Lion Finance Group Aktie

Welcome to Lion Finance Group's quarterly earnings call. Today, we are pleased to present our performance and results for the second quarter and the first half of 2026. My name is Nini Arshakuni, I am Head of IR, and today I will be moderating this call.

I am joined, as always, by the group CEO, Archil Gachechiladze, group as well as Bank of Georgia CFO, Giorgi Shagidze, Ameriabank CFO, Hovhannes Toroyan, and our group economist, Akaki Liqokeli. We will present – we'll go through the results presentation first, and then in the second half of this call, you will be able to ask questions. Please be aware that this call is being recorded.

With that, I will first hand over to Archil for the opening remarks, and then we will continue with the deep dives. Archil, please go ahead.

Thank you for joining the call. I am very happy to report a very strong quarter. In the second quarter, we registered a very high quality of the franchise, which is shown in the Net Promoter Score in both markets, being very high, as well as the significant growth of our retail franchise, which is reflected in growth of monthly active users in Georgia, reaching very close to half of the population, meaning the total population, including the small kids and so forth, who are not all bankable, of 1.9 million, which is 13.3% higher than last year and much higher growth, so stronger penetration happening in Armenia, getting close to 400,000 monthly active users.

What's also interesting is that in Georgia, we also achieved more than 1 million daily active users, so that more than 1 million people open our application daily.

In terms of the revenue numbers, our second quarter was up by 23.4% and 19.6% for the first half year. And profit was similarly strong growth, where we had 20.6% growth in the first quarter -- the second quarter, sorry, and 17.3% for the half year.

Also, which was very strong showing was balance sheet growth, both on loans as well as deposits with 23% and 26.8% accordingly. That's in constant currency. As you may remember, we guide about 15% growth, but usually deliver around 20% over the last few years as the macro has been stronger than the average outlook that we have for longer term.

Having said that, 23% is even stronger than our historic average. And that's happening while we have a lower-than-guided cost of risk of 0.6% in the second quarter and 0.5% for the first half year, and delivering about 27% return on equity. So very strong numbers, not only in terms of profitability, but growth in terms of revenue as well as balance sheet.

We also had positive operating jaws in both markets and then obviously combined. So all in all, very, very good numbers as well as strong numbers in terms of the quality of the franchise shown in terms of coverage of monthly active users and the satisfaction of the customers. So I'm very appreciative of the whole team's efforts that will lead them to deliver these results.

So with that, I will let Akaki tell us about the macroeconomic environment in Armenia and Georgia.

Hello, everyone. I will share with you the recent macroeconomic developments and outlook for our core markets, Georgia and Armenia. And let me start with growth performance. In the first half of the year, Georgian economy has demonstrated and maintained strong growth performance, with real GDP growth reaching 7.9% year-on-year. With this strong number and also improving economic resilience, we have revised our full year real GDP growth forecast for 2026 from 7% to 7.5%.

The Armenian economy expanded by 4% year-on-year in the first quarter, reflecting high base effect from the previous year and some pre-election uncertainty. The preliminary numbers show that the growth trajectory improved significantly from quarter 2, and our full year real GDP growth performance, growth outlook for Armenia is 5.5%.

Overall, these growth projections remain significantly above the peer median, and they are expected to be driven by services in the following years, as it was the case in the previous periods, as the right-hand side chart shows. This service-led growth is expected to be broad-based, export-oriented, and productivity enhancing.

To give you a few highlights in this area, Armenia launched the largest AI factory in the CIS region just a few days ago, and Georgia has moved on to the construction phase of its first deep sea port. The strong growth performance has been also supported by diversified and resilient external sector inflows, including export proceeds, tourism revenues, and remittances.

As this slide shows, the overall inflows continues to increase in the first half of 2026, despite escalations in tensions in the Middle East. The resilient inflows have also supported currency strength.

Georgian lari and Armenian dram continue to appreciate against the U.S. dollar in the first 7 months of 2026. And in fact, these 2 currencies are among the best performers, 3 best performers in the broader region, as the right-hand side chart shows.

Importantly, the strength of Georgian lari and Armenian dram has been also underpinned by credible macroeconomic policy frameworks in the 2 countries, reflected in declining deposit de-dollarization trend and also growing demand for local currency government securities among international investors. These structural drivers are expected to remain in place in the following years and support local currency values.

The currency strength also contributes to price stability. And in recent months, we have seen signs of inflation stabilization in both countries following some uptick in previous periods, driven by global increases in food and energy prices.

More importantly, service price inflation has been relatively stable in both countries, reinforcing our confidence that inflation should go back to Central Bank's 3% target next year as base effects unwind. The central banks continue to be attentive of remaining inflation risks as global commodity markets remain volatile.

In May, the National Bank of Georgia increased its policy rate by 25 basis points, signaling its continued commitment to price stability. For the rest of the year, we do not anticipate any policy rate moves from either central bank. And in 2027, we see room for around 75 basis point cuts by National Bank of Georgia as it gradually exits moderately tight policy stance. The central banks have been also actively building international reserves. This has been enabled by resilient inflows and ongoing trend of deposit de-dollarization.

As of end of July, gross reserves reached new record highs of USD7.5 billion in Georgia and $6.2 billion in Armenia. Importantly, the reserve levels remain within adequacy ranges, providing solid buffers against possible external shocks.

Also, higher reserve levels have been a major factor behind improving credit outlooks of both countries recently. Fiscal policy is another pillar of macroeconomic resilience. Both Georgia and Armenia continue to demonstrate fiscal discipline through prudent management of public debt.

As this chart shows, the Georgian authorities remain on a deleveraging path, maintaining narrow fiscal deficits. The Armenian authorities have managed to stabilize public debt levels despite temporarily elevated spending needs. In both countries, public debt continues to de-dollarize, reducing the fiscal sector's exposure to exchange rate movements.

And lastly, the banking sectors in Georgia and Armenia have benefited from favorable macroeconomic conditions. They continue to deliver robust growth and sustain strong asset quality.

Loan dollarization levels remain low by historical standards, with a recent uptick in Armenia related to business lending. Capitalizations are highest among the regional peers in Georgia and Armenia as measured by Tier 1 capital to assets ratios. This demonstrates prudent risk management practices in both countries and a conservative supervisory approach.

So this concludes my part. Thank you. Back to you, Nini.

Thank you, Akaki. Now, Giorgi will walk us through the main highlights of the Georgian financial services first.

Thank you, Akaki. Thank you, Nini. Let me share the presentation. So good afternoon, everyone. As Archil said, we had another quarter of very strong financial performance across the board. I'll be now going through Georgian financial services, and we'll start with the highlights for the quarter.

Our profit for the quarter grew by 15.4% year-on-year, and for the first half of the year, it grew by 13.5%. This resulted into the return on equity of 30.4% and 30.9%, respectively. Our loan book grew by 17.1% at constant currency rate and 24.2% in deposits. If we exclude Ministry of Finance deposits, the growth was about 18.4%. Retail monthly active customers grew by 9.5%, reaching 2.28 million, and retail digital monthly active users grew by 13.3%, reaching 1.92 million.

Now, this slide basically shows why we believe our customer growth is durable, and it is supported by broad digital ecosystem, as you can see on the left-hand side of the slide. On the right-hand side, I can stress a few numbers.

On the retail app, our customer satisfaction was very high at 92%, with the scores at Apple Store and Google Play at 4.6 and 4.7 respectively. Our digital daily active users reached 1 million. So pretty much 1 million people open our app every day. 88% of our loans were granted through digital channels. In business banking app, a similar dynamics with the customer satisfaction score at 92%, digital monthly active users being at 84% of total monthly active customers. Here, too, at the Apple Store and Google Play, we have very high scores at 4.9.

I want finally on this slide to reiterate that Global Finance named us as the world's best digital bank in both 2024 and 2025 years. Moving on to payment slide. Payments are one of the core pillars for the ecosystems that I mentioned. You can see a very strong growth, in acquiring volumes, 20% year-on-year or 12% or 12.7% quarter-over-quarter. In terms of issuing, this growth was 11.9% year-on-year.

In terms of number of cards reaching 1.7 million, which is about 2.5% growth quarter-over-quarter. We reached 28,800 active merchant terminals, which was 13.3% growth year-on-year. And finally, our market share for the acquiring volumes was further strengthened, reaching 56.7%.

Now, in terms of customer centricity, which represent -- which is shown here in terms of Net Promoter Score, it approximately doubled over the period shown. And then for the recent 6 quarters, it was more than 70%, while it a little bit dropped last 2 quarter, it is still within the acceptable statistical noise and being above 70%, it is extraordinarily high on par with very strong customers or the best customer centric banks in the world.

This allows us to anticipate customer needs and wants before the customers approach us and then translate it into the respective financials as we do this. Loan and deposit growth was strong as well, 17.1% at the constant currency rate growth of the loan year-on-year or 4.2% growth of the loan book quarter-over-quarter. The growth was across the board, corporate and retail banking leading the growth in loans.

The de-dollarization remained broadly stable with 57.8% local currency loans contributing to total loans. In terms of deposits, the growth was 24.2% constant currency rate. As I said, if we exclude Ministry of Finance deposit, the growth would be 18.4% year-on-year and 3.5% quarter-over-quarter. Now in the quarterly growth here, the SME led percentage growth wise.

And then in terms of the de-dollarization, the local currency deposits contributed to 58.1% of total deposits. And this brings to final slide of my part of the presentation, with the growth and strong profitability actually further strengthened our positions both for capital and for liquidity. We operate with the buffers comfortably above the minimum respective requirements.

In terms of capital, we operate 2.7, 3.4, and 2.2 percentage point above the respective CET1, Tier 1, and total capital requirements. In terms of liquidity coverage ratio, we were at 152% and net stable funding ratio at 132.9%, both above the minimum 100% requirements. Now we will be deploying the liquidity in dollars supporting growth. The liquidity in local currency may remain the same, but we optimize cost of funding so that the high liquidity also has positive impact on our profitability.

So thank you. And Nini, please.

Thank you, Giorgi. Now let's move on to the Armenian financial services and Hovhannes will discuss the results.

Yes. Thank you. I am very happy to share also a pretty impressive results for the second quarter for the Armenian financial services.

So for the second quarter, our net profits grew about 50% year-over-year. And for the first 6 months, the growth was slightly more than 42% to reach GEL 272 million. Return on equity by the end of the second quarter was 23.1%, and these were predominantly due to two factors. On one hand, we had very significant and impressive growth on the balance sheet. Our loan book grew by almost 37% in constant currency, and deposits grew 37.1% in constant currency basis, with NIM stable from one quarter to another. At the same time, there is also a significant boost by noninterest income.

Indeed, our net fee and commission income grew by more than 38% year-over-year, and net foreign currency gain grew 19.3% year-over-year. Cost-to-income ratio came down lower than 40% for Q2. We do continue to grow extensively. Our monthly active customers grew by almost 28%, to surpass 0.5 million.

And as during the previous quarters, our digital MAU grew much faster at 47% year-over-year. And this growth of accelerated MAU and DAUs is predominantly to our digital ecosystem that we have been building around the super app that goes beyond banking functionality. And as presented earlier, it has 2 main pillars.

On one hand, we are building a system to satisfy the customer needs in terms of their banking and financial needs, both in terms of functionality and user experience. At the same time, it's still around microservice architecture for better scalability.

And here you can see different pillars that are building this banking and beyond banking proposition for our customer base. And as already mentioned, our digital MAU grew by 47% year-over-year. Our DAU grew even faster, 58% year-over-year. And our digital engagement increased by almost 10 percentage points to surpass 75% by end of the Q2.

We launched our MyAmeriaStar, that is a retail application for kids, last year, and it is really picking up both for education -- financial educational purpose as well as to satisfy very basic needs of younger population.

Here you can also see more details about our loan portfolio and deposit portfolio. Our loan portfolio in constant currency grew almost 37%. The structure continues to be very balanced in terms of foreign currency, and 55% is loans in FX, and 45% is local currency.

The mix of local currency has slightly gone down, and this is predominantly due to the fact that our corporate loans grew a bit faster. Indeed, year-over-year, it grew 45%, despite being the largest in the country. And this really reflects and resembles with the large infrastructure and private projects that are unleashing in the country, as Akaki also presented.

Our retail loans grew 26.8% in constant currency base, and consumer loans grew 39%. In terms of our deposits, the de-dollarization continues to evolve, and this is predominantly due to the fact of having very stable Armenian dram over the course of last few years. The growth overall was slightly more than 37% in constant currency basis, whereas the share of local currency is slightly more than 60%. We do continue to be the largest lender in the economy and to the households as well.

At the same time, we were able to increase our market share, both in terms of loans by 1.7 percentage point as well as for deposits by 1.1 percentage point. I think it's also important to mention that beyond simply lending and attracting more customers, our transactional banking has seen a very significant boost.

Indeed, our acquiring business volume grew by 48% year-over-year. At the same time, our issuing business payment MAU grew by more than 60% year-over-year to surpass 400,000.

In terms of capital position, we were able to improve and have more than 1.5 percentage point headroom on top of the CBA requirement. These changes have been predominantly due to 3 factors. One, we did distribute the second tranche of our AT1 notes. As you might remember, we had the first tranche in February of this year at 8.5% coupon. The second tranche of, again, USD50 million was distributed in April by 8.0 coupon. At the same time, Central Bank of Armenia introduced some easing on risk weights for the SMEs starting from April, aligning it with the Basel III requirements.

And as a result of these changes also, we were able to pay our first dividends to the group at the amount of GEL 157 million. We continue to have a very comfortable liquidity position as well. Our LCR sits at 180%, and our NSFR is 126%.

This is it for me, and then I'll be happy to take more questions later. Thank you.

Thank you, Hovhannes. Now we are handing over back to Archil, who will summarize the results and discuss them from the group perspective.

Hovhannes, I think the group results are good. Hello? I think the group results are good, but when I hear Ameriabank separately, it's hard to follow because 35% increase in loan and deposits and then 40% in, I think, acquiring volumes, payment acquiring is not an easy thing to follow.

Just one second. Let me think a second. Hello again. Yes. So to summarize what it translates into the group numbers, the operating income has gone up by 19.5% for the quarter year-over-year, 17.3% for the first half. And we saw that the net interest income has gone up year-over-year by 21.8%, of which 18% was Georgia and 28.6% was Armenia. Obviously, Armenia is experiencing much higher growth, although Georgian is also not too bad with about 17% growth on constant currency.

Net noninterest income was up by 14.2%, slightly less in Georgia, 17.1%, and we'll see the breakdown of the fee and commission and FX separately. And the Armenia was up by almost 30% year-over-year, which was very strong showing.

Now in terms of how that breaks down is that net fee and commission income was -- showed a very healthy growth of 26.3%, of which 25% year-over-year was Georgia, which benefited from a lower base last year. And if you normalize for that, which was something to do with the Visa and Mastercard fee structure, which unwounded in the fourth quarter. So if you normalize that, it would be around 17%, if I am not mistaken. Normalized, sorry, 22.3%. And then in terms of Armenia had also an adjustment last year, we didn't have something in the base, which this time it is there.

And if you adjust it for that and normalized, the net fee and commission income growth would be 27.5% in the year-over-year in the quarter. In net FX, Georgia had a slight decline, so there it continues to be a very competitive environment in Georgia for the FX, but showed a very strong growth in Armenia of 19.3%, which is welcome news.

And operating expenses were 12.8% combined, of which 13.9% was for Georgia and 2.6% was Armenia. If you adjust for the base effect of the sign-up bonus, which ended last in the third quarter, you would be looking at 13.5% in Armenia. In both markets, the operating jaws were positive, and obviously, the combined was positive as well.

And you can see that in the cost-to-income ratio, the overall group's cost-to-income ratio reduced by 2 percentage points from year-over-year in the quarter, second quarter. As you can see, from 36.4% to 34.4%. And in Georgia, the reduction was slightly. In Armenia, a slightly bigger one for the reasons that we discussed. So being under 35% for the combined entity is a comfortable place to be.

As we described, the growth overall for the group was 23%, and 26.8% for the deposits, both well above our medium-term guidance. Net interest margin stayed stable in Armenia, and showed a slight uptick in Georgia, because of slight reduction in deposits and slight uptick in the loans. So nothing significant really happened there, but it was still positive. Going forward, we should expect growth stability will be growing dollars, but there will be some offsetting factors as well.

Cost of risk, although it was slightly up in Armenia, mainly due to the consumer loan proportion becoming larger. But otherwise, it's still well below our interim guidance of 80 to 100 basis points. So 0.6%. And for the half year, it came out to be 0.5%. So the coverage didn't change much. And the profitability, as we discussed, was 20.6% higher year-over-year, and 17.3% for the full year.

