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The Republic of Georgia, located between East and West, can trace its history and culture back thousands of years. But it has been occupied repeatedly over the centuries, including decades under Soviet rule.
After declaring independence in 1991, the nation has been subject to attacks of aggression by Russian President Vladimir Putin as he attempted to recapture all or part of the former Soviet empire.
However, peace has reigned for the past 15 years and most experts believe this proud nation is no longer a priority for Russia’s warmongering leader. This has led to a period of prosperity for Georgia, which recorded economic growth of more than 10 percent in 2021 and 2022, with 7.5 percent growth expected by 2023 and several years of new gains predicted by economists.
Georgia is also a candidate to join the European Union, tilting its axis firmly toward the West.
Bank of Georgia It is the country’s largest bank 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.
Prosperous: Bank of Georgia is the largest bank in the country, and when Midas recommended the stock in 2013
Back then, staff morale was low, customer confidence was lacking and shares were in decline. Gachechiladze was also aware that challenger banks, with the latest technology, were getting ahead of his business, which was mired in bureaucracy and outdated systems. He embarked on a radical and branch renovation, taking inspiration from some of the world’s best digital banks and investing in both IT and people to turn Bank of Georgia into a modern company.
The strategy generated criticism at the time, but has produced good results. The number of customers has 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, second only to Facebook and Instagram.
Profits have also soared, more than doubling between 2018 and 2022, from £145 million to £370 million. 2023 results will be revealed this month and brokers are expecting another period of strong growth, with profits of around £475m rising steadily thereafter. Gachechiladze is also a dividend enthusiast, with £2.28 forecast for 2023, rising to around £2.40 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 leading bank, Ameriabank, and hopes to transfer its best ideas across the border, aiming to achieve growth of 20 to 25 percent annually for several years from the new subsidiary , with Bank of Georgia itself expanding at least 10 percent annually 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 he is also doing much more, with bold initiatives that could teach British banks a thing or two. At £50.20, Bank of Georgia has proven to be a rewarding investment over the last decade, but there is more to come for new and existing shareholders.
Traded in: Main market Heart: BGEO Contact: bankofgeorgiagroup.com or 020 3178 4052