Retail Banking Financial Update

NATIONAL BANK OF GEORGIA'S SUPERVISORY PLAN 6 In March 2020, the NBG introduced an updated Supervisory Plan for the banking sector aimed at alleviating the negative financial and economic challenges created by the COVID-19 pandemic. The measures were mainly focused on capital adequacy and liquidity initiatives that allow banks to use existing regulatory capital buffers to support customers in the current financially stressed circumstances, to continue normal business activities, and to support the economy through ongoing lending operations. • CAPITAL ADEQUACY INITIATIVES Combined buffer - the conservation buffer requirement of 2.5% of risk- weighted assets reduced to 0% indefinitely Pillar 2 requirements: Currency induced credit risk buffer (CICR) requirement reduced by 2/3rds indefinitely The phase-in of additional credit portfolio concentration risk buffer (HHI) and net GRAPE buffer requirements on CET1 and Tier 1 capital, planned at the end of March 2020, postponed indefinitely The possibility of fully or partially releasing the remaining requirements of Pillar 2 buffers (HHI, CICR, net GRAPE), if necessary, remains open During the period the banks are allowed to partially or fully use these buffers, they are restricted to make capital distribution in any form COVID-19 GENERAL LOAN LOSS PROVISIONING NBG requested the Georgian banks to create general provisions under the local regulatory accounting basis used for calculation of capital adequacy ratios in 1Q20. The specific quantum of the provision reflected the NBG's current expectation of estimated credit losses on the lending book of the banking system for the whole economic cycle. The NBG considered the banking system capital ratios to be sufficiently in excess of the expected minimum capital requirements, to be able to absorb the upfront general provision, whilst maintaining sufficiently comfortable buffers over the required minimum capital ratios LIQUIDITY INITIATIVES Liquidity coverage ratio (LCR) requirements (for local and foreign currency, as well as total requirement) may be revisited and reduced, if necessary. On 1 May 2020, the NBG temporarily cancelled the 75% LCR requirement for local currency for a one-year period, or until further communicated by the NBG Mandatory reserve requirements may be revisited and reduced, if necessary The eligibility criteria for repo-eligible securities has already been extended by the NBG and may be revisited further, if necessary, to support the local currency liquidity OTHER INITIATIVES The NBG will not impose any monetary sanctions in case of breach of economic normatives and limits driven by external factors (e.g. reserves, exchange rate depreciation) NBG on-site audits, except for ongoing anti-money laundering reviews, postponed indefinitely All new regulatory changes and requirements postponed until September, 2020, or until further communicated by the NBG. This does not apply to regulations with regard to open banking, XBRL reporting and resolution framework

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