NPLs at 2.9% in June 2019
In June 2019, the banking sector loan portfolio increased 14.2% y/y after growing 13.2% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 24.0% y/y and up 3.9% m/m to GEL 28.7bn (US$ 10.0bn). Deposits were up 10.7% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 21.6% y/y and up 2.9% m/m to GEL 24.6bn (US$ 8.6bn). Loan dollarization stood at 56.2% (+2.38ppts y/y and flat m/m) and deposit dollarization reached 62.4% (+1.63ppts y/y and +0.43ppts m/m). NPLs stood at 2.9% in June 2019 (+0.52ppts y/y and -0.26ppts m/m).
NBG keeps monetary policy rate unchanged at 6.5%
At its meeting on 24 July 2019, NBG’s monetary policy committee decided to keep its key rate unchanged at 6.50%. In June 2019, annual inflation was 4.3%. Price level was mostly affected by increased tobacco excises, which contributed 1.3ppts to overall inflation. Importantly, core inflation (excludes food, energy and tobacco prices) stood at 1.4% in June indicating that the rise in inflation is temporary. NBG commented that increased inflationary pressure from the exchange rate depreciation is balanced currently by the weak demand. By NBG’s current forecast, inflation is expected to remain above the 3% target through 2019 and decline from March 2020 once one-off factors fade. The regulator also hinted on a possible monetary tightening if the upward pressure on inflation stemming from the exchange rate will persist. The next committee meeting is scheduled for 4 September 2019.
