3rd Quarter Results
Bank of Georgia
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1.41 GEL/US$ September 2008 period end
1.47 GEL/US$ 9 month 2008 average
1.41 GEL/US$ Q3 2008 average
1.66 GEL/US$ September 2007 period end
1.69 GEL/US$ September 2007 average
1.66 GEL/US$ Q3 2007 average
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JSC BANK OF GEORGIA ANNOUNCES CONSOLIDATED Q3 2008 & YEAR-TO-DATE 2008 RESULTS
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Millions, unless otherwise noted Q3 2008 Growth y-o-y
(2)
Bank of Georgia (Consolidated, Unaudited, US$ GEL
IFRS-based(1))
Total Operating Income (Revenue)(3) 61.1 85.9 53%
Recurring Operating Costs 35.3 49.6 71%
Normalised Net Operating Income(4) 25.8 36.3 34%
Net Provision Expenses 73.4 103.2 3259%
Net Income/(Loss) (42.0) (59.0) NMF
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Millions, unless otherwise noted 9 Months 2008 Growth y-o-y
(2)
Bank of Georgia (Consolidated, Unaudited, US$ GEL
IFRS-based)
Total Operating Income (Revenue)(3) 180.0 252.9 69%
Recurring Operating Costs 101.8 143.0 81%
Normalised Net Operating Income(4) 78.3 110.0 56%
Net Provision Expenses 83.9 117.8 1396%
Net Income/(Loss) 0.9 1.3 NMF
Total Assets 2,245 3,154 31%
Net Loans 1,374 1,931 51%
Total Deposits 943 1,325 17%
Tier 1 Capital Adequacy Ratio (BIS)(5) 24.7% 7%
Total Capital Adequacy Ratio (BIS)(6) 25.3% 8%
Tier 1 Capital Adequacy Ratio (NBG) 18.2% 30%
Total Capital Adequacy Ratio (NBG) 15.5% -9%
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(1 )Except Provisions. Provisions represent management estimates.
(2) Compared to the same period in 2007; growth calculations based on GEL
values.
(3) Revenue includes Net Interest Income and Net Non-Interest Income.
(4) Normalised for Net Non-Recurring Costs.
(5) 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.
(6) 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 universal
bank, announced today its Q3 2008 and YTD 2008 consolidated results (IFRS-based,
derived from management accounts), reporting a Q3 2008 Net Loss of GEL 59.0
million. The Net Loss is mainly due to the extraordinary increase in Net
Provision Expense (GEL 103.2 million for the quarter) related to the military
conflict between Georgia and Russia in August 2008 (the 'Conflict').
Consolidated Net Income for nine months of 2008 amounted to GEL 1.3 million. Net
Provision Expense for the quarter has been calculated based on management's
estimates, which, management believes, are conservative and should cover any
potential loss in the loan portfolio.
Q3 2008 Summary
In Q3 2008 the Bank's Total Operating Income (Revenue) increased by 52.9% y-o-y
(q-o-q(7)) to GEL 85.9 million. Net Interest Income grew by 75.9% y-o-y (up 5.4%
q-o-q) to GEL 58.9 million and Net Non-Interest Income amounted to GEL 27.1
million up 19.1% y-o-y (down 10.1% q-o-q). Increased interest rates on banking
products and growing share of higher-yielding retail loans in the Bank's loan
portfolio continued to drive Interest Income growth during the quarter. The Net
Interest Margin increased to 9.8% in Q3 2008 from 9.1% in Q2 2008, 8.9% in Q1
2008 and 7.6% in Q3 2007, reflecting the growth of Net Interest Income and the
decrease of interest expense resulting from the deposit outflow during the
quarter and the repayment of US$55 million first tranche of the Bank's US$123.5
million syndicated loan received in August 2007.
The decrease of Net Income from Documentary Operations (GEL 1.7 million, down
9.8% q-o-q and by 6.9% y-o-y) and of Net Foreign Currency Related Income (GEL
9.4 million, down by 9.3% q-o-q, and up 51.4% y-o-y), was a result of the
decrease of foreign exchange trading volumes during September, in the aftermath
of the Conflict, and low foreign exchange (GEL/USD) volatility during the
quarter. Net Fee and Commission Income grew by 7.7% q-o-q during the quarter (up
58.5% y-o-y) and reached GEL 10.9 million.
Net Other Non-Interest Income amounted to GEL 5.0 million during Q3 2008, down
34.7% q-o-q and down 35.7% y-o-y and was largely a reflection of disrupted
capital markets affecting the operations of Galt & Taggart Securities ('GTS'),
the Bank's brokerage subsidiary. The 34.7% decline in Net Other Non-Interest
Income was the main contributor to the 10.1% q-o-q decrease in Net Non-Interest
Income for the quarter, which amounted to GEL 27.1 million, up 19.1% y-o-y.
Consolidated Recurring Operating Costs for the quarter grew by 1.6% q-o-q (up
70.5% y-o-y) to GEL 49.6 million, resulting in Net Normalized Operating Income
('NNOI') of GEL 36.3 million, a 34.1% increase y-o-y (down 2.1% q-o-q).
The Bank's Net Non-Recurring Cost of GEL 2.6 million in Q3 2008 (25.9% y-o-y),
was largely due to the unplanned costs associated with the Conflict.
YTD 2008 Summary
In nine months of 2008 the Bank's Total Operating Income (Revenue) increased by
69.3% y-o-y to GEL 252.9 million, driven by an 81.9% increase y-o-y in Net
Interest Income and a 50.0% increase y-o-y in Net Non-Interest Income. Total
Recurring Operating Costs increased by 81.0% y-o-y to GEL 143.0 million. NNOI
grew 56.2% y-o-y to GEL 110.0 million. The Bank reported Net Profit of GEL 1.3
million for nine months of 2008 due to the Conflict-related increase in Net
Provision Expense to GEL 103.2 million in Q3 2008.
On 30 September 2008 the Bank's consolidated Total Assets amounted to GEL 3.2
billion (up 31.2% y-o-y, up 6.8% year-to-date and down 7.2% in Q3 2008 as
compared with Q2 2008 or q-o-q). Gross Loans stood at GEL 2,060 million (up
58.1% y-o-y, up 17.6% year-to-date and down 2.2% q-o-q). Corporate Gross Loans
to Clients in Georgia stood at GEL 795.8 million (up 11.2% y-o-y, down 1.4%
year-to-date and down 9.6% q-o-q). Retail Gross Loans to Clients in Georgia
reached GEL 930.9 million (up 74.4% y-o-y, up 44.5% year-to-date and up 1.0%
q-o-q). Wealth Management Gross Loans to Clients in Georgia amounted to GEL 45.2
million (up 31.6% y-o-y, up 2.2% year-to-date and up 6.0% q-o-q). UBDP accounted
for 10.7% and 12.5% of the Bank's Total Assets and Total Gross Loans,
respectively. BNB accounted for 2.1% and 1.7% of the Bank's Total Assets and
Total Gross Loans, respectively.
