Bank Of Georgia Group Regulatory News (BGEO)

4Q23 AND FY23 FINANCIAL HIGHLIGHTS

Due to the settlement of a legacy claim, the fair value revaluation of the receivable resulted in a one-off other income of GEL 1.5 million posted in 4Q23 and one-off other income of GEL 22.6 for FY23. Net other income has been adjusted for these one-offs. Due to the settlement of the same legacy claim, 4Q22 and FY22 net other income was adjusted for a one-off GEL 391.1 million. The entire legacy claim amount has already been settled. 4Q22 and FY22 income tax expense was adjusted for a one-off GEL 79.3 income tax expense due to an amendment to the corporate taxation model in Georgia. As a result, ROAA and ROAE were adjusted for both one-off other income and one-off income tax expense where applicable and Cost:income ratios were adjusted for one-off other income where applicable. Comparisons given in text are with adjusted figures of respective periods. You can see the unadjusted P&L on page 18 and the unadjusted ratios on page 19.

CHIEF EXECUTIVE OFFICER'S STATEMENT

2024 started off with a major event in the Group's history, and before I discuss the 2023 results, I would like to touch on the news. In February we announced the proposed acquisition of Ameriabank, a leading universal bank in Armenia, a neighbouring country to Georgia. Armenia and Georgia are both prudently managed economies of similar size, with high GDP growth rates. Ameriabank is a leading franchise in the local market - #1 by loans and #2 by deposits - and is the "top-of-mind" banking brand in Armenia, with further upside to grow, especially in the retail and SME segments, leveraging the Group's experience and know-how in digitalisation, payments, and customer experience. I believe this acquisition, which was approved by the shareholders on March 14th, is a great opportunity for the Group to increase scale and unlock further growth. We are set to acquire Ameriabank with our surplus capital, with no dilution for shareholders, and it is expected to be immediately earnings enhancing with an ROE uplift. Importantly, our dividend and capital distribution policy and payout ratio of 30-50% will not change. Considering the Group's strong performance during 2023 and robust capital and liquidity positions, the Board intends to recommend, at the 2024 Annual General Meeting, a final dividend for 2023 of GEL 4.94 per share, making a total dividend for 2023 of GEL 8.00 per share. This is a 5% increase on the dividend for 2022 - a year boosted by significant one-offs and FX income which broadly normalised in 2023. In addition, the Board has also approved an extension of the buyback and cancellation programme by an additional GEL 100 million. This represents an overall dividend and share buyback pay-out ratio for the year ended 31 December 2023 of 37% (2022: 37%).

Turning to the Group's recent performance, 2023 was another successful year during which we continued to deliver on our strategic priorities. Our team's dedication to improving the customer experience, especially in digital channels, has resulted in a 21.0% year-on-year growth in Digital MAU[2] to almost 1.4 million. We closed the year with a Net Promoter Score of 59, highlighting our dedication to customer satisfaction. Our payments business continued to grow, with the volume of acquiring transactions in Georgia up 46.5% year-on-year in 2023, achieving a 54.9% market share in December 2023. In addition, more than 1.2 million individuals used Bank of Georgia's cards for payments at least once in December 2023, a 20.1% increase over the same period in 2022.

This focus on customer needs and product quality, coupled with the favourable macroeconomic conditions, translated into full year operating income before cost of risk (adjusted for one-off items) of GEL 1,777.8m, up 30.6% year-on-year, profit (adjusted for one-off items) of GEL 1,374.7 million, up 21.4% year-on-year and ROAE of 29.9%[3]. On the portfolio side, loan book growth picked up in 2023 and was 19.6% year-on-year on a constant currency basis, while deposit growth was 12.2% year-on-year on a constant currency basis, building on the significant inflows during 2022. This continued strong balance sheet growth has more than offset the expected net interest margin erosion in the second half of 2023. Going forward, we expect our double-digit balance sheet growth to more than offset the margin impact of deposit re-pricing and lower policy rates.

