The FINANCIAL — As of November 30, Bank of Georgia, the leading Georgian bank by assets, had served GEL 104.3 million of loans for corporate clients and physical persons. In comparison with October, the bank’s total deposits have increased by GEL 61.4 million,” said Irakli Gilauri, General Director of Bank of Georgia.
“In November USD 5.1 million investment deposits have been opened. Investment deposits are the deposit and also the investment product. Getting extra profit is connected with the oil price change. It allows consumers to gain more profit. The investment deposit campaign is continuing,” officials of Bank of Georgia reported.
Bank of Georgia and American Express have drawn up an agreement according to which Bank of Georgia locally produces American Express brand cards. These cards will serve their owners in trading or service objects with cashless payments.
The proprietors of American Express cards will involve the well known American Express international bonus system – Membership Rewards.
American Express Company is a diversified global financial service company that is headquartered in New York City, New York. The company is best known for its credit card, charge card, and traveller’s cheque businesses. American Express’s Chief Executive Officer is Kenneth Chenault, who took over in 2001.
The company’s common stock trades on the New York Stock Exchange under the ticker symbol “AXP”. It is one of the 30 components of the Dow Jones Industrial Average. In 2007, Interbrand ranked American Express as the fourteenth most valuable brand in the world, estimating it to be worth USD 20.87 billion.
On November 10, 2008, during the financial crisis of 2008, the company won Federal Reserve System approval to convert to a bank holding company, making it eligible for government help under the Troubled Assets Relief Programme. At that time, American Express had total consolidated assets of about USD 127 billion.
At the opening of a new office in Adjara, Black Sea region of Georgia, Irakli Gilauri, General Director of Bank of Georgia, presented the bank’s monthly report.
Bank of Georgia has 149 branches, more than 904,000 physical persons’ and 133,000 corporative clients’ current accounts. The Bank offers its clients consumer’s banking, corporative and investment banking services.
Bank of Georgia opened a new regional office in Adjara last week. “This is to be the Head Office of the Adjara region; it will comply with the requirements of international standards,” David Beridze, Regional Manager of Bank of Georgia, said.
“Bank of Georgia has 15 service centres in Adjara. In 2008 6 new service centres were opened in this region. USD 1,000,000 was invested in the repairs of the new branch in Batumi. Totally we have employed 250 persons in this region,” Gilauri added.
Bank of Georgia is No.1 by assets (around 33.9%), loans (around 33.1%), deposits (around 29.2%), and equity (37.9%). Bank of Georgia serves over 880,000 retail clients through its network of 142 branches and 386 ATMs.
“Shares of Green Deposits have been very successful for Bank of Georgia. We are going to plant 30,000 trees next year as a result,” Gilauri declared. Green Deposit was launched in September 2008 to renew the wood destroyed due to the conflict between Russia and Georgia.
“The new Head Office of Bank of Georgia in Batumi is considered to be one of the most well designed and outfitted with all modern equipments, this new office is evidence that Bank of Georgia pays much attention to the region of Adjara,” said David Beridze.
In Q3 2008, Bank of Georgia’s Consolidated Net Income for nine months of 2008 amounted to GEL 1.3 million.
The Bank’s deposits in Georgia decreased by GEL 194 million (or 16.6% q-o-q) to GEL 972.6 million. The Bank has said that the decrease of deposits was primarily the result of retail and corporate deposit withdrawals during the conflict, as well as unusually slow deposit inflows and high withdrawals during the post-conflict period from corporate clients, which experienced business interruptions and loss of revenue during the conflict.
“The decrease in deposits during the conflict was amplified by lending restrictions imposed on all Georgian banks by NBG until the end of August 2008. Due to this restriction, many corporate customers, who repaid their loans in August (total corporate loan repayments in August amounted to GEL 81.7 million) were unable to draw down their existing credit lines, thus affecting inflows on corporate current accounts. The reduction of the deposits was also attributed to the appreciation of the GEL against the USD by approximately 1% and the EUR by approximately 10% in Q3 2008 also contributed notably to the decrease in deposits.”
The Bank’s NBG Liquidity Ratio stood at approximately 34% on 31 July 2008 and decreased to 27% on 30 September, 2008, still well above the NBG requirement of 20%.
The Bank booked net loan loss provisions of GEL 103.9 million in Q3 2008, as compared to loan loss provisions of GEL 2.8 million in Q3 2007 and GEL 8.6 million in Q2 2008. The Bank’s management believes that these provisions are made based on conservative assumptions and should be sufficient to cover any potential conflict-related loss in the loan portfolio. The increased provision resulted in the NPL Coverage of 554% as of 30 September, 2008.
“Following the conflict we made significant loan loss provisions, which, in our view, are based on conservative macro economic assumptions and are more than adequate to cover all potential conflict-related losses in the loan portfolio,” commented Nicholas Enukidze, Chairman of the Supervisory Board.
“Despite these provisions our capital base remains strong and well above the requirements of NBG. Our liquidity position is solid despite significant conflict-related deposit outflow in Q3 2008. Responding to the increasingly challenging market environment we plan to maintain a highly conservative approach to liquidity management. We expect to further improve our liquidity position through sizeable wholesale funding transactions mentioned in our previous press releases. The conflict and the global financial crisis have forced us to temporarily put on hold our plans to reduce the Bank’s involvement in several of its non-core subsidiaries, including Aldagi BCI, GTAM and Liberty Consumer. However we plan to re-launch these transactions as soon as the market environment permits,” commented Nicholas Enukidze.
Last week it was reported that the European Bank for Reconstruction and Development is to become a shareholder of Bank of Georgia.
“We are very pleased about the participation of EBRD, as it will strengthen the leader’s position, which our bank already holds,” Enukidze said.
Written By Tako Khelaia