MFOs’ Rating

Natia Turnava briefed on the current situation in the country in terms of macroeconomic and financial stability to the members of the IMF mission, led by Alejandro Hajdenberg.According to the President of the NBG, the National Bank remains committed to the existing monetary policy framework, within which the central bank successfully ensures price stability.The International Monetary Fund mission, which is being carried out within the framework of consultations provided for in Article IV of the IMF’s Articles of Agreement (“Article Four Consultations”), began its work in Georgia on Wednesday.The mission aims to provide the IMF with a review of the current macroeconomic situation in Georgia, as well as the country’s fiscal and monetary policies.The meeting held at the National Bank was also attended by Vice Presidents of the National Bank of Georgia Ekaterine Mikabadze, Ekaterine Galdava and Nino Jeladze. IMF Resident Representative in Georgia Andrew Jewell and heads of NBG departments.In the coming days, the IMF mission will hold working meetings with the Macroeconomics and Statistics, Financial Stability, Financial Markets, Specialized Risks and other departments of the National Bank.At the end of the visit, the mission will hold a summary meeting with the President of the National Bank Natia Turnava and representatives of the ministries of economic profile.The President of the NBG stated about the absence of disagreements with the IMF last week, when presenting the annual report to the parliament. He considered that the open issues have been exhausted and nothing prevents the discussion of further cooperation.As you remember, the IMF’s suspended $280 million program was tied to obligations to be fulfilled within 36 months.The fund had questions about the introduction of the post of First Vice President of the National Bank, which draft was vetoed by President Zurabishvili.This was in February 2023, and in June the parliament returned to the issue (similar to Russian law, although the difference was in the time interval of 1 year and half a year). The veto was overcome and Turnava became First Vice President.Added to this was Turnava’s adoption of an exceptional rule on the implementation of international sanctions, which opponents of the government linked to the sanctioning of Partskhaladze.Third, there was the issue of state-owned enterprise reform.

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Operations are performed with digital security standards and in full compliance with the regulations of the National Bank of GeorgiaSimple interface: the application is available to users with any digital experienceSwiss Capital, in the MFO market (29 months) is positioned in 2nd place with 262 million GEL of assets, including 230 million GEL of loans. In recent years, we have been developing digital channels. As part of the digital transformation, the mobile application Scapp is also being developed as a multifunctional platform designed to increase access to services.Scapp is available in both the App Store and the Play Store.The service is available every day from 10:00 to 22:00.

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He criticized Wilson, claiming the congressman had long expressed contempt toward Georgia, including through actions hostile to the country. Gorduladze reiterated that Georgia has a pro-Western government rooted in democratic values, sovereignty, and national dignity.“This is exactly what Prime Minister Irakli Kobakhidze’s open letter and our team’s statements aimed to highlight. We are working to strengthen our strategic partnership with the U.S., taking steps to bring it to a qualitatively new level,” he noted.On Wednesday, May 21, at 18:45 Tbilisi time, United States Secretary of State Marco Rubio made his first statement regarding Georgia since Trump's re-election and the appointment of the new administration. He called the "Georgian Dream" "anti-American."Congressman  Joe Wilson expressed concern about the Georgian Dream party, calling it an “anti-American regime” and accusing it of rigging the October 26 elections, criminalising ties with the U.S., targeting American companies, obstructing trade through the Middle Corridor, and aligning with the Chinese Communist Party.“With that in mind, I’m really grateful that they, with the Rondeli Foundation, just released a report, indicating the control by the Chinese Communist Party now in the Republic of Georgia. And, I’d like to provide this for the record. Additionally, for 200 consecutive days, freedom-loving Georgians have heroically taken to the streets, embracing themselves in American flags and carrying posters of the president. Under your leadership, what will be done to help the State Department impose real costs on the anti-American Georgian Dream on behalf of the people of Georgia?” Joe Wilson asked Secretary Rubio.The U.S. Secretary of State responded that the U.S. foreign policy is guided by national interest.“Going back to what I’ve said earlier in my opening statement, the goal of the United States is our national interests. So, we will look at that and say, is it our national interest to have an anti-American government governing an important part of the world? And if not, we’ll take appropriate actions to impose costs on that government.That’s currently under review, and we’re looking for options and additional options. I have no announcement today specifically on what we plan to do yet, but I can tell you that that is something that’s being discussed and again, a great example of why we’re going to look to our regional bureaus, and our local office on the ground there to provide us guidance as to what are the measures that the government, the anti-American government would be most responsive to,” said Marco Rubio.