As of 30 September 2008 the Bank's consolidated Total Liabilities stood at GEL
2.4 billion (up 24.6% y-o-y, up 0.8% year-to-date and down 7.7% q-o-q). Against
the background of intensifying competition for deposits in Georgia and 11.7%
appreciation of Georgian Lari against the US dollar during nine months of 2008,
Client Deposits in Georgia amounted to GEL 972.6 million (down 7.9% y-o-y and
down 16.6% q-o-q). Bank of Georgia's Consolidated Client Deposits stood at GEL
1,202 million (up 12.9%y-o-y and down 13.9% q-o-q).
As of 30 September 2008 Bank of Georgia on standalone basis held market share of
32.9%, 32.6% and 27.8% by total assets, gross loans, and deposits, respectively
in Georgia(8).
As of 30 September 2008 the Bank's Shareholders' Equity amounted to GEL 739.3
million, (up GEL 181.4 million year-to-date, up GEL 274.4 million y-o-y and down
GEL 43.7 million q-o-q). The Bank's equity book value per share stood at GEL
23.66 (US$16.84) as at 30 September 2008, up 38.2% y-o-y, up 14.7% year-to-date
and down 5.6% q-o-q.
Bank of Georgia (Standalone)
Discussion of the impact of the Conflict
Deposits
In Q3 2008, the Bank's deposits in Georgia decreased by GEL 194 million (or
16.6% q-o-q) to GEL 972.6 million. The decrease of deposits was primarily the
result of retail and corporate deposit withdrawals during the Conflict, as well
as unusually slow deposit inflows and high withdrawals during post-Conflict
period from corporate clients, which experienced business interruptions and loss
of revenue during the conflict. The decrease in deposits during the Conflict was
amplified by lending restrictions imposed on all Georgian banks by NBG until the
end of August 2008. Due to this restriction, many corporate customers, who
repaid their loans in August (total corporate loan repayments in August amounted
to GEL 81.7 million) were unable to draw down their existing credit lines, thus
affecting inflows on corporate current accounts.
The reduction of the deposits was also attributed to the appreciation of Lari
against USD by approximately 1% and EURO by approximately 10% in Q3 2008 also
contributed notably to the decrease in deposits.
Capital Adequacy, Liquidity and Leverage
According to the requirement of NBG Tier I Capital Adequacy Ratio should be no
less than 8% and Total Capital Adequacy Ratio no less than 12%. As of 30
September 2008, the Bank's Tier I Capital Adequacy Ratio was 18.2% and Total
Capital Adequacy Ratio was 15.5% by NBG standards. The Bank's Tier I Capital
Adequacy Ratio was 24.7% and Total Capital Adequacy Ratio was 25.3% by BIS
standards.
The Bank's NBG Liquidity Ratio stood at approximately 34% on 31 July 2008 and
decreased to 27% on 30 September 2008, still well above the NBG requirement of
20%.
The Bank's leverage ratio (Total Liabilities to Shareholders Equity) stood at
3.27x as of 30 September 2008, down from 3.35x on June 2008, despite
extraordinary Conflict-related loan loss provisions booked by the Bank.
Provisions
The Bank booked net loan loss provisions of GEL 103.9 million in Q3 2008, as
compared to loan loss provisions of GEL 2.8 million in Q3 2007 and GEL 8.6
million in Q2 2008. The Bank's management believes that these provisions are
made based on conservative assumptions and should be sufficient to cover any
potential Conflict-related loss in the loan portfolio. The increased provision
resulted in the NPL Coverage of 554% as of 30 September 2008.
The Bank's subsidiaries showed mixed results in Q3 2008. The Bank's Ukrainian
subsidiary, Universal Bank for Development and Partnership ('UBDP'), reported
its second consecutive profitable quarter since the start of the reorganization
in Q4 2007. UBDP's Net Income increased 9.7% q-o-q to GEL 0.72 million in Q3
2008.
GTS, the Bank's fully-owned investment banking subsidiary, which witnessed
significant market disruptions in Ukraine and Georgia in Q3, reported a
quarterly Net Loss of GEL 2.3 million. Aldagi BCI, the Bank's fully-owned
Georgian Insurance subsidiary, reported a quarterly Net Loss of GEL 26,000
compared with Net Income of GEL 36,000 in Q2 2008.
As of Q3 2008 the quarterly results of Belarusky Narodny Bank ('BNB') are fully
consolidated into Bank of Georgia financial results for the period. As the
acquisition of BNB was completed just few days before the end of the Q2 2008,
the Bank's equity interest in BNB was reported as Investments in Other Business
Entities on the Bank's 30 June 2008 Balance Sheet. In Q3 2008 BNB reported a Net
Income of GEL 1.0 million.
Business Unit Overview
Corporate Banking (CB)(9)
Allocated Revenues grew 46.0% y-o-y to GEL 71.6 million in nine months of 2008,
while Allocated Recurring Costs increased by 31.0% y-o-y to GEL 18.8 million.
NNOI grew 52.2% y-o-y to GEL 52.8 million, contributing 48.0% to the
consolidated NNOI. Net Income decreased by 203.1% y-o-y to Net Loss of GEL 22.7
million, which was primarily due to the extraordinary conflict-related
provisions booked by the Bank.
On a quarterly basis, Allocated Revenues in Q3 2008 grew 40.7% y-o-y to GEL 24.7
million, up 8.1% q-o-q, while Allocated Recurring Costs decreased to GEL 4.6
million, down 15.3% y-o-y, down 36.2% q-o-q. Q3 2008 NNOI grew by 56.0% y-o-y to
GEL 20.1 million, up 44.3% q-o-q, contributing 55.3% to the consolidated NNOI.
Q3 2008 Net Loss equaled GEL 45.6 million.
CB Gross Loans grew 11.2% y-o-y to GEL 795.8 million (down 1.4% year-to-date).
Allocated Client Deposits stood at GEL 576.2 million down 14.1% y-o-y and down
by 14.5% year-to-date. The reduction of deposits was mainly due to an outflow of
deposits during the Conflict.
Retail Banking (RB)
Allocated Revenues grew 102.3% y-o-y to GEL 132.1 million in nine months of
2008, while Allocated Recurring Costs increased by 68.7% y-o-y to GEL 57.2
million. NNOI grew 138.5% y-o-y to GEL 74.9 million, contributing 68.1% to the
consolidated NNOI. Net Income decreased 78.3% y-o-y to GEL 37.2 million.
On a quarterly basis, Allocated Revenues in Q3 2008 grew 118.3% y-o-y to GEL
50.6 million, up 15.6% q-o-q, while Allocated Recurring Costs grew to GEL 18.5
million, up 46.9% y-o-y and down 10.2% q-o-q. Q3 2008 NNOI grew by 203.5% y-o-y
to GEL 32.1 million, up 38.7% q-o-q, contributing 88.4% to the consolidated
NNOI. Quarterly Net Loss in Q3 2008 equaled GEL 17.2 million, compared to Net
Income of GEL 12.8 in Q2 2008 and Net Income of GEL 6.1 in Q3 2007.
RB Gross Loans grew 74.4% y-o-y to GEL 930.9 million (up 44.5% 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
predominantly in 1H 2008. Allocated Client Deposits increased 1.0% y-o-y to GEL
326.0 million (down 4.7% year-to-date), mainly due to the Conflict.
