Capturing Growth Opportunities. Investor Presentation: 3Q15 & 9M15 results

Transcription

1 Capturing Growth Opportunities Investor Presentation: 3Q15 & 9M15 results

2 Disclaimer Forward Looking Statements This presentation contains forward-looking statements that are based on current beliefs or expectations, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forwardlooking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and JSC Bank of Georgia and/or the Bank of Georgia Holdings plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are various factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, legal, business and social environment. The forward-looking statements in this presentation speak only as of the date of this presentation. JSC Bank of Georgia and Bank of Georgia Holdings undertake no obligation to revise or update any forward-looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. page 2

3 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices 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 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 GBP US$ US$ millions BGEO Shareholder structure and share price BGEO shareholder structure As of 3 September 215 7% 17% 3% 2% 41% Unvested and unawarded shares for management and employees Vested shares held by management and employees UK/Ireland US/Canada Scandinavia Top Shareholders As of September 215 Rank Name Ownership % 1 Schroders Investment Management Harding Loevner Management LP Westwood International Advisors Artemis Investment Management Firebird Management LLC Others BGH has been included in the FTSE 25 and FTSE All-share Index Funds since 18 June 212 Share price performance x5 growth in market capitalisation BGEO LN GDR Up 12 since premium listing 1 1,, 9,, 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, Average daily trading volume 95, 2,, 5,3, 9,5, Average daily trading volume ,2 1, Market Capitalisation 1, Sep-4 5-Oct-15 1 Share price change calculated from the last price of BGEO LI on 27 February 212 to the price of BGEO LN on 5 th October Market capitalisation for Bank of Georgia Holdings PLC, the Bank s holding company, as of 5 th October 215, GBP/USD exchange rate of page 4

5 Renaming the group to reflect 4x2 strategy Platform for Efficiently Allocating Cash & Human Capital BGEO is a Georgia focused bank holding company with investment arm BGEO aims to deliver on its 4X2 strategy by allocating capital efficiently page 5

6 BGEO at a glance Group Structure Investment Business GGU Water utility and hydro Retail Banking Corporate Banking Other Banking Businesses Healthcare Business Real Estate Business Utilities (GGU) Legacy Investments #1 Retail Bank in Georgia 2.mln retail clients 26 branches 73 ATMs 2,354 Express Pay terminals 7,685 POS terminals 1,53,564 Express cards 1.9mln cards GEL 2,751.3mln net loans GEL 1,85.8mln client deposits #1 Corporate Bank in Georgia 5k clients GEL 2,253.2mln net loans GEL 1,67.8mln client deposits Investment Management Wealth management, research, advisory, brokerage, private equity GEL 1,347.mln AUM GEL 1,16.4mln WM client deposits P&C Insurance Leasing Payment Services IB BNB Plans to divest from BNB #1 Healthcare company in Georgia Revenue GEL 171.4mln in 9M15 EBITDA GEL 39.6mln Healthcare services 42 healthcare facilities 2,67 beds Over 3/4 of population covered Market share of 26.6% by beds Health insurance 38.1% market share Insuring 27k people #1 Real Estate company in Georgia 2 completed projects and 5 under construction Total sales of 1,376 apartments US$ 115.8mln since 211, of which US$ 58.9mln to be recognised upon completion of projects 99% sale in completed projects 72% pre-sales for ongoing 4 projects Total BOG mortgages sold GEL 66.3mln Major player on the market Provides water and wastewater services to 1.4mln people (1/3 of Georgia) Operates 3 hydro facilities with 143MW capacity Acquired 25% of shareholding 214 EBITDA of GEL 51.6mln 1 GGU profit (BOG share) of GEL 1.4mln in 3Q15 and GEL 2.1mln in 9M15 1 Per GGU management accounts, neither audited or reviewed by auditors or Bank of Georgia Source: Company, financial and operating data is for FY 214 page 6

7 4x2 strategy Strong performance in 215, 9M We are a Georgia Focused Banking Group with an Investment Arm Target : ROE c.2 Tier I c.2 Retail Growth c.2 ROAE of 23.3% in 3Q15 ROAE of 2.6% in 9M15 N/A became non-relevant: 1.Regulation moved to Basel 2/3 2.In the context of excess capital of c. GEL7mln at HoldCo, have efficient capital management at bank 48. y-o-y growth 27.7% y-o-y growth on constant currency basis 9M15: Profit Contribution GEL 194mln or 9 Investment Business 4 121% IRR from Min. IRR GHG IPO of 2 65% IRR from m2 Real Estate projects Target : At least 8 Up to 2 Ongoing Dividends 9M15: GEL 22mln or 1 Ordinary dividends: Dividend 214 was GEL 2.1 / share GEL 8.4mln total, 31.2% payout ratio Capital return: Planned US$ 1mln management trust share buyback page 7

8 BGEO Robust corporate governance compliant with UK Corporate Governance Code Board of Directors of BGEO Group PLC 8 non-executive Supervisory Board members; 8 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 co-chairman 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, Group CEO experience: formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland Hanna Loikkanen, Independent Director experience: Currently advisor to Representative office of East Capital international; previously: Senior executive at East Capital, FIM Group Russia, Nordea Finance, SEB Kaha Kiknavelidze, Independent Director experience: currently managing partner of Rioni Capital, London based investment fund; previously Executive Director of Oil and Gas research team for UBS David Morrison, Chairman of the Audit Committee, Vice Chairman of the Supervisory Board, Independent Director experience: senior partner at Sullivan & Cromwell LLP prior to retirement Tamaz Georgadze, Independent Director experience: Partner at McKinsey & Company in Berlin, Founded SavingGlobal GmbH, aide to President of Georgia Al Breach, Chairman of the Remuneration Committee, Independent Director experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs Kim Bradley, Chairman of Risk Committee, Independent Director experience: Goldman Sachs AM, SeniorExecutive at GE Capital, President of Societa Gestione Crediti, Board Chairman at Archon Capital Deutschland Bozidar Djelic, Independent Director experience: EBRD s Transition to Transition senior advisory group, Deputy Prime Minister of Serbia, Governor of World Bank Group and Deputy Governor of EBRD, Director at Credit Agricole page 8

9 BGEO New Management Structure 9 9 BGEO Group PLC JSC Bank of Georgia Irakli Gilauri, Group CEO, formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland Archil Gachechiladze, Group CFO and Deputy CEO, Investment Management of JSC Bank of Georgia; formerly Deputy CEO in charge of Corporate Banking, Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University Avto Namicheishvili, Deputy CEO, Group Legal Counsel; previously partner at Begiashvili &Co, law firm in Georgia; LLM from CEU, Hungary Murtaz Kikoria, CEO of Bank of Georgia; previously CEO of Group s healthcare business; 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 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 Georgia Healthcare Group m2 Real Estate Nikoloz Gamkrelidze, CEO, Georgia Healthcare Group; previously Group CFO, 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 Irakli Burdiladze, CEO, m2 Real Estate; previously CFO at GMT Group, Georgian real estate developer; Masters degree from Johns Hopkins University George Chiladze, Deputy CEO, Chief Risk Officer; formerly Deputy CEO in Finance, Deputy CEO at Partnership Fund, Programme trading desk at Bear Stearns NY, Ph.D. in physics from John Hopkins University in Baltimore Levan Kulijanishvili, Chief Financial Officer 15 year of experience at BOG. Formerly Head of Security and Internal Audit at Bank of Georgia; Holds MBA from Grenoble School of Business, in Grenoble, France Tornike Gogichaishvili, Chief Operating Officer Previously CEO of Aldagi and CFO of BG Bank, Ukraine; Holds Executive Diploma from Said Business School, Oxford Senior Executive Compensation Policy applies to top executives and envisages long-term deferred and discretionary awards of securities and no cash bonuses to be paid to such executives page 9

10 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 1

11 3Q15 P&L BGEO P&L results highlights BGEO Group Consolidated Investment Business Change Change Change Change Change Income Statement 3Q15 3Q14 y-o-y 2Q15 q-o-q 3Q15 3Q14 y-o-y 2Q15 q-o-q 3Q15 3Q14 y-o-y 2Q15 Change q-o-q Net banking interest income 126,178 88, % 122, % 129,249 89, % 126,43 2.3% Net fee and commission income 3,791 27, % 29, % 31,61 27, % 3, % Net banking foreign currency gain 18,675 13, , % 18,675 13, , % Net other banking income 4,938 1,291 NMF 2, ,231 1, % 2, % Gross insurance profit 9,783 9, , % 5,829 3, % 3, % 4,498 6, % 2, % Gross healthcare profit 22,118 14, % 18, % ,118 14, % 18, % Gross real estate profit 751 1, % (41) NMF , % (41) NMF Gross other investment profit 3,373 3, % 4, % ,229 3,58-9.8% 4, % Revenue 216,67 159, , % 19,45 136, % 182, % 3,596 25,46 2.2% 25, % Operating expenses (77,562) (65,563) 18.3% (76,848).9% (66,167) (54,718) 2.9% (65,244) 1.4% (12,244) (11,484) 6.6% (12,381) -1.1% Operating income before cost of credit risk / EBITDA 139,45 93, % 125, % 123,878 81, % 117, % 18,352 13, % 13, % Profit from associates 1, , , , Depreciation and amortization of investment business (4,227) (2,352) 79.7% (2,579) 63.9% (4,227) (2,352) 79.7% (2,579) 63.9% Net foreign currency gain (loss) from investment business (2,311) (281) NMF 2,689 NMF (2,311) (281) NMF 2,689 NMF Interest income from investment business % % % Interest expense from investment business (2,8) (1,872) 11.1% (2,632) (5,485) (3,912) 4.2% (7,51) -26.9% Operating income before cost of credit risk 132,37 89, % 125, % ,492 7, % 8, % Cost of credit risk (35,647) (15,35) 132.9% (41,867) -14.9% (34,752) (14,863) 133.8% (4,764) -14.7% (895) (442) 12.5% (1,13) -18.9% Profit 8,95 62, % 72,3 12.3% 73,42 55, % 61, % 7,53 6, % 1, % Earning per share (basic) % % 9M15 P&L BGEO Group Consolidated Investment Business Income Statement 9M15 9M14 Change y-o-y 9M15 9M14 Change y-o-y 9M15 9M14 Change y-o-y Net banking interest income 369, , % 378,71 256, % Net fee and commission income 86,767 73, % 89,324 75, Net banking foreign currency gain 57,41 36, % 57,41 36, % Net other banking income 9,29 4, % 1,137 4, % Gross insurance profit 23,174 25, ,66 11, % 9,99 15, % Gross healthcare profit 57,94 37, % ,94 37, % Gross real estate profit 1,919 1, % ,919 1, % Gross other investment profit 9,56 9,439.7% ,481 9, % Revenue 615,26 448, , , % 78,484 72, % Operating expenses (23,47) (187,766) 22.7% (196,687) (158,493) 24.1% (36,282) (31,219) 16.2% Operating income before cost of credit risk / EBITDA 384, , % 353, , % 42,22 41,36 2.2% Profit from associates 2, , Depreciation and amortization of investment business (9,494) (6,837) 38.9% (9,494) (6,837) 38.9% Net foreign currency gain (loss) from investment business 4,67 (2,13) NMF ,67 (2,13) NMF Interest income from investment business 1, % ,381 1, % Interest expense from investment business (7,171) (5,621) 27.6% (18,951) (11,747) 61.3% Cost of credit risk (119,356) (42,468) 181. (116,287) (4,942) 184. (3,69) (1,526) 11.1% Profit 215, , % 193, , % 21,68 18, % Earnings per share (basic) * Note: and Investment Business financials do not include interbusiness eliminations. Detailed financials, including interbusiness eliminations are provided in annexes. page 11

