1st Quarter Results
1.48 GEL/US$ Q1 2008 period end
1.55 GEL/US$ Q1 2008 average
1.70 GEL/US$ Q1 2007 period end
1.71 GEL/US$ Q1 2007 average
Bank of Georgia
JSC BANK OF GEORGIA ANNOUNCES CONSOLIDATED Q1 2008 RESULTS
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Millions, unless otherwise noted Q1 2008 Growth y-o-y (1)
Bank of Georgia Consolidated
US$ GEL
Bank of Georgia (Consolidated, Unaudited,
IFRS Based)
Total Operating Income (Revenue)(2) 54.9 81.1 98%
Recurring Operating Costs 30.1 44.5 103%
Normalised Net Operating Income(3) 24.8 36.6 91%
Net Income 21.6 31.9 134%
Consolidated EPS (Basic), GEL & US$(4) 0.74 1.09 101%
Consolidated EPS (Fully Diluted), GEL &
US$(5) 0.69 1.02 104%
ROAA(6)% 4.2
ROA (7) % 4.1
ROAE(8) % 19.6
ROE(9)% 17.1
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Bank of Georgia (LSE: BGEO, GSE: GEB), the leading Georgian universal bank,
announced today its Q1 2008 consolidated results (IFRS based, derived from
managementas accounts), reporting record quarterly Net Income of GEL 31.9
million, (up 133.6% y-o-y and 24.9% q-o-q) or consolidated Basic EPS of US$0.74
(up 101.5% y-o-y and 16.0% q-o-q).
(1) Compared to the same period in 2007; 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) Basic EPS equals Net Income of the period divided by weighted average
outstanding shares for the period.
(5) 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.
(6) Return on Average Total Assets equals Net Income for the period divided by
the average Total Assets for the period.
(7) Return on Assets equals Net Income for the period divided by the Total
Assets at the end of the period.
(8) Return on Average Total Shareholders' Equity equals Net Income for the
period divided by the average Total Shareholders' Equity for the period.
(9) Return on Equity equals Net Income for the period divided by the Total
Equity at the end of the period.
Q1 2008 Summary
Total Operating Income (Revenue) grew by 97.5% y-o-y (up 18.7% q-o-q) to GEL
81.1 million in Q1 2008. Net Interest Income of GEL 49.8 million grew by 91.1%
y-o-y (up 16.6% q-o-q), driven by the loan book growth, mainly in retail
banking. Strong growth of the retail loan book also contributed to the
strengthening of Net Interest Margin, which increased to 8.9% in Q1 2008 from
8.1% in Q4 2007. Net Non-Interest Income of GEL 31.3 million increased by 108.7%
y-o-y (up 22.2% q-o-q) and was mostly driven by solid growth in Foreign Currency
Related Income (GEL 13.2 million, up 209.3% y-o-y and 37.3% q-o-q), Net Fee and
Commission Income and Net Income from Documentary Operations (GEL 11.6 million,
up 76.2% y-o-y and 21.9% q-o-q), and Net Other Non-Interest Income (GEL 6.5
million, up 56.6% y-o-y and 0.2% q-o-q). Recurring Operating Costs(1) grew to
GEL 44.5 million, an increase of 103.1% y-o-y (up 31.8% q-o-q). The growth was
mostly driven by increased personnel and administrative expenses due to branch
and headcount expansion in Georgia, as well as rearrangement of compensation
structure and new senior hiring in Ukraine. Net Normalised Operating Income
('NNOI')(1) was up 91.1% y-o-y (up 5.9% q-o-q) to GEL 36.6 million in Q1 2008.
The bank's consolidated Total Assets reached GEL 3.2 billion by 31 March 2008,
up 92.7% y-o-y (up 6.6% year-to-date), while Gross Loans amounted to GEL 1,856
million, a 122.1% increase y-o-y (up 5.9% year-to-date). Corporate Gross Loans
to Clients in Georgia grew by 1.8% year-to-date to GEL 821.4 million, retail
Gross Loans to Clients in Georgia grew by 17.2% year-to-date to GEL 754.7
million and private banking Gross Loans To Clients in Georgia decreased by 21.1%
year-to-date to GEL 34.9 million. As of 31 March 2008 the combined share of
retail and private banking (excluding Universal Bank of Development and
Partnership ('UBDP'), the bank's Ukrainian Subsidiary) in Bank of Georgia's
Gross Loans To Clients, increased to 49.3% from 43.8% as of 31 March 2007.
UBDP's Total Assets grew by 2.8% year-to-date and amounted to GEL 360.0 million
and Gross Loans to Clients increased by 12.6% to GEL 254.9 million in Q1 2008.
UBDP accounted for approximately 11.4% and 13.7% of the Bank's Total Assets and
Total Gross Loans, respectively.
The bank's consolidated Total Liabilities reached GEL 2.4 billion by 31 March
2008, up 92.4% y-o-y (up 0.2% year-to-date). Client Deposits in Georgia reached
GEL 1.1 billion up 84.4% y-o-y (up 2.1% year-to-date), slower growth reflecting
intensifying competition for deposits in Georgia and 6.91% appreciation of
Georgian Lari against the US dollar year-to-date). Client Deposits in Ukraine
experienced a decrease of GEL 51.8 million (19.3% decrease year-to-date) caused
by the departure of several sizable depositors in Ukraine due to UBDP's
restructuring. Bank of Georgia's Consolidated Client Deposits were GEL 1,326
million as at 31 March 2008, representing an increase of 120.2% y-o-y and a
decrease of 2.2% year-to-date.
As of 31 March 2008 Bank of Georgia on standalone basis held market share of
33.7%, 32.2% and 28.3% in Georgia by total assets, gross loans, and deposits
respectively(2) . On a year-on-year basis, the bank's market shares grew by
0.7%, 4.6% and 3.4% by total assets, gross loans and deposits, respectively. The
strong P&L performance resulted in Bank of Georgia capturing
47.1%<superbanking market share by Net Income in Georgia on a
standalone basis in Q1 2008, which compares to 26.7% in Q1 2007.
Total Shareholders' Equity grew by GEL 361.4 million in Q1 2008 (GEL 188.7
million year-to-date) and amounted to GEL 746.7 million. The year-to-date growth
was mainly attributed to Q1 2008 Net Income of GEL 31.9 million, as well as a
capital increase through the placement of four million new ordinary shares in
the form of GDRs on 13 February 2008, which raised gross proceeds of US$100
million.
Despite the capital increase in February 2007, Bank of Georgia's Consolidated
ROAE increased to 19.6% in Q1 2008 as compared to consolidated ROAE of 14.4% in
Q1 2007 and 17.7% for the full year 2007. Consolidated ROAA grew to 4.2% in Q1
2008 from 3.8% in Q1 2007 and 3.8% for the full year 2007. Equity book value per
share stood at GEL 23.90 (US$16.19) as at 31 March 2008, up 55.3% y-o-y (up
15.9% year-to-date).
The Extraordinary Meeting of Shareholders (the 'EGM') held on 22 February 2007,
acknowledged the resignation of Lado Gurgenidze as the Chairman of the
Supervisory Board of Bank of Georgia and elected Mr. Kaha Kiknavelidze as a new
member of the Supervisory Board. Subsequently, Mr. Nicholas Enukidze, Vice
Chairman of the Supervisory Board since November 2006 and Acting Chairman since
November 2007, was elected as Chairman of the Supervisory Board by the
Supervisory Board.
(1) Starting in Q1 2008 Bonuses and Share Based Compensation Expense is included
in the calculation of the Recurring Operating Costs. For the purposes of this
press release for all previous reporting periods Recurring Operating Costs are
recalculated using the new methodology and NNOI is adjusted to the changes in
the calculation methodology of Recurring Operating Costs.
(2) 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. Deposit market share is calculated based on the amount
of total deposits, including client and interbank deposits
Strategic Business Unit and Business Unit Overview
Corporate Banking (CB)(3)
Discussion Of Results
In Q1 2008 CB continued to successfully leverage Bank of Georgia's position as
the leading financial institution in Georgia, increasing its operating
efficiency and profitability. Allocated Revenues grew 75.4% y-o-y to GEL 24.1
million (up 7.2% q-o-q). Operating leverage of CB has improved, as the growth
rate of allocated Recurring Costs (up 92.1% y-o-y and down by 13.6% q-o-q)
lagged the growth rate of the allocated Revenues. NNOI grew 69.4% y-o-y to GEL
17.1 million (up 18.9% q-o-q), contributing 46.7% to the consolidated NNOI. Net
Income grew 40.5% y-o-y to GEL 10.5 million (up 56.6% q-o-q), contributing 32.9%
to the consolidated Net Income. Gross Loans grew 82.2% y-o-y to GEL 821.4
million (up 1.8% year-to-date). Allocated Client Deposits stood at GEL 652.7
million up 109.5% increase y-o-y and down by 2.5% year-to-date, which was caused
by the notably increased competition for deposits in Q1 2008 driven by wholesale
funding constraints and higher interest rate environment resulting from
significant increase in benchmark interest rate. Allocated Total CB Assets
amounted to GEL 1,431 million, up 106.5% y-o-y (up 0.7% year-to-date), while
allocated Total CB Liabilities stood at GEL 1,079 million, up 78.6% y-o-y (down
by 2.1% year-to-date).
Highlights
-- Major new corporate client acquisitions include Alon Group Israel, an
investment company, JSC Caucasus Energy and Infrastructure, a fund
investing in energy and infrastructure assets in Georgia, and Georgian
Trading Company, a high end (Bali, Trussardi etc.) apparel retailer in
Tbilisi.
-- Increased the number of corporate clients using the bank's payroll
services from approximately 700 at the end of 2006 to over 850 by 31
March 2007. By the end of Q1 2008, the number of individual clients
serviced through the corporate payroll programs administered by the bank
increased from approximately 150,000 at the beginning of the year to
153,984.
-- Approximately 4,000 legal entities opened accounts at the bank in Q1
2008, bringing the total to approximately 68,000.
