Page 32 - GEORptDec20

8.0​ Financial & capital markets
Georgia - Commercial banks lead As of Jun 2019 2018 2017 2016 indicators (end of period) 2020
Interest income (GEL mn)
319.0 339.9 296.86 275.70 227.44
Net profit / loss (GEL mn)
-476.64 953.64 914.72 869.80 679.11
Bank assets (GEL mn)
49,276.11 47,183.37 39,682.98 34,593.50 30,149.32
Bank deposits (GEL mn)
22,107.98 21,390.76 18,273.92 15,717.54 13,662.0
Bank loans (GEL mn)
32,986.92 31,078.64 25,918.14 21,761.90 18,512.30
ROA (%)
-2.4% 2.5% 3.0% 3.1% 3.1%
ROE (%)
-21.7% 20.3% 23.3% 23.3% 22.1%
CAR (%)
18.0% 19.0% 18.4% 19.1% 15.1%
NPL to total gross loans (%)
2.4% 2.6% 2.6% 2.8% 3.4%
Source: National Bank of Georgia
8.1​ Bank sector overview
Fitch says Georgia’s banking sector on the mend
The pre-impairment profitability of Georgian banks will likely improve in the second half of 2020 and 2021, Fitch Ratings ​said​ during a recent webinar on Georgia.
Fee incomes have already started to recover amid improving economic activity, and margins will likely be supported by lower funding costs and more active lending, in particular to higher-yielding segments, such as micro, small and medium sized enterprises, the rating agency added.
In the first quarter of this year, in line with National Bank of Georgia (NBG) instructions, banks created Georgian lari (GEL) 1.1bn of loan loss provisions (about 3% of sector loans at end-March) against potential pandemic-driven future deterioration in asset quality. Coupled with weaker revenues, this resulted in a GEL0.5bn sector loss in the first half of the year, corresponding to an annualised return on equity of minus 18%.
At end-June, the Georgian banking sector’s non-performing loans (NPL), as defined by the NBG, stood at 5.5% of the sector portfolio, with the provisions coverage ratio of 130%.
Sizeable one-off reserves resulted, however, in weaker capital metrics: the sector Tier 1 capital adequacy ratio declined to 12.8% at the end of June, from 14.6% at end-2019. But owing to relaxed regulatory requirements, headroom above the reduced minimum levels remained comfortable.
Fitch had previously revised​ ​the outlooks on most of the Georgian banks it monitors, namely TBC Bank (TBC, BB-), Bank of Georgia (BOG, BB-), Liberty Bank (LB, B+), Terabank (Tera, B+) and Basisbank (Basis, B+) to negative from stable, while affirming their Long-Term Issuer Default Ratings
32​ GEORGIA Country Report ​December 2020 ​ ​www.intellinews.com