Finance

TBC Achieved Breakeven delivering a combined GEL 59 million profit in 2023

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Tbilisi (GBC) - TBCU was loss-making during the first three years of its operations due to high operating costs related to establishing its business operations. In 2023, the bank reported its first annual net profit, with a return on average equity of 7%. High margins and economies of scale should boost TBCU's profitability in 2024-2025, although it will remain moderate in our base case due to still substantial operating expenses.

TBC UZ and Payme delivering a combined GEL 59 million profit in 2023, up sevenfold, with 26.0% ROE. TBC UZ became profitable and added 0.6 million digital MAU. Its loan book more than doubled in 2023 to GEL 797 million, driven by the popular instant cash loan product, ending the year with a meaningful contribution of 10% of total group retail loans. The deposit portfolio also saw strong growth, increasing by 76% to GEL 581 million, equivalent to 7% share of our total retail deposits.

The bank has relied on annual capital contributions from its shareholders to support its lending growth and comply with prudential requirements. While we expect TBCU to receive additional large-scale capital injections in 2024-2025, its Fitch Core Capital (FCC) ratio will moderate to 13%-14% during this period from 15% at end-2023 in our base case.

TBCU is largely funded by granular, albeit pricey, retail deposits (86% of end-2023 total liabilities). However, the bank has recently started to attract wholesale debt, including from the parent group, and we expect the share of external borrowings to increase in the medium term. The bank's liquidity position is modest, with total liquid assets covering around a quarter of customer deposits at end-2023.

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Mortgage maintains 11% growth

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NBG Keeps Its Monetary Policy Rate At 8%

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NBG assesses expectations for consumer prices

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NBG also provided lari to the market

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Global Finance rated Turnava's activity with lowest grade “ D”

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Lending to large businesses decreased by 35%

Other news

Mortgage maintains 11% growth

According to the NBG’s analytical report, as of September, it stands at 19.6%. Early in 2024, it was 20.09%, while at the beginning of 2023, it stood at 21.4%.The portfolio of mortgage loans amounts to 11.3 billion GEL, of which the balance of loans with a maturity of 5 to 10 years is up to 3 billion GEL, loans with a term of more than 10 years (01/2024 – 2.6 billion; 7.3 billion).The share of foreign currency in loans with a maturity of more than 10 years is 42%. The portfolio amounts to 3.1 billion GEL. As you know, from the fall of 2022, the maximum term of the foreign currency mortgage was shortened from 15 to 10 years. In the summer regulation of the same year, a +3% corridor was opened, both for foreign currency and GEL mortgages.The annual growth of the mortgage is 11.42%. The rate is higher than the same period of last year (+10.25%Y.Y), it will be lower than the rate of 2023 (+14.9%Y.Y).Retail lending is still growing, e.g. the share of consumer loans has increased to 19.2%. Banks less finances the direction of agriculture, because it is considered a risky segment, therefore, the share of lending to the agricultural sector is small.The volume of bad loans in the foreign currency mortgage portfolio remains up to 2%. At the same time, the share of problem loans in Euro has increased.According to the National Bank, the share of non-performing loans in Euro is within 2.4%, in USD - 1.8%, and in local currency within 1.7%.In the 11.3 billion GEL portfolio, problematic mortgages exceed 202.5 million GEL. Of this, 117 million are in GEL, equivalent to 47 million GEL in Euros, and 38.6 million GEL in USD.As of 01.09.2024, 7.3 billion GEL mortgage loans were issued in GEL; The equivalent of 2.4 billion GEL in US dollars and 1.7 billion GEL in Euro.

