Final Results

RNS Number : 1483Y

Bank of Georgia Holdings PLC

19 February 2013

BANK OF GEORGIA

HOLDINGS PLC

PRELIMINARY RESULTS ANNOUNCEMENT

2012

FORWARD LOOKING STATEMENTS

This document contains statements that constitute "forward-looking statements", including , but not limited to, statements con-cerning expectations, projections , objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development.

While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other factors could cause actual developments and results to differ materially from our expectations.

These factors include, but are not limited to, (1) general market, macroeconomic, governmental, legislative and regulatory trends, (2) movements in local and international currency exchange rates; interest rates and securities markets, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counter-parties and developments in the market in which they operate, (6) management changes and changes to our group structure and (7) other key factors that we have indicated could adversely affect our business and financial performance, which are contained elsewhere in this document and in our past and future filings and reports, including those filed with the respective authorities.

When relying on forward-looking statements, investors should carefully consider the foregoing factors and other uncertainties and events. Accordingly, we are under no obligations (and expressly disclaim and such obligations) to update or alter our forward-looking statements whether as a result of new information, future events, or otherwise.

The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2012 or 2011. No statutory accounts for the Company for 2011 have been delivered to the Registrar of Companies, and those for 2012 will be delivered in due course.

2012 Overview

Bank of Georgia Holdings plc (LSE: BGEO LN) (the "Bank"), the holding company of JSC Bank of Georgia and its subsidiaries, Georgia's leading bank, announces today the consolidated results for year ended 31 December 2012 (IFRS based, derived from management accounts with such announcement approved by the board of directors of BGH on 15 February 2013). The Bank reported full-year 2012 profit of GEL 179.6 million (US$ 108.4 million/GBP 67.4 million), or GEL 5.22 per share (US$3.15 per share/GBP1.96 per share). Unless otherwise mentioned, all comparisons refer to the full year 2011 results.

· Positive operating leverage maintained with strong profitability

o Net interest margin of 7.9% in 2012, compared to 7.8% in 2011;

§ Q4 2012 NIM increased to 7.8% from 7.3% in Q3 2012.

o Revenue increased by GEL 64.5 million, or 14.9%, y-o-y, to GEL 498.3 million; excluding the benefit of the one-off currency hedge gains in 2011, revenue increased by 21.9%;

§ Q4 2012 revenue grew 11.1% y-o-y to GEL 128.3 million; excluding the benefit of the one-off currency hedge in Q4 2011, Q4 2012 revenue grew 15.5%.

o Positive operating leverage maintained, as operating expenses increased at a lower rate than revenue, up 5.2% y-o-y to GEL 221.2 million; excluding the 2011 one-off gains, operating leverage was 16.7%;

§ Q4 2012 operating expenses were largely flat q-o-q at GEL 54.0 million.

o Cost to Income ratio improved to 44.4% from 48.5% in 2011, and to 42.1% in Q4 2012 from 44.4% in Q3 2012.

o Profit before tax from continuing operations of GEL 212.8 million, up by GEL 40.7 million, or 23.7%; excluding the benefit of one-off currency hedge gains in 2011, profit grew 44.7%.

o Profit for the period increased by GEL 43.8 million, or 32.3%, to GEL 179.6 million.

o Earnings per share (basic) increased by 17.6% to GEL 5.22.

o Return on Average Assets (ROAA) increased to 3.5%, compared to 3.2%.

o Return on Average Equity (ROAE) increased to 19.1%, from 18.3%.

· Strong balance sheet and capital position maintained

o Cost of Funds declined to 7.3% in 2012, compared to 8.0%.

§ Q4 2012 Cost of Funds of 6.6%, down from 7.1% in Q3 2012 and 8.4% in Q4 2011.

o Net loan book increased by 18.2% during the year , while client deposits increased 2.7%, reflecting the Bank's strategy to improve its cost of funding by reducing high interest paying corporate deposits;

§ In US$ terms the net loan book increased by 19.2% reflecting the stable currency position.

§ Retail Banking client deposits grew 15.5%, Wealth Management client deposits grew 33.2%, Corporate Banking declined 17.1%, reflecting the targeted outflow of high-interest paying deposits.

o Cost of Risk increased to 1.3% in 2012 from 0.9% in 2011, reflecting the absence of the previous year's net releases and recoveries and higher provisions in the second half of 2012.

o Strong funding and liquidity position with a Net Loans to Customer Funds ratio of 114.8%. Net Loans to Customer Funds and Long-Term IFI Funding ratio was 91.9%. National Bank of Georgia (NBG) liquidity ratio of 41.1%, compared to 37.8% a year ago and to a 30% minimum requirement by the NBG.

o BIS Tier 1 capital adequacy ratio improved to 22.0%.

o Book Value per Share increased by 16.7% y-o-y to GEL 30.33 (US$18.31/GBP11.38).

o Balance Sheet leverage reduced to 4.3 times at 31 December 2012, compared to 4.7 times at 31 December 2011 and 4.5 times at 30 September 2012.

· Business highlights

o Strong performances from each of the Bank's businesses in Georgia - Corporate Banking and Retail Banking reported continued loan growth and improving efficiencies.

o Retail Banking continues to deliver strong franchise growth, supported by the successful roll-out of the Express Banking strategy in 2012.

o Corporate Banking has delivered strong, well-diversified balance sheet growth over the last 12 months; customer lending grew 23.1%

o Wealth Management continued to expand its client franchise with deposits increasing by 33.2% to GEL 605.2 million during the year.

o Excellent progress in developing the Bank's synergistic businesses: Insurance and Healthcare business expansion through acquisition of Imedi L International. Integration successfully executed, realising annual synergies of GEL 8.7 million; Affordable Housing completed its pilot project of an 123 apartment building realising SBRE's first profit of GEL 1.7 million; a second 522 apartment building project is in progress.

CHIEF EXECUTIVE OFFICER'S STATEMENT

"In 2012 your company reported another record profit of GEL 179.6 million, an increase of 32.3% from the profit delivered by Bank of Georgia in 2011. This strong progress continues to reflect the strength of the Bank's earnings power and resulted in a Return on Average Equity of 19.1%, up from 18.3%, and EPS growth of 17.6% to GEL 5.22, reflecting a strong business performance, significantly reduced cost of funding and improved efficiency across the business.

On 28 February 2012 Bank of Georgia Holdings PLC started trading on the LSE Main Market and in June 2012 became a FTSE 250 constituent company, which in turn has markedly improved the liquidity of your stock, positively affecting the price of BGEO LN, which grew 30.3% since the premium listing almost one year ago on the back of average trading volume of approximately 102 thousand shares per day (GBP 1.1 million). We have a well-diversified shareholder base including our long-time investors across various geographies and the addition of many new non-Emerging Markets focused institutional investors, who now make up circa 15% of our investor base.

2012 was a momentous year for Georgia as well. Following the parliamentary elections in October 2012, we witnessed a democratic passing of power for the first time in the country's history. The new government has asserted its commitment to the continuation of Georgia's investor and business friendly policies and in December 2012 the newly-elected parliament approved a well-balanced budget for 2013 that forecasts 6% real GDP growth, further improvements in general government debt ratios and a continous focus on infrastructure sector development. In Q4 2012, the uncertainty in respect of the change of political leadership resulted in a relative slow-down of corporate business lending growth throughout the Georgian banking sector. While we may continue to see this slower trend over the next few months, we have been encouraged by higher levels of business activity in January 2013.

Our revenue this year totalled GEL 498.3 million, up 21.9% (revenue adjusted for one-off currency hedge) compared to 2011. The significant increase in revenue was due to the robust performances of our businesses and the effects of our diversified sources of growth. Strong interest income was driven by the growth of both the retail and corporate loan books, especially in the first nine months of the year. Fee income increased 14.8% to GEL 86.5 million, reflecting our leadership in money transmission payments and the superior fee generating capabilities of our corporate banking business. We enjoy an estimated 50% market share in card acquiring business in Georgia, have unmatched client reach through the largest network of ATMs and Self Service Terminals, American Express card exclusivity in Georgia, as well as the exclusive management of transportation system payments.

Our Insurance and Healthcare businesses, which had an eventful year in terms of M&A activity, contributed 11.5% to the consolidated revenue and 8.7% to the consolidated profit, becoming an increasingly meaningful source of the Bank's income.

Our affordable housing business successfully completed its pilot project, contributing GEL 15.5 million to the mortgage loan book and SBRE realising profit of GEL 1.7 million . Non-interest income amounted to 43.0% of revenue, an achievement that is particularly striking compared to four years ago, when this ratio stood at 34.3%.

We have become more efficient. For the past five quarters we have consistently delivered strong positive operating leverage, as our operating costs have regularly increased at only half the rate of revenue growth. Several factors behind this achievement are described below.

We successfully strengthened and expanded further our retail franchise through our Express banking strategy, which entails the rollout out of cost-efficient small-sized express branches, avoiding the need to build costly flagship branches, to continue to serve our ever-increasing client base. With Express banking in place, we have pushed further the ongoing shift to transactional banking by means of a wide-range of electronic channels, away from regular or flagship branches, which are now focusing on selling more value-added products and services. We have continued to invest in IT to minimise and, in certain cases, eliminate document flow, and stepped-up optimisation of the centralised retail banking back office. These developments coupled with the ongoing cost control measures that we already have in place, have resulted in a substantial improvement in the retail cost to income ratio to 44% from 51% last year while the corporate banking cost to income ratio improved to 33% from 43% in 2011. The increasing benefits we are delivering from these improved efficiencies are expected to underpin further improvements in our cost to income ratio over the next few years. It has been a rewarding and exciting experience to observe the effects of economies of scale.

Credit quality has continued to be robust, albeit the cost of credit risk was at the top end of our expected range, increasing by GEL 22.5 million to GEL 44.7 million, or 1.3% of customer lending. This largely reflected the absence of last year's releases and recoveries, and an increase in the retail banking impairment charge as a result of job reductions made in a large payroll client during the first half of the year. We did however see an increase in corporate provisions in the fourth quarter, reflecting the impact of a provision of GEL 14.2 million relating to one single corporate credit. This was offset however by the impact of the 2008 and 2009 stress years dropping out of our retail banking provision methodology.

I would also like to highlight the excellent progress we have made against our liability management objectives. Throughout the year we have consistently sought to optimise our funding structure and cost base. Strong branding and our pre-eminence in the retail segment has enabled aggressive deposit pricing on the back of the Bank's growing retail deposit base, while the more competitive corporate environment led to the outflow of expensive Lari corporate deposits, allowing us to replace them with less-costly long-term international borrowing. The funding profile of corporate banking has improved markedly as the corporate banking cost of deposits declined to a historic low of 6.2% in Q4 2012, also benefiting from superior access to trade finance lines, which represent substantially cheaper long-term funding. Overall, the Bank's cost of funding decreased to 7.3% from 8.0% last year, and as low as 6.6% in Q4 2012.

In 2013, we do not expect any changes to the fundamentals of our business strategy. We intend to continue to focus on the Georgian market, with retail banking and corporate banking continuing to drive profitability. The full effects of our recent scaling up of the business are still to be realised, as more customers shift to electronic channels. The introduction of a sophisticated CRM system will further enhance product penetration and boost revenues per client, thus further improving our efficiency. In corporate banking we intend to further expand our export and trade finance businesses and to build on our strong fee generating capabilities, supported by research and advisory services. We are set to build our regional asset management business on the currently AUM US$ 365.3 million-strong wealth management platform.

The potential health insurance reform, the structure of which is still under consideration, envisages the provision of basic healthcare coverage for the entire Georgian population in addition to existing state-subsidised socially vulnerable groups. We expect these reforms to be a positive factor for the healthcare revenues of Aldagi BCI, the country's leading healthcare provider.

While we are very pleased with our progress in cost optimisation in 2012, we see lots of opportunities to further improve efficiency and to ensure that our costs continue to increase at a lower rate than our revenue growth. In 2013, we will be vigilant of our asset quality and determined to continue to enhance our risk management practices.

At the end of December 2012, the Bank's total capital ratio, on a Basel 1 basis, was 27.0% and the tier 1 capital ratio was 22.0%. As a result, the Bank continues to maintain an extremely strong capital position with capital ratios significantly in excess of its minimum capital requirements. The Bank is well positioned to further improve its performance in 2013 and this, combined with continued strong profitability and capital ratios, has led the Board to review the Bank's dividend policy. The Board intends to recommend at the AGM an annual dividend of GEL 1.5 per share payable in British Sterling at the prevailing rate. This represents a significant increase of 114.3%, compared to the annual dividend of GEL 0.70 per share last year, a payout ratio of 28.7% and a dividend yield for shareholders of 5.5%, calculated on the basis of the preliminary results and using the 31 December 2012 share price of GBP 10.30. When the Bank announces that the Board is recommending any dividend to the AGM, the Bank will also announce details of the dividend timetable applicable to such dividend. Going forward, the Board will aim to maintain a dividend payout ratio in the 25%-40% range," commented Irakli Gilauri, Chief Executive Officer of Bank of Georgia Holdings PLC and JSC Bank of Georgia.

