Lion Finance Group PLC

Hello, everyone. Welcome to Lion Finance Group PLC's third quarter results call. My name is Ninia Arshakouni. I'm Head of Investor Relations and I'll be the moderator for today's call. I am joined on this call by Archil Gaciciladze, our Group CEO. Hovhannes Toroian, who is the chief financial officer of Ameriabank, our banking subsidiary in Armenia, and Akakili Kokeli, our group economist, who will be covering the macro. We're pleased to report another set of solid results for the quarter with very strong customer franchise growth across our business operations in Georgia and Armenia. Our loan book grew 22% in constant currency with even stronger growth in the Armenian operations. Overall, our profit for the quarter amounted to 547 million Georgian lari, an 8% increase versus the prior year. Return on average equity stood at a solid 28%. Cost to income was 35.3% and improvement versus the prior quarter. And our cost of credit risk ratio was 0.5%. And we maintained robust asset quality across the whole business. Before we dive into the details of these results, we'll first start with the macroeconomic developments and Akake will kick off and then we'll hear from Archil and Joannès and in the end we'll open the floor for questions. Akake, now you can start the macro part and let's move on.

Thank you, Nini. Hello, everyone. I will be presenting the macroeconomic update for our core markets, Georgia and Armenia. Let's start with growth performance. In the first nine months of the year, both economies delivered solid growth numbers supported by robust domestic demand and resilient external sector inflows. Accordingly, we have maintained our full year real GDP growth forecast for 2025 at 7.5% for Georgia and 5% for Armenia. That said, the uncertainty around the baseline remains elevated due to geopolitical instability in the region and domestic political tensions. Nevertheless, the demonstrated resilience of the economies, along with continued improvements in relations between Armenia and Azerbaijan, has strengthened the outlook. and we have revised our expectation for 2026 is the strong growth will persist at 6% real GDP growth in Georgia and 5.5% growth in Armenia. Importantly, our projections are in line with the latest IMF forecasts, which place Georgia and Armenia among the top performers in the region in terms of average real GDP growth over the next five years. Turning to the composition of growth, both economies have increasingly shifted to domestic demand drivers, particularly consumption, which is supported by sustained increases in household income from employment and remittances, and ongoing fiscal expansion in Armenia is also helping in this regard. Investment spending is also contributing positively, aided by ongoing public infrastructure projects. External sector inflows are also contributing to growth. The income from exports, tourism and remittances is increasing at a solid pace in Georgia. We also see that the inflows have gained momentum in Armenia after one of highs registered last year. Also, the non-travel export of services, particularly IT and transport, demonstrate solid growth and contributing to overall hard currency inflows. The strength of inflows is supporting the stability of local currencies as well. Georgian lari and Armenian dram have been broadly stable against the US dollar over the last two years, in contrast to most peer currencies. The real exchange rates are also adjusting smoothly after strong appreciations in previous years. This is working through lower inflation with no impact on nominal exchange rates. We expect gel and Armenian dram to remain stable over the medium term, supported by solid macro fundamentals and prudent policies. uh exchange rate stability is also essential for keeping inflation low and stable which we have observed in both countries in recent years however more recently we have seen some uptick in inflation in georgia where the headline number was 5.2 percent year-on-year in october this is mostly driven by price increases on several food items from last year's low levels and we expect this to be temporary and short-lived as inflation expectations remain well anchored as reflected in low core inflation numbers, and the National Bank of Georgia maintains moderately tight monetary policy with the refinancing rate at 8%. In 2026, as inflation pressures ease, we see scope for a half percentage point rate cut by the MBG. On the Armenian side, the inflation is more stable and the refinancing rate is slightly lower at 6.75%. In 2026, we also expect a limited space for cuts within 25-50 basis points. The central banks of Georgia and Armenia have been also very active in foreign currency purchases this year, and as a result, there is official reserve levels have reached record high numbers, and they are also converging to the minimum adequacy levels. According to our estimates, 6 billion will be sufficient to reach that level in Georgia and 5 billion in Armenia. And those levels are quite realistic to be achieved in the following year. Strong reserve positions are essential for macroeconomic stability as well as fiscal discipline that we also observe in both countries. Georgia remains on a consolidation path with tightly managed fiscal deficit within 3% of GDP and also the government targets to reduce further the debt level below 3%. 35% of GDP. On the Armenian side, the temporary increase in spending needs has led to somewhat elevated budget deficits in the following years, but notably more spending is going to CAPEX projects, and the government is committed to maintain the public debt below 55% of GDP, and this is also supported by ongoing IMF arrangements. Lastly, a few words about the banking sectors, which benefit from favorable macroeconomic conditions in both countries. Lending growth has converged to the nominal economic growth in Georgia. And in Armenia, we also see some moderation to more sustainable levels as the mortgage subsidy program is phasing out. Loan dollarization has been stable after substantial decreases in previous years, which contribute to lower exposure to exchange rate risk. And the asset quality remains solid with Armenia and Georgia among the top countries in the region in terms of low non-performing loans, according to IMF. So this concludes my part. Back to you, Nini.

Thank you, Akaki. Now we'll move to discussing our performance in Georgia and Armenia separately, and Archul will first start with Georgian operations and strategic highlights, and then we'll move to Armenia.