Bank sector assets of Georgia to GDP reaches all-time high
Baku, Azerbaijan, September 13
By Tamilla Mammadova – Trend:
Bank sector assets of Georgia to GDP reached an all-time high of 96 percent in January 2019, Trend reports, referring to the report of European Investment Bank (EIB).
"Banks dominate the financial system in Georgia.The banking sector’s loan and deposit portfolios have followed a somewhat similar trend. They stood at 64 percent and 56 percent of GDP in January 2019, respectively. Overall, the gap between the loan and deposit stock increased and the loan to deposit ratio (LTD) was around 110 percent," said the report.
EIB says the banking sector in Georgia is well capitalized, with a capital adequacy ratio (CAR) in accordance with Basel standards of 18.4 percent in 2018. Return on Assets (ROA) was well above 2 percent in 2018. Georgian banks’ liquidity positions have been relatively stable.
"Nevertheless, liquid assets covered only 27 percent of short-term liabilities in 2018, below the domestic minimum liquidity requirements of 30 percent for the first time in the last decade," said the report.
The share of Non-Performing-Loans (NPLs) has been steadily improving and reached 5.6 percent in 2018 on the back of several factors including tighter regulatory requirements.
"SMEs dominate the enterprise landscape in Georgia. Indicators of production, turnover, value added and employment also reflect a significant SME outreach in the economy," the report said.
The bank states that in the third quarter of 2018, SMEs accounted for 59 percent of total production value, 53 percent of turnover, 62 percent of value added (2017) and 62 percent of the total number of employees in the business sector. 50 percent of the country’s exports in 2018 came from the SME segment, a number that has been steadily rising since 2015, whilst an even greater share of imports – 58 percent were intended for SMEs.