#1May 2012 საქაFOBDEL განქn BANK OF GEORGIA Bank of Georgia Investor Presentation#2Contents Bank of Georgia Overview Bank of Georgia 2011 and Q1 2012 Results Overview Business Segment Discussion Georgian Macro BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 2#3The leading bank in Georgia Leading market position: No. 1 bank in Georgia by assets (35.6%), loans (34.5%), client deposits (36.9%) and equity (35.4%)¹ Underpenetrated market with stable growth perspectives: Average real GDP growth for 2004-2011 of 13.8% CAGR. IMF estimates 6.0% growth for 2012. Gross loans/GDP grew from 9.8% to c.31.9% over the period, still below regional average; Total deposits/GDP grew from 10.0% in 2004 to 30.3% in 2011 Strong brand name recognition and retail banking franchise: Offers the broadest range of financial products to the retail market through a branch network of 164 branches and 431 ATMs to approximately one million customers as of March 2012 The only Georgian company with credit ratings from all three global rating agencies: S&P: 'BB-', Moody's: 'B1/Ba3' (foreign and local currency), Fitch Ratings: 'BB-'; outlooks are 'Stable' High standards of transparency and governance: First and still the only entity from Georgia to list on the London Stock Exchange since 2006 (in the form of GDRs since 2006 and premium listing since February 2012) Experienced management with deep understanding of local market and a strong track record: Sustainable growth combined with strong capital, liquidity and strong profitability (US$ mln)² Total Assets Loans to customers, net Customer funds³ Shareholders' equity Revenue Profit³ Change Q1 2012 2011 2010 2011/2010 2,750.8 2,793.6 2,258.8 23.7% 1,634.8 1,566.7 1,334.5 17.4% 1,581.5 1,637.9 1,142.9 43.3% 617.3 486.6 391.1 24.4% 70.4 264.2 195.5 35.1% 24.0 90.4 46.6 93.8% 31.1% 34.7% 30.9% 3.5% 3.5% 2.4% ROAE5 18.2% 20.6% 13.5% Tier I Capital Adequacy Ratio (BIS)6 Total Capital Adequacy Ratio (BIS)6 Leverage ratio 23.2% 19.9% 17.5% 29.7% 28.5% 26.6% 3.5x 4.7x 4.8x Liquid assets/total liabilities ROAA5 Bank of Georgia Holdings plc. (BGH) (LSE: BGEO) a UK-incorporated holding company of JSC Bank of Georgia. As of 31 March 2012, BGH's shareholder structure was as follows: 7.1% 2.6% Market capitalisation (US$ mln) Total assets (US$ mln) 2004 45.2 31 March 2012 616.6* Change 13.6x 199.0 2,750.8 13.8x Market share by total assets 19% 36% 89% *Market capitalisation for Bank of Georgia Holdings plc., the Bank's holding company, as of 11 May 2012 1 Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 31 December 2011 www.nbg.gov.ge 2 US$/GEL 1.66 as at 31 March 2012 3 Amounts due to customers 4 Liquid assets include cash and cash equivalents, cash placed with credit institutions and NBG CDs and Georgian government treasuries 5 Profit from continuing operations used for the calculation of ROAA and ROAE 6 Capital Adequacy ratios as of 31 March 2012 include EBRD and IFC loan conversions and are presented on a consolidated basis 90.3% Institutional Investors ■Management & Employees* ■Management Trust (Unvested and unawarded share options) Selected Institutional Shareholders East Capital Firebird Management LLC International Finance Corporation European Bank for Reconstruction and Development Prosperity Capital Management Limited OP-Pohjola Group Central Cooperative Artio International Equity Fund * Includes shares held by and share options allocated for the Bank's Supervisory and Management Board members and certain other employees of the Bank and its subsidiaries BGEO to become FTSE All Share Index component in June 2012; Candidate for inclusion in the FTSE 250 BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 3#4Leveraged play on the growing Georgian economy through an LSE premium listed company With one third of the Georgian market by assets, loans and client deposits, Bank of Georgia is a uniquely placed growth bank in an underpenetrated, highly capitalised and profitable banking market that has been growing in terms of assets at 33% CAGR 2003-2011 Retail Strategic business Well established brand Largest retail franchise: 926,800+ retail clients, 164 branches, 431 ATMs, 703,000 cards outstanding as of 31 March 2012 Market shares of c.37% by retail loans and c.32% by retail deposits as of year end 2011 Corporate Largest corporate bank with more than 8,900 corporate clients; 41% market share by corporate deposits as of year end 2011 Wealth Management (WM) WM client deposits 2009-2011 CAGR growth of 66.9%; Outstanding WM client deposits of GEL 454.2 mln at 31 December 2011 Synergistic business Growth opportunities to support Strategic Business Insurance and Healthcare Strongly positioned to benefit from the growth of insurance and healthcare sectors through insurance subsidiary ABCI, one of the leading providers of life and non-life insurance in Georgia with c.33.4%* market share by gross premiums written Vertical integration with healthcare business to boost insurance business growth and its contribution to the Bank's income Affordable Housing Stimulate mortgage lending and improve liquidity of the repossessed real estate assets through housing development; pilot project successfully completed Non-core business Intention to exit from the non-core business over time BNB Belarus banking operation accounting for 2.2% total assets as of 31 December 2011 The Bank owns 80%, the remainder owned by IFC/World Bank Assets of US$ 56.0 mln and equity of US$ 21.9 mln as of 31 December 2011 Fully written off goodwill (GEL 23.4 mln) Liberty Consumer The Bank's equity interest of 67%, or GEL 17.0 mln Legacy asset management investments in the Georgian consumer-driven businesses such as wine production, supermarket chain, etc. *As of 30 September 2011 per NBG. Includes market share of newly acquired insurance company Imedi L International BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 4#5Strong profitability and excellent capital adequacy ROE c.20% Profit from continuing operations up 82.6% to GEL 150.9 mln in 2011 vs. 2010 Other non-interest income surged 87.6% to GEL 108.9 mln in 2011 ☑Operational efficiency/scale: Cost to income ratio improved to 49% in 2011 from 58% in 2010 Prudent risk management: Cost of risk of 0.7% in 2011 2011 ROAE of 20.6%; compared to 2010 ROAE of 13.5% TIER I c.20% ☑Conservative National Bank of Georgia (NBG) regulation Risk weighting of FX assets at 175%, Bank's leverage at 3.5x as of 31 March 2012 ☑Strong internal cash generation to