1.6567 GEL/US$ 31 December 2012

1.6593 GEL/US$ 30 September 2012

1.6703 GEL/US$ 31 December 2011

2.6653 GEL/GBP 31 December 2012

2.6881 GEL/GBP 30 September 2012

2.5776 GEL/GBP 31 December 2011

FINANCIAL SUMMARY

BGH (Consolidated, IFRS-based)	Year ended		Change
Income Statement Summary	31 Dec 12	31 Dec 11	Y-O-Y¹
GEL thousands, unless otherwise noted		Audited

Revenue²	498,255	433,753	14.9%
Operating expenses³	(221,152)	(210,165)	5.2%
Operating income before cost of credit risk	277,103	223,588	23.9%
Cost of credit risk⁴	(44,717)	(22,196)	101.5%
Net operating income	232,386	201,392	15.4%
Net non-operating expense, including goodwill impairment	(19,634)	(29,338)	-33.1%
Profit	179,552	135,710	32.3%

BGH (Consolidated, IFRS-based)	31 Dec 12	31 Dec 11	Change
Statement of Financial Position		Audited	Y-O-Y


Total assets	5,655,595	4,665,261	21.2%
Net loans⁵	3,092,320	2,616,361	18.2%
Customer funds⁶	2,693,025	2,735,222	-1.5%
Leverage⁷	4.3	4.7

KEY PERFORMANCE MEASURES


Performance Indicators	2012	2011
ROAE	19.1%	18.3%
Cost to Income Ratio	44.4%	48.5%
Net Interest Margin	7.9%	7.8%
Tier I Capital Adequacy Ratio (BIS)⁸	22.0%	19.9%
Total Capital Adequacy Ratio (BIS)⁸	27.0%	28.5%
NBG Tier I Capital Adequacy Ratio⁹	13.8%	10.5%
NBG Total Capital Adequacy Ratio⁹	16.2%	16.2%
EPS (GEL)	5.22	4.44
Loan portfolio growth	18.2%	10.6%

¹ Compared to the respective period in 2011; growth calculations based on GEL values

² Revenue includes net interest income, net fee and commission income, net insurance revenue, net healthcare revenue and other operating non-interest income

³Operating expenses equal operating non-interest expenses

⁴ Cost of credit risk includes impairment charge (reversal of impairment) on: loans to customers, finance lease receivables and other assets

⁵Net loans equal to net loans to customers and finance lease receivables

⁶ Customer funds equal amounts due to customers

⁷Leverage (Times) equals Total Liabilities divided by Total Equity

⁸ BIS Tier I Capital Adequacy Ratio equals consolidated Tier I capital as of the period end divided by total consolidated risk weighted assets as of the same date. BIS total capital equals total consolidated capital as of the period divided by total consolidated risk weighted assets. Both ratios calculated in accordance with the requirements of Basel Accord I

⁹ NBG Tier I Capital and Total Capital Adequacy ratios calculated in accordance with the requirements of the National Bank of Georgia (NBG)

DISCUSSION OF RESULTS

This summary compares the financial results for the year ended 31 December 2012 to the comparable period in 2011.

Revenue

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y
		Audited
Loans to customers	509,339	438,989		16.0%
Investment securities¹¹	33,950	37,701		-9.9%
Amounts due from credit institutions	15,813	18,103		-12.6%
Finance lease receivables	8,701	6,565		32.5%
Interest income	567,803	501,358		13.3%
Amounts due to customers	(202,484)	(167,294)		21.0%
Amounts due to credit institutions	(79,492)	(99,763)		-20.3%
Interest expense	(281,976)	(267,057)		5.6%
Net interest income before interest rate swaps	285,827	234,301		22.0%
Net (losses) gains from derivative financial instruments	(1,710)	4,984		NMF
Net interest income	284,117	239,285		18.7%
Fee and commission income	109,278	93,541		16.8%
Fee and commission expense	(22,791)	(18,204)		25.2%
Net fee and commission income	86,487	75,337		14.8%
Net insurance premiums earned	91,176	46,396		96.5%
Net insurance claims incurred	(57,038)	(28,658)		99.0%
Net insurance revenue	34,138	17,738		92.5%
Healthcare revenue	54,376	5,700		NMF
Cost of healthcare services	(31,030)	(3,242)		NMF
Net healthcare revenue	23,346	2,458		NMF
Net gain from trading and investment securities	2,308	1,382		67.0%
Net gain from revaluation of investment property	-	1,984		-100.0%
Net gain from foreign currencies	49,571	51,385		-3.5%
Other operating income	18,288	19,128		-4.4%
Other operating non-interest income	70,167	73,879		-5.0%
Revenue adjusted for gain from BYR hedge	498,255	408,697		21.9%
Gain from BYR hedge	-	25,056		-100.0%
Revenue	498,255	433,753		14.9%

¹¹Investment securities primarily consist of Georgian government treasury bills and bonds and National Bank of Georgia's Certificates of deposits (CDs)

The Bank maintained strong growth momentum across all main revenue items in 2012, delivering a record revenue of GEL 498.3 million, up 14.9% year-on-year. The key driver of solid revenue growth was net interest income, which increased by 18.7% to GEL 284.1 million as a result of growing interest earning assets and largely stable loan yields coupled with lower funding costs. A rapid expansion of the Bank's insurance and healthcare businesses, as a result of a combination of organic growth and acquisitions also boosted net insurance and net healthcare revenues and the two businesses together contributed 11.5% to the consolidated revenue in 2012, compared to 4.7% in 2011.

The 22.0% growth in net interest income before interest rate swaps, to GEL 285.8 million, was a result of a 13.3% increase in interest income and slower growth of interest expense, which grew at 5.6%, or less than half the interest income growth rate. Interest income growth was primarily driven by the healthy growth of the loan book on the back of stable loan yields maintained at 17.5% in 2012, compared to 17.6% in 2011. The reduction in the cost of funds from 8.0% in 2011 to 7.3% in 2012, reflected reduced deposit costs and the partial repayment of costly international borrowings following the Eurobond issuance in July 2012. Cost of funds to credit institutions were down by 161 basis points to 7.2% in 2012, as a result of targeted liability management throughout the year. Reflecting continued discipline with deposit pricing, the cost of client deposits declined from 7.6% in 2011 to 7.3% in 2012, while average customer funds increased by 25.0% during the year, which in turn resulted in a 21.0% increase in interest expense due to customers.

The Net Interest Margin (NIM) in the second half of the year remained broadly flat at 7.9%, despite the impact of the carrying cost of the Eurobond issued in July 2012.

Net Interest Margin

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y

Net interest income	284,117	239,285		18.7%
Net Interest Margin	7.9%	7.8%		1.3%
Average interest earning assets¹⁰	3,614,921	3,082,850		17.3%
Average interest bearing liabilities¹⁰	3,904,874	3,292,724		18.6%
Average customer funds outstanding	2,772,597	2,217,275		25.0%

¹⁰Monthly averages are used for calculation of average interest earning assets and average interest bearing liabilities

In a positive shift towards diversifying revenue sources, net non-interest income grew 26.4% in 2012 and amounted to 43.0% of total revenue compared to 41.5% in 2011(excluding the effects of one-off gains from the Belarusian currency hedge in 2011). Net insurance revenue almost doubled from GEL 17.7 million to GEL 34.1 million, net healthcare revenue grew nearly tenfold to GEL 23.3 million, and net fee and commission income increased from GEL 75.3 million to GEL 86.5 million. Adjusted for the impact of the last year's one-off currency (Belarusian Ruble) hedge gains, total revenue increased by 21.9% y-o-y.

Net fee and commission income

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y
		Audited
Fee and commission income	109,278	93,541		16.8%
Fee and commission expense	(22,791)	(18,204)		25.2%
Net fee and commission income	86,487	75,337		14.8%

An increase in the level of economic activity in 2012 had a positive effect on clients' activity across all lines of settlement operations, including the Bank's card business operations, guarantees and letters of credit and cash operations. The growth of our Express banking service, through which the Bank delivers extremely cost-effective self-service transactional and remote banking facilities, has supported strong growth in banking operations. As a result, net fee and commission income, grew 14.8% to GEL 86.5 million in 2012.

Net insurance revenue and net healthcare revenue

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y
		Audited
Net insurance premiums earned	91,176	46,396		96.5%
Net insurance claims incurred	(57,038)	(28,658)		99.0%
Net insurance revenue	34,138	17,738		92.5%
Healthcare revenue	54,376	5,700		NMF
Cost of healthcare services, of which:	(31,030)	(3,242)		NMF
Salaries and other employee benefits	(21,602)	(2,021)		NMF
Other operating expenses	(9,428)	(1,221)		NMF
Net healthcare revenue	23,346	2,458		NMF

Aldagi BCI had an eventful year in terms of M&A activity and delivered a record earnings performance becoming the undisputed leader in the Georgian insurance market. In May 2012, Aldagi BCI acquired Georgia's third largest insurance company, Imedi L International (Imedi L). The acquisition, along with the organic growth of Aldagi BCI, led to the excellent growth of our insurance businesses, which in turn translated into strong growth of the insurance policy portfolio. As a result, net insurance revenue nearly doubled in 2012 to GEL 34.1 million and contributed 6.9% to the total revenue of the Group compared to just 4.3% in 2011 revenue (adjusted for BYR hedge). The increase in net insurance claims mostly reflected the acquisition of Imedi L.

The growth of the healthcare business, following the expansion of healthcare operations by Aldagi BCI as a result of recent acquisitions, led to a tenfold growth in net healthcare revenue to GEL 23.3 million in 2012. The share of healthcare business to total revenue (adjusted for BYR hedge) increased from 0.6% in 2011 to 4.7% in 2012.

Other operating non-interest income

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y
		Audited
Net gain from trading and investment securities	2,308	1,382		67.0%
Net gain from revaluation of investment property	-	1,984		-100.0%
Net gain from foreign currencies	49,571	51,385		-3.5%
Other operating income*	18,288	19,128		-4.4%
Other operating non-interest income adjusted for gain from BYR hedge	70,167	73,879		-5.0%
Gain from BYR hedge	-	25,056		-100.0%
Other operating non-interest income	70,167	98,935		-29.1%

*Other operating income includes Net revenue from sale of goods of the Bank's non-banking subsidiaries

Other operating non-interest income, adjusted for one-off gains from the BYR currency hedge, decreased 5.0% to GEL 70.2 million, as a result of a 3.5% decline in net gain from foreign currencies reflecting the slowdown in economic activity in the second half of 2012 and a 4.4% decrease in other operating income. Affordable Housing and the Bank's non-core segments contributed GEL 4.4 million and GEL 9.6 million respectively to other operating income in 2012. Overall, other operating non-interest income declined by 29.1% y-o-y, due to the one-off gain of GEL 25.1 million on the BYR currency hedge in 2011.

Net operating income, cost of credit risk, profit for the period

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y
		Audited
Salaries and other employee benefits	(122,556)	(114,622)		6.9%
General and administrative expenses	(67,041)	(61,942)		8.2%
Depreciation and amortization expenses	(28,606)	(27,254)		5.0%
Other operating expenses	(2,949)	(6,347)		-53.5%
Operating non-interest expenses	(221,152)	(210,165)		5.2%
Operating income before cost of credit risk	277,103	223,588		23.9%
Impairment charge on loans to customers	(39,186)	(23,216)		68.8%
Impairment charge on finance lease receivables	(495)	(317)		56.2%
Impairment reversal (charge) on other assets and provisions	(5,036)	1,337		NMF
Cost of credit risk	(44,717)	(22,196)		101.5%
Net operating income	232,386	201,392		15.4%
Net non-operating expense	(19,634)	(29,338)		-33.1%
Profit before income tax expense	212,752	172,054		23.7%
Income tax expense	(33,200)	(21,125)		57.2%
Profit from continuing operations	179,552	150,929		19.0%
Net loss from discontinued operations	-	(15,219)		-100.0%
Profit	179,552	135,710		32.3%

The Bank successfully continues to deliver positive operating leverage on an ongoing basis. During 2012, the Bank's operating non-interest expenses increased by 5.2% to GEL 221.2 million, significantly lagging the revenue growth rate of 14.9%. Adjusted for the one-off currency hedge gain in 2011, operating leverage was 16.7% in 2012. The increase in expenses primarily reflected a 6.9% increase in salaries and other employee benefits as a result of the Bank's headcount growth to service Bank of Georgia's and its subsidiaries' increased revenue base over the last twelve months. General and administrative expenses for the reporting period grew by 8.2% to GEL 67.0 million, which included expenditure on new branches, distribution channels such as ATMs and self-service terminals, and marketing costs. The Cost to Income ratio improved further to 44.4% in 2012 from 48.5%, benefiting from ongoing cost efficiency measures undertaken by the Bank. When adjusted for the one-off revenue gains in 2011, the Cost to Income ratio improved substantially from 51.4% adjusted for BYR hedge gains to 44.4%, reflecting significant underlying cost efficiency improvements.

The Bank's operating income before the cost of credit risk increased by 23.9%, to GEL 277.1 million.

The cost of credit risk increased by GEL 22.5 million to GEL 44.7 million in 2012, reflecting the absence of the previous year's recoveries, the increase in the retail banking impairment charge as a result of job reductions made in a large payroll client during the first half of the year and the increase in the corporate banking cost of risk in the second half of the year, predominantly due to provisions attributed to a single corporate client in Q4 2012. In Q4 2012, an impairment charge of GEL14.2 million (increasing respective allowance for losses to 50% of total balance sheet exposure) was recognised in respect to one of the larger corporate clients of the Bank in the infrastructure sector, with a total exposure of GEL 58.8 million, of which GEL 36.2 million comprises of a loan and GEL 22.6 million off-balance sheet guarantee. Bankruptcy procedures have been initiated against the borrower, and while the Bank expects to be able to recover the un-provisioned amount of the loan from the borrower's assets (including pledged collateral) in the bankruptcy proceeding it will continue to assess objective evidence of further impairment of the overall exposure in 2013. These factors that negatively affected the cost of risk were partially offset by the effects of a change in the methodology for provisioning non-specific risks in the loan portfolio. The loss experience used to determine the appropriate general risk provision was changed from seven years to three years in Retail banking in 2012. As a result of the changes, Retail Banking NPL coverage ratio decreased from 222.5% in Q3 2012 to 143.0% at the end of Q4 2012. As a result of the foregoing, in 2012 cost of risk amounted to 1.3%, up from 0.9% in 2011. The allowance for loan impairment was GEL 110.5 million or 3.5% of total gross loans as of 31 December 2012, compared to 4.2% as of 31 December 2011.

The Bank's non-performing loans (NPLs increased to GEL 126.3 million as of 31 December 2012 from GEL 100.3 million a year earlier, reflecting the addition of the above-mentioned corporate client. NPLs are defined as the principal and interest on loans overdue for more than 90 days any additional losses estimated by management. The Bank's NPLs to total gross loans ratio stood at 3.9% as of 31 December 2012, up from 3.7% a year ago, while NPL coverage ratio was at 87.5% at the year end.

