3rd Quarter Results

Bank of Georgia NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN JSC Bank of Georgia Consolidated YTD September 2006 Results, IFRS, Unaudited, Reviewed 1.736 GEL/US$ period end JSC BANK OF GEORGIA ANNOUNCES NINE MONTH RESULTS IFRS, unaudited, reviewed -0- *T Thousands, unless otherwise noted Nine months 2006 Growth y-o-y(1) GEL US$ Bank of Georgia (Consolidated, IFRS, Unaudited, Reviewed) Revenue(2) 72,235 41,622 63.5% Net Income 17,301 9,969 96.3% Consolidated EPS (Basic), 1.12 0.65 86.7% Consolidated EPS (Diluted), 1.12 0.65 86.7% Adjusted EPS (3), 0.76 0.44 ROAA (Annualized)(4) 3.5% ROAE (Annualized)( 4) 20.2% *T Bank of Georgia (LSE: BGEO, GSE: GEB), a leading Georgian universal bank, announced today nine months consolidated results (IFRS, Unaudited, Reviewed), reporting year to date Net Income of GEL 17.3 million (US$ 10.0 million), up 96% year on year. The Bank reported Net Interest Income before impairment of interest earning assets of GEL 41.3 million (US$ 23.8 million), a 53% growth year on year, and Net Fees and Commission Income of GEL 15.9 million (US$ 9.2 million) a 68% increase year on year as at 30 September 2006. The Bank's Other Non-Interest Income grew by 94% year on year to GEL 15.0 million (US$ 8.7 million), while Other Non-Interest Expenses reached GEL 39.6 million (US$ 22.8 million), up by 49% year on year, for the nine months ended 30 September 2006. The Bank's total assets were GEL 856.7 million (US$ 493.6 million), representing an 86% growth year to date, which was largely driven by the increase in the loan book to GEL 560.4 million (US$ 322.9 million), an 88% growth year to date. Total equity(5 )reached GEL 137.1 million (US$ 79.0 million). 'I am delighted that the bank's profitable growth in the third quarter of 2006 continued following the strong results for the first half of 2006. The highlights of the quarter were the Bank's success in attracting US$ 55 million in aggregate in the form of non-deposit debt funding from Merrill Lynch, Thames River Capital and HBK Investments and an aggregate of GEL 23.5 million (US$ 13.6 million) in equity funding raised through two capital increases in July and September 2006. The Bank's client deposits grew to GEL 468.0 million (US$ 269.7 million), a 73% increase year to date. The debt and equity funding raised will continue to support the rapid growth of the Bank's net loan book, which by 30 September 2006 grew by 88 % year to date, and compares to the 52% increase in the total net loan portfolio of the Georgian banking system over the same period. I am particularly pleased that we have been able to grow our market share since the end of 2005,' commented Lado Gurgenidze, Chairman of the Supervisory Board. (1) Compared to the same period last year; growth calculations based on GEL values (2) Revenue includes net interest income before impairment of interest earning assets, net fees & commissions income and other non-interest income (3) Adjusted to reflect the number of shares outstanding following the bank's offering of 7,440,207 new shares in the form of GDRs in late November and early December 2006. The number of shares outstanding is the sum of the weighted average number of ordinary shares outstanding during the nine months ended 30 September 2006 and 7,440,207 new shares in the form of GDRs issued in late November and early December 2006. Such number of shares is 22,884,810 (excluding the unawarded shares subscribed for by the bank's Executive Equity Compensation Plan) as compared with the total of 25,180,620 number of shares outstanding as of December 5, 2006 (4) Nine months average annualized (5) Total equity is expected to have increased significantly as a result of the offering of new shares in the form of GDRs that took place in late November and early December 2006 The financial information as of and for the nine months ended September 30, 2006 contained in this news report is unaudited. The bank's results for an interim period are not necessarily indicative of what its results will be for the full year. INCOME STATEMENT DATA -0- *T For the nine months ended September 30 Growth Year on Year(1) 