support loan growth without compromising capital ratios BIS Tier I of 23.2% and BIS Total Capital ratio of 29.7% as of 31 March 2012 NBG Tier I 15.2% and NBG Total Capital of 18.2% as of 31 March 12 Growth c.20% Strong growth across the board supported by synergistic business Loan book growth 15.7%** in 2011 Customer funds grew 3.2** times compared to the loan book growth rate of 49.5%** Consumer driven franchise with robust sales force to increase cross selling with synergistic businesses Increase in contribution from synergistic business in the group's profit * Impairment of interest earning assets of the period to average interest earning assets **Excluding BG Bank in 2012 BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 5#6• • • • • Robust corporate governance compliant with UK Corporate Governance Code Supervisory Board of JSC Bank of Georgia 7 non-executive Supervisory Board members; 5 Independent members, including the Chairman and Vice Chairman Neil Janin, Chairman of the Supervisory Board, Independent Director experience: formerly director at McKinsey & Company in Paris; formerly 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 David Morrison, Vice Chairman of the Supervisory Board, Independent Director experience: senior partner at Sullivan & Cromwell LLP prior to retirement Ian Hague, Managing partner and co-founder of Firebird Management LLC, EM hedge fund manager, c. US$1.0 bn AUM Hanna Loikkanen, Representative of East Capital, Sweden-based asset manager focusing on Eastern Europe & China, EUR 3.4 AUM Allan Hirst, Chairman of the Audit Committee, Independent Director experience: 25 years at Citibank, including CEO of Citibank, Russia; various senior capacities at Citibank Kaha Kiknavelidze, Independent Director currently managing partner of Rioni Capital, London based investment fund; experience: previously Executive Director of Oil and Gas research team for UBS Al Breach, Chairman of the Remuneration Committee, Independent Director experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs • • • • • • Members of management boards of Bank of Georgia and major subsidiaries Irakli Gilauri, CEO; formerly EBRD banker; MS in banking from CASS Business School, London; BBS from University of Limerick, Ireland Murtaz Kikoria, Group CFO; c.20 years banking experience including as Senior Banker at EBRD and Head of Banking Supervision at the National Bank of Georgia. Archil Gachechiladze, Deputy CEO, Corporate Banking; formerly Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University Mikheil Gomarteli, Deputy CEO, Retail Banking; 15. years work experience at BOG Vasil Revishvili, Deputy CEO, Wealth Management; previously Head of the Investment Risk Unit and Senior Investment Manager at Pictet Asset Management in London and Geneva; MS in Finance from London Business School Sulkhan Gvalia, Deputy CEO, Chief Risk Officer; c.20 years banking experience founder of TUB, Georgian bank acquired by BOG in 2004 Avto Namicheishvili, Deputy CEO, Group Legal Counsel; previously partner at Begiashvili &Co, law firm in Georgia; LLM from CEU, Hungary Nikoloz Gamkrelidze, CEO of Aldagi BCI; previously CEO of JSC My Family Clinic; World Bank Health Development Project; Masters degree in International Health Management from Imperial College London, Tanaka Business School Irakli Burdiladze, Deputy CEO, Affordable Housing; previously CFO at GMT Group, Georgian real estate developer; Masters degree from Johns Hopkins University Senior Executive Compensation Policy applies to top nine executives and envisages guaranteed and discretionary awards of securities and no cash bonuses to be paid to such executives Irakli Gilauri (as Executive Director and CEO) and the Supervisory Board members (as Non-Executive Directors) also serve as directors of BGH. BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 6#7Competitive landscape Peer group's market share in total assets 36.2% 35.6% Peer group's market share in gross loans 40% 40% 35.9% 34.5% 33.0% 35% 31.8% 35% 30% 30% 25.4% 26.1% 23.8% 25% 25% 21.6% 21.3% 20.8% 19.1% 20% 18.7% 20% 18.7% 17.4% 16.0% 16.6% 15% 15% 10% 5% 9.8% 8.6% 8.2% 7.3% 7.7% 5.4% 5.1% 5.9% 4.1% 4.6% 3.2% 3.4% 10% 5% 10.2% 9.4% 8.8% 10.1% 6.8% 5.6% 6.1% 4.6% 3.0% 3.7% 3.9% 2.0% 0% 0% LOSONGODU NOGUT -TOB-drif BANKER TBC DANK ProCredit Bank |AE:7F Lპუტლქე BANK REPUBLIC LAT E GVTB MOSOLO AS 656.305363295 Other Banks TBC BANK ProCredit Bank BANK REPUBLIC L VTB Other Banks SAN DORIM YE 2009 ■YE 2010 YE 2011 ■YE 2009 ■YE 2010 ■YE 2011 Foreign Banks market share by assets Peer group's market share in deposits 40% 35.6% 2006 2011 35% 32.6% 30% 27.4% 28.3% 24.1% 24.1% 5% 0% Foreign banks, Foreign banks, 5% 16.7% 16.9% 13.1% 32.0% 26.2% Local Local 0% 9.1% 8.1% 17.1% banks, 68.0% banks, 5% 10.8% 8.3% 8.4% 6.9% 5.0% 6.4% 5.5% 3.1% 2.5% 73.8% 0% 20 TBC BANK 2003 ProCredit Bank BANK REPUBLIC €VTB Other Banks. YE 2009 ■YE 2010 ■YE 2011 Note: all data based on standalone accounts as reported to the National Bank of Georgia and as published by the National Bank of Georgia www.nbg.gov.ge BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 7#8Contents Bank of Georgia Overview Bank of Georgia 2011 and Q1 2012 Results Overview Business Segment Discussion Georgian Macro BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 8#9Q1 2012 P&L results highlights GEL millions unless otherwise noted Bank of Georgia (Consolidated, IFRS) Q1 2012 (Unaudited) (Unaudited) Q1 2011 Change 2011 (Audited) 2010 (Audited) Change Net interest income 61.2 56.9 7.5% 239.3 208.5 14.8% Net fee and commission income 19.7 15.5 27.3% 75.3 63.4 18.8% Net insurance revenue 3.8 4.7 -18.7% 17.7 16.7 6.5% Other operating non-interest income 32.2 13.6 136.3% 108.9 58.0 87.6% Revenue 116.9 90.7 28.9% 441.2 346.6 27.3% Operating expenses (57.3) (50.3) 13.9% (217.6) (199.8) 8.9% Operating income before cost of credit risk 59.5 40.3 47.6% 223.6 146.9 52.2% Cost of credit risk (7.4) (5.4) 36.4% (22.2) (47.7) -53.5% Net operating income 52.2 34.9 49.3% 201.4 99.2 103.1% Net non-operating expenses* (4.4) NMF (29.3) (0.7) NMF Profit for the period from continuing operations 39.7 29.1 36.4% 150.9 82.7 82.6% Profit for the period 39.8 16.9 135.9% 135.7 82.7 64.2% EPS, basic (GEL)** 1.21 0.97 24.7% 4.95 2.78 78.1% *Includes impairment of property and intangible assets ** EPS calculated using profit for the period from continuing operations attributable to shareholders of the Bank BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 