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JSC Bank of Georgia (BGEO)

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Wednesday 20 May, 2009

JSC Bank of Georgia

1st Quarter Results

1st Quarter Results

Bank of Georgia

1.67 GEL/US$ 31 March 2009 period end 
1.67 GEL/US$ Q1 2009 average 1.67 GEL/US$ Q1 2009 average 
1.67 GEL/US$ December 2008 period end 1.67 GEL/US$ December 2008 period end 
1.56 GEL/US$ Q4 2008 average 1.56 GEL/US$ Q4 2008 average 
1.48 GEL/US$ 31 March 2008 period end 1.48 GEL/US$ 31 March 2008 period end 
1.55 GEL/US$ Q1 2008 average 1.55 GEL/US$ Q1 2008 average

JSC Bank of Georgia Reports Q1 2009 Net Income of GEL 5.1 Million

Millions, unless otherwise noted   Q1 2009     Growth y-o-y 1
 
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$     GEL
Total Operating Income (Revenue)2 50.7 84.6 4%
Recurring Operating Costs 26.7 44.6 0%
Normalised Net Operating Income3 24.0 40.0 9%
Net Non-Recurring Operating Costs (0.1) (0.2) NMF
Net Provision Expenses 21.0 35.0 370%
Net Income/(Loss) 3.0 5.1 -84%
 
Total Assets 1,908.2 3,186.76 1%
Net Loans 1,144.7 1,911.60 5%
Total Deposits 710.1 1,185.87 -11%
Tier I Capital Adequacy Ratio (BIS)4 22.25%
Total Capital Adequacy Ratio (BIS)5 31.75%
Tier I Capital Adequacy Ratio (NBG) 16.40%
Total Capital Adequacy Ratio (NBG) 17.37%

Bank of Georgia (LSE: BGEO, GSE: GEB) (the “Bank”), Georgia’s leading bank, announced today its Q1 2009 consolidated results (IFRS-based, derived from management accounts), reporting a Q1 2009 Net Income of GEL 5.1 million.

Q1 2009 Summary of the Bank’s Consolidated Results

In Q1 2009 the Bank’s total Operating Income increased by 4.4% y-o-y to GEL 84.6 million, (down 2.2% q-o-q6), driven by 11.2% y-o-y growth of Net Interest Income to GEL 55.4 million (down 1.8% q-o-q) and 6.5% y-o-y decrease of Net Non-Interest Income to GEL 29.3 million (down 3.0% q-o-q). The main reason for the q-o-q decline of Net Non-Interest Income was a 41.1% q-o-q decrease of Net Foreign Currency Related Income to GEL 8.8 million in Q1 2009, which was caused by a lower volatility of Ukrainian Hryvna and Georgian Lari during Q1 2009 as compared to the volatility of these currencies in Q4 2008. Net Income from Documentary Operations of GEL 2.2 million increased 57.5% q-o-q (up by 54.7% y-o-y) and Net Fee and Commission Income increased by 46.7% q-o-q during the quarter (down 12.5% y-o-y), to GEL 8.9 million. Net Other Non-Interest Income, consisting of Net Insurance Income, Brokerage and Investment Banking Income, Asset Management Income and Other Income, stood at GEL 9.4 million during Q1 2009, up 19.9% q-o-q and up 44.5% y-o-y, driven largely by 85.8% y-o-y growth of Net Insurance Income to GEL 3.0 million in Q1 2009. Net Interest Margin (NIM) for the quarter stood at 9.26%, a decrease of 89 basis points from Q4 2008 NIM and an increase of 33 basis points from Q1 2008.

NNOI increased to GEL 40.0 million, up 3.5% q-o-q and up 9.2% y-o-y, reflecting a 6.9% q-o-q reduction of Total Consolidated Recurring Operating Costs to GEL 44.6 million (up 0.4% y-o-y) in Q1 2009. The 14.6% y-o-y decrease in Personnel costs, the largest cost item, was the main contributor to the decline of Total Recurring Operating Costs for the quarter. Cost optimization measures, including headcount reduction, implemented by the Bank since December 2008 reduced Personnel Costs to GEL 22.0 million in Q1 2009 (down 4.7% q-o-q) from GEL 23.1 million in Q4 2008 which already reflected the GEL 4.0 million reversal of bonuses accrued in 2008. On a quarterly basis, Personnel Costs declined 18.6% q-o-q net of bonus reversal costs, translating into 14.0% q-o-q decline of Total Consolidated Recurring Operating Costs net of bonus reversal in Q4 2008. Recurring Operating Costs excluding Personnel Costs and comprising of Procurement and Operations Support expenses, Depreciation and Amortization Expenses, Selling, General & Administrative Expenses and Other Operating Expenses, reached a total of GEL 22.7 million in Q1 2009, a 8.9% decline q-o-q. Normalized Cost/Income ratio (Costs exclude Net Non-Recurring Costs) declined to 52.7% from 55.4% in Q4 2008 and 54.8% in Q1 2008.

Net loan loss provisions of GEL 35.0 million booked by the Bank in Q1 2009 were mostly attributed to net loan loss provisions of GEL 9.4 million booked by BG Bank, reflecting challenging economic environment in Ukraine, and the net loan provisions of the Bank’s retail loan book in Georgia of GEL 22.8 million. The effect of the armed conflict between Georgia and Russia in August 2008 (the “Conflict”) and the slowdown of the economies in the Bank’s target markets resulted in the increase of NPLs to GEL 104.6 million, representing 5.1% of the consolidated gross loans as at the 31 March 2009, up from 2.1% in 2008. With NPL coverage ratio at 129.3%, the Bank remains well provisioned to absorb further deterioration of the loan book quality. Loan loss reserves reached GEL 135.2 million or 6.6% of gross loan book in Q1 2009 as compared to 5.0% in Q4 2008 and 2.1% in Q1 2008.

The Bank’s Consolidated Total Assets stood at GEL 3.2 billion, down 2.2% from 31 December 2008 and up 1.2% from Q1 2008. The Bank’s Net Loans decreased by 8.1% q-o-q (up 5.3% y-o-y) to GEL 1,912 million, reflecting the Bank’s cautious lending policy in light of challenging economic environment in its target markets and the Bank’s conservative approach to liquidity. Throughout this quarter the Bank has witnessed a system-wide decline in deposit base in Georgia and Ukraine. The Bank’s Client Deposits decreased by 5.0% q-o-q to GEL 1.1 billion as of 31 March 2009, as compared to a 11.0% decline of the total client deposits in Georgia and 5.0% in Ukraine since year-end 2008.

On 30 December 2008 the Bank signed agreements for a US$200 million financing package from EBRD and IFC (“EBRD/IFC Package”), which included senior loan, subordinated loan and convertible subordinated loan. In Q1 2009 the Bank drew down all of US$ 200 million from the EBRD/IFC Package. During Q1 2009 the Bank repaid US$ 165.5 million of wholesale debt financing. This included US$65 million loan facility arranged by Merrill Lynch and the second tranche of the syndicated loan received by the Bank in August 2007 in the amount of US$43.5 million. In addition, the Bank repurchased Loan Passthrough Notes issued in June 2008 and maturing in June 2010 (puttable in June 2009) with the face value of US$57.0 million. The remaining outstanding amount of Loan Passthrough Notes at the end of Q1 2009 was US$83.0 million. In April 2009 the Bank repurchased additional Loan Passthrough Notes with the face value of US$34 million. As a result as of the date of this press release, the Bank needs to repay US$ 59.9 million of international wholesale funding obligations in 2009 and the total of US$ 76.4 million in 2010 and 2011.

Consolidated Book Value per Share on 31 March 2009 stood at GEL 22.8, a decline from GEL 23.0 as of 31 December 2008, reflecting the decline of BNB’s book value due to the translation loss as a result of devaluation of Belarusian Ruble against Georgian Lari by 21.1%.

In Q1 2009 the Bank’s Tier I Capital Adequacy Ratio was 22.2% and Total Capital Adequacy Ratio was 31.7% by BIS standards.

