The FINANCIAL — Bank of Georgia, Georgia’s leading bank said is has signed International Swaps and Derivatives Association (ISDA) Master Agreement with International Finance Corporation (IFC). The Agreement will help the Bank engage for the first time in interest rate swap transactions.
The Agreement provides Bank of Georgia an additional risk- management tool, allowing it to hedge U.S.-dollar interest-rate risk on the Bank’s outstanding long-term borrowings. The ISDA Master Agreement is the international legal documentation for the execution of risk-management transactions.
“Signing of this agreement with IFC will give Bank of Georgia a powerful additional risk management tool to fix interest rates on our long term borrowings at today’s favorable levels’, said Nicholas Enukidze, Chairman of the Supervisory Board of Bank of Georgia.
“Proactive risk management such as this will help protect our future profits.” Snezana Stoiljkovic, IFC Director for Central and Eastern Europe, said: “Prudent risk management is critical for banks to protect themselves during the current financial crisis. This agreement with Bank of Georgia shows the high-value-added services that IFC can provide to its clients.” The agreement is part of IFC‟s broader strategy to improve risk management capacity within its client banks and introduce innovative products to its clients in Central and Eastern Europe.
Bank of Georgia Financial highlights
Bank of Georgia reported 2008 Net income of GEL 0.2 million, or GEL 0.13 per share, and total Net operating income (Revenue) of GEL 335.7 million, compared with record Net income of GEL 75.6 million, or GEL 2.96 per share and total Net operating income of GEL 235.8 million in 2007. Company said decline in Net income for the year was primarily a result of a significantly higher Impairment charge on Loans to Customers of GEL 122.8 million, reflecting the addition of GEL 77.7 million to the Bank’s Allowance for loan impairment; Losses from trading and investment securities in the amount of GEL 4.9 million; and Expenses from impairment of other assets and guarantee provisions of GEL 4.6 million in 2008.
As of 31 December 2008 Bank of Georgia had Total assets of GEL 3,259 million, as compared to Total Assets of GEL 2,954 million in 2007, an increase of 10.3%. The increase was mainly attributable to the loan book (Loans to customers) growth which stood at GEL 2,039 million, an increase of GEL 363.3 million, or 21.7% growth from 2007. Cash and cash equivalents, which accounted for 12.2% of Total assets, decreased by 2.0% to GEL 397.6 million in 2008, mostly a result of the decrease in the amount of short-term interbank deposits. The average liquidity ratio, based on the NBG standards, was 31.4% in 2008, higher than the NBG's 20% requirement. In 2008 gross loan book increased by 25.9% to GEL 2,146 million. The growth was mostly attributable to the increased commercial, consumer and residential mortgage lending which grew 11.6% to GEL 1,045 million, 49.9% to GEL 496.2 million, and 65.7% to GEL 391.6 million, respectively. The majority of lending was accounted for by commercial loans in 2008.
Written By Levan Lomtadze
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