The FINANCIAL — Bank of Georgia (BOG) gave out loans worth USD 28,449,501 and USD 44,096,728 in the first and second halves of September. The total amount of loans in September was USD 72,546,229. In the second half of the month BOG started giving out micro loans again.
Currently over 200 micro loans have been issued. According to bank representatives the terms of the loans stay the same. As for student loans, there were more than 600 loans issued during September.
After the war Bank of Georgia employed 200 people in its new branches. Today the bank has 145 branches in Georgia.
“Bank of Georgia became the first Georgian bank after the war to get financial assistance. This financing will further help the country’s economic development. It underscores IFC’s confidence in the Georgian economy and in Bank of Georgia,” Irakli Gilauri, BOG General Director, told The FINANCIAL.
As Gilauri said, BOG is having negotiations with some international organization and in October or November the bank plans to attract USD 240 million, which will be used on fiscal and also on corporate clients. BOG has been getting credit from IFC for a long time; this recent one is the fifth or sixth precedent.
According to the National Bank of Georgia as of September 1, 2008, the banking sector in Georgia has been represented by 21 commercial banks, including 14 foreign-controlled banks and 2 branches of non-resident banks. Compared to the beginning of the year total assets of Georgian commercial banks (in current prices) increased by USD 703.4 million (13.7 percent) and constituted USD 5,831.1 million. However, as a result of the hostilities in August, as compared to July of the current year this figure decreased by 7.9 percent (USD 499.0 million), of which balances on correspondent accounts decreased by 35.3 percent (USD351.5 million), investment securities – by 28.0 percent (USD 45.9 million), net loans – by 3.9 percent (USD 150.1 million), non-bank deposits, including term deposits – by 13.4 and 14.3 percent (USD 338.3 and 183.7 million respectively).
On July 31, 2008, the bank held a 34 percent market share by total assets. The bank has credit ratings from all three major rating agencies: Standard & Poor’s, Fitch, and Moody’s.
Compared to the beginning of the year, the banking sector’s own funds (equity capital) have grown by USD 255.5 million (24.4 percent) to equal USD 1,301.9 million, which makes up 22.3 percent of commercial banks’ net total assets. The growth of paid-in capital constituted USD 97.6 million (30.2 percent). Compared to the beginning of the year, the number of foreign-controlled banks has increased from 12 to14 and their share in the banks’ total equity capital made up 68.6 percent.
The share of five banks having the largest assets within the total amount of the banking sector assets decreased from 80.4 percent at the beginning of the year to 77.5 percent.
Despite continued difficult market conditions, Bank of Georgia raised USD 166 million in debt funding in Q2 2008, including approximately USD 26 million in GEL-denominated short-term promissory notes, a USD 30 million subordinated loan from Dutch and German development banks FMO and DEG and USD 110 million two-year Loan Pass-through Notes (Bloomberg: BKGORG) arranged by JPMorgan.
On 30 June 2008 the bank’s consolidated Total Assets amounted to USD 2.4 billion (up 77.3% y-o-y, up 15.1% year-to-date and an 8.0% increase in Q2 2008 compared with Q1 2008 or q-o-q). Gross Loans reached USD 1.497 million (up 98.9% increase y-o-y, up 20.2% year-to-date and up 13.5% q-o-q). Corporate Gross Loans to Clients in Georgia stood at USD 625.8 million (up 54.3% y-o-y, up 9.1% year-to-date and up 7.2% q-o-q). Retail Gross Loans to Clients in Georgia reached USD 655.2 million (up 110.0% y-o-y, up 43.1% year-to-date and up 22.2% q-o-q). Wealth Management Gross Loans to Clients in Georgia amounted to USD 30.3 million (up 30.3% y-o-y, down 3.6% year-to-date and up 22.3% q-o-q).
As a result of a 25 day fire that started in Borjomi Gorge in August about 1,000 ha of forest was burnt. The damage to the environment was more than EUR 500,000,000. Bank of Georgia has created a new product called “Green Deposit” which will be part of the rehabilitation programme of forests burnt in Borjomi Gorge. For every term or child deposit exceeding GEL 500 (USD 356), BOG will plant a tree in Borjomi-Kharagauli National Park. Every new planted tree will have a number and the owner of the deposit will be given a special ownership certificate.
“At this moment our bank has made an order for 15,000 saplings which will be planted at the end of October” Irakli Gilauri told The FINANCIAL “In October-November the number of deposits will double and we will plant 30,000 saplings.”
According to the BOG representatives this aid program will be permanent and the planting procedures will take place in autumn and spring. The new forest will be of a mixed type.
BOG followed the advice of the Forestry Department and ordered Pine-trees, cedars, maples and oaks.
According to BOG by the end of September 6,000 green deposits were opened. The total amount of term deposits opened at BOG in September was USD 32,721,582.
On September 24 there was a robbery at one of the BOG branches on Dadiani Street. It was the first such robbery for Bank of Georgia. The total amount stolen, USD 10,000 and GEL 13,000, was returned.
“Thanks to the police and our security systems both of the criminals were arrested and we got back the money,” said the Public Relations Manager of BOG, Sophie Balavadze.
The bank increased the number of retail current accounts from approximately 705,000 at the beginning of the year to over 880,000 as of 30 June, 2008.
BOG continued investing in electronic banking channels. The number of ATMs grew to 363 by 30 June, 2008; the number of mobile banking users reached 42,119, up 6.1% from the beginning of the year, and the number of registered internet banking users grew 256.6% y-o-y to over 200,000. In Q2 2008 the Person-to-Person Money transfer feature was added to Bank of Georgia’s ATM network.
The incomes of active commercial banks for the period from January through August reached USD 778.4 million and total value of expenditures amounted to USD 712.2 million. In the first 8 months of the current year commercial banks’ net profit equalled USD 48.01 million, which is USD 6.8 million (i.e. 12.5 percent) less than the indicator for the same period of last year. Profitability of the banking sector assets (ROA) equalled 1.2 percent and profitability of capital (ROE) – 5.8 percent (compared to 2.2 percent and 11.4 percent respectively for the same period of last year).
In the aftermath of the conflict between Russia and Georgia in August 2008, sharp focus on the bank’s key asset – banking business in Georgia became more and more important.
Written By Levan Lomtadze
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