JSC Bank of Georgia (Standalone)

Bank of Georgia’s banking operations in Georgia, which are provided through JSC Bank of Georgia, reported Q1 2009 standalone Net Income of GEL 11.3 million, as compared to Net Income of GEL 28.8 in Q4 2008 (down 60.8% q-o-q and down 55.5% y-o-y). The decline in profitability was mostly due to Net Provision Expense on a standalone basis of GEL 27.0 million (in Q4 2008 loan loss provision reversal was GEL 4.5 million), including loan loss provisions of GEL 22.8 million on Georgian retail loan book and the reversal of GEL 4.8 million provisions booked in Q4 2008 on the Georgian corporate loan book. The Net Provision Expense growth for the quarter more than offset the 2.5% q-o-q growth of NNOI, which reached GEL 40.8 million (up 6.8% y-o-y).

Total Operating Income reached GEL 69.6 million, down 0.5 % q-o-q and up 4.4% y-o-y. Net Interest Income stood at GEL 53.3 million, up 4.4% q-o-q and up 17.6% y-o-y. Net Non-Interest Income stood at GEL 16.3 million down 13.8 % q-o-q and down 23.6% y-o-y. The decline of Net Non-Interest Income was mainly attributed to the 26.4% q-o-q decline Net Foreign Currency Related Income to GEL 5.6 million. Bank of Georgia’s standalone Total Recurring Operating Costs decreased 4.5% q-o-q to GEL 28.8 million, as personnel costs increased 2.2% q-o-q to GEL 14.7 million (down 15.8% y-o-y). Standalone Personnel Costs declined 9.6% q-o-q net of bonus reversal in Q4 2008, translating into 14.6% q-o-q decline of Total Recurring Operating Costs net of bonus reversal costs on a standalone basis. Bank of Georgia’s standalone Normalized Cost/Income ratio for Q1 2009 decreased to 41.4% from 43.1% in Q4 2008 and 44.5% in Q1 2008.

As of 31 March 2009 Bank of Georgia’s Total Assets on a standalone basis stood at GEL 2.9 billion, down 2.4% q-o-q, up 6.1% y-o-y. Net Loans declined 7.2% q-o-q to GEL 1.8 billion, up by 9.7% y-o-y, as a result of the Bank’s conservative lending policy. Corporate Banking (CB) gross loans stood at GEL 860.6 million, down 6.3% q-o-q, and up 4.1% y-o-y, while Retail Banking (RB) and Wealth Management (WM) gross loans amounted to GEL 974.0 million, down by 7.3% q-o-q and up 23.4% y-o-y. Reserve for loan losses at the end of Q1 2009 was up 4.6% q-o-q reaching GEL 102.7 million, with reserve on RB and WM loan losses representing 56.3% of total Reserve for Loan Losses on a standalone basis, up from 50.8% in Q4 2008. NPLs for the quarter stood at GEL 87.4 million, and represented 4.7% of the total gross loan book, compared to the same ratio of 3.2% in Q4 2008. The growth of the Bank of Georgia’s standalone NPLs was driven by the growth of non-performing RB and WM loans from GEL 22.7 million in Q4 2008 to GEL 46.3 million in Q1 2009 as non-performing CB loans declined from GEL 41.6 million in Q4 2008 to GEL 41.1 million in Q1 2009. With the Q1 2009 NPL coverage ratio at 117.4%, the Bank remains well positioned to absorb increases in the NPLs.

Breakdown of the Standalone Total Gross Loans, currency, loan loss reserves and NPLs by Business Units

GEL million   GEL   Foreign Currency   Gross Loans   LL Reserves   Net Loan Book   NPLs
RB + WM   255.7   718.3   974.0   (57.7)   916.2   46.3
CB 208.8 651.8 860.6 (38.2) 822.4 41.1
Corporate Centre, (mainly CB loans)   3.4   14.4   17.8   (6.7)   11.1   -
Total 467.9 1,384.4 1,852.3 (102.6) 1,749.7 87.4

In Q1 2009, the Bank’s client deposits in Georgia decreased by GEL 66.2 million to GEL 979.0 million, down 6.3% compared to Q4 2008, when the growth in deposits was largely driven by increased spending of the Georgian government in December 2008 and devaluation of Lari in November 2008.

Breakdown of Standalone Total Deposits by currency

Bank of Georgia, Stand-alone   31-Mar-09   31-Dec-08
GEL million   GEL   Foreign Currency   Total   GEL   Foreign Currency   Total
RB + WM 66.2   307.6   373.7 89.1   329.4   418.5
CB   66.2   339.0   605.2   269.0   380.8   649.8
Total 132.3 646.6 979.0 358.1 710.2 1,068.3

As of 31 March 2009 Bank of Georgia on standalone basis held market share of 34.3 %, 32.2 %, 27.8 %, 40.8% and 38.0% by total assets, gross loans, deposits, shareholders’ equity and regulatory capital respectively in Georgia7.

Capital Adequacy, Liquidity and Leverage

As of 31 March 2009, the Bank’s Tier I Capital Adequacy Ratio was 16.4% and Total Capital Adequacy Ratio was 17.4% by NBG standards. According to the requirement of NBG Tier I Capital Adequacy Ratio should be no less than 8% and Total Capital Adequacy Ratio no less than 12%.

The Bank’s NBG Liquidity Ratio (standalone) stood at 37.6% on 31 March 2009 an increase from 27.3% on 31 December 2008, well above the NBG requirement of 20%.

The Bank’s standalone leverage ratio (Total Liabilities to Shareholders Equity) stood at 3.1x as of 31 March 2009, down from 3.3x on 31 December 2008.

BG Bank (Ukraine)

In Q1 2009 BG Bank’s Revenue decreased to GEL 5.5 million, down 41.1% q-o-q and down 15.9% y-o-y, reflecting challenging economic environment and lower income from BG Bank’s Foreign Currency Related Income due to lower volatility of Hryvna compared to the previous quarter and increased borrowing costs on local inter-bank and deposit markets. Recurring Costs stood at GEL 5.7 million, up 11.5% q-o-q and down 21.1% y-o-y. BG Bank’s loan loss provision charge amounted to GEL 9.4 million as compared to GEL 23.3 million booked in Q4 2008 and GEL 0.5 million booked in Q3 2008. In Q1 2009 BG Bank recorded Net Loss of GEL 7.3 million as compared to Net Loss of GEL 10.7 million in Q4 2008 and Net Loss of GEL 0.7 million in Q1 2008.

BG Bank’s Total Assets decreased by 32.0% y-o-y to GEL 244.8 million (down 1.4% q-o-q), in part due to 31.3% y-o-y depreciation of Hryvna against Lari in 2008 and decrease BG Bank’s net loans due to conservative lending policy and increased provisioning. In Q1 2009 gross Loans to Clients decreased 22.0% y-o-y to GEL 198.8 million (up 2.2% q-o-q8) and loan loss reserves increased 50.0% q-o-q to GEL 31.6 million or 15.9% of BG Bank’s Gross Loan Book. 58.0% of BG Bank’s gross loans is issued in Hryvna and the remaining loans are issued in foreign currency. As at 31 March 2009, BG Bank’s NPLs stood at GEL 15.9 million, or 8.0% of BG Bank’s Gross Loan book. The NPL coverage ratio stood at 198.8% as of 31 March 2009.

Breakdown of the BG Bank’s Total Gross Loans, currency, loan loss reserves and NPLs by Business Units

GEL millions   UAH   Foreign Currency   Gross Loan Book   LL Reserves   Net Loan Book   NPLs
RB   12.9   27.7   40.6   (12.2)   28.4   9.7
CB   101.6   56.6   158.2   (19.4)   138.8   6.2
Total 114.5 84.3 198.8 (31.6) 167.2 15.9

BG Bank’s Client Deposits dropped 5.0% q-o-q to GEL 121.1 million as the deposit outflow continued throughout the system despite certain restrictions on deposit withdrawals introduced by NBU (in Hryvna terms, BG Bank’s Client Deposits in Q1 2009 declined by 5.1%). BG Bank’s Total Liabilities stood at GEL 183.7 million in Q1 2009, down 37.0% y-o-y and up 0.5% q-o-q. BG Bank has no international wholesale funding obligations and its leverage stood at a healthy 3.0x as of 31 March 2009.

