#1LUSHOƆCML ¿563N BANK OF GEORGIA GROWTH AT THE RIGHT PRICE LSE: BGEO/GSE:GEB JSC Bank of Georgia investor presentation October 2010 VTB Capital Investment Forum Russia Calling October 5-7, 2010, Moscow#2Introduction to Bank of Georgia The leading universal bank in Georgia No.1 by assets (35%), (¹) gross loans (33%), (¹) client deposits (30%) (¹) and equity (40%) (¹). June 2010 YTD market share gain 2.1% Assets of GEL 3.5 bn (USD 1.9 bn), Net Loans of GEL 2.0 bn (USD 1.1 bn), Client Deposits of GEL 1.5 bn (USD 0.8) and Equity of GEL 649.3 million (USD 352.1 bn) 40% 35.4% 35.1% 32.9% 33.0% BOG Market Share by Assets 27.9% 30% 17.2% 19.0% 17.8% 20% 10% 0% 2003 2004 2005 2006 2007 2008 III 2009 Q2 2010 Leading retail banking, with top brand, best distribution network and broadest range of services of any bank in Georgia. Number of Retail Clients 714,400, Number of Branches 137, ATMs 387 Leading corporate bank with approximately 88,100+ legal entities and over 164,800+ current accounts Leading wealth management, insurance, brokerage, leasing and card-processing services provider Banking operations in Ukraine (BG Bank) and Belarus (BNB) account for less than 10% of BoG's consolidated total assets The only Georgian entity with credit ratings from all three global rating agencies - S&P: 'B/B' at the sovereign ceiling; Fitch Ratings: ‘B+/B'; Moody's: '‘B3/NP (FC)' & 'Ba3/NP (LC)' Listed on the London Stock Exchange (GDRs) and Georgian Stock Exchange Market Cap (LSE) US$ 438 mln as of 1 October 2010 Approximately 95% free float Issue of the first ever Eurobonds in Georgia Bloomberg: BKGEO; 5 year, 9%, US$200 mln (US$ 50 mln bought back) B/Ba2/B (composite B+) (1) All data according to the NBG as of 30 June 2010 Ownership Structure Institutional Shareholders* 92.9% Local Shares Held by Domestic and Foreign Retail Shareholders 3.8% Management and Employees** 3.3% *through BNY Nominees Limited **includes GDRs held as part of EECP LOLO BANK OF GEORGIA www.bog.ge/ir October 2010 Page 2#3LUSHOƆCML ¿563N BANK OF GEORGIA The Georgian Economy October 2010#4Georgia's Economy – Basic Facts Area: 69,700 sq km - Population: 4.4 million (as of January 1, 2009) Life expectancy: 76.5 years Official language: Georgian Literacy: 100% Capital: Tbilisi Currency (code): Lari (GEL) GDP 2010F: US$11.5 billion GDP real growth rate 2009A: -3.9% GDP real growth rate 2010F: 6.0% GDP per capita 2010F (Nominal): US$ 2,610 GDP per capita 2010F (PPP): US$ 4,971 Budget Deficit 2010F: 6.3 % of GDP Inflation rate 2010F: 6.0% External public debt / GDP 2010F: 36.0% Sovereign ratings: Fitch B+/Stable S&P B+/Stable/B+ Source: Government of Georgia/IMF/Bank of Georgia estimates Lobko BANK OF GEORGIA www.bog.ge/ir CANADA ARCTIC OCEAN 60% RUSSA 454 ATLANTIC OCEAN EUROPE CHINA GEORGIA ALGERIA FLAM DELANUS War UKRAINE ROMANA My IRAT INDIA GEORGIA TORNEY IDIAN OCEAN October 2010 Page 4#5Strong economic growth before crisis ... starting again? Gross Domestic Product USD billion 14 15% 12.8 12.3% 12 11.1% 11.5 13% 10.7 9.6% 10.2 9.4% 11% 10 9% 8 7.8 5.9% 6.4 6 5.1 4.0 4 6.0% 7% 5% 2.3% 3% 1% 2 -1% 0 -3% -3.9% -2 -5% 2003A GDP per capita 2004A 2005A 2006A Nominal GDP (LHS) 2007A Real GDP Growth (RHS) 2008A 2009A 2010F USD 6,000 5,000 4,038 4,000 3,644 3,242 2,966 3,000 2,000 1,764 1,484 1,188 919 1,000 0 2003 Source: National Statistics Office of Georgia Lak BANK OF GEORGIA www.bog.ge/ir 2,315 4,664 4,971 4,863 4,747 2,921 2,610 2,450 2004 2005 2006 Nominal GDP per capita 2007 GDP per capita PPP 2008 2009 2010F October 2010 Page 5#6GDP per capita is low, leaving much room to climb GDP per capita across countries US$ 45,000 39,000 40,000 35,000 30,000 25,000 20,000 16,680 13,980 15,000 12,530 10,580 9,500 10,000 7,770 8,230 5,190 3,850 5,000 2,520 2,610 Ukraine Georgia China Belarus Romania Russia Turkey Poland Hungary Estonia Czech Western Republic Europe US$ 4,500 average (EU 15+) 4,000 3,500 2,984 3,012 3,000 2,737 2,555 2,610 2,641 2,500 2,000 1,500 1,000 500 0 Bulgaria 2003 Georgia 2010F Turkey 2002 Romania 2003 Russia 2003 Serbia 2004 Source: IMF, National Bank of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir October 2010 Page 6#7Key Drivers of Economic Growth Regional Hub Financial Services Libertarian Economy Export Growth Lobko BANK OF GEORGIA www.bog.ge/ir FDIS Increased importance of Georgia as regional transportation and logistics hub with geopolitically important location for cross country trade and energy transit. Export CAGR of 17% from 2003 to 2009; 33% y-o-y increase in 1H 2010. Net electricity exporter since 2007. FDI averaging at 16% of GDP during past three years, with cumulative FDI (2004-2009) in country reaching 60.5% of GDP as of YE 2009. Rapidly developing Financial sector with demonstrated resilience to crises (conservative regulation; No government bailouts) with high capital base to support the growth. October 2010 Page 7#8Libertarian Economic Policies Kick-start Modernization Tax and Tax rates slashed: Only six taxes, down from 21 Flat personal income tax of 20% (15% by 2013) Corporate income tax 15% By 2012 no taxes on dividends, interest income or worldwide income "Liberty Act" Referendum is required for an increase in tax rates Budget expenditure capped at 30% of GDP (effective FY2012) Budget deficit capped at 3%, effective FY2012 Public