TBC Capital Weekly Bulletin

TBC Capital Weekly Bulletin

Georgia’s real GDP slipped by 2.7% YoY in March 2020, as most of the sectors declined, except construction and ICT, according to the GeoStat’s rapid estimates. Estimated GDP growth rate remained positive at 1.5% YoY in Q1 2020.

The NBG reduced policy rate by 0.50 pp to 8.5% on April 29th. According to the central bank, upward pressure on prices stemming from the supply side factors will be only temporary, while lower aggregate demand coupled with sharp reduction in oil prices should dominate later in the year. As per the latest projections, inflation should remain above the target over 2020 and decline towards the 3% target in the first half of 2021. Gradual exit from still tight monetary policy stance is expected to continue with the pace depending on inflation expectation developments, according to the statement by the MPC.

Bank deposits increased by 11.9%* YoY to GEL 28.9bn as of March 2020. The GELdenominated deposits went up to GEL 9.7bn (+10.3% YoY), while foreign currency deposits reached GEL 19.1bn equivalent (+12.8%* YoY). As a result, the share of home currency deposits equaled 33.7% by the end of March 2020. Spread between the new GEL and the FX deposits’ interest rates was up by 0.7pp, as the rates on GEL deposits increased MoM by 0.7pp, while the rates on FX deposits increased by only 0.03pp MoM.

Bank loans increased by 17.1%* YoY to GEL 35bn by the end of March. The GEL-denominated loans went up to GEL 14.4bn (+24.3% YoY), while foreign currency loans reached GEL 20.6bn equivalent (+11.6%* YoY1). Interest rates on new GEL and the FX loans converged in March 2020, compared to February, as market interest rates for GEL loans went down by 0.2 pp MoM to 16.10%, while they increased by 0.31 pp MoM to 6.45% for FX-denominated loans.

Corporate (+28.7% YoY excl. FX effect) and MSME lending (+16.8% YoY excl. FX effect) somewhat slowed down from previous month but remained strong overall. Retail lending went up by 8.5% YoY on constant currency basis with mortgage lending increasing by 14.0% YoY while non-mortgage lending increased by 1.9% YoY.

The materials contained in this Bulletin have been prepared by LLC TBC Capital (“TBC Capital”) solely for information purposes and have not been independently verified. No reliance should be placed on the accuracy, completeness or correctness of the information or the opinions contained in this Bulletin for any purposes whatsoever.

None of the TBC Capital or any of its shareholders, directors, officers, employees, affiliates, advisors and representatives accepts any liability for any loss arising from any use of this Bulletin or its contents or otherwise arising in connection therewith. Accordingly, no representation, warranty or undertaking, express or implied, is made or given by or on behalf of the TBC Capital or any of its shareholders, directors, officers, employees, affiliates, advisors and representatives as to the accuracy, completeness or correctness of the information or the opinions contained in this Digest. The information in this Bulletin is subject to verification, completion and change.

 

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