Wealth Management (WM)
In nine months of 2008 Allocated Revenues for WM was GEL 4.4 million, an
increase of 25.8% y-o-y. Net Income equaled GEL 579 thousand as compared to Net
Income of GEL 1.4 million for January - September 2007. On a quarterly basis,
Allocated Revenues was GEL 1.5 million, up 19.1% q-o-q and up 10.8% y-o-y. Net
Loss amounted to GEL 406 thousand in Q3 2008.
WM Gross Loans stood at GEL 45.2 million an increase of 31.6% y-o-y and up 2.2%
year-to-date. Allocated Client Deposits increased by 10.1% y-o-y (up 0.9%
year-to-date) to GEL 70.4 million, largely due to the outflow of deposits during
the conflict.
Ukraine
UBDP's Total Operating Income (Revenue) amounted to GEL 22.0 million in nine
months of 2008, while Recurring Costs stood at GEL 21.0 million, resulting in a
Net Income of GEL 0.7 million. On a quarterly basis, UBDP's Revenue increased by
29.2% from Q2 2008 to GEL 8.7 million and Q3 2008 Net Income reached GEL 0.7
million, up 9.7% q-o-q.
UBDP's Total Assets decreased by 3.8% year-to-date to GEL 336.8 million,
partially due to the 15% appreciation of Lari against Hryvna. Gross Loans to
Clients stood at GEL 256.8 million by 30 September 2008, down by 13.4%
year-to-date. Client Deposits dropped 36.3 % year-to-date to GEL 170.6 million,
reflecting the departure of several significant depositors due to UBDP's
restructuring during 1H 2008. As expressed in Hryvna, UBDP's Client Deposits in
Q3 2008 increased by UAH 23 million, up 3.8 % q-o-q. UBDP's Total Liabilities
stood at GEL 229.2 million.
UBDP's leverage is expected to decrease to just above 2.0x once the UAH 125
million capital increase, approved by the UBDP's Shareholders' Meeting in May
2008, is registered by the National Bank of Ukraine. UBDP has no international
wholesale funding to be refinanced in 2008 and 2009. The bank's exposure to the
real estate development sector is limited.
Belarus
BNB's Total Operating Income (Revenue) amounted to GEL 2.1 million in Q3 2008,
while Recurring Costs stood at GEL 1.3 million, resulting in a Net Income of GEL
1.0 million. BNB's Total Assets stood at GEL 66.7 million and Gross Loans to
Clients equaled GEL 34.7 million by 30 September 2008. Client Deposits amounted
to GEL 26.6 million, while Total Liabilities stood at GEL 29.7 million.
Galt & Taggart Securities (GTS)
Difficult capital markets in Georgia and Ukraine (both GTS Index and the PFTS
Index decreased by 68% in nine months of 2008) had a negative impact on GTS,
Bank of Georgia's fully-owned investment banking subsidiary. In Q3 2008 GTS
reported a Net Loss of GEL 2.3 million in Q3 2008 which compares to Net Loss of
GEL 2.6 million in Q2 2008. GTS' Revenue and Net Loss in Q3 2008 and Q2 2008
includes the loss from trading activities of GEL 5.8 million, which reflects
loss on GTS' proprietary trading book in Ukraine. In Q3 2008, GTS initiated a
strategic review of its operations and started the implementation of a
significant cost-cutting program, including headcount reduction and tight cost
control procedures, aimed at reducing its losses in Q4 2008 and returning to
profitability in 2009. GTS' Q3 2008 results also include relevant severance
payments related to the cost-cutting program.
Asset Management (AM)
The following key entities are included in the AM segment: Galt & Taggart Asset
Management ('GTAM'), the bank's asset management arm, majority owned by the
Bank; JSC Liberty Consumer (formerly JSC Galt & Taggart Capital ('GTC'), a
GSE-listed consumer-and retail- oriented investment company managed by GTAM in
which the Bank owns 65.24% equity stake and JSC SB Real Estate ('SBRE'), a real
estate investment company managed by GTAM in which GTC owns 52.08% equity stake.
In the nine months of 2008 Revenues of Asset Management business segment
amounted to GEL 14.6 million, which compares to GEL 2.4 million Revenues in the
same period in 2007. Net Income for the period amounted to GEL 11.2 million as
compared to GEL 1.2 million Net Loss for January - September 2007. On a
quarterly basis, Revenue from Asset Management business segment amounted to GEL
477 thousand, down 30.4% y-o-y, and down 71.6% q-o-q and Net Loss was GEL 410
thousand, down 46.0% y-o-y and down 112.0% q-o-q.
Insurance
Gross Premiums Written of Aldagi BCI, the bank's fully-owned Georgian insurance
subsidiary, increased by 61.9% y-o-y to GEL 49.3 million. Net Premiums Earned
grew 12.4% y-o-y to GEL 27.4 million. Revenues increased by 7.8% y-o-y to GEL
6.5 million for nine months of 2008. Net Loss for nine months of 2008 equaled
GEL 361 thousand. On a quarterly basis, Revenues increased by 25.9% y-o-y to GEL
2.1 million, while Net Loss amounted to GEL 26 thousand for Q3 2008. The loss in
2008 was mainly due to Aldagi BCI's participation in the state healthcare
program for socially vulnerable citizens and school teachers launched in Q4
2007, which brought 84,000 new clients to Aldagi BCI. The program which was
originally scheduled to end in September - December 2008, was extended for
another year at increased premiums per participant (60% upward adjustment to the
premium). Unlike other major Georgian insurance companies, Aldagi BCI chose not
to participate in a new similar program aimed at 550,000 socially vulnerable
citizens which was launched in 2008.
Comments
'We are pleased to report that despite the conflict between Russia and Georgia
in August 2008 and intensifying global financial crisis Bank of Georgia has a
strong capital base, solid liquidity position and clearly visible wholesale
funding pipeline.
Following the Conflict, we made significant loan loss provisions, which, in our
view, are based on conservative macro economic assumptions and are more than
adequate to cover all potential Conflict-related losses in the loan portfolio.
Despite these provisions our capital base remains strong and well above the
requirements of NBG. Our liquidity position is solid despite significant
Conflict-related deposit outflow in Q3 2008. Responding to increasingly
challenging market environment we plan to maintain a highly conservative
approach to liquidity management. We expect to further improve our liquidity
position through sizeable wholesale funding transactions mentioned in our
previous press releases.
The Conflict and the global financial crisis have forced us to temporarily put
on hold our plans to reduce the Bank's involvement in several of its non-core
subsidiaries, including Aldagi BCI, GTAM and Liberty Consumer. However, we plan
to re-launch these transactions as soon as the market environment permits',
commented Nicholas Enukidze, Chairman of the Supervisory Board.