Return on equity stayed around 27%, and return on average assets was a very strong showing, also just shy of 4%. So all in all of this translates into stronger capital distribution. So the Board recommended a second quarter dividend of GEL 3.05. Since last year, we had dividend only for the half year, so not quarterly. The half year number compares to the previous half year number, which is up by 15.7%.

So we are continuing to strongly increase the capital distribution, and there will be also another GEL 59 million spent on the invested in the stock as the share buyback. So we're continuing our tradition of 2/3, 1/3 roughly, dividend versus buyback.

So this is to summarize the fact, which we already mentioned a couple of times, that our midterm growth, which is 15%, we are hitting that target very strongly with 23% in both markets. By the way, we are ahead of the market growth. In terms of the return on equity, we are also well above long-term guidance at 27%. And we're distributing about 30% given the fact that we are growing much faster than our midterm average. So we are deploying capital at very profitable rates and sitting at very comfortable buffers as well.

So that's on our side, and we will stop here and open for Q&A.

Yes. We can move to the Q&A, and we have a few raised hands already from our analysts. The first on the line is Jens Ehrenberg. Hi, Jens.

And well done on another very strong quarter. Just a couple from my side. Firstly, on Georgia, I appreciate, Archil, you said there was not too much that happened on the NIM. I think this is the second quarter in a row where you're well ahead of sort of my expectations on the NIM. So is there anything that came out of this that would give you -- I don't know that would will give sort of more confidence in the sustainability of the NIM as to where it is right now?

And then secondly, for Hovhannes on Armenia. I think you've highlighted the investment in infrastructure activity that has been supporting the corporate side. I suppose, how much do you think will that remain a key driver for the business? And more broadly, how should we think about sort of split between really the underlying market growth versus further market share gains in Ameriabank?

So maybe I'll start with NIM. So yes, we believe that the ability to retain that NIM is very strong. So we will be slightly higher, slightly lower. It doesn't really change much overall in the big picture. I understand that it's good to calculate exactly, but the life doesn't happen like this.

Right now, what we can see is that there is pressure that NIM can slightly increase, in fact, but I think there are also some other factors that could reduce it. So we are seeing growth stability, and we feel quite strong about it. So, yes, that's all I can say about that. Hovhannes?

Yes. Thank you. I mean, we have been presenting that there are -- I mean, the overall economic output in the country is very positive. It has been very positive for the last couple of years, and for the near future, we still remain very positive as Akaki presented. And it's not only due to the large scale projects that are happening in the country, but also the overall base or the macroeconomic stability is there.

So Ameriabank, being the largest lender in Armenia, obviously is taking advantage of the situation in a good way, that it is being able to serve more and more customers, both that existed here and also the new large projects that are being established. So if you look backwards and if you look at our trends as well, there is a very solid growth for the market overall.

But we have been beating the market year after year, and we will be continuing to do that as well. So I would anticipate that overall, due to the very positive macroeconomic environment, overall, the banking system will continue its significant growth. But we will do our best to win over some of our competitors to increase our market share as well as alongside growing overall margin.

Yes, especially with the retail rollout, right? I mean it's -- for years, Ameriabank has been the #1 premium brand. #1 brand in corporate and #1 premium retail brand, which was rolled out to the mass retail using the digital capabilities. So that will very much continue. I mean it's just shy of 400,000 monthly active users and can easily be well above 1 million. So this will take years, obviously, but it will be happening.

Thank you, Jens. The next question comes from Sheel Shah.

Hello. How are you guys? Can you hear me?

Yes. Go ahead.

Yes.

Great. I've got a couple if you could help me, please. First, on the Georgian deposit market shares. On Slide 20, you can see that there's a little bit of a dip in terms of Georgia, also TBC. Is there anything here going on in terms of competition we should be thinking about? Or is that more the strategy to get below the 40, and then we can get the 50 bps capital release on the back of that as well? That's the first question.

Yes. It's engineered, basically. We've been targeting to go below 40 without upsetting customers too much. So I mean, we can easily go under 40 like in 1 month, but you don't want to be a place where people don't think of you when they want to deposit money, right?

So it has taken us time and very careful consideration how to do it. But yes, that's exactly right. I mean, we wanted to be below 40, and that capital release will take some time, though, because the way it's applied is the last 12 months average has to be below 40. It will take us 6 to 12 months to get there. But yes, that's what we should anticipate 50 bps release.

Thank you. That's helpful. And then SECONDLY, you've given the capital ratio for Georgia, you've given it for Armenia, and you can see a dividend upstream for both to the group. What's the capital position of the group? Because that's a dividend paying entity. That's also the acquisition entity. And in terms of CET1 there and sort of the excess capital held at that level, how does that look?

There's no leverage there. Giorgi, do you want to cover that?

Yes, we don't have any capital requirement at the group level. It is a holding company. We do keep some cash to meet the various expenses requirements, as well as some cash for future growth. There is no capital requirements at the group level.

But in terms of the capital position, I think it's -- if you remember the capital position there, it's like $60 million, maybe more or less, but it's all cash. So we don't have much assets there other than the holding company, and we killed any leverage there for a number of years ago. So there's not much there, and there's a little bit of cash as a buffer.

Okay. That's helpful. And then finally, just on cost of risk in Armenia. Is there anything that we should be thinking about there as the consumer loans are growing quite fast and there was a pickup there in terms of retail cost of risk?

Well, I mean, if we -- when we look at it as product by product, by all the products, we are still way below our midterm guidance, and we are very comfortable at the levels that they are at. Obviously, consumer loans in general are a bit more risky, but with higher yield.

So technically, in terms of risk reward combination, we are very comfortable with the yield and risk level for the consumer loans as well. But obviously, the more the structure of the balance sheet will change, we may see some changes to the risk position as well as net interest income position.

Right.

So the overall numbers are comfortable. Obviously, when you're looking at the 40% increase year-over-year, where we're looking at the different subgroups and dissecting and so forth. But overall, numbers are still very solid.

I think Sheel was done with questions. The next on the line is Alex Kantarovich.

I hope you can hear me. Great results. It was a pleasure to go through them. I would like to ask about the second half. If with the regular adjustments for seasonality of OpEx, for example, if second half trends would be broadly comparable to the first half. This is my first question.

The second question is much broader. Given that there were reports of certain issues, geopolitical issues for Armenia with Russia, if you can see any macroeconomic impact potentially. That would be my worry. Other than that, once again, great trends, great results.

Yes. In terms of the second half, we have all the reasons to believe that they will be as strong as the first half. Usually, in fact, it's more. So if we look at the history of our banks, given the high growth and because the first quarter is slightly slower, usually second half is better in terms of activity and so forth. There's no guarantees, obviously, but the anticipation are all positive. Regarding Hovhannes, do you want to cover the revenue numbers.

Yes, sure. In terms of the recent development of the relationship between Armenia and Russia, I mean, there are some limitations on the foreign trade, but that covers less than 8% of the trade with Russia. So -- and obviously, in a short-term perspective, there have been some subsectors that have experienced some shock. The government of Armenia has taken certain measures to minimize this impact.

And when we discuss the issue with our customers, we feel that by and large, the measures that have been taken by the government of Armenia are, that we can call enough to cover that short-term shock. And today, most of those products are being exported to other countries, mostly to Europe or other regions.

So we do not really anticipate in the mid-term to long-term any significant impact of the limitations that have been introduced over the previous 2 months on the development or economic development of the country. And it is fully in line with the recent reports that have been on our Armenia in terms of forecast of GDP growth and so on.

Thank you, Alex. The next on the line is [ Dmitriy Vlasov ].

Again, congrats on very strong results. My questions would be about Armenia, also, a bit broad ones. So the first one is about your ambition to get to 30% plus market share at some point in near-term. Like is this organic or also includes potentially some inorganic capabilities?

And then the second one is on the overall market. Like the figures are very impressive, and we see very little slowdown in the market overall. Do you have the understanding when we would see a bit of normalization slowdown?

Regarding the acquisition versus organic growth, maybe I will cover that, Hovhannes, and then take the second question. So we would be open -- I mean, first of all, our default case is to go on with the operate of -- organic growth. Obviously, we'll be open for the inorganic, but that would depend on the regulators' openness to seeing such merger given the fact that we are already the largest player on the market. Having said that, who knows? But, yes, our default case is organic. Please, Hovhannes.

Yes, in terms of market position, you're right. I mean, overall, the market has produced very good numbers for the last couple of years. And when we look at the macroeconomic forecasts, both done internally within our group as well as third party, we still remain pretty optimistic about overall development.

Also, as presented for Ameriabank in particular, we do expect to grow a bit faster than the market and in both sectors, for corporate and retail. For retail, as Archil also mentioned, it's predominantly due to the rollout, and we see very impressive results in terms of growth. Our MAU is growing at 47%. Acquiring business is growing at 48%. Our loans, consumer loans are growing at 39%. And indeed, more than 96% of those loans are A to Z automated.

So it not only enables us to lend to bigger chunk of the population, but also the cost of loan underwriting is going down significantly. So we do hope to continue these developments further, and we still remain very positive both for the banking sector overall, and also we plan to beat the market in terms of overall growth.

Could I have a very quick follow-up on the financial market share? Can you please remind me what sort of the regulatory cap on the market share in Armenia?

There is no regulatory market cap in Armenia, at least as of today, because we are the largest lender and we are slightly shy of 23%. As of today, there is no cap.

Just to be clear, there's no cap in Georgia either. But on the deposit side, from the financial system stability point of view, above 40%, there's higher capital requirements, and it's just not worth it to go much further than that on the deposit side.

Thank you, Dimitry. The next question is from Ben Maher.

I just have 3 questions, please. The first one is on the customer spreads in Armenia. I think in local currency it's still showing signs of pressure. I think last quarter it was mainly driven by the deposits, but this quarter see it's more on the asset side. So just interested in any color behind that.

Second question is, again, on Armenia. Cost growth is still well below revenue growth. I'm just interested in how you -- do you expect this to continue? Or how do you expect cost growth to evolve in the second half relative to revenue growth?

And then my final question, I think it was already touched upon pressure overlay in Armenia. The capital buffers obviously now are comfortably above your minimums. How do you view, if you don't necessarily pull the trigger on Armenia, how do you view new market, new potential markets? Are there any kind of countries that you're particularly interested in?

Let me cover the second and third one, and then I'll ask you to repeat the first question. Then, sorry, I didn't really quite get the question. So in terms of having a positive jaws ratio, for the last couple of years, that has been enabled predominantly due to the investments that we have been doing into our digitalization in general.

As I mentioned, for example, in terms of underwriting, the cost of single loan underwriting for consumer loans is going up more than 30x. And moreover, I mean, in terms of overall coverage option, today we are able to serve any customer on the territory of Armenia without having like a physical presence nearby.

And we see, you've seen, as I mentioned several times about our growth rate of MAUs and DAUs, that our customers tend to use our digital channels more. And due to the fact that the single usage is technically the marginal cost of usage of our mobile banking or other digital channels is close to 0. I think it's very much expected that costs are growing much slower than revenues.

Plus, on the revenues, we do already experience a significant network effect, and that was something that we were talking about 2 years ago, that our rolling into mass market would enable us a network effect on the revenue or asset side as well. And now when we are serving more than 500,000 monthly active customers, we are getting more and more of that. And you can see it in our P&L as well as on our balance sheet. If you don't mind, could you repeating the first question?

Yes. Just on the customer spread in local currency, it is down again Q-on-Q. Just interested in any color behind that.

Yes. There has been some changes in the regulatory environment where the central bank -- where our required reserves in the Central Bank of Armenia in local currency have been reduced. And instead, we have been reserving in FX. And that has created a temporarily additional excess liquidity in local currency in the local market. That has had its impact on the short-term in terms of rates, both on the borrowing and lending side.

We do expect that to normalize by the end of the year. And overall, for both technically currencies, we anticipate in the mid-term to have broadly stable spreads that will translate into broadly stable NIM.

And the third one was, what are the other markets that we would consider looking at as a group to enter? And we laid it out during the Investor meeting in June that the target markets would be the Baltics, the Balkans, and 2 countries in Central Asia, 2 large countries.

Having said that, because we are focused on the largest players in the market, top 3 or top 5 maximum in some of the larger countries, that also means that we will be waiting and seeing the -- looking for the right opportunity.

Thank you, Ben. The next on the line is Simon Nellis.

Congratulations on the strong results. Just a quick question on the dividend from Armenia. Are you going to be paying dividends regularly from that business? Or is it going to be an annual event? And roughly how much of the earnings do you expect to be upstreaming? That would be my first question.

And then, yes, sorry if you have touched on this before, but could you just elaborate on the outlook for margins in both Georgia and Armenia a bit? Is the sharp increase in margin we saw in Georgia sustainable? Or do you expect that to normalize somewhat?

So I'll start with the last one. So the margins we expect broadly stable in both markets. And they are different kind of moves on the positive and negative sides, which will be, I think, offsetting each other.

In short, there's slight -- we'll be deploying more liquidity, dollar liquidity, in Georgia. Having said that, there's slightly some other changes that are offsetting. In Armenia, it should be more or less stable going forward, at 6%, as we can see. What was the other one?

On dividend.

On the dividend side, it's a business that's delivering right now 22%, 23% return on equity and growing at 35%. So obviously, we will not be counting on giving out too much money. Having said that, given the regulatory change and the deployment of the Tier 1 capital, additional Tier 1 capital, we had a little bit of extra capital, and we thought it was a good idea to pull it out. In other words, until we see very high growth, we will be reinvesting the capital or return on earnings in Armenia.

When it normalizes closer to 10% to 15% in a number of years' time, then obviously we'll be taking up and generally up the extra dividends, extra earnings. But now, we shouldn't count going forward because the expectation is that the high growth will continue, 20 plus percent.

Thank you, Simon. The next question comes from Melker Samuelsson. Hi, Melker.

Congratulations to another strong set of numbers. I wanted to ask on the slide for the liquidity on GFS. You report the increase in both LCR as well as net stable funding. And you mentioned you're doing a liquidity exercise to sort of see overlaps. Could you maybe elaborate a little bit on that strategy, what you're trying to do and some quantification, as well as, I guess, both on the deposits as well as other sources of funding.

Giorgi, do you want to start it?

Yes. So from the perspective of liquidity, indeed, both increased, and you may remember that we even issued the bonds about 1.5 months ago when it further strengthened it. What we will be doing is that in terms of the dollar liquidity, we will be using it to support the growth.

But for the liquidity in lari, the high liquidity most likely will remain. But what we are doing is that we are optimizing the cost of that liquidity so that it still has positive impact on our balance and on our financials. Number-wise, I think the dollar liquidity, which is not reported here, will decrease most likely by 10 percentage points. And then we may see these numbers to go down, not dramatically, though. If I'm answering your question.

Yes. And that's mostly via term deposits or like what's the deposit strategy to lower it, that you reduce term deposits or just elaborate a little bit on that.

Sure. I mean mostly they are the large deposits that could be term or current account when it comes to corporate. But then again, we try to be careful with Archil said that next time the customer needs to deposit monies, so we still need to be here. And then it is mix of large, term, and current accounts.

Thank you, Melker. The next question is from [ Roman Fazaev ].

Hi, guys. Can you hear me?

Yes.

Yes.

Great. Congrats on the results. Really fantastic numbers again. A couple of questions for me. The first one on Armenia. I saw that the loan-to-deposit ratio remains, I think about 125%, 130%. And I wonder over time whether there is a plan to bring that number below 100% or if you're comfortable continuing to operate at this level. If there is a plan to bring it down, whether that will be a source of margin pressure over time at the Armenia business as you replace some of that funding with deposit funding or maybe not.

And the second question is, on international expansion, there was a big transaction in your kind of target geography with Luminor being acquired by OTP Bank during the quarter. I wonder if that was something that you guys looked at, whether that was of interest or not, if you had any comments on that.

Hovhannes. We start with the last one. I cannot comment on that.

Okay. I guess that's simple.

For the Armenian operations, you're right. Our loan-to-deposit ratio is above 100%. But I mean, that's somewhere where we are feeling very comfortable because if you look at the mix of our liabilities, we have a significant chunk of the DFI borrowings that are -- that we consider very stable on long term.

So it really helps us in terms of those local borrowings are usually much shorter term contractually. Obviously, behaviorally, they're getting longer tenure. But contractually, they're shorter-term. Hence, we always prefer to mix it with the long-term IFI borrowings that are giving us also better comfort in terms of our gaps. And over the times, we have confirmed that these funds are very stable in their nature, and whenever needed, we were able to rely on them as well.

