Economy
Posted: 3 years ago

Ten out of Fifteen Commercial Banks Found to have Declining Profits

The rate of profitability of the Georgian banking sector is declining. According to statistics published by the National Bank of Georgia (NBG), commercial banks received profits of 198,601,000 GEL in the first quarter of 2019, down 15% compared to the same period in 2018.

According to the March statistics, Return of Assets (ROA) declined by 0.2%, and made up 19.9%. Return on Equity (ROE) decreased by 1.5%, and totaled 14.2%.

In the first quarter of 2019, Georgia-based commercial banks received revenues of 1,036,704,000 GEL, up 10% year on year. At the same time, the sector’s expenditures rose by 18% compared to revenues. As a result, the profitability rate of Georgia-based commercial banks declined.

Total expenditures of commercial banks constituted 808,236,000 GEL, including: interest rates – 380,868,000 GEL. Year on year growth made up 13.6%; noninterest expenses amounted to 303,288,000 GEL, up 6.4% year on year; losses on available loss of assets – 124,080,000 GEL, up 102% year on year. As a result, the sector’s profits before taxes declined by 13%, to 228,468,000 GEL, while taxed profits constituted 198,601,000 GEL.

According to the 1Q19 financial report, ten commercial banks out of 15 were found to have declining profits. In whole, the financial sector’s profits constituted 198,601,203 GEL, down 34,712,821 GEL year on year.

In terms of profits, TBC Bank ranks first, with 98,571,884 GEL, down 8.5% year on year.

Bank of Georgia ranks second with 73,350,878 GEL, down 2% year on year. Terabank ranks third.

Liberty Bank’s profits considerably decreased. The profits of Georgia’s third biggest bank in the first quarter made up 3,986,406 GEL, down 73% year on year. Liberty Bank ranks 7th in the rating.

In terms of the growth of net profits, Credo Bank ranks first with 5.7 million GEL, up 600% year on year. Cartu Bank’s net profits grew by 500%. Halyk Bank’s net profits declined by 17.87% to 2.6 million GEL. Three other commercial banks finished the reporting period with losses.

According to statistics, Georgia-based commercial banks received 1,036,704,000 GEL profits in the first quarter of 2019, up 10% year on year. However, the expenditures of commercial banks increased by 18%,  compared to the pace of revenues growth. As a result, the profit growth rate of commercial banks has declined.

 

List of Commercial Banks

Q 1 2019 (Mln. USD Dollars)

Q1 2018

(Mln. USD Dollars)

1.

TBC

98.6

107.7

2.

BOG

73.4

74.8

3.

Tera bank

6.2

6.2

4.

Credo

5,7

0.9

5.

ProCredit Bank

4.6

8.1

6.

Cartu

4.1

-1.0

7.

Liberty Bank

4.0

15.0

8.

VTB Bank

2.4

9.1

9.

Basisbank

2.2

7.2

10.

Isbank Georgia

1.8

0.0

11.

Ziraat Bank

0.8

0.6

12.

Silk Road Bank

- 0.2

0.0

13.

PASHA Bank

- 0.9

0.9

14.

Finca Bank

-1.5

0.6

15.

Halyk Bank

-2.6

3.4

 

All banks

199

233

It should be noted that in 2018, the net profits of Georgia-based commercial banks made up 915 million GEL, up 45 million GEL compared to 2017 (up 5.2%). Net profits in 2017 made up 870 million GEL. Namely, in December 2018, profits of commercial banks constituted 119 million GEL. In December 2017, commercial banks received profits of 153 million GEL. In 2018 commercial banks paid 123 million GEL in profits as taxes to the state budget. In 2018, the total revenues of commercial banks made up 4.2 billion GEL, including interest incomes with a 79% ratio and non-interest revenues with a 21% ratio.