Page 38 - GEORptMay20

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 the Georgian economy will contract in 2020, which will have a negative impact on many businesses and individuals in the country.
Therefore, in close co-ordination with the NBG, TBC has decided to create an "extra loan loss provision buffer" to prepare for the potential impact of the COVID-19 pandemic on the Georgian economy. As of 31 March 2020, TBC Bank decided to book additional provisions in accordance with local standards, at 3.0-3.3% of the loan book and resulting in an estimated up to 2.44% decrease in the CET1 capital adequacy ratio, according to the bank's press release.
Both of the banks are expected to compile and publish their quarterly financials under IFRS during May.
8.1.3​ NPLs
Georgian​ banks have weathered the depreciation well, with non-performing loans (NPLs) at a manageable rate of 2.6% of total loan portfolio in 2019 and 2018​, compared with a ratio of 3.5% in 2016, according to the National Bank of Georgia. NPL to total gross loans was at 2.2% in the first quarter of 2020.
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.
8.1.4 ​Bank specific regulations, issues
Georgia’s central bank to provide liquidity with swaps
To support liquidity the National Bank of Georgia (NBG) has​ ​announced that it will provide Georgian lari (GEL) to commercial banks and microfinance organisations with swap operations conducted to a
38​ GEORGIA Country Report ​May 2020 ​​www.intellinews.com