Half-yearly Report

Bank of Georgia

JSC BANK OF GEORGIA ANNOUNCES Q2 AND 1H 2011 RESULTS,
REPORTS Q2 2011 ROAE¹ OF 26.1%

Bank of Georgia (LSE:BGEO)(GSE:GEB) (the â€œBankâ€), Georgiaâ€™s leading bank, announced today its Q2 2011 and 1H 2011 consolidated results (IFRS based, derived from management accounts), reporting a Q2 2011 Net Income of GEL 46.9 million, or GEL 1.50 per share and 1H 2011 Net Income of GEL 77.5 million before loss from Discontinued Operations (Extraordinary Item in Q1 2011), or GEL 2.47 per share.

Q2 2011 and 1H 2011 highlights

Financial Highlights

Record high quarterly Net Income of GEL 46.9, increase of 53.4% q-o-q and 139.1% y-o-y
1H 2011 consolidated Return on Average Equity (ROAE) increased substantially to 22.0%¹, up from 12.2% in 1H 2010, as the Bank benefited from the high growth rates of the Georgian economy
- Q2 2011 consolidated ROAE increased to 26.1%, up from 17.7% and 12.2% in Q1 2011 and in Q2 2010, respectively
Q2 2011 standalone Profit Before Provisions grew 57.2% y-o-y to GEL 54.7 million, up 28.6% q-o-q
Both Net Loan Book and Client Deposits continued to increase strongly as the growth of the economy created greater demand for financial services among both corporate and retail clients
- Net Loan Book, standalone, increased by 10.2% q-o-q to GEL 2,441.9 million, up 32.4% y-o-y and up 11.0% YTD. In nominal terms², standalone Net Loan Book grew 15.3% q-o-q, up 16.1% YTD
- Client Deposits, standalone, increased by 5.3% q-o-q to GEL 2,070.4 million, up 54.2% y-o-y, up 14.8% YTD. In nominal terms, standalone Client Deposits increased 9.4% q-o-q, up 19.4% YTD
Complementing the growth in the Bankâ€™s business, rigorous financial management and cost control resulted in improved efficiency
- Cost/Income Ratio, consolidated, declined to 49.9% in Q2 2011 from 54.4% in Q1 2011, while in 1H 2011, consolidated Cost/Income Ratio declined to 52.0% in 1H 2011 from 60.2% in 1H 2010
- Q2 2011 consolidated operating leverage amounted to 12.5% on a y-o-y basis, while standalone operating leverage stood at 32.6% on a y-o-y basis during the same period.

â€œI am pleased that on the back of significant monetary and fiscal tightening in the first half of 2011 and 6.4% Lari appreciation against U.S.$, we observed year-to-date 11% net loan book growth in Georgia and significant asset quality improvements. These two factors played the critical role in achieving triple digit net profit growth in first half 2011 compared to first half 2010, translating into 22%¹ return on average equity in first half 2011 - our main target.

Georgian economy showed a 5.8% estimated real GDP growth while FDI reached U.S.$ 174 million in first quarter of 2011. By June 2011, the number of visitors to Georgia increased by 45% compared to the same period in 2010, one of the contributor to the appreciation of Lari against U.S.$ and the growth of the NBG FX reserves by 25% to U.S.$2.5 million in first half of 2011. Inflation growth rate, the only concern since the beginning of the year, slowed down significantly after peaking at 14.3% in May 2011 to 8.5% in July 2011 and we started to observe loosening of monetary policy as the National Bank decreased the refinancing rate by 25 bps to 7.75% in July 2011 and reduced the minimum reserve requirement for commercial banks from 15% to 0% on international borrowings with the remaining maturities of more than two years in August 2011. At the same time, we expect significant stimulus from the Ministry of Finance in second half of 2011 as it needs to achieve budget deficit of circa GEL 454 million from budget surplus of GEL 48 million in first half 2011. This increased spending will enable the sovereign to achieve circa 3% budget deficit for 2011.

Solid first half results and positive macro outlook as outlined above gives us good ground for strong second half performance in terms of balance sheet growth and profitabilityâ€ commented Irakli Gilauri, Chief Executive Officer.

¹ ROAE excluding minority interest
² Nominal terms applied GEL/US$ as of 31 December 2010 to the 30 June 2011

Financial Summary

Millions, unless otherwise noted	Â	Q2 2011³			Â	Growth q-o-q³	Â	Growth y-o-y⁴
Bank of Georgia (Consolidated, Unaudited, IFRS-based)		US$	Â	GEL
Total Operating Income (Revenue)⁵		61.1		101.8		11.7%		25.2%
Recurring Operating Costs		29.8		49.6		5.0%		6.7%
Normalised Net Operating Income⁶		31.3		52.1		18.9%		50.0%
Profit/(Loss) before provisions		30.6		51.0		22.8%		40.7%
Net Provision Expenses		1.3		2.1		-59.4%		-83.4%
Net Income/(Loss)		28.1		46.9		53.5%		139.4%
EPS (Basic)		0.90		1.50		53.4%		139.1%
									Â
Millions, unless otherwise noted		1H 2011				Growth y-o-y⁴
Bank of Georgia (Consolidated, Unaudited, IFRS-based)		US$		GEL
Total Operating Income (Revenue)⁵		115.7		192.8		22.7%
Recurring Operating Costs		58.2		96.9		4.4%
Normalised Net Operating Income⁶		57.6		95.9		49.1%
Profit/(Loss) before provisions		55.5		92.5		47.8%
Net Provision Expenses		4.3		7.2		-63.7%
Net Income/(Loss)⁷		46.5		77.5		113.1%
EPS (Basic)		1.48		2.47		112.8%
									Â
Total Assets		2,474.2		4,123.3		20.4%
Net Loans		1,464.1		2,439.9		23.1%
Client Deposits		1,247.8		2,079.4		39.8%
Tier I Capital Adequacy Ratio (BIS)⁸						18.0%
Total Capital Adequacy Ratio (BIS)⁹						27.2%
NBG Tier I Capital Adequacy Ratio						11.5%
NBG Total Capital Adequacy Ratio						15.1%
									Â
Book Value Per share	Â	US$ 14.4	Â	GEL 24.0	Â	Â Â Â Â Â Â 15.6%	Â	Â

Q2 2011 summary of the Bankâ€™s consolidated results

In Q2 2011, the Bankâ€™s Total Operating Income (Revenue) increased 11.7% q-o-q and 25.2% y-o-y to GEL 101.8 million. This was driven by 16.1% y-o-y growth of Net Interest Income (reaching GEL 60.0 million, up 5.4% q-o-q) and 41.1% y-o-y growth of Net Non-Interest Income (GEL 41.8 million up 22.2% q-o-q). On a quarterly basis, the growth of Net Interest income benefited from the growth of the net loan book, which increased by 8.8% q-o-q on a consolidated and 10.2% on a standalone basis outpacing the 5.2% q-o-q growth of consolidated and 5.3% q-o-q standalone client deposits, respectively. As a result, Net Interest Margin (NIM) for the quarter increased to 7.3%, up from the NIM of 7.0% in Q1 2011. Increase in overall business activity drove the growth of all other Non-Interest Income items. Net Foreign Currency Related Income, grew by 40.5% q-o-q to GEL 13.4 million and Net Fee and Commission Income increased by 25.2% to GEL 15.0 million.

On a year-on-year basis, in Q2 2011, Net Interest Income grew 16.1% y-o-y, despite the 39.8% y-o-y growth in Client Deposits compared to the 23.1% increase of the loan book year-on-year. The Bankâ€™s 41.1% y-o-y growth of Q2 2011 Net Non-Interest Income was driven by the growth of all Non-Interest Income items compared to the same period last year. Net Fees and Commission Income grew 38.2% y-o-y to GEL 15.0 million, Net Income from Documentary Operations grew by 59.7% y-o-y to GEL 3.4 million and Net Foreign Currency Related Income increased 51.8% y-o-y to GEL 13.4 million. Net Other Non-Interest Income amounted to GEL 9.9 million, up 27.9% y-o-y, with the growth mostly attributed to the increase in Brokerage and Investment Banking Fees to GEL 1.3 million in Q2 2011 compared to GEL 20 thousand in Q2 2010. As result of the healthy growth of all Non-Interest Income items, the Q2 2011 Net-Non Interest Income accounted for 41.1% of the Bankâ€™s revenue, up from 37.5% in Q1 2011 and from 36.4% in Q2 2010.

Total consolidated Recurring Operating Costs for the quarter increased by 5.0% q-o-q to GEL 49.6 million (up 6.7% y-o-y). The main driver of cost growth during the quarter was the increase in Personnel Costs, which grew 6.1% on a year-on year and 7.2% on a quarter on quarter basis to GEL 27.5 million, in line with the growth of the Bankâ€™s banking operations in Georgia. In Q2 2011, Personnel Costs as percent of Revenue continued to decline reaching 27.1% of the Bankâ€™s Revenue, down from 31.9% in Q2 2010 and from 28.2% in Q1 2011. Normalised Net Operating Income of GEL 52.1 million was up 50.0% y-o-y (up 18.9% q-o-q), resulting in the improved consolidated Normalised Cost/Income Ratio of 48.8% compared to the Normalised Cost/Income ratio of 51.9% in Q1 2011 and 57.3% in Q2 2010.

Net Non-Recurring Income (Costs) for the quarter amounted to GEL 1.1 million and consisted of the following items:

Net Non-Recurring Income / (Costs)	Â	Q2 2011
		Â
Amounts in GEL '000		Quarter
Gain from BYR/U.S.$ Hedge		20,054
BNB Goodwill Impairment		(13,000)
Loss from the Eurobond Buyback		(5,452)
Loss from Disposal of Liberty Consumer Associate, InfoGeorgia		(1,371)
Gain from Sale of Properties		864
One-off Tax Adjustment		(2,906)
Other Net Non-Recurring		694
Total		(1,117)

Due to the Belarusian Ruble (BYR0 devaluation against the U.S.$ the Bank recorded GEL 20.1 million non-recurring income on its BYR/US$ hedge. Also as a result of BYR devaluation the Bank made a GEL 13.0 million goodwill write-down on its BNB investment and as of 30 June 2011, the total goodwill related to BNB amounted to GEL 10.4 million. The non-recurring cost of GEL 5.5 million was recorded due to the Eurobond buy-back in Q2 2011. The Bank made a negative adjustment on tax in the amount of GEL 2.9 million under the non-recurring items, which is related to tax benefit of GEL 3.3 million, recorded under the corporate profit tax item.

The Bankâ€™s consolidated Net Provision Expense for the quarter declined to GEL 2.1 million, down from Net Provision Expense of GEL 5.2 million and GEL 12.6 million in Q1 2011 and Q2 2010, respectively. Net Provision Expense in Q2 2011 was largely a result of the Net Provision Expense for BNB in the amount of GEL 3.4 million due to the 40.1% devaluation of the BYR against GEL during the period, which more than offset GEL 1.9 million reversal of provision charges at the Bank of Georgia standalone level. Consolidated Cost of Risk for the quarter stood at 0.35% a decrease from 2.44% in Q2 2010.

On 30 June 2011, the Bankâ€™s consolidated Total Assets stood at GEL 4,123.3 million, up 20.4% y-o-y and up 3.0% from 31 December 2010. The Bankâ€™s consolidated Net Loan Book was up by 8.8% q-o-q to GEL 2,439.9 million, up 23.1% y-o-y, while consolidated Client Deposits of GEL 2,079.4 million were 3.7% higher than at 31 December 2010, and 39.8% higher than consolidated Client Deposits on 30 June 2010. The increases in the loan book and client deposits were attributed to the growth of Bank of Georgiaâ€™s Georgian loan book (up 11.0% YTD and up 32.4% y-o-y) and client deposits (up 14.8% YTD and up 54.2% y-o-y) in 1H 2011, while the equivalent comparisons on a consolidated basis are impacted by the inclusion of BG Bank loans and deposits in the 2010 financials. In Q2 2011, the consolidated Loan Loss Reserves of GEL 122.5 million declined to 4.8% of the consolidated Gross Loan Book from 5.1% in Q1 2011, reflecting the improved operating environment in Georgia while consolidated NPLs of GEL 100.9 million declined from GEL 173.7 million in Q2 2010, up from GEL 90.8 million in Q1 2011. As of 30 June 2011, consolidated NPLs represented 3.9% of the consolidated gross Loan Book, remaining largely flat compared to the same ratio of 3.8% in Q1 2011. The consolidated NPL Coverage ratio for the quarter stood at 121.4%.