Breakdown of BG Bank’s Total Deposits by currency

  31-Mar-09   31-Dec-08
GEL million   UAH   Foreign Currency   Total   GEL   Foreign Currency   Total
RB 27.1   47.0   74.1 26.7   52.0   81.7
CB   42.2   4.8   47.0   36.2   9.5   45.7
Total 69.3 51.8 121.1 65.9 61.5 127.4

As of 31 March 2009, BG Bank’s regulatory position remained strong. National Bank of Ukraine (NBU) Capital Adequacy Ratio of BG Bank stood at 22.8% well above 8% required by NBU. In Q1 2009 Current and Short-Term Liquidity Ratios of BG Bank stood at 75.7% and 47.5%, respectively, higher than the NBU requirement of 40% and 20% respectively.

The cost optimization measures at BG Bank initiated in Q4 2008 continued throughout Q1 2009. BG Bank closed down 11 branches, bringing the number of branches to 20. The expected recurring annual cost savings from these measures amount to circa UAH 4 million per annum.

Belaruskiy Narodniy Bank (Belarus)

BNB financial results were mostly affected by devaluation of Belarusian Ruble against Georgian Lari by 21.1% in January 2009. As a result in Q1 2009 BNB’s Total Operating Income decreased to GEL 2.4 million, down 11.7% q-o-q, while Recurring Costs stood at GEL 1.5 million, down 15.0% q-o-q, resulting in a Net Income of GEL 661 thousand as compared to Net Loss of GEL 208 thousand* in Q4 2008. On 31 March 2009 BNB’s Total Assets stood at GEL 60.1 million, down 18.3% q-o-q and Gross Loans to Clients equaled GEL 29.6 million, down 17.7% q-o-q. Client Deposits amounted to GEL 25.4 million, down 17.3% q-o-q, while Total Liabilities stood at GEL 26.5 million, down 16.8% q-o-q.

Breakdown of the BNB’s Total Gross Loans, currency, loan loss reserves and NPLs by Business Units

GEL millions   BYR   Foreign Currency   Gross Loan Book   LL Reserves   Net Loan Book   NPLs
RB   0.6   2.6   3.2   (0.1)   3.1   0.1
CB   12.7   13.7   26.4   (1.1)   25.4   1.2
Total 13.3 16.3 29.6 (1.2) 28.4 1.3

Breakdown of BNB’s Total Deposits by currency

  31-Mar-09   31-Dec-08
GEL million   BYR   Foreign Currency   Total   GEL   Foreign Currency   Total
RB 0.2   4.2   4.4 0.3   4.0   4.3
CB   4.2   16.8   21.0   9.1   17.3   26.4
Total 4.4 21.0 25.4 9.4 21.3 30.7

Total Capital Adequacy stood at solid 28.0%, while Tier I Capital Adequacy Ratio amounted to 53.3%. National Bank of Belarus requires Total Capital Adequacy ratio of 8% and Tier I Capital Adequacy Ratio of 4%.

* Q4 2008 Net Loss (Audited) as opposed to unautied Net Income of GEL 243 thousand was a result of capitalization of part of 2008 earnings due to mid-year acquisition of BNB.

Galt & Taggart Securities (GTS)

Against the background of global financial crisis and tough equity markets in Georgia and Ukraine (in Q1 2009 GTS Index decreased by 36.4% and the PFTS Index decreased by 24.7%) GTS continued the restructuring of its business in line with the challenging market environment.

In Q1 2009 the efforts of GTS’s management started to pay off as GTS reported Net Income of GEL 148 thousand, an impressive improvement compared to Net Loss of GEL 4.6 million in Q4 2008.

Asset Management (AM)

The following key entities are included in the AM segment: Galt & Taggart Asset Management (“GTAM”), the Bank’s asset management arm, majority owned by the Bank; JSC Liberty Consumer (“LC”), a GSE-listed consumer and retail-oriented investment company managed by GTAM in which the Bank owns 65.24% equity stake and JSC SB Real Estate (“SBRE”), a real estate investment company managed by GTAM in which LC owns 52.08% equity stake.

As part of its strategy in 2008, the Bank declared its intention to review its positions in GTAM, LC and SBRE. As announced previously, going forward the Bank plans to continue exploring its options in respect of GTAM, LC and SBRE.

In Q1 2009 AM reported Net Loss of GEL 2.3 million, as compared to Net Loss of GEL 11.2 million in Q4 2008 and Net Income of GEL 8.2 million in Q1 2008. The quarterly net loss was mainly driven by the at-loss sale of certain property by SB Real Estate, share of losses generated by associates engaged in consumer retail business and unrecognized deferred tax asset.

On 31 March 2009 LC had total assets of GEL 95.0 million and net book value of GEL 69.2 million and SBRE had total assets of GEL 49.2 million and net book value of GEL 37.1 million.

Insurance

Aldagi BCI, the Bank’s wholly-owned Georgian insurance subsidiary, reported Q1 2009 Net Income of GEL 656 thousand (as compared to Net Loss of GEL 5.6 million in Q4 2008 and Net Loss of GEL 371 in Q1 2008). The notable improvement in Aldagi BCI’s performance reflects the clean-up of Aldagi BCI’s health insurance portfolio and introduction of new tariffs undertaken in the second half of 2008. Gross Premiums Written increased by 62.5% y-o-y to GEL 22.1 million in Q1 2009 (up 87.1% q-o-q). Net Premiums Earned grew 46.8% y-o-y to GEL 11.7 million (up 20.9% q-o-q). Revenue grew by 89.8% y-o-y to GEL 3.4 million in Q1 2009.

In 2009 Aldagi BCI’s objective is to further improve its profitability through better claims management, cost control and efficiency. In line with its strategy of focusing on its core businesses, the Bank continues considering its strategic options in respect of Aldagi BCI.

Comments

“We are very pleased that our efforts to reorganize our business and optimize our cost structure in line with the challenging market environment have started to bear fruit. Due to the Bank’s focused cost optimization drive our Cost/Income ratio (normalized) was reduced to approximately 53% on the consolidated and approximately 42% on a standalone basis. Our capital position remains strong and despite increased loan loss provisioning for the past three quarters, our capacity to absorb additional provisions without a need for additional capital remains substantial. The Bank’s liquidity position is also solid and the Bank has sufficient liquidity to comfortably cover all of its international wholesale obligations in payable in the near future.

This year we will continue to focus on operational efficiency, loan book quality, deposit gathering and liquidity management”, commented Nicholas Enukidze, Chairman of the Supervisory Board.

1 Compared to the same period in 2008; growth calculations based on GEL values.

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

3 Normalised for Net Non-Recurring Costs.

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

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

6 q-o-q compares Q1 2009 results with Q4 2008 results

7 Market share data are derived from the information published by the National Bank of Georgia (www.nbg.gov.ge) and represent an aggregation of standalone financial information (non-IFRS, based on National Bank of Georgia requirements) filed by Georgian banks. Deposit market share is calculated based on the amount of total deposits, including client and interbank deposits

8 Some of the loans in audited financial statements of BG Bank as of 31 December 2008 were presented on a net basis (i.e. gross loans less respective reserves). Without this effect standalone gross Loans to Clients of BG Bank declined by 1.1% q-o-q.

SEGMENT RESULTS

               
Total Operating Income (Revenue)   Growth y-o-y   Q1 2009   Share   Q4 2008   Share   Q1 2008   Share   Growth q-o-q
Corporate Banking 20.34% 28,985 34.24% 26,939 31.11% 24,085 29.70% 7.60%
Retail Banking 24.10% 46,820 55.31% 48,314 55.80% 37,727 46.52% -3.09%
Wealth Management -25.32% 1,225 1.45% 1,421 1.64% 1,641 2.02% -13.77%
Ukraine -15.87% 5,471 6.46% 9,281 10.72% 6,503 8.02% -41.05%
Belarus NMF 2,431 2.87% 2,753 3.18% - 0.00% -11.7%
Galt & Taggart Securities -23.39% 1,239 1.46% (2,776) -3.21% 1,617 1.99% NMF
Asset Management NMF (483) -0.57% (5,335) -6.16% 12,402 15.29% -90.95%
Insurance 89.84% 3,419 4.04% (76) -0.09% 1,801 2.22% NMF
Corporate Center/Eliminations   -4.62%   (4,464)   -5.27%   6,069   7.01%   (4,682)   -5.77%   NMF
Total Operating Income (Revenue)   4.38%   84,643   100.00%   86,590   100.00%   81,094   100.00%   -2.25%
 
