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Bank of Georgia

Summary Details:

  • iconCountry Name: Georgia
  • iconS&P Rating: BB-
  • iconMoody's Rating: B1
  • iconFitch Rating: BB-
  • iconAssets: GEL 7,537,301
  • iconProfits: GEL 245,984
  • iconOwnership: 93.0% Institutional Shareholders,
    3.9% Local Shares Held by Domestic and Foreign Retail Shareholders,
    3.1% Management and Employees
  • iconDate Modified: Jul-2015

Syndicated Analyses:

Reuters "Fitch Affirms Six Georgian Banks; Outlook Stable" 28-May-2015:
Fitch Ratings has affirmed Bank of Georgia (BoG, BB-/Stable/bb-), TBC Bank (BB-/Stable/bb-), ProCredit Bank (Georgia) (PCBG, BB/Stable/bb-), JSC Liberty Bank (LB, B/Stable/b), Basisbank (BB, B/Stable/b) and Halyk Bank Georgia (HBG, BB-/Stable).
The affirmation of BoG's, TBC's, PCBG's, LB's and BB's VRs, and (with the exception of PCBG) their Long-term IDRs with Stable Outlooks, reflects their generally robust capitalisation, ample liquidity and still sound financial metrics notwithstanding a challenging operating environment in Georgia. The economic slowdown, depreciation of the Georgian lari (GEL) and higher funding costs are likely to have a moderate negative impact on banks' performance in 2015, but Fitch expects that this will be within the tolerance range of the ratings.
Direct losses from devaluation will be limited, as the rated Georgian banks do not run significant short open currency positions. Nonetheless, with over 60% of banks' loan portfolios US dollar denominated (with the notable exception of LB, 4%), the fall of the lari could create asset quality pressures and a slight decrease in regulatory capital ratios due to asset inflation.
Liquidity is adequate, underpinned by high levels of liquid assets on balance sheets, which provide the banks with solid buffers to absorb unexpected funding outflows.
In Fitch's view, the authorities would likely have a high propensity to support BoG and TBC in light of the banks' systemic importance, and LB given its social function as the country's primary distributor of pensions and social benefits.
Moody's Corporation "Moody's: Bank of Georgia and TBC Bank set for robust expansion in 2015" 23-Jan-2015:
The Republic of Georgia's two largest banks -- Bank of Georgia (Ba3 stable; D- stable/ba3) and TBC Bank (Ba3 stable; D- stable/ba3) -- are poised for strong business expansion in 2015, aided by the country's growing economy and efforts to tap opportunities in a largely unbanked population
Against this background, these two entities could report lending growth of 20% in 2015. However, the banks face headwinds as they expand particularly from the high use of the dollar for loans and deposits, which exposes them to foreign-exchange induced credit and liquidity risks, in a country in which the credit culture is still evolving.
Growth opportunities for these two leading Georgian entities are unmatched in the Caucasus and Black Sea region. Moody's forecasts real GDP growth in Georgia of 5.5% in 2015, which is one of the strongest in the region. We also expect the banks to benefit from their dominant positions in the domestic market - Bank of Georgia and TBC Bank jointly account for 57% of Georgia's banking assets - aided by lack of any significant competition from foreign lenders
Standard & Poor's RatingsDirect "Bank of Georgia" 18-Dec-2014:
Strengths: • Largest domestic bank in Georgia, with a superior distribution network. • Strong management team, focused on strengthening the bank's organization and risk management framework. • Adequate liquidity, supported by a diversified funding base, substantial funding support from multilateral organizations, and low short-term refinancing needs. Weeknesses: • High political, economic, and operating risks inherent to operating in Georgia. • Recent economic slowdown that could undermine asset quality and capitalization. • Vulnerability of loan portfolio quality to high amounts of foreign-currency-denominated lending.
Standard & Poor's Ratings Services' stable outlook on Bank of Georgia (BoG) reflects its view that the bank's good earnings and capitalization balance its high credit risk.
We consider BoG to have a "strong" business position, "adequate" capital and earnings, a "moderate" risk position, "average" funding, and "adequate" liquidity
Georgian banks benefit from the government's political commitment to market-oriented policies and structural reform.
The risk appetite of the country's banks, however, has been high, as can be seen in the rapid growth of their assets before the 2008-2009 financial market crisis and their significant exposure to the risky real estate and construction sectors.
BoG has a "strong" business position in the Georgian context. It benefits from a leading franchise in the domestic market, with a 31.6% share of the sector's loans and 27.5% share of deposits as of Sept. 30, 2014.
BoG benefits from a strong management team, which, since 2004, has focused on upgrading the bank's organization, infrastructure, and risk management capabilities. Management has international experience and is professional, in our view
BoG's current focus is on its home market. Consequently, the bank has been exiting its foreign operations and does not envisage any further investments for the time being. BoG acquired two small banks in Ukraine and Belarus in 2007 and 2008, respectively. It divested its subsidiary in Ukraine in 2011 due to the difficult operating environment there, and it may consider exiting its Belarusian operations in the medium term due to its ocus in Georgia. The current weight of BoG's international subsidiaries is insignificant.
We consider the Georgian regulator's approach to calculating capital adequacy to be conservative, insofar as the central bank requires a 175% risk weight for foreign-currency loans and banks to maintain a minimum total capital adequacy ratio of 12%.
Profitability has normalized since heavy losses in 2009, with BoG posting a profit of GEL214 million ($123 million) in 2013. Earnings continued strengthening in the first half of 2014, despite elevated credit losses.
BoG's reserves have remained comfortable, covering problem loans by over 90%, providing a buffer in the event of further asset quality deterioration.
Moody's Corporation "Moody's affirms the ratings of Bank of Georgia and TBC Bank; outlooks stable" 27-Sep-2013:
Today's affirmations reflect to differing degrees the two banks': (1) strong domestic franchises; (2) solid profitability metrics; and (3) sufficient capitalisation buffers to absorb unexpected losses. These positive elements are balanced against: (1) the risk of accelerated asset-quality deterioration, owing to extensive foreign-currency lending; and (2) operating environment risks arising from Georgia's shallow, developing economy, which is vulnerable to external shocks and political challenges
BoG's strong domestic franchise is a key driver behind the affirmation of the bank's ratings. BoG is the largest bank in Georgia, with a market share of over a third of system assets, loans and deposits. It has the most extensive branch network of any Georgian bank, providing it with strong access to primary deposits and broad brand recognition. The bank's size and standing also translates into price-setting capacity in terms of loans and deposits, which has allowed the bank to maintain strong financial metrics.
Moody's also notes that BoG displays strong core profitability metrics, as demonstrated by pre-provision income-to-risk-weighted assets of 5.9% and net income-to-risk-weighted assets ratio of 3.8% as at year end 2012. Although Moody's expects that margins will come under gradual pressure, the rating agency expects that BoG's franchise will support its capacity to generate strong revenues. The bank also maintains sufficient capitalisation metrics to absorb unexpected losses, with BoG's Tier 1 ratio under National Bank of Georgia's (NBG) rules at 15.4%
the ratings also reflect the high credit risks arising from foreign-currency lending, which accounted for 66% of its loan book, as at June 2013. Foreign-currency loans to unhedged customers are susceptible to accelerated deterioration and lower recoverability during periods of economic downturn that result in local-currency depreciation. The bank is also exposed to operating environment risks, as the Georgian economy is vulnerable to external shocks and political challenges. Consequently, uncertainty surrounding the parliamentary elections in October 2012, which triggered an economic slowdown, drove an increase in problem loan formation, which led to a 74% increase in loan-loss provision expense in H1 2013 compared with H1 2012.