The Bankâ€™s consolidated Book Value per Share on 30 June 2011 stood at GEL 23.97 (US$ 14.38), compared to GEL 23.52 (U.S.$ 13.79) as of 31 March 2011, GEL 22.12 (U.S$12.48) as of 31 December 2010 and GEL 20.74 (U.S.$ 11.25) as of 30 June 2010.

1H 2011 summary of the Bankâ€™s consolidated results

The 1H 2011 results include the loss from Discontinued Operations (Extraordinary Item) of GEL 13.7 million related to the disposal of BG Bank Ukraine in Q1 2011. The accounting treatment of the one-off Extraordinary Item related to BG Bank disposal in Q1 2011 carries limited economic value for the Bank, therefore Q1 2011 consolidated results and the discussion of the results in this report exclude the Extraordinary Item.

For the discussion of results on a comparable basis please refer to the Bank of Georgia standalone results, which do not include BG Bankâ€™s results for all the periods discussed

The Bank reported 1H 2011 consolidated Net Income¹⁰ of GEL 77.5 million. In the 1H 2011, the Bankâ€™s Total Operating Income (Revenue) increased 22.7% y-o-y to GEL 192.8 million, driven by a 20.6% y-o-y increase in Net Interest Income to GEL 116.9 million and by 26.1% y-o-y growth of Net Non-Interest Income to GEL 76.0 million. Net Interest Income of GEL 116.9 million grew 20.6% y-o-y as Interest Income (GEL 238.4 million) growth of 19.6% achieved on the back of 23.1% y-o-y growth of the net loan book outpaced the 18.6% increase in interest expense (GEL 121.5 million, driven mostly by 39.8% y-o-y growth of the Client Deposits. In line with the increased lending and overall business activity, the Bankâ€™s Net Non-Interest Income in 1H 2011 rose by 26.1% y-o-y to GEL 76.0 million. This was a result of the 27.5% y-o-y increase in Net Fees and Commission Income to GEL 27.0 million, the 60.3% y-o-y growth Net Income from Documentary Operations to GEL 6.9 million, the 42.0% y-o-y increase in Net Foreign Currency Related Income to GEL 23.0 million, while Net Other Non-Interest Income grew by 2.8% y-o-y to GEL 19.1 million.

Reflecting the improved efficiency across the Bankâ€™s businesses as well as the exclusion of BG Bank results from the 2011 consolidated results, the total Recurring Operating Costs of GEL 96.9 million were up by 4.4% y-o-y which, when set alongside the 22.7% y-o-y growth of the Revenue to GEL 192.8 million translates into Operating Leverage of 16.6% on a year-on-year basis.

The Bankâ€™s Net Provision Expense declined from GEL 20.0 million in 1H 2010 to GEL 7.2 million in 1H 2011 reflecting the improved loan quality of Bank of Georgia on a standalone basis and the improved operating environment in Georgia. The Bank reported triple digit Net Income growth with 1H 2011 Net Income¹⁰ of GEL 77.5 million compared to the Net Income of GEL 36.3 million in 1H 2010.

JSC Bank of Georgia standalone results

Bank of Georgia on a standalone basis reported Q2 2011 Net Income of GEL 56.2 million, an increase of GEL 31.5 million, or 130.2%, compared to the standalone Net Income of GEL 24.4 million in Q2 2010. Q2 2011 Net Income grew by GEL 24.7 million, or 78.5%, compared to the Q1 2011 standalone Net Income. Reflecting the strong growth combined with the improved asset quality in Q2 2011, the Bankâ€™s 1H 2011 standalone Net Income of GEL 87.7 million is a significant increase compared to the GEL 37.3 million standalone Net Income for the same period in 2010.

On a year-on-year basis, Q2 2011 Net Income growth was driven by 25.1% year-on-year growth of the standalone Total Operating Income (Revenue) to GEL 86.4 million, a result of 19.9% y-o-y increase of Net Interest Income to GEL 58.0 million, attributable mostly to the standalone loan book (net) growth of 32.4% y-o-y, which more than offset the 54.2% growth of Client Deposits, and 37.1% growth of Net Non-Interest Income to GEL 28.5 million, due to the y-o-y growth of most of the non-interest income items, as the Bankâ€™s superior franchise allowed it to benefit from economic growth in Georgia. On a quarterly basis, standalone Net Interest Income grew by 4.9% to GEL 58.0 million and Net Non-Interest Income increased by 24.0% to GEL 28.5 million, resulting in the 10.5% q-o-q growth of standalone Revenue. The rise in interest income during the quarter was a result of healthy q-o-q growth of the standalone Net Loan Book, which grew 10.2%-q-o-q outpacing the 5.3% q-o-q growth rate of standalone Client Deposits. Standalone NIM at 7.1% was slightly better than the standalone NIM of 7.0% in Q1 2011.

Bank of Georgiaâ€™s standalone Q2 2011 Recurring Operating Costs of GEL 37.2 million grew 8.7% q-o-q (up 14.6% y-o-y) translating into Normalised Net Operating Income (NNOI) for the quarter of GEL 49.2 million, up by GEL 12.6 million, or 34.4% y-o-y.

The improved efficiency and Revenue growth on a yearly basis translated into the standalone positive operating leverage of 32.6% y-o-y. Bank of Georgiaâ€™s standalone Cost/Income ratio stood at 36.7% in Q2 2011 compared to 45.6% in Q1 2011 and 49.6% in Q2 2010. The combination of Loan Book growth and improved operating performance resulted in the 57.2% growth of Profit Before Provisions to GEL 54.7 million, up 28.6% q-o-q. Reflecting the improved asset quality, the Bankâ€™s Net Provision Reversal on a standalone basis amounted to GEL 1.9 million in Q2 2011 compared to the Net Provision Expense of GEL 5.6 million in Q1 2011 and GEL 6.5 million in Q2 2010.

Bank of Georgiaâ€™s 1H 2011 standalone Total Operating Income stood at GEL 164.6 million, up by GEL 36.2 million or 28.1% compared to the Total Operating Income of GEL 128.5 million in 1H 2010. Net Interest Income in the 1H 2011 grew by 24.5% y-o-y to GEL 113.2 million as Interest Income growth of 26.6% y-o-y to (GEL 232.2 million) more than offset the 28.7% y-o-y growth rate of Interest Expense to GEL 119.0 million, as the Bank maintained higher average client deposits and higher liquidity in 1H 2011 compared the same period last year. Net Non-Interest Income increased by 37.0% y-o-y to GEL 51.4 million, with the increase being driven by a 22.7% y-o-y increase in Net Fees and Commission Income to GEL 22.7 million, a 53.6% y-o-y increase of Net Foreign Currency Related Income to GEL 20.7 million, and a 62.6% y-o-y increase in Net Income from Documentary Operations to GEL 6.8 million.

The Total Recurring Costs of Bank of Georgia on a standalone basis increased by 13.0% y-o-y to GEL 71.4 million, driven by a 21.3% increase of Personnel Costs on a y-o-y basis, a result of increased headcount in line with the increase in lending activity during the period. Despite the growth in Personnel Cost in the first half of 2011, Personnel Costs represented 24.1% of the Revenue, a decrease from 25.4% in 1H 2010. The continuous improvement of the Bankâ€™s asset quality on a standalone basis for the past three quarters, resulted in an improved Net Provision Expense, which in 1H 2011 amounted to GEL 3.6 million, compared to a GEL 18.8 million Net Provision Expense in the 1H 2010, resulting in 1H 2011 Standalone Net Income of GEL 87.7 million, up 135.5% y-o-y.

As of 30 June 2011, Bank of Georgiaâ€™s standalone Total Assets stood at GEL 4.0 billion, up 20.4% y-o-y, 2.0% q-o-q and up 4.0% YTD. Bank of Georgiaâ€™s standalone Net Loan Book increased by 32.4% y-o-y to GEL 2,441.9 million (up 11.0% YTD) driven by 41.1% y-o-y increase of the Corporate Net Loan Book to GEL 1,356.6 million (up 13.7% YTD) and 25.0% y-o-y growth of Retail Net Loan Book to GEL 1,061.2 million (up 9.4% YTD). On a quarterly basis, the standalone Net Loan Book increased by 10.2% q-o-q, up 11.0% YTD. Standalone NPLs stood at GEL 99.1 million and represented 3.9% of the total gross loan book, largely flat compared to the same ratio of 3.8% in Q1 2011, when the NPLs amounted to GEL 87.6 million on a standalone basis.

As of the Q2 2011, the standalone Client Deposits amounted to GEL 2,070.4 million, representing an increase of GEL 103.9 million, or 5.3% during Q2 2011, up GEL 728.0 million, or 54.2% y-o-y (up 14.8% YTD). The growth was primarily driven by the Retail and CB Client Deposits, which grew 9.9% q-o-q, 49.4% y-o-y, 2.8% q-o-q and 60.6% y-o-y, respectively. Wealth Management Client Deposits were up 4.7% q-o-q and 44.1% y-o-y.

As of 30 June 2011 Bank of Georgia on a standalone basis held market shares in Georgia of 36.1%, 36.0%, and 34.6% by total assets, gross loans, and client deposits, respectively. Since 30 June 2010, the Bank gained market shares of 1.0% by assets, 3.0% by gross loans and 4.9% by client deposits¹¹. The market shares grew 3.1% by assets, 4.1% by loans and 6.3% by client deposits, since 31 December 2009.

The business segment discussion set forth below is derived from IFRS-based management reports. Business segment results of CB, RB and WM represent Bank of Georgiaâ€™s standalone performance and do not include intercompany eliminations.

Retail Banking (RB)

GEL millions, unless otherwise noted	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010	Â	Change Q-O-Q	Â	Change Y-O-Y	Â	1H 2011	Â	1H 2010	Â	Change Y-O-Y
Total operating income (Revenue)		51.4		42.5		37.2		20.9%		38.4%		94.0		69.9		34.3%
Total recurring operating costs		23.7		21.9		21.0		8.3%		12.6%		45.5		41.2		10.4%
Net income / (Loss)		29.4		21.3		2.0		37.8%		NMF		50.7		4.1		NMF
Loans to clients, gross		1,100.2		1,008.9		929.6		9.1%		18.3%
Loans to clients, net		1,061.2		969.6		849.0		9.4%		25.0%
Client deposits		670.1		609.5		448.6		9.9%		49.4%

Discussion of results

In Q2 2011, RB Revenues increased 20.9% q-o-q (up 38.4% y-o-y) to GEL 51.4 million, driven predominantly by the 17.5% q-o-q increase in RB Net Interest Income to GEL 36.9 million (up 40.3% y-o-y). RB Interest Expense declined by 1.8% q-o-q to GEL 27.6 million, while RB Interest Income increased 8.4% q-o-q to GEL 64.5 million. RB Loan Yield Excluding Provisions grew from 21.2% in Q1 2011 to 21.6% in Q2 2011. RB Net Non-Interest Income during the quarter increased by 30.7% q-o-q (up 33.9% y-o-y) to GEL 14.5 million, mostly driven by 29.6% q-o-q increase of RB Net Fee and Commission Income to GEL 11.0 million, up 31.0% y-o-y. RB Recurring Operating Costs increased by 8.3% q-o-q to GEL 23.7 million (up 12.6% y-o-y). RB Net Provision Reversal in Q2 2011 amounted to GEL 50 thousand, compared to the Net Provision Reversal of GEL 4.4 million in Q1 2011. RB Net Income for Q2 2011 amounted to GEL 29.4 million, contributing 52.3% to the standalone Net Income.

On a YTD basis, RB Revenues increased 34.3% y-o-y to GEL 94.0 million, driven predominantly by the 37.0% y-o-y increase in RB Net Interest Income to GEL 68.4 million and 24.8% y-o-y growth of Net Fee and Commission income to GEL 19.6 million. In 1H 2011, RB Recurring Operating Costs grew by 10.4% y-o-y to GEL 45.5 million, leading to the 86.5% y-o-y increase of RB Profit Before Provisions. The Net Provision Reversal for RB in 1H 2011 reached GEL 4.4 million, compared to the Net Provision Expense of GEL 22.0 million in 1H 2010.

RB Net Loans of GEL 1,061.2 million, increased by 9.4% q-o-q up 25.0% y-o-y and up 9.4% YTD. RB Client Deposits grew 9.9% q-o-q and 49.4% y-o-y to GEL 670.1 million, driven primarily by the growth of time deposits.