12 BGEO Balance sheet highlights 3Q15 BS BGEO Group PLC Investment Business Balance Sheet Sept-15 Sept-14 Change y-o-y Jun-15 Change q-o-q Sept-15 Sept-14 Change y-o-y Jun-15 Change q-o-q Sept-15 Sept-14 Change y-o-y Jun-15 Change q-o-q Liquid assets 2,924,784 1,749, % 2,741, % 2,913,651 1,728, % 2,726, % 186,812 75, % 127, % Loans to customers 5,266,125 3,818, % 5,52, % 5,367,311 3,897, % 5,142, % Accounts receivable and other loans 87,348 62, , % 13,291 6, % 15, % 79,989 57,41 4.2% 7, % Insurance premiums receivable 55,7 36, % 58, % 28,413 14, % 26, % 29,165 22, % 32,23-8.9% Prepayments 4,33 34, % 52, % 21,374 19, % 3, % 18,956 15, % 21, % Inventories 148,777 85, % 131, % 1,929 6, % 1, % 137,848 79,1 74.5% 121, % Investment property 224,28 185, % 221,56 1.1% 143, , % 143, % 8,559 63, , % Property and equipment 775, , % 669, % 339,3 31,4 12.7% 338,858.1% 436, , % 33, % Total assets 9,937,889 6,815, % 9,375, ,14,36 6,34, % 8,712,71 4.9% 1,94, , % 883, % Client deposits and notes 4,477,98 3,88, ,14, % 4,649,572 3,142, % 4,212, % Amounts due to credit institutions 2,115,859 1,264, % 2,139, % 2,11,81 1,167, % 2,45,93-1.6% 29, , % 189, Debt securities issued 1,76, , % 1,63, % 999, , % 99, ,549 27, % 79, % Accruals and deferred income 166,435 98, % 132, % 16,629 13, % 14, % 149,86 85, % 118, % Insurance contracts liabilities 66,68 57, % 73,1-8.8% 4,369 35, ,91-5.9% 26,239 22, % 3, % Total liabilities 8,179,93 5,487, % 7,719, ,891,998 5,255,88 5.2% 7,463, % 584, , % 476, % Total equity 1,757,959 1,328, % 1,655, % 1,248,38 1,84, % 1,248, % 59, , % 47, % Book value per share % % Key Ratios Ratios 3Q15 3Q14 2Q15 9M15 9M14 ROAA 3.3% 3.5% 2.9% 3.1% 3.3% ROAE 23.3% % 2.6% 19.8% Net Interest Margin 7.6% 7.6% 7.6% 7.7% 7.5% Loan Yield 14.7% 14.2% 14.6% 14.7% 14.4% Cost of Funds 5.1% 4.7% % 4.8% Cost of Customer Funds 4.1% 4.1% 4.4% 4.3% 4.3% Cost of Amounts Due to Credit Institutions 6.3% 4.8% 5.3% 5.7% 4.8% Cost / Income 34.8% 4.1% 35.7% 35.7% 41.3% NPLs To Gross Loans To Clients % 4.1% % NPL Coverage Ratio % 82.2% % NPL Coverage Ratio, adjusted for discounted value of collateral 121.9% 112.1% 115.1% 121.9% 112.1% Cost of Risk 2.5% 1.6% 2.7% 2.8% 1.2% Tier I capital adequacy ratio (BIS) 16.7% 22.7% 2.4% 16.7% 22.7% Total capital adequacy ratio (BIS) 23.7% 26.4% 26.7% 23.7% 26.4% Tier I capital adequacy ratio (New NBG, Basel II) 1.2% 11.2% 1.4% 1.2% 11.2% Total capital adequacy ratio (New NBG, Basel II) 15.8% 14.2% 15.9% 15.8% 14.2% page 12

13 GEL millions GEL millions GEL millions GEL millions BGEO Strong revenue growth, with positive operating leverage Revenue nine-month Revenue quarterly BGEO % +8.2% (7.7) (13.6) Revenue 9M14 Investment Business Revenue 9M15 Investment business Banking business Eliminations BGEO % % (2.5) (4.) Revenue 3Q14 Investment Revenue 3Q15 Business Investment business Banking business Eliminations Change y-o-y Change y-o-y Operating expenses nine-month BGEO % +16.2% (1.9) (2.5) Operating expenses Investment Business Operating expenses 9M14 9M5 Change y-o-y BGEO +22.7% +2.9% +6.6% Investment business Banking business Eliminations Operating expenses quarterly (.6) (.8) Investment Business Change y-o-y Operating expenses 3Q % Operating expenses 3Q15 Investment business Banking business Eliminations page 13

14 GEL millions GEL millions GEL millions BGEO Strong profitability Profit nine-month Profit quarterly BGEO +23.5% BGEO +29.8% 9.4% % 42.4% 54.5% NMF x % 37.5% -33.6% 124.7% 7.1% NMF x Inv business Bank business Inv Business Bank Business 1 9M14 RB CB IM Other BB GHG m2 Other IB 9M15 3Q14 RB CB IM Other BB GHG m2 Other IB 3Q15 Change y-o-y Change y-o-y Equity excl. Non-controlling interest 2, 1,8 1,6 1,4 1,2 1, BGEO 1, , % 15.1% 86.6% 2.9% 12.7% NMF % n/a 1, Inv business 1,229 Bank business Key takeaways 9M15 profit increased to GEL 215.3mln, up 23.5% y-o-y and 3Q15 profit increased to GEL 8.9mln, up 29.8% y-o-y driven by strong performance of CB and GHG segments GEL 1,668mln capital allocation: 73.7% and 26.3% to Banking Business and Investment Business, respectively Equity increased to GEL 1,668mln, up 31.2% driven by GEL 212.2mln increase in retained earnings and GEL 219.mln capital raise completed in December 214 ROAE 9M15 page 14

15 GEL millions GEL millions GEL millions GEL millions Assets BGEO Balance Sheet, 3 September 215 BGEO GHG M2 Real Estate 12, 1, 8, 6, 4, 2, -2, 6, ,34.4 (136.) (296.8) 3-Sep-14 assets Investment Business assets 9, , , Sep-15 1, 8, 6, 4, 2, 6, , , Sep-14 Liquid assets Net loans Other assets 9, % 5, % 31.9% 2, Sep Sep % 68.6% PPE Other assets Sep % 29.2% 43.6% Inventories Investment properties Other assets Liabilities BGEO GHG M2 Real Estate 12, 1, 8, 6, 4, 2, -2, 5, , , ,892. (136.) (296.8) 3-Sep-14 3-Sep-15 liabilities Investment Business liabilities 4.5% 96.5% 1,. 8,. 6,. 4,. 2,. - 5, , , Sep-14 7, ,. 2,11.8 4, Sep-15 Other liabilities Debt securities issued Amounts due from credit institutions Client Deposits and Notes 2.9% 12.7% 25.5% 58.9% Sep % 59.8% Other liabilities Borrowed funds Sep % 7.4% 27.5% Other liabilities Accruals and deferred income Borrowed funds page 15

16 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 16

17 GEL million GEL million BOG The leading bank in Georgia Leading market position: No. 1 bank in Georgia by assets (34.7%), loans (32.7%), client deposits (31.9%) and equity (31.5%) 1 Sustainable growth combined with strong capital, liquidity and robust profitability Underpenetrated market with stable growth perspectives: Real GDP average growth rate of 5.8% for Geostat estimates 4.8% GDP growth in 214. Loans/GDP grew from 9% to 44% in the period of , still below regional average; Deposits/GDP grew from 8% to 4 over the period Balance Sheet +14.9% +8.4% +19.2% +13.1% +16.7% Strong brand name recognition and retail banking franchise: Offers the broadest range of financial products to the retail market through a network of 26 branches, 73 ATMs, 2,354 Express Pay Terminals and c.1.9 million customers (includingc.4, Privatbank customers) as of 3 September 215 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: The only entity from Georgia to be listed on the premium segment of the Main Market of the London Stock Exchange (LSE:BGEO) since February 212. LSE listed through GDRs since 26 Only private entity to issue Eurobonds from the Caucasus: US$4 million Eurobonds outstanding including US$15 raised through a tap issue in November 213. The bonds are currently trading at a yield of c.5.4% 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, 7,44 6,158 5,333 9,14 Income Statement ,914 1,94 1,596 1,875 5,367 4,441 3,567 3,127 Total assets Liquid assets Net loans to customers Revenue ,65 3,482 3,141 2, Client deposits 31-Dec Dec Dec-14 3-Sep % Profit +14.5% +39.4% Revenue 1, ,64 1,248 Total equity CAGR % Profit Q14 2Q15 3Q15 Change y-o-y 1 Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 3 September page 17

18 BOG Leading the competition across the board Peer group s market share in total assets Peer group s market share in gross loans 4 35% 3 25% 2 15% 1 5% 36.7% 33.8% 34.7% 32.6% 26.9% 25.8% 24.5% 23.7% 5.1% 7.3% % 19.3% 17.9% 16.2% 14.7% 7.8% 6.1% 6.2% 7.7% 5.5% 5.8% 6.3% 6.3% 4.9% 3.8% 4.8% 4.9% BOG TBC PCB BR LB VTB Others #1 BOG 4 35% 3 25% 2 15% 1 5% 35.4% 32.5% 32.7% 32.2% 28.3% 26.2% 25.2% 25.3% 19.1% 17.7% 16.3% 14.7% 8.3% % 6.6% 6.7% 5.7% 7.2% 6.2% 5.8% 4.6% 4.8% 4.8% 5.8% 4.8% 4.2% 5. BOG TBC PCB BR LB VTB Others #1 BOG Q Q3 215 Foreign banks market share by assets Peer group s market share in client deposits 26 3Q % % 31.9% 3.4% 28.6% 31.5% 3.7% 28.8% 27.8% #1 BOG No state ownership of commercial banks since 1994 Local banks, 68. Foreign banks, 32. Local banks, 74.6% Foreign banks, 25.4% 25% 2 15% 1 5% 15.2% 12.6% 12.7% 11.8% % 6.9% 5.6% 5.8% 5.3% 6.1% 5.1% 5.3% % 5.4% 4.8% 3.8% BOG TBC PCB BR LB VTB Others Q3 215 Note: - All data based on standalone accounts as reported to the National Bank of Georgia and as published by the National Bank of Georgia page 18

