Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q1 2023 Earnings Presentation
23 slides from Georgia Capital's earnings presentation, May 2023
Slide 1: Macroeconomic Overview 1Q23 Results
MACROECONOMIC OVERVIEW 1Q23 RESULTS
Slide 2: Real GDP up by 7.2% in 1Q23
REAL GDP UP BY 7.2% IN 1Q23 PRELIMINARY ECONOMIC GROWTH STANDING AT 7.2% Y-O-Y IN 1Q23, FOLLOWING UP ON TWO YEARS OF DOUBLE-DIGIT EXPANSION (10.5% AND 10.1% IN 2021-2022 RESPECTIVELY) ECONOMIC GROWTH REMAINS STRONG 50% 45% 40% 30% 26% ➢ Strong external demand supplemented by the migration effect, 19
Slide 3: Georgia ranks among top performers in the world on economic growth indicators
GEORGIA RANKS AMONG TOP 10 PERFORMERS IN THE WORLD WITH RESPECT TO VARIOUS ECONOMIC GROWTH INDICATORS RECENT AND PROJECTED ECONOMIC GROWTH INDICATORS IN GEORGIA (IMF) 8th place 8th place 9th place 3rd place 9th place 9th place among all among all among all among countries among all among all countri
Slide 4: Georgian Lari – now above pre-pandemic levels
GEORGIAN LARI – NOW ABOVE PRE-PANDEMIC LEVELS APPRECIATING SINCE MID-2021, BRIEFLY INTERRUPTED AFTER THE RUSSIAN INVASION OF UKRAINE, GEL HAS NOW STRENGTHENED TO ABOVE PRE-PANDEMIC LEVELS AGAINST USD GEL APPRECIATION DRIVERS 3.8 Series1 3.46 3.40 3.3 ➢ Record-high remittance inflows, surging by 130%
Slide 5: Current account deficit at a record low of 4.1% of GDP in 2022
CURRENT ACCOUNT DEFICIT AT A RECORD LOW OF 4.1% OF GDP IN 2022, ON THE BACK OF A RECORD-HIGH 5.7% SURPLUS IN 3Q22 CURRENT ACCOUNT COMPONENTS AND FDI INFLOWS (% OF NOMINAL GDP) 28% Goods, net Services, net Investment income, net EXTERNAL INFLOWS AT RECORD-HIGH LEVELS Current transfers, net Current ac
Slide 6: Inflation below the target level in April 2023
INFLATION BELOW THE TARGET LEVEL IN APRIL 2023 INFLATION Y-O-Y VS. INFLATION TARGET Headline Inflation Core Inflation Target Monetary Policy Rate SIGNIFICANT DISINFLATION UNDERWAY 16 12 11.00 ➢ Annual inflation decelerated to 2.7% in April 2023, below the 3% 8 target, decelerating significantly comp
Slide 7: Public debt shrinking below pre-COVID levels and fiscal deficit under 3%
PRELIMINARY ESTIMATES SHOW PUBLIC DEBT SHRINKING BELOW PRE- COVID LEVELS AND THE FISCAL DEFICIT FALLING UNDER 3% OF GDP IN 2022 GENERAL GOVERNMENT DEBT (% OF GDP) General Government Debt, External (% of GDP) General Government Debt, Total (% of GDP) FISCAL SUPPORT HAS CONTINUED MODERATING 60.1% 60%
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 January 2023 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook ▪ Area:
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 | 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 11: Economic growth continuing at pace
ECONOMIC GROWTH CONTINUING AT PACE Gross domestic product Nominal GDP structure, 2022 Nominal GDP, GEL bn (LHS) Real GDP, YoY % 72 24% 70 60 20% 60 49 49 50 45 16% 41 36 10.5% 10.1% 40 31 34 12% 27 29 30 25 8% 20 4% 10 0% 0 -10 -4% -6.8% -20 -8% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 12: 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 Imports, y/y Imports, vs 2019 68% 80% 80% 217% 80% 57% 240% 240% 40% 33% 40% 180% 40% 33% 127
