Capturing Growth Opportunities. Investor Presentation: 4Q15 & full year 2015 preliminary results

Transcription

1 Capturing Growth Opportunities Investor Presentation: 4Q15 & full year 215 preliminary 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 Banking Business Results Discussion Investment Business 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 Nov-15 Dec-15 Jan-16 GBP US$ US$ millions BGEO Shareholder structure and share price As of 31 December 215 BGEO shareholder structure As of 31 December 215 BGEO top shareholders 9% 16% 3% 3% 2% 4% Unvested and unawarded shares for management and employees Vested shares held by management and employees UK/Ireland US/Canada Scandinavia Others BGEO has been included in the FTSE 25 and FTSE All-share Index Funds since 18 June 212 Rank Shareholder name Ownership % 1 Schroders Investment Management Harding Loevner Management LP Westwood International Advisors Artemis Investment Management Firebird Management LLC BGEO share price performance BGEO LN Up 17% since premium listing 1 GDR 1,, 8,, 6,, 4,, 2,, - X5 growth in market capitalisation Average daily trading volume 2,, 95, 5,3, 9,5, 5,1, ,2 1, Market Capitalisation Sep-4 15-Jan-16 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 BGEO Group structure Investors Regular dividends Capital Returns Banking Business Cash buffer Investment Business BGEO Group Retail Banking Corporate Banking Investment Management GGU Water utility and hydro GHG (Healthcare) M2 (Real Estate) GGU (Utilities) Aldagi (P&C Insurance) BNB (Bank in Belarus) GRE (Renewable Energy) Teliani Valley (Wine & Beer) page 5

6 4x2 strategy Strong performance in 215 We are a Georgia Focused Banking Group with an Investment Arm Target : ROE c.2% Tier I c.2% Retail Growth c.2% Banking Business ROAE of 25.1% in 4Q15 ROAE of 21.7% in 215 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 35.3% y-o-y growth 19.% y-o-y growth on constant currency basis Profit Contribution Investment Business 4 121% IRR from Min. IRR GHG IPO of 2% 65% IRR from m2 Real Estate projects 215: At least 8% GEL 274mln or 88% Target : Up to 2% Ordinary dividends aiming 25-4% dividend payout ratio Dividend growth CAGR 1-15 of 51.6% At the 216 AGM, the board intends to recommend an annual dividend of GEL 2.4 per share payable in British Pound Sterling at the prevailing rate, a 14% y-o-y increase Ongoing Dividends 215: GEL 37mln or 12% Capital return: Aiming for at least 3 capital returns in next 5 years Completed GEL 23.4mln worth of market purchase of shares for Employee Benefit Trust Announced additional US$ 1mln worth of market purchase of shares for Employee Benefit Trust page 6

7 4x2 strategy going forward We are a Georgia Focused Banking Group with an Investment Arm Banking Business Investment Business 1 ROE c.2% 3 Min. IRR of 2% Target investments with min. 2% IRR and partial or full exit in max 6 years 2 Growth c.2% 4 Profit up to 2% of retail loan book of BGEO Group profit New target Ongoing Dividends Ordinary dividends: linked to recurring profit from banking business Aiming 25-4% dividend payout ratio Capital Return: Aiming for at least 3 capital returns in next 5 years Aiming for Capital Return to represent at least 5% of regular dividend from banking business page 7

8 GEL Solid regular dividend payout from banking business Payout ratio 11% 16% 3% 36% 33% % 215 Dividend per share CAGR % E page 8

9 3 forms of Capital Returns 3 forms of Capital Retuns Capital Return forms Cash Dividends Stock dividends Share buy-back In the end of 215 and beginning of 216, we completed market purchase of 352,796 shares for Employee Benefit Trust with total value of GEL 23.4mln Capital Return Strategy Announced 3 capital returns during timeline 5 years 5 years 3 capital returns during page 9

10 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 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 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 page 1

11 BGEO Management Structure 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 BGEO Group PLC Irakli Gilauri, Group CEO, formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland Avto Namicheishvili, Deputy CEO, Group Legal Counsel; previously partner at Begiashvili &Co, law firm in Georgia; LLM from CEU, Hungary JSC Bank of Georgia Georgia Healthcare Group 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 Levan Kulijanishvili, Deputy CEO,Group CFO 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 Ekaterina Shavgulidze Head of Investor Relations and Funding at BGEO Group, previously Supervisory Board Member and Chief Executive Officer of healthcare services business. Before joining the Group she was an Associate Finance Director at AstraZeneca, UK. Holds MBA from Wharton Business School 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 page 11

12 JSC Bank of Georgia Management Structure 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 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 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, Deputy CEO, Chief Operating Officer Previously CEO of Aldagi and CFO of BG Bank, Ukraine; Holds Executive Diploma from Said Business School, Oxford Mikheil Gomarteli, Deputy CEO, Retail Banking; 15 years work experience at BOG Alexander Katsman, Deputy CEO, HRM and Branding Previously Head of Branding Department at the Bank. Before joining the bank he was a partner at Sarke, the largest communications group in Georgia. Holds EMBA from the Berlin School of Creative Leadership Archil Gachechiladze, Deputy CEO, Corporate Investment Banking of JSC Bank of Georgia; formerly BGEO Group CFO, Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University page 12

13 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business Georgian Macro Overview Appendices page 13

14 BGEO P&L results highlights Quarterly P&L BGEO Group Consolidated Banking Business Investment Business INCOME STATEMENT 4Q15 4Q14 Change 3Q15 Change 4Q15 4Q14 Change 3Q15 Change 4Q15 4Q14 Change 3Q15 Change GEL thousands, unless otherwise noted Y-O-Y Q-O-Q Y-O-Y Q-O-Q Y-O-Y Q-O-Q Net banking interest income 131,434 98, % 126, % 134,217 11, % 129, % Net fee and commission income 31,639 26,359 2.% 3, % 32,266 26, % 31,61 3.9% Net banking foreign currency gain 19,525 16, % 18, % 19,525 16, % 18, % Net other banking income 9,318 4, % 4, % 9,699 5, % 5, % Gross insurance profit 6,733 3, % 9, % 5,441 4, % 5, % 2,126 (38) NMF 4, % Gross healthcare profit 23,845 16, % 22, % ,845 16, % 22, % Gross real estate profit 12,769 2, % % ,769 2, % % Gross other investment profit 11,271 4, % 3, % ,157 4, % 3, % Revenue 246, , % 216, % 21, , % 19,45 5.8% 49,897 22, % 3, % Operating expenses (84,262) (69,265) 21.7% (77,562) 8.6% (71,172) (59,177) 2.3% (66,167) 7.6% (14,58) (11,2) 32.3% (12,244) 19.1% Operating income before cost of credit risk / EBITDA 162,272 13, % 139, % 129,976 94, % 123, % 35,317 11, % 18, % Profit from associates 1, , % , , % Depreciation and amortization of investment business (4,731) (2,349) 11.4% (4,227) 11.9% (4,731) (2,349) 11.4% (4,227) 11.9% Net foreign currency loss from investment business (3,416) (1,61) NMF (2,311) 47.8% (3,416) (1,61) NMF (2,311) 47.8% Interest income from investment business % % % % Interest expense from investment business (3,166) (933) NMF (2,8) 52.2% (6,542) (4,338) 5.8% (5,485) 19.3% Operating income before cost of credit risk 153,499 99,24 55.% 132,37 16.% ,523 4, % 8, % Cost of credit risk (36,22) (16,552) 117.6% (35,647) 1.1% (35,23) (14,789) 138.2% (34,752) 1.4% (792) (1,763) -55.1% (895) -11.5% Profit 95,672 66, % 8, % 8,591 64, % 73,42 9.8% 15,81 1, % 7,53 11.% Earning per share (basic) % % Annual P&L BGEO Consolidated Banking Business Investment Business INCOME STATEMENT Change Change Change GEL thousands, unless otherwise noted Y-O-Y Y-O-Y Net banking interest income 51,39 349, % 512, , % Net fee and commission income 118,46 99, % 121,589 11, % Net banking foreign currency gain 76,926 52, % 76,926 52, % Net other banking income 18,528 9, % 19,837 9,89 1.6% Gross insurance profit 29,97 29,43 1.6% 2,47 16, % 12,116 14, % Gross healthcare profit 8,938 53, % ,938 53, % Gross real estate profit 14,688 13, % ,688 13, % Gross other investment profit 2,777 12, % ,639 12, % Revenue 861,56 621, % 751, , % 128,381 94, % Operating expenses (314,732) (257,31) 22.4% (267,859) (217,764) 23.% (5,862) (42,145) 2.7% Operating income before cost of credit risk / EBITDA 546, , % 483,467 32, % 77,519 52, % Profit from associates 4, ,5 - - Depreciation and amortization of investment business (14,225) (9,164) 55.2% (14,225) (9,164) 55.2% Net foreign currency gain (loss) from investment business 651 (3,169) NMF (3,169) NMF Interest income from investment business 2,34 1, % ,338 1, % Interest expense from investment business (1,337) (6,558) 57.6% (25,493) (16,89) 58.4% Cost of credit risk (155,377) (59,2) 163.3% (151,517) (55,732) 171.9% (3,86) (3,288) 17.4% Profit 31,945 24, % 274,257 22, % 36,688 2, % Earnings per share (basic) % * Note: Banking Business and Investment Business financials do not include interbusiness eliminations. Detailed financials, including interbusiness eliminations are provided in annexes. page 14