debt capped at 60% of GDP, effective FY2012 Corruption and Red tape slashed Corruption significantly reduced, Transparency International ranked Georgia 7th out of 69 by Global Corruption Barometer 98% of Georgians didn't have to pay bribe in past year, according to International Republican Institute Georgia 11th out of 183 in the WB's Ease of Doing Business (up from 112 in 2005) Customs code harmonized with EU; Capital controls abolished since 1990s Bribe payers index (% are not paying bribes) United States Turkey Georgia United Kingdom Poland Belarus Romania Armenia Azerbaijan Ease of doing business Ukraine Russia Turkey Poland FSU Average EE Average Belarus 54% 57% 142 120 73 72 71 67 58 Romania 55 Armenia 43 Azerbaijan 38 Israel 29 Switzerland 21 Georgia 11 UK 5 United States 4 87% 86% 98% 98% 98% 97% 96% LOLE BANK OF GEORGIA Source: Transparency International, the Heritage Foundation, World Bank www.bog.ge/ir October 2010 Page 8#9Regional Hub Baku Tbilisi Ceyhan (BTC) oil export pipeline - operated by BP from Caspian Sea to Europe via the Turkish coast. 1.0 million bbl/day or circa 1.2% of the current World oil consumption (9% of the consumption by EU, 80% of aggregate consumption by Turkey, Romania, Bulgaria and Poland) is transported through BTC or railway; c. $4bln invested by BP Consortium; Shah-Deniz (BTE) gas pipeline (South Caucasus pipeline) - 6.6 bcm/year operated by BP to transport gas from Caspian Sea to Turkey; Iran-Azerbaijan-Georgia (IAG) gas pipeline - 3.5 bcm/year Western Route Pipeline (Baku Supsa) oil export pipeline 5.75 mt/year operated by BP from Caspian Sea to European Markets through the Black Sea; Russia-Georgia-Armenia gas pipeline - 5.8 bcm/year - Free industrial zones created around Tbilisi, Poti (port), Kutaisi (second largest city). Tax rates in FIZ are largely 0% Two sea ports. Poti Sea Port privatized in December 2008 by Rakeen Group (UAE) to build infrastructure for operating Free Industrial Zone Transportation Communication and Trade cumulative CAGR 2004-2009 of 9.4% Upcoming Projects NABUCCO Project is to finish by 2015, and White Stream project is flagged as "Priority Project" by EC Baku-Akhalkalaki-Kars railway line - sanctioned in 2007 building railway to link Asia and Europe LNG - Azerbaijan-Georgia-Romania-Hungary Black Sea liquefied natural gas export route will supply c.6- to 8-billion cubic meters of liquefied Azerbaijani natural gas per year to Europe via Black Sea tankers White Stream (proposed Nabucco gas pipeline to Central Europe (planned) Russia Georgia Supsa Baku-Supsa oil pipeline Caspian Sea Armenia Baku-Tbilisi-Ceyhan oil pipeline Erzurum Baku-Tbilisi-Erzurum gas pipeline Turkey Cehyan Iraq Syria GDP Breakdown Health, social and community work, 10.1% Education, 3.9% Public administration, 13.3% Real estate, renting and business activities, 6.9% Hotels and restaurants, 1.8% Financial intermediation, 2.6% Kazakhstan Trans-Casplan gas pipeline (proposed) Azerbaijan Sangachal Türkmenbasy Terminal Iran Agriculture, hunting and forestry; fishing, 7.5% Construction, 5.6% Turkmenistan Trade (Retail & Wholesale), 11.7% Transport & Communication, 10.8% Mining and quarrying, Manufacturing, 7.79,8% Utilities & household processing, 4.6% Lobko BANK OF GEORGIA www.bog.ge/ir 22.5% October 2010 Page 9#10Export Growth WTO member since 2000; No quantitative restrictions on trade; As of November 2007 Georgia has entered into a FTA with Turkey One of the two beneficiaries of the EU GSP+ Scheme in the CIS since 2006, granting local companies the right to export 7,200 categories of goods duty-free. US-Georgia charter on strategic partnership envisions an update of Bilateral Investment Treaty, expansion of Georgian access to the GSP and the possibility of entry into Free Trade Agreement Export growth of 33% y-o-y 1H 2010 driven by exports of main export items: agricultural products, ferroalloy, precious metals, aircraft, rail car, vessels, fertilizers and machinery Significant investments made in export oriented companies: import of capital goods amounted at c.13% of GDP from 2004 to 2009 Rapidly growing tourism sector - c.US$1.4B of donor money earmarked for investments in infrastructure. 2010 a record year in number of tourists visiting Georgia Huge untapped hydro-power resources - only 18% of Georgia's hydro potential of 50 GWh is being utilized; 1,200 MW transmission line to Turkey will become operational in 2013 which will significantly boost export potential to Turkey Electricity Export/Import mln kWh 2,000 1,500 1,000 1,217 500 236 749 634 679 494 1,256 200 71 122 96 30 (255) (434) (649) (39) (777) (500) (1,080) (1,288) (1,399) (681) (1,000) (844) (1,217) (1,277) 2003 2004 2005 2006 2007 2008 2009 Aug-10 Export Import Net export (1,500) Number of tourists '000 2,500 2,000 1,500 1,000 560 500 368 313 1,500 1,290 983 1,052 1,950 Source: National Statistics Office of Georgia, Ministry of Energy of Georgia Loka BANK OF GEORGIA www.bog.ge/ir 2003 2004 2005 2006 2007 2008 2009 2010F Europe excluding Turkey CIS Turkey Other October 2010 Page 10#11US$ mln Trade Structure Exports and Imports* 8,000 Imports of goods & services CAGR ('04-'09): 16% Exports of goods & services CAGR ('04-09): 14% 7,499 Income and Transfers 7,000 6,000 5,000 4,413 4,000 3,318 3,000 2,493 686 1,865 421 2,000 492 193 1,000 