(7) q-o-q compares Q3 2008 results with Q2 2008 results
(8) 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
(9) The Corporate Banking business unit was previously referred to as Corporate
and Investment Banking ('CIB')
SEGMENT RESULTS
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9 months 9 months
Total Operating Income (Revenue) Growth y-o-y 2008 Share 2007 Share
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Corporate & Investment Banking 46.0% 71,606 28.3% 49,057 32.8%
Retail Banking 102.3% 132,129 52.2% 65,326 43.7%
Wealth Management 25.8% 4,372 1.7% 3,476 2.3%
Ukraine NMF 21,963 8.7% - 0.0%
Belarus NMF 2,087 0.8% - 0.0%
Galt & Taggart Securities NMF (1,322) -0.5% 18,703 12.5%
Asset Management 505.7% 14,557 5.8% 2,403 1.6%
Insurance 7.8% 6,501 2.6% 6,032 4.0%
Corporate Center/Eliminations -76.3% 1,036 0.4% 4,381 2.9%
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Total Operating Income (Revenue) 69.3% 252,929 100.0% 149,379 100.0%
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Total Recurring Operating Costs
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Corporate & Investment Banking 31.0% 18,807 13.2% 14,357 18.2%
Retail Banking 68.7% 57,230 40.0% 33,923 42.9%
Wealth Management 115.7% 3,177 2.2% 1,473 1.9%
Ukraine NMF 20,995 14.7% - 0.0%
Belarus NMF 1,315 0.9% - 0.0%
Galt & Taggart Securities 42.2% 6,823 4.8% 4,799 6.1%
Asset Management 33.7% 5,167 3.6% 3,864 4.9%
Insurance 35.3% 6,664 4.7% 4,925 6.2%
Corporate Center/Eliminations 45.6% 22,787 15.9% 15,651 19.8%
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Total Recurring Operating Costs 81.0% 142,966 100.0% 78,991 100.0%
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Net Income/Loss
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Corporate & Investment Banking NMF (22,749) -1756.9% 22,058 44.2%
Retail Banking 78.3% 37,243 2876.3% 20,891 41.9%
Wealth Management -57.5% 579 44.7% 1,361 2.7%
Ukraine NMF 682 52.6% - 0.0%
Belarus NMF 1,020 78.8% - 0.0%
Galt & Taggart Securities NMF (6,699) -517.4% 10,926 21.9%
Asset Management NMF 11,154 861.5% (1,152) -2.3%
Insurance NMF (361) -27.8% 645 1.3%
Corporate Center/Eliminations 302.5% (19,574) -1511.7% (4,863) -9.8%
-----------------------------------------------------------------------------------------------
Net Income -97.4% 1,295 100.0% 49,868 100.0%
-----------------------------------------------------------------------------------------------
Basic EPS Contribution Growth y-o-y Contribution Share Contribution Share
-----------------------------------------------------------------------------------------------
Corporate & Investment Banking NMF (0.75) -1756.9% 0.87 44.2%
Retail Banking 47.8% 1.22 2876.3% 0.83 41.9%
Wealth Management -64.7% 0.02 44.7% 0.05 2.7%
Ukraine NMF 0.02 52.6% - 0.0%
Belarus NMF 0.03 78.8% - 0.0%
Galt & Taggart Securities NMF (0.22) -517.4% 0.43 21.9%
Asset Management NMF 0.37 861.5% (0.05) -2.3%
Insurance NMF (0.01) -27.8% 0.03 1.3%
Corporate Center/Eliminations 233.7% (0.64) -1511.7% (0.19) -9.8%
-----------------------------------------------------------------------------------------------
Total -97.8% 0.04 100.0% 1.98 100.0%
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SEGMENT RESULTS CONT'D
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Total Operating Income Growth Growth q-
(Revenue) y-o-y Q3 2008 Share Q2 2008 Share Q3 2007 Share o-q
-------------------------------------------------------------------------------------------------------------
Corporate & Investment
Banking 40.7% 24,680 28.7% 22,841 26.6% 17,545 31.2% 8.1%
Retail Banking 118.3% 50,621 58.9% 43,782 51.0% 23,184 41.3% 15.6%
Wealth Management 10.8% 1,485 1.7% 1,247 1.5% 1,339 2.4% 19.1%
Ukraine NMF 8,714 10.1% 6,746 7.9% - 0.0% 29.2%
Belarus NMF 2,087 2.4% - 0.0% - 0.0% NMF
Galt & Taggart
Securities -128.2% (1,934) -2.3% (1,006) -1.2% 6,853 12.2% 92.3%
Asset Management -30.4% 477 0.6% 1,678 2.0% 685 1.2% -71.6%
Insurance 25.9% 2,101 2.4% 2,600 3.0% 1,668 3.0% -19.2%
Corporate
Center/Eliminations -147.3% (2,316) -2.7% 8,034 9.4% 4,897 8.7% NMF
-------------------------------------------------------------------------------------------------------------
Total Operating Income
(Revenue) 52.9% 85,914 100.0% 85,921 100.0% 56,172 100.0% 0.0%
-------------------------------------------------------------------------------------------------------------
Total Recurring
Operating Costs
-------------------------------------------------------------------------------------------------------------
Corporate & Investment
Banking -15.3% 4,609 9.3% 7,230 14.8% 5,442 18.7% -36.2%
Retail Banking 46.9% 18,531 37.3% 20,647 42.3% 12,611 43.3% -10.2%
Wealth Management 196.5% 1,844 3.7% 677 1.4% 622 2.1% 172.3%
Ukraine NMF 6,730 13.6% 7,098 14.5% - 0.0% -5.2%
Belarus NMF 1,315 2.6% - 0.0% - 0.0% NMF
Galt & Taggart
Securities -65.5% 894 1.8% 2,130 4.4% 2,591 8.9% -58.0%
Asset Management -41.2% 984 2.0% 1,368 2.8% 1,674 5.8% -28.1%
Insurance 46.1% 2,236 4.5% 2,616 5.4% 1,530 5.3% -14.6%
Corporate
Center/Eliminations 169.4% 12,484 25.2% 7,095 14.5% 4,635 15.9% 76.0%
-------------------------------------------------------------------------------------------------------------
Total Recurring
Operating Costs 70.5% 49,627 100.0% 48,861 100.0% 29,106 100.0% 1.6%
-------------------------------------------------------------------------------------------------------------
Net Income/Loss
-------------------------------------------------------------------------------------------------------------
Corporate & Investment
Banking NMF (45,630) 77.4% 12,383 43.7% 6,721 38.4% NMF
Retail Banking 87.0% 11,488 -19.5% 12,819 45.2% 6,142 35.1% -10.4%
Wealth Management NMF (406) 0.7% 314 1.1% 497 2.8% NMF
Ukraine NMF 721 -1.2% 657 2.3% - 0.0% 9.7%
