3rd Quarter Results

3rd Quarter Results

Bank of Georgia

JSC Bank of Georgia Q3 2009 and YTD 2009 Consolidated Results Tbilisi, 6 November, 2009

Tbilisi, 6 November, 2009

1.68 GEL/US$ 30 September 2009 period end

1.67 GEL/US$ 9 month 2009 average

1.67 GEL/US$ Q3 2009 average

1.66 GEL/US$ 30 June 2009 period end

1.66 GEL/US$ Q2 2009 average

1.41 GEL/US$ 30 September 2008 period end

1.47 GEL/US$ 9 month 2008 average

1.43 GEL/US$ Q3 2008 average

JSC BANK OF GEORGIA REPORTS Q3 2009 AND YTD 2009 RESULTS

Millions, unless otherwise noted   Q3 2009   Growth q-o-q 1
 
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$   GEL
Total Operating Income (Revenue)2 47.3 79.3 -2%
Recurring Operating Costs 26.8 45.0 -3%
Normalised Net Operating Income3 (NNOI) 20.5 34.3 0%
Profit Before Provisions 19.3 32.4 -5%
Net Provision Expenses 17.9 30.0 -26%
Net Income/(Loss) 1.6 2.6 NMF
 
 
Total Assets 1,777.0 2,980.2 2%
Net Loans 989.4 1,659.3 -5%
Client Deposits 705.1 1,182.5 15%
Tier I Capital Adequacy Ratio (BIS)4 25.4% 6%
Total Capital Adequacy Ratio (BIS)5 34.6% 1%
Tier I Capital Adequacy Ratio (NBG) 20.4% 14%
Total Capital Adequacy Ratio (NBG) 21.2% 15%
 
YTD 2009 Growth y-o-y 1
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$ GEL
Total Operating Income (Revenue)2 144.1 241.6 -4%
Recurring Operating Costs 81.1 135.9 -5%
Normalised Net Operating Income3 63.0 105.7 -4%
Profit Before Provisions 61.6 103.2 -13%
Net Provision Expenses 61.3 102.8 -13%
Net Income/(Loss) 2.0 3.4 161%

1 Compared to the respective period in 2008 and 2009; growth calculations based on GEL values.

2 Revenue includes Net Interest Income and Net Non-Interest Income.

3 Normalised for Net Non-Recurring Costs.

4 BIS Tier I Capital Adequacy Ratio equals Tier I Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I.

5 BIS Total Capital Adequacy Ratio equals Total Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I

Bank of Georgia (LSE: BGEO, GSE: GEB) (the “Bank”), Georgia’s leading bank, announced today its Q3 2009 and YTD 2009 consolidated results (IFRS-based, derived from management accounts), reporting a Q3 2009 Net Income of GEL 2.6 million and YTD 2009 Net Income of GEL 3.4 million.

Quarter highlights

  • Consolidated Client Deposits grew 15.3% q-o-q to GEL 1,183 million, driven by:
    • 16.3% q-o-q growth of Bank of Georgia Standalone Client Deposits to GEL 1,058 million, of which
      • Wealth Management Client Deposits grew 26.8% q-o-q to GEL 131.4 million
      • Retail Banking Client Deposits grew 16.2% q-o-q to GEL 331.2 million
      • Corporate Banking Client Deposits grew 14.3% q-o-q to GEL 594.9 million
    • Consolidated NPLs of GEL 139.8 million, improved by 6.0% q-o-q, driven by:
      • 2.4% q-o-q decrease of Bank of Georgia Standalone NPLs to GEL 115.9 million
    • Consolidated Net Provision Expenses of GEL 30.0 million improved 26.3% q-o-q, driven by:
      • 40.2% decline in Net Provision Expenses of Bank of Georgia (Standalone) to GEL 17.7 million, while BG Bank’s Net Provision Expense of GEL 12.9 million grew by 17.1% q-o-q
    • Total Capital Adequacy Ratio of Bank of Georgia (Standalone) grew to 21.2% from 18.4% in Q2 2009 and Tier I Capital Adequacy Ratio of Bank of Georgia (Standalone) grew to 20.4% from 17.8% in Q2 2009 (both ratios by NBG standards), mostly a result of the Georgian FSA’s decision to reduce the risk-weighting of foreign currency denominated loans from 175% to 150%
    • Acquisition of HR Soft and new core banking system, to be fully deployed in 2011 will further increase the Bank’s operational efficiency
    • Continued downscaling of Ukrainian operations have resulted in the closure of 13 branches and headcount reduction by 168 employees since the year end 2008
    • BG Bank launched private banking in Ukraine
    • The first equity capital markets transaction since the beginning of financial crisis in 2008 accomplished as BG Capital completed a US$13 million equity placement for Sintal Agriculture in Ukraine
    • Since the end of the reporting period, new senior management appointments include Archil Gachechiladze, as Deputy CEO for Corporate Banking in Georgia and Nikoloz Shurgaia, Deputy CEO, International Banking focusing on Belarus

Q3 2009 summary of the Bank’s consolidated results

In Q3 2009, the Bank’s Total Operating Income (Revenue) amounted to GEL 79.3 million, a 1.6% decline q-o-q (down 7.7% y-o-y), a result of a 1.1% q-o-q decrease of Net Interest Income to GEL 48.9 million and a 2.4% q-o-q decline of Net Non-Interest Income to GEL 30.4 million (up 12.3% y-o-y). The decline of Net Interest Income during the quarter was due to contraction of consolidated gross loan book, which was down by 3.8% q-o-q (lower rate of decline than 8.5% in Q2 2009). Despite high liquidity during the quarter, Net Interest Margin (NIM) stood at 9.1% in Q3 2009. Lower Net Non-Interest Income was a result of an 8.4% q-o-q decrease (down 31.4% y-o-y) of Net Foreign Currency Related Income to GEL 6.5 million, attributed to the decreased FX transaction volumes and a 9.3% q-o-q decrease of Net Fees and Commission Income to GEL 10.5 million (down 18.8% y-o-y), reflecting the contraction of the loan book during the quarter. Net Income from Documentary Operations increased 30.6% q-o-q to GEL 2.3 million, (up 37.3% y-o-y), a result of the increase in trade finance activities. Net Other Non-Interest Income increased 3.5% q-o-q to GEL 11.1 million, mostly due to the increase in brokerage income during the quarter.

NNOI in Q3 2009 increased 0.3% q-o-q to GEL 34.3 million, (down 5.4% y-o-y), on the back of 2.9% q-o-q improvement of Total Consolidated Recurring Operating Costs for the quarter to GEL 45.0 million (down 9.4% y-o-y). Personnel Costs, the largest Recurring Cost item, was reduced 3.8% q-o-q largely an effect of the cost cutting measures implemented at BG Bank, Ukraine. Such measures include the closure of 13 branches bringing the number of branches to 18 and headcount reduction by 168 full time employees (or 23% reduction) since the beginning of the year. Total Recurring Operating Costs excluding Personnel Costs reached a total of GEL 22.6 million in Q3 2009, a 2.1% decrease q-o-q. Normalized Cost/Income ratio (Costs exclude Net Non-Recurring Costs) decreased to 56.7 % in Q3 2009 from 57.5% in Q2 2009 and 57.8% in Q3 2008. Total Non-Recurring Costs for the quarter amounted to GEL 1.9 million, that include fees and commissions related to the increase of the Bank’s GDRs block listing on the London Stock Exchange in August 2009.

The Bank’s Net Provision Expense for the quarter amounted to GEL 30.0 million, compared to the Net Provision Expense of GEL 40.7 million in Q2 2009 and GEL 103.2 million in Q3 2008. The 26.3% improvement of Net Provision Expense for the quarter was largely driven by the improving market environment in Georgia. The Bank’s Net Provision Expense in Georgia amounted to GEL 17.7 million (compared to Net Provision Expense of GEL 29.6 million in Q2 2009), while BG Bank’s Net Provision Expense reached GEL 12.9 million (compared to Net Provision Expense of GEL 11.0 million in Q2 2009), or 17.1% q-o-q increase, reflecting the management’s conservative approach to provisioning in Ukraine.

