Page 36 - GEORptMar21
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 8.1.1 Earnings
   Profits of Georgia’s banking system shrink eightfold in 2020
Georgia’s biggest lender TBC reports 2020 profits under IFRS
 The aggregate net profit of Georgia’s banking system reached Georgian lari (GEL) 99mn ($30mn) in 2020, resulting in a slim 0.17% return on assets (ROA) ratio, according to calculations published by Business Media.
The banks' financial results were hit by provisions set up at the request of the central bank at the end of March, ahead of the expected deterioration in the quality of their loan portfolios amid the economic disruption caused by the coronavirus pandemic.
The total assets of the banks increased by 22% despite the economic crisis and amounted to GEL56.9bn ($17.2bn, a figure comparable to the country’s GDP).
However, the total profit of the sector decreased by eight times compared to the GEL853mn recorded in 2019.
In 2020, eight banks posted a loss. The biggest loss was registered by Cartu Bank, which suffered a loss of GEL24.7mn. TBC Bank had the highest net profit, posting GEL123mn.
VTB Bank recorded a loss according to the Georgian financial standards. "We had a loss according to the Georgian standard, but we are profitable according to the international standard; which standard is more correct, decide for yourself," said Archil Kontselidze, CEO of VTB Bank, in response to questions from BM.GE.
According to the 2020 financial results submitted to the National Bank of Georgia, VTB Bank had a loss of GEL14.8mn, which was related to the creation of a reserve of GEL40mn for expected credit losses.
Kontselidze said that the bank did not have a liquidity problem. "Liquidity is the key in all crises. The banking system and our bank have not a liquidity problem. As for profitability, people lost wages, companies stopped operating and the bank itself suffered, including VTB Bank [in this instance]," said Kontselidze
"We hope that the reserve we made, which in the case of our bank was a loss reserve of up to GEL40mn, [will cover the non-performing loans that occurred during this period]. It depends on how quickly we get out of the pandemic period, how fast the economy and tourism start working," Kontselidze reportedly added.
Georgia’s largest lender TBC Bank has announced a 2020 profit under international financial accounting standards. The LSE-listed bank said its profit fell to Georgian lari (GEL) 322.5mn ($98mn) from GEL540.3mn a year earlier.
The bank’s return on average equity (ROE) stood at 11.7%, roughly half the 22.9% seen in 2019.
The profitability ratio dropped so distinctly mainly because of provisions set aside for loan losses. ROE before expected credit loss allowances stood at 24.7% compared to 26.8% in 2019.
Lending continued at a robust pace in 2020.
 36 GEORGIA Country Report March 2021 www.intellinews.com
 

















































































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