Lion Finance Group PLC (BGEO) Earnings Call Transcript

Welcome to Lion Finance Group's quarterly earnings call. Today, we are pleased to present our performance and results for the second quarter and the first half of 2026. My name is Nini Arshakuni, I am Head of IR, and today I will be moderating this call. I am joined, as always, by the group CEO, Archil Gachechiladze, group as well as Bank of Georgia CFO, Giorgi Shagidze, Ameriabank CFO, Hovhannes Toroyan, and our group economist, Akaki Liqokeli. We will present – we'll go through the results presentation first, and then in the second half of this call, you will be able to ask questions. Please be aware that this call is being recorded. With that, I will first hand over to Archil for the opening remarks, and then we will continue with the deep dives. Archil, please go ahead.

Thank you for joining the call. I am very happy to report a very strong quarter. In the second quarter, we registered a very high quality of the franchise, which is shown in the Net Promoter Score in both markets, being very high, as well as the significant growth of our retail franchise, which is reflected in growth of monthly active users in Georgia, reaching very close to half of the population, meaning the total population, including the small kids and so forth, who are not all bankable, of 1.9 million, which is 13.3% higher than last year and much higher growth, so stronger penetration happening in Armenia, getting close to 400,000 monthly active users. What's also interesting is that in Georgia, we also achieved more than 1 million daily active users, so that more than 1 million people open our application daily. In terms of the revenue numbers, our second quarter was up by 23.4% and 19.6% for the first half year. And profit was similarly strong growth, where we had 20.6% growth in the first quarter -- the second quarter, sorry, and 17.3% for the half year. Also, which was very strong showing was balance sheet growth, both on loans as well as deposits with 23% and 26.8% accordingly. That's in constant currency. As you may remember, we guide about 15% growth, but usually deliver around 20% over the last few years as the macro has been stronger than the average outlook that we have for longer term. Having said that, 23% is even stronger than our historic average. And that's happening while we have a lower-than-guided cost of risk of 0.6% in the second quarter and 0.5% for the first half year, and delivering about 27% return on equity. So very strong numbers, not only in terms of profitability, but growth in terms of revenue as well as balance sheet. We also had positive operating jaws in both markets and then obviously combined. So all in all, very, very good numbers as well as strong numbers in terms of the quality of the franchise shown in terms of coverage of monthly active users and the satisfaction of the customers. So I'm very appreciative of the whole team's efforts that will lead them to deliver these results. So with that, I will let Akaki tell us about the macroeconomic environment in Armenia and Georgia.

