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JSC Bank of Georgia (BGEO)

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Tuesday 16 August, 2011

JSC Bank of Georgia

Half-yearly Report

Half-yearly Report

Bank of Georgia

JSC BANK OF GEORGIA ANNOUNCES Q2 AND 1H 2011 RESULTS,
REPORTS Q2 2011 ROAE1 OF 26.1%

Bank of Georgia (LSE:BGEO)(GSE:GEB) (the “Bank”), Georgia’s leading bank, announced today its Q2 2011 and 1H 2011 consolidated results (IFRS based, derived from management accounts), reporting a Q2 2011 Net Income of GEL 46.9 million, or GEL 1.50 per share and 1H 2011 Net Income of GEL 77.5 million before loss from Discontinued Operations (Extraordinary Item in Q1 2011), or GEL 2.47 per share.

Q2 2011 and 1H 2011 highlights

Financial Highlights

  • Record high quarterly Net Income of GEL 46.9, increase of 53.4% q-o-q and 139.1% y-o-y
  • 1H 2011 consolidated Return on Average Equity (ROAE) increased substantially to 22.0%1, up from 12.2% in 1H 2010, as the Bank benefited from the high growth rates of the Georgian economy
    • Q2 2011 consolidated ROAE increased to 26.1%, up from 17.7% and 12.2% in Q1 2011 and in Q2 2010, respectively
  • Q2 2011 standalone Profit Before Provisions grew 57.2% y-o-y to GEL 54.7 million, up 28.6% q-o-q
  • Both Net Loan Book and Client Deposits continued to increase strongly as the growth of the economy created greater demand for financial services among both corporate and retail clients
    • Net Loan Book, standalone, increased by 10.2% q-o-q to GEL 2,441.9 million, up 32.4% y-o-y and up 11.0% YTD. In nominal terms2, standalone Net Loan Book grew 15.3% q-o-q, up 16.1% YTD
    • Client Deposits, standalone, increased by 5.3% q-o-q to GEL 2,070.4 million, up 54.2% y-o-y, up 14.8% YTD. In nominal terms, standalone Client Deposits increased 9.4% q-o-q, up 19.4% YTD
  • Complementing the growth in the Bank’s business, rigorous financial management and cost control resulted in improved efficiency
    • Cost/Income Ratio, consolidated, declined to 49.9% in Q2 2011 from 54.4% in Q1 2011, while in 1H 2011, consolidated Cost/Income Ratio declined to 52.0% in 1H 2011 from 60.2% in 1H 2010
    • Q2 2011 consolidated operating leverage amounted to 12.5% on a y-o-y basis, while standalone operating leverage stood at 32.6% on a y-o-y basis during the same period.

“I am pleased that on the back of significant monetary and fiscal tightening in the first half of 2011 and 6.4% Lari appreciation against U.S.$, we observed year-to-date 11% net loan book growth in Georgia and significant asset quality improvements. These two factors played the critical role in achieving triple digit net profit growth in first half 2011 compared to first half 2010, translating into 22%1 return on average equity in first half 2011 - our main target.

Georgian economy showed a 5.8% estimated real GDP growth while FDI reached U.S.$ 174 million in first quarter of 2011. By June 2011, the number of visitors to Georgia increased by 45% compared to the same period in 2010, one of the contributor to the appreciation of Lari against U.S.$ and the growth of the NBG FX reserves by 25% to U.S.$2.5 million in first half of 2011. Inflation growth rate, the only concern since the beginning of the year, slowed down significantly after peaking at 14.3% in May 2011 to 8.5% in July 2011 and we started to observe loosening of monetary policy as the National Bank decreased the refinancing rate by 25 bps to 7.75% in July 2011 and reduced the minimum reserve requirement for commercial banks from 15% to 0% on international borrowings with the remaining maturities of more than two years in August 2011. At the same time, we expect significant stimulus from the Ministry of Finance in second half of 2011 as it needs to achieve budget deficit of circa GEL 454 million from budget surplus of GEL 48 million in first half 2011. This increased spending will enable the sovereign to achieve circa 3% budget deficit for 2011.

Solid first half results and positive macro outlook as outlined above gives us good ground for strong second half performance in terms of balance sheet growth and profitability” commented Irakli Gilauri, Chief Executive Officer.

1 ROAE excluding minority interest
2 Nominal terms applied GEL/US$ as of 31 December 2010 to the 30 June 2011

Financial Summary

Millions, unless otherwise noted   Q2 20113   Growth q-o-q3   Growth y-o-y4
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$   GEL
Total Operating Income (Revenue)5 61.1 101.8 11.7% 25.2%
Recurring Operating Costs 29.8 49.6 5.0% 6.7%
Normalised Net Operating Income6 31.3 52.1 18.9% 50.0%
Profit/(Loss) before provisions 30.6 51.0 22.8% 40.7%
Net Provision Expenses 1.3 2.1 -59.4% -83.4%
Net Income/(Loss) 28.1 46.9 53.5% 139.4%
EPS (Basic) 0.90 1.50 53.4% 139.1%
 
Millions, unless otherwise noted 1H 2011 Growth y-o-y4
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$ GEL
Total Operating Income (Revenue)5 115.7 192.8 22.7%
Recurring Operating Costs 58.2 96.9 4.4%
Normalised Net Operating Income6 57.6 95.9 49.1%
Profit/(Loss) before provisions 55.5 92.5 47.8%
Net Provision Expenses 4.3 7.2 -63.7%
Net Income/(Loss) 7 46.5 77.5 113.1%
EPS (Basic) 1.48 2.47 112.8%
 
Total Assets 2,474.2 4,123.3 20.4%
Net Loans 1,464.1 2,439.9 23.1%
Client Deposits 1,247.8 2,079.4 39.8%
Tier I Capital Adequacy Ratio (BIS)8 18.0%
Total Capital Adequacy Ratio (BIS)9 27.2%
NBG Tier I Capital Adequacy Ratio 11.5%
NBG Total Capital Adequacy Ratio 15.1%
 

Book Value Per share

 

US$ 14.4

 

GEL 24.0

 

      15.6%

   

Q2 2011 summary of the Bank’s consolidated results

In Q2 2011, the Bank’s Total Operating Income (Revenue) increased 11.7% q-o-q and 25.2% y-o-y to GEL 101.8 million. This was driven by 16.1% y-o-y growth of Net Interest Income (reaching GEL 60.0 million, up 5.4% q-o-q) and 41.1% y-o-y growth of Net Non-Interest Income (GEL 41.8 million up 22.2% q-o-q). On a quarterly basis, the growth of Net Interest income benefited from the growth of the net loan book, which increased by 8.8% q-o-q on a consolidated and 10.2% on a standalone basis outpacing the 5.2% q-o-q growth of consolidated and 5.3% q-o-q standalone client deposits, respectively. As a result, Net Interest Margin (NIM) for the quarter increased to 7.3%, up from the NIM of 7.0% in Q1 2011. Increase in overall business activity drove the growth of all other Non-Interest Income items. Net Foreign Currency Related Income, grew by 40.5% q-o-q to GEL 13.4 million and Net Fee and Commission Income increased by 25.2% to GEL 15.0 million.

On a year-on-year basis, in Q2 2011, Net Interest Income grew 16.1% y-o-y, despite the 39.8% y-o-y growth in Client Deposits compared to the 23.1% increase of the loan book year-on-year. The Bank’s 41.1% y-o-y growth of Q2 2011 Net Non-Interest Income was driven by the growth of all Non-Interest Income items compared to the same period last year. Net Fees and Commission Income grew 38.2% y-o-y to GEL 15.0 million, Net Income from Documentary Operations grew by 59.7% y-o-y to GEL 3.4 million and Net Foreign Currency Related Income increased 51.8% y-o-y to GEL 13.4 million. Net Other Non-Interest Income amounted to GEL 9.9 million, up 27.9% y-o-y, with the growth mostly attributed to the increase in Brokerage and Investment Banking Fees to GEL 1.3 million in Q2 2011 compared to GEL 20 thousand in Q2 2010. As result of the healthy growth of all Non-Interest Income items, the Q2 2011 Net-Non Interest Income accounted for 41.1% of the Bank’s revenue, up from 37.5% in Q1 2011 and from 36.4% in Q2 2010.

Total consolidated Recurring Operating Costs for the quarter increased by 5.0% q-o-q to GEL 49.6 million (up 6.7% y-o-y). The main driver of cost growth during the quarter was the increase in Personnel Costs, which grew 6.1% on a year-on year and 7.2% on a quarter on quarter basis to GEL 27.5 million, in line with the growth of the Bank’s banking operations in Georgia. In Q2 2011, Personnel Costs as percent of Revenue continued to decline reaching 27.1% of the Bank’s Revenue, down from 31.9% in Q2 2010 and from 28.2% in Q1 2011. Normalised Net Operating Income of GEL 52.1 million was up 50.0% y-o-y (up 18.9% q-o-q), resulting in the improved consolidated Normalised Cost/Income Ratio of 48.8% compared to the Normalised Cost/Income ratio of 51.9% in Q1 2011 and 57.3% in Q2 2010.

Net Non-Recurring Income (Costs) for the quarter amounted to GEL 1.1 million and consisted of the following items:

Net Non-Recurring Income / (Costs)   Q2 2011
 
Amounts in GEL '000 Quarter
Gain from BYR/U.S.$ Hedge 20,054
BNB Goodwill Impairment (13,000)
Loss from the Eurobond Buyback (5,452)
Loss from Disposal of Liberty Consumer Associate, InfoGeorgia (1,371)
Gain from Sale of Properties 864
One-off Tax Adjustment (2,906)
Other Net Non-Recurring 694
Total (1,117)

Due to the Belarusian Ruble (BYR0 devaluation against the U.S.$ the Bank recorded GEL 20.1 million non-recurring income on its BYR/US$ hedge. Also as a result of BYR devaluation the Bank made a GEL 13.0 million goodwill write-down on its BNB investment and as of 30 June 2011, the total goodwill related to BNB amounted to GEL 10.4 million. The non-recurring cost of GEL 5.5 million was recorded due to the Eurobond buy-back in Q2 2011. The Bank made a negative adjustment on tax in the amount of GEL 2.9 million under the non-recurring items, which is related to tax benefit of GEL 3.3 million, recorded under the corporate profit tax item.

The Bank’s consolidated Net Provision Expense for the quarter declined to GEL 2.1 million, down from Net Provision Expense of GEL 5.2 million and GEL 12.6 million in Q1 2011 and Q2 2010, respectively. Net Provision Expense in Q2 2011 was largely a result of the Net Provision Expense for BNB in the amount of GEL 3.4 million due to the 40.1% devaluation of the BYR against GEL during the period, which more than offset GEL 1.9 million reversal of provision charges at the Bank of Georgia standalone level. Consolidated Cost of Risk for the quarter stood at 0.35% a decrease from 2.44% in Q2 2010.

On 30 June 2011, the Bank’s consolidated Total Assets stood at GEL 4,123.3 million, up 20.4% y-o-y and up 3.0% from 31 December 2010. The Bank’s consolidated Net Loan Book was up by 8.8% q-o-q to GEL 2,439.9 million, up 23.1% y-o-y, while consolidated Client Deposits of GEL 2,079.4 million were 3.7% higher than at 31 December 2010, and 39.8% higher than consolidated Client Deposits on 30 June 2010. The increases in the loan book and client deposits were attributed to the growth of Bank of Georgia’s Georgian loan book (up 11.0% YTD and up 32.4% y-o-y) and client deposits (up 14.8% YTD and up 54.2% y-o-y) in 1H 2011, while the equivalent comparisons on a consolidated basis are impacted by the inclusion of BG Bank loans and deposits in the 2010 financials. In Q2 2011, the consolidated Loan Loss Reserves of GEL 122.5 million declined to 4.8% of the consolidated Gross Loan Book from 5.1% in Q1 2011, reflecting the improved operating environment in Georgia while consolidated NPLs of GEL 100.9 million declined from GEL 173.7 million in Q2 2010, up from GEL 90.8 million in Q1 2011. As of 30 June 2011, consolidated NPLs represented 3.9% of the consolidated gross Loan Book, remaining largely flat compared to the same ratio of 3.8% in Q1 2011. The consolidated NPL Coverage ratio for the quarter stood at 121.4%.

The Bank’s consolidated Book Value per Share on 30 June 2011 stood at GEL 23.97 (US$ 14.38), compared to GEL 23.52 (U.S.$ 13.79) as of 31 March 2011, GEL 22.12 (U.S$12.48) as of 31 December 2010 and GEL 20.74 (U.S.$ 11.25) as of 30 June 2010.

1H 2011 summary of the Bank’s consolidated results

The 1H 2011 results include the loss from Discontinued Operations (Extraordinary Item) of GEL 13.7 million related to the disposal of BG Bank Ukraine in Q1 2011. The accounting treatment of the one-off Extraordinary Item related to BG Bank disposal in Q1 2011 carries limited economic value for the Bank, therefore Q1 2011 consolidated results and the discussion of the results in this report exclude the Extraordinary Item.

For the discussion of results on a comparable basis please refer to the Bank of Georgia standalone results, which do not include BG Bank’s results for all the periods discussed

The Bank reported 1H 2011 consolidated Net Income10 of GEL 77.5 million. In the 1H 2011, the Bank’s Total Operating Income (Revenue) increased 22.7% y-o-y to GEL 192.8 million, driven by a 20.6% y-o-y increase in Net Interest Income to GEL 116.9 million and by 26.1% y-o-y growth of Net Non-Interest Income to GEL 76.0 million. Net Interest Income of GEL 116.9 million grew 20.6% y-o-y as Interest Income (GEL 238.4 million) growth of 19.6% achieved on the back of 23.1% y-o-y growth of the net loan book outpaced the 18.6% increase in interest expense (GEL 121.5 million, driven mostly by 39.8% y-o-y growth of the Client Deposits. In line with the increased lending and overall business activity, the Bank’s Net Non-Interest Income in 1H 2011 rose by 26.1% y-o-y to GEL 76.0 million. This was a result of the 27.5% y-o-y increase in Net Fees and Commission Income to GEL 27.0 million, the 60.3% y-o-y growth Net Income from Documentary Operations to GEL 6.9 million, the 42.0% y-o-y increase in Net Foreign Currency Related Income to GEL 23.0 million, while Net Other Non-Interest Income grew by 2.8% y-o-y to GEL 19.1 million.

Reflecting the improved efficiency across the Bank’s businesses as well as the exclusion of BG Bank results from the 2011 consolidated results, the total Recurring Operating Costs of GEL 96.9 million were up by 4.4% y-o-y which, when set alongside the 22.7% y-o-y growth of the Revenue to GEL 192.8 million translates into Operating Leverage of 16.6% on a year-on-year basis.

The Bank’s Net Provision Expense declined from GEL 20.0 million in 1H 2010 to GEL 7.2 million in 1H 2011 reflecting the improved loan quality of Bank of Georgia on a standalone basis and the improved operating environment in Georgia. The Bank reported triple digit Net Income growth with 1H 2011 Net Income10 of GEL 77.5 million compared to the Net Income of GEL 36.3 million in 1H 2010.

JSC Bank of Georgia standalone results

Bank of Georgia on a standalone basis reported Q2 2011 Net Income of GEL 56.2 million, an increase of GEL 31.5 million, or 130.2%, compared to the standalone Net Income of GEL 24.4 million in Q2 2010. Q2 2011 Net Income grew by GEL 24.7 million, or 78.5%, compared to the Q1 2011 standalone Net Income. Reflecting the strong growth combined with the improved asset quality in Q2 2011, the Bank’s 1H 2011 standalone Net Income of GEL 87.7 million is a significant increase compared to the GEL 37.3 million standalone Net Income for the same period in 2010.

On a year-on-year basis, Q2 2011 Net Income growth was driven by 25.1% year-on-year growth of the standalone Total Operating Income (Revenue) to GEL 86.4 million, a result of 19.9% y-o-y increase of Net Interest Income to GEL 58.0 million, attributable mostly to the standalone loan book (net) growth of 32.4% y-o-y, which more than offset the 54.2% growth of Client Deposits, and 37.1% growth of Net Non-Interest Income to GEL 28.5 million, due to the y-o-y growth of most of the non-interest income items, as the Bank’s superior franchise allowed it to benefit from economic growth in Georgia. On a quarterly basis, standalone Net Interest Income grew by 4.9% to GEL 58.0 million and Net Non-Interest Income increased by 24.0% to GEL 28.5 million, resulting in the 10.5% q-o-q growth of standalone Revenue. The rise in interest income during the quarter was a result of healthy q-o-q growth of the standalone Net Loan Book, which grew 10.2%-q-o-q outpacing the 5.3% q-o-q growth rate of standalone Client Deposits. Standalone NIM at 7.1% was slightly better than the standalone NIM of 7.0% in Q1 2011.

Bank of Georgia’s standalone Q2 2011 Recurring Operating Costs of GEL 37.2 million grew 8.7% q-o-q (up 14.6% y-o-y) translating into Normalised Net Operating Income (NNOI) for the quarter of GEL 49.2 million, up by GEL 12.6 million, or 34.4% y-o-y.

The improved efficiency and Revenue growth on a yearly basis translated into the standalone positive operating leverage of 32.6% y-o-y. Bank of Georgia’s standalone Cost/Income ratio stood at 36.7% in Q2 2011 compared to 45.6% in Q1 2011 and 49.6% in Q2 2010. The combination of Loan Book growth and improved operating performance resulted in the 57.2% growth of Profit Before Provisions to GEL 54.7 million, up 28.6% q-o-q. Reflecting the improved asset quality, the Bank’s Net Provision Reversal on a standalone basis amounted to GEL 1.9 million in Q2 2011 compared to the Net Provision Expense of GEL 5.6 million in Q1 2011 and GEL 6.5 million in Q2 2010.

Bank of Georgia’s 1H 2011 standalone Total Operating Income stood at GEL 164.6 million, up by GEL 36.2 million or 28.1% compared to the Total Operating Income of GEL 128.5 million in 1H 2010. Net Interest Income in the 1H 2011 grew by 24.5% y-o-y to GEL 113.2 million as Interest Income growth of 26.6% y-o-y to (GEL 232.2 million) more than offset the 28.7% y-o-y growth rate of Interest Expense to GEL 119.0 million, as the Bank maintained higher average client deposits and higher liquidity in 1H 2011 compared the same period last year. Net Non-Interest Income increased by 37.0% y-o-y to GEL 51.4 million, with the increase being driven by a 22.7% y-o-y increase in Net Fees and Commission Income to GEL 22.7 million, a 53.6% y-o-y increase of Net Foreign Currency Related Income to GEL 20.7 million, and a 62.6% y-o-y increase in Net Income from Documentary Operations to GEL 6.8 million.

The Total Recurring Costs of Bank of Georgia on a standalone basis increased by 13.0% y-o-y to GEL 71.4 million, driven by a 21.3% increase of Personnel Costs on a y-o-y basis, a result of increased headcount in line with the increase in lending activity during the period. Despite the growth in Personnel Cost in the first half of 2011, Personnel Costs represented 24.1% of the Revenue, a decrease from 25.4% in 1H 2010. The continuous improvement of the Bank’s asset quality on a standalone basis for the past three quarters, resulted in an improved Net Provision Expense, which in 1H 2011 amounted to GEL 3.6 million, compared to a GEL 18.8 million Net Provision Expense in the 1H 2010, resulting in 1H 2011 Standalone Net Income of GEL 87.7 million, up 135.5% y-o-y.

As of 30 June 2011, Bank of Georgia’s standalone Total Assets stood at GEL 4.0 billion, up 20.4% y-o-y, 2.0% q-o-q and up 4.0% YTD. Bank of Georgia’s standalone Net Loan Book increased by 32.4% y-o-y to GEL 2,441.9 million (up 11.0% YTD) driven by 41.1% y-o-y increase of the Corporate Net Loan Book to GEL 1,356.6 million (up 13.7% YTD) and 25.0% y-o-y growth of Retail Net Loan Book to GEL 1,061.2 million (up 9.4% YTD). On a quarterly basis, the standalone Net Loan Book increased by 10.2% q-o-q, up 11.0% YTD. Standalone NPLs stood at GEL 99.1 million and represented 3.9% of the total gross loan book, largely flat compared to the same ratio of 3.8% in Q1 2011, when the NPLs amounted to GEL 87.6 million on a standalone basis.

As of the Q2 2011, the standalone Client Deposits amounted to GEL 2,070.4 million, representing an increase of GEL 103.9 million, or 5.3% during Q2 2011, up GEL 728.0 million, or 54.2% y-o-y (up 14.8% YTD). The growth was primarily driven by the Retail and CB Client Deposits, which grew 9.9% q-o-q, 49.4% y-o-y, 2.8% q-o-q and 60.6% y-o-y, respectively. Wealth Management Client Deposits were up 4.7% q-o-q and 44.1% y-o-y.

As of 30 June 2011 Bank of Georgia on a standalone basis held market shares in Georgia of 36.1%, 36.0%, and 34.6% by total assets, gross loans, and client deposits, respectively. Since 30 June 2010, the Bank gained market shares of 1.0% by assets, 3.0% by gross loans and 4.9% by client deposits11. The market shares grew 3.1% by assets, 4.1% by loans and 6.3% by client deposits, since 31 December 2009.

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

Retail Banking (RB)

GEL millions, unless otherwise noted   Q2 2011   Q1 2011   Q2 2010   Change Q-O-Q   Change Y-O-Y   1H 2011   1H 2010   Change Y-O-Y
Total operating income (Revenue) 51.4 42.5 37.2 20.9% 38.4% 94.0 69.9 34.3%
Total recurring operating costs 23.7 21.9 21.0 8.3% 12.6% 45.5 41.2 10.4%
Net income / (Loss) 29.4 21.3 2.0 37.8% NMF 50.7 4.1 NMF
Loans to clients, gross 1,100.2 1,008.9 929.6 9.1% 18.3%
Loans to clients, net 1,061.2 969.6 849.0 9.4% 25.0%
Client deposits 670.1 609.5 448.6 9.9% 49.4%

Discussion of results

In Q2 2011, RB Revenues increased 20.9% q-o-q (up 38.4% y-o-y) to GEL 51.4 million, driven predominantly by the 17.5% q-o-q increase in RB Net Interest Income to GEL 36.9 million (up 40.3% y-o-y). RB Interest Expense declined by 1.8% q-o-q to GEL 27.6 million, while RB Interest Income increased 8.4% q-o-q to GEL 64.5 million. RB Loan Yield Excluding Provisions grew from 21.2% in Q1 2011 to 21.6% in Q2 2011. RB Net Non-Interest Income during the quarter increased by 30.7% q-o-q (up 33.9% y-o-y) to GEL 14.5 million, mostly driven by 29.6% q-o-q increase of RB Net Fee and Commission Income to GEL 11.0 million, up 31.0% y-o-y. RB Recurring Operating Costs increased by 8.3% q-o-q to GEL 23.7 million (up 12.6% y-o-y). RB Net Provision Reversal in Q2 2011 amounted to GEL 50 thousand, compared to the Net Provision Reversal of GEL 4.4 million in Q1 2011. RB Net Income for Q2 2011 amounted to GEL 29.4 million, contributing 52.3% to the standalone Net Income.

On a YTD basis, RB Revenues increased 34.3% y-o-y to GEL 94.0 million, driven predominantly by the 37.0% y-o-y increase in RB Net Interest Income to GEL 68.4 million and 24.8% y-o-y growth of Net Fee and Commission income to GEL 19.6 million. In 1H 2011, RB Recurring Operating Costs grew by 10.4% y-o-y to GEL 45.5 million, leading to the 86.5% y-o-y increase of RB Profit Before Provisions. The Net Provision Reversal for RB in 1H 2011 reached GEL 4.4 million, compared to the Net Provision Expense of GEL 22.0 million in 1H 2010.

RB Net Loans of GEL 1,061.2 million, increased by 9.4% q-o-q up 25.0% y-o-y and up 9.4% YTD. RB Client Deposits grew 9.9% q-o-q and 49.4% y-o-y to GEL 670.1 million, driven primarily by the growth of time deposits.

Highlights

  • Issued 71,646 debit cards, up 69.3% q-o-q, in Q2 2011 bringing the total debit cards outstanding to 500,993
  • Issued 15,504 credit cards in Q2 2011 of which 9,897 were American Express cards. A total of 78,024 American Express cards were issued since the launch in November 2009. The total number of credit cards outstanding amounted to 109,706 as of 30 June 2011.
  • Outstanding number of RB clients reached 862,369, up 2.0% q-o-q and up 8.7% y-o-y.
  • Acquired 484 new clients in the Solo business line, mass affluent sub-brand, in Q2 2011, of which 150 new clients joined in Q2 2011. As of 30 June 2011, the number of the Solo clients reached 3,094. Introduced Premium Deposit for Solo Clients.
  • Number of SMS Loans available for the payroll clients through ATMs, launched in Q4 2010, amounted to 11,586 and aggregate SMS loans outstanding reached GEL 36.7 million as of 30 June 2011.
  • Increased Point of Sales (POS) footprint: As of 30 June 2011, 135 desks at 242 contracted merchants, up from 99 desks and 99 merchants at the end of Q4 2010 when the Bank re-entered POS market. POS loans outstanding reached GEL 10.5 million.
  • Increased acquiring business footprint, as Point-of-sales terminals reached 2,630 at 1,212 merchants, up from 2,330 and 1,112, respectively in 31 December 2010.
  • RB Loan Yield Excluding Provisions amounted to 21.6% in Q2 2011 (21.2% in Q1 2011) and RB Deposit Yield amounted to 6.5% in Q2 2011 (7.2% in Q1 2011).
  • Consumer loan originations of GEL 164.0 million (up 150.9% q-o-q and up 155.0% y-o-y) resulted in consumer loans outstanding in the amount of GEL 238.5 million as of 30 June 2011, up 82.2% y-o-y, up 41.2% q-o-q.
  • Micro loan originations of GEL 114.1 million (up 22.1% q-o-q and up 59.2% y-o-y) resulted in micro loans outstanding in the amount of GEL 274.0 million as of 30 June 2011, up 74.6% y-o-y, up 10.1% q-o-q
  • Mortgage loan originations of GEL 43.0 million (up 54.7% q-o-q and down 6.4% y-o-y) resulted in mortgage loans outstanding in the amount of GEL 340.4 million as of 30 June 2011, down 10.0% y-o-y and down 1.9% q-o-q.
  • SME loan originations of GEL 19.6 million (up 18.8% q-o-q and up 5.4% YTD) resulted in SME loans outstanding in the amount of GEL 44.0 million as of 30 June 2011, up 40.6% YTD and up 22.2% q-o-q.

Corporate Banking (CB)

GEL millions, unless otherwise noted   Q2 2011   Q1 2011   Q2 2010   Change Q-O-Q   Change Y-O-Y   1H 2011   1H 2010   Change Y-O-Y
Total operating income (Revenue) 33.6 33.8 31.2 -0.6% 7.7% 67.4 56.5 19.3%
Total recurring operating costs 12.7 11.4 10.6 11.4% 19.9% 24.0 20.1 19.8%
Net income 25.8 9.2 22.6 180.5% 14.0% 35.0 31.0 12.8%
Loans to clients, gross 1,436.4 1,286.9 1,015.5 11.6% 41.4%
Loans to clients, net 1,356.6 1,209.5 961.2 12.2% 41.1%
Client deposits 1,095.9 1,066.2 682.5 2.8% 60.6%

Discussion of results

CB Revenues decreased 0.6% q-o-q to GEL 33.6 million (up 7.7% y-o-y), driven by the 9.8% q-o-q decrease of Net Interest Income to GEL 20.0 million (down 7.7% y-o-y). CB Interest Expense grew 9.7% q-o-q to GEL 33.5 million (up 43.8% y-o-y) as both CB deposits and CB deposit yields rose during the period. CB Interest Income grew 1.5% q-o-q to GEL 53.5 million, up 18.9% y-o-y. CB Net Non-Interest income increased 17.0% q-o-q (up 42.8% y-o-y) a result of the 23.1% q-o-q increase in CB Net Fee and Commission Income to GEL 1.6 million (up 9.8% y-o-y) and 29.6% q-o-q increase in CB Net Foreign Currency related income to GEL 8.4 million (up 53.1% y-o-y). CB Income from Documentary Operations decreased by 8.2% q-o-q to GEL 3.0 million (up 42.4% y-o-y). CB Recurring Operating Costs amounted to GEL 12.7 million, a 11.4% increase q-o-q and 19.9% increase y-o-y. CB Net Provision Reversal for the quarter amounted to GEL 1.5 million, a decrease compared to the Net Provision Expense of GEL 10.2 million in Q1 2011. CB Net Income for Q2 2011 amounted to GEL 25.8 million, contributing 45.9% to the standalone Net Income for the quarter.

On a YTD basis, CB Revenues increased 19.3% y-o-y to GEL 67.4 million, driven predominantly by the 6.2% y-o-y increase in CB Net Interest Income to GEL 42.2 million and 61.0% y-o-y growth of Net Foreign Currency Related Income to GEL 14.9 million. 1H 2011 CB Recurring Operating Costs grew by 19.8% y-o-y to GEL 24.0 million and CB Profit Before Provisions increased by 30.2% y-o-y. The Net Provision Expense for CB in 1H 2010 reached GEL 8.8 million as compared to Net Provision Reversal of GEL 0.7 million in 1H 2010.

CB net loans increased 12.2% q-o-q to GEL 1,356.6 million (up 41.1% y-o-y and up 13.7% YTD), while CB Client Deposits grew 60.6% y-o-y to GEL 1,095.9 million, up 2.8% q-o-q and up 8.9% YTD.

Highlights

  • CB Loan Yield Excluding Provisions amounted to 14.1% in Q2 2011 (vs. 16.8% in Q2 2010). CB Deposit Yield increased to 7.1% in Q2 2011 up from 6.1% in Q1 2011, as the share of higher yielding GEL denominated CB deposits in total CB client deposit portfolio increase from 46.9% to 56.3% during the quarter.
  • The number of corporate clients using the Bank’s payroll services increased from 1,890 as of Q1 2011 to 2,044 in Q2 2011. As of 30 June 2011, the number of individual clients serviced through the corporate payroll programs administered by the Bank amounted to 169,169.

Wealth Management (WM)

GEL millions, unless otherwise noted   Q2 2011   Q1 2011   Q2 2010   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 1.4 1.9 0.8 -26.0% 83.5%
Total recurring operating costs 0.9 1.0 0.9 -14.3% -3.5%
Net income / (Loss) 1.0 1.0 (0.2) 7.6% NMF
Loans to clients, gross 25.5 37.7 36.3 -32.5% -29.9%
Loans to clients, net 24.1 36.1 33.7 -33.1% -28.5%
Client deposits 304.4 290.8 211.2 4.7% 44.1%

Discussion of results

WM Client Deposits continued to grow reaching GEL 304.4 million, up 4.7% q-o-q, up 44.1% y-o-y and up 16.3% YTD, while WM Net Loan Book decreased 33.1% q-o-q to GEL 24.1 million. WM Client Deposits from non-resident clients continued to grow during the quarter, reaching GEL 202.8 million by Q2 2011, (up 2.6% q-o-q). Client Deposits from non-resident clients accounted for 66.6% of Total WM Client Deposits as of 30 June 2011 and accounted for 9.8% of total Client Deposits.

On a YTD basis, WM Revenues increased by 59.1% y-o-y to GEL 3.3 million, driven predominantly by the 97.2% y-o-y increase in WM Net Interest Income to GEL 2.7 million that more than offset the 18.3% y-o-y decline of Net Non-Interest Income. 1H 2011 WM Recurring Operating Costs declined by 3.5% y-o-y to GEL 1.9 million, leading to the WM Profit Before Provisions of GEL 1.4 million compared to the WM Pre-Provision Profit of GEL 99 thousand in 1H 2010. The Net Provision Reversal for WM in 1H 2011 reached GEL 732 thousand compared to the Net Provision Reversal of GEL 2.5 million in 1H 2010.

Insurance & Healthcare

GEL millions, unless otherwise noted   Q2 2011   Q1 2011   Q2 2010   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 4.0 4.9 4.8 -18.3% -15.3%
Total recurring operating costs 3.2 3.3 3.6 -2.5% -10.5%
Net income 1.2 1.2 0.9 - 35.8%
Gross premiums written 17.8 18.7 16.8 -5.0% 6.0%

Discussion of results

Standalone Revenue of Aldagi BCI (ABCI), the Bank’s wholly-owned insurance subsidiary, declined 15.3% y-o-y to GEL 4.0 million, (down 18.3% q-o-q), largely due to the increase in claims costs in Q2 2011. ABCI standalone Gross Premiums Written were down 5.0% q-o-q to GEL 17.8 million, up 6.0% y-o-y. Standalone Operating Costs of GEL 3.2 million were down 2.5% q-o-q (down 10.5% y-o-y). ABCI’s Combined Ratio, increased from 89.7% in Q2 2010 to 92.8% in Q2 2011. ABCI’s Q2 2011 Net Income of GEL 1.2 million was flat q-o-q, up 35.8% y-o-y.

Total Assets amounted to GEL 94.9 million, while Total Liabilities reached GEL 70.4 million as at 30 June 2011.

Highlights

  • ROAE1 for the quarter amounted to 20.9% in Q2 2011, compared to the 19.7% ROAE1 of the same period last year.
  • Launched flagship health insurance product, MediCard that has been integrated with ABCI’s outpatient clinic network. Since the launch in May 2011, outstanding MediCards have amounted to 5,647.

Belaruskiy Narodniy Bank, Belarus (BNB)

GEL millions, unless otherwise noted   Q2 2011   Q1 2011   Q2 2010   Change Q-O-Q   Change Y-O-Y
Total operating income (Revenue) 5.7 4.2 3.0 37.7% 92.5%
Total recurring operating costs 3.4 3.1 2.0 9.9% 71.0%
Net income 4.1 0.8 0.6 NMF NMF
Loans to clients gross 59.3 84.1 41.8 -29.5% 41.8%
Loans to clients, net 56.6 83.2 39.7 -32.0% 42.3%
Client deposits 36.3 37.1 15.7 -2.2% 131.3%

Discussion of results

The Q2 2011 results of BNB reflect the impact of 40.1% BYR devaluation against GEL during the quarter. Q2 2011 BNB’s Total Operating Income increased to GEL 5.7 million, up 37.7% q-o-q (up 92.5% y-o-y). This was mainly driven by the 67.9% q-o-q increase in Net Non-Interest Income to GEL 2.4 million a result of the 79.6% q-o-q increase in Net Foreign Currency Related income to GEL 1.6 million, (mainly related to the devaluation of currency in Q2 2011), and 49.2% q-o-q increase in Net Fee and Commission Income to GEL 704 thousand. BNB’s Net Income from Documentary Operation grew by 3.2% q-o-q to GEL 52 thousand (up 101.7% y-o-y). BNB’s Net Interest Income increased 21.4% q-o-q to GEL 3.3 million (up 39.6% y-o-y) as Interest Income increased by 34.2% q-o-q to GEL 4.3 million and Interest Expense increased by 104.4% to GEL 1.0 million. In Q2 2011, BNB’s Recurring Costs increased 9.9% q-o-q to GEL 3.4 million. BNB’s Net Provision Expense for the quarter amounted to GEL 3.4 million as compared to the Net Provision Expense of GEL 71 thousand in Q1 2011. BNB posted Net Income of GEL 4.1 million as compared to Net Income of GEL 753 thousand in Q1 2011 and Net Income of GEL 571 thousand in Q2 2010.

In Q2 2011 BNB’s Gross Loans decreased by 29.5% q-o-q to GEL 59.3 million, up 41.8% y-o-y. On 30 June 2011, Total Assets stood at GEL 137.3 million, up 15.1% q-o-q and up 51.8% y-o-y. Client Deposits amounted to GEL 36.3 million, down 2.2% q-o-q. The decline in Balance Sheet items was due to the devaluation of BYR against GEL.

Highlights

  • Increased the number of SME and corporate clients by 46.7% y-o-y to 1,843 as of 30 June 2011.
  • Increased the number of corporate clients using the BNB’s payroll services by 14.7% q-o-q to 297 as of 30 June 2011.

Comment:

“We are delighted to report strong Q2 2011 results that benefited from the healthy growth of the Bank’s loan book, the continued inflow of client deposits, overall growth in business activity, low cost of risk and improved efficiency. The healthy growth of nearly all Revenue items and the controlled growth of operating costs enabled us maintain strong operating leverage. The Bank’s consolidated operating leverage, one of the key metrics followed by the management, amounted to 12.5% in Q2 2011 and 16.6% in 1H 2011 on a year-on-year basis. As demand picked up from both corporate and retail clients, the loan growth accelerated in Q2, with consolidated net loan book reaching GEL 2,439.9, or 11.0% year-to-date increase, while loan yield increased from 17.4% in Q1 2011 to 17.6% in Q2 2011. The Bank’s Net Interest Margin grew to 7.3% in Q2 2011 compared to the NIM of 7.0% in Q1 2011, mostly a result of increased loan demand. Cost of risk improved on lower provisions and continued strong recovery, as net provisions charges declined to GEL 2.1 million in Q2 2011 from GEL 5.2 million in Q1 2011. In addition, the changes in the tax treatment of certain items resulted in a one-off net tax benefit of approximately GEL 5.3 million. All this translated into record high quarterly Net Income of GEL 46.9 million, increase of 53.5% q-o-q and 139.4% y-o-y.

Continued inflows of clients’ funds and the Bank’s excess liquidity during the quarter enabled us to further decrease our outstanding 2012 US$200 million Eurobonds through buy-backs. As a result, as of 30 June 2011, the Bank’s Eurobonds outstanding stood at U.S.$70.1 million”, commented Giorgi Chiladze, Deputy Chief Executive Officer, Finance.

STANDALONE Q2 2011 SEGMENT INCOME STATEMENT DATA

  CB   RB   WM   CC/ Eliminations   Total    
GEL millions, unless otherwise noted Q2 '11   Q2 '10 Q2 '11   Q2 '10 Q2 '11   Q2 '10 Q2 '11   Q2 '10 Q2 '11   Q2 '10
Interest Income 53.5 45.0 64.5 49.5 8.6 6.0 (7.8) (4.5) 118.8 96.0
Interest Expense 33.5 23.3 27.6 23.2 7.6 5.6 (7.8) (4.5) 60.8 47.6
Net Interest Income 20.0 21.7 36.9 26.3 1.0 0.4 - - 58.0 48.4
Net Non-Interest Income 13.6 9.5 14.5 10.8 0.3 0.4 - - 28.5 20.8
Total Operating Income (Revenue) 33.6 31.2 51.4 37.2 1.4 0.8 - - 86.4 69.1
Total Recurring Operating Costs 12.7 10.6 23.7 21.0 0.9 0.9 - - 37.2 32.5
Normalized Net Operating Income / (Loss) 21.0 20.7 27.8 16.1 0.5 (0.1) - - 49.2 36.6
Net Non-Recurring Income / (Costs) 3.5 (0.5) 2.0 (1.4) 0.0 0.0 - - 5.5 (1.8)
Net Provision Expense / (Reversal) (1.5) (6.1) (0.1) 12.6 (0.4) 0.0 - - (1.9) 6.5
Net Income / (Loss) 25.8 22.6 29.4 2.0 1.0 (0.2) - - 56.2 24.4

STANDALONE 1H 2011 SEGMENT INCOME STATEMENT DATA

  CB   RB   WM   CC/ Eliminations   Total
GEL millions, unless otherwise noted 1H '11   1H '10 1H '11   1H '10 1H '11   1H '10 1H '11   1H '10 1H '11   1H '10
Interest Income 106.2 84.5 124.0 95.3 17.0 11.9 (15.0) (8.3) 232.2 183.4
Interest Expense 64.0 44.8 55.7 45.4 14.3 10.5 (15.0) (8.3) 119.0 92.5
Net Interest Income 42.2 39.7 68.4 49.9 2.7 1.4 - - 113.2 91.0
Net Non-Interest Income 25.3 16.8 25.6 20.1 0.6 0.7 - - 51.4 37.5
Total Operating Income (Revenue) 67.4 56.5 94.0 69.9 3.3 2.0 - - 164.6 128.5
Total Recurring Operating Costs 24.0 20.1 45.5 41.2 1.9 1.9 - - 71.4 63.2
Normalized Net Operating Income / (Loss) 43.4 36.4 48.4 28.7 1.4 0.1 - - 93.2 65.3
Net Non-Recurring Income / (Costs) 2.7 (1.0) 1.3 (2.0) 0.0 (0.0) - - 4.1 (3.1)
Net Provision Expense / (Reversal) 8.8 (0.7) (4.4) 22.0 (0.7) (2.5) - - 3.6 18.8
Net Income / (Loss) 35.0 31.0 50.7 4.1 2.0 2.2 - - 87.7 37.2

STANDALONE Q2 2011 SEGMENT BALANCE SHEET DATA

  CB   RB   WM   CC/ Eliminations   Total
GEL millions, unless otherwise noted Q2 '11   Q2 '10 Q2 '11   Q2 '10 Q2 '11   Q2 '10 Q2 '11   Q2 '10 Q2 '11   Q2 '10
Loans To Clients, Gross 1,436 1,016 1,100 930 26 36 - - 2,562 1,982
Loans To Clients, Net 1,357 961 1,061 849 24 34 - - 2,442 1,844
Total Assets 1,976 1,445 1,847 1,513 28 42 162 333 4,013 3,333
Client Deposits 1,096 683 670 449 304 211 - - 2,070 1,342
Total Liabilities 1,635 1,250 1,296 1,075 304 211 - - 3,235 2,536
Total Shareholders’ Equity 345 244 265 211 6 10 162 333 778 797
Total Liabilities And Shareholders’ Equity 1,980 1,493 1,560 1,286 311 221 162 333 4,013 3,333

CONSOLIDATED Q2 2011 INCOME STATEMENT

Period ended   Q2 2011   Q1 2011   Q2 2010   Change4   Change4
Consolidated, IFRS - based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Interest Income 72,531 120,873 68,891 117,521 56,565 104,317 2.9% 15.9%
Interest Expense 36,544 60,900 35,540 60,628 28,557 52,664 0.4% 15.6%
Net Interest Income 35,987 59,973 33,351 56,893 28,008 51,653 5.4% 16.1%
Fees & Commission Income 10,841 18,066 9,384 16,009 7,473 13,782 12.8% 31.1%
Fees & Commission Expense 1,835 3,058 2,357 4,020 1,585 2,923 -23.9% 4.6%
Net Fees & Commission Income 9,006 15,008 7,028 11,989 5,888 10,859 25.2% 38.2%
Income From Documentary Operations 2,266 3,777 2,253 3,844 1,427 2,632 -1.7% 43.5%
Expense On Documentary Operations 205 341 200 341 260 480 0.0% -29.0%
Net Income From Documentary Operations 2,062 3,436 2,053 3,503 1,167 2,152 -1.9% 59.7%
Net Foreign Currency Related Income 8,056 13,426 5,601 9,554 4,797 8,846 40.5% 51.8%
Net Insurance Income / (Loss) 2,207 3,678 2,731 4,659 1,704 3,142 -21.1% 17.1%
Brokerage And Investments Banking Income 768 1,280 206 351 11 20 NMF NMF
Asset Management Income 35 58 35 60 29 53 -3.3% 9.4%
Net Investment Gains / (Losses) - 53 (88) 71 121 88 162 NMF NMF
Other Operating Income 2,992 4,986 2,323 3,962 2,373 4,377 25.8% 13.9%
Net Other Non-Interest Income 5,949 9,914 5,365 9,153 4,205 7,754 8.3% 27.9%
Net Non-Interest Income 25,073 41,784 20,047 34,199 16,056 29,611 22.2% 41.1%
Total Operating Income (Revenue) 61,060 101,757 53,398 91,092 44,065 81,264 11.7% 25.2%
Personnel Costs 16,521 27,533 15,058 25,688 14,068 25,945 7.2% 6.1%
Selling, General & Administrative Expenses 5,552 9,253 5,564 9,491 4,822 8,892 -2.5% 4.1%
Procurement & Operations Support Expenses 2,376 3,959 2,001 3,413 1,793 3,306 16.0% 19.8%
Depreciation And Amortization 3,981 6,635 3,581 6,109 3,547 6,542 8.6% 1.4%
Other Operating Expenses 1,354 2,257 1,508 2,572 997 1,839 -12.2% 22.7%
Total Recurring Operating Costs 29,785 49,637 27,711 47,273 25,227 46,524 5.0% 6.7%
Normalized Net Operating Income / (Loss) 31,275 52,120 25,687 43,819 18,837 34,740 18.9% 50.0%
Net Non-Recurring Income / (Costs) (670) (1,117) (1,341) (2,287) 812 1,498 (1) NMF
Profit / (Loss) Before Provisions 30,605 51,003 24,346 41,532 19,650 36,238 22.8% 40.7%
Net Provision Expense 1,254 2,089 3,020 5,151 6,830 12,595 -59.4% -83.4%
Pre-Tax Income / (Loss) 29,351 48,914 21,327 36,381 12,820 23,643 34.4% 106.9%
Income Tax Expense / (Benefit) 1,210 2,017 3,415 5,826 2,198 4,053 -65.4% -50.2%
Net Income / (Loss) from Continuing Operations 28,141 46,897 17,911 30,555 10,622 19,590 53.5% 139.4%
Net Loss from Discontinued Operations - - (8,033) (13,704) - - -100.0% NMF
Net Income / (Loss) - - 9,878 16,851 - - -100.0% NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7059 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 2011

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

4 Change calculations based on GEL values

CONSOLIDATED 1H INCOME STATEMENT

Period ended   1H 2011   1H 2010   Change4
Consolidated, IFRS - based US$1   GEL US$3   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
Interest Income 143,051 238,394 108,092 199,344 19.6%
Interest Expense 72,924 121,528 55,548 102,441 18.6%
Net Interest Income 70,127 116,866 52,545 96,903 20.6%
Fees & Commission Income 20,447 34,075 14,639 26,997 26.2%
Fees & Commission Expense 4,247 7,078 3,156 5,820 21.6%
Net Fees & Commission Income 16,200 26,997 11,483 21,177 27.5%
Income From Documentary Operations 4,573 7,621 2,868 5,289 44.1%
Expense On Documentary Operations 409 682 521 960 -29.0%
Net Income From Documentary Operations 4,164 6,939 2,347 4,329 60.3%
Net Foreign Currency Related Income 13,789 22,980 8,777 16,186 42.0%
Net Insurance Income / (Loss) 5,003 8,337 3,959 7,301 14.2%
Brokerage And Investments Banking Income 979 1,631 129 237 NMF
Asset Management Income 71 118 52 95 24.2%
Net Investment Gains / (Losses) 20 33 1,156 2,131 -98.5%
Other Operating Income 5,369 8,948 4,761 8,781 1.9%
Net Other Non-Interest Income 11,441 19,067 10,056 18,545 2.8%
Net Non-Interest Income 45,594 75,983 32,663 60,237 26.1%
Total Operating Income (Revenue) 115,721 192,849 85,208 157,140 22.7%
Personnel Costs 31,936 53,221 26,747 49,326 7.9%
Selling, General & Administrative Expenses 11,248 18,744 10,137 18,695 0.3%
Procurement & Operations Support Expenses 4,424 7,372 3,694 6,813 8.2%
Depreciation And Amortization 7,647 12,744 7,154 13,193 -3.4%
Other Operating Expenses 2,898 4,829 2,579 4,756 1.5%
Total Recurring Operating Costs 58,152 96,910 50,311 92,783 4.4%
Normalized Net Operating Income / (Loss) 57,569 95,939 34,897 64,357 49.1%
Net Non-Recurring Income / (Costs) (2,043) (3,404) (959) (1,768) 92.5%
Profit / (Loss) Before Provisions 55,527 92,535 33,938 62,589 47.8%
Net Provision Expense 4,344 7,240 10,820 19,955 -63.7%
Pre-Tax Income / (Loss) 51,182 85,295 23,118 42,634 100.1%
Income Tax Expense / (Benefit) 4,706 7,843 3,410 6,289 24.7%
Net Income / (Loss) from Continuing Operations 46,476 77,452 19,708 36,345 113.1%
Net Loss from Discontinued Operations (8,033) (13,704) - - NMF
Net Income / (Loss) 38,443 63,748 - - NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

3 Change calculations based on GEL values

CONSOLIDATED Q2 2011 BALANCE SHEET

Period ended   Q2 2011   Q1 2011   Q2 2010   Change4   Change4
Consolidated, IFRS based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Cash And Cash Equivalents 71,867 119,767 91,443 155,992 80,078 147,679 -23.2% -18.9%
Loans And Advances To Credit Institutions 316,056 526,708 394,975 673,788 206,672 381,144 -21.8% 38.2%
Mandatory Reserves With NBG / NBU / NBRB 172,550 287,554 170,592 291,013 27,333 50,408 -1.2% NMF
Other Accounts With NBG / NBU / NBRB 47,945 79,900 22,232 37,925 3,248 5,990 110.7% NMF
Balances With And Loans To Other Banks 95,562 159,254 202,151 344,850 176,090 324,746 -53.8% -51.0%
Investment Securities: AFS & Trading Securities 243,131 405,177 213,055 363,450 19,239 35,480 11.5% NMF
Investment Securities: HTM, Treasuries - - - - 145,450 268,238 - -100.0%
Loans To Clients, Gross 1,537,632 2,562,464 1,384,180 2,361,272 1,181,929 2,179,714 8.5% 17.6%
Less: Reserve For Loan Losses (73,528) (122,534) (69,959) (119,343) (106,945) (197,228) 2.7% -37.9%
Loans To Clients, Net 1,464,104 2,439,930 1,314,221 2,241,929 1,074,984 1,982,486 8.8% 23.1%
Insurance Related Assets 20,072 33,450 20,404 34,807 18,668 34,427 -3.9% -2.8%
Investment Property 59,618 99,353 59,396 101,324 53,931 99,459 -1.9% -0.1%
Investments In Other Business Entities, Net 2,364 3,939 3,942 6,725 2,916 5,378 -41.4% -26.8%
Property And Equipment Owned, Net 167,074 278,429 165,887 282,986 158,860 292,969 -1.6% -5.0%
Intangible Assets Owned, Net 13,026 21,708 13,526 23,074 12,669 23,365 -5.9% -7.1%
Goodwill 33,752 56,248 40,593 69,248 37,496 69,151 -18.8% -18.7%
Tax Assets, Current And Deferred 12,444 20,738 13,520 23,064 13,489 24,877 -10.1% -16.6%
Prepayments And Other Assets 70,733 117,877 42,712 72,862 31,959 58,939 61.8% 100.0%
Total Assets 2,474,242 4,123,324 2,373,673 4,049,249 1,856,410 3,423,592 1.8% 20.4%
Client Deposits 1,247,789 2,079,441 1,158,853 1,976,887 806,420 1,487,200 5.2% 39.8%
Deposits And Loans From Banks 103,941 173,218 79,905 136,310 118,411 218,373 27.1% -20.7%
Borrowed Funds 488,073 813,374 566,135 965,769 512,737 945,589 -15.8% -14.0%
Issued Fixed Income Securities 89,447 149,063 56,573 96,508 1,980 3,651 54.5% NMF
Insurance Related Liabilities 27,296 45,488 25,281 43,127 24,076 44,401 5.5% 2.4%
Tax Liabilities, Current And Deferred 14,479 24,130 14,429 24,615 17,264 31,839 -2.0% -24.2%
Accruals And Other Liabilities 52,114 86,848 40,131 68,459 23,197 42,780 26.9% 103.0%
Total Liabilities 2,023,140 3,371,562 1,941,307 3,311,675 1,504,085 2,773,833 1.8% 21.5%
Share Capital – Ordinary Shares 18,818 31,360 18,010 30,723 16,985 31,324 2.1% 0.1%
Share Premium 287,162 478,556 280,702 478,850 260,397 480,225 -0.1% -0.3%
Treasury Shares -857 (1,428) -828 (1,413) -754 (1,391) 1.1% 2.7%
Revaluation And Other Reserves 16,839 28,063 35,926 61,287 27,075 49,931 -54.2% -43.8%
Retained Earnings 76,272 127,107 71,867 122,598 19,624 36,190 3.7% NMF
Net Income / (Loss) For The Period 38,251 63,745 9,878 16,851 19,708 36,345 NMF 75.4%
Shareholders’ Equity Excluding Minority 436,485 727,403 415,555 708,896 343,034 632,624 2.6% 15.0%
Minority Interest 14,617 24,359 16,811 28,678 9,291 17,135 -15.1% 42.2%
Total Shareholders’ Equity 451,102 751,762 432,366 737,574 352,325 649,759 1.9% 15.7%
Total Liabilities And Shareholders’ Equity 2,474,242 4,123,324 2,373,673 4,049,249 1,856,410 3,423,592 1.8% 20.4%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7059 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 2011

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

4 Change calculations based on GEL values

STANDALONE Q2 2011 INCOME STATEMENT

Period ended   Q2 2011   Q1 2011   Q2 2010   Change4   Change4
Standalone, IFRS-based US$1   GEL US$2   GEL US$3   GEL Q-O-Q Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Interest Income 71,273 118,776 66,491 113,427 52,034 95,962 4.7% 23.8%
Interest Expense 36,489 60,808 34,106 58,182 25,820 47,618 4.5% 27.7%
Net Interest Income 34,784 57,968 32,385 55,245 26,214 48,344 4.9% 19.9%
Fees & Commission Income 9,932 16,551 8,195 13,980 7,078 13,052 18.4% 26.8%
Fees & Commission Expense 2,259 3,764 2,361 4,028 1,633 3,012 -6.6% 25.0%
Net Fees & Commission Income 7,673 12,787 5,834 9,952 5,444 10,040 28.5% 27.4%
Income From Documentary Operations 2,216 3,692 2,198 3,749 1,401 2,584 -1.5% 42.9%
Expense On Documentary Operations 186 309 178 304 260 480 1.6% -35.6%
Net Income From Documentary Operations 2,030 3,383 2,019 3,445 1,141 2,104 -1.8% 60.8%
Net Foreign Currency Related Income 6,999 11,665 5,280 9,007 4,248 7,835 29.5% 48.9%
Net Other Non-Interest Income 384 639 326 557 431 795 14.7% -19.6%
Net Non-Interest Income 17,086 28,474 13,460 22,961 11,265 20,774 24.0% 37.1%
Total Operating Income (Revenue) 51,870 86,442 45,844 78,206 37,479 69,119 10.5% 25.1%
Personnel Costs 12,610 21,015 10,928 18,642 9,337 17,219 12.7% 22.0%
Selling, General & Administrative Expenses 3,629 6,048 3,883 6,623 3,059 5,642 -8.7% 7.2%
Procurement & Operations Support Expenses 2,060 3,433 1,685 2,874 1,417 2,614 19.5% 31.3%
Depreciation And Amortization 3,444 5,739 2,935 5,006 3,004 5,540 14.6% 3.6%
Other Operating Expenses 581 967 639 1,090 793 1,462 -11.3% -33.9%
Total Recurring Operating Costs 22,324 37,203 20,069 34,236 17,610 32,477 8.7% 14.6%
Normalized Net Operating Income / (Loss) 29,546 49,239 25,775 43,969 19,869 36,642 12.0% 34.4%
Net Non-Recurring Income / (Costs) 3,291 5,484 (833) (1,421) (998) (1,840) NMF NMF
Profit / (Loss) Before Provisions 32,837 54,723 24,942 42,548 18,871 34,802 28.6% 57.2%
Net Provision Expense (1,164) (1,940) 3,267 5,573 3,546 6,540 NMF NMF
Pre-Tax Income / (Loss) 34,001 56,663 21,675 36,975 15,325 28,262 53.2% 100.5%
Income Tax Expense / (Benefit) 256 426 3,211 5,478 2,077 3,831 -92.2% -88.9%
Net Income / (Loss) from Continuing Operations 33,745 56,237 18,464 31,497 13,248 24,431 78.5% 130.2%
Net Loss from Discontinued Operations - - (8,033) (13,704) - - -100.0% NMF
Net Income / (Loss) - - 10,431 17,793 - - -100.0% NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7059 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 2011

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

4 Change calculations based on GEL values

STANDALONE 1H INCOME STATEMENT

Period ended   1H 2011   1H 2010   Change4
Consolidated, IFRS – based US$1   GEL US$3   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
Interest Income 139,336 232,203 99,462 183,428 26.6%
Interest Expense 71,401 118,990 50,144 92,476 28.7%
Net Interest Income 67,934 113,213 49,317 90,951 24.5%
Fees & Commission Income 18,320 30,531 13,100 24,159 26.4%
Fees & Commission Expense 4,676 7,792 3,048 5,620 38.6%
Net Fees & Commission Income 13,645 22,739 10,052 18,538 22.7%
Income From Documentary Operations 4,466 7,442 2,798 5,160 44.2%
Expense On Documentary Operations 368 614 521 960 -36.0%
Net Income From Documentary Operations 4,097 6,828 2,277 4,200 62.6%
Net Foreign Currency Related Income 12,404 20,672 7,298 13,459 53.6%
Net Other Non-Interest Income 718 1,196 728 1,343 -10.9%
Net Non-Interest Income 30,864 51,435 20,356 37,541 37.0%
Total Operating Income (Revenue) 98,798 164,648 69,674 128,492 28.1%
Personnel Costs 23,797 39,657 17,729 32,695 21.3%
Selling, General & Administrative Expenses 7,603 12,671 6,340 11,693 8.4%
Procurement & Operations Support Expenses 3,785 6,308 2,962 5,463 15.5%
Depreciation And Amortization 6,448 10,746 5,984 11,036 -2.6%
Other Operating Expenses 1,235 2,057 1,276 2,354 -12.6%
Total Recurring Operating Costs 42,868 71,439 34,292 63,241 13.0%
Normalized Net Operating Income / (Loss) 55,931 93,208 35,382 65,251 42.8%
Net Non-Recurring Income / (Costs) 2,438 4,063 (1,659) (3,060) NMF
Profit / (Loss) Before Provisions 58,369 97,271 33,723 62,191 56.4%
Net Provision Expense 2,180 3,633 10,220 18,848 -80.7%
Pre-Tax Income / (Loss) 56,188 93,638 23,502 43,343 116.0%
Income Tax Expense / (Benefit) 3,543 5,904 3,304 6,093 -3.1%
Net Income / (Loss) from Continuing Operatios 52,646 87,734 20,198 37,250 135.5%
Net Loss from Discontinued Operations (8,033) (13,704) - - NMF
Net Income / (Loss) 44,613 74,030 - - NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

3 Change calculations based on GEL values

STANDALONE Q2 2011 BALANCE SHEET

Period ended   Q2 2011   Q1 2011   Q4 2010   Q2 2010   Change5   Change5   Change5
Standalone, IFRS-based US$1   GEL US$2   GEL US$3   GEL US$4   GEL Q-O-Q YTD Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited) (Unaudited)
Cash And Cash Equivalents 59,071 98,442 79,908 136,315 86,021 152,499 62,198 114,706 -27.8% -35.4% -14.2%
Loans And Advances To Credit Institutions 302,028 503,330 391,767 668,315 287,306 509,335 216,326 398,949 -24.7% -1.2% 26.2%
Mandatory Reserves With NBG / NBU / NBRB 172,408 287,319 170,437 290,748 48,886 86,665 24,524 45,228 -1.2% NMF NMF
Other Accounts With NBG / NBU / NBRB 46,775 77,951 17,756 30,291 30,997 54,951 423 781 157.3% 41.9% NMF
Balances With And Loans To Other Banks 82,845 138,061 203,574 347,276 207,423 367,719 191,379 352,940 -60.2% -62.5% -60.9%
Investment Securities: AFS & Trading Securities 237,728 396,173 206,040 351,483 158,743 281,420 - - 12.7% 40.8% -
Investment Securities: HTM, Treasuries - - - - - - 145,449 268,238 - - -100.0%
Loans To Clients, Gross 1,537,379 2,562,042 1,367,891 2,333,485 1,308,820 2,320,276 1,074,458 1,981,515 9.8% 10.4% 29.3%
Less: Reserve For Loan Losses (72,080) (120,122) (69,405) (118,399) (67,869) (120,318) (74,604) (137,585) 1.5% -0.2% -12.7%
Loans To Clients, Net 1,465,299 2,441,920 1,298,485 2,215,086 1,240,951 2,199,957 999,853 1,843,930 10.2% 11.0% 32.4%
Investment Property 48,609 81,007 47,181 80,485 44,717 79,274 34,125 62,932 0.6% 2.2% 28.7%
Investments In Other Business Entities, Net 97,175 161,942 95,098 162,227 190,588 337,875 180,333 332,570 -0.2% -52.1% -51.3%
Property And Equipment Owned, Net 133,826 223,021 133,916 228,448 126,154 223,646 125,472 231,396 -2.4% -0.3% -3.6%
Intangible Assets Owned, Net 11,566 19,275 11,972 20,423 9,613 17,043 9,873 18,208 -5.6% 13.1% 5.9%
Goodwill 13,650 22,748 13,335 22,748 12,832 22,748 12,335 22,748 0.0% 0.0% 0.0%
Tax Assets, Current And Deferred 3,569 5,947 7,971 13,597 - - 3,591 6,622 -56.3% - -10.2%
Prepayments And Other Assets 35,326 58,871 21,012 35,844 18,743 33,228 17,591 32,442 64.2% 77.2% 81.5%
Total Assets 2,407,848 4,012,678 2,306,684 3,934,972 2,175,668 3,857,025 1,807,147 3,332,741 2.0% 4.0% 20.4%
Client Deposits 1,242,350 2,070,377 1,152,770 1,966,511 1,017,007 1,802,950 727,870 1,342,338 5.3% 14.8% 54.2%
Deposits And Loans From Banks 85,897 143,148 71,057 121,216 70,988 125,847 104,771 193,219 18.1% 13.7% -25.9%
Borrowed Funds 479,735 799,478 557,624 951,250 566,069 1,003,527 512,737 945,589 -16.0% -20.3% -15.5%
Issued Fixed Income Securities 89,447 149,063 56,573 96,508 12,027 21,321 1,980 3,651 54.5% NMF NMF
Tax Liabilities, Current And Deferred 11,796 19,657 12,986 22,152 18,544 32,874 16,251 29,969 -11.3% -40.2% -34.4%
Accruals And Other Liabilities 31,786 52,972 23,931 40,824 19,168 33,980 11,602 21,397 29.8% 55.9% 147.6%
Total Liabilities 1,941,011 3,234,695 1,874,941 3,198,462 1,703,801 3,020,499 1,375,211 2,536,164 1.1% 7.1% 27.5%
Share Capital - Ordinary Shares 18,818 31,360 18,379 31,353 17,681 31,345 16,985 31,324 0.0% 0.0% 0.1%
Share Premium 286,642 477,688 280,477 478,465 268,876 476,664 260,537 480,482 -0.2% 0.2% -0.6%
Treasury Shares (781) (1,302) (746) (1,272) (776) (1,375) (642) (1,184) 2.4% -5.3% 10.0%
Revaluation And Other Reserves 22,752 37,917 29,927 51,052 29,688 52,631 35,591 65,637 -25.7% -28.0% -42.2%
Retained Earnings 94,985 158,292 93,275 159,118 104,128 184,597 99,267 183,068 -0.5% -14.3% -13.5%
Net Income / (Loss) For The Period 44,421 74,028 10,430 17,793 52,270 92,665 20,198 37,250 NMF -20.1% 98.7%
Total Shareholders' Equity 466,836 777,983 431,743 736,510 471,867 836,526 431,936 796,577 5.6% -7.0% -2.3%
Total Liabilities And Shareholders’ Equity 2,407,848 4,012,678 2,306,684 3,934,972 2,175,668 3,857,025 1,807,147 3,332,741 2.0% 4.0% 20.4%

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7059 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 2011

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.7728 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 2011

4 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgia Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

5 Change calculations based on GEL values

BNB (BELARUS) 1H 2011 INCOME STATEMENT

Period ended   1H 2011   1H 2010   Change3
Standalone, IFRS-based US$1   GEL US$2   GEL Y-O-Y
000s Unless otherwise noted (Unaudited) (Unaudited)
Interest Income 4,480 7,466 2,790 5,146 45.1%
Interest Expense 900 1,500 273 503 198.2%
Net Interest Income 3,580 5,966 2,518 4,643 28.5%
Fees & Commission Income 1,315 2,192 414 764 186.9%
Fees & Commission Expense 609 1,015 75 138 NMF
Net Fees & Commission Income 706 1,177 339 626 88.0%
Income From Documentary Operations 103 172 15 27 NMF
Expense On Documentary Operations 41 68 - - -
Net Income From Documentary Operations 62 103 15 27 NMF
Net Foreign Currency Related Income 1,524 2,540 298 550 NMF
Net Other Non-Interest Income 49 81 22 41 97.6%
Net Non-Interest Income 2,341 3,901 675 1,244 NMF
Total Operating Income (Revenue) 5,921 9,867 3,192 5,887 67.6%
Personnel Costs 2,377 3,961 1,165 2,149 84.3%
Selling, General & Administrative Expenses 556 926 245 451 105.3%
Procurement & Operations Support Expenses 588 979 280 517 89.4%
Depreciation And Amortization 196 327 144 265 23.4%
Other Operating Expenses 192 320 211 389 -17.7%
Total Recurring Operating Costs 3,909 6,514 2,045 3,771 72.7%
Normalized Net Operating Income / (Loss) 2,012 3,353 1,147 2,116 58.5%
Net Non-Recurring Income / (Costs) 4,036 6,727 (7) (12) NMF
Profit / (Loss) Before Provisions 6,048 10,080 1,141 2,104 NMF
Net Provision Expense 2,072 3,453 356 657 NMF
Pre-Tax Income / (Loss) 3,976 6,627 785 1,447 NMF
Income Tax Expense / (Benefit) 1,042 1,736 183 337 NMF
Net Income / (Loss) 2,935 4,891 602 1,110 NMF

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6665 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2011

2 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.8442 per US$1.00, such exchange rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia on 30 June 2010

3 Change calculations based on GEL values

KEY RATIOS

Ratios presented on a consolidated basis, unless otherwise noted

 

  1H 2011   1H 2010
Profitability Ratios
ROAA 1, Annualised 3.8% 2.3%
ROAE2, Annualised 21.2% 11.8%
ROAE2, Annualised, excluding minority interest 22.0% 12.2%
ROA, Annualised 3.8% 2.1%
ROE, Annualised 20.6% 11.2%
ROE, Annualised, excluding minority interest 21.3% 11.5%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised3 18.0% 19.4%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised3 14.6% 16.7%
Cost Of Funds 4, Annualied 7.6% 8.5%
Net Spread Excl. Cash, Annualised 5 10.4% 10.9%
Net Spread Incl. Cash, Annualised 5 7.0% 8.2%
Net Interest Margin 6, Annualised 7.1% 8.1%
Loan Yield Excl. Provisions7, Annualised 17.4% 18.7%
Loan Yield Incl. Provisions7, Annualised 16.5% 16.4%
Deposit Yield, Annualised 7.3% 8.0%
Interest Expense To Interest Income 51.0% 51.4%
Net Non-Interest Income To Average Total Assets, Annualised 3.7% 3.8%
Net Non-Interest Income To Revenue 8 39.4% 38.3%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised 1.3% 1.3%
Net Fee And Commission Income To Revenue 14.0% 13.5%
Operating Leverage, Y-O-Y 10 16.6% -6.5%
Operating Leverage, Y-O-Y, Normalized 10 18.3% -5.2%
Total Operating Income (Revenue) To Total Assets, Annualised 9.4% 9.2%
Recurring Earning Power 11, Annualised 4.6% 4.0%
Net Income To Revenue 40.2% 23.1%
 
Efficiency Ratios
Operating Cost To Average Total Assets 12, Annualised 4.8% 5.9%
Cost To Average Total Assets 13, Annualised 4.9% 6.0%
Cost / Income 14 52.0% 60.2%
Cost / Income, Normalized 37 50.3% 59.0%
Cash Cost / Income 36.1% 44.4%
Total Employee Compensation Expense To Revenue 16 27.6% 31.4%
Total Employee Compensation Expense To Cost 53.1% 52.2%
Total Employee Compensation Expense To Average Total Assets, Annualised 2.6% 3.1%
 
Liquidity Ratios
Net Loans To Total Assets 17 59.2% 57.9%
Average Net Loans To Average Total Assets 56.5% 57.1%
Interest Earning Assets To Total Assets 81.6% 76.9%
Average Interest Earning Assets To Average Total Assets 80.6% 75.7%
Liquid Assets To Total Assets 18 25.5% 24.3%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone 37.9% 34.8%
Liquid Assets To Total Liabilities, IFRS Consolidated 31.2% 30.0%
Net Loans To Client Deposits 117.3% 133.3%
Average Net Loans To Average Client Deposits 114.3% 130.1%
Net Loans To Total Deposits 19 108.3% 116.2%
Net Loans To (Total Deposits + Equity) 81.2% 84.2%
Net Loans To Total Liabilities 72.4% 71.5%
Total Deposits To Total Liabilities 66.8% 61.5%
Client Deposits To Total Deposits 92.3% 87.2%
Client Deposits To Total Liabilities 61.7% 53.6%
Current Account Balances To Client Deposits 42.0% 44.2%
Demand Deposits To Client Deposits 13.7% 9.0%
Time Deposits To Client Deposits 44.3% 46.7%
Total Deposits To Total Assets 54.6% 49.8%
  1H 2011 1H 2010
Client Deposits To Total Assets 50.4% 43.4%
Client Deposits To Total Equity (Times) 20 2.8 2.3
Due From Banks / Due To Banks 21 304.1% 174.5%
Total Equity To Net Loans 30.8% 32.8%
Leverage (Times) 22 4.5 4.3
 
Asset Quality
NPLs (in GEL) 23 100,911 173,743
NPLs To Gross Loans To Clients 24 3.9% 8.0%
NPL Coverage Ratio 27 121.4% 113.5%
Cost of Risk 25, Annualised 0.6% 2.0%
Reserve For Loan Losses To Gross Loans To Clients 26 4.8% 9.0%
% Of Loans To Clients Collateralized 88.3% 91.0%
Equity To Average Net Loans To Clients 32.7% 36.1%
 
Capital Adequacy:
Equity To Total Assets 18.2% 19.0%
BIS Tier I Capital Adequacy Ratio, Consolidated 28 18.0% 20.3%
BIS Total Capital Adequacy Ratio, Consolidated 29 27.2% 32.7%
BIS Tier I Capital Adequacy Ratio, Stand-alone 28 19.2% 25.2%
BIS Total Capital Adequacy Ratio, Stand-alone 29 27.7% 32.3%
NBG Tier I Capital Adequacy Ratio 30 11.5% 15.8%
NBG Total Capital Adequacy Ratio 31 15.1% 14.5%
 
Per Share Values:
Basic EPS (GEL) 32 2.47 1.16
Basic EPS (US$) $1.48 $0.63
Fully Diluted EPS (GEL) 33 2.33 1.16
Fully Diluted EPS (US$) $1.40 $0.63
Book Value Per Share (GEL) 34 23.97 20.74
Book Value Per Share (US$) $14.38 $11.25
Ordinary Shares Outstanding – Weighted Average, Basic 31,356,855 31,318,827
Ordinary Shares Outstanding – Period End 31,360,322 31,324,466
Ordinary Shares Outstanding – Fully Diluted 34,831,469 34,793,441
 
Selected Operating Data:
Full Time Employees, Group 4,844 4,651
Full Time Employees, Group (including temporary contracts) 5,315 5,118
Full Time Employees, BOG Stand-Alone 3,216 2,963
Total Assets Per FTE 35 851,220 736,100
Total Assets Per FTE, BOG Stand-Alone 1,247,720 1,124,790
Number Of Active Branches 143 137
Number Of ATMs 408 387
Number Of Cards Outstanding 610,299 551,741
Number Of POS Terminals 2,630 2,225

KEY RATIOS

Ratios presented on a consolidated basis, unless otherwise noted

Profitability Ratios   Q2 2011   Q1 2011   Q2 2010
ROAA 1, Annualised 4.6% 3.0% 2.4%
ROAE2, Annualised 25.1% 17.1% 12.5%
ROAE2, Annualised, excluding minority interest 26.1% 17.7% 12.2%
ROA, Annualised 4.5% 3.0% 2.3%
ROE, Annualised 25.0% 16.6% 12.1%
ROE, Annualised, excluding minority interest 25.9% 17.2% 11.7%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised3 18.2% 17.9% 19.5%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised3 14.7% 14.5% 16.8%
Cost Of Funds 4, Annualied 7.7% 7.6% 8.4%
Net Spread Excl. Cash, Annualised 5 10.5% 10.4% 11.1%
Net Spread Incl. Cash, Annualised 5 7.0% 6.9% 8.4%
Net Interest Margin 6, Annualised 7.3% 7.0% 8.3%
Loan Yield Excl. Provisions7, Annualised 17.6% 17.4% 18.7%
Loan Yield Incl. Provisions7, Annualised 16.4% 16.7% 15.7%
Loan Yield Excl. Provisions, Including Interest Income from liquid assets 20.1% 19.3% 20.2%
Deposit Yield, Annualised 7.5% 7.0% 8.1%
Interest Expense To Interest Income 50.4% 51.6% 50.5%
Net Non-Interest Income To Average Total Assets, Annualised 4.1% 3.4% 3.6%
Net Non-Interest Income To Revenue 8 41.1% 37.5% 36.4%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised 1.8% 1.5% 1.7%
Net Fee And Commission Income To Revenue 14.7% 13.2% 13.4%
Operating Leverage, Y-O-Y 10 12.5% 20.0% 4.2%
Operating Leverage, Y-O-Y, Normalized 10 18.5% 17.9% 0.4%
Operating Leverage, Consecutive Q-O-Q 10 9.3% 1.1% 16.2%
Operating Leverage, Consecutive Q-O-Q, Normalized 10 6.7% 4.4% 6.5%
Total Operating Income (Revenue) To Total Assets, Annualised 9.9% 9.0% 9.5%
Recurring Earning Power 11, Annualised 5.0% 4.1% 4.4%
Net Income To Revenue 46.1% 33.5% 24.1%
 
Efficiency Ratios
Operating Cost To Average Total Assets 12, Annualised 4.9% 4.7% 5.7%
Cost To Average Total Assets 13, Annualised 5.0% 4.9% 5.5%
Cost / Income 14 49.9% 54.4% 55.4%
Cost / Income, Normalized 37 48.8% 51.9% 57.3%
Cash Cost / Income 34.4% 38.0% 43.0%
Total Employee Compensation Expense To Revenue 16 27.1% 28.2% 31.9%
Total Employee Compensation Expense To Cost 54.2% 51.8% 57.6%
Total Employee Compensation Expense To Average Total Assets, Annualised 2.7% 2.5% 3.2%
 
Liquidity Ratios
Net Loans To Total Assets 17 59.2% 55.4% 57.9%
Average Net Loans To Average Total Assets 56.4% 56.3% 57.6%
Interest Earning Assets To Total Assets 81.6% 80.6% 76.9%
Average Interest Earning Assets To Average Total Assets 81.1% 80.0% 76.3%
Liquid Assets To Total Assets 18 25.5% 29.5% 24.3%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone 37.9% 44.5% 34.8%
Liquid Assets To Total Liabilities, IFRS Consolidated 31.2% 36.0% 30.0%
Net Loans To Client Deposits 117.3% 113.4% 133.3%
Average Net Loans To Average Client Deposits 113.3% 115.1% 131.1%
Net Loans To Total Deposits 19 108.3% 106.1% 116.2%
  Q2 2011 Q1 2011 Q2 2010
Net Loans To (Total Deposits + Equity) 81.2% 78.6% 84.2%
Net Loans To Total Liabilities 72.4% 67.7% 71.5%
Total Deposits To Total Liabilities 66.8% 63.8% 61.5%
Client Deposits To Total Deposits 92.3% 93.5% 87.2%
Client Deposits To Total Liabilities 61.7% 59.7% 53.6%
Current Account Balances To Client Deposits 42.0% 44.3% 44.2%
Demand Deposits To Client Deposits 13.7% 11.2% 9.0%
Time Deposits To Client Deposits 44.3% 44.5% 46.7%
Total Deposits To Total Assets 54.6% 52.2% 49.8%
Client Deposits To Total Assets 50.4% 48.8% 43.4%
Client Deposits To Total Equity (Times) 20 2.77 2.68 2.29
Due From Banks / Due To Banks 21 304.1% 494.3% 174.5%
Total Equity To Net Loans 30.8% 32.9% 32.8%
Leverage (Times) 22 4.5 4.5 4.3
 
Asset Quality
NPLs (in GEL) 23 100,911 90,795 173,743
NPLs To Gross Loans To Clients 24 3.9% 3.8% 8.0%
NPL Coverage Ratio 27 121.4% 131.4% 113.5%
Cost of Risk 25, Annualised 0.35% 0.8% 2.4%
Reserve For Loan Losses To Gross Loans To Clients 26 4.8% 5.1% 9.0%
% Of Loans To Clients Collateralized 88.3% 90.1% 91.0%
Equity To Average Net Loans To Clients 32.7% 32.2% 36.1%
 
Capital Adequacy:
Equity To Total Assets 18.2% 18.2% 19.0%
BIS Tier I Capital Adequacy Ratio, Consolidated 28 18.0% 18.0% 20.3%
BIS Total Capital Adequacy Ratio, Consolidated 29 27.2% 28.8% 32.7%
BIS Tier I Capital Adequacy Ratio, Stand-alone 28 19.2% 19.3% 25.2%
BIS Total Capital Adequacy Ratio, Stand-alone 29 27.7% 29.0% 32.3%
NBG Tier I Capital Adequacy Ratio 30 11.5% 12.7% 15.8%
NBG Total Capital Adequacy Ratio 31 15.1% 15.6% 14.5%
 
Per Share Values:
Basic EPS (GEL) 32 1.50 0.97 0.63
Basic EPS (US$) $0.90 $0.57 $0.34
Fully Diluted EPS (GEL) 33 1.40 0.93 0.62
Fully Diluted EPS (US$) $0.84 $0.55 $0.34
Book Value Per Share (GEL) 34 23.97 23.52 20.74
Book Value Per Share (US$) $14.38 $13.79 $11.25
Ordinary Shares Outstanding – Weighted Average, Basic 31,360,322 31,353,349 31,321,662
Ordinary Shares Outstanding – Period End 31,360,322 31,353,349 31,324,466
Ordinary Shares Outstanding – Fully Diluted 34,834,936 34,827,963 34,796,276
 
Selected Operating Data:
Full Time Employees, Group, including temporary contracts 5,315 5,226 5,118
Full Time Employees, BOG Stand-Alone 3,216 3,150 2,963
Total Assets Per FTE (including temporary contracts) 35 775,790 774,830 668,930
Total Assets Per FTE, BOG Stand-Alone 1,247,720 1,249,200 1,124,790
Number Of Active Branches 143 143 137
Number Of ATMs 408 408 387
Number Of Cards Outstanding 610,299 614,990 551,741
Number Of POS Terminals 2,630 2,404 2,225

KEY RATIOS

Ratios presented on a Standalone basis

Profitability Ratios

  1H 2011   1H 2010
ROAA 1, Annualised 4.4% 2.4%
ROAE2, Annualised 22.6% 9.9%
ROA, Annualised 4.4% 2.2%
ROE, Annualised 22.6% 9.4%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised3 17.9% 18.6%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised3 14.5% 16.0%
Cost Of Funds 4, Annualied 7.7% 8.2%
Net Spread Excl. Cash, Annualised 5 10.3% 10.4%
Net Spread Incl. Cash, Annualised 5 6.8% 7.8%
Net Interest Margin 6, Annualised 7.1% 7.9%
Loan Yield Excl. Provisions7, Annualised 17.6% 18.9%
Loan Yield Incl. Provisions7, Annualised 16.9% 16.5%
Deposit Yield, Annualised 7.2% 7.5%
Interest Expense To Interest Income 51.2% 50.4%
Net Non-Interest Income To Average Total Assets, Annualised 2.6% 2.5%
Net Non-Interest Income To Revenue 8 31.2% 29.2%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised 1.2% 1.2%
Net Fee And Commission Income To Revenue 13.8% 14.4%
Operating Leverage, Y-O-Y 10 26.5% -9.1%
Operating Leverage, Y-O-Y, Normalized 10 15.2% -8.5%
Total Operating Income (Revenue) To Total Assets, Annualised 8.2% 7.7%
Recurring Earning Power 11, Annualised 4.9% 4.1%
Net Income To Revenue 53.3% 29.0%
 
Efficiency Ratios
Operating Cost To Average Total Assets 12, Annualised 3.6% 4.1%
Cost To Average Total Assets 13, Annualised 3.4% 4.3%
Cost / Income 14 40.9% 51.6%
Cost / Income, Normalized 37 43.4% 49.2%
Cash Cost / Income 29.2% 34.4%
Total Employee Compensation Expense To Revenue 16 24.1% 25.4%
Total Employee Compensation Expense To Cost 58.9% 49.3%
Total Employee Compensation Expense To Average Total Assets, Annualised 2.0% 2.1%
 
Liquidity Ratios
Net Loans To Total Assets 17 60.9% 55.3%
Average Net Loans To Average Total Assets 56.8% 56.0%
Interest Earning Assets To Total Assets 83.2% 75.3%
Average Interest Earning Assets To Average Total Assets 81.2% 74.9%
Liquid Assets To Total Assets 18 24.9% 23.5%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone 37.9% 34.8%
Liquid Assets To Total Liabilities, IFRS Stand-Alone 30.9% 30.8%
Net Loans To Client Deposits 117.9% 137.4%
Average Net Loans To Average Client Deposits 115.2% 138.7%
Net Loans To Total Deposits 19 110.3% 120.1%
Net Loans To (Total Deposits + Equity) 81.6% 79.1%
Net Loans To Total Liabilities 75.5% 72.7%
Total Deposits To Total Liabilities 68.4% 60.5%
Client Deposits To Total Deposits 93.5% 87.4%
Client Deposits To Total Liabilities 64.0% 52.9%
Current Account Balances To Client Deposits 42.7% 45.8%
Demand Deposits To Client Deposits 13.7% 10.0%
Time Deposits To Client Deposits 51.6% 65.6%
Total Deposits To Total Assets 55.2% 46.1%
Client Deposits To Total Assets 51.6% 40.3%
Client Deposits To Total Equity (Times) 20 2.7 1.7
Due From Banks / Due To Banks 21 351.6% 206.5%
  1H 2011 1H 2010
Total Equity To Net Loans 31.9% 43.2%
Leverage (Times) 22 4.2 3.2
 
Asset Quality
NPLs (in GEL) 23 99,058 129,164
NPLs To Gross Loans To Clients 24 3.9% 6.5%
NPL Coverage Ratio 27 121.3% 106.5%
Cost of Risk 25, Annualised 0.3% 2.0%
Reserve For Loan Losses To Gross Loans To Clients 26 4.7% 6.9%
% Of Loans To Clients Collateralized 53.4% 48.9%
Equity To Average Net Loans To Clients 34.7% 46.5%
 
Capital Adequacy:
Equity To Total Assets 19.4% 23.9%
BIS Tier I Capital Adequacy Ratio, Stand-alone 28 19.2% 25.2%
BIS Total Capital Adequacy Ratio, Stand-alone 29 27.7% 32.3%
NBG Tier I Capital Adequacy Ratio 30 11.5% 15.8%
NBG Total Capital Adequacy Ratio 31 15.1% 14.5%
 
Per Share Values:
Basic EPS (GEL) 32 2.80 1.19
Basic EPS (US$) $1.68 $0.64
Fully Diluted EPS (GEL) 33 2.63 1.19
Fully Diluted EPS (US$) $1.58 $0.64
Book Value Per Share (GEL) 34 24.81 25.43
Book Value Per Share (US$) $14.89 $13.79
Ordinary Shares Outstanding - Weighted Average, Basic 31,356,855 31,318,827
Ordinary Shares Outstanding - Period End 31,360,322 31,324,466
Ordinary Shares Outstanding - Fully Diluted 34,831,469 34,793,441
 
Selected Operating Data:
Full Time Employees, BOG Stand-Alone 3,216 2,963
Total Assets Per FTE, BOG Stand-Alone 1,247,720 1,124,79 0
Number Of Active Branches 143 137
Number Of ATMs 408 387
Number Of Cards Outstanding 610,299 551,741
Number Of POS Terminals 2,630 2,225

KEY RATIOS

Ratios presented on a Standalone basis

Profitability Ratios   Q2 2011   Q1 2011   Q2 2010
ROAA 1, Annualised 5.7% 3.2% 3.1%
ROAE2, Annualised 29.6% 16.0% 12.8%
ROA, Annualised 5.6% 3.2% 2.9%
ROE, Annualised 28.9% 17.1% 12.3%
Interest Income / Average Int. Earning Assets Excl. Cash, Annualised3 18.0% 18.0% 18.8%
Interest Income / Average Int. Earning Assets Incl. Cash, Annualised3 14.5% 14.4% 16.0%
Cost Of Funds 4, Annualied 7.8% 7.6% 8.1%
Net Spread Excl. Cash, Annualised 5 10.2% 10.4% 10.7%
Net Spread Incl. Cash, Annualised 5 6.8% 6.8% 7.9%
Net Interest Margin 6, Annualised 7.1% 7.0% 8.1%
Loan Yield Excl. Provisions7, Annualised 17.6% 17.7% 18.9%
Loan Yield Incl. Provisions7, Annualised 17.0% 16.9% 16.9%
Loan Yield Excl. Provisions, Including Interest Income from liquid assets 19.8% 19.6% 20.0%
Deposit Yield, Annualised 7.4% 6.9% 7.3%
Interest Expense To Interest Income 51.2% 51.3% 49.6%
Net Non-Interest Income To Average Total Assets, Annualised 2.9% 2.3% 2.6%
Net Non-Interest Income To Revenue 8 32.9% 29.4% 30.1%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised 1.6% 1.3% 1.7%
Net Fee And Commission Income To Revenue 14.8% 12.7% 14.5%
Operating Leverage, Y-O-Y 10 32.6% 20.2% 2.5%
Operating Leverage, Y-O-Y, Normalized 10 10.5% 20.4% 1.6%
Operating Leverage, Consecutive Q-O-Q 10 21.6% -12.4% 9.1%
Operating Leverage, Consecutive Q-O-Q, Normalized 10 1.9% 0.2% 10.8%
Total Operating Income (Revenue) To Total Assets, Annualised 8.6% 7.9% 8.3%
Recurring Earning Power 11, Annualised 5.5% 4.3% 4.4%
Net Income To Revenue 65.1% 40.3% 35.3%
 
Efficiency Ratios
Operating Cost To Average Total Assets 12, Annualised 3.8% 3.5% 4.1%
Cost To Average Total Assets 13, Annualised 3.2% 3.6% 4.3%
Cost / Income 14 36.7% 45.6% 49.6%
Cost / Income, Normalized 37 43.0% 43.8% 47.0%
Cash Cost / Income 28.3% 30.2% 33.2%
Total Employee Compensation Expense To Revenue 16 24.3% 23.8% 24.9%
Total Employee Compensation Expense To Cost 66.3% 52.3% 50.2%
Total Employee Compensation Expense To Average Total Assets, Annualised 2.1% 1.9% 2.2%
 
Liquidity Ratios
Net Loans To Total Assets 17 60.9% 56.3% 55.3%
Average Net Loans To Average Total Assets 57.6% 55.9% 56.1%
Interest Earning Assets To Total Assets 83.2% 82.1% 75.3%
Average Interest Earning Assets To Average Total Assets 82.5% 80.1% 75.6%
Liquid Assets To Total Assets 18 24.9% 29.4% 23.5%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone 37.9% 44.5% 34.8%
Liquid Assets To Total Liabilities, IFRS Stand-Alone 30.9% 36.1% 30.8%
Net Loans To Client Deposits 117.9% 112.6% 137.4%
Average Net Loans To Average Client Deposits 113.3% 116.5% 138.2%
Net Loans To Total Deposits 19 110.3% 106.1% 120.1%
Net Loans To (Total Deposits + Equity) 81.6% 78.4% 79.1%
Net Loans To Total Liabilities 75.5% 69.3% 72.7%
Total Deposits To Total Liabilities 68.4% 65.3% 60.5%
Client Deposits To Total Deposits 93.5% 94.2% 87.4%
Client Deposits To Total Liabilities 64.0% 61.5% 52.9%
Current Account Balances To Client Deposits 42.7% 45.1% 45.8%
Demand Deposits To Client Deposits 13.7% 11.2% 10.0%
Time Deposits To Client Deposits 51.6% 53.5% 65.6%
Total Deposits To Total Assets 55.2% 53.1% 46.1%
  Q2 2011 Q1 2011 Q2 2010
Client Deposits To Total Assets 51.6% 50.0% 40.3%
Client Deposits To Total Equity (Times) 20 266.1% 267.0% 168.5%
Due From Banks / Due To Banks 21 351.6% 551.3% 206.5%
Total Equity To Net Loans 31.9% 33.2% 43.2%
Leverage (Times) 22 4.2 4.3 3.2
       
Asset Quality      
NPLs (in GEL) 23 99,058 87,593 129,164
NPLs To Gross Loans To Clients 24 3.9% 3.8% 6.5%
NPL Coverage Ratio 27 121.3% 135.2% 106.5%
Cost of Risk 25, Annualised 0.5% 0.8% 2.0%
Reserve For Loan Losses To Gross Loans To Clients 26 4.7% 5.1% 6.9%
% Of Loans To Clients Collateralized 53.4% 51.9% 48.9%
Equity To Average Net Loans To Clients 34.7% 33.5% 46.5%
       
Capital Adequacy:      
Equity To Total Assets 19.4% 18.7% 23.9%
BIS Tier I Capital Adequacy Ratio, Stand-alone 28 19.2% 19.3% 25.2%
BIS Total Capital Adequacy Ratio, Stand-alone 29 27.7% 29.0% 32.3%
NBG Tier I Capital Adequacy Ratio 30 11.5% 12.7% 15.8%
NBG Total Capital Adequacy Ratio 31 15.1% 15.6% 14.5%
       
Per Share Values:      
Basic EPS (GEL) 32 1.79 1.00 0.78
Basic EPS (US$) $1.08 $0.59 $0.42
Fully Diluted EPS (GEL) 33 1.67 0.96 0.76
Fully Diluted EPS (US$) $1.00 $0.56 $0.41
Book Value Per Share (GEL) 34 24.81 23.49 25.43
Book Value Per Share (US$) $14.89 $13.77 $13.79
Ordinary Shares Outstanding - Weighted Average, Basic 31,360,322 31,353,349 31,321,662
Ordinary Shares Outstanding - Period End 31,360,322 31,353,349 31,324,466
Ordinary Shares Outstanding - Fully Diluted 34,834,936 34,827,963 34,796,276
       
Selected Operating Data:      
Full Time Employees, BOG Stand-Alone 3,216 3,150 2,963
Total Assets Per FTE, BOG Stand-Alone 35 1,247,72 0 1,249,200 1,124,790
Number Of Active Branches 143 143 137
Number Of ATMs 408 408 387
Number Of Cards Outstanding 610,299 614,990 551,741
Number Of POS Terminals 2,443 2,404 2,225

1 ROAE excluding minority interest

2 Nominal terms applied GEL/US$ as of 31 December 2010 to the 30 June 2011

3 Compared to Q1 2011; growth calculations based on GEL values.

4 Compared to the respective period in 2010

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

6 Normalized for Net Non-Recurring Income/(Costs).

7 Net income/(Loss) excludes Extraordinary Item in Q1 2011.

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, both calculated in accordance with the requirements of Basel Accord I.

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

10 Before Discontinued Operations

11 All data according to the NBG as of 30 June 2011

About Bank of Georgia

Bank of Georgia is the leading Georgian bank offering a broad range of corporate banking, retail banking, wealth management, brokerage and insurance services to its clients. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 36% market share by total assets (all data according to the NBG as of 30 June 2011). The Bank has 143 branches and more than one million retail and 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 ‘B1/NP’ (FC) & ‘Ba3/NP’ (LC)

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

Irakli Gilauri   Giorgi Chiladze   Macca Ekizashvili   David Westover/Justin Griffiths
Chief Executive Officer Deputy CEO, Finance Head of Investor Relations Citigate Dewe Rogerson
+995 32 444 109 +995 32 444 249 +995 32 2 444 256 +44 (0) 207 638 9571

igilauri@bog.ge

gchiladze@bog.ge

ir@bog.ge

bog@citigatgdr.co.uk

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 Q2 2010, 1H 2010, Q2 2011 and 1H 2011 contained in this news report is unaudited, derived from IFRS-based management reports and reflects the best estimates of management. The Bank’s actual results may differ from the amounts reflected herein as a result of various factors.

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; ROAE Excluding Minority Interests equals Net Income Excluding Minority Interest(s) of the period divided by quarterly Average Total Equity Excluding Minority Interest for the same period.
3 Average Interest Earning Assets are calculated on a quarterly basis; Interest Earning Assets include: Loans And Advances To Credit Institutions, Treasuries And Equivalents, Other Fixed Income Instruments and Net Loans to Clients;
4 Cost Of Funds equals Interest Expense of the period divided by quarterly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Client Deposits, Deposits And Loans From Banks, Borrowed Funds and Issued Fixed Income Securities;
5 Net Spread equals Interest Income To Average Interest Earning Assets less Cost Of Funds;
6 Net Interest Margin equals Net Interest Income of the period divided by quarterly Average Interest Earning Assets of the same period;
7 Loan Yield equals Interest Income, less Net Provision Expense, divided by quarterly Average Gross Loans To Clients;
8 Revenue equals Total Operating Income;
9 Net Fee And Commission Income includes Net Income From Documentary Operations of the period ;
10 Operating Leverage equals percentage change in Revenue less percentage change in Total Costs;
11 Recurring Earning Power equals Profit Before Provisions of the period divided by average Total Assets of the same period;
12 Operating Cost equals Total Recurring Operating Costs;
13 Cost includes Total Recurring Operating Costs and Net Non-Recurring Costs (Income);
14 Cost/Income Ratio equals Costs of the period divided by Total Operating Income (Revenue);
15 Cost/Income Normalized equals Total Recurring Operating cost (excludes net non-recurring costs) divided by total operating income.
16 Total Employee Compensation Expense includes Personnel Costs;
17 Net Loans equal Net Loans To Clients;
18 Liquid Assets include: Cash And Cash Equivalents, Other Accounts With NBG, Balances With And Loans To Other Banks, Treasuries And Equivalents and Other Fixed Income Securities as of the period end and are divided by Total Assets as of the same date;
19 Total Deposits include Client Deposits and Deposits And Loans from Banks;
20 Total Equity equals Total Shareholders’ Equity;
21 Due From Banks/ Due To Banks equals Loans And Advances To Credit Institutions divided by Deposits And Loans From Banks;
22 Leverage (Times) equals Total Liabilities as of the period end divided by Total Equity as of the same date;
23 NPLs (in GEL) equals total gross non-performing loans as of the period end; non-performing loans are loans that have debts in arrears for more than 90 calendar days
24 Gross Loans equals Gross Loans To Clients;
25 NPL Coverage Ratio equals Reserve For Loan losses as of the period end divided by NPLs as of the same date;
26 Cost Of Risk equals Net Provision For Loan Losses of the period, plus provisions for (less recovery of) other assets, divided by quarterly average Gross Loans To Clients over the same period;
27 Reserve For Loan Losses To Gross Loans To Clients equals reserve for loan losses as of the period end divided by gross loans to clients as of the same date;
28 BIS Tier I Capital Adequacy Ratio equals Tier I Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I;
29 BIS Total Capital Adequacy Ratio equals Total Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of Basel Accord I;
30 NBG Tier I Capital Adequacy Ratio equals Tier I Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements the National Bank of Georgia;
31 NBG Total Capital Adequacy Ratio equals Total Capital as of the period end divided by Total Risk Weighted Assets as of the same date, both calculated in accordance with the requirements of the National Bank of Georgia;
32 Basic EPS equals Net Income of the period divided by the weighted average number of outstanding ordinary shares over the same period;
33 Fully Diluted EPS equals net income of the period divided by the number of outstanding ordinary shares as of the period end plus number of ordinary shares in contingent liabilities;
34 Book Value Per Share equals Equity as of the period end, plus Treasury Shares, divided by the total number of Outstanding Ordinary shares as of the same date
35 Equals total consolidated assets divided by total number of full-time employees