Main

BTU researchers calculate that consumer loans and mortgages accounted for half of Georgia’s annual increase in outstanding credit in August 2026. Business lending also contributed substantially, but the economically important question is how additional debt will translate into future income and whether borrowers can service it.

Key Takeaways

• BTU researchers calculate that consumer loans and mortgages generated 50% of Georgia’s exchange-rate-adjusted annual credit-stock increase in August 2026: together they contributed 7.4 percentage points to overall growth of 14.8%.
• According to the National Bank of Georgia, business loans contributed 6.8 percentage points to annual credit growth in August 2026; BTU calculates that contribution as approximately 45.9% of the annual increase.
• BTU researchers assess that Georgia’s August 2026 credit expansion should be evaluated through loan purpose, product-specific borrowing costs and repayment capacity together, rather than through aggregate growth alone.

Credit growth in Georgia is often reduced to a single number. A larger loan book suggests that more financing is available and more money is working in the economy. That matters, but it is an incomplete account. One loan helps a company fulfil a new order, another enables a household to purchase a home, and a third bridges a gap between current expenses and income. Their economic consequences and risks differ.

The National Bank of Georgia’s October 2026 Monthly Review makes those distinctions visible. Its credit section reports August data. Excluding exchange-rate effects, outstanding loans grew by 14.8% year on year, with the annual growth rate 0.2 percentage points higher than in the previous month. That does not establish that every borrower is financially stronger. Understanding the expansion requires identifying its sources and the obligations behind it.

BTU’s analytical processing turns the headline into an accessible picture: consumer lending and mortgages generated half the annual increase, while business lending generated roughly 46%. Georgia’s credit expansion therefore has two substantial supports. Financing household purchases and housing contributed slightly more than business lending. That balance, rather than the aggregate number alone, deserves attention.

What half the increase actually means

Two concepts need to be distinguished first. The stock of loans is outstanding debt at a particular point in time. New lending is the amount issued during a period. Banks extend new credit while borrowers repay existing obligations, and the outstanding stock changes as a result of those movements. The increase in the stock therefore does not equal the full volume of new loans issued.

The calculated 50% is a share of the annual increase. It is neither half of all outstanding loans nor a description of how every hundred lari newly lent in August was allocated. Foreign-currency debt can also change in its lari valuation when exchange rates move. The NBG’s adjusted measure removes that effect to make the underlying credit movement more visible.

Percentage points are the second essential distinction. Several contributions add up to the 14.8% overall growth rate. Consumer loans contributed 4.4 percentage points, mortgages 3.0, business loans 6.8 and other loans 0.6. Those are not the individual categories’ own growth rates. Adding the contributions produces the total rate of 14.8%.

Composition of Georgia’s annual credit stock increase August 2026

Source: NBG, October 2026, p. 6. Exchange-rate-adjusted. First numeric column: NBG figures; second: BTU calculations. pp means percentage points. Shares are rounded.

BTU’s calculation is straightforward: the combined contribution of consumer loans and mortgages, 7.4 points, is divided by the total, 14.8 points. The result is 50%. The equivalent calculation for business loans gives approximately 45.9%. These shares are derived from the source’s rounded published figures; they explain the composition of growth without claiming additional statistical precision.

This reading is more useful to a broad business audience than simply repeating the headline. Higher sales, for example, can reflect either stronger income or purchases supported by borrowing. The statistics discussed here do not separately measure those causes. They do, however, show why every improvement in current demand should not automatically be treated as an increase in consumers’ permanent income.

Two channels with different consequences

Consumer credit allows expenditure to be spread over time. A household can purchase a necessary item now and pay for it over subsequent months. That financing can support demand for retail goods and services. It also creates a future payment obligation: part of future household income is already committed to debt service.

For consumers, access to a loan is therefore only one part of the decision. Income stability and the resources remaining after essential expenditure matter as well. For businesses, credit-supported demand creates a sales opportunity, but treating it automatically as a durable foundation for expansion calls for caution. The ability to finance a purchase and the buyer’s financial resilience are different things.

Mortgages operate through a different economic channel. They finance housing purchases and can support property transactions and associated services. Mortgage growth does not, by itself, measure the construction of additional homes. A mortgage can also finance the purchase of an existing property. Its contribution to credit expansion cannot therefore be translated directly into new construction or an equivalent amount of additional economic value.

Business lending also serves several purposes. A company may finance inventory, a temporary payroll requirement, equipment or expansion. The same statistical category can cover short-term working capital and a long-term investment plan. The review’s aggregate measure does not distinguish between those uses. The 45.9% contribution share is significant, but describing all of it as productive fixed investment would overstate the evidence.