Total Recurring Operating Costs*                                
Corporate Banking -14.62% 5,949 13.32% 3,300 6.88% 6,968 15.67% 80.27%
Retail Banking -3.05% 17,501 39.20% 19,377 40.42% 18,052 40.59% -9.68%
Wealth Management 12.14% 736 1.65% (3) -0.01% 656 1.47% NMF
Ukraine -21.08% 5,657 12.67% 5,073 10.58% 7,168 16.12% 11.51%
Belarus NMF 1,506 3.37% 1,772 3.70% - 0.00% -14.99%
Galt & Taggart Securities -67.72% 1,226 2.75% 2,158 4.50% 3,799 8.54% -43.18%
Asset Management -29.70% 1,979 4.43% 3,964 8.27% 2,815 6.33% -50.06%
Insurance 58.47% 2,872 6.43% 2,421 5.05% 1,812 4.08% 18.65%
Corporate Center/Eliminations   125.06%   7,219   16.17%   9,874   20.60%   3,208   7.21%   -26.90%
Total Recurring Operating Costs   0.38%   44,645   100.00%   47,936   100.00%   44,478   100.00%   -6.87%
 
Net Income/Loss                                
Corporate Banking 121.67% 23,271 458.08% 40,815 -3641.50% 10,498 32.89% -42.98%
Retail Banking -58.68% 5,345 105.22% 3,457 -308.39% 12,936 40.53% 54.65%
Wealth Management NMF (30) -0.59% 233 -20.78% 670 2.10% NMF
Ukraine 951.19% (7,325) -144.20% (10,721) 956.49% (697) -2.18% -31.67%
Belarus NMF 661 13.01% (208) 18.59% - 0.00% NMF
Galt & Taggart Securities NMF 148 2.92% (4,633) 413.38% (1,854) -5.81% NMF
Asset Management NMF (2,336) -45.99% (11,178) 997.30% 8,147 25.52% -79.10%
Insurance NMF 656 12.90% (5,550) 495.15% (371) -1.16% NMF
Corporate Center/Eliminations   NMF   (15,310)   -301.35%   (13,336)   1189.75%   2,588   8.11%   14.80%
Net Income/Loss   NMF   5,080   100.00%   (1,121)   100.00%   31,919   100.00%   NMF
 
Basic EPS Contribution   Growth y-o-y   Contribution   Share   Contribution   Share   Contribution   Share   Growth q-o-q
Corporate Banking 107.32% 0.74 458.08% 1.33 -3607.75% 0.36 32.89% -44.08%
Retail Banking -61.35% 0.17 105.22% 0.09 -251.35% 0.44 40.53% 84.38%
Wealth Management NMF (0.00) -0.59% 0.01 -19.60% 0.02 2.10% NMF
Ukraine 883.15% (0.23) -144.20% (0.35) 940.30% (0.02) -2.18% -32.46%
Belarus NMF 0.02 13.01% (0.01) 19.67% - 0.00% NMF
Galt & Taggart Securities NMF 0.00 2.92% (0.15) 396.71% (0.06) -5.81% NMF
Asset Management NMF (0.07) -45.99% (0.37) 994.86% 0.28 25.52% -79.64%
Insurance NMF 0.02 12.90% (0.18) 485.79% (0.01) -1.16% NMF
Corporate Center/Eliminations   NMF   (0.49)   -301.35%   (0.41)   1141.37%   0.08   8.11%   16.29%
Total   -85.11%   0.16   100.00%   (0.04)   100.00%   1.09   100.00%   NMF

*total recurring operating costs in Q1 2009 include bonus cost of GEL 4.2 million

SEGMENT RESULTS CONT’D

               
Total Assets   Growth, y-o-y   31-Mar-09   Share   31-Dec-08   Share   31-Mar-08   Share   Growth, q-o-q
Corporate Banking -3.93% 1,375,064 43.15% 1,431,178 43.92% 1,431,303 45.47% -3.92%
Retail Banking 11.58% 1,465,198 45.98% 1,489,335 45.70% 1,313,114 41.72% -1.62%
Wealth Management 32.47% 81,229 2.55% 83,570 2.56% 61,319 1.95% -2.80%
Ukraine -32.00% 244,813 7.68% 248,367 7.62% 360,022 11.44% -1.43%
Belarus NMF 60,066 1.88% 73,549 2.26% - 0.00% -18.33%
Galt & Taggart Securities -77.53% 18,545 0.58% 29,652 0.91% 82,549 2.62% -37.46%
Asset Management 10.23% 103,948 3.26% 107,164 3.29% 94,303 3.00% -3.00%
Insurance 37.81% 89,443 2.81% 82,531 2.53% 64,901 2.06% 8.38%
Corporate Center/Eliminations   -3.14%   (251,547)   -7.89%   (286,439)   -8.79%   (259,715)   -8.25%   -12.18%
Total Assets   1.24%   3,186,759   100.00%   3,258,907   100.00%   3,147,796   100.00%   -2.21%
 
Loans to Clients, Gross                                
Corporate Banking 4.35% 857,133 41.88% 958,241 43.77% 821,373 44.26% -10.55%
Retail Banking 22.31% 922,978 45.09% 994,545 45.43% 754,649 40.67% -7.20%
Wealth Management 46.24% 50,988 2.49% 55,506 2.54% 34,867 1.88% -8.14%
Ukraine -22.02% 198,783 9.71% 194,410 8.88% 254,923 13.74% 2.25%
Belarus NMF 29,570 1.44% 35,933 1.64% - 0.00% -17.71%
Galt & Taggart Securities 0.00% - 0.00% - 0.00% - 0.00% NMF
Asset Management 0.00% - 0.00% - 0.00% - 0.00% NMF
Insurance 0.00% - 0.00% - 0.00% - 0.00% NMF
Corporate Center/Eliminations   24.38%   (12,602)   -0.62%   (49,244)   -2.25%   (10,133)   -0.55%   -74.40%
Total Loans to Clients   10.30%   2,046,850   100.00%   2,189,391   100.00%   1,855,678   100.00%   -6.51%
 
Total Liabilities                                
Corporate Banking 8.63% 1,171,657 47.34% 1,225,380 48.24% 1,078,595 44.92% -4.38%
Retail Banking 17.98% 886,855 35.83% 934,074 36.77% 751,719 31.31% -5.06%
Wealth Management 34.49% 126,776 5.12% 130,905 5.15% 94,261 3.93% -3.15%
Ukraine -37.01% 183,727 7.42% 182,754 7.19% 291,663 12.15% 0.53%
Belarus NMF 26,527 1.07% 31,883 1.26% - 0.00% -16.80%
Galt & Taggart Securities -54.27% 12,348 0.50% 20,690 0.81% 27,003 1.12% -40.32%
Asset Management 0.03% 32,661 1.32% 33,356 1.31% 32,651 1.36% -2.08%
Insurance 56.74% 74,759 3.02% 68,228 2.69% 47,695 1.99% 9.57%
Corporate Center/Eliminations   NMF   (40,398)   -1.63%   (87,213)   -3.43%   77,473   3.23%   -53.68%
Total Liabilities   3.08%   2,474,912   100.00%   2,540,057   100.00%   2,401,060   100.00%   -2.56%
 
Client Deposits                                
Corporate Banking -7.27% 605,228 53.42% 629,460 52.76% 652,712 49.22% -3.85%
Retail Banking -22.88% 280,410 24.75% 319,033 26.74% 363,584 27.42% -12.11%
Wealth Management 22.08% 93,339 8.24% 96,702 8.10% 76,460 5.77% -3.48%
Ukraine -43.96% 121,045 10.68% 127,359 10.67% 215,991 16.29% -4.96%
Belarus NMF 25,401 2.24% 30,708 2.57% - 0.00% -17.28%
Galt & Taggart Securities -56.92% 7,508 0.66% 16,036 1.34% 17,428 1.31% -53.18%
Asset Management 0.00% - 0.00% - 0.00% - 0.00% NMF
Insurance 0.00% - 0.00% - 0.00% - 0.00% NMF
Corporate Center/Eliminations   0.00%   -   0.00%   (26,174)   -2.19%   -   0.00%   -100.00%
Total Client Deposits   -14.57%   1,132,931   100.00%   1,193,124   100.00%   1,326,175   100.00%   -5.05%
 
