Half-yearly Report
Bank of Georgia
1.67 GEL/US$ 1H 2007 period end
1.70 GEL/US$ 1H 2007 average
1.77 GEL/US$ 1H 2006 period end
1.81 GEL/US$ 1H 2006 average
JSC BANK OF GEORGIA ANNOUNCES CONSOLIDATED Q2 2007 AND 1H 2007 RESULTS
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Millions, unless otherwise noted Q2 2007 Growth y-o-y (1)
Unaudited
GEL US$
Bank of Georgia (Consolidated, IFRS Based)
Total Operating Income (Revenue)(2) 52.2 31.2 92%
Recurring Operating Costs 20.4 12.2 90%
Normalized Net Operating Income(3) 31.7 19.0 93%
Pre-Bonus Result 30.9 18.5 188%
Net Income 18.7 11.2 172%
Millions, unless otherwise noted 1H 2007 Growth y-o-y (1)
Unaudited
GEL US$
Bank of Georgia (Consolidated, IFRS Based)
Total Operating Income (Revenue)(2) 93.2 55.8 107%
Recurring Operating Costs 37.0 22.1 83%
Normalised Net Operating Income(3) 56.2 33.7 128%
Pre-Bonus Result 53.4 32.0 204%
Net Income 32.4 19.4 193%
Consolidated EPS (Basic), GEL & US$(4) 1.28 0.77 80%
Consolidated EPS (Diluted), GEL & US$(5) 1.19 0.71 72%
ROAA(6,)%,annualised 3.9
ROA (7) %,annualised 3.4
ROAE(8) %,annualised 16.6
ROE(9)%,annualised 16.0
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(1) Compared to the same period in 2006; growth calculations based on
GEL.
(2) Revenue includes Net Interest Income and Net Non-Interest Income.
(3) Normalized for the Net Non-Recurring Costs.
(4) Basic EPS equals Net Income of the period divided by weighted
average outstanding shares for the period.
(5) Diluted EPS equals Net Income of the period divided by the number
of outstanding ordinary shares as of the period end plus number
of ordinary shares in contingent liabilities.
(6) Return on Average Total Assets equals annualised Net Income for
the period divided by the average Total Assets for the period.
(7) Return on Assets equals annualised Net Income for the period
divided by the Total Assets at the end of the period
(8) Return on Average Total Shareholders' Equity equals annualised Net
Income for the period divided by the average Total Shareholders'
Equity for the period.
(9) Return on Equity equals annualised Net Income for the period
divided by the Total Equity at the end of the period
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About Bank of Georgia
Bank of Georgia, a leading universal Georgian bank with operations in Georgia
and Ukraine, is the largest bank by assets, loans, deposits and equity in
Georgia, with 32% market share by total assets (all data according to the NBG as
of June 30 2007). The major component of the Galt & Taggart Index, the bank has
105 branches and over 530,000 retail and more than 55,000 corporate current
accounts. The bank offers a full range of retail banking and corporate and
investment banking services to its customers across Georgia. The bank also
provides a wide range of corporate and retail insurance products through its
wholly-owned subsidiary, Aldagi BCI, as well as asset & wealth management
services.
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Bank of Georgia has, as of the date hereof, the following credit ratings:
Standard & Poor's 'B+/B' Stable
Moody's 'B3/NP' (FC) & 'Ba1/P-3' Stable
(LC)
FitchRatings 'B+/B' Stable
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For further information, please visit www.bog.ge/ir or contact:
Lado Gurgenidze Irakli Gilauri Macca Ekizashvili
Chairman of the Supervisory Board Chief Executive Officer Head of Investor Relations
+995 32 444 103 +995 32 444 109 +995 32 444 256
lgurgenidze@bog.ge igilauri@bog.ge ir@bog.ge
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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 the first half 2007 and first half 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.
Bank of Georgia (LSE: BGEO, GSE: GEB), the leading Georgian universal bank,
announced today its Q2 2007 and 1H 2007 consolidated results (IFRS based,
derived from management accounts), reporting record quarterly Net Income of GEL
18.7 million in Q2 2007, (up 171.8% y-o-y) or US$0.44 per share (up 76.9%
y-o-y).
In 1H 2007, Net Income on the consolidated basis reached GEL 32.4 million (up
193.4% y-o-y), or US$0.77 per share (Basic, up 91.2 % y-o-y).
Q2 2007 Summary
The growth of the bank's Net Normalised Operating Income ('NNOI') by 92.5% y-o-y
to GEL 31.7 million was driven by a 100.1% growth y-o-y of Net Interest Income
to GEL 30.9 million and an 80.4% growth y-o-y in Net Non-Interest Income to GEL
21.3 million. Recurring Operating Costs grew by 90.2% y-o-y, resulting in
Pre-Bonus Result ('PBR') of GEL 30.9 million, up 187.5% y-o-y.
1H 2007 Summary
The bank reported strong consolidated results with a record Net Income of GEL
32.4 million, up 193.4% y-o-y. Total Operating Income (Revenue) grew 107.3%
y-o-y to GEL 93.2 million, driven by a 119.9% increase y-o-y in Net Interest
Income and a 90.1% increase y-o-y in Net Non-Interest Income, outpacing the
82.5% y-o-y growth of Total Recurring Operating Costs to GEL 37.0 million. As a
result of the improved operating leverage, NNOI grew 127.5% y-o-y to GEL 56.2
million. PBR grew 203.9 % y-o-y to a record GEL 53.4 million, as the bank had
Net Non-Recurring Income of GEL 1.9 million largely attributed to the
non-recurring gains from the sale of non-core assets and its Cost of Risk
decreased to 1.1% in 1H 2007 from 2.9% for the same period of the previous year.