9#10Balance Sheet results highlights GEL millions unless otherwise noted 31 March Change 31 December Change 30 September Change Bank of Georgia (Consolidated, IFRS) 31 March 2012 (Unaudited) 2011 Q1'12/Q1'11 (Unaudited) 2011 (Audited) Q1'12/Q4'11 2011 Q4'11/Q3'11 (Unaudited) Net loans to customers* 2,713.8 2,241.9 21.0% 2,616.4 3.7% 2,560.7 2.2% Total assets 4.566.4 4.049.2 12.8% 4.665.3 -2.1% 4,359.4 7.0% Liquid assets 1,103.0 1,190.6 -7.4% 1,337.8 -17.6% 1,146.4 16.7% Liquid assets as percent of total assets 24.2% 29.4% -17.8% 28.7% -15.8% 26.3% 9.1% Liquid assets as percent of total liabilities 31.1% 36.0% -13.4% 34.7% -10.3% 32.0% 8.6% Customer funds, of which 2,625.2 2,073.4 26.6% 2,735.2 -4.0% 2,322.9 17.7% Client deposits 2,442.0 1,976.9 23.5% 2,554.1 -4.4% 2,161.1 18.2% Promissory notes 183.2 96.5 89.8% 181.1 1.2% 161.8 11.9% Amounts due to credit institutions, of which 753.8 1,102.1 -31.5% 921.2 -18.2% 1,099.7 -16.2% Borrowed funds, of which 671.8 965.8 -30.4% 863.0 -22.2% 799.5 7.9% Borrowings from IFIS 577.1 614.7 -6.1% 639.9 -9.8% 620.3 3.2% Total liabilities 3,541.6 3,311.7 6.9% 3,852.7 -8.1% 3,583.7 7.5% Total equity 1,024.8 737.6 38.9% 812.6 26.1% 775.7 4.8% Book value per share (GEL) 26.90 23.69 26.09 25.19 BIS Tier I Capital Adequacy Ratio, Consolidated 23.2% 18.0% 19.9% 17.9% BIS Total Capital Adequacy Ratio, Consolidated 29.7% 28.8% 28.5% 26.1% NBG Tier I Capital Adequacy Ratio 15.2% 12.7% 10.5% 10.8% NBG Total Capital Adequacy Ratio 18.2% 15.6% 16.2% 15.0% * includes net finance lease receivables BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 10#11Consolidated Strong revenue growth Revenue growth, annual Revenue growth, quarterly GEL mln 500.00 450.00 +27.3% y-0-y GEL mln 441.2 +28.9% y-0-y 140.0 119.1 116.9 400.00 346.6 120.0 350.00 294.9 201.9 46% 90.7 100.0 300.00 138.1 40% 59.1 49% 55.7 48% 250.00 80.0 110.6 38% 33.8 200.00 60.0 37% 150.00 62% 239.3 54% 40.0 100.00 184.3 208.5 51% 60% 56.9 63% 60.1 61.2 52% 20.0 50.00 0.00 0.0 2009 Net interest income 2010 2011 ■Net non-interest income Q1 2011 Q4 2011 Q1 2012 ■Net interest income. Net non-interest income Net non-interest income, annual Net non-interest income, quarterly +46.2% y-0-y GEL mln GEL mln +64.9% y-0-y 201.9 200.0 70.0 59.1 55.7 138.1 Gain from 60.0 150.0 108.9 110.6 BYR* hedge of 50.0 GEL 25 mln 58.0 33.8 33.4 40.0 32.2 100.0 40.2 17.7 16.7 30.0 15.4 13.6 3.6 3.8 50.0 55.0 63.4 75.3 20.0 4.7 10.0 22.1 15.5 19.7 2009 2010 2011 Q1 2011 Q4 2011 Q1 2012 ■Net fee and commission income ■Net insurance revenue ■Other operating non-interest income Net fee and commission income Net insurance revenue Other operating non-interest income *Belarusian Rouble BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 11#12Strengthening operating leverage as operating costs grow at half the rate of revenue Operating costs, annual Operating costs, quarterly +13.9% y-0-y +8.9% y-0-y 250.0 195.0 199.8 200.0 11.7 217.6 93 27.3 GEL mln 28.0 I 57.5 57.3 25.4 60.0 50.3 3.0 150.0 61.9 3.6 57.3 61.0 50.0 I 6:1 7.7 6.8 I 40.0 100.0 16.2 15.8 15.6 30.0 50.0 100.5 104.6 119.1 20.0 27.2 30.7 31.2 10.0 2009 ■Salaries and other employee benefits ■Depreciation and amortisation 2010 2011 ■Selling and administrative expenses ■Other operating expenses Net non-operating expenses, operating income before cost of credit, annual Full goodwill Q1 2011 ■Salaries and other employee benefits ■Depreciation and amortisation Q4 2011 Q1 2012 ■Selling and administrative expenses Other operating expenses Net non-operating expenses, operating income before cost of credit, quarterly +52.2% y-0-y GEL mln GEL mln impairment of 223.6 250.0 70.0 61.6 59.5 BG Bank of GEL 68.0 mln Full goodwill 60.0 200.0 146.9 impairment of BNB 50.0 40.3 BNB goodwill impairment 150.0 99.9 of GEL 23.4 mln 40.0 100.0 30.0 20.0 50.0 10.0 (50.0) (100.0) (73.6) 2009 2010 (0.7) (29.3) 2011 (10.0) (0.1) (20.0) Q1 2011 (9.7) Q4 2011 (4.4) Q1 2012 LAUKO 5630 BANK OF GEORGIA ■Net non-operating expenses, including impairements Operating income before cost of credit risk www.bogh.co.uk www.bankofgeorgia.ge/ir ■Net non-operating expenses, including impairements Operating income before cost of credit risk May 2012 Page 12#13Improving efficiency Cost/Income ratio, annual Cost/Income ratio, quarterly 70.0% 66.1% 65.0% 57.6% 55.5% 51.0% 60.0% 55.0% 48.3% 49.1% 49.3% 44.4% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 10.0% 15.0% 0.0% 5.0% -10.0% -5.0% 2009 2010 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Cost/Income Ratio Cost/Income Ratio BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 13#14Liquid assets GEL 1,103 mln, 24% of total assets Diversified asset structure Total asset structure, 31 March 2012 Other, Cash and GEL 750 mln, equivalents, GEL 381 mln, 8.4% Government bonds, treasury bills, NBG CDs GEL 434 mln, 9.5% Amounts due from credit institutions, GEL 288 mln, 6.3% 16.4% Loans to customers, GEL 2,714 mln, 59.4% Gross loans breakdown, 31 March 2012 Retail loans*, GEL 1,319 mln, 47.6% Commercial loans, GEL 1,450 mln, 52.4% LAUKO 5630 BANK OF GEORGIA Gross loan portfolio structure, 31 March 2012 Micro and SME loans, 11.7% Gold-pawn loans, 3.0% Residential mortgage loans, 13.7% Consumer loans and credit card balances** 19.2% Commercial loans, 52.4% Note: Retail loans include Wealth Management loans of GEL 44.8 mln and BNB loans of GEL 56.7 mln Concentration of top 10 borrowers As of 31 March 2012, concentration of gross loans granted by the Group to ten largest third party borrowers comprised GEL 397.1 million (US$239.2 million)*** accounting for 14% of gross loan portfolio of the Group (31 December 2011: 15% and 31 December 2010: 15%) Single borrower exposure did not exceed 2.4% of total loans as of 31 December 2011 Major borrowers of the Group were private companies and individuals Retail loans include consumer loans, mortgage loans, micro and SME loans, auto loans and credit card balances ** Credit card balances of GEL 135.8 million included, 4.9% of total loan book *** US$/GEL 1.66 as of 31 March 2012 www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 14#15Loan portfolio quality improving Consolidated NPLs Consolidated NPL composition & coverage ratio GEL mln GEL mln 160.0 170.0% 8.2% 8.1% 149.3% 160.0 7.5% 8.5% 7.2% 140.0 150.0% 140.0 7.7% 117.6 7.5% 28.6 130.0% 120.0 120.0 140.0 6.5% 114.3% 100.3 94.3 5.5% 100.0 119.0% 126.2% 110.0% 36.3 4.6 100.0 3.9 4.7% 90.0% 4.5% 80.0 80.0 3.4% 3.5% 75.8 54.2 70.0% 60.0 3.8% 60.0 2.5% 