October Bank of Georgia Q and 1H 2013 Results Presentation

Transcription

1 October 213 Bank of Georgia Q2 213 and 1H 213 Results Presentation

2 Contents Bank of Georgia Overview Georgian Macro Overview Bank of Georgia Q2 213 and 1H 213 Results Overview and Analyses Business Segment Discussion Appendices October 213 Page 2

3 The leading bank in Georgia Leading market position: No. 1 bank in Georgia by assets (34.7%), loans (34.), deposits (31.4%) and equity (36.6%) 1 Underpenetrated market with stable growth perspectives: Nominal GDP growth for of 13. CAGR. IMF estimates 4. real GDP growth for 213. Gross loans/gdp grew from 9.6% to 33.4% from , still below regional average; Total deposits/gdp grew from 1. to 31.3% over the period Strong brand name recognition and retail banking franchise: Offers the broadest range of financial products to the retail market through a branch network of 197 branches, 481 ATMs and 87 Express pay terminals to more than one million customers as of 3 June 213 The only Georgian company with credit ratings from all three global rating agencies: S&P: BB-, Moody's: B1/Ba3 (foreign and local currency), Fitch Ratings: BB- ; outlooks are Stable High standards of transparency and governance: First and still the only entity from Georgia to list on the London Stock Exchange since 26 (in the form of GDRs since 26 and premium listing since February 212) Only private entity to issue Eurobonds from the Caucasus: In July 213 issued US$25 million Eurobonds, which are currently trading at a historical low yield of c.6% Sustainable growth combined with strong capital, liquidity and strong profitability US$ mln 2 1H Change 212/211 Total assets 3, , , , % Loans to customers, net 1, , , , % Customer funds 3 1, , , , % Total equity % Revenue % Profit % Experienced management with deep understanding of local market and a strong track record: 3 Jun Sep 24 Change Market capitalisation (US$ mln) 1,47.4* x Total assets (US$ mln) 3, x Market share by total assets 35% 18% 17ppts * Market capitalisation for Bank of Georgia Holdings PLC, the Bank s holding company, as of 26 September 213, GBP/USD exchange rate of Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 3 June US$/GEL 1.659, , and as at 3 June 213, 31 December 212, 31 December 211 and 31 December 21, respectively 3 Amounts due to customers 4 Revenue adjusted for one-off currency gain by BNB in 212 and one-off BYR hedge in October 213 Page 3

4 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Shareholder structure and share price Bank of Georgia Holdings plc. (BGH) (LSE: BGEO) a UK-incorporated holding company of JSC Bank of Georgia. As of 3 June 213, BGH s shareholder structure was as follows: 56.6% 1.8% 5.5% 36. Management Trust (unawarded share options) Management and employees* UK institutional investors (estimate) Emerging market institutional investors Selected Institutional Shareholders, Sep 213 Firebird Management LLC Franklin Templeton Investments Wellington Management International Finance Corporation European Bank for Reconstruction and Development GBP Share price performance Up 133% since premium listing** BGEO LN YTD growth of 86% GDR BGEO is included in FTSE 25 and FTSE All Share Index Funds as of 18 June 212, as announced by FTSE on 6 June 212 Average daily number of shares traded $3.7 mln Average daily trading volume 15, $.9 mln 73, 3 months prior to the listing 1 Mar September months prior to the listing 1 Mar September 213 *Includes shares held, shares vested awarded and unvested of the Management Board, Supervisory board and other employees of the Bank and its subsidiaries **Share price change calculated from the last price of BGEO LI on 27 February 212 to the price of BGEO LN on 26 September October 213 Page 4

5 3x2: Growth story over time with dividends UK corporate governance FTSE 25 ROE c.2 TIER I c.2 Growth c.2 Dividends Revenue up 13.6% q-o-q to GEL mln in Q2 213, in 1H 213 up 11.3% 1 to GEL mln Profit up 26.4% q-o-q to GEL 53.1 mln in Q2 213, up 1.5% y-o-y to GEL 95.1 mln in 1H 213 Non-interest income increased by 22.7% q-o-q to GEL 61.8 mln in Q2 213 and in 1H 213 increased by 1.7% to GEL mln Operational efficiency/scale: Cost to income ratio improved to 39.9% in Q2 213 compared to 43.8% Q1 213 and 45.5% in Q H 213 cost to income at 41.7% compared to 45.6% in 1H 212. Prudent risk management: Cost of risk 2 of 1.5% in Q2 213 compared to 1.4% in Q1 213 Q2 213 ROAE of 19.3%, compared to 15.9 in Q1 213 Conservative National Bank of Georgia (NBG) regulation Risk weighting of FX assets at 175%, Bank s leverage at 4.1x as of 3 June 213 and 4.3x as of 31 December 212 Strong internal cash generation to support loan growth without compromising capital ratios BIS Tier I of 22.9% and BIS Total Capital ratio of 27.8% as of 3 June 213 NBG Tier I 15.4% and NBG Total Capital of 16.3% as of 3 June 213 Strong growth across the board supported by synergistic business Net loan book 3 grew 6.8% y-o-y to GEL 3,122.9 million Client deposits in Q2 213 increased 3.5% y-o-y and 8.2% year-to-date to GEL 2,838.2 million despite sharp decrease in cost of deposits. Cost of client deposits declined to 5.9% in Q2 213 from 6.4% in Q1 213 and 7.4% in Q2 212 Consumer driven franchise with robust sales force to increase cross selling with synergistic businesses Increase in contribution from synergistic business in the group s profit. Insurance and healthcare business contributed 12. to the Group s profit in 1H 213 compared to 6.3% in 1H 212 An annual dividend of GEL 1.5 per share for 212 was paid in June 213 Dividend of GEL.7/27p per share for 211 Going forward, the Board will aim to maintain a dividend payout ratio in the 25%-4 range 1 Excluding one-off fx gain for BNB 3 Including finance lease receivables 2 Equals impairment charge for loans to customers and finance lease receivables for the period divided by montly average gross loans to customers and finance lease receivables over the same period October 213 Page 5

