NPLs at 2.3% in May 2020
In May 2020, the banking sector loan portfolio increased 15.3% y/y after growing 17.2% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 23.8% y/y and flat m/m to GEL 34.2bn (US$ 10.8bn). Deposits were up 8.7% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 17.9% y/y and 2.3% m/m to GEL 28.2bn (US$ 8.9bn). Loan dollarization stood at 57.7% (+1.47ppts y/y and flat m/m) and deposit dollarization was 64.1% (+2.11ppts y/y and -1.57ppts m/m). NPLs stood at 2.3% in May 2020 (-0.80ppts y/y and flat m/m).
NBG cuts its policy rate by 0.25ppts to 8.25%
At its meeting on 24 June 2020, NBG’s monetary policy committee decided to reduce its policy rate by 25bps to 8.25%. According to NBG, on the one-hand the Covid-19 prevention measures increased short-term logistic costs leading to rise in inflation, however, on the other hand weaker external and domestic demand seems to last longer and a downward pressure on prices is expected through the year. As inflation is expected to decrease, the committee decided to continue the gradual exit from the tightened monetary policy. The pace of further policy normalization will depend on how quickly inflation expectations fade. The next committee meeting is scheduled for 5 August 2020