2006(2) 2005(3) JSC Bank of Georgia Consolidated, IFRS, Unaudited, Reviewed (Unaudited) (Unaudited) thousands, unless otherwise noted US$ GEL US$ GEL Interest Income 75.3% 36,372 63,123 20,088 36,007 Interest Expense 141.1% 12,561 21,800 5,044 9,042 Net Interest Income 53.2% 23,810 41,323 15,043 26,965 Impairment of Interest Earning Assets 90.4% 6,145 10,665 3,125 5,602 Net Interest Income After Impairment of Interest Earning Assets 43.5% 17,665 30,658 11,918 21,363 Fees & Commissions Income 68.8% 11,399 19,783 6,538 11,720 Fees & Commissions Expense 71.3% 2,239 3,885 1,265 2,268 Net Fees & Commissions Income 68.2% 9,160 15,898 5,273 9,452 Gains less losses from foreign currencies - dealing 77.2% 4,722 8,195 2,580 4,624 - translation differences NMF (4) (174) (302) 23 41 Net Insurance Premiums Earned 77.5% 2,544 4,415 1,387 2,487 Other Operating Income 350.2% 1,559 2,706 335 601 Other Non-Interest Income 93.7% 8,651 15,014 4,325 7,753 Salaries & Other Employee Benefits 31.8% 12,593 21,855 9,247 16,576 Administrative Expenses 72.2% 7,666 13,304 4,311 7,727 Depreciation, Amortization & Impairment 22.2% 2,207 3,830 1,749 3,135 Reversal of Impairment of Other Assets & Provisions -29.5% (426) (740) (585) (1,049) Net Insurance Claims Incurred 404.8% 782 1,358 150 269 Other Non-Interest Expenses 48.6% 22,822 39,607 14,872 26,658 Income Before Income Tax Expense 84.4% 12,655 21,963 6,644 11,910 Income Tax Expense (Benefit) 50.6% 2,686 4,662 1,727 3,095 Net Income For The Period 96.3% 9,969 17,301 4,918 8,815 EPS (Basic), GEL 86.7% 0.65 1.12 0.33 0.60 EPS (Diluted), GEL 86.7% 0.65 1.12 0.33 0.60 Adjusted EPS NMF (4) 0.69 0.44 NMF (4) NMF (4) *T (1) Compared to the same period last year; growth calculations based on GEL values (2) Converted to U.S. dollars for convenience using an exchange rate of GEL 1.736 per US$1.00, being the official Georgian Lari to U.S. dollar exchange rate as reported by National Bank of Georgia on 30 September 2006. (3) Converted to U.S. dollars for convenience using an exchange rate of GEL 1.793 per US$1.00, being the official Georgian Lari to U.S. dollar exchange rate as reported by National Bank of Georgia on 30 September 2005. (4) Not meaningful The financial information as of and for the nine months ended September 30, 2006 contained in this news report is unaudited. The bank's results for an interim period are not necessarily indicative of what its results will be for the full year. BALANCE SHEET DATA -0- *T September 30, December 31, 2006(2) 2005(3) Year to Date Growth(1) (Unaudited) (Audited) JSC Bank of Georgia Consolidated, IFRS US$ GEL US$ GEL thousands, unless otherwise noted Assets Cash and cash equivalents 103.5% 67,118 116,483 31,922 57,236 Amounts due from credit institutions 68.2% 32,378 56,192 18,627 33,398 Loans to customers, net 88.4% 322,906 560,403 165,854 297,376 Net investments in lease 109.9% 5,216 9,053 2,406 4,314 Investment securities: -available-for-sale -26.0% 3,550 6,161 5,643 8,327 -held-to-maturity -88.9% 146 253 273 2,280 Property and equipment, net 46.9% 30,324 52,627 19,975 35,815 Intangible assets, net 232.5% 14,723 25,551 4,286 7,685 Income tax assets NMF(4) - - 1,433 2,570 Prepayments 604.8% 1,848 3,207 254 455 Other assets 141.0% 15,433 26,784 6,199 11,114 Total assets 86.0% 493,641 856,714 256,871 460,570 Liabilities Amounts owed to credit institutions 183.0% 128,610 223,203 43,989 78,873 Amounts owed to customers 73.4% 269,659 467,993 150,559 269,952 Debt securities issued -1.3% 650 1,128 637 1,143 Income tax liabilities 86.0% 2,236 3,881 1,164 2,087 Provisions NMF(4) - - 544 975 Other liabilities 45.7% 13,500 23,430 8,967 16,078 Total liabilities 95.0% 414,656 719,635 205,861 369,108 Equity Share capital 13.6% 9,644 16,738 8,215 14,729 Share premium 81.8% 34,495 59,866 18,361 32,922 Treasury shares 148.1% (116) (201) (45) (81) Retained earnings 44.9% 31,248 54,231 20,874 37,427 Other reserves -1.6% 3,045 5,285 2,994 5,369 Total equity attributable to shareholders 50.4% 78,317 135,919 50,399 90,366 Minority interest 5.8% 668 1,160 611 1,096 Total equity 49.9% 78,985 137,079 51,011 91,462 Total liabilities and equity 86.0% 493,641 856,714 