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Banks’ Sector Profits Grow by 75%

According to the statistics of the National Bank of Georgia (NBG), the Georgian bank sector ended the January to April period in 180.46 million GEL net profits.

At the end of April, 2015 the sector’s net profits made up 114.8 million GEL and consequently, the profits have increased by 57.2% this year.

In January to April 2016 the revenues of commercial banks made up 1.02 billion GEL. The revenues marked 1.3 billion GEL in January to April 2015. The sector’s expenditures have also shrunk from 1.1 billion GEL  to 817.6 million GEL.

As of May 1, 2016 losses of four commercial banks made up 17 million GEL.

Caucasus Development Bank has recorded second worst result in terms of losses of 2.303 million GEL. Silk Road Bank is third with 0.851 million GEL losses and Progress Bank is fourth with 0.472 million GEL losses.

It should be also noted that the month of May has brought considerable benefits to the Georgian bank sector, in general. In May 2015 the sector’s profits marked 70.8 million GEL. In May 2014 the sector’s profits made up 17.7 million GEL. Net profits of commercial banks in January to May period marked 197.5 million GEL. TBC Bank is leader among profitable banks with 68.2 million GEL. Bank of Georgia ranks second with 55 million GEL. It should be noted the ratio of the mentioned two leading commercial banks in total profits of the Georgian bank sector makes up 62%.

The dollarization coefficient also grows in the bank sector along with national currency volatility. It should be noted the deposits dollarization coefficient makes up 70%. This indicator has increased by 4% year on year.

The loans dollarization indicator was also high with 63.9% in April, while the indicator was 64.6% in the same period of 2015.

In April 2016, as compared to the previous month of March, the volume of deposits drawn by commercial banks increased by 242 million GEL. As compared to April 2015, in April 2016 GEL-denominated deposits decreased by 142 million GEL.

In April 2016 foreign currency denominated deposits increased by 156 million USD. The volume has increased by 929 million USD year on year. The deposits dollarization coefficient marked 70.5%. A year ago the dollarization coefficient was 66.3%. In whole, foreign currency denominated loans marked 11 billion GEL, while GEL denominated deposits amounted to 4.6 billion GEL.

As of May 1, 2016 the averaged annual interest rate on USD-denominated deposits made up 3.5%, down from 4.4% compared to the same period of 2015. The averaged annual interest rate on GEL-denominated deposits made up 8.7%, while the indicator was 7.4% a year ago.

In April 2016, as compared to March, GEL-denominated loans portfolio (without interbank loans) increased by 2 million GEL, while USD-denominated loans portfolio decreased by 40 million USD. Over the past year, GEL-denominated loans increased by 345 million GEL and USD denominated loans increased by 321 million USD.

In total loans the ratio of foreign currency denominated loans made up 63.9%, down from 64.6% year on year.

It should be noted in April 2 the annual average interest rate on GEL-denominated loans increased by 0.3% to 21.2%. The interest rates on USD-denominated loans decreased by 0.3% to 9.7%.

As to main sources of revenues of commercial banks, proceeds from loans rank first (688 million GEL), including 407 million GEL from retail loans and 279 million GEL from corporate loans.

It should be also noted that profits from currency conversion operations made up 100 million GEL in January-April 2016, while profits from currency conversion made up 13 million GEL in the same period of 2015.

By Merab Janiashvili
Economic Analyst
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