GROWTH AT THE RIGHT PRICE LSE: BGEO / GSE:GEB. JSC Bank of Georgia investor presentation

Transcription

1 GROWTH AT THE RIGHT PRICE LSE: BGEO / GSE:GEB JSC Bank of Georgia investor presentation March 21

2 Introduction to Bank of Georgia The leading universal bank in Georgia No.1 by assets (33.%), (1) loans (31.8%), (1) client deposits (28.3%) (1) and equity (38.6%) (1) Leading retail banking, with top brand, best distribution network and broadest range of services of any bank in Georgia December September December Retail Accounts 999,+ 895,+ 866,+ Cards Outstanding 537,+ 569,+ 639,+ Branches ATMs Leading corporate bank with approximately 82, legal entities and over 153, current accounts Leading card-processing, leasing, insurance and wealth management services provider Banking operations in Ukraine and Belarus, with BG Bank (Ukraine) and BNB (Belarus) accounting for less than 1% of BoG s consolidated total assets The only Georgian entity with credit ratings from all three global rating agencies S&P: B/B at the sovereign ceiling Fitch Ratings: B/B Moody s: B3/NP (FC) & Ba3/NP (LC) Listed on the London Stock Exchange (GDRs) and Georgian Stock Exchange Market Cap (LSE) US$ 313 mlnas of 25 February 21 Approximately 95% free float Issue of the first ever Eurobonds in Georgia Bloomberg: BKGEO; 5 year, 9%, US$2 mln B/Ba2/B (composite B+) (1) All data according to the NBG as of 31 December 29 March 21 Page 2

3 March 21 The Georgian Economy

4 Georgia s Economy Basic Facts Area: 69,7 sq km Population: 4.4 million (as of January 1, 29) Life expectancy: 76.5 years Official language: Georgian Literacy: 1% Capital: Tbilisi Currency (code): Lari (GEL) GDP (29F): US$12.3 billion GDP real growth rate 29F: -4% GDP per capita 29F (market): US$ 2,82 GDP per capita 29F (PPP): US$ 4,747 Current account deficit 29F: US$ 1.6bn, 12.8% of GDP Budget Deficit 29F: 9.5% of GDP Inflation rate (October, 12-month rate) 29: 3.2% External public debt / GDP 29F: 27% March 21 Page 4

5 Key drivers of economic growth Export-led growth with sufficient diversity Agricultural product exports of US$282m in 29 Ferroalloy exports of US$426m in 28 Aircraft, rail car, vessels and vehicles exports of US$122m in 28 and US$17m in 29 Fertilizers exports of US$15m in 28 and US$6m 29 Machinery exports of US$29m in 28 and US$3m in 29 Oil and gas pipelines Russia-Georgia-Armenia pipeline 5.8 bcm/year Shah-Deniz (BTE) gas pipeline -6.6 bcm/year Iran-Azerbaijan-Georgia (IAG) gas pipeline 3.5 bcm/year Baku-Supsa oil pipeline 5.75 mt/year Baku-Tbilisi-Ceyhan (BTC) oil pipeline -5 mt/year Huge untapped hydro-power resources only 18% of Georgia s hydro potential is being utilized Increasing domestic consumption Consumer spending in 28 - US$3.8bn estimated average household size of 3.7, far higher than in most CEE/CIS peers new construction has not caught up with the cumulative deterioration of the Soviet-built housing stock less than 18, households (out of the estimated total of 1.3 million) have mortgages Consumer debt per capita (including mortgages) stood at US$92 as of 31 December 29 Organized retail trade (supermarkets, hypermarkets, consumer electronics & white goods, etc) account for a low share of total Economic growth is supported by FDI expected at US$.8 bn in 21 Free industrial zones created around Poti (port), Kutaisi (second largest city) etc. (Tax rates in zones largely %) Net transfers from abroad Increasing consumer spending Sustained government spending Source: Ministry of Economic Development, Ministry of Finance, State Statistics Department March 21