So despite having a loan-to-deposit ratio formally above 100%, without inclusion of the IFI borrowings, obviously, due to the fact that we are working with more than a dozen IFIs, one of the most active partners of the DFIs in Armenia, it gives us full comfort.

Is there a meaningful chunk of non-DFI borrowing on the Armenian liabilities mix or no?

We do have non-DFI borrowings from international financial institutions as well, but their size is much smaller.

And plus, we also have some funds, mostly due to the trade finance operation because -- we are the largest trade finance operator in the country. So that is also shorter term, and in terms of size, it's smaller, though more significant than simple DFI borrowings.

Roman, right now, a lot of our DFIs are highly motivated to increase their exposure in Armenia.

Interesting. So we should expect that sort of structure to sustain 100% plus for the foreseeable future?

Over for the next few years, yes. And surprisingly, what you can see is what we have seen in Georgia as well over the years is that in times of crisis, in fact, that DFI funding is increased. So it's countercyclical, and it's very stabilizing for the emerging markets like ourselves.

Thank you, Roman. I think Jens has a raised hand, but I think he forgot to put it down. There is one question from Nikolai Dimitrov. He's asking, We're observing blockbuster numbers in Armenia. Where are you in the process of repositioning Ameriabank? Would you say you are 70% there or the process is almost complete?

Definitely not complete, and we are not 70% there. In terms of what we would like to see, is we would like to see more than 1 million monthly active users, and other deposit and loan products being offered to our retail clients there. Hovhannes, do you want to say anything there?

Yes. If it depends, if the question is on the results, definitely, I mean, we are not halfway where we want to be and where we plan to be. But if we are talking about the product mix and positioning in the market, then probably we are well beyond the 50% of the way that we've done.

I mean, if you look at Ameriabank as a kind of top-of-mind, where we were a few years ago and where we are now, I mean, we have almost doubled the top-of-mind recognition of the brand.

And because, as Archil mentioned, 10 years ago, Ameriabank was perceived as, let's say, exclusive bank for middle-income population. Today, it's openly regarded as a bank for all, and that's very important.

At the same time, all our products and propositions that we have rolled out for the mass market, for middle-income market, I think again, those are also very important significant moves to cover the needs of different layers or different segments of the population. So if the question is on the results, yes, definitely we are not halfway there. In terms of being prepared for it, I would say we're more than half.

Thank you, Hovhannes. Very well said. But the coverage and the potential in the market is quite large. There are a lot of large projects being implemented in Armenia. The entrepreneurial spirit is there, and we have a very strong team on the market. And the brand and operation is top of the line.

So with all of that, we believe that the current coverage of retail of just shy of 400,000 can triple over the years. So that's a fantastic opportunity, in a high-growth environment.

I see one raised hand from Dan Mikhaylov.

This is Dan from Vergent. Am I audible?

Yes.

Great. Congratulations on the results. I just have a question on Armenia. If I look at Ameriabank's stand-alone disclosures, I see that loans classified under agriculture, forestry, and timber account for about 11% of gross loans. Hovhannes, I was wondering if you could shed some light on what these exposures are, given that you mentioned that you had these conversations with the clients. You're not seeing a lot of risk from the trade restrictions that Russia has imposed on Armenian exports. That'd be much appreciated.

Yes. Our exposure to the agricultural sector is mostly industrial scale agriculture. So we're talking about -- we do not really have at least significant exposure to the smaller farms. So we're talking about large greenhouses, large gardens, and so on, that deploy the latest technology that are much more efficient.

And then when we compare in terms of production capabilities, they are several times higher than the sector average. And a chunk of it also has been developed during the recent years, post-COVID, when the government of Armenia launched a new project of modernization of the agricultural sector and deployed 2 new projects of co-financing or subsidizing some of the costs of industrial large-scale agricultural projects.

And as I mentioned, obviously, we have done initial analysis and when it comes to the recent limitations in terms of Russian export, while some of our customers have been exporting to Russia earlier, we see that in the mid-term or even long-term perspective, this change that has been introduced over the last 2, 3 months will not really pose any significant risk, neither on their business nor on our balance sheet.

Yes. Just as a follow-up, have you had any requests to restructure any of these loans? Because I seem to recall that the government's now rolled out an interest rate subsidy scheme to support agricultural borrowers.

Yes. As I mentioned earlier, I mean, the bigger thing was like the short-term shocks. As most of these large-scale customers have been under the government, either co-financing or subsidy programs, the government has actually announced that they're extending these programs, because some of them were maturing this year, and next year, that will technically kind of take away the short-term shock from the customers.

So that's one of the examples where the measures taken by the government were able to kind of protect these players, and hence, as I said, yes, there are being some complications in terms of finding new routes of transportation. Entering new markets is never that easy. But I think on the both political level as well as actually we see the developments that we see on the ground are very much promising that these customers should not have any problems, neither this year or in the near future.

Sounds very encouraging.

Sure.

Thank you, Dan. Thank you.

Dan, to provide a little bit more color. Then Dan has left. That's all right.

You can. Should I let fit in?

So to provide color. So these project are top of the line in terms of the technology, deploying the latest technology from the in case of Orchard, let's say, the Italian freeze, and the drip irrigation and so forth, at the highest level, highly automated, brand-new.

The reality is that as they change the market, the target market, their margins will be squeezed. Having said that, their business model was outrageously profitable. So even by changing one market to the other, of course, they'll make less money, but they should be fine. Some of the larger ones have very strong sponsor support as well, so we have gone through a detailed risk assessment and don't expect a major charge on that.

Thank you. Actually, there is one, the only question left in the Q&A chat from Daniella Mirkov. Are widening EU sanctions creating any compliance risk for Bank of Georgia, and do we have any exposure to the oil refinery today?

We don't, in fact. So we didn't bank the company, so that's not -- it doesn't create any risks with that, so no.

No more questions.

What we know, in fact, on that full everything is that they are in detailed negotiations with the European authorities to see what they can do is basically because their business model is still very valid, working on the non-Russian oil, given how demanded the refinery capacity has become worldwide.

No more questions.

That's what they will do, but we're not exposed, no. Should we summarize, Nini?

Yes.

I am glad to say that this is a very strong quarter. So as we are delivering 27% return on equity, with a very solid capital position, which is the highest in the wider region, in fact. And we are growing at 20-plus percent in almost everything. So in loans, 23%, in deposits, 28%, in acquiring business, 20% plus in Georgia and 48% in Armenia. So deepening and strengthening the Georgian franchise, growing rapidly Armenian franchise, doing all of this while having positive operating jaws in both markets, and then combined, and growing the top franchise, which is delivering 27%, growing at 20 plus percent.

So I think that combination speaks for itself. And I will leave you with this. And I hope that for our shareholders, this is a positive news, and this will stay as a positive news with you as you take your vacation. And I wish you to rest well and come back energized after the August holidays. Thank you very much.

Thank you, everyone. Take care. Bye-bye.

Thank you.

Today, we're pleased to report our results for the first quarter of 2026. My name is Nina Arshakuni. I'm Head of IR, and I'll moderate this call today. And we have a few speakers today on the call. I'm joined, as always, by the Group CEO, Archil Gachechiladze. Also, we have our Group and Bank of Georgia CFO today on the line, Georgi Shagidze, who joined the group recently in March 2026. We also have Hovhannes Toroyan, who is the CFO of Ameria Bank, our banking subsidiary in Armenia; and Akaki Liqokeli, our Group Economist, who will talk about [indiscernible].

First, we'll kick off with a few opening remarks by Archil, and then we'll continue with the other parts.

Hello, everyone. Thank you for joining the call. We had a very interesting quarter this time, 20 years after we joined the London Stock Exchange in 2006, we went public, in fact, in form of TDRs. And in 2026, we joined FTSE 100, as many of you may know. And that is a very special moment for all of us because it kind of summarizes the achievement over the last 20 years, but it's only a new beginning for more to come. So as you remember who we are, we are 2/3 Georgia, roughly 1/3 Armenia. It's not quite there, but Armenia is increasing very rapidly. We're serving about 2.7 million retail customers and delivering close to 30% return on equity over the last 5 years on average. And we have a very strong market share in Georgia of 38% and #1 position in Armenia, which -- with growing market share.

Could you go to the next slide? Yes, and in terms of the quarter, we had a very solid quarter. We had 14% year-on-year increase in our return in our profitability and 27.4% return on equity, slightly down with more capital effect. Our risk remained at very low level with 2.1% NPL ratio and 0.3% cost of risk, which is well below our midterm guidance of 80 to 100 basis points. I'm particularly happy about balance sheet growth. We saw 23% growth of our loans, very strong in Armenia and also quite good in Georgia with deposits growing at 17.5%. Also on the revenue side, we saw strong growth in the net interest income and fee and commission income, but not so strong in terms of the FX income where we see the pressures. Costs are in line more or less with the revenue, but they remain a focus, especially in an environment where the incomes are growing double digit, which is very good for our consumer franchise in both countries, also remains a focus there. The franchise and talking of franchise quality in both countries, the NPS scores remain very high, and that underlines that our retail franchise is very strong and in corporate as well. So with this -- all of this is, in fact, based on very strong economic performance. And that's why we would like to cover a few slides on the economy and Akaki Liqokeli will do that over the next few slides. Thank you.

Thank you, Archil. Let me provide a quick update on the macroeconomic developments in our core markets, Georgia and Armenia. And let me start with growth performance. The macroeconomic backdrop has continued to be favorable. And both countries, Georgia and Armenia have entered 2026 on a strong footing. Preliminary Q1 growth numbers are quite strong, 9.1% year-on-year GDP growth in Georgia, 7.1% growth in Armenia and services continue to be the key growth drivers in both countries. So this stronger-than-expected performance in the first quarter, together with demonstrated resilience of the economies have led us to revise our full year real GDP growth forecast for 2026 to 7% for Georgia and to 6% for Armenia. As you can see on the right-hand side, the sustained strong performance of these two economies combined with positive medium-term outlook have positioned Georgia and Armenia among the top-performing economies in the broader region and distinguished by significant advantage in income per capita levels compared to our intermediate peers. The recent escalation in the Middle East have introduced downside risks, mainly through higher energy prices and transport disruptions. However, the impact on Georgia and Armenia have so far been muted due to limited direct macroeconomic exposure to the region, also resilient and diversified external inflows and sound macroeconomic policies. Furthermore, we -- in the scenario of prolonged conflict, we see upsides in terms of increased strategic relevance of the middle corridor as well as possible redirection of tourism and capital to sold Caucasus.

Currency performance have been also very strong despite regional geopolitical tensions. As you see on the left-hand side, in contrast with previous episodes of stress, Georgian Lari and Armenian Dram have remained broadly stable, underpinned by strong macroeconomic fundamentals and prudent policies. We expect the currency stability will persist in the future as the economies remain resilient and policies remain agile. The main area where we have seen the impact of the Middle East escalation is inflation. Higher fuel prices have added to existing food price pressures and have pushed inflation higher in both countries. We expect the headline inflation numbers will remain elevated throughout the year before returning to the Central Bank's 3% targets gradually as the supply side pressures ease. The monetary policies remain prudent in both countries. Yesterday, National Bank of Georgia raised the refinancing rate by 25 basis points, reinforcing its commitment to keeping inflation expectations in check. We expect the monetary policy in Georgia will remain moderately tight throughout the year. In Armenia, the Central Bank has kept the refinancing rate unchanged at 6.5% since the beginning of the year. However, recently, the communication has become more hawkish, so we don't rule out the possibility that we may see some modest tightening over the year.

The central banks have been also very active in reserve accumulation also in the beginning of 2026. The gross international reserves had reached USD 6.3 billion in Georgia and USD 5.5 billion in Armania by the end of March. And in both countries, the reserves remain above the International Monetary Funds minimum adequacy thresholds, reinforcing macroeconomic resilience in both countries. Another key pillar for macroeconomic stability is fiscal discipline and Georgia and Armenia have been very consistent in this area. The government debt-to-GDP ratio continues to come down in Georgia as fiscal deficits are kept at 2.5% of GDP. In Armenia, the government have been very successful in balancing elevated spending needs with fiscal sustainability objectives. And despite elevated fiscal deficits, they have kept the public debt-to-GDP ratio more or less stable. This year, we expect the fiscal policy will remain growth supportive, mostly through sustained capital expenditure. And lastly, the financial sectors, banking sectors in both countries remain sound, supported by strong lending expansion, historically low levels of loan dollarization and solid capital buffers. So that's all on my side. Back to you.

Thank you, Akaki. We will now have Georgi Shagidze cover the main developments at the Georgian Financial Services.

Georgi, you are on mute. Please, un-mute yourself.

Apologies for this. Good afternoon, everyone, and I'm very pleased to join my first Lion Financial Group results call, and I look forward to seeing many of you on the future occasions.

Let me start with the summary of GFS. It was another quarter of very strong results. You can see from the slide that profit grew by 11.6%, reaching GEL 452 million with a return on equity of 31.5%. The loan book year-on-year grew by 17.8%. This happened on the back of 0.4% cost of risk and 2% NPLs. Deposit book grew by 13% and retail monthly active customers and retail digital monthly active users reached 2.2 million and 1.9 million, respectively.

This slide summarizes our award-winning financial super app. Maybe what I can summarize or highlight here is 52.7% digital daily active users and 88% of all loans granted from our digital channels. Both results are one of the best in the industry. On the bottom left-hand side, what we have here is how our customers are giving the ratings with the CSAT being at 93% with the very prestigious awards from Global Finance naming us World's Best Digital Bank in the second consecutive year, along with another prestigious award in innovation in AI in the region.

The next slide summarizes our digital ecosystem in business. And just like in our retail, here too, the numbers are quite impressive with 108,000 digital monthly active users and 83.5 digital monthly active users as a percentage of monthly active customers. Here, too, on the bottom left-hand side, we see the Apple Store and Google Play customer ratings being as high as they actually get.

In terms of the payment business, our acquiring volume of payment transactions grew by 19.7% year-on-year. The quarter-over-quarter decrease is mostly seasonal. And now we are enjoying the market share of 56.9%. We have 26,700 POS terminals, which is about 17% year-on-year growth. And in terms of issuing, our year-on-year number grew by 12.2%. In terms of NPS, the NPS reached 75%, which again is one of the best in the industry, and this is the reflection of the bank's customer-centric culture as well as investment in people and in technology.

Loan book during the period grew by 17.5%. The growth was across the board, but then the higher growth in consumer loans and in corporate loans. The dollarization of loan book broadly remained stable. Quarter-over-quarter growth was 3.6%, and that happened with our margins also growing by about 30 basis points. In terms of deposit portfolio, it grew by 12.6% year-on-year, mostly in retail and in corporate deposits, and that also supported the dollarization of the deposit book.

This is last slide from my part. It's about capital and liquidity position. In both metrics, we enjoy very comfortable buffers with CET capital buffer being at 2.5 percentage points. And in liquidity position, our LCR stood at 140% with our NSFRS being at 130%. Thank you, Nini.

Thank you, Giorgi. And now I would like to ask Hovhannes to continue with the review of the Armenian Financial Services performance for the quarter.

Thank you, Nini, and good afternoon, everyone. I'm very much delighted to present to you the results of our operations for the Q1. As already mentioned, we have had a very strong performance for the first quarter. As you can see, our profit grew 35% year-over-year to reach GEL 129 million. Return on equity was 21.8%. Particularly, as Archil mentioned, the growth of loan book and deposit base was very positive. Indeed, we had 34.6% growth in constant currency basis for loan book and almost 30% for deposit base. At the same time, we continue to improve our positioning in terms of coverage of the market. We are -- we have grown our number of customers, monthly active users by more than 33% and digital MAU has grown more than 47% to reach 362,000. Indeed, while the growth pace is very, very impressive, we're still less than 0.5 million. So there is still much bigger opportunities for growth in this area, and we're going to be continuing this expansion as well. Just like BOG, we continue to invest heavily into our digital propositions. Our applications are being enhanced with a lot of new functionalities and products and a number of improvements based on the analysis of the customer usage are being done, but I want to highlight our loyalty program that we launched last quarter, and we see very positive traction with our loyalty program and beyond banking propositions that are integrated into our mobile application. And both of the applications for adults and for kids are very important tools for us also in terms of financial education and financial literacy improvement in the country.

And as you can see from the bottom numbers, not only we're able to grow our customer base by more than 1/3 every year, but also the depth and digital usage of these customers is growing up. Our online banking penetration has reached 83.7%. That is almost 5 percentage point increase year-over-year. Digital MAU to MAC ratio has increased by 7.2 percentage points to reach 73%. And MAU ratio -- DA MAU ratio is at 44%, again, with 2.5 percentage point improvement. In terms of growth of our portfolios, as mentioned, our loans grew more than 34% year-over-year and 6.2% during the first quarter. While both segments have been very active and positive in terms of growth, the corporate sector grew a bit faster, and that's where we see that the share of FX-denominated loans have slightly increased during the Q1. On the deposit side, again, very high loyalty to our franchise, almost 30% growth of the deposits year-over-year and almost 6% growth for the Q1. Here, we see further increase of the share of AMD-denominated deposits, and that has to do with increased number of the customer base.