Book Value Per Share   Growth y-o-y   Contribution   Share   Contribution   Share   Contribution   Share   Growth, q-o-q
Corporate Banking -42.36% 6.51 28.57% 6.58 28.63% 11.29 47.23% -1.19%
Retail Banking 2.96% 18.50 81.25% 17.77 77.24% 17.97 75.18% 4.13%
Wealth Management 38.19% (1.46) -6.40% (1.51) -6.58% (1.05) -4.41% -3.80%
Ukraine -10.69% 1.95 8.58% 0.29 1.25% 2.19 9.15% -6.92%
Belarus NMF 1.07 4.71% 2.36 10.27% - 0.00% -19.53%
Galt & Taggart Securities -88.85% 0.20 0.87% 0.46 1.99% 1.78 7.44% -30.87%
Asset Management 15.57% 2.28 10.01% 1.33 5.80% 1.97 8.26% -3.44%
Insurance -14.70% 0.47 2.06% 2.10 9.13% 0.55 2.30% 2.64%
Corporate Center/Eliminations   -37.41%   (6.75)   -29.66%   (6.38)   -27.71%   (10.79)   -45.15%   5.96%
Book Value Per Share   -4.72%   22.77   100.00%   23.00   100.00%   23.90   100.00%   -1.00%
                   

STANDALONE Q1 2009 INCOME STATEMENT DATA

 
Period Ended Q1 2009 Q4 2008 Growth3 Q1 2008 Growth
Standalone, IFRS Based US$1     GEL US$2     GEL Q-O-Q US$4     GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Interest Income 56,235 93,913 55,928 93,232 0.7% 54,772 80,843 16.2%
Interest Expense 24,323 40,620 25,300 42,175 -3.7% 24,071 35,529 14.3%
Net Interest Income 31,912 53,293 30,629 51,058 4.4% 30,700 45,314 17.6%
Fee & Commission Income 6,126 10,231 6,883 11,474 -10.8% 7,088 10,462 -2.2%
Fee & Commission Expense 1,336 2,231 1,368 2,281 -2.2% 901 1,329 67.8%
Net Fee & Commission Income 4,790 8,000 5,515 9,193 -13.0% 6,187 9,133 -12.4%
Income From Documentary Operations 1,612 2,692 1,323 2,205 22.1% 1,319 1,947 38.3%
Expense On Documentary Operations 273 456 470 783 -41.8% 339 500 -8.9%
Net Income From Documentary Operations 1,339 2,237 853 1,421 57.4% 980 1,447 54.6%
Net Foreign Currency Related Income 3,343 5,583 4,552 7,588 -26.4% 7,570 11,173 -50.0%
Net Other Non-Interest Income 270 450 402 670 -32.8% (314) (464) NMF
Net Non-Interest Income 9,742 16,270 11,321 18,873 -13.8% 14,423 21,289 -23.6%
Total Operating Income (Revenue) 41,654 69,563 41,950 69,931 -0.5% 45,124 66,602 4.4%
Personnel Costs 8,800 14,695 8,628 14,383 2.2% 11,823 17,451 -15.8%
Selling, General & Administrative Costs 3,788 6,325 4,411 7,353 -14.0% 3,167 4,675 35.3%
Procurement & Operations Support Expenses 1,631 2,725 2,158 3,598 -24.3% 2,103 3,104 -12.2%
Depreciation & Amortization 2,454 4,097 2,913 4,856 -15.6% 2,088 3,081 33.0%
Other Operating Expenses 566 945 (27) (46) NMF 69 102 825.5%
Total Recurring Operating Costs 17,238 28,787 18,083 30,144 -4.5% 19,250 28,413 1.3%
Normalized Net Operating Income 24,417 40,776 23,867 39,786 2.5% 25,873 38,189 6.8%
Net Non-Recurring Income (Costs) 322 538 7,398 12,332 -95.6% 1,113 1,642 -67.3%
Profit Before Provisions 24,095 40,238 16,469 27,454 46.6% 24,761 36,547 10.1%
Net Provision Expense 16,146 26,963 (2,691) (4,487) NMF 4,536 6,695 302.7%
Pre-Tax Income 7,949 13,275 19,161 31,941 -58.4% 20,225 29,851 -55.5%
Income Tax Expenses/(Benefit) 1,192 1,991 1,873 3,123 -36.2% 3,034 4,478 -55.5%
Net Income 6,757 11,284 17,287 28,818 -60.8% 17,191 25,374 -55.5%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6700 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6670 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 December 2008

3Growth calculations based on GEL values

4 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4760 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2008

STANDALONE Q1 2009 BALANCE SHEET DATA

                   
31-Mar-09 31-Dec-08 31-Mar-08 Growth4 Growth4
Standalone, IFRS Based US$1     GEL US$2     GEL US$3     GEL Y-O-Y Q-O-Q
000s, unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Cash & Cash Equivalents 67,042 111,960 93,298 155,528 78,449 115,791 -3.3% -28.0%
Loans & Advances To Credit Institutions 254,884 425,656 193,831 323,117 171,531 253,179 68.1% 31.7%
Mandatory Reserve With NBG 17,634 29,449 18,539 30,904 57,211 84,443 -65.1% -4.7%
Other Accounts With NBG 43,249 72,226 25,791 42,993 34,463 50,868 42.0% 68.0%
Balances With & Loans To Other Banks 194,001 323,981 149,501 249,219 79,857 117,869 174.9% 30.0%
Available-For-Sale & Trading Securities - - - - - - NMF NMF
Treasuries & Equivalents - - 4,963 8,274 18,726 27,639 NMF -100.0%
Other Fixed Income Instruments 22,954 38,333 8,741 14,571 190,534 281,229 -86.4% 163.1%
Gross Loans To Clients 1,109,171 1,852,315 1,189,616 1,983,090 1,101,759 1,626,196 13.9% -6.6%
Less: Reserve For Loan Losses (61,464) (102,645) (58,868) (98,133) (21,466) (31,684) 224.0% 4.6%
Net Loans To Clients 1,047,707 1,749,670 1,130,748 1,884,957 1,080,293 1,594,512 9.7% -7.2%
Insurance Related Assets - - - - - - NMF NMF
Investments In Other Business Entities, Net 188,328 314,507 177,138 295,290 147,461 217,653 44.5% 6.5%
Property & Equipment Owned, Net 138,605 231,471 139,239 232,112 137,670 203,201 13.9% -0.3%
Intangible Assets Owned, Net 4,076 6,807 8,034 13,393 1,279 1,888 260.5% -49.2%
Goodwill 13,642 22,783 13,646 22,748 14,935 22,044 3.4% 0.2%
Tax Assets - Current & Deferred - - 3,974 6,624 1,414 2,086 NMF NMF
Prepayments & Other Assets 9,140 15,263 18,463 30,778 19,990 29,505 -48.3% -50.4%
Total Assets 1,746,378 2,916,451 1,792,077 2,987,392 1,862,282 2,748,729 6.1% -2.4%
 
Client Deposits 586,214 978,977 626,992 1,045,195 740,320 1,092,712 -10.4% -6.3%
Deposits & Loans From Banks 17,573 29,348 35,854 59,768 15,041 22,201 32.2% -50.9%
Borrowed Funds 696,288 1,162,801 682,525 1,137,770 538,668 795,074 46.3% 2.2%
Issued Fixed Income Securities - - - - 5,304 7,828 NMF NMF
Insurance Related Liabilities - - - - - - NMF NMF
Tax Liabilities - Current & Deferred 9,682 16,169 12,064 20,110 11,199 16,530 -2.2% -19.6%
Accruals & Other Liabilities 13,644 22,786 16,289 27,153 79,904 117,938 -80.7% -16.1%
Total Liabilities 1,323,402 2,210,082 1,373,723 2,289,996 ,390,436 2,052,283 7.7% -3.5%
 
Ordinary Shares 18,719 31,261 18,748 31,253 21,168 31,244 0.1% 0.0%
Share Premium 279,874 467,390 281,746 469,670 310,271 457,960 2.1% -0.5%
Treasury Shares (699) (1,167) (676) (1,128) (1,033) (1,525) -23.5% 3.5%
Retained Earnings 82,834 138,332 75,752 126,279 84,563 124,816 10.8% 9.5%
Revaluation & Other Reserves 35,491 59,269 28,013 46,698 39,686 58,577 1.2% 26.9%
Net Income (Loss) For The Period 6,757 11,284 14,771 24,624 17,191 25,374 -55.5% -54.2%
Shareholders' Equity Excluding Minority Interest 422,976 706,370 418,354 697,396 471,847 696,446 1.4% 1.3%
Minority Interest - - - - - - NMF NMF
Total Shareholders' Equity 422,976 706,370 418,354 697,396 471,847 696,446 1.4% 1.3%
Total Liabilities & Shareholders' Equity 1,746,378 2,916,451 1,792,077 2,987,392 1,862,282 2,748,729 6.1% -2.4%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6700 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 March 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6670 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 December 2008