We delivered positive operating leverage year-on-year in FY23, but the growth in operating expenses was high in the fourth quarter, partly reflecting the impact of transaction costs relating to the acquisition of Ameriabank, as well as ongoing business development projects. These investments are expected to underpin our future business growth, whilst we will also continue to ensure we maintain a strong focus on day-to-day efficiency and cost control. And, finally, a key positive aspect of these results is the continued strength of our loan portfolio, which translated into a lower cost of credit risk, particularly in Retail.

The Group remains well-positioned to capture the benefits of strong economic activity in the region. Georgia's EU candidacy status, a significant milestone achieved in December 2023, which has defined the country's geopolitical vector, is expected to support ongoing investments in the Georgian economy. We expect both Georgian and Armenian real GDPs to grow by more than 5% in 2024, and we remain focused on our strategic priorities to unlock growth opportunities and sustainably deliver strong growth and high profitability.

Archil Gachechiladze,

CEO, Bank of Georgia Group PLC

14 March 2024

MACROECONOMIC DEVELOPMENTS

Strong economic growth

The Georgian economy maintained its strong growth momentum in 2023 as domestic spending on consumption and investment picked up to offset slowing external demand. The ongoing recovery in international tourism and gradual exit from tight monetary policy also supported the strong economic performance. According to preliminary data by Geostat, real GDP growth was 7.5% in 2023, with the main contributions from the trade, IT, construction, transport and education sectors. Economic activity is expected to remain robust with 6.0% real GDP growth in 2024, driven by strong consumption and investment expenditure along with resilient external demand. The granting of Georgia's EU candidate status by the European Council in December 2023 is also expected to help the economy by improving sentiment among consumers and investors. Sustained geopolitical instability in the region and tight global financial conditions pose downside risks to the outlook, however, increased fiscal space and replenished international reserves cushion the economy from possible shocks.

Resilient external sector

Georgia's international merchandise trade slowed in 2023 reflecting the prior year's high base and falling commodity prices. Exports and imports of goods posted modest y-o-y contractions in the last quarter of 2023, resulting in 9.1% and 14.0% growth rates for the full year, respectively. The slowing merchandise exports were partially offset by robust growth in tourism revenues and solid increases in other service exports including IT and transportation services. In 2023, tourism revenues increased by 17.3% y-o-y, while the number of tourist visits recovered to 91.9% of the 2019 level, suggesting room for further growth. Remittances remained solid despite a contraction from the prior year's record-high levels. Declining migrant-related inflows were substituted by increased money transfers from the US and EU countries leading to a modest decrease in total remittances of 5.7% in 2023. Overall, external sector inflows are expected to remain sound on the back of strong external demand and diversified income sources.

Healthy bank lending

Bank lending growth remained robust in the last quarter of 2023, increasing by 17.1% y-o-y on a constant currency basis, following the 14.9% y-o-y growth in the previous quarter. Credit growth was evenly split between local and foreign currency lending, while loan dollarisation stood at 45.2% at end-2023 (down 0.3 ppts y-o-y). Importantly, the growth in legal entity lending has remained above the growth in household loans since mid-2023, indicating a more productive allocation of funds with favourable effects on medium-term economic growth prospects. The quality of the banking sector's credit portfolio was sound, with the sector's non-performing loans ratio at 1.5% at end-2023.

Easing of macroprudential policy

In the last quarter of 2023, the National Bank of Georgia introduced changes to several regulations to soften the impact of the globally tight financial conditions on the Georgian financial system. Specifically, the accumulation period of the countercyclical buffer was extended from one to four years and the upper limit of the mandatory reserve requirement on short-term FX liabilities was reduced from 25% to 20%. These measures are expected to increase FX liquidity in the banking system and provide more flexibility in capital buffer accumulation, thus supporting increased access to credit.