Slide 13: Unemployment down at historic lows
UNEMPLOYMENT DOWN AT HISTORIC LOWS Unemployment rate at historical lows Labour force participation rate by contributions 1450 27.2 27.2 26.7 Employed, Thsd Unemployment, % 30 26.4 Hired Self-Employed Unemployed Participation Rate 23.0 25 54% 54% 55% 55% 54% 54% 21.9 21.7 21.6 21.9 22.1 51% 52% 53% 5
Slide 14: Inflation below the target level in April 2023
INFLATION BELOW THE TARGET LEVEL IN 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 11.00 12
Slide 15: Current account deficit at a record low of 4.1% of GDP in 2022
CURRENT ACCOUNT DEFICIT AT A RECORD LOW OF 4.1% OF GDP IN 2022, ON THE BACK OF A RECORD-HIGH 5.7% SURPLUS IN 3Q22 Current account balance (% of nominal GDP) Exports and Re-exports, US$ billion Goods, net Services, net 28% Investment income, net Current transfers, net Service exports Goods exports, g
Slide 16: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE Exports and imports of goods, Y-o-Y % External trade by countries, 1Q23, share in total Imports, YoY % Exports, YoY % Export 1,5 USD BN Import 3,3 USD BN 75% 75% 60% 60% Armenia-15% Turkey-17% 45% 45% Azerbaijan-12% Russia-15% 30% 30% Russia-12% United States-8% China-9% Ch
Slide 17: Remittances at record high levels as tourism revenues bounce back
REMITTANCES AT RECORD HIGH LEVELS DUE TO THE MIGRANT EFFECT AS TOURISM REVENUES ALSO BOUNCE BACK Tourism revenues to GDP International Visitors by country Number of International Visitors in 1Q23 (LHS) Recovery level in 1Q23 (% of 1Q19 level) (RHS) Tourism Revenues, $ mn Tourism Revenues, % of GDP 3
Slide 18: Appropriate monetary policy stance ensuring macroeconomic stability
APPROPRIATE MONETARY POLICY STANCE ENSURING MACROECONOMIC STABILITY Monetary policy rate International Reserves 6,000 14 Official Reserve Assets, US$ mln Net Foreign Assets, US$ mln 12 5,000 11.00 International reserves reached a record-high US $5.0 bn in March 2023 (+ 24% y-o-y) 10 4,000 8 3,000 6
Slide 19: GEL appreciating since mid-2021 and now above pre-pandemic levels
80 90 100 110 120 130 70 0% 10% 20% 30% 40% 50% -10% Jan-22 Mar-17 Jan-22 Jun-17 Sep-17 Mar-22 Dec-17 Apr-22 Mar-18 May-22 Jun-18 Loans by currencies Sep-18 Exchange rate indices May-22 Dec-18 Jun-22 Mar-19 Georgia Capital PLC | Source: NBG, Bloomberg Jun-19 Jul-22 Sep-19 GEL Loans, YoY Aug-22 Dec-1
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 29.5 28.5 30 24.0 23.5 25 22.4 21.6 20.9 21.5 21.1 20.5 18.8 19.5 20 18.0 18.2 17.5 16.8 16.7 16.9 17.2 17.1 15.4 15.2 15.2 15.1 15 10 5 0 REG. Tier1 REG. Tier1 REG. Tier
Slide 21: Public debt shrinking below pre-COVID levels and fiscal deficit under 3%
PRELIMINARY ESTIMATES SHOW PUBLIC DEBT SHRINKING BELOW PRE- COVID LEVELS AND THE FISCAL DEFICIT FALLING UNDER 3% OF GDP IN 2022 Public debt at pre-pandemic levels Public debt structure General Government Debt, External (% of GDP) 60.1% 60% General Government Debt, Total (% of GDP) Average weighted 5
Slide 22: 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 23: 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