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Finance
MFOs’ Market Is Getting Smaller – TOP-10 MFOs’ By Credit Portfolio

Last year, the market was represented by more entities, 36 MFOs with credit investments of 1.574 billion GEL.More than 1/2 of the portfolio, up to 53%, comes from 2 large MFOs, which operate with a different strategy. Rico is focused on pawnshops, Crystal provides both consumer and business loans, as well as MBC.This is the main condition that allows MFO to transform into a microbank. At the moment, MBC and Crystal have submitted license applications to the NBG.After the exit of the mentioned entities from the M/O market, the already small 2.4% share of the credit union in the financial system will further decrease, while the 91.4% share of the banks will increase.A microbank license seeker and a new player pay the license fee at the same rate – GEL 100,000, a MFO license costs GEL 50,000, a commercial bank license costs GEL 200,000.

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MFO's income from the pawn shop has increased - Rating Of MFO

The share of corporate loans in MFO investment is still small. Compared to the previous period, it has decreased. As of October, 1,200 loans were issued. As of 01.01.2024, there are a total of 1,000 pawn loans with a volume of 25.6 million GEL.However, in the retail portfolio there are also credits with entrepreneurial purpose. Also loans of entrepreneurial individuals, the source of financing of which is income from business.Among the clients of MFO, there are more than half a million pawnshop users. As of 01.01.2024, 833 million GEL, 645,700 loans have been issued, almost half of MFO's total portfolio (GEL 1.7 billion).There are 34 entities registered in the NBG in the microfinance market, among them two, Crystal and MBC, have submitted an application for a microbank license to the NBG.MFO by Revenues of Pawn Shop

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Basis Bank ended January with a profit of 8 million

Hualing Group Bank (Chinese Capital) is No. 3 in business lending. It ranks 4th in total credit investments with a 4.7% share.It is also fourth in terms of deposit portfolio. BB's market share in legal entity deposits exceeds 6%.The bank's market share by assets is up to 4.5%.

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TBC Holds the largest number of legal entities’ deposits

In 2024, the management of TBC has announced to maintain >20% returns, on various platforms.In addition, TBC is the market leader in deposits of legal entities. With a portfolio of 8.5 billion, Systemic Bank is No. 1, with a 43% share.It is also a leader in large portfolio banks (TBC, BOGG, BB, LB) with a credit portfolio of 20.8 billion GEL.TBC ended January with a net profit of up to 86 million GEL and is #2 among profitable banks (13) with a 36.6% share.

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TOP-5 Banks By ROE

Compared to 2020, the profitability of 2021 was due to the base effect. In 2022, the growth was stable and the trend was maintained in 2023.However, as of 01.02.2024, it is already decreasing. The sector's return on equity (ROE) is 23%, which is 3pp below the benchmark.As of 01.02.2024, the sector's return on equity (ROE) is 25.1%.Out of 15 banks operating in the market (reporting from newly licensed digital banks, including Paysera, not yet Hsh), the capital of 13 is profitable, including no longer sanctioned VTB, which ROE is negative >9%. The subsidiary of the Russian bank, whose capital still remains in Georgia, ended January with a loss of 2.3 million GEL. Paysera’s coefficient is also negative.Of the 15 banks operating in the market, the capital of 12 is profitable, including sanctioned VTB. The coefficient of "Pasha Bank", "Silk Bank" and "Paysera" (digital bank) newly entered the market is negative.​TOP-5 Banks By ROE

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Shares of Georgian companies rose sharply on the LSE - Bank of Georgia...

