming years, as I already mentioned. In terms of the structure of deposits, I think it would be fair to anticipate similar changes in coming years because we do anticipate very stable macroeconomic performance and FX exchange rate in the country. At the same time, the more we cover retail segment, the more AMD denominated deposits share is going to grow over years. I'm not sure about the same dynamics in terms of the speed of change, but it would be fair to expect that in the coming years, share of IMD deposits and current accounts will be slightly growing.

Great, thank you. Just on the consumer lending strong growth, is there any obvious reasons behind that that you see in both markets?

So consumer growth in both markets has been very strong. In Ameriabank, I think it's partly due to the fact that our offering has become much higher quality in terms of user experience, and the reach in terms of offering has been much wider as well. In Georgia, we are in a leading position, and we have seen Georgian consumer uh their incomes growing double digit five years in a row and first two years was high teens as well so i think it's a very strong base uh we're not seeing any signs of of any credit quality deterioration uh we we watch it very carefully in different sub segments of of credit so uh um yeah so so like no signs whatsoever at this point uh and in fact if anything there are very very strong signs on the credit quality side on um all around the fact the only part the only part where we saw a little bit of issues where smaller hotels in the regions which is the lake you know one percent of course only or less and and they will tighten the underwriting that's two years ago and we we described it in different qualities but in terms of the large corporates in terms of real estate in fact that was a big focus and and we've seen a very strong much stronger performance than than anticipated In terms of all different types of consumption, investment, there has been very, very strong performance all around. And, in fact, people underestimate the amount of investment portfolio that is geared up to invest in a lot of different segments in Georgia, especially on the energy side, especially on the logistics side, and other things. And Armenia is a slightly different sector, but same place for once.

Yeah, I mean, I'm totally in the same line. So technically, the disposable income of the households over the last five, six years have grown immensely. And as Artyom mentioned, our digital propositions have improved. But also, please keep into consideration that during the last two years, we have doubled the number of customers that we're serving. So technically, in our case, we have also this very significant growth of the customer base. And clearly this also is additional market for us to go out there and present our different propositions, including consumer finance opportunities.

Thank you.

Thank you, Ben. We have another question from Dmitry Vlasov.

Thank you very much for the opportunity to ask a question. Congrats on a very strong set of results. So my first question is about cost of risk. You have a guidance of around 100 basis points over the cycle. And my question is, do you have a view for 2026 and how will it be different for Armenia and Georgia? The second question is about the potential M&A. Is my logic correct that it's mostly about the right opportunity, right timing and the right product price, rather than you waiting to maybe scale Amiri first and then sort of deploy capital elsewhere? Yeah, those are the two questions.

um on the cost of risk side you rightly said that between 80 to 100 base point is through the cycle guidance that that that we provide uh having said that we've been well below those numbers when the macro uh macro growth uh has been bigger and and the performance has been much stronger than than average uh in the history for both countries and i think you can apply that rule In terms of the M&A, you are absolutely right. I mean, we are opportunistic. So we scan different markets and we look for the right opportunity and right price. And we are quite disciplined about it. So we don't have to do any M&A, but if the right opportunity comes up, we would like to be in a position to do that. So that's our approach. uh it may be that we do something and maybe we don't do anything um and in terms of what we're looking for we're looking for major players and that by just by by our scale that means that we're looking at smaller markets unfortunately but we we do uh prefer to look at well-established players and in fact if we can add value in terms of applying our approach to customer care and technology and usually we do uh we we we like those kind of stories where it's a well-established player and we can add value um by by um by putting some of the approaches that we have uh to customer care and technology in in place uh and that i think um can can be very beneficial for the franchise for the country where we may be going uh as well as uh as well as for our shareholders uh also we look at uh we don't like turnaround stories um so banking is a leveraged business so we we are very careful there and we like good um good teams we we're very lucky with the team in in armenia it's a fantastic team and we've done everything uh possible to retain the whole team and we're very happy to to see them stay and uh and deliver fantastic results We may not get as lucky every time, but that would be the idea.

