Georgian banks’ profits 38% larger than before crisis

Georgian banks’ profits 38% larger than before crisis
By Iulian Ernst in Bucharest November 25, 2021

The aggregated net profit of Georgia’s banking system in January-October rose by 38% compared to the same period in 2019, to GEL 1.76bn ($567mn), according to data released by the central bank.

In the same period last year, the banks reported GEL85mn net losses, caused by the mandatory provisions set aside for the expected deterioration in the quality of their loans. Since then part of the provisions was released – which contributed to the robust profits in 2021. The increase in this year’s profit was thus partly an effect of the one-off financial incomes, just as last year’s losses reflected the build-up of provisions.

The annualised return on average assets for Georgia’s entire banking system improved to 3.7% in the first 10 months this year, according to bne IntelliNews calculations, compared to -0.2% in the same period of 2020 and 2.1% in 2019.

As regards the net interest income reported by the Georgian banks in January-October, it increased by 37% y/y and by 33% compared to the same period of 2019 to GEL2.98bn ($962mn). The annualised net interest to assets ratio thus improved to 6.2% this year, compared to 5.3% in the same period last year. However, the ratio dropped from 6.5% in the first 10 months of 2019.

*annualised return on assets ratios are calculated based on 9M average assets for each year, as the assets at the end of October will be released on November 25.