Page 31 - GEORptMay19.pdf

growth on medium horizon
ADB extends loan to Georgia to spur mortgage lending in rural areas
Georgia’s leading commercial bank TBC moves into Uzbekistan
position, the bank's chief executive Archil Gachechiladze said in an interview w ith Reuters.
The bank reported 14.5% growth in revenue in 2018 while its profit before non-recurring items and tax soared by 25.1%. Net profit increased, however, by only 5.5%..
“Our profit should be growing a bit more than our revenue line ... We believe that medium-term growth (in net profit) will be about 15% ,” Archil Gachechiladze, who became the bank’s chief executive three months ago, told the news agency.
"We believe that medium-term loan book growth will be above 15 percent," Gachechiladze said.
Gachechiladze said recent regulatory changes in retail lending guidelines would lead to an easing in growth of unsecured consumer lending. The changes include tighter rules on how much banks can lend and consumers can borrow.
"In the shorter term it [the tighter regulation] does mean less growth for us, or in some cases not being able to lend to customers that we would like to," Gachechiladze said, adding that the new rules were "extremely beneficial for the country as they reduce risks."
He said the bank still expected solid growth in mortgages and lending to corporates, as well as to small and medium sized enterprises (SMEs).
"On average we will be growing at around 15-plus percent ... There will be a bit less growth in consumer lending, a bit more growth in corporate, SMEs, mortgages," the 39-year-old Gachechiladze said.
Georgian lender Credo Bank and the Asian Development Bank (ADB) on April 17 announced t hat they have signed a GEL60mn (€20mn) loan agreement aimed at helping the local bank extend long-term financing in local currency to support low-income customers in home purchase, renovation and construction in rural areas and on the outskirts of Georgia’s capital, Tbilisi.
Associated technical assistance will suport Credo Bank’s efforts to extend the reach of its branchless banking services to rural clients, with a specific focus on improving financial and business literacy as well as access to finance for women.
The loan is provided in Georgian lari supporting Georgia’s strategy to increase the use of local currency and reduce the foreign currency-induced credit risks of loan beneficiaries and banks.
“This is ADB’s second project with Credo and it allows the bank to expand its services to small business and rural household customers, most of whom are women,” said ADB lead investment specialist for private sector operations Rainer Hartel.
“We are proud to work with Credo Bank to reach underserved regions, boosting economic activity and affordable housing to enhance Georgia’s sustainable and inclusive growth.”
Credo is a financial service provider for households as well as micro and small enterprises (MSEs) in Georgia, serving about 230,000 MSE borrowers, 50% of whom are female. It has an average loan size of GLE 2,300.
The biggest bank in Georgia TBC is moving into Uzbekistan following the acquisition of a local payment service called Payme. It is purchasing a 51% stake in the fintech company for $5.5mn, the bank announced this month. The idea is to roll out TBC’s digital banking offering and tap into the Uzbek population, by far the largest in Central Asia, while the country rapidly opens to the rest of the world following changes that have followed the death
31 GEORGIA Country Report May 2019 www.intellinews.com