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4760 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 March 2008

4 Growth calculations based on GEL values

BG BANK (UKRAINE) Q1 2009 INCOME STATEMENT DATA

                   
Period Ended Q1 2009 Q4 2008 Growth3 Q1 2008 Growth
Standalone, IFRS Based US$1     GEL US$2     GEL Q-O-Q US$4     GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Interest Income 6,649 11,103 5,139 8,566 30% 8,177 12,069 -8%
Interest Expense 4,935 8,241 2,870 4,785 72% 4,936 7,286 13%
Net Interest Income 1,714 2,862 2,268 3,781 -24% 3,241 4,783 -40%
Fee & Commission Income 493 823 552 921 -11% 887 1,309 -37%
Fee & Commission Expense 123 205 136 227 -10% 179 265 -23%
Net Fee & Commission Income 370 618 416 694 -11% 707 1,044 -41%
Income From Documentary Operations - - - - NMF - - NMF
Expense On Documentary Operations - - - - NMF - - NMF
Net Income From Documentary Operations - - - - NMF - - NMF
Net Foreign Currency Related Income 1,192 1,991 2,863 4,772 -58% 458 676 195%
Net Other Non-Interest Income - - 20 33 -100% - - NMF
Net Non-Interest Income 1,562 2,609 3,299 5,499 -53% 1,165 1,720 52%
Total Operating Income (Revenue) 3,276 5,471 5,567 9,280 -41% 4,406 6,503 -16%
Personnel Costs 1,938 3,236 1,546 2,577 26% 2,937 4,335 -25%
Selling, General & Administrative Costs 796 1,329 1,166 1,943 -32% 1,731 2,554 -48%
Procurement & Operations Support Expenses - - - - NMF - - NMF
Depreciation & Amortization 125 209 195 325 -36% 214 316 -34%
Other Operating Expenses 529 883 137 227 287% (25) (37) NMF
Total Recurring Operating Costs 3,387 5,657 3,043 5,072 12% 4,856 7,168 -21%
Normalized Net Operating Income (111) (186) 2,524 4,208 NMF (451) (665) -72%
Net Non-Recurring Income (Costs) 107 179 220 366 -51% 123 181 -1%
Profit Before Provisions (4) (7) 2,744 4,574 NMF (328) (484) -99%
Net Provision Expense 5,619 9,384 10,911 18,189 -48% 301 445 2010%
Pre-Tax Income (5,623) (9,391) (8,167) (13,615) -31% (629) (929) 911%
Income Tax Expenses/(Benefit) (1,237) (2,066) (1,736) (2,894) -29% (157) (232) 789%
Net Income (4,386) (7,325) (6,431) (10,721) -32% (472) (697) 951%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6700 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6670 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 December 2008

3Growth calculations based on GEL values

4 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4760 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2008

BNB (BELARUS) Q1 2009 INCOME STATEMENT DATA

           
Q1 2009 Q4 2008 Growth3
Period Ended US$1     GEL US$2     GEL Q-O-Q
Standalone, IFRS Based (Unaudited) (Unaudited)
000s, unless otherwise noted
Interest Income 971 1,621 1,127 1,880 -14%
Interest Expense 375 626 465 775 -19%
Net Interest Income 596 995 663 1,105 -10%
Fee & Commission Income 204 341 348 580 -41%
Fee & Commission Expense 30 50 51 84 -41%
Net Fee & Commission Income 174 291 298 496 -41%
Income From Documentary Operations 2 3 - - NMF
Expense On Documentary Operations 1 1 - - NMF
Net Income From Documentary Operations 1 2 - - NMF
Net Foreign Currency Related Income 704 1,175 591 986 19%
Net Other Non-Interest Income (19) (32) 100 167 -119%
Net Non-Interest Income 860 1,436 989 1,649 -13%
Total Operating Income (Revenue) 1,456 2,431 1,652 2,754 -12%
Personnel Costs 455 761 475 792 -4%
Selling, General & Administrative Costs 95 159 440 733 -78%
Procurement & Operations Support Expenses 139 233 (119) (198) NMF
Depreciation & Amortization 99 166 192 320 -48%
Other Operating Expenses 113 188 75 125 51%
Total Recurring Operating Costs 902 1,506 1,063 1,772 -15%
Normalized Net Operating Income 554 925 589 982 -6%
Net Non-Recurring Income (Costs) 6 10 (5) (9) NMF
Profit Before Provisions 560 935 584 973 -4%
Net Provision Expense 17 29 591 985 -97%
Pre-Tax Income 543 906 (7) (12) NMF
Income Tax Expenses/(Benefit) 147 245 118 196 25%
Net Income 396 661 (125) (208) NMF

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6700 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6670 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 December 2008

3Growth calculations based on GEL values

CONSOLIDATED Q1 2009 INCOME STATEMENT DATA

                   
Period Ended Q1 2009 Q4 2008 Growth3 Q1 2008 Growth
Consolidated, IFRS Based US$1     GEL US$2     GEL Q-O-Q US$4     GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Interest Income 62,733 104,763 59,258 98,784 6.05% 62,724 92,580 13.16%
Interest Expense 29,586 49,409 25,433 42,396 16.54% 29,007 42,815 15.40%
Net Interest Income 33,147 55,354 33,825 56,388 -1.83% 33,717 49,765 11.23%
Fee & Commission Income 6,823 11,395 6,747 11,247 1.31% 7,975 11,771 -3.19%
Fee & Commission Expense 1,489 2,486 3,104 5,175 -51.96% 1,080 1,594 55.96%
Net Fee & Commission Income 5,334 8,909 3,643 6,072 46.71% 6,895 10,177 -12.46%
Income From Documentary Operations 1,614 2,695 1,323 2,205 22.24% 1,319 1,947 38.42%
Expense On Documentary Operations 274 457 470 783.8201 -41.73% 339 500 -8.67%
Net Income From Documentary Operations 1,340 2,238 853 1,421 57.53% 980 1,447 54.69%
Net Foreign Currency Related Income 5,256 8,778 8,938 14,900 -41.09% 8,961 13,226 -33.63%
Net Insurance Income 1,821 3,042 1,910 3,184 -4.48% 1,109 1,638 85.76%
Brokerage Income 202 337 254 423 -20.32% 864 1,275 -73.53%
Asset Management Income 97 162 1,093 1,822 -91.12% 438 646 -74.96%
Realized Net Investment Gains (Losses) (2) (3) (2,059) (3,432) -99.91% (253) (373) -99.21%
Other 3,489 5,826 3,486 5,811 0.26% 2,232 3,294 76.85%
Net Other Non-Interest Income 5,607 9,364 4,684 7,808 19.92% 4,390 6,480 44.51%
Net Non-Interest Income 17,537 29,289 18,117 30,201 -3.02% 21,226 31,330 -6.51%
Total Operating Income (Revenue) 50,684 84,643 51,943 86,589 -2.25% 54,943 81,095 4.38%
Personnel Costs 13,165 21,985 13,832 23,057 -4.65% 17,432 25,730 -14.55%
Selling, General & Administrative Costs 6,999 11,688 6,387 10,648 9.77% 7,659 11,304 3.40%
Procurement & Operations Support Expenses 1,771 2,957 2,040 3,401 -13.04% 2,103 3,104 -4.72%
Depreciation & Amortization 3,105 5,185 3,827 6,380 -18.74% 2,730 4,029 28.68%
Other Operating Expenses 1,694 2,830 2,670 4,450 -36.41% 211 312 808.25%
Total Recurring Operating Costs 26,734 44,645 28,756 47,936 -6.87% 30,135 44,479 0.38%
Normalized Net Operating Income 23,950 39,998 23,187 38,653 3.48% 24,808 36,616 9.24%
Net Non-Recurring Income (Costs) (137) (228) (17,984) (29,980) -99.24% 5,737 8,468 -102.70%
Profit Before Provisions 23,813 39,770 5,203 8,673 358.51% 30,545 45,084 -11.79%
Net Provision Expense 20,953 34,992 6,528 10,882 221.57% 5,048 7,451 369.63%
Pre-Tax Income 2,860 4,778 (1,325) (2,209) NMF 25,497 37,633 -87.30%
Income Tax Expenses/(Benefit) (181) (302) (652) (1,088) -72.21% 3,873 5,715 NMF
Net Income 3,041 5,080 (673) (1,121) NMF 21,624 31,918 -84.08%
 
