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Commercial Banks Net Profit Increased by 11.6%

PMC Group Research Center has published a review of the banking sector. The research covers the January – July period.

Net profit of commercial banks increased by 11.6% in  January –July  2014 compared with the same period of  2013 and amounted to  GEL 214.9 million.

In July 2014, the balances of deposits increased (19.1%) compared to July 2013 and amounted  to GEL  10,953 million. During this period, the volume of loans allocated for  the national economy increased by 23.2% and amounted to  GEL 10.816 million.

As of July 2014, the volume of deposits increased (19.1%) and amounted to GEL 10.953 million. In addition, compared with the same period  of last year, deposits denominated in the national currency increased (21.0%) and in  foreign currency (17.9%)

The share of foreign currency deposits (60.9%) was higher than the share of deposits denominated in GEL (39.1%).

This is primarily due to the policy of the National Bank of Georgia, including the expansion of banks collateral base used in the National Bank’s operations and the establishment of standard certificates of deposit for commercial banks.

In July 2014, the interest rate paid on deposits decreased (-0.4 percentage points) compared to July 2013 and amounted to 6.1%. The interest rate is reduced both on deposits denominated in GEL  (-0.2 percentage points), as well as in foreign currency (-0.5 percentage points).

In July 2014, the volume of loans granted by commercial banks in the national economy increased (23.2%). The volume of loans issued in the national currency increased by (44.3%) and in foreign currency by  (10.6%).

Loans issued in foreign currency (59, 7%) still exceed the value of credit in the national currency (41, 3%), although a growth in lending in GEL is observed – policy of the National Bank allows  to reduce liquidity risks of the national currency, which in turn increases the demand for loans in local currency.

In July 2014 a volume of  loans issued to individuals increased 31, 1% and 16% – to legal entitiescompared to July 2013, indicating that the growth of economic activity in the country.

In July 2014 the percentage rate for loans to legal entities in national and foreign currency decreased by 1.6% compared with July 2013.

Basic interest rate credits for individuals in foreign currency reduced by 0.4% in July and  in the national currency – by 0.8%.

In July 2014, 50. 8% of all loans were issued to the business sector. Of these 31, 1% falls on trade, 22.7%-  for  industry, 7.8% – on the real estate, 7.4% were issued for construction.

In July 2014 consumer lending increased  by 35.7%, the amount of loans secured by real estate increased by  34.6%.

Compared with July 2013, in July 2014 the amount of non-performing loans increased by 24.2% which led to its growth in total loans from 9% to 9.05%. In this case, the amount of overdue  loans decreased by 4% and  amounted to GEL  358 million. The share of overdue loans in total loans also reduced by 0.9%  and  currently stands at 3.3%.