The Bank's net operating income totalled GEL 232.4 million, up 15.4% year-on-year. Adjusted for the one-off gain in 2011, the net operating income in 2012 was up 31.8% y-o-y. In 2012, the Bank's net non-operating expenses declined to GEL 19.6 million from GEL 29.3 million in 2011. The non-operating expenses in 2012 were largely incurred for the purposes of tender offer and premium listing.

As a result of the foregoing, profit before income tax from continuing operations in 2012 totalled GEL 212.8 million, an increase of GEL 40.7 million, or 23.7% y-o-y. After income tax expense of GEL 33.2 million, the Bank's profit for the period stood at GEL 179.6 million, up by GEL 28.6 million, or 19.0%, while profit for the period adjusted for the net loss from discontinued operations in 2011, grew 32.3% y-o-y to GEL 179.6 million.

Balance Sheet highlights

As of 31 December 2012, the Bank's total assets stood at GEL 5,655.6 million, an increase of 21.2% since 31 December 2011. The annual growth in total assets reflects a strong growth in net loan book, which increased by GEL 476.0 million or 18.2%. On a constant currency basis, the net loan book grew by 19.2%.

The Bank's liquid assets, comprised of high quality assets including National Bank CDs, Georgian government treasury bills and bonds and interbank deposits and cash and cash equivalents, grew by 21.3% to GEL 1,624.3 million at 31 December 2012. The funds raised as a result of the Eurobond issuance by JSC Bank of Georgia in July 2012 contributed to the significant increase in the liquidity pool.

The growth of the loan book over the last twelve months was driven by a 10.4% increase in retail banking lending to GEL 1,348.3 million and a 23.1% increase in corporate banking lending to GEL 1,696.3 million. Loans denominated in foreign currencies (primarily in US$) accounted for 68.4% of the Bank's net loan book as of 31 December 2012, compared to 69.6% as of 31 December 2011 and 69.5% as of 30 September 2012.

Total liabilities amounted to GEL 4,596.1 million, up 19.3% year-to-date, driven by the growth in borrowed funds, up 42.0% to GEL 1,225.8 million as a result of the Eurobond issued in July 2012. The Bank's average customer funds grew 25.0% to GEL 2,772.6 million during the year, while the deposit rate cuts throughout the year led to a reduction of the more costly GEL denominated deposit base, bringing period end customer funds down by 1.5%, compared to last year, to GEL 2,693.0 million as of 31 December 2012. The planned deposit repricing resulted in the further reduction in the Cost of Client Deposits to 6.6% in Q4 2012, compared to 8.2% in Q4 2011 and 7.1% in Q3 2012. Correspondingly, the resulting outflow of the more costly GEL denominated deposits, increased the level of client deposits denominated in foreign currency to 68.7% of the Bank's client deposits as of 31 December 2012, from 59.1% as of 31 December 2011.

Shareholders' equity totalled GEL 1,059.5 million, a 16.3% increase since 28 February 2012, when Bank of Georgia Holdings PLC acquired 98.3% of the entire issued capital of JSC Bank of Georgia as a result of the Tender Offer (tender offer by BGH to Bank of Georgia shareholders as announced in December 2011 and completed in February 2012). Shareholders' equity increased by GEL 246.9 million compared to JSC Bank of Georgia's shareholders' equity as of 31 December 2011, the increase reflecting the inclusion of the current year's profit and the conversion of loan notes by EBRD and IFC into shareholders' equity in February 2012.

The Bank's Book Value per share on 31 December 2012 stood at GEL 30.33 (US$18.31/GBP11.38) compared to GEL 28.81/(US$17.36/GBP10.72) as of 30 September 2012 and GEL 25.98 (US$15.55/GBP10.08) as of 31 December 2011.

Liquidity, Funding and Capital Management

			Change		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11	Y-O-Y	30 Sep 12	Q-O-Q
		Audited
Amounts due to credit institutions, of which:	1,657,162	921,172	79.9%	1,454,045	14.0%
Borrowed funds	1,225,793	863,004	42.0%	1,091,314	12.3%
Inter-bank loans and deposits	431,369	58,168	NMF	362,731	18.9%
Customer Funds	2,693,025	2,735,222	-1.5%	2,795,794	-3.7%
Client deposits	2,622,911	2,554,084	2.7%	2,688,540	-2.4%
Promissory notes	70,114	181,138	-61.3%	107,254	-34.6%
Net Loans / Customer Funds	114.8%	95.7%		109.6%
Liquid assets	1,624,317	1,338,952	21.3%	1,530,830	6.1%
Liquid assets as percent of total assets	28.7%	28.7%		27.7%
Liquid assets as percent of total liabilities	35.3%	34.8%		33.8%
NBG liquidity ratio	41.1%	37.8%		42.0%

The Bank continues to maintain a strong liquidity position, considerably in excess of conservative regulatory requirements. The liquidity ratio, as per requirements of the National Bank of Georgia, stood at 41.1% against the required minimum of 30%, while liquid assets, comprised of cash and cash equivalents, investment securities consisting of National Bank of Georgia CDs, government treasury bills and bonds and interbank deposits accounted for 28.7% of total assets and 35.3% of total liabilities as of the end of December 2012.

The composition of the Bank's balance sheet reflects its aim to maintain a diversified funding base, while optimising funding costs. Customer lending was largely funded by customer deposits as the increase of the average client loans by GEL 426.0 million in 2012 compares to the increase of average customer funds/deposits by GEL 555.3 million. The strong trend of client deposit inflows in the first half of year was reversed in the second of 2012, as reduced deposit pricing led to lower customer account balances of corporate clients in particular in Q4 2012. The change in the funding structure also reflected the issuance of the Eurobond in July 2012, resulting in the increase of the Bank's Net Loans to Customer Funds ratio to 114.8% from 109.6% in Q3 2012 and 95.7% in Q4 2011. Net Loans to Customer Funds and Long-Term IFI Funding Ratio was 91.9% as of 31 December 2012 (72.7% in 2011), as the Bank's borrowed funds predominantly comprised of long-term borrowing from International Financial Institutions, which accounted for 54.9% of the Bank's borrowed funds and 14.6% of total liabilities.

Capital Adequacy BIS			Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11	Y-O-Y
		Audited
Ordinary shares	36,513	32,878	11.1%
Share premium	608,546	473,732	28.5%
Retained earnings	408,538	257,767	58.5%
Tier I capital	1,053,597	764,377	37.8%
General loan loss provisions	59,823	47,993	24.6%
Revaluation reserves	13,717	14,478	-5.3%
Subordinated debt	211,591	317,830	-33.4%
Tier II capital	285,132	380,301	-25.0%
Deductions from capital	(46,121)	(49,341)	-6.5%
Total Capital	1,292,608	1,095,337	18.0%
Risk-weighted assets	4,785,870	3,839,462	24.6%
Tier I capital adequacy ratio (BIS)	22.0%	19.9%	2.1%
Total capital adequacy ratio (BIS)	27.0%	28.5%	-1.5%

Regulatory Capital and Capital Adequacy NBG			Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11	Y-O-Y
		Audited
Ordinary shares	36,049	29,731	21.2%
Share premium	555,903	460,737	20.7%
Retained earnings	188,749	62,836	200.4%
Less: Intangible Assets	(40,821)	(41,066)	-0.6%
Tier I capital	739,880	512,238	44.4%
Current year profit	134,349	152,835	-12.1%
General loan loss provisions	63,827	54,871	16.3%
Subordinated debt	191,509	256,119	-25.2%
Tier II capital	389,685	463,825	-16.0%
Deductions from capital	(262,616)	(184,323)	42.5%
Total Capital	866,949	791,740	9.5%
Risk-weighted assets	5,352,187	4,872,931	9.8%
Tier I capital adequacy ratio (NBG)	13.8%	10.5%	3.3%
Total capital adequacy ratio (NBG)	16.2%	16.2%	-

The Bank ended the year with an extremely strong capital position with robust Tier I ratio (BIS) of 22.0%. This is a further improvement from the 19.9% Tier I Capital of JSC Bank of Georgia in 2011.

Risk weighted assets increased 24.6% to GEL 4,785.9 million, reflecting the increase in interest earning assets during the year, while Tier 1 Capital (BIS) increased by GEL 289.2 million, of which GEL 150.8 million was generated by retained profits and GEL 73.9 million was due to the conversion of the EBRD and IFC subordinated and convertible loans into JSC Bank of Georgia's equity, subsequently acquired by BGH upon the completion of Tender Offer. Total capital resources increased by GEL 197.3 million.

SEGMENT RESULTS

Strategic Businesses Segment Result Discussion

Segment result discussion is presented for the Bank of Georgia's retail banking (RB), corporate banking (CB) and wealth management (WM) operations in Georgia, excluding inter-company eliminations.

Retail banking

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y

Net interest income	174,360	144,396		20.8%
Net fee and commission income	53,563	49,512		8.2%
Net gain from foreign currencies	14,985	12,992		15.3%
Other operating non-interest income	3,365	3,996		-15.8%
Revenue	246,273	210,896		16.8%
Operating non-interest expenses	(109,041)	(107,936)		1.0%
Operating income before cost of credit risk	137,232	102,960		33.3%
Cost of credit risk	(12,482)	2,575		NMF
Net non-operating expense	(6,828)	(6,224)		9.7%
Profit before income tax expense	117,922	99,311		18.7%
Income tax expense	(16,392)	(9,582)		71.1%
Profit from continuing operations	101,530	89,729		13.2%
Net loss from discontinued operations	-	(7,183)		-100.0%
Profit	101,530	82,546		23.0%
Net loans, standalone	1,348,331	1,221,443		10.4%
Client deposits, standalone	816,709	707,136		15.5%
Loan yield	21.4%	21.0%
Cost of deposits	6.1%	6.7%
Cost / income ratio	44.3%	51.2%

Retail banking provides consumer loans, mortgage loans, overdrafts, credit card facilities and other credit facilities as well as funds transfer and settlement services and handling customer deposits for both individuals and legal entities, encompassing the mass affluent segment, retail mass markets, SME and micro businesses.

In 2012, retail banking revenue grew 16.8% y-o-y to GEL 246.3 million, driven by a 20.8% increase in net interest income to GEL 174.4 million reflecting the strong growth of the retail net loan book, which increased by GEL 126.9 million to GEL 1,348.3 million. Loan yields increased by 36 basis points to 21.4% y-o-y, while cost of deposits decreased from 6.7% in 2011 to 6.1% in 2012, reflecting the Bank's leadership in Georgia's retail segment. Net fees and commission income increased by 8.2% to GEL 53.6 million as a result of a growth of the Bank's card operations, boosted by the launch of the Bank's Express Banking franchise, while net gains from foreign currencies were up 15.3% to GEL 15.0 million.

In 2012, retail banking again reported strong positive operating leverage, with the expenses growth rate of 1.0% lagging significantly behind retail revenue growth of 16.8%. Increased efficiencies of scale, supported by the build-out of the Bank's Express banking franchise and prudent cost control measures, resulted in a markedly improved retail banking Cost to Income ratio, which was 44.3% in 2012 compared to 51.2% in 2011. As a result of the foregoing, operating income before cost of credit risk grew by 33.3% to GEL 137.2 million.

The Cost of credit risk of GEL 12.5 million was largely attributed to the consumer and credit card portfolio, reflecting provisions and impairments on credit card and consumer loan balances of employees of a large payroll client that implemented a significant layoff during the year. Retail banking profit before income tax expense amounted to GEL 117.9 million, an increase of 18.7%.

Deposits from retail clients increased by GEL 109.6 million, or 15.5% to GEL 816.7 million as of 31 December 2012 despite interest rate reductions that led to a decrease in the cost of retail deposits by 66 basis points to 6.1% in 2012. In Q4 2012, retail client deposits increased 9.6% q-o-q. US$ denominated deposits amounted to 69.4% of retail deposits, down from 73.2% in 2011.

Highlights

§ Under its Express banking strategy, launched contactless Express cards for the first time in Georgia. Express cards also serve as a metro and bus transport contactless payment card and offer loyalty programmes to clients. Since the launch on 5 September 2012, 193,007 Express cards have been issued as of the date of this report.

§ Increased its branch network, adding 30 Express branches since 31 December 2011 bringing the total Express branches and Metro branches to 63 (of which 24 Metro branches).

§ Increased number of Self Service Terminals from 99 to 221 as of 31 December 2012. Self Service Terminals are used for bank transactions such as credit card and consumer loan payments, cash deposits, utility bill payments and mobile telephone top-ups.

§ Issued 151,991 debit cards, including Express cards, in Q4 2012 bringing the total debit cards outstanding to 718,239 up 34.2% y-o-y.

§ Issued 20,167 credit cards of which 18,346 were American Express cards in Q4 2012. A total of 156,385 American Express cards have been issued since the launch in November 2009. The total number of active credit cards outstanding amounted to 107,261 (of which 94,591 were American Express Cards).

§ Outstanding number of Retail Banking clients totalled 1,054,248 up 18.6% y-o-y.

§ Acquired 855 new clients in the Solo business line, the Bank's mass affluent sub-brand in Q4 2012. As of 31 December 2012, the number of Solo clients reached 5,413.

§ Increased Point of Sales (POS) footprint: as of 31 December 2012, 231 desks at 474contracted merchants, up from 179 desks and 369 merchants as of 31 December 2011. GEL 56.4 million POS loans were issued in 2012, compared to GEL 40.1 million POS loans issued in 2011. POS loans outstanding amounted to GEL 30.5 million, up from GEL 24.7 million as of 31 December 2011.

§ POS terminals outstanding reached 3,725, up 31.7% y-o-y. The volume of transactions through the Bank's POS terminals grew 36.5% y-o-y to GEL 336.8 million, while number of POS transactions increased by 1.4 million in 2012 from 3.0 million to 4.4 million.

§ Consumer loan originations of GEL 434.5 million resulted in consumer loans outstanding totalling of GEL 350.5 million as of 31 December 2012 up 21.6% year-to-date.