6 Libertarian economic policies kick-start modernization Tax and tax rates slashed Now only 6 taxes, down from 21 Flat personal income tax of 2% (to come down to 15% by 213) Corporate income tax 15% By 212, no taxes on dividends, interest income, or world-wide income Liberty Act : Referendum is required for an increase in tax rates Budget expenditure capped at 3% of GDP (FY 212) Budget deficit capped at 3% of GDP (FY212) Public debt capped at 6% of GDP (FY212) Budget earmarks are limited Red tape and import duties cut Customs code harmonized with EU. Customs procedures reduced from15 to 7 Capital controls abolished Corruption significantly reduced In the World Bank s Ease of Doing Business survey in 29 Georgia was 11th (out of 183), from 112th in 25 In the 29 Transparency International Corruption Index Georgia was 66th (4.1 score), just below Turkey (61st, 4.4), the same as Croatia and above Brazil (75th, 3.7), China (79th, 3.6), India (84th, 3.4) and Russia & Ukraine (146th= 2.2) According to the International Republican Institute survey, 98% of Georgians didn t have to pay a bribe in the past 12 months In Forbes Tax Misery & Reform Index, Georgia was 4th best behind Hong Kong, UAE & Qatar Ambition: Create a fast-growing free enterprise economy that attracts investment and become regional logistical and banking hub March 21 Page 6

7 GDP breakdown: Trade, Logistics, Services GDP Breakdown, Q3 29 Health, social and community work, 8.3% Education, 4.3% Agriculture etc., 7.8% Mining and quarrying,.7% Manufacturing, 8.2% Public administration, 13.5% Utilities & household processing, 5.3% Real estate and imputed rent etc., 3.7% Construction, 6.% Financial intermediation, 2.3% Transport & communication, 1.6% Hotels and restaurants, 2.1% Trade (Retail & Wholesale), 12.7% Source: National Bank of Georgia Page 7 March 21 Page 7

8 GDP per capita is low, leaving much room to climb GDP per capita across countries US$ 45, 4, 39, 35, 3, 25, 2, 15, 1, 5, 2,52 2,921 3,85 5,19 7,77 8,23 9,5 1,58 12,53 13,98 16,68 - US$ 4,5 Ukraine Georgia China Belarus Romania Russia Turkey Poland Hungary Estonia Czech Republic Western Europe average (EU 15+) 4, 3,5 3, 2,5 2, 2,34 2,555 2,556 2,641 2,737 2,921 2,984 1,5 1, 5 China 26 Bulgaria 23 Poland 1994 Turkey 22 Romania 23 Georgia 28 Russia 23 Source: IMF, National Bank of Georgia March 21 Page 8

9 Strong economic growth before crisis starting again? Gross domestic product (GDP) US$ billion % % 9.6% 9.4% % % 2.% 2-4.% F 21F 15% 13% 11% 9% 7% 5% 3% 1% -1% -3% -5% GDP per capita US$ 6, 5, Nominal GDP (LHS) Real GDP Growth (RHS) 4,664 4,863 4,747 4,9 4, 3, 2, 1, 919 2,966 1,188 3,242 1,484 3,644 1,764 4,38 2,315 2,92 2,82 2, F 21F Source: State Statistics Department of Georgia Nominal GDP per capita GDP per capita PPP March 21 Page 9