Hello, everyone. I will share with you the recent macroeconomic developments and outlook for our core markets, Georgia and Armenia. And let me start with growth performance. In the first half of the year, Georgian economy has demonstrated and maintained strong growth performance, with real GDP growth reaching 7.9% year-on-year. With this strong number and also improving economic resilience, we have revised our full year real GDP growth forecast for 2026 from 7% to 7.5%. The Armenian economy expanded by 4% year-on-year in the first quarter, reflecting high base effect from the previous year and some pre-election uncertainty. The preliminary numbers show that the growth trajectory improved significantly from quarter 2, and our full year real GDP growth performance, growth outlook for Armenia is 5.5%. Overall, these growth projections remain significantly above the peer median, and they are expected to be driven by services in the following years, as it was the case in the previous periods, as the right-hand side chart shows. This service-led growth is expected to be broad-based, export-oriented, and productivity enhancing. To give you a few highlights in this area, Armenia launched the largest AI factory in the CIS region just a few days ago, and Georgia has moved on to the construction phase of its first deep sea port. The strong growth performance has been also supported by diversified and resilient external sector inflows, including export proceeds, tourism revenues, and remittances. As this slide shows, the overall inflows continues to increase in the first half of 2026, despite escalations in tensions in the Middle East. The resilient inflows have also supported currency strength. Georgian lari and Armenian dram continue to appreciate against the U.S. dollar in the first 7 months of 2026. And in fact, these 2 currencies are among the best performers, 3 best performers in the broader region, as the right-hand side chart shows. Importantly, the strength of Georgian lari and Armenian dram has been also underpinned by credible macroeconomic policy frameworks in the 2 countries, reflected in declining deposit de-dollarization trend and also growing demand for local currency government securities among international investors. These structural drivers are expected to remain in place in the following years and support local currency values. The currency strength also contributes to price stability. And in recent months, we have seen signs of inflation stabilization in both countries following some uptick in previous periods, driven by global increases in food and energy prices. More importantly, service price inflation has been relatively stable in both countries, reinforcing our confidence that inflation should go back to Central Bank's 3% target next year as base effects unwind. The central banks continue to be attentive of remaining inflation risks as global commodity markets remain volatile. In May, the National Bank of Georgia increased its policy rate by 25 basis points, signaling its continued commitment to price stability. For the rest of the year, we do not anticipate any policy rate moves from either central bank. And in 2027, we see room for around 75 basis point cuts by National Bank of Georgia as it gradually exits moderately tight policy stance. The central banks have been also actively building international reserves. This has been enabled by resilient inflows and ongoing trend of deposit de-dollarization. As of end of July, gross reserves reached new record highs of USD7.5 billion in Georgia and $6.2 billion in Armenia. Importantly, the reserve levels remain within adequacy ranges, providing solid buffers against possible external shocks. Also, higher reserve levels have been a major factor behind improving credit outlooks of both countries recently. Fiscal policy is another pillar of macroeconomic resilience. Both Georgia and Armenia continue to demonstrate fiscal discipline through prudent management of public debt. As this chart shows, the Georgian authorities remain on a deleveraging path, maintaining narrow fiscal deficits. The Armenian authorities have managed to stabilize public debt levels despite temporarily elevated spending needs. In both countries, public debt continues to de-dollarize, reducing the fiscal sector's exposure to exchange rate movements. And lastly, the banking sectors in Georgia and Armenia have benefited from favorable macroeconomic conditions. They continue to deliver robust growth and sustain strong asset quality. Loan dollarization levels remain low by historical standards, with a recent uptick in Armenia related to business lending. Capitalizations are highest among the regional peers in Georgia and Armenia as measured by Tier 1 capital to assets ratios. This demonstrates prudent risk management practices in both countries and a conservative supervisory approach. So this concludes my part. Thank you. Back to you, Nini.

Thank you, Akaki. Now, Giorgi will walk us through the main highlights of the Georgian financial services first.

Thank you, Akaki. Thank you, Nini. Let me share the presentation. So good afternoon, everyone. As Archil said, we had another quarter of very strong financial performance across the board. I'll be now going through Georgian financial services, and we'll start with the highlights for the quarter. Our profit for the quarter grew by 15.4% year-on-year, and for the first half of the year, it grew by 13.5%. This resulted into the return on equity of 30.4% and 30.9%, respectively. Our loan book grew by 17.1% at constant currency rate and 24.2% in deposits. If we exclude Ministry of Finance deposits, the growth was about 18.4%. Retail monthly active customers grew by 9.5%, reaching 2.28 million, and retail digital monthly active users grew by 13.3%, reaching 1.92 million. Now, this slide basically shows why we believe our customer growth is durable, and it is supported by broad digital ecosystem, as you can see on the left-hand side of the slide. On the right-hand side, I can stress a few numbers. On the retail app, our customer satisfaction was very high at 92%, with the scores at Apple Store and Google Play at 4.6 and 4.7 respectively. Our digital daily active users reached 1 million. So pretty much 1 million people open our app every day. 88% of our loans were granted through digital channels. In business banking app, a similar dynamics with the customer satisfaction score at 92%, digital monthly active users being at 84% of total monthly active customers. Here, too, at the Apple Store and Google Play, we have very high scores at 4.9. I want finally on this slide to reiterate that Global Finance named us as the world's best digital bank in both 2024 and 2025 years. Moving on to payment slide. Payments are one of the core pillars for the ecosystems that I mentioned. You can see a very strong growth, in acquiring volumes, 20% year-on-year or 12% or 12.7% quarter-over-quarter. In terms of issuing, this growth was 11.9% year-on-year. In terms of number of cards reaching 1.7 million, which is about 2.5% growth quarter-over-quarter. We reached 28,800 active merchant terminals, which was 13.3% growth year-on-year. And finally, our market share for the acquiring volumes was further strengthened, reaching 56.7%. Now, in terms of customer centricity, which represent -- which is shown here in terms of Net Promoter Score, it approximately doubled over the period shown. And then for the recent 6 quarters, it was more than 70%, while it a little bit dropped last 2 quarter, it is still within the acceptable statistical noise and being above 70%, it is extraordinarily high on par with very strong customers or the best customer centric banks in the world. This allows us to anticipate customer needs and wants before the customers approach us and then translate it into the respective financials as we do this. Loan and deposit growth was strong as well, 17.1% at the constant currency rate growth of the loan year-on-year or 4.2% growth of the loan book quarter-over-quarter. The growth was across the board, corporate and retail banking leading the growth in loans. The de-dollarization remained broadly stable with 57.8% local currency loans contributing to total loans. In terms of deposits, the growth was 24.2% constant currency rate. As I said, if we exclude Ministry of Finance deposit, the growth would be 18.4% year-on-year and 3.5% quarter-over-quarter. Now in the quarterly growth here, the SME led percentage growth wise. And then in terms of the de-dollarization, the local currency deposits contributed to 58.1% of total deposits. And this brings to final slide of my part of the presentation, with the growth and strong profitability actually further strengthened our positions both for capital and for liquidity. We operate with the buffers comfortably above the minimum respective requirements. In terms of capital, we operate 2.7, 3.4, and 2.2 percentage point above the respective CET1, Tier 1, and total capital requirements. In terms of liquidity coverage ratio, we were at 152% and net stable funding ratio at 132.9%, both above the minimum 100% requirements. Now we will be deploying the liquidity in dollars supporting growth. The liquidity in local currency may remain the same, but we optimize cost of funding so that the high liquidity also has positive impact on our profitability. So thank you. And Nini, please.