The bank's consolidated Total Assets reached GEL 1.9 billion by 30 June 2007, up
168.0% y-o-y and up 58.1% YTD. The bank's corporate, retail and private banking
Gross Loans To Clients grew by 105.5%, 156.1% and 93.3% y-o-y and 45.0%, 55.9%,
45.2% YTD, respectively, to GEL 570.6 million, GEL 439.1 million and GEL 32.7
million, respectively, contributing to the 130.0% y-o-y growth of Net Loans To
Clients to GEL 1.0 billion (up 49.3% YTD). The balance sheet growth in 1H 2007
resulted in an approximately 4.3% market share gain by assets and approximately
3.6% market share gain by gross loans, resulting in the market share of
approximately 32.2% and 30.0% by total assets and gross loans, respectively, as
at 30 June 2007.(8) The bank's non-deposit funding base grew 317.9% y-o-y and
133.6% YTD to GEL 522.2 million as at 30 June 2007, largely due to the US$200
million debut Eurobond placement in Q1 2007. Client Deposits (GEL 828.0 million
as at 30 June 2007) increased by 86.1% y-o-y and 47.9% YTD. As a result, the
bank's market share by Total Deposits grew by 3.2% to 27.7% as at 30 June 2007.
Consolidated ROAE of 16.6% remained flat compared to the consolidated ROAE of
16.5% as of 31 December 2006, while consolidated ROAA reached 3.9% in 1H 2006,
compared to 3.4% as of the year-end 2006. The equity book value per share stood
at GEL 15.97 as at 30 June 2007, up 131.4% y-o-y and up 7.3% YTD.
(1) Market share data are derived from the information published by the National
Bank of Georgia (www.nbg.gov.ge) and represent an aggregation of standalone
financial information filed by Georgian banks.
Strategic Business Unit and Business Unit Overview
Corporate & Investment Banking (CIB)
Discussion Of Results
Allocated Revenues grew 101.7% y-o-y to GEL 31.5 million, impacted by the growth
of Net Interest Income and Net Non-Interest Income. Operating leverage of CIB
has improved, as the growth rate of allocated Recurring Costs (71.0% y-o-y),
lagged the growth rate of the allocated Revenues. PBR grew 180.9% y-o-y to GEL
22.8 million, contributing 42.7% to the consolidated PBR. Earnings grew 133.5%
y-o-y, contributing 47.4% to the consolidated Net Income. Gross Loans grew
105.5% y-o-y and 45.0% YTD to GEL 570.6 million, driven by the increased lending
to corporate clients and rapid growth of the SME loan book. Allocated Client
Deposits grew 85.9% y-o-y and 74.2% YTD to GEL 492.6 million, primarily due to
the growth of current account balances. Allocated Total CIB Assets amounted to
GEL 968.9 million, up 146.2% y-o-y and up 81.1% YTD, while allocated Total CIB
Liabilities reached GEL 786.6 million, up 127.4% y-o-y and up 72.6% YTD.
Highlights
-- Major new corporate client acquisitions include Heidelberg Cement
Georgia and Coca-Cola Bottlers Georgia Group Companies.
-- Increased the number of corporate clients using the bank's payroll
services from 480 at the end of 2006 to over 621 by the end of 1H 2007.
By 30 June 2007, the number of individual clients serviced through the
corporate payroll programs administered by the bank increased from
approximately 83,500 at the beginning of the year to over 120,000.
-- More than 10,000 legal entities opened accounts at the bank in 1H 2007,
bringing the total to over 57,000.
Retail Banking (RB)
Discussion Of Results
Allocated Revenues grew 162.6% y-o-y to GEL 42.1 million, impacted by the growth
of Net Interest Income and Net Non-Interest Income. Operating leverage of RB has
improved, as the growth rate of allocated Recurring Costs (102.6% y-o-y, driven
primarily by the branch and headcount expansion) lagged the growth rate of the
allocated Revenues. PBR grew 440.6% y-o-y to GEL 21.9 million, contributing
40.9% to the consolidated PBR. Earnings grew 361.4% y-o-y to GEL 14.7 million,
contributing 45.6% to the consolidated Net Income. Gross Loans grew 156.1% y-o-y
and 55.9% YTD to GEL 439.1 million, driven by the increased lending activity due
to high demand from customers. Allocated Client Deposits grew 66.7% y-o-y and
32.7% YTD to GEL 272.9 million, driven primarily by the growth of current
account balances and time deposits. Allocated Total RB Assets amounted to GEL
740.6 million, up 207.2% y-o-y and up 98.3% YTD, while allocated Total RB
Liabilities reached GEL 498.7 million, up 133.7% y-o-y and up 89.6% YTD.
Highlights
-- Increased the number of retail current accounts from approximately
420,000 at the beginning of the year to more than 530,000 by 30 June,
2007.
-- Increased the number of branches (service centers) from 100 at the
beginning of the year to 105 by 30 June 2007.
-- The purchase of commercial space previously rented by seven existing
branches resulted in the implied cost savings of GEL 0.3 million per
annum.
-- Bought or leased premises for 24 new branches, which are currently being
fitted out and are expected to be operational by YE 2007 and in Q2 2008.
-- Stepped up the issuance of credit cards, as the number of credit cards
issued reached approximately 17,000 in Q2 2007, compared to
approximately 5,800 credit cards issued in Q1 2007. As of 30 June 2007,
the number of credit cards outstanding amounted to approximately 23,000
up from nil same period last year and approximately 6,000 as at 31 March
2007.