 
Weighted Average Number of Shares Outstanding (000s) 31,261 31,253 0.03% 29,237 6.92%
Fully Diluted Number of Shares Period End (000s) 35,074 31,253 12.23% 31,244 12.26%
EPS (Basic) 0.10 0.16 (0.02) (0.04) NMF 0.74 1.09 -85.11%
EPS (Fully Diluted) 0.09 0.14 (0.02) (0.04) NMF 0.69 1.02 -85.82%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6700 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2009

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6670 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 December 2008

3Growth calculations based on GEL values

4 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4760 per U$S1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 31 March 2008

CONSOLIDATED Q1 2009 BALANCE SHEET DATA

                   
31-Mar-09 31-Dec-08 Growth3, q-o-q 31-Mar-08 Growth3
Consolidated, IFRS Based US$1     GEL US$2     GEL US$4     GEL Y-O-Y
000s, unless otherwise noted (Unaudited) (Audited) (Unaudited)
 
Cash & Cash Equivalents 102,477 171,136 238,507 397,591 -56.96% 146,001 215,497 -20.59%
Loans & Advances To Credit Institutions 248,418 414,857 59,768 99,633 316.39% 157,305 232,182 78.68%
Mandatory Reserve With NBG/NBU/NBRB 29,350 49,014 23,787 39,653 23.61% 59,344 87,591 -44.04%
Other Accounts With NBG/NBU/NBRB 43,249 72,226 25,791 42,993 68.00% 34,463.11 50,868 41.99%
Balances With & Loans To Other Banks 175,818 293,617 10,190 16,987 1628.48% 63,498 93,723 213.28%
Available-For-Sale & Trading Securities 24,252 40,501 20,238 33,737 20.05% 34,830 51,409 -21.22%
Treasuries & Equivalents - - 4,963 8,274 -100.00% 18,726 27,639 NMF
Other Fixed Income Instruments 22,967 38,355 8,741 14,571 163.23% 190,534 281,229 -86.36%
Gross Loans To Clients 1,225,658 2,046,850 1,313,372 2,189,391 -6.51% 1,257,235 1,855,678 10.30%
Less: Reserve For Loan Losses (80,985) (135,245) (65,245) (108,764) 24.35% (26,818) (39,584) 241.67%
Net Loans To Clients 1,144,673 1,911,605 1,248,127 2,080,627 -8.12% 1,230,417 1,816,094 5.26%
Insurance Related Assets 31,506 52,615 25,189 41,990 25.30% 22,955 33,882 55.29%
Investments In Other Business Entities, Net 21,875 36,531 38,398 64,009 -42.93% 45,623 67,339 -45.75%
Property & Equipment Owned, Net 203,532 339,898 181,034 301,784 12.63% 167,416 247,107 37.55%
Intangible Assets Owned, Net 6,839 11,421 10,930 18,220 -37.31% 4,220 6,229 83.36%
Goodwill 80,992 135,257 80,527 134,238 0.76% 74,679 110,227 22.71%
Tax Assets - Current & Deferred 4,003 6,685 7,670 12,786 -47.72% 2,371 3,499 91.03%
Prepayments & Other Assets 16,705 27,897 30,861 51,447 -45.77% 37,577 55,464 -49.70%
Total Assets 1,908,238 3,186,758 1,954,953 3,258,907 -2.21% 2,132,654 3,147,797 1.24%
 
Client Deposits 678,402 1,132,931 715,731 1,193,124 -5.05% 898,493 1,326,175 -14.57%
Deposits & Loans From Banks 31,702 52,942 47,362 78,952 -32.94% 29,541 43,602 21.42%
Borrowed Funds 696,288 1,162,801 682,525 1,137,770 2.20% 538,668 795,074 46.25%
Issued Fixed Income Securities 81 136 - - NMF 9,173 13,540 -99.00%
Insurance Related Liabilities 38,207 63,806 33,237 55,406 15.16% 29,221 43,130 47.94%
Tax Liabilities - Current & Deferred 11,348 18,951 14,633 24,394 -22.31% 18,357 27,095 -30.06%
Accruals & Other Liabilities 25,955 43,344 30,243 50,412 -14.02% 103,283 152,446 -71.57%
Total Liabilities 1,481,983 2,474,911 1,523,731 2,540,058 -2.56% 1,626,736 2,401,062 3.08%
 
Ordinary Shares 18,719 31,261 18,748 31,253 0.03% 21,168 31,244 0.05%
Share Premium 274,512 458,435 281,183 468,732 -2.20% 302,975 447,191 2.51%
Treasury Shares (1,199) (2,002) (1,211) (2,018) -0.81% (1,250) (1,846) 8.46%
Retained Earnings 72,529 121,123 82,540 137,594 -11.97% 97,705 144,213 -16.01%
Revaluation & Other Reserves 27,890 46,577 15,717 26,201 77.77% 42,537 62,785 -25.81%
Net Income (Loss) For The Period 3,042 5,080 104 174 2819.65% 21,624 31,918 -84.08%
Shareholders' Equity Excluding Minority Interest 395,493 660,474 397,081 661,936 -0.22% 484,759 715,505 -7.69%
Minority Interest 30,762 51,373 34,141 56,913 -9.73% 21,159 31,230 64.50%
Total Shareholders' Equity 426,255 711,847 431,222 718,849 -0.97% 505,918 746,735 -4.67%
Total Liabilities & Shareholders' Equity 1,908,238 3,186,758 1,954,953 3,258,907 -2.21% 2,132,654 3,147,797 1.24%
 
Shares Outstanding 31,261 31,253 31,244 0.05%
Book Value Per Share 13.64 22.77 13.80 23.00 16.19 23.90 4.72%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6700 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 March 2009

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6670 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 December 2008

3 Growth calculations based on GEL values

4 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4760 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 31 March 2008

 KEY RATIOS

           
Q1 2009 Q1 2008
Profitability Ratios
ROAA 1, Annualised       0.63%       4.18%
ROA       0.64%       4.06%
ROAE2, Annualised       2.85%       19.57%
ROE       2.85%       17.10%
Interest Income To Average Interest Earning Assets 3, Annualised       17.52%       16.60%
Cost Of Funds 4, Annualised       8.25%       7.71%
Net Spread 5       9.27%       8.89%
Net Interest Margin 6, Annualised       9.26%       8.92%
Net Interest Margin Normalized 35, Annualised       9.26%       8.92%
Loan Yield 7, Annualised       13.15%       18.88%
Interest Expense To Interest Income       47.16%       46.25%
Net Non-Interest Income To Average Total Assets, Annualised       3.62%       4.11%
Net Non-Interest Income To Revenue 8       34.60%       38.63%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised       1.49%       1.82%
Net Fee And Commission Income To Revenue       10.53%       12.55%
Operating Leverage 10       -20.24%       33.36%
Total Operating Income (Revenue) To Total Assets, Annualised       10.62%       10.30%
Recurring Earning Power 11, Annualised       4.91%       7.05%
Net Income To Revenue       6.00%       39.36%
 
Efficiency Ratios
Operating Cost To Average Total Assets 12, Annualised       5.51%       4.69%
Cost To Average Total Assets 13, Annualised       5.54%       4.72%
Cost / Income 14       53.01%       44.40%
Cost / Income, Normalized 37       52.74%       54.85%
Cost / Income, Bank of Georgia, Standalone 15       42.16%       45.13%
Cost/Income, Normalized, Bank of Georgia, Standalone       41.38%       44.46%
Cash Cost / Income       46.89%       39.44%
Total Employee Compensation Expense To Revenue 16       25.97%       31.73%
Total Employee Compensation Expense To Cost       48.99%       71.45%
Total Employee Compensation Expense To Average Total Assets, Annualised       2.71%       3.37%
 
