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2018 – Year of Financial Education

In 2018 Government of Georgia expects that the reforms will justify, while business sector and consumers expect their revenues to grow.

At the same time, all social groups want that an inflow of investments rise in the country. The banking sector represents a cornerstone for everybody, because both corporate and retail sectors get access to financial resources through commercial banks.

The banking sector’s assets exceeded 34 billion GEL in 2017. Net profits constituted 700 million GEL and the capital totaled 5 billion GEL, including the ratio of two major commercial banks, TBC Bank and Bank of Georgia, accounts for 4% (15 billion GEL).

Zurab Gvasalia, president of Association of Banks, appraises the year of 2017:

«Reforms of crucial  importance were carried out in the banking sector in 2017. These reforms comply with tendencies of the coming decade and are to minimize risks and expand access to credit resources. As a result, these reforms should become a base element of fast economic growth. Government has introduced a new instruction for protection of consumer rights. All lending organizations will be subjected to supervision. The Parliament has already discussed a due bill».


Zurab Gvasalia expects Larization effect to strengthen in 2018. This year the campaign brought 10% result. Restrictions set by the regulator on foreign currency crediting has increased Larization ratio in the portfolio by 10%. The banking sector finished the year of 2017 with 22.4 billion GEL crediting portfolio. Despite skeptical position towards Dedollarization (because only economic growth generates long GEL), depositors should make savings in GEL. This is a natural process and it cannot be regulated artificially.

Bankers assert that the GEL resource extension instrument is an important product of the year. They also approve an enhancement of consumer rights protection. They express readiness to join financial education campaign for clients. The year of 2017 has altered priorities. Along with profitability, satisfaction coefficient of consumers have become also very important.

TBC Bank Vakhtang Butskhrikidze (director general)

“The main thing is that our clients should feel that we are their bank. The main thing is to maintain direct  relations with any our consumer, despite our size, in other case, we will reap disastrous outcomes.

Ratio of Georgia’s biggest bank in state economy accounts for 25% (2.7 million consumers, 70% of our population). Sizes matter,  but it is of secondary importance anyway. Individual approaches and maintaining of partnership relations matters more than even benefits received from positioning of TBC Bank at London Stock Exchange (LSE). The bank’s capitalization exceeds 1 billion USD.

TBC Bank’s image is of crucial importance. All 7 000 employees of TBC team represent the bank’s image.  25% ratio in state economy and the status of a system player implies huge responsibility before our country.

As of December 1, 2017, the bank’s assets are estimated by 12.5 billion GEL and the ratio in total portfolio accounts for 36.2%. The Bank is leader in loans portfolio (8.527 billion GEL) and deposits portfolio (7.897 billion GEL) with 38.4% and 39.7% ratios in total portfolios, respectively. January-November net profits exceed 238 million GEL.

Bank of Georgia Kakha Kiknavelidze (director general)

We appraise the year of 2017 positively. We hope the existing stability will further strengthen in 2018.

Bank of Georgia is a system bank and its success depends on favorable economic environment. Stability matters. We have introduced many innovations this year, including transformation in retail sector. This implies an entirely different approach. Previously, bankers were divided due to products, now universal banker serves clients and they provide all types of offers. Mobile services were expanded.

We have important plans for the corporate sector too. In 2018 we will maintain focus on financing business sector, including small and medium companies.

GEL-denominated bonds represent an issuance of the year. In this way the Bank has made important contribution to the long-term campaign of Larization.

The Bank aspires to make significant contribution to financial education of clients. In this component Bank of Georgia and National Bank of Georgia (NBG) follow shared values.

National Bank of Georgia Koba Gvenetadze, NBG President

«Banking system of Georgia has withstood difficult times, because NBG pays due attention to prudence policy that ensures the system stability. Liquidity coefficient has been introduced in the banking system along with instructions on important indicators, such as loan guarantee and service coefficient to help commercial banks maintain a healthy practice of crediting. The next move was compatible with Bazel III principles, creating capital buffers for commercial banks stage by stage. NBG also renovates bank recovery and resolution management framework document and works on corporate management guidebook for commercial banks.

Larization long-term project has already brought certain results. In 2017 dollarization of total loans declined by 9% to 56%. Deposits dollarizaion has also shrunk.

Crisis and GEL depreciation has not ceased economic growth. Georgia has responded to the shock with floating exchange rate and this instrument turned out an efficient mechanism for absorbing external shocks.

  • Capital Buffers/ Prudence Norm of 2017

The concentrated market with domination of two commercial banks reduces risks for investors and attracts them, but it also generates threats.  Policy tightening is related to theoretical presumptions of bankruptcy and it aims to protect financial resource of taxpayers.

At the end of 2017 NBG instructed commercial banks to introduce additional buffers in 2018.

The new prudence norm with corresponding coefficient is specific and different, taking into account positioning of the bank and scales of its influence.

According to the new decree of the NBG President, amendments were made to the decree on Approval of Provisions on Requirement for  Capital Adequacy (28/12/2013 №100/04) . The new decree sets obligations for growing capital adequacy coefficient and introduces various buffers, including concentration, counter-cycle and combined buffer.

TBC Bank, Liberty Bank and Bank of Georgia were recognized as system banks.

The system buffer for TBC Bank, Bank of Georgia and Liberty is +2.5%, +2.5% and +1.5% respectively. This obligation should be performed in 4 years. But major commercial banks do not care. TBC Bank vice president Paata Ghadzadze noted that the system banks have no problems with capital and will not have ever, despite the scales of restrictions by NBG.

The first stage comes at the end of 2018. TBC Bank and Bank of Georgia are obliged to add 1%, while Liberty Bank must add 0.6%.

In the rating of major commercial banks, Liberty Bank ranks third, but its assets are 10 times less as compared to other commercial banks beyond the top three positions. The bank has the largest network with 2 million consumers. However, the bank’s portfolio consists of mainly retail loans (97%).