10 Current Account Deficit Exports and Imports* Remittances Exports of goods &services CAGR ('4-9F): 11% Imports of goods & services CAGR ('4-'9F): 15% US$ mln 8, 7, 6, 5, 4, 3, 2, 1, 7,497. 5, ,122. 4, , , , , , , , , , , F *Export and Import of goods and services Source: Central Bank of Georgia Current Account Deficit Donor inflows (DI) Total private capital inflows (TPCI) CAD CAD as % of GDP CAD+TPCI+DI as % of GDP US$ mln 5, 4, 3, 2, 1, -1, -2, -3, -4, 1.3% 1.1% 7.7% 5.6% 5.4% 3.2% 1.7% 3,23.3 1, ,56.8 2, ,92.6 (353.6) % (79.5) -9.6% (1,174.6) (2,8.7) (2,85.5) (1,649.5) (383.3) -11.1% -15.1% -12.8% -19.7% -22.3% F 15.% 1.% 5.%.% -5.% -1.% -15.% -2.% -25.% Donor Inflows include both public and private sectors. Donor inflows in 29 adjusted according to the banking sector foreign debt outflows Source: Central Bank of Georgia, Minister of Finance of Georgia March 21 Page 1

11 WTO member since 2 No quantitative restrictions on trade Simplified customs regime since August 26, new customs code becomes effective in January 27 One of the two beneficiaries of the EU GSP+ Scheme in the CIS since 26, granting local companies the right to export 7,2 categories of goods duty-free As of November 27 Georgia has entered into a free trade agreement with Turkey US-Georgia charter on strategic partnership envisions an update of Bilateral Investment Treaty, expansion of Georgian access to the General System of Preferences and the possibility of entry into Free Trade Agreement Trade structure Import structure by country, 29 Turkmenistan, 2.8% United Arab Emirates, 2.5% Kazakhstan,.5% Armenia,.9% USA, 5.2% China, 4.% Import structure by product, 29 Sugar, 1.4% Paper, 2.% Ferrous Metal Products, 2.2% Russia, 6.6% Ukraine, 9.6% Others, 36.5% Others, 12.4% Azerbaijan, 12.1% Source: State Statistics Department of Georgia EU Countries, 29.9% Turkey, 18.% Mechanical Equipment & Electrical Machinery, 2.1% Mechanical Equipment & Electrical Machinery, 17.5% Vehicles, 7.8% Ferrous Metals, 1.9% Apparel & footwear, Plastic, 3.% Pharmaceuticals, 4.4% 3.2% Cereals, 4.% Page 11 Export structure by country, 29 China,.5% United Arab Emirates, 1.5% Kazakhstan, 1.8% Russia, 1.9% USA, 3.3% Armenia, 7.8% Ukraine, 7.4% Canada, 1.4% Other, 1.% Azerbaijan, 16.3% Turkey, 19.9% Export structure by product, 29 Sugar,.1% Vessels & Aircraft, 2.% Pharmaceuticals, 1.3% Oil & Gas, 3.9% Others, 28.3% Equipment & Rail Cars, 4.% Fertilizers, 5.3% Cement, 2.1% Ores, 5.9% EU Countries, 2.9% Ferrous Metals, 17.4% Vehicles, 7.4% Beverages, Spirits & Vinegar, 1.9% Gems & Precious Stones, 1.4% March 21 Page 11

12 FDI picking up again Quarterly FDI inflows FDI Inflows US$ mln US$ mln 2,5. 2,. 1,5. 1, % 7.% % 1, % 2, % 1, % % 2.% 15.% 1.% 5.%. Q1 '5 Q2 '5 Q3 '5 Q4 '5 Q1 '6 Q2 '6 Q3 '6 Q4 '6 Q1 '7 Q2 '7 Q3 '7 Q4 '7 Q1 '8 Q2 '8 Q3 '8 Q4 '8 Q1 '9 Q2 '9 Q3 ' F Net FDI Net FDI as % of GDP.% Cumulative net FDI breakdown by origin 24-Q3 29 Country US$ mln % UK 743, % UAE 583,76 9.4% USA 484,92 7.8% Turkey 515,47 8.3% Netherlands 5,328 8.% British Virgin Islands 416, % Kazakhstan 37, % Czech Republic 29,84 4.7% Cyprus 296, % Subtotal 4,138, % Other countries 2,84, % Total 6,223,243 1.% FDI breakdown by sectors (27-Q3 29) Banking system, 5.1% Other services, 18.9% Real estate, 12.2% Transports and communications28.6% Not stated, 1.% Agriculture,.6% Industry, 16.9% Energy sector, 17.4% Construction, 6.2% March 21 Page 12

