Georgia’s banks post impressive 1H22 annualised return on equity

Georgia’s banks post impressive 1H22 annualised return on equity
By Iulian Ernst in Bucharest July 22, 2022

Georgian banks recorded enough profitability to post an impressive 1H22 annualised return on equity (ROE) ratio of 21% (down from 34% in 1H21) while the annualised return on assets (ROA) ratio was 2.7%, according to data published by the National Bank of Georgia (NBG).

In all, the banks reported an aggregated net profit of GEL836mn (€279mn) in the first half, down 21% y/y.

The banking system's average assets in January-May (June data was not released yet) increased by 7.4% y/y to GEL61.78bn while the average equity for the same period surged by 29.5% y/y to GEL8.11bn.

Out of the total aggregated net profit, 95% was generated by the country’s two big banks, TBC and Bank of Georgia, according to the Georgian Banking Association.

The decrease experienced by the banking system’s profit in 1H this year was prompted by loan loss provisions (GEL64mn) compared to GEL154mn provisions reversed (hence registered as revenues) in the first half of 2021.

Otherwise, the banks’ revenues increased by 17% y/y to GEL3.36bn while expenses increased by 39% y/y to GEL 2.36bn.

Notably, interest expenses increased by only 15% y/y to GEL1.30bn, while interest revenues rose by 18% y/y to GEL2.66bn.