Thank you, Giorgi. Now let's move on to the Armenian financial services and Hovhannes will discuss the results.

Yes. Thank you. I am very happy to share also a pretty impressive results for the second quarter for the Armenian financial services. So for the second quarter, our net profits grew about 50% year-over-year. And for the first 6 months, the growth was slightly more than 42% to reach GEL 272 million. Return on equity by the end of the second quarter was 23.1%, and these were predominantly due to two factors. On one hand, we had very significant and impressive growth on the balance sheet. Our loan book grew by almost 37% in constant currency, and deposits grew 37.1% in constant currency basis, with NIM stable from one quarter to another. At the same time, there is also a significant boost by noninterest income. Indeed, our net fee and commission income grew by more than 38% year-over-year, and net foreign currency gain grew 19.3% year-over-year. Cost-to-income ratio came down lower than 40% for Q2. We do continue to grow extensively. Our monthly active customers grew by almost 28%, to surpass 0.5 million. And as during the previous quarters, our digital MAU grew much faster at 47% year-over-year. And this growth of accelerated MAU and DAUs is predominantly to our digital ecosystem that we have been building around the super app that goes beyond banking functionality. And as presented earlier, it has 2 main pillars. On one hand, we are building a system to satisfy the customer needs in terms of their banking and financial needs, both in terms of functionality and user experience. At the same time, it's still around microservice architecture for better scalability. And here you can see different pillars that are building this banking and beyond banking proposition for our customer base. And as already mentioned, our digital MAU grew by 47% year-over-year. Our DAU grew even faster, 58% year-over-year. And our digital engagement increased by almost 10 percentage points to surpass 75% by end of the Q2. We launched our MyAmeriaStar, that is a retail application for kids, last year, and it is really picking up both for education -- financial educational purpose as well as to satisfy very basic needs of younger population. Here you can also see more details about our loan portfolio and deposit portfolio. Our loan portfolio in constant currency grew almost 37%. The structure continues to be very balanced in terms of foreign currency, and 55% is loans in FX, and 45% is local currency. The mix of local currency has slightly gone down, and this is predominantly due to the fact that our corporate loans grew a bit faster. Indeed, year-over-year, it grew 45%, despite being the largest in the country. And this really reflects and resembles with the large infrastructure and private projects that are unleashing in the country, as Akaki also presented. Our retail loans grew 26.8% in constant currency base, and consumer loans grew 39%. In terms of our deposits, the de-dollarization continues to evolve, and this is predominantly due to the fact of having very stable Armenian dram over the course of last few years. The growth overall was slightly more than 37% in constant currency basis, whereas the share of local currency is slightly more than 60%. We do continue to be the largest lender in the economy and to the households as well. At the same time, we were able to increase our market share, both in terms of loans by 1.7 percentage point as well as for deposits by 1.1 percentage point. I think it's also important to mention that beyond simply lending and attracting more customers, our transactional banking has seen a very significant boost. Indeed, our acquiring business volume grew by 48% year-over-year. At the same time, our issuing business payment MAU grew by more than 60% year-over-year to surpass 400,000. In terms of capital position, we were able to improve and have more than 1.5 percentage point headroom on top of the CBA requirement. These changes have been predominantly due to 3 factors. One, we did distribute the second tranche of our AT1 notes. As you might remember, we had the first tranche in February of this year at 8.5% coupon. The second tranche of, again, USD50 million was distributed in April by 8.0 coupon. At the same time, Central Bank of Armenia introduced some easing on risk weights for the SMEs starting from April, aligning it with the Basel III requirements. And as a result of these changes also, we were able to pay our first dividends to the group at the amount of GEL 157 million. We continue to have a very comfortable liquidity position as well. Our LCR sits at 180%, and our NSFR is 126%. This is it for me, and then I'll be happy to take more questions later. Thank you.