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Residential Property Price Index decreased by 0.9%

As of the document, compared to the 2020 average, the index change amounted to 46.7%. The RPPI covers the market of new residential property in Tbilisi, both flats and detached houses segments.In the third quarter of 2024 a price decrease compared to the previous quarter was registered both in flats (-1.1%) and detached houses (-0.2 %) segments.Compared to the third quarter of 2023, the prices increased in both segments, for flats by 7.5% and for detached houses by 9.7%.The following graph represents the median prices of 1m2 in the newly-built residential properties in the third quarter of 2024 in Tbilisi, by districts:

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NBG Keeps Its Monetary Policy Rate At 8%

Georgia continues to maintain a low-inflation environment. Since the start of 2023, inflation has consistently remained below the 3 percent target. In September of this year, headline inflation was recorded 0.6 percent, with core inflation at 0.8 percent. The price stability is largely attributed to the NBG’s effective monetary policy, which involved timely tightening followed by gradual normalization, stabilizing long-term inflation expectations. Domestic inflation, which reflects these expectations most accurately, is currently below the 3 percent target. Additionally, increased competition in the economy has reduced firms’ profit margins, further supporting low inflation. Together, these factors have helped neutralize inflationary pressures from strong demand. Economic growth has exceeded expectations this year, leading to a revised growth forecast of 8.5 percent. However, the NBG estimates that the economy’s overall production potential has also increased, easing pressures on prices and contributing to the low-inflation environment. According to the NBG's updated forecast, all else being equal, inflation is expected to remain below the target level in 2024, averaging around 1.2 percent, before stabilizing around 3 percent in the medium term.Despite these positive developments, heightened uncertainty—both domestically and globally—continues to pose risks. Against the backdrop of ongoing hostilities in Ukraine and elevated geopolitical tensions in the Middle East, there may be, among other effects, a rise in regional risk premium, creating price pressures through various channels. Additionally, volatility in international oil and food prices has increased, while developments in the Red Sea region may raise shipping costs, further elevating risks to overall inflation through higher costs for imported goods. Beyond external factors, domestic economic activity is stronger than expected, which could also exert upward pressure on prices in the future. Based on the current analysis of domestic and external conditions, the NBG has maintained the monetary policy rate unchanged at 8.0 percent. Such a cautious approach to the normalization of monetary policy is important to keeping inflation close to its target in the medium term. If inflationary risks do not materialize and the severity of inflationary pressures diminishes, the NBG will continue to vigilantly reduce the policy rate to its neutral level. Conversely, if inflationary pressures resurface, tightening the policy stance or maintaining the current rate for a longer period may be necessary.The National Bank of Georgia continuously monitors ongoing economic processes and financial markets and will use all available tools to ensure price stability.The next meeting of the Monetary Policy Committee will be held on December 18, 2024.

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The Kulevi plant will process 1 million tons of crude oil

In the history of independent Georgia, such large investments have not been made many times, "with the coordination of the state and the private sector, which will allow us to establish a new industry in the country", said Economy Minister Levan Davitashvili at the presentation of the new factory project.Black Sea Petroleum is building the first full-cycle plant. The total investment volume is up to 700 million US dollars. The output of phase I will be more than 1 million tons.At the final stage, the enterprise will be able to satisfy both local consumption and produce high-standard products, which are also exported to the European market.The factory will be equipped with high-tech, modern equipment, which will ensure the production of final products of the highest quality, international standard. In addition, according to the information of the First Vice Prime Minister, the development of the enterprise is fully in line with the highest environmental protection standards. The plant will start operating in March 2025 and plans to process 1.2 million tons of crude oil annually in the first stage.

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Security Sector Reform is a long-term political process - EU Ambassado...

