#1BANK OF GEORGIA BANK OF GEORGIA GROUP PLC Investor Presentation 4Q19 and FY19 Financial Results 13 February 2020 www.bankofgeorgiagroup.com#2DISCLAIMER - FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development. Although Bank of Georgia Group PLC believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements, certain of which are beyond our control, include, among other things: currency fluctuations, including depreciation of the Georgian Lari, and macroeconomic risk; regional instability; loan portfolio quality; regulatory risk; liquidity risk; operational risk, cyber security, information systems and financial crime risk; and other key factors that indicated could adversely affect our business and financial performance, which are contained elsewhere in this document and in our past and future filings and reports of the Group, including the 'Principal risks and uncertainties' included in Bank of Georgia Group PLC's 2Q19 and 1H19 results announcement and in Annual Report and Accounts 2018. No part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in Bank of Georgia Group PLC or any other entity within the Group, and must not be relied upon in any way in connection with any investment decision. Bank of Georgia Group PLC and other entities within the Group undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Nothing in this presentation should be construed as a profit forecast. BANK OF GEORGIA 2#3CONTENTS Group Overview Results Discussion • Georgian Macro Overview • Appendices BANK OF GEORGIA 4 9 39 63 3#4BANK OF GEORGIA GROUP OVERVIEW Banking Business BANK OF GEORGIA GROUP PLC Top shareholders As of 31 December 2019 Retail Banking Corporate and Investment Banking Rank Shareholder name Ownership 1 JSC Georgia Capital* 19.90% 2 Harding Loevner LP 4.78% 3 JP Morgan Asset Management (UK) Ltd 3.52% Wealth Management BNB (Bank in Belarus) Dimensional Fund Advisors (DFA) LP 2.90% 5 Vanguard Group Inc 2.82% Van Eck Global 2.78% 7 Norges Bank Investment Management 2.65% Shareholder structure GLG Partners LP 2.65% As of 31 December 2019 1% 2% 29% Unvested and unawarded shares for management and employees Vested shares held by management and employees 9 Jupiter Asset Management 2.47% 10 Grandeur Peak Global Advisors LLC 2.40% US 4% 7% 28% BANK OF GEORGIA 29% UK/Ireland Scandinavia ■Luxembourg Other** The Group has been included in the FTSE 250 and FTSE All-Share Index Funds since 18 June 2012 The Group continues to be included in the global responsible investment index FTSE4Good * JSC Georgia Capital will exercise its voting rights at the Group's general meetings in accordance with the votes cast by all other Group Shareholders, as long as JSC Georgia Capital's percentage holding in Bank of Georgia Group PLC is greater than 9.9% **Includes 19.9% shareholding of JSC Georgia Capital 4#5DELIVERING ON GROUP STRATEGY SUCCESSFUL TRACK RECORD OF DELIVERING STRONG RESULTS BANKING BUSINESS KEY TARGETS Nominal Real 1 25.2% 26.4% 26.1% 2 27.0% 22.2% Loan book 24.5% 21.4% ROAE 20%+ 17.4% growth 22.0% c.15% 19.0% 16.1% 15.9% T 2016 2017 2018* 2019** 2016 2017 2018 2019 3 Robust Capital Management Track Record Capital position: We aim to maintain +200bps buffer for CET1 and Tier 1 capital ratios over minimum regulatory requirement during the medium term Maintain regular dividend payouts: Aiming 25-40% dividend payout ratio BANK OF GEORGIA ** GEL 648mln+ cash dividend paid during 2013-2019, within the targeted payout range over past 7 years Regular Dividends Payout 30% 36% 33% 34% 32% 30% 30% 26% ratio: 4.7% 4.0% 4.2% 3.1% 3.1% 3.2% 2.4% 2.7% GEL millions 122 124 98 102 72 80 51 2013 2014 2015 2016 Total dividend paid during the year 2017 2018 2019 2020 Dividend yield* *** 2018 ROAE adjusted for GEL 30.3mln demerger related costs, GEL 8.0mln demerger related corporate income tax gain, GEL 30.3mln one-off impact of re-measurement of deferred tax balances and GEL 3.9mln (net of income tax) termination costs of the former CEO 2019 ROAE adjusted for GEL 14.2mln (net of income tax) termination costs of the former CEO and executive management Dividend yield for 2013-2019 years is calculated based on the closing price of the shares immediately prior to ex-dividend date. At the 2020 Annual General Meeting, the Board intends to recommend an annual dividend for 2019 of GEL 2.67 per share (GEL 130mln in total) payable in British Pounds Sterling at the prevailing rate. Dividend yield for 2020 is calculated based on the closing price of the shares on 31 January 2020 ST 5#6REBASE YEAR | HIGHLIGHTS MACRO DEVELOPMENTS ■ The Georgian economy continued to deliver strong real growth numbers, estimated at 5.2% in 2019 ■ The country's current account deficit reduced significantly to estimated 4.1% of GDP in 2019, down from the 2016 highs of 12.4%, reflecting healthy growth in exports and lower imports; trends that we expect to see continued While the impact of fewer Russian tourists on the economy has been small, the negative expectations have partly resulted in the 6.0% depreciation of the GEL vs US Dollar exchange rate since 20 June 2019, before strengthening in December and early 2020. This did however have an impact on headline inflation, which increased to 7.0% in December 2019 ■To curb this inflation, the National Bank of Georgia increased the monetary policy rate from 6.5% to 9.0% in the second half of 2019 ■ On 11 October 2019, S&P Global Ratings upgraded the Georgia's sovereign credit rating by one notch to BB, a testament to the positive changes as a result of the Government's recent reforms ■ With a ranking of 7th, Georgia remains in the top 10 of best places in the world to do business in 2020 according to the World Bank's ranking ■ Exports are showing healthy growth, while imports are shrinking, resulting in the expected current account deficit falling below 5% of GDP, down from the 2016 highs GROUP DEVELOPMENTS ■ A new base year - a new environment with a successfully reshuffled portfolio, lower NIM and lower cost of credit risk on the back of new regulations, leading to lower systemic risk, resulting in growing operating income and a strong profitability ■ Our new mission established: we are here to help people achieve more of their potential. A new brand platform adopted and first new brand campaign launched. Bank of Georgia is the brand that stands for taking action and doing something about it; we are here to empower and support our customers and employees. The Bank clearly comes out "top of mind" and is regarded as the most trusted financial institution through all age groups of Georgian population ■ New CSR strategy aligned with new mission - to help people achieve more of their potential. Focusing on three main pillars: education, employment and MSME development ■ Two main strategic pillars: customer satisfaction and employee engagement. The KPIs of the top management revised to include NPS/ ENPS scores. Investment made in the leading customer experience management platform, Medallia, to help us capture and prioritise large amounts of customer feedback. Already rolled out throughout the Bank's digital channels and planed to be expanded to the call center and branches in 2020 ■ Investments in digital capabilities - doubling digital staff over a 12 month period (announced in June 2019). Results already evident - a significantly higher number of mobile banking transactions of individual customers (35.9 million in 2019, up 129.2% y-o-y). Overall, more than 93% of daily transactions now performed through digital channels BANK OF GEORGIA 6#7REBASE YEAR | RESULTS HIGHLIGHTS* Income Statement ** Profit adjusted for one-off costs Banking Business GEL thousands unless otherwise noted Net interest income Net fee and commission income Net foreign currency gain Net other income/ (expense) Operating income Operating expenses Profit from associates Operating income before cost of risk Cost of risk Net operating income before non-recurring items Net non-recurring items Profit before income tax expense and one-off costs Income tax expense One-off termination costs of former CEO and executive management (after tax), one-off demerger related expenses (after tax) and one-off impact of re-measurement of deferred tax balances 4Q19 4Q18 207,091 46,558 37,177 187,438 Change y-o-y 10.5% Change Change 3Q19 2019 2018 q-o-q y-o-y 200,992 3.0% 789,419 739,604 6.7% 41,344 53,358 12.6% -30.3% 48,009 -3.0% 180,014 153,182 17.5% 32,233 15.3% 119,363 129,437 -7.8% 18,439 309,265 (121,545) 153 187,873 (14,232) (9,073) 273,067 (100,857) 318 172,528 (40,778) NMF 3,728 NMF 21,474 7,815 NMF 13.3% 20.5% -51.9% 8.9% -65.1% 173,641 131,750 31.8% 284,962 (107,917) 194 177,239 (15,223) 162,016 8.5% 12.6% -21.1% 6.0% -6.5% 7.2% 1,110,270 (419,946) (378,517) 789 1,339 691,113 652,860 (107,584) (160,225) 583,529 1,030,038 7.8% 10.9% -41.1% 5.9% -32.9% 492,635 18.5% (1,591) (2,185) -27.2% (5,019) 172,050 129,565 32.8% 156,997 -68.3% 9.6% (10,723) (22,643) -52.6% 572,806 469,992 21.9% (15,515) (10,888) 42.5% (22,697) -31.6% (58,619) (34,948) 67.7% 156,535 118,677 31.9% 134,300 16.6% 514,187 435,044 18.2% (3,861) NMF (14,236) (56,402) -74.8% Profit 156,535 114,816 36.3% 134,300 16.6% 499,951 378,642 32.0% Balance Sheet Key Ratios GEL thousands unless otherwise noted Dec-19 Liquid assets Cash and cash equivalents Amounts due from credit institutions Investment securities Loans to customers and finance lease receivables 11,931,262 Property and equipment Total assets Client deposits and notes Amounts owed to credit institutions Borrowings from DFIs 379,788 18,569,497 10,076,735 3,934,123 1,486,044 Short-term loans from NBG 1,551,953 Loans and deposits from commercial banks Debt securities issued Total liabilities Change y-o-y 5,559,500 4,540,032 22.5% 2,153,624 1,215,799 77.1% 1,305,216 24.0% 1,619,072 1,786,804 2,019,017 -11.5% 9,397,747 27.0% 344,059 10.4% 14,798,303 25.5% 8,133,853 23.9% 2,994,879 31.4% 1,302,679 14.1% 1,118,957 38.7% 896,126 573,243 56.3% 2,120,064 1,730,414 22.5% 16,418,589 13,000,030 Dec-18 Sep-19 Change q-o-q Banking Business 4Q19 4Q18 3Q19 2019 2018 ROAA** 3.4% 3.3% 3.2% 3.1% 3.2% 5,099,111 1,369,194 1,834,195 1,895,722 11,339,745 9.0% 57.3% -11.7% -5.7% ROAE** 29.9% 27.0% 26.8% 26.1% 26.4% Net interest margin 5.4% 6.0% 5.4% 5.6% 6.5% Loan yield 11.4% 12.8% 11.5% 11.7% 13.5% Liquid assets yield 3.7% 3.8% 3.2% 3.5% 3.8% Cost of funds 4.7% 5.0% 4.5% 4.6% 5.0% 5.2% Cost of client deposits and notes 3.0% 3.4% 2.9% 3.0% 3.5% Cost of amounts owed to credit institutions 7.4% 7.9% 6.8% 7.1% 7.3% 364,405 17,540,692 4.2% Cost of debt securities issued 7.9% 7.8% 7.7% 7.7% 7.8% 5.9% Cost Income*** 39.3% 36.9% 37.9% 37.8% 36.7% Total equity 2,150,908 1,798,273 9,613,718 3,437,718 1,355,426 1,271,027 811,265 2,175,820 26.3% 15,500,833 19.6% 2,039,859 4.8% 14.4% 9.6% NPLs to gross loans to clients 2.1% NPL coverage ratio 80.9% 3.3% 2.9% 90.5% 85.3% 2.1% 80.9% 3.3% 90.5% 22.1% 10.5% NPL coverage ratio, adjusted for discounted value of collateral 139.6% 129.9% 129.3% 139.6% 129.9% Cost of credit risk ratio 0.2% 1.1% 0.5% 0.9% 1.6% -2.6% 5.9% 5.4% NBG (Basel III) CET1 capital adequacy ratio NBG (Basel III) Tier I capital adequacy ratio NBG (Basel III) Total capital adequacy ratio 11.5% 12.2% 11.1% 11.5% 12.2% 13.6% 12.2% 13.3% 13.6% 12.2% 18.1% 16.6% 16.8% 18.1% 16.6% BANK OF GEORGIA The detailed financials of the Group are presented on pages 66-71 The full year 2019 income statement adjusted profit excludes GEL 14.2mln one-off employee costs (net of income tax) related to former CEO and executive management termination benefits. The amount is comprised of GEL 12.4mln (gross of income tax) excluded from salaries and other employee benefits and GEL 4.Omln (gross of income tax) excluded from non-recurring items. The income statement adjusted profit in 4Q18 excludes GEL 3.9mln one-off employee costs (net-off income tax) related to the former CEO termination benefits, which is comprised of GEL 4.4mln (gross of income tax) excluded from non- recurring items. In addition to this, the full year 2018 income statement adjusted profit excludes GEL 52.5mln demerger related expenses (net of income tax) and one-off impact of re-measurement of deferred tax balances. ROAE and ROAA have been adjusted accordingly for all periods presented. Full IFRS income statement is presented on pages 66 and 67. *** The full year cost/income ratio adjusted for GEL 12.4mln one-off employee costs (gross of income tax) related to termination benefits of the former executive management 7#8CONTENTS ■ Group Overview Results Discussion • Georgian Macro Overview ■ Appendices BANK OF GEORGIA 4 9 39 63 8#9THE LEADING BANK IN GEORGIA BOG - Leading Bank in Attractive Banking Sector ■Top Systemically important financial institution in Georgia Market position in Georgia by assets (36.3%), loans (34.9%), client deposits (36.3%) and equity (29.8%) as of 31 December 2019* ■Market with stable growth perspectives: Real GDP average annual growth rate of 4.5% for 2007-2018; 5.2% estimated real GDP growth in 2019 according to Geostat. Loans to GDP was 64.5% and Deposits to GDP was 53.0% at 31 December 2019 ■Strong brand name recognition and retail banking franchise: Offers the broadest range of financial products to the retail market