YTD 2009 summary of the Bank’s consolidated results

In nine months of 2009 the Bank’s Total Operating Income (Revenue) decreased 4.5% y-o-y to GEL 241.6 million, due to 8.3% y-o-y decrease in Net Interest Income to GEL 150.8 million, which more than offset a 2.6% y-o-y increase in Net Non-Interest Income to GEL 90.8 million. The decline of Net Interest Income reflects the decrease of the consolidated gross loan book from GEL 2,059.7 million at the end of Q3 2008 to GEL 1,833.1 million in Q3 2009. Net Foreign Currency Related Income declined by 32.5% y-o-y to GEL 22.3 million mostly due to decrease in volumes and lower FX volatility throughout the year. The Bank’s Net Fees and Commission Income decreased 8.2% y-o-y to GEL 33.2 million due to decline in lending activity, while Net Income from Documentary Operations grew by 26.4% y-o-y to GEL 6.3 million. Net Other Non-Interest Income reached GEL 28.9 million, up 103.7% y-o-y, mostly driven by the increased profitability of the Bank’s insurance subsidiary, resulting in the Net Insurance Income of GEL 13.0 million for the nine months of 2009, up 123.2% y-o-y. Total Recurring Operating Costs decreased by 4.9% y-o-y to GEL 135.9 million, mostly due to a 17.0% y-o-y decline of Personnel Costs, a result of the cost optimization measures, including headcount reduction implemented by the Bank in Georgia and Ukraine.

Net Provision Expense in nine months of 2009 amounted to GEL 102.8 million, which compares to GEL 117.8 million Net Provision Expense booked by the Bank in Q3 2008. The Bank had Net Provision Expense of GEL 33.3 million in Ukraine and GEL 71.3 million in Georgia. The Bank reported Net Income of GEL 3.4 million for the nine months of 2009.

On 30 September 2009, the Bank’s Consolidated Total Assets stood at GEL 3.0 billion, up 2.5% from 30 June 2009, down 8.6% from 31 December 2008 and down 5.5% from Q3 2008. The Bank’s Net Loans decreased by 5.2% q-o-q (down 14.1% y-o-y) to GEL 1,659.3 million.

In Q3 2009 loan loss reserves amounted to GEL 173.7 million or 9.5% of consolidated gross loan book, up from 8.1% in Q2 2009, the increase due to the decline of the gross loan book in Georgia and increased reserves in Ukraine. NPLs declined to GEL 139.8 million (down from GEL 148.8 million in Q2 2009), representing 7.6% of the consolidated gross loans as at 30 September 2009, compared to 7.8% in Q2 2009.

Since the end of Q2 2009, the Bank witnessed an inflow of client deposits in Georgia leading to a 15.3% q-o-q increase of consolidated Client Deposits during Q3 2009 to GEL 1,182.5 million as of 30 September 2009, a 4.4% increase since Q1 2009, and nearly reaching the year-end 2008 Client Deposits of GEL 1,193.1 million. Since year-end 2008 client deposits in Georgia increased from GEL 1,045.2 million to GEL 1,057.5 million and in Ukraine decreased from GEL 127.4 million to GEL 117.1 million as of 30 September 2009. Client Deposit growth trend continued throughout October both in Georgia and Ukraine, increasing 5.1% month-on-month to GEL 1,111.5 million in Georgia and 2.1% month-on-month to GEL 119.6 million in Ukraine as of 31 October 2009.

JSC Bank of Georgia (Standalone)

Bank of Georgia’s banking operations in Georgia, which are provided through JSC Bank of Georgia, reported Q3 2009 standalone Net Income of GEL 10.8 million, as compared to Net Income of GEL 0.9 in Q2 2009. The increase in Net Income for the quarter was a result of the lower provisions booked by the Bank, which stood at GEL 17.7 million on a standalone basis in Q3 2009 compared to provisions of GEL 29.6 million and GEL 24.0 million booked by the Bank in Q2 2009 and Q1 2009, respectively.

In Q3 2009 Total Operating Income amounted to GEL 61.5 million, down 1.3 % q-o-q and down 13.8 % y-o-y. Net Interest Income stood at GEL 44.5 million, down 2.1% q-o-q and down 14.6 % y-o-y, reflecting the 16.7% contraction of the standalone gross loan book since the year-end 2008. Net Non-Interest Income amounted to GEL 17.0 million, up 1.1 % q-o-q and down 11.6% y-o-y. The q-o-q increase of Net Non-Interest Income was mainly attributed to the 30.6% q-o-q increase of Net Income from Documentary Operations to GEL 2.3 million, which more than offset 1.9% q-o-q decline of Net Fees and Commission Income to GEL 8.1 million, a result of the decreased lending activity, and a 6.2% decline of the Net Foreign Currency Related Income to GEL 6.0 million. On a standalone basis, Bank of Georgia’s standalone Total Recurring Operating Costs increased 1.3% q-o-q to GEL 30.1 million. On a year-on-year basis, the Bank’s Total Recurring Operating Costs in Q3 2009 decreased 10.8%, mostly due to 23.5% decrease of Personnel Costs in Q3 2009 compared to Q3 2008. The Bank’s Net Provision Expense on a standalone basis during the quarter reached GEL 17.7 million, attributed mostly to the Bank’s retail banking loans.

Bank of Georgia’s YTD 2009 Total Operating Income on a standalone basis amounted to GEL 190.4 million down 8.9% y-o-y, a result of 4.9% y-o-y decline of Net Interest Income to GEL 140.4 million, and 18.6% y-o-y decline of Net Non-Interest Income to GEL 50.1 million. The decline of Net Non-Interest Income was mostly due to 37.2% y-o-y decline of Foreign Currency Related Income to GEL 18.0 million due to decreased FX transaction volumes. The Total Recurring Operating Costs of the Bank’s Georgian operations in the nine months 2009 declined by 5.7%, driven predominantly by 17.8% y-o-y decline of Personnel Costs and other cost containment measures implemented by the Bank. In September 2009, the Bank selected Temenos T24 as its new core banking software, expected to be fully deployed in 2011. The new core banking software will centralize the Bank’s IT functions and is expected to further increase the Bank’s operational efficiency.

Net Provision Expense in nine months of 2009 amounted GEL 71.3 million, resulting in YTD 2009 standalone Net Income of GEL 23.0 million.

As of 30 September 2009 Bank of Georgia’s Total Assets on a standalone basis stood at GEL 2.8 billion, up 2.5% q-o-q and 1.3% y-o-y. Net Loans declined 4.6% q-o-q to GEL 1.5 billion, down by 8.2% y-o-y. Reserve for loan losses at the end of Q3 2009 was up 7.5 % q-o-q reaching GEL 123.4 million, with reserve on RB and WM loan losses representing 62.5% of total Reserve for Loan Losses on a standalone basis, down from 65.7% in Q2 2009 and up from 52.7% in Q4 2008. NPLs stood at GEL 115.9 million, and represented 7.0% of the total gross loan book, an increase from the same ratio of 6.9% in Q2 2009, when the NPLs amounted to GEL 118.7 million on a standalone basis.

Breakdown of the Standalone Total Gross Loans, currency, loan loss reserves and NPLs by Business Units

GEL million   GEL   Foreign Currency   Gross Loans   LL Reserves   Net Loan Book   NPLs
RB 197.6 631.3 828.9 (73.3) 755.6 54.5
WM 0.6 57.2 57.8 (3.9) 53.9 0.0
CB 171.5 593.2 764.7 (46.3) 718.4 61.4
Total 369.7 1,281.6 1,651.3 (123.4) 1,527.9 115.9

In Q3 2009, the Bank’s client deposits in Georgia stood at GEL 1,057.5 million as compared to GEL 909.3 million in Q2 2009 and GEL 1,045.2 million on 31 December 2008. The deposit growth trend, which started mid-May 2009 continued through the end of October 2009, when Client Deposits reached GEL 1,111.5 million. The growth of Client Deposits during the period was mostly driven by the increase of Wealth Management client deposits that reached GEL 131.4 million as of 30 September 2009, up 35.9% YTD, up 86.5% y-o-y and up 26.8% q-o-q. Deposits from the Bank’s non-resident clients amounted to GEL 74.4 million, contributing 56.6% to the Wealth Management client deposits as of 30 September 2009. Retail Banking Client Deposits amounted to GEL 331.2 million, up 3.8% YTD, up 1.7% y-o-y and up 16.2% q-o-q. Corporate Banking Client Deposits stood at GEL 594.9 million, down 5.5% YTD, up 3.2% y-o-y and up 14.3% q-o-q.

