Capturing Growth Opportunities. Investor Presentation: 1Q15 results

Transcription

1 Capturing Growth Opportunities Investor Presentation: 1Q15 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 Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 3

4 GBP US$ US$ millions BGH Shareholder structure and share price BGH shareholder structure As of 31 March 215 US/Canada 27% Scandinavia 7% Others 19% UK/Ireland 41% Unvested and unawarded shares for management and employees 3% Vested shares held by management and employees 3% BGH has been included in the FTSE 25 and FTSE All-share Index Funds since 18 June 212 Note: Bank of Georgia Holdings PLC (BGH) (LSE: BGEO) is a UKincorporated holding company of JSC Bank of Georgia Share price performance x5 growth in market capitalisation Up 118% since premium listing 1 1,, 9,, 8,, 7,, 6,, 5,, 4,, Average daily trading volume 5,3, 9,5, 1, BGEO LN GDR 3,, 2,, 1,, 95, 2,, Average daily trading volume Sep-4 7-May-15 1 Share price change calculated from the last price of BGEO LI on 27 February 212 to the price of BGEO LN on 7 2 Market capitalisation for Bank of Georgia Holdings PLC, the Bank s holding company, as of 7, GBP/USD exchange rate of page 4

5 BGH 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 Data before Privatbank integration: 1.5mln retail clients 219 branches 554 ATMs 2,245 Express Pay terminals 6,537 POS terminals 817,445 Express cards 1.2mln cards GEL 2,639.8mln net loans GEL 1,874.3mln client deposits Privatbank data: 424k mln retail clients 72 branches 376 ATMs 1,68 POS terminals.9mln cards GEL mln loans GEL mln deposits #1 Corporate Bank in Georgia 5k clients GEL 2,381.3mln loans GEL 1,341.8mln client deposits Investment Management Wealth management, research, advisory, brokerage, private equity AUM of GEL 1,213.8mln WM client deposits GEL 913.3mln P&C Insurance Leasing Payment Services IB BNB Plans to divest from BNB #1 Healthcare company in Georgia Revenue of GEL 52.9mln in 1Q15 EBITDA of 1.1mln Healthcare services 39 healthcare facilities 2,14 beds Over 2/3 of population covered Market share of 22.% by beds Health insurance 35.9% market share Insuring 257k people #1 Real Estate company in Georgia 2 completed projects and 4 under construction Total sales of 1,346 appartments US$112.9mln since 211, of which US$57.1 mln to be recognised upon completion of ptojects 99% sale in completed projects 7% pre-sales for on-going 4 projects Total BOG mortgages sold GEL 63.6mln 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 Acquisition of 25% shareholding with an option to acquire additional 24.9% 214 EBITDA of GEL51.6mln 1 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 5

6 BGH Updated our strategy from 3x2 to 4x2 Earlier Strategy Current Strategy Georgia Focused Banking Group with an Investment Arm Leading Georgian bank with investments in noncore sectors with a divestment strategy ROAE c.2% TIER I c.2% Growth c.2% Dividend Policy: Payout Ratio 25-4% One-off dividends from divestments over time Capital Allocation (GELm) 29.7% 11.7% 487 Retail Banking RoAE 554 Corporate Banking Underpenetrated Retail Banking Sector Provides Room for Further Growt % 21.% 21.8% Retail Loans / Corporate Loans / GDP GDP External corporate indebtedness ROE c.2% Tier I c.2% Growth c.2% ROAE of 19.8% in 1Q15 2 Strong internal cash generation to support loan growth without compromising capital ratios Tier I ratio of 2.8% as of 31 Mar Aiming 2% growth in retail banking business 24.6% y-o-y real growth excluding Privatbank as of 31 Mar 215 Target Current contribution 4 Investment Business Min. IRR of 2% Investment Approach Highly disciplined approach to unlock value through selective investments in Georgia, which have a well defined exit path Target investments with min. 2% IRR and partial or full exit in max 6 years Opportunistic investments Staging and small capital commitments EBITDA potential of at least GEL6m (c.us$3m) in 3-4 years Clear exit path See annex for Chairman and CEO speech for more information on our investment approach Target Current contribution Profit Contribution c.8% 1Q15: GEL 59m or 94% c.2% 1Q15: GEL 3m or 6% At the 215 AGM the Board intends to recommend an annual dividend of GEL 2.1 per share, a 5.% y-o-y increase Recurring: linked to recurring profit from banking business Aiming 25-4% dividend payout ratio Ongoing Dividends Aiming for at least 3 special dividends in next 5 years, representing at least 5% of regular dividend from banking business Note 1: Ratios calculated based on NBG Data as at 31 December214. Note 2: Pro-forma, excluding the acquisition of Privatbank and allocation of US$ 3mln capital earmarked for and held at the holding company Note 3: Tier I ratio is calculated under Basel 1 and Pro-forma implying allocation of US$ 3mln capital earmarked for and held at the holding company. page 6

7 BGH Robust corporate governance compliant with UK Corporate Governance Code Board of Directors of Bank of Georgia Holdings PLC 7 non-executive Supervisory Board members; 7 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 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 Irakli Gilauri, Group CEO experience: formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland Kaha Kiknavelidze, Independent Director experience: currently managing partner of Rioni Capital, London based investment fund; experience: 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 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 7

8 BGH Revised Management Structure (with Effect from June 215) 8 8 Murtaz Kikoria became CFO of JSC Bank of Georgia with immediate effect and CEO of JSC Bank of Georgia with effect from June 215. Nikoloz Gamkrelidze became CEO of Georgia Healthcare Group with immediate effect. Bank of Georgia Holdings PLC No changes New Holding Company Irakli Gilauri, 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; formerly Deputy CEO in charge of Corporate Banking, Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University JSC Bank of Georgia Irakli Gilauri will become Chairman of JSC Bank of Georgia 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 Avto Namicheishvili, Deputy CEO, Group Legal Counsel; previously partner at Begiashvili &Co, law firm in Georgia; LLM from CEU, Hungary 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, Chairman, 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 Archil Gachechiladze, Group CFO and Deputy CEO, Investment Management; formerly Deputy CEO in charge of Corporate Banking, Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University BoG will aim to appoint Deputy CEO, Finance by the end of June 215 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 8

9 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 9

10 BGH P&L results highlights 1Q15 P&L Income Statement Summary GEL thousands BGH Consolidated * Investment Business* 1Q15 1Q14 Change 4Q14 Change 1Q15 1Q14 Change 4Q14 Change 1Q15 1Q14 Change 4Q14 Change y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q Net banking interest income 12,989 8, % 98, % 123,58 82, % 11, % Net fee and commission income 26,854 19, % 26, % 28,9 2, % 26,755 5.% Net banking foreign currency gain 18,962 11, % 16, % 18,962 11, % 16, % Net other banking income 1, % 4, % 2, % 5, % Gross insurance profit 7,574 9,76-22.% 3, % 5,36 4, % 4, % 2,691 5,9-54.4% (36.) NMF Gross healthcare profit 16,877 9, % 16,33 3.3% ,877 9, % 16, % Gross real estate profit 1,29 6,13-8.2% % ,29 6, % % Gross other investment profit 1,399 2, % 5, % ,543 2,34-33.% 5, % Revenue 195,654 14, % 172, % 177, , % 153, % 22,32 23, % 22, % Operating expenses (76,59) (58,254) 3.6% (69,264) 9.8% (65,277) (49,515) 31.8% (59,175) 1.3% (11,654) (9,42) 24.% (11,21.) 5.7% Operating income before cost of credit risk /EBITDA 119,595 82, % 13, % 112,234 69,7 61.% 94, % 1,666 14, % 11, % Loss from associates (1,31) (1,31) Depreciation and amortization of investment business (2,688) (2,229) 2.6% (2,349) 14.4% (2,688) (2,229) 2.6% (2,349.) 14.4% Net foreign currency loss from investment business 3,69 (416) NMF (1,61) NMF ,69 (416) NMF (1,61.) NMF Net interest expense from investment business (1,845) (1,228) 5.2% (612) NMF (5,151) (3,56) 68.6% (3,868.) 33.2% Cost of credit risk (41,842) (13,316) NMF (16,551) 152.8% (4,771) (12,81) NMF (14,789) 175.7% (1,7) (515) 17.8% (1,762.) -39.3% Profit 62,339 53, % 66, % 58,81 46, % 64, % 3,529 7, % 1, % EPS % % Income Statement Summary excl Privatbank* GEL thousands 1Q15 1Q14 Change 4Q14 Change y-o-y q-o-q Net banking interest income 18,134 82, % 11,62 7.% Net fee and commission income 25,18 2, % 26, % Net banking foreign currency gain 18,62 11, % 16, % Net other banking income 1, % 5, % Gross insurance profit 5,2 4, % 4, % Revenue 158, , % 153, % Operating expenses (55,388) (49,515) 11.9% (59,175) -6.4% Operating income before cost of credit risk /EBITDA 12,727 69,7 47.4% 94, % Cost of credit risk (32,66) (12,81) 154.7% (14,789) 12.5% Profit 57,67 46, % 64, % EPS * Note: and Investment Business financials do not include interbusiness eliminations. Detailed financials, including interbusiness eliminations are provided in annexes. page 1

