TBILISI

Georgia’s commercial banking sector pursued its recovery last year as lenders reported profits that offset the losses incurred 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 2.081 billion lari ($674 million) from January to December compared to a profit of 99.3 million lari in 2020. The banking sector returned to profit only in November 2020. The country’s central bank said that total income was 5.970 billion lari last year compared with 4.882 billion lari in 2020. Banks reduced their expenses in that period to 3.633 billion lari, compared with 4.586 billion lari.

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 started its economic recovery in April last year when it recorded 44.8 percent year-on-year growth. Economic recovery continued to gather pace as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, although the growth had been gradually slowing since April.

The country brought some restrictions back in August amid a hike in the number of infections and fatalities.

Georgia’s gross domestic product (GDP) grew by 10.7 percent year-on-year in January-November after contracting 5.9 percent in the same period a year earlier. In November alone, the economy expanded by 12 percent, compared with a 7.7 percent contraction a year ago. Growth was recorded in all sectors of the economy except for construction.

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.

The central bank projected economic growth at 10 percent in 2021 as the country continued to demonstrate economic recovery and a rise in demand after months of contraction due to the restrictions imposed to curb the coronavirus pandemic.

The IMF said in July that Georgia’s GDP was now projected to grow 7.7 percent in 2021 and 5.8 percent in 2022. In October, the IMF said that significant risks, including slow vaccination, remained to Georgia’s economic recovery.

In August, Fitch Ratings has revised the outlook on Georgia’s long-term foreign-currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at ‘BB’.

Georgia’s banking sector, which includes 14 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.