TBILISI

Georgia’s commercial banking sector showed signs of recovery in the first eight months of the year as lenders reported profits that offset the losses they incurred in the same period a year earlier, when restrictions to stop the spread of the COVID-19 were first put into place, crippling the country’s tourist-reliant economy.

Commercial banks reported a total net profit of 1.470 billion lari ($474 million) from January to August compared to a loss of 316.7 million lari in the same period in 2020. The country’s central bank said that total income was 3.921 billion lari compared with 3.100 billion lari in the first eight months of 2020. Banks reduced their expenses in that period to 2.284 billion lari, compared with 3.274 billion lari.

In July, Georgia revised its economic growth forecast to 7.7 percent from a previous projection of 4.3 percent in 2021 amid signs of economic recovery, and in line with the International Monetary Fund’s (IMF) current projection.

Georgia’s highly tourism-reliant economy has been hit especially hard by the COVID crisis and lacks the resource-extraction or manufacturing base that has helped cushion the blow in some other ex-Soviet countries.

The country’s economic recovery started in April when it recorded 44.8 percent year-on-year growth. It continued to gather pace in May, June and July as the majority of the restrictions imposed to curb the coronavirus pandemic were eased, businesses reopened and tourists tentatively started to return.

Gross domestic product (GDP) grew by 12.2 percent year-on-year in January-July after contracting 5.8 percent in the same period last year. Growth was recorded in all sectors of the economy except for the mining industry and construction.

According to the IMF forecast, Georgia’s GDP is expected to grow 7.7 percent in 2021 and 5.8 percent in 2022.

Georgia’s banking sector, which includes 15 commercial banks, of which 14 have foreign capital, started to show its first signs of recovery at the beginning of the year, when some of the restrictions imposed by the pandemic were first eased. In March, Fitch Ratings revised the outlooks on three major commercial banks in Georgia – TBC Bank JSC (TBC), Bank of Georgia (BOG) and JSC Liberty Bank (LB)- to “stable” from “negative”, while affirming their long-term Issuer Default Ratings (IDRs).

TBC and BOG are the biggest commercial banks in Georgia and are both listed on the London Stock Exchange.

In August, Fitch revised the outlooks on two Georgian commercial banks – ProCredit Bank (PCBG) and Halyk Bank (HBG) long-term Issuer Default Ratings (IDRs) to Stable from Negative and affirmed the IDRs at ‘BB+’. Both banks are in the top ten commercial banks in the ex-Soviet country.