256,871 460,570 *T (1) Growth calculations based on GEL values (2) Converted to U.S. dollars for convenience using an exchange rate of GEL 1.736 per US$1.00, being the official Georgian Lari to U.S. dollar exchange rate as reported by National Bank of Georgia on 30 September 2006 (3) Converted to U.S. dollars for convenience using an exchange rate of GEL 1.793 per US$1.00, being the official Georgian Lari to U.S. dollar exchange rate as reported by National Bank of Georgia on 31 December 2005 (4) Not meaningful The financial information as of and for the nine months ended September 30, 2006 contained in this news report is unaudited. The bank's results for an interim period are not necessarily indicative of what its results will be for the full year. RATIOS -0- *T September December 30, 2006 31, 2005 JSC Bank of Georgia Consolidated Ratios, IFRS, Unaudited Profitability ROAA (1) 3.5%* 3.3% ROAE (2) 20.2%* 18.5% Net Interest Margin (3) 10.0%* 11.9% Interest Expense to Interest Income 34.5% 25.2% Net Fee & Commission Income to Total Operating Income (4) 22.0% 22.4% Interest Income to Average Interest Earning Assets (3) 15.3% 15.9% Cost of Funds (5) 5.6% 4.0% Net Spread (6) 9.7% 11.8% Net Non-Interest Income to Total Operating Income (7) 42.8% 39.7% Efficiency Ratios Other Non-Interest Expense to Average Total Assets 8.0%* 10.0% Salaries & Other Employee Benefits to Total Operating Income (8) (9) 30.3% 36.2% Salaries & Other Employee Benefits to Other Non-Interest Expense (8) 55.2% 56.3% Liquidity Ratios Net Loans to Total Assets 65.4% 64.6% Net Loans to Amounts Owed to Customers 119.7% 110.2% Net Loans to Total Deposits (9) 99.7% 96.8% Net Loans to Total Liabilities 77.9% 80.6% Interest Earning Assets to Total Assets (3) 83.7% 83.7% Liquid Assets to Total Assets (10) 14.3% 14.2% Total Deposits to Total Assets (9) 65.6% 66.7% Amounts Owed to Customers to Total Deposits 83.3% 87.9% Amounts Owed to Customers to Total Equity (times) 3.41 2.95 Amounts Due From Credit Institutions to Amounts Owed to Credit Institutions, except for Borrowings from International Credit Institutions 59.7% 89.9% Total Equity to Net Loans 24.5% 30.8% Leverage, times (11) 5.2 4.0 Asset Quality Allowance at Period End for Loan Impairment to Gross Loans (12) 3.7% 5.4% Capital Adequacy (At Period End) (13) Consolidated Tier I Capital Adequacy Ratio (14) 19.2% 23.0% Consolidated Total Capital Adequacy Ratio (14) (15) 25.2% 24.0% Standalone Tier I Capital Adequacy Ratio (16) 19.8% 23.6% Standalone Total Capital Adequacy Ratio (16) (17) 24.4% 23.8% *Nine month average annualised in 2006 *T -0- *T (1) Return on average total assets (2) Return on average total equity (3) Net Interest Income before impairment of interest earning assets divided by average interest earning assets. Interest earning assets include time deposits with credit institutions with effective maturity up to 90 days, amounts due from credit institutions, loans to customers, minimum lease payments receivable and investment securities. (4) Total operating income includes net interest income before impairment of interest earning assets, net fees and commissions income and other non-interest income (5) Cost of funds equals interest expense over the average amounts owed to credit institutions, amounts owed to customers and debt securities issued (6) Net spread is calculated as the difference between interest income to average interest earning assets and interest expense to average interest bearing liabilities (7) Net non-interest income is the sum of net fees and commissions income and other non-interest income (8) Salaries and other employee benefits amount to GEL21.9 million as of 30 September 2006 (9) Total deposits include amounts owed to customers and amounts owed to credit institutions except for the borrowings from credit institutions (10) Liquid assets include cash and cash equivalents and investment securities available for sale. Liquid assets amount to GEL122.6 million as of 30 September 2006 (11) Total liabilities divided by total equity (12) Allowance for loan impairment amounted to GEL 21.3 million as of 30 September 2006 (13) The bank's capital adequacy