Liquidity Ratios
Net Loans To Total Assets 17       59.99%       57.69%
Average Net Loans To Average Total Assets       61.64%       57.99%
Interest Earning Assets To Total Assets       74.21%       74.88%
Average Interest Earning Assets To Average Total Assets       73.82%       73.13%
Liquid Assets To Total Assets 18       19.32%       22.88%
Liquid Assets To Total Liabilities, NBG Stand-Alone       37.63%       34.19%
Liquid Assets To Total Liabilities, IFRS Consolidated       26.86%       33.65%
Net Loans To Client Deposits       168.73%       136.94%
Average Net Loans To Average Client Deposits       168.52%       131.95%
Net Loans To Total Deposits 19       161.20%       132.58%
Net Loans To (Total Deposits + Equity)       100.73%       85.81%
Net Loans To Total Liabilities       77.24%       75.64%
Total Deposits To Total Liabilities       47.92%       57.05%
Client Deposits To Total Deposits       95.54%       96.82%
Client Deposits To Total Liabilities       45.78%       55.23%
Current Account Balances To Client Deposits       42.15%       43.75%
Demand Deposits To Client Deposits       7.56%       6.99%
Time Deposits To Client Deposits       50.29%       49.26%
Total Deposits To Total Assets       37.21%       43.52%
Client Deposits To Total Assets       35.55%       42.13%
Client Deposits To Total Equity (Times) 20       1.59       1.78
Due From Banks / Due To Banks 21       783.61%       532.50%
Total Equity To Net Loans       37.24%       41.12%
Leverage (Times) 22       3.48       3.22

 

 

Asset Quality
NPLs (in GEL) 23       104,587       18,992
NPLs To Gross Loans To Clients 24       5.11%       1.02%
Cost of Risk 25, Annualized       6.59%       1.65%
Cost of Risk Normalized 36, Annualized       6.59%       1.65%
Reserve For Loan Losses To Gross Loans To Clients 26       6.61%       2.13%
NPL Coverage Ratio 27       129.31%       208.42%
Equity To Average Net Loans To Clients       35.63%       42.21%
 
Capital Adequacy
Equity To Total Assets       22.34%       23.72%
BIS Tier I Capital Adequacy Ratio, consolidated 28       22.25%       25.24%
BIS Total Capital Adequacy Ratio, consolidated 29       31.75%       25.81%
NBG Tier I Capital Adequacy Ratio 30       16.40%       18.26%
NBG Total Capital Adequacy Ratio 31       17.37%       16.33%
 
Per Share Values
Basic EPS (GEL) 32       0.16       1.09
Basic EPS (US$)       0.10       0.74
Fully Diluted EPS (GEL) 33       0.14       1.02
Fully Diluted EPS (US$)       0.09       0.69
Book Value Per Share (GEL) 34       22.77       23.90
Book Value Per Share (US$)       13.64       16.19
Ordinary Shares Outstanding - Weighted Average, Basic       31,260,888       29,237,387
Ordinary Shares Outstanding - Period End       31,260,888       31,244,092
Ordinary Shares Outstanding - Fully Diluted       35,074,482       31,244,092
 
Selected Operating Data
Full Time Employees (FTEs)       4,989       4,926
FTEs, Bank of Georgia Standalone       2,692       3,056
Total assets per FTE 23 (GEL Thousands)       639       639
Total Assets per FTE, Bank of Georgia Standalone (GEL Thousands)       1,184       1,030
Number Of Active Branches       142       131
Number Of ATMs       420       310
Number Of Cards (Thousands)       645       743
Number Of POS Terminals       2,548       2,063

NOTES TO KEY RATIOS

1 Return On Average Total Assets (ROAA) equals Net Income of the period divided by quarterly Average Total Assets for the same period;

2 Return On Average Total Equity (ROAE) equals Net Income of the period divided by quarterly Average Total Equity for the same period;

3 Average Interest Earning Assets are calculated on a quarterly basis; Interest Earning Assets include: Loans And Advances To Credit Institutions, Treasuries And Equivalents, Other Fixed Income Instruments and Net Loans to Clients;

4 Cost Of Funds equals Interest Expense of the period divided by quarterly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Client Deposits, Deposits And Loans From Banks, Borrowed Funds and Issued Fixed Income Securities;

5 Net Spread equals Interest Income To Average Interest Earning Assets less Cost Of Funds;

6 Net Interest Margin equals Net Interest Income of the period divided by quarterly Average Interest Earning Assets of the same period;

7 Loan Yield equals Interest Income, less Net Provision Expense, divided by quarterly Average Gross Loans To Clients;

8 Revenue equals Total Operating Income;

9 Net Fee And Commission Income includes Net Income From Documentary Operations of the period ;

10 Operating Leverage equals percentage change in Revenue less percentage change in Total Costs;

11 Recurring Earning Power equals Profit Before Provisions of the period divided by average Total Assets of the same period;

12 Operating Cost equals Total Recurring Operating Costs;

13 Cost includes Total Recurring Operating Costs and Net Non-Recurring Costs (Income);

14 Cost/Income Ratio equals Costs of the period divided by Total Operating Income (Revenue);

15 Cost/ Income, Bank of Georgia, standalone, equals non-consolidated Total Costs of the bank of the period divided by non-consolidated Revenue of the bank of the same period;

16 Total Employee Compensation Expense includes Personnel Costs;

17 Net Loans equal Net Loans To Clients;

18 Liquid Assets include: Cash And Cash Equivalents, Other Accounts With NBG, Balances With And Loans To Other Banks, Treasuries And Equivalents and Other Fixed Income Securities as of the period end and are divided by Total Assets as of the same date;

19 Total Deposits include Client Deposits and Deposits And Loans from Banks;

20 Total Equity equals Total Shareholders’ Equity;

21 Due From Banks/ Due To Banks equals Loans And Advances To Credit Institutions divided by Deposits And Loans From Banks;

22 Leverage (Times) equals Total Liabilities as of the period end divided by Total Equity as of the same date;

23 NPLs (in GEL) equals consolidated total gross non-performing loans as of the period end; non-performing loans are loans that have debts in arrears for more than 90 calendar days;

24 Gross Loans equals Gross Loans To Clients;

25 Cost Of Risk equals Net Provision For Loan Losses of the period, plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans To Clients over the same period;

26 Reserve For Loan Losses To Gross Loans To Clients equals reserve for loan losses as of the period end divided by gross loans to clients as of the same date;

27 NPL Coverage Ratio equals Reserve For Loan losses as of the period end divided by NPLs as of the same date;

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

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

30 NBG Tier I Capital Adequacy Ratio equals Tier I Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements the National Bank of Georgia;

31 NBG Total Capital Adequacy Ratio equals Total Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of the National Bank of Georgia;

32 Basic EPS equals Net Income of the period divided by the weighted average number of outstanding ordinary shares over the same period;

33 Fully Diluted EPS equals net income of the period divided by the number of outstanding ordinary shares as of the period end plus number of ordinary shares in contingent liabilities;

34 Book Value Per Share equals Equity as of the period end, plus Treasury Shares, divided by the total number of Outstanding Ordinary shares as of the same date.

35 Net Interest Margin Normalized equals Net Interest Income of the period, less interest income generated by non-performing loans through the date of their write-off, divided by quarterly Average Interest Earning Assets of the same period;

36 Cost Of Risk Normalized equals Net Provision For Loan Losses of the period, less provisions for the interest income generated by non-performing loans through the date of their write-off, plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans To Clients over the same period;

37 Cost / Income Normalized equals Recurring Operating Costs divided by Total Operating Income (Revenue) for the same period

About Bank of Georgia

Bank of Georgia is the leading Georgian bank offering a broad range of corporate and investment banking, retail banking, wealth management and insurance services to its customers in Georgia, Ukraine and Belarus. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 34.3% market share by total assets (all data according to the NBG as of 31 March 2009). The bank has 142 branches and over 870,000 retail and more than 140,000 corporate current accounts.

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

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

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

Nicholas Enukidze     Irakli Gilauri     Macca Ekizashvili
Chairman of the Supervisory Board Chief Executive Officer Head of Investor Relations
+995 32 444 858 +995 32 444 109 +995 32 444 256

nenukidze@bog.ge

igilauri@bog.ge

ir@bog.ge

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

The financial information as of Q1 2008, Q4 2008 and Q1 2009 contained in this news report is unaudited and reflects the best estimates of management. The bank’s actual results may differ significantly from the amounts reflected herein as a result of various factors.