13 and more donor money to continue to flow EU member states, 3.8% US$173 mln Japan, 4.4% US$2 mln Norway,.9% US$4 mln Switzerland,.4% US$19 mln Other,.6% US$29 mln Asian Development Bank, 6.6% US$ 3 mln CoEB,.3% US$1.32 mln European Community, 14.1% US$638 mln European Investment Bank, 7.3% US$329.6 mln EBRD, 2.4% US$ mln United States, 22.% US$1, mln Financial institutions & organizations, 53.7% US$2,438 mln IFC, 7.7% US$35 mln World Bank, 11.7% US$ 53 mln 5 kv. power transmission line (EBRD, EIB, KfW) East-West highway improvement project (WB, Japan) Adjarabypass road (ADB) Vaziani-Gombori-Telavi road (WB) South Georgia road (MCG) Secondary and local roads (WB) Rehabilitation of infrastructure facilities in Batumi (KfW) Regional and municipal infrastructure development projects (ADB, EBRD) Total pledged funds: US$4.5 bn As of YE 29 over US$1 bndisbursed Source: Ministry of Finance of Georgia March 21 Page 13

14 Net remittances Net remittances, Net remittances by countries, 29 US$ mln % 4.9% 5.4% 7.4% 7.2% 6.7% 8% 7% 6% 5% Germany, 1.1% Kazakhstan,.9% Israel, 1.1% UK,.7% Turkey, 2.7% Other countries, 13.4% % 3% 2% 1% Ukraine, 6.9% Spain, 2.7% Russia, 54.5% 24A 25A 26A 27A 28A 29F % Greece, 7.7% Net remittances (LHS) Net remittances as % of GDP (RHS) Cumulative net remittances, Country US$ 's % of total Russia 1,15, % USA 126, % Greece 14, % Spain 39, % Ukraine 19, % Turkey 36, % UK 11,872.7% Israel 15,761.9% Kazakhstan 16,36 1.% Germany 12,61.7% Other countries 196, % Total 1,684,352 1.% Source: National Bank of Georgia USA, 8.5% Cumulative net remittances by countries, Germany,.7% Kazakhstan, 1.% Israel,.9% UK,.7% Turkey, 2.2% Ukraine, 6.5% Spain, 2.3% Greece, 6.2% USA, 7.5% Other countries, 11.7% Russia, 6.3% March 21 Page 14

15 so FX reserves rose, while inflows funded investment FX reserves, $ mn US$ mln US$2.3 bnoct 9 2, 1,5 US$1.36 bn US$1.48 bn Record high for Georgia 1, US$.93 bn 5 US$.19 bn US$.38 bn US$.49 bn FX rates: Nominal Lari/US$ and Real effective Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan Real effective rate, Jan4=1 (LHS) Lari / US$ (RHS) Source: National Bank of Georgia, Ministry of Finance of Georgia March 21 Page 15

16 Fiscal indicators: The worst seems past Overall fiscal balance of the state budget, 24-29F F 21F 211F , , % -3.4% -1,72.5.% -2.% -4.% -1, % -6.% -1, % -7.3% -8.% -2,. -9.4% -1.% Overall fiscal balance Overall fiscal balance as % of GDP Overall fiscal balance of the state budget, 24-29F January February March April May June July August September October November December March 21 Page 16