Naturally, we have been -- we continue to improve our market share. Our market share by loans has reached 22%. That is 1.7 percentage point growth for year-over-year. And for deposits, we have improved our market position by 1 percentage point year-over-year to reach 19.5%. In terms of capital position, as many of you have probably heard, we have issued our first ever AT1 notes locally worth USD 50 million with 8.5% coupon within 6 days actually in February. And that has improved our capital position. As you can see, we have roughly 1.5% headroom over the CBL requirements. At the same time, we do -- we have also announced the second tranche of AT1 notes, again, USD 50 million at 8% coupon that are supposed to be located locally as well. This will enhance our capital structure and give us more flexibility in terms of being able to nurture further growth. In terms of liquidity, we continue to be positively well above the regulatory requirements. LCR stands above 200% and NSFR is above 125%. So both of these figures are giving us relevant comfort for our operations. This is on the Armenia side of the business.

Thank you, Hovhannes. And now I will hand over to Archil for a few group financial highlights and also the wrap.

It's a hard act to follow when you're talking about 35% increase of loan book and 40-plus percent increase in retail number of monthly active users. But I'll try. I'll try my best. So here we go. So those are some of the numbers that we already discussed, but our operating income was up by 15%. Net interest income showed a strong uptick of about 18.4%. Net noninterest income was slightly subdued. And there, when you look at the details, we had pretty strong net fee and commission income growth year-over-year in both markets, in fact, in Georgia, that was partly due to the effect of our new deal with the system operators. And in Armenia, we had one M&A transaction, but it was not a major one. It was GEL 5 million out of GEL 30 million, as you can see there.

In the net FX, it remained low like we guided previously that we don't have much volatility in both markets. In fact, our either markets don't have much volatility as well as slight uptick in the competition as well. So we see pressures on the FX, but all the other parts of the business have been doing very well.

Operating expenses, as I mentioned, were less than the revenue growth. So we had positive operating growth. In Georgia, it was slightly higher, 16.6%, and Armenia was lower, but it was partly due to the fact that in the base effect, we had that amortization of the sign-up bonus previously, which we no longer do. So that is helping the numbers. Cost-income ratio remained just below 35% with loans. And then going forward, let's see, but that's the objective. In terms of the loan growth, as we said in detail already, 23% growth and 17.5% in deposits and Armenia really stood out with very strong numbers, as you can see. But Georgia also, I mean, when the market grows about 14%, we grow 17.8%. We're very happy with that. And what we saw in terms of the net margin, although it was flat, we had the lower margin in Armenia and higher margin in Georgia. In Armenia, we had slight uptick in the cost of funding as well as the lower yields on the overall portfolio, mainly due to the fact that the first part, which is funding, we increased the proportion of the Armenian draw, which is almost by default more expensive than U.S. dollars as well as issuance of Tier 1s. So all of this is -- Tier 1 is marginal here because it was at the end of this second quarter. But there are other debt issuances on the sub debt side that also affected.

And in terms of the loan yield, there were several large issuances of corporate loans, which put a little bit of a pressure on that. Going forward, we believe it should be flattish in Armenia. In Georgia, we did what we promised, which was pushed down the deposit price and that was about 10 basis points and deployed more liquidity, which we are flushed with and that was another 20 basis points. So that's the 30 basis points that you see there. All in all, as a group, we're flat. And in terms of the loan yields, not much to say there. Cost of risk remained at low levels of 0.3% and you see the distribution of where it's coming from, not much to add there other than the fact that our midterm guidance is 80 to 100 basis points. And we are happy to see that for a number of years, we will be remaining at very low levels due to higher than medium-term expectation of growth in both markets. In fact, I mean, it's remarkable that the last 5 years, we've been growing about 9%, more or less the real growth plus nominal growth and plus local currency getting turning stronger versus U.S. dollar.

Loan quality remains very solid with low number of NPL at 2.1% and solid coverage. And all of this resulted in profit growing by 14% year-over-year, return on equity of 27.4% and return on average assets, which is something we closely watch at almost 4%. This wraps up the -- ops sorry. Wrap up, yes, there are a couple of slides, I apologize.

So in the wrap-up, I would like to say that we are announcing a capital distribution of GEL 177 million of that, GEL 122 million will be distributed as dividends and about GEL 55 million will be invested in our own stock. That means GEL 2.85 per share for the first quarter only. Last year, we moved to the quarterly dividends from the third quarter onwards. So there's no direct comparison, but we're definitely in our own inside comparison, we are increasing the dividends on the mid-teens level roughly. And you see a number of shares declining over the last few years as we deploy about 1/3 roughly of our usual distribution in share buybacks. We guide 15% annual book growth. And as you can see over the last 5 years, we've mostly other than 2022 remained well above that, and we are continuing that. And in fact, growth accelerated here. Return on equity is at 27% and with high and higher capital ratios, in fact. And in terms of distribution, we are on the low side of our range that we guide 30% and 50% and that is to build up the capital buffers and finance higher-than-expected growth, in fact. So that's how it's going.

And with this, let me pass it back to Nini for the Q&A, which is usually the most interesting part of our quarterly.

We are ready to take questions, and I see a few raised hands already from our analysts. The first raise hand is from Sheel Shah from JP Morgan.

Two questions from my side. Firstly, on the margins. I know that you said Armenia to be flattish from here on. It would be good to get an understanding of the moving parts because it looks like there is maybe some increased competition or maybe increase in the local currency deposits, which could continue to maybe weigh on the NIM going forward. And on the Georgian side as well, clearly, we have the rate hike from two days ago and your previous guidance of flattish NIM with two rate cuts, as you previously said. So it would be interesting to get your outlook on the Georgian NIM as well. And then secondly, on costs. Georgian costs are running at 17% much higher than inflation. I know that you've been running at that same -- a very similar level last year as well. But it will be interesting to get an understanding of where you're using these costs. Why are the costs so high? What are you investing in? And should we expect that to normalize lower going forward? Or is this the run rate we should expect going forward?

Why don't I start with the Georgian side, and then I'll pass over to Hovhannes to talk about Armenia. So in Georgia, NIM should remain around flattish, I would say. So when there are movements in the refinancing rate, obviously, higher refinancing rate is marginally better for us. So we could have a little bit of a back there and see where we go to. But I would not expect a major change in there. One thing which is clear for us is that we have announced that we want to stay under 40% market share in terms of deposits. There's an extra capital requirement of 50 basis points associated with being above that ratio, and we would like to get capital efficiency there, obviously, as well as it's a guidance from the regulator not to go above that, about 40% for too long. And in terms of the cost, you're absolutely right that the inflation is lower. But one thing we should pay more attention to, I guess, is the average income levels in the country. So although inflation in terms of the cost of the inflation definition is one thing. But mostly what our costs are is people. And the inflation of labor costs have remained double digit in Georgia, single digit in Armenia, in fact. So I think that's what's weighing on the cost side. On the Georgian side, we can definitely say that we'll be looking at neutral to positive operating jaws going forward, and that's all I can say. But I do not expect a major change in that unless we see the environment changing, i.e., the growth of the economy and the average income is coming down. But it's back there, but it's really good on the consumer credit side where we are a dominant bank, and we've been benefiting from from substantial increases there without having any uptick in the cost of risk. So it's two sides of the same coin, but overall very positive there. Hovhannes, any words on the...

Yes, sure. On the Armenia side of the NIM, I think it will be fair to say that we shall expect slight recovery of NIM. And there are, as Arch mentioned, a few factors. One, the proportion of local currency and foreign currency that is a factor that we presume will be there. So with the around being very, very stable and strong. We see more and more depositors and customers leaning towards our medium. At the same time, other effects, indeed, the distribution of AT1 notes that are in essence capital instruments, and they are not leveraged yet and they have higher impact on the cost side will be leveled out closer to the end of the year. And second is the attractions of funds from DFIs and subordinate debt that we borrowed end of Q4 2025. So technically, especially in January and February, we have been very over liquid. We have increased our capital buffer significantly with subordinated debt. And over time, with the growth pace that we have already shown in Q1, this is going to be utilized. So in terms of efficiency, it's going to come down. It's going to improve our NIM slightly. So I would say towards the Q3 and Q4, there should be some partial recovery of NIM on the business.

I guess you don't have any further questions. So we'll move to the next question. Sorry, let me -- the next question is from Jens Ehrenberg. So I'll let him speak.

Can you hear me all right?

Yes, Perfect.

Congrats on a quite outstanding quarter with the performance and the FTSE 100 inclusion, great to see. Just a couple from my side. Firstly, on the outlook for the sort of FX revenue line, I appreciate it's a tricky one to forecast. If we look at the quarter, obviously, there's been a lot less FX volatility than we've seen previously. Is that sort of EUR 130 million level that you've delivered in the quarter? Is that a level you would assume normal if there's not too much FX volatility? And secondly, just taking into account sort of your persistent overall loan book growth, coupled with what is still really, really good credit quality and very low cost of risk. How do we think about that going forward? Do you think that sort of credit quality will eventually see a bit of an impact from that strong growth? And then last one is probably for Hovhannes, if that's all right. I appreciate if you'll give me a very diplomatic answer, no doubt. But just on the digital uptake in Armenia, I appreciate we got lots of headroom to grow here. Again, this quarter, impressive growth rate in terms of the uptake there. How much longer do you think those growth rates will be sustained until there's some sort of normalization, or do you think, well, it's that successful, you'll see that persist for the near future? Sorry, a couple of things in there, but thanks very much.

In terms of FX and loan on Georgian side, let me take it. So on the FX side, you asked for the overall numbers. And probably, it's fair to assume that those are the numbers of low volatility and unless anything changes strongly, then those are the numbers that we would expect. Having said that, it's an environment where there are many things that affect our numbers. In terms of the loan growth versus quality, yes, we've been growing and the quality of the loans have remained. One thing that affects it is high growth. And over the last 5 years, our -- both of the countries have benefited from a very strong growth, high inflation at some point as well, but now it's more moderated, but still above the target. Until we have that, I think we will enjoy good quality of the loan book because we have not changed the underwriting standards in any way, in fact. So all the growth that you see there is not because we've become more tolerant to the risk, but rather because of the economy is going well and because of us increasing the quality of interaction with the clients. And in terms of the midterm guidance on the cost of risk, you know that's about double of what we see in terms of cost of risk right now over the last few years. So there, we don't expect that until the economy slow down. Now will the economy slow down depends on many different things, but we have this idea of the middle corridor, which is actually becoming very real more and more. There's conflict on the north side, south side. So more and more Europe and Central Asia, in fact, and increasingly China is interested in this corridor being there and being real as an alternative to some of the other corridors that exist, not that we will replace all the others that would not be realistic, but rather as an alternative to exist to all the other transportation groups. And that means that there will be a lot of investment going in, in the infrastructure and then supporting businesses as well. So that could, in fact, provide a medium to long-term good growth numbers for both countries for -- I wouldn't say for decades, but definitely 5, 10 years, and that's say something. So with Armenian growth, maybe Hovhannes?

Yes, sure. I want to take off from the point that Archil made. I mean, indeed, our economies are performing pretty good. And as you remember, last year, we're seeing that especially in Armenia, there are several large projects that could really have significant impact on the overall macroeconomic performance of the country. Likewise, a few days ago in Armenia, we had a huge first ever Armenia EU Summit, where maybe you've heard most of the EU leaders have arrived and a number of mutual agreements and declarations have been signed. That could be another significant boost to the economy. So events happening around the country possess significant positive upside risk or potential for microeconomic development. And that's potentially going to fuel our growth further. In terms of digital uptake and increase of the number of customers, indeed, we were able to grow our customer base by, on average, 34% for the last few years. And at the same time, we do expect to continue this extensive growth for the next 2, 3 years at least. Where we're going to end up, I think we are looking at our partners in Georgia. We are still far behind in terms of utilization of the local potential. And we believe and hope that we're going to be able to at least match the achievements that Georgian peers have in their respective market. So -- and again, the traction speaks for itself. Miles and DAUs are growing from 45% to 55% every year for the last 3 years. And we expect a similar pace. I mean it's going to be very difficult to continue 50% growth every year, but we expect to have similar growth in the next 2, 3 years.

On the monthly active users, yes. But on the balance sheet, you will probably moderate. I mean you can grow...

On balance sheet, yes, I mean it's going to be much lower. We have been growing again slightly more than 30% for the last couple of years, and we would expect to have some moderation there.

The next question comes from [indiscernible]

Congrats on strong quarter. I have a follow-up question on costs, specifically for Armenia. So could you remind me what's the potential here in terms of the cost to income? It's interesting to say that costs in Armenia, specifically labor grow slower. Maybe I'm just wondering if there is a risk that they could accelerate at some point.

In reality, I do not think we are going to have acceleration of the labor cost in Armenia. Indeed, as Archil mentioned during the presentation, these costs are moderate also due to the signing bonus arrangements that were there up until last year, and it's not there anymore. Indeed, when we look at our cost-to-income ratio, we have declared it earlier that eventually, we also want to push our cost-to-income ratio down. Our target is to keep it below 40% in the midterm. But if you look at 2025, '26 have been years where we have been investing significantly into our infrastructure development. While having the largest loan portfolio in the country for more than 10 years, our footprint branch network is very, very limited. So last year, we opened four additional branches. This year, we are opening five new branches. that will offload some of the branches that we have and improve the service quality within the branches. And while, as I mentioned, our online banking penetration is more than 87%. Our branches serve less than 1% of all the operations that we do. We feel that slightly more branches will improve overall to meet our customer needs. Other than that -- other than these investments into infrastructure development, there should not be any unforeseen increases in labor costs whatsoever. So hopefully, 2027, '28, we'll see the cost-to-income ratio coming down.

The next raise hand is from Ben Maher.

Can you hear me?

Yes, go ahead.

So two quick ones. The first one is again on asset quality. Obviously, there's another quarter of good performance in that area. But I appreciate the tensions in the Middle East have a bit of a lag effect on credit quality. Just interested on how the metrics have performed in April and the first week of May. And then my second question is just on M&A. You delivered a 27% return on tangible equity during the quarter. Obviously sets a very high bar in terms of potential M&A targets you can look for, and you're benchmarking that against the ROI of a potential acquisition. So I was wondering if you're seeing any targets that offer those kind of returns? Or are you still quite happy just to redeploy everything back into the business?

I'll take those. So in terms of the some negative signs of -- on the credit quality side, we don't see any major -- we don't expect any major changes in fact. So it's -- definitely, we are seeing higher -- slightly higher inflation, and that may have some effect. But overall, the first quarter, including March numbers in Georgia came very strong as well. So we increased the economic prediction for the full year for the real growth. So we don't expect any change in terms of the credit quality of our portfolio. In terms of -- what was the second question again?

Just on M&A, obviously delivering -- the business is delivering very good...

Yes, in terms of M&A, it's very difficult to find a combination of a case where you have a real growth of 8%, 9% and the stable currency and the corporate governance that we have in both countries. So it's that it will be difficult to repeat. Having said that, there are some very interesting markets in South Eastern Europe and Central Asia, and we are looking for acquisition targets. Having said that, we'll be always deciding in terms of what's better and how to deploy the capital is it with the acquisition or buying our own stock. So that's the benchmark that we'll be using to decide to go or not to go in different markets. But yes, there are not many markets that are delivering similar kind of returns with stable currency.

I don't see any further questions at this point.

Very good. Thank you very much for joining this results call, another strong quarter for all of us. And more importantly, I think looking ahead, we are looking at a strong growth or at least we are expecting a strong growth in both of the economies. And as quality of the franchise remains at the highest level we have ever been historically, we are there to benefit from all of this and contribute to it in ways that we can. So thank you for your support and interest, and stay tuned for more news in the second quarterly results call in [indiscernible] quarter.

Thank you, everyone, and take care. Bye-bye.

[indiscernible] joining Lion Finance Group PLC's results call. Today, we are presenting our results for the fourth quarter and the full year of 2025. My name is Nini Arshakuni. I'm Head of IR, and I'll be moderating today's call. I'm joined, as always, by the Group CEO, Archil Gachechiladze. We also have on the line the CFO of Ameriabank, our banking subsidiary in Armenia, Hovhannes Toroyan; and our Group Economist, Akaki Liqokeli.