19 Diversified asset structure Total asset structure 3 September 215 Liquid assets 3 September 215 Total: GEL 9.1bln Other assets 9.4% Total: GEL 2.9bln Other liquid assets 3. Loans to customers, net 58.7% Liquid assets 31.9% Government bonds, treasury bills, NBG CDs 27.9% Amounts due from credit institutions 24. Cash and equivalents 45.1% Loans breakdowns 3 September 215 Total Loans breakdown by segments Total: GEL 5.5bln Retail loans, GEL 2,979.2 mln, 53.7% Corporate loans, GEL 2,57. mln, 46.3% Card overdrafts 1% Car loans (auto+) 1% POS loans 4% Retail Banking Loans breakdown by product Total: GEL 2.8bln Legacy retail loans 2% Micro loans 2 Credit card balances 1 Other loans Consumer loans 22% SME loans 12% Mortgage loans 28% Health and social work 4.2% Mining and quarrying 4.6% Financial intermediation 2.8% Construction 5.4% Electricity, gas and water supply 3.3% Transport & Communication 5.7% Corporate Banking Loans breakdown by sectors Other Total: GEL 2.3bln 15.4% Manufacturing 27.1% Hospitality 5.1% Real estate 1.1% Trade 16.3% *Retail loans include loans of Retail Banking segment, BNB retail loans, Investment Management and Affordable Housing Mortgages, Corporate loans include Corporate Banking Segment and BNB Corporate loans page 19

20 US$ loan portfolio breakdown Highlights 44.1% of Retail Banking Loans were denominated in USD loans with non-usd income* We offered re-profiling in Feb-215. Since, 992 loans (out of 14,) were re-profiled, with total value of US$34.9mln For RB: Loans 15 days past due were 1.4% at 3 September 215, compared to 1.4% a year ago and 1.4% as of 3 June % of Corporate Banking Loans denominated in USD loans with non-usd income Retail Banking and Wealth Management 3 Sep 215 Total GEL mln , % 2.4 1, % % 1, % Loan portfolio Provision amount LLR rate Other GEL USD Corporate Banking 3 Sep 215 Total GEL mln , % , % 6.65% 4.3% Loan portfolio Provision amount LLR rate Other GEL USD Amounts in GEL millions RB Loan portfolio % of total RB loan portfolio Mortgages Consumer loans* SME & Micro GEL and other currency loans* 1, % USD loans with USD income % USD loans with non-usd income 1, % Total 2, , % of total Amounts in GEL millions CB Loan portfolio CB loan portfolio GEL and other currency loans* % USD loans with USD income 1, % USD loans with non-usd income % Total 2, * includes credit cards Note: standalone BOG figures from management accounts *Re-profiling implies effectively increasing the tenor of the loan so that monthly payment in Lari stays at the same level it was prior to the recent devaluation of the Lari. When re-profiling, we do not change the interest rate of the loan. We offered reprofiling in Feb 215 page 2

21 GEL thousand GEL thousand GEL thousand Resilient loan portfolio quality (1/2) NPLs NPL composition % 7.9% % 3.9% % % 7.7% M 215 NPLs NPLs to gross loans Net Interest Margin 9% 8% 7% 6% 5% 4% 3% 2% 1% M 215 NPLs RB & WM NPLs CB NPLs Other Loan loss reserve NPL coverage ratio % 3.9% 3.4% % % % % M 215 5% 4% 4% 3% 3% 2% 2% 1% 1% % 19.6% 11.6% 121.9% 86.3% 82.8% 67.5% M 215 Loan loss reserves (LLR) NPLs to gross loans LLR as % of gross loans NPL coverage ratio NPL coverage ratio, discounted for value of collateral *Retail loans include loans of Retail Banking segment, BNB retail loans, Investment Management and Affordable Housing Mortgages, Corporate loans include Corporate Banking Segment and BNB Corporate loans page 21

22 GEL millions GEL millions Resilient loan portfolio quality % % % 1..5%. Cost of Credit Risk nine-month % 1.3% % 1.2% % y-o-y M14 9M15 Cost of Risk nine-month Devaluation effect Like-for-like +16 bps 2.8%.4% 2.4% M14 9M bps y-o-y Devaluation effect Like-for-like Cost of Credit Risk quarterly % % % 1..5% % %.9%.6% 1.6% % Q14 1Q15 2Q15 3Q15 Devaluation effect Privatbank Like-for-like Cost of Risk quarterly -14.7% -29.4% like-for-like -2 bps -6 bps like-for-like 2.5%.4% 2.1% 3Q14 1Q15 2Q15 3Q15 6. Devaluation effect Privatbank Like-for-like page 22

23 GEL millions Bank Standalone, GEL mln Strong liquidity (1/2) Liquid assets to total liabilities NBG liquidity ratio 9, 8, 7, 6, 5, 4, 3, 2, 1, 36. 1,596 4, % 5,94 1,94 1, % 5, % 7,892 2, M 215 Liquid assets Total liabilities Liquid assets to total liabilities 4 35% 3 25% 2 15% 1 5% 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 4, % 45.7% 45% 3,415 3, % 4 3,166 35% 3 25% 1,89 1, ,32 1,245 15% % M 215 Liquid assets (NBG) Liabilities (NBG) Excess liquidity Liquid assets / liabilities 3 NBG min requirement Net loans to customer funds Net loans to customer funds & DFIs % 114.8% 113.6% 115.4% M 215 Net loans to customer funds, consolidated % 92.5% 96.8% 95.9% M 215 Net loans to customer funds & DFIs, consolidated page 23

24 GEL thousands GEL thousands GEL thousands Strong liquidity (2/2) Liquidity coverage ratio & net stable funding ratio JSC Bank of Georgia standalone % % 163.8% % 15.9% 14.5% 18.6% M 215 Foreign currency VaR analysis* JSC Bank of Georgia standalone 3,5 3, 2,5 2, 1,5 1, ,1.5 3,77.7 2, , , , , , ,24.7 2, , , ,593.6 Liquidity coverage ratio Net stable funding ratio Monthly VaR GEL (Average) VaR Limit Cumulative maturity gap, 3 June 215 Open currency position JSC Bank of Georgia standalone 1,, 8, 6, 4, 2, -2, -4, 883,738 83, , % 1.6% 9.9% -3.6% -3.7% (275,946) (282,972) 627,424 25% 2 15% 1 8.3% 5% -5% -1 4, -4, -8, -12, -16, -2, 1.4% 12,173-11,394-12, % -1.4% -155, % 4% 2% -2% -4% -6% -8% -1-12% -14% On Demand -3 Months 3-6 Months 6-12 Months 1-3 Years >3 Years M 215 Maturity gap Maturity gap, as % of total assets FC net position, on and off balance, total As % of NBG total regulatory capital (old) *Daily VaR time series averaged for each respective month page 24

25 USD millions Funding structure is well established Interest Bearing Liability structure 9M 215 Well diversified international borrowings 3Q15 Borrowings, GEL 1,68.7 mln, 13.5% Debt securities issued, GEL 1,. mln, 12.7% Other amounts due to credit institutions, GEL mln, 12. Interest Bearing Liabilities GEL 7.9 bn Other liabilities, GEL 23.6 mln, 2.9% Client deposits & notes, GEL 4,649.6 mln, 58.9% Current account & demand deposits 49.94% Time deposits 5.6% Other debt securities, GEL 53.1 mln, 2.6% Eurobonds, GEL mln, 45.8% Others borrowings, GEL mln, 5.7% DFIs, GEL mln, 45.9% 1. Borrowed funds maturity breakdown* % Excl. US$4 mln Eurobonds maturing in % 1.2% %.1% % % Senior Loans Subordinated Loans % of Total assets % 2% -2% -4% -6% -8% -1 Interest bearing liabilities has a well-balanced funding structure with 58.9% of interest bearing liabilities coming from client deposits and notes, 12. from Developmental Financial Institutions (DFIs) and 12. from Eurobonds, as of 3 September 215 The Bank has also been able to secure favorable financing from reputable international commercial sources, as well as DFIs, such as EBRD, IFC, DEG, Asian Development Bank, etc. As of 3 September 215, US$ 71.9 million undrawn facilities from DFIs with one to seven year maturity * Consolidated, converted at GEL/US$ exchange rate of of 3 September 215 ** Total Assets as of 3 September 215 page 25

26 GEL millions GEL millions GEL millions GEL millions Strong revenue growth Revenue growth nine-month % +34.1% +47.8% Revenue growth quarterly +39.4% +4.1% M 214 9M 215 Net interest income Net non-interest income Q3 214 Q2 215 Q3 215 Net interest income Net non-interest income Net non-interest income nine-month % % % +18.9% M 214 9M 215 Net fee and commission income Net banking foreign currency gain Gross insurance profit Net other banking income Net non-interest income quarterly % +8.1% Q3 214 Q2 215 Q3 215 Net fee and commission income Gross insurance profit Net banking foreign currency gain Net other banking income page 26

27 Keeping a tight grip on costs Operating expenses nine-month Operating expenses quarterly +2.9% +24.1% +1.4% GEL millions GEL millions M 214 9M 215 Salaries and other employee benefits Banking depreciation and amortisation Administrative expenses Other operating expenses Operating income before cost of credit risk nine-month (51.3) (126.8) 9M 214 9M 215 Cost of credit risk and net non-recurring items Operating income before cost of credit risk GEL millions GEL millions Q3 214 Q2 215 Q3 215 Salaries and other employee benefits Administrative expenses Banking depreciation and amortisation Other operating expenses Operating income before cost of credit risk quarterly (15.6) (44.2) (39.7) Q3 214 Q2 215 Q3 215 Cost of credit risk and net non-recurring itemss Operating income before cost of credit risk page 27

28 GEL millions GEL millions Focus on efficiency Cost / Income ratio half-year Cost / Income ratio quarterly 44% 42% 4 38% 36% 41.3% 44% 42% 4 38% 36% 39.2% 41.5% 42.2% 4.1% 38.5% 36.8% 35.7% 34.8% 34% 35.7% 34% 32% 32% 3 9M 214 9M Q 213 1Q 214 2Q 214 3Q 214 4Q 214 1Q 215 2Q 215 3Q 215 Cost/Income Ratio Revenue and operating expenses half-year Operating Leverage +19.1% y-o-y Revenue and operating expenses quarterly Operating Leverage + 2.7% q-o-q % y-o-y M 214 9M 215 Revenue Operating expenses 3Q 214 2Q 215 3Q 215 Revenue Operating expenses page 28