17 Public debt Georgia s economy is quite unleveraged compared to other emerging market economies Georgia s public debt is 28.5% of GDP in 28 down from 56% in 23 Paris club rescheduling in 21 and 24 The external debt is all multilateral or bilateral and significant share is highly concessional This explains why the government debt service burden is low Eurobonds debut issuance of US$5 mln in April 28, maturity date 213 External public debt service US$ mln % 7.1% % Source: The Georgian Economy Overview, Government of Georgia Presentation, June % 2.9% % A 25A 26A 27A 28A 29F External debt service External debt service as % of budget revenue 1.% 9.% 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% Breakdown of public debt US$ billion Source: The Georgian Economy Overview, Government of Georgia Presentation, December 29. General government debt as % of GDP, Q1 9 Kazakhstan Russia Estonia Bulgaria Czech Republic Slovak Republic Belarus Lithuania Ukraine Turkey Armenia Latvia Poland Georgia Hungary % 4.% 32.% % % 5% 1% 15% 2% 25% 3% 35% 4% 45% 28 Q1 '9 general government debt/29f GDP Source: World Bank, International Monetary Fund % A 25A 26A 27A 28A 29F External public debt Internal public debt Total public debt as % of GDP % 6.% 5.% 4.% 3.% 2.% 1.%.% March 21 Page 17

18 March 21 Strategy & Governance

19 Strategic objectives: grow at the right price More efficient Enhance operational efficiency through technological improvements: Temenos T24, core banking software, acquired in October 9 is in the process of implementation; Deployment of Softscape, talent management solution, and CRIF, credit scoring solution, is under way Deposit funded lending machine Divesting of non-core assets Wealth Management services launched in Israel and Ukraine Deposits from international clients reach GEL 1 mlnin 9 Premier Banking launched for the affluent client base supported by the exclusivity of Amex Card issuing and acquiring business in Georgia Despite high rate of bank debt growth in 5-9, ample room for growth with total loans/gdp under 3%; retail loans/gdp under 1% First stage of restructuring of equity investment business completed Controlling stake in investment management company sold in Oct 9 International operations Scale down operations of BG Bank; leverage on corporate banking and brokerage to build trade finance business in Ukraine to capture growing (c.u$1 bn) trade between Georgia and Ukraine Focus on high margin, unattended SME sector in Belarus; explore the possibility of third party investor, such as IFIs, in BNB Challenges in 21: Cost control and Loan book growth Page 19 March 21 Page 19

20 A move to classical two-tier board structure 2 2 Supervisory Board 7 non-executive SB members ; non-executive Chairman SB members Nicholas Enukidze, Chairman experience: MD at Concorde, Ukrainian investment bank; ABN AMRO Corporate finance in Moscow and London, Global One Communications, VA. USA Ian Hague, Firebird Management LLC Allan Hirst, Independent Director, experience: 25 years at Citibank, including CEO of Citibank, Russia; various senior capacities at Citibank Kaha Kiknavelidze, Independent Director currently managing partner of Rioni Capital, London based investment fund; previously Executive Director of Oil and Gas research team for UBS Jyrki Talvitie, East Capital David Morrison, Independent Director experience: senior partner at Sullivan & Cromwell LLP prior to retirement Al Breach,Advisor to SB, to replace Irakli Gilaurias SB member subject to the next AGM experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs Management Board Chief Executive Officer and 8 Deputies MB members Irakli Gilauri, CEO; formerly EBRD banker in Tbilisi and London, MS from CASS Business School, London Giorgi Chiladze, Finance; formerly CEO of BTA Bank (Georgia); Program Trading Desk at Bear Sterns, NYC ArchilGachechiladze, Corporate Banking; formerly Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University AvtoNamicheishvili, Legal; previously partner at Begiashvili &Co, law firm in Georgia. LLM from CEU, Hungary Irakli Burdiladze, COO; previously CFO at GMT Group, Georgian real estate developer. Masters degree from Johns Hopkins University Sulkhan Gvalia, Risk; founder of TUB, Georgian bank acquired by BOG in 24 Murtaz Kikoria, acting CEO of BG Bank; formerly senior banker at EBRD; Head of Banking Supervision at the National Bank of Georgia. MikheilGomarteli, Retail Banking; 1 years work experience at BOG Nick Shurgaia, International Business; previously CEO of VTB Georgia, Senior Banker at EBRD, London; MBA from LBS Page 2 March 21 Page 2