through a network of 267 branches, 933 ATMs, 3,217 Express Pay Terminals and more than 2.5 million customers as of 31 December 2019 Sustainable high profitability with average ROAE of more than 20% over the last four years on the back of solid NIM, low cost of credit risk and stringent cost control ■Resilient credit profile: Well-capitalised, diversified and high quality loan book and strong liquidity profile ■ High standards of transparency and governance: The first entity from Georgia to be listed on the premium segment of the Main Market of the London Stock Exchange (LSE:BGEO) since February 2012. LSE listed through GDRs since 2006 Credit ratings from global rating agencies Strong profitability and growth momentum, on the back of outstanding capital and liquidity positions Banking Business CAGR GEL billions 20 210 15 Balance Sheet Highlights 19.7% 18.6 14.8 12.9 11.1 9.1 10 5 сл Total assets ■31-Dec-15 22.1% 11.9 9.4 7.7 6.7 5.4 19.1% 10.1 5.05.8 7.18.1 Net loans 31-Dec-18 Client deposits ■31-Dec-19 31-Dec-16 ■31-Dec-17 Income Statement Highlights Banking Business 13.3% GEL millions 400 300 273 259 257 2853 309 200 100 31.9% 29.9% 27.0%** 26.8% 119** 157 111** 134 24.5%** 112** 22.9%** Rating Agency Rating Outlook Affirmed MOODY'S Ba3/Ba2 Stable Fitch Ratings BB- Stable 14-Sep-17 15-Apr-19 BANK OF GEORGIA Operating income 4Q18 1Q19 Profit ■2Q19 ■3Q19 ROAE ■ 4Q19 Market data based on standalone accounts as published by the National Bank of Georgia (NBG) www.nbg.gov.ge Profit and ROAE are adjusted for one-off costs for the periods presented. For more details on one-offs, please refer to pages 66-67 a 10#10THE COMPETITION Leading market position in Georgia by assets (36.3%), loans (34.9%), client deposits (36.3%) and equity (29.8%) Peer group's market share in total assets Peer group's market share in gross loans 50% 38.2% 40% 36.3% 30% 20% 50% 39.5% 40% 34.9% 30% 14.2% 20% 14.6% 10% 4.5% 3.5% 3.2% 10% 3.9% 3.7% 3.4% 0% 0% BOG TBC LB VTB PCB Others BOG TBC LB VTB PCB Others 2017 2018 2019 2017 2018 2019 Foreign banks market share by assets Peer group's market share in client deposits 2006 2019 No state ownership of Foreign banks, commercial 32.0% banks since 50% 39.0% 40% 36.3% Foreign banks 30% 18.3% 20% Local 1994 banks, Local 68.0% banks 10% 11.4% 5.9% 4.4% 2.9% 81.7% 0% BOG TBC LB ■2017 2018 2019 VTB PCB Others BANK OF GEORGIA Market data based on standalone accounts as published by the National Bank of Georgia (NBG) as of 31 December 2019 www.nbg.gov.ge 10 10#11STRONG UNDERLYING PERFORMANCE Operating income | quarterly GEL millions Banking Business +13.3% +8.5% 309.3 350 285.0 273.1 280 102.2 84.0 33% 85.7 29% 210 31% 140 187.4 201.0 71% 207.1 67% 70 69% O 4Q18 Net interest income 3Q19 4Q19 Net non-interest income Net non-interest income | quarterly Banking Business +19.3% +21.7% 102.2 GEL millions 110 90 85.7 84.0 18.4 3.8 70 53.4 32.2 37.2 50 30 48.0 46.6 41.3 10 -10 (9.0) 4Q18 3Q19 4Q19 Net fee and commission income Net other income/ (expense) Net foreign currency gain BANK OF GEORGIA GEL millions GEL millions Operating income | full year Banking Business +7.8% 1,110.3 1,200 1,030.0 1,000 290.4 28% 320.9 29% 800 600 400 739.6 72% 789.4 71% 200 О 2018 2019 Net interest income Net non-interest income Net non-interest income | full year Banking Business 350 290.4 7.8 280 210 129.4 140 70 153.2 2018 Net fee and commission income Net other income +10.5% 320.9 21.5 119.4 180.0 2019 Net foreign currency gain 11#12STRONG UNDERLYING PERFORMANCE Operating expenses* | quarterly Banking Business GEL millions +20.5% +12.6% 121.5 107.9 140 120 100.9 1.1 0.8 1.2 23.8 100 11.4 21.3 80 30.0 26.3 35.1 60 40 58.3 59.5 61.5 20 О Operating expenses* | full year Banking Business GEL millions 450 378.5 4.0 360 45.4 270 113.3 180 215.8 90 4Q18 3Q19 4Q19 2018 Other operating expenses Administrative expenses ■Depreciation, amortisation and impairment ■Salaries and other employee benefits Other operating expenses Administrative expenses Operating income before cost of risk* | quarterly Banking Business GEL millions 200 172.5 150 100 50 177.2 -50 4Q18 (43.0) 3Q19 (20.2) 4Q19 (15.8) Cost of risk and net non-recurring items Operating income before cost of risk BANK OF GEORGIA 187.9 +10.9% 419.9 4.2 78.1 106.2 231.4 2019 Depreciation, amortisation and impairment ■Salaries and other employee benefits Operating income before cost of risk* | full year Banking Business GEL millions 800 600 400 200 652.9 2018 2019 -200 (118.3) (182.9) Cost of risk and net non-recurring items Operating income before cost of risk * Operating expenses, operating income before cost of risk and net non-recurring items are adjusted for one-off costs. Please see details on one- offs on pages 66-67 for all the periods presented. 691.1 12 12#13FOCUS ON EFFICIENCY Cost / Income | quarterly Banking Business 40% Banking Business 40% 39.3% 37.9% 35% 35% 36.9% 30% 25% 20% 4Q18 3Q19 4Q19 30% 25% Cost / Income* | full year 36.7% 20% 2018 37.8% 2019 Operating income and operating expenses | quarterly Banking Business Operating income and operating expenses* | full year Operating Leverage*: -7.3% y-o-y Banking Business Operating Leverage*: -3.2% y-o-y -4.1% q-o-q 400 309.3 285.0 GEL millions 273.1 300 200 100.9 107.9 121.5 100 GEL millions O 4Q18 Operating income 3Q19 4Q19 Operating expenses 1,200 1,030.0 1,000 800 600 378.5 400 200 O 2018 Operating income 1,110.3 419.9 2019 Operating expenses BANK OF GEORGIA * Operating expenses, operating leverage and cost/income ratio are adjusted for one-off costs. Please see details on one-offs on pages 66-67 for all the periods presented. 13#14SOLID INCOME NOTWITHSTANDING THE PRESSURE ON YIELDS Banking Business Loan Yields | quarterly Loan Yields | full year Banking Business 120% 12.8% 15% 120% 14.2% 14.2% 13.5% 15% 11.5% 11.4% 11.7% 100% 100% 80% 10% 80% 10% 61.7% 58.9% 58.5% 61.7% 61.7% 58.5% 60% 60% 71.3% 40% 5% 40% 5% 20% 38.3% 41.1% 41.5% 20% 28.7% 38.3% 38.3% 41.5% 0% 0% 0% 0% 4Q18 3Q19 Net loans, FC, consolidated 4Q19 2016 2017 2018 2019 Net loans, FC, consolidated Net loans, GEL, consolidated Currency-blended loan yield, annualised Net loans, GEL, consolidated Currency-blended loan yield, annualised Loan Yields, Foreign currency | quarterly Loan Yields, Local currency | quarterly Banking Business Banking Business 12% 25% 19.7% 10% 8.3% 8.2% 20% 7.9% 16.5% 16.3% 8% 15% 6% 10% 4% 5% 2% 0% 0% 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 BANK OF GEORGIA 14#15STABLE COST OF FUNDING Cost of Customer Funds | quarterly Cost of Customer Funds | full year Banking Business Banking Business 120% 3.4% 4% 120% 3.8% 3.5% 3.5% 4% 2.9% 3.0% 3.0% 100% 100% 3% 3% 80% 80% 67.5% 69.3% 69.3% 60% 2% 60% 76.8% 69.5% 67.5% 69.3% 2% 40% 40% 1% 1% 20% 20% 32.5% 30.7% 30.7% 23.2% 30.5% 32.5% 30.7% 0% 0% 0% olo olo olo olo o 0% 4Q18 3Q19 4Q19 2016 2017 2018 2019 I Client deposits, FC, consolidated Client deposits, GEL, consolidated Currency-blended cost of client deposits, annualised Cost of Funds | quarterly Client deposits and notes, FC, consolidated Client deposits and notes, GEL, consolidated -Currency-blended cost of client deposits and notes Cost of Funds | full year Banking Business Banking Business 6% 6% 5.0% 5.0% 4.7% 4.7% 4.7% 5% 4.5% 4.6% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% 0% 4Q18 3Q19 4Q19 2016 2017 2018 2019 BANK OF GEORGIA 15#16DIVERSIFIED ASSET STRUCTURE AND LOAN PORTFOLIO Total asset structure | 31 Dec 2019 Banking Business Liquid assets | 31 Dec 2019 Total: GEL 18.6bln Banking Business Total: GEL 5.6bln Other assets 5.8% Liquid assets 29.9% Loans to customers, net 64.3% Other liquid assets 17.0% Government bonds, treasury bills, NBG CDs 15.2% Cash and equivalents 38.7% Amounts due from credit institutions 29.1% Bank of Georgia Standalone Total Gross Loans breakdown by segments Total: GEL 11.4bln Retail loans, GEL 7,536.9 mln, 66.0% Loans breakdown | 31 Dec 2019 Retail Banking Net Loans breakdown by product Total: GEL 7.4bln CIB loans, Credit cards and overdrafts 3.1% GEL 3,878.1 mln, 34.0% Corporate and Investment Banking Gross Loans breakdown by sectors Total: GEL 3.9bln Mining and. quarrying 2.7% Financial intermediation Other 2.4% General consumer loans 20.2% Mortgage loans 40.8% 1.3% Micro- and agro- financing loans and SME loans Electricity, gas and. water supply 1.3% 33.5% Health and social work 3.5% Other 8.6% Construction 11.0% Manufacturing 28.3% Hospitality 6.2% Transport & Communication Real estate Trade 15.5% 3.8% Service 4.1% 13.7% BANK OF GEORGIA 16#17GEL millions LOAN PORTFOLIO BREAKDOWN Retail Banking | 31 Dec 2019 Corporate and Investment Banking | 31 Dec 2019 JSC Bank of Georgia standalone JSC Bank of Georgia standalone 7,537 109 4,270 3,267 1.4% 2.1% 89 0.6% 21 Loan portfolio Allowance for ECL ECL rate FC GEL Amounts in GEL millions GEL loans* FC loans not exposed to FC risk FC loans exposed to FC risk Total * Includes credit cards BANK OF GEORGIA GEL millions 1.9% 3,878 74 0.5% 724 70 2.2% 3,154 Loan portfolio Allowance for ECL ECL rate FC GEL RB Loan portfolio 4,270 546 % of total RB loan portfolio 56.7% 7.2% Consumer Mortgages SME & Micro loans* 1,284 432 1,716 75 1,269 39 2,721 36.1% 1,326 180 1,215 7,537 100.0% 3,043 1,971 2,523 Amounts in GEL millions GEL loans* FC loans not exposed to FC risk FC loans exposed to FC risk Total *Includes credit cards CB & WM % of total CIB Loan portfolio loan portfolio 724 18.7% 1,543 39.8% 1,611 41.5% 3,878 100.0% 17#18RESILIENT LOAN PORTFOLIO QUALITY Expected credit loss and NIM NPL composition Banking Business NPL Banking Business coverage ratio 86.7% 92.7% 90.5% 80.9% 7.4% 7.3% 400 8% 6.5% 500 5% 4.2% 3.8% 5.6% 3.3% 300 5.1% 6% 400 2.1% 4% 4.7% 4.9% 295 318 301 4.7% 300 27 253 3% 200 4% 38 49 18 256 279 288 200 159 2% 121 203 185 100 205 2% 100 1% 133 114 55 68 0% O 0% 2016 2017 2018 2019 2016 2017 2018 2019 Allowance for ECL, GEL mln Risk Adjusted NIM Net Interest Margin NPLs RB, GEL mln NPLs Other, GEL mln. NPLS CIB, GEL mln NPLs to gross loans Cost of Credit Risk Cost of Risk -32.8% Banking Business -70bps 3.0% 2.7% -90bps Banking Business -30bps 180 168 167 160 2.5% 2.2% 2.0% 1.6% 1.5% 1.0% 0.5% 1.1% 0.9% 0.5% 0.2% GEL millions 150 120 -65.1% 108 -6.5% 90 60 30 41 15 14 0.0% O 2016 2017 2018 2019 4Q18 3Q19 4Q19 2016 2017 2018 2019 4Q18 3Q19 4Q19 BANK OF GEORGIA 18#19COST OF CREDIT RISK DECOMPOSITION Cost of credit risk Retail Banking cost of credit risk 2017 2018 2019 Retail Banking cost of credit risk, as reported 2.5% 2.1% 1.2% Retail Banking cost of credit risk, excluding high-yield portfolio 1.3% 1.2% 1.0% Retail Banking cost of credit risk decomposition 2017 2018 2019 Mortgage loans 0.1% 0.0% 0.1% MSME loans 0.6% 0.4% 0.5% Consumer loans, excluding high-yield portfolio 0.5% 0.7% 0.4% High-yield portfolio 1.3% 1.0% 0.2% Total 2.5% 2.1% 1.2% Total cost of credit risk decomposition 2017 2018 2019 CIB loans 0.5% 0.2% 0.1% Mortgage loans 0.0% 0.0% 0.1% MSME loans 0.4% 0.3% 0.3% Consumer loans, excluding high-yield portfolio 0.3% 0.5% 0.3% High-yield portfolio 0.8% 0.6% 0.2% Other (BNB and GLC) 0.2% 0.0% -0.1% Total 2.2% 1.6% 0.9% BANK OF GEORGIA Key takeaways Of 2.5% of Retail Banking cost of credit risk ratio in 2017, 1.3% was attributable to the high- yield loan portfolio, as compared to only 0.2% in 2019, as a result of change in regulatory environment and phase-out of high-yield portfolio since 2nd quarter 2018 The cost of credit risk ratio of the Retail Banking loan portfolio excluding the high-yielding loans has been around 1.0-1.3% historically, and has been improving during 2019 The decline in the overall cost of credit risk of the loan portfolio is attributable of the reshuffling of the loan book on the back of regulatory changes since second quarter 2018 19 19#20STRONG LIQUIDITY Liquid assets to total liabilities Banking Business Liquidity coverage ratio & net stable funding ratio JSC Bank of Georgia standalone (Basel III Liquidity) 18,000 37.9% 38.3% 34.9% 33.9% 40% 200% 151.5% 136.7% 15,000 133.6% 11,355 13,000 16,419 30% 150% 125.5% 132.5% GEL millions 12,000 9,771 120.1% 97.0% 100.3% 9,000 20% 100% 5,560 6,000 3,705 4,347 4,540 10% 50% 3,000 0 0% 0% 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-16 31-Dec-17 31-Dec-18* 31-Dec-19* Liquid assets Total liabilities Liquid assets to total liabilities Liquidity coverage ratio ■Net stable funding ratio Net loans to customer funds & DFI Banking Business Cumulative maturity gap | 31 Dec 2019 Banking Business 140% 116.1% 115.5% 118.4% 120% 109.4% 1,500,000 1,008,164 1,265,224 25% 1,055,316 (3,160,194) 500,000 15% 100% 103.2% 99.6% 80% 93.3% 89.0% GEL millions -500,000 179,964 5.7% 5.4% 1.0% On 0-3 3-6 6-12 Demand Months Months Months (1,527,020) 6.8% 5% 1-3 Years 3 Years -1,500,000 -5% -8.2% -2,500,000 -15% 60% 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 -17.0% -3,500,000 -25% Net loans to customer funds & DFIs Net loans to customer funds Maturity gap Maturity gap, as % of total assets BANK OF GEORGIA * The ratios at 31 December 2018 and 2019 are calculated for standalone JSC Bank of Georgia according to the guidelines set by National Bank of Georgia 20#21STRONG NBG (BASEL III) CAPITAL ADEQUACY POSITION Capital adequacy requirements introduced by National Bank of Georgia in December 2017 Transition to Basel III Standards: Systemic capital surcharge: 2.5% of risk weighted assets to be phased-in during the following years as per below schedule: Capital Adequacy Ratios Systemic Buffer 31-Dec-17 0% 31-Dec-18 1.0% 31-Dec-19 1.5% 31-Dec-20 2.0% 31-Dec-21 2.5% Currency induced credit risk ("CICR") buffer was introduced instead of additional 75% weighting of FX denominated loans. 