Bank Of Georgia Group Regulatory News (BGEO)

Bank of Georgia

Group PLC

2Q22 and 1H22 results

Name of authorised official of issuer responsible for making notification:

Nini Arshakuni, Head of Investor Relations

www.bankofgeorgiagroup.com

ABOUT BANK OF GEORGIA GROUP PLC

Bank of Georgia Group PLC ("Bank of Georgia Group" or the "Group" and on the LSE: BGEO LN) is a UK-incorporated holding company. The Group mainly comprises: a) retail banking and payments business (Retail Banking); and b) corporate banking and investment banking operations (Corporate and Investment Banking) in Georgia. 

JSC Bank of Georgia ("Bank of Georgia", "BOG", or the "Bank"), a systematically important and leading universal bank in Georgia, is the core entity of the Group. The Bank is a leader in the payments business and financial mobile application, with strong retail and corporate banking franchises. In line with our digital strategy, the Group focuses on expanding technological and advanced data analytics capabilities to offer more personalised solutions and seamless experiences to our customers. Employee empowerment, customer satisfaction, and data-driven decision-making, together with the strength of the banking franchise, are key enablers of the Group's sustainable value creation. By building on its competitive strengths and uncovering more opportunities, the Group is committed to delivering strong profitability sustainably and maximising shareholder value.

The Group expects to benefit from the growth of the Georgian economy, and through both its Retail Banking and Corporate and Investment Banking operations, it aims to deliver on its strategy and its key medium-term objectives ̶ at least 20% return on average equity (ROAE) and c.10% growth of its loan book.

2Q22 AND 1H22 RESULTS AND CONFERENCE CALL DETAILS

Bank of Georgia Group PLC announces the Group's consolidated financial results for the second quarter and the first half of 2022. Unless otherwise noted, numbers in this announcement are for 2Q22 and comparisons are with 2Q21. The results have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the United Kingdom and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority. The results are based on International Financial Reporting Standards (IFRS) as adopted by the United Kingdom, are unaudited and derived from management accounts. The results announcement is available on the Group's website at www.bankofgeorgiagroup.com.

A webinar with investors and analysts will be held on 16 August 2022, at 14:00 BST / 15:00 CET / 09:00 EST.

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CONTENTS

FORWARD-LOOKING STATEMENTS

This announcement 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 intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development. Although Bank of Georgia Group PLC believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements, certain of which are beyond our control, include, among other things: macro risk, including domestic instability; regional instability risk; credit risk; liquidity and funding risk; capital risk; market risk; regulatory and legal risk; financial crime risk; information security and data protection risks; operational risk; human capital risk; COVID-19 pandemic risk; model risk; climate change risk; and other key factors that could adversely affect our business and financial performance, as indicated elsewhere in this document and in past and future filings and reports of the Group, including the 'Principal risks and uncertainties' included in Bank of Georgia Group PLC's Annual Report and Accounts 2021 and in this document. No part of this document constitutes, or shall be taken to constitute, an invitation or inducement to invest in Bank of Georgia Group PLC or any other entity within the Group, and must not be relied upon in any way in connection with any investment decision. Bank of Georgia Group PLC and other entities within the Group undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Nothing in this document should be construed as a profit forecast.

MACROECONOMIC DEVELOPMENTS

The Georgian economy has maintained strong momentum despite the ongoing war in Ukraine. In the first half of 2022, real GDP growth was 10.5%, mainly driven by consumption. Demand has been supported by increased revenues from the external sector and strong credit growth and fiscal spending. Importantly, recent growth has been broad-based, benefitting from active hospitality and real estate sectors as well as increased cargo turnover. Considering the strong activity in the first six months and improved outlook for the rest of the year, Galt & Taggart has revised its real GDP growth forecast for 2022 up to 9.2%.

Resilient external sector

Revenues from the external sector have demonstrated resilience. Despite considerable exposure to the Russian and Ukrainian markets, Georgia's exports remained strong in the first half of 2022, increasing by 35.7% year-on-year. Import growth has also accelerated on the back of strong consumption. In recent months, the increasing trade deficit has been more than offset by the robust recovery in tourism inflows and money transfers from abroad. Although the recovery in tourist arrivals has been relatively modest, tourism revenues reached 78.5% of the 2019 level in the first half of 2022. Meanwhile, remittances have risen significantly - up 65.0% y-o-y in 1H22 - on the back of growing number of migrants from the region. Given the positive dynamics in all sources of inflows, the external balance is expected to improve this year.

