Page 39 - GEORptDec20

Mortgage maturity limits will increase: the maximum maturity for mortgages in the national currency, the lari, will increase from 15 to 20 years.
If an individual receives income from abroad, the loan-to-value (LTV) ratio (a financial term used by lenders to express the ratio of a loan to the value of an asset purchased) for buying an apartment will be expanded from 60% to 70%. Corporate governance requirements will be introduced for commercial banks and microfinance organisations.
8.1.5 ​Bank news
Georgia’s TBC Bank posts robust Q3 profit growth
Bank of Georgia upbeat on further growth
TBC Bank's third-quarter profit rose by a fifth as Georgia's biggest lender increased income and set aside less for credit losses.
Net profit rose by 20.4% to Georgian lari (GEL) 153mn from GEL127mn a year earlier as net interest income rose by 9.4% to GEL211.8m. Pretax profit rose by 15.6% to GEL164.5m.
TBC set aside GEL13.4mn for credit losses—48% less than a year earlier. Costs rose 1.6% to GEL113.5mn and the cost-income ratio dropped to 38.7% from 39.9%.
Georgia's economy continued to recover from the first wave of coronavirus (COVID-19) in the third quarter, contracting 3.8% compared with the 12.3% drop seen in the second quarter. GDP shrank 0.7% in September.
However, the resurgence of the pandemic, combined with the regional conflict between Armenia and Azerbaijan, is putting downward pressure on the recovery, TBC said.
Bank of Georgia Group’s (BGEO’s) third-quarter earnings grew 29.4% q/q to Georgian lari (GEL) 148mn (13% above expectations), implying a 26.0% return on equity (ROE), Russia’s VTB Capital said in a note to investors. Higher loan yields supported the 62bp q/q recovery in the net interest margin to 5.2%, while business activity growth drove net fees and commissions up 38.4% q/q. Lower staff costs pushed opex down 2.4% q/q, while the provision charge (vs. the net provision release in Q2) only partially erased the q/q gain in net operating income (it was down only 1.8% y/y).
Asset quality worsened, with the share of non-performing loans (NPLs) moving up to 3.8%. However, management considered the current cash coverage ratio of 77%, and the 131% coverage ratio including collateral, to be sufficient under the current risk scenario.
VTB Capital saw the results as solid, given the strong rebound in the core business. Management was upbeat about growth prospects. VTB said it thought that the focus on more than 20% ROE of separate segments and products was set to secure BGEO’s medium-term target of 20+% ROE for the group and 25-40% DPR. With underlying profitability staying high, the potential economic recovery in 2021 and regulatory requirements on capital easing, dividend payments could be triggered it said.
The bank held an investor day during which management reiterated the medium-term targets of more than 20% ROE, with 15% per annum loan growth net of the FX effect.
Management also reconfirmed its aim to resume dividend payments after the regulator issues new capital requirements following the transfer to IFRS standards in 2021, which might add some 3pp to the bank’s CAR. Strong capital creation, driven by the target of more than 20% ROE per product, supports the strategic aim of 25-40% DPR.
BGEO also presented its ecosystem development. In 2019-20, the bank
39​ GEORGIA Country Report ​December 2020 ​ ​www.intellinews.com