Continued fiscal consolidation

After sizeable improvements in fiscal performance in 2022, the Government of Georgia remained committed to fiscal consolidation. In 2023, the estimated fiscal deficit was reduced to 2.5% of GDP (down from 3.0% of GDP in 2022) and the estimated total public debt to GDP ratio declined to 39.1% (from 39.5% in 2022). Thanks to robust economic growth in 2023, consolidated budget tax revenues increased by 13.5% y-o-y. In 2024, the Government plans to further reduce the fiscal deficit and the public debt relative to GDP. The plan is underpinned by demonstrated fiscal discipline and a positive growth outlook. The ongoing consolidation helps strengthen fiscal buffers and ensure fiscal sustainability.

Low inflation

Inflation remained low on the back of reducing domestic price pressures and declining import prices in the last quarter of 2023. Headline CPI inflation was 0.4% y-o-y in December 2023, a significant decrease from 9.8% registered in December 2022. Inflation is expected to remain close to the central bank's 3% target in 2024. However, upside risks to inflation persist considering the strong domestic economic performance and geopolitical instability in the region and in the Middle East. Steady improvements in the inflation outlook enabled the National Bank of Georgia to cut the policy rate by a total of 1.5 ppts throughout 2023. On 13 March 2024, the central bank delivered an additional rate cut of 0.75 ppts after reducing the rate by 0.5 ppts in January, thereby bringing the refinancing rate down to 8.25%. More interest rate reductions are expected in 2024 amid improved inflation outlook.

Stable GEL

Sustained external inflows continue to support the local currency. Despite some interim volatility, GEL remained broadly unchanged against USD in 2023, after a 12.5% appreciation in 2022. In the medium term, GEL is expected to remain stable.

DELIVERING VALUE IN 4Q23 AND FY23

The Group's business consists of four key business segments. (1) Retail Banking (RB) operations in Georgia, comprising sub-segments that serve mass retail (Mass Retail), and mass affluent and high-net-worth clients (Premium Banking). (2) SME Banking (SME) operations in Georgia, serving small and medium-sized businesses[4]. (3) Corporate and Investment Banking (CIB) operations in Georgia, serving corporate and institutional customers and providing capital markets and brokerage services through JSC Galt & Taggart. (4) JSC Belarusky Narodny Bank (BNB), serving retail and SME clients in Belarus.

Strategic Review

The following figures are given for JSC Bank of Georgia unless otherwise stated

Strong franchise growth

· Bank of Georgia had 1.8 million monthly active retail clients as of 31 December 2023, up 10.8% y-o-y and up 4.0% q-o-q. Significant growth was recorded in Premium Banking - 38.6% y-o-y and 7.5% q-o-q. In December 2023, the number of active SOLO clients was 125 thousand (90 thousand in December 2022), and the share of Premium Banking active clients in total Retail Banking active clients stood at 7.0% as of 31 December 2023 vs 5.6% as of 31 December 2022 and 6.8% as of 30 September 2023.

· Monthly active legal entities, that is business clients, were up 20.2% y-o-y and up 6.5% q-o-q to 98 thousand entities. The growth was predominantly driven by small businesses.

· Monthly active digital users among retail clients (Digital MAU) increased by 21.0% y-o-y and by 7.5% q-o-q to 1.4 million users as of 31 December 2023. The share of Digital MAU in monthly active retail customers increased to 75.0% as of 31 December 2023, up from 68.7% as of 31 December 2022 and 72.6% as of 30 September 2023, highlighting the extensive adoption of our market-leading financial superapp and internet banking platform.

Financial superapp and other digital channels

· Bank of Georgia is successfully developing its retail financial superapp to tailor product offerings and user experience to customer needs. In October 2023, the Bank launched trivia-style gamification in the app, engaging users in different activities, including those increasing awareness of the Bank's financial products and services. By answering questions users accumulated coins during the game and redeemed these coins for vouchers at partner merchants. The main goal of this game was to increase engagement within the app, increase financial education, and show a myriad of benefits of using the app. More than 500,000 users were engaged in the game.

