Lion Finance profit rises 17.3% as Armenia powers rapid growth

Lion Finance Group PLC has reported another strong period of growth, with first-half profit climbing 17.3% to GEL 1,203.8 million.

The banking group, which operates principally through Bank of Georgia and Armenia's Ameriabank, benefited from a larger loan book, growing customer deposits and increased digital engagement. Armenia was the standout growth engine, although the established Georgian operation continued to deliver attractive profitability.

Shareholders also received more direct returns. Lion Finance declared a second-quarter dividend of GEL 3.05 per share and approved a further GEL 59.0 million share buyback and cancellation programme.

The full 115-page original company announcement contains plenty of detail, but the central message is straightforward: growth remains well ahead of the group's medium-term target, while returns and asset quality remain healthy.

Lion Finance's key first-half figures

Metric	1H26 result	Year-on-year change
Profit	GEL 1,203.8 million	+17.3%
Net operating income	GEL 2,366.5 million	+17.3%
Operating income before cost of risk	GEL 1,551.4 million	+19.6%
Net interest income	GEL 1,708.8 million	+20.2%
Net fee and commission income	GEL 382.5 million	+26.6%
Operating expenses	GEL 816.1 million	+13.2%
Return on average equity	27.2%	27.9% in 1H25
Net interest margin	6.3%	6.0% in 1H25
Cost of credit risk	0.5%	0.4% in 1H25

Second-quarter profit reached GEL 618.8 million, up 20.6% year on year and 5.8% from the previous quarter. Basic earnings per share increased 22.1% year on year to GEL 14.52.

Return on average equity, or ROAE, measures the profit generated from shareholders' capital. At 27.2% for the half year, Lion Finance remained comfortably above its medium-term target of more than 20%.

Lending and deposits continue to expand

The group's loan book reached GEL 44,429.0 million at 30 June 2026, representing constant-currency growth of 23.0% year on year. Constant currency strips out exchange-rate movements to show the underlying operational change.

That performance was well ahead of Lion Finance's medium-term target of approximately 15% annual loan growth.

Client deposits and notes increased 26.8% in constant currency to GEL 43,664.8 million. Georgian deposit growth was partly boosted by Ministry of Finance balances, but still reached 18.4% after excluding those deposits.

The combination of loan and deposit growth helped net interest income rise by 20.2%. This is the difference between the interest a bank earns and the interest it pays to fund itself.

The group's net interest margin, or NIM, improved to 6.3% from 6.0%. NIM measures net interest income relative to interest-earning assets and is an important indicator of banking profitability.

Georgia remains the high-return core

Georgian Financial Services delivered first-half profit of GEL 925.1 million, up 13.5%. Its second-quarter profit increased 15.4% to GEL 473.0 million.

The Georgian loan book grew 17.1% year on year in constant currency, supported by retail and corporate lending. Consumer loans rose 23.0%, while mortgages increased 16.6% on the same basis.

Digital engagement also continued to deepen. Bank of Georgia's retail digital monthly active users increased 13.3% to 1.92 million. Daily active users passed one million for the first time, rising 20.0% to 1.05 million.

That matters because a more engaged customer base can support product sales and strengthen deposit relationships. Lion Finance said 73% of Bank of Georgia's retail products were sold through digital channels, compared with 69% a year earlier.

GFS maintained a second-quarter ROAE of 30.4%, while its NIM expanded by 40 basis points to 6.4%. A basis point is one-hundredth of a percentage point.

Costs rose 13.9% during the quarter, mainly because of higher staff and administrative spending. However, the cost-to-income ratio remained efficient at 29.9%, compared with 30.1% a year earlier.

Ameriabank is becoming a bigger earnings contributor

Armenian Financial Services produced the fastest growth in the group. First-half profit increased 42.4% to GEL 272.5 million, while second-quarter profit rose 49.3% to GEL 143.0 million.

The Armenian loan book grew 36.8% year on year in constant currency. Corporate lending increased 44.9%, consumer loans rose 39.0% and mortgages grew 21.4%.

Ameriabank also expanded its lending market share to 22.9%, retaining the number-one position disclosed by the company. Its deposit market share, including local bonds, reached 20.2%.

Retail digital monthly active users surged 47.0% to 392,100, while daily active users increased 58.3% to 174,200. This suggests Lion Finance is not simply adding balance-sheet volume in Armenia. It is also scaling customer engagement.

The operational leverage was notable. AFS net operating income increased 28.9% in the second quarter, while reported operating expenses rose just 2.6%. The comparison benefited from retention bonuses recorded in the prior-year period, so the underlying cost increase was higher at 13.5%.

There was also some margin pressure. AFS's second-quarter NIM fell from 6.5% to 6.0% year on year, reflecting higher funding costs and competitive pressure on local-currency lending.

Dividends and buybacks step up

The board declared a second-quarter dividend of GEL 3.05 per share, taking the first-half total to GEL 5.90 per share. That was 15.7% higher than the comparable distribution.

The shares are due to trade ex-dividend on 10 September 2026, with payment scheduled for 25 September 2026. The sterling amount will depend on the Georgian Lari to pound exchange rate used during the specified conversion period.

Lion Finance also approved a further GEL 59.0 million buyback and cancellation programme after completing the GEL 55.0 million programme announced alongside its first-quarter 2026 results.

The group's stated capital distribution policy remains a payout of 30% to 50% of annual profit through dividends and buybacks.

What could concern investors?

The pace of lending growth is impressive, but rapid credit expansion deserves monitoring. The group's non-performing loan ratio increased to 2.1% from 1.9%, while the first-half cost of credit risk rose to 0.5% from 0.4%.

A non-performing loan, or NPL, is a loan where the borrower has fallen sufficiently behind on payments. Current levels remain described as healthy by Lion Finance, but further deterioration would matter because credit losses can quickly absorb banking income.

The Armenian retail NPL ratio increased to 3.9% from 1.1%. Lion Finance said this partly reflected a change in write-off policy introduced during the third quarter of 2025. Even so, this is an area worth watching alongside the continued rapid growth in consumer lending.

Operating expenses also increased 13.2% at group level, including higher staff and administrative costs in Georgia. Although income grew faster and the cost-to-income ratio improved, cost discipline remains important.

Finally, Lion Finance is geographically concentrated in Georgia and Armenia. The company highlighted risks from regional instability, inflation, exchange rates, political developments and tensions involving Russia and the Middle East. These markets offer attractive growth, but they also bring risks that investors in more geographically diversified banks may not face to the same degree.

Growth remains ahead of Lion Finance's targets

Lion Finance delivered growth across most of the measures that matter for a bank: profit, lending, deposits, fees, digital customers and book value per share.

The established Georgian business continues to produce a high return on equity, while Ameriabank is gaining scale and becoming a more significant source of group earnings. At the same time, dividends and buybacks are returning additional capital to shareholders.

The next test is whether the group can sustain above-target lending growth without allowing credit costs, non-performing loans or funding pressures to rise materially. For now, the first-half figures show strong momentum, but asset quality in Armenia and the wider geopolitical backdrop remain the clearest items to monitor.