6 Leveraged play on the growing Georgian economy through an LSE premium listed company With one third of the Georgian market by assets, loans and client deposits, Bank of Georgia is a uniquely placed growth bank in an underpenetrated, highly capitalised and profitable banking market that has been growing in terms of assets at 3 CAGR Strategic business Synergistic business Non-core business Well established brand Retail Largest retail franchise: 1,172,652 retail clients, 197 branches, 481 ATMs, 99,39 cards outstanding as of 3 June 213 Market shares of c.31. by retail loans and c.29.7% by retail deposits as of 3 June 213 Corporate Largest corporate bank with c.7,7 corporate clients; 34.4% market share by corporate deposits as of 3 June 213 Investment Management Investment Management client deposits CAGR growth of 54.8%; Outstanding client deposits of GEL mln at 3 June 213 International representative office network in Israel, UK and Hungary Growth opportunities to support strategic business Insurance and Healthcare (Aldagi) Strongly positioned to benefit from the growth of insurance and healthcare sectors through insurance subsidiary Aldagi, one of the leading providers of life and non-life insurance in Georgia with 31.8%* market share by gross insurance premium revenue Vertical integration with healthcare business to boost insurance business growth and its contribution to the Bank s income Approximately 11.1% of BGH revenues and 12. of BGH profit in 1H 213 Affordable Housing Stimulate mortgage lending and improve liquidity of repossessed real estate assets through housing development; completed pilot project of 123 apartment building. 522 apartment building project in progress, 68% pre-sold since June 212 Mortgages with a total value of GEL 22.5 mln sold Intention to exit from non-core business over time BNB Belarus banking operation accounting for 4.1% total assets as of 3 June 213 The Bank owns 8, the remainder owned by IFC/World Bank Assets of US$139.5mln and equity of US$3. mln as of 3 June 213 Fully written off goodwill (GEL 23.4 mln) * Based on insurance revenues as of 31 December 212 per NBG. Includes market share of newly acquired insurance company Imedi L International October 213 Page 6

7 Robust corporate governance compliant with UK Corporate Governance Code 7 7 Board of Directors of Bank of Georgia Holdings PLC 7 non-executive Supervisory Board members; 5 Independent members, including the Chairman and Vice Chairman Neil Janin, Chairman of the Supervisory Board, Independent Director experience: formerly director at McKinsey & Company in Paris; formerly cochairman of the commission of the French Institute of Directors (IFA); formerly Chase Manhattan Bank (now JP Morgan Chase) in New York and Paris; Procter & Gamble in Toronto Irakli Gilauri, formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland David Morrison, Vice Chairman of the Supervisory Board, Independent Director experience: senior partner at Sullivan & Cromwell LLP prior to retirement Allan Hirst, Chairman of the Audit Committee, Independent Director experience: 25 years at Citibank, including CEO of Citibank, Russia; various senior capacities at Citibank Kaha Kiknavelidze, Independent Director currently managing partner of Rioni Capital, London based investment fund; experience: previously Executive Director of Oil and Gas research team for UBS Al Breach, Chairman of the Remuneration Committee, Independent Director experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs Ian Hague, Representative of Firebird, Managing partner and co-founder of Firebird Management LLC, EM hedge fund manager, c. US$1. bn AUM Hanna Loikkanen, Representative of East Capital, Sweden-based asset manager focusing on Eastern Europe & China, EUR 3.4 bn AUM Members of management boards of JSC Bank of Georgia and major subsidiaries Irakli Gilauri, CEO; formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland Nikoloz Gamkrelidze, Group CFO; previously CEO of Aldagi BCI and JSC My Family Clinic; World Bank Health Development Project; Masters degree in International Health Management from Imperial College London, Tanaka Business School Archil Gachechiladze, Deputy CEO, Asset and Wealth Management; formerly Deputy CEO in charge of Corporate Banking, Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University Mikheil Gomarteli, Deputy CEO, Retail Banking; 15 years work experience at BOG Sulkhan Gvalia, Deputy CEO, Corporate Banking; formerly Chief Risk Officer, c.2 years banking experience founder of TUB, Georgian bank acquired by BOG in 24 Avto Namicheishvili, Deputy CEO, Group Legal Counsel; previously partner at Begiashvili &Co, law firm in Georgia; LLM from CEU, Hungary George Chiladze, Deputy CEO, Chief Risk Officer; formerly Deputy CEO in Finance, Deputy CEO at Parnership Fund, Programme trading desk at Bear Strearns NY, Ph.D. in physics from John Hopkins University in Baltimore Irakli Burdiladze, Deputy CEO, Affordable Housing; previously CFO at GMT Group, Georgian real estate developer; Masters degree from Johns Hopkins University Murtaz Kikoria, CEO of Aldagi BCI; c.2 years banking experience including various senior positions at Bank of Georgia Group, Senior Banker at EBRD and Head of Banking Supervision at the National Bank of Georgia. Senior Executive Compensation Policy applies to top eight executives and envisages long-term deferred and discretionary awards of securities and no cash bonuses to be paid to such executives October 213 Page 7

8 Competitive landscape Peer group s market share in total assets Peer group s market share in gross loans 4 35% 3 25% 2 15% 1 5% 36.2% 36.7% 35.6% 34.7% 25.4% 25.8% 24.5% 21.3% 18.7% 16.6% 16.8% 14.7% 8.2% 7.3% 7.7% 7.3% 5.5% 5.9% 7.7% 6.6% 5.4% 5.7% 5.1% 6.3% 3.8% 3.2% 3.4% 4.1% BOG TBC PCB BR LB VTB Others Others 4 35% 3 25% 2 15% 1 5% 35.9% 35.4% 34.5% % 26.1% 25.1% 23.8% 17.3% % 14.7% 9.4% 8.8% 7.5% 8.3% 6.8% 6.7% 4.6% 6.1% 6.6% 4.6% 5.3% 3.9% 4.8% % 4.2% Others BOG TBC PCB BR LB VTB Others Q Q2 213 Foreign banks market share by assets Peer group s market share in deposits No state ownership of commercial banks since Local banks, 68. Foreign banks, June 213 Local banks, 72.5% Foreign banks, 27.5% % 32.6% 31.8% 31.4% 3.9% 28.3% 27.9% 24.1% 16.9% 14.6% % 12.2% 8.1% 6.5% 8.3% 5.9% 8.4% 9.1% 7.1% 5.6% 6.9% % 4.1% 3.1% 3.6% 2.5% BOG TBC PCB BR LB VTB Others Others Q2 213 Note: all data based on standalone accounts as reported to the National Bank of Georgia and as published by the National Bank of Georgia October 213 Page 8

9 Contents Bank of Georgia Overview Georgian Macro Overview Bank of Georgia Q2 213 and 1H 213 Results Overview and Analyses Business Segment Discussion Appendices October 213 Page 9