Belarus NMF 1,020 -1.7% - 0.0% - 0.0% NMF
Galt & Taggart
Securities NMF (2,292) 3.9% (2,553) -9.0% 3,213 18.3% -10.2%
Asset Management -46.0% (410) 0.7% 3,418 12.1% (758) -4.3% NMF
Insurance -77.6% (26) 0.0% 36 0.1% (116) -0.7% NMF
Corporate
Center/Eliminations NMF (23,423) 39.7% 1,261 4.5% 1,816 10.4% NMF
-------------------------------------------------------------------------------------------------------------
Net Income/Loss NMF (58,958) 100.0% 28,335 100.0% 17,515 100.0% NMF
-------------------------------------------------------------------------------------------------------------
Growth Growth q-
Basic EPS Contribution y-o-y Contribution Share Contribution Share Contribution Share o-q
-------------------------------------------------------------------------------------------------------------
Corporate & Investment
Banking NMF (1.51) 76.9% 0.40 44.1% 0.27 38.4% NMF
Retail Banking 51.1% 0.37 -18.8% 0.41 45.4% 0.24 35.1% -11.0%
Wealth Management NMF (0.01) 0.7% 0.01 1.1% 0.02 2.8% NMF
Ukraine NMF 0.02 -1.2% 0.02 2.5% - 0.0% 5.2%
Belarus NMF 0.03 -1.7% - 0.0% - 0.0% NMF
Galt & Taggart
Securities NMF (0.07) 3.8% (0.08) -9.1% 0.13 18.3% -11.3%
Asset Management -40.7% (0.02) 0.9% 0.11 11.6% (0.03) -4.3% NMF
Insurance NMF (0.00) 0.0% 0.00 0.2% (0.00) -0.7% NMF
Corporate
Center/Eliminations NMF (0.77) 39.3% 0.04 4.3% 0.07 10.4% NMF
-------------------------------------------------------------------------------------------------------------
Total NMF (1.96) 100.0% 0.91 100.0% 0.69 100.0% NMF
-------------------------------------------------------------------------------------------------------------
*T
SEGMENT RESULTS CONT'D
-0-
*T
Total Assets Growth y-o-y Sep-08 Share Sep-07 Share
-----------------------------------------------------------------------------------
Corporate & Investment
Banking -0.5% 1,228,414 38.9% 1,235,060 51.4%
Retail Banking 63.8% 1,506,102 47.7% 919,474 38.3%
Wealth Management 4.7% 73,357 2.3% 70,084 2.9%
Ukraine NMF 336,787 10.7% - 0.0%
Belarus NMF 66,719 2.1% - 0.0%
Galt & Taggart
Securities 54.8% 79,618 2.5% 51,442 2.1%
Asset Management 106.2% 119,230 3.8% 57,822 2.4%
Insurance 53.2% 83,221 2.6% 54,339 2.3%
Corporate
Center/Eliminations -2344.5% (339,193) -10.8% 15,112 0.6%
-----------------------------------------------------------------------------------
Total Assets 31.2% 3,154,255 100.0% 2,403,333 100.0%
-----------------------------------------------------------------------------------
Loans to Clients, Gross
-----------------------------------------------------------------------------------
Corporate & Investment
Banking 11.2% 795,783 38.6% 715,338 54.9%
Retail Banking 74.4% 930,876 45.2% 533,644 41.0%
Wealth Management 31.6% 45,170 2.2% 34,316 2.6%
Ukraine NMF 256,816 12.5% - 0.0%
Belarus NMF 34,681 1.7% - 0.0%
Galt & Taggart
Securities 0.0% - 0.0% - 0.0%
Asset Management 0.0% - 0.0% - 0.0%
Insurance 0.0% - 0.0% - 0.0%
Corporate
Center/Eliminations -118.9% (3,671) -0.2% 19,412 1.5%
-----------------------------------------------------------------------------------
Total Loans to Clients 58.1% 2,059,656 100.0% 1,302,711 100.0%
-----------------------------------------------------------------------------------
Total Liabilities
-----------------------------------------------------------------------------------
Corporate & Investment
Banking -3.0% 1,048,423 43.4% 1,081,302 55.8%
Retail Banking 39.0% 873,506 36.2% 628,565 32.4%
Wealth Management 15.5% 96,949 4.0% 83,924 4.3%
Ukraine NMF 229,249 9.5% - 0.0%
Belarus NMF 29,735 1.2% - 0.0%
Galt & Taggart
Securities 154.5% 36,222 1.5% 14,230 0.7%
Asset Management 18.1% 36,529 1.5% 30,926 1.6%
Insurance 65.4% 64,921 2.7% 39,258 2.0%
Corporate
Center/Eliminations -101.0% (617) 0.0% 60,136 3.1%
-----------------------------------------------------------------------------------
Total Liabilities 24.6% 2,414,917 100.0% 1,938,341 100.0%
-----------------------------------------------------------------------------------
Client Deposits
-----------------------------------------------------------------------------------
Corporate Banking -14.1% 576,169 47.9% 670,781 63.0%
Retail Banking 1.0% 325,964 27.1% 322,798 30.3%
Wealth Management 10.1% 70,443 5.9% 63,998 6.0%
Ukraine NMF 170,552 14.2% - 0.0%
Belarus NMF 26,558 2.2% - 0.0%
Galt & Taggart
Securities 326.7% 32,346 2.7% 7,581 0.7%
Asset Management 0.0% - 0.0% - 0.0%
Insurance 0.0% - 0.0% - 0.0%
Corporate
Center/Eliminations 0.0% - 0.0% - 0.0%
-----------------------------------------------------------------------------------
Total Client Deposits 12.9% 1,202,033 100.0% 1,065,158 100.0%
-----------------------------------------------------------------------------------
Book Value Per Share Growth y-o-y Contribution Share Contribution Share
-----------------------------------------------------------------------------------
Corporate & Investment
Banking 1.7% 5.76 24.3% 5.67 33.1%
Retail Banking 88.9% 20.24 85.6% 10.72 62.6%
Wealth Management 48.0% (0.75) -3.2% (0.51) -3.0%
Ukraine NMF 3.44 14.5% 0.00 0.0%
Belarus NMF 1.18 5.0% 0.00 0.0%
Galt & Taggart
Securities 1.3% 1.39 5.9% 1.37 8.0%
Asset Management 167.0% 2.65 11.2% 0.99 5.8%
Insurance 5.4% 0.59 2.5% 0.56 3.2%
Corporate
Center/Eliminations 553.1% (10.83) -45.8% (1.66) -9.7%
-----------------------------------------------------------------------------------
Book Value Per Share 38.1% 23.66 100.0% 17.13 100.0%
-----------------------------------------------------------------------------------
*T
NINE MONTHS 2008 INCOME STATEMENT DATA
-0-
*T
Period Ended 9 months 2008 9 months 2007 Growth(3)
Consolidated, IFRS Based US$(1) GEL US$(2) Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited)
Interest Income 217,192 305,155 99,637 165,198 84.7%
Interest Expense 100,145 140,704 45,115 74,800 88.1%
