3rd Quarter Results

3rd Quarter Results

Bank of Georgia

1.81 GEL/US$ 30 September 2010

1.79 GEL/US$ 9 months 2010 average

1.84 GEL/US$ Q3 2010 average

1.84 GEL/US$ 30 June 2010

1.80 GEL/US$ Q2 2010 average

1.68 GEL/US$ 30 September 2009

1.67 GEL/US$ 9 months 2009 average

1.67 GEL/US$ Q3 2009 average

JSC BANK OF GEORGIA REPORTS Q3 2010 AND YTD 2010 RESULTS

Millions, unless otherwise noted   Q3 2010   Growth q-o-q1
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$   GEL
Total Operating Income (Revenue)2 50.5 91.2 10.5%
Recurring Operating Costs 28.2 51.0 6.7%
Normalised Net Operating Income3 22.2 40.1 15.6%
Net Non-Recurring Income / (Costs) (0.9) (1.6) NMF
Profit/(Loss) before provisions 21.3 38.5 6.2%
Net Provision Expenses 7.9 14.2 12.8%
Net Income/(Loss) 11.5 20.8 6.3%
 
9 months 2010 Growth y-o-y1
US$ GEL
Total Operating Income (Revenue)2 138.2 249.6 3.3%
Recurring Operating Costs 80.3 145.1 6.7%
Normalised Net Operating Income3 57.9 104.5 -1.1%
Net Non-Recurring Income / (Costs) (1.9) (3.4) NMF
Profit/(Loss) before provisions 56.0 101.1 -2.1%
Net Provision Expenses 18.9 34.2 -66.8%
Net Income/(Loss) 31.7 57.2 NMF
 
Total Assets 2,001.5 3,615.6 21.3%
Net Loans 1,141.1 2,061.4 24.2%
Client Deposits 918.1 1,658.5 40.3%
Tier I Capital Adequacy Ratio (BIS)4 19.9%
Total Capital Adequacy Ratio (BIS)5 32.6%
Tier I Capital Adequacy Ratio (NBG) 15.2%
Total Capital Adequacy Ratio (NBG) 15.7%

1 Compared to Q2 2010; growth calculations based on GEL values.

2 Compared to the respective period in 2009

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 bank, announced today its Q3 2010 and year-to-date (YTD) 2010 consolidated results (IFRS based, derived from management accounts), reporting a Q3 2010 Net Income of GEL 20.8 million and YTD 2010 Net Income of GEL 57.2 million.

Q3 2010 highlights

  • For the first time in the past three years, the Bank posted double digit quarter-on-quarter growth of the Consolidated Net Normalized Operating Income (NNOI) which grew 15.6% q-o-q to GEL 40.1 million, up 16.9% y-o-y, while Consolidated Profit Before Provisions increased 6.2% q-o-q to GEL 38.5 million, up 18.7% y-o-y
  • Consolidated Net Cash Flow from operating activities increased 67.4% y-o-y to GEL 138.7 million in nine months in 2010
  • Consolidated Loan book quality improved as consolidated NPLs declined from GEL 173.7 million in Q2 2010 to GEL 131.5 million in Q3 2010. Consolidated NPL coverage ratio stood at 141.4% in Q3 2010 compared to 113.5% in Q2 2010
  • Cost of Funds continued to decline reaching 7.9% in Q3 2010, down from 8.4% in Q2 2010 and down from 8.6% in Q1 2010
  • Consolidated Client Deposits grew 11.5% q-o-q to GEL 1,658.5 million, up 30.3% YTD and up 40.3% y-o-y, driven by:
    • Retail Banking (RB) Client Deposits 10.2% q-o-q increase to GEL 494.2 million, up 31.4% YTD and up 51.5% y-o-y;
    • Corporate Banking (CB) Client Deposits 17.1% q-o-q increase to GEL 799.4 million, up 36.1% YTD and up 34.0% y-o-y;
    • Wealth Management (WM) Client Deposits 3.6% q-o-q increase to GEL 218.7 million, up 34.1% YTD and up 62.7% y-o-y.
  • Extended approximately GEL 485.9 million,on a standalone basis, (up 103.3% y-o-y and down 3.0% q-o-q), in new loans to an estimated 24,000 clients (through credit cards, mortgages, consumer and other loans) and to small-and-medium sized companies and corporate clients
  • Net Loan to Client Deposit Ratio declined to 124.3% in Q3 2010 from 133.3% in Q2 2010 and 140.3% in Q3 2009
  • Consolidated gross loan portfolio grew 3.1% q-o-q to GEL 2,247.3 million, up 21.4% YTD and up 23.1% y-o-y

“I am pleased to note that despite the 11.5% q-o-q client deposit growth outpacing the 3.1% q-o-q growth of gross loan book, the Bank’s Net Interest Margin (NIM) remained flat at 8.2% in Q3 2010. This is primarily due to the decrease of Cost of Funds for the second consecutive quarter to 7.9% in Q3 2010 down from 8.3% in Q2 2010 and down from 8.6% in Q1 2010, as deposit rate cuts earlier in the year continued to produce results in the third quarter 2010.

Another highlight of the quarter is a 24.3% q-o-q decrease in consolidated NPLs to GEL 131.5 million representing 5.9% of the gross loan book. Improved operating environment in Georgia led to the improvement of the Bank’s asset quality as standalone NPLs that peaked at GEL 136.8 million, or 7.4% of gross loan book in Q1 2010 declined to GEL 96.5 million, or 4.7% of the gross loan book as of 30 September 2010. Our Georgian retail portfolio, mortgage and credit card portfolios in particular, started to improve and we reduced our consolidated loan loss reserves by GEL 11.3 million q-o-q, bringing the loan loss reserves to gross loan book ratio down to 8.3% from 9.0% in Q2 2010. Improved asset quality and strong balance sheet have been reflected in the healthy increase of net operating cash flow by 67.4% to GEL 138.6 in nine months in 2010 compared to nine months in 2009”, commented Giorgi Chiladze, Deputy Chief Executive Officer, Finance.

Q3 2010 summary of the Bank’s consolidated results

In Q3 2010, the Bank’s Total Operating Income (Revenue) increased 10.5% q-o-q to GEL 91.2million, (up 15.0% y-o-y), a result of 9.4% q-o-q growth of Net Interest Income to GEL 56.5 million (up 15.5% y-o-y), and 12.3% q-o-q growth of Net Non-Interest Income to GEL 34.7 million (up 14.1% y-o-y). On a quarterly basis, Interest Income growth of 5.8% q-o-q outpaced the 2.3% q-o-q growth of Interest Expense, the effect of the increase in lending and the deposit rate cuts in the beginning of the year, respectively. NIM of 8.2% for the quarter remained largely flat compared to the NIM of 8.3% in Q2 2010. On a year-on-year basis, Interest Income in Q3 2010 grew by 17.8% compared to 20.3% y-o-y growth of Interest Expense, as the Bank’s Client Deposits were 40.3% higher as of 30 September 2010 compared to the same period last year. In Q3 2010, the Bank’s Net Non-Interest Income grew by 12.3% q-o-q to GEL 34.7 million compared to Q2 2010 and 14.1% compared to Q3 2009. The quarterly growth of Net Non-Interest Income in Q3 2010 was primarily driven by the 26.5% q-o-q growth of Net Fee and Commission Income to GEL 13.7 million (up 14.0% y-o-y), in line with the increased lending and the overall increased business activity. The Bank’s Net Income from Documentary Operations grew 13.8% q-o-q to GEL 2.5 million (up 5.6% y-o-y), while Net Foreign Currency Related Income amounted to GEL 8.0 million, down 9.2% q-o-q and up 24.1% y-o-y. Net Other Non-Interest Income increased by 15.9% q-o-q, driven by the 29.0% q-o-q increase of Net Insurance Income to GEL 5.4 million.

Total Consolidated Recurring Operating Costs for the quarter increased by 6.7% q-o-q to GEL 51.0 million, (up 13.5% y-o-y), a result of increased Personnel Costs (up 3.9% q-o-q) and the growth of administrative expenses due to headcount expansion in Georgia and overall growth of business. NNOI for the quarter increased by 15.6% q-o-q to GEL 40.1 million (up 16.9% y-o-y), while Normalized Cost/Income ratio in Q3 2010 declined to 56.0% from the Normalized Cost/Income ratio of 57.9% in Q2 2010 and 61.0% in Q1 2010.

The Bank’s Consolidated Net Provision Expense for the quarter was GEL 14.2 million, up from Net Provision Expense of GEL 12.6 million in Q2 2010, with the increase largely attributed to the 95.1% increase of Net Provision Expense of BG Bank to GEL 3.8 million. Bank of Georgia’s Q3 2010 standalone Net Provision Expense of GEL 9.9 million increased from GEL 6.5 million in Q2 2010, when extraordinary reversals of provision charges have occurred. Cost of Risk for the quarter remained largely flat at 2.6% in Q3 2010 compared to the Cost of Risk of 2.4% in Q2 2010.

On 30 September 2010 the Bank’s Consolidated Total Assets stood at GEL 3,615.6 million, up 5.6% from 30 June 2010 and up 24.1% from 31 December 2009. The gross loan book increased by 3.1% q-o-q to GEL 2,247.3 million as of the end of the second quarter, up 23.1% y-o-y and up 21.4% YTD.

In Q3 2010 Loan Loss Reserves of GEL 166.3 million amounted to 8.3% of consolidated gross loan book, a reduction from 9.0% in Q2 2010. Consolidated Net Loans increased by 4.0% q-o-q (up 24.2% y-o-y and up 22.8% YTD) to GEL 2,061.4 million. Consolidated NPLs of GEL 131.5 million declined considerably by 24.3% q-o-q, representing 5.9% of the consolidated gross loan book as of 30 September 2010, down from the same ratio of 8.0% in Q2 2010.