15 BGEO Balance sheet highlights Balance Sheet BGEO Consolidated Banking Business Investment Business STATEMENT OF FINANCIAL POSITION Dec-15 Dec-14 Change Sep-15 Change Dec-15 Dec-14 Change Sep-15 Change Dec-15 Dec-14 Change Sep-15 Change GEL thousands, unless otherwise noted Y-O-Y Q-O-Q Y-O-Y Q-O-Q Y-O-Y Q-O-Q Liquid assets 3,68,166 1,898, % 2,924, % 3,6,991 1,874, % 2,913, % 37, , % 186, % Loans to customers and finance lease receivables 5,322,117 4,347, % 5,266, % 5,366,764 4,438,32 2.9% 5,367,311.% Total assets 1,13,93 7,579, % 9,937, % 9,185,791 7,44,2 3.4% 9,14,36.5% 1,247,96 775,57 6.9% 1,94, % Client deposits and notes 4,751,387 3,338, % 4,477,98 6.1% 4,993,681 3,482,1 43.4% 4,649, % Amounts due to credit institutions 1,789,62 1,49, % 2,115, % 1,692,557 1,324, % 2,11, % 144, , % 29, % Debt securities issued 1,39,84 856, % 1,76, % 961, , % 999, % 84,474 29, % 83, % Total liabilities 8,56,455 5,945, % 8,179,93-1.5% 7,87,5 5,813, % 7,891, % 489, , % 584, % Total equity 2,73,638 1,634, % 1,757, % 1,315,291 1,23, % 1,248,38 5.4% 758,347 43, % 59, % Key Ratios Banking Business 4Q15 4Q14 3Q ROAA 3.5% 3.9% 3.3% 3.2% 3.5% ROAE 25.1% 22.7% 23.3% 21.7% 2.6% Net Interest Margin 7.6% 7.7% 7.6% 7.7% 7.6% Loan Yield 14.8% 14.1% 14.7% 14.8% 14.3% Liquid assets yield 3.3% 2.9% 3.1% 3.2% 2.5% Cost of Funds 5.1% 4.7% 5.1% 5.1% 4.8% Cost of Client Deposits and Notes 4.4% 4.1% 4.1% 4.3% 4.2% Cost of Amounts Due to Credit Institutions 5.9% 4.8% 6.3% 5.8% 4.8% Cost of Debt Securities Issued 6.8% 7.2% 7.3% 7.1% 7.2% Cost / Income 35.4% 38.4% 34.8% 35.7% 4.5% NPLs To Gross Loans To Clients 4.3% 3.4% 4.% 4.3% 3.4% NPL Coverage Ratio 83.4% 68.% 82.1% 83.4% 67.5% NPL Coverage Ratio, Adjusted for discounted value of collateral 12.6% 11.6% 121.9% 12.6% 11.6% Cost of Risk 2.4% 1.2% 2.5% 2.7% 1.2% New NBG (Basel 2/3) Tier I Capital Adequacy Ratio 1.9% 11.1% 1.2% 1.9% 11.1% New NBG (Basel 2/3) Total Capital Adequacy Ratio 16.7% 14.1% 15.8% 16.7% 14.1% page 15

16 AMOUNT (GEL, mln) ROAE / IRR BGEO Capital allocation Data as of 31 Dec, 215 unless otherwise stated GEL 1,852mln Banking Business Investment Business Unallocated Cash At a glance 7% 24% 6% GEL 1,291mln GEL 444mln GEL 117mln 25% 16% 38% 79% -23% 22% 121% 65% n/a n/a n/a Breakdown by businesses RB CB P&C IM Other BB BNB GHG m2 GGU Other IB BGEO unallocated * Planning to divest from BNB page 16

17 AMOUNT (GEL, mln) Y-o-Y change Contr. BGEO 215 profit contributions Data as of 31 Dec, 215 unless otherwise stated GEL 311mln At a glance Banking Business 88% Investment Business 12% GEL 274mln GEL 37mln 47.2% 27.8% 4.6% 5.6% 4.% -1.% 7.5% 3.5%.8% +8.8% +51.6% +24.5% +11.4% +11.8% +31.% +78.9% +85.7% 81.8% Profit breakdown by businesses (3.) RB CB IM BNB P&C Other BB GHG m2 Other IB page 17

18 GEL millions GEL millions GEL millions GEL millions BGEO Strong revenue growth, with positive operating leverage BGEO Revenues, 215 Revenues quarterly BGEO +39.6% +35.3% +38.7% +3.6% % +43.1% 1, (2.) (11.9) (18.1) 214 Banking Business Investment 215 Business Investment business Banking business Eliminations (4.2) (4.5) Revenue 4Q14 Banking Business Investment Business Revenue 4Q15 Investment business Banking business Eliminations Operating expenses, 215 Operating expenses quarterly BGEO (5.) % +2.7% +22.4% (2.9) (4.) 214 Banking Business Investment 215 Business Investment business Banking business Eliminations BGEO (2.) % +32.3% +21.7% (.9) (1.5) 4Q14 Banking Business Investment Business 4Q15 Investment business Banking business Eliminations page 18

19 BGEO Balance Sheet, 31 December 215 BGEO Banking Business GHG M2 Real Estate Assets Gel Millions 12, 1, 8, 6, 4, 2, -2, 7, , % 1,13.1 1,248. 9,185.8 (24.4) (33.7) 31-Dec-14 Banking Business assets Investment Business assets 31-Dec % 9.7% 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, 7, ,438. 1, Dec-14 Liquid assets Net loans Other assets +3.4% 9, , ,7. 31-Dec % 58.4% 32.7% Dec % 57.7% PPE Other assets Dec % 39.4% 34.6% Other assets Investment properties Inventories BGEO Banking Business GHG M2 Real Estate Liabilities Gel Millions 1, 8, 6, 4, 2, -2, +35.5% 8, % , % 7,87.5 5,813.2 (24.4) (33.7) 31-Dec Dec-15 Investment Business liabilities 8, 6, 4, 2, 5, , , Dec % 7, , , Dec-15 Other liabilities Debt securities issued Amounts due from credit institutions Client Deposits and Notes 2.8% 12.2% 21.5% 63.4% Dec-15 Borrowed funds Other liabilities 47.7% 52.3% Dec-15 4.% 64.9% 31.1% Other liabilities Accruals and deferred income Borrowed funds * Note: Borrowed Funds include - Amounts due to credit institutions and debt securities issued page 19

20 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business Georgian Macro Overview Appendices page 2

21 GEL million GEL million BOG The leading bank in Georgia Leading market position: No. 1 bank in Georgia by assets (33.4%), loans (32.%), client deposits (33.%) and equity (31.6%) 1 Underpenetrated market with stable growth perspectives: Real GDP average growth rate of 5.8% for Geostat estimates 2.8% GDP growth in 215. 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 266 branches, 746 ATMs, 2,589 Express Pay Terminals and c.2. million customers (includingc.4, Privatbank customers) as of 31 December 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: c.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 Banking Business CAGR : 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, Banking Business Change y-o-y: ,44 6,158 5, % +23.5% +19.7% +22.4% +39.6% 9,186 Balance Sheet 3,7 1,94 1,596 1,875 Income Statement +24.4% 5,367 4,441 3,567 3,127 3,482 3,141 2, % 4,994 Total assets Liquid assets Net loans to Client deposits customers 31-Dec Dec Dec Dec Revenue Profit % % 1,2311, ,64 Total equity Revenue Profit 4Q14 3Q15 4Q15 1 Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 31 December page 21

22 Targets & priorities Banking Business 1 3-year Targets ROAE 2%+ FY % 2 Retail Banking Growth 2%+ 35.3% 19.% on constant currency basis Grow Retail share in loan book Increase Product to Client Ratio De-concentrate Corporate Loan Book 65% 55.% % Top 1 borrowers 12.4% 6 NIM 7.25% % 7.7% 7 8 Cost / Income Cost of Risk c. 35% 35.7% 1.5-2% 2.7 % page 22

23 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% 33.4% 32.6% BOG 25.8% 26.7% 24.5% 23.7% 19.3% 17.9% 17.5% 14.7% 7.3% 7.7% 6.5% 7.8% 6.% 4.8% 6.1% 5.8% 6.3% 6.3% 4.8% 5.1% 5.5% 3.8% 4.9% 4.8% BOG TBC PCB BR LB VTB Others #1 4% 35% 3% 25% 2% 15% 1% 5% % 35.4% 32.2% 32.5% 32.% 28.7% 26.2% 25.3% 25.2% 8.3% 6.7% 6.7% 7.6% 6.6% 7.% 5.8% 5.7% 19.1% 17.7% 16.6% 14.7% 6.2% 4.6% 4.8% 4.8% 5.8% 4.4% 4.2% 4.8% BOG TBC PCB BR LB VTB Others #1 BOG Foreign banks market share by assets Peer group s market share in client deposits #1 No state ownership of commercial banks since 1994 Local banks, 68.% Foreign banks, 32.% Local banks, 73.1% Foreign banks, 26.9% 35% 3% 25% 2% 15% 1% 5% 33.1% 33.% 3.4% 28.6% 31.5% 28.8% 29.% 27.8% 6.9% 5.1% 5.6% 5.3% 5.8% 4.6% 5.3% 5.1% 11.8% 12.% 9.% 8.6% 6.1% 5.4% 3.8% 4.7% BOG 15.2% 15.% 12.6% 1.% % BOG TBC PCB BR LB VTB Others 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 23

24 Banking Business Diversified asset structure Total asset structure 31 December 215 Liquid assets 31 December 215 Banking Business Banking Business Total: GEL 9.2bln Total: GEL 3.bln Other assets 8.8% Liquid assets 32.7% Government bonds, treasury bills, NBG CDs 27.2% Other liquid assets 3.% Cash and equivalents 45.8% Loans to customers, net 58.4% Amounts due from credit institutions 24.% Banking Business Total Loans breakdown by segments Total: GEL 5.6bln Retail loans, GEL 3,13.8 mln, 55.7% Corporate loans, GEL 2,464. mln, 44.3% Loans breakdown 31 December 215 Automobile loans 1.% Pawn loans 2.2% Credit cards and overdrafts 1.2% Retail Banking Loans breakdown by product Total: GEL 2.8bln General consumer loans 21.5% POS loans 4.1% Mortgage loans 28.7% Micro- and agro-financing loans and SME loans 32.2% Financial intermediation 2.8% Construction 6.6% Electricity, gas and water supply 3.4% Transport & Communication 5.8% Mining and quarrying 5.2% Hospitality 5.2% Corporate Banking Loans breakdown by sectors Total: GEL 2.2bln Health and Other social work 7.1% 2.5% Real estate 18.7% Manufacturing 26.5% 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 24