11 BGH Balance sheet highlights 1Q15 Balance Sheet Balance Sheet Summary GEL thousands BGH Consolidated * Investment Business* 1Q15 1Q14 Change 4Q14 Change 1Q15 1Q14 Change 4Q14 Change 1Q15 1Q14 Change 4Q14 Change y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q Liquid assets 2,427,226 1,959, % 1,898, % 2,42,38 1,938, % 1,874, % 199,29 6, % 166,56 2.% Loans to customers and finance lease receivables 5,156,386 3,48, % 4,35, % 5,248,559 3,534, % 4,44, % Total assets 9,3,53 6,619, % 7,579, % 8,447,951 6,185, % 7,44,4 19.9% 864,53 529, % 775, % Client deposits and notes 4,99,29 3,65, % 3,338, % 4,271,854 3,16, 37.5% 3,482, 22.7% Amounts due to credit institutions 1,78,636 1,26, % 1,49, % 1,694,668 1,12, % 1,324, % 181, , % 177, % Debt securities issued 1,26, , % 856, % 962, , % 827, % 66, , % Total liabilities 7,329,96 5,332, % 5,945, % 7,163,765 5,124, % 5,813, % 448,93 33, % 372,19 2.4% Total Equity 1,7,147 1,287, % 1,634,93 4.% 1,284,187 1,61,34 21.% 1,23, % 415,96 225, % 43, % Balance Sheet Summary excluding Privatbank * GEL thousands 1Q15 1Q14 Change 4Q14 Change y-o-y q-o-q Liquid assets 2,242,112 1,938, % 1,874, % Loans to customers and finance lease receivables 4,958,595 3,534, % 4,44, % Total assets 8,66,893 6,185, % 7,44,4 14.5% Client deposits and notes 3,91,943 3,16, 25.6% 3,482, 12.1% Amounts due to credit institutions 1,688,582 1,12,95 5.6% 1,324, % Debt securities issued 962, , % 827, % Total liabilities 6,783,846 5,124, % 5,813, % Total Equity 1,283,46 1,61,34 2.9% 1,23, % Note reporting format change Effective 1Q15, we have changed our reporting format to reflect our recently updated strategy. As a result, we now present our consolidated Group financial statements as a combination of our Banking Business and Investment Business, with corresponding interbusiness eliminations. comprises: Retail Banking, Corporate Banking, Investment Management, P&C insurance, and Belarusky Narodny Bank ( BNB ) Investment Business comprises: Healthcare Business (GHG) including healthcare services ( Evex ) and health insurance ( Imedi L ), Real Estate Business (m 2 Real Estate), Water & Utility Business (GGU) other legacy investments (including wine subsidiary Teliani Valley) discussion is presented separately, following the Group s financial summary Retail Banking, Corporate Banking, Investment Management, GHG and m 2 Real Estate are reported separately in the segment results discussion Bank of Georgia Holdings consolidated financials are presented in the form of and Investment Business segments as well as consolidated, for each period, on the face of the income statement and balance sheet. This reflects the Group s recently updated strategy, ongoing legal reorganisation as well as management s future vision regarding key performance indicators. Interbusiness eliminations represent transactions and/or balances that exist as of and for each reporting period between the and Investment Business. They are eliminated for final consolidation purposes. Privatbank results were fully consolidated in 1Q15 GGU, where we own 25% stake, was consolidated on an equity basis reflected in profit and loss from associates in the income statement and other assets in the balance sheet * Note: and Investment Business financials do not include interbusiness eliminations. Detailed financials, including interbusiness eliminations are provided in annexes. **Pro-forma for 1Q15, implying allocation of US$ 3mln capital earmarked for and held at the holding company. Ratios reported to NBG are reported in the appendix page 11

12 BGH key ratios Key Ratios 1Q15 Including Privatbank Excluding Privatbank Ratios 1Q15 1Q15 1Q14 4Q14 Profitability ROAA 3.% 3.1% 3.% 3.9% ROAE 19.2% 18.8% 17.8% 22.8% Net Interest Margin 7.8% 7.3% 7.5% 7.7% Loan Yield 14.5% 13.7% 14.7% 14.1% Cost of Funds 5.% 4.8% 5.% 4.7% Cost of Customer Funds 4.4% 4.1% 4.5% 4.1% Cost of Amounts Due to Credit Institutions 5.2% 5.1% 5.% 4.8% Cost / Income 36.8% 35.% 41.5% 38.4% NPLs To Gross Loans To Clients 3.5% 3.6% 3.8% 3.4% NPL Coverage Ratio 74.2% 71.7% 92.% 68.% NPL Coverage Ratio, Adjusted for discounted value of collateral 118.% 116.5% 121.4% 111.1% Cost of Risk 3.1% 2.6% 1.% 1.2% Tier I capital adequacy ratio (BIS)* 2.8% 21.5% 23.7% 22.1% Total capital adequacy ratio (BIS)* 24.8% 25.6% 27.7% 26.1% Tier I capital adequacy ratio (New NBG, Basel II)* 1.6% 1.% % Total capital adequacy ratio (New NBG, Basel II)* 13.7% 13.2% % *Pro-forma for 1Q15, implying allocation of US$ 3mln capital earmarked for and held at the holding company. Ratios reported to NBG are reported in the appendix page 12

13 GEL millions GEL millions BGH Strong revenue growth, with positive operating leverage Revenue BGH % growth ex-privatbank (2.5) +2.3% Investment Business growth without m % % (4.2) Revenue 1Q14 Investment Business Revenue 1Q15 Change 1Q15-1Q14 Operating Expenses +39.3% +3.6% Privatbank Investment business Banking business Eliminations BGH (.7) Operating expenses 1Q % % (.9) Investment Business Operating expenses 1Q15 Change 1Q15-1Q14 Privatbank Investment business Banking business Eliminations NIM 1.% 9.5% 9.% 8.5% 8.% 7.5% 7.% 6.5% 6.% 7.9% 7.8% 7.6% Q15 Net Interest Margin, including Privatbank Net Interest Margin 7.8% 7.3% Highlights Revenue, up 39.3% to GEL 195.7mln, driven by the net banking interest income and gross healthcare profit, up 49.5% to GEL 121.mln and up 81.3% y-o-y to GEL 16.9mln, respectively 8.7 ppts operating leverage. Improved operating leverage is a result of targeted optimisation of costs carried out in anticipation of lower than expected economic growth in 215 y-o-y increase in costs was primarily driven by Privatbank acquisition and Healthcare Business, which continues to extract synergies from hospital acquisitions in 214 page 13

14 GEL millions GEL millions BGH Strong profitability Profit BGH % -.9% n/a 52.5% x % 8.% NMF NMF Equity increased to GEL 1,7.1mln, up 32.1% Investment business driven by GEL 19.5 mln retained earnings and GEL 215.7mln capital raise completed in December 214 (of which GEL 154.8mln is held at holding company level) RB Privatbank CB IM Other BB GHG m2 Other IB 1Q15 Change 1Q15-1Q Banking business Highlights GEL 1,7.1mln capital was allocated as 75.5% and 24.5% to and Investment Business, respectively Open foreign currency position was GEL 136.6mln or 1.5% of total assets, predominantly long on US$ and GBP Equity BGH 2, 1,8 1,6 1,4 1,2 1, % 4.4% 11.8% NMF 23.4% 14.9% NMF.4% n/a RB* Privatbank CB IM Other BB GHG M2 Other IB Unallocated capital ROAE 1.7k Unallocated capital 88 Investment business 329 Banking business 1,284 1Q15 *Proforma: US$3 million capital allocated to Retail Banking (from other ) page 14

15 GEL millions GEL millions Assets BGH 1Q15 Balance Sheet BGH Assets Assets GHG Assets M2 Real Estate Assets 1,. 8,. 6,. 4,. 2,. - (2,.) Liabilities 6, , , ,448. (94.9) (282.) 1Q14 1Q15 Eliminations Investment Business assets assets 9.6% 93.6% 9,. 8,. 7,. 6,. 5,. 4,. 3,. 2,. 1,. - 6, , , Q14 Liquid assets Net loans Other assets 8, , ,42.3 1Q15 9.5% 62.1% 28.4% Loan book growth: +19.6% growth of loans on constant currency basis, ex- Privatbank 4.3% gowth ex- Privatbank (Privatbank loans GEL 29mln) Q15 PPE Other assets 37.8% 62.2% Q15 Other assets Investment properties Inventories 38.1% 26.6% 35.3% BGH Liabilities Liabilities GHG Liabilities M2 Real Estate Liabilities 8,. 6,. 4,. 2,. - (2,.) 5, , , ,163.8 (94.9) (282.) 1Q14 1Q15 Eliminations Investment Business liabilities liabilities 6.1% 97.7% 8,. 7,. 6,. 5,. 4,. 3,. 2,. 1,. - 5, ,12.9 3,16. 7, , , % 1Q14 1Q15 Other liabilities Debt securities issued Amounts due from credit institutions Client Deposits 13.4% 23.7% 59.6% Deposits growth: -.6% growth of deposits on constant currency basis, ex- Privatbank 25.6% growth ex- Privatbank (Privatbank deposits GEL 37mln) Q15 Other liabilities Borrowed funds 36.6% 63.4% Q15 5.2% 54.1% 4.7% Other liabilities Accruals and deferred income Debt securities issued page 15

