TBILISI

Georgia’s commercial banking sector showed signs of recovery in the first five 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 COVID-19 were first put in place, crippling the country’s tourist-reliant economy.

Commercial banks reported a total net profit of 764 million lari ($239 million) in January-May compared to a loss of 614 million lari in the same period in 2020. The country’s central bank said that total income was 2.307 billion lari compared with 1.915 billion lari in January to May last year. Banks almost halved their expenses in the period to 1.462 billion lari, compared with 2.633 billion lari.

Georgia’s banking sector, which includes 15 commercial banks, of which 14 have foreign capital. started to show its first signs of recovery in beginning of the year ,when some of 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).

The agency said that the revision of the outlooks to “stable” on TBC, BOG and LB reflected “reduced pressure on the banks’ credit profiles from the pandemic and contraction of the Georgian economy.”

“We expect their pre-impairment profits will be sufficient to absorb additional credit losses from the pandemic without jeopardising their financial profiles, it said in a statement.

Fitch said that the funding and liquidity profiles of both TBC and BOG had been stable as banks were largely funded by customer deposits (66 percent and 73 percent of liabilities at TBC and BOG, respectively) and there had been no material outflows at times of market turbulence in 2020.

“Banks entered the crisis with healthy capital cushions and sound performance metrics and we believe the ratings of BOG, TBC and LB can tolerate further moderate deterioration of asset quality,” the Fitch said.

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