Page 41 - GEORptApr21

8.1.1 Earnings
Georgia’s banks boast stronger profits by 25% in Jan-Feb
Profits of Georgia’s banking system shrink eightfold in 2020
The aggregated profit of the 15 banks operating in Georgia was Georgian lari (GEL) 245.5mn ($74mn) in January-February, marking a 25% improvement year on year.
Also, according to financial statements submitted to the National Bank of Georgia (NBG), the net profit of the sector in February amounted to GEL132.1mn, 16% more than was recorded for February 2020.
The aggregated income of the banks in the first two months of 2021 rose by 10.3% y/y to GEL878mn. Out of this, interest income amounted to GEL627mn. Interest derived from retail loans rose by 10% to GEL368mln while corporate loans generated GEL259.5mn in interest (21.3% up y/y).
Banks’ revenues this year were backed by robust increase in the stock of loans: 22% y/y to GEL37.6bn ($11.4bn) at end-February. The stock of loans to companies rose by 24.4% y/y to GEL24.4bn while retail loans advanced by 19.8% y/y to GEL19.0bn.
In the first two months of 2021, banks’ expenditures increased by 4.7% y/y to GEL606 mn. Of this, interest expenses were GEL370mn (+12.2% y/y). At the same time, the payroll increased by only 4.9% y/y to GEL121mn.
The banks did not set aside significant loan loss provisions in the first two months of 2021, since they built massive buffers in this regard in March last year. Only GEL16.7mn was set aside as provisions in January-February this year, 47% less than in the same period of 2020.
As a result, the net profit of the banks amounted to GEL245.5mn, while the amount paid as profit tax amounted to GEL26.3mn.
The aggregate net profit of Georgia’s banking system reached Georgian lari (GEL) 99mn ($30mn) in 2020, resulting in a slim 0.17% return on assets (ROA) ratio, according to calculations published by Business Media.
The banks' financial results were hit by provisions set up at the request of the central bank at the end of March, ahead of the expected deterioration in the quality of their loan portfolios amid the economic disruption caused by the coronavirus pandemic.
The total assets of the banks increased by 22% despite the economic crisis and amounted to GEL56.9bn ($17.2bn, a figure comparable to the country’s GDP).
However, the total profit of the sector decreased by eight times compared to the GEL853mn recorded in 2019.
In 2020, eight banks posted a loss. The biggest loss was registered by Cartu Bank, which suffered a loss of GEL24.7mn. TBC Bank had the highest net profit, posting GEL123mn.
VTB Bank recorded a loss according to the Georgian financial standards. "We had a loss according to the Georgian standard, but we are profitable according to the international standard; which standard is more correct, decide for
41 GEORGIA Country Report April 2021 www.intellinews.com