Georgia Capital PLC · LSE:CGEO
Georgia Capital — FY2023 Earnings Presentation
20 slides from Georgia Capital's earnings presentation, 2024
Slide 1: Macroeconomic Overview 4Q23 & FY23 Results
MACROECONOMIC OVERVIEW 4Q23 & FY23 RESULTS
Slide 2: Real GDP up by 7.5% in 2023, while inflation has fallen below the target
REAL GDP UP BY 7.5% IN 2023, WHILE INFLATION HAS FALLEN BELOW THE TARGET PRELIMINARY ECONOMIC GROWTH STANDS AT 7.5% Y-O-Y IN 2023, FOLLOWING TWO ANNUAL INFLATION STANDING BELOW THE 3% TARGET SINCE APRIL YEARS OF DOUBLE-DIGIT EXPANSION (10.6% AND 11.0% IN 2021-2022, RESPECTIVELY) 2023, WITH JANUARY 2
Slide 3: Improved external position
IMPROVED EXTERNAL POSITION TOTAL FX INFLOWS INCREASED BY 6.4% Y-O-Y AND AMOUNTED US$ 14.3 BLN IN 2023 CURRENT ACCOUNT DEFICIT HAS NARROWED SIGNIFICANTLY AS FDI CONTINUES TO FULLY FINANCE THE DEFICIT Export of goods Money Transfers Tourism revenues Total FX Inflows Goods, net Services, net Investment
Slide 4: Appropriate macro policy stance
APPROPRIATE MACRO POLICY STANCE INFLATION Y-O-Y VS. INFLATION TARGET GENERAL GOVERNMENT DEBT (% OF GDP) 16 Headline Inflation Core Inflation Target Monetary Policy Rate General Government Debt, External (% of GDP) General Government Debt, Total (% of GDP) 12 60.2% 60% 9.0 8 50% 47.6% 41.8% 4 39.5% 3
Slide 5: Georgia's EU candidacy and the rising significance of the Middle Corridor
UNLOCKING NEW LONG-TERM OPPORTUNITIES: GEORGIA’S EU CANDIDACY AND THE RISING SIGNIFICANCE OF THE MIDDLE CORRIDOR RE-EXPORT INCREASED BY 75% Y-O-Y IN 2023 AND BY 196% COMPARED TO 2021, KEY MILESTONES IN EU-GEORGIA RELATIONS PRIMARILY DUE TO THE INCREASED RE-EXPORT OF MOTOR CARS Motor cars Cigars and
Slide 6: Macroeconomic wrap-up
STRONG GDP PERFORMACE BELOW-TARGET INFLATION ROBUST EXTERNAL BALANCE SHEET GEL/US$ ABOVE THE PRE-PANDEMIC LEVELS MACROECONOMIC WRAP-UP SOUND MACROECONOMIC FRAMEWORK EU CANDIDACY & MIDDLE CORRIDOR: OPPORTUNITIES FOR GEORGIA 6
Slide 7: 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 2024 Georgia BB Positive January 2024 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook ▪ Area:
Slide 8: 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 9: Institutional oriented reforms
INSTITUTIONAL ORIENTED REFORMS OPEN BUDGET INDEX, 2021 | INTERNATIONAL BUDGET PARTNERSHIP ECONOMIC FREEDOM INDEX | 2023 (HERITAGE FOUNDATION) (BUDGET TRANSPARENCY) Ireland 3 Georgia 1 Sweden 3 Latvia 17 Norway 6 Lithuania 20 Italy 10 Czech Republic 21 UK 12 Germany 14 Portugal 30 France 15 Japan 31
Slide 10: Economic growth continuing at pace
ECONOMIC GROWTH CONTINUING AT PACE GROSS DOMESTIC PRODUCT NOMINAL GDP STRUCTURE, 9M23 Nominal GDP, GEL bln (LHS) Real GDP, YoY % 73 24% 70 61 58 20% 60 52 50 50 50 45 16% 41 35 37 10.6% 11.0% 9.6% 40 32 12% 26 28 29 7.7% 30 8% 20 4% 10 0% 0 -10 -4% -6.3% -20 -8% 2011 2012 2013 2014 2015 2016 2017 20
Slide 11: ICT sector: boosts GDP growth and emerges as new source of FX flows
