The FINANCIAL — Bank of Georgia has increased monthly limits on mortgage loans by USD 4.5 million. According to Irakli Gilauri, CEO of Bank of Georgia, one of the leading Georgian banks, the Bank has an unprecedented amount of surplus liquidity and is focused on turning it to loans. Otherwise the Bank will just become a place for saving people’s money.
Gilauri’s assessment of the total economic situation in Georgia is generally positive. He states that the Bank greatly cares about the accuracy of their loan portfolio.
“Unused capital is the main motivator for the Bank to start giving out loans.”
The total sum of launched credits for the 8 months of 2009 is GEL 550 million. The share of mortgage loans was GEL 20-24 million.
“We had planned to increase limits on different types of loans. The limit on hypothec credits was USD 50,000 which we have now increased to USD 150,000. That will increase the demand for hypothec credits. According to our evaluations, demand for mortgage loans is high and we will be able to satisfy our customer’s demands,” Gilauri says.
He notes that the monthly limit on hypothec credits will be USD 4.5 million and will be unlikely to increase in the future.
Bank of Georgia has also shortened interest rates on hypothec credits, from 18% to 16%.
“The total tendencies are positive. Demand for credit from good payers continues to rise,” Gilauri mentions.
In August 2009, Bank of Georgia fixed an unprecedented increase of its deposit portfolio. In July, the sum of deposits was GEL 43 million and in August it rose by GEL 72.6 million and reached GEL 996 million.
“These figures are unprecedented in the history of our bank,” Gilauri declares. “Our individual, as well as corporate customers have raised the number of deposits. The sum of deposits of individual clients was over GEL 50 million. Accordingly we are thinking of offering more flexible terms and increased limits on different types of credits.”
Because of the excess capital Bank of Georgia plans to reduce average interest rates on deposits. “We are not interested in attracting extra sums of deposits,” Gilauri declares.
After the beginning of the global recession Bank of Georgia was giving out mortgage loans to the sum of GEL 3 million per month. Before the beginning of the Russo-Georgian war the sum of mortgage loans was GEL 8-10 million monthly.
Recently Bank of Georgia reduced interest rates on micro credits. Whereas previously this figure was 24%, now it is about 20%, one of the lowest interest rates on the market. Bank of Georgia has decided to increase limits on micro business financing. Management of the Bank considers micro business less risky.
“Our decision to increase the limit was due to several reasons. The first is that risks have reduced in micro business. We can also see that macro economical activity is rising,” Gilauri told The FINANCIAL.
“For several months after the beginning of the global recession the monthly limit on micro credits was GEL 5 million. We increased this limit by 2.5 percent. Presently we plan to launch credit lines to the amount of GEL 12.5 million per month. The average amount of micro credits will be from GEL 500 to GEL 150,000,” Gilauri notes.
The reason for the Banks’ recent positive turn towards micro credits was due to the newly reduced risks in this sector.
“As for hypothec credits before the August war it was GEL 8-10 million. After the beginning of the war it stood at GEL 2-2.5 million.” Gilauri notes that presently these figures are doubling.
Gilauri informs us that the share of total loans of Elit Electronics in Bank of Georgia is minimal. He mentions that the Bank will follow the decision of other creditors.
“There are banks that have given out large amounts of credit lines for Elit Electronics. Because of its minimal interests Bank of Georgia will take a passive position in the discussion. We do not want to participate in its restructuring processes. For us the decision of the creditor council will be perfectly acceptable.
Bank of Georgia started the re-hiring of previously laid off staff in December.
“We always said that our fired workers would be a priority. They are well trained with good job experience,” Gilauri notes.
Bank of Georgia is giving out consumer loans to customers who are involved in their salary programme. “As for the other customers we plan to overview terms from September,” he notes.
Bank of Georgia refused to participate in fiscal obligation offered by the Government. “The Government offered us the lowest interest rates, 4% on fiscal obligation, and accordingly we did not participate.”
“Presently the index of liquidity is 42% and we need to have it at 20%. If it continues as it is, the Bank will become a place just for keeping money. We need to enlarge credit investment, but we do not want to rush and make any subsequent mistakes,” Gilauri explained.
Written By Madona Gasanova
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