Client Deposits continued to grow during the quarter, resulting in the 11.5% q-o-q growth of the Bank’s Total Client Deposits to GEL 1,658.5 million as of 30 September 2010, a 30.3% increase from 31 December 2009 and a 40.3% increase since 30 September 2009. As of 30 September 2010, the Bank’s consolidated Net Loans/Client Deposits ratio stood at 124.3%, down from 133.3% in Q2 2010, 131.9% as of December 2010 and 140.3% as of Q3 2009.

YTD 2010 summary of the Bank’s consolidated results

The Bank reported the YTD Net Income of GEL 57.2 million. In the nine months in 2010, the Bank’s Total Operating Income (Revenue) increased 3.3% y-o-y to GEL 249.6 million, attributable to 1.7% y-o-y increase in Net Interest Income to GEL 153.4 million and 5.9% y-o-y increase in Net Non-Interest Income of GEL 96.2 million. In nine months in 2010, Net Foreign Currency Related Income increased by 8.5% y-o-y to GEL 24.2 million, predominantly due to the high FX volumes in Georgia during the year. The Bank’s Net Fees and Commission Income increased 0.4% y-o-y to GEL 34.9 million, while Net Income from Documentary Operations grew by 7.0% y-o-y to GEL 6.8 million. YTD 2010 Net Other Non-Interest Income increased 10.6% y-o-y to GEL 30.2 million, with the Bank’s insurance subsidiary contributing the YTD 2010 Net Insurance Income of GEL 13.8 million, up 6.2% y-o-y.

The YTD 2010 Consolidated Recurring Operating Costs increased 6.7% y-o-y to GEL 145.1 million, driven by the 13.0% y-o-y increase in Personnel Costs to GEL 76.3 million, a result of the increase of personnel due to the growth of business across the board during 2010. NNOI in the nine months of 2010 reached GEL 104.5 million, down by 1.1% y-o-y.

On a year-to-date basis, the Bank’s Net Provision Expense dropped from GEL 102.8 million in nine months 2009 to GEL 34.2 million in nine months 2010, in line with the improvements in asset quality and the turnaround of Georgia’s economy during the year. The Bank had Net Provision Expense of GEL 28.7 million in Georgia and GEL 4.2 million in Ukraine. The Bank reported Net Income of GEL 57.2 million in nine months in 2010 compared to the Net Income of GEL 3.4 million in nine months in 2009.

The Bank’s consolidated Book Value per Share on 30 September 2010 stood at GEL 21.69 (US$ 12.01), compared to GEL 20.74 (US$ 11.25) as at 30 June 2010 and GEL 19.12 (US$ 11.34) as of 31 December 2009.

JSC Bank of Georgia (standalone) results

Bank of Georgia on a standalone basis reported Q3 2010 Net Income of GEL 23.7 million, which compares to the standalone Net Income of GEL 24.4 million in Q2 2010 and GEL 10.8 million in Q3 2009. The slight decrease in Net Income in the third quarter is largely attributable to the q-o-q growth in standalone Net Provision Expenses, due to extraordinary reversal of provision charges in Q2 2010.

In Q3 2010, Total Operating Income on a standalone basis amounted to GEL 74.9 million, up 8.4% q-o-q (up 21.9% y-o-y). Net Interest Income grew 8.6% q-o-q to GEL 52.5 million, driven by 5.5% q-o-q increase of Interest Income to GEL 101.2 million, outpacing the 2.3% q-o-q growth of Interest Expense to GEL 48.7 million. Interest Income growth during the quarter was driven by the healthy loan book growth of the past quarters, while interest expense continued to grow at a slower pace compared to the previous quarters, benefiting from the interest rate cuts on deposits in Georgia. On a year-on-year basis, the 17.9% increase of Net Interest Income was predominantly related to the increase in loan book since the beginning of 2010. In Q3 2010 Net Non-Interest Income amounted to GEL 22.5 million, up 8.1% q-o-q and up 32.3% y-o-y, with the growth driven by the 4.0% q-o-q increase of the Net Foreign Currency Related Income to GEL 8.1 million, the 13.5% q-o-q growth of Net Fees and Commission Income to GEL 11.4 million and a 14.1% q-o-q increase in Net Income from Documentary Operations. On a standalone basis, Bank of Georgia’s Total Recurring Operating Costs increased 7.4% q-o-q to GEL 34.9 million (up 16.0% y-o-y), primarily due to the increase of the Personnel Costs driven by the headcount increase to GEL 19.5 million, up 13.4% q-o-q (up 32.8% y-o-y) and the increase in operations support expenses attributed to the growth of business during the quarter. On a standalone basis, Bank of Georgia achieved positive operating leverage of 1.4% on a consecutive q-o-q basis and 3.6% on a y-o-y basis. The Bank’s Net Provision Expense on a standalone basis increased from GEL 6.5 million in Q2 2010 to GEL 9.9 million in Q3 2010.

Bank of Georgia’s YTD 2010 standalone Total Operating Income on a standalone basis grew by 6.8% y-o-y to GEL 203.4 million. Net Interest Income in the nine months of 2010 increased by 2.2% y-o-y to GEL 143.4 million, as 9.0% y-o-y growth of Interest Income to GEL 284.6 million offset the 16.9% y-o-y growth rate of Interest Expense which increased to GEL 141.2 million in nine months 2010. Net Non-Interest Income increased by 19.9% y-o-y to GEL 60.0 million, with the increase driven by 20.2% y-o-y increase of Net Foreign Currency Related Income to GEL 21.6 million and 23.2% y-o-y increase in Net Fees and Commission Income to GEL 29.9 million. Net Income from Documentary Operations reached GEL 6.6 million, up 4.3% y-o-y. The Total Recurring Cost of Bank of Georgia on a standalone basis increased by 10.8% y-o-y, driven by a 18.0% increase of Personnel Costs on a y-o-y basis, a result of increased headcount in line with the increase in lending and overall business activity during the period. Net Provision Expense in nine months in 2010 reached GEL 28.7 million, compared to GEL 71.3 million Net Provision Expense in the nine months in 2009, resulting in YTD 2010 Standalone Net Income of GEL 60.9 million, up 164.7% y-o-y.

As of 30 September 2010, Bank of Georgia’s Total Assets on a standalone basis stood at GEL 3.5 billion, up 5.7% q-o-q, up 27.9% y-o-y and up 23.9% YTD. Gross loans increased 4.0% q-o-q (up 24.8% y-o-y and up 18.8% YTD) to GEL 2.1 billion driven by 2.3% q-o-q increase of the corporate gross loan book to GEL 1,038.9 million and 5.5% q-o-q growth of retail gross loan book to GEL 980.6 million. NPLs stood at GEL 96.5 million and represented 4.7% of the total gross loan book, a decrease from the same ratio of 6.5% in Q2 2010, when the NPLs amounted to GEL 129.2 million on a standalone basis.

In Q3 2010, the Bank’s Client Deposits in Georgia stood at GEL 1,512.4 million, up 12.7% q-o-q, up 34.2% YTD and up 43.0% y-o-y. The growth of Client Deposits during the period was mostly driven by the increase of both Corporate and Retail Banking client deposits by GEL 116.9 million and by GEL 45.6 million, respectively.

As of 30 September 2010 Bank of Georgia on a standalone basis held market share of 34%, 34%, and 30% by total assets, gross loans, and client deposits, respectively in Georgia. Since the year-end 2009, the Bank gained market shares of 1.2% by assets, 2.2% by gross loans and 2.0% by client deposits7.

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

In 2010 the Bank introduced new model for standalone segment reporting. The comparative numbers for Q3 2009 business segment reporting have been adjusted respectively.

Retail Banking (RB)

GEL millions, unless otherwise noted   Q3 2010   Q2 2010*   Q3 2009   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 42.0 37.2 36.7 13.0% 10.6%
Total recurring operating costs

23.0

21.0 20.1 9.4% 12.6%
Net income / (Loss) 12.9 2.0 5.0 NMF 102.9%
Loans to clients, gross 980.6 929.6 831.3 5.5% 18.0%
Loans to clients, net 910.9 849.0 758.1 7.3% 20.2%
Client deposits 494.2 448.6 326.3 10.2% 51.5%

* Q2 2010 numbers have been restated

Discussion of results

RB Revenues increased 13.0% q-o-q (up 10.6% y-o-y) to GEL 42.0 million, a result of the growth of all RB revenue items in Q3 2010. RB Net Interest Income increased by 11.5% q-o-q (up 3.8% y-o-y) to GEL 28.3 million, as RB Interest Income growth of 10.4% q-o-q to GEL 54.7 million more than offset the 9.2% q-o-q growth rate of RB Interest Expense to GEL 25.4 million in Q3 2010. RB Net Non-Interest Income during the quarter increased by 16.7% q-o-q (up 30.7% y-o-y) to GEL 12.6 million, mostly driven by 14.3% q-o-q increase of RB Net Fee and Commission Income to GEL 9.6 million (up 41.4%- y-o-y). RB Recurring Operating Costs increased by 9.4% q-o-q to GEL 23.0 million (up 12.6% y-o-y), translating into a positive operating leverage for the quarter. The improvement of the RB loan book quality as well as healthy loan recovery during the quarter, translated into a 78.4% q-o-q drop in RB Net Provision Expense to GEL 2.7 million. On a year-on-year basis, the Q3 2010 RB Net Provision Expense improved by 76.4%, reflecting the upturn of the overall operating environment during the year. Net Income for Q3 2010 amounted to GEL 12.9 million, contributing 54.2% to the standalone Net Income and 61.7% to the consolidated Net Income.