Breakdown of Standalone Total Client Deposits by currency

  30-Sep-09       30-Jun-09       31-Dec-08
GEL million GEL   Foreign

Currency

  Total GEL   Foreign Currency   Total GEL   Foreign Currency   Total
RB 69.9 261.3 331.2 61.9 220.9 282.8 80.1 239.7 319.8
WM 4.6 126.7 131.3 5.1 102.4 107.5 9.1 89.6 98.7
CB 299.0 296.0 595.0 271.8 247.2 519.0 245.8 380.9 626.7
Total 373.5 684.0 1,057.5 338.8 570.5 909.3 335.0 710.2 1,045.2

As of 30 September 2009 Bank of Georgia on a standalone basis held market share of 33.6 %, 31.1%, 29.3 %, 40.4% and 35.3% by total assets, gross loans, client deposits, shareholders’ equity and regulatory capital, respectively in Georgia1.

As of 30 September 2009, the Bank’s Tier I Capital Adequacy Ratio was 20.4% and Total Capital Adequacy Ratio was 21.2% according to the Georgian FSA standards. The increase from Q2 2009 Tier I Capital Adequacy Ratio of 17.8% and Total Capital Adequacy Ratio of 18.4% is in part a result of reduction of the risk-weighting requirement of US$ denominated loans from 175% to 150% by the Georgian FSA in August 2009. According to the requirement of the Georgian FSA Tier I Capital Adequacy Ratio should be no less than 8% and Total Capital Adequacy Ratio no less than 12%.

The Bank’s NBG Liquidity Ratio (standalone) stood at 43.5% as of 30 September 2009, translating into GEL 325.4 million of excess liquidity.

BG Bank (Ukraine)

As reported, BG Bank’s strategy was adjusted in line with current market conditions. BG Bank is now focusing on closer integration with BG Capital’s investment banking operations in Ukraine, facilitating and financing trade between Ukraine and Georgia and Belarus, servicing SME corporate clients providing trade finance and short-term working capital facilities. BG Bank will also focus on private banking services to Ukrainian clients leveraging its private banking expertise in Georgia.

In Q3 2009 BG Bank’s Revenue amounted to GEL 5.3 million, down by 5.9% q-o-q and down 39.7% y-o-y. Recurring Costs declined 14.3% q-o-q to GEL 3.9 million, down 41.6% y-o-y, following the cost-control measures that are being implemented by BG Bank. In line with the Bank’s strategy of shifting the focus away from retail banking, such cost-control measures include the branch network optimization entailing the closure of 13 branches since the beginning of the year and headcount reduction by 23%. The implementation of these and other measures resulted in a 20.1% q-o-q decrease of Personnel Costs (the largest cost item of BG Bank) to GEL 2.6 million and an 82.9% decrease of Procurement and Operations Support Expenses to GEL 185.1 thousand during the quarter. BG Bank’s Net Provision Expense for the quarter amounted to GEL 12.9 million as compared to GEL 11.0 million in Q2 2009 and GEL 26.3 million booked in Q4 2008. In Q3 2009 BG Bank recorded Net Loss of GEL 5.5 million.

In nine months of 2009 BG Bank’s Revenue decreased to GEL 16.3 million, down 25.8% y-o-y. Recurring Costs stood at GEL 14.2 million, down 32.5% y-o-y. BG Bank’s Net Provision Charge for nine months of 2009 reached GEL 33.3 million as compared to GEL 0.3 million recovery of provision charge in same period in 2008. In nine months of 2009 BG Bank recorded Net Loss of GEL 23.6 million as compared to Net Income of GEL 682 thousand in nine months 2008.

BG Bank’s Total Assets decreased by 40.0% y-o-y to GEL 202.0 million (down 1.7% q-o-q), due to the growth in loan loss reserves by GEL 43.7 million over 12 month period, 31.4% y-o-y decrease in BG Bank’s client deposits and the effect of 50.7% devaluation of Hryvna against Lari. In Q3 2009 gross Loans to Clients decreased 27.5% y-o-y to GEL 186.2 million (down 2.2% q-o-q) and loan loss reserves increased 28.6% q-o-q to GEL 50.2 million or 26.9% of BG Bank’s Gross Loan Book. 56.5% of BG Bank’s gross loans is issued in Hryvna and the remaining loans are issued in foreign currency. As at 30 September 2009, BG Bank’s NPLs stood at GEL 23.9 million, or 12.8% of BG Bank’s Gross Loan book. The NPL coverage ratio stood at 210.0% as of 30 September 2009.

6 Market share data are derived from the information published by the National Bank of Georgia (www.nbg.gov.ge) and represent an aggregation of standalone financial information (non-IFRS, based on National Bank of Georgia requirements) filed by Georgian banks.

Breakdown of the BG Bank’s Total Gross Loans, currency, loan loss reserves and NPLs by Business Units

GEL millions   UAH   Foreign Currency   Gross Loan Book   LL Reserves   Net Loan Book   NPLs
RB 6.1 28.1 34.2 (12.9) 21.3 6.3
CB 99.2 52.8 152.0 (37.3) 114.7 17.6
Total 105.3 80.9 186.2 (50.2) 136.0 23.9

BG Bank’s Client Deposits increased by 2.0% q-o-q to GEL 117.1 million, reversing the trend of several previous quarters. BG Bank’s Total Liabilities stood at GEL 160.5 million in Q3 2009, down 30.0% y-o-y and up by 2.3% q-o-q. BG Bank has no international wholesale funding obligations and its leverage stood at a 3.9x as of 30 September 2009.

Breakdown of BG Bank’s Total Client Deposits by currency

  30-Sep-09   30-Jun-09   31-Dec-08
GEL million UAH Foreign Currency Total   UAH Foreign Currency Total   UAH Foreign Currency Total
RB 22.6 51.3 73.9 27.3 49.8 77.1 29.7 52 81.7
CB 37.2 6.0 43.2   34.0 3.7 37.7   36.2 9.5 45.7
Total 59.8 57.3 117.1 61.3 53.5 114.8 65.9 61.5 127.4

As of 30 September 2009, BG Bank’s Capital Adequacy Ratio (National Bank of Ukraine (NBU) standard) of BG Bank stood at 22.8% well above 8% required by NBU. In Q3 2009 Current and Quick Liquidity Ratios of BG Bank stood at 81.0% and 63.0%, respectively, higher than the NBU requirement of 40% for both ratios.

Belaruskiy Narodniy Bank, Belarus (BNB)

In Q3 2009 BNB’s Total Operating Income increased to GEL 2.1million, up 22.6% q-o-q. BNB’s Recurring Costs stood at GEL 1.5 million, down 0.5% q-o-q, resulting in a Net Income of GEL 617.0 thousand as compared to Net Income of GEL 196.8 thousand in Q2 2009, Net income of GEL 660.8 thousand in Q1 2009 and Net Loss of GEL 208.4 thousand in Q4 2008.

In nine months of 2009 BNB’s Total Operating Income reached GEL 6.2 million, while Total Recurring Operating Costs stood at GEL 4.4 million. NNOI equaled GEL 1.8 million, while Net Income in the nine months of 2009 amounted to GEL 1.5 million.

On 30 September 2009 BNB’s Total Assets stood at GEL 57.0 million, up 9.9% q-o-q and Gross Loans to Clients equaled GEL 26.5 million, down 3.2% q-o-q. Client Deposits amounted to GEL 17.9 million, up 10.3% q-o-q, while Total Liabilities stood at GEL 22.4 million, up 16.9% q-o-q.

Total Capital Adequacy stood at solid 58.3%, while Tier I Capital Adequacy Ratio amounted to 29.7%. National Bank of Belarus (NBB) requires Total Capital Adequacy ratio of 8% and Tier I Capital Adequacy Ratio of 4%. As of 1 January 2010, regulatory capital requirement by the NBB will increase from the current EUR 10 million to EUR 25 million. The Bank intends to participate in the capital increase to meet the NBB requirement.

BG Capital (formerly Galt & Taggart Securities)

In Q3 2009 BG Capital had made a significant progress in its development. BG Capital moved to a new HQ building in Kiev where it will be co-located with BG Bank’s private banking unit enabling better utilization of synergies between two business units. BG Capital also signed several interesting corporate finance mandates, one of which, a US$13 million equity placement for Sintal Agriculture was successfully completed in October 2009. The Sintal Agriculture transaction was the first equity capital markets transaction from Ukraine from the beginning of financial crisis in 2008.

BG Capital’s Revenue for the quarter amounted to GEL 1.8 million and Net Income to GEL 0.5 million. BG Capital’s Revenue for the nine months in 2009 was GEL 4.5 million and Net Income was GEL 1.4 million. In nine months of 2009 BG Capital’s Total Recurring Costs amounted GEL 3.3 million as compared to nine months 2008 GEL 6.8 million, down by 57.1% y-o-y.

