FitchRatings: „B/B‟ Stable Moody‟s: „B3/NP‟ (FC) & „Baa3/P - 3‟ (LC); Stable Standard & Poor‟s: „B+/B‟ Stable LSE: BGEO GSE: GEB Berlin-Bremen Boerse: B7D1 Bank of Georgia Nine Months 2006 Results Overview February, 2007
Introduction To Bank Of Georgia The leading universal bank in Georgia Top bank in Georgia no. 1 by assets (c.27.9%) (1) , loans (c.26.5%) (1) & equity A 'leveraged play' on Georgia’s (c.39.9%) (1) no. 2 by deposits (c.24.5%) (1) economic growth 10.2% market share gain in total assets to c.27.9%, 8.2% market share gain in loans to c.26.5% and 5.5% market share gain in total deposits to c.24.5% y-o-y by December 2006 Diversified revenue streams and disciplined capital leadership in retail banking, with management 405,000 retail accounts 270,000+ cards issued 99 branches 124 ATMs Domestic universal banking strategy driving top brand, best distribution network and broadest range of profitable growth services of any bank in Georgia Leading corporate and investment banking franchise top broker with c. 83 % (2) market share of total trading volume on the Georgian Stock Exchange Domestic sector consolidator and aspirations for Leading insurance, asset & wealth management and leasing regional expansion services provider Top credit rating in Georgia S&P: „B+/B‟ Stable – at the sovereign ceiling Moody‟s: „B3/NP‟ (FC) & „Baa3/P - 3‟ (LC); Stable Sophisticated management team with Western Fitch Ratings: „B/B‟ Stable banking & finance background and education Listed on the London Stock Exchange (GDRs) and Georgian Stock Exchange Market Cap (LSE) US$706.5 mln as of 8 February 2007 Transparency and good governance, 82% LSE: BGEO institutionally owned, majority of Board seats held by GSE: GEB large shareholders and an independent director Notes: (1) As of December 2006 (2) As of September 2006 Page 1 February, 2007 www.bog.ge/ir
Georgian Banking Sector Page 2 February, 2007 www.bog.ge/ir
Georgian Banking Sector GEL/US$ Market Share (YE 2006) BoG market Period End share gain since (US$m) YE 2005 YE 2006 Since YE 2005 Top 5 Banks Bank of Georgia YE 2005 (%) YE 2005= 1.79 YE 2006= 1.71 Total Assets 1,421 2,467 73.6% 80.1% 27.9% + 10.2% Gross Loans 965 1,565 62.1% 83.2% 26.5% + 8.2% Deposits 858 1,359 58.3% 82.2% 24.5% + 5.5% Shareholders‟ Equity 267 524 96.0% 78.3% 39.9% + 21.1% Net Income 35 54 57.5% 80.8% 23.6% + 2.9% Peer Group’s market shares in Total Assets Asset growth since +65% +23% +58% +161% +65% +21% +31% YE 2005 30.0% 27.9% 25.0% 22.6% 22.5% YE 2005 20.0% 17.8% YE 2006 15.3% 15.0% 13.2% 12.9% 12.6% 11.1% 10.2% 9.8% 10.0% 8.3% 8.3% 7.3% 5.0% 0.0% Bank of Georgia TBC Bank United Georgian ProCredit Bank Bank Republic Cartu Bank Other Banks Bank Notes: (1) All data based on standalone accounts as reported to the National Bank of Georgia and as published by the National Bank of Georgia www.nbg.gov.ge (2) Change in peer group total assets calculations based on GEL values Page 3 February, 2007 www.bog.ge/ir
Georgian Banking Sector cont’d Peer Group’s market shares in Gross Loans GEL/US$ Gross loan growth Period End +125% +23% +31% +37% +57% +50 +49% since YE 2005 YE 2005= 1.79 30.0% 26.5% YE 2006 = 1.71 25.0% 22.2% 22.0% 20.0% 18.2% 17.6% 14.0% 14.0% 15.0% 11.8% 10.0% 10.4% 9.5% 10.0% 8.8% 7.8% 7.3% YE 2005 5.0% YE 2006 0.0% Bank of Georgia TBC Bank United Georgian ProCredit Bank Cartu Bank Bank Republic Other Banks Bank Peer Group’s market shares in Deposits Deposit growth +41% since YE 2005 +96% -1.4% +90% +58% +11% +61% 30.0% 26.5% 24.8% 24.5% 25.0% 20.0% 19.0% 18.4% YE 2005 14.2% 15.0% 12.0% YE 2006 11.3% 11.3% 10.6% 9.6% 10.0% 9.2% 4.9% 5.0% 3.6% 0.0% TBC Bank Bank of Georgia United Georgian ProCredit Bank Bank Republic Cartu Bank Other Banks Bank Peer Group’s market shares in Equity Equity growth +57% +300% +37% +16% +90% +110% +19% since YE 2005 45.0% 39.9% 40.0% YE 2005 35.0% 30.0% YE 2006 25.0% 25.0% 18.7% 18.1% 20.0% 16.9% 15.9% 13.2% 15.0% 10.4% 9.3% 7.8% 10.0% 7.0% 6.9% 5.8% 5.2% 5.0% 0.0% Bank of Georgia TBC Bank Cartu Bank Bank Republic ProCredit Bank United Georgian Other Banks Bank Notes: (1) All data based on standalone accounts as reported to the National Bank of Georgia and as published by the National Bank of Georgia www.nbg.gov.ge (2) Change in peer group gross loans, peer group deposits and peer group equity calculations based on GEL values Page 4 February, 2007 www.bog.ge/ir
Market Potential And High Degree Of Concentration Market Shares of Top 5 Banks by Assets Gross loans to GDP (%, 2005) 100% Slovenia, Estonia, Latvia 56% 83% 80% 78% Hungary, Bosnia.-Herz 52% 80% 66% 43% Bulgaria 65% 64% Czech Republic 39% 60% 50% 49% 36% Slovakia 42% 41% 35% 31% 40% Ukr., Lith., Turkey, Poland 26% Serbia, Russia 20% 22% Romania Georgia 15% 0% Georgia Bulgaria Belarus Hungary Slovakia Slovenia Russia Czech Romania Poland Ukraine 0% 10% 20% 30% 40% 50% 60% Rep Sources: Georgia data from NBG 30 September 2006, other countries data from JP Morgan research, August 2006, RZB CEE Banking Sector Report, September 2006 Source: ECB, local Central Banks Card penetration (% of population, 2005) Total deposits to GDP (%, 2005) 80% Czech Republic 63% 56% 63% Slovenia, Slovakia 50% Turkey, Bulgaria 60% 47% Estonia, Bosnia-Herz 43% Hungary 40% 30% Poland 39% 31% Latvia 19% Romania, Lithuania 28% 20% 14% 6% Ukraine, Serbia, Russia 25% Georgia 11% 0% Czech Hungary Poland Russia Georgia 0% 10% 20% 30% 40% 50% 60% 70% Republic Source: National Bank of Georgia, Merrill Lynch Source: ECB, local Central Banks Page 5 February, 2007 www.bog.ge/ir
The Georgian Economy Page 6 February, 2007 www.bog.ge/ir
The Georgian Economy High GDP growth Stable currency Strong fiscal performance Low level of dependence on a single source of energy supply Increasing consumer spending with very low levels of consumer indebtedness Significant government spending on infrastructure, driving productivity growth Reasonable interest rate environment No currency or capital control since the mid-1990s New simplified tax code, with reduced payroll tax and VAT, and flat 12% personal income tax The majority of customs duties abolished, simplified new customs code Extensive deregulation and liberalization Significantly reduced corruption Improving corporate governance practices Increased foreign investor activity Increasing Ahead of most CIS economies in the 2005 EBRD Transition Indicators, third lowest level of 'corruption' recognition of Georgia‟s Named number one reformer by World Bank (Doing Business 2007) successful Well ahead of its CIS peers in the Heritage Foundation 2006 Index of Economic Freedom economic growth Page 7 February, 2007 www.bog.ge/ir
The Georgian Economy At A Glance 2003 2004 2005 2006E Economic Activity Nominal GDP (US$m) 3,995 5,166 6,401 7,669 Nominal GDP (GELm) 8,582 9,846 11,629 14,068 Real GDP Growth (y-o-y; %) 11.1 5.9 9.3 8.0 GDP per Capita (US$) 877 1,139 1,416 1,688 Population (e-o-p; m) 4.555 4.535 4.521 4.544 Unemployment (%) 11.5 12.6 13.8 12.5 Inflation CPI (year-end;%) 7.0 7.5 6.2 8.2 External Balance Total Exports (FOB; US$m) 1,273 1,631 2,168 2,391 Exports as % of GDP 31.9 31.6 33.9 31.2 Total Imports (CIF; US$m) 1,856 2,491 3,312 3,756 Trade Balance (US$m) -636 -916 -1,214 -1,449 Current Account Balance (US$m) -371 -348 -693 -802 As % of GDP (9.3) (6.7) (10.8) (10.5) Capital Account Balance (US$m) 378 524 790 1,010 Net FDI (US$m) 336 490 539 765 As % of GDP 8.4 9.5 8.4 8.5 Gross FX Reserves (including Gold and SDRs; US$m) 192 384 475 734 Import Cover (Gross Reserves in Days of Imports) 38 56 52 61 Fiscal Balance and Debt Indicators State Budget Revenues (GELm) 932 1,773 2,608 3,538 State Budget Expenditures (GELm) 1,119 1,924 2,617 3,828 Budget Balance (GELm) -186 -151 -9 -290 as % of GDP (2.2) (1.5) (0.1) (2.1) Foreign Debt (US$m) 1,754 1,762 1,651 1,631 Foreign Debt (% of GDP) 43.9 34.1 25.8 21.3 Exchange Rate GEL:US$ (average) 2.15 1.92 1.81 1.78 Source: Galt & Taggart Securities “Georgian Economy At A Glance”,Ministry of Economic Development, Ministry of Finance, State Statistics Department Page 8 February, 2007 www.bog.ge/ir
Trade Structure WTO member Import Structure by Country, Jan-Nov 2006 Export Structure by Country, Jan-Nov 2006 since 2001 No quantitative restrictions on trade Simplified customs regime since August 2006, new customs code becomes effective in January 2007 One of the two beneficiaries of the EU GSP+ Scheme in the CIS since 2006, Import Structure by Product, Jan-Nov 2006 Export Structure by Product, Jan-Nov 2006 granting duty- free export for Other Ferrous Metals 7,200 various products As of January Cement Beverages, Spirits & 2006 Georgia Vinegar Copper obtained GSP+ Oil & Gas status with Turkey Equipment & Rail Cars Ores Fertilizers Gems & Precious Stones Vessels & Aircrafts Vegetables Vehicles Source: State Statistics Department Page 9 February, 2007 www.bog.ge/ir
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