Georgia Capital PLC · LSE:CGEO
Georgia Capital — 9M22 Earnings Presentation
24 slides from Georgia Capital's earnings presentation, November 2022
Slide 1: Macroeconomic Overview 3Q22 & 9M22 Results
MACROECONOMIC OVERVIEW 3Q22 & 9M22 RESULTS
Slide 2: Real GDP continuing double-digit growth in 2022
REAL GDP CONTINUING DOUBLE-DIGIT GROWTH IN 2022 REAL GDP UP 10.2% Y-O-Y IN 9M22 50% 45% REAL GDP UP 10.2% Y-O-Y IN 9M22 40% 26% 30% 19% 18.0% KEY DRIVERS 20% 14.6% 10% 10% 12% 11.6% 9.7% 10.5% 8.8% 10% 7.2% 7% 7% ➢ Strong external demand supplemented by the migration effect, as 10% 4% 10.6% remittan
Slide 3: IMF projects the Georgian economy to grow by 9% in 2022
IMF PROJECTS THE GEORGIAN ECONOMY TO GROW BY 9% Y-O-Y IN 2022, THE 8TH HIGHEST GROWTH IN THE WORLD REAL GDP GROWTH FORECASTS FOR 2022 | IMF GDP PER CAPITA BY COUNTRIES # Country GDP growth forecast, 2022 50,000 180% 1 Guyana 57.8 2 Fiji 12.5 45,000 162% 160% 3 Seychelles 10.9 159% 4 Barbados 10.5 40
Slide 4: Georgian Lari – back to pre-pandemic levels
GEORGIAN LARI – BACK TO PRE-PANDEMIC LEVELS APPRECIATING SINCE MID-2021, BRIEFLY INTERRUPTED AFTER THE RUSSIAN INVASION OF UKRAINE, GEL HAS NOW STRENGTHENED TO PRE-PANDEMIC LEVELS AGAINST USD Sources: NBG GEL APPRECIATION DRIVERS 3.7 3.5 3.46 ➢ Record high remittance inflows, increasing by 65% y-o-y
Slide 5: 83.5K migrants have opened Georgian bank accounts
83.5K MIGRANTS HAVE OPENED GEORGIAN BANK ACCOUNTS, WORTH OVER $500 MN, SINCE THE START OF THE WAR NUMBER OF NEW BANK ACCOUNTS BY RESIDENCY, THOUSANDS NON-RESIDENTS’ DEPOSITS IN GEORGIAN BANKING SYSTEM BY RESIDENCY, GEL BLN 3.0 Russia Ukraine Belarus + US$ 635 MLN since war 12.5 0.2 2.5 0.2 0.5 2.0 0
Slide 6: Net external earnings turned positive since 2Q22
NET EXTERNAL EARNINGS* HAVE TURNED POSITIVE SINCE 2Q22, DELIVERING A RECORD-HIGH EXTERNAL SURPLUS EXTERNAL EARNINGS (US$ MILLION) TERMS OF TRADE HAVE REACHED 109% ON AVERAGE IN 9M22, COMPARED TO 101% IN 2021 (JAN 2017=100) Money transfers (Inflows) Money transfers (Outflows) Tourism revenues Exports
Slide 7: Inflation to decelerate gradually in 2023
INFLATION TO DECELERATE GRADUALLY IN 2023 INFLATION Y-O-Y VS. INFLATION TARGET Sources: NBG, GeoStat INFLATION TO DECELERATE BUT REMAIN 16 Headline Inflation Core Inflation Target CLOSE TO DOUBLE DIGITS IN 2022 12 ➢ Annual inflation reached 10.6% in October 2022 (12.3% on average in 10.6 10M22) and
Slide 8: Public debt to fall below 2019 levels in 2022
PUBLIC DEBT TO FALL BELOW 2019 LEVELS IN 2022, WITH THE DEFICIT PROJECTED AT 3.2% OF GDP PUBLIC DEBT Sources: MoF FISCAL SUPPORT HAS BEGUN MODERATING External public debt to GDP, % Total public debt to GDP, % 59.9% ➢ Fiscal support moderated in 2022, with current expenditures 60% growing by 9% y-o-y
Slide 9: Sovereign ratings with favourable macro fundamentals
SOVEREIGN RATINGS WITH FAVOURABLE MACRO FUNDAMENTALS Key Ratings Highlights General Facts Rating Agency Rating Outlook Affirmed Ba2 Negative April 2022 BB Stable February 2022 Georgia BB Stable July 2022 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook ▪ Area: 69,7
Slide 10: Georgia's key economic drivers
GEORGIA’S KEY ECONOMIC DRIVERS Top performer globally in WB Doing Business over the past 12 years 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 clause activ
Slide 11: Institutional oriented reforms
INSTITUTIONAL ORIENTED REFORMS Open Budget Index, 2021 | International Budget Partnership Economic Freedom Index | 2022 (Heritage Foundation) (Budget Transparency) Ireland 3 Georgia 1 Sweden 3 Lithuania 17 Norway 6 Latvia 18 Italy 10 Czech Republic 21 UK 12 Germany 14 Georgia 26 France 15 Bulgaria 2
Slide 12: Economic growth continuing at pace
ECONOMIC GROWTH CONTINUING AT PACE Gross domestic product Nominal GDP structure, 1H22 According to preliminary estimates, real GDP grew by 10.5% y-o-y in 1H22 Nominal GDP, GEL bn (LHS) Real GDP, YoY % Industry Other 17% 70 24% 21% 60 60 20% 49 49 50 45 41 16% 36 12.0% 40 34 10.4% 10.5% 29 31 12% 25
Slide 13: Strong external demand evident in accelerating FX inflows
