News Column

Bank Of Georgia Pretax Profit Hit By Expenses Rise

August 22, 2014

Samuel Agini

LONDON (Alliance News) - Bank of Georgia Holdings PLC, the holding company of JSC Bank of Georgia and its subsidiaries, Friday reported a fall in second quarter pretax profit as salary costs were pushed up by the acquisitions it has made in order to grow its healthcare business.

Expenses were also pushed higher due to the increase in the number of senior managers eligible for the group's share based compensation, or non-cash bonus.

In a statement, Bank of Georgia Holdings said it made a GEL59.0 million pretax profit in the three months ended June 30, compared with a GEL60.9 million pretax profit in the corresponding period last year.

Revenue increased by 3.2% to GEL144.2 million, driven by increases in net interest income, net fee and commission income and net healthcare revenue, which together more than offset declines in net insurance revenue and other operating non-interest income.

However, operating expenses rose by 15% to GEL64.3 million, with higher salaries and other employee benefits, up 14%, and general and administrative expenses, up 22%, driving the increase.

"The increase in expenses on year-on-year basis was a result of an increase in costs associated with the bank's non-banking businesses, particularly its healthcare and real estate businesses," the holding company said in a statement.

"The bank's healthcare business significantly increased its headcount following several acquisitions, while the respective post-acquisition synergies have not yet fully been realised," it said.

Bank of Georgia Holdings shares were Friday down 0.1% to 2,498.00 pence in early trade.

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Source: Alliance News

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