Deposits table:

CurrencySort DescTypeSort DescMaturitySort DescRateSort DescDate ModifiedSort DescView
USDTerm3-52%Nov-2015View
USDTerm6-83%Nov-2015View
USDTerm9-113.5%Nov-2015View
USDTerm12-144%Nov-2015View
USDTerm15-174%Nov-2015View
USDTerm18-204.1%Nov-2015View
USDTerm21-234.2%Nov-2015View
USDTerm24-254.25%Nov-2015View
USDSavings3-52%Nov-2015View
USDSavings6-83%Nov-2015View
USDSavings9-113.5%Nov-2015View
USDSavings12-174%Nov-2015View
USDSavings18-234.1%Nov-2015View
USDSavings24-254.25%Nov-2015View
USDCD33%Nov-2015View
USDCD64%Nov-2015View
USDCD94.75%Nov-2015View
USDCD125.5%Nov-2015View
USDCD185.75%Nov-2015View
USDCD246%Nov-2015View
USDCD366.1%Nov-2015View
USDCD486.25%Nov-2015View
USDCD606.5%Nov-2015View
GBPTerm3-52%Nov-2015View
GBPTerm6-83%Nov-2015View
GBPTerm9-113.5%Nov-2015View
GBPTerm12-144%Nov-2015View
GBPTerm15-174%Nov-2015View
GBPTerm18-204.1%Nov-2015View
GBPTerm21-234.2%Nov-2015View
GBPTerm24-254.25%Nov-2015View
GBPSavings3-52%Nov-2015View
GBPSavings6-83%Nov-2015View
GBPSavings9-113.5%Nov-2015View
GBPSavings12-174%Nov-2015View
GBPSavings18-234.1%Nov-2015View
GBPSavings24-254.25%Nov-2015View
GBPCD33%Nov-2015View
GBPCD64%Nov-2015View
GBPCD94.75%Nov-2015View
GBPCD125.5%Nov-2015View
GBPCD185.75%Nov-2015View
GBPCD246%Nov-2015View
GBPCD366.1%Nov-2015View
GBPCD486.25%Nov-2015View
GBPCD606.5%Nov-2015View
EURTerm3-51%Nov-2015View
EURTerm6-82%Nov-2015View
EURTerm9-112.5%Nov-2015View
EURTerm12-143%Nov-2015View
EURTerm15-173%Nov-2015View
EURTerm18-203.1%Nov-2015View
EURTerm21-233.2%Nov-2015View
EURTerm24-253.25%Nov-2015View
EURSavings3-51%Nov-2015View
EURSavings6-82%Nov-2015View
EURSavings9-112.5%Nov-2015View
EURSavings12-173%Nov-2015View
EURSavings18-233.1%Nov-2015View
EURSavings24-253.25%Nov-2015View
EURCD32%Nov-2015View
EURCD63%Nov-2015View
EURCD93.75%Nov-2015View
EURCD124.5%Nov-2015View
EURCD184.75%Nov-2015View
EURCD245%Nov-2015View
EURCD365.1%Nov-2015View
EURCD485.25%Nov-2015View
EURCD605.5%Nov-2015View
CHFTerm6-81%Nov-2015View
CHFTerm9-111.5%Nov-2015View
CHFTerm12-142%Nov-2015View
CHFTerm15-172%Nov-2015View
CHFTerm18-202.1%Nov-2015View
CHFTerm21-232.2%Nov-2015View
CHFTerm24-252.25%Nov-2015View
CHFCD31%Nov-2015View
CHFCD62%Nov-2015View
CHFCD92.75%Nov-2015View
CHFCD123.5%Nov-2015View
CHFCD183.75%Nov-2015View
CHFCD244%Nov-2015View
CHFCD364.1%Nov-2015View
CHFCD484.25%Nov-2015View
CHFCD604.5%Nov-2015View