Bank of Georgia Group (BGEO LN) shares closed at GBP 45.60/share (+15.01% w/w and +22.75% m/m). More than 413k shares traded in the range of GBP 39.85 - 47.05/share. Average daily traded volume was 41k in the last 4 weeks. The volume of BGEO shares traded was at 0.90% of its capitalization.TBC Bank Group (TBCG LN) closed the week at GBP 30.55/share (+7.01% w/w and +6.82% m/m). More than 122k shares changed hands in the range of GBP 28.15 - 30.75/share. Average daily traded volume was 25k in the last 4 weeks. The volume of TBCG shares traded was at 0.22% of its capitalization.Georgia Capital (CGEO LN) shares closed at GBP 12.36/share (+9.77% w/w and +17.49% m/m). More than 729k shares traded in the range of GBP 11.24 - 12.52/share. Average daily traded volume was 79k in the last 4 weeks. The volume of CGEO shares traded was at 1.66% of its capitalization.

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The share of non-resident deposits remains at 19%

In the last reporting month, it decreased by 1 percentage point, and as of 02/2024, the annual growth was 14%.According to NBG's analytical report, 13.7% comes from the growth of retail deposits, and the contribution of foreign currency deposits among them is reduced to 2.6%. from 14% as of February last year.As of 01/2024, the banking sector has deposits of 50.7 billion GEL. Foreign currency and GEL are distributed almost equally in the portfolio. Half of the deposits come from foreign exchange investments.

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The NBG registered 2 fintechs

At this time, a new lifeline appears in the financial market, which assumes a kind of intermediary role between business and banks.As the founder of "Geofintech" Gigi Glont told his business partner, the bureau-platform will be useful for both parties. The company will be assisted in the preparation of financial documentation to be submitted to the borrower. On the other hand, through the new platform, banks will search for the desired client.As you know, this intermediary link between the borrower and the lender was created by "Open Banking". After the NBG made changes in the regulation and "Creditinfo" was given the opportunity to share information with other entities besides banks.Bureau-platforms will offer a set of loan products of different banks online to the customer, who will choose the best one from the mentioned package.The financial market expects a variety of content from the fintech segment, not limited to niche products, but also combined packages. The advantage of the platform is the variety of choices. The potential client is given the opportunity to get acquainted with the offers of several banks/MFO/insurance/leasing companies at the same time.At the moment, along with "Geofintech" there is also the 2nd entity "Ranco" on the market. The bureau-platform has access to the creditinfo database. The NBG registers the interested person, the platform, within the framework of the regulatory laboratory (for the purpose of implementing financial technological projects)."Geofintech" will serve companies, the main target group is small and micro-businesses. "Ranko" plans to operate in the retail segment.The platform will receive income from partner lenders in the form of a commission, the bureau-platform service is free for the borrower.

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The portfolio of banks decreased by 800 million

If we take into account the economic growth of 2023, including wages have increased by 15-20%. Therefore, it does not create additional risks. That is why NBG did not activate the countercyclical buffer.By 02/2024, the credit portfolio of banks is up to 52 billion GEL. There is a decrease of 800 million in January.According to the NBG statistics, the volume of loans issued in national currency decreased by 166.8 million GEL (by 0.58%), while the volume of loans issued in foreign currency decreased by 650 million GEL.As of February 1st, commercial banks had granted 8.51 billion GEL loans in national currency and 14.4 billion GEL loans in foreign currency to finance legal entities.During January 2024, the balance of retail loans decreased by 35.4 million GEL to 27.2 billion GEL.The share of the retail portfolio in the total investment decreased to 53.7% and amounts to 27.8 billion GEL. Larization of the portfolio of individuals is 71%.Foreign currency credits prevail in business loans. As of February 1, it is up to 64%.

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The volume of deposits raised in foreign currency decreased by more th...

Current accounts in foreign currency deposits have decreased by 364 million GEL and amount to 7.32 billion.Deposits have decreased by 372 million GEL and equaled to 8.88 billion GEL.The volume of term- deposits has increased by 194 million GEL and by the end of January it was equal to 10.19 billion GEL.As for the benefits of depositors, on average 2.19% is charged on funds placed in foreign currency. Interest rates vary from 1.07% to 3.55% depending on the maturity.

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