Highlights

Issued 71,646 debit cards, up 69.3% q-o-q, in Q2 2011 bringing the total debit cards outstanding to 500,993
Issued 15,504 credit cards in Q2 2011 of which 9,897 were American Express cards. A total of 78,024 American Express cards were issued since the launch in November 2009. The total number of credit cards outstanding amounted to 109,706 as of 30 June 2011.
Outstanding number of RB clients reached 862,369, up 2.0% q-o-q and up 8.7% y-o-y.
Acquired 484 new clients in the Solo business line, mass affluent sub-brand, in Q2 2011, of which 150 new clients joined in Q2 2011. As of 30 June 2011, the number of the Solo clients reached 3,094. Introduced Premium Deposit for Solo Clients.
Number of SMS Loans available for the payroll clients through ATMs, launched in Q4 2010, amounted to 11,586 and aggregate SMS loans outstanding reached GEL 36.7 million as of 30 June 2011.
Increased Point of Sales (POS) footprint: As of 30 June 2011, 135 desks at 242 contracted merchants, up from 99 desks and 99 merchants at the end of Q4 2010 when the Bank re-entered POS market. POS loans outstanding reached GEL 10.5 million.
Increased acquiring business footprint, as Point-of-sales terminals reached 2,630 at 1,212 merchants, up from 2,330 and 1,112, respectively in 31 December 2010.
RB Loan Yield Excluding Provisions amounted to 21.6% in Q2 2011 (21.2% in Q1 2011) and RB Deposit Yield amounted to 6.5% in Q2 2011 (7.2% in Q1 2011).
Consumer loan originations of GEL 164.0 million (up 150.9% q-o-q and up 155.0% y-o-y) resulted in consumer loans outstanding in the amount of GEL 238.5 million as of 30 June 2011, up 82.2% y-o-y, up 41.2% q-o-q.
Micro loan originations of GEL 114.1 million (up 22.1% q-o-q and up 59.2% y-o-y) resulted in micro loans outstanding in the amount of GEL 274.0 million as of 30 June 2011, up 74.6% y-o-y, up 10.1% q-o-q
Mortgage loan originations of GEL 43.0 million (up 54.7% q-o-q and down 6.4% y-o-y) resulted in mortgage loans outstanding in the amount of GEL 340.4 million as of 30 June 2011, down 10.0% y-o-y and down 1.9% q-o-q.
SME loan originations of GEL 19.6 million (up 18.8% q-o-q and up 5.4% YTD) resulted in SME loans outstanding in the amount of GEL 44.0 million as of 30 June 2011, up 40.6% YTD and up 22.2% q-o-q.

Corporate Banking (CB)

GEL millions, unless otherwise noted	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010	Â	Change Q-O-Q	Â	Change Y-O-Y	Â	1H 2011	Â	1H 2010	Â	Change Y-O-Y
Total operating income (Revenue)		33.6		33.8		31.2		-0.6%		7.7%		67.4		56.5		19.3%
Total recurring operating costs		12.7		11.4		10.6		11.4%		19.9%		24.0		20.1		19.8%
Net income		25.8		9.2		22.6		180.5%		14.0%		35.0		31.0		12.8%
Loans to clients, gross		1,436.4		1,286.9		1,015.5		11.6%		41.4%
Loans to clients, net		1,356.6		1,209.5		961.2		12.2%		41.1%
Client deposits		1,095.9		1,066.2		682.5		2.8%		60.6%

Discussion of results

CB Revenues decreased 0.6% q-o-q to GEL 33.6 million (up 7.7% y-o-y), driven by the 9.8% q-o-q decrease of Net Interest Income to GEL 20.0 million (down 7.7% y-o-y). CB Interest Expense grew 9.7% q-o-q to GEL 33.5 million (up 43.8% y-o-y) as both CB deposits and CB deposit yields rose during the period. CB Interest Income grew 1.5% q-o-q to GEL 53.5 million, up 18.9% y-o-y. CB Net Non-Interest income increased 17.0% q-o-q (up 42.8% y-o-y) a result of the 23.1% q-o-q increase in CB Net Fee and Commission Income to GEL 1.6 million (up 9.8% y-o-y) and 29.6% q-o-q increase in CB Net Foreign Currency related income to GEL 8.4 million (up 53.1% y-o-y). CB Income from Documentary Operations decreased by 8.2% q-o-q to GEL 3.0 million (up 42.4% y-o-y). CB Recurring Operating Costs amounted to GEL 12.7 million, a 11.4% increase q-o-q and 19.9% increase y-o-y. CB Net Provision Reversal for the quarter amounted to GEL 1.5 million, a decrease compared to the Net Provision Expense of GEL 10.2 million in Q1 2011. CB Net Income for Q2 2011 amounted to GEL 25.8 million, contributing 45.9% to the standalone Net Income for the quarter.

On a YTD basis, CB Revenues increased 19.3% y-o-y to GEL 67.4 million, driven predominantly by the 6.2% y-o-y increase in CB Net Interest Income to GEL 42.2 million and 61.0% y-o-y growth of Net Foreign Currency Related Income to GEL 14.9 million. 1H 2011 CB Recurring Operating Costs grew by 19.8% y-o-y to GEL 24.0 million and CB Profit Before Provisions increased by 30.2% y-o-y. The Net Provision Expense for CB in 1H 2010 reached GEL 8.8 million as compared to Net Provision Reversal of GEL 0.7 million in 1H 2010.

CB net loans increased 12.2% q-o-q to GEL 1,356.6 million (up 41.1% y-o-y and up 13.7% YTD), while CB Client Deposits grew 60.6% y-o-y to GEL 1,095.9 million, up 2.8% q-o-q and up 8.9% YTD.

Highlights

CB Loan Yield Excluding Provisions amounted to 14.1% in Q2 2011 (vs. 16.8% in Q2 2010). CB Deposit Yield increased to 7.1% in Q2 2011 up from 6.1% in Q1 2011, as the share of higher yielding GEL denominated CB deposits in total CB client deposit portfolio increase from 46.9% to 56.3% during the quarter.
The number of corporate clients using the Bankâ€™s payroll services increased from 1,890 as of Q1 2011 to 2,044 in Q2 2011. As of 30 June 2011, the number of individual clients serviced through the corporate payroll programs administered by the Bank amounted to 169,169.

Wealth Management (WM)

GEL millions, unless otherwise noted	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010	Â	Change Q-O-Q	Â	Change Y-O-Y
Total operating income (Revenue)		1.4		1.9		0.8		-26.0%		83.5%
Total recurring operating costs		0.9		1.0		0.9		-14.3%		-3.5%
Net income / (Loss)		1.0		1.0		(0.2)		7.6%		NMF
Loans to clients, gross		25.5		37.7		36.3		-32.5%		-29.9%
Loans to clients, net		24.1		36.1		33.7		-33.1%		-28.5%
Client deposits		304.4		290.8		211.2		4.7%		44.1%

Discussion of results

WM Client Deposits continued to grow reaching GEL 304.4 million, up 4.7% q-o-q, up 44.1% y-o-y and up 16.3% YTD, while WM Net Loan Book decreased 33.1% q-o-q to GEL 24.1 million. WM Client Deposits from non-resident clients continued to grow during the quarter, reaching GEL 202.8 million by Q2 2011, (up 2.6% q-o-q). Client Deposits from non-resident clients accounted for 66.6% of Total WM Client Deposits as of 30 June 2011 and accounted for 9.8% of total Client Deposits.

On a YTD basis, WM Revenues increased by 59.1% y-o-y to GEL 3.3 million, driven predominantly by the 97.2% y-o-y increase in WM Net Interest Income to GEL 2.7 million that more than offset the 18.3% y-o-y decline of Net Non-Interest Income. 1H 2011 WM Recurring Operating Costs declined by 3.5% y-o-y to GEL 1.9 million, leading to the WM Profit Before Provisions of GEL 1.4 million compared to the WM Pre-Provision Profit of GEL 99 thousand in 1H 2010. The Net Provision Reversal for WM in 1H 2011 reached GEL 732 thousand compared to the Net Provision Reversal of GEL 2.5 million in 1H 2010.

Insurance & Healthcare

GEL millions, unless otherwise noted	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010	Â	Change Q-O-Q	Â	Change Y-O-Y
Total operating income (Revenue)		4.0		4.9		4.8		-18.3%		-15.3%
Total recurring operating costs		3.2		3.3		3.6		-2.5%		-10.5%
Net income		1.2		1.2		0.9		-		35.8%
Gross premiums written		17.8		18.7		16.8		-5.0%		6.0%

Discussion of results

Standalone Revenue of Aldagi BCI (ABCI), the Bankâ€™s wholly-owned insurance subsidiary, declined 15.3% y-o-y to GEL 4.0 million, (down 18.3% q-o-q), largely due to the increase in claims costs in Q2 2011. ABCI standalone Gross Premiums Written were down 5.0% q-o-q to GEL 17.8 million, up 6.0% y-o-y. Standalone Operating Costs of GEL 3.2 million were down 2.5% q-o-q (down 10.5% y-o-y). ABCIâ€™s Combined Ratio, increased from 89.7% in Q2 2010 to 92.8% in Q2 2011. ABCIâ€™s Q2 2011 Net Income of GEL 1.2 million was flat q-o-q, up 35.8% y-o-y.

Total Assets amounted to GEL 94.9 million, while Total Liabilities reached GEL 70.4 million as at 30 June 2011.

Highlights

ROAE¹ for the quarter amounted to 20.9% in Q2 2011, compared to the 19.7% ROAE¹ of the same period last year.
Launched flagship health insurance product, MediCard that has been integrated with ABCIâ€™s outpatient clinic network. Since the launch in May 2011, outstanding MediCards have amounted to 5,647.

Belaruskiy Narodniy Bank, Belarus (BNB)

GEL millions, unless otherwise noted	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010	Â	Change Q-O-Q	Â	Change Y-O-Y
Total operating income (Revenue)		5.7		4.2		3.0		37.7%		92.5%
Total recurring operating costs		3.4		3.1		2.0		9.9%		71.0%
Net income		4.1		0.8		0.6		NMF		NMF
Loans to clients gross		59.3		84.1		41.8		-29.5%		41.8%
Loans to clients, net		56.6		83.2		39.7		-32.0%		42.3%
Client deposits		36.3		37.1		15.7		-2.2%		131.3%

Discussion of results

The Q2 2011 results of BNB reflect the impact of 40.1% BYR devaluation against GEL during the quarter. Q2 2011 BNBâ€™s Total Operating Income increased to GEL 5.7 million, up 37.7% q-o-q (up 92.5% y-o-y). This was mainly driven by the 67.9% q-o-q increase in Net Non-Interest Income to GEL 2.4 million a result of the 79.6% q-o-q increase in Net Foreign Currency Related income to GEL 1.6 million, (mainly related to the devaluation of currency in Q2 2011), and 49.2% q-o-q increase in Net Fee and Commission Income to GEL 704 thousand. BNBâ€™s Net Income from Documentary Operation grew by 3.2% q-o-q to GEL 52 thousand (up 101.7% y-o-y). BNBâ€™s Net Interest Income increased 21.4% q-o-q to GEL 3.3 million (up 39.6% y-o-y) as Interest Income increased by 34.2% q-o-q to GEL 4.3 million and Interest Expense increased by 104.4% to GEL 1.0 million. In Q2 2011, BNBâ€™s Recurring Costs increased 9.9% q-o-q to GEL 3.4 million. BNBâ€™s Net Provision Expense for the quarter amounted to GEL 3.4 million as compared to the Net Provision Expense of GEL 71 thousand in Q1 2011. BNB posted Net Income of GEL 4.1 million as compared to Net Income of GEL 753 thousand in Q1 2011 and Net Income of GEL 571 thousand in Q2 2010.

In Q2 2011 BNBâ€™s Gross Loans decreased by 29.5% q-o-q to GEL 59.3 million, up 41.8% y-o-y. On 30 June 2011, Total Assets stood at GEL 137.3 million, up 15.1% q-o-q and up 51.8% y-o-y. Client Deposits amounted to GEL 36.3 million, down 2.2% q-o-q. The decline in Balance Sheet items was due to the devaluation of BYR against GEL.

Highlights

Increased the number of SME and corporate clients by 46.7% y-o-y to 1,843 as of 30 June 2011.
Increased the number of corporate clients using the BNBâ€™s payroll services by 14.7% q-o-q to 297 as of 30 June 2011.