25 Banking Business US$ loan portfolio breakdown Highlights 43.2% of Retail Banking Loans were denominated in USD loans with non-usd income* We offered re-profiling in Feb-215. Since, 1,29 loans (out of 14,) were re-profiled, with total value of US$34.4mln For RB: Loans 15 days past due were.9% at 31 December 215, compared to.8% a year ago and 1.4% as of 3 September % of Corporate Banking Loans denominated in USD loans with non-usd income The following factors contribute to what we consider to be a relatively low default rates in Retail Banking: Large number of our Retail Banking borrowers (approximately 5, borrowers), whose loans are in local currency, are not affected by the U.S. dollar appreciation against Georgian Lari Although our mortgage borrowers are affected by the devaluation as most mortgages are U.S. dollar denominated, they represent a very small portion of our clients (approximately 14,). Additionally, these customers are relatively high earners, with a bigger capacity to bear the effects of devalution Our Retail Banking clients prefer to save in US$ as indicated by the dollarization levels of our client deposits; thus their interest income in nominal GEL terms has increased with the GEL devaluation against US$. These also represent clients who either have local currency or Mortgage loans US$ is the main currency for remittances, a major source of hard currency inflows to Georgia, which represent the main income for a large number of families in Georgia. Therefore, their income increased in nominal local currency terms with the U.S. dollar appreciation Retail Banking Wealth Management 31 Dec 215 Corporate Banking 31 Dec 215 Banking Business Total GEL mln Banking Business Total GEL mln 1% 8% 6% 4% 2% % 1.98% 2, % , % 1, % Loan portfolio Provision amount LLR rate Other GEL USD 1% 8% 6% 4% 2% % 5.33% 2, % % 1, % 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, % 73 1,22 39 USD loans with USD income % USD loans with non-usd income 1, % Total 2,934 1.% 814 1, * includes credit cards % 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 2,251 1.% 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 25

26 GEL thousand GEL thousand GEL thousand Banking Business Resilient loan portfolio quality (1/2) Banking Business % 7.9% % 3.9% NPLs % 7.6% 3.4% % NPLs NPLs to gross loans Net Interest Margin 9% 8% 7% 6% 5% 4% 3% 2% 1% % Banking Business NPL composition NPLs RB & WM NPLs CB NPLs Other Banking Business % 3.9% 3.4% 19.1 Loan loss reserve 3.3% % 3.4% % 3.6% Loan loss reserves (LLR) NPLs to gross loans LLR as % of gross loans 5% 5% 4% 4% 3% 3% 2% 2% 1% 1% % Banking Business 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% NPL coverage ratio 111.5% 19.6% 11.6% 12.6% 86.3% 82.8% 67.5% 83.4% M 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 26

27 GEL millions GEL millions Banking Business Resilient loan portfolio quality (2/2) Banking Business Cost of Credit risk full-year Devaluation effect Like-for-like % % y-o-y Banking Business Cost of Credit risk quarterly % % like-for-like 4Q14 1Q15 2Q15 3Q15 4Q15 Devaluation effect Privatbank Like-for-like Banking Business 3.% 2.5% 2.% 1.5% 1.%.5% Cost of Risk full-year 1.3% 1.3% 1.2% +15 bps +12 bps y-o-y 2.7%.3% 2.4% Cost of Risk quarterly Banking Business 3.1% 3% 2.7%.9%.4% 2%.6% 1.2% 1.6% 2.3% 1% -1 bps 2.5% 2.4%.4% 2.1% +3 bps like-for-like.% % 4Q14 1Q15 2Q15 3Q15 4Q15 Devaluation effect Like-for-like Devaluation effect Privatbank Like-for-like page 27

28 GEL millions Bank Standalone, GEL mln Banking Business Strong liquidity (1/2) Banking Business 9, 8, 7, 6, 5, 4, 3, 2, 1, Liquid assets to total liabilities 36.% 1,596 4, % 5,94 1,94 1, % 5,813 3,7 38.2% Liquid assets Total liabilities Liquid assets to total liabilities 7,871 4% 35% 3% 25% 2% 15% 1% 5% % NBG liquidity ratio Banking Business 5, 4,871 5% 45.7% 46.2% 4, 41.1% 3,415 3,558 4% 3, % 3, 3% 2,251 2, 1,562 2% 1,32 1,245 1, % % Liquid assets (NBG) Liabilities (NBG) Excess liquidity Liquid assets / liabilities 3% NBG min requirement Banking Business Net loans to customer funds Net loans to customer funds & DFI Banking Business 14% 13% 12% 11% 1% 9% 8% 7% 6% 5% 114.8% 113.6% 127.5% 17.5% 12% 11% 1% 9% 8% 7% 6% 5% 92.5% 96.8% 18.6% 9.8% 4% Net loans to customer funds, consolidated 4% Net loans to customer funds & DFIs, consolidated page 28

29 GEL thousands GEL thousands GEL thousands Banking Business Strong liquidity (2/2) Liquidity coverage ratio & net stable funding ratio Foreign currency VAR analysis* JSC Bank of Georgia standalone 25% 2% 16.8% 15% 15.9% 1% 5% 218.% 115.8% 163.8% 14.5% 199.5% 111.9% JSC Bank of Georgia standalone 3,5 3, 2,5 2, 1,5 1, , , , , , , ,1.5 3,77.7 2, , , , , , , ,859.7 % Liquidity coverage ratio Net stable funding ratio Monthly VaR GEL (Average) VaR Limit Cumulative maturity gap, 3 September 215 Banking Business JSC Bank of Georgia standalone Open currency position 1,2, 1,, 8, 6, 4, 2, -2, -4, 1,3,76 1,47,895 1,5,344 25% 2% 725, % 13.2% 15% 13.6% 9.5% 1% -2.6% 5% -2.6% % On Demand -3 Months 3-6 Months 6-12 Months 1-3 Years >3 Years -5% (196,374) -1% 2, -2, -4, -6, -8, -1, -12, -14, 12, % -11,394-12, ,74-1.3% -1.4% -9.3% 2% % -2% -4% -6% -8% -1% (193,84) 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 29

30 USD millions Banking Business Funding structure is well established Banking Business Interest Bearing Liability structure 215 Well diversified international borrowings 215 Banking Business Debt securities issued, GEL mln, 12.2% Interest Bearing Liabilities GEL 7.9 bn Other liabilities, GEL mln, 2.8% Other debt securities, GEL 53.7 mln, 2.7% Others borrowings, GEL 96.3 mln, 4.9% Borrowings, GEL 1,13.4 mln, 12.9% Other amounts due to credit institutions, GEL mln, 8.6% Client deposits & notes, GEL 4,993.7 mln, 63.4% Time deposits 48.2% Current account & demand deposits 51.8% Eurobonds, GEL 98.2 mln, 46.% DFIs, GEL mln, 46.4% Banking Business Borrowed funds maturity breakdown* % 11.3% Excl. c.us$4 mln Eurobonds maturing in %.6%.1%.1%.1% % 2.3% Senior Loans Subordinated Loans % of Total assets 15.% 1.% 5.%.% -5.% -1.% Interest bearing liabilities Banking Business has a well-balanced funding structure with 63.4% of interest bearing liabilities coming from client deposits and notes, 11.7% from Developmental Financial Institutions (DFIs) and 11.5% from Eurobonds, as of 31 December 215 The Bank has also been able to secure favorable financing from reputable international commercial sources, as well as DFIs, such as EBRD, IFC, DEG, Asian Development Bank, etc. As of 31 December 215, US$ 71.2 million undrawn facilities from DFIs with up to seven year maturity * Consolidated, converted at GEL/US$ exchange rate of of 31 December 215 ** Total Assets as of 31 December 215 page 3

31 GEL millions GEL millions GEL millions GEL millions Banking Business Strong revenue growth Revenue growth full-year Revenue growth quarterly Banking Business +39.6% Banking Business +3.6% +5.8% % 66% +31.8% +43.5% % 68% % % 33% % 68% 67% Q4 214 Q3 215 Q4 215 Net interest income Net non-interest income Net interest income Net non-interest income Net non-interest income full-year Net non-interest income quarterly Banking Business % Banking Business % Net fee and commission income Gross insurance profit Net banking foreign currency gain Net other banking income Q4 214 Q3 215 Q4 215 Net fee and commission income Net banking foreign currency gain Gross insurance profit Net other banking income page 31

32 GEL millions GEL millions Banking Business Keeping a tight grip on costs Operating expenses full-year Operating expenses quarterly Banking Business +23.% Banking Business +2.3% +7.6% Salaries and other employee benefits Administrative expenses Banking depreciation and amortisation Other operating expenses Q4 214 Q3 215 Q4 215 Salaries and other employee benefits Administrative expenses Banking depreciation and amortisation Other operating expenses GEL millions GEL millions Operating income before cost of credit risk full-year Banking Business (67.6) -2 (164.6) Cost of credit risk and net non-recurring itemss Operating income before cost of credit risk Operating income before cost of credit risk quarterly Banking Business (16.3) -4-6 (39.7) (37.7) Q4 214 Q3 215 Q4 215 Cost of credit risk and net non-recurring itemss Operating income before cost of credit risk page 32

33 GEL millions GEL millions Banking Business Focus on efficiency Cost / Income full-year Cost / Income quarterly Banking Business Banking Business 5% 48% 46% 44% 42% 4% 38% 36% 34% 32% 3% 41.3% 39.8% 4.5% 35.7% % 42.% 4.% 38.% 36.% 34.% 32.% 3.% 42.2% 41.5% 4.2% 39.2% 38.4% 36.8% 35.7% 35.4% 34.8% 4Q 213 1Q 214 2Q 214 3Q 214 4Q 214 1Q 215 2Q 215 3Q 215 4Q 215 Revenue and operating expenses full-year Banking Business Operating Leverage: +16.6% y-o-y Revenue Operating expenses Revenue and operating expenses quarterly Banking Business Operating Leverage: - 1.7% q-o-q + 1.4% y-o-y Q4 214 Q3 215 Q4 215 Revenue Operating expenses page 33

