The microfinance sector shows stable profitability. According to preliminary data, the lending rate in the sector doubled last year, which is associated with a reduction in interest expenses and improvement in general indicators. According to the head of the "Georgian Microfinance Association", profitability in MFOs is relatively lower compared to the banking sector, but stable, which indicates the sector's recovery. Current events in the country do not allow Nino Devdariani to be fully optimistic, however, she hopes that the low-interest expense rate will be maintained this year as well, which will allow the sector to grow even more.
"2024 was quite a good year for the microfinance sector. This was reflected in the growth of lending rates. We finished 2023 with approximately 8-9% growth. In 2024, this growth rate doubled and we expect 20% growth.
The sector maintains a low-risk profile, which indicates its health and a declining risk trend, which points to further improvement.
Stable profitability is maintained, with approximately 17-18% ROE, including in 2024. This profitability is lower compared to the banking sector, however, stable profitability is a good sign.
Last year, there was a significant reduction in interest expenses in the microfinance sector. This exactly contributed to accelerating the growth rate and improving general parameters.
I have great hope that this will be maintained in 2025 as well, although the current situation does not allow me to be fully optimistic, however, I hope that the low-interest expense rate will still be maintained and this will give the sector more opportunity to grow and recover," - Nino Devdariani said.
It should be noted that the National Bank has not yet published financial indicators of microfinance organizations for 2024.
