The countries at the eastern end of the Organisation of the Black Sea Economic Co-operation (BSEC) region represent a very diverse set of economies, ranging from Azerbaijan’s hydrocarbon-driven growth to Ukraine’s large population and sizeable agricultural and industrial production. As a result, financial cycles are at very different stages, causing a dramatic difference in the performance of banking sectors in the five countries.
Georgia has long been an outperformer, thanks to its highly concentrated and modern banking sector. Excluding Ukraine, the top Georgian banks account for two of the top three in the region – Bank of Georgia and TBC Bank. The country’s aggregate return on capital in 2012 was 19.2%, the strongest in the region. Georgian banks punched well above their weight in terms of profitability, generating 24% of profits among the five countries from just 6% of total assets.