Growth Boom Continues in Georgian Banking Sector


Growth boom continues in all branches of the banking sector of Georgia.

The trend that has been taking place in the country’s banking system for a significant period of time remained unchanged in the first ten months of 2007. Be it the deposits volume, the number of issued plastic cards or the net profit of the whole banking system, the growth rate much exceeds the impressive 50 percent.

According to the National Bank of Georgia (NBG), the growth of all credits allocated by Georgian commercial banks was conditioned by improvement of investment climate in Georgia, general increase of economic activity and growth of the attracted funds and new credit lines.
In January-October 2007 the volume of credits allocated to the Georgian economy grew by GEL 1.6 billion (64.8 percent), amounting to GEL 4.2 billion as of November 01, 2007. It should be mentioned that credits volume allocated in the Georgian national currency (GEL) increased by 63.5 percent, equaling GEL 1.1 billion, while credits allocated in the foreign currency increased by 65.2 percent and amounted to USD 3.1 billion.
Crediting volume of legal entities in the economic sectors stood at GEL 605.1 million for those denominated in GEL (grew by 42.8 percent as compared to the similar period in 2006) and GEL 2.2 billion for those denominated in foreign currency (grew by 55.2 percent).
The sectors that involved scaled crediting are agriculture, forestry and fishing (GEL 55.5 million – grew fourfold); industry (GEL 500.9 million – grew by 44.7 percent); construction (GEL 316.5 million – grew by 61.9 percent); commerce (GEL 1.4 billion – grew by 65.2 percent); education (GEL 8.8 million – grew threefold); real estate (GEL 58.0 million – grew 3.3 times); transport and communication (GEL 46.0 million – grew by 63.7 percent); hotels and recreation (GEL 44.9 million – grew by 38.5 percent); healthcare and welfare protection (GEL 14.0 million – grew by 56.5 percent).
It is also significant that apart from commercial banks credit unions were largely engaged in crediting in the territory of Georgia. Credit unions that assist in distribution of funds and money circulation on regional level attract deposits and allot credits only from and to their members. The number of these establishments grew to 23 as of November 01. The activity of credit unions, whose consolidated assets equaled GEL 1 539 551, covers practically every region of the country. Total liabilities of credit unions operating in Georgia equaled GEL 1 149 090, while the volume of overall capital of the unions reached GEL 390 461.

In the ten months of 2007 the volume of total deposits placed in the commercial banks of Georgia reached GEL 2.8 billion, having grown 66.7 percent year-on-year.
The volume of deposits denominated in the national currency equaled GEL 1.4 billion (grew by 100.9 percent), while those denominated in the foreign currency amounted to USD 1.110 billion (grew by 67.9 percent).
This has largely affected the level of deposits’ dollarization which decreased by 7.5 percent as compared to November 01, 2006 and equaled 64.46 percent. This is the lowest dollarization rate since the 1998 crisis. Such significant growth of deposits in GEL was conditioned by clear policy conducted by the commercial banks that offer higher interest rates on deposits in GEL (10.2 percent on average) as compared to those in foreign currency (8.3 percent on average).

Plastic cards
The number of plastic cards issued in Georgia reached 1.9 million as of November 01 (grew by 60%). It should be pointed out that from the total amount of plastic cards a total of 94 percent are debit cards.
Visa International plastic cards make up 73 percent of the cards currently in circulation in Georgia, EC/MC system cards – 16 percent, while 12 percent are local cards.
The volume of operations carried out by means of plastic cards increased by 10 percent a month and their total value equaled GEL 2.3 billion in the course of the 10-month period. As for the application of the operations, 75 percent of them were carried out through ATMs, 24 percent – at POS terminals, 1 percent – via the Internet.
In January-October 2007, 85 percent of operations out of the total volume were performed by means of plastic cards emitted by resident banks, 5 percent are due to similar operations abroad, while 9 percent – to operations carried out by means of plastic cards emitted by non-resident banks. Operations performed through the Internet make up approximately 1 percent.

Money transfers
The volume of fast money orders in Georgia made USD 682.7 million in Georgia in January-October 2007 (57.1 percent more than in the same period of 2006).
Russia remains the leader in remittances of money to Georgia from abroad by means of various electronic payment systems such as Western Union, Anelik, Caucasus Express and others. The country’s share equaled 63.1 percent with some USD 430.5 million transferred. The USA came second with about USD 92.8 million transferred (13.6 percent), then came Greece (about USD 22.6 million or 3.3 percent), Spain (about USD 20.8 million or 3.3 percent), the Ukraine (about USD 14.4 million or 2.1 percent), Turkey (about USD 14.0 million or 2.1 percent) and Austria (about USD 11.7 million or 1.7 percent).
The volume of fast money transfers from Georgia abroad by means of various electronic payment systems on the contrary has decreased by about USD 31.7 million or 27.3 percent and stood at USD 84.3 million.

General information
Today the Georgian banking system unites as many as nineteen banks. Those are JSC Bank Republic (Societe Generale group), JSC Taoprivatbank, JSC Agroinvestbank, JSC First British Bank, JSC TBC Bank, JSC Bank of Georgia, JSC People’s Bank of Georgia, JSC BasisBank, JSC VTB Bank – Georgia, JSC Bank Cartu, JSC Galt & Taggart Bank, JSC ProCredit Bank, JSC Standard Bank, JSC BTA Silk Road Bank, JSC Investbank, JSC Ziraat Bank A.S. (Tbilisi Branch, head office – Ankara, Turkey), Transcaucasus Development Bank LLC (Tbilisi Branch, head office – Baku, Azerbaijan), JSC The International Bank of Azerbaijan – Georgia and JSC HSBC Bank – Georgia.
Total assets of commercial banks of Georgia grew by 80.9 percent to GEL 6.8 billion as of November 01, 2007 (GEL 3.8 billion in the same period of 2006). In this period the net profit of the country’s banking system grew by 58.5 percent and reached GEL 103.8 million.