Asset Management (AM)

In September 2009 Bank of Georgia completed the first stage of the restructuring of its asset management business entailing the sale of its controlling stake in GTAM, the Bank’s main vehicle for asset management business line since Q4 2007. The Bank’s asset management business line now includes JSC Liberty Consumer (“LC”), where the Bank owns 65.2% equity interest and which in turn owns 52.1% JSC SB Real Estate (“SBRE”).

Insurance

Aldagi BCI, the Bank’s wholly-owned insurance subsidiary, reported Q3 2009 Net Income of GEL 1.6million (as compared to Net Income of GEL 1.6 million in Q2 2009 and Net Loss of GEL 26 thousand in Q3 2008). Revenue grew by 145.1% y-o-y and 1.9% q-o-q to GEL 6.3 million. The notable improvement of Aldagi BCI’s cost control and efficiency and better claims management resulted in the 7.1% q-o-q decrease of Recurring Operating Costs to GEL 3.7 million. In nine months of 2009 Aldagi BCI’s Gross Premiums Written grew 11.0% y-o-y to GEL 54.7 million. Net Premiums Earned increased 36.6% y-o-y, reaching GEL 37.5 million. Revenue for nine months of 2009 equaled GEL 15.9 million, compared to GEL 6.5 million for the same period last year.

Comment:

“We are very pleased that in Q3 2009 we started to observe signs of improving operating environment, which in our view is driven by positive macro economic developments in Georgia. In our view this is a beginning of a positive long-term trend and I am pleased that the Bank is well positioned capital-and liquidity-wise to capture the growth opportunities which lie ahead in 2010 and beyond. In order to stimulate demand for our loan products we are decreasing interest rates on retail and corporate loans in Georgia in Q4 2009. At the same time we made two rounds of interest rate cuts on retail and wealth management time deposits, in August by 0.25-0.5% and in November by further 0.75% to 1.0%,” commented Nicholas Enukidze, Chairman of the Supervisory Board.

CONSOLIDATED Q3 2009 INCOME STATEMENT DATA

Period ended   Q3 2009   Q2 2009     Q3 2008  
Consolidated, IFRS based US$1   GEL US$2   GEL Growth US$3   GEL Growth
000s Unless otherwise noted (Unaudited) (Unaudited) Q-O-Q (Unaudited) Y-O-Y
Interest Income 55,874 93,707 57,028 94,547 -0.9% 77,138 108,379 -13.5%
Interest Expense 26,703 44,783 27,201 45,097 -0.7% 35,251 49,527 -9.6%
Net Interest Income 29,172 48,924 29,827 49,450 -1.1% 41,888 58,852 -16.9%
Fees & Commission Income 8,091 13,569 8,494 14,082 -3.6% 10,798 15,171 -10.6%
Fees & Commission Expense 1,819 3,050 1,502 2,490 22.5% 1,580 2,220 37.4%
Net Fees & Commission Income 6,272 10,519 6,992 11,592 -9.3% 9,218 12,951 -18.8%
Income From Documentary Operations 1,669 2,799 1,434 2,377 17.8% 1,592 2,237 25.1%
Expense On Documentary Operations 286 480 363 601 -20.1% 390 548 -12.4%
Net Income From Documentary Operations 1,383 2,319 1,071 1,776 30.6% 1,202 1,689 37.3%
Net Foreign Currency Related Income 3,858 6,471 4,261 7,064 -8.4% 6,717 9,437 -31.4%
Net Insurance Income / (Loss) 2,935 4,923 3,047 5,052 -2.6% 1,750 2,459 100.2%
Brokerage And Investments Banking Income 1,138 1,908 813 1,348 41.5% 82 115 1559.1%
Asset Management Income 125 210 154 256 -18.0% 105 148 41.9%
Net Investment Gains / (Losses) (314) (526) 185 306 NMF (814) (1,144) NMF
Other 2,717 4,557 2,255 3,739 21.9% 1,001 1,407 223.9%
Net Other Non-Interest Income 6,602 11,072 6,455 10,701 3.5% 2,125 2,985 270.9%
Net Non-Interest Income 18,115 30,381 18,779 31,133 -2.4% 19,261 27,062 12.3%
Total Operating Income (Revenue) 47,287 79,305 48,605 80,583 -1.6% 61,149 85,914 -7.7%
Personnel Costs 13,306 22,315 13,989 23,193 -3.8% 20,194 28,372 -21.3%
Selling, General & Administrative Expenses 6,278 10,529 6,017 9,976 5.5% 7,643 10,738 -1.9%
Procurement & Operations Support Expenses 1,762 2,955 2,345 3,888 -24.0% 2,523 3,545 -16.6%
Depreciation And Amortization 3,762 6,310 3,966 6,576 -4.0% 3,885 5,458 15.6%
Other Operating Expenses 1,700 2,851 1,623 2,691 5.9% 1,078 1,514 88.3%
Total Recurring Operating Costs 26,808 44,960 27,941 46,324 -2.9% 35,322 49,627 -9.4%
Normalized Net Operating Income / (Loss) 20,479 34,345 20,664 34,259 0.3% 25,827 36,287 -5.4%
Net Non-Recurring Income / (Costs) (1,136) (1,906) (175) (290) 555.2% (1,854) (2,605) -26.8%
Profit / (Loss) Before Provisions 19,342 32,439 20,489 33,967 -4.5% 23,973 33,682 -3.7%
Net Provision Expense 17,889 30,001 24,543 40,690 -26.3% 73,431 103,171 -70.9%
Pre-Tax Income / (Loss) 1,454 2,438 (4,054) (6,721) NMF (49,458) (69,489) NMF
Income Tax Expense / (Benefit) (113) (189) (1,445) (2,395) NMF (7,495) (10,531) NMF
Net Income / (Loss) 1,566 2,627 (2,609) (4,326) NMF (41,963) (58,958) NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6771 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6579 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2009

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4050 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2008

4 Change calculations based on GEL values

CONSOLIDATED 9 MONTHS 2009 INCOME STATEMENT DATA

  9 months 2009   9 months 2008  
Period ended US$1   GEL US$2   GEL Growth3
Consolidated, IFRS based (Unaudited) (Unaudited) y-o-y
000s Unless otherwise noted
Interest Income 172,969 290,087 217,192 305,155 -4.9%
Interest Expense 83,053 139,289 100,145 140,704 -1.0%
Net Interest Income 89,916 150,798 117,047 164,451 -8.3%
Fees & Commission Income 24,609 41,271 30,120 42,318 -2.5%
Fees & Commission Expense 4,786 8,026 4,349 6,110 31.4%
Net Fees & Commission Income 19,823 33,245 25,771 36,208 -8.2%
Income From Documentary Operations 4,693 7,871 4,608 6,474 21.6%
Expense On Documentary Operations 917 1,538 1,043 1,465 5.0%
Net Income From Documentary Operations 3,776 6,333 3,565 5,009 26.4%
Net Foreign Currency Related Income 13,305

22,313

23,536 33,068 -32.5%
Net Insurance Income / (Loss) 7,762 13,017 4,152 5,833 123.2%
Brokerage And Investments Banking Income 2,142 3,593 2,104 2,956 21.5%
Asset Management Income 374 628 740 1,040 -39.6%
Net Investment Gains / (Losses) (133) (223) (1,347) (1,892) -88.2%
Other 7,094 11,897 4,453 6,256 90.2%
Net Other Non-Interest Income 17,239 28,912 10,102 14,193 103.7%
Net Non-Interest Income 54,143 90,803 62,974 88,478 2.6%
Total Operating Income (Revenue) 144,059 241,601 180,021 252,929 -4.5%
Personnel Costs 40,244 67,493 57,909 81,362 -17.0%
Selling, General & Administrative Expenses 19,196 32,193 24,229 34,042 -5.4%
Procurement & Operations Support Expenses 5,843 9,800 7,039 9,890 -0.9%
Depreciation And Amortization 10,775 18,071 10,073 14,152 27.7%
Other Operating Expenses 4,992 8,372 2,505 3,520 137.8%
Total Recurring Operating Costs 81,050 135,929 101,755 142,966 -4.9%
Normalized Net Operating Income / (Loss) 63,009 105,672 78,265 109,963 -3.9%
Net Non-Recurring Income / (Costs) (1,445) (2,424) 6,589 9,257 -126.2%
Profit / (Loss) Before Provisions 61,563 103,248 84,854 119,220 -13.4%
Net Provision Expense 61,268 102,752 83,855 117,816 -12.8%
Pre-Tax Income / (Loss) 296 496 999 1,404 -64.7%
Income Tax Expense / (Benefit) (1,721) (2,886) 78 109 -2747.7%
Net Income / (Loss) 2,017 3,382 922 1,295 161.2%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6771 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4050 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2008