56% of CICR buffer should be held on CET1 level, 75% on Tier 1 level and 100% on total capital General Risk Assessment Program ("GRAPE") for individual banks: GRAPE buffer is currently set at 2.6%. GRAPE buffer will be reviewed annually and will be phased-in on different levels of capital according to the below schedule: 20% 18.1% 16.6% 17.1% 16.7% 16.8% 15% 13.3% 13.6% 12.7% 13.3% 12.2% 10% 12.2% 12.7% 11.1% 11.5% 11.0% 5% 0% 11111 31-Dec-17 31-Dec-18 31-Mar-20 31-Mar-21 31-Mar-22 CET 1 Tier 1 0% 15% 30% 45% 56% 0% 20% 40% 60% 75% Total Capital 0% 100% 100% 100% 100% Credit Portfolio Concentration buffer, effective from 1 April 2018 and phased in over the four year period on different levels of capital according to the above schedule Net Stress Test buffer effective from 1 October 2020 In the view of above, Bank of Georgia is subject to the following minimum capital requirements: Fully Loaded Estimate* from 31-Dec-22 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Decr-21 Estimate⭑ Estimate* CET 1 8.1% 9.5% 10.1% Tier 1 9.9% 11.4% 12.2% 10.9% 13.1% 11.8% 14.1% 12.1% 14.5% Total Capital 12.4% 15.9% 17.1% 17.1% 17.6% 17.6% GEL millions 4Q18 1Q19 2Q19 3Q19 4Q19 CET1 Capital Adequacy Ratio Tier I Capital Adequacy Ratio Total Capital Adequacy Ratio Risk Weighted Assets 15,000 13,585 13,868 12,559 11,339 11,461 12,000 9,000 6,000 3,000 * Indicated minimum capital adequacy ratios contain Pillar 1 and Pillar 2 buffer estimates. Range provides our best minimum and maximum estimates of the variable buffers Transition to Basel III is not expected to affect the Bank's growth prospects or its ability to maintain dividend distributions within the existing dividend policy payout range BANK OF GEORGIA 4Q18 1Q19 2Q19 3Q19 4Q19 21 21#22STRONG NBG (BASEL III) CAPITAL ADEQUACY POSITION Capital Management Issuance of AT1 Capital Notes in March 2019 In March 2019, the Bank issued inaugural US$ 100 million Additional Tier 1 capital perpetual subordinated notes. It is reflected in the capital ratios since April 2019 after the receipt of the regulatory approval on the classification as AT1 instrument. At the time of issuance, the instrument added approximately 230bps to the Bank's Tier 1 capital ratio Tier 2 subordinated club facility In December 2019, the Bank signed a ten-year US$ 107mln subordinated syndicated loan agreement arranged by FMO. The facility is expected to be treated as a Bank Tier 2 capital instrument (upon disbursement and approval of the National Bank of Georgia). Of the total facility, US$ 52mln was already drawn-down and the regulatory approval on classification was received in December 2019. The undrawn part of the facility is expected to be utilised as needed within six months of 2020 Capital Adequacy Tier 1 Capital Adequacy Ratio Evolution 15% 2.1% JSC Bank of Georgia standalone 0.4% 13.6% 2.8% 1.0% 13% 12.2% 2.1% 11% 9% 7% 5% Dec-18 Business Growth 2019 profit Dividend Issuance of GEL AT1 Capital Devaluation Notes Dec-19 BOG Equity vs. Tier 1 Regulatory Capital | 31 Dec 2019 % of RWAs 13.6% 1.5% 0.8% 1.1% -2.1% " Robust internal capital generation per annum Existing additional capital buffers (within c. 2.3% of RWAS) reflecting differences in provisioning between NBG methodology and IFRS 9 Capital Buffer We aim to maintain c.+200bps for CET1 and Tier 1 capital ratios over minimum regulatory requirements in the medium term GEL millions 2,500 2,000 148 287 117 211 2,076 1,888 1,500 1,000 500 3.4% О NBG Tier 1 Capital Loan Other provisioning provisioning deductions* IP AT1 Capital Notes methodologymethodology difference difference BOG Equity (IFRS) BANK OF GEORGIA * Other deductions Include revaluation reserve, investments in non-financial subsidiaries and intangible assets 22#23WELL-ESTABLISHED FUNDING STRUCTURE Interest Bearing Liabilities structure | 31 Dec 2019 Banking Business Interest Bearing Liabilities GEL 16.1bln Well diversified international borrowings | Dec-19 Banking Business Borrowings, GEL 1,848.8 mln, 11.5% Debt securities issued, GEL 2,120.1 mln, 13.1% Other amounts owed to credit institutions, GEL 2,085.3 mln, 12.9% Client deposits & notes, GEL 10,076.7 mln, 62.5% Current accounts and Time deposits, 50.0% demand deposits, 50.0% の European Bank for Reconstruction and Development OPIC KFW DEG ADB IFC FMO Finance for Development Black Sea Trade & Development Bank EFSE EUROPEAN FUND FOR SOUTHEAST EUROPE Other debt securities, GEL 431.5 mln, 10.9% Others borrowings, GEL 362.7 mln, 9.1% DFIs, GEL 1,486.1 mln, 37.4% Eurobonds, GEL 1,688.6 mln, 42.5% Borrowed funds maturity breakdown* Banking Business US$ millions 500 428 4.9% 400 6.6% 1.3% 316 0.5% 300 339 174 0.7% 200 101 100 90 142 87 89 9 34 48 О 11 10% " 5% 1.1% 0% 1.6% 0.1% 0.0% 0.0% -5% 72 -10% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Senior Loans Subordinated Loans % of Total assets Eurobonds Highlights for 2019 Group has a well-balanced funding structure with 62.5% of interest bearing liabilities coming from client deposits and notes, 9.2% from Developmental Financial Institutions (DFIs) and 10.5% from Eurobonds and notes issued, at 31 December 2019 At 31 December 2019, c.GEL 320 million undrawn facilities from DFIs with up to ten years maturity In December 2019, the Bank signed a ten-year US$ 107mln subordinated syndicated loan arranged by FMO in collaboration with other participating lenders. The facility is expected to be treated as a Bank Tier 2 capital instrument (upon disbursement and approval of the National Bank of Georgia) under the Basel III framework In July 2016, BGEO Group issued 7 year, US$ 350mln Eurobonds with 6.00% coupon (bonds were pushed down to BOG in March 2018). Bonds were trading at 4.133%** on 31 January 2020 In June 2017, BOG issued 3 year, GEL 500mln local currency international bonds with 11.00% coupon. Bonds were trading at 9.238%** on 31 January 2020 In March 2019, BOG issued US$ 100mln 11.125% Additional Tier 1 capital perpetual subordinated notes callable after 5.25 years and on every subsequent interest payment date, subject to prior consent of the NBG. Notes were trading at 9.704%** on 31 January 2020 BANK OF GEORGIA converted at GEL/US$ exchange rate of 2.8677 at 31 December 2019 ** source: Bloomberg 23#24RETAIL BANKING HIGHLIGHTS Data as at 31 December 2019 for JSC Bank of Georgia standalone 1 BANK OF GEORGIA EXPRESS 2 3 BANK OF GEORGIA SOLO Mass Affluent 4 BANK OF GEORGIA BUSINESS MSME Segments Emerging Retail Mass Retail Clients 543 k 1,727 k 55k 221k Loans GEL 279 279 mln GEL 2,321 mln GEL 2,239 min GEL 2,697 mln Deposits GEL315min GEL 2,372 min GEL 2,218 min GEL 808 mln 2019 Profit* GEL 18 mln GEL 133 mln GEL 80 mln GEL 94 mln P/C ratio 3.3 1.7 5.1 1.4 Branches 162 93 12 n/a BANK OF GEORGIA 2019 profit adjusted for GEL 10.1mln one-off employee costs (net of income tax) related to former CEO and executive management termination benefits 24#25RETAIL BANKING HIGHLIGHTS Income Statement Highlights* GEL thousands unless otherwise noted Net interest income Net fee and commission income Net foreign currency gain Net other income / (expense) 4Q19 4Q18 Change y-o-y Change Change 3Q19 2019 2018 9-0-9 y-o-y 134,839 32,775 136,895 -1.5% 142,202 -5.2% 545,701 546,873 -0.2% 32,915 -0.4% 36,696 -10.7% 136,510 118,858 14.9% 14,795 24,047 -38.5% 14,410 2.7% 51,009 56,357 -9.5% 9,233 (5,420) NMF 581 NMF 8,230 1,372 NMF Operating income 191,642 188,437 1.7% 193,889 -1.2% 741,450 723,460 2.5% Salaries and other employee benefits (39,683) (37,052) 7.1% (37,732) 5.2% (147,982) (138,635) 6.7% Administrative expenses (22,593) (21,620) 4.5% (17,585) 28.5% (70,968) (84,323) -15.8% Depreciation, amortisation and impairment (20,383) (9,857) Other operating expenses (625) Operating expenses Profit from associate (83,284) 153 Operating income before cost of risk 108,511 (639) (69,168) 318 119,587 106.8% -2.2% 20.4% -51.9% -9.3% (17,973) 13.4% (66,136) (39,134) 69.0% (379) (73,669) 194 64.9% (2,286) (2,332) -2.0% 13.1% (287,372) (264,424) 8.7% -21.1% 120,414 -9.9% Cost of risk (7,118) (37,486) -81.0% (16,831) -57.7% 789 454,867 (89,879) 1,339 460,375 -41.1% -1.2% (130,715) -31.2% Net operating income before non-recurring items 101,393 82,101 23.5% 103,583 -2.1% 364,988 329,660 10.7% Net non-recurring items 68 (779) NMF (575) NMF (846) (13,529) -93.7% Profit before income tax expense and one-off costs 101,461 81,322 24.8% Income tax expense (8,910) (6,155) 44.8% Profit adjusted for one off costs 92,551 75,167 One-off costs (after tax) (2,939) Profit 92,551 72,228 23.1% NMF 28.1% 103,008 (14,060) 88,948 -1.5% -36.6% 364,142 (35,396) 316,131 15.2% (21,389) 65.5% 4.1% 328,746 294,742 11.5% (10,142) (36,483) -72.2% 88,948 4.1% 318,604 258,259 23.4% Loan Yield Deposit Cost 120% 16.8% 16.1% 15.1% 18% 120% 4% 12.9% 3.3% 2.9% 2.9% 2.6% 100% 15% 100% 3% 80% 48.8% 50.3% 43.7% 12% 80% 60.8% 60% 9% 60% 75.0% 72.1% 69.7% 68.0% 2% 40% 6% 40% 1% 51.2% 49.7% 56.3% 20% 39.2% 3% 20% 25.0% 27.9% 30.3% 32.0% 0% 0% 0% 0% 2016 2017 2018 2019 2016 2017 2018 2019 I Net loans, RB, FC Net loans, RB, GEL I Client deposits, RB, FC Client deposits, RB, GEL BANK OF GEORGIA Currency-blended loan yield, RB Currency-blended cost of client deposits, RB The full year 2019 income statement adjusted profit excludes GEL 10.1mln one-off employee costs (net of income tax) related to the former CEO and executive management termination benefits. The amount is comprised of GEL 8.6mln (gross of income tax) excluded from salaries and other employee benefits and GEL 2.9mln (gross of income tax) excluded from non- recurring items. The income statement adjusted profit in 4Q18 excludes GEL 2.9mln one-off employee costs (net-off income tax) related to the former CEO termination benefits, which is comprised of GEL 3.3mln (gross of income tax) excluded from non-recurring items. In addition to this, the full year 2018 income statement adjusted profit excludes GEL 33.5min demerger related expenses (net of income tax) and one-off impact of re-measurement of deferred tax balances 25#26GEL millions RETAIL BANKING LOANS AND DEPOSITS Market share - Loans* Market Share - Deposits * 38.8% 37.5% 34.9% 35.5% 40.3% 36.9% 34.6% 33.0% 2016 2017 2018 2019 2016 2017 2018 2019 Retail Banking Loans +18.5% 8,000 7,428 7,000 6,267 6,000 5,044 5,000 4,000 3,902 3,000 2,000 1,000 2016 2017 2018 2019 BANK OF GEORGIA * Market shares by Loans and Deposits to Individuals GEL millions Retail Banking Deposits +31.7% 8,000 7,000 5,713 6,000 5,000 4,339 4,000 3,267 3,000 2,414 2,000 1,000 2016 2017 2018 2019 26#27RETAIL BANKING LOAN YIELD, COST OF DEPOSITS & NIM RB Loan Yield I quarterly RB Loan Yield I full year 30% 20% 30% 20.7% 21.5% 17.0% 16.7% 17.6% 14.2% 12.8% 12.4% 20% 15.1% 12.9% 7.4% 7.5% 6.8% 7.9% 7.3% 10% 10% 0% 0% Loan Yield ■4Q18 Loan yield, GEL 3Q19 4Q19 Loan yield, FC Loan Yield 2018 Loan yield, GEL 2019 Loan yield, FC RB Cost of Deposit I quarterly RB Cost of Deposit I full year 6% 5.0% 5.0% 5.1% 6% 4.9% 5.1% 4% 2.9% 2.6% 2.5% 4% 2.9% 2.6% 2.1% 1.5% 1.4% 2.0% 1.5% 2% 2% 0% 0% Cost of deposits Cost of deposits, GEL Cost of deposits, FC Cost of deposits Cost of deposits, GEL Cost of deposits, FC 2018 2019 4Q18 3Q19 4Q19 RB NIM I quarterly RB NIM I full year 10% 10% 7.5% 8% 8% 6.7% 6.1% 5.7% 6% 6% 6.1% 4% 4% 4Q18 3Q19 4Q19 2018 2019 BANK OF GEORGIA 27 22#28RETAIL BANKING - LEADING RETAIL BANK IN GEORGIA RB Client Data Mortgage Loans Dollarisation Operating Data, GEL mln 2019 2018 2017 2016 100% 5% Number of total Retail clients, of which: 2,540,466 Number of Solo clients Consumer loans & other outstanding, volume Consumer loans & other outstanding, number 54,542 1,726 472,791 2,440,754 44,292 1,555 566,740 2,315,038 32,104 1,480 738,694 2,141,229 23% 26% 19,267 80% 42% 1,104 60% 647,441 95% Mortgage loans outstanding, volume Mortgage loans outstanding, number Micro & SME loans outstanding, volume 3,043 46,907 2,539 39,007 1,706 1,228 40% 77% 74% 26,643 16,300 58% 2,523 2,005 1,637 1,346 20% Micro & SME loans outstanding, number 81,739 68,832 53,732 36,379 0% Credit cards and overdrafts outstanding, volume 245 290 Credit cards and overdrafts outstanding, number Credit cards outstanding, number, of which: 395,012 454,512 308 480,105 291 442,487 2016 2017 2018 2019 American Express cards 395,536 99,307 547,038 105,899 673,573 97,178 800,621 79,567 ■Mortgage loans, FC Mortgage loans, GEL Credit cards and overdrafts 3.1% Net Loans by products Total: GEL 7.4bln Other 2.4% General RB Portfolio | 31 December 2019 Deposits by currency Total: GEL 5.7bln consumer loans 20.2% Micro- and agro- financing loans and SME loans 33.5% BANK OF GEORGIA Mortgage loans 40.8% Deposits by category Total: GEL 5.7bln Client Deposits, GEL 32% Client Deposits, FC 68% Time deposits 56% Current accounts and on demand deposits 44% 28#29DIVERSIFIED RETAIL PORTFOLIOS AND INCOME STREAMS Balance Sheet | 31 Dec 2019 JSC Bank of Georgia Standalone 4% Income