Final Results

TBILISI, Georgia--()--

JSC BANK OF GEORGIA Q4 2011 AND FULL YEAR 2011 RESULTS AND EXPECTED 2011 DIVIDENDS

Bank of Georgia Holdings plc. (“BGH”) (LSE: BGEO LN), the holding company of JSC Bank of Georgia and its subsidiaries (the “Bank”), Georgia’s leading bank, announced today the Bank’s Q4 2011 and full-year 2011 consolidated results (IFRS based, derived from management accounts), reporting a Q4 2011 profit for the period from continuing operations of GEL 37.3 million and full-year 2011 profit for the period from continuing operations of GEL 150.9 million, or GEL 4.95 per share for the period on a continuing basis (US$2.96 per share).

An excellent business performance 2011

  • Strong profitability and further efficiency improvements
    • Revenue increased by GEL 94.6 million, or 27.3% y-o-y, to GEL 441.2 million in 2011
    • Single digit growth in operating expenses; up 8.9% y-o-y to GEL 217.6 million in 2011
    • 2011 profit from continuing operations of GEL 150.9 million, up by GEL 68.3 million, or 82.6% y-o-y
    • Cost to Income ratio improved to 49.3% in 2011 from 57.6% in 2010
    • Earnings per share (basic) for the period on a continuing basis increased by 78.1% y-o-y to GEL 4.95 compared to GEL 2.78 in 2010
    • Return on Average Assets (ROAA) increased to 3.6% compared to 2.5% in 2010
    • Return on Average Equity (ROAE) increased to 20.4% compared to 13.5% in 2010
  • Prudent asset quality with further strengthening of the Bank’s Balance Sheet
    • Cost of risk decreased to 0.9% in 2011 from 2.1% in 2010. In absolute terms, cost of credit risk decreased by GEL 25.5 million, or 53.5% y-o-y to GEL 22.2 million in 2011
    • Non-performing loans reduced by 17.3% y-o-y to GEL 97.2 million in 2011 or 3.6% of total loan book
    • High loan loss reserve coverage of non-performing loans at 118.5 %
    • Net loan book on a standalone basis increased by 19.8% y-o-y, while client deposits on a standalone basis increased 41.2% y-o-y; in US$ terms, net loan book on a standalone basis increased 27.2% y-o-y, while client deposits grew 49.9% y-o-y
    • Excellent funding position as net loans to client deposits ratio improved significantly to 102.4% from 118.0% in 2010, reflecting continued strong deposit growth; Net Loans to Customer Funds declined to less than 96%
    • BIS Tier 1 capital adequacy ratio remained strong at 19.9% following the EBRD and IFC loan conversion in February 2012, the 31 December 2011 BIS Tier I capital adequacy ratio, on a pro-forma basis, would have been 22.1%
    • Book Value per Share increased by 17.4% to GEL 26.09 (US$15.62)
  • Reshaping business
    • Strong focus on growing the Bank’s strategic businesses in Georgia – Corporate Banking, Retail Banking and Wealth Management
    • Further progress in developing growth opportunities offered by the Bank’s synergistic businesses: Insurance and Healthcare and Affordable Housing
    • Disposal of non-strategic businesses: disposal of BG Bank, Ukraine; closure of BG Capital, brokerage business in Ukraine
    • Full goodwill impairment in non-core Belarus business (BNB); the BNB goodwill impairment amounted to GEL 10.4 million in Q4 2011 and GEL 23.4 million for the full year 2011

“I am very pleased to report a strong set of results for 2011 reflecting an excellent performance in all of our core businesses. Revenue growth of 27.3% substantially exceeded expense growth of 8.9% which, when combined with significantly improved asset quality, led to a 74.8% increase in profit before income tax from the continuing operations. A prudent approach to growing our balance sheet has resulted in the Bank’s 41.2% standalone client deposit growth significantly exceeding customer lending growth of 19.8% and reducing our Loan to Client Deposit ratio to close to one hundred percent. Net loans to Customer Funds declined even further to less than 96%. Profitability has continued to remain strong with a post-tax Return on Average Equity of 20.4% and Earnings per Share growing by 78.1% to GEL 4.95.

At the end of December 2011, the Bank’s NBG Tier 1 capital ratio was 10.5% (BIS 19.9%), and as of 29 February 2012, this was further increased to approximately 15.3% (BIS 22.1% on a pro-forma basis) as a result of the inclusion of 2011 profit in the Tier I capital as of 1 January 2012 as per National Bank of Georgia requirement and previously announced conversion of the convertible loans in February 2012.

The Bank is well positioned to further improve its performance in 2012 and this, combined with both, Georgia’s robust macroeconomic outlook and the Bank’s strong momentum, profitability and capital ratios, has led the Board to review the Bank’s dividend payment. As a result of the Bank’s strong financial performance and condition, the BGH Board of Directors intend to recommend to the next Annual General Meeting of Shareholders of BGH, to be held in May/June 2012, annual dividends in the amount of GEL 0.70 per share payable in British Sterling at the then prevailing exchange rate. This proposed dividend payment is the continuation of the Bank’s progressive dividend policy and represents a substantial increase from the GEL 0.30 per share paid for 2010 performance. As part of this progressive dividend policy, the Board of BGH will aim to continue to increase the GEL 0.70 annual dividend per share overtime.

In December 2011, Bank of Georgia Holdings plc., the UK-incorporated holding company of the Bank made a tender offer to Bank of Georgia shareholders. Following the successful completion of the tender offer, BGH was admitted to trading on the premium segment of the UKLA and to trading on the Main Market of the LSE on 28 February 2012. We are delighted with the very high level of participation and would like to thank our shareholders for their strong support for the move to the premium listing aimed at enhancing investor profile and broadening shareholder base.” commented Irakli Gilauri, Chief Executive Officer of Bank of Georgia Holdings plc. and JSC Bank of Georgia.

1.670 GEL/US$ 31 December 2011

1.773 GEL/US$ 31 December 2010

2.578 GEL/GBP 31 December 2011

2.739 GEL/GBP 31 December 2010

Financial Summary

Millions, unless otherwise noted   Full Year

2011

      Full Year 2010       Growth y-o-y1
Bank of Georgia (Consolidated, Unaudited IFRS-based) US$   GBP   GEL GEL
Revenue2 264.2 173.1 441.2 346.6 27.3%
Operating expenses3 130.3 84.4 217.6 199.8 8.9%
Operating income before cost of credit risk 133.9 86.7 223.6 146.9 52.2%
Cost of credit risk4 13.3 8.6 22.2 47.7 -53.5%
Net operating income 120.6 78.1 201.4 99.2 103.1%
Net non-operating expenses, including goodwill impairment 17.6 11.4 29.3 0.7 NMF
Profit for the period from continuing operations 90.4 58.5 150.9 82.7 82.6%
EPS (Basic)4 2.96 1.92 4.95 2.78 78.1%
 
Millions, unless otherwise noted Q4 2011 Q4 2010 Growth y-o-y1
Bank of Georgia (Consolidated, Unaudited, IFRS-based) US$ GBP GEL GEL
Revenue2 71.3 46.2 119.1 95.6 24.6%
Operating expenses3 34.5 22.3 57.5 45.4 26.8%
Operating income before cost of credit risk 36.9 23.9 61.6 50.2 22.6%
Cost of credit risk4 5.3 3.4 8.8 17.4 -49.6%
Net operating income 31.6 20.5 52.8 32.8 60.8%
Net non-operating expenses, including goodwill impairment 5.8 3.8 9.7 0.2 NMF
Profit for the period from continuing operations 22.3 14.5 37.3 25.5 46.5%
EPS (Basic) 0.70 0.46 1.18 0.90 31.1%
 
Standalone Balance Sheet Summary
Total assets 2,713.5 1,757.8 4,531.6 3,857.0 17.5%
Net loans5 1,578.1 1,022.3 2,635.4 2,200.0 19.8%
Customer funds6 1,632.6 1,057.6 2,726.4 1,824.6 49.4%
 
Consolidated Balance Sheet Summary
Total assets 2,793.6 1,809.6 4,665.3 4,004.9 16.5%
Net loans5 1,566.7 1,014.9 2,616.4 2,366.1 10.6%
Customer funds6 1,637.9 1,061.0 2,735.2 2,026.3 35.0%
Tier I Capital Adequacy Ratio (BIS)7 19.9% 17.5%
Total Capital Adequacy Ratio (BIS)7 28.5% 26.6%
NBG Tier I Capital Adequacy Ratio8 10.5% 13.0%
NBG Total Capital Adequacy Ratio8 16.2% 14.5%
NBG Tier I Capital Adequacy Ratio as of 29 February 20119 15.3%
NBG Total Capital Adequacy Ratio as of 29 February 20119 17.8%

1 Compared to the respective period in 2010; growth calculations based on GEL values

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

3 Operating Expenses equal other operating non-interest expenses

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

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

6 Customer funds equal amounts due to customers

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

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

9 Capital Adequacy Ratios as of 29 February 2012 reflect the inclusion of 2011 profit and the conversion of the EBRD and IFC convertible loans

Discussion of Results

Revenue

GEL millions, unless otherwise noted       2011       2010       Change Y-O-Y    
Loans to customers 439.0 389.4 12.7%
Investment securities – AFS & HTM 37.7 19.8 90.6%
Amounts due from credit institutions 18.1 9.8 84.8%
Finance lease and receivables 6.6 4.2 57.9%
Interest income 501.4 423.1 18.5%
Amounts due to customers 167.3 115.0 45.5%
Amounts due to credit institutions 99.8 91.8 8.6%
Interest expense 267.1 206.8 29.1%
Net gains (losses) from derivative financial instruments 5.0 (7.8) NMF
Interest expense adjusted for net gains (losses) from derivative financial instrument 262.1 214.6 22.1%
Net interest income 239.3 208.5 14.8%
Fee and commission income 93.5 74.3 26.0%
Fee and commission expense 18.2 10.8 67.9%
Net fee and commission income 75.3 63.4 18.8%
Net insurance premiums earned 46.4 44.6 4.1%
Net insurance claims incurred 28.7 27.9 2.7%
Net insurance revenue 17.7 16.7 6.5%
Other operating non-interest income 108.9 58.0 87.6%
Revenue 441.2 346.6 27.3%

The Bank ’s 2011 revenue increased to GEL 441.2 million, or 27.3% growth year-on-year, an increase driven by the 14.8% y-o-y growth of net interest income to GEL 239.3 million and 87.6% y-o-y increase in other operating non-interest income to GEL 108.9 million.

In 2011, the Bank’s interest income growth of 18.5% y-o-y to GEL 501.4 million was primarily attributable to the increase in the Bank’s standalone net loans to customers and finance lease receivables (net loan book), which grew by GEL 435.4 million, or 19.8% y-o-y to GEL 2,635.4 million. The growth of the average outstanding amounts of interest earning investment securities resulted in the 90.6% y-o-y, or GEL 17.9 million increase in interest income from investment securities to GEL 37.7 million, while the increases in average volumes of inter-bank deposits prompted the increase in interest income from amounts due from credit institutions from GEL 9.8 million in 2010 to GEL 18.1 million in 2011.

