Georgia Capital PLC · LSE:CGEO
Georgia Capital — 9M23 Earnings Presentation
21 slides from Georgia Capital's earnings presentation, November 2023
Slide 1: Macroeconomic Overview 3Q23 & 9M23 Results
MACROECONOMIC OVERVIEW 3Q23 & 9M23 RESULTS
Slide 2: Real GDP up by 6.8% in 9M23, while inflation has fallen below the target
REAL GDP UP BY 6.8% IN 9M23, WHILE INFLATION HAS FALLEN BELOW THE TARGET PRELIMINARY ECONOMIC GROWTH STANDS AT 6.8% Y-O-Y IN 9M23, ANNUAL INFLATION STANDING BELOW THE 3% TARGET SINCE APRIL 2023, FOLLOWING TWO YEARS OF DOUBLE-DIGIT EXPANSION (10.5% AND 10.1% IN WITH SEPTEMBER 2023 INFLATION PRINTED A
Slide 3: ICT sector: boosts GDP growth and emerges as a new source for foreign currency 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 4.9% IN 2Q23, AS OPPOSED TO 3.1% IN 2018-2021 Information and Communication, Value Added (GEL mln, LHS) T
Slide 4: The growing importance of "Middle Corridor"
THE GROWING IMPORTANCE OF “MIDDLE CORRIDOR” RE-EXPORT INCREASED BY 89% Y-O-Y IN 9M23, AND BY 199% COMPARED TO THE REVENUES FROM ROAD USAGE CHARGE (RUC) INCREASED BY 59% Y-O-Y AND BY 9M21, MOSTLY DUE TO THE INCREASED RE-EXPORT OF MOTOR CARS 176% COMPARED TO 9M21 Motor cars Cigars and cigarettes Medic
Slide 5: Improved external position
IMPROVED EXTERNAL POSITION TOTAL FX INFLOWS INCREASED BY 17.8% Y-O-Y AND AMOUNTED TO US$ 11.1 BLN CURRENT ACCOUNT DEFICIT HAS NARROWED SIGNIFICANTLY AS FDI CONTINUES IN 9M23 TO FULLY FINANCE THE DEFICIT Export of goods Money Transfers Tourism revenues Total FX Inflows Goods, net Services, net Invest
Slide 6: 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% 10 60% 8 50% 47.6% 41.8% 4 39.8% 37
Slide 7: Macroeconomic wrap-up
STRONG GDP PERFORMACE BELOW - TARGET INFLATION ROBUST EXTERNAL BALANCE SHEET MACROECONOMIC WRAP-UP GEL/US$ ABOVE THE PRE-PANDEMIC LEVELS SOUND MACROECONOMIC FRAMEWORK 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 Negative April 2022 BB Stable February 2022 Georgia BB Positive July 2023 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook ▪ Area: 69
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, 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 11: Economic growth continuing at pace
ECONOMIC GROWTH CONTINUING AT PACE Gross domestic product Nominal GDP structure, 1H23 Nominal GDP, GEL bln (LHS) Real GDP, YoY % 72 70 20% 60 60 49 49 16% 50 45 41 10.5% 10.1% 10.6% 36 36 12% 40 34 29 31 32 25 27 8% 30 20 7.6% 4% 10 0% 0 -4% -10 -6.8% -20 -8% 2017 1H22 1H23 2011 2012 2013 2014 2015
Slide 12: May-20 Sep-20 Nov-20
0% 60% 120% 180% 240% -60% 0% 600% 1200% 1800% -600% May-20 Apr-20 Jul-20 Jun-20 Sep-20 Aug-20 Nov-20 Oct-20 Jan-21 Dec-20 Mar-21 Feb-21 May-21 Apr-21 Jul-21 Remittances, y/y Tourism Revenues, y/y Jun-21 Sep-21 Aug-21 Nov-21 Oct-21 Jan-22 Dec-21 Mar-22 Feb-22 May-22 Apr-22 Jul-22 Jun-22 Sep-22 Georg
Slide 13: Unemployment down at historic lows
UNEMPLOYMENT DOWN AT HISTORIC LOWS Unemployment rate at historical lows Participation rate in total 15+ population 1450 27.2 27.2 26.7 Employed, Thsd Unemployment, % 30 26.4 Hired Self-Employed Unemployed Participation Rate 23.0 25 54% 53% 54% 55% 55% 54% 53% 54% 53% 52% 53% 21.9 21.7 21.6 20.4 21.9
Slide 14: 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 Housing and utilities Other Inflation 16 14 12 12 10
Slide 15: Current account deficit standing at 5.3% of GDP in 1H23
CURRENT ACCOUNT DEFICIT STANDING AT 5.3% OF GDP IN 1H23 Current account balance (% of nominal GDP) Exports and Re-exports, US$ billion Goods, net Services, net Investment income, net Current transfers, net Current account FDI, inflows Service exports Goods exports, geo-originated Re-exports 28% 1.9
Slide 16: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE Exports and imports of goods, Y-o-Y % External trade by countries, 9M23, share in total Imports, YoY % Exports, YoY % Export 4.6 USD BLN (13% Y/Y) Import 11.3 USD BLN (18% Y/Y) 75% 75% 60% 60% Azerbaijan -14% Türkiye-16% 45% 45% Armenia -13% United States-12% 30% 30% Russia
Slide 17: Tourism revenues bounce back
TOURISM REVENUES BOUNCE BACK Tourism revenues to GDP International visitors by country Tourism revenues, US $ mln Tourism revenues, % of GDP Number of International Visitors in 9M23 (LHS) Recovery level in 9M23 (% of 9M19 level) (RHS) 4,000 20% 1,149 3,500 1,200 1,081 Total international visitors re
Slide 18: 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 $5.3 bln in 5,000 September 2023 (+ 22% y-o-y) 10 10 4,000 8 3,000 6 2,000 4 2 1,
Slide 19: GEL appreciating since mid-2021 and now above pre-pandemic levels
70 90 80 100 110 120 130 0% 10% 20% 30% 40% 50% -10% Jan-22 Sep-17 Mar-22 Dec-17 Mar-22 Mar-18 Apr-22 Jun-18 May-22 Sep-18 Jun-22 Dec-18 Loans by currencies Jul-22 Mar-19 Exchange rate indices Jun-19 Aug-22 Sep-19 Georgia Capital PLC | Source: NBG, Bloomberg Sep-22 Dec-19 Oct-22 Mar-20 GEL Loans, Yo
Slide 20: 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 31.8 30.9 30 25 23.5 23.0 22.2 21.6 21.6 21.4 20.9 20.2 21.0 20.2 19.8 19.3 20 18.8 18.1 18.7 17.6 17.3 16.7 17.7 16.4 15.3 15 13.7 10 5 0 REG. Tier1 REG. Tier1 REG. Tier
Slide 21: Public debt shrinking below pre-COVID levels and fiscal deficit falling
PRELIMINARY ESTIMATES SHOW PUBLIC DEBT SHRINKING BELOW PRE- COVID LEVELS AND THE FISCAL DEFICIT FALLING TO 3.1% OF GDP IN 2022 Public debt at pre-pandemic levels Public debt structure General Government Debt, External (% of GDP) 60.2% 60% General Government Debt, Total (% of GDP) 50% 47.6% Average w