(3) Previously Corporate Banking business unit was referred to as Corporate and
Investment Banking ('CIB')
Retail Banking (RB)
Discussion Of Results
In Q1 2008 we continued to witness vibrant demand for loans from our retail
customers. Retail banking business in Georgia continued its impressive growth
making significant contribution to the bank's loan portfolio growth and net
interest margin. Allocated Revenues grew 100.9% y-o-y to GEL 37.7 million (up
35.1% q-o-q). Operating leverage of RB has improved, as the growth rate of
allocated Recurring Costs (up 91.2% y-o-y and 93.2% q-o-q), driven primarily by
the branch and headcount expansion, lagged behind the growth rate of the
allocated Revenues. NNOI grew 110.6% y-o-y to GEL 19.7 million (up 5.9% q-o-q),
contributing 53.7% to the consolidated NNOI. Net Income grew 84.1% y-o-y to GEL
12.9 million (up 113.5% q-o-q), contributing 40.5% to the bank's consolidated
Net Income. Gross Loans grew 124.4% y-o-y to GEL 754.7 million (up 17.2%
year-to-date), driven by the increased lending activity due to high demand for
mortgages, car loans, consumer loans, credit cards and other retail banking
products. Allocated Client Deposits grew 56.5% y-o-y to GEL 363.6 million (up
6.9% year-to-date), reflecting increased competition for deposits. Allocated
Total RB Assets amounted to GEL 1,313 million, up 153.2% y-o-y (up 16.7%
year-to-date), while allocated Total RB Liabilities reached GEL 751.7 million,
up 66.8% y-o-y (up 5.9% year-to-date).
Highlights
-- Increased the number of retail current accounts from approximately
705,000 at the beginning of the year to over 770,000 as at 31 March
2008.
-- Opened 14 new branches (service centers) in Georgia, bringing the total
number of branches to 131 by 31 March 2008.
-- Remodeled four pilot branches based on new brand concept and design
developed by Allen International, a UK based integrated strategic design
consultancy. The pilot branches included two pioneering mortgage centers
in Georgia.
-- Stepped up the issuance of credit cards, as the number of credit cards
issued reached approximately 38,500 during Q1 2008 compared to 5,861
credit cards issued in Q1 2007. As of 31 March 2008, the number of
credit cards outstanding amounted to 147,075, up from 108,616 at the
beginning of the year. Increased the issuance of debit cards, with over
70,000 debit cards issued in Q1 2008, compared to approximately 63,000
debit cards issued during Q1 2007. The number of debit cards outstanding
increased from approximately 538,000 at the beginning of the year to
approximately 595,468 by 31 March 2008.
-- Continued to make gains in merchant acquiring as the installed POS
terminal footprint grew to 2,063 compared to 1,594 at year end 2007.
-- Total number of cards serviced by Georgian Card grew from 876,263 at
year end 2007 to 977,572 by 31 March 2008, while the number of
transaction authorisations processed by Georgian Card in Q1 2008 grew
146.3% y-o-y to approximately 7.2 million. The volume of transactions
processed grew to GEL 496.7 million, up 189.8% y-o-y.
-- Continued investing in the electronic banking channels, as the number of
ATMs grew to 310 by 31 March 2008 (up from 250 at the end of 2007),
number of mobile banking users reached 44,002 up 10.8% from the
beginning of the year and number of registered Internet banking users
grew 44.2% to over 165,000.
-- Increased car loan originations for Q1 2008 to GEL 17.1 million (up
419.7% y-o-y and 46.2% q-o-q). Car loans outstanding by 31 March 2008
stood at GEL 46.5 million, up 305.0% y-o-y (25.4% year-to-date).
Increased mortgage loan originations to GEL 77.5 million in Q1 2008 (up
161.5% y-o-y and 18.9% q-o-q). Mortgage loans outstanding on 31 March
2008 stood at GEL 222.4 million, up 175.2% y-o-y (up 23.1%
year-to-date).
-- Launched a new mortgage strategy in Georgia designed to provide
integrated real estate development, real estate brokerage and mortgage
lending service to retail clients. Under the new strategy the bank has
entered into a joint venture with JSC Iberia Real Estate, a leading
Georgian real estate development company, aimed at developing over
55,000 sq/m of economy class residential housing over the next three
years. Presto, a real estate brokerage established by Bank of Georgia
which is leveraging the bank's extensive branch network to build its
distribution capabilities, will serve as the exclusive sales agent and
Bank of Georgia will provide customized mortgage products for the
properties developed by the joint venture.
-- Jointly with Magti, Georgia's leading Mobile Operator, launched a
co-branded credit card (MagtiCard) distributed to Magti's top 60,000
retail customers, which will serve as the platform for the introduction
of Georgia's first credit based mobile service for retail customers. A
50% discount on roaming services and 25% discount on international calls
offered by Magti to MagtiCard holders makes this card particularly
attractive for Magti's business-oriented customers.
-- Won a tender for the exclusive right for management of municipal bus
payment system, which will be seamlessly integrated with Tbilisi metro
(subway) payment system already managed by the bank since September
2006. As the result, Bank of Georgia will have access to an estimated
900,000 residents of Tbilisi who use municipal transport regularly. Bank
of Georgia's contactless debit cards will be introduced as the most
convenient method of payment of transport fare. As a pilot project, a
student contact less co-branded debit card (BaliCard), which can be used
to pay metro fare, was successfully introduced in Q4 2007.
Wealth Management (WM)
Discussion Of Results
In Q1 2008 Bank of Georgia's WM unit focused on streamlining its operations in
Georgia, including the appointment of Mr. Givi Giorgadze, former head of
corporate business at Aldagi BCI, as the new Head of WM in Georgia, and
developing an offshore private banking offering for the markets with large
Georgian communities, which could provide an important source of client deposits
for the bank. Mr. Zurab Maisuradze, former Head of WM in Georgia will spearhead
the development of the offshore private banking. Allocated Revenues for WM was
GEL 1.6 million in Q1 2008 increasing 98.8% y-o-y (down by 0.7% q-o-q).
Allocated Recurring Costs of GEL 0.7 million grew 107.3% y-o-y (down 17.8%
q-o-q). Net Income grew 196.6% y-o-y (up 17.8% q-o-q) to GEL 0.7 million,
contributing 2.1% to the consolidated Net Income. Gross Loans which stood at GEL
34.9 million grew 17.2% y-o-y, but decreased 21.1% year-to-date due to the
repayment of several sizeable loans in Q1 2008. Allocated Client Deposits
increased by 40.8% y-o-y (up 10.1% year-to-date) to GEL 76.5 million. Allocated
Total WM Assets amounted to GEL 61.3 million, up 34.0% y-o-y (down 27.4%
year-to-date), while allocated Total WM Liabilities reached GEL 94.3 million, up
28.2% y-o-y (down 0.6% year-to-date).
Ukraine
Discussion Of Results
In Q1 2008 UBDP underwent a significant change in terms of its transparency,
organizational structure and risk processes, which resulted in the departure of
several corporate clients, a number of high-profile additions to the management
team and the rearrangement of UBDP's compensation structure. As a result, in Q1
2008, UBDP's Revenue decreased by 6.9% q-o-q to GEL 6.5 million and Net Loss for
the period stood at GEL 0.7 million, as compared to Net Income of GEL 1.7
million for Q4 2007. Gross Loans reached GEL 254.9 million, up 12.6%
year-to-date and Client Deposits amounted to GEL 216.0 million, down 19.3%
year-to-date. UBDP's Total Assets increased to GEL 360.0 million (up 2.8%
year-to-date), while Total Liabilities reached GEL 291.7 million (up 2.9%
year-to-date).
Galt & Taggart Securities
Discussion Of Results
Galt & Taggart Securities, Bank of Georgia's wholly-owned investment banking
subsidiary, was negatively affected by challenging capital markets and resulting
slowdown in trading activity and losses on proprietary trading book in Q1 2008.
Revenue of GEL 1.6 million in Q1 2008 represents a 14.2% increase y-o-y and a
26.6% decrease q-o-q. Recurring Operating Costs amounted to GEL 3.8 million, as
compared to the Recurring Operating Costs of GEL 1.0 million in Q1 2007. The
growth of Recurring Operating Costs reflects the build-out of Galt & Taggart
Securities operations in Ukraine and Georgia over the last year. Galt & Taggart
Securities recorded a net loss of GEL 1.9 million in Q1 2008.
In Q1 2008 Galt & Taggart Securities continued to hold the leading position in
equities trading in Georgia, with an approximately 86.3% market share in terms
of trading volume and ranked #10 among broker-dealers with an approximately 2.7%
market share by equities trading volume in Ukraine.
Asset Management
Galt & Taggart Asset Management (GTAM), the bank's asset management arm,
continued its strong development in Q1 2008. Assets Under Management of GTAM
stood at approximately US$125 million as of 31 March 2008, an increase of 65.2%
since the year end 2007 and 86.8% increase since its establishment in October
2007. Revenues grew to GEL 12.4 million in Q1 2008, up 3806.8% y-o-y (down 39.9%
q-o-q). Recurring Operating Costs increased 191.5% y-o-y (94.0% q-o-q) to GEL
2.8 million. Net Income stood at GEL 8.2 million in Q1 2008 and contributed
25.5% to the consolidated Net Income. Assets grew to GEL 94.3 million as at 31
March 2008, up 144.1% y-o-y (up 20.0% year-to-date). Liabilities reached GEL
32.7 million by 31 March 2008, up 87.0% y-o-y (down 2.7% year-to-date). Galt &
Taggart Capital and SB Real Estate, funds managed by GTAM and majority owned by
the bank, are currently fully consolidated in Bank of Georgia's financial
statements and are reported under Asset Management business unit.
Insurance
Discussion Of Results
Aldagi BCI, the bank's wholly-owned Georgian insurance subsidiary, showed a
strong growth in Gross Premiums Written combined with a marginal loss for the
quarter, which was mainly due to Aldagi BCI's participation in a the state
health care program for socially vulnerable citizens and school teachers
launched in Q4 2007, which brought 84,000 new clients to Aldagi BCI. This
program will end in September 2008. Unlike other major Georgian insurance
companies, Aldagi BCI chose not to participate in a new similar program aimed at
550,000 socially vulnerable citizens announced in Q1 2008. Gross Premiums
Written of Aldagi BCI, the bank's wholly-owned insurance subsidiary, increased
by 56.5% y-o-y to GEL 13.6 million (up 18.9% q-o-q). Net Premiums Earned grew
147.2% y-o-y to GEL 8.0 million (up 39.6% q-o-q). Revenues decreased by 17.7%
y-o-y to GEL 1.8 million (up 1120.5% q-o-q). Net Loss equaled GEL 0.4 million in
Q1 2008. Total Insurance Assets amounted to GEL 64.9 million, up 39.7% y-o-y (up
2.1% year-to-date) while Total Insurance Liabilities reached GEL 47.7 million,
up 14.3% y-o-y (up 5.2% year-to-date) as at 31 March 2008.
Highlights
-- Major new corporate client acquisitions include EnergoPro, a leading
energy distribution company in Georgia and Ashrom, an Israel-based main
subcontractor of the Millennium Challenge Georgia's infrastructure
projects in Georgia.
-- Opened the third branch of Aldagi BCI's My Family Clinic in Tbilisi.