Statement | 2019 JSC Bank of Georgia Standalone Total Gross Loans GEL 7,537min 12% Net Interest Income GEL 546mln 29% 31% 36% ■Mass Retail (GEL 2,321mln) ■MSME (GEL 2,697mln) ■Solo (GEL 2,239mln) Express Bank (GEL 279mln) JSC Bank of Georgia Standalone 5% 42% 39% 14% 20% 38% 30% ■Mass Retail (GEL 205mln) ■MSME (GEL 162mln) Solo (GEL 111mln) Express Bank (GEL 68min) Total Deposits GEL 5,713mln JSC Bank of Georgia Standalone 18% 35% 22% 25% Mass Retail (GEL 2,372 mln) MSME (GEL 808mln) Solo (GEL 2,218mln) Express Bank (GEL 315mln) Mass Retail (GEL 40mln) ■MSME (GEL 28mln) Solo (GEL 25min) Express Bank (GEL 20mln) BANK OF GEORGIA Net Fee & Commission Income GEL 113min 29#30RETAIL BANKING | DIGITAL PENETRATION mBank/iBank statistics Number of Active Users | '000 Number of transactions (millions) mBank 569 12.8 15,000.00 საქართველოს ბანკის 481 506 10.8 მობილბანკი შენი 23.000.00 .000.00 452 417 9.5 მობილური ცხოვრებისთვის 15,000 8.1 7.0 www.mBank.ge 11.5 9.5 8.2 6.7 5.5 1.5 1.4 1.3 1.3 1.3 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 iBank mBank Digital vs non-digital transactions Number of transactions in millions Transactions breakdown by channel | 2019 49.1 7% 45.0 45.6 21% 42.1 41.5 16% 93.2% share of digital transactions 3.7 3.2 3.3 3.2 3.4 4Q18 1Q19 2Q19 3Q19 4Q19 - Through tellers -Through digital channels 56% mBank/iBank ATMs BANK OF GEORGIA Information on this slides depicts the usage of digital and non-digital channels by individual customers Express pay terminals Branches +8.5% YoY -7.9% YoY 65.00 518:00-2 760C 30#31DIGITAL AREA ECOSYSTEM OVERVIEW MSME RETAIL Merchant services Lite and modular solutions All-in-one solution (hardware + software) Al-driven offers Business loan pre-qualification HR solutions ■ Lite and modular solutions Open API model Streamlined HR operation ■ Al-based performance management DIGITAL AREA Real estate ecosystem Al-optimised content ■ Advanced real estate estimation Mortgage loan pre-qualifications Remodeling and interior design Online marketplace ■ Advanced search/comparison Al-optimised content ■ Consumer loan pre-qualification ■ Utilisation of BOG merchant networks Business intelligence /accounting ■ Lite and modular solutions Open API model ■ Advanced visualisations ■ Tailored to MSMEs BANK OF GEORGIA Auto ecosystem Al-optimised content Cross-selling (e-commerce, leasing, dealerships, etc.) ■ Auto loan pre-qualification ■ Advanced vehicle inspection 31#32DIGITAL AREA ECOSYSTEM Current standing and next steps SINCE AUGUST 2018 COMING SOON - 2020 area.ge full scale launch extra.ge acquisition and beta launch extra.ge full scale re-launch Auto ecosystem full scale launch Merchant services full scale launch HR solutions MVP launch Auto ecosystem active development in progress BANK OF GEORGIA BI/Accounting MVP launch 32#33CORPORATE AND INVESTMENT BANKING HIGHLIGHTS Income Statement Highlights* Market Position** Change Change GEL thousands unless otherwise noted 4Q19 4Q18 3Q19 2019 2018 y-o-y q-o-q Net interest income 65,642 43,696 50.2% 51,827 26.7% 217,874 165,723 Net fee and commission income 11,928 6,939 71.9% 9,826 21.4% 37,018 26,680 Change y-o-y 31.5% 38.7% Market Share by Loans Market Share by Deposits Net foreign currency gain 14,341 23,984 -40.2% 13,510 6.2% 49,355 54,702 -9.8% 33.1% Net other income / (expense) 9,212 (3,451) NMF 3,300 Operating income 101,123 71,168 42.1% 78,463 179.2% 28.9% 13,506 6,699 101.6% 317,753 253,804 25.2% 30.5% 31.0% 31.2% Salaries and other employee benefits (15,495) (14,645) 5.8% (15,304) 1.2% Administrative expenses (8,989) (4,921) 82.7% (5,866) 53.2% (57,975) (22,886) (17,409) (54,792) 5.8% 30.9% 30.3% 31.5% 28.9% 28.8% Depreciation, amortisation and impairment (2,387) (1,122) 112.7% (2,416) -1.2% (8,437) (4,945) 70.6% Other operating expenses (295) (347) -15.0% (241) 22.4% Operating expenses (27,166) (21,035) Operating income before cost of risk 73,957 50,133 29.1% 47.5% (23,827) 14.0% (1,042) (90,340) (78,321) (1,175) -11.3% 15.3% Cost of risk (7,389) (3,408) 116.8% Net operating income before non-recurring items 66,568 46,725 Net non-recurring items (217) (619) 42.5% -64.9% 54,636 1,239 55,875 35.4% 227,413 175,483 29.6% NMF (14,548) (25,888) -43.8% Profit before income tax expense and one-off 66,351 46,106 43.9% (3) 55,872 19.1% NMF 18.8% 212,865 149,595 42.3% costs Income tax expense (5,344) Profit adjusted for one-off costs 61,007 (3,570) 42,536 49.7% (7,444) -28.2% One-off costs (after tax) Profit 61,007 (922) 41,614 43.4% NMF 46.6% 48,428 26.0% 48,428 26.0% (293) 212,572 142,998 (19,819) (10,014) 192,753 132,984 44.9% (4,094) (13,846) -70.4% 188,659 119,138 58.4% (6,597) -95.6% 48.7% 97.9% 2016 2017 2018 2019 2016 2017 2018 2019 Loan Yield Deposit Cost 120% 5% 120% 100% 10.4% 10.7% 10.2% 9.1% 12% 3.9% 4.0% 4.1% 3.3% 100% 4% 9% 80% 80% 63.1% 61.2% 3% 65.9% 60% 74.8% 60% 83.3% 83.1% 82.3% 81.1% 6% 2% 40% 40% 3% 1% 20% 20% 36.9% 38.8% 34.1% 25.2% 16.7% 16.9% 17.7% 18.9% 0% 0% 0% 0% 2016 2017 2018 2019 2016 I Net loans, CIB, FC Net loans, CIB, GEL Currency-blended loan yield, CIB 2017 Client deposits, CIB, FC Client deposits, CIB, GEL Currency-blended cost of client deposits, CIB 2018 2019 BANK OF GEORGIA The full year 2019 income statement adjusted profit excludes GEL 4.1mln one-off employee costs (net-off income tax) related to the former CEO and executive management termination benefits. The amount is comprised of GEL 3.8mln (gross of income tax) excluded from salaries and other employee benefits and GEL 1.1mln (gross of income tax) excluded from non-recurring items. The income statement adjusted profit in 4Q18 excludes GEL 0.9min one-off employee costs (net-off income tax) related to the former CEO termination benefits, which is comprised of GEL 1.1mln (gross of income tax) excluded from non-recurring items. In addition to this, the full year 2018 income statement adjusted profit excludes GEL 12.9mln demerger related expenses (net of income tax) and one-off impact of re-measurement of deferred tax balances ** Market shares by Loans and Deposits to Legal entities 33#34CIB LOAN BOOK & DEPOSITS Highlights CIB Loans GEL millions +45.3% Leading corporate bank in Georgia 4,000 Integrated client coverage in key sectors 3,000 2,618 2,395 2,260 2,000 2,701 corporate clients served by dedicated relationship 1,000 bankers Mining and. quarrying 2.7% Financial intermediation 1.3% Electricity, gas and water supply 1.3% Transport & Communication 3.8% GEL millions CIB Deposits +10.1% 3,804 4,000 3,825 3,457 3,473 3,059 3,000 2,000 1,000 0 2016 2017 2018 2019 2016 2017 2018 2019 Loans by sectors Portfolio breakdown | 31 December 2019 Deposits by category Deposits by currency Health and social work 3.5% Other 8.6% Manufacturing 28.3% Top 10 CIB borrowers represent 30.9% of total CIB loan book Construction Time deposits, 35.3% 11.0% Hospitality 6.2% Service 4.1% Real estate 13.7% Trade 15.5% BANK OF GEORGIA Top 20 CIB borrowers represent 42.0% of total CIB loan book Current accounts and demand deposits, 64.7% Client deposits, FC, 65.9% Client deposits, GEL, 34.1% 34#35CIB LOAN YIELD, COST OF DEPOSITS & NIM CIB Loan Yield I quarterly CIB Loan Yield I full year 15% 10% 12.8% 12.5% 13.1% 11.5% 15% 12.0% 9.8% 8.9% 9.2% 9.2% 8.4% 8.5% 10.2% 9.1% 9.6% 8.6% 10% 5% 5% 0% 0% Loan Yield Loan yield, GEL 4Q18 3Q19 4Q19 Loan yield, FC Loan Yield 2018 Loan yield, GEL 2019 Loan yield, FC CIB Cost of Deposit I quarterly CIB Cost of Deposit I full year 10% 10% 6.2% 5.6% 6.1% 6.4% 5.8% 4.1% 5% 4.0% 3.2% 3.3% 5% 3.3% 2.4% 1.8% 2.3% 1.8% 1.7% 0% 0% Cost of deposits Cost of deposits, GEL Cost of deposits, FC 4Q18 3Q19 4Q19 Cost of deposits Cost of deposits, GEL Cost of deposits, FC 2018 2019 CIB NIM I quarterly CIB NIM I full year 5% 5% 3.8% 3.6% 3.3% 4% 3.2% 3.2% 4% 3% 3% 2% 2% 1% 1% 4Q18 3Q19 4Q19 2018 2019 BANK OF GEORGIA 35#36BUILDING BLOCKS TO BECOME THE FINANCIAL SERVICES HUB Wealth Management – aim to increase AUM to US$3.Obln in 5 years time Strong international presence: Israel (since 2008), UK (2010), Hungary (2012) and Turkey (2013) London Budapest Tel Aviv Tbilisi Istanbul AUM of GEL 2,567.2 million, up 13.0% y-o-y Diversified funding sources: Georgia 36% ■ Israel 10% UK 2% Germany 2% CIS 22% Other 28% Wealth Management Vision - Become the regional hub for wealth management offering . • • • Business and tax friendly environment Secure and attractive destination Conservative regulation and high level of banking secrecy Market dominated by two LSE listed banks with high standards of transparency ■ Brand new office in the centre of Tbilisi, since January 2019, dedicated to serving wealth management clients SCHE GELDSCHRANK RESORBAUANSTALT. HERM.BODE HANNOVER. BANK OF GEORGIA 36#37BUILDING BLOCKS TO BECOME THE FINANCIAL SERVICES HUB Galt & Taggart - Largest Investment Bank in Georgia Brokerage The leading brokerage house in the region The leading investment bank in the region The only international sub-custodian in the region ■ Wide product coverage and Exclusive partner of SAXO Bank SAXO via White Label structure, that provides highly adaptive trading BANK platform with professional tools, insights and world-class execution Research " Sector, macro and fixed income coverage " Georgian quarterly macroeconomic update International distribution S&P CAPITAL IQ Bloomberg MCGRAW HILL FINANCIAL THOMSON REUTERS Opply DCM/ECM During 2019, Galt & Taggart acted as: lead manager for several international finance institutions (IFIs) facilitating placement of c.GEL 320mln local public and private bond issuances denominated in Georgian Lari lead manager for several Georgian corporates and microfinance organisations facilitating placement of c.GEL 205mln local public bond issuances denominated both in Georgian Lari and US$ co-manager of Bank of Georgia's inaugural US$ 100mln international Additional Tier 1 bond issuance, in March 2019 buy-side advisor for Bank of Georgia Group on acquisition of extra.ge online platform, in May 2019 ■sole sell-side advisor of Linnaeus Capital Partners B.V. on a sale of 100% shareholding in Lilo1- logistics center, in June 2019 In May 2019, Galt & Taggart participated in a competitive tender process and won a three year exclusive mandate to manage the private pension fund of a large Georgian corporate client Corporate Advisory Team with sector expertise and international M&A experience Proven track record of more than 30 completed transactions over the past 8 years BANK OF GEORGIA GLOBAL FINANCE Best Investment Bank in Georgia 2019, 2018,2017,2016,2015 37#38CONTENTS Group Overview Results Discussion • Georgian Macro Overview • Appendices BANK OF GEORGIA 4 9 39 63 38#39GEORGIA AT A GLANCE Hamburg Dusseldorf Leipzig GERMANY Frankfurt General Facts Herdam Area: 69,700 sq km Population (2019): 3.7 mln Life expectancy: 74 years Official language: Georgian Literacy: 100% Capital: Tbilisi Currency (code): Lari (GEL) Economy ☐ Nominal GDP (Geostat) 2019E: GEL 49.4 bln (US$17.6 bln) Real GDP growth rate 2015-2019E: 3.0%, 2.9%, 4.8%, 4.8%, 5.2% Real GDP 2011-2019E annual average growth rate: 4.7% GDP per capita 2019E (PPP): US$ 13,443 Annual inflation (e-o-p) 2019: 7.0% External public debt to GDP 2019E: 31.9% BANK OF GEORGIA POLAND BELARUS CZECH REP. SLOVAKIA UKRAINE Penza KAZA Munich MOLDOVA AUSTRIA LECHENSTEN HUNGARY Elista WICZERLAND SLOVENIA Milan Turin ROMANIA BOSNIA & Genoa CROATIA HERZEG Majkop Nalčk MONAS ce SAN MARINO CAN Grozny YUGOSLAVIA ALBANIA MACEDONIA Salon BULGARIA Black Sea Macha GEORGIA ARMENIA AZERBAUA TURKEY AZER GEORGIA Sovereign Credit Ratings Rating Agency MOODY'S Fitch Ratings Rating Outlook Affirmed Ba2 Stable September 2019 BB Stable August 2019 S&P Global BB Stable October 2019 39#40GEORGIA'S KEY ECONOMIC DRIVERS Top performer globally in WB Doing Business over the past 12 years Liberal economic policy Regional logistics and tourism hub Strong FDI Support from international community Electricity transit hub potential Political environment Liberty Act ensures a credible fiscal and monetary framework Fiscal deficit/GDP capped at 3%; Government debt/GDP capped at 60% 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 Access to a market of 2.8bn customers without customs duties: Free trade agreements with EU, China, CIS, Turkey, Hong Kong and with EFTA countries. The GSP with USA, Canada and Japan Tourism revenues on the rise: tourism inflows stood at 18.7% of GDP in 2019 and total international arrivals reached 9.4mln visitors in 2019 (up 7.8% y-o-y), out of which tourist arrivals were up 6.8% y-o-y to 5.1mln visitors. 