3Change calculations based on GEL values

CONSOLIDATED Q3 2009 BALANCE SHEET DATA

Period ended   30-Sep-09   30-Jun-09   31-Mar-09   Change4   Change4
Consolidated, IFRS based US$1   GEL US$2   GEL US$3   GEL Sep 30 Sep 30
/June 30 /March 30
000s Unless otherwise noted (Unaudited) (Unaudited)
Cash And Cash Equivalents 98,714 165,553 85,886 142,390 102,477 171,136 16.3% -3.3%
Loans And Advances To Credit Institutions 228,380 383,016 187,879 311,484 248,417 414,857 23.0% -7.7%
Mandatory Reserves With NBG / NBU / NBRB 22,795 38,230 20,473 33,943 29,350 49,014 12.6% -22.0%
Other Accounts With NBG / NBU / NBRB 52,408 87,893 78,692 130,464 43,249 72,226 -32.6% 21.7%
Balances With And Loans To Other Banks 153,177 256,893 88,713 147,077 175,819 293,617 74.7% -12.5%
Investment Securities: Available-For-Sale & Trading 17,909 30,036 17,128 28,396 24,252 40,501 5.8% -25.8%
Treasuries And Equivalents 21,826 36,605 - - - - - -
Other Fixed Income Instruments 40,043 67,156 35,651 59,105 22,967 38,355 13.6% 75.1%
Loans To Clients, Gross 1,093,003 1,833,075 1,148,849 1,904,676 1,225,659 2,046,850 -3.8% -10.4%
Less: Reserve For Loan Losses (103,588) (173,727) (93,535) (155,072) (80,985) (135,245) 12.0% 28.5%
Loans To Clients, Net 989,415 1,659,348 1,055,313 1,749,604 1,144,673 1,911,605 -5.2% -13.2%
Insurance Related Assets 27,177 45,578 28,569 47,365 31,506 52,615 -3.8% -13.4%
Investments In Other Business Entities, Net 45,010 75,486 48,787 80,884 21,875 36,531 -6.7% 106.6%
Property And Equipment Owned, Net 178,840 299,933 171,397 284,159 203,532 339,898 5.6% -11.8%
Intangible Assets Owned, Net 7,271 12,194 7,195 11,928 6,839 11,421 2.2% 6.8%
Goodwill 80,931 135,729 81,604 135,291 80,992 135,257 0.3% 0.3%
Tax Assets, Current And Deferred 7,695 12,906 4,996 8,283 4,003 6,685 55.8% 93.1%
Prepayments And Other Assets 33,761 56,621 29,515 48,933 16,705 27,898 15.7% 103.0%
Total Assets 1,776,973 2,980,161 1,753,919 2,907,822 1,908,238 3,186,759 2.5% -6.5%
 
Client Deposits 705,097 1,182,519 618,424 1,025,285 678,402 1,132,931 15.3% 4.4%
Deposits And Loans From Banks 25,877 43,398 24,805 41,124 31,702 52,942 5.5% -18.0%
Borrowed Funds 547,746 918,625 610,037 1,011,380 696,288 1,162,801 -9.2% -21.0%
Issued Fixed Income Securities 405 680 119 198 81 136 243.4% 400.0%
Insurance Related Liabilities 31,114 52,182 35,987 59,663 38,207 63,806 -12.5% -18.2%
Tax Liabilities, Current And Deferred 13,609 22,824 11,679 19,362 11,348 18,951 17.9% 20.4%
Accruals And Other Liabilities 24,697 41,420 24,675 40,909 25,955 43,345 1.2% -4.4%
Total Liabilities 1,348,547 2,261,648 1,325,726 2,197,921 1,481,983 2,474,912 2.9% -8.6%
 
Share Capital - Ordinary Shares 18,660 31,295 18,862 31,272 18,719 31,261 0.1% 0.1%
Share Premium 280,198 469,920 277,125 459,446 274,512 458,435 2.3% 2.5%
Treasury Shares (1,078) (1,808) (1,081) (1,793) (1,199) (2,002) 0.8% -9.7%
Retained Earnings 84,908 142,399 73,081 121,161 72,529 121,123 17.5% 17.6%
Revaluation And Other Reserves 13,033 21,857 28,653 47,504 27,890 46,577 -54.0% -53.1%
Net Income For The Period 2,017 3,382 455 754 3,042 5,080 348.5% -33.4%
Shareholders' Equity Excluding Minority Interest 397,737 667,045 397,095 658,344 395,493 660,474 1.3% 1.0%
 
Minority Interest 30,689 51,468 31,098 51,557 30,762 51,373 -0.2% 0.2%
Total Shareholders' Equity 428,426 718,513 428,193 709,901 426,256 711,847 1.2% 0.9%
 
Total Liabilities And Shareholders' Equity 1,776,973 2,980,161 1,753,919 2,907,822 1,908,238 3,186,759 2.5% -6.5%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6771 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6579 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 June 2009

3 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.670 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2009

4Change calculations based on GEL values

STANDALONE Q3 2009 INCOME STATEMENT DATA

Period ended   Q3 2009   Q2 2009   Change3   Q3 2008   Growth
Standalone, IFRS based US$1   GEL US$2   GEL Q-O-Q US$4   GEL Y-O-Y
000s Unless otherwise noted
Interest Income 50,461 84,628 51,621 85,582 -1.1% 66,867 93,948 -9.9%
Interest Expense 23,911 40,101 24,179 40,087 0.0% 29,746 41,793 -4.0%
Net Interest Income 26,550 44,527 27,441 45,495 -2.1% 37,121 52,155 -14.6%
Fees & Commission Income 6,176 10,358 6,298 10,442 -0.8% 7,377 10,364 -0.1%
Fees & Commission Expense 1,361 2,283 1,334 2,212 3.2% 1,275 1,791 27.5%
Net Fees & Commission Income 4,815 8,075 4,964 8,230 -1.9% 6,102 8,573 -5.8%
Income From Documentary Operations 1,668 2,798 1,433 2,376 17.8% 1,592 2,237 25.1%
Expense On Documentary Operations 286 480 363 601 -20.1% 390 548 -12.4%
Net Income From Documentary Operations 1,382 2,318 1,071 1,775 30.6% 1,202 1,689 37.2%
Net Foreign Currency Related Income 3,576 5,998 3,855 6,392 -6.2% 5,902 8,293 -27.7%
Net Other Non-Interest Income 352 590 244 404 46.0% 466 655 -9.9%
Net Non-Interest Income 10,125 16,981 10,134 16,801 1.1% 13,673 19,211 -11.6%
Total Operating Income (Revenue) 36,675 61,508 37,575 62,297 -1.3% 50,794 71,366 -13.8%
Personnel Costs 8,769 14,707 8,949 14,836 -0.9% 13,688 19,232 -23.5%
Selling, General & Administrative Expenses 3,852 6,461 3,603 5,974 8.2% 3,950 5,550 16.4%
Procurement & Operations Support Expenses 1,503 2,521 1,551 2,571 -1.9% 2,382 3,347 -24.7%
Depreciation And Amortization 3,109 5,214 3,154 5,229 -0.3% 3,054 4,291 21.5%
Other Operating Expenses 699 1,173 653 1,082 8.4% 926 1,301 -9.8%
Total Recurring Operating Costs 17,933 30,076 17,909 29,692 1.3% 24,001 33,721 -10.8%
Normalized Net Operating Income / (Loss) 18,742 31,432 19,666 32,605 -3.6% 26,794 37,645 -16.5%
Net Non-Recurring Income / (Costs) (583) (978) (1,169) (1,938) -49.5% (1,403) (1,971) -50.4%
Profit / (Loss) Before Provisions 18,159 30,454 18,497 30,666 -0.7% 25,391 35,675 -14.6%
Net Provision Expense 10,561 17,712 17,853 29,598 -40.2% 73,916 103,852 -82.9%
Pre-Tax Income / (Loss) 7,598 12,743 644 1,069 1092.0% (48,525) (68,177) -118.7%
Income Tax Expense / (Benefit) 1,139 1,911 97 160 1094.4% (7,279) (10,227) -118.7%
Net Income / (Loss) 6,458 10,831 548 908 1092.8% (41,246) (57,951) -118.7%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6771 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6579 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 June 2009