10 Country overview Area: 69,7 sq km Population (212): 4.5 mln Life expectancy: 75 years Official language: Georgian Literacy: 1 Capital: Tbilisi Currency (code): Lari (GEL) GDP 211: GEL 24.3 bn (US$14.4 bn) GDP 212E: GEL 26.1 bn (US$15.8 bn) GDP growth rate 211: 7.2%, 212E: 6.1% GDP growth rate per IMF 213E: 4. Nominal GDP CAGR 4-12 (E): 13. GDP per capita 212E (PPP) per IMF: US$5,98 Inflation rate (e-o-p) 212: -1.4% External Public debt to GDP 212E: 27.6% Sovereign ratings: S&P BB-/B/Stable/ upgraded in November 211 Moody s Ba3/NP/Stable Fitch BB-/B/Stable upgraded in December 211 Sources: Ministry of Finance of Georgia, Geostat, IMF, Government of Georgia Presentation (Georgia.gov.ge) October 213 Page 1

11 Georgia s key economic drivers Liberal economic policy Regional logistics and tourism hub Strong FDI Support from international community Cheap electricity Liberty Act, enshrined in the constitution and effective starting 214 ensures a credible fiscal and monetary framework: Government expenditure/gdp capped at 3 Budget deficit/gdp capped at 3% Government debt/gdp capped at 6 Proceeds from foreign tourism estimated at $1,411 mln in 212 up 48% y-o-y, 4.4 million visitors in 212 up 56% y-o-y (3.6 million visitors in 8M 213, up 26% y-o-y) Regional energy transit corridor with approx. 1.6% of world s oil production and diversified gas supply passing through the country Strong FDI inflows diversified across different sectors (1H 213: US$459 mln, 212E: US$865, 211: US$1,117 mln) Net remittances of US$1,226 mln in 212, up 5% y-o-y, US$838 mln in 1H 213, up 6% y-o-y FDI averaged 1 of GDP in Free Trade Agreements (To be agreed with the EU in November 213 and formally signed after technical procedures are completed; Discussions commenced with the USA) to drive inward investments and exports Strong political support from NATO, EU, US, UN and member of WTO since 2 Substantial support from DFIs, the US and EU: US$2.5bn already disbursed out of the US$4.5bn Brussels pledge Diversified trade structure across countries and products Net electricity exporter since 27*, net electricity importer for more than a decade before 27; Over last six years, exported on average.8 TWh electricity annually Only 18% of hydropower capacity utilized; 4 hydropower stations are being built/developed Black Sea Transmission Network project envisages construction of new 5kV/4kV line connecting to Turkey. Project commenced in 29 and is expected to become operational in 213. BSTN to significantly boost export potential to Turkey, up by 75MW from current capacity Political environment stabilized *Apart from 212 Healthy operating environment for business and low tax regime Parliamentary elections in 212 led to a democratic transition of power, presidential elections are scheduled for 213 New constitution amendments passed in Q1 213 to enhance governing responsibility of Parliament and reduce the powers of the Presidency Continued economic relationship with Russia Russia began issuing visas to Georgians in March 29; Georgia abolishes visa requirements for Russians Direct flights between the two countries resumed in January 21 WTO negotiations successfully completed; Georgia, a member of WTO since 2, allows Russia s access to WTO In 213 trade begins with Russia, first cargo has already shipped Sources: Geostat, IMF, National Bank of Georgia, Government of Georgia Presentation (Georgia.gov.ge) October 213 Page 11

12 Growth oriented reforms Ease of Doing Business, 213 (WB-IFC Doing Business Report) Economic Freedom Index, 213 (Heritage Foundation) Norway UK GEORGIA Estonia Armenia Kazakhstan Montenegro Bulgaria Azerbaijan Belarus Turkey Romania Serbia Russia Ukraine USA Up from 113 in USA Estonia UK GEORGIA Hungary Latvia Romania Bulgaria France Turkey Italy Azerbaijan Russia Ukraine Denmark Norway GEORGIA UK Estonia US Romania Bulgaria Czech Republic Armenia Latvia Turkey Greece Serbia Lithuania Kazakhstan Ukraine TI 213 Global Corruption Barometer 1% 3% 4% 5% 6% 7% 7% 8% % admitting having paid a bribe last year 15% 18% 19% 21% 22% 26% 26% 32% 37% GEORGIA - No 1 Reformer (WB-IFC Doing Business Report) Sources: Transparency International, Heritage Foundation, World Bank October 213 Page 12

13 Positive economic outlook Gross domestic product GDP composition*, % 11.1% % % % 5.9% 6.1% % % % E213F Nominal GDP (USD bln) Real GDP growth (%) 14% 12% 1 8% 6% 4% 2% -2% -4% -6% Health and social work 6% Education 5% Public administration 11% Other 11% Real Estate 5% Financial intermediation 3% Communication 3% Agriculture, hunting and forestry; fishing 8% Transport 8% Wholesale and retail trade 17% Hotels and restaurants 2% Manufacturing 11% Electricity, gas and water supply 3% Construction 7% 1 8% 6% 4% 2% -2% Sources: Geostat, 213 forecast by IMF Real GDP growth in 212 (estimate) Sources: IMF, Geostat *estimates 6.1% % 3.9% 4.3% 4.9% 2.4% 3.9% 3..9% 7.8% 8, Source: National Bank of Georgia GDP per capita 5,491 5,98 6, 4,677 4,96 4,758 5,64 2,921 3,231 3,514 2,966 3,242 3,644 4,4 4, 2,315 2,455 2, ,188 1,484 1,764 2, * Nominal GDP per capita (USD) GDP per capita PPP (Current international dollar) Sources:IMF October 213 Page 13

14 Demonstrated fiscal discipline and low public debt Fiscal deficit as % of GDP Breakdown of public debt F -.3% -2.6% -3.4% -3.6% -2.9% -2.8% -4.8% -6.5% -6.7% -9.2% Fiscal deficit as % of GDP Public debt as % of GDP 63% 51% 4 45% 35% 27% 32% 31% 26% 21% 24% 17% 41% 42% 37% 35% 32% 34% 29% 28% F US$ mln Affordable public debt stock and very low interest rate on external public debt Domestic 21% External 79% Source: Ministry of Finance of Georgia Multilateral 56% Bilateral 13% Eurobond 1 Government external debt service 4.3% 3.8% 3.3% 2.9% % 6.5% 5.4% 4.7% % External public debt portfolio weighted average interest rate as % % 6% 4% 2% Total public debt as % of GDP Sources: Ministry of Finance of Georgia, Geostat External public debt as % of GDP IMF (Budget Support) Other Loans Gov't External Debt Service as % of Budget Revenues Gov't External Debt Service as % of Exports Source: Ministry of Finance of Georgia October 213 Page 14