34 Banking Business Growing income notwithstanding the pressure on yields Loan Yields full-year Loan Yields quarterly Banking Business Banking Business 1% 8% 17.2% 16.2% 14.3% 14.8% 2% 16% 1% 8% 14.1% 14.7% 14.8% 2% 15% 6% 4% 74.% 69.1% 72.8% 72.% 12% 8% 6% 4% 71.5% 7.7% 72.% 1% 2% 26.% 3.9% 27.2% 28.% 4% 2% 28.5% 29.3% 28.% 5% % Net loans, GEL, consolidated Net loans, FC, consolidated Currency-blended loan yield % % Q4-214 Q3-215 Q4-215 Net loans, FC, consolidated Net loans, GEL, consolidated Currency-blended loan yield, annualised % Loan Yields, GEL Full-year Loan Yields, Foreign currency quarterly Banking Business Banking Business 3% 25% 2% 2.1% 22.8% 23.4% 3% 25% 2% 15% 15% 11.7% 11.2% 11.3% 1% 1% 5% 5% % Q4 214 Q3 215 Q4 215 % Q4 214 Q3 215 Q4 215 Loan yields excluding provisions page 34

35 Banking Business Stable Cost of Funding Cost of Funds full-year Cost of Funds quarterly Banking Business Banking Business 8% 7.1% 8% 7% 6% 5% 5.9% 4.8% 5.1% 7% 6% 5% 4.7% 5.1% 5.1% 4% 4% 3% 3% 2% 2% 1% 1% % % Q4-214 Q3-215 Q4-215 Banking Business Cost of Customer Funds full-year Banking Business Cost of Customer Funds quarterly 1% 8% 6% 4% 2% % 7.1% 5.5% 4.2% 4.3% 69.9% 68.2% 71.2% 74.9% 3.1% 31.8% 28.8% 25.1% 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% % 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 4.1% 4.1% 4.4% 71.5% 73.5% 74.9% 28.5% 26.5% 25.1% Q4-214 Q3-215 Q4-215 Client deposits, FC, consolidated Client deposits, GEL, consolidated Currency-blended cost of client deposits, annualised 8% 7% 6% 5% 4% 3% 2% 1% % page 35

36 Banking Business Excellent capital adequacy position JSC Bank of Georgia consolidated Basel I capital adequacy ratios NBG (Basel 2/3), capital adequacy ratios JSC Bank of Georgia standalone 3% 25% 2% 15% 1% 21.2% 26.1% 23.% 27.1% 22.1% 26.1% 17.9% 24.9% 18% 16% 14% 12% 1% 8% 6% 14.2% 14.1% 11.2% 11.1% 9.8% 12.9% 15.9% 15.8% 1.4% 1.2% 1.9% 16.7% 1.5% 8.5% 5% 4% 2% % Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio % Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Q4 215 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio NBG Tier I CAR min requirement NBG Total CAR min requirement standalone (BIS 2/3) Risk Weighted Assets NBG (Basel 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 8,351 8,473 8,363 7,24 6,471 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Q4 215 NBG Basel 2/3 GEL 31 Dec 215 Sep 215 Jun 215 Mar 215 Dec 214 Dec 213 Tier I Capital (Core) Tier 2 Capital (Supplementary) Total Capital 1,394. 1, , , Risk weighted assets 8, , ,35.5 7, ,24.1 5,733.7 Tier 1 Capital ratio 1.9% 1.2% 1.4% 9.1% 11.1% 13.1% Total Capital ratio 16.7% 15.8% 15.9% 12.3% 14.1% 16.4% reported to NBG are reported in the appendix page 36

37 Total No of Clients 1,999,869 Retail banking Client-Centric, Multi-brand strategy Client-Centric, Multi-brand strategy Brands & target segments Emerging Retail Mass Retail and MSME Mass Affluent 376,7 clients 1,611,3 clients 11,869 clients 19% 81% 1% Selected Operating Data (215) P/C ratio: # of branches: Profit / client: GEL 71 GEL 56 GEL 1,374 Strategic Focus Double number of transactions Product/client ratio growth Client growth page 37

38 Retail Banking Financial Data Balance sheet data Income statement data 18% 3% Total Loans GEL 2,854mln 7% 1% Net Interest Income GEL 318mln 79% Mass Retail & MSME - GEL 2,256.4mln Solo - GEL 57.4mln Express Bank GEL - GEL 9.3mln 83% Mass Retail & MSME - GEL 263.7mln Solo - GEL 23.8mln Express Bank - GEL 3.6mln 4% Total Deposits GEL 1,88mln 22% Net Fee & Commission Income GEL 64mln 3% 9% 66% 69% Mass Retail & MSME - GEL 1,245.8mln Solo - GEL 57.1mln Express Bank - GEL 64.1mln Mass Retail & MSME - GEL 44.mln Solo - GEL 5.7mln Express Bank - GEL 14.1mln page 38

39 GEL millions Retail Banking (RB) No. 1 retail bank in Georgia RB standalone Client Data Operating Data, GEL mln 215 % of clients Number of total Retail clients, of which: 1,999,869 1,451,777 1,245,48 1,54,248 Consumer loans & other outstanding, volume Consumer loans & other outstanding, number 625, % 526, ,557 46,213 Mortgage loans outstanding, volume Mortgage loans outstanding, number 12,857.6% 11,92 1,212 9,85 Micro & SME loans outstanding, volume Micro & SME loans outstanding, number 19,45 1.% 16,246 13,317 11,136 Credit cards and overdrafts outstanding, volume Active credit cards and overdrafts outstanding, number 435,1 21.8% 199, ,57 142,72 Total credit cards outstanding, number, of which: 754, % 116, ,913 17,261 American Express cards 1,515 5.% 11,362 18,68 99,292 RB standalone Loans by products Total: GEL 2.8 bn Portfolio breakdown Pawn loans 2.2% Credit cards and overdrafts 1.2% General consumer loans 21.5% Automobile loans 1.% POS loans 4.1% Mortgage loans 28.7% Micro- and agro-financing loans and SME loans 32.2% RB Loans RB Deposits RB standalone Loans growth: 35.3% growth y-o-y 19.% growth y-o-y on constant urrency basis RB standalone Deposits growth: 39.3% growth y-o-y 15.5% growth y-o-y on constant currency basis Deposits by category Total: GEL 1.9 bn Current accounts and demand deposits 38.5% Time deposits 61.5% 3, 2,5 2, 1,5 1, 5 1,348 1,613 2,67 2, Retail net loans 2, 1,8 1,6 1,4 1,2 1, ,87 1,35 1, Retail client deposits Deposits by currency Total: GEL 1.9 bn Client deposits, GEL 25.9% Client deposits, FC 74.1% page 39

40 Retail Banking (RB) Strong loan book growth RB Consolidated P&L Retail Banking Income Statement Highlights 4Q15 4Q14 Change 3Q15 Change Change GEL thousands, unless otherwise noted Y-O-Y Q-O-Q Y-O-Y Net banking interest income 85,318 6, % 83, % 322, , % Net fee and commission income 21,264 17, % 19, % 78,218 58, % Net banking foreign currency gain 3,697 6, % 5, % 17,18 18, % Net other banking income 3, NMF 2, % 9,159 3, % Revenue 114,229 84, % 111, % 427, , % Salaries and other employee benefits (23,613) (17,762) 32.9% (22,466) 5.1% (92,91) (69,299) 32.9% Administrative expenses (14,445) (11,37) 3.9% (12,81) 19.6% (5,398) (37,339) 35.% Banking depreciation and amortisation (7,259) (5,151) 4.9% (6,86) 6.7% (27,714) (19,525) 41.9% Other operating expenses (782) (426) 83.6% (353) 121.5% (2,93) (1,464) 43.% Operating expenses (46,99) (34,376) 34.1% (41,76) 1.5% (172,296) (127,627) 35.% Operating income before cost of credit risk 68,13 5, % 69,48-1.9% 255,68 169, % Cost of credit risk (15,371) (2,283) NMF (22,713) -32.3% (75,47) (9,241) NMF Net non-recurring items (2,494) (744) NMF (3,128) -2.3% (8,945) (5,797) 54.3% Profit before income tax 5,265 47, % 43, % 17, , % Income tax expense (7,67) (7,448) 2.1% (4,747) 6.2% (23,994) (19,295) 24.4% Profit 42,658 39, % 38, % 146, , % Loan Yield Retail Banking Deposit Cost Retail Banking RB standalone RB standalone 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% 21.4% 49.9% 5.1% 19.8% 41.1% 58.9% 17.4% 17.6% 5.5% 54.3% 49.5% 45.7% 25% 2% 15% 1% 5% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% 6.1% 69.4% 63.6% 3.6% 5.2% 67.6% 36.4% 32.4% 3.8% 3.9% 74.1% 25.9% 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 4

41 Retail Banking Strong loan book growth RB Loan Yield quarterly RB Cost of Deposit quarterly RB standalone RB standalone 3.% 25.% 2.% 15.% 1.% 5.%.% 24.7% 25.4% 21.7% 17.% 17.9% 17.9% 12.% 11.4% 11.2% Loan Yield Loan yield, GEL Loan yield, FC 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.% 4.3% 4.4% 4.% 3.6% 3.7% 3.5% 3.5% 3.5% 3.2% Cost of deposits Cost of deposits, GEL Cost of deposits, FC 4Q14 3Q15 4Q15 4Q14 3Q15 4Q15 RB NIM quarterly RB standalone 12.% 11.% 1.% 9.9% 9.5% 9.6% 9.% 8.% 7.% 6.% 5.% 4Q14 3Q15 4Q15 page 41