3 Change calculations based on GEL values

4 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4050 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2008

STANDALONE 9 MONTHS 2009 INCOME STATEMENT DATA

  9 months 2009   9 months 2008   Change3
Period ended US$1   GEL US$2   GEL Y-O-Y
Standalone, IFRS based
000s Unless otherwise noted
Interest Income 155,740 261,192 189,333 266,013 -1.8%
Interest Expense 72,033 120,807 84,308 118,453 2.0%
Net Interest Income 83,706 140,384 105,024 147,559 -4.9%
Fees & Commission Income 18,503 31,031 23,479 32,988 -5.9%
Fees & Commission Expense 4,010 6,725 3,645 5,121 31.3%
Net Fees & Commission Income 14,493 24,306 19,833 27,866 -12.8%
Income From Documentary Operations 4,691 7,867 4,608 6,474 21.5%
Expense On Documentary Operations 916 1,537 1,043 1,465 4.9%
Net Income From Documentary Operations 3,774 6,330 3,565 5,009 26.4%
Net Foreign Currency Related Income 10,717 17,973 20,375 28,627 -37.2%
Net Other Non-Interest Income 861 1,444 - - -
Net Non-Interest Income 29,845 50,053 43,774 61,503 -18.6%
Total Operating Income (Revenue) 113,552 190,438 148,799 209,062 -8.9%
Personnel Costs 26,378 44,239 38,284 53,789 -17.8%
Selling, General & Administrative Expenses 11,186 18,760 11,673 16,400 14.4%
Procurement & Operations Support Expenses 4,661 7,817 6,899 9,693 -19.4%
Depreciation And Amortization 8,670 14,541 8,013 11,258 29.2%
Other Operating Expenses 1,908 3,200 1,958 2,751 16.3%
Total Recurring Operating Costs 52,803 88,556 66,827 93,892 -5.7%
Normalized Net Operating Income / (Loss) 60,749 101,882 81,972 115,170 -11.5%
Net Non-Recurring Income / (Costs) (2,060) (3,454) (715) (1,004) NMF
Profit / (Loss) Before Provisions 58,689 98,428 81,257 114,166 -13.8%
Net Provision Expense 42,539 71,342 84,769 119,100 -40.1%
Pre-Tax Income / (Loss) 16,150 27,086 (3,512) (4,934) NMF
Income Tax Expense / (Benefit) 2,423 4,063 (527) (740) NMF
Net Income / (Loss) 13,728 23,023 (2,985) (4,194) NMF

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6771 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4050 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2008

3Change calculations based on GEL values

STANDALONE Q3 2009 BALANCE SHEET DATA

Period ended   30-Sep-09   30-Jun-09   31-Mar-09   Change4   Change
Standalone, IFRS based US$1   GEL US$2   GEL US$3   GEL Sep 30/ Sep 30/
000s Unless otherwise noted Jun 30 Mar 31
Cash 74,866 125,557 66,203 109,758 67,042 111,960 14.4% 12.1%
Balances With NBG 71,885 120,559 95,401 158,165 60,883 101,675 -23.8% 18.6%
Balances With And Loans To Other Banks 158,404 265,660 98,333 163,026 194,001 323,981 63.0% -18.0%
Treasuries And Equivalents 21,826 36,605 - - - - NMF NMF
Other Fixed Income Instruments 39,137 65,636 34,537 57,259 22,954 38,333 14.6% 71.2%
Loans To Clients, Net 911,022 1,527,875 966,292 1,602,016 1,047,707 ,749,670 -4.6% -12.7%
Investments In Other Business Entities, Net 181,484 304,367 189,709 314,518 188,328 314,507 -3.2% -3.2%
Property And Equipment Owned, Net 142,965 239,767 135,255 224,240 138,605 231,471 6.9% 3.6%
Intangible Assets Owned, Net 3,891 6,526 4,379 7,260 4,076 6,807 -10.1% -4.1%
Goodwill 13,846 23,221 13,742 22,783 13,643 22,783 1.9% 1.9%
Prepayments And Other Assets 21,920 36,762 16,379 27,155 9,140 15,263 35.4% 140.9%
Total Assets 1,641,247 2,752,536 1,620,230 2,686,180 1,746,378 2,916,451 2.5% -5.6%
 
Deposits And Loans From Banks 6,913 11,594 9,811 16,265 17,574 29,348 -28.7% -60.5%
Client Deposits 630,570 1,057,529 548,436 909,252 586,214 978,977 16.3% 8.0%
Borrowed Funds 545,180 914,322 609,036 1,009,720 696,288 1,162,801 -9.4% -21.4%
Tax Liabilities, Current And Deferred 11,526 19,330 10,274 17,033 9,682 16,169 13.5% 19.5%
Accruals And Other Liabilities 12,996 21,795 14,246 23,619 13,644 22,786 -7.7% -4.3%
Total Liabilities 1,207,185 2,024,570 1,191,802 1,975,888 1,323,402 2,210,082 2.5% -8.4%
 
Share Capital - Ordinary Shares 18,660 31,295 18,862 31,272 18,719 31,261 0.1% 0.1%
Share Premium 284,741 477,539 283,702 470,349 279,874 467,390 1.5% 2.2%
Treasury Shares (890) (1,493) (677) (1,123) (699) (1,167) 32.9% 27.9%
Retained Earnings 95,706 160,509 83,438 138,332 82,834 138,332 16.0% 16.0%
Revaluation And Other Reserves 22,117 37,092 35,749 59,269 35,490 59,269 -37.4% -37.4%
Net Income / (Loss) For The Period 13,728 23,023 7,354 12,192 6,757 11,284 88.8% 104.0%
Total Shareholders' Equity 434,062 727,965 428,428 710,291 422,976 706,370 2.5% 3.1%
Total Liabilities And Shareholders' Equity 1,641,247 2,752,536 1,620,230 2,686,180 1,746,378 2,916,451 2.5% -5.6%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6771 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6579 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2009

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.670 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 March 2009

4 Change calculations based on GEL values

BG BANK (UKRAINE) 9 MONTHS 2009 INCOME STATEMENT DATA

Period ended   9 months 2009   9 months 2008   Change3
Standalone, IFRS based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted
Interest Income 17,017 28,539 26,944 37,857 -24.6%
Interest Expense 10,356 17,368 15,056 21,153 -17.9%
Net Interest Income 6,661 11,171 11,889 16,704 -33.1%
Fees & Commission Income 2,264 3,797 2,875 4,039 -6.0%
Fees & Commission Expense 674 1,130 668 939 20.3%
Net Fees & Commission Income 1,590 2,666 2,206 3,100 -14.0%
Income From Documentary Operations - - - - -
Expense On Documentary Operations - - - - -
Net Income From Documentary Operations - - - - -
Net Foreign Currency Related Income 1,470 2,466 1,537 2,159 14.2%
Net Other Non-Interest Income - - - - -
Net Non-Interest Income 3,060 5,132 3,743 5,259 -
Total Operating Income (Revenue) 9,721 16,303 15,632 21,963 -
Personnel Costs 5,400 9,057 9,502 13,350 -32.2%
Selling, General & Administrative Expenses 1,500 2,515 4,971 6,984 -64.0%
Procurement & Operations Support Expenses 755 1,267 - - -
Depreciation And Amortization 467 784 452 635 23.5%
Other Operating Expenses 327 549 19 26 2011.5%
Total Recurring Operating Costs 8,450 14,172 14,943 20,995 -32.5%
Normalized Net Operating Income / (Loss) 1,271 2,132 689 968 120.2%
Net Non-Recurring Income / (Costs) (200) (336) (260) (366) NMF
Profit / (Loss) Before Provisions 1,070 1,795 428 601 198.7%
Net Provision Expense 19,866 33,317 (236) (332) NMF
Pre-Tax Income / (Loss) (18,796) (31,522) 665 934 NMF
Income Tax Expense / (Benefit) (4,699) (7,881) 179 252 NMF
Net Income / (Loss) (14,097) (23,642) 485 682 NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6771 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4050 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2008