29 growing income notwithstanding the pressure on yields Loan Yields annual Loan Yields quarterly % 16.2% 14.3% 14.7% 2 15% % 14.6% 14.7% 2 15% % % 72.8% 27.2% 7.7% 29.3% 5% % % 3.4% % 5% M 215 Q3-214 Q2-215 Q3-215 Net loans, GEL, consolidated Net loans, FC, consolidated Currency-blended loan yield Net loans, FC, consolidated Net loans, GEL, consolidated Currency-blended loan yield, annualised Loan Yields, GEL quarterly Loan Yields, foreign currency quarterly 24% 23% 22% 21.6% 22.8% 14% 12% % 11.4% 11.2% 21% 8% % 6% 4% 19% 2% 18% Q3 214 Q2 215 Q3 215 Q3 214 Q2 215 Q3 215 Loan yield, GEL Loan yield, FC Loan yields excluding provisions page 29

30 Stable Cost of Funding Cost of Funds half-year Cost of Funds quarterly 8% 7.1% 8% 7% 6% 5% 5.9% 4.8% 5.1% 7% 6% 5% 4.7% % 4% 4% 3% 3% 2% 2% 1% 1% M 215 Q3-214 Q2-215 Q3-215 Cost of funds, consolidated Cost of funds, consolidated Cost of Customer Funds annual Cost of Customer Funds quarterly % 5.5% 4.2% 4.3% 69.9% 68.2% 71.2% 73.5% 3.1% 31.8% 28.8% 26.5% M 215 Client deposits and notes, FC, consolidated Client deposits and notes, GEL, consolidated Currency-blended cost of client deposits and notes 8% 7% 6% 5% 4% 3% 2% 1% % 4.4% 4.1% 7.4% % 29.6% % Q3-214 Q2-215 Q3-215 Client deposits, FC, consolidated Client deposits, GEL, consolidated Currency-blended cost of client deposits, annualised 8% 7% 6% 5% 4% 3% 2% 1% page 3

31 Excellent capital adequacy position Basel I capital adequacy ratios JSC Bank of Georgia consolidated NBG (Basel 2/3), capital adequacy ratios JSC Bank of Georgia standalone 3 25% 2 15% 21.2% 26.1% % 22.1% 26.1% 16.7% 23.7% 18% 16% 14% 12% 1 8% 14.2% 14.1% 11.2% 11.1% 9.8% 12.9% 15.9% 15.8% 1.4% 1.2% 1.5% 8.5% 1 6% 5% M 215 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio 4% 2% Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio NBG Tier I CAR min requirement NBG Total CAR min requirement Risk Weighted Assets Basel I vs NBG (Basel 2/3) JSC Bank of Georgia consolidated (BIS I), standalone (BIS 2/3) NBG (Basel 2/3)Tier I Capital and Total Capital JSC Bank of Georgia standalone 9, 8, 7, 6, 5, 4, 3, 2, 1, 6,471 5,628 6,253 7,24 8,359 8,351 8,473 7,172 7,253 6,77 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 BIS NBG Basel 2/3 GEL 3 Sep 215 Dec 214 Sep 214 Jun 214 Mar 214 Dec 213 Tier I Capital (Core) Tier 2 Capital (Supplementary) Total Capital 1, , Risk weighted assets 8, ,24.1 6,47.6 6,22.9 5,91.9 5,733.7 Tier 1 Capital ratio 1.2% 11.1% 11.2% 1.8% 12.9% 13.1% Total Capital ratio 15.8% 14.1% 14.2% % 16.4% reported to NBG are reported in the appendix page 31

32 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 32

33 GEL millions Retail Banking (RB) No. 1 retail bank in Georgia Client data RB standalone Volumes are in GEL millions 3-Sep-15 % of clients Number of total Retail clients, of which: 1,959,111 1,451,777 1,245,48 1,54,248 Number of Solo clients ( Premieum Banking ) 1,328.5% 7,971 6,81 5,413 Consumer loans & other outstanding, volume Consumer loans & other outstanding, number 634, % 526, ,557 46,213 Mortgage loans outstanding, volume Mortgage loans outstanding, number 12,576.6% 11,92 1,212 9,85 Micro & SME loans outstanding, volume Micro & SME loans outstanding, number 18,296.9% 16,246 13,317 11,136 Credit cards and overdrafts outstanding, volume Credit cards and overdrafts outstanding, number 443, % 199, ,57 142,72 Credit cards outstanding, number, of which: 729, % 116, ,913 17,261 American Express cards 12,85 5.2% 11,362 18,68 99,292 Portfolio breakdowns RB standalone Loans by products Total: GEL 2.8 bn Pawn loans 2.3% Credit cards and overdrafts 1.9% General consumer loans 22.1% Automobile loans 1. POS loans 3.5% Mortgage loans 28.3% Micro- and agro-financing loans and SME loans 32. RB loans RB standalone Loans growth: 48. growth y-o-y 27.7% growth y-o-y on constant urrency basis RB deposits RB standalone Deposits growth: 49.7% growth y-o-y 2.3% growth y-o-y on constant currency basis Deposits by category Total: GEL 1.8 bn Current accounts and demand deposits 38.8% Time deposits 61.2% 3, 2,5 2, 1,5 1, 5-2,751 2,67 1,613 1, M 215 2, 1,8 1,6 1,4 1,2 1, ,86 1,35 1, M 215 Deposits by currency Total: GEL 1.8 bn Client deposits, GEL 25.7% Client deposits, FC 74.3% Retail net loans Retail client deposits page 33

34 PL Retail Banking Retail Banking (RB) Strong loan book growth RB Consolidated Income statement Highlights 3Q15 3Q14 Change Change Change 2Q15 9M15 9M14 GEL thousands, unless otherwise noted y-o-y q-o-q y-o-y Net banking interest income 83,141 54, % 79, % 237,56 155, % Net fee and commission income 19,982 15, % 18,46 8.6% 56,954 41, % Net banking foreign currency gain 5,22 4,31 2.7% 4,35 2.8% 13,412 12,55 6.9% Net other banking income 2, NMF 1, % 5,29 2, % Revenue 111,186 75, % 13, % 313, , % Salaries and other employee benefits (22,466) (18,87) 24.2% (22,416).2% (68,478) (51,58) 32.8% Administrative expenses (12,81) (9,218) 31.1% (11,632) 3.9% (35,953) (26,321) 36.6% Banking depreciation and amortisation (6,86) (4,95) 37.5% (6,818) -.2% (2,455) (14,375) 42.3% Other operating expenses (353) (298) 18.5% (496) -28.8% (1,312) (1,35) 26.8% Operating expenses (41,76) (32,553) 28.1% (41,362).8% (126,198) (93,311) 35.2% Operating income before cost of credit risk 69,48 42, % 62,2 12.1% 186, , % Cost of credit risk (22,713) (6,587) NMF (2,662) 9.9% (6,35) (6,959) NMF Net non-recurring items (3,128) (284) NMF (2,875) 8.8% (6,451) (5,51) 27.7% Profit before income tax 43,639 35, % 38, % 12,451 16, % Income tax expense (4,747) (5,621) -15.5% (5,9) -19.5% (16,386) (11,878) 38. Profit 38,892 3, % 32, % 14,65 95,92 9.4% Loan Yields Retail Banking RB standalone Deposit Costs Retail Banking RB standalone % 49.9% 5.1% 19.8% 41.1% 58.9% 17.4% 17.5% 5.5% 52.1% 49.5% 47.9% M % 2 15% 1 5% % 69.4% 3.6% 5.2% 63.6% 67.6% 36.4% 32.4% 3.8% % 25.7% M 215 7% 6% 5% 4% 3% 2% 1% Net loans, RB, GEL Net loans, RB, FC Currency-blended loan yield, RB Client deposits, RB, FC Client deposits, RB, GEL Currency-blended cost of client deposits, RB page 34

35 Retail Banking Strong loan book growth RB Loan Yield quarterly RB standalone RB Cost of Deposits quarterly RB standalone % 23.6% 21.5% 17.2% 17.3% 17.9% 12.1% 11.2% 11.4% Loan Yield Loan yield, GEL Loan yield, FC % % % % 1..5%. 4.6% 4.3% 3.9% % 3.7% 3.5% 3.6% 3.5% Cost of deposits Cost of deposits, GEL Cost of deposits, FC 3Q14 2Q15 3Q15 3Q14 2Q15 3Q15 RB NIM quarterly RB standalone % 9.5% 3Q14 2Q15 3Q15 9.5% NIM page 35

36 PL Corporate Banking Corporate Banking (CB) CB Consolidated Income statement Highlights 3Q15 3Q14 Change Change Change 2Q15 9M15 9M14 GEL thousands, unless otherwise noted y-o-y q-o-q y-o-y Net banking interest income 32,126 25, % 33, % 11,494 73, % Net fee and commission income 8,75 6, % 8, % 23,22 18, % Net banking foreign currency gain 7,272 6, % 9, % 24,875 17, % Net other banking income 2, % 1, % 5,177 2, % Revenue 5,391 39, % 53, % 154, , % Salaries and other employee benefits (9,392) (8,938) 5.1% (8,853) 6.1% (26,733) (24,634) 8.5% Administrative expenses (3,) (2,348) 27.8% (3,773) -2.5% (9,28) (8,19) 14.4% Banking depreciation and amortisation (1,65) (958) 11.2% (957) 11.3% (3,12) (2,847) 5.8% Other operating expenses (17) (121) -11.6% (188) -43.1% (57) (692) -26.7% Operating expenses (13,564) (12,365) 9.7% (13,771) -1.5% (39,532) (36,282) 9. Operating income before cost of credit risk 36,827 26, % 4,82-8.1% 115,36 75, % Cost of credit risk (1,531) (7,659) 37.5% (14,146) -25.6% (44,57) (31,533) 39.7% Net non-recurring items (1,41) (115) NMF (199) NMF (2,199) (2,568) -14.4% Profit before income tax 24,895 18, % 25, % 68,78 4, Income tax expense (2,698) (2,84) -5. (4,119) -34.5% (1,163) (5,193) 95.7% Profit 22,197 16, % 21, % 58,617 35, Loan Yields Corporate Banking, standalone CB standalone Deposit Costs Corporate Banking, standalone CB standalone % 12.4% 1.6% 1.6% 83.6% 83.2% 86.8% % 16.8% 13.2% M 215 Net loans, CB, GEL Net loans, CB, FC Currency-blended loan yield, CB 16% 14% 12% 1 8% 6% 4% 2% % 5.3% 5.9% 51.4% 51.4% 4.6% 2.9% % 49.1% 48.6% 48.6% M 215 Client deposits, CB, FC Client deposits, CB, GEL Currency-blended cost of client deposits, CB 8% 7% 6% 5% 4% 3% 2% 1% page 36

37 GEL millions Corporate Banking (CB) Highlights Portfolio breakdowns, 3 September 15 CB standalone No.1 corporate bank in Georgia Integrated client coverage in key sectors c.5, clients served by dedicated relationship bankers Loans & Deposits CB standalone Health and social work 4.2% Mining and quarrying 4.6% Financial intermediation 2.8% Construction 5.4% Other 15.4% Electricity, gas and water supply 3.3% Transport & Communicatio n 5.7% Hospitality 5.1% Loans by sectors Real estate 1.1% Deposits by category Manufacturing 27.1% Trade 16.3% Top 1 CB borrowers represent 3 of total CB loan book Top 2 CB borrowers represent 44% of total CB loan book 2,5 2,161 2,253 Time Deposits, 26.9% 2, 1,696 1,819 1,68 1,5 1, 1,149 1,221 1,186 GEL, 49% FC, 51% M 215 Corporate net loans Corporate client deposits Current Account & Demand Deposits, 73.1% page 37