-- More than doubled the issuance of debit cards with over 160,000 debit
cards issued in 1H 2007 as compared to approximately 69,000 debit cards,
issued in 1H 2006. The number of debit cards outstanding increased from
approximately 285,000 at the beginning of the year to approximately
408,000 by the end of 1H 2007.
-- Continued to make gains in merchant acquiring as the installed POS
terminal footprint grew to 616.
-- Total number of cards serviced by Georgian Card grew from 370,000 at the
beginning of the year to 575,000 by 30 June 2007, while the number of
transaction authorisations processed by Georgian Card in 1H 2007 grew
164% y-o-y to approximately 7.2 million (compared to approximately 2.9
million in 1H 2006).
-- Continued investing in the electronic banking channels, as the number of
ATMs grew to 166 by 30 June 2007 (up from 124 at the beginning of the
year), number of mobile banking users reached 18,808, and number of
registered Internet banking users grew 55.0% YTD to over 56,500.
-- POS express consumer lending, commenced by the bank in 2006 to
complement the branch-based general-purpose consumer lending, resulted
in the 734 express loan POS contracts signed with merchants (of which
454 outlets were served by 30 June 2007). POS express loan originations
have reached GEL34.8 million in 1H 2007 (up 960.4% y-o-y), while POS
express loans outstanding amounted to GEL 32.0 million at the end of 1H
2007, up 966.2% y-o-y and up 44.1% YTD.
-- Stepped up mortgage loan originations to GEL 64.0 million in 1H 2007 (up
235.6% y-o-y) resulting in mortgage loans outstanding by 30 June 2007 of
GEL 105.7 million, up 136.1% y-o-y and up 66.1% YTD.
-- Car loan originations of GEL 16.0 million (up 263.0% y-o-y) resulted in
car loans outstanding by 30 June 2007 of GEL 22.2 million, up 235.4%
y-o-y and up 127.9% YTD.
Insurance
Discussion Of Results
Standalone Revenues of Aldagi BCI, the bank's wholly-owned insurance subsidiary,
grew 12.0% y-o-y on a pro forma basis to GEL 5.8 million, impacted by the growth
in both corporate and consumer lines of business, with pro forma standalone
Gross Premiums Written up 4.2% y-o-y to GEL 17.0 million. Pro forma standalone
Operating Costs were GEL 3.4 million, up 4.6% y-o-y, and pro forma standalone
Net Claims Incurred were GEL 2.3 million, up 39.2% y-o-y, reflecting the growth
of the business. Pro forma PBR grew 42.1% y-o-y to GEL 1.4 million while pro
forma earnings grew 14.7% y-o-y, to GEL 0.8 million in 1H 2007. Total Insurance
Assets amounted to GEL 43.3 million, while Total Insurance Liabilities reached
GEL 39.5 million as at 30 June 2007.
Highlights
-- Completed the merger of BCI and Aldagi on 22 June 2007. Combined market
share of Aldagi and BCI by Gross Premiums Written amounted in 1H 2007 to
approximately 36%.
Corporate Center (CC)
Significant decreases in the Allocated Revenues and Net Income of the Corporate
Center is a result of a significant increase in the elimination adjustment in Q2
2007, driven by the adjustments of securities trading gains of Galt & Taggart
Securities, eliminated for the consolidation purposes as per IFRS requirements.
Allocated Total CC Assets amounted to GEL 3.1 million, representing 0.2% of the
consolidated Total Assets. Allocated Total CC Liabilities reached GEL 65.8
million, representing 4.3% of the consolidated Total Liabilities.
Wealth Management (WM)
Discussion Of Results
Allocated Revenues grew 145.0% y-o-y, impacted by the growth of Net Interest
Income (driven primarily by the growth of the Private Banking loan book) to GEL
2.1 million in 1H 2007. Allocated Recurring Costs of GEL 0.6 million grew 72.3%
y-o-y. PBR grew 1301.0% y-o-y to GEL 1.3 million, contributing 2.4% to the
consolidated PBR. Earnings grew 1065.4% y-o-y, contributing 2.7% to the
consolidated Net Income. Gross Loans grew 93.3% y-o-y and 45.2 YTD to GEL 32.7
million, while Allocated Client Deposits increased by 247.6% y-o-y and decreased
by 13.7% YTD to GEL 56.4 million. Allocated Total WM Assets amounted to GEL 55.1
million, up 136.2% y-o-y and 364.4% YTD, while allocated Total WM Liabilities
reached GEL 73.2 million, up 247.2% y-o-y and 26.6% YTD.
Highlights
-- The number of private banking clients grew from 873 at the beginning of
the year to 943 at the end of 1H 2007.
-- Private banking mortgage loan originations of GEL 7.3 million (up 7.3%
y-o-y) in 1H 2007 resulted in mortgage loans outstanding of GEL 22.9
million as at 30 June 2007, up and 110.5% y-o-y and up 32.7% YTD.
-- Private Banking car loan originations of GEL 1.4 million in 1H 2007
resulted in car loans outstanding of GEL 3.1 million as at 30 June 2007,
up 133.6% y-o-y and up 36.2% YTD.