· The share of products sold through digital channels stood at 70.3% in 4Q23, compared with 45.2% in 4Q22 and 47.1% in 3Q23. The significant increase in digital sales was partly boosted by the gamification in our financial superapp. We expect the digital product sales to normalise following the end of gamification, but continue to increase from a higher baseline going forward.

· Since the launch of sCoolApp - the first financial mobile application for school students in Georgia - in 2022, the Bank has deepened its relationships with the youth segment. As at 31 December 2023, 90 thousand school students were monthly active users of sCoolApp.

· Considering the increasing pace of digitalisation as well as the growing share of transactional activity happening outside of branches, Bank of Georgia's Retail Banking strategy entails a gradual transformation of transactional branches into full-scale branches where customers will be offered a full spectrum of banking products and advice. This transformation will result in the reduction of transactional branches.

Payments

· Bank of Georgia's market share in acquiring by volume stood at 54.9% in December 2023 vs 51.3% in December 2022 and 55.2% in September 2023. The volume of payment transactions executed through BOG's in-store and online terminals was up 38.2% y-o-y and up 10.1% q-o-q in the fourth quarter of 2023 to GEL 4.5bn. In FY23, it was up 46.5% y-o-y to GEL 15.0 billion.

· Bank of Georgia's cards were used for payments at least once by more than 1.2 million individuals in December 2023 (up 20.1% y-o-y and up 7.6% q-o-q) - important progress towards a more cashless economy in Georgia.

Customer satisfaction

· Net Promoter Score (NPS) remained flat in the fourth quarter, standing at a high level of 59 (58 in 4Q22 and 59 in 3Q23).

Update on management team

· Zurab Masurashvili, Head of SME Banking since May 2019, will move to International Business direction with effect from 1 April 2024, and Tornike Kuprashvili will take on the role of Head of SME Banking, directly reporting to the CEO, with effect from the same date. Tornike joined Bank of Georgia in 2014 as a Principal Corporate Banker and during his 10-year career with the Bank, he has advanced through a number of roles in Corporate Banking. He held various senior roles, including Head of Corporate Rehabilitation and Head of Corporate Banking Department, directly reporting to Deputy CEO during 2020-2024. Prior to joining Bank of Georgia, Tornike worked at KPMG Tbilisi office for 3 years as an Audit assistant. Tornike holds a bachelor's degree in business administration from Caucasus School of Business. 

Financial Review

Due to the settlement of a legacy claim, the fair value revaluation of the receivable resulted in a one-off other income of GEL 1.5 million posted in 4Q23 and one-off other income of GEL 22.6 for FY23. Net other income has been adjusted for these one-offs. Due to the settlement of the same legacy claim, 4Q22 and FY22 net other income was adjusted for a one-off GEL 391.1 million. The entire legacy claim amount has already been settled. 4Q22 and FY22 income tax expense was adjusted for a one-off GEL 79.3 income tax expense due to an amendment to the corporate taxation model in Georgia. As a result, ROAA and ROAE were adjusted for both one-off other income and one-off income tax expense where applicable and Cost:income ratios were adjusted for one-off other income where applicable. Comparisons given in text are with adjusted figures of respective periods. You can see the unadjusted P&L on page 18 and the unadjusted ratios on page 19.

Net interest income

· Interest income in 4Q23 was up 22.6% y-o-y and up 5.4% q-o-q to GEL 744.8m. In FY23, interest income amounted to GEL 2,748.3m, up 21.8% y-o-y. The y-o-y increase in interest income in the periods presented was mostly attributable to increased loan portfolio coupled with higher loan yield (up 40 bps y-o-y in 4Q23 and up 100 bps y-o-y in FY23, on the back in increasing rates in foreign currency). The q-o-q increase was mainly related to loan growth during the quarter.