1,289 1,647 2,187 2,552 0 2003 *Export and Import of goods and services Source: Central Bank of Georgia Current Account Deficit US$ mln 6,215 5,917 5,267 1,178 900 725 849 3,182 3,688 3,199 3,940 2004 2005 2006 2007 2008 2009 2010F Donor inflows (DI) Total private capital inflows (TPCI) CAD CAD as % of GDP CAD+TPCI+DI as % of GDP 5,000 20.0% 14.7% 4,000 15.0% 7.7% 8.6% 7.9% 3,000 5.6% 10.0% 3.2% 5.5% 1.6% 2,982.4 2,000 1,698.4 5.0% 734.8 1,000 479.6 0 351.0 98.3 (383:3) -6.9% 1782) (709.2) -1,000 (383.8) 1,508.1 261.7 (1,175.3) 2,291.8 276.2 (2,010.0) 1,423.4 0.0% 942.0 1,092.6 658.0 -5.0% (1,216.5) (2,912.3) (1,096.8) -10.0% -9.6% -11.1% -11.3% -2,000 -9.5% -15.0% -15.1% -3,000 -20.0% -19.8% -22.8% -4,000 -25.0% 2009 2010F 2003 2004 2005 2006 2007 2008 BoG Forecasts for 2010 Donor Inflows include both public and private sectors. Donor inflows in 2009 adjusted according to the banking sector foreign debt outflows Source: Central Bank of Georgia, Ministry of Finance of Georgia LOLEJN BANK OF GEORGIA www.bog.ge/ir October 2010 Page 11#127.4% 7.2% 7.2% FDIS and Donor Assistance Liberal regulatory environment for foreign businesses, resulting in FDI averaging at 16% of GDP during past three years, with cumulative FDI (2004 -2009) in country reaching 60.5% of GDP as of YE 2009. Unequivocal support from the West and IFIs with total financial pledge through 2011 of US$4.5 bln (42% of 2009 GDP). Approximately one third of the package is earmarked for financial sector. By end of FY 2010, cumulative donor commitment to Georgia under the Brussels pledge will total circa US$4.2 billion, with possibility of further upward adjustment. As of YE 2009, US$ 1.4 billion was disbursed In addition: Approved access to US$1.2 bln under SBA by IMF until 2011 U.S. Committed US$ 124 mln investment in energy infrastructure development (February 2010) US$70 million from ADB for infrastructure repairs Quarterly FDI inflows Net remittances US$ mln 1000 900 800 700 5.4% 600 4.9% 4.2% 500 400 300 420.5 200 315.4 100 212.7 0 2004 A 2005A FDI Inflows 2006A Net remittances (LHS) US$ mln 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 280.7 421.4 01.5 489.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 04 Q1 Q2 Q3 Q4 '05 '05 '05 '05 '06 '06 '06 '06 '07 Source: National Statistics Office of Georgia '07 '07 '07 Lobko BANK OF GEORGIA www.bog.ge/ir 34.7 Q2 Q3 Q4 22 8 2 2 '08 '08 '08 '08 US$ mln 3,000 2,500 2,000 1,500 917.9 766.5 755.4 2007A 2008A 9% 8.4% 8% 7% 6% 5% 950.0 4% 3% 2% 1% 0% 2009 2010F Net remittances as % of GDP (RHS) 25.0% 19.8% 20.0% 942.0 276.2 15.3% 15.0% 261.7 12.2% 1,092.6 10.0% 658.0 1,000 7.0% 2,015.0 9.4% 1,564.0 7.7% 82 114.C 77.2 173.2 194.0 75.7 196.5 160.3 176.7 1,190.0 6.1% 5.0% 500 870 658.0 483.0 450.0 0 0.0% 2004 2005 2006 2007 2008 2009 2010F Q2 Q3 Q4 Q1 02 '09 '09 '09 '09 '10 '10 Net FDI Source: Government of Georgia presentation Donor inflows Net FDI as % of GDP October 2010 Page 12#13Bank debt to GDP 200 Financial Intermediation Prudent Regulation Ensuring Financial Stability High Regulatory Capital Requirement: Top 5 Banks average Tier I capital adequacy ratio (NBG standards)– 14.2%, Bank of Georgia 15.8% (BOG standalone BIS Tier I Capital adequacy ratio 24.6%) High level of liquidity requirements from NBG at 30% of Liabilities, Bank of Georgia 34.8% 180 160 140 120 100 2880 60 400 40 20 20 22.3 24.3 28.9 33.1 41.5 45.7 47.0 47.3 49.5 67.9 114.6 90.4 76.0 76.9 186.0 Resilient Banking Sector Demonstrated strong resilience towards both domestic and external shocks without single bank going bankrupt No nationalization of the banks has occurred, no government bail-out plans have been required, no Government ownership since 1995 **Excess liquidity and excess capital that has been accumulated by the banking sector to enable boosting the financing of the economic growth Very low leverage of population with Retail Loans below 10% of GDP with and Total Loans at c. 30% of GDP resulted in contained number of defaults during the global crisis (Average LLP by BoG standalone as of end Q2'10 at c. 7%) Russia Bulgaria Romania Turkey Georgia Azerbaijan Armenia Banking sector assets GEL mln 12,000 10,000 8,000 6,000 4,000 Poland Belarus CAGR 33% Kuwait Ukraine Bahrain UAE USA* EU* 9,846 8,865 8,293 2,271 7,208 1,550 2,069 1,430 4,227 5,202 5,455 749 4,524 4,425 2,548 1,697 287 2,000 2.585 1,336 275 1,645 900 389 522 616 893 1,353 1,860 1,699 2,372 2003 2004 2005 2006 2007 2008 2009 2010 YTD *Includes only loans to households Labkon BANK OF GEORGIA www.bog.ge/ir Cash Net Loans Other Assets October 2010 Page 13#14LUSHOƆCML ¿563N BANK OF GEORGIA Management target for 2010 October 2010#15Targeted financial performance 2010 Target pre-provision profit for 2010 GEL mln 160 127.9 135.6 5.73 135.0 13.03 120 106.8 21.85 80 60 40 40 68.02 Assumptions 2010 real GDP growth of 2%* in Georgia 2010 inflation rate of 3.2%* in Georgia The GEL/US$ exchange rate remains stable during 2010 ☑Geo-political stability is sustained in the region 0 2007 Profit before provisions Losses related to Real Estate Other 2008 27.0 2009 2010F Goodwill Impairment associated with BG Bank Losses related to investments Target net provision expense for 2010 GEL m In 160.0 120.0 80.0 40.0 17.0 0.0 2007 Lobko BANK OF GEORGIA www.bog.ge/ir 133.1 128.7 Target net income for 2010 