Galt & Taggart Securities
Discussion Of Results
The growth of standalone Revenues to GEL 11.8 million in 1H 2007 (up 880.7%
y-o-y) was driven primarily by increases in commissions from brokerage, (GEL 1.4
million, up 85.0% y-o-y), commissions from custody and safekeeping, (GEL 0.1
million, up 967.9% y-o-y) and securities trading gains (GEL 8.8 million, up
2264.7% y-o-y). Standalone Recurring Operating Costs increased 742.5% y-o-y to
GEL 1.0 million. The lower growth rate of the Operating Costs (GEL 1.2 million,
up 473.8% y-o-y), compared to the standalone Revenue growth rate, resulted in
the y-o-y increase of 953.6% of the standalone NNOI to GEL 10.5 million.
Standalone PBR reached GEL 10.5 million in 1H 2007, (up 907.5% y-o-y).
Standalone Earnings grew 851.5% y-o-y, reaching GEL 7.7 million in 1H 2007.
Standalone Assets grew to GEL 52.7 million as at 30 June 2007, up 336.1% y-o-y
and 163.9% YTD, mostly as a result of the dramatic growth of the proprietary
book. Standalone Liabilities reached GEL 20.3 million by 30 June 2007, up 118.0%
y-o-y and up 206.3% YTD.
Highlights
-- Assets Under Custody grew 162.7% y-o-y and 11.1% YTD to GEL 377.0
million as of 30 June 2007.
-- Proprietary book grew 1946.9% YTD to GEL 29.4 million as at 30 June
2007.
-- Continued to hold the leading position by the equities trading volume in
Georgia, with an approximately 62% market share.
-- Successfully introduced Teliani Valley, Georgia's leading winery, to the
Georgian Stock Exchange (GSE: WINE).
-- Acted as sole placement agent on a GEL 6 million capital increase of JSC
Populi, the leading Georgian supermarket chain.
-- Launched a fully-fledged Ukrainian research platform in April 2007, with
six analysts covering various sectors.
Asset Management
Highlights
-- The market capitalization of Galt & Taggart Capital reached GEL 92.9
million as at 30 June 2007, an increase of 73.7% YTD and an increase of
182.4% since the company was admitted to trading on the Georgian Stock
Exchange in November 2006.
-- Galt & Taggart Capital participated in the capital increase of JSC
Populi to fund the rapid expansion of its retail footprint and purchased
a 25.0% equity interest in Teliani Valley.
-- SB Real Estate made several real estate investments in Tbilisi and on
the Black Sea coast.
-- Assets Under Management at the Aldagi BCI Pension Fund grew 217.6% y-o-y
(up 61.1% YTD) to GEL 0.9 million at the end of 1H 2007, while the
number of Aldagi BCI Pension Fund members stood at 3,004 at the end of
1H 2007, up from 1,285 members at the end of 1H 2006.
Comments
'I am very pleased with our 1H 2007 results. We have successfully funded our
loan book growth, gained market share by assets, loans and deposits and
ascertained market leadership in all of our businesses', commented Lado
Gurgenidze, Chairman of the Supervisory Board.
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SEGMENT RESULTS
Change y-o-y 1H 2007 Share 1H 2006 Share
Total Operating Income (Revenue)
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Corporate & Investment Banking 101.7% 31,512 33.8% 15,621 34.7%
Retail Banking 162.6% 42,143 45.2% 16,046 35.7%
Wealth Management 145.0% 2,137 2.3% 872 1.9%
Galt & Taggart Securities 845.5% 11,850 12.7% 1,253 2.8%
Asset Management NMF 1,718 1.8% 0 0.0%
Insurance 38.3% 4,364 4.7% 3,155 7.0%
Corporate Center NMF (516) -0.6% 8,025 17.8%
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Total Operating Income (Revenue) 107.3% 93,207 100.0% 44,973 100.0%
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Total Recurring Operating Costs
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Corporate & Investment Banking 71.0% 5,326 14.4% 3,114 15.4%
Retail Banking 102.6% 17,891 48.4% 8,831 43.6%
Wealth Management 72.3% 650 1.8% 377 1.9%
Galt & Taggart Securities 362.6% 1,337 3.6% 289 1.4%
Asset Management NMF 2,062 5.6% 0 0.0%
Insurance 29.8% 2,970 8.0% 2,288 11.3%
Corporate Center 25.7% 6,733 18.2% 5,357 26.4%
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Total Recurring Operating Costs 82.5% 36,970 100.0% 20,257 100.0%
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Pre-Bonus Result
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Corporate & Investment Banking 180.9% 22,776 42.7% 8,110 46.2%
Retail Banking 440.6% 21,850 40.9% 4,042 23.0%
Wealth Management 1301.0% 1,280 2.4% 91 0.5%
Galt & Taggart Securities 990.1% 10,512 19.7% 964 5.5%
Asset Management NMF (374) -0.7% 0 0.0%
Insurance 58.2% 1,372 2.6% 867 4.9%
Corporate Center NMF (4,049) -7.6% 3,489 19.9%
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Pre-Bonus Result 203.8% 53,366 100.0% 17,563 100.0%
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Net Income
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Corporate & Investment Banking 133.5% 15,337 47.4% 6,569 59.6%
