NPLs at 3.2% in September 2017
In September 2017, the banking sector loan portfolio increased 16.0% y/y after growing 13.6% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 22.8% y/y and 3.0% m/m to GEL 20.2bn (US$ 8.2bn). Deposits were up 18.4% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 23.2% y/y and up 3.2% m/m to GEL 18.3bn (US$ 7.4bn). Deposit dollarization reached 65.4% (-3.8ppts y/y and -0.2ppts m/m). NPLs stood at 3.2% in September 2017 (-0.7ppts y/y and -0.2ppts m/m).
NBG keeps its policy rate unchanged at 7.0%
At its meeting on 25 October 2017, NBG’s monetary policy committee decided to keep the policy rate unchanged at 7.0%. The decision is based on the macroeconomic forecast, according to which the inflation is expected to be above 4.0% target rate during 2017 due to one-offs, and the inflation will get close to the 3.0% target level in the beginning of 2018, once temporary factors expire. NBG added that the annual inflation was 6.2% in September 2017, however inflation was slightly below inflation forecast for 3Q17. NBG also noted that inflation expectations have not changed recently and it expects the key rate to gradually decrease to its neutral level in the medium term given the absence of additional factors affecting price level. The next committee meeting is scheduled for 13 December 2017 (NBG increased the key rate to 6.75% on January 25 and to 7.0% on May 2, and kept the rate unchanged at three previous meetings, on June 14, on July 26 and September 6).
