Acting National Bank Governor highlights “stable, low” credit risks in energy sector’s portfolio in banks

Natia Turnava, the Acting Governor of the National Bank of Georgia, on Monday said the energy sector’s portfolio in banks was characterised by “stable and low” credit risks and its substantial share in loan portfolios contributed to “financial stability and reduced cyclicality”.

[W]e are actively promoting more loans for the development of green energy. Our strategy is centred on developing sustainable financing, and as such, we are implementing regulations to incentivise banks to finance as many green energy projects as possible”, Turnava said while presenting an NBG study to finance and energy sector representatives.

The research, prepared by the Bank’s Specialised Risk Department, said existing private hydroelectric power plants in the country demonstrated “high creditworthiness” and operating profit rates. It also noted the volume of bank liabilities issued to the energy sector had doubled from 2018 to 2023 and occupied a “significant share” of the total business credit portfolio.

The NBG said loans in the energy sector had an “average maturity twice as long as those in other sectors” issued at similar interest rates, adding the sector portfolio was characterised by “one of the lowest credit risks despite relatively high concentration”.

The study also highlighted the “highly efficient” domestic electricity generation from hydroelectric power stations, attributed to the country's favourable landscape, climatic conditions, international trade opportunities and investments made in the sector.