Page 35 - GEOGRptJun19

lending in robust economy
Earnings at Georgia’s TBC Bank up 37% y/y in Q1
ADB extends loan to Georgia to spur mortgage lending in rural areas
Profit of Georgian insurers doubles in 2018
bank’s net interest margin shrunk as new rules hit unsecured consumer lending.
The bank said adjusted net profit rose to GEL112.2mn (€36.7mn) in Q1, up from GEL101.7mn reported a year earlier. Reported profit, edged up by only 0.3%, hit by one-off costs related to executive terminations.
Bank of Georgia’s net interest margin dropped to 5.8% from 7% due to a sharper focus on lending in the mortgage segment and to lower-margin corporate and small and medium sized enterprise clients on the back of tighter rules applied to unsecured consumer lending.
In comparison, Georgia’s biggest retail lender and Bank of Georgia’s main rival TBC Bank Group the previous day reported a surge in first-quarter profit by 36.7% y/y to GEL133.3mn (EUR43.4mn), helped by a strong loan book.
FTSE-250-listed TBC, which serves retail, corporate and small and medium-sized enterprise customers across the country, said gross loans and advances to customers rose 22.9% to GEL10.37bn (€3.37bn) from last year. TBC’s net interest margin (NIM), seen as the main indicator of a bank’s financial strength, dropped to 6.1% from 6.9%, with new regulations restricting its ability to lend to higher-yield retail customers.
Economic growth in Georgia, a former Soviet republic, slowed in the first quarter, but jumped 6% in March.
After becoming Georgia’s biggest retail lender following its purchase of JSC Bank Republic a few years ago, TBC now has roughly 2.4mm customers and around 7,300 employees.
Georgian lender Credo Bank and the Asian Development Bank (ADB) on April 17 announced t hat they have signed a GEL60mn (€20mn) loan agreement aimed at helping the local bank extend long-term financing in local currency to support low-income customers in home purchase, renovation and construction in rural areas and on the outskirts of Georgia’s capital, Tbilisi.
Associated technical assistance will suport Credo Bank’s efforts to extend the reach of its branchless banking services to rural clients, with a specific focus on improving financial and business literacy as well as access to finance for women.
The loan is provided in Georgian lari supporting Georgia’s strategy to increase the use of local currency and reduce the foreign currency-induced credit risks of loan beneficiaries and banks.
“This is ADB’s second project with Credo and it allows the bank to expand its services to small business and rural household customers, most of whom are women,” said ADB lead investment specialist for private sector operations Rainer Hartel.
“We are proud to work with Credo Bank to reach underserved regions, boosting economic activity and affordable housing to enhance Georgia’s sustainable and inclusive growth.”
Credo is a financial service provider for households as well as micro and small enterprises (MSEs) in Georgia, serving about 230,000 MSE borrowers, 50% of whom are female. It has an average loan size of GLE 2,300.
The net profit of Georgia's insurance sector expanded by 107% to Georgian lari (GEL) 42.2mn ($15.66mn) in 2018, according to a report from the insurance supervision service.
The volume of insurance premiums attracted during the year was GEL542.2mn from direct insurance activities, compared to GEL441.4mn in 2017.
35 GEORGIA Country Report June 2019 www.intellinews.com