Strong bank lending growth

Bank lending has remained strong, supported by increased economic activity. Total bank credit growth was 18.7% year-on-year on a constant currency basis in the first half of 2022, dominated by local currency lending and particularly strong in consumer and business portfolios. Importantly, current lending growth remains healthy with bank credit to GDP ratio below its long-term trend.

Improved fiscal performance

Fiscal performance has improved considerably. Tax revenues increased by 33.9% year-on-year in the first half of 2022. Accordingly, the Government has revised the planned budget deficit for 2022 down to 3.6% of GDP (from 4.4% of GDP), reflecting better-than-expected tax revenues. Public debt projection for the end of 2022 has been revised down from 51.1% of GDP to 45.3% due to GEL appreciation and stronger-than-anticipated GDP growth. Importantly, IMF approved a three-year Stand-By Arrangement for Georgia of US$ 280 million in June 2022. The programme focuses on strengthening Georgia's fiscal framework. Overall, the improved growth outlook, the Government's commitment to fiscal consolidation in the following years and stand-by facilities are expected to support fiscal sustainability.

High inflation and tight monetary policy

Headline CPI inflation remains elevated at 12.8% year-on-year in June, mainly driven by supply-side factors related to global commodity markets, however, demand-side price pressures have also intensified. Monetary policy remains tight with the NBG policy rate at 11.0%. Inflation is expected to fall gradually as supply-side factors are subdued and tight monetary policy contains demand-side pressures and inflation expectations. Monetary policy is expected to remain tight for the rest of the year and ease gradually from early 2023.

Stable GEL

GEL continues to appreciate on the back of strong external inflows, tight monetary policy, and improved sentiments. As at 31 July 2022, Lari gained 12.0% against the US Dollar year-to-date (12.2% appreciation vs end of March). Given strong external inflows and tight monetary policy, GEL is expected to remain stable in the medium term.

2Q22 AND 1H22 FINANCIAL RESULTS HIGHLIGHTS

FINANCIAL HIGHLIGHTS

§ Outstanding performance supported by strong economic growth momentum. The Group generated operating income before cost of risk of GEL 334.2m in 2Q22 (up 60.0% y-o-y and up 29.8% q-o-q) and GEL 591.7m in 1H22 (up 46.0% y-o-y). The year-on-year growth was strong across revenue lines, and the q-o-q growth was particularly robust on the net fee and commission income and net foreign currency gain side, mainly driven by exchange rate volatility and client-driven flows as Georgia attracted tourists and migrants from nearby countries.

§ Excellent profitability. Our profit in 2Q22 amounted to GEL 275.5m, up 36.3% y-o-y and up 14.5% q-o-q, and was GEL 516.1m in 1H22, up 51.3% vs 1H21. ROAE stood at 32.8% in 2Q22 (29.4% in 2Q21 and 30.7% in 1Q22) and at 31.8% in 1H22 (25.6% in 1H21).

§ Net interest margin was 5.3% in 2Q22, up 60bps y-o-y and flat q-o-q. On a six months basis, NIM was 5.3%, up 70bps y-o-y. The y-o-y increase in NIM was mainly driven by higher loan yield and the deployment of excess liquidity.

§ Positive y-o-y and q-o-q operating leverage and cost to income ratio reduced to 32.5% in 2Q22 (36.4% in 2Q21 and 35.0% in 1Q22) and 33.6% in 1H22 (35.9% in 1H21).

§ Loan book grew 10.2% y-o-y and 0.1% q-o-q at 30 June 2022. Growth on a constant-currency basis was 17.8% y-o-y and 4.3% q-o-q, particularly reflecting strong consumer, MSME and corporate lending.

§ Client deposits and notes were up 8.3% y-o-y and 4.0% q-o-q at 30 June 2022. On a constant-currency basis, client deposits and notes grew 16.0% y-o-y and 9.1% q-o-q.

§ Cost of credit risk ratio was 0.6% in 2Q22 (-0.6% in 2Q21 and 0.8% in 1Q22) and 0.7% in 1H22 (0.1% in 1H21), mainly driven by the ECL charge posted in Retail Banking, largely reflecting the strong growth in consumer lending. RB's cost of credit risk started to stabilise during the second quarter, as expected.