Thank you, Hovhannes. Now we are handing over back to Archil, who will summarize the results and discuss them from the group perspective.

Hovhannes, I think the group results are good. Hello? I think the group results are good, but when I hear Ameriabank separately, it's hard to follow because 35% increase in loan and deposits and then 40% in, I think, acquiring volumes, payment acquiring is not an easy thing to follow. Just one second. Let me think a second. Hello again. Yes. So to summarize what it translates into the group numbers, the operating income has gone up by 19.5% for the quarter year-over-year, 17.3% for the first half. And we saw that the net interest income has gone up year-over-year by 21.8%, of which 18% was Georgia and 28.6% was Armenia. Obviously, Armenia is experiencing much higher growth, although Georgian is also not too bad with about 17% growth on constant currency. Net noninterest income was up by 14.2%, slightly less in Georgia, 17.1%, and we'll see the breakdown of the fee and commission and FX separately. And the Armenia was up by almost 30% year-over-year, which was very strong showing. Now in terms of how that breaks down is that net fee and commission income was -- showed a very healthy growth of 26.3%, of which 25% year-over-year was Georgia, which benefited from a lower base last year. And if you normalize for that, which was something to do with the Visa and Mastercard fee structure, which unwounded in the fourth quarter. So if you normalize that, it would be around 17%, if I am not mistaken. Normalized, sorry, 22.3%. And then in terms of Armenia had also an adjustment last year, we didn't have something in the base, which this time it is there. And if you adjust it for that and normalized, the net fee and commission income growth would be 27.5% in the year-over-year in the quarter. In net FX, Georgia had a slight decline, so there it continues to be a very competitive environment in Georgia for the FX, but showed a very strong growth in Armenia of 19.3%, which is welcome news. And operating expenses were 12.8% combined, of which 13.9% was for Georgia and 2.6% was Armenia. If you adjust for the base effect of the sign-up bonus, which ended last in the third quarter, you would be looking at 13.5% in Armenia. In both markets, the operating jaws were positive, and obviously, the combined was positive as well. And you can see that in the cost-to-income ratio, the overall group's cost-to-income ratio reduced by 2 percentage points from year-over-year in the quarter, second quarter. As you can see, from 36.4% to 34.4%. And in Georgia, the reduction was slightly. In Armenia, a slightly bigger one for the reasons that we discussed. So being under 35% for the combined entity is a comfortable place to be. As we described, the growth overall for the group was 23%, and 26.8% for the deposits, both well above our medium-term guidance. Net interest margin stayed stable in Armenia, and showed a slight uptick in Georgia, because of slight reduction in deposits and slight uptick in the loans. So nothing significant really happened there, but it was still positive. Going forward, we should expect growth stability will be growing dollars, but there will be some offsetting factors as well. Cost of risk, although it was slightly up in Armenia, mainly due to the consumer loan proportion becoming larger. But otherwise, it's still well below our interim guidance of 80 to 100 basis points. So 0.6%. And for the half year, it came out to be 0.5%. So the coverage didn't change much. And the profitability, as we discussed, was 20.6% higher year-over-year, and 17.3% for the full year. Return on equity stayed around 27%, and return on average assets was a very strong showing, also just shy of 4%. So all in all of this translates into stronger capital distribution. So the Board recommended a second quarter dividend of GEL 3.05. Since last year, we had dividend only for the half year, so not quarterly. The half year number compares to the previous half year number, which is up by 15.7%. So we are continuing to strongly increase the capital distribution, and there will be also another GEL 59 million spent on the invested in the stock as the share buyback. So we're continuing our tradition of 2/3, 1/3 roughly, dividend versus buyback. So this is to summarize the fact, which we already mentioned a couple of times, that our midterm growth, which is 15%, we are hitting that target very strongly with 23% in both markets. By the way, we are ahead of the market growth. In terms of the return on equity, we are also well above long-term guidance at 27%. And we're distributing about 30% given the fact that we are growing much faster than our midterm average. So we are deploying capital at very profitable rates and sitting at very comfortable buffers as well. So that's on our side, and we will stop here and open for Q&A.