The Bank’s interest income growth more than offset the interest expense growth, which, adjusted for net gains (losses) from interest rate swap contracts was up by GEL 47.5 million, or 22.1% y-o-y, to GEL 262.1 million. The interest expense growth in 2011 was attributed to the strong deposit inflow during the year, and especially in the fourth quarter 2011, as standalone customer funds (client deposits and promissory notes issued) reached GEL 2,726.4, up 49.4% y-o-y. The currency-blended loan yields of the Bank were 18.3% and 17.3% in 2010 and 2011, respectively, while currency-blended customer deposit yields comprised 7.5% and 8.0% during the same periods, respectively. In 2011, the increase in deposit yields was attributed to the growth of the share of the higher yielding GEL denominated client deposits in total client deposits for the period from 28.9% at the end of 2010 to 40.8% at the end of 2011.

As a result of the foregoing, the Bank’s net interest income increased by 14.8% y-o-y, to GEL 239.3 million in 2011. Correspondingly, the 2011 Net Interest Margin (NIM) was 7.1% compared to 8.0% in 2010. The change in margin was primarily attributable to the increased liquidity, growth of interest-bearing liabilities, the increase of the share of GEL denominated client deposits in the total client deposits and the decline in the loan yields, mainly on corporate banking loans, to 14.4% in 2011 from 16.2% in 2010, when the rates on loans remained high following the increase of rates in 2009 as a result of the crisis.

GEL millions, unless otherwise noted       2011       2010       Change Y-O-Y    
Net interest income 239.3 208.5 14.8%
Net Interest Margin 7.1% 8.0% -12.0%
Average interest earning assets* 3,382.8 2,595.5 30.3%
Average interest bearing liabilities* 3,292.7 2,606.6 26.3%

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

The increase in overall business activity in Georgia in 2011 was predominantly driven by the growth of the non-interest revenue items (including net foreign currency gains from the Belarusian Ruble (BYR) hedge), accounting for 45.8% of the revenue in 2011 compared to 39.8% in 2010.

Net fee and commission income grew 18.8% y-o-y to GEL 75.3 million, reflecting the overall improvement of the economic environment in Georgia and increased foreign trade turnover of Georgian businesses. Reflecting the continued growth of the insurance business and improvements in claims management net insurance revenue grew 6.5% y-o-y to GEL 17.7 million in 2011.

GEL millions, unless otherwise noted       2011       2010       Change Y-O-Y    
Fee and commission income 93.5 74.3 26.0%
Fee and commission expense 18.2 10.8 67.9%
Net fee and commission income 75.3 63.4 18.8%
Net insurance premiums earned 46.4 44.6 4.1%
Net insurance claims incurred 28.7 27.9 2.7%
Net insurance revenue 17.7 16.7 6.5%

The Bank's other operating non-interest income excluding the foreign currency gains from the BYR hedge, increased by 44.3% y-o-y to GEL 83.8 million in 2011, a result of the 52.1% y-o-y growth of net gains from foreign currencies to GEL 51.3 million, reflecting the increase in volumes of foreign currency conversions by the Bank during the period and 32.5% y-o-y increase in other operating income to GEL 29.1 million. The other operating income growth was predominantly driven by the increase in healthcare revenues as part of the Bank’s insurance business and by the increase in revenues generated by the Bank’s non-core subsidiaries. The net effect of GEL 25.1 million related to the BYR hedge resulted in the increase of other operating non-interest income to GEL 108.9 million in 2011.

GEL millions, unless otherwise noted       2011       2010       Change Y-O-Y    

Net gains from trading securities and investment securities
available-for-sale

1.4 2.0 -31.1%
Net gains from foreign currencies 51.3 33.7 52.1%
Net gains from revaluation of investment property 2.0 0.4 NMF
Other operating income 29.1 21.9 32.5%
Other operating non-interest income 83.8 58.0 44.3%
Net gains from foreign currencies, BYR hedge 25.1 - NMF
Other operating non-interest income adjusted for foreign currency gains from the BYR hedge 108.9 58.0 87.6%

Fourth quarter 2011 comparison with fourth quarter 2010 and third quarter 2011

GEL millions, unless otherwise noted       Q4 2011       Q3 2011       Q4 2010       Change Q-O-Q       Change Y-0-Y    
Interest income 133.4 128.7 116.1 3.6% 14.9%
Interest expense 73.2 68.0 61.1 7.8% 19.9%

Net losses (gains) from derivative financial
instruments

(0.1) 2.6 1.5 NMF NMF

Interest expense adjusted for net (losses)
gains from derivative financial instruments

73.3 65.4 59.6 12.2% 23.1%
Net interest income 60.1 63.3 56.0 -5.2% 6.3%
Net fee and commission income 22.1 19.3 19.0 14.7% 16.4%
Net insurance revenue 3.6 5.1 4.2 -29.3% -14.9%
Other operating non-interest income 33.3 18.6 15.9 79.7% 109.9%
Revenue 119.1 106.3 95.6 12.1% 24.6%

On a year-on-year basis, Q4 2011 revenue growth of 24.6% y-o-y to GEL 119.1 million was largely driven by the growth of net interest income and other operating non-interest income during the quarter. Q4 2011 net interest income of GEL 60.1 million grew 6.3% y-o-y, as interest income growth of 14.9% y-o-y more than offset the 23.1% y-o-y growth of interest expense to GEL 73.3 million (adjusted for the impact of changes in the fair value of interest rate swap contracts). The Bank’s other operating non-interest income of GEL 33.3 million in Q4 2011 grew 109.9% y-o-y reflecting the gains from foreign currencies, partially related to the gains from the BYR hedge, which amounted to GEL 4.8 million in Q4 2011. The increase in revenue from the healthcare business also contributed to the growth. On a quarterly basis, the 5.2% q-o-q decline in net interest income was due to the 12.2% q-o-q growth of the interest expense (adjusted for net gains or losses from the change in fair value of interest rate swap contracts) that compares to 3.6% q-o-q growth of interest income, reflecting a 17.7% q-o-q increase in customer funds that outpaced the 2.2% q-o-q increase in net loan book in Q4 2011. The healthy growth of non-interest items, such as net fee and commission income (up 14.7% q-o-q to GEL 22.1 million) and other operating non-interest income (up 79.7% to GEL 33.3 million) strongly contributed to the Q4 2011 revenue growth of 12.1% compared to the prior quarter.

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

GEL millions, unless otherwise noted       2011       2010       Change Y-O-Y    
Salaries and other employee benefits 119.1 104.6 13.9%
General and administrative expenses 61.9 61.0 1.5%
Depreciation and amortization 27.3 28.0 -2.5%
Other operating expenses 9.3 6.3 49.1%
Other operating non-interest expenses 217.6 199.8 8.9%
Operating income before cost of credit risk 223.6 146.9 52.2%
Cost of credit risk 22.2 47.7 -53.5%
Net operating income 201.4 99.2 103.1%
Impairment of goodwill, property and equipment 23.4 0.4 NMF
Net other non-operating expenses 5.9 0.3 NMF
Net non-operating expenses 29.3 0.7 NMF
Profit before income tax expense from continuing operations 172.1 98.4 74.8%
Income tax expense 21.1 15.8 33.9%
Profit for the period from continuing operations 150.9 82.7 82.6%
Net loss from discontinued operations 15.2 - NMF
Net profit for the period 135.7 82.7 64.2%

In 2011, the Bank's other operating non-interest expenses increased by GEL 17.9 million, or 8.9% y-o-y, to GEL 217.6 million. The increase was primarily due to 13.9% y-o-y increase in salaries and other employee benefits as the Bank’s headcount and the bonus pool increased to reflect the growth of the Bank’s business during 2011. General and administrative expenses for the year grew moderately by 1.5% y-o-y to GEL 61.9 million, reflecting the cost efficiency measures undertaken by the Bank and the effect of disposal of BG Bank in the beginning of 2011. As a result, the Cost to Income ratio of the Bank improved to 49.3% in 2011 from 57.6% in 2010.

As a result of the foregoing factors, the Bank's operating income before cost of credit risk increased by GEL 76.7 million, or 52.2% y-o-y, to GEL 223.6 million in 2011.

Cost of credit risk decreased by GEL 25.5 million, or 53.5% y-o-y, to GEL 22.2 million in 2011, a result of improvements in the economy generally reflected in the improvement of the Bank's loan portfolio quality, and the disposal of BG Bank in the beginning of 2011. Allowance for loan impairment was GEL 115.1 million or 4.2% of total gross loans as of 31 December 2011, compared to 6.9% as of same date previous year.

The Bank’s non-performing loans (NPLs) amounted to GEL 97.2 million as of 31 December 2011 compared to GEL 117.6 million as of 31 December 2010, down by 17.3% y-o-y. The Bank’s NPLs to total gross loans ratio improved to 3.6% in 2011 from 4.6% as of 31 December 2010.

In 2011 net operating income amounted to GEL 201.4 million, up 103.1% y-o-y. The Bank’s non-operating expense for the period amounted to GEL 29.3 million, consisting of GEL 23.4 million goodwill associated with the BNB, Belarus, and GEL 5.9 million of net other non-operating expenses incurred from the buy-back of Eurobonds by the Bank and expenses incurred for the purposes of the Tender Offer, announced by the Bank’s holding company, BGH in December 2011 that was successfully completed in February 2012. 2011 profit before income tax expense from continuing operations of GEL 172.1 million was up by 74.8% y-o-y. The 2011 income tax expense reached GEL 21.1 million and the Bank’s 2011 profit for the period from continuing operations stood at GEL 150.9 million, up by GEL 68.3 million, or 82.6% y-o-y.

The 2011 impairment of goodwill charge of GEL 23.4 million fully comprised BNB goodwill impairment. As a result, the goodwill associated with BNB has been fully written-off as of 31 December 2011.

Fourth quarter 2011 comparison with fourth quarter 2010 and third quarter 2011

GEL millions, unless otherwise noted       Q4 2011       Q3 2011       Q4 2010       Change Q-O-Q       Change Y-0-Y    
Other operating non-interest expenses 57.5 54.1 45.4 6.3% 26.8%
Operating income before cost of credit risk 61.6 52.1 50.2 18.2% 22.6%
Cost of credit risk 8.8 5.2 17.4 69.8% -49.6%
Net operating income 52.8 47.0 32.8 12.5% 60.8%
Net non operating expenses 9.7 0.9 0.2 NMF NMF
Income tax expense 5.8 8.4 7.1 -31.2% -19.2%
Net profit from continuing operations 37.3 37.6 25.5 -0.8% 46.5%
Net loss from discontinued operations 3.0 - - NMF NMF
Net profit for the period 34.4 37.6 25.5 -8.7% 34.9%

The Bank’s Q4 2011 net operating income grew 12.5% q-o-q, as the revenue growth rate of 12.1% q-o-q during the quarter outpaced the expense growth rate of 6.3% q-o-q during the same period. Profit for the period from continuing operations of GEL 37.3 million, declined by 0.8% q-o-q impacted by the GEL 3.6 million increase in the Bank’s cost of credit risk to GEL 8.8 million. The increase in cost of credit risk during the quarter is largely due to the GEL 1.7 million q-o-q increase in impairment of receivables of ABCI, as a result of change in IFRS disclosure requirements, effective 2011. The increase in cost of credit risk is also attributed to the growth of loan impairment charge of BNB by GEL 2.1 million q-o-q in Q4 2011.

