Page 34 - GEORptMar20

8.1.2​ Loans
Lending in Georgia rises driven by real estate sector
The stock of bank loans in Georgia increased by 20% y/y to GEL31.1bln ($11.1bn) at the end of January, easing slightly from the annual growth rates of above 30% y/y seen during 2019 but remaining at an outstanding level, according to data from the National Bank of Georgia.
The real estate sector (construction firms, developers, mortgage loans contracted by households) is the main driver behind the strong growth, although lending to industry is advancing at double-digit rates as well.
At the end of 2019, the bank loans were 22% up y/y, after the annual growth rate peaked at 26% at the end of July.
The strong bank lending is driven particularly by corporate lending (+30% y/y at the end of January), with the loans extended to construction companies (+56% y/y) and developers (+65% y/y) making a significant contribution.
The stock of loans extended to industry, more than one quarter of the GEL15.2bn total corporate loans, also increased by a significant 36% y/y. The loans extended to construction companies and developers account altogether for nearly one-quarter of the corporate loans as well. The sector of trade accounts for one-fifth of the corporate loans and they had advanced by 15% y/y as of the end of January.
The loans extended to households, GEL15.8bn at the end of January, increased by 12% y/y with the mortgage loans (over GEL10bn, meaning two-thirds of total retail loans) advancing by nearly 19% y/y.
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. 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.
34​ GEORGIA Country Report​ March 2020 ​​www.intellinews.com