ICT SECTOR: BOOSTS GDP GROWTH AND EMERGES AS A NEW SOURCE FOR THE FOREIGN CURRENCY FLOWS THE INFORMATION AND COMMUNICATION (ICT) SECTOR SHARE IN GDP EXPORTS OF ICT SERVICES (US$ MLN) STANDING AT 5.7% IN 9M23, AS OPPOSED TO 3.2% IN 2018-2021 Information and Communication, Value Added (GEL mln, LHS) T
Slide 12: Unemployment down at historic lows
UNEMPLOYMENT DOWN AT HISTORIC LOWS UNEMPLOYMENT RATE AT HISTORICAL LOWS PARTICIPATION RATE IN TOTAL 15+ POPULATION 1450 27.2 Employed, Thsd Unemployment, % 30 26.7 Hired Self-Employed Unemployed Participation Rate 23.0 25 54% 53% 54% 55% 55% 54% 53% 54% 53% 52% 53% 54% 54% 21.7 22.1 51% 52% 52% 50%
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 Headline Inflation Core Inflation Target Monetary Policy Rate Food and non-alcoholic beverages Alcoholic beverages and tobacco Transport 16 16 Housing and utilities Other Inflation 14 12 12 10
Slide 14: Current account deficit standing at 2.6% of GDP in 9M23
CURRENT ACCOUNT DEFICIT STANDING AT 2.6% OF GDP IN 9M23 CURRENT ACCOUNT BALANCE (% OF NOMINAL GDP) EXPORTS AND RE-EXPORTS, US$ BILLION Goods, net Services, net Investment income, net Service exports Goods exports, geo-originated Re-exports 1.9 28% Current transfers, net Current account FDI, inflows
Slide 15: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE EXPORTS AND IMPORTS OF GOODS, Y-O-Y % EXTERNAL TRADE BY COUNTRIES, 2023, SHARE IN TOTAL Imports, YoY % Exports, YoY % Export 6.1 USD BLN (9% Y/Y) Import 15.4 USD BLN (14% Y/Y) 75% 75% Azerbaijan-14% Türkiye-17% 60% 60% Armenia-13% United States-13% 45% 45% Kazakhstan-12% Ru
Slide 16: 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, % OF 2019 Tourism revenues, US$ bln Tourism revenues, % of GDP Number of International Visitors in 2023, Thousand Recovery level in 2023 (
Slide 17: Appropriate monetary policy stance ensuring macroeconomic stability
APPROPRIATE MONETARY POLICY STANCE ENSURING MACROECONOMIC STABILITY MONETARY POLICY RATE INTERNATIONAL RESERVES 14 6,000 Official Reserve Assets, US$ mln Net Foreign Assets, US$ mln 12 International reserves reached US $5.0 bln in 5,000 December 2023 (+ 2.2% y-o-y) 10 9.0 4,000 8 3,000 6 2,000 4 2 1
Slide 18: GEL appreciating since mid-2021 and now above pre-pandemic levels
70 80 90 100 110 120 130 0% 10% 20% 30% 40% 50% -10% Jan-22 Mar-22 Sep-17 Mar-22 Dec-17 Mar-18 Apr-22 Jun-18 May-22 Sep-18 Jun-22 Dec-18 Jul-22 LOANS BY CURRENCIES Mar-19 Aug-22 EXCHANGE RATE INDICES Jun-19 Sep-22 Sep-19 Oct-22 Georgia Capital PLC | Source: NBG, Bloomberg Dec-19 Nov-22 Mar-20 Dec-22
Slide 19: Georgian banking system remains liquid and well-capitalized
GEORGIAN BANKING SYSTEM REMAINS LIQUID AND WELL-CAPITALIZED REGULATORY /TIER1 CAPITAL TO RISK-WEIGHTED ASSETS, % (LATEST 2023) 35 31.0 30.1 30 25 23.3 22.7 22.8 22.6 21.8 21.2 19.7 20.2 20.7 20.5 20.2 20.1 19.3 19.0 18.5 20 18.1 18.2 15.9 17.0 15.9 15.9 15 13.0 10 5 0 REG. Tier1 REG. Tier1 REG. Tier
Slide 20: Government balance sheet improving with external public debt at lowest
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) 60.2% 60% General Governm