Net non-operating expense of GEL 9.7 million in Q4 2011 includes GEL 10.4 million impairment of BNB goodwill, which more than offset GEL 4.8 million foreign currency gain from the BYR hedge. The Bank’s net loss from discontinued operations in Q4 2011 amounted to GEL 3.0 million, comprised of the impairment of amounts receivable from the sale of BG Bank in February 2011. Net outstanding carrying value of the receivable as of 31 December 2011 after the impairment comprises GEL 3.7 million. As a result of the foregoing, the Q4 2011 net profit for the period declined 8.7% q-o-q to GEL 34.4 million.

On a year-on-year basis, the Bank’s net operating income growth of 60.8% y-o-y was a result of the 22.6% y-o-y growth of operating income before cost of credit risk to GEL 61.6 million and the improvement of the cost of credit risk by 49.6% y-o-y. Net profit for the period of GEL 34.4 million was up by 34.9% compared to the same period previous year.

Balance Sheet highlights

As of 31 December 2011, the Bank had total assets of GEL 4,665.3 million, a 7.0% increase compared to 30 September 2011 and 16.4% increase compared to 31 December 2010. Net loan book on a standalone basis grew by GEL 435.4 million, or 19.8% y-o-y, to GEL 2,635.4 million. The growth of total assets during 2011 was also attributed to the increase in the amounts due from credit institutions, mainly consisting of cash placed on the overnight deposits with banks that grew by GEL 173.1 million, or 148.6% y-o-y to GEL 289.5 million. The Bank’s investment securities available-for-sale, consisted of the NBG CDs and Georgian Government treasury bills and bonds, increased by 42.3% y-o-y to GEL 419.6 million as of the year-end 2011. Loans denominated in US$ (or other foreign currency) accounted for 74.0% of the Bank’s net loan book as of 31 December 2011, compared to 77.1% as of 31 December 2010.

The strong deposit inflow during 2011 enabled the Bank to further enhance its general funding and liquidity position. Customer funds on a standalone basis stood at GEL 2,726.4 million, up 17.5% q-o-q and up 49.4% y-o-y, the growth driven by client deposits growth of 18.0% q-o-q and 41.2% y-o-y. In addition to client deposits, customer funds include promissory notes, which reached GEL 181.1 million as of 31 December 2011. The healthy deposit growth allowed the Bank decrease its reliance on more expensive wholesale funding as amounts due to credit institutions declined from GEL 1,138.9 million at the end of 2010 to GEL 921.2 million at the end of 2011. As a result, customer funds represented 71.0% of total liabilities as of 31 December 2011, an improvement from 61.2% as of the YE 2010. By the end of 2011, the Bank’s Net Loan to Client Deposit ratio improved to 102.4% reflecting the continuous deposit inflow during the year. Client deposits denominated in US$ (or other foreign currency) accounted for 59.2% of the Bank’s client deposits as of 31 December 2011, compared to 71.1% as of 31 December 2010. The Bank continues to maintain a strong liquidity position, considerably in excess of the conservative regulatory requirements. The liquidity ratio, as per the NBG requirement, stood at 37.8% against the required minimum of 30%, while liquid assets accounted to 28.7% of total assets and 34.8% of total liabilities as of the end of 2011. As of 31 December 2011, the Bank had total liabilities of GEL 3,852.7 million, up 7.5% q-o-q and up 16.3% y-o-y.

Liquidity and Funding position

GEL millions, unless otherwise noted       2011       2010       Change Y-O-Y    
Amounts due to credit institutions, of which 921.2 1,138.9 -19.1%
Wholesale funding 863.0 1,003.9 -14.0%
Customer funds, of which 2,735.2 2,026.3 35.0%
Client deposits 2,554.1 2,004.7 27.4%
Promissory notes 181.1 21.6 NMF
Net Loans / Customer Funds 95.7% 116.8% -18.1%
Net Loans / Client Deposits 102.4% 118.0% -13.2%
Liquid assets 1,326.3 1,011.7 31.1%
Liquid assets as percent of total assets 28.4% 25.3% 12.5%
Liquid assets as percent of total liabilities 34.8% 30.9% 12.3%

As of 31 December 2011, the Bank had shareholders' equity of GEL 775.7 million, compared to shareholders' equity of GEL 663.3 million as of 31 December 2010. The growth was mostly attributed to the increase of the Bank’s net profit for the period from GEL 82.7 million in 2010 to GEL 135.7 million in 2011. In October 2011, the Bank issued 1.5 million ordinary shares for the purpose of the Senior Executive Compensation Plan. The Bank’s Book Value per share on 31 December 2011 stood at GEL 26.09 (US$15.62) compared to GEL 22.23 (US$12.54) as of 31 December 2010.

Strategic Businesses Segment Result Discussion

Segment result discussion presented for the Banks Retail Banking, Corporate Banking and Wealth Management operations on a standalone basis for the Bank’s corporate banking, retail banking and wealth management operations in Georgia and the results exclude the inter-company eliminations.

Retail Banking (RB)          
GEL millions, unless otherwise noted            
Period end 2011 2010 Change
Net interest income 141.5 116.4 21.6%
Net fees and commission income 49.8 42.1 18.3%
Net gains from foreign currencies 12.2 9.2 32.6%
Other operating non-interest income 6.0 1.2 NMF
Operating income from other segments 1.6 0.5 NMF
Revenue 211.0 169.4 24.6%
Other operating non-interest expenses 109.4 97.9 11.7%
Operating income before cost of credit risk 101.7 71.6 42.0%
Cost of credit risk (3.1) 29.1 NMF
Profit for the period from continuing operations 110.4 40.0 NMF
Net loans, standalone 1,221.4 969.5 26.0%
Total assets 2,164.2 1,746.2 23.9%
Client deposits, standalone 707.1 535.3 32.1%
Total liabilities 1,268.0 1,176.9 7.7%

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

In 2011 Retail Banking Revenue grew 24.6% y-o-y to GEL 211.0 million, the growth driven by a 21.6% increase in net interest income to GEL 141.5 million reflecting the strong growth of retail net loan book by GEL 251.9 million , or 26.0% y-o-y, to GEL 1,221.4 million as of 31 December 2011. Net fees and commission income increased 18.1% y-o-y to GEL 49.8 million, while net gains from foreign currencies amounted to GEL 12.2 million, up 32.6% y-o-y.

In 2011, deposits from retail clients increased by GEL 171.8 million, or 32.1% y-o-y, to GEL 707.1 million as of 31 December 2011.

Highlights

  • Completed the Bank’s brand restyling with new corporate-endorsed brand architecture that unites the group’s banking sub-brands and the non-banking business under one umbrella.
  • Launched new-look corporate website, redesigned to reflect the Bank’s brand restyling.
  • Launched Express Banking - small-format service points in December 2011. Transactional banking at Express branches to free flagship branches for higher value-added services and products. As of 31 December 2011 nine Express branches operational in key locations in Tbilisi.
  • Issued 263,143 debit cards in 2011 bringing the total debit cards outstanding to 535,385, up 7.9% y-o-y.
  • Issued 61,980 credit cards of which 48,382 were American Express cards in 2011. A total of 105,132 American Express cards have been issued since the launch in November 2009. The total number of credit cards outstanding amounted to 127,820, up 19.7% since December 2010. In June 2011, Bank of Georgia announced a winner of an American Express Global Network Services Marketing Award in the category of Outstanding Loyalty and Engagement Program for its membership Rewards Campaign.
  • Signed merchant and ATM acquiring agreement with Diners Club International in April 2011. Bank of Georgia became an exclusive partner for Diners Club International acquiring business in Georgia and an ATM processer for Diners Club International and Discover card transactions.
  • Outstanding number of Retail Banking clients reached 888,794 up 7.9% y-o-y.
  • Acquired 1,726 new clients in Solo business line, the Bank’s mass affluent sub-brand, in 2011. As of 31 December 2011, the number of Solo clients reached 3,728.
  • Increased Point of Sales (POS) footprint: As of 31 December 2011, 179 desks at 369 contracted merchants, up from 99 desks and 177 merchant at the end of 2010. POS loans outstanding amounted to GEL 24.7 million, up from GEL 6.5 million at the end of 2010.
  • POS terminals outstanding reach 2,828, up 21.4% y-o-y. The volume of transactions through the Banks’ POS terminals grew 97.5% y-o-y to GEL 246.6 million, while number of POS transactions increased from 1.5 million to 3.0 million in 2011.
  • RB Loan Yield Excluding Provisions amounted to 21.0% in 2011 (21.4% in 2010) and RB Deposit Yield amounted to 6.7% in 2011 (7.5% in 2010).
  • Consumer loan originations of GEL 425.3million (up 66.9% y-o-y) resulted in consumer loans outstanding in the amount of GEL 288.2 million as of 31 December 2011, up 77.6% y-o-y.
  • Micro and SME loan originations of GEL 449.0 million (up 47.5% y-o-y) resulted in micro and SME loans outstanding in the amount of GEL 318.5 million as of 31 December 2011, up 33.7% y-o-y.
  • Mortgage loans originations of GEL 168.1 million (up 3.8% y-o-y) resulted in mortgage loans outstanding in the amount of GEL 375.0 million as of 31 December 2011, up 1.2% y-o-y.
Corporate Banking (CB)          
GEL millions, unless otherwise noted            
Period end 2011 2010 Change
Net interest income 72.8 74.8 -2.7%
Net fees and commission income 20.3 16.6 22.3%
Net gains from foreign currencies 29.0 21.4 35.5%
Other operating non-interest income 6.6 (2.1) NMF
Operating income from other segments 6.6 12.5 -47.2%
Revenue 135.4 123.1 10.0%
Other operating non-interest expenses 54.7 43.8 24.9%
Operating income before cost of credit risk 80.8 79.3 1.9%
Cost of credit risk 25.6 12.8 100.0%
Profit for the period from continuing operations 60.1 68.7 -12.5%
Net loans, standalone 1,378.1 1,192.8 15.5%
Total assets 2,215.7 1,745.4 26.9%
Client deposits, standalone 1,384.0 1,006.0 37.6%
Total liabilities 1,996.0 1,552.4 28.6%

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

The growth of Corporate Banking revenue in 2011 was driven by non-interest income growth during the year. Net fees and commission income grew 22.3% y-o-y to GEL 20.3 million, while net gains from foreign currencies rose to GEL 29.0 million, or 35.5% y-o-y, reflecting the increase in volumes of foreign currency conversions by the Bank’s corporate clients. The 2.7% y-o-y decline of net interest income of corporate banking was predominantly attributable to the additional carrying cost of the strong deposit inflows on the Bank’s corporate client accounts, which rose by 37.6% y-o-y, or by GEL 378.0 million, to GEL 1,384.0 million as of 31 December 2011 on a standalone basis. Corporate Banking standalone net loans increased by GEL 185.3 million, or 15.5% y-o-y, to GEL 1,378.1 million during the period. Impairment charge on interest earning corporate banking assets increased to GEL 25.6 million in 2011 from GEL 12.8 million in 2010.