Retail Banking 361.4% 14,749 45.6% 3,197 29.0%
Wealth Management 1065.4% 864 2.7% 74 0.7%
Galt & Taggart Securities 905.9% 7,713 23.8% 767 7.0%
Asset Management NMF (393) -1.2% - 0.0%
Insurance 14.1% 762 2.4% 668 6.1%
Corporate Center 2619.7% (6,679) -20.6% (246) -2.2%
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Net Income 193.4% 32,352 100.0% 11,028 100.0%
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Basic EPS Contribution Change y-o-y Contribution Share Contribution Share
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Corporate & Investment Banking 41.6% 0.61 47.4% 0.43 59.6%
Retail Banking 179.7% 0.58 45.6% 0.21 29.0%
Wealth Management NMF 0.03 2.7% 0.00 0.7%
Galt & Taggart Securities 509.8% 0.31 23.8% 0.05 7.0%
Asset Management NMF (0.02) -1.2% - 0.0%
Insurance -30.8% 0.03 2.4% 0.04 6.1%
Corporate Center NMF (0.26) -20.6% (0.02) -2.2%
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Total 78.0% 1.28 100.0% 0.72 100.0%
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SEGMENT RESULTS CONT'D
Total Assets Change y-o-y 1H 2007 Share 1H 2006 Share
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Corporate & Investment Banking 146.2% 968,859 50.5% 393,503 55.0%
Retail Banking 207.2% 740,564 38.6% 241,069 33.7%
Wealth Management 136.2% 55,125 2.9% 23,342 3.3%
Galt & Taggart Securities 223.4% 52,722 2.7% 16,302 2.3%
Asset Management NMF 53,239 2.8% - 0.0%
Insurance 193.3% 44,189 2.3% 15,064 2.1%
Corporate Center -88.1% 3,135 0.2% 26,254 3.7%
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Total Assets 168.0% 1,917,833 100.0% 715,534 100.0%
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Loans to Clients, Gross
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Corporate & Investment Banking 105.5% 570,618 53.9% 277,634 58.5%
Retail Banking 156.1% 439,112 41.5% 171,478 36.1%
Wealth Management 93.3% 32,712 3.1% 16,919 3.6%
Galt & Taggart Securities NMF - 0.0% - 0.0%
Asset Management NMF - 0.0% - 0.0%
Insurance NMF - 0.0% - 0.0%
Corporate Center 93.3% 16,756 1.6% 8,670 1.8%
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Total Loans to Clients 123.1% 1,059,197 100.0% 474,701 100.0%
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Total Liabilities
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Corporate & Investment Banking 127.4% 786,613 52.0% 345,949 56.8%
Retail Banking 133.7% 498,748 32.9% 213,405 35.1%
Wealth Management 247.3% 73,233 4.8% 21,085 3.5%
Galt & Taggart Securities 144.1% 20,342 1.3% 8,332 1.4%
Asset Management NMF 28,734 1.9% - 0.0%
Insurance 319.6% 40,346 2.7% 9,616 1.6%
Corporate Center 538.7% 65,810 4.3% 10,304 1.7%
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Total Liabilities 148.7% 1,513,826 100.0% 608,691 100.0%
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Client Deposits
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Corporate & Investment Banking 85.9% 492,580 59.5% 264,986 59.6%
Retail Banking 66.7% 272,899 33.0% 163,666 36.8%
Wealth Management 247.6% 56,448 6.8% 16,238 3.6%
Galt & Taggart Securities NMF 6,054 0.7% - 0.0%
Asset Management NMF - 0.0% - 0.0%
Insurance NMF - 0.0% - 0.0%
Corporate Center NMF - 0.0% - 0.0%
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Total Client Deposits 86.1% 827,981 100.0% 444,889 100.0%
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Book Value Per Share Change y-o-y Contribution Share Contribution Share
----------------------------------------------------------------------------------------------
Corporate & Investment Banking 135.3% 7.21 45.1% 3.06 44.5%
Retail Banking 436.8% 9.56 59.9% 1.78 25.9%
Wealth Management NMF -0.72 -4.5% 0.15 2.1%
Galt & Taggart Securities 149.5% 1.28 8.0% 0.51 7.5%
Asset Management NMF 0.97 6.1% - 0.0%
Insurance -56.7% 0.15 1.0% 0.35 5.1%
Corporate Center NMF -2.48 -15.5% 1.03 14.9%
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Total Client Deposits 132.2% 15.97 100.0% 6.88 100.0%
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INCOME STATEMENT DATA
Period Ended 1H 2007 1H 2006 Change(3)
Consolidated, IFRS Based US$(1) GEL US$(2) GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited)
Interest Income 59,377 99,130 21,655 38,393 158.2%
Interest Expense 25,267 42,183 7,049 12,498 237.5%
Net Interest Income 34,110 56,946 14,605 25,895 119.9%
Fee & Commission Income 7,834 13,079 4,675 8,288 57.8%
Fee & Commission Expense 932 1,555 612 1,085 43.4%
Net Fee & Commission Income 6,903 11,524 4,063 7,204 60.0%
Income From Documentary Operations 1,807 3,016 1,237 2,194 37.5%
Expense On Documentary Operations 601 1,003 327 580 72.9%
Net Income From Documentary Operations 1,206 2,013 910 1,613 24.8%
Net Foreign Currency Related Income 6,197 10,346 2,626 4,656 122.2%
Net Insurance Income 2,110 3,523 1,689 2,995 17.6%
Brokerage Income 911 1,521 467 828 83.8%
Asset Management Income - - - - NMF(4)
