Page 41 - GEORptJun20

8.1.2​ Loans
Georgian banks agree to extend loan repayment moratorium for debtors troubled amid pandemic
Major Georgian banks take 3.0-3.3% of loan book provisions for coming losses
Georgians who have lost their jobs or have suffered reduced incomes amid the coronavirus (COVID-19) pandemic are to have their bank loans repayments deferred for another three months, Prime Minister Giorgi Gakharia announced on May 21 after talks with the banks.
He stressed that interest accumulated over the moratorium period would not be capitalised.
"As a result of cooperation between the Government of Georgia, the National Bank of Georgia [central bank] and the banking sector, we made a joint decision at the very first stage of the crisis to offer a three-month grace period on loans to our citizens. At yesterday's meeting, we made a joint, agreed decision to allow those who have lost their jobs or whose incomes have been reduced amid the pandemic to benefit from another 3-month grace period on loans," the PM said.
Georgia’s major banks, the LSE-listed Bank of Georgia and TBC, have announced that they have both taken provisions in the amount of 3.0-3.3% of their loan books, in agreement with the National Bank of Georgia (NBG) and on the banks’ local accounting basis, used for the calculation of the banks' capital ratios.
The size of the provisions indicate anticipated losses incurred in the whole economic cycle prompted by effects of the coronavirus (COVID-19) pandemic.
The provisions will affect the CET1capital adequacy ratios, which, however, remain above or close to the 7.0% revised estimated minimum requirement (6.9% for the Bank of Georgia and 8.7% for TBC) even after the provisioning.
Furthermore, the central bank NBG has allowed banks to use part of their supplementary, conservative buffers under a decision issued on April 3. The supplementary resources released under this decision are more than enough to cover provisions taken for covering future losses, according to data included in the two banks’ press releases, but at the same time the release of the supplementary buffers is a temporary, one-year, measure.
“Our understanding is that the specific quantum of the provision reflects the NBG's current expectation of estimated credit losses on the Bank's lending book for the whole economic cycle, given current economic expectations,” Bank of Georgia said in a press release sent to LSE, referring to the provision taken.
Bank of Georgia Group announced that, further to the announcement on 3 April, relating to the NBG’s updated supervisory plan for the Georgian banking sector, it has agreed with the NBG that JSC Bank of Georgia will create a general provision of Georgian lari (GEL) 400mn on the bank's local accounting basis.
This represents approximately 3.3% of the Bank's lending book, and the general provision is expected to be taken in the first quarter of 2020.
TBC Bank decided to book additional provisions in accordance with local standards, at the end of March, at 3.0-3.3% of the loan book, according to a press release issued April 3.
41​ GEORGIA Country Report ​June 2020 ​ ​www.intellinews.com