Yes. We can move to the Q&A, and we have a few raised hands already from our analysts. The first on the line is Jens Ehrenberg. Hi, Jens.

And well done on another very strong quarter. Just a couple from my side. Firstly, on Georgia, I appreciate, Archil, you said there was not too much that happened on the NIM. I think this is the second quarter in a row where you're well ahead of sort of my expectations on the NIM. So is there anything that came out of this that would give you -- I don't know that would will give sort of more confidence in the sustainability of the NIM as to where it is right now? And then secondly, for Hovhannes on Armenia. I think you've highlighted the investment in infrastructure activity that has been supporting the corporate side. I suppose, how much do you think will that remain a key driver for the business? And more broadly, how should we think about sort of split between really the underlying market growth versus further market share gains in Ameriabank?

So maybe I'll start with NIM. So yes, we believe that the ability to retain that NIM is very strong. So we will be slightly higher, slightly lower. It doesn't really change much overall in the big picture. I understand that it's good to calculate exactly, but the life doesn't happen like this. Right now, what we can see is that there is pressure that NIM can slightly increase, in fact, but I think there are also some other factors that could reduce it. So we are seeing growth stability, and we feel quite strong about it. So, yes, that's all I can say about that. Hovhannes?

Yes. Thank you. I mean, we have been presenting that there are -- I mean, the overall economic output in the country is very positive. It has been very positive for the last couple of years, and for the near future, we still remain very positive as Akaki presented. And it's not only due to the large scale projects that are happening in the country, but also the overall base or the macroeconomic stability is there. So Ameriabank, being the largest lender in Armenia, obviously is taking advantage of the situation in a good way, that it is being able to serve more and more customers, both that existed here and also the new large projects that are being established. So if you look backwards and if you look at our trends as well, there is a very solid growth for the market overall. But we have been beating the market year after year, and we will be continuing to do that as well. So I would anticipate that overall, due to the very positive macroeconomic environment, overall, the banking system will continue its significant growth. But we will do our best to win over some of our competitors to increase our market share as well as alongside growing overall margin.

Yes, especially with the retail rollout, right? I mean it's -- for years, Ameriabank has been the #1 premium brand. #1 brand in corporate and #1 premium retail brand, which was rolled out to the mass retail using the digital capabilities. So that will very much continue. I mean it's just shy of 400,000 monthly active users and can easily be well above 1 million. So this will take years, obviously, but it will be happening.

Thank you, Jens. The next question comes from Sheel Shah.

Hello. How are you guys? Can you hear me?

Yes. Go ahead.

Yes.

Great. I've got a couple if you could help me, please. First, on the Georgian deposit market shares. On Slide 20, you can see that there's a little bit of a dip in terms of Georgia, also TBC. Is there anything here going on in terms of competition we should be thinking about? Or is that more the strategy to get below the 40, and then we can get the 50 bps capital release on the back of that as well? That's the first question.

Yes. It's engineered, basically. We've been targeting to go below 40 without upsetting customers too much. So I mean, we can easily go under 40 like in 1 month, but you don't want to be a place where people don't think of you when they want to deposit money, right? So it has taken us time and very careful consideration how to do it. But yes, that's exactly right. I mean, we wanted to be below 40, and that capital release will take some time, though, because the way it's applied is the last 12 months average has to be below 40. It will take us 6 to 12 months to get there. But yes, that's what we should anticipate 50 bps release.

Thank you. That's helpful. And then SECONDLY, you've given the capital ratio for Georgia, you've given it for Armenia, and you can see a dividend upstream for both to the group. What's the capital position of the group? Because that's a dividend paying entity. That's also the acquisition entity. And in terms of CET1 there and sort of the excess capital held at that level, how does that look?