That's very clear. Thank you very much. Maybe one small additional question, if I may, about how 2026 started for you so far. Is it in line or maybe even a bit above your expectations? Thank you.

2006 started very well. So, strong start. Thank you.

Thank you, Dmitry. Thank you. We have one more question from Simon Nellis. I saw his hand, yes. Hi, Simon.

Hi. Thanks for the opportunity. Apologies if this question has already been asked because I had to drop off just for a little bit. It's around your capital return strategy going forward because I think you've been at the lower end of your guidance range as you reinvest into the Armenia business. Is that still the case or are you going to up the payout over time?

Until we are able to grow at the rates which we have been growing, which is blended 20%, probably we'll be on the lower side of the recovery times. Also, I think our buffers allow for us to be a bit more opportunistic if non-organic comes along. If one or the other of those do not happen, then obviously we'll be increasing to the higher side of that recovery. uh guidance which which is between 30 and 50. so we'll be we've been on the 30 side but obviously as things mature then we'll be increasing that significantly but short term i think we are in a luckily in a situation where we are growing um well above our our midterm guidance and are you still reinvesting the dividends into i mean you're not paying dividends out of armenia and you don't intend to We have not, but we'll be looking at slight upstreaming, especially because we have had ability to put the TR1 instrument in place, which provides significant buffers there. But we'll be watching the growth opportunities there. Quite frankly, I believe that Armenia has been doing very well. In fact, as a macro story and geopolitically, there are huge positive moves. And when big investments happen, I mean, there have been just a couple of big investments, to be honest, you want to mention that have been announced.

Yeah, recently the Vice President of the US was in Armenia and around this whole P3 corridor, there have been mentioned several very significant investments into AI, data center, technology institutions, nuclear power plant and a number of other infrastructural projects like railway, roads and so on. So, we are talking about four to nine billion U.S. dollars of potential investments into the country and for our economy it's really huge. The potential positive impact of that on the economy and subsequently on the financial sector could be really very decisive in the coming years.

So Simon, all of these positive things, they need banking. And we want to be able to bank them properly without much limitations. And I think our capital position and liquidity position allows us to be flexible. And if we find that we are growing at, I don't know, 12% instead of 25%, then then we return more capital i mean we are quite cost conscious and quite disciplined on on capital side um and we act as shareholders in fact so uh yes i mean as so far we've been growing more uh than we guided medium term and that's true for last three years in a row almost 20 growth of balance sheet and uh going forward if that continues we'll be returning capital but on the lower side And if we grow less, then we return more capital.

Very clear. Thank you.

Thank you, Simon. So I don't see a raise hands. There is just maybe two questions that I'll read. One is on Armenia. Can you please confirm the growth in Armenia is self-funded? And also, is there any inorganic growth opportunities in Armenia? So two questions.

Yes and no.

In Armenia, we are self-funded in terms of not receiving any funds from within the group. So there are not any intra-group funding locations or capital locations as of today. But at the same time, we are also very actively working with a number of developing financial institutions. And in 2025 alone, we were able to attract 400 million US dollar equivalent funding from the DFIs that also improved our liquidity position in foreign currencies. It's kind of long-term financing for us to be able to serve the needs of our customers. So technically as a fully independent entity, yes, we are funded by the funds of our customer base as well as our partner DFIs. if that's the question.

And then we also, and then this question is for Archeo on MPS. So it says, a couple of years ago you said you won't push on MPS as hard given the costs associated with it, but yet it keeps improving. How did you do it?

Just can't help it. It's part of DNA now. I think customer satisfaction and the focus on that is key to long-term success of any franchise, especially when you are touching lives of millions of people.

So I would keep that focus.

We don't have any more questions.

Excellent.

On this bright note, I I would like to thank you for your interest and for your support that we have felt not just today but over the long period of time for your trust. And I would like to thank the Armenian and Georgian team and the whole Lion Finance Group team for really doing your best and delivering consistently very good results. As long as we make our customers' lives better, I think we'll be in business and doing well. So thank you for your support, and let's look forward to a very strong start of the year, and I hope some good news very soon as well. So thank you.

Thank you, everyone, and see you next time. Thank you. Take care.