§ NPLs to gross loans remained largely stable at 2.6% at 30 June 2022, vs 3.5% at 30 June 2021 and 2.5% at 31 March 2022.

§ Robust capital adequacy position. At 30 June 2022, the Bank's Basel III Common Equity Tier 1, Tier 1, and Total capital adequacy ratios stood at 14.0%, 16.4%, and 19.8%, respectively, all comfortably above the minimum requirements of 11.7%, 14.0% and 17.5%, respectively.

§ Strong liquidity and funding positions. At 30 June 2022, the Bank's liquidity coverage ratio was 113.5% and the net stable funding ratio was 130.6%, comfortably above the 100% minimum required levels.

STRATEGIC HIGHLIGHTS[2]

§ The Bank had approximately 1.6 million monthly active customers at 30 June 2022, up 14.7% y-o-y and up 4.6% q-o-q, reflecting the strong growth in our retail and MSME franchises and the increasing engagement of our customers.

§ 959 thousand individuals were monthly active users of our mBank and iBank at 30 June 2022, up 31.6% y-o-y and up 7.5% q-o-q. The share of MAU in total active individuals also increased to 64.3% at 30 June 2022, from 56.0% at 30 June 2021 and 62.4% at 31 March 2022.

§ Digital channels. We have continued to develop our digital channels and provide superior digital experience. In 2Q22, more than 96% of total transactions were non-branch transactions, with the share of transactions via mBank/iBank at 54%, up from 46% in 2Q21. Bank of Georgia's financial mobile application was named Best Mobile Banking App in Central and Eastern Europe in 2022 by Global Finance. In addition, Bank of Georgia was named Best Consumer Digital Bank in Georgia and the winner of the following regional sub-categories: Best Online Deposit, Card and Investment Product Offerings, Best in Lending, Best Trade Finance Services, Best SME Banking, Best Mobile Banking App (Corporate/Institutional).

§ Product offloading. Our objective is to increase customer activity and product sales in digital channels. We have made good progress in product offloading in 2Q22 vs last year, increasing the rate by 12.2 ppts to 34% vs planned 36%. In July, offloading reached 36.0%, and as we continue to work on refining our products and digital journeys, we expect to see a positive effect on total offloading rate going forward.

§ Payments. 52.3% of total volume of POS transactions in Georgia went through BOG's physical POS terminals in 2Q22 vs 48.0% in 2Q21.

§ Customer satisfaction. Net promoter score at 52%, broadly stable.

CHIEF EXECUTIVE OFFICER'S STATEMENT

As I write this letter the war in Ukraine is ongoing, and this has undoubtedly been an emotional time for our people and our communities. It is inspiring to see how our colleagues continue to support each other at all times, and I am grateful to our entire team for their commitment to this organisation and for the outstanding performance that we delivered together during the second quarter.

The numbers speak for themselves, but I'll highlight a few points. In the second quarter, the Group's operating income before cost of risk grew 60.0% y-o-y and 29.8% q-o-q to GEL 334.2 million, and profit amounted to GEL 275.5 million, up 36.3% y-o-y and up 14.5% q-o-q. We delivered a combination of strong customer lending growth, a higher ROAE of 32.8%, and a lower cost/income ratio of 32.5%. The Group's performance was supported by the resilience of the Georgian economy. The higher-than-expected economic growth underpinned by Georgia's position as an important transport, trading, and logistics corridor in the region and increased activity in the tourism, hospitality, and real estate sectors, was reflected across all lines of business. In particular, there were outstanding payments-driven revenues and net foreign currency gains, mainly driven by exchange rate volatility and client-driven flows as Georgia attracted tourists and migrants from nearby countries. The full-year real GDP growth forecast has been revised up to 9.2%, with some upside potential. We're still dealing with high inflation, which is expected to ease gradually from early 2023, and persistent uncertainty relating to the ongoing war in Ukraine and global recession fears remain downside risks. Nevertheless, I expect the Georgian economy to demonstrate its usual resilience and strong levels of growth in the medium term.

Overall, the strong first half of 2022 led to a profit of GEL 516.1 million, an increase of 51.3%, combined with a return on equity of 31.8%. Our balance sheet has also remained strong. Overall lending growth on a constant-currency basis was 4.3% during the quarter, driven by growth in the consumer, MSME, and corporate portfolios. Asset quality also remained robust. In Retail, we are now returning to a more normalised level of cost of credit risk ratio, while our corporate lending portfolio is still benefitting from some recoveries. 