GEL mln 100.0 75.6 80.0 60.0 40.0 20.0 0.2 10 72.3 2007 2008 2009 2010F (20.0) 50.0 (40.0) (60.0) (80.0) (100.0) 2008 2009 2010F *IMF Estimates (98.9) October 2010 Page 15#16LUSHOƆCML ¿563N BANK OF GEORGIA Strategy October 2010#17Strategic objectives: grow at the right price More efficient Deposit funding Lending machine Focus on International operations Enhance operational efficiency through technological improvements: Temenos T24, core banking software, acquired in October ‘09 is in the process of implementation; Deployment of Softscape, talent management solution, and CRIF, credit scoring solution, is under way Wealth Management services launched in Israel, Ukraine and London Deposits from international clients reach GEL 100 mln in '09, c. 8% of total deposits Premier Banking launched for the affluent client base supported by the exclusivity of Amex Card issuing and acquiring business in Georgia Despite high rate of bank debt growth in '05-'09, ample room for growth with total loans/GDP under 30%; retail loans/GDP under 10% Both corporate and retail lending stepped up in Georgia, Corporate loans up 15.6% YTD and Retail loans up 15.2% YTD Emphasis on micro loans, SMEs, consumer loans and mortgages in Georgia Focus on restructuring of Ukrainian operations, with options varying from further scale down to divesting Focus on high margin, unattended SME sector in Belarus; 19.99% of equity interest in BNB sold to IFC in 1H 2010 First stage of restructuring of equity investment business completed Controlling stake in investment management company sold Lobko BANK OF GEORGIA www.bog.ge/ir October 2010 Page 17#18LUSHOƆCML ¿563N BANK OF GEORGIA Intention to pay dividends October 2010#19Intention to pay dividends for 2010 # of Shares outstanding 31,252,553 27,154,918 25,202,009 31,306,071 III YE 2006 YE 2007 YE 2008 YE 2009 The new dividend policy will serve to further increase capital management discipline as we consider investing in our growth going forward Estimated dividend payout for 2010 performance GEL 9.4 million The Bank intends to propose the establishment of a progressive dividend policy at the 2010 AGM The intention is to recommend GEL 0.30 dividend per share in 2011 in respect of 2010 financial year performance Dividend payment is subject to management achieving 2010 financial targets outlined above The Bank anticipates increasing the dividend payment in the future The new dividend policy is to set dividend payments while taking into consideration the need to maintain proper balance between the ability to finance growth and preserving progressive dividend Lobko BANK OF GEORGIA www.bog.ge/ir October 2010 Page 19#20LUSHOƆCML ¿563N BANK OF GEORGIA Governance October 2010#21A move to classical two-tier board structure Supervisory Board ⚫ 7 non-executive SB members; non-executive Chairman • SB members ⚫ Neil Janin, Independent Director experience: Director at McKinsey & Company in Paris; Co-chairman of the commission of the French Institute of Directors (IFA); Chase Manhattan Bank (now JP Morgan Chase) in New York and Paris; Procter & Gamble in Toronto. • Ian Hague, Firebird Management LLC • Allan Hirst, Independent Director experience: 25 years at Citibank, including CEO of Citibank, Russia; various senior capacities at Citibank ⚫ Kaha Kiknavelidze, Independent Director currently managing partner of Rioni Capital, London based investment fund; previously Executive Director of Oil and Gas research team for UBS Jyrki Talvitie, Independent Director ⚫ David Morrison, Independent Director experience: senior partner at Sullivan & Cromwell LLP prior to retirement Al Breach, Independent Director experience: Head of Research, Strategist & Economist at UBS: Russia and CIS economist at Goldman Sachs ■ Hanna Loikkanen, East Capital - Advisor to Bank of Georgia Supervisory Board. Management Board Chief Executive Officer and 9 Executive members of Management Board MB members . • Irakli Gilauri, CEO; formerly EBRD banker in Tbilisi and London, MS from CASS Business School, London Giorgi Chiladze, Finance; formerly CEO of BTA Bank (Georgia); Program Trading Desk at Bear Sterns, NYC Archil Gachechiladze, Corporate Banking; formerly Deputy CEO of TBC Bank, Georgia; Lehman Brothers Private Equity, London; MBA from Cornell University Avto Namicheishvili, Legal; previously partner at Begiashvili &Co, law firm in Georgia. LLM from CEU, Hungary ⚫ Irakli Burdiladze, Deputy CEO in charge of SB Real Estate; previously CFO at GMT Group, Georgian real estate developer. Masters degree from Johns Hopkins University . • · Sulkhan Gvalia, Risk; founder of TUB, Georgian bank acquired by BOG in 2004 Murtaz Kikoria, acting CEO of BG Bank; formerly senior banker at EBRD; Head of Banking Supervision at the National Bank of Georgia. Mikheil Gomarteli, Retail Banking; 10 years work experience at BOG Nick Shurgaia, International Business; previously CEO of VTB Georgia, Senior Banker at EBRD, London; MBA from LBS Vasil Revishvili, Head of Wealth Management; previously Head of the Investment Risk Unit and Senior Investment Manager at Pictet Asset Management in London and Geneva. MS in Finance from London Business School Lobko BANK OF GEORGIA www.bog.ge/ir October 2010 Page 21#22LUSHOƆCML ¿563N BANK OF GEORGIA Q2 2010 results highlights October 2010#23Assets Total