On an YTD basis, RB Revenues decreased 8.0% y-o-y to GEL 111.9 million, driven predominantly by the 14.1% y-o-y decrease in RB Net Interest Income to GEL 79.2 million which more than offset 21.3% y-o-y growth of Net Fee and Commission income to GEL 25.3 million and 30.5% y-o-y growth of Net other Non-Interest income to GEL 0.8 million. YTD 2010 RB Recurring Operating Costs grew by 6.2% y-o-y to GEL 64.2 million, leading to the 26.9% y-o-y decrease of RB Profit Before Provisions to GEL 44.8 million. The Net Provision Expense for RB in nine months in 2010 reached GEL 24.8 million, down 63.2% from nine months in 2009.

RB gross loans increased 5.5% q-o-q to GEL 980.6 million (up 18.0% y-o-y and up 21.6% YTD), as a result of a pick-up in the retail lending activity during nine months in 2010. RB Client Deposits grew 10.2% q-o-q, 31.4% YTD and 51.5% y-o-y to GEL 494.2 million, driven primarily by the growth of time deposits.

Highlights

  • Issued 44,319 debit cards in Q3 2010 bringing the total debit cards outstanding to 470,913 .
  • Issued 28,304 credit cards of which 20,240 American Express cards in Q3 2010. A total of 34,359 American Express cards were issued since the launch in November 2009. The total number of credit cards outstanding amounted to 94,480 as of 30 September 2010.
  • Outstanding number of RB clients reached 729,578, up 2.1% q-o-q up 4.0% y-o-y.
  • Acquired 141 new clients in Solo business line, Bank of Georgia’s mass affluent sub-brand. As of 30 September, the number of Solo clients reached 1,608.
  • Stepped up mortgage loan originations to GEL 55.2 million in Q3 2010 (up 20.1% q-o-q) resulting in mortgage loans outstanding by 30 September 2010 of GEL 392.4 million, up 14.9% y-o-y and up 15.0% YTD.
  • Consumer loan originations of GEL 69.8 million (up 8.5% q-o-q and up 51.1% y-o-y) resulted in consumer loans outstanding in the amount of GEL 146.9 million as of 30 September 2010, up 17.0% y-o-y and up 28.8% YTD.
  • Micro loan originations of GEL 78.3 million (up 9.2% q-o-q and up 204.1% y-o-y) resulted in micro loans outstanding in the amount of GEL 182.6 million as of 30 September 2010, up 97.2% y-o-y and up 84.7% YTD.
  • Car loan originations of GEL 6.9 million (up 37.8% q-o-q) resulted in car loans outstanding in the amount of GEL 50.7 million as of 30 September 2010, down 20.2% y-o-y and down 10.4% YTD.
  • SME Unit previously part of Corporate business segment became part of Retail business segment, a move that will help better utilize the Bank’s superior retail branch network. SME Unit portfolio stood at GEL 25.6 million as of Q3 2010.

Corporate Banking (CB)

GEL millions, unless otherwise noted   Q3 2010   Q2 2010*   Q3 2009   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue)

31.5

31.2 23.8 1.0% 39.5%
Total recurring operating costs 10.7 10.6 9.0 1.1% 25.4%
Net income 10.6 22.6 7.8 -51.8% 78.7%
Loans to clients, gross 1,038.9 1,015.5 764.7 2.3% 35.9%
Loans to clients, net 976.5 961.2 718.5 1.6% 35.9%
Client deposits 799.4 682.5 596.8 17.1% 34.0%

* Q2 2010 numbers have been restated

Discussion of results

CB Revenues increased 1.0% q-o-q to GEL 31.5 million (up 39.5% y-o-y), driven by the 1.5% q-o-q growth of CB Net Interest Income to GEL 22.0 million (up 40.5% y-o-y). Net Non-Interest Income during the quarter decreased by 0.3% q-o-q (up 37.1% y-o-y) to GEL 9.5 million, mostly a result of 4.3% decrease of CB Net Foreign Currency Related Income to GEL 5.3 million. CB Net Fee and Commission Income increased 7.4% to GEL 1.6 million (up 38.2%- y-o-y), reflecting the growth of CB loan book. CB Recurring Operating Costs increased by 1.1% q-o-q to GEL 10.7 million (up 25.4% y-o-y), resulting in a positive operating leverage for the quarter. CB Net Provision Expense for the quarter amounted to GEL 7.2 as compared to the CB Net Provision Reversal in Q2 2010 which amounted to GEL 6.1 million. Net Income for Q3 2010 amounted to GEL 10.9 million, contributing 46.0% to the standalone Net Income for the quarter and 52.3% to the consolidated Net Income.

On a YTD basis, CB Revenues increased 33.8% y-o-y to GEL 88.0 million, driven predominantly by the 33.6% y-o-y increase in CB Net Interest Income to GEL 61.7 million and 52.7% y-o-y growth of Net Foreign Currency Related Income to GEL 14.5 million. During nine months in 2010, CB Recurring Operating Costs grew by 23.9% y-o-y to GEL 30.7 million, resulting in a 48.0% y-o-y increase of CB Profit Before Provisions. The YTD 2010 Net Provision Expense for CB reached GEL 6.5 million as compared to GEL 1.1 million in nine months in 2009.

CB gross loans increased 2.3% q-o-q to GEL 1,038.9 million (up 35.9% y-o-y and 18.0% YTD), while CB Client Deposits grew 36.1% YTD and 34.0% y-o-y to GEL 799.4 million, up 17.1% q-o-q.

Highlights

  • Increased the number of corporate clients using the Bank’s payroll services from 1,567 as of Q2 2010 to 1,657 in Q3 2010. By 30 September 2010, the number of individual clients serviced through the corporate payroll programs administered by the Bank decreased from approximately 167,219 as of 30 September 2009 to 163,412 as of 30 September 2010.
  • More than 6,000 new corporate accounts opened at the Bank in Q3 2010, bringing the total to over 171,000.

Wealth Management (WM)

GEL millions, unless otherwise noted   Q3 2010   Q2 2010*   Q3 2009   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue)

1.4

0.8 1.0 91.8% 50.6%
Total recurring operating costs 1.2 0.9 1.0 34.3% 5.6%
Net income / (Loss) (0.0) (0.2) (1.6) NMF NMF
Loans to clients, gross 41.1 36.3 55.3 13.2% -25.6%
Loans to clients, net 38.4 33.7 51.4 13.9% -25.3%
Client deposits 218.7 211.2 134.4 3.6% 62.7%

* Q2 2010 numbers have been restated

Discussion of results

WM Client Deposits continued to grow reaching GEL 218.7 million, up 3.6% q-o-q and up 62.7 y-o-y, while WM Loan book increased 13.2% q-o-q to GEL 41.1 million. WM Revenue grew 91.8% q-o-q to GEL 1.4 million as Interest Expense decreased by 7.1% q-o-q to GEL 5.2 million. Interest income grew by 6.6% q-o-q to GEL 6.4 million. The WM Net Non-Interest Income during the quarter decreased by 25.3% q-o-q (down 17.9% y-o-y) to GEL 295.6 thousand, mostly driven by 54.0% q-o-q decrease of Net WM Foreign Currency related Income to GEL 126.2 thousand (down 23.8% y-o-y). WM Net Fee and Commission Income increased 28.9% q-o-q (up 56.9% y-o-y) to GEL 157.0 thousand. WM Total Recurring Operating Costs increased by 34.3% q-o-q to GEL 1.2 million (up 5.6% y-o-y). WM Net Provision Reversal amounted to GEL 53.8 thousand in Q3 2010 compared to Q2 2010 Net Provision Expense of GEL 30.3 thousand. Net Loss for Q3 2010 amounted to GEL 54.4 thousand compared to the Net Loss of GEL 160.4 thousand in Q2 2010.

On a YTD basis, WM Revenues increased by 17.4% y-o-y to GEL 3.5 million, driven predominantly by the 27.0% y-o-y increase in WM Net Interest Income to GEL 2.5 thousand that more than offset the 1.9% y-o-y decline of Net Non Interest Income to GEL 1.0 million. Nine months 2010 WM Recurring Operating Costs declined by 3.0% y-o-y to GEL 3.1 million, leading to the WM Loss Before Provisions of GEL 19.8 thousand compared to the WM Pre-Provison Loss of GEL 405.9 thousand in nine months 2009. The Net Provision Reversal for WM in nine months 2010 reached GEL 2.6 million compared to the Net Provision Expense of GEL 3.0 million in nine months 2009.

Highlights

  • WM Assets under management reached GEL 247.2 million as of 30 September 2010, up from GEL 235.7 million as of 30 June 2010, or 4.9% q-o-q.
  • The number of WM clients amounted to 1,331 clients, of which 433 were non-resident WM clients, up from 365 non-resident WM clients as of 30 September 2009.
  • Launched Bank of Georgia Representative Office in London that will principally focus on introducing the Bank’s wealth management offerings to the prospective clients it the UK. The opening of the Representative Office in London following the success of WM activities in Israel is in line with the Bank’s WM strategy of deposit raising internationally.