42 Privatbank Story Strategic acquisition and flawless integration execution Strategic acquisition Business highlights Primarily a credit card business, with mono-product Loan Book GEL 245.6mln Deposits GEL 266.8mln Total Clients 4K NIM 2.5% Cost of funding 8.1% Cost of risk 1.1% Transaction highlights A strong strategic fit with our target to increase our share of retail loans. c.gel92mln cash consideration for 1% of Privatbank (1.11x P/BV), resulting in P/E of 3.2x Integration costs totalled GEL 2.6mln as of 3 June 215, less compared to our expectation of up to GEL 3mln Completed integration in under five months compared to our initial integration estimate of 9-12 months. We anticipate annualised pre-tax administrative and funding cost synergies to reach c.gel 29mln above our pre-announced GEL 25mln Flawless integration execution (Georgia) December January months following the acquisition 9 May 215 Decision to acquire Completed the acquisition IT integration Optimisation of costs and number of branches Product development Trainings Completed integration *Pro-forma assuming that synergies took effect in the beginning of the quarter instead of actual last 5 days in second quarter page 42

43 Corporate Banking (CB) P&L Corporate Banking CB Consolidated Income Statement Highlights 4Q15 4Q14 Change 3Q15 Change Change Gel thousands, unless otherwise notes Y-O-Y Q-O-Q Y-O-Y Net banking interest income 33,389 3, % 32, % 134,883 13, % Net fee and commission income 8,119 6, % 8,75-6.7% 31,142 24, % Net banking foreign currency gain 13,261 7, % 7, % 38,136 24, % Net other banking income 4,2 4,5-11.1% 2, % 9,178 6, % Revenue 58,771 48, % 5, % 213, , % Salaries and other employee benefits (7,95) (8,52) -16.7% (9,392) -24.5% (33,828) (33,196) 1.9% Administrative expenses (3,927) (2,868) 36.9% (3,) 3.9% (13,27) (1,963) 2.5% Banking depreciation and amortisation (1,114) (965) 15.4% (1,65) 4.6% (4,126) (3,812) 8.2% Other operating expenses (22) (322) -31.7% (17) 15.6% (727) (1,14) -28.3% Operating expenses (12,356) (12,675) -2.5% (13,564) -8.9% (51,888) (48,985) 5.9% Operating income before cost of credit risk 46,415 35, % 36, % 161,451 11, % Cost of credit risk (11,62) (1,217) 13.7% (1,531) 1.3% (55,678) (41,75) 33.4% Net non-recurring items (2,342) (15) NMF (1,41) 67.2% (4,539) (2,672) 69.9% Profit before income tax 32,453 25, % 24, % 11,234 66, % Income tax expense (4,763) (4,269) 11.6% (2,698) 76.5% (14,928) (9,493) 57.3% Profit 27,69 21, % 22, % 86,36 56, % CB standalone Loan Yield Corporate Banking, standalone Deposit Cost Corporate Banking, standalone CB standalone 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 13.9% 12.4% 1.6% 1.7% 83.6% 83.2% 86.8% 89.7% 16.4% 16.8% 13.2% 1.3% % 14% 12% 1% 8% 6% 4% 2% % 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 7.2% 5.3% 5.9% 51.4% 57.9% 4.6% 2.9% 3.4% 49.7% 49.1% 48.6% 42.1% % 7% 6% 5% 4% 3% 2% 1% % Net loans, CB, GEL Net loans, CB, FC Currency-blended loan yield, CB Client deposits, CB, FC Client deposits, CB, GEL Currency-blended cost of client deposits, CB page 43

44 GEL millions Corporate Banking (CB) Highlights Portfolio breakdown, 31 December 215 No.1 corporate bank in Georgia Integrated client coverage in key sectors c.5, clients served by dedicated relationship bankers CB standalone Financial intermediation 2.8% Construction 6.6% Electricity, gas and water supply 3.4% Transport & Communicatio n 5.8% Mining and quarrying 5.2% Hospitality 5.2% Health and social work 2.5% Loans by sectors Other 7.1% Real estate 18.7% Manufacturing 26.5% Trade 16.3% Top 1 CB borrowers represent 31% of total CB loan book Top 2 CB borrowers represent 45% of total CB loan book CB standalone Loans & Deposits Deposits by category 2,5 2, 1,696 1,819 2,161 2,13 1,848 Time Deposits, 25.% 1,5 1, 1,149 1,221 1,186 FC, 57.9% GEL, 42.1% Corporate net loans Corporate client deposits Current Accounts & Demand Deposits, 75.% page 44

45 Corporate Banking (CB) CB Loan Yield quarterly CB Cost of Deposit quarterly CB standalone CB standalone 14.% 12.% 1.% 8.% 6.% 4.% 2.%.% 13.2% 13.3% 1.5% 1.9% 1.3% 1.2% 1.5% 1.6% 1.% Loan Yield Loan yield, GEL Loan yield, FC 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 7.6% 4.4% 4.4% 3.8% 2.9% 3.1% 2.% 1.9% 1.6% Cost of deposits Cost of deposits, GEL Cost of deposits, FC 4Q14 3Q15 4Q15 4Q14 3Q15 4Q15 CB NIM quarterly CB standalone 1.% 9.% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% 4.8% 4.1% 4.3% 4Q14 3Q15 4Q15 page 45

46 Investment Management platform 1 Wealth Management Research 2 Strong international presence: Israel (since 28), UK (21), Hungary (212) and Turkey (213). Planned expansion - Cyprus, Singapore, USA. Sector, macro and fixed income coverage International distribution AUM of GEL 1,373 million, up 34% y-o-y Diversified funding sources: Georgia 44% Israel 12% UK 4% Germany 3% Other 35% 4 Brokerage Investment Management Corporate Advisory 3 Wide product coverage Bond placement GEL GEL63.6mln and US$35mln bonds placement at year-to-date Corporate advisory platform Team with sector expertise and international M&A experience Exclusive partner of SAXO Bank via While Label structure, that provides highly adaptive trading platform with professional tools, insights and world-class execution Proven track record of more than 15 completed transactions over the past 8 years with an accumulated transaction value of more than GEL 2 million page 46

47 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business Georgia Healthcare Group Georgian Macro Overview Appendices page 47

48 GHG full year Income Statement P&L GHG Income Statement, full year Healthcare services Medical insurance Total GHG GEL thousands; unless otherwise noted Change, Change, Change, Y-o-Y Y-o-Y Y-o-Y Revenue, gross 195,32 147, % 55,256 69, % 242, , % Corrections & rebates (3,68) (1,816) 98.7% (3,68) (1,816) 98.7% Revenue, net 191, , % 55,256 69, % 239,65 196, % Cost of services (17,291) (83,298) 28.8% (46,76) (61,233) -24.8% (145,936) (126,66) 15.8% Gross profit 84,133 62, % 9,18 8, % 93,129 7, % Total operating expenses (34,75) (27,197) 25.3% (6,61) (7,51) -11.9% (4,48) (34,387) 17.7% Other operating income 3, % % 3, % EBITDA 53,526 35, % 2,613 1, % 56,139 36, % EBITDA margin 27.4% 24.3% 23.1% 18.6% Depreciation and amortization (11,973) (6,998) 71.1% (692) (632) 9.6% (12,665) (7,63) 66.% Net interest (expense) / income (2,352) (13,138) 54.9% % (2,281) (12,86) 58.4% Net (losses) / gains from foreign currencies 1,312 (2,82) NMF % 2,97 (2,494) NMF Net non-recurring (expense) / income (96) 578 NMF (722) - NMF (1,682) 578 NMF Profit before income tax expense 21,553 13, % 2,55 1, % 23,68 14, % Income tax (expense) / benefit 37 (1,145) NMF (298) (11) 195.1% 9 (1,246) NMF Profit for the period 21,86 12, % 1, % 23,617 13, % Attributable to: - shareholders of the Company 17,894 9, % 1, % 19,651 1, % - non-controlling interests 3,966 3, % ,966 3, % Note: Adjusted net profit was GEL 9.5mln in 4Q15 and GEL 28.mln in 215 Sources: GHG internal reporting, financials are for 215 Note: healthcare services business and medical insurance business financials do not include inter business eliminations. Detailed financials, including inter business eliminations, are provided in annexes

49 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.% 7.3% 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) 1% 18% 33.% 17.% % % GHG Market shares 26.6% Bed market share 33.% 215 Long-term target 38.4% Share in total Healthcare spending 25.% 215 Long-term target 215 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% % 2.% 15.% 1.% 5.%.% 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 49

50 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 32, (GHG) 3.5 (Georgia) Significant expansion of capacity by k 5.4 Substantial room to grow beyond k 8.9 Nurse to doctor ratio 1:1.3 (Georgia) 4:1 (Georgia, WHO recommendation) 3.4:1 Pharmaceuticals share in total healthcare spending 38.4% (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; NCDC healthcare statistical yearbook 214 (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 5

51 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 2, % #1 1 36% 64% Renovated beds Soviet-era beds Key Georgian Hospitals (1) Ghudushauri-Chachava Vienna Insurance Group Aversi PSP Other , % 4% 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 3.4% 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 31 December 215 (2) GHG internal reporting page 51

52 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.16.6mln Imedi L spending on ambulatories in 215, only 32.8% 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 52

53 EBITDA Revenue GEL 56.1mln GEL 239.1mln* GHG - Segment overview Key Segments Referral and Specialty Hospitals Evex Imedi L Community Hospitals Ambulatory Clinics 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 (215) (1) GEL.9bln (215) (1) GEL.14bln (215) (1) 18% by revenues 26.6% by beds (2,67), which is expected to grow to c.3.% as a result of renovation of recently acquired hospital facilities (additional c.5 beds); Market Share 1% 38% Selected Operating Data % 16 hospitals 2,29 beds 17% 19 hospitals 461 beds 1 clinics 234, insured 68% 7% 2% 23% Financials 215 GEL mln CAGR 64% GEL 17.6 mln CAGR 12% GEL 5.3 mln CAGR 9% GEL 55.3 mln 9% 83% 3% 5% CAGR 14% GEL 46.9 mln CAGR 7% GEL 4.8 mln CAGR 24% GEL 1.8 mln CAGR 33% GEL 2.6 mln EBITDA Margin (1) : 28.% EBITDA Margin (1) : 27.7% EBITDA Margin (1) : 3.5% EBITDA Margin (1) : 4.7% CAGR -15% Source: GHG internal reporting (1) Frost & Sullivan analysis, 215 (2) EBITDA margins are based on gross of intercompany eliminations as well as gross of head office and management costs