77.1 70.3 50.0% 40.0 1.5% 40.0 30.0% 20.0 0.5% 20.0 35.5 10.0% 0.0 -0.5% 27.1 18.6 20.2 -10.0% 2009 NPLs 2010 2011 Q1 2012 2009 2010 2011 Q1 2012 NPLs to gross loans Net Interest Margin INPLS RB & WM NPLs CB NPLs Other NPL coverage ratio Consolidated loan loss reserve, NPLs to gross loans GEL mln 200.0 Consolidated cost of credit risk & cost of risk ratio 10.0% GEL mln 166.5 9.1% 175.5 140.0 8.0% 150.0 119.0 120.0 6.0% 7.7% 6.9% 114.7 6.0% 100.0 100.0 4.3% 4.3% 4.0% 80.0 4.7% 3.4% 132.2 60.0 50.0 3.8% 2.0% 40.0 0.0 2009 2010 0.0% 20.0 2011 Q1 2012 Loan loss reserves Loan loss reserves as % of gross loans NPLs to gross loans *Other NPLs include BNB and BG Bank BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir 7.0% 6.0% 5.0% 4.0% 2.3% 3.0% 1.0% 0.9% 2.0% 47.7 1.0% 22.2 7.4 0.0% 2009 2010 2011 Q1 2012 Cost of credit risk Cost of risk ratio, annualised May 2012 Page 15#16Strong liquidity Liquidity coverage ratio & net stable funding ratio NBG liquidity ratio 149.6% 160.0% 140.0% 125.4%122.5% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 31-Dec-10 31-Dec-11 31-Mar-12 ■Liquidity coverage ratio ■Net stable funding ratio 125.5% 118.9% 109.0% Bank Standalone, GEL mln 31-Mar-12 31-Dec-11 31-Dec-10 NBG Liquidity Ratio Liquid Assets (NBG) 1,041 1,392 939 Liabilities (NBG) 3,041 3,448 2,492 Liquid Assets Liabilities > 30% Excess liquidity 34.2% 40.4% 37.7% 128 358 191 Maturity gap Liquid assets to total liabilities (IFRS consolidated) GEL '000s GEL mlns 477,927 4,500 40.0% 500,000 400,000 300,000 200,000 100,000 -3.1% -1.8% (100,000) (79,631) (200,000) (300,000) (137,881) -6.1% (269,949) 0-3 Months 3-6 Months 6-12 Months 1-3 Years Cumulative maturity gap Cumulative maturity gap, as % of Total Assets 12.0% 3,853 4,000 3,312 3,542 35.0% 313,298 10.8% 10.0% 3,500 8.0% 31.1% 30.0% 7.1% 6.0% 3,000 2,540 29.9% 2,315 30.9% 34.7% 25.0% 4.0% 2,500 21.8% 20.0% 2.0% 2,000 0.0% 1,338 15.0% 1,500 1,023 1,103 -2.0% 1,000 691 10.0% 554 -4.0% 500 5.0% -6.0% 0.0% -8.0% >3 Years 2008 2009 2010 Liquid Assets Total Liabilities 2011 Q1 2012 Liquid Assets, as % of Total Liabilities BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 16#17Strong liquidity management and open currency position Net loans to customer funds Net loans to client deposits and net loans to customer funds & IFIs 130.5% 140.0% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 2009 116.1% 140.0% 130.6% 100.9% 93.4% 120.0% 117.3% 100.0% 108.5% 100.0% 93.9% 80.0% 88.1% 82.7% 74.9% 60.0% 40.0% 20.0% 0.0% 2010 2011 Q1 2012 2009 2010 2011 Q1 2012 Net loans to customer funds, consolidated Foreign currency monthly VaR analysis Net loans to client deposits, consolidated Open currency position GEL '000s GEL '000s 60,000 700 610.7 613.1 51,741 8.0% 589.2 7.0% 600 448.1 469.3 475.9 490.2 491.7 494.7 502.4 507.6 520.1 543.0 50,000 40,000 500 5.8% 31,960 6.0% 5.0% 4.0% 30,000 400 300 200 125.3 140.5 128.7 71.2 371.1 247.1 180.8 110.9 80.0 3.0% 20,000 212.8 2.0% 146.2 145.8 10,000 1.0% 121.3 0.0% 100 -0.8% -1.0% 0 Mar-11 May-11 Jul-11 Sep-11 Nov-11 (10,000) Jan-12 Mar-12 (7,058) -2.0% Monthly VaR (Average) VaR Limit* 31-Dec-10 31-Dec-11 FC net position, on and off balance, total 31-Mar-12 As % of NBG total regulatory capital *7 bps of NBG total regulatory capital BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 17#18Funding structure is well-balanced Liability structure Well diversified international borrowings Other liabilities GEL Total Liabilities GEL 3,541 mln 163 mln, 4.6% Borrowings GEL 672 mln, 19.0% Other amounts due to credit institutions GEL 82 mln, 2.3% Promissory Notes, GEL 183 mln, 5.2% Client deposits, GEL 2,442 mln, 69.0% Borrowed funds maturity breakdown Subordinated loans callable in August 2012 US$ mln 250 5.0% 3.9% 200 4.0% 3.4% 150 3.0% 107 93 2.3% 100 1.8% 1.8% 64 72 35 1.6% 49 1.8% 2.0% 50 0.8% 50 1.0% 50 58 36 48 43 40 50 23 0 14 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 Senior Loans (principal) Promissory Notes Subordinated loans % to Total Assets** * Converted at US$/GEL exchange rate of 1.66 as of 31 March 2012 ** Total Assets as of 31 March 2012 BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir Other, GEL 95 mln, 14.1% IFIS, GEL 577 mln, 85.9% European Bank for Reconstruction and Development DEG KFW-GRUPPE IFC FMO Finance for Development OPIC ADB World Business Capital Financing Business Across Borders Amounts due to credit institutions The Bank has a well-balanced funding structure with 74% of total liabilities coming from customer funds and 16% from International Financial Institutions (IFIs) as of 31 March 2012 The Bank has also been able to secure favorable financing from reputable international commercial sources, as well as IFIs, such as EBRD, IFC, DEG, Asian Development Bank, etc. As of 31 December 2011, US$62.5 mln undrawn facilities from IFIS with five to six year maturities May 2012 Page 18#19Yield dynamics Loan yields, annual Loan yields, quarterly 17.5% 120.0% 18.5% 120.0% 17.5% 17.5% 18.2% 17.9% 100.0% 100.0% 18.0% 79.8% 68.0% 80.0% 77.0% 80.0% 16.9% 17.5% 60.0% 60.0% 75.9% 68.0% 66.5% 17.4% 17.0% 17.4% 40.0% 40.0% 20.0% 16.5% 32.0% 20.2% 23.0% 20.0% 32.0% 0.0% 16.0% 24.1% 0.0% 2009 2010 2011 Q1 2011 Q4 2011 33.5% 17.3% Q1 2012 Gross Loans, GEL, consolidated Gross Loans, FC, consolidated Currency-blended loan yield, consolidated Gross Loans, GEL, consolidated Gross Loans, FC, consolidated Currency-blended loan yield, consolidated Loan yields, GEL, quarterly 16.0% Loan yields, foreign currency, quarterly 15.9% 25.5% 25.0% 24.9% 24.5% 15.5% 15.0% 24.0% 23.5% 23.2% 14.5% 23.5% 23.0% 14.0% 22.5% 13.5% 22.0% Q1 2011 Q1 2011 Q4 2011 Q1 2012 Loan Yield, GEL, standalone Loan yields excluding provisions BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir Q4 2011 14.7% 14.7% Loan Yield, FC, standalone Q1 2012 May 2012 Page 19#208.6% Cost of funds and loans to deposits Cost of funds, annual Cost of deposits, annual 7.9% 8.4% 8.4% 8.2% 8.0% 7.8% 7.6% 7.4% 7.2% 2009 9.0% 8.0% 7.0% 6.0% 5.0% 8.0% 4.0% 3.0% 7.7% 2.0% 1.0% 0.0% 2009 2010 Cost of funds, consolidated 2011 7.0% 7.0% 2010 2011 Cost of deposit, currency blended, consolidated BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 20#2140.0% Risk weighting of 34.7% FX denominated 35.0% 28.5% 29.7% loans at 175% 30.0% 26.6% Excellent capital adequacy position BIS capital adequacy ratios, Consolidated NBG capital adequacy ratios, Standalone Tier I Ratio grew due to the conversion of EBRD & IFC loans of US$50 mln in