Page 38 - GEORptMar21

Major Georgian banks take 3.0-3.3% of loan book provisions for coming losses
Georgia.
"The steps taken by this program are critically important to mitigate the economic impact of Covid-19 and maintain macroeconomic stability over the medium to long term and also to protect the lives of the people most affected by the crisis," said ADB representative Rogerio de Almeida Vieira de Sa. "The program will help older citizens who are particularly vulnerable to the consequences of Covid-19."
In May this year, the ADB approved a $100mn loan to support the government’s anti-crisis measures, including tax deferments for small and medium sized businesses, temporary payments for pandemic-affected workers, and free access to COVID-19 diagnostic and treatment services.
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.
The global and thus Georgian economic environment is difficult and uncertain, TBC said in its press release. Bank economists' latest analyses forecast that
38 GEORGIA Country Report March 2021 www.intellinews.com