The FINANCIAL — Bank of Georgia’s corporate banking loan portfolio grew by 23 percent and reached GEL 1,700 million in 2012. The Bank is expecting the same growth rate in 2013.
The FINANCIAL — Bank of Georgia’s corporate banking loan portfolio grew by 23 percent and reached GEL 1,700 million in 2012. The Bank is expecting the same growth rate in 2013. The portfolio is equally divided across all sectors of the economy as this approach seems the most prudent to the Bank.
“Our main principle is not to become dependent on any single sector and this approach will remain in 2013,” said Archil Gachechiladze, Bank of Georgia Deputy CEO. “This year we will focus more on agriculture and construction sectors. We are looking forward to the possibility to participate in the Agricultural Development Project initiated by the Government. Certainly, the r decision depends on the terms of the project, but we will try our best to partake.”
Bank of Georgia has been focusing on agriculture for the past one year. “I would say that Bank of Georgia is the most active bank in terms of financing large scale agricultural projects. We have financed the development of several big swine farms helping to replace imported meat, which is very important for the country. Two of the farms have already been launched and one will open this year. We are supporting the processing industry as well.”
“We are observing the processes and are very optimistic about the next few years. The fact that the government change occurred peacefully and there was no civil disruption should result in significantly increased business activity and more investments being brought in. We expect that the stable business environment will bring about a period of an intensive expansion. Businesses can’t remain closed for a long time. It is important for the business to feel reassured by the existing state of things. From my point of view, signs of stability and trust are already evident.”
“A good example is Tata Motors, a company which is going to invest hundreds of millions of US dollars in the Georgian hydropower sector and already wants to meet with us. The company was observing the situation for a long time and has finally made a decision to enter the country. They feel that their business can run without any major problems. Others will follow Tata Motors.”
Q. Bank of Georgia had the biggest net profit in 2012 despite the fact that the net profit of the entire banking sector reduced two times. What was the role of the corporate banking segment in the overall success of your bank?
A. The corporate banking segment plays a significant role in the success of the Bank, however retail banking makes up the bigger share of all the Bank’s activities as well as its profit. The -reduced net profit of the banking sector was the result of a huge loss of one bank. As for the other banks, they had a more or less stable year. For Bank of Georgia, 2012 was certainly a better year than 2011.
Q. What are the other notable projects that Bank of Georgia implemented in 2012?
A. We launched Research Department and produced several reports last year, with hydropower and tourism sectors research among others. This year we will produce three different reports on agriculture. The Research Department has also prepared reports on the Eurobonds issued by the Georgian Railway and the Georgian Oil and Gas Corporation. Investors who are looking at entering Georgia read our research in the first place. It has become a point of reference for them. The existence of quality research on different sectors is essential for making investors confident about doing business here.
We undertake the research of the sectors which are supposed to be the most interesting for the investors. We consider hydropower, tourism and agriculture sectors to be the most attractive ones for the moment and, therefore the ones which will be able to attract the most investments.
Q. The construction business is an interesting one for Bank of Georgia to finance. Does this mean that the sector has managed to overcome its problems and is developing sufficiently well? From your experience which sector has the most problems?
A. From my point of view, none of the sectors is especially problematic. Still, developers have the biggest challenge to face. There are many players in construction business that significantly lack capital. These companies chose a wrong way to solve their problems and therefore were not able to overcome the challenges they faced.
We financed six projects in the construction sector with a total amount of almost US$ 20 million in 2012. As of today, the number of construction projects financed by Bank of Georgia loans that are close to completion, or are in an active phase of building, is close to 15. Bank of Georgia will continue to finance all adequately-planned construction projects in 2013, and providing loans to the construction sector will remain one of our priorities. We are waiting for more activity in this sector as the economy is gradually growing.
Before the crisis there were cases of huge projects being financed and unfortunately they have not been completed up until now. Unlike that period, now we tend to finance medium-size construction projects and issue loans that are enough to complete the project. Such attitude is more reliable both for the developers as well as the buyers.
Past experience and financial participation on the part of the developer is essential for obtaining a loan at Bank of Georgia. All other terms are adjusted individually, depending on the project.
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