BTU researchers identify the central economic question as whether financing growth is followed by enough income growth to service the additional debt. For a household, the answer depends on employment or other stable income. For a company, it depends on the relationship between sales, costs and cash receipts. This is the analytical question raised by the data, rather than an outcome already demonstrated by them.

Nor does the allocation establish that business has been crowded out. Business loans generated almost half the annual increase. Growth in consumer lending and mortgages does not itself show that banks withdrew resources from companies. A crowding-out conclusion would require additional evidence on unmet demand, rejected applications and financing conditions.

These distinctions matter because economic labels do not settle the quality of a loan. A business loan can sustain a viable operating cycle or postpone an unresolved cash-flow problem. Household financing can meet an important durable need or create excessive future pressure. The aggregate categories identify where to investigate; the borrower’s actual income and repayment profile determine the more specific assessment.

Why the average interest rate can mislead

Price matters alongside volume. According to the NBG, the weighted average lending rate increased by 0.45 percentage points from July to 13.9% in August. The rate for national-currency loans was 16.0%, while that for foreign-currency loans was 9.3%. Reading those aggregates as evidence that every credit product became more expensive would be misleading.

In the same month, the rate on lari loans to legal entities fell by 0.1 percentage points to 12.8%. The lari mortgage rate declined by 0.2 points to 11.2%. Foreign-currency mortgage rates also fell, while foreign-currency rates for legal entities increased slightly. Different directions sit behind the overall average.

Lending flow interest rates August 2026

Source: NBG, October 2026, pp. 6–7. Official average rates and changes; categories are hierarchical and not additive. These are not individual loan offers.

The table presents lending-flow rates, describing the pricing of loans issued in the relevant period. It does not indicate an automatic repricing of all existing contracts. A weighted average depends both on the rates within individual categories and on the composition of lending. Consequently, an aggregate average can increase even when rates for some important products decline.

This distinction has practical significance for Georgian companies. A firm seeking financing should not read the market-wide 13.9% as its own loan offer. Its terms will depend on purpose, maturity, collateral, currency and the lender’s assessment of the borrower. The published average is a reference point; the full cost of a particular agreement depends on its own conditions.

Comparing lari and foreign-currency nominal rates also requires asking in which currency the borrower earns income. A lower interest rate captures only one component of the decision. When income and liabilities are denominated in different currencies, exchange-rate movements can alter the payment burden. No individual borrower’s total cost is calculated here; the relevant contribution is to frame the comparison correctly.

Repayment belongs in the growth story

The review also reports overdue loans. Their outstanding amount increased by GEL 68.3 million in August to GEL 888.7 million. BTU researchers calculate that this represents approximately 8.3% growth from the reconstructed previous-month level of GEL 820.4 million. It is an additional reason to monitor payment performance alongside the expansion in lending.

An absolute amount does not reveal the proportion of borrowers affected. A movement in one large loan and deterioration across many small obligations could generate the same monetary change while having different social and economic implications. Nor should overdue balances be equated with banks’ eventual losses. The figures support neither a declaration of crisis nor indifference to repayment risk.

Three parts of the NBG account therefore need to be read together: what is increasing debt, what particular types of financing cost, and how overdue balances are changing. Each provides only a partial picture on its own. Combined, they show why strong credit activity is not automatically a measure of either prosperity or danger. Its interpretation depends on the use of finance and the source of future repayment.

BTU’s principal conclusion is clear: half of Georgia’s annual credit expansion came from consumer loans and mortgages, with business lending also contributing strongly. The next important question concerns the quality of that expansion. Financing is economically useful when it meets today’s needs without placing an unsustainable obligation on tomorrow’s income. Seeing the structure behind 14.8% is more informative than treating the aggregate as a verdict.

Questions and answers

Does 50% mean that half of all loans were issued to households?

No. It describes the contribution of consumer loans and mortgages to the exchange-rate-adjusted annual increase in outstanding credit measured in August. The allocation of new loan issuance is a different measure.

Why did the average rate rise while lari mortgages became cheaper?

The aggregate combines product-specific rates and their lending weights. A decline in one product’s rate does not automatically reduce the total average; the review does not isolate the exact composition effect.

Can all business-credit growth be treated as investment?

Business loans can finance both investment and working capital. The aggregate category discussed here does not separately identify those purposes.

What does the rise in overdue loans tell us?

GEL 888.7 million and approximately 8.3% monthly growth warrant attention to payment performance. Assessing the extent of borrower stress also requires the portfolio share, duration of arrears and distribution across loans.