38 Corporate Banking (CB) CB Loan Yield quarterly CB standalone CB Cost of Deposits quarterly CB standalone % 13.2% 1.7% 1.6% 1.3% 1.5% 1.6% 1.4% 1. Loan Yield Loan yield, GEL Loan yield, FC % % % % 1..5%. 4.4% 4.4% 3.6% % 2.8% % 1.7% Cost of deposits Cost of deposits, GEL Cost of deposits, FC 3Q14 2Q15 3Q15 3Q14 2Q15 3Q15 CB NIM quarterly CB standalone % 4.5% 4.1% Q14 2Q15 3Q15 page 38

39 GEL millions Investment Management results overview Highlights Client deposits September 215 Strong presence internationally through representative offices in Israel (since 28), the UK (21), Hungary (212) and Turkey (213). Successfully placed CDs worth US$8 million, EUR 8 million and GBP 5 million Euroclearable CDs. CDs issued to IM clients stood at GEL527.5 million. WM funds breakdown Other 27% Georgia 48% 1,2 1, 8 6 WM client deposits 1, Galt & Taggart acted as a Co-Leader Manager for the GBP 218mln IPO of Georgia Healthcare Group on the London Stock Exchange ( GHG LN ). This marks a landmark transaction for G&T in helping Georgian companies raise equity financing from local and international investors UK 4% Virgin Islands British 4% Germany 5% Israel 12% M 215 Client Deposits, WM AUM* of GEL 1,347. million as of September 215, up 37.4% y-o-y * Wealth Management client deposits, Galt &Taggart client assets, Aldagi Pension Fund and Wealth Management client assets at Bank of Georgia Custody Galt & Taggart - Investment Bank Galt &Taggart - Research Acted as lead arranger in 1H15 for bond offerings for o US$15 mln bonds issued by Evex o GEL 25 mln floating notes issued by EBRD o GEL 3 mln bonds issued by IFC o US$2 mln bonds issued by m 2 Sector coverage Energy Tourism Agriculture Wine Commercial Real Estate Macro coverage Georgia Azerbaijan Fixed Income Coverage GOGC Georgian Railway page 39

40 E 216F 217F 218F E 216F 217F 218F E 216F 217F 218F 219F 22F 4.8% 5.1% 5.3% 5.3% 5.5% 6.1% 6.4% % 7.6% 7.8% Capacity Revenue Georgia healthcare market & GHG market share evolvement GHG strategy Hospitals Ambulatories Pharmaceuticals Maintain dominant market share in hospitals by capacity and revenue GHG Replicating hospital consolidation experience in outpatient segment, with a first mover advantage Redistribution of funds expected from pharmaceuticals to ambulatory services GEL 1.2bln (1) GEL.9bln (1) GEL 1.3bln (1).5% 17.6% GHG Market shares 26.6% Bed market share 33. In 9M15* Long-term target 38. Share in total Healthcare spending 25. In 9M15 Long-term target Year 214 medium term target 2, 1,5 1, Market Hospitals, GEL mln CAGR'3-14: 13.7% '14-18: 11% 1,23 1, ,647 1,489 1,341 2, 1,5 1, 5 - Ambulatories, GEL mln CAGR'3-14: 17.9% '14-18: 16% , , , GDP nominal, GEL bln CAGR'3-14: 11.8% '15-2: 9% Growth drivers Low utilisation (5-6) Low equipment penetration Fragmented market System inefficiency (low nurse-to-doctor ratio) GHG: accelerated revenue market share growth on the back of well-invested asset base Low outpatient encounters Fragmented market New prescription policy GHG: replicating hospital cluster model and consolidation experience in ambulatory sector new prescription policy introduced in 214 ambulatory market consolidation Weakening of existing pharma-duopoly spending on pharma Georgia s 38% vs 16-17% in Europe; decreasing trend in comparable countries (1) 215E market value Sources: GHG internal reporting; Frost & Sullivan analysis, 215; NHA, Ministry of Labor, Health and Social Affairs of Georgia; NCDC; OECD, World Health Organisation and World Bank, 213 data page 4

41 GHG Long-term, High-growth Story Medium-term Target (5-1 Year Horizon) Long-term Target (Beyond 1 Year Horizon) Georgia 214 or most recent year (1) Georgia medium-term (1) EM 214 or most recent year (2) Spending per capita (US$) 217 (Georgia) 52 1,76 Price inflation (heart surgery, US$) $ $ 6,5 (GHG) 9, 25, $ GHG Revenue per bed (US$) Outpatient Encounters per capita 4, (GHG) 2.7 (Georgia) Significant expansion of capacity by k 5.4 Substantial room to grow beyond k 8.9 Nurse to doctor ratio 1:1.6 (Georgia) 4:1 (Georgia, WHO recommendation) 3.4:1 Pharmaceuticals share in total healthcare spending 38% (Georgia) 25% 15.4% Sources: (1) Bed utilisation for referral hospitals; World Bank; GHG internal reporting; Management Estimates; Ministry of Finance of Georgia; Frost & Sullivan 215 (2) WHO: Average of countries: Chile, Costa Rica, Czech Republic, Estonia, Croatia, Hungary, Lithuania, Latvia, Poland, Russian Federation, Slovak Republic; BAML Global Hospital Benchmark, August 214 page 41

42 GHG Maintain dominant market share in hospitals by capacity and revenue Hospital Competition Key takeaways: (1) GHG is more than four times larger than next largest competitor Highly fragmented with top 5 players having 4 market share and average number of beds per hospital at 45 84% of national bed capacity is privately owned 64% of beds are renovated in Georgia, compared to 86% of GHG s beds that are renovated National bed capacity, % breakdown (1) National bed capacity (# of Beds, # of Hospitals) (1) Soviet-era legacy Renovated Evex 2, % # % 64 % Renovated beds Soviet-era beds Key Georgian Hospitals (1) Vienna Insurance Group Gudushauri-Chachava Aversi PSP Other , % 5% 2% 2% 6 86% of GHG beds are renovated (2) Revenue market share growth drivers: c.3 market share by capacity to be achieved after renovation of Deka and Sunstone (additional c.5 beds) increasing presence in Tbilisi hospital market (from 24. to 3.2% by beds) that has1.9x higher hospitalization rate vs Georgian average. Continuing to optimise service mix at recently acquired, less efficient hospitals (Avante, Traumatology, Sunstone, Deka, HTMC) by adding higher revenue generating services X X Market share Number of hospitals Average number of beds at hospital Sources: (1) Market share by number of beds. Source: NCDC, data as of December 214, updated by company to include changes before 3 June 215 (2) GHG internal reporting page 42

43 GHG ambulatory clinics Competition GHG Replicating hospital consolidation experience in outpatient segment Ambulatory Competition Key takeaways: GHG has less than 1% market share in ambulatories, targeting 17% (long-term) The rest of the market similarly fragmented, with no single player having more than 1% market share and comparable access to capital and management Potential to grow ambulatory revenue from Imedi L out of GEL c.16mln Imedi L spending on ambulatories (215E), only 34% is spent at GHG ambulatory clinics due to limited footprint in ambulatory segment Clinic facade Reception / registration Doctor s office Clinic facade Reception / registration Doctor s office Sources: GHG internal reporting; Frost & Sullivan analysis, 215, company photos page 43

44 EBITDA GEL 39.6mln Revenue GEL 171.4mln* GHG Segment overview Key Segments Referral and Specialty Hospitals Evex Community Hospitals Ambulatory Clinics Imedi L Medical Insurance Key Services General and specialty hospitals offering outpatient and inpatient services in Tbilisi and major regional cities Basic outpatient and inpatient services in regional towns and municipalities Outpatient diagnostic and treatment services in Tbilisi and major regional cities Range of private insurance products purchased by individuals and employers Market Size GEL 1.2bln (215E) GEL.9bln (215E) GEL.14bln (215E) 17.6% by revenues Market Share 26.6% by beds (2,67), which is expected to grow to c.3. as a result of.5% 38.1% renovation of recently acquired hospital facilities (additional c.5 beds); Selected Operating Data (9M 215) 83% 16 hospitals 2,29 beds 17% 19 hospitals 461 beds 7 clinics 31,+ outpatients treated 27, insured 67% 8% 2% 23% Financials (9M 215) GEL 12.mln 212-9M15 CAGR 68% 8 GEL 13.3mln 212-9M15 CAGR 14% GEL 3.7mln 212-9M15 CAGR 8% GEL 4.7mln 1 3% 7% 212-9M15 CAGR 15% GEL 31.8mln 212-9M15 CAGR 71% GEL 3.9mln 212-9M15 CAGR 3 GEL 1.3mln 212-9M15 CAGR 37% GEL 2.6mln 212-9M15 CAGR -7% EBITDA Margin (1) : 27.9% EBITDA Margin (1) : 28.6% EBITDA Margin (1) : 31. EBITDA Margin (1) : 6.5% Note: EBITDA margins are based on gross of intercompany eliminations revenue numbers Source: GHG internal reporting (1) EBITDA margins are are calculated based based on on revenue gross gross of of correction and and rebates rebates * Eliminations are included in total revenue

45 m 2 Real Estate Leading real estate development company (1/2) Outstanding Track Record Core business activities: the company develops, sells and manages residential apartments 2 Completed Projects 5 On-going Projects Total sales US$56.9mln Number of apartments: 645 Total Project Cost: US$48.6mln Total net income: US$7mln Land value materialized: US$6.3mln Total sales US$7.6mln, yet to be recognised as revenue Number of apartments (under construction): 1843 Total Project Cost: US$13 mln Total expected net income: US$21.5 mln Land value to be materialized: US$15.9mln Revenue Dynamics (GEL thousand) 4,574 1,478 Fast Growing Company 13, Note: m 2 Affordable Housing Business figures only EBITDA Dynamics (GEL thousand) 51% 2,314 73% 7,6 63% 8, EBITDA EBITDA Margin Value Creation Project Initiation BoG made a cash investment of GEL 5.m (US$3m) with an idea to develop problem land plots seized after 28 into an opportunity Testing the market and potential for value creation After successful completion of two projects and launch of five ongoing projects, M2 has become a leading real estate company with significant potential for growth Value Creation The Group generates an IRR of more than 3, leveraging on M2 s successful track record of completed projects Source: Company information. Conversion form US$ to GEL was done using current exchange rate as at 31 December 214. page 45