Realised Net Investment Gains (Losses) 1,840 3,072 217 384 699.4%
Other 2,552 4,261 788 1,398 204.8%
Net Other Non-Interest Income 7,414 12,377 3,161 5,605 120.8%
Net Non-Interest Income 21,719 36,261 10,760 19,078 90.1%
Total Operating Income (Revenue) 55,829 93,207 25,366 44,973 107.3%
Personnel Costs 10,460 17,462 5,656 10,028 74.1%
Selling, General & Administrative Costs 5,934 9,906 2,749 4,873 103.3%
Procurement & Operations Support Expenses 2,693 4,496 1,216 2,157 108.5%
Depreciation & Amortization 2,540 4,241 1,427 2,530 67.6%
Other Operating Expenses 518 866 378 670 29.3%
Total Recurring Operating Costs 22,145 36,970 11,425 20,257 82.5%
Normalized Net Operating Income 33,685 56,237 13,940 24,716 127.5%
Net Non-Recurring Income (Costs) 1,157 1,932 -690 (1,223) NMF
Profit Before Provisions & Bonuses 34,842 58,169 13,251 23,493 147.6%
Provisions For Loan Losses 4,409 7,360 4,162 7,380 -0.3%
Recovery Of Loans 1,462 2,442 166 295 728.6%
Provisions For (Recovery Of) Other Assets -69 (116) -652 (1,155) -90.0%
Net Provision Expense 2,877 4,803 3,345 5,930 -19.0%
Pre-Bonus Result 31,965 53,366 9,906 17,563 203.9%
Bonuses & Share Based Compensation
Expenses 7,736 12,915 1,875 3,324 288.5%
Pre-Tax Income 24,230 40,452 8,031 14,239 184.1%
Income Tax Expenses 4,851 8,099 1,811 3,211 152.2%
Net Income 19,379 32,352 6,220 11,028 193.4%
Weighted Average Shares Outstanding (000s) 25,258 15,499
Diluted Number of Shares Period End (000s) 27,248 15,925
EPS (Basic) 0.77 1.28 0.40 0.71 80.0%
EPS (Diluted) 0.71 1.19 0.39 0.69 71.5%
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(1) Converted to U.S. dollars for convenience using a period-end
exchange rate of GEL 1.6695 per U$S1.00 , such rate being the
official Georgian Lari to U.S. dollar period-end exchange rate as
reported by the National Bank of Georgia as at 30 June 2007
(2) Converted to U.S. dollars for convenience using a period-end
exchange rate of GEL 1.7730 per U$S1.00 , such rate being the
official Georgian Lari to U.S. dollar period-end exchange rate as
reported by the National Bank of Georgia as at 30 June 2006
(3) Growth calculations based on GEL values
(4) Not meaningful
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BALANCE SHEET DATA
30-Jun-07 Growth(2) 31-Dec-06 Growth(4) 30-Jun-06
Consolidated, IFRS Based US$(1) GEL YTD US$(3) GEL Y-O-Y US$(5) GEL
000s, unless otherwise noted (Unaudited) (Audited) (Unaudited)
Cash & Cash Equivalents 58,055 96,922 -10.1% 62,917 107,809 5.3% 51,897 92,014
Loans & Advances To Credit Institutions 149,545 249,666 279.9% 38,349 65,711 289.8% 36,126 64,052
Mandatory Reserve With NBG 39,254 65,534 6.6% 35,869 61,461 66.2% 22,238 39,428
Other Accounts With NBG 46,072 76,918 32492.4% 138 236 377.8% 9,080 16,098
Balances With & Loans To Other Banks 64,219 107,214 2571.0% 2,343 4,014 1157.5% 4,809 8,526
Available-For-Sale Securities 4,244 7085 28.0% 3,230 5,534 210.3% 1,288 2,283
Treasuries & Equivalents 34,288 57,244 -69.4% 109,276 187,244 NMF(6) - -
Other Fixed Income Instruments 140,610 234,748 5292.8% 2,540 4,353 NMF - -
Gross Loans To Clients 634,440 1,059,197 48.1% 417,310 715,061 123.1% 267,739 474,701
Less: Reserve For Loan Losses -13,878 -23,170 9.7% -12,330 -21,128 -4.2% -13,635 -24,174
Net Loans To Clients 620,561 1,036,027 49.3% 404,980 693,933 130.0% 254,104 450,527
Investments In Other Business Entities,
Net 14,255 23,799 1844.4% 714 1,224 2484.0% 519 921
Property & Equipment Owned, Net 71,093 118,690 77.6% 39,001 66,828 144.7% 27,360 48,510
Intangible Assets Owned, Net 1,779 2,970 -5.7% 1,838 3,150 63.5% 1,024 1,816
Goodwill 25,880 43,206 7.3% 23,507 40,279 84.4% 13,218 23,436
Tax Assets - Current & Deferred 1,273 2,125 NMF - - 587.7% 174 309
Prepayments & Other Assets 27,165 45,350 21.7% 21,746 37,261 43.2% 17,860 31,666
Total Assets 1,148,747 1,917,832 58.1% 708,098 1,213,326 168.0% 403,572 715,534
Client Deposits 495,945 827,981 47.9% 326,610 559,646 86.1% 250,924 444,889
Deposits & Loans From Banks 32,650 54,510 6201.7% 505 865 308.9% 7,518 13,330
Borrowed Funds 312,803 522,225 133.6% 130,444 223,516 317.9% 70,490 124,978
Insurance Related Liabilities 15,261 25,478 230.9% 4,493 7,699 356.4% 3,148 5,582
Issued Fixed Income Securities 790 1,319 22.9% 626 1,073 -1.0% 752 1,333
Tax Liabilities - Current & Deferred 7,837 13,084 60.8% 4,749 8,138 363.2% 1,593 2,825
Accruals & Other Liabilities 41,466 69,228 84.5% 21,903 37,531 339.4% 8,886 15,754
Total Liabilities 906,754 1,513,825 80.5% 489,331 838,468 148.7% 343,311 608,691
Ordinary Shares 15,157 25,304 0.4% 14,708 25,202 63.4% 8,735 15,488
Share Premium 149,460 249,523 -10.1% 161,914 277,440 567.5% 21,085 37,383
Treasury Shares -732 -1,222 21.7% -586 -1,004 688.4% -87 -155
Retained Earnings 37,541 62,675 69.5% 21,578 36,974 49.2% 23,699 42,019