We continue to roll out new products and refine existing ones, focusing our attention on our digital-first approach, ensuring that more of our customers are active digitally. At 30 June 2022, 64% of monthly active individual clients were also monthly active digital users (56% a year ago), with daily engagement in our financial mobile app and internet bank at 46%, also on an upward trajectory. Customer satisfaction measured by NPS remains at a solid 52%. Employee NPS dropped to 50% in April this year from its highest point of 61% at the end of last year, reflecting some organisational changes during the period and the impact of the ongoing inflationary pressure for many in our workforce. We continue to listen to our colleagues and take relevant actions to create better outcomes for the entire organisation.

Bank of Georgia is consistently delivering strong profitability while maintaining capital adequacy ratios comfortably above our minimum regulatory requirements. The high level of internal capital generation, combined with the appreciation of the Lari against the US Dollar, led to a 30 basis points increase in the CET1 capital adequacy ratio in the second quarter of 2022, even after an 80 basis points effect of dividend distribution. In addition, on 30 June 2022, the Board announced the commencement of a GEL 72.7 million share buyback and cancellation programme which, on top of the total dividends paid in respect of the Group's 2021 earnings, increased the total dividend/share buyback payout ratio, relating to 2021 earnings, to 35.0%.

Considering the Group's strong performance during the first half of 2022, the Board has decided to declare an interim dividend of GEL 1.85 per ordinary share in respect of the period ended 30 June 2022, payable to ordinary shareholders of Bank of Georgia Group PLC on 20 October 2022. In addition, after the completion of the current GEL 72.7 million share buyback and cancellation programme, the Board will extend the programme by a further GEL 40 million.

The ongoing strength of the Georgian economy, and our focus on developing our digital presence and excellent customer experience, are ensuring that we remain well-positioned to continue to deliver on our key financial priorities: strong growth and high profitability.

Archil Gachechiladze,

CEO, Bank of Georgia Group PLC

15 August 2022

DISCUSSION OF RESULTS

The Group's business consists of three key segments. (1) Retail Banking operations in Georgia comprising sub-segments that target mass retail, mass affluent and high-net-worth client segments and MSMEs. (2) Corporate and Investment Banking operations in Georgia serving corporate and institutional customers and providing brokerage services through Galt & Taggart. (3) JSC Belarusky Narodny Bank - BNB - serving retail and SME clients in Belarus.

Performance highlights

§ The Group generated operating income of GEL 494.9m in 2Q22 (up 47.7% y-o-y and up 25.0% q-o-q), ending six months of 2022 with operating income of GEL 890.6m (up 39.5% y-o-y). The Group's strong top-line performance was driven by key revenue lines:

- Net interest income was up 23.2% y-o-y and up 3.6% q-o-q, and amounted to GEL 281.2m. In 1H22, net interest income was GEL 552.6m, up 25.4% y-o-y.

- Net fee and commission income was GEL 81.1m in 2Q22 (up 41.7% y-o-y and up 37.8% q-o-q) and GEL 139.9m in 1H22 (up 32.2% y-o-y). Strong performance in the second quarter and in the first half of 2022 vs last year was mainly driven by higher net fee and commission income generated from our settlement operations as well as currency conversion operations. The q-o-q growth was driven by our settlements operations, cash operations, and currency conversion operations.

- Net foreign currency gain amounted to GEL 125.5m in the second quarter, up 5.7 times y-o-y and up 94.7% q-o-q, ending six months of 2022 with GEL 190.0m, 4.6 times higher vs 1H21. The significant increase in net foreign currency gain was mainly driven by higher client-related volumes on the back of increased tourism and migrant inflows, increased inbound remittances and robust economic activity as well as by increased spreads resulting from exchange rate volatility, both at Bank of Georgia and BNB.

- Net other income dropped vs last year due to the high base in 2Q21 and 1H21, and reflected lower gains from the sale of real estate properties and the sale of investment securities.

§ NIM was 5.3% in 2Q22 (up 60bps y-o-y and flat q-o-q) and 5.3% in the first half of 2022 (up 70 bps). The y-o-y increase in NIM in 2Q22 and 1H22 was driven by higher loan yield and the deployment of excess liquidity, partly offset by increased cost of funds. We saw broad stability in the q-o-q margin.