Comment:

â€œWe are delighted to report strong Q2 2011 results that benefited from the healthy growth of the Bankâ€™s loan book, the continued inflow of client deposits, overall growth in business activity, low cost of risk and improved efficiency. The healthy growth of nearly all Revenue items and the controlled growth of operating costs enabled us maintain strong operating leverage. The Bankâ€™s consolidated operating leverage, one of the key metrics followed by the management, amounted to 12.5% in Q2 2011 and 16.6% in 1H 2011 on a year-on-year basis. As demand picked up from both corporate and retail clients, the loan growth accelerated in Q2, with consolidated net loan book reaching GEL 2,439.9, or 11.0% year-to-date increase, while loan yield increased from 17.4% in Q1 2011 to 17.6% in Q2 2011. The Bankâ€™s Net Interest Margin grew to 7.3% in Q2 2011 compared to the NIM of 7.0% in Q1 2011, mostly a result of increased loan demand. Cost of risk improved on lower provisions and continued strong recovery, as net provisions charges declined to GEL 2.1 million in Q2 2011 from GEL 5.2 million in Q1 2011. In addition, the changes in the tax treatment of certain items resulted in a one-off net tax benefit of approximately GEL 5.3 million. All this translated into record high quarterly Net Income of GEL 46.9 million, increase of 53.5% q-o-q and 139.4% y-o-y.

Continued inflows of clientsâ€™ funds and the Bankâ€™s excess liquidity during the quarter enabled us to further decrease our outstanding 2012 US$200 million Eurobonds through buy-backs. As a result, as of 30 June 2011, the Bankâ€™s Eurobonds outstanding stood at U.S.$70.1 millionâ€, commented Giorgi Chiladze, Deputy Chief Executive Officer, Finance.

STANDALONE Q2 2011 SEGMENT INCOME STATEMENT DATA

	Â	CB			Â	RB			Â	WM			Â	CC/ Eliminations			Â	Total			Â	Â
GEL millions, unless otherwise noted		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10
Interest Income		53.5		45.0		64.5		49.5		8.6		6.0		(7.8)		(4.5)		118.8		96.0
Interest Expense		33.5		23.3		27.6		23.2		7.6		5.6		(7.8)		(4.5)		60.8		47.6
Net Interest Income		20.0		21.7		36.9		26.3		1.0		0.4		-		-		58.0		48.4
Net Non-Interest Income		13.6		9.5		14.5		10.8		0.3		0.4		-		-		28.5		20.8
Total Operating Income (Revenue)		33.6		31.2		51.4		37.2		1.4		0.8		-		-		86.4		69.1
Total Recurring Operating Costs		12.7		10.6		23.7		21.0		0.9		0.9		-		-		37.2		32.5
Normalized Net Operating Income / (Loss)		21.0		20.7		27.8		16.1		0.5		(0.1)		-		-		49.2		36.6
Net Non-Recurring Income / (Costs)		3.5		(0.5)		2.0		(1.4)		0.0		0.0		-		-		5.5		(1.8)
Net Provision Expense / (Reversal)		(1.5)		(6.1)		(0.1)		12.6		(0.4)		0.0		-		-		(1.9)		6.5
Net Income / (Loss)		25.8		22.6		29.4		2.0		1.0		(0.2)		-		-		56.2		24.4

STANDALONE 1H 2011 SEGMENT INCOME STATEMENT DATA

	Â	CB			Â	RB			Â	WM			Â	CC/ Eliminations			Â	Total
GEL millions, unless otherwise noted		1H '11	Â	1H '10		1H '11	Â	1H '10		1H '11	Â	1H '10		1H '11	Â	1H '10		1H '11	Â	1H '10
Interest Income		106.2		84.5		124.0		95.3		17.0		11.9		(15.0)		(8.3)		232.2		183.4
Interest Expense		64.0		44.8		55.7		45.4		14.3		10.5		(15.0)		(8.3)		119.0		92.5
Net Interest Income		42.2		39.7		68.4		49.9		2.7		1.4		-		-		113.2		91.0
Net Non-Interest Income		25.3		16.8		25.6		20.1		0.6		0.7		-		-		51.4		37.5
Total Operating Income (Revenue)		67.4		56.5		94.0		69.9		3.3		2.0		-		-		164.6		128.5
Total Recurring Operating Costs		24.0		20.1		45.5		41.2		1.9		1.9		-		-		71.4		63.2
Normalized Net Operating Income / (Loss)		43.4		36.4		48.4		28.7		1.4		0.1		-		-		93.2		65.3
Net Non-Recurring Income / (Costs)		2.7		(1.0)		1.3		(2.0)		0.0		(0.0)		-		-		4.1		(3.1)
Net Provision Expense / (Reversal)		8.8		(0.7)		(4.4)		22.0		(0.7)		(2.5)		-		-		3.6		18.8
Net Income / (Loss)		35.0		31.0		50.7		4.1		2.0		2.2		-		-		87.7		37.2

STANDALONE Q2 2011 SEGMENT BALANCE SHEET DATA

	Â	CB			Â	RB			Â	WM			Â	CC/ Eliminations			Â	Total
GEL millions, unless otherwise noted		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10		Q2 '11	Â	Q2 '10
Loans To Clients, Gross		1,436		1,016		1,100		930		26		36		-		-		2,562		1,982
Loans To Clients, Net		1,357		961		1,061		849		24		34		-		-		2,442		1,844
Total Assets		1,976		1,445		1,847		1,513		28		42		162		333		4,013		3,333
Client Deposits		1,096		683		670		449		304		211		-		-		2,070		1,342
Total Liabilities		1,635		1,250		1,296		1,075		304		211		-		-		3,235		2,536
Total Shareholdersâ€™ Equity		345		244		265		211		6		10		162		333		778		797
Total Liabilities And Shareholdersâ€™ Equity		1,980		1,493		1,560		1,286		311		221		162		333		4,013		3,333

CONSOLIDATED Q2 2011 INCOME STATEMENT

Period ended	Â	Q2 2011			Â	Q1 2011			Â	Q2 2010			Â	Change⁴	Â	Change⁴
Consolidated, IFRS - based		US$¹	Â	GEL		US$²	Â	GEL		US$³	Â	GEL		Q-O-Q		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)				(Unaudited)
Interest Income		72,531		120,873		68,891		117,521		56,565		104,317		2.9%		15.9%
Interest Expense		36,544		60,900		35,540		60,628		28,557		52,664		0.4%		15.6%
Net Interest Income		35,987		59,973		33,351		56,893		28,008		51,653		5.4%		16.1%
Fees & Commission Income		10,841		18,066		9,384		16,009		7,473		13,782		12.8%		31.1%
Fees & Commission Expense		1,835		3,058		2,357		4,020		1,585		2,923		-23.9%		4.6%
Net Fees & Commission Income		9,006		15,008		7,028		11,989		5,888		10,859		25.2%		38.2%
Income From Documentary Operations		2,266		3,777		2,253		3,844		1,427		2,632		-1.7%		43.5%
Expense On Documentary Operations		205		341		200		341		260		480		0.0%		-29.0%
Net Income From Documentary Operations		2,062		3,436		2,053		3,503		1,167		2,152		-1.9%		59.7%
Net Foreign Currency Related Income		8,056		13,426		5,601		9,554		4,797		8,846		40.5%		51.8%
Net Insurance Income / (Loss)		2,207		3,678		2,731		4,659		1,704		3,142		-21.1%		17.1%
Brokerage And Investments Banking Income		768		1,280		206		351		11		20		NMF		NMF
Asset Management Income		35		58		35		60		29		53		-3.3%		9.4%
Net Investment Gains / (Losses)		- 53		(88)		71		121		88		162		NMF		NMF
Other Operating Income		2,992		4,986		2,323		3,962		2,373		4,377		25.8%		13.9%
Net Other Non-Interest Income		5,949		9,914		5,365		9,153		4,205		7,754		8.3%		27.9%
Net Non-Interest Income		25,073		41,784		20,047		34,199		16,056		29,611		22.2%		41.1%
Total Operating Income (Revenue)		61,060		101,757		53,398		91,092		44,065		81,264		11.7%		25.2%
Personnel Costs		16,521		27,533		15,058		25,688		14,068		25,945		7.2%		6.1%
Selling, General & Administrative Expenses		5,552		9,253		5,564		9,491		4,822		8,892		-2.5%		4.1%
Procurement & Operations Support Expenses		2,376		3,959		2,001		3,413		1,793		3,306		16.0%		19.8%
Depreciation And Amortization		3,981		6,635		3,581		6,109		3,547		6,542		8.6%		1.4%
Other Operating Expenses		1,354		2,257		1,508		2,572		997		1,839		-12.2%		22.7%
Total Recurring Operating Costs		29,785		49,637		27,711		47,273		25,227		46,524		5.0%		6.7%
Normalized Net Operating Income / (Loss)		31,275		52,120		25,687		43,819		18,837		34,740		18.9%		50.0%
Net Non-Recurring Income / (Costs)		(670)		(1,117)		(1,341)		(2,287)		812		1,498		(1)		NMF
Profit / (Loss) Before Provisions		30,605		51,003		24,346		41,532		19,650		36,238		22.8%		40.7%
Net Provision Expense		1,254		2,089		3,020		5,151		6,830		12,595		-59.4%		-83.4%
Pre-Tax Income / (Loss)		29,351		48,914		21,327		36,381		12,820		23,643		34.4%		106.9%
Income Tax Expense / (Benefit)		1,210		2,017		3,415		5,826		2,198		4,053		-65.4%		-50.2%
Net Income / (Loss) from Continuing Operations		28,141		46,897		17,911		30,555		10,622		19,590		53.5%		139.4%
Net Loss from Discontinued Operations		-		-		(8,033)		(13,704)		-		-		-100.0%		NMF
Net Income / (Loss)		-		-		9,878		16,851		-		-		-100.0%		NMF

¹ Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

² Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7059 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 2011

³ Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 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 June 2010

⁴ Change calculations based on GEL values

CONSOLIDATED 1H INCOME STATEMENT

Period ended	Â	1H 2011			Â	1H 2010			Â	Change⁴
Consolidated, IFRS - based		US$¹	Â	GEL		US$³	Â	GEL		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)
Interest Income		143,051		238,394		108,092		199,344		19.6%
Interest Expense		72,924		121,528		55,548		102,441		18.6%
Net Interest Income		70,127		116,866		52,545		96,903		20.6%
Fees & Commission Income		20,447		34,075		14,639		26,997		26.2%
Fees & Commission Expense		4,247		7,078		3,156		5,820		21.6%
Net Fees & Commission Income		16,200		26,997		11,483		21,177		27.5%
Income From Documentary Operations		4,573		7,621		2,868		5,289		44.1%
Expense On Documentary Operations		409		682		521		960		-29.0%
Net Income From Documentary Operations		4,164		6,939		2,347		4,329		60.3%
Net Foreign Currency Related Income		13,789		22,980		8,777		16,186		42.0%
Net Insurance Income / (Loss)		5,003		8,337		3,959		7,301		14.2%
Brokerage And Investments Banking Income		979		1,631		129		237		NMF
Asset Management Income		71		118		52		95		24.2%
Net Investment Gains / (Losses)		20		33		1,156		2,131		-98.5%
Other Operating Income		5,369		8,948		4,761		8,781		1.9%
Net Other Non-Interest Income		11,441		19,067		10,056		18,545		2.8%
Net Non-Interest Income		45,594		75,983		32,663		60,237		26.1%
Total Operating Income (Revenue)		115,721		192,849		85,208		157,140		22.7%
Personnel Costs		31,936		53,221		26,747		49,326		7.9%
Selling, General & Administrative Expenses		11,248		18,744		10,137		18,695		0.3%
Procurement & Operations Support Expenses		4,424		7,372		3,694		6,813		8.2%
Depreciation And Amortization		7,647		12,744		7,154		13,193		-3.4%
Other Operating Expenses		2,898		4,829		2,579		4,756		1.5%
Total Recurring Operating Costs		58,152		96,910		50,311		92,783		4.4%
Normalized Net Operating Income / (Loss)		57,569		95,939		34,897		64,357		49.1%
Net Non-Recurring Income / (Costs)		(2,043)		(3,404)		(959)		(1,768)		92.5%
Profit / (Loss) Before Provisions		55,527		92,535		33,938		62,589		47.8%
Net Provision Expense		4,344		7,240		10,820		19,955		-63.7%
Pre-Tax Income / (Loss)		51,182		85,295		23,118		42,634		100.1%
Income Tax Expense / (Benefit)		4,706		7,843		3,410		6,289		24.7%
Net Income / (Loss) from Continuing Operations		46,476		77,452		19,708		36,345		113.1%
Net Loss from Discontinued Operations		(8,033)		(13,704)		-		-		NMF
Net Income / (Loss)		38,443		63,748		-		-		NMF

² Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

³ Change calculations based on GEL values

CONSOLIDATED Q2 2011 BALANCE SHEET

Period ended	Â	Q2 2011			Â	Q1 2011			Â	Q2 2010			Â	Change⁴	Â	Change⁴
Consolidated, IFRS based		US$¹	Â	GEL		US$²	Â	GEL		US$³	Â	GEL		Q-O-Q		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)				(Unaudited)
Cash And Cash Equivalents		71,867		119,767		91,443		155,992		80,078		147,679		-23.2%		-18.9%
Loans And Advances To Credit Institutions		316,056		526,708		394,975		673,788		206,672		381,144		-21.8%		38.2%
Mandatory Reserves With NBG / NBU / NBRB		172,550		287,554		170,592		291,013		27,333		50,408		-1.2%		NMF
Other Accounts With NBG / NBU / NBRB		47,945		79,900		22,232		37,925		3,248		5,990		110.7%		NMF
Balances With And Loans To Other Banks		95,562		159,254		202,151		344,850		176,090		324,746		-53.8%		-51.0%
Investment Securities: AFS & Trading Securities		243,131		405,177		213,055		363,450		19,239		35,480		11.5%		NMF
Investment Securities: HTM, Treasuries		-		-		-		-		145,450		268,238		-		-100.0%
Loans To Clients, Gross		1,537,632		2,562,464		1,384,180		2,361,272		1,181,929		2,179,714		8.5%		17.6%
Less: Reserve For Loan Losses		(73,528)		(122,534)		(69,959)		(119,343)		(106,945)		(197,228)		2.7%		-37.9%
Loans To Clients, Net		1,464,104		2,439,930		1,314,221		2,241,929		1,074,984		1,982,486		8.8%		23.1%
Insurance Related Assets		20,072		33,450		20,404		34,807		18,668		34,427		-3.9%		-2.8%
Investment Property		59,618		99,353		59,396		101,324		53,931		99,459		-1.9%		-0.1%
Investments In Other Business Entities, Net		2,364		3,939		3,942		6,725		2,916		5,378		-41.4%		-26.8%
Property And Equipment Owned, Net		167,074		278,429		165,887		282,986		158,860		292,969		-1.6%		-5.0%
Intangible Assets Owned, Net		13,026		21,708		13,526		23,074		12,669		23,365		-5.9%		-7.1%
Goodwill		33,752		56,248		40,593		69,248		37,496		69,151		-18.8%		-18.7%
Tax Assets, Current And Deferred		12,444		20,738		13,520		23,064		13,489		24,877		-10.1%		-16.6%
Prepayments And Other Assets		70,733		117,877		42,712		72,862		31,959		58,939		61.8%		100.0%
Total Assets		2,474,242		4,123,324		2,373,673		4,049,249		1,856,410		3,423,592		1.8%		20.4%
Client Deposits		1,247,789		2,079,441		1,158,853		1,976,887		806,420		1,487,200		5.2%		39.8%
Deposits And Loans From Banks		103,941		173,218		79,905		136,310		118,411		218,373		27.1%		-20.7%
Borrowed Funds		488,073		813,374		566,135		965,769		512,737		945,589		-15.8%		-14.0%
Issued Fixed Income Securities		89,447		149,063		56,573		96,508		1,980		3,651		54.5%		NMF
Insurance Related Liabilities		27,296		45,488		25,281		43,127		24,076		44,401		5.5%		2.4%
Tax Liabilities, Current And Deferred		14,479		24,130		14,429		24,615		17,264		31,839		-2.0%		-24.2%
Accruals And Other Liabilities		52,114		86,848		40,131		68,459		23,197		42,780		26.9%		103.0%
Total Liabilities		2,023,140		3,371,562		1,941,307		3,311,675		1,504,085		2,773,833		1.8%		21.5%
Share Capital â€“ Ordinary Shares		18,818		31,360		18,010		30,723		16,985		31,324		2.1%		0.1%
Share Premium		287,162		478,556		280,702		478,850		260,397		480,225		-0.1%		-0.3%
Treasury Shares		-857		(1,428)		-828		(1,413)		-754		(1,391)		1.1%		2.7%
Revaluation And Other Reserves		16,839		28,063		35,926		61,287		27,075		49,931		-54.2%		-43.8%
Retained Earnings		76,272		127,107		71,867		122,598		19,624		36,190		3.7%		NMF
Net Income / (Loss) For The Period		38,251		63,745		9,878		16,851		19,708		36,345		NMF		75.4%
Shareholdersâ€™ Equity Excluding Minority		436,485		727,403		415,555		708,896		343,034		632,624		2.6%		15.0%
Minority Interest		14,617		24,359		16,811		28,678		9,291		17,135		-15.1%		42.2%
Total Shareholdersâ€™ Equity		451,102		751,762		432,366		737,574		352,325		649,759		1.9%		15.7%
Total Liabilities And Shareholdersâ€™ Equity		2,474,242		4,123,324		2,373,673		4,049,249		1,856,410		3,423,592		1.8%		20.4%

⁴ Change calculations based on GEL values

STANDALONE Q2 2011 INCOME STATEMENT

Period ended	Â	Q2 2011			Â	Q1 2011			Â	Q2 2010			Â	Change⁴	Â	Change⁴
Standalone, IFRS-based		US$¹	Â	GEL		US$²	Â	GEL		US$³	Â	GEL		Q-O-Q		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)				(Unaudited)
Interest Income		71,273		118,776		66,491		113,427		52,034		95,962		4.7%		23.8%
Interest Expense		36,489		60,808		34,106		58,182		25,820		47,618		4.5%		27.7%
Net Interest Income		34,784		57,968		32,385		55,245		26,214		48,344		4.9%		19.9%
Fees & Commission Income		9,932		16,551		8,195		13,980		7,078		13,052		18.4%		26.8%
Fees & Commission Expense		2,259		3,764		2,361		4,028		1,633		3,012		-6.6%		25.0%
Net Fees & Commission Income		7,673		12,787		5,834		9,952		5,444		10,040		28.5%		27.4%
Income From Documentary Operations		2,216		3,692		2,198		3,749		1,401		2,584		-1.5%		42.9%
Expense On Documentary Operations		186		309		178		304		260		480		1.6%		-35.6%
Net Income From Documentary Operations		2,030		3,383		2,019		3,445		1,141		2,104		-1.8%		60.8%
Net Foreign Currency Related Income		6,999		11,665		5,280		9,007		4,248		7,835		29.5%		48.9%
Net Other Non-Interest Income		384		639		326		557		431		795		14.7%		-19.6%
Net Non-Interest Income		17,086		28,474		13,460		22,961		11,265		20,774		24.0%		37.1%
Total Operating Income (Revenue)		51,870		86,442		45,844		78,206		37,479		69,119		10.5%		25.1%
Personnel Costs		12,610		21,015		10,928		18,642		9,337		17,219		12.7%		22.0%
Selling, General & Administrative Expenses		3,629		6,048		3,883		6,623		3,059		5,642		-8.7%		7.2%
Procurement & Operations Support Expenses		2,060		3,433		1,685		2,874		1,417		2,614		19.5%		31.3%
Depreciation And Amortization		3,444		5,739		2,935		5,006		3,004		5,540		14.6%		3.6%
Other Operating Expenses		581		967		639		1,090		793		1,462		-11.3%		-33.9%
Total Recurring Operating Costs		22,324		37,203		20,069		34,236		17,610		32,477		8.7%		14.6%
Normalized Net Operating Income / (Loss)		29,546		49,239		25,775		43,969		19,869		36,642		12.0%		34.4%
Net Non-Recurring Income / (Costs)		3,291		5,484		(833)		(1,421)		(998)		(1,840)		NMF		NMF
Profit / (Loss) Before Provisions		32,837		54,723		24,942		42,548		18,871		34,802		28.6%		57.2%
Net Provision Expense		(1,164)		(1,940)		3,267		5,573		3,546		6,540		NMF		NMF
Pre-Tax Income / (Loss)		34,001		56,663		21,675		36,975		15,325		28,262		53.2%		100.5%
Income Tax Expense / (Benefit)		256		426		3,211		5,478		2,077		3,831		-92.2%		-88.9%
Net Income / (Loss) from Continuing Operations		33,745		56,237		18,464		31,497		13,248		24,431		78.5%		130.2%
Net Loss from Discontinued Operations		-		-		(8,033)		(13,704)		-		-		-100.0%		NMF
Net Income / (Loss)		-		-		10,431		17,793		-		-		-100.0%		NMF

⁴ Change calculations based on GEL values

STANDALONE 1H INCOME STATEMENT

Period ended	Â	1H 2011			Â	1H 2010			Â	Change⁴
Consolidated, IFRS â€“ based		US$¹	Â	GEL		US$³	Â	GEL		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)
Interest Income		139,336		232,203		99,462		183,428		26.6%
Interest Expense		71,401		118,990		50,144		92,476		28.7%
Net Interest Income		67,934		113,213		49,317		90,951		24.5%
Fees & Commission Income		18,320		30,531		13,100		24,159		26.4%
Fees & Commission Expense		4,676		7,792		3,048		5,620		38.6%
Net Fees & Commission Income		13,645		22,739		10,052		18,538		22.7%
Income From Documentary Operations		4,466		7,442		2,798		5,160		44.2%
Expense On Documentary Operations		368		614		521		960		-36.0%
Net Income From Documentary Operations		4,097		6,828		2,277		4,200		62.6%
Net Foreign Currency Related Income		12,404		20,672		7,298		13,459		53.6%
Net Other Non-Interest Income		718		1,196		728		1,343		-10.9%
Net Non-Interest Income		30,864		51,435		20,356		37,541		37.0%
Total Operating Income (Revenue)		98,798		164,648		69,674		128,492		28.1%
Personnel Costs		23,797		39,657		17,729		32,695		21.3%
Selling, General & Administrative Expenses		7,603		12,671		6,340		11,693		8.4%
Procurement & Operations Support Expenses		3,785		6,308		2,962		5,463		15.5%
Depreciation And Amortization		6,448		10,746		5,984		11,036		-2.6%
Other Operating Expenses		1,235		2,057		1,276		2,354		-12.6%
Total Recurring Operating Costs		42,868		71,439		34,292		63,241		13.0%
Normalized Net Operating Income / (Loss)		55,931		93,208		35,382		65,251		42.8%
Net Non-Recurring Income / (Costs)		2,438		4,063		(1,659)		(3,060)		NMF
Profit / (Loss) Before Provisions		58,369		97,271		33,723		62,191		56.4%
Net Provision Expense		2,180		3,633		10,220		18,848		-80.7%
Pre-Tax Income / (Loss)		56,188		93,638		23,502		43,343		116.0%
Income Tax Expense / (Benefit)		3,543		5,904		3,304		6,093		-3.1%
Net Income / (Loss) from Continuing Operatios		52,646		87,734		20,198		37,250		135.5%
Net Loss from Discontinued Operations		(8,033)		(13,704)		-		-		NMF
Net Income / (Loss)		44,613		74,030		-		-		NMF