Highlights

  • CB Loan Yield Excluding Provisions amounted to 14.4% in 2011 (16.2% in 2010) and CB Deposit Yield amounted to 7.1% in 2011 (5.6% in 2010). In 2011, the increase in deposit yields was attributed to the growth of the share of the higher yielding GEL denominated CB client deposits in total CB client deposits for the period from 22.2% at the end of 2010 to 32.9% at the end of 2011.
  • Increased the number of corporate clients using the Bank’s payroll services from 1,737 as of 31 December 2010 to 2,387 as of 31 December 2011. As of 31 December 2011, the number of individual clients serviced through the corporate payroll programs administered by the Bank amounted to 177,321.
  • Number of corporate banking accounts opened increased from 1,842 in 2010 to 5,192 corporate banking accounts opened in 2011.
Wealth Management (WM)          
GEL millions, unless otherwise noted            
Period end 2011 2010 Change
Net interest income 5.9 3.1 90.3%
Net fees and commission income 0.7 0.5 40.0%
Net gains from foreign currencies 0.7 0.6 16.7%
Other operating non-interest income 0.1 (0.1) (0.1) NMF
Revenue 7.4 4.1 80.5%
Other operating non-interest expenses 4.1 4.6 -10.9%
Operating income before cost of credit risk 3.2 (0.5) (0.5) NMF
Profit for the period from continuing operations 3.6 2.0 80.0%
Net loans, standalone 35.8 37.6 -4.8%
Total assets 37.6 43.1 -12.8%
Client deposits, standalone 451.5 261.6 72.6%
Total liabilities 451.5 261.6 72.6%

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

In 2011, Wealth Management revenue grew by 80.5% y-o-y to GEL 7.4 million, a result of the 90.3% growth of the net interest income to GEL 5.9 million, 40.0% y-o-y growth in net fees and commission income to GEL 0.7 million and 16.7% y-o-y growth of net gains from foreign currencies to GEL 0.7 million. Profit for the period from continuing operations of the Wealth Management business grew 80.0% y-o-y to GEL 3.6 million. Client deposits of Wealth Management business grew by GEL 189.9 million, or 72.6% y-o-y, to GEL 451.5 million.

Corporate Center

Corporate center provides back office services to all segments of the Bank and investments in subsidiaries.

Highlights

  • Moved to new Headquarters to meet the growing needs of the Bank’s business and provide professional facilities to the Bank’s clients and employees. Approximately 600 employees of the Bank, including back-office staff previously spread across 12 offices rented by the Bank, have relocated to the new HQ.
  • Signed a sub-custodian agreement with State Street Bank and Trust Company/ becoming the only bank in Georgia that has an account at Euroclear Bank and the only Bank to offer sub-custody services to global custodians in Georgia.
  • Standard & Poor’s and Fitch Ratings raised their respective long-term ratings ratings on Bank of Georgia to ‘BB-‘, noting Bank’s business position, capitalization, liquidity, profitability and strong corporate governance and management teams as the drivers for the rating upgrades.
  • Wholesale funding in 2011 declined 14.0% y-o-y to GEL 863.0 million, with long-term IFI (International Financial Institutions, including EBRD, IFC, DEG among others) accounted for 80.7% of wholesale funding as of 31 December 2011. The Bank completed the full repayment, upon maturity, of Eurobonds totalling GEL 92.6 million (US$ 55.5 million) on 8 February 2012 and the conversion of the EBRD and IFC convertible loans with the nominal values totalling GEL 80.8 million (US$ 49.9 million) in February 2012.
  • Has entered into ISDA (International Swaps and Derivatives Association) agreements with Commerzbank in 2011 and Merrill Lynch in 2012 in addition to ISDA agreement signed with IFC in 2009. ISDA enables the Bank to enter into interest rate swaps in order to hedge its US$ interest rate risk on the Bank’s long-term borrowings.
  • Signed a five-year Agricultural Finance Facility Agreement with EBRD a synthetic Georgian lari loan denominated in US dollars in the amount of US$14.5 million and a six year US$40.0 million loan facility agreement with FMO and DEG to support the growth of the Bank’s SME portfolio.

Insurance and Healthcare (ABCI)

  2011   2010   Change
GEL millions, unless otherwise noted Insurance   Healthcare   Insurance and Healthcare Insurance   Healthcare   Insurance and Healthcare Insurance   Healthcare   Insurance and Healthcare
Gross premiums written 56.4 - 56.4 56.3 - 56.3 0.2% NMF 0.2%
Net insurance revenue 17.7 - 17.7 16.7 - 16.7 6.0% NMF 6.0%
Net interest income 1.3 0.3 1.6 0.7 - 0.7 85.7% NMF 128.6%
Net (losses) gains from foreign currencies (0.8) - (0.8) 0.4 (0.1) 0.3 NMF -100.0% NMF
Other operating non-interest income 1.3 10.7 12.0 0.3 2.6 2.9 NMF NMF NMF
Operating income from other segments (1.4) 1.3 (0.1) (2.2) 2.6 0.4 -36.4% -50.0% NMF
Revenue 18.3 12.2 30.5 15.8 5.1 20.9 15.8% 139.2% 45.9%
Other operating non-interest expenses 12.4 11.0 23.4 11.0 3.7 14.7 12.7% 197.3% 59.2%
Operating income before cost of credit risk 5.7 1.3 7.0 4.7 1.5 6.2 21.3% -13.3% 12.9%

ABCI, the Bank’s wholly-owned subsidiary provides life and non-life insurance and healthcare products and services in Georgia. A leader in the Georgian life and non-life insurance markets, based on a market share of 19.5% of the life and 16.8% of the non-life insurance markets (based on gross premiums written), ABCI cross-sells its insurance products with the Bank’s retail and corporate banking products. ABCI’s healthcare business consists of My Family Clinic, Georgia’s leading healthcare provider, operating a chain of healthcare centers in Georgia, in line with the Bank’s strategy of vertically integrating its insurance and healthcare businesses.

In 2011, insurance and healthcare revenue grew 45.9% y-o-y to GEL 30.5 million reflecting the 6.0% y-o-y growth of net insurance revenue to GEL 17.7 million and the growth of other operating non-interest income from GEL 2.9 million in 2010 to GEL 12.0 million in 2011. The net insurance revenue growth was attributed to the 0.2% y-o-y growth of gross premiums written to GEL 56.4 million and the improvements in the claims management by ABCI. The increase of other operating non-interest income was predominantly attributed to the non-interest income generated by the healthcare business, which reached GEL 10.7 million in 2011 up from GEL 2.6 million healthcare revenue generated in 2010. Operating income before cost of credit risk grew 12.9% y-o-y to GEL 7.0 million in 2011.

Highlights

  • Acquired assets and liabilities of JSC Insurance Company Partner, the twelfth largest insurance company in Georgia. The non-cash transaction involved ABCI acquiring total assets in the amount of GEL 5.3 million and liabilities accounted for GEL 5.7 million. As of 30 June 2011, ABCI had a market share of 16.8% of the non-life market in Georgia based on gross premiums written and JSC Insurance Company Partner had 1.3%.

In line with the Bank’s strategy of integrating its insurance and healthcare operations, following developments are highlighted below:

  • ABCI secured 8.25 years Export Credit Facility in the amount of US$11.9 million from ING Bank N.V. the Netherlands. The facility will be used for the restoration of healthcare facilities in the country to enable My Family Clinic, ABCI’s subsidiary and one of the leading health care providers in Georgia, to develop hospitals with aggregate bed count of 160 beds in Western Georgia. Four new healthcare facilities comprising a total of approximately 60 bed became operational by the end of 2011.
  • In December 2011, My Family Clinic had merged with the healthcare business of the Block Georgia group of companies. As a result of the transaction, ABCI retained the controlling equity interest of 51% in My Family Clinic, while Block Georgia group of companies holds the remaining 49%. Following the merger, My Family Clinic became the largest healthcare provider in the country with 21 hospitals and healthcare centers and 3,500 employees.

Affordable Housing

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

Highlights

  • The pilot project of building and selling small-format apartments largely completed under the original completion timetable, the full completion is expected in Q2 2012. 92 apartments from the total of 132- apartment building have been pre-sold as of 5 March 2012.
  • Secured US$20 million funding, SBRE’s first internationally raised debt, from FMO for the development of a new housing project of circa 525 apartments to be launched in Q2 2012.

Non-Core Businesses

The Bank’s non-core businesses that accounted for 2.9% of total assets and 13.8% of total revenue in 2011, comprise BNB, Belarus banking operation and Liberty Consumer, a Georgia focused investment company in which the Bank holds a 65% stake. In order for the Bank to focus on its strategic businesses, the Bank announced its intention to exit from its non-core operations.

To this end, in February 2011, the Bank sold 80% equity interest in BG Bank, its subsidiary in Ukraine. The Bank’s 2011 consolidated results include results of operation of BG Bank for one month ended 31 January 2011. Net loss from discontinued operations related to the disposal of BG Bank amounted to GEL 15.2 million in 2011.

In December 2011, the Bank initiated proceedings and has subsequently completed the closure of BG Capital, Ukraine, the Ukrainian operations of its brokerage subsidiary BG Capital.

About JSC Bank of Georgia

Bank of Georgia is the leading Georgian bank, based on total assets (with a 35.6% market share), total loans (with a 34.5% market share) and client deposits (with a 35.6% market share) as of 31 December 2011, all data based on standalone financial information filed by banks in Georgia with the National Bank of Georgia. The Bank offers a broad range of corporate banking, retail banking, wealth management, brokerage and insurance services to its clients.

