The East-meets-West Republic of Georgia can trace its history and culture back thousands of years. But it has been occupied repeatedly through the centuries, including decades under Soviet rule.
Declaring independence in 1991, the nation has since been subjected to bouts of aggression from Russian president Vladimir Putin, as he has tried to regain all or part of the old Soviet empire.
Peace has reigned for the past 15 years, however, and most experts believe this proud nation is no longer a priority for Russia’s warmongering leader. This has engendered a period of prosperity for Georgia, which reported economic growth of more than 10 per cent in 2021 and 2022, with 7.5 per cent growth expected for 2023 and several years of further gains forecast by economists.
Georgia is also a candidate to join the European Union, tilting its axis firmly towards the West.
Bank of Georgia is the biggest bank in the country and, when Midas recommended the shares in 2013, they were priced at £17.70. They have almost tripled to £50.20 and most of those gains have come since Archil Gachechiladze took over as chief executive in 2019.
Thriving: Bank of Georgia is the biggest bank in the country and, when Midas recommended the shares in 2013
Back then staff morale was low, customer trust was lacking and the shares were at a low ebb. Gachechiladze was also aware that challenger banks, with all the latest tech, were stealing a march on his business, which was bogged down in bureaucracy and old-fashioned systems. He embarked on a root and branch makeover, taking inspiration from some of the best digital banks in the world and investing in both IT and people to turn Bank of Georgia into a modern business.
The strategy attracted criticism at the time but it has paid off handsomely. Customer numbers have more than doubled to 1.3 million, a third of the population, and the bank’s app is one of the most popular in Georgia, outranked only by Facebook and Instagram.
Profits have soared too, more than doubling between 2018 and 2022, from £145 million to £370 million. Results for 2023 will be revealed this month and brokers expect another period of strong growth, with profits of around £475 million, rising steadily thereafter. Gachechiladze is a dividend enthusiast too, with £2.28 pencilled in for 2023, rising to around £2.40 for this year. With Bank of Georgia shares at £50.20, that puts the stock on an attractive 4.8 per cent yield.
The bank has just acquired Armenia’s top bank, Ameriabank and expects to transfer its best ideas across the border, aiming to deliver growth of between 20 and 25 per cent annually for several years from the new subsidiary, with Bank of Georgia itself expanding by at least 10 per cent a year as well.
Midas verdict: Georgia may seem far away but its economy is growing, political conditions are relatively stable and consumers are optimistic. Gachechiladze is benefiting from this benign environment but doing a lot more besides, with bold initiatives that could teach British banks a thing or two. At £50.20, Bank of Georgia has proved a rewarding investment over the past decade but there is more to come for new and existing shareholders.
Traded on: Main market Ticker: BGEO Contact: bankofgeorgiagroup.com or 020 3178 4052