First, we'll start with the presentations. And in the second session of this call, you will be able to ask your questions. And with that, I will hand over to Archil first for opening remarks, and then we'll dive into our performance and the operating environment. Archil, you can go ahead.

Thank you, Nini. Hello, everyone. Thank you for joining the call. I will just have opening remarks followed by the macro review by Akaki. So as you can see, we have delivered a record quarter and a record year, in fact, with our net income growing by 20.9%, just shy of GEL 2.2 billion, delivering 28.4% return on equity. And in the quarter, that was just above 30% return on equity with 35.5% cost-to-income ratio and cost of risk, which is about half of what we usually expect through the cycle. So for the quarter, it was 0.3%, but then for the full year, it was 0.4%. Both of the strong franchises have delivered very good increase in the quality of the franchise, which we measure by the satisfaction of the customers as well as the pickup of the monthly active users on the retail front. And also, both of the franchises delivered above average or above expected or above guidance growth in our portfolio, especially on the credit side, but also on the deposit side.

So we are quite happy with the results, and I would like to thank our Armenian and Georgian colleagues who have done a very good job in 2025. And as a kind reminder, Ameriabank full year -- in 2025 was the first year when Ameriabank was the -- for the full year part of the Lion Finance Group, hence, the renaming, as you know. And as you can see, it has delivered substantial good growth, not only on the balance sheet side, but also on the retail coverage side.

With this bright note, I would like Akaki to cover our macro. As you know, both of the countries have enjoyed a record-breaking macro performance over the last few years, which is continuing year-by-year. So Akaki, would you tell us what to expect?

Thank you, Archil. Hello, everyone. I will be presenting the macroeconomic update for our core markets, Georgia and Armenia. Starting with growth performance, 2025 was another strong year for both countries. The Georgian economy expanded by 7.5%, fully in line with our expectations and supported by strong consumption spending and resilient external inflows. Meanwhile, Armenia surprised on the upside, delivering 7.2% real GDP growth.

For 2026, we expect this strong growth momentum to persist, supported by ongoing strength of services and public capital expenditure. Real GDP growth in Georgia is expected at 6% and within the range of 5.5% to 6% in Armenia. Due to this strong growth in recent years, as you can see on the right-hand side, per capita income levels in both economies have been steadily growing and converging towards Central and Eastern European peers. While the baseline outlook remains positive, uncertainty is still elevated. Geopolitical tensions in the region creates downside risks. However, both economies are well positioned to withstand potential shocks, supported by solid macroeconomic buffers and prudent policy frameworks. Upside opportunities could also emerge, especially from the ongoing implementation of the historic peace agreement between Armenia and Azerbaijan.

Solid external inflows have also supported local currency strength. Georgian Lari and Armenian Dram have been relatively stable in recent years, recording modest but consistent gains against the U.S. dollar. Notably, real effective exchange rates for both currencies have stabilized, reinforcing our assessment of that currency valuations are broadly in line with fundamentals and supporting stable medium-term outlook. Currency strength is also important for low and stable inflation, which the 2 countries have enjoyed in recent years. The recent headline inflation uptick in Georgia is mostly related to food price pressures and core inflation remains low, reflecting well-anchored inflation expectations.

Over 2026, we expect inflation to stay close to the Central Bank's 3% targets in both countries, underpinned by prudent monetary policies. In the second half of this year, we see a room for around 50 basis points cuts by National Bank of Georgia, while the policy rate of the Central Bank of Armenia is expected to remain unchanged as the current policy stance is assessed as broadly neutral. Both central banks have been very active in accumulating foreign currency reserves due to strong foreign currency inflows and stable exchange rates. By the end of 2025, current exchange -- foreign currency reserves reached record high levels of USD 6.2 billion in Georgia and USD 5.1 billion in Armenia. Importantly, the current reserve levels are above the minimum adequacy thresholds, and they continue to increase.

Another key pillar for macroeconomic stability is prudent management of public finances. Georgia and Armenia have demonstrated fiscal discipline over the years. The Georgian government remains on a consolidation path with tight management of fiscal deficits at 2.5% of GDP and declining debt-to-GDP ratio. Meanwhile, the Armenian authorities have been successful in balancing ongoing spending needs with fiscal sustainability objectives. Despite elevated fiscal deficits in recent years, they managed to keep debt-to-GDP ratio broadly unchanged. This year, we expect fiscal policies in both countries to remain sound and supportive to growth, particularly through sustained public capital expenditure.

And lastly, financial sectors in both countries have benefited from favorable macroeconomic environment and continue to support growth. We observed solid and strong expansion of lending, lower levels of loan dollarization and solid capital buffers.

So this concludes my part. Back to you, Nini.

Thank you, Akaki, for the overview. Now we're back to Archil, who will discuss our performance first in Georgia.

Just one second, let me share the presentation. So in Georgia, the numbers were, as we said, ahead of our expectations. So our net profit for the quarter was just shy of GEL 460 million, which was 17% growth on year-on-year and return on equity of 32.7%. And in terms of loan book growth, we were at 16.1%. As you may remember, we guide 10-plus percent. So 16% was a strong showing. And our digital monthly active users continued to grow by 15% year-on-year, reaching 1.8 million. We have our retail app and the business mobile app, both quite capable applications that do a lot of different things, and we have a list here. But what's interesting is that second year in a row, we won the World's Best Digital Bank by Global Finance. And there were very big names in the run-up at the end, big mobile digital banks basically, the biggest in Europe.

So in terms of the monthly active users, you can say that we are up by 15%, but also on a daily active, it's up by more than that, which was 24%, achieving just shy of 1 million customers, which gives you an idea that the engagement is increasing. Customer engagement is ever increasing number, which is very good showing. Also on the legal side, so on the company side, we had increase of 14% year-on-year, achieving 133,000 companies that use our mobile application. And obviously, Internet then is used there as well.

We are increasing our sales with digital and there, we have achieved new highs of 71% in the fourth quarter, achieving 71% of all products are being sold digitally. And you can see that in loans as well in deposits, we are increasing the share of sales which are done digitally. And that is based on small differences or small improvements that we do through to each product.

On the Net Promoter Score, which is part of our DNA, no customer satisfaction and the focus on that is part of the DNA. And this NPS is more like a quick measure of how we are doing overall. We have achieved new highs of 76 showing at the end of December and it just shows you that our franchise is enjoying a high moment or the highest quality it has ever been, in fact.

In terms of our payments acquiring volumes, we are up by 22.6% and market share of 55.8%, 0.1% down year-on-year. But basically, it's the strongest showing. As you can see, what makes me also very happy is number of people using our Visa, Mastercard or, let's say, the cards, not just Visa, Mastercard -- Visa, Mastercard and AmEx, because AmEx debit is something that we do as well. It's up by 13% year-on-year to 1.64 million people in Georgia, which is -- it keeps us -- it makes us happy to see that although we are a leading retail franchise in the country and in the region, we can say -- is also we can say that it's still increasing double-digit number of people using our cards on a monthly active user basis, which is something that makes us happy and lays a strong ground for further growth going forward.

Our loan portfolio, as we discussed, grew by 15.9% or 16.1% in constant currency basis. On a quarterly basis, that was 4.5%. Deposits continued to grow 13.6%. Having said that, and we'll discuss it later that high liquidity is weighting on our NIM. So we would like to go below 40% market share. We are at 41% and we would like to do it so that we don't hurt the franchise so that people still have Bank of Georgia as the top choice for keeping their money.

On the capital position side, as you can see, there are very strong buffers there on the liquidity side, slightly higher than we usually keep. On this note, I would like to ask Hovhannes to cover the Armenian side, which has delivered fantastic results, please.

Thank you, Archil, and greetings, everyone. I'll be showing the presentation. Yes. So as Archil mentioned, this quarter was another breaking record quarter for us in terms of performance. Our net profit for the quarter grew 38% and annualized stand-alone net profit grew about like 24%. Our return on equity was 26.8%. And the loan portfolio growth was also astonishing 28% in constant currency basis, and this was very diversified between both retail and corporate portfolios. Our time deposits grew 33% year-over-year, showing the very strong trust of our customers towards our franchise. Total attractions from customers grew 22% on a constant currency basis. And again, we are very happy with this. All these are well above the benchmarks and guidelines that we have shared earlier.

We are very happy also to mark that our MAU and DAU ratios are growing at astonishing over 25% per annum. In terms of digital infrastructure, we do continue to heavily invest into improving our digital infrastructure, both internally as well as customer-facing part. And our mobile app has already incorporated most of the beyond banking services. So it has become a very good ecosystem for our customers to meet a number of their needs, including investments in terms of brokerage, my home, my car and so on and so forth.

We have enhanced the digital payments in our ecosystem and mobile application. And technically, the number of transactions through our online banking have more than doubled within 1 year's span. We have launched our loyalty program in Q4 of 2025, and we are very happy and enthusiastic about it. We hear a lot of compliments from customers already. So we do believe that it's going to be another very strong pillar for us to bond our long-term relationship with our customers. And again, we do continue to invest heavily into financial education, both for the kids as well as for the adults. And MyAmeria Star is the application targeting kids and mostly educational part of that. And we are very happy to see the uptake on that as well.

We do have very positive dynamics in terms of coverage of retail sector. Here, you can see more than 45% of growth for MAUs and DAUs. And we are currently serving 1/3 of the adult population of Armenia, and this gives us much bigger opportunities for growth in the local market, and we are very happy with it. At the same time, I cannot fail mentioning about very positive dynamics of digital uptake and engagement ratios that show that whatever improvements we are doing into our systems are actually to the benefit of our customer base.

In terms of portfolios, the very strong macroeconomic situation in the country leads to very healthy and positive demand for loans. And you can see that we were able to increase our loan portfolio by 28% in Q4 of 2025 year-over-year. And we do expect to see very positive dynamics going into 2026 as well. As I mentioned, the growth has been very balanced between retail and corporate. But within retail portfolio, we see that the share of consumer loans is growing a bit faster than mortgages that constitute about half of the portfolio of the retail banking in Armenia.

Deposits and attractions from customers are also growing very, very fast. And we can see that 22% roughly growth of total attraction from customers comes to prove it. It's very important also to note that 60% of our deposits already constitute deposits in AMD. And this is a result of a rapid increase of the number of customers. Over the last year only, we have increased the number of customers by 33%. At the same time, it is also a result of the very stable macroeconomic situation and very stable currency of Armenian Dram.

Ameriabank has been continuing to improve its market share. We are at 21.7% in terms of loans and 19.5% in terms of deposits. And as we have announced earlier, this really shows the additional growth opportunities that we see in the local market. In Q4 alone, 96% of all the loans disbursed by Ameriabank retail sector were loans that were underwritten through our online channels, technically AI and machine learning based underwriting algorithms that cover it. That gives us opportunity to reach out to technically any Armenian citizen across the country with very low costs.

In terms of liquidity, just like the Georgian peer, we have been over liquid towards end of the year. You can see from the ratios. And at the same time, in terms of capital position, I want to mention that while technically, the capital position was tight by the end of the year, we did enhance our capital position already in December. It just came into factor in January when Central Bank of Armenia approved it as part of our regulatory equity. We're talking about EUR 30 million. And effectively, by end of January, our capital position was only 17.5%. And later in early February, we were able to do the first inaugural USD 50 million AT1 notes that will elevate our capital position by another 86 basis points further. So we are very confident on both in terms of our capital position and liquidity position. This is very short. I'm going to hand it over back to Archil. Thank you.

Thank you, Hovhannes. Those are very impressive results from Armenia and Armenia is continuing to deliver very strong results also on the macro side. And as Hovhannes mentioned, it's very good that we are increasing the number of customers that we are serving. And having said that, we only serve about 1/3 of the adult population in Armenia. So there's plenty of growth that can happen there.

So now I will summarize what it means for the group results. So overall, the operating income up by 16.4% in the quarter and by 20.8% for the year, as you can see here, the net interest income was very strong showing of 19.9% for the quarter and 25.9% for the year. The reason why we don't show Armenia here for the year is that in the base year of 2024, 1 quarter is omitted. So it will not be a right comparison. As you remember, we acquired the bank end of March in 2024. So net noninterest income was up by 10% for the quarter and by 10.8% for the year. And I'll discuss a little bit there because there was some details there that we should discuss. And we did disclose it in the results. But I'll just mention that in the fourth quarter, net fee and commission income was up by 33.8%, but that was partly due to the fact that we got a new deal from the system providers for the card payment system providers, which was starting from the 1st of April. So it covered the last 3 quarters. In fact, it was booked in 2020 in the fourth quarter.

So we got a few questions earlier today that what should you think going forward? And on the net fee and commission income side, I think going forward, we should expect growth to be somewhere between 15% and 20%, so on the high teens side because it -- not only we benefited for the last 3 quarters, but we benefit for the next 5 years with improved terms with the system providers.

On the net FX side, we have seen a decrease in both markets. On an annual basis, it's up by 5.1%. So there, I think it's important to note that both of the currencies have been very stable. So we make more money at better margins when the volatility is there. volatility has been down. The competition has increased as well in Georgia specifically. But especially when you have a one-sided bet when the currency is getting stronger and the National Bank provided a backstop to about GEL 2.7, GEL 2.68 per dollar. That basically is a one-sided bet. It's hard to make money there. So that's what we have been experiencing, similar kind of trends in Armenia as well. But if there is volatility, we'll make more money. If there's no volatility, we will be flattish to slightly increasing going forward. So I think it's already reflected that low volatility is already reflected in the numbers. And going forward, we expect positive dynamics.

Operating expenses were up by 14% for the group on the Georgian side, slightly higher than the revenue. But going forward, as we said, that overall as a group, we are expecting to have neutral or positive operating leverage. As you can see, in the fourth quarter, the group was 35.2% cost income, but notably, Armenian side was 40.5%. That kind of drop is partly for the cost control and partly due to the fact that third quarter was the last one where we amortized the retention bonus arrangement that we had with the key managers of the bank. So going forward, as I said, we expect neutral to slightly positive operating leverage going forward.

Loan portfolio growth was well ahead of our guidance, close to 20%, 19.7% and the last quarter was 5.8% where Georgia, as we said, contributed 4%, 4.5% and quarter-over-quarter growth in Armenia was 8.5%, which was very significant. Overall, I think Hovhannes did mention that 28% was ahead of our expectation in Armenia in terms of growth. But what's interesting also is that last quarter -- fourth quarter of 2024 was a very big jump in loan growth. So with that high base to grow at 28%, especially on a Q-over-Q basis, you get the idea that the activity was very strong. Armenia overall is -- there's a lot of positive dynamic happening there and a lot of businesses are expecting to grow. So on the deposit side, we grew 17.3%, as you can see the breakdown there as well. Both of the franchises are enjoying very high liquidity, which shows strength on one side, but it also is a weight on our cost of interest.

Net interest margin was slightly reduced in fourth quarter, as I said, partly due to the fact that it was increased cost in Lari and AMD. So local currency is becoming both markets, in fact, higher proportion and the costs there have been a bit higher. That will be a big focus going forward over the next couple of quarters.

Cost of risk, we were down at 0.3%. So for the annual costs came 40 basis points. Our NPL ratio remained 2.1%. And although we had a slight increase in Armenia, but slight decrease in Georgia. So overall, as a group, we are at 2.1% NPL ratio, which is just fine. In terms of NPL coverage, mainly the decrease there is automatic. We didn't change any rules. In fact, the main reason why that change happens is because the proportion of the NPL ratio is increasingly towards the unsecured. So there, basically that's what it's resulting.

Profit before one-offs, as you can see, we had 22.7% growth in the quarter. So it was a very strong quarter, in fact, a record quarter. And for the annual growth was also by 20.9%, which is very strong and Armenia played a very good role there. With return on equity for the quarter at 30.1%. Nowadays, every time return on equity starts with 3%, I'm relatively happy. And for the full year, I was less happy because it was 28.4% and not starting with 3%, but who knows.

Return on average assets, as you can see, was up slightly from the previous quarter and for the full year, it was 4%. All in all, I think it's something to note that leverage ratios in Georgia and Armenia are very low. So we have almost twice as much capital as our peers in Eastern Europe. As a result of this, we have declared a dividend, which is an increase for the full year of 16.7%. Having said that, we are laying significant buffers in both banks for strong growth because we have been -- over the last 3 years, in fact, we have been growing more than we indicated as our medium-term guidance, and we want to be able to have that flexibility of deploying capital where the growth opportunities are.

For example, in Armenia, we did indicate at the acquisition that we were going to deploy the retained earnings, which are quite strong, to fund the growth. And that is very important to have that flexibility and ability as a group, which is well funded, on one side, to pay dividends, which is growing year-by-year and a CAGR of 28.8%. But just last year was 16.7%. And going forward, we expect positive dynamics there as well as ability to deploy our capital in growth opportunities, be it organic or inorganic if it comes along. That's basically that.