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

Standard & Poor’s     ‘BB-/B’
FitchRatings ‘BB-/B’
Moody’s ‘B1/NP’ (FC) & ‘Ba3/NP’ (LC)

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

Irakli Gilauri         Macca Ekizashvili
Chief Executive Officer Head of Investor Relations
+995 322 444 109 +995 322 444 256

igilauri@bog.ge

ir@bog.ge

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

The financial information as of Q4 2011, Q3 2011 Q4 2010, full year 2011 and full year 2010 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

CONSOLIDATED QUARTERLY INCOME STATEMENT

  Q4 2011   Q4 2010   Q3 2011   Change   Change
Y-O-Y Q-O-Q
GEL thousands, unless otherwise noted unaudited
 
Loans to customers 115,816 104,668 111,707 10.7% 3.7%
Investment securities – AFS & HTM 9,782 6,563 9,567 49.0% 2.2%
Amounts due from credit institutions 4,718 3,908 5,716 20.7% -17.5%
Finance lease receivables 3,099 942 1,744 229.0% 77.7%
Interest income 133,415 116,081 128,734 14.9% 3.6%
Amounts due to customers (49,719) (32,586) (41,947) 52.6% 18.5%
Amounts due to credit institutions (23,536) (28,521) (26,012) -17.5% -9.5%
Interest expense (73,255) (61,107) (67,959) 19.9% 7.8%
Net interest income before net (losses) gains from derivative financial instruments 60,160 54,974 60,775 9.4% -1.0%
Net (losses) gains from derivative financial instruments (92) 1,541 2,584 NMF NMF
Net interest income 60,068 56,515 63,359 6.3% -5.2%
Fee and commission income 26,188 20,252 23,717 29.3% 10.4%
Fee and commission expense (4,086) (1,264) (4,452) 223.3% -8.2%
Net fee and commission income 22,102 18,988 19,265 16.4% 14.7%
Net insurance premiums earned 11,515 10,938 11,758 5.3% -2.1%
Net insurance claims incurred (7,937) (6,736) (6,694) 17.8% 18.6%
Net insurance revenue 3,578 4,202 5,064 -14.9% -29.3%

Net gains (losses) from trading securities and investment securities available-for-
sale

850 (558) (200) NMF NMF
Net gains (losses) from revaluation of investment property 1,984 (2,732) - NMF NMF
Net gains (losses) from foreign currencies:
– dealing 11,992 8,759 12,590 36.9% -4.7%
– translation differences 8,899 (1,088) (451) NMF NMF
Other operating income 9,654 11,523 6,636 -16.2% 45.5%
Other operating non-interest income 33,379 15,904 18,575 109.9% 79.7%
Revenue 119,127 95,609 106,263 24.6% 12.1%
Salaries and other employee benefits (30,662) (24,875) (30,727) 23.3% -0.2%
General and administrative expenses (16,169) (13,411) (15,191) 20.6% 6.4%
Depreciation and amortization (7,735) (7,841) (6,578) -1.4% 17.6%
Other operating expenses (2,972) 753 (1,651) NMF 80.0%
Other operating non-interest expenses (57,538) (45,374) (54,147) 26.8% 6.3%
Operating income before cost of credit risk 61,589 50,235 52,116 22.6% 18.2%
Impairment charge on loans to customers 6,194 15,877 5,691 -61.0% 8.8%
Impairment charge (reversal) of impairment on finance lease receivables 195 (5,246) (49) NMF NMF
Impairment charge (reversal) on other assets and provisions 2,380 6,765 (477) -64.8% NMF
Cost of credit risk 8,769 17,396 5,165 -49.6% 69.8%
Net operating income 52,820 32,839 46,951 60.8% 12.5%
Share of (loss) gain of associates (283) 255 47 NMF NMF
Impairment of goodwill, property and equipment (10,394) (435.0) - NMF NMF
Other non-operating income 8,072 - - NMF NMF
Other non-operating expense (7,103) (21) (974) NMF NMF
Net non-operating expenses (9,708) (201) (927) NMF NMF
Profit before income tax expense from continuing operations 43,112 32,638 46,024 32.1% -6.3%
Income tax expense 5,789 7,165 8,410 -19.2% -31.2%
Profit for the period from continuing operations 37,323 25,473 37,614 46.5% -0.8%
Net loss from discontinued operations 2,972 - - NMF NMF
Net profit for the period 34,351 25,473 37,614 34.9% -8.7%
 
Attributable to:
– shareholders of the Bank 31,971 27,075 36,915 18.1% -13.4%
– non-controlling interests 2,380 (1,602) 699 NMF 240.5%

CONSOLIDATED INCOME STATEMENT

      2011       2010       Change    
Y-O-Y
GEL thousands, unless otherwise noted unaudited
Loans to customers 438,989 389,402 12.7%
Investment securities – AFS & HTM 37,701 19,785 90.6%
Amounts due from credit institutions 18,103 9,795 84.8%
Finance lease receivables 6,565 4,159 57.9%
Interest income 501,358 423,141 18.5%
Amounts due to customers (167,294) (114,968) 45.5%
Amounts due to credit institutions (99,763) (91,829) 8.6%
Interest expense (267,057) (206,797) 29.1%
Net interest income before net gains (losses) from derivative financial instruments 234,301 216,344 8.3%
Net gains (losses) from derivative financial instruments 4,984 (7,826) NMF
Net interest income 239,285 208,518 14.8%
Fee and commission income 93,541 74,265 26.0%
Fee and commission expense (18,204) (10,845) 67.9%
Net fee and commission income 75,337 63,420 18.8%
Net insurance premiums earned 46,396 44,561 4.1%
Net insurance claims incurred (28,658) (27,898) 2.7%
Net insurance revenue 17,738 16,663 6.5%
Net gains from trading securities and investment securities available-for-sale 1,382 2,006 -31.1%
Net gains from revaluation of investment property 1,984 350 NMF
Net gains from foreign currencies:
– dealing 45,694 33,651 35.8%
– translation differences 30,747 98 NMF
Other operating income 29,052 21,927 32.5%
Other operating non-interest income 108,859 58,032 87.6%
Revenue 441,219 346,633 27.3%
Salaries and other employee benefits (119,111) (104,551) 13.9%
General and administrative expenses (61,942) (61,000) 1.5%
Depreciation and amortization (27,254) (27,963) -2.5%
Other operating expenses (9,324) (6,253) 49.1%
Other operating non-interest expenses (217,631) (199,767) 8.9%
Operating income before cost of credit risk 223,588 146,866 52.2%
Impairment charge on loans to customers 23,216 49,886 -53.5%
Impairment charge (reversal) of impairment on finance lease receivables 317 (5,775) NMF
Impairment (reversal) charge on other assets and provisions (1,337) 3,587 NMF
Cost of credit risk 22,196 47,698 -53.5%
Net operating income 201,392 99,168 103.1%
Share of (loss) gain of associates (487) 255 NMF
Impairment of goodwill, property and equipment (23,394) (435) NMF
Other non-operating income 8,072 271 NMF
Other non-operating expense (13,529) (816) NMF
Net non-operating expenses (29,338) (725) NMF
Profit before income tax expense from continuing operations 172,054 98,443 74.8%
Income tax expense 21,125 15,776 33.9%
Profit for the period from continuing operations 150,929 82,667 82.6%
Net loss from discontinued operations 15,219 - NMF
Net profit for the period 135,710 82,667 64.2%
 
Attributable to:
– shareholders of the Bank 132,531 83,640 58.5%
– non-controlling interests 3,179 (973) NMF

CONSOLIDATED BALANCE SHEET

GEL thousands, unless otherwise noted       2011       2010       Change    
Y-O-Y
Assets unaudited
Cash and cash equivalents 628,731 611,584 2.8%
Amounts due from credit institutions 289,530 116,469 148.6%
Investment securities – AFS & HTM 419,576 294,961 42.2%
Loans to customers and finance lease receivables 2,616,361 2,366,116 10.6%
Investments in associates 3,014 5,633 -46.5%
Investment properties 101,686 113,496 -10.4%
Property and equipment 348,110 285,852 21.8%
Goodwill 46,195 69,212 -33.3%
Other intangible assets 21,222 22,390 -5.2%
Current income tax assets 8,487 2,247 277.7%
Deferred income tax assets 14,852 18,178 -18.3%
Prepayments 29,929 23,364 28.1%
Other assets 137,568 75,420 82.4%
Total assets 4,665,261 4,004,922 16.5%
Liabilities
Amounts due to customers (Customer funds), of which 2,735,222 2,026,308 35.0%
Client deposits 2,554,084 2,004,698 27.4%
Promissory notes 181,138 21,610 NMF
Amounts due to credit institutions 921,172 1,138,927 -19.1%
Current income tax liabilities 1,174 4,251 -72.4%
Deferred income tax liabilities 36,242 30,901 17.3%
Provisions 386 4,407 -91.2%
Other liabilities 158,462 106,787 48.4%
Total liabilities 3,852,658 3,311,581 16.3%
Equity
Share capital 32,878 31,345 4.9%
Additional paid-in capital 473,732 477,285 -0.7%
Treasury shares (3,146) (1,510) 108.3%
Other reserves 14,478 26,816 -46.0%
Retained earnings 254,588 130,314 99.3%
Total equity attributable to shareholders of the Bank 772,530 664,250 16.3%
Non-controlling interests 40,073 29,091 37.8%
Total equity 812,603 693,341 17.2%
Total liabilities and equity 4,665,261 4,004,922 16.5%

STANDALONE QUARTERLY INCOME STATEMENT OF JSC BANK OF GEORGIA

  Q4 2011   Q4 2010   Q3 2011   Change   Change
Y-O-Y Q-O-Q
GEL thousands, unless otherwise noted unaudited
 
Loans to customers 115,359 98,065 111,346 17.6% 3.6%
Investment securities – AFS & HTM 9,787 6,500 9,572 50.6% 2.2%
Amounts due from credit institutions 3,592 1,965 3,999 82.8% -10.2%
Interest income 128,738 106,530 124,917 20.8% 3.1%
Amounts due to customers (47,029) (26,832) (41,493) 75.3% 13.3%
Amounts due to credit institutions (22,673) (26,244) (25,068) -13.6% -9.6%
Interest expense (69,702) (53,076) (66,561) 31.3% 4.7%

Net interest income before net (losses) gains from derivative financial
instruments

59,036 53,454 58,356 10.4% 1.2%
Net (losses) gains from derivative financial instruments (92) 1,090 2,584 NMF NMF
Net interest income 58,944 54,544 60,940 8.1% -3.3%
Fee and commission income 23,688 18,975 21,718 24.8% 9.1%
Fee and commission expense (5,148) (3,449) (4,641) 49.3% 10.9%
Net fee and commission income 18,540 15,526 17,077 19.4% 8.6%
Net gains from trading securities and investment securities available-for-sale 841 118 29 NMF NMF
Net gains from revaluation of investment property 312 357 - -12.6% -
Net gains (losses) from foreign currencies:
– dealing 12,398 8,705 9,624 42.4% 28.8%
– translation differences 5,322 (640) 2,298 NMF 131.6%
Other operating income 598 803 1,012 -25.5% -40.9%
Other operating non-interest income 19,471 9,343 12,963 108.4% 50.2%
Revenue 96,955 79,413 90,980 22.1% 6.6%
Salaries and other employee benefits (22,952) (15,127) (20,963) 51.7% 9.5%
General and administrative expenses (11,255) (11,328) (12,412) -0.6% -9.3%
Depreciation and amortization (5,546) (6,341) (5,411) -12.5% 2.5%
Other operating expenses (1,218) 1,414 (1,085) NMF 12.3%
Other operating non-interest expenses (40,971) (31,382) (39,871) 30.6% 2.8%
Operating income before cost of credit risk 55,984 48,031 51,109 16.6% 9.5%
Impairment charge on loans to customers 6,474 7,018 8,106 -7.8% -20.1%
Impairment charge (reversal) on other assets and provisions 291 2,532 (18) -88.5% NMF
Cost of credit risk 6,765 9,550 8,088 -29.2% -16.4%
Net operating income 49,219 38,481 43,021 27.9% 14.4%
Impairment of property and equipment - (435) - -100.0% NMF
Other non-operating expense (6,728) (21) (974) NMF NMF
Net non-operating expenses (6,728) (456) (974) NMF NMF
Profit before income tax expense from continuing operations 42,491 38,025 42,047 11.7% 1.1%
Income tax expense 5,338 6,463 6,592 -17.4% -19.0%
Profit for the period from continuing operations 37,153 31,562 35,455 17.7% 4.8%
Net loss from discontinued operations 2,972 - - NMF NMF
Net profit for the period 34,181 31,562 35,455 8.3% -3.6%

