“Bank lending slowed during the third quarter, resulting in a 13.7% year-on-year growth on a constant currency basis in 3Q22 vs 18.7% y-o-y growth in the first half of the year. Tighter lending conditions driven by higher interest rates on FX loans and the NBG’s recent decision to reduce maximum tenor on uncollateralized consumer loans from four to three years have weighed on credit demand. As growth is driven by local currency lending, the dollarisation of bank loans in Georgia has reduced to 45.1%.”
Seem to be suggesting that growth is slowing and at the same time as result of them tightening lending criteria. Aim to increase lending by 10% at least and have increased by 13%
Profit increase 56% 3rd quarter 22 over 3rd quarter 21. Share price up 3%
Good reading on the economy in 3rd quarter announcements see right side of page.
This could be it the day it doubles for me.
Has done so regularly mid day but I don’t count it unless it finishes the end of trading double the price I bought it at.
Its up 105% at the moment.
I’ve done a little research and there is a correlation between the share price and the GEL/£ exchange rate.
I’m now keeping a much closer eye on the exchange rate, because if the £ strengthens against the GEL, there might be a reduction in the BGEO share price.
(Pretty obvious stuff really )
The exchange rate is a product of interest rates more than anything else.
Interest rates particular at this point in time is a product of inflation.
Like a lot of emerging market countries, Georgia increased interest rates quickly and high.
Presently base rates are 11%. Inflation has fallen to 9.8%
Unlike developed economies interest rates are higher than inflation.
The sovereign bank of Georgia doesn’t seem in hurry to lower them.
I would watch the inflation rate and the base rates.
I would make a guess and say the market may come to the conclusion that interest rates are going to fall before they actually do based entirely on the inflation rate. The exchange rate may fall earlier than interest rates simply on an assumption.
The higher the interest rate the larger the spread is between what a bank can borrow at and what it can lend at. So the profits per future loans will fall. But they maybe able to lend more as loans become more affordable.
The market generally overreacts it’s quite possible the banks profits could rise further than the effect of the falling exchange rate.
That won’t be evident immediately so you are probably right exchange rates will fall and the share price with it And probably further.
All my above predictions are based on guess work as my crystal ball is fogged up at the moment.
"What I should have pointed out was the large fall on inflation
“The annual inflation rate in Georgia eased to 9.8% in December of 2022 from 10.4% in the previous month.”
As you can see a little out of date
“9 Jan 2023 - 15:40, Tbilisi,Georgia”
“Galt & Taggart, a Georgian-based investment banking and investment management services, has forecast a 5.2 percent average annual inflation in Georgia this year.”
“Along with decelerating inflation, we expect the monetary policy rate to be cut to nine percent by end-2023 from the current level of 11 percent”, it noted"
Still at 11% great place to park your money!
Ruling party is not doing themselves any good with the new bill going through parliament. It was introduced intialy by another party. An extremist pro Russian one. This is making it harder to join the EU.
Doesn’t seem to have effected the share price today.
The big fall in inflation I would have thought would via an assumption that interest rates are going to fall. Next monetary policy committee is where you will find out.
But I would not expect one. Looking at 7%.
Worth remembering bank of Georgia spread is 5.6% it will narrow as interest rates fall.
Against that it will also make loans cheaper. So may not effect profits.
I am waiting for a fall to buy back in ISA post April.
Good call Bob your timing is spot on. Even with a good share good timing can ce the cherry on the cake.
Should read the results but was there a mention of à dividend increase?
No dividend increase but at 7.5% can’t complain.
Good cover at 4.
Mention of share buy bask as well, would.prefer divi increase… Can’t have everything I suppose.
All fundamentals look good.
Looks.like.a.little.top up required.
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