Net Interest Income 117,047 164,451 54,522 90,398 81.9%
Fee & Commission Income 26,615 37,394 13,023 21,592 73.2%
Fee & Commission Expense 4,349 6,110 1,908 3,163 93.2%
Net Fee & Commission Income 22,266 31,284 11,115 18,429 69.8%
Income From Documentary Operations 4,608 6,474 3,215 5,330 21.5%
Expense On Documentary Operations 1,043 1,465 907 1,503 -2.5%
Net Income From Documentary
Operations 3,565 5,009 2,308 3,827 30.9%
Net Foreign Currency Related Income 23,536 33,068 9,999 16,579 99.5%
Net Insurance Income 4,151 5,833 3,380 5,605 4.1%
Brokerage Income 2,104 2,956 1,735 2,877 2.7%
Asset Management Income 740 1,040 9 14 7121.3%
Realized Net Investment Gains NMF(4)
(Losses) (1,346) (1,892) 3,321 5,506
Other 7,958 11,181 3,706 6,144 82.0%
Net Other Non-Interest Income 13,607 19,118 12,151 20,146 -5.1%
Net Non-Interest Income 62,974 88,478 35,574 58,981 50.0%
Total Operating Income (Revenue) 180,021 252,929 90,096 149,379 69.3%
Personnel Costs 57,909 81,362 28,876 47,877 69.9%
Selling, General & Administrative
Costs 24,229 34,042 9,886 16,392 107.7%
Procurement & Operations Support
Expenses 7,039 9,890 4,065 6,741 46.7%
Depreciation & Amortization 10,072 14,152 4,047 6,710 110.9%
Other Operating Expenses 2,505 3,520 767 1,272 176.8%
Total Recurring Operating Costs 101,755 142,966 47,642 78,991 81.0%
Normalized Net Operating Income 78,266 109,963 42,453 70,388 56.2%
Net Non-Recurring Income (Costs) 6,588 9,257 (83) (138) NMF(4)
Profit Before Provisions 84,854 119,220 42,370 70,250 69.7%
Net Provision Expense/(Benefit) 83,855 117,816 4,749 7,874 1396.2%
Pre-Tax Income 999 1,404 37,621 62,375 -97.7%
Income Tax Expenses 78 109 7,544 12,508 -99.1%
Net Income 922 1,295 30,077 49,868 -97.4%
Weighted Average Number of Shares
Outstanding (000s) 30,451 25,638 18.8%
Fully Diluted Number of Shares Period
End (000s) 31,250 27,249 14.7%
EPS (Basic) 0.03 0.04 1.17 1.95 -97.8%
EPS (Fully Diluted) 0.03 0.04 1.10 1.83 -97.7%
*T
(1 )Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.4050 per US$1.00, 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
(2) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.6580 per US$1.00, such rate being the official Georgian Lari to U.S.
dollar period-end exchange rate as reported by the National Bank of Georgia as
at 30 September 2007
(3) Growth calculations based on GEL values
(4) Not meaningful
Q3 2008 INCOME STATEMENT DATA
-0-
*T
Period Ended Q3 2008 Q2 2008 Growth(3) Q3 2007 Growth
Consolidated, IFRS Based US$(1) GEL US$(2) GEL Q-O-Q US$(4) GEL Y-O-Y
000s, unless otherwise (Unaudited) (Unaudited) (Unaudited)
noted
Interest Income 77,138 108,379 73,481 104,196 4.0% 39,848 66,068 64.0%
Interest Expense 35,250 49,527 34,106 48,362 2.4% 19,672 32,617 51.8%
Net Interest Income 41,888 58,852 39,375 55,834 5.4% 20,176 33,451 75.9%
Fee & Commission Income 9,369 13,164 8,787 12,460 5.7% 5,134 8,513 54.6%
Fee & Commission Expense 1,580 2,220 1,619 2,296 -3.3% 970 1,608 38.1%
Net Fee & Commission
Income 7,789 10,944 7,167 10,163 7.7% 4,165 6,905 58.5%
Income From Documentary
Operations 1,592 2,237 1,615 2,290 -2.3% 1,396 2,314 -3.3%
Expense On Documentary
Operations 390 548 294 417 31.4% 302 500 9.6%
Net Income From
Documentary Operations 1,202 1,689 1,321 1,873 -9.8% 1,094 1,814 -6.9%
Net Foreign Currency
Related Income 6,716 9,437 7,338 10,405 -9.3% 3,759 6,233 51.4%
Net Insurance Income 1,750 2,459 1,224 1,736 41.7% 1,256 2,082 18.1%
Brokerage Income 82 115 1,104 1,566 -92.7% 818 1,355 -91.5%
Asset Management Income 105 148 174 246 -39.9% 9 14 926.7%
Realized Net Investment
Gains (Losses) (814) (1,144) (265) (375) 204.7% 1,468 2,434 NMF(5)
Other 2,430 3,414 3,154 4,472 -23.7% 1,135 1,883 81.3%
Net Other Non-Interest
Income 3,553 4,992 5,392 7,645 -34.7% 4,686 7,769 -35.7%
Net Non-Interest Income 19,261 27,062 21,218 30,087 -10.1% 13,704 22,720 19.1%
Total Operating Income
(Revenue) 61,149 85,914 60,593 85,921 0.0% 33,879 56,172 52.9%
Personnel Costs 20,194 28,372 19,225 27,260 4.1% 10,555 17,500 62.1%
Selling, General &
Administrative Costs 7,642 10,738 8,463 12,001 -10.5% 3,912 6,486 65.6%
Procurement & Operations
Support Expenses 2,523 3,545 2,286 3,242 9.3% 1,354 2,245 57.9%
Depreciation &
Amortization 3,885 5,458 3,289 4,664 17.0% 1,490 2,470 121.0%
Other Operating Expenses 1,077 1,514 1,195 1,695 -10.7% 245 406 272.8%
Total Recurring Operating
Costs 35,321 49,626 34,458 48,862 1.6% 17,555 29,106 70.5%
Normalized Net Operating
Income 25,827 36,287 26,135 37,059 -2.1% 16,324 27,066 34.1%
Net Non-Recurring Income
(Costs) (1,854) (2,605) 2,393 3,394 -176.8% (1,248) (2,070) 25.9%
Profit Before Provisions 23,973 33,682 28,528 40,453 -16.7% 15,076 24,996 34.7%
Net Provision Expense 73,432 103,171 5,073 7,194 1334.1% 1,853 3,072 3258.6%
Pre-Tax Income (49,459) (69,489) 23,455 33,259 NMF(5) 13,223 21,924 NMF(5)
Income Tax
Expenses/(Benefit) (7,496) (10,531) 3,473 4,924 NMF(5) 2,659 4,409 NMF(5)
Net Income (41,963) (58,958) 19,982 28,335 NMF(5) 10,564 17,515 NMF(5)
Weighted Average Number of
Shares Outstanding (000s) 31,250 31,247 0.01% 26,222 19.2%
Fully Diluted Number of
Shares Period End (000s) 31,250 31,248 0.01% 27,249 14.7%
EPS (Basic) (1.34) (1.89) 0.64 0.91 NMF(5) 0.40 0.67 NMF(5)
EPS (Fully Diluted) (1.34) (1.89) 0.64 0.91 NMF(5) 0.39 0.64 NMF(5)
*T
(1) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.4050 per US$1.00, 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
(2) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.4180 per US$1.00, 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 2008
(3) Growth calculations based on GEL values
(4) Converted to U.S. dollars for convenience using a period-end exchange rate
of GEL 1.6580 per US$1.00, such rate being the official Georgian Lari to U.S.