Belaruskiy Narodniy Bank, Belarus (BNB)

GEL millions, unless otherwise noted   Q3 2010   Q2 2010   Q3 2009   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 3.2 3.0 2.1 6.3% 50.3%
Total recurring operating costs 2.5 2.0 1.5 25.3% 72.2%
Net income 0.8 0.6 0.6 34.2% 24.1%
Loans to clients gross 51.7 41.8 25.7 23.7% 100.8%
Loans to clients, net 50.4 39.7 25.5 26.7% 97.9%
Client deposits 18.4 15.7 17.9 16.9% 2.6%

Discussion of results

In Q3 2010 BNB’s Total Operating Income increased to GEL 3.2 million, up 6.3% q-o-q, mostly driven by the 54.5 % q-o-q growth of Net Non-Interest Income to GEL 1.0 million (up 46.4 % y-o-y) a result of the growth in Net Foreign Currency Related Income to GEL 527.0 thousand, up 186.4% q-o-q and up 91.2 % y-o-y. BNB’s Net Interest Income decreased by 6.6 % q-o-q to GEL 2.2 million, Interest Expense growing by 16.9 % and Interest Income declining by 4.7 % q-o-q. In Q3 2010, BNB’s Recurring Costs increased 25.3% q-o-q to GEL 2.5 million as the bank positions itself for growth. BNB’s Net Provision Expense for the quarter amounted to GEL 32.0 thousand as compared to GEL 236.0 thousand in Q2 2010. BNB posted Net Income of GEL 766.0 thousand as compared to Net Income of GEL 571.0 thousand in Q2 2010 and Net Income of GEL 617.0 thousand in Q3 2009.

In Q3 2010 BNB’s Gross Loans increased by 23.7% q-o-q (up 100.8% y-o-y). On 30 September 2010 Total Assets stood at GEL 116.2 million, up 103.8% y-o-y. Client Deposits amounted to GEL 18.4 million, up 16.9% q-o-q. Total Liabilities of BNB stood at GEL 54.4 million, up 92.3% q-o-q.

Highlights

  • Increased the number of corporate clients by 22.5% y-o-y to 1,335 as of 30 September 2010.
  • Increased the number of corporate clients using the BNB’s payroll services by 84.7% y-o-y to 182 as of 30 September 2010.
  • Upgraded Retail lending risk management.
  • Launched Internet & mobile banking.
  • Rolled out three new SME and retail banking products: Investment Loan – long-term loan SMEs for financing investments in equipment, machinery and fixed assets; Multipurpose secured long-term loans to retail clients and Car Loans.

BG Bank (Ukraine)

GEL millions, unless otherwise noted   Q3 2010   Q2 2010   Q3 2009   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 3.0 4.3 5.3 -30.1% -42.7%
Total recurring operating costs 3.3 4.9 3.9 -32.9% -16.8%
Net income / (Loss) (3.1) (1.7) (5.5) 85.5% -43.7%
Loans to clients, gross 191.6 207.7 179.6 -7.8% 8.3%
Loans to clients, net 134.6 143.4 136.0 -6.1% -1.1%
Client deposits 155.2 142.0 117.1 9.3% 32.5%

Discussion of results

In Q3 2010 BG Bank’s Revenue amounted to GEL 3.0 million, down by 30.1% q-o-q (down 42.7% y-o-y). Recurring Costs stood at GEL 3.3 million, compared to GEL 4.9 million in Q2 2010 and down 16.8% y-o-y, a result of tightening of the lending activity in Ukraine and the effects of the downsizing of the BG Bank . BG Bank’s Net Provision Expense for the quarter amounted to GEL 3.8 million as compared to Net Provision Expense of GEL 2.0 million in Q2 2010. In Q3 2010 BG Bank recorded Net Loss of GEL 3.1 million that compares to the Net Loss of GEL 5.5 million for the same period last year.

On a YTD basis, BG Bank reported a Net Loss of GEL 4.5 million, compared to the Net Loss of GEL 23.6 million in nine months 2009.

BG Bank’s Total Assets decreased by 9.7 % q-o-q to GEL 194.3 million (down 3.8 % y-o-y), driven primarily by the 7.8% q-o-q decline of BG Bank’s gross loans to GEL 191.6 million (up 6.7 % y-o-y), reflecting the Bank’s cautious lending policy in Ukraine. BG Bank’s Loan Loss Reserves declined 11.4% q-o-q to GEL 56.9 million or 29.7% of BG Bank’s gross loan book. As at 30 September 2010, BG Bank’s NPLs stood at GEL 32.7 million, or 17.1 % of BG Bank’s gross loan book.

BG Bank’s Client Deposits increased by 9.3% q-o-q to GEL 155.2 million, up 32.5% y-o-y. BG Bank’s Total Liabilities stood at GEL 165.5 million in Q3 2010, up 3.1% y-o-y and down by 9.1% q-o-q.

Insurance

GEL millions, unless otherwise noted   Q3 2010   Q2 2010   Q3 2009   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 4.2 6.0 6.1 -31.2% -32.0%
Total recurring operating costs 2.5 4.9 3.8 -48.6% -33.8%
Net income 1.3 0.9 1.6 52.6% -18.9%
Gross premiums written 15.0 16.8 15.6 -10.9% -4.3%

Discussion of results

Standalone Revenue of Aldagi BCI (ABCI), the Bank’s wholly-owned insurance subsidiary, decreased by 31.2% q-o-q to GEL 4.2 million, with standalone Gross Premiums Written down 4.3% y-o-y to GEL 15.0 million. Standalone Operating Costs were GEL 2.5 million, down 48.6% q-o-q. The cleanup of the portfolio from loss making accounts led to the larger decline in ABCI’s Recurring Costs than in its Revenue, leading to the 52.6% q-o-q increase in ABCI’s Q3 2010 Net Income to GEL 1.3 million. Total Assets amounted to GEL 86.1 million, while Total Liabilities reached GEL 65.5 million as at 30 September 2010.

Highlights

  • Number of retail clients exceeded 221,000 as of the end of Q3 2010.
  • As a result of a tender, construction works for building six healthcare facilities on six sites in Western Georgia have commenced. ABCI operates four outpatient clinics and one mid-sized hospital and intends to add six more healthcare facilities in line with the Bank’s strategy to vertically integrate the health insurance business.

BG Capital

In Q3 2009 BG Capital posted Revenue of GEL 1.0 million, that compares to GEL 0.9 million in Q3 2009. Recurring Operating Costs of BG Capital were down 11.8% q-o-q to GEL 1.9 million, up 37.7% y-o-y. Net Loss for the quarter reached GEL 0.8 million, compared to the Net Loss of GEL 1.9 million in Q2 2010 and Net Loss of GEL 1.7 million in Q3 2009.

BG Capital was not immune to the drop in brokerage activity across the CIS in 3Q10, however this was somewhat offset by continued growth in the company’s investment banking business. BG Capital also continued to solidify its position as the leading brokerage in the CIS frontier space. To address the weaker-than-expected volumes in the brokerage business, BG Capital’s management began taking steps to implement a cost optimization program.

Comment:

“During Q3 2010 we continued to experience a strong growth of our core business lines, extending more than GEL 517.4 million in new loans on a consolidated basis throughout the year. Our deposits grew 40.3% y-o-y to a record GEL 1,658.5 million and the loan book quality improved notably with the non-performing loans represent 5.9% of the gross loan book as of Q3 2010. Strong credit and deposit growth once again underlines strong recovery of the Georgian economy, which showed remarkable real GDP growth rate of 8.4% y-o-y in Q2 2010 and 6.6% y-o-y in the first half of 2010.

We continue to be firmly committed to working on our priorities going forward. We have moved our SME business from Corporate to Retail to take advantage of our retail infrastructure in order to penetrate this market segment currently dominated by our competitors. We continue targeting the Georgian mass-affluent retail segment through the already well-established sub-brand Solo and intend to further expand our wealth management business internationally. As the close-to-zero percent growth environment in the developed countries is likely to persist for some time, we will continue attracting more deposits internationally through our wealth management offices in Tel Aviv and London and open more offices elsewhere.

We are strongly positioned to benefit the most from the growing demand for retail and corporate credit in Georgia and we are keeping our unrelenting focus on our asset quality and efficiency as we embark upon the growth in 2011 and beyond,” commented Irakli Gilauri, Chief Executive Officer.

STANDALONE Q3 2010 SEGMENT INCOME STATEMENT DATA

  CB   RB   WM   CC/ Eliminations   Total
GEL millions, unless otherwise noted Q3 '10   Q3 '09   Q3 '10   Q3 '09   Q3 '10   Q3 '09   Q3 '10   Q3 '09   Q3 '10   Q3 '09
Interest Income 45.3   35.6   54.7   47.0   6.4   4.0   (5.2)   (2.0)   101.2   84.6
Interest Expense 23.3 19.1 25.4 19.0 5.2 4.0 (5.2) (2.0) 48.7 40.1
Net Interest Income 22.0 16.5 29.3 28.0 1.2 - - - 52.5 44.5
Net Non-Interest Income 9.4 7.3 12.7 9.7 0.3 - - - 22.4 17.0
Total Operating Income (Revenue) 31.4 23.8 42.0 36.7 1.5 1.0 - - 74.9 61.5
Total Recurring Operating Costs 10.7 9.0 22.9 20.1 1.2 1.0 - - 34.8 30.1
Normalized Net Operating Income / (Loss) 20.7 14.8 19.1 16.6 0.3 - - - 40.1 31.4
Net Non-Recurring Income / (Costs) (0.6) (2.0) (0.9) 1.0 (0.4) - - - (1.9) (1.0)
Net Provision Expense / (Reversal) 7.3 4.0 2.8 11.7 (0.1) 2.0 - - 10.0 17.7
Net Income / (Loss) 10.6 7.8 12.9 5.0 0.0 (2.0) - - 23.5 10.8