· Interest expense in 4Q23 was up 16.2% y-o-y and up 10.5% q-o-q to GEL 317.1m. In FY23, interest expense amounted to GEL 1,132.8m, up 5.4% y-o-y. The y-o-y increase in interest expense in 4Q23 was driven by increased deposit portfolio coupled with higher cost of deposits (up 80 bps y-o-y), partly offset by reduced interest expense on amounts owed to credit institutions. On a q-o-q basis, the interest expense was mainly driven by an increased balance of the amounts owed to credit institutions accumulated during the quarter for liquidity management purposes. For the full year, the main driver of increased interest expense was a significant increase in deposit portfolio coupled with a 40-bps increase in cost of deposits, partly offset by reduced interest expense on amounts owed to credit institutions.

· Net interest margin was 6.3% in 4Q23 (up 60 bps y-o-y and down 30 bps q-o-q). NIM in FY23 stood at 6.5% (up 110 bps y-o-y). The expected q-o-q decrease in NIM was driven by a combination of lower loan yield, on the back of decreased GEL policy rate and excepted decreases of policy rates by FED and ECB, and a more normalised higher cost of funds following last year's very strong deposit inflows.

Net non-interest income

· Net fee and commission income was GEL 114.1m in 4Q23 (up 16.5% y-o-y and down 4.1% q-o-q). The y-o-y increase was mainly driven by settlement operations, with strong growth also posted on guarantees and letters of credit and currency conversion operations. The q-o-q decrease was related to the elevated base of the previous quarter as the Group reported a one-off adjustment with a positive net effect of GEL 25.0 million in 3Q23. If we exclude the net positive adjustment, the q-o-q growth of net fee and commission would have been 21.4%. In FY23, net fee and commission income amounted to GEL 434.5m, up 36.8% y-o-y, mainly due to settlement operations and advisory services.

· Net foreign currency (FX) gain has broadly normalised, following last year's higher activity levels, and amounted to GEL 97.3m in 4Q23 (down 22.4% y-o-y and down 0.6% q-o-q). In FY23, net foreign currency gain amounted to GEL 365.7m (down 21.5% y-o-y).

· Net other income (adjusted for a one-off GEL 1.5m other income) amounted to GEL 18.3m in 4Q23 (down 32.2% y-o-y and up 3.2x q-o-q). The y-o-y decrease was due to higher income from the revaluation of investment property posted in 4Q22, and the q-o-q increase was mainly driven by higher net gains on the sale of repossessed assets. In FY23, net other income (adjusted for a one-off GEL 22.6m other income) was GEL 114.7m, up 3.2x y-o-y, driven by the significant net gains on the sale of repossessed assets booked in the second and the fourth quarters of 2023.

Overall, the Group generated operating income (adjusted for one-off other income) of GEL 657.2m in 4Q23 (up 12.4% y-o-y and up 2.3% q-o-q). The y-o-y increase in 4Q23 was mainly driven by strong net interest income generation and increased net fee and commission income, partly offset by lower net foreign currency gain and lower net other income. Compared with 3Q23, the fourth quarter was relatively subdued in all major revenue lines, with growth reported in net interest income and net other income. In FY23, operating income (adjusted for one-off other income) amounted to GEL 2,530.4m, up 26.4% y-o-y, driven by strong income generation across core revenue lines, partly offset by lower net foreign currency gains reflecting a normalising trend.

Operating expenses and efficiency

· Operating expenses amounted to GEL 225.2m in 4Q23 (up 24.4% y-o-y and up 21.5% q-o-q). In FY23, operating expenses amounted to GEL 754.1m (up 17.6% y-o-y). The rise in operating expenses in 4Q23 was primarily related to overall business growth and ongoing investments in strategic areas. Additionally, the y-o-y and the q-o-q increase in administrative expenses was partly attributable to the transaction costs incurred in relation to the acquisition of Ameriabank as well as the consulting projects in IT and several other business areas (totalling GEL 10.5 million).

