TBILISI

Georgia’s commercial banking sector reported a rise in net profit in amount of 303,305 million lari ($94,8 million) in the first two months of this year compared with 245,483 million lari in January-February 2021.

In February alone, net profit declined to 90,610 million lari from 212,695 million lari in January this year and 132,115 million lari in February last year.

The country’s central bank said that total income was 1.026 billion lari, up from 877,988 million lari a year earlier. Banks increased their expenses to 678,281 million lari, up from 606,157 million lari.

Total assets of commercial banks rose to 61,688 billion lari as of March 1 from 57,306 billion lari a year ago, while total liabilities rose to 53,686 billion lari from 51,211 billion lari. Total capital rose to 8,002 billion lari from 6,095 billion lari.

Last year, Georgian banks pursued recovery 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 in 2021 compared to a profit of 99.3 million lari in 2020. The banking sector returned to profit only in November 2020.

Georgia’s banking sector, which includes 14 commercial banks, of which 13 have foreign capital, started to show its first signs of recovery at the beginning of the last year when some of the restrictions imposed by the pandemic were first eased.

Georgia’s economy expanded by 18 percent year-on-year in January this year supported by growth in almost all sectors and compared to 11.5 percent growth in January 2021. Growth was recorded in all sectors of the economy except for construction and communications.

The country demonstrated economic growth last year as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, businesses reopened and tourists tentatively started to return. Gross domestic product (GDP) grew by 10.6 percent year-on-year in 2021 after contracting by 6.1 percent a year earlier.

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.

For this year, Georgia projects 6 percent economic growth.

In February, Fitch Ratings has affirmed the outlook on Georgia’s long-term foreign-currency Issuer Default Rating (IDR) at ‘BB’ with a Stable outlook.

Fitch said that the economic recovery had been driven by domestic demand, strong inflows of net remittances, a partial tourism recovery, and fiscal stimulus (e.g. subsidies and social benefits). Growth in exports of goods also performed strongly due to the recovery of key trading partners and higher commodity prices.

For 2022 and 2023, Fitch forecast Georgia’s economy to expand by 5.5 percent and 5.3 percent, respectively, above the potential of 4.0-4.5 percent. Increased financial inflows will support private consumption and investment. Recovery in the tourism sector is also projected to pick up, with Fitch forecasting tourism receipts towards 80 percent of 2019 levels in 2022, after reaching 38.1 percent of 2019 levels in 2021.

According to the World Bank’s updated forecast, Georgia’s economy is expected to expand by 5,5 percent in 2022 as the “economy is projected to ease toward its potential growth rate in 2022 and 2023 amid tighter fiscal policy.”