- Loan yield was 11.4% in 2Q22, up 100 bps y-o-y and 30 bps q-o-q. In 1H22 loan yield was 11.3%, up 90 bps y-o-y. GEL loan yield was up 110 bps y-o-y and up 20 bps q-o-q in 2Q22 to 16.0%. In 1H22, GEL loan yield stood at 15.9%, up 100 bps y-o-y. The increase in GEL loan yield mainly reflected increased refinancing rate as well as the strong growth of our consumer portfolio.

- Cost of funds was 5.2% in 2Q22, up 70 bps y-o-y and up 20 bps q-o-q. In 1H22 cost of funds was 5.1%, up 60 bps y-o-y. GEL cost of funds was up 180 bps y-o-y and up 40 bps q-o-q to 9.6% in 2Q22. On a six months basis, GEL cost of funds increased by 170 bps y-o-y to 9.4%, mainly reflecting the refinancing rate hikes by the NBG.

§ Operating expenses grew 32.1% y-o-y and 16.3% q-o-q in 2Q22, and were up 30.6% y-o-y in 1H22, mainly driven by strong business growth, continuing investments in IT and other key strategic areas, amid the inflationary environment. In addition, operating expenses in the second quarter included employee costs related to the termination of service of Executive Management members as announced by the Group, as well as to the change in management's share-based payments scheme in line with new regulatory requirements. We improved our cost to income ratio to 32.5% in 2Q22, from 36.4% in 2Q21 and 35.0% in 1Q22. On a six months basis, cost to income ratio was 33.6%, down from 35.9% in 1H21.

§ Cost of risk in 2Q22 and 1H22 reflected the following factors:

- Cost of credit risk ratio was 0.6% in 1Q22 (a net gain of 0.6% in 2Q21 and cost of credit risk ratio of 0.8% in 1Q22) and 0.7% in 1H22 (0.1% in 1H21). In 2Q22 we posted ECL provisions on loans to customers and finance lease receivables in the amount of GEL 32.5m for the Retail Banking business, partially offset by a net ECL reversal of GEL 6.2m in the Corporate and Investment Banking segment. For the first half of 2022, cost of credit risk ratio reflected a GEL 82.8m ECL charge in Retail Banking and a GEL 20.3m ECL charge in BNB, partially offset by a net ECL reversal of GEL 47.8m in Corporate and Investment Banking.

- Expected credit loss and impairment charge on other assets and provisions in 1H22 included a GEL 44.3m recovery of some previously paid legal fees.

§ Quality of the loan book. The NPLs to gross loans ratio improved y-o-y in 2Q22 and was broadly stable q-o-q.  

§ Overall, the Group posted GEL 275.5m in profit in 2Q22 (up 36.3% y-o-y and up 14.5% q-o-q) and GEL 516.1m in 1H22, up 51.3% y-o-y. The Group's ROAE was 32.8% in 2Q22 (29.4% in 2Q21 and 30.7% in 1Q22) and 31.8% in the first half of 2022 (25.6% in 1H21).

Our balance sheet remains highly liquid (NBG liquidity coverage ratio of 113.5%) and well capitalised (NBG Basel III CET1 capital adequacy ratio of 14.0%) with a well-diversified funding base (client deposits and notes to total liabilities of 68.8%) at 30 June 2022.

§ Loan book. Net loans and finance lease receivables amounted to GEL 16,299.6m at 30 June 2022, up 10.2% y-o-y and up 0.1% q-o-q. Growth on a constant-currency basis was 17.8% y-o-y and 4.3% q-o-q. GEL-denominated loans increased by 23.5% y-o-y and by 5.0% q-o-q, and the share of GEL loans increased to 48.8% at 30 June 2022, up 5.3 ppts y-o-y and up 2.3 ppts q-o-q). At 30 June 2022, Retail Banking accounted for 69.4% of total loan portfolio (65.9% at 30 June 2021 and 68.9% 31 March 2022).

§ Deposits. Client deposits and notes stood at GEL 15,100.1m at 30 June 2022, up 8.3% y-o-y and up 4.0% q-o-q. On a constant-currency basis, deposits were up 16.0% y-o-y and up 9.1% q-o-q. The share of GEL deposits was 38.8% at 30 June 2022, down 2.5 ppts y-o-y and down 0.8 ppts q-o-q.