Comments
'We are very pleased to report strong Q1 2008 results. Our profitability remains
robust driven by our market-leading retail banking franchise and corporate
banking businesses in Georgia. Throughout Q1 2008, despite the interest rate
increase on loans, we continued to witness vibrant demand for lending products
from customers in Georgia. At the same time, competition for deposits has
increased notably driven by wholesale funding constraints and higher interest
rate environment resulting from significant increase in benchmark interest rate
of the National Bank of Georgia. In this challenging market conditions, we made
it our priority to continue capturing profitable growth opportunities while
maintaining a disciplined approach to capital management and risk control.
In Q1 2008 we continued our work on the integration and repositioning for growth
of our Ukrainian business and expect to see improvement in the operating results
later this year. Our investment banking business, which was negatively affected
by turbulent capital markets, concentrated on improving its operations and
closer alignment with the banking businesses in Georgia and Ukraine. At the same
time our investments made over last several years in funds managed by GTAM
showed impressive performance making important contribution to our bottom line',
commented Nicholas Enukidze, Chairman of the Supervisory Board.
SEGMENT RESULTS
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Total Operating Income
(Revenue) Growth y-o-y Q1 2008 Share Q1 2007 Share
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 75.4% 24,085 29.7% 13,734 33.5%
Retail Banking 100.9% 37,727 46.5% 18,783 45.8%
Wealth Management 98.8% 1,641 2.0% 825 2.01%
Ukraine NMF 6,503 8.0% n.a. n.a
Galt & Taggart Securities 14.2% 1,617 2.0% 1,417 3.5%
Asset Management 3806.8% 12,402 15.3% 317 0.8%
Insurance -17.7% 1,801 2.2% 2,187 5.3%
Corporate Center/Eliminations NMF -4,681 -5.8% 3,791 9.2%
-------------------------------------------------------------------------------------------------
Total Operating Income
(Revenue) 97.5% 81,094 100.0% 41,055 100.0%
-------------------------------------------------------------------------------------------------
Total Recurring Operating
Costs
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 92.1% 6,968 15.8% 3,628 16.6%
Retail Banking 91.2% 18,052 40.6% 9,441 43.1%
Wealth Management 107.3% 656 1.5% 316 1.4%
Ukraine NMF 7,168 16.1% n.a. n.a
Galt & Taggart Securities 272.4% 3,799 8.5% 1,020 4.7%
Asset Management 191.5% 2,815 6.3% 966 4.4%
Insurance 9.9% 1,812 4.1% 1,650 7.5%
Corporate Center/Eliminations -34.2% 3,207 7.2% 4,876 22.3%
-------------------------------------------------------------------------------------------------
Total Recurring Operating
Costs 103.1% 44,478 100.0% 21,897 100.00%
-------------------------------------------------------------------------------------------------
Net Income
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 40.5% 10,498 32.9% 7,471 54.7%
Retail Banking 84.1% 12,936 40.5% 7,027 51.4%
Wealth Management 196.6% 670 2.1% 226 1.7%
Ukraine NMF -697 -2.2% n.a. n.a
Galt & Taggart Securities NMF -1,854 -5.8% 317 2.3%
Asset Management NMF 8,147 25.5% -156 -1.1%
Insurance NMF -371 -1.2% 401 2.9%
Corporate Center/Eliminations NMF 2,588 8.1% -1,623 -11.9%
-------------------------------------------------------------------------------------------------
Net Income 133.6% 31,918 100.00% 13,663 100.0%
-------------------------------------------------------------------------------------------------
Basic EPS Contribution Growth y-o-y Contribution Share Contribution Share
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 21.2% 0.36 33.0% 0.30 55.6%
Retail Banking 58.8% 0.44 40.4% 0.28 51.9%
Wealth Management 155.8% 0.02 1.8% 0.01 1.9%
Ukraine NMF -0.02 -1.8% n.a. n.a
Galt & Taggart Securities NMF -0.06 -5.5% 0.01 1.9%
Asset Management NMF 0.28 25.7% -0.01 -1.9%
Insurance NMF -0.01 -0.9% 0.02 3.7%
Corporate Center/Eliminations NMF 0.09 8.3% -0.06 -11.1%
-------------------------------------------------------------------------------------------------
Total 101.5% 1.09 100.0% 0.54 100.0%
-------------------------------------------------------------------------------------------------
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SEGMENT RESULTS CONT'D
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Total Assets Growth y-o-y Q1 2008 Share Q1 2007 Share
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 106.5% 1,431,303 45.5% 693,108 42.4%
Retail Banking 153.2% 1,313,114 41.7% 518,651 31.8%
Wealth Management 34.0% 61,319 1.9% 45,765 2.8%
Ukraine NMF 360,022 11.4% n.a. NMF
Galt & Taggart Securities 144.5% 82,549 2.6% 33,759 2.1%
Asset Management 144.1% 94,303 3.0% 38,629 2.4%
Insurance 39.7% 64,901 2.1% 46,454 2.8%
Corporate Center/Eliminations NMF -259,714 -8.3% 257,159 15.7%
----------------------------------------------------------------------------------------------
Total Assets 92.7% 3,147,797 100.0% 1,633,525 100.0%
----------------------------------------------------------------------------------------------
Loans to Clients, Gross
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 82.2% 821,373 44.3% 450,866 54.0%
Retail Banking 124.4% 754,649 40.7% 336,253 40.3%
Wealth Management 17.2% 34,867 1.9% 29,757 3.6%
Ukraine NMF 254,923 13.7% n.a. NMF
Galt & Taggart Securities NMF - NMF - NMF
Asset Management NMF - NMF - NMF
Insurance NMF - NMF - NMF
Corporate Center/Eliminations NMF -10,133 -0.5% 18,464 2.2%
----------------------------------------------------------------------------------------------
Total Loans to Clients 122.1% 1,855,678 100.0% 835,339 100.0%
----------------------------------------------------------------------------------------------
Total Liabilities
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 78.6% 1,078,595 44.9% 603,994 48.4%
Retail Banking 66.8% 751,719 31.3% 450,539 36.1%
Wealth Management 28.2% 94,261 3.9% 73,552 5.9%
Ukraine NMF 291,663 12.1% n.a. NMF
Galt & Taggart Securities 105.2% 27,003 1.1% 13,161 1.1%
Asset Management 87.0% 32,651 1.4% 17,456 1.4%
Insurance 14.3% 47,695 2.0% 41,744 3.3%
Corporate Center/Eliminations 62.1% 77,474 3.2% 47,787 3.8%
----------------------------------------------------------------------------------------------
Total Liabilities 92.4% 2,401,061 100.0% 1,248,233 100.0%
----------------------------------------------------------------------------------------------
Client Deposits
----------------------------------------------------------------------------------------------
Corporate Banking 109.5% 652,712 49.2% 311,603 51.7%
Retail Banking 56.5% 363,584 27.4% 232,392 38.6%
Wealth Management 40.8% 76,460 5.8% 54,295 9.0%
Ukraine NMF 215,991 16.3% n.a. NMF
Galt & Taggart Securities 345.9% 17,428 1.3% 3,909 0.6%
Asset Management NMF - 0.0% - 0.0%
Insurance NMF - 0.0% - 0.0%
Corporate Center/Eliminations NMF - 0.0% - 0.0%
----------------------------------------------------------------------------------------------
Total Client Deposits 120.2% 1,326,175 100.0% 602,199 100.0%
----------------------------------------------------------------------------------------------
Book Value Per Share Growth y-o-y Contribution Share Contribution Share
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 238.1% 11.29 47.2% 3.53 23.1%
Retail Banking 543.1% 17.97 75.2% 2.70 17.7%
Wealth Management NMF -1.05 -4.4% -1.1 -7.2%
Ukraine NMF 2.19 9.2% n.a. NMF
Galt & Taggart Securities 117.9% 1.78 7.4% 0.82 5.4%
Asset Management 135.3% 1.97 8.2% 0.84 5.5%
Insurance 195.2% 0.55 2.3% 0.19 1.2%
Corporate Center/Eliminations NMF -10.79 -45.1% 8.29 54.3%
----------------------------------------------------------------------------------------------
Book Value Per Share 56.6% 23.90 100.0% 15.26 100.0%
----------------------------------------------------------------------------------------------
*T
INCOME STATEMENT DATA
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*T
Period Ended Q1 2008 Q1 2007 Growth(3)
Consolidated, IFRS Based US$(1) GEL US$(2) GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited)
Interest Income 62,724 92,580 25,326 43,054 115.0%
Interest Expense 29,007 42,815 10,005 17,008 151.7%
Net Interest Income 33,716 49,765 15,321 26,046 91.1%
Fee & Commission Income 7,975 11,771 3,776 6,419 83.4%
Fee & Commission Expense 1,080 1,594 290 493 223.6%
Net Fee & Commission Income 6,895 10,177 3,486 5,926 71.7%
Income From Documentary Operations 1,319 1,947 689 1,171 66.2%
Expense On Documentary Operations 339 500 294 500 0.0%
Net Income From Documentary Operations 980 1,447 395 671 115.7%
Net Foreign Currency Related Income 8,961 13,226 2,515 4,276 209.3%
Net Insurance Income 1,109 1,638 1,229 2,089 -21.6%
Brokerage Income 864 1,275 594 1,010 26.2%
Asset Management Income 438 646 - - NMF(4)
Realized Net Investment Gains (Losses) (253) (373) 42 71 NMF(4)
Other 2,232 3,294 569 967 240.6%
Net Other Non-Interest Income 4,390 6,480 2,434 4,137 56.6%
Net Non-Interest Income 21,226 31,329 8,829 15,010 108.7%
Total Operating Income (Revenue) 54,942 81,094 24,150 41,055 97.5%
Personnel Costs 17,432 25,730 7,586 12,897 99.5%
Selling, General & Administrative
Costs 7,659 11,304 2,594 4,409 156.4%
Procurement & Operations Support
Expenses 2,103 3,104 1,276 2,170 43.0%
Depreciation & Amortization 2,730 4,029 1,156 1,965 105.1%
Other Operating Expenses 211 312 269 457 -31.8%
Total Recurring Operating Costs 30,134 44,478 12,881 21,897 103.1%
Normalized Net Operating Income 24,808 36,616 11,269 19,158 91.1%
Net Non-Recurring Income (Costs) 5,737 8,468 (22) (37) NMF(4)
Profit Before Provisions 30,545 45,085 11,247 19,121 135.8%
Net Provision Expense 5,048 7,451 1,186 2,017 269.5%
Pre-Tax Income 25,497 37,634 10,061 17,104 120.0%
Income Tax Expenses 3,873 5,716 2,024 3,441 66.1%
Net Income 21,624 31,918 8,037 13,663 133.6%
Weighted Average Number of Shares
Outstanding (000s) 29,237 25,217 15.9%
Fully Diluted Number of Shares Period End
(000s) 31,244 27,230 14.7%
EPS (Basic) 0.74 1.09 0.32 0.54 101.4%
EPS (Fully Diluted) 0.69 1.02 0.30 0.50 103.6%
*T
(1) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.4760 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 2008
(2) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.7000 per U$S1.00, such rate being the official Georgian Lari to U.S.