STANDALONE INCOME STATEMENT OF JSC BANK OF GEORGIA

      2011       2010       Change    
Y-O-Y
GEL thousands, unless otherwise noted unaudited
 
Loans to customers 434,429 366,298 18.6%
Investment securities – AFS & HTM 37,652 18,927 98.9%
Amounts due from credit institutions 13,776 5,646 144.0%
Interest income 485,857 390,871 24.3%
Amounts due to customers (161,840) (96,976) 66.9%
Amounts due to credit institutions (96,584) (89,707) 7.7%
Interest expense (258,424) (186,683) 38.4%

Net interest income before net gains (losses) from derivative financial
instruments

227,433 204,188 11.4%
Net gains (losses) from derivative financial instruments 4,984 (8,080) NMF
Net interest income 232,417 196,108 18.5%
Fee and commission income 83,378 66,524 25.3%
Fee and commission expense (18,195) (13,799) 31.9%
Net fee and commission income 65,183 52,725 23.6%
Net gains from trading securities and investment securities available-for-sale 889 129 NMF
Net gains from revaluation of investment property 312 1,083 -71.2%
Net gains (losses) from foreign currencies:
– dealing 39,874 31,624 26.1%
– translation differences 23,767 (299) NMF
Other operating income 4,601 3,204 43.6%
Other operating non-interest income 69,443 35,741 94.3%
Revenue 367,043 284,574 29.0%
Salaries and other employee benefits (86,942) (70,597) 23.2%
General and administrative expenses (46,789) (40,669) 15.0%
Depreciation and amortization (21,702) (23,026) -5.8%
Other operating expenses (3,265) (2,312) 41.2%
Other operating non-interest expenses (158,698) (136,604) 16.2%
Operating income before cost of credit risk 208,345 147,970 40.8%
Impairment charge on loans to customers 22,313 39,070 -42.9%
Impairment reversal on other assets and provisions (3,827) (814) NMF
Cost of credit risk 18,486 38,256 -51.7%
Net operating income 189,859 109,714 73.0%
Impairment of property and equipment - (435) -100.0%
Other non-operating income - 271 -100.0%
Other non-operating expense (13,154) (816) NMF
Net non-operating expenses (13,154) (980) NMF
Profit before income tax expense from continuing operations 176,705 108,734 62.5%
Income tax expense 17,823 16,069 10.9%
Profit for the period from continuing operations 158,882 92,665 71.5%
Net loss from discontinued operations 15,219 - NMF
Net profit for the period 143,663 92,665 55.0%

STANDALONE BALANCE SHEET OF JSC BANK OF GEORGIA

GEL thousands, unless otherwise noted       2011       2010       Change    
Y-O-Y
Assets unaudited
Cash and cash equivalents 608,217       558,922 8.8%
Amounts due from credit institutions 281,114 102,913 173.2%
Investment securities – AFS & HTM 412,043 281,420 46.4%
Loans to customers and finance lease receivables 2,635,364 2,199,958 19.8%
Investments in associates 171,042 337,875 -49.4%
Investment properties 72,855 79,274 -8.1%
Property and equipment 237,398 223,647 6.1%
Goodwill 22,748 22,748 0.0%
Other intangible assets 18,464 17,043 8.3%
Current income tax assets 6,696 - NMF
Prepayments 17,855 16,561 7.8%
Other assets 47,758 16,664 186.6%
Total assets 4,531,554 3,857,025 17.5%
Liabilities
Amounts due to customers (Customer funds), of which: 2,726,435 1,824,560 49.4%
Client deposits 2,545,297 1,802,950 41.2%
Promissory notes 181,138 21,610 NMF
Amounts due to credit institutions 884,098 1,114,558 -20.7%
Current income tax liabilities - 4,166 -100.0%
Deferred income tax liabilities 31,255 28,708 8.9%
Provisions 386 4,407 -91.2%
Other liabilities 54,836 44,099 24.3%
Total liabilities 3,697,010 3,020,498 22.4%
Equity
Share capital 32,878 31,345 4.9%
Additional paid-in capital 470,506 476,664 -1.3%
Treasury shares (3,146) (1,375) 128.8%
Other reserves 41,350 52,631 -21.4%
Retained earnings 292,956 277,262 5.7%
Total equity 834,544 836,527 -0.2%
Total liabilities and equity 4,531,554 3,857,025 17.5%

CONSOLIDATED INCOME STATEMENT in US$ and GBP

Thousands, unless otherwise noted   US$   GBP
unaudited
2011   2010   Change 2011   2010   Change
Y-O-Y Y-O-Y
Loans to customers $262,868 $ 219,629 19.70% £170,283 £142,169 19.80%
Investment securities – AFS & HTM $ 22,575 $ 11,159 102.30% £ 14,624 £7,223 102.50%
Amounts due from credit institutions $ 10,840 $ 5,525 96.20% £7,022 £3,576 96.40%
Finance lease receivables $3,931 $ 2,346 67.60% £2,547 £1,518 67.80%
Interest income $ 300,214 $238,659 25.80% £194,476 £154,486 25.90%
Amounts due to customers $ (100,176) $(64,844) 54.50% -£ 64,893 -£ 41,974 54.60%
Amounts due to credit institutions $ (59,738) $(51,793) 15.30% -£ 38,698 -£ 33,526 15.40%
Interest expense $ (159,914) $ (116,637) 37.10% -£103,591 -£ 75,500 37.20%

Net interest income before net gains (losses) from derivative
financial instruments

$140,300 $ 122,022 15.00% £ 90,885 £ 78,986 15.10%
Net gains (losses) from derivative financial instruments $2,984 $ (4,414) NMF £1,933 -£2,857 NMF
Net interest income $143,284 $ 117,608 21.80% £ 92,818 £ 76,129 21.90%
Fee and commission income $ 56,013 $ 41,887 33.70% £ 36,284 £ 27,114 33.80%
Fee and commission expense $ (10,901) $ (6,117) 78.20% -£7,061 -£3,959 78.40%
Net fee and commission income $ 45,112 $ 35,770 26.10% £ 29,223 £ 23,155 26.20%
Net insurance premiums earned $ 27,782 $ 25,133 10.50% £ 17,997 £ 16,269 10.60%
Net insurance claims incurred $ (17,160) $(15,735) 9.10% -£ 11,116 -£ 10,185 9.10%
Net insurance revenue $ 10,622 $ 9,398 13.00% £6,881 £6,084 13.10%
Net gains from trading securities and investment securities available-for-sale $ 828 $ 1,131 -26.80% £ 536 £ 732 -26.80%
Net gains from revaluation of investment property $1,188 $ 197 NMF £ 770 £ 128 NMF
Net gains from foreign currencies:
– dealing $ 27,362 $ 18,980 44.20% £ 17,725 £ 12,286 44.30%
– translation differences $ 18,411 $55 NMF £ 11,927 £ 36 NMF
Other operating income $ 17,396 $ 12,367 40.70% £ 11,269 £8,005 40.80%
Other operating non-interest income $ 65,185 $ 32,730 99.20% £ 42,227 £ 21,187 99.30%
Revenue $264,203 $ 195,506 35.10% £171,149 £126,555 35.20%
Salaries and other employee benefits $ (71,324) $(58,968) 21.00% -£ 46,203 -£ 38,171 21.00%
General and administrative expenses $ (37,091) $(34,405) 7.80% -£ 24,027 -£ 22,271 7.90%
Depreciation and amortization $ (16,320) $(15,772) 3.50% -£ 10,572 -£ 10,209 3.60%
Other operating expenses $ (5,583) $ (3,527) 58.30% -£3,617 -£2,283 58.40%
Other operating non-interest expenses $ (130,318) $ (112,672) 15.70% -£ 84,419 -£ 72,934 15.70%
Operating income before cost of credit risk $133,885 $ 82,834 61.60% £ 86,730 £ 53,621 61.70%
Impairment charge on loans to customers $ 13,902 $ 28,136 -50.60% £9,005 £ 18,213 -50.60%
Impairment charge (reversal) of impairment on finance lease receivables $ 190 $ (3,257) NMF £ 123 -£2,108 NMF
(Impairment reversal) charge on other assets and provisions $ (801) $ 2,023 NMF -£ 519 £1,310 NMF
Cost of credit risk $ 13,291 $ 26,902 -50.60% £8,609 £ 17,415 -50.60%
Net operating income $120,594 $ 55,932 115.60% £ 78,121 £ 36,206 115.80%
Share of (loss) gain of associates $ (292) $ 144 NMF -£ 189 £ 93 NMF
Impairment of goodwill, property and equipment $ (14,008) $ (245) NMF -£9,074 -£ 159 NMF
Other non-operating income $4,834 $ 153 NMF £3,131 £ 99 NMF
Other non-operating expense $ (8,101) $ (460) NMF -£5,248 -£ 298 NMF
Net non-operating expenses $ (17,567) $ (408) NMF -£ 11,380 -£ 265 NMF
Profit before income tax expense from continuing operations $103,027 $ 55,524 85.60% £ 66,741 £ 35,941 85.70%
Income tax expense $ 12,650 $ 8,898 42.20% £8,194 £5,760 42.30%
Profit for the period from continuing operations $ 90,377 $ 46,626 93.80% £ 58,547 £ 30,181 94.00%
Net loss from discontinued operations $9,113 $ - NMF £5,903 £ - NMF
Net profit for the period $ 81,264 $ 46,626 74.30% £ 52,644 £ 30,181 74.40%
 
Attributable to:
– shareholders of the Bank $ 79,360 $ 47,174 68.20% £ 51,408 £ 30,537 68.30%
– non-controlling interests $1,904 $ (548) NMF £1,236 -£ 356 NMF

Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.670 per US$1.00 and GEL 1.773 per US$1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

Converted to GBP for the convenience using a period-end exchange rate of GEL 2.578 per GBP 1.00 and GEL 2.739 per GBP 1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