And as a reminder, our strategy is to be the main bank for our customers and be excellent in customer experience and with our eyes on profitability with annual book growth of about 15% and profitability of 20-plus percent, over the last few years has been closer to 28% to 30% and dividend payout ratio between 30% and 50%. And there, we have, as indicated, in fact, a couple of years ago, we've been on the lower side, which reflects our higher than guided growth over the last 3 years. That about that.

And let's open up for questions because I think questions -- Q&A is usually the most interesting part, not only for our audience, but also for us.

Yes. So we can open the floor for questions, and we have a few raised hands from the analysts. So the first will be Sheel Shah from JPMorgan.

Great. I've got two questions, please, if you can help me. First, can I ask about the NIM outlook for the business going forward in the context of rate cuts coming in Georgia or expected some of the funding pressures you've seen in the fourth quarter. And then you've also said the local currency deposits, you're going to be focusing on those, I presume on the cost of those going forward. So I'd be interested to hear, firstly, on the NIM outlook of the business going forward.

And then secondly, I'd like to know a bit more about the tech infrastructure of the bank because we can clearly see the output of the tech in terms of the NPS score, the growth in the number of mobile active customers, the number of sales on the digital channel. But I'd be interested in how many of your applications are on the cloud? What sort of platforms are you using? How many core banking systems are you using? What are you doing in terms of AI, which I noticed is newly on the slide. So a bit more information on the tech stack would be interesting, please.

So on the NIM side, you did mention all the negatives, and you didn't mention the positive, which is deploying this extra liquidity. I mean, we are drowning in extra liquidity, which we either will deploy or push out of the bank. So that's -- so on balance, we'll either be flat to slightly positive on the NIM side, and that's in both markets.

On tech side, we are either the largest or second largest technology company in the whole region. We employ 1,000-plus tech specialists either or digital specialists, in fact, be it on the programming side or just digital workers. We have translated that into the good numbers as well on the customer acquisition side as well as the balance sheet growth. A few years ago, we basically -- first of all, our core banking in Bank of Georgia is homemade. So it's fully homemade as well as the main applications, the retail app and the -- on the mobile app on retail as well as business. In Armenia, I'll ask Hovhannes to cover it in a couple of minutes, but mostly homegrown there as well.

But basically, we have a few years ago, said that we want to be on cloud or cloud ready. So about 3, 4 years ago, we started to integrate that thinking in the design and everyday development, and we have been chopping up our core system into smaller pieces connected with APIs, which allows for the scale up not to be too expensive in different parts of the business. So it's -- many parts of our data is on cloud and the rest can be on cloud any minute, but it's a cost-benefit exercise on which case because -- yes, that's because it's not cheap. But otherwise, in terms of technical capability of putting everything on cloud and having it in smaller pieces, 90% is done. I mean there are small pieces that we are rewriting and changing. But otherwise, it's very well developed.

Also on the AI side, we are experimenting in many different directions. Chatbot is the most obvious one, but we have done a lot of different testing of different capability now in the processing, payments processing, AML and other types of applications as well as on the risk and underwriting. So there's -- while we focus on AI, a lot of times, we understood that there's more to be done on the automation side. So there's a lot of work going there. But not much more to report there. Only thing I can say is that it's a big focus and going forward, it will deliver efficiency, but also more importantly, the speed of execution and quality, which will benefit our customers. Hovhannes?

Yes. In the Armenian operations, we are using the 2 major software from third parties. The core banking is from the leading provider in the country. And at the same time, CRM is one of the leading international solutions that we use. Other than that, the other major parts, namely mobile banking, online banking are internally developed. At the same time, we are also technically one of the largest technological companies in the country despite tech being one of the strategically important sectors for the country with a number of employees engaged into tech development that we have. And we also have this agile framework. So product teams are working through this agile mechanism. And we do deploy machine learning and AI in certain areas, namely in a number of areas to improve internal efficiency as well as to improve the customer experience.

For example, one of the latest beta types of the AI applications we've seen internally was analyzing the needs or potential needs of the customers to be able to come up with the best next offer for the customers. As I mentioned, 96% of all the retail loans that we've disbursed in fourth quarter were through our online and automated models, machine learning and AI models. So technically, for us, that means, a, underwriting process is 38x cheaper than it would have been through conventional lending technique; and b, it also means outreach to technically anybody on the territory of Armenia. And obviously, I mean, that's another perspective that we look at it. And clearly, we are also at the doorsteps on unleashing all the opportunities that these new technologies in hand for our sector. So we are very optimistic that we're going to be using AI in general wider with better benefits.

That's very helpful. If I can have just one quick follow-up. When you say that you have the potential for outreach to all of Armenia or all of Georgia, is this a direct-to-consumer method? Or are you using sort of online tools -- online aggregators? What's your method of distribution of these loans?

In case of Armenia, it's technically mostly direct. We are rarely using other platforms as an aggregator to outreach our customer base. But technologically, and we do have a number of customers today that can become a customer of Ameriabank remotely sitting on their couch. They can apply for a loan remotely sitting at their home or office. So this actually -- with the pretty significant penetration ratio of mobile and Internet usage across population, we see our digital platforms, our own digital platforms gaining very good and positive traction over the last few years. And that's actually also being represented by more than 45% growth of our MAUs and DAUS. As I said, our transactions more than doubled, 96% of retail loans through online platforms. So all these are kind of early indicators that whatever we have been doing for the last 4 or 5 years are actually kind of giving their results already.

I'll cover the Georgian side. So we have 1 million users daily in the country of 3.7 million people. So short answer is, yes, we do it directly. And the long answer is that we are the biggest brand, not only in the financial intermediation where the top of mind is 57%. But we are the biggest brand in the country, period. I mean, it's bigger than any other brand. So when we say, do we do it directly or not, yes, we do it directly. We still have a very significant branch network, very significant ATM network. And we are the biggest brand in the country overall and plus in finance. So that basically gives you an idea that we are not the back office or some kind of intermediary, but we are the main intermediary in the country.

So the next question is from Alex Kantarovich from Roemer.

Yes. Can we please differentiate between outlook for loans between Georgia and Armenia. Clearly, the dynamics are somewhat different. This is my first question. Yes, and I'll follow up with the second one.

[indiscernible] I'll do it. So 10-plus in Georgia, 20-plus in Armenia.

That's very short and sweet. And if I can address the elephant in the room, inclusion in FTSE 100, do you expect it to happen imminently?

As economists like to say, all else being equal, yes.

Yes, that's great. That's great. And finally, I appreciate that you deploy your capital very, very efficiently. But is there a scope for increasing the levels of distribution from 30%.

Absolutely. But as long as we grow at 20% instead of 15%, as long as we are open to the M&A opportunities being major banks and smaller economies, and such opportunities may come along, we would like to keep a little bit of buffers there. If either one or the other don't play out for a longer period of time and we grow at, I don't know, 12%, 13% instead of 20%, like we have been growing over the last 3 years, then of course, we will return more capital and our distribution is between 30% and 50%. So I think it's a mirror image. So either we grow more and we deploy capital.

And I think we have been very disciplined and showed to our investors that we don't throw around the money. So we either deploy it in businesses which are generating 25% to 30% return on equity or we are looking at acquisitions of similar kind of returns. So if this doesn't happen, then of course, we will return more. But I hope it will happen. So until those things are happening, we will be on the lower side of the distribution guidance of 30% to 50%. And if it happens less, then we'll grow capital returns.

The next question is from Jens Ehrenberg.

A couple of questions from my side. Firstly, just on Armenia, I suppose it's very good to see more sort of digital uptake there. It feels like with sort of 11% of penetration, the growth headroom there is still really enormous. Is that the right way to think about it, given you're sort of roughly 47% in Georgia. Is the opportunity really that big.

Secondly, on Armenia, I think we've had quite a material improvement in the cost-to-income ratio in the fourth quarter. And I appreciate you touched on that earlier. But just going forward, is sort of the low 40s level, do you reckon that is sustainable for Armenia going forward?

And then lastly, I suppose, on the Georgian side, I believe we had -- one of your key competitors talk about their strategy yesterday and the intention to try and grow more on the retail side in Georgia. Just curious to see how you see the competitive situation on the ground at the moment and really what you expect going forward there?

Hovhannes, do you want to take the opportunities of growth on the Armenia side?

Sure. We have indicated earlier that currently for midterm, we do envisage to grow our market share to 30%. So this is our midterm strategic objective as of today. Obviously, I mean, that's going to be a moving target as we go forward. And you have seen that over the last few years, we have improved our market share significantly. And we do anticipate to be outperforming the market in the year 2026 and next 2 years as well. So in that case, theoretically, maybe in a bit longer term, we could get closer to the market share where our Georgian peers are, but current target is at 30%. So that's kind of where we want to be first, and then we'll see how it goes.

In terms of cost-to-income ratio, we do believe that the ratio that we have reported in fourth quarter is more than sustainable. Moreover, as I mentioned, a number of initiatives that we've done within the bank have significantly improved our cost base. So we do expect to continue in that direction further. So I would say I would not be very surprised to see the higher 30s in terms of our cost-to-income ratio in the coming years.

Yes. Regarding the competition, I think, first of all, I cannot comment on competitors' statements. The only thing I can say is that competition on the ground in each and every direction is nothing new. So as you can see, over the last 20 years, there has been a pretty strong competition between the 2. Having said that, I think both players have been cognizant of the fact that they don't want to destroy the profitability. So I think we are seeing a significant push and effort on the side of the quality, in terms of user experience, in terms of easiness of use, et cetera, et cetera. And all of that, I think, will continue. Having said that, we believe that we are very well placed to continue delivering the strong numbers well ahead of the whole banking system.

So we have the next question from Ben Maher from KBW.

Yes. Just got a couple of questions. The first one is on market shares. Obviously, you mentioned you've been growing it in Armenia. I noticed there was a small decrease in the quarter in Georgia. I was just wondering if there's a particular reason for this? And also, could you just please clarify your -- I think there was a point on liquidity where you said you wanted to keep the deposit market share below 40% in Georgia.

And my second question is just on consumer lending. It has been very strong through the year. Is this just household releveraging? Or do you think that's potentially early signs of some financial strain. I will say asset quality has been doing very well. So just interested in your thoughts. And then on the share of time deposits in Armenia, that's risen year-on-year, although it was down slightly in the quarter. How do you expect the share of these deposits to evolve in 2026?

I think, Ben, I would not read too much into the quarterly changes of market shares. They are rather volatile. So let me show you the -- what you're referring to. So you're referring to this change here, the last quarter. And I would say, look at the longer term, look at 10 years or more. For this particular year, you can see that 37.6% has become 37.8% for the full year. So it's flat to slightly increasing and competitors' numbers are different. So that's that.

And in terms of the retail deposit market share also is very strong. Here, on the total deposits, we're trying to decrease it below 40% without losing the preferred status in people's mind in terms of keeping their money. So we feel very strong on the local market, in fact. So when you look at the -- I think the key characteristics when you look at the quality of the franchise is the NPS score, which kind of is like a body temperature measuring the health of the service. But inside, there are a lot of different subsegments. Top of mind, most trusted, those are some of the things that we are watching at, and all of those are basically at record highs. So we are in a very, very strong position. I can say that probably the strongest position that the franchise has ever been in terms of the quality of the franchise. And that's on the back of a very strong macro performance over the last few years and double-digit growth of average incomes as the unemployment rate comes down. So overall, very strong macro and a very strong franchise. So that's the combination that we have and very similar in Armenia. Hovhannes?

Yes. It's very similar technically in Armenia, but we do expect to grow, obviously, our market share in the coming years, as I already mentioned. In terms of the structure of deposits, I think it would be fair to anticipate similar changes in coming years because we do anticipate very stable macroeconomic performance and FX exchange rate in the country. At the same time, the more we cover retail segment, the more AMD-denominated deposits share is going to grow over years. So I'm not sure about the same dynamics in terms of the speed of change, but it would be fair to expect that in the coming years, share of AMD deposits and current accounts will be slightly growing.

Great. Sorry, on the consumer lending, strong growth. Is there any obvious reasons behind that you see in both markets?

So consumer growth in both markets has been very strong. In Ameriabank, I think it's partly due to the fact that our offering has become much higher quality in terms of the user experience and the reach in terms of offering has been much wider as well. In Georgia, we are in a leading position, and we have seen Georgian consumer, their incomes growing double digit 5 years in a row and first 2 years was high teens as well. So I think it's a very strong base. We are not seeing any signs of any credit quality deterioration. We watch it very carefully in different subsegments of credit. So yes, so no signs whatsoever at this point. And in fact, if anything, there are very, very strong signs on the credit quality side on all around.

The only part where we saw a little bit of issues were smaller hotels in the regions, which is like 1% of portfolio or less. And there, we have tightened the underwriting 2 years ago, and we described it in different qualities. But in terms of the large corporate, in terms of real estate, in fact, there was a big focus, and we have seen a much stronger performance than anticipated. In terms of all different types of consumption, investment, there has been a very, very strong performance all around. And in fact, people underestimate the amount of investment portfolio that is geared up to invest in a lot of different segments in Georgia, especially on the energy side, especially on the logistics side and other things. And Armenia is slightly different sectors, but same. Please, Hovhannes?

Yes. I mean, I'm totally in the same line. So technically, the disposable income of the households over the last 5, 6 years have grown immensely. And as Archil mentioned, our digital propositions have improved. But also, please keep into consideration that during the last 2 years, we have doubled the number of customers that we're serving. So technically, in our case, we have also this very significant growth of the customer base. And clearly, this also is additional market for us to go out there and present our different propositions, including consumer finance opportunities.

So we have another question from [ Dmitry Vlasov ].

Congrats on a very strong set of results. So my first question is about cost of risk. You have a guidance of around 100 basis points over the cycle. And my question is, do you have a view for 2026? And how will it be different for Armenia and Georgia?

The second question is about the potential M&A. Is my logic correct that it's mostly about the right opportunity, right timing and the right price rather than you waiting to maybe scale Ameria first and then sort of deploy capital elsewhere. Yes, those are the two questions.

On the cost of risk side, you rightly said that between 80 to 100 basis points is through the cycle guidance that we provide. Having said that, we've been well below those numbers when the macro growth has been bigger and the performance has been much stronger than average in the history for both countries. And I think you can apply that rule. In terms of the M&A, you're absolutely right. I mean, we are opportunistic. So we scan different markets, and we look for the right opportunity and right price, and we are quite disciplined about it. So we don't have to do any M&A. But if the right opportunity comes up, we would like to be in a position to do that. So that's our approach. So it may be that we do something and maybe we don't do anything.

And in terms of what we are looking for, we are looking for major players and that by -- just by our scale, that means that we're looking at smaller markets, unfortunately. But we do prefer to look at well-established players. And in fact, if we can add value in terms of applying our approach to customer care and technology, usually, we do, we like those kind of stories where it's a well-established player, and we can add value by putting some of the approaches that we have to customer care and technology in place. And that, I think, can be very beneficial for the franchise, for the country where we may be going as well as for our shareholders.

Also, we look at -- we don't like turnaround stories. So banking is a leveraged business. So we are very careful there. And we like good teams. We are very lucky with the team in Armenia. It's a fantastic team, and we have done everything possible to retain the whole team, and we are very happy to see them stay and deliver fantastic results. We may not get as lucky every time, but that would be the idea.

That's very clear. Maybe one small additional question, if I may, about how 2026 started for you so far? Is it in line or maybe even a bit above your expectations?

2026 started very well. So a strong start.

We have one more question from Simon Nellis.

Apologies if this question has already been asked because I had to drop off just for a little bit. It's around your capital return strategy going forward because I think you've been at the lower end of your guidance range as you reinvest into the Armenia business. Is that still the case? Or are you going to up the payout over time?

Until we are able to grow at the rates which we have been growing, which is blended 20%, probably we will be on the lower side of the capital returns. Also, I think our buffers allow for us to be a bit more opportunistic if nonorganic comes along. If one or the other of those do not happen, then obviously, we would be increasing to the higher side of that guidance, which is between 30% and 50%. So we've been on the 30% side. But obviously, as things mature, then we will be increasing that significantly. But Short term, I think we are luckily in a situation where we're growing well above our midterm guidance.

And are you still reinvesting the dividends into -- I mean, you're not paying dividends out of Armenia and you don't intend to.

We have not, but we will be looking at slight upstreaming, especially because we have had ability to put the Tier 1 instrument in place, which provides significant buffers there. But we'll be watching the growth opportunities there. Quite frankly, I believe that Armenia has been doing very well. In fact, as a macro story and geopolitically, they are huge positive moves. And when big investments happen, I mean, there have been just a couple of big investments, so honestly, you want to mention that have been announced.