16 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings 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 (36.9%), loans (34.7%), client deposits (32.5%) and equity (36.3%) 1 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 Strong brand name recognition and retail banking franchise: Offers the broadest range of financial products to the retail market through a network of 219 BOG and 72 Privatbank branches, BOG 554 ATMs and 376 Privatbank ATMs, 2,245 Express Pay Terminals to c.1.5 million BOG and c.4, Privatbank customers as of 31 March 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% Sustainable growth combined with strong capital, liquidity and robust profitability Balance Sheet +8.4% +19.2% +14.9% +13.1% 9, 8, 7, 6, 5, 4, 3, 2, 1, 2,42 1,875 1,94 1,596 Liquid assets Income Statement Revenue +1.2% ,249 4,441 3,567 3,127 6,158 5,333 7,44 8,448 4,272 3,482 3,141 2, % 1,284 1,231 1,56 89 Net loans to customers Total assets Client deposits Total Equity 31-Dec Dec Dec Mar-15 CAGR Profit +14.6% Revenue +48.9% % 65 Profit Q1 214 Q4 214 Q Change y-o-y 1 Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 31 March (215 BOG figures include Privatbank) 2 Amounts due to customers 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% 36.9% 33.8% 32.6% +2.6% from Privatbank in 1Q % 25.8% 24.5% 23.7% 7.3% 6.1% 7.8% 7.7% 4.8% 6.% 5.5% 6.3% 5.1% 5.8% 6.7% 5.7% 3.8% 4.9% 5.% 5.% #1 BOG 19.3% 17.9% 14.7% 15.3% 4% 35% 3% 25% 2% 15% 1% 5% 35.4% 34.7% 32.5% 32.2% 28.% 26.2% 25.2% 25.3% +2.3% from Privatbank in 1Q15 8.3% 6.7% 6.7% 6.6% 7.% 6.2% 4.8% 5.8% 5.7% 6.8% 4.6% 5.8% 4.8% 4.9% 5.2% 4.2% #1 BOG 19.1% 17.7% 14.7% 14.7% % BOG TBC PCB BR LB VTB Others % BOG TBC PCB BR LB VTB Others Q Q1 215 Foreign banks market share by assets Peer group s market share in client deposits 26 1Q15 35.% 3.% 33.1% 32.5% 3.4% 28.6% 31.5% 28.8% 29.4% 27.8% #1 BOG No state ownership of commercial banks since 1994 Local banks, 68.% Foreign banks, 32.% Local banks, 74.9% Foreign banks, 25.1% 25.% 2.% 15.% 1.% 5.%.% +2.9% from Privatbank in 1Q % 12.% 11.8% 12.6% 12.2% 1.3% 9.% 1.% 6.9% 5.6% 6.1% 5.1% 5.3% 5.8% 5.3% 5.4% 5.% 5.7% 3.8% 4.9% BOG TBC PCB BR LB VTB Others Q1 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 - BOG includes Privatbank (in 1Q15), TBC includes Constanta page 18

19 Diversified asset structure Total asset structure 31 March 215 Liquid assets 31 March 215 Total: GEL 8.4 bn Total: GEL 2.4 bn Other assets 9.5% Loans to customers 62.1% Liquid assets 28.4% Includes: Privatbank total assets of GEL 516.7mln, of which 56% loans Includes: Privatbank liquid assets of GEL 16.2mln (6.7% of total liquid assets) Investment securities 36.7% Amounts due from credit institutions* 21.8% Cash and cash equivalents 41.5% * Amounts due from credit institutions consists of obligatory reserves with central banks (NBG & NBRB), time deposits with credit institutions with original maturities of over 9 days and interbank loans receivable Loans breakdowns 31 March 215 Total Loans breakdown by segments Total: GEL 5.3bn Investment BNB loans Management loans 5.7%.4% Corporate Banking loans 43.7% Retail Banking loans 5.3% Includes Privatbank GEL 29. mln loans, predominantly consumer loans and credit card loans Legacy retail loans 2.2% Privatbank loanbook 11.% Retail Banking Loans breakdown by product Total: GEL 2.6bn Consumer loans and credit card balances 29.4% Residential mortgage loans 27.4% Micro and SME loans 3.% Mining and quarrying 4.4% Corporate Banking Loans breakdown by sectors Total: GEL 2.4bn Health and social work 4.1% Financial intermediation 2.4% Construction 3.9% Electricity, gas and water supply 4.8% Transport & Communication 5.5% Hospitality 6.5% Other 7.1% Real estate 18.8% Manufacturing 25.4% Trade 17.1% *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 denominated in USD loans with non-usd income We offered re-profiling in Feb-215. Since, 61 loans (out of 14,) were re-profiled, with total value of US$21.7mln For RB, loans 15 days past due were 1.% at 31 March 215, compared to 1.5% a year ago and.8% at 31 December % of Corporate Banking Loans denominated in USD loans with non-usd income Retail Banking and Wealth Management 1Q15 Total GEL mln 2, % 1% 13.5% 8% 1.9% 1, % Other 6% 28 GEL 4% 2.1% USD 2% 1, % 11.8% % Loan portfolio Provision amount LLR rate Corporate Banking 1Q15 Total % 2, % GEL mln 1% % % 8% 29 6% 4% 1, % 59 2% 2.1% 9.% 3.% Loan portfolio Provision amount LLR rate Other GEL USD Amounts in GEL million RB Loan Portfolio % of total RB Loan portfolio 2 Mortgages Consumer loans (incl Credit Cards) 3 GEL and other currency loans 1 1, % USD loans with USD income % USD loans with non-usd income 1, % Total 2,697 1.% ,42 1 includes credit cards 2 includes Privatbank loans of which 87 is denominated in GEL 3 cash covered loans of GEL 28.6 million SME & Micro Amounts in GEL million CB Loan Portfolio % of total CB Loan portfolio GEL and other currency loans % USD loans with USD income 1, % USD loans with non-usd income % Total 2,384 1.% Note: standalone BOG figures from management accounts (non-ifrs) page 2

21 GEL thousand GEL thousand GEL thousand Resilient loan portfolio quality (1/2) NPLs 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 126, % 144, % 153, % 3, , % Q15 NPLs Privatbank NPLs NPLs to gross loans, including Privatbank NPLs to gross loans 3.5% 4.% 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 3.3% NPL composition 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 4,17 7,414 1, ,43 11, ,48 3,945 18,91 137,339 21,84 16,1 18,943 27, Q15 NPLs, Privatbank NPL, Other NPL, CB NPLs, RB + IM Loan loss reserve NPL coverage ratio 16, 14, 12, 1, 8, 6, 4, 2, 3.4% 3.3% 2.3% 7, % 11, ,428 14,59 131, Q15 Loan loss reserves, Privatbank Loan loss reserves LLR as % of gross loans 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5% 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 112.7% 11.6% 87.5% 83.8% 118.% 111.1% 116.5% 68.% 74.2% 71.7% Q15 NPL Coverage ratio, discounted for value of collateral NPL Coverage ratio Including Privatbank *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 Resilient loan portfolio quality (2/2) Cost of Credit Risk Small demand for re-profiling activity On the back of 4.3% increase in loan book ex- Privatbank % y-o-y We offered re-profiling in Feb-215. 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. Since Feb-215, 61 loans were re-profiled worth US$ 21.7mln, including 52 mortgages worth US$19.6mln and 18 consumer loans worth US$2.1mln Q14 4Q14 1Q15 Devaluation Privatbank 1Q15 Like-for-like 1Q15 one-offs Cost of Risk Stable default rates on retail banking loans 4.% 3.% 2.% 1.% 1.3% 1.3% 1.2% 1.% 1.2% +6 bps y-o-y 1.6%.9%.6% 3.1% 1.6% 1.4% 1.2% 1.%.8%.6%.4% 1.5%.8% 1.%.2%.% Q14 4Q14 1Q15 Devaluation Privatbank 1Q15.% 31-Mar Dec Mar-15 Like-for-like 1Q15 one-offs 1-15 days past due page 22

23 GEL millions Bank Standalone, GEL mln Strong liquidity (1/2) Liquid assets to total liabilities NBG liquidity ratio (inlcudes Privatbank) 8, 7, 6, 5, 4, 3, 2, 1, 1, % 4, % 5,12 1,94 1,875 5, % 2,42 7, % Mar-15 Liquid assets Total liabilities Liquid assets to total liabiltiies 38% 37% 36% 35% 34% 33% 32% 31% 3% 29% (includes Privatbank) 4,5 45.7% 4,63 4, 41.1% 3,415 3,558 3,5 3, % 35.3% 3, 2,5 2, 1,562 1,32 1, ,465 1, Q15 Liabilities (NBG) Liquid assets (NBG) Excess liquidity Liquid assets/liabilities NBG min requirement 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % Net loans to customer funds Net loans to customer funds & DFIs 13% 125% 127.5% 127.1% 122.9% 115% 11% 15% 18.6% 17.3% 15.2% 12% 115% 11% 114.8% 113.6% 1% 95% 9% 85% 92.5% 96.8% 15% Mar-15 Net Loans to Customer Funds Net Loans to Customer Funds, with PBG 8% Mar-15 Net Loans To Customer Funds + DFIs Net Loans to Customer Funds + DFIs, with PBG Pro-forma, implying allocation of US$ 3mln capital earmarked for and held at the holding company. Ratios reported to NBG are reported in the appendix 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 25% 218.% 2% 16.8% 163.8% 177.7% 15% 15.9% 115.8% 14.5% 15.% 1% 5% % Q15 Liquidity coverage ratio Net stable funding ratio Foreign currency VaR analysis* JSC Bank of Georgia standalone 2,5 2, , ,24.7 2, 1,5 1,36.8 1, Monthly VaR GEL (Average) VaR Limit Cumulative maturity gap, 31 March 215** Open currency position JSC Bank of Georgia standalone 1,2, 1,, 8, 6, 4, 2, -2, -4, 1,72, % 89, % 723,28 8.6% (19,334) -2.9% (248,457) 76, % On Demand -3 Months 3-6 Months 6-12 Months 1-3 Years >3 Years Maturity gap Maturity gap, as % of assets 14% 12% 1% 8% 9.% 6% 4% 2% % -2% -4% -6% 7, 6, 5, 4, 3, 2, 1, -1, -2, 56,814 12, Q15 (11,394) (12,578) FC net position, on and off balance, total As % of NBG total regulatory capital (old) 7% 6% 5% 4% 3% 2% 1% % -1% -2% -3% *Daily VaR time series averaged for each respective month **GEL 1,248.3 mln of current accounts and demand deposits are placed in 6-12 months bucket page 24