Revaluation & Other Reserves 17,120 28,582 443.7% 3,068 5,257 NMF - -
Net Income For The Period 19,378 32,352 20.8% 15,624 26,772 193.4% 6,220 11,028
Shareholders' Equity Excluding Minority
Interest 237,924 397,214 7.2% 216,306 370,641 275.6% 59,652 105,763
Minority Interest 4,069 6,793 61.1% 2,461 4,217 529.0% 609 1,080
Total Shareholders' Equity 241,993 404,007 7.8% 218,767 374,858 278.1% 60,261 106,843
Total Liabilities & Shareholders'
Equity 1,148,747 1,917,832 58.1% 708,098 1,213,326 168.0% 403,572 715,534
Shares Outstanding 25,304,087 25,202,009 15,537,891
Book Value Per Share 9.57 15.97 7.4% 8.68 14.87 131.4% 3.89 6.90
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(1) Converted to U.S. dollars for the convenience using a period-end
exchange rate of GEL 1.6695 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 2007
(2) Compared to 31 December 2006; growth calculations based on GEL
values
(3) Converted to U.S. dollars for the convenience using a period-end
exchange rate of GEL 1.7135 per US$1.00, such exchange rate being
the official Georgia Lari to U.S. dollar period-end exchange rate
as reported by the National Bank of Georgia on 31 December 2006
(4) Compared to the same period in 2006; growth calculations based on
GEL values
(5) Converted to U.S. dollars for the convenience using a period-end
exchange rate of GEL 1.7730 per US$1.00, such exchange rate being
the official Georgia Lari to U.S. dollar period-end exchange rate
as reported by the National Bank of Georgia on 30 June 2006
(6) Not meaningful
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KEY RATIOS
1H 2007 2006 1H 2006
Profitability Ratios
ROAA,(1) Annualised for 1H 3.9% 3.4% 3.5%
ROA, Annualised 3.4% 2.2% 3.1%
ROAE,(2) Annualised for 1H 16.6% 16.5% 22.0%
ROE, Annualised 16.0% 7.1% 20.6%
Interest Income To Average Interest Earning Assets, (3)
Annualised for 1H 14.6% 16.7% 15.6%
Cost Of Funds, (4) Annualised for 1H 7.2% 5.8% 4.9%
Net Spread (5) 7.5% 10.9% 10.7%
Net Interest Margin (6) Annualised for 1H 8.4% 11.1% 10.5%
Net Interest Margin, Normalised, (7) Annualised for 1H 8.4% 10.6% 9.4%
Loan Yield (8) 21.0% 17.4% 15.9%
Interest Expense To Interest Income 42.6% 33.5% 32.6%
Net Non-Interest Income To Average Total Assets, Annualised for
1H 4.4% 5.8% 6.0%
Net Non-Interest Income To Revenue (9) 38.9% 40.4% 42.4%
Net Fee And Commission Income To Average Interest Earning
Assets, (10) Annualised for 1H 1.7% 3.1% 2.9%
Net Fee And Commission Income To Revenue 12.4% 16.5% 16.0%
Operating Leverage (11) 13.9% 18.8% NMF
Total Operating Income (Revenue)/Total Assets, Annualised for
1H 9.7% 9.2% 12.6%
Recurring Earning Power (12) Annualised for 1H 7.0% 7.7% 7.4%
Net Income To Revenue 34.7% 23.9% 24.5%
Efficiency Ratios
Operating Cost To Average Total Assets, (13) Annualised for 1H 4.5% 6.8% 6.3%
Cost To Average Total Assets (14) Annualised for 1H 5.8% 8.2% 7.8%
Cost / Income (15) 51.4% 56.7% 55.2%
Cost /Income Normalised (16) 53.5% 55.9% 52.4%
Cash Cost/Income(17) 46.9% 51.4% 49.5%
Cost / Income, Bank of Georgia, Standalone (18) 48.3% 51.2% 52.2%
Total Employee Compensation Expense To Revenue (19) 32.6% 29.7% 29.7%
Total Employee Compensation Expense To Cost 63.3% 52.5% 53.8%
Total Employee Compensation Expense To Average Total Assets,
Annualised for 1H 3.7% 4.3% 4.2%
Liquidity Ratios
Net Loans To Total Assets (20) 54.0% 57.2% 63.0%
Average Net Loans To Average Total Assets 52.7% 61.3% 60.5%
Interest Earning Assets To Total Assets 82.3% 78.4% 75.9%
Average Interest Earning Assets To Average Total Assets 81.6% 77.3% 77.2%
Liquid Assets To Total Assets (21) 30.2% 25.0% 16.6%
Net Loans To Client Deposits 125.1% 124.0% 101.3%
Average Net Loans To Average Client Deposits 129.7% 113.4% 101.0%
Net Loans To Total Deposits (22) 117.4% 123.8% 98.3%
Net Loans To Total Liabilities 68.4% 82.8% 74.0%
Total Deposits To Total Liabilities 58.3% 66.8% 75.3%
Client Deposits To Total Deposits 93.8% 99.8% 97.1%
Client Deposits To Total Liabilities 54.7% 66.7% 73.1%
Current Account Balances To Client Deposits 56.4% 54.4% 56.8%
Demand Deposits To Client Deposits 10.0% 6.4% 6.6%
Time Deposits To Client Deposits 33.7% 39.2% 36.6%
Total Deposits To Total Assets 46.0% 46.2% 64.0%
Client Deposits To Total Assets 43.2% 46.1% 62.2%
Client Deposits To Total Equity (times) (23) 2.05 1.49 4.16
Due From Banks / Due To Banks (24) 458% 7597% 481%
Leverage (times) (25) 3.7 2.2 5.7
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KEY RATIOS CONT'D
1H 2007 2006 1H 2006
Asset Quality
NPLs (in GEL) (26) 18,012 16,266 26,957
NPLs to Gross Loans (27) 1.7% 2.3% 5.7%
Cost of Risk (28) 1.1% 2.7% 2.9%
Cost of Risk, Normalised(29) 1.1% 2.2% 2.4%
Reserves for Loan Losses to Gross Loans (30) 2.2% 3.0% 5.1%
NPL Coverage ratio (31) 128.6% 129.9% 89.7%
Equity to average net loans to clients 46.1% 78.8% 27.7%
Total Equity To Net Loans 39.0% 54.0% 23.7%
