COVID-19: TRACKING THE RECOVERY 19.06.2020

Otar Nadaraia Chief Economist, TBC Group

Mary Chachanidze, CFAManaging Director, TBC Capital

Aleqsandre BluashviliHead of Macro-Financial Analysis Division, TBC Bank

Tornike Kordzaia, CFAHead of Research, TBC Capital

KEY DEVELOPMENTS

• At -45% YoY, a trend of recovery in apartment sales registrations continues, up from -68% YoY last week

• Currently at +47% YoY, non-cash spending in apparel started to stabilize

• A slight decline in growth of non-cash spending on construction materials and consumer durables

• The improvement continues in spending on eating out

• The marginal improvement in noncash payments in hotels depicts the first effect of domestic tourism; the occupancy is

growing in regions as prices decline

• Remittances inflow already at 2019 levels in the second week of June

*Sector growth is based on POS and E-commerce payments through TBC channels; Growth rates may differ from total turnover dynamics due to the changing share of non-cash

transactions and TBC market share

Change of mortgages issued vs Jan-Feb Avg. (7 day MA)

RESIDENTIAL REAL ESTATE: ON TRACK OF THE GRADUAL RECOVERY

Source: NAPR

Dynamics of the number of apartments sold in Tbilisi (7 day MA)

3

• Compared to Jan-Feb average, the YoY change

in mortgages issued stood at -42% in the week

ending on 14th June

• The 7-day average growth rate of residential

property sales registration in Tbilisi continued to

improve, reaching -45% YoY as of 11th of June

from -68% the week before. Compared to the

period of Jan-Feb, the change stands at -24%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

11-M

ar-

20

16-M

ar-

20

21-

Ma

r-2

0

26

-Ma

r-2

0

31-

Ma

r-2

0

5-A

pr-

20

10-A

pr-

20

15-A

pr-

20

20

-Ap

r-2

0

25

-Ap

r-2

0

30

-Ap

r-2

0

5-M

ay

-20

10-M

ay

-20

15-M

ay

-20

20

-Ma

y-2

0

25

-Ma

y-2

0

30

-Ma

y-2

0

4-J

un

-20

9-J

un

-20

14-J

un

-20

Source: TBC Bank

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

11-M

ar-

20

15-M

ar-

20

19-M

ar-

20

23

-Ma

r-2

0

27

-Ma

r-2

0

31-

Ma

r-2

0

4-A

pr-

20

8-A

pr-

20

12-A

pr-

20

16-A

pr-

20

20

-Ap

r-2

0

24

-Ap

r-2

0

28

-Ap

r-2

0

2-M

ay

-20

6-M

ay

-20

10-M

ay

-20

14-M

ay

-20

18-M

ay

-20

22

-Ma

y-2

0

26

-Ma

y-2

0

30

-Ma

y-2

0

3-J

un

-20

7-J

un

-20

11-J

un

-20

Change vs Jan-Feb Avg. (%) Change YoY (%)

4MARGINAL DECLINE IN GROWTH TEMPO OF NON-CASH PAYMENTS ON NON-GROCERY AND NON-PHARMACY CATEGORIES

Source: TBC Bank

Total non-cash spending on grocery shopping and pharmacy (YoY change)

Resident non-cash spending (YoY change)

• A marginal decline of the growth rate visible in

resident non-cash spending on non-grocery &

pharmacy items

• Non-cash spending on grocery and pharmacy

continue solid growth trends

-80%

-40%

0%

40%

80%

120%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Resident expenses excl. grocery & pharmacy Resident expenses on grocery & pharmacy

0%

20%

40%

60%

80%

100%

120%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Grocery Pharmacy

5

Non-cash spending on entertainment and fitness (YoY change)

Source: TBC Bank

Non-cash spending on apparel & accessories (YoY change)