25 USD millions Funding structure is well established Interest Bearing Liability structure 31 March 215 Well diversified international borrowings 1Q15 Interest Bearing Liabilities GEL 6.9 bn Of which, GEL 42.3mln or 5.9% Privatbank Short-term loans from central banks 7.5% Loans and deposits from commercial banks 6.6% Borrowings from DFIs 1.4% Debt securities issued 13.9% Client deposits 61.7% Current account & demand deposits, 44.6% Time deposits, 55.4% Other debt securities issued, 49,224, 1.9% Other amounts owed to credit institutions, 976,128, 36.7% DFIs, 718,54, 27.% Eurobonds, 913,364, 34.4% Borrowed funds maturity breakdown* % % 1.5% 1.6% % % 32.3.%.%.% Promissory Notes Subordinated Loans, IFIs Senior Loans, IFIs Excl. US$4 mln Eurobonds maturing in 217 Subordinated Loans, Non-IFIs Senior Loans, Non-IFIs % of assets 5.% 4.% 3.% 2.% 1.%.% -1.% Interest bearing liabilities has a well-balanced funding structure with 61.7% of interest bearing liabilities coming from client deposits and notes, 1.4% from Developmental Financial Institutions (DFIs) and 13.2% from Eurobonds, as of 31 March 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 31 March 215, US$31. million undrawn facilities from a DFI with four to eight year maturity * Consolidated, converted at GEL/US$ exchange rate of of 31 March 215 ** Total Assets as of 31 March 215 page 25

26 GEL millions GEL millions GEL millions GEL millions Strong revenue growth Revenue growth full-year Net non-interest income Net interest income +8.9% +1.2% % Revenue growth quarterly Q14 4Q14 1Q15 Privatbank Net non-interest income Net interest income +48.9% +15.3% Ex-Privatbank +32.6% y-o-y Net non-interest income full-year % +5.2% -17.2% +8.9% +15.2% Net other banking income Gross insurance profit Net banking foreign currency gain Net fee and commission income Net non-interest income quarterly % +2.9% Q14 4Q14 1Q15 Privatbank Net other banking income Gross insurance profit Net banking foreign currency gain Net fee and commission income Ex-Privatbank +35.9% y-o-y page 26

27 GEL millions GEL millions keeping a tight grip on costs Operating expenses full-year Other operating expenses Banking depreciation and amortisation Administrative expenses Salaries and other employee benefits Net non-recurring items & operating income before cost of credit full-year (6.9) (55.7) Operating income before cost of credit risk Cost of credit risk Operating expenses quarterly +11.4% +31.8% GEL millions GEL millions (12.8) (14.8) Q14 4Q14 1Q15 Cost of credit risk Privatbank Operating income before cost of credit risk Q14 4Q14 1Q15 Privatbank Other operating expenses Banking depreciation and amortisation Administrative expenses Salaries and other employee benefits +1.3% Net non-recurring items & operating income before cost of credit quarterly Excl Privatbank +11.9% y-o-y -6.4% q-o-q (32.6) (8.2) page 27

28 GEL millions GEL millions Focus on efficiency Cost / Income ratio full-year Cost / Income ratio quarterly 45% 44% 44% 42% 41.5% 43% 42% 41% 4% 39% 38% 41.7% 39.9% 4.5% 4% 38% 36% 34% 32% 38.4% 36.8% 35.% 37% Cost to Income ratio 3% 1Q14 4Q14 1Q15 Cost to Income ratio Cost to Income ratio, including Privatbank Revenue and operating expenses full-year Revenue and operating expenses quarterly Incl. Privatbank Revenue Operating expenses Operating Leverage Privatbank Operating expenses Revenue + 9.1% q-o-q + 2.7% y-o-y Q14 4Q14 1Q % q-o-q % y-o-y 9.9 page 28

29 growing income notwithstanding the pressure on yields Loan Yields annual Loan Yields quarterly 12% 1% 8% 6% 4% 2% % 17.2% 16.% 14.3% 74.% 69.1% 72.8% 26.% 3.9% 27.2% FC GEL Currency-blended loan yield 2% 18% 16% 14% 12% 1% 8% 6% 4% 2% % 12% 1% 8% 6% 4% 2% % 67.4% 14.7% 14.1% 14.5% 72.8% 71.% 32.6% 27.2% 29.% 1Q14 4Q14 1Q15 FC GEL Currency-blended loan yield, with Privatbank Currency-blended loan yield 13.7% 18% 16% 14% 12% 1% 8% 6% 4% 2% % Loan Yields, GEL quarterly Loan Yields, foreign currency quarterly 23% 15.% 22% 14.% 21% 21.4% 13.% 12.% 12.2% 11.7% 11.6% 2% 19.9% 2.1% 11.% 1.% 19% 9.% 8.% 18% Q1 214 Q4 214 Q % Q1 214 Q4 214 Q1 215 Loan Yield, GEL Loan Yield, FC Loan yields excluding provisions page 29

30 Significantly improved Cost of Funding Cost of Funds annual 1% 9% 8% 7.1% 7% 5.8% 6% 4.8% 5% 4% 3% 2% 1% % Cost of Funds Cost of Customer Funds annual Cost of Funds quarterly 6.% 5.5% 5.% 4.5% 4.% 3.5% 3.% 5.% 4.7% Q1 214 Q4 214 Q1 215 Cost of Funds, with Privatbank Cost of Funds Cost of Customer Funds quarterly 5.% 4.8% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 7.1% 5.5% 69.9% 4.2% 68.2% 71.2% 3.1% 31.8% 28.8% FC GEL Currency-blended deposit cost 8% 7% 6% 5% 4% 3% 2% 1% % 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 4.5% 71.4% 71.2% 72.2% 4.1% 4.4% 4.1% 28.6% 28.8% 27.8% 1Q14 4Q14 1Q15 FC GEL Currency-blended deposit cost, with Privatbank Currency-blended deposits cost 5% 5% 4% 4% 4% 4% 4% 4% 4% 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% 1% 5% % 21.2% 26.1% 23.% 27.1% 22.1% 26.1% 2.8% 24.8% Mar-15 Tier I Capital Adequacy ratio Total Capital Adequacy ratio 18% 16% 14% 12% 1% 8% 6% 4% 2% 16.4% 16.2% 13.1% 12.9% 11.1% 14.1% 13.7% 1.6% % * 31-Dec Mar-14 3-Dec Mar-15* NBG Tier I CAR (Basel 2/3) Total CAR (Basel 2/3) NBG Tier I CAR min requirement NBG Total CAR min requirement 1.5% 8.5% 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, 8,359 7,24 7,158 6,25 5,734 5,92 5,81 5,23 31-Dec Mar-14 3-Dec Mar-15 Basel I NBG Basel 2/3 GEL 31 Mar 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 1.6% 11.1% 11.2% 1.8% 12.9% 13.1% Total Capital ratio 13.7% 14.1% 14.2% 14.% 16.2% 16.4% *Pro-forma, implying allocation of US$ 3mln capital earmarked for and held at the holding company. Ratios reported to NBG are reported in the appendix page 31

32 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings 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 31-Mar-15 % of clients Number of total Retail clients, of which: 1,49,247 1,451,777 1,245,48 1,54,248 Number of Solo clients ( Premieum Banking ) 8,282.6% 7,971 6,81 5,413 Consumer loans & other outstanding, volume Consumer loans & other outstanding, number 544, % 526, ,557 46,213 c. 4k additional Mortgage loans outstanding, volume Privatbank clients Mortgage loans outstanding, number 12,147.8% 11,92 1,212 9,85 Micro & SME loans outstanding, volume Micro & SME loans outstanding, number 17,15 1.2% 16,246 13,317 11,136 Credit cards and overdrafts outstanding, volume Credit cards and overdrafts outstanding, number 214, % 199, ,57 142,72 Credit cards outstanding, number, of which: 115, % 116, ,913 17,261 American Express cards 11,74 7.4% 11,362 18,68 99,292 Loans by products Total: GEL 2.6 bn Includes Privatbank GEL 29. mln loans, predominantly consumer loans and credit card loans Portfolio breakdowns RB standalone Legacy retail loans 2.2% Privatbank loanbook 11.% Consumer loans and credit card balances 29.4% Micro and SME loans 3.% Residential mortgage loans 27.4% Deposits by category Total: GEL 1.9 bn Time deposits 49.1% RB loans RB standalone 3, 2,5 2, 1,5 1, 5 1,348 1,348 1,613 1,613 Loans growth: 24.6% growth on constant currency basis, ex-privatbank 41.5% growth ex- Privatbank 2,67 2,67 2, , Q15 3, 2,5 2, 1,5 1, 5 RB deposits RB standalone 817 1,87 1,35 1, , Q15 Deposits growth: 16.% growth on constant currency basis, ex-privatbank 39.1% growth ex- Privatbank Deposits by currency Total: GEL 1.9 bn Privatbank 14.% Privatbank 11.7% Privatbank 5.8% Client deposits, GEL 21.3% Current accounts and demand deposits 31.1% Client deposits, FC 58.9% Privatbank Retail Banking loan book Privatbank Retail Banking deposits Privatbank 8.1% page 33