February 2012 and inclusion of 2011 profit according to the 25.0% 22.4% 23.2% 25.0% National Bank of 19.9% 19.7% 20.0% 17.5% 20.0% Georgia standards 16.8% 16.2% 18.2% 10.5% 15.0% 13.0% 15.0% 14.5% 12%: Minimum CAR requirement 15.2% NBG requires that 10.0% 10.0% investments in 5.0% subsidiaries of 8%: Minimum Tier 1 requirement 0.0% 5.0% more than 50% to 2009 2010 2011 Q1 2012 be deducted from ■Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio 0.0% Total Capital 2009 2010 2011 Q1 2012 ■Total Capital Adequacy Ratio Risk-weighted assets BIS vs. NBG ■Tier I Capital Adequacy Ratio NBG Tier I Capital and Total Capital GEL mln 6,000 GEL mln Q1 2012 Tier I Capital (Core) 738.5 4,873 4,845 5,000 4,000 Tier 2 Capital (Supplementary) 333.7 YE 2011 512.2 463.8 Change 44.2% -28.1% 4,126 Less: Deductions 3,653 3,801 3,839 (191.3) (184.3) 3.8% Total Capital 880.9 791.7 11.3% 2,717 3,000 2,455 Risk weighted assets 4,845.2 4,872.9 -0.6% 2,000 Tier 1 Capital ratio 15.2% 10.5% 45.0% 1,000 Total Capital ratio 18.2% 16.2% 11.9% 2009 2010 2011 Q1 2012 ■BIS ■NBG BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 21#22Contents Bank of Georgia Overview Bank of Georgia 2011 and Q1 2012 Results Overview Business Segment Discussion Georgian Macro BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 22#23Retail Banking (RB): Strong growth of revenue, loans and deposits, deposit rate cuts Retail Banking (RB) GEL millions, unless otherwise noted Period end Net interest income Net fees and commission income Q1 2012 39.0 Q1 2011 % Change 2011 2010 % Change 31.4 24.2% 141.5 116.4 21.6% 11.7 9.7 20.6% 49.8 42.1 18.1% Net gains from foreign currencies 3.0 2.0 50.0% 12.2 9.2 32.6% Other operating non-interest income 1.0 0.6 66.7% 6.0 1.2 NMF Operating income from other segments Revenue 0.3 0.3 1.6 0.5 NMF 54.9 44.1 24.5% 211.0 169.4 24.6% Other operating non-interest expenses 26.4 24.3 8.6% 109.4 97.9 11.7% Operating income before cost of credit risk 28.5 19.8 43.9% 101.7 71.6 42.1% Cost of credit risk 4.7 -4.4 NMF (3.1) 29.1 NMF Profit for the period from continuing operations 22.1 23.0 -3.9% 110.4 40.0 NMF Cost/Income 48.1% 55.1% 51.8% 57.8% Retail Banking loan yields Retail Banking deposit costs 120.0% 23.0% 22.5% 100.0% 13.0% 100.0% 22.4% 90.0% 11.0% 22.0% 80.0% 80.0% 21.4% 52.6% 51.3% 21.5% 70.0% 9.0% 6.7% 6.5% 60.0% 76.5% 61.8% 60.0% 21.0% 21.0% 7.8% 7.0% 20.5% 50.0% 7.5% 5.0% 20.5% 40.0% 40.0% 76.0% 77.3% 73.2% 73.1% 30.0% 3.0% 20.0% 47.4% 48.7% 20.0% 20.0% 38.2% 19.5% 10.0% 24.0% 22.7% 26.8% 26.9% 1.0% 23.5% 0.0% -1.0% 0.0% 19.0% 2009 2010 2011 Q1 2012 2009 2010 Gross Loans, RB, GEL Gross Loans, RB, FC 2011 Q1 2012 Loan Yield, Currency Blended, RB Client Deposits, RB, GEL Client Deposits, RB, FC Deposit Yield, Currency Blended, RB LAUKO 5630 BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 23#24Retail Banking (RB) – No. 1 retail bank in Georgia Retail Bank loans originated - Total retail gross loans: GEL 1,274 mln Retail Bank gross loan portfolio, 31 March 2012 Automobile loans, POS loans, GEL 32 mln, 2.5% GEL 24 mln, 1.8% Pawn loans, GEL 83 mln, 6.5% GEL mln 400.0 350.0 300.0 250.0 196.4 200.0 150.0 100.0 50.0 335.0 313.3 259.4 219.7 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 ■Retail loans issued Retail gross loans and deposits growth GEL mlns 1,400 1,200 1,000 800 1,268 1,274 1,063 840 707 709 6666 535 600 376 400 200 BANK OF GEORGIA 2009 Retail gross loans 2010 2011 ■Retails client deposits Q1 2012 www.bogh.co.uk www.bankofgeorgia.ge/ir Credit Cards and Overdrafts, GEL 146 mln, 11.5% Mortgage loans, GEL 364 mln, 28.6% General consumer loans, GEL 302 min, 23.7% Micro- SME loans, GEL 324 mln, 25.4% Note: does not include Wealth Management loans of GEL 44.8 mln and BNB loans of GEL56.7 mln May 2012 Page 24#25Corporate Banking (CB): Improved efficiency and profitability Corporate Banking (CB) GEL millions, unless otherwise noted Period end Net interest income Net fees and commission income Net gains from foreign currencies Other operating non-interest income Operating income from other segments Revenue Other operating non-interest expenses Operating income before cost of credit risk Cost of credit risk Profit for the period from continuing operations Cost / Income Corporate Banking loan yields Q1 2012 Q1 2011 Change 2011 2010 Change 17.8 20.7 -14.0% 72.8 74.8 -2.6% 7.1 4.6 54.3% 20.3 16.6 22.5% 8.4 4.8 75.0% 29.0 21.4 35.7% 1.2 0.6 100.0% 6.6 (2.1) NMF 2.8 2.1 33.3% 6.6 12.5 -46.8% 37.2 32.8 13.4% 135.4 123.1 10.0% 11.2 11.9 -5.9% 54.7 43.8 24.9% 26.0 20.9 24.4% 80.8 79.3 1.8% 1.3 9.2 -85.9% 25.6 12.8 99.8% 21.2 10.0 112.0% 60.1 68.7 -12.6% 30.1% 36.3% 40.4% 35.6% Corporate Banking deposit costs 120.0% 13.0% 120.0% 100.0% 80.0% 60.0% 78.0% 40.0% 20.0% 22.0% 0.0% 2009 17.0% 8.3% 11.0% 100.0% Deposit 16.5% 16.4% 9.0% rate cuts 16.2% 80.0% 16.0% 50.3% 7.7% 38.4% 55.0% 44.7% 7.0% not yet 15.5% 60.0% 7.1% reflected in 84.6% 83.4% 77.9% 15.0% 5.6% 5.0% the Q1 CB 14.4% 40.0% 14.5% 14.5% 61.6% 3.0% cost of 49.7% 55.3% 14.0% 20.0% 45.0% 1.0% deposits 15.4% 2010 16.6% 2011 22.1% 13.5% 0.0% -1.0% 13.0% 2009 2010 2011 Q1 2012 Q1 2012 Gross Loans, CB, GEL Gross Loans, CB, FC Loan Yield,Currency Blended, CB Client Deposits, CB, GEL Client Deposits, CB, FC Deposit Yield, Currency Blended, CB BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 25#26Corporate Banking (CB): Strong growth of the diversified CB loan book Integrated client Highlights coverage in the following key sectors Trade Energy Fast Moving Consumer Goods (FMCG) Real Estate FInfrastructure Industry Pharmaceuticals & healthcare State Hospitality No.1 corporate bank in Georgia Circa 41.4% market share based on customer deposits (1) Integrated client coverage in key sectors Corporate loan portfolio, 31 March 2012 Other, GEL 113 mln, 7.7% Hospitality, GEL 133 mln, 9.2% State, GEL 20 mln, 1.4% More than 8,900 clients served by dedicated relationship bankers Increased number of corporate clients using the Bank's payroll Pharmaceuticals & services from 1,737 in 2010 to 2,603 in Q1 2012 Gearing up for launching macro and sector research covering Caucasus region by the brokerage subsidiary Corporate client deposits, 31 March 2012 healthcare, GEL 64 mln, 4.4% Industry, GEL 210 mln, 14.5% Trade, GEL 349 mln, 24.1% Energy, GEL 135 mln, 9.3% FMCG, GEL 193 mln, 13.3% Infrastructure deevlopment, GEL 86 mln, 5.9% Real Estate development, GEL 147 mln, 10.2% Corporate gross loan and deposit growth GEL mln 1,800 1,600 Time Deposits, 45% 