21 March 21 FY 29 and Q4 29 results highlights

22 Total assets declined by 9.8% in 29 Gross loans declined by 14.9% in 29 Gross loans grew 1.7% q- o-q in Q4 9 Liquid funds increased by GEL 18 mln, 35%, to GEL 7 mlnin 29 GEL 36 mlm of excess liquidity at YE 29 Goodwill of GEL 7 mln written-off in Q4 29, of which GEL 68 mlnassociated with Ukraine Assets Total assets 6, 5, 4, 3, 2, 1, 3,147.7 Corporate loan book breakdown Pharmaceuticals and Healthcare, 1.7% 3,4.7 Industry & State, 11.9% 3,154.3 Other, 14.3% Construction & Real Estate, 17.1% 3,258.9 FMCG, 14.4% 3, , ,16.7 2,59.7 2, ,46.8 1,94.7 1, ,864.2 Trade, 32.1% 2,97.8 Energy, 8.5% 2,98.2 2,938.4 Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Gross loans Loan book BG Bank, 1% RB & WM, 46% BNB, 1% Retail loan book breakdown Credit cards and overdrafts, 16% Micro loans, 12% Consumer and other*, 29% CB, 47% Mortgage loans, 43% March 21 Page 22

23 Loan portfolio quality NPLs Consolidated Loan loss reserve, Consolidated % % % 138.3% % 14.2% % 131.% Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 NPLs NPL coverage ratio NPLs, BoG Standalone 6.% 5.% 4.% 3.% 2.% 1.%.% % 2.1% % % % % Loan loss reserve, BoG Standalone 9.5% % Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Loan loss reserves Reserve For Loan Losses To Gross Loans, BoG Consolidated 12% 1% 8% 6% 4% 2% % % 7.% % 1 4.7% % % % 1.3% Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 8% 7% 6% 5% 4% 3% 2% 1% % % 2.% % % % % % % Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 8% 7% 6% 5% 4% 3% 2% 1% % RB &WM CB % of Gross loans RB & WM CB Loan loss reserve as % of gross loans March 21 Page 23

24 Total Client deposits grew by 7% in 29 WM client deposits grew 68.6% in 29 (24.1% q-o-q in Q4 9) RB client deposits grew 19.3% in 29 (14.9% q-oqin Q4 29) CB client deposits declined 6.7% in 29 (1.2% q-o-q in Q4 29) GEL 225 of Borrowed funds repaid in 29, resulting in 2% decrease y-o-y GEL 1 mln decline in Shareholders equity in 29 due to 29 loss associated with Ukraine, markdowns of real estate and investment Liabilities Client deposits 2, 1, , , ,22 1, Retail banking deposits ,133 1, , Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q RB Client Deposits CB Client Deposits WM Client Deposits Other , Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Wealth Management deposits Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Borrowed funds 15 1, , , Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 March 21 Page 24

25 Equity & Capital adequacy Total Shareholder s equity BIS capital adequacy ratios, BoGConsolidated 4% 35% 3% 25% 2% 15% 1% 5% % BV/share US$ BV/share US$ Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q % 34.6% 31.7% 33.7% 25.3% 27.3% 25.2% 25.% 24.7% 23.9% 25.4% 22.5% 22.2% 22.2% 25.8% 25.8% Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 NBG capital adequacy ratios, BoGStandalone 25% 2% 15% 1% 5% % 18.3% Highlights 15.8% 18.2% 16.6% 16.4% 17.8% Total Capital Adequacy Ratio of Bank of Georgia Standalone at16.8% in Q4 29 Tier 1 Capital adequacy Ratio of Bank of Georgia Standalone at 2.4% in Q Both ratios by NBG standards 2.4% 19.7% 16.3% 15.1% 15.5% 13.5% 17.4% 18.4% 21.2% 16.8% Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio March 21 Page 25