34 Retail Banking (RB) Strong loan book growth PL Retail Banking RB Consolidated GEL thousands, unless otherwise noted 1Q15 1Q14 Change y-o-y 4Q14 Change q-o-q RB exluding Privatbank Change Change 1Q15 y-o-y q-o-q Net banking interest income 75,15 49, % 6, % 6, %.1% Net fee and commission income 18,566 11, % 17,349 7.% 15, % -1.7% Net banking foreign currency gain 3,95 4,33-3.2% 6, % 2, % -54.4% Net other banking income % % % 15.6% Revenue 98,584 65, % 84, % 79, % -5.9% Operating expenses 43,129 29, % 34, % 33, % -2.5% Operating income before cost of credit risk 55,455 35, % 5, % 46, % -8.2% Cost of credit risk 16,66 (1,924) NMF 2,282 NMF 8,495 NMF NMF Profit 32,68 31, % 39, % 31,61 -.9% -2.5% Loan Yields Retail Banking RB standalone 1% 1.8% 9% 21.4% 19.8% 49.3% 51.1% 8% 49.9% 17.4% 7% 17.3% 41,1% 6% 5.5% 15.8% 5% 4% 9.2% 3% 58.9% 5.1% 49.5% 48.9% 2% 39.7% 1% % Q15 Loans RB, FC, Privatbank Loans, RB, FC Loans RB, GEL, Privatbank Loans, RB, GEL Currency blended loan yield, RB with Privatbank Currency blended loan yield, RB 25% 2% 15% 1% 5% % 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Deposit Costs Retail Banking RB standalone 6.1% 69.4% 3.6% 5.2% 63.6% 3.8% 67.6% 36.4% 32.4% 8.1% 58.9% 4.4% 3.6% 11.7% 21.3% Q15 Client Deposits RB, FC, Privatbank Client Deposits RB, GEL, Privatbank Currency blended Client Deposits Cost, RB with Privatbank 67.% 33.% 7% 6% 5% 4% 3% 2% 1% % Client Deposits, RB, FC Client Deposits, RB, GEL Currency blended Client Deposit Cost, RB page 34

35 Retail Banking Strong loan book growth RB Loan Yield quarterly RB standalone RB Cost of Deposits quarterly RB standalone 25% 2% 15% 1% 5% 17.3% 18.% 17.% 15.8% 23.% 21.3% 21.7% 2.7% 11.4% 13.3% 12.% 11.4% 6.% 5.% 4.% 3.% 2.% 1.% 4.2% 4.4% 3.6% 3.6% 4.6% 5.5% 4.% 4.% 4.% 3.8% 3.5% 3.5% % 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 Loan yield Loan yield, GEL Loan yield, FC.% 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 Cost of deposits Cost of deposits, GEL Cost of deposits, FC Loan yield with Privatbank Cost of deposits with Privatbank RB NIM quarterly RB standalone 11% 1% 9% 8% 1.% 9.9% 9.7% 8.7% 7% 6% 5% 1Q14 4Q14 1Q15 Net Interest Margin Net Interest Margin, with Privatbank page 35

36 Acquisition of Privatbank Georgia a value creative transaction Privatbank acquisition Relative Contribution based on 1Q15 Results Integration completed in < 5 months, compared to initial estimate of 9-12 months. We are 6 months ahead of capturing pre-tax admin and funding cost synergies of GEL 25 million GEL92m (US$49.6m) consideration for Privatbank constituted 4% of BoGH s market value at the time of acquisition Acquisition of a significant distribution network and retail customer base Accelerated BoG s retail banking growth, particularly in high margin card business Low assets per employee implies significant potential to increase utilization of the franchise (GEL m) Total assets Total equity Net loans Client deposits BS 94% 93% 94% 91% 6% 7% 6% 9% IFRS IFRS Unaudited (7) 8, , , , Side by Side Analysis of Operating KPIs IS (Georgia) Net interest income 88% 12% Total # of Retail Clients (k) 1, Total # of Cards (k) 1, # of Branches # of ATMs # of POS 6,537 1,68 # of Employees 3,799 1,15 Non-interest income Total revenue Operating expenses 92% 89% 85% 8% 11% 15% Net income 98% 2% 58 1 (Georgia) page 36

37 Corporate Banking (CB) PL Corporate Banking CB Consolidated GEL thousands, unless otherwise noted 1Q15 1Q14 Change y-o-y 4Q14 Change q-o-q Net banking interest income 35,418 24, % 3, % Net fee and commission income 6,1 5, % 6, % Net banking foreign currency gain 7,835 6, % 7, % Net other banking income 1, % 4, % Revenue 5,324 36, % 48, % Operating expenses 12,197 11, % 12, % Operating income before cost of credit risk 38,127 25, % 35, % Cost of credit risk 19,381 13, % 1, % Net non-recurring items % 14 NMF Profit before income tax 18,148 11, % 25, % Income tax (expense) benefit 3,346 1, % 4, % Profit 14,82 9, % 21,156-3.% Loan Yields Corporate Banking, standalone CB standalone 15% 13.9% 16% 1% 12.4% 14% 1.6% 1.7% 12% 95% 16.4% 16.8% 13.2% 13.4% 1% 9% 8% 85% 6% 4% 8% 83.6% 86.8% 83.2% 86.6% 2% 75% % Q15 Loans, CB, GEL Loans, CB, FC Currency-blended loan yield Deposit Costs Corporate Banking, standalone CB standalone 12% 7.2% 8% 1% 49.1% 7% 6% 8% 49.8% 4.6% 48.5% 42.9% 5% 6% 4% 2.9% 2.8% 4% 3% 2% 5.2% 5.9% 51.5% 57.1% 2% 1% % % Q15 Client deposits, CB, GEL Client deposits, CB, FC Currency-blended Client Deposits Cost page 37

38 GEL millions Corporate Banking (CB) Highlights Portfolio breakdowns, 31 Mar 15 CB standalone No.1 corporate bank in Georgia Integrated client coverage in key sectors Health and social work Mining and 4.1% quarrying 4.4% Loans by sectors Other 7.1% c.5, clients served by dedicated relationship bankers Financial intermediation 2.4% Construction 3.9% Electricity, gas and water supply 4.8% Transport & Communication 5.5% Manufacturing 25.4% Trade 17.1% Top 1 CB borrowers represent 16% of total loan book Top 2 CB borrowers represent 23% of total loan book Hospitality 6.5% Real estate 18.8% Loans & Deposits CB standalone Deposits by category 3, 2,5 2,161 2,381 2, 1,696 1,819 Time deposits 37.5% 1,5 1, 1,149 1,221 1,186 1,342 FC 57.1% GEL 42.9% Q15 Corporate Banking loan book Corporate Banking deposits Current accounts & demand deposits 62.5% page 38

39 Corporate Banking (CB) CB Loan Yield quarterly CB standalone CB Cost of Deposits quarterly CB standalone 12% 11% 1% 1.8% 11.3% 1.7% 1.5% 1.2% 1.5% 1.9% 1.7% 1.6% 5% 4% 3% 2% 3.2% 3.1% 3.2% 2.9% 3.8% 3.9% 2.% 2.8% 1.8% 1% 9% Q1 214 Q4 214 Q1 215 Loan yield, Currency Blended Loan yield, GEL Loan yield, FC % Q1 214 Q4 214 Q1 215 Cost of deposits, Currency Blended Cost of deposits, GEL Cost of deposits, FC CB NIM quarterly CB standalone 5.% 4.9% 4.9% 4.8% 4.8% 4.7% 4.6% 4.5% 4.1% 4.4% 4.3% 4.2% 4.1% 1Q14 4Q14 1Q15 Net Interest Margin, currency-blended page 39

40 GEL millions Investment Management results overview Highlights Client deposits Mar 215 Strong presence internationally through representative offices in Israel (since 28), the UK (21), Hungary (212) and Turkey (213). Preparing to launch funds: Mezzanine, Renewable Energy and Caucasus Money Market Successfully placed CDs worth US$8 million, EUR 8 million and GBP 5 million Euroclearable CDs. CDs issued to IM clients stood at GEL56. million. Galt & Taggart hosted first investor conference dedicated to the equity and bond market development in the region. The conference brought together 6 institutional investors and analysts and 2 one-on-one meetings were held with Georgian and Azeri companies USA, 4% Bahamas, 5% Germany, 5% Others, 23% UK, 4% Israel, 12% AUM* of GEL 1,214 million as of 31 March 215 up 35.5% y-o-y Georgia, 46% 1, Q15 Client deposits, IMWM * 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 Executed its first sizeable M&A deal in 214 and received a success fee. IM segment s fee and commission income totalled GEL 8.8 million (GEL 1.2 million in 213) Acted as lead arranger in 1Q15 for bond offerings for 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 4

