Page 41 - GEORptDec21

Compared to October 2019, before the crisis, the volume of assets and loans surged by 29% and 36% respectively (21% and 27% respectively, for the volume expressed in US dollars).
The figures reveal the robustness of the Georgian banking system and its continuous expansion over the past decade. However, it comes in sharp contrast to sluggish economic growth – which questions the ultimate utility of the financial system’s development.
Thus, the bank loan portfolio at the end of October 2021 accounts for 76.7% of GDP – calculated based on the latest four-quarter GDP available (end-June). Calculated under the same methodology for comparability, the loan-to-GDP ratio was 74.0% in October 2020 and 66.6% in October 2019. The ratio was only 31.6% 10 years ago in October 2011.
Over the past decade, the portfolio of bank loans nearly tripled (x2.9 times) from $4.49bn in October 2011 to $13.2bn in October 2021. The average annual growth rate of the loan portfolio was 11.4%, expressed in US dollars. Georgia’s GDP increased, however, by less than a quarter from $13.5bn to $16.7bn at an average annual rate of 2.15%.
8.1.3 NPLs
NPL ratio for Georgia’s banks doubles during 2020 to 8.4%
The Financial Stability Committee of the National Bank of Georgia (NBG) has announced that, against the background of the crisis of 2020, the volume of non-performing loans (NPLs) in the country has doubled compared to the previous year and accounts for 8.4% of the banking system’s loan portfolio.
According to NBG forecast, the NPL ratio in the banking system is expected to reach 10% in the first half of 2021.
Silk Road bank also posts a high NPL ratio of 26.7% after a 7.2pp rise over the past 12 months.
As for the highest annual growth, Pasha Bank and Silk Road Bank are the first place with the annual rise of their NPL ratios at 7.2pp.
The NPL ratios have increased by 4.8pp and 4.6pp in 2020 at the systemic banks, Bank of Georgia and TBC Bank, respectively. Their NPL ratios were 8.4% and 7.7% respectively.
41 GEORGIA Country Report December 2021 www.intellinews.com