3 Change calculations based on GEL values

BG BANK (UKRAINE) Q3 2009 INCOME STATEMENT DATA

Period ended   Q3 2009   Q2 2009   Change3
Standalone, IFRS based US$1   GEL US$2   GEL Q-O-Q
000s Unless otherwise noted
Interest Income 4,942 8,288 5,518 9,148 -9.4%
Interest Expense 2,573 4,315 2,902 4,812 -10.3%
Net Interest Income 2,369 3,973 2,615 4,336 -8.4%
Fees & Commission Income 1,132 1,898 650 1,077 76.2%
Fees & Commission Expense 420 705 133 221 219.0%
Net Fees & Commission Income 711 1,193 516 855 39.5%
Income From Documentary Operations - - - - -
Expense On Documentary Operations - - - - -
Net Income From Documentary Operations - - - - -
Net Foreign Currency Related Income 50 84 235 390 -78.5%
Net Other Non-Interest Income - - - - -
Net Non-Interest Income 761 1,277 751 1,245 2.6%
Total Operating Income (Revenue) 3,131 5,251 3,366 5,581 -5.9%
Personnel Costs 1,542 2,586 1,952 3,236 -20.1%
Selling, General & Administrative Expenses 433 727 277 459 58.4%
Procurement & Operations Support Expenses 110 185 653 1,082 -82.9%
Depreciation And Amortization 177 297 168 278 6.8%
Other Operating Expenses 81 136 (283) (470) NMF
Total Recurring Operating Costs 2,344 3,931 2,765 4,584 -14.2%
Normalized Net Operating Income / (Loss) 787 1,320 601 997 32.4%
Net Non-Recurring Income / (Costs) 4 6 (314) (521) NMF
Profit / (Loss) Before Provisions 791 1,326 287 476 178.6%
Net Provision Expense 7,698 12,911 6,649 11,023 17.1%
Pre-Tax Income / (Loss) (6,908) (11,586) (6,362) (10,547) 9.9%
Income Tax Expense / (Benefit) (3,612) (6,058) 147 243 NMF
Net Income / (Loss) (3,296) (5,528) (6,508) (10,790) NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6771 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6579 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2009

3 Change calculations based on GEL values

BNB (BELARUS) 9 months 2009 INCOME STATEMENT DATA

Period ended   9 months 2009   9 months 2008   Change3
Standalone, IFRS based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted
Interest Income 2,997 5,026 1,208 1,697 196.2%
Interest Expense 979 1,642 335 470 249.4%
Net Interest Income 2,018 3,385 874 1,228 175.7%
Fees & Commission Income 723 1,212 261 367 230.2%
Fees & Commission Expense 101 170 36 50 240.0%
Net Fees & Commission Income 621 1,042 226 317 228.7%
Income From Documentary Operations 2 4 - - -
Expense On Documentary Operations 1 1 - - -
Net Income From Documentary Operations 2 3 - - -
Net Foreign Currency Related Income 1,035 1,735 386 543 219.5%
Net Other Non-Interest Income 47 78 - - -
Net Non-Interest Income 1,704 2,858 612 860 232.3%
Total Operating Income (Revenue) 3,722 6,243 1,485 2,087 199.1%
Personnel Costs 1,351 2,266 470 660 243.3%
Selling, General & Administrative Expenses 301 505 100 141 258.2%
Procurement & Operations Support Expenses 427 716 141 198 261.6%
Depreciation And Amortization 229 384 100 140 174.3%
Other Operating Expenses 323 542 125 176 208.0%
Total Recurring Operating Costs 2,632 4,414 936 1,315 235.7%
Normalized Net Operating Income / (Loss) 1,091 1,829 550 773 136.6%
Net Non-Recurring Income / (Costs) 42 71 6 9 688.9%
Profit / (Loss) Before Provisions 1,133 1,900 557 782 143.0%
Net Provision Expense (103) (172) (242) (340) NMF
Pre-Tax Income / (Loss) 1,235 2,072 799 1,122 84.7%
Income Tax Expense / (Benefit) 357 598 73 102 486.3%
Net Income / (Loss) 879 1,475 726 1,020 44.6%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6771 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4050 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2008

3 Change calculations based on GEL values

BNB (BELARUS) Q3 2009 INCOME STATEMENT DATA

Period ended Q3 2009 Q2 2009 Change3
Standalone, IFRS based      
000s Unless otherwise noted US$1   GEL US$2   GEL Q-O-Q
Interest Income 1,179 1,977 861 1,428 38.4%
Interest Expense 321 538 288 478 12.6%
Net Interest Income 858 1,439 573 950 51.5%
Fees & Commission Income 281 471 241 400 17.8%
Fees & Commission Expense 38 63 34 57 10.5%
Net Fees & Commission Income 243 408 207 343 19.0%
Income From Documentary Operations - - - 1 -
Expense On Documentary Operations - - - - -
Net Income From Documentary Operations - - - 1 -
Net Foreign Currency Related Income 165 276 171 284 -2.8%
Net Other Non-Interest Income (14) (24) 81 134 -117.9%
Net Non-Interest Income 394 660 460 762 -13.4%
Total Operating Income (Revenue) 1,252 2,100 1,033 1,712 22.7%
Personnel Costs 440 738 463 768 -3.9%
Selling, General & Administrative Expenses 114 191 94 156 22.4%
Procurement & Operations Support Expenses 148 249 142 235 6.0%
Depreciation And Amortization 48 80 83 138 -42.0%
Other Operating Expenses 115 193 97 161 19.9%
Total Recurring Operating Costs 865 1,450 879 1,457 -0.5%
Normalized Net Operating Income / (Loss) 387 649 153 254 155.5%
Net Non-Recurring Income / (Costs) 31 52 5 9 477.8%
Profit / (Loss) Before Provisions 418 701 159 264 165.5%
Net Provision Expense (103) (173) (17) (28) 517.9%
Pre-Tax Income / (Loss) 521 874 176 292 199.3%
Income Tax Expense / (Benefit) 153 257 57 95 170.5%
Net Income / (Loss) 368 617 119 197 213.2%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6771 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 September 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6579 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2009

3 Change calculations based on GEL values

KEY RATIOS

  9 months 2009   9 months 2008
 
Profitability Ratios
ROAA 1, Annualised 0.1% 0.1%
ROAE2, Annualised 0.6% 0.2%
Interest Income To Average Interest Earning Assets 3, Annualised 17.5% 17.2%
Cost Of Funds 4, Annualised 8.5% 8.2%
Net Spread 5 9.1% 8.9%
Net Interest Margin 6, Annualised 9.1% 9.2%
Net Interest Margin Normalized 35, Annualised 9.1% 9.2%
Loan Yield 7, Annualised 12.8% 12.9%
Interest Expense To Interest Income 48.0% 46.1%
Net Non-Interest Income To Average Total Assets, Annualised 4.0% 3.7%
Net Non-Interest Income To Revenue 8 37.6% 35.0%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised 2.0% 1.8%
Net Fee And Commission Income To Revenue 13.8% 12.4%
Operating Leverage 10 -7.9% 0.3%
Total Operating Income (Revenue) To Total Assets, Annualised 10.8% 10.7%
Recurring Earning Power 11, Annualised 4.5% 5.9%
Net Income To Revenue 1.4% 0.5%
 
Efficiency Ratios
Operating Cost To Average Total Assets 12, Annualised 6.0% 5.1%
Cost To Average Total Assets 13, Annualised 6.1% 5.6%
Cost / Income 14 57.2% 52.9%
Cost / Income, Normalized 15 56.0% 56.5%
Cost / Income, Bank of Georgia, Stand-Alone 16 48.3% 45.4%
Cost / Income, Bank of Georgia, Stand-Alone, Normalized 46.5% 44.9%
Cash Cost / Income 49.8% 47.3%
Total Employee Compensation Expense To Revenue 17 27.9% 32.2%
Total Employee Compensation Expense To Cost 48.8% 60.8%
Total Employee Compensation Expense To Average Total Assets, Annualised 3.0% 3.4%
 