STANDALONE Q3 2010 SEGMENT BALANCE SHEET DATA

  CB   RB   WM   CC/ Eliminations   Total
GEL millions, unless otherwise noted Q3 '10   Q3 '09   Q3 '10   Q3 '09   Q3 '10   Q3 '09   Q3 '10   Q3 '09   Q3 '10   Q3 '09
Loans To Clients, Gross 1,038.9   764.7   980.6   831.3   41.1   55.3   0.0   0.0   2,060.6   1,651.3
Loans To Clients, Net 976.5 718.5 910.9 758.0 38.4 51.4 0.0 0.0 1,925.8 1,527.9
Total Assets 1,515.0 1,051.0 1,629.0 1,338.2 45.0 59.0 333.0 304.0 3,522.0 2,753.0
Client Deposits 799.5 596.8 494.2 326.3 218.7 134.4 0.0 0.0 1,512.4 1,057.5
Total Liabilities 1,380.0 988.0 1,107.0 902.0 219.0 134.4 0.0 0.0 2,706.0 2,025.0
Total Shareholders Equity 259.0 218.0 216.0 194.0 8.0 12.0 333.0 304.0 816.0 728.0
Total Liabilities And Shareholders’ Equity 1,639.0 1,206.0 1,323.0 1,096.0 227 146.0 333.0 304.0 3,522.0 2,753.0

CONSOLIDATED Q3 2010 INCOME STATEMENT

Period ended   Q3 2010   Q2 2010   Q3 2009   Change4   Change4
Consolidated, IFRS based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
 
Interest Income 61,095 110,362 56,565 104,317 55,874 93,707 5.8% 17.8%
Interest Expense 29,821 53,869 28,557 52,664 26,703 44,783 2.3% 20.3%
Net Interest Income 31,274 56,493 28,008 51,653 29,172 48,924 9.4% 15.5%
Fees & Commission Income 8,752 15,809 7,473 13,782 9,002 15,097 14.7% 4.7%
Fees & Commission Expense 1,149 2,075 1,585 2,923 1,819 3,050 -29.0% -32.0%
Net Fees & Commission Income 7,603 13,734 5,888 10,859 7,183 12,047 26.5% 14.0%
Income From Documentary Operations 1,628 2,940 1,427 2,632 1,669 2,799 11.7% 5.0%
Expense On Documentary Operations 271 490 260 480 286 480 2.1% 2.1%
Net Income From Documentary Operations 1,356 2,450 1,167 2,152 1,383 2,319 13.8% 5.6%
Net Foreign Currency Related Income 4,445 8,030 4,797 8,846 3,858 6,471 -9.2% 24.1%
Net Insurance Income / (Loss) 3,012 5,441 2,288 4,219 2,935 4,923 29.0% 10.5%
Brokerage And Investments Banking Income 260 469 11 20 1,138 1,908 NMF -75.4%
Asset Management Income 30 55 29 53 125 210 3.8% -73.8%
Net Investment Gains / (Losses) 266 480 88 162 (314) (526) 196.3% NMF
Other 2,224 4,018 2,482 4,577 1,807 3,030 -12.2% 32.6%
Net Other Non-Interest Income 5,792 10,463 4,897 9,031 5,691 9,545 15.9% 9.6%
Net Non-Interest Income 19,197 34,677 16,749 30,888 18,116 30,382 12.3% 14.1%
Total Operating Income (Revenue) 50,471 91,170 44,757 82,541 47,288 79,306 10.5% 15.0%
Personnel Costs 14,930 26,969 14,068 25,945 13,306 22,315 3.9% 20.9%
Selling, General & Administrative Expenses 5,803 10,483 4,822 8,892 6,278 10,529 17.9% -0.4%
Procurement & Operations Support Expenses 2,124 3,837 1,793 3,306 1,762 2,955 16.1% 29.8%
Depreciation And Amortization 3,845 6,945 3,547 6,542 3,762 6,310 6.2% 10.1%
Other Operating Expenses 1,546 2,792 1,690 3,116 1,700 2,851 -10.4% -2.1%
Total Recurring Operating Costs 28,247 51,026 25,920 47,801 26,808 44,960 6.7% 13.5%
Normalized Net Operating Income / (Loss) 22,223 40,144 18,837 34,740 20,479 34,346 15.6% 16.9%
Net Non-Recurring Income / (Costs) (912) (1,647) 812 1,498 (1,136) (1,906) NMF -13.6%
Profit / (Loss) Before Provisions 21,311 38,497 19,650 36,238 19,343 32,440 6.2% 18.7%
Net Provision Expense 7,864 14,206 6,830 12,595 17,889 30,001 12.8% -52.6%
Pre-Tax Income / (Loss) 13,447 24,291 12,820 23,643 1,454 2,439 2.7% NMF
Income Tax Expense / (Benefit) 1,915 3,460 2,198 4,053 (113) (189) -14.6% NMF
Net Income / (Loss) 11,532 20,831 10,622 19,590 1,567 2,628 6.3% NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.844 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 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

4 Change calculations based on GEL values

CONSOLIDATED NINE MONTHS INCOME STATEMENT

Period ended   9 months 2010   9 months 2009   Change3
Consolidated, IFRS based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Interest Income 171,449 309,706 172,969 290,087 6.8%
Interest Expense 86,531 156,310 83,053 139,289 12.2%
Net Interest Income 84,918 153,396 89,916 150,798 1.7%
Fees & Commission Income 23,697 42,806 25,520 42,799 0.0%
Fees & Commission Expense 4,371 7,895 4,786 8,026 -1.6%
Net Fees & Commission Income 19,326 34,911 20,734 34,773 0.4%
Income From Documentary Operations 4,555 8,229 4,693 7,871 4.5%
Expense On Documentary Operations 803 1,450 917 1,538 -5.7%
Net Income From Documentary Operations 3,753 6,779 3,776 6,333 7.0%
Net Foreign Currency Related Income 13,406 24,216 13,305 22,313 8.5%
Net Insurance Income / (Loss) 7,650 13,819 7,762 13,017 6.2%
Brokerage And Investments Banking Income 391 706 2,142 3,593 -80.4%
Asset Management Income 83 150 374 628 -76.1%
Net Investment Gains / (Losses) 1,445 2,611 (133) (223) NMF
Other 7,196 12,999 6,183 10,370 25.4%
Net Other Non-Interest Income 16,765 30,285 16,329 27,385 10.6%
Net Non-Interest Income 53,250 96,191 54,143 90,804 5.9%
Total Operating Income (Revenue) 138,168 249,587 144,059 241,602 3.3%
Personnel Costs 42,236 76,295 40,244 67,493 13.0%
Selling, General & Administrative Expenses 16,153 29,178 19,196 32,193 -9.4%
Procurement & Operations Support Expenses 5,896 10,650 5,843 9,800 8.7%
Depreciation And Amortization 11,148 20,138 10,775 18,071 11.4%
Other Operating Expenses 4,885 8,825 4,992 8,372 5.4%
Total Recurring Operating Costs 80,318 145,086 81,050 135,929 6.7%
Normalized Net Operating Income / (Loss) 57,850 104,501 63,009 105,673 -1.1%
Net Non-Recurring Income / (Costs) (1,891) (3,415) (1,445) (2,424) 40.9%
Profit / (Loss) Before Provisions 55,960 101,086 61,564 103,249 -2.1%
Net Provision Expense 18,911 34,161 61,268 102,752 -66.8%
Pre-Tax Income / (Loss) 37,049 66,925 296 497 NMF
Income Tax Expense / (Benefit) 5,397 9,749 (1,721) (2,886) NMF
Net Income / (Loss) 31,652 57,176 2,017 3,383 NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

3 Change calculations based on GEL values

CONSOLIDATED Q3 2010 BALANCE SHEET

Period ended   Q3 2010   Q2 2010   Q3 2009   Change4   Change4
Consolidated, IFRS based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Cash And Cash Equivalents 75,317 136,052 80,078 147,679 98,714 165,553 -7.9% -17.8%
Loans And Advances To Credit Institutions 265,813 480,165 206,672 381,144 228,380 383,016 26.0% 25.4%
Mandatory Reserves With NBG / NBU / NBRB 47,986 86,682 27,333 50,408 22,795 38,230 72.0% 126.7%
Other Accounts With NBG / NBU / NBRB 41,881 75,654 3,248 5,990 52,408 87,893 NMF -13.9%
Balances With And Loans To Other Banks 175,946 317,829 176,090 324,746 153,177 256,893 -2.1% 23.7%
Investment Securities: AFS & Trading Securities 7,124 12,869 19,239 35,480 17,909 30,036 -63.7% -57.2%
Investment Securities: HTM, Treasuries And Equivalents 164,803 297,701 145,450 268,238 21,826 36,605 11.0% NMF
Investment Securities: HTM, Other Fixed Income Instruments - - - - 40,043 67,156 NMF -100%
Loans To Clients, Gross 1,244,095 2,247,333 1,181,929 2,179,714 1,088,597 1,825,686 3.1% 23.1%
Less: Reserve For Loan Losses (102,953) (185,974) (106,945) (197,228) (99,182) (166,338) -5.7% 11.8%
Loans To Clients, Net 1,141,142 2,061,359 1,074,984 1,982,486 989,415 1,659,348 4.0% 24.2%
Insurance Related Assets 18,620 33,635 18,668 34,427 27,177 45,578 -2.3% -26.2%
Investment Property 62,801 113,443 53,931 99,459 32,345 54,246 14.1% 109.1%
Investments In Other Business Entities, Net 3,237 5,847 2,916 5,378 12,664 21,240 8.7% -72.5%
Property And Equipment Owned, Net 161,602 291,918 158,860 292,969 178,840 299,933 -0.4% -2.7%
Intangible Assets Owned, Net 12,568 22,703 12,669 23,365 7,271 12,194 -2.8% 86.2%
Goodwill 38,282 69,152 37,496 69,151 80,931 135,729 0.0% -49.1%
Tax Assets, Current And Deferred 14,418 26,044 13,489 24,877 7,695 12,906 4.7% 101.8%
Prepayments And Other Assets 35,823 64,711 31,959 58,939 33,761 56,621 9.8% 14.3%
Total Assets 2,001,549 3,615,599 1,856,410 3,423,592 1,776,973 2,980,161 5.6% 21.3%
Client Deposits 918,132 1,658,513 806,420 1,487,200 705,097 1,182,519 11.5% 40.3%
Deposits And Loans From Banks 143,396 259,030 118,411 218,373 25,877 43,398 18.6% NMF
Borrowed Funds 487,990 881,506 512,737 945,589 547,746 918,625 -6.8% -4.0%
Issued Fixed Income Securities 2,002 3,616 1,980 3,651 405 680 -1.0% NMF
Insurance Related Liabilities 24,341 43,970 24,076 44,401 31,114 52,182 -1.0% -15.7%
Tax Liabilities, Current And Deferred 19,582 35,373 17,264 31,839 13,610 22,825 11.1% 55.0%
Accruals And Other Liabilities 29,908 54,025 23,197 42,780 24,696 41,418 26.3% 30.4%
Total Liabilities 1,625,350 2,936,033 1,504,085 2,773,833 1,348,546 2,261,647 5.8% 29.8%
Share Capital - Ordinary Shares 17,346 31,333 16,985 31,324 18,660 31,295 0.0% 0.1%
Share Premium 263,210 475,463 260,397 480,225 280,198 469,920 -1.0% 1.2%
Treasury Shares (877) (1,585) (754) (1,391) (1,078) (1,808) 13.9% -12.3%
Revaluation And Other Reserves 25,536 46,129 27,075 49,931 13,033 21,857 -7.6% 111.0%
Retained Earnings 23,376 42,227 19,624 36,190 84,908 142,399 16.7% -70.3%
Net Income / (Loss) For The Period 31,652 57,176 19,708 36,345 2,017 3,383 57.3% NMF
Shareholders' Equity Excluding Minority Interest 360,243 650,743 343,034 632,624 397,738 667,046 2.9% -2.4%
Minority Interest 15,956 28,823 9,291 17,135 30,689 51,468 68.2% -44.0%
Total Shareholders' Equity 376,199 679,566 352,325 649,759 428,427 718,514 4.6% -5.4%
Total Liabilities And Shareholders’ Equity 2,001,549 3,615,599 1,856,410 3,423,592 1,776,973 2,980,161 5.6% 21.3%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.844 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 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

