Bank of Georgia Financial Analysis

GEORGIA ABSORBS NEGATIVE SHOCK FROM TURKEY Summary Diversified economic linkages serve Georgia well, minimizing negative impact from Turkey Despite reduced earnings from Turkey since Aug-18, Georgia's overall earnings from exports, remittances and tourism from other countries continued strong growth Georgia's exposure to Turkey, 2018 GEL's real exchange rate vs. TRY and GEL's REER 180% 180% Turkey Other countries GEL appreciated by 14.0% y/y in real terms vs TRY GEL'S REER appreciation was 3.4% y/y in December 2018, 160% 160% External flows as GEL remains competitive toward US$ % change US$ mn y/y Share in total, % % change US$ mn y/y 140% 140% Exports Tourism 232.7 7.4% 6.9% 3,129.4 24.2% 120% 120% 421.8 9.1% 13.2% 2,780.7 20.0% 100% 100% Remittances 105.6 -3.4% 6.7% 1,474.9 15.8% 80% 80% Import 1,470.1 7.0% 16.1% 7,652.2 16.6% Aug-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Oct-14 Apr-15 Oct-15 Apr-16 Nov-16 May-17 Nov-17 May-18 Dec-18 Trade deficit 1,237.4 6.9% 21.5% 4,522.9 11.8% GEL/TRY RER (Jan-2010-100) Source: Geostat, NBG, GNTA, G&T BANK OF GEORGIA GEL'S REER (Jan-2010=100) Source: NBG Note: Index growth means GEL's appreciation and decline means GEL's depreciation 54 54

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