Page 25 - Caucasus Outlook 2023

3.0 Real economy outlook

3.1 Real economy – Georgia

3.1.1 Retail
Retail sales in Georgia increased 22.6% y/y in the second quarter of
2022, down from a 31% increase in the previous quarter, according to
Geostat. The second quarter of 2020 was by far the largest decline in
retail trade recorded at -14.5%, brought on by the pandemic.

In 2017, retail trade turnover reached GEL9,929.8mn, up from
GEL8,101.9mn in 2016. Retail sales, which has been growing at a
strong double-digit pace for several years, grew by only 8-9% in
2015-16 as wage growth slowed and unemployment rose.

Retail sales y/y in Georgia averaged 14.5% from March 2010 to June
2021.

3.1.2 Banks

Georgian commercial banks' financial reports indicate that 14 banks in
the country together earned a net profit of GEL836mn ($285mn) in the
first half of 2022. According to the Banking Association of Georgia, 95%
of these profits were attributed to the country's two largest banks, TBC
and Bank of Georgia. In 1H22, the banks received interest income of
GEL2.7bn ($919mn), most of which stemmed directly from loans made
to citizens and businesses.

TBC Bank reported a continued, “robust” financial performance in its
third quarter, with net profit for 3Q22 totaling GEL321mn ($119.6mn).
This made for 55% annual growth, driven by both interest and
non-interest income streams. The FTSE 250 company said that as a
result, its return on equity for the quarter stood at 31.1%, while its return
on assets amounted to 4.8%. For the first nine months of 2022, its net
profits came to GEL780m ($290.5mn) – up by 28% y/y – with a return
on equity of 26.6% and on assets of 4.1%.

“I am confident that the strength of our Georgian banking franchise,
coupled with our international operations, will ensure strong growth and
profitability in years to come,” said TBC Bank CEO Vakhtang
Butskhrikidze.

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