4 Change calculations based on GEL values

STANDALONE Q3 2010 INCOME STATEMENT

Period ended   Q3 2010   Q2 2010   Q3 2009   Change4   Change4
Standalone, IFRS-based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
   
Interest Income 56,030 101,212 52,034 95,962 50,461 84,628 5.5% 19.6%
Interest Expense 26,973 48,724 25,820 47,618 23,911 40,101 2.3% 21.5%
Net Interest Income 29,057 52,489 26,214 48,344 26,550 44,527 8.6% 17.9%
Fees & Commission Income 8,065 14,569 7,078 13,052 6,176 10,358 11.6% 40.7%
Fees & Commission Expense 1,757 3,174 1,633 3,012 1,361 2,283 5.4% 39.0%
Net Fees & Commission Income 6,308 11,395 5,444 10,040 4,815 8,075 13.5% 41.1%
Income From Documentary Operations 1,595 2,882 1,401 2,584 1,668 2,798 11.5% 3.0%
Expense On Documentary Operations 267 482 260 480 286 480 0.3% 0.3%
Net Income From Documentary Operations 1,329 2,401 1,141 2,104 1,382 2,318 14.1% 3.6%
Net Foreign Currency Related Income 4,510 8,148 4,248 7,835 3,577 5,998 4.0% 35.8%
Net Other Non-Interest Income 286 517 431 795 352 590 -34.9% -12.4%
Net Non-Interest Income 12,434 22,460 11,265 20,774 10,126 16,982 8.1% 32.3%
Total Operating Income (Revenue) 41,491 74,949 37,479 69,119 36,676 61,509 8.4% 21.9%
Personnel Costs 10,810 19,527 9,337 17,219 8,770 14,707 13.4% 32.8%
Selling, General & Administrative Expenses 3,207 5,794 3,059 5,642 3,852 6,461 2.7% -10.3%
Procurement & Operations Support Expenses 1,719 3,105 1,417 2,614 1,503 2,521 18.8% 23.2%
Depreciation And Amortization 3,127 5,649 3,004 5,540 3,109 5,214 2.0% 8.3%
Other Operating Expenses 447 808 793 1,462 699 1,173 -44.7% -31.1%
Total Recurring Operating Costs 19,310 34,882 17,610 32,477 17,934 30,077 7.4% 16.0%
Normalized Net Operating Income / (Loss) 22,180 40,067 19,869 36,642 18,742 31,432 9.3% 27.5%
Net Non-Recurring Income / (Costs) (1,026) (1,854) (998) (1,840) (583) (978) 0.8% 89.6%
Profit / (Loss) Before Provisions 21,154 38,213 18,871 34,802 18,159 30,454 9.8% 25.5%
Net Provision Expense 5,457 9,858 3,546 6,540 10,561 17,712 50.7% -44.3%
Pre-Tax Income / (Loss) 15,697 28,355 15,325 28,262 7,598 12,743 0.3% 122.5%
Income Tax Expense / (Benefit) 2,581 4,662 2,077 3,831 1,140 1,911 21.7% 143.9%
Net Income / (Loss) 13,116 23,693 13,248 24,431 6,458 10,831 -3.0% 118.7%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.844 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 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

4 Change calculations based on GEL values

STANDALONE NINE MONTHS INCOME STATEMENT

Period ended   9 months 2010   9 months 2009   Change3
Standalone, IFRS-based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Interest Income 157,573 284,640 155,740 261,192 9.0%
Interest Expense 78,166 141,200 72,033 120,807 16.9%
Net Interest Income 79,407 143,440 83,707 140,384 2.2%
Fees & Commission Income 21,439 38,727 18,503 31,031 24.8%
Fees & Commission Expense 4,868 8,794 4,010 6,725 30.8%
Net Fees & Commission Income 16,571 29,933 14,493 24,306 23.2%
Income From Documentary Operations 4,452 8,042 4,691 7,867 2.2%
Expense On Documentary Operations 798 1,442 916 1,537 -6.2%
Net Income From Documentary Operations 3,654 6,600 3,774 6,330 4.3%
Net Foreign Currency Related Income 11,961 21,607 10,717 17,973 20.2%
Net Other Non-Interest Income 1,030 1,860 861 1,444 28.8%
Net Non-Interest Income 33,216 60,001 29,845 50,053 19.9%
Total Operating Income (Revenue) 112,622 203,441 113,552 190,438 6.8%
Personnel Costs 28,909 52,222 26,378 44,239 18.0%
Selling, General & Administrative Expenses 9,681 17,487 11,186 18,760 -6.8%
Procurement & Operations Support Expenses 4,743 8,569 4,661 7,817 9.6%
Depreciation And Amortization 9,236 16,684 8,670 14,541 14.7%
Other Operating Expenses 1,750 3,161 1,908 3,200 -1.2%
Total Recurring Operating Costs 54,320 98,123 52,803 88,556 10.8%
Normalized Net Operating Income / (Loss) 58,303 105,318 60,749 101,882 3.4%
Net Non-Recurring Income / (Costs) (2,720) (4,914) (2,060) (3,454) 42.3%
Profit / (Loss) Before Provisions 55,582 100,404 58,689 98,428 2.0%
Net Provision Expense 15,892 28,707 42,539 71,342 -59.8%
Pre-Tax Income / (Loss) 39,691 71,697 16,151 27,086 164.7%
Income Tax Expense / (Benefit) 5,954 10,755 2,423 4,063 164.7%
Net Income / (Loss) 33,737 60,943 13,728 23,023 164.7%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

3 Change calculations based on GEL values

STANDALONE Q3 2010 BALANCE SHEET

Period ended   Q3 2010   Q2 2010   Q3 2009   Change4   Change4
Standalone, IFRS-based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
 
Cash And Cash Equivalents 62,116 112,205 62,198 114,706 74,866 125,557 -2.2% -10.6%
Loans And Advances To Credit Institutions 256,555 463,440 216,326 398,949 230,290 386,219 16.2% 20.0%
Mandatory Reserves With NBG / NBU / NBRB 45,983 83,064 24,524 45,228 19,478 32,666 83.7% 154.3%
Other Accounts With NBG / NBU / NBRB 17,771 32,102 423 781 52,408 87,893 NMF -63.5%
Balances With And Loans To Other Banks 192,801 348,275 191,379 352,940 158,404 265,660 -1.3% 31.1%
Investment Securities: HTM, Treasuries And Equivalents 164,803 297,701 145,449 268,238 21,826 36,605 11.0% NMF
Loans To Clients, Gross 1,140,736 2,060,626 1,074,458 1,981,515 984,619 1,651,305 4.0% 24.8%
Less: Reserve For Loan Losses (74,626) (134,804) (74,605) (137,586) (73,597) (123,430) -2.0% 9.2%
Loans To Clients, Net 1,066,110 1,925,822 999,853 1,843,929 911,022 1,527,875 4.4% 26.0%
Investment Property 42,743 77,210 34,125 62,932 - - 22.7% NMF
Investments In Other Business Entities, Net 184,194 332,728 180,333 332,570 181,484 304,367 0.0% 9.3%
Property And Equipment Owned, Net 128,124 231,444 125,472 231,396 142,965 239,767 0.0% -3.5%
Intangible Assets Owned, Net 9,784 17,673 9,873 18,208 3,891 6,526 -2.9% 170.8%
Goodwill 12,593 22,748 12,335 22,748 13,846 23,221 0.0% -2.0%
Tax Assets, Current And Deferred 3,652 6,597 3,591 6,622 - - -0.4% NMF
Prepayments And Other Assets 18,944 34,221 17,591 32,442 21,920 36,762 5.5% -6.9%
Total Assets 1,949,618 3,521,790 1,807,147 3,332,740 1,641,247 2,752,536 5.7% 27.9%
Client Deposits 837,240 1,512,390 727,870 1,342,338 630,570 1,057,529 12.7% 43.0%
Deposits And Loans From Banks 135,490 244,749 104,771 193,219 6,913 11,594 26.7% NMF
Borrowed Funds 487,991 881,506 512,737 945,589 545,180 914,322 -6.8% -3.6%
Issued Fixed Income Securities 2,002 3,616 1,980 3,651 - - -1.0% NMF
Tax Liabilities, Current And Deferred 18,869 34,085 16,251 29,969 11,526 19,330 13.7% 76.3%
Accruals And Other Liabilities 16,450 29,715 11,602 21,396 12,995 21,796 38.9% 36.3%
Total Liabilities 1,498,041 2,706,061 1,375,210 2,536,163 1,207,185 2,024,571 6.7% 33.7%
Share Capital - Ordinary Shares 17,346 31,333 16,985 31,324 18,660 31,295 0.0% 0.1%
Share Premium 263,592 476,153 260,537 480,482 284,741 477,539 -0.9% -0.3%
Treasury Shares (778) (1,406) (642) (1,184) (890) (1,493) 18.7% -5.8%
Revaluation And Other Reserves 36,580 66,079 35,591 65,637 22,117 37,092 0.7% 78.1%
Retained Earnings 101,100 182,627 99,267 183,068 95,707 160,509 -0.2% 13.8%
Net Income / (Loss) For The Period 33,737 60,943 20,198 37,250 13,728 23,023 63.6% 164.7%
Total Shareholders' Equity 451,577 815,729 431,937 796,577 434,062 727,965 2.4% 12.1%
Total Liabilities And Shareholders Equity 1,949,618 3,521,790 1,807,147 3,332,740 1,641,247 2,752,536 5.7% 27.9%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.844 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 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