CONSOLIDATED BALANCE SHEET in US$ and GBP

Thousands, unless otherwise noted   US$   GBP
unaudited
2011   2010   Change 2011   2010   Change
Assets Y-O-Y Y-O-Y
Cash and cash equivalents $ 376,486 $ 344,943 9.1% £243,883 £ 223,287 9.2%
Amounts due from credit institutions $ 173,371 $ 65,690 163.9% £112,308 £ 42,522 164.1%
Investment securities – AFS & HTM $ 251,243 $ 166,363 51.0% £162,753 £ 107,689 51.1%
Loans to customers and finance lease receivable $ 1,566,683 $ 1,334,527 17.4% £ 1,014,880 £ 863,861 17.5%
Investments in associates $ 1,805 $ 3,177 -43.2% £1,169 £ 2,057 -43.2%
Investment properties $ 60,890 $ 64,014 -4.9% £ 39,444 £ 41,437 -4.8%
Property and equipment $ 208,449 $ 161,225 29.3% £135,031 £ 104,364 29.4%
Goodwill $ 27,662 $ 39,037 -29.1% £ 17,919 £ 25,269 -29.1%
Other intangible assets $ 12,708 $ 12,628 0.6% £8,232 £ 8,175 0.7%
Current income tax assets $ 5,082 $ 1,267 NMF £3,292 £ 820 NMF
Deferred income tax assets $ 8,893 $ 10,253 -13.3% £5,761 £ 6,637 -13.2%
Prepayments $ 17,922 $ 13,178 36.0% £ 11,609 £ 8,530 36.1%
Other assets $ 82,376 $ 42,538 93.7% £ 53,362 £ 27,536 93.8%
Total assets $ 2,793,570 $ 2,258,840 23.7% £ 1,809,643 £1,462,184 23.8%
Liabilities
Amounts due to customers, of which $ 1,637,858 $ 1,142,869 43.3% £ 1,060,986 £ 739,799 43.4%
Client deposits $ 1,529,392 $ 1,130,681 35.3% £990,723 £ 731,909 35.4%
Promissory notes $108,466 $ 12,188 NMF £ 70,263 £ 7,890 NMF
Amounts due to credit institutions $ 551,600 $ 642,373 -14.1% £357,320 £ 415,819 -14.1%
Current income tax liabilities $703 $ 2,398 -70.7% £ 455 £ 1,552 -70.7%
Deferred income tax liabilities $ 21,702 $ 17,429 24.5% £ 14,058 £ 11,282 24.6%
Provisions $231 $ 2,486 -90.7% £ 150 £ 1,609 -90.7%
Other liabilities $ 94,888 $ 60,230 57.5% £ 61,467 £ 38,987 57.7%
Total liabilities $ 2,306,982 $ 1,867,785 23.5% £ 1,494,436 £1,209,048 23.6%
Equity
Share capital $ 19,687 $ 17,679 11.4% £ 12,753 £ 11,444 11.4%
Additional paid-in capital $ 283,672 $ 269,196 5.4% £183,760 £ 174,255 5.5%
Treasury shares $ (1,884) $ (852) 121.1% -£1,220 -£ 551 121.4%
Other reserves $ 8,669 $ 15,125 -42.7% £5,616 £ 9,790 -42.6%
Retained earnings $ 152,448 $ 73,499 107.4% £ 98,754 £ 47,577 107.6%

Total equity attributable to shareholders of the
Bank

$ 462,592 $ 374,647 23.5% £299,663 £ 242,515 23.6%
Non-controlling interests $ 23,996 $ 16,408 46.2% £ 15,544 £ 10,621 46.4%
Total equity $ 486,588 $ 391,055 24.4% £315,207 £ 253,136 24.5%
Total liabilities and equity $ 2,793,570 $ 2,258,840 23.7% £ 1,809,643 £1,462,184 23.8%

Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.670 per US$1.00 and GEL 1.773 per US$1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

Converted to GBP for the convenience using a period-end exchange rate of GEL 2.578 per GBP 1.00 and GEL 2.739 per GBP 1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

STANDALONE INCOME STATEMENT OF JSC BANK OF GEORGIA in US$ and GBP

Thousands, unless otherwise noted   US$   GBP
unaudited
2011   2010   Change 2011   2010   Change
Y-O-Y Y-O-Y
Loans to customers $ 260,137 $ 206,598 25.9% £168,514 £133,734 26.0%
Investment securities – AFS & HTM $ 22,546 $ 10,675 111.2% £ 14,605 £6,910 111.4%
Amounts due from credit institutions $ 8,249 $ 3,184 159.1% £5,344 £2,061 159.3%
Interest income $ 290,932 $ 220,457 32.0% £188,463 £142,705 32.1%
Amounts due to customers $(96,910) $(54,696) 77.2% -£ 62,777 -£ 35,406 77.3%
Amounts due to credit institutions $(57,835) $(50,596) 14.3% -£ 37,465 -£ 32,752 14.4%
Interest expense $ (154,745) $ (105,292) 47.0% -£100,242 -£ 68,158 47.1%

Net interest income before net gains (losses) from derivative
financial instruments

$ 136,187 $ 115,165 18.3% £ 88,221 £ 74,547 18.3%
Net gains (losses) from derivative financial instruments $ 2,984 $ (4,557) NMF £1,933 -£2,950 NMF
Net interest income $ 139,171 $ 110,608 25.8% £ 90,154 £ 71,597 25.9%
Fee and commission income $ 49,927 $ 37,521 33.1% £ 32,342 £ 24,288 33.2%
Fee and commission expense $(10,895) $ (7,783) 40.0% -£7,058 -£5,038 40.1%
Net fee and commission income $ 39,032 $ 29,738 31.3% £ 25,284 £ 19,250 31.3%
Net gains from trading securities and investment securities available-for-sale $ 532 $73 NMF £ 345 £ 47 NMF
Net gains from revaluation of investment property $ 187 $ 611 -69.4% £ 121 £ 395 -69.4%
Net gains from foreign currencies:
– dealing $ 23,877 $ 17,836 33.9% £ 15,467 £ 11,546 34.0%
– translation differences $ 14,232 $ (169) NMF £9,219 -£ 109 NMF
Other operating income $ 2,755 $ 1,807 52.5% £1,785 £1,170 52.6%
Other operating non-interest income $ 41,583 $ 20,158 106.3% £ 26,937 £ 13,049 106.4%
Revenue $ 219,786 $ 160,504 36.9% £142,375 £103,896 37.0%
Salaries and other employee benefits $(52,061) $(39,818) 30.7% -£ 33,725 -£ 25,775 30.8%
General and administrative expenses $(28,017) $(22,938) 22.1% -£ 18,149 -£ 14,848 22.2%
Depreciation and amortization $(12,995) $(12,987) 0.1% -£8,418 -£8,407 0.1%
Other operating expenses $ (1,955) $ (1,304) 49.9% -£1,266 -£ 844 50.0%
Other operating non-interest expenses $(95,028) $(77,047) 23.3% -£ 61,558 -£ 49,874 23.4%
Operating income before cost of credit risk $ 124,758 $ 83,457 49.5% £ 80,817 £ 54,022 49.6%
Impairment charge on loans to customers $ 13,361 $ 22,036 -39.4% £8,655 £ 14,264 -39.3%
(Impairment reversal) charge on other assets and provisions $ (2,292) $ (459) NMF -£1,484 -£ 297 NMF
Cost of credit risk $ 11,069 $ 21,577 -48.7% £7,171 £ 13,967 -48.7%
Net operating income $ 113,689 $ 61,880 83.7% £ 73,646 £ 40,055 83.9%
Impairment of property and equipment $ - $ (245) -100.0% £ - -£ 159 -100.0%
Other non-operating income $ - $ 153 -100.0% £ - £ 99 -100.0%
Other non-operating expense $ (7,877) $ (460) NMF -£5,102 -£ 298 NMF
Net non-operating expenses $ (7,877) $ (552) NMF -£5,102 -£ 358 NMF
Profit before income tax expense from continuing operations $ 105,812 $ 61,328 72.5% £ 68,544 £ 39,697 72.7%
Income tax expense $ 10,672 $ 9,063 17.8% £6,913 £5,867 17.8%
Profit for the period from continuing operations $ 95,140 $ 52,265 82.0% £ 61,631 £ 33,830 82.2%
Net loss from discontinued operations $ 9,113 $ - NMF £5,903 £ - NMF
Net profit for the period $ 86,027 $ 52,265 64.6% £ 55,728 £ 33,830 64.7%

Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.670 per US$1.00 and GEL 1.773 per US$1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

Converted to GBP for the convenience using a period-end exchange rate of GEL 2.578 per GBP 1.00 and GEL 2.739 per GBP 1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

STANDALONE BALANCE SHEET OF JSC BANK OF GEORGIA in US$ and GBP

Thousands, unless otherwise noted   US$   GBP
unaudited
2011   2010   Change 2011   2010   Change
Assets Y-O-Y Y-O-Y
Cash and cash equivalents $ 364,202 $ 315,241 15.5% £235,926 £ 204,061 15.6%
Amounts due from credit institutions $ 168,332 $ 58,045 190.0% £109,043 £ 37,573 190.2%
Investment securities – AFS & HTM $ 246,732 $ 158,725 55.4% £159,830 £ 102,746 55.6%
Loans to customers and finance lease receivable $ 1,578,062 $ 1,240,811 27.2% £ 1,022,251 £ 803,198 27.3%
Investments in associates $ 102,420 $ 190,567 -46.3% £ 66,347 £ 123,357 -46.2%
Investment properties $ 43,626 $ 44,712 -2.4% £ 28,260 £ 28,943 -2.4%
Property and equipment $ 142,154 $ 126,140 12.7% £ 92,086 £ 81,653 12.8%
Goodwill $ 13,622 $ 12,830 6.2% £8,824 £ 8,305 6.2%
Other intangible assets $ 11,056 $ 9,613 15.0% £7,162 £ 6,222 15.1%
Current income tax assets $ 4,010 $ - NMF £2,597 £ - NMF
Prepayments $ 10,692 $ 9,341 14.5% £6,926 £ 6,046 14.6%
Other assets $ 28,598 $ 9,399 204.3% £ 18,525 £ 6,084 204.5%
Total assets $ 2,713,506 $ 2,175,424 24.7% £ 1,757,777 £1,408,188 24.8%
Liabilities
Amounts due to customers, of which $ 1,632,596 $ 1,029,080 58.6% £ 1,057,578 £ 666,141 58.8%
Client deposits $ 1,524,130 $ 1,016,892 49.9% £987,315 £ 658,251 50.0%
Promissory notes $108,466 $ 12,188 NMF £ 70,263 £ 7,890 NMF
Amounts due to credit institutions $ 529,400 $ 628,628 -15.8% £342,939 £ 406,922 -15.7%
Current income tax liabilities $ - $ 2,350 -100.0% £ - £ 1,521 -100.0%
Deferred income tax liabilities $ 18,716 $ 16,192 15.6% £ 12,124 £ 10,481 15.7%
Provisions $231 $ 2,486 -90.7% £ 150 £ 1,609 -90.7%
Other liabilities $ 32,837 $ 24,874 32.0% £ 21,268 £ 16,102 32.1%
Total liabilities $ 2,213,780 $ 1,703,610 29.9% £ 1,434,059 £1,102,776 30.0%
Equity
Share capital $ 19,687 $ 17,679 11.4% £ 12,753 £ 11,444 11.4%
Additional paid-in capital $ 281,740 $ 268,846 4.8% £182,508 £ 174,028 4.9%
Treasury shares $ (1,884) $ (776) 142.8% -£1,220 -£ 502 143.0%
Other reserves $ 24,760 $ 29,685 -16.6% £ 16,040 £ 19,215 -16.5%
Retained earnings $ 175,423 $ 156,380 12.2% £113,637 £ 101,227 12.3%
Total equity $ 499,726 $ 471,814 5.9% £323,718 £ 305,412 6.0%
Total liabilities and equity $ 2,713,506 $ 2,175,424 24.7% £ 1,757,777 £1,408,188 24.8%

Converted to U.S. dollars for the convenience using a period-end exchange rate of GEL 1.670 per US$1.00 and GEL 1.773 per US$1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

Converted to GBP for the convenience using a period-end exchange rate of GEL 2.578 per GBP 1.00 and GEL 2.739 per GBP 1.00, such exchange rates being the official Georgian Lari to U.S. dollar period-end exchange rates as reported by the National Bank of Georgia on 31 December 2011 and 31 December 2010.

