Outlook and Indicators

www.pmcg-i.com
Issue #15

Economic

EEEEEBanking Sector

25.12.2013

This issue of Economic Outlook and Indicators analyzes the banking sector in the period of January-October 2013. In October 2013 the volume of deposits, as well as the volume of loans to the National economy increased ( 22.6%; 12.6%) in comparison with the indicators of the corresponding period in 2012. The share of deposits nominated in foreign currency decreased (- 5.4 percentage points), thus the indicator of dolarization has also decreased correspondingly (-5.4 percentage points). In this period, the weighted average interest rate on deposits was 6% and on loans was 17.7%. In December 2013, GEL depreciated against USD (2.8%) as well as against Euro (7.4%) compared to the indicator of December 2012. In October 2013, the volume of deposits increased (22.6%) in Deposits and its growth rate comparison with the indicator of October 2012. In this period the 12000 45% volume of deposits denominated in GEL as well as in foreign curren40% 10000 cy increased (41.2%; 12.5%). 35% The share of deposits denominated in foreign currency (59.4%) 8000 30% still exceeds to the share of deposits denominated in GEL (40.6%), 25% but it is 5.4 percentage points lower than the indicator of October 6000 20% 2012 (64.8%). This points to the increase of the level of larization, which on its turn is a significant determinant for the implementa4000 15% tion of the effective Monetary Policy and its effect on economy. 10% 2000 In October 2013, the weighted average interest rate on deposits 5% is 6%, which is 2.1 percentage points lower than the corresponding 0 0% indicator in October 2012. This change can be explained by the reduction of the monetary policy interest rate (-2 percentage point) and increase of the volume of deposits (22.6%). Deposits in National Currency Deposits in Foreign Currency Deposits Growth Rate (compared to the previous year)
2011 Jan 2012 Jan 2013 Jan May May March March March May Oct Oct Apr Apr July July Apr Sept Sept July Sept Aug Nov Aug Nov Aug Dec Dec Feb Feb Feb Oct Jun Jun Jun

In October 2013, the volume of the loans to the national economy increased (12.6%) compared to October 2012. The share of the loans to both, legal entities as well as to individuals increased ( 4.2%; 23.6%). In October 2013, the highest shares of the loans to National economy are for Trade (48%), Industry (17%) and Construction (8%) sectors. The share of consumer loans in total loans to individuals is 35.4% and the share of the loans secured by the real estate in total loans to individuals is 42.6%. In October 2013, the weighted average interest rate on loans is 17.7% , which is 1 percentage point lower than the indicator of October 2012. The interest rate on National currency denominated loans reduced by 2 percentage points and equals 19.9% and on foreign currency denominated loans reduced by 0.8 percentage point and equals 13.7%.
Dynamics of NPLs and its share in total loans
1000 900 800 700
m ln.GEL

Deposits growth rate (%)

mln.GEL

Monthly Dynamics of loans to the National Economy

10000 9000 8000 7000
mln.GEL

35% 30% 25% 20% 15% 10% 5% 0%

2011 Jan 2012 Jan 2013 Jan Jun Jun March March March July July Jun May May May Aug Aug July Sept Sept Aug Sept Feb Feb Dec Nov Nov Dec Feb Oct Oct Apr Apr Apr Oct

6000 5000 4000 3000 2000 1000 0

Loans of Legal Entities

Loans of Individuals

Growth rate of Loans (compared to the previous year)

14% 12% 10% 8% 6% 4% 2% 0%

Feb Feb Dec Dec Feb Apr Apr 2011 Jan 2012 Jan 2013 Jan Apr Jun Jun March March March July July Jun May May May Aug Aug July Sept Sept Aug Sept Nov Nov Oct Oct Oct

500 400 300 200 100 0

NPLs

Share of NPLs in total loans

Share,%

600

The share of the non-performing loans in total loans is an important indicator for determining the quality of the loan portfolio. In October 2013, the volume of NPLs increased (6.3%) compared to the indicator of October 2012. The volume of total loans aslo increased (12%). Thus, the share of NPL in total loans (9.4%) decreased by 0.5 percentage point (8.9%). In October 2013, 48.9% of non-performing loans is covered by the special reserves. At the end of October 2013 the comercial banks had profit (33.9 mln.GEL).

Loans growth rate (%)

Outlook and Indicators

www.pmcg-i.com Issue #15

Economic

EEBanking Sector
Exchange rate of GEL against USD and Euro

M25.12.2013

2000 1800 1600 1400

National Bank's foreign currency reserves

mln.USD

1200 1000 800 600 400 200 0

2013 Jan July Jun March Sept May Nov Feb Apr Aug Oct

Securities

Cash and deposits in foreign currency

Basic Economic Indicators

Nominal GDP in current prices (mln USD)
Per capita GDP (USD) GDP real growth, percent Consumer Price Index Foreign Direct Investment (USD) Unemployment Rate External Public Debt (mln USD) Poverty Level

I12
3388.3 753.4
6.70%

II12
3918.3 871.2
8.20%

III12
4156.1 924.1
7.50%

IV12
4367.6

971.1
2.80%

269.4
-

219.4
-

195.4
-

Source:

National Statistics Office of Georgia, Ministry of Finance of Georgia, National Bank of Georgia

-2-

2011 Jan Feb March Apr May Jun July Aug Sept Oct Nov Dec 2012 Jan Feb March Apr May Jun July Aug Sept Oct Nov Dec 2013 Jan Feb March Apr May Jun July Aug Sept Oct Nov

The exchange rate of GEL against USD as well as against Euro is depreciating since May 2013. In December 2013, GEL depreciated against USD in comparison with November 2013 (1.7%), as well as in comparison with December 2012 (2.8%). In December, 2013 GEL depreciated against Euro in comparison with November 2013 (3.1%), as well as in comparison with December 2012 (7.4%). The depreciation of GEL will lead the increase of the prices of imported goods, as well as the price of loans in foreign currency.

1.85
Exchange rate of GEL against USD

2.50 2.40 2.30 2.20 2.10 2.00 1.90 1.80

Exchange rate of GEL agaist Euro

1.80 1.75 1.70 1.65 1.60 1.55 1.50

USD

Euro

The National Bank of Georgia regulates the exchange rate by buying and selling the reserves of foreign currency. In November 2013, in order to stop the process of depreciation of GEL, NBG sold 80 mln USD reserves. Consequently, the share of foreign currency reserves in total reserve assets is 93%, which is lower (-2.7%) in comparison with the indicator of October 2013, but exceeds (6.9%) the indicator of November 2012.

2012
15 846.8 3 523.4 6.2% 99.1

I 13*
3487.6

II 13*
3958.4 882.8 1.5%

III 13*
4120.3 918.9 1.4% Contact Information

777.8
2.40%

PMCG Research

181

911.6 15% 4357.1 9.7%

226.2

Tamar Jugheli
232.4

238.7

E-mail: research@pmcg.ge
www.pmcg-i.com

E-mail: t.jugheli@pmcg.ge T: (+995) 2 921171

*projected