Page 30 - GEORptJul18

The volume of loans in Georgian lari was up 1.5% to GEL150.3mn, while loans in foreign currencies grew by a more modest 0.7%. Excluding the exchange rate effect loans in foreign currency grew by just 0.3%.
The “larization ratio” for total loans stood at 44.92% on June 1, up by 0.19 of a percentage point compared to May 1.
The volume of deposits held by Georgian banks was up 0.7% to GEL20.0bn.
8.1.1 Earnings
The Georgian banking sector is dominated by TBC Bank and Bank of Georgia, two lenders that are listed on the London Stock Exchange and that, together, account for two thirds of total banking assets. In total, 16 commercial banks operate in the country, after TBC Bank merged with Bank Republic, the country's fifth largest lender, in October. The sector has performed well in recent years, but financial services penetration in the market remains modest.
In 2017, the net profit of Georgia’s commercial banks reached GEL 870mn, up 28% y/y or GEL 191mn higher compared to 2016, according to the National Bank of Georgia. Total revenues of the banking system for the period was GEL 3.58bn, including 77% from interest income (GEL 2.76bn) and 23% from interest-free income (GEL 821mn). Commercial banks received GEL 368mn from commission fees, GEL 202mn from currency sales-purchase operations and GEL 77mn from fines.
8.1.2 Loans
Commercial banks loans reached GEL21.7bn in 2017, growing by 15% y/y, as compared to a growth of 18.1% in 2016, according to the National Bank of Georgia. Lending rate was at 16.8% in 2017.
Moody's estimates that 60% of Georgian lenders' loan portfolios are denominated in dollars, and that the two largest lenders in the country - TBC Bank and Bank of Georgia, accounting for two thirds of sector assets - have awarded some 40% of their loans in dollars to borrowers that do not have dollar incomes. Georgian banks nevertheless remain cushioned against potential risks by the central bank's 175% risk weight for foreign-currency-denominated loans to unhedged borrowers, the ratings agency concludes.
8.1.3 NPLs
Georgian banks have weathered the depreciation well, with non-performing loans (NPLs) at a manageable rate of 2.8% of total loan portfolio at end-2017 , compared with a ratio of 3.4% at end-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.
30 GEORGIA Country Report July 2018 www.intellinews.com