15 Revenues and expenditures dynamics Revenues to Expenditures 8, 7,58 7, 6,389 6,642 5,367 5,422 5,467 5,927 6, 4,917 5, 4, 3, 2, 1, Revenue Expenditures Source: Ministry of Finance 35% 3 25% 2 15% 1 5% Expenditure as % of GDP 19.4% 22.9% Sources: Ministry of Finance, NBG 29.1% 29.8% 26.4% 24.3% 25.4% Expenditure as % of GDP 1 8 Capital vs. current expenditures 86.9% 77.9% 74.4% 77.9% 74.9% % 22.1% 25.6% 22.1% 25.1% Current Expenditures Capital Expenditures Source: Ministry of Finance October 213 Page 15

16 US$ bln 2,5 2, 1,5 1, 5 FDI inflows 8.5% Four main sources of capital inflow 9.7% % 1, % 12.2% 2,15 1,564 1H 213: US$459 mln 7.7% 6.1% 7. 1, % Net FDI Net FDI as % of GDP 25% 2 15% 1 5% 5, 4, 3, 2, 1, Number of tourists 3.6 mln visitors in 8M 213, up 26% y-o-y 2,32 DISBURSED 1,52 1,29 1,5 ~$2.5 Billion , ,389 1, Foreign visitors (thousands persons) Tourism revenues (mln USD) c. 12% from Russia Sources: National Bank of Georgia, Ministry of Finance of Georgia US$ bln 1,4 1,2 1, Net remittances 4.2% % % % 7.2% 7.1% % 8.1% 7.7% 949 1,168 1, * 211* 212* Net remittances US$838 mln in 8M 213, up 5.7% y-o-y Net remittances as % of GDP US$ mln 1 1,2 8% 6% 4% 2% Donor inflows 1, Sources: Georgian National Tourism Agency, National Bank of Georgia, Bank of Georgia estimates , E Donor Inflows Brussels Pledge Implementation c.us$2. bn of the total US$4.5 bn pledged remains to be drawn down Source: National Bank of Georgia * including remittances through micro finance institutions Sources: Ministry of Finance, Bank of Georgia estimates October 213 Page 16

17 US$bn FX reserves Controllable CAD and strong FDI & donor inflows High, but well capitalised CAD. Remittances and FDI cover CAD Aug-13 FX reserves In 8M 213 NBG net buyer of US$475 mln M2 multiplier % 1 FX rate (GEL/US$) and CPI 8% 6% 4% 2% -2% -4% % % % -.4% CPI (e-o-p) GEL/USD Rate (period average) , 3, 2, 1, -1, -2, -3, -4, Source: National Bank of Georgia Current account deficit 7% 2, , ,53 1,663 4% -5% 3% 894-7% 942 1, % 2% 3% (384) (354) (71)-11% -11% -1-1 (1,176) 8% (1,134) (1,192) -12% (2,9) (2,813) (1,84) -15% -15% % % Total private capital inflows (TPCI) CAD Donor inflows (DI) CAD+TPCI+DI as % of GDP CAD as of % GDP Source: National Bank of Georgia, Ministry of Finance CAD 212: US$1,769 mln, 11.1% of GDP 213E: US$1,98 mln, 11. of GDP 5% -25% TWh Source: National Bank of Georgia Electricity generation By 22 Electricity generation will increase by 1 Tw/h (US$8 mln*) F 215F 217F 219F Consumption Export Hydro Thermal Import *Assuming price of US$.8 per Kw/h October 213 Page 17

18 Summary Growing and well capitalised banking sector Prudent regulation ensuring financial stability Sector total capital ratio (NBG standards) 17% in 212 High level of liquidity requirements from NBG at 3 of liabilities, resulting in banking sector liquid assets to client deposits of 53% as of May 213 Resilient banking sector Demonstrated strong resilience towards both domestic and external shocks without single bank going bankrupt No nationalization of the banks and no government ownership since 1994 Excess liquidity and excess capital accumulated by the banking sector to help boost the financing of the economic growth Very low leverage with retail loans c. 14.7% of GDP and total loans at c. 33.4% of GDP as at 31 December 212 resulting in low number of defaults during the global crisis Source: National Bank of Georgia, Geostat Banking sector assets, loans and deposits Bank debt and deposits to GDP Bank Loans to GDP Source: National Bank of Georgia, Geostat Deposits to GDP Gross Loans/GDP 33.4% Total Deposits/GDP 31.3% NPLs as % of total gross loans according to the IMF, lower than the banking sector NIM of c.7% as of YE212 GEL bln Source: National Bank of Georgia CAGR 29% H 213 Assets Deposits Loans Georgia Russia Poland Latvia Croatia Ukraine Hungary Romania Bulgaria Lithuania Source: World Bank 4.1% 6.7% 8.4% % 14.1% 15.8% 16.8% 16.9% October 213 Page 18

19 One of the highest level of capital and low debt level compared to other frontier markets Equity /Assets % 11% 14% 13% 1 Source: National Bank of Georgia, Citi 9% 9% 11% 12% 14% Dollarisation % 73% Source: National Bank of Georgia 68% 64% 74% 69% 67% 59% 64% 62% H 213 FC Deposits/Total Deposits GEL mln Public debt / GDP, frontier markets % 49% 5 35% 39% 41% 4 31% Ukraine Georgia Romania Czech Argentina Vietnam Pakistan Gross Loans / GDP % 39% 45% 44% 46% 55% 56% 62% 5 75% Attractive growth potential 193% 24% 64% Sources: Citi, National Bank of Georgia, CIA Gross Loans / GDP Sources: National Bank of Georgia, World Bank, Business Monitor October 213 Page 19

20 Contents Bank of Georgia Overview Georgian Macro Overview Bank of Georgia Q2 213 and 1H 213 Results Overview and Analyses Business Segment Discussion Appendices October 213 Page 2

21 P&L results highlights 1H 213 1H 212 Change Q2 213 Q2 212 Change Q1 213 Change GEL thousands unless otherwise noted Unaudited Unaudited Y-O-Y Unaudited Unaudited Y-O-Y Unaudited Q-O-Q Net interest income 15, , % 77,898 76,51 1.8% 72, % Net fee and commission income 42,276 41, % 21,779 21, % 2, % Net insurance revenue 22,724 11, ,998 7, , % Net healthcare revenue 8,991 9, % 5,1 4, % 3, % Other operating non-interest income 38,191 38, % 23,925 19, % 14, % Other operating non-interest income adjusted for one off gain from BNB FX 38,191 35, ,925 19, % 14, % Revenue adjusted for one-off FX gain from BNB 262, , % 139,7 129, % 122, % Revenue 262, , % 139,7 129, % 122, % Operating expenses (19,621) (19,64).5% (55,74) (58,754) -5.1% (53,88) 3.5% Operating income before cost of credit risk 153,55 129, % 83,96 7, % 69, % Cost of credit risk (36,261) (13,947) 16. (18,984) (6,568) 189. (17,278) 9.9% Net operating income 116, ,974.7% 64,976 63,82 1.8% 51, % Net non-operating expense* (5,453) (12,393) -56. (4,89) (7,994) -48.8% (1,365) 199.6% Profit for the period 95,12 86,39 1.5% 53,15 46, % 41, % Earnings per share (basic) % % % *Includes impairment of property and intangible assets, BGH IPO costs, impairment of investment, etc October 213 Page 21

