Georgia Capital PLC · LSE:CGEO
Georgia Capital — 9M24 Earnings Presentation
20 slides from Georgia Capital's earnings presentation, November 2024
Slide 1: Macroeconomic Overview 3Q24 & 9M24 Results
MACROECONOMIC OVERVIEW 3Q24 & 9M24 RESULTS 1
Slide 2: Strong real GDP growth in 8M24, with inflation below target
STRONG REAL GDP GROWTH IN 8M24, WITH INFLATION BELOW TARGET GEORGIA’S ECONOMY CONTINUES TO EXPAND, WITH PRELIMINARY ECONOMIC GROWTH ANNUAL INFLATION BELOW THE 3% TARGET SINCE APRIL 2023, WITH SEPTEMBER 2024 AT 10.0% Y-O-Y IN 8M24 INFLATION AT 0.6% Y-O-Y 15% 13% 12% 12% Headline Inflation Target End
Slide 3: Stronger-than-expected economic growth supported by robust domestic activity
STRONGER-THAN-EXPECTED ECONOMIC GROWTH IS SUPPORTED BY ROBUST DOMESTIC ACTIVITY AND RECOVERING EXTERNAL FLOWS LOANS GROWTH DECOMPOSITION BY SECTORS, (ON A CONSTANT CURRENCY BASIS) GENERAL GOVERNMENT FISCAL EXPENSES, GEL BLN 25% Legal Entities Households Total Loans Growth rate, % Y-o-Y Current Expen
Slide 4: Deleveraging underway as external balance sheet shows significant improvement
DELEVERAGING UNDERWAY AS EXTERNAL BALANCE SHEET SHOWS SIGNIFICANT IMPROVEMENT CAB NARROWED TO -6.0% OF GDP, SUPPORTED BY GROWTH IN THE TRANSFER AND SERVICES NET EXTERNAL EARNINGS TURNED POSITIVE IN SUMMER AS SEASONAL FACTORS COME BALANCE INTO PLAY Goods, net Services, net Investment income, net Net
Slide 5: Overview of the continued volatility in market sentiment
OVERVIEW OF THE CONTINUED VOLATILITY IN MARKET SENTIMENT DESPITE RECENT DEPRECIATION, THE GEL HAS SINCE RECOVERED ITS VALUE, WIDENED SOVEREIGN SPREAD REFLECTS RECENT POLITICAL DEVELOPMENTS SHOWING ONLY 1.1% YTD DEPRECIATION 700 EMBI diversified sovereign spread Georgia sovereign z-spread 600 3.6 3.4
Slide 6: Macro policy stance continues to be appropriate
MACRO POLICY STANCE CONTINUES TO BE APPROPRIATE NET NBG INTERVENTIONS ON THE FX MARKET AND OFFICIAL RESERVE ASSETS THE OPERATING BALANCE SURGES DUE TO HIGHER-THAN-EXPECTED TAX REVENUE COLLECTION Net Interventions, US$ mln (LHS) Reserve Assets, US$ bln (RHS) 5.4 213 5.5 250 205 8000 176 Tax Revenues
Slide 7: Macroeconomic wrap-up
STRONG GDP PERFORMACE BELOW-TARGET INFLATION EXTERNAL DEMAND IS SUPPORTING GROWTH AGAIN MACROECONOMIC ROBUST EXTERNAL BALANCE SHEET WRAP-UP MACROECONOMIC POLICY FRAMEWORK REMAINS APRROPRIATE 7
Slide 8: Sovereign ratings with favourable macro fundamentals
SOVEREIGN RATINGS WITH FAVOURABLE MACRO FUNDAMENTALS Key Ratings Highlights General Facts Rating Agency Rating Outlook Affirmed Ba2 Stable March 2024 BB Stable August 2024 Georgia BB Stable June 2024 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook ▪ Area: 69,700 s
Slide 9: Georgia's key economic drivers
GEORGIA’S KEY ECONOMIC DRIVERS Top performer compared to peers across a wide range of international rankings Liberal ▪ Liberty Act (effective January 2014) ensures a credible fiscal framework; Fiscal deficit/GDP capped at 3%; Public debt/GDP capped at 60%. economic policy ▪ Following the emergency c
Slide 10: Institutional oriented reforms
INSTITUTIONAL ORIENTED REFORMS OPEN BUDGET INDEX, 2023 | INTERNATIONAL BUDGET PARTNERSHIP ECONOMIC FREEDOM INDEX | 2024 (HERITAGE FOUNDATION) (BUDGET TRANSPARENCY) Ireland 3 Georgia 1 Sweden 3 Lithuania 15 Moldova 5 Latvia 20 Norway 8 Czech Republic 24 Bulgaria 10 Italy 13 Portugal 29 Germany 14 Bul
Slide 11: Economic growth continuing at pace
ECONOMIC GROWTH CONTINUING AT PACE GROSS DOMESTIC PRODUCT NOMINAL GDP STRUCTURE, 1H24 Nominal GDP, GEL bln (LHS) Real GDP, YoY % 80 24% 80 73 70 61 20% 60 50 50 16% ublic 50 45 10.6% 11.0% 41 41 dministration, ducation, 35 37 37 12% 40 32 7.5% . % .2% 26 28 29 Trade, 1 .3% 30 8% 9.1% Real state, 10.
