Page 36 - GEORptFeb21

8.0​ Financial & capital markets
Georgia - Commercial banks lead 2020* 2019 2018 2017 2016 indicators (end of period)
Interest income (GEL mn)
381.6 339.9 296.86 275.70 227.44
Net profit / loss (GEL mn)
99.26 953.64 914.72 869.80 679.11
Bank assets (GEL mn)
56,870.98 47,183.37 39,682.98 34,593.50 30,149.32
Bank deposits (GEL mn)
23,709 21,390.76 18,273.92 15,717.54 13,662.0
Bank loans (GEL mn)
37,374.29 31,078.64 25,918.14 21,761.90 18,512.30
ROA (%)
-2.5% 2.5% 3.0% 3.1% 3.1%
ROE (%)
-20% 20.3% 23.3% 23.3% 22.1%
CAR (%)
17.6% 19.0% 18.4% 19.1% 15.1%
NPL to total gross loans (%)
2.3% 2.6% 2.6% 2.8% 3.4%
Source: National Bank of Georgia
8.1​ Bank sector overview
Financial sector overview
The banking sector may end 2020 at close to zero profitability, or with a small profit, according to estimates of Vakhtang Butskhrikidze, CEO of the country’s biggest lender by assets TBC Bank. ​According to the central bank, the banks posted a small GEL1.5mn operating loss in the first 11 months of 2020.
The main determinant of losses in the financial sector in 2020 was the accumulation of provisions for the potential deterioration of loan portfolios, at the request of the GNB. In total, Georgian commercial banks have set aside GEL1.22bn ($370mn, 2.4% of banking sector assets and 3.8% of the volume of net loans as of March 2020) in the buffer, which reflects the amount of possible loan losses due to the expected crisis. The central bank also decided in the spring to radically reduce the capital requirement.
"The banking sector depends on the economy itself, so the expectation is that the economy will grow by 4% or just over 4%. Therefore, I think that 2021 will be better for the financial sector compared to this year, but the sector as a whole will probably return to its old indicators in 2022," said Vakhtang Butskhrikidze.
The National Bank of Georgia has appropriately maintained a moderately tight monetary stance to anchor inflation expectations, while safeguarding exchange rate flexibility, the IMF concluded in its December EFF revision. The tight monetary policy stance and continued foreign exchange intervention may need to be sustained to prevent disorderly market conditions and bring inflation towards the 3% target.
The central bank on December 9 decided to keep its key refinancing rate
36​ GEORGIA Country Report​ February 2021 ​ ​www.intellinews.com