(Reuters) - London-listed Bank of Georgia (BGEO.L) reported a 36.9% rise in first-half profit on the back of strong lending at its retail banking business, while its overall margins were hurt by pricing pressure in the unsecured consumer lending market.
The lender, which serves retail, corporate and small and medium-sized enterprise customers across Georgia, said profit jumped to 209.1 million laris (£60.03 million) for the six months ended June 30, from 152.7 million laris a year earlier.
Bank of Georgia’s loan book climbed 30.5% to 10.58 billion laris, 67.2% of which was made up of retail loans.
The company, however, said net interest income — the main indicator of a bank’s financial strength — dropped to 5.6% from 7% on tough competition and a shift towards higher quality and finer margin products amid tighter lending rules.
Earlier this year, Bank of Georgia flagged that recent regulatory changes in retail lending guidelines would see slower growth of unsecured consumer loans.
“The bank has adapted to substantial regulatory change and has already reset its base for the coming years,” said Chief Executive Officer Archil Gachechiladze, who took on the role this year.
Over the years, the economic health of the former Soviet republic has helped Bank of Georgia and its main rival TBC Bank (TBCG.L) post strong results on robust lending.
However, the head of Georgia’s central bank warned in July that the country’s gross domestic product might be reduced by more than 1% this year after a dispute with neighbouring Russia.
On Wednesday, Bank of Georgia said while a flight ban imposed by Russia may slightly reduce Georgia’s GDP growth, it was not expected to have any impact on the company.
Reporting by Muvija M in Bengaluru; Editing by Shounak Dasgupta