There's no leverage there. Giorgi, do you want to cover that?

Yes, we don't have any capital requirement at the group level. It is a holding company. We do keep some cash to meet the various expenses requirements, as well as some cash for future growth. There is no capital requirements at the group level.

But in terms of the capital position, I think it's -- if you remember the capital position there, it's like $60 million, maybe more or less, but it's all cash. So we don't have much assets there other than the holding company, and we killed any leverage there for a number of years ago. So there's not much there, and there's a little bit of cash as a buffer.

Okay. That's helpful. And then finally, just on cost of risk in Armenia. Is there anything that we should be thinking about there as the consumer loans are growing quite fast and there was a pickup there in terms of retail cost of risk?

Well, I mean, if we -- when we look at it as product by product, by all the products, we are still way below our midterm guidance, and we are very comfortable at the levels that they are at. Obviously, consumer loans in general are a bit more risky, but with higher yield. So technically, in terms of risk reward combination, we are very comfortable with the yield and risk level for the consumer loans as well. But obviously, the more the structure of the balance sheet will change, we may see some changes to the risk position as well as net interest income position.

Right.

So the overall numbers are comfortable. Obviously, when you're looking at the 40% increase year-over-year, where we're looking at the different subgroups and dissecting and so forth. But overall, numbers are still very solid.

I think Sheel was done with questions. The next on the line is Alex Kantarovich.

I hope you can hear me. Great results. It was a pleasure to go through them. I would like to ask about the second half. If with the regular adjustments for seasonality of OpEx, for example, if second half trends would be broadly comparable to the first half. This is my first question. The second question is much broader. Given that there were reports of certain issues, geopolitical issues for Armenia with Russia, if you can see any macroeconomic impact potentially. That would be my worry. Other than that, once again, great trends, great results.

Yes. In terms of the second half, we have all the reasons to believe that they will be as strong as the first half. Usually, in fact, it's more. So if we look at the history of our banks, given the high growth and because the first quarter is slightly slower, usually second half is better in terms of activity and so forth. There's no guarantees, obviously, but the anticipation are all positive. Regarding Hovhannes, do you want to cover the revenue numbers.

Yes, sure. In terms of the recent development of the relationship between Armenia and Russia, I mean, there are some limitations on the foreign trade, but that covers less than 8% of the trade with Russia. So -- and obviously, in a short-term perspective, there have been some subsectors that have experienced some shock. The government of Armenia has taken certain measures to minimize this impact. And when we discuss the issue with our customers, we feel that by and large, the measures that have been taken by the government of Armenia are, that we can call enough to cover that short-term shock. And today, most of those products are being exported to other countries, mostly to Europe or other regions. So we do not really anticipate in the mid-term to long-term any significant impact of the limitations that have been introduced over the previous 2 months on the development or economic development of the country. And it is fully in line with the recent reports that have been on our Armenia in terms of forecast of GDP growth and so on.

Thank you, Alex. The next on the line is [ Dmitriy Vlasov ].

Again, congrats on very strong results. My questions would be about Armenia, also, a bit broad ones. So the first one is about your ambition to get to 30% plus market share at some point in near-term. Like is this organic or also includes potentially some inorganic capabilities? And then the second one is on the overall market. Like the figures are very impressive, and we see very little slowdown in the market overall. Do you have the understanding when we would see a bit of normalization slowdown?

Regarding the acquisition versus organic growth, maybe I will cover that, Hovhannes, and then take the second question. So we would be open -- I mean, first of all, our default case is to go on with the operate of -- organic growth. Obviously, we'll be open for the inorganic, but that would depend on the regulators' openness to seeing such merger given the fact that we are already the largest player on the market. Having said that, who knows? But, yes, our default case is organic. Please, Hovhannes.

Yes, in terms of market position, you're right. I mean, overall, the market has produced very good numbers for the last couple of years. And when we look at the macroeconomic forecasts, both done internally within our group as well as third party, we still remain pretty optimistic about overall development. Also, as presented for Ameriabank in particular, we do expect to grow a bit faster than the market and in both sectors, for corporate and retail. For retail, as Archil also mentioned, it's predominantly due to the rollout, and we see very impressive results in terms of growth. Our MAU is growing at 47%. Acquiring business is growing at 48%. Our loans, consumer loans are growing at 39%. And indeed, more than 96% of those loans are A to Z automated. So it not only enables us to lend to bigger chunk of the population, but also the cost of loan underwriting is going down significantly. So we do hope to continue these developments further, and we still remain very positive both for the banking sector overall, and also we plan to beat the market in terms of overall growth.

