Lion Finance Group PLC

Hello, welcome everybody to Lion Finance Group PLC's earnings call. Today we're presenting our results for the first quarter and the full year of 2024. My name is Ninia Arshagoni, I'm head of IR and I'll be joined on this call by the Group CEO, Arshil Gaceciladze. We are very pleased to report another strong set of results. driven by strong performance across our key business divisions in Georgia and Armenia, with Armenian financial services now accounting for 26% of the group's total assets. We have achieved a record adjusted profit for the full year of 1.8 billion gel. That's a 32% increase versus 2023, and we actually reported significant items on top of this figure in 2024. Our return on equity stands at 30%, cost to income ratio is below 35%, and our loan portfolio quality remains very healthy with cost of credit risk ratio at 0.5% for the full year. Our CEO, Arshil, will provide a deeper dive into this result, but before that, I would like to invite our chief economist who will review key macroeconomic developments impacting Georgia and Armenia, as well as the macro outlook moving forward. And with that, I'll just stop sharing my screen and get Akaki on the line. So now Akaki is on the line. Hi Akaki, you can go ahead.

Hi Nini, thank you. So I will be providing the macroeconomic update. Let me quickly share my screen. Okay, so last year, Georgian and Armenian economies continued to demonstrate strong performance despite geopolitical and domestic political headwinds. The Georgian economy increased by 9.5% year-on-year, while the Armenian economy expanded by 5.9%. Consumption spending has been a common growth driver amid improved labor market conditions, low inflation, and reducing local currency interest rates. From this year, we expect growth to stabilize at around 5% in both countries, and we believe this rate is sustainable over the medium term. As you can see on the right hand side chart, Per capita income levels in Armenia and Georgia has increased significantly over the past years. However, they remain well below the average level of Central and Eastern Europe. So there is plenty of room for catch-up growth going forward. Downside risks are elevated. However, we believe that both economies will continue to be resilient and prudent macroeconomic policies will remain in place. The preliminary data from January suggests that strong economic performance was sustained in Georgia, so we do not exclude the possibility that growth may surprise on the upside. As Georgia and Armenia are small open economies, external sector inflows are a key source of economic growth and local currency stability. As you can see, those inflows have remained quite resilient in both countries, despite some moderation in Armenia recently, which is which was after one of spike in re-exports. But more importantly, exports of Georgia and Armenia have become more diversified, particularly exports of non-travel services such as transportation and storage and IT services have been increasing steadily. So those services provide not only diversification benefits but also productivity gains to the overall economy. Resident external sector inflows are a key driver of exchange rates over the medium term. And in Armenia, last year was a record high in terms of inflows. So Armenian DRAM was one of very few currencies in the region which appreciated against the US dollar. These inflows were also strong in Georgia, however, Georgian Larry weakened slightly due to sentiment shifts amid elevated uncertainty. However, from early 2025, Georgian Larry recovered somewhat and volatility decreased. Over the medium term, we expect both gel and Armenian drown will be stable, underpinned by resilient fundamentals and prudent macroeconomic management. Stable exchange rates also contribute to low and stable inflation. And as you can see on this chart, headline inflation has decreased substantially from early 2023, both in Armenia and Georgia. And since then, the two countries have enjoyed favorable inflation environment with headline number below the central bank targets. However, the two central banks have chosen different paces of easing. In Armenia, the Central Bank of Armenia delivered consecutive rate cuts last year, so it left little room for reductions in 2025. In the case of Georgia, the National Bank of Georgia basically has kept the policy rate at 8% since May 2024. So here there is more room for reductions, but we do not expect any cuts this year as inflation risks are elevated amid the uncertainty, the ongoing uncertainty. Overall, we expect inflation rates in Georgia and Armenia to pick up slightly this year from their very low levels of 2024. However, they should remain close to the central bank targets. Apart from low and stable inflation, solid policy buffers are also essential for macroeconomic stability. In this regard, there has been some deterioration in reserve adequacy in Armenia and Georgia, which took place last year. In Armenia, the main reason was increased exposure to export inflows, which, as I mentioned, one-off transitory, so its impact should decrease in the following periods. While in Georgia, there was a decrease in the amount of international reserves amid central bank interventions to mitigate the impact of sentiment shifts on currency volatility. And also, the government of Georgia has paid down external debt and gradually substituting it with local currency debt. So the deterioration in reserves was not related to any issues in external balance. The Central Bank of Georgia has already started replenishing the reserves, and we expect this process to continue going forward. And lastly, the commercial banks in the two countries maintain strong performance, long book portfolio increasing by 17% in constant currency last year in Georgia. The growth was even higher, 25% in Armenia. At the same time, The dollarization has been going down in both countries, contributing to lower exposure to exchange rate risk. And asset quality has remained decent, with non-performing loans in these two countries being one of the lowest among the peers. So this concludes my part of the presentation, and now I will hand it back to Nini.

Thank you, Akaki. With that, I'm handing over to Arshu, who will provide more color on the group's results now.