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Article 81 of the Company sets out a limit on the maximum total remuneration payable to directors. The limit may only be changed by resolution of the shareholders.At the 2024 Annual General Meeting held in London today, shareholders were presented with a revised remuneration policy, which sets out the maximum total remuneration cap for directors at $1,750,000 (the “Cap”).According to the resolution, the shareholders were proposed to increase the cap to $2,500,000, taking into account the expected appointment of additional directors to the management in 2025, as described in the annual report. Accordingly, it is necessary to increase the cap for remuneration to accommodate the financial effect of this change. The said policy and cap were approved by the shareholders.As a result of the vote, the issue of increasing the maximum total remuneration payable to directors was supported by 100% of the shareholders participating in the vote (38,442,500 shares). 68.39% of the issued share capital of the company participated in the vote.The remuneration policy, approved at the 2024 Annual General Meeting and reflected in the 2024 Annual Report, remains unchanged in all other respects.

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After a long wait, the 100,000 GEL loan limit has been removed (from 16.05.2025), which also limits the long-term partnership of the financier with the business client, because with the expansion of the business, the 100,000 GEL limit can no longer meet the increased needs and is losing customers.Since May 16, along with the increase in the loan limit, the lending opportunities have also increased. However, at the same time, the regulation has also been tightened. The sector will have to increase capital. Loans exceeding 100,000 GEL in the MFO portfolio should not exceed 50% of the regulatory capital.With the new norms (which the NBG introduced to the sector last week), MFOs will have to improve corporate and operational risk management. Compliance with the new standards will require additional resources and, accordingly, increase costs. So, MFOs will not be able to reduce lending rates until they reach equilibrium. But in the future, when they improve management; reduce costs arising from risks; gain greater trust from consumers and investors, there will be an opportunity to make loans cheaper.Earlier, as MBC (Microbank, former MFO) Risk Director Nino Devdariani noted on 1TV.ge, “At the initial stage, regulation is an additional cost, its implementation. The organization has more upfront costs than revenues.”The Chairman of the Board of the Microfinance Association expects the increase in the business portfolio by increasing the limit, as pawnshops and consumer loans are sold with a smaller volume. At the moment, pawnshops prevail.As of Q1/2025, 29 MFOs are represented on the market with a retail portfolio of more than 1.5 billion GEL (791,481 loans), where up to 730,000 loans worth up to 1.2 billion GEL are pawnshops. The quarterly (Q1/2025) net profit of the MFO sector is 29.06 million GEL.

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As of April 2025, the number of transactions of residential flats in Batumi has decreased by 6.7% to 1,178 units. The market size has increased by 2.2% standing at USD 67 millions.In April 2025 the weighted average price of newly-built flats in Batumi increased by 9.1% equaling USD 1,201 per sq m.As of March 2025, the number of transactions of residential flats in Batumi has increased by 5.7% to 1,233 units. The market size has increased by 4.9% standing at USD 64 millions.

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The growth is mostly driven by the primary market, where weighted average price increased by 13.8% citywide (some primary transactions are registered late, resulting in a price growth trend that does not reflect reality.) In the secondary market of newly built apartments, the weighted average price across the city increased by 5.5%.In April 2025, the number of transactions in new projects in Tbilisi increased by 5%, driven by growth in the primary market. It should be noted that some transactions in new projects within the primary market are recorded later by developers, which could potentially distort the data and fail to present an accurate picture of the primary market. The declining trend in old projects has persisted - the figure for old flats features a 21.3% decrease compared to April 2024.As of April 2025 in Tbilisi the weighted average price of old flats has increased by 7.5% in the suburbs compared to April 2024, in the city centre 4.4% growth was witnessed, while in the wide centre the weighted average price decreased by 1.5%.In April 2025, in Tbilisi the number of transactions of residential flats amounted to 3,256 units, reflecting only 2.6% YoY decrease. Market size increased by 6.6% standing at USD 244 millions.As of March 2025 the weighted average price of newly-built flats in Tbilisi has increased by 27.7% in the wide centre compared to March 2024, 21% growth was observed in the city centre , while in the suburbs 7.3% increase was witnessed. The significant growth is mostly driven by the primary market, where transactions are registered late, resulting in a price growth trend that does not reflect reality. In the secondary market of newly built apartments, the weighted average price across the city increased by 11.6%.

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The macroeconomic update states that the net effect of the variables affecting the GEL has recently been more pronounced in the direction of strengthening. In this regard, external factors play a leading role, although some improvement is also observed in the domestic component. Strengthening by only 2.7% YTD against the USD, the GEL has largely been resisting appreciation pressures from both external and domestic components in 2025; On the external side, two particular drivers – improving net foreign currency inflows and global USD weakness - have been supporting the GEL; The combination of rising interest rates and a depreciating currency, common for emerging markets and unusual for a developed economy, has been underscoring the ongoing  USD weakness; Domestically, demand on foreign currency has relatively eased, with early signs of deposits gradually switching back to the GEL; On this backdrop, appreciation pressures have largely translated into the NBG replenishing foreign currency reserves, buying 102 mn in March and, per our estimates, only accelerating purchases since; As for other arguments going forward, while the pressure stemming from inflation dynamics seems relatively insignificant, the recent GEL REER undervaluation implies risks of higher imported inflation and thus possibly more pronounced GEL appreciation.

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