ratios are expected to have increased significantly as a result of the offering of new shares in the form of GDRs that took place in late November and early December 2006. (14) The consolidated Tier I capital adequacy ratio calculated in accordance with Basel Capital Accord standards. The consolidated Tier I capital adequacy ratio of the Bank equals the consolidated Tier I capital divided by the consolidated risk weighted assets. The consolidated Tier I capital amounted to GEL 130.8 million as of September 30 2006. The consolidated risk weighted assets amounted to GEL 679.9 million as of 30 September 2006. (15) The consolidated total capital adequacy ratio calculated in accordance with Basel Capital Accord standards. The consolidated total capital adequacy ratio of the Bank equals regulatory capital (Tier I + Tier II - deductions) divided by the consolidated risk weighted assets. The consolidated regulatory capital (Tier I + Tier II - deductions) amounted to GEL 171.4 million as at 30 September 2006. (16) The standalone Tier I capital adequacy ratio calculated in accordance with Basel Capital Accord standards. The standalone Tier I capital adequacy ratio of Bank of Georgia equals standalone Tier I capital divided by standalone risk weighted assets. The standalone Tier I capital amounted to GEL 130.9 million as of 30 September 2006. The standalone risk weighted assets amounted to GEL 660.4 million as at September 30, 2006. (17) The standalone total capital adequacy ratio is calculated in accordance with Basel Capital Accord standards. The standalone total capital adequacy ratio of the Bank equals the standalone regulatory capital (Tier I + Tier II - deductions) divided by the standalone risk weighted assets. The standalone regulatory capital (Tier I + Tier II - deductions) amounted to GEL 161.2 as at 30 September 2006. *T The financial information as of and for the nine months ended September 30, 2006 contained in this news report is unaudited. The bank's results for an interim period are not necessarily indicative of what its results will be for the full year. NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN *** For further information, please visit www.bog.ge/ir or contact: -0- *T Bank of Georgia Bank of Georgia Bank of Georgia Shared Value Limited Lado Gurgenidze Irakli Gilauri Macca Ekizashvili Larisa Kogut-Millings Chairman of the Chief Executive Head of Investor Supervisory Board Officer Relations +995 32 444 103 +995 32 444 109 +995 32 444 256 +44 (0) 20 7321 5037 lgurgenidze@bog.ge igilauri@bog.ge ir@bog.ge bog@sharedvalue.net *T Bank of Georgia, a leading universal Georgian bank, is the largest bank by total equity and total assets in the country. The bank has 98 branches and over 380,000 retail clients. The bank offers a full range of retail banking and corporate and investment banking services to its customers across Georgia. The bank also provides a wide range of corporate and retail insurance products through its wholly-owned subsidiary, BCI, as well as asset & wealth management services. Bank of Georgia has 'B+/B' rating with a stable outlook from Standard & Poor's; 'B3/NP' (FC) and 'Baa3/P-3' (LC) ratings with a stable outlook from Moody's; and a 'B-/B' credit rating with a positive outlook from FitchRatings. This press release is not an offer of securities for sale in the United States. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the 'Securities Act'), and may not be offered or sold in the United States or to US persons unless the securities are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. No public offering of the securities will be made in the United States. Other selling restrictions are applicable. The financial information as of and for the nine months ended September 30, 2006 contained in this news report is unaudited and reflects the best estimates of management. The bank's actual results may differ significantly from the amounts reflected herein as a result of various factors. The bank's results for an interim period are not necessarily indicative of what its results will be for the full year.

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