The Banker Awards 2009 - Country Winners Georgia
Bank of Georgia
The Georgian banking sector took a double pounding in 2008 and 2009, as the conflict with Russia was followed almost immediately by the peak of the financial crisis. Bank of Georgia grappled with this damage using a tough cost-control strategy, including shutting retail business lines that were most vulnerable to the economic decline, shutting less profitable points of sale and merging its consumer and mortgage lending arms.
The measures are paying off.
The bank narrowly stayed in profit in 2008, and after a painful first half of 2009, returned to profit in the third quarter as non-performing loan provisioning began to fall, after doubling in the previous year. The cost-to-income ratio of its Georgian operations on a standalone basis shrank impressively from 58% in the fourth quarter of 2008 to just 42% in the first quarter of 2009. Tier 1 capital has been kept strikingly high, at about 22%, to withstand the shocks, while liquidity is plentiful - most wholesale obligations are now not due until 2012.
"In what was probably the most testing market environment that followed the armed conflict in Georgia and the global financial crisis, Bank of Georgia succeeded in maintaining solid capital base and strong liquidity, at the same time improving operational efficiency, strengthening the management team and retiring our international wholesale obligations," says chairman Nicholas Enukidze.
"With the improvement of the operating environment in Georgia, the bank intends to continue its tradition of innovation, while focusing on delivering value to its shareholders," he says. Unbowed by the crisis, the innovation that Mr Enukidze speaks of is already in evidence, with the bank designing a deposit linked to currency hedging in response to the introduction of greater exchange rate flexibility in Georgia.
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