Page 28 - GEORptSep18

8.1.1 Earnings
The Georgian banking sector is dominated by TBC Bank and Bank of Georgia, two lenders that are listed on the London Stock Exchange and that, together, account for two thirds of total banking assets. In total, 16 commercial banks operate in the country, after TBC Bank merged with Bank Republic, the country's fifth largest lender, in October. The sector has performed well in recent years, but financial services penetration in the market remains modest.
In 2017, the net profit of Georgia’s commercial banks reached GEL 870mn, up 28% y/y or GEL 191mn higher compared to 2016, according to the National Bank of Georgia. Total revenues of the banking system for the period was GEL 3.58bn, including 77% from interest income (GEL 2.76bn) and 23% from interest-free income (GEL 821mn). Commercial banks received GEL 368mn from commission fees, GEL 202mn from currency sales-purchase operations and GEL 77mn from fines.
8.1.2 Loans
Volume of lending by Georgian banks up 1.9% m/m in June
The volume of lending by Georgian commercial banks -- including loans to non-residents -- grew by 1.9% compared to May to reach GEL23.3bn (€8.1bn), the country’s central bank said . It did not provide an annual comparison.
Loans issued in Georgian lari were up GEL286.9mn or 2.8%, while the volume of loans in foreign currencies rose by GEL140.4mn or 1.1% during the month. As of end-June 2018, commercial banks had issued GEL2.7bn worth of lari-denominated loans (4.4% up compared to the previous month), and GEL7.1bn worth of foreign currency denominated loans, up 0.3% m/m, to resident legal entities, the central bank said. The volume of lending to resident individuals increased by 1.2% in June to GEL12.5bn as of July 1.
According to the central bank, the larisation ratio, denoting the proportion of loans in the local currency, for total loans stood at 45.32% on July 1, up 0.41 of a percentage point compared to June 1.
Meanwhile, commercial banks loans reached GEL21.7bn in 2017, growing by 15% y/y, as compared to a growth of 18.1% in 2016, according to the National Bank of Georgia. Lending rate was at 16.8% in 2017.
8.1.3 NPLs
Georgian banks have weathered the depreciation well, with non-performing loans (NPLs) at a manageable rate of 2.8% of total loan portfolio at end-2017 , compared with a ratio of 3.4% at end-2016, according to the National Bank of Georgia. 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.
28 GEORGIA Country Report September 2018 www.intellinews.com