Presentations

Liberty Bank Research Note - Q3 2014 and 9M 2014 Results

Description
Liberty Bank announced its Q3 2014 and 9M 2014 consolidated financial results, reporting Net Income of GEL 6.0 mln in Q3 2014 (up 24.2% q-o-q and 19.7% y-o-y) and Net Income of GEL 14.3 mln in 9M 2014 (up 121.3% y-o-y).
Categories
Published
of 3
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
Share
Transcript
    Georgia | Banks | Company Update 7 November 2014 GEL/US$ 1.7556   Liberty Bank Q3 2014 and 9M 2014 Results GSE: BANK | BLOOMBERG: BANK GG | ISIN: GE1100000300    R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T  Not Rated Market Data Current Price (GEL) 0.0145 52 Week High (05/05/2014) 0.0160 52 Week Low (18/11/2013) 0.0111 1M Change -3.3% 3M Change -3.3% 12M Change 26.1% Ordinary Shares Outstanding (bn) 5.5 MCap (GEL mln) 79.8 MCap (US$ mln) 45.4 Free Float (Including ESOP) 22.1% Free Float (US$ mln) 10.0 % Of Free Float Traded in 2010 46.9% 1  % Of Free Float Traded in 2011 59.5% 1  % Of Free Float Traded in 2012 0.95% 1  % Of Free Float Traded in 2013 2.55% 1  Average Weekly Traded Volume in 2010-2013 (GEL '000) 111.8 % Of Free Float Traded YTD 3.41% 1  Average Weekly Traded Volume YTD (GEL '000) 17.2 Major Shareholder - Liberty Holding Georgia Ltd 70.8% GDR: Reg S & 144A Common Shares/GDR 500:1 GDRs Fully Fungible? Yes Current GDR Programme Ceiling (% Of Shares Outstanding) 30% % Of Shares Outstanding Currently Converted Into GDRs 12.0% Dividend Yield (Ordinary Shares) 0% Convertible Preferred Shares Outstanding (mln) 5.2 Placement Price Per Convertible Preferred Share (GEL) 1.00 Convertible Preferred Dividend Yield/Placement Price 17.0% Share Price Performance Source: GSE, Bloomberg Key Financials & Ratios GEL mln, unless otherwise noted Unaudited Unaudited Unaudited Consolidated, IFRS-based Q3 2014 Q2 2014 Q3 2013 Growth q-o-q Growth y-o-y Total Assets 1,539 1,471 1,278 4.6% 20.4% Net Loans 681 671 508 1.5% 33.9% Total Liabilities 1,411 1,349 1,170 4.6% 20.6% Client Balances & Deposits 1,352 1,293 1,126 4.5% 20.0% Shareholders’ Equity  128 122 108 4.8% 18.4% Revenue 38.6 36.6 23.2 5.4% 66.3% Net Income/(Loss) 6.0 4.8 5.0 24.2% 19.7% EPS Basic 0.0011 0.0009 0.0009 EPS Fully Diluted 0.0010 0.0008 0.0008 ROAA 1.60% 2  1.34% 2  1.63% 2  ROAE 19.77% 2  16.65% 2  19.06% 2  CAR (Current NBG Regulation) 13.93% 13.36% 12.87% RWA/TA (Current NBG Regulation) 64.64% 64.64% 59.70% CAR (New NBG Regulation) 12.60% 12.07% NMF RWA/TA (New NBG Regulation) 68.23% 70.32% NMF Valuation Metrics 2012A 2013A 2014F P/E 7.96 5.94 4.53 4  P/B 0.42 0.71 0.64 BV Per Share 0.018 3  0.020 3  0.023 3  P/Diluted EPS 4.51 P/Diluted Book Value 0.65 Diluted BV Per Share 0.023 3   1. By parties other than JSC Liberty Capital and Liberty Holding Georgia LLC 2. Annualised 3. Excluding shares issued but not sold 4. Net Income less the preferred dividend used in the calculation   Liberty Bank (GSE: BANK, not rated) announced its Q3 2014 and 9M 2014 consolidated financial results, reporting Net Income of GEL 6.0 mln in Q3 2014 (up 24.2% q-o-q and 19.7% y-o-y) and Net Income of GEL 14.3 mln in 9M 2014 (up 121.3% y-o-y). Total Operating Income in Q3 2014 reached GEL 38.6 mln, an increase of 5.4% q-o-q and 66.3% y-o-y. Total Operating Income in 9M 2014 reached GEL 107.2 mln, an increase of 72.9% y-o-y. Recurring Operating Costs increased by 4.4% q-o-q and 23.3% y-o-y to GEL 23.1 mln, resulting in the positive Operating Leverage of 43.0% in Q3 2014. Normalised Cost/Income Ratio increased to 63.3% in Q3 2014 from 63.0% in