“It is my pleasure to welcome you to this EU-funded event to discuss fundamental topics for any democratic society: national security and societal resilience.Security Sector Reform is a long-term political process. It goes to the heart of power relations in any country. In order to succeed, security sector reform needs to be nationally driven and based on political commitment and leadership, inter-institutional cooperation and broad stakeholder participation.Democratic oversight is equally important for a strong and resilient national security system. Accountability, transparency and openness must be applied and legal guarantees put in place to prevent arbitrary decision-making and possible abuse of the security structures.This is why a strong oversight mechanism of the Georgia’s security system has been included also as one of the nine steps attached to Georgia’s EU candidate status. Addressing and improving the parliamentary oversight of security services would be necessary for Georgia to continue on its EU accession path. [step 5 - Further improve the implementation of parliamentary oversight notably of the security services…]Despite some reforms undertaken in this regard in the past, the reports that will be presented today unfortunately reveal serious concerns. Research findings show that the parliamentary and judicial oversight of security services in Georgia are still too weak and inefficient.The hosts of today’s gathering are three civil society organisations – the Social Justice Center, CRRC Georgia and Georgian Young Lawyers’ Association. These organisations have been implementing this EU-funded security sector oversight project for the last three years.Three years marked by increasingly hostile environment for civil society oversight. Today, in this crucial moment for the future of Georgia, civil society organisations have become direct targets of disinformation and propaganda campaigns and their space has been curtailed by a combination of legal and non-legal measures. In this environment, meaningful oversight has become even harder.This is incompatible with Georgia’s aspiration to join the European Union. As HRVP Borrell said last week, these are signals of a shift towards authoritarianism, which takes Georgia away from the EU path.As the EU ambassador, my sincere hope is that the future developments will result in re-establishing of the favourable environment for meaningful reforms, including the security sector reform and building of the National Security System aligned with the European standards.The standards are respect of human rights, access to credible information and free and independent media, and undisturbed functioning of effective democratic control and oversight”, - EU Ambassador said

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Kulevi oil refinery project to be presented today afresh

In particular, the construction of an oil refinery in the free industrial zone of Kulevი has been planned since 2012, and "Black Sea Petroleum" LLC is the third investor in the project, which should invest $30 million on the site.To remind, construction of an oil refinery in Kulev FIZ has been planned since 2012, when an investment agreement was signed with Socar during the time of the previous government, but the mentioned project was not implemented. After that, the obligation to implement the project was transferred to the company Phasis Oil, which failed to fulfill its obligations, due to which the government replaced the investor and in 2023 the project was handed over to "Black Sea Petroleum" LLC. It is worth noting that "Phasis Oil", which failed to build an oil refinery in Kulevi for 7 years, was fined by the state, although later it wrote off the fine of more than USD 20 million.

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4.1% Of Assets Of Non-Financial Corporations Amounting to GEL 142.4 BL...

In 2023, the volume of short-term assets out of the total financial assets was 6.6 billion GEL and the liquidity percentage was 44.8.At the end of 2023, liabilities of non-financial corporations amounted to 72.3 billion GEL (of which, short-term liabilities were 19.9 billion GEL).Out of total liabilities, liabilities in foreign currency amounted to 15.8 billion GEL1 . At the end of 2023, out of total debt, debt to non-residents (Foreign Debt) amounted to 9.9 billion GEL.The volume of capital and reserves by the end of 2023 amounted to 70.1 billion GEL.In 2023, interest expenses of non-financial corporations amounted to 2.7 billion GEL and total income was 18.5 billion GEL.In 2023, expenditures on debt service (repaying base debt obligation plus interest payment on loan) amounted to 13.4 billion GEL. Out of this amount, debt service as the interest payment was 1.8 billion GEL. Debt service provided by loans from individuals equaled 114.4 million GEL, and debt service provided by other non-financial corporations was 820.5 million GEL.

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NBG assesses expectations for consumer prices

According to the NBG research, in the same survey, fewer expect an increase in wages in September. As of August statistics, more people thought about a salary increase of up to 10% in the previous month.At the same time, more respondents joined the group where they think that up to 10% salary decrease is expected.

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NBG Keeps Its Monetary Policy Rate At 8%

1729676887 • Finance

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Politics

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Over 200,000 adult citizens of Georgia do not own a passport, an elect...

The Service Development Agency of the Ministry of Justice informed about this to the chairperson of the "National Movement" faction, Tina Bokuchava, in response to a parliamentary question.In addition, according to the document, as of September 30, a total of 882,052 citizens, both adults and minors, do not have identity documents in Georgia.According to the information provided to the MP by the agency, as of September 30, a total of 458,234 citizens have the passport of an active citizen of Georgia. Among them, 293,863 adults and 164,371 minors.As for the number of citizens holding electronic ID cards, according to official data, a total of 3,345,274 citizens have the document. Among them, 3,203,702 adults and 141,572 minor citizens.In addition, according to the document, 395 citizens have non-electronic identity certificates in the country.