§ Strong capital position. The Bank maintains robust capital structure, with Basel III Common Equity Tier 1, Tier 1, and Total capital adequacy ratios at 14.0%, 16.4% and 19.8% respectively at 30 June 2022, comfortably above the minimum requirements of 11.7%, 14.0% and 17.5%, respectively. The movement in capital adequacy ratios in 2Q22 and the potential impact of a 10% devaluation of local currency on capital is as follows:

On 31 May 2022, the Bank signed a $50m Additional Tier 1 Capital Perpetual Subordinated Syndicated Facility with the European Bank for Reconstruction and Development and Swedfund International AB as lenders. In June 2022, the Bank repaid $70m of its subordinated loan facility from International Finance Corporation, out of which $42m qualified as Tier II capital.

The Bank's minimum capital requirements, reflecting the full loading of Basel III capital requirements, to be completed in 2023, which remain subject to ongoing annual regulatory reviews, are currently expected to be as follows:

Expected minimum capital requirements for 2022-2023

§ Capital distribution: The Board today declared an interim dividend of GEL 1.85 per ordinary share in respect of the period ended 30 June 2022, payable in Pounds Sterling on 20 October 2022 to those ordinary shareholders of Bank of Georgia Group PLC on the register of members at the close of business on 7 October 2022, according to the following timetable:

Ex-Dividend Date: 6 October 2022

Record Date: 7 October 2022

Currency Conversion Date: 7 October 2022

Payment Date: 20 October 2022

The NBG's Lari/Pounds Sterling average exchange rate for the period of 3 October to 7 October 2022 will be used as the exchange rate on the Currency Conversion Date.

In addition, after the completion of the current GEL 72.7 million share buyback and cancellation programme, the Board will extend the programme by a further GEL 40 million.

§ Sanctions compliance: The NBG and Georgian financial institutions act fully in accordance with the financial sanctions imposed by the United States and others on the Russian Federation. Compliance with international financial sanctions is ensured by effective systems and controls and systematically checked during the onsite inspections of financial institutions, as noted in a recent report by the U.S. Department of State.[3]

§ The Group's banking subsidiary in Belarus, BNB: Last quarter we reassessed our assets in BNB due to deteriorated expectations and that resulted in a GEL 49.3m total negative effect on equity in 1Q22. Throughout the second quarter, BNB has demonstrated resilience and a focus on maintaining solid liquidity and capital positions. The resilient quarterly results were largely driven by strong net fee and commission income and net foreign currency gain. The capital ratios, calculated in accordance with the National Bank of the Republic of Belarus (NBRB) standards, stood comfortably above the minimum requirements at 30 June 2022, with Tier 1 capital adequacy ratio at 12.8% (minimum requirement of 7.0%) and Total capital adequacy ratio at 18.9% (minimum requirement of 12.5%). For BNB's financial highlights, see page 19.

DISCUSSION OF SEGMENT RESULTS

RETAIL BANKING (RB)[4]

Performance highlights

§ RB generated operating income of GEL 328.2m in 2Q22 (up 61.1% y-o-y and up 29.9% q-o-q) and GEL 580.8m in 1H22 (up 46.2% y-o-y). The y-o-y growth was driven by strong performance across key revenue lines, while the q-o-q growth was particularly strong in net fee and commission income and net foreign currency gain.

§ RB's NIM stood at 4.6% in 2Q22, up 50 bps y-o-y and down 10 bps q-o-q. In 1H22, NIM was 4.7%, up 60 bps y-o-y. The y-o-y increase in NIM in the periods presented was mainly driven by higher loan yield and the deployment of excess liquidity.

§ Cost of credit risk ratio has started to stabilise as expected and was 1.2% in 2Q22 (0.3% in 2Q21 and 1.9% in 1Q22) and 1.5% in 1H22 (0.8% 1H21). On a six months basis, cost of credit risk ratio was mainly driven by the fast growth of our unsecured consumer loan portfolio.

§ Net loans and finance lease receivables stood at GEL 10,924.9m at 30 June 2022, up 17.9% y-o-y and up 1.7% q-o-q. On a constant currency basis, loan book increased by 24.0% y-o-y and by 4.9% q-o-q in 2Q22. GEL-denominated loans represented 62.9% of total RB loans at 30 June 2022, compared with 58.3% at 30 June 2021 and 60.4% at 31 March 2022.

The y-o-y loan book growth in the periods presented was mainly driven by consumer, micro, and SME: