National Bank of Georgia to leave countercyclical capital buffer unchanged

Finance Materials 27 November 2019 15:29 (UTC +04:00)
National Bank of Georgia to leave countercyclical capital buffer unchanged

BAKU, Azerbaijan, November 27

By Tamilla Mammadova – Trend:

Financial Stability Committee of National Bank of Georgia (NBG) made a decision to leave the countercyclical capital buffer of the country unchanged, at 0 percent, Trend reports referring to NBG.

As reported, since the regulation of responsible lending to natural persons came into force in January 2019, the growth of loans has been following the expected tendency.

"The annual growth rate of credit portfolio in October 2019 amounted to 13.9 percent, excluding the exchange rate effect, which is mainly due to the growth of loans to legal entities. It should be noted that Credit-to-GDP ratio still exceeds its long run trend, mainly due to exchange rate effect and the excessive credit growth in past periods," NBG said.

According to the committee's assessment, the lending growth will converge to its sustainable level in the medium term.

Meanwhile, Georgian financial system remains resilient against potential shocks. The banking sector is highly capitalized and liquid, and maintains high profitability indicators, while share of non-performing loans in total credit remains low.

However, it should be noted that usually in the ascending credit cycle the share of non-performing loans decreases. Therefore, this indicator should not be interpreted too optimistically, according to the report.

"The National Bank of Georgia continues to monitor the country's financial stability and assess domestic and foreign risks. If necessary, it will use all available instruments to minimize the possible risks," said the bank.

The Financial Stability Committee's next meeting will be held on February 26, 2020.


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