TRENDS AND CHALLENGES OF BANKING IN GEORGIA

Banking is one of the most developed business in Georgia. We have 16 banks with total assets of 30.1 bln GEL. Two of them are presented at London's stock exchange “prime listing”. The sector overcome 2008 financial crisis without significant loses and breaks. National Bank of Georgia is successfully adopting all kind of regulation and supervision practice from the Basel III. Despite the merging process in the sector, the business environment has competitive nature. The spread, percentage gap between deposits and loans are the lowest (2.7%) not only in the Caucasus but also in Baltic states. The financial depth (bank loans / GDP) has positive trend and the highest (62.5%) level in region. Beyond positive results and achievements, the sector has some critical challenges. First should be mentioned an inadequate high level of sovereign credit rating. Therefore, banks from Georgia cannot borrow the cheap resources abroad. High interest rate on loans is damaging the loan portfolio structure, where share of corporate loans are second, after household loans. These problems are reflected in structure of the revenues. The leading sources of the cash inflows are interest from household loans (36%) and non-interest incomes (37%).