Lion Finance Group PLC Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Lion Finance Group PLC's Q3 2025 earnings call highlighted strong customer franchise growth, particularly in Armenia, with a 22% loan book increase in constant currency. Profit for the quarter reached GEL 547 million, an 8% year-over-year increase, with a solid return on average equity of 28%. The call also covered macroeconomic updates for Georgia and Armenia, focusing on GDP growth, inflation, and banking sector performance.
Key Financial Results
Profit for the quarter amounted to GEL 547 million, an 8% increase versus the prior year.
Return on average equity stood at a solid 28%.
Cost to income was 35.3%, an improvement versus the prior quarter.
Cost of credit risk ratio was 0.5%.
The Georgian subsidiary had a return on equity of 32%, with 16% year-on-year growth in loans and 14% in deposits.
Armenian operations profit grew 22% year-over-year to reach GEL 111.5 million.
Return on equity in Armenia improved quarter versus quarter to reach 21.8%.
Business Segment Results
Loan book grew 22% in constant currency, with stronger growth in Armenian operations.
Georgian subsidiary loans grew by 16% year-on-year and deposits by 14%.
Armenia's loan book grew by 36.5% and deposit portfolio grew by 28.6% in constant currency.
Operating income grew by 15.6%, with 13.4% in Georgia and 21.3% in Armenia.
Net interest income growth was 18.4% in Georgia and 30% in Armenia, translating into 21% growth year-over-year.
Net fee and commission income grew by only 4.8% for the overall group, with 8.6% in Georgia and down by 17.8% in Armenia.
Capital Allocation
Announced a quarterly dividend of GEL 2.65 per share.
Recommended buybacks of GEL 51.5 million for the quarter, involving share buyback and cancellation.
Industry Trends and Dynamics
Lending growth has converged to nominal economic growth in Georgia and Armenia.
Loan dollarization has been stable after substantial decreases in previous years.
Non-travel export of services, particularly IT and transport, demonstrated solid growth.
Competitive Landscape
Recognized by Global Finance as the best digital bank in the world for the second time in a row, beating global names including Revolute.
NPS score in Georgia achieved a new high of 74.
NPS in Armenia further improved to 77.4, a 1.4 percentage point increase versus the previous year end.
Macroeconomic Environment
Full year real GDP growth forecast for 2025 is maintained at 7.5% for Georgia and 5% for Armenia.
Expect strong growth to persist in 2026 with 6% real GDP growth in Georgia and 5.5% in Armenia.
Georgian Lari and Armenian Dram have been broadly stable against the US dollar over the last two years.
Inflation in Georgia saw a recent uptick, with the headline number at 5.2% year-on-year in October.
The National Bank of Georgia maintains a moderately tight monetary policy with the refinancing rate at 8%.
Inflation in Armenia is more stable, and the refinancing rate is slightly lower at 6.75%.
Georgia remains on a consolidation path with a tightly managed fiscal deficit within 3% of GDP.
Growth Opportunities and Strategies
Focus on growing monthly active users in both retail and business segments.
Expansion of digital capabilities, including the development of a financial super app.
Attracting new to bank customers and activating the existing customer base through various campaigns.
Aiming to increase market share in the local Armenian market.
Exploring potential M&A opportunities in East Europe, Central Eastern Europe, Southeast Europe, and Central Asia, focusing on top banks.
Financial Guidance and Outlook
Expect GEL and Armenian dram to remain stable over the medium term.
Sees scope for a 0.5 percentage point rate cut by the NBG in 2026.
Expects limited space for rate cuts within 25 to 50 basis points in Armenia in 2026.
Expects neutral to positive operating jaws from next year.
Guides for a cost of credit between 80 and 100 basis points through the cycle.
Anticipates lower double-digit growth for the Armenian market for the next couple of years.
Estimates Ameriabank to maintain between 15% and 20% growth for the next three to four years.
Expects loan growth in Georgia between 10% and 12% to 13% medium term.