§ Micro loan originations of GEL 339.6 million resulted in micro loans outstanding totalling GEL 257.8 million as of 31 December 2012, up 5.4% year-to-date.

§ SME loan originations of GEL 151.1 million resulted in SME loans outstanding totalling GEL 106.6 million as of 31 December 2012, up 44.1% year-to-date.

§ Mortgage loans originations of GEL 132.4 million resulted in mortgage loans outstanding of GEL 388.7 million as of 31 December 2012, up 3.6% year-to-date.

§ RB loan yield amounted to 21.3% in Q4 2012 (20.3% in Q4 2011) and RB deposit cost declined to 5.8% in Q4 2012 (6.8% in Q4 2011).

Corporate banking

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y

Net interest income	92,276	77,900		18.5%
Net fee and commission income	28,701	20,559		39.6%
Net gain from foreign currencies	29,819	27,383		8.9%
Other operating non-interest income	3,996	5,275		-24.2%
Revenue	154,792	131,117		18.1%
Operating non-interest expenses	(51,323)	(56,282)		-8.8%
Operating income before cost of credit risk	103,469	74,835		38.3%
Cost of credit risk	(29,490)	(21,553)		36.8%
Net non-operating expense	(8,415)	(6,318)		33.2%
Profit before income tax expense	65,564	46,964		39.6%
Income tax expense	(9,936)	(4,896)		102.9%
Profit from continuing operations	55,628	42,068		32.2%
Net loss from discontinued operations	-	(7,807)		-100.0%
Profit	55,628	34,261		62.4%
Net loans, standalone	1,696,325	1,378,147		23.1%
Client deposits, standalone	1,148,913	1,383,983		-17.0%
Loan yield	13.9%	14.4%
Cost of deposits	7.2%	7.1%
Cost / income ratio	33.2%	42.9%

Corporate banking business in Georgia comprises of loans and other credit facilities to the country's large corporate clients as well as other legal entities, excluding SME and micro businesses. The services include fund transfers and settlements services, currency conversion operations, trade finance services and documentary operations as well as handling savings and term deposits for corporate and institutional customers. Corporate banking business also includes finance lease facility provided by the Bank's leasing operations (Georgian Leasing Company).

The 18.1% growth of corporate banking revenue during 2012 was driven by an 18.5% growth in net interest income to GEL 92.3 million and strong growth of net fees and commission income, up by 39.6% to GEL 28.7 million, in line with the Bank's focus on further developing its fee generating business for corporate clients. Net gains from foreign currencies rose to GEL 29.8 million, or 8.9% y-o-y, reflecting the increase in volumes of foreign currency conversions by the Bank's corporate clients. Further improvements in operating efficiency resulted in an 8.8% decline in corporate banking operating costs to GEL 51.3 million, translating into an improved corporate banking Cost to Income ratio of 33.2%, down from 42.9% in 2011.

As described above, in 2012, the corporate banking cost of credit risk increased to GEL 29.5 million from GEL 21.6 million in 2011As a result of its strong positive operating leverage, corporate banking posted profit before income tax expense of GEL 65.6 million, an increase of 39.6%.

Corporate banking net loans increased by GEL 318.2 million, or 23.1%, to GEL 1,696.3 million during the period, while corporate banking client deposits decreased by 17.0% to GEL 1,148.9 million. Aggressive corporate deposit pricing during the year resulted in the targeted ouflow of costly Lari denominated deposits which in turn led to the reduction of corporate cost of deposits to 6.2% in Q4 2012, which has not been fully reflected in the full year ratio. US$ denominated deposits amounted to 50.2% of corporate deposits, up from 38.4% in 2011.

Highlights

§ The slight increase in corporate banking deposit cost is attributed to the strong inflow of costly GEL denominated deposits in Q4 2011 and Q1 2012. The subsequent reduction of the deposit rates has been partially reflected in Q4 2012 corporate banking deposit costs, which came down to 6.2% in Q4 2012 from 8.3% in Q1 2012 to 7.3% in Q2 2012 and 6.8% in Q3 2012.

§ Corporate banking loan yield amounted to 13.9% in 2012 (14.4% in 2011) and Corporage banking deposit cost amounted to 7.2% (7.1% in 2011).

§ Increased the number of corporate clients using the Bank's payroll services from 2,387 as of 31 December 2011 to 3,429 as of 31 December 2012. As of 31 December 2012, the number of individual clients serviced through the corporate payroll programmes administered by the Bank amounted to 204,629.

§ Since its launch in June 2012, Bank of Georgia Research has initiated research coverage of Georgian Electricity Sector, Georgian Oil and Gas Corporation, Georgian Railway, and issued notes on Georgian State Budget and the Tourism Sector as of the date of this report. The Bank of Georgia research platform is aimed at supporting the growth of CB's fee generating business.

§ Substantially increased the aggregate trade finance limits from international partner credit institutions from US$178.4 million equivalent to US$308.8 million diversified across different currencies (US$, EUR, CHF). The number of partner credit institutions that opened trade finance lines with the Bank increased from 10 to 14.

Asset and Wealth Management

	Year end		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y

Net interest income	12,644	6,000		110.7%
Net fee and commission income	523	604		-13.4%
Net gain from foreign currencies	682	740		-7.8%
Other operating non-interest income	73	24		NMF
Revenue	13,922	7,368		89.0%
Operating non-interest expenses	(4,665)	(3,967)		17.6%
Operating income before cost of credit risk	9,257	3,401		172.2%
Cost of credit risk	727	87		NMF
Net non-operating expense	(305)	(197)		54.8%
Profit before income tax expense	9,679	3,291		194.1%
Income tax expense	(1,339)	(318)		NMF
Profit from continuing operations	8,340	2,973		180.5%
Net loss from discontinued operations	-	(229)		-100.0%
Profit	8,340	2,744		198.9%
Net loans, standalone	38,644	35,774		8.0%
Client deposits, standalone	605,183	454,178		33.2%
Loan yield	11.3%	12.7%
Cost of deposits	8.9%	9.9%
Cost / income ratio	33.5%	53.8%

The Bank's wealth management business provides private banking services to resident and non-resident clients by ensuring an individual approach and exclusivity in providing banking services such as holding the clients' savings and term deposits, fund transfers, currency exchange and settlement operations. In addition, wealth management involves providing wealth and asset management services to its clients through a wide range investment opportunities and specifically designed investment products.

In 2012, net interest income from wealth management more than doubled to GEL 12.6 million translating into a 89.0% y-o-y growth in revenue to GEL 13.9 million. Profit before income tax expense of the wealth management business grew from GEL 3.3 million in 2011 to GEL 9.7 million, as a result of considerably higher revenue growth compared to operating costs, which increased 17.6% to GEL 4.7 million. Client deposits of the wealth management business grew by GEL 151.0 million, or 33.2%, to GEL 605.2 million.

Highlights

§ Expanded the representative office network by opening its third representative office for Eastern Europe, in Budapest, in September 2012.

§ The Asset and Wealth Management (AWM) business currently serves over 1,300 clients from more than 60 countries. Client funds attracted by AWM have grown more than three times since the end of 2009 to GEL 605.2 million as of 31 December 2012, of which approximately GEL 100 million has been attracted from clients in Hungary.

§ Bank of Georgia started a Certificates of Deposit (CD) Programme in December 2012 (official launch January 2013). Certificates of Deposit are tradable securities offering attractive yields to investors in both Local and Foreign currencies. CDs can be traded through both the Bank treasury department (Bid and Offer is published on the following link: http://bankofgeorgia.ge/ge/services/treasury-operations/deposit-certificates), and any authorised third party. The CD Programme is expected to further contribute to both expanding the client base and efficient liquidity management for the Bank.

Synergistic Businesses

Insurance and Healthcare (Aldagi BCI)

	Year ended 31 Dec 2012				Year ended 31 Dec 2011				Change, Y-O-Y
GEL thousands, unless otherwise noted	Insurance	Healthcare	Eliminations	Total	Insurance	Healthcare	Eliminations	Total	Insurance	Healthcare	Total
Gross premiums written	127,922	-	-	127,922	61,845	-	-	61,845	106.8%	-	106.8%
Net interest income (expense)	1,825	(6,481)	-	(4,656)	(249)	(143)	-	(392)	NMF	NMF	NMF
Net fee and commission expenses	(107)	-	-	(107)	-	-	-	-	-	-	-
Net insurance revenue	29,661	-	6,422	36,083	17,725	-	1,900	19,625	67.3%	-	83.9%
Net healthcare revenue (loss)	-	29,768	(6,422)	23,346	-	4,358	(1,900)	2,458	-	NMF	NMF
Net gain (loss) from foreign currencies	238	(1,090)	-	(852)	(779)	-	-	(779)	NMF	-	9.4%
Other operating non-interest income	1,000	257	(209)	1,048	1,294	802	-	2,096	-22.7%	-68.0%	-50.0%
Revenue	32,617	22,454	(209)	54,862	17,991	5,017	-	23,008	81.3%	NMF	138.4%
Operating non-interest expenses	(17,437)	(17,917)	209	(35,145)	(12,382)	(3,582)	-	(15,964)	40.8%	NMF	120.2%
Operating income before cost of credit risk	15,180	4,537	-	19,717	5,609	1,435	-	7,044	170.6%	NMF	179.9%
Cost of credit risk	(1,502)	(802)	-	(2,304)	(1,885)	-	-	(1,885)	-20.3%	-	22.2%
Net non-operating income	-	440	-	440	702	1,402	-	2,104	-100.0%	-68.6%	-79.1%
Profit before income tax expense	13,678	4,175	-	17,853	4,426	2,837	-	7,263	NMF	47.2%	145.8%
Income tax expense	(2,068)	(242)	-	(2,310)	(702)	(43)	-	(745)	194.6%	NMF	NMF
Profit from continuing operations	11,610	3,933	-	15,543	3,724	2,794	-	6,518	NMF	40.8%	138.5%
Net gain from discontinued operations	-	-	-	-	-	-	-	-	-	-	-
Profit	11,610	3,933	-	15,543	3,724	2,794	-	6,518	NMF	40.8%	138.5%
Cost / income ratio	53.5%	79.8%		64.1%	68.8%	71.4%		69.4%

Aldagi BCI, the Bank's wholly-owned subsidiary, provides life and non-life insurance and healthcare products and services in Georgia. A leader in the Georgian life and non-life insurance markets, with a market share of 33.5% based on gross insurance premium revenue, Aldagi BCI cross-sells its insurance products with the Bank's retail banking, corporate banking and wealth management products. Aldagi BCI's healthcare business consists of My Family Clinic, Georgia's leading healthcare provider, operating a chain of healthcare centers in Georgia, in line with the Bank's strategy of vertically integrating its insurance and healthcare businesses.

In 2012, insurance and healthcare revenue increased to GEL 54.9 million from GEL 23.0 million in 2011, reflecting the growth of both the insurance and healthcare businesses through organic growth as well as through recent acquisitions, mainly Imedi L in May 2012. The Bank's insurance business doubled gross premiums written during the period and saw improvements in insurance claims management as a result of the successful integration of Imedi L Insurance. Operating costs growth of 40.8% y-o-y compares to a 81.3% growth of revenue, resulting in a strong increase of 170.6% in operating income before the cost of credit risk of the insurance operation. Net healthcare revenue grew from GEL 5.0 million in 2011 to GEL 22.5 million in 2012, driving the significant growth of operating income before cost of risk in the healthcare business from GEL 1.4 million to GEL 4.5 million in 2012.

As a result, Aldagi BCI posted revenue of GEL 54.9 million, up 138.4%, and profit before tax of GEL 17.9 million, up 145.8%. Excluding inter-company eliminations, the year-end profit of Aldagi BCI on a standalone basis amounted to GEL 16.4 million.

Highlights

§ Completed the integration of business with Imedi L within three months of its acquisition.

§ Increased market share by Gross insurance premium revenue to 33.5% as of 30 Sep 2012 from 20.0% at the end of December 2011.

§ Increased number of insurance clients from 220,000 as of end of December 2011 to 607,000 as of 31 December 2012.

§ As of Q4 2012, Aldagi BCI operated 22 hospitals with a total of 919 beds.

§ In October 2012, Murtaz Kikoria replaced Nikoloz Gamkrelidze as Chief Executive Officer of Aldagi BCI. Prior to this appointment, Murtaz Kikoria served as Deputy CEO, Finance at JSC Bank of Georgia.

Affordable Housing

		Year ended
GEL thousands, unless otherwise noted	31 December 2012				31 December 2011			Change, Y-O-Y, %
	SBRE		Mortgages	Total	SBRE	Mortgages	Total	SBRE	Mortgages	Total

Net interest income (expense)	(276)		423	147	(840)	35	(805)	-67.1%	NMF	NMF
Net fee and commission income	196		-	196	-	-	-	-	-	-
Net loss from foreign currencies	(145)		-	(145)	(51)	-	(51)	184.3%	-	184.3%
Other operating non-interest income	4,378		-	4,378	3,378	-	3,378	29.6%	-	29.6%
Revenue	4,153		423	4,576	2,487	35	2,522	67.0%	NMF	81.4%
Operating non-interest expenses	(2,381)		-	(2,381)	(2,029)	-	(2,029)	17.3%	-	17.3%
Operating income before cost of credit risk	1,772		423	2,195	458	35	493	NMF	NMF	NMF
Cost of credit risk	-		(219)	(219)	-	(32)	(32)	-	NMF	NMF
Net non-operating income	282		-	282	8	-	8	NMF	-	NMF
Profit before Income tax benefit (expense)	2,054		204	2,258	466	3	469	NMF	NMF	NMF
Income tax benefit (expense)	(307)		-	(307)	178	-	178	NMF	-	NMF
Profit from continuing operations	1,747		204	1,951	644	3	647	171.3%	NMF	NMF
Net gain from discontinued operations	-		-	-	-	-	-	-	-	-
Profit	1,747		204	1,951	644	3	647	171.3%	NMF	NMF
Cost / income ratio	57.3%		0.0%	52.0%	81.6%	0.0%	80.5%

The Affordable Housing business consists of the Bank's wholly-owned subsidiary SBRE, which holds investment properties repossessed by the Bank from defaulted borrowers. With the aim to improve liquidity of these repossessed real estate assets and stimulate the Bank's mortgage lending business capitalising on the market opportunity in the affordable housing segment in Georgia, the Bank develops and leases such real estate assets through SBRE. SBRE outsources the construction and architecture works and focuses on project management and sales of apartments and mortgages through its well-established branch network and sales force, thus representing a synergistic business for the Bank's mortgage business.