³ Change calculations based on GEL values

STANDALONE Q2 2011 BALANCE SHEET

Period ended	Â	Q2 2011			Â	Q1 2011			Â	Q4 2010			Â	Q2 2010			Â	Change⁵	Â	Change⁵	Â	Change⁵
Standalone, IFRS-based		US$¹	Â	GEL		US$²	Â	GEL		US$³	Â	GEL		US$⁴	Â	GEL		Q-O-Q		YTD		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)								(Unaudited)
Cash And Cash Equivalents		59,071		98,442		79,908		136,315		86,021		152,499		62,198		114,706		-27.8%		-35.4%		-14.2%
Loans And Advances To Credit Institutions		302,028		503,330		391,767		668,315		287,306		509,335		216,326		398,949		-24.7%		-1.2%		26.2%
Mandatory Reserves With NBG / NBU / NBRB		172,408		287,319		170,437		290,748		48,886		86,665		24,524		45,228		-1.2%		NMF		NMF
Other Accounts With NBG / NBU / NBRB		46,775		77,951		17,756		30,291		30,997		54,951		423		781		157.3%		41.9%		NMF
Balances With And Loans To Other Banks		82,845		138,061		203,574		347,276		207,423		367,719		191,379		352,940		-60.2%		-62.5%		-60.9%
Investment Securities: AFS & Trading Securities		237,728		396,173		206,040		351,483		158,743		281,420		-		-		12.7%		40.8%		-
Investment Securities: HTM, Treasuries		-		-		-		-		-		-		145,449		268,238		-		-		-100.0%
Loans To Clients, Gross		1,537,379		2,562,042		1,367,891		2,333,485		1,308,820		2,320,276		1,074,458		1,981,515		9.8%		10.4%		29.3%
Less: Reserve For Loan Losses		(72,080)		(120,122)		(69,405)		(118,399)		(67,869)		(120,318)		(74,604)		(137,585)		1.5%		-0.2%		-12.7%
Loans To Clients, Net		1,465,299		2,441,920		1,298,485		2,215,086		1,240,951		2,199,957		999,853		1,843,930		10.2%		11.0%		32.4%
Investment Property		48,609		81,007		47,181		80,485		44,717		79,274		34,125		62,932		0.6%		2.2%		28.7%
Investments In Other Business Entities, Net		97,175		161,942		95,098		162,227		190,588		337,875		180,333		332,570		-0.2%		-52.1%		-51.3%
Property And Equipment Owned, Net		133,826		223,021		133,916		228,448		126,154		223,646		125,472		231,396		-2.4%		-0.3%		-3.6%
Intangible Assets Owned, Net		11,566		19,275		11,972		20,423		9,613		17,043		9,873		18,208		-5.6%		13.1%		5.9%
Goodwill		13,650		22,748		13,335		22,748		12,832		22,748		12,335		22,748		0.0%		0.0%		0.0%
Tax Assets, Current And Deferred		3,569		5,947		7,971		13,597		-		-		3,591		6,622		-56.3%		-		-10.2%
Prepayments And Other Assets		35,326		58,871		21,012		35,844		18,743		33,228		17,591		32,442		64.2%		77.2%		81.5%
Total Assets		2,407,848		4,012,678		2,306,684		3,934,972		2,175,668		3,857,025		1,807,147		3,332,741		2.0%		4.0%		20.4%
Client Deposits		1,242,350		2,070,377		1,152,770		1,966,511		1,017,007		1,802,950		727,870		1,342,338		5.3%		14.8%		54.2%
Deposits And Loans From Banks		85,897		143,148		71,057		121,216		70,988		125,847		104,771		193,219		18.1%		13.7%		-25.9%
Borrowed Funds		479,735		799,478		557,624		951,250		566,069		1,003,527		512,737		945,589		-16.0%		-20.3%		-15.5%
Issued Fixed Income Securities		89,447		149,063		56,573		96,508		12,027		21,321		1,980		3,651		54.5%		NMF		NMF
Tax Liabilities, Current And Deferred		11,796		19,657		12,986		22,152		18,544		32,874		16,251		29,969		-11.3%		-40.2%		-34.4%
Accruals And Other Liabilities		31,786		52,972		23,931		40,824		19,168		33,980		11,602		21,397		29.8%		55.9%		147.6%
Total Liabilities		1,941,011		3,234,695		1,874,941		3,198,462		1,703,801		3,020,499		1,375,211		2,536,164		1.1%		7.1%		27.5%
Share Capital - Ordinary Shares		18,818		31,360		18,379		31,353		17,681		31,345		16,985		31,324		0.0%		0.0%		0.1%
Share Premium		286,642		477,688		280,477		478,465		268,876		476,664		260,537		480,482		-0.2%		0.2%		-0.6%
Treasury Shares		(781)		(1,302)		(746)		(1,272)		(776)		(1,375)		(642)		(1,184)		2.4%		-5.3%		10.0%
Revaluation And Other Reserves		22,752		37,917		29,927		51,052		29,688		52,631		35,591		65,637		-25.7%		-28.0%		-42.2%
Retained Earnings		94,985		158,292		93,275		159,118		104,128		184,597		99,267		183,068		-0.5%		-14.3%		-13.5%
Net Income / (Loss) For The Period		44,421		74,028		10,430		17,793		52,270		92,665		20,198		37,250		NMF		-20.1%		98.7%
Total Shareholders' Equity		466,836		777,983		431,743		736,510		471,867		836,526		431,936		796,577		5.6%		-7.0%		-2.3%
Total Liabilities And Shareholdersâ€™ Equity		2,407,848		4,012,678		2,306,684		3,934,972		2,175,668		3,857,025		1,807,147		3,332,741		2.0%		4.0%		20.4%

³Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7728 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 December 2011

⁴ Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 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 June 2010

⁵ Change calculations based on GEL values

BNB (BELARUS) 1H 2011 INCOME STATEMENT

Period ended	Â	1H 2011			Â	1H 2010			Â	Change³
Standalone, IFRS-based		US$¹	Â	GEL		US$²	Â	GEL		Y-O-Y
000s Unless otherwise noted		(Unaudited)				(Unaudited)
Interest Income		4,480		7,466		2,790		5,146		45.1%
Interest Expense		900		1,500		273		503		198.2%
Net Interest Income		3,580		5,966		2,518		4,643		28.5%
Fees & Commission Income		1,315		2,192		414		764		186.9%
Fees & Commission Expense		609		1,015		75		138		NMF
Net Fees & Commission Income		706		1,177		339		626		88.0%
Income From Documentary Operations		103		172		15		27		NMF
Expense On Documentary Operations		41		68		-		-		-
Net Income From Documentary Operations		62		103		15		27		NMF
Net Foreign Currency Related Income		1,524		2,540		298		550		NMF
Net Other Non-Interest Income		49		81		22		41		97.6%
Net Non-Interest Income		2,341		3,901		675		1,244		NMF
Total Operating Income (Revenue)		5,921		9,867		3,192		5,887		67.6%
Personnel Costs		2,377		3,961		1,165		2,149		84.3%
Selling, General & Administrative Expenses		556		926		245		451		105.3%
Procurement & Operations Support Expenses		588		979		280		517		89.4%
Depreciation And Amortization		196		327		144		265		23.4%
Other Operating Expenses		192		320		211		389		-17.7%
Total Recurring Operating Costs		3,909		6,514		2,045		3,771		72.7%
Normalized Net Operating Income / (Loss)		2,012		3,353		1,147		2,116		58.5%
Net Non-Recurring Income / (Costs)		4,036		6,727		(7)		(12)		NMF
Profit / (Loss) Before Provisions		6,048		10,080		1,141		2,104		NMF
Net Provision Expense		2,072		3,453		356		657		NMF
Pre-Tax Income / (Loss)		3,976		6,627		785		1,447		NMF
Income Tax Expense / (Benefit)		1,042		1,736		183		337		NMF
Net Income / (Loss)		2,935		4,891		602		1,110		NMF

³ Change calculations based on GEL values

KEY RATIOS

Ratios presented on a consolidated basis, unless otherwise noted

Â	Â	1H 2011	Â	1H 2010
Profitability Ratios
ROAA¹, Annualised		3.8%		2.3%
ROAE², Annualised		21.2%		11.8%
ROAE², Annualised, excluding minority interest		22.0%		12.2%
ROA, Annualised		3.8%		2.1%
ROE, Annualised		20.6%		11.2%
ROE, Annualised, excluding minority interest		21.3%		11.5%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised³		18.0%		19.4%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised³		14.6%		16.7%
Cost Of Funds ⁴, Annualied		7.6%		8.5%
Net Spread Excl. Cash, Annualised ⁵		10.4%		10.9%
Net Spread Incl. Cash, Annualised ⁵		7.0%		8.2%
Net Interest Margin ⁶, Annualised		7.1%		8.1%
Loan Yield Excl. Provisions⁷, Annualised		17.4%		18.7%
Loan Yield Incl. Provisions⁷, Annualised		16.5%		16.4%
Deposit Yield, Annualised		7.3%		8.0%
Interest Expense To Interest Income		51.0%		51.4%
Net Non-Interest Income To Average Total Assets, Annualised		3.7%		3.8%
Net Non-Interest Income To Revenue ⁸		39.4%		38.3%
Net Fee And Commission Income To Average Interest Earning Assets ⁹, Annualised		1.3%		1.3%
Net Fee And Commission Income To Revenue		14.0%		13.5%
Operating Leverage, Y-O-Y ¹⁰		16.6%		-6.5%
Operating Leverage, Y-O-Y, Normalized ¹⁰		18.3%		-5.2%
Total Operating Income (Revenue) To Total Assets, Annualised		9.4%		9.2%
Recurring Earning Power ¹¹, Annualised		4.6%		4.0%
Net Income To Revenue		40.2%		23.1%
					Â
Efficiency Ratios
Operating Cost To Average Total Assets ¹², Annualised		4.8%		5.9%
Cost To Average Total Assets ¹³, Annualised		4.9%		6.0%
Cost / Income ¹⁴		52.0%		60.2%
Cost / Income, Normalized ³⁷		50.3%		59.0%
Cash Cost / Income		36.1%		44.4%
Total Employee Compensation Expense To Revenue ¹⁶		27.6%		31.4%
Total Employee Compensation Expense To Cost		53.1%		52.2%
Total Employee Compensation Expense To Average Total Assets, Annualised		2.6%		3.1%
					Â
Liquidity Ratios
Net Loans To Total Assets ¹⁷		59.2%		57.9%
Average Net Loans To Average Total Assets		56.5%		57.1%
Interest Earning Assets To Total Assets		81.6%		76.9%
Average Interest Earning Assets To Average Total Assets		80.6%		75.7%
Liquid Assets To Total Assets ¹⁸		25.5%		24.3%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone		37.9%		34.8%
Liquid Assets To Total Liabilities, IFRS Consolidated		31.2%		30.0%
Net Loans To Client Deposits		117.3%		133.3%
Average Net Loans To Average Client Deposits		114.3%		130.1%
Net Loans To Total Deposits ¹⁹		108.3%		116.2%
Net Loans To (Total Deposits + Equity)		81.2%		84.2%
Net Loans To Total Liabilities		72.4%		71.5%
Total Deposits To Total Liabilities		66.8%		61.5%
Client Deposits To Total Deposits		92.3%		87.2%
Client Deposits To Total Liabilities		61.7%		53.6%
Current Account Balances To Client Deposits		42.0%		44.2%
Demand Deposits To Client Deposits		13.7%		9.0%
Time Deposits To Client Deposits		44.3%		46.7%
Total Deposits To Total Assets		54.6%		49.8%
Â		1H 2011		1H 2010
Client Deposits To Total Assets		50.4%		43.4%
Client Deposits To Total Equity (Times) ²⁰		2.8		2.3
Due From Banks / Due To Banks ²¹		304.1%		174.5%
Total Equity To Net Loans		30.8%		32.8%
Leverage (Times) ²²		4.5		4.3
					Â
Asset Quality
NPLs (in GEL) ²³		100,911		173,743
NPLs To Gross Loans To Clients ²⁴		3.9%		8.0%
NPL Coverage Ratio ²⁷		121.4%		113.5%
Cost of Risk ²⁵, Annualised		0.6%		2.0%
Reserve For Loan Losses To Gross Loans To Clients ²⁶		4.8%		9.0%
% Of Loans To Clients Collateralized		88.3%		91.0%
Equity To Average Net Loans To Clients		32.7%		36.1%
					Â
Capital Adequacy:
Equity To Total Assets		18.2%		19.0%
BIS Tier I Capital Adequacy Ratio, Consolidated ²⁸		18.0%		20.3%
BIS Total Capital Adequacy Ratio, Consolidated ²⁹		27.2%		32.7%
BIS Tier I Capital Adequacy Ratio, Stand-alone ²⁸		19.2%		25.2%
BIS Total Capital Adequacy Ratio, Stand-alone ²⁹		27.7%		32.3%
NBG Tier I Capital Adequacy Ratio ³⁰		11.5%		15.8%
NBG Total Capital Adequacy Ratio ³¹		15.1%		14.5%
					Â
Per Share Values:
Basic EPS (GEL) ³²		2.47		1.16
Basic EPS (US$)		$1.48		$0.63
Fully Diluted EPS (GEL) ³³		2.33		1.16
Fully Diluted EPS (US$)		$1.40		$0.63
Book Value Per Share (GEL) ³⁴		23.97		20.74
Book Value Per Share (US$)		$14.38		$11.25
Ordinary Shares Outstanding â€“ Weighted Average, Basic		31,356,855		31,318,827
Ordinary Shares Outstanding â€“ Period End		31,360,322		31,324,466
Ordinary Shares Outstanding â€“ Fully Diluted		34,831,469		34,793,441
					Â
Selected Operating Data:
Full Time Employees, Group		4,844		4,651
Full Time Employees, Group (including temporary contracts)		5,315		5,118
Full Time Employees, BOG Stand-Alone		3,216		2,963
Total Assets Per FTE ³⁵		851,220		736,100
Total Assets Per FTE, BOG Stand-Alone		1,247,720		1,124,790
Number Of Active Branches		143		137
Number Of ATMs		408		387
Number Of Cards Outstanding		610,299		551,741
Number Of POS Terminals		2,630		2,225