Q2 2014 and decreased from 83.1% in Q3 2013. BANK reported Normalised Net Operating Income of GEL 15.4 mln in Q3 2014, an increase of 6.9% q-o-q and 248.8% y-o-y. Recurring Operating Costs increased by 25.5% y-o-y to GEL 66.1 mln, resulting in the positive Operating Leverage of 47.4% in 9M 2014. Normalised Cost/Income Ratio decreased to 64.6% in 9M 2014 from 85.8% in 9M 2013. BANK reported Normalised Net Operating Income of GEL 41.1 mln in 9M 2014, an increase of 341.8% y-o-y. Pre-Provision Operating Profit increased by 26.4% q-o-q and 258.5% y-o-y to GEL 15.9 mln in Q3 2014. Net Provision Expense in Q3 2014 reached GEL 7.5 mln, up 8.5% q-o-q and compared to net recoveries of GEL 1.9 mln in Q3 2013. Pre-Tax Profit increased by 47.3% q-o-q and 20.0% y-o-y to GEL 7.0 mln in Q3 2014. Pre-Provision Operating Profit increased by 333.6% y-o-y to GEL 39.7 mln in 9M 2014. Net provision expense in 9M 2014 reached GEL 21.2 mln as compared to Net Provision expense of GEL 1.2 mln in 9M 2013. 9M 2013 Net Provision expense reflects the recoveries of large legacy exposures. Pre-Tax Profit increased by 105.5% y-o-y to GEL 15.7 mln in 9M 2014. BANK is the third largest bank in Georgia (by Total Assets, Gross Loans and Client Balances & Deposits), with the consolidated Total Assets reaching GEL 1,538.8 mln, up 4.6% q-o-q and 20.4% y-o-y. The Liquidity Ratio (Liquid Assets divided by Total Assets) stood at 43.4% as at 30 September 2014, up from 41.3% as at 30 June 2014 and down from 46.7% as at 30 September 2013. Gross Loans grew by 2.0% q-o-q and 35.5% y-o-y to GEL 760.7 mln, driven by an increase in retail lending. Net Loans increased by 1.5% q-o-q and 33.9% y-o-y to GEL 680.5 mln as at 30 September 2014. Client Balances & Deposits reached GEL 1,351.5 mln as at 30 September 2014, up 4.5% q-o-q and 20.0% y-o- y. Consolidated Shareholders’ Equity as at 30 September 2014 equalled GEL 127.6 mln, up 4.8% q-o-q and 18.4% y-o-y. BANK ’s  market share reached 8.2% by Total Assets as of 30 September 2014 (up from 7.7% as of 31 December 2013). Market share in Gross Loans and Client Balances & Deposits reached 6.5% and 12.7% as of 30 September 2014, respectively (up from 6.2% and 11.8% as of 31 December 2013, respectively). BANK’s BIS (Basel I) CAR stood at 15.5% as of 30 September 2014 as compared to BIS CAR of 15.1% as at Q2 2014. The Capital Adequacy Ratio as per the old NBG methodology which is in line with Basel I requirements reached 13.9% as at 30 September 2014. The Capital Adequacy Ratio as per the new NBG regulation which is in line with Basel II requirements, with elements of Basel III stood at 12.6%. Georgian banks are required to be in compliance with both old and new capital adequacy requirements. BANK was compliant, as of 30 September 2014, with the prudential capital adequacy ratios. BANK’s Net Loans/Total Assets ratio decreased to 44.2% as at 30 September 2014 from 45.6% as at 30 June 2014. Looking ahead, we forecast Net Loans/Total Assets of 43.4% by YE 2014, with the annual balance sheet growth reaching or exceeding 19.9%. We forecast the overall Cost of Risk to reach 3.6% in 2014, assuming GEL 25.5 mln of net provision charge and GEL 704.8 mln of the average Gross Loans. We forecast 2014 Net Income to reach GEL 19.3 mln, implying that ROAE (attributable to the ordinary shares) and ROAA will reach 15.3% and 1.3%, respectively. On 31 October 2014, Fitch Ratings changed BANK’s outlook from Stable to Positive maintaining its B/B rating. In Q4 2014, BANK faces an important milestone, as its contract for the distribution of state pensions and welfare payments is expiring at YE 2014. BANK is expected to bid for the new contract. 