SBRE completed its pilot apartment project, recognising other operating income of GEL 4.4 million, which includes revenues from sale of apartments and rentals, compared to other operating income of GEL 3.4 million in 2011.

Highlights

§ Pilot project of 123 apartment building with a total buildable area of 15,015 square meters completed; 117 of the units pre-sold. The total sales from the pilot project amounted to US$8.6 million. Project IRR estimated at 43%.

§ Total mortgage loans extended under pilot project of the Affordable Housing amounted to GEL equivalent of US$4.1 million. Number of mortgages sold 71.

§ Construction of a second project of 522 apartment building with a total buildable area of 63,247 square meters in progress. 227 already pre-sold. The total sales from this project amounted to US$18.2 million. Number of mortgages sold 113.

§ Total mortgage loans extended under the second Affordable Housing project amounted to US$6.9 million.

§ Drew down two tranches each in the amount of US$5 million of the US$20 million financing raised from FMO, Dutch Development Bank.

§ Cash balance (comprising cash and cash equivalents and amounts due form credit institutions) of SBRE as of 31 December 2012 amounted to GEL 23.3 million.

Non-Core Businesses

The Bank's non-core businesses that accounted for 4.3% of total assets and 5.6% of total revenue in 2012, comprise BNB, our Belarusian banking operation, and Liberty Consumer, a Georgia focused investment company in which the Bank holds a 67% stake. In order for the Bank to focus on its strategic businesses, the Bank has announced its intention to exit from its non-core operations. In line with its intention of exiting from its non-core operations, the Bank continued to sell and/or liquidate non-performing assets held by Liberty Consumer. As of 31 December 2012, the Bank still held Teliani Valley, a Georgian wine producer, through Liberty Consumer. The Bank intends to sell this remaining asset in due course. The Bank's 2011 consolidated results include the results of the operation of BG Bank, Ukraine for two months ended 28 February 2011. The Bank sold, its 80% equity interest in BG Bank in February 2011.

BNB

	Year ended		Change
GEL thousands, unless otherwise noted	31 Dec 12	31 Dec 11		Y-O-Y

Net interest income	12,074	13,183		-8.4%
Net fee and commission income	3,809	2,028		87.8%
Net gain from foreign currencies	5,306	35,764		-85.2%
Other operating non-interest income	68	(15)		NMF
Revenue	21,257	50,960		-58.3%
Operating non-interest expenses	(10,327)	(13,321)		-22.5%
Operating income before cost of credit risk	10,930	37,639		-71.0%
Cost of credit risk	(1,306)	(1,398)		-6.6%
Net non-operating expense	(443)	(18,225)		-97.6%
Profit before Income tax expense	9,181	18,016		-49.0%
Income tax expense	(2,367)	(6,009)		-60.6%
Profit from continuing operations	6,814	12,007		-43.2%
Net gain from discontinued operations	-	-		-
Profit	6,814	12,007		-43.2%
Cost / income ratio	48.6%	26.1%

Through BNB, the Bank provides retail banking and corporate banking services in Belarus. BNB reported good results attributed to strong growth in fee and commission income and decline in operating costs during the period. BNB's performance in 2012 resulted in a return on average equity of 16.4%, up from 4.1% as of year-end 2010 but down 35.4% from as of year end 2011 having been affected by hyperinflation and currency hedge. BNB's net loan book increased 2.4 times to GEL 112.1 million, while client funds amounted to GEL 105.2 million, up 2.4 times year on year. As of 31 December 2012, BNB's total assets stood at GEL 185.0 million, net loan book at GEL 117.3 million, client deposits at GEL 105.2 million and equity at GEL 45.7 million, representing 3.3%, 3.8% and 4.0% of the Bank's total assets, loan book and client deposits, respectively.

Highlights

§ As of 31 December 2012, BNB was the 19th bank in Belarus by assets (2011: 23rd) and 13th by profit (2011: 20th).

§ Increased revenues from trade finance operations by 54% to US$0.7 million.

§ Stepped up plastic card issuance by 71% year-on-year to 20,000 cards outstanding as of 31 December 2012.

§ Signed MSME US$ 8 million credit line facility with EBRD.

§ Received Straight Through Processing (STP) Award from Commerzbank.

§ Won "Best Belarusian Call center" contest among the banks in Belarus.

RESULTS BY QUARTER

Revenue

			Change		Change
GEL thousands, unless otherwise noted	Q4 2012	Q4 2011	Y-O-Y	Q3 2012	Q-O-Q


Loans to customers	134,451	115,816	16.1%	129,923	3.5%
Investment securities¹¹	8,018	9,782	-18.0%	8,125	-1.3%
Amounts due from credit institutions	2,141	4,718	-54.6%	4,049	-47.1%
Finance lease receivables	2,327	3,099	-24.9%	2,241	3.8%
Interest income	146,937	133,415	10.1%	144,338	1.8%
Amounts due to customers	(46,284)	(49,719)	-6.9%	(52,435)	-11.7%
Amounts due to credit institutions	(23,943)	(23,536)	1.7%	(21,502)	11.4%
Interest expense	(70,227)	(73,255)	-4.1%	(73,937)	-5.0%
Net interest income before interest rate swaps	76,710	60,160	27.5%	70,401	9.0%
Net gain (loss) from interest rate swaps	(171)	(92)	85.9%	(485)	-64.7%
Net interest income	76,539	60,068	27.4%	69,916	9.5%
Fee and commission income	28,028	26,188	7.0%	29,773	-5.9%
Fee and commission expense	(6,906)	(4,086)	69.0%	(5,942)	16.2%
Net fee and commission income	21,122	22,102	-4.4%	23,831	-11.4%
Net insurance premiums earned	32,956	11,515	186.2%	25,837	27.6%
Net insurance claims incurred	(20,698)	(7,937)	160.8%	(15,915)	30.1%
Net insurance revenue	12,258	3,578	NMF	9,922	23.5%
Healthcare revenue	15,751	3,630	NMF	16,038	-1.8%
Cost of healthcare services	(8,626)	(2,318)	NMF	(9,013)	-4.3%
Net healthcare revenue	7,125	1,312	NMF	7,025	1.4%
Net gain from trading and investment securities	73	850	-91.4%	1,282	-94.3%
Net gain from revaluation of investment property	-	1,984	-100.0%	-	-
Net gain from foreign currencies	10,878	16,520	-34.2%	12,502	-13.0%
Other operating income	293	4,665	-93.7%	6,503	-95.5%
Other operating non-interest income	11,244	24,019	-53.2%	20,287	-44.6%
Revenue adjusted for gain from BYR hedge	128,288	111,079	15.5%	130,981	-2.1%
Gain from BYR hedge	-	4,371	-100.0%	-	-
Revenue	128,288	115,450	11.1%	130,981	-2.1%

¹¹primarily consist of Georgian government treasury bills and bonds and National Bank of Georgia's Certificates of deposits

The Bank's Q4 2012 revenue of GEL 128.3 million grew 11.1% y-o-y and but decreased 2.1% q-o-q due to the quiet post-election period. On a year-on-year basis, 27.4% increase in net interest income drove the growth in revenue, which was partially offset by lower net fee and commission income and the decline of net gains from foreign currencies as a result of lower demand of forex transactions in Q4 2012. The growth of net interest income during the period reflects the decreasing interest expense, down 4.1% y-o-y, as a result of the reduced Cost of Funds over the past twelve months. Cost of funds decreased to 6.6% in Q4 2012 from 8.4% in 2011. Insurance business posted strong results in Q4 2012, with net insurance revenue increasing 3.4 times y-o-y to GEL 12.3 million.

Net Interest Margin

			Change		Change
GEL thousands, unless otherwise noted	Q4 2012	Q4 2011	Y-O-Y	Q3 2012	Q-O-Q

Net interest income	76,539	60,068	27.4%	69,916	9.5%
Net Interest Margin	7.8%	7.3%	6.8%	7.3%	6.8%
Average interest earning assets¹²	3,891,637	3,259,481	19.4%	3,815,503	2.0%
Average interest bearing liabilities¹²	4,264,983	3,458,812	23.3%	4,196,393	1.6%

¹²monthly averages are used for calculation of average interest earning assets and average interest bearing liabilities

The Q4 2012 Net Interest Margin increased from 7.3% to 7.8% y-o-y reflecting solid growth of net interest income on y-o-y basis as a sharp decline in the Cost of Funds from 8.4% to 6.6% significantly offset the slight decline in loan yield from 17.5% to 17.1% and the faster growth of average interest bearing liabilities compared to average interest earning assets. The q-o-q growth of the NIM was also driven by higher net interest income as a result of declining interest expense due to a reduction in the Cost of Funds from 7.1% to 6.6% q-o-q.

Net insurance revenue and net healthcare revenue

			Change		Change
GEL thousands, unless otherwise noted	Q4 2012	Q4 2011	Y-O-Y	Q3 2012	Q-O-Q

Net insurance premiums earned	32,956	11,515	186.2%	25,837	27.6%
Net insurance claims incurred	(20,698)	(7,937)	160.8%	(15,915)	30.1%
Net insurance revenue	12,258	3,578	NMF	9,922	23.5%
Healthcare revenue	15,751	3,630	NMF	16,038	-1.8%
Cost of healthcare services, of which:	(8,626)	(2,318)	NMF	(9,013)	-4.3%
Salaries and other employee benefits	(5,793)	(1,463)	NMF	(6,343)	-8.7%
Other Operating expenses	(2,833)	(855)	NMF	(2,670)	6.1%
Net healthcare revenue	7,125	1,312	NMF	7,025	1.4%

The strong financial performance in insurance and healthcare business during the quarter was underpinned by organic growth and recent acquisitions. The insurance business posted strong results in Q4 2012, with net insurance revenue of GEL 12.3 million for the quarter increasing 3.4 times y-o-y and by 23.5% q-o-q. The healthcare business growth benefited from the integration from the recently acquired Imedi L and Q4 2012 net healthcare revenue increased more than fivefold to GEL 7.1 million, as a result of solid growth in healthcare revenue.

Net operating income, cost of credit risk, profit for the period

			Change		Change
GEL thousands, unless otherwise noted	Q4 2012	Q4 2011	Y-O-Y	Q3 2012	Q-O-Q

Salaries and other employee benefits	(32,383)	(28,356)	14.2%	(32,340)	0.1%
General and administrative expenses	(15,278)	(16,169)	-5.5%	(18,002)	-15.1%
Depreciation and amortization expenses	(7,303)	(7,735)	-5.6%	(7,384)	-1.1%
Other operating expenses	998	(1,600)	NMF	(388)	NMF
Operating non-interest expenses	(53,966)	(53,860)	0.2%	(58,114)	-7.1%
Operating income before cost of credit risk	74,322	61,590	20.7%	72,867	2.0%
Impairment charge on loans to customers	(13,898)	(6,194)	124.4%	(12,287)	13.1%
Impairment reversal (charge) on finance lease receivables	(286)	(195)	46.7%	32	NMF
Impairment charge on other assets and provisions	(1,940)	(2,380)	-18.5%	(2,390)	-18.8%
Cost of credit risk	(16,124)	(8,769)	83.9%	(14,645)	10.1%
Net operating income	58,198	52,821	10.2%	58,222	0.0%
Net non-operating expense	(4,189)	(9,709)	-56.9%	(3,051)	37.3%
Profit before income tax expense	54,009	43,112	25.3%	55,171	-2.1%
Income tax expense	(7,134)	(5,788)	23.3%	(8,528)	-16.3%
Profit from continuing operations	46,875	37,324	25.6%	46,643	0.5%
Net loss from discontinued operations	-	(2,972)	-100.0%	-	-
Profit	46,875	34,352	36.5%	46,643	0.5%

In Q4 2012 the Bank maintained positive operating leverage on a year-on-year basis as operating non-interest expenses stayed broadly flat, compared to 11.1% revenue growth over the same period, driving the operating income before the cost of credit risk up 20.7% y-o-y to GEL 74.3 million. As a result of a decline in operating non-interest expenses by 7.1% q-o-q, operating income before cost of credit risk increased 2.0% q-o-q and operating leverage remained positive at 5.1%

In Q4 2012, the cost of credit risk increased from GEL 14.6 million to GEL 16.1 million q-o-q. In Q4 2012, the Bank changed the methodology of collective impairment assessment, whereby the loss experience used to determine the appropriate general risk provision was changed from seven years to three years in Retail banking in 2012, thus eliminating the stress years of 2008 and 2009 in the calculation.

As a result of the foregoing, the Bank's net operating income totalled GEL 58.2 million in Q4 2012, up GEL 5.4 million, or 10.2% year-on-year. The Bank's net non-operating expenses for the period declined to GEL 4.2 million from GEL 9.7 million in Q4 2011. Profit before income tax from continuing operations in the fourth quarter of 2012 therefore totalled GEL 54.0 million, an increase of GEL 10.9 million, or 25.3%. After income tax expense of GEL 7.1 million, the Bank's Q4 2012 profit stood at GEL 46.9 million, compared to GEL 34.4 million in the fourth quarter of 2011 and GEL 46.6 million in the third quarter of 2012.