Yes. Very recently, the Vice President of the U.S. was in Armenia and around this whole peace treaty and TRIPP corridor, there have been mentioned several very significant investments into AI, data center, technology institutions, nuclear power plant and a number of other infrastructure projects like railway, roads and so on. So we are talking about USD 4 billion to USD 9 billion of potential investments into the country. And for our economy, it's really huge and the potential positive impact of that on the economy and subsequently on the financial sector could be really very decisive in the coming years.

So Simon, all of these positive things, they need banking, and we want to be able to bank them properly without much limitations. And I think our capital position and liquidity position allows us to be flexible. And if we find that we are growing at, I don't know, 12% instead of 25%, then we return more capital. I mean we are quite cost conscious and quite disciplined on capital side, and we act as shareholders, in fact. So yes, I mean, so far, we have been growing more than we guided medium term, and that's true for the last 3 years in a row, almost 20% growth of balance sheet. And going forward, if that continues, we'll be returning capital, but on the lower side. And if we grow less, then we'll return more capital.

So I don't see raised hands. There is just -- maybe two questions that I'll read. One is on Armenia. Can you please confirm the growth in Armenia is self-funded? And also if there are any inorganic growth opportunities in Armenia. So there is two questions.

Yes and no.

In Armenia, we are self-funded in terms of not receiving any funds from within the group. So there are not any intra-group funding allocations or capital allocation as of today. But at the same time, we are also very actively working with a number of development financial institutions. And in 2025 alone, we were able to attract USD 400 million equivalent funding from the DFIs that also improved our liquidity position in foreign currencies. It's kind of long-term financing for us to be able to serve the needs of our customers. So technically, as a fully independent entity, yes, we are funded by the funds of our customer base as well as our partner DFIs, if that's the question.

And then this question is for Archil on MBS. So it says a couple of years ago, you said you won't push on MBS as hard given the costs associated with it, but yet it keeps improving. How did you do it?

Just can't help it. It's part of DNA now. I think customer satisfaction and the focus on that is key to long-term success of any franchise, especially when you are touching lives of millions of people. So I would keep that focus.

We don't have any more questions.

Excellent. On this bright note, I would like to thank you for your interest and for your support that we have felt not just today, but over the long period of time, for your trust. And I would like to thank the Armenian and Georgian team and the whole Lion Finance Group team for really doing your best and delivering consistently very good results. As long as we make our customers' lives better, I think we'll be in business and going well. So thank you for your support, and let's look forward to a very strong start of the year, and I hope some good news very soon as well. So thank you.

Thank you, everyone, and see you next time. Thank you. Take care.

Welcome to Lion Finance's Third Quarter results call. My name is Nini Arshakuni. I'm Head of Investor Relations, and I will be the moderator for today's call. I'm joined on this call by Archil Gachechiladze, our Group CEO; Hovhannes Toroyan, who's the Chief Financial Officer of Ameriabank, our banking subsidiary in Armenia; and Akaki Liqokeli, our Group Economist, who will be covering the macro.

We're pleased to report another set of solid results for the quarter with very strong customer franchise growth across our business operations in Georgia and Armenia. Our loan book grew 22% in constant currency. It was even more -- with even stronger growth in the Armenia operations. Overall, our profit for the quarter amounted to GEL 547 million, an 8% increase versus the prior year. Return on average equity stood at solid 28%. Cost to income was 35.3%, an improvement versus the prior quarter. And our cost of credit risk ratio was 0.5%, and we maintained robust asset quality across the whole business.

Before we dive into the details of these results, we'll first start with the macroeconomic developments, and Akaki will kick off, and then we'll hear from Archil and Hovhannes. And in the end, we'll open the floor for questions.

Akaki, now you can start the macro part, and let's move on.

Thank you, Nini. Hello, everyone. I will be presenting the macroeconomic update for our core markets, Georgia and Armenia. Let's start with growth performance. In the first 9 months of the year, both economies delivered solid growth numbers, supported by robust domestic demand and resilient external sector inflows. Accordingly, we have maintained our full year real GDP growth forecast for 2025 at 7.5% for Georgia and 5% for Armenia. That said, the uncertainty around the baseline remains elevated due to geopolitical instability in the region and domestic political tensions. Nevertheless, the demonstrated resilience of the economies, along with continued improvements in relations between Armenia and Azerbaijan has strengthened the outlook. And we have revised our expectation for 2026, is the strong growth will persist at 6% real GDP growth in Georgia and 5.5% growth in Armenia.

Importantly, our projections are in line with the latest IMF forecast, which place Georgia and Armenia among the top performers in the region in terms of average real GDP growth over the next 5 years.

Turning to the composition of growth. Both economies have increasingly shifted to domestic demand drivers, particularly consumption, which is supported by sustained increases in household income from employment and remittances. And ongoing fiscal expansion in Armenia is also helping in this regard. Investment spending is also contributing positively, aided by ongoing public infrastructure projects.

External sector inflows are also contributing to growth. The income from exports, tourism and remittances is increasing at a solid pace in Georgia. We also see that the inflows have gained momentum in Armenia after one-off highs registered last year. Also, the nontravel export of services, particularly IT and transport, demonstrate solid growth and contributing to overall hard currency inflows. The strength of inflows is supporting the stability of local currencies as well. Georgian lari and Armenian dram have been broadly stable against the U.S. dollar over the last 2 years in contrast to most peer currencies. The real exchange rates are also adjusting smoothly after strong depreciations in previous years. This is working through lower inflation with no impact on nominal exchange rates. We expect GEL and Armenian dram to remain stable over the medium term, supported by solid macro fundamentals and prudent policies.

Exchange rate stability is also essential for keeping inflation low and stable, which we have observed in both countries in recent years. However, more recently, we have seen some uptick in inflation in Georgia, where the headline number was 5.2% year-on-year in October. This is mostly driven by price increases on several food items from last year's low levels. And we expect this to be temporary and short-lived as inflation expectations remain well anchored as reflected in low core inflation numbers and the National Bank of Georgia maintains moderately tight monetary policy with the refinancing rate at 8%.

In 2026, as inflation pressures ease, we see scope for 0.5 percentage point cut -- rate cut by the NBG. On the Armenian side, the inflation is more stable, and refinancing rate is slightly lower at 6.75%. In 2026, we also expect a limited space for cuts within 25, 50 basis points. The central banks of Georgian and Armenia have been also very active in foreign currency purchases this year. And as a result, there is -- official reserve levels have reached record high numbers. And they are also converging toward the minimum adequacy levels. According to our estimates, [ $6 billion ] will be sufficient to reach the debt level in Georgia and [ $5 billion ] in Armenia, and those levels are quite realistic to be achieved in the following year.

Strong reserve positions are essential for macroeconomic stability as well as fiscal discipline that we also observe in both countries. Georgia remains on a consolidation path with tightly managed fiscal deficit within 3% of GDP and also the government targets to reduce further the debt level below 35% of GDP.

On the Armenian side, the temporary increase in spending needs has led to somewhat elevated budget deficits in the following years. But notably, this is -- more spending is going to CapEx projects, and the government is committed to maintain the public debt below 55% of GDP, and this is also supported by ongoing IMF arrangements.

Lastly, a few words about the banking sectors, which benefit from favorable macroeconomic conditions in both countries. Lending growth has converged to the nominal economic growth in Georgia. And in Armenia, we also see some moderation to more sustainable levels as the mortgage subsidy program is phasing out.

Loan dollarization has been stable after substantial decreases in previous years, which contribute to lower exposure to exchange rate risk and the asset quality remains solid with Armenia and Georgia among the top countries in the region in terms of low nonperforming loans according to IMF.

So this concludes my part. Back to you, Nini.

Thank you, Akaki. Now we'll move to discussing our performance in Georgia and Armenia separately, and Archil will first start with Georgian operations and strategic highlights, and then we'll move to Armenia.

Hello, everyone. Thank you for joining the call. Let me share the presentation. Nini, can you see me share the screen?

We see the screen. We don't see -- yes, now we see the presentation.

Excellent. So thank you again for joining the earnings call. We will discuss some of the numbers here. So I will present the operating parameters of our Georgia subsidiary, then Hovhannes will present the Armenia side, and then I'll summarize in terms of the overall revenue numbers and costs and so forth.

So the Georgian subsidiary had a very good showing of return on equity of 32% with 16% year-on-year growth in loans and 14% in deposits as well as continuing to increase its retail coverage with retail monthly active users achieving 1.74 million users, up by almost 15% year-on-year. Just a kind reminder basically that our mobile application retail as well as business is basically financial superapp with a lot of different capabilities, including not only daily banking and multicurrency accounts attached to a single card and so forth, but peer-to-peer payment and bill split and so forth as well as fractional trading on U.S. markets, low-cost fractional trading and many other capabilities.

And for that reason and not just that, but as our overall digital capabilities of the bank, we have been recognized second time in a row by Global Finance as the Best Digital Bank in the World, and in the run-up to this competition for the best in the world, there were some big global names, including Revolut and others. So it's -- I would like to congratulate our team behind this effort. And it is a nice achievement and recognition for our bank to have that given that our home markets are rather small on a global scale.

So what we see here is that we are going from strength to strength in terms of the monthly active users. You can see this number here, the middle gray line, which is up by 14.7% that I already mentioned. And the daily engagement is very good. Basically, it's about 50% now, which is very strong. What's also notable is that our business users are growing year-on-year monthly active user of our business mobile application is up 19%, which is quite incredible. In terms of the shares sold digitally, we have achieved a new high of 70%, which is very good. So more and more of our loans and deposits and cards and other packages are acquired fully digitally. And on top of that, our NPS score, we achieved a new high of 74% -- not percent, 74, I apologize, in terms of the NPS showing, which shows you the strength of our franchise and the satisfaction of our customers with our services and daily banking that they do.

That has translated into a 21% increase in terms of volumes of payments, that's POS terminals and e-commerce with a slight pickup in the market share year-on-year. Some people have asked the question in terms of this used to be 57%, that's restated to exclude peer-to-peer payment that went through the card rails, but that's not really an acquiring business. So we excluded that. And if you restated it for longer term, that's -- those are the numbers.

In terms of number of people using -- unit individuals using our cards, year-on-year, it's up by 13.9%. So given our high penetration, it's an incredible number, well above 1.5 million now. And so it's 2.5% up Q-over-Q.

Loan growth was 16.5%, constant currency, 16.1% and a quarterly number of 3.6% on a constant currency basis, which is very strong showing the markets growing about 13%. Deposit was up also by 14%, a slight bump on a quarterly basis. Capital position remains strong. CET1 and Tier 1 is a big focus, obviously, because the sub debt is widely available for a number of providers. So it's more tightly managed. But this is plenty of capital. And as a reminder, we target a management buffer of 1.5% above the minimum requirement. We can go slightly lower, if need be, but basically, that provides a slightly higher cushion that we target.

Now I would like to ask Hovhannes to step in and present the shiny results that Ameriabank has.

Can you see my screen?

Yes, Hovhannes. Yes.

Yes. Perfect. Thank you, everyone, for your time. For the Armenian operations, I want to mention that our profit grew 22% year-over-year to reach GEL 111.5 million. Our return on equity also improved quarter versus quarter to reach 21.8%. As Archil already mentioned, both loan and deposit portfolios grew at significant rates, namely loan book grew 36.5 percentage point in constant currency basis and deposit portfolio grew 28.6% again, in constant currency basis.

We continue our expansion in terms of acquiring more customers. And here, you can see that both total customer base, monthly active customers as well as MAU/DAUs are increasing pretty solidly, and I'll be talking about it on the next slides.

Here, again, likewise, we're working on developing superapp locally that is becoming more and more popular. Indeed, the usage of our mobile application that is called MyAmeria has increased more than 60%. That is also remarkable given the high penetration that we have in the local market. And there, we have several different features, more than actually 100 new features introduced during this quarter. And we also introduced our loyalty program that we hope will tie up our customers with us in the long term.

As we spoke last quarter, we have launched MyAmeriaStar, this is application for kids, 2 quarters ago. And we can be very happy that it's gaining more and more popularity among children and is serving to become a financial educational platform for a number of kids in Armenia.

In terms of digital usage, as I mentioned, if you look on our growth on an annual basis, it's mostly at or about 60% for both MAU and DAU, and we are very also happy and proud to share that also our digital uptake has improved more than 5 percentage point quarter-over-quarter. That is also remarkable given this very rapid growth of the number of customers that we have, number of MAU and DAU. Here, I also want to mention that we have been doing a number of campaigns to attract new-to-bank customers as well as to activate the customer base that we have. And we are offering a number of perks and benefits to our customer base. So when we'll be talking about fees and commissions, the costs on there are running a bit faster related to card transactions due to the campaigns that we are doing.

For the loan and deposit portfolio, again, we have remarkable results, 36.9% on loans. It's very important to note that the growth is very balanced, both on the corporate and retail side. Also, just to remind that last year, we had elevated demand for the mortgages due to this tax rebate program. I want to mention that on one hand, the growth pace of the mortgages has decreased, but it's higher than whatever we had in 2023 and 2022. So there is a very healthy growth continuing in this market. So we have no fears about any potential bubbles in this sector.

As for the deposits, again, 28.8% growth year-over-year. And here, I also want to mark another milestone agreement that we announced very recently with another DFI, EBRD. We have been very active with our DFI partners to attract more liabilities to support our long-term growth.

As for the capital position and liquidity position, I'm very happy to also mention that there is improvement in both areas. Our headroom versus requirements has improved versus quarter 2. Also, the Central Bank of Armenia has made -- officially introduced the changes to the local regulation, where in line with a couple of other changes. Now banks can do perpetual bonds as part of their regulatory equity. Also, there is significant improvement in our liquidity ratio. You can see 202% and 121% for NFSR and LCR ratios.

So we are standing very sound, both in terms of capital position as well as liquidity. Our NPS has also further improved to 77.4. It's 1.4 percentage point increase versus previous year-end. And obviously, with the remarkable growth rates of the loans and deposits, our market share both for loans and deposits has increased by 1.6 percentage point. So as we announced earlier, we see significant untapped market opportunities, and we will be working towards increasing our market share in the local market.

With this, I can conclude and pass the floor back to Nini. Thank you.

Thank you, Hovhannes. And I'll now hand it over to Archil for the overall group overview.

Congratulations to the whole Armenian team. I think it's incredible results in terms of balance sheet growth, but also in terms of the -- fundamentally, our coverage and rolling out of our retail products and enhancing monthly active users there. So with 300,000 people using our products there monthly, that's about 10% of the population. In Georgia, we're covering 45%. So there's plenty of opportunity to grow and roll out our daily banking excellent services to more and more clients.

So in terms of how this translates into the overall numbers, you can say that our operating income grew by 15.6%. And you see an equal distribution of 13.4% in Georgia and 21.3% in Armenia. In terms of the net interest income, the growth was stronger than the overall revenue, which was 18.4% in Georgia and 30% in Armenia, so translating into 21% growth of net interest income year-over-year. And net noninterest income was rather subdued, and we have discussed it in our results as well, and I'll go into detail in terms of FX and non-FX numbers on the next slide.

So net fee and commission income grew by only 4.8% for the overall group. In Georgia, it was 8.6%. Last quarter, I said in Georgia would be high single digits. So that's more or less what we have there. And in Armenia, it was down by 17.8%, largely due to the massive spending on the client acquisition and reactivation that Hovhannes mentioned as well.

In net FX, it has been largely flat, slight decrease in Georgia, 3.3% year-over-year, partly due to the stability of the currency. So this line of revenue is more juicy when there's more volatility in the currency. In both markets, the stability has been there because basically, there's a strong inflow into the country and both national banks are basically providing the lower target basically through which they're not allowing the currency to get stronger, but they are refilling the reserves, which -- that kind of stability is not great for us, obviously. But overall, it's still solid numbers.

Operating expenses were up 17.1%, about 15.4% and 16.6% in Georgia and Armenia, and the other business was a bit slightly higher. But overall, Q-over-Q, there was a slight improvement in cost-to-income, but year-over-year slight [ decrease ] from 34.8% blended to 35.3% blended. That remains our focus. And from next year, we should expect neutral to positive operating jaws.

Loan portfolio growth and deposit portfolio growth for both countries were very positive in this quarter. In Georgia, we grew by 16.1% in constant currency year-over-year and in Armenia was incredible 36.5%. And as Hovhannes has mentioned, it was well distributed between retail and corporate. So it's all very good and strong growth in deposits as well.

