Lion Finance Group PLC

Everyone, welcome to Line Finance Group's quarterly earnings call. Today, we're pleased to present 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. I'm joined... As always, by the Group CEO Archil Gachechiladze, Group as well as Bank of Georgia CFO Giorgi Shagidze, Ameriabank CFO Hovhannes Toroyan, and our Group Economist Akaki Liqokeli. 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 dive. Archil, please go ahead.

Thank you for joining the call. I'm very happy to report a very strong quarter. In the second quarter, 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 a significant growth of our retail franchise, which is reflected in growth of monthly active users in Georgia, All the population, meaning the total population, including the small kids and so forth, is not all bankable, of 1.9 million, which is 13.3% higher than last year, 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 1 million users So, we have more than a million people open our application daily. 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 second quarter and 17.3% for the half year. Also, which was very strong showing was balance sheet growth both on loans as well as deposits with 23% and 26.8% accordingly. That's in custom currency. As you may remember, we guide about 50% 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. 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. 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 growth in both markets and then obviously combined. 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 users and the satisfaction of the customers. So I'm very appreciative of the whole team's efforts that lead and deliver these results. So with that, I will let Akaki tell us about the macroeconomic environment in Armenia and Georgia.

Hello everyone, I will share with you the recent macroeconomic developments and outlook for our core markets Georgia and Armenia. And let me start with growth performance. 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. 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 high base effect from the previous year and some pre-election uncertainty. Preliminary numbers show that growth trajectory improved significantly from Q2 and our full-year real GDP growth outlook for Armenia is 5.5%. 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. This 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 the first half of 2026, despite escalations in tensions in the Middle East. The resilient inflows have also supported currency strength. Georgian Lari and Armenian Trump continue to appreciate against the US dollar in the first seven months of 2026. 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 Trump has been also underpinned by These are 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. The structural drivers are expected to remain in place in the following years and support local currency values. The currency's trend 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. More importantly, service price inflation has been relatively stable in both countries, reinforcing our confidence that inflation should go back to Central Bank's 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. 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. The central banks have been also actively building international reserves. This has been enabled by resilient inflows and ongoing trend of deposit de-dollarization. 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. The Armenian authorities have managed to stabilize public debt levels despite temporarily elevated spending needs. In both countries, public debt continues to dollarize, reducing the fiscal sector's exposure to exchange rate movements. 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. Long dollarization levels remain low by historical standards with recent uptick in Armenia related to business lending. Capitalizations are Thank you, Akaki. Now, Giorgi will walk us through the main highlights of the Georgian financial services first.