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

	Dec-12	Dec-11	Change
GEL thousands, unless otherwise noted	YTD	YTD	Y-O-Y
	Unaudited	Audited	%

Loans to customers	509,339	438,989	16.0%
Investment securities	33,950	37,701	-9.9%
Amounts due from credit institutions	15,813	18,103	-12.6%
Finance lease receivables	8,701	6,565	32.5%
Interest income	567,803	501,358	13.3%
Amounts due to customers	(202,484)	(167,294)	21.0%
Amounts due to credit institutions	(79,492)	(99,763)	-20.3%
Interest expense	(281,976)	(267,057)	5.6%
Net interest income before interest rate swaps	285,827	234,301	22.0%
Net gain (loss) from interest rate swaps	(1,710)	4,984	NMF
Net interest income	284,117	239,285	18.7%
Fee and commission income	109,278	93,541	16.8%
Fee and commission expense	(22,791)	(18,204)	25.2%
Net fee and commission income	86,487	75,337	14.8%
Net insurance premiums earned	91,176	46,396	96.5%
Net insurance claims incurred	(57,038)	(28,658)	99.0%
Net insurance revenue	34,138	17,738	92.5%
Healthcare revenue	54,376	5,700	NMF
Cost of healthcare services	(31,030)	(3,242)	NMF
Net healthcare revenue	23,346	2,458	NMF
Net gain from trading and investment securities	2,308	1,382	67.0%
Net gain from revaluation of investment property	-	1,984	-100.0%
Net gain from foreign currencies	49,571	76,441	-35.2%
Other operating income	18,288	19,128	-4.4%
Other operating non-interest income	70,167	98,935	-29.1%
Revenue	498,255	433,753	14.9%
Salaries and other employee benefits	(122,556)	(114,622)	6.9%
General and administrative expenses	(67,041)	(61,942)	8.2%
Depreciation and amortization expenses	(28,606)	(27,254)	5.0%
Other operating expenses	(2,949)	(6,347)	-53.5%
Operating non-interest expenses	(221,152)	(210,165)	5.2%
Operating income before cost of credit risk	277,103	223,588	23.9%
Impairment charge on loans to customers	(39,186)	(23,216)	68.8%
Impairment charge on finance lease receivables	(495)	(317)	56.2%
Impairment reversal (charge) on other assets and provisions	(5,036)	1,337	NMF
Cost of credit risk	(44,717)	(22,196)	101.5%
Net operating income	232,386	201,392	15.4%
Net non-operating expense	(19,634)	(29,338)	-33.1%
Profit before Income tax expense	212,752	172,054	23.7%
Income tax expense	(33,200)	(21,125)	57.2%
Profit from continuing operations	179,552	150,929	19.0%
Net loss from discontinued operations	-	(15,219)	-100.0%
Profit	179,552	135,710	32.3%
Attributable to:
- shareholders of the Group	174,437	132,531	31.6%
- non-controlling interests	5,115	3,179	60.9%

Earning per share (basic)	5.22	4.44	17.6%
Earning per share (diluted)	5.17	4.20	23.1%

CONSOLIDATED INCOME STATEMENT

	Q4 - 2012	Q4 - 2011	Change	Q3 - 2012	Change
GEL thousands, unless otherwise noted	Quarter	Quarter	Y-O-Y	Quarter	Q-O-Q
	Unaudited	Unaudited	%	Unaudited	%

Loans to customers	134,451	115,816	16.1%	129,923	3.5%
Investment securities	8,018	9,782	-18.0%	8,125	-1.3%
Amounts due from credit institutions	2,141	4,718	-54.6%	4,049	-47.1%
Finance lease receivables	2,327	3,099	-24.9%	2,241	3.8%
Interest income	146,937	133,415	10.1%	144,338	1.8%
Amounts due to customers	(46,284)	(49,719)	-6.9%	(52,435)	-11.7%
Amounts due to credit institutions	(23,943)	(23,536)	1.7%	(21,502)	11.4%
Interest expense	(70,227)	(73,255)	-4.1%	(73,937)	-5.0%
Net interest income before interest rate swaps	76,710	60,160	27.5%	70,401	9.0%
Net gain (loss) from interest rate swaps	(171)	(92)	85.9%	(485)	-64.7%
Net interest income	76,539	60,068	27.4%	69,916	9.5%
Fee and commission income	28,028	26,188	7.0%	29,773	-5.9%
Fee and commission expense	(6,906)	(4,086)	69.0%	(5,942)	16.2%
Net fee and commission income	21,122	22,102	-4.4%	23,831	-11.4%
Net insurance premiums earned	32,956	11,515	186.2%	25,837	27.6%
Net insurance claims incurred	(20,698)	(7,937)	160.8%	(15,915)	30.1%
Net insurance revenue	12,258	3,578	NMF	9,922	23.5%
Healthcare revenue	15,751	3,630	NMF	16,038	-1.8%
Cost of healthcare services	(8,626)	(2,318)	NMF	(9,013)	-4.3%
Net healthcare revenue	7,125	1,312	NMF	7,025	1.4%
Net gain from trading and investment securities	73	850	-91.4%	1,282	-94.3%
Net gain from revaluation of investment property	-	1,984	-100.0%	-	-
Net gain from foreign currencies, of which:	10,878	20,891	-47.9%	12,502	-13.0%
Other operating income	293	4,665	-93.7%	6,503	-95.5%
Other operating non-interest income	11,244	28,390	-60.4%	20,287	-44.6%
Revenue	128,288	115,450	11.1%	130,981	-2.1%
Salaries and other employee benefits	(32,383)	(28,356)	14.2%	(32,340)	0.1%
General and administrative expenses	(15,278)	(16,169)	-5.5%	(18,002)	-15.1%
Depreciation and amortization expenses	(7,303)	(7,735)	-5.6%	(7,384)	-1.1%
Other operating expenses	998	(1,600)	NMF	(388)	NMF
Operating non-interest expenses	(53,966)	(53,860)	0.2%	(58,114)	-7.1%
Operating income before cost of credit risk	74,322	61,590	20.7%	72,867	2.0%
Impairment charge on loans to customers	(13,898)	(6,194)	124.4%	(12,287)	13.1%
Impairment reversal (charge) on finance lease receivables	(286)	(195)	46.7%	32	NMF
Impairment charge on other assets and provisions	(1,940)	(2,380)	-18.5%	(2,390)	-18.8%
Cost of credit risk	(16,124)	(8,769)	83.9%	(14,645)	10.1%
Net operating income	58,198	52,821	10.2%	58,222	0.0%
Net non-operating expense	(4,189)	(9,709)	-56.9%	(3,051)	37.3%
Profit before Income tax expense	54,009	43,112	25.3%	55,171	-2.1%
Income tax expense	(7,134)	(5,788)	23.3%	(8,528)	-16.3%
Profit from continuing operations	46,875	37,324	25.6%	46,643	0.5%
Net loss from discontinued operations	-	(2,972)	-100.0%	-	-
Profit	46,875	34,352	36.5%	46,643	0.5%
Attributable to:
- shareholders of the Group	45,228	31,972	41.5%	44,994	0.5%
- non-controlling interests	1,647	2,380	-30.8%	1,649	-0.1%

Earnings per share (basic)	1.33	1.08	23.1%	1.35	-1.5%
Earnings per share (diluted)	1.33	1.03	29.1%	1.35	-1.5%

CONSOLIDATED BALANCE SHEET

	Dec-12	Dec-11	Change	Sep-12	Change
			Y-O-Y		Q-O-Q
GEL thousands, unless otherwise noted	Unaudited	Audited	%	Unaudited	%

Cash and cash equivalents	762,827	628,731	21.3%	666,896	14.4%
Amounts due from credit institutions	396,559	289,530	37.0%	487,275	-18.6%
Investment securities	463,960	419,576	10.6%	375,853	23.4%
Loans to customers and finance lease receivables	3,092,320	2,616,361	18.2%	3,063,390	0.9%
Investments in associates	2,441	3,014	-19.0%	3,020	-19.2%
Investment property	160,353	101,686	57.7%	149,904	7.0%
Property and equipment	430,877	348,110	23.8%	412,487	4.5%
Goodwill	45,657	46,195	-1.2%	45,463	0.4%
Intangible assets	23,078	21,222	8.7%	20,667	11.7%
Income tax assets	15,296	23,339	-34.5%	23,883	-36.0%
Prepayments	41,147	29,929	37.5%	47,748	-13.8%
Other assets	221,080	137,568	60.7%	233,931	-5.5%
Total assets	5,655,595	4,665,261	21.2%	5,530,517	2.3%

Amounts due to customers, of which:	2,693,025	2,735,222	-1.5%	2,795,794	-3.7%
Client deposits	2,622,911	2,554,084	2.7%	2,688,540	-2.4%
Promissory notes and CDs issued	70,114	181,138	-61.3%	107,254	-34.6%
Amounts due to credit institutions	1,657,162	921,172	79.9%	1,454,045	14.0%
Income tax liabilities	60,002	37,416	60.4%	61,646	-2.7%
Provisions	683	386	76.9%	603	13.3%
Other liabilities	185,211	158,462	16.9%	210,481	-12.0%
Total liabilities	4,596,083	3,852,658	19.3%	4,522,569	1.6%

Share capital	957	32,878	-97.1%	965	-0.8%
Additional paid-in capital	14,767	473,732	-96.9%	-	-
Treasury shares	(69)	(3,146)	-97.8%	(68)	1.5%
Other reserves	14,097	14,478	-2.6%	15,980	-11.8%
Retained earnings	981,322	254,588	NMF	945,006	3.8%
Total equity attributable to shareholders of the Group	1,011,074	772,530	30.9%	961,883	5.1%
Non-controlling interests	48,438	40,073	20.9%	46,065	5.2%
Total equity	1,059,512	812,603	30.4%	1,007,948	5.1%
Total liabilities and equity	5,655,595	4,665,261	21.2%	5,530,517	2.3%

Book value per share	30.33	25.98	16.7%	28.81	5.3%

CONSOLIDATED INCOME STATEMENT

	USD			GBP
	Dec-12	Dec-11	Change	Dec-12	Dec-11	Change
GEL thousands, unless otherwise noted	YTD	YTD	Y-O-Y	YTD	YTD	Y-O-Y
	Unaudited	Audited	%	Unaudited	Audited	%

Loans to customers	307,442	262,820	17.0%	191,100	170,309	12.2%
Investment securities	20,493	22,571	-9.2%	12,738	14,626	-12.9%
Amounts due from credit institutions	9,545	10,838	-11.9%	5,933	7,023	-15.5%
Finance lease receivables	5,251	3,931	33.6%	3,264	2,548	28.1%
Interest income	342,731	300,160	14.2%	213,035	194,506	9.5%
Amounts due to customers	(122,221)	(100,158)	22.0%	(75,970)	(64,903)	17.1%
Amounts due to credit institutions	(47,982)	(59,727)	-19.7%	(29,825)	(38,704)	-22.9%
Interest expense	(170,203)	(159,885)	6.5%	(105,795)	(103,607)	2.1%
Net interest income before interest rate swaps	172,528	140,275	23.0%	107,240	90,899	18.0%
Net gain (loss) from interest rate swaps	(1,032)	2,984	NMF	(641)	1,933	NMF
Net interest income	171,496	143,259	19.7%	106,599	92,832	14.8%
Fee and commission income	65,961	56,003	17.8%	41,000	36,290	13.0%
Fee and commission expense	(13,757)	(10,899)	26.2%	(8,551)	(7,062)	21.1%
Net fee and commission income	52,204	45,104	15.7%	32,449	29,228	11.0%
Net insurance premiums earned	55,035	27,777	98.1%	34,209	18,000	90.1%
Net insurance claims incurred	(34,429)	(17,157)	100.7%	(21,401)	(11,118)	92.5%
Net insurance revenue	20,606	10,620	94.0%	12,808	6,882	86.1%
Healthcare revenue	32,822	3,413	NMF	20,401	2,211	NMF
Cost of healthcare services	(18,730)	(1,941)	NMF	(11,642)	(1,257)	NMF
Net healthcare revenue	14,092	1,472	NMF	8,759	954	NMF
Net gain from trading and investment securities	1,393	827	68.4%	866	536	61.6%
Net gain from revaluation of investment property	-	1,188	-100.0%	-	770	-100.0%
Net gain from foreign currencies	29,922	45,765	-34.6%	18,599	29,656	-37.3%
Other operating income	11,038	11,451	-3.6%	6,861	7,420	-7.5%
Other operating non-interest income	42,353	59,231	-28.5%	26,326	38,382	-31.4%
Revenue	300,751	259,686	15.8%	186,941	168,278	11.1%
Salaries and other employee benefits	(73,976)	(68,624)	7.8%	(45,982)	(44,468)	3.4%
General and administrative expenses	(40,467)	(37,084)	9.1%	(25,153)	(24,031)	4.7%
Depreciation and amortization expenses	(17,267)	(16,317)	5.8%	(10,733)	(10,573)	1.5%
Other operating expenses	(1,779)	(3,800)	-53.2%	(1,106)	(2,463)	-55.1%
Operating non-interest expenses	(133,489)	(125,825)	6.1%	(82,974)	(81,535)	1.8%
Operating income before cost of credit risk	167,262	133,861	25.0%	103,967	86,743	19.9%
Impairment charge on loans to customers	(23,653)	(13,899)	70.2%	(14,702)	(9,007)	63.2%
Impairment charge on finance lease receivables	(299)	(190)	57.4%	(186)	(123)	51.2%
Impairment reversal (charge) on other assets and provisions	(3,040)	800	NMF	(1,890)	519	NMF
Cost of credit risk	(26,992)	(13,289)	103.1%	(16,778)	(8,611)	94.8%
Net operating income	140,270	120,572	16.3%	87,189	78,132	11.6%
Net non-operating expense	(11,851)	(17,564)	-32.5%	(7,366)	(11,382)	-35.3%
Profit before income tax expense	128,419	103,008	24.7%	79,823	66,750	19.6%
Income tax expense	(20,040)	(12,648)	58.4%	(12,456)	(8,196)	52.0%
Profit from continuing operations	108,379	90,360	19.9%	67,367	58,554	15.1%
Net loss from discontinued operations	-	(9,111)	-100.0%	-	(5,904)	-100.0%
Profit	108,379	81,249	33.4%	67,367	52,650	28.0%
Attributable to:
- shareholders of the Group	105,292	79,346	32.7%	65,448	51,417	27.3%
- non-controlling interests	3,087	1,903	62.2%	1,919	1,233	55.6%

