Baku, Azerbaijan, September 16
By Tamilla Mammadova – Trend:
Total assets of the finance sector in Georgia amounted to 1.5 million lari in 2018, a decrease of 4 percent from the same period in the preceding year, Trend reports via the report of European Investment Bank (EIB).
"The average capital hovers around 30 percent. Some 70 percent of total assets were loans. The sectorial distribution of the microfinance loan portfolio was split between loans issued to individuals (92 percent) and loans issued to legal entities (2 percent)," said the report.
As of March 2019, there were 61 microfinance institutions in Georgia. In total, they employ more than 4 000 people. They have close to 400 branches spread out throughout the country. They make up 4 percent of the financial sector’s assets.
The report said that in the "loans to individuals" category, custom loans represented 31 percent, pawnshop loans 27 percent and trade and services 17 percent of the total amount. From the beginning of 2017 to the end of third quarter of 2018, the dollarization of loans in microfinance organizations fell from 54 percent to 17 percent.
When considering profitability indicators, 2017 Return on equity (ROE) stood at 9.5 percent (down from 33.3 percent in 2016) and Return on assets (ROA) stood at 2.5 percent (down from 8.4 percent in 2016).
"Minimum paid share capital must be over 250,000 lari. Recently, the registration processes and rules for liquidation with National Bank of Georgia have been made more transparent. As of December 2018, capital adequacy and liquidity ratios were introduced. The volume of capital markets is still small. The main volume of market transactions revolves around government securities," said the report.
Total market capitalization is approximately 3.49 million lari – of which 1.94 million lari from the stock market and 1.54 million lari from the bond market. This accounts for a 10 percent share of total financial sector assets.
(1 USD = 2.96 GEL on September 16)