Liquidity Ratios
Net Loans To Total Assets 18 55.7% 61.2%
Average Net Loans To Average Total Assets 59.6% 59.1%
Interest Earning Assets To Total Assets 72.0% 71.1%
Average Interest Earning Assets To Average Total Assets 72.8% 74.8%
Liquid Assets To Total Assets 19 21.6% 16.2%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone 43.5% 27.2%
Liquid Assets To Total Liabilities, IFRS Consolidated 30.2% 28.9%
Net Loans To Client Deposits 140.3% 160.6%
Average Net Loans To Average Client Deposits 164.4% 141.8%
Net Loans To Total Deposits 20 135.4% 145.7%
Net Loans To (Total Deposits + Equity) 85.3% 93.5%
Net Loans To Total Liabilities 73.4% 79.9%
Total Deposits To Total Liabilities 54.2% 54.9%
Client Deposits To Total Deposits 96.5% 90.7%
Client Deposits To Total Liabilities 52.3% 49.8%
Current Account Balances To Client Deposits 42.8% 39.2%
Demand Deposits To Client Deposits 9.2% 3.8%
Time Deposits To Client Deposits 48.0% 57.1%
Total Deposits To Total Assets 41.1% 42.0%
Client Deposits To Total Assets 39.7% 38.1%
Client Deposits To Total Equity (Times) 21 1.6 1.6
Due From Banks / Due To Banks 22 882.6% 226.7%
Total Equity To Net Loans 43.3% 38.3%
Leverage (Times) 23 3.1 3.3

KEY RATIOS CONT’D

  9 months 2009   9 months 2008
 
Asset Quality
NPLs (in GEL) 24 139,829 23,274
NPLs To Gross Loans To Clients 25 7.6% 1.1%
Cost of Risk 26, Annualized 7.0% 8.1%
Cost of Risk Normalized 27, Annualized 7.0% 8.1%
Reserve For Loan Losses To Gross Loans To Clients 28 9.5% 6.3%
NPL Coverage Ratio 29 124.2% 554.4%
Equity To Average Net Loans To Clients 39.8% 39.5%
0.0%
Capital Adequacy: 0.0%
Equity To Total Assets 24.1% 23.4%
BIS Tier I Capital Adequacy Ratio, consolidated 30 25.4% 24.7%
BIS Total Capital Adequacy Ratio, consolidated 31 34.6% 25.3%
NBG Tier I Capital Adequacy Ratio 32 20.4% 18.2%
NBG Total Capital Adequacy Ratio 33 21.2% 15.5%
 
Per Share Values:
Basic EPS (GEL) 34 0.11 0.04
Basic EPS (US$) 0.06 0.03
Fully Diluted EPS (GEL) 35 0.10 0.04
Fully Diluted EPS (US$) 0.06 0.03
Book Value Per Share (GEL) 36 22.96 23.66
Book Value Per Share (US$) 13.69 16.84
Ordinary Shares Outstanding - Weighted Average, Basic 31,271,060 30,450,867
Ordinary Shares Outstanding - Period End 31,294,603 31,250,211
Ordinary Shares Outstanding - Fully Diluted 34,769,217 31,250,211
 
Selected Operating Data:
Full Time Employees (FTE) 4,798 6,165
FTEs, Bank of Georgia Stand-Alone 2,663 3,853
Total Assets Per FTE 37 (GEL Thousands) 621 512
Total Assets Per FTE, Bank of Georgia Stand-Alone (GEL Thousands) 1,119 819
Number Of Active Branches 140 139
Number Of ATMs 380 386
Number Of Cards (Thousands) 570 918
Number Of POS Terminals 1,892 2,969

NOTES TO KEY RATIOS

1   Return On Average Total Assets (ROAA) equals Net Income of the period divided by quarterly Average Total Assets for the same period;
2 Return On Average Total Equity (ROAE) equals Net Income of the period divided by quarterly Average Total Equity for the same period;
3 Average Interest Earning Assets are calculated on a quarterly basis; Interest Earning Assets include: Loans And Advances To Credit Institutions, Treasuries And Equivalents, Other Fixed Income Instruments and Net Loans to Clients;
4 Cost Of Funds equals Interest Expense of the period divided by quarterly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Client Deposits, Deposits And Loans From Banks, Borrowed Funds and Issued Fixed Income Securities;
5 Net Spread equals Interest Income To Average Interest Earning Assets less Cost Of Funds;
6 Net Interest Margin equals Net Interest Income of the period divided by quarterly Average Interest Earning Assets of the same period;
7 Loan Yield equals Interest Income, less Net Provision Expense, divided by quarterly Average Gross Loans To Clients;
8 Revenue equals Total Operating Income;
9 Net Fee And Commission Income includes Net Income From Documentary Operations of the period ;
10 Operating Leverage equals percentage change in Revenue less percentage change in Total Costs;
11 Recurring Earning Power equals Profit Before Provisions of the period divided by average Total Assets of the same period;
12 Operating Cost equals Total Recurring Operating Costs;
13 Cost includes Total Recurring Operating Costs and Net Non-Recurring Costs (Income);
14 Cost/Income Ratio equals Costs of the period divided by Total Operating Income (Revenue);
15 Cost/Income Normalized equals Total Recurring Operating cost (excludes net non-recurring costs) divided by total operating income.
16 Cost/ Income, Bank of Georgia, standalone, equals non-consolidated Total Costs of the bank of the period divided by non-consolidated Revenue of the bank of the same period;
17 Total Employee Compensation Expense includes Personnel Costs;
18 Net Loans equal Net Loans To Clients;
19 Liquid Assets include: Cash And Cash Equivalents, Other Accounts With NBG, Balances With And Loans To Other Banks, Treasuries And Equivalents and Other Fixed Income Securities as of the period end and are divided by Total Assets as of the same date;
20 Total Deposits include Client Deposits and Deposits And Loans from Banks;
21 Total Equity equals Total Shareholders’ Equity;
22 Due From Banks/ Due To Banks equals Loans And Advances To Credit Institutions divided by Deposits And Loans From Banks;
23 Leverage (Times) equals Total Liabilities as of the period end divided by Total Equity as of the same date;
24 NPLs (in GEL) equals consolidated total gross non-performing loans as of the period end; non-performing loans are loans that have debts in arrears for more than 90 calendar days;
25 Gross Loans equals Gross Loans To Clients;
26 Cost Of Risk equals Net Provision For Loan Losses of the period, plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans To

Clients over the same period;

27 Cost Of Risk Normalized equals Net Provision For Loan Losses of the period, less provisions for the interest income generated by non-performing loans through the date of their write-off, plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans To Clients over the same period;
28 Reserve For Loan Losses To Gross Loans To Clients equals reserve for loan losses as of the period end divided by gross loans to clients as of the same date;
29 NPL Coverage Ratio equals Reserve For Loan losses as of the period end divided by NPLs as of the same date;
30 BIS Tier I Capital Adequacy Ratio equals Tier I Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I;
31 BIS Total Capital Adequacy Ratio equals Total Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I;
32 NBG Tier I Capital Adequacy Ratio equals Tier I Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements the National Bank of Georgia;
33 NBG Total Capital Adequacy Ratio equals Total Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of the National Bank of Georgia;
34 Basic EPS equals Net Income of the period divided by the weighted average number of outstanding ordinary shares over the same period;
35 Fully Diluted EPS equals net income of the period divided by the number of outstanding ordinary shares as of the period end plus number of ordinary shares in contingent liabilities;
36 Book Value Per Share equals Equity as of the period end, plus Treasury Shares, divided by the total number of Outstanding Ordinary shares as of the same date
37 Equals total consolidated assets divided by total number of full-time employees

About Bank of Georgia

Bank of Georgia is the leading Georgian bank offering a broad range of corporate and investment banking, retail banking, wealth management and insurance services to its customers in Georgia, Ukraine and Belarus. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 33.6% market share by total assets (all data according to the NBG as of 30 September 2009). The bank has 140 branches and over 880,000 retail and more than 146,000 corporate current accounts.

Bank of Georgia has, as of the date hereof, the following credit ratings:

Standard & Poor’s   ‘B/B’
FitchRatings ‘B/B’
Moody’s ‘B3/NP’ (FC) & ‘Ba3/NP’ (LC)

For further information, please visit www.bog.ge/ir or contact:

Nicholas Enukidze   Irakli Gilauri   Macca Ekizashvili
Chairman of the Supervisory Board CEO, Supervisory Board Member Head of Investor Relations
+995 32 444 858 +995 32 444 109 +995 32 444 256

nenukidze@bog.ge

igilauri@bog.ge

ir@bog.ge

This news report is presented for general informational purposes only and should not be construed as an offer to sell or the solicitation of an offer to buy any securities. Certain statements in this news report are forward-looking statements and, as such, are based on the management’s current expectations and are subject to uncertainty and changes in circumstances.

The financial information as of Q3 2009, September YTD 2009, Q2 2009, Q3 2008 and September YTD 2008 contained in this news report is unaudited and reflects the best estimates of management. The bank’s actual results may differ significantly from the amounts reflected herein as a result of various factors.

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