26 29 Net Interest Income declined by 5% and interest expense was largely flat In Q4 29 Total operating Income/Revenue was GEL 79.5 mln(+.2% q-oq) In 29 Total operating Income/Revenue was GEL mln(-5.4% y-o-y) Georgia accounts for 91.1% of total consolidated revenues, BG Bank 6.3% and BNB 2.6% Revenue Revenue Net Interest Income Net Non Interest Income Revenue by segments Belarus 2.6%, GEL 8.4 mln (+74.2% y-o-y) Ukraine 6.3%, GEL 2.1 mln (-35.8% y-o-y) Aldagi BCI 5.9%, GEL 18.9mln (+194.6% y-o-y) Other 6.4%, GEL 2.6 mln (+5.% y-o-y) BoG Standalone 78.8%, GEL mln (-8.8% y-o-y) Revenue, quarterly Composition of revenue Q Net foreign currency related income 6.6%, GEL 5.2 mln Net fee and (-19.1% q-o-q) commision income15.3%, GEL 12.2 mln (+1.1% q-o-q) Net income from documentary operations 2.9%, GEL 2.3 mln (-.7% q-o-q) Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Net other noninterest income 14.3%, GEL 11.4 mln (+19.% q-o-q) Net interest income 6.9%, GEL 48.4 mln (-1.1% q-o-q) Net Interest Income Net Non-Interest Income Page 26 March 21 Page 26

27 Net Foreign Currency related income decreased by 42.6% in 29, due to the decline in trade activities in Georgia by c.3% & exceptionally high FX Income in Ukraine in Q4 8. Revenue cont d Net fee & commission income Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Net foreign currency related income Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Income from documentary operations increased by 34.3 % in 29 Income from documentary operations Other non-interest income Net Other Non- Interest Income increased by 126% in 29, mostly due to the increases in brokerage and insurance income Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Net Insurance Income Brokerage Income Asset Management Income Realized Net Investment Gains Other March 21 Page 27

28 Total Recurring Operating costs decreased by 2. y-o-yin 29 Non Net Non- Recurring Costs of GEL 18.6 mln driven by goodwill writedown associated with BG Bank (GEL68 mln) and mark down of real estate and investments Costs Recurring operating costs Personel costs Other Recurring Operating Costs Recurring operating costs Employees Q ,674 4,781 Q ,669 4,798 Q ,665 4,914 Q ,692 4,964 Q4 28 4,977 2, Q ,853 6,196 Q ,619 5,911 Q ,56 4,926 Q ,692 4,459 1, 2, 3, 4, 5, 6, 7, BG Bank BoG Standalone Group Consolidated Net non-recurring costs (2.) (2.7) Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q (111.) Personnel Costs Other Recurring Operating Costs Page 28 March 21 Page 28

29 Consolidated Net provision expenses improved by 8.% q-o-q Bank of Georgia Standalone Net provision expenses declined by 1.9% q-o-q Operating profit, Provision expense Normalized net operating income BG Bank s Net provision expense Net provision expense BoGStandalone improved by 37.2% q-o-q which drove 16 overall changes higher Net loss for Q was GEL mln Net 6 loss was GEL mln (4.5) -2 Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q Net provision expense BoGConsolidated Net provision expense BG Bank Standalone (5) 27.6 Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q (1.3) Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q March 21 Page 29