1,400 1,200 Current 940 Accounts & 1,000 734 Demand 800 Deposits, 600 55% 400 200 Notes: Total corporate deposits: GEL 1,429 mln (1) source: National Bank of Georgia, does not include interbank deposits BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir 2009 1,574 1,425 1,450 1,429 1,363 1,229 2010 2011 Q1 2012 ■Corporate client deposits Corporate gross loans May 2012 Page 26#27Wealth Management (WM) results overview Wealth Management (WM) GEL millions, unless otherwise noted Q1 2012 Q1 2011 Change 2011 2010 Change Net interest income Net fees and commission income Net gains from foreign currencies Other operating non-interest income Revenue Other operating non-interest expenses 2.9 1.7 70.6% 5.9 3.1 92.6% 0.1 0.1 0.7 0.5 30.7% 0.2 0.1 100.0% 0.7 0.6 10.0% NMF 0.1 (0.1) NMF 3.2 1.9 68.4% 7.4 4.1 80.5% 0.9 1.0 -10.0% 4.1 4.6 -10.8% Operating income before cost of credit risk 2.3 0.9 155.6% 3.2 (0.5) NMF Profit for the period from continuing operations 2.3 1.0 130.0% 3.6 2.0 80.0% Cost/Income 28.1% 52.6% 55.4% Loan yield 11.4% 12.7% 12.7% 122.0% 16% WM client deposits growth 7.3% q-0-9 GEL mln +394.5% since 2008 12.0% 600.0 487.4 454.2 10.0% 500.0 8.8% 10.2% 9.8% 8.9% 8.5% 8.0% 400.0 261.6 6.0% 300.0 163.1 4.0% 200.0 98.6 2.0% 100.0 0.0% 2008 2009 2010 2011 Q1 2012 Client deposits Overhead costs associated with WM international business Deposit Costs (excl. overheads) BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir Highlights Strengthening presence internationally through representative offices in Israel (since 2008) and the UK (2010). Preparing to launch local currency fixed income fund initially focusing on Caucasus region May 2012 Page 27#28Gross premiums written breakdown Insurance and Healthcare (ABCI) Gross premiums written & Net premiums earned GPW Summary by Products (GEL ‘000) 2011 2010 2009 70,000 59,559 Health and Life Government 12,750 16,110 21,142 56,306 56,441 60,000 Health and Life Non-Government 17,480 15,298 13,503 50,000 45,477 44,561 46,396 Motor 13,684 12,486 12,315 Property 5,651 5,993 40,000 6,593 Liability insurance 3,004 2,140 2,440 30,000 Other 3,872 4,279 3,566 20,000 Total GPW 56,441 56,306 59,559 10,000 0 2009 Aldagi BCI Revenue by segments ■Gross Premiums Written 2010 2011 ■Net Premiums Earned Aldagi BCI Costs by segments GEL 000s GEL 000s 23,430 35,000 25,000 30,473 30,000 20,000 25,000 20,898 12,213 19,324 14,309 14,679 11,000 20,000 15,000 5,114 3,661 6,349 5,183 15,000 10,000 10,000 15,784 18,260 12,975 5,000 11,018 12,430 9,126 5,000 BANK OF GEORGIA 2009 2010 2011 ■Insurance revenue ■Healthcare revenue www.bogh.co.uk www.bankofgeorgia.ge/ir 2009 2010 2011 Insurance costs Healthcare costs May 2012 Page 28#29Insurance and Healthcare (ABCI), cont'd Loss ratio & combined ratio* ABCI Profits & ROAE 100.0% 93.7% GEL mln 89.5% 88.9% 90.0% 8.0 80.0% 7.0 70.0% 63.4% 56.9% 57.0% 6.0 60.0% 7.3 28.0% 27.4% 5.6 26.1% 26.0% 5.0 50.0% 40.0% 4.0 3.0 30.0% 3.0 24.3% 24.0% 20.0% 2.0 10.0% 1.0 0.0% 2009 2010 2011 0.0 22.0% 2009 2010 2011 ■Loss ratio, ABCI ■Combined ratio, ABCI Net profit ROAE * Combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by earned premium BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 29#30ABCI market share & market Gross Premiums Written ABCI share in non-life insurance market ABCI share in total market (life & non-life) GEL mln 400 351 351 350 300 18.6% 250 200 150 100 50 2009 Market GPW, non-life 33.4% market share with Imedi L 30.0% GEL mln 25.0% 400 360 361 30.0% 252 350 20.0% 25.0% 18.4% 17.2% 300 263 15.0% 18.6% 250 17.1% 20.0% 200 19.0% 15.0% 10.0% 150 10.0% 5.0% 100 5.0% 0.0% 50 2010 Sep 2011 0.0% 2009 2010 ABCI Share, non-life Market GPW, total Sep 2011 ABCI Share, total Market GPW to Nominal GDP GEL mln 2.0% 1.9% 1.6% 1.5% 1.3% 1.2% 0.8% 0.4% 0.0% 2009 2010 2011E Market GPW to Nominal GDP BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir Imedi L acquisition In May 2012 Aldagi BCI acquired 85% equity interest in Imedi L International, the third largest insurance company in Georgia Total gross assets of Imedi L comprised GEL 68.0 million as of 31 December 2011, with estimated net assets of GEL 8.0 million as of 31 March 2012, translating into the valuation of one time net asset value The Bank injected GEL 32.5 million into Aldagi BCI to ensure Imedi L has sufficient capital and liquidity to meet its existing hospital construction obligations May 2012 Page 30#31Contents Bank of Georgia Overview Bank of Georgia 2011 and Q1 2012 Results Overview Business Segment Discussion Georgian Macro BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 31#32Country overview Area: 69,700 sq km Population (2011): 4.4 mln Life expectancy: 76 years Official language: Georgian Literacy: 100% CANADA ARCTIC OCEAN ATLANTIC OCEAN EUROPE GEORGIA Capital: Tbilisi Currency (code): Lari (GEL) GDP 2011 (E): GEL 24.2 bn (US$14.4 bn) GDP real growth rate 2011 (E): 7.0% GDP real growth 2012 IMF estimate: 6.0% GDP CAGR '03-'11 (E): 6.0% POLAME GDP per capita 2011 (PPP): US$5,491 Inflation rate (e-o-p) 2011: 2.00% External Public debt to GDP 2011: 29.0% Sovereign ratings: S&P BB-/B/Stable/ upgraded in November 2011 Moody's Ba3/NP/Stable Fitch BB-/B+/Stable upgraded in December 2011 Sources: Ministry of Finance of Georgia, Geostat, IMF, Government of Georgia Presentation (Georgia.gov.ge) BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir ALGERIA UKRAINE PARNIVA ROMANA RUSSLA 60% IN PAT INDIA GEORGIA BADENE CHRSEY CHINA DIAN OCEAN May 2012 Page 32#33Georgia's key economic drivers Liberal economic policy Regional logistics and tourism hub Strong FDI Support from international community Cheap electricity Political environment stabilized Liberty Act, enshrined in the constitution and effective starting 2014 ensures a credible fiscal and monetary framework: -Government expenditure/GDP capped at 30% - Budget deficit/GDP capped at 3% - Government debt/GDP capped at 60% Proceeds from foreign tourism estimated at $937 mln in 2011, with 2.8 million visitors (42% increase y-o-y); number of foreign visitors grew by 39% in Q1 y-o-y Regional energy transit corridor with approx. 