46 Project Sales (US$m) m 2 Real Estate Leading real estate development company (2/2) 5 Total sales of US$127.4mln since Tamarashvili Street IRR: 46% Start: May-12 Completion: Jun-14 Apartments sold: 519/ 522 (99%) Sales: US$47.4 mln Kazbegi Street IRR: 165% Start: Dec-13 Completion: Dec-15 Apartments sold: 262/295 (89%) Sales: US$23.9mln Nutsubidze Street IRR: 58% Start: Dec-13 Completion: Sep-15 Apartments sold: 196/221 (89%) Sales: US$15.7 mln Tamarashvili Street II IRR: 71% Start: Jul-14 Completion: Apr-16 Apartments sold: 177/27 (66%) Sales: US$16.4 mln Tamarashvili Street III IRR: 31% Start: Jul-15 Completion: Sep-18 Apartments sold: 135/819 (16%) Sales: US$9 mln 2 1 Chubinashvili Street IRR: 47% Start: Sep-1; Completion: Aug-12 Apartments sold: 123/123 (1) Sales: US$9.9 mln Moscow Avenue IRR: 31% Start: Sep-14 Completion: Mar-16 Apartments sold: 126/238 (53%) Sales: US$5.1 mln Significant potential of the project from sales of US$29, price apartments with current IRR of c. 31% Projects *As per the revenue recognition policy adopted by the company in line with IFRS, revenue is recognised at the full completion of the project instead of in line with percentage construction completion page 46

47 Acquisition of a minority interest in GGU an Attractive Investment Opportunity Transaction Rationale Company Overview Exit strategy through potential IPO is feasible Strong potential for value generation for shareholders in short term Strong management and streamlined operations but room for potential further improvement exists Attractive Investment Opportunity Potential to improve utilisation A profitable company with significant capacity for growth A natural monopoly Cash generating business, no additional financing required for planned capex Georgian Global Utilities Ltd. ( GGU ) is a privately owned company that supplies water and provides wastewater services to 1.4 million people (approximately 1/3 of Georgia s total population) in Tbilisi, Mtskheta and Rustavi and operates hydropower electricity generation facilities Sales to corporates represented c.7 of water revenue GGU owns and operates 3 hydropower generation facilities with a total capacity of 143MW Most of the milestones committed to the authorities during the privatization have already been achieved with one project remaining before 218 No additional equity financing is required for planned Capex program Transaction Overview Transaction to be structured in several steps Acquisition of 25% shareholding for GEL48.7m (US$26m) Attractive valuation with GGU valued at EV / EBITDA 214E deal multiple of 4.7x, while industry peers are trading at 8.5x average EV / EBITDA 214E multiple (3) BoGH provided a US$25mn loan to GGU with proceeds to be paid as dividend to the selling shareholders The transaction was earnings accretive Commercial terms have been agreed, transaction will be subject to certain conditions Revenue Dynamics (4) (GEL m) EBITDA Dynamics (4) (GEL m) Selected Financials % 52.5% 44.3% 48.2% % Source: Company information. Conversion form US$ to GEL was done using current exchange rate as at 27 November, 214 for the consideration amounts. (1) Net of accrued interest and dividends for the second tranche. (2) Market Capitalisation as of 1 December 214. (3) Universe of comparable companies includes Pennon Group, Acea, Artesian Resources, American State Water Company, Athens Water and Thessaloniki Water Supply. (4) Group companies unconsolidated IFRS financial statements. page 47

48 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 48

49 Georgia at a glance General Facts Area: 69,7 sq km Population (212): 4.5 mln Life expectancy: 77 years Official language: Georgian Literacy: 1 Capital: Tbilisi Currency (code): Lari (GEL) Economy Nominal GDP (Geostat) 214: GEL 29.2 bn (US$16.5 bn) Real GDP growth rate 211-1H15: 7.2%, 6.2%, 3.3%, 4.8%, 2.8% Real GDP average 1 yr growth rate: 5.8% GDP per capita 214E (PPP) per IMF: US$ 9,29 Annual inflation (e-o-p) 214: 2. External public debt to GDP 214: 26.8% Sovereign ratings: S&P BB-/B/Stable, affirmed in May 215 Moody s Ba3/NP/Positive, affirmed in March 215 Fitch BB-/B/Stable, affirmed in October 215 page 49

50 Georgia s key economic drivers Liberal economic policy Regional logistics and tourism hub Strong FDI Support from international community Electricity transit hub potential Political environment stabilised Outstanding progress in governance and business reforms, eliminating corruption, strengthening public finances, and streamlining tax and customs procedures. These economic and structural improvements have been institutionalized. Liberty Act (effective January 214) ensures a credible fiscal and monetary framework: Public expenditure/gdp capped at 3; Fiscal deficit/gdp capped at 3%; Public debt/gdp capped at 6 Productivity gains accounted for 66% of the average 5.6% growth over , according to the World Bank Business friendly environment and low tax regime (attested by favourable international rankings) A natural transport and logistics hub, connecting land-locked energy rich countries in the east and European markets in the west, and a market of 9mn customers without customs duties. Free trade agreements with EU, CIS and Turkey and GSP with USA, Canada, Japan, Norway and Switzerland Tourism revenues at US$1,787mln in 214 (up 3.9% y-o-y); 5.5mln visitors in 214 (up 2% y-o-y); 5.mln visitors in 1M15 (up 6.8% y-o-y) Regional energy transit corridor accounting for 1.6% of the world s oil and gas transit volumes An influx of foreign investors on the back of the economic reforms have boosted productivity and accelerated growth. FDI diversified across sectors (214: US$1,758mln 213: US$942mln, 212: US$912mln, 211: US$1,117mln); FDI averaged 1 of GDP in FDI up 4.8% y-o-y in 1H15 to US$53.mln Net remittances of US$1,262.6mln in 214, 19.5% CAGR 4-14, US$82.9mln in 9M15 Georgia and the EU signed an Association Agreement in June 214. The deal includes a DCFTA, which is the major vehicle for Georgia s economic integration with the EU, a common customs zone of c.5mn customers and a US$ 18.5tn economy, spurring exports and enhancing the diversification and competitiveness of Georgian products 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 Developed, stable and competitively priced energy sector Only 2 of hydropower capacity utilized; 88 hydropower plants are in various stages of construction or development Georgia became a net electricity exporter in (a net importer in due to low precipitation and increased domestic demand) Georgia imports natural gas mainly from Azerbaijan Significantly boosted transmission capacity in recent years, a new 4 kv line to Turkey built, other transmission lines to Armenia and Russia upgraded Additional 5, MW transmission capacity development in the pipeline, facilitating cross-border electricity trade and energy swaps to Eastern Europe Maintaining healthy economic growth is a priority (potential to grow at an annual average 5% over the next decade) Georgia underscored its commitment to European values by securing a democratic transfer of political power in successive parliamentary, presidential, and local elections and by signing an Association Agreement and free trade agreement with the EU New constitution amendments passed in 213 to enhance governing responsibility of Parliament and reduce the powers of the Presidency Continued economic relationship with Russia, although economic dependence is relatively low Russia began issuing visas to Georgians in March 29; Georgia abolished visa requirements for Russians Direct flights between the two countries resumed in January 21 Member of WTO since 2, allowed Russia s access to WTO; In 213 trade restored with Russia In 9M15, Russia and Ukraine together accounted for 9.2% of Georgia s exports and 13.3% of imports; just 4.1% of cumulative FDI over page 5

51 Growth oriented reforms Ease of Doing Business 216 (WB-IFC Doing Business Report) Economic Freedom Index 215 (Heritage Foundation) UK USA Sweden Norway Estonia GEORGIA Armenia Czech Rep. Romania Kazakhstan Montenegro Turkey Serbia Azerbaijan Ukraine USA Estonia UK GEORGIA Hungary Latvia Romania Bulgaria France Turkey Italy Azerbaijan Russia Ukraine Global Corruption Barometer TI 213 Denmark Norway GEORGIA UK Estonia US Romania Bulgaria Czech Republic Armenia Latvia Turkey Greece Serbia Lithuania Kazakhstan Ukraine 1% 3% 4% 5% 6% 7% 7% 8% % admitting having paid a bribe last year 15% 18% 19% 21% 22% 26% 26% 32% 37% Business Bribery Risk, 214 Trace International Germany USA Georgia Norway Netherlands UK Estonia Poland Czech Rep. Serbia Turkey Montenegro Romania Armenia Russia Azerbaijan Sources: Transparency International, Heritage Foundation, World Bank page 51

52 F Diversified resilient economy Gross domestic product Nominal GDP structure, FY % % % % 12.6% % % 6.2% % % 3.3% 4.8% E Nominal GDP (US$bn) Real GDP growth, y/y (%) 1H15 GDP growth of 2.8% 14% 12% 1 8% 6% 4% 2% -2% -4% Financial interm. 3.3% Healthcare 5.7% Real Estate 6. Construction 7.3% Hotels & restaurants 2.3% Agriculture 9.2% Other 11.2% Public administr. 9.9% Trade 17.4% Manufacturing 17.1% Transport & commun. 1.5% Source: Geostat Source: Geostat Comparative real GDP growth rates, % (24-214) 7% 5.8% 6% 5.1% 5.1% 5% 3.8% 3.8% % 4.4% 4% 3.5% 3. 3% 2.2% 2% 1% GDP per capita 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, 7,287 6,135 6,571 5,788 6,3 4,329 4,943 4,131 3,431 3,779 2,479 3,159 3,711 2,694 2, ,22 1,522 1,863 8,6 8,526 9,29 4,267 9,566 4,434 3,72 Nominal GDP per capita, US$ GDP per capita, PPP Sources: IMF, Geostat Sources: IMF page 52

53 Georgia Kyrgyz Rep. Kazakhstan Latvia Slovak Rep. 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Romania Macedonia Lithuania Moldova Estonia Azerbaijan Armenia Czech Rep. Bulgaria Russia Belarus Productivity gains have been the main engine of growth since 24 Overall contributions of capital, labour, and Total Factor Productivity (TFP) to growth, Contributions of capital, labour, and TFP to growth during periods TFP growth 3.65% Capital stock 1.6 Labor force.32% 1 8% 6% 4% 2% -2% -4% 3.65% 6.32% 1.48% 2.25% 3.86%.67% 1.56% -2.2% Capital stock Labor force TFP growth Source: Georgia Rising (213), WB Source: Georgia Rising (213), WB Real GDP growth projection, Employed persons in business sector, 6% 5% 4% 3% 2% 1% -1% -2% -3% 216F 217F Sources: IMF, WEO October 215 Source: GeoStat page 53

54 Further job creation is achievable Georgia s unemployment rate down 2.2ppts y/y to 12.4% in 214 Average monthly wages and income per household 1,9 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 18% 16% 14% 12% 1 8% 6% 4% 2% Sources: GeoStat Employment (thousands) Unemployment rate Wages, US$ Total income, US$ Sources: GeoStat Agriculture remains the largest employer, although the share of services in total employment has increased 2, 1,8 1,6 1,4 1,2 1, Hired workers account for about 39.7% in total employment Services Source: GeoStat Industry Note: services include construction Agriculture Public sector Non-public sector Sources: GeoStat page 54