54 Expanding into Tbilisi Istitutionalising the business GHG roadmap - Creating single largest healthcare player Year Milestone EV/EBITDA Investment per bed BGH Investment GEL mln Facilities & beds Decision to invest 211 State infrastructure reform starts Started investing in hospitals Merged with Block Georgia (non-cash) 3.1x, GEL 74k Imedi L acquisition 4.9x, GEL 47k Investment to support organic growth GEL 56k State Universal Healthcare Program starts Acquired Caraps 6.x, GEL 142k Accelerate growth 214 Acquired Avante 3.7x, GEL 73k Acquired Sunstone GEL 99k Acquired Traumatology 3.9x, GEL 134k 1 6 Acquired Block minority 215 Acquired HTMC 6.4x, GEL 26k Acquired Deka GEL 183k 1 8 Launched ambulatory expansion strategy IPO-ed Total (as of Dec-215) ,67 page 54

55 BoG Group achieved 121% IRR at GHG IPO invested IPO 215 valued Investment (GEL mln) Valued (GEL mln) Achieved 3.9x money at IPO page 55

56 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business m2 Real Estate Georgian Macro Overview Appendices page 56

57 m2 - Income statement Highlights m2 Consolidated P&L m2 Income Statement Highlights 4Q15 4Q14 Change 3Q15 Change Change Gel thousands, unless otherwise Y-O-Y Q-O-Q Y-O-Y Real estate revenue 47,465 9, % % 53,852 6, % Cost of real estate (34,869) (7,439) NMF (23) NMF (39,721) (46,81) -15.1% Gross real estate profit 12,596 2, % % 14,131 13, % Gross other investment profit 7, % % 7, % Revenue 19,873 2, % % 21,633 13, % Salaries and other employee benefits (356) (317) 12.3% (24) 74.5% (1,15) (1,177) -2.3% Administrative expenses (1,515) (1,45) 45.% (879) 72.4% (4,71) (3,959) 19.% Operating expenses (1,871) (1,362) 37.4% (1,83) 72.8% (5,86) (5,136) 14.1% EBITDA 18, % (396) NMF 15,773 8, % Depreciation and amortization of investment business (55) (6) -8.3% (51) 7.8% (191) (332) -42.5% Net foreign currency loss from investment business (836) (468) 78.6% (1,23) -32.% (1,534) (896) 71.2% Interest income from investment business % (6) -1.% % Interest expense from investment business (173) (168) 3.% (155) 11.6% (1,566) (778) 11.3% Net operating income before non-recurring items 16, % (1,838) NMF 12,868 6, % Net non-recurring items (7) NMF (137) 18 NMF Profit before income tax 16, % (1,828) NMF 12,731 6, % Income tax (expense) benefit (2,64) (37) NMF 274 NMF (1,974) (1,22) 93.2% Profit 14, % (1,554) NMF 1,757 5, % page 57

58 m 2 Real Estate Strong project performance and pipeline Project status No of projects Total Apartments Apartments sold % Sales US$ mln Land value unlocked, US$m Completion date Completed % n/a Ongoing 5 1,641 49% Feb Apt Mar Apt Apr Apt Dec Apt Sep Apt Total 8 2,57 66% Outstanding performance: All completed projects were on budget and on schedule Strong revenue and development pipeline: US$ 57.1mln will be recognised upon completion of the on-going projects during years, of which c. US$ 43mln is expected to be recognised in 216 Land stock of value US$ 23mln, with c.52 apartments page 58

59 m 2 Real Estate Strategy Real estate developer Continue unlocking land value by developing housing projects Business lines Start developing 3 rd party lands Accumulate yielding assets, by: Mainly retain commercial real estate in residential buildings Develop hotels and apartments (mixed-use) to increase yielding business Capital management discipline pay to BGEO US$ 2-25mln dividends every five years page 59

60 m 2 Real Estate Hotel strategy 3-star hotel opportunity in Tbilisi Develop 3 hotels in next 7 years in Tbilisi catering to budget travelers Visitors in Georgia 25% CAGR 3-15 Limited supply last Branded hotel opening in Tbilisi in 212 6, 5, 4,428 5,898 5,516 5,392 Distribution of rooms in Tbilisi by accommodation type, 211 Wyndham Ramada Anchor exclusivity for 7 years Equity investment US$ 7 million Number of rooms 37 Investment per room US$ 7k Occupancy rate 65% (3 rd year stabilised) ADR US$ 1 4, 3, 2, 1, 1,5 1,29 1, ,32 2,822 Other accommodation units (local) 74% Internationally branded hotels 26% ROE 2% Foreign visitors (thousand persons) Source: Galt & Taggart Research page 6

61 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business Renewable Energy Opportunity Georgian Macro Overview Appendices page 61

62 Opportunities Renewable Energy opportunity 1 2 Underpenetrated industry Cheap to develop Only 2-25% of Georgia s hydro resources utilised US$ 1.5mln for 1MW development in Georgia 3 Strategic partnership Strategic partnership with industry specialists RP Global (Austria) 4 5 Small investment to date BGEO planned investment in ongoing projects Only US 1mln invested during first 1.5 years of due-diligence and planning BGEO investment US$ 28mln Total investment US$ 43mln (partnership: 65% BGEO 35% RP Global) Expected IRR 25%+ page 62

63 Renewable Energy 5 year roadmap Goal Establish renewable energy platform, targeting 1MW+ in 4 medium size hydro power plants by 219 Development 2 ongoing projects 15MW, 4 HPPs Projects Mestiachala 1 & 2 Zoti 1 & 2 Pipeline Estimated Capacity 1 MW 5MW 55MW Estimated Project Timeline Note: Project timeline includes only construction period. In general construction period is preceded by a 1-2 year pre-construction period. On average 5% of total project cost is spent during this period on due diligence page 63

64 Renewable Energy 5 year roadmap Goal Establish renewable energy platform, targeting 1MW+ in 4 medium size hydro power plants by 219 Financing Pipeline BGEO contribution US$ 28mln over next 4 years (estimated total equity US$ 43mln) Small investment until now Staged investments 4 years BGEO investment page 64

65 Renewable Energy 5 year roadmap Goal Expected IRR 25%+ Math EBITDA (run rate) Total US$ 15.9mln BGEO share US$ 1.3mln Equity contribution US$ 43mln US$ 28mln Exit opportunities 1 2 Sale in parts Scale up (2 nd stage) and public listing or strategic sale page 65

66 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business GGU Georgian Global Utilities Georgian Macro Overview Appendices page 66

67 GGU Overview Two core activities: Business overview 1. Water utility Provides water to 1.4mln people (1/3 of Georgia) 2. Generation of electric power Owns and operates 3 HPPs with total installed capacity of 143MW. Generated power is primarily used by GGU s water business. The excess amount of generated power is sold to the third party clients every year Highlights We acquired 25% of shareholding, December 214 We had an option to acquire an additional 24.9% share in GGU. We did not exercise this option 214 EBITDA GEL51.6mln 215E EBITDA GEL 63.2mln Profit contribution to BGEO: 4Q15 GEL 1.9mln 215 GEL 4.1mln water delivery losses to 4%, from current 5% page 67

68 GEL millions GGU EBITDA dynamics GGU EBITDA CAGR % E 216F 217F 218F EBITDA growth drivers Cost saving from reduction in water delivery losses to 4%, from current 5% Double effect from water delivery loss reduction selling freed-up energy page 68

69 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business Teliani Valley Georgian Macro Overview Appendices page 69

70 Teliani Valley Business overview Goal Become leading beverages producer and distributor in Caucasus Strong existing franchise New business line Leading wine producer With wide distribution platform Launch beer production Teliani Business Black Sea Poti Batumi Russian Federation Georgia Tbilisi Rustavi Caspian Sea Turkey Armenia Azerbaijan Baku 3 million bottles sold annually US$ 8mln revenue in 215 US$ 1.7mln EBITDA in 215 6% of sales from export 4,4 sales points Exporting to 26 countries, including all FSU, Poland, Sweden, Finland, USA, Canada, Brazil, China, Thailand, Singapore Launch beer production facility in Georgia 1 year exclusivity with Heineken to sell in Georgia, Armenia and Azerbaijan (17mln population) page 7

71 Teliani Valley Exclusive Heineken producer in Caucasus Exclusive Heineken producer in Caucasus Strong management with proven track record Highly concentrated market Low consumption per capita compared to peers Investment Rationale 1.3 EBITDA Net Income Domestic market segmentation (Q3 215) 31% 6% 12% 51% Effes Georgia Zedazeni Argo Other Beer Consumption in Peer Countries 214 (l/capita) Peer Average page 71

72 Teliani Valley Exclusive Heineken producer in Caucasus Exclusive Heineken producer in Caucasus Investment EBITDA projection Exit options Financials Total investment US$ 37.9mln, of which US$ 15mln is equity BGEO to invest US$ 1.9mln in total, amounting to 64% of shares of Teliani GEO equity value of c.us$ 14mln is projected to grow 5x in 7 years, targeting 25%+ IRR in 5-7 years time EBITDA Evolution, USDmn (215-22) 13.8% 15.1% 18.4% % 21.2% % E 216E 217E 218E 219E 22E 25% 2% 15% 1% 5% % Trade sale Global Beer Georgia EBITDA (LHS) Teliani Valley EBITDA (LHS) EBITDA margin (RHS) page 72

73 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Banking Business Results Discussion Investment Business Georgian Macro Overview Appendices page 73

