Page 38 - GEORptMay21

to mitigate the effects of the COVID-19 outbreak.
8.1.1 Earnings
Georgian banks post $120mn profit in Q1
Georgia’s banks boast stronger profits by 25% in Jan-Feb
Total profit of the 15 commercial banks operating in Georgia in March was Georgian lari (GEL) 166.3mn, resulting in a GEL412mn (GEL120mn) cumulative figure in the first quarter of the year, seen by analysts as robust.
Compared to 2020, the banks' profitability has improved radically. In the first quarter of 2020, they reported losses of GEL747mn, resulting from setting aside provisions in the amount of GEL1.1bn to offset possible loan losses generated by the coronavirus crisis imminent at that time. However, even filtering out the effect of the provisioning, the profitability of the banks has improved in 2021 by a double-digit rate (16%), which exceeds both inflation and currency depreciation.
The banks’ operating profit has also improved. The total income of the banks during March was GEL473mn, which amounts to an increase of 17% y/y. Of this, interest income amounted to GEL334mn. Income from loans to individuals amounted to GEL198mn (an increase of 21% y/y), while income from loans to legal entities was GEL136.7mn (+24% y/y).
As for other income of the banks, the revenues from fees and commissions increased by 85% on an annual basis and amounted to GEL37.6mn, while the banks received a profit of GEL28mn from currency exchange operations.
Also in March, the banks’ expenditures were GEL300.3mn. Of this, interest expenses were GEL192.8mn. Interest paid on deposits was GEL111.4mn, while the service fees for other liabilities of the banks were GEL58mn. At the same time, GEL11.3mn was set aside in provisions for possible asset losses.
The aggregated profit of the 15 banks operating in Georgia was Georgian lari (GEL) 245.5mn ($74mn) in January-February, marking a 25% improvement year on year.
Also, according to financial statements submitted to the National Bank of Georgia (NBG), the net profit of the sector in February amounted to GEL132.1mn, 16% more than was recorded for February 2020.
The aggregated income of the banks in the first two months of 2021 rose by 10.3% y/y to GEL878mn. Out of this, interest income amounted to GEL627mn. Interest derived from retail loans rose by 10% to GEL368mln while corporate loans generated GEL259.5mn in interest (21.3% up y/y).
Banks’ revenues this year were backed by robust increase in the stock of loans: 22% y/y to GEL37.6bn ($11.4bn) at end-February. The stock of loans to companies rose by 24.4% y/y to GEL24.4bn while retail loans advanced by 19.8% y/y to GEL19.0bn.
In the first two months of 2021, banks’ expenditures increased by 4.7% y/y to GEL606 mn. Of this, interest expenses were GEL370mn (+12.2% y/y). At the same time, the payroll increased by only 4.9% y/y to GEL121mn.
The banks did not set aside significant loan loss provisions in the first two months of 2021, since they built massive buffers in this regard in March last
38 GEORGIA Country Report May 2021 www.intellinews.com