60.090.0120.0150.0180.0210.0240.0270.0300.0    J   a   n  -   1   3   J   a   n  -   1   3   M   a   r  -   1   3   A   p   r  -   1   3   M   a   y  -   1   3   M   a   y  -   1   3   J   u   n  -   1   3   J   u    l  -   1   3   A   u   g  -   1   3   S   e   p  -   1   3   O   c   t  -   1   3   N   o   v  -   1   3   D   e   c  -   1   3   J   a   n  -   1   4   F   e    b  -   1   4   M   a   r  -   1   4   A   p   r  -   1   4   M   a   y  -   1   4   J   u   n  -   1   4   J   u    l  -   1   4   A   u   g  -   1   4   S   e   p  -   1   4   O   c   t  -   1   4   N   o   v  -   1   4 BANK Closing Price (Rebased)GSE Index (Rebased)MSCI Emerging Markets Banks Index (Rebased)    Liberty Bank Q3 2014 and 9M 2014 Results GSE: BANK | BLOOMBERG: BANK.GG | ISIN: GE1100000300    R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T   R   E   S   E   A   R   C   H    A   L   E   R   T   Income Statement Consolidated, IFRS-based Unaudited Unaudited Unaudited Unaudited Unaudited GEL '000, unless otherwise noted Q3 2014 Q2 2014 Q3 2013 Growth q-o-q Growth y-o-y 9M 2014 9M 2013 Growth y-o-y Interest Income 58,517 55,206 41,313 6.0% 41.6% 164,244 112,313 46.2% Interest Expense 28,570 26,922 25,960 6.1% 10.1% 81,491 71,495 14.0% Net Interest Income 29,947 28,285 15,353 5.9% 95.1% 82,753 40,818 102.7% Fee And Commission Income 7,743 7,258 6,257 6.7% 23.8% 21,720 17,306 25.5% Fee And Commission Expenses 1,164 925 822 25.9% 41.6% 2,968 2,215 34.0% Net Fee And Commission Income 6,579 6,333 5,435 3.9% 21.1% 18,752 15,092 24.3% Net Income From Documentary Operations 105 92 136 13.6% -23.0% 302 363 -16.7% Net Other Non-Interest Income 226 262 248 -13.8% -8.9% 726 831 -12.6% Net Income From FX And Translation Operations 1,731 1,635 2,033 5.9% -14.9% 4,682 4,912 -4.7% Net Non-Interest Income 8,641 8,323 7,853 3.8% 10.0% 24,463 21,197 15.4% Total Operating Income 38,588 36,608 23,206 5.4% 66.3% 107,216 62,016 72.9% Recurring Operating Costs 23,143 22,164 18,777 4.4% 23.3% 66,147 52,720 25.5% Normalised Net Operating Income 15,445 14,443 4,428 6.9% 248.8% 41,069 9,295 341.8% Non-Recurring Costs/(Income) (439) 1,879 (2) -123.3% NMF 1,392 144 867.6% Pre-Provision Operating Profit 15,883 12,565 4,430 26.4% 258.5% 39,676 9,151 333.6% Net Provisions 7,542 6,948 (1,890) 8.5% NMF 21,159 1,175 1700.0% Pre-Bonus Result 8,342 5,662 6,329 47.3% 31.8% 18,558 8,078 129.7% Discretionary Bonus Pool 1,264 893 500 41.4% NMF 2,855 500 470.9% Share Of Associates' Net Profit (53) (1) 24 NMF -320.1% (43) 42 NMF Pre-Tax Profit 7,025 4,768 5,853 47.3% 20.0% 15,661 7,620 105.5% Accrued Or Paid Income Tax Benefit/(Expense) (1,074) (759) (880) 41.4% 22.0% (2,426) (1,151) 110.8% Current Deferred Tax Benefit - 784 - -100.0% NMF 1,084 - NMF Net Income   5,951 4,792 4,973 24.2% 19.7% 14,319 6,469 121.3% Balance Sheet Consolidated, IFRS-based Unaudited Unaudited Unaudited GEL '000, unless otherwise noted Q3 2014 Q2 2014 Q3 2013 Growth q-o-q Growth y-o-y Cash And Due From Banks 481,414 452,117 419,932 6.5% 14.6% Treasuries & CDs 187,059 155,397 176,364 20.4% 6.1% Other Fixed Income Instruments - - - NMF NMF Net Loans 680,520 670,792 508,381 1.5% 33.9% Accrued Interest & Dividends, Net 11,819 12,683 7,220 -6.8% 63.7% Net Investments 310 347 322 -10.8% -3.8% Net Property Owned 1,086 728 798 49.2% 36.2% Investment Property 4,986 4,986 4,793 0.0% 4.0% Net Property, Plant & Equipment 133,656 132,121 127,142 