· The Group's cost to income ratio was 34.3% in 4Q23 (31.0% in 4Q22 and 28.8% in 3Q23). For the full year of 2023, the Group delivered positive operating leverage, with the cost to income ratio at 29.8% vs 32.0% for the full year of 2022.

Cost of risk 

The cost of credit risk ratio was 0.4% in 4Q23 (0.9% in 4Q22 and 0.6% in 3Q23). The expected credit loss charge on loans and finance lease receivables posted during the fourth quarter amounted to GEL 20.1m, driven by the Corporate and Investment Banking and the SME Banking segments, partly offset by better performance in the Retail Banking segment. The y-o-y and the q-o-q decrease in cost of credit risk ratio in 4Q23 was driven by improved loan portfolio performance in Retail Banking. The expected credit loss charge on loans and finance lease receivables posted for the full year of 2023 amounted to GEL 127.1m, translating into the cost of credit risk ratio of 0.7% in FY23 (0.8% in FY22).

Profitability

· The Group's profit (adjusted for a one-off) was GEL 328.6m in 4Q23 (up 0.8% y-o-y and down 8.1% q-o-q). For FY23, profit (adjusted for a one-off) was GEL 1,374.7m (up 21.4% y-o-y). 

· Return on average equity (adjusted for a one-off) was 26.7% in 4Q23 (33.7% in 4Q22 and 30.7% in 3Q23). For FY23, ROAE (adjusted for a one-off) was 29.9% (32.4% in FY22).

Loan book

· Net loans and finance lease receivables amounted to GEL 20,232.7m at 31 December 2023, up 20.0% y-o-y and up 6.4% q-o-q in nominal terms. Growth on a constant-currency basis was 19.6% y-o-y and 5.5% q-o-q respectively. On a constant currency basis, each segment recorded a strong growth of loan book: RB - up 16.2% y-o-y and up 5.0% q-o-q; SME - up 11.4% y-o-y and up 1.9% q-o-q, and CIB - up 30.5% y-o-y and up 12.6% q-o-q.

· The share of GEL-denominated loans stood at 53.6% at 31 December 2023 vs 52.5% at 31 December 2022 and 53.8% at 30 September 2023.

· The NPLs to gross loans ratio reduced to 2.3% as at 31 December 2023 (down 40 bps y-o-y and down 10 bps q-o-q). The NPL ratios in Retail and SME were broadly stable compared with 30 September 2023. The NPL ratio in CIB decreased significantly in 4Q23, by 50 bps compared with prior quarter, and stood at 1.7% as at 31 December 2023.

· The positive asset quality trend is reflected in improved Stage 3 loans to gross loans ratio to 2.5% as at 31 December 2023 compared with 3.4% as at 31 December 2022 and 2.8% as at 30 September 2023.

Deposits

· Client deposits and notes amounted to GEL 20,522.7m as at 31 December 2023 (up 12.4% y-o-y and down 5.6% q-o-q). On a constant currency basis, deposits increased by 12.2% y-o-y and decreased by 6.3% q-o-q. The q-o-q decrease was driven by reduced CIB deposits by 29.4% on a constant currency basis, partially offset by increases in RB by 6.4% and SME by 6.9% on a constant currency basis. The q-o-q reduction in corporate deposits reflects a substitution of the Ministry of Finance deposits, which are treated as corporate deposits, for NBG deposits, which are categorised as Central Bank loans.

· The year-on-year growth was driven by both current/demand and time deposits, while the q-o-q decrease was mainly driven by time deposits.

· The share of GEL-denominated deposits in total deposits stood at 43.0% at 31 December 2023, vs 36.7% at 31 December 2022 and 46.1% at 30 September 2023.

