Listing on the LSE will not prevent sanctions

88% of the income - 409 million GEL (H1/2024 – 208 mln) was received by the MFO sector for retail lending. Among others, 129 million from consumer loans (H1/2024 -71.7 million), 202 million from pawnshops (H1/2024 - 93 million).As of 01.01.2025, the loan portfolio of the bank is 1.970 billion GEL and the largest number, 712,870 loans (1.1 billion) are pawnshops (H1/2024 - 1.899 billion, 712,745 loans)In total, 890,436 loans have been issued (H12/2024 - 909,177).The share of problem (bad) loans is within 2.1%. Including 2.8% in trade/service sector lending; 0.7% - in pawnshop loans; the problem ratio for agricultural loans is 4.2%.

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The largest amount, 29,000 GEL, was sanctioned to “T-N Goldia” (owners: Khatuna Chikvaidze 82%, Tamar and Nino Chiburdanidze 18%).The lender delayed submitting the financial monitoring form, for which it was fined with 5,000 GEL. The supervisor submitted incorrect documentation for 2 clients and issued 2,000 GEL each.In addition, the lender’s software system works with flaws. It is difficult to identify suspicious users. The program was unable to detect/block all sanctioned ones, for which it was also fined 15,000 GEL.Added to this was 5,000 GEL for ignoring AML requirements in relation to 4 clients.3 MFOs were sanctioned for failure to comply with obligations under AML/CFT legislation,  including “Giro Credit” (owner Giorgi Gugumberidze). MFO “Moneta Express” (owners: Zviad Gubeladze 50%, Giorgi and Zurab Akhvlediani 50%), for concealing information on 5 transactions subject to monitoring. “Micro Fin” (Supervisory Board of JSC: Tamar and Levan Lebanidze) was fined with 6,000 GEL.

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This year’s Forum brought together the Governors and Vice Governors of the central banks of EU Member States and candidate countries, focusing on Europe’s investment priorities and the identification of best practices and effective strategies to meet investment needs.The Forum aimed to support the mobilization of resources necessary to strengthen the European Single Market and prevent potential economic fragmentation. As part of the EIB Group Forum, MEPs, representatives of central banks from various countries, and stakeholders from the business and financial sectors discussed key topics, including mechanisms for decarbonizing industry, the development of artificial intelligence, capital market integration, security, and innovation promotion.During the panel discussion, experts from diverse fields also explored global economic challenges and exchanged insights on effective strategies for attracting investment.“In an era of rapid technological change and globalization, the National Bank of Georgia spares no effort in developing an open finance ecosystem and introducing new services to enhance consumer access to a wide range of financial products. It is also worth noting that, within the scope of our mandate, the NBG remains committed to reducing barriers for new market players and advancing modern financial infrastructure through initiatives such as open banking, the regulatory sandbox, and other projects. These efforts contribute to fostering a sustainable and secure investment environment,” noted Nino Jeladze. 

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The value of export increased by 4.0 percent reaching USD 835.4 million, while the import increased by 19.5 percent and amounted to USD 2 728.6 million.The trade deficit equaled USD 1 893.3 million and its share in trade turnover constituted 53.1 percent.

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According to the EU Delegation, the findings were derived from responses by up to 200 European companies operating in Georgia and it shows that businesses are facing challenges that could hinder long-term economic stability.“Georgia’s Business Landscape: Economic Growth Faces Political, Workforce and Structural Barriers Despite continued economic growth in 2023 and early 2024, businesses in Georgia are facing number of challenges, primarily driven by political uncertainty and workforce shortages, according to the newly released EU Business Climate Report Georgia 2024. The survey, conducted among up to 200 companies with European links, highlights concerns that could hinder long-term economic stability.Key Challenges Facing Businesses in GeorgiaThe report underscores three critical obstacles affecting businesses: Political Instability: The stalled EU accession process since June 2024, coupled with upcoming parliamentary elections, has impacted business environment –76.7 % of companies cite instability as a major concern Workforce Deficit & Skills Gap: Nearly half of surveyed companies report skills shortages leading to 5-40% underperformance, with an estimated annual GDP loss of 26%. Exchange Rate Fluctuations: Currency instability continues to challenge businesses in financial planning and investment decisions. Additionally, concerns over corruption and regulatory inefficiencies have been raised by businesses, particularly in relation to tax policies, public procurement, and the judicial system, further complicating the investment climate.One of the most important findings is the severe shortage of skilled labor, which has led to an annual income loss of 55.6 billion GEL across businesses. High emigration and mismatched education programs further worsen this issue. Despite its cost, investing in internal workforce training has shown a positive return for businesses proving that workforce development is a key driver of resilience.Impact of Workforce Shortage: GDP loss: -26% annually Value added shortfall: -21.2B GEL Unrealized business income: -55.6B GEL Meanwhile, while the EU remains Georgia’s largest trade partner, exports to the EU fell by 18% in 2023(Geostat figures), primarily due to: High compliance costs for EU standards Lack of accredited laboratories for European certification Limited understanding of regulatory frameworks among businesses Additionally, SMEs, despite showing growth, still struggle with low economic contribution, and their access to EU markets remains challenging.The report calls for accelerated judicial and education reforms to enhance business confidence. Education institutions must work closely with the private sector to align skills development programs with market needs. Meanwhile, improving economic policies and trade infrastructure will be crucial to sustaining Georgia’s EU market integration efforts.In conclusion, the findings of the EU Business Climate Report Georgia 2024 paint a complex picture. While economic growth continues, it is overshadowed by political uncertainties, workforce shortages, and trade barriers. To maintain momentum, Georgia must address these structural issues—particularly workforce development—to secure long-term stability and EU market access,” notes the information by the European Union Delegation to Georgia.