1.2% 5.1% Net Intangible Assets 10,241 10,209 9,869 0.3% 3.8% Net Other Assets 27,713 31,573 22,766 -12.2% 21.7% Total Assets 1,538,805 1,470,954 1,277,587 4.6% 20.4% Total Balances & Deposits 1,367,600 1,301,184 1,127,607 5.1% 21.3% Borrowed Funds - - - NMF NMF Payable Interest & Dividends 13,442 14,723 18,519 -8.7% -27.4% Provisions For Issued Guarantees 133 119 181 11.4% -26.3% Other Liabilities 30,060 33,232 23,542 -9.5% 27.7% Total Liabilities 1,411,234 1,349,259 1,169,848 4.6% 20.6% Shareholders' Equity 127,571 121,695 107,739 4.8% 18.4% Total Liabilities And Shareholders' Equity 1,538,805 1,470,954 1,277,587 4.6% 20.4% Selected Ratios Consolidated, IFRS-based %, unless otherwise noted Q3 2014 Q2 2014 Q3 2013 2013 2012 2011 2010 2009 ROAA 1.60% 1.34% 1.63% 1.14% 0.62% 1.06% 1.11% -1.70% ROAE 19.77% 16.65% 19.06% 12.75% 6.46% 13.29% 21.58% -45.86% Net Interest Margin 11.64% 11.58% 7.62% 7.96% 9.03% 9.44% 11.89% 3.16% Net Interest Margin 1  13.61% 13.38% 9.01% 9.47% 9.74% 9.39% 12.38% 9.45% Net Spread 13.54% 13.32% 9.56% 9.89% 8.88% 9.78% 18.08% 8.15% Net Non-Interest Income/Total Operating Income 22.39% 22.74% 33.84% 32.75% 40.60% 50.95% 62.43% 89.85% Net Income (Loss)/Total Operating Income 15.42% 13.09% 21.43% 14.40% 5.64% 9.15% 7.39% -13.21% Net Fee & Commission Income/Total Operating Income 17.05% 17.30% 23.42% 23.33% 31.77% 42.80% 51.29% 71.49% Net Fee & Commission Income/Average Total Assets 1.77% 1.78% 1.78% 1.85% 3.48% 4.96% 7.64% 9.21% Cost/Income Ratio (Normalised) 63.25% 62.99% 83.07% 85.70% 75.37% 70.78% 73.16% 103.44% Costs/Average Total Assets (Normalised) 6.56% 6.47% 6.32% 6.80% 8.25% 8.21% 10.90% 13.33% Personnel Costs/Total Operating Income 32.39% 32.27% 46.52% 46.45% 40.85% 37.11% 40.12% 48.99% Personnel Costs/Average Total Assets 3.36% 3.31% 3.54% 3.68% 4.47% 4.30% 5.97% 6.31% Personnel Costs/Total Recurring Operating Costs 54.01% 53.29% 57.49% 56.01% 56.14% 54.10% 54.83% 47.36% Net Loans/Total Assets 44.22% 45.60% 39.79% 45.60% 44.58% 43.74% 29.49% 25.14% Total Deposits/Total Liabilities 96.91% 96.44% 96.39% 97.11% 93.37% 93.86% 80.52% 81.38% Net Loans/Total Deposits 49.76% 51.55% 45.15% 51.49% 54.11% 51.73% 39.19% 31.81% Net Loans/Total Liabilities 48.22% 49.72% 43.46% 50.01% 50.52% 48.56% 31.54% 25.88% Liquid Assets/Total Assets 43.44% 41.30% 46.67% 40.71% 34.93% 35.35% 42.00% 35.06% Leverage (Total Liabilities/Equity), Times 11.06 11.09 10.86 10.34 7.50 9.08 15.25 33.80 Shareholders' Equity/Total Assets 8.29% 8.27% 8.43% 8.82% 11.76% 9.36% 6.15% 2.87% Average Shareholders' Equity/Average Total Assets 8.44% 8.44% 8.90% 9.32% 9.59% 7.99% 7.04% 3.71% Loan Loss Reserves/Gross Loans 4.75% 4.05% 3.90% 4.28% 5.22% 9.69% 12.67% 22.38% NPLs/Gross Loans 5.52% 5.00% 5.60% 4.74% 4.29% 11.66% 18.55% 35.46% LLR Coverage Ratio 103.36% 99.69% 89.67% 90.18% 121.56% 86.30% 59.84% 60.35% Cost of Risk 3.37% 3.79% -1.82% -0.73% 3.03% 6.21% 7.01% 14.01% 1. Net Interest Margin equals interest income from loans less interest expense divided by average gross loans for the same period Quarterly ratios are annualised, where applicable      Liberty Bank Q3 2014 and 9M 2014 Results GSE: BANK | BLOOMBERG: BANK.GG | ISIN: GE1100000300 This document has been produced by Liberty Securities Ltd (“Liberty Securities”). Liberty Securities and/or persons connected  with it may effect or may have effected a transaction or transactions for their own account in the securities or instruments or st rategies (collectively, the “Instruments”) referred to in this document or any related investment before