dollar period-end exchange rate as reported by the National Bank of Georgia as
at 31 March 2007
(3)Growth calculations based on GEL values
(4) Not meaningful
BALANCE SHEET DATA
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31-Mar-08 Growth(2) 31-Dec-07 Growth(2) 31-Mar-07
Consolidated, IFRS Based US$(1) GEL YTD US$(3) GEL Y-O-Y US$(4) GEL
000s, unless otherwise noted (Unaudited) (Audited) (Unaudited)
Cash & Cash Equivalents 146,001 215,497 -41.8% 232,642 370,273 164.8% 47,871 81,381
Loans & Advances To Credit
Institutions 157,305 232,182 22.2% 119,413 190,057 -16.5% 163,647 278,199
Mandatory Reserve With
NBG/NBU 59,344 87,591 -39.4% 90,872 144,631 46.9% 35,067 59,614
Other Accounts With NBG/NBU 34,463 50,868 43.3% 22,303 35,497 278.1% 7,914 13,454
Balances With & Loans To
Other Banks 63,498 93,723 844.0% 6,238 9,929 -54.3% 120,666 205,132
Available-For-Sale Securities 34,830 51,409 5.5% 30,616 48,729 9727.3% 308 523
Treasuries & Equivalents 18,726 27,639 -65.3% 50,111 79,757 -41.0% 27,552 46,838
Other Fixed Income Instruments 190,534 281,229 149.5% 70,814 112,708 43.7% 115,156 195,766
Gross Loans To Clients 1,257,235 1,855,678 5.9% 1,100,842 1,752,100 122.1% 491,376 835,339
Less: Reserve For Loan
Losses -26,818 -39,584 33.1% -18,689 -29,745 85.8% -12,533 -21,307
Net Loans To Clients 1,230,416 1,816,094 5.4% 1,082,153 1,722,355 123.1% 478,843 814,033
Investments In Other Business
Entities, Net 45,623 67,339 67.2% 25,303 40,273 202.0% 13,116 22,297
Property & Equipment Owned,
Net 167,416 247,107 20.7% 128,585 204,656 144.1% 59,547 101,230
Intangible Assets Owned, Net 4,220 6,229 65.1% 2,370 3,772 109.7% 1,747 2,970
Goodwill 74,679 110,227 -1.8% 70,505 112,216 163.9% 24,573 41,773
Tax Assets - Current &
Deferred 2,371 3,499 124.7% 978 1,557 1812.8% 108 183
Prepayments & Other Assets 60,533 89,346 32.8% 42,258 67,258 84.9% 28,431 48,333
Total Assets 2,132,654 3,147,797 6.6% 1,855,750 2,953,611 92.7% 960,898 1,633,526
11,591 19,705
Client Deposits 898,493 1,326,175 -2.2% 851,644 1,355,476 120.2% 354,235 602,199
Deposits & Loans From Banks 29,541 43,602 -33.7% 41,349 65,811 22.4% 20,959 35,631
Borrowed Funds 538,668 795,074 -4.9% 525,248 835,984 50.7% 310,265 527,451
Issued Fixed Income Securities 9,173 13,540 171.2% 3,137 4,993 -31.3% 671 1,141
Insurance Related Liabilities 29,221 43,130 4.4% 25,968 41,330 3681.5% 11,591 19,705
Tax Liabilities - Current &
Deferred 18,357 27,095 -27.2% 23,378 37,209 149.1% 6,399 10,878
Accruals & Other Liabilities 103,282 152,445 178.1% 34,441 54,817 197.6% 30,135 51,230
Total Liabilities 1,626,736 2,401,062 0.2% 1,505,165 2,395,620 92.4% 734,255 1,248,234
Ordinary Shares 21,168 31,244 15.1% 17,061 27,155 23.8% 14,850 25,245
Share Premium 302,975 447,191 41.8% 198,175 315,415 73.0% 152,081 258,538
Treasury Shares -1,250 -1,846 6.3% -1,091 -1,737 59.3% (681) (1,158)
Retained Earnings 97,705 144,213 125.8% 40,122 63,858 136.5% 35,869 60,977
Revaluation & Other Reserves 42,537 62,784 -6.8% 42,318 67,354 175.5% 13,407 22,791
Net Income For The Period 21,624 31,918 -57.8% 47,526 75,642 133.6% 8,037 13,663
Shareholders' Equity Excluding
Minority Interest 484,759 715,505 30.6% 344,111 547,687 88.3% 223,562 380,055
Minority Interest 21,159 31,230 203.1% 6,474 10,304 496.3% 3,081 5,237
Total Shareholders' Equity 505,918 746,735 33.8% 350,585 557,991 93.8% 226,642 385,292
Total Liabilities &
Shareholders' Equity 2,132,654 3,147,797 6.6% 1,855,750 2,953,611 92.7% 960,898 1,633,526
Shares Outstanding 31,244,092 15.1% 27,154,918 23.8% 25,244,609
Book Value Per Share 16.19 23.90 15.9% 12.95 20.62 55.3% 9.05 15.39
(1) Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4760 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 31 March 2008
(2) Growth calculations based on GEL values
(3) Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.5916 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 December 2007
(4) Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7000 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 2007
*T
KEY RATIOS
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Q1 2008 Q1 2007
Profitability Ratios
ROAA( 1), Annualised 4.2% 3.8%
ROA 4.1% 3.3%
ROAE(2), Annualised 19.6% 14.3%
ROE 17.1% 14.2%
Interest Income To Average Interest Earning Assets (3), Annualised 16.6% 15.1%
Cost Of Funds (4), Annualised 7.7% 7.0%
Net Spread (5) 8.9% 8.1%
Net Interest Margin (6), Annualised 8.9% 9.1%
Net Interest Margin Normalized (35), Annualised 8.9% 9.1%
Loan Yield (7), Annualised 18.9% 21.2%
Interest Expense To Interest Income 46.2% 39.5%
Net Non-Interest Income To Average Total Assets, Annualised 4.1% 4.2%
Net Non-Interest Income To Revenue (8) 38.6% 36.6%
Net Fee And Commission Income To Average Interest Earning Assets (9),
Annualised 1.8% 2.1%
Net Fee And Commission Income To Revenue 12.5% 14.4%
Operating Leverage (10) 33.4% 38.6%
Total Operating Income (Revenue) To Total Assets, Annualised 10.3% 10.0%
Recurring Earning Power (11), Annualised 4.8% 6.9%
Net Income To Revenue 39.4% 33.3%
Efficiency Ratios
Operating Cost To Average Total Assets (12), Annualised 5.8% 6.1%
Cost To Average Total Assets (13), Annualised 4.7% 6.2%
Cost / Income (14) 44.4% 53.4%
Cost / Income, Normalized (37) 54.8% 53.3%
Cost / Income, Bank of Georgia, Standalone (15) 45.1% 50.1%
Cash Cost / Income 39.4% 48.6%
Total Employee Compensation Expense To Revenue (16) 31.7% 31.4%
Total Employee Compensation Expense To Cost 71.5% 58.8%
Total Employee Compensation Expense To Average Total Assets, Annualised 3.4% 3.6%
Liquidity Ratios
Net Loans To Total Assets (17) 57.7% 49.7%
Average Net Loans To Average Total Assets 58.0% 52.9%
Interest Earning Assets To Total Assets 74.9% 81.6%
Average Interest Earning Assets To Average Total Assets 73.1% 80.2%
Liquid Assets To Total Assets (18) 22.9% 33.2%
Net Loans To Client Deposits 136.9% 135.2%
Average Net Loans To Average Client Deposits 132.0% 129.8%
Net Loans To Total Deposits (19) 132.6% 127.7%
Net Loans To Total Liabilities 75.6% 65.2%
Total Deposits To Total Liabilities 57.0% 48.2%
Client Deposits To Total Deposits 96.8% 94.4%
Client Deposits To Total Liabilities 55.2% 48.2%
Current Account Balances To Client Deposits 43.8% 61.0%
Demand Deposits To Client Deposits 7.0% 5.5%
Time Deposits To Client Deposits 49.3% 33.5%
Total Deposits To Total Assets 43.5% 39.0%
Client Deposits To Total Assets 42.1% 36.8%
Client Deposits To Total Equity (Times) (20) 1.78 1.55
Due From Banks / Due To Banks (21) 532.5% 780.8%
Total Equity To Net Loans 41.1% 47.7%
Leverage (Times) (22) 3.2 3.2
*T
KEY RATIOS CONT'D
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*T
Q1 2008 Q1 2007
Asset Quality
NPLs (in GEL) 23 18,992 21,059
NPLs To Gross Loans To Clients (24) 1.0% 2.5%
Cost of Risk 25, Annualized 1.7% 1.0%
Cost of Risk Normalized (36), Annualized 1.7% 1.0%
Reserve For Loan Losses To Gross Loans To Clients (26) 2.1% 2.6%
NPL Coverage Ratio (27) 208.4% 101.2%
Equity To Average Net Loans To Clients 42.2% 51.5%
Capital Adequacy:
Equity To Total Assets 23.7% 23.7%
BIS Tier I Capital Adequacy Ratio, consolidated (28) 25.2% 34.1%
BIS Total Capital Adequacy Ratio, consolidated (29) 25.8% 34.8%
NBG Tier I Capital Adequacy Ratio (30) 18.3% 19.2%
NBG Total Capital Adequacy Ratio (31) 16.3% 22.5%
Per Share Values:
Basic EPS (GEL) (32) 1.09 0.54
Basic EPS (US$) 0.74 0.32
Fully Diluted EPS (GEL) (33) 1.02 0.50
Fully Diluted EPS (US$) 0.69 0.30
Book Value Per Share (GEL) (34) 23.90 15.39
Book Value Per Share (US$) 16.19 9.05
Ordinary Shares Outstanding - Weighted Average, Basic 29,237,387 25,216,510
Ordinary Shares Outstanding - Period End 31,244,092 25,244,609
Ordinary Shares Outstanding - Fully Diluted 31,244,092 27,230,351
Selected Operating Data:
Full Time Employees (FTEs) 4,926 2,558
FTEs, Bank of Georgia Standalone 3,056 1,933
Total assets per FTE (23 )(GEL Thousands) 639 640
Total Assets per FTE, Bank of Georgia Standalone (GEL Thousands) 1,030 847
Number Of Active Branches 131 103
Number Of ATMs 310 146
Number Of Cards (Thousands) 743 344
Number Of POS Terminals 2,063 497
*T
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, 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;
(16) Total Employee Compensation Expense includes Personnel Costs;
(17) Net Loans equal Net Loans To Clients;
(18) 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;
(19) Total Deposits include Client Deposits and Deposits And Loans from Banks;
(20) Total Equity equals Total Shareholders' Equity;
(21) Due From Banks/ Due To Banks equals Loans And Advances To Credit
Institutions divided by Deposits And Loans From Banks;
(22) Leverage (Times) equals Total Liabilities as of the period end divided by
Total Equity as of the same date;
(23) NPLs (in GEL) equals 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;
(24) Gross Loans equals Gross Loans To Clients;
25 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;
(26) 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;
(27) NPL Coverage Ratio equals Reserve For Loan losses as of the period end
divided by NPLs as of the same date;
(28) 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;
(29) 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;
(30) 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;
(31) 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;
(32) Basic EPS equals Net Income of the period divided by the weighted average
number of outstanding ordinary shares over the same period;
(33) 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;
(34) 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.
