BAKU, Azerbaijan, Feb. 14
By Tamilla Mamedova - Trend:
Fitch revised the Outlook on Georgian banks' ratings to Negative in April 2020, Trend reports via the Fitch.
Uncertainty related to the economic recovery, risks attached to a high share of foreign-currency loans (55.3 percent at end-2020), and the eventual unwinding of government support measures, will likely result in a deterioration of banks' asset quality, earnings and capitalization.
Non-performing loans increased to 8.2 percent of gross loans at end-2020, from 4.4 percent end-2019. The sector regulatory Tier 1 capital ratio declined to 12.8 percent at end-2020, from 14.6 percent at end-2019 due to pre-emptive provisioning in 1Q2020 amounting to 3 percent of sector loans.
Fitch believes asset quality trends will be key for banks' performance in 2021.
"Georgia's governance and ease of doing business indicators outperform the median percentile of its 'BB' peers, and commitment to the current IMF EFF program helps maintain a positive structural reform agenda. We expect Georgia to agree a successor deal with the Fund when the EFF expires in April," the report said.
Georgia has an ESG Relevance Score (RS) of 5 for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, as is the case for all sovereigns.
"Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model," the Fitch said.
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