1.6% of world's oil production and diversified gas supply passing through the country Strong FDI inflows (US$981mln in 2011), diversified across different sectors Net remittances of US$1,168min in 2011, 23% increase over previous year FDI averaged 10% of GDP in 2003-2011 Free Trade Agreements (Official Discussion in progress with the EU; Discussions commenced with the USA) to drive inward investments and exports Strong political support from NATO, EU, US, UN and member of WTO since 2000 Substantial support from IFIs, the US and EU: US$2.5bn already disbursed out of the US$4.5bn Brussels pledge Diversified trade structure across countries and products Net electricity exporter since 2007, net electricity importer for more than a decade; 2011 electricity export reached 1.5 TWH Only 18% of hydro power capacity utilized; 40 hydro power stations are being built/developed Black Sea Transmission Network project envisages construction of new 500kV/400kV line connecting to Turkey. Project commenced in 2009 and is expected to become operational in 2013. BSTN to significantly boost export potential to Turkey, up by 750MW from current capacity Healthy operating environment for business and low tax regime Parliamentary elections in 2012, presidential elections are scheduled for 2013 New constitution passed in May 2010 to enhance governing responsibility of Parliament and reduce the powers of the Presidency Continued economic relationship with Russia - Russia began issuing visas to Georgians in March 2009; Georgia abolishes visa requirements for Russians - Direct flights between the two countries resumed in January 2010 - WTO negotiations successfully completed; Georgia, a member of WTO since 2000, allows Russia's access to WTO Sources: Geostat, IMF, National Bank of Georgia, Government of Georgia Presentation (Georgia.gov.ge) BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 33#34Growth oriented reforms Ease of Doing Business, 2011 (WB-IFC Doing Business Report) UK 4 USA 5 Norway 8 GEORGIA 12 Estonia 17 Azerbaijan Armenia Up from 112 in 2005 54 48 Bulgaria Romania Turkey 51 56 65 Kazakhstan 59 Montenegro 66 Belarus 68 Serbia 89 Russia 123 Ukraine 145 Economic Freedom Index, 2010 (Heritage Foundation) USA UK 8 11 Estonia 16 GEORGIA 26 Latvia 50 Hungary 55 51 Romania 63 France Turkey Italy Bulgaria Kazakhstan Azerbaijan 64 67 74 75 82 96 Russia 143 Ukraine 162 TI 2010 Global Corruption Barometer: % admitting having paid a bribe within the last 12 months TI 2010 Global Corruption Barometer: % of the surveyed claiming the corruption level has decreased United Kingdom 1% GEORGIA 3% Canada 4% United States 5% Spain 5% EU+ 5% France 7% Austria 9% Japan 9% Italy 13% Czech Republic Poland Latvia Romania 14% 15% 15% 28% Turkey 33% 34% Lithuania Sources: Transparency International, Heritage Foundation, World Bank BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir GEORGIA Poland Turkey 26% 26% Japan 14% Czech Republic 14% Austria 9% Latvia 9% Lithuania 8% France 7% United States 6% Italy 5% Canada 4% United Kingdom 3% Spain 3% EU+ 3% Romania 2% 78% Georgia ranks 1st in the world in terms of the (public perception of the) decrease of the level of corruption May 2012 Page 34#35Positive economic outlook Gross domestic product US$ billion GDP grew GDP composition, 31 December 2011 Eduction, 4% Health, social and community work, 5% 23 12.3% 15% at 8.8% 11.1% 9.6% 9.4% 17.3 Agriculture, hunting and forestry, fishing, 8% annual rate 18 6.3% 16.0 14.4 11% in Q4 2011 5.9% 12.8 13 10.2 10.8 11.6 6.0% 5.5% 7.8 6.4 2.3 8 5.1 4.0 3 In US$ terms, -2 nominal GDP 2003 2005 2007 2009 grew 23.5% y-o-y in 2011 Nominal GDP (LHS) Sources: Geostat, IMF Projections КИТ -3.8% 2011E Real GDP Growth (RHS) 7% 0% Real estate, renting and business activities, 4% Public administration, 10% 3% Hotels and restaurants, 2% -1% Financial intermediation, Trade (Retail & Wholesale), 15% 2% -5% Construction, 5% 2013F Utilities & household processing, 6% Manufacturing, 9% Transport and Communications, 9% Mining and quarrying, 1% GDP per capita, US$ Source: National Bank of Georgia 10% 8% 6% 4% 2% 0% BANK OF GEORGIA UK Real GDP growth in 2011 1.1% 1.4% 1.8% 2.7% Hungary Czech.. Germany Poland Sources: Central Intelligence Agency, Geostat 9.2% 7.8% 6.6% 7.0% 5.2% 4.3% 3.80% Russia Ukraine Turkey Georgia www.bogh.co.uk www.bankofgeorgia.ge/ir India China 2,966 3,242 3,644 4,040 4,677 4,906 4,767 5,064 5,491 5,929 2,921 3,215 3,549 2,315 2,455 2,623 919 1,188 1,484 1,764 FFFFFFF 2007 2008 2009 2010 2011E 2012F 2003 2004 2005 2006 ■Nominal GDP per capita ■GDP per capita PPP Sources: Geostat, Ministry of Finance of Georgia, IMF May 2012 Page 35#36Demonstrated fiscal discipline and low public debt Fiscal deficit as % of GDP Breakdown of public debt Affordable public debt stock and very low interest rate on external public debt (US$mln) 2004 2005 2006 2007 2008 2009 2010 2011E 2012F 0% -1% -0.3% -2%- -3% -2.6% -4% -3.4% -3.6% -3.5% -5% -4.8% -6% -7% -6.5% -6.7% -8% -9% -10% -9.2% Source: Ministry of Finance of Georgia Public debt as % of GDP Domestic 1,122 21% Multilateral 57% External 4,201 79% Bilaterai 12% Eurobond 10% Source: Ministry of Finance of Georgia Government external debt service Portfolio Weighted Average Interest Rate as of 31 December 2011 2.0% 60% 52% US$ mln 50% 600 8% 7.1% 6.5% 40% 41% 37% 500 37% 35% 40% 5.4% 6% 33% 400 4.3% 4.7% 29% 3.7% 3.8% 26% 259 30% 35% 34% 300 256 4% 32% 2.7% 29% 20% 27% 28% 200 3.3% 2.9% 140 150 140 24% 66 59 21% 100 59 91 103 116 2% 17% 10% 0 0% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013 2014 2018 2019 2020 Total public debt as % of GDP External public debt as % of GDP Other Loans Sources: Ministry of Finance of Georgia, Geostat BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir Gov't External Debt Service as % of Budget Revenues Source: Ministry of Finance of Georgia IMF (Budget Support) Gov't External Debt Service as % of Exports May 2012 Page 36#37Revenues to expenditures Revenues and expenditures dynamics Expenditure as % of GDP GEL mln % 8,000 125% 6,876 123% 45% 7,000 120% 39% 37% 5,866 6,000 5,264 5,407 5,613 35% 5,399 34% 33% 115% 35% 31% 30% 29% 5,000 110% 26% 109% 4,000 25% 105% 3,000 100% 15% 2,000 97% 1,000 95% 5% 0 90% 2009 Revenues 2010 2011 -5% 2005 2006 2007 2008 2009 2010 2011E 2012F 2013F Current Expenditures Source: Ministry of Finance Capital vs. current expenditures Current revenue to Expenditure ratio Sources: Ministry of Finance, NBG 100% 86.9% 77.9% 74.4% 77.9% 74.9% 80% 60% 40% 20% 0% 13.1% 2003 22.1% 25.6% 22.1% 25.1% 2005 2007 2009 2011 Current Expenditures Capital Expenditures Source: Ministry of Finance BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 37#38Four main sources of capital inflow FDI inflows US$ mln Number of tourists Q1 2012 foreign visitors of 677,000, up by 39% y-o-y 2,820 19% 