KEY RATIOS

Ratios presented on a consolidated basis, unless otherwise noted

Profitability Ratios	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010
ROAA¹, Annualised		4.6%		3.0%		2.4%
ROAE², Annualised		25.1%		17.1%		12.5%
ROAE², Annualised, excluding minority interest		26.1%		17.7%		12.2%
ROA, Annualised		4.5%		3.0%		2.3%
ROE, Annualised		25.0%		16.6%		12.1%
ROE, Annualised, excluding minority interest		25.9%		17.2%		11.7%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised³		18.2%		17.9%		19.5%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised³		14.7%		14.5%		16.8%
Cost Of Funds ⁴, Annualied		7.7%		7.6%		8.4%
Net Spread Excl. Cash, Annualised ⁵		10.5%		10.4%		11.1%
Net Spread Incl. Cash, Annualised ⁵		7.0%		6.9%		8.4%
Net Interest Margin ⁶, Annualised		7.3%		7.0%		8.3%
Loan Yield Excl. Provisions⁷, Annualised		17.6%		17.4%		18.7%
Loan Yield Incl. Provisions⁷, Annualised		16.4%		16.7%		15.7%
Loan Yield Excl. Provisions, Including Interest Income from liquid assets		20.1%		19.3%		20.2%
Deposit Yield, Annualised		7.5%		7.0%		8.1%
Interest Expense To Interest Income		50.4%		51.6%		50.5%
Net Non-Interest Income To Average Total Assets, Annualised		4.1%		3.4%		3.6%
Net Non-Interest Income To Revenue ⁸		41.1%		37.5%		36.4%
Net Fee And Commission Income To Average Interest Earning Assets ⁹, Annualised		1.8%		1.5%		1.7%
Net Fee And Commission Income To Revenue		14.7%		13.2%		13.4%
Operating Leverage, Y-O-Y ¹⁰		12.5%		20.0%		4.2%
Operating Leverage, Y-O-Y, Normalized ¹⁰		18.5%		17.9%		0.4%
Operating Leverage, Consecutive Q-O-Q ¹⁰		9.3%		1.1%		16.2%
Operating Leverage, Consecutive Q-O-Q, Normalized ¹⁰		6.7%		4.4%		6.5%
Total Operating Income (Revenue) To Total Assets, Annualised		9.9%		9.0%		9.5%
Recurring Earning Power ¹¹, Annualised		5.0%		4.1%		4.4%
Net Income To Revenue		46.1%		33.5%		24.1%
							Â
Efficiency Ratios
Operating Cost To Average Total Assets ¹², Annualised		4.9%		4.7%		5.7%
Cost To Average Total Assets ¹³, Annualised		5.0%		4.9%		5.5%
Cost / Income ¹⁴		49.9%		54.4%		55.4%
Cost / Income, Normalized ³⁷		48.8%		51.9%		57.3%
Cash Cost / Income		34.4%		38.0%		43.0%
Total Employee Compensation Expense To Revenue ¹⁶		27.1%		28.2%		31.9%
Total Employee Compensation Expense To Cost		54.2%		51.8%		57.6%
Total Employee Compensation Expense To Average Total Assets, Annualised		2.7%		2.5%		3.2%
							Â
Liquidity Ratios
Net Loans To Total Assets ¹⁷		59.2%		55.4%		57.9%
Average Net Loans To Average Total Assets		56.4%		56.3%		57.6%
Interest Earning Assets To Total Assets		81.6%		80.6%		76.9%
Average Interest Earning Assets To Average Total Assets		81.1%		80.0%		76.3%
Liquid Assets To Total Assets ¹⁸		25.5%		29.5%		24.3%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone		37.9%		44.5%		34.8%
Liquid Assets To Total Liabilities, IFRS Consolidated		31.2%		36.0%		30.0%
Net Loans To Client Deposits		117.3%		113.4%		133.3%
Average Net Loans To Average Client Deposits		113.3%		115.1%		131.1%
Net Loans To Total Deposits ¹⁹		108.3%		106.1%		116.2%
Â		Q2 2011		Q1 2011		Q2 2010
Net Loans To (Total Deposits + Equity)		81.2%		78.6%		84.2%
Net Loans To Total Liabilities		72.4%		67.7%		71.5%
Total Deposits To Total Liabilities		66.8%		63.8%		61.5%
Client Deposits To Total Deposits		92.3%		93.5%		87.2%
Client Deposits To Total Liabilities		61.7%		59.7%		53.6%
Current Account Balances To Client Deposits		42.0%		44.3%		44.2%
Demand Deposits To Client Deposits		13.7%		11.2%		9.0%
Time Deposits To Client Deposits		44.3%		44.5%		46.7%
Total Deposits To Total Assets		54.6%		52.2%		49.8%
Client Deposits To Total Assets		50.4%		48.8%		43.4%
Client Deposits To Total Equity (Times) ²⁰		2.77		2.68		2.29
Due From Banks / Due To Banks ²¹		304.1%		494.3%		174.5%
Total Equity To Net Loans		30.8%		32.9%		32.8%
Leverage (Times) ²²		4.5		4.5		4.3
							Â
Asset Quality
NPLs (in GEL) ²³		100,911		90,795		173,743
NPLs To Gross Loans To Clients ²⁴		3.9%		3.8%		8.0%
NPL Coverage Ratio ²⁷		121.4%		131.4%		113.5%
Cost of Risk ²⁵, Annualised		0.35%		0.8%		2.4%
Reserve For Loan Losses To Gross Loans To Clients ²⁶		4.8%		5.1%		9.0%
% Of Loans To Clients Collateralized		88.3%		90.1%		91.0%
Equity To Average Net Loans To Clients		32.7%		32.2%		36.1%
							Â
Capital Adequacy:
Equity To Total Assets		18.2%		18.2%		19.0%
BIS Tier I Capital Adequacy Ratio, Consolidated ²⁸		18.0%		18.0%		20.3%
BIS Total Capital Adequacy Ratio, Consolidated ²⁹		27.2%		28.8%		32.7%
BIS Tier I Capital Adequacy Ratio, Stand-alone ²⁸		19.2%		19.3%		25.2%
BIS Total Capital Adequacy Ratio, Stand-alone ²⁹		27.7%		29.0%		32.3%
NBG Tier I Capital Adequacy Ratio ³⁰		11.5%		12.7%		15.8%
NBG Total Capital Adequacy Ratio ³¹		15.1%		15.6%		14.5%
							Â
Per Share Values:
Basic EPS (GEL) ³²		1.50		0.97		0.63
Basic EPS (US$)		$0.90		$0.57		$0.34
Fully Diluted EPS (GEL) ³³		1.40		0.93		0.62
Fully Diluted EPS (US$)		$0.84		$0.55		$0.34
Book Value Per Share (GEL) ³⁴		23.97		23.52		20.74
Book Value Per Share (US$)		$14.38		$13.79		$11.25
Ordinary Shares Outstanding â€“ Weighted Average, Basic		31,360,322		31,353,349		31,321,662
Ordinary Shares Outstanding â€“ Period End		31,360,322		31,353,349		31,324,466
Ordinary Shares Outstanding â€“ Fully Diluted		34,834,936		34,827,963		34,796,276
							Â
Selected Operating Data:
Full Time Employees, Group, including temporary contracts		5,315		5,226		5,118
Full Time Employees, BOG Stand-Alone		3,216		3,150		2,963
Total Assets Per FTE (including temporary contracts) ³⁵		775,790		774,830		668,930
Total Assets Per FTE, BOG Stand-Alone		1,247,720		1,249,200		1,124,790
Number Of Active Branches		143		143		137
Number Of ATMs		408		408		387
Number Of Cards Outstanding		610,299		614,990		551,741
Number Of POS Terminals		2,630		2,404		2,225

KEY RATIOS

Ratios presented on a Standalone basis

Profitability Ratios	Â	1H 2011	Â	1H 2010
ROAA¹, Annualised		4.4%		2.4%
ROAE², Annualised		22.6%		9.9%
ROA, Annualised		4.4%		2.2%
ROE, Annualised		22.6%		9.4%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised³		17.9%		18.6%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised³		14.5%		16.0%
Cost Of Funds ⁴, Annualied		7.7%		8.2%
Net Spread Excl. Cash, Annualised ⁵		10.3%		10.4%
Net Spread Incl. Cash, Annualised ⁵		6.8%		7.8%
Net Interest Margin ⁶, Annualised		7.1%		7.9%
Loan Yield Excl. Provisions⁷, Annualised		17.6%		18.9%
Loan Yield Incl. Provisions⁷, Annualised		16.9%		16.5%
Deposit Yield, Annualised		7.2%		7.5%
Interest Expense To Interest Income		51.2%		50.4%
Net Non-Interest Income To Average Total Assets, Annualised		2.6%		2.5%
Net Non-Interest Income To Revenue ⁸		31.2%		29.2%
Net Fee And Commission Income To Average Interest Earning Assets ⁹, Annualised		1.2%		1.2%
Net Fee And Commission Income To Revenue		13.8%		14.4%
Operating Leverage, Y-O-Y ¹⁰		26.5%		-9.1%
Operating Leverage, Y-O-Y, Normalized ¹⁰		15.2%		-8.5%
Total Operating Income (Revenue) To Total Assets, Annualised		8.2%		7.7%
Recurring Earning Power ¹¹, Annualised		4.9%		4.1%
Net Income To Revenue		53.3%		29.0%
					Â
Efficiency Ratios
Operating Cost To Average Total Assets ¹², Annualised		3.6%		4.1%
Cost To Average Total Assets ¹³, Annualised		3.4%		4.3%
Cost / Income ¹⁴		40.9%		51.6%
Cost / Income, Normalized ³⁷		43.4%		49.2%
Cash Cost / Income		29.2%		34.4%
Total Employee Compensation Expense To Revenue ¹⁶		24.1%		25.4%
Total Employee Compensation Expense To Cost		58.9%		49.3%
Total Employee Compensation Expense To Average Total Assets, Annualised		2.0%		2.1%
					Â
Liquidity Ratios
Net Loans To Total Assets ¹⁷		60.9%		55.3%
Average Net Loans To Average Total Assets		56.8%		56.0%
Interest Earning Assets To Total Assets		83.2%		75.3%
Average Interest Earning Assets To Average Total Assets		81.2%		74.9%
Liquid Assets To Total Assets ¹⁸		24.9%		23.5%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone		37.9%		34.8%
Liquid Assets To Total Liabilities, IFRS Stand-Alone		30.9%		30.8%
Net Loans To Client Deposits		117.9%		137.4%
Average Net Loans To Average Client Deposits		115.2%		138.7%
Net Loans To Total Deposits ¹⁹		110.3%		120.1%
Net Loans To (Total Deposits + Equity)		81.6%		79.1%
Net Loans To Total Liabilities		75.5%		72.7%
Total Deposits To Total Liabilities		68.4%		60.5%
Client Deposits To Total Deposits		93.5%		87.4%
Client Deposits To Total Liabilities		64.0%		52.9%
Current Account Balances To Client Deposits		42.7%		45.8%
Demand Deposits To Client Deposits		13.7%		10.0%
Time Deposits To Client Deposits		51.6%		65.6%
Total Deposits To Total Assets		55.2%		46.1%
Client Deposits To Total Assets		51.6%		40.3%
Client Deposits To Total Equity (Times) ²⁰		2.7		1.7
Due From Banks / Due To Banks ²¹		351.6%		206.5%
Â		1H 2011		1H 2010
Total Equity To Net Loans		31.9%		43.2%
Leverage (Times) ²²		4.2		3.2
					Â
Asset Quality
NPLs (in GEL) ²³		99,058		129,164
NPLs To Gross Loans To Clients ²⁴		3.9%		6.5%
NPL Coverage Ratio ²⁷		121.3%		106.5%
Cost of Risk ²⁵, Annualised		0.3%		2.0%
Reserve For Loan Losses To Gross Loans To Clients ²⁶		4.7%		6.9%
% Of Loans To Clients Collateralized		53.4%		48.9%
Equity To Average Net Loans To Clients		34.7%		46.5%
					Â
Capital Adequacy:
Equity To Total Assets		19.4%		23.9%
BIS Tier I Capital Adequacy Ratio, Stand-alone ²⁸		19.2%		25.2%
BIS Total Capital Adequacy Ratio, Stand-alone ²⁹		27.7%		32.3%
NBG Tier I Capital Adequacy Ratio ³⁰		11.5%		15.8%
NBG Total Capital Adequacy Ratio ³¹		15.1%		14.5%
					Â
Per Share Values:
Basic EPS (GEL) ³²		2.80		1.19
Basic EPS (US$)		$1.68		$0.64
Fully Diluted EPS (GEL) ³³		2.63		1.19
Fully Diluted EPS (US$)		$1.58		$0.64
Book Value Per Share (GEL) ³⁴		24.81		25.43
Book Value Per Share (US$)		$14.89		$13.79
Ordinary Shares Outstanding - Weighted Average, Basic		31,356,855		31,318,827
Ordinary Shares Outstanding - Period End		31,360,322		31,324,466
Ordinary Shares Outstanding - Fully Diluted		34,831,469		34,793,441
					Â
Selected Operating Data:
Full Time Employees, BOG Stand-Alone		3,216		2,963
Total Assets Per FTE, BOG Stand-Alone		1,247,720		1,124,79 0
Number Of Active Branches		143		137
Number Of ATMs		408		387
Number Of Cards Outstanding		610,299		551,741
Number Of POS Terminals		2,630		2,225

