Page 35 - GEORptOct20

Georgia earmarks $110mn for guaranteeing loans to productive sectors
The global and thus Georgian economic environment is difficult and uncertain, TBC said in its press release. Bank economists' latest analyses forecast that the Georgian economy will contract in 2020, which will have a negative impact on many businesses and individuals in the country.
Therefore, in close co-ordination with the NBG, TBC has decided to create an "extra loan loss provision buffer" to prepare for the potential impact of the COVID-19 pandemic on the Georgian economy. As of 31 March 2020, TBC Bank decided to book additional provisions in accordance with local standards, at 3.0-3.3% of the loan book and resulting in an estimated up to 2.44% decrease in the CET1 capital adequacy ratio, according to the bank's press release.
The government of Georgia has passed changes in a credit guarantee scheme to provide more state guarantees on loans in the most productive sectors. ​The budget of the programme will be Georgian lari (GEL) 300mn ($100mn) instead of the initially announced GEL20mn.
The credit guarantees are valid for no more than 10 years after the loan is issued or restructured.
Furthermore, along with the banks, microfinance organisations will be involved in the programme, for which an additional GEL30mn ($10mn) will be allocated, economy minister Natia Turnava said.
The programme will be administered by the Ministry of Economy under the name "Produce in Georgia".
The government decree also stipulates that in order for a company to be eligible to participate in the credit guarantee system, its revenue should not exceed a certain threshold and its existing loan liabilities should not exceed GEL12mn.
Within the framework of the programme, the beneficiary is entitled to use several loans.
The minimum loan amount issued by the commercial bank to the beneficiary under the programme will be GEL50,000, while the minimum loan amount issued by the microfinance organisation will be GEL20, 000, and the maximum volume of financing guaranteed per company is GEL5mn.
A total of 203 areas of activity in which funding can be allocated has been defined.
8.1.3​ NPLs
Georgian​ banks have weathered the depreciation well, with non-performing loans (NPLs) at a manageable rate of 2.6% of total loan portfolio in 2019 and 2018​, compared with a ratio of 3.5% in 2016, according to the National Bank of Georgia. NPL to total gross loans was at 2.2% in the first quarter of 2020.
NPLs account for around 3% of total lending. Banks are well capitalised and positioned to absorb a moderate deterioration in their loan portfolios, according to Fitch ratings agency.
35​ GEORGIA Country Report ​October 2020 ​ ​www.intellinews.com