Bank Credit Growth came in at 14.1% YoY in June 2019

Bank credit growth came in at 14.1% YoY in June 2019 being 1.4 pp higher compared to the 12.7% in the previous month.

In terms of the segments, corporate loans were the main driver of the acceleration with an 18.0% YoY growth rate, partly thanks to the one-off transactions. On top of that, MSME lending also increased by a solid 17.2% YoY.

On the other hand, retail lending continues to decelerate. Mortgage lending growth slowed to 25.7% YoY, while non-mortgage lending declined by around the same 5.6% rate on an annual basis, similar to previous months. Seasonally adjusted monthly figures suggest the retail lending recovery in May was short-lived as the growth weakened again in June. On the other hand, the NBG announced amendments to the existing framework, potentially easing the credit conditions for mortgage borrowers. This along with the low base effect gradually coming into play is likely to support the normalization of retail credit growth. If needed, there are more ways to stimulate lending without excessive risk taking, in our view (See TBC ER insight #8).

In June 2019 GEL loans increased by 18.5% YoY, FX loan growth came in at slightly above 10%, adjusted for the currency effect. As a result, loan dollarization fell further to 56.8%, down by 1.8 PP YoY excl. the FX effect.