the material is published to Liberty Securities’ clients, may have a position in the securities and/or any related investment and may make a purchase and/or sale, or offer to make a purchase and/or sale, of the Instruments and/or any related investment from time to time, in the open market or otherwise, in each case either as a principal or as an agent. Liberty Securities or persons connected with Liberty Securities may provide or have provided corporate finance, brokerage and other services to the issuer(s) of the Instruments and may seek to do so in the future. Accordingly, information may be available to Liberty Securities and/or persons connected with it which is not reflected in this document. This document is not, and should not be construed as an offer to sell or a solicitation of an offer to buy any securities. The information and opinions contained in this document have been compiled or arrived at by Liberty Securities from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document constitut e Liberty Securities’ judgment as of the date hereof and are subject to change without notice. The information contained in this document is published for the assistance of the intended recipients, but is not to be relied upon as authoritative or be the basis for an investment decision. Liberty Securities accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document may include estimates, projections and other forward-looking statements. Due to numerous factors, actual events may differ substantially from those presented. Liberty Securities assumes no duty to update any such statements. Any holdings of a particular Instrument discussed herein are under periodic review by the investment team and are subject to change at any time, without notice. Nothing contained herein should be considered a recommendation or advice to purchase or sell any security. This document may not be reproduced, distributed or published for any purpose. Further information may be available and for this purpose the intended recipients hereof should contact Liberty Securities at the address given above. This document is not to be distributed in the United States and the United Kingdom, and in any other jurisdiction where such distribution is unlawful. An investment in the   Instruments has risks, including the risk of losing some or all of the invested capital. Performance includes reinvestment of all distributions. Past performance is not   indicative of future results. Prior to investing, a prospective investor should carefully review all the relevant information and factors, consider the risks and suitability of the Instruments based on his/her own investment objectives and financial position and consult with his/her financial, legal and tax advisors.   Some of the Instruments   described herein may not be a regulated financial instrument and, as such, may not require the publication of a prospectus or similar document.   Liberty Securities Liberty Tower 74 I. Chavchavadze Ave bilisi, Georgia 0162 el: + 995 32 2555 500 research@libertysecurities.ge ww.libertysecurities.ge Skype: liberty.securities Temur Iremashvili  Director Liberty Securities +995 591 158 877 temur.iremashvili@libertysecurities.ge Skype: temur_75 Victor Meskhi  Director of Research Liberty Securities +995 593 551 506 victor.meskhi@libertysecurities.ge Skype: v.meskhi Tengiz Lashkhi Asset Management Director Liberty Securities +995 591 709 280 tengiz.lashkhi@libertysecurities.ge
Search
Tags
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks