3rd Quarter Results

1.41 GEL/US$ September 2008 period end

1.47 GEL/US$ 9 month 2008 average
1.41 GEL/US$ Q3 2008 average
1.66 GEL/US$ September 2007 period end
1.69 GEL/US$ September 2007 average
1.66 GEL/US$ Q3 2007 average

JSC BANK OF GEORGIA ANNOUNCES CONSOLIDATED Q3 2008 & YEAR-TO-DATE 2008 RESULTS

Millions, unless otherwise noted   Q3 2008   Growth y-o-y 2
 
Bank of Georgia (Consolidated, Unaudited, IFRS-based1) US$   GEL
Total Operating Income (Revenue)3 61.1 85.9 53%
Recurring Operating Costs 35.3 49.6 71%
Normalised Net Operating Income4 25.8 36.3 34%
Net Provision Expenses 73.4 103.2 3259%
Net Income/(Loss) (42.0) (59.0) NMF
Millions, unless otherwise noted   9 Months 2008   Growth y-o-y 2
 
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$   GEL
Total Operating Income (Revenue)3 180.0 252.9 69%
Recurring Operating Costs 101.8 143.0 81%
Normalised Net Operating Income4 78.3 110.0 56%
Net Provision Expenses 83.9 117.8 1396%
Net Income/(Loss) 0.9 1.3 NMF
 
Total Assets 2,245 3,154 31%
Net Loans 1,374 1,931 51%
Total Deposits 943 1,325 17%
Tier 1 Capital Adequacy Ratio (BIS)5 24.7% 7%
Total Capital Adequacy Ratio (BIS)6 25.3% 8%
Tier 1 Capital Adequacy Ratio (NBG) 18.2% 30%
Total Capital Adequacy Ratio (NBG) 15.5% -9%

1 Except Provisions. Provisions represent management estimates.

2 Compared to the same period in 2007; growth calculations based on GEL values.

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

4 Normalised for Net Non-Recurring Costs.

5 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.

6 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

Bank of Georgia (LSE: BGEO, GSE: GEB) (the Bank), Georgias leading universal bank, announced today its Q3 2008 and YTD 2008 consolidated results (IFRS-based, derived from management accounts), reporting a Q3 2008 Net Loss of GEL 59.0 million. The Net Loss is mainly due to the extraordinary increase in Net Provision Expense (GEL 103.2 million for the quarter) related to the military conflict between Georgia and Russia in August 2008 (the Conflict). Consolidated Net Income for nine months of 2008 amounted to GEL 1.3 million. Net Provision Expense for the quarter has been calculated based on managements estimates, which, management believes, are conservative and should cover any potential loss in the loan portfolio.

Q3 2008 Summary

In Q3 2008 the Banks Total Operating Income (Revenue) increased by 52.9% y-o-y (q-o-q7) to GEL 85.9 million. Net Interest Income grew by 75.9% y-o-y (up 5.4% q-o-q) to GEL 58.9 million and Net Non-Interest Income amounted to GEL 27.1 million up 19.1% y-o-y (down 10.1% q-o-q). Increased interest rates on banking products and growing share of higher-yielding retail loans in the Banks loan portfolio continued to drive Interest Income growth during the quarter. The Net Interest Margin increased to 9.8% in Q3 2008 from 9.1% in Q2 2008, 8.9% in Q1 2008 and 7.6% in Q3 2007, reflecting the growth of Net Interest Income and the decrease of interest expense resulting from the deposit outflow during the quarter and the repayment of US$55 million first tranche of the Banks US$123.5 million syndicated loan received in August 2007.

The decrease of Net Income from Documentary Operations (GEL 1.7 million, down 9.8% q-o-q and by 6.9% y-o-y) and of Net Foreign Currency Related Income (GEL 9.4 million, down by 9.3% q-o-q, and up 51.4% y-o-y), was a result of the decrease of foreign exchange trading volumes during September, in the aftermath of the Conflict, and low foreign exchange (GEL/USD) volatility during the quarter. Net Fee and Commission Income grew by 7.7% q-o-q during the quarter (up 58.5% y-o-y) and reached GEL 10.9 million.

Net Other Non-Interest Income amounted to GEL 5.0 million during Q3 2008, down 34.7% q-o-q and down 35.7% y-o-y and was largely a reflection of disrupted capital markets affecting the operations of Galt & Taggart Securities (GTS), the Banks brokerage subsidiary. The 34.7% decline in Net Other Non-Interest Income was the main contributor to the 10.1% q-o-q decrease in Net Non-Interest Income for the quarter, which amounted to GEL 27.1 million, up 19.1% y-o-y.

Consolidated Recurring Operating Costs for the quarter grew by 1.6% q-o-q (up 70.5% y-o-y) to GEL 49.6 million, resulting in Net Normalized Operating Income (NNOI) of GEL 36.3 million, a 34.1% increase y-o-y (down 2.1% q-o-q).

The Banks Net Non-Recurring Cost of GEL 2.6 million in Q3 2008 (25.9% y-o-y), was largely due to the unplanned costs associated with the Conflict.

YTD 2008 Summary

In nine months of 2008 the Banks Total Operating Income (Revenue) increased by 69.3% y-o-y to GEL 252.9 million, driven by an 81.9% increase y-o-y in Net Interest Income and a 50.0% increase y-o-y in Net Non-Interest Income. Total Recurring Operating Costs increased by 81.0% y-o-y to GEL 143.0 million. NNOI grew 56.2% y-o-y to GEL 110.0 million. The Bank reported Net Profit of GEL 1.3 million for nine months of 2008 due to the Conflict-related increase in Net Provision Expense to GEL 103.2 million in Q3 2008.

On 30 September 2008 the Banks consolidated Total Assets amounted to GEL 3.2 billion (up 31.2% y-o-y, up 6.8% year-to-date and down 7.2% in Q3 2008 as compared with Q2 2008 or q-o-q). Gross Loans stood at GEL 2,060 million (up 58.1% y-o-y, up 17.6% year-to-date and down 2.2% q-o-q). Corporate Gross Loans to Clients in Georgia stood at GEL 795.8 million (up 11.2% y-o-y, down 1.4% year-to-date and down 9.6% q-o-q). Retail Gross Loans to Clients in Georgia reached GEL 930.9 million (up 74.4% y-o-y, up 44.5% year-to-date and up 1.0% q-o-q). Wealth Management Gross Loans to Clients in Georgia amounted to GEL 45.2 million (up 31.6% y-o-y, up 2.2% year-to-date and up 6.0% q-o-q). UBDP accounted for 10.7% and 12.5% of the Banks Total Assets and Total Gross Loans, respectively. BNB accounted for 2.1% and 1.7% of the Banks Total Assets and Total Gross Loans, respectively.

As of 30 September 2008 the Banks consolidated Total Liabilities stood at GEL 2.4 billion (up 24.6% y-o-y, up 0.8% year-to-date and down 7.7% q-o-q). Against the background of intensifying competition for deposits in Georgia and 11.7% appreciation of Georgian Lari against the US dollar during nine months of 2008, Client Deposits in Georgia amounted to GEL 972.6 million (down 7.9% y-o-y and down 16.6% q-o-q). Bank of Georgias Consolidated Client Deposits stood at GEL 1,202 million (up 12.9%y-o-y and down 13.9% q-o-q).

As of 30 September 2008 Bank of Georgia on standalone basis held market share of 32.9%, 32.6% and 27.8% by total assets, gross loans, and deposits, respectively in Georgia8.

As of 30 September 2008 the Banks Shareholders Equity amounted to GEL 739.3 million, (up GEL 181.4 million year-to-date, up GEL 274.4 million y-o-y and down GEL 43.7 million q-o-q). The Banks equity book value per share stood at GEL 23.66 (US$16.84) as at 30 September 2008, up 38.2% y-o-y, up 14.7% year-to-date and down 5.6% q-o-q.

Bank of Georgia (Standalone)

Discussion of the impact of the Conflict

Deposits

In Q3 2008, the Banks deposits in Georgia decreased by GEL 194 million (or 16.6% q-o-q) to GEL 972.6 million. The decrease of deposits was primarily the result of retail and corporate deposit withdrawals during the Conflict, as well as unusually slow deposit inflows and high withdrawals during post-Conflict period from corporate clients, which experienced business interruptions and loss of revenue during the conflict. The decrease in deposits during the Conflict was amplified by lending restrictions imposed on all Georgian banks by NBG until the end of August 2008. Due to this restriction, many corporate customers, who repaid their loans in August (total corporate loan repayments in August amounted to GEL 81.7 million) were unable to draw down their existing credit lines, thus affecting inflows on corporate current accounts.

The reduction of the deposits was also attributed to the appreciation of Lari against USD by approximately 1% and EURO by approximately 10% in Q3 2008 also contributed notably to the decrease in deposits.

Capital Adequacy, Liquidity and Leverage

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%. As of 30 September 2008, the Banks Tier I Capital Adequacy Ratio was 18.2% and Total Capital Adequacy Ratio was 15.5% by NBG standards. The Banks Tier I Capital Adequacy Ratio was 24.7% and Total Capital Adequacy Ratio was 25.3% by BIS standards.

The Banks NBG Liquidity Ratio stood at approximately 34% on 31 July 2008 and decreased to 27% on 30 September 2008, still well above the NBG requirement of 20%.

The Banks leverage ratio (Total Liabilities to Shareholders Equity) stood at 3.27x as of 30 September 2008, down from 3.35x on June 2008, despite extraordinary Conflict-related loan loss provisions booked by the Bank.

Provisions

The Bank booked net loan loss provisions of GEL 103.9 million in Q3 2008, as compared to loan loss provisions of GEL 2.8 million in Q3 2007 and GEL 8.6 million in Q2 2008. The Banks management believes that these provisions are made based on conservative assumptions and should be sufficient to cover any potential Conflict-related loss in the loan portfolio. The increased provision resulted in the NPL Coverage of 554% as of 30 September 2008.

The Banks subsidiaries showed mixed results in Q3 2008. The Banks Ukrainian subsidiary, Universal Bank for Development and Partnership (UBDP), reported its second consecutive profitable quarter since the start of the reorganization in Q4 2007. UBDPs Net Income increased 9.7% q-o-q to GEL 0.72 million in Q3 2008.

GTS, the Banks fully-owned investment banking subsidiary, which witnessed significant market disruptions in Ukraine and Georgia in Q3, reported a quarterly Net Loss of GEL 2.3 million. Aldagi BCI, the Banks fully-owned Georgian Insurance subsidiary, reported a quarterly Net Loss of GEL 26,000 compared with Net Income of GEL 36,000 in Q2 2008.

As of Q3 2008 the quarterly results of Belarusky Narodny Bank (BNB) are fully consolidated into Bank of Georgia financial results for the period. As the acquisition of BNB was completed just few days before the end of the Q2 2008, the Banks equity interest in BNB was reported as Investments in Other Business Entities on the Banks 30 June 2008 Balance Sheet. In Q3 2008 BNB reported a Net Income of GEL 1.0 million.

Business Unit Overview

Corporate Banking (CB)9

Allocated Revenues grew 46.0% y-o-y to GEL 71.6 million in nine months of 2008, while Allocated Recurring Costs increased by 31.0% y-o-y to GEL 18.8 million. NNOI grew 52.2% y-o-y to GEL 52.8 million, contributing 48.0% to the consolidated NNOI. Net Income decreased by 203.1% y-o-y to Net Loss of GEL 22.7 million, which was primarily due to the extraordinary conflict-related provisions booked by the Bank.

On a quarterly basis, Allocated Revenues in Q3 2008 grew 40.7% y-o-y to GEL 24.7 million, up 8.1% q-o-q, while Allocated Recurring Costs decreased to GEL 4.6 million, down 15.3% y-o-y, down 36.2% q-o-q. Q3 2008 NNOI grew by 56.0% y-o-y to GEL 20.1 million, up 44.3% q-o-q, contributing 55.3% to the consolidated NNOI. Q3 2008 Net Loss equaled GEL 45.6 million.

CB Gross Loans grew 11.2% y-o-y to GEL 795.8 million (down 1.4% year-to-date). Allocated Client Deposits stood at GEL 576.2 million down 14.1% y-o-y and down by 14.5% year-to-date. The reduction of deposits was mainly due to an outflow of deposits during the Conflict.

Retail Banking (RB)

Allocated Revenues grew 102.3% y-o-y to GEL 132.1 million in nine months of 2008, while Allocated Recurring Costs increased by 68.7% y-o-y to GEL 57.2 million. NNOI grew 138.5% y-o-y to GEL 74.9 million, contributing 68.1% to the consolidated NNOI. Net Income decreased 78.3% y-o-y to GEL 37.2 million.

On a quarterly basis, Allocated Revenues in Q3 2008 grew 118.3% y-o-y to GEL 50.6 million, up 15.6% q-o-q, while Allocated Recurring Costs grew to GEL 18.5 million, up 46.9% y-o-y and down 10.2% q-o-q. Q3 2008 NNOI grew by 203.5% y-o-y to GEL 32.1 million, up 38.7% q-o-q, contributing 88.4% to the consolidated NNOI. Quarterly Net Loss in Q3 2008 equaled GEL 17.2 million, compared to Net Income of GEL 12.8 in Q2 2008 and Net Income of GEL 6.1 in Q3 2007.

RB Gross Loans grew 74.4% y-o-y to GEL 930.9 million (up 44.5% year-to-date), driven by the increased lending activity due to high demand for mortgages, car loans, consumer loans, credit cards and other retail banking products predominantly in 1H 2008. Allocated Client Deposits increased 1.0% y-o-y to GEL 326.0 million (down 4.7% year-to-date), mainly due to the Conflict.

Wealth Management (WM)

In nine months of 2008 Allocated Revenues for WM was GEL 4.4 million, an increase of 25.8% y-o-y. Net Income equaled GEL 579 thousand as compared to Net Income of GEL 1.4 million for January September 2007. On a quarterly basis, Allocated Revenues was GEL 1.5 million, up 19.1% q-o-q and up 10.8% y-o-y. Net Loss amounted to GEL 406 thousand in Q3 2008.

WM Gross Loans stood at GEL 45.2 million an increase of 31.6% y-o-y and up 2.2% year-to-date. Allocated Client Deposits increased by 10.1% y-o-y (up 0.9% year-to-date) to GEL 70.4 million, largely due to the outflow of deposits during the conflict.

Ukraine

UBDPs Total Operating Income (Revenue) amounted to GEL 22.0 million in nine months of 2008, while Recurring Costs stood at GEL 21.0 million, resulting in a Net Income of GEL 0.7 million. On a quarterly basis, UBDPs Revenue increased by 29.2% from Q2 2008 to GEL 8.7 million and Q3 2008 Net Income reached GEL 0.7 million, up 9.7% q-o-q.

UBDPs Total Assets decreased by 3.8% year-to-date to GEL 336.8 million, partially due to the 15% appreciation of Lari against Hryvna. Gross Loans to Clients stood at GEL 256.8 million by 30 September 2008, down by 13.4% year-to-date. Client Deposits dropped 36.3 % year-to-date to GEL 170.6 million, reflecting the departure of several significant depositors due to UBDPs restructuring during 1H 2008. As expressed in Hryvna, UBDPs Client Deposits in Q3 2008 increased by UAH 23 million, up 3.8 % q-o-q. UBDPs Total Liabilities stood at GEL 229.2 million.

UBDPs leverage is expected to decrease to just above 2.0x once the UAH 125 million capital increase, approved by the UBDPs Shareholders Meeting in May 2008, is registered by the National Bank of Ukraine. UBDP has no international wholesale funding to be refinanced in 2008 and 2009. The banks exposure to the real estate development sector is limited.

Belarus

BNBs Total Operating Income (Revenue) amounted to GEL 2.1 million in Q3 2008, while Recurring Costs stood at GEL 1.3 million, resulting in a Net Income of GEL 1.0 million. BNBs Total Assets stood at GEL 66.7 million and Gross Loans to Clients equaled GEL 34.7 million by 30 September 2008. Client Deposits amounted to GEL 26.6 million, while Total Liabilities stood at GEL 29.7 million.

Galt & Taggart Securities (GTS)

Difficult capital markets in Georgia and Ukraine (both GTS Index and the PFTS Index decreased by 68% in nine months of 2008) had a negative impact on GTS, Bank of Georgias fully-owned investment banking subsidiary. In Q3 2008 GTS reported a Net Loss of GEL 2.3 million in Q3 2008 which compares to Net Loss of GEL 2.6 million in Q2 2008. GTS Revenue and Net Loss in Q3 2008 and Q2 2008 includes the loss from trading activities of GEL 5.8 million, which reflects loss on GTS proprietary trading book in Ukraine. In Q3 2008, GTS initiated a strategic review of its operations and started the implementation of a significant cost-cutting program, including headcount reduction and tight cost control procedures, aimed at reducing its losses in Q4 2008 and returning to profitability in 2009. GTS Q3 2008 results also include relevant severance payments related to the cost-cutting program.

Asset Management (AM)

The following key entities are included in the AM segment: Galt & Taggart Asset Management (GTAM), the banks asset management arm, majority owned by the Bank; JSC Liberty Consumer (formerly JSC Galt & Taggart Capital (GTC), 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 GTC owns 52.08% equity stake.

In the nine months of 2008 Revenues of Asset Management business segment amounted to GEL 14.6 million, which compares to GEL 2.4 million Revenues in the same period in 2007. Net Income for the period amounted to GEL 11.2 million as compared to GEL 1.2 million Net Loss for January September 2007. On a quarterly basis, Revenue from Asset Management business segment amounted to GEL 477 thousand, down 30.4% y-o-y, and down 71.6% q-o-q and Net Loss was GEL 410 thousand, down 46.0% y-o-y and down 112.0% q-o-q.

Insurance

Gross Premiums Written of Aldagi BCI, the banks fully-owned Georgian insurance subsidiary, increased by 61.9% y-o-y to GEL 49.3 million. Net Premiums Earned grew 12.4% y-o-y to GEL 27.4 million. Revenues increased by 7.8% y-o-y to GEL 6.5 million for nine months of 2008. Net Loss for nine months of 2008 equaled GEL 361 thousand. On a quarterly basis, Revenues increased by 25.9% y-o-y to GEL 2.1 million, while Net Loss amounted to GEL 26 thousand for Q3 2008. The loss in 2008 was mainly due to Aldagi BCIs participation in the state healthcare program for socially vulnerable citizens and school teachers launched in Q4 2007, which brought 84,000 new clients to Aldagi BCI. The program which was originally scheduled to end in September December 2008, was extended for another year at increased premiums per participant (60% upward adjustment to the premium). Unlike other major Georgian insurance companies, Aldagi BCI chose not to participate in a new similar program aimed at 550,000 socially vulnerable citizens which was launched in 2008.

Comments

We are pleased to report that despite the conflict between Russia and Georgia in August 2008 and intensifying global financial crisis Bank of Georgia has a strong capital base, solid liquidity position and clearly visible wholesale funding pipeline.

Following the Conflict, we made significant loan loss provisions, which, in our view, are based on conservative macro economic assumptions and are more than adequate to cover all potential Conflict-related losses in the loan portfolio. Despite these provisions our capital base remains strong and well above the requirements of NBG. Our liquidity position is solid despite significant Conflict-related deposit outflow in Q3 2008. Responding to increasingly challenging market environment we plan to maintain a highly conservative approach to liquidity management. We expect to further improve our liquidity position through sizeable wholesale funding transactions mentioned in our previous press releases.

The Conflict and the global financial crisis have forced us to temporarily put on hold our plans to reduce the Banks involvement in several of its non-core subsidiaries, including Aldagi BCI, GTAM and Liberty Consumer. However, we plan to re-launch these transactions as soon as the market environment permits, commented Nicholas Enukidze, Chairman of the Supervisory Board.

7 q-o-q compares Q3 2008 results with Q2 2008 results

8 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

9 The Corporate Banking business unit was previously referred to as Corporate and Investment Banking (CIB)

SEGMENT RESULTS

Total Operating Income (Revenue)   Growth y-o-y   9 months 2008   Share   9 months 2007   Share
Corporate & Investment Banking   46.0%   71,606   28.3%   49,057   32.8%
Retail Banking 102.3% 132,129 52.2% 65,326 43.7%
Wealth Management 25.8% 4,372 1.7% 3,476 2.3%
Ukraine NMF 21,963 8.7% - 0.0%
Belarus NMF 2,087 0.8% - 0.0%
Galt & Taggart Securities NMF (1,322) -0.5% 18,703 12.5%
Asset Management 505.7% 14,557 5.8% 2,403 1.6%
Insurance 7.8% 6,501 2.6% 6,032 4.0%
Corporate Center/Eliminations   -76.3%   1,036   0.4%   4,381   2.9%
Total Operating Income (Revenue)   69.3%   252,929   100.0%   149,379   100.0%
 
Total Recurring Operating Costs                    
Corporate & Investment Banking 31.0% 18,807 13.2% 14,357 18.2%
Retail Banking 68.7% 57,230 40.0% 33,923 42.9%
Wealth Management 115.7% 3,177 2.2% 1,473 1.9%
Ukraine NMF 20,995 14.7% - 0.0%
Belarus NMF 1,315 0.9% - 0.0%
Galt & Taggart Securities 42.2% 6,823 4.8% 4,799 6.1%
Asset Management 33.7% 5,167 3.6% 3,864 4.9%
Insurance 35.3% 6,664 4.7% 4,925 6.2%
Corporate Center/Eliminations   45.6%   22,787   15.9%   15,651   19.8%
Total Recurring Operating Costs   81.0%   142,966   100.0%   78,991   100.0%
 
Net Income/Loss                    
Corporate & Investment Banking NMF (22,749) -1756.9% 22,058 44.2%
Retail Banking 78.3% 37,243 2876.3% 20,891 41.9%
Wealth Management -57.5% 579 44.7% 1,361 2.7%
Ukraine NMF 682 52.6% - 0.0%
Belarus NMF 1,020 78.8% - 0.0%
Galt & Taggart Securities NMF (6,699) -517.4% 10,926 21.9%
Asset Management NMF 11,154 861.5% (1,152) -2.3%
Insurance NMF (361) -27.8% 645 1.3%
Corporate Center/Eliminations   302.5%   (19,574)   -1511.7%   (4,863)   -9.8%
Net Income   -97.4%   1,295   100.0%   49,868   100.0%
 
Basic EPS Contribution   Growth y-o-y   Contribution   Share   Contribution   Share
Corporate & Investment Banking NMF (0.75) -1756.9% 0.87 44.2%
Retail Banking 47.8% 1.22 2876.3% 0.83 41.9%
Wealth Management -64.7% 0.02 44.7% 0.05 2.7%
Ukraine NMF 0.02 52.6% - 0.0%
Belarus NMF 0.03 78.8% - 0.0%
Galt & Taggart Securities NMF (0.22) -517.4% 0.43 21.9%
Asset Management NMF 0.37 861.5% (0.05) -2.3%
Insurance NMF (0.01) -27.8% 0.03 1.3%
Corporate Center/Eliminations   233.7%   (0.64)   -1511.7%   (0.19)   -9.8%
Total   -97.8%   0.04   100.0%   1.98   100.0%

SEGMENT RESULTS CONTD

Total Operating Income (Revenue)   Growth y-o-y   Q3 2008   Share   Q2 2008   Share   Q3 2007   Share   Growth q-o-q
Corporate & Investment Banking   40.7%   24,680   28.7%   22,841   26.6%   17,545   31.2%   8.1%
Retail Banking 118.3% 50,621 58.9% 43,782 51.0% 23,184 41.3% 15.6%
Wealth Management 10.8% 1,485 1.7% 1,247 1.5% 1,339 2.4% 19.1%
Ukraine NMF 8,714 10.1% 6,746 7.9% - 0.0% 29.2%
Belarus NMF 2,087 2.4% - 0.0% - 0.0% NMF
Galt & Taggart Securities -128.2% (1,934) -2.3% (1,006) -1.2% 6,853 12.2% 92.3%
Asset Management -30.4% 477 0.6% 1,678 2.0% 685 1.2% -71.6%
Insurance 25.9% 2,101 2.4% 2,600 3.0% 1,668 3.0% -19.2%
Corporate Center/Eliminations   -147.3%   (2,316)   -2.7%   8,034   9.4%   4,897   8.7%   NMF
Total Operating Income (Revenue)   52.9%   85,914   100.0%   85,921   100.0%   56,172   100.0%   0.0%
 
Total Recurring Operating Costs                                
Corporate & Investment Banking -15.3% 4,609 9.3% 7,230 14.8% 5,442 18.7% -36.2%
Retail Banking 46.9% 18,531 37.3% 20,647 42.3% 12,611 43.3% -10.2%
Wealth Management 196.5% 1,844 3.7% 677 1.4% 622 2.1% 172.3%
Ukraine NMF 6,730 13.6% 7,098 14.5% - 0.0% -5.2%
Belarus NMF 1,315 2.6% - 0.0% - 0.0% NMF
Galt & Taggart Securities -65.5% 894 1.8% 2,130 4.4% 2,591 8.9% -58.0%
Asset Management -41.2% 984 2.0% 1,368 2.8% 1,674 5.8% -28.1%
Insurance 46.1% 2,236 4.5% 2,616 5.4% 1,530 5.3% -14.6%
Corporate Center/Eliminations   169.4%   12,484   25.2%   7,095   14.5%   4,635   15.9%   76.0%
Total Recurring Operating Costs   70.5%   49,627   100.0%   48,861   100.0%   29,106   100.0%   1.6%
 
Net Income/Loss                                
Corporate & Investment Banking NMF (45,630) 77.4% 12,383 43.7% 6,721 38.4% NMF
Retail Banking 87.0% 11,488 -19.5% 12,819 45.2% 6,142 35.1% -10.4%
Wealth Management NMF (406) 0.7% 314 1.1% 497 2.8% NMF
Ukraine NMF 721 -1.2% 657 2.3% - 0.0% 9.7%
Belarus NMF 1,020 -1.7% - 0.0% - 0.0% NMF
Galt & Taggart Securities NMF (2,292) 3.9% (2,553) -9.0% 3,213 18.3% -10.2%
Asset Management -46.0% (410) 0.7% 3,418 12.1% (758) -4.3% NMF
Insurance -77.6% (26) 0.0% 36 0.1% (116) -0.7% NMF
Corporate Center/Eliminations   NMF   (23,423)   39.7%   1,261   4.5%   1,816   10.4%   NMF
Net Income/Loss   NMF   (58,958)   100.0%   28,335   100.0%   17,515   100.0%   NMF
 
Basic EPS Contribution   Growth y-o-y   Contribution   Share   Contribution   Share   Contribution   Share   Growth q-o-q
Corporate & Investment Banking NMF (1.51) 76.9% 0.40 44.1% 0.27 38.4% NMF
Retail Banking 51.1% 0.37 -18.8% 0.41 45.4% 0.24 35.1% -11.0%
Wealth Management NMF (0.01) 0.7% 0.01 1.1% 0.02 2.8% NMF
Ukraine NMF 0.02 -1.2% 0.02 2.5% - 0.0% 5.2%
Belarus NMF 0.03 -1.7% - 0.0% - 0.0% NMF
Galt & Taggart Securities NMF (0.07) 3.8% (0.08) -9.1% 0.13 18.3% -11.3%
Asset Management -40.7% (0.02) 0.9% 0.11 11.6% (0.03) -4.3% NMF
Insurance NMF (0.00) 0.0% 0.00 0.2% (0.00) -0.7% NMF
Corporate Center/Eliminations   NMF   (0.77)   39.3%   0.04   4.3%   0.07   10.4%   NMF
Total   NMF   (1.96)   100.0%   0.91   100.0%   0.69   100.0%   NMF

SEGMENT RESULTS CONTD

Total Assets   Growth y-o-y   Sep-08   Share   Sep-07   Share
Corporate & Investment Banking   -0.5%   1,228,414   38.9%   1,235,060   51.4%
Retail Banking 63.8% 1,506,102 47.7% 919,474 38.3%
Wealth Management 4.7% 73,357 2.3% 70,084 2.9%
Ukraine NMF 336,787 10.7% - 0.0%
Belarus NMF 66,719 2.1% - 0.0%
Galt & Taggart Securities 54.8% 79,618 2.5% 51,442 2.1%
Asset Management 106.2% 119,230 3.8% 57,822 2.4%
Insurance 53.2% 83,221 2.6% 54,339 2.3%
Corporate Center/Eliminations   -2344.5%   (339,193)   -10.8%   15,112   0.6%
Total Assets   31.2%   3,154,255   100.0%   2,403,333   100.0%
 
Loans to Clients, Gross                    
Corporate & Investment Banking 11.2% 795,783 38.6% 715,338 54.9%
Retail Banking 74.4% 930,876 45.2% 533,644 41.0%
Wealth Management 31.6% 45,170 2.2% 34,316 2.6%
Ukraine NMF 256,816 12.5% - 0.0%
Belarus NMF 34,681 1.7% - 0.0%
Galt & Taggart Securities 0.0% - 0.0% - 0.0%
Asset Management 0.0% - 0.0% - 0.0%
Insurance 0.0% - 0.0% - 0.0%
Corporate Center/Eliminations   -118.9%   (3,671)   -0.2%   19,412   1.5%
Total Loans to Clients   58.1%   2,059,656   100.0%   1,302,711   100.0%
 
Total Liabilities                    
Corporate & Investment Banking -3.0% 1,048,423 43.4% 1,081,302 55.8%
Retail Banking 39.0% 873,506 36.2% 628,565 32.4%
Wealth Management 15.5% 96,949 4.0% 83,924 4.3%
Ukraine NMF 229,249 9.5% - 0.0%
Belarus NMF 29,735 1.2% - 0.0%
Galt & Taggart Securities 154.5% 36,222 1.5% 14,230 0.7%
Asset Management 18.1% 36,529 1.5% 30,926 1.6%
Insurance 65.4% 64,921 2.7% 39,258 2.0%
Corporate Center/Eliminations   -101.0%   (617)   0.0%   60,136   3.1%
Total Liabilities   24.6%   2,414,917   100.0%   1,938,341   100.0%
 
Client Deposits                    
Corporate Banking -14.1% 576,169 47.9% 670,781 63.0%
Retail Banking 1.0% 325,964 27.1% 322,798 30.3%
Wealth Management 10.1% 70,443 5.9% 63,998 6.0%
Ukraine NMF 170,552 14.2% - 0.0%
Belarus NMF 26,558 2.2% - 0.0%
Galt & Taggart Securities 326.7% 32,346 2.7% 7,581 0.7%
Asset Management 0.0% - 0.0% - 0.0%
Insurance 0.0% - 0.0% - 0.0%
Corporate Center/Eliminations   0.0%   -   0.0%   -   0.0%
Total Client Deposits   12.9%   1,202,033   100.0%   1,065,158   100.0%
 
Book Value Per Share   Growth y-o-y   Contribution   Share   Contribution   Share
Corporate & Investment Banking 1.7% 5.76 24.3% 5.67 33.1%
Retail Banking 88.9% 20.24 85.6% 10.72 62.6%
Wealth Management 48.0% (0.75) -3.2% (0.51) -3.0%
Ukraine NMF 3.44 14.5% 0.00 0.0%
Belarus NMF 1.18 5.0% 0.00 0.0%
Galt & Taggart Securities 1.3% 1.39 5.9% 1.37 8.0%
Asset Management 167.0% 2.65 11.2% 0.99 5.8%
Insurance 5.4% 0.59 2.5% 0.56 3.2%
Corporate Center/Eliminations   553.1%   (10.83)   -45.8%   (1.66)   -9.7%
Book Value Per Share   38.1%   23.66   100.0%   17.13   100.0%

NINE MONTHS 2008 INCOME STATEMENT DATA

Period Ended   9 months 2008   9 months 2007   Growth3
Consolidated, IFRS Based US$1   GEL US$2   Y-O-Y

000s, unless otherwise noted

(Unaudited) (Unaudited)
Interest Income 217,192 305,155 99,637 165,198 84.7%
Interest Expense 100,145 140,704 45,115 74,800 88.1%
Net Interest Income 117,047 164,451 54,522 90,398 81.9%
Fee & Commission Income 26,615 37,394 13,023 21,592 73.2%
Fee & Commission Expense 4,349 6,110 1,908 3,163 93.2%
Net Fee & Commission Income 22,266 31,284 11,115 18,429 69.8%
Income From Documentary Operations 4,608 6,474 3,215 5,330 21.5%
Expense On Documentary Operations 1,043 1,465 907 1,503 -2.5%
Net Income From Documentary Operations 3,565 5,009 2,308 3,827 30.9%
Net Foreign Currency Related Income 23,536 33,068 9,999 16,579 99.5%
Net Insurance Income 4,151 5,833 3,380 5,605 4.1%
Brokerage Income 2,104 2,956 1,735 2,877 2.7%
Asset Management Income 740 1,040 9 14 7121.3%
Realized Net Investment Gains (Losses) (1,346) (1,892) 3,321 5,506 NMF4
Other 7,958 11,181 3,706 6,144 82.0%
Net Other Non-Interest Income 13,607 19,118 12,151 20,146 -5.1%
Net Non-Interest Income 62,974 88,478 35,574 58,981 50.0%
Total Operating Income (Revenue) 180,021 252,929 90,096 149,379 69.3%
Personnel Costs 57,909 81,362 28,876 47,877 69.9%
Selling, General & Administrative Costs 24,229 34,042 9,886 16,392 107.7%
Procurement & Operations Support Expenses 7,039 9,890 4,065 6,741 46.7%
Depreciation & Amortization 10,072 14,152 4,047 6,710 110.9%
Other Operating Expenses 2,505 3,520 767 1,272 176.8%
Total Recurring Operating Costs 101,755 142,966 47,642 78,991 81.0%
Normalized Net Operating Income 78,266 109,963 42,453 70,388 56.2%
Net Non-Recurring Income (Costs) 6,588 9,257 (83) (138) NMF4
Profit Before Provisions 84,854 119,220 42,370 70,250 69.7%
Net Provision Expense/(Benefit) 83,855 117,816 4,749 7,874 1396.2%
Pre-Tax Income 999 1,404 37,621 62,375 -97.7%
Income Tax Expenses 78 109 7,544 12,508 -99.1%
Net Income 922 1,295 30,077 49,868 -97.4%
 
 
Weighted Average Number of Shares Outstanding (000s) 30,451 25,638 18.8%
Fully Diluted Number of Shares Period End (000s) 31,250 27,249 14.7%
EPS (Basic) 0.03 0.04 1.17 1.95 -97.8%
EPS (Fully Diluted) 0.03 0.04 1.10 1.83 -97.7%

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4050 per US$1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2008

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6580 per US$1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2007

3 Growth calculations based on GEL values

4 Not meaningful

Q3 2008 INCOME STATEMENT DATA

Period Ended   Q3 2008   Q2 2008   Growth3   Q3 2007   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 77,138 108,379 73,481 104,196 4.0% 39,848 66,068 64.0%
Interest Expense 35,250 49,527 34,106 48,362 2.4% 19,672 32,617 51.8%
Net Interest Income 41,888 58,852 39,375 55,834 5.4% 20,176 33,451 75.9%
Fee & Commission Income 9,369 13,164 8,787 12,460 5.7% 5,134 8,513 54.6%
Fee & Commission Expense 1,580 2,220 1,619 2,296 -3.3% 970 1,608 38.1%
Net Fee & Commission Income 7,789 10,944 7,167 10,163 7.7% 4,165 6,905 58.5%
Income From Documentary Operations 1,592 2,237 1,615 2,290 -2.3% 1,396 2,314 -3.3%
Expense On Documentary Operations 390 548 294 417 31.4% 302 500 9.6%
Net Income From Documentary Operations 1,202 1,689 1,321 1,873 -9.8% 1,094 1,814 -6.9%
Net Foreign Currency Related Income 6,716 9,437 7,338 10,405 -9.3% 3,759 6,233 51.4%
Net Insurance Income 1,750 2,459 1,224 1,736 41.7% 1,256 2,082 18.1%
Brokerage Income 82 115 1,104 1,566 -92.7% 818 1,355 -91.5%
Asset Management Income 105 148 174 246 -39.9% 9 14 926.7%
Realized Net Investment Gains (Losses) (814) (1,144) (265) (375) 204.7% 1,468 2,434 NMF5
Other 2,430 3,414 3,154 4,472 -23.7% 1,135 1,883 81.3%
Net Other Non-Interest Income 3,553 4,992 5,392 7,645 -34.7% 4,686 7,769 -35.7%
Net Non-Interest Income 19,261 27,062 21,218 30,087 -10.1% 13,704 22,720 19.1%
Total Operating Income (Revenue) 61,149 85,914 60,593 85,921 0.0% 33,879 56,172 52.9%
Personnel Costs 20,194 28,372 19,225 27,260 4.1% 10,555 17,500 62.1%
Selling, General & Administrative Costs 7,642 10,738 8,463 12,001 -10.5% 3,912 6,486 65.6%
Procurement & Operations Support Expenses 2,523 3,545 2,286 3,242 9.3% 1,354 2,245 57.9%
Depreciation & Amortization 3,885 5,458 3,289 4,664 17.0% 1,490 2,470 121.0%
Other Operating Expenses 1,077 1,514 1,195 1,695 -10.7% 245 406 272.8%
Total Recurring Operating Costs 35,321 49,626 34,458 48,862 1.6% 17,555 29,106 70.5%
Normalized Net Operating Income 25,827 36,287 26,135 37,059 -2.1% 16,324 27,066 34.1%
Net Non-Recurring Income (Costs) (1,854) (2,605) 2,393 3,394 -176.8% (1,248) (2,070) 25.9%
Profit Before Provisions 23,973 33,682 28,528 40,453 -16.7% 15,076 24,996 34.7%
Net Provision Expense 73,432 103,171 5,073 7,194 1334.1% 1,853 3,072 3258.6%
Pre-Tax Income (49,459) (69,489) 23,455 33,259 NMF5 13,223 21,924 NMF5
Income Tax Expenses/(Benefit) (7,496) (10,531) 3,473 4,924 NMF5 2,659 4,409 NMF5
Net Income (41,963) (58,958) 19,982 28,335 NMF5 10,564 17,515 NMF5
 
 
Weighted Average Number of Shares Outstanding (000s) 31,250 31,247 0.01% 26,222 19.2%
Fully Diluted Number of Shares Period End (000s) 31,250 31,248 0.01% 27,249 14.7%
EPS (Basic) (1.34) (1.89) 0.64 0.91 NMF5 0.40 0.67 NMF5
EPS (Fully Diluted) (1.34) (1.89) 0.64 0.91 NMF5 0.39 0.64 NMF5

1 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4050 per US$1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2008

2 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.4180 per US$1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 June 2008

3 Growth calculations based on GEL values

4 Converted to U.S. dollars for convenience using a period-end exchange rate of GEL 1.6580 per US$1.00, such rate being the official Georgian Lari to U.S. dollar period-end exchange rate as reported by the National Bank of Georgia as at 30 September 2007

5 Not meaningful

BALANCE SHEET DATA

  30-Sep-08   Growth2   31-Dec-07   Growth2   30-Sep-07
Consolidated, IFRS Based US$1   GEL YTD US$3   GEL Y-O-Y US$4   GEL
000s, unless otherwise noted (Unaudited) (Audited) (Unaudited)
 
Cash & Cash Equivalents 122,030 171,452 -5.7% 232,642 370,273 83.7% 56,280 93,312
Loans & Advances To Credit Institutions 198,307 278,622 46.6% 119,413 190,057 -16.4% 201,004 333,265
Mandatory Reserve With NBG/NBU/NBRB 107,474 25,478 -82.4% 90,872 144,631 -66.3% 45,548 75,518
Other Accounts With NBG/NBU/NBRB 107,474 151,002 325.4% 22,303 35,497 65.4% 55,064 91,296
Balances With & Loans To Other Banks 72,699 102,142 928.7% 6,238 9,929 -38.6% 100,393 166,452
Available-For-Sale Securities 36,032 50,625 3.9% 30,616 48,729 391.6% 6,211 10,298
Treasuries & Equivalents 12,852 18,057 -77.4% 50,111 79,757 -69.3% 35,435 58,751
Other Fixed Income Instruments 11,713 16,457 -85.4% 70,814 112,708 -93.1% 144,272 239,203
Gross Loans To Clients 1,465,947 2,059,656 17.6% 1,100,842 1,752,100 58.1% 785,712 1,302,711
Less: Reserve For Loan Losses (91,832) (129,024) 333.8% -18,689 -29,745 405.3% (15,401) (25,535)
Net Loans To Clients 1,374,116 1,930,632 12.1% 1,082,153 1,722,355 51.2% 770,311 1,277,176
Investments In Other Business Entities, Net 74,174 104,214 158.8% 25,303 40,273 -28.5% 87,899 145,736
Property & Equipment Owned, Net 207,246 291,181 42.3% 128,585 204,656 109.0% 84,042 139,341
Intangible Assets Owned, Net 6,580 9,245 145.1% 2,370 3,772 215.3% 1,768 2,932
Goodwill 95,894 134,731 20.1% 70,505 112,216 210.8% 26,149 43,355
Tax Assets - Current & Deferred 663 932 -40.1% 978 1,557 -72.3% 2,026 3,360
Prepayments & Other Assets 105,414 148,107 37.5% 42,258 67,258 63.4% 34,141 56,605
Total Assets 2,245,021 3,154,255 4.9% 1,855,750 2,953,611 28.9% 1,449,538 2,403,334
 
Client Deposits 855,539 1,202,033 -11.3% 851,644 1,355,476 12.9% 642,436 1,065,158
Deposits & Loans From Banks 87,458 122,878 86.7% 41,349 65,811 79.2% 41,348 68,556
Borrowed Funds 674,592 947,801 13.4% 525,248 835,984 37.9% 414,667 687,518
Issued Fixed Income Securities 3,368 4,731 -5.2% 3,137 4,993 NMF - -
Insurance Related Liabilities 41,064 57,694 39.6% 25,968 41,330 75.2% 19,856 32,922
Tax Liabilities - Current & Deferred 19,018 26,720 -28.2% 23,378 37,209 30.4% 12,360 20,493
Accruals & Other Liabilities 37,764 53,059 -3.2% 34,441 54,817 -16.7% 38,416 63,694
Total Liabilities 1,718,802 2,414,917 0.8% 1,505,165 2,395,620 24.6% 1,169,084 1,938,341
 
Ordinary Shares 22,242 31,250 15.1% 17,061 27,155 15.1% 16,378 27,154
Share Premium 323,544 454,579 44.1% 198,175 315,415 49.7% 183,117 303,607
Treasury Shares (715) (1,005) -42.1% -1,091 -1,737 -43.6% (1,074) (1,781)
Retained Earnings 96,275 135,267 111.8% 40,122 63,858 116.1% 37,746 62,583
Revaluation & Other Reserves 46,010 64,644 -4.0% 42,318 67,354 268.9% 10,570 17,525
Net Income For The Period 922 1,295 -98.3% 47,526 75,642 -97.4% 30,077 49,868
Shareholders' Equity Excluding Minority Interest 488,277 686,030 25.3% 344,111 547,687 49.5% 276,813 458,956
Minority Interest 37,942 53,308 417.4% 6,474 10,304 783.0% 3,641 6,037
Total Shareholders' Equity 526,219 739,338 32.5% 350,585 557,991 59.0% 280,454 464,993
Total Liabilities & Shareholders' Equity 2,245,021 3,154,255 6.8% 1,855,750 2,953,611 31.2% 1,449,538 2,403,334
 
Shares Outstanding 31,250 15.1% 27,155 23.5% 25,304
Book Value Per Share 16.84 23.66 14.8% 12.95 20.62 48.2% 9.63 15.97

1 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.4050 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 September 2008

2 Growth calculations based on GEL values

3 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.5916 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 2007

4 Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.6580 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 September 2007

KEY RATIOS

  9 months 2008   9 months 2007
Profitability Ratios        
ROAA 1, Annualised   0.1%   3.5%
ROA   0.03%   2.8%
ROAE2, Annualised   0.2%   16.2%
ROE   0.1%   14.3%
Interest Income To Average Interest Earning Assets 3, Annualised   17.2%   14.4%
Cost Of Funds 4, Annualised   8.2%   7.3%
Net Spread 5   8.9%   7.1%
Net Interest Margin 6, Annualised   9.2%   7.9%
Net Interest Margin Normalized 35, Annualised   9.2%   7.9%
Loan Yield 7, Annualised   12.9%   20.6%
Interest Expense To Interest Income   46.1%   45.3%
Net Non-Interest Income To Average Total Assets, Annualised   3.7%   4.2%
Net Non-Interest Income To Revenue 8   35.0%   39.5%
Net Fee And Commission Income To Average Interest Earning Assets 9, Annualised   1.8%   1.6%
Net Fee And Commission Income To Revenue   12.4%   12.3%
Operating Leverage 10   0.3%   11.3%
Total Operating Income (Revenue) To Total Assets, Annualised   10.7%   8.3%
Recurring Earning Power 11, Annualised   5.0%   6.4%
Net Income To Revenue   0.5%   33.4%
 
Efficiency Ratios        
Operating Cost To Average Total Assets 12, Annualised   6.0%   4.1%
Cost To Average Total Assets 13, Annualised   5.6%   5.6%
Cost / Income 14   52.9%   53.0%
Cost / Income, Normalized 37   55.5%   N/A
Cost/Income Distributed Non-Recurring   56.5%   52.9%
Cost / Income, Bank of Georgia, Standalone 15   45.4%   48.8%
Cost/Income, Normalized, Bank of Georgia, Standalone   44.9%   N/A
Cash Cost / Income   47.3%   48.5%
Total Employee Compensation Expense To Revenue 16   32.2%   32.1%
Total Employee Compensation Expense To Cost   60.8%   60.5%
Total Employee Compensation Expense To Average Total Assets, Annualised   3.4%   3.4%
 
Liquidity Ratios        
Net Loans To Total Assets 17   61.2%   53.1%
Average Net Loans To Average Total Assets   59.1%   52.6%
Interest Earning Assets To Total Assets   71.1%   79.4%
Average Interest Earning Assets To Average Total Assets   74.8%   81.1%
Liquid Assets To Total Assets 18   16.2%   30.6%
Net Loans To Client Deposits   160.6%   119.9%
Average Net Loans To Average Client Deposits   141.8%   125.4%
Net Loans To Total Deposits 19   145.7%   112.7%
Net Loans To Total Liabilities   79.9%   65.9%
Total Deposits To Total Liabilities   54.9%   58.5%
Client Deposits To Total Deposits   90.7%   94.0%
Client Deposits To Total Liabilities   49.8%   55.0%
Current Account Balances To Client Deposits   39.2%   57.2%
Demand Deposits To Client Deposits   3.8%   9.6%
Time Deposits To Client Deposits   57.1%   33.1%
Total Deposits To Total Assets   42.0%   47.2%
Client Deposits To Total Assets   38.1%   44.3%
Client Deposits To Total Equity (Times) 20   1.6   2.3
Due From Banks / Due To Banks 21   226.7%   486.1%
Total Equity To Net Loans   38.3%   36.4%
Leverage (Times) 22   3.3   4.2

KEY RATIOS CONTD

  9 months 2008   9 months 2007
Asset Quality        
NPLs (in GEL) 23   23,274   16,711
NPLs To Gross Loans To Clients 24   1.1%   1.3%
Cost of Risk 25, Annualized   8.1%   1.0%
Cost of Risk Normalized 36, Annualized   8.1%   1.0%
Reserve For Loan Losses To Gross Loans To Clients 26   6.3%   2.0%
NPL Coverage Ratio 27   554.4%   152.8%
Equity To Average Net Loans To Clients   39.5%   46.8%
 
Capital Adequacy        
Equity To Total Assets   23.4%   19.3%
BIS Tier I Capital Adequacy Ratio, consolidated 28   24.7%   23.2%
BIS Total Capital Adequacy Ratio, consolidated 29   25.3%   23.3%
NBG Tier I Capital Adequacy Ratio 30   18.2%   14.0%
NBG Total Capital Adequacy Ratio 31   15.5%   16.9%
 
Per Share Values        
Basic EPS (GEL) 32   0.04   1.95
Basic EPS (US$)   0.03   1.17
Fully Diluted EPS (GEL) 33   0.04   1.83
Fully Diluted EPS (US$)   0.03   1.10
Book Value Per Share (GEL) 34   23.66   17.12
Book Value Per Share (US$)   16.84   10.33
Ordinary Shares Outstanding - Weighted Average, Basic   30,450,867   25,637,740
Ordinary Shares Outstanding - Period End   31,250,211   27,154,099
Ordinary Shares Outstanding - Fully Diluted   31,250,211   27,249,100
 
Selected Operating Data        
Full Time Employees (FTEs)   6,165   3,992
FTEs, Bank of Georgia Standalone   3,853   2,388
Total assets per FTE 23 (GEL Thousands)   511.6   602.0
Total Assets per FTE, Bank of Georgia Standalone (GEL Thousands)   818.6   1006.4
Number Of Active Branches   139   108
Number Of ATMs   386   185
Number Of Cards (Thousands)   918   529
Number Of POS Terminals   2,969   1,093

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 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, the leading universal Georgian bank with operations in Georgia, Ukraine and Belarus, is the largest bank by assets, loans, deposits and equity in Georgia, with 33% market share by total assets (all data according to the NBG as of 30 September, 2008). The bank has 149 branches and over 904,000 retail and more than 133,000 corporate current accounts. The bank offers a full range of retail banking and corporate and investment banking services to its customers across Georgia. The bank also provides corporate and retail insurance products through its wholly-owned subsidiary, Aldagi BCI, as well as asset & wealth management services.

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

Standard & Poors   B/B

Fitch Ratings

B/B
Moodys B3/NP (FC) & Ba1/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 32 444 800 +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 managements current expectations and are subject to uncertainty and changes in circumstances.

The financial information as of Q2 2008, Q3 2008, nine months 2008, Q3 2007 and nine months 2007 contained in this news report is unaudited and reflects the best estimates of management. The banks actual results may differ significantly from the amounts reflected herein as a result of various factors.

Short Name: JSC Bank of Georgia
Category Code: QRT
Sequence Number: 144415
Time of Receipt (offset from UTC): 20081031T005933+0000

Contacts

Bank of Georgia

Contacts

Bank of Georgia