STRONG EXTERNAL DEMAND EVIDENT IN ACCELERATING FX INFLOWS, WHILE DOMESTIC DEMAND ALSO REMAINS ROBUST DESPITE FISCAL SUPPORT MODERATING Remittances, y/y Remittances, vs 2019 80% Exports, y/y Exports, vs 2019 71% 80% Imports, y/y Imports, vs 2019 80% 80% 240% 240% 35% 159% 40% 40% 180% 180% 40% 40% 12
Slide 14: Employment dynamics catching up with recovery in wages
EMPLOYMENT DYNAMICS CATCHING UP WITH RECOVERY IN WAGES Unemployment rate down since 2H21 UNDP Human Development Index Sources: GeoStat Sources: UNDP 1450 27.2 27.2 26.7 Employed, Thsd Unemployment, % 30 0.9 0.80 0.81 0.80 0.80 0.75 0.76 0.77 0.77 0.78 0.78 26.4 0.8 0.72 0.73 0.73 0.73 0.74 0.74 23.0
Slide 15: Inflation to decelerate gradually in 2023
INFLATION TO DECELERATE GRADUALLY IN 2023 Inflation Y-o-Y vs. inflation target Inflation components Sources: NBG, GeoStat Source: GeoStat 16 Headline Inflation Core Inflation Target Food and non-alcoholic beverages Alcoholic beverages and tobacco 16 Transport Housing and utilities 14 12 10.6 12 10 8
Slide 16: Current account deficit 8.2% of GDP in 1H22
CURRENT ACCOUNT DEFICIT 8.2% OF GDP IN 1H22 AND EXPECTED TO IMPROVE FURTHER FOR THE FULL YEAR Current account balance (% of nominal GDP) Exports and Re-exports, US$ billion Sources: NBG Source: NBG 30% The CAB was -8.2% of GDP in 1H22, with the goods trade deficit slightly improving 30% Georgian-ori
Slide 17: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE Exports and imports of goods, Y-o-Y % Foreign Demand, 9M22 Source: Geostat Source:, Geostat 75% Imports, YoY % Exports, YoY % 75% 2% Crude materials, inedible, except fuels 3% 0% 60% 60% 6% Machinery and transport equipment 22% 45% 45% 9% Manufactured goods 30% 30% Beverage
Slide 18: Remittances at record high levels as tourism bounces back
REMITTANCES AT RECORD HIGH LEVELS DUE TO THE MIGRANT EFFECT AS TOURISM REVENUES ALSO BOUNCE BACK Tourism revenues to GDP Tourism revenues by country Sources: NBG, Geostat Sources: GNTA Tourism revenues have bounced back to 122% of 2019 levels on average since July 2022, aided by rebounding travel an
Slide 19: Appropriate monetary policy stance ensuring macroeconomic stability
APPROPRIATE MONETARY POLICY STANCE ENSURING MACROECONOMIC STABILITY Monetary policy rate International Reserves Sources: NBG Sources: NBG NBG further increased the monetary policy rate to 11% in March 2022 and has left it International reserves reached $4.3 bn by the end of September 2022, up 5.8% y
Slide 20: GEL appreciating since mid-2021 and back to pre-pandemic levels
GEL APPRECIATING SINCE MID-2021 AND BACK TO PRE-PANDEMIC Loans by currencies LEVELS Dollarization ratios Sources: NBG Source: NBG Commercial bank lending has remained resilient throughout the year on the back of rebounding Both deposit and loan dollarization have fallen since May-June 2021, in paral
Slide 21: Tax revenues continue overperformance while expenditure growth moderated
TAX REVENUES CONTINUE OVERPERFORMANCE WHILE EXPENDITURE GROWTH HAS MODERATED TAX REVENUES GREW BY 27% Y-O-Y IN 8M22, WITH VAT REVENUES GROWING TOTAL EXPENSES GREW BY 9% Y-O-Y IN 8M22, WITH A 9% Y-O-Y GROWTH BY 24% Y-O-Y AND INCOME TAX REVENUES GROWING BY 39% Y-O-Y IN CURRENT AND 12% Y-O-Y GROWTH IN
Slide 22: Public debt to fall below 2019 levels in 2022
PUBLIC DEBT TO FALL BELOW 2019 LEVELS IN 2022, WHILE THE DEFICIT PROJECTED AT 3.2% OF GDP AVERAGE WEIGHTED INTEREST RATE WAS 1.58%, WHILE REMAINING Public debt Sources: MOF Public debt is projected to fall to under 40% on GDP in 2022, lower MATURITY TOTALED 9.4 YEARS AS OF 31 AUGUST 2022 Source: MOF
Slide 23: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or int
Slide 24: Company Information
COMPANY INFORMATION Georgia Capital PLC Registered Address 42 Brook Street London W1K 5DB United Kingdom www.georgiacapital.ge Registered under number 10852406 in England and Wales Stock Listing London Stock Exchange PLC’s Main Market for listed securities Ticker: “CGEO.LN” Contact Information Georg