KEY RATIOS

Bank of Georgia Consolidated

Ratios presented on a consolidated basis, unless otherwise noted

Profitability Ratios       2011       2010    
ROAA 1       3.60%       2.45%
ROAE2       20.4%       13.5%
Interest Income To Average Int. Earning Assets Excl. Cash 3       18.1%       19.2%
Interest Income To Average Int. Earning Assets Incl. Cash 3       14.8%       16.3%
Cost of Funds 4       8.0%       8.2%
Cost of Funds (excluding gains (losses) from interest rate derivatives)       8.1%       7.9%
Net Spread Excl. Cash 5       10.0%       11.3%
Net Spread Incl. Cash 5       6.7%       8.4%
Net Interest Margin 6       7.1%       8.0%
Net Interest Margin (excluding gains (losses) from interest rate derivatives)       6.9%       8.3%
Loan Yield Excl. Provisions7       17.3%       18.3%
Loan Yield Incl. Provisions7       16.4%       16.0%
Deposit Yield       8.0%       7.5%
Interest Expense To Interest Income       53.3%       48.9%
Net Non-Interest Income To Average Total Assets 8       4.8%       4.1%
Net Non-Interest Income To Revenue       45.8%       39.8%
Net Fee And Commission Income To Average Interest Earning Assets 9       1.8%       1.9%
Net Fee And Commission Income To Revenue       17.1%       18.3%
Operating Leverage, Y-O-Y 10       18.3%       15.1%
Operating Leverage, Y-O-Y, Normalized 10       12.7%       22.6%
Total Operating Income (Revenue) To Total Assets       9.5%       8.7%
Recurring Earning Power 11       5.3%       4.3%
Net Income To Revenue 34.2% 23.8%
 
Efficiency Ratios                
Operating Cost To Average Total Assets 12       5.2%       5.9%
Cost / Income 13       49.3%       57.6%
Cash Cost / Income       36.6%       43.7%
Personnel Cost To Revenue 14       27.0%       30.2%
Personnel Cost To Operating Cost       54.7%       52.3%
Personnel Cost To Average Total Assets 2.8% 3.1%
 
Liquidity Ratios                
Net Loans To Total Assets 15       56.1%       59.1%
Average Net Loans To Average Total Assets       57.5%       57.5%
Interest Earning Assets To Total Assets       80.7%       79.1%
Average Interest Earning Assets To Average Total Assets       80.7%       76.8%
Liquid Assets To Total Assets 16       28.4%       25.3%
Liquid Assets To Total Short-Term Liabilities, NBG Stand-Alone       37.8%       34.7%
Liquid Assets To Total Liabilities, IFRS Consolidated       34.8%       30.9%
Net Loans To Client Deposits       102.4%       118.0%
Net Loans to Customer Funds       95.7%       116.8%
Average Net Loans To Average Client Deposits       114.8%       127.2%
Net Loans To Total Deposits 17       100.2%       110.2%
Net Loans To (Total Deposits + Total Equity)       76.4%       83.3%
Net Loans To Total Liabilities       67.9%       71.4%
Total Deposits To Total Liabilities       67.8%       64.8%
Client Deposits To Total Deposits       97.8%       93.4%
Client Deposits To Total Liabilities       66.3%       60.5%
Total Deposits To Total Assets       56.0%       53.6%
Client Deposits To Total Assets       54.7%       50.1%
Client Deposits To Total Equity (Times)       3.14       2.89
Due From Banks / Due To Banks 18       1298.4%       419.5%
Total Equity To Net Loans       31.1%       29.3%
Leverage (Times) 19 4.7 4.8
 
Asset Quality                
NPLs (in GEL thousands) 20       97,191       117,580
NPLs To Gross Loans 21       3.6%       4.6%
NPL Coverage Ratio 22       118.5%       149.8%
Cost of Risk 23       0.9%       2.1%
Reserve For Loan Losses To Gross Loans 24       4.2%       6.9%
% Of Loans To Clients Collateralized       87.0%       91.8%
Equity To Average Net Loans To Clients 33.8% 35.7%
 
Capital Adequacy:                
Equity To Total Assets       17.4%       17.3%
BIS Tier I Capital Adequacy Ratio, Consolidated 25       19.9%       17.5%
BIS Total Capital Adequacy Ratio, Consolidated 26       28.5%       26.6%
NBG Tier I Capital Adequacy Ratio 27       10.5%       13.0%
NBG Total Capital Adequacy Ratio 28 16.2% 14.5%
 
Per Share Values:                
Basic EPS (GEL) 29       4.44       2.78
Basic EPS (US$)       $2.66       $1.57
Basic EPS (GEL), from continuing operations       4.95       2.78
Basic EPS (US$), from continuing operations       $2.96       $1.57
Book Value Per Share (GEL)30       26.09       22.23
Book Value Per Share (US$)       $15.62       $12.54
Ordinary Shares Outstanding – Weighted Average, Basic31       29,866,366       30,037,041
Ordinary Shares Outstanding – Period End       32,877,547       31,344,860
Ordinary Shares Outstanding – Diluted 32 33,501,366 33,511,655
 
Selected Operating Data:                
Full Time Employees, Group, Of Which:       7,301       5,610
- Full Time Employees, BOG Stand-Alone       3,364       3,110
- Full Time Employees, Aldagi BCI       2,911       1,046
- Full Time Employees, BNB       260       255
- Full Time Employees, Other       766       1,199
Total Assets Per FTE, BOG Stand-Alone (in GEL thousands) 33       1,347       1,240
Number Of Active Branches, Of Which:       158       142
- Number Of Flagship Branches       34       34
- Metro Branches       24       24
Express Branches       9       -
- All Other Branches       91       84
Number Of ATMs       426       405
Number Of Cards Outstanding       663,205       603,049
Number Of POS Terminals 2,828 2,330

NOTES TO KEY RATIOS

1     Return On Average Total Assets (ROAA) equals Net Profit for the period from continuing operations divided by monthly Average Total Assets for the same period;
2 Return On Average Total Equity (ROAE) equals Net Profit for the period from continuing operations attributable to shareholders of the Bank divided by monthly Average Equity attributable to shareholders of the Bank for the same period;
3 Average Interest Earning Assets are calculated on a monthly basis; Interest Earning Assets Including Cash include: Amounts Due From Credit Institutions, Investment Securities Held-To-Maturity, Investments Securities Available-For-Sale (but excluding equity instruments – shares, etc.) and Loans To Customers And Finance Lease Receivables; Interest Earning Assets Excluding Cash include all of the above except Amounts Due From Credit Institutions;
4 Cost Of Funds equals Interest Expense of the period (adjusted for the gains or losses from revaluation of interest rate derivatives) divided by monthly Average Interest Bearing Liabilities; Interest Bearing Liabilities Include: Amounts Owed To Credit Institutions and Amounts Owed To Customers;
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 (adjusted for the gains or losses from revaluation of interest rate derivatives) divided by monthly Average Interest Earning Assets Including Cash for the same period;
7 Loan Yield Including Provisions equals Interest Income From Loans To Customers And Finance Lease Receivables, less Impairment Charge for Loans To Customers And Finance Lease Receivables, divided by monthly Average Gross Loans To Customers And Finance Lease Receivables; Loan Yield Excluding Provisions equals Interest Income From Loans To Customers And Finance Lease Receivables divided by monthly Average Gross Loans To Customers And Finance Lease Receivables;
8 Net Non-Interest Income includes: Net Fee And Commission Income, Net Insurance Revenues and Other Operating Non-Interest Income (excluding Net Gains or Losses From Derivative Financial Instruments);
9 Net Fee And Commission Income also includes net commission income from documentary operations (such as income from guarantees and letters of credit);
10 Operating Leverage equals percentage change in Revenue less percentage change in Other Operating Non-Interest Expenses;
11 Recurring Earning Power equals Operating Income Before Cost of Credit Risk for the period divided by monthly average Total Assets of the same period;
12 Operating Cost equals Other Operating Non-Interest Expenses;
13 Cost / Income Ratio equals Operating Cost divided by Revenue;
14 Personnel Cost equals Salaries And Other Employee Benefits;
15 Net Loans equal Net Loans To Customers And Finance Lease Receivables;
16 Liquid Assets include: Cash And Cash Equivalents, Amounts Due From Credit Institutions, Investment Securities Held-To-Maturity and Investment Securities Available-For-Sale (but excluding equity instruments – shares, etc);
17 Total Deposits include Client Deposits and Corresponding Accounts, Times Deposits and Inter-Bank Loans from other banks;
18 Due From Banks equals Cash And Cash Equivalents plus Amounts Due From Credit Institutions (but excluding Cash On Hand); Due To Banks equals Corresponding Accounts, Times Deposits and Inter-Bank Loans from other banks;
19 Leverage (Times) equals Total Liabilities divided by Total Equity;
20 NPLs (in GEL) equals total gross non-performing loans as of the period end; non-performing loans are loans that either have debts in arrears for more than 90 calendar days or, based on the reasonable opinion of the Bank’s management, are qualified to be non-performing due to other factors (e.g. restructuring due to the borrower’s inability to meet payment obligations);
21 Gross Loans equals Gross Loans To Customers And Finance Lease Receivables;
22 NPL Coverage Ratio equals Allowance For Impairment Of Loans And Finance Lease Receivables divided by NPLs;
23 Cost Of Risk equals Impairment Charge for Loans To Customers And Finance Lease Receivables for the period divided by monthly average Gross Loans To Customers And Finance Lease Receivables over the same period;
24 Reserve For Loan Losses To Gross Loans equals Allowance For Impairment Of Loans And Finance Lease Receivables divided by Gross Loans And Finance Lease Receivables;
25 BIS Tier I Capital Adequacy Ratio equals Tier I Capital divided by Total Risk Weighted Assets, both calculated in accordance with the requirements of Basel Accord I;
26 BIS Total Capital Adequacy Ratio equals Total Capital divided by Total Risk Weighted Assets, both calculated in accordance with the requirements of Basel Accord I;
27 NBG Tier I Capital Adequacy Ratio equals Tier I Capital a divided by Total Risk Weighted Assets, both calculated in accordance with the requirements the National Bank of Georgia instructions;
28 NBG Total Capital Adequacy Ratio equals Total Capital divided by Total Risk Weighted Assets, both calculated in accordance with the requirements of the National Bank of Georgia instructions;
29 Basic EPS equals Net Profit for the period attributable to shareholders’ of the Bank divided by the weighted average number of outstanding ordinary shares over the same period;
30 Book Value Per Share equals Total Equity attributable to shareholders of the Bank divided by Net Ordinary Shares Outstanding at period end; Net Ordinary Shares Outstanding equals total number of Ordinary Shares Outstanding less number of Treasury Shares at period end;
31 Weighted average number of ordinary shares equal average of daily outstanding number of shares less daily number of treasury shares;
32 Diluted number of ordinary shares equals weighted average number of ordinary shares plus dilutive number of shares known to the management as of the period end;
33 Equals stand-alone Total Assets of the Bank divided by total number of full-time employees of the Bank.

Category Code: FR
Sequence Number: 318763
Time of Receipt (offset from UTC): 20120319T181457+0000

Contacts

Bank of Georgia

Contacts

Bank of Georgia