22 Balance Sheet results highlights and key ratios Q2 213 Q2 212 Change Q1 213 Change GEL thousands unless otherwise noted Unaudited Unaudited Y-O-Y Unaudited Q-O-Q Net loans to customers* 3,122,916 2,923,14 6.8% 2,954, % Total assets 5,671,694 4,935, % 5,533, % Liquid assets 1,52,214 1,132, % 1,558, % Liquid assets as percent of total assets 26.8% 22.9% 28.2% Liquid assets as percent of total liabilities 33.3% 28.5% 35.2% Amounts due to customers, of which: 2,85,234 2,846,263.1% 2,817, % Client deposits, of which: 2,838,153 2,742,61 3.5% 2,87,64 1.1% CDs NMF - NMF Promissory notes 12,81 13, % 1, % Amounts due to credit institutions, of which 1,475, , % 1,355,27 8.9% Eurobonds 424,854 - NMF 418, % Subordinated debt 28, , % 26,947.6% Loans and deposits from other banks 842,596 64, % 729, % Total liabilities 4,568,789 3,977, % 4,424,43 3.3% Total equity 1,12,95 957, % 1,19, % Book value per share (basic) % % Net loans/customer funds 19.6% 12.7% 14.9% Net loans/customer funds +DFIs % 85.2% Excess liquidity 491, , % 475,78 3.4% NBG liquidity ratio 44.8% 35.2% 44.1% KEY RATIOS Q2 213 Q2 212 Q1 213 ROAE 19.3% % ROAA 3.8% % Cost/Income 39.9% 45.5% 43.8% NIM 7.9% % Loan yield 16.9% % Cost of client deposits 5.9% 7.4% 6.4% Cost of funds 6.2% 7.5% 6.7% Cost of risk 1.5%.9% 1.4% NPL coverage 89.1% 115.2% 86.5% NPL coverage ratio adjusted for discounted value of collateral 117.4% % 1H 213 1H 212 ROAE 17.6% 19.6% ROAA 3.4% 3.7% Cost/Income 41.7% 45.6% Cost/Income** 41.7% 46.2% NIM 7.7% 8.2% Loan yield 16.8% 17.8% Cost of client deposits 6.2% 7.7% Cost of funds 6.4% 7.9% Cost of risk 1.5%.9% NPL coverage 89.1% 115.2% BIS Tier I Capital Adequacy Ratio 22.9% 21.9% 23.2% BIS Total Capital Adequacy Ratio 27.8% 28.1% 28.2% NBG Tier I Capital Adequacy Ratio 15.4% % NBG Total Capital Adequacy Ratio 16.3% 17.8% 17.1% *includes finance lease receivables **excluding effect of one-off fx currency gain for BNB October 213 Page 22

23 GEL mln GEL mln Strong revenue growth Revenue growth, half-year Net non-interest income, half-year % Excluding one-off currency gain for BNB in 1H % y-o-y % 1H 212 1H 213 Net interest income Net non-interest income % 57% +14. y-o-y H 212 1H 213 Other operating non-interest income Net healthcare revenue Net insurance revenue Net fee and commission income GEL mln Revenue growth, quarterly % % Net non-interest income, quarterly GEL mln % q-o-q % % Q2 212 Q1 213 Q2 213 Net interest income Net non-interest income +22.7% q-o-q Cost of healthcare services in Q2 213, Q1 213 and 1H 213 includes additional depreciation and utility expenses, which were presented in operating expenses in % 56% Q2 212 Q1 213 Q2 213 Net fee and commission income Net insurance revenue Net healthcare revenue Other operating non-interest income October 213 Page 23

24 Strengthening operating leverage as operating expenses grow at half the rate of revenue GEL mln Operating expenses, half-year % y-o-y 1H 212 1H 213 Other operating expenses Depreciation and amortisation expenses General and administrative expenses Salaries and other employee benefits GEL mln Net non-operating expenses, operating income before cost of credit, half-year +17.8% y-o-y H 212 1H 213 (26.3) (41.7) Net non-operating expenses, including impairment Operating income before cost of credit risk GEL mln Operating expenses, quarterly -5.1% y-o-y Q2 212 Q1 213 Q2 213 Other operating expenses Depreciation and amortisation expenses General and administrative expenses Salaries and other employee benefits GEL mln Net non-operating expenses, operating income before cost of credit, quarterly % y-o-y Q2 212 Q1 213 Q2 213 (14.6) (18.6) (23.1) Net non-operating expenses, including impairment Operating income before cost of credit risk October 213 Page 24

25 Improving efficiency 48% 46% 44% 42% 4 Cost / Income ratio, half-year 46.2% 45.6% 41.7% 41.7% 46% 44% 42% 4 38% Cost / Income ratio, quarterly 45.5% 43.8% 39.9% 38% GEL mln Cost/Income Ratio 1H 212 1H 213 Revenue and operating expenses, half-year % Cost/Income Ratio, excluding BNB one-off FX gain +.5% H 212 1H 213 Revenue* Operating expenses** *Excluding one-off fx gain from BNB **Operating non-interest expenses 1H 213 operating leverage of 1.8%* 36% Q2 212 Q1 213 Q2 213 Cost/Income Ratio Revenue and operating expenses, quarterly GEL mln Q2 213 operating leverage of 13.3% Q2 212 Q1 213 Q2 213 Revenue Operating expenses October 213 Page 25

26 Diversified asset structure, consolidated Total asset structure, 3 June 213 Total assets: GEL 5,672 mln Other assets Liquid assets, 3 June % Liquid assets Government Cash and 26.8% bonds, treasury bills, NBG CDs 42.2% equivalents 36.2% Liquid assets GEL 1,52 mln, 26.8% of total assets and 33.3% of total liabilities Total gross loans: GEL 3,24 mln Loans to customers, net 55.1% Gross loans breakdown, 3 June 213 Retail loans*, GEL 1,477.3 mln, 45.6% Corporate loans, GEL 1,763.1 mln, 54.4% Residential mortgage loans, GEL mln, 11.7% Amounts due from credit institutions 21.6% Gross loan portfolio structure, 3 June 213 Legacy retail loans, GEL Micro and 73.4 mln, 2.3% SME loans, GEL mln, 14.4% Consumer loans and credit card balances, GEL 617. mln, 19. Corporate loans**, GEL 1,72.7 mln, 52.5% * Retail loans include consumer loans, residential mortgage loans, micro and SME loans, legacy retail loans and credit card balances **includes BNB loans and finance lease receivable *** Credit card balances of GEL million included, 4. of total loan book October 213 Page 26