2,500 20% 3,000 15% 2,500 2,000 2,032 15% 2,000 1,500 1,500 1.290 10% 1,500 1,052 1,000 7% 2,015 7%0 937 1,000 763 659 1,564 560 1,190 5% 500 981 815 658 500 31347 368 177 241 313 384 447 476 450 0 0% 2003 2004 2005 2005 2006 2007 2008 2009 2010 2011E ■Foreign visitors (thousands persons) 2006 2007 2008 2009 2010 2011 ■Tourism revenues (mln USD) Net FDI Net FDI as % of GDP Sources: National Bank of Georgia, Ministry of Finance of Georgia Net remittances Q1 2012 net remittances of US$266 mln, up by 14% y-o-y Sources: Georgian National Tourism Agency, National Bank of Georgia Donor inflows US$ mln 1,400 8.2% 7.4% 7.2% 7.2% 8.1% 9% US$ mln c.US$2.0 8% 1,200 1,200 1,093 942 bn of the total 7% 1,000 830 1,000 5.4% 6% 4.9% 800 800 622 658 4.2% 5% US$4.5 bn pledged remains to 600 4% 600 695 1,168 550 be drawn 918 949 3% down 400 400 262 276 755 767 588 2% 160 177 200 420 200 315 1% 213 0 0% 0 2004 2005 2006 2007 2008 2009 2010* 2011* 2004 2005 2006 2007 2008 2009 2010 2011E Net remittances (LHS) Net remittances as % of GDP (RHS) Source: National Bank of Georgia * including remittances through micro finance institutions ■Donor Inflows. ■Brussels Pledge Implementation Sources: Ministry of Finance, Bank of Georgia estimates BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 38#39Controllable CAD and strong FDI & donor inflows High, but well capitalised CAD. Low domestic savings rate at 8.6% of GDP. Remittances and FDI cover CAD. FX reserves FX rate (US$/GEL) US$bn 1.7 2.8 3.0 2.8 1.8 1.5 1.6 2.5 1.3 2.3 1.90 2.1 1.1 1.4 2.0 1.0 1.85 1.3 1.2 0.8 0.8 0.8 1.5 1.4 1.0 1.80 1.5 0.8 0.9 1.75 1.0 0.6 0.4 0.5 1.70 0.4 0.5 0.2 0.2 1.65 0.0 0.0 1.60 2003 2004 2005 2006 2007 Official reserve assets Source: National Bank of Georgia Current account deficit 2008 2009 2010 2011 Mar-12 Reserve Assets/M2 15-May-10 15-Jun-10- 15-Jul-10- 15-Aug-10 15-Sep-10- 15-Oct-10- 15-Nov-10- 15-Dec-10- 15-Jan-11 15-Feb-11 15-Mar-11 15-Apr-11 15-May-11- Source: National Bank of Georgia CPI US$ mln 4,000 20% 15% 3,000 10% 7% 8% 3% 3% 10% 2,000 3% 2,377 4% 10% 2% 2% 2,561 1,503 649 1,663 507 1,000 894 571 0% 393 177 942 1,093 658 830 0 7709 262 276 5% -1,217 -354 -384 -1,175 -2,009 -2,912 -1,337 -1,000 -1,645 -10% -10% -11% -2,000 -11% -15% -11% -11% 0% -20% -3,000 -20% -23% -4,000 -30% -5% 2003 2004 2005 2006 2007 2009 2010E 2011F Dec-'05 Donor inflows (DI) CAD CAD+TPCI+DI as % of GDP Source: NBG, Ministry of Finance, Bank of Georgia estimates 2008 Total private capital inflows (TPCI) CAD as % of GDP BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir Dec-'06 Dec-'07 CPI (e-o-p, trailing 12 months) Source: National Bank of Georgia Dec-'08 15-Jun-11 15-Jul-11 - 15-Aug-11- 10% appreciation over past 24 months 15-Sep-11- 15-Oct-11 15-Nov-11- 15-Dec-11 15-Jan-12 15-Feb-12- Dec-'09 Dec-'10 Dec-'11 CPI (average, trailing 12 months) May 2012 Page 39 15-Mar-12- 15-Apr-12- 15-May-12-#40Summary - - - Growing and well capitalised banking sector Prudent regulation ensuring financial stability Sector total capital ratio (NBG standards) -20%, Basel 26% High level of liquidity requirements from NBG at 30% of liabilities, resulting in banking sector liquid assets to client deposits of 57% 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 1995 Excess liquidity and excess capital accumulated by the banking sector to help boost the financing of the economic growth Very low leverage with retail loans c. 11.6% of GDP and total loans at c. 31.9% of GDP resulting in low number of defaults during the global crisis Source: National Bank of Georgia, Geostat Banking sector assets, loans and deposits as YE2011 GEL bn 14 12 10 8 6 4 2 CAGR 32.5% Bank debt and deposits to GDP as of YE2011 120% 100% 80% 60% 40% 20% 0% ■Bank Loans to GDP Gross Loans/GDP 31.9% Total Deposits/GDP 30.3% Armenia Belarus Georgia Macedonia Russia Turkey Moldova Serbia Source: National Bank of Georgia, Geostat Deposits to GDP Estonia Latvia Bulgaria Ukraine Lithuania Romania Hungary Croatia Bosnia&Herzegovina NPLs as % of total loans according to the IMF, lower than the banking sector NIM of c.7% as of YE2011 12.7 Georgia USA Poland Ireland 7.2 Hungary 6.7 Croatia 2003 2004 2005 Total Assets 2006 2007 2008 2009 Net Loans ■Deposits 2010 2011 Source: National Bank of Georgia BANK OF GEORGIA Romania Bulgaria Ukraine Latvia Lithuania 0.0% 4.6% 4.7% 8.4% 9.2% 10.4% 11.5% 13.4% 13.5% 15.4% 18.4% 19.1% 5.0% 10.0% 15.0% 20.0% 25.0% Source: National Bank of Georgia, IMF www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 40#410% Georgia Kaz-stan Russia Source: National Bank of Georgia, Citi Public debt/GDP, frontier markets Turkey Romania BANK OF GEORGIA Sources: Citi, National Bank of Georgia, CIA www.bogh.co.uk www.bankofgeorgia.ge/ir GEL mln 250% 70% 60% 60% 57% 200% 49% 50% 40% 37% 39% 41% 150% 31% 30% 20% 10% 0% 0% Ukraine Georgia Romania Czech Argentina Vietnam Pakistan Poland Czech Ukraine Bulgaria Georgia Kaz-stan Russia Turkey 50% 100% 40% 73% 74% 80% 68% 69% 64% 67% 30% 59% 16% 20% 14% 11% 13% 9% 9% 11% 12% 14% 60% 10% 40% 20% 0% II i III i 2005 2006 2007 2008 2009 2010 2011 ■FC Deposits / Deposits Source: National Bank of Georgia, Gross Loans/GDP Increasing comfort in saving in GEL and at Bank of Georgia in particular One of the highest level of capital and low debt level compared to other frontier markets Equity/Assets Dollarisation declining 100% 50% 32% 39% 45% 44% 46% 55% 56% 62% Romania Poland Czech Ukraine Gross Loans / GDP Sources: National Bank of Georgia, World Bank, Business Monitor Bulgaria 75% 64% C&EE Markets Eurozone United Kingdom 204% ☑Attractive growth 193% potential May 2012 Page 41#42Forward Looking Statements The forward-looking statements contained in this presentation are based upon the current beliefs and expectations of JSC Bank of Georgia's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JSC Bank of Georgia's actual results to differ materially from those described in this presentation can be found in JSC Bank of Georgia's Annual Report for the year ended 31 December 2011 which has been filed with the UK's Financial Services Authority and is available on Bank of Georgia's website www.bankofgeorgia.ge/ir and on the London Stock Exchange website (www.londonstockexchange.com). JSC Bank of Georgia does not undertake to update the forward- looking statements to reflect the impact of circumstances or events that may arise after the date of this presentation BANK OF GEORGIA www.bogh.co.uk www.bankofgeorgia.ge/ir May 2012 Page 42