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 FDI stood at US$ 1.3bln (7.2% of GDP) in 2018 FDI averaged 8.8% of GDP in 2010-2018 Georgia and the EU signed an Association Agreement and DCFTA in June 2014 Visa-free travel to the EU is another major success in Georgian foreign policy. Georgian passport holders were granted free entrance to the EU countries from 28 March 2017 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 DFIs Developed, stable and competitively priced energy sector Only 25% of hydropower capacity utilized; 150 renewable (HPPS/WPPS/SPPs) energy power plants are in various stages of construction or development Georgia imports natural gas mainly from Azerbaijan Significantly boosted transmission capacity with 400 kV line to Turkey and 500 kV line to Azerbaijan built, other transmission lines to Armenia and Russia upgraded Additional 2,000 MW transmission capacity development in the pipeline, facilitating cross-border electricity trade and energy swaps to Eastern Europe 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 Constitution amendments passed in 2013 to enhance governing responsibility of Parliament and reduce the powers of the Presidency Member of WTO since 2000, allowed Russia's access to WTO; In 2013 trade restored with Russia Despite resumed economic ties, exposure to Russia remains moderate. In 2019, Russia accounted for 13.2% of Georgia's exports and 10.8% of imports; just 3.6% of cumulative FDI over 2003-9M19 BANK OF GEORGIA 40#41GROWTH ORIENTED REFORMS Ease of Doing Business | 2020 New Zealand 1 Singapore 2 Denmark 4 USA Georgia UK 8 Norway 9 Lithuania 11 Estonia Latvia Germany Kazakhstan Russia Turkey Azerbaijan Poland Czech Rep. Armenia Ukraine Economic Freedom Index | 2019 Source: Heritage Foundation Source: WB-IFC Doing Business Report UK 7 USA 12 Estonia Georgia 15 16 #1 in Europe and Central Asia Region Lithuania 21 Czech rep. Top 8 in Europe region out of 44 countries 23 Latvia 35 Bulgaria 37 Romania Poland Armenia Kazakhstan Azerbaijan 42 46 47 59 60 33 34 Hungary Tukey 40 France 41 47 64 Italy Russia Ukraine 64 68 71 80 98 147 189 22 25 28 Global Corruption Barometer | 2017 Source: Transparency International Germany 3% Georgia 7% % admitting having paid a bribe last year Poland 7% Czech Rep. Slovakia Latvia Montenegro Bulgaria Turkey Lithuania Armenia Bosnia & Herz. Romania Kazakhstan Russia Ukraine Azerbaijan Moldova 9% 12% 15% Georgia is on a par with EU member states 16% 17% 18% 24% 24% 27% 29% 29% 34% 38% 38% 42% BANK OF GEORGIA Norway Sweden Business Bribery Risk | 2019 Source: Trace International UK 6 Singapore 12 Estonia 14 USA 15 France 19 Lithuania 24 Georgia 27 Czech rep. 34 Poland * 40 Latvia 42 Armenia Bulgaria Azerbaijan Russia Ukraine Turkey Kazakhstan Uzbekistan 74 77 79 110 122 123 126 181 41#42GOVERNMENT'S REFORMS ■ Tax reform Corporate income tax reform Ongoing structural reforms Enhancing easiness of tax compliance ■ Favorable tax rates for SME development Enhance business environment ■ New insolvency law Capital market reform Boosting stock exchange activities Developing of local bond market ■ Pension reform ■ Implementation of private pension system ■ PPP reform Transparent and efficient PPP framework Deposit insurance Boosting private savings Strengthening trust to financial system Responsible lending Decrease household exposure over indebtedness EU-Georgia association agreement agenda Deepening economic and political relations with EU Public investment management framework Improved efficiency of state projects General education reform Maximising quality of teaching in secondary schools Fundamental reform of higher education ■ Based on the comprehensive research of the labor market needs ■ Improvement of vocational education ■ Increase involvement of the private sector in the professional education Promoting transit and tourism hub Development/enhancement of road, rail, air, maritime infrastructure ■ Inclusive government ■ Involvement of the private sector in legislative process Accounting reform ■ Increased transparency and financial accountability Enhanced protection of shareholder rights BANK OF GEORGIA 42#43о 20 20 DIVERSIFIED RESILIENT ECONOMY Gross domestic product Diversified nominal GDP structure, 9M19 15 7.4% 6.4% 10 сл 5 Source: Geostat 12% 9% 5.2% 4.8% 4.8% 6% 4.4% 3.6% 3.0% 2.9% 2015 2018 2019E 3% 0% Nominal GDP, US$ bn Real GDP growth, % Comparative real GDP growth rates, % (2011-2019E average) 6% 5% 4% 3% 2.3% 2.5% 2% 1.6% 1.2% 1% 0.1% 0% Ukraine 3.6% 3.6% 3.6% 3.7% 3.9% 4.5% Financial & insurance 5.6% Transport & storage 6.5% Other 29.6% Trade. 14.2% Public administrati on Agriculture 7.6% 6.8% GDP per capita Real estate 11.6% Manufacturi ng 10.0% Construction 8.1% Source: Geostat Source: IMF, Geostat Source: IMF, Geostat, G&T 16,000 5.5% 14,000 13,443 12,417 4.7% 4.6% 11,485 12,000 9,886 10,267 10,511 10,000 9,259 8,573 7,900 8,000 7,193 6,000 4,023 4,422 4,624 4,739 4,013 4,062 4,359 4,722 4,716 4,000 3,233 2,000 0 Azerbaijan Russia Czech rep. Bulgaria Latvia Lithuania Poland Estonia Romania Moldova Armenia BANK OF GEORGIA Georgia Turkey ■Nominal GDP per capita, US$ ■■GDP per capita, PPP 2019E 43#446% 5% 4% 3% 1.9% 2% 1% 0% Russia Total factor productivity 1.8% CAPITAL AND PRODUCTIVITY HAVE BEEN THE MAIN ENGINES OF GROWTH SINCE 2004 Overall contribution of capital, labor, and Total Factor Productivity (TFP) to growth, 2011-2019E Contributions of capital, labor, and TFP to growth during periods Labor force 0.7% Source: Geostat, Galt &Taggart 10% 8% 6% Capital stock 2.2% 4% 2% 0% -2% 2004-07 2008-09 ■TFP Real GDP growth projection, 2020 Source: IMF 4.3% 4.9% 2.1% 2.6% 2.7% 2.8% 2.9% 3.0% 3.0% 3.1% 3.2% Azerbaijan Czech Rep. Lithuania BANK OF GEORGIA Latvia Estonia Turkey Ukraine Poland Bulgaria Romania Moldova 3.8% 3.5% Georgia Armenia 6% 5% 4% 3% 2% 1% 0% do Alo olo olo olo do do plo glo 8% 7% ■Labor force 2010-14 Real GDP growth: Georgia, Middle East & Central Asia, Emerging & Developing EU 2018 2019E 2020F Source: Geostat, Galt &Taggart 2015-19E Capital stock Source: IMF, Geostat Georgia Middle East & Central Asia Emerging & Developing EU 2021F 2022F 2023F 2024F 44#45FURTHER JOB CREATION IS ACHIEVABLE Unemployment rate down 1.3ppts y/y to 12.7% in 2018 Source: Geostat Hired workers on the rise Source: Geostat 1,800 17.4% 17.3% 17.2% 16.9% 20% 1,100 1,700 14.6% 14.1% 14.0% 13.9% 1,000 1,600 12.7% 15% 860 900 1,500 1,400 10% 800 833 1,300 1,628 1,643 1,659 1,643 1,734 1,694 1,717 1,707 1,694 700 1,200 5% 600 1,100 500 1,000 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 ――Unemployment rate, % Self-employed, 000' persons Hired, 000' persons Employed, 000' persons Share of services in total employment on the rise Private sector creates jobs Source: Geostat Source: Geostat 1,000 2,000 900 800 116 121 120 123 124 124 138 122 140 1,500 700 600 761 782 796 779 774 778 750 737 659 560 512 530 540 500 366 403 429 485 442 1,000 400 300 500 730 726 760 747 794 849 843 833 895 200 302 281 287 252 259 287 272 284 300 100 2010 2011 2012 2013 2014 2015 2016 2017 2018 ■Services (incl. construction) ■ Agriculture ■Industry BANK OF GEORGIA 2010 2011 2012 2013 2014 2015 2016 2017 2018 ■Public sector (hired workers) Non-public sector (hired workers) 45#460% LOW PUBLIC DEBT Fiscal deficit -2% 2.0% -1.7% -1.9% -4% -2.6% -2.4% -2.9% -2.7% -2.3% -2.4% -2.5% -2.6% -6% -5.3% -8% -10% Fiscal deficit (IMF program definition) Note: Deficit calculated as net lending / borrowing minus budget lending 2018 2019E 2020F 2021F Public debt as % of GDP Source: IMF, MoF, Geostat 140% 70% Public debt/GDP 60% capped at 60% 50% 40% 30% 20% 10% 70% 120% 60% 100% 50% 80% 60% 40% 40% 30% 20% 20% 0% 10% BANK OF GEORGIA Total public debt to GDP, % - External public debt to GDP, % 2018 2019E 2020F 2021F Russia ☐ Source: MoF, IMF Domestic 21% External 79% Multilateral 57% Breakdown of public debt Source: MoF, as of December 2019 Bilateral 15% Eurobond 7% External public debt portfolio weighted average interest rate 2.1% Contractual maturity 22 years Gross government debt/GDP, 2019E Source: IMF, MoF, Galt & Taggart Kazakhstan Uzbekistan Moldova Turkey Czech rep. Lithuania Latvia Romania Georgia Belarus 40.3% Poland Slovakia Armenia Ukraine Slovenia Hungary Croatia Spain Canada Montenegro Singapore Italy 44 46#47BANK OF GEORGIA ■2018 2019E 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Turkey Armenia Georgia Belarus Hungary Russia Estonia Lithuania Bulgaria Croatia Poland Expenditures (current + capital), GEL mn Expenditures (current + capital) as % of GDP Government social expenditure as % of GDP ■2020F Source: MoF, Geostat 20,000 100% 40% 32.3% 29.4% 29.4% 27.6% 28.4% 28.6% 29.4% 28.2% 27.7% 28.2% 28.2% 27.9% 80% 15,000 30% 80.0% 81.7% 76.0% 78.1% 80.0% 60% 72.5% 73.4% 10,000 20% 40% 24.0% 27.5% 26.6% 5,000 10% 20.0% 18.3% 21.9% 20.0% 20% 0% 0% Source: IMF ■2018 8% 7% 6% 5% 4% 3% 2% 1% 0% Turkey Croatia Lithuania Russia Armenia Poland Belarus 47 Bulgaria Hungary Estonia Georgia 2019E 2020F INVESTING IN INFRASTRUCTURE AND SPENDING LOW ON SOCIAL Budget expenditures Expenditure breakdown: current vs. capital Source: MoF 2010 2011 2012 2013 2014 2015 -Current Expenditures Capital Expenditures and net lending Government capital expenditure as % of GDP Source: IMF 2016 2017 2018 2019E 2020F 2021F 74.2% 73.1% 74.3% 75.3% 75.3% 25.8% 26.9% 25.7% 24.7% 24.7%#48DIVERSIFIED FOREIGN TRADE Imports of goods and services Exports of goods and services Source: NBG BOP statistics Source: NBG - BOP statistics 10.0 12 8.9 10.8 10.1 7.6 0.8 9.4 8.0 10 9.2 9.3 7.2 7.0 8.7 2.2 8.5 6.1 6.2 0.5 1.7 6.0 8.0 1.1 0.9 3.6 00 1.4 1.6 2.0 6.0 5.2 0.4 0.3 8 1.7 1.7 0.9 3.1 1.3 6.1 4.0 0.7 3.1 3.1 2.6 2.5 4.0 6 0.5 2.5 1.1 2.5 1.9 4.5 4 7.7 8.3 8.6 2.0 4.0 7.7 6.7 7.0 7.4 3.0 3.0 3.1 3.3 6.8 1.6 2.0 2.6 5.1 0.0 2 0 2010 2011 2012 2013 ■Goods imports, US$ bn 2014 2015 2016 2017 ■Services imports, US$ bn 2018 Re-exports, US$ bn ■Services exports, US$ bn ■Goods exports, Geo-originated, US$ bn Goods imports, 2019 Goods exports, 2019 Source: Geostat Source: Geostat Armenia Other 18.3% EU 25.6% 3.0% USA 4.3% Ukraine 4.6% Kyrgyzstan 1.9% 1,000 Other 15.1% EU 800 21.9% 600 400 200 Azerbaijan 13.2% O Azerbaija -200 -400 Oil imports Source: GeoStat 75% 60% Uzbekistan 2.4% USA 3.5% 45% 30% 15% Turkey ✓ 0% n 6.2% China Russia 9.5% 10.8% 5.4% Turkey China 17.8% 6.0% Ukraine 6.5% Russia Armenia 13.2% 10.9% I Oil imports, US$ mn Oil imports, % change, y/y -15% -30% BANK OF GEORGIA 48#49BANK OF GEORGIA DIVERSIFIED SOURCES OF CAPITAL Strong foreign investor interest Tourist arrivals and revenues on the rise FDI, US$ bn Remittances - steady source of external funding Source: Geostat Source: NBG, Geostat FDI stood at 7.1% of GDP in 9M19 (down 16.9% y/y) 2.0 16% 3.5 18.3% 18.7% 21% 12.1% 16.6% 11.6% 3.0 18% 10.9% 1.5 10.4% 12% 13.9% 2.5 12.5% 15% 7.1% 7.5% 1.0 6.4% 6.0% 7.2% 2.0 10.0% 10.1% 12% 8% 8.6% 1.5 6.3% 9% 5.4% 1.0 0.5 6% 4% 0.5 3% 0.0 0% 0.0 0% --FDI as % of GDP Source: NBG, Geostat 7% 2.1 12% 5.8% 9.9% 6% 5.4% 1.8 9.0% 8.6% 8.4% 8.6% 8.5% 10% 8.1% 8.2% 7.6% 1.5 7.2% 1.7 5% 1.6 8% 1.2 1.3 1.3 113 1.5 1.4 1.4 4% 6% 0.9 1.1 == 1.2 1.1 3% 2.5% 4% 0.6 2% 2% 0.3 1% 0.0 0% 0% Remittances, US$ bn Remittances as % of GDP 2010 2011 2012 Tourism revenues, US$ bn ―― Tourism revenues as % of GDP Public external borrowing for capex, % of GDP 2013 2.0% 3.3% 3.2% 3.1% 3.0% 3.1% IIII 2014 2015 2016 2017 2018 2019E 49 49 2018 Source: MOF, Geostat 2.7% 2019E#50CURRENT ACCOUNT DEFICIT SUPPORTED BY FDI Current account balance (% of nominal GDP) CA deficit at record low 2.7% of GDP in 9M19 Source: NBG, Geostat Source: NBG, Geostat 30% Goods, net Income, net -CA deficit Services, net Transfers, net .net FDI 20% 9.5% 10.4% 8.1% 8.2% Income (net) 6.0% 6.5% Trade deficit -20.4% -23.1% -4.2% -4.9% ■9M19 ■9M18 10% 4.6% 5.3% 5.3% 0% Current Transfers (net) -10% -5.6% -8.1% -6.8% -9.8% -12.2% -11.4% -10.2% Services (net) -11.8% 7.9% 7.7% 14.0% 14.5% -20% -12.4% -30% -2.7% CA deficit -5.8% 2010 2011 2012 2013 2014 2015 2016 2017 2018 FDI and capital goods import Building international reserves, US$ bn Source: Geostat Source: NBG 18% 16% 4.0 3.5 3.3 14% 12.1% 11.6% 3.5 3.0 10.9% 12% 2.8 2.9 2.8 3.0 2.7 2.8 10.4% 8.5% 2.5 10% 7.5% 8.1% 8.0% 7.1% 2.5 2.3 8% 6.5% 8.7% 2.0 6% 7.2% 7.9% 7.6% 7.2% 7.1% 7.2% 6.4% 4% 6.0% 1.5 5.7% 1.0 2% 0% 0.5 2012 2015 2018 9M19 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 FDI to GDP, % --Capital goods imports to GDP, % BANK OF GEORGIA 50#514 2 100 80 60 Jan-14 Apr-14 Jul-14 ៖៖៖៖៖៖៖៖៖៖ INFLATION TARGETING SINCE 2009 Annual Inflation Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 120 ― Energy Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 Apr-16 BANK OF GEORGIA Jul-16 Nov-16 Apr-16 Jul-16 hike on tobacco and GEL depreciation Inflation increased due to excise tax ―Headline inflation -Core (non-food, non-energy, non-tobacco) Nov-16 Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 May-19 World commodity prices Non-energy Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 May-19 Sep-19 Dec-19 Note: Jan2014=100 Source: World Bank 120 100 80 40 20 60 Jan-14 Sep-19 Dec-19 Apr-14 Aug-14 Nov-14 Mar-15 Jun-15 Oct-15 Jan-16 May-16 Aug-16 Dec-16 Source: Geostat 7.0% 8% -2% Jan-14 Apr-14 Monthly inflation Source: Geostat Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 Apr-16 Jul-16 Nov-16 Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 May-19 Sep-19 Dec-19 Average inflation Source: Geostat Apr-17 Jul-17 Nov-17 Feb-18 Jun-18 Sep-18 Jan-19 Apr-19 Aug-19 Dec-19 51 4.9% 5% 4% 3% 0.4% 0%#5210% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Jan-14 Apr-14 BANK OF GEORGIA Aug-14 Nov-14 Mar-15 Jun-15 Oct-15 Jan-16 May-16 Aug-16 Dec-16 Apr-17 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Jan-14 Apr-14 Aug-14 Nov-14 Mar-15 Jun-15 Oct-15 Jan-16 May-16 INTERNATIONAL RESERVES SUFFICIENT TO FINANCE MORE THAN 3 MONTHS OF IMPORTS Gross international reserves, US$ bn Monetary policy rate Aug-16 Dec-16 Apr-17 Jul-17 Nov-17 