Could I have a very quick follow-up on the financial market share? Can you please remind me what sort of the regulatory cap on the market share in Armenia?

There is no regulatory market cap in Armenia, at least as of today, because we are the largest lender and we are slightly shy of 23%. As of today, there is no cap.

Just to be clear, there's no cap in Georgia either. But on the deposit side, from the financial system stability point of view, above 40%, there's higher capital requirements, and it's just not worth it to go much further than that on the deposit side.

Thank you, Dimitry. The next question is from Ben Maher.

I just have 3 questions, please. The first one is on the customer spreads in Armenia. I think in local currency it's still showing signs of pressure. I think last quarter it was mainly driven by the deposits, but this quarter see it's more on the asset side. So just interested in any color behind that. Second question is, again, on Armenia. Cost growth is still well below revenue growth. I'm just interested in how you -- do you expect this to continue? Or how do you expect cost growth to evolve in the second half relative to revenue growth? And then my final question, I think it was already touched upon pressure overlay in Armenia. The capital buffers obviously now are comfortably above your minimums. How do you view, if you don't necessarily pull the trigger on Armenia, how do you view new market, new potential markets? Are there any kind of countries that you're particularly interested in?

Let me cover the second and third one, and then I'll ask you to repeat the first question. Then, sorry, I didn't really quite get the question. So in terms of having a positive jaws ratio, for the last couple of years, that has been enabled predominantly due to the investments that we have been doing into our digitalization in general. As I mentioned, for example, in terms of underwriting, the cost of single loan underwriting for consumer loans is going up more than 30x. And moreover, I mean, in terms of overall coverage option, today we are able to serve any customer on the territory of Armenia without having like a physical presence nearby. And we see, you've seen, as I mentioned several times about our growth rate of MAUs and DAUs, that our customers tend to use our digital channels more. And due to the fact that the single usage is technically the marginal cost of usage of our mobile banking or other digital channels is close to 0. I think it's very much expected that costs are growing much slower than revenues. Plus, on the revenues, we do already experience a significant network effect, and that was something that we were talking about 2 years ago, that our rolling into mass market would enable us a network effect on the revenue or asset side as well. And now when we are serving more than 500,000 monthly active customers, we are getting more and more of that. And you can see it in our P&L as well as on our balance sheet. If you don't mind, could you repeating the first question?

Yes. Just on the customer spread in local currency, it is down again Q-on-Q. Just interested in any color behind that.

Yes. There has been some changes in the regulatory environment where the central bank -- where our required reserves in the Central Bank of Armenia in local currency have been reduced. And instead, we have been reserving in FX. And that has created a temporarily additional excess liquidity in local currency in the local market. That has had its impact on the short-term in terms of rates, both on the borrowing and lending side. We do expect that to normalize by the end of the year. And overall, for both technically currencies, we anticipate in the mid-term to have broadly stable spreads that will translate into broadly stable NIM.

And the third one was, what are the other markets that we would consider looking at as a group to enter? And we laid it out during the Investor meeting in June that the target markets would be the Baltics, the Balkans, and 2 countries in Central Asia, 2 large countries. Having said that, because we are focused on the largest players in the market, top 3 or top 5 maximum in some of the larger countries, that also means that we will be waiting and seeing the -- looking for the right opportunity.

Thank you, Ben. The next on the line is Simon Nellis.

Congratulations on the strong results. Just a quick question on the dividend from Armenia. Are you going to be paying dividends regularly from that business? Or is it going to be an annual event? And roughly how much of the earnings do you expect to be upstreaming? That would be my first question. And then, yes, sorry if you have touched on this before, but could you just elaborate on the outlook for margins in both Georgia and Armenia a bit? Is the sharp increase in margin we saw in Georgia sustainable? Or do you expect that to normalize somewhat?

So I'll start with the last one. So the margins we expect broadly stable in both markets. And they are different kind of moves on the positive and negative sides, which will be, I think, offsetting each other. In short, there's slight -- we'll be deploying more liquidity, dollar liquidity, in Georgia. Having said that, there's slightly some other changes that are offsetting. In Armenia, it should be more or less stable going forward, at 6%, as we can see. What was the other one?