Capital Adequacy:
Equity To Total Assets 21.1% 30.9% 14.9%
BIS Tier I Capital Adequacy Ratio (32) 24.7% 44.9% 16.1%
BIS Total Capital Adequacy Ratio (33) 24.5% 41.8% 19.0%
NBG Tier I Capital Adequacy Ratio (34) 15.8% 23.2% 8.9%
NBG Total Capital Adequacy Ratio (35) 19.2% 28.5% 9.1%
Per Share Values:
Basic EPS (GEL) (36) 1.28 1.62 0.71
Basic EPS (US$) $0.77 $0.89 $0.40
Diluted EPS (GEL) (37) 1.19 0.98 0.69
Diluted EPS (US$) $0.71 $0.54 $0.39
Book Value Per Share (GEL) (38) 15.97 14.87 6.90
Book Value Per Share (US$) $9.56 $8.14 $3.89
Ordinary Shares Outstanding - Weighted Average, Basic 25,258,491 16,505,701 15,499,175
Ordinary Shares Outstanding - Period End 25,304,087 25,202,009 15,537,891
Ordinary Shares Outstanding - Diluted 27,248,162 27,229,418 15,924,560
Selected Operating Data:
Full Time Employees (FTE) 2,796 2,226 1,557
FTEs, Bank of Georgia Standalone 2,103 1,601 1,326
Total Assets per FTE (GEL Thousands) 686 558 460
Total Assets per FTE, Bank of Georgia Standalone (GEL
Thousands) 912 776 540
Branches 105 100 72
ATMs 166 124 51
Plastic Cards (Thousands) 432 286 121
POS Terminals 616 471 237
Note: All annualized numbers presented throughout have been annualised by dividing Income Statement
component by the number of months in the period multiplied by twelve.
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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 Net Interest Margin Normalised equals Net Interest Income of the period, less provisions for
the interest income generated by non-performing loans through the date of their write-offs,
plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans
To Clients over the same period.
8 Loan Yield equals Interest Income, less Net Provision Expense divided by quarterly Average
Gross Loans To Clients;
9 Revenue equals Total Operating Income;
10 Net Fee And Commission Income includes Net Income From Documentary Operations of the period;
11 Operating Leverage equals percentage change in Revenue less percentage change in Total Costs;
12 Recurring Earning Power equals Profit Before Provisions and Bonuses of the period divided by
average Total Assets of the same period;
13 Operating Cost equals Total Recurring Operating Costs;
14 Cost includes Total Recurring Operating Costs, Net Non-Recurring Costs (Income) and Bonuses &
Share Based Compensation Expenses;
15 Cost/Income Ratio equals Costs of the period divided by Total Operating Income (Revenue);
16 Cost/Income Normalised equals Recurring Operating Costs plus Bonuses & Share Based
Compensation Expenses divided by Total Operating Income (Revenue) for the same period.
17 Cash Cost equals Cost minus Depreciation & Amortisation;
18 Cost/Income, Bank of Georgia, standalone, equals to non-consolidated Total Costs of the bank
of the period divided by non-consolidated Revenue of the bank of the same period;
19 Total Employee Compensation Expense includes Personnel Costs and Bonuses & Share-Based
Compensation Expenses;
20 Net Loans equal Net Loans To Clients;
21 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;
22 Total Deposits include Client Deposits and Deposits And Loans from Banks;
23 Total Equity equals Total Shareholders' Equity;
24 Due From Banks/Due To Banks equals Loans And Advances To Credit Institutions divided by
Deposits And Loans From Banks;
25 Leverage (Times) equals Total Liabilities as of the period end divided by Total Equity as of
the same date;
26 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;
27 Gross Loans equals Gross Loans To Clients;
28 Cost Of Risk equals Net Provision For Loan Losses of the period, less recovery of other
assets, divided by quarterly average Gross Loans To Clients over the same period;
29 Cost of Risk Normalised equals Net Provision For Loan Losses of the period, less provisions
for the interest income generated by non-performing loans through the date of their write-
off, plus provisions for (less recovery of) other assets, divided by quarterly average Gross
Loans to Clients over the same period.
30 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;
31 NPL Coverage Ratio equals Reserve For Loan losses as of the period end divided by NPLs as of
the same date;
32 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 Capital Accord I;
33 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 Capital Accord I;
34 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;
35 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;
36 Basic EPS equals Net Income of the period divided by the weighted average number of
outstanding Ordinary Shares over the same period;
37 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;
38 Book Value Per Share equals Total Equity plus Treasury Shares, divided by the total number of
outstanding Ordinary Shares.
*T
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