(35) Net Interest Margin Normalized equals Net Interest Income of the period,
less interest income generated by non-performing loans through the date of their
write-off, divided by quarterly Average Interest Earning Assets of the same
period;
(36) 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;
(37) Cost / Income Normalized equals Recurring Operating Costs divided by Total
Operating Income (Revenue) for the same period
About Bank of Georgia
Bank of Georgia, the leading universal Georgian bank with operations in Georgia
and Ukraine, is the largest bank by assets, loans, deposits and equity in
Georgia, with 33.7% market share by total assets (all data according to the NBG
as of March 31, 2008). The major component of the Galt & Taggart Index, the bank
has 131 branches and over 770,000 retail and more than 120,000 corporate current
accounts. The bank offers a full range of retail banking and corporate and
investment banking services to its customers across Georgia. The bank also
provides a wide range of corporate and retail insurance products through its
wholly-owned subsidiary, Aldagi BCI, as well as asset & wealth management
services.
Bank of Georgia has, as of the date hereof, the following credit ratings:
-0-
*T
Standard & Poor's 'B+/B' Stable
FitchRatings 'B+/B' Stable
Moody's 'B3/NP' (FC) & 'Ba1/NP' (LC)
*T
For further information, please visit www.bog.ge/ir or contact:
-0-
*T
Nicholas Enukidze Irakli Gilauri Macca Ekizashvili
Chairman of the Supervisory Board Chief Executive Officer Head of Investor Relations
+995 32 444 800 +995 32 444 109 +995 32 444 256
nenukidze@bog.ge igilauri@bog.ge ir@bog.ge
*T
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 Q1 2008 and Q1 2007 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.banking market share by Net Income in Georgia on a
standalone basis in Q1 2008, which compares to 26.7% in Q1 2007.
Total Shareholders' Equity grew by GEL 361.4 million in Q1 2008 (GEL 188.7
million year-to-date) and amounted to GEL 746.7 million. The year-to-date growth
was mainly attributed to Q1 2008 Net Income of GEL 31.9 million, as well as a
capital increase through the placement of four million new ordinary shares in
the form of GDRs on 13 February 2008, which raised gross proceeds of US$100
million.
Despite the capital increase in February 2007, Bank of Georgia's Consolidated
ROAE increased to 19.6% in Q1 2008 as compared to consolidated ROAE of 14.4% in
Q1 2007 and 17.7% for the full year 2007. Consolidated ROAA grew to 4.2% in Q1
2008 from 3.8% in Q1 2007 and 3.8% for the full year 2007. Equity book value per
share stood at GEL 23.90 (US$16.19) as at 31 March 2008, up 55.3% y-o-y (up
15.9% year-to-date).
The Extraordinary Meeting of Shareholders (the 'EGM') held on 22 February 2007,
acknowledged the resignation of Lado Gurgenidze as the Chairman of the
Supervisory Board of Bank of Georgia and elected Mr. Kaha Kiknavelidze as a new
member of the Supervisory Board. Subsequently, Mr. Nicholas Enukidze, Vice
Chairman of the Supervisory Board since November 2006 and Acting Chairman since
November 2007, was elected as Chairman of the Supervisory Board by the
Supervisory Board.
(1) Starting in Q1 2008 Bonuses and Share Based Compensation Expense is included
in the calculation of the Recurring Operating Costs. For the purposes of this
press release for all previous reporting periods Recurring Operating Costs are
recalculated using the new methodology and NNOI is adjusted to the changes in
the calculation methodology of Recurring Operating Costs.
(2) 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. Deposit market share is calculated based on the amount
of total deposits, including client and interbank deposits
Strategic Business Unit and Business Unit Overview
Corporate Banking (CB)(3)
Discussion Of Results
In Q1 2008 CB continued to successfully leverage Bank of Georgia's position as
the leading financial institution in Georgia, increasing its operating
efficiency and profitability. Allocated Revenues grew 75.4% y-o-y to GEL 24.1
million (up 7.2% q-o-q). Operating leverage of CB has improved, as the growth
rate of allocated Recurring Costs (up 92.1% y-o-y and down by 13.6% q-o-q)
lagged the growth rate of the allocated Revenues. NNOI grew 69.4% y-o-y to GEL
17.1 million (up 18.9% q-o-q), contributing 46.7% to the consolidated NNOI. Net
Income grew 40.5% y-o-y to GEL 10.5 million (up 56.6% q-o-q), contributing 32.9%
to the consolidated Net Income. Gross Loans grew 82.2% y-o-y to GEL 821.4
million (up 1.8% year-to-date). Allocated Client Deposits stood at GEL 652.7
million up 109.5% increase y-o-y and down by 2.5% year-to-date, which was caused
by the notably increased competition for deposits in Q1 2008 driven by wholesale
funding constraints and higher interest rate environment resulting from
significant increase in benchmark interest rate. Allocated Total CB Assets
amounted to GEL 1,431 million, up 106.5% y-o-y (up 0.7% year-to-date), while
allocated Total CB Liabilities stood at GEL 1,079 million, up 78.6% y-o-y (down
by 2.1% year-to-date).
Highlights
-- Major new corporate client acquisitions include Alon Group Israel, an
investment company, JSC Caucasus Energy and Infrastructure, a fund
investing in energy and infrastructure assets in Georgia, and Georgian
Trading Company, a high end (Bali, Trussardi etc.) apparel retailer in
Tbilisi.
-- Increased the number of corporate clients using the bank's payroll
services from approximately 700 at the end of 2006 to over 850 by 31
March 2007. By the end of Q1 2008, the number of individual clients
serviced through the corporate payroll programs administered by the bank
increased from approximately 150,000 at the beginning of the year to
153,984.
-- Approximately 4,000 legal entities opened accounts at the bank in Q1
2008, bringing the total to approximately 68,000.
(3) Previously Corporate Banking business unit was referred to as Corporate and
Investment Banking ('CIB')
Retail Banking (RB)
Discussion Of Results
In Q1 2008 we continued to witness vibrant demand for loans from our retail
customers. Retail banking business in Georgia continued its impressive growth
making significant contribution to the bank's loan portfolio growth and net
interest margin. Allocated Revenues grew 100.9% y-o-y to GEL 37.7 million (up
35.1% q-o-q). Operating leverage of RB has improved, as the growth rate of
allocated Recurring Costs (up 91.2% y-o-y and 93.2% q-o-q), driven primarily by
the branch and headcount expansion, lagged behind the growth rate of the
allocated Revenues. NNOI grew 110.6% y-o-y to GEL 19.7 million (up 5.9% q-o-q),
contributing 53.7% to the consolidated NNOI. Net Income grew 84.1% y-o-y to GEL
12.9 million (up 113.5% q-o-q), contributing 40.5% to the bank's consolidated
Net Income. Gross Loans grew 124.4% y-o-y to GEL 754.7 million (up 17.2%
year-to-date), driven by the increased lending activity due to high demand for
mortgages, car loans, consumer loans, credit cards and other retail banking
products. Allocated Client Deposits grew 56.5% y-o-y to GEL 363.6 million (up
6.9% year-to-date), reflecting increased competition for deposits. Allocated
Total RB Assets amounted to GEL 1,313 million, up 153.2% y-o-y (up 16.7%
year-to-date), while allocated Total RB Liabilities reached GEL 751.7 million,
up 66.8% y-o-y (up 5.9% year-to-date).
Highlights
-- Increased the number of retail current accounts from approximately
705,000 at the beginning of the year to over 770,000 as at 31 March
2008.
-- Opened 14 new branches (service centers) in Georgia, bringing the total
number of branches to 131 by 31 March 2008.
-- Remodeled four pilot branches based on new brand concept and design
developed by Allen International, a UK based integrated strategic design
consultancy. The pilot branches included two pioneering mortgage centers
in Georgia.
-- Stepped up the issuance of credit cards, as the number of credit cards
issued reached approximately 38,500 during Q1 2008 compared to 5,861
credit cards issued in Q1 2007. As of 31 March 2008, the number of
credit cards outstanding amounted to 147,075, up from 108,616 at the
beginning of the year. Increased the issuance of debit cards, with over
70,000 debit cards issued in Q1 2008, compared to approximately 63,000
debit cards issued during Q1 2007. The number of debit cards outstanding
increased from approximately 538,000 at the beginning of the year to
approximately 595,468 by 31 March 2008.
-- Continued to make gains in merchant acquiring as the installed POS
terminal footprint grew to 2,063 compared to 1,594 at year end 2007.
-- Total number of cards serviced by Georgian Card grew from 876,263 at
year end 2007 to 977,572 by 31 March 2008, while the number of
transaction authorisations processed by Georgian Card in Q1 2008 grew
146.3% y-o-y to approximately 7.2 million. The volume of transactions
processed grew to GEL 496.7 million, up 189.8% y-o-y.
-- Continued investing in the electronic banking channels, as the number of
ATMs grew to 310 by 31 March 2008 (up from 250 at the end of 2007),
number of mobile banking users reached 44,002 up 10.8% from the
beginning of the year and number of registered Internet banking users
grew 44.2% to over 165,000.
-- Increased car loan originations for Q1 2008 to GEL 17.1 million (up
419.7% y-o-y and 46.2% q-o-q). Car loans outstanding by 31 March 2008
stood at GEL 46.5 million, up 305.0% y-o-y (25.4% year-to-date).