KEY RATIOS

Ratios presented on a Standalone basis

Profitability Ratios	Â	Q2 2011	Â	Q1 2011	Â	Q2 2010
ROAA¹, Annualised		5.7%		3.2%		3.1%
ROAE², Annualised		29.6%		16.0%		12.8%
ROA, Annualised		5.6%		3.2%		2.9%
ROE, Annualised		28.9%		17.1%		12.3%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised³		18.0%		18.0%		18.8%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised³		14.5%		14.4%		16.0%
Cost Of Funds ⁴, Annualied		7.8%		7.6%		8.1%
Net Spread Excl. Cash, Annualised ⁵		10.2%		10.4%		10.7%
Net Spread Incl. Cash, Annualised ⁵		6.8%		6.8%		7.9%
Net Interest Margin ⁶, Annualised		7.1%		7.0%		8.1%
Loan Yield Excl. Provisions⁷, Annualised		17.6%		17.7%		18.9%
Loan Yield Incl. Provisions⁷, Annualised		17.0%		16.9%		16.9%
Loan Yield Excl. Provisions, Including Interest Income from liquid assets		19.8%		19.6%		20.0%
Deposit Yield, Annualised		7.4%		6.9%		7.3%
Interest Expense To Interest Income		51.2%		51.3%		49.6%
Net Non-Interest Income To Average Total Assets, Annualised		2.9%		2.3%		2.6%
Net Non-Interest Income To Revenue ⁸		32.9%		29.4%		30.1%
Net Fee And Commission Income To Average Interest Earning Assets ⁹, Annualised		1.6%		1.3%		1.7%
Net Fee And Commission Income To Revenue		14.8%		12.7%		14.5%
Operating Leverage, Y-O-Y ¹⁰		32.6%		20.2%		2.5%
Operating Leverage, Y-O-Y, Normalized ¹⁰		10.5%		20.4%		1.6%
Operating Leverage, Consecutive Q-O-Q ¹⁰		21.6%		-12.4%		9.1%
Operating Leverage, Consecutive Q-O-Q, Normalized ¹⁰		1.9%		0.2%		10.8%
Total Operating Income (Revenue) To Total Assets, Annualised		8.6%		7.9%		8.3%
Recurring Earning Power ¹¹, Annualised		5.5%		4.3%		4.4%
Net Income To Revenue		65.1%		40.3%		35.3%
							Â
Efficiency Ratios
Operating Cost To Average Total Assets ¹², Annualised		3.8%		3.5%		4.1%
Cost To Average Total Assets ¹³, Annualised		3.2%		3.6%		4.3%
Cost / Income ¹⁴		36.7%		45.6%		49.6%
Cost / Income, Normalized ³⁷		43.0%		43.8%		47.0%
Cash Cost / Income		28.3%		30.2%		33.2%
Total Employee Compensation Expense To Revenue ¹⁶		24.3%		23.8%		24.9%
Total Employee Compensation Expense To Cost		66.3%		52.3%		50.2%
Total Employee Compensation Expense To Average Total Assets, Annualised		2.1%		1.9%		2.2%
							Â
Liquidity Ratios
Net Loans To Total Assets ¹⁷		60.9%		56.3%		55.3%
Average Net Loans To Average Total Assets		57.6%		55.9%		56.1%
Interest Earning Assets To Total Assets		83.2%		82.1%		75.3%
Average Interest Earning Assets To Average Total Assets		82.5%		80.1%		75.6%
Liquid Assets To Total Assets ¹⁸		24.9%		29.4%		23.5%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone		37.9%		44.5%		34.8%
Liquid Assets To Total Liabilities, IFRS Stand-Alone		30.9%		36.1%		30.8%
Net Loans To Client Deposits		117.9%		112.6%		137.4%
Average Net Loans To Average Client Deposits		113.3%		116.5%		138.2%
Net Loans To Total Deposits ¹⁹		110.3%		106.1%		120.1%
Net Loans To (Total Deposits + Equity)		81.6%		78.4%		79.1%
Net Loans To Total Liabilities		75.5%		69.3%		72.7%
Total Deposits To Total Liabilities		68.4%		65.3%		60.5%
Client Deposits To Total Deposits		93.5%		94.2%		87.4%
Client Deposits To Total Liabilities		64.0%		61.5%		52.9%
Current Account Balances To Client Deposits		42.7%		45.1%		45.8%
Demand Deposits To Client Deposits		13.7%		11.2%		10.0%
Time Deposits To Client Deposits		51.6%		53.5%		65.6%
Total Deposits To Total Assets		55.2%		53.1%		46.1%
Â		Q2 2011		Q1 2011		Q2 2010
Client Deposits To Total Assets		51.6%		50.0%		40.3%
Client Deposits To Total Equity (Times) ²⁰		266.1%		267.0%		168.5%
Due From Banks / Due To Banks ²¹		351.6%		551.3%		206.5%
Total Equity To Net Loans		31.9%		33.2%		43.2%
Leverage (Times) ²²		4.2		4.3		3.2
Â		Â		Â		Â
Asset Quality		Â		Â		Â
NPLs (in GEL) ²³		99,058		87,593		129,164
NPLs To Gross Loans To Clients ²⁴		3.9%		3.8%		6.5%
NPL Coverage Ratio ²⁷		121.3%		135.2%		106.5%
Cost of Risk ²⁵, Annualised		0.5%		0.8%		2.0%
Reserve For Loan Losses To Gross Loans To Clients ²⁶		4.7%		5.1%		6.9%
% Of Loans To Clients Collateralized		53.4%		51.9%		48.9%
Equity To Average Net Loans To Clients		34.7%		33.5%		46.5%
Â		Â		Â		Â
Capital Adequacy:		Â		Â		Â
Equity To Total Assets		19.4%		18.7%		23.9%
BIS Tier I Capital Adequacy Ratio, Stand-alone ²⁸		19.2%		19.3%		25.2%
BIS Total Capital Adequacy Ratio, Stand-alone ²⁹		27.7%		29.0%		32.3%
NBG Tier I Capital Adequacy Ratio ³⁰		11.5%		12.7%		15.8%
NBG Total Capital Adequacy Ratio ³¹		15.1%		15.6%		14.5%
Â		Â		Â		Â
Per Share Values:		Â		Â		Â
Basic EPS (GEL) ³²		1.79		1.00		0.78
Basic EPS (US$)		$1.08		$0.59		$0.42
Fully Diluted EPS (GEL) ³³		1.67		0.96		0.76
Fully Diluted EPS (US$)		$1.00		$0.56		$0.41
Book Value Per Share (GEL) ³⁴		24.81		23.49		25.43
Book Value Per Share (US$)		$14.89		$13.77		$13.79
Ordinary Shares Outstanding - Weighted Average, Basic		31,360,322		31,353,349		31,321,662
Ordinary Shares Outstanding - Period End		31,360,322		31,353,349		31,324,466
Ordinary Shares Outstanding - Fully Diluted		34,834,936		34,827,963		34,796,276
Â		Â		Â		Â
Selected Operating Data:		Â		Â		Â
Full Time Employees, BOG Stand-Alone		3,216		3,150		2,963
Total Assets Per FTE, BOG Stand-Alone ³⁵		1,247,72 0		1,249,200		1,124,790
Number Of Active Branches		143		143		137
Number Of ATMs		408		408		387
Number Of Cards Outstanding		610,299		614,990		551,741
Number Of POS Terminals		2,443		2,404		2,225

¹ROAE excluding minority interest

²Nominal terms applied GEL/US$ as of 31 December 2010 to the 30 June 2011

³ Compared to Q1 2011; growth calculations based on GEL values.

⁴ Compared to the respective period in 2010

⁵ Revenue includes Net Interest Income and Net Non-Interest Income.

⁶ Normalized for Net Non-Recurring Income/(Costs).

⁷ Net income/(Loss) excludes Extraordinary Item in Q1 2011.

⁸ BIS Tier I Capital Adequacy Ratio equals Consolidated Tier I Capital as of the period end divided by Total Consolidated Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I.

⁹ BIS Total Capital Adequacy Ratio equals Total Consolidated Capital as of the period end divided by Total Consolidated Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I

¹⁰Before Discontinued Operations

¹¹All data according to the NBG as of 30 June 2011

About Bank of Georgia

Bank of Georgia is the leading Georgian bank offering a broad range of corporate banking, retail banking, wealth management, brokerage and insurance services to its clients. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 36% market share by total assets (all data according to the NBG as of 30 June 2011). The Bank has 143 branches and more than one million retail and corporate current accounts.

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

Standard & Poorâ€™s	Â	â€˜B/Bâ€™
FitchRatings		â€˜B+/Bâ€™
Moodyâ€™s		â€˜B1/NPâ€™ (FC) & â€˜Ba3/NPâ€™ (LC)

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

Irakli Gilauri	Â	Giorgi Chiladze	Â	Macca Ekizashvili	Â	David Westover/Justin Griffiths
Chief Executive Officer		Deputy CEO, Finance		Head of Investor Relations		Citigate Dewe Rogerson
+995 32 444 109		+995 32 444 249		+995 32 2 444 256		+44 (0) 207 638 9571
igilauri@bog.ge		gchiladze@bog.ge		ir@bog.ge		bog@citigatgdr.co.uk

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 managementâ€™s current expectations and are subject to uncertainty and changes in circumstances.

The financial information as of Q2 2010, 1H 2010, Q2 2011 and 1H 2011 contained in this news report is unaudited,Â derived from IFRS-based management reportsÂ and reflects the best estimates of management. The Bankâ€™sÂ actual results may differ from the amounts reflected herein as a result of various factors.

NOTES TO KEY RATIOS

1	Â	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; ROAE Excluding Minority Interests equals Net Income Excluding Minority Interest(s) of the period divided by quarterly Average Total Equity Excluding Minority Interest for the same period.
3		Average Interest Earning Assets are calculated on a quarterly basis; Interest Earning Assets include: Loans And Advances To Credit Institutions, Treasuries And Equivalents, Other Fixed Income Instruments and Net Loans to Clients;
4		Cost Of Funds equals Interest Expense of the period divided by quarterly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Client Deposits, Deposits And Loans From Banks, Borrowed Funds and Issued Fixed Income Securities;
5		Net Spread equals Interest Income To Average Interest Earning Assets less Cost Of Funds;
6		Net Interest Margin equals Net Interest Income of the period divided by quarterly Average Interest Earning Assets of the same period;
7		Loan Yield equals Interest Income, less Net Provision Expense, divided by quarterly Average Gross Loans To Clients;
8		Revenue equals Total Operating Income;
9		Net Fee And Commission Income includes Net Income From Documentary Operations of the period ;
10		Operating Leverage equals percentage change in Revenue less percentage change in Total Costs;
11		Recurring Earning Power equals Profit Before Provisions of the period divided by average Total Assets of the same period;
12		Operating Cost equals Total Recurring Operating Costs;
13		Cost includes Total Recurring Operating Costs and Net Non-Recurring Costs (Income);
14		Cost/Income Ratio equals Costs of the period divided by Total Operating Income (Revenue);
15		Cost/Income Normalized equals Total Recurring Operating cost (excludes net non-recurring costs) divided by total operating income.
16		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 Shareholdersâ€™ 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		NPL Coverage Ratio equals Reserve For Loan losses as of the period end divided by NPLs as of the same date;
26		Cost Of Risk equals Net Provision For Loan Losses of the period, plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans To Clients over the same period;
27		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;
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		Equals total consolidated assets divided by total number of full-time employees

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