assets GEL mln Gross loans grew 10.9% q-o-q, up 17.2% YTD and up 14.0% y-o-y Loan book, gross BNB, 2% GEL 41.8 mln BG Bank, 9% GEL 201.0 mln 4,000 3,471.9 The Balance Sheet growth since the 3,400.7 3,500 3,154.3 3,258.9 3,186.8 3,147.7 2,980.2 2,907.8 3,124.1 2,913.4 3,000 beginning of the year in 1H 2010 2,500 resulted in 2.1% 2,000 market share gain by assets, 1.1% 1,500 market share gain by gross loans and 1,000 2,106.7 2,059.7 2,189.4 2,046.8 2,163.3 1,855.7 1,904.7 1,833.1 1,851.9 1,950.6 2.5% market share 500 gain by client 0 deposits CB, 47% GEL 1,017.4 mln RB & WM, 45% GEL 966.0 mln Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Gross loans Corporate loan book breakdown, BoG Standalone Retail loan book breakdown, BoG Standalone Other, 14% Pharmaceuticals and Healthcare, 2% Industry & State, 12% Trade, 31% Construction & Real Estate, 17% Energy, 11% FMCG, 13% Lobko BANK OF GEORGIA www.bog.ge/ir Micro loans, 16% Mortgage loans, 42% Credit cards and overdrafts, 15% Consumer and other, 27% October 2010 Page 23#24Loan portfolio quality Bank of Georgia Loan quality under the following stress tests standalone NPLs declined 5.6% q- 0-q to GEL 129.2 million, while BG Bank' (Ukraine) NPLs grew 45.6% q-o- q to GEL 41.9 million Domestic and international crises 17% devaluation of Lari against US$ in one day in November 2008 Political crisis in Georgia peak in Spring 2009 NPLs, BoG Standalone NPLs, Consolidated GEL min 200 180 160 140 120 20 554.4% 600% 173.3 168.9 500% 148.8 32.1 44.6 139.8 140.0 30.1 400% 23.9 28.6 104.6 100 00 69.2 58.9 - 300% 17.2 51.3 61.4 80 208.4% 61.5 75.4 60 138.3% 3.8 169.1% 200% 60 41.1 118.8% 99.3% 119.3% 102.6% 109.3% 40 32.1 23.3 122.2% 100% 19.0 41.6 20 22.4 11.3 35.9 10.9 70.3 22.7 67.6 8.1 9.7 12.0 46.3 54.5 67.4 0 0% Q1 2008 Q2 2008 Q3 2008 RB & WM CB *Other NPLs include BNB and BG Bank Other* Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 NPL coverage ratio Q1 2010 Q2 2010 Loan loss reserve, Consolidated GEL m In 160 8% 7.5% 7.5% GEL mln 7.4% 200.0 9.1% 9.0% 10.0% 6.8% 6.9% 8.9% 6.9% 8.8% 140- 7.4% 7% 180.0 9.0% 7.0% 7.8% 120 6.7% 6.4% 6.5% 160.0 8.0% 6% 5.5% 140.0 6.3% 6.3% 7.0% 4.9% 80 100 5% 120.0 5.0% 6.0% 4.7% 80- 4% 100.0 5.0% 189.8 3.2% 111.3 118.7 136.8 129.2 80.0 166.3 167.0 173.3 4.0% 115.9 60 3% 147.7 129.0 127.9 40 -1.9% 2.0% 87.4 64.3 1.3% 1.7% 60.0 2.1% 2.1% 3.0% 101.4 2% 40.0 2.0% 20 H2% 32.1 23.3 19.0 0 Q1 2008 Q2 2008 Q3 2008 20.0 39.6 44.4 1.0% 1% 0.0 0.0% 0% Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 NPLS % of Gross loans Loan loss reserve as % of gross loans Q2 2010 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Loan loss reserves Reserve For Loan Losses To Gross Loans, BoG Consolidated Labo BANK OF GEORGIA www.bog.ge/ir October 2010 Page 24#251,500 Total Client deposits grew by 46.2% y-o-y in Q2 '10 (7.5% q- o-q WM client Liabilities Client deposits GEL mln 2,000 Record high GEL mln Wealth Management deposits +96.9% 200.0 1,499 1,395 1,394 1,326 212.3 180.7 163.1 deposits grew 1,272 151.9 1,202 1,193 1,183 142.9 160.0 96.9% y-o-y 228.4 1,133 233.2 1,025 145.7 212.3 81.6 174.1 (17.5% q-o-q) 76.5 229.4 125.0 180.7 134.4 154.0 163.1 1,000 98.6 116.0 134.4 120.0 in Q2 '10 70.4 93.3 107.8 98.6 107.8 93.3 681.5 683.5 656.1 81.6 652.7 76.5 FRB client 576.2 626.7 587.6 594.9 80.0 70.4 605.2 518.4 500 deposits 59.3% y-o-y (8.7% q-o- q) in Q2 10 40.0 363.6 403.4 326.0 319.8 280.4 283.1 331.2 376.1 414.7 450.8 0 0.0 FCB client Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 ■RB Client Deposits CB Client Deposits WM Client Deposits Other deposits grew 31.8% y-o-y (4.2% q-o-q) in Retail banking deposits GEL mln 500 +59.3% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Borrowed funds -21.6% Q2 10 GEL 225 mln of 403.4 borrowed funds repaid in 2009 400 363.6 300 200 100 GEL mln 1500 450.8 414.7 1250 376.1 331.2 326.0 319.8 280.4 283.1 1000 947.8 903.6 795.1 750 500 250 1,137.8 1,162.8 1,011.4 945.6 918.6 913.3 912.0 0 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Lobko BANK OF GEORGIA www.bog.ge/ir October 2010 Page 25#26Equity & Capital adequacy Total Shareholder's equity GEL mln 900.0 Risk weighting of FX denominated assets at 150% according to the National Bank of Georgia standards 600.0 783.0 746.7 739.3 718.8 711.8 709.9 718.5 649.3 15% 611.7 598.4 25% NBG capital adequacy ratios, BoG Standalone 20.4% 19.7% 20% 18.3% 18.2% 17.8% 17.7% 16.6% 16.4% 15.8% 15.8% 13.94% Risk weighting of 5% FX denominated assets will be 0% increased to 175% 300.0 from January Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 BIS capital adequacy ratios, BoG Consolidated 40% US$ 16.00 10% 16.3% 15.1% 15.5% 16.8% 13.5% 17.4% 18.4% 21.2% 15.9% 14.5% 13.59% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Pro Tier I Capital Adequacy Ratio Share price performance Total Capital Adequacy Ratio forma Aug '10 35% 36.2% 35.6% 33.8% 34.3% 34.9% 14.00 30% 25.3% 12.00 26.5% 25.2% 25.0% 24.9% 24.7% 25% 23.4% 21.7% 22.6% 10.00 21.7% 21.4% 19.6% 20% 25.8% 8.00 25.8% 15% 32.5% 6.00 10% 5% 0% Loka BANK OF GEORGIA Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 ■Tier I Capital Adequacy Ratio ■Total Capital Adequacy Ratio www.bog.ge/ir 4.00 2.00 0.00 1-Jan-09 105.9% y-0-y 67.7% YTD 30 June 2010 BV/share US$11.24 YTD # of GDRs traded 17.0mln Volume: US$ 190.1 mln 1-Feb-09 