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Annual inflation remains below the target level of 3%. In February 2025, the overall price level increased by 2.4% year-on-year, while core inflation stood at 2.0%. Inflation for domestically produced goods and services, which tend to be stickier and better reflects long-term inflation expectations, remains aligned with the target level, reaching 3.0% in February. Compared to previous months, the moderate increase in inflation and its convergence toward the target can be attributed, on the one hand, to the realization of risks in international markets. Specifically, the increase in international food commodity prices has been partly passed on to the domestic market, leading to a slight rise in inflation compared to the previous month. On the other hand, the moderate increase in inflation is related to the fading base effect of the reduction in electricity tariffs.Notably, based on data from January-February 2025, current dynamics are largely in line with the central scenario assumptions of the NBG’s latest forecast. Against the backdrop of increased pressure from international markets, inflation is gradually converging toward the target level and is expected to be close to it in the first half of 2025. Subsequently, partly due to the base effect, inflation will temporarily exceed the target before stabilizing around 3% in the medium term. However, economic activity appears stronger than initially expected. According to preliminary data, economic growth in January stood at 11.1%. At this stage, according to the latest estimates from the NBG, economic potential remains high, alongside strong aggregate demand, which partially offsets demand pressures on prices. Robust aggregate demand is also supported by credit activity, primarily driven by business loans, which contribute positively to economic potential growth.Amid elevated global uncertainty, the Monetary Policy Committee has, on one hand, considered a high-inflation risk scenario, where the realization of fundamental factors would require a higher path for the policy rate compared to the central scenario. Recently rising global uncertainty has been largely driven by tariff policies in international markets. Such policies highlight signs of economic fragmentation at the international level, intensifying the likelihood of supply chain disruptions and the emergence of a global high-inflation environment. On the domestic front, demand-driven price pressures remain a notable concern.On the other hand, the Monetary Policy Committee has considered a low-inflation risk scenario, where the realization of fundamental factors would require a lower trajectory for the monetary policy rate compared to the central scenario. In the wake of global uncertainty and tariff policies, the U.S. dollar index (DXY) is weakening. Against this backdrop, the appreciated exchange rate will exert downward pressure on headline inflation through imported goods inflation.As a result of macroeconomic analysis and the assessment of existing risks, the Monetary Policy Committee has considered it optimal to adopt a cautious approach toward further normalizing the monetary policy rate, keeping it unchanged at 8%. Upcoming decisions on the monetary policy rate will depend on updated macroeconomic forecast scenarios and risk assessments.The NBG will use all available instruments to maintain price stability. This means keeping the overall price level increase close to the 3% target over the medium term.The next meeting of the Monetary Policy Committee will be held on May 7, 2025.

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According to Creditinfo, as of March 1, active loan contracts worth 49.55 billion GEL have been signed with commercial bank clients (L/Y – GEL 39.8 billion)The portfolio of leasing companies is within 591 million GEL (L/Y – GEL 501 million) within 0.5 billion GEL.As you know, Creditinfo only records loans up to 10 million GEL. The limit was increased at the end of 2022. Previously, it included loans of 3 million.As of 01.03.2025, 90,047 loans of 931 million GEL from 50,055 borrowers of the bank are in 1-year arrears (L/Y - 840 million);A portfolio of GEL 595 million is in 2/3 years arrears (L/Y - GEL 555 million).The problem loan portfolio of banks has increased, unlike previous years (2024, 2023). In addition, the annual growth rate of lending has increased. As of 02/2025, it is 17.9% (01.03.2024: + 17.35%Y.Y).The CreditInfo database also includes loans issued based on income received through remittances.

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As of February 1, the bank is the leader with assets of 38 billion. It is No. 2 in lending, after TBC. It is also the second in deposits of legal entities.It is the market leader in total and including deposits of individuals.Bank of Georgia has more profit than all banks. With a net profit of up to 126.2 million GEL in January (01/2024 – 121.4 million), with a 53% share (01/2024 – 51.7%) it leads among 14 profitable banks, the total indicator of which is 251.7 million GEL (01/2024 – the aggregate of 12 profitable banks - 238.066 million).

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