Page 30 - GEORptAug18

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
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.
Moody's estimates that 60% of Georgian lenders' loan portfolios are denominated in dollars, and that the two largest lenders in the country - TBC Bank and Bank of Georgia, accounting for two thirds of sector assets - have awarded some 40% of their loans in dollars to borrowers that do not have dollar incomes. Georgian banks nevertheless remain cushioned against potential risks by the central bank's 175% risk weight for foreign-currency-denominated loans to unhedged borrowers, the ratings agency concludes.
8.1.3 NPLs
8.1.4 Banks specific issues
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.
Georgia’s TBC Bank clarifies banking restrictions on Iranians
Largest Georgian lender TBC Bank has clarified new restrictions on Iranians conducting business in Georgia, including new rules on residency, the Financial Tribune reported on May 26.
Iranians have used Georgia’s friendly banking climate in recent years to open private and business accounts, but the early May announcement by the US that it is unilaterally exiting the 2015 nuclear deal has forced countries to reconsider their relations with Iranian companies.
30 GEORGIA Country Report August 2018 www.intellinews.com