41 Georgia Healthcare Group Leading market player GHG has two core activities: EVEX: largest healthcare service provider in Georgia Over 2/3 of population covered (1) Operating 33 hospitals and 6 ambulatory clinics (2) 2,14 beds (85% of new beds) (2) 22.% of market share by bed capacity (3) IMEDI L: leading health insurance business 36.7% market share (4) Insuring 257 thousand people (2) Evolution of GHG s Number of Beds , Acquisitions Disciplined Investment Strategy (GEL m) Company Overview Change during the period 2,14 1Q Q15 Before After GPIH-IRAO Gudushauri- Chachava HMTC Aversi Undisputed Leader in a Significant Market Hospital Services (3) Health Insurance (4) # of Beds(# of Hospitals) Gross premium revenue, GEL mln Total Healthcare expenditure is c.9.4% of GDP 484 (18) 483 (2) 45 (1) 225 (5) 2,14 (39) 22% GDP Composition (5) Other 23% Financial intermediation 3% Healthcare 6% Real estate 6% Construction 7% GPIH Irao IC Aversi Other Transport 8% Trade 17% Manuf acturing 11% Public sector 1% Agri 9% % Project Initiation Testing the market and potential for value creation Value Creation Value Creation By the end of 21, BoG already had cumulative investment of GEL 2.7 million (US$11.7 million) in its insurance and healthcare business initiatives Acknowledging the potential for growth and value creation of the GHG group, BoG additionally invested GEL114m (US$63m) GHG has turned into an undisputed leader in healthcare business in Georgia leveraging on its two pillars, EVEX and Imedi L Note: Evex and Imedi L revenues do not add up to GHG revenues due to intercompany eliminations Source: Company information. Financial data is based on GHG internal reporting. (1) Geostat.ge, data as of 1 January 214. (2) GHG internal reporting: hospital related data as of 31October 214; number of insured as of 3 September214. (3) Market share by number of beds. Source: NCDC, data as of December 212, updated by company to include new facilities acquired before 31 October 214. (4) Market share by gross premiums earned; Insurance State Supervision Service Agency of Georgia as of 3 September 214. (5) Geostat data as at 213. page 41

42 Georgia Healthcare Group Leading market player Broad geographic coverage and diversified healthcare services network covering 2/3 of Georgia s population Extensive Geographic Coverage (1) Network of healthcare facilities Regional market shares (2) Geographically Diversified Network 2/3 of population covered 2,14 hospital beds 33 hospitals 6 ambulatory clinics operated by GHG Bubble size denotes relative size based on % of population (3) The Capital city Tbilisi Kakheti Imereti Ajara Samegrelo Samtskhe 51.3% 68.6% #1 1 Black Sea 186 Zugdidi 15 + Chakvi 7 + Russian Federation Poti Kobuleti Batumi Tsalenjikha Chkhorotsku Khobi Abasha Martvili Khoni Tskaltubo Kutaisi Khulo Adigeni Shuakhevi Keda Tkibuli Terjola Georgia Akhaltsikhe Tbilisi Akhalkalaki Ninotsminda Turkey Armenia N Referral and Specialty Hospitals Akhmeta + Kvareli Telavi 7 Azerbaijan 14.1% 22.8% #1 1 # % 38.% #1 1 #1 1 Tbilisi Market share up from 1.3% at YE x higher hospitalization rate in Tbilisi vs Georgian average #1 1 N Community Hospitals + Ambulatory Clinics Regions of Presence Sources: (1) GHG internal reporting data as of 31 December 214 (2) Market share by number of beds. Source: NCDC, data as of December 212, updated by company to include changes before 31 December 214. Market shares by beds are as of 31 December 214 (3) Geostat.ge, data as of 1 January 214 page 42

43 Georgia Healthcare Group Integrated synergistic business model Well established hospital network allows a seamless patient treatment pathway from local doctors to multi-profile or specialised hospitals whilst the insurance business plays a feeder role in originating and directing patients Three key pillars of business model GHG operates a highly integrated patient capture business model referral & specialty hospitals provide secondary and tertiary level healthcare services operating 1,679 beds community hospitals provide primary out- and inpatient healthcare services operating 461 beds ambulatory clinics provide primary outpatient healthcare services Referral & Specialty Hospitals Community Hospitals Ambulatory Clinics A vertically integrated care pathway 2/3 of Georgia's 4.5mln (1) population covered Patients 1.8 mln GEL Evex revenue driven by health insurance division in 1Q15 (2) Sources: (1) Geostat.ge, data as of 1 January 214 (2) GHG internal reporting. Note: revenues do not add up due to intercompany eliminations 43 page 43

44 Georgia Healthcare Group Delivering growth Improving margins with the increasing scale of business Capturing growth driven by the recent healthcare reform Healthcare service revenue by sources, annual GEL mln Growing revenue & profitability Revenue Dynamics (GEL m) Evex CAGR of 13% +38.% FY211 FY212 FY213 FY 214 Evex growth, y-o-y Q14 1Q15 Out of pocket Insurance State +25.8% +62.5% +36.9% 41.8 Imedi L Evex GHG % Q14 1Q Healthcare service revenue, quarterly EBITDA Dynamics (GEL m) Evex CAGR of 112% % FY211 FY212 FY213 FY 214 Evex growth, y-o-y % +4.8% Imedi L Evex GHG Q14 4Q14 1Q % Total healthcare service revenue +34.6% % Evex organic revenue growth y-o-y in1q % Q Q15 Note: Evex and Imedi L revenues do not add up to GHG revenues due to intercompany eliminations Note: all amounts are for GHG, unless otherwise indicated, Source: GHG internal reporting 44 page 44

45 Georgia Healthcare Group Favourable state healthcare policy Expanding health insurance coverage and creating opportunities for private participation (via top-ups) has been the key impact of the Universal Health Care reform 214 Healthcare coverage of Georgia s 4.5mln population: PMI PMI SIP UHC UHC Legend: OOP Full out-of-pocket (No Insurance or State cover) PMI Private Medical Insurance SIP State Insurance Program UHC Universal Healthcare Program =.5 million people PMI, UHC, SIP include co-payments How UHC works Coverage: Under UHC 4mln people receive basic coverage of healthcare needs from state, with significant co-payments (c.3%) Pricing: Prices for healthcare services are not regulated. Government sets reimbursement limit and difference between price and reimbursed amount is paid by patient Patient has free choice of provider Any private or public licensed hospital in Georgia is eligible to participate PMI PMI SIP SIP OOP OOP OOP Increasing state healthcare financing State healthcare spending dynamics (1) Total state spending breakdown, FY 214 (1) GEL mln 1,2 1, 5.% 5.2% 6.6% 7.9% 8.% 8.% 8.1% B 216F 217F State healthcare spending Healthcare spending as % of total state spending 15.% 4% 2% 1.% Social service 4% Economic development 5.% 7% 27% General state service.% Public safety -5.% 8% Education -1.% 11% -15.% -2.% 11% Healthcare State defence 15% Leisure, culture & religion Housing-utility economy 11% Environmental protection Sources: (1) Ministry of Finance of Georgia page 45

46 Georgia Healthcare Group Strategy: Doubling 215 revenue by 218 GHG s strategy is focused on growing market share while consistently increasing profitability Hospitals Achieve 1/3 market share, currently 22.% (1) room to grow in Tbilisi, where GHG s current market share is only 14.1% (1) Ambulatories Rapid launch of outpatient clinics 2-3 ambulatory clinics, within 2-3 years, in highly fragmented and under-penetrated outpatient segment Medical equipment pick-ups To invest in medical equipment, utilizing existing service gaps Sources: (1) Market share by number of beds. Source: National Center for Decease Control, data as of December 212, updated by company to include changes before 31 December 214 (2) Market share by gross revenue; Insurance State Supervision Service Agency of Georgia as of 3 September 214 (3) Source: Geostat.ge, data as of 1 January 214 (4) GHG internal reporting: hospital related data as of 31 December 214; number of insured as of 3 September 214 (5) As of 31 December 214; number of full time employees including Tbilisi ambulatory clinic (Nutsubidze) opened in 4Q14 page 46

47 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 4 On-going Projects Total sales US$56.7mln Number of apartments: 645 Total Project Cost: US$48.6mln Total net income: US$7mln Land value materialized: US$6.3mln Total sales US$57.1mln, yet to be recognised as revenue Number of apartments: 1,24 Total Project Cost: US$65.2mln Total expected net income: US$14mln Land value to be materialized: US$1mln Revenue Dynamics (GEL thousand) 4,574 1,478 13, Fast Growing Company 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$3m) with an idea to develop problem land plots seized after 28 into an opportunity Testing the market and potential for value creation After successful completion of two projects and four ongoing projects, M2 has become a leading real estate company with significant potential for growth Value Creation The Group generates an IRR of more than 4%. Leveraging on M2 s successful track record of completed projects Source: Company information. Conversion form US$ to GEL was done using current exchange rate as at 31 December 214. page 47

48 Project Sales (US$m) m 2 Real Estate Leading real estate development company (2/2) Total sales of US$112.9mln since 211 Of which, US$57.1mln yet to be recognised as revenue* Tamarashvili Street IRR: 46% Start: May-12 Completion: Jun-14 Apartments sold: 98% of 522 Sales: US$46.8 mln Kazbegi Street IRR: 165% Start: Dec-13 Completion: Oct-15 Apartments sold: 82% of 295 Sales: US$23.4mln Tamarashvili Street II IRR: 71% Start: Jul-14 Completion: Apr-16 Apartments sold: 59% of 27 Sales: US$14.5 mln 2 1 Chubinashvili Street IRR: 47% Start: Sep-1; Completion: Aug-12 Apartments sold: 1% of 123 Sales: US$9.9 mln Nutsubidze Street IRR: 58% Start: Dec-13 Completion: Aug-15 Apartments sold: 78% of 221 Sales: US$13.7 mln Moscow Avenue IRR: 31% Start: Sep-14 Completion: Mar-16 Apartments sold: 5% of 238 Sales: US$4.6 mln Completed Projects 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 Significant potential of the project from sales of US$29, price apartments with current IRR of c. 31% page 48

49 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 Selected Financials Transaction to be structured in several steps Acquisition of 25% shareholding for GEL48.7m (US$26m) Option to acquire an additional 24.9% within 1 months for GEL48.7m (US$26m), plus 2% per annum accrued on the call option consideration over the period from closing date to exercise date less any dividends distributed through the call option period Total consideration of c.gel97m (US$52m) (1) represents c. 1.3% of BoGH s assets and 4.5% of its market capitalisation (2) 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 will also provide a US$25mn loan to GGU with proceeds to be paid as dividend to the selling shareholders The transaction is earnings accretive Commercial terms have been agreed, transaction will be subject to certain conditions Revenue Dynamics (4) (GEL m) EBITDA Dynamics (4) (GEL m) Source: Company information. Conversion form US$ 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 % 52.5% 44.3% 48.2% % 1% 8% 6% 4% 2% % page 49