1-Mar-09 1-Apr-09 1-May-09 1-Jun-09 1-Jul-09 1-Aug-09 1-Sep-09 1-Oct-09 1-Nov-09 1-Dec-09 1-Jan-10 1-Feb-10 1-Mar-10 October 2010 Page 26#27Georgia accounts Revenue for 83.0% of total Revenue consolidated +79.2% 167.0 revenues, BG 180.0 Bank 4.9% and 160.0 BNB 3.6% 140.0 +104.8% Positive 120.0 consolidated 93.2 100.0 operating 80.0 leverage achieved +56.4% 36.3 60.0 (16.4% q-o-q 45.5 basis and 4.2% y- 40.0 29.1 19.6 56.9 o-y basis) as 10.8 20.0 25.9 Revenue grew 18.3 0.0 9.1% q-o-q and 1H 2005 1H 2006 Total Recurring Net interest income Operating Costs lagged with 3.3% Revenue, quarterly -2.8% -2.2% Revenue as a function of loan book change 2,200 162.3 158.6 2,150 2,100 61.4 60.4 61.7 2,050 2,000 1,950 1,900 105.6 101.9 96.9 1,850 1,800 1,750 1H 2009 1H 2010 1,700 1H 2007 1H 2008 Net non interest income q-o-q growth. GEL mln +2.7% 100 Standalone 86.6 90 85.9 86.1 7.8 82.5 Revenue grew 81.1 5.0 81.7 80.6 79.3 7.8 80 77.4 75.9 6.5 9.4 7.1 9.0 15.3% q-o-q 14.9 10.7 10.4 9.5 1.7 10.7 70 8.8 10.8 8.8 13.2 1.9 1.4 while standalone 12.9 2.2 7.1 6.5 5.7 60 1.4 10.2 10.9 1.8 2.3 2.2 2.3 7.3 11.1 Total Recurring 2.2 10.9 10.2 11.6 12.0 12.6 50 10.3 Operating Costs 40 grew by 5.6% q- 30 o-q, achieving 55.8 58.9 56.4 49.8 52.4 49.5 48.9 51.7 62.4% of 46.0 45.3 20 positive standalone 10 Total Revenue operating 0 leverage 8.4% on Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 q-o-q and 1.8% Net Interest Income on q-o-q basis Net Income From Documentary Operations Net Other Non-Interest Income Net Fee & Commission Income Net foreign currency related income Lobko BANK OF GEORGIA www.bog.ge/ir Revenue GEL 162.3 mln Revenue GEL 158.6 mln Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Revenue by segments Q2 2010 Belarus 3.6%, GEL3.0 mln (+1.6%-9-0-9) Ukraine 4.9%, GEL4.1 mln (+33.5% q-0- 9) Aldagi BCI 5.7%, GEL4.7 mln (+4.4% q-o-q) Other 2.7%, GEL2.3 mln (-62.6% q-0- 9) BOG Standalone 83.0%, GEL68.7 mln (+15.7% q-0- q) October 2010 Page 27#28Costs Recurring operating costs 100.0 +3.4% 1H y-o-y 94.1 Employees 279 Q2 2010 2,968 93.3 91.0 4,911 393 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 1H 2005 1H 2006 1H 2007 1H 2008 1H 2009 1H 2010 49.9 40.3 45.8 ..lll 19.5 24.2 18.7 30.4 1.7 13.4 11.0 53.0 Q1 2010 2,825 5,048 621 Q4 2009 2,674 4,781 45.0 -1.7% 1H y-o-y 617 Q3 2009 2,669 4,798 707 Q2 2009 2,665 4,914 757 Q1 2009 2,692 4,964 786 Q4 2008 2,741 4,977 +8.5% 1H y-o-y 842 Q3 2008 3,853 6,196 49.0 45.2 836 Q2 2008 3,619 5,911 824 Q1 2008 3,056 4,926 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Group Consolidated BoG Standalone BG Bank Personnel costs Other recurring operating costs Recurring operating costs GEL mln 60 50 50 40 40 +3.3% q-o-q +3.2% y-o-y 48.9 49.6 47.9 47.8 46.6 46.3 44.6 46.3 45.0 44.5 100 30 21.3 21.6 22.2 18.7 24.9 23.1 22.7 22.6 24.1 22.9 25.7 27.3 28.4 25.6 23.1 22.0 23.2 22.3 22.5 23.4 10 20 20 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 ■Other Recurring Operating Costs 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Personnel Costs Q1 2009 Lobko BANK OF GEORGIA www.bog.ge/ir Costs by segments Aldagi BCI, 8.0% GEL 3.8 mln (+13.9% q-o-q) BNB, 4.2% GEL 2.0 mln (+12.1% q-o-q) BG Bank, 8.9% GEL 4.2 mln (+7.1% q-o-q) Other, 11.0% GEL 5.3 mln (-16.8% q-o-q) BOG standalone, 67.9% GEL 32.5 mln (+5.6% q-o-q) October 2010 Page 28#29Consolidated Net Normalized GEL mln 45.0 Operating Income (NNOI) 40.0 38.7 36.6 37.3 36.3 37.1 34.3 increased 18.1% 34.3 35.0 30.8 q-o-q up 2.1% 29.6 30.0 у-о-у 25.0 Operating profit, Provision expense Normalized net operating income Net provision expense BoG standalone GEL mln 160 +18.1 q-o-q 140 35.0 120 103.9 100 80 Related to the armed conflict in August 2008 60 Consolidated 20.0 60 Net provision 15.0 40 40 expenses of GEL 13.1 mln 10.0 20 8.6 6.7 29.6 24.0 18.2 17.7 12.3 6.2 in Q2 2010, (4.5) 5.0 0 GEL 7.4 mln in Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 0.0 Q1 2010 and -20- Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 GEL 40.7 mln in -40 Q2 2010 Profit (loss) before provisions/NI Net operating cash flow improved by 67.9% y-o-y GEL mln 60.0 45.1 1H 2010 1H 2009 40.5 Bank of 40.0 33.7 31.9 28.3 Georgia 36.8 36.8 32.4 34.0 26.4 16.8 19.5 unaudited 20.0 Standalone Net 8.7 5.1 2.6 Cash flow from operating activities Interest received Interest paid 199,514 188,779 (83,179) (99,394) 0.0 provision (1.1) (4.3) Fees and commissions received 33,641 32,133 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Fees and commissions paid (6,349) (5,313) expenses -20.0 declined by Net realised gains (losses) from trading securities 2,140 1,609 Net realised gains from investments securities 307 79.1% y-o-y -40.0 Net realised gains from foreign currencies 15,747 11,368 Recoveries of loans to customers 15,354 8,213 -60.0 Net Income for (59.0) Insurance premiums received 21,827 19,314 1H 2010 was -80.0 Insurance claims paid (13,449) (14,632) (76.1) Other operating income received 10,580 12,939 GEL 36.2 mln -100.0 Salaries and other employee benefits paid (50,519) (47,430) (102.3) General, administrative and operating expences paid (32,216) (34,413) -120.0 Profit Before Provisions Net Income Net cash flow from operating activities 113,091 73,480 Growth rate 53.9% Lobko BANK OF GEORGIA www.bog.ge/ir October 2010 Page 29#308.3% 8.3% 100 7.2% 40 Net Interest Margin (NIM) improved from 8.0% in Q1 2010 to 8.3% in Q2 2010 as Cost of Funds declined Profitability & selected ratios Cost of funds 120 808 60 00 10 94.5 49.4 49.8 98.8 42.4 101.8 45.1 43.0 44.8 Net loans/Client deposits 10% 200% 8.6% 8.5% 9% 180% 174.4% 8.3% 168.7% 170.6% 7.8% 160.6% 93.7 95.0 8% 160% 89.0 147.8% 7% 136.9% 140% 6% 104.1 120% 52.4 5% 100% 4% 80% 3% 60% 2% 20 1% 40% 0 0% 20% Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 0% Interest Income Interest Expense Cost of Funds Net interest margin (annualized) 12% 140.3% 131.9% 131.7% 127.5% Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Cost Income Ratio 200% 9.8% 10.1% 10% 8.9%9.1% 9.3% 9.8% 9.0% 9.1% 160% 9.9% 9.0% 8.5% 9.1% 8% 8.1% 8.6% 8.8% 8.9% 8.0% 8.3% 8.6% 7.5% 7.8% 8.0% 120% 6% 4% 2% 0% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 -Net Interest Margin, Group Consolidated Net Interest Margin, BoG Standalone Lobko BANK OF GEORGIA www.bog.ge/ir 90.0% 128.3% A 65.3% 80% 60.8% 59.1% 52.9% 54.9% 49 30 60.7% 49.370 48.3% 57.8% 50.8% 58.0% 50.5% 53.9% 56.1% 49.6% 40% 50.0% 45.9% 44.8% 44.0% 43.0% 45.3% 43.9% 41.0% 38.3% 0% Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 -Cost/Income Ratio, Consolidated Cost/Income Ratio, Bank of Georgia Standalone Cash Cost/Income Ratio, Consolidated October 2010 Page 30#31Summary Operating environment in Georgia is improving and 2010 looks promising for Bank of Georgia: Consumer confidence and economic activity is increasing with a 7.5% q-o-q and 46.2% y-o-y increase in client deposits in Q2 2010; Q2 2010 Net remittances increased by 14.6% y-o-y; GDP real growth rate: 8.4% y-o-y Q2 2010; 6.0% 2010F; growth mainly driven by donor money inflows, export growth and credit growth in1H 2010; VAT collection up by 20%+ y-o-y in recent months, 1H 2010 trade turnover up by 18% y-o-y, NBG reserves still on high level at around USD 2 bln, exceeding M2 by 1.5 times Strong operating leverage achieved, 16.4% q-o-q and 4.2% y-o-y basis driven by: Improvement in NIM from 8.0% to 8.3%, as our cost of funds decreased from 8.6% to 8.3%, as a result of deposit rate cuts Solid growth of higher yielding retail loan book Increase of Net Interest Income as lending activity picked up As a result Consolidated Cost/Income ratio decreased from 65.3% in Q1 to 55.5% in Q2 2010, standalone Cost/Income ratio decreased from 53.9% in Q1 2010 to 49.9% in Q2 2010 As of 31 July 2010, the outstanding Eurobonds maturing in February 2012 amounted at US$149 million, out of original US$ 200 million, in August 2010 the Bank has signed agreements for US$ 50 million 5-year credit facilities with EBRD YTD loan book growth funded through deposit inflows locally and internationally. WM Representative Office opened in London Outlook for 2H 2010 • • The growth rate of balance sheet in Q3 lower than Q2 due to seasonality effect as business activities in July and August is usually low Growth expected to resume in Q4 • Higher yielding retail loan book expected to grow faster in 2nd half of the year • Confident to deliver previously announced management target for 2010 We came out strong from the downturn and are well positioned to take advantage of our high liquidity and strong capital to achieve growth at the right price.... .....by implementing our strategy to become more efficient, deposit funded lending machine Lak BANK OF GEORGIA www.bog.ge/ir October 2010 Page 31#32LUSHOƆCML ¿563N BANK OF GEORGIA Economy Annex October 2010#33FDI and Net remittances Cumulative net FDI breakdown by origin, 2004 - Q2 2010 Country FDI breakdown by sectors, Q2 2010 Financial sector, 6.1% Agriculture, fishing, 1.2% Other services, 14.3% Industry, 21.3% Energy sector, - US$ '000s % of total UK 770,488 11.6% UAE 613,245 9.2% Turkey 565,356 8.5% Netherlands 571,968 8.6% British Virgin Islands 472,830 7.1% Real estate, 16.9% Kazakhstan 258,077 3.9% Azerbaijan 330,016 5.0% Czech Republic 341,867 5.1% Cyprus 275,657 4.1% Subtotal 4,199,503 63.2% Other countries 2,449,570 Total 6,649,073 36.8% 100.0% Cumulative net remittances, 2007-Q2 2010 Country Russia USA Greece Spain Ukraine Turkey UK Israel Kazakhstan Germany Other countries Total Transports and communications, 53.0% 1.3% Construction,- 4.1% Hotels and restaurants, -7.6% Net remittances by countries, Q2 2010 Germany, 1.5%- Other countries. 11.6% US$ '000s 1,717,761 % of total 60.8% Kazakhstan, 0.7%- Israel, 1.4% 272,138 9.6% UK, 0.7% 157,725 5.6% 78,011 2.8% Turkey, 3.6%- 137,785 4.9% Ukraine, 5.1% 62,096 2.2% Spain, 2.4% 22,738 0.8% 26,879 1.0% Greece, 7.0% 28,465 1.0% 21,451 0.8% 298,575 10.6% 2,823,623 100.0% Source: National Bank of Georgia, National Statistics Office of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir USA, 8.6% Russia, 57.4% October 2010 Page 33#34FX Reserves and Inflation FX reserves, $ mln 2500 2000 2003-2009 CAGR 48.6% Fxreserves FX/M2 17 1.7 1500 0.8 0.8 1.1 1.0 1000 0.8 US$0.93 bn US$0.49 bn 500 US$0.38 bn US$0.19 bn 1.3 US$1.48 bn US$ 1.36 bn 0 2003 2004 2005 2006 2007 2008 NBG Interventions 2.0 1.7 1.8 1.6 1.4 1.5 US$ 2,20 bn 1.2 1.0 US$ 2.11 bn US$ 1,95 bn 0.8 0.6 0.4 0.2 0.0 2009 Mar '10 Aug-10 Inflation NBG Interventions -Average Lari/US$ 140 600.0 2.5 115.7 432.4 120 101.6 105.9 106.0 108.3 10.0% 400.0 100 2.0 200.0 880 8.89 11.0% 107.9 10 8.2% 8 9.2% 9.2% 3.7% 5.5% 5.8% '6 197.0 156.7 124.0 60 1.5 