So all in all, that -- yes, one other good news was that as we deployed more liquidity in Georgia, we had a slight pickup in the net interest margin in Georgia and a 10 basis point pickup in Armenia as well. And so all in all, it translated into an increase of 20 basis points Q-over-Q, which was welcome news.

Cost of credit was 0.5%, and that's more closer to the normal levels. And we guide between 80 and 100 basis points through the cycle, but we are in a good benign environment. So that's what it is.

We had a slight pickup in NPL ratios, which was mostly on the SME side, reclassifying some small hotels, mainly in the regions that have not performed very well. There's no systemic underlying issue in any of these segments there.

So that's about that. So the profit was up by 7.5% year-over-year, although that basically does not show the fundamental pre-provision size of the business grew about 15%, which is something that we focus on as well. Return on equity is 27.8%.

All in all, strong showing. We are announcing a dividend -- quarterly dividend of GEL 2.65 per share as well as recommending to do the buybacks of GEL 51.5 million for this quarter, and it's a buyback and cancellation, as you know. And you see over the last 5 years how the number of share has been reducing because of this type of capital returns that we do. This is what we promised to do, and we are continuing to do that.

I'll wrap it up here and open for Q&A. Nini, anything to add?

Yes, we can start the Q&A, nothing to add. So to ask questions, please use the Raise hand button or the Q&A chat, and please introduce yourself when you speak.

So we have the first question from Jens Ehrenberg and let me bring him on the line.

I hope you can hear me all right. A couple of questions from my side. And sorry, I should have introduced myself. It's Jens Ehrenberg from Cavendish.

Firstly, I suppose looking at loan book growth, which has been pretty strong across both markets. Are there any key growth levers you'd look at over the next 12 to 18 months that we should be mindful of?

Then secondly, just on the level of NIMs. I mean it's great to see how robust they've been in the quarter. I suppose in the face of uncertainty around global rates, how should we think about this going forward? Are you sort of confident in the stability of those margins? Or is there anything we should be mindful of?

And finally, more on the sort of digital side of things, particularly on the retail side. Thinking back to sort of the time of the demerger, to what extent do you believe that, I suppose the market actually appreciates the franchise value that you've built on the back of the digital retail offering?

So thank you. So for loan growth, I'll say Georgia and then maybe Hovhannes can cover the Armenian side. So we guide -- we don't guide Georgia separately, but our expectation is between 10% and 12%, 13% medium term, although as long as the growth of the Georgian economy remains above 5%, which is the medium to long term expectation of Georgian growth, not long term, but medium term, that allows us to grow faster than that. So we have been able to grow -- as the market grows at 13%, we have been able to grow at 16%. There's no particular sites other than -- so retail and corporate, both are growing very strongly. SME has not been growing strongly. It's high single digit there. And we are in discussion with policymakers how to support SME growth, SME loan growth there.

But in terms of Georgian corporates are in excellent shape. They've delevered as the denominator of the economy overall grew their profitability as well as margins were in excellent shape over the last 3, 5 years. So they're delevered and able to invest in many different sectors. Energy remains a big sector that should attract a lot of investment over the next 3 years in Georgia. So -- and consumer is still growing very well because the income levels have been growing at double digits 5 years in a row, 5 years, every year, double digit, which is excellent growth that we are seeing.

And Hovhannes, do you want to say about loan growth in Armenia and then I'll switch to NIM? Why don't you cover NIM as well in Armenia and then I'll turn to Georgian side.

Sure. Yes. Absolutely. So for the loan growth, we do anticipate for the market like lower double-digit growth for the next couple of years. For Ameriabank, our estimate is to keep it between 15% and 20%, maybe a bit higher for the initial years and then going slightly lower towards like 3, 4 years horizon. But we should be able to keep it between 15% and 20% growth for the next 3 to 4 years.

As for NIM, we do think that the level of the NIM where we are is fairly stable. So we do not anticipate any sharp changes either way, either up or down. So there could be 10, 15 basis point change over time. But overall, we think this is -- in terms of midterm, this is -- this could be a guiding figure for the management.

Thank you, Hovhannes. I'm a bit more optimistic on the loan growth side. As long as we grow on retail side as we want to, I think it should provide 20-plus percent growth, but we'll see.

On the NIM, in Georgia, it's broadly stable. We are in a good shape there. I don't expect any major changes. Obviously, this business just happens. So we'll see [Technical Difficulty] there is no reason to expect a particular movement there.

On the franchise value side, you're absolutely right. So a lot of people are focused on book multiple because there's this understanding that banking is all about the balance sheet play and somebody can bring a couple of billion dollars and recreate this franchise. And I don't think that is right. I mean when there's the front end, it's not just the balance sheet, the front end, which basically -- that's why I focus so much on the NPS, on the top of mind, most trusted bank. So this shows the stickiness of the customer revenue and so forth, which translate then into growth [indiscernible], but also, it's the stickiness of such revenue.

And unfortunately, the market has not given us credit for it because we're still trading around 5x P/E, while historically, we used to trade at 8, 9, sometimes 10x. And if you ask me, and maybe that's subjective, but also objective measures show that we are in the best shape in terms of the franchise quality that we have ever been on the Georgian side, and now it's joined with Armenia, it's getting better and going from strength to strength there as well.

So unfortunately, not yet appreciated, but hopefully, it's coming, right?

There were a few questions typed into the Q&A side. Nini, do you want to cover those?

Yes. So maybe if we kind of categorize them, there are 2 questions on the market shares. For -- on the Armenian side, basically, the question is what percent market share is attainable in the next few years? And then for Georgia, the question is, given already large market share, how much more market share could be BOG gain in the next few years? So maybe we'll cover the market share questions first.

I can cover both, Hovhannes, sorry. In Georgia, regulator has basically said that they would like to keep the concentration constant and not increase it too much, i.e. below 40%. So we have basically -- so there's more capital requirement as we go above 40% in deposits, which we are currently -- we have about 50 basis points extra for that. So we intend to keep it just under 40%, a slight percentage or 2% gain still available on the loan side. So there's not much to gain there, a little bit.

But in Armenia, we would like to grow towards 30% and slightly above that over the next few years. So that the scale advantage that we currently have actually translates into good advantage in cost-to-income ratio as well.

Okay. Then [ Mike Gabon ] has a few questions. One is if we can give more color into the potential perpetual bond issuance from Armenia?

Hovhannes, do you want to say anything? But be aware of the public market rules there.

Sure. So we have not formally yet discussed and approved internally. So I would really prefer to refrain from giving any guidance, but we will definitely -- I mean, we have been working with some of the bankers to understand actually [Technical Difficulty] market opportunities. And also, we clearly understand our needs. I just can say that this is very good tool to improve the efficiency and cost structure of the equity. And we are actually seriously considering that opportunity. But once approved by our ALCO committee and then by the Board, I think after that, we can disclose more.

Thank you, Hovhannes. So another question is from Mike Gabon as well on the Bank of Georgia's recent eurobond issuance. The question is if -- why did we issue this 3-year bond if we have so much capital and why in Georgian lari and why 11.5%, which Mike thinks is a high rate? So [indiscernible]. Archil, can you take it?

Yes. I think lari instrument has not been present on the local -- on the international market for some time. So I agree that 11.5% was a bit disappointing. But it's unfortunate that the people have not been looking at the lari's strength for a long time because there was no instrument, lari instrument outstanding. So that's partly due to the fact of the high interest.

But we would like to have some public financing available in U.S. dollar as well as lari. There's no need for U.S. dollar at this point. But in lari, there was need. So that's why we raised it. Given how we are deploying it, we thought it was a good idea. So I don't know what you are referring to. So if we didn't think it was a good idea, we would not raise it, but we think it's a good idea. And it does help us to de-dollarize the balance sheet, which has a marginal improvement on the liquidity requirement as well. So that helps as well overall, which every time you de-dollarize either because of funding basically or the loans, then it helps you with the lower liquidity requirement. So marginal side is pretty good. It provides longer-term value as well, 3 years is better than most of the deposit, which is either current or 1 year.

Nini, next question.

Yes. So the next 2 questions come from [indiscernible] Capital. The first is, please comment on the fee and commission income Q-over-Q decline and outlook for the next several quarters. Maybe we'll take that first. And then the second is on the operating leverage. You mentioned positive operating leverage effects ahead. Could you guide us a bit with what cost -- with respect to cost-to-income ratio for GFS and AFS.

Yes. So on the fee and commission income, so basically, we will have improvement. It was not decline. It was a small increase, 3.8%. But we should be in Georgian side, growing double digit in the fourth quarter and then going forward, we should -- that should stick. In Armenia, it's a bit more bumpy, could be given the fact that we are in a very high expansion period of grabbing new clients and so forth.

So there should be improvement, but we don't provide more guidance than that. And the same is true for cost-to-income as well. So we are guiding either neutral or positive or slightly positive operating jaws for next year, but we don't want to provide more breakdown than that.

Thank you, Archil. So now we have a raised hand from Simon Nellis from Citi. So I'll let him talk.

I was hoping you could elaborate a bit more on what was driving the margin expansion in Georgia, I think, a little bit over the quarter in Armenia as well. I know you're guiding for broadly stable margins, but can you kind of give us some thoughts longer term about the sensitivity of your margin in both markets to rates, which might come down, I guess? And what is your rate view kind of going forward over the next 12 to 24 months?

Yes. Let me do that on the Georgian side. So basically, I'll start with the last one. So first -- sorry. First was deploying higher liquidity. So we had slightly higher liquidity than normal. And as we were deploying it, we thought that it would translate into a slight pickup. So there was a pretty simple exercise there. Our -- in the mix, we have slightly higher consumer. So consumer is growing slightly more than other stuff. So that's also helping the margin. So that's why it's north of 6% instead of historically lower. So if you rewind 5, 10 years before, sometimes we have had it at 7%, 8%, but then we have had it just about 5% as well. Right now, it's 6%, partly due to the mix and high interest rate environment.

Now talking about interest rates, as our Chief Economist, shared with you, we expect around 50 basis point reduction at the end of 2026 in lari. And that should be either neutral or maybe 10 basis point reduction over time. So initially, it's slightly positive, in fact, because we have short term and fixed lari is more of the assets, are in fixed short term than the funding. So that, in fact, has a slight pickup of 10 basis points or so. But then over time, it neutralizes up. And in Armenia, Hovhannes, do you want to say a few things?

In Armenia, we also have a short position on interest rate on the FX. So technically, the decrease of the rates of USD or euro LIBOR will affect slightly positively, but that's not going to be anything significant because we do not really keep a very big position, I mean, open position.

As for the NIM, yes, we did have a 0.1 percentage point improvement in NIM. But here, we again are guiding it to be flat in the Q4 and probably in the next couple of quarters. This was due to a slight increase in the yield of the loans. But at the same time, we also note that short term, our cost of funding has gone up slightly, and that was mainly driven by our attraction of DFI funding. That is slightly more expensive as of today. But given the long tenure of those facilities, we have estimated that through the lifetime, the average cost of that fund will be slightly lower than the local borrowing. So we are currently paying a bit more than the local market, but with the expectation to be paying less within the expectation that the rates will go down.

Let's see. So we have one question from [indiscernible] on the Georgian business. What is your market share in private banking affluent retail in Georgia? And asking specifically about retail deposit market share. And how much is the share of these deposits in your total deposit base? And what is the dollar...

Yes, it's -- we cannot exactly measure the market share, but my estimate is somewhere between 45% plus/minus. And in terms of the total share, I don't remember. So we'll probably have to get back to you.

So there's the solo, which is upper premium segment, which is substantial, and we do disclose. But in terms of what you are asking for, I think it's more like wealth management. I'm not sure we disclose the breakdown of that, but we can get back to you on that. In terms of how much we are paying, it's the average deposit cost, I also don't remember. We'll need to provide that to you.

So overall, part of the cost in Georgian operations cost of client deposits in foreign currency is 1.4%, but that's blended across all segments.

Correct.

I see Jens' hand, but he might have just forgotten to -- yes, he put it down. Let's see what else. Then we have one raised hand from [indiscernible] think from Armenia, but let's see if -- [ Gohar ], do you have a question? Maybe it's accidental.

There are a few questions from Mike Gabon that are in Q&A. Do you want to cover those?

Yes. Let's see. Questions on Armenia. Is there a higher regulatory capital requirement on foreign currency in Armenia? That's probably for Hovhannes. And also, is there any notable inflows, outflows of foreign currency into and out of Armenia?

We do have higher capital requirement for FX-denominated loans, and that has been enforced from 2004. So it's not new to us. On average, I would say, because there are different weights, risk weights for different asset classes, but most of the FX-denominated assets have approximately 50% more capital requirement or their risk weights are about 50% higher.

And the second part was about the cap...

About the foreign currency inflows in and out of Armenia. Any notable foreign currency inflows happening in and out of Armenia?

Yes. I think Akaki also presented that when we look at the remittances, for instance, I mean, there is very healthy growth in Armenia. If I'm not mistaken, it's about 16% year-over-year. And that positive trend is continuing both in 2025 and was also there in 2024.

Hovhannes, and then the clarifying question was that the cap -- Mike was asking about the cap, any cap on deposits in foreign currency or any additional requirements?

There is no any capital requirement for FX-denominated deposits, but there is a higher regulatory cost in terms of higher required reserves for foreign currency-denominated deposits regardless where they're attracted from. And now with these new changes to the regulation, the Central Bank of Armenia is also introducing higher requirements for concentrated attractions for our customers in terms of calculation of NSFR and LCR, probability of the outflow. But again, we did our internal analysis.

And due to this increased requirement to this concentrated means, the requirement for liquidity position for Ameriabank will not change. That is very immaterial change. So we're going to be, as I presented, well above the required thresholds.

Okay. Thank you, Hovhannes. Another question is regarding the potential M&A opportunities, if we can comment on any potential M&A plans and if we have any interest in Central Asia, I think that's the question in summary.

There's no comment that we can provide in terms of our expansion, but we are scanning the market, and that would be East Europe -- Central and Eastern Europe, Southeast Europe, Central Asia, mainly 2 countries, which is Kazakhstan, Uzbekistan, we're always looking. But we are concentrated on top banks, top 3, maybe top 5 for larger banks. We don't like turnaround stories. We like stories where we can enhance and so forth. So there's no immediate update there.

Should I cover the next one? [ Bruno Berry ] is asking about capital distribution.

Yes. So the range of 30%, 50%, which is our medium -- like the target, where do we expect it to be in the near term? And what are our thoughts regarding the split between dividends and buybacks?

We expect it to be in low 30s as we guided a couple of years ago for 2, 3 years. And that's because the growth, we remain on the higher side, and we have been growing more than our medium guidance, medium-term guidance. So that's why we are deploying capital there.

And in terms of the split of capital returns, roughly 2/3, 1/3 has been dividend and buybacks, and we'll probably stick to that.

The next question is from Ben Maher on the line.

Can you hear me?

Yes.

Just a quick one on -- I think you mentioned some regulatory changes in Armenia. I'm interested if you have any -- do you expect any further regulatory changes or any headwinds as we move into next year across Georgia or Armenia? Any color would be helpful.

There's nothing material coming up in Armenia.

There's nothing immediate in Georgia, either. There's plenty of discussion in terms of open banking and how this is affecting and encouraging fintechs and so forth, but there's no particular big change right now.

No more questions.

So with that, thank you very much for joining our quarterly call. Third quarter was a record high. This is the first time that we made more than $200 million equivalent, right? Nini, maybe you correct me if I'm wrong. But I think it was the first time and given the fact that we'll be growing quarter-by-quarter, hopefully, we can deliver value to our shareholders.

Armenia remains a very strong case and prospects there are also very positive, medium- to long-term prospects given the fact that Azerbaijan and Turkish borders remain closed while there's an in-principle agreement already to open those up, but this will take time, a few months but less than a year, hopefully. And that means that the economy will open up with plenty of opportunities that will emerge, and we are very well placed there to fund and provide funding for growth to go there.

And Georgia remains and continues to be a very strong economy. So more and more people appreciate how strong the economy and numbers have been. As you can see, the growth has been good, high single digit. Inflation is under control. CPI picked up, but core inflation remains at 2.4%. And all of this basically translates into a strong economy, people benefiting with average incomes growing double digit, and all of this is reflected in our strength.

And Georgia, so on the macro side, it's a very good story. On the franchise value, I think we are stronger than we've ever been. So we are very well placed to benefit from this medium-term wave, which is called investment in the middle corridor, be it through this highway being discussed from Azerbaijan to Armenia or being through a more established Georgian route. In both cases, we're very well placed to benefit from this medium-term movement. And all of that, I think, will translate into long-term value creation.

So thank you for joining this call, and we look forward to seeing you in one quarter.

Thank you, and take care. Bye.