Increased mortgage loan originations to GEL 77.5 million in Q1 2008 (up
161.5% y-o-y and 18.9% q-o-q). Mortgage loans outstanding on 31 March
2008 stood at GEL 222.4 million, up 175.2% y-o-y (up 23.1%
year-to-date).
-- Launched a new mortgage strategy in Georgia designed to provide
integrated real estate development, real estate brokerage and mortgage
lending service to retail clients. Under the new strategy the bank has
entered into a joint venture with JSC Iberia Real Estate, a leading
Georgian real estate development company, aimed at developing over
55,000 sq/m of economy class residential housing over the next three
years. Presto, a real estate brokerage established by Bank of Georgia
which is leveraging the bank's extensive branch network to build its
distribution capabilities, will serve as the exclusive sales agent and
Bank of Georgia will provide customized mortgage products for the
properties developed by the joint venture.
-- Jointly with Magti, Georgia's leading Mobile Operator, launched a
co-branded credit card (MagtiCard) distributed to Magti's top 60,000
retail customers, which will serve as the platform for the introduction
of Georgia's first credit based mobile service for retail customers. A
50% discount on roaming services and 25% discount on international calls
offered by Magti to MagtiCard holders makes this card particularly
attractive for Magti's business-oriented customers.
-- Won a tender for the exclusive right for management of municipal bus
payment system, which will be seamlessly integrated with Tbilisi metro
(subway) payment system already managed by the bank since September
2006. As the result, Bank of Georgia will have access to an estimated
900,000 residents of Tbilisi who use municipal transport regularly. Bank
of Georgia's contactless debit cards will be introduced as the most
convenient method of payment of transport fare. As a pilot project, a
student contact less co-branded debit card (BaliCard), which can be used
to pay metro fare, was successfully introduced in Q4 2007.
Wealth Management (WM)
Discussion Of Results
In Q1 2008 Bank of Georgia's WM unit focused on streamlining its operations in
Georgia, including the appointment of Mr. Givi Giorgadze, former head of
corporate business at Aldagi BCI, as the new Head of WM in Georgia, and
developing an offshore private banking offering for the markets with large
Georgian communities, which could provide an important source of client deposits
for the bank. Mr. Zurab Maisuradze, former Head of WM in Georgia will spearhead
the development of the offshore private banking. Allocated Revenues for WM was
GEL 1.6 million in Q1 2008 increasing 98.8% y-o-y (down by 0.7% q-o-q).
Allocated Recurring Costs of GEL 0.7 million grew 107.3% y-o-y (down 17.8%
q-o-q). Net Income grew 196.6% y-o-y (up 17.8% q-o-q) to GEL 0.7 million,
contributing 2.1% to the consolidated Net Income. Gross Loans which stood at GEL
34.9 million grew 17.2% y-o-y, but decreased 21.1% year-to-date due to the
repayment of several sizeable loans in Q1 2008. Allocated Client Deposits
increased by 40.8% y-o-y (up 10.1% year-to-date) to GEL 76.5 million. Allocated
Total WM Assets amounted to GEL 61.3 million, up 34.0% y-o-y (down 27.4%
year-to-date), while allocated Total WM Liabilities reached GEL 94.3 million, up
28.2% y-o-y (down 0.6% year-to-date).
Ukraine
Discussion Of Results
In Q1 2008 UBDP underwent a significant change in terms of its transparency,
organizational structure and risk processes, which resulted in the departure of
several corporate clients, a number of high-profile additions to the management
team and the rearrangement of UBDP's compensation structure. As a result, in Q1
2008, UBDP's Revenue decreased by 6.9% q-o-q to GEL 6.5 million and Net Loss for
the period stood at GEL 0.7 million, as compared to Net Income of GEL 1.7
million for Q4 2007. Gross Loans reached GEL 254.9 million, up 12.6%
year-to-date and Client Deposits amounted to GEL 216.0 million, down 19.3%
year-to-date. UBDP's Total Assets increased to GEL 360.0 million (up 2.8%
year-to-date), while Total Liabilities reached GEL 291.7 million (up 2.9%
year-to-date).
Galt & Taggart Securities
Discussion Of Results
Galt & Taggart Securities, Bank of Georgia's wholly-owned investment banking
subsidiary, was negatively affected by challenging capital markets and resulting
slowdown in trading activity and losses on proprietary trading book in Q1 2008.
Revenue of GEL 1.6 million in Q1 2008 represents a 14.2% increase y-o-y and a
26.6% decrease q-o-q. Recurring Operating Costs amounted to GEL 3.8 million, as
compared to the Recurring Operating Costs of GEL 1.0 million in Q1 2007. The
growth of Recurring Operating Costs reflects the build-out of Galt & Taggart
Securities operations in Ukraine and Georgia over the last year. Galt & Taggart
Securities recorded a net loss of GEL 1.9 million in Q1 2008.
In Q1 2008 Galt & Taggart Securities continued to hold the leading position in
equities trading in Georgia, with an approximately 86.3% market share in terms
of trading volume and ranked #10 among broker-dealers with an approximately 2.7%
market share by equities trading volume in Ukraine.
Asset Management
Galt & Taggart Asset Management (GTAM), the bank's asset management arm,
continued its strong development in Q1 2008. Assets Under Management of GTAM
stood at approximately US$125 million as of 31 March 2008, an increase of 65.2%
since the year end 2007 and 86.8% increase since its establishment in October
2007. Revenues grew to GEL 12.4 million in Q1 2008, up 3806.8% y-o-y (down 39.9%
q-o-q). Recurring Operating Costs increased 191.5% y-o-y (94.0% q-o-q) to GEL
2.8 million. Net Income stood at GEL 8.2 million in Q1 2008 and contributed
25.5% to the consolidated Net Income. Assets grew to GEL 94.3 million as at 31
March 2008, up 144.1% y-o-y (up 20.0% year-to-date). Liabilities reached GEL
32.7 million by 31 March 2008, up 87.0% y-o-y (down 2.7% year-to-date). Galt &
Taggart Capital and SB Real Estate, funds managed by GTAM and majority owned by
the bank, are currently fully consolidated in Bank of Georgia's financial
statements and are reported under Asset Management business unit.
Insurance
Discussion Of Results
Aldagi BCI, the bank's wholly-owned Georgian insurance subsidiary, showed a
strong growth in Gross Premiums Written combined with a marginal loss for the
quarter, which was mainly due to Aldagi BCI's participation in a the state
health care program for socially vulnerable citizens and school teachers
launched in Q4 2007, which brought 84,000 new clients to Aldagi BCI. This
program will end in September 2008. Unlike other major Georgian insurance
companies, Aldagi BCI chose not to participate in a new similar program aimed at
550,000 socially vulnerable citizens announced in Q1 2008. Gross Premiums
Written of Aldagi BCI, the bank's wholly-owned insurance subsidiary, increased
by 56.5% y-o-y to GEL 13.6 million (up 18.9% q-o-q). Net Premiums Earned grew
147.2% y-o-y to GEL 8.0 million (up 39.6% q-o-q). Revenues decreased by 17.7%
y-o-y to GEL 1.8 million (up 1120.5% q-o-q). Net Loss equaled GEL 0.4 million in
Q1 2008. Total Insurance Assets amounted to GEL 64.9 million, up 39.7% y-o-y (up
2.1% year-to-date) while Total Insurance Liabilities reached GEL 47.7 million,
up 14.3% y-o-y (up 5.2% year-to-date) as at 31 March 2008.
Highlights
-- Major new corporate client acquisitions include EnergoPro, a leading
energy distribution company in Georgia and Ashrom, an Israel-based main
subcontractor of the Millennium Challenge Georgia's infrastructure
projects in Georgia.
-- Opened the third branch of Aldagi BCI's My Family Clinic in Tbilisi.
Comments
'We are very pleased to report strong Q1 2008 results. Our profitability remains
robust driven by our market-leading retail banking franchise and corporate
banking businesses in Georgia. Throughout Q1 2008, despite the interest rate
increase on loans, we continued to witness vibrant demand for lending products
from customers in Georgia. At the same time, competition for deposits has
increased notably driven by wholesale funding constraints and higher interest
rate environment resulting from significant increase in benchmark interest rate
of the National Bank of Georgia. In this challenging market conditions, we made
it our priority to continue capturing profitable growth opportunities while
maintaining a disciplined approach to capital management and risk control.
In Q1 2008 we continued our work on the integration and repositioning for growth
of our Ukrainian business and expect to see improvement in the operating results
later this year. Our investment banking business, which was negatively affected
by turbulent capital markets, concentrated on improving its operations and
closer alignment with the banking businesses in Georgia and Ukraine. At the same
time our investments made over last several years in funds managed by GTAM
showed impressive performance making important contribution to our bottom line',
commented Nicholas Enukidze, Chairman of the Supervisory Board.