dollar period-end exchange rate as reported by the National Bank of Georgia as
at 30 September 2007
(5) Not meaningful
BALANCE SHEET DATA
-0-
*T
30-Sep-08 Growth(2) 31-Dec-07 Growth(2) 30-Sep-07
Consolidated, IFRS Based US$(1) GEL YTD US$(3) GEL Y-O-Y US$(4) GEL
000s, unless otherwise noted (Unaudited) (Audited) (Unaudited)
Cash & Cash Equivalents 122,030 171,452 -5.7% 232,642 370,273 83.7% 56,280 93,312
Loans & Advances To Credit
Institutions 198,307 278,622 46.6% 119,413 190,057 -16.4% 201,004 333,265
Mandatory Reserve With
NBG/NBU/NBRB 107,474 25,478 -82.4% 90,872 144,631 -66.3% 45,548 75,518
Other Accounts With NBG/NBU/NBRB 107,474 151,002 325.4% 22,303 35,497 65.4% 55,064 91,296
Balances With & Loans To Other
Banks 72,699 102,142 928.7% 6,238 9,929 -38.6% 100,393 166,452
Available-For-Sale Securities 36,032 50,625 3.9% 30,616 48,729 391.6% 6,211 10,298
Treasuries & Equivalents 12,852 18,057 -77.4% 50,111 79,757 -69.3% 35,435 58,751
Other Fixed Income Instruments 11,713 16,457 -85.4% 70,814 112,708 -93.1% 144,272 239,203
Gross Loans To Clients 1,465,947 2,059,656 17.6% 1,100,842 1,752,100 58.1% 785,712 1,302,711
Less: Reserve For Loan Losses (91,832) (129,024) 333.8% -18,689 -29,745 405.3% (15,401) (25,535)
Net Loans To Clients 1,374,116 1,930,632 12.1% 1,082,153 1,722,355 51.2% 770,311 1,277,176
Investments In Other Business
Entities, Net 74,174 104,214 158.8% 25,303 40,273 -28.5% 87,899 145,736
Property & Equipment Owned, Net 207,246 291,181 42.3% 128,585 204,656 109.0% 84,042 139,341
Intangible Assets Owned, Net 6,580 9,245 145.1% 2,370 3,772 215.3% 1,768 2,932
Goodwill 95,894 134,731 20.1% 70,505 112,216 210.8% 26,149 43,355
Tax Assets - Current & Deferred 663 932 -40.1% 978 1,557 -72.3% 2,026 3,360
Prepayments & Other Assets 105,414 148,107 37.5% 42,258 67,258 63.4% 34,141 56,605
Total Assets 2,245,021 3,154,255 4.9% 1,855,750 2,953,611 28.9% 1,449,538 2,403,334
Client Deposits 855,539 1,202,033 -11.3% 851,644 1,355,476 12.9% 642,436 1,065,158
Deposits & Loans From Banks 87,458 122,878 86.7% 41,349 65,811 79.2% 41,348 68,556
Borrowed Funds 674,592 947,801 13.4% 525,248 835,984 37.9% 414,667 687,518
Issued Fixed Income Securities 3,368 4,731 -5.2% 3,137 4,993 NMF - -
Insurance Related Liabilities 41,064 57,694 39.6% 25,968 41,330 75.2% 19,856 32,922
Tax Liabilities - Current &
Deferred 19,018 26,720 -28.2% 23,378 37,209 30.4% 12,360 20,493
Accruals & Other Liabilities 37,764 53,059 -3.2% 34,441 54,817 -16.7% 38,416 63,694
Total Liabilities 1,718,802 2,414,917 0.8% 1,505,165 2,395,620 24.6% 1,169,084 1,938,341
Ordinary Shares 22,242 31,250 15.1% 17,061 27,155 15.1% 16,378 27,154
Share Premium 323,544 454,579 44.1% 198,175 315,415 49.7% 183,117 303,607
Treasury Shares (715) (1,005) -42.1% -1,091 -1,737 -43.6% (1,074) (1,781)
Retained Earnings 96,275 135,267 111.8% 40,122 63,858 116.1% 37,746 62,583
Revaluation & Other Reserves 46,010 64,644 -4.0% 42,318 67,354 268.9% 10,570 17,525
Net Income For The Period 922 1,295 -98.3% 47,526 75,642 -97.4% 30,077 49,868
Shareholders' Equity Excluding
Minority Interest 488,277 686,030 25.3% 344,111 547,687 49.5% 276,813 458,956
Minority Interest 37,942 53,308 417.4% 6,474 10,304 783.0% 3,641 6,037
Total Shareholders' Equity 526,219 739,338 32.5% 350,585 557,991 59.0% 280,454 464,993
Total Liabilities & Shareholders'
Equity 2,245,021 3,154,255 6.8% 1,855,750 2,953,611 31.2% 1,449,538 2,403,334
Shares Outstanding 31,250 15.1% 27,155 23.5% 25,304
Book Value Per Share 16.84 23.66 14.8% 12.95 20.62 48.2% 9.63 15.97
*T
(1) 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 Georgian
Lari to U.S. dollar period-end exchange rate as reported by the National Bank of
Georgia on 30 September 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 1.6580 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 2007
KEY RATIOS
-0-
*T
9 months 9 months
2008 2007
Profitability Ratios
---------------------------------------------------------------------------------------------------
ROAA( 1), Annualised 0.1% 3.5%
---------------------------------------------------------------------------------------------------
ROA 0.03% 2.8%
---------------------------------------------------------------------------------------------------
ROAE(2), Annualised 0.2% 16.2%
---------------------------------------------------------------------------------------------------
ROE 0.1% 14.3%
---------------------------------------------------------------------------------------------------
Interest Income To Average Interest Earning Assets (3), Annualised 17.2% 14.4%
---------------------------------------------------------------------------------------------------
Cost Of Funds (4), Annualised 8.2% 7.3%
---------------------------------------------------------------------------------------------------
Net Spread (5) 8.9% 7.1%
---------------------------------------------------------------------------------------------------
Net Interest Margin (6), Annualised 9.2% 7.9%
---------------------------------------------------------------------------------------------------
Net Interest Margin Normalized (35), Annualised 9.2% 7.9%
---------------------------------------------------------------------------------------------------
Loan Yield (7), Annualised 12.9% 20.6%
---------------------------------------------------------------------------------------------------
Interest Expense To Interest Income 46.1% 45.3%
---------------------------------------------------------------------------------------------------
Net Non-Interest Income To Average Total Assets, Annualised 3.7% 4.2%
---------------------------------------------------------------------------------------------------
Net Non-Interest Income To Revenue (8) 35.0% 39.5%
---------------------------------------------------------------------------------------------------
Net Fee And Commission Income To Average Interest Earning Assets (9),
Annualised 1.8% 1.6%
---------------------------------------------------------------------------------------------------
Net Fee And Commission Income To Revenue 12.4% 12.3%
---------------------------------------------------------------------------------------------------
Operating Leverage (10) 0.3% 11.3%
---------------------------------------------------------------------------------------------------
Total Operating Income (Revenue) To Total Assets, Annualised 10.7% 8.3%
---------------------------------------------------------------------------------------------------
Recurring Earning Power (11), Annualised 5.0% 6.4%
---------------------------------------------------------------------------------------------------
Net Income To Revenue 0.5% 33.4%
---------------------------------------------------------------------------------------------------
Efficiency Ratios
---------------------------------------------------------------------------------------------------
Operating Cost To Average Total Assets (12), Annualised 6.0% 4.1%
---------------------------------------------------------------------------------------------------
Cost To Average Total Assets (13), Annualised 5.6% 5.6%
---------------------------------------------------------------------------------------------------
Cost / Income (14) 52.9% 53.0%
---------------------------------------------------------------------------------------------------
Cost / Income, Normalized (37) 55.5% N/A
---------------------------------------------------------------------------------------------------
Cost/Income Distributed Non-Recurring 56.5% 52.9%
---------------------------------------------------------------------------------------------------
Cost / Income, Bank of Georgia, Standalone 15 45.4% 48.8%
---------------------------------------------------------------------------------------------------
Cost/Income, Normalized, Bank of Georgia, Standalone 44.9% N/A
---------------------------------------------------------------------------------------------------
Cash Cost / Income 47.3% 48.5%
---------------------------------------------------------------------------------------------------
Total Employee Compensation Expense To Revenue (16) 32.2% 32.1%
---------------------------------------------------------------------------------------------------