4 Change calculations based on GEL values

BG BANK (UKRAINE) Q3 2010 INCOME STATEMENT

Period ended   Q3 2010   Q3 2009   Change3
Standalone, IFRS-based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Interest Income 4,345 7,849 4,942 8,288 -5.3%
Interest Expense 3,005 5,428 2,573 4,315 25.8%
Net Interest Income 1,340 2,421 2,369 3,973 -39.1%
Fees & Commission Income 205 370 1,132 1,898 -80.5%
Fees & Commission Expense 26 47 420 704 -93.3%
Net Fees & Commission Income 178 322 712 1,194 -73.0%
Income From Documentary Operations 13 24 - - NMF
Expense On Documentary Operations - - - - -
Net Income From Documentary Operations 13 24 - - NMF
Net Foreign Currency Related Income 128 232 50 84 174.3%
Net Other Non-Interest Income 6 10 - - NMF
Net Non-Interest Income 326 588 762 1,278 -54.0%
Total Operating Income (Revenue) 1,666 3,009 3,131 5,252 -42.7%
Personnel Costs 1,152 2,081 1,542 2,586 -19.5%
Selling, General & Administrative Expenses 318 575 433 727 -20.8%
Procurement & Operations Support Expenses 230 415 110 185 124.0%
Depreciation And Amortization 144 260 177 297 -12.4%
Other Operating Expenses (33) (60) 81 136 NMF
Total Recurring Operating Costs 1,811 3,271 2,344 3,931 -16.8%
Normalized Net Operating Income / (Loss) (145) (262) 788 1,321 NMF
Net Non-Recurring Income / (Costs) 60 108 3 6 NMF
Profit / (Loss) Before Provisions (85) (153) 791 1,327 NMF
Net Provision Expense 2,113 3,818 7,698 12,910 -70.4%
Pre-Tax Income / (Loss) (2,198) (3,971) (6,907) (11,584) -65.7%
Income Tax Expense / (Benefit) (475) (858) (3,612) (6,058) -85.8%
Net Income / (Loss) (1,723) (3,113) (3,295) (5,526) -43.7%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

3 Change calculations based on GEL values

BG BANK (UKRAINE) NINE MONTHS INCOME STATEMENT

Period ended   9 months 2010   9 months 2009   Change3
Standalone, IFRS-based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Interest Income 12,800 23,122 17,017 28,539 -19.0%
Interest Expense 7,850 14,181 10,356 17,368 -18.4%
Net Interest Income 4,950 8,941 6,661 11,171 -20.0%
Fees & Commission Income 755 1,364 2,264 3,797 -64.1%
Fees & Commission Expense 237 428 674 1,130 -62.1%
Net Fees & Commission Income 518 936 1,590 2,666 -64.9%
Income From Documentary Operations 70 126 - - NMF
Expense On Documentary Operations - - - - -
Net Income From Documentary Operations 70 126 - - NMF
Net Foreign Currency Related Income 193 349 1,470 2,466 -85.8%
Net Other Non-Interest Income 15 28 - - NMF
Net Non-Interest Income 796 1,439 3,060 5,132 -72.0%
Total Operating Income (Revenue) 5,746 10,380 9,721 16,303 -36.3%
Personnel Costs 4,159 7,513 5,401 9,057 -17.0%
Selling, General & Administrative Expenses 1,037 1,873 1,500 2,515 -25.5%
Procurement & Operations Support Expenses 690 1,247 755 1,267 -1.6%
Depreciation And Amortization 342 619 467 784 -21.1%
Other Operating Expenses 473 854 327 549 55.6%
Total Recurring Operating Costs 6,702 12,106 8,450 14,172 -14.6%
Normalized Net Operating Income / (Loss) (956) (1,726) 1,271 2,132 NMF
Net Non-Recurring Income / (Costs) 36 65 (200) (336) NMF
Profit / (Loss) Before Provisions (920) (1,661) 1,071 1,795 NMF
Net Provision Expense 2,331 4,211 19,866 33,317 -87.4%
Pre-Tax Income / (Loss) (3,251) (5,872) (18,796) (31,522) -81.4%
Income Tax Expense / (Benefit) (738) (1,333) (4,699) (7,881) -83.1%
Net Income / (Loss) (2,513) (4,539) (14,097) (23,642) -80.8%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

3 Change calculations based on GEL values

BNB (BELARUS) Q3 2010 INCOME STATEMENT

Period ended   Q3 2010   Q3 2009   Change3
Standalone, IFRS-based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Interest Income 1,342 2,424 1,179 1,977 22.6%
Interest Expense 130 235 321 538 -56.3%
Net Interest Income 1,212 2,189 858 1,439 52.1%
Fees & Commission Income 276 499 281 471 6.0%
Fees & Commission Expense 66 119 38 63 89.1%
Net Fees & Commission Income 210 380 243 408 -6.8%
Income From Documentary Operations 19 34 - 1 NMF
Expense On Documentary Operations 4 8 - - NMF
Net Income From Documentary Operations 14 26 - 1 NMF
Net Foreign Currency Related Income 292 527 164 276 91.2%
Net Other Non-Interest Income 19 34 (14) (24) NMF
Net Non-Interest Income 535 967 394 660 46.4%
Total Operating Income (Revenue) 1,747 3,156 1,252 2,100 50.3%
Personnel Costs 797 1,439 440 738 95.0%
Selling, General & Administrative Expenses 179 324 114 191 69.9%
Procurement & Operations Support Expenses 176 318 148 249 27.7%
Depreciation And Amortization 100 181 48 80 126.5%
Other Operating Expenses 131 236 115 193 22.5%
Total Recurring Operating Costs 1,383 2,498 865 1,450 72.2%
Normalized Net Operating Income / (Loss) 364 658 387 649 1.3%
Net Non-Recurring Income / (Costs) 177 319 31 52 NMF
Profit / (Loss) Before Provisions 541 977 418 701 39.3%
Net Provision Expense 18 32 (103) (173) NMF
Pre-Tax Income / (Loss) 523 945 521 874 8.1%
Income Tax Expense / (Benefit) 99 179 153 257 -30.4%
Net Income / (Loss) 424 766 368 617 24.1%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

3 Change calculations based on GEL values

BNB (BELARUS) NINE MONTHS INCOME STATEMENT

Period ended   9 months 2010   9 months 2009   Change3
Standalone, IFRS-based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
 
Interest Income 4,191 7,570 2,997 5,026 50.6%
Interest Expense 409 738 979 1,642 -55.0%
Net Interest Income 3,782 6,832 2,018 3,385 101.8%
Fees & Commission Income 699 1,263 723 1,212 4.2%
Fees & Commission Expense 142 257 101 170 51.2%
Net Fees & Commission Income 557 1,006 621 1,042 -3.5%
Income From Documentary Operations 34 61 2 4 NMF
Expense On Documentary Operations 4 8 1 1 NMF
Net Income From Documentary Operations 29 53 2 3 NMF
Net Foreign Currency Related Income 596 1,077 1,034 1,735 -37.9%
Net Other Non-Interest Income 42 75 47 78 -4.3%
Net Non-Interest Income 1,224 2,211 1,704 2,858 -22.6%
Total Operating Income (Revenue) 5,006 9,043 3,722 6,243 44.9%
Personnel Costs 1,986 3,588 1,351 2,266 58.3%
Selling, General & Administrative Expenses 429 775 301 505 53.4%
Procurement & Operations Support Expenses 462 835 427 716 16.6%
Depreciation And Amortization 247 446 229 384 16.1%
Other Operating Expenses 346 625 323 542 15.4%
Total Recurring Operating Costs 3,470 6,269 2,632 4,414 42.0%
Normalized Net Operating Income / (Loss) 1,536 2,774 1,091 1,829 51.7%
Net Non-Recurring Income / (Costs) 170 307 42 71 NMF
Profit / (Loss) Before Provisions 1,706 3,081 1,133 1,900 62.1%
Net Provision Expense 381 689 (103) (172) NMF
Pre-Tax Income / (Loss) 1,324 2,392 1,236 2,072 15.4%
Income Tax Expense / (Benefit) 286 516 356 598 -13.7%
Net Income / (Loss) 1,039 1,876 879 1,475 27.2%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.806 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 2010