SEGMENT RESULTS
-0-
*T
Total Operating Income
(Revenue) Growth y-o-y Q1 2008 Share Q1 2007 Share
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 75.4% 24,085 29.7% 13,734 33.5%
Retail Banking 100.9% 37,727 46.5% 18,783 45.8%
Wealth Management 98.8% 1,641 2.0% 825 2.01%
Ukraine NMF 6,503 8.0% n.a. n.a
Galt & Taggart Securities 14.2% 1,617 2.0% 1,417 3.5%
Asset Management 3806.8% 12,402 15.3% 317 0.8%
Insurance -17.7% 1,801 2.2% 2,187 5.3%
Corporate Center/Eliminations NMF -4,681 -5.8% 3,791 9.2%
-------------------------------------------------------------------------------------------------
Total Operating Income
(Revenue) 97.5% 81,094 100.0% 41,055 100.0%
-------------------------------------------------------------------------------------------------
Total Recurring Operating
Costs
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 92.1% 6,968 15.8% 3,628 16.6%
Retail Banking 91.2% 18,052 40.6% 9,441 43.1%
Wealth Management 107.3% 656 1.5% 316 1.4%
Ukraine NMF 7,168 16.1% n.a. n.a
Galt & Taggart Securities 272.4% 3,799 8.5% 1,020 4.7%
Asset Management 191.5% 2,815 6.3% 966 4.4%
Insurance 9.9% 1,812 4.1% 1,650 7.5%
Corporate Center/Eliminations -34.2% 3,207 7.2% 4,876 22.3%
-------------------------------------------------------------------------------------------------
Total Recurring Operating
Costs 103.1% 44,478 100.0% 21,897 100.00%
-------------------------------------------------------------------------------------------------
Net Income
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 40.5% 10,498 32.9% 7,471 54.7%
Retail Banking 84.1% 12,936 40.5% 7,027 51.4%
Wealth Management 196.6% 670 2.1% 226 1.7%
Ukraine NMF -697 -2.2% n.a. n.a
Galt & Taggart Securities NMF -1,854 -5.8% 317 2.3%
Asset Management NMF 8,147 25.5% -156 -1.1%
Insurance NMF -371 -1.2% 401 2.9%
Corporate Center/Eliminations NMF 2,588 8.1% -1,623 -11.9%
-------------------------------------------------------------------------------------------------
Net Income 133.6% 31,918 100.00% 13,663 100.0%
-------------------------------------------------------------------------------------------------
Basic EPS Contribution Growth y-o-y Contribution Share Contribution Share
-------------------------------------------------------------------------------------------------
Corporate & Investment Banking 21.2% 0.36 33.0% 0.30 55.6%
Retail Banking 58.8% 0.44 40.4% 0.28 51.9%
Wealth Management 155.8% 0.02 1.8% 0.01 1.9%
Ukraine NMF -0.02 -1.8% n.a. n.a
Galt & Taggart Securities NMF -0.06 -5.5% 0.01 1.9%
Asset Management NMF 0.28 25.7% -0.01 -1.9%
Insurance NMF -0.01 -0.9% 0.02 3.7%
Corporate Center/Eliminations NMF 0.09 8.3% -0.06 -11.1%
-------------------------------------------------------------------------------------------------
Total 101.5% 1.09 100.0% 0.54 100.0%
-------------------------------------------------------------------------------------------------
*T
SEGMENT RESULTS CONT'D
-0-
*T
Total Assets Growth y-o-y Q1 2008 Share Q1 2007 Share
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 106.5% 1,431,303 45.5% 693,108 42.4%
Retail Banking 153.2% 1,313,114 41.7% 518,651 31.8%
Wealth Management 34.0% 61,319 1.9% 45,765 2.8%
Ukraine NMF 360,022 11.4% n.a. NMF
Galt & Taggart Securities 144.5% 82,549 2.6% 33,759 2.1%
Asset Management 144.1% 94,303 3.0% 38,629 2.4%
Insurance 39.7% 64,901 2.1% 46,454 2.8%
Corporate Center/Eliminations NMF -259,714 -8.3% 257,159 15.7%
----------------------------------------------------------------------------------------------
Total Assets 92.7% 3,147,797 100.0% 1,633,525 100.0%
----------------------------------------------------------------------------------------------
Loans to Clients, Gross
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 82.2% 821,373 44.3% 450,866 54.0%
Retail Banking 124.4% 754,649 40.7% 336,253 40.3%
Wealth Management 17.2% 34,867 1.9% 29,757 3.6%
Ukraine NMF 254,923 13.7% n.a. NMF
Galt & Taggart Securities NMF - NMF - NMF
Asset Management NMF - NMF - NMF
Insurance NMF - NMF - NMF
Corporate Center/Eliminations NMF -10,133 -0.5% 18,464 2.2%
----------------------------------------------------------------------------------------------
Total Loans to Clients 122.1% 1,855,678 100.0% 835,339 100.0%
----------------------------------------------------------------------------------------------
Total Liabilities
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 78.6% 1,078,595 44.9% 603,994 48.4%
Retail Banking 66.8% 751,719 31.3% 450,539 36.1%
Wealth Management 28.2% 94,261 3.9% 73,552 5.9%
Ukraine NMF 291,663 12.1% n.a. NMF
Galt & Taggart Securities 105.2% 27,003 1.1% 13,161 1.1%
Asset Management 87.0% 32,651 1.4% 17,456 1.4%
Insurance 14.3% 47,695 2.0% 41,744 3.3%
Corporate Center/Eliminations 62.1% 77,474 3.2% 47,787 3.8%
----------------------------------------------------------------------------------------------
Total Liabilities 92.4% 2,401,061 100.0% 1,248,233 100.0%
----------------------------------------------------------------------------------------------
Client Deposits
----------------------------------------------------------------------------------------------
Corporate Banking 109.5% 652,712 49.2% 311,603 51.7%
Retail Banking 56.5% 363,584 27.4% 232,392 38.6%
Wealth Management 40.8% 76,460 5.8% 54,295 9.0%
Ukraine NMF 215,991 16.3% n.a. NMF
Galt & Taggart Securities 345.9% 17,428 1.3% 3,909 0.6%
Asset Management NMF - 0.0% - 0.0%
Insurance NMF - 0.0% - 0.0%
Corporate Center/Eliminations NMF - 0.0% - 0.0%
----------------------------------------------------------------------------------------------
Total Client Deposits 120.2% 1,326,175 100.0% 602,199 100.0%
----------------------------------------------------------------------------------------------
Book Value Per Share Growth y-o-y Contribution Share Contribution Share
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 238.1% 11.29 47.2% 3.53 23.1%
Retail Banking 543.1% 17.97 75.2% 2.70 17.7%
Wealth Management NMF -1.05 -4.4% -1.1 -7.2%
Ukraine NMF 2.19 9.2% n.a. NMF
Galt & Taggart Securities 117.9% 1.78 7.4% 0.82 5.4%
Asset Management 135.3% 1.97 8.2% 0.84 5.5%
Insurance 195.2% 0.55 2.3% 0.19 1.2%
Corporate Center/Eliminations NMF -10.79 -45.1% 8.29 54.3%
----------------------------------------------------------------------------------------------
Book Value Per Share 56.6% 23.90 100.0% 15.26 100.0%
----------------------------------------------------------------------------------------------
*T
INCOME STATEMENT DATA
-0-
*T
Period Ended Q1 2008 Q1 2007 Growth(3)
Consolidated, IFRS Based US$(1) GEL US$(2) GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited)
Interest Income 62,724 92,580 25,326 43,054 115.0%
Interest Expense 29,007 42,815 10,005 17,008 151.7%
Net Interest Income 33,716 49,765 15,321 26,046 91.1%
Fee & Commission Income 7,975 11,771 3,776 6,419 83.4%
Fee & Commission Expense 1,080 1,594 290 493 223.6%
Net Fee & Commission Income 6,895 10,177 3,486 5,926 71.7%
Income From Documentary Operations 1,319 1,947 689 1,171 66.2%
Expense On Documentary Operations 339 500 294 500 0.0%
Net Income From Documentary Operations 980 1,447 395 671 115.7%
Net Foreign Currency Related Income 8,961 13,226 2,515 4,276 209.3%
Net Insurance Income 1,109 1,638 1,229 2,089 -21.6%
Brokerage Income 864 1,275 594 1,010 26.2%
Asset Management Income 438 646 - - NMF(4)
Realized Net Investment Gains (Losses) (253) (373) 42 71 NMF(4)
Other 2,232 3,294 569 967 240.6%
Net Other Non-Interest Income 4,390 6,480 2,434 4,137 56.6%
Net Non-Interest Income 21,226 31,329 8,829 15,010 108.7%
Total Operating Income (Revenue) 54,942 81,094 24,150 41,055 97.5%
Personnel Costs 17,432 25,730 7,586 12,897 99.5%
Selling, General & Administrative
Costs 7,659 11,304 2,594 4,409 156.4%
Procurement & Operations Support
Expenses 2,103 3,104 1,276 2,170 43.0%
Depreciation & Amortization 2,730 4,029 1,156 1,965 105.1%
Other Operating Expenses 211 312 269 457 -31.8%
Total Recurring Operating Costs 30,134 44,478 12,881 21,897 103.1%
Normalized Net Operating Income 24,808 36,616 11,269 19,158 91.1%
Net Non-Recurring Income (Costs) 5,737 8,468 (22) (37) NMF(4)
Profit Before Provisions 30,545 45,085 11,247 19,121 135.8%
Net Provision Expense 5,048 7,451 1,186 2,017 269.5%
Pre-Tax Income 25,497 37,634 10,061 17,104 120.0%
Income Tax Expenses 3,873 5,716 2,024 3,441 66.1%
Net Income 21,624 31,918 8,037 13,663 133.6%
Weighted Average Number of Shares
Outstanding (000s) 29,237 25,217 15.9%
Fully Diluted Number of Shares Period End
(000s) 31,244 27,230 14.7%
EPS (Basic) 0.74 1.09 0.32 0.54 101.4%
EPS (Fully Diluted) 0.69 1.02 0.30 0.50 103.6%
*T
(1) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.4760 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 2008
(2) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.7000 per U$S1.00, such rate being the official Georgian Lari to U.S.
