How is the coronavirus affecting the banking sector in Georgia?
Net profit was negative and amounted to -747 million GEL, which is only 1.5 per cent of total assets, announces the National Bank of Georgia. Photo: Nino Alavidze/Agenda.ge.
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Banks operating in Georgia are ending the first quarter of 2020 with negative net profit as they have created reserves for handling the negative expectations caused by the coronavirus pandemic.
The operating profits of banks in Georgia was 386 million GEL (about $122.54m/€112.92m) in the first quarter of 2020. Net profit was negative and amounted to -747 million GEL (about $237.14m/€218.53m), which is only 1.5 per cent of total assets, announces the National Bank of Georgia.
This is mainly due to the creation of a reserve for negative expectations from COVID-19. As of March the banking sector created a reserve for possible losses of 1.2 billion GEL in loans, and this number represents only a potential (and not realised) loss. The reserve itself, if this loss actually takes place, will allow banks in the future to avoid the risks of financial sustainability", reads the press-release published by the NBG.
In recent years, the annual average profit of the banking sector was 900 million GEL (about $285.71m/€263.29m). NBG said that due to the increased credit losses, the net profit of banks this year may be negative.
However, given these decent operating incomes, it is expected that when the pandemic is over banks will soon regain profitability", said NBG.
NBG said that there are quite large buffers to neutralise potential losses this year, and the stability of the banking sector is not in danger.
The National Bank of Georgia recommends that consumers use contactless pay methods instead of paying by cash to prevent the spread of the new coronavirus. It also urges people to use distant banking services instead of going to the banks.
Starting today currency exchange booths and other financial organisations have temporarily stopped functioning today in Georgia with an aim towards reducing the spread of the coronavirus in the country, announces the National Bank of Georgia (NBG).
Liberty Bank has announced it will transfer 100 million GEL in pensions in advance to citizens of Georgia who are in a high risk group for the coronavirus, announces the Director General of Liberty Bank Vasil Khodeli.
Small and medium-size business owners (SMEs) who have leased municipality-owned areas for their business activities have been made exempt from lease payments for three months to mitigate the negative impact of COVID-19 on the business, Mayor of Tbilisi, Kakha Kaladze stated today.
Five more individuals tested positive for coronavirus in Georgia increasing the total number of confirmed cases to 416. Meanwhile, nine infected individuals have recuperated from the virus bringing the total number of recoveries to 107.
Georgia has reported four new cases of the coronavirus today, bringing the total number of cases to 420. 107 of the 420 people have recovered, while five others have died.As of today 306 individuals remain infected with COVID-19 inside the country. 5,223 people are under quarantine and 584 others in hospitals. The village of Gvankiti in Terjola municipality of western Georgia has been put in lockdown earlier today as 10 people have tested positive for the virus so far.