Feb-18 Jun-18 Sep-18 Jan-19 International reserves Central Bank's interventions Source: NBG Source: NBG 250220 US$ sale NBG purchased US$ 216mn and sold US$ 92.8mn in 2019 200 120 150 100 100 60 60 40 40 27 40 50 20 40 32.8 20 о -20-20 -20-20 -50 -15 -201 -30 -100 US$ purchase -40 -40 -30-25 63 -70 -80 -65 -150 -101 -120 -140 Apr-19 Aug-19 Dec-19 Source: NBG Policy rate increased by 250bp in Sep-Dec 2019 to 80% 10% 9.0% curb GEL depreciation pass-through effect 9% 75% 8% 7% 70% 6% 65% 5% 4% 60% 3% 55% 2% 1% 50% 0% Jul-17 Nov-17 Feb-18 Jun-18 Sep-18 Jan-19 Apr-19 Aug-19 Dec-19 Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Loan dollarization Dec-15 Apr-16 Jul-16 -200 Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 Apr-16 Jul-16 Nov-16 NBG net interventions, US$ mn Loan and deposit dollarization Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 May-19 Sep-19 Dec-19 Source: NBG 80% 75% 70% 64.1% 65% 60% 55.1% 55% Nov-16 Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 May-19 Sep-19 Dec-19 Deposit dollarization 52 42 50%#5335% 30% 25% 20% 15% 10% 5% 0% -5% Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 Apr-16 Jul-16 Nov-16 BANK OF GEORGIA -M2, % change, y/y (LHS) Source: NBG 130 5.0 1.42 1.6 1.36 1.30 1.31 1.25 1.23 1.24 1.29 1.4 1.16 4.0 1.03 1.2 1.0 3.0 3.3 3.5 3.0 0.8 2.8 2.9 2.8 2.7 2.8 28 120 110 100 2.0 2.5 0.6 2.3 0.4 0.0 00 90 1.0 90 0.2 80 0.0 Feb-17 Jun-17 FLOATING EXCHANGE RATE - POLICY PRIORITY FX reserves Nominal and Real effective exchange rate (Jan2014-100) Official FX reserves, US$ bn --M2 multiplier M2 and annual inflation Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 Annual inflation, eop (RHS) 2018 2019 Source: NBG 8% 35% 7% 30% 6% 25% 5% 20% 4% 15% 3% 2% 10% 1% 5% 0% 0% -1% -5% May-19 Sep-19 Dec-19 appreciation Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 M2, % change, y/y (LHS) Apr-16 Jul-16 Nov-16 Jan-14 Apr-14 Jul-14 Nov-14 Feb-15 Jun-15 Sep-15 Dec-15 Nominal effective exchange rate Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Apr-16 Jul-16 Nov-16 Feb-17 Jun-17 Sep-17 Dec-17 Apr-18 Jul-18 Nov-18 Feb-19 M2 and USD/GEL Real effective exchange rate Source: NBG 40% depreciation 30% 20% 10% 0% Jul-18 Nov-18 Feb-19 May-19 GEL/USD, % change (RHS) Sep-19 Dec-19 53 53 -10% Source: NBG 130 120 -7.9% y/y 110 -5.3% y/y 100 May-19 Sep-19 Dec-19 80 06#54GROWING AND WELL-CAPITALISED BANKING SECTOR Summary Prudent regulation and oversight ensuring financial stability 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 Resilient to different shocks to the economy, room for healthy credits growth with retail loans at 33.2% of GDP and total loans at 64.5% of GDP in 2019 45 OUSTON WWE U 20 Banking sector assets, loans and deposits 25.0% CAGR Source: NBG 47.2 39.7 34.6 30.1 31.9 26.6 25.2 20.6 22.3 17.3 18.9 14.4 12.7 16.0 7.2 8.9 8.3 10.6 13.0 2.7 6.0 4.6 5.2 6.3 7.7 8.7 10.5 1.3 1.7 2.5 4.2 508701017.3 2.1 3.2 3.6 4.0 5.5 6.7 7.6 9.7 11.6 14.3 17.0 19.8 23.0 26.2 Source: National Bank of Georgia, Geostat Banking Sector loans to GDP, 2018 Source: IMF, NBG Russia 51.1% Bulgaria 51.5% Poland 52.7% Czech Rep. 52.8% Bosnia & Herz 54.5% Armenia 55.5% Croatia 56.0% Georgia 59.6% Slovakia 61.4% Estonia 64.1% Turkey 64.2% Israel 66.5% BANK OF GEORGIA Assets, GEL bn Loans, GEL bn Deposits, GEL bn Non-performing loans, latest-2019 Source: IMF, NBG Georgia 1.9% Hungary 2.0% Lithuania 2.2% Czech Rep. 2.9% Poland 4.0% Turkey 4.1% Romania Belarus Armenia Latvia 4.6% 5.0% 5.5% 5.7% Bulgaria Croatia Bosnia & Herz. Portugal Kazakhstan 7.6% 7.6% 7.7% 7.7% 8.6% Russia 10.1% 54 54#55BANK OF GEORGIA GROWING ECONOMY SUPPORTS HEALTHY CREDIT GROWTH Banking sector corporate & retail loans to GDP Source: NBG, Geostat Mortgage loans Source: NBG 70% 106,370 Retail loans to GDP 60% Corporate loans to GDP 7,048 6,031 92,980 31,720 50% 72,140 33% 4,315 35,990 33% 79.0% 40% 27% 30% 3,506 49,410 23% 80.1% 32,680 30% 20% 17% 91.7% 74,650 11% 12% 13% 36,060 87.2% 56,990 20% 31% 21.0% 39,470 10% 17% 17% 18% 19% 21% 24% 26% 25% 27% 19.9% 8.3% 13,360 12.8% 2016 2017 2018 2019 2016 2017 2018 2019 0% 180 160 140 120 100 80 60 40 Inflation adjusted real estate price index (2010=100, GEL) Real wage index (2010-100, GEL) Real estate price index ■FX-denominated mortgage loans, share in total ■GEL-denominated mortgage loans, share in total • Total mortgage loans, GEL mn Number of mortgage loans in FX Number of mortgage loans in GEL • Total number of mortgage loans Source: NBG, Geostat 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 55#56BANK OF GEORGIA Armenia Azerbaijan Russia Ukraine Belarus Armenia Inflation: Georgia and peers Source: National Statistics Offices Euro Moldova 19.2% 15.1% 16.5% Georgia 30% 25% End-2018 End-2019 20% 15% End-2018 End-2019 25% 20% 11.8% 15% 10% 7.0% 10% 5.4% 6.25% 4.1% 4.7% 5.50% 5% 2.8% 3.0% 5% 0.7% 0% 0% Kazakhstan Georgia Turkey Armenia Russia Azerbaijan Georgia Belarus FLEXIBLE FX REGIME SUPPORTS TO MACRO STABILITY Source: Bloomberg Currency weakening vs. US$ Note: US$ per unit of national currency, period 1-Aug-2014 -31-December-2019 Russia Ukraine Belarus Kazakhstan Azerbaijan 51.0% 52.3% 54.0% 48.2% 42.3% 39.5% Turkey Monetary policy rate: Georgia and peers Source: Central banks 7.50% 9.00% 9.00% 9.25% 12.00% 13.50% Kazakhstan 99 56 Turkey Ukraine 64.1%#578% 7% 6% 5% 4.5% 4% 3% 3.4% 2% 1.8% 1% 1Q16 2.2% 1Q17 4.5% 6.8% 4.4% Economy resilient to Russia's flight ban RECENT TREND - REAL GDP AND ITS COMPONENTS Real GDP growth by quarter, % change y/y Contribution to real GDP growth Savings and investment to GDP 40% ■Savings Investments 35% 30% 25% 20% 15% 10% 5% 0% 1Q16 2Q16 3Q16 BANK OF GEORGIA 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Source: Geostat 12% ■Investment 7.2% 6.0% 5.8% 5.0% Net export 9% 6% 5.3% 3% 4.6% 4.1% 3.6% 3.2% 0% -3% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 -6% 1Q16 2Q16 3Q16 4Q16 ■Consumption 1Q17 2Q17 3Q17 4Q17 Real GDP growth by month, % change y/y Source: Geostat 7.5% 8% 7% 6.5% 6% 5.5% 5.6% 4.6% 5% 5.6% 4% 4.4% 4.0% 3% 2% 6.7% 5.6% 6.0% 5.0% 4.6% 5.1% ww 2.0% 2.2% 3.5% 4.7% 1% 0% Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Source: Geostat, Galt & Taggart Consumption driving growth 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Source: Geostat 6.1% 5.8% 5.7% 5.2% 3.8% Oct-19 Nov-19 Dec-19 57 57 6.4%#58о 400 300 200 100 500 RECENT TREND - GOODS TRADE DEFICIT DOWN Exports up 12.4% y/y in 2019 Source: Geostat Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Exports, US$ mn Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Trade deficit down 8.5%y/y in 2019 % change y/y Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 60% 1,000 800 50% 009 40% 400 30% 200 20% о 10% -200 -400 0% Jan-17 Imports down 0.8% y/y in 2019 Source: Geostat 50% 40% 30% 20% 10% 0% -10% Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Source: Geostat -20% 50% 40% 30% 20% 10% 10%% 0% 2% 1% -1% -10% -3%3% -14% -70407% 4% 50% 42% 40% 33% 30% 22% 21% 20% 17% 15% 14% 9% 9% 20% 10% 6% Hazelnuts 0% 1.8% -30% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 N -4% -3%9%1%8% -12% -11% -13% -15% -23% -18% -4% -10% Gold -7% 1.9% -20% Fertilizers Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 -30% 2.5% BANK OF GEORGIA Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul- Aug-18 Imports, US$ mn Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 % change y/y Exports by commodity, 2019 Source: Geostat Other 32.8% 8.0% Wine Spirits. 3.4% Waters Pharm. 5.9% 3.5% 4.6% Ferro-alloys Cars 18.2% Copper 17.3% 58 -20%#59RECENT TREND - TOURIST ARRIVALS UP DESPITE RUSSIA'S FLIGHT BAN International visitors by country International visitors by type Tourist arrivals by month +7.3% 7.7mn 8 7.2mn Source: GNTA +7.3% 7.7mn 8 7.2mn 7 7 1.72mn Other 2.64mn 1.62mn a 2.44mn +8.1% Same-day 6 0.48mn EU 0.39mn 5 5 1.15mn 1.09mn Turkey 4 4 1.36mn Armenia 1.26mn 3 3 +6.8% 5.08mn 4.75mn Tourists 2 1.40mn 1.47mn Russia 2 1 1 1.42mn 1.52mn Azerbaijan O О 2018 2019 2018 2019 Source: GNTA 800 2.3% 400 2018 2019 350 700 300 1.0% 250 600 Annual growth 0.6% 200 18.0% 500 7.8% 18.0% 150 100 400 4.2% 4.3% 10.3% 5.9% 15.5% 50 5.1% 300 200 100 11 -100 о -50 BANK OF GEORGIA Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Tourism revenues at US$ 3.3bn in 2019 Tourism revenues, US$ mn -% change y/y May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Source: NBG 70% 60% 50% 40% 30% 20% 10% 0% -10% 59 59 -20% Source: GNTA#60200 160 120 80 40 о Jan-18 BANK OF GEORGIA Feb-18 Mar-18 Apr-18 RECENT TREND - REMITTANCES AT US$ 1.7bn IN 2019 May-18 Jun-18 Remittances up 9.7% y/y in 2019 Jul-18 Aug-18 Sep-18 Sep-18 Remittances, US$ mn Oct-18 Nov-18 શ Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Total remittances, % change y/y Source: NBG 40% 30% Ukraine 20% Remittances by county, 2019 Kyrgyzstan 1.7% Other 7.7% EU 38.3% 2.5% Turkey. 5.5% 10% Israel 9.4% 0% USA 10.3% Russia 24.7% 60 60 Source: NBG#61EXPOSURE TO PARTNER COUNTRIES WELL DIVERSIFIED Exports, tourism, FDI and remittances, % of GDP Well diversified economic linkages, 2019 (exports, tourism, FDI and remittances), share in total 50% 40% 30% 20% 10% 0% 2013 -Turkey Russia Source: Geostat, NBG, GNTA, Galt & Taggart Source: Geostat, NBG, GNTA, Galt & Taggart 50% 42.5% 40% Other countries 28.1% EU 23.8% 30% 20% China 9.4% 10% 3.0% 5.1% Ukraine Russia 17.0% 0% 2016 2017 2018 4.2% 2019 Armenia 7.2% Azerbaijan Turkey Other countries 8.6% 8.0% Summary Economic linkages breakdown Source: Geostat, NBG, GNTA, Galt & Taggart In 2019: % of GDP, 2019 Exports Tourism FDI Remittances Total The EU (38% of total) remains the largest source of remittances, while Russia's share continue to decline (25% of total) Total 21.5% 18.6% 7.1% 9.9% 57.0% EU 4.7% 2.4% 3.1% 3.8% 14.0% • The EU remains Georgia's largest FDI provider Azerbaijan remains the top export market accounting for 13% of the total Tourism sector demonstrated resilience to Russia's direct flight ban strong growth of tourist arrivals from EU and other countries fully compensated reduced Russian tourist in 2H19. - Russia 2.8% 3.9% 0.2% 2.4% 9.4% Turkey 1.2% 2.2% 1.2% 0.5% 5.1% Ukraine 1.4% 0.7% 0.0% 0.2% 2.3% Azerbaijan 2.8% 1.2% 0.3% 0.1% 4.5% Armenia 2.3% 1.5% 0.1% 0.1% 4.0% China 1.3% 0.2% 0.3% 0.0% 1.7% Other countries 4.9% 6.5% 1.9% 2.7% 16.0% BANK OF GEORGIA 61#62CONTENTS • Group Overview Results Discussion ■ Georgian Macro Overview ■ Appendices BANK OF GEORGIA 4 9 39 63 42 62#63BOARD OF DIRECTORS Robust Corporate Governance based on UK Corporate Governance Code Neil Janin, Independent Non-Executive Chairman Experience: formerly Director at McKinsey & Company in Paris; formerly co-chairman of the commission of the French Institute of Directors (IFA); formerly Chase Manhattan Banking New York and Paris Archil Gachechiladze, Chief Executive Officer Experience: with the Group since 2009; originally joined as Deputy CEO, Corporate Banking; formerly: CEO of Georgian Global Utilities (formerly part of BGEO Group PLC). Over 17 years' experience in the financial services Hanna Loikkanen, Senior Independent Non-Executive Director Experience: currently advisor to East Capital Private Equity AB; Non-Executive Director of PJSC Rosbank; formerly: Senior executive at East Capital, FIM Group Russia, Nordea Finance, SEB Al Breach, Independent Non-Executive Director Experience: Director of Gemsstock Ltd, The Browser and Furka Holdings AG, and advisor to East Capital; formerly: Head of Research, Strategist & Economist at UBS Russia and CIS, economist at Goldman Sachs Tamaz Georgadze, Independent Non-Executive Director Experience: Executive Director and founder of Raisin GmbH (formerly Saving Global GmbH); formerly: Partner at McKinsey & Company in Berlin, aide to President of Georgia Jonathan Muir, Independent Non-Executive Director Experience: CEO of LetterOne Holdings SA and of LetterOne Investment Holdings; formerly: CFO and Vice President of Finance and Control of TNK-BP, Partner at Ernst & Young Cecil Quillen, Independent Non-Executive Director Experience: Partner at Linklaters LLP with nearly 29 of years experience in working on a broad spectrum of securities and finance matters BANK OF GEORGIA Véronique McCarroll, Independent Non-Executive Director Experience: 30 years' in Financial Services; Currently, Head of Strategy for Digital banking across Europe at Orange; formerly: Executive Director at Crédit Agricole CIB, Partner at McKinsey & Company, Oliver Wyman and Andersen/ Ernst & Young 63#64HIGHLY EXPERIENCED MANAGEMENT TEAM 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 Archil Gachechiladze, Chief Executive Officer With the Group since 2009. Previously, CEO of Georgian Global Utilities. Held various positions with the Group, such as Deputy CEO, Corporate Banking, Deputy CEO, Investment Management, CFO of BGEO Group, Deputy CEO, Corporate Investment Banking. More than 17 years of experience of senior roles at TBC Bank, Lehman Brothers Private Equity, Salford Equity Partners, KPMG, World Bank, EBRD. Holds an MBA from Cornell University. Levan Kulijanishvili, Deputy CEO, Operations With the Group since 1997. Joined as a Junior Financial Analyst of the Bank. Held various senior positions, including Deputy CEO in charge of finance, Head of Internal Audit, Head of Financial Monitoring, Head