Earnings per share (basic)	3.15	2.66	18.4%	1.96	1.72	14.0%
Earnings per share (diluted)	3.12	2.51	24.3%	1.94	1.63	19.0%

CONSOLIDATED INCOME STATEMENT

	USD					GBP
INCOME STATEMENT	Q4-2012	Q4-2011	Change	Q3-2012	Change	Q4-2012	Q4-2011	Change	Q3-2012	Change
QUARTERLY	Quarter	Quarter	Y-O-Y	Quarter	Q-O-Q	Quarter	Quarter	Y-O-Y	Quarter	Q-O-Q
	Unaudited	Unaudited	%	Unaudited	%	Unaudited	Unaudited	%	Unaudited	%

Loans to customers	81,156	69,338	17.0%	78,300	3.6%	50,445	44,932	12.3%	48,333	4.4%
Investment securities	4,840	5,856	-17.3%	4,897	-1.2%	3,008	3,795	-20.7%	3,023	-0.5%
Amounts due from credit institutions	1,292	2,825	-54.3%	2,440	-47.0%	803	1,830	-56.1%	1,506	-46.7%
Finance lease receivables	1,405	1,856	-24.3%	1,350	4.1%	874	1,202	-27.3%	833	4.9%
Interest income	88,693	79,875	11.0%	86,987	2.0%	55,130	51,759	6.5%	53,695	2.7%
Amounts due to customers	(27,937)	(29,767)	-6.1%	(31,601)	-11.6%	(17,365)	(19,289)	-10.0%	(19,506)	-11.0%
Amounts due to credit institutions	(14,452)	(14,091)	2.6%	(12,958)	11.5%	(8,983)	(9,131)	-1.6%	(7,999)	12.3%
Interest expense	(42,390)	(43,857)	-3.3%	(44,559)	-4.9%	(26,349)	(28,420)	-7.3%	(27,505)	-4.2%
Net interest income before interest rate swaps	46,303	36,017	28.6%	42,428	9.1%	28,781	23,340	23.3%	26,190	9.9%
Net gain (loss) from interest rate swaps	(103)	(55)	87.3%	(292)	-64.7%	(64)	(36)	77.8%	(181)	-64.6%
Net interest income	46,200	35,962	28.5%	42,136	9.6%	28,717	23,304	23.2%	26,009	10.4%
Fee and commission income	16,918	15,679	7.9%	17,943	-5.7%	10,516	10,160	3.5%	11,076	-5.1%
Fee and commission expense	(4,169)	(2,447)	70.4%	(3,581)	16.4%	(2,591)	(1,585)	63.5%	(2,211)	17.2%
Net fee and commission income	12,749	13,232	-3.7%	14,362	-11.2%	7,925	8,575	-7.6%	8,865	-10.6%
Net insurance premiums earned	19,893	6,894	188.6%	15,571	27.8%	12,365	4,467	176.8%	9,612	28.6%
Net insurance claims incurred	(12,494)	(4,752)	162.9%	(9,591)	30.3%	(7,766)	(3,079)	152.2%	(5,921)	31.2%
Net insurance revenue	7,399	2,142	NMF	5,980	23.7%	4,599	1,388	NMF	3,691	24.6%
Healthcare revenue	9,507	2,173	NMF	9,666	-1.6%	5,910	1,408	NMF	5,966	-0.9%
Cost of healthcare services	(5,206)	(1,388)	NMF	(5,432)	-4.2%	(3,237)	(899)	NMF	(3,353)	-3.5%
Net healthcare revenue	4,301	785	NMF	4,234	1.6%	2,673	509	NMF	2,613	2.3%
Net gain from trading and investment securities	44	509	-91.4%	773	-94.3%	27	330	-91.8%	477	-94.3%
Net gain from revaluation of investment property	-	1,188	-100.0%	-	-	-	770	-100.0%	-	-
Net gain from foreign currencies	6,566	12,507	-47.5%	7,535	-12.9%	4,081	8,105	-49.6%	4,651	-12.3%
Other operating income	177	2,794	-93.7%	3,918	-95.5%	111	1,809	-93.9%	2,420	-95.4%
Other operating non-interest income	6,787	16,998	-60.1%	12,226	-44.5%	4,219	11,014	-61.7%	7,548	-44.1%
Revenue	77,436	69,119	12.0%	78,938	-1.9%	48,133	44,790	7.5%	48,726	-1.2%
Salaries and other employee benefits	(19,547)	(16,977)	15.1%	(19,490)	0.3%	(12,150)	(11,001)	10.4%	(12,031)	1.0%
General and administrative expenses	(9,222)	(9,680)	-4.7%	(10,849)	-15.0%	(5,732)	(6,273)	-8.6%	(6,697)	-14.4%
Depreciation and amortization expenses	(4,408)	(4,631)	-4.8%	(4,450)	-0.9%	(2,740)	(3,001)	-8.7%	(2,747)	-0.3%
Other operating expenses	602	(957)	NMF	(235)	NMF	374	(621)	NMF	(144)	NMF
Operating non-interest expenses	(32,575)	(32,245)	1.0%	(35,024)	-7.0%	(20,248)	(20,896)	-3.1%	(21,619)	-6.3%
Operating income before cost of credit risk	44,861	36,874	21.7%	43,914	2.2%	27,885	23,894	16.7%	27,107	2.9%
Impairment charge on loans to customers	(8,389)	(3,708)	126.2%	(7,405)	13.3%	(5,214)	(2,403)	117.0%	(4,571)	14.1%
Impairment reversal (charge) on finance lease receivables	(173)	(117)	47.9%	19	NMF	(107)	(76)	40.8%	12	NMF
Impairment charge on other assets and provisions	(1,170)	(1,425)	-17.9%	(1,440)	-18.8%	(729)	(923)	-21.0%	(889)	-18.0%
Cost of credit risk	(9,732)	(5,250)	85.4%	(8,826)	10.3%	(6,050)	(3,402)	77.8%	(5,448)	11.0%
Net operating income	35,129	31,624	11.1%	35,088	0.1%	21,835	20,492	6.6%	21,659	0.8%
Net non-operating expense	(2,529)	(5,813)	-56.5%	(1,838)	37.6%	(1,571)	(3,766)	-58.3%	(1,135)	38.4%
Profit before Income tax expense	32,600	25,811	26.3%	33,250	-2.0%	20,264	16,726	21.2%	20,524	-1.3%
Income tax expense	(4,306)	(3,465)	24.3%	(5,140)	-16.2%	(2,677)	(2,246)	19.2%	(3,172)	-15.6%
Profit from continuing operations	28,294	22,346	26.6%	28,110	0.7%	17,587	14,480	21.5%	17,352	1.4%
Net loss from discontinued operations	-	(1,780)	-100.0%	-	-	-	(1,153)	-100.0%	-	-
Profit	28,294	20,566	37.6%	28,110	0.7%	17,587	13,327	32.0%	17,352	1.4%
Attributable to:
- shareholders of the Group	27,300	19,141	42.6%	27,116	0.7%	16,969	12,404	36.8%	16,739	1.4%
- non-controlling interests	994	1,425	-30.2%	994	0.0%	618	923	-33.0%	613	0.8%

Earnings per share (basic)	0.80	0.65	23.1%	0.81	-1.2%	0.50	0.42	19.0%	0.50	0.0%
Earnings per share (diluted)	0.80	0.62	29.0%	0.81	-1.2%	0.50	0.40	25.0%	0.50	0.0%

CONSOLIDATED BALANCE SHEET

	USD					GBP
	Dec-12	Dec-11	Change	Sep-12	Change	Dec-12	Dec-11	Change	Sep-12	Change
			Y-O-Y		Q-O-Q			Y-O-Y		Q-O-Q
	Unaudited	Audited	%	Unaudited	%	Unaudited	Audited	%	Unaudited	%

Cash and cash equivalents	460,450	376,418	22.3%	401,914	14.6%	286,207	243,921	17.3%	248,092	15.4%
Amounts due from credit institutions	239,367	173,340	38.1%	293,663	-18.5%	148,786	112,325	32.5%	181,271	-17.9%
Investment securities	280,051	251,198	11.5%	226,513	23.6%	174,074	162,778	6.9%	139,821	24.5%
Loans to customers and finance lease receivables	1,866,554	1,566,402	19.2%	1,846,194	1.1%	1,160,215	1,015,038	14.3%	1,139,612	1.8%
Investments in associates	1,473	1,804	-18.3%	1,820	-19.1%	916	1,169	-21.6%	1,123	-18.4%
Investment property	96,791	60,879	59.0%	90,342	7.1%	60,163	39,450	52.5%	55,766	7.9%
Property and equipment	260,081	208,412	24.8%	248,591	4.6%	161,662	135,052	19.7%	153,449	5.4%
Goodwill	27,559	27,657	-0.4%	27,399	0.6%	17,130	17,922	-4.4%	16,913	1.3%
Intangible assets	13,930	12,706	9.6%	12,455	11.8%	8,659	8,233	5.2%	7,688	12.6%
Income tax assets	9,233	13,973	-33.9%	14,393	-35.9%	5,739	9,055	-36.6%	8,885	-35.4%
Prepayments	24,837	17,918	38.6%	28,776	-13.7%	15,438	11,611	33.0%	17,763	-13.1%
Other assets	133,445	82,361	62.0%	140,982	-5.3%	82,947	53,370	55.4%	87,024	-4.7%
Total assets	3,413,771	2,793,068	22.2%	3,333,042	2.4%	2,121,936	1,809,924	17.2%	2,057,407	3.1%

Amounts due to customers, of which:	1,625,535	1,637,563	-0.7%	1,684,924	-3.5%	1,010,402	1,061,151	-4.8%	1,040,064	-2.9%
Client deposits	1,583,214	1,529,117	3.5%	1,620,286	-2.3%	984,096	990,877	-0.7%	1,000,164	-1.6%
Promissory notes and CDs issued	42,321	108,446	-61.0%	64,638	-34.5%	26,306	70,274	-62.6%	39,900	-34.1%
Amounts due to credit institutions	1,000,279	551,501	81.4%	876,300	14.1%	621,754	357,376	74.0%	540,919	14.9%
Income tax liabilities	36,218	22,401	61.7%	37,152	-2.5%	22,512	14,516	55.1%	22,933	-1.8%
Provisions	412	231	78.4%	363	13.5%	256	150	70.7%	224	14.3%
Other liabilities	111,796	94,870	17.8%	126,850	-11.9%	69,491	61,476	13.0%	78,301	-11.3%
Total liabilities	2,774,240	2,306,566	20.3%	2,725,589	1.8%	1,724,415	1,494,669	15.4%	1,682,441	2.5%

Share capital	578	19,684	-97.1%	582	-0.7%	359	12,755	-97.2%	359	0.0%
Additional paid-in capital	8,914	283,621	-96.9%	-	-	5,540	183,788	-97.0%	-	-
Treasury shares	(42)	(1,883)	-97.8%	(41)	2.4%	(26)	(1,221)	-97.9%	(25)	4.0%
Other reserves	8,509	8,667	-1.8%	9,630	-11.6%	5,290	5,618	-5.8%	5,944	-11.0%
Retained earnings	592,335	152,421	NMF	569,521	4.0%	368,184	98,769	NMF	351,552	4.7%
Total equity attributable to shareholders of the Group	610,294	462,510	32.0%	579,692	5.3%	379,347	299,709	26.6%	357,830	6.0%
Non-controlling interests	29,237	23,992	21.9%	27,761	5.3%	18,174	15,546	16.9%	17,136	6.1%
Total equity	639,531	486,502	31.5%	607,453	5.3%	397,521	315,255	26.1%	374,966	6.0%
Total liabilities and equity	3,413,771	2,793,068	22.2%	3,333,042	2.4%	2,121,936	1,809,924	17.2%	2,057,407	3.1%

Book value per share (basic)	18.31	15.55	17.7%	17.36	5.5%	11.38	10.08	12.9%	10.72	6.2%

RATIOS

KEY RATIOS YTD	Dec-12	Dec-11

Profitability
ROAA¹	3.5%	3.2%
ROAE²	19.1%	18.3%
Net Interest Margin³	7.9%	7.8%
Loan Yield⁴	17.5%	17.6%
Cost of Funds⁵	7.3%	8.0%
Cost of Client Deposits	7.3%	7.6%
Cost of Amounts Due to Credit Institutions	7.2%	8.8%
Operating Leverage, Y-O-Y⁶	9.6%	19.7%
Efficiency
Cost / Income⁷	44.4%	48.5%
Liquidity
NBG Liquidity Ratio⁸	41.1%	37.8%
Liquid Assets To Total Liabilities⁹	35.3%	34.8%
Net Loans To Customer Funds	114.8%	95.7%
Leverage (Times)¹⁰	4.3	4.7
Asset Quality:
NPLs (in GEL)	126,337	100,342
NPLs To Gross Loans To Clients	3.9%	3.7%
NPL Coverage Ratio¹¹	87.5%	114.7%
Cost of Risk, Annualised¹²	1.3%	0.9%
Capital Adequacy:
BIS Tier I Capital Adequacy Ratio, Consolidated¹³	22.0%	19.9%
BIS Total Capital Adequacy Ratio, Consolidated¹⁴	27.0%	28.5%
NBG Tier I Capital Adequacy Ratio¹⁵	13.8%	10.5%
NBG Total Capital Adequacy Ratio¹⁶	16.2%	16.2%
Per Share Values:
Basic EPS (GEL)¹⁷	5.22	4.44
Diluted EPS (GEL)	5.17	4.20
Book Value Per Share (GEL)¹⁸	30.33	25.98
Ordinary Shares Outstanding - Weighted Average, Basic¹⁹	33,405,181	29,866,366
Ordinary Shares Outstanding - Weighted Average, Diluted²⁰	33,931,562	33,501,366
Ordinary Shares Outstanding - Period End, Basic	33,332,636	29,731,407
Treasury Shares Outstanding - Period End	(2,576,747)	(3,146,140)
Selected Operating Data:
Full Time Employees, Group, Of Which:	11,095	7,301
- Full Time Employees, BOG Stand-Alone	3,734	3,364
- Full Time Employees, Aldagi BCI Insurance	515	338
- Full Time Employees, Aldagi BCI Healthcare	5,749	2,573
- Full Time Employees, BNB	323	260
- Full Time Employees, Other	774	766
Total Assets Per Banking FTE (in GEL thousands)	1,445	1,347
Number Of Active Branches, Of Which:	194	158
- Flagship Branches	34	34
- Standard Branches	97	91
- Express Branches (including Metro)	63	33
Number Of ATMs	478	426
Number Of Cards Outstanding, Of Which:	825,500	663,205
- Debit cards	718,239	535,385
- Credit cards	107,261	127,820
Number Of POS Terminals	3,725	2,828

