TBILISI

Georgia’s commercial banking sector showed signs of recovery in the first half 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 1.059 billion lari ($342 million) from January to June compared to a loss of 477 million lari in the same period in 2020. The country’s central bank said that total income was 2.871 billion lari compared with 2.301 billion lari in the first six months of 2020. Banks almost halved their expenses in that period to 1.694 billion lari, compared with 2.651 billion lari.

The banks’ total assets rose to 55.981 million lari by July 1 from 49.276 million lari a year ago.

Total liabilities rose to 49.145 million lari from 44.073 million lari. Capital rose 6.836 million lari from 5.203 million lari.

Earlier this month, 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 and June 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 11.5 percent year-on-year in January-May 2021 after contracting 5.4 percent in the same period last year. Growth was recorded in all sectors of the economy.

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.