The Banking Sector’s Profits in last years Exceeded the 2001-2013 Profits Twice
According to the National Bank of Georgia (NBG), in 2017 net profits of Georgia-based commercial banks (profits after profits tax) made up 870 million GEL, up 191 million GEL as compared to the 2016 indicators (+28%). Net profits of commercial banks in 2016 made up 679 million GEL. The sector’s profits in December 2017 constituted 153 million GEL. In December 2016 the sector’s profits made up 113 million GEL. In 2017 commercial banks paid 91 million GEL to the state budget in the form of profits tax.
Today, the Georgian banking sector registers 16 commercial banks, 15 ones are profitable and their total profits account for 870.3 million GEL. The only commercial bank is Silk Road Bank, which ended the last year in 495 555 GEL losses. As to the most profitable banks, for many years Bank of Georgia maintains the leading position and TBC Bank comes second. Consolidated revenues of these largest banks account for 667 million GEL, that is 76% (3/4) in the sector’s consolidated profits.
In 2017 total revenues of commercial banks made up 3.58 billion GEL, including 77% from interest incomes (2.76 billion GEL) and 23% from interest-free incomes (821 million GEL). It should be noted that in 2017 commercial banks received 368 million GEL from commission fees, 202 million GEL from currency sales-purchase operations and 77 million GEL from fines.
In 2017 commercial banks spent 668.5 million GEL on deposits interest rates, while interest incomes from loans made up 2.76 billion GEL, up about 5 times compared to the attracted financial resources (Deposits). Throughout the 2017, net profits from sales and purchase of currencies made up 202.954 million GEL. It should be noted that in the same period of 2016 this indicator was 219.332 million GEL.
As to loans, crediting portfolio of commercial banks constituted 22 billion GEL as of January 1, 2018. According to the NBG information, Dollarization in corporate loans constituted 74%. GEL-denominated corporate loans made up 2.5 billion GEL, while foreign currency denominated corporate loans amounted to 7.1 billion GEL.
Retail loans portfolio constitutes 11.2 billion GEL. In this case Larization coefficient is 57%. Foreign currency denominated retail loans amounted to 4.857 billion GEL, while GEL-denominated retail loans made up 6.373 billion GEL. As compared to the previous year, Larization coefficient has considerably increased. The indicator stood at 45.5% in 2016.
The List of top three leading commercial banks shows that Bank of Georgia is leader in terms of profits. TBC Bank is second and Liberty Bank is third. The year of 2017 has brought serious success to Bank of Georgia with a 73% upturn in profits and totaled 372 million GEL. The bank’s profits was 215 million GEL in 2016. In 2017 Bank of Georgia reserved only 30 million GEL. The bank’s assets rose to 12 billion GEL from 10 billion GEL and liabilities rose to 10 billion GEL from 9 billion GEL. The bank’s stock capital rose to 1.3 billion GEL from 1 billion GEL.
TBC Bank ranks second in terms of profits. The bank’s profits rose by 15% to 295 million GEL in 2017. It should be noted that in 2017 TBC Bank reserved 135 million GEL. The bank’s assets rose to 12 billion GEL from 9 billion GEL, while liabilities rose to 11 billion GEL from 7 billion GEL.
The bank’s stock capital has increased to 1.6 billion GEL from 1.4 billion GEL.
In the previous year, Liberty Bank’s profits rose by 48% to 52 million GEL. In 2016 the bank’s profits made up 35 million GEL. In 2017 Liberty Bank reserved 37 million GEL. The bank’s assets rose to 1.8 billion GEL from 1.6 billion GEL, liabilities rose to 1.6 billion GEL from 1.4 billion GEL. The bank’s stock capital rose to 226 million GEL from 186 million GEL.
It should be noted that in 2001-2013 total net profits of commercial banks made up 1.119 billion GEL, while in 2014-2017 period the figure marked 2.561 billion GEL. This signifies in 2014-2017 the Georgian banking sector has earned twice more net profits compared to the 2001-2013 period.
It should be also noted that in 2013-2017 the banking sector’s annual profits growth rate exceeds Georgia’s economic growth pace 6 times.
The banking sector’s profitability is determined by two indicators: ROA (return on assets) and ROE (return on equity).
Georgian banking sector is recorded among top ten banking sectors worldwide, due to the mentioned indicators. To be precise, according to the International Monetary Fund (IMF) indicators, Georgian commercial banks rank 9th in terms of profitability, along with undeveloped countries of Africa, Asia and Latin America.
It should be noted that in 2012 Return on Equity was 7.9%, today (according to the 1Q17 indicators), ROE is 27.6%. The indicator has increased 3.5 times. At the end of 2012 ROA was 1.3%, Today (according to 1Q17 indicators) ROA is 3.8%. The ROA rose 2.8 times.