Page 35 - GEORptMar20

8.1.4 ​Bank specific issues, regulation
Georgia passes derivatives law
The Georgian parliament has passed a package of laws that regulate local financial markets and amend capital markets legislation, following close cooperation with the European Bank for Reconstruction and Development (EBRD). ​The new law provides for the enforceability of derivatives transactions, including netting, close-out netting and financial collateral.
The EBRD welcomed the move as amounting to an important new chapter in terms of developing Georgia’s capital markets.
The new laws went through with the EBRD’s technical assistance, provided to the National Bank of Georgia in the drafting of the package and capacity-building. Experts, funded by the EBRD-managed Shareholder Special Fund, worked with the National Bank of Georgia and local market participants on the legal reform. This project was also coordinated with, and supported by, the International Swaps and Derivatives Association (ISDA).
In the field of derivatives, the new legislation also reinforces key related concepts, such as settlement finality. It puts Georgia on the derivatives’ and netting map, allowing companies to safely and efficiently hedge their risk and exposure, including in foreign exchange and interest rates, contributing to the development of a local currency financial market.
8.1.5 ​Bank news
Georgia’s TBC Bank boasts 15% stronger net earnings in 2019
TBC Bank Group, which operates one of Georgia’s two major banks, has reported a 15% rise in annual profit for 2019. The LSE-listed lender's loan book saw strong growth of 22% with a sharp 47% rise in corporate lending.
The net interest margin, however, slipped to 5.6% from 6.9%.
For 2019, TBC recorded Georgian lari (GEL) 585.5mn in pretax profit, equivalent to around $200mn (+15% y/y).
TBC ended the year with a gross loan book of GEL12.66bn (+22% y/y), or $4.3bn. The bank’s retail loan book expanded 7.5% y/y. The micro, small, and medium sized enterprises (MSME) loan book was widened by 18%.
Customer deposits totalled GEL10.05bn, up 7.5% from the same point the year before.
TBC chief executive Vakhtang Butskhrikidze said that "in 2019, we recorded strong financial results and made significant progress against our strategic priorities, including the development of customer focused ecosystems and international expansion in Uzbekistan.
“This lays a solid foundation for further development of these initiatives and I am very excited about our ambitious plans for 2020. Our leading digital capabilities, outstanding customer experience and advanced data analytical capabilities, coupled with our strong team spirit, make me confident that we are well positioned to achieve sustainable growth and to deliver superior results for our shareholders.”
TBC reiterated its medium-term targets of a return on equity above 20%, cost-to-income below 35% and loan book growth of around 10% to 15%.
35​ GEORGIA Country Report​ March 2020 ​​www.intellinews.com