27 Loan portfolio quality GEL mln GEL mln Consolidated NPLs 8.8% % 7.8% 7.9% 7.7% 1.3 Consolidated loan loss reserve, NPLs to gross loans * Other NPLs include BG Bank (as 21) and BNB % 3.9% 4.1% H 213 NPLs NPLs to gross loans Net Interest Margin % 4.6% % 3.9% 3.7% % 3.5% 3.6% H 213 Loan loss reserves (LLR) NPLs to gross loans LLR as % of gross loans 1 8% 6% 4% 2% 8% 7% 6% 5% 4% 3% 2% 1% Consolidated NPL composition & coverage ratio GEL mln Consolidated cost of credit risk & cost of risk ratio GEL mln % % % % % H 213 Cost of credit risk 114.7% % 89.1% H 213 NPLs RB & WM NPLs CB NPLs Other* NPL coverage ratio Cost of risk ratio, annualised % 2% 1% October 213 Page 27

28 Strong liquidity Liquid assets to total liabilities NBG liquidity ratio GEL mln 5, 4, 3, 2, 1, ,24 3, % 34.8% 3,853 1,339 Net loans to customer funds 35.3% 4,596 4,569 1,624 1,52 *Customer funds includes client deposits, promissory notes and CDs issued 33.3% 36% 35% 34% 33% 32% 31% 3 29% 28% H 213 Liquid assets Total liabilities Liquid assets to total liabilities 116.8% 95.7% 114.8% 19.6% H 213 Net loans to customer funds*, consolidated Bank Standalone, GEL mln 1H Liquid Assets (NBG) 1,486 1,32 1,242 Liabilities (NBG) 3,315 3,166 3,286 Liquid Assets / Liabilities % 41.1% 37.8% Excess liquidity Net loans to customer funds & DFIs 88.7% 76.9% 91.9% H 213 Net loans to customer funds & DFIs, consolidated October 213 Page 28

29 Strong liquidity Liquidity coverage ratio & net stable funding ratio GEL mln % 149.6% 122.5% 118.9% Maturity gap, June 213 GEL ' 7, 6, 5, 4, 3, 2, 1, -1, -2, 16.8% 165.5% 15.9% 18.4% H 213 Liquidity coverage ratio Net stable funding ratio 41,42.7% 115, % (25,578) -3 Months 3-6 Months 6-12 Months Maturity gap 61, % (118,169) -2.1% 1-3 Years >3 Years Maturity gap, as % of total assets 12% 7% 2% -3% -8% Foreign currency monthly VaR analysis GEL ' GEL ' 6, 5, 4, 3, 2, 1, -1, Open currency position STANDALONE Monthly VaR GEL (Average) 5.8% 31,96 51, % VaR Limit 12, % H 213 FC net position, on and off balance, total 8% 7% 6% 5% 4% 3% 2% 1% -1% As % of NBG total regulatory capital October 213 Page 29

30 Funding structure is well-balanced Other amounts due to credit institutions, GEL 3.5 mln, 6.6% Liability structure Borrowings, GEL 1,175.2 mln, 25.7% Promissory notes, GEL 12.1 mln,.3% Other liabilities, GEL mln, 5.3% Client deposits, GEL 2,838.2 mln, 62.1% Total Liabilities GEL 4,568.8 mln Others, GEL mln, 11. Well diversified international borrowings Eurobonds, GEL mln, 36.2% DFIs, GEL 62.5 mln, 52.8% USD mln Borrowed funds maturity breakdown* % 15% 1 1.3% 1.9% 1.8% 1.1% % 1.6% 5% % Senior Loans Promissory Notes Subordinated Loans Eurobonds % of Total assets Amounts due to credit institutions The Bank has a well-balanced funding structure with 62% of total liabilities coming from customer funds, 14% from Developmental Financial Institutions (DFIs) and 9% from Eurobonds, as of 3 June The Bank has also been able to secure favorable financing from reputable international commercial sources, as well as DFIs, such as EBRD, IFC, DEG, Asian Development Bank, etc. As of 3 June 213, US$98.2 mln undrawn facilities from DFIs with three to nine year maturities * Consolidated, converted at GEL/US$ exchange rate of of 3 June 213 ** Total Assets as of 3 June October 213 Page 3

31 Yield dynamics Loan yields Loan yields, quarterly % 17.6% 17.5% 16.8% % 16.9% % 69.4% 67.9% 66.2% 15% % 65.1% 66.2% 15% 1 2 Loan yields, GEL, quarterly 27% 25% 23% 21% 19% 22.3% 24.7% 3.6% 32.1% 33.8% H 213 Gross loans, GEL, consolidated Gross loans, FC, consolidated Currency-blended loan yield 22.6% 22.3% 5% 2 15% 14% 31.7% 34.9% 33.8% Q2 212 Q1 213 Q2 213 Gross loans, FC, consolidated Gross loans, GEL, consolidated Currency-blended loan yield, annualised Loan yields, foreign currency, quarterly 14.4% 13.3% 13.8% 5% 17% 15% Q2 212 Q1 213 Q2 213 Loan yield, GEL, standalone 13% Q2 212 Q1 213 Q2 213 Loan yield, FC, standalone Loan yields excluding provisions October 213 Page 31

32 Cost of funds and loans to deposits 1 9% 8% 7% 6% Cost of Funds 8.2% % 6.4% 8% 6% Cost of Funds, quarterly 7.5% 6.7% Deposit rate cuts have not yet been fully reflected in Q2 213 Cost of Funds 6.2% 5% 4% H 213 Cost of funds, consolidated Cost of client deposits 4% Q2 212 Q1 213 Q2 213 Cost of funds, consolidated Cost of client deposits, quarterly % 7.6% 7.3% 71.2% 28.8% 59.1% 4.9% 6.2% 68.7% 65.6% 31.3% 34.4% H 213 Client deposits, FC, consolidated Client deposits, GEL, consolidated Currency-blended cost of client deposits 8% 6% 4% 2% % 6.4% 5.9% 68.3% 65.4% 65.6% 31.7% 34.6% 34.4% Q2 212 Q1 213 Q2 213 Client deposits, FC, consolidated Client deposits, GEL, consolidated Currency-blended cost of client deposits, annualised 8% 7% 6% 5% 4% 3% 2% 1% October 213 Page 32

