Lion Finance Q2 2025 slides: profit up 19.4%, Armenian operations surge 197%

Published 20/08/2025, 07:10
Lion Finance Q2 2025 slides: profit up 19.4%, Armenian operations surge 197%

Introduction & Market Context

Lion Finance Group PLC (LSE:BGEO) presented its Q2 2025 and first half 2025 results on August 20, 2025, highlighting strong performance across its operations in Georgia and Armenia. The company’s stock closed at 7,640 lari on August 19, down 0.97% from the previous close, according to market data.

The financial services group operates in two of the fastest-growing economies in the EMEA region, with Georgia posting 8.3% GDP growth and Armenia achieving 6.3% GDP growth in the first half of 2025. This favorable macroeconomic backdrop has supported the company’s expansion strategy.

As shown in the following chart, both Georgia and Armenia have maintained strong economic growth compared to their peers, with Georgia’s GDP growth particularly impressive at 7.1% in Q2 2025:

Quarterly Performance Highlights

Lion Finance reported a profit of GEL 513 million for Q2 2025, representing a 19.4% increase year-over-year. For the first half of 2025, profit reached GEL 1,026 million, up 28.4% compared to the same period last year. The group maintained a strong return on average equity (ROAE) of 27.2% in Q2 and 27.9% for 1H 2025.

The company’s performance was driven by robust growth in both its Georgian Financial Services (GFS) and Armenian Financial Services (AFS) segments. GFS, operated through JSC Bank of Georgia, contributed GEL 410 million to Q2 profit (+7.6% y-o-y), while AFS, through Ameriabank CJSC, delivered exceptional growth with profit surging 197.3% year-over-year to GEL 96 million.

The following chart illustrates the group’s key performance metrics for Q2 and 1H 2025:

Lion Finance’s loan book grew by 22.5% year-over-year in constant currency terms, exceeding the company’s medium-term target of approximately 15%. Deposit growth was also strong at 14.7%. The group maintained solid asset quality with a cost of credit risk ratio of 0.5% in Q2 and 0.4% for the first half of 2025.

As illustrated in the following chart, the group has demonstrated consistent growth in its loan and deposit portfolios:

Detailed Financial Analysis

Operating income for Q2 2025 reached GEL 1,039 million, with net interest income contributing GEL 716 million and net non-interest income adding GEL 323 million. For 1H 2025, operating income totaled GEL 1,593 million, representing strong growth driven by net interest income generation across both core markets.

The following chart breaks down the group’s operating income components:

The group’s net interest margin (NIM) stood at 6.0% in Q2 2025, slightly up from 5.9% in Q1. At GFS, NIM was 5.9% in Q2, up 20 basis points from the previous quarter as the bank continued to deploy excess liquidity. Management expects GFS NIM to remain broadly stable with potential for slight upside.

Lion Finance maintained strong profitability metrics throughout the first half of 2025, as shown in the following chart:

The board declared a cumulative Q1 and Q2 dividend of GEL 5.1 per share and approved the repurchase and cancellation of additional shares worth GEL 98 million, demonstrating the company’s commitment to shareholder returns.

Strategic Initiatives

Lion Finance continues to focus on digital transformation across its operations. In Bank of Georgia, 86% of retail loans were sold through digital channels in Q2 2025, up 5.6 percentage points year-over-year. Similarly, 73% of deposits were opened digitally, an increase of 8.5 percentage points from the previous year.

The following chart illustrates the increasing shift toward digital sales channels:

The group’s customer base continues to expand, with retail customers reaching 2.0 million as of June 2025, representing a compound annual growth rate of 20.4%. Digital monthly active users (MAU) have also grown significantly, with Bank of Georgia reporting 1.7 million digital MAU (+15.5% y-o-y) and Ameriabank reaching 267,000.

As shown in the following chart, the group has maintained consistent growth in its customer franchise while delivering strong financial performance:

The Georgian Financial Services segment, which accounts for 71% of the group’s assets, reported strong performance in Q2 2025:

Forward-Looking Statements

Lion Finance has outlined several strategic priorities for future growth, including being the main bank in customers’ daily lives by leveraging digital and payments ecosystems, providing excellent customer experience, and focusing on profitable growth in areas with high potential.

The group’s medium-term targets include approximately 15% annual loan book growth, 20%+ ROAE, and a 30-50% dividend and share buyback payout ratio. These targets are supported by enablers such as customer-centricity, data and AI, people and culture, brand strength, and effective risk management.

The macroeconomic outlook remains favorable for Lion Finance’s operations, with both Georgia and Armenia experiencing currency strength against the US dollar. As illustrated in the following chart, both the Georgian lari (GEL) and Armenian dram (AMD (NASDAQ:AMD)) have appreciated against the USD:

While the company’s stock price experienced a 7.07% decline following its Q1 2025 results announcement, as mentioned in previous earnings coverage, the strong Q2 performance may help address investor concerns about future growth prospects. With a P/E ratio of 4.03 reported after Q1 results, the stock appears undervalued relative to its fair value, especially considering the consistent profit growth and strong returns demonstrated in the latest presentation.

Full presentation:

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