55 Demonstrated fiscal discipline and low public debt Fiscal deficit as % of GDP Breakdown of public debt -2% -4% -6% -8% % -2.6% -3.4% -4.8% -6.5% Fiscal deficit/gdp capped at 3% -6.7% -3.6% -2.8% -2.6% % E 215F Domestic 22% External 78% Multilateral 53% Bilateral 13% Eurobond 9% External public debt portfolio weighted average interest rate 1.9% (Contractual maturity 23 years) Fiscal Deficit as % of Nominal GDP Source: Ministry of Finance of Georgia Source: Ministry of Finance of Georgia, as of end of 214 Public debt as % of GDP Government external debt service % 45% 51% 35% 4 27% 32% 21% 26% 17% Public debt/gdp capped at 6 31% 24% Sources: Ministry of Finance of Georgia, Geostat 41% 42% 32% 34% 37% 35% 36% 36% 29% 28% 27% 27% E Total public debt as % of GDP External public debt as % of GDP US$ mln % % % % Multilateral Bilateral Eurobond 221 External debt service as % of budget revenues Note: Debt service payments provided based on stock as of June 215, budget ratios based on 216 initial budget draft Source: Ministry of Finance of Georgia page 55

56 Turkey Armenia Georgia Latvia Estonia Belarus Romania Albania Serbia Lithuania Hungary Russia Macedonia Bos and Herz Bulgaria Poland Croatia Croatia Romania Turkey Latvia Lithuania Serbia Poland Macedonia Russia Estonia Armenia Belarus Albania Hungary Bulgaria Georgia Bos and Herz F Investing in infrastructure and spending low on social Revenues and expenditures Current and capital expenditure 12, 1, Current Expenditures Capital Expenditures 8, 6, 4, 2, 37.2% 33.9% 3.7% 3.6% 29.3% 3.2% 29.8% % 78.1% 22.1% 21.9% % 83.6% 82.2% 17.7% 16.4% 17.8% F Total Budget Receipts, GEL mn Expenditures (Capital + Current), GEL mn Expenditures (capital + current) as % of GDP Source: Ministry of Finance Sources: Ministry of Finance Government social expenditure as % of GDP Government capital expenditure as % of GDP F 215F Source: IMF F 215F Source: IMF page 56

57 Diversified foreign trade Import of goods and services Export of goods and services 12, 1, 8, 6, 4, 2, 2,472 1, ,426 1,986 3, ,631 4, ,643 5, ,944 7,471 1,246 6,224 5, ,27 6,114 1,93 5,21 7,988 1,265 6,723 9,133 9,259 1,447 1,562 1,16 7,685 7,697 8, Goods imports, US$ mn Services imports, US$ mn 1,725 8, 7, 6, 5, 4, 3, 2, 1, 2,5 2,152 1, , ,37 1,39 3, ,17 3, ,271 1,839 2,16 3, ,329 4, ,641 1,625 1,938 5, ,19 6, ,562 2,535 2,545 7,175 7,38 1, ,984 3,43 3,1 3, Georgia originated exports, US$ mn Serveces exports, US$ mn Re-exports, US$ mn Source: NBG BOP statistics Source:, NBG BOP statistics Imports, 9M15 Exports, 9M15 Oil imports UAE 3% Ukraine 6% USA 3% Azerbaijan 7% Japan 3% Other 13% Russia 7% China 8% Sources: Geostat, Galt & Taggart Research EU 33% Turkey 17% Canada 3% Uzbekistan 4% USA 5% China 5% Russia 7% Other 17% Armenia 9% EU 29% Turkey 9% Azerbaijan 12% 1,2 1, Sources: GeoStat 9M15 imports US$54.2mln, down 27.5% y-o-y Oil imports, US$ mn Oil imports, % change, y/y page 57

58 F Diversified sources of capital inflow FDI inflows US$ mln 2,5 2, 1,5 1, 5 8.5% % ,19 2, % 19.8% 1, % 1,787 1, % % 6.1% 5.8% 5.8% E Sources: Geostat FDI inflows FDI as % of GDP US$53. mln in 9M15, up 4.8% 25% 2 15% 1 5% Number of tourists 6, 5, 4, 3, 2, 1, 5.mln visitors in 1M15, up 6.8% 2,32 1,5 1,29 1, , ,428 1,155 5,392 5,493 1,426 1, E Foreign visitors (thousands persons) Net tourist revenue (mln USD) Sources: Georgian National Tourism Agency, National Bank of Georgia Net remittances Public donor funding 1,4 1,2 1, US$ bln % 4.9% % % 7.2% 7.1% US$82.9 mln in 9M15, down 26.8% % 8.1% 949 1, % 1, % 1, % 1, % 8% 7% 6% 5% 4% 3% 2% 1% US$ mln Net remittances Net remittances as % of GDP Source: National Bank of Georgia Investment projects, credits, US$ mn Investment projects, grants, US$ mn page 58

59 Azerbaijan Georgia Turkey Armenia Russia Kazakhstan Moldova Ukraine Belarus Current account deficit supported by FDI Current account deficit and FDI FDI and capital goods import 2 15% 1 5% -5% -1-15% -2-25% 2 18% 16% 14% 12% 1 8% 6% 4% 2% 8.4% 3.7% 15.1% 9.6% 7.1% 3.9% 5.3% 6.5% 17.2% 6.7% 12.2% 6.2% 1.6% % 7.8% 6.7% 6.1% 6.9% 5.8% 6.9% 5.9% % CA deficit to GDP net FDI to GDP Sources: Geostat, NBG FDI to GDP, % Capital goods imports to GDP, % Sources: Geostat, NBG Currency devaluation by countries* Monetary policy rates % Armenia USD/AMD 25.2% Azerbaijan USD/AZN LHS: Devaluation RHS: Inflation 27.3% Georgia USD/GEL 29.3% Turkey USD/TRY 34.8% Moldova USD/MDL 45.9% Belarus USD/BYR 49.2% 49.8% Russia USD/RUB Kazakhstan USD/KZT 63.8% Ukraine USD/UAH 5 45% 4 35% 3 25% 2 15% 1 5% 3 25% 2 15% 1 5% End-214 Latest-215 *from 1 January 214 to 9 Source: Bloomberg, Source: Central banks 24.9% page 59

60 Jan-3 May-3 Sep-3 Jan-4 May-4 Sep-4 Jan-5 May-5 Sep-5 Jan-6 May-6 Sep-6 Jan-7 May-7 Sep-7 Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-3 May-3 Sep-3 Jan-4 May-4 Sep-4 Jan-5 May-5 Sep-5 Jan-6 May-6 Sep-6 Jan-7 May-7 Sep-7 Jan-8 May-8 Sep-8 Jan-9 May-9 Sep-9 Jan-1 May-1 Sep-1 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-3 Sep-3 May-4 Feb-5 Oct-5 Jul-6 Mar-7 Dec-7 Aug-8 May-9 Jan-1 Sep-1 Jun-11 Feb-12 Nov-12 Jul-13 Apr-14 Dec-14 Sep-15 Floating exchange rate policy and stronger market fundamentals FX reserves REER US$ 2.4 bln reserves as of October 215 US$bn NBG was a net seller of US$247 mln in 1M FX reserves M2 multiplier Sources: NBG Sources: NBG M2 and annual inflation M2 and USD/GEL % 14% 12% 1 8% 6% 4% 2% -2% -4% -6% Lari deppriciation Lari appreciation 35% 25% 15% 5% -5% -15% -25% -35% Source: NBG M2, % change, y/y (LHS) Annual inflation, eop (RHS) M2 % change, y/y (LHS) USD/GEL % change, y/y (RHS) Source: NBG page 6

61 Turkey Georgia Austria Belgium Belarus Denmark Slovakia Latvia Czech Rep. Armenia Russia Kosovo Malta Lithuania Macedonia Moldova Slovenia Ukraine Bos. & Herz. Croatia Hungary Kazakhstan Romania Growing and well capitalised banking sector Summary Prudent regulation ensuring financial stability Sector total capital ratio (NBG standards) 17% in 213 High level of liquidity requirements from NBG at 3 of liabilities, resulting in banking sector liquid assets to client deposits of 53% as of 31 Dec 214 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 Very low leverage with retail loans 18. of GDP and total loans at 39.1% of GDP as at 31 December 213 resulting in low number of defaults during the global crisis Source: National Bank of Georgia, Geostat Banking sector assets, loans and deposits NPLs, 214 GEL bln % CAGR % % 1 5% Assets Loans Deposits Source: WB, IMF Source: National Bank of Georgia page 61

62 Underpenetrated retail banking sector provides room for further growth Corporate loans to GDP Retail loans to GDP 4 35% 3 25% 2 15% 1 5% 9% 8% 6% 7% 6% 1 6% 13% 15% 14% 15% 6% 6% 8% % 17% 17% 17% 18% 18% 2 22% 4 35% 3 25% 2 15% 1 5% 3% 3% 4% 6% 9% 13% 11% 11% 13% 14% 18% 21% External corporate indebtdness to GDP Corporate loans to GDP Retail loans to GDP Banking Sector loans and deposits YE 213 Georgia* Moldova Romania Lithuania Russia Turkey Ukraine Bulgaria Serbia Latvia Estonia 39.1% Gross loans/gdp 36.1% 43.5% Deposits/GDP 53.5% 44.3% 57.8% 48.8% 4.1% 53.4% 39.1% 55.6% 53.8% 63.8% 46.9% 68.1% 67.3% 74.9% 56.3% 78.2% 45.9% 78.8% 74.5% Source: NBG, Central Banks page 62

63 Turkey Georgia Belarus Macedonia Romania Lithuania Armenia Czech Rep. Denmark Bos. & Herz. Switzerland Slovakia Finland Montenegro Croatia Ukraine Netherlands Germany Slovenia Hungary Austria Canada UK Belgium Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 USA Italy Czech Republic Romania Russia Poland Ukraine Turkey Bulgaria Kazakhstan Georgia Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 One of the highest level of capital and low debt level compared to other frontier markets Bank Capital to Assets, YE 214 Dollarisation 2 18% 16% 14% 12% 1 8% 6% 4% 2% 7% 8% 9% 9% 11% 11% 12% 12% 18% 8 75% 7 65% 6 55% 8 75% 7 65% 6 55% Sources: IMF Deposit dollarization Loan dollarization Sources: National bank of Georgia Government debt / GDP, YE 214 NBG FX interventions % US$ sale US$ purchase Sources: IMF, Ministry of Finance NBG monthly net interventions US$ mn page 63

64 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Results Discussion Segments Georgian Macro Overview Developments in 215 Appendices page 64

