The FINANCIAL — “2009 was a hard but successful year. The main challenge for us in 2009 was instability within the country, but presently that is over. We do not think we will face any challenges in 2010,” Irakli Gilauri, General Director of Bank of Georgia, one of the leading Georgian banks, told The FINANCIAL.
According to the third quarter of 2009 the total income of Bank of Georgia consisted of 61.5 million GEL. The net profit of the Bank reached 10.8 million GEL. The coefficient of its capital’s adequacy reached its highest point during 2009 at 21.2%.
The expected net profit for Bank of Georgia in 2010 is 72.2 million GEL. In 2010 the Bank plans to sharply increase its credit portfolio, increase its market share in retail banking activity and import deposits.
Bank of Georgia plans to increase its market share in European countries. “We already have a banking license in Ukraine and Belorussia. As for Tel-Aviv, we manage an office which is mostly focused on the marketing activity of our products. In a certain European country, which we cannot yet name, we will open a branch of the same kind,” Gilauri reveals.
According to current Belorussian and Ukrainian legislation Bank of Georgia will be obligated to increase its capital.
Gilauri speaks about the importance of increasing the development of Belorussian and Ukrainian banks. “Occupying banking licenses in other countries will depend on our success in the above-mentioned countries,” he says.
Gilauri underlines that Bank of Georgia is the only Georgian company that runs its international business abroad, not taking into account exporters. “Bank of Georgia is not only selling its products but also doing business abroad. The Bank is still collecting experience of running business on an international market. When we feel totally satisfied in achieving our goals on the Belorussian and Ukrainian markets, we will start thinking of acquiring licenses in other countries,” he says.
During 2009 price per stock of Bank of Georgia rose by 75.6%. The cost per stock currently sits at around 8 USD. The highest cost that the stock reached was 40 USD. Gilauri says that it was during the period of the investor’s boom and high interest in the banking sectors of the CIS. “As we understood later this was not realistic price,” he adds.
On November 9 bank announced that it will start issuing the American Express Card and the American Express Gold Card in Georgia. Later bank also implemented new types of plastic card: Solo. “We have already accepted about 1,500 applications for AmEx cards. 70% of these figures have already been issued. The demand is similar for Solo cards and we are sure of the success of this service,” Gilauri tells.
The Bank will initiate offering progressive dividends to its shareholders from 2011. The cost per stock will be a 0.30 GEL increase so as to achieve the results that the Bank has already planned.
Gilauri explains that when the cost per stock was five times higher than its capital, the management and shareholders preferred not to get dividends and returned to capital. “But now, as the price of capital is not overpriced we think that it was good step to launch dividends,” he says.
Bank of Georgia first launched dividends in 2005, when the price per dividend was only 0.5 GEL.
During 2009 Bank of Georgia has reduced interest rates on mortgage, customer and auto loans. Interest rates on hypothec credits became 14.5%. Customer loans have shortened to 20%, as for auto loans it was offered in 16%. Previously, during global recession interest rates for mortgage loans was 18%, customer loans – 36% and auto loans – 17%.
Bank of Georgia has also reduced interest rates to 17% for micro loans. Previously this figure was 20%. The Bank has also resumed giving out express and agro loans. This was due to positive predictions about the micro loan sector, Bank of Georgia officials explained.
Bank has decided to increase limits on micro business financing. The management of the Bank considered micro business less risky.
Bank of Georgia has also started giving out small sized micro credits; Express Loans. The minimum sum for an Express Loan was GEL 10,000 and the term 18 months. This type of loan was acceptable for financing consumer costs, current expenses and so on.
Bank of Georgia has resumed giving out agro loans. The maximum amount for that became USD 100,000, in the terms of 18-36 months.
In the third quarter of 2009 bank has made changes in its management team. Ex-assistant of the Director General of Bank of Georgia was replaced by Archil Gachechiladze. Gachechiladze worked at TBC Bank from August 2008.
The Bank has launched a new position of assistant of General Director in the field of international banking. Nikoloz Shurgaia, former General Director of VTB Bank, occupied the new position. Shurgaia started running the operations of international banking and held a position on the Board of Directors of the Belorussian bank.
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