50 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices page 5

51 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: 7.2%, 212: 6.2%, 213: 3.3% 214P:4.7%, 1Q15: 3.2% Real GDP average 1 yr growth rate: 5.8% GDP per capita 214E (PPP) per IMF: US$7,653 Inflation rate (e-o-p) 214: 2.% External public debt to GDP 214: 26.8% Sovereign ratings: S&P BB-/B/Stable, affirmed in November 214 Moody s Ba3/NP/Positive, affirmed August 214 Fitch BB-/B/Stable, affirmed in April 215 page 51

52 Georgia s key economic drivers Liberal economic policy Regional logistics and tourism hub Liberty Act, which became effective in 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% Proceeds from foreign tourism at US$1,787 mln in 214 up 3.9% y-o-y and 5.5 million visitors in 214, up 2% y-o-y Regional energy transit corridor Strong FDI Support from international community Strong FDI inflows diversified across different sectors (213: US$942 mln, 212: US$912, 211: US$1,117 mln), US$1,273 mln in 214, up 35.1% y-o-y Net remittances of US$1,262.6mln in 214, down 4.5% FDI averaged 1% of GDP in Georgia and the EU signed an Association Agreement in June 214 and Georgia s parliament ratified the agreement in July 214. The deal includes a DCFTA, which is the major vehicle for Georgia s economic integration with the EU 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 Diversified trade structure across countries and products Cheap electricity Only 18-2% of hydropower capacity utilized; 66 new hydropower stations are being built/developed Significantly boosted transmission capacity in recent years, having rehabilitated a 5kV line to Azerbaijan and built a 5/4 kv line to Turkey. Another 5 kv line to Armenia is under construction and Georgia s transmission capacity to Russia is expected to rise 1.7x to 1,48 MW by 216 after a new 5 kv line becomes operational Political environment stabilised Healthy operating environment for business and low tax regime Parliamentary elections in 212 led to a democratic transition of power giving victory to Georgian Dream coalition and the subsequent presidential elections in October 213 gave victory to the candidate of the ruling Georgian Dream coalition 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 page 52

53 Growth oriented reforms Ease of Doing Business 215 (WB-IFC Doing Business Report) Economic Freedom Index 215 (Heritage Foundation) Norway USA UK GEORGIA Estonia Montenegro Bulgaria Armenia Romania Turkey Belarus Russia Kazakhstan Azerbaijan Serbia 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% 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 page 53

54 Diversified resilient economy Gross domestic product GDP composition, FY % % % % 12.6% % % 6.2% % % 3.3% 4.8% E Nominal GDP (US$bn) Real GDP growth, y/y (%) Source: Geostat, Galt & Taggart Research (nominal GDP estimate) 1Q15 GDP growth of 3.2% 14% 12% 1% 8% 6% 4% 2% % -2% -4% Health and social work 6% Education 5% Public administration 1% Real Estate 6% Financial intermediation 3% Communication 3% Other 1% Transport 8% Source: Geostat Agriculture, hunting and forestry; fishing 9% Manufacturing 11% Electricity, gas and water supply 3% Construction 7% Wholesale and retail trade 17% Hotels and restaurants 2% Comparative real GDP growth rates, % (24-213) 7% 6% 5% 4% 3% 2% 1% %.8% Hungary 2.5% Czech Republic Sources: IMF, Geostat 2.7% 3.% 3.3% 3.5% 4.% 4.1% 4.9% 5.9% Ukraine Estonia Latvia Lithuania Poland Russia Turkey Georgia GDP per capita 9, 7,653 8, 7,18 6,826 7, 6,343 5,45 5,671 5,841 6, 5,496 4,669 5, 4,218 3,734 4, 3,411 2,921 2,315 2,455 2,623 3, 3,231 3,523 3,6 3,681 1,484 1,764 2, 919 1,188 1, P Nominal GDP per capita (USD) GDP per capita (PPP) Sources: IMF page 54

55 Demonstrated fiscal discipline and low public debt Fiscal deficit as % of GDP Breakdown of public debt % -.3% -2% -4% -6% -8% -2.6% -3.4% -4.8% -6.5% -6.7% -3.6% -2.8% -2.6% -3.% -3.% Domestic 22% External 78% Multilateral 53% External public debt portfolio weighted average interest rate as 1.9% (contractual maturity 23 years) -1% -9.2% E 215F Bilateral 13% Eurobond 9% Fiscal Deficit as % of Nominal GDP Source: Ministry of Finance of Georgia, Galt & Taggart Research (214 and 214 estimates) Source: Ministry of Finance of Georgia, as of end of 214 Public debt as % of GDP 7% 6% 5% 4% 3% 2% 1% % 63% 45% 51% 35% 4% 27% 32% 21% 26% 17% 31% 24% Sources: Ministry of Finance of Georgia, Geostat 41% 42% 32% 34% 37% 35% 35% 36% 29% 28% 27% 27% E Total public debt as % of GDP External public debt as % of GDP Government external debt service US$ mln % % 3.9% *Coupon payments only, Eurobonds mature in 221 Source: Ministry of Finance of Georgia, IMF 4.8% Multilateral Bilateral Eurobond* External debt service as % of budget revenues page 55 6% 5% 4% 3% 2% 1% %

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 Investing in infrastructure and spending low on social Revenues and expenditures Current and capital expenditure 12, 1, 8, 6, 4, 2, 7,592 6,765 6,685 9,715 8,618 7,963 8,315 7,994 7,861 7,23 7,462 1,575 8,861 9, % 33.9% 3.7% 3.6% 29.3% 3.4% 29.9% 7% 6% 5% 4% 3% 2% 1% 1% 8% 6% 4% 2% 77.9% 78.1% 22.1% 21.9% 75.% 76.% 25.% 24.% 82.3% 81.7% 8.4% 17.7% 18.3% 19.6% E 215F Total Budget Receipts, GEL mn Expenditures (Capital + Current), GEL mn Expenditures (Capital + Current) as % of GDP % % E 215F Current Expenditures Capital Expenditures Source: Ministry of Finance Sources: Ministry of Finance Government social expenditure as % of GDP Government capital expenditure as % of GDP F 215F F 215F *Current Source: IMF expenditure Source: IMF page 56

57 Diversified foreign trade Import of goods and services Export of goods and services 12, 1, 8, 6, 4, 2, 9,92 9,161 9,297 1,268 8,9 7,54 1,25 1,449 1, ,443 5,917 6,138 1,239 1,261 1, , , ,85 3, ,866 2, ,423 1,914 2,595 3,51 4,82 6,16 4,78 4,66 6,88 6,693 6,29 6, E Other imports, US$ mn Services imports, US$ mn Imports for re-exports, US$ mn 8, 7, 6, 5, 4, 3, 2, 1, 7,21 7,125 6,46 1,61 1,49 5,263 1,139 4, ,688 3,182 3, , ,8 2,964 3,49 2,187 1,26 2,544 1,647 1,94 1, ,314 1, ,371 1,471 1,886 2,153 1,654 2,26 2,521 2,364 2,636 2, E Georgia originated exports, US$ mn Services exports, US$ mn Re-expots, US$ mn Note: Foreign trade data for goods imports and exports are adjusted to BOP statistics Source: Geostat, NBG, Galt & Taggart Research Note: Foreign trade data for goods imports and exports are adjusted to BOP statistics Source: Geostat, NBG, Galt & Taggart Research Imports, 214 Exports, 214 Excluding re-exports Originating from Georgia Oil imports Japan 5% Other 11% UAE 2% China 9% Azerbaijan 4% US 4% Ukraine 7% Russia 7% European Union 29% Turkey 22% Kazakhstan 4% Armenia 5% Ukraine 7% Azerbaijan 1% Other 17% US 1% European Union 22% Turkey 12% Russia 13% 1,2 1, Q15 imports US$123mln, down 31.8% y-o-y Oil imports, US$ mn Oil imports, % change, y/y % 8% 6% 4% 2% % -2% -4% Sources: Geostat, Galt & Taggart Research Sources: GeoStat page 57

58 F Diversified sources of capital inflow FDI inflows US$ bln 2,5 2, 1,5 1, 5 8.5% % 7.% ,19 2, % 19.8% 1, % 1,273 1, % 7.7% 7.7% 6.1% 5.8% 5.8% E FDI inflows FDI as % of GDP Sources: Geostat 25% 2% 15% 1% 5% % Number of tourists 6, 5, 4, 3, 2, 1, 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) 1.6mln visitors in 4M15, down 1.6% Sources: Georgian National Tourism Agency, National Bank of Georgia, Galt & Taggart estimates Net remittances Public donor funding 1,4 1,2 1, US$ bln % 4.9% % % 7.2% 7.1% Source: National Bank of Georgia, Galt & Taggart Research (214 GDP estimate) % 8.1% 949 1, % 1, % 1, % 1, Net remittances Net remittances as % of GDP US$27.1 mln in 1Q15, down 27.3% 9% 8% 7% 6% 5% 4% 3% 2% 1% % US$mln Investment projects, credits, US$ mn Investment projects, grants, US$ mn page 58