dollar period-end exchange rate as reported by the National Bank of Georgia as
at 31 March 2007
(3)Growth calculations based on GEL values
(4) Not meaningful
BALANCE SHEET DATA
-0-
*T
31-Mar-08 Growth(2) 31-Dec-07 Growth(2) 31-Mar-07
Consolidated, IFRS Based US$(1) GEL YTD US$(3) GEL Y-O-Y US$(4) GEL
000s, unless otherwise noted (Unaudited) (Audited) (Unaudited)
Cash & Cash Equivalents 146,001 215,497 -41.8% 232,642 370,273 164.8% 47,871 81,381
Loans & Advances To Credit
Institutions 157,305 232,182 22.2% 119,413 190,057 -16.5% 163,647 278,199
Mandatory Reserve With
NBG/NBU 59,344 87,591 -39.4% 90,872 144,631 46.9% 35,067 59,614
Other Accounts With NBG/NBU 34,463 50,868 43.3% 22,303 35,497 278.1% 7,914 13,454
Balances With & Loans To
Other Banks 63,498 93,723 844.0% 6,238 9,929 -54.3% 120,666 205,132
Available-For-Sale Securities 34,830 51,409 5.5% 30,616 48,729 9727.3% 308 523
Treasuries & Equivalents 18,726 27,639 -65.3% 50,111 79,757 -41.0% 27,552 46,838
Other Fixed Income Instruments 190,534 281,229 149.5% 70,814 112,708 43.7% 115,156 195,766
Gross Loans To Clients 1,257,235 1,855,678 5.9% 1,100,842 1,752,100 122.1% 491,376 835,339
Less: Reserve For Loan
Losses -26,818 -39,584 33.1% -18,689 -29,745 85.8% -12,533 -21,307
Net Loans To Clients 1,230,416 1,816,094 5.4% 1,082,153 1,722,355 123.1% 478,843 814,033
Investments In Other Business
Entities, Net 45,623 67,339 67.2% 25,303 40,273 202.0% 13,116 22,297
Property & Equipment Owned,
Net 167,416 247,107 20.7% 128,585 204,656 144.1% 59,547 101,230
Intangible Assets Owned, Net 4,220 6,229 65.1% 2,370 3,772 109.7% 1,747 2,970
Goodwill 74,679 110,227 -1.8% 70,505 112,216 163.9% 24,573 41,773
Tax Assets - Current &
Deferred 2,371 3,499 124.7% 978 1,557 1812.8% 108 183
Prepayments & Other Assets 60,533 89,346 32.8% 42,258 67,258 84.9% 28,431 48,333
Total Assets 2,132,654 3,147,797 6.6% 1,855,750 2,953,611 92.7% 960,898 1,633,526
11,591 19,705
Client Deposits 898,493 1,326,175 -2.2% 851,644 1,355,476 120.2% 354,235 602,199
Deposits & Loans From Banks 29,541 43,602 -33.7% 41,349 65,811 22.4% 20,959 35,631
Borrowed Funds 538,668 795,074 -4.9% 525,248 835,984 50.7% 310,265 527,451
Issued Fixed Income Securities 9,173 13,540 171.2% 3,137 4,993 -31.3% 671 1,141
Insurance Related Liabilities 29,221 43,130 4.4% 25,968 41,330 3681.5% 11,591 19,705
Tax Liabilities - Current &
Deferred 18,357 27,095 -27.2% 23,378 37,209 149.1% 6,399 10,878
Accruals & Other Liabilities 103,282 152,445 178.1% 34,441 54,817 197.6% 30,135 51,230
Total Liabilities 1,626,736 2,401,062 0.2% 1,505,165 2,395,620 92.4% 734,255 1,248,234
Ordinary Shares 21,168 31,244 15.1% 17,061 27,155 23.8% 14,850 25,245
Share Premium 302,975 447,191 41.8% 198,175 315,415 73.0% 152,081 258,538
Treasury Shares -1,250 -1,846 6.3% -1,091 -1,737 59.3% (681) (1,158)
Retained Earnings 97,705 144,213 125.8% 40,122 63,858 136.5% 35,869 60,977
Revaluation & Other Reserves 42,537 62,784 -6.8% 42,318 67,354 175.5% 13,407 22,791
Net Income For The Period 21,624 31,918 -57.8% 47,526 75,642 133.6% 8,037 13,663
Shareholders' Equity Excluding
Minority Interest 484,759 715,505 30.6% 344,111 547,687 88.3% 223,562 380,055
Minority Interest 21,159 31,230 203.1% 6,474 10,304 496.3% 3,081 5,237
Total Shareholders' Equity 505,918 746,735 33.8% 350,585 557,991 93.8% 226,642 385,292
Total Liabilities &
Shareholders' Equity 2,132,654 3,147,797 6.6% 1,855,750 2,953,611 92.7% 960,898 1,633,526
Shares Outstanding 31,244,092 15.1% 27,154,918 23.8% 25,244,609
Book Value Per Share 16.19 23.90 15.9% 12.95 20.62 55.3% 9.05 15.39
(1) Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4760 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 31 March 2008
(2) Growth calculations based on GEL values
(3) Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.5916 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 December 2007
(4) Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7000 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 2007
*T
KEY RATIOS
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Q1 2008 Q1 2007
Profitability Ratios
ROAA( 1), Annualised 4.2% 3.8%
ROA 4.1% 3.3%
ROAE(2), Annualised 19.6% 14.3%
ROE 17.1% 14.2%
Interest Income To Average Interest Earning Assets (3), Annualised 16.6% 15.1%
Cost Of Funds (4), Annualised 7.7% 7.0%
Net Spread (5) 8.9% 8.1%
Net Interest Margin (6), Annualised 8.9% 9.1%
Net Interest Margin Normalized (35), Annualised 8.9% 9.1%
Loan Yield (7), Annualised 18.9% 21.2%
Interest Expense To Interest Income 46.2% 39.5%
Net Non-Interest Income To Average Total Assets, Annualised 4.1% 4.2%
Net Non-Interest Income To Revenue (8) 38.6% 36.6%
Net Fee And Commission Income To Average Interest Earning Assets (9),
Annualised 1.8% 2.1%
Net Fee And Commission Income To Revenue 12.5% 14.4%
Operating Leverage (10) 33.4% 38.6%
Total Operating Income (Revenue) To Total Assets, Annualised 10.3% 10.0%
Recurring Earning Power (11), Annualised 4.8% 6.9%
Net Income To Revenue 39.4% 33.3%
Efficiency Ratios
Operating Cost To Average Total Assets (12), Annualised 5.8% 6.1%
Cost To Average Total Assets (13), Annualised 4.7% 6.2%
Cost / Income (14) 44.4% 53.4%
Cost / Income, Normalized (37) 54.8% 53.3%
Cost / Income, Bank of Georgia, Standalone (15) 45.1% 50.1%
Cash Cost / Income 39.4% 48.6%
Total Employee Compensation Expense To Revenue (16) 31.7% 31.4%
Total Employee Compensation Expense To Cost 71.5% 58.8%
Total Employee Compensation Expense To Average Total Assets, Annualised 3.4% 3.6%
Liquidity Ratios
Net Loans To Total Assets (17) 57.7% 49.7%
Average Net Loans To Average Total Assets 58.0% 52.9%
Interest Earning Assets To Total Assets 74.9% 81.6%
Average Interest Earning Assets To Average Total Assets 73.1% 80.2%
Liquid Assets To Total Assets (18) 22.9% 33.2%
Net Loans To Client Deposits 136.9% 135.2%
Average Net Loans To Average Client Deposits 132.0% 129.8%
Net Loans To Total Deposits (19) 132.6% 127.7%
Net Loans To Total Liabilities 75.6% 65.2%
Total Deposits To Total Liabilities 57.0% 48.2%
Client Deposits To Total Deposits 96.8% 94.4%
Client Deposits To Total Liabilities 55.2% 48.2%
Current Account Balances To Client Deposits 43.8% 61.0%
Demand Deposits To Client Deposits 7.0% 5.5%
Time Deposits To Client Deposits 49.3% 33.5%
Total Deposits To Total Assets 43.5% 39.0%
Client Deposits To Total Assets 42.1% 36.8%
Client Deposits To Total Equity (Times) (20) 1.78 1.55
Due From Banks / Due To Banks (21) 532.5% 780.8%
Total Equity To Net Loans 41.1% 47.7%
Leverage (Times) (22) 3.2 3.2
*T
KEY RATIOS CONT'D
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Q1 2008 Q1 2007
Asset Quality
NPLs (in GEL) 23 18,992 21,059
NPLs To Gross Loans To Clients (24) 1.0% 2.5%
Cost of Risk 25, Annualized 1.7% 1.0%
Cost of Risk Normalized (36), Annualized 1.7% 1.0%
Reserve For Loan Losses To Gross Loans To Clients (26) 2.1% 2.6%
NPL Coverage Ratio (27) 208.4% 101.2%
Equity To Average Net Loans To Clients 42.2% 51.5%
Capital Adequacy:
Equity To Total Assets 23.7% 23.7%
BIS Tier I Capital Adequacy Ratio, consolidated (28) 25.2% 34.1%
BIS Total Capital Adequacy Ratio, consolidated (29) 25.8% 34.8%
NBG Tier I Capital Adequacy Ratio (30) 18.3% 19.2%
NBG Total Capital Adequacy Ratio (31) 16.3% 22.5%
Per Share Values:
Basic EPS (GEL) (32) 1.09 0.54
Basic EPS (US$) 0.74 0.32
Fully Diluted EPS (GEL) (33) 1.02 0.50
Fully Diluted EPS (US$) 0.69 0.30
Book Value Per Share (GEL) (34) 23.90 15.39
Book Value Per Share (US$) 16.19 9.05
Ordinary Shares Outstanding - Weighted Average, Basic 29,237,387 25,216,510
Ordinary Shares Outstanding - Period End 31,244,092 25,244,609
Ordinary Shares Outstanding - Fully Diluted 31,244,092 27,230,351
Selected Operating Data:
Full Time Employees (FTEs) 4,926 2,558
FTEs, Bank of Georgia Standalone 3,056 1,933
Total assets per FTE (23 )(GEL Thousands) 639 640
Total Assets per FTE, Bank of Georgia Standalone (GEL Thousands) 1,030 847
Number Of Active Branches 131 103
Number Of ATMs 310 146
Number Of Cards (Thousands) 743 344
Number Of POS Terminals 2,063 497
*T
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, 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;
(16) Total Employee Compensation Expense includes Personnel Costs;
(17) Net Loans equal Net Loans To Clients;
(18) 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;
(19) Total Deposits include Client Deposits and Deposits And Loans from Banks;
(20) Total Equity equals Total Shareholders' Equity;
(21) Due From Banks/ Due To Banks equals Loans And Advances To Credit
Institutions divided by Deposits And Loans From Banks;
(22) Leverage (Times) equals Total Liabilities as of the period end divided by
Total Equity as of the same date;
(23) NPLs (in GEL) equals 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;
(24) Gross Loans equals Gross Loans To Clients;
25 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;
(26) 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;
(27) NPL Coverage Ratio equals Reserve For Loan losses as of the period end
divided by NPLs as of the same date;
(28) 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;
(29) 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;
(30) 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;
(31) 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;
(32) Basic EPS equals Net Income of the period divided by the weighted average
number of outstanding ordinary shares over the same period;
(33) 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;
(34) 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.
(35) Net Interest Margin Normalized equals Net Interest Income of the period,
less interest income generated by non-performing loans through the date of their
write-off, divided by quarterly Average Interest Earning Assets of the same
period;
(36) 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;
(37) Cost / Income Normalized equals Recurring Operating Costs divided by Total
Operating Income (Revenue) for the same period
About Bank of Georgia
Bank of Georgia, the leading universal Georgian bank with operations in Georgia
and Ukraine, is the largest bank by assets, loans, deposits and equity in
Georgia, with 33.7% market share by total assets (all data according to the NBG
as of March 31, 2008). The major component of the Galt & Taggart Index, the bank
has 131 branches and over 770,000 retail and more than 120,000 corporate current
accounts. The bank offers a full range of retail banking and corporate and
investment banking services to its customers across Georgia. The bank also
provides a wide range of corporate and retail insurance products through its
wholly-owned subsidiary, Aldagi BCI, as well as asset & wealth management
services.
Bank of Georgia has, as of the date hereof, the following credit ratings:
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*T
Standard & Poor's 'B+/B' Stable
FitchRatings 'B+/B' Stable
Moody's 'B3/NP' (FC) & 'Ba1/NP' (LC)
*T
For further information, please visit www.bog.ge/ir or contact:
-0-
*T
Nicholas Enukidze Irakli Gilauri Macca Ekizashvili
Chairman of the Supervisory Board Chief Executive Officer Head of Investor Relations
+995 32 444 800 +995 32 444 109 +995 32 444 256
nenukidze@bog.ge igilauri@bog.ge ir@bog.ge
*T
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 Q1 2008 and Q1 2007 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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