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Economic

Outlook and Indicators Issue #15

www.pmcg-i.com

EEEEEBanking Sector

25.12.2013

Oct

Monthly Dynamics of loans to the National Economy 10000

35%

9000

25%

7000 6000

20%

5000 15%

4000 3000

10%

2000

Loans growth rate (%)

30%

8000

5%

1000

Loans of Individuals

Oct

Sept

Jun

July

Aug

Apr

May

Feb

March

2013 Jan

Oct

Dec

Nov

Sept

Jun

July

Aug

Apr

May

Feb

March

2012 Jan

Oct

Dec

Nov

Sept

Jun

July

Loans of Legal Entities

Aug

Apr

May

Feb

0% March

0 2011 Jan

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%.

mln.GEL

Sept

Jun

July

Aug

May

Feb

Apr

March

2013 Jan

Oct

Dec

Nov

Sept

Jun

July

Aug

May

Feb

Apr

March

2012 Jan

Oct

Dec

Nov

Sept

Jun

July

Aug

May

Feb

Apr

March

2011 Jan

mln.GEL

Deposits growth rate (%)

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)

Growth rate of Loans (compared to the previous year)

Dynamics of NPLs and its share in total loans 1000

14%

900

12%

800

8%

500 6%

400 300

4%

200

2%

100

NPLs

Share of NPLs in total loans

Oct

Sept

Aug

Jun

July

May

Apr

Feb

March

2013 Jan

Dec

Oct

Nov

Sept

Aug

Jun

July

May

Apr

Feb

March

2012 Jan

Dec

Oct

Nov

Sept

Aug

Jun

July

May

Apr

Feb

0% March

0 2011 Jan

m ln.GEL

600

Share,%

10%

700

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).


Economic

Outlook and Indicators www.pmcg-i.com

Issue #15

EEBanking Sector

M25.12.2013

2.50

1.80

2.40

1.75

2.30

1.70

2.20

1.65

2.10

1.60

2.00

1.55

1.90

1.50

1.80 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

Exchange rate of GEL against USD

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.

USD

2000

Euro

National Bank's foreign currency reserves

The National Bank of Georgia regulates the exchange rate by buying and selling the reserves of foreign currency.

1800 1600 1400

mln.USD

Exchange rate of GEL agaist Euro

Exchange rate of GEL against USD and Euro 1.85

1200

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.

1000 800 600 400 200

Securities

Nov

Oct

Sept

Aug

July

Jun

May

Apr

March

Feb

2013 Jan

0

Cash and deposits in foreign currency

I12

II12

III12

IV12

2012

I 13*

II 13*

III 13*

Nominal GDP in current prices (mln USD)

3388.3

3918.3

4156.1

4367.6

15 846.8

3487.6

3958.4

4120.3

Per capita GDP (USD)

753.4

871.2

924.1

971.1

3 523.4

777.8

882.8

918.9

GDP real growth, percent

6.70%

8.20%

7.50%

2.80%

6.2%

2.40%

1.5%

1.4%

226.2

232.4

238.7

Basic Economic Indicators

99.1

Consumer Price Index Foreign Direct Investment (USD) Unemployment Rate

181

911.6

269.4

219.4

195.4

-

-

-

15%

External Public Debt (mln USD)

-

-

-

4357.1

Poverty Level

-

-

-

9.7%

Source:

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

-2-

*projected

Contact Information

PMCG Research

Tamar Jugheli E-mail: research@pmcg.ge

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

Economic outlook and indicators banking sector january october 2013 (1)  

This issue of „Economic Outlook and Indicators” reviews banking sector of Georgia in the period of January-October 2013. The newsletter cove...

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