Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information 10. Loans to Customers and Finance Lease Receivables 2018 2017 2016 Commercial loans 2,956,446 2,594,424 2,699,506 Consumer loans 1,876,888 1,751,106 1,367,228 Micro and SME loans 2,129,215 1,776,044 1,493,937 Residential mortgage loans 2,549,453 1,712,515 1,234,176 Gold – pawn loans 80,770 67,940 60,685 Loans to customers at amortised cost, gross 9,592,772 7,902,029 6,855,532 Less – Allowance for expected credit loss/impairment loss (311,843) (276,885) (252,769) Loans to customers at amortised cost, net 9,280,929 7,625,144 6,602,763 Finance lease receivables, gross 110,087 67,686 48,267 Less – Allowance for expected credit loss/impairment loss (1,648) (2,380) (2,548) Finance lease receivables, net 108,439 65,306 45,719 Loans and advances to customers at FVTPL 8,379 n/a n/a Total loans to customers and finance lease receivables 9,397,747 7,690,450 6,648,482 As at 31 December 2018, loans to customers carried at GEL 357,342 (2017: GEL 333,944, 2016: 177,825) were pledged for short-term loans from the NBG. Expected credit loss Movements of the gross loans and respective allowance for expected credit loss/impairment of loans to customers by class are as follows , within which the new financial asset originated or purchased and the assets repaid during the year include the effects from revolving loans and increase of exposure to clients, where existing loans have been repaid with new contracts issued during the year: As at 31 December 2018 Commercial loans at amortised cost, gross: Stage 1 Stage 2 Stage 3 POCI Total Balance at 1 January 2018 1,920,508 362,673 293,105 26,847 2,603,133 New financial asset originated or purchased 2,901,831 88,529 9,875 – 3,000,235 Transfer to Stage 1 353,609 (353,487) (122) – – Transfer to Stage 2 (490,844) 540,968 (50,124) – – Transfer to Stage 3 (34,031) (43,065) 77,096 – – Assets derecognised (excluding write-offs) (332,561) (847) – – (333,408) Assets repaid (2,066,508) (266,330) (71,492) (13,664) (2,417,994) Impact of modifications – – – – – Write-offs – – (44,675) – (44,675) Recoveries of amounts previously written off – – 2,914 – 2,914 Unwind of discount – – 3,437 (151) 3,286 Currency translation differences (11,571) (1,553) (499) – (13,623) Net other changes 138,727 942 22,904 (5,995) 156,578 Balance at 31 December 2018 2,379,160 327,830 242,419 7,037 2,956,446 Individually assessed – – 240,708 988 241,696 Collectively assessed 2,379,160 327,830 1,711 6,049 2,714,750 Balance at 31 December 2018 2,379,160 327,830 242,419 7,037 2,956,446 Annual Report 2018Bank of Georgia Group PLC 219