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.677 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 2009

3 Change calculations based on GEL values

KEY RATIOS

  Q3 2010   Q2 2010   Q3 2009
Profitability Ratios            
ROAA 1, Annualized   2.4%   2.4%   0.4%
ROAE2, Annualized   12.5%   12.5%   1.5%
ROA, Annualized   2.3%   2.3%   0.4%
ROE, Annualized   12.3%   12.1%   1.5%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualized3   19.3%   19.5%   21.1%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualized3   16.1%   16.8%   17.5%
Cost Of Funds 4, Annualied   7.9%   8.4%   8.5%
Net Spread Excl. Cash, Annualized 5   11.4%   11.1%   12.7%
Net Spread Incl. Cash, Annualized 5   8.2%   8.4%   9.1%
Net Interest Margin 6, Annualised   8.2%   8.3%   9.1%
Loan Yield Excl. Provisions7, Annualised   20.0%   20.2%   20.1%
Loan Yield Incl. Provisions7, Annualised   17.4%   17.8%   13.6%
Deposit Yield, Annualised   8.8%   9.1%   9.6%
Interest Expense To Interest Income   48.8%   50.5%   47.8%
Net Non-Interest Income To Average Total Assets, Annualised   3.9%   3.8%   4.1%
Net Non-Interest Income To Revenue 8   38.0%   37.4%   38.3%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised   2.0%   1.7%   2.3%
Net Fee And Commission Income To Revenue   15.1%   13.2%   15.2%
Operating Leverage, Y-O-Y 10   2.6%   3.1%   2.6%
Operating Leverage, Y-O-Y, Normalized 10   1.5%   -0.8%   -
Operating Leverage, Consecutive Q-O-Q 10   -3.3%   15.3%   -2.1%
Operating Leverage, Consecutive Q-O-Q, Normalized 10   3.7%   5.5%   1.4%
Total Operating Income (Revenue) To Total Assets, Annualised   10.1%   9.6%   10.6%
Recurring Earning Power 11, Annualised   4.4%   4.4%   4.4%
Net Income To Revenue   22.8%   23.7%   3.3%
             
Efficiency Ratios            
Operating Cost To Average Total Assets 12, Annualised   5.8%   5.9%   6.1%
Cost To Average Total Assets 13, Annualised   6.0%   5.7%   6.3%
Cost / Income 14   57.8%   56.1%   59.1%
Cost / Income, Normalized 15   56.0%   57.9%   56.7%
Cash Cost / Income   42.0%   43.9%   43.0%
Total Employee Compensation Expense To Revenue 16   29.6%   31.4%   28.1%
Total Employee Compensation Expense To Cost   51.2%   56.0%   47.6%
Total Employee Compensation Expense To Average Total Assets, Annualised   3.0%   3.2%   3.0%
Liquidity Ratios            
Net Loans To Total Assets 17 57.0% 57.9% 55.7%
Average Net Loans To Average Total Assets 57.1% 57.6% 58.0%
Interest Earning Assets To Total Assets 78.5% 76.9% 72.0%
Average Interest Earning Assets To Average Total Assets 77.6% 76.3% 72.4%
Liquid Assets To Total Assets 18 25.6% 24.3% 22.9%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone 33.8% 34.8% 43.5%
Liquid Assets To Total Liabilities, IFRS Consolidated 31.6% 30.0% 30.2%
Net Loans To Client Deposits 124.3% 133.3% 140.3%
Average Net Loans To Average Client Deposits 128.2% 131.1% 155.0%
Net Loans To Total Deposits 19 107.5% 116.2% 135.4%
Net Loans To (Total Deposits + Equity) 79.4% 84.2% 85.3%
Net Loans To Total Liabilities 70.2% 71.5% 73.4%
Total Deposits To Total Liabilities 65.3% 61.5% 54.2%
Client Deposits To Total Deposits 86.5% 87.2% 96.5%
Client Deposits To Total Liabilties 56.5% 53.6% 52.3%
Current Account Balances To Client Deposits 43.0% 44.2% 44.9%
Demand Deposits To Client Deposits   10.6%   9.0%   9.2%
Time Deposits To Client Deposits   46.4%   46.7%   45.9%
Total Deposits To Total Assets   53.0%   49.8%   41.1%
Client Deposits To Total Assets   45.9%   43.4%   39.7%
Client Deposits To Total Equity (Times) 20   2.44   2.29   1.65
Due From Banks / Due To Banks 21   185.4%   174.5%   882.6%
Total Equity To Net Loans   33.0%   32.8%   43.3%
Leverage (Times) 22   4.3   4.3   3.1
Asset Quality            
NPLs (in GEL) 23   131,506   173,743   139,959
NPLs To Gross Loans To Clients 24   5.9%   8.0%   7.7%
NPL Coverage Ratio 25   141.4%   113.5%   118.8%
Cost of Risk 26, Annualized   2.6%   2.4%   6.4%
Reserve For Loan Losses To Gross Loans To Clients 27   8.3%   9.0%   9.1%
% Of Loans To Clients Collateralized   91.6%   91.0%   89.4%
Equity To Average Net Loans To Clients   36.4%   36.1%   49.8%
Capital Adequacy:            
Equity To Total Assets   18.8%   19.0%   24.1%
BIS Tier I Capital Adequacy Ratio, Consolidated 28   19.9%   20.0%   25.0%
BIS Total Capital Adequacy Ratio, Consolidated 29   32.6%   33.1%   36.4%
BIS Tier I Capital Adequacy Ratio, Stand-alone 28   24.7%   25.2%   27.5%
BIS Total Capital Adequacy Ratio, Stand-alone 29   31.2%   32.3%   33.4%
NBG Tier I Capital Adequacy Ratio 30   15.2%   15.8%   20.4%
NBG Total Capital Adequacy Ratio 31   15.7%   14.5%   21.2%
Per Share Values:            
Basic EPS (GEL) 32   0.66   0.63   0.08
Basic EPS (US$)   $0.37   $0.34   ($0.05)
Fully Diluted EPS (GEL) 33   0.60   0.56   0.08
Fully Diluted EPS (US$)   $0.33   $0.31   ($0.05)
Book Value Per Share (GEL) 34   21.69   20.74   22.96
Book Value Per Share (US$)   $12.01   $11.25   $13.69
Ordinary Shares Outstanding - Weighted Average, Basic   31,333,253   31,321,662   31,294,603
Ordinary Shares Outstanding - Period End   31,333,253   31,324,466   31,294,603
Ordinary Shares Outstanding - Fully Diluted   34,807,867   34,796,276   34,769,217
Selected Operating Data:            
Full Time Employees, Group   5,313   5,118   4,798
Full Time Employees, BOG Stand-Alone   3,060   2,963   2,669
Total Assets Per FTE 35   680.52   668.93   621.13
Total Assets Per FTE, BOG Stand-Alone   1,150.91   1,124.79   1,031.30
Number Of Active Branches   137   137   140
Number Of ATMs   388   387   380
Number Of Cards Outstanding   565,393   551,741   569,766
Number Of POS Terminals   2,280   2,225   1,892

NOTES TO KEY RATIOS

1   Return On Average Total Assets (ROAA) equals Net Income of the period divided by quarterly Average Total Assets for the same period;
2 Return On Average Total Equity (ROAE) equals Net Income of the period divided by quarterly Average Total Equity for the same period;
3 Average Interest Earning Assets are calculated on a quarterly basis; Interest Earning Assets include: Loans And Advances To Credit Institutions, Treasuries And Equivalents, Other Fixed Income Instruments and Net Loans to Clients;
4 Cost Of Funds equals Interest Expense of the period divided by quarterly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Client Deposits, Deposits And Loans From Banks, Borrowed Funds and Issued Fixed Income Securities;
5 Net Spread equals Interest Income To Average Interest Earning Assets less Cost Of Funds;
6 Net Interest Margin equals Net Interest Income of the period divided by quarterly Average Interest Earning Assets of the same period;
7 Loan Yield equals Interest Income, less Net Provision Expense, divided by quarterly Average Gross Loans To Clients;
8 Revenue equals Total Operating Income;
9 Net Fee And Commission Income includes Net Income From Documentary Operations of the period ;
10 Operating Leverage equals percentage change in Revenue less percentage change in Total Costs;
11 Recurring Earning Power equals Profit Before Provisions of the period divided by average Total Assets of the same period;
12 Operating Cost equals Total Recurring Operating Costs;
13 Cost includes Total Recurring Operating Costs and Net Non-Recurring Costs (Income);
14 Cost/Income Ratio equals Costs of the period divided by Total Operating Income (Revenue);
15 Cost/Income Normalized equals Total Recurring Operating cost (excludes net non-recurring costs) divided by total operating income.
16 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 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

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 in Georgia, Ukraine and Belarus. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 34.2% market share by total assets (all data according to the NBG as of 30 September 2010). The bank has 137 branches and more than one million retail and 171,052 corporate current accounts.

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

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

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

Irakli Gilauri   Giorgi Chiladze   Macca Ekizashvili
Chief Executive Officer Deputy CEO, Finance Head of Investor Relations
+995 32 444 109 +995 32 444 249 +995 32 444 256

igilauri@bog.ge

gchiladze@bog.ge

ir@bog.ge

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

The financial information as of Q3 2009, Q2 2010 and Q3 2010 contained in this news report is unaudited, derived from IFRS-based management reports and reflects the best estimates of management. Q2 2010 Consolidated numbers have been reviewd. The Bank’s actual results may differ from the amounts reflected herein as a result of various factors

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