Total Employee Compensation Expense To Cost 60.8% 60.5%
---------------------------------------------------------------------------------------------------
Total Employee Compensation Expense To Average Total Assets, Annualised 3.4% 3.4%
---------------------------------------------------------------------------------------------------
Liquidity Ratios
---------------------------------------------------------------------------------------------------
Net Loans To Total Assets (17) 61.2% 53.1%
---------------------------------------------------------------------------------------------------
Average Net Loans To Average Total Assets 59.1% 52.6%
---------------------------------------------------------------------------------------------------
Interest Earning Assets To Total Assets 71.1% 79.4%
---------------------------------------------------------------------------------------------------
Average Interest Earning Assets To Average Total Assets 74.8% 81.1%
---------------------------------------------------------------------------------------------------
Liquid Assets To Total Assets (18) 16.2% 30.6%
---------------------------------------------------------------------------------------------------
Net Loans To Client Deposits 160.6% 119.9%
---------------------------------------------------------------------------------------------------
Average Net Loans To Average Client Deposits 141.8% 125.4%
---------------------------------------------------------------------------------------------------
Net Loans To Total Deposits (19) 145.7% 112.7%
---------------------------------------------------------------------------------------------------
Net Loans To Total Liabilities 79.9% 65.9%
---------------------------------------------------------------------------------------------------
Total Deposits To Total Liabilities 54.9% 58.5%
---------------------------------------------------------------------------------------------------
Client Deposits To Total Deposits 90.7% 94.0%
---------------------------------------------------------------------------------------------------
Client Deposits To Total Liabilities 49.8% 55.0%
---------------------------------------------------------------------------------------------------
Current Account Balances To Client Deposits 39.2% 57.2%
---------------------------------------------------------------------------------------------------
Demand Deposits To Client Deposits 3.8% 9.6%
---------------------------------------------------------------------------------------------------
Time Deposits To Client Deposits 57.1% 33.1%
---------------------------------------------------------------------------------------------------
Total Deposits To Total Assets 42.0% 47.2%
---------------------------------------------------------------------------------------------------
Client Deposits To Total Assets 38.1% 44.3%
---------------------------------------------------------------------------------------------------
Client Deposits To Total Equity (Times) (20) 1.6 2.3
---------------------------------------------------------------------------------------------------
Due From Banks / Due To Banks (21) 226.7% 486.1%
---------------------------------------------------------------------------------------------------
Total Equity To Net Loans 38.3% 36.4%
---------------------------------------------------------------------------------------------------
Leverage (Times) (22) 3.3 4.2
---------------------------------------------------------------------------------------------------
*T
KEY RATIOS CONT'D
-0-
*T
9 months 9 months
2008 2007
Asset Quality
------------------------------------------------------------------------------------------------------
NPLs (in GEL) (23) 23,274 16,711
------------------------------------------------------------------------------------------------------
NPLs To Gross Loans To Clients (24) 1.1% 1.3%
------------------------------------------------------------------------------------------------------
Cost of Risk (25), Annualized 8.1% 1.0%
------------------------------------------------------------------------------------------------------
Cost of Risk Normalized (36), Annualized 8.1% 1.0%
------------------------------------------------------------------------------------------------------
Reserve For Loan Losses To Gross Loans To Clients (26) 6.3% 2.0%
------------------------------------------------------------------------------------------------------
NPL Coverage Ratio (27) 554.4% 152.8%
------------------------------------------------------------------------------------------------------
Equity To Average Net Loans To Clients 39.5% 46.8%
------------------------------------------------------------------------------------------------------
Capital Adequacy
------------------------------------------------------------------------------------------------------
Equity To Total Assets 23.4% 19.3%
------------------------------------------------------------------------------------------------------
BIS Tier I Capital Adequacy Ratio, consolidated (28) 24.7% 23.2%
------------------------------------------------------------------------------------------------------
BIS Total Capital Adequacy Ratio, consolidated (29) 25.3% 23.3%
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NBG Tier I Capital Adequacy Ratio (30) 18.2% 14.0%
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NBG Total Capital Adequacy Ratio (31) 15.5% 16.9%
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Per Share Values
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Basic EPS (GEL) (32) 0.04 1.95
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Basic EPS (US$) 0.03 1.17
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Fully Diluted EPS (GEL) (33) 0.04 1.83
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Fully Diluted EPS (US$) 0.03 1.10
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Book Value Per Share (GEL) (34) 23.66 17.12
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Book Value Per Share (US$) 16.84 10.33
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Ordinary Shares Outstanding - Weighted Average, Basic 30,450,867 25,637,740
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Ordinary Shares Outstanding - Period End 31,250,211 27,154,099
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Ordinary Shares Outstanding - Fully Diluted 31,250,211 27,249,100
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Selected Operating Data
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Full Time Employees (FTEs) 6,165 3,992
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FTEs, Bank of Georgia Standalone 3,853 2,388
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Total assets per FTE (23 )(GEL Thousands) 511.6 602.0
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Total Assets per FTE, Bank of Georgia Standalone (GEL Thousands) 818.6 1006.4
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Number Of Active Branches 139 108
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Number Of ATMs 386 185
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Number Of Cards (Thousands) 918 529
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Number Of POS Terminals 2,969 1,093
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*T
NOTES TO KEY RATIOS
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*T
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
*T
About Bank of Georgia
Bank of Georgia, the leading universal Georgian bank with operations in Georgia,
Ukraine and Belarus, is the largest bank by assets, loans, deposits and equity
in Georgia, with 33% market share by total assets (all data according to the NBG
as of 30 September, 2008). The bank has 149 branches and over 904,000 retail and
more than 133,000 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 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'
Fitch Ratings 'B/B'
Moody's 'B3/NP' (FC) & 'Ba1/NP' (LC)
*T
For further information, please visit www.bog.ge/ir or contact:
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*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 Q2 2008, Q3 2008, nine months 2008, Q3 2007 and
nine months 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.