In the first half of 2016 the Georgian bank sector’s net profits made up 290.655 million GEL, up 19.6% compared to the same period of 2015 (242.988 million GEL).
In January-June 2016 the banking sector’s revenues made up 1.574 billion GEL and expenditures totaled 1.264 billion GEL, while in the same period of 2015 the mentioned indicators were 1.825 billion GEL and 1.539 billion GEL respectively.
As of July 1 revenues of commercial banks made up 1.574 billion GEL, up 303 million GEL compared to the May indicator. Interest return of commercial banks also grow in stable regime and the figure marks 1.154 billion GEL.
It should be noted that commercial banks receive major revenues from retail loans – 615.5 million GEL, while revenues from corporate loans made up 416 million GEL.
Revenues from securities grow at high paces and this indicator hit 102.3 million GEL in January-June. In the last year, commercial banks received only 173 million GEL throughout the year. Commission fee revenues made up 132.2 million GEL. Finally, in January-June net profits of commercial banks equaled 290.7 million GEL.
Bank Republic is an only major commercial bank with slowdown in profits. It should be noted that Societe Generale has decided to sell Bank Republic to Hualing Group, the owner of Basisbank.
According to official statistics of the National Bank of Georgia (NBG), in June, as compared to May, total assets of commercial banks of Georgia (in current prices), rose by 2 billion GEL, that is 8.8% (without the exchange rate effect – by 3.2%) and totaled 25.3 billion GEL. The bank sector’s own funds made up 3.7 billion GEL, 14.6% of total assets of commercial banks.
Besides profits, commercial banks have also increased deposits and loans volumes. The crediting volume (including loans issued to nonresidents) rose by 1.2 billion GEL in June 2016, as compared to May (up 7.8%) and made up 16.4 billion GEL as of July 1. In the same period, the GEL denominated loans volume rose by 69.3 million GEL (up 1.2%), while foreign currency denominated loans increased by 1.1 billion GEL (up 11.6%).
As of July 2016 commercial banks had issued 1.7 billion GEL corporate loans in the national currency, up 7.3% compared to the previous month, and 5.9 billion GEL corporate loan in foreign currency, up 18.3%.
It should be noted that as of July 1 the dollarization coefficient of total loans made up 65.5% that, excluding the exchange rate effect, have increased by 0.26%, compared to the previous month.
Similar tendency is reported regarding deposits too. The volume of nonbank deposits placed in the banking sector made up 14.3 billion GEL as of July 1, 2016, up 849.5 million GEL (+6.3%) compared to the June 1 indicators.
The deposits dollarization coefficient made up 67.25% as of July 1, up 0.32% compared to June 1. The USD ratio in foreign currency denominated loans made up 82.6%, while the EUR ratio totaled 14.6%.
It should be noted the NBG president made a special speech about high dollarization coefficient in the Georgian economy. In the coming years the NBG will prioritize to enhance dedollarization tendencies. In the country with low inflation rate, bilateral fluctuation of the exchange rates and financial development paces, as a rule, the dollarization indicator should not be so high. Georgia is an evident sample of how difficult is to get rid of this disease, the NBG President Gvenetadze noted.
“Reasons should be found in our past, at the beginning of 1990s. Amid heavy social-economic situation the Coupon quickly lost purchasing value and the US Dollar became an only currency for payments and saving money in Georgia. Our country has not overcome this bitter experience, We have to perform much job in this direction, both the national bank and the Authorities.
If the dollarization coefficient is kept on low level, then the exchange rate volatility will bring less negative results. Our citizens should be accustomed to living without USD and we should prioritize our Georgian national currency. The dedollarization process is not a simple process and we should take active steps in this direction”, the NBG President Koba Gvenetadze said. Thus, the Georgian banking sector follows the tradition and, contrary to the remaining part of the state economy, it does not lack for assets and revenues. Commercial banks make a record volume of profits every year.
In 2015 the Georgian banking sector’s profits exceeded 0.5 billion GEL and this was a record figure. Therefore, the January-June indicators give ground to conclude that the banking sector’s profits in 2016 will increase compared to the previous year.