of Strategy and Planning, and Head of the Financial Analysis. Holds an MBA from Grenoble Graduate School of Business. Sulkhan Gvalia, Chief Financial Officer With the Group since 2004. Previously, founder and CEO of E- Space Limited, Tbilisi. Held various positions with the Group, such as Chief Risk Officer and Head of Corporate Banking. Prior to joining the Group, served as Deputy CEO of TbilUniversal Bank, prior to its acquisition by the Bank. Also, serves as non-executive independent director at Inecobank (Armenia) since 2018. Holds a law degree from Tbilisi State University. George Chiladze, Deputy CEO, Chief Risk Officer With the Group since 2008. Joined as a Deputy CEO in charge of finance at the Bank. Left the Group in 2011 and rejoined in 2013 as Deputy CEO, Chief Risk Officer. Prior to rejoining the Group, he was Deputy CEO at the Partnership Fund. Prior to returning to Georgia in 2003, he worked at the programme trading desk at Bear Stearns in New York City. Holds a PhD in physics from Johns Hopkins University in Baltimore, Maryland. Mikheil Gomarteli, Deputy CEO, Emerging and Mass Retail Banking With the Group since 1997. Mikheil is a textbook professional growth story made possible in our Group - he developed his way from selling debit cards door-to-door to successfully leading our Retail Banking franchise for over ten years now. Holds an undergraduate degree in Economics from Tbilisi State University. Vakhtang Bobokhidze, Deputy CEO, Information Technologies With the Group since 2005. Joined as Quality Control Manager. Left the Group in 2010 and rejoined the Group in December 2010. Prior to being appointed as Deputy CEO, served as Head of IT Department since 2016. Holds an MBA from Tbilisi State University. Giorgi Pailodze, Deputy CEO, Corporate and Investment Banking With the Group since June 2019. Previously, Vice President at Evercore in London (2017-2019) and New York (2015-2017), spent two years in corporate and investment banking in Citigroup in New York (2013-2015). He started his banking career in Georgia and held various managerial roles at TBC Bank and HSBC Bank Georgia. Holds an MBA from Cornell University. BANK OF GEORGIA 64#65HIGHLY EXPERIENCED MANAGEMENT TEAM BANK OF GEORGIA Etuna Iremadze, Head of SOLO Business Banking With the Group since 2006 with more than 18 years of experience in financial services. Previously, Head of Strategic Projects Department in Georgian Global Utilities (formerly part of BGEO Group PLC). Held various positions with the Group, such as Head of Blue Chip Corporate Banking Unit covering structured lending, M&As, significant buyouts in the country, as well as project financing. Holds an MBA from Grenoble Graduate School of Business. Zurab Masurashvili, Head of SME Business Banking With the Group since 2015 with extensive experience in financial services. Previously, Head of Express Business, Head of MSME Business and Head of Retail Business Banking in the Bank. Prior to joining the Group, held several positions in international organisations such as EBRD, the World Bank and GTZ, and also served as a Deputy Chairman of the Board of Directors in JSC Privatbank. Holds a degree in Geology from Georgian Technical University. Ekaterine Liluashvili, Head of Wealth Management With the Group since 2008 with extensive experience in financial services. Previously, held various senior positions, including Head of International Business Development and Private Banker in the Bank. Prior to joining the Group, served as Private Banker in Bank Republic (Société Générale Group). Holds a degree in Banking from University of Cooperative Education - Berufsakademie Mosbach, Germany, with a specialisation in Private Banking. Andro Ratiani, Head of Innovation With the Group since 2018 with extensive experience in the global financial services sector. Previously, Director - Global Head of Product Management at IHS Markit, spent 6 years in UBS AG Investment and Wealth Management Bank in New York, worked for Wells Fargo during major acquisition phase of Wachovia Bank. Started his career at Bank of Georgia's Corporate and Investment Banking Department. Holds a Master's degree in technology management from Columbia University. Levan Gomshiashvili, Chief Marketing Officer With the Group since 2019 with extensive experience in marketing. The founder of HOLMES&WATSON, creative agency, where he acted as Account Manager for clients operating in banking, as well as other sectors. Also, the founder of Tbilisi School of Communication, an educational facility with an emphasis on ExEd. Started his career in Georgian Railway, covering advertising and project management. Holds MSc in Management from University of Edinburgh. Nutsa Gogilashvili, Head of Customer Experience and Human Capital Management With the Group since 2016 with over 8 years of experience in financial services. Previously, Head of Strategic Processes of Corporate and Investment Banking and Head of Customer Experience Management in the Bank. Prior to joining the Group, held various senior positions in local and international financial institutions. Holds MSc in Finance from Cass Business School in London. Nino Suknidze, General Counsel, Georgia With the Group since 2017. Previously, Counsel at an international law firm, Dentons Georgia. Held various senior positions, including Legal Director at international law firm DLA Piper Georgia, a legal advisor to financial director of United Energy Distribution Company of Georgia and senior legal advisor at Georgian representative office of PA Consulting Group GmbH. Holds a LLM (cum laude, Nuffic scholar) in Business and Trade Law from Erasmus University Rotterdam. Certified attorney and a member of the Georgian bar. 65 55#66BANK OF GEORGIA GROUP INCOME STATEMENT GEL thousands, unless otherwise noted 4Q19 4Q18 Bank of Georgia Group Consolidated Change 3Q19 y-o-y Change 9-0-9 Interest income Interest expense Net interest income Fee and commission income Fee and commission expense Net fee and commission income Net foreign currency gain Net other income Operating income Salaries and other employee benefits Administrative expenses Depreciation, amortisation and impairment Other operating expenses Operating expenses 393,480 345,760 (186,389) (158,322) 207,091 187,438 77,472 (30,914) (21,006) 46,558 41,344 37,177 53,358 18,439 (9,073) 309,265 273,067 (61,504) (58,331) (35,131) (30,010) (23,815) 13.8% 366,721 7.3% 17.7% (165,729) 12.5% 10.5% 200,992 3.0% 62,350 24.3% 76,166 1.7% 47.2% (28,157) 9.8% 12.6% 48,009 -3.0% -30.3% 32,233 15.3% NMF 3,728 NMF (11,365) (1,095) (1,151) Profit from associates Operating income before cost of risk Expected credit loss/ impairment charge on loans to customers 187,873 Expected credit loss/ impairment charge on finance lease receivables Other expected credit loss/ impairment charge on other assets and provisions Cost of risk Net operating income before non-recurring items (7,985) 451 (6,698) (121,545) (100,857) 153 318 172,528 (25,783) 514 (15,509) Net non-recurring items (excluding one-offs) One-off termination costs of former CEO (1) Net non-recurring items Profit before income tax expense Income tax expense (excluding one-offs) Income tax benefit related to one-off termination costs of former CEO (2) Income tax expense Profit 13.3% 284,962 5.4% (59,539) 17.1% 109.5% -4.9% 20.5% -51.9% 8.9% -69.0% -12.3% -56.8% (14,232) (40,778) -65.1% (15,223) 173,641 131,750 31.8% 162,016 (1,591) (2,185) -27.2% (4,401) NMF (1,591) (6,586) -75.8% (5,019) 172,050 125,164 37.5% 156,997 (15,515) (10,888) 42.5% 540 NMF (15,515) (10,348) 49.9% (22,697) 156,535 114,816 36.3% 134,300 8.5% 3.3% (26,251) 33.8% (21,320) 11.7% (807) 35.7% (107,917) 12.6% 194 177,239 (13,617) -21.1% 6.0% -41.4% (333) NMF (1,273) NMF -6.5% 7.2% (5,019) -68.3% -68.3% 9.6% (22,697) -31.6% -31.6% 16.6% One-off items (1)+(2) (3,861) NMF Profit attributable to: - shareholders of the Group - non-controlling interests Earnings per share (basic) Earnings per share (diluted) BANK OF GEORGIA 155,823 114,240 712 576 36.4% 133,687 23.6% 16.6% 613 16.2% 3.30 2.40 37.5% 2.81 17.4% 3.29 2.40 37.1% 2.81 17.1% 66#67BANK OF GEORGIA GROUP INCOME STATEMENT Bank of Georgia Group Consolidated Change GEL thousands, unless otherwise noted 2019 2018 2019 Banking Business 2018 Discontinued Operations y-o-y Change y-o-y 2019 2018 Interest income Interest expense Net interest income Fee and commission income Fee and commission expense Net fee and commission income Net foreign currency gain Net other income / (expense) Operating income 1,437,161 1,322,297 (647,742) (580,544) 8.7% 11.6% 1,437,161 1,327,085 (647,742) 8.3% (587,481) 10.3% 789,419 741,753 6.4% 789,419 739,604 6.7% 284,193 228,769 24.2% 284,193 229,670 23.7% (104,179) (76,107) 36.9% (104,179) (76,488) 36.2% 180,014 152,662 17.9% 180,014 153,182 17.5% 119,363 128,762 -7.3% 119,363 129,437 -7.8% 21,474 7,262 NMF 21,474 7,815 NMF 1,110,270 1,030,439 7.7% 1,110,270 1,030,038 7.8% Salaries and other employee benefits (excluding one-offs) (231,443) (214,761) 7.8% (231,443) (215,816) 7.2% One-off termination costs of executive management (1) (12,412) NMF (12,412) NMF Salaries and other employee benefits (243,855) (214,761) 13.5% (243,855) (215,816) 13.0% Administrative expenses (106,157) (112,654) -5.8% (106,157) (113,264) -6.3% Eliminations Change y-o-y Change 2019 2018 y-o-y (4,788) NMF 6,937 NMF 2,149 NMF (901) NMF 381 NMF (520) NMF (675) NMF (553) NMF 401 NMF 1,055 NMF 1,055 NMF 610 NMF Depreciation, amortisation and impairment Other operating expenses Operating expenses Profit from associates Expected credit loss/ impairment charge on finance lease receivables Operating income before cost of risk Expected credit loss/ impairment charge on loans to customers Other expected credit loss/ impairment charge on other assets and provisions Cost of risk (78,118) (4,228) (432,358) 789 678,701 (94,155) (885) (12,544) (45,442) 71.9% (78,118) (45,442) 71.9% (3,995) 5.8% (376,852) 14.7% (4,228) (432,358) (3,995) 5.8% 1,339 654,926 (139,499) (164) (20,562) -41.1% 3.6% -32.5% NMF -39.0% 789 678,701 (94,155) (885) (12,544) (378,517) 1,339 652,860 (139,499) 14.2% 1,665 NMF -41.1% 4.0% -32.5% 2,066 NMF (164) (20,562) NMF -39.0% (107,584) (160,225) -32.9% (107,584) (160,225) -32.9% Net operating income before non-recurring items Net non-recurring items (excluding one-offs) 571,117 494,701 15.4% 571,117 492,635 15.9% (10,723) (22,471) -52.3% (10,723) (22,643) -52.6% One-off termination costs of former CEO, one-off demerger related expenses (2) (3,985) (34,685) -88.5% (3,985) (34,685) -88.5% Net non-recurring items (14,708) (57,156) -74.3% (14,708) (57,328) -74.3% Profit before income tax expense from continuing operations Income tax expense (excluding one-offs) 556,409 437,545 27.2% 556,409 435,307 27.8% 2,238 2,066 NMF 172 NMF - 172 NMF NMF (58,619) (34,948) Income tax benefit related to one-off termination costs, one-off demerger related expenses and one-off impact of re-measurement of deferred tax balances (3) 2,161 Income tax expense Profit from continuing operations Profit from discontinued operations Profit One-off items (1)+(2)+(3) Profit attributable to: (56,458) 499,951 499,951 (21,717) (56,665) 380,880 107,898 488,778 67.7% NMF -0.4% 31.3% NMF 2.3% (58,619) (34,948) 67.7% 2,161 (56,458) 499,951 (21,717) NMF (56,665) -0.4% 378,642 32.0% 2,238 NMF 110,136 499,951 378,642 32.0% 110,136 NMF NMF (2,238) NMF (14,236) (56,402) -74.8% (14,236) (56,402) -74.8% - shareholders of the Group - non-controlling interests Profit from continuing operations attributable to: - shareholders of the Group - non-controlling interests Profit from discontinued operations attributable to: - shareholders of the Group - non-controlling interests 497,664 2,287 468,996 19,782 6.1% -88.4% 497,664 2,287 377,075 32.0% 91,921 NMF 1,567 45.9% 18,215 NMF 497,664 379,313 2,287 1,567 31.2% 45.9% 497,664 2,287 377,075 32.0% 2,238 NMF 1,567 45.9% 89,683 NMF 91,921 NMF (2,238) NMF 18,215 NMF 18,215 NMF : Earnings per share (basic) 10.45 10.78 -3.1% - earnings per share from continuing operations 10.45 8.72 19.8% - earnings per share from discontinued operations 2.06 NMF Earnings per share (diluted) 10.42 10.71 -2.7% - earnings per share from continuing operations 10.42 8.66 20.3% - earnings per share from discontinued operations 2.05 NMF BANK OF GEORGIA 67#68BANK OF GEORGIA GROUP BALANCE SHEET Bank of Georgia Group Consolidated Change Change GEL thousands, unless otherwise noted Dec-19 Dec-18 Sep-19 y-o-y 9-0-9 Cash and cash equivalents 2,153,624 1,215,799 77.1% 1,369,194 57.3% Amounts due from credit institutions 1,619,072 1,305,216 24.0% 1,834,195 -11.7% Investment securities 1,786,804 2,019,017 -11.5% 1,895,722 -5.7% Loans to customers and finance lease receivables 11,931,262 9,397,747 27.0% 11,339,745 5.2% Accounts receivable and other loans 3,489 2,849 22.5% 4,475 -22.0% Prepayments 42,632 44,294 -3.8% 43,795 -2.7% Inventories 12,297 13,292 -7.5% 11,257 9.2% Right-of-use assets 96,095 NMF 106,130 -9.5% Investment property 225,073 151,446 48.6% 193,499 16.3% Property and equipment Goodwill Intangible assets Income tax assets 379,788 344,059 10.4% 364,405 4.2% 33,351 33,351 0.0% 33,351 0.0% 106,290 83,366 27.5% 95,829 10.9% Other assets