59 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% 15.1% 17.2% 12.2% 8.4% 9.6% 7.1% 6.1% 7.% 7.3% 5.8% 5.9% 7.7% % -5.7% -9.7% -11.1% -1.5% -1.3% -12.7% -11.7% -9.7% -15.1% -19.8% -22.% CA deficit to GDP (%) FDI inflows to GDP (%) 1.% 8.% 6.% 4.% 2.%.% -2.% -4.% -6.% -8.% -1.% 7.% 7.3% 7.7% 6.1% 5.8% 5.9% % -5.6% -7.1% -8.% -6.9% -7.1% Capital goods import to GDP (%) FDI inflows to GDP (%) Sources: Geostat, NBG, Galt & Taggart Sources: Geostat, NBG, Galt & Taggart Currency devaluation by countries* 18% 16% 14% 12% 1% 8% 6% 4% 2% % 18% 21% Armenia Kazakhstan USD/AMD USD/KZT 28% Turkey USD/TRY 34% 35% 36% Azerbaijan USD/AZN Georgia USD/GEL Moldova USD/MDL 5% Belarus USD/BYR 56% Russia USD/RUB 153% Ukraine USD/UAH 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % LHS: Devaluation RHS: Inflation *from 1January 214 to 13 Source: % page 59

60 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Jan-3 Mar-3 Jun-3 Aug-3 Nov-3 Jan-4 Apr-4 Jun-4 Sep-4 Dec-4 Feb-5 May-5 Jul-5 Oct-5 Dec-5 Mar-6 Jun-6 Aug-6 Nov-6 Jan-7 Apr-7 Jun-7 Sep-7 Nov-7 Feb-8 May-8 Jul-8 Oct-8 Dec-8 Mar-9 May-9 Aug-9 Nov-9 Jan-1 Apr-1 Jun-1 Sep-1 Nov-1 Feb-11 May-11 Jul-11 Oct-11 Dec-11 Mar-12 May-12 Aug-12 Oct-12 Jan-13 Apr-13 Jun-13 Sep-13 Nov-13 Feb-14 Apr-14 Jul-14 Sep-14 Dec-14 Mar-15 Jan-3 Sep-3 May-4 Jan-5 Sep-5 May-6 Jan-7 Sep-7 May-8 Jan-9 Sep-9 May-1 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15 GEL is approaching equilibrium FX reserves REER US$ 2.4 bln reserves as of April 215 US$bn NBG was a net seller of US$2 mln in 4M FX reserves M2 multiplier Source: National Bank of Georgia Sources: NBG Sources: NBG REER M2 and annual inflation M2 and GEL/USD 7% 6% 5% 4% 3% 2% 1% % -1% -2% -3% 16% 14% 12% 1% 8% 6% 4% 2% % -2% -4% -6% 7% 6% 5% 4% 3% 2% 1% % -1% -2% -3% Lari depreciation Lari appreciation 2% 15% 1% 5% % -5% -1% -15% -2% M2, % change, y/y Annual inflation, eop Source: MOF * Preliminary data for January 215 M2 % change, y/y USD/GEL % change, y/y Source: MOF * Preliminary data for January 215 page 6

61 Growing and well capitalised banking sector Summary Banking Sector loans and deposits YE 213 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 Georgia* Moldova Romania Lithuania Russia Turkey Ukraine Bulgaria Serbia Latvia Estonia 39.1% 36.1% Gross loans/gdp 43.5% 53.5% Deposits/GDP 44.3% 57.8% 48.8% 4.1% 39.1% 53.4% 55.6% 53.8% 46.9% 63.8% 68.1% 67.3% 56.3% 74.9% 45.9% 78.2% 78.8% 74.5% Source: National Bank of Georgia, Geostat Source: NBG, Central Banks Banking sector assets, loans and deposits GEL bln % CAGR Assets Loans Deposits NPLs as % of total gross loans, YE 214 Turkey 2.7% Georgia 3.5% Latvia 5.3% Armenia 6.1% Russia 6.5% Lithuania 9.9% Moldova 11.9% Ukraine 14.6% Croatia 16.4% Romania 22.3% Source: IMF, Global Finsancial Stability Report, National Bank of Georgia Source: National Bank of Georgia page 61

62 Mar-15 One of the highest level of capital and low debt level compared to other frontier markets Bank Capital to Assets, YE 213 Dollarisation 18% 16% 14% 12% 1% 8% 6% 8% 8% 9% 1% 11% 11% 13% 15% 17% 8% 6% 4% 73% 73% 68% 64% 74% 69% 67% 59% 64% 6% 6% 66% 4% 2% 2% % Czech Republic Romania Poland Bulgaria Turkey Russia Kazakhstan Ukraine Georgia % Sources: IMF Sources: National bank of Georgia FC Deposits/Total Deposits Public debt / GDP, YE 213 6% 57% 5% 4% 35% 35% 36% 39% 41% 41% 46% 3% 2% 1% % Georgia Latvia Turkey Romania Ukraine Armenia Czech Republic Sources: IMF, Ministry of Finance Poland page 62

63 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Results Discussion Segments Georgian Macro Overview Appendices Express Banking Solo Banking Analyst Coverage Privatbank acquisition Chairman & CEO statements Financial Statements page 63

64 How Express works 84 Express Branches 817,445 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 2,245 Express Pay Terminals 6,537 POS Terminals at 1,72 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 64

65 No. of transitions s Express Banking Capturing Emerging Mass Market Customers Express Pay terminals 3,434 19,41 25,928 x8 Express cards 1,5 3,625 5,269 x5 Express branches 3,411 5,621 4,949 x2 1Q15 ATMs 3,172 2,747 3,86 +39% 1Q14 1Q13 POS Terminals 1,337 3,58 4,21 x3 Internet banking ,51 x2 Mobile banking x8 5, 1, 15, 2, 25, 3, 4,211 Tellers 3,956 4,31 +4% page 65

66 Solo a fundamentally different approach to premium banking Through the recently launched Solo, we target to attract new clients (currently only c.8,) to significantly increase market share in premium banking from c.13% SOLO Lounges New Solo offers: Tailor made banking solutions New financial products such as bonds Concierge-style environment Access to exclusive products and events Lifestyle opportunities page 66

67 Analyst coverage Bank of Georgia Holdings PLC Consensus Target Price: GBP GBP 2. GBP 24. GBP GBP GBP 25.6 GBP 22.4 GBP 18. GBP 25.4 GBP 22. GBP 26. GBP 18.7 page 67

68 Acquisition of Privatbank Georgia a value creative transaction Company Overview At the date of transaction, Privatbank Georgia was the 9 th largest bank in Georgia by total assets with a focus on retail banking Retail loans represented 85% of the loan book, credit cards account for 69% of loans (1) Countrywide distribution network with 92 branches, 431 ATMs and 1,937 POS terminals Over 1,1 employees Privatbank Georgia had a 2.8% market share in Georgia by total assets, 4.9% by retail loans and 3.% by customer deposits (2) Operated captive insurance and leasing franchise Privatbank Georgia was a subsidiary of PJSC Commercial Bank Privatbank ( Privatbank Ukraine ), ultimately owned by Igor Kolomoisky and Gennady Bogolyubov Geographical Footprint Branches & Distribution Outlets Regions of Tbilisi s presence 92 ATMs 431 Points of Sale 1,937 Employees 1,154 Shareholders (Before acquisition) Management 2.5% Unimain Holdings 4.2% PrivatBank Ukraine 57.3% Privatbank Georgia was ultimately controlled by Privatbank Ukraine Strong Transaction Rationale The acquisition of Privatbank is expected to be earnings accretive on a run rate basis before the end of year one Strong Strategic Fit Market Share Enhancement Distribution Network Enhancement Synergistic Transaction Privatbank Georgia operated in an Express branch model; loans to individuals represented 85% of its total loan book The transaction fits BoG s strategy to further grow its Express business. BoG had c.56, Express clients by the time of this transaction. Transaction increased BoG s market share in loans to individuals by 4.9% and in deposits from individuals by 2.6% (2) Privatbank Georgia operated a large distribution network of 92 branches across the country, which was 42% of BoG s distribution network as at 31 December 214 Strengthened BoG s Express branch distribution network Strong payment platform (431 ATMs and 1,937 POS) Significant cost and funding synergy potential: BoGH s Cost of Funding of 4.9% (4) vs 8.1% (4) for Privatbank implies estimated annualized pre-tax funding synergies of approximately GEL1m realizable within 9-12 months Substantial cost synergies estimated pre-tax of at least GEL15m on an annual basis and realizable within 9-12 months expected from back office and distribution network optimisation initiatives Up to GEL3m of integration costs Significant potential to increase utilization of Privatbank franchise (e.g. assets per employee of Privatbank Georgia is GEL436k vs. GEL2,16k (5) of BoGH) Opportunity to cross-sell BoG banking products to customers of Privatbank Georgia, which has limited portfolio of banking products due to strategic focus on credit cards Transaction Overview c.gel92m (US$49.6m) cash consideration for 1% of Privatbank (1.11x P/BV (4) ) Definitive agreements have been signed and the deal is closed. 7% of the consideration has already been paid, 2% will be paid upon successful migration of Privatbank data and records to BoG systems and the remaining 1% will be paid on the first anniversary of the closing (January 216), subject to representations and warranties / holdback provisions. Pro forma capital position of BoG broadly unchanged (NBG Tier 1 ratio slightly declines to 11.% from 11.2%) Source: Company. (1) Based on 213 IFRS consolidated financial statements. (2) Market data based on standalone accounts as published by the National Bank of Georgia ( NBG ) as of 31 December 214. (3) Calculated excluding any branch optimization initiatives.(4) IFRS as per BoG estimates derived by applying auditor IFRS transformations for 213 numbers to 9M 214 data. (5) BoG number of employees are taken for the calculation of BoGH assets per employee. page 68