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Georgian PM unveils plan for “balanced” regional development, environm...

Kobakhidze said over GEL 2 billion ($730mln) would be allocated for the development of regions through the Municipal Development Fund while a special programme focused on infrastructure development in settlements across the occupation line separating the Russian-occupied regions from the rest of the country would receive an annual allocation of GEL 20 million ($7.29mln).“Under the rural support programme, a minimum of GEL 400 million ($145.73mln) will be allocated over the next four years. At least GEL 155 million ($56.47mln) will be allocated under the Mountain Fund [...] It is crucial to ensure that the benefits are evenly distributed across the country, reaching different regions. Investments will continue to be made in this regard”, Kobakhidze said.In environmental initiatives, the Government aims to implement modern early warning systems over the next four years and increase the area of protected areas in the country by an additional 100,000 hectares, the Prime Minister said.“Also, 15,000 hectares of forest will be restored and planted. In the last four years, we have increased the pace of reforestation by about five times compared to the previous government. It is not even worth comparing; the amount of forests restored and planted by them was so insignificant in our country”, he said.Kobakhidze also highlighted reduction in air pollution in major cities such as the capital city of Tbilisi and Rustavi, saying air pollution had decreased by 25 percent and 35 percent respectively over the past few years.The Prime Minister said GEL 200 million ($72.87mln) would be allocated for the municipal transport programme over the next four years.“This funding will be used to improve the transport infrastructure and services in municipalities and regions [...] The combined budget for all 68 municipalities totalled around GEL 1.3 billion ($470mln) in 2012, mainly allocated for administrative expenses. However, the budget for 2024 in the regions alone has already reached GEL 3.34 billion ($1.22bln), with a projected figure of GEL 4.59 billion ($1.67bln) for 2028”, he said.“As for Tbilisi, the budget of the capital city was only GEL 657 million ($239.36mln) in 2012. The budget has already exceeded GEL 2 billion ($730mln) in 2024, and the forecast for 2028 is GEL 2.25 billion ($820mln). This amount does not include projects financed from the central budget. Tbilisi City Hall has significant plans for expanding the metropolitan network, rehabilitating avenues, and more. Additional resources beyond the GEL 2.25 billion will be allocated from the central budget for these projects”, Kobakhidze added.The Prime Minister also said the budget of the western city of Kutaisi had been GEL 62 million ($22.59mln) in 2012, before increasing to GEL 195 million ($71.04mln) the following year. Government projections by 2028 put it at GEL 225 million ($81.97mln), he added.Budget for the central-eastern city of Rustavi had been GEL 49 million ($17.85mln) in 2012, he said, adding the figure was expected to rise to GEL 180 million ($65.58mln) by 2025 and reach GEL 210 million ($76.51mln) by 2028. The Black Sea port city of Poti had a budget of GEL 31 million ($11.29mln) in 2012, the PM noted, before adding the number was anticipated to surpass GEL 100 million ($36.43mln) next year and reach about GEL115 million ($41.90mln) by 2028.In public services, the Government head contrasted the number of 12 Public Service Halls across the country with the opening of 109 more venues since the year, with plans to open 12 more between 2024-2025 to complete the project of their expansion.“This will ensure that [Public Service Halls] are available throughout the country, and all municipalities have the necessary infrastructure. Additionally, the Mobile [Public Service Hall] project has been implemented to provide relevant services to even remote villages. The number of services offered in the [venues] has also doubled, which is crucial for our citizens”, Kobakhidze said.He also emphasised the importance of the initiative of systematic registration of land, calling it a “crucial” project and thanking the Ministry of Justice and Minister Rati Bregadze for initiating and implementing it.“Over the recent years, one and a half billion plots of land have been surveyed under this project, and one billion plots have already been registered. Additional funding will be allocated in the coming years to register 500,000 plots to their respective owners”, Kobakhidze said.Addressing the tourism sector, the Prime Minister said the country would attract eight million visitors this year and increase the number to 11 million by 2028.“Tourism is an important sector for our country’s economy, and we take pride in being known for our hospitality. The development of tourism not only has an economic impact, but also a cultural significance for us. We can be proud of the significant growth we have achieved in this area”, Kobakhidze said.“We had 4.7 million visitors in the country in 2012. This figure is expected to reach almost eight million by 2024. The number of visitors is projected to increase to 11 million by 2028. This shows a very positive growth trend in the number of visitors”, he added.He noted income from tourism was projected to increase from $1.4 billion in 2012 to $6.4 billion by 2028, calling it an “impressive” result.“Of course, these incomes will ultimately affect incomes and social status of our population”, Kobakhidze added.The Prime Minister further presented “impressive data” regarding accommodation facilities, including hotels and guest houses.“There were 777 hotels in our country with 23,000 places in 2012. The number of hotels is projected to increase to 2,363 with 108,000 places by 2024. This represents a 4.5-fold increase in the number of places in the hotel sector. The number of hotels is expected to reach 2,680 with 142,700 places by 2028, which is nearly six times the number in 2012”, he said.Kobakhidze revealed plans to support the growth of the industry through private investments of about GEL 1 billion ($360mln) in the hotel sector, as well as allocating over GEL 1 billion for the development of tourist infrastructure, including urban renewal projects.