• Growth of non-cash transactions through TBC

channels in apparel starting to stabilize at +46% YoY

in the second week of June as the effect of pent-up

demand gradually weakens

• Change in spending on entertainment stood at -73%

YoY, improving for the last several weeks

• Non-cash spending on fitness have been down to

zero for last two months

NONCASH PAYMENTS ON APPAREL STARTING TO STABILIZE; FITNESS STILL AWAITING REOPENING

-100%

-50%

0%

50%

100%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Entertainment Fitness

6A SLIGHT DECLINE IN GROWTH OF NON-CASH SPENDING ON CONSTRUCTION MATERIALS AND CONSUMER DURABLES

Source: TBC Bank

Non-cash spending on construction materials and consumer durables (YoY change)

• Although still strong, the growth in non-cash

spending on construction materials have been slowly

winding down for past five weeks, standing at 70%,

62%, 63%, 64% and 49% YoY, respectively. The

effect of the pent-up demand might have started to

gradually weaken

• The week was somewhat weaker for non-cash

spending in furniture and appliances, standing at

28% YoY in week of 8-14th June, compared to 41%

last week

• Growth in electronics marginally down since last

week, currently at 22% YoY

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Construction Materials Furniture & Appliance Electronics

7NONCASH PAYMENTS ON OTHER CONSUMER GOODS AND TRANSPORTATION MAINTAIN BROADLY THE SAME TEMPO

Non-cash spending on personal care and other consumer goods (YoY change)

Non-cash spending on car repair and fuel & transport (YoY change)

Source: TBC Bank

• Growth of non-cash spending on personal care

maintain a positive growth rate, while other

consumer goods fell marginally

• Spending on car repair services has been exhibiting a

strong growth for past five weeks, standing at 43%,

40%, 54%, 45% and 41% YoY, respectively

• Non-cash spending on fuel has remained at 2019

level in the second week of June

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%12

-18

Fe

b

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Personal Care Other consumer goods

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Car repair Fuel & transport

8NONCASH PAYMENTS ON DOCTOR VISITS KEEPS GROWING

Non-cash spending on doctor visits and medical equipment (YoY change)

Source: TBC Bank

• Growth of non-cash spending on doctor visits has

displayed a positive growth during the last four

weeks, standing at +46% YoY in the week of 8-14th

June

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Doctor Medical Equipment

9THE MARGINAL IMPROVEMENT IN NONCASH PAYMENTS IN HOTELS DEPICTS THE FIRST EFFECT OF DOMESTIC TOURISM; THE IMPROVEMENT CONTINUES IN SPENDING ON EATING OUT

Source: TBC Bank

Non-cash spending on accommodation and eating out (YoY change)

Total non-cash non-resident expenses (YoY change)

• In the week 8-14th June, the Non-cash spending on

hotels marginally improved due to the domestic

tourism. By now, the residents remain a sole source

of the spending on hotels in Georgia

• Further improvements are visible in Restaurant

spending as restrictions have eased, with the change

currently at -41% YoY in the week of 8-14th June

-100%

-80%

-60%

-40%

-20%

0%

20%12

-18

Fe

b

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

12-1

8 F

eb

19-2

5 F

eb

26

-4 M

ar

5-1

1 M

ar

12-1

8 M

ar

19-2

5 M

ar

26

-1 A

pr

2-8

Ap

r

9-1

5 A

pr

16-2

2 A

pr

23

-29

Ap

r

30

-6 M

ay

7-1

3 M

ay

14-2

0 M

ay

21-

27

Ma

y

28

-3 J

un

4-1

0 J

un

8-1

4 J

un

Hotels Restaurants & cafes

10SUMMARY OF NON-CASH SPENDING DYNAMICS BY SECTORS

Dynamics of non-cash spending over the last five weeks as of 14th June (YoY change)