74 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$16.5 bn) Real GDP growth rate E: 7.2%, 6.4%, 3.3%, 4.6%, 2.8% Real GDP average 1 yr growth rate: 5.8% GDP per capita 215E (PPP) per IMF: US$ 9,566 Annual inflation (e-o-p) 215: 4.9% External public debt to GDP 215E: 32.4% Sovereign ratings: S&P BB-/B/Stable, affirmed in November 215 Moody s Ba3/NP/Positive, affirmed in March 215 Fitch BB-/B/Stable, affirmed in October 215 page 74

75 Georgia s key economic drivers Liberal economic policy Regional logistics and tourism hub Strong FDI Support from international community 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); 5.9mln visitors in 215 (up 6.9% 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 at US$1,19mln in 9M15 (down 17.3% y-o-y) Net remittances of US$1,262.6mln in 214, 19.5% CAGR 4-14, US$98.9mln in 215 (down -28.% y-o-y) 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, spurring exports and enhancing the diversification and competitiveness of Georgian products Visa-free travel to the EU is another major success in Georgian foreign policy, acknowledged in the EC s 4th and final report on Georgia s achievements released on December 18, 215. Georgian passport holders are expected to start free entrance to the EU countries by mid-216 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 Electricity transit hub potential Political environment stabilised 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 -The Russian side recently announced to ease visa procedures for Georgians citizens effective December 23, 215 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 215, Russia and Ukraine together accounted for 1.1% of Georgia s exports and 14.% of imports; just 4.1% of cumulative FDI over page 75

76 Growth oriented reforms Ease of Doing Business 216 (WB-IFC Doing Business Report) Economic Freedom Index 216 (Heritage Foundation) UK USA Sweden Norway Estonia GEORGIA Armenia Czech Rep. Romania Kazakhstan Montenegro Turkey Serbia Azerbaijan Ukraine Estonia UK USA Georgia Latvia Hungary Bulgaria Romania France Turkey Italy Azerbaijan Russia Ukraine Global Corruption Barometer TI 213 Business Bribery Risk, 214 Trace International 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% 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 76

77 E Diversified resilient economy Gross domestic product Nominal GDP structure, FY % 11.1% % 9.4% 6.2% % 4.6% 5.9% 7.2% % % 2.8% -3.7% Nominal GDP, US$ bn Real GDP growth, y/y % 14% 12% 1% 8% 6% 4% 2% % -2% -4% Financial interm. 3.4% Real estate 6.% Hotels & restaurants 2.4% Health 6.% Construction 7.1% Agriculture 9.3% Other 11.% Public administr. 9.9% Trade 17.5% Industry 16.9% Transport & commun. 1.4% Source: Geostat Source: Geostat Comparative real GDP growth rates, % (24-214) GDP per capita 7% 6% 5% 4% 3.% 3% 2.2% 2% 1% % Sources: IMF, Geostat 3.5% 3.8% 3.8% 4.% 4.2% 4.4% 5.1% 5.1% 5.8% 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, 9,566 9,29 8,6 8,526 7,287 6,135 5,788 6,3 6,571 3,711 4,131 4,434 4,329 4,943 3,431 3,779 4,267 3,72 3,159 2,479 2,694 2,951 1, ,22 1, F Nominal GDP per capita, US$ GDP per capita, PPP Sources: IMF page 77

78 Georgia Kyrgyz Rep. Kazakhstan Latvia Slovak Rep. Romania Macedonia Lithuania Moldova Estonia Azerbaijan Armenia Czech Rep. Bulgaria Russia Belarus 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Productivity gains have been the main engine of growth since 24 Overall contribution of capital, labour, and Total Factor Productivity (TFP) to growth, Contributions of capital, labour, and TFP to growth during periods TFP growth 3.65% Source: Georgia Rising (213), WB Capital stock 1.6% Labor force.32% 1% 8% 6% 4% 2% % -2% -4% 3.65% 6.32% 1.48% 2.25% Capital stock Labor force TFP growth Source: Georgia Rising (213), WB 3.86%.67% 1.56% -2.2% Real GDP growth projection, Employed persons in business sector, 6% 5% 4% 3% 2% 1% % -1% -2% -3% 216F 217F % -13.6% 12.7% -3.% 4.9% 3.% 14.4% 6% 5% 4% 3% 2% 1% % -1% -2% Employment in business sector, ' Pers. income tax revenues, % change y/y Sources: IMF, WEO October 215 Source: GeoStat, MOF page 78

79 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, % 16% 14% 12% 1% 8% 6% 4% 2% % Sources: GeoStat Employment (thousands) Unemployment rate Sources: GeoStat Wages, US$ Total income, US$ Agriculture remains the largest employer, although the share of services in total employment has increased Hired workers account for about 39.7% in total employment 2, 1,8 1,6 1,4 1,2 1, Services Agriculture Industry Public sector Non-public sector Source: GeoStat Note: services include construction Sources: GeoStat page 79

80 E 216F 217F 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 USA Italy Demonstrated fiscal discipline and low public debt Fiscal deficit as % of GDP Breakdown of public debt % -2% -4% -6% -8% -1% -.3% -2.6% -3.4% -4.8% -6.5% Fiscal deficit/gdp capped at 3% -6.7% -2.8% -2.6% -3.% -3.% -3.% -3.6% -9.2% E 216F Domestic 21% External 79% Multilateral 56% Bilateral 13% Eurobond 9% External public debt portfolio weighted average interest rate 1.9% (Contractual maturity 23 years) Fiscal deficit as % of GDP Source: Ministry of Finance of Georgia Source: Ministry of Finance of Georgia, as of end-215 Public debt as % of GDP Government Debt/GDP, 214 7% 6% 5% Public debt/gdp capped at 6% 7% 6% 5% 14% 12% 1% 4% 4% 8% 3% 3% 6% 2% 2% 4% 34% 1% 1% 2% % % % Total public debt to GDP, % External public debt to GDP, % Sources: Ministry of Finance of Georgia, Geostat Source: IMF page 8

81 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 E 216F Investing in infrastructure and spending low on social Revenues and expenditures Current and capital expenditure 12, 1, 8, 6, 4, 2, 37.2% 33.9% 3.7% 3.6% 29.3% 3.2% 29.6% 3.% E 216F 7% 6% 5% 4% 3% 2% 1% % 1% 8% 6% 4% 2% Current Expenditures 77.9% 78.1% 75.% 76.% 22.1% 21.9% 25.% 24.% Capital Expenditures 82.3% 83.6% 82.2% 83.2% 17.7% 16.4% 17.8% 16.8% Total Budget Receipts, GEL mn Expenditures (Capital + Current), GEL mn % Expenditures (capital + current) as % of GDP Source: Ministry of Finance, GeoStat 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 81

82 Diversified foreign trade Import of goods and services Export of goods and services 12, 1, 8, 1,16 9,133 9,259 7,988 1,447 1,562 1,725 7,471 1,265 6,644 5,879 1,246 6,114 6, 5,248 1, ,93 4, , 3, ,944 6,224 6,723 7,685 7,697 8,29 1,825 2, ,643 4,27 5,21 5,391 2, ,426 1,986 2, M15 Goods imports, US$ mn Services imports, US$ mn 8, 7, 6, 5, 4, 3, 2, 1, 7,175 7,38 6,21 1, , , ,984 3, ,19 2,562 2,5 3,163 3,658 4,34 3, ,17 1, ,424 2,152 1, ,329 1,641 1, ,37 1,39 1,839 2,16 3,1 3, ,535 2, ,625 1,938 1, M15 Georgia originated exports, US$ mn Serveces exports, US$ mn Source: NBG BOP statistics Source:, NBG BOP statistics Imports, 215 Exports, 215 Oil imports UAE 3% USA 3% Ukraine 6% Azerbaijan 7% Japan 3% Other 13% China 7% Russia 8% Sources: Geostat, Galt & Taggart Research EU 33% Turkey 17% Canada 3% Uzbekista n 4% USA 5% Other 18% China 6% Russia 7% Armenia 8% Turkey 9% EU 29% Azerbaijan 11% 1, Sources: GeoStat 215 imports US$657.4mln, down 28.4% y-o-y Oil imports, US$ mn Oil imports, % change, y/y 1% 75% 5% 25% % -25% -5% page 82

83 E Diversified sources of capital inflow FDI inflows Number of tourists 2,5 US$1.2 bln in 9M15, down 17.3% 25% 6, 5.9mln visitors in 215, up 6.9% 5,392 5,516 5,898 2, 1,5 1, 5 2% 15% 1% 5% % 5, 4, 3, 2, 1, 4,428 2,822 2,32 1,52 1,29 1,5 1,155 1,426 1,489 1,68* FDI (US$ mn) FDI as % of GDP Foreign visitors (thousand persons) Net tourist revenue (US$ mn) Sources: Geostat Sources: Georgian National Tourism Agency, National Bank of Georgia, Galt&Taggart Research Net remittances Public donor funding 1,4 1,2 1, % % % % 7.2% 7.1% Net remittances Net remittances as % of GDP US$1.8 bln in 215, down 25.% % 8.1% 949 1, % 1, % 1, % 1, % 99 9% 8% 7% 6% 5% 4% 3% 2% 1% % US$ mln F Investment projects, credits, US$ mn Investment projects, grants, US$ mn Source: National Bank of Georgia page 83

84 Azerbaijan Turkey Georgia 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% 9.6% 7.1% 3.7% 3.9% 5.3% 17.2% 15.1% 12.2% 6.1% 7.% 7.3% 7.8% 6.7% 1.6% 6.5% 6.7% 6.9% 6.2% 5.8% 5.9% 5.% 5.4% 6.9% CA deficit to GDP net FDI to GDP Sources: Geostat, NBG Sources: Geostat, NBG FDI to GDP, % Capital goods imports to GDP, % Currency devaluation by countries* Monetary policy rates 8% 7% 6% 5% 4% 3% 2% 1% % 17.6% 28.8% 3.2% 37.2% 51.9% 54.9% Armenia Turkey Georgia Moldova Azerbaijan Belarus USD/AMD USD/TRY USD/GEL USD/MDL USD/AZN USD/BYR 58.5% 59.5% Russia USD/RUB Kazakhstan USD/KZT 67.% Ukraine USD/UAH 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% % 3% 25% 2% 15% 1% 5% % End-214 End-215 LHS: Devaluation RHS: Annual Inflation, 215 eop *from 1 January 214 to 25 January 216 Source: Bloomberg, Source: Central banks 24.9% page 84