30 Profitability & Selected Ratios Net Income (Loss) Net loans/client deposits (2) % 136.9% 1% 147.8% 16.6% 174.4% 168.7% 17.6% 14.3% 131.7% (4) (6) (8) (1) (12) (99.) % Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Net interest margin (annualized) 12% Cost Income Ratio* 24% 1% 8% 8.1% 8.9% 8.6% 9.1% 9.% 9.8% 9.8% 9.9% 1.1% 1.% 9.3% 9.3% 9.% 9.1% 9.6% 9.2% 8.9% 2% 16% 6% 7.5% 12% 4% 2% 8% 4% 54.8% 56.9% 57.8% 59.1% 55.4% 52.7% 57.5% 56.7% 49.3% 44.8% 46.5% 47.3% 46.5% 52.3% 5% 49.5% 44.7% 47.3% 43.1% 47.7% 44.5% 41.4% 48.9% 48.5% % Q4 27 Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Net Interest Margin, Group Consolidated Net Interest Margin, BoG Standalone % Q1 28 Q2 28 Q3 28 Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 Cost/Income Ratio, Consolidated Cost/Income Ratio, Bank of Georgia Standalone Cash Cost/Income Ratio *Normalized for Total Non-recurring costs March 21 Page 3

31 March 21 Management target for 21

32 Targeted financial performance 21 Target pre-provision profit Target net provision expense F Profit before provisions Losses related to Real Estate Other Goodwill Impairment associated with BG Bank Losses related to investments Assumptions 21 real GDP growth of 2%* in Georgia 21 inflation rate of 3.2%* in Georgia The GEL/US$ exchange rate remains stable during 21 Geo-political stability is sustained in the region F * IMF Estimates March 21 Page 32

33 March 21 Intention to pay dividends

34 Intention to pay dividends for 21 # of Shares outstanding 25,22,9 27,154,918 31,252,553 31,36,71 YE 26 YE 27 YE 28 YE 29 The new dividend policy will serve to further increase capital management discipline as we consider investing in our growth going forward Estimated dividend payout for 21 performance -GEL 9.4 million The Bank intends to propose the establishment of a progressive dividend policy at the 21 AGM The intention is to recommend GEL.3 dividend per share in 211 in respect of 21 financial year performance Dividend payment is subject to management achieving 21 financial targets outlined above The Bank anticipates increasing the dividend payment in the future The new dividend policy is to set dividend payments while takinginto consideration the need to maintain proper balance between the ability to finance growth and preserving progressive dividend Page 34 March 21 Page 34

35 Summary Operating environment in Georgia is improving and 21 looks promising for Bank of Georgia: NPLs stabilized.1% q-o-q decrease in Q4 29 Consumer confidence and economic activity is increasing with a 16% increase in client deposits in Q3 29 and 8% q-o-q increase in client deposits in Q4 29 National Bank of Georgia has highest FX reserves in Georgia s history US$2+ bn, a 56% increase in FX reserves YTD A 12% y-o-y growth of VAT, a highly correlated measure to GDP, in January, suggests a healthy economic growth trend, that may result in higher than estimated 2% growth of 21 GDP We came out strong from the downturn and are well positioned to take advantage of our high liquidity and strong capital to achieve growth at the right price...by implementing our strategy to become more efficient, deposit funded lending machine Page 35 March 21 Page 35

36 Caution Regarding Forward-Looking Statements This presentation contains statements that constitute forward-looking statements, including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other factors could cause actual developments and results to differ materiallyfrom our expectations. These factors include, but are not limited to, (1) general market, macroeconomic, governmental, legislative and regulatory trends, (2) movements in local and international currency exchange rates, interest rates and securities markets, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties and developments in the markets in which they operate, (6) management changes and changes to our group structure and (7) other key factors that we have indicated could adversely affect our business and financial performance, which are contained elsewhere in this presentation and in our past and future filings and reports, including those filed with the NSCG. We are under no obligation (and expressly disclaim any such obligations) to update or alter our forward-looking statements whether as a result of new information, future events, or otherwise. Page 36 March 21 Page 36

37 Contact Irakli Gilauri Chief Executive Officer MaccaEkizashvili Head of Investor Relations March 21 Page 37