Assets held for sale 282 143,154 36,284 19,451 -98.6% 7,682 -96.3% 126,008 13.6% 202,426 -29.3% 42,408 -14.4% 38,987 -6.9% Total assets 18,569,497 14,798,303 25.5% 17,540,692 5.9% Client deposits and notes 10,076,735 8,133,853 23.9% 9,613,718 4.8% Amounts owed to credit institutions 3,934,123 2,994,879 31.4% 3,437,718 14.4% Debt securities issued 2,120,064 1,730,414 22.5% 2,175,820 -2.6% Lease liabilities 94,616 NMF 105,285 -10.1% Accruals and deferred income 52,471 47,063 11.5% 41,521 26.4% Income tax liabilities Other liabilities 37,918 102,662 28,855 31.4% 39,251 -3.4% 64,966 58.0% 87,520 17.3% Total liabilities 16,418,589 13,000,030 26.3% 15,500,833 5.9% Share capital Additional paid-in capital 1,618 492,072 1,618 480,555 Treasury shares (64) (51) 0.0% 2.4% 25.5% 1,618 0.0% 498,593 -1.3% (53) 20.8% Other reserves (7,481) 30,515 NMF 28,472 NMF Retained earnings 1,655,256 1,277,732 29.5% 1,502,248 10.2% Total equity attributable to shareholders of the Group 2,141,401 1,790,369 19.6% 2,030,878 5.4% Non-controlling interests 9,507 Total equity 2,150,908 Total liabilities and equity Book value per share 18,569,497 45.36 7,904 1,798,273 14,798,303 37.59 20.3% 8,981 5.9% 19.6% 25.5% 20.7% 2,039,859 17,540,692 5.4% 5.9% 42.69 6.3% BANK OF GEORGIA 68#69BNB FINANCIAL HIGHLIGHTS INCOME STATEMENT, HIGHLIGHTS GEL thousands, unless otherwise stated Change Change Change 4Q19 4Q18 3Q19 2019 2018 y-o-y 9-0-9 y-o-y Net interest income 7,194 6,471 11.2% 7,447 -3.4% 27,586 25,894 6.5% Net fee and commission income 1,602 1,356 18.1% 1,956 -18.1% 7,169 7,805 -8.1% Net foreign currency gain 6,548 5,261 24.5% 5,405 21.1% 20,688 16,605 24.6% Net other income 92 332 -72.3% 57 61.4% 463 745 -37.9% Operating income 15,436 13,420 15.0% 14,865 3.8% 55,906 51,049 9.5% Operating expenses (9,493) (8,785) 8.1% (9,135) 3.9% (35,366) (32,261) 9.6% Operating income before cost of risk 5,943 4,635 28.2% 5,730 3.7% 20,540 18,788 9.3% Cost of risk (7) 670 NMF 293 NMF (2,691) (3,069) -12.3% Net non-recurring items (46) NMF (1) NMF Profit before income tax expense 5,890 5,298 11.2% 6,022 Income tax expense (1,261) (1,163) 8.4% (1,193) Profit 4,629 4,135 11.9% 4,829 -2.2% 5.7% -4.1% (110) 17,739 (3,404) (3,545) 14,335 (717) -84.7% 15,002 18.2% -4.0% 11,457 25.1% BALANCE SHEET, HIGHLIGHTS GEL thousands, unless otherwise stated Dec-19 Dec-18 Change y-o-y Change Sep-19 9-0-9 Cash and cash equivalents 212,777 110,340 92.8% 170,787 24.6% Amounts due from credit institutions 12,742 19,664 -35.2% 22,534 -43.5% Investment securities 81,573 67,734 20.4% 101,511 -19.6% Loans to customers and finance lease receivables 580,876 432,657 34.3% 556,541 4.4% Other assets 55,102 50,155 9.9% 59,397 -7.2% Total assets 943,070 680,550 38.6% 910,770 3.5% Client deposits and notes 608,777 389,001 56.5% 588,647 3.4% Amounts owed to credit institutions 144,621 162,823 -11.2% 132,648 9.0% Debt securities issued 69,438 38,163 82.0% 72,931 -4.8% Other liabilities 11,038 5,300 108.3% 8,239 34.0% Total liabilities Total equity Total liabilities and equity 833,874 595,287 40.1% 802,465 3.9% 109,196 85,263 28.1% 108,305 0.8% 943,070 680,550 38.6% 910,770 3.5% BANK OF GEORGIA 69#70BANKING BUSINESS KEY RATIOS Profitability ROAA, annualised ** ROAA, annualised (unadjusted) ROAE, annualised ** RB ROAE ** CIB ROAE ** ROAE, annualised (unadjusted) Net interest margin, annualised RB NIM CIB NIM Loan yield, annualised RB Loan yield CIB Loan yield Liquid assets yield, annualised Cost of funds, annualised 4Q19 4Q18 3Q19 2019 2018 3.4% 3.3% 3.2% 3.1% 3.2% 3.4% 3.2% 3.2% 3.1% 2.8% 29.9% 27.0% 26.8% 26.1% 26.4% 31.4% 28.4% 30.7% 28.6% 30.3% 28.5% 28.5% 24.6% 25.6% 22.8% 29.9% 26.2% 26.8% 25.4% 22.9% 5.4% 6.0% 5.4% 5.6% 6.5% 5.7% 6.7% 6.1% 6.1% 7.5% 3.8% 3.2% 3.2% 3.6% 3.3% 11.4% 12.8% 11.5% 11.7% 13.5% 12.4% 14.2% 12.8% 12.9% 15.1% 9.2% 9.8% 8.9% 9.1% 10.2% 3.7% 3.8% 3.2% 3.5% 3.8% 4.7% 5.0% 4.5% 4.6% 5.0% Cost of client deposits and notes, annualised 3.0% 3.4% 2.9% 3.0% 3.5% RB Cost of client deposits and notes 2.5% 2.9% 2.6% 2.6% 2.9% CIB Cost of client deposits and notes 3.3% 4.0% 3.2% 3.3% 4.1% Cost of amounts owed to credit institutions, annualised 7.4% 7.9% 6.8% 7.1% 7.3% Cost of debt securities issued 7.9% 7.8% 7.7% 7.7% 7.8% Operating leverage, y-o-y *** -7.3% 3.8% -5.2% -3.2% 2.9% Operating leverage, q-o-q Efficiency Cost/Income *** RB Cost/Income CIB Cost/Income *** Cost Income (unadjusted) Liquidity *** -4.1% -2.3% 1.2% 0.0% 0.0% 39.3% 36.9% 37.9% 37.8% 36.7% 43.5% 36.7% 38.0% 38.8% 36.6% 26.9% 29.6% 30.4% 28.4% 30.9% 39.3% 36.9% 37.9% 38.9% 36.7% NBG liquidity ratio (minimum requirement 30%) 31.1% 31.9% 36.8% 31.1% 31.9% NBG liquidity coverage ratio (minimum requirement 100%) 136.7% 120.1% 118.5% 136.7% 120.1% Liquid assets to total liabilities 33.9% 34.9% 32.9% 33.9% 34.9% Net loans to client deposits and notes 118.4% 115.5% 118.0% 118.4% 115.5% Net loans to client deposits and notes + DFIs 103.2% 99.6% 103.4% 103.2% 99.6% Leverage (times) 7.6 7.2 7.6 7.6 7.2 Asset Quality: NPLs (in GEL) 252,695 NPLs to gross loans to clients 2.1% 318,356 3.3% 339,118 2.9% 252,695 2.1% 318,356 3.3% NPL coverage ratio 80.9% 90.5% 85.3% 80.9% 90.5% NPL coverage ratio, adjusted for discounted value of collateral 139.6% 129.9% 129.3% 139.6% 129.9% Cost of credit risk, annualised 0.2% 1.1% 0.5% 0.9% 1.6% RB Cost of credit risk 0.2% 1.7% 0.9% 1.2% 2.1% CIB Cost of credit risk 0.5% -0.2% -0.2% 0.2% 0.8% Capital Adequacy: NBG (Basel III) CET1 capital adequacy ratio 11.5% 12.2% 11.1% 11.5% 12.2% Minimum regulatory requirement 10.1% 9.5% 9.5% 10.1% 9.5% NBG (Basel III) Tier I capital adequacy ratio 13.6% 12.2% 13.3% 13.6% 12.2% Minimum regulatory requirement NBG (Basel III) Total capital adequacy ratio Minimum regulatory requirement 12.2% 11.4% 11.6% 12.2% 11.4% 18.1% 16.6% 16.8% 18.1% 16.6% 17.1% 15.9% 16.1% 17.1% 15.9% * For the description of Key Ratios, refer to page 77 BANK OF GEORGIA 4Q18 and the full year 2019 ratios are adjusted for one-off employee costs related to termination benefits of the former CEO and executive management. The full year 2018 ratios are adjusted for one-off employee costs related to termination benefits of the former CEO, demerger related expenses and one-off impact of re-measurement of deferred tax balances *** The full year 2019 results are adjusted for one-off employee costs related to termination benefits of the former executive management 70#71KEY OPERATING DATA Dec-19 Dec-18 Sep-19 Selected operating data: Total assets per FTE 2,515 1,995 2,402 Number of active branches, of which: 272 276 276 - Express branches (including Metro) 162 165 167 - Bank of Georgia branches 98 99 97 - Solo lounges 12 12 12 Number of ATMs Number of cards outstanding, of which: 933 876 911 2,145,060 2,177,273 2,121,830 - Debit cards - Credit cards 1,749,524 1,630,235 1,674,105 395,536 547,038 447,725 Number of POS terminals 21,870 16,870 21,088 3,217 3,115 3,231 Number of Express Pay terminals FX Rates: GEL/US$ exchange rate (period-end) 2.8677 GEL/GBP exchange rate (period-end) 3.7593 2.6766 3.3955 2.9552 3.6319 Full time employees (FTE), of which: 7,383 7,416 7,304 - Full time employees, BOG standalone 5,879 5,828 5,706 - Full time employees, BNB 565 669 584 - Full time employees, BB other 939 919 1,014 Shares outstanding Ordinary shares Treasury shares Total shares outstanding BANK OF GEORGIA 47,210,876 1,958,552 49,169,428 47,626,147 1,543,281 49,169,428 47,574,153 1,595,275 49,169,428 71#72MULTICHANNEL PERFORMANCE Number of Transactions '000s 12,307 +7% 13,119 13,368 x5.7 2017 2018 2019 46,177 -17% 35,938 15,676 5,892 6,349 6,415 5,302 +80% 83,055 62,110 +35% +18% 45,935 45,443 38,810 31,148 26,101 22,990 Tellers Mobile banking Internet banking POS terminals ATMs Express branches BANK OF GEORGIA +4% 108,330 108,240 104,022 Express Pay terminals 72#73SOLO A FUNDAMENTALLY DIFFERENT APPROACH TO PREMIUM BANKING - At 31 December 2019, we were serving 54,542 Solo clients through 12 Solo lounges SOLO Lounges BANK OF GEORGIA SOLO Solo offers: Tailor made banking solutions ° New financial • • • products such as bonds Concierge-style environment Access to exclusive products and events Lifestyle opportunities SOLO SOLO Solo Club Launched in 2Q17, a membership group within Solo, which offers exclusive access to Solo products and offers ahead of other Solo clients, continues to increase its client base. At 31 Dec 2019, Solo Club had 5,482 members, up 43.3% y-o-y and up 6.4% 9-0-9 73#74SOLO - THINKING AHEAD OF CUSTOMERS NEEDS Banking Customer-centric approach maximisation Lifestyle TOP AFFLUENT Advisory services in banking and lifestyle solutions MASS AFFLUENT Personal banking and lifestyle offering EDUCATION TRAVEL ENTERTAINMENT HEALTH BANK OF GEORGIA 74#75SOLO A MID-TERM KEY OBJECTIVE - DOUBLING PROFIT IN 3 YEARS REACHING GEL 112MLN BANK OF GEORGIA EXCELLENCE IN CUSTOMER SERVICE HIGHER DIGITALISATION TAILOR-MADE BUNDLED OFFERING 75 45#76RETAIL BANKING - CLIENT-CENTRIC MODEL At 31 December 2019, we have 76 branches operating on our client- centric model STOGE BANK OF GEORGIA გაიგ 8500 76#77NOTES TO KEY RATIOS - - Cost of funds Interest expense of the period divided by monthly average interest bearing liabilities; Cost of credit risk Expected loss/impairment charge for loans to customers and finance lease receivables for the period divided by monthly average gross loans to customers and finance lease receivables over the same period; Cost to income ratio Operating expenses divided by operating income; Interest bearing liabilities Amounts owed to credit institutions, client deposits and notes, and debt securities issued; Interest earning assets (excluding cash) Amounts due from credit institutions, investment securities (but excluding corporate shares) and net loans to customers and finance lease receivables; Leverage (times) Total liabilities divided by total equity; Liquid assets Cash and cash equivalents, amounts due from credit institutions and investment securities; Liquidity coverage ratio (LCR) High quality liquid assets (as defined by NBG) divided by net cash outflows over the next 30 days (as defined by NBG); Loan yield Interest income from loans to customers and finance lease receivables divided by monthly average gross loans to customers and finance lease receivables; NBG liquidity ratio Daily average liquid assets (as defined by NBG) during the month divided by daily average liabilities (as defined by NBG) during the month; NBG (Basel III) Common Equity Tier I capital adequacy ratio Common Equity Tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the National Bank of Georgia instructions; NBG (Basel III) Tier I capital adequacy ratio Tier I capital divided by total risk weighted assets, both calculated in accordance with the requirements of the National Bank of Georgia instructions; NBG (Basel III) Total capital adequacy ratio Total regulatory capital divided by total risk weighted assets, both calculated in accordance with the requirements of the National Bank of Georgia instructions; Net interest margin (NIM) Net interest income of the period divided by monthly average interest earning assets excluding cash for the same period; Non-performing loans (NPLs) The principal and interest on loans overdue for more than 90 days and any additional potential losses estimated by management; NPL coverage ratio Allowance for expected credit loss/impairment loss of loans and finance lease receivables divided by NPLs; NPL coverage ratio adjusted for discounted value of collateral Allowance for expected credit loss/impairment loss of loans and finance lease receivables divided by NPLs (discounted value of collateral is added back to allowance for expected credit loss/impairment loss); Operating leverage Percentage change in operating income less percentage change in operating expenses; Return on average total assets (ROAA) Profit for the period divided by monthly average total assets for the same period; Return on average total equity (ROAE) Profit for the period attributable to shareholders of the Group divided by monthly average equity attributable to shareholders of the Group for the same period; NMF Not meaningful BANK OF GEORGIA 77#78COMPANY INFORMATION BANK OF GEORGIA Registered Address 84 Brook Street London W1K 5EH United Kingdom Registered under number 10917019 in England and Wales Secretary Link Company Matters Limited 65 Gresham Street London EC2V 7NQ United Kingdom Stock Listing London Stock Exchange PLC's Main Market for listed securities Ticker: "BGEO.LN" Contact Information Bank of Georgia Group PLC Investor Relations Telephone: +44 (0) 203 178 4052; +995 322 444444 (9282) E-mail: [email protected] www.bankofgeorgiagroup.com Auditors Ernst & Young LLP 25 Churchill Place Canary Wharf London E14 5EY United Kingdom Registrar Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AE United Kingdom Please note that Investor Centre is a free, secure online service run by our Registrar, Computershare, giving you convenient access to information on your shareholdings. Investor Centre Web Address - www.investorcentre.co.uk Investor Centre Shareholder Helpline - +44 (0)370 873 5866 Share price information Shareholders can access both the latest and historical prices via the website, www.bankofgeorgiagroup.com 78#79Empty