May 30, 2019

Countercyclical buffer remained unchanged at 0%

Quick Update

  • The Financial Stability Committee of the National Bank of Georgia on its May 29, 2019 meeting decided to keep the countercyclical buffer unchanged at 0%.
  • According to the Committee, in line with the expectations the credit growth is moderating, reflecting the recently introduced retail lending regulations. At the same time, as a result of the higher growth in the previous year and the currency depreciation effect, the credit to GDP ratio remains above its long term trend1.
  • As per committee’s assessment, if current tendencies are maintained, credit growth will align closer to its sustainable rate over the medium term.
  • The lending regulations have started to positively influence the quality of loans as indicated by the improved PTI and LTV ratios. In addition, the share of domestic currency in the newly issued loans is increasing while the interest rates are declining.
  • The committee reiterated that the banking sector remains well capitalized with solid liquidity and profitability levels, while the quality of the loan portfolio stays robust.
  • The NBG continues to closely monitor credit growth dynamics, including the mortgage loan developments, to assess the impact of the regulations.
  • The next Financial Stability Committee meeting is scheduled for September 18, 2019.

 

1. See more on credit growth in TBC economic review, Insight #8

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