33 Excellent capital adequacy position BIS capital adequacy ratios, consolidated NBG capital adequacy ratios, standalone Risk weighting of FX denominated loans at 175% according to the National Bank of Georgia standards NBG requires that investments in subsidiaries of more than 5 to be deducted from Total Capital 3 25% 2 15% 1 5% GEL mln 6, 5, 4, 3, 2, 17.5% 26.6% 19.9% 28.5% Risk-weighted assets BIS vs. NBG % % H 213 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio 3,6533,81 3,839 4,873 5,352 5,313 4,786 4, % 1 5% 14.5% % Tier I Ratio grew due to the conversion of EBRD & IFC loans of US$5 mln in February 212 and inclusion of 211 profit 16.2% 16.2% 16.3% 15.4% 13.8% H 213 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio NBG Tier I Capital and Total Capital GEL mln 1H Tier I Capital (Core) Tier 2 Capital (Supplementary) Less: Deductions (265.8) (262.6) (184.3) Total Capital Risk weighted assets 5,313. 5, , , H 213 BIS NBG Tier 1 Capital ratio 15.4% 13.8% 1.5% Total Capital ratio 16.3% 16.2% 16.2% October 213 Page 33

34 Contents Bank of Georgia Overview Georgian Macro Overview Bank of Georgia Q2 213 and 1H 213 Results Overview and Analyses Business Segment Discussion Appendices October 213 Page 34

35 Retail Banking (RB): Strong growth of deposits despite rate cuts GEL thousands unless otherwise stated Jun-13 Jun-12 Change Q2 213 Q2 212 Change Q1 213 Change Y-O-Y Y-O-Y Q-O-Q Net interest income 91,65 83, % 48,77 44, % 42, % Net fee and commission income 25,321 25,54 -.7% 12,86 13, % 12, % Net gain from foreign currencies 7,63 6, % 3,64 3, % 3, % Other operating non-interest income 2,657 2, % 1,546 1,64-5.7% 1, % Revenue 126,16 117, ,69 62, % 6,38 1. Operating expenses (6,514) (55,263) 9.5% (32,271) (28,91) 11.6% (28,244) 14.3% Operating income before cost of credit risk 65,592 62, % 33,798 34,58 -.8% 31, % Cost of credit risk (17,47) (11,139) 56.8% (7,881) (6,442) 22.3% (9,589) -17.8% Net non-operating expenses (539) (3,869) -86.1% (274) (2,159) -87.3% (264) 3.8% Profit before Income tax expense 47,583 47, ,643 25,457.7% 21, % Income tax expense (6,15) (7,389) -18.6% (2,675) (3,991) -33. (3,341) -19.9% Profit from continuing operations 41,568 4, % 22,968 21, ,6 23.5% Net loss from discontinued operations (23) Profit 41,568 4, % 22,968 21, % 18,6 23.5% Net loans, standalone 1,445,324 1,26, % 1,445,324 1,26, % 1,371, % Client deposits, standalone 925, , , , , Loan yield 2.5% 21.1% 2.6% 21.8% 2.3% Cost of deposits 5.7% 6.3% 5.4% 6.2% 6.1% Retail Banking loan yields 21.5% % 61.8% 38.2% 2.5% 52.6% 49.4% % 5.6% H 213 Gross loans, RB, FC Gross loans, RB, GEL Currency-blended loan yield, RB 1 *The loss experience used to determine appropriate general risk provision was changed from seven to three years in Retail Banking in % 2 15% 1 5% Retail Banking deposit costs 7.5% 6.7% 6.1% 5.7% 77.3% 73.2% 69.4% 68.8% 22.7% 26.8% 3.6% 31.2% H 213 Client deposits, RB, FC Client deposits, RB, GEL Currency-blended cost of client deposits, RB 8% 6% 4% 2% October 213 Page 35

36 Retail Banking (RB) No. 1 retail bank in Georgia Retail Banking loans originated, standalone GEL mln Volumes are in GEL millions 1H 213 % of clients Number of total Retail clients, of which: 1,172,652 1,54, , ,859 Number of Solo clients ( Premier Banking ) 6,32.5% 5,413 3,728 2,33 Consumer loans & other outstanding, volume Consumer loans & other outstanding, number 438, % 46, , ,212 Mortgage loans outstanding, volume Mortgage loans outstanding, number 9,914.8% 9,85 9,162 8,434 Micro & SME loans outstanding, volume Micro & SME loans outstanding, number 12, % 11,136 9,86 8,36 Credit cards and overdrafts outstanding, volume Credit cards and overdrafts outstanding, number 168, % 142,72 131, ,444 Credit cards outstanding, number*, of which: 111, % 17, ,82 16,89 American Express cards 1,66 8.6% 99,292 97,1 55,2 *definition changed in 212 to include only active credit cards Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 RB loans issued Retail Banking gross loan portfolio consolidated, Automobile 3 June 213 Pawn loans 5. loans 1.4% Credit cards and overdrafts 9.9% General consumer loans 26.9% POS loans 2.7% Mortgage loans 25.5% Micro- and agrofinancing loans and SME loans 28.7% Total retail gross loans: GEL 1,46 mln Retail Banking gross loans and deposits growth, consolidated GEL mln 1,6 1,4 1,2 1, , , , , H 213 Retail gross loans Retail client deposits October 213 Page 36

37 Corporate Banking (CB): Improved efficiency GEL thousands unless otherwise stated Jun-13 Jun-12 Change Q2 213 Q2 212 Change Q1 213 Change Y-O-Y Y-O-Y Q-O-Q Net interest income 5,46 45, % 25,282 26,8-5.7% 25,177.4% Net fee and commission income 14,372 14, % 7,936 7, % 6, % Net gain from foreign currencies 12,536 16, % 7,18 7, % 5, % Other operating non-interest income 3,256 2, % 1,778 1, , % Revenue 8,624 78, % 42,14 43, % 38,61 8.8% Operating expenses (2,854) (25,337) -17.7% (8,489) (14,158) -4. (12,366) -31.4% Operating income before cost of credit risk 59,77 53,5 11.7% 33,525 29,4 15.4% 26, % Cost of credit risk (17,191) (1,541) NMF (1,275) (285) NMF (6,916) 48.6% Net non-operating expenses (1,17) (4,568) -77.7% (763) (2,655) -71.3% (253) NMF Profit before Income tax expense 41,562 47, % 22,487 26,1-13.8% 19, % Income tax expense (5,973) (7,822) -23.6% (2,68) (4,44) -33.7% (3,292) -18.6% Profit from continuing operations 35,589 39, % 19,87 22,56-1.2% 15, % Net loss from discontinued operations - (3) (31) Profit 35,589 39, % 19,87 22,25-1.1% 15, % Net loans, standalone 1,668,41 1,65, % 1,668,41 1,65, % 1,591,87 4.8% Client deposits, standalone 1,234,963 1,467, % 1,234,963 1,467, % 1,274, % Loan yield 13.2% 14.7% % 13.5% Cost of deposits 5.5% 7.7% 5.3% 7.3% 5.7% Corporate Banking loan yields 15.9% 14.4% 13.9% 13.2% 84.6% 83.3% 81.9% 83.1% 15.4% 16.7% 18.1% 16.9% H 213 Gross loans, CB, FC Gross loans, CB, GEL Currency-blended loan yield, CB 2 15% 1 5% Corporate Banking deposit costs 5.6% % 7.2% 38.4% 61.6% 5.5% 5.2% 44.9% 49.8% 55.1% H 213 Client deposits, CB, FC Client deposits, CB, GEL Currency-blended cost of client deposits, CB 8% 6% 4% 2% October 213 Page 37