Liquid assets and liquidity position

· Liquid assets stood at GEL 9,984.2m at 31 December 2023 (down 3.7% y-o-y and down 2.7% q-o-q). The share of liquid assets in total assets stood at 31.4% at 31 December 2023 vs 35.9% at 31 December 2022 and 33.3% at 30 September 2023. The reduction of the upper limit of the mandatory reserve requirement on short-term FX liabilities from 25% to 20% by National Bank of Georgia has resulted in a lower FC liquidity requirement for the Bank.

· Bank of Georgia continues to operate with comfortable levels of liquidity. At 31 December 2023, the Bank's IFRS-based Liquidity Coverage Ratio (LCR) stood at 125.2% (132.4% at 31 December 2022 and 135.7% at 30 September 2023), above the minimum requirement of 100%[9]. The Net Stable Funding Ratio also stood at a high level of 130.4% at 31 December 2023 (131.9% at 31 December 2022 and 134.5% at 30 September 2023). The loan-to-deposit ratio increased to 98.6% at 31 December 2023 vs 92.3% at 31 December 2022 and vs 87.4% at 30 September 2023, mainly driven by strong loan book growth.

Capital position

· The Bank continues to operate with robust capital adequacy levels. At 31 December 2023, the Bank's Basel III CET1, Tier1, and Total capital ratios stood at 18.2%, 20.0%, and 22.1%, respectively, all comfortably above the minimum requirements of 14.5%, 16.7%, 19.6%, respectively. The movement in capital adequacy ratios in 4Q23 and the potential impact of a 10% devaluation of GEL is as follows:

· In March 2023, the Financial Stability Committee at the NBG set the cycle-neutral countercyclical capital buffer (base rate) at 1%. Local banks are required to accumulate neutral countercyclical capital buffer according to the following schedule: 0.25% by March 15, 2024; 0.5% by March 15, 2025; 0.75% by March 15, 2026; 1% by March 15, 2027.

· The Bank's minimum capital requirements for December 2024 are expected to be 14.7%, 16.9% and 19.9% for CET 1 ratio, Tier 1 ratio, and Total capital ratio respectively.

Capital return

· In August 2023, the Board of Directors declared an interim dividend of GEL 3.06 per ordinary share in respect of the period ended 30 June 2023 to ordinary shareholders of Bank of Georgia Group PLC. The interim dividend was paid on 27 October 2023.

· In August 2023, the Board announced a further share buyback and cancellation programme ("Buyback Programme") totalling GEL 62 million. The total number of shares cancelled since the launch of this Buyback Programme is 205,621 at a cost of GEL 23.9 million. There are currently 45,709,102 shares in issue. 

· At the 2024 Annual General Meeting, the Board intends to recommend for shareholder approval a final dividend for 2023 of GEL 4.94 per share payable in Pounds Sterling at the prevailing rate. This would make a total dividend in respect of the Group's 2023 earnings of GEL 8.00 per share. This is a 5% increase on the dividend for 2022 - a year boosted by significant one-offs and FX income which broadly normalised in 2023.

· In addition, the Board has also approved an extension of the share buyback and cancellation programme by an additional GEL 100 million.

SEGMENT RESULTS[11]

In the first quarter of 2023 we split the SME Banking segment from Retail Banking and transferred the majority of the Micro portfolio, where customers had business-related needs, to SME Banking. The remaining Micro portfolio has been transferred to Mass Retail. The SME segment has grown significantly over the past few years. In addition, the value proposition for business clients has been different from the value proposition for retail customers, leading to our decision to change the segmentation. The comparative figures have been restated accordingly to reflect this change.

RETAIL BANKING (RB)  

4Q22 and FY22 were adjusted for a one-off GEL 33.1 income tax expense due to an amendment to the corporate taxation model in Georgia. As a result, ROAE was adjusted for this one-off item. Comparisons given in text are with adjusted figures of respective periods. You can see the unadjusted ROAE at the bottom of this table.