Source: TBC Bank

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Fit

ne

ss

Ho

tels

En

tert

ain

me

nt

Ea

tin

g o

ut

Oth

er

con

sum

er

go

od

s

Fu

el

& t

ran

spo

rt

Pe

rso

na

l Ca

re

Ga

mb

lin

g

Ele

ctro

nic

s

Fu

rnit

ure

& A

pp

lia

nce

Ca

r re

pa

ir

Ph

arm

acy

Do

cto

r

Ap

pa

rel

& a

cce

sso

rie

s

Gro

cery

Sh

op

pin

g

Co

nst

ruct

ion

Ma

teri

als

14-20 May 21-27 May 28-3 Jun 4-10 Jun 8-14 Jun

11HOTEL SURVEY: MODERATE GROWTH IN OCCUPANCY IN REGIONS AS PRICES DECLINE

Occupancy rates (%) by current bookings

-100%

-80%

-60%

-40%

-20%

0%

Jun Jul Aug

Tbilisi Batumi Regions

YoY decline in ADRs (%) by current bookings

Note: We subtracted the quarantine related occupancy from Batumi in June, which was included in the previous report

0%

10%

20%

30%

15-30 Jun Jul Aug Sep Oct Nov Dec

Tbilisi Batumi Regions

Source: Survey of 17 branded hotels

• In the second half of June the forward occupancy

rates of the surveyed branded hotels in Regions

increased and totaled 22% as of June 15th

reservations

• Circa 86% of June reservations were made by

Georgian citizens, whereas non-residents made 14%

of the bookings. The proportion changes in the

following months, with 70% of bookings in July

currently made by the foreigners

• In June, the YoY decline (%) in the room prices (ADR)

in the surveyed hotels equaled circa -30% for Tbilisi,

circa -40% for Batumi and circa -50% for the Regions

12REMITTANCES REACH THE SAME LEVEL AS IN 2019

Dynamics of remittances – volumes (FX Adjusted YoY change, 7 day MA)

Source: TBC Bank; Note

• The growth in total inflows stood at 0% YoY during the seven days ending on 15th June

• The high growth of inflows from Azerbaijan, Armenia and other CIS countries contributed to the acceleration of YoY growth in overall inflows, while the

dynamics from Russia remain negative. The marginal YoY decline of inflows from the Middle East (incl. Turkey) was mainly attributable to the base effect of

solid second week of June 2019

• Inflows from EU & UK, which make up the largest share in the remittances, are on the double digit growth territory

-80%

-60%

-40%

-20%

0%

20%

40%

60%

1-F

eb

-20

10-F

eb

-20

19-F

eb

-20

28

-Fe

b-2

0

8-M

ar-

20

17-M

ar-

20

26

-Ma

r-2

0

4-A

pr-

20

13-A

pr-

20

22

-Ap

r-2

0

1-M

ay

-20

10-M

ay

-20

19-M

ay

-20

28

-Ma

y-2

0

6-J

un

-20

15-J

un

-20

Outflows Inflows

Country/Region 2-8 June 9-15 June

EU & UK 8% 20%

Middle East 41% -6%

Russia -30% -34%

North America 1% 10%

Ukraine -7% 118%

Armenia 45% 49%

Azerbaijan 209% 137%

Other CIS 10% 19%

Total FX Adjusted growth -1% 0%

Mobility in residential area (Change %)

13GOOGLE MOBILITY DYNAMICS: WEAKER DYNAMICS IN MOBILITY IN PUBLIC SPACES

Source: Google; Note: Change compared to first 5 weeks of 2020

Mobility in working places (Change %)

Mobility in transit stations (Change %) Mobility in parks and recreational area (Change %)

Mobility in grocery and pharmacy (Change %)

Mobility in retail & recreation (Change %)

(5)

-

5

10

15

20

25

30

35

2/1

8/2

02

0

2/2

3/2

02

0

2/2

8/2

02

0

3/4

/20

20

3/9

/20

20

3/1

4/2

02

0

3/1

9/2

02

0

3/2

4/2

02

0

3/2

9/2

02

0

4/3

/20

20

4/8

/20

20

4/1

3/2

02

0

4/1

8/2

02

0

4/2

3/2

02

0

4/2

8/2

02

0

5/3

/20

20

5/8

/20

20

5/1

3/2

02

0

5/1

8/2

02

0

5/2

3/2

02

0

5/2

8/2

02

0

6/2

/20

20

6/7

/20

20

6/1

2/2

02

0

EU & UK Georgia CIS (excl. Russia)

