Profit of Georgian banks declines

In the first seven months of 2019, the profit of most Georgian commercial banks declined. Overall, net profit of the financial sector amounted to GEL 443.4 million in January-February, which is GEL 21 million, or 5% less than in the same period of 2018.

The information was released by the National Bank of Georgia (NBG). According to the consolidated statistics, the decline in profits of banks is not due to the decrease in revenues but is due to the high growth rate of bank expenditures.

In the first six months of 2019, the total income of Georgian banks increased by 7.5% which is GEL 2,485,807,000. Among them, there has been an increase in both physical and legal persons’ directions.

Banks also received income from the interest payments of loans totaling GEL 1,115,930,000 which is 2.9% more than in 2018. Interest income from legal entities amounted to GEL 644,106,000, which is 17% more than the previous year.

In addition, the increase was seen from the penalties paid by people. In total, banks collected imposed fines of GEL 55,188,000 (up 18%). They also generated 206,658,000 GEL from currency exchange operations which is 69% more than in 2018.

However, in comparison to the profit, Georgian banks saw their expenses increased. Banks paid GEL 744,169,000 for administrative, office and operational as well as other non-interest expenses, which is 11% more than in 2018.

As a result of the loss of assets, Georgian banks saw the loss of GEL 302,336,000, which is 30% more than the previous year.

The total profit of banks before taxation was GEL 498 million and net profit - GEL 443 million. Profit tax paid amounted to GEL 44.9 million, and unforeseen expenses - 9.9 million.

NBG reports that As of August 1, 2019, the banking sector in Georgia is represented by 15 commercial banks, including 14 foreign-controlled banks. In July 2019, compared to the previous month, the total assets of Georgian commercial banks (in current prices) increased by 1.3 billion GEL (or by 3.0 percent) and constituted 44.3 billion GEL (exchange rate effect excluded above-mentioned indicator increased by 1.4 percent).

The banking sector funds (equity capital) equal 5.3 billion GEL, which makes up 12.0 percent of the commercial banks' total assets.