6.2% 0.0 (42.9) 2004 2005 2006 2007 2008 2009 Mar '10 Jun-10 40 2.2% 2.8% 4 2 (200.0) (182.7) 1.0 20 0 6120 ∞ 6 + NO 24 14 (400.0) (341.2) 0.5 (600.0) Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Mar-10 Jun-10 (660.8) (800.0) 0.0 Real effective rate, Jan05-100 (LHS) CPI (e-o-p) CPI (average) Loka Source: National Bank of Georgia, Ministry of Finance of Georgia BANK OF GEORGIA www.bog.ge/ir October 2010 Page 34#35Public debt: No burden to Public Finances Georgia's economy is quite unleveraged compared to other emerging market economies Georgia's public debt is 40.8% of GDP in 2009 down from 58.0% in 2003 The external debt is all multilateral or bilateral and significant share is highly concessional This explains why the government debt service burden is low Eurobonds debut issuance of US$500 mln in April 2008, maturity date 2013 Breakdown of public debt US$ billion 6.0 4.0 60.0% 46.1% 5.0 52.5% 50.0% 1.03 40.3% 32.8% 1.00 40.8% 40.0% 0.97 3.0 26.4% 30.0% 0.83 28.5% 0.85 0.89 0.85 4.15 2.0 20.0% 3.38 2.68 1.86 10.0% 1.73 1.70 1.79 10 1.0 External public debt service US$ mln 180 8.8% 160 140 120 100 60 80 60 40 40 20 7.3% 7.1% 110.6 103.8 0 2004A 2005A 152.2 0.0 0.0% 2004A 2005A 2006A 2007A 2008A 2009 A 2010F External public debt Internal public debt Total public debt as % of GDP Source: "The Georgian Economy Overview", Government of Georgia Presentation, Public debt as % of GDP, 2009 Russia Turkey 10% 9% Bulgaria 8% Ukraine 7% Lithuania 6% 5.20% Slovak Republic 4.4% 5% 169.3 Georgia 4% 136.7 Poland 3.4% 118.7 3% 102.1 Latvia 2.9% 2% Kazakhstan Hungary 2006A 2007 A 2008A 2009A 1% 0% 2010F External debt service External debt service as % of budget revenue Source: "The Georgian Economy Overview", Government of Georgia Presentation, June 2009. Labkon BANK OF GEORGIA www.bog.ge/ir Estonia Czech Republic 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: World Bank, International Monetary Fund October 2010 Page 35#36Fiscal indicators: The worst seems past Overall fiscal balance of the state budget, 2004-2011F GEL mln 0.0 0.0% 2006 2007 2008 2009 2010F 2011F -200.0 -1.0% -468.9 -400.0 -815.7 -2.0% -935.7 -600.0 -3.0% -1,258.6 -1,390.1 -4.5% -800.0 -4.0% -3.4% -1,720.5 -1,000.0 -5.0% -4.8% -1,200.0 -6.0% -1,400.0 -7.0% -6.6% -7.3% -1,600.0 -8.0% -1,800.0 -9.0% -2,000.0 -9.4% -10.0 Overall fiscal balance Fiscal revenue performance GEL mln 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 January February March April May ■2007 Source: National Bank of Georgia, National Statistics Office of Georgia Labkon BANK OF GEORGIA www.bog.ge/ir June -Overall fiscal balance as % of GDP 2008 July 2009 August 2010 September October November December October 2010 Page 36#37Trade structure Import structure by country, Q2 2010 Kazakhstan, 1.3% Armenia, 1.0%- Turkmenistan, 1.4% USA, 4.1% Others, 10.1% EU Countries, 29.5% 3.1% Export structure by country, Q2 2010 China, 1.5% United Arab Emirates, 2.1% Kazakhstan, 2.4%- Russia, 3.9% Other, 10.0% Turkey, 17.0% China, 6.0% Russia, 5.4% Ukraine, 11.1% Azerbaijan, 8.7% Turkey, 18.2% EU Countries, 13.8% USA, 13.7% Armenia, 9.5% Azerbaijan, 14.9% Import structure by product, Q2 2010 Ferrous Metal Paper, 2.1% Products, 3.2% Sugar, 0.9% Ukraine, 6.8% Canada, 4.5% Export structure by product, Q2 2010 Plastic, 3.7%- Cereals, 3.3%- Pharmaceuticals, 4.0% Apparel & footwear, 4.0% Ferrous Metals, 2.8% Vehicles, 8.4% Others, 34.1% Mechanical Equipment & Oil & Gas, 18.1% Electrical Machinery, 15.5% Source: National Statistics Office of Georgia www.bog.ge/ir LOORIN BANK OF GEORGIA Pharmaceuticals, 1.8% Others, 16.6% Ferrous Metals. 32.4% Vessels & Aircraft, 10.8% Oil & Gas, 5.6% Equipment & Rail Cars, 1.7% Fertilizers, 5.1%- Cement, 0.1%- Gems & Precious Stones, 4.6% Ores, 4.8% Vehicles, 5.8% Beverages, Spirits & Vinegar, 10.5% October 2010 Page 37#38Caution Regarding Forward-Looking Statements This presentation contains statements that constitute "forward-looking statements", including, but not limited to, statements relating to the implementation of strategic initiatives and other statements relating to our business development and financial performance. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macroeconomic, governmental, legislative and regulatory trends, (2) movements in local and international currency exchange rates, interest rates and securities markets, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties and developments in the markets in which they operate, (6) management changes and changes to our group structure and (7) other key factors that we have indicated could adversely affect our business and financial performance, which are contained elsewhere in this presentation and in our past and future filings and reports, including those filed with the NSCG. We are under no obligation (and expressly disclaim any such obligations) to update or alter our forward-looking statements whether as a result of new information, future events, or otherwise. Lobko BANK OF GEORGIA www.bog.ge/ir October 2010 Page 38#39Contact Irakli Gilauri Chief Executive Officer +995 32 444 109 [email protected] Lobko BANK OF GEORGIA www.bog.ge/ir Macca Ekizashvili Head of Investor Relations Head of Representative Office, London 84 Brook St, London, W1K 5EH +44 203 178 4052 [email protected] October 2010 Page 39