Slide 12: Unemployment rate at historical lows
UNEMPLOYMENT RATE AT HISTORICAL LOWS UNEMPLOYMENT RATE AT HISTORICAL LOWS, DOWN TO 16.4% IN 2023 FROM 17.3% IN 2022 LABOR FORCE STRUCTURE 30% Employed Unemployed Labor force Labour force participation rate,% 27.2% 26.7% 25% 23.0% 1,800 60% 21.7% 22.1% 1,676 1,655 1,654 1,641 20.4% 1,625 1,627 1,629
Slide 13: Inflation below the target level since April 2023
INFLATION BELOW THE TARGET LEVEL SINCE APRIL 2023 INFLATION Y-O-Y VS. INFLATION TARGET INFLATION COMPONENTS Food and non-alcoholic beverages Alcoholic beverages and tobacco Transport 16 Headline Inflation Core Inflation Target Monetary Policy Rate 16 Housing and utilities Other Inflation 14 12 12 10
Slide 14: Exports have rebounded; remittances stabilizing
EXPORTS HAVE REBOUNDED, SHOWING A SIGNIFICANT POSITIVE TREND IN THE DOMESTIC COMPONENT, WITH STRONG PERFORMANCE OF RE-EXPORTED MOTOR CARS REMITTANCES STABILIZING AS DECLINE FROM RUSSIA IS OFFSET BY INCREASING TRANSFERS RE-EXPORTED MOTOR CARS CONTRIBUTING MOST TO THE SURGING EXPORT IN THE THIRD FROM
Slide 15: Diversification of the external earnings enhances resilience
DIVERSIFICATION OF THE EXTERNAL EARNINGS ENHANCES RESILIENCE SINCE 2022, THE EXPORT OF ICT SERVICES HAS INCREASED - IN 2023 ICT EXPORTS TOTALLED EXPORTS AND RE-EXPORTS, US$ BILLION US$ 892 MLN WITH A 49% Y-O-Y GROWTH RATE Travel ICT services Transport Other services Services Export from BOP, bln USD
Slide 16: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE EXPORTS AND IMPORTS OF GOODS, Y-O-Y % EXTERNAL TRADE BY COUNTRIES, 9M24, SHARE IN TOTAL 75% Imports, YoY % Exports, YoY % 75% Export 4.8 USD BLN Import 12 USD BLN 60% 60% Kyrgyzstan-19% Türkiye-17% 45% 45% Kazakhstan-13% United States-11% Azerbaijan-11% Russia-11% 30% 30% R
Slide 17: Tourism revenues back to full strength
TOURISM REVENUES BACK TO FULL STRENGTH, DESPITE LOWER NUMBER OF TRAVELERS COMPARED TO PRE-COVID LEVELS TOURISM REVENUES TO GDP INTERNATIONAL VISITORS BY COUNTRY Tourism revenues, US$ bln Tourism revenues, % of GDP Number of International Visitors in 9M24, Thousand Recovery level in 9M24 (% of 9M19 l
Slide 18: Appropriate monetary policy stance ensuring macroeconomic stability
APPROPRIATE MONETARY POLICY STANCE ENSURING MACROECONOMIC STABILITY THE NBG CONTINUED TO EASE ITS TIGHTENED MONETARY POLICY STANCE WITH 150 BPS INTERNATIONAL RESERVES CUT IN 1H24 14 6,000 Official Reserve Assets, US$ mln Net Foreign Assets, US$ mln 12 5,000 International reserves reached US $4.7 bln
Slide 19: Loans by currencies and dollarization ratios
0% 20% 30% 40% 50% -10% 10% 0% 5% -5% 10% 15% 20% 25% May-18 Feb-17 May-17 Aug-18 Aug-17 Nov-18 Nov-17 Feb-19 Feb-18 May-19 May-18 Aug-19 LOANS BY CURRENCIES Aug-18 Nov-19 Georgia Capital PLC | Source: NBG Nov-18 Business Loans Consumer Loans Feb-19 Feb-20 May-19 May-20 Aug-19 Aug-20 Nov-19 Nov-20 G
Slide 20: Government balance sheet improving with external public debt at lowest level
GOVERNMENT BALANCE SHEET IMPROVING WITH EXTERNAL PUBLIC DEBT (% OF GDP) HITS ITS LOWEST LEVEL SINCE 2015 AND DEFICIT IS IN LINE WITH THE FISCAL RULE GENERAL GOVERNMENT DEBT AT PRE-PANDEMIC LEVELS GENERAL GOVERNMENT DEBT STRUCTURE General Government Debt, External (% of GDP) 60% General Government De