65 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-11 Apr-11 Jul-11 Nov-11 Feb-12 May-12 Sep-12 Dec-12 Mar-13 Jul-13 Oct-13 Jan-14 May-14 Aug-14 Nov-14 Mar-15 Jun-15 Oct-15 Armenia Azerbaijan Georgia Turkey Kazakhstan Belarus Moldova Russia Ukraine Armenia Russia Euro Georiga Moldova Turkey Azerbaijan Ukraine Belarus Kazakhstan Georgia Turkey Ukraine Russia Belarus Moldova Armenia Azerbaijan Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Global, regional and local factors fully affected lari in 9M15 Stronger dollar, regional economic problems and domestic expectations fed into GEL moves... and Georgia used less reserves to support GEL compared to peers GEL remained competitive. 45% 4 35% 3 25% 2 15% 1 5% Weakening against US$ 21% 22% 11% 11% 1% 23% 25% 31% 33% 41% % Reserve loss, % % 27.3% 2.8% 21.3% % REER, Jan 213=1 NEER, Jan 213=1 Lari real depreciation Source: Bloomberg Note: 9 November Source: IMF Note: Sep-214 to Sep-215; Armenia s reserves exclude a US$ 5mn Eurobond issued in March 215 Source: NBG Inflation remained low in Georgia, compared to trading partners helped by lower world commodity prices and elevated commodity prices in peers 16% 14% 12% 1 8% 6% 4% 2% -2% -4% Annual inflation % World commodity prices 3 25% 2 15% 1 5% End-214 Annual inflation Latest % Source: GeoStat, NBG Core (non-food, non-energy) Headline Inflation Total Non-energy Energy Source: IMF Note: Commodity price indices, 25=1 Source: National statistics offices Note: Latest Oct 215, as of September for Azerbaijan, Moldova, & Belarus page 65

66 Azerbaijan Georgia Turkey Armenia Russia Kazakhstan Moldova Ukraine Belarus Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Foreign reserves at adequate level Reserves sufficient to finance more than 3 months of merchandise and services imports FX Reserves NBG intervened moderately at the beginning of US$ sale US$ purchase Gross International Reserves, US$ bn Net Foreign Assets, US$ bn NBG monthly net interventions US$ Source: NBG Source: NBG Policy rate lower in Georgia vs peers 3 25% 2 Monetary policy rates End-214 Latest % 1 5% Source: Central banks Note: Latest data as of 9 page 66

67 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Aug-15 Sep-15 Oct-15 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 BOP pressure on lari eased in 2Q15 BOP: 1Q15 vs 1Q14, trade deficit widened, reserves down BOP: 2Q15 vs 2Q14, trade deficit narrowed, reserves up As % of 1Q15 GDP Trade deficit (goods) Tourism, net Current transfers, net CA deficit FDI, net Other investments, net Reserves US$ mn +14.4% +29.1% decrease % -3.8% -1,5-1, Q15 1Q % 7.3% 1.4% 13.8% 3.6% Trade deficit (goods) Trade deficit (goods) Tourism, Tourism, net net Current Current transfers, transfers, net net CA deficit CA deficit FDI, net FDI, net Other Other investments, investments, net net Reserves Reserves -16.2% -16.2% +5.6% +5.6% +15.4% % increase increase -1,5-1,5-1, -1, Q15 2Q15 2Q14 2Q14 As % of 2Q15 GDP 29.1% 11.1% 12.4% 1.4% 9.2% Source: NBG Source: NBG US$/GEL exchange rate Deposit dollarization increased further in August-Septmber Q15 BOP pressure Aug-Sep deposit dollarization 8 75% % Dec-Jan deposit dollarization 2Q15 BOP pressure eased 65% 6 65% % 55% 1.5 Deposit dollarization Loan dollarization Source: NBG Source: NBG page 67

68 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep F Strong FDI pattern drives trade deficit; Services and remittances compensating c.7 Current account balance, as % of GDP Tourism revenues on the rise Trade Deficit Remittances Trade Deficit mainly driven by FDI 7 of Trade Deficit is financed by services exports (mainly tourism, with strong growth potential) and remittances (diversified by countries) Goods, net Services, net Income, net Transfers, net CA deficit net FDI Source: GeoStat, NBG, G&T Research Trade deficit down on the back of lower consumer goods imports Tourism remains resilient Remittances down from Russia and Greece % 2 Trade deficit, % change, y/y 19% % 6% 8% 9% 14% 9% 2% 2% 9% 11% Source: GeoStat; excluding one-offs -18% -11% -28% -36% -7% Tourist arrivals International arrivals, mn % change, y/y Source: GNTA 2 15% 1 5% -5% Remittances Inflow, US$ mn % change, y/y Source: NBG -32.9% page 68

69 E 216F 18.7% 22.9% 23.1% 2.1% 23.8% 24.8% 21.9% 24.5% 25.9% 35.3% 31.3% 27.7% Prudent 215 fiscal parameters Budget tax revenues posted a strong performance so did capex and privatization, while current expenditure growth was almost flat in real terms % % % +47.7% % 5 (VAT) Pers. Corp. Excise tax income tax income tax +7.2% Property tax -3.4% +4.2% Custom duties Other taxes -5-1 Current spending, % change y/y Capital spending, % change y/y Privatization, % change y/y 1M13 1M14 1M15 9M13 9M14 9M15 Source: Treasury Service Source: MOF Government is committed to smoother spending in 215, while deficit financing was taking place mostly in 4Q of , pressuring GEL Government revised budget for 215E growth 2% from 5%, while fiscal deficit, tax and total expenditures ratios to GDP remain unchanged 4 35% 3 25% 2 15% 1 5% % 3 25% 2 15% 1 1Q 2Q 3Q 4Q Source: MOF Note: Budget expenditures as % of annual plan Source: MOF, GeoStat Tax revenues as % of GDP Expenditures (capital + current) as % of GDP page 69

70 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices Analyst Coverage Express Banking Privatbank acquisition Solo Banking Healthcare comps Financial Statements page 7

71 Analyst coverage BGEO Group PLC Consensus Target Price: GBP 23.4 GBP 19.6 GBP 2. GBP 24. GBP 25.4 GBP GBP 23. GBP GBP 26. GBP 25.6 GBP 22.4 GBP 18.7 GBP page 71

72 Express emerging retail banking How Express works 1 11 Express Branches 2 1,53,564 Express Cards for Transport payments Opening accounts and deposits Issuing loans and credit cards Credit card and loan repayments Cash deposit into accounts Money transfers Utility and other payments Acts as payments card in metro, buses and mini-buses 3 2,354 Express Pay Terminals 4 7,685 POS Terminals at 3,157 Merchants Credit card repayments Loan repayments Cash deposit into accounts Loan activation Utility and other payments Mobile top-ups MetroMoney top-ups Payments via cards and Express points P2P transactions between merchant and supplier Credit limit with interest rate page 72

73 No. of transitions s Express Banking Capturing Emerging Mass Market Customers Express Pay terminals 32,54 7,767 82,949 x3 Express branches 11,645 18,247 15,457 57% ATMs 1,871 8,85 13,314 51% POS terminals 4,939 1,78 14,74 x3 9M15 9M14 9M13 Express cards 4,734 13,256 17,92 x4 Internet banking 3,26 3,189 2,135 53% Mobile banking 1, x6-1, 2, 3, 4, 5, 6, 7, 8, 9, Tellers 11,884,396 12,566,547 13,765, page 73

74 Solo a fundamentally different approach to premium banking SOLO Lounges Through the recently launched Solo, we target to attract new clients (currently only 1,328) to significantly increase market share in premium banking from c.13% New Solo offers: Tailor made banking solutions New financial products such as bonds Concierge-style environment Access to exclusive products and events Lifestyle opportunities 3x higher new clients attracted per banker ratio, compared to same period last year page 74

75 USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi US$ GHG LONG-TERM HIGH-GROWTH PROSPECTS / Comps (1/4) Low expenditure on healthcare services Per capita expenditure on healthcare services, current US$ (1) Expenditure on healthcare services % of GDP (1) 8, 6, 4, 2, 1, 5 - Growth opportunities: US$ 217 expenditure per capita on healthcare services % 14% 12% 1 8% 6% 4% 2% Growth opportunities: 5.8% of GDP spent on healthcare services 5.8% Note: Healthcare services expenditure for other countries is pro-forma, based on assumption that pharmaceuticals is 17% of total spending Source: (1) World Bank 213 data page 75

76 USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi GHG LONG-TERM HIGH-GROWTH PROSPECTS / Comps (2/4) Government spending on healthcare is only 6.7% of state budget and 2% of GDP General government expenditure on health as % of total government expenditure (1) 25% 2 15% 1 6.7% 5% Government expenditure on health as % of GDP (1) 1 9% 8% 7% 6% 5% 4% 3% 2% 1% 2. Government finances only c.2 of total healthcare costs General government expenditure on health as % of total expenditure on health (1) % With c.2 of government tax revenues spent on capex Total government budget, breakdown by operating and capital expenditures (2) GELm 1,. 9,. 8,. 7,. 6,. 5,. 4,. 3,. 2,. 1,.. 3,947 5,719 6,92 7,23 7,462 7,9947,861 6,685 8,813 9,335 2,993 22% 26% 22% 22% 22% 25% 24% 1,446 1,977 18% 16% 19% 22% 22% 13% Capital Expenditures Current Expenditures Capital Expenditure as % of total expenditure Sources: (1) World Health Organisation and World Bank, 213 data (2) Ministry of Finance of Georgia page 76

77 USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi USA UK France Germany Japan Russia Turkey Estonia Poland Bulgaria Thailand Malaysia Georgia UAE S.Africa Saudi GHG LONG-TERM HIGH-GROWTH PROSPECTS / Comps (3/4) Capacity-wise Georgia stands alongside US, UK and Turkey Physician overcapacity yet to be addressed Beds per 1, people (1) 84% of national bed capacity is privately owned Highly fragmented with top 5 players having 4 market share and average number of beds per hospital at :1.6 Nurse to Doctor ratio 4.3 Number of physicians per 1, people (1) With significant room for improvement in terms of service mix and quality, as indicated by: under 5 mortality rate and life expectancy at birth Under 5 mortality per 1, live births (1) Total (years) (1) Source: (1) World Bank 212, 213 data page 77

78 Georgia (GHG) India Turkey Germany South Africa South East Asia UK US MENA Thailand South Africa Georgia US Malaysia UK Poland Turkey Russia GHG LONG-TERM HIGH-GROWTH PROSPECTS / Comps (4/4) Rooms for growth low price and low utilisation base currently GHG owns the capacity for revenue market share growth (Deka and Sunstone to be renovated in ) 1x price gap with developed EM benchmarks Imedi L outpatient encounters increased to 3.9 in 215 ** up from 2.2 in Low revenue per bed Average revenue per bed, US$ thousand ,22 Price gap Prices, US$ thousands Heart Liver Knee surgery transplant replacement USA 1, 3, 48, UK 4, 2, 8, Turkey 45,625 86,7 17,5 Thailand 15, 75, 8, Singapore 15, 14, 25, India 5, 45, 6, Georgia 6,5 45, 1, Low outpatient encounters Outpatient encounter per capita, annual * pro-forma 1H15 result, based on Frost & Sullivan annual 215 forecast ** annualized YTD May-215 result Sources: GHG internal reporting,; Frost & Sullivan analysis, 215, NHA, Ministry of Labor, Health and Social Affairs of Georgia; OECD, World Health Organisation and World Bank, 213 data page 78