85 Jan-3 Sep-3 May-4 Dec-4 Aug-5 Apr-6 Nov-6 Jul-7 Mar-8 Nov-8 Jun-9 Feb-1 Oct-1 May-11 Jan-12 Sep-12 May-13 Dec-13 Aug-14 Apr-15 Dec-15 Jan-3 Sep-3 May-4 Dec-4 Aug-5 Apr-6 Nov-6 Jul-7 Mar-8 Nov-8 Jun-9 Feb-1 Oct-1 May-11 Jan-12 Sep-12 May-13 Dec-13 Aug-14 Apr-15 Dec-15 Jan-3 Aug-3 Apr-4 Dec-4 Aug-5 Mar-6 Nov-6 Jul-7 Mar-8 Oct-8 Jun-9 Feb-1 Oct-1 May-11 Jan-12 Sep-12 May-13 Dec-13 Aug-14 Apr-15 Dec-15 Floating exchange rate policy and stronger market fundamentals FX reserves REER US$ 2.5 bln reserves as of December 215 NBG was a net seller of US$287 mln in 215 US$ bln FX Reserves M2 multiplier Sources: NBG Sources: NBG M2 and annual inflation M2 and USD/GEL 7% 6% 5% 4% 3% 2% 1% % -1% -2% -3% 16% 14% 12% 1% 8% 6% 4% 2% % -2% -4% -6% 7% 53% 35% 18% % -18% -35% -53% -7% Lari deppriciation Lari appreciation 4% 3% 2% 1% % -1% -2% -3% -4% Source: NBG M2, % change, y/y (LHS) M2 % change, y/y (LHS) USD/GEL % change, y/y (RHS) Source: NBG page 85

86 Growing and well capitalised banking sector Summary Prudent regulation ensuring financial stability High level of liquidity requirements from NBG at 3% of liabilities, resulting in banking sector liquid assets to client deposits of 41% as of Dec 215 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 at 19.5% of GDP and total loans at 44.5% of GDP as at 31 December 214 resulting in low number of defaults during the global crisis Source: National Bank of Georgia, Geostat Banking sector assets, loans and deposits NPLs, Assets Loans Deposits Source: NBG 27.7% CAGR Source: WB Turkey Georgia Austria Belgium Denmark Latvia Belarus Slovakia Czech Rep. Lithuania Kosovo Russia Malta Armenia Macedonia Slovenia Kazakhstan Hungary Romania Bos. & Herz. Moldova Croatia Ukraine Source: National Bank of Georgia page 86

87 Underpenetrated retail banking sector provides room for further growth Corporate loans to GDP Households loans to GDP 4% 35% 3% 25% 2% 15% 1% 5% % 9% 8% 6% 6% 7% 1% 15% 14% 15% 6% 6% 8% 1% 1% 6% 13% 17% 17% 17% 17% 18% 18% 2% 22% % 35% 3% 25% 2% 15% 1% 5% % 21% 18% 13% 9% 11% 11% 13% 14% 3% 3% 4% 6% External corporate indebtdness to GDP Corporate loans to GDP Banking Sector loans and deposits Georgia* Moldova Romania Lithuania Russia Turkey Ukraine Bulgaria Serbia Latvia Estonia 39.1% 36.1% 43.5% 44.3% 4.1% Gross loans/gdp Deposits/GDP 53.5% 57.8% 48.8% 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 87

88 Contents Bank of Georgia Holdings PLC Overview Results Discussion Bank of Georgia Holdings PLC Results Discussion Banking Business Results Discussion Segments Georgian Macro Overview Developments in 215 Appendices page 88

89 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 Nov-15 Dec-15 Jan-11 Apr-11 Jul-11 Nov-11 Feb-12 May-12 Aug-12 Dec-12 Mar-13 Jun-13 Oct-13 Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 May-15 Sep-15 Dec-15 Armenia Georgia Azerbaijan Turkey Belarus Russia Kazakhstan Moldova Ukraine Armenia Georgia Turkey Moldova Ukraine Russia Belarus Azerbaijan Kazakhstan Kazakhstan 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 Nov-15 Dec-15 Georgia Turkey Ukraine Russia Belarus Moldova Armenia Azerbaijan Global, regional and local factors fully affected lari in 215 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. 6% 5% 4% 3% 2% 1% % Weakening against US$ 2% 9% 9% 1% 12% 26% 29% 35% 51% 1% % -1% -2% -3% -4% -5% -6% -7% 2.1% -8.4% -13.1% -17.5% -21.6% -27.1% Reserve loss, % -36.4% -4.1% 1% % -1% -2% -3% -4% -5% -6% -62.3% -7% REER, Jan 213=1 NEER, Jan 213=1 Lari real depreciation 9 Source: Bloomberg Note: 1 August January 216 Source: IMF Note: Nov-215 vs Aug-214; 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 9% 8% 7% 6% 5% 4% 3% 2% 1% % Annual inflation 7.% 4.9% 9% 8% 7% 6% 5% 4% 3% 2% 1% % World commodity prices 3% 25% 2% 15% 1% 5% % -5% End-214 End-215 Annual inflation 43% 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 Dec 215 page 89

90 Azerbaijan Turkey Georgia Armenia Russia Kazakhstan Moldova Ukraine Belarus Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 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 Nov-15 Dec-15 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 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 Nov-15 Dec-15 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 Nov-15 Dec-15 Jan-16 Foreign reserves at adequate level Reserves sufficient to finance more than 3 months of merchandise and services imports NBG intervened moderately at the beginning of FX Reserves US$ sale US$ purchase Gross International Reserves, US$ bn Net Foreign Assets, US$ bn NBG monthly net interventions US$ mn Source: NBG Source: NBG Policy rate lower in Georgia vs peers Deposit and loan dollarization 3% 25% End-214 End-215 8% 75% 8% 75% 2% 15% 7% 7% 1% 65% 65% 5% 6% 6% % 55% 55% Source: Central banks Note: Latest data as of 26 December 215 Source: NBG Deposit dollarization Loan dollarization page 9

91 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 Nov-15 Dec-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 Nov-15 Dec-15 Jan-16 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 Nov-15 Dec F Strong FDI drives trade deficit; Services and remittances compensating c.7% Current account balance, as % of GDP 3% 2% 1% % -1% Tourism revenues on the rise 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) -2% -3% Trade Deficit -4% 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 4% 3% 2% 1% % -1% -2% -3% -4% 1% 6% 8% 2% 29% 2% 13% 2% 19% 2% 14% 9% 9% 1% 12% Trade deficit, % change, y/y -1% -18% % -27% -35% -6% -16% -14% -25% 1. Tourist arrivals % 15% 1% 5% % -5% -1% Remittances -12.2% 8% 6% 4% 2% % -2% -4% Source: GeoStat; excluding one-offs International arrivals, mn Source: GNTA % change, y/y Source: NBG Inflow, US$ mn % change, y/y page 91

92 E 216F 18.7% 22.9% 23.1% 2.1% 23.8% 24.8% 21.9% 24.5% 25.9% 27.7% 35.3% 31.3% Prudent fiscal performance Budget tax revenues posted a strong performance so did capex and privatization, while current expenditure growth was flat in real terms GEL mln VAT +6.3% +14.7% +23.7% Pers. income Corp. income tax tax +7.5% +18.1% Excise tax Property tax Customs duties -27.% +8.4% Other taxes 25% 2% 15% 1% 5% % -5% -1% +5.5% Current spending, % change y/y +36.7% Capital spending, % change y/y +29.7% Privatization, % change y/y Source: Treasury Service Source: MOF Government was committed to smoother spending in 215, while deficit financing was taking place mostly in 4Q of , pressuring GEL Government revised budget for 215E growth 2.8% from 5%, while fiscal deficit, tax and total expenditures ratios to GDP remained unchanged 4% 35% 3% 25% 4% 35% 3% 2% 15% 1% 5% 25% 2% 15% % % Source: MOF Note: Budget expenditures as % of annual plan 1Q 2Q 3Q 4Q Source: MOF, GeoStat Tax revenues as % of GDP Expenditures (capital + current) as % of GDP page 92

93 Contents BGEO Group PLC Overview Results Discussion BGEO Group PLC Results Discussion Banking Business Results Discussion Investment Business Georgian Macro Overview Appendices Analyst Coverage Express Banking Solo Banking Financial Statements page 93

94 Analyst coverage BGEO Group PLC Consensus Target Price: GBP Nov.215 GBP GBP Feb Feb.216 GBP 24. GBP Feb Feb.216 GBP GBP Jan Feb.215 GBP GBP Feb Feb.216 GBP 25.6 GBP Dec Dec.215 GBP 26.8 page 94

95 Express emerging retail banking How Express works Express Branches 2 1,191,828 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 2,589 Express Pay Terminals 4 8,13 POS Terminals at 3,335 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 95

96 No. of transitions s Express Banking Capturing Emerging Mass Market Customers 113,75 Express Pay terminals 49,669 99,38 x2 Express branches 16,889 21,51 25,733 52% ATMs 12,36 17,97 14,92 46% POS terminals 7,235 14,649 2,618 x ,985 Express cards 7,552 18,496 x3 4,45 Internet banking 4,262 3,79 45% Mobile banking 1, x5-2, 4, 6, 8, 1, 12, 18,549,591 Tellers 16,32,951 16,978,669 +9% page 96

97 Solo a fundamentally different approach to premium banking SOLO Lounges Through the recently launched Solo, we target to attract new clients (currently only 11,869) 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 97