(100)

(80)

(60)

(40)

(20)

-

20

2/1

8/2

02

0

2/2

3/2

02

0

2/2

8/2

02

0

3/4

/20

20

3/9

/20

20

3/1

4/2

02

0

3/1

9/2

02

0

3/2

4/2

02

0

3/2

9/2

02

0

4/3

/20

20

4/8

/20

20

4/1

3/2

02

0

4/1

8/2

02

0

4/2

3/2

02

0

4/2

8/2

02

0

5/3

/20

20

5/8

/20

20

5/1

3/2

02

0

5/1

8/2

02

0

5/2

3/2

02

0

5/2

8/2

02

0

6/2

/20

20

6/7

/20

20

6/1

2/2

02

0

EU & UK Georgia CIS (excl. Russia)

(90) (80) (70) (60) (50) (40) (30) (20) (10)

- 10 20

2/1

8/2

02

0

2/2

3/2

02

0

2/2

8/2

02

0

3/4

/20

20

3/9

/20

20

3/1

4/2

02

0

3/1

9/2

02

0

3/2

4/2

02

0

3/2

9/2

02

0

4/3

/20

20

4/8

/20

20

4/1

3/2

02

0

4/1

8/2

02

0

4/2

3/2

02

0

4/2

8/2

02

0

5/3

/20

20

5/8

/20

20

5/1

3/2

02

0

5/1

8/2

02

0

5/2

3/2

02

0

5/2

8/2

02

0

6/2

/20

20

6/7

/20

20

6/1

2/2

02

0

EU & UK Georgia CIS (excl. Russia)

(60)

(40)

(20)

-

20

40

60

80

100

120

2/1

8/2

02

0

2/2

3/2

02

0

2/2

8/2

02

0

3/4

/20

20

3/9

/20

20

3/1

4/2

02

0

3/1

9/2

02

0

3/2

4/2

02

0

3/2

9/2

02

0

4/3

/20

20

4/8

/20

20

4/1

3/2

02

0

4/1

8/2

02

0

4/2

3/2

02

0

4/2

8/2

02

0

5/3

/20

20

5/8

/20

20

5/1

3/2

02

0

5/1

8/2

02

0

5/2

3/2

02

0

5/2

8/2

02

0

6/2

/20

20

6/7

/20

20

6/1

2/2

02

0

EU & UK Georgia

CIS (excl. Russia)

(100)

(80)

(60)

(40)

(20)

-

20

2/1

8/2

02

0

2/2

3/2

02

0

2/2

8/2

02

0

3/4

/20

20

3/9

/20

20

3/1

4/2

02

0

3/1

9/2

02

0

3/2

4/2

02

0

3/2

9/2

02

0

4/3

/20

20

4/8

/20

20

4/1

3/2

02

0

4/1

8/2

02

0

4/2

3/2

02

0

4/2

8/2

02

0

5/3

/20

20

5/8

/20

20

5/1

3/2

02

0

5/1

8/2

02

0

5/2

3/2

02

0

5/2

8/2

02

0

6/2

/20

20

6/7

/20

20

6/1

2/2

02

0

EU & UK Georgia

CIS (excl. Russia)

(80)

(60)

(40)

(20)

-

20

40

2/1

8/2

02

0

2/2

3/2

02

0

2/2

8/2

02

0

3/4

/20

20

3/9

/20

20

3/1

4/2

02

0

3/1

9/2

02

0

3/2

4/2

02

0

3/2

9/2

02

0

4/3

/20

20

4/8

/20

20

4/1

3/2

02

0

4/1

8/2

02

0

4/2

3/2

02

0

4/2

8/2

02

0

5/3

/20

20

5/8

/20

20

5/1

3/2

02

0

5/1

8/2

02

0

5/2

3/2

02

0

5/2

8/2

02

0

6/2

/20

20

6/7

/20

20

6/1

2/2

02

0

EU & UK Georgia CIS (excl. Russia)

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