OTHER RATIOS YTD	Dec-12	Dec-11

Profitability Ratios:
ROE	17.3%	17.2%
Interest Income / Average Int. Earning Assets²¹	15.7%	16.3%
Net F&C Inc. To Av. Int. Earn. Ass.,	2.1%	2.2%
Net Fee And Commission Income To Revenue	17.4%	17.4%
Operating Leverage, Y-O-Y	9.6%	19.7%
Revenue to Total Assets	8.8%	9.3%
Recurring Earning Power ²²	5.5%	5.3%
Profit To Revenue	36.0%	31.3%
Efficiency Ratios:
Operating Cost to Av. Total Ass.²³	4.4%	5.0%
Cost to Average Total Assets,	4.8%	6.0%
Personnel Cost to Revenue	24.6%	26.4%
Personnel Cost to Operating Cost	55.4%	54.5%
Personnel Cost to Average Total Assets,	2.4%	2.7%
Liquidity Ratios:
Liquid Assets To Total Assets	28.7%	28.7%
Net Loans to Total Assets	54.7%	56.1%
Average Net Loans to Average Total Assets	56.1%	57.5%
Interest Earning Assets to Total Assets	77.9%	81.0%
Average Interest Earning Assets/Average Total Assets	79.3%	82.1%
Net Loans to Client Deposits	117.9%	102.4%
Average Net Loans to Av. Client Deposits	107.9%	114.8%
Net Loans to Total Deposits	101.2%	100.2%
Net Loans to (Total Deposits + Equity)	75.2%	76.4%
Net Loans to Total Liabilities	67.3%	67.9%
Total Deposits to Total Liabilities	66.5%	67.8%
Client Deposits to Total Deposits	85.9%	97.8%
Client Deposits to Total Liabilities	57.1%	66.3%
Total Deposits to Total Assets	54.0%	56.0%
Client Deposits to Total Assets	46.4%	54.7%
Client Deposits to Total Equity (Times)	2.5	3.1
Total Equity to Net Loans	34.3%	31.1%
Asset Quality:
Reserve For Loan Losses to Gross Loans to Clients²⁴	3.5%	4.2%
% of Loans to Clients collateralised	87.1%	85.0%
Equity to Average Net Loans to Clients	34.3%	31.1%

KEY RATIOS QUARTERLY	Q4-2012	Q4-2011	Q3-2012

Profitability
ROAA, Annualised¹	3.4%	3.1%	3.4%
ROAE, Annualised²	18.2%	16.6%	19.2%
Net Interest Margin, Annualised³	7.8%	7.3%	7.3%
Loan Yield, Annualised⁴	17.1%	17.5%	17.0%
Cost of Funds, Annualised⁵	6.6%	8.4%	7.1%
Cost of Client Deposits, Annualised	6.6%	8.2%	7.1%
Cost of Amounts Due to Credit Institutions, Annualised	6.3%	9.1%	6.7%
Operating Leverage, Y-O-Y⁶	10.9%	1.0%	14.8%
Efficiency
Cost / Income⁷	42.1%	46.7%	44.4%
Liquidity
NBG Liquidity Ratio⁸	41.1%	37.8%	42.0%
Liquid Assets To Total Liabilities⁹	35.3%	34.8%	33.8%
Net Loans To Customer Funds	114.8%	95.7%	109.6%
Leverage (Times)¹⁰	4.3	4.7	4.5
Asset Quality:
NPLs (in GEL)	126,337	100,342	102,719
NPLs To Gross Loans To Clients	3.9%	3.7%	3.2%
NPL Coverage Ratio¹¹	87.5%	114.7%	105.2%
Cost of Risk, Annualised¹²	1.8%	0.9%	1.6%
Capital Adequacy:
BIS Tier I Capital Adequacy Ratio, Consolidated¹³	22.0%	19.9%	20.4%
BIS Total Capital Adequacy Ratio, Consolidated¹⁴	27.0%	28.5%	25.9%
NBG Tier I Capital Adequacy Ratio¹⁵	13.8%	10.5%	13.4%
NBG Total Capital Adequacy Ratio¹⁶	16.2%	16.2%	15.9%
Per Share Values:
Basic EPS (GEL)¹⁷	1.33	1.08	1.35
Diluted EPS (GEL)	1.33	1.03	1.35
Book Value Per Share (GEL)¹⁸	30.33	25.98	28.81
Ordinary Shares Outstanding - Weighted Average, Basic¹⁹	33,940,021	29,734,272	33,350,984
Ordinary Shares Outstanding - Weighted Average, Diluted²⁰	33,940,021	33,369,272	33,350,984
Ordinary Shares Outstanding - Period End, Basic	33,332,636	29,731,407	33,388,904
Treasury Shares Outstanding - Period End	(2,576,747)	(3,146,140)	(2,520,479)
Selected Operating Data:
Full Time Employees, Group, Of Which:	11,095	7,301	10,537
- Full Time Employees, BOG Stand-Alone	3,734	3,364	3,635
- Full Time Employees, Aldagi BCI Insurance	515	338	509
- Full Time Employees, Aldagi BCI Healthcare	5,749	2,573	5,328
- Full Time Employees, BNB	323	260	309
- Full Time Employees, Other	774	766	756
Total Assets Per Banking FTE (in GEL thousands)	1,445	1,347	1,452
Number Of Active Branches, Of Which:	194	158	187
- Flagship Branches	34	34	34
- Standard Branches	97	91	95
- Express Branches (including Metro)	63	33	58
Number Of ATMs	478	426	468
Number Of Cards Outstanding, Of Which:	825,500	663,205	896,234
- Debit cards	718,239	535,385	766,132
- Credit cards	107,261	127,820	130,102
Number Of POS Terminals	3,725	2,828	3,528

OTHER RATIOS QUARTERLY	Q4 - 2012	Q4 - 2011	Q3 - 2012

Profitability Ratios:
ROE, Annualised,	17.8%	16.4%	18.6%
Interest Income / Average Int. Earning Assets, Annualised²¹	15.0%	16.2%	15.0%
Net F&C Inc. To Av. Int. Earn. Ass., Annualised	1.9%	2.4%	2.2%
Net Fee And Commission Income To Revenue	16.5%	19.1%	18.2%
Operating Leverage, Q-O-Q	5.1%	8.0%	2.5%
Revenue to Total Assets, Annualised	9.0%	9.8%	9.4%
Recurring Earning Power, Annualised²²	5.3%	5.5%	5.3%
Profit To Revenue	36.5%	29.8%	35.6%
Efficiency Ratios:
Operating Cost to Av. Total Ass., Annualised²³	3.9%	4.8%	4.3%
Cost to Average Total Assets, Annualised	4.2%	6.4%	4.5%
Personnel Cost to Revenue	25.2%	24.6%	24.7%
Personnel Cost to Operating Cost	60.0%	52.6%	55.6%
Personnel Cost to Average Total Assets, Annualised	2.3%	2.5%	2.4%
Liquidity Ratios:
Liquid Assets To Total Assets	28.7%	28.7%	27.7%
Net Loans to Total Assets	54.7%	56.1%	55.4%
Average Net Loans to Average Total Assets	55.3%	58.2%	55.0%
Interest Earning Assets to Total Assets	77.9%	81.0%	77.1%
Average Interest Earning Assets/Average Total Assets	77.7%	83.0%	79.2%
Net Loans to Client Deposits	117.9%	102.4%	113.9%
Average Net Loans to Av. Client Deposits	116.0%	113.3%	106.0%
Net Loans to Total Deposits	101.2%	100.2%	100.4%
Net Loans to (Total Deposits + Equity)	75.2%	76.4%	75.5%
Net Loans to Total Liabilities	67.3%	67.9%	67.7%
Total Deposits to Total Liabilities	66.5%	67.8%	67.5%
Client Deposits to Total Deposits	85.9%	97.8%	88.1%
Client Deposits to Total Liabilities	57.1%	66.3%	59.4%
Total Deposits to Total Assets	54.0%	56.0%	55.2%
Client Deposits to Total Assets	46.4%	54.7%	48.6%
Client Deposits to Total Equity (Times)	2.5	3.1	2.7
Total Equity to Net Loans	34.3%	31.1%	32.9%
Asset Quality:
Reserve For Loan Losses to Gross Loans to Clients²⁴	3.5%	4.2%	3.4%
% of Loans to Clients collateralised	87.1%	85.0%	86.7%
Equity to Average Net Loans to Clients	34.3%	31.1%	32.9%

NOTES TO RATIOS

1 Return On Average Total Assets (ROAA) equals Profit for the period from continuing operations divided by monthly Average Total Assets for the same period;

2 Return On Average Total Equity (ROAE) equals Profit for the period from continuing operations attributable to shareholders of the Bank divided by monthly Average Equity attributable to shareholders of the Bank for the same period;

3 Net Interest Margin equals Net Interest Income of the period (adjusted for the gains or losses from revaluation of interest rate derivatives) divided by monthly Average Interest Earning Assets Including Cash for the same period; Interest Earning Assets Including Cash include: Amounts Due From Credit Institutions, Investment Securities (but excluding corporate shares and other equity instruments) and Loans To Customers And Finance Lease Receivables;

4 Loan Yield equals Interest Income From Loans To Customers And Finance Lease Receivables divided by monthly Average Gross Loans To Customers And Finance Lease Receivables;

5 Cost Of Funds equals Interest Expense of the period (adjusted for the gains or losses from revaluation of interest rate derivatives) divided by monthly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Amounts Due To Credit Institutions and Amounts Due To Customers;

6 Operating Leverage equals percentage change in Revenue less percentage change in Other Operating Non-Interest Expenses;

7 Cost / Income Ratio equals Other Operating Non-Interest Expenses divided by Revenue;

8 Average liquid assets during the month (as defined by NBG) divided by selected average liabilities and selected average off-balance sheet commitments (both as defined by NBG);

9 Liquid Assets include: Cash And Cash Equivalents, Amounts Due From Credit Institutions and Investment Securities;

10 Leverage (Times) equals Total Liabilities divided by Total Equity;

11 NPL Coverage Ratio equals Allowance For Impairment Of Loans And Finance Lease Receivables divided by NPLs;

12 Cost Of Risk equals Impairment Charge for Loans To Customers And Finance Lease Receivables for the period divided by monthly average Gross Loans To Customers And Finance Lease Receivables over the same period;

13 BIS Tier I Capital Adequacy Ratio equals Tier I Capital divided by Total Risk Weighted Assets, both calculated in accordance with the requirements of Basel Accord I;

14 BIS Total Capital Adequacy Ratio equals Total Capital divided by Total Risk Weighted Assets, both calculated in accordance with the requirements of Basel Accord I;

15 NBG Tier I Capital Adequacy Ratio equals Tier I Capital a divided by Total Risk Weighted Assets, both calculated in accordance with the requirements the National Bank of Georgia instructions;

16 NBG Total Capital Adequacy Ratio equals Total Capital divided by Total Risk Weighted Assets, both calculated in accordance with the requirements of the National Bank of Georgia instructions;

17 Basic EPS equals Profit for the period from continuing operations attributable to shareholders of the Bank divided by the weighted average number of outstanding ordinary shares over the same period;

18 Book Value Per Share equals Total Equity attributable to shareholders of the Bank divided by Net Ordinary Shares Outstanding at period end; Net Ordinary Shares Outstanding equals total number of Ordinary Shares Outstanding at period end less number of Treasury Shares at period end;

19 Weighted average number of ordinary shares equal average of daily outstanding number of shares less daily outstanding number of treasury shares;

20 Weighted average diluted number of ordinary shares equals weighted average number of ordinary shares plus weighted average dilutive number of shares known to the management during the same period;

21 Average Interest Earning Assets are calculated on a monthly basis; Interest Earning Assets Excluding Cash include: Investment Securities (but excluding corporate shares and other equity instruments) and Loans To Customers And Finance Lease Receivables;

22 Recurring Earning Power equals Operating Income Before Cost of Credit Risk for the period divided by monthly average Total Assets of the same period;

23 Operating Cost equals Other Operating Non-Interest Expenses;

24 Reserve For Loan Losses To Gross Loans equals Allowance For Impairment Of Loans And Finance Lease Receivables divided by Gross Loans And Finance Lease Receivables.

SHAREHOLDER INFORMATION

BANK OF GEORGIA HOLDINGS PLC

Registered Address

84 Brook Street

London W1K 5EH

United Kingdom

www.bogh.co.uk

Registered under number 7811410 in England and Wales

Incorporation date: 14 October 2011

Stock Listing

London Stock Exchange plc's Main Market for

listed securities

Ticker: "BGEO.LN"

Contact Information

Bank of Georgia Holdings Plc Investor Relations

Telephone: +44 (0) 20 3178 4052

E:mail: ir@bog.ge

www.bogh.co.uk

Auditors

Ernst & Young LLP

1 More London Place

London SE1 2AF

United Kingdom

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgewater Road

Bristol BS13 8AE

United Kingdom

Share price information

BGH shareholders can access both the latest and historical prices via our website, www.bogh.co.uk

This information is provided by RNS

The company news service from the London Stock Exchange

END

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