38 Integrated client coverage in the following key sectors Trade Energy Fast Moving Consumer Goods (FMCG) Real Estate Infrastructure Industry Pharmaceuticals & healthcare State Hospitality Total corporate deposits: GEL 1,234 mln Corporate Banking (CB): Strong growth of the diversified CB loan book Highlights No.1 corporate bank in Georgia Circa 34.4% market share based on client deposits 1 as of 3 June 213 Integrated client coverage in key sectors c.7,7 clients served by dedicated relationship bankers Corporate banking client deposits standalone, 3 June 213 Time Deposits 25.8% Current Accounts & Demand Deposits 74.2% GEL mln 2, 1,5 1, 5 Total gross loan portfolio GEL 1,688 mln Corporate gross loan portfolio, standalone, 3 June 213 FMCG 8.8% Energy 1.5% Others 9.5% Trade 24.3% Real Estate Development 7.7% Infrastructure Development 6.4% Hospitality 7. Industry 19. State 5.3% Pharmaceutic al and Healthcare 1.5% Corporate gross loan and deposit growth, consolidated 1,222 1,6 1,58 1,384 1,725 1,148 Gross loan book increased by 4.9% q-o-q 1,65 1,234 1 source: National Bank of Georgia, does not include interbank deposits H 213 Corporate gross loans Corporate client deposits October 213 Page 38

39 Investment Management results overview GEL thousands unless otherwise stated Jun-13 Jun-12 Change Q2 213 Q2 212 Change Q1 213 Change Y-O-Y Y-O-Y Q-O-Q Net interest income 4,553 6,55-3.5% 25,282 26,8-5.7% 25,177.4% Net fee and commission income % 7,936 7, % 6, % Net gain from foreign currencies % 7,18 7, % 5, % Other operating non-interest income ,778 1, , % Revenue 5,639 7,2-21.7% 42,14 43, % 38,61 8.8% Operating expenses (2,659) (1,924) 38.2% (8,489) (14,158) -4. (12,366) -31.4% Operating income before cost of credit risk 2,98 5, % 33,525 29,4 15.4% 26, % Cost of credit risk NMF (1,275) (285) NMF (6,916) 48.6% Net non-operating expenses (26) (126) -79.4% (763) (2,655) -71.3% (253) NMF Profit before Income tax expense 3,216 5, % 22,487 26,1-13.8% 19, % Income tax expense (42) (799) -49.7% (2,68) (4,44) -33.7% (3,292) -18.6% Profit 2,814 4, % 19,87 22,25-1.1% 15, % Net loans, standalone 16,698 47, % 1,668,41 1,65, % 1,591,87 4.8% Client deposits, standalone 624,27 528, ,234,963 1,467, % 1,274, % Cost of deposits 8.1% 9.1% 5.3% 7.3% 5.7% GEL mln Investment Management client deposits growth H 213 Client Deposits, Investment Management *Change in internal transfer pricing rate within segments (from Investment Management to RB and CB) Highlights Strengthening presence internationally through representative offices in Israel (since 28), the UK (21) and Hungary (212). Preparing to launch local currency fixed income fund initially focusing on Caucasus region to allow investors access to fixed income instruments of these frontier markets that offer attractive risk return profile. Bank of Georgia Research unit, previously under Corporate Banking has moved under Investment Management. The unit has already initiated sector coverage of Energy, Tourism and Agricultural sectors and is gearing up for launching macro research. October 213 Page 39

40 Insurance & healthcare Net premiums earned & net claims incurred, half-year % GEL mln % Jun-12 3-Jun-13 Net premiums earned Net claims incurred Healthcare revenue and costs, annual GEL mln 4 Up 5x Up 4x Insurance revenue and operating expenses, half-year GEL mln % Jun-12 3-Jun-13 Insurance revenue Insurance operating expenses Healthcare revenue and costs*, quarterly GEL mln Healthcare revenue Healthcare operating expenses Jun-12 Healthcare revenue 3-Jun-13 Healthcare operating expenses Cost of healthcare services in 1H 213 include additional depreciation and utility expenses, which were presented in operating expenses in October 213 Page 4

41 Insurance and Healthcare (Aldagi), cont d Loss ratio & combined ratio 9.5% 88.7% 86.7% 86.2% % 64.4% 7.1% H 213 Loss Ratio, ABCI Combined Ratio, ABCI Aldagi Profits & ROAE GEL mln % % % H 213 ABCI Profit ABCI ROAE 3 25% 2 15% 1 5% Market GPW to nominal GDP 5 Aldagi market share in total market 4 2% 1% % 1.3% % % % Market GPW to Nominal GDP Market Gross Insurance Revenue ABCI Market Share * The sum of incurred losses and expenses divided by earned premium October 213 Page 41

42 Aldagi healthcare October 213 Page 42

43 Contents Bank of Georgia Overview Georgian Macro Overview Bank of Georgia Q2 213 and 1H 213 Results Overview and Analyses Business Segment Discussion Appendices Analyst Coverage Financial Statements October 213 Page 43

44 Analyst coverage of Bank of Georgia Holdings PLC Citi and Bank of America Merrill Lynch initiated coverage in May 212 and September 212, respectively BGEO becomes first Georgian stock to be covered by bulge bracket investment banks Consensus Target Price: GBP Net Profit Consensus: GEL 21 mln GBP 22. GBP 23.5 GBP 21.1 GBP 18.5 GBP 21.5 GBP 22.9 GBP 2.2 GBP GBP GBP 16.1 GBP October 213 Page 44