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Parliamentary majority moves to reinitiate impeachment proceedings aga...

“As you are aware, on October 16, 2023, the Constitutional Court of Georgia ruled that Salome Zourabichvili violated the Constitution by undertaking foreign visits without obtaining the government’s consent, as required by Article 52 of the Constitution.Following this ruling, Zourabichvili retained her position solely due to the support of parliamentarians from the radical opposition. With their backing, she has continued disregarding the Constitution by making several foreign trips without government consent, including visits to France, Germany, Poland, and Belgium just last week.Before the court’s decision, foreign nations and organizations might have asserted ignorance regarding the requirement for presidential approval for such visits. However, after the ruling, any reception of Salome Zourabichvili without the necessary consent not only disrespects the Georgian people and their constitutional order but also violates the principle of non-interference in internal matters, contradicting our shared European values.The Constitution is the supreme document embodying the will of the Georgian people, and its open and deliberate violation cannot go unanswered. Therefore, the parliamentary majority has decided to reinitiate the impeachment process and prepare a new constitutional submission, which will be presented to the Constitutional Court before the parliamentary elections.Once the Constitutional Court affirms the violation, the new parliament will proceed to remove Salome Zourabichvili from office via impeachment during its very first sessions, with a minimum of 100 votes in favour.Salome Zourabichvili’s term concludes this year, which means that impeaching her would reduce her time in office by only one month. While the impact on her remaining term is largely symbolic, the legal and political significance of this decision is considerable. Deliberate and recurrent violations of the supreme law of the Georgian people must not go unpunished.It is essential to remember Salome Zourabichvili not as a former president but as a displaced one. This precedent will serve as a strong deterrent against future constitutional violations and will help fortify Georgian democracy,” stated Papuashvili.

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Blackmail continues against Bidzina Ivanishvili, to take a step that i...

Prime Minister Kobakhidze noted that the purpose of such steps is to force Bidzina Ivanishvili to take a step that is against the national interests of Georgia."The blackmail against Mr. Bidzina Ivanishvili continues. You know that he is already under de facto sanctions, he has 2 billion US dollars frozen in Europe, but now the blackmail continues in a different form, you hear threats to impose